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either that or the gold price is going to collapse, but I can't see that happening.
looking at the year to date, all gold miners have under performed the metal price by a long way since May. I guess you could say that during that period, they were behaving a lot like the rest of the equity market. However in the past few weeks, gold miners have began to peform more like gold:
http://finance.yahoo.com/echarts?s=^HUI+Interactive#chart1:symbol=^hui;range=2y;compare=gdx+gdxj+gld;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
it is also interesting if you look at the 5 year graph, the miners are well behind, thanks to that massive dip in 07/08. Before that though, they tracked the gold price quite nicely. I doubt they will reach parity with the gold price, but one can only hope.
I guess the way to play this is either to buy the gold miners index, or buy a mixture of large, mid and small caps you like the look of. I think we can also add silver miners into the mix, as the same thing is happening there.
I like the look of the following:
Large Cap:
GoldCorp
Silver Wheaton
Mid Cap:
African Barrick Gold
Fortuna Silver mines
Small Cap/AIM:
Ortac Resources
Orogen Gold
Red Rock Resources
add yours below:
looking at the year to date, all gold miners have under performed the metal price by a long way since May. I guess you could say that during that period, they were behaving a lot like the rest of the equity market. However in the past few weeks, gold miners have began to peform more like gold:
http://finance.yahoo.com/echarts?s=^HUI+Interactive#chart1:symbol=^hui;range=2y;compare=gdx+gdxj+gld;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
it is also interesting if you look at the 5 year graph, the miners are well behind, thanks to that massive dip in 07/08. Before that though, they tracked the gold price quite nicely. I doubt they will reach parity with the gold price, but one can only hope.
I guess the way to play this is either to buy the gold miners index, or buy a mixture of large, mid and small caps you like the look of. I think we can also add silver miners into the mix, as the same thing is happening there.
I like the look of the following:
Large Cap:
GoldCorp
Silver Wheaton
Mid Cap:
African Barrick Gold
Fortuna Silver mines
Small Cap/AIM:
Ortac Resources
Orogen Gold
Red Rock Resources
add yours below:
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Be careful with these. They are all good stocks and gold and silver is the place to be right now but NIA (National Inflation Association) use pump and dump tactics on these sort of stocks. They charge people 1k for advanced knowledge and then those people buy. They then release the stock name to the rest of their subscribers who bump it up while the others get out. They are definitely in Silver Wheaton.
This inexperienced child is looking for miners to "explode" on the upside when all you have to do is take the other side of his prediction....ALMOST TO THE DAY....with 3X ETFs and become filthy rich in a matter of weeks.
Whippet Joined: 01 Oct 07
Replies: 5030 01 Jul 11 18:10
FTSE 7000, Dow 14000, Gold $1250, AAPL $450 from here.
Whippet = the ultimate counter indicator
Whippet Joined: 01 Oct 07
Replies: 5030 01 Jul 11 18:10
FTSE 7000, Dow 14000, Gold $1250, AAPL $450 from here.
Whippet = the ultimate counter indicator
I suspect Whippet is an agent from the Anunnaki and is ensuring that he will be in a strong position next year when planet Nibiru arrives. He will rule a country, possibly Kenya and will take his place in the NWO. At his left side will be Mr We Buy Any Gold and on his right Philip Clarke.
I am unsure as to what I was drinking last night but it seems to be rather potent.
I am unsure as to what I was drinking last night but it seems to be rather potent.
HUI up 4.30% today. Just broken through it's all time high. Let's see if it can hold.
HUI struggling to hold the 580 support now. Will sell out for a small loss if it dips any lower, and look to buy back in if it tries to breakout again. Has to happen eventually, if gold continues to trade higher that is.
none. The business model is to fund some of the development costs of building the mines, in return for a share of the silver being produced. Silver wheaton currently have 420 million ounces attributable to them of proven resources (and up to 1.2 billion ounces if you include probable, measured and indicated resources) at a low cost of $4/oz (+ small inflation adjustment). That is huge upside to any silver price increases (which is inevitable imo).
Nice to see the HUI closing up again at 597, still above it's support level at 580 ish. Let's see if it can break out this time.
Nice to see the HUI closing up again at 597, still above it's support level at 580 ish. Let's see if it can break out this time.
Whippet,
"none" - precisely, might have been worth a mention in a "miners" thread.
They are "streamers" which is a big difference.
These $3.90 deals they have at the moment are very good but I struggle to see what's in it for the actual miners - won't they feel mugged? Won't it be a case of once bitten twice shy? As 2013 approaches and such as the Barrick deals get closer to the end won't that mean Silver Wheaton have to renegotiate at a higher price? Then that makes SW more of a gamble unless the silver price increases a lot more (which it could).
Or am I missing something and miners are really prepared to offer what they have, at a continually much lower price than they could get themselves?
"none" - precisely, might have been worth a mention in a "miners" thread.
They are "streamers" which is a big difference.
These $3.90 deals they have at the moment are very good but I struggle to see what's in it for the actual miners - won't they feel mugged? Won't it be a case of once bitten twice shy? As 2013 approaches and such as the Barrick deals get closer to the end won't that mean Silver Wheaton have to renegotiate at a higher price? Then that makes SW more of a gamble unless the silver price increases a lot more (which it could).
Or am I missing something and miners are really prepared to offer what they have, at a continually much lower price than they could get themselves?
It behaves exactly the same as any mining stocks hence it belongs here.
Yes you are missing something; it is in miners interest to sell off part of their silver (which has many years before it comes out of the ground, and which is actually a bi-product in most cases) in order to fund the building of the mine. Lets look at Barrick's pascua mine as an example. It is set to open in 2013, and has a mine life of 25 years, and they are spending $1.5 billion on it. They have sold silver wheaton the rights to 25% of the silver production across the life of the mine at approx $3.90/oz. That isn't exactly loose change as there is 635m oz of silver in that mine. Miner's hedge production all the time to protect themselves from price fluctuations, they get worse rates on stuff that is still in the ground, hence the $3.90/oz price.
Of course they won't be able to renegotiate any more deals on the same terms, as it all depends what price silver is at the time, however this isn't really a problem for the forseeable future. They have agreements in place for 400 million ounces of proven resources (and up to 1.2 billion of probable and measured/indicated, all depends on how the mines actually produce, which aren't set in stone). If you look at the major contracts, all are for the next 20-25 years, and are set to bring in approx 30m oz/year between them.
Yes you are missing something; it is in miners interest to sell off part of their silver (which has many years before it comes out of the ground, and which is actually a bi-product in most cases) in order to fund the building of the mine. Lets look at Barrick's pascua mine as an example. It is set to open in 2013, and has a mine life of 25 years, and they are spending $1.5 billion on it. They have sold silver wheaton the rights to 25% of the silver production across the life of the mine at approx $3.90/oz. That isn't exactly loose change as there is 635m oz of silver in that mine. Miner's hedge production all the time to protect themselves from price fluctuations, they get worse rates on stuff that is still in the ground, hence the $3.90/oz price.
Of course they won't be able to renegotiate any more deals on the same terms, as it all depends what price silver is at the time, however this isn't really a problem for the forseeable future. They have agreements in place for 400 million ounces of proven resources (and up to 1.2 billion of probable and measured/indicated, all depends on how the mines actually produce, which aren't set in stone). If you look at the major contracts, all are for the next 20-25 years, and are set to bring in approx 30m oz/year between them.
Silver Wheaton were very shrewd doing their deals at just the right time in a global downturn when the silver price was so low.
The upside to their price now is a rise in the price of silver and gold from those deals but from a deal making point of view things seem to have dried up. Last deal Feb 2010? Those that did make deals with them appear to have blundered and are being laughed at by the those that didn't.
http://www.e-mj.com/index.php/news/us-a-canada/974-gold-producers-eye-silvers-soaring-market.html
It seems ironic that to make any further deals they seem to need to gold/silver price to drop to scare miners into panicking to sell their metals too cheaply again - but that means the revenue from the current mines falls at the same time. The ideal situation is a big fall in prices, deals done and then a big surge in prices.
The upside to their price now is a rise in the price of silver and gold from those deals but from a deal making point of view things seem to have dried up. Last deal Feb 2010? Those that did make deals with them appear to have blundered and are being laughed at by the those that didn't.
http://www.e-mj.com/index.php/news/us-a-canada/974-gold-producers-eye-silvers-soaring-market.html
It seems ironic that to make any further deals they seem to need to gold/silver price to drop to scare miners into panicking to sell their metals too cheaply again - but that means the revenue from the current mines falls at the same time. The ideal situation is a big fall in prices, deals done and then a big surge in prices.
all of your points are irrelevant.
It is undervalued at present; most of it's agreements will last 20-25 years; it is set to increase output by 80% by 2015 based purely on existing contracts.
Who gives a sh1t about future agreements unless you are planning to hold this ultra long term? Did you miss the part that says they have up to 1.2 billion ounces including reserves and resources?
Nice link - if you are an after timer. I suppose you think all those people hedging on the futures markets are mugs as well do you?
For smaller miners, forward selling your silver to find the mine building is arguably a better option than debt financing or further share dilution, so it will always have a place, regardless of what the silver price is doing.
It is undervalued at present; most of it's agreements will last 20-25 years; it is set to increase output by 80% by 2015 based purely on existing contracts.
Who gives a sh1t about future agreements unless you are planning to hold this ultra long term? Did you miss the part that says they have up to 1.2 billion ounces including reserves and resources?
Nice link - if you are an after timer. I suppose you think all those people hedging on the futures markets are mugs as well do you?
For smaller miners, forward selling your silver to find the mine building is arguably a better option than debt financing or further share dilution, so it will always have a place, regardless of what the silver price is doing.
“We have become a mainstream form of financing,” said Chief Executive Peter Barnes. “In the old days, you just had debt and equity. Now you have debt, equity and silver streaming.” Barnes said demand is still high for stream deals, but Silver Wheaton, one of the top three performers on the Toronto Stock Exchange last year, is having to pay more upfront.
Demand is still high. They will have to pay more upfront, but it is pretty much a fixed % of whatever the silver price is at the time of the agreement (about a third of the current price by the looks of it). If they were to agree deals now I doubt they would pay more than $14/oz or so.
I think you are seriously failing to understand the futures market and the concept of forward selling your production. People producing commodities like to do it. You won't have to see huge drops to scare them into selling. They are willing to sell silver because it is a bi-product in all of these cases, and it is a more attractive option than debt financing or share dilution.
Demand is still high. They will have to pay more upfront, but it is pretty much a fixed % of whatever the silver price is at the time of the agreement (about a third of the current price by the looks of it). If they were to agree deals now I doubt they would pay more than $14/oz or so.
I think you are seriously failing to understand the futures market and the concept of forward selling your production. People producing commodities like to do it. You won't have to see huge drops to scare them into selling. They are willing to sell silver because it is a bi-product in all of these cases, and it is a more attractive option than debt financing or share dilution.
Calm down.
I said Silver Wheaton were shrewd. I wasn't laughing at the miners who had sold future production I was saying other miners were.
"Those who did sell are feeling a bit sheepish, as the spot price for silver doubled in the last year, according to a session report offered by conference sponsor Reuters news service. “A lot of our competitors have sold away all their silver stream,” Agnico Eagle Chief Executive Sean Boyd told the Reuters Mining and Steel Summit. “We’ve never done it. We like silver.”
If something looks too good to be true it's in my nature to question it
Isn't it going to get to the point where inflation in such as wages, energy costs mean that some of the miners are going to be mining for Silver Wheaton at a loss to themselves or will their increased costs be added onto the $3.90 via inflation clauses?
I said Silver Wheaton were shrewd. I wasn't laughing at the miners who had sold future production I was saying other miners were.
"Those who did sell are feeling a bit sheepish, as the spot price for silver doubled in the last year, according to a session report offered by conference sponsor Reuters news service. “A lot of our competitors have sold away all their silver stream,” Agnico Eagle Chief Executive Sean Boyd told the Reuters Mining and Steel Summit. “We’ve never done it. We like silver.”
If something looks too good to be true it's in my nature to question it
Isn't it going to get to the point where inflation in such as wages, energy costs mean that some of the miners are going to be mining for Silver Wheaton at a loss to themselves or will their increased costs be added onto the $3.90 via inflation clauses?
silver is a bi-product in all of these mines. The main cost is getting stuff out of the ground. After that, separating silver from everything else hardly costs anything. Don't forget that the miner still owns 75% of the silver, so it would only become uneconomical if the cost of separating silver from everything else started to exceed the spot price, which is never going to happen as it is literally a few $ per tonne. The only other way they would be making a loss is if the entire project suddenly became unfeasible for whatever the main product is (gold, copper etc). In that case, if they closed the entire mine down, slw would get nothing. However I don't think barrick etc would be committing to a 20-25 year project with massive upfront expenditure if they didnt think it was going to be feasible. 1% is the max yearly inflation adjustment they can charge slw so no problems there either.
I didn't mean a loss on the mine overall I meant a loss on the percentage they had streamed.
At $3.90 with rising wage and energy costs etc. and a 1% inflation limit, as their production costs rise won't they be losing money getting Silver Wheaton's metal out of the ground?
At $3.90 with rising wage and energy costs etc. and a 1% inflation limit, as their production costs rise won't they be losing money getting Silver Wheaton's metal out of the ground?
Do you think there is an area in this mine containing only silver, and an area containing only gold, and an area containing only copper or something? What is dug up is a mixture of things, and has to be refined. If the grades of silver are sufficiently high they will be refining it regardless, because it costs next to nothing to do (certainly nowhere near $3.90/oz or they wouldn't have agreed to do it).
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