Best performing gold and silver stocks ytd

Reproduced below is a very interesting graphic from Scotia Capital showing the best performing precious metals mining stocks year to date – an interesting list, but one showing that most have made gains this year, but a small few have been decidedly poor choices.  Pleased to say that my own gold stock recommendations as published in articles on Seeking Alpha are not among the losers, but then I haven’t managed to pick the very top ones either – but it’s early days in 2017 so far.

World Gold Council’s Latest Gold Demand Trends Report

The World Gold Council (WGC)’s quarterly Gold Demand Trends report is always well worth analysing as it contains some excellent statistical research on global gold supply and demand supplied by London based precious metals consultancy, Metals Focus.  One may not agree with all their data, but overall it is among the most comprehensive available to the gold market analyst.  Here follows the WGC’s own release on the latest report, published today, and links to enable readers to access the full data set:

Gold demand rises 2% in 2016 as investment surges

Global gold demand rose 2% in 2016 to reach 4,309 tonnes (t), the highest level since 2013, according to the World Gold Council’s latest Gold Demand Trends report. This was largely driven by inflows into gold-backed Exchange Traded Funds (ETFs) of 532t, the second-highest year on record, as investors responded to concerns over future monetary policy, geopolitical uncertainty and negative interest rates.

Continued global economic and political uncertainty, most notably Brexit, the US election and currency weakness in China, helped to boost overall investment demand by 70%, to a four-year high of 1,561t.   The price dip in November led to a strong recovery in the bar and coin market in the final quarter of 2016, although this didn’t offset weak demand in the first three quarters; annual demand reached 1,029t, down 2% year-on-year.

Alistair Hewitt, Head of Market Intelligence at the World Gold Council, commented: “2016 saw an unprecedented degree of political upheaval, which underpinned huge institutional investor flows into gold. Retail investors – having been subdued for most of the year – responded quickly to the price fall in Q4, a fact reflected by a surge in demand in the physical market. With an equally uncertain political and economic environment likely in 2017, we expect investment demand to remain buoyant.”

While overall investment demand rose sharply, it was counterbalanced by declines in both jewellery, a 15% fall in 2016 to 2,042t, and central bank purchases. Central banks faced a challenging backdrop, with increased pressure on foreign exchange reserves resulting in demand falling by 33% to 384t for the year. Despite this, 2016 was the seventh consecutive year of net purchases by central banks.

In spite of resilient consumer demand in the fourth quarter of 2016, the two leading gold markets, India and China, both experienced a drop in consumer buying in 2016, falling 21% and 7% respectively. In China, jewellery demand was dampened due to a high gold price throughout much of the year, coupled with constrained levels of supply in Q4, owing to a tightening of currency controls in the country.

Indian demand also faced a raft of challenges throughout the year, including regulatory changes, culminating in the surprise demonetisation policy, which severely hampered demand in both the jewellery and retail investment sectors.

Alistair Hewitt added: “The Indian market faces a challenging time in 2017. We anticipate many of the headwinds that affected demand in 2016 to continue into this year, but we are confident that the Government’s move towards a more transparent gold market will ensure that gold remains an important asset class for millions of people in India.”

Total supply reached 4,571t in 2016, an increase of 5% compared with 2015. Growth in the sector was supported by net producer hedging, which doubled in 2016, as gold producers saw an opportunity to secure cashflow at higher prices. It was also supported by high levels of recycling in Europe and the Middle East, driven by weak currencies and a high gold price. Mine production remained virtually unchanged from 2015 as a result of industry cost-cutting schemes, however, higher gold prices and lower costs have seen a renewed interest in exploration and increased project development is likely in the years ahead.

The key findings included in the Gold Demand Trends Full Year 2016 report are as follows:

Full year 2016 figures:

  • Overall demand for FY 2016 was 4,309t, up 2% compared with 4,216t in 2015
  • Total consumer demand for FY 2016 fell by 11% to 3,071t, from 3,436t in 2015
  • Total investment demand grew by 70% to 1,561t in FY 2016 from 919t in 2015
  • Global jewellery demand was down 15% at 2,042t, compared with 2,389t in 2015
  • Central bank demand was 384t, down 33% compared with 577t in 2015
  • Demand in the technology sector decreased by 3% to 322t from 332t in 2015
  • Total supply grew by 5% to 4,571t this year from 4,363t during 2015. This was largely driven by recycling, which increased 17% to 1,309t from 1,117t in 2015.

 Q4 2016 figures:

  • Overall demand was 994t, a fall of 11% compared with 1,123t in Q4 2015
  • Total consumer demand increased by 5% to 989t from 940t in Q4 2015
  • Total investment demand fell 21% to 174t this quarter compared with 220t last year
  • Global jewellery demand was down 5% at 622t, compared with 653t in Q4 2015
  • Central bank demand reached 114t this quarter, a fall of 32% from 169t in Q4 2015
  • Demand in the technology sector increased by 3% year-on-year, up to 84t compared with 82t during Q4 2015
  • Total supply fell by 4% to 1,036t this quarter from 1,081t during Q4 2015.  
  • Recycling increased by 5% to 250t during the fourth quarter, from 239t during Q4 last year.

The Gold Demand Trends Full Year 2016 report, which includes comprehensive data provided by Metals Focus, can be viewed at http://www.gold.org/supply-and-demand/gold-demand-trends and on our iOS and Android apps. Gold Demand Trends data can also be explored using our interactive charting tool http://www.gold.org/supply-and-demand/interactive-gold-market-charting.

How Big Is Your Gold and Silver Picture?

By David Smith*

Gold Bear and Bull Markets

Whether you surf the Internet for information about the precious metals and mining stocks or receive newsletters by snail mail, you’re exposed to predictions by all and sundry:

  • How high will prices go?
  • How long will it take?
  • Will they remain elevated if/when they reach record nominal and/or inflation-adjusted highs?

Truth be told, all of us are “inquiring minds who would like to know.” We want to believe that someone somewhere can predict the future. So we seek out gurus who might have special knowledge that puts us on the inside track.

It could be on a site like GoldSeek.com, where newsletter writers publish a portion of their work a short time after subscribers have read the current issue (perhaps from a subscription costing $10 a month…or $3,000 a year).

At the edge of propriety, a small number of “tire kickers” – the bane of the subscription newsletter industry – sign up, take a position in the recommendations, and then cancel their subscription.

A subset of this is the legitimate subscriber who, as soon as a new issue comes out, buys the stock pick without even reading why it’s being recommended!

Beyond the fact that they will always need to be given the proverbial fish rather than learning how to fish for themselves – their fickle behavior causes them to view the future through a short-term, near-sighted lens. They will never be able to establish a core position, hold onto it for the majority of a bull run, then sell into a late-term rise for a substantial profit.

My Biggest Lesson from the 1970s Epic Gold-Silver Bull Market…

An example from my past might be instructive. In 1980, I went to San Francisco to attend my only investment conference during that historic precious metals’ bull run. (It ironically ended the same year.) All the luminaries of the day were presenting. A few, such as Doug Casey, are still active in the business. For this attendee, there were two speakers of particular note – indeed they were the pre-eminent gold and silver gurus of their day – Harry Browne and Jerome Smith.

Harry had made a particularly large splash in the 1970’s when he wrote the prescient titles How You Can Profit from the Coming Devaluation, and New Profits from the Monetary Crisis. He had discussed dollar devaluation vis a vís the Swiss Franc, the little-understood (even today) corrosiveness of “moderate” inflation on the average person’s wealth, and the historic role played by holding real money – gold and silver – in one’s possession.

At first, just like now, few paid attention, because they saw no reason to hold onto something that “didn’t pay interest.” But by early 1980 in the major cities, there were lines around the block in front of coin shops to buy gold and silver.

When silver was trading for $4, Jerome Smith had written Silver Profits in the Seventies, with the “wild” prediction that silver would hit $50. By the 1980 San Francisco Conference, it had done just that.

Having invested in physical silver and gold and Swiss franc futures based upon Browne’s predictions, I had built up a large “paper profit.” Harry, the keynote speaker, told the audience that the silver bull market, now trading in the mid-$40 range after having touching $50 the ounce, would be in jeopardy if the price dropped below about $37.50. After hearing the guru speak, my first inclination was to go out on the break and place a stop loss to sell silver if it fell below that $37.50 level.

Not Greed

But then… Jerome Smith rose to speak. Smith (no relation to me) was now talking about $100 silver!

The world was going to run out, with the price destined to double from his original prediction! So, no action was taken on the stop loss!

Soon thereafter, the price dropped below Harry Browne’s price point, on its way first to $10.80, a bounce to $25, and then a two-decade-long decline to $5.

My big mistake? Not greed (Honest!) but rather, a fixation on a specific price point rather than paying attention to the market’s prevailing structural integrity (or lack thereof). I knew the market was at risk from a technical perspective, and I was aware that the Hunt Brothers were getting boxed in on the exchanges.

It’s a Mistake to Focus on Price Predictions

This conceptual error in thinking is equally instructive for today’s rising market. Try not to focus on price predictions, but rather gauge the market’s internal strength, the dominant trend, and where we are on that continuum.

The new book David Morgan and I will soon publish, Second Chance: How to Make and Keep Big Money during the Coming Gold and Silver Shock-Wave, includes more detail about this event, wherein I was able to speak with both Harry Browne and Jerome Smith that day. That incident, and many other topics we discuss, can help inform your own decision-making during the coming years.

The takeaway is this, you must keep a big picture – on the upside – for at least the next few years as the public mania builds. Then monitor it later as it appears to top out, when just about “everyone watching the parade has already become part of that parade.”

Stewart Thomson, whom we quote in our book, says it as succinctly as anyone we know: “If you look at your investment efforts through a microscope, your results will be… microscopic.”

Learn How to Read the Tea Leaves

What follows are two pieces of counsel – one each for gold and silver – that are the types of information you should pay attention to when looking for big picture (both fundamental and technical analysis) data supporting the bullish thesis.

In a recent interview with Mining Weekly, South Africa’s leading resource sector publication, Randgold CEO Mark Bristow said the following about the trend in global gold production:

Just to keep the industry supplied, he estimates that it will require the discovery of 90-million ounces a year, and to reverse the grade deterioration (mining gold with lower g/t values), 180-million ounces a year will need to be discovered. However, current discovery levels are a fraction of what is required, in the range of 10-15 million ounces (moz) a year…

On the silver side, discussing the significance of silver trading above its 20-month moving average, Roland Watson for Silver Analyst said:

Largest Precious Metals Inflows on Record (Data Since 2005)

Now we come to the present day and having spent exactly four years under the moving average, silver broke clear this May with monthly silver closing at $15.99.

Based on our prior examples, this suggests that silver has now entered a new multi-year bull market.

Processing information like this can “keep your picture big enough,” and help you avoid getting caught up in the game of allowing your decisions to be driven by specific price expectations.

Precious metals do not “have” to reach a certain price point in order for your analysis to be correct, and for you to amass substantial profits. They just need to advance smartly over time, in line with what tends to take place as a robust bull market builds momentum and then much later, plays itself out. In respect to gold and silver, that upside run is – as a Canadian would say – “written in the rocks.”

Barrick Announces Resumption of Operations at Veladero

Barrick Gold Corporation (NYSE:ABX)(TSX:ABX) (Barrick or the “company”) today announced the resumption of normal operations at the Veladero mine in Argentina following approval from San Juan provincial authorities.

Operations at the mine were suspended on September 15, a week after falling ice damaged a pipe carrying process solution in the leach pad area, causing some material to leave the leach pad. This material, primarily crushed ore saturated with process solution, was contained on the mine site and returned to the leach pad. Extensive water monitoring in the area has confirmed the incident did not result in any environmental impacts. The company has completed a series of remedial works required by provincial authorities designed to prevent such an incident from reoccurring, including increasing the height of the perimeter berms that surround the leach pad.

As normal operations resume, the company will continue to assess the impact of the temporary suspension on Veladero’s production for 2016. However, Barrick continues to expect total gold production for 2016 in the range of 5.0-5.5 million ounces at a cost of sales applicable to gold of $5.2-$5.5 billion and all-in sustaining costs1 of $750-$790 per ounce.2

Will the COMEX need a golden rescue?

This commentary from Ed Steer* – with a couple of opening paragraphs from Ted Butler – looks at some hugely anomalous transactions on the U.S. gold and silver markets over the past week which appear to breach regulations – indeed Ted describes them as illegal.  As Ed points out in his introductory paragraphs, before he gets to his own opinions on what may happen now in his Wrap-up: “Although the Commercial net short position in gold decreased by the expected smallish amount, there was a tiny increase in silver once again.  But under the surface in the headline gold number, was an absolutely stunning change that both Ted and I were shocked to see.  But it proves Ted’s premise that one of the smaller traders in the Big 8 category most likely had its financial back against the wall — and had to get bailed out in whole or in part by one or more the Big 4 traders.”

Ed goes on: “Even though the Commercial net short position declined by 6,454 contracts during the reporting week, Ted said that the Big 4 traders actually increased their net short position by about 8,400 contracts — plus the raptors, the commercial traders other than the Big 8, also increased their short position by around 1,800 contracts.  But the biggest change was in the ‘5 through 8’ category, as they reduced their net short position by about 16,700 contracts.  My immediate reaction when I saw that number was that one of the Big 4 — most likely JPMorgan, and I’m speculating here — had to come to the rescue of one of the ‘5 through 8’ traders that was about to go bust because of margin calls.  And rather than have this trading firm cover their short position in the open market, which would have driven gold [and most likely silver] prices to the moon and the stars, and bankrupted everyone else in the process — a Good Samaritan stepped in to prevent that from happening, saving themselves, plus everyone else in the process — at least for the moment.

“If this is what actually happened, then it has all the hallmarks of another Bear Stearns moment, when JPMorgan was forced to take over that firm back in early 2008 when the same thing was about to happen there.”  

Now the shenanigans which take place on COMEX where these kinds of paper gold transactions seem to be the norm rather than the exception – although perhaps not to the kind of extent noted above – tend to fall outside my own zone of understanding as far as relevance to overall gold and silver prices are concerned – apart from having an obvious impact in terms of setting (controlling) U.S. precious metals prices, which tend to be followed by the rest of the world’s markets, but Ted Butler has been following this activity for many years in meticulous detail and has no compunction in calling some of these activities, and their perpetrators as technically criminal in effect, but the authorities trusted with overseeing these markets seem to turna a continual blind eye to them.

In his introductory paragraphs, which incorporate charts, mostly from Nick Laird’s sharelynx.com site, Ed also notes: “The changes in this week’s Commitment of Traders Report are certainly unprecedented — and hint at desperation on part of the commercial traders, especially the smaller ones that don’t have deep pockets like JPMorgan, Citigroup, or maybe Canada’s Scotiabank.  Firms like Morgan Stanley would certainly be a member of the Big 8 — and even Goldman Sachs could even be included in this group now.  These would be five members of the Big 8 — and whoever the three remaining firms that are part of the Big 8, wouldn’t have access to unlimited funding like the Big 5 I just mentioned.  Of course, with the probable rescue of one of the ‘5 through 8’ traders, all that does is elevate one of Ted’s raptors, the commercial traders other than the Big 8, into the Big 8 category by default — and as Ted correctly mentioned, you have to wonder about their financial ability to meet margins calls along with some of the other raptors that are close to Big 8 status as well.

“One thing is for sure — there’s big, big trouble brewing in River City at the moment — and how this is resolved remains to be seen”

Ed’s full introductory comment and conclusions are available on goldseek.com – click here to read

Conclusions

Ed’s wrap-up on what has been happening – with the intro paragraphs from Ted Butler now follows:

I find myself thinking about the circumstances of how the big 5 thru 8 gold short which bought back its short position and came to be replaced by JPMorgan or another big short trader. This doesn’t sound at all like a fully open market transaction in which a big short moved to buy back in a transparent manner and accepting free market sell orders to close out the short position. Instead, it reeks as an arranged trade (highly illegal) in which the vast majority of market participants and observers knew nothing about as it was transacted. The price action during the reporting week it which it occurred was highly orderly and no hint was given that a big short fish was in trouble. My guess is that the big gold short which covered came into financial distress weeks ago and was carried by the exchange until the position rearrangement was finalized.

As such, someone had to know of it – certainly the short trader which bought back and JPMorgan or whoever else added gold shorts. The CME clearing house had to know and probably arranged the illegal transaction. While I am convinced few other traders were aware of the gold short in trouble, I am not sure if the CFTC was in on this or is as out to lunch as some (including me) profess. My hunch is that the CFTC was told after the gold short got in trouble but before the transaction was effected. In any event, this was an arranged transaction in keeping with a long COMEX tradition of arranged transactions (such as the Bear Stearns takeover and the May 1, 2011 silver price massacre). The only questions are was it enough and what now?

Even though I think I have a clear reading on what took place that doesn’t extend to blueprinting short term price action. As I’ve maintained all along, I’ve narrowed it down to either we go straight up from here or experience one last hard shake to the downside before lifting off for good. This week’s extraordinary big 8 gold repositioning just accentuates either outcome. Should the commercials lose control, prices will surge and it is hard to understate all the unintended consequences. I’m not an end of the world guy, but a genuine commercial failure could rock the world.Silver analyst Ted Butler: 30 July 2016

It was obvious that the powers-that-be were all over the precious metal prices during the COMEX trading session on Friday, because if they’d been allowed to trade freely, the moon and the stars would have been the limit as far as closing prices were concerned.  Then the resulting margin calls to the Big 8 traders alone would have certainly buried more of them and, as I said in my discussion on the COT Report, it appears that one of the smaller trader has already been bailed out.

Ted mentioned on the phone yesterday that the current paper loses for the Big 8 now total at least $3 billion dollars as of the close of trading on Friday — and those loses do not include the realized gains that they made earlier this year.  He says it’s likely more than that, but wasn’t able to compute it more precisely during the time we spent on the phone yesterday, which was considerable.  These are huge loses, but there’s now no question that for some of the small traders in the Big 8 category, plus most likely for some of the raptors [the commercial traders other than the Big 8] the writing is on the wall.

I’d guess that a resolution to all this is very near — and there are only three end-game scenarios that I can think of at this time of morning — and they are all ugly — and are as follows: 1] with the approval of the CFTC and SEC, both organizations that most certainly know what’s going on at the moment, we’ll get another JPMorgan-led drive-by shooting like we had starting on May 1, 2011 in silver.  This time it would be in gold as well, plus platinum most likely.  But as to how successful that might be in the current financial and monetary environment remains to be seen. 2] Another one or more small Commercial traders rush to cover — and we have a melt-up in precious metal prices, plus a melt-down in the U.S. banking system as the margin calls bankrupt ever larger players up the precious metal food chain as the price management scheme unwinds around the world, or 3]  The CFTC is forced to close the COMEX in order save JPMorgan et al.  That would save all the short players, but suddenly the precious metals would be selling on the spot market, with no futures and options attached to them.  I can’t even begin to comprehend what would happen to the financial market on a world-wide basis if that came to pass.

Ted was of the opinion that the possibility existed that these unprecedented gold deliveries we’ve been watching unfold over the last two or three months could be part and parcel of what’s happening now.  I couldn’t agree more.

The other thing we talked about — and I alluded to in my discussion on the COT Report earlier, was the fact that with such huge volume and open interest, there could be all kinds of things going on under the hood in the COMEX futures market that can’t be seen in the COT Report, or at least that are not that obvious.  But in the ‘obvious’ category — and as a ‘for instance’ the huge increase in the long position in silver in the Managed Money category this week.  Who was that — and what was it all about?

There are many more questions than answers, but JPMorgan et al have now painted themselves into such a small corner that there doesn’t appear to be any more wiggle room left — and the first sign of big trouble was the apparent rescue of one of the Big 8 traders in the COMEX futures market in gold.

A cornered beast is a dangerous animal — and those caught in the price management scheme as it breaths its last, will do just about anything, legal or otherwise, to save themselves and the system that nurtures them.  So this bears watching carefully in the days and weeks ahead, if in fact we actually have that much time left.

‘Push’ really has become ‘shove’ at this juncture — and I must admit that I’m on ‘Red Alert’ from this point onward.

How did it come to this?

*Ed Steer publishes a 5 day a week newsletter on gold and precious metals and on geopolitics and geo-economics which he finds relevant to the precious metals markets.  It is a subscription publication but gives insights into what is going on in the sector seldom covered by mainstream media.  To learn more click click on edsteergoldandsilver.com 

Ted Butler is perhaps the doyen of all commentators primarily covering the silver markets, but also touching on gold given its particular relevance to the path taken by its less costly sibling.  Again he publishes a subscription newsletter.  To learn more click on www.butlerresearch.com

World Gold Council: Gold demand at record levels in Q1 2016

World gold demand, as assessed by consultancy Metals Focus on behalf of the World Gold Council (WGC), rose 21% as investors surged into gold ETFs.  Key figures on global demand and supply for the quarter as released by the WGC are set out below:

According to the WGC figures, global gold demand reached 1,290 tonnes in the first quarter of  2016, a 21% increase compared to the same period last year, making it the second largest quarter on record. This increase was driven by huge inflows into exchange traded funds (ETFs), fuelled by investor concerns regarding economic fragility and an uncertain financial landscape. It was all the more remarkable in that Asian demand, primarily from China and India, has been weak so far this year. thus, global demand for jewellery was down 19%, as higher prices and industrial action in India and a softening of the economy in China meant many consumers delayed making purchases.

Inflows into ETFs totalled a massive  364 tonnes in the quarter – the highest quarterly level since Q1 2009 – and compares with 26 tonnes in Q1 a year ago. The WGC reckons that gold found favour as a risk diversifier due to the negative interest rate environment in Europe and Japan, combined with uncertainty over the Chinese economy, anticipation of slower interest rate rises in the US and global stock market turmoil.

Total bar and coin demand, even in Asia,  was stronger by some 254 tonnes, marginally higher than the same period last year. Weakness in price sensitive markets was offset by strength elsewhere with 5% growth in China (62 tonnes) and strong demand in the US and the UK, which grew by 55% and 61% respectively. In total, investment demand was 618 tonnes, up 122% from 278 tonnes in the same period last year, igniting a rally in the gold price which appreciated by 17% in dollar terms during the quarter.

This strong investment performance was not reflected in the bigger jewellery sector though, with demand levels sharply down in India and China. While both countries had a slow start to the year as a result of consumer uncertainty and rising gold prices, the situation was greatly exacerbated by the industrial action in India.

Central banks remained strong buyers, purchasing 109 tonnes in the quarter. This represents the 21st consecutive quarter that central banks have been net purchasers of gold as they continue to diversify away from the US dollar.

Alistair Hewitt, Head of Market Intelligence at the World Gold Council, said: “Two major themes emerged in the first quarter of 2016. Spurred on by the uncertainty raised by negative interest rates, the investment sector was the dominant driver of gold demand, helping to push prices up 17% over the course of the quarter, as ETF inflows swelled. Conversely, jewellery demand endured a difficult quarter due to a continued lack of consumer confidence in the face of a weakening Chinese economy and a 42 day strike by jewellers in India. But we believe Indian demand has simply been postponed, with buying likely to increase for Akshaya Tritiya [Akshaya Tritya demand, which was a few days ago, turned out to be disappointing] and the wedding season.

“Looking ahead we anticipate that ongoing market uncertainty and unconventional monetary policies will continue to support both investment and central bank demand. This, combined with an expected recovery in India, should see gold demand remain healthy over the course of 2016.”

Total supply for Q1 2016 saw an increase of 5% to 1,135 tonnes compared with 1,081 tonnes in the first quarter of 2015. Increased hedging of 40 tonnes, coupled with slightly higher mine production of 734 tonnes (729 tonnes in Q1 2015), outweighed a marginal decline in recycling.

The key findings from the report for Q1 2016 are as follows:

  • Overall demand for Q1 2016 increased by 21% to 1,290 tonnes, up from 1,070 tonnes in Q1 2015.
  • Total consumer demand was 736 tonnes down 13% compared to 849 tonnes in Q1 2015.
  • Global investment demand was 618 tonnes, up 122% from 278 tonnes in the same period last year.
  • Global jewellery demand fell 19% to 482 tonnes versus 597 tonnes in the first quarter of 2015.  
  • Central bank demand dipped slightly to 109 tonnes in Q1 2016, compared to 112 tonnes in the same period last year.
  • Demand in the technology sector fell 3% to 81 tonnes in Q1 2016.
  • Total supply was up 5% to 1,135 tonnes in Q1 2016, from 1,081 tonnes in the first quarter of 2015. Mine supply was up 8% to 774 tonnes.

The Q1 2016 Gold Demand Trends report, which includes comprehensive data provided by Metals Focus, can be viewed  here  and on the WGCs iOS and Android apps. Gold Demand Trends data can also be explored using the WGC interactive charting tool 

Randgold Resources: Tough Quarter, Good results

Followers of perhaps the best performing gold mining major of the past few years are directed to the following article I’ve published on the Seeking Alpha website: Randgold: Tough Quarter, Good Results.  Interestingly Randgold (LSE: RRS, NASDAQ: GOLD)’s stock price has not risen nearly as much as some of its peers but that is because of its far better performance while virtually all the other major gold stocks were dropping like stones.  It has no debt, has not needed to take any impairments and is operating a progressive dividend policy where again most of its peers have been slashing their shareholder payments.  It has thus just announced a 10% dividend increase to $0.66 a share.

Highlights from Q1 2016 are as follows:

  • Profits up 19% quarter on quarter and 25% on corresponding quarter of prior year
  • Production down 11% quarter on quarter but up 4% on corresponding quarter of prior year
  • Total cash cost/oz up 3% quarter on quarter but down 8% on corresponding quarter of prior year
  • Cash increases 19% to $253.8 million on the back of reduced total cash costs and higher gold price
  • Solid quarter from Loulo-Gounkoto with production in line with plan and significant decrease in total cash cost/oz
  • Morila delivers steady performance with lower costs
  • Tongon production impacted by quaternary crushers commissioning and power supply interruptions
  • Kibali completes challenging quarter including optimising 100% sulphide feed, compounded by mill downtime
  • New Moku JV adds 1 275km2 to Randgold exploration portfolio in same greenstone belt as Kibali
  • West African exploration programmes deliver positive borehole and trench results
  • Shareholders approve 10% increase in annual dividend of $0.66 per share

In addition to the article on Seeking Alpha linked above, you can download the full quarterly statement at http://www.randgoldresources.com/quarterly-reports-page/3321

Randgold’s Kibali mine in DRC shines in record gold production year

For the record here follows a statement from Randgold Resources noting the success of its new Kibali mine in the DRC, which is already Africa’s biggest gold mine in terms of annual gold output.  Kibali is jointly owned by Randgold and AngloGold Ashanti, each holding 45% with the balance owned by DRC parastatal SOKIMO.  Randgold is the operator.

The Kibali gold mine in the Democratic Republic of Congo was the star performer in Randgold’s portfolio of operations in 2015, exceeding its target by 7% to contribute 642 720 ounces to the group’s record production for the year.

Speaking at a local media briefing here, Randgold chief executive Mark Bristow noted that the two-year-old operation’s remarkable success was a tribute to an effective cooperative effort which had united the developers, the authorities, the community, the contractors and suppliers in a strong commitment and a common purpose.

“It’s been a significant achievement for a country which is rich in mineral resources but has not always managed to make the most of this endowment.  Kibali is going to make a major impact on the Congolese economy – it has already spent more than $1 billion with local service and goods providers – and I believe it will also be the flagship for the development of a major gold mining industry in this country,” he said.

Bristow cautioned, however, that Kibali was still a work in progress and faced many challenges as it worked towards its completion in 2018, when the underground mine was expected to be fully operational.

“The next two years will be particularly tough, as Kibali continues to ramp up its underground production within the constraints of a lower grade and the consequent need for a higher throughput, and we are therefore forecasting an output of 610 000 ounces for 2016 and 620 000 ounces for 2017,” he said.

“To ensure Kibali’s continued delivery, our partnership with government and the community will if anything have to be strengthened.  For its part, government has to focus on the urgent need to establish an effective local administration, in an area where rapid population growth and the lack of functional structures are generating a complex social dynamic that will become increasingly difficult to deal with.”

Bristow said that despite the stressed gold market, the operational challenges at Kibali and socio-political issues in the DRC, Randgold remained committed to increasing its presence in the country, and had recently entered into a new joint-venture agreement – its third in the region – with government-owned Société Minière de Kilo-Moto SA (SOKIMO) and Moku Goldmines AG (Moku) for the Moku-Beverendi gold exploration project, along the same greenstone belt that hosts Kibali.  In terms of the agreement with the owner of the project, Société Minière de Moku-Beverendi SA, Randgold can earn in a minimum 51% stake in the project by funding and conducting exploration and completing a prefeasibility study.  This addition to its portfolio extends Randgold’s exploration footprint in the DRC to 7 824km², spanning the major gold belt in the north-east of the country.

“Our commitment to expanding our presence and stepping up our greenfields exploration here demonstrates our long term intent of finding world-class gold deposits and developing them into profitable mines, thus contributing to the DRC’s continuing evolution as a democratic society with a robust economy,” Bristow said.

121 Mining Investment Conference, London – next week

The 121 Group is a mining focused investment events company set up by the principal team which made the Mines & Money events such a success over a number of years.  The 121 conferences are designed, as the name suggests, to facilitate one-to-one meetings with the presenting companies in a relatively relaxed environment.

The next such event will be held in a new conference centre in London by Fenchurch Street Station, at the end of next week.  Registration is free for investors and analysts.  Check out the programme, which includes special presentations from industry experts and panel discussions, as well as corporate presentations, on the 121 Group website

Targeted networking – Two days of pre-arranged and targeted 1-2-1 meetings connecting projects to capital

Exclusivity – Entry is restricted to qualified investors, analysts, senior mining company executives and relevant mining investment professionals only

Market intelligence – Interactive two-day programme where presenters and panelists actively engage with the audience to create a two-way conversation

Convenience – Located in a brand new conference venue in the heart of London’s financial district

Local expertise – 121 Mining Investment London is run by a team with many years’ experience running leading mining investment events in London

Mining corporates – Present project updates, connect with current and potential shareholders and discuss your financing and capital raising needs with leading mine financiers and investment specialists

Mining investors and financiers – Meet with the management teams of mining production, development and exploration companies, brought together for your convenience in a state of the art City venue

Registration for the event is available via the 121 Group website noted above.

Three hugely informative reports on gold published today.  Free downloads available

Seldom has so much information on gold been released in a single day.  The last day of Q1 2016 has seen the publication of consultancy Metals Focus’ Gold Focus 2016 and the similar GFMS Gold Survey 2016.  Both run to nearly 100 pages and are packed with analysis and data.

The third report is out from the World Gold Council (for which nowadays Metals Focus is the major gold statistics provider).  This looks at gold in a negative interest rates environment.

All three of these reports are downloadable off the internet free of charge and are absolute musts for anyone with an interest in gold analysis and trends.  To download click on the respective links below:

Metals Focus Gold Focus 2016

GFMS Gold Survey 2016

World Gold Council:  Gold in a world of Negative Interest Rates

UK’s Royal Mint introduces ‘The Queen’s Beasts’ gold and silver coins

The UK’s Royal Mint has expanded its bullion sales portfolio with the addition of gold and silver coins celebrating The Queen’s Beasts – ten creatures that have featured throughout hundreds of years of British royal heraldry.

The series will be introduced a ‘beast’ at a time, starting with the gallant Lion of England, by British coin designer Jody Clark.  The coins are legal tender with face values way below their worth, but this makes them both VAT and Capital Gains Tax exempt for the investor.  The price for a single 1 ounce Gold Lion coin is priced on the Royal Mint’s website at the time of writing at £sterling 917.66 – suggesting that it carries a premium over the gold price of around 7% which does not seem unreasonable given the VAT and CGT exemptions.  Discounts are available for larger orders which will represent smaller premiums over the gold price – down to £898.27 for orders of 500+ suggesting a premium of only 5% for such a large order.  However one would need contact the Royal Mint directly for the latest price which will depend on fluctuations in the daily gold price.

Head of Bullion Sales, Nick Bowkett said: “The introduction of The Queen’s Beasts series brings an exciting new series of bullion coins to investors around the globe. With the current range consisting of 1 oz and 1/4 oz gold coins, the series also sees the introduction of our first two-ounce 999.9 pure silver bullion coin.”

Bearing The Queen’s Fifth portrait, also by Jody Clark, the new coins take their place in The Royal Mint’s core bullion range alongside the organisation’s flagship gold Sovereign and gold and silver Britannia bullion coins, as well as the Royal Mint Refinery range of gold and silver bars.

The Queen’s Beasts bullion coins will be exclusively available in the UK from www.royalmintbullion.com. The Queen’s Beasts bullion coins are also available for purchase via The Royal Mint’s global wholesale distributor A-Mark.

About the design

Inspiration for this series has been taken from The Queen’s Beasts sculptures, each standing at around 2 metres tall, originally created by James Woodford RA for the coronation ceremony of Her Majesty The Queen Elizabeth II held in Westminster Abbey in 1953. The heraldic creatures symbolised the various strands of royal ancestry brought together in a young woman about to be crowned queen. Each beast, used as an heraldic badge by generations that went before her, was inspired by the King’s Beasts of Henry VIII that still line the bridge over the moat at his Hampton Court Palace.

Today, The Queen’s Beasts sculptures can be found at the Canadian Museum of History in Quebec, while Portland stone replicas, also carved by James Woodford, watch over Kew Gardens in the UK.

The Lion

The Lion of England is the first of the beasts to be introduced for this new bullion coin series. Royal Arms are the arms of the monarch, an ancient device that represents their sovereignty. For the arms that represent Queen Elizabeth II and the United Kingdom, two beasts are shown supporting a quartered shield, the Scottish Unicorn and the English Lion. The crowned golden Lion of England has been one of the supporters of the Royal Arms since King James I came to the throne in 1603, but the symbol of a lion has stood for England far longer. Richard the  Lion-heart,  son of King Henry II, is famed for his three golden lions as the Royal Arms of England, and since the twelfth century, lions have appeared on the coat of arms of every British sovereign.  

The designer

Jody Clark is a member of The Royal Mint’s team of graphic designers and engravers. Jody has worked on notable projects such as the medals struck to celebrate the 2014 Ryder Cup and Nato Summit, whilst his contemporary interpretation of the iconic Britannia was chosen for the celebrated coin’s 2014 collection.

Jody is best known for creating the latest definitive coinage portrait of Her Majesty The Queen, released on United Kingdom coins in 2015, which features on these bullion coins.

In turning his talents to the reverse designs for The Queen’s Beast’s Bullion Range, Jody said: “I took inspiration from the original Queen’s Beasts, both the original versions in Canada and the Portland Stone replicas here that look out over Kew Gardens. They are very stylised and look imposing as statues, but the challenge was to capture this on the surface of a coin.

“I researched the origins of heraldry and coats of arms, and wanted to replicate the sense of strength and courage they were designed to convey. I created a sense of movement to make the beasts bold and dynamic, but the shields they guard still feature strongly as they are integral to the story.

“The lion in my design takes a rampant stance, the most fierce. I researched imagery of lions in the wild to make sure that mine had a true likeness to the creature’s character, but I was careful that it wasn’t too realistic. In this context the lion is a ‘beast’ and I wanted it to feel fantastical, so when it came to areas like the eyes I kept them blank. Adding too much detail softened the look and I think this way there is still a sense of sculpture reflecting the originals.”

Specification

Coin title The Queen’s Beasts 2016 – The Lion One Ounce Fine Gold Bullion Coin The Queen’s Beasts 2016 – The Lion Quarter-Ounce Fine Gold Bullion Coin The Queen’s Beasts 2016 – The Lion Two-Ounce Fine Silver Bullion Coin
Denomination: £100 £25 £5
Issuing Authority: UK
Metal: 999.9 Au 999.9 Au 999.9 Ag
Weight: 31.21g 7.80g 62.42g
Diameter: 32.69mm 22.00mm 38.61mm
Obverse Designer: Jody Clark
Reverse Designer: Jody Clark
Quality: Bullion
Packaging: Available as singles or in tubes of 10 coins. Available as singles or in tubes of 25 coins. Available as singles or in tubes of 10 coins.

 

Images of The Royal Mint and its products are available upon request. The Royal Mint retains copyright ownership © of all images. These may only be used for editorial purposes and cannot be sold or used for other marketing purposes without the permission of The Royal Mint.

About The Royal Mint

The Royal Mint has an unbroken history of minting British coinage dating back over 1,000 years. By the late thirteenth century the organisation was based in the Tower of London, and remained there for over 500 years. By 1812 The Royal Mint had moved out of the Tower to premises on London’s Tower Hill. In 1967 the building of a new Royal Mint began on its current site in South Wales, UK.

While The Royal Mint’s finest traditions are always respected, it continually innovates in order to stay at the forefront of world minting, embracing the latest production techniques and technology in order to offer excellence to our clients across the globe. By underpinning our proud heritage with a highly progressive outlook, The Royal Mint produces coins that remain a byword for trust and reliability the world over.

There were estimated to be 28.9 billion UK coins in circulation at 31 March 2014 ,with a total face value of over £4 billion, all manufactured by The Royal Mint. In total, nearly 2 billion UK coins were issued during 2013-14.

As well as over 1,000 years of producing British coinage, The Royal Mint has long been trusted with the currencies of other countries. It has served more than 100 issuing authorities around the world and currently meets approximately 15% of global demand, making us the world’s leading export mint.

The Royal Mint has been making official military campaign medals since it was commissioned to make awards for soldiers who fought in the battle of Waterloo in 1815. The year 2012 was of particular significance for The Royal Mint’s medal-making team, with the manufacture of all 4,700 Victory Medals for the London 2012 Olympic and Paralympic Games.

The Royal Mint has recently introduced a new fineness of Britannia bullion coins and a highly-secure on-site bullion vault storage facility, building on the gold Sovereign’s long-standing reputation for integrity, accuracy. This positions The Royal Mint and its bullion products as a premium proposition in this marketplace.

In September 2014, The Royal Mint launched a new bullion trading website, www.royalmintbullion.com, enabling customers to buy, store and sell bullion coins at constantly updated prices directly from The Royal Mint quickly, effortlessly and securely, 24 hours a day, 365 days a year.

In January 2015, The Royal Mint announced the revival of The Royal Mint Refinery bullion brand. Gold and silver minted bars bearing the historic marque became available for the first time since 1968, available direct to the public at www.royalmintbullion.com.

In June 2015, The Royal Mint launched Signature Gold, a new addition to its bullion trading service, allowing customers to purchase and own a fractional amount of a 400 oz gold bar from www.royalmintbullion.com.

In April 2014, The Royal Mint unveiled plans to develop a purpose-built visitor centre at its headquarters in Llantrisant, South Wales. Construction is expected to be completed during 2016.

 

Today’s gold headlines from Sharps Pixley

This morning’s top gold headlines on Sharps Pixley

Buy Gold From SharpsPixley.com

This morning’s top news headlines on sharpspixley.com

Silver mine margins benefiting from falling costs

London based precious metals consultancy, Metals Focus has noted an improvement in operating margins at the silver mining operations it analyses as the mining companies have been succeeding in making some substantial unit costs savings.  With most silver production coming from countries which have seen significant currency depreciation against the US Dollar, this has played a significant part in the margin improvement.  The Metals Focus note on this from its latest Precious Metals Weekly newsletter follows:

In spite of a fall in silver prices, basic operating margins rose q-o-q in Q2.15, aided by some notable cost reductions. Utilising data from our Silver Mine Cost Service, primary by-product silver total cash costs saw a 12% decrease q-o-q, falling to US$6.84/oz, a level not seen since 2011. This continued decline in operating costs is linked to the depreciation of many producers’ currencies relative to the US dollar. Of note, the Mexican Peso and Peruvian Nuevo Sol weakened by a further 2-3% versus Q1.15. In addition to the positive FX impact, increased revenue from by-product credits also helped. Q-o-q, lead, zinc and copper prices rose by 7%, 5% and 4% respectively, although this was partially countered by a 2% reduction in gold. Outside of this, oil rose by 7% q-o-q (based on the Brent price), although at an average of $66/bbl it was still some 35% lower versus Q2.14. Global silver grades also remained unchanged, averaging 160 g/t over the past 12 months.

All-in sustaining costs continued to fall, although this was solely attributable to the decline in underlying total cash costs, with the all-in sustaining component actually rising by $0.55 q-o-q; this additional component includes items such as stay-in business capital, near mine exploration and corporate head office costs. Looking at the financial standing of the industry, based on an average silver price of $16.44 in Q2.15, just 9% of the industry was loss making on an all-in sustaining basis; in comparison, 23% of gold production was loss making on an all-in sustaining basis during the quarter.

Looking to the current quarter, although mine site costs will benefit from further domestic currency weakness and falling oil prices, costs in the current quarter will be impacted by falling by-product metal prices. To date in the third quarter, lead, zinc and gold are on average some 11%, 14% and 6% below their second quarter level, while the fact that silver itself is down 9% will further eat into producer margins.