RE: With gold surging, am expecting EDV to hike offer31 Dec 2019 09:06
Gone in for some gold this morning. Bought Centamin CEY. A hedge against bumps in the road on the main markets.
A good write up here from one of my Brokers.
Centamin (CEY) A gold miner ramping up production and profits
It’sbeenagreatyearforgold.Thepreciousmetalhitsix-yearhighsinSeptember,risingtoover$1,500perounce. Demandforthis‘safehaven’assethassurgedamidstawaveofrisingglobaleconomicandgeopoliticaluncertainty. Theseconcernslooksettocontinueforsometime.
Subsequently, gold miners have become an attractive option for investors looking to diversify their portfolios and potentially take advantage of rising bullion prices. With no debt, healthy operating margins and increasing output levels we think mid-cap producer Centamin could be one of the best opportunities in this sector.
Further gains for gold look likely
Major gold bull markets are rare. The most recent one lasted from the late 1990s until 2011. The one before that ran between the late 1960s and 1980. Many market commentators are predicting we could now be witnessing the start of another. It’s easy to see why. Many of the catalysts behind this year’s yellow metal upswing show no signs of abating any time soon. Whilst Brexit noise and the US-China trade war may have settled down slightly, low interest rates, rising tensions in the Middle East and fears of a slowing global economy still cast their omnipresent shadows.
Since this summer’s high, the price of gold has pulled back slightly and now seems to be drifting sideways above support at the $1,460 level. But, with all signs pointing to a continuation of strong demand, it’s likely this could just be a phase of consolidation before bullion surges higher once again.
In September UBS, the usually conservative Swiss Bank, upped its gold forecast for the second time in less than two months. It now predicts that further buying from large funds and central banks could push the price up to $1,730 in 2020. That’s an increase of close to 20% from current levels.
An appealing recovery play
Predictably, as gold prices moved higher this year so have the shares of many gold mining companies. This means finding value in the sector is tricky, which is what makes the Centamin story so appealing. In February the miner revealed that a series of operational issues at its flagship Sukari mine in Egypt had resulted in a 13% drop in production during 2018. This hit profits, prompting an investor sell-off which saw the share price tumble.
Lower than expected grades of gold and disruption to the mining processes were to blame for the weaker output. However, it’s not unusual for a mine to encounter short-term problems like these occasionally, due to unforeseen geological factors. Centamin quickly put these setbacks behind it, reassuring investors it had a ‘new team in place’ and was confident it could return Sukari ‘back to its full potential’, having ‘identified, evaluated and implemented’ solutions to the problems which ha
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