3 Mining Stocks to Buy While They’re Still a Bargain

By Tim Melvin
Investor Place

goldnugs160As we move further into earnings season we are starting to see some of the reports from mining stocks, and it is still a messy picture. If you make your money digging stuff out of the ground, you’re having a pretty tough go of it in 2014.

Although there are signs and whispers of improvements, that’s not showing up in the earnings numbers just yet. These basic resources need a stronger economy that worked off excess supplies as well as a reduction in capacity that creates firmer pricing, and so far none of that is happening to any great degree.

The global economy may be better than it was a few years ago, but it’s still nowhere near strong enough to help the mining companies see any real profit growth. Of course, the more the short picture is bleak, the more interested my contrarian value mind is intrigued and interested.

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Gold Miners Gain From Geopolitical Crises

By Troy Kuhn
Bidnesss Etc.

gold100s-160The on-going geopolitical instability, especially the Ukrainian crisis and the Israel-Palestine war, have serious repercussions for the markets at large. The impact on the financial markets is wide-spread — investors become more conscious of losing their investments’ value — and the shuffling of savings from one asset to another begins. Usually, investors move their investments from risky assets, such as equities, towards safer options, such as US bonds or precious metals.

As the events in Ukraine unfold, financial markets become volatile. Gold, the most widely recognized safe-haven investment, has wide-swings in its price over the past fortnight. The price of gold fell from a high of $1350 on July 11 to below the $1,300 mark, reaching $,1297 by July 15 as the Federal Reserve signaled that it will increase interest rates as the economy recovers.

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Mali cancels 130 mining permits after sector audit

mali

By Bate Felix
Business Day (South Africa)

Mali has cancelled 130 mining permits, about 30% of existing permits in the gold-producing West African nation, in a drive to clean up the sector, a mines ministry official said on Thursday.

The new government said in September that it would carry out a complete inventory of existing mining contracts, titles and licences and was ready to renegotiate permits that were not in the country’s interest.

The cancelled licences include a range of permits covering a surface area of about 13,000 square kilometres, but do not involve mines already in production.

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Newmont Plans $1 Billion Suriname Gold Mine to Cut Costs

By Liezel Hill
Bloomberg

suri180Newmont Mining Corp. (NEM) will build a mine in Suriname for as much as $1 billion as the largest U.S. gold producer continues efforts to reduce operating costs following the metal’s decline.

The Merian project will produce 300,000 to 400,000 ounces a year and is expected to start up in late 2016, the Greenwood Village, Colorado-based company said yesterday in a statement. The mine’s forecast costs in the first five years are $750 to $850 an ounce, as much as 29 percent less than Newmont’s total average in the second quarter of this year.

“At current gold prices, we estimate Merian investment could have a payback of less than four years,” Michael S. Dudas, an analyst at Sterne Agee & Leach Inc., said in a note yesterday.

The approval marks the first for a gold project of its size since gold’s 28 percent plunge last year spurred producers to rein in spending, delay expansions and sell less profitable assets to shore up their balance sheets. Newmont has sold smaller assets in Nevada and Australia, as well as holdings in Canadian Oil Sands Ltd. and Paladin Energy Ltd.

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We’re Ready to Profit in the Coming Correction — Are You?

By Laurynas Vegys
Casey Research

Laurynas Vegys

Laurynas Vegys

Sometimes I see an important economic or geopolitical event in screaming headlines and think: “That’s bullish for gold.” Or: “That’s bad news for copper.” But then metals prices move in the opposite direction from the one I was expecting. Doug Casey always tells us not to worry about the short-term fluctuations, but it’s still frustrating, and I find myself wondering why the price moved the way it did.

As investors we’re all affected by surges and sell-offs in the investments that we own, so I want to understand. Take gold, for example. Oftentimes we find that it seems to tease us with a nice run-up, only to give a big chunk of the gains back the next week. And so it goes, up and down…

The truth is — and it really is this simple, but so obvious that people forget — that there are always rallies and corrections. The timing is rarely predictable, but big market swings within the longer-term megatrends we’re speculating on are normal in our sector.

Since 2001, the gold price had 20 surges of 12% or greater, including the one that kick-started 2014. Even with last year’s seemingly endless “devil’s decline,” we got one surge. If we were to lower the threshold to 8%, there’d be a dozen more and an average of three per year, including two this year.

Here at Casey Research, we actually look forward to corrections. Why? We know we’ll pay less for our purchases — they’re great for new subscribers who missed the ground-floor opportunities years ago.

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Paul Renken: Bottom-Fishing for the Best Junior Resource Equities

renken140

Paul Renken

It’s the lazy days of summer and Paul Renken, senior geologist and analyst with VSA Capital, is bottom-fishing. He sees a lot of value in unloved resource equities. It’s the lazy days of summer and Paul Renken, senior geologist and analyst with VSA Capital, is bottom-fishing. He sees a lot of value in unloved resource equities. It’s the lazy days of summer and Paul Renken, senior geologist and analyst with VSA Capital, is bottom-fishing. He sees a lot of value in unloved resource equities and spends much of his time sifting through the lot to find juniors that will get the increasingly sparse financing needed to turn potential into production. Renken offers an abundant catch of equity picks in this interview with The Gold Report.

Renken has a broad range of experience in various aspects of the mining and minerals business. He began his career as a geologist for Canadian junior resource companies in the western United States. Owning a stake in a private consulting firm as vice president of exploration, Renken searched for various base metals, precious metals and industrial minerals. In the UK, he worked in the equity market media outlets of Digitallook and Hemscott before joining VSA as mining analyst in 2006.


Interview by Brian Sylvester of The Gold Report

The Gold Report: VSA Capital recently published a research report that reads, “One of the key parts of exploration funding and the acceptance of risk versus monetary reward was the considerable correlation between share price appreciation and the reduction of geological risk.” However, this no longer seems to be the case. What’s broken?

Paul Renken: What has transpired for the last couple of years, particularly in the junior and very small-cap exploration space, is that the money to find deposits and advance them along the risk profile to a bankable state has largely disappeared. The dollars required to define a resource have been viewed by the market as an opportunity to sell shares to take advantage of any short-term price strength. From the long-term shareholders’ point of view, the money was wasted. Companies should have sat on the cash and not bothered with any exploration.

Metallurgical testing onMkango Resources Ltd.’sREE deposit in Malawi suggests that it should be fairly easy to process with relatively high rates of recovery.

The directors of these companies need to realize that at the early stages of a project, they have to consider the probability of finding a significant deposit and how much it’s going to cost to define it. Investors, and institutional investors in particular, are looking for very low costs of discovery.

TGR: Has that become part of your investment thesis for junior resource equities?

PR: Yes, we’re looking to bottom-fish particularly good stories with good deposits that have languished for some time but that are now showing good economics. There are many firms out there seeking capital but there just isn’t much capital to finance all of them, or even the majority. If you’re going to commit capital to bring some of these stories to production, why not cherry-pick the best stories and the best deposits at the most economical cost? The smaller you get in the resource space, the good deposits or good corporate stories are available at very low valuations simply because the sector has been so out of favor for so long.

TGR: When is risk capital going to return to the sector?

PR: The exploration side of the business, a subsector of the mining space, needs to show that it has the same or greater potential for a return on investor capital versus other sectors. It is a competition for the available dollars among all the different companies in all the different sectors—as well as debt capital and currency markets—not just other mining companies. Continue reading

Africa’s Largest Refinery Finds 2.7 Tons Of Gold “Missing” After Computer Upgrade

By Tyler Durden
Zero Hedge

bull999-160It’s one thing to implicitly admit that there is a physical gold shortage and as a result nations — such as Germany — are unable to repatriate their physical gold held in the safe and trusted confines 90 feet below the NY Fed, gold which may or may not be there and has likely been leased out exponentially to cover paper shorts by virtually every BIS-overseen central bank (and the BIS paper gold selling team itself of course). It is something totally different to corzine, as in vaporize, 87,000 ounces of physical gold, some 2.7 tons, and blame it on a computer upgrade glitch. Which is precisely what Rand, Afrrica’s largest refinery and processor of about a third of the world’s gold since 1920, has done after it “discovered” that $113 million in precious metal was missing after “adopting a new computer system.”

Bloomberg reports that the refinery in Germiston, a town 20 kilometers east of Johannesburg, has 87,000 ounces of physical gold less than the amount present in its accounting records after “implementation difficulties” with the new system, the company said in a statement today. That’s worth about $113 million at today’s price of $1,296 an ounce.

Taking a page out of China’s infinite rehypothecation scheme, the South African refiner essentially told its investors, most of whom are gold miners, to step up and replenish the missing metal or else investors may come asking questions about their own reported gold holdings. And, it succeeded.

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Irresponsible Actions by Federal Reserve Make Gold and Silver a Buy

By Shayne Heffernan
Live Trading News

goldbowl140I have some good news and some bad news this week; first the bad news. The “policy makers” dictating “monetary policy” at the Federal Reserve have decided that in order to save the banking system from its scandalous behavior over the past four decades, it’s now necessary that grandma receive only 0.15% on her savings at the bank. The good news? She still intends to vote for Roosevelt this November.

Some may not see the humor in my good news, but sadly, in all too many instances it’s true. Occasionally I see political commentators remark that Wall Street has a natural enemy in President Obama, but in fact President Obama is the best friend Wall Street has had since Franklyn Delano Roosevelt (FDR) became president. Just like FDR in 1933, Obama came to office in 2009 with the Federal Reserve and its banking system suffering from near fatal self-inflicted wounds. If FDR or Obama had really wanted to clean up Wall Street by eliminating the Federal Reserve and its ability to counterfeit US dollars they both had the perfect opportunity to do so, but both chose to leave the fox in the hen house.

The public in 1933, as in 2009, was ready to support honest reform in the financial markets. In March 2009 Obama’s attorney general Eric Holder needed no new legislation from the Congress to charge Wall Street with fraud. How hard would it have been to have prosecuted and convict the management of Wall Street for selling bogus interest-rate derivative contracts? Not hard at all, but that didn’t happen! One of the first decisions made by the Obama administration in 2009 was to protect the banks that had sold hundreds of trillions of dollars of these worthless derivatives to insurance companies, pension & mutual funds and foreign sovereign investment funds. Instead of prosecuting these criminals President Obama chose to bail out Wall Street with taxpayer money and look the other way as the Federal Reserve extended a $12 trillion line of credit to European banks, a sum that (at the time) was larger than the entire $10.8 trillion dollar US national debt.

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6 Tips for Picking Winning Gold Miners

By Ben Kramer-Miller
Gold Stock Bull

goldpick160There is no substitute for gold. But gold miners, if you choose them correctly, can not only leverage your exposure as they grow their businesses, but they can generate cash-flow and dividends that are correlated to the gold price.

This sounds great! Unfortunately it isn’t so easy to pick gold miners that provide these advantages.

If you take a look at some of the largest gold mining companies in the world, you’ll find that they have done a lousy job of generating leverage to the gold price. In fact some have even lost value! Just consider the performances of the following gold miners over the past 10 years and keep in mind that the gold price has more than tripled during this time frame.

  • Barrick Gold (ABX): Down 9%
  • Newmont Mining (NEM): Down 40%
  • Harmony Gold (HMY): Down 68%

Even if you look at some of the winners, and some of the stocks that gold mining investors tend to like, you’ll find that their performances over this time frame is lackluster.

  • Goldcorp (GG): Up 132%
  • Yamana Gold (AUY): Up 233%
  • Agnico Eagle (AEM): Up 192%

Of these six companies, only Yamana Gold has kept pace with the gold price. So, picking winning gold stocks is more difficult than it would appear on the surface. Indeed, it requires hours of research, due diligence and a little bit of luck for good measure.

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Deutsche Bank, HSBC Accused of Silver Fix Manipulation

By Patricia Hurtado
Bloomberg

silver160Deutsche Bank AG, HSBC Holdings Plc and Bank of Nova Scotia were accused in a lawsuit of rigging the price of billions of dollars in silver, an allegation similar to earlier suits involving the London gold fix.

The banks unlawfully manipulated the price of the metal and its derivatives, an investor claims in a complaint filed on Friday in federal court in Manhattan. The banks abused their position of controlling the daily silver fix to reap illegitimate profit from trading, hurting other investors in the silver market who use the benchmark in billions of dollars of transactions, according to the suit.

“The extreme level of secrecy creates an environment that is ripe for manipulation,” according to the complaint. “Defendants have a strong financial incentive to establish positions in both physical silver and silver derivatives prior to the public release of silver fixing results, allowing them to reap large illegitimate profits.”

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