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You do realize that UWTI trends off WTI's move here:
http://m.investing.com/commodities/crude-oil
?
lol..."morning shakeout precedes big move, sets up short squeeze" <<possible headlines?
Interesting morning nonetheless.
Here's one for the board:
Entertaining videos, JD.
Not a McCain fan.
I suspect you missed putting a zero in your hoped for pricing as a result of a conflagration to occur, which would necessarily drive price up rather than down.
"Conflagration: an extensive fire that destroys a great deal of land or property."
Hmm...it's kind of like being a paramedic or firefighter being bored in station, hoping for some calamity to occur so that you can rush to the scene and practice your life-saving skills. After all, you did not take all of that training to sit idle in a brick building. Sort of...but generally traders are not so well intended. Sheesh! Now you have me thinking about my moral intentions...lol! ($$$$$$$)
Of course, the line of morality in the above situations would be if you started the fire or caused the accident...and here we are making observations about the current situations and trading accordingly. (Perhaps now you feel better about your hopes?)
http://m.investing.com/news/forex-news/eur-usd-moves-lower,-following-fischer's-comments-on-possible-rate-hike-358309
Investing.com -- EUR/USD crashed below 1.12 on Friday capping a frenetic week of fluctuations, after market-moving comments from an influential member of the Federal Reserve on the increasing possibility of a September interest rate hike pushed the dollar broadly higher.
The currency pair wavered between 1.157 and 1.1310 on Friday before settling at 1.1187, up 0.0058 or 0.52% on the session. Over the last five days of trading, EUR/USD experienced one of its most volatile weeks of the year trading between a range of 1.11 and 1.17. After surging by more than 2% in Monday's session, the euro has fallen against the dollar in four consecutive sessions. For the week, EUR/USD closed lower by approximately 1.75%.
EUR/USD likely gained support at 1.1015, the low from August 18 and was met with resistance at 1.1713, the high from Aug. 24.
Speaking exclusively with CNBC, Fed vice chairman Stanley Fischer indicated that recent U.S. economic data had been impressive providing a compelling argument for short-term rates to head in a higher direction. Without explicitly stating that the U.S. central bank will raise its benchmark Federal Funds Rate next month, Fischer said the Fed could not wait for the case to be "overwhelming" before hiking rates above its current level of zero to 0.25%. Fischer also indicated that temporary headwinds that have caused recent volatility in global markets could recede quickly.
Currency traders await a panel discussion by several influential central bankers on Saturday, including Fischer at a conference in Jackson Hole for further indications on how global inflation could impact the Fed's decision on hiking short-term interest rates next month. The three-day summit at the mountaintop resort in Wyoming will conclude on Saturday with the most anticipated event of the conference – a symposium that will also feature Bank of England governor Mark Carney and Reserve Bank of India governor Raghuram Rajan.
Fischer, a noted Dove, could provide some clarity on the Fed's relatively ambiguous interpretation of its short-term projections on inflationary growth. Last week's release of the July minutes from the Federal Open Market Committee's last meeting painted a picture of a sharply divided Fed regarding their views on inflation. The FOMC said by some objectives the inflation data was "not progressing" toward its targeted goal, according to the minutes. Other members, however, said that inflation conditions for a rate hike would be met or could be "met shortly."
The Consumer Price Index for July inched up 0.1% on a month over month basis, below consensus estimates of a 0.2% increase. The Core CPI, which strips out food and energy prices, also rose modestly by 0.1%, falling below analysts' expectations. The yearly reading, which is a preferred gauge of inflation by the Fed, increased by 1.8%. In every month over the last three years, Core CPI on a year-over-year basis has fallen below the Fed's target of 2%.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose more than 0.5% to an intraday high of 96.35, before falling back slightly to 96.15 in U.S. afternoon trading. Following Friday's considerable gains, the index closed higher for a fourth consecutive session.
Here's a bold call:
"In the case of a widespread Gulf conflict, ‘$40 oil would be missing at least one zero.’
Richard Hastings, Global Hunter Securities "
http://www.marketwatch.com/story/tensions-in-yemen-may-soon-become-a-big-deal-to-oil-2015-08-28
Tensions in Yemen may soon become a big deal to oil
Yemeni men wearing military fatigue in March 2015.
Increasing tensions in Yemen could soon provide a sizable boost to oil prices once again.
Saudi Arabian ground troops entered northern territories in Yemen in a move to counter retaliatory attacks by Yemeni forces on Saudi soil, according to a report dated Thursday from Tehran-based Press TV, which cited comments from a military official.
Richard Hastings, macro strategist at Global Hunter Securities, said the news was likely part of the reason for oil’s price jumped on Friday after soaring Thursday.
October crude CLV5, +6.51% rose 6.3% on the New York Mercantile Exchange to settle at $45.22 a barrel. October Brent crude LCOV5, +4.98% on the ICE Futures exchange added 5.2%.
“Yemen would be, from a speculative perspective, the trigger for a much bigger conflict between the Gulf leaders with Saudi alignment, and Iran,” said Hastings. “If that were to unfold, then of course $40 oil would be missing at least one zero.”
Read: Why Yemen has the power to rally oil prices
Oil prices had rallied earlier this year after Saudi Arabia and other Gulf nations launched airstrikes against rebel forces in Yemen.
More from MarketWatch
http://www.channelnewsasia.com/mobile/business/shell-shuts-down-2-key/2083676.html
A
A
LAGOS: Anglo-Dutch oil giant Shell has shut down two key supply pipelines in Nigeria because of leaks and sabotage and declared a "force majeure" on crude oil exports.
Shell's subsidiary in Nigeria SPDC said in a statement the force majeure became effective from Thursday "following the shutdown of both the Trans Niger Pipeline (TNP) and Nembe Creek Trunkline (NCTL)."
The two pipelines take crude to the Bonny Light exports terminal, one of Nigeria's main oil terminals.
The company said a leak was reported on the TNP at Oloma in southern Rivers state, "while the NCTL is shut down for the removal of crude theft points."
Shell said it was working to repair and reopen the two key pipelines as quickly as possible.
"Force majeure" is a legal term releasing a company from contractual obligations when faced with circumstances beyond its control.
Shell, a major oil operator in Nigeria, did not disclose the volume of output affected by the incident.
The company has blamed repeated oil thefts and sabotage of key pipelines as the major cause of spills and pollution in the oil-producing region.
Crude oil theft or "bunkering" is a major problem in Nigeria, with estimates that the country loses some US$6 billion (€4.3 billion) in revenue every year because of the practice.
Nigeria is Africa's largest oil producer, accounting for more than two million barrels per day.
They are not raising rates, more QE is on the menu:
Oil continues surge; gold on the move as well
http://www.seekingalpha.com/news/2751336
• Slightly in the red for most of the morning following yesterday's melt-up, crude oil has turned sharply higher again in the past few minutes, now up 3.75% to $44.16 per barrel. Black gold had traded south of $38 during Monday's panic.
• Asleep for most of the week as the markets tossed and turned, gold has moved higher by 1.15% to $1,135.50 per ounce.
• There's no particular news out, but an appearance on CNBC by leading Fed dove Kocherlakota (not a FOMC voter this year) makes for a good excuse. Given the weakening inflation numbers, the Minneapolis Fed boss said a near-term rate hike would not be appropriate. More interesting, he's not against consideration of QE4, and says the Fed still has asset-purchase tools.
Agreed.
Oil continues surge; gold on the move as well
http://www.seekingalpha.com/news/2751336
• Slightly in the red for most of the morning following yesterday's melt-up, crude oil has turned sharply higher again in the past few minutes, now up 3.75% to $44.16 per barrel. Black gold had traded south of $38 during Monday's panic.
• Asleep for most of the week as the markets tossed and turned, gold has moved higher by 1.15% to $1,135.50 per ounce.
• There's no particular news out, but an appearance on CNBC by leading Fed dove Kocherlakota (not a FOMC voter this year) makes for a good excuse. Given the weakening inflation numbers, the Minneapolis Fed boss said a near-term rate hike would not be appropriate. More interesting, he's not against consideration of QE4, and says the Fed still has asset-purchase tools.
• ETFs: GLD, USO, OIL, IAU, UCO, PHYS, UWTI, SCO, SGOL, BNO, DBO, UGL, DWTI, DGP, GTU, GLL, DTO, UGA, UGLD, DZZ, USL, GLDI, OUNZ, DGL, DNO, DGZ, DGLD, AGOL, UHN, OLO, SZO, GEUR, UBG, GYEN, OLEM, QGLDX
I have to admit that you could very well be correct...if the emergency OPEC meeting request is denied...or if they decide to continue on current course. Other factors could also come into play. GLTY.
True. My post was mere opinion and not a "call", but based on other OPEC country needs and the current Venezuela call for an emergency OPEC meeting.
The Saudi's could stiff everyone, and tell other OPEC countries "Sorry, your people have to die until we kill our enemies.."
Keep watching. If emergency OPEC meeting occurs, this could quickly drop to $40 or less.
http://www.businessinsider.com/venezuela-wants-an-emergency-opec-meeting-2015-8
Careful keyote. IMO crude going back to $75-$80 level. The Saudi's are hurting too many other OPEC countries too deeply to not curb production and up pricing soon...not that the Saudi's are known to be great humanitarians, but they have subsidized other coalition countries. Currently, with the Saudi's having to borrow billions to balance their own budget, they are having to trim next years expenditures as well...so I don't think they have the wherewithal to continue down the current path. Venezuela is deeply hurting with food shortages and riots. Other OPEC countries are unable to balance their budgets. While past calls for an emergency OPEC meeting have been rejected, I think this one may get action, or cause greater adversity for the Saudi's than they can really master. (Don't forget, their great ambassador who was masterful at negotiations is also dead, not just the former King Abdullah.)
Basically, IMO, this war in Yemen has cost the Saudi's far more than they had anticipated. Their "Dessert Storm"-like moniker for there invasion of Yemen reveals how far they underestimated the Houthi's.
So on two fronts, economic and war, they are overextended like a high risk trade gone very badly. Eventually, they will have to cut their losses or risk losing all. Just my opinion only, GLTY in your trades.
OPEC countries can't balance their budgets at current pricing:
http://www.businessinsider.com/venezuela-wants-an-emergency-opec-meeting-2015-8
Reason why Venezuela wants emergency meeting:
http://www.foxnews.com/world/2015/08/27/venezuelas-food-shortages-trigger-long-lines-hunger-and-looting/
OPEC countries can't balance their budgets at current pricing:
http://www.businessinsider.com/venezuela-wants-an-emergency-opec-meeting-2015-8
Reason why Venezuela wants emergency meeting:
http://www.foxnews.com/world/2015/08/27/venezuelas-food-shortages-trigger-long-lines-hunger-and-looting/
Any oil players?
Oil skies 10% as Venezuela reportedly asks for emergency OPEC meeting
http://www.seekingalpha.com/news/2749766
• According to the WSJ, Venezuela is pushing for an emergency OPEC meeting to come up with a plan to combat the rout in oil prices. Any strategy would likely need the cooperation of non-OPEC producers, namely Russia, says one OPEC delegate.
• Russia would like closer ties with OPEC, but to this point hasn't had interest in cutting production to do so.
• OPEC isn't scheduled to meet again until Dec. 4, and has shot down previous requests for an emergency meeting.
• WTI crude oil is higher by 9.4% to $42.23 per barrel. USO +8.3%
• The Energy Select SPDR's (XLE +3.8%) gain this session is more than double that of the S&P 500.
• ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, UGA, USL, DNO, UHN, OLO, SZO, OLEM, XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, IYE, IEO, FENY, PXE, FIF, PXJ, NDP, RYE, FXN, DDG, DRIP, GUSH
• Oil skies 10% as Venezuela reportedly asks for emergency OPEC meeting
http://www.seekingalpha.com/news/2749766
According to the WSJ, Venezuela is pushing for an emergency OPEC meeting to come up with a plan to combat the rout in oil prices. Any strategy would likely need the cooperation of non-OPEC producers, namely Russia, says one OPEC delegate.
• Russia would like closer ties with OPEC, but to this point hasn't had interest in cutting production to do so.
• OPEC isn't scheduled to meet again until Dec. 4, and has shot down previous requests for an emergency meeting.
• WTI crude oil is higher by 9.4% to $42.23 per barrel. USO +8.3%
• The Energy Select SPDR's (XLE +3.8%) gain this session is more than double that of the S&P 500.
• ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, UGA, USL, DNO, UHN, OLO, SZO, OLEM, XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, IYE, IEO, FENY, PXE, FIF, PXJ, NDP, RYE, FXN, DDG, DRIP, GUSH
Is Apple the leading edge for the hydrogen fuel cell powered car? Lots of development going on in this field of technology. It is also interesting that Saudi Arabia has committed to building huge solar energy fields, and that these solar fields are currently said to be the among most effective means of producing hydrogen. (<<I'm not sure how or why.) Could Saudi Arabia be ahead in the future market scheme of energy? Are they pumping oil at record rates to sell as much as they can before it becomes near worthless?
Has Apple Found The Holy Grail Of Electric Vehicles? $AAPL
http://www.seekingalpha.com/article/3464786
Summary
Apple's much rumored electric vehicle may use fuel cell technology from U.K. startup Intelligent Energy.
Intelligent Energy's technology doesn't require high pressure hydrogen storage and can be refueled by swapping out self-contained modules.
Apple may already have exclusive rights to the technology, and use this as leverage to partner with an auto manufacturer such as BMW.
By now, the weight of the evidence that Apple (NASDAQ:AAPL) is working on a car has become overwhelming, but an announcement out of the UK of a hydrogen fuel cell powered iPhone may shed the most light yet on Apple's automobile project. The technology used to build the fuel cell powered iPhone could be used to build a fuel cell powered car, but not just any hydrogen powered car. The fuel cells powering the iPhone could amount to the Holy Grail of EV technology, able to provide long range combined with convenient and safe refueling almost anywhere.
Really Intelligent Energy
The report of the fuel cell powered iPhone 6 contained important clues about the technology. The fuel cell was built by Intelligent Energy (IE), a British startup with reported close ties to Apple. The ultra compact hydrogen fuel cell they built fit into the space allotted for the battery of the current iPhone and could power the phone for a full week.
The report also indicated that the hydrogen was stored at low pressure in some form of powdered medium. The fuel cell could be refilled through an gas inlet port converted from the headphone jack.
Intelligent Energy's iPhone fuel cell demonstrates impressive energy density, able to store about 4 KWh/liter. If the technology scales approximately as the current device, which is likely, then a gallon sized container would hold about 15 KWh. Just 6 of these gallon containers would store as much energy as the Tesla (NASDAQ:TSLA) Model S 85 KWh battery pack.
Although Intelligent Energy made the iPhone fuel cell refillable, it considers the best option for the future to be sealed cells that would be user replaceable. IE already markets a USB recharging system based on similar technology, called Upp, in the U.K. The Upp system uses metal hydride powder as the hydrogen storage medium.
I mentioned the gallon size battery pack because that's a reasonable size for something that could be swapped into an EV by a user. Each cell is a self-contained battery pack, so there's no messing with filling the vehicle with high pressure hydrogen gas. Because the cells are completely sealed low pressure devices, they could probably be sold anywhere. The Upp system and fuel cell cartridges are sold at Apple stores in the U.K.
Also very impressive is the weight of the cells relative to the Tesla battery pack. The 85 KWh Model S battery pack is estimated to weigh about 1200 lbs. For a similar 85KWh of storage (6 gallon modules using the iPhone cell technology), the weight would be about 1/10th of that.
Disrupting the Automobile Fueling Paradigm
The concept of lightweight, sealed fuel cells that are user replaceable completely disrupts the current paradigm of vehicle refueling. The IE fuel cell technology eliminates the need for special stations that provide fossil fuel, or even hydrogen or high speed battery charging. The cells could be made available through any retailer willing to participate in a cell exchange program with the maker of the cells.
Not only does this solve the problem of infrastructure availability, but it provides owners with a convenient way to eliminate range anxiety. Planning a long trip? Throw a few extra cells in the trunk.
The IE technology also appears to be safer than the fossil fuel alternatives and high pressure hydrogen fuel cell vehicles. Probably, the safety of the IE fuel cells is on the order of Tesla's demonstrated and enviable safety record.
Closer Than We Thought
When rumors first appeared about the Apple car, I wrote in Apple's Electric Vehicle Opportunity that an Apple car was about 5 years away. Lately, there have been indications that this timeline might be shorter. Reports of Apple's discussions with BMW (OTCPK:BAMXY) and Daimler (OTCPK:DDAIY) suggest that Apple's route to an EV will be very different, and potentially much faster than Tesla's.
It's been clear that Apple would not try to build it's own manufacturing capability from scratch, as Tesla has done. Apple would need a manufacturing partner for an EV just as it does now for its other products. Even with a manufacturing partner, development of an all new vehicle from scratch, all the design and engineering, would have been a daunting task for a company inexperienced with building automobiles. Assuming that this could be done in 5 years was probably generous.
Instead, Apple appears to be searching for a preexisting platform on which to base an EV. The lifts a lot of the design and engineering burden from Apple's shoulders. It also means that much of the production capacity would already be in place at the manufacturer's facility.
Apple needs an automobile manufacturer as a partner for another very important reason: distribution. Apple really can't sell the Apple car through its stores. As the Tesla experience has shown, people expect to be able to take their cars to the dealership for servicing. Apple stores couldn't provide that.
So Apple needs a manufacturing partner with a dealership network that can stock a reasonable selection of vehicles for customers and provide service for the customers. Apple wouldn't try to do that from scratch. Selling an Apple branded car through the partner manufacturer's dealership network is a much better option.
Wanting to partner with the likes of BMW or Daimler only makes sense. These are well known premium brands that also maintain substantial global networks of dealerships, especially in the U.S. So far, discussions appear not to have come to fruition.
I expect that they will eventually, if Apple really has gotten exclusive rights to IE's fuel cell technology. IE's technology promises to be the Holy Grail of EV: an electric vehicle technology that provides long range, easy refueling, and which doesn't require an enormous investment in refueling infrastructure.
Disclosure: I am/we are long AAPL.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Obviously Fed Chair Yellen is fully engaged, but fortunately she won't spoil the beauty of Jackson Hole:
http://seekingalpha.com/news/2745746-yellen-to-skip-jackson-hole?ifp=0
Along with several other FOMC members, Fed Chair Janet Yellen is planning to skip the annual gathering of monetary policymakers in Jackson Hole this year, marking the second time in three years the Fed's top official won’t be traveling to Wyoming.
Yellen's predecessor, Ben Bernanke, skipped the 2013 gathering.
The topic for the Aug. 27-29 conference will be inflation dynamics and monetary policy.
http://m.timesofindia.com/business/india-business/Indias-gold-demand-could-hit-950-tonnes-as-prices-fall/articleshow/48642560.cms
India's gold demand could hit 950 tonnes as prices fall
PANAJI: India's gold demand might reach 950 tonnes this year as lower prices spur buying during the peak festival season and for weddings, the world's biggest gold refiner, Valcambi, said.
Stronger demand in the world's second-biggest gold consumer could support global prices, which rebounded this week after hitting a 5-1/2 year low under $1,100 an ounce in July.
Valcambi chief executive Michael Mesaric said gold demand would be strong this year. "It could be between 900 tonnes to 950 tonnes," he said on the sidelines of the International Gold Convention in the city of Panaji in Goa state.
Demand for gold jewellery is usually robust in the final quarter as India celebrates festivals such as Diwali and Dussehra, when buying the metal is considered auspicious.
"All this should boost demand," said Alistair Hewitt, the World Gold Council's (WGC) market intelligence director.
In the first half of 2015, Indian demand fell 7 per cent from a year earlier to 346.2 tonnes. But gold prices in India have risen more than 11 per cent since hitting their lowest in four years in late July.
Reuters photo.
Industry officials say Indian demand is determined more by perceptions about future price movements.
"If consumers feel prices will go up, then they will buy during the festive season," said Rajan Venkatesh, managing director, India bullion, ScotiaMocatta, part of the Bank of Nova Scotia.
He expects Indian gold imports of between 850 tonnes and 900 tonnes in 2015, compared with 891.5 tonnes in 2014.
Another factor affecting gold buying will be the June-September monsoon rains. While some parts of the country had good rainfall the season is expected to be deficient overall.
READ ALSO: 7 reasons why gold prices are falling
Earlier this month the India Meteorological Department (IMD) kept its forecast that rains would be 88 per cent of the long-run average as a strengthening El Nino weather pattern was likely to trim rainfall in August-September to 84 percent, raising fears of the first drought in six years.
"If monsoon remains weak, then it will be a big negative for gold. More than 60 per cent of demand comes from rural India," Rajan said.
Meanwhile, in the Saudi's ongoing Yemen debacle:
http://news.yahoo.com/saudi-border-guard-killed-rocket-fire-yemen-103626578.html
Saudi officer killed in cross-border fire from Yemen
Riyadh (AFP) - A Saudi army general has been killed in cross-border fire from Yemen, the armed forces announced Sunday, making him the highest-ranking officer to be killed in border attacks since March.
Major General Abdulrahman bin Saad al-Shahrani, commander of the 18th Brigade, was inspecting troops deployed "on the front lines along the southern region when the post came under random enemy fire," said the military said in a statement carried by the official SPA news agency.
Shahrani was wounded in the attack and hospitalised, it said.
The statement did not say when the attack occurred but added that Shahrani had died of his injuries on Sunday.
Earlier, the SPA reported that a Saudi border guard had been killed on Saturday by a rocket fired from Yemeni anti-government rebels that hit a border post in the kingdom's Hazan region.
More than 50 people, most of them troops, have been killed along the Saudi-Yemen border since the Riyadh-led military coalition began air strikes on Iran-backed rebels across the kingdom's impoverished neighbour in March.
But Shahrani is the most senior Saudi officer to be killed in cross-border fire.
This has been inevitable. The patience of other OPEC nations pandering to Saudi's fears over Iran and the Houthi's in Yemen is like being stuck in traffic behind that one stubborn guy who thinks it's his civic duty to keep other traffic going slowly behind him. Eventually the road rage will take over. When it does we could see that once rumored spike by the Saudi oil minister to $200, and a totally different power structure in the region. (IMO, Iran has played their cards perfectly.) My prediction: lots of volatility ahead. :)
Gold continued its ascent, through $1140 resistance now at $1153. Might be time to sell Dow and buy gold. Bullish if gold hits $1200 next week.
http://www.kitco.com/charts/livegold.html?sitetype=fullsite
Gold still climbing:
http://www.kitco.com/charts/livegold.html?sitetype=fullsite
News flash: God may interrupt oil shipping lanes by parting the Red Sea again! Link and story below:
http://www.reuters.com/article/2015/08/17/us-mideast-yemen-quake-idUSKCN0QM1QK20150817
U.S. agency reports magnitude 5.9 tremor off Yemen coast
WASHINGTON
The U.S. Geological Survey on Monday reported a magnitude 5.9 earthquake off the coast of Yemen. The tremor took place about 128 miles northwest of Socotra Island, Yemen, according to USGS.
(Reporting by Susan Heavey; Editing by Emily Stephenson)
Could tighten the gap between WTI and Brent, re UWTI:
The Obama administration will now allow limited sales of U.S. crude to Mexico for the first time, marking another milestone in loosening a contentious ban on exporting domestic oil. The shipments, likely to be high-quality shale oil, would help Mexico's aging refineries produce more premium fuels, while U.S. refiners would continue to get Mexican heavy oil, a better match for them than the light oil coming from Texas and North Dakota. Crude futures -1.1% to $42.04/bbl
10% over the same period.
The Obama administration will now allow limited sales of U.S. crude to Mexico for the first time, marking another milestone in loosening a contentious ban on exporting domestic oil. The shipments, likely to be high-quality shale oil, would help Mexico's aging refineries produce more premium fuels, while U.S. refiners would continue to get Mexican heavy oil, a better match for them than the light oil coming from Texas and North Dakota. Crude futures -1.1% to $42.04/bbl
Banro's (BAA) CEO John Clarke on Q2 2015 Results - Earnings Call Transcript $BAA
http://www.seekingalpha.com/article/3437616
Banro Corporation (NYSEMKT:BAA)
Q2 2015 Earnings Conference Call
August 13, 2015 11:00 AM ET
Executives
John Clarke – President and Chief Executive Officer
Kevin Jennings – Senior Vice President and Chief Financial Officer
Analysts
Presentation
Operator
Operator
Good morning, ladies and gentlemen. And welcome to Banro Corporation Second Quarter 2015 Financial Results Conference Call. After the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time. Please note that this call is being recorded today, Thursday, August 13, 2015 at 11 AM Eastern Time.
I would now like to turn the meeting over to John Clarke, Banro's President and CEO. Please go ahead Mr. Clarke.
John Clarke
Thank you, Katy. And thanks to everyone for joining us today. Before we get started, we would like to emphasize that some of the information discussed in this call, particularly our targets for 2015 and beyond, and our forward-looking plan, is based on the information as of today, August 13. As well, our commentary contains forward-looking statements that involve risk and uncertainty.
Actual results may differ materially from those contained in these statements. And for a discussion of these risks and uncertainties, please look at the forward-looking statements disclosure in the financial results press release issued yesterday and in Banro's regulatory filings, including the Q2 2015 MD&A.
As usual during today’s call, I’ll provide broad overview of the second quarter 2015 together with an operations update for both Twangiza-Namoya. Kevin Jennings, Banro's CFO will provide an update on Banro's financial situation in this call. In June we published Banro's annual report of mineral resources and mineral reserves of the company’s four core projects of Twangiza, Namoya, Lugushwa and Kamituga. It provided a 59% increase in mineral reserves at Twangiza, the conversion of transition of fresh mineral resources into mineral reserves and the reference says to review whist as of December 31, 2014. The reserve growth at Twangiza extends the mine life of current installed operations to 14 years and provides the foundation for future optimization and the possible future expansion of the existing Twangiza operations.
The potential for future expansions coupled with the new level of consistent steady performance of design capacity being achieved at Twangiza, that we outlined yesterday in our Q2 2015 report and due to the flexibility of our operations going forward in any gold price environments.
Namoya remains on target to achieve commercial production in the third quarter of this year, stock material continues to increase as a result of the enhancements made thus far in 2015, and the focus is now shifting to ore delivery, which will receive a significant boost with the receipt of the larger mining fleet due to arrive shortly on site.
Now I’ll hand the call over Banro’s CFO, Kevin Jennings, for an overview of our Q2 2015 financial results.
Kevin Jennings
Thank you, John and good morning to everyone. Since most of you have read the financial results, press release and filings. I’ll go over them briefly and provide you some commentary on our Q2 and H1 results and some expectations for H2 2015.
In Q2, at Twangiza, we reported 34,000 ounces of gold and revenues of $42.5 million were generated from sales of 36,000 ounces at an average price of $1,194 per ounce. This compares to 21,000 ounces produced in Q2 of 2014 for revenue of $26.5 million from the sale of 21,000 ounces at the average price $1,292 per ounce.
This is a 74% increase in gold sold over the same quarter of 2015 with an increases of revenues of over 60% over that previous period. In terms of the key revenue drivers from Q1 to Q2, we saw Twangiza achieved the same quarterly mill throughput as Q1 at 428,000 ounces of ore milled, but at a lower grade dropping from 3.2 grams per tonne to 3.0 grams per tonne. Partly offset by improved recoveries from 80.7% to 82% as the operations continues to fine-tune the plant with the higher proportion of non-oxide material.
The Twangiza cash cost per ounce in all-in sustaining cost per ounce remain on target with the lower range of the 2015 guidance provided earlier in the year. The H1 cash costs were $558 per ounce that compares well with the lower range of the 2015 production guidance of $650 to $750 per ounce. The cash cost profile will increase as we progress through the year due to the decreasing ounce profile but with the improved production forecast at Twangiza in the second half. We expect to remain or beat the lower range of the guidance.
Q2 cash costs were $587 per ounce. A large improvement from the previous year and 11% higher than Q1 primarily to a number of inventory adjustments being the lease of sales ounces greater than production and a density reduction in ore stockpiles as a result of the NI 43-101 report findings. Partly offset by lower mining and processing costs due to lower ore tons mined and cheaper diesel pricing. In H1 the Twangiza all-in sustaining cost of $643 per ounce. And the all-in sustaining cost for the year is forecast at $800 to $850 per ounce.
Reflecting the lower production in H2 and higher sustaining capital spent on the TMF construction in the second part of the year. The company generated $14.7 million in EBITDA for the quarter and $33 million for H1 which was $23 million higher than EBITDA of $11 million in H1 of 2014. Net income before asset impairments was $1.5 million that’s compared to a net loss of $3 million in Q2 of 2014. A $50 million rate down was taken on the mine under construction balance at Namoya. This was a result of the aggregate adverse impact of lower consensus long-term gold price outlook.
And the impact of financing terms from the equity stream financing. As well the buildup of capitalized borrowing cost and pre-commercial operating losses from the extended ramp up due to the delay in financing and the redesign of the plant. The cash – restricted cash at the end of the second quarter amounted to $17 million compared to $3 million at the end of Q1 2015. The cash position improved with the funds from the second tranche of the Twangiza gold forward sale agreement and Namoya streaming transaction as well as additional funds from the $10 million gold forward sale agreement to procure cat mobile equipment, which is the company’s classified is restricted cash to highlight the predetermined use of proceeds.
The capital expenditures for Q2 are mainly be spend on the construction of the TMF, and this construction will be in full gear in Q3 and part of Q4. On the Namoya update, with the limited financial flexibility during the quarter, we had a balance of the cash spend with the activities, since we are going to be delayed with our cashable seven trucks due to the financing and logistics, we opted to commit financial resources to the additional 40 ton truck fleet.
On the process side, our primary focus was to ensure, we reached steady state stacking rate as supposed to making the – some modifications to the CIL plant. This concludes my summary of the financial results.
Now, I’ll pass it back to John for his operations review.
John Clarke
Thank you, Kevin. I’m going to the operations there is some receptive – some reputation, reputation to the some of the production staffs. Our staffs with the numbers for Q2 2015 the combined Twangiza and Namoya operations increased 44,850 ounces of gold with 34,325 of those ounces coming from the mine. Distinctly, first half of 2015 combined production from Twangiza and Nomaya to 90,047 ounces of gold, with 70,258 of those ounces coming from Twangiza.
The first half of 2015 cash costs for Twangiza decreased 30% to $558 per ounce when compared from $794 per ounce from the first half of 2014. And as Kevin pointed out the first half of 2015 all-in sustaining cost of $643 per ounce represents the 29% decrease from the first half 2014 cost of $902 per ounce.
With the completion of Q2, 2015 Twangiza has achieved a new level of consistent performance with continued strong gold production. This provides confidence and the flexibility to maintain current performance levels while increasing the proportion of non-oxide material in the Namoya field.
I’m very pleased to report on behalf of the Twangiza team, the Twangiza was loss time injury free, in Q2 2015. Progressing during the quarter to over 18 months and $7.5 million loss time, three hours. During the second quarter 2015, the plant at the Namoya mine maintained the first quarter 2015 achievements of 101% of design capacity by processing 428,661 tonnes of ore compared to the 340,654 tonnes during the second quarter of 2014, and the 428,844 tonnes in the first quarter of 2015. Continued focus on debottlenecking and incremental process improvements allow the mill throughput levels to be maintained even while increasing the proportion of the non-oxide material to an average of 43% for the quarter.
Indicated head grade of ore process during the second quarter of 2015 was 3.01 grams per tonne which can be compared to the 2.44 grams per ton during the second quarter of 2014 and 3.21 grams per tonne during the first quarter of 2015. The process recovery rates for Q2 was 82.2% compared to 84.3% during the second quarter 2014 and 80.7% in first quarter 2015. Q2 2015 gold production was 34,325 ounces compared to 21,431 ounces during the second quarter of 2014 and 25,943 ounces in first quarter of 2015.
Capital spending at Twangiza during Q2 2015 was focused on upgrades to mobile fleet and the continued construction of the TMF. Mobile fleet upgrades during the quarter included the replacement of critical components of the existing fleet. And the TMF construction continued at increasing activity levels, with activity levels expected to increase during the current third quarter based on the availability of appropriate waste from mining activities.
Pass on to Namoya, during the second quarter of 2015, the Namoya mine produced 10,525 ounces of gold from a total of 330,267 tonnes of ore, which was stacked and sprayed on the heap leach pads, at an indicated head grade of 1.53 grams per tonne gold. Stacking levels at the beginning of the second quarter decreased substantially from those achieved in March 2015, as a result of the impact of modifying the mine plan to allow the earlier access to the Kakula reserve pits as well as the adverse impact of unseasonably high rains on the delivery of materials and supplies.
During the second half of June and early July, Namoya achieved stacking rates in excess of 5,000 tonnes per day leading to material stacked in July of 151,026 tonnes. Further improvements are expected in August and September. And Namoya's focus is on ore delivery in order to support the increases in the stacking rate towards commercial production levels during Q3 2015 as well as optimizing the stacking process with the agglomerated heap leach in order to improve percolation and gold extraction.
At Namoya, for this third quarter 2015, we’re preparing for the delivery of the CAT 777 mining fleet additions in early September and commissioning in phases starting again in September. The Namoya Summit has been cleared for delineation and is planned to be ready for production activities during the fourth quarter of 2015.
On the exploration front, consistent with the first quarter 2015, exploration activities in the second quarter were limited as the company focused on development at Namoya and incremental operational achievements at Twangiza. Target drilling has not commenced for the Namoya Summit related targets and will continue through this quarter.
I’d like to make some closing comments. Out management team continues to focus on increased gold production from operations, while containing costs and increase in the company’s mineral resources to potentially enhanced life of its mines thereby increasing shareholder value. In the variable gold price environment, a constant focus on cost efficiencies is essential.
During Q2, 2015 with continued achievements exemplary statistics the increase in ore reserves and with the continuing steady state operations, design capacity of Twangiza. Our management team has demonstrated its ability to build and operate efficient, low cost gold operations, capable of accommodating the current fiscal gold market.
We do expecting our next call to show similar achievements both something in Namoya into commercial production to unlock Namoya’s great potential for further growth and to do so in the safe working environment.
Thank you, all for joining us today. I would like to turn the call back to our operator. And to open this call up to questions. Thank you.
Question-and-Answer Session
Operator
[Operator Instructions] And it seems that we do have a question from the line of [indiscernible], Private Investor. Caller, your line is open.
Unidentified Analyst
Yes. I've been long time in this – in the Banro stock. And obviously I’m happy about a lot of things you’ve done in terms of your input into the community and what you’re doing to uplifting the community. Just in terms of long-term what is the company’s direction in terms of, I’ve realized it’s a very long-term question in 5, 10, 15 years in terms of power, and other was total one points and generating the hydroelectric power. And how would the company utilizing its income from the mines to diversify and enlarge itself as a company that diversifies into other areas in the economy – into the – concerning the deal as one of the fastest growing economies in Africa.
John Clarke
I'll start answering that one first, thanks for the question. On the power front, we’re still focused on bringing hydro online at our operations. We don’t want to go into a greater depth to take our productions forward, so we are looking at those significant benefits, but focusing on timing – times that we can afford to take those depths than we do plan to do it. It’s not just hydro, our management team has pointed out to us in recent times that the cost of solar, the cost of winds power has come down substantially in the international markets.
And hydro is the obvious big winner for all of us, but we shouldn’t think – we want to ignore the incremental gains that we took assets even quite small capital costs and those other sources. It’s not the future is concerned, let’s make it success with what we already have with our existing mines, not just in returning value to shareholders from those two, but we have – we’ve actually got those two mines at the two extremes of it, 200, 250 kilometer goal about, all of which has exploration lands in kind of those names, which includes Lugushwa and Kamituga as landfill sites for redevelopment into mining operations. So we would expect diversification in operation to other core assets before we would be looking to far the field – that we already have.
If we were looking two years, two years ago, we used to have a statement on our presentation saying that we were – we had – the portfolio – the senior with the passion of the junior, from the success of Nomaya we can really use those statements again because we felt – it is actually asset base. I would go further what looking at, what can we do for the fields. And our focus is mining, because that’s were our skill basis and we’ve got an incredible asset base. But to the foundation, we all maintained to some significant agricultural developments, opportunities in the facility of our mines, that the foundation will ensure that the local communities benefit from because we want to be operating and successful by communities and those agricultural developments will help that. This is bit of a long answer. I hope I’ve stated your needs.
Unidentified Analyst
Yes. I understand, you focused on what’s going on right now. So I asked by super mature to really look into other aspects. Thank you very much for your time.
Operator
And your next question comes from the line of [indiscernible]. Go ahead caller your line is open.
Unidentified Analyst
Yes, what would be spending on the Tailings Management Facility at Twangiza in quarter three and four?
Kevin Jennings
Yes, the expenditures in that period of time will be approximately – will be anticipate spending at least $1.5 million to $2 million per month for the next five months.
Unidentified Analyst
Okay, so it would be going out over time?
Kevin Jennings
Yes, instruction that is really tonnes move to tonnes placed on to the TMF with aggregate stand and the actual construction.
Unidentified Analyst
It will be done as your mining – and you’re disclosing to that.
Kevin Jennings
Exactly
Unidentified Analyst
Okay, thank you.
Kevin Jennings
It’s a monthly task.
Unidentified Analyst
Okay so won’t be – you can draw that overtime, that won’t affect your finances significantly or one side obviously?
Kevin Jennings
Correct.
Unidentified Analyst
Okay. Thank you very much.
Operator
Thank you. Your next question comes from the line of [indiscernible] Goldman Associates. Your line is open.
Unidentified Analyst
Thank you. Congratulations Mr. Clarke on achieving so much success at low cost production and getting through some problems there, I’m aware of, and probably made even in that. I’ve got a couple of questions and how get off much you explained, can you give me more comfort on the $58 million write-downs and we walk around that good debt and talk about why we took that at this time and why that size and my second question is the agglomeration effort at Namoya held is up and was a surprise and cost as a money, is that working well and is the tradeoff between cost and technically speaking at Namoya with that agglomeration of the mines is that working for us.
John Clarke
So keep in mind I’ll answer that question, the last one first, it’s the quickest answer, its working extremely well. And we all operating very traditional heap leach pad having that agglomeration drum in place. The decision to fly that drum and save many months of working for change really has paid off. And so the answer is yes, it was the right decision it’s paid off well and is going extremely well.
Unidentified Analyst
Great.
Kevin Jennings
Okay. And in terms of little bit more color around the $50 million breakdown, as you know the pre-breakdown the assets at Namoya were about $440 million, this $50 million breakdown represents about 11% of the asset value and obviously 5% of our total book value. The changes basically it triggered the asset impairment was one – the change in our kind of the long-term consensus gold price that we put into the evaluation model, that had an impact also the impact of the financing terms of the equity stream, because the stream is not – part of the consolidated debt it is associated with the asset because it is stream and because of the current gold market the financing terms where a bit higher than our weighted average cost of capital to do that deal.
And also we’ve been capitalizing cost borrowing and some commercial losses over the last year. That have been building up and these are the indirect of opening cost and that’s partly due to some of the delayed financing and the redesign of the plant that we did not get to full commercial production right away. So I can tell you that the direct development cost obviously the evaluation is much higher than what we directly spent on the project and this $50 million kind of really reflects that delay in the project as well.
Unidentified Analyst
Would you call out of a generous allocation or a minimal allocation or kind of in the middle?
Kevin Jennings
Well. Now with the way the amount of scrutiny regulators give on asset impairment on the life of asset that – it is a prudent number.
Unidentified Analyst
Thank you, very much.
Operator
And there are no further questions at this time. I’d like to turn the call back over to the presenters.
John Clarke
Thank you very much. Thank you, everybody for taking part in the call. And we look forward to keeping you frequently up-to-date and providing growth over the future quarters. Thank you.
Operator
This concludes today’s conference call. You may now disconnect
Part two (missed part of the story):
Washington and New York claim they didn't see this coming and the headlines suggest it was out of the blue. Not true. In fact, China's telegraphed this move for years.
For example, Yi Gang, a deputy governor at the People's Bank of China noted on November 20, 2013, that "it's no longer in China's favor to accumulate foreign-exchange reserves." Zhou Xiaochuan, who was the leader of China's central bank at the time, proposed "supersovereign currency" that would diminish the importance of any national currency but especially the U.S. dollar in March 2008.
My point is that while Washington views the dollar as a weapon, China increasingly views it as a liability. And, in accordance with that nation's view of the world, Beijing has simply taken steps to defend itself because our leaders couldn't or wouldn't.
So now what?
We've actually seen this playbook before, albeit in a different era with different actors. Think back to September 1931, when the United Kingdom stunned the world by eschewing the gold standard - and in the process, caused the pound sterling to plummet more than 30%.
The severe devaluation gave Britain an exporting advantage - until a "me too" effect led other major exporters to take a hatchet to their own currencies. Of course, there's no gold standard to abandon today, which is a major reason the media have such a hard time envisioning another currency war, even as it happens right in front of them.
This time around, Beijing's actions firmly shift the global economic balance in China's favor. Sadly, Western Central Bankers and politicians could have prevented this situation, but that's a story for another time.
What matters now is how you handle the situation and how to position your money for profits even as most investors will be left behind their own self-imposed "Great Wall."
August 13, 2015
China's Doing Yellen's Job and Creating a Trillion Dollar Profit Pivot
by Keith Fitz-Gerald
Despite what the markets seem to think and many news sources would have you believe, China's move to devalue the yuan by 1.9% is not an act of desperation intended to prop up a failing economy. It's not a surprise. And, it sure as heck is not the end of the financial universe as we know it.
Instead, it's a brilliant move that singlehandedly changes the investing landscape and creates a fabulous new set of profits if you've got the guts and the smarts to make your move.
Today we're going to talk about why and, as always, what makes the situation so very appealing and so potentially profitable at the same time.
As always, I've got a few specific recommendations to get you started.
Let's begin by talking about what Beijing did and why I believe this is a major move that changes the investing landscape.
This is the biggest currency adjustment Beijing's made in 20 years and it's the biggest single drop since 1994 when China ended the old dual currency system.
On the surface, the 1.9% decrease in that nation's central bank "reference rate" is designed to support exporters and boost market pricing in China. Western analysts view it as a threat because it's clearly more "price fixing" on China's behalf.
What they don't understand is that China's been propping up the yuan for years to guard against capital outflows, to protect foreign currency borrowers and to stabilize the yuan's role in global trade as a potential reserve currency for the International Monetary Fund. If you think China's got too much power now, imagine what the world would have looked like today if that nation had not restrained its currency.
Dropping the yuan is actually a means of making room for market-based pricing.
I've long counselled that Washington had better be careful what it wished for when it accused China of currency manipulation, specifically because of the kind of reaction that's happening today.
Contrary to what Washington would have you believe about China's currency being undervalued, the yuan's real effective exchange rate has risen by 33% over the past four quarters, according to the Bank of International Settlements. In fact, the growth was so high and so fast that it was the single fastest appreciation move and the highest among 32 major global currencies tracked as reported by Bloomberg.
Dropping the yuan is not only logical, but part of the path China has to take to make its currency fully convertible.
In the old days, China would simply set a peg rate to the dollar that - love it or hate it - was completely arbitrary. Hence the currency manipulation allegations.
But now - effective immediately - market makers who submit prices to the People's Bank of China as part of the reference rate have to take the prior day's closing spot exchange rate into consideration, foreign exchange supply and demand, AND changes in major currency rates. In other words, market-based pricing.
This is exactly what's required by the IMF for reserve status - that a currency be freely usable and market driven.
China's Attack on the Greenback
The other thing that stands out about this move is that China is doing Yellen's job. You're not hearing about that... yet. But you will.
Classic economic theory dictates that a stronger dollar makes U.S. exports weaken, imports cheapen, devalues overseas profits, and brings about a sharp increase in domestic labor cost. By any measure, it's a restrictive economic policy which is why the Fed has so far refused to raise rates and - with a straight face - been able to sell their zero interest rate policies for so long.
The problem is that sooner or later the markets always fix things themselves.
China's move immediately makes the dollar stronger. That, in turn, further hamstrings U.S. exporters and worsens the trade imbalance with China. It also shifts the competitive advantage to Beijing.
Theoretically, Team Yellen would have addressed this by shifting the advantage to the United States with a rate increase long ago. Instead, what we got was more of the same - a totally inept sequence of fiscal blunders, stimulus and a "data-driven" Fed that's scared of its own shadow.
China simply took matters into its own hands.
http://news.banro.com/press-releases/banro-announces-q2-2015-financial-results-achieve-nyse-mkt-baa-201508121021205001
TORONTO, ONTARIO--(Marketwired - Aug. 12, 2015) - Banro Corporation ("Banro" or the "Company") (NYSE MKT:BAA)(TSX:BAA) today announced its financial and operating results for the second quarter of 2015.
FINANCIAL HIGHLIGHTS
Record Q2 2015 revenues of $42.6 million, a 61% increase over Q2 2014 revenues of $26.5 million; and record H1 2015 revenues of $83.6 million, compared with $57 million in the comparable period in 2014
Record EBITDA of $34 million in H1 2015, a 210% increase over H1 2014 ($11 million)
35,665 gold ounces sold in Q2 2015, representing a 74% increase over the same period in 2014
Gross earnings from operations of $15 million in Q2 2015, a 239% increase over Q2 2014 ($4 million)
OPERATIONAL HIGHLIGHTS
Twangiza continues to outperform expectations, resulting in a 60% increase in gold production to 34,325 ounces from Q2 2014 production of 21,431 ounces
Twangiza increases the proportion of non-oxide material processed to an average of 43% in Q2 2015
H1 2015 cash costs per ounce at Twangiza decreased 30% to $558 per ounce from $794 per ounce in H1 2014
H1 2015 AISC of $643 per ounce, a 29% decrease from H1 2014 of $902 per ounce
As reported in the Company's June 8, 2015 press release, Twangiza Reserves increased 59%, extending the mine life utilizing the existing plant to 14 years
PROJECT HIGHLIGHTS
Namoya continues to increase stacked material as it progresses on schedule to achieving commercial production in Q3 2015
China’s woes are a gift to gold stocks, Sterne Agee CRT says
http://www.seekingalpha.com/news/2721886
• China’s currency devaluation is welcome news for gold stocks such as Newmont Mining (NEM +5.2%), Agnico Eagle Mines (AEM +8.1%), Coeur Mining (CDE +13.9%) and Gold Resource (GORO +2.5%), Sterne Agee CRT analysts say.
• China's move should help gold and silver prices through risk-off investor diversification and heightened investment attention, especially from Chinese investors looking to protect purchasing power, and fragile global economic growth prospects highlighted by China’s struggles could delay any meaningful U.S. rate increases, the firm says.
• With investor sentiment still skeptical, the supportive macro news flow could provide fuel for a rally in gold mining equities, the firm says, preferring Buy-rated NEM, AEM, CDE and GORO; Barrick Gold (ABX +3.9%) is rated Neutral
The longer gold prices remain depressed below $1200, the more apparent the risk of holding miners with higher AISC will be. BAA shines because it can still maintain a sustainable profit margin at current spot gold pricing. Have you noticed how other miners with higher AISC have cut production?
#profitmarginmatters
Saudi Arabia is the sole controlling factor in current pricing. They turned all their spigots on. September is when they have said they are going to begin to slow production.
http://www.wallstreetsectorselector.com/investment-articles/editors-desk/2015/08/why-does-saudi-arabia-continue-to-pump-so-much-oil/
The Fed playbook driving the strength of the dollar has remained the same since the inception of QE (quantitative easing): print more money to dilute debt while stating you are going to raise interest rates. Eventually you would think people would learn that the Fed is simply bluffing on an interest hike, as a means of buffering investor sentiment.
Three or four years back I read an interesting article on QE, defining QE as the slippery slope that will eventually crash the dollar. Their thesis was that the strength of the dollar is a house of cards that will come crashing down if one of two things happens: people realize that once the Fed started down the QE road, an interest hike would be fatal to their policy...or the Feds actually incur an interest hike. That QE can only be successful if there is no interest hike, but people remain convinced that an interest hike is "just around the corner".
Since I read that piece, I've noted that every Fed meeting seems to accomplish just that, case in point:
Wall Street Breakfast: Bond Yields, Dollar Climb On Fed Outlook
http://www.seekingalpha.com/article/3400185
"Global bond yields are on the rise
after Atlanta Fed President Dennis Lockhart said it would take "significant deterioration" in the U.S. economy for him to not support a rate hike in September. Lockhart's opinion is especially notable as he's considered a centrist on the FOMC whose views typically mirror the consensus. Tracking similar movement in U.S. treasuries, German 10-year yields +3 bps to 0.66%, rebounding from a two-month low hit on Tuesday. The dollar index is also getting a boost, up 0.2% to 98.23 - its highest since April 23."
The question is: how long can this policy remain effective?
http://timesofindia.indiatimes.com/business/india-business/No-need-to-rush-to-buy-gold-or-silver-just-yet/articleshow/48323001.cms
No need to rush to buy gold or silver just yet
Gold prices are at a five-year low. However, experts feel investors should wait and watch as prices could slide further.
Thinking of accumulating gold be cause of the steep decline in prices?
Analysts feel this is not the time to go bottom fishing. Global gold pric es touched a 5-year low of $1,090 per troy ounce (31.1 gram) on July 22, down more than 42% from the all-time peak of $1,900 in September 2011. Though prices bounced back a bit the next day , experts feel more pain is in store. The metal is trading very close to the support level of $1,080. If it falls below $1,080, prices could recede by another 4-8% in the international market. "If the $1,080 support is broken, the next major supports are $1,040 and $990," says C.P. Krishnan, Whole Time Director, Geojit Comtrade.
However, the price may not fall too much because $1,000 per troy ounce acts as a longterm support. "It is the mining cost of gold," says Krishnan. Even so, the rise may be capped by resistances. "Heavy long build up in gold happened between $1,130 and $1,230.All these bull operators are in losses now.They will try recover their money once gold price reaches $1,130-1,140. This range will now be a major resistance zone," says Ram Pitre, independent commodities analyst.
While gold is down, the cut in silver has been more severe. The white metal is down 70% from its all-time peak of $48.6 reached in April 2011. Silver has been hit badly be cause it also has industrial uses. The slowdown in China has pulled down prices to $14.71 per troy ounce. The downside is not capped here because mining cost is $10.
Factors pulling down gold
Gold is down because recent events have led to a reduction in risk aversion. The Greek crisis has been resolved and Iran has signed the nuclear deal with the US. China, the largest consumer of the metal, has witnessed large scale selling. And fears of an interest rate hike by the US Fed have buoyed the dollar. Experts say there is nothing that can trigger a rally in gold right now. "Gold is the least preferred asset class right now," says Krishnan. The total gold holdings in SPDR Gold Trust, the largest gold ETF in the world, coming down from 1,291 tonnes in 2012 to 690 tonnes now, a fall of 47%, reflects this shift.
The fall in user demand from key markets like China and India is another worry for gold. The Chinese demand is expected to get affected because of the economic problems there. In India, the compulsory PAN requirement for purchase of more than `1 lakh has already started affecting demand. Monsoon is anyway a lean period for gold demand in India. "Since we are in the middle of a lean period, there is no need to jump in right now.Investors should wait for 2-3 months," says Manoj Kumar Jain, Director (Commodities & Forex), IndiaNivesh Commodities. Till now, domestic gold prices were cushioned from the global crash due to the depreciation of the rupee against the dollar. But the rupee has stabilised in recent weeks and there is also a possibility of it appreciating. "If that happens, it will be a double whammy for gold investors," says Pitre.
Should you short sell now
Given the headwinds faced by gold, short selling the metal in the commodity futures market could prove rewarding. You can buy and sell gold and silver by paying just 5% of the value. However, you have to buy (or sell) at least one contract of 1 kg. Gold is trading at `24,667 per 10 grams so the total value of one contract is '24.67 lakh and the margin required is 1.33 lakh'.
But playing the futures market is a risky game where newbie investors can lose their shirts. If the leverage multiplies your potential gains, it also amplifies the possible losses.If you have short-sold and the price of gold falls by '250 per 10 gram, you make a cool 25,000 on a contract'. A 1% change in gold price will yield a 20% gain on the investment.This could very well work the other way round. A 1% rise in the price of gold will wipe out 20% of the investment and will result in a margin call from the broker. A 5% change in the price can either double your investment or wipe it out completely .
Analysts believe one should not short sell gold at current levels. It is normal for the market to pull back to a previous support before the next wave of sell off. "$1,130-1,140 ('25,400 per 10 g) is a good price to short gold," says Pitre. Traders should take precautions by keeping strict stop losses and a buffer of margin money . "Short selling is a high risk game. Investors need to place a stop loss," says Krishnan. A stop loss can be placed at 25,700,' the price of gold before the crash.
http://news.banro.com/press-releases/banro-files-ni-43-101-technical-report-for-twangiz-nyse-mkt-baa-201507301019459001
Basics below, click on link to read the whole release.
TORONTO, ONTARIO--(Marketwired - July 29, 2015) - Banro Corporation ("Banro" or the "Company") (NYSE MKT:BAA)(TSX:BAA) announces that it has filed on SEDAR a National Instrument 43-101 technical report in respect of the Company's Twangiza gold mine, which follows the Mineral Reserve update for Twangiza announced by the Company in its June 8, 2015 press release. This report, which was prepared by SRK Consulting (UK) Limited ("SRK"), is dated July 29, 2015 and entitled "NI 43-101 Technical Report, Mineral Resource and Reserve Update, December 31 2014, Twangiza Gold Mine, Democratic Republic of the Congo" (the "Technical Report").
Highlights
As previously reported in Banro's June 8, 2015 press release, as at December 31, 2014, Twangiza Proven and Probable Reserves increased 59% to 1.64 million ounces ("Moz") of gold (22.38Mt @ 2.28g/t Au) with the inclusion of non-oxide materials in the reserve pit shell which are now considered to be economically treatable with the existing plant.
Total gold production of 1,246,311 ounces over 14 years, with an average annual production of 108,733 ounces of gold over the first 5 years.
Average total cash operating costs over the current life of mine of US$699/ounce, with total cost per ounce over the current life of mine of US$888/ounce.
Post-tax net present value ("NPV") of US$285 million based on a 5% discount rate and a gold price of US$1,200 per ounce.
Eventually, just in my opinion, crude will go MUCH higher.
To understand world diplomatic effects on oil, think of balance of power being like a tricky game of pic-up-sticks or straw that broke the donkeys back. Status quo keeps things equal.
First shift of power was Bush in Iraq (Sunni) taking out Saddam Husein, who held Iran (Shiite) in check. Now comes O, offering a nuclear deal to Iran. Saudi Arabia (main Sunni power) cannot understand the great betrayal by U.S., and launches crude boost driving down oil and sets out to eliminate Houthi (Shiite) threat on southern border in Yemen.
There are three great world powers, Russia, China, and America, along with lesser world powers that drives events. The Saudis had been relying on America to honor long term regional alliances. The Iranians are the main Shiite power, and deadly enemies of the Sunnis. Shiites are the most radically controlled by clerics of all Muslims, though ISIS (Sunni) is the extreme opposite in Muslim theocracy.
You can never tell what another will do under pressure based on your own values...because not all people share the same values.
Hope this basic sketch helps you.