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Hi,
I was wondering what people think about the prospect of a rising $ and a crashing $ over the next 5 to 10 years.
Russia, China and lots of other non western central banks have started to sell down the usd and move to gold. Naturally this is good for cey as they are a gold producer but my question is what will happen if the world does shift from the usd to say euros and china and a more diversified currency set. How do you all see the impact of such changes on the price of gold and inflation, digital currencies etc
Personally I see America slowly crashing out over the next few years and dragging the rest of the world along for the ride.
The weaker the dollar the better provided the POG is adjusted in situ.
The dollar is slowly moving from $1.40 to the £, to $1.30 (where it was five years ago.)
The real prize is for the price of Gold to rise organically independent of the currency exchanges.
Razor do you mean a stronger dollar, as the dollar is strengthening versus the pound from above 1.40 towards 1.30. Cey is priced in pounds, so it is the sterling price of gold which matters to us and if gold stays flat, and the dollar rises against sterling, the sterling gold price rises by that percentage. Moreover as Cey trades and reports in dollars, profit move is augmented by the pounds fall, so the share price rises a bit, all a small part of the great recent rise. For us rising gold and rising dollar is golden.
Sotolo the currency rates should have nil affect on the value of the product or the value of the share.
if gold were to stay the same but the dollar halve, then gold would double in sterling which is what matters to us and sterling profits would go up by maybe 4 or 5 times! The exchange rate affects our sterling share price considerable and when everything else is the same a falling pound makes our share like other UK shares that make their profits abroad more valuable. Anyway with my simple maths! All the best and another thing that has been helping us, now lets have rising gold, rising dollar, and rising ounces mined.
Hi Sotolo,
Are wages and fuel for example paid in Egyptian pounds ?
Let’s hope we can stay north of 102p this week. Will be happy for any finish about that
Yes of course Auson, but the Egyptian pound has been almost flat against the dollar this year ranging from 15.6 to 15.76, plus many costs like heavy machinery are in dollars, and the oil price is ultimately connected to its dollar price. So it is the pound dollar that counts for us and a lower pound raises our sterling profits
Sotolo,
Do you happen to know if there was any fuel hedging this year ?
Sorry for the delay in reply,
Egyptian employees & Fuel is procured in Egypt and paid for in EGP.
Sotolo is right ..a stronger dollar and gold price increase is golden .
Just think of dividends
We will be getting 9 cents dividend ...at the current exchange rate of 1.34 that would equate to 6.72 pence
Now let's say the highly unlikely happens and the dollar is equal to £1.
Then a 9 cents dividend converts to 9 pence dividend
However a stronger dollar does tend to suppress the price of gold because gold is priced in dollars which means that the price of gold falls , to match dollar strength
So under normal situations it tends towards being a zero sum game , but there is obviously some price and therefore profit variance built in .
There is no doubting though the powers of exchange rates because it's the timing of exchange rate differences that are key , especially to the conversion rate for dividends
Thank you Candid & Sotolo for the explanation re dividend & exchange rates etc.
You are welcome Mr T
Regards
bit late to the party, but previous message from AUSON
"SOTOLO, Do you happen to know if there was any fuel hedging this year ?"
Kudos to that question, preferably around the -$40 mark? that would be good for AISC!
With inflation really kicking off worldwide, it would seem imprudent not to be hedging fuel costs, especially as its looking like oil is probably going to test its previous $100+/bl high from near the 08 crash.
Sorry I can’t find anything on a Cey fuel hedge, the last quarterly report said: “ Strong balance sheet with no debt, no hedging ….. with lower underground costs partially offsetting higher fuel prices ”. My view is that miners, like airlines, are ultimately better off not hedging fuel, or PM sales, as unless they are prescient they are paying a margin to the hedge givers, or unless like Hoc they have a mine nearing life end with high cost and low profit, which they can lock in for another couple of years as Hoc did with Pallancata, which would barely be making, or losing, money this year without it, but doesn’t apply to us!
Hello Sotolo I believe I heard an analyst ask Ross Jerrard in the last cc about fuel hedging and Jerrard replied that no hedging was in place.
An hour would find it, I’m sure the cc is still available on the Centamin website.
I’m not sure what their overall fuel bill is - but I guess if it was high they would hedge- am sure they’re all over it…
Correct Razors,
I recall in the past they did have an agreement with Chevron that fixed the price for 3 months in advance, although whether that fix still applies I don't know
a) In January 2012 Chevron informed CEY DFO (Diesel Fuel Oil) would be supplied to the mine at Sukari at international prices instead of at local subsidised prices.
b) In November 2012, Chevron demanded repayment of fuel subsidies for DFO supplied from late 2009 through to January 2012, the claim is EGP403 million (approx US$22.9 million).
It seems Chevron were forced into a) and b) by EGPC who in turn were informed by the Department of the Council of State that companies operating in the gold mining sector in Egypt were not entitled to DFO subsidies.
c) In June 2012 CEY lodged an appeal against EGPC£s decision in the Administrative Courts.
d) As a practical measure has paid the full "international price" for fuel since January 2012 however no provision has been made by CEY in the company accounts for the USD 22 million.
CEY management believes that, notwithstanding an unfavourable State Commissioner’s report, the prospects of a court finding in its favour in relation to this matter remain very strong.
There may not be a need for fuel hedging, https//on.rt.com/blb8
As for physical gold demand, the problem may be ,less demand for paper.
https/on.rt.com/blbe
Now there is more demand from the American public.
Sorry ,
https://on.rt.com/blb8
https://on.rt.com/blbe
Try that. :-)
The fact paper prices affect the physical prices, is really absurd but of course a strong tool for manipulators.
As there is apparently no will for the so called regulators to interfere means licence to manipulate, because that is what it is.
IMO.
Mr Bond
Love your succinct analysis of the present scenario , however you have not researched sufficiently to determine the major players in the Comex debacle. i I did some research some time ago as to the elements as to determining the Comex price syndrome and was astonished as to the manipulators of what is supposedly an open market availability. You might find the Fed has a massive input into Comex but what do I know . Kind regards
Bob
Yes Bob ,I have done my research.
But to save boring many I prefer precie.
Best wishes.
Thanks Mr Bond,
The Comex casino seems to be using leveraged price manipulation on just about everything and should be stopped, it serves no justifiable useful purpose,