Let's consider what the real impact of rising yields have on stock markets during the different phases they enter, because this is important, and far too many professionals don’t understand bonds and their impact on other asset classes.
It seems that after several months of rest the gold price is showing promise again. Remember I am a gold bug who believes the gold price will be significantly higher in the coming year and years and have spoken at length about the basis behind why gold (platinum and silver too) will be much higher.
I know this is the fifth time I am writing about gold but with the precious metal surging to fresh new multi-year highs I need to stress to readers the enormous opportunity that is being presented to investors.
Gold continues to perform well in US dollar terms and even better in Australian Dollar terms and the backdrop to a higher gold price is only strengthening. It, along with the “yield crunch” thematic I have discussed here all year long are my two favourite broad market trends that present an enormous opportunity for investors.
Silver Lake’s result was messy. The underlying loss was not as much as the broker had forecast but underlying earnings were soft given the cost of closing the Murchison mine. Cash flow should improve in FY15, the broker suggests, but will remain tight.
The company has announced FY14 sales from Mt Monger, in line with guidance. Sales have been better than UBS expected and revenue forecasts for FY14 are lifted by 6%. Costs are left unchanged but the broker suspects this could prove to be an optimistic assumption.
Silver Lake’s production fell 8% short of the broker, revenue was slightly weaker and costs slightly higher. The broker has rejigged its earnings forecasts to reflect the closure of Murchison and the ramp up of Mt Monger.
An asset impairment charge led to a miss for Silver Lake’s profit result although underlying earnings were slightly better than expected. A $39m placement was announced to assist in placing Murchison in care & maintenance and to provide capital for the Mt Monger project. The broker sees the Murchison closure as pragmatic but it does mean forecasts take a hit, and it will be 18 months before SLR is generating cash.