Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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excerpts from a recent article by Lyn Alden
When a country starts getting to about 100% debt-to-GDP, the situation becomes nearly unrecoverable.
What I mean by “unrecoverable” is that there is a vanishingly small probability that the bonds will be able to avoid default
a study by Hirschman Capital noted that out of 51 cases of govt debt breaking above 130% of GDP since 1800, 50 governments have defaulted.
The only exception, so far, is Japan, which is the largest creditor nation in the world. By “defaulted”, Hirschman Capital included nominal default and major inflations where the bondholders failed to be paid back by a wide margin
There’s no example I can find of a large country with more than 100% government debt-to-GDP where the central bank doesn’t own a significant chunk of that debt. Central banks quickly increase their holdings of government debt when the debt gets that large relative to the size of the economy.
Even the US Congressional Budget Office shows that the current forecast is dire, despite the fact that for political reasons they never factor recessions into their forecasts, and recessions result in larger deficits when they occur:
Let’s say that annual GDP is $25 trillion as it will be soon, and that federal debt is 130% of GDP, which would equal $32.5 trillion. If we assume that federal tax revenue is 17% of GDP, that’s $4.25 trillion per year in tax revenue.
So right off the bat, we can calculate that the debt/revenue ratio of the federal government in this example is $32.5 trillion divided by $4.25 trillion, or about 7.6x. If this were a company, it would be junk bond status based on that.
Texas Instruments (TXN), for example, has $7.7 billion in debt and about $17.6 billion in annual revenue, or about a 0.45x ratio of debt to revenue. That’s investment grade, although of course it depends on the profit margins of the company. Texas Instruments currently brings in about $7.3 billion in net income per year, so it has a debt/income ratio of 1.05x. If they devoted most of their net income to paying down debt, they could do so in a little over a year. Any lender can see that they have a good chance of being able to service their debt for the foreseeable future.
The government has a high debt/revenue ratio, and then also has negative income. If it were a company, that would put it down near the bottom of junk bond status at imminent default risk, rather than just normal junk bond status. The financial situation, if analyzed like a company, is abysmal.
From 1942 to 1951, for example, the US Treasury effectively forced the Federal Reserve to monetize US Treasuries and hold interest rates at 2.5% despite running inflation at an average of 6% per year. This was the only prior time in US history where federal debt as a percentage of GDP went over 100%, and they resorted to repressing yields and inflating a large chunk of it away.
The rest here:
https://www.lynalden.com/does-the-national-debt-matt
It felt like the only sensible thing to do was buy a few more
Gold up, ftse up even Nasdaq and s and p have jumped back from big drop- even my crypto is up! And yet CEY is still down ~1.75% today
This share can be very frustrating. Gold up at 1840 and we're back down at 90p
What's the matter with CEY today- come on, get with the gold game...
Better returns on cash ?,, banks pay nothing ,, other investment ?bonds etc ?
Prince_3k and other readers who have the same question,
I am not sure which country you are based in. The price of gold in pounds was last under £1300 an ounce back in October. Since then it has varied between £1326- £1380 and last night was £1358 on the current price uplift. So it has gained 4% or so since November. In Turkish Lira gold has shot far higher. As for USD we have the FED trying to keep USD more valuable as a reserve currency. If it drops lower than the oil price for example would go a lot higher and that would have global implications and drive inflation higher still. The effect of keeping the dollar higher in value and so lower inflation in commodities priced in USD, may arise from selling paper gold which reduces the gold price. However if you want to buy physical gold in the UK it has a premium added to it and you would get no change at £1390 an ounce or so here in the UK. Equally buying physical in USA will have a high premium per ounce attached to it. Eventually everything around us with high inflation needs more gold ounces to acquire it. Eventually there is a big rerate and for no explained reason gold goes up 20% or so and global inflation may have a read of 3% that year and in essence gold catches up. Over a long time gold keeps its value against inflation, but its not the case on a weekly or monthly basis and you need to look at over several years. You may like to read articles in gold eagle that will give different views about gold and its value. Tony
Gold is a brilliant hedge against very high or hyper-inflation, is my understanding. But single digit inflation and the prospect of higher base rates means investors can get better returns on cash. As there is no yield on gold it can depress the gp.
Can someone please explain to me why Gold price drops on increased inflation. Surely it's supposed to be an inflation hedge. I can understand increased inflation meaning increased likelihood of the fed raising interest rates, hence a reduction in gold price. But surely if gold price doesn't increase with larger inflation, then how is it a hedge?
In the title
https://twitter.com/barrickgold/status/1491729143033126914?s=21
Sotolo--a question for you. IF (looking a fair way off yet) Centamin went up to £1.50 would you sell yours? If not , at what price would you sell?
Pre "Wall" episode you were saying they were going up to £3 when they were about £2.20?
Just curious.
Hi Dasut,
"But then, I suppose, when with the benefit of hindsight one begins to search one's past for such 'turning points', one is apt to start seeing them everywhere."Kazuo Ishiguro
Looking back now the concerns flagged up in 2015 & 2018 by Kees Dekker about the way that Pardey his team were running Sukari were opportunities for them to change their ways.
But instead they continued to compound bad mining practice onto the previous bad mining practice whist denying that anything was wrong and papering over the cracks until a crack appeared that no papering over could cover!
i accept that unexpected difficulties can present themselves in mining but when that happens they should be truthfully acknowledged , explained fully and dealt with professionally in the most appropriate manner, none of which happened!
To say Share holders and the market were misled is an understatement, Pardey, Josef and Youssef continued to trumpet unrealistic and certainly as now apparent unsustainable guidance predictions in the Egyptian media and in Centamins quarterly reports to share holders and the market.
The link that Cowichan provided to the 'Times" article raising questions about what or whom was responsible for happened to the LHDR, this has never been explained to this day,why not?
I agree that mining equipment is very expensive, that said in comparison though failing to mitigate production risk by not having a contingency plan or even a spare LHDR can cost a lot more.
How many millions of dollars have been spent drilling holes for no return in the WA projects, some of that funding would have been better spent on Sukari producing ore rather than unfulfilled promises.
Barminco may have considerable experience in underground drilling,although their performance at Sukari does seem questionable in many respects.
In the absence of any explanation to the contrary after the failings in 2018 it is hard to have any confidence in the way that certain contractors operated which seems to have been on the limit or even possibly in a careless manner?
True the contactors staff have experience, but then the client/comapny must also have gained some understanding of the contacted out operations or works.
There seems little justification in staying with with a contactor for fear that that their equipment or fleet is unreliable or nearing the end of its life.
Contractors are in the business to make profits out of the client and certainly as happened in the the UK the NHS & Local authorities that entered into PFI partnerships in good faith by outsourcing to contactors have always ended up being taken advantage of because they are regarded as over a barrel which as been the case in every other industry as we are now painfully aware in today's world.
Far better to take control of essential operations by employing the right staff investing in the right equipment/plant and managing them in the proper way.
Equipment depreciation cost are reclaimable against tax.
I think that the problem is that as long as gold is stuck in this range, that it has been for so many months, cost inflation slowly eats away at most gold miners profits. They need gold 10% higher than a year ago to account for all the extra costs including of course Oil; in real terms gold is lowest it’s been in nearly two years, when and if it will catch up is the big question. Whatever todays cpi will be way ahead of the price.
I own some shares in HZM and so far I am down 18%. Pity they looked promising.
Impressive magazine front cover…
“Centamin CEO on renewables and ESG plans”
The Magazine includes an update on the largest hybrid renewables project for an off-grid mine from Centamin CEO Martin Horgan
https://energyandmines.com/2022/02/zero-carbon-mining-in-africa-download-energy-and-mines-magazine-issue-39/
They own a significant percentage of HZM.
European stock exchanges were up in premarket trade on Thursday as investors analyzed the latest quarterly results from Credit Agricole, Credit Suisse, Siemens, ThyssenKrupp, and ArcelorMittal and awaited figures from AstraZeneca, TotalEnergies, Unilever and Linde.
The DAX gained 0.28%, London's FTSE 100 rose by 0.09%, while the CAC 40 advanced 0.43% at 8:01 am CET.
Both the euro and the British pound were flat compared to the dollar, trading at 1.14218 and 1.35356, respectively, at the same time.
Baha Breaking the News (BBN) / MS
*As Europe’s 7 am (reporting rule) happens one hour prior to ours. There are some seriously positive Q1, year-on-year percentages being reported, mainly from German industrialist.
Can’t hurt today’s market momentum.
Interesting group operating in the undervalued gold space ....
https://www.youtube.com/watch?app=desktop&v=lUx3qBBZlmw
In Berlin, Ministry of Economy disclosed that as of January 11, Germany only has “a theoretical working gas availability of 17.7 days.” Russian gas supplies had stopped since December 21 and Gazprom has not booked any capacity to pump gas to Europe through the Yamal pipeline through February. Overall, European storage facilities were 49.33% full as of January 12.
“As has been repeatedly emphasized from the Russian side, the issue is urgent. We are not ready to wait endlessly, and we are not willing to immerse ourselves in the usual diplomatic, bureaucratic nonsense about which formats are optimal for this. We need a direct and clear answer, and in writing,” Deputy Foreign Minister Sergey Ryabkov explained 19 January 2022. “What we need, above all else, is a legal guarantee of NATO’s non-expansion… and a reliable solution to the issue of non-deployment of strike weapons along our borders.”
https://www.globalsecurity.org/military/world/war/russo-ukraine-2022.htm
and we wont mention Kazakstan ...
https://www.aljazeera.com/news/2022/1/5/explainer-what-is-behind-the-protests-rocking-kazakhstan
always something on the go, and many times energy prices are a focal point
https://blogs.imf.org/2022/01/28/global-inflation-pressures-broadened-on-food-and-energy-price-gains/
Hi Mr Bond
I don't think there is a contradiction in what we are saying. - I'm not aware that B3 has any control over the Comex and its futures-trading activities - B3 is about rules covering International banking. - The BIS is the arbitor of banking-regulations and so far as I know, their remit has no responsibility in covering trading-platforms activities..
I bet the ceo of Endeavour knew which report was the truth when he came trying to steal on December 3rd 2019
Question for @CentaminPlc management: as per your conflicting reports - was the 2019
@HiSeis seismic survey at #sukari halted due to 'inconclusive data quality' or a 'multiple #gold system discovery'? #bmoconference @OSC_News @TheFCA @BarrickGold
https://www.centamin.com/media/1605/cey-rns_fy19_final_180520.pdf
---------------------------->>>>
I highlighted the text in Centamin's Audited Annual Results which states:
"A 2D geoseismic programme was completed in 2019. Initial data interpretation is very encouraging, identifying multiple potential gold systems..."
Yet follow up correspondence with Centamin IR have denied the statement as factual
Which is it?
The market cannot be legally told two different stories - shareholders need answers to this now. Either:
a) redact the statement released 18 May 2020 in the Audited Annual Results
for the twelve months ended 31 December 2019
or
b) confirm the seismic survey as stated in the annual results
https://twitter.com/DonLawson_/status/1491455132793708544
Two things can happen now. Centamin can ignore my (our) requests for a clear answer like they did with Batie West/Burkina Faso or they can prove they are different from the last lying CEO Andrew Pardey and come clean. Which will it be??
I fully understand what you say,but to my understanding the US has till 31. 12.2022, to continue selling paper contracts.
And as they seem to control a vast proportion of paper futures, I expect Gold Prices will still be controled as they please.
Simply by dumping to keep low, until they have run out of time to buy more Physical to cover themselves.
Pardon me if wrong.
Tibbs,
There are many schools of thought when it comes to contractor or owner mining no such thing as one case fits all. Much too large a subject to go into in any detail but there are many very successful, experienced and highly professional contract mining companies that provide excellent work for mining companies of all sizes including the majors.
As I said earlier it isn't just about the mining but I do agree that mining is the core activity of a mining company or if it isn't it should be but as I say it isn't always that simple.
There again what is mining is it digging ore and loading trucks and driving trucks to the hopper or is it who owns the equipment and employs the operators/drivers, or is mining telling the operators and drivers where to dig and dump? With mining being processing the ore and selling the mineral. Is it employing people or bringing in self employed do you maintain your own equipment or do you contract out to someone to do this for you? Just a couple of questions and these will all need to be taken into account as getting rid of a contractor will add additional responsibilities, personnel, activities, knowledge and the list goes on so as I say not clear cut.
In the case of Sukari underground one of the issues I have is taking ownership of a used fleet of underground machines that may or may not be reliable. Something else that worries me is continuity of knowledge and experience, with the contractors leaving with considerable knowledge and experience and trust me Barminco have considerable experience. However, it is relatively early days in the development of the underground so whilst a gutsy decision we will have to put our trust in the new team.