Gold Miners Facing Tough Challenges

A new report from the world's largest gold producer Barrick Gold provides yet another illustration of the problems facing gold mining companies.


While 1991 saw the discovery of 11 new gold mines, in 2011 only three mines with production potential were found. Aside from the drop in gold ore and rising production costs, a third factor is increasingly hindering gold production: producing countries' tedious licensing processes and sluggish bureaucracy. 


According to Barrick Gold, this is being exacerbated by increasing environmental regulations that could jeopardise many mining operations.


In South Africa, extraction of gold from depths of more than 6,000 metres has almost become the rule rather than the exception. Mining costs are being pushed up by the logistical challenges of drilling at great depths, as well as an increasingly militant work force which is demanding higher wages. 


Add exploration costs to this mix and it’s little wonder that companies’ profits are being squeezed, despite the high gold price. According to Barrick, total production costs for all mining companies exceeded the $8 billion mark last year.

Many companies are also facing increasing hostility from residents in mining areas. This has been particularly evident in Peru, Bolivia or Ecuador – where there have been violent clashes between local people and police.

A tricky set of factors for many companies. But given the gains in gold many expect in the coming years, great fortunes could still be made in the right gold mining investments.

5 Things You Should Know Before You Flip A Property

1. Get An Inspection On The Home:

Get a complete inspection done on your property. By, spending a few hundred dollars on this expense you can save thousands in problems that you cannot see. Foundation, Pest, Wood Rot, Etc… By, getting a full inspection you can rest assured that you know every thing that is wrong with the property before its to late. 

In the contact for the house you need to make sure that you have 7 days to have a inspection preformed, and if the inspection finds problems that are going to cost more money that you are willing to spend you can get out of the contract with no penalties.

2. Money Is Made At The Buy, Not The When flipping a house your money is made at the purchase not at the sell of the house. So, many times people buy a house with the intensions of making a huge profit only to find out that they could not make any money after all the renovations because the purchased price of the house was to high. 

When you purchase your property you need to be sure that you buy the house with enough money to make renovations, have carrying cost, and add about 5 $6,000. Now, cost is at $147,000, and that is if everything goes as planned. Profit is under 10,000 dollars. The mistake was made at the purchase at the home, not the sell.


3. Don’t Do The Work Yourself:

Get a contractor or several sub-contractors and have the work done quickly. You need to have you house flipped ASAP, so that you can get it on the market and get it sold. When I started flipping my brother and me did a house together, and we did all the construction. I had a construction background and figured it would save thousands, but it took us over 4 months to get the work done that a contractor could have had the work done in a month. 
But, we trying to save money on our flip did all the work on our time off and after work, and it just took to long. 

On our 2′nd flip we used contractors for almost everything and had the house completely flipped with a new roof, new air conditioning, new hardwood, and much more in only 3 weeks. We did not have to spend all our time working on the property and were able to spend that time looking for the next deal. This is how you get rich in real estate.


4. Use A Real Estate Agent:

Do not try to sell you house on your own. Harness the power of a real estate agent and the power of the MLS system. When you do a FSBO you are depending on people driving by your house and seeing you sign, with a real estate agent you have some one actively marketing you house to get it sold. Once again this will free up more time for you to look for more great deals. If you want to help the process I have found that Craigslist and listing you house in Google Adwords help to, but I use these tools with the help of a agent to make sure I have all my bases covered.


5. Place The Property For Sale 1 To 2 Percent Below Market Value:

If you are wanting to flip real estate and make money the object is to buy and sell the property as quickly as possible, so that you can move on to the next house. If you purchase a house and try to sell it at top dollar to make and extra couple of thousand dollars on your flip, and end up holding it for 6 months you are loosing money. Get the house on the market at a price that is going to blow the competition away, and you will sell it no matter what the market conditions.

On our second house the market for selling house went down do to the housing market as a whole, and the tightening of the loans across America. We were told that you could not sell a property in this market, but we went ahead anyway and flipped our house. After 3 weeks on the market we had 3 people wanting to buy the house. Why, because we offered it at such a great deal that people wanted to jump on it. That is what you have to do especially if the market is slow.


I hope this article has been helpful with the basics needs of flipping a house. If you will study and learn you will make money. But, do your homework before you purchase a house, and make sure that you can pull a profit on your deal. Then, make it happen!

Vancouver Real-Estate Market Unlikely Victim Of China Slowdown

Over the past 18 months, the global fascination with Chinese economic invincibility has steadily waned. And economic sophisticates have reached a consensus: China’s growth rate is slowing. Western demand for exports is falling. And the economy is plagued by overinvestment and excess capacity in housing, steel, and a host of other sectors. Officially, China is growing at a 7.5 percent rate this year. But I guesstimate that China is downshifting. Over the next 10 years, it’s possible that China will grow at an annual rate between 3 and 5 percent.

The financial press is doing a good job discussing these direct impacts of China’s growth slowdown. But there are plenty of other indirect, second-order impacts that have been ignored.

For instance, the impact of the Chinese economic slowdown on art markets, something I’ve wrote about in this space, has been dramatic—with the share price of Sotheby’s falling by almost 50 percent over the past 18 months.

The hidden story embedded in the Chinese economic “slowdown” is that investment-led growth is plunging. And the global implications are many: industrial commodities like coal and iron ore lose their China “bid”; mining companies find themselves expanding capacity in the face of slowing demand; commodity-reliant countries like Brazil find the China growth tailwind is turning into a headwind; currencies like the Australian dollar are exposed as extremely vulnerable; rail and port operators find that the volume of containers they handle is falling.

“Vancouver has been a popular destination for Chinese, driven in large part by its proximity to China and its spectacular feng shui,” notes Jamie MacDougal of Sotheby’s International Realty. The surge of Chinese interest began in earnest following the Tiananmen Square massacre. Vancouver emerged as a safe place to park capital. A long-standing Canadian policy has offered citizenship to foreigners willing to make substantial investments. But MacDougal notes that Chinese offshore buyers arriving in Vancouver spiked to truly unsustainable levels in 2011, during which bidding wars were regular events and property values rose by the week. Check out the chart below.

Given this dynamic of rapidly rising supply, it would not be surprising to most observers if prices were falling rapidly. This has not been the case. According to Eugen Klein, president of the Real Estate Board of Greater Vancouver, “prices in the region remain relatively stable overall.” Again, the raw numbers seem to validate his view: average home prices in the Vancouver area were down a mere 0.8 percent between September 2011 and September 2012. It sure seems like we are witnessing stable prices in the face of rising supply and falling demand.

What You Need To Know Before Investing In Silver

I believe there is more opportunity in the silver market over the next two years relative to gold and, as such I’m now advocating accumulating a large overweight position in silver relative to gold because, over the long-term, there is such a great demand vs. supply situation developing….Before investing in silver, however, there are a number very important things that you must understand about the silver market. Let me explain.

1. Avoid Leveraged Silver ETFs:

Another important thing you need to understand about the silver market is you won’t know what’s about to happen ahead of time when the large players really move the market, and you will have to just endure it if it goes against you. Therefore, it is essential that you don’t use leveraged ETFs because the volatility will intensify. It is difficult enough to endure the volatility without using a leveraged non-physical backed derivative to trade it.

2. Recognize The High Degree Of Volatility:

The silver market…will trade with about 300% more volatility than gold does. This means if gold is up or down 1%, silver will probably be up or down 3%. The total silver market is a fraction of the size of the gold market in dollar amounts, so the market is less liquid. Relatively small amounts of money in or out of the market will produce sharp price swings. Because there are only a few large institutions, such as JPMorgan and HSBC that dominate the market making of silver and are also the custodians of the large inventories, it is an easily manipulated market.

3. Don’t Trade Silver Futures:

Also, do not trade silver futures, because of the high leverage and the way the exchange can change your margin requirements overnight. They can crush you and force you to liquidate at the worst time. Do not do anything that might force you to sell except when you intend to. Many speculators found this out the hard way in 2011, when the price of silver approached $50 and the exchange tripled margin requirements. This is supposed to protect the exchange and it does, but the real reason was to try to crush the longs and staunch the losses of exchange members, who had shorted and were literally losing hundreds of millions of dollars.

There is also a clause in every futures contract that it can be settled in cash, and not actual physical delivery so if silver soared so much it was bankrupting exchange members, they could declare that the market is in “liquidation only” mode like in 1980. This would short-change the investors on the right side of the trade. Of course conveniently, this is never done when average investors are on the wrong side of the trade, but only when members of the exchange and large institutions are hemorrhaging cash.

4. Physically Possess Your Silver Holdings:

By far, I feel the safest place to store your metals holdings is to physically possess them, and I strongly advocate that….I feel Canada is the best place to have your metals stored when you use exchange traded funds or trusts. It is a country with a long history of mining and natural resources, and most of the companies involved in the sector are located there, so it is probably the safest country from government confiscation. They have different and easy to invest vehicles for their own and foreign citizens to own gold and silver, like the Central Gold Trust (GTU) and the Central Fund of Canada Limited (CEF). These are long-term vehicles with extra precautions, like storage at mints, and they are even insured.

5. Average Into Your Silver Purchases:

Another thing you want to do when accumulating your silver position, especially if it is correcting, is be patient and average into your purchases very, very slowly.

The Fundamental Flaw In The Silver Market:

The paper silver market (all outstanding futures and derivatives) is many times larger than the actual physical silver market which means that if a significant percentage of paper silver investors demanded actual delivery, the price would rocket higher when the shorts in the market couldn’t fulfill their obligations. That is a fundamental flaw in the structure of the silver market.

As time goes by and demand increases along with very tight supplies, [this shortage in actual physical silver] will force silver prices to increase much more than the gold market. That is also why you need to be concerned if you actually physically possess your silver. [You must] make sure you are using the best ETF possible to profit from the huge increase in higher prices. When you own a silver trust, you know it is physically backed and can deliver the silver so if there is a breakdown in the silver market structure, the premium for this trust would skyrocket.

How To Get Started Investing In Silver

Many leap into the silver's market without realizing how volatile the market can be. Most investments to the uninformed can involve some major risks. Taking your chances is never ever a waste of time provided that you know how the program works, and you use the spot chart to your benefit. Making a good guess on when prices will rise or fall is the main key to success in this trade.

Taking appropriate actions to any event in the silver market will save you from unnecessary loses.
Many industries suffered a loss during the economic recession in 2009. Silver miners reported a drop in production, whereas demand from photography and kitchen ware industries fell by a certain percentage. This year, however, the silver spot chart 2012 shows that the silver market is starting to gain momentum once more. Demand for silver is now on the rise, with digital gadgets, laboratory equipment, and medical instruments depending on silver for raw material.

It is speculated that the silver market will remain stable for the entire year, yet this does not make silver any less volatile. Silver prices may still go up or down anytime at a range not higher than $13. Experts have different interpretations of how the silver market will fare in the years to come. Only one thing is certain, that the demand for silver will continue to increase. At the same time, the mining industry does not foresee shortage in supply of silver in the near future.

What determines prices as with anything is supply and demand. When there is a decrease in the supply of silver, tendency is for customers to demand for more, resulting in an increase in price. Alternatively, when the supply of silver exceeds the demand for it, the price will go down. In this circumstance, the best time to acquire silver is when the cost is low, and the best time to sell is when the cost is higher. But it is not as simple as it appears.

What makes silver a risky venture is that, you cannot tell exactly when the silver prices will go up or down. The use of a silver spot chart is indispensable for predicting what will happen next in the silver market. It shows silver prices and the real modifications in realtime. It lets you see how the figures go up and down over a predefined period. By examining the behavior of silver prices and their causes, you have a better chance of realizing the appropriate option between buying and selling silver at any circumstance. A silver spot chart is crucial for knowledgeable and low risk investment in the silver market.

Gloomy Reports Show Europe's Economies Worsening

The fourth quarter has so far brought no improvement in the fortunes of most of Europe's economies, which now risk shrinking more than previously expected, gloomy data showed on Tuesday.

Purchasing managers indexes (PMIs), which gauge the activity of thousands of companies worldwide, showed euro zone businesses endured their worst month in October since June 2009, with little hope of a turnaround coming soon.

The euro zone relies heavily on Germany, its largest economy, to generate growth.

If the PMIs fail to improve for November and December, the euro zone economy could easily face a hefty contraction in the fourth quarter rather than the stagnation projected by economists polled by Reuters two weeks ago.

"Given the stabilization in financial markets, and in consumer sentiment indicators in some countries, we thought perhaps you would see some stabilization in the PMIs as well," said Janet Henry, chief European economist at HSBC.

"What's disappointing about the Q4 data is the weakness reflected in the core euro zone indicators -- the French and German PMIs."
German industrial orders data for September only added to the sense of gloom with a 3.3 percent month-on-month decline, far worse than the 0.5 percent consensus fall in a Reuters poll of 38 economists.

Markit's Eurozone Composite PMI fell in October to 45.7 from 46.1 in September, down slightly from a preliminary reading of 45.8 two weeks ago and marking its ninth consecutive month below the 50 mark dividing growth from contraction.
The survey will do little to alter the view of a majority of economists that the European Central Bank will trim interest rates to a new record low of 0.5 percent, although probably early next year rather than this Thursday.

"Sentiment is still being hit hard as companies worry about the dual impact of weak domestic demand and a slowing global economy," said Rob Dobson, senior economist at PMI compiler Markit.

British industrial output also fell more sharply than expected in September, data showed on Tuesday, reinforcing fears an incipient recovery will struggle to gather pace.
Britain's services PMIs were released on Monday, and suggested the same.

But there were two bright spots in Tuesday's PMI data. The Irish survey rebounded strongly in October and the Italian services PMI, while still showing businesses are struggling, shot above the highest forecast from economists.

"It's not all really bad news, but it's all consistent with a contraction in the real economy. And that's not what you want when you've got really high debt levels," said HSBC's Henry.

That applies particularly to Spain, the euro zone's No.4 economy, as its services sector shrank for a 16th straight month. Most say it's only a matter of time, likely before the end of the year, that Spain asks for a full sovereign bailout.

The European Commission has set dire economic forecasts for Spain until 2014, a newspaper reported on Tuesday, shooting down the targets set out by Madrid and potentially pushing it closer to seeking euro zone aid.

Jewellery Buy Isn’t Equal To Investing In Gold Asset Class

It is good you want to start planning for your future. But it should not be limited only to create a fund for buying a house; you should also start creating a corpus for your other financial needs, such as buying a car, planning for a holiday and the most important of all your retirement. To achieve the same, you need to start now as it gives you a heads up.

As you have currently projected a need which is 10 years away, your investments can be long term. You should start investing via systematic investment plans (SIPs) in equity funds. It seems you are a first time investor and if you are not comfortable taking risk or are risk averse, you can look at hybrid funds or monthly income plans (MIPs). Hybrid or balanced funds invest 65% in equities and the balance in debt instruments. Funds with a consistent track record are HDFC Balanced fund and Tata Balanced fund. MIPs invest even less in equities (15-25%). Reliance MIP and Canara Robeco MIP are good options.

You are right when you say that equity MFs have not seen any gains in the last two years. On an average, equity funds have delivered low or negative returns during the said period. But that is the true nature of equity; any equity investment needs to be done with a long-term view. What you need to do is periodically review it and ensure the fund you are invested in is not under-performing and is in accordance with its peer group. In case of continuous underperformance, consider changing the fund.

You should continue your PPF. Buying jewellery is not an investment and a better way to invest in gold is through exchange-traded funds and gold funds. But you should not have more than 10% of your investments in gold; the balance can be spread between MFs and PPF. 

You should try to optimize your portfolio rather than maximizing your returns. The endeavour should be to achieve a healthy risk-adjusted return.