Subscribe for 12 months with recurring billing - $199

Buy 12 months of subscription time - $199

 

Search Gold Prices
Gold Price
[Most Recent Quotes from www.kitco.com]
Our RSS Feed

Gold Updates by Mail

Enter your email address:

Follow Us on Twitter
Wednesday
Oct272010

Agnico-Eagle Mines Limited: Record Quarterly Net Income of $121.5 million

AEM Chart 28 October 2010.JPG

Another record performance by Agnico-Eagle Mines Limited (AEM) on the back of high gold prices along with the completion of a number of quality projects should render the Eagle more than desirable in this sector of the market. And as the trend is to acquire more ounces on Bay Street through merger and acquisition activity, its a surprise to us that this company has not been the target of a take over move by one of the large caps.

So, we will kick off with a quick look at the above chart where we can see that AEM has had a good run recently, so one imagine that the latest set of record results would give the stock price a little boost. Also note that the pull back in price over the last few weeks which has taken the steam out of the technical indicators, thus allowing the stock price to move higher in tandem with gold prices. At the time of writing we checked into the 'after hours' trading session where we can see that the stock was traded up in the after hours session, which is a positive sign.

AEM After Hours Trading 28 October 2010.JPG

Today's results show a record quarterly net income of $121.5 million, or $0.73 per share, for the third quarter of 2010. These improved figures are largely attributable to a 140% increase in gold production, the highlights being as follows:

- Record Gold Production, Record Revenue and Record Net Earnings -
quarterly gold production of 285,178 ounces resulted in revenue of
$398.5 million and net earnings of $121.5 million

- Record Cash Flows - excluding non-cash changes in working capital,
$170.9 million versus the prior quarter's record of $138.9 million

- Record quarterly gold recovery at Kittila - with the 81% recovery in
the mill at Kittila, the design rate of 83% is on target for year end
2010

- Creston Mascota at Pinos Altos about to Start-Up - crushing plant has
been commissioned and loading of leach pads scheduled to begin in
fourth quarter

It should also be noted that the transformational phase at Agnico-Eagle is over, in terms of mine construction, AEM in now in a phase of optimization and expansion of their newly constructed mining projects.

Sean Boyd, Vice-Chairman and Chief Executive Officer, has mentioned the possibility of increasing the dividend, which is good news for investors who have had a dividend paid to them for the last twenty odd years, though it has been a fairly small one.

At quick look at the total cash costs per ounce gives us a figure of $441. This compares with the total cash costs per ounce of $436 in the third quarter of 2009, although it is disappointing to see it rise slightly.

We will see over the coming days and weeks just how well the market receives these results, as we know the market can be a fickle place and should these results not meet with their expectations some investors will take profits and look to re-enter at a lower share price. We do own this stock as Agnico-Eagle forms part of our core position and we will continue to hold onto it.

To read their news release in full please click here.


Back to our latest venture which was the launch of an Options trading service we are pleased to report that it is going very well so its a big thanks to all those who have signed up for it and the supportive emails that you have sent us.

Our premium options trading service, SK OptionTrader, has opened and closed 12 trades in the last 6 weeks, banking an average profit of 70% on these trades.

This brings our total of closed trades to 38, with 36 winners. This means that a subscriber who had invested $1000 in each of our 38 trades would have banked profits of $15,636.00. We have just posted a set of charts demonstrating the importance of timing in any trade on gold-prices, please click here if you are interested.


SK Chart 23 Oct 2010.JPG


The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today?


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.







Tuesday
Oct262010

Chart of the Week: Inflation in the Real World

The Real Cost of Living 27 October 2010.JPG
By Jake Weber, Editor, The Casey Report

As is often the case, there is a big difference between what the government statistics are reporting and what’s going on in the real world. According to the most recent inflation reading published by the Bureau of Labor Statistics (BLS), consumer prices grew at an annual rate of just 1.1% in August.

The government has an incentive to distort CPI numbers, for reasons such as keeping the cost-of-living adjustment for Social Security payments low. While there’s no question that you may be able to get a good deal on a new car or a flat-screen TV today, how often are you really buying these things? When you look at the real costs of everyday life, prices have risen sharply over the last year. For simplicity’s sake, consider the cash market prices on some basic commodities.

On average, our basic food costs have increased by an incredible 48% over the last year (measured by wheat, corn, oats, and canola prices). From the price at the pump to heating your stove, energy costs are up 23% on average (heating oil, gasoline, natural gas). A little protein at dinner is now 39% higher (beef and pork), and your morning cup of coffee with a little sugar has risen by 36% since last October. 

You probably aren’t buying new linens or shopping for copper piping at the hardware store every day, but I included these items to show the inflationary pressures on some other basic materials that will likely affect consumer prices down the road. 

The jump in gold and silver prices illustrates that it’s not just supply and demand issues driving the precious metals higher – the decline in purchasing power of the dollar is also showing up in the price of physical goods. It is because stashing wheat and cotton in the garage is an impractical way to protect purchasing power that investors are increasingly looking to protect themselves with the monetary metals – a trend that is now very much in motion.
---

[Jake is going to be digging deeper into the “secret” inflation in the next edition of The Casey Report, which will be released just following the upcoming midterm elections. Sign up today and make the powerful trends now sweeping the global economy and investment markets work in your favor. Our 3-month, 100% satisfaction guarantee assures you’ll love the publication or get a full no-questions-asked refund. Details here.]



Back to our latest venture which was the launch of an Options trading service we are pleased to report that it is going very well so its a big thanks to all those who have signed up for it and the supportive emails that you have sent us.

Our premium options trading service, SK OptionTrader, has opened and closed 12 trades in the last 6 weeks, banking an average profit of 70% on these trades.

This brings our total of closed trades to 38, with 36 winners. This means that a subscriber who had invested $1000 in each of our 38 trades would have banked profits of $15,636.00. We have just posted a set of charts demonstrating the importance of timing in any trade on gold-prices, please click here if you are interested.

SK Chart 23 Oct 2010.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Monday
Oct252010

SK OptionTrader Trades Show The Importance Of Timing

Recently closed trades by our premium options trading service SK OptionTrader show the importance of timing in any trade, especially when dealing with options.

SK OptionTrader Trades

The above charts document trades recommended by SK OptionTrader, along with the buy and sell prices that were signaled to subscribers. This illustrates the importance of timing when trading. As shown above, timing the market correctly can produce great profits, but equally poor timing can result in severe losses.

SK OptionTrader has been fortunate enough to being doing rather well recently when it comes to timing the gold market, as our options trades above show. In fact as well as an exceptional performance recently, we have averaged a gain of 41.15% per trade since we began the service last year. That includes all of our 38 closed trades, with 36 winners and just 2 losers.

This means that investing just $1000 in one average trade would have paid for your mere $99 subscription 4 times over.

In fact if one had invested $1000 in each of SK OptionTrader's trading signals to date, including the losing trades, one would have amassed $15,636 in profits.


We understand that what matters to most investors and traders is the bottom line and results.

SK OptionTrader has been delivering results and substantial profits for our subscribers bottom line.

Our full trading record can be viewed here, which contains a complete record of all 38 of our closed trades.

Not just our best 38 trades, not a handpicked selection of 38 trades, but all 38 trades that SK OptionTrader has recommended and closed.

SK OptionTrader is not merely another gold investment letter that aims to perform well solely when gold prices increase

We aim to perform, period.

This is not a service which recommends you buy XYZ and hold it until eventually some day it goes up.

This is not a service which gives buy recommendations, claims larger paper profits, but never gives a sell signal then.

This is an active trading service, with the average trade being held for less than 60 days, which aims to make money in all circumstances, whether gold be going up, down or even sideways.

To find out what are next trades are, sign up to SK OptionTrader now by clicking one of the buttons below and following the instructions.

You do not need to be a member of Paypal, all you need is a valid credit card or bank account.


Subscribe for 6 months - $499

 

Subscribe for 12 months - $799

 

Wednesday
Oct202010

Getting Real About Real Estate

David Galland interviews real estate professional Andy Miller, Miller Frishman Group
In 1990, following the real estate debacle of the 1980s, Andy Miller co-founded SevoMiller, Inc. The company provided workout services for major financial institutions throughout the country and also began buying and developing apartments, retail and office properties. From its founding to the present, the company’s acquisitions totaled over 30,000 apartment units, several million square feet of retail space, and numerous office projects throughout the country, including the states of Colorado, Arizona, California, Nevada, Illinois, Texas, Louisiana, Indiana, Oklahoma, Georgia, and Florida. 

Employing over 500 people, SevoMiller also built, managed, marketed, leased, and sold commercial real estate for many institutions and third-party owners across the country. Clients included General Electric Credit, SunAmerica, and Huntington Bank, as well as many defunct banks, savings and loans, and private equity groups

In 1994, Andy and Dave Frishman co-founded Realty Funding Group, a mortgage and finance company that has acted as a mortgage broker and mortgage banker for numerous commercial real estate projects across the U.S. RFG has provided financing for over $1 billion of commercial real estate. In 1998, Andy founded Rapid Funding, a commercial and residential hard-money lender that has loaned in excess of $200 million for land developments, shopping centers, office buildings, and construction loans on condominium buildings. In addition to sourcing and servicing real estate loans, Rapid Funding also handled its own workouts and sales. 

Each of these companies founded or co-founded by Andy now operates as part of the Miller Frishman Group.

The following interview with Andy Miller is brought to you by The Casey Report, where readers seek big profits from big trends, and was conducted on Monday, October 11, 2010.

David Galland: Given the importance of real estate to the economy, it’s not surprising that we get a lot of questions about the sector. There's a growing awareness of the problems with mortgage-backed securities and foreclosures, so let’s start there. What's the buzz in the industry?

Andy Miller: Talking about single family, as opposed to commercial, the most visible news story is what happens with the "robo signing" scandal and the foreclosure moratorium.  

The short answer is that we don’t know the full implications yet. A lot will depend on how inclusive this becomes in terms of which lenders will also adopt this moratorium, in how many states, and for how long? All those questions have yet to be answered, but as a generic comment, I'll say this; if what happens results in a concerted effort to impede or stop or delay foreclosures throughout the country, it's going to have a very, very big impact. It's going to have an impact in some ways that are obvious, and some ways that aren’t so obvious.

We believe there are roughly 8 million loans now in some stage of default or foreclosure. If those 8 million loans are impeded, if the time that it takes to foreclose is extended, or if state attorney generals won't let lenders start foreclosures, that will have serious repercussions.

Paradoxically, because it will reduce the number of foreclosures and short-sales coming to market, one of the things you may see is the home market improve slightly over the next three to five months. That may seem like a blessing to the politicians as it will certainly staunch some of the negative news headlines out there around foreclosures, but it doesn’t do you any good because ultimately the price paid for the short-term abatement in the news cycle could be high. 

DG: Okay, so that’s a plus for the political optics of the situation, but what about the flipside?

AM: Well, for starters you have to ask what impact this will have in the mid to long term on the ability to sell mortgage-backed securities into the marketplace? If you're an investor or institution that's already loaded up on a bunch of mortgage-backed securities and your master servicers or your special servicers are saying, "We're really stuck in this mire right now where we can't foreclose or address our defaults," how much more of this paper are you going to want to buy? I don’t think very much.

Now, the truth is that the Fed is buying a lot of these things, but at some point in time, it is going to need to divest itself of the trillions of dollars of mortgage-backed securities, and who's going to want to buy those, and at what yields? I mean, if you know that with the swipe of a pen, an attorney general can impose a moratorium or somehow prohibit you from doing foreclosures, that has to have dire implications for the future of mortgage-backed securities.

DG: Then there’s the moral hazard.

AM: Absolutely. If you're a hard-working person who has stayed current on your mortgage even at some hardship to yourself, and your neighbor who's been living in his home for 12 or 15 months without making payments comes over to the barbecue on Saturday afternoon and tells you, "Oh by the way, my foreclosure has been blocked. It looks like I get to live here another 12 or 18 months scot-free," does that encourage anybody else to do the same? It's very hard to know, David, but it doesn’t do the market any good.

As you know, it's my contention that the only thing that's going to fix this situation is to let the free market deal with the issues so that prices can settle at their own level. All these machinations to manipulate foreclosures and/or prices and/or interest rates are only exacerbating the already bad consequences for the home market.

DG: What should concern investors in all of this?

AM: Frankly, we can’t know yet. There are too many variables still unsettled. What I would advise is that everybody should be acutely aware of what's happening right now, and once we really know how much time this is going to take and what lenders are most involved, only then will we be able to interpret how bad this is going to be and what the risks are. But right now it's unknown. It just doesn’t look very good. 

DG: What about commercial real estate?

AM: In contrast with the residential housing market, on the commercial side everybody has the giggles. I've never seen anything like it. It's a real paradox, because there’s a very active commercial market right now with all kinds of money entering the market and paying ridiculously high prices for assets, and it is almost as if the crisis never happened. In some cases, meaning some states and some product types, we are actually seeing commercial real estate prices at about what they were in '07. 

DG: These are people looking to deploy their cash into tangible, productive assets?

AM: Yes. There's a lot of institutional money on the sidelines earning no yield that is increasingly being deployed. A lot of this hot money has found its way into commercial real estate. There are very few individual buyers out there that are actually laying out their own money to buy product – this is mostly institutional money, which means the buyers are using other people's money to chase product, and we see that acutely.

DG: You’ve discussed this point in the past interviews we’ve done in The Casey Report – that these institutional money managers are often given time limits during which they have to deploy the money they are entrusted with, or return it to the investors. And so the buying can become fairly indiscriminate. Do these chickens come home to roost at some point?

AM: Yes, absolutely. David, the commercial business is a mess. The fundamentals are not improving. We've talked about this before, but just to reiterate, you have to start by asking, what constitutes a recovery in commercial real estate?

Everybody is very convinced right now that we're seeing a recovery. In commercial real estate, we can be specific in defining what that actually means. Recovery means one or more of three things are happening: either your rents are going up, your expenses are going down, or your vacancies are going down. That's it. 

In order for commercial real estate to be in recovery, one or more of those factors have to be present. That is a recovery. If you measure each section of the United States, if you look at all the various product types within those states, those fundamental factors are not improving, meaning there is no recovery happening. In fact, I would argue that they’re eroding.

DG: What about the banks? Recently money manager Chris Whalen made the case that despite being given essentially free money by the Fed, and lots of it, the big banks are still in deep trouble over their mortgage portfolios.

AM: The banks have been very fortunate because they’ve managed to squirrel away a lot of money into their reserves, at least those institutions that focus on the commercial side. This is not true on residential. On the commercial side, I think they are very heavily reserved for a lot of what they see as their problems. Most of the banks that I come into contact with feel very comfortable that they have adequate reserves, so that no matter what happens to commercial real estate, they believe they’re covered. 

DG: I guess we'll find out in time if they are.

AM: Yes, we will. Even so, I don’t think commercial is the big Achilles heel for these institutions right now because of the manipulations the federal government has undertaken. I think the real Achilles heel for all these banks, and for bond markets, is going to be the residential markets. Not to be overly dramatic, but this is a huge ticking time bomb. Things are getting worse, not better.

In fact, what we see now is that the distress is moving up the scale. The single-family home markets under $350,000 in a lot of the country are fairly sound. There is a pick-up in sales activity and lending. But when you get to the mid and the upper ends of the marketplace, there's no upward mobility. In other words, people aren’t selling less expensive houses in order to trade up, which was very much going on in the housing bubble. In fact, people are having a very difficult time in the mid and upper ranges selling their homes.

For one reason: it is now very difficult to finance these homes without a large down payment. We've watched that situation closely and think that’s going to really exacerbate the problems in the market. 

DG: There is a lot of discussion about the problems in loan origination documents. How serious a problem do you think this is? One reader wrote in that they know somebody who didn’t even have a mortgage on his house, but a lender tried to foreclose on it anyway. Are things really that screwy at this point?

AM: It's certainly problematic, and there was a lot of sloppiness when these loans were securitized and sold off. Who knows where the original documents are or what shape they are in? I can tell you, however, that if you lose an original note and you have to file a foreclosure, it's not the end of the world. You can have that addressed by a title company, but it's expensive and it's time consuming. But at this point we don’t know the extent to which documents are lost, poorly executed, or don’t exist.

For the time being, Bank of America has put a national moratorium on foreclosures. In order to understand how big a problem this really is, I think we have to wait and see who else follows suit, and how long this will last. If you take this to its nth degree and you assume that the worst case unfolds, it's bad. It's going to look good in the short run, but it's really bad for the market, and it's really bad for homeowners going forward.

DG: Obama's refusal to sign the bill regarding electronic notarizations strikes me as being based as much on politics as anything. After all, ahead of an election, it wouldn’t do to be seen signing something considered supportive of foreclosures. So the administration has just kicked the can down the road, past the election.

AM: At this point I would judge every event and every news story that you see by just one criterion, and that is that the government is doing everything it can to slow down or impede the foreclosure process.

So whether the president signs something or doesn’t sign something, or says something or doesn’t say something, the intent is to do whatever it takes to impede or slow down this crisis. If there are losses to mortgage holders and investors, the politicians will try to turn this to their advantage by framing it as being that the banks and mortgage lenders deserve the losses because they’re the cause of this problem. That's what you're going to see, that's what you're going to hear, and it's all intended to be a feel-good solution that makes everybody believe that our government is really looking out for us. Meanwhile, the SOBs that originated all these mortgages are going to get what they deserve.

DG: But ultimately this has to be resolved, that is unless the government is willing to give a bunch of people free houses. 

AM: Years ago I said to you that what was happening in real estate was going to culminate in a big crisis, but that if it were to happen in a measured way that let the free market do what it does best, then the crisis would be less intense. But the latest developments are going to create a lot of intensity and only make things worse.

DG: What about Fannie and Freddie? They were right in the middle of creating the mortgage mess, and they are at this point de facto government institutions? Not letting them foreclose would seem to be setting the stage for another huge loss to taxpayers.

AM: The nice thing about being the federal government is that you can throw Fannie and Freddie under the bus and suffer no real consequences, at least not in the short term. For most people, that will look good.

The important thing for your readers to remember is that these aren’t solutions that do anything. These are solutions that have optics, that's all. There's an election coming up. The government wants people to feel good. They want everybody to feel like our government is really addressing these problems. They want it to seem to the public like the government cares. And that's what this is, that's what this is all about, in my opinion, and I think you're going to see some really very, very undesirable, unintended consequences.

DG: And on that note, thank you very much for your time. Very interesting, as always.

AM: Happy to help out. Let's talk again soon.

Staying in touch with the powerful trends sweeping the U.S. and global economy has rarely been more important. That’s where The Casey Report comes in. Co-editors Doug Casey, Bud Conrad, Terry Coxon, Don Grove, and David Galland make it their purpose each month to bring investors the facts about what’s really going on the economy and investment markets, as opposed to the daily bombardment of fictions you hear from Wall Street and members of the government. And one of their favorite investments for the near future is betting on rising interest rates. Read more here.


Back to our latest venture which was the launch of an Options trading service we are pleased to report that it is going very well so its a big thanks to all those who have signed up for it and the supportive emails that you have sent us.

Our premium options trading service, OptionTrader, closed 5 trades last week, banking profits of 100.00%, 101.34%, 101.49%, 85.05% and 81.43%

SK Chart 17 October 2010.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Tuesday
Oct192010

Severstal Gold IPO imminent?

HRG Logo 31 July 2009.JPG

Always appreciated we now have an update from Chris Charlwood who has very kindly sent us this missive updating us on the current state of play over at High River Gold Mines Limited (HRG) which we hope that you find interesting and informative:

Although Severstal declines to comment on their Nord Gold IPO (name changed from Severstal Gold), the media reports are becoming very frequent with two more today (linked below). The $4-5B valuation claim is consistent and let’s keep in mind  that High River Gold  makes up 57% of the total Nord Gold production and over 31% of resources – with potentially more resources to come through the $23M drill program underway and a resolution to the Prognoz Silver dispute. I suspect that once these results are in, HRG will make up 50% of the total $4-5B value (putting HRG at $2.40 - $3/share).
 
In preparation for its IPO, Severstal yesterday announced it will buy out the rest of the Crew Gold shareholders for US$4.65/share by way of an amalgamation. Severstal gets to vote its 93% shareholdings on Dec. 2nd. This gets them comfortably by the 2/3rds  votes  required for the amalgamation to succeed.  In effect, this amalgamation squeeze-out transaction could be considered  ‘a Fait Accompli’ –subject to minority dissention rights.  As there are concerns that HRG shareholders may suffer a similar fate in future, I thought I would get legal clarification as to the rules - stated below. The bottom line is that HRG shareholders are in a safe position and as stated in my previous communication, I believe Severstal understands the HRG minority temperament and will not try for a buy-out prior to the IPO. The main difference in comparing the two situations is that Severstal owns 93% of Crew Gold and only 72% of HRG. The exemption kicks in at  90%. Severstal would need to purchase an additional 18% (142M) of the outstanding HRG shares to get to over 90%.  As long as more than 10% (84.3M shares) hold out and don't sell their shares, Severstal cannot succeed at an amalgamation squeeze-out transaction with HRG. Currently HRG minority hold over 27% (230M shares). The institutional shareholders likely own up to 90M shares and have said they won't sell until fair value. I know of up to another 28M of retail minority shares that are not likely sellers and am sure that other anonymous owners will add to these numbers.

Here is the quote from the lawyer regarding the rules:
 
“While majority of the minority approval is generally required for a related party transaction, there is an exemption if the related party beneficially owns 90% or more of the class of affected securities and a statutory appraisal remedy (or an appraisal remedy on terms substantially equivalent to the statutory remedy) is available to the minority shareholders.  A dissent right is an appraisal remedy and a dissent right will be available to the minority shareholders in an amalgamation or arrangement.  By the way, there is no equivalent exemption from the  formal valuation requirement for the amalgamation/arrangement transaction.”
 
Here is my layman`s explanation after a follow up phone call with my lawyer:
 
There are two sets of rules that could apply in take-over attempts: the amalgamation rules and the related party bid rules. In the related party bid rules, the majority of the minority (over 50%) need to actually tender their shares for a take private transaction to succeed (the related party cannot vote its shares). In the Business Act amalgamation rules, 2/3s of those turning up to vote at a special meeting need to vote in favour of  an amalgamation transaction (majority holder can vote its shares). As an amalgamation is often proposed by a related party then both sets of rules apply thereby making the majority of the minority rule the main protector for minority shareholders. However, with the current amalgamation proposal for Crew Gold, Severstal is relying on an exemption to the majority of minority rule as they own over 90%. Unfortunately for Crew Gold minority, they now need to choose to accept the offer or give notice to dissent. To dissent means to write a letter indicating dissention along with proof of their shares. They  will still need to tender their shares as part of this process, but have the right to hire their own valuator for Crew Gold and put it to a judge. Severstal will have its own valuation on Crew that support its bid at US$4.65. In the end a judge will decide what the real value is and what needs to be paid to the dissenting shareholders. The downside to this course of action is that the shareholders are without the shares and without the cash throughout the court proceedings.
 
In an unrelated topic, HRG recently announced the resignation of its CEO - Igor Klimanov. The press release stated that the Board would convene to replace him. Igor says he has been offered another job by Severstal. I suspect we may see him as part of the Nord Gold team. Either way, I think we can relax in knowing that Severstal management is running HRG as efficiently as usual. They have a capable team and HRG is too important a piece of the IPO for them to lose focus. It would not surprise me if the CEO positions of both HRG and Nord Gold would be filled by the same person eventually.
 
Articles
Please note that in the second article, I believe this statement got lost in translation; ``Severstal also increased its interest in High River Gold [CA:HRG] to 73% and will take full control over the company via an off-market transaction.`` I believe that like in previous articles, it meant to say that the recent  purchase of an additional 2.4% was an off-market transaction and got them to 72% ownership continuing their full control of HRG. I don't believe any other off-market transactions have increased their ownership beyond the 72%.
 
http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a1.C_JIzNd_k         
 
http://minefund.com/wordpress/2010/10/19/severstal-said-to-eye-london-for-listing-of-nord-gold/
 
http://www.prweek.com/uk/news/1034729/Severstal-calls-FD-handle-IPO-task/               
 
Chris Charlwood
Investor
Rainerc7@gmail.com
604-718-2668

Back to our latest venture which was the launch of an Options trading service we are pleased to report that it is going very well so its a big thanks to all those who have signed up for it and the supportive emails that you have sent us.

Our premium options trading service, OptionTrader, closed 5 trades last week, banking profits of 100.00%, 101.34%, 101.49%, 85.05% and 81.43%

SK Chart 17 October 2010.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Tuesday
Oct192010

Gold Prices: On Days Like This

There are days when you pitch up for work and you really don't want to login, this is one of those days. No matter how much we warn you about volatility in our tiny sector of the market it still comes as a shock to the system for some of us when silver and gold prices undergo a sharp pull back. If our mail bag is anything to go by there are a few of you with a finger on the sell button ready to react to any news bite that hits your screen.

If your long term strategy includes a core holding then nothing has changed. Your trading account may have positions that have matured and reached the targets that you set, in that case you stick to your game plan and take the appropriate profits. Otherwise there is no need to panic as the current drop in gold prices, of around $36.00/oz to $1332.00/oz, is only 2.7%. If a stock fell by 2.7% we would pay no mind to it. This move is not a deal breaker or a trend buster, so keep your head and remain calm.

Taking a quick scan of the economic landscape we can also see that the DOW is down around 200 points, WTI Crude is down around $3.00, the HUI is down around 25 points, standing at 495 as we write. So, what is the driving force behind todays volatility, not too hard to detect as the Chinese have announced that it will raise rates as per this snippet from The New York Times:

China’s central bank unexpectedly announced Tuesday that it would raise interest rates for the first time in nearly three years, apparently in the hopes of dampening inflation and cooling off this country’s hot property market.

The move had an immediate effect on markets worldwide, sending stocks lower on exchanges in Europe and the United States as investors weighed the effect on China’s continued economic growth and its ability to serve as an engine for a global recovery.




Just in is this missive from Jim Sinclair:

Today is the height of nonsense for those that understand what is in fact taking place.
 
The .25 increase in Chinese money costs are symbolic and their use of MOPE.
 
The following statement by the US Treasury is simply an answer to China's position that the US is involved in more than benign neglect in the collapse of the dollar rally.
 
Gold is going to and through $1650. Today is just another day of drama in gold, full of noise and fury signifying nothing whatsoever in terms of the trend.

In conclusion all we can say is let the day roll on by, the dust settle and we will see just what the trends are telling us. We are not too far away from the next meeting of the Federal Reserve where QE2 would appear to be baked into the cake. The effect of such actions will play a major role in the direction of gold prices.


Back to our latest venture which was the launch of an Options trading service we are pleased to report that it is going very well so its a big thanks to all those who have signed up for it and the supportive emails that you have sent us.

Our premium options trading service, OptionTrader, closed 5 trades last week, banking profits of 100.00%, 101.34%, 101.49%, 85.05% and 81.43%

SK Chart 17 October 2010.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Sunday
Oct172010

Never Mind What The Fed Thinks, The Markets Have Decided QE2 is Coming

Federal Reserve Board of Governors 18 October 2010.JPG

Gold prices embarked on a massive rally recently, rising from around $1210 to $1380 in just two months. Simultaneously the US index, which has a traditional inverse relationship with gold, has fallen from 83.5 to 76.5 as America puts a nose ahead in the current currency devaluation wars. The fundamental factor that is driving both gold and equities higher, and the USD lower is the expectation of a second dose of quantitative easing (dubbed QE2) by the US Federal Reserve.

Two months ago, whilst we were signalling to our subscribers to purchase 'out of the money' GLD calls (on which we have doubled our money in a few weeks), there was a mixture of opinions of whether or not the Fed would announce more quantitative easing measures in 2010. Now it appears the consensus is that we will most certainly get an announcement of additional quantitative easing by the Fed at their meeting on November 2nd, the debate has moved from not if there will be more quantitative easing, nor when, but how much it will be.

The way the markets have behaved recently suggests that the expectation is that QE2 will be in the hundreds of billions, perhaps even a trillion, as the stocks have rallied, the US dollar is in a nosedive, US treasury yields continue to fall and gold prices are soaring. This puts the Federal Reserve in a precarious situation, since the markets have jumped the gun and probably already priced in around $500 billion of quantitative easing, perhaps more.

Whether or not the Federal Reserve previously intended to announce QE2 this November is now irrelevant. The fact that the financial markets have priced in hundreds of billions of dollars in more quantitative easing for this November effectively means that the Fed has been backed into a corner and the decision has now been made for them. Not announcing more quantitative easing means that the markets have anticipated and priced in, will be rapidly priced out. Stocks, treasuries and gold would sell off and the resulting increase in demand for greenbacks would cause a surge in the US dollar. The sell off would be particularly rapid and ruthless due to the large number of speculative positions taken in anticipation of QE2. The S&P hasn’t rallied 130 points in 50 days due to retail investors becoming more optimistic, improvements in the economy or company fundamentals. Those gains have been established by speculative buying by proprietary trading desks, hedge funds, and other trading operations all chasing the beta effect of a much anticipated QE2. In addition to this, of course the quant traders, which account for up to 70% of daily trading volume in US stocks and simply use computer algorithms to trade statistical relationships on a second to second basis, have jumped on the pattern and played their part to keep the markets ticking up nicely.

The Federal Reserve is not about disappoint and will certainly deliver QE2. Even if they were going to do it anyway, the accumulation of speculative positions betting on QE2 is now so large that they will not risk having those market players reverse their positions in an instant, sending stock plummeting and causing interest rates to jump, and therefore QE2 is now a certainty.

For similar reasons to those detailed above the Fed must also announce quantitative easing measures that live up to market expectations, since if they fall significantly short of the $500 billion or so that financial markets are currently pricing in, we would see similar severe selling pressures and this is another headache that Ben Bernanke does not want. Therefore the size of the quantitative easing package must be equal to or in excess of market expectations.

In fact it could be argued that QE2 in excess of market expectation is what is actually required, since many traders will have taken positions specifically for this announcement, and will close these trades shortly after, with the time old adage of buying the rumour and selling the news comes into play. Therefore perhaps a QE2 figure above what is currently priced into the market is needed in order to stimulate some buying after the announcement, to counteract the selling that will undoubtedly comes as traders take profits.

In additional to this there is a fair chance that the Fed will go too large for the fear of going too small. For the same reason that central banks generally do not set a target inflation range of 0% to X% for fear of deflation, it is probable that the Federal Reserve will err on the side of caution and lean towards announcing a number larger than market expectations than trying to target the precise level the market needs and risk coming up short.

Although many may believe that it is the market that must pay heed to what the Fed says, this is one of the cases where is it the market that is calling the shots. The situation between the Federal Reserve and financial markets is that what the market wants, the market gets; zero interest rates, multibillion dollar capital injections, insurance bailouts of 100 cents in the dollar, the market is indeed calling the shots down to the price of a paper clip. In just a few months Wall Street has picked the QE rabbit out of the Fed’s hat while Main Street sits out there wondering how the hell we got here, (to paraphrase Mr Gordon Gekko), when not long ago the recession was over and we were going to have a great recovery.

In conclusion, although QE2 may be a given, what is not certain is how much is already priced in, and how the market will perceive whatever figure we get in November. We have decided to maintain stop orders on our open positions in gold and silver, moving the stops up to lock in more profits as the market continues play in our favour. This keeps us exposed to further upside in the precious metals whilst limiting our downside risk. We actually think that some form of pull back in gold would be good to see, as it would make an assault on $1500 in the next few months a lot more probably from a technical perspective. On any such correction we would be aggressive buyers, however we are keeping our discipline and will not buy any additional positions whilst gold and silver are so drastically overbought.

Our premium option trading service OptionTrader is banking great gains in this rally, closing 5 positions on Friday with gains of 81% to 101% on trades opened just last month.

To get on board for the next move in gold and maximise your return by using options, visit www.skoptionstrading.com where you can view our full trading record and subscribe for just $199 for 6 months or $349 for 12 months.



Saturday
Oct162010

OptionTrader Closes 5 trades: Average Profit of 94% in 18 days

Our premium options trading service, OptionTrader, closed 5 trades this week, banking profits of 100.00%, 101.34%, 101.49%, 85.05% and 81.43%

This brings our total of closed trades to 35, with 33 winners. To demonstrate our performance, lets say a subscriber had invested $1000 in each of our 35 trades. That subscriber would have banked profits of $13742.90.

option-trader-acc-profits-5.png

Please not that these are closed trades, profits that we have taken and are in the bank, not paper gains in a portfolio that can vanish as quickly as they arrive.

In addition to this we have 3 open trades at present, showing gains of 144.55%, 140.38% and 68.75%.

We understand that what matters to investors and traders more than anything is the bottom line. Therefore our focus is on producing profitable results, and we feel we have achieved that. Our full trading record can be viewed here, which contains a complete record of all 35 of our closed trades.

Not just our best 35 trades, not a handpicked selection of 35 trades, but all 35 trades that OptionTrader has recommended and closed.

The five trades we closed this week are summarised below:


Bought GLD Jan-11 $131 CALLS @ $3.55 on 17/9/10
Sold for $7.10 on the 15/10/10
100% Profit in 29 days

Bought GLD Dec-10 $131 CALLS @ $2.98 on 28/9/10
Sold for $6.00 on 15/10/10
101.34% Profit in 17 days

Bought GLD Dec-10 $132 CALLS @ $2.68 on 28/9/10
Sold for $5.40 on the 15/10/10
101.49% Profit in 17 days

Bought GLD Dec-10 $135 CALLS @ $2.15 on 1/10/10
Sold at $4.00 on the 15/10/10
86.05% Profit in 14 days

Bought GLD Dec-10 $134 CALLS @ $2.37 on 1/10/10
Sold at $4.30 on the 15/10/10
81.43% Profit in 14 days

With a 6 month subscription costing just $199, and the average return on a trade being 39.26%, one would only need to have invested $1000 in just one average trade to have paid for the cost of subscription almost twice over!

You can subscribe to OptionTrader by clicking one of the buttons below and following the instructions. You do not need to be a member of Paypal, all you need is a valid credit card or bank account.

Subscribe for 6 months - $499

 

Subscribe for 12 months - $799

 

Thursday
Oct142010

Nothing Like Uncertainty to Boost Gold Prices

Gold Silver HUI USD Chart 14 October 2010.JPG


A snap shot of the year as captured by the above chart, shows that we have in first place silver, followed by gold, which is closely followed by the gold producers and in fourth spot, heading the wrong way, the US Dollar. Despite the stated strong dollar policy, the reality is that the United States Dollar is in free fall.

As things stand we have the sequel to Quantitative Easing about to darken our doorway in early November when the Federal Reserve will announce their intentions, which they have already trailed, so all we need to know is just how much will be allocated for this purpose. Then we have the Obama administration losing its popularity and facing the mid term elections also in early November. The results of which may well throw up a few new faces who just might have something to say about how things are being run and the wisdom of printing more money. We wont know until the results come in and we get some indication of where the power lies and just how vocal and influential these people will be.

We also have the unfolding sub prime mess which throws into question home ownership and puts a question mark above property investment, placing both buyers and sellers into the doldrums as the situation stagnates while ownership issues are resolved. Housing is not only an important part of the economy it weighs heavily on the minds of home owners who are now wondering if they do actually have the correct paperwork in place and can clearly demonstrate that the roof over them is in fact theirs. The only certainty we can see here is that the lawyers will very busy. Enough said.

Looking at the external forces that come into play the biggest by far is the stance that foreign governments are taking by disparately trying to maintain parity will dollar in order not to lose their competitive edge. And so the race to bottom continues with the competitive advantage being won and lost on a momentary basis as the other countries try to fall into line by making similar devaluations.

Over on Wall Street the 'DD' phrase is being played down, however we do have the possibility that we could experience a Double Dip recession as the recovery, in the western world at least, remains fragile with robustness still a long way off.

So just where are the winners? The answer is to look no further than the precious metals sector where both silver and gold prices have been on a tear and look set to become turbo charged. Its also true that the other commodities have also sprung into life, but that's a discussion for another day.

Please read what we have to say with a pinch of salt as we are not in the 5% to 15% of our portfolio allocated to the gold and silver group, apart from a little cash, we are fully loaded with physical gold and silver, their associated stocks and tranches of Options Contracts. These opportunities do not come along everyday and we are hitting it as hard as we can, a strategy that is not for the majority of investors.


Below we have the chart for gold prices where we can see a stupendous rally which started a little over two months ago adding $200/oz, driven by strong fundamentals and a weakening US Dollar. Also note that the technical indicators are at the top of their ranges, in particular the RSI, which could remain there for some time to come, as in this instance we expect the fundamentals to overcome the technical analysis and drive gold prices ever higher.


Gold Chart 14 October 2010.JPG


Taking a quick look at silver and we can see that over recent times silver prices are outperforming gold prices which adds a little spice to the world of precious metals. Since the end of August silver prices have gained a staggering $6.00/oz, which should come as no surprise as the gold/silver ratio has been out of kilter for some time. However, there is now a yawning gap opening up between the price and the 200dma which is now about 33% above that of the 200dma, but it can go to 50% plus before we get a breather. Although the indicators suggest a breather is due, as with gold we expect them to remain on the side for some time yet. With the occasional shallow pull back we expect silver prices to climb all the way to the end of the year.

Silver Chart 14 October 2010.JPG

Finally we have the US Dollar, which as we write has just fallen through the '77' level on the US Dollar Index, next stop could be as low as '72' where it will need to find a few friends in order to stop the rot.

USD Chart 14 October 2010.JPG


Back to our latest venture which was the launch of an Options trading service we are pleased to report that it is going very well so its a big thanks to all those who have signed up for it and the supportive emails that you have sent us. Stops are now being raised in order to lock in profits on our open positions.

SK Chart 11 October 2010.JPG


The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.







Tuesday
Oct122010

Severstal to acquire more of High River Gold Mines Limited

RIANOVOSTI logo 13 October 2010.JPG



Earlier today we picked up this small clip in the Business section of Rianovosti regarding Severstal's intention to increase its exposure to High River Gold (HRG) through the acquisition of more stock as follows:

Russia's Severstal, one of the world's leading steel and mining companies, is increasing its share in Canadian gold mining company High River Gold (HRG) to 72.64 percent from 70.38 percent, Severstal said on Tuesday.

The company said in a statement that its subsidiary Nord Gold N.V., formerly Severstal Gold N.V, had reached an agreement on the acquisition of 19 million shares, or a 2.26 percent stake in High River Gold Mines, at a price of $1.037 per share.

Severstal expects the transaction to be closed on October 18, the company said.

In August, Severstal, which had previously announced an intention to acquire 100 percent of HRG, purchased nearly 40.7 million ordinary shares in HRG for approximately $25.1 million, increasing its stake to 70.38 percent.

A little later we came across a similar article on MarketWatch from which we gleaned the following:

Following the Transaction, Severstal will have beneficial ownership and control over 610,362,172 Common Shares, representing approximately 72.64% of the issued and outstanding Common Shares as at the date hereof. The additional acquisition of Common Shares will occur in a private transaction outside of Canada from a non-Canadian seller.

Please click the links to read the articles in full.

It looks a like a question of watch this space for now.



Back to our latest venture which was the launch of an Options trading service we are pleased to report that it is going very well so its a big thanks to all those who have signed up for it and the supportive emails that you have sent us.

SK Chart 11 October 2010.JPG


The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.


Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.