Weekend Show – Sat 8 Apr, 2017

By Cory The US Economy and Gold Market Coverage

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This week we had the Fed minutes, job numbers, and a geopolitical event all of which had minimal impact on the markets. The Fed minutes were the most significant for future market and economic moves. We got a little more info on a potential unwinding of the Fed’s balance sheet and the statement from Fed Presidents that stocks are over valued. We continue to see slow and boring markets with the precious metals remaining range bound. All of these topics are discussed in this weekend’s show.

The first hour is dedicated to economic data and the broad averages. The second hour we focus on the gold market and get a couple company updates.

We hope you all have a great weekend and for all the golf fans enjoy the Masters!

Segment 1 & 2: Jesse Felder kicks off the first 2 segments of the show. We discuss the Fed minutes and the comment on stocks being over valued. We also look at sectors where Jesse sees value for investors.
Segment 3: Trader Vic shares his opinion of how the boring markets is killing hedge funds and forcing more investors into passive investing.
Segment 4: We get an update on the Uranium sector from our go to Uranium guy Craig Parry.
Segment 5 & 6: Ned Schmidt, Founder of the Value View Gold Report focuses on the gold price and what he think will be the drivers through year end.
Segment 7: Aurvista Gold President and CEO Jean Lafleur updates us on the further consolidation of the Douay Gold Project.

Click here to visit the Aurvista website.

Segment 8: We get an update on Theralase from Roger White.

Click here for the full interview.

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Source:: The Korelin Economics Report

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Top 10 copper mining companies in 2016

By analyst

By Vladimir Basov

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Preliminary production by the top 10 copper mining companies compiled by IntelligenceMine totalled 9,448 kilotonnes of copper in 2016. That represents a 4% increase compared to 2015 and makes up ~49% of global copper production that reached 19,400 kt last year.

Six out of 10 companies increased their copper output while four of them declined. All companies in the Top 10 that disclose production costs reported significant reduction in copper unit costs.

1. Codelco

Trucks. Chuquicamata mine, Chile. Image: Codelco

Chilean state-owned miner Codelco holds first place worldwide in terms of attributable copper mine output with preliminary estimates of 1,827 kt of copper produced in 2016, including Codelco’s stake in Minera el Abra and Anglo American Sur S.A, – an approximate 3% decline on 2015 (1,891 kt).This drop was mainly due to lower production coming from El Abra, Anglo American Sur and Andina division, partially offset by higher production in Salvador, El Teniente and Radomiro Tomic divisions.

During 2016, Codelco’s cash cost was $1.26 per pound, compared to $1.39 per pound in 2015. A decrease of 9% primarily attributable to lower operational costs and favourable exchange rate movements.

2. Freeport

Cerro Verde copper mine, Peru. Image: Freeport

Headquartered in Phoenix, Ariz., Freeport-McMoRan Copper & Gold Inc. ranks second in global copper competition. It produced about 1,696 kt of copper in 2016 (based on net equity ownership, including discontinued operations), or about 12% higher compared to 2015 (1,514 kt).

This significant growth was achieved because of the Cerro Verde expansion project that achieved capacity operating rates during first-quarter 2016, as well as copper production increase at Grasberg operations currently mining the final phase of the Grasberg open pit, which contains high copper and gold ore grades.

Consolidated average unit net cash costs (net of by-product credits) for FCX’s copper mines (including Tenke) of $1.26 per pound of copper in 2016 were 18% lower than unit net cash costs of $1.53 per pound in 2015, primarily reflecting higher by-product credits and higher sales volumes from Cerro Verde and Grasberg.

3. Glencore

Drilling at Kamoto UG copper mine, DRC. Image: Katanga Mining

In third place, Swiss-based Glencore International plc with copper production from its own sources of ~1,288 kt (approximate number; efforts were made to calculate attributable Glencore’s total mined copper originated from Copper, Zinc and Nickel Operating Divisions, but due to a complex nature of the company’s assets, the exact figure might be slightly different), which is 2% lower than in 2015 (~1,311 kt), reflecting the production suspensions at African Copper, partly offset by improved grades and volumes at the South American assets.

Glencore’s copper unit production costs were $0.87 per pound in 2016.

4. BHP Billiton

Escondida copper mine, Chile. Image: BHP

Ranking fourth, Anglo-Australian BHP Billiton reduced its copper output by 6%, from 1,179 kt in 2015 to 1,113 kt in 2016 calendar year.This decrease was due to reduced volumes at Olympic Dam, maintenance at Pampa Norte and lower copper grades, as planned, at Antamina.

Significant reduction in C1 cash cost during half-year ended December 31, 2016 …read more

Source:: Infomine

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Bearish Reversal in Gold and Silver

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By Jordan Roy-Byrne CMT, MFTA

Precious metals ended a quiet week with quite a reversal. Gold surged above its 200-day moving average for the first time since November, only to lose the gains and then close below the 200-day moving average. Silver was already trading above its 200-day moving average before it moved higher but it then reversed strongly and even below its 200-day moving average. The miners, which have been much weaker than the metals were mostly unchanged but after opening higher. Today’s bearish reversal could signal an imminent decline in the entire complex or just signal that more time is needed before the next attempt at a breakout.

As you can see below, the metals reversed course as the 10-year Treasury yield formed a very bullish reversal around key 2.30% support. Precious metals have been tightly correlated to falling bond yields and today provided more evidence of that. It is also a concern that the metals formed their reversals at the 200-day moving average. Gold went from below to above then back below while Silver started the day above its 200-day moving average but closed below it, at $17.99. (Note, there appears to be a data error in the Silver chart).

Gold, Silver, 10-Year Yield

Turning to the miners, we see increased risk for an immediate decline. The failure and reversal in the metals is one reason. Another reason is the failure in the miners to hold Friday’s opening strength. At the open, GDXJ appeared to be breaking out of its triangle and GDX appeared to be breaking out from its flag formation. From false moves come fast moves and therefore we must be wary of selling in the miners next week. In particular, focus on GDXJ’s trendline support (blue arrow). If that breaks, GDXJ could test its March lows.

GDX & GDXJ Daily Bar Charts

Precious metals traders and investors should be on guard for more weakness in the days and weeks ahead. We certainly have been early with this call but Friday’s bearish reversal could be the catalyst that starts the decline. Metals and miners would need to close above today’s open to invalidate this analysis. Today’s reversal in the metals was not a surprise given recent relative weakness in the miners. For precious metals bulls and speculators, continue to be patient and wait for more weakness. For this year we want to buy weakness, not chase strength. We continue to look for high quality juniors that we can buy on weakness and hold into 2018. For professional guidance in riding this new bull market, consider learning more about our premium service including our current favorite junior miners.

Jordan Roy-Byrne, CMT, MFTA

Jordan@TheDailyGold.com

…read more

Source:: The Daily Gold

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Gold price touches post-Trump high, then rally fizzles

By analyst

By Frik Els

Gold bulls and safe haven buyers made the most of a disappointing jobs number in the US, worries about the fallout from US bombing in Syria and the latest terrorist attack in Europe to push gold 1.6% higher early on Friday.

Gold for delivery in June, the most active contract on the Comex market in New York with more than 36m ounces traded (a third higher than the usual daily average volumes) touched $1,273 an ounce, the highest since November 11 last year, shortly after the open.

But by the end of regular dealings had given up almost all of its gains to trade at $1,256.10 bringing its year-to-date gains to 9.1%.

Gold remains under-owned and macro conditions should continue to encourage broader participation

In a research note quoted in MarketWatch UBS strategists Joni Teves and Roque Montero cut their forecasts for the average gold price in 2017 by $50 to $1,300. The investment bank’s outlook for 2018 is even bleaker and now believes gold will average $1,325 next year. That’s down from $1,450:

“Firstly, the pickup in gold interest in Q1 was slower than we expected,” the UBS team says. “Secondly, a faster pace of Fed tightening than previously expected presents downside risks for gold, although more from the impact on sentiment than how we expect Fed policy to ultimately affect rates.”

Europe could produce some downside price risks, especially as the political clouds clear and economic data gets better. That in turn could push up the pressure on global bond yields, providing a better alternative to gold, said the strategists.

Still, they toss a bone to gold bugs: “Gold allocation remains valid amid moderate rates, modest growth acceleration and macro uncertainty … Gold remains under-owned and macro conditions should continue to encourage broader participation,” say Teves and Montero.

The post Gold price touches post-Trump high, then rally fizzles appeared first on MINING.com.

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Source:: Infomine

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Daily Market Wrap – Fri 7 Apr, 2017

🙁

By Cory

Wrapping up the markets for the week

Well that geopolitcal news didn’t last long for the markets. Gold could not hold above the $1260-$1265 level and the S&P did not break below 2350. On a day when fear could have entered the markets it only lasted a couple hours. Doc and I discuss what we are watching closely to tell us about future market moves.

As a side note – Apparently I have a lot of trouble saying “shallower” (at 5:54)

Everyone have a great weekend.

Download audio file (07_Apr_2017-Market-Wrap.mp3)

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Source:: The Korelin Economics Report

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How Student Debt Becomes an Asset-Backed Security

student-debt-asset-backed-security-1

By Samuel Taube

Ben Franklin once famously said, “An investment in knowledge pays the best interest.” And if you’ve ever grappled with student debt, you know that the quote is true both literally and figuratively.

Of course, Franklin was talking about the life-changing potential of education, and we don’t mean to discount that. But Franklin may have been more cynical about “investments in knowledge” if he was around to see the rise of student loan asset-backed securities (SLABS).

Student debt has been on the rise for decades now. Total debt and debt-per-borrower are both climbing at accelerating rates. That’s really bad news for students, but pretty great news for lenders and investors. “The best interest” indeed.

The total student debt balance in the U.S. currently stands at $1.26 trillion. It’s given rise to a $200 billion asset-backed securities market. SLABS are generally regarded as very safe investments with decent interest rates. But some economists see unnerving similarities to the securitization of subprime housing debt in the 2000s.

You’d think that the financial press would report on this sector more. But they’re too busy speculating about what the stock market will do next time Trump opens his mouth.

Let’s dive into the strange world of student debt securitization.
How Student Debt Gets Securitized
There are two forms of student debt: public and private. More than 90% of student loans are public, meaning that the government either directly loans the money or guarantees the loan.

Public student debt has more favorable conditions for the borrower, but less favorable conditions for the lender. But since the lender here is the U.S. government, it’s not a big issue. The government can borrow money very cheaply, so it charges lower interest rates on its student loans.

However, it also does not check borrowers’ credit before lending. As a result, there’s a slightly higher default risk for public loans. But the government still has never lost money on the program. The sheer number of outstanding loans virtually guarantees that the government collects more in interest payments than it loses from defaults.

The real action happens in the smaller private student debt market. Here, private lenders like Sallie Mae (Nasdaq: SLM) and Nelnet (NYSE: NNI) package private student debt into SLABS. They charge variable interest rates based on the student’s credit eligibility.

This makes private loans more expensive for borrowers, and it’s part of the reason why the market is smaller. Students don’t borrow privately unless they still need money after exhausting their available supply of public loans.

In both cases, student debt is refinanced by lending institutions and packaged into asset-backed securities. Then the SLABS are cut into segments called tranches. Finally, the tranches are rated by credit agencies and sold to investors. It’s a very similar process to mortgage debt securitization—with some similar risks. But more on that in a moment.

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Investing in Student Loan Asset-Backed Securities
SLABS pay respectable interest rates. They generally range between 1% and 7% per year. However, they’re tranched out in very high denominations meant for purchase by pension plans and institutions. It’s tough to buy SLABS …read more

Source:: Investment You

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The Smartest Insiders on Wall Street… With Unbeatable Track Records

By Alexander Green Over the last few columns, I’ve written about insider buying and its exceptional value as an indicator of future stock prices.

It’s not a difficult concept to understand.

Insiders – corporate board members, CEOs, presidents and other officers – have access to all sorts of material, nonpublic information. (Material in that it is relevant to the near-term prospects for the business – and nonpublic in that it is unavailable to anyone outside the company.)

When these insiders pile into their own companies’ stocks with their own money at current market prices, it’s a telltale signal.

Academic research, institutional research and my own three decades of research all show that stocks under accumulation by insiders outperform the market by a wide margin in the weeks that follow.

Last year, for instance, I wrote about how the CEO of JPMorgan Chase (NYSE: JPM), Jamie Dimon, was backing up the truck at his own company.

On February 11, 2016, he purchased 330,000 shares at $59.22, an investment of more than $17.7 million.

At the time, the stock market had just gotten off to its worst annual start in over a decade. The economy was wobbling. Share prices were falling. And pessimism was rampant.

But Dimon took the opposite point of view. After purchasing his shares, he wrote a Wall Street Journal op-ed piece in which he said…
America’s future has never been brighter. The U.S. has the best universities, hospitals and businesses on the planet, and our people are the most entrepreneurial and innovative in the world, from the factory floor to the executive suite. We have by far the widest, deepest and most transparent capital markets, and a citizenry with an unparalleled work ethic and “can do” attitude.
Some readers responded that Dimon was hopelessly out of touch with the world. And his $17.7 million purchase at a time when the market was crumbling?

An act of sheer foolishness.

But now it’s 14 months later. And we can more clearly judge what Dimon said and did.

The shares he bought at $59.22 now change hands at more than $86. For those keeping score at home, that’s a 14-month gain of 45%, netting Dimon profits of more than $8.9 million.

The same percentage gains were available to anyone who decided to ride Dimon’s coattails.

Just how good was his timing? Well, 2016 turned out to be a breakthrough year for JPMorgan. It earned a record $24.7 billion on revenue of $99.1 billion, reflecting strong underlying performance across all its business lines.

Who knew? Well, Dimon knew.

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The bank has also bought back $25.7 billion in stock at tangible book value over the last five years. (When you divide growing earnings by fewer shares outstanding, you get even stronger growth in earnings per share.)

Hmm… massive share buybacks and heavy insider buying by one of the smartest guys on Wall Street.

Who says nobody rings a bell at the bottom?

But here’s something even more surprising. My research team and I have done a thorough investigation of more than 7.8 million insider transactions going all the way back to 2003…

What we uncovered was shocking: …read more

Source:: Investment You

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Coking coal price close to $300 a tonne on Australian disruptions

By analyst

By Cecilia Jamasmie

Coking coal prices closed the week 86% higher, climbing 34% on Friday alone to $283.10 a tonne, after damage caused by a cyclone that struck Australia’s north-east coast in late March has put supply at risk.

One of the largest disruption to Australia’s coking coal exports in six years has caused a record surge in prices.

Major producers including BHP Billiton and Peabody Energy have declared force majeure after rail lines were closed due heavy rain and landslides, which has pushed top buyers such as China and Japan to look for supplies elsewhere.

Queensland, the worst hit by Cyclone Debbie, accounts for more than 50% of global seaborne coking coal supplies and is major provider to China’s steel industry.

Analysts at Standard & Poor believe disruptions in the area could mean between 15 million and 20 million tonnes of steelmaking coal, and about and 3 million tonnes of thermal could be eliminated from global markets.

The last time Queensland was hit by a cyclone six years ago, coking coal prices hit a record high of $330 a tonne.

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Source:: Infomine

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The Dollar Is Crashing: These FOUR Execs Are Laughing…

US Dollar 2017-04-05 (002).png

By Zach Scheidt

This post The Dollar Is Crashing: These FOUR Execs Are Laughing… appeared first on Daily Reckoning.

Take a look at the list below…

David Taylor, CEO of Procter & Gamble
Jeff Immelt, CEO of General Electric
André Calantzopoulos, co-CEO of Philip Morris
Louis C. Camilleri, co-CEO of Philip Morris

What do all four of these multi-millionaire executives have in common?

They’re all smiling as the U.S. Dollar breaks down.

You see, ever since topping in December, the value of the U.S. Dollar has been trading lower. And as this trend picks up momentum, it will send shock waves throughout the global economy.

So why are these four execs celebrating? Let’s talk about what’s happening with the greenback…

The Dollar is moving lower as it becomes clear that the Fed is less likely to aggressively hike rates this year. In Fed announcements and minutes, Janet Yellen has made it clear that the Fed will be very cautious going forward.

Yellen is worried that raising interest rates “too soon” will hurt the modest growth in the U.S. economy. And with so much uncertainty in the market this year, I wouldn’t even be surprised to see the Fed resort to lowering rates in the not-too distant future.

As the market comes to terms with a more cautious Fed, the Dollar is sinking.

The reason is simple. For years the market has been waiting for higher interest rates. And higher interest rates strengthen the U.S. Dollar — after all you’d have to pay more to borrow it.

But the opposite is true with lower interest rates. With rates expected to stay lower for longer the outlook for the Dollar weakens.

You can see the start of the U.S. Dollar’s breakdown in the chart below.

The Dollar is heading downward… and that makes a certain subset of executives giddy.

It’s not because these executives relish the lower value of the dollars in their bank accounts. No, it’s because a weaker U.S. Dollar will boost profits for their respective companies. (And in turn, their executive compensation, their stock options, and their corporate empires will all increase in value.)

Here’s how it works…

Most investors don’t realize that a weak U.S. Dollar actually benefits American companies that do business overseas. But the truth is, a weak Dollar actually does wonders for companies who sell products or services to international customers.

There are two major reasons why a weak U.S. Dollar helps these companies…

First, a weak U.S. Dollar makes American companies more competitive. This is true for companies that sell products around the world, for service companies that have customers in other parts of the world, and for any U.S. business that generates revenue in non-U.S. currencies.

Think about a company that sells aircraft engines to an international customer base.

This company has expenses associated with each engine it produces. For simplicity sake, let’s say that it costs $1 million to produce an engine, and the company targets a $1.2 million selling price. This way the company can turn a profit on each engine it produces.

In December, one euro could be exchanged for $1.04 in …read more

Source:: Daily Reckoning feed

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