James Altucher
Silver ETF?
6/21/05 9:27 AM ET
Since early March, 2003 I have been recommending silver on both this site and Street Insight. Some of the reasons are: (from my March, 2003 post, all of the points still apply):
a. The gold/silver ratio is at an extreme.
b. Silver hasn't risen with gold in part because it is an industrial metal just as much as its a precious metal.
People are concerned the rise in digital photography will slow down the need for silver. However, digital cameras are still too expensive for most of the world (photography is quickly becoming a favorite pastime in China) and the glossy paper used to print up digital photographs contains silver. In addition, silver is used for batter production and other industrial purposes.
c. Demand is outpacing production at a rate of about 100M ounces a year. 1.5B ounces of silver have been depleted in the past dozen years. The U.S. government has run out of silver for the first time in 50 years and last year started buying on the open market.
d. Above-ground supply is approximately 400M ounces. Warren Buffett owns about 130M ounces of that. Note that George Soros owns 26% of SIL and Bill Gates own 10% of PAAS."
Two weeks ago, Barclays began the process of creating a Silver ETF, with an expected launch in early 2006. Given the potential shortage of silver in production right now, combined with the need for the ETF to buy silver on the open market, silver at its current price of $7.22, could easily hit $8-$9 by year-end.
http://www.forbes.com/home/investmentnewsletters/2005/07/27/china-gold-lehmann-cz_rl_0727soapbox_inl.html
aktsiaturu pikaajalisest suunast...
Velikij, Suffiks - aga kas seda usute, et globaalne majanduskasv on pikaajaliselt positiivse märgiga?
Velikij, Suffiks - aga kas seda usute, et globaalne majanduskasv on pikaajaliselt positiivse märgiga?
to: enz
Usun, kui me eeldame, et maailma jääb valitsema Bilderbergi klubi mitte ei võta ohje enda kätte ökoradikaalid.
Kuid mis see börsi puutub?
1)Börsid peavad kas rämedalt langema et ajalooliselt ahvatlevat hinnataset saavutada
2)või on investeerimise tulevik private equitys.
Ma ise usun pigem viimast. Aga kes teab.
Usun, kui me eeldame, et maailma jääb valitsema Bilderbergi klubi mitte ei võta ohje enda kätte ökoradikaalid.
Kuid mis see börsi puutub?
1)Börsid peavad kas rämedalt langema et ajalooliselt ahvatlevat hinnataset saavutada
2)või on investeerimise tulevik private equitys.
Ma ise usun pigem viimast. Aga kes teab.
Bloomberg: October 5, 2005.
Royal Gold's Royalties Pay Off for Investors: Taking Stock
Oct. 5 (Bloomberg) -- Royal Gold Inc. has become one of North America's best-performing gold stocks this year without producing a single ounce of the metal.
The company, which has 13 employees, invests in mines operated by companies such as Placer Dome Inc. and receives a percentage of revenue as a royalty. Royal Gold has benefited from gold prices' surge to 17-year highs without having the expense of production costs, such as fuel.
``Most of the operators have experienced pretty high cost increases, and we're not burdened with that,'' said Stanley Dempsey, chief executive officer of the Denver-based company. ``I don't have all the headaches, but I have all the benefits.''
Investors such as Darko Kuzmanovic, of David W. Tice & Associates, are skeptical of the company's prospects. They said Royal Gold faces declining production from its primary source of revenue, a property in Nevada known as the Pipeline Mining Complex.
Even with its share of doubters, the stock has risen 43 percent this year to $26.11, the third-biggest advance in the 37- member Amex Gold Miners Index. Gammon Lake Resources Inc., located in Dartmouth, Nova Scotia, is the best performer with a 54 percent advance.
The index has gained 9.8 percent this year as Gold futures reached $479 an ounce, the highest since 1988, on Sept. 22 in New York.
Gold's rally intensified after Hurricane Katrina. The price has climbed 6.1 percent since the storm struck the U.S. Gulf Coast on Aug. 29. Some investors view the metal as a hedge against a potential decline in the value of U.S. assets.
Earnings, Share Sale
Royal Gold said in August that fiscal 2005 revenue climbed 18 percent, to a record $25.3 million, and earnings increased to 54 cents a shares from 42 cents. Since closing at a record on Sept. 16, the stock is down 8.8 percent. The company two weeks ago sold an additional 2.23 million shares at $26 each.
Dempsey, who became CEO in 1986, said he helped transform the company from a miner and driller five years later after realizing ``we ended up with a marquee royalty.''
The company held the lease on the Pipeline property and performed the initial mining in 1987. Royal Gold then sold its interest to Placer Dome, based in Vancouver, for a royalty in 1991 ``because we didn't have enough money to keep it going,'' Dempsey said.
The deal with Placer Dome, Canada's second-largest gold producer, provided a ``sliding-scale'' entitlement to the gold extracted from the mine. The amount rises and falls along with the metal's price.
`Pure Cash'
``It's just pure cash,'' said John Hathaway, manager of the $577 million Tocqueville Gold Fund in New York, which had 100,000 Royal Gold shares as of Sept. 30. ``There's no mining. It's a business model that investors like.''
Placer Dome runs Pipeline through a joint venture with London- based Rio Tinto Group, the world's third-largest miner. Placer Dome's share of production last year was 630,000 ounces, or 17 percent of its worldwide total of 3.65 million ounces.
Gold averaged $427 an ounce for the fiscal fourth quarter ended in June, giving Royal Gold a 4.25 percent entitlement at Pipeline, the company said. The amount rose from 4 percent a year earlier, when gold averaged $393.
Royal Gold's revenue has more than quadrupled during the past four years as a rising gold price boosted its claim to Pipeline's production. Since 2001, the mine has generated between 85 percent and 95 percent of the revenue.
`Lucrative'
``Not every royalty is going to be as lucrative'' as the Nevada project, said David Tice's Kuzmanovic, manager of a gold and precious-metals fund. The investor, based in Vancouver, said he doesn't own the shares because higher gold prices make it easier for miners to obtain funds without paying royalties.
``In a bullish market, there's much more capital flowing around,'' Kuzmanovic said. Placer Dome and Rio Tinto last month agreed to develop a mine close to Pipeline without any financing from Royal Gold.
Shares of producers such as Placer Dome have trailed Royal Gold this year as higher oil prices have caused mining costs to rise. Placer Dome said in July that it had a $7 million loss in the second quarter. The stock has fallen 13 percent to C$19.57 this year as crude oil prices surged 47 percent.
Newmont Mining Corp. and Freeport-McMoRan Copper & Gold Inc., the two biggest U.S. gold producers, slumped as the year started. Even after rallying since May, their shares have lagged Royal Gold's by rising 4 percent and 23 percent, respectively.
Placer Dome has 13,000 employees, Newmont has 14,000, and Freeport employs close to 8,000.
`Declining Trajectory'
While Royal Gold has an advantage because of its lower costs, Kuzmanovic said the dependence on revenue from Pipeline may spell trouble. Placer Dome forecasts a drop in output as the company develops the neighboring mine.
``The Pipeline deposit is on a declining trajectory, so over time the production levels coming out will decline,'' said Gregory Martin, Placer Dome's director of investor relations. As for the new mine, he said, ``We don't have a need for any financing that would encourage us to offer a royalty.''
Michael Jalonen, an analyst at Merrill Lynch & Co., wrote in an Aug. 31 note that Royal Gold's 2007 earnings will fall to 49 cents a share from his 2006 estimate of 56 cents because of a drop in revenue from the mine. Jalonen, based in New York, rates the shares ``neutral.''
The 66-year-old Dempsey, who holds $18 million of Royal Gold's shares and is the fifth-biggest stakeholder, said he will find royalty agreements to make up for the decline in production from the Pipeline mine.
The best opportunities remain in Nevada, Dempsey says. The company holds stakes in mines run by Newmont and Barrick Gold Corp. in Eureka County, where he expects production to ``ramp up'' in the coming years.
``A big part of our strategy was to find other production that would offset any changes in Pipeline production,'' Dempsey said. ``If money is very easily available, it's harder to sell people on royalty financing. I have to work harder.''
Royal Gold's Royalties Pay Off for Investors: Taking Stock
Oct. 5 (Bloomberg) -- Royal Gold Inc. has become one of North America's best-performing gold stocks this year without producing a single ounce of the metal.
The company, which has 13 employees, invests in mines operated by companies such as Placer Dome Inc. and receives a percentage of revenue as a royalty. Royal Gold has benefited from gold prices' surge to 17-year highs without having the expense of production costs, such as fuel.
``Most of the operators have experienced pretty high cost increases, and we're not burdened with that,'' said Stanley Dempsey, chief executive officer of the Denver-based company. ``I don't have all the headaches, but I have all the benefits.''
Investors such as Darko Kuzmanovic, of David W. Tice & Associates, are skeptical of the company's prospects. They said Royal Gold faces declining production from its primary source of revenue, a property in Nevada known as the Pipeline Mining Complex.
Even with its share of doubters, the stock has risen 43 percent this year to $26.11, the third-biggest advance in the 37- member Amex Gold Miners Index. Gammon Lake Resources Inc., located in Dartmouth, Nova Scotia, is the best performer with a 54 percent advance.
The index has gained 9.8 percent this year as Gold futures reached $479 an ounce, the highest since 1988, on Sept. 22 in New York.
Gold's rally intensified after Hurricane Katrina. The price has climbed 6.1 percent since the storm struck the U.S. Gulf Coast on Aug. 29. Some investors view the metal as a hedge against a potential decline in the value of U.S. assets.
Earnings, Share Sale
Royal Gold said in August that fiscal 2005 revenue climbed 18 percent, to a record $25.3 million, and earnings increased to 54 cents a shares from 42 cents. Since closing at a record on Sept. 16, the stock is down 8.8 percent. The company two weeks ago sold an additional 2.23 million shares at $26 each.
Dempsey, who became CEO in 1986, said he helped transform the company from a miner and driller five years later after realizing ``we ended up with a marquee royalty.''
The company held the lease on the Pipeline property and performed the initial mining in 1987. Royal Gold then sold its interest to Placer Dome, based in Vancouver, for a royalty in 1991 ``because we didn't have enough money to keep it going,'' Dempsey said.
The deal with Placer Dome, Canada's second-largest gold producer, provided a ``sliding-scale'' entitlement to the gold extracted from the mine. The amount rises and falls along with the metal's price.
`Pure Cash'
``It's just pure cash,'' said John Hathaway, manager of the $577 million Tocqueville Gold Fund in New York, which had 100,000 Royal Gold shares as of Sept. 30. ``There's no mining. It's a business model that investors like.''
Placer Dome runs Pipeline through a joint venture with London- based Rio Tinto Group, the world's third-largest miner. Placer Dome's share of production last year was 630,000 ounces, or 17 percent of its worldwide total of 3.65 million ounces.
Gold averaged $427 an ounce for the fiscal fourth quarter ended in June, giving Royal Gold a 4.25 percent entitlement at Pipeline, the company said. The amount rose from 4 percent a year earlier, when gold averaged $393.
Royal Gold's revenue has more than quadrupled during the past four years as a rising gold price boosted its claim to Pipeline's production. Since 2001, the mine has generated between 85 percent and 95 percent of the revenue.
`Lucrative'
``Not every royalty is going to be as lucrative'' as the Nevada project, said David Tice's Kuzmanovic, manager of a gold and precious-metals fund. The investor, based in Vancouver, said he doesn't own the shares because higher gold prices make it easier for miners to obtain funds without paying royalties.
``In a bullish market, there's much more capital flowing around,'' Kuzmanovic said. Placer Dome and Rio Tinto last month agreed to develop a mine close to Pipeline without any financing from Royal Gold.
Shares of producers such as Placer Dome have trailed Royal Gold this year as higher oil prices have caused mining costs to rise. Placer Dome said in July that it had a $7 million loss in the second quarter. The stock has fallen 13 percent to C$19.57 this year as crude oil prices surged 47 percent.
Newmont Mining Corp. and Freeport-McMoRan Copper & Gold Inc., the two biggest U.S. gold producers, slumped as the year started. Even after rallying since May, their shares have lagged Royal Gold's by rising 4 percent and 23 percent, respectively.
Placer Dome has 13,000 employees, Newmont has 14,000, and Freeport employs close to 8,000.
`Declining Trajectory'
While Royal Gold has an advantage because of its lower costs, Kuzmanovic said the dependence on revenue from Pipeline may spell trouble. Placer Dome forecasts a drop in output as the company develops the neighboring mine.
``The Pipeline deposit is on a declining trajectory, so over time the production levels coming out will decline,'' said Gregory Martin, Placer Dome's director of investor relations. As for the new mine, he said, ``We don't have a need for any financing that would encourage us to offer a royalty.''
Michael Jalonen, an analyst at Merrill Lynch & Co., wrote in an Aug. 31 note that Royal Gold's 2007 earnings will fall to 49 cents a share from his 2006 estimate of 56 cents because of a drop in revenue from the mine. Jalonen, based in New York, rates the shares ``neutral.''
The 66-year-old Dempsey, who holds $18 million of Royal Gold's shares and is the fifth-biggest stakeholder, said he will find royalty agreements to make up for the decline in production from the Pipeline mine.
The best opportunities remain in Nevada, Dempsey says. The company holds stakes in mines run by Newmont and Barrick Gold Corp. in Eureka County, where he expects production to ``ramp up'' in the coming years.
``A big part of our strategy was to find other production that would offset any changes in Pipeline production,'' Dempsey said. ``If money is very easily available, it's harder to sell people on royalty financing. I have to work harder.''