Monday, September 3, 2012

Gold Fields Limited (NYSE: GFI)

Gold Fields Limited engages in the acquisition, exploration, development, and production of gold properties. It holds interests in eight operating mines in South Africa, Peru, Ghana, and Australia. As of February 27, 2012, the company had total attributable precious metal and gold equivalent mineral resources of 217.0 million ounces and mineral reserves of 80.6 million ounces. Gold Fields Limited was founded in 1968 and is based in Sandton, South Africa.

To review Gold Fields' stock, please take a look at the 1-year chart of GFI (Gold Fields Limited) below with my added notations:

1-year chart of GFI (Gold Fields Limited)

GFI has been trading within a large, sideways Rectangle for the last (5) months. Rectangle patterns form 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. What's great about a Rectangle pattern is that it not only provides you with trading points of support & resistance, but it also gives clearly defined breakout & breakdown points. For GFI, the Rectangle pattern formed a $14 resistance (red) and a $12 support (blue).

Chart patterns can also provide price targets. Simply take the height of the overall pattern and add or subtract that amount to or from the breakout or breakdown point to get the minimum price objective. For example, since the Rectangle pattern for GFI is $2 high ($14 - $12), GFI should climb to a minimum of $16 ($14 + $2) if it breaks above $14 or fall to $10 ($12 - $2) if the stock breaks below the $12 level. Chart pattern price targets are certainly not guarantees, but they are often fulfilled.

The Tale of the Tape: GFI has formed a very common chart pattern know as a Rectangle. The possible long positions on GFI would be either on a pullback to $12, or on a breakout above $14. The short opportunities would be at either $14 or on a breakdown below $12.

Apartheid Redux: Platinum Mine Killings Cause Panic in South Africa / By SV /

Let’s face it – the platinum miners who charged at police at one of the world’s biggest platinum mines this month must’ve known that they were going to get blow to sh*t. But, at the same time, for rock bottom wages, these miners tread 2 miles into the earth in order to mine platinum, having to move 10 tons of dirt for the rich man’s gold. So, perhaps therein lies a reason for their cracking and subsequent attack on police.

But the news in the wake of the event that 270 miners who were also on scene will be charged with the murders sounds like a Monty Python curveball of fiction. But, sometimes truth is stranger than fiction. Indeed, the police killing of 34 strikers in South Africa has resulted in the charging of 270 miners with the murder of their colleagues. South Africa’s justice minister said on Friday that the decision had caused “shock, panic and confusion” among South Africans. The killing of strikers at the Marikana mine earlier in the month represents one of the worst incidents since the end of white rulership in 1994.

Prosecutors said they have invoked the “common purpose” measure due to the fact that the miners were at the scene with weapons and therefore complicit in the killings. Members of the government’s Human Rights Commission questioned if the prosecutors knew the law. The law dates from the apartheid era under which they are deemed to have had a “common purpose” in the murder of their co-workers.


Art Cashin – The Most Disastrous Economic Event In US History / August 31, 2012

Today 50 year veteran Art Cashin shocked King World News by speaking about the most disastrous economic event in the history of the United States. Cashin said, “The most disastrous thing economically that happened in this country, happened in August of 1971, when they came off the gold exchange standard.”

Cashin, who is Director of Floor Operations for UBS, which has $612 billion under management, also warned, “I’m not sure that the leadership is alert enough to be able to implement the gold standard again, but they should really consider, at least, returning to something like the gold exchange standard.”

But first, when asked about how long and brutal this cycle is going to be for the disappearing middle-class and people who are suffering around the world, Cashin responded, “We’ve got a couple of things going here. In the stock market, traders think of something called the 17.6 year cycle. The feeling on Wall Street is that you go through these 17.6 year cycles, where you have a ‘fat’ cycle, where you can pick almost any stock you want and it will go up.”

“The other one in which the markets go up and down, but don’t make any real progress. An example of that is the period from 1966 to 1982, where you started at about 800 on the Dow, and ended at about 800 on the Dow, having gone to 1,000 several times, having gone to 500 several times.

So with that as the backdrop, the current 17.6 year cycle says we’ve got, probably, another 6 years to go. We (started this cycle) in February of 2000. If the economy is going to mirror the market, in some way, then for these people to get back on their feet, we may not be looking at months, we may well be looking at years, and several of them at that.”


Coronado: Crohn's dieases to diabetes

by John McCamant, editor The Medical Technology Stock Letter

Coronado (CNDO) recently announced the initiation of TRUST- I, a Phase II trial of TSO (CNDO-201) in patients with Crohn's disease.

TSO, the microscopic eggs of the porcine whipworm, is a novel, orally administered, natural immunomodulator that regulates T-Cells and inflammatory cytokines.

TRUST-I is a randomized, double-blind, placebo-controlled, U.S. multicenter study designed to evaluate the safety and efficacy of TSO.

Approximately 220 patients with Crohn's disease will be enrolled and randomized to receive either 7500 ova or placebo once every 2 weeks, over a period of 12 weeks.

The primary endpoint for the study is induction of response, as measured by the Crohn's Disease Activity Index (CDAI), with induction of remission being the secondary endpoint. The study is expected to be completed in the second half of 2013.

Coronado's development partner for TSO in Crohn's disease, Dr. Falk Pharma GmbH, is also conducting a Phase II double-blind, randomized, placebo-controlled, multi-center study in Europe to evaluate the efficacy and safety of TSO in active Crohn's disease.

Dr. Karin Hehenberger, their Executive Vice President and Chief Medical Officer, is a recognized expert and has spent most of her career in diabetes research.

She is currently leading and coordinating Coronado's research programs for TSO, the company's biologic agent for the treatment of autoimmune diseases, in such therapeutic areas as inflammatory bowel disease, type-1 diabetes, multiple sclerosis, psoriasis and autism.

The timely start of Phase II in Crohn’s disease in the U.S. is a positive for CNDO. We look forward to seeing what we expect to be positive data in the second half of 2013.

The ability of TSO to potentially have efficacy in type-1 diabetes is truly revolutionary as, to date, the medical community has had zero success in preventing type-1 diabetes.

The potential markets that TSO may address are so large, that eventually there is no way CNDO will be able to fully develop TSO by themselves.

Thus, once TSO delivers positive Phase II data, we would expect CNDO to ink multiple partnerships as Phase II data that demonstrates both efficacy and safety, opening up the entire field of autoimmune disease as potential markets for TSO.

Coronado just announced hat it has entered into a $15 million secured loan facility with Hercules Technology Growth Capital. We believe the loan ensures CNDO has enough cash to fund its clinical operations into 2014.

We are buyers of CNDO at current levels as we believe the current valuation will look ridiculous once positive Phase II TSO data is delivered. CNDO is a buy under $8.

Linn Energy: Hedging gas gains (LINE)

Linn Energy LLC (LINE) and other savvy publicly-traded partnerships are buying gas-producing properties at low prices and locking in favorable prices on expected output through futures contracts.

The firm has moved quickly to acquire gas-rich acreage at valuations and hedge future production at prices that guarantee a reasonable rate of return. As such, we view Linn Energy as a low-risk, high-yield bet on natural gas.

If natural gas prices remain depressed for an extended period, these acquirers can cut their costs to the bone by performing only basic well-maintenance work.

If natural gas prices rally after 2015, these companies can ramp up drilling activity to boost production and take advantage of higher prices.

On March 30, 2012, Linn Energy completed the $1.2 billion acquisition of 600,000 net acres and 2,400 wells in the Hugoton Basin of Kansas from energy giant BP.

These wells currently generate 110 million cubic feet of natural gas equivalent per day, roughly 63 percent of which is natural gas and 37 percent of which are NGLs.

Linn Energy hedged 100 percent of its expected natural gas output from these wells over the next five years. The purchased acreage also contains an identified drilling inventory of 800 additional sites, providing plenty of upside if natural gas prices rally.

Management notes that that deal will be immediately accretive to the Linn Energy’s distributable cash flow, enabling the firm to boost its quarterly payout to unitholders while maintaining a comfortable coverage ratio.

Linn Energy followed up this transaction with another deal with BP, spending $1 billion on 12,500 net acres and 750 producing wells in Wyoming’s Jonah Field.

Linn Energy also hedged all its anticipated production from this field through the end of 2017, limiting its exposure to fluctuations in commodity prices and locking in favorable profit margins.

Thus far in 2012, Linn Energy has completed almost $2.8 billion worth of acquisitions, compared to less than $1.5 billion in all of 2011 and $1.35 billion in 2010.

The upstream operator -- which currently yields over 7% -- has grown its distribution by roughly 10 percent over the last year, and these latest deals should give the company the scope to increase its quarterly payout by another 10 percent to 15 percent in the next 12 months.

US Weekly Economic Calendar

time (et) report period Actual forecast previous
Labor Day holiday
None scheduled
8:55 AM Markit PMI Aug. -- 51.9
10 am ISM Aug. 50.5 49.8
10 am Construction spending July 0.5% 0.4%
TBA Motor vehicle sales Aug. 14.3 mln 14.1 mln
8:30 am Productivity 2Q 2.0% 1.6%
8:30 am Unit labor costs 2Q 1.4% 1.7%
8:15 am ADP employment Aug. -- 163,000
8:30 am Weekly jobless claims 8-31 375,,000 374,000
10 am ISM nonmanufacturing Aug. 52.5 52.6
8:30 am Nonfarm payrolls Aug.
130,000 163,000
8:30 am Unemployment rate Aug. 8.3% 8.3%