Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.

4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete Wargent is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.

"Pete's daily analysis is unputdownable" - Dr. Chris Caton, Chief Economist, BT Financial.

Invest in Sydney/Brisbane property markets, or for media/public speaking requests, email pete@allenwargent.com

Saturday, 27 July 2013

Gold miners slammed

There has been a reasonable bounce in the gold price in recent weeks, but much of the pain has already been felt by the gold miners.

Share prices had been pumped up across the sector as forward earnings estimates were modelled based upon a continuing high gold spot price, but as institutional investors pulled funds out of the sector the gold price collapsed.

And while ever-bullish brokers had rated a swathe of Australian miners as 'buy' recommendations based upon a copper price of around US$5.00/lb, nervous global sentiment has failed to see this happy position materialise with the copper spot languishing at a decidedly pessimistic ~US$3.10/lb.

US gold miner Newmont has been forced to take a large write-down totalling US $1.5 billion as well as laying off staff.

Gold and copper miner Newcrest Mining (ASX: NCM) has already been hit with impairment write-offs totalling a whopping A$6 billion and has a correspondingly ugly share price chart, the company having lost almost three-quarters of its market capitalisation in the past 2 years.

Similar pain was felt by Goldcorp, who booked a $2 billion write-down after recording losses highlighting potential impairments.

This highlights the potential volatility of companies which are exposed heavily to one metric such as a commodity price or an exchange rate.

While larger mining companies hedge forward their revenue streams, lower commodity prices will ultimately be reflected in the bottom line and lower earnings.

As mining companies deplete their resources over time, they tend to retain capital for thepruposes of re-investment, rather than distributing strong dividends back to shareholders.

This makes it especially important to be wary of buying resources stocks when they are trading at high price-earnings multiples based upon unpredictable commodity price forecasts.


Source; ASX