Gemfields steps up fight against takeover by largest investor

By analyst

By Cecilia Jamasmie

Emeralds and rubies miner Gemfields (LON:GEM) said Wednesday a group of independent directors recommended shareholders to reject a takeover bid by largest investor Pallinghurst Resources Limited.

The Johannesburg-listed private equity firm wants to buy all the shares it doesn’t already own in Gemfields, but an “independent committee” formed by the precious stones miner has determined the offer “significantly undervalues the company, its unique asset base and its leading position in the coloured gemstone sector.”

Pallinghurst Resources wants to buy all the shares it doesn’t already own in Gemfields, but miner said offer is “derisory.”

Shares in Gemfields fell on the news, closing 1.10% down in London to 33.75p.

The group of advisers is made up of chairman Graham Mascall, chief executive Ian Harebottle, chief financial officer Janet Boyce and non-executive directors Clive Newall and Finn Behnken.

Despite their close ties with Gemfields, the company said it considered the committee to be “free from conflicts of interest in respect of the unsolicited offer”.

Gemfields is the world’s biggest coloured gems producer, accounting for roughly a third of the world’s emeralds and rubies from two mines in Mozambique and Zambia. The miner also owns the luxury Fabergé brand.

Pallinghurst also has interests in the platinum and manganese sector in South Africa, but Gemfields is the assets where it has the largest share. The firm has until June 16 to release full details of its offer for Gemfields under Takeover Panel rules.

The post Gemfields steps up fight against takeover by largest investor appeared first on MINING.com.

…read more

Source:: Infomine

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China’s Next Step to Destroy the Dollar

Dollar Gold New Levels Bloomberg

By Byron King

This post China’s Next Step to Destroy the Dollar appeared first on Daily Reckoning.

China is currently modifying the terms of its oil trade with Saudi Arabia. Specifically, China is working on a deal to pay for Saudi oil using Chinese yuan. This effort poses a direct threat to the security of the dollar.

If this China-Saudi deal happens — yuan for oil — it’s another step closer to the grave for the petrodollar, which has dominated global finance since 1974. You can revisit Jim Rickards article about the Assault on the Dollar, here.

To recap, the petrodollar is weakening because the dollar is losing power as the world’s reserve currency. This is similar to the way pounds sterling gradually fell out of favor during the decline of the British Empire. The decline may take a long time, but what we’re seeing today is another step in the death march of the dollar.

I’ll tell you how to protect your wealth in dollars after I explain this shift.

Since 1974, Saudi has accepted payment for almost all of its oil exports — to all countries — in dollars. This is due to an agreement between Saudi and the U.S., dating back to the days of President Nixon.

Beginning about 15 years ago, China ceased being self-sufficient in oil, and began buying Saudi oil. As per all Saudi customers, China had to pay in dollars. Even today, China still pays for Saudi oil in U.S. dollars and not yuan, which perturbs China’s leaders.

Since 2010, China’s total oil imports have nearly doubled. According to Bloomberg News, China has surpassed the U.S. as the world’s largest oil importing nation. Here’s a chart, showing the trend.

As China imports more and more oil, the idea of paying for that oil in yuan instead of dollars becomes more critical. China does not want to use dollars to buy oil. So, China is beginning to squeeze Saudi over the form of currency in which their oil trade is conducted. China is doing this by steadily lowering its oil purchases from Saudi.

Presently, China’s three top oil suppliers are Russia, Saudi and the West African nation of Angola. Backing-up these three key suppliers are a combination of sources in Iran, Iraq and Oman, which help to diversify China’s oil-supply chain.

In the past few years, China has shifted oil purchases away from Saudi, and Russia’s oil exports have risen from 5% to 15% of the Chinese total.

China imports more oil from Russia, Iran, Iraq and Oman; less from Saudi.

Saudi’s share of Chinese imports has dropped from over 25% in 2008, to under 15% now. Meanwhile, Saudi competitors Russia, Iran, Iraq and Oman are selling more oil to China.

Saudi would like to reverse this declining trend of oil-trade with China. However, these kind of major oil flows don’t just happen in a vacuum.

There’s a good reason why Russian oil sales to China are increasing. As you’ll see in Nomi’s article, trade and financial services are often closely linked. …read more

Source:: Daily Reckoning feed

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A $19 Investment in the Most Lucrative AI Stocks

ai-stocks-cheap-investment-1

By Matthew Carr

Back in December, I wrote that one of the best sectors to invest in this year is artificial intelligence (AI).

And that has proven to be the case so far. You don’t even have to look at the stock market to see the rising importance of this emerging technology.

Every dinner party I go to… every barbecue I attend… every birthday party or chat over coffee, the subject ultimately turns to AI.

We’re even inundated now with TV commercials about AI. You’ve probably seen an ad for IBM’s (NYSE: IBM) Watson or Intel’s (Nasdaq: INTC) “The Future of Artificial Intelligence” with The Big Bang Theory’s Jim Parsons.

And there’s plenty of reason for the excitement… The enterprise AI systems market is expected to grow from $358 million in 2016 to more than $31 billion by 2025.

So far this year, a lot of the big-name AI companies are obliterating the market…

Shares of Amazon (Nasdaq: AMZN), Apple (Nasdaq: AAPL), Microsoft (Nasdaq: MSFT), Facebook (Nasdaq: FB), NVIDIA (Nasdaq: NVDA) and Alphabet (Nasdaq: GOOG) are all up double digits in 2017.

In fact, Amazon, Apple, NVIDIA and Facebook are all up more than 30%.

Shares of these companies are soaring, setting all-time highs as the markets do the same. And since these companies are often the largest components of the Dow Jones, S&P 500 and Nasdaq composite, that’s not too surprising.

But many of these stocks are trading for nearly $1,000 each.

I believe share price shouldn’t be an obstacle for investors. I’m a proponent of equal weighting in a portfolio. So it doesn’t matter if you own three shares of a company or 1,000. All that matters is that you’re investing the same dollar amount in each.

But for investors who don’t want to follow a whole list of AI stocks, there are more affordable and simpler routes.

[iu-adbox]

One such alternative taps into another aspect of the AI revolution… Robots.

According to a study by Oxford University and the Oxford Martin School, 47% of jobs in the U.S. are at risk of being automated.

Amazon already has a robot workforce larger than some countries’ armies. But the largest market for robots has been in Asia… and that will likely be the case for the near future. Between 2012 and 2015, the deployment of robots in Asia increased 70%.

The Global X Robotics & Artificial Intelligence ETF (Nasdaq: BOTZ) is keeping pace with more expensively priced AI plays…

Year to date, the Global X ETF is up 24%. That’s several times the performance of the Dow Jones Industrial Average and 10 percentage points better than the Nasdaq composite.

The largest holding in the ETF is Intuitive Surgical (Nasdaq: ISRG).

For those who don’t know, Intuitive Surgical was into robots long before the current bull market. And these robots are for exactly what the company’s name suggests… surgery. Shares of Intuitive Surgical are up more than 44% this year. But, like Amazon and Alphabet, they’re trading for more than $900.

So the Global X ETF is a much more affordable way to get exposure. It currently trades for less than …read more

Source:: Investment You

The post A $19 Investment in the Most Lucrative AI Stocks appeared first on Junior Mining Analyst.

Are You Wasting Your Time with This Weird Indicator?

Get ready Dow

By Greg Guenthner

This post Are You Wasting Your Time with This Weird Indicator? appeared first on Daily Reckoning.

Everyone went gaga over Dow 20,000.

The financial media had a field day when the Dow crossed the magical 20,000 mark on a cold morning back in February.

But the Dow teased investors countless times before finally making the leap. The financial press was already whipped into a frenzy by December, only to have to wait two agonizing months for the breakout.

“Does that mean it’s time to bet against the market?” we asked back in December 2016.

Just look at that bullish headline. Barron’s was bulled up on stocks again. The party hats were on order. If we were smart, we’d bet against the bulls, right?

I don’t think so.

Look, there are tons of dumb market sentiment indicators out there. But there’s one in particular that folks take way too seriously: the magazine cover indicator.

Today, I’m going to reveal the truth about the “magazine cover indicator” and why so many investors make such a big mistake when they try to use it as a timing tool.

Here’s how it’s supposed to work: When some major magazine like Business Week is bearish on stocks or some other asset class, you should start getting bullish. If the cover is bullish, that’s your warning to get the heck out.

In other words, when the mainstream press says one thing, do another.

But is it a reliable strategy?

Nope.

The myth of the “magazine cover indicator” got its start with the infamous 1979 “Death of Equities” Business Week cover. America had just endured the stagflation seventies—and no one in command of his senses could fathom a return of a bull market for stocks.

And we all know how that turned out…

The “Death of Equities” cover didn’t perfectly sync up with the raging bull that would follow. But it was damn close.

So there you have it. Dead simple. All you need to do is look at the mainstream media, do the opposite just like George Costanza would, and presto—instant riches!

If only…

There are some critical nuances you need to understand before you begin relying on anecdotal sentiment readings like the magazine cover indicator.

First up is hindsight. Anybody can pick out the media hype leading up to a market extreme when they’re looking in the rear view mirror. Yes, there’s the “Home $weet Home” Time magazine cover from 2005 – the very peak of the housing bubble. And if you want to get a little creative, you also have Amazon CEO Jeff Bezos getting the “Man of the Year” nod from Time back in 1999, just before the dot-com boom went bust.

But here’s the thing… There were plenty of previous bullish cover stories on housing leading up to the Time article that could have marked the top. Same goes for the 90s dot-com bubble. These stories weren’t rare. But as it turns out, they were worthless as a contrarian indicator…

Did any of your genius contrarian friends sell their positions at any of these previous points …read more

Source:: Daily Reckoning feed

The post Are You Wasting Your Time with This Weird Indicator? appeared first on Junior Mining Analyst.

Why Michael Kors Stock Is Rated a “Strong Buy” Today

michael-kors-stock-michael-kors-earnings-2

By Rob Otman

Michael Kors (Nasdaq: KORS) is a $6 billion company today. Investors that bought shares one year ago are sitting on a -13.21% total return. That’s below the S&P 500’s return of 17.39%.

Michael Kors stock is underperforming the market. It’s beaten down, but it reports earnings tomorrow. So is it a good time to buy? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.

Our system looks at six key metrics…

[iu-adbox]

✓ Earnings-per-Share (EPS) Growth: Michael Kors reported a recent EPS growth rate of 2.47%. That’s above the textiles, apparel and luxury goods industry average of -2.07%. That’s a great sign. Michael Kors’ earnings growth is outpacing that of its competitors.

✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the textiles, apparel and luxury goods industry is 86.41. And Michael Kors’ ratio comes in at 8.03. It’s trading at a better value than many of its competitors.

✓ Debt-to-Equity: The debt-to-equity ratio for Michael Kors stock is 7.97. That’s below the textiles, apparel and luxury goods industry average of 62.01. The company is less leveraged.

✓ Free Cash Flow per Share Growth: Michael Kors’ FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.

✓ Profit Margins: The profit margin of Michael Kors comes in at 20.05% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Michael Kors’ profit margin is above the textiles, apparel and luxury goods average of 7.17%. So that’s a positive indicator for investors.

✓ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Michael Kors is 39.52%, and that’s above its industry average ROE of 17.77%.

Michael Kors stock passes six of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Strong Buy.

Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth. For more details, click here. …read more

Source:: Investment You

The post Why Michael Kors Stock Is Rated a “Strong Buy” Today appeared first on Junior Mining Analyst.

Daily Market Wrap – Tue 30 May, 2017

By Cory Gold and the VIX to the next Fed meeting

Another slow day in the markets so I take a look ahead to what will drive gold and the markets into the Fed meeting and beyond. With investors largely ignoring weak economic data and money continuing to flow out of the USD this summer could see a change of course.

Download audio file (2017_05_30-Market-Wrap.mp3)

…read more

Source:: The Korelin Economics Report

The post Daily Market Wrap – Tue 30 May, 2017 appeared first on Junior Mining Analyst.

Gold’s Next Spike

By James Rickards

The current rally in gold began on December 15, 2016 at $1,128/oz. For over 5 months, gold has Adhered to a pattern in which each new high price is above the one before (“higher highs”), and each drawdown settles at a price above the one before (“higher lows”), If this pattern persists, the next high will be above $1,300/oz. Gold could rally further from there based on Fed policy.

The question for investors today is: Where does the gold market go from here?

We’re seeing a persistent excess of demand over new supply. China and Russia alone are buying more than 100% of annual output each year. That’s on top of normal demand by individuals and the jewelry industry. This means that demand has to be satisfied from existing stocks in vaults.

But western central banks have all but stopped selling in recent years. The last large sales were by Switzerland in the early 2000s and the IMF in 2010.

Private holders are keeping their gold also. On a recent visit to Switzerland, I was informed that secure logistics operators could not build new vaults fast enough and were taking over nuclear-bomb proof mountain bunkers from the Swiss Army to handle the demand for private storage.

With gold sellers disappearing and large demand continuing, the price will have to go up to clear markets — regardless of how much “paper gold” is dumped.

Geopolitics is another powerful factor. The crises in North Korea, Syria, Iran, the South China Sea, and Venezuela are not getting better; they’re getting worse. The headlines may fade in any given week, but geopolitical shocks will return when least expected and send gold soaring in a flight to safety.

Fed policy tightening is normally a headwind for gold. But, the last two times the Fed raised rates — December 14, 2016 and March 15, 2017 — gold rallied as if on cue. Gold is the most forward-looking of any major market. It may be the case that the gold market sees the Fed is tightening into weakness and will eventually over-tighten and cause a recession.

At that point, the Fed will pivot back to easing through forward guidance. That will result in more inflation and a weaker dollar, which is the perfect environment for gold. Look for another Fed rate hike on June 14, and another gold spike to go along with it.

In short, all signs point to higher gold prices in the months ahead. I look for a short-term rally to $1,300 in the next month, and then a more powerful surge toward $1,400 later this year based on Fed ease, geopolitical tensions, and a weaker dollar.

The gold rally that began on December 15, 2016 looks like one that will finally break the bear pattern of lower highs and lower lows, and turn it into the bullish pattern of higher highs and higher lows.

Regards,

This post Gold’s Next Spike appeared first on Daily Reckoning.

[Ed. Note: Jim Rickards’ latest New York Times bestseller, The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis, is out now. Learn how to get your free copy – click HERE. This vital book transcends geopolitics and rhetoric from the Fed to prepare you for what you should be watching now.]

Is the latest gold rally for real?

Investors can be forgiven for asking that question. Gold reached an all-time high dollar price of $1,898 per ounce on September 5, 2011. Then it began a relentless four-year, 43% plunge that took it to $1,058 on November 27, 2015.

Of course, gold did not go down in a straight line. There were numerous strong rallies along the way.

Gold rallied 13%, from $1,571 in June 2012 to $1,780 in October 2012. Then gold rallied 15%, from $1,202 in December 2013 to $1,381 on March 2014. Gold rallied 22.5% again, from $1,058 in November 2015 to $1,366 in July 2016, just after the Brexit vote in the UK.

If you were fortunate enough to buy each dip and sell at each high, lucky you. I don’t know anyone who actually did that. More common behavior is to buy near the interim tops on euphoria, and sell at the interim lows on depression. That’s a great way to lose money, but unfortunately it’s exactly how many investors behave.

With that said, no one can blame investors for being discouraged and skeptical about the price action in gold. Every rally since late-2011 was followed by a sickening plunge.

Perhaps the worst plunge was the dizzying 24% plunge, from $1,607 to $1,223 per ounce, in a brief 15-week span between March 22 and July 5, 2013. That period included the notorious “April Massacre” when gold fell over 5% in just two trading days.

Each time gold experienced one of these major reversals, investors were quick to claim price manipulation by dark forces, usually central banks, using highly-leveraged “paper gold” dumps on the commodity futures exchanges.

Actually there is strong statistical and forensic evidence to support the gold price manipulation claims, as I explain in my 2016 book, The New Case for Gold. China has a keen interest in keeping gold prices low because it is on a multi-year, multi-thousand ton buying spree. If you were buying 3,000 tons in a thin market, you’d want low prices too.

Of course, all of that will change when China reaches its gold reserve target of 10,000 tons — surpassing the United States. At that point, it will be in China’s interest to become more transparent and let the price of gold soar, which is another way of saying the value of the dollar is in free-fall.

China’s endgame may still be a few years away. Meanwhile, there are other more prosaic explanations for the long decline in gold prices from 2011 to 2015.

The best explanation I’ve heard came from legendary commodities investor Jim Rogers. He personally believes that gold will end …read more

Source:: Daily Reckoning feed

The post Gold’s Next Spike appeared first on Junior Mining Analyst.

The Greatest Financial Bubble in History

By James Rickards

This post The Greatest Financial Bubble in History appeared first on Daily Reckoning.

China is in the greatest financial bubble in history. Yet, calling China a bubble does not do justice to the situation. This story has been touched on periodically over the last year.

China has multiple bubbles, and they’re all getting ready to burst. If you make the right moves now, you could be well positioned even as Chinese credit and currency crash and burn.

The first and most obvious bubble is credit. The combined Chinese government and corporate debt-to-equity ratio is over 300-to-1 after hidden liabilities, such as provincial guarantees and shadow banking system liabilities, are taken into account.

Paying off that debt requires growth, but the growth itself is fueled by more debt. China is now at the point where enormous new debt is required to achieve only modest new growth. This is clearly non-sustainable.

The next bubble is in investment instruments called Wealth Management Products, or WMPs. You may remember hearing about in the Daily Reckoning and also covered in Bloomberg’s article China Is Playing a $9 Trillion Game of Chicken With Savers.

Picture this. You’re a middle-class Chinese saver and you walk into a bank. They offer you two investment options. The first is a bank deposit that pays about 2%. The other is a WMP that pays about 7%. Which do you choose?

In the past ten years, bank customers have chosen almost $12 trillion of WMPs. That might be fine if WMPs were like high-quality corporate or municipal bonds. They’re not. They’re more like the biggest Ponzi scheme in history.

Here’s how they work. Proceeds from sales of WMPs are loaned to speculative real estate developers and unprofitable state owned enterprises (SOEs) at attractive yields in the form of notes.

So, WMPs resemble collateralized debt obligations, CDOs, the same product that sank Lehman Brothers in the panic of 2008.

The problem is that the borrowers behind the WMPs can’t pay their debts. They’re relying on further bubbles in real estate or easy credit from the government to meet their interest obligations.

What happens when a WMP matures? Usually the bank customer is encouraged to rollover the investment into a new WMP. What happens if the customer wants her money back? The bank sells a new WMP to another customer, then uses those sales proceeds to redeem the first customer. The new customer now steps into the shoes of the first customer with the same pile of bad debt. That’s where the Ponzi dynamic comes in.

Simply put, most of the debts backing up the WMPs cannot be repaid, which means it’s just a matter of time before the WMP market goes into a full meltdown and triggers a banking panic.

Finally, there is an infrastructure bubble. As explained in more detail below, China has kept its growth engine humming mostly with investment instead of aggregate demand from consumers.

Investment is fine if it is directed at long-term growth projects that produce a positive expected return …read more

Source:: Daily Reckoning feed

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Chris Temple from The National Investor – Tue 30 May, 2017

By Cory Is liquidity becoming a problem for the Fed and markets

Another slow day for the markets so we take a step back and look at how these markets continue to hit all time highs. Chris Temple kicks off today with a discussion of how the markets ignore data and news but certain sectors are telling us otherwise… Look at treasuries, oil, base metals, and inflation data.

Click here to visit Chris’s website.

Download audio file (2017_05_30-Chris-Temple.mp3)

…read more

Source:: The Korelin Economics Report

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