Thursday, June 28, 2012

Sabina A Possible 10-Bagger Within 2-3 Years

Investors looking for an emerging producer with the capability to put a medium sized gold deposit into production in a relatively politically stable jurisdiction, where costs are reasonable, and without having to dilute shareholders with a gazillion share issue, or bootstrap itself with a project financing, look no further.

The timing is probably good too.

Sabina Gold & Silver published a preliminary economic assessment completed by SRK on the Back River project recently.

The news release stated the following:

“PEA contemplates a scenario with concurrent open-pit and underground mining operations delivering mineralized material from the Llama, Umwelt, Goose and George deposits to a centralized 5,000 tonne per day ("tpd") processing facility located near the Umwelt deposit. Gold production is projected to average ~300,000 oz/year over 12.3 years for total production of 3,677,000 oz Au, beginning in late 2016 or early 2017.”

SRK concluded that the project may be economically viable and that Sabina should proceed to a pre-feasibility study. It calculated an after tax NPV-5% of about $650 million and an IRR of 25% (4 year payback) at a $1250 gold price ($1.1billion and 32% IRR (pre–tax)), assuming cash operating costs of $542 per ounce, preproduction capital of $450 million, and sustaining capital of $388 million (plus a $100 million contingency). (more)

Moody’s warns on Canadians mortgage debt

The federal government’s attempt to cool the housing market “may have come too late” to prevent a harsh landing for residential real estate, Moody’s Investors Service is warning.

After Finance Minister Jim Flaherty announced last week that Ottawa is tightening the rules on government-backed mortgages to keep the housing market from overheating, Moody’s said it is concerned the efforts may not be enough. High levels of household debt in Canada have left consumers with little flexibility to adapt to shifting markets, the credit rating agency said.

“The government’s moves may have come too late, owing to the buildup in consumer debt that has already occurred,” Moody’s said in a research note Monday. “Canadian consumers’ reliance on low interest rates to support high debt loads remains a risk.”

Mr. Flaherty introduced several changes which the government hopes will result in a soft landing in the housing market, rather than a hard crash. Most notably, Ottawa reduced the maximum amortization on a government-backed loan to 25 years, from 30 years; and reduced the amount consumers could borrow against their home, to 80 per cent, down from 85 per cent.

It was the fourth time in four years the government has waded into the market to tweak mortgage rules to reduce the debt appetite of Canadians, who have sent household debt levels to record levels amid historically low interest rates.

Mr. Flaherty had been saying for the past six months that the government would step in “if necessary” but Moody’s worries Ottawa may have waited too long, and that a soft landing may be difficult to engineer now. (more)

Roper Industries Inc. (NYSE: ROP)

Roper Industries, Inc. designs, manufactures, and distributes radio frequency (RF) products and services, industrial technology products, energy systems and controls, and medical and scientific imaging products and software. Its Medical and Scientific Imaging segment offers patient positioning devices, 3-D measurement technology, diagnostic and therapeutic disposable products, ultrasound bladder volume measurement instruments, and video laryngoscopes. The company's Energy Systems and Controls segment produces control systems, fluid properties testing equipment, industrial valves and controls, sensors and controls, and non-destructive inspection and measurement products and solutions. Its Industrial Technology segment produces water and fluid handling pumps, equipment and consumables, leak testing equipment, flow measurement and metering equipment, water meter, and automatic meter reading products and systems. The company's RF Technology segment provides radio frequency identification communication technology and software solutions that are used in toll and traffic systems and processing; security and access control. The company distributes its products through direct sales personnel, manufacturers' representatives; value added resellers, original equipment manufacturers, and distributors. It principally operates in the United States, Canada, Asia, Europe, the Middle East, and South America.

To review Roper's stock, please take a look at the 1-year chart of ROP (Roper Industries, Inc.) below with my added notations:

Since moving higher from October of last year, ROP has been consolidating within a small Rectangle pattern over the last (2) months. A Rectangle pattern forms when a stock gets stuck bouncing between a horizontal support and resistance. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. With ROP, the Rectangle pattern has formed a $103 resistance (red) and a $95 support area (navy), a support that was also a strong resistance prior.

The Tale of the Tape: ROP has formed a common Rectangle pattern. The possible long positions on ROP would be either on a pullback to $95, or on a breakout above $103. The ideal short opportunity would be on a break below $95.

Eveillard – This Is All A Delusion, I Am Keeping My Gold

from KingWorldNews:

With global stock markets trading higher, today King World News interviewed legendary value investor Jean Marie Eveillard, who oversees $50 billion at First Eagle Funds. Eveillard told KWN that despite “the fact that the stimulus has been completely unprecedented in scope … the economic recovery seems to be sputtering.” He also discussed the gold market, but first, here is what Eveillard had to say about the ongoing crisis: “There is no doubt that there are major deflationary forces at play. There is also no doubt that the private sector is continuing to deleverage. But in order to prevent the deleveraging of the private sector from sending the economy into a replay of the Great Depression, governments are leveraging themselves.”

“So the public sector is leveraging up in a major way in practically every country. And in a pure paper money system, which we’ve had for more than 40 years, in a pure paper money system you can always inflate. There are deflationary forces at work, but governments are making sure they are offset, if not more than offset, by leveraging up of the public sector. So I wouldn’t worry too much about deflation.

Jean-Marie Eveillard continues @

Credit Default Swaps Explained

from Wealth Cycles:

A credit default swap (CDS) is a derivative referencing the credit of the ‘reference entity.’ A derivative is simply a contract.

You can think of a credit default swap (CDS) as kind of like auto insurance. Let’s say you are buying car insurance for yourself:

  • You purchase car insurance from an insurance company
  • You will make periodic payments to the insurance company
  • If you do not get in an accident, the insurance company keeps the money
  • If you do get in an accident, the insurance covers the cost of the damages

A CDS is similar but not identical. One difference is, with a CDS you are buying insurance to protect against a credit event of the reference entity:

  • The buyer will purchase a CDS to insure against the reference entity
  • The CDS buyer will make periodic payments to the seller
  • If the reference entity does not suffer a credit event, as defined by the ISDA, the CDS seller keeps the payments
  • In the case of a credit event, the CDS buyer receives full value, and the CDS seller typically receives the defaulted security from the CDS buyer (as an auto insurer would receive a totaled vehicle)
  • Read More @

Will India Implement The First “Executive Order 6102″ Of The 21st Century?

from Zero Hedge

Something strange has been happening in India in the last year: while the rest of the “developed” world has been doing all in its power to crush its currency in order to promote exports within a globalist mercantilist system suddenly gone haywire, India has had the opposite problem: with its economy slowing down even as rampant inflation persists, its currency has been sliding against all other currencies. But probably more importantly: plunging against gold, as can be seen on the chart enclosed.

Continue Reading at…

McAlvany Weekly Commentary

Arab Spring, Paraguayan Summer, Spanish Fall, Greek Winter

A Look At This Week’s Show:
-Fed “Twist” disappoints speculators
-Retail insiders hit the exits
-Patience equals investment virtue

Dow’s Heavy-Duty Sell Signal Spells Trouble

Monday’s drubbing was followed by a lethargic low-volume rebound Tuesday, which was triggered by a Case-Shiller 20-City Home Price Index that had a lower-than-expected decline. But consumer sentiment was a disappointment falling to 62 where 64 was expected.

The market lost much of Monday’s volatility but regained some of the losses. The Dow Jones Industrial Average rose 32 points to 12,534, the S&P 500 closed at 1,320, up 6 points, and the Nasdaq was up 18 points to close at 2,854. The NYSE traded 711 million shares and the Nasdaq crossed 416 million. Advancers led decliners by 1.7-to-1 on the Big Board and by 1.3-to-1 on the Nasdaq.

Dow Chart
Click to EnlargeTrade of the Day Chart Key

Volatility is a key characteristic of the Dow Jones Industrial Average since the late-April top. The index broke the 200-day moving average briefly in early June, then bounced, and in late June, penetrated the 50-day moving average.

Despite Tuesday’s 32-point advance, the test of the 200-day may not be over. Sluggish volume and a lack of depth, as well as a heavy-duty sell signal from the stochastic, tell us that the bulls are under more pressure than the bears. (more)