April 30, 2013

US Gov: #Simandou illegal things: #Guinea Bribe-Probe Defendant Cilins Ordered Held Without Bail - Bloomberg


Benny can't be happy...

Guinea Bribe-Probe Defendant Cilins Ordered Held Without Bail

A French citizen with ties to BSG Resources Ltd. who is charged with obstructing a U.S. grand jury investigation into bribes paid to win mining rights in Guinea was ordered held without bail by a federal judge.
Frederic Cilins was ordered today by U.S. Magistrate Judge James Klindt in Jacksonville, Florida, to remain in custody because of concern he may try to flee if released. Cilins will be transported from Florida to New York to face criminal charges, Klindt said at a hearing.
Cilins, 50, submitted a false, unsigned affidavit in support of his bid to win release on bail and presents a “grave risk of flight,” prosecutors said in a court filing yesterday.
Cilins was described by Guinean Justice Minister Christian Sow as an agent of BSGR. He is accused of offering to pay a cooperating witness to lie to the grand jury and to turn over documents for him to destroy, according to an indictment filed last week in federal court in Manhattan. BSGR is controlled by billionaire Beny Steinmetz, who is Israel’s richest person, according to data compiled by Bloomberg.
Cilins, who was arrested April 15 in Jacksonville, is charged with five criminal counts. Prosecutors said he “repeatedly attempted to obstruct the grand jury investigation” in conversations and meetings with the witness.
In the affidavit Cilins filed to support his request for bail, Cilins said he is the sole owner of two limited liability companies that hold Florida properties being proposed for use as security for a bond, Assistant U.S. Attorney Kelly Karase in Jacksonville said in yesterday’s filing. Instead, the LLCs are owned by Cilins and two other men, Michael Noy and Avraham Lev Ran, who are tied to Cilins’s alleged crime, Karase said.
“There is simply no reason to believe that either of these individuals would want the defendant to attend a trial at which their own activities will be the subject of inquiry,” Karase said in the filing.
Noy was heard on a wiretapped phone call discussing with Cilins efforts to get a cooperating witness, who was the wife of a dead, former top Guinean official, to sign a false document that was to be submitted in the bribery investigation, the government said. Lev Ran signed a contract that included payments to the cooperating witness and transferred hundreds of thousands of dollars to her in the U.S., according to the filing.
Lev Ran couldn’t be reached for comment. Noy couldn’t be located. Michelle Smith, a lawyer who represents Cilins, didn’t immediately respond to a phone message seeking comment on today’s hearing.
The case is U.S. v. Cilins, 13-mj-00975, U.S. District Court, Southern District of New York (Manhattan).
The Florida case is U.S. v. Cilins, 13-mj-01087, U.S. District Court, Middle District of Florida (Jacksonville).
To contact the reporters on this story: Bob Van Voris in Manhattan federal court atrvanvoris@bloomberg.net.
To contact the editor responsible for this story: Michael Hytha atmhytha@bloomberg.net



Guinea Bribe-Probe Defendant Cilins Ordered Held Without Bail - Bloomberg

April 28, 2013

#Goldman Sachs On #Gold: A Realist's Analysis - Seeking Alpha


Goldman Sachs On Gold: A Realist's Analysis
Bu Quoth the Raven, Seeking Alpha
The Gold Set-Up
I'm not really amused by Goldman Sachs (GS) recently, and investors that have been taking their advice on gold shouldn't be either. Those that read my articles know that I'm a big advocate for going ultra-long both gold (GLD) and silver (SLV). Those that read my articles also know that I try and give people a bit of perspective by "pulling back the curtain" once in a while to show that all analysts, bloggers, and financial advisors usually have agendas.
Operating from their Keynesian-bubble on the outskirts of another dimension, Goldman Sachs reported on April 10th (merely two weeks ago) that it had downgraded its price target for gold and it advised investors to go short. As reported by CNBC.com, Goldman analysts cited "waning" interest as a reason to not hold gold:

"Despite resurgence in euro area risk aversion and disappointing U.S. economic data, gold prices are unchanged over the past month, highlighting how conviction in holding gold is quickly waning," said Goldman Sachs analysts Damien Courvalin and Jeffrey Currie in the note.
The analysts cut their gold forecast to $1,450 per ounce for 2013 and $1,270 for 2014, the second cut in their price target this year.
On the heels of Goldman's downgrade came a barrage of headlines the following days, all of which advising that the gold "bubble" was about to burst. Subsequent to that, gold prices got absolutely demolished:

After the downgrade was issued, I penned an article on April 15th called "Goldman's Gold Analysts Fail to Grasp Reality". In that article, I made some suggestions, saying it was not totally out of the question for Goldman to possibly be manipulating the price of gold for them (or their clients) to buy at a lower price (bold emphasis added for the purpose of this article):

[Gold] is a non-complex issue that economists like to make sound complex in order to further their temporary need for market stimulation. Anyone that tells you that the result of Nixon shock is any more complicated than supply and demand methods learned in an ECON 101 class is trying to pull the wool over your eyes. What I mean by that is that this is a far less complicated issue than many economists will have you believe. It has to do with the amount of money in the supply versus the finite, unchangeable amount of gold available worldwide.
So, the wool that Goldman could be trying to pull over your eyes here could be the same tactics used by analysts, market makers and hedge fund traders everywhere: create a trend and buy/sell the opposite into it. If you think Goldman could not possibly be buying gold on their very own downgrade and assumed corresponding price decline, then I have some real estate in Alaska I'd like to sell you.
As I said in "My 17 Definitive Cardinal Rules for Investing Success," you have to understand that all of these people have money in the same game they're directing the public's investments on:

As much as I hate (read: love) to bash Jim Cramer in two successive articles, he's the pinnacle example of this rule. Much of the public was absolutely flattened when they watched his interview a couple of years back on the Daily Show. In this interview, Jon Stewart played back for Cramer a YouTube video of himself openly admitting to making up and disseminating rumors about companies when his hedge fund was short them. This was the public's first glance into the dirty work that goes on behind the scenes at hedge funds; if they knew the down and dirty details, jaws would drop all the way to the ground.
The lesson I hoped the public learned from this is that 95% of the people feeding you advice; whether it's here on Seeking Alpha, on CNBC, or in the Wall Street Journal all have agendas and positions that they're trying to make money on. Believing these people disclose these positions all the time is laughable. Take everything, including what I write, as a sales pitch. Go in as a skeptic and question motives. Again, finance is a lesson in cutthroat 101.
I also noted after writing that article, that there were several (non-Goldman) analysts that seemed to feel the exact same way I did about Goldman's downgrade. In an article titled "Should Traders Trust Anything Goldman Says?", we get another perspective on the downgrade:

"Their calls have been suspect at best, so I'm not giving this one much merit," said Jeff Kilburg of KKM Financial. "Traders out here in Chicago are not lending much credibility to their calls, because they've been so inaccurate lately."
Peter Schiff of Euro Pacific Capital goes one further. "Goldman obviously wants to buy more gold, so it needs to convince other to sell it to them," Schiff said. "It also wants to buy low, so it needs sellers to drive down the price."
I then went, on April 15th, to comment:

The only point I can see for downgrading gold here is to be able to try and buy at a lower price. Since the Nixon shock of the early '70s, gold is only going to continue to head in one direction: up. To understand why, again, you don't need to be some seasoned analyst at a firm somewhere; you just need to understand that gold is a finite non-renewable resource with only a set limited quantity of it on earth, and printed money...well...isn't.
In addition, five days prior to me writing that article Goldman had stated they were lowering their 2014 forecasts, as well. This wasn't just some short term correction on gold, right? This was a major financial firm alluding to the commonfolk investors about a massive pullback in the price of gold that would run well through 2013 and into 2014:

Pointing to forecasts for stronger U.S. economic growth later this year, longtime gold bull Goldman Sachs slashed its price targets on the precious metal on Wednesday, warning prices could tumble below $1,300 an ounce by the end of 2014.
The Wall Street heavyweight not only told investors to close their long gold position, Goldman is now recommending a short COMEX gold position as one of its top trades.
"While there are risks for modest near-term upside to gold prices should U.S. growth continue to slow down, we see risks to current prices as skewed to the downside as we move through 2013," Goldman analysts Damien Courvalin and Jeffrey Currie wrote in a note to clients.
Marking Goldman's second downgrade in six weeks, the analysts cut their average 2013 gold price forecast to $1,545 from $1,610 and their 2014 average to $1,350 from $1,490. Goldman also set a $1,450 year-end target for 2013 and a $1,270 year-end target for next year.
My Reaction
Upon submitting my previous article, I was lambasted by comments and private messages, calling me everything from a conspiracy theorist to a flat out whack job. Even the Seeking Alpha editors, who remain a contributor's best friend hands down, had me tone certain things down, as they cautiously reminded me that accusing Goldman of price manipulation was a serious statement. I agreed as well, and it's important to note that I'm not pointing the finger and saying they did it, I'm merely bringing up the point that it could have happened and I wouldn't be the least bit surprised. Anyway, I agreed, and out of respect for them and the site, toned it down a bit before subsequently being published.
I watched steadfastly, convinced that we were just in a temporary, analyst induced correction for the precious metal. Any time I would doubt that, I'd take a look at this chart I prepared for a previous article:

That sure is a lot of "corrections"! I especially love how after every one of them, we continue onward and upward. On April 19th, nine days after Goldman's downgrade, I stuck to my guns and took a long position in another precious metal, silver. I wrote about my reasoning behind it in my article "My 5 Summer Stock Market Flings for 2013". Betting on a correction from all the bear-raid panic on precious metals, I wrote:

This is another story of putting my money where my mouth is. I've been pumping silver and gold for, well, forever. I've talked about the importance of holding gold for a number of reasons in almost every single one of my macro outlook articles that I've produced. What I recently said about gold holds very true for the same way I feel about silver.
When volatility is skyrocketing and the market is starting to pull back and correct, we should be seeing gold continue to rise in value. This correction is a major buying opportunity for people looking to hedge and firm up their investments in equities.
In an age where demand is created from the Fed injecting money into the supply and events like the horrible tragedy in Boston earlier this week are occurring on a global scale more often than ever, the security of gold is simply a no-brainer buy at these levels.
I bought SLV calls when the equity price was about $22, opposed to gold calls as a "hedge to a hedge", in essence. I hardly believe that there is a gold bubble, but what I do believe in is the possibility of other traders believing there is and causing panic. Gold is in a lot of headlines right now. Headlines mean volatility; panic buying and panic selling - this is why I'm going with silver here. Don't get me wrong, however, I'm also still ultra-bullish long term gold.
Goldman Takes a "Mulligan" that Yields Them 10%
Imagine my surprise on April 23, less than two weeks after Goldman's massive downgrade, I see front page on CNBC.com with the headline "Surprise! Goldman Covers Gold Short" :

Goldman Sachs on Tuesday reversed its high-profile call to short gold, which it made two weeks ago, just before the metal sunk into bear market territory.
The firm's commodities research team said the decline in gold was more rapid than it expected, and it exited the trade with a potential gain of 10.4 percent, below its original target price of $1,450.
Interesting. Goldman was short gold before issuing a "world is going to end" style downgrade on gold and then covered their entire short after the market and the commonfolk sold off to bring gold down about 15%? Duly noted. I'm not saying its market manipulation, rather just a series of coincidences. Yeah, let's call it that.
For our visual learners, here's a picture version of all that pesky text you might not want to read through:

(Click to enlarge)
How You Can Benefit - Go Long Gold, Short or Long Term
Am I the least bit surprised by any of this? Can't say that I am. I've been watching botched calls by mediums that report market activity for years now. What can you do, aside from having perspective, to make money here from gold?
Well, first, keep your friends close but your enemies closer. Know that Goldman is now holding long (again) and gold is likely to make a short term run back to the levels it was at before this whole fiasco started. It's a great time to go long gold short-term.
Long term holds will yield gains, just as they have for years now.
From the same CNBC.com article as earlier, here's confirmation that Central Banks continue to furiously stash gold in reserve:

Philip Silverman, managing director of Kingsview Management in New York, advised investors not to bet against gold last month because central bank demand remains strong. According to the World Gold Council, central banks' gold purchases in 2012 were the highest for nearly 50 years, as banks sought to diversify their reserves.
Why do you think central banks are holding it in reserve? Surely, not for some short term flip, right? Central banks know how the global economy works. You'd be hard pressed to find an analyst anywhere that could ignore yet another one of my patented "haymaker" charts like this:

(Click to enlarge)
Also, it's (always, in my opinion) a great time to go long for the long-term on gold. As I've consistently advocated article after article, gold going up is nothing more than the basics of supply and demand. Because we are a globe that prints money out of thin air, central banks will continue to hold gold in reserve, the corresponding price of gold will continue to rise, and you can make money on it just like the big banks.
I remain, and will remain, bullish on gold, and you should too. Best of luck to all investors.
Disclosure : Again, I am in no way accusing Goldman of blatant market manipulation, rather just pointing out things I find coincidental and trying to possibly "pull back the curtain" a bit. I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.


Goldman Sachs On Gold: A Realist's Analysis - Seeking Alpha

April 26, 2013

#Gold Investor Investment World Gold Council


Gold’s recent price weakness and the sizeable outflows from gold-backed ETFs have rekindled speculation about the end of gold’s bull run and generated comparisons to its 1980s decline. We discuss the limitations of the most common arguments and contextualise gold’s price pullbacks. We examine structural shifts that the gold market has experienced over the last decade resulting in a robust set of demand factors, very different from that seen during the 1970s.

See the World Gold Council's Q1 Investment Commentary here: Gold Investor Investment World Gold Council

April 23, 2013

#Goldman Sachs Covers Gold "Sell" Recommendation Today + Commodity Watch




Please see attached the Goldman Sachs recommendation change this morning on Gold: 

"We closed our short trading recommendation on gold. We have closed our recommendation to short COMEX Gold, as prices moved above the stop at $1,400/toz. 

We have exited the trade significantly below our original target of $1,450/toz, for a potential gain of 10.4%. 

The move since initiation was surprisingly rapid, likely exacerbated by the break of well-flagged technical support levels. 

Our bias is to expect further declines in gold prices on the combination of continued ETF outflows as conviction in holding gold continues to wane as well as our economists' forecast for a re-acceleration in US growth later this year."

See the full Commodities Note attached. 

Finally along with the strong Asian physical demand, this represents some positive news here for an over-sold sector. 

April 22, 2013

Barron's: A Vein of Hope for #Gold Miners

CONCLUSION : Barron's taking a constructive view on gold miners for the following reasons : 1- valuation looking very enticing with stocks trading at multi year lows. 2- companies trying to become more shareholder friendly. 3- a new honesty towards showing all in costs. 4- new CEO's wanting to implement changes ( newmont and Barrick).

 

Interestingly, the article highlights both Newmont and Goldcorp. Goldcorp being the highest quality of the large miners. Barrick is highlighted also as the highest risk higheest reward one particularly if the gold price rallies.

 

 | SATURDAY, APRIL 20, 2013

A Vein of Hope for Gold Miners

By ANDREW BARY  

The miners have probably the most hated stocks in the market—and not without reason. Now they're getting their acts together. Why Newmont and Goldcorp could rise 40%.

After a sharp decline, gold-mining stocks probably are the most hated group in the market.

There are plenty of reasons for that. The metal has moved into bear-market territory, falling last week to $1,402 an ounce—26% off its all-time high of $1,900, hit in September 2011—including a jarring $134 drop on Monday. And despite the high prices of recent years, well above the less than $800 at which gold traded in 2008, the miners haven't been able to generate significant profits and free cash flow.

Many investors have given up on the miners, opting for direct gold exposure through exchange-traded funds such as the SPDR Gold Trust (ticker: GLD), which holds $50 billion of bullion.

image

Manuel Diaz/AP Photo

A mine in the Dominican Republic owned by Goldcorp and Barrick. Political risk is a major hazard for miners.

But mining stocks now look enticing, trading at or near multiyear lows, and the companies are trying to become more shareholder-friendly. In the past year two of the top miners, Newmont Mining (NEM) and Barrick Gold (ABX), brought in new CEOs and vowed change.

"In my career, I've rarely seen a group less well-liked than the gold miners," says David Steinberg of DLS Capital in Chicago. He notes that the widely followed Philadelphia Stock Exchange Gold & Silver Sector index (XAU) trades where it was in the late 1980s. "Relative to history, these stocks are extraordinarily undervalued, but I don't know when sentiment will turn," he says. His firm owns Barrick, Goldcorp (GG), and Kinross Gold (KGC).

Gold stocks were out of favor even before the recent plunge. At $28, a leading U.S. exchange-traded fund, the Market Vectors Gold Miners (GDX), is down 27% this month, 39% this year, and is at less than half of its 2011 peak. Looking at the fund's three largest stocks, Goldcorp has slid 24% this year, to $28; Barrick is off 49%, to $18; and Newmont is down 29%, to $33.

Downside in these stocks seems limited, barring a further collapse in gold prices. They could rise 40% if gold rallies back toward $1,700, where it started 2013.

Among this group, Goldcorp probably is the safest play because it has the lowest mining costs, the strongest balance sheet, the best growth outlook, and the largest market value at $22 billion. It aims to boost its annual gold output to about four million ounces by 2017, from 2.3 million last year, while many rivals will struggle to simply maintain annual production.


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None

Once the industry leader and the only gold stock in the Standard & Poor's 500, Newmont has been a huge disappointment; its shares are below where they stood a decade ago, when gold was at $400. Its attributes include a broad global portfolio that makes it less dependent on a single mine. One of its innovative moves is a dividend linked to the gold price. At the current price, the quarterly dividend would be 25 cents a share—a yield of 3.1%. (The yield in the table nearby is based on its most recent payout, which was keyed to a higher gold price.) Newmont shares are no higher than they were in the late 1980s.

BARRICK IS THE RISKIEST of the three because it has the most debt, at $14 billion, isn't generating any free cash flow after heavy capital expenditures, and faces a big challenge with an enormous mine it is developing in a remote location at an elevation of 15,000 feet on the Chile-Argentina border. Chile has ordered Barrick to stop work on its side of the mine, due to environmental issues.

At a minimum, this probably will delay the mine's opening, which had been scheduled for 2014, and potentially drive up the cost, projected at $8 billion to $8.5 billion—already about double the original estimate. Barrick also faces pressure from the Dominican Republic for higher payments on the newly opened Pueblo Viejo mine, in which it has a 60% stake; the rest is held by Goldcorp.

JPMorgan analyst John Bridges downgraded Barrick last week to Neutral from Overweight, noting the company's "debt load and capital overruns are becoming problematic in an environment of weaker gold prices."

Last week the Wall Street Journal reported that Barrick is seeking to sell three of its Australian mines.

Barrick looks particularly cheap with a 2013 price/earnings ratio of five, but profit estimates could come down, due to lower gold prices. If gold rallies, Barrick probably has the most upside of the three.

Enlarge Image

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image

Barrick is a poster child for the industry's woes, including higher operating costs, bad acquisitions, cost overruns on new mines, and political risk. Resource nationalism around the world is becoming a growing issue for miners. It's getting more difficult to get government approval for mines, and once they're operational, governments sometimes want to rewrite contracts and get higher taxes, knowing they have leverage.

One encouraging sign is that the industry is showing a new honesty about costs. In the past, companies emphasized "cash costs," which often were about $500 to $600 per ounce. But that ignored a slew of other costs, including those for maintenance and environmental remediation. Barrick, for instance, forecasts 2013 cash costs of about $635 an ounce and "all-in sustaining costs" of about $1,050; Newmont projects about $1,150.

LOW CASH-COST ESTIMATES are designed to impress investors with the industry's profitability. They also encourage host governments to shake down miners. "Governments are seeking to impose significantly higher taxes on us because they think we're making superprofits," said Goldfields CEO Nick Holland in a speech last summer. "The opposite is true."

Doug Groh of the Tocqueville Gold fund (TGLDX) estimates the industry's true all-in cost is about $1,350 an ounce, reflecting new mine development. Thus, miners aren't creating much value at current prices. Nonetheless, he sees reason for optimism, owing to "management turnover, better capital allocation, and reduced cost pressures." Further declines in gold price could lead to an industry shakeout that ultimately would be bullish.

The Bottom Line

With their shares at multidecade lows, the miners are minding costs and becoming more shareholder-friendly. They could rise 40% if gold rebounds.

Given the risks of individual stocks, a better option for investors could be an ETF like the Market Vectors fund or a gold mutual fund. Betting on junior miners, including those in the Market Vectors Junior Gold ETF (GDXJ), looks dangerous. Big miners, having been burned with bad deals, are less inclined to buy the juniors. The top-performing open-ended gold mutual fund in the past three years has been First Eagle Gold (SGGDX); Tocqueville is No. 1 over the past five years, according to Morningstar.

The monetary backdrop for gold looks favorable, as major governments around the world suppress interest rates and crank up the monetary printing presses. "Unlimited global monetary debasement is a reason to buy, not sell [gold]," tweeted Barron's Roundtable member and gold bull Fred Hickey of the High-Tech Strategist. The amount of gold in the world, an estimated 5.6 billion ounces worth $7.8 trillion, is a fraction of the global monetary base, and it's growing at just 1.5% a year.

Most investors have little or no allocation to gold and mining stocks. This could be a good time to get in. The metal and the depressed stocks offer a hedge against all the ills that can flow from monetary and fiscal profligacy around the world. 

E-mail: editors@barrons.com

April 18, 2013

Paulson's Advantage fund stung by plunge in gold - Yahoo! News


Paulson's Advantage fund stung by plunge in gold

By Svea Herbst-Bayliss and Katya Wachtel
BOSTON/NEW YORK (Reuters) - Hedge fund billionaire John Paulson's best-known fund is down 2.4 percent in April, largely due to the sharp selloff in gold, a source familiar with the numbers said on Thursday.
The Paulson & Co Advantage fund is making money for the year, but just barely, with a 1.3 percent gain, the source said.
The fund's substantial holdings in several gold mining stocks, including a bet on AngloGold Ashanti Ltd, which is down 40 percent this year, have dramatically cut into the Advantage fund's returns.
Gold is one of the worst performing assets this year after rising mightily following the financial crisis. The precious metal has fallen 17 percent this year, including a 13 percent drop in April alone.
Shares of companies tied to the performance of gold, including the SPDR Gold Trust, the biggest gold exchange-traded fund, also have fallen sharply. This year investors have pulled $10 billion out of the gold ETF as of Wednesday, said financial information firm Markit.
The sharp slide appears to have caught a number of hedge fund managers like Paulson by surprise. Next week he intends to update his clients about all of his funds, including a fund dedicated specifically to investing in gold, several sources said.
Paulson, who has made money on gold up until this year, has long held firm to the view that inflation will eventually rebound, making gold a prudent hedge. But in the wake of the selloff, the firm has incurred losses in the hundreds of millions of dollars in several funds that invest in gold, said people familiar with the firm.
The fund manager, lionized after a big bet against the overheated housing market in 2007 that made billions for his investors, has floundered trying to repeat the success in recent years.
Assets at his firm have dropped to $18 billion down from $38 billion in early 2011 due to redemptions and poor performance. Over the past two years, the Advantage fund and a leveraged version of the fund have posted some of the worst numbers in the $2.2 trillion hedge fund industry.
At the end of the first quarter, the Advantage strategy, which includes the two funds and managed accounts, had about $4.6 billion in assets.
STICKING WITH GOLD
Still, Paulson is sticking with his plan. "The recent decline in gold prices has not changed our intermediate- to long-term thesis," Paulson partner John Reade said earlier this week.
A Paulson spokesman would not comment on the April numbers for the Advantage Fund.
For the New York-based fund manager, gold's drop is another in a string of black eyes. He has also taken heavy losses on some big investments, including in Chinese forestry company Sino-Forest Corp and Bank of America Corp. In 2011, the Advantage Fund's sister fund, Advantage Plus, lost more than half of its value.
The Advantage Fund's performance this year also leaves Paulson near the bottom of the rankings. Some hedge fund managers are reporting double-digit gains, but most were up only 3 percent in the first quarter. The Standard & Poor's 500 index was up 10 percent.
Paulson's fund is not alone in holding fast to the notion that gold is still an asset to hold.
In a research note this week, Ray Dalio's $141 billion Bridgewater Associates wrote that while the magnitude of the selling in gold was surprising, much of it was driven by selling by "weak" and leveraged hands.
However, several investment banks beginning with Goldman Sachs cut their 2013 gold price forecasts over the past two weeks. Any fund that uses technical analysis to buy and sell securities is selling gold now, a Wall Street analyst who was not authorized to speak publicly said.
Other investors say some hedge fund managers have lost a lot of money on gold because they did not hedge the bet properly. "Most people who are long gold are only long," said John Burbank, who runs hedge fund Passport Capital. He said his own fund hedged by owning physical gold and betting against gold mining companies, whose share prices have dropped dramatically.
Burbank said his company employs two geologists to dig deeply into the gold mining companies. "Other firms don't have that," he said.
In addition to Paulson, other well-known hedge fund managers David Einhorn and Daniel Loeb are also victims of the recent gold rout.
Loeb said gold was one of his Third Point hedge fund's biggest losers in the first quarter in a recent investor letter. Einhorn's Greenlight Capital Management recently listed gold as one of his five largest positions. He is believed to largely own physical gold as opposed to shares in the exchange-traded fund.
Any hedge fund with large gold positions, whether in its physical form or through equities, is being hurt, said the Wall Street analyst.
Other investors had better timing and slashed gold investments before the metal began to nosedive this year. Billionaire George Soros significantly reduced his gold exposure in the fourth quarter of last year, for example, and recently said the asset was "destroyed as a safe haven".
Hedge funds Moore Capital Management and Lone Pine both got rid of stakes in the SPDR Gold Trust ETF at the end of the year, regulatory filings show.
(Reporting By Svea Herbst-Bayliss and Katya Wachtel; Editing by Matthew Goldstein, Kenneth Barry, John Wallace and Tim Dobbyn)



Paulson's Advantage fund stung by plunge in gold - Yahoo! News

April 17, 2013

#Gold funds: Net outflows totaled US$1.2bn since the start of the year

Gold funds suffered a major outflow of cash this year. Net outflows totalled US$1.2bn since the start of the year through Apr 10, the most since 2011 (EPFR Global). At the same time, global equity funds recorded net inflows of US$21.25bn.

·         SPDR gold holdings continued to slide and totalled 1,146t (36,843koz) valued at US$50.827bn from 1,154t (37,113koz) yesterday.

April 13, 2013

Bloodbath in the #GOLD Markets - Key Levels Collapse

general equity holders should refrain from schadenfreude

Next support levels seen at $1470 then $1340.

In light of the big gold price dive today, Ross Norman, suggests that gold may yet have the last laugh:

Gold will remain on the ropes until it engenders higher levels of investment demand - for that it will require more sales channels, more product innovation and more education. It is a tiny lifeboat in a sea of economic trouble - this boat ain't sunk yet !

Bloodbath in the GOLD Markets - Key Levels Collapse

ROSS NORMAN - Sharps Pixley

After gold slipped gently below the important technical level of $1540 this afternoon, it appeared that short sellers and heavy long liquidations had done their worst - but more was to come. $1540 was the market low in 2012, a level it tested and held in October 2011 and May 2012.
Gold investors have been noticeably absent and are perhaps now fully desensitized to bad news as the lacklustre price action in the wake of Cyprus, North Korea and weakening US data proved.
Shorting gold will remain a popular sport while there is money in it and there has been a noticeable absence of bounce in the price after each sell-off, prompting repeat attacks to the short side. Next support levels seen at $1470 then $1340.
For those seeking a haven in equities that have been trading at all time highs, we suggest you refrain from schadenfreude - and be careful what you wish for.
Underpinning gold are attractive fundamentals with the price floor in the form of mine costs rising sharply (gold prices rose 6% last year and costs 12%). More of this and a little below the current price and the gold-shorters will be butting up against production cut-backs - this wheeze will run its course.
Meanwhile the total US national debt rises in 2013 from 16.8 to 17.8 trillion dollars - before number blindness creeps in a translation is perhaps in order - that is equivalent to more than 330,000 tonnes of gold, or over twice all of the gold ever produced in history or total gold mine production for the next 120 years - fat chance that is going to be paid down through the fruits of economic labour.
Gold will remain on the ropes until it engenders higher levels of investment demand - for that it will require more sales channels, more product innovation and more education. It is a tiny lifeboat in a sea of economic trouble - this boat ain't sunk yet !

Ross Norman

See the article online here: ROSS NORMAN - Bloodbath in the GOLD Markets - Key Levels Collapse

April 10, 2013

#Goldman advises to short #gold | FT Alphaville

despite the resurgence in euro area risk aversion, it’s pretty notable (if not remarkable) that gold prices have remained unchanged over that period, something which is pretty visible on the ETF level.


This is from their latest commodity research note:
Turn in gold prices accelerating; closing our long gold position
Given gold’s recent lackluster price action and our economists’ expectation that the acceleration in US growth later this year to above-trend pace will support US real rates, we are lowering our USD-denominated gold price forecast once again. Our new forecast is further below the forward curve with year-end targets of $1,450/toz in 2013 and $1,270/toz in 2014. As a result, we recommend closing the long COMEX gold position that we first initiated on October 11, 2010 for a potential gain of $219/toz, with the risk reversal overlay expired on March 25. Our long-term gold price forecast (2017+) remains at $1,200/toz: while higher inflation may be the catalyst for the next gold cycle, this is likely several years away.
Initiating a short COMEX gold position as our ECS Top Trade #8
While there are risks for modest near-term upside to gold prices should US growth continue to slow down, we see risks to current prices as skewed to the downside as we move through 2013. In fact, should our expectation for lower gold prices continue to prove correct, the fall in prices could end up being faster and larger than our forecast, as aggregate speculative net long positions across COMEX futures and gold ETFs remain near record highs. We therefore recommend initiating a short COMEX gold position as our ECS Top Trade #8, implemented through an S&P GSCI® front-month rolling index to further benefit from the contango in the COMEX future curve, targeting a move to $1,450/toz with a stop at $1,650/toz. While we may be end up too early in entering this trade, we prefer that to being late given our belief that the skew to current prices is to the downside.
The other interesting thing they note, is that despite the resurgence in euro area risk aversion, it’s pretty notable (if not remarkable) that gold prices have remained unchanged over that period, something which is pretty visible on the ETF level.
Indeed ETF gold holdings continue to decline quickly.

 READ THE REST OF THE ARTICLE HERE: Goldman advises to short gold | FT Alphaville

The MasterMetals Blog

April 8, 2013

Barron's: Bearish take on natural #gas

 there are some signs that demand from utilities is slowing down: data from the U.S. Energy Department released last week showed gas usage by electric utilities fell by 0.6 billion cubic feet (the measure for stockpiles) a day in January compared with January 2012.

 

Commodities Corner

 | SATURDAY, APRIL 6, 2013

Gas Bubble Ready to Pop

By JERRY A. DICOLO  

Prices have climbed 23% this year. But there's too much supply and fading demand, so long investors should think about selling.

DJ-AIG Commodity Indexes

The rally in natural-gas prices looks set to fade.

Futures have surged 23% this year, reaching the highest level in 20 months Friday. But despite the recent gains, many analysts believe that gas futures rose too fast, and are still too high—and ripe for a big pullback.

"Once the cold winter weather passes, we think support is likely to prove flimsy," said Credit Suisse analysts in a research report late last month. The bank recommends that investors start preparing for a price decline.

A blast of chilly weather at the tail end of winter was the primary cause of the rally. March temperatures were colder than normal across much of the U.S., which increased demand for gas-fired heating and resulted in a steep decline in U.S. natural-gas stockpiles.

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The drop in inventories removed the biggest weight on prices over the last year and a half—too much supply thanks to vast amounts of the fuel unlocked from shale-rock formations by new drilling techniques, which sharply increased U.S. production. This time last year, U.S. gas reserves stood roughly 60% above five-year average levels—and prices were on their way to a 10-year low of $1.907 per million British Thermal Units, notched last April.

On April 4, the U.S. Energy Department said that stockpiles fell below the five-year average for the first time since September 2011—to 1.687 trillion cubic feet last week, or 2.1% below the average. Natural-gas futures rose 2.5% for the week on the New York Mercantile Exchange, settling at $4.125 per million BTUs Friday. Market analysts are looking ahead to spring, when gas usage by homes, businesses, and utilities typically declines.

Roughly half of U.S. homes use natural gas for space heating, and many more have electric heating powered by gas-burning utilities. When temperatures rise, gas demand drops.

That factor leads to stockpile gains every summer. But gas being pricier near $4 per million BTUs, investors may have reason to worry about a bigger increase in reserves.

SOME MARKET WATCHERS are concerned that the rally that took gas to its current $4 level will also lead to reduced demand from utilities. Over the past year, power plants took advantage of low prices and shifted to burning gas instead of more expensive coal, raising demand for the fuel and helping to shrink the U.S. supply glut. There are signs, however, that utilities are already dialing back their move to natural gas.

Teri Viswanath, senior natural-gas strategist at BNP Paribas, pointed to data from the U.S. Energy Department released last week that showed gas usage by electric utilities fell by 0.6 billion cubic feet (the measure for stockpiles) a day in January compared with January 2012.

Ms. Viswanath says that "unexpected weakness" could mean utilities aren't as keen on gas at these price levels, which could mean price declines are ahead. Meanwhile, Credit Suisse analysts are forecasting a drop in electric-power demand of two billion cubic feet per day this summer, which would likely help to push stockpiles higher.

Natural-gas bulls have fought back from decade lows to stage a startling rally over the past year, but it looks like now is the time to declare victory, and to take profits. 

JERRY A. DICOLO covers commodities and other topics for The Wall Street Journal.

E-mail: editors@barrons.com

April 5, 2013

#BHP Billiton halts work on #Manganese project in #Gabon

Producing an estimated 2,000 tonnes in 2012 according to the US Geological Survey (up by 7.5% on the previous year), Gabon is the fourth-largest producer globally

"A fall in existing manganese output... could weigh on our GDP growth, export and fiscal revenue expectations for 2013 and beyond."

 From the EIU:
 "The halting of operations at BHP Billiton's two manganese assets in the east of the country—at Mounana and Okondja—presents a serious downside risk to economic growth, exports and fiscal revenue. It also potentially jeopardises the country's goal of overtaking South Africa as the world's largest producer of the metal. Producing an estimated 2,000 tonnes in 2012 according to the US Geological Survey (up by 7.5% on the previous year), Gabon is the fourth-largest producer globally, behind South Africa, Australia and China."


See the whole article from the EIU here: BHP Billiton halts work


#Bitcoin bubble grows and grows - FT.com

When will the real "Bitcoin", i.e. #Gold, react?

 Bitcoin's soaring price

This time, Wall St is innocent.
To the long list of asset bubbles – from tulips to the South Sea Company, from dotcom stocks to US housing – economic historians may soon be adding a virtual “currency” called Bitcoin. But while it is bankers who are most often blamed for blowing up bubbles, the rise and rise in the Bitcoin price has taken place without any such intervention.
Bitcoin's soaring price
A buying frenzy has sent the value of the total Bitcoin stock past $1.5bn and the price of a single Bitcoin has doubled in less than two weeks. Having passed $100 on April 1, it peaked at $147 in the small hours of Wednesday morning.
Untethered to any real asset, the Bitcoin’s price is determined only by speculation on exchanges around the world, the largest of which, Mt Gox, reported technical difficulties on Wednesday as interest rocketed.
“Trading tulips in real time,” declared the veteran UBS stockbroker Art Cashin in a note to clients. “It is rare that we get to see a bubble-like phenomenon trade tick for tick, but all that may be changing before our very eyes.”
The currency was created four years ago by an unknown computer scientist and the limited stock of “coins” grows according to a predetermined algorithm. A small number of online services accept Bitcoins as payment but the value appears correlated less to their use than to talk on Twitter, blogs and in the media.
But the Bitcoin is nothing if not volatile. For example, a 2011 spike took the price of a single Bitcoin from $2 to over $30 – and back again.
The latest, biggest burst of interest coincided with the bail-in of depositors in Cyprus, after which Bitcoin’s advocates pitched it as an alternative to fiat currencies that can be devalued or confiscated. “It’s gold for computer nerds,” said Nicholas Colas, chief market strategist at ConvergeX.
Some finance industry entrepreneurs have leapt at the opportunity. Exante, a Malta-based asset manager, set up a Bitcoin fund last year that was largely intended as a fun punt. Wealthy investors each put in $1,000 when Bitcoins were trading at $13 on the understanding they could lose the original investment. Exante predicted that public and media interest would take off when Bitcoins were trading at $100. Managing partner Gatis Eglitis claims they are now getting 20 calls a day from large asset managers looking to invest up to $100m.
Jim Angel, professor at the McDonough School of Business at Georgetown University, is sceptical of Bitcoin’s long-term viability. “Governments don’t like competition in the currency business and if it gets too big they will clamp down,” he said. “Also, you are trusting algorithms to protect the system, and we all know that technology breaks or gets hacked.
“We are just one scandal away from Bitcoin collapsing entirely.”

read the article online here: Bitcoin bubble grows and grows - FT.com

April 3, 2013

How low can the #Gold and #Silver stocks go?

Brutal day for precious metals juniors, explorers

It was not a nice day to be a precious metals junior or explorer.
Author: Kip Keen
Posted: Wednesday , 03 Apr 2013

EXPLORATION

HALIFAX, NS (MINEWEB) - 
Walloped.
As the price of precious metals sank Wednesday – gold down 1.4 percent and silver down 1.5 percent at presstime – explorers with sizeable gold and silver deposits and junior gold and/or silver producers took outsized beatings.
“The sentiment is just not there,” said Haywood analyst Stefan Ioannou, speaking to the market hit juniors were taking today.
“Things are already cheap,” he said. And could, by his measure, get cheaper.
“But then there's no rush to pile back in.”
Ioannou noted that financing continues to be hard to come by, making what were already high risk assets, “super, super high risk”, he said.
“Bank's aren't picking up the phones, either,” Ioannou said, making it harder for some would-be mine developers to advance mine developments.
Indeed, 2013 has been an awful year so far for gold juniors and explorers in particular. A typical stock chart ramps down. Today such charts fell off a sizeable ledge.
No scientific poll, here, but a quick perusal of top gold and silver project developers and leading gold and silver juniors on the TSX Venture and the main board told the same story late in the trading day Wednesday.
Take some explorers with multimillion ounce gold deposits: Torex, Pretium and Seabridge. Each were respectively down 12 percent, 9 percent and 5 percent at presstime.
The take some junior gold producers: Detour Gold, Brigus Gold, B2Gold and Osisko. All were down as well, respectively 9 percent, 8 percent, 5 percent and 5 percent at presstime.
It was the same story for larger silver explorers and junior producers.
Meantime the TSX Venture headed to new multi-year lows.
It's a volatile sector where wide swings are the norm. But today was particularly brutal and reflected a lack of optimism in - and high sensitivity to - the price of gold and silver and the prospects of those companies that need to raise cash to keep projects going.
It didn't matter where your project was. It didn't matter how much cash you had in the bank or how nice your gold deposit may be or whether you had arranged financing already or had good prospects of doing so.
All the mattered – for this trading day at least - was to sell, at a discount, anything smelling of precious metals.


Brutal day for precious metals juniors, explorers - EXPLORATION - Mineweb.com Mineweb