Gold Stocks: Time to Buy or Will They Get Worse?
Thursday, October 2, 2014
Gold has fallen from over $1,300 in mid-August to around $1,210 per ounce as of October 21, dragging many gold-related stocks down with them. Steve Todoruk joined Rick Rule at Sprott Global Resource Investments Ltd. in 2003. Should cautious investors steer clear of the sector for now? Or is this an opportunity to buy gold stocks? In a recent note, Steve weighed in:
While gold has gotten cheaper in recent weeks – partially because of US dollar strengthening — the stock prices of many major miners and small juniors are holding well above their lows of December 2013.
In my view, we are seeing the ‘higher lows’ that we would expect in share prices as we move out of the bear market and into a potential bull market. To the disappointment of many investors, this gradual rise is not the sharp upturn out of a three-year bear market, but rather a slow, frequently-interrupted climb.
For the junior mining stocks, as of October 2nd, Virginia Gold Mines stands around $12.30 (from $11.60 on December 20)2, Mag Silver is at $7.40 (from $5 on December 20)3, Rubicon Minerals Corp. is at $1.30 (from near $0.75 on December 20)4, Premier Gold Mines is at $2.70 (from $1.30 on December 20)5, Detour Gold is at $8.60 (from $3.80 on December 20)6 and Roxgold Inc. is $0.70 (was $0.42 on December 20)7. One reason many of these juniors are holding up is that some of them are potential takeover targets. A cash bid could come along and offer a payout to investors regardless of what happens to the price of gold – which explains why they have retained their value. Of course, not all companies that are potential takeover targets will do well in the coming months or year – and their performance this year is no indication that they will continue to rise.
Some of these companies were able to take advantage of strong prices earlier this year to raise significant amounts of cash in the equity markets. I believe those companies now stand to be better protected to the downside, and may benefit from the ability to spend money advancing their projects.
Jim Sinclair’s Commentary
She will certainly go to hell for this.
IMF’s Lagarde: Global Recovery ‘Not Good Enough’
Thursday, 02 Oct 2014 01:49 PM
The global economy could be stuck in a weak growth rut for a long time as countries struggle to pull free from a past of high debt and unemployment, the head of the International Monetary Fund said on Thursday.
The economic rebound is even weaker than the IMF predicted six months ago, and countries risk getting stuck in a prolonged period of sluggish growth, especially in the eurozone, Christine Lagarde, the IMF’s managing director, said.
"Yes, there is a recovery but as we all know — and can all feel it — the level of growth and jobs is simply not good enough," Lagarde said in remarks at Georgetown University in Washington. "The world needs to aim higher and try harder."
Lagarde said the IMF pared its expectations for potential growth, or the change in the global economy’s ability to produce.
In its last forecast in July, the IMF said the global economy should expand 3.4 percent this year, with growth speeding up to 4 percent in 2015.
Lagarde, who spoke ahead of the IMF and World Bank fall meetings next week, chronicled a series of "clouds on the horizon" that could hurt the global economy, including central banks’ differing plans to raise interest rates.
Labor Participation Rate Drops To 36 Year Low; Record 92.6 Million Americans Not In Labor Force
Submitted by Tyler Durden on 10/03/2014 08:55 -0400
While by now everyone should know the answer, for those curious why the US unemployment rate just slid once more to a meager 5.9%, the lowest print since the summer of 2008, the answer is the same one we have shown every month since 2010: the collapse in the labor force participation rate, which in September slid from an already three decade low 62.8% to 62.7% – the lowest in over 36 years, matching the February 1978 lows. And while according to the Household Survey, 232,000 people found jobs, what is more disturbing is that the people not in the labor force, rose to a new record high, increasing by 315,000 to 92.6 million!
And that’s how you get a fresh cycle low in the unemployment rate.
So the next time Obama asks you if you are "better off now than 6 years ago"show him this chart of employment to the overall population: it speaks louder than the president ever could.
Jim Sinclair’s Commentary
The jobs number were not a "blow out" as financial TV would have you believe.
4 Of 5 Top Job Additions In September Were Low Or Minimum Wage
Tyler Durden on 10/03/2014 09:55 -0400
Interested why despite the euphoric headline NFP print, a cursory glance deeper inside the payrolls report reveals weakness after weakness, with both participation plunging again and wages the worst since last summer? Here is the answer: 4 of the top 5 largest job additions in September, retail trade, leisure and hospitality, education and health and temp help, were of the lowest quality, and paying, jobs possible. So yes, America added a whole lot of minimum wage waiters, store clerks, groundskeepers and temps: truly the stuff New Normal "recoveries" are made of.
"Hiring Grandparents Only": 230K September Jobs Added In 55-69 Age Group; 10K Lost In Prime, 25-54 Group
Tyler Durden on 10/03/2014 11:00 -0400
The further one digs into today’s "blockbuster" jobs report, the uglier it gets. Because it is not only the participation rate collapse, the slide in average earnings, but, topping it all off, we just learned that the future of the US workforce is bleak. In fact, with the age of the median employed male now in their mid-40′s, the US workforce has never been older. Case in point: the September data confirmed that the whopping surge in jobs… was thanks to your "grandparents" those in the 55-69 age group, which comprised the vast majority of the job additions in the month, at a whopping 230K.This was the biggest monthly jobs increase in the 55 and over age group since February!
What about the prime worker demographic, those aged 25-54 and whose work output is supposed to propel the US economy forward? They lost 10,000 jobs.
Of course, don’t expect any of this to be mentioned on any financial entertainment outlets: it would spoil the party of today’s "surging" jobs day.
Then again in retrospect, it has never been a stronger labor market. Well, if you are 55 and over that is, the age group that just hit a record 32.6 million in jobs.
Peak Housing 2.0 – Mark Hanson Warns This Bubble Correction Could Be A "Doozy"
Submitted by Tyler Durden on 10/02/2014 20:46 -0400
Via Mark Hanson,
1) “Peak Housing”: The “Return to Normal”
The take-away from last month’s housing data was that “the market was returning to normal”, which despite the persevering weakness, was viewed as a “great thing”. This overly-simplistic and flawed assumption was made, as the all-cash cohort demand dramatically cooled and distressed supply and sales plunged YoY.
What people are suffering from is a lack of a medium-term memory, as what’s happening today happened in 2007/08; “Peak Housing”.
Back in 2007, the speculators (every ma and pa in America) driven by exotic credit stimulus without a “mortgage loan house price governor” — that drove prices over years of tremendous incremental and pulled-forward latitudinous demand — went away over a short period of time leaving the heavy lifting to weak, end-user fundamentals.
Today the unorthodox, new-era buy to rent/flip speculators driven by Fed stimulus without a “mortgage loan house price governor” — that drove prices through years of tremendous incremental and pulled-forward narrow demand — are going away quickly leaving the heavy lifting to weak, end-user fundamentals.
It was the stimulus-driven, unorthodox “things” that drove the “V” bottom in demand and prices yet again, not coincidentally from exactly the time in 2011 that Twist was first announced and yields plunged. Moreover, a rush of incremental and pulled forward end-user demand caused by the nuclear monetary policy that followed, forced end-users to chase spec-vestors. Before you knew it, spec-vestors and end-users were tripping all over themselves piled 30 deep bidding on houses. Prices surged, as the “mortgage loan house price governor” was removed just like from 2003 to 2007.
Although 2003-07 and 2011-13 were basically the same in nature, a big difference is that this stimulus-cycle was much greater in stimulus input over a shorter period of time than from 2003 to 2007. If stimulus “hangovers” are proportional to the amount of stimulus that preceded them, then this one could be a doozy.
Bottom line: a “Return to Normal” is “Peak Housing” this time around too; a huge headwind — just like the “return to normal in 2007/08″ on the loss of exotic credit — to the consensus estimates of 10% to 20% sales volume gains and 5% to 10% price gains in perpetuity. In fact, organic house prices are already on the down — lagging the persevering demand slump — and likely to drop by 10% to 20% over the next 2 years, down more at the high-end.