Member Info for goldgnome

China still consuming 3 times more gold than it produces and it is the world largest gold producer ... some excellent new discoveries, very underexplored ...not like osme other countries I know ...

To continue the sad story of banking, if the fractional reserve debacle is not enough of an insult to any thinkiing person, then if the banks fail, then the poor tax payer is on the hook for a bailout. What a great basis for a financial system. If a real engineer came up with something as conflicted and unstable they would be sacked, but as a society we seem to sit back and swallow, take our medicien. In the meantime the marvellous all conquering Bank CEO has got his or her short term mega-bonuses and ridden off into the sunset .....

... and now I choked on my gluten free muesli, when I saw the Europeans saying their banks are too small to compete against the likes of the US megabanks (what ahppened to the convincing narrative "too big to fail"). JPMorgan’s market capitalisation today exceeds the combined value of BNP Paribas, ING, Intesa Sanpaolo, BBVA, Santander, Credit Suisse, UBS and Deutsche Bank....Somehow the Europeans have forgot one of the fundamental lessons from Germany's 200 year outstanding growth ... their community-bank-dominated financial system. Hopefully no one forgets the lessons provided by Deutsche Bank trying to grow beyond to a megabank, but my guess is that this is an inconvenient fact that would spoil the narrative of bigger is better ....

https://www.ft.com/content/3ae6432c-2307-11e9-b20d-5376ca5216eb

Supplying kindling (jetfuel?) to the gathering flame, the regulator for banks in the eurozone — the European Central Bank — appears to be positively encouraging combinations of banks, bigger is more competitive (for who? doing what for society?). Danièle Nouy, .... the just-retired chair of the ECB’s Supervisory Board .... has gone on record saying that the “European banking union sets the scene for banks to merge across borders”. Thank goodness he has retired! Pehraps we can get some youthful critical thinking and far better engineer?

In the former southern colony, we sit and wonder about the relative merits of Brexit. But in the meantime we have just found out the swamp in our capital city of Canberra, costs $8b per year ! $5.5b goes to Public Service "Premium" wage, $1.4 b goes to public broadcasters, $0.4b to "internal organisations", $70m for "public funding of political parties" and $191m for "tax-payer funded advocacy groups"...

Our gold miners are going gang busters, with rising gold price, and depreciating currency against the USD...but sadly no new greenfields discoveries now since Independence Gold found Tropicana in 2004/5 ..no new exploration technologies to assist in the greenfields discovery process..and things are not getting any easier in the gold exploration business in Oz, as all the low hanging fruit is well and truly picked, the risk reward has gone through the roof, which has been picked by most of the mug punters, so that funding for greenfields exploration and companies that do that sort of thing has all but died ...

Can times get any better for gold?

best
the g

It seems that slowly the central banks have been revealing the lie that banks are intermediataries just lending deposits out to borrowers. As Adam Creighton commented int he Australian a few days ago, the vast bulk of money in Oz has been created by the Banks, not the Central Bank or the Government. They literally have a liscense to print money. The concerning thing in Oz is that a lot of this money has been used to purchase real estate in forms of houses and aprtments, rathern than invetsments to improve infrastructure "efficincies and effectivenesses", which can be a key driver for increasing productive GDP (there is a lot of non productive GDP but wont go there)...real productivity. "Banks create around 80% of money in the economy as electronic deposits in this way. In comparison, banknotes and coins only make up three percent. Finally, most banks have accounts with us at the Bank of England, allowing them to transfer money back and forth. This is called electronic central bank money, or reserves." Of course there are more stringent requirements now? and limits in place now, but its a license to print money, and a great cash flow business. The RBA explained last year that banks create depsoits when they make loans. Since June 2008 the volume of $ in the Australian Mkt has doubled to $2.1 trillion or about 115% of GDP. ..and much of this has been created for the housing market, which has driven the prices of houses out of the hands and abilities of Australia's youth. Globally private sector debt has reached 125% of GDP (assume 2008 100%) according to Oxf Econ. Think sensitivities to int rates and the recession that seems to be looming quickly. Interesting remarks on similarities with the large private businesses, who can get loans from banks, and create money without limit by Richard Werner (U of Southhampton), something small businesses cannot do or at best find v difficult to do. ...and this flows on to thouhts on employment creation, which is what small businesses are v good at . In Oz now getting money for houses and small businesses is (if you are successful) about 5 times slower than it used to be, and failure rate very high..so interesting times, and especially for gold! Nice rise in Gold P to wake to this morning...the goldgnome (I do apprecaite the writings of Hartley Withers- ahead of his time? https://archive.org/details/bankerscredit00withuoft )

AH HA....but does anyone want to risk making 20-30% if the news is in line with guidance/projections ....
The big end of town are usiing M and A to grow (v high risk stuff), as the cupoards are bare for exploration success, despite significant amounts of money pushed at exploration. The Junior market in Canada has gone chasing dope, the Oz Market does not fund greenfields, the UK well who knows but not a lot of Junior activity due to the high costs of running a public company and low success rates ... Supply side from mining is severely constratined for the next 20 years, as even a deposit was found now, the time it goes into production on average is about 12 years, but with all of the land rights, endless bureacracy, environmental compliance...lest take a stab at 20 years, fif they survive the hurdles ....the gold demand I suspect is going to go higher, as the uncertainties pile up, the slobalisation takes another lower gear, tarrifs and legal challenges (not to mention walls of various sorts) are built ....the gnome

Fairly well documented now, but the picture and implications are becoming clearer. When did the slowdown begin? Consider a dozen measures of global integration (see graphic). Eight are in retreat or stagnating, of which seven lost steam around 2008. Trade has fallen from 61 per cent of world GDP in 2008 to 58 per cent now. If these figures exclude emerging markets (of which China is one), it has been flat at about 60 per cent. The capacity of supply chains that ship half-finished goods across borders has shrunk. Intermediate imports rose fast in the 20 years to 2008, but since then have dropped from 19 per cent of world GDP to 17 per cent. The march of multinational firms has halted. Their share of global profits of all listed firms has dropped from 33 per cent in 2008 to 31 per cent. Long-term cross-border investment by all firms, known as foreign direct investment, has tumbled from 3.5 per cent of world GDP in 2007 to 1.3 per cent last year. ... The rate of return on all multinational investment dropped from an average of 10 per cent in 2005-07 to a puny 6 per cent in 2017. Firms found that local competitors were more capable than expected and that large investments and takeovers often flopped. Politicians found they could win votes and make themselves heroes (even electable) on digging in against the international corporations, imposing proper taxation measures. In Australia we even started to see Good and Services Txaes be imposed on such Companies as Amazon, and their sales, making them having to complete on a more level laying field than what they experienced initally, when the pollies idi not see the big picture. Margins and ROE are shrinking. Equities may not look the stellar investment place to be, unless commpanies have solid balance sheets, including free cash flow, and treat shareholders witht dignity. I imagine some of the big US Corps who have outrageous PE ratios will take a bath.
International taxation laws will get tighter, and more fairer and stop the ridiculous transfer pricing outrages (watch this one in mining companies)

Deep forces are at work. Services are becoming a larger share of global economic activity and they are harder to trade than goods. A Chinese lawyer is not qualified to execute wills in Berlin and Texan dentists cannot drill in Manila.

Me thinks Gold will hold, if not increase, its allure in this slobalised world...

the goldgnome ...

Aton, looks like the promotoers and employees may make gold but whether the company makes anything out of their permits, I will be surprised. The grades are not breathtaking and the metallurgy looks very uninspiring. Mngt looks top heavy, ....VP of Exploration, and then we have an Exploration Mngr...where is the lean mean structure ? Looks like a good company to avoid to me.

the gnome ...

Yes, v disappointing response ....

Well the banter around the Huawei legal action is interesting and I am sure the legal and trade bartering will be even more interesting. There is some form by the US which is worth revisting. In April 2018, the Commerce Department issued Chinese telephony maker ZTE with a “denial order” that stopped it buying equipment from US technology suppliers. ZTE, which is far smaller than Huawei, had already pleaded guilty to violating US sanctions against Iran, and for lying to the US government. Until it was rescinded after three months due to President Xi Jinping lobbying President Donald Trump, the order crippled ZTE’s operations. Then in October 2018, the Commerce Department invoked an economic security argument to impose export controls on memory chipmaker Fujian Jinhua. This action also followed criminal indictments alleging that Fujian Jinhua stole trade secrets from US rival Micron. It seems that being choked off from US technology will cause Fujian Jinhua to stop production by March.

The charges Huawei now faces include similar complaints and it seems likely that the Commerce Department will follow up these criminal indictments with a similar denial order. Huawei is less dependent on US suppliers than ZTE, but without access to US technologies ... even it will not survive long. Hence, in order to seek relief, the Chinese firm will need to negotiate with the US government. A ZTE-like outcome seems fairly likely: Huawei will pay a large fine and accept US monitoring in order to access US technologies. We monitor, they monitor, everyone is monitoring ...

There are other factors to consider ...aside from being bigger than ZTE, Huawei makes more advanced equipment, and since 2012 has been regarded as a threat by the US government (and I could throw in the Oz govt, but lets not go there). In the last few months, the US has been successful in lobbying its allies to stop using Huawei’s telecom equipment (OK, I went there). The fact that Huawei’s CFO was arrested when transiting through a Canadian airport may point to elements in the US government wanting to pursue Huawei more aggressively than it did ZTE.

But we do live in interesting times ... and I think it is reasonable to assume that US muscle will come to the fore, as will Chinese negotiation skills .....

go gold, moving nicely .....the gnome

“My new theme for 2019-2020 is balance sheet, it doesn’t matter which sector you are talking about, you want the best balance sheet in each sector,” O’Leary said, adding that it is more relevant now than the last three years..

and CEY has a very impressive balance sheet ....

good luck to all ...
the gnome

Lets hope Josef pays more attention from now, and guides the company into more growth, learning from his mistakes and his meanderings.. His past performance has been very medicocre in my humble opinion, and he needs to demonstrate he has the smarts and the goods, my guess is CEY is about 30% undervalued at the moment so this si what Josef and his board should be focussed on delivering. ... The board needs to play a larger role than they do at the moment, all looking very relaxed and comfortable ....being born with a silver spoon, does not guarantee a golden performance ....I guess to be fair, the share price of FTSE 100-listed silver and gold miner Fresnillo (LSE: FRES) has declined by 30% since the start of the year, while Centamin (LSE: CEY) have fallen by 27%. They are therefore int he group of the FTSE 350’s worst-performing gold shares of 2018. Centamin’s PEG ratio of ~0.7? also suggests that it may also be undervalued. The production disruption in recent months has contributed to its share price fall. Indeed, the first half of the financial year 2018/2019 has been disappointing for the company, with gold production declining by 25% in the second quarter.

However, it remains on track to meet production guidance for the full year, with the company expecting a significant ramp-up in production in the second half of the year, so this is what the board has to deliver. Although it is reliant upon the Sukari mine, the asset offers significant production potential over the long-term, as well as a relatively stable political outlook. Alongside a dividend yield of 4-10% which is covered 1.6 times by profit if 4%, its overall return prospects seem to be high.

With the potential for a full-scale trade war between the US and China escalating weekly, and now with the US unveiling criminal charges against Huawei, investor sentiment for various equities could easily come under pressure in future. In such a scenario, gold shares such as Centamin could become increasingly popular after what has been a disappointing 2018. https://www.ft.com/content/ff000e70-233c-11e9-b329-c7e6ceb5ffdf

There is a lot at stake in the Huawei move by the US legals, and one hopes they have mapped out their options. Significant US Corporates (Apple) sitting on the sides... The Chinese have been long known to have a cavalier attitude to IP and perhaps we can see some very important boundaries drawn on IP, but this will be slow, painful and I can see trade wars coming up and being protracted.

What an interesting world we live in !

the gold gnome.

When you say belief in paper, well thats only part of what goes on. It's a belief now in digits on an electronic screen thats most fundamental, and everyone knows how easy it is to create them? The velocity of money precludes the printing and passing of paper. And now the electronic whiz masters, have invented a variant of the game of tennis, whereby they serve one currency and another electronic currency is returned, FOREX trading....Daily volumes in March 2018 reached $1.855 trillion...but it does not stop there ...
Average daily volumes of spot and derivatives currency trading touched $461 billion in March 2018, slightly lower than the record month of February when volumes hit $463 billion...its just all serve and return, push and pull, clip the ticket, make a small margin, and do it all again. Quite pointless, except they are using money to make money which is the point of the game, and why get your hands dirty with all of the physical stuff, and associated logistics..its too slow for the money men, and they must make a lot of money now to support lifestyles. You now really dont have to have anything to back the money..but as you say, watchout when the music stops...and there will come a point at which people no longer trust the electronic number on their screen, ?the Russians have hacked or the Swiss?, or the money men in the good ol' City of London, and they all relasie that there have been additional arbitrage added to all transactions for the past 25 years...I feel a novel welling up inside of me...! Enjoy the rest of the weekend. We celebrated Australia day yesterday, and of course there were endless protests by some ....the gnome, who has a fondness for gold ...

Thanks MrTibbs, Its fascinatng to watch the UK Brexit, and the wider working of the EU from afar. It seems somewhat that one of the driving forces is to re-create the grandeur of the Roman Empire... the re-creation of an over-arching political structure for Europe, and use the Roman empire as a model, of course it all ended in tears in 400-500 AD. In 800AD (new model)—more than three centuries after the fall of Rome—Charlemagne, the king of the Franks, had himself crowned in Rome by the pope. His new empire stretched from the Pyrenees to the Danube and from Hamburg to Sicily; and his imperial seal bore the words Renovatio Imperii Romani, “the Renewal of the Roman Empire”. But the propoents of this thiought must also have a good idea of how they are going to overcome the same problems that overcame the Roman Empire (and Charlemange, Happsburgs etc and the other unsuccessful models thta they no doubt have studied very carefully). ..., individual groups of people liking their own space and their own authority over that space, debasement of currency, excessive taxation, crippling bureacracy, corruption of many flavours, administrational inertia, nespotism..that led to the kindom to being split into two, and then finally overun. Given the way the EU has developed, it appears that they are well on target to end up just like the Roman Empire, but probably make this achievement well inside 400 years and possibly within 40 years. One of the events that caught my eye some years ago, was when the European Court of Justice ruled that the European Union can lawfully suppress political criticism of its institutions and of leading figures, sweeping aside English Common Law and 50 years of European precedents on civil liberties. The EU's top court in 2001, found that the European Commission was entitled to sack Bernard Connolly, a British economist dismissed in 1995 for writing a critique of European monetary integration entitled The Rotten Heart of Europe (now published as a book). There were going to be no more internal violent conflicts in Europe, but no one told the Serbians and Croats. And it would have one currency which would be supported by an agreed set of laws and behaviours, but no one told the Italians and Greeks. ... and on it goes ....

Must apologise about my typing, fingers on present key board do not synchronise with brain movements, and operating in restricted time bursts! I will be more careful, and will get a new Keyboard (not sure about the fingers and the brain though ? ... more difficult)

Gold is moving in the right direction. Very interesting arrest in the US this morning, and Trumps backdown on the mighty wall ... might be a measure of things to come, as the Mueller investigation gets closer to some interesting collusion details, and the political circus which must have had a negative impact on sales in netflix and Stan as real life enterainment is superb and introguing to say the least, watch the NRA and Wikileakes links ... So the circus lurches on to its conclusion. https://www.rollingstone.com/politics/politics-news/mueller-russia-nra-trump-784002/

Analysts suggested that with Fed rate policy apparently on hold for now, the subject of its balance sheet could be more actively discussed at next week’s policy meeting. The dividend to member banks must be maintained etc?... The Member Banks (owners) of the Federal Reserve had to take a haircut in their dividend in 2016, which is not good for the renters. Recapping the 2016 story ... Banks that belong to the Federal Reserve system must buy stock in their regional Feds that they cannot trade but which pays dividends....Now the Fed must pay institutions with $10 billion or more in assets either the traditional rate of 6 percent or the prevailing 10-year Treasury auction rate, whichever is less. Traditional rate of 6% is not bad money for what? Anyhow I am sure we know the story ... but in case you don't https://newrepublic.com/article/116913/federal-reserve-dividends-most-outrageous-handout-banks

The dollar retreated sharply — after reaching a three-week high against a basket of currencies on Thursday — helping gold hit a seven-month peak of $1,300 an ounce. Predictionis the Ozzie with sink to $0,6 of USD..and stay there in the near future. Probably factoring in the political circus we have going on, and forthcooming election,and depending on result could see me move to Singapore?

“While the Fed’s approach is not perhaps the key driver of risk-off moves, it is good to know that, with trade wars and a shutdown driving sentiment, that the Fed is not about to make the situation worse,” said Chris Beauchamp, chief market analyst at IG. You may pause to think why they would be expected to do that in the first place?

The pound climbed above $1.31 to a three-month high on Friday after reports that the Democratic Unionist Party may be willing to support prime minister Theresa May’s Brexit deal. Sanity in the UK?

So for an Ozzie invested in CEY and gold, it was a good day "at the office".

The Oz Open Tennis should be a great match, Dokovitch did well last night, but my money is still on Nadal.

best the gnome, slightly glowing in the dark of recent (been a tad warm)

For sure ...

Gold is good
The deposit is world class
No debt
Free cash flow
great social liscense
focuss

....not a big believer in the big is beautiful strou esp in the gold space...

beautiful is profitable and returning $$ to shareholders ....
can they improve...yes (been through this in previous posts) ...

happy chappy, and myother money is on Nadal to win the Australian Open !!!

Well they are, or were almost as good as gold, and now Goldmans might be in for a rough time (v deservedly).

Just before Christmas, Malaysian authorities filed criminal charges against Goldman, seeking a stunning $7.5 billion in reparations for the bank’s role in the scandal. Singapore authorities also announced they were expanding their own 1MDB probe to include Goldman.

In the 1MDB scheme, actors tied to former Malaysian Prime Minister Najib Razak allegedly siphoned mountains of cash out of a state investment fund. The misrouted money went to lavish parties with celebrity guests like Alicia Keys, .....a $35 million jet, ....works by Monet and Van Gogh, ....property in New York, Los Angeles and London, and (ironically) ....the funding of the movie The Wolf of Wall Street.

The cash for this mother of all bacchanals originally came from bonds issued by Goldman, which earned a whopping $600 million from the Malaysians. The bank charged prices for its bond issuance that analysts believe were suspiciously high – like a massage price that suggests you’re probably getting more than a massage.

Rest at below link, titllating, but lets hope justice is done and swiftly ...
https://www.rollingstone.com/politics/politics-news/1mdb_malaysia-goldman-sachs-criminal-charges-772795/

A short dicussion around the M and A growth activity/spurts While there is competition over projects and assets, when it comes to the day-to-day business, these gold companies are mining the same product and selling it for the same price (ignoring the slight variances in sale price that some see due to small hedging programs).

To survive in this industry, a company just needs to have decent margins, make sure their balance sheet doesn't get too stretched, and maintain access to additional liquidity.

A gold miner doesn't have to operate at the lowest cost in the industry and have a well fortified balance sheet to remain viable. There is no true competition in this space to drive the weaker players out of business and create stronger mining entities. And that's the problem.

This has allowed the sector to become fragmented, as most of these companies are trying to remain on an island - isolating themselves to their own little corner of the sector. Managements and boards of these companies are content, some fat and happy, many well entrenched....

So where does Centamin fit in the spectrum? ..... How do they scrub up in the newly evolving landscape. Certainly the M and A is going with a flurry. The motive for the Newmont merger? Shareholder value ...hmmm, not so sure about that. Barrick...rights off billions in S America, retrenches a lot of its exploration team ... and then merges with Randgold, and re-opens the account in S America ....and Sukari sits 2nd out of the global asset list of lowest cost producers ....http://q4live.s22.clientfiles.s3-website-us-east-1.amazonaws.com/788666289/files/br/Investor-Presentation.pdf

Not a bad place to be ....

I am not a big fan of the merged companies, see lots of egoes clashing, culture clashes, lots of assets getting throiwn out of the back of the truck, ...and in the end do we see genuine shareholder value ....bigger is better....more profitable is better ....

The government and PM has resigned.
https://www.thenational.ae/world/africa/burkina-faso-government-resigns-as-security-deteriorates-1.815257

May the world assist Burkina Faso, quickly and effectively
the gnome ...

Things have been deteriating in nothern Burkina Faso and Mali since 2011. The causes are interesting to examiine, and I dont propose I know them all. But it has been a very tragic period for the local populations in both these counries, neither of which are happy with the situations they find themsleves in. I find the popular media reporting a little shallow on this region, to be polite. Organised crime is on the rise.

http://www.iai.it/sites/default/files/menara_wp_15.pdf

https://www.cna.org/cna_files/pdf/DCP-2012-U-003450-Final.pdf

https://www.chathamhouse.org/sites/default/files/publications/research/2018-04-12-libyas-war-economy-eaton-final.pdf

http://www.smallarmssurvey.org/fileadmin/docs/U-Reports/SAS-SANA-Report-Niger.pdf

https://www.usip.org/sites/default/files/2017-12/sr416-matriarchal-and-tribal-identity-community-resilience-and-vulnerability-in-south-libya.pdf

I have long pondered Centamins strategy in this area, and the money they have spent and the reporting on that spend is not in accord with effort. They should conisder a strategic retreat. Like I inferred in a previous post, Egypt maynot be the worse place to be, and they have ddeveloped strong social liscense and government support .

best
the gnome.

Yes, noted Mr Tibbles.
On the other end of the scale, sad to see Jack Bogles depart....the father of Vanguard, ....

Notably, Vanguard was a success where the gains have accrued to Vanguard’s customers (INVESTORS) and not its founder, as Bogle structured Vanguard to be owned by its investors. In an industry that has tended to enrich its pioneers with vast wealth, this was an unprecedented and still unrivalled move. Vanguard is a $5tn investment behemoth, and one of the leading players in the global index investing industry that he helped birth.....

best

the gnome.