Will #Gold & #Silver be 2016's outperforming sector?

Light at the End of the Tunnel?

Gold's correlation to stocks decreases during economic contractions and gold's correlation to other assets remains quite low; in contrast, stocks generally increase their correlation to risk assets during these periods.

This comes from advisors at Canaccord Genuity's Vancouver office. 

Gold and Silver: An outperforming sector for 2016?

·         January 2016: In just 5 days, investors bought 26.8 metric tons of bullion through exchange-traded products backed by the metal, the most since 2015 (source: Bloomberg).

·         Gold and silver demand is off the charts; the U.S. Mint sold nearly as much gold on the first day of 2016 as in all of January 2015.  American Eagle silver coin sales jumped after the U.S. Mint said it set the first weekly allocation of 2016 at 4 million ounces, roughly four times the amount rationed in the last five months of 2015 (source: Reuters).

·         Gold has risen 3.1 percent so far this year.

• HSBC believes that gold has "shrugged off" two bearish developments, a strong dollar and weaker commodity prices, announcing that they remain bullish on the precious metal. The group sees good emerging market demand, eventual dollar declines and central bank accumulation helping gold this year.
• The FTSE/JSE Africa Gold Mining Index, which rallied 20 percent this year, has had the best start since 1995 (source: Bloomberg).

·         Global economic landscape for 2016 is looking ripe for further deterioration, increases in credit defaults and a "beggar-thy-neighbor" policy of rampant currency devaluations.

·         Equities look like they are rolling over into a secular bear versus gold which has bottomed and is likely resuming its bull market run.

·         Gold will resume its safe-haven status as global investors seek insurance and a potential hedge against the frailties of the monetary system.

·         Gold's run will strengthen from a currency play stance and not from traditional commodity supply & demand movements.

While the financial media's "talking heads" are busy trying to assure investors that corrections in the market are normal and to "stay the course", we are advising investors to include an allocation to gold within the portfolio.  We are not going to pretend that we can predict market movements; however we are steadfast in our belief that the volatility we are seeing is not going to stop anytime soon.  From our macro perspective, investors need to act as defensively as possible, thus if you are not selling your long equity positions you are employing strategies into the portfolio to mitigate potential losses - gold exposure can do that.  We recommend buying the physical and top-tier gold mining shares.  Mining shares are leveraged to the gold bullion price and due to a massive correction in the precious metals equities sector over the past four years; the opportunity for tremendous upside is present.  We recommend a gold portfolio weighting which is large enough that it can mitigate losses from the other asset classes.  We have created a list of gold mining companies which we think are representing above average opportunities in the sector. Our key criterion for recommendation looks at: share price depreciation from former highs, previous financing levels, successful project advancement and development and most importantly, all in sustaining costs (AISC). AISC essentially refers to the overall cost of mining an ounce of gold and selling it; an important metric in today's volatile markets.  The valuation shows the company has the ability to demonstrate strong free cash flow and has a buffer for profitability as the spot price of gold ebbs and flows.  Should you wish to review or discuss our list of gold mining companies to watch, please contact us and we will be happy to forward this information to you.

We would like to bring your attention (see below) to an investment commentary published by the World Gold Council, which outlines the fundamentals which should drive gold investment demand in 2016.

World Gold council 2016 outlook:

#Uranium: #NexGen Returns Best Hole EVER at Arrow - Continuous GT = 787

Wow! 78.0 m at 10.00% U3O8 including 12m at 38.29% U3O8 including 2.5m at 60.58% U3O8 and a continuous GT of 787 

It's one for the record books!

 

A simply stunning result from the Arrow zone. Hole –62 which was the last of the summer 2015 program returns 78.0 m at 10.00% U3O8 including 12m at 38.29% U3O8 including 2.5m at 60.58% U3O8 and a continuous GT of 787 is the best hole to date at Arrow and the best in the Basin's history (angled holes in basement-hosted mineralization).

 

Hole –62 replaces another hole at Arrow - AR-15–44b (continuous GT of 655) as the best continuous GT returned from an angled hole drilled into basement-hosted mineralization from surface in the Athabasca Basin's history (on public record).  See table below.  

 

Equity #crowdfunding: the future of capital raising for #mining? @Mineweb

As the commodities rout makes it increasingly difficult for mining companies to tap capital markets, equity crowdfunding is emerging as an alternate financing mechanism.

Equity crowdfunding: the future of capital raising?

Prinesha Naidoo | 17 December 2015 10:54 

JOHANNESBURG – As the commodities rout makes it increasingly difficult for mining companies to tap capital markets, equity crowdfunding is emerging as an alternate financing mechanism.

Traditionally considered the domain of technology startups, equity crowdfunding appears to be changing the way in which companies, irrespective of the sectors in which they operate, are raising funds. According to Oscar A. Jofre, President, CEO and Founder of KoreConX, $30bn dollars was raised via global equity crowdfunding platforms in the first quarter of the year.

Equity crowdfunding for companies in the mining sector, a relatively new concept whereby investors receive a stake in the companies in which they invest, appears to be gaining momentum. “There are more mining companies that would like to crowdfund through our platform than we can deal with at the moment,” said Cameron McLean, Managing Director of Mineral Intelligence, an Australian platform in which investors with as little as AU$500 can buy stakes in mining projects.

For Jofre, the relative success of equity crowdfunding, lies in the “democratisation of capital” and exposure to a wider investment pool. “Until now there has been no precedent for non-professional investors to invest in innovative ideas and potentially receive great returns,” he said. Speaking to Mineweb from Toronto, he added that only about 1% of potential investors have been able to participate in private placements over the past 10 years.

For companies, other benefits of crowdfunding include a faster process, free listing (on Mineral Intelligence) and less administrative rigour around listing rules, McLean said from Perth. Mineral Intelligence doesn’t list all the projects it receives for crowdfunding on its website but takes five to six to conduct independent assessments of companies that wish to raise funds via its platform as well as their projects before listing only the most promising ones, he said. As per the terms and conditions on its website, the company does not accept any liability which may arise from the use or reliance on any part of the site or its content.

“Equity portals are required to conduct full due diligence and if they fail that process not only can they be sued by investors but [they] also face regulatory enforcement,” Jofre said, noting that portals are required to be registered, bonded and carry insurance. “Securities commissions are charged by the local government to implement laws providing detailed regulations, monitor and provide oversight and intervene when necessary with fines, penalties and sanctions,” he said.

Like public companies, those raising funds via equity crowdfunding are also required to disclose material information to shareholders on a regular basis albeit at a lower cost.  “The difference in equity crowdfunding globally [is] we do things voluntarily because it is good for everyone and we adopt technology to make us more efficient,” Jofre said.

According to McLean, equity crowdfunding is replacing the seed capital stage thereby allowing a broad range of shareholders to realise greater value. During the seed capital stage, only people who were very close to a company had chance to invest, usually at very low prices due to the high risk associated with stage of funding, he said. “Equity crowdfunding presents an opportunity to increase shareholder value between buying shares, without brokers or middlemen, when the company is unlisted and when the company is either listed or acquired by someone else,” he said.

Should investors wish to sell or buy additional shares prior to a company going public, Jofre said they can do so via secondary markets. He anticipates that there will be more secondary markets in the world than stock exchanges by 2017.

Depending on the country and jurisdiction of the crowdfunding platform, Jofre said companies typically have 30 to 90 days in which to raise funds. “If the minimum amount is not reached within the listing period, the funding round has not succeeded. In this case, nothing will happen, all funds in escrow are returned to investors,” he writes. Jofre added that the “golden rule” of crowding funding that companies should secure 30% of the amount they intend raising before going to the crowd as it proves the credibility of their offering. At the fundraising stage, companies are able to determine the rules around their offerings such as the minimum price at which equity investors can buy a stake, whether investors will gain voting rights and the percentage of dividends to which investors will be entitled.

Thus far, the most successful mining related crowdfunding campaign appears to be that of asteroid mining company Planetary Resources. Through a 33 day Kickstarter campaign in 2013, it raised more than $1.5m from over 17000 backers to fund the world’s first public space telescope.

Jofre maintains that equity crowdfunding is “the most disruptive thing to happen to the finance sector this century” and anticipates both its popularity and investor appetite to grow. “It is a multi-billion dollar sector that is just waiting to be tapped,” he said.

http://www.mineweb.com/news/mining-finance-and-investment/equity-crowdfunding-the-future-of-capital-raising/

Equity crowdfunding: the future of capital raising? - Mineweb