The mining sector has been crashed in the stockmarket,gold producers have dropped even worse.Wonder Why?

Mine: A confidence crisis

 PricewaterhouseCoopers Report

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The mining industry faces a confidence crisis. Confidence over whether costs can be controlled, return on capital will improve and commodity prices will not collapse, among others. Over the past decade, the mining industry has outperformed the broader equity markets, but this trend has recently changed. While 2012 saw mining stocks fall slightly, they fell nearly 20% in the first four months of 2013.

Regaining confidence depends on how the mining industry responds to its rising costs, increasingly volatile commodity prices and other challenges such as resource nationalism. Despite this drop in confidence, it’s not all bad news. Production volumes and dividend yields are up and while prices have fallen, they have not crashed. China continues to be the industry’s most important customer. While Chinese growth rates are slowing down, they are coming from a bigger base, so future demand for commodities still looks healthy.

Miners are trying to rebuild the market’s confidence - capital expenditures have been scaled back, hurdle rates are being increased and non-core assets are being disposed of. Across the board, there is a shift from maximising value by increasing production volumes, to a renewed focus on maximising returns from existing operations through managing productivity and improving efficiencies. 

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Jim Rogers thoughts: are your bank accounts safe enough?

"It’s been condoned [now] by the IMF, the European union, and everybody else in sight; that a government in need, can take assets. We all knew they could tax us…but this is the first time that I’m aware of, that they’ve gone in and taken bank accounts. They took gold from people in the U.S. in the 1930′s…but I’ve never heard of them taking bank accounts. [Now] they’re doing it. So be careful [because], now they can take your bank account under this precedent.“

"Who knows if I’m right or not, but I’d rather be safe than sorry as all of those people who had money in Cyprus have learned. They thought they had a normal bank account…but now it’s been [taken] with the sanctions of many governments and institutions.”

“If people have money in any account, anywhere in the world…cut it down to under the guaranteed amount. They might take that too someday when things get desperate, because the precedent has been set, but that’s where I would start if I had money in the bank anywhere in the world.”

Excerpts from Tekoa Da Silva's interview to Jim Rogers in The Bull Market Thinking

American Energy Boom long term solution for present economic woes?

Energy Boom Ripples Through US Economy

 CNBC

Published: Monday, 25 Mar 2013 | 10:15 AM ET

By: John W. Schoen, NBC News

Excerpts

The boom in new oil and natural gas flowing through U.S. pipelines is beginning to ripple through the wider American economy.

Booms, Busts and Booms

Since the first gusher of oil spewed from of the ground above the Spindletop salt dome outside Beaumont, Texas, more than a century ago, the U.S. energy industry has enjoyed its share of booms and busts. After peaking in the early 1970s, U.S. oil and gas production began to decline as thousands of depleted wells were shut down. The U.S. rapidly became dependent on foreign suppliers to fuel its economy.

About a decade ago, advanced oilfield production technologies like hydraulic fracturing, or "fracking," and horizontal drilling began to reverse that trend. Many of the now-bountiful fields being brought back on line were mothballed long ago when the remaining "tight" oil and gas deposits were considered too costly or technically difficult to produce.

"It is a sizeable opportunity," said John Larson, an economist with IHS Global Insight. "It's a game changer."

America's growing energy independence also has been fueled by gains in efficiency: U.S. vehicles are squeezing more mileage from every gallon of fuel, and high-tech heating and cooling units and green building techniques and materials have cut energy bills for commercial and residential buildings by 10 percent since 2005.

Challenges remain

To be sure, there are forces that could delay – or even derail – the ongoing energy boom. The drop in natural gas prices has already slowed production of some projects that become too costly when gas prices are too low.

Lower oil prices could have the same impact, but it's not clear that added U.S. supplies will be sufficient to make a dent in global oil prices, especially if OPECproducers like Saudi Arabia throttle back on supplies to maintain current prices.

The original article was published by NBC

Massive losses for small investors as they where forced to swap preferred shares and hybrid debt in Bankia for ordinary shares.

MADRID | Thu May 23, 2013 6:49pm EDT

(Reuters) - Small investors in shares of in Spain's nationalized lender Bankia suffered new massive losses on Thursday as the stock plunged by more than 50 percent amid an abnormally high volume of trading which the stock market regulator said would be looked at closely.

Tens of thousands of small savers, who were often missold preferred shares and hybrid debt in Bankia, swapped their investment for ordinary shares on Thursday at a an average discount of around 40 percent.

But while they had hoped the move would help them recoup part of their money, they instead saw how the new shares, initially valued at 1.35 euro each and which they cannot exchange until next Tuesday, lost 51.4 percent on the day to close at 0.68 euro.

While analysts had widely expected the share price to drop and adjust to 1.35 euro before the bank received 15.5 billion euros ($20 billion) of fresh funds, the abnormally high trading volume registered on Thursday raised eyebrows at the stock market regulator.

A source with knowledge of the matter said some institutional investors who were also forced to swap their hybrid debt and preference shares at a discount may have engaged in naked short-selling to compensate for their losses.

Naked short-selling, where traders sell a stock they don't own in order to make a profit by buying it at a later date at a lower price, is not allowed under Spanish market rules.

Bankia said in a statement that after the new cash injection its parent group BFA owned 68.4 percent of its capital while former holders of hybrid debt and preference shares owned 31 percent and current shareholders hold the remaining 0.5 percent. ($1 = 0.7751 euros)

(Reporting by Julien Toyer, additional reporting by Sarah White; editing by Andrew Hay and David Gregorio)

Soros changes positions, sold gold buys GDX

Soros Reports Over $239mm In Gold Positions, Buys $25mm In Call Options On Juniors

May 16, 2013 | By Tekoa Da Silva

• inShare78
 

In a 13-F release issued by the SEC after market close yesterday, it was reported that Soros Fund Management LLC, founded and chaired by billionaire financier George Soros, significantly increased its gold related holdings, most notably, through the purchase of over $25 million dollars worth of call options on the GDXJ Junior Gold Miners index.

This stunning move by one of the world’s top performing hedge funds, suggests a powerful surge ahead for gold equities. It should be noted, that in the forty years prior to 2010, the Soros Fund averaged a 20% annual rate of return.

A breakdown of the 13-F data indicates that during the first quarter, the Soros Fund:

1. Maintained a $32mm stake in individual miners.

2. Added a staggering 1.1 million shares of GDX to its holdings, at a reported price of $37.84 per share. Total Soros Fund GDX holdings now stand at 2.666 million shares, at a reported value of over$100,000,000.

3. Reduced it’s long position in the GDXJ Junior Miners Index fund, from1.998 million shares to 1.2 million shares—only to turn around, and purchase 1.510 million call options on the same index, at a reported value of $25,200,000. 

4. Lastly, the fund reduced its stake in the GLD gold fund from 600k shares to 530k shares, for a total reported value of $82,000,000.

In summary, as of May 15th, 2013, Soros Fund Management LLCreported owning over $239.2 million in gold related positioning, with over $25 million dedicated to call options on junior mining stocks.
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Bottom Line: While debate continues as to how far gold and gold equities will continue to drop, the Soros Fund is lightening up on physical gold in exchange for gold mining equities and call options on the extremely volatile junior mining stocks. 

There couldn’t be any stronger indication by the fund as to its beliefs about the timing of this bottom (outside of selling everything and going all-in on call options of course). 

It remains to be seen whether these positions will end up in the green or not, but with a forty year track record of 20% annual returns, I’ll be betting on the Soros Fund.
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To view the entire Q1 2013 13-F filing as reported by Soros Fund Management LLC, visit: SEC.gov

The nature of the mining industry: Boom and Bust?

"'Markets are cyclical, to coin a hoary old phrase. What does this mean? One interpretation of recent trends might be to say that when mining is in, other sectors are out. Or to flip it round, when other sectors are in - as they are now, with the FTSE and the Dow Jones still powering ahead - mining is out. 

But, as is now beginning to be recognised, mining hasn’t done itself any favours. To coin another hoary old phrase, the miners failed to fix the roof when the sun was shining. 

And it has shone a lot over the past decade or so, even allowing for the storms in 2007/8.
Instead, producers across the board went for growth at the expense of returns - from the catastrophic aluminium acquisitions of Rio Tinto and the crazy headlong expansions of Barrick at the top of the scale, down to the mispriced acquisitions of Gem Diamonds and the dubious deals of Cambridge Mineral Resources at the lower end of the market"'. 

''Meantime, explorers continued to rely on diluting shareholder equity in order to keep the rigs turning, on the premise that markets would continue to go up and wipe out the effects of the dilution.
For a few, like Petra Diamonds and Pan African Resources, the focus on growth has paid off. But for most, it’s now a busted flush, and a large number of Aim listed miners are now trading at a fraction of their listing prices. Who will buy into a gold or an iron ore growth story now, in the full knowledge that heavy dilution will follow, sure as night follows day, before too long? In a flat-to-falling market, it’s a clear “no sale”.

As for the producers, they are now scrambling to catch up to reality, desperately presenting themselves as likely dividend payers and deliverers of solid returns, when less than eighteen months ago the familiar refrain from mining company directors was that they, rather than shareholders, knew where company money could best be spent"'. 

Minesite Weekly Roundup 7th - 13th May 2013

Mr Faber revisited. Holding Stocks with reluctance.

Posted: 04 May 2013 08:55 AM PDT

“I am reluctantly maintaining an approximately 25% weighting in equities (mostly in Asia and in Europe) and I have not yet shorted any stocks because I have learnt that a bubble can get bigger still and exceed my expectations – before it implodes violently.”
“I want to make clear that I own equities not because of the belief that they are inexpensive and that they will move up substantially but because I do not trust the banking system and, therefore, I do not wish to be overexposed to bank deposits.”
- Marc Faber In May 2013 Gloom Boom Doom Report

Marc Faber. Easy money and uneven flow of money to asset classes.

"The Fed has been flooding the system with money. The problem is the money doesn’t flow into the system evenly. It doesn’t increase economic activity and asset prices in concert. Instead, it creates dangerous excesses in countries and asset classes. Money-printing fueled the colossal stock-market bubble of 1999-2000, when the Nasdaq more than doubled, becoming disconnected from economic reality. It fueled the housing bubble, which burst in 2008, and the commodities bubble. Now money is flowing into the high-end asset market – things like stocks, bonds, art, wine, jewelry, and luxury real estate".

 Continued on:http://www.prisonplanet.com/marc-faber-people-with-financial-assets-are-all-doomed.html