ABX update, again and K, Kinross

June 27, 2013June 27, 2013 Hamilton

Our best guess is that ABX is completing the 5th wave of 3. A trend line target would be somewhere around $14 which is also where waves 1 and 5 of 5 are equal. The RSI seems to support this. The reason why the stock will be a buy there is that there should then be a 4th wave (of larger degree) to take the stock up fairly rapidly to $24 and possible a lot higher as the guideline of alternation would suggest this wave should take the form of a zig-zag. The stock is a buy regardless of how precisely this plays out as even at todays price the outlook is for an $8 rebound or 50%. During this 5th wave of 3 the stock dropped from $40 to $16 or 60%. Regardless of the fundamentals a rebound here would fit nicely.

K, Kinross, is essentially in a similar position!, that is a 4 of C starting about now (slightly different from count in previous blogs). It could bounce from the high $4 to close to $10 before it starts its last dive in 5.

JPM update

June 25, 2013 Hamilton

This is a double take on JP Morgan, using Yahoo and Globe & Mail charts (see also previous blogs). As always the charts can be enlarged by clicking on them! JPM is arguable the most prominent US financial institution having once played the role of quasi central bank. Where it goes should tell us a thing or two about where the US financial system as a whole goes. EW is invariable full of nasty ambiguities which makes the counting of the sequences difficult. In this case we have a long triangle or a short one. These constructs occur only in 4th waves or B waves (including the B within a B-wave). It has to be one or the other. In the former case , a 4th wave, the target is around $70 and the timing could be years out still. In the latter case, a B within a B-wave, the target is more like $60 and the timing is “around the corner”, that is sometime in the next year or so. Both scenarios are positive for the moment but by the same token both will become very negative down the road. Our preference, marginally, is for the B-wave triangle (in black or purple).

FTSE update

June 24, 2013June 24, 2013 Hamilton

This is the Financial Times 100 index from Bigcharts. Recently it topped out for a third time at 6876, roughly at the same level it had reached the previous two times. I do not understand EW well enough to make accurate pronouncement on what the ups and downs represent, but looking exclusively at the last up leg one can quite reliable conclude that it is a B-wave. The two perfectly equal legs with an expanding triangle intervening make that an almost certainty. In any event a drop now substantially below about 6000, we are presently at 6116, would create overlap and limit most other alternatives (there are three possible triangle in the middle three years, an expanding one, a normal horizontal contracting one and a third one starting one phase later). Below is the more detailed picture;

Once overlap occurs the index is likely to drop to , at least, 4800 and probable all the way to the bottom.

SFF, Seafield update

June 23, 2013June 24, 2013 Hamilton

The stock may still climb back to 10 cents briefly, but if the count on the right is remotely correct there is little hope of it staying there. Next week (25th of June) is the big general board meeting held at the posh address of Toronto street. In advance of that we have had some stock option repricing , poison pills, and now a new study to examine the feasibility of the main project.

Cash costs, the equivalent of variable cost pricing, are estimated at $724.77 per ounce of gold. Silver is ignored due to its secondary role. Total capital plus maintenance costs are estimated (in great detail) at $154,349 mln. For this it is expected that 529,453 ounces will be produced over the life of the mine with a recovery rate of 89%. That works out to a “fixed” cost of $291.52 per ounce ( using the fixed/variable analogy further). The total cost per ounce is then $1016.29. A table in the report shows the sensitivity to the gold price as follows;

The report uses $1500 for the baseline. $1295,00 , where the yellow stuff is as we speak, is conveniently NOT featured as a possibility. Interestingly the $200 drop in the gold price causes an almost halving of the return. Another $200 drop would eliminate all profit which is not all that surprising as that is approximately where the cost of production are if certain elements that are not included in the full costs, such as royalties etc. are included. Lately just about every miner has managed to incur costs overruns of colossal proportions so there is no reason to expect these chaps to be much different. So, this is a screaming buy if you expect gold to climb to $2000 and up. If you expect gold to maybe hit $1000 or lower, don’t touch it with a twenty foot pole. By the way, you only have about 8 months or so and then the cash facility is gone, fully utilized. By definition therefore, this is as close as you can get to buying an option, which is exactly what everyone else from management to employees and financiers now has. Only difference will be that you are fully vested from the start and the expiry date is undetermined!

All of the above is predicated on a discount model that uses 5%. To what extent that is representative of a junior exploration company yet to move to actual production, is an interesting question. Judging by the 7% charged on the finance facility (not including the equity bonus) one would have to conclude that it is not representative at all.

or; http://www.stockhouse.com/companies/bullboard/v.sff/seafield-resources-ltd?threadid=21545904

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