tag:blogger.com,1999:blog-1708908742323002823.post803398584566280217..comments2024-02-10T02:18:27.240-08:00Comments on Trader Dan's Market Views: Continued Weakness Across the Mining SectorTrader Danhttp://www.blogger.com/profile/05484363461047659198noreply@blogger.comBlogger44125tag:blogger.com,1999:blog-1708908742323002823.post-14442869159470340922013-11-28T08:46:58.186-08:002013-11-28T08:46:58.186-08:00I like the idea of the royalty business model as i...I like the idea of the royalty business model as it reduces the risk of mining. Don't really understand the options they have when a mine closes / does not develop or produce. Think it is generally to take metal from other mines under the same ownership. <br /><br />In the worst case, if an ownership closes all mines, what happens?Mike Ehlerthttps://www.blogger.com/profile/03796788820435662856noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-29156752497006321892013-11-28T01:31:53.961-08:002013-11-28T01:31:53.961-08:00Even the GLD and SLV might soon do a REVERSE SPLIT...Even the GLD and SLV might soon do a REVERSE SPLIT. Do you think they could go BK?The News UNIThttps://www.blogger.com/profile/02597408419488351139noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-52473410941475145282013-11-27T09:37:25.990-08:002013-11-27T09:37:25.990-08:00I think you are right AK. At some point physical g...I think you are right AK. At some point physical gold will require much higher prices to move. There will be a point when real gold hides at these ridiculous paper prices. Look at the physical drain from GLD this year. It must be close to 500 tons. These insane western paper markets consider that bearish for "gold" when it means the opposite. Gold is flowing east, good luck prying it out of Chinese hands for 1200 an ounce! Hold on to your real gold and dump the paper.Anonymoushttps://www.blogger.com/profile/01370226402752071107noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-14785699397834560382013-11-27T08:34:37.852-08:002013-11-27T08:34:37.852-08:00anonymous;
those are very good points about those...anonymous;<br /><br />those are very good points about those mining companies that do not have any actual production to hedge. They really do not have too many options left to them in an environment in which gold prices are falling. There are some strategies that they could employ but those would be the similar to something I might use which would really not be hedges, but speculative positions. That could be dangerous for all but the most experienced of risk managers.<br /><br />I agree with you on the mergers/acquisitions... I expect that we will see a fair number of those if gold stays down at these levels for an extended period of time. Trader Danhttps://www.blogger.com/profile/05484363461047659198noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-15916110087542076952013-11-27T08:30:53.041-08:002013-11-27T08:30:53.041-08:00John Kitcher;
Yes, John, that is basically what I...John Kitcher;<br /><br />Yes, John, that is basically what I am saying. When the trend is bullish, good risk hedge management will lift the hedge while employing other option strategies in its place. that way the mining outfit can maximize profits from a rising gold price. When it is evident that the trend is stalling, then downside price protection strategies should be employed. It does require a lot of hands on trading/timing but then again, that is what all hedges require. <br /><br />Trader Danhttps://www.blogger.com/profile/05484363461047659198noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-84091971828060658962013-11-27T06:09:20.651-08:002013-11-27T06:09:20.651-08:00Hubert, I think the world is overlooking the obvi...Hubert, I think the world is overlooking the obvious and that is that China is aggressively positioning themselves to unseat the dollar as the global reserve currency. They have publicly stated that it's time for the world to de-Americanize. Part of their strategy to accomplish that is to accumulate as much physical Gold as possible. So while all the genius traders of the world and the gold bulls and bears argue back and forth on which way the next major move will go, China is all too happy to quietly accumulate all the physical Gold they can at any price and the lower the price the better. China has been buying Gold at any price and I don't think they really care all that much how they pay for the Gold given their massive reserves that they are trying to divest themselves of to buy anything of value. By the time most of us have figured out what they are really up to, all the physical Gold will have migrated from West to East in one of the biggest transfers of real wealth the world has ever seen. My point is that trying to time the bottom of this paper gold price decline may be the biggest investment mistake you will ever make if it turns out that when we finally reach the bottom, the physical Gold will all be gone. ABN Amro's and Rabobank's default on physical Gold earlier this year is a clear sign that bullion bank are running out of Gold. I don't know how low the price will go, but the lower the price goes the more aggressive the buying becomes. I think that China has been accumulating as much Gold as they can WITHOUT impacting the paper price, but I imagine if we go much lower from here they won't care anymore, they will simply buy up whatever is left.AKhttps://www.blogger.com/profile/14929460326203772785noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-83043905428279881062013-11-26T23:39:07.074-08:002013-11-26T23:39:07.074-08:00This comment has been removed by a blog administrator.hasnain razahttps://www.blogger.com/profile/11629194654437486724noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-80970178486062060602013-11-26T21:42:48.469-08:002013-11-26T21:42:48.469-08:00AK, giving up one's physical now IS a big mist...AK, giving up one's physical now IS a big mistake.<br />My suggestion is to hedge.<br />Whether like Eph by shorting when you feel unsure, via CFDs for small accounts.<br />Or buying a few puts enough out of the money if you are lucky enough to manage options. That way you don't have to invest a lot of cash to protect your main position in physical.<br />Anyhow we are getting close to the bloody 1180 now. <br />So if one seeks protection, it's rather now than after it breaks (IF it breaks, once again, no forecast on my behalf about that)Anonymoushttps://www.blogger.com/profile/00335835171576180359noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-38170240386813548362013-11-26T21:02:24.709-08:002013-11-26T21:02:24.709-08:00Hubert, I think you are right. We have not yet se...Hubert, I think you are right. We have not yet seen a full capitulation, but I wonder if we will ever get there because the physical demand is so strong. Remember, China owns well in excess of a trillion dollars in treasury bills and they are willing to divest themselves of those toxic bonds for any hard assets. China was a buyer of gold at $1,800, they were buying gold at $1,600 and they are certainly buying now. China does not care about the price of Gold today or tomorrow, all they care about is to accumulate as much as possible and they have plenty of dollars to do so at any price. If the price drops to below $1,000, I think they will back up the container ship to buy every last ounce of physical gold they can leaving the rest of to scramble for scraps. I think giving up your physical at these prices could be a big mistake for these reasons. I guess we will soon find out.AKhttps://www.blogger.com/profile/13081077354726500817noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-67136121701708526492013-11-26T20:13:41.755-08:002013-11-26T20:13:41.755-08:00Hey Dan,
Thanks for your thoughts. From what l re...Hey Dan,<br /><br />Thanks for your thoughts. From what l remember, miners were heavily hedged prior to the 2010, but as the PMs started surging miners bought back their hedges for a premium. In a bull market i would prefer an unhedged miner, but in a bear market you need to hedge. I guess that they have started hedging, selling into the bearish trend, pulling prices down more. Also, once gold rebounds, l wonder if gold miners will bounce back slowly the next time around.Anonymoushttps://www.blogger.com/profile/08248703812009022489noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-69117105116562826312013-11-26T19:52:25.990-08:002013-11-26T19:52:25.990-08:00Gold bugs are not traders. It will have to go lowe...Gold bugs are not traders. It will have to go lower then 1000 for the majority of bugs to sell. I'd say $750 and even then I doubt it. Most gold bugs are people that have very strong convictions. Petedivinehttps://www.blogger.com/profile/10565797299325588194noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-20237544909422207952013-11-26T18:02:01.791-08:002013-11-26T18:02:01.791-08:00For the most part I agree with you Trader Dan. Min...For the most part I agree with you Trader Dan. Miners need a desk for price protection but in a down market you would have to rely on contrary paper to help you through. Not impossible but takes a level skill that doesn't include how to run a shovel.<br /><br />An example would be JS and his TRX. You don't think JS knows how to hedge, buy swaps, find funding, etc.? Commits half the profits to the country he mines in, has no gold production to speak of now or in the future and is relegated to being a typical mining corporation that has just enough contracts (with China in this case) to pay the salaries of the principles. Shareholders left out in the cold but mining is a rough life esp. without finding pay dirt.<br /><br />As with most bottoming action, will come the acquisitions and mergers when the weak can no longer survive and are consumed into the collectives. I haven't seen much of that yet. China was buying the tops not to long ago but no rush now with slow economies everywhere.anonymoushttps://www.blogger.com/profile/13458537409932488443noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-16357041881758876282013-11-26T16:16:55.840-08:002013-11-26T16:16:55.840-08:00full agreement herefull agreement hereMike Ehlerthttps://www.blogger.com/profile/03796788820435662856noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-78911706476551820632013-11-26T14:24:20.429-08:002013-11-26T14:24:20.429-08:00There are buyers out there...who are buying.
It ma...There are buyers out there...who are buying.<br />It may not be the exact bottom but they may be buying the deal of the decade, who's to know.<br /><br />How many here bought the Dow in Dec 2008 or Jan 2009 ?<br />If you did back up the truck in those months then none of this should scare you in the least. Anonymoushttps://www.blogger.com/profile/12484142363488637120noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-83408551526659694502013-11-26T14:22:26.811-08:002013-11-26T14:22:26.811-08:00Don't think I have ever heard of company manag...Don't think I have ever heard of company management discussing thier risk management departments. Closest I can come off the cuff is their desire to do more drilling to de-risk the coming capital investment.Mike Ehlerthttps://www.blogger.com/profile/03796788820435662856noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-44643045080806327542013-11-26T14:19:09.456-08:002013-11-26T14:19:09.456-08:00Mike Ehlert;
Thanks for the comments.
I would s...Mike Ehlert;<br /><br />Thanks for the comments. <br /><br />I would say what I just wrote to anonymous. Any entity in the production of a commodity of any sort, MUST have a risk management department and must know when and how to read price charts. No exceptions... there are too many variables in today's global economy to allow any company to be completely exposed and utterly unprotected to downside price developments. It is simply inexcusable in my opinion.<br /><br />Like I said to anonymous, there are plenty of traders out there such as myself who can read charts and understand trends. Maybe they should hire us to help them if they lack a competent risk management department which cannot manage their hedging program. there are all sorts of price protection strategies which can be employed if there are experienced and knowledgeable individuals there who can implement them. Trader Danhttps://www.blogger.com/profile/05484363461047659198noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-59233575727095388832013-11-26T14:14:26.554-08:002013-11-26T14:14:26.554-08:00anonymous;
farmers do not need to play the future...anonymous;<br /><br />farmers do not need to play the futures market in order to lock in profitable selling prices on expected production. They can do quite nicely using option spreads. Not having hedges in place exposes one to the full risk of the market and is not wise. the futures market came into existence for the express purpose of providing farmers with a mechanism with which to lock in higher selling prices.<br /><br />no one should have to "ASK" miners to hedge. They should do it automatically. It is not my fault that too many of them have people in their risk management departments (assuming they even have one) who cannot read a damned price chart and understand when a trend has turned from one of bullishness to one of bearishness. <br /><br />When the trend turns, any competent risk manager will spot that and take action accordingly to protect profitability. If a mining company is too stupid to have a risk manager then maybe they should hire guys like myself to be their advisors and teach them how to take care of their shareholders by pretending that their companies are speculators and not businesses which are responsible to their shareholders.Trader Danhttps://www.blogger.com/profile/05484363461047659198noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-27125557867322611922013-11-26T14:06:17.491-08:002013-11-26T14:06:17.491-08:00Exactly Prophet.
Get a grip man.
If you are a tr...Exactly Prophet.<br /><br />Get a grip man.<br /><br />If you are a trader then trade but if you are an investor than wait.<br /><br />Gold may go to $500 or lower BUT it will return. Sure you may lose an opportunity to make more $US profit but I thought gold was for insurance not profit OR am I wrong.Anonymoushttps://www.blogger.com/profile/16653011486951085164noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-52098865645898636262013-11-26T14:02:12.715-08:002013-11-26T14:02:12.715-08:00I think central banks could care less about timing...I think central banks could care less about timing. Central banks are expected to accumulate around 350T of gold in 2013 (down from 2012 by about 180T). Germany has sold 3.4 metric tons which is expected as the Bundesbank typically sell 6-7 tons per year to the finance ministry to mint commemorative coins. IMHO central banks have not been accumulating gold because of price action. It is a wealth reserve, not an investment.Anonymoushttps://www.blogger.com/profile/01370226402752071107noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-37713027682300887452013-11-26T14:01:41.972-08:002013-11-26T14:01:41.972-08:00Asking miners to hedge is like asking a farmer to ...Asking miners to hedge is like asking a farmer to hedge his crops, the farmer grows things and to be a futures market player at the same is asking a lot.<br /><br />Most miners (or farmers) don't sit on cash, it is needed for expenditures. Most miners already hedge but a year forwarded is not not technically considered hedging.<br /><br />Example HL has cash flow with low cost silver ounce production and pays a dividend no matter what method they use to the figure the numbers i.e. byproducts sold against production costs (on the other hand, why the CEO deserves 2 mil a year is beyond me), yet it is caught in the downdraft, it is sector wide.<br /><br />Talking cycles, human thinking and reactions, everything cycles. Armstrong had been calling for US markets to reach new highs, gold to fill some gap around $1,000 and the US dollar to outperform the other fiats, back when he was sitting in jail, based on his previous cycle findings. Still considers gold in a correction and keeps pushing the gold bull run further out, now to around 2020. So a lot can happen in the years to come. Only around $600 spot would signal the end of the gold bull.<br /><br />Gold/miners/sector pausing here and will resume its downward leg. One day's worth of activity doesn't qualify as capitulation.anonymoushttps://www.blogger.com/profile/13458537409932488443noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-15724894010306652402013-11-26T13:58:26.663-08:002013-11-26T13:58:26.663-08:00Mark this is the stock market not the Hindenburg c...Mark this is the stock market not the Hindenburg crash.The Prophet Elijahhttps://www.blogger.com/profile/11595344655963613167noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-5185715278975060922013-11-26T13:42:30.563-08:002013-11-26T13:42:30.563-08:00If you are talking about GS and JPM I would rather...If you are talking about GS and JPM I would rather look at what they do than what they say....<br /><br />I don't want to be another muppet.weeblehttps://www.blogger.com/profile/08759805220605790162noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-13471255105404407492013-11-26T13:38:58.265-08:002013-11-26T13:38:58.265-08:00Royalty companies are making lot of money and have...Royalty companies are making lot of money and have growth. Companies like Royal Gold, Franco Nevada, and Silver Wheaton should withstand a very low precious metals price and still make money even if some of the riskier mines shut down. If gold went to $1000 for a long term there will be a lot of pain, but low cost producers with income or cash on hand like Yamana and Newgold should survive and rebound strongly when gold goes back up. <br /><br />I am not saying they can't go down from here, I am just saying it is not all doom like so many people are saying. There is limited downside when these quality companies have already been hit so hard. Any sudden event that drives gold higher and these kind of companies will go up so fast that it will be hard to get in quick enough to maximize gains. It is not easy for any long term investor but I would rather ride them down another 10 % or 20 % over the next few months than be out of the market and miss out on a 10 % gain tomorrow.weeblehttps://www.blogger.com/profile/08759805220605790162noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-55877533286910192232013-11-26T13:10:42.346-08:002013-11-26T13:10:42.346-08:00Utterly horrific.
Hands down the worst crash of a...Utterly horrific.<br /><br />Hands down the worst crash of any sector in history.<br /><br />Yet the "acclaimed experts" will jump up and down and claim and say "Any Minute Now, I Swear"!!!<br /><br />GDX/GLD closed at all time, world record lows a .18 today, full crash mode now.Markhttps://www.blogger.com/profile/13068811838777958318noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-43836732645396195122013-11-26T12:43:49.254-08:002013-11-26T12:43:49.254-08:00By the way, less and less mention of what a bargai...By the way, less and less mention of what a bargain the mining stocks are by the usual suspects, so despair may be setting in. pounded pounded pounded down. I would guess the better positioned royalty companies/streamers would be the way to go, as they can negotiate better deals with desperate miners...but then again RGLD, SLW, etc. haven't touched their june lows...MDLGTOhttps://www.blogger.com/profile/06636563285000423292noreply@blogger.com