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CaptainGrumpy

4,594 Posts.

177

09/02/16

13:24

Post #: 16975893
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Originally posted by CaptainGrumpy ↑

Absolutely top shelf Orwell. Many thanks for your time on this.

From an FA perspective I do think they've turned the corner. The debt levels cop the spotlight in Australia, but compared to other gold producers of this magnitude globally these levels are actually quite reasonable and very manageable. The last 12 months they carved off 800m from memory.

The biggest concern for me right now (with a short to medium term view) is exposure to copper which is absolutely copping a hiding. I think this could cause issues in the next few quarterlies so I'm wary. Being a price taker is always an issue, but I still like to play in the commodity space, it's actually the sector I understand best.

From a currency perspective I'm very bearish AUD for the next year at least. Obviously should this play out, it'll provide an ongoing tailwind. It should also increasingly bring international funds into play. NCM have one of the biggest resources globally and I think the largest mine life of anyone so they will do exceptionally well in a higher AUDPOG environment. They also have protection to the downside as their AISC is very low. I'm having an issue with pdf's right now so can't download their latest presso but think it was US$750-800 or so.

I like the fact that funds buy NCM for exposure to gold. It's always the big boys that move first. If the market gets a whiff of a bottom the big money will be falling over each other to get in....including internationals. That's going to be a lot of money flowing in. When I do decide to go all in gold, NCM and NST will be the first ones I buy, then rotate into the mids and specs as the cycle really gets into gear. If AUD falls and POG puts in a bottom soon, we could be about to experience a one in a lifetime opportunity in our own backyard.

From a chart perspective I just liked that little channel it been holding. Reversing off the bottom got me interested in a swing long, with a stop below the channel. Now I have a lot more to think about!

Big picture wise on gold I'm a bit torn. I have a few scenarios.

1. We could be putting in a final low right now. I've got nothing concrete to base that on, but often bottoms (and tops) get put in above or below the key technical levels. Everything in my analysis is saying $1000 or $900 the key targets, but I wonder if 1060-odd is close enough? Call me crazy, but I have this little gut feel that it's exactly what's happening, so I'm hyper alert on POG right now.

2. Price could overshoot on the downside. This would be my preference as it would make a long entry much safer. There are still too many bulls around for my liking, i'd prefer gold to be universally despised with quality mid and small caps volume grinding to a halt.

3. Death by a thousand cuts. This slow grind could continue on for another couple of years. Normally the cycle would have turned by now or at least very much ready to bottom but we just haven't had the capitulation. The reason for this IMO is low rates. This is keeping dogs in the game far longer than in previous cycles, although credit really is only going into the best projects now, so this would be the lowest probability for mine.

Anyway some food for thought if nothing else.

Thanks again Orwell, much appreciated.

Expand

That channel worked a charm. Out at 16.7. 40% don't mind if I do.

Re: Gold Price, It's just a gut feel but I think this might be a head fake above 1180. New York put in a decent session given what could have happened following Friday's close. I'm expecting a bear rally there leading into Yellen speech. That would set the scene for a retrace in gold. All things being equal at the moment, I want to start loading long gold next pullback.
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