Each day we review over 400 articles drawn from over 50 websites and blogs that we have screened for what we see as ‘quality content’ and post over 25 of those articles on StockResearchPortal.com – organized topically by Economic News, Base Metal News, Gold News, Silver News, Uranium News, and Oil & Gas News. These articles are then retained in the website ‘system’ for three days. I then further screen and comment on some of those articles on this Blog.

To benefit to the greatest degree from this screening process readers should consider visiting the ‘Today’s News’ feature on StockResearchPortal.com each day and reviewing the headings of the articles we link to there. Readers can then efficiently link to to, and read, those articles they find of interest. Full access to this feature is available to anyone who visits StockResearchPortal.com – no Subscription sign-up is required.

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An article in Seeking Alpha today discusses five companies that rely on royalties from metal producers.  Of the five, two rely on gold royalties, two on silver royalties, and one on base metal royalties.  The companies featured in the article are:

I have taken the information in the first two columns of the table from the article.  The information in the third – sixth columns I sourced on the StockResearchPortal.com website.  Given the ease of searching that website and the manner in which the information is presented it took me 8 minutes to find the information on all five companies.  Dollar values are Canadian, and are stated at the close of trading March 5.  For full disclosure Silver Wheaton is an advertiser on StockResearchPortal.com.

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Bloomberg reports this morning that:

•    crude oil rose above $40 a barrel on speculation a U.S. stimulus plan will revive demand in the world’s largest energy consumer as (an analyst quote) “The market is becoming more confident that the infrastructure packages, which are probably going to be approved this week, will have some effect” - to read click here;

•    “gold fell the most in a week on expectations the U.S. Congress will pass a smaller-than-expected stimulus package to revive the economy, easing the risk of accelerating inflation. Silver also declined” – to read click here; and,

•    copper rose in London on speculation economic growth in China will spur demand for metals, and zinc $5 to $1,190 a ton. The report then says that “Both metals pared advances after the U.S. financial recovery plan was delayed, potentially extending a U.S. recession that has reduced demand for industrial metals”. A Goldman Sachs analyst is reported to have said that he believes (paraphrased) “Zinc will be higher in 12 months at $1,235 a ton as demand holds up better than other industrial metals “given its high infrastructure-related usage, and copper will be lower at $3,200 a ton” – to read click here.

While I find these numbers interesting and monitor them daily, because I am not a day trader I am far more interested in what I think are likely to be the near and long-term trend prices.  I find some of the explanations given for intra-day and daily oil and metal price changes shallow, and frankly pay little attention to them.  However, if I were a day trader I would pay far closer attention to daily commodity pricing than I do.

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Following from my post yesterday titled Mexican Miners/The Peso, I think readers might find the following statistics interesting - particularly in light of currency exchange rates generally, and the obvious need to continually monitor them in the context of their mining company investments.

There are approximately 1,350 base metal, gold, silver and uranium mining companies listed for trading on the Toronto and Toronto Venture Stock Exchanges.  These companies can be distinguished between those that only explore for metals, and those that both explore for and produce metals.  Collectively, these companies conduct their principal operations in almost 90 countries around the world.  To put this number of companies in perspective, our analysis suggests that these 1,350 companies may represent as much as 60% of all mining companies listed for trading on all world stock exchanges.

Again, it is obvious that anyone owning shares in those 1,350 companies whose principal operations are in a country other than Canada need to continually monitor the currency exchange rate between Canada and the country(ies) where there investee companies principally conduct business.  They then need to continuously assess the positive or negative affect of currency fluctuations on each of those companies.  Where there is a large short-term currency fluctuation I suggest the quickest way to determine its affect is to call the company’s President or CFO and question them about its affect(s).  Again, I find these people are readily available to shareholders.  My advice – don’t hesitate to pick up the telephone.

In the StockResearchPortal.com website you can find up-to-date geopolitical and economic write-ups on most of those 90 countries, and up-to-date currency exchange statistics for nine of the major world currencies.  In both cases find this data under the Economic Research tab in the Left Navigation column under ‘Country Detail’ and ‘Currency Exchange’ respectively.

The views expressed in this Post are those of the author. They are offered to readers for information and general guidance only. They are neither intended to, nor should be taken to, constitute economic or investment advice. No check of data underlying articles or comments referenced herein has been made, and no responsibility is taken for them.  See Legal Disclaimer.

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In a January 29 article – click here – Freeport-McMoran Copper & Gold Inc. (CNI) is reported as saying in its Q408 Conference Call (paraphrased):  “We will have reduced volumes of copper sales and molybdenum sales in 2009, 2010 compared with where we were at the end of third quarter (of 2008)”.

The article goes on to report that Freeport’s copper prices fell by 50% during the quarter, that it cut production and costs., but expects copper will be a source of growth as it responds to global economic conditions and the continued development of infrastructure in China and elsewhere around the world.  Freeport is reported as saying the industry is challenged to find new supplies of copper, that copper produced from existing mines is being limited by (among other factors) falling grades and operational issues, and that “clearly China is going to be the key factor near term in terms of copper markets. And they’re doing activities within their country that’s going to consume copper.”

I have long thought as I saw the current economic condition coming that China was a principal key to near and longer-term base metal prices.  I continue to think that.  I have stayed away from investments in base metals and base metal companies for the past 24 months – with the exception of one small base metal explorer I consider particularly well positioned in what I consider to be a good geo-political environment.  That company has large high grade, good metallurgy, and expanding Resources and Reserves.  I fully expect this investment to provide me with good returns in time, but have simply ‘parked it’ and think of it for the time being as at least a 3 – 5 year (or longer) hold.  My thinking as to when that investment may mature has to do with my own intuitive time horizon for world economic recovery and in particular for what I see as a long-term shift by China from dependence on the U.S. consumer to sustainable self-dependence.

The views expressed in this Post are those of the author. They are offered to readers for information and general guidance only. They are neither intended to, nor should be taken to, constitute economic or investment advice. No check of data underlying articles or comments referenced herein has been made, and no responsibility is taken for them.  See Legal Disclaimer.

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Turning Rocks Into Money

The Gold Report has just published an interview with Vancouver based geologist Brent Cook titled ‘Turning Rocks Into Money’.  You can read the article in its entirety and in context here.  I have topically paraphrased excerpts summarizing Cook’s current views as expressed in the interview.  Words shown in brackets are mine and not Cook’s.  I think Cook is spot on in most of what he says, and consider the article a good read.  In the last half of the interview (not set out in this post) Cook discusses several companies he thinks are worthy of investment consideration.  For those readers not familiar with Streetwise, I suggest you visit the Streetwise website here.

With respect base metals:  “Looking at the metals market, which is what I know best, we’ve had—just by my count—on the order of 125 base metal mines shut down, suspended and put on hold over the past six months. On top of that, we’ve got dozens of companies that are in the process of proving up resources, converting the resources to reserves or in the permitting stage, but are now completely halted. I don’t see base metal prices increasing much over the next few years, at least. Basically, all the discoveries for the next bull market are sitting idle right now. As base metal prices slowly increase as the global economy rights itself, all the pent-up supply will act as a cap to rapid price increases—barring another speculative binge. So I don’t see much hope for base metal prices, certainly on an inflation-adjusted basis. In terms of exploration, the world doesn’t need another porphyry copper or VMS deposit.”

With respect to Precious Metals:  “That’s a different story. I think precious metals will be entering a new era of respect over the next few years at least. Gold is going to do quite well over the long run and silver, which to some degree mirrors the gold price, will also do well.  Gold is real money. Silver is often lumped into that category as well by investors. I do think the fundamentals for silver are going to improve just because 70% of silver production comes out of base metal deposits. With these base metal deposits being shut down, the silver supply or production is going to drop off and that should be positive for the silver price.”

With respect to gold production:   “No (gold production is not increasing). This is interesting. Since about 2001, gold production has been declining slightly. Yet, starting in 2001, the gold price up till now has increased about $600. That’s counter intuitive. You would think that as gold price rose, gold production would rise. That hasn’t happened.  The reasons behind that are that it’s getting harder and harder to find good deposits. We’ve got mining companies decreasing their reserves by 78 million ounces a year coupled with dearth of new gold discoveries coming online. We’ve got mining companies trying to increase their production and unable to do so, so their production profile is falling off.

With respect to whether there are a finite number of economic gold deposits:  (We are faced with a) “finite amount of economically viable gold deposits. There is no shortage of uneconomic gold deposits out there.”

With respect to why the gold price hasn’t taken off:  “My suspicion is that what we’ve got is a massive global deleveraging and what that means is people are selling everything they possibly can to get liquid. Gold is one of the most liquid instruments out there, so I think we’re seeing people, or more likely funds and countries, selling gold to raise cash. And, on top of that, the most liquid currency is the U.S. dollar, so people have been buying U.S. dollars because it’s perceived as safe.  I personally believe we’re going to see gold get whacked again in the near future as the realization of what’s happening to the banks in Europe and across the world starts to take effect and people grasp that things are not going to get better very quickly and that we’ve got serious problems. I think that’ll drop the gold price for the very reason I gave you before, that people need to get liquid and they run to the dollar. That’s what I’m looking for to jump in a lot harder into the gold ETFs and the leveraged instruments.”

With respect to gold mining companies:  (They) “have not performed as well as they should have and I think it’s because of the deleveraging that’s been happening, as well as they really haven’t provided much shareholder value. As the gold price has gone up, the production costs have gone up.  So your margins aren’t increasing that much, even though the gold price is going up.”

The views expressed in this Post are those of the author. They are offered to readers for information and general guidance only. They are neither intended to, nor should be taken to, constitute economic or investment advice. No check of data underlying articles or comments referenced herein has been made, and no responsibility is taken for them.  See Legal Disclaimer.

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