GOLD stocks gathering momentum

[Ken]

See the following Gold stocks.

IGR
RSG
OXR
RCO
TBR
SBM
AVO


These gold stocks are all gathering some momentum.

Just a thought that Gold stocks could be again in favour for the end of 2007. predictions were a spot price of gold of $700 from the gold conference.

Just a thought that gold could be on the move again.

 

[Boyou]

Hi ken,
Could you elaborate on the "momentum" of these stocks? I have a few Goldies myself.Unfortunately none of them are on your list.

It would be great knowledge for me if you could give some clues about the ones listed..I hold MON.TAM and DGR..although the latter has a few more strings to its bow than Gold

Cheers

 

[purple]

Ken,

phew - the way Aus is going, most metals on the block - precious/base - is predicted to rise : nickel, iron ore etc etc. i fully agree that there is a great potential for upside, but the problem is that i've no more free cash to invest!!

i watched SGX break its downslide and start to run fast the last few weeks.

 

[Ken]

I got a list of gold stocks emailed to me. Basically it was a full analysis on gold and how much they are effected by the spot price of gold, etc had their costs, and any future upside.

It went through all the explorers producers and in the event gold price rises which will do best.

RSG has high leverage to gold price from memory. where if gold was $1000 an ounce it would be valued at $8.00.

I guess its a timing thing with all stocks. These are the gold stocks I have followed for various reasons from the reports. There would be gold stocks that have underperformed or lost ground... psv... disaster.

Momentum I am referring to gold as a sector. I listened to a brr report on gold and basically the directors seemed cheerful on the future of gold. From all reports people a lot of analysts are bullish on it.

Thus I would think come the end of the year as a sector Gold stocks should do well.

Much like the oil and gas sector has done, and the biotechs earlier in the year.

I am convinced that the market cause through periods where money is put into certain areas. When tin goes up everyone puts money into Tin. When iron ore goes up, people put money into Iron Ore.

If you're bullish on Gold for years end now is the time to be researching the gold stocks you want in on. Just a thought.

ATN is another one.

Lot of gold stocks moving.

 

[TheAbyss]

Is the email available at all Ken? Nice to have a view of the analysis etc.

I was reading (i think on this forum) that the price of gold has underperformed and in fact declined when you take into consideration the decline in the US$.

There is also another thread where Kennas had posted a chart comparing POG with the S&P 400. Not the thread i am thinking of but a similar line of thinking.

Whether to invest in Gold stocks is another question as most sectors get their turn sooner or later and you are usually an astute judge so i wont bet against you Ken.:alcohol:

 

[j4mesa]

Hi ken,

I think OXR gold production roughly only have 10% proportion of its production.
50% Copper, 40% Zinc. At this stage ,i would not classify as it is highly tied with gold.



(holding)

 

[Ken]

Yeah very true OXR are almost blue chip now.

They are a bit of a cash cow.

 

[purple]

well Ken i can't remember which stock now, but i remember seeing you post on a stock very early on which later ran hard. so I'm interested in what you have to say about this gold stuff.

yeah, is that email available?

btw the only gold I've got a finger on right now is the gold around my 4th finger.

 

[Ken]

I think I deleted the email.

Will let you know tomorrow if I still have it to forward on.

They always good to have as they compare the fundamentals of all the gold companies.

I am no guru. I am still learning.

I try and do a lot of research, but dont really understand drill results as such, so find it hard to move fast on announcements. I try and find out what they are drilling, or going to announce before hand.

Will keep you posted if I still have it.

 

[brerwallabi]

Two to keep an eye on are EQI and MDL, both held up very well today and have some very encouraging projects to come alive shortly.

EQI recently all time high and only just off it now and it pays a divvy (what a gold company paying a div?????)

MDL volume increasing and is recovering back up from the mid $1.20's to high $1.40's.

 

[purple]

SRI, with their joint venture with Newcrest (Ashburton project) and the Newmont Alliance.

DGM, a 40cent IPO trying to turn their 1.3million oz gold deposit to JORC standards, and then on to a Feasibility study.

 

[explod]

Liquidity Crisis Hits Markets and Gold

By Chris Laird
Jul 27 2007 11:13AM

www.prudentsquirrel.com



For the last several years, corporate buyouts, corporate stock buy backs and such, the Yen carry trade, and the mortgage derivatives markets have added tremendous liquidity to world financial markets. In tandem with this, the market analysts came to view a ‘world stock bull’ emerging, and even the most conservative market bears started to get into this world stock bull theme in their writings. The total amount of these sources of financing and liquidity in the last 2 years is over $5trillion, and has been one of the major supports for stock markets.

All of a sudden, these sources of liquidity are vanishing so fast, that market experts are amazed. This all came together in about 3 or 4 weeks after the Bear Stearns mortgage derivatives mess revealed how illiquid structured finance (derivatives in mortgages and such) can become – instantaneously. After that, investors started to flee from billions of dollars value of structured finance offerings in the last several weeks, and in the blink of an eye, almost the entire derivatives financing universe lost liquidity across the board. This is a prime cause of the latest world stock crashes.

Right now, virtually all sources of liquidity are drying up faster than anyone would have thought. Or, put another way, with corporate buy outs and stock buybacks at over $1 trillion in the last year alone – that is now almost gone as support for the markets. Investment banks such as Morgan and Goldman have had to park about 40 huge deals planned this year, as they have not been able to sell of the bonds and financing for these deals. This picture emerged in only about 3 weeks.

Continuing, the now well known debacle with mortgage derivatives – structured finance packaging risky mortgages into so called AAA rated tranches – have led to financial crises at Bear Stearns, Italease, killed deals with Morgan, and Goldman and others, and caused that sector to lose liquidity to zero basically, in a mere two or three weeks after the problems with Bears two now worthless hedge funds emerged. Now, the almost the entire mortgage derivative universe is tanking – and huge margin calls by banks to counter parties are happening- and no one wants to buy.

Then, the long threatening unwinding of the Yen carry trade is afoot, the Yen strengthening significantly now for two weeks, and as that continued apace, world stock markets finally started to fall apart – or crash – this week. Lots of cheap Yen are borrowed at about 1% and invested in every financial market imaginable. As the Yen rises, investors have to sell out stocks and whatever, and then pay back Yen at higher exchange rates – a sure loser. This effect is magnified by a factor of ten by hedge funds who use 10 to 1 or more leverage.

And the list of liquidity drying up goes on, but, only a few weeks after the Bear Stearns CDO (mortgage derivative mess) showed that no one wanted to buy CDOs any more, that rumbled through credit markets, and now, as one trader said, ‘there is a full blown liquidity crisis at hand in world financial markets’. This is not just about CDOs, but has now scared almost the entire structured finance (derivatives) universe because it showed how illiquid they can become- basically instantly illiquid.

And, as, in the case of Bear, or Italease, bankers have to call in loans from counterparties who hold their structured finance derivatives, and find that their counterparties cannot fulfill the ‘margin’ calls in many cases – read as a liquidity crisis.

Then, as this all is occurring, world financial markets are crashing, as the easy liquidity for corporate buyouts and buybacks, and mortgage financing, all of a sudden vanishes in only about 3 weeks. The speed which this liquidity crisis is emerging is amazing many.

Gold suffers because it is sold as a liquid asset by funds and investors to make margin calls among other things. As losses cascade in this latest world stock crash in Asia – down 2 to 4% last night, Europe – down about 2%, the US down 2% or so yesterday, gold (and precious metals) is dragged down with them.



My purpose in posting the above article is to caution that it may take some time and patience before gold and gold stocks begin to rise again (In fact they may fall considerable for a week or two). The dynamics unfolding above confirm that the rush to find the non-existent liquidity is just beginning. Gold as with other tangible assets will be the only store of wealth at the end of the game but the US market in particular being so large in it's influence will bring it all down for some time. Investments in Banks and the financial services are suicidal now. Some big players in Australia have recently borrowed well beyond thier means to buy into some huge overseas lemons. Without mentioning names one CEO of an Aussie bank, who is paid in eccess of $30mil.annual, may be scratching for his wage rise next year

However hold those gold stocks and the physical. When the penny finallyhits the floor gold will fly out of the universe

A loaded goods train at full speed takes a long time to stop.

cheers explod

 

[Uncle Festivus]

Excellent post Explod.

A rolling Moss will gather plenty of stones falling down the hill.

UF

 

[YOUNG_TRADER]

A loaded goods train at full speed takes a long time to stop.

A rolling Moss will gather plenty of stones falling down the hill.

UF

Hey guys, thought I'd add to the deep and meaningful oneliners

A Coyote on an Acme rocket can travel faster than a Road Runner, but unfortunatley is unable to manuvere as its does, Beep Beep!


While I do think we are having a correction, I don't think this is end game just yet. Regardless of this blip, ChIndia or even the BRIC (Brazil Russia India China) are still developing,

These "Yen carry trade" issues have been talked about so much just like the "invetiable decline of the USD" however I do not think the time is now,

I do believe these negative aspects of global economic conditions (as well as Subprime woes, Interest rates, Inflation, Oil etc etc) will take the spotlight for a few weeks, however the Bull will march on its a matter of when not if for me,

I will be cautious though over the next few weeks



p.s. Was it just me, or as a kid who else hated the fact that the Coyote never got the road runner?

 

[Mofra]

Brilliant article Explod.

If you re-read it with the understanding of just how unregulated some of the hedge funds are (and how poor some of the reporting practices are as well) it is more worrying the second time

 

[zt3000]

Hey guys, thought I'd add to the deep and meaningful oneliners

A Coyote on an Acme rocket can travel faster than a Road Runner, but unfortunatley is unable to manuvere as its does, Beep Beep!


While I do think we are having a correction, I don't think this is end game just yet. Regardless of this blip, ChIndia or even the BRIC (Brazil Russia India China) are still developing,

These "Yen carry trade" issues have been talked about so much just like the "invetiable decline of the USD" however I do not think the time is now,

I do believe these negative aspects of global economic conditions (as well as Subprime woes, Interest rates, Inflation, Oil etc etc) will take the spotlight for a few weeks, however the Bull will march on its a matter of when not if for me,

I will be cautious though over the next few weeks



p.s. Was it just me, or as a kid who else hated the fact that the Coyote never got the road runner?

Haha, YT, yeah that Beeping Beep Beep (replace the Beep with a obscenity lol) got on my nerves too ... i wished one of those big rocks or rockets or holes in the road would eventually get the road runner ... hahah

i guess it wasn't to be lol

 

[springhill]

Hi guys theres a speccie gold company im split over at the moment, just had BAD asx release on fri and has been absolutely hammered of late. Just wanting some thoughts and analysis of these drill results in relation to grade and depth;

8m @ 10.56 from 116m, including 3m @ 22.37
6m @ 3.0 from 183
5m @ 3.36 from 147
2m @ 4.39 from 160
2m @ 2.06 from 160
3m @ 3.3 from 160

With further drill target testing in the June quarter. Im not interested in ramping here (if these results are even ramp worthy?!? ) so i wont post the name of the company, but anyone interested can PM me, no probs.

 

[YOUNG_TRADER]

150m down is deep stuff, which suggests an underground mine.

I hate underground miners, especially gold! Why? see CRS, GTM, BDG, Sons of Gwalia, BMO and the Beaconsfield Mine


I much much much prefer open pit mines

Also those grades are avg and thin for such a deep depth

Just my thoughts

 

[Pommiegranite]

Good point YT.

Here's an example of shallow depth (Frontier Resources).

Andewa
This highly prospective project is located within an extinct stratovolcano /caldera that is ~9km wide, eroded and breached to the NW. It has widespread and substantial hydrothermal alteration of the multi-phase, calc-alkaline rocks contained within a 7,000m x 2,500m NW trending structural zone.
There are five known high stratigraphic level, undrilled prospects requiring substantial evaluation and many additional areas of interest. The project area is well located for possible project development near the northern coast of West New Britain Province.
Gold/ arsenic anomalous soil geochemistry covers an embayed triangular shaped area of about 18km².
Results have documented a 2,000m long vein system at the Komsen Prospect, that is well defined over 1,000m and contains a ‘higher’ grade core zone about 500m long. Immediate drilling targets are present and include both moderate grade vein and bulk mineable targets.
Several trenches containing visible gold and assays include 3m of 14.26 g/t gold, 15.6m of 5.12 g/t gold, 5m of 8.61 g/t + 5.9m of 3.86 g/t gold + 5.1m of 3.27 g/t gold, 9m of 6.80 g/t gold and 9m of 6.06 g/t gold. In addition, outcrop rocks assay to 58.4 g/t gold, often with high silver +/-lead/ zinc.

It is Frontier’s intent to attempt to fast track evaluation of the Andewa Prospects with the view to define moderate grade, possibly vat leachable resources for evaluation of near term development potential.
The 492km² EL also covers Mt Schrader to the west, both in a similar general tectonic setting to the Lihir Deposit.

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[barrett]

8m @ 10.56 from 116m, including 3m @ 22.37
6m @ 3.0 from 183
5m @ 3.36 from 147
2m @ 4.39 from 160
2m @ 2.06 from 160
3m @ 3.3 from 160

OP mines often go to these depths - but in this case because there are no intercepts closer to surface the stripping costs would be too high. So yes it would have to be an underground mine, with all their issues.

To be economic, underground gold mines usually need at least about a 4g/t intercept average, because of higher costs. So their deeper intercepts are a bit lightweight.

But for a tiny, early stage explorer these results could start to look interesting if they get more intercepts like the first one.