Gold Stocks – Miners, Junior Miners and Exploration

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http://tanagold.over-blog.com/gold-stocks-miners-junior-miners-and-exploration

Gold stocks are a popular method for people who want to invest in the rising price of physical gold. Gold stocks can cover mining, production and exploration — and typically — have a levered effect when reacting to the price of gold (this means they are more volatile investments).

As part of her ongoing coverage of gold and precious metals, Alix Steel frequently analyzes gold stocks in her daily gold brief.

 

Gold Stocks – Miners, Junior Miners and Exploration

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Image 

http://tanagold.over-blog.com/gold-stocks-miners-junior-miners-and-exploration

Gold stocks are a popular method for people who want to invest in the rising price of physical gold. Gold stocks can cover mining, production and exploration — and typically — have a levered effect when reacting to the price of gold (this means they are more volatile investments).

As part of her ongoing coverage of gold and precious metals, Alix Steel frequently analyzes gold stocks in her daily gold brief.

TANA GOLDFIELD-Gold as an investment

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http://copytaste.com/p4172

Gold has been used throughout history as money and has been a relative standard for currency equivalents specific to economic regions or countries, until recent times. Many European countries implemented gold standards in the latter part of the 19th century until these were temporarily suspended in the financial crises involving World War I.[citation needed] After World War II, the Bretton Woods system pegged the United States dollar to gold at a rate of US$35 per troy ounce. The system existed until the 1971 Nixon Shock, when the US unilaterally suspended the direct convertibility of the United States dollar to gold and made the transition to a fiat currency system. The last currency to be divorced from gold was the Swiss Franc in 2000.[citation needed]

Since 1919 the most common benchmark for the price of gold has been the London gold fixing, a twice-daily telephone meeting of representatives from five bullion-trading firms of the London bullion market. Furthermore, gold is traded continuously throughout the world based on the intra-day spot price, derived from over-the-counter gold-trading markets around the world (code “XAU”). The following table sets forth the gold price versus various assets and key statistics on the basis of data taken with the frequency of five years

The analysis of log-linear oscillations in the gold price dynamics for 2003–2010 conducted in 2010 by Askar Akayev’s research group has allowed them to forecast a collapse in gold prices in May–July 2011. As of 18 July 2011, this collapse had not yet occurred, with gold at record prices of over $1600 per ounce. On 22 August 2011 gold reached a new record high of $1908.00 at the London Gold Fixing. The predicted collapse actually took place in August–September 2011.Yet, on 19 June 2012, gold zoomed further to INR 30,750 per 10 gm in the New Delhi, breaking its previous record of all time high. On 13 June 2012, gold prices breached INR 30,000 (Rupee) mark due to global financial uncertainty and touched the record high of INR 30,420 per 10 gms.

However, further collapse of gold prices was observed in April 2013.

Gold Miners Stall Out, But There Are Still Opportunities

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http://johnnycurtte.blog.fc2.com/blog-entry-3.html

This morning, the major stock indexes are all rallying higher at the start of the trading session, but the gold mining stocks are not participating. Today, the Market Vectors Gold Mining ETF (NYSEARCA:GDX) is trading lower by 0.10 cents to $24.39 a share. Day traders can watch for intra-day support levels around the $24.00, $23.70, and $23.34 levels. The daily chart of the GDX still remains in a vulnerable position by trading below the important 20 and 50-day moving averages. This tells us that swing traders will want to remain very short term as volatility is likely to remain high in the gold mining sector.

Some leading gold mining stocks that are declining lower today include Randgold Resources Limited (NASDAQ:GOLD), Newmont Mining Corporation (NYSE:NEM), and Barrick Gold Corporation (NYSE:ABX). Most of the leading gold mining stocks also remain very weak on the daily charts at this time. Traders and investors must expect this industry group to remain volatile in the near term.

Join us as we day trade these stocks and more live in our Intra Day Stock Chat. The gap trades are easy money makers right now, like this one traded right after the bell this morning. Don’t miss this action.

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Gold Investment Scams: How to Avoid Them

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http://finance.yahoo.com/news/gold-investment-scams-avoid-them-151310393.html

The Pitch: As Safe as Keeping Metal in Your Mattress?
As part of a Federal Security Investment Task Force, Brown has been involved in many precious metal scam investigations. She has uncovered deceptive sales scripts that bill precious metals as a safe-haven investment, even calling it “as safe as keeping metal in your mattress.”

“They cold call consumers and give very strong sales pitches, saying precious metals will rise significantly, doubling or tripling in as little as 30 days, and that consumers must send in money immediately so they don’t lose out on the opportunity,” Brown said.
Studies have shown the number of companies offering consumers the chance to buy or invest in precious metals has increased, according to a fraud alert released by the U.S. Commodity Futures Trading Commission earlier this year.
“However, many of these companies do not actually purchase or store any metal for their customers,” the report said.

How Precious Metal Scams Operate
One such fraudulent company was run by fugitive Luis Ferreira. A two-time telemarketing fraudster, Ferreira was fresh out of federal prison and barred from fundraising for three years. In 2008, he used his mother’s name to incorporate Spyker Consulting, a precious metals telemarketing firm based in south Florida. (See: How Luis Ferreira Became a Fugitive.)
Without direct access to the precious metals market, Spyker supposedly contracted a London-based “clearing firm” to buy, sell, and store the precious metals.
But the company was a sham – the London-based clearing firm did not exist. The mail and phone calls that supposedly went to that office were simply redirected back to the Spyker’s Florida office, according to the Federal Bureau of Investigation. (Read More: Criminal Complaint Against Luis Ferreira.)
Rather than investing his clients’ money, Ferreira pocketed it, up to $27,000 a month by 2010, according to the FBI. When the feds confronted him, Ferreira confessed. He pled guilty to conspiracy and received a three-year prison sentence. Rather than serve his time, however, Ferreira disappeared.

Falling Prey to a Career Conman
The news devastated investor Steve Starr, who lost $25,000 in Ferreira’s scam. Starr owned a Tampa Bay, Fla.-based RV dealership that in 2008 was seeing an all-time low in sales when a Spyker telemarketer called him. The sales pitch convinced him to invest $5,000 in silver. Over a few months, Starr received statements that showed his money growing.
“I thought it was the best thing I ever did ’cause I watched the silver go up and up and up. And I said, ‘Wow, these guys were right. It was worth 15 percent commission,’ ” Starr told CNBC’s “American Greed: The Fugitives.”
Then another Spyker telemarketer called. Starr recalled, “[He] told me palladium is getting ready to take off and I should invest in some palladium. He says you need to get every dime you can scrape up and he says you’re gonna make a ton of money.” (See: Steve Starr Explains What Information Telemarketers Are After.)
So Starr doubled down and invested $20,000 more. But by late 2009, he sensed trouble. His statements stopped coming and when he tried to liquidate his account, he was told he had to wait.
Needing to pay property taxes, Starr took out a home equity loan on his previously paid for house. The next time he called Spyker, the phone was disconnected. Starr lost his entire investment and was now saddled with debt.
“I sleep very little. I’m lucky if I sleep two or three hours at night. I mean my health has gone downhill. It’s been, it’s been devastating,” he said.

Not All Brokers Are Equal
Unfortunately, Starr’s story was like many others Brown had heard before. Potential investors should know that people who sell “physical” precious metals, like gold or silver bullion, are not required to obtain licensing or training from the National Futures Association (NFA). Yet, some companies advertised their brokers as being licensed, Brown said.
“They are referring to a telemarketing license. If they were licensed in commodities, we’d call them brokers. But instead we consider them telemarketers,” Brown said.
The FTC has found that many fraudulent companies were operated by brokers who had lost their license to sell stocks or futures because of deceptive sales practices.
The best advice Brown said she could give was to search the NFA database to check the regulatory history of your broker. It tells you if the person is licensed, sanctioned, or banned from the NFA. If you don’t find your broker’s name listed, you should think hard about to whom you’re giving your money, Brown said.
“Why would you want to deal with someone if they’re not licensed and they’re in this unregulated trade, especially when there are precious metal companies that use licensed brokers? I would suggest finding someone who carries a license,” Brown said.

Mining Stocks Appear Cheap Versus Gold Bullion: Is Now the Time to Buy?

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Sasha Cekerevac writes: The drop in the price of gold bullion has surprised many investors. With the level of monetary stimulus provided by the Federal Reserve and other central banks, many had believed that gold bullion would continue rising. The drop has not only impacted investors in gold bullion, but those in the associated mining stocks as well.

While central banks have been buying gold bullion, investors in exchange-traded funds (ETF) have been selling a massive amount. The total amount sold by investors in ETFs is approximately 467 metric tons so far this year.

At this point, mining stocks have become quite oversold in relation to the price of gold bullion, according to my analysis. There is the potential that this spread will narrow over time. It is true that gold bullion mining stocks face significant headwinds, specifically higher costs, but it appears much of this is now priced into the stocks. To combat the higher costs with the combination of lower gold bullion prices, many mining stocks are reducing production and cutting costs.

The chart below shows the ratio between an index of gold bullion mining stocks (the Market Vectors Gold Miners) versus the price of gold bullion. This is not an indication on the direction, but a representation of the shift in valuation between mining stocks and gold bullion.

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In the chart above, notice the area circled during the last part of 2008. At this point, the gold bullion mining stocks became extremely oversold versus the price of gold bullion itself. Since gold bullion and the mining stocks are closely correlated, a move to either extreme will tend to revert or bounce back.

This is exactly what occurred, as the relationship between gold bullion and the mining stocks then reverted back to a more normalized level by the spring of 2009. Currently, the relationship between gold bullion and the mining stocks is once again becoming extremely stretched. This could potentially be a situation in which mining stocks close the gap between them and gold bullion.

Of course, we are talking about correlation and not direction. This means that this spread can narrow, even if both gold bullion and the index of mining stocks continue dropping. My analysis simply indicates that if they both continue to fall, the index of mining stocks is closer to the bottom and will fall less in comparison to gold bullion. Conversely, they could both move up; if they did, my analysis indicates that the index of mining stocks could outperform gold bullion again.

In the lower portion of the above chart showing the relationship between gold bullion and the mining stocks index is the price chart of the Market Vectors Gold Miners Index (NYSE/GDX) and gold bullion itself. The vertical lines correspond to points of extreme valuation and a more normalized level.

From the fall of 2008 until the spring of 2009, gold bullion went from approximately $700.00 to $1,000 an ounce, a nice return of over 42%. However, mining stocks went from less than $20.00 to approximately $40.00, a return of over 100%.

Note that I am not recommending simply buying mining stocks based on this cursory analysis. I am simply pointing out that this relationship is now at a fairly extreme level and has the possibility of narrowing. As I stated earlier, both gold bullion and the index of mining stocks might continue falling in price, yet this spread could narrow. They could also both begin rising. Perhaps this is an indication that much of the bad news is now priced into gold bullion mining stocks. In my experience, these types of stretched correlations tend to revert to the mean.

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