Mining Shares Lead Stock Losses

  • Cartoon of the Day: Falling Stocks - falling bull cartoon 10.13.2014
  • Copper, zinc, coal all tumble on deepening China concern
  • Credit Suisse lowers target prices for diversified miners

Mining shares including Glencore Plc led a slump in European equities as metals prices tumbled on fears that an economic slowdown in China, the world’s biggest consumer of raw materials, is deepening.

Glencore fell as much as 10 percent to a record 107 pence in London trading. Anglo American Plc, Antofagasta Plc and ArcelorMittal dropped more than 6 percent, dragging the regional benchmark Stoxx Europe 600 Index lower. KAZ Minerals Plc plunged almost 18 percent, the most since January, to a record low.

“Until China demand and emerging-market currencies find a floor, it will remain challenging to put an absolute floor on commodity prices,” Credit Suisse Group AG analysts led by Liam Fitzpatrick wrote in a note Tuesday.

The bank cut its price estimates for large diversified miners including Glencore and BHP Billiton Ltd., which said on Tuesday it’s planning to sell hybrid securities to help refinance near-term liabilities. Stainless steel producer Outokumpu Oyj sank as much as 16 percent after saying third-quarter delivery volumes may be 10 percent lower than the previous quarter.

Growth Cut

The Asian Development Bank reduced its growth forecasts for China and said the country’s declining appetite for energy, metals and other raw materials would hurt commodity-focused export economies like Mongolia and Indonesia. China is set to grow at its slowest pace in a quarter century this year even after five central bank interest-rate cuts and fiscal stimulus.

Copper declined 2.5 percent to $5,139 a metric ton. Zinc sank as much as 1.8 percent to $1,628 a ton, the lowest in five years. European coal for 2016 dropped below $50 a ton for the first time.

Glencore, which sells all three commodities, was down 8.7 percent at 108.60 pence by 11:02 a.m. in London trading, after earlier touching the lowest since it began trading in May 2011.

“Glencore is a bet on copper, and weakness in metal prices is sending tremors through Glencore’s shareholders,” said Richard Knights, a mining analyst at Liberum Capital in London.

Gold Miners : Burkina Faso Update


IAMGOLD* (IMG : TSX : $2.25), Net Change: 0.10, % Change: 4.65%, Volume: 2,077,314

Endeavour Mining* (EDV : TSX : $0.62), Net Change: 0.01, % Change: 1.64%, Volume: 1,560,390

Franco-Nevada* (FNV : TSX : $57.45), Net Change: 0.94, % Change: 1.66%, Volume: 692,493

Sandstorm Gold* (SSL : TSX : $3.80), Net Change: 0.25, % Change: 7.04%, Volume: 142,864

True Gold Mining* (TGM : TSX-V : $0.16), Net Change: -0.02, % Change: -11.43%, Volume: 2,440,473

Roxgold* (ROG : TSX-V : $0.63), Net Change: -0.02, % Change: -3.08%, Volume: 273,497

Orezone Gold* (ORE : TSX : $0.26), Net Change: -0.01, % Change: -3.77%, Volume: 41,855


Media sources are reporting that a military junta has taken power in Burkina Faso following the arrest of interim President and Prime Minister. The transitional government has also been disbanded, only four weeks before elections (planned for October 11). The military guard that is leading the coup is the RSP (Régiment de sécurité présidentielle), loyal to the ousted leader Compaore who has fled to Ivory Coast almost a year ago.

Demands from the RSP have not yet been tabled. While there have been no reported impacts to mining operations, companies with exposure to Burkina Faso are likely to face headwinds in the near term. Among producing companies  IAMGOLD and Endeavour Mining have the largest exposure to Burkina Faso at 45% and 32% of NAV, respectively.

The Canaccord Genuity Metals & Mining Team notes that for IAMGOLD, approximately 45% of NAV and 43% of YTD gold production is sourced from Burkina Faso and is its lowest cost owner-operated asset. Endeavour Mining is less exposed at 32% of NAV; however, only 13% of 2015’s estimated gold production is sourced from the country. In the Team’s opinion, Hounde is already heavily discounted by the market and a positive construction decision is unlikely in the current market environment. The bigger impact would be Youga which is in production but only 1% of NAV.

Endeavour has a solid operating base in Mali, Ghana, and Ivory Coast, and we believe that the coup should have minimal impact to the company in the near term. Streaming companies Franco-Nevada and Sandstorm Gold both have streams on True Gold’s Karma project in Burkina Faso; however, company-wide exposure for the streamers remains small. For Franco-Nevada, Karma represents 1.7% of NAV.

In Sandstorm’s valuation, Karma represents approximately 6% of NAV; however, this would decline to 4% if you net out the money that still needs to be paid to True Gold. If anything, this perfectly showcases what royalty/streaming companies are all about – a defense against government coups and instability and the general risk. Development companies Roxgold and Orezone have 100% exposure and may see development delays depending on how the coup impacts logistics and workers in the country (via general strikes, for instance).

Gold miners on ‘knife edge’ : “Gold is on the ropes”

Gold miners on ‘knife edge’ as slump wipes out $19-billion

Gold’s slump to a five-year low this month is squeezing the world’s biggest producers of the precious metal, already struggling to rein in costs and pay down debt.

A rout in bullion has sapped investor confidence in gold miners, sending the benchmark 30-member Philadelphia Stock Exchange Gold and Silver Index of the largest producers to its lowest since 2001. A five-day losing streak through Monday wiped $19-billion off the index, which includes Barrick Gold Corp. and Newmont Mining Corp.

Reuters Jul. 22 2015, 6:27 AM EDT

 India goes cold on gold

The metal’s plunge is eroding profits at mines across the globe and stressing balance sheets in an industry where the biggest producers are weighed down by a record debt load of $31.5-billion. Gold futures in New York are heading for their longest losing streak since 1996 amid increasing speculation U.S. interest rates will climb this year, weakening the appeal of bullion.

“The whole industry is on a bit of a knife-edge,” said James Sutton, a portfolio manager at JPMorgan Chase & Co.’s $2-billion Natural Resources Fund who is underweight gold stocks. “They are making very, very small margins. Really everybody in the industry needs higher prices. You’re going to see some companies run into trouble.”

The industry, on average, needs about $1,200 an ounce to break even when all costs are considered, according to Sutton. Bullion for immediate delivery declined to $1,086.18 an ounce on Monday, the lowest since March 2010. It fell 0.9 per cent to $1,091.20 an ounce at 2:56 p.m. in London.

Wood Mackenzie Ltd. said Wednesday that about 10 per cent of gold miners would be loss-making with bullion at $1,100 an ounce.

Investors Souring

Investors have soured on gold miners as they battled to contain ballooning costs and the outlook for prices dimmed. Some producers have been obliged to enact bailout plans. Petropavlovsk Plc, a Russian miner once valued at more than $3-billion, was forced to tap shareholders for emergency funds earlier this year after its stock slid 99 per cent in five years.

“There’s a lot of pain to be taken in this sector,” Clive Burstow, who helps manage $44-billion at Baring Asset Management in London, said by phone. “Everyone has had to rationalize balance sheets, you’ve seen management turnover, you’ve seen dividends being either pared back or cut.”

Companies like Randgold Resources Ltd., a producer in West Africa, and Vancouver-based Goldcorp Inc. are best-positioned to weather the price slump, Burstow said.

Randgold, which built its business making its own discoveries in Mali, Senegal and Ivory Coast, has a war chest of at least $500-million to buy assets from distressed rivals.

“Another $50 off the gold price and this industry is toast,” Randgold Chief Executive Officer Mark Bristow said July 15, when bullion traded at about $1,150 an ounce.

1986 Low

The Philadelphia Stock Exchange Gold and Silver Index posted its biggest one-day fall in seven years on Monday, with Toronto-based Barrick declining to the lowest since 1986. The benchmark has tumbled 29 per cent in 2015, led by North American miners, with IAMGold Corp. down 51 per cent, Yamana Gold Inc. 48 per cent and Kinross Gold Corp. 41 per cent.

“This is a correction that has to take its course,” Markus Bachmann, CEO of resources-focused investor Craton Capital, said in a phone interview from Johannesburg. “Corrections do not stop halfway. Fundamentals do not matter. A lot of it is sentiment driven.”

Prices could fall below $1,000 an ounce for the first time since 2009, Jeffrey Currie, Goldman Sachs Group Inc.’s New York– based head of commodities research, told Bloomberg in an interview Tuesday.

“Gold is on the ropes,” Ross Norman, CEO of dealer Sharps Pixley, said in an interview with Bloomberg Television. “I suspect we’ll have another bear raid before long. I don’t think the bears have finished their game, they’ll keep punching it until it stops moving.

Protect Your Portfolio Profits

Precious Metals Routed as Gold Extends Decline

Gold Extends Decline to Five-Year Low

Precious metals were routed as gold sank to the lowest in more than five years on prospects for higher U.S. rates and after China said it held less metal in reserves than some analysts expected. Platinum plunged to the lowest since 2009, while silver and palladium lost more than 2 percent.

Bullion for immediate delivery tumbled as much as 4.2 percent to $1,086.18 an ounce, the lowest price since March 2010, and traded at $1,106.90 at 10:54 a.m. in Singapore. Miners’ equities fell as prices extended a fourth weekly loss.

Gold has fallen out of favor with investors as Federal Reserve Chair Janet Yellen prepares to raise rates this year, boosting the dollar. While China updated its bullion reserves on Friday for the first time since 2009, the 57 percent increase to 1,658 metric tons was smaller than had been estimated. Gold’s plunge raises the prospect of third straight annual drop.

“The market is in one of its bear phases, where any news is bearish news,” said Jack A. Bass Vancouver-based managing partner at Jack A. Bass and Associates, predicting that gold may drop as low as $1,050 an ounce. “People had expected China’s holdings to be higher,” said Bass , author of The Gold Investors Handbook. His managed accounts hold no gold or gold miners.

Newcrest Mining Ltd., Australia’s largest producer, lost 7.1 percent to A$12.26 in Sydney, while Evolution Mining Ltd. slumped 13 percent and Saracen Mineral Holdings Ltd. tumbled 13 percent. In Hong Kong, Zijin Mining Group Co. lost 3.8 percent.

“Gold has generally been suppressed by the ongoing expectation that the dollar may get stronger should the U.S. Fed raise interest rates,” Wallace Ng, a trader at Gemsha Metals Co., said from Shanghai. “But this sudden drop during Asian trading seemed to have been triggered by some stop-loss selloffs that have nothing to do with fundamentals.”

Commodity Losses

Some investors are turning away from precious metals amid a wider retreat in raw materials. The Bloomberg Commodity Index dropped for a fifth day on Monday to as low as 96.6395, heading for the longest run of declines since March.

China bought about 604 tons of gold since 2009, second only to Russia, according to data from the central bank and International Monetary Fund. The total holdings make China, the world’s biggest producer, the world’s fifth-biggest gold owner.

Prospects for a U.S. rate increase strengthened the dollar, hurting the allure of gold, which generally offers returns only through price gains. The Bloomberg Dollar Spot Index rose as much as 0.1 percent to the highest level since April 13.

‘Still Bearish’

“I’m still bearish on gold,” said Barnabas Gan, an economist at Singapore-based Oversea-Chinese Banking Corp., the most accurate precious metals forecaster in the eight quarters to March, according to Bloomberg rankings. “For the year-end, I’m still looking at $1,050 an ounce. The bearish outlook is underpinned by the likelihood of the U.S. Fed rate hike.”

Holdings in gold-backed exchange-traded products have shrunk as U.S. equities rallied and the dollar climbed. Global holdings were at 1,585.96 tons on Thursday, down from a record 2,632.5 tons in December 2012.

Gold futures retreated as much as 4.6 percent to $1,080 an ounce and traded at $1,109.50 on the Comex in New York. Money managers are holding the smallest net-bullish bet on gold since the U.S. government data begins in 2006.

Platinum for immediate delivery dropped as much as 4.7 percent to $947.38 an ounce, the lowest since January 2009, and traded at $962.90. The metal is 20 percent lower this year.

Spot silver lost as much as 2.3 percent to $14.5449 an ounce, the lowest since December 2014, and was at $14.6678. Palladium fell as much as 3 percent to $596.75 an ounce, the lowest since October 2012.

Seeking Alpha highlights Gold Portfolio Destruction

The destruction of capital can be seen across a swath of gold relative securities, and silver too.

Precious Metal Relative Last Week Last 3 Mos. TTM
SPDR Gold Trust -2.5% -6.0% -13.9%
iShares Gold Trust (NYSE: IAU) -2.6% -5.9% -13.8%
ETFS Physical Swiss Gold Trust (NYSE: SGOL) -2.5% -6.0% -14.5%
iShares Silver Trust (NYSE: SLV) -4.4% -8.6% -29.9%
ETFS Physical Silver Trust (NYSE: SIVR) -4.6% -8.4% -28.7%
Market Vectors Gold Miners (NYSE: GDX) -7.9% -21.8% -42.5%
Market Vectors Junior Gold Miners (NYSE: GDXJ) -5.3% -14.3% -52.2%
Direxion Daily Gold Miners Bull 3X (NYSE: NUGT) -23% -55.2% -89.1%
Goldcorp (NYSE: GG) -10.4%* -24.8% -44.4%
Randgold Resources (NASDAQ: GOLD) -3.6% -17.1% -28.6%
Barrick Gold (NYSE: ABX) -13.1% -30.5% -52.8%
Silver Wheaton (NYSE: SLW) -9.5% -29.5% -48.1%
Coeur Mining (NYSE: CDE) -8.2% -22.3% -48.8%
Silvercorp Metals (NYSE: SVM) -9.6% -28.8% -56.2%

-3 month & trailing 12 month data from Seeking Alpha; GG 1 week performance adjusted for dividend

Now get your watch list updated – from Books

for portfolio guidance and tax reduction strategies 


Silver Wheaton’s ‘train wreck : bought deal is getting snubbed

Silver Wheaton acquires silver and gold “streams” from mining companies to help them finance their projects. That has been a very active business during the mining downturn, and Silver Wheaton has kept bankers busy.

Nicky Loh/BloombergSilver Wheaton acquires silver and gold “streams” from mining companies to help them finance their projects. That has been a very active business during the mining downturn, and Silver Wheaton has kept bankers busy.

The stock traded below the offer price all day Tuesday, and sources said a very large portion remains unsold. One source described the entire deal as a “train wreck.”

The bought deal, which was announced Monday night, was priced at US$20.55 a share by lead underwriter Scotiabank. The pricing was very aggressive, as it represented a 3% discount to Silver Wheaton’s closing price that day. Typically, the discount on bought deals is larger, as a reflection of the risks taken on by the underwriters, one of which is that the stock price drops. On this deal, the underwriters are also charging agents’ fees of 3.75%. – or $0.77 a share.

Amid weaker precious metal prices Tuesday, Silver Wheaton shares did fall, by 5.5%, and closed at US$20.02. On heavy volume – trading in New York and Toronto at 11.4 million shares was about 1.5 times normal – the shares hit an intraday  low of US$19.83.

Silver Wheaton is a very liquid stock, so if investors want to build a large position, they can buy it on the open market and bypass the bought deal. Deal insiders are hopeful that metal prices will rise on Wednesday and they will be able to sell more of the offering.

Investment banks lined up to be part of this bought deal, because Vancouver-based Silver Wheaton has been one of their top mining clients in recent years. Indeed there are four lines of underwriters (all with varying degrees of liability), with BMO, CIBC and RBC on the second line, BofA Merrill Lynch and TD on the third line, and Scotiabank signed on for a 25% share.

Silver Wheaton acquires silver and gold “streams” from mining companies to help them finance their projects. That has been a very active business during the mining downturn, and Silver Wheaton has kept bankers busy.

A source said there has been no serious talk so far about trying to cut the price on the offering, or reduce the size. Scotiabank does not typically lead mining offerings this big.

This is the third time in recent months where banks had trouble selling a very large mining stock offering. It shows that investor appetite for these stocks is not endless amid rough market conditions.

In late 2013, Barrick Gold Corp. did a US$3 billion bought deal, which was priced at a 5.4% discount to the market price. And in the middle of last year, Franco-Nevada Corp.’s US$500 million share offering proved to be a tough sell.

The Franco-Nevada bought deal has similarities to the current Silver Wheaton deal. Both firms are in the mining-royalty business, and in both cases, the discount to the market price was very small. It was less than 2% in the Franco transaction.

Silver Wheaton plans to use cash from the bought deal to fund its acquisition of a gold stream from Vale SA’s Salobo mine in Brazil. It is the second gold stream that Silver Wheaton is buying from this mine.

Protect your portfolio profits from the tax season goblin http;//


Are You Really Going To Trust A Fund Manager – Again?

How will You Improve Your Portfolio Results In 2015 ?

This probably comes as no big surprise, but the average fund manager hasn’t beat the market indices during the last 10 years. Amazing isn’t it?
And for those managers who do, it usually only in a bull market.
In bear markets, the number of profitable funds drops to almost zero! With those kind of odds, do you really want turn your money over to managers who won’t even move you to cash when its time to protect you from severe market declines?
As you have no doubt discovered, the old “tried and true” rules of investing may are still tried, but they certainly aren’t true. In fact, if the “buy and hold” strategy were really the best way to profit, why would institutional traders – the largest daily volume traders in the markets – move their money in and out of stocks like clockwork.
The truth is, they are making profits by selling to you when they know it’s time to go!
Unsuspecting investors buy when institutions are ready to sell, and sell when big money is ready to buy. Retail investors are the perfect  shills because the little guy will always trade on emotion or bad advice, and end up putting their money right into the hands of the hedge fund traders wanting to unload positions!
Our ( Jack A. Bass)  Managed Accounts keeps you from falling into that trap! It shows in advance when institutional traders are about to make the switch, whether buying or selling, and you’ll be moving your money to keep one step ahead of them – with much less emotion.
Now, instead of market “head fakes” causing you to lose money, you’ll leverage minor turns as opportunities to add to positions you are already holding. We call it trading the short term cycle.
End Costly Investing Mistakes
Successful investing is can often be counter- intuitive to how most investors want to trade.

Proof of The Pudding:

Here is our recent letter:

Managed Accounts Year End Review and Forecast

November 2014 – 40 % cash position
Gold and Precious MetalsThe largest gains for our clients came from the exit from the gold producers at $18oo an ounce and continuing until we hold no gold and no gold miners . This from the author of The Gold Investors Handbook.2015 – We continue to be on the sidelines for this sector – regardless of the gnomes of Switzerland . As a safe haven gold simply wasnot there for investors despite turmoil in the Middle East, Africa and Ukraine.How much more frightening can the prospect for peace be than to have wars in multiple locations? Secondly the spectre of inflation – on which I have given numerous talks – simply failed to materialize. In fact economists and portfolio managers such as myself are now more concerned about deflation – and the spectre is a Japanese style decades long slide in the world economy.
Shipping Sector / Bulk ShippersYou can review our stock market letter at to follow our profits in the shipping sector before our retreat as overcapacity has yet to effect continued overbuiding. In 2008-9 rates-  illustrated by the Baltic Dry Index – were at their peak. The BDI hit over 10,000. Today it is roughly 10 % of that benchmark and the sector slide continues. We have an impressive watchlist of former ” darlings” – but we are content to watch and wait.
Oil/ EnergyI am very happy for the call in natural gas prices – out at $12 and into oil. When oil was above $100 we lessened positions and that is our saving grace in the past two weeks. We are not bottom feeders and will wait for a turn in the market before reentering drillers or producers.On Friday November 27th, crude oil prices dropped to below $72 and the slide has continued into the weekend, with Brent crude oil at $70.15 as I write this post. Shares of major oil companies traded down on Friday. Our former energy sector holdings are down another between 4% and 11%, including SDRL, which dropped another 8% following Wednesday’s 23% plunge…

Have you avoided these sectors – you would have been better off to follow our advice in 2014 and now you have to decide for 2015.
No one – and I am not being humble here – can project the future with great accuracy but our clients continue to do very well and we offer that experience to you.

Fees : 1 % annual set up and a performance bonus of 20 % – only if we perform.

You can withdraw your funds monthly if you require an income stream.

Alternate Guaranteed Income Payments

Private client funds Minimum $10,000 Maximum Loan $500,000

Our client is seeking funds to expand their tanker fleet .

Interest 12 % compounded – paid 1% per month

Floating charge of the full $500,000 against the fleet – valued at  more than $ 1 M


Contact information:

To learn more about portfolio management ,asset protection, trusts ,offshore company formation and structure for your business interests (at no cost or obligation)

Email OR  OR

Call Jack direct at 604-858-3202

10:00 – 4:00 Monday to Friday Pacific Time ( same time zone as Los Angeles).

Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

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