US Markets, Gold and our first comments on the Panama Papers
Chris Temple and Richard Postma wrap with the markets with Cory Fleck. We chat about the move down today in the US markets and the move up in gold. We then shift focus to address our first impressions of the Panama Papers and the fallout that follow.
This is a longer market wrap so here are the times if you want to skip to a certain topic.
- Start – US Markets
- 6:08 – Gold
- 11:20 – US Treasuries
- 13:18 – Panama Papers
Click download link to listen on this device: Download Show
How anyone can hold Seabridge superlative to Pretium is mindless. Production fully capitalized in 18 months, fully permitted. Yes, Seabridge is multi-metal based, but next decade minimally to production. We get to $1600 gold, PVG may be a $100 junior.
These numbers are not realistic for a gold mine. I suspect fraudulent reporting, or a very casual, drug-addled way of dealing with the facts,
FranSix
That is an interesting comment (I have heard similar). Maybe no one believes the drill results. Therefore, Premium is not valued appropriately.
Have you seen the pictures of the rock samples from VOC? Very visible gold. But, perhaps, these are fake, too?
Oh well … put your chips on RED or BLACK and spin the wheel, I guess.
Thank-you for kindly emphathizing. I am not trying to despoil anything for anyone. Imagine if you will, 12 kilogram bars, each about the size of an iPhone stacked on their sides in the small space of a foot and a half. This is what the company is saying that they have.
I am the first to attempt to demonstrate that the numbers are not consistent with reality on my own investment and have been dealing with crazy-man balance sheets for some time, including what appears to be a management strike!
De Guzman of bre-x might be back salting the samples. He parachuted when he jumped.
Jumped? Maybe more like he had someone’s footprint in the middle of his back when they scraped him off the jungle floor.
You can buy dead bodies over there for a price to cover up and make it look like you died.
FranSix,
Robert Quartermain, probably the most reputable mining CEO in the Americas. I’ve known him conversationally for 12 years. The consummate CEO! whose main focus is shareholder value.
Marty
I have been frustrated watching Seabridge soar while Pretium languishes.
I just do not get it: Not only does Pretium have the BEST gold deposit in the world, they have a property adjacent to Seabridge (Snowfield) that is almost identical.
So,. When you typed “$100 junior” what did you mean the PVG sharePrice would be $US100 @ $US1600 gold?
Because I have the top share price for Pretium at about $25 at $1500 gold (US$)
PVG ! Shares 173 MILLION ! Seabridge ! Shares 52 MILLION ! And don’t forget the Optionality Investment ! Seabridge is a Optionality PVG is a Miner !
Diss will helpe you Brian ! ( i love PVG ) ! http://sprottglobal.com/special/rick-rule-optionality-commentary-march-2-2016/
Astute comment / very good observation Franky.
Hope all’s well,
Luv’
LPG
Jonnalin,
Pretium also has a low grade 20 million optionality oz deposit( Snowfields) bordering Seabridge.
Marty,
IMHO, I think to have PVG share price hit @ $100, you’ll need either
1) much much much higher gold prices
2) much expanded reserve/M&I resource est.
Personally, if anything, I’d suspect a takeover to occur well before the shares hit $100.
My 2cts.
LPG
Disclaimer: I’m long the name
I believe Pretium will get taken out eventually and a larger company will want those ounces in the ground. Same thing with Seabridge. They are both great optionality and development stories and will be great takeout stories once they get the development finished and are close to production, or once they start producing. There are inherit risks with any company going through development and the early stages of any mine, but that is also a very exciting time to be an investor with some nice potential upside.
Marty,
Follow-up comment.
I just realized you linked PVG shares potentially at $100 if we get $1600 gold.
So here’s the way I’d look at that scenario you envisaged, just to put some numbers into context – fwiw.
PVG AISC = $450/Oz.
So at $1600 gold, they’d make $1150 in operating cash ($1600-450), before taxes (and I also believe before interest payment for their debt – but let’s leave this aside).
Est. average production for Brucejack is 400k Oz per year over LOM (I use the average figure here for simplicity sake).
So $1150/Oz x 400k Oz = $460mn, pre-tax income.
Take out 26% for tax purposes, that leaves you with… $340mn Net income.
Assuming the shares are trading at $100, this would imply a 18.6bn market (on a fully diluted shares basis).
At $100 for the shares, the implied P/E would be 18600/340= 55x
So….
–> Is this possible ? Yes – almost anything is.
–> Is this likely ? Well, if/when gold hits $1600, I doubt PVG shares will be trading at such a 55x multiple.
Again, keep in mind I’m saying this while I’m long the stock.
I repeat that imho, and fwiw, we would need to (1) see much much much higher gold prices and/or (2) a substantially expanded reserve/resource for PVG in order for the company share price to hit $100. Irrespectively, I believe that the company would be subject to a takeover before this $100/share occurs in case (1) or (2) start to materialize.
Again, my 2cts.
LPG
LPG, a 55 PE isn’t nearly as unlikely as it seems. Aside from during the depths of a very bad bear market, it is normal for gold miners to trade at very high PEs. Single digit PEs represent great values for any stock but they can represent spectacular values when they show up in gold miners.
I’m sure there are better discussions on the subject but a quick search turned up this:
P/E
As a final caveat (beware), never analyze a precious-metals company based on the price-to-earnings ratio. In general, a high P/E means high projected earnings in the future, but all gold stocks have high P/E ratios. The P/E ratio for a gold stock doesn’t really tell us anything because precious metals companies need to be compared by assets, not earnings. Unlike buildings and machinery, gold companies have large amounts of gold in their vaults and in mines throughout the world. Gold on the balance sheet is unlike other capital assets; gold is seen as currency of last resort. Investors are therefore willing to pay more for a gold company because it is the next best thing to physically holding the gold themselves.
http://www.investopedia.com/features/industryhandbook/metals.asp
-And that’s coming from someone who does not own PVG and likely never will.
Matthew,
Hope all’s good.
Thanks for these.
I was just trying to put some context into things w. the P/E calculation.
Personally, P/E is not the main metric i use indeed, but it provides some context though.
In that particular case, i considered that calculating the implied P/E for the stock at a certain price but GIVEN an avge annual output figure was a good guiding post.
But you will note that my initial comment was that for me, for the stock to reach $100, either gold prices will have to be much much higher OR much expanded reserve/resource est. (balance sheet effect).
Fwiw, i personally use a simple DCF on PVG to value it currently and keep an eye on EV/Oz (which is one of my favorite metrics, but which, again, cannot be taken in isolation but in a context).
Best to you,
LPG
LPG, thanks for the objective analysis and understanding of the internals. My intuitive perspective comes with being heavily involved in the sector for more than 17 years. I was an owner of Aurelian and Minefinders that I realized 6200 % and 3200%. Aurelian ultimately appreciated near 8000% ($.50- $40.) and Minefinders $1- $40.
I just recognize Pretium as the only low hanging fruit that I see even at near production could be had at a reasonable price.
No worries Marty. I hear you.
Hope all’s well & good luck investing/trading.
LPG
Looks like Pretium hit a secret Tutankhamen chamber in the alley of the Kings.
Oil went to the expected 35.50 area. It finally has a buy signal on the hourly chart. Currently 36.52.
The drop will continue, with breaks, now and again, until it overshoots what might be a reasonable level for the earnings.
Everything goes in cycles and we are in a current rotten/incompetent government cycle.
Taxation and regulations are too high and too many.
It will be reduced peacefully sometime sooner or by revolution sometime later.
Given the level of knowledge of the voting public, the ignorance/economic stupidity of the Presidential candidates,(B.S. and D.T.) this may be the time that democracy in the U.S. has failed/collapsing.
Anyone invested in Alexco for the long-term, will enjoy this chart (Gold Tent)
https://goldtadise.com/wp-content/uploads/2016/04/axu-4-5.png
It’s pure hypocrisy. The U.S. is the number one tax haven in the world. Its government will help you avoid your country’s taxes just as long as your country isn’t the U.S. Gotta love it!
The daily chart on gold prices in $US nearly obtained a BREAKOUT today. The Stochastic 14,7,7 is showing a crossover, while the green indicator edged over the ADX momentum line.
FranSix
Beauty Chart, eh? It is so perfect is MUST happen 😉
Brian
Actually, I Look at this chart as a rough approximation. Perhaps tomorrow in volume?
Great comments…… on the 10,11, and 12 month comments…….
The above was directed to DOC….thanks for the input
Worth repeating!
It’s pure hypocrisy. The U.S. is the number one tax haven in the world. Its government will help you avoid your country’s taxes just as long as your country isn’t the U.S. Gotta love it!
And to add!
Only for big corporations, the connected, and politicians! ( greasing the corrupt wheel )
One can only hope the Panama papers are the beginning of opening Pandora’s box!
Chartster………Panama gold……don’t you use that at the beach for suntan relief…..
Actually, anyone (who’s not a U.S. citizen) can use the U.S. for its tax haven benefits – not just big corporations, etc.
Chris T……..again, good thoughts on the gold…..
Chartster….Might as well give up, seems like nobody on her wants to debate it. Maybe they have Panama accounts….HaHa.
That soros is an evil bastard. Just read PUTIN is about to release a lot of info.
First we had wars , then we had currency wars , now we are about to have information wars…….What next ?….Star Wars!!!!!!!!!!!!!!!!
Irishtony ! You ain’t seen nothing yet ! https://www.youtube.com/watch?v=7miRCLeFSJo
IrishTony, that’s the truth.
( ISIS ) Is banking HEIR ! http://www.hsbc.com
This chart is a nightmare for gold bears:
RE: Panama Papers
Ask yourself why not a single Amerocon politician, bureaucrat or other gooberment official was mentioned and only those on the Amerocon gooberment hit list were leaked? Oh, that’s right…the USAA has no corruption in it’s gooberment. Chris has it right.
See this
The Panama Papers are out and the Panama Papers propaganda is out right along with it. So why does this new mega-leak seemingly only expose those in the State Department crosshairs or expendable others and not a single prominent American politician or businessman? And what does this have to do with the OECD’s plan for a global taxation grid? Find out more in today’s Thought For The Day with James Corbett.
http://www.freedomsphoenix.com/News/194463-2016-04-05-what-i-learned-from-the-panama-papers.htm
This is the obvious conclusion. No way Americans or western Europeans are any less corrupt than anyone else.
Hah! You boys see this. Rickets is going to be on with George Noory tonight.
http://www.coasttocoastam.com/show/2016/04/05
Just the other night Noory was interviewing a 3 headed human! 🙂
Rickets is …
That should be RICKARDS! Dang, spell check correcter!!!
After Noory is through with RICARDS he will talk to a woman who talks to the dead. I wonder if she can talk to those dead fiat currencies.
And regarding that three headed human…apparently one of the heads has died.
http://www.coasttocoastam.com/article/return-of-the-3-headed-person/
LOL
He is everywhere, gotta sell those books. He is fast talking and can do several interviews a day.
What happened to Rick?
Putin is the only remaining defender of Christian civilization? What are you smoking Chris?
I smoke a good cigar about once a week or so.
Holy Goldy. 375 ounces per tonne (over 0.5 meters) !!
Look at these drill results from Pretium released today for the Valley of the Kings (VOC)
— Hole VU-633 intersected 428.43 grams of gold per tonne uncut over 14.00
meters, including 11,650 grams of gold per tonne uncut over 0.50 meters;
— Hole VU-592 intersected 37.87 grams of gold per tonne uncut over 28.00
meters, including 1,760 grams of gold per tonne uncut over 0.50 meters;
— Hole VU-598 intersected 46.15 grams of gold per tonne uncut over 34.00
meters, including 1,660 grams of gold per tonne uncut over 0.50 meters;
— Hole VU-622 intersected 77.30 grams of gold per tonne uncut over 9.54
meters, including 1,425 grams of gold per tonne uncut over 0.50 meters;
— Hole VU-648 intersected 40.46 grams of gold per tonne uncut over 17.13
meters, including 1,245 grams of gold per tonne uncut over 0.50 meters;
— Hole VU-637 intersected 26.16 grams of gold per tonne uncut over 28.85
meters, including 1,410 grams of gold per tonne uncut over 0.50 meters.