Bill,
I thought I would give the GATA faithful a little follow up into the stupidity that is the gold share market. According to the Q2 Mitsui hedge book. ABX is short 9.5M ounces in their hedge book. I have $Gold up $197 on the year, per GLD. If my math is right, ABX has lost 1.87 BILLION!
GFI has a 7.1B market cap. ABX has a paper loss equal to 1/4 the valuation of a hedge free miner. Now which one has had the stellar year?! So I am now firmly in the camp that the excuse that we have all been using about escalating costs is NOT our answer. After all, find me a miner whose costs have exploded to the extent that ABX’s has this year? Even NEM’s loss is looking light next to this 1.87B dollar disaster.
Sabre
More from an irate Sabre…
I have seen unbelievable action in markets before. I watched the Internet craze from the trenches but in all my life I have never seen manipulation like I am seeing in the gold share market.
If you look at charts of the miners against $Gold, most have plummeted this year. A very notable exception, excluding the silvers, is ABX. This is most curious since their hedge book is so far underwater. There is a reason ABX is getting support IMO. The cartel has to keep its capitalization as high as possible to keep them from being in the position we just saw Sallie Mae in that forced them to do an equity issuance.
Just look at this market from a logical perspective. Citi just sent a note out that ABX’s large project will have costs that far exceed estimates, yet the stock does not fall. RGLD has no expenses yet it isn’t anywhere close to a 52 week high, it just continues to fall against $Gold.
The entire SA gold complex is skirting 52 week lows on the JSE. Where is the excitement? Is there not a single mutual fund on the planet that wants in to these shares in a big way? Is there some sort of unwritten law that these shares are not to be touched? What is altogether shocking is there is no fear of the upside REGARDLESS of what $Gold does, ever.
Look at the charts of the miners, the only time there are powerful thrusts to the upside occurs when they are dramatically oversold. Two days ago $Gold breaks out of its pennant. GFI gaps higher to $14.94. Over $10 off its all-time high from 1 1/2 years ago and someone promptly sells 7K JAN 15 calls for 55 cents? The stock has had nary an uptick since. Who has that type of control?
I have read more times than I can count how gold shares lead and gold shares have leverage. There has also been talk that GLD has taken money away from the share market. Let’s examine these issues. Gold stocks outside of a select few have gone nowhere for years, silvers are the exception. The junior market has been a short sellers dream. Leverage to the $Gold price has been negative, yes, negative, for years in the mid-tier and senior shares. The shares do not lead. The shares, just recently, crashed 20% via the $HUI against a mild consolidation in $Gold. GLD has not taken interest away from the shares. Look at a ten year chart of the miners and overlay volume. Volume has not gone down.
There is some entity out there that wants these shares down. I keep thinking that there is some price level in gold that will make all the difference and there isn’t one that exists right now. Newsletter writers and well heeled veterans in this market continue to believe that the gold shares represent value. I do not disagree at all, BUT who is the enemy here? How is it that all comers are taken on in these stocks so effortlessly in these shares?
Lastly, I came across something curious last week. Overlay a chart of the $XOI against $Gold. For that matter, overlay a chart of the oil drillers against $Gold. They are eerily similar. Now take any number of gold stocks and overlay them against $Gold. The similarity is there in the first few years but disappears the last few. All the Elliot wavers and chartists conjure up reasons as to why this is happening but the facts are that the oil stocks are a better proxy for $Gold.
So how does all of this end? If I knew who we were fighting I could venture a guess but right now I simply have no idea. $Gold is certainly headed higher, $Silver the same. From the looks of the agriculture charts we are headed for some serious price increases across the world. What will be the trigger for some institutional sponsorship for this sector? Will there ever be one? And when, if ever, will the CEO’s of these companies step up to the plate and start touting their prospects!
Sabre
All I can say for now is all this contrived market nonsense is going to lead to the most spectacular move in the history of markets as far as the gold/silver shares are concerned!!!!
GATA BE IN IT TO WIN IT!
MIDAS
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