Over the past two days gold is up about 2% or more against just about every major currency. When was the last time that happened?
Another thing that's new from a sentiment perspective, in the past when gold had a strong rally like this, there were usually no shortage of pundits calling a bottom or at least getting a little excited over possibility of an end to bear market. I don't see many this time. In fact many are saying this is just a temporary, fed induced bump soon to be followed by a resumption of the decline. That may still be the case, but usually bear markets end with disbelief from the formerly faithful in the early lift off from bottom. We'll see.
Gold seems to be holding onto yesterday's gains despite a strong rally in the USD today. Gold rally in Euros is resuming today. The miners either see this as a temporary event perhaps driven by short covering or they have yet to catch up. I'm betting on the latter.
The Fed keeps saying that the path of rates is data dependent and a key data point is their expectation of inflation (medium term is what they said). They also say that rates will be lower than normal for a considerable time after employment and inflation reach their targets.
I read that as rates, even when they do go up, will stay lower than inflation for some time and that means negative real rates for some time. It is real rates, not nominal rates that ultimately drive gold.
Every single gold market pundit, blogger or newsletter writer I could find, including the goldbug type, is looking for lower prices (at least in the short term). Maybe some traders realized that the boat had tipped to one side as far as it was going to for now. These are choppy waters afterall.
According to Kitco, Ronald-Peter Stoeferle, the author of a report called "In Gold We Trust" is bearish on gold in the near-term. I know it's a bit anecdotal, but if a guy who writes a report called "In Gold We Trust" is bearish, then who is left to sell?? Gold may still have further to fall, but it's moments like this that typically mark the turning point in markets.
Gold is now at all-time highs in Brazilian Reals.
Also passed 1100 Euros today, very near 1-year high.
To a lot of people around the world, gold has been rising over the past year or so when measured in their local currency. I think market technicians out there have a very US-centric view of the market when they draw conclusion from their charts. In USD you see gold price hitting lower lows and lower highs over the past year, a clear downtrend, but in most other major currencies (not pegged to dollar) you see the opposite, with higher highs and higher lows. I get that the USD is the worlds reserve currency and is currently on a roll, but until recently it was mostly falling in all currencies. That has changed now and I think it is a fundamental change marking the end of this bear market.
Unfortunately cheap financing doesn't apply to miners at this time - I doubt they can get the super low rates available to other corporates in this environment. The other factors you mention all apply however. Stick with miners with mines outside the US and with reasonable debt loads - Kinross, Eldorado, Dundee Precious Metals, etc.
Seems like it, doesn't it, especially over shorter time frames. The market also hasn't noticed that mining costs are coming down, particularly for mines in countries whose currency has depreciated against the USD. All those miners and contractors being paid in Rubles, Real or Euros are now much cheaper to pay. Also have you noticed the price of gold in Euros? its near a 1 year high.
Maybe kinros, but not Kinross. Kinross has $1B in cash and is cash flow positive even at current gold price. Costs have been going down at least in line with gold price. It would take a significant decline in gold price from here and it would have to stay down for extended period before bankruptcy was on the table.
Gdx is down again this morning despite a small recovery in gold price. It is back to where it was when gold last saw this price despite much lower mine operating costs due to much lower oil and much lower foreign currencies at non-US mines. Either GDX is anticipating lower gold or it is way oversold.
Senior Greek Government official says they won't block it, but will review some permits:
I disagree. If gold can just hold the current level miners like Kinross should do quite well in 2015. If you look at what went into the cost estimates for 2015, they include $90 oil, $1.10 CAD/USD, 40RUB/USD, etc. In other words very conservative cost estimates compared to today's rates. If oil just stays where it is and the USD doesn't appreciate any more, Kinross costs will be much lower than estimated and margins higher. On top of that, depreciation expense will be a lot lower after asset impairments (mind you that doesn't affect cash flow). If however oil and FX rates were to return to levels used in their cost estimates, the gold price would likely soar.
The unfortunate thing with Kinross is they are likely to be gun shy after spectacular past failures and unwilling to pull the trigger re acquisitions at the right price. That's somewhat true of the whole industry.
Headlines for Google still blaring about sliding shares after hours even though its up $10 now.
There are a lot of moving pieces in the AMZN numbers and they're not all good.
Just for a little perspective: AMZN is back to the same price level as it was after Q4 earnings last year, after reporting lower earnings, lower FCF and lower net cash after debt.
"Crude oil seems to found the bottom here to really save anymore on the production costs"
Most of the drop in oil was in the 4th quarter. It's hard to imagine the miners have seen all they're going to in cost savings. Most probably bought the diesel used in Q4 at much higher prices. If oil prices only stay where they are and gold price does the same, you will see significant margin improvement in 2015. Higher USD also contributes to margins for non-US mines.