The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
CEY always overdoes it's moves. We got the best x3 up in H1 2016 and now we endure more slide than justified or vs peers.
I expect the fact that the cartel banks are now net long paper Comex gold and silver for the first time since 2001 is very significant. At some point they are going to snap the trap on the managed money hedge funds who are now record short. That is why spot64 point is a valid one. What happens next if gold's 15% pullback from this year's high to $1161 last month was the bottom ?
Why is CEY down more today on it's own when gold is currently $1197.6 +6.5 +0.55% ? I have a theory that Centamin's 1150m shares in issue include a higher proportion of punters who buy high and sell low...and never learn to do the opposite. For the 2nd day in a row 6 other LSE gold miners are going up.
I expect the selling in Centamin to peter out shortly and mean revert with a gold rally.Precious metals are the only major markets at multi year lows when stocks and property are at record highs. There is no absolute that Trump will win on tariffs and the dollar will keep rising and paper gold will keep falling as spot64 notes below. At some point the EM currency crisis will infect major Western markets. After a Fed rate rise later this month we'll soon know if it
Kitco headlines today include :
Bloomberg " a bit of sustained mean reversion in the stock market or dollar should unlock the cage for the well rested gold bull."
Reuters : India's august gold imports double, hits 15 month high.
FCstone & Hubbis : Asian portfolio advisors recommend a 10 % portfolio exposure to gold...up from 3-5% before.
Metals Focus: "world gold mine production is expected to decline 1.3% over next 2 years."
Kitco's in house trader's comment on gold trying to find a bottom:
http://www.kitco.com/commentaries/2018-09-05/Gold-Building-A-Bottom.html
6 other LSE quoted large and mid cap gold miners right now are either up a little or unchanged. Silver and gold producer Fresnillo is the worst at -0.83%. Yet Centamin is -3.4% after yesterday's -4.26%.
All of these companies have had production or debt financing issues within the last year. Centamin's production cut was not isolated. If anything there should be a premium for Centamin with $300m cash and no debts.
This is now the best price in 26 months. A snap back is overdue when Cey is 41% down on the year and gold is down 8.5%. Centamin's sentiment and price are overly negative especially against peers.
I see a lot of towels and blood. A good time to buy.
CEY has dropped twice as far as other LSE peers today because it is both much more liquid and it is a constituent of multiple ETF's where the majority of mine co trading capital goes. As a s mid size co it is in GDX with Rand but also in GDXJ and multiple other leveraged ETF's. ACA, POG,HGM aren't. On downswings this abundance of ETF representation exacerbates the drawdown for CEY vs peers. But the opposite will apply when these ETF's bottom and rally.
CEY's worst 3 days in August 15/8-17/8 co-incided with new 52 week lows for GDX and GDXJ. That pattern has repeated today. GDX new 52 week low 17.97 -3.10% GDXJ 26.88 -2.73%.
Worth bearing in mind the many cogs at play here.
Both GDX and GDXJ ETF's hit 18 month lows yesterday and arguably became technically oversold on a 5 year comparative basis. CEY is a key constituent of both and goes up and down with them.
In the first hour of trading today in NY :
GDX $18.77 +0.61 +3.22%
GDXJ $27.58 +0.77 +2.87%
and not fearful:
Today is US stock options expiry where they will want to maximise general stock gains. Pressure on risk off assets like gold and miners will likely lift next week.
Turkey'd dollar debt is not fixed and capital controls remain a very real possibility. potentially explosively gold positive.
The commercial holders ie the Cartel banks are now slightly net long gold contracts for the first time in 24 years. These guys never lose in their own casino! While the large speculator category - managed money and hedge funds are now holding a record short paper gold position. If the commercials now turn buyers they will front run the specs, many of whom are highly leveraged so it would no take much for a sub $1200 short to become a stop loss panic bid if gold finds a bottom around here.
We are only 2 weeks away from31/8 Centamin interim dividend record date. Thus we are close to shaking out the last of the sellers to be replaced by bargain hunters liking the 25 month bargain price and a dividend in 6 weeks.
August is a terrible month to judge share markets when volume is thin and it is easier to move a price but it is not necessarily meaningful in the medium term. September on the other hand tends to be the best seasonal month for gold and miners.
Rebess Haha I know you love an RNS.
However, in this case I don't think that changes to senior management below Board level require an RNS.
But you'd think that after CEO Pardey stated publicly yesterday that there is a new Sukari General Manager that the new appointed Manager's name would at least be posted on their website. But alas no.
The general manager's responsibility for the LHDR crisis seems to have been accepted judging by Pardey's comment in the conference call yesterday when he said that Sukari has a new General Manager. But no name was given.
Confusingly however, the Centamin PLC website still has listed under senior management :
Youssef El-Raghy, General Manager - Egyptian Operations since Jan 2010
Is he still in post, moved or out ???
Alliance news headline at 09.46 "Centamin profit rises in first half on higher gold prices". The setback in production was partially alleviated on a comparable basis as the average realised gold price in H1 2018 was $1316 vs $1235 for H1 2017.
A businesslike, accountant speak from both CEO and CFO conference call. With only one surprise for me. If I heard Pardey correctly Sukari now has a new general manager. That would suggest that Youssef El-Raghy has been removed.
Re Divi policy Centamin will continue paying out excess cash above a float of $250-$300m. A share buy back was debated by the Board but rejected as costly and sub optimal.
Pardey described Doropo project in C. D'Iv as "very exciting for us". But I wonder if Sukari's Cleopatra, which now has its own full time development team and 2 full time drilling rigs may offer the greatest potential in 2019 ?
The Board apologised for the setback in production in Q2 and are determined to recover momentum in H2 to meet revised FY production.
Thankfully in the report no mention of salary review consultants. And instead of once again repeating re court case "with the potential for the legal process in Egypt to be lengthy..." the report used flattery and praised the government for Egyptian reforms...to encourage more. Proactive.
Notably the CEO said nothing about the key determinant: the forward price of gold. Centamin and all gold miners remain the Cinderella sector shunned and derided with the buoyant general stocks, a HY dollar rally and gold down 9% year to date into the summer doldrums. But key gold catalysts may welling up for higher gold prices in H2 which would energise both Centamin and the sector sentiment.
The fact that the latest COT report shows that the Large Speculators (hedge funds) are at their most short paper gold since dec 2015 is encouraging for a contrarian investor because the Commercials (cartel banks) the real power of the paper gold market have cut their shorts to the lowest level in years. When the Commercials start buying back and profit taking the Large Spec's will be forced to scramble to short cover. This could start any time after tomorrow's US non farm payroll report.
I topped up at 110p 3 weeks ago and have no regrets buying low into a quality company where at 113p it has 26p of it's value in cash on the balance sheet and just 87p of value for Sukari's 20 year + mine and exploration elsewhere. A bargain.
A strong bounce off the day's low 108.35p, a close only 0.20p lower than the 21/6 close at 114.10p, the lowest close in 2 years, and a thorough flushing out 20.5m shares volume. I bought this morning at 110p because I like a bargain and I have struggled to answer a question.
Who is going to keep selling CEY at these ridiculously cheap prices ? Was today the final tree shake ? As we enter the seasonal upswing for gold I believe that our fortitude will be rewarded.
I bring to your attention that the ranks of the conspiracy theorists now includes President Reagan's former Treasury Sec Paul Craig Roberts. Read the section about the Plunge Protection Team and the section in italics highlighting why they sell gold futures in particular.
https://www.zerohedge.com/news/2018-06-27/paul-craig-roberts-how-long-can-federal-reserve-stave-inevitable
A. As gold is money, not credit or a debt instrument it is used as a currency pair not by "regulators" but by the BIS, and individual central banks to maintain confidence in the dollar and keep investors in the general stock market. The cartel banks are the brokers and they profit enormously.
Why do the cartel banks bother to manipulate the paper gold price ? For enormous super normal profits in the billions per year, knowing that the regulators like the CFTC will do nothing. On 15/6 there was a sudden waterfall plunge in Comex gold on the opening when 260,000 contracts were dumped into the market with a notional value of $34bn. This wasn't a mad collective of gold miners or jewellers throwing in the towel. Who ever heard of a "normal" trader who dumps 260,000 contracts all at once ? It was done to suppress as per every wash and rinse cycle with the Comex paper market.
The cartel banks will no doubt be hoovering up some of these naked shorts now that they have got the price down $45. That's $1.17bn profit if they bought back all 260,000 contracts. Not bad in 10 days !
B. The gold price in dollars and the gold mine shares are suppressed but that will not be permanent. There will be a reversion to the mean and true price discovery probably when the Chinese feel that they have bought enough physical gold "on sale" or gold is included in a new reserve currency. Or will the Chinese play the Comex delivery demand card in the trade war if it gets out of hand ?
Gold and miners do well in stock market corrections, inflation or times of geopolitical uncertainty. All three are developing if you care to look. Patiently holding for our sector to take centre stage again just like in H1 2016 and 2008-2011.
Welcome on board BigBangs. The article was from Zerohedge.com an indep. US based market commentator which is one of a number I scan to try to get a different opinion from the "confirmation bias" of much of the main stream media : FT, Bloomberg, Reuters etc.
Another good indep. site for gold news is 321gold.com.
mrtibble and others will I believe find the attached article by well respected gold analyst Ronan Manly timely, pertinent and exasperating.
Firstly it notes how Paulson's new Shareholders Gold Council (SGC) want to coordinate to hold leading miners more to account. The article details the history of squandered investment in the gold sector between 2010 and 2017 highlighting 13 of the world's largest miners. Over that period they had to write off $85bn of dud investments. But the executives somehow managed to pay themselves $550m over the same period.
In the second half of the article Manly asks why Paulson's Council is not raising the most important issue determining gold miner success...why so few in the gold space (including Pushmepullyou's champion The World Gold Council) refuse to analyse the gold price discovery.
Another example of the opaque nature of the gold price was GATA's letter in May asking the US Regulator for an explanation for the enormous scale of Exchange for Physical contracts between Comex and LBMA in 2018 to date. They have yet to receive a reply.
https://www.zerohedge.com/news/2018-06-26/paulson-and-shareholders-gold-council-sgc-just-dont-mention-gold-price
Thanks I feel better after that. I remain optimistic because all the essential elements are in place for progress in a rising gold price environment. But the Board needs to start scoring regularly for Centamin to become a leader and not an also ran.
mrtibbles you highlight some of the problems but I want to highlight some solutions. Firstly, if there was any complacency by management it has hopefully all gone now with the last three weeks share price fall and the drop out of the top 200 UK quoted companies. The vast majority of investors want both capital appreciation for their shareholdings and a progressive dividend policy. It is about time that the Board made share price appreciation a core metric for share vesting and bonuses. As it is we private investors take the risk buying shares with after tax income whereas the vast majority of Mr Pardey and Co's shares are awarded "gratis". In that sense we have much more skin and risk and pain than they do. I hope that this point has been grasped. Market makers are not so important today. 96% of all trading is programme trading. Their algos filter all news looking for positive or negative changes. We lost 30% of the share price as the RNS was outside of normal reporting and contradicted ie a negative surprise to that of Q1 given 3 weeks earlier. Added to that analysts could cite the" same old news" as Centamin has nothing else to demonstrate progress. One country, one mine, two court cases and 2 green field explorations are not news that one can keep repeating as unchanged and expect the share price to progress. But the tin ear award went for the announcement that Korn Ferry would review management renumeration. I want management rewarded for problem solving and strategic development of our business. Centamin PLC is competing for investor funds. I want to see our Board being proactive like similarly sized Kirkland Lake. They now have 3 active mines in Ontario and strategic shareholding investments in 3 prospectors in Australia including Novo Resources. Is W.Africa a goer ? If Centamin can't envisage a mine plan within a year we should be looking to invest the majority of the cash holding in a late stage developer in another safe jurisdiction or buy a shareholding strategic stake to harness the gold price rally before prices take off. I hope the Board are constantly reviewing all options available especially with their Australian roots and contacts. Sukari is an ideal foundation for a major gold company. Does the Board share my ambition ?
Dimensional are not a new investor. The RNS was required because their holding surpassed 5% with their latest top up on 11/6. The institutional shareholder record shows that they were the 3rd largest holder in April of 2017 with then a 3.33% holding and 38.25m shares. So over the last 13 months they have added a total of 19.8m shares or +1.69%. As of the last report Blackrock was the biggest holder with 14.8% and 170.58m shares followed by VanEck (of the ETF's GDX and GDXJ which CEY is a constituent of) with 9.26%. But the VanEck may change with the ETF rebalancing on Friday 15/6.
Despite the current angst and gloom on here sentiment for CEY, gold miners generally and gold are not Sisyphus condemned to push a boulder uphill then watch it roll back down again...for eternity. At worst our crime is buying a great stock and sector too early in the business cycle. We are captives of the gold price and individual co performance until animal spirits return to the gold sector. As Grant Williams put it "nobody cares about gold and mining stocks". But that will change. Look at how CEY tripled in 7 months in H1 2016 from 61p to 184p on gold's mini bull run from $1045 to $1375. Looking at the 10 year gold chart shows the potential if it can get above $1380...then CEY and other miners will start to perform with rising momentum and sentiment and we'll be out of this perpetual vicious circle and into a virtuous one. Again looking at recent history we've seen this kind of drop before.The 9/11/16 top out at 170p post the Trump election gold spike. As gold was capped viciously the following day CEY started a 5 week slide down to 114.60p low of 15/12/16 where it bottomed with the Fed int rate rise of that day. There was also an ETF rebalancing 19m volume flush out on Fri 16/12. We're now in week three of this drawdown and today we are likely to get a 0.25% Fed int rate rise, but that is largely priced in. What Powell says about guidance will dictate how gold is likely to react. As it happens we also have an ETF rebalancing on Fri 15/6 so I expect high volume volatility for the next couple of days. Overall I feel that the majority of sellers have sold now and we await for sentiment to start to recover...as it always does. Seasonality may help. Gold usually starts to rise from second half of June through to September lead up to the Indian buying season. Lastly note that GATA wrote on 5/5/18 to the regulator to ask why if Comex exchange for physical contracts were an emergency measure are they now standard practice. They have received no reply to date.
Quite so mrtibbles. For me the presentation also underlines how the inevitable breakout in the gold price above $1370 and geographical mine diversity will be a transformative for Centamin and us battered shareholders. As we brood about the share price hit from the production cut I hope Korn Ferry advising the Renumeration Committee has been relegated low down on the list of priorities for our Board. We know that a number of us on here have substantial skin in the CEY game ie 100k + 500k shares. I wonder if any other director is going to join Mr Bankes and buy while the share price languishing at 17 month lows ? Josef memorably bought 500k shares in both 2012 and 2013 albeit at much lower prices but the commitment was appreciated and it helped confidence. The search and selection of the Non Exec Chairman will tell us a lot about the real ambition of this post Josef Board. Do they want to build a great international long term gold mine business for all stakeholders ? I really hope that they hire someone like a Sprott, Mcewan or Neumeyer to lead Centamin onwards and upwards. I noted the impact that the cutback in production drops Sukari for 16th largest to 20th in the league of largest mines (page 13). Yet with just one mine Centamin is still in the top 30 largest gold miners in the world (page 13). That just underlines how critical having back-up plans and equipment are for a one mine company and just how valuable getting a second mine developed in another country for geographic and operational diversity will be. It is reassuring to note that in 2017 Sukari reserves rose more than were mined. In contrast the recent Maison Placements report stated that 50% of the gold majors are failing to replace reserves. The long term value of the existing resource at Sukari over at least 20 years is in contrast to an average of 10year gold mine life (page 4). I hope that it is an encouraging indicator that the total man hours worked in Cote D'Ivoire at 136,610 is an impressive 10% of Sukari's in less than 4 years. Can we dare to infer that Doropo is getting very close to a feasibility development project ? The Souwa deposit "material returned 85%-91% recoveries" (page 30) sounds promising. Finally, this caught my eye (page 33) "progress Sukari solar project feasibility study". Intriguing. Could they power the fixed equipment, crushers etc with solar and reduce their reliance on the rising costs of diesel ?