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I have previously commented on the countries lining up to help (themselves) as part of the imminent reconstruction and development to the regained Azeri territory - Now the US seen to have have a first move, and with them comes the big money and rapid progress.
IMO it looks great for AAZ, everyone wants to share in the opportunities provided by new transport corridors and surely it must help even with the existing mines WRT getting materials in and out and even staff to sites.
One of the proposed transport/railway corridors will make some of the sites much more accessible, things are progressing even if AAZ can do nothing.
"The US is interested in cooperating with Azerbaijan Railways and attracting new companies in railway infrastructure, U.S. Deputy Ambassador Michael Dickerson said during the meeting with Azerbaijan’s Railways Chairman Javid Gurbanov on March 10.
During the meeting, Azerbaijan’s Railways Chairman briefed the participants on the importance of infrastructure projects, reforms and international transport corridors implemented by the Railways.
Gurbanov emphasized that the active participation in important projects such as the East-West, North-South and North-West transport corridors, makes Azerbaijan one of the reliable transport and logistics centers of Eurasia.
It was noted that the North-South corridor, aimed at reducing the time of goods delivery from India to Russia, Northern and Western Europe, requires extensive use of Azerbaijan’s favourable transit opportunities."
https://www.azernews.az/business/177006.html
@TornadoTony Useful piece. My assumption has been that the bond yields would rise for all teh reasons you outlined until they become unbearable as the US Government cannot allow things to get to a position where it becomes effectively insolvent.
At some point (soon) yield suppression will resume and real interest rates will head further negative rather than further positive as they have been since Aug-2020. The various commentators in this space have been citing circa 1.5% on the 3-year and 3% on the 10-year ... we are currently around those levels which is why I think this situation will not be allowed to persist.
Once the Fed restarts yield suppression activities in earnest then the gold/silver bull will resurge. We may even get gold and the USD rising in unison as USD is the 'least worst' fiat currency so safer than being in cash elsewhere.
ATB APR
Thanks for your reply Tony. Isn't the chance of US rate rise this year or 'soon' extremely slim? I'm sure Powell has mentioned rates will remain at current levels until 2023. But even if they raise rates and bond yields continue to rise, that would mean the US are paying more interest on their massive $30 trillion debt pile.
Like you say the US are ahead of the EU in terms of vaccine rollout and their economy returning to growth should encourage dollar investments. But if inflation takes off investors won't want to hold onto the USD and see their value eroded.
The PE values are striking and definitely point towards imbalance in the markets. Perhaps the US10YR normalising at 1.5% will act as a stabiliser for when there is a temporary rise in inflation.
It will be interesting to watch and hopefully not as painful as 2008. Thanks again
Further on my last post yesterday, I said of Geopromining and Zod they : "are currently laying off hundreds of local miners who reportedly plan to blockage the railway in Armenia- not a sign they expect to regain the mine!). "
There's more on this today in the Armenian press, apparently another mine, actually in Armenia, Amulsar (nothing to do with AAZ) is going to get the go-ahead to operate soon and Goepro are quoted as saying that miners being laid off at Zod will get jobs at the mine.
https://news.am/eng/news/632879.html
https://translate.google.co.uk/translate?hl=en&sl=hy&u=https://armlur.am/press_reviews/joxovurd/&prev=search&pto=aue
Bears out what I said that Geopro don't expect to get the Azeri side of Zod back and their assertion that they can operate at previous capacity appears a little optimistic.
Righton - agree with everything you say, the Russians say they will not interfere, but they will look after their own national interest.
The Russian have a balancing problem , in that they want to remain friends with all parties and will only side with Armenia (under treaty) if the Azeri's invade Armenia proper and I believe the Azeri's will never be so stupid.
The consequences even for Russia in taking any action against the Azeri's are huge as they have more important relationships that could be jeopardised elsewhere, Turkey, Israel and numerous regional players are aligned with the Azeris The cost to Russia would be too high, especially as the all parties (except some Armenians) desperately want commercial and transport links through the region.
There has been a steady stream of countries meeting and expressing a desire to help the Azeri's to rebuild the territories, including the UK, Germany, Ukraine, Russia, Italy, Iran and loads of minor players. Peace is now in everyone's interest.
As far as Geopro's links to Putin, for Zod it will not cut it, the Azeris are to bitter to give their mine to a firm with an alleged atrocious record and have paid no royalties and are seen as plundering crooks (Environmental damage left and are currently laying off hundreds of local miners who reportedly plan to blockage the railway in Armenia- not a sign they expect to regain the mine!). Perhaps equally important our boss has very close links with the Azeri authorities ( and Azeri's control the territory not the Russians).
Don't worry about the mines - the more I've read the clear it is the Azeri's despise all the companies that have, as they see it, plundered their territory.
If you have doubts read the attached article from Armenian perspective before the war, it includes many mines including a section on Zod and damning comments from an ex mine manager/geologist and other locals
https://hetq.am/en/article/104582
jointhedots your report is very appropriate and shows why there are concerns. I would however like to offer an opinion. In my experience the Russians do not always involve themselves as "peacekeepers", but moreso as "protectors" of their geopolitical influence. They have seen Armenia drifting away from their sphere under this new PM, so it suits them very well indeed to see him under pressure. Meanwhile they are major arms suppliers to Azerbaijan, as well as Armenia, so they are onto a win-win if a simmering conflict endures. Lastly, you will remember that it was a Russian company (oligarch) who owned and mined the deposit on the border, and they are also there to protect his interests. I feel pretty sure that the oligarch will have Putin's ear, which AAZ surely do not have. We should not not underestimate the influence that Russia can have in this conflict, and it's not always as a peacekeeper.
I don't know is everyone is aware, I assumed so, apparently the Armenians are going through a bit of a constitutional crisis - it is unfolding rapidly and may be temporarily weighing on the share price IMO.
For anyone that is not aware, this is the background:
The PM blamed the Armenian army for the loss of the war, thousands of soldiers were being investigated for deserting their posts. It appears in response the Chief of Staff of the armed forces and generals called for the resignation of the PM, citing under resourcing and poor political leadership blamed on the government. Previous presidents and political opposition joined in and called for PM to be deposed for signing a poor settlement deal (they appear delusional, somehow seem to feel they could have turned the tide of the war, but as we all know populism (Trump, Johnson) is a winning formula).
From there, the PM called for the military leaders to be sacked and there are calls from some for a coup. Now it looks like the PM will call am election - probably through fear of a coup. Meanwhile, the Russians have said they will not intervene.
So here we are with what looks like a group of nationalist politicians likely to gain control on the basis of being tough and possibly reigniting the dream of retaking the lost territory. That backdrop is not helpful for investment, even though there is not a snowball in hells chance of them regaining the territory - if they do kick off they will lose the Russian support and lose more territory IMO as they do not have the financial clout.
This backdrop is not helpful to AAZ and may be preventing some entities from committing to buy shares until the dust settles - I've been surprised that no institutional investors appear have not moved to take positions. Approval for AAZ to start visiting to make assessment on the restored sites will help greatly IMO.
https://news.am/eng/news/632688.html
Somehow hold became whole and I did not spot.
BPat890
The USD is gaining strength as its interest rate to whole USA dollars in bonds has gone up in value (yield to around 1.6% on 10yr Treasuries where as for UK its 0.75%). The second factor is vaccine roll out with USA at 24% and the UK is actually higher. Hence UK is only marginally down against the USD and the euro is down significantly against both currencies as they have lower interest rates and have below an 8% vaccine roll out. The higher the interest rate the stronger the currency.
Its potentially bad for the USA government is amount of debt that is now subject to higher interest so a lot of austerity to follow unless the interest rate goes back down. Furthermore, if the USA interest rate hits around 3% the American equity markets essentially blow up as the monies earned from bond interest are likely to exceed dividend rates of most USA listed companies. USA company earnings are not that great and the PE rates in the market are at all time highs.
So the upshot is whether the USA Treasury yields breaker higher and gold keeps falling and this continues and we get a 2008 crash in the markets or whether the FED steps in with its plunge protection team and save the day. The key is to be sitting on some cash and not be overweight in this market. The current situation is under a cautionary flag. Hope the above is of some help.
Tony
Sensible views as always jointhedots! Thanks for sharing your research over the past year, it has been interesting to read more about the mines in the (no longer) contested region.
I don't fully understand why the USD is strengthening now at a time when more stimulus added to the system is expected to drive growth and inflation this summer.
I read this weekend Germany's bond yields are negative 0.3%, the UK are positive 0.75% but US yields are now 1.6% - surely a bad thing for the USD.
As other posters have stated already any of us can to now is take our stance, whatever we do will have no bearing on the outcome for AAZ. I can think of a lot worse places to stick £1500.
Gold, the metal is where the action is until AAZ release more news, an army of opportunists are slugging it out for victory on the gold price, no matter what the news in the market it seems there are entities portraying it as bad news for gold. It is a little ridiculous the US can commit to printing cash like there is no tomorrow and gold flat-lines - the consequences are good for gold as the process advances. The US$ sinks and gold does not respond, oil and gold traditionally moved together in the opposite direction to the US$ yet here we are with gold seemingly uncoupled. Interest rates are still at or below zero, but at the same time the perception that there will be no inflation and companies are about to put in a powerful grow spurt appears to defy logic.
Gold appears to be well out of favour - but isn't that traditionally a good time to buy?
I took another 1200 shares off the market today, the price was a little higher than I was hoping to pay but still very happy with that price :)
Very positive about the long term prospects, but just for the next week I'd like the SP to stay slightly lower so I can get a handful more shares when I reinvest my dividend
That's a surprise somehow all the spaces where taken out of my last post.
Gold is under pressure and may remain so for a while or even break to the upside - many of us are nursing losses but there is no point dwelling on it whist we wait for the next company development. There is no problem here and we are simply following the sector - it will changeIn the meantime I'm trying to understand what the company's true potential is, Zod is a large gold mine and provides great potential, but apparently it was not the biggest mine in Armenia, that is Kajaran who have huge reserves, 6% of world molybdenum which sells for 3 times the price of Copper, they are also profitable . The reason I took a look at them was more than academic, the mine appear to be relatively close to our Ordubad licence area, so I took a look to see if they had found any molybdenum there or on the same trend - as far as I can see none is reported, Copper/Gold/Silver so far and no correlation, but the area still needs lots of exploration. It looks to me like the takeaway is that these contract areas have the potential for some very large ore bodies if regional mines are anything to go by - can't say I've ever heard of a potential mine life of 120 years for a metals mine (see quote below). It will be interesting to read the Natural History Museum's view after they publish their study finding, we have no idea of the potential scale and may not for a few years"The largest mine in the country, the Kajaran copper and molybdenum mine, claims reserves of 2.24 billion tonnes of ore?—?6 percent of global molybdenum reserves. Kajaran also accounts for 60% of mining turnover in the country. Given its confirmed reserves and the current rate of mining (18 million tonnes per year), the mine could be operational for another 100–120 years."https://ampop.am/en/mining-transparency-in-armenia/