Gold and Silver – Page 294 – Republic of Mining

Munk warned against irrational exuberance in gold – by David Olive (Toronto Star – April 24, 2013)

April 24, 2013

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

As he prepares to meet shareholders, Peter Munk must deal with a plunging gold price, a stalled mining development and controversy over executive compensation.

If Peter Munk was a genuine goldbug, the kind who see the yellow metal as the “one true way,” a lifetime gold bear like me could hail a comeuppance for the founder and chairman of Toronto-based Barrick Gold Corp., world’s biggest gold miner.

But I don’t, because the GTA philanthropist who rose phoenix-like from the ruins of Clairtone to build a global mining empire has always had a sensible regard for the aptly named “currency of fear.”

Real goldbugs are besotted with a commodity that doesn’t pay interest or dividends, is too cumbersome to be a viable method of exchange, and even as a metal is too soft to be of use in all but a handful of industrial applications, suitable only for jewellery.

By contrast, in some 30 years of building Barrick, Munk has not been an evangelist for gold, despite having a powerful vested interest in being one.

Barrick Gold at 20-Year Low Turns to Thornton – by Liezel Hill (Bloomberg.com – April 23, 2013)

April 23, 2013

http://www.bloomberg.com/

April 23 (Bloomberg) -– Barrick Gold Corp. (ABX) founder Peter Munk sees a successor in former Goldman Sachs Group Inc. (GS) President John Thornton as the world’s biggest gold miner tries to reverse a 54 percent plunge in market value in the past year.

“I searched the world for a successor,” Munk, the 85- year-old chairman of Barrick, said yesterday in an e-mailed statement. “I am delighted I found John. I am confident he will take Barrick to a new level as a global player.”

Thornton, 59, faces his first annual shareholders’ meeting tomorrow as co-chairman after the Toronto-based miner has struggled with cost overruns, writedowns, and opposition to his $11.9 million signing bonus from shareholders including Canada’s six largest pension fund managers.

Barrick, which also reports first-quarter earnings tomorrow, this month lost its position as the top gold miner by market value to Goldcorp Inc. (G), which produces fewer than half the ounces of the precious metal. It’s “appropriate” that the company considers a path to new leadership at a board level, Munk wrote in Barrick’s annual report filed March 25.

“My job was to develop the strategic vision, seek new opportunities, develop strong partnerships, build relationships with government leaders, and navigate some of the tough environments we work in,” Munk said in the e-mail yesterday. Thornton has those skills, he said.

At the barricades with Barrick Gold – by Terence Corcoran (National Post – April 23, 2013)

April 23, 2013

The National Post is Canada’s second largest national paper.

With all the problems Barrick Gold is facing, the giant government-created Canadian pension institutions have zeroed in on a mostly trivial obsession: executive compensation

On Wednesday, Peter Munk’s Barrick Gold will stage its annual meeting while under fire on all fronts. The price of gold has crashed, major projects are coming in way over budget, third-world governments are giving the company a hard time, Barrick’s stock price is at its lowest in decades, investors have lost billions in market value.

Third quarter results will also be released Wednesday. In the face of all this turmoil, what do the Giants of Self-Important Canadian Pension Institutions do? Move in with an attack on the most trivial issue of all: executive compensation.

In a news release last Friday, seven of Canada’s government-based institutional pension investors and a pension-management firm from the U.K. announced that they would be voting against Barrick’s say-on-pay resolution and against the three directors who are members of the company’s compensation committee.

For the record, the seven Canadian funds are: Alberta Investment Management Corp., B.C. Investment Management Corp., Caisse de depot et placement du Quebec, Canada Pension Plan Investment Board, Ontario Municipal Employees Retirement System, Ontario Teachers’ Pension Plan and the Public Sector Pension Investment Board.

Eric Sprott: Can the gold hawk find magic after the commodities crash? – By Tim Kiladze and Jacqueline Nelson (Globe and Mail – April 22, 2013)

April 22, 2013

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Surfing the Internet in his home office one day more than a decade ago, Sheldon Meingarten came across an unusual investment fund.

It had been a tough time for investors to make money: The bursting of the tech bubble, 9/11 and a moderate recession in the U.S. had conspired to send stock markets on a downward spiral. But one portfolio manager, Eric Sprott, seemed like a wizard, generating annual returns of roughly 30 per cent since 1997.

Mr. Meingarten invested a chunk of his wife’s RRSP into the Sprott Canadian Equity Fund. Soon after, he added his own money, spreading the investments across several funds. In all, he put in a “healthy six figures.”

For years he felt like a genius. At one point his return on the investment had climbed to about 250 per cent, so he didn’t pay much attention to Mr. Sprott’s world view that hard assets such as gold and silver would thrive in a world awash in debt, and that producers of these precious metals would soar when the financial system collapsed. “I was riding that rocket,” Mr. Meingarten said.

The rocket has now crashed. Falling prices for commodities and resource stocks have badly hurt the performance of Sprott Asset Management, and Mr. Sprott has lost more than a little of his reputation as the man with the Midas touch.

Investors look for Barrick’s ‘Plan B’ as gold prices tank – by Pav Jordan (Globe and Mail – April 22, 2013)

April 22, 2013

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Peter Munk could not have anticipated what lay before his company when he publicly berated the management team at Barrick Gold Corp.’s annual meeting last May for failing to boost the company’s share price, despite six years of record profits.

Fast-forward a year and shareholders might have their own harsh words at this year’s meeting on Wednesday for Mr. Munk and for Barrick, the Toronto-based company he built into the world’s largest gold miner.

The past 12 months have been some of the hardest in Barrick’s 30-year history. The company has changed CEOs, shuffled its board and been hit with project delays and multibillion-dollar cost overruns and writedowns. It’s also facing some anger by institutional shareholders over its decision to pay an $11.9-million (U.S.) signing bonus to co-chairman John Thornton, a former Goldman Sachs executive.

Just as the company looked to be getting its finances under control, it has been whacked by a tectonic shift in the gold price, which last week dropped as low as $1,361 an ounce from highs of $1,900 in 2011.

Barrick rebellion: With gold miner’s stock in the dumps, investors push back – by Peter Koven (National Post – April 20, 2013)

April 22, 2013

The National Post is Canada’s second largest national paper.

This has been the worst month in Barrick Gold Corp.’s modern history. It is about to get worse. On Wednesday, the Toronto-based gold miner will be greeted by some very frustrated shareholders at its annual meeting. The company does not usually face hostility from investors at its AGMs, but this year appears to be different.

Virtually everything has gone wrong for Barrick lately. And as gold began a steep descent last week and the company’s key project was partially halted, the stock price plunged 33% in six days. It is an gut-wrenching freefall for a company of Barrick’s size and it takes the stock to its lowest levels since 1993 when gold averaged just US$360 an ounce.

Remarkably, an even bigger source of investor ire emerged on Friday. Seven of Canada’s largest pension funds announced that they are opposing the US$11.9-million “signing bonus” that Barrick paid to co-chairman John Thornton last year, and plan to vote against the entire compensation committee. Mr. Thornton received a whopping US$17-million in 2012, and he was not the only beneficiary of Barrick’s largesse. Chairman Peter Munk (US$4.3-million), chief executive Jamie Sokalsky (US$11.4-million) and “ambassador” Brian Mulroney ($2.5-million) all received big pay hikes despite a bad year for the stock price.

The Secret World of Gold – Canadian Broadcasting Corporation (CBC) Documentary (April 18, 2013)

April 5, 2015April 19, 2013

First broadcast on Thursday, April 18, 2013 AT 9:00 P.M. ON CBC-TV

The Secret World of Gold is a documentary exploring the power and politics of gold, a precious metal with more allure and fascination than any other. Valued for its permanence, beauty and scarcity, people will lie, cheat, steal and kill in the name of gold.

To finance the Third Reich, the Nazis went after the gold of Europe. Allied countries stored their gold offshore to keep it safe. In the first months of the Second World War, the gold of England and France was secretly shipped to vaults in Montreal, Ottawa and New York.

Those ships made it safely to port, but throughout history, many were not so lucky. It is estimated that worldwide, 3 million shipwrecks loaded with treasure lie at the bottom of the ocean. Odyssey Marine, an American company listed on the NASDAQ stock exchange, spends huge amounts of money to search for that gold. But there’s always the risk they will have to hand it over to countries claiming ownership.

Brian McKenna explores The Secret World of Gold – by T’Cha Dunlevy (Montreal Gazette – April 18, 2013)

April 5, 2015April 19, 2013

http://www.montrealgazette.com/index.html

Documentarian reveals the drama and danger behind one of the world’s oldest currencies

MONTREAL – Brian McKenna didn’t predict the recent nosedive in gold prices, but he knows someone who did.

“Andy sent me an email early Friday morning,” recounted the Montreal director. “He said, ‘There’s a big event happening. Someone’s dumping 500 tons of gold into the market.’ That ended up driving the price down by $78 an ounce. And 500 tons is 16 million ounces — we’re talking about a serious intervention here. Who’s got that kind of money?”

“Andy” is Andrew Maguire, a key source in McKenna’s fascinating new film The Secret World of Gold, which premières Thursday at 9 p.m. on CBC-TV. The hour-long documentary plunges into the dramatically rich narrative of gold, unveiling some shocking facts along the way. “I was just going to do a history piece, until I stumbled over a whistleblower,” McKenna said.

A veteran gold and silver trader, Maguire denounces the shady tactics of the industry, breaking down the ways in which precious metal prices are manipulated using insider trading.

“He was tremendous,” McKenna said. “It took me eight months to persuade him to come on camera, but I was willing to wait. I knew he was critical to the film. It turns out he was burned by the BBC. He spent seven months showing them everything, going online and showing them the way things worked. Then after all that, they said, ‘The show’s been killed.’

Gold slump tipped to fuel China’s acquisition hunt – by Sonali Paul and Sarah Young (Reuters U.S. – April 18, 2013)

April 18, 2013

http://www.reuters.com/

MELBOURNE/LONDON, April 18 (Reuters) – The collapse in bullion prices is set to rekindle gold mining takeovers as Chinese companies, sovereign wealth funds and private equity and hedge funds step in to rescue cash-strapped small and mid-sized miners.

Gold miners in China, the world’s biggest producer, have been chasing mines and listed companies in a bid to grow and match the largest global producers, like Barrick Gold Corp .

A seven-fold rise in gold prices between 2001 and 2011 spurred a run of gold mergers and acquisitions. Activity fell last year as major miners digested some big buys and smaller players held out for better offers, with global gold M&A tumbling to $14.6 billion from $43.3 billion in 2011, according to Ernst & Young.

But that is expected to pick up again this year as a 15 percent plunge in gold prices this month forces smaller miners, especially those with high-cost production or single assets, to seek partners to stave off a cash crunch.

“This might be the final shoe to drop that makes some people think ‘there’s no way I’m able to finance myself going forward, so I’ve got to think more seriously about my investors and give my investors a return by putting things together with people that have … got the cash’,” John McGloin, executive chairman of Africa-focused miner Amara Mining, told Reuters.

Huge Barrick mine in Chile faces long delay as obstacles pile up – by Alexandra Ulmer (Reuters U.S. – April 16, 2013)

April 18, 2013

http://www.reuters.com/

SANTIAGO, April 15 (Reuters) – Barrick Gold Corp faces some tough legal obstacles to complete its up to $8.5 billion Pascua-Lama gold mine after a recent court decision, and even the possibility that its Chilean environmental permit might
be canceled.

In the latest of several recent blows to the country’s mining and power industries, a Chilean court last week suspended
construction of the mine, which straddles the border of Chile and Argentina, while it weighs claims by indigenous communities that the mine destroys pristine glaciers and harms their water supply.

The ruling is one of several challenges facing Pascua-Lama, which was originally touted as one of the world’s largest and
lowest-cost gold mines. Experts say there is a risk that the unpopular project faces months, or even years, of legal limbo, damaging Chile’s investor-friendly reputation.

Moreover, politicians are unlikely to intervene during an election year on behalf of the project, a hot potato in Chile. “Pascua-Lama’s legal path looks difficult,” said Luis Cordero, law professor at the Universidad de Chile. “If the company isn’t able to adequately negotiate a plan to meet (demands), its permit could be revoked.”

Gold Wipes $560 Billion From Central Banks as Equities Rally – by Debarati Roy & Joe Richter (Bloomberg.com – April 18, 2013)

April 18, 2013

http://www.bloomberg.com/

Investors are dumping gold funds at the fastest pace in two years in favor of equities, compounding a slump that has wiped $560 billion from the value of central bank reserves.

Exchange-traded products linked to gold dropped $37.2 billion in 2013 as the metal reached a two-year low yesterday. Gold funds suffered net outflows of $11.2 billion this year through April 10, the most since 2011, while global and U.S. equity funds had net inflows of $21.25 billion, according to Cambridge, Massachusetts-based EPFR Global.

Central banks are among the biggest losers because they own 31,694.8 metric tons, or 19 percent of all the gold mined, according to the World Gold Council in London. After rallying for 12 straight years, the metal has tumbled 28 percent from its September 2011 record of $1,923.70 an ounce. Growing economies and corporate profits, along with slowing inflation, boosted global equities by $2.28 trillion this year at the expense of the traditional store of value, according to data compiled by Bloomberg.

“There’s a perception that risk has been lessened, and with that, investors are looking for assets that either generate income or have growth potential, neither of which gold has,” Anthony Valeri, a market strategist with LPL Financial Corp. in San Diego, which oversees $350 billion. “We’ve seen a grab for yield, and without a yield, gold has been left out.”

Meltdown? 15% of world’s gold miners face collapse after plunge in price strips $169-billion off market value – by Soraya Permatasari, David Stringer and Liezel Hill (Bloomberg News/National Post – April 18, 2013)

April 18, 2013

The National Post is Canada’s second largest national paper.

Gold producers, ignored as global stocks rebounded in the past two years and investors turned to exchange-traded funds that track bullion, face closing mines or shutting themselves down after the metal’s worst slump in three decades this week made 15% of miners unprofitable.

Barrick Gold Corp. and Newmont Mining Corp., the world’s two largest producers, are among companies in the FTSE Gold Mines Index that have collectively lost about US$169 billion in market value since bullion peaked in 2011. Gold equities are trading at the lowest level relative to gold in at least 20 years after the metal’s 14% plunge so far in April.

Barrick took another hit this week when the cost to insure its debt surged to the highest in four years after Moody’s Investors Service said it may downgrade the company’s bonds.

The review of Barrick’s Baa1 debt rating was prompted by a legal challenge to its US$8.5 billion project in the Andes, Moody’s said in a statement. Toronto-based Barrick is the biggest producer of the precious metal with US$7.5 billion of bonds.

This month’s futures price drop to as low as US$1,361.10 an ounce brings gold closer to the global average production cost of about US$1,200 an ounce, according to Nomura Holdings Inc.

McKenna documentary is a fool’s guide to gold – by John Doyle (Globe and Mail – April 18, 2013)

April 5, 2015April 18, 2013

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Here in the TV Cranny, financial management consists of occasional bouts of scribbling numbers on a scrap of paper followed by some basic addition and subtraction. Hopes for the future rest on six bucks spent weekly on the Lotto 6/49.

If I read the wonderfully written Streetwise Blog of this great newspaper, I do so with admiration and complete bafflement. I’m sure that Boyd Erman and Jacqueline Nelson are absolutely right about capital markets and equity backers, but I couldn’t explain why.

I am deaf to the countless commercials urging me to trade in my old gold jewellery for cash. I have no gold jewellery, new or old. Besides, those places where such transactions occur always seem to be located in areas of Toronna so obscure that a journey there would require a warning to friends and colleagues that if I’m not back in two days, send out a search party. If I had old gold jewellery, I wouldn’t go there.

The lure of gold. I get it. Precious stuff. Or I thought I did. After watching the wonderful documentary The Secret World of Gold (CBC, 9 p.m. on Doc Zone [April 18, 2013]), I’m not so sure. And, as the price of gold is crashing, apparently, this program might help to explain the situation.

Eric Sprott: Why a gold bug won’t throw in the towel – by Pav Jordan, Tim Kiladze, Jacqueline Nelson (Globe and Mail – April 17, 2013)

April 17, 2013

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

The biggest rout in gold prices in decades isn’t enough to sway Canada’s chief gold bull from his faith in the metal.

Eric Sprott turned his ability to call the gold and silver markets into personal wealth that once topped a billion dollars. His investment firm, Sprott Inc., has been hurt by gold’s recent plunge, but the company founder predicts gold will roar back and even hit new highs by the end of the year.

“I’ve always imagined that gold would hit a new high by the end of this year, over $1,900, so that is what I think,” Mr. Sprott said in an interview Tuesday, with gold bobbing below $1,400 (U.S.) an ounce.

Mr. Sprott believes the yellow metal is safer than paper money, which can be printed by governments. He backs that up with his own investments, saying a few months ago that he has about 80 per cent of his money in the precious metals sector.

“I think [gold] will end up for the year, just like in 2008 … because in a financial crisis, you don’t want your money in a bank,” he said.

End of the supercycle looms as commodities, stocks sell off – by Nathan Vanderklippe and Carolynne Wheeler (Globe and Mail – April 16, 2013)

April 16, 2013

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

CALGARY AND BEIJING – For months now, worries have mounted that the end was approaching for the near-decade of dizzying good times in a commodities boom that saw companies rush to build mines and oil fields to feed surging global demand.

But for some it wasn’t until Monday, amid a rout in gold, copper, oil and a host of other commodities, that it became undeniably clear the so-called “supercycle” has expired.

“The alarm bell has been ringing for a while for the supercycle, but today looks to be the day the world woke up to the reality,” said Douglas Porter, chief economist at BMO Nesbitt Burns, as a free-fall in gold prices led broad selling fuelled by unease over the prospects for the global economy.

Commodities fell hard on Monday, led by a 9-per-cent drop in gold and a 12-per-cent plunge for silver. Copper and other metals slumped along with wheat, coffee and other crops. Oil prices sank about 3 per cent, continuing last week’s retreat. The selloff spread to stocks, as the S&P/TSX composite index dropped more than 332 points or about 2.7 per cent, and the Canadian dollar, often tied to commodities, sank more than a penny against the U.S. dollar.