| 03/22/2008
www.insidemetals.com |
Vol
3, Issue 6 |
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In
This Edition...
Precious
Metals Market Update Geopolitical View
Gold
Producer News
Website Updates
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| Dear
Subscriber |
This
newsletter will be published next on April
5, 2008.
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IN
THIS EDITION OF INSIDEMETALS
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In this edition of
the InsideMetals Newsletter, we'll take a
look at big oil, big mining, and big
trading strategies, as well as precious
metals trends, gold producer news and
recent website updates, which includes
updates on our InsideMetals Quarterly Gold
Stocks ScoreCard.
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| In
This Issue |
| Precious
Metals Markets Update |
| 2007
Silver Nevada Miner Bar |
| Geopolitical
View |
| Whitney
& Whitney Inc. |
| NYSE
Gold Producer News |
| AMEX
Gold Producer News |
| NASD
Gold Producer News |
| InsideMetals.com
Website Updates |
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| |
PRECIOUS
METALS MARKET UPDATE
|
 Gold
closed at $925.75/oz (London Fix)
on March 20, 2008. This is 5.2% lower than
the $976.50/oz (London Fix) closing price
on March 6, 2008, when data for the
previous newsletter was gathered.
Silver closed
at $17.53/oz (London Fix) on March 20,
2008. This is a 15.7% decrease from the
$20.80/oz (London Fix) closing price on
March 6, 2008.
Platinum
closed at $1823.00/oz (London Fix) on
March 20, 2008. This is 18.25% lower than
the $2230.00/oz (London Fix) closing price
on March 6, 2008.
Palladium
closed at $430.00/oz (London Fix) on March
20, 2008. This price is 19.6% lower than
the $535.00/oz (London Fix) closing price
on March 6, 2008.
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2007
Silver Nevada Miner Bar - 99.9%
Pure 5 Troy Ounces of American History
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GEO
POLITICAL VIEW
|
 TULMULTOUS
WEEK OF FINANCIAL GYRATIONS
What
a week! Hopefully the Good Friday respite
will allow the markets to settle down.
It started Monday, March 17th with news
that Bear Stearns, the 85 year old
investment banking, securities and
derivative trading company was going to be
acquired by J.P. Morgan Chase & Co.,
to keep Bear from filing for bankruptcy.
On the previous Monday, March 10th, Bear's
stock opened at $70.28, and closed that
day down 11.3% at $62.30. By Friday, March
14th, the stock of Bear continued to
decline. It opened on Friday at $54.24,
and closed at $30.00, a further decline of
44.7%. The Dow on Friday closed at 11,951,
down 195 points from the previous day.
Gold (London Fix) closed on Friday at
$1003.50 per ounce.
The decline on Bear's stock occurred as
investors became increasingly concerned as
to whether Bear could make good on its
obligations. Bear had been struggling with
mortgage related losses, and their
situation became more precarious as
customers withdrew money from their Bear
accounts. According to a March 18th , Wall
Street Journal article, The Week That
Shook Wall Street: Inside the Demise of
Bear Stearns, by Robin Sidel, Geg Ip,
Michael M. Phillips, and Kate Kelly, hedge
funds with short positions on Bear were
encouraging a decline in the stock by
spreading negative rumors.
According to the Wall Street Journal
article the end to Bear was triggered by
their participation in the repo market,
where banks and security firms extend and
receive short-term loans, typically made
overnight and backed by securities. On
Thursday March 13th, at 7:30 am, Bear
would have to begin paying back some of
the repo loans which amount to billions of
dollars. Failure to make payment on time
could force creditors to sell pledged
collateral. This could also cause
investors to question the safety of the
repo market outside of Bear.
The repo market totals $4.5 trillion, and
any default is a major concern to the
Federal Reserve. The Fed believed it was
critical to get the pending Bear
bankruptcy resolved before the markets
open on Monday, March 17th. Over the
weekend a plan was worked out where the
Fed would loan Bear money for up to 28
days, through J.P. Morgan, to get Bear
through its cash crisis. The Fed
would take responsibility for the $30
billion in hard-to-trade Bear securities.
The weekend deal provided J.P. Morgan an
option to purchase approximately 20% of
Bear's stock at $2.00 per share, and an
option to purchase Bear's valuable
headquarters building in midtown Manhattan
even if Bear's board recommended a rival
offer. The building may have a value in
excess of $1 billion.
On Monday, March 17th, Bear's stock opened
at $3.17 per share, and closed at $4.81 a
share, up from the $2.00 per share J.P.
Morgan offer, as the market anticipates
that a higher offer may be made. On Monday
the Dow closed at 11,972, up 21 points
from Friday, and gold closed at $1011.25
(London Fix), up $7.75 an ounce from the
Friday close.
On Tuesday, March 18th, the Fed took the
action of lowering the federal funds rate
by three quarters of a percent. This was a
disappointment to some investors that were
hoping for a cut of one percent. This cut
put pressure on the dollar as dollar
denominated securities become less
attractive to foreign investors. The drop
in the dollar was followed by a decline in
gold to $1006.75 an ounce and a 420 point
rise in the Dow to 12,392.
The impetus to the rise in the Dow was
from earnings reported by investment
banker's Goldman Sachs Group Inc. and
Lehman Brothers Holdings Inc. Both
companies reported positive earnings in
spite of the current turmoil within the
financial markets. Their earnings were
down, but in light of the financial
markets, they were well received by Wall
Street.
Goldman suffered its first decline in
year-over-year earnings per share in 11
quarters. Goldman's earnings dropped 53%
to $1.5 billion, or $3.23 per share, from
$3.2 billion, or $6.67 a share from the
year earlier quarter.
For its fiscal year ended February 29,
Lehman posted a net income of $489 million
or $0.81 a share, down 57% from $1.15
billion, or $1.96 a share for the prior
year.
Both companies had mortgage related
losses. Goldman had $1 billion in
residential mortgage products and Lehman
took a net $800 million loss on its
residential-mortgage holdings. Both
companies were able to somewhat lessen
these losses through offsetting bets and
hedges.
On Wednesday, March 19th, Morgan Stanley,
another large investment bank reported
lower first quarter earnings, but this was
also viewed as an outstanding quarter in
the face of asset write-downs and existing
difficulties in capital markets. Morgan
reported earnings of $1.53 billion, or
$1.45 per share, down 42% from $2.66
billion, or $2.17 per share for the year
earlier.
On Wednesday the Dow closed at 12,100, a
decline of 292 points from its previous
close, and gold dropped by $48.25 per
ounce (4.8%) to close at $958.50 per ounce
as the dollar strengthened.
The drop in gold continued on Thursday as
gold closed at $925.75 an ounce, a further
decline of $32.75 an ounce as the dollar
strengthened against the euro and other
major currencies, and the Dow rose 260
points to close at 12,361. Refer to Fig.1
below (Gold vs. Euro/U$ - 3/10/2008 -
3/20/2008) for the 10 days of Gold prices
and the Euro compared to the US dollar.
Thursday was another day of decline
for commodities. During the last week
while gold dropped nearly $100 an
ounce, or 9.9% from its $1011.25 an
ounce, March 17th close; crude oil
declined 7.7% from $110.00 to $101.45
per barrel; silver declined 16.2% from
$20.92 to $17.53.00 an ounce; platinum
declined 8.6% from $1,995 to $1823.00
an ounce; and palladium declined 10.9%
from $483.00 to $430.00 an ounce.
The decline in the metals and crude
oil was not as significant as the
decline in gold stocks. The table
below shows the decline of select
highly regarded InsideMetals' Gold
Producer Stocks during the week.
The percent decline in the stock
prices of the above InsideMetals'
Gold Producer Stocks suggests the
week's sell off may have been
excessive and there could be some
opportunities to purchase quality
Gold Producer Stocks next week.
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to a world-wide targeted audience
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Whitney
& Whitney Inc. - A Nevada Based
Management Consulting Firm
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NYSE
GOLD PRODUCER NEWS
|
 March
12, 2008: Barrick Gold Corp (ABX)
has completed the acquisition of Arizona
Star Resource Corp. by acquiring the
remaining outstanding shares. Arizona Star
owned a 51% interest in Cerro Casale, one
of the world's largest undeveloped gold
and copper deposits. Shareholders of
Arizona Star will receive Cdn. $18.00 cash
for each share.
March 12,
2008: Coeur d'Alene Mine (CDE)
announced the pricing of its $200 million
in convertible senior unsecured notes due
2028. CDE has also given the underwriters
an option to purchase up to an additional
$30 million of notes to cover
over-allotments. The notes will have an
interest at a rate of 3.25% per year,
payable on March 15 and September 15 of
each year, beginning on September 15,
2008. The notes will mature on March 15,
2028, unless earlier converted, redeemed,
or repurchased by CDE. Full results can be
seen in CDE's press release.
March 12,
2008: Stillwater Mining Co (SWC)
announced the closing of its $181.5
million aggregate principal amount of
1.875% Convertible Senior Notes due 2028
to qualified institutional buyers in
accordance with Rule 144A under the
Securities Act of 1933. SWC recently
announced the pricing of $165 million
aggregate principal amount of the notes,
subject to which, in connection to the
closing, the purchaser may acquire an
additional $16.5 million of the notes to
cover over-allotments. If certain
conditions are met, the notes will be
convertible into shares of SWC common
stock. The notes will pay interest
semiannually at a rate of 1.875% per
annum. The notes will be convertible at an
initial conversion price of $23.51 per
share, which is equal to a conversion rate
of approximately 42.5 shares of common
stock per $1,000 principal amount of
notes. Full details can be seen in SWC's
press release.
March 17,
2008: Gold Fields Ltd (GFI) and
Mvela Resources have agreed that Mvela
will receive 50 million GFI shares if and
when Mvela's future stake of 15% in GFI
Mining South Africa Limited (GFIMSA)
Limited is exchanged at the instance of
either GFI or Mvela Resources, for shares
in GFI. GFIMSA is the vehicle that owns
and holds the South African assets of GFI.
March 17,
2008: Silver Wheaton Corp (SLW) has
agreed to purchase all of the silver
produced by Mercator Minerals Ltd., at its
copper-molybdenum-silver Mineral Park Mine
in Arizona. SLW will pay Mercator an
upfront cash payment of $42 million to
acquire the silver produced by the Mineral
Park Mine over its entire mine life, for
the lesser of US$3.90 per ounce of silver
(subject to a 1% annual adjustment
beginning 3 years after a minimum
production level has been met) or the
prevailing market price per ounce of
silver. The Mineral Park Mine has an
estimated 35.4 million ounces of silver
reserves and an additional 52.1 million
ounces of silver resources.
March 17,
2008: Newmont Mining Corp (NEM) has
completed the acquisition of Miramar
Mining Corp. Miramar shares have been
delisted from the AMEX as of March 17,
2008.
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AMEX
GOLD PRODUCER NEWS
|
 March
7, 2008: Golden Star Resources Ltd
(GSS) announced that Mr. Tom Mair has been
appointed President and CEO. The
appointment is to be effective
immediately. Mr. Mair has been serving as
Interim President and CEO since December
2007.
March 13,
2008: Canyon Resources Corp (CAU)
stockholders voted to approve and adopt
the Agreement and Plan of Merger with Atna
Resources Ltd. (ATN: TSX) reported on
November 16, 2007. The Merger was
completed after the close of business on
March 18, 2008, and the shares of CAU
ceased trading on the AMEX.
March 17,
2008: Eldorado Gold Corp (EGO) has
signed a non-binding Memorandum of
Understanding (MOU) with BHP Billiton
regarding the future sale of iron ore from
EGO's Vila Nova Iron Ore Project in
Brazil. The terms of the agreement are
expected to be finalized within the next
few weeks. The MOU will result in a Long
Term Supply Agreement that will be
structured to provide 100% of the first 3
years of production of lump ore and sinter
fines from the project to be purchased by
BHP. EGO will own 75% of the project by
financing approximately $39 million of
pre-production capital expenditures,
including working capital and certain
property payments to Brazilian partner
Mineraco Amapari SA who holds a 25%
interest in the project.
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| NASDAQ
GOLD PRODUCER NEWS |
 March
20, 2008: Lihir Gold Ltd (LIHR) and
Equigold NL will be merging their
businesses creating a pure gold company.
When combined the company will have
properties in Australia, West Africa and
Papua New Guinea, producing over 1.2
million ounces of gold a year beginning in
2009. The total worth of the merger is
estimated at $9.0 billion. Full results of
the merger can be seen in LIHR's press
release.
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INSIDEMETALS.COM
WEBSITE UPDATES
|
 InsideMetals
Quarterly Gold Stocks ScoreCard: Precious
metals investors are now able to purchase
online, for $49.95, InsideMetals' Gold
Stocks ScoreCard which presents a 34
company summary of 3rd Quarter 2007
Operating & Financial results as a PDF
file that will be e-mailed to you. This
Gold Stocks Scorecard for the 3rd quarter
presents in a concise manner, revenue,
earnings, ounces produced, ounces sold
during the quarter, and a forecast
of ounces produced in the 4th quarter
based on company forecasts or calculated
by InsideMetals based on company guidance
for 2007 and actual reported 2007
quarterly results.
Companies
that were profitable in the 3rd quarter
should report profits in the 4th quarter,
or should have had positive stock gains
since the average price of gold in the 4th
quarter (London Fix) was $106 per ounce
higher than the average price of gold in
the 3rd quarter (London Fix). The same is
true for silver producing companies as the
price of silver was $1.52 an ounce higher
in the 4th quarter. Silver prices
in the 3rd quarter averaged $12.70 an
ounce (London Fix) while silver in the 4th
quarter averaged $14.22 an ounce (London
Fix).
The data for the 34 Gold Producer Stocks
is presented as in the example below for
Pan American Silver Corp. Compiling this
data for all 34 companies represents a
significant number of hours and can be
purchased for only $49.95
At the beginning of the 3rd quarter PAAS
could have been purchased for ~$26.75 per
share, and could have been sold at year
end for ~$35.00 per share. This would have
resulted in a 30.8% gain. On January 10th,
the share price of PAAS reached as high as
$38.10. A PAAS share price of $37.00 would
amount to an additional gain of $2.00 per
share or an additional 7.4%. PAAS had
forecast that its 4th quarter production
would exceed its 3rd quarter production.
PAAS has reported a record 4th quarter
production of 5.1 million ounces of silver
on January 23rd, and the stock moved back
up $37.58 before a month end sell off.
There are several other companies
identified in the in the Quarterly Gold
Stocks ScoreCard that should produce
better returns based on 4th quarter
production forecasts. To date 25 of the 34
InsideMetals' Gold Producer Stocks have
reported their 4th quarter production, and
16 of the 25 exceeded their production
forecast. The average stock price gain for
these 16 companies from the beginning of
the year, to thru February 29th. is up an
average of 25%. The companies that didn't
make their forecast only had gains that
averaged 9%.
Purchase the Quarterly Gold Stocks
ScoreCard before the remaining 9 companies
report their 4th quarter production and
earnings.
Investors interested in purchasing the
Quarterly Gold Stocks ScoreCard and
receiving the PDF by e-mail can check the
Home Page of the InsideMetals.com website
for a Shopping Cart link. Investor's who
wish to order the PDF with their credit
card by telephone can call 775 689-7650 in
Reno, NV.
Paid
Subscriber's Resources: Canyon
Resources Corp. will be dropped from the
list of InsideMetals' Gold Producer
Stocks. CAU has it has been acquired by
Atna Resource Ltd. and has ceased trading
on the AMEX. Soon Western Goldfields Inc.
(WGW) and Apex Silver Mines Ltd. (SIL)
will be added.
Paid subscribers can view the business
Summaries of these future additions by
clicking the "All Gold Stocks"
button bar under the "Subscribers
Resource" area on the left margin of
the website. This will take the user to
the Index of listed gold companies where
the subscriber can then use the
"Quick Nav Bar" on the Index
Page and then click on "B" to
view the Business Summary for the
requested company.
Potential subscribers can learn more about
the Reports and the "Gold Company
Quick Nav Bar" by going to
"Tutorials" and clicking on the
"About the Reports Bar."
Clicking on the "How to use
InsideMetals" bar in the Tutorials
section will explain many of the useful
features that InsideMetals.com offers to
both Free and Paid Subscribers.
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We
hope you have enjoyed our newsletter.
This newsletter will be published next on
April 5, 2008.
Until next time!!!,
InsideMetals
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