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Look at the attached. I would say that Wall St stocks are in the "complacency" position while gold and gold producers like Centamin are in depression. I feel that a stealth rally is building in gold miners and very few holders realise. For the first time since H1 2016 headwinds are turning into tailwinds. Gold and miners couldn't get traction when the stocks momentum for FANG and tech were always rising over the last few years except for the 6 months H1 2016 gold romance .
But the end of QE, rising int rates, reducing buy back programmes, trade wars and overvaluation eventually burst a few bubbles all at once : bonds, property, stocks, even FANG stocks. For once it is the US's turn to catch down to the rest of the world which is already in correction mode but I suspect their overvalued markets will have bigger declines :
Shanghai index -22% YTD
German DAX -13.6%
Ftse -9.5%
Wall St's bubble has burst almost a year later yet the signs are that there is much more to come. Despite Nasdaq still +1% YTD it is already -14% from the high of the year. The S&P is unchanged YTD despite all of its stock buybacks - the very definition of a misallocation of capital when in the coming recession and companies have no funds for new plant or acquisitions. DJ is 1% down for the year. The path of least resistance looks down.
Gold and quality gold producers will transit from being optional investments to essential in the next rotation.Centamin's trading over the last two weeks is strong evidence of accumulation before the rush. Centamin will be the largest primary gold producer on the LSE as of February when Randgold is delisted which will bring in new institutional investors.
https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=2ahUKEwiz7Yar0ureAhVCQ8AKHTkeBvUQjRx6BAgBEAU&url=http%3A%2F%2Fwww.onemint.com%2F2010%2F06%2F30%2Fwall-street-cheat-sheet-psychology-of-a-market-cycle%2F&psig=AOvVaw0Dmp33WQLqytQICVIDV17z&ust=1543066912635944
Precious metals Co consolidation advances.
Six weeks after Barrick announced its Randgold merger (with no premium) to Randgold. Now Kitco reports that the world's 2nd largest primary silver miner Pan American is offering a 34.9% premium to buy Tahoe Resources.
https://www.kitco.com/news/2018-11-14/Pan-American-Agrees-To-Acquire-Tahoe-Resources-For-1-07-Billion.html
5/11/18 Barrick shareholders 99.8% voted in favour of the merger.
7/11/18 Randgold shareholders 95% voted in favour on a 100% turnout.
The merger is due to complete Q1 2019 and Randgold will delist from the LSE. That will leave Fresnillo as the only large cap, liquid trading volume, precious metal co in the Ftse 100 Index.
The Dems winning the House of Reps. and the Republicans retaining the Senate was the most gold positive outcome.
Current reactions along with CEY +2p :
Gold $1230.70 +$4.2 +0.34%
US $ Index 96.01 -0.25 -0.26%
Watch the US $ Index because a break below 96.00 would be significant and gold supportive. The Fed are having their monthly meeting today and tomorrow and may have an impact one way or the other. If you look at recent US bond auctions the demand even for a higher yield has been weak and that should be a real concern for the Fed and the US Treasury if the rest of the world are losing their appetite for US debt.
NOmi Prins ex Fed economist said last week if there is more stock market weakness before the December fed meeting the Fed may well "pause" the proposed Dec rate rise.
All the above plus added uncertainty from a now divided Congress is gold price supportive.
Thanks Siko and RazorsEdge for encouraging evidence of Sukari's recovering production.
Sotolo the HUI index is not an appropriate benchmark for a CEY comparison.
The HUI represents the largest 15 gold producers and is 40% weighted with just 3 companies : Newmont, Barrick and Goldcorp. These 3 companies and many of the other 12 have legacy issues that are particular to the gold majors since their mad buying spree of 2009-2012 at the top of the last gold bull rally.
6 years on many of the HUI co's are wrestling with declining production and reserves, huge write downs and high debts and disaffected shareholders. OK we have the latter but not the others. A higher gold price could have repaired the balance sheets of the majors but Obama's directive to the cartel banks in April 2012 has ever since subverted true gold price discovery in order to support the S&P and the dollar.
There will likely be much more consolidation amongst the majors but a few specific companies like Agnico Eagle, Kirkland Lake and Centamin have the potential to compete as lean and mean debt free predators and do exceptionally well. Looking ahead a $1500 gold price would help all producers balance sheets and PE ratios but would be transformational for debt free cashed up Centamin.
Too optimistic ? Even the LBMA think $1500 gold is possible. Last Wednesday 31/10 the LBMA conference in Boston forecast that gold could rally +25% to $1532 in 2019.
It's always darkest before the dawn.
Just 10.4p above its 2.5yr low registered on Q3 Update 5/10. In comparison gold mine peers have already begun to respond to the gold price pick up from the low 7 weeks ago at $1161.
Today gold is $1234.5 +$4.4 +0.45% and CEY is down again while all her key peers are up both today with gold and have rallied with gold over the last 7 weeks.
RRS and ACA have enjoyed a big boost and investor interest since the Barrick merger announcement of 24/9. Yesterday Barrick shareholders voted 99.8% in favour of deal 5/11. They have momentum :
RRS price now +39.8% since low 14/9
ACA price now +68.5% since low 14/9
Smaller peer HGM is now + 24.3% since it's share price low of 2/8.
Centamin is trading near 2.5 year low price, with $300m cash in hand and recovering production to optimal levels. Gold prices historically are higher Nov-Jan and as of February when Randgold is delisted from the LSE, Centamin will be the largest pure UK registered gold miner.
We had a period like this when CEY was scorned and ignored at end of 2015 and then CEY went from 60p to 180p in 5 months.
Catalysts for a big gold and miner rally might include a divided Congress after the midterm election; Fed pausing Int rates rises after Dec; Trump declaring a weak dollar strategy to undermine the Chinese Yuan devaluations; inflation hotting up; recession appearing; another banking crisis starting in Italy; threat or real war in Middle East; full tariffs on all Chinese exports. A realisation that the momentum stock bubble is over and world debt is out of control. Then gold and gold stocks even Centamin will be sought out and cherished.
Since CEY's close on Wed 17/10 at 105.85p the pullback and anchoring near day's lows for two days in row is odd. I said before that it was partly out of backfilling and confidence building that the recovery steps have been tentative. But yesterday and today there was another factor in play. Let's call it A+A.
A : On Wednesday Acacia informed investors of new charges and staff arrests at their subsidiary in Tanzania.
A : for algos. Yesterday and today Centamin was trading in treacle never able to get going. Why ? I believe that the algos which direct 94% of passive trading noted the uncertainty for Acacia and did a read across marking down Centamin because it just happens to be mining on the same continent.
Despite that Centamin still closed up 1.18% on the week and the 5th week out of 6 to rise.I still believe that the macro economic and stock market volatility support Centamin moving into the 105p-110p range next week. Once it breaks out of the 110p resistance for the last 11 weeks then more momentum investors will join the bus.
After finding a bottom 11/9 at 84.74p and then having it retested after the revised down FY outlook with Q3 5/10, it is no surprise that the share price is making lots of backfilling moves to make the next up move as robust as possible.This is our third week of 100p-105p for the most part and we're in the 10th week closing under 110p.
The next challenge is the 105p-110p range before the assault on a close above 110p.
With today's backfilling CEY now needs a reversion to the mean to catch up with mining peers and todays stealth rally in gold currently $1229.4 +7.5 +0.60% and GDX ETF currently 20.25 +0.34 +1.71% trading at highest level since 10/8, ten weeks ago.
Arguably Centamin has some catching up to do.
GDX ETF now trading 19.45 +0.82 +4.4%. The highest it has traded since 14/8. What it does in the next few days will probably tell us whether funds were parked here as insurance for a few days or alternatively as part of a major sector rotation. The spot gold price move today $1217.40 +$23 + 1.93% would suggest a real test of 3 month resistance for the most traded Comex contract Dec at $1220 is now in play.
Trump channeling Erdogan blames his Central Bank for market slump.
The Fed determined ? to raise rates so they have ammo to cut in a recession.
Bond market telling us the Fed is dangerously behind the yield curve.
Amazon at a PE of 155 is nuts.
US/China trade war is a disaster for China now and for US imminently.
Hedge funds record short Comex gold futures. Break above Dec Comex $1210 & it could get lively quickly.
US Dollar Index potential double top 14/8 96.73 and 9/10 96.14
US mid term election in 4 weeks.
US debt bomb just keeps on growing.
Why not buy some gold or quality miners as insurance ? After all gold is in a bull market in most developing currency markets. Gold and miners are massively undervalued and unloved. The HUI index is near a 16 year valuation low. The GDX ETF of the largest gold miners including CEY closed +1.31% last night. In contrast the tech ETF suffered the biggest one day drop in 7 years.
Putting even 5%-10% of one's portfolio into gold and miners looks more sensible by the day.
An hour before LSE closed and CEY was falling below 92p. Why ? It may have been related to the major miners ETF GDX trading down to 18.15 -0.24 at that time and gold was unchanged yet Wall St was slumping. But gold made a small rise to Comex close and GDX picked up and closed 18.63 +0.24 +1.3%. Which is impressive in an otherwise brutal day in the US markets :
DJ -3.15% biggest drop since Feb
S&P -3.29%
Nasdaq -4.08% worst day in more than 2 years.
Thanks Rebess. I'm just catching up with the S.Times business section "The week in the markets" and low and behold their different messaging impact.
Among S.Times 5 Risers of the week it says :
Acacia 114.4p +8.7% on wk. On sentiment
Fallers of the week :
Centamin 91.3p -14% on wk. On second production forecast cut
Let's hope Centamin have learnt from this own goal.
Acacia reported better than expected Q3 today and raised their FY target. Their previous FY target had a 40k oz range 435k-475k and they now expect 500k.
Hindsight is wonderful but i wonder if Centamin in Q2 would have been better putting a similar wide revised FY target such as 480k-520k a 40k range also. Then because of the uncertainty of how long the intersection to better grade took in Q3 (we know now it was 2 months) then the company would have given a more constructive message:
Q3 improved on Q2 and we believe that with our September step up through Q4 we can achieve at least 480k if not more.
The aim after a setback should be to "kitchen sink" the downside so that the company has a chance to underpromise and then overdeliver
Amongst analysts comments on Friday RBC criticised the Q3 "on a number of levels", including "poor messaging".
Pardey completely lacks the skillset in front of investors and analysts that Sami and Josef had.
If Pardey is removed (by whom ?) the co would then need to fill two vital posts :a strong Chairman to lead an ambitious strategy with the fantastic assets that the company has; and a personable, persuasive dynamic CEO who can work with staff and investors to build the best diversified miner. Pardey comes across to me as out of his comfort zone explaining and selling the company to investors.
I really hope that the El-Raghy's are part of Chairman selection process to ensure their legacy will thrive and demand change from the current Board where necessary for the good of all Centamin stakeholders.
Might a new Chairman remove Pardey ?
Picket a daily volume comparison after an RNS is irrelevant I'm afraid. After the 25/5 RNS we had 65m shares traded in total over three days. After the 9/7 Q2 production and new FY guidance the vol was 20.5m. This flush out will probably take several days to complete.
Yet is gold a potential support here ? Gold $1204.8 +5.10 +0.43% on a Friday after NFP. Where is the cartel smack down we've come to expect ? If the cartel banks don't sell to keep gold down then the hedge fund record shorts will have to bid the price up just to get out. Watch gold closely.
Sept US Non farm payrolls report missed expectations of +180k new jobs with a print of 134k. NFP Friday each months often used to wack Comex paper gold before the announcement. Right now spot gold $1203.5 and Dec Comex gold price $1207 +5.40 +0.45%.
It will be interesting to see what GDX does when it opens at 14.30. Close last night 18.79. If GDX rises with the gold price that may well help CEY price to find a bottom.
Firstly well said Siko.
Dasut thanks for your excellent mining perspective. As those of us who have invested in a number of natural resources companies over the years today's RNS does not come as a great surprise. Mining is not precise and mine grade forecasting likewise particularly after a poor grade setback. But September's 48,511 oz production is encouraging and in line with the run rates achieved in Q3 2016,Q3 2017 and Q4 2017.
it is possible that we get a gold price spike in Q4 and then the higher achieved gold sale price will mitigate higher costs. As of September 2018 the average monthly gold price Yr on Yr is $1275 vs $1261 up to Sept 2017. Will a short covering rally be triggered by the hedge funds trying to get out of their record paper gold shorts by December ?
And what about a black swan event to trigger a gold rally:
a Trump miscalculation (potential list is long)
US China trade war turning nasty. China to limit/stop rare earth exports ?
Italian bank or Deutsche bank default ?
A 10% US stock market correction long overdue. In H1 2016 the last correction CEY share price rising 200% to 180p.
End of sugar rush from US tax cuts and reality check of gigantic debt. US bond market loss of confidence
chaos in US whoever gains seats in Congress midterm elections 6/11.
Cowichan thank you, excellent data mining once again.
Do you see a pattern. The C.Galbraith report you posted noted the problems the major miners had between 2011 and 2016 with mis-allocation of capital and destruction of shareholder value and a flat gold price.
Centamin is one of the lowest cost producers today and a likely beneficiary if the gold price stays in this range. The management developed the Sukari mine on time and on budget while dealing with problems not of their making : two revolutions, strikes ,shortages and court cases. Yet Sukari is now the 20th largest gold mine in the world and Centamin has well advanced W.Af exploration, no debt and $300m cash to invest for growth.
If the Barrick-randgold merger really is the catalyst for money managers and general investors to re-consider the sector, despite the production cut in Q2 Centamin is a best in class company which isundervalued and under owned. But for how much longer? Sector rotation anyone ?
Mining is tough and none mores than gold mining. The rationale for the proposed Barrick-Randgold merger illustrates many of the challenges even for the largest and best financed. Today Reuters reports on struggling gold miner Avocet. All in Avocet has lost 99.3% of its share price value since it floated at 1200p p share in 2007.
https://uk.finance.yahoo.com/news/gold-miner-avocet-hints-possible-063018713.html
Precious metals are the only major sector not in a bubble and thus wildly under-owned and out of favour. This will change and when it does expect investors first to target the high quality miners with a solid cash balance,no debts, and a working development plan. There are very few of these companies and Centamin is one.
Even 20p off the recent low Centamin remains a bargain.