Rebalancing in $GDXJ $GDX brought big moves to all the stocks involved! Junior #Gold ETF (GDXJ) -

The share price of many gold companies declined between 25% to 30% - And this during a period gold prices were slightly up.

The VanEck Vectors Gold Miners ETF (GDXJ) tracks a market-cap-weighted index in global gold- and silver mining firms, focusing on small-capitalization companies.

 

GDXJ became so popular that holdings of some companies were bumping up against 20% ownership. Faced with these problems, GDXJ chose to dramatically alter the composition of the underlying index that GDXJ is supposed to track. In early April 2017, VanEck Vectors Junior Gold ETF announced to modify its rules to include larger companies on or around June 17, 2017.

 

Attachment 1 shows the potential reductions. One column states the estimated Index weight change and the next column the estimated new Index weight. Attachment 2 shows the additions to the Index.

 

The massive reshuffling meant that many of the

forecasted index flows represent 10+days of average

volume for some stocks, hence huge! Traders have been beaten the stocks coming out of the index with an ugly stick. One of Toronto-Dominion Bank (TD) Index specialist described the rebalance as "the single greatest wealth destruction event in index history".

 

Attachment 3 shows on average stock additions lost 3.3%, reductions -15.7% and GDXJ -16.1%. Attachment 4 shows how investors dumped the GDXJ ETF. The real picture, however, looks even worse. The last column of Table 9 shows the price changes from April 12 (date of the announcement of index changes to May 31st, 2017). As can be seen the share price of many gold companies declined between 25% to 30% (last column - Price Change). And this during a period gold prices were slightly up.

 

 

 

2017 Global #Diamonds Prod'n Forecast 142M carats worth $15.6B # Russia #Botswana #Canada

- 11.5% increase in carat volume produced over 2016 and an 9.9% increase in total value

2017 Global natural Diamonds Prod'n Forecast142M carats worth $15.6B

May 3, 2017 By Paul Zimnisky paul@paulzimnisky.com Mined diamond production in 2017 is estimated to be 142.3 million carats worth $15.6B (see appendix below), which would be an 11.5% increase in carat volume produced over 2016 and an 9.9% increase in total value produced.  The top 10 largest mines in the world by value produced are estimated to represent 58% of global production. De Beers' Jwaneng mine in Botswana is ranked number one, and is estimated to independently produce 15% of the world’s diamonds in value.  The International mine in Russia. Source: ALROSA Russia is estimated to be the largest producing nation by value at 35%, followed by Botswana at 22%, Canada at 14%, Angola at 8%, South Africa at 7%, Namibia at 5%, and Australia at 3%. Russia Russian diamond production is dominated by ALROSA (RTS: ALRS) which is 58% owned by Russian national and regional governments. The company’s prized Jubilee mine is estimated to produce 9.2M carats worth $1.4B in 2017, which by itself represents 9% of global diamond output by value. Company-wide, ALROSA’s portfolio includes 11 mines and 5 alluvial operations, producing 27% of global diamond production by volume and 33% by value (see Figure 1 for complete company-wide production figures of major producers).   Figure 1 - Big 5 diamond miner production and sales data 2015-2017E  Read the whole report here: 2017 Global Natural Diamond Production Forecasted at 142M Carats Worth $15.6B - Paul Zimnisky | Diamond Industry Analysis: 2017 global natural diamond production estimated at 142 million carats worth $15.6 billion

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#Gold - At what implied gold price are #MiningStocks trading at

The largest gold stocks are trading currently on average at almost no premium (3%) to the gold bullion price. High premiums can still be found in Randgold (31%) and Agnico-Eagle Mines (22%) (see attachment 1+2), the darlings of the gold stocks.

 

Here is a comment and table from Scotiabank:

The "Implied Gold Price" and resulting calculated premium/discount, is the gold price that would be need for the respective stocks to be trading at 1.0x NAV3%.

 

The group of companies trading at a discount to bullion continues to grow – with ELD, ACA, YRI, IMG, G, GFI and AU all trading below the current spot price.

ELD=Eldorado Gold, ACA= Acadian Mining, YRI=Yamana Gold, IMG=IAMGold, G=Goldcorp, GFI=Gold Fields and AU=AngloGold.

 

 

Source: Scotiabank GBM Precious Metals Research