Member Info for Sotolo

Gotti of course you are right that Cey sell gold in dollars and state profits in the same, but As Tiger kindly points out our shares quoted in London are priced in pounds, so the exchange rate is important for us, and has to be applied, so you can use that on profits to see what they will be for us, however it is very easy to apply to the price of gold as it is already quoted in both sterling and dollars. Profit very broadly is gold price less aisc times ounces mined less tax and royalty etc. Assuming aisc and ounces don’t change then dollar profit is dollar gold price x this constant, which then has to be divided by the eXchange rate to give sterling profit which will be about a twelfth of the sterling share price. Alternatively the exchange rate division is already done if you use the sterling gold price as it gives you the sterling profit immediately.
Of course as we know the share price will overshoot and undershoot depending on the market which often gets it wrong giving us opportunity, but I find it helpful to work out a fair value to make buying and selling decisions and taking into account the exchange rate is very helpful for that

Actually the gold price is nearly 3% down in sterling since the May top, which is about 7 or 8% off profits and cey share price which is in sterling is about that much down. Plus 190 was always going to be tried a couple of times before going through. Let’s hope this time it makes it. Also that golf makes a new 7yr sterling high
Ps Tiger lucky for us that some like Aberdeen sell low and buy back high if that is the case

Gnome, thank you so much, I quite agree, the demise of the fourth estate is perhaps the biggest threat we face as it is so necessary for democracy. Also thanks for your analyses and links, tho Prof like me holds rather more than 10% in gold. As Prof ruminates that gold is a currency, it is the pound against gold that counts for us UK based investors. And gold in sterling seems as resolutely stuck in the trading range of the last few months, let us just hope as we near the ceiling again that the the breakout is up not down

Hoc may have made a recent recovery but it fell much further - it is more volatile as less liquid plus bad production and suffered full lockdown; it still has a way to go to get back to its more usual roughly 1.6 times Cey and is currently still 40% off its high while Cey is only 15% off. We can’t complain!

Halfpenny. Centamin rose 5 fold from 36 when quantative easing was announced in autumn 2008 to 178 in 2010! It fell in the months before, as it fell initially this time. Of course each time it is different but 5 fold from our low is £4
Prof, thanks v much for telling us about your sale and attempted buyback, good timing! Please keep doing so tho before market closes. One reason I don’t often try to get in and out as often noes it seems hard to get a quote in reasonable quantity, and when you do the spread is bigger in quantity. I seem to have to do it in a few lots. Of course even worse in Hoc, my other big holding, that only turns ove around a million shares a day compared to our maybe six.

Halfpenny great to see a different view, and you are right that as stocks fall (which we almost all think they should) the market PE falls too so Cey tumbles at constant gold price. We have been stuck in a range of around 1680-1750 and depends which way we break out. If down you could be right. However during the last quantitive easing gold more than doubled from years 2008 to 2012. If gold does that again it would get to around $3000. At that price Cey should get to £4 I reckon even on a falling market as would be clearing £400k a year. However will gold do the same this time, and how much of that by year end, I bravely hope for £2.50....my halfpenny

I think most of us are long term holders, so yes we think it will, attacking its all time high of 190 again, and then into the 200’s. However we can’t tell what it will do short term, it may fall back on lower production in the second quarter, as some worry, even though this has been heralded. Overall thought this is a great place to be and looking back if we are right won’t matter a lot what price you got in at, the best is hopefully yet to come...

You are I think wise to have bought around 160, on the pullback after our share attempted its all time high, and very welcome to such a lovely, courteous, thoughtful board with so many different and wise forms of knowledge from others here Good luck, gold up again this am in sterling....

Gotti, Centamin share is priced in sterling so I was mentioning the sterling price of gold which fell from £1443 to £1325, from 15th May to5th June, which is a bit over 8%. Happily gold is back to £1364 tonight so only £80 down since 15th May or 5.5%. Hopefully the share price will have recovered around a third of its fall by tomorrow if the gold price holds and we'll be back in 160's as Prof suggests. I, like Prof, hope for two steps forward one step back to continue and to break 190 and then quickly 200 if gold keeps going. As Tiger says the big question is inflation and there is real argument about whether it is coming or deflation - many pointing to Japan which has used a wall of money in an attempt to get inflation back and pretty much failed. As I have posted before I believe this is different and the stupendous of money, combined with reduced production of goods and services, will lead to inflation and a higher gold price sooner or later, as gold is the only safe currency. We all just have to hold our nerve and when the sterling gold price falls over 8% not be surprised 20% or so off our price. Centamin profits are geared about 2.5 times to the price of gold. Finally Prof please promise to tell us when you think the next rise has gone far enough to sell and buy back later, are you thinking of 200p?

Hope and expect you’ll never get 150,

Prof, not that small a move in gold 9% in sterling which impacts profits by around 25%. Brave of you buying so many more, wish I could have at 20% off but as you know I already have too many.

It always has the potential to drop lower, but once the mines are whining again it will be highly profitable... and go on being so if exploration goes well. Given none of us know what PM’s and Hoc will do in the short term, but are excited in the long term why not put a third of your money in now and see what happens?

Very very simply if profit is price gold is sold at less cost to dig it up, explore for more and admin etc then each 1% rise or fall when gold is $100 above aisc is around 10% on profit, when gold is $300 above aisc it is about 3.5%, now gold is $750 above our aisc the multiplier is down to a bit over 2%. It is why high cost mines can rise most in a bull market as can go from loss to profit, let’s see what happens to hoc when silver rises enough for Arcata mine to be started up again. Conversely look at Orosur which had an aisc of $1350, when the gold price stayed resolutely below that it had to close the mine. The gearing is great in miners on the rise, painful on the fall as last week.

You did the right thing, I wish I was not fully invested or would have done so too.
Gold in sterling(that counts for us) is down 9% from the top
That reduces Cey profits by about 23%, so shares should be down around 23% from 190 which is 146. It is just about there so still PE of 12 and around fair value with no other news
However reading Crispin Odey’s monthly report today he concludes that the only thing being made in the last couple of months is money, so more of it will be trying to buy fewer things, so inflation is coming very soon
Good for gold and good for your new purchase Tiger

With stock market having strong momentum - holding hoc we are missing out on tui itv, iag etc - gold sadly has only one way for the moment which is to test lower, but it is a highly volatile situation. March we thought end of the world as locked down and emptied hospitals in preparation. The April peak wasn’t as bad as feared. May it seemed we might get over it and June opening up again. But just as the overall market was too pessimistic in March it may be too optimistic now so too soon to write off gold but a worrying time.

Hochschild has been in many games and actually is now mainly a gold miner; as silver has run down, and Arcata (going since the 60's) had to be mothballed the remaining silver became so expensive to get out, Hoc is now about 1/3rd silver. However I totally agree that despite profits are likely to be nil or worse with the Covid shutdowns this year, both gold and silver running out, and scary politics for miners in both Peru and Argentina also with indigenous unrest, as you say the big plus is that Hoc has been around over a century although with some wild ups and downs, including nationalisations and rebirths, Mauricio Hochschild was a metal trader then Bolivian Tin baron and the company has only been into PM's more recently, Mauricio's great nephew Edouardo, our chairman, has been with the company over 30 years, in 1998 he and his father Luis were kidnapped, and Luis killed, the family still have skin in the game - more than half of Hochschild - so are keen on its long term success, hence the rare earth which is a long term gamble. Why I hold

15 years gives plenty of time to find more, that is there, at Sukari, so longer and as far as most of us are concerned should be longer than us, it is what makes Cey so special compared to rivals who struggle to explore with fewer finds that are more expensive to mine

Tiger us too, I hated LA till I discovered living on the sea, we’ve gravitated from Venice, where Discovery first took me in 2003, slowly up to Santa Monica Canyon where we go for the winter now, with the excuse work is still calling. and do a few bits and pieces. Luckily returned to Suffolk on Feb 27th missing the entertainment work collapse, being locked down there with all the drama, and now riots on Ocean, and just in time to stay amused by the amazing Cey tumble and soar. I have been following, and occasionally trading, the difference between Hoc, my other big holding, and Cey. Hoc is much more volatile with far smaller volume despite half or ? of market cap, because of family ownership and riskiness. It is usually around 1.6 times cey but fell below in the tumble, got to evens in late Apr and is now 1.2 times (36p, the most this year)

Thanks, the knowledge of many on tis board is truly helpful. Incidentally if my back of matchbox profit figure is about right then, with our lower market cap this week, our forward PE is about 10 !

Thanks cherry burn, you are wise on production but even if 10% lower and disc up a bit should still make very good profits if gold price holds. Yes our new CEO is renowned for deals, did you rate him on meeting?