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It looks like the tankers attacks in the Gulf and a slowdown in the world's two largest economies will spur an investor gold rush
Yes, agreed. Shorting can be used for a variety of reasons. Incidentally, it's worth mentioning that Millennium appears to be acting alone. When a group of investors short a stock, it does make me look at lot closer at what is happening. At the moment, Millennium appears to be unwinding its short position but still has some way to go. On 3rd June it reported a 1.22% stake, on 5th June a 1.12% stake and today that has fallen to 1.07%. As I mentioned earlier, shorting a Gold miner does seem a very risky proposition. A spike in the price of Gold can upset even the best-executed strategy.
Shorting is used by many, but professionals often use it as a hedge against risk. Working out why the short is open is not always easy. There are so many uses. As an example someone could be heavily invested in another gold share that it think will outperform HGM. The net effect of the short and the investment is the difference.
Shorting gold is in itself very risky. This share is my best performer for the past 5 years, and if the gold price trend is up, as many believe, yield this year will top 8% at the current share price. I always reinvest my dividends, and will do so until I retire.
It looks very well run, and the annual report is always impressive.
Absurd to some but I think that shorters play an important role in the market. So long as their actions are based upon sound research rather than inside information. Or, even more worryingly, on the dissemination of false information. But as I mentioned in an earlier post, shorting a Gold miner strikes me as a very risky proposition. For sure, interest rates may dramatically increase or a Central Bank could divest its reserves and the price of Gold will probably fall. However, an international crisis could easily blow up, as it seems to periodically, and the Gold price may well increase substantially overnight. Unless a Gold miner has deeply intrinsic problems, it does seem a gamble. Far riskier than shorting most sectors. As I write, Millennium holds 1.12% of the stock. Not huge by hedge fund standards but still a good deal of exposure to something that is so inherently risky.
BAN SHORTING OF AIM STOCK
This is to make you aware that a petition to ban shorting of
London AIM stocks has been started.
Consider signing the petition if you agree, - deadline 04.09.2019
Gold flying at the time of posting, there could be another nice rise tomorrow. It will be interesting to see if the short position declared by Millenium International is closed soon. I must say that I didn't really get their rationale behind this, aside from possible political risk.
I like this company. Who are the bad guys these days - Russia ? China ? USTrump ? - the bigger the corporation - the more stateless and multinational it is - the worse it can behave and get away with it. JMHO.
There's a certain irony with today's RNS issued in respect to its AGM. Instead of the usual bland “Duly passed” comment in reference to the company's resolutions, HGM gives a breakdown of the votes. Basically, it applies the UK Corporate Governance Code. Not rocket science but really useful for investors. Sure, if a company follows the Quoted Companies Alliance guidelines, it will report the number of votes against a resolution if the total is greater than 20% of the votes cast. But that does not pick up on an underlying resentment or simmering problems. It just seems ironic that a Russian company should assist in the move towards shareholder democracy and greater transparency. The RNS is attached.
Wrong board !
The shs are XD the 2.4p divd today - payable on the 7th June - sasa.
It goes without saying that any brokers' tips need to be treated with caution. However, I noticed that Numis has just come out with a buy recommendation for Highland Gold and has put in a target price of 250p. Purely out of curiosity, I plotted some (Not all) of its recommendations in relation to Highland Gold on to a Highland Gold share graph. The pattern is not linear but it has been broadly right. Numis has been broadly correct in terms of the share price trajectory from October 2014.
Interesting times indeed. Jim Mellon speaking on the main stage at yesterday's Master Investor Show in London gave Highland Gold Mining as his top tip. More broadly, he was bullish on Gold and Silver. And raised considerable doubts about the US technology darlings of recent years. But it will be interesting to see who is right.
As you point out, Highland Gold Mining is being shorted. However, as of 5th April 2019, the Jane Street Group no longer appears to be shorting the company. Nevertheless, Millenium International Management is still showing as a shorter with 1.07% of the stock.
The one caveat that I have in regard to shorting Gold mining stocks is this. No matter what research the shorter carries out. Aside from something really egregious such as a massive fraud, the shorter is exposed to volatility in the Gold market. The shorter may make a correct estimation in terms of geology or even management. But a spike in the price of Gold can negate everything. And the potential losses could be great.
The large sales in recent weeks have probably been caused by Jane Street Group and Millennium International Management taking short positions in HGM. The disclosed short positions have been given at 2.08% of the company's stock.
I'm not sure if their rationale is company specific or they just don't buy into the gold bull case. I note that Jane Street have significant short positions in Petropavlovsk and Centamin as well. Encouragingly for holders, this hasn't impacted on the share price here judging by continued rises in the lat week.
- The U.S. Federal Reserve took a more accommodative stance at its policy meeting
- U.S.China trade talks are not improving
- Markets weakened as global growth slows
Gains in the broad Asian index followed a wobbly session on Wall Street overnight, after a move toward risk taking sparked by the Fed's dovish shift was overtaken by growth and trade concerns.
U.S. President Donald Trump on Wednesday warned that Washington may leave tariffs on Chinese goods for a "substantial period" to ensure Beijing's compliance with any trade deal.
China-U.S. trade talks are set to resume next week.
Trump's comments had more of an effect on U.S. shares than their Asian counterparts, said Sean Darby, chief global equity strategist at Jefferies in Hong Kong, adding that a move lower in U.S. rates "actually has a far bigger impact or efficacy in EM and Asia than in the United States itself."
In comments at the end of a two-day policy meeting Wednesday, the Fed abandoned projections for any interest rate hikes this year amid signs of an economic slowdown, and said it would halt the steady decline of its balance sheet in September.
"What the Fed is doing is trying to engineer a soft landing. What the market is hearing though is things have gotten so weak so quickly ... and the earnings outlook is so dire that real money managers don't want to chase this rally," Greg McKenna, strategist at McKenna Macro wrote in a morning note to clients.
The Fed's comments dragged yields on benchmark U.S. Treasuries lower, with 10-year notes yielding 2.5245 percent compared with a U.S. close of 2.537 percent on Wednesday. The abandonment of plans for more rate hikes this year pushed the two-year yield, sensitive to expectations of higher Fed fund rates, to 2.3982 percent, down from a U.S. close of 2.4 percent.
Anyone know whether there were large sales last night, which resulted in the drop? I presume the price won't rise too much today as gold has dropped.
Some huge buys tonight
Update: anyone know why the price has suddenly fallen?
anyone in know here why the SP keep going up?
20p up less than a week , nice.
Very quiet here in the lead up to FY results. Gold up to $1294/oz this morning in what may be the beginning of a new leg higher and another attempt to break through $1349/oz coming. Lot's of potential catalysts around, EURO debt, BREXIT, 5 of the 6 top banks easing or loosening policy, further US rate rises on hold, US China trade war unresolved and the general economic slowdown which can not be prevented. etc
Yesterday the European Central Bank decided to cut 2019 growth and inflation forecasts and expectations for the same through 2021. This will likely happen again the quarter after BREXIT, assuming the UK leaves with no deal at the end of the month. There is undoubtedly a building of fear coupled with a refusal from the political elite to change the broken system and so the rot continues to spread.
My homework this month is reading back to the events in 2011 and what the causes were that led to the Euro crisis that sent gold up to $1900. I think we are sleepwalking into the next crisis, the question is when will the dominoes start falling.
Have been waiting a while for these to dip, small top up at 159 for me. About 6 weeks to go before FY results and the quarterly update a week or so after that. After CEY and FRES cut their dividends, you would expect investors to rush to better performing producers like HGM. We will see
I'm quite surprised the directors cashed in all the shares they recently bought, albeit for a tidy profit.
Gold up another 1% to $1320 oz. Tailwind for HGM SP
Why doesnt HGM buy AAZ and TSG? Both are low cost undervalued producers .