GOLD & SILVER MINING SECTORS

Transcription

1 PC WONG

2 DISCLAIMER The views by the author are his alone. All opinions expressed by the author are subject to change. The viewer is not to assume the performance of any company shares will equal its past performance. Use of information contained in this presentation does not constitute any contractual relationship between the viewer and the author. The author hereby disclaims all responsibilities and liabilities for any use of information contained in this presentation. The author s risk assessment may differ from the viewer's. Risks are subject to economic uncertainties and market conditions. Viewers are advised to exercise due diligence and do their own assessment of the risks involved when investing in any company. Viewers shall not hold the author liable for investments which have gone sour.

3 GOLD & SILVER MINING SECTORS

4 ECONOMY FACTSHEET Global debt continues to grow at alarming rate Global economy has continued to deteriorate with the BOJ and ECB embarking on NIRP, bigger QE, including purchase of government and corporate bonds and ETFs. Inflation remains persistently below target US$7T worth of bonds are now with negative returns Restriction on cash withdrawals in certain parts of the EU China continues its debt expansion by reducing the banks reserve ratio to allow more lending. China is increasing its lending to lower the % of NPL while allowing distressed debt to be converted into equity US Q GDP growth was a measly 1% US PMI for manufacturing and services in contraction mode US shale oil producers financial distress continues to grow while revolving credit is reduced further Federal Reserve indicated 2 rate hikes vs 4

5 GOLD PRICE CHART Golden Cross Reached a bottom at US$ on 1 December 2015 Since then, has reached a high at US1, on 6 march 2016 Golden Cross: When the 60 Day MA crosses the 200 Day MA a reversal in the bear trend Source: kitco.com

6 SILVER PRICE CHART Although silver has bottomed out it has yet to go into bullish territory The Golden Cross has yet to converged between the 60 Day MA and 200 Day MA Source: kitco.com

7 HOW DID THE GOLD & SILVER MINERS SCORE SBM* BUY A$1.38 Now A$ % MML BUY A$0.565 Now A$ % ABX BUY US$7.50 Now US$ % GG BUY US$15.03 Now US$ % EGO BUY US$3.82 Now US$ % SLW BUY US$13.23 Now US$ % PAAS BUY US$6.49 Now US$ % *BUY call was issued at the end of Session 3 at A$0.92

8 HOW DID THE GOLD & SILVER ETFs SCORE GLD BUY US$ Now US$ % IAU BUY US$10.40 Now US$ % PHYS BUY US$8.87 Now US$ % PSLV BUY US$5.32 Now US$ % SLV BUY US$13.31 Now US$ % The miners have out performed the Gold and Silver ETFs!

9 GOLD MINERS ETFs Listing : Market Vectors Gold Miners ETF NYSE: ARCA under the code GDX. Singular unit Market Vectors Junior Gold Miners ETF NYSE: ARCA under the code GDXJ. Singular unit Definition : GDX Tracks a market-cap-weighted index of global gold mining firms that are listed on NYSE or NASDAQ. It also includes firms mining other precious metals GDXJ Covers precious metals mining firms below the market-cap cutoff for GDX the 'junior' mining firms. More market risk due to the riskier nature of these smaller miners.

10 GDX MINING SECTORS Highest exposure in gold mining companies at 85.30% Net Asset Value US$5,963,528,000 Source: NAVPS US$19.12 Price/Book Value 1.08x

11 GDX COMPONENT STOCKS Source: Countries GDX Regions GDX Canada 56.08% United States 11.36% Australia 10.54% South Africa 9.89% United Kingdom 6.68% Hong Kong 3.79% Peru 1.66% North America 67.44% Asia-Pacific 14.33% Middle East & Africa 9.89% Europe 6.68% Latin America 1.66% Developed 82.40% Emerging Split 17.60%

12 GDX PERFORMANCE YTD Source:

13 DIVIDEND HISTORY US$ US$ US$ US$ US$ US$ US$0.1160

14 SHARE PRICE PERFORMANCE (GDX) Chart Source: 52 Week Low of US$12.40 and 52 Week High of US$ Current price of US$20.57 is 3.2% off its 52 week high of US$21.25 Historic high is US$65.80 which is 68.7% discounted at current price

15 GDXJ MINING SECTORS Highest exposure in gold mining companies at 72.93% Net Asset Value US$1,777,175,500 Source: NAVPS US$26.45 Price/Book Value 1.08x

16 GDXJ COMPONENT STOCKS Source: Countries GDXJ Regions GDXJ Canada 66.64% Australia 15.62% United States 5.94% United Kingdom 4.82% Hong Kong 2.76% China 1.62% South Africa 1.59% Turkey 1.00% North America 72.58% Asia-Pacific 20.00% Europe 5.82% Middle East & Africa 1.59% Developed 82.40% Emerging Split 17.60%

17 GDXJ PERFORMANCE YTD Source:

18 DIVIDEND HISTORY US$ US$ US$ US$ US$ 0.139

19 SHARE PRICE PERFORMANCE (GDXJ) Chart Source: 52 Week Low of US$16.87 and 52 Week High of US$ Current price of US$28.47 is 3.5% off its 52 week high of US$29.50 Historic high is US$ which is 83.4% discounted at current price

20 SILVER MINERS ETFs Listing : Global X Silver Miners ETF NYSE: ARCA under the code SIL. Singular unit PureFunds ISE Junior Silver Miners ETF NYSE: ARCA under the code SILJ. Singular unit Definition : SIL Tracks a market-cap-weighted index of companies actively engaged in the silver mining industry. It offers comprehensive exposure to the silver miner space SILJ Tracks a modified market-cap-weighted index of small-cap silver mining and exploration companies. It offers unique exposure that focuses solely on smalland micro-cap silver mining and exploration companies. Riskier in nature

21 SIL MINING SECTORS Highest exposure in precious metals and minerals at 60.48% Silver is often a by-product of mining activities Source: Net Asset Value US$186,550,000 NAVPS US$26.65 Price/Book Value 1.04x

22 SIL COMPONENT STOCKS Source: Countries SIL Regions SIL Canada 60.03% United Kingdom 19.84% United States 10.42% Mexico 9.71% North America 70.45% Europe 19.84% Latin America 9.71% Developed 90.06% Emerging Split 9.94%

23 SIL PERFORMANCE YTD Source:

24 DIVIDEND HISTORY US$ US$ US$ US$ US$ US$

25 SHARE PRICE PERFORMANCE (SIL) Chart Source: 52 Week Low of US$14.94 and 52 Week High of US$ Current price of US$27.83 is 5.9% off its 52 week high of US$29.59 Historic high is US$92.61 which is 69.9% discounted at current price

26 SILJ MINING SECTORS Highest exposure in precious metals and minerals at 49.93% Silver is often a by-product of mining activities Source: Net Asset Value US$7,480,000 NAVPS US$8.32 Price/Book Value 1.06x

27 SILJ COMPONENT STOCKS Source: Countries SIL Regions SIL Canada 90.18% United States 5.24% United Kingdom 4.59% North America 95.41% Europe 4.59% Developed 90.06% Emerging Split 9.94%

28 SILJ PERFORMANCE YTD Source:

29 DIVIDEND HISTORY US$ US$

30 SHARE PRICE PERFORMANCE (SILJ) Chart Source: 52 Week Low of US$4.04 and 52 Week High of US$8.92. Current price of US$8.86 is 0.7% off its 52 week high of US$8.92 Historic high is US$21.02 which is 57.8% discounted at current price

31 EVENT WHICH COULD IMPACT THE STOCKS NEGATIVELY Possibility of rate hike taking place, though there could be an immediate negative response, but with added uncertainties and potential of further inflation, could boost the shift to precious metals and benefit the miners Further strength of the US$, though this co-relation is related to further interest rate hikes

32 IFS: PRECIOUS METALS OUTLOOK Global uncertainty due to negative interest rate policies, cash restrictions in EU, further QE, China slowdown and potential banking crisis, depression and severe recession in various countries in Europe, Latin America, Africa and severe budget deficit and geopolitical tension in Middle East, all adds to the allure of precious metals as safe haven investments World Gold Council: 2015 demand 4,212 tonnes vs supply 4,258 tonnes. Supply declined by 4%, the is lowest since With continuous buying by Central Banks and demand from investors, demand is expected to outstrip supply Silver production expected to decline by 5% in 2016, the first reduction in mine production since Demand for silver is expected to rise as a cheaper alternative to gold as a precious metal investment Gold to silver price ratio is currently >80 to 1. Historically it has been 15 to 1.

33 IFS: CHINA - THE WILD CARD China continues to purchase gold as a reserve, as do Russia and India News are circulating that China could have a Yuan fix on gold on April 19, 2016, where 10 Chinese banks would fix the price of gold in Yuan This is in line with the SGE (Shanghai Gold Exchange) being the largest physical gold exchange in the world and China as the largest gold miner in the world Impact of fix: Gold in China will be traded in Yuan instead of US$, thus reducing the demand for US$ This could result in lower value of the US$, therefore boosting the price of gold China could boost its Yuan position as one of the 5 currencies in the SDR by backing the Yuan with gold

34 IFS ASSESSMENT GDX Risk GDXJ Risk SIL Risk SILJ Risk BUY Medium BUY Medium High BUY Medium BUY but small position recommended High All ETFs are not rated by Ideal Ratings

35 MY DISCLOSURE I own GDX I do not own GDXJ, SIL and SILJ

36 Q & A All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying is deemed an infringement under the Malaysian Copyright Act 1987

37 HAPPY INVESTING! THANK YOU All rights reserved by Jupiter Consultancy Sdn Bhd. Any unauthorised copying is deemed an infringement under the Malaysian Copyright Act 1987