Monday, October 12, 2015
TAKING A LONG TERM VIEW ON GOLD MINING COMPANIES
I have written about buying gold mining companies recently. But such investments must take a long term view. Gold will always be a hedge against potential crisis or inflation. In the near term, gold price could be trending down or trade within a tight band. But in the longer term, gold could rise owing to these few factors:
1) A potential Asian Debt Crisis originating in China and affecting the whole of Asia
2) A China recession which prevents the Federal Reserve from raising further rates. A China recession can turn into a global recession
3) Amidst QE in Japan and EU, and a low interest rate policy across Asia, the world is awash with liquidity, and this does not allow the Federal Reserve to raise rates consecutively every quarter because this will price US goods out of the market. But the danger, when the market is awash with liquidity and if output continues to lag, coupled with depressed currencies, the world is ripe for a super inflation.
Any of the 3 scenarios could happen. So at least diversify your portfolio into some gold mining companies because in precisely those moments, gold will shine. At the most, 10% - 15% of your portfolio should include gold mining companies.
The above is just my opinion. You are encouraged to do your own research.
Sunday, October 11, 2015
SECOND LINER GOLD MINING COMPANIES TO EXPLORE
Gold is trending up and gold mining companies do look a cheap bargain, many having seen their marketcap reduced by more than 80% form their historic highs.
You can explore ASX listed MML (Medusa Mining) which in 2015 write off more than AUD200M and look to start anew. Low producer from the Philippines. Current price of AUD0.62 vs historic high of AUD8.35
Another is US listed KGC (Kinross Gold) which has US$1B cash at hand. Has recently been upgraded with a target price of US$2.55.
Please do your own research before buying.
I own MML and have intention to buy KGC in the next 24 hours
You can explore ASX listed MML (Medusa Mining) which in 2015 write off more than AUD200M and look to start anew. Low producer from the Philippines. Current price of AUD0.62 vs historic high of AUD8.35
Another is US listed KGC (Kinross Gold) which has US$1B cash at hand. Has recently been upgraded with a target price of US$2.55.
Please do your own research before buying.
I own MML and have intention to buy KGC in the next 24 hours
Friday, October 9, 2015
US RIGS COUNT
US rigs count dropped by 9, pushing the total to 605.
This could possibly lend some support to the oil price next week.
However, investors should also pay heed to the US stockpile report out in the mid week as the stockpile could continue to rise as many refineries go into maintenance mode in autumn. A substantial increase in the stockpile could hamper the upward march of oil price.
This could possibly lend some support to the oil price next week.
However, investors should also pay heed to the US stockpile report out in the mid week as the stockpile could continue to rise as many refineries go into maintenance mode in autumn. A substantial increase in the stockpile could hamper the upward march of oil price.
OUT OF A FRYING PAN AND INTO FIRE?
During the recent equity sell off in China, many investors flocked to the safe haven of bonds, and in the process push up the price of bonds to the highest in six years.This prompted companies to issue bonds to the highest level on record.
In an economy which is showing signs of fatigue and slowing down, revenue and profits are bound to decline. So companies may face difficulties in meeting the interest payments for bonds, more so because they had issued bonds at record pace.
So could this be a case that China, after the collapse of the stock market in July, 2015 could see another bubble forming in the bond market? Is this a case of being out from the frying pan and into the fire?
A bond market crash in China would surely cause a rout in bond markets in emerging markets, and this could spell trouble for many of the emerging economies which are heavily indebted, and where foreign ownership of the bonds are high.
What next is a stock market sell off and a fall in the value of currencies vs the US$.
The world as it is, is watching China. China is the 800 pound gorilla in room and if its economy runs amok, emerging economies will be the collateral damage.
Link: http://www.bloomberg.com/news/articles/2015-10-08/if-you-thought-china-s-equity-bubble-was-scary-check-out-bonds
In an economy which is showing signs of fatigue and slowing down, revenue and profits are bound to decline. So companies may face difficulties in meeting the interest payments for bonds, more so because they had issued bonds at record pace.
So could this be a case that China, after the collapse of the stock market in July, 2015 could see another bubble forming in the bond market? Is this a case of being out from the frying pan and into the fire?
A bond market crash in China would surely cause a rout in bond markets in emerging markets, and this could spell trouble for many of the emerging economies which are heavily indebted, and where foreign ownership of the bonds are high.
What next is a stock market sell off and a fall in the value of currencies vs the US$.
The world as it is, is watching China. China is the 800 pound gorilla in room and if its economy runs amok, emerging economies will be the collateral damage.
Link: http://www.bloomberg.com/news/articles/2015-10-08/if-you-thought-china-s-equity-bubble-was-scary-check-out-bonds
Thursday, October 8, 2015
CHINA'S SILK ROAD INITIATIVE
China may be sidelined in the TPP, but they are undertaking an initiative of their own. The building of a modern silk Road linking China through Central Asia and Russia to Europe is estimated to cost trillions of US$.
Link: http://news.xinhuanet.com/english/2015-03/28/c_134105435.htm
Link: http://news.xinhuanet.com/english/2015-03/28/c_134105435.htm
Tuesday, October 6, 2015
INTERESTING CORRELATION OF OIL BY BNP PARIBAS
Interesting correlation of oil as happened in 1985 and what is happening now. Look at the charts. The similarity is incredible!
http://www.cnbc.com/2015/10/06/the-crude-oil-chart-looks-a-lot-like-1985-bnp-paribas.html
http://www.cnbc.com/2015/10/06/the-crude-oil-chart-looks-a-lot-like-1985-bnp-paribas.html
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