Did you say leverage?

A myth often heard is that precious metal miners offer a good leverage over the price of the metals. With precious metals rising the PM miners see their cash flow multiply at constant mining costs. I'm not digging into why this isn't always the case, I just show some evidence rising when comparing the HUI index to Gold.

HUI relative to Gold

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Both graphs below show the HUI (basket of unhedged gold miners), relative to the continuous contract price of gold. High values mean miners are relatively more expensive.

daily (6 months) chart, click to enlarge

Weekly (3 years) chart, click to enlarge. The 200 moving average refers to 200 weeks or close to 4 years. The HUI:Gold ratio consistently stays below its 200 weeks moving average and is about to drop below its 50 weeks moving average. 

We saw excellent gold rallies over the past six months with gold strengthening by $200/Oz between mid July and end December. Gold mining earnings being leveraged to the price level of their output, you could expect a stellar performance of the HUI, with an increase of the HUI:Gold ratio. In the midst of the rallies this indeed worked out.

However, over the short term (graph over a 6 months lapse, daily observations) you'll notice the HUI turning weaker relative to gold during any correction, amplifying the decline of Gold. There is some support at the 0.37 level. We're still above that one. The HUI/Gold ratio dropped below its 50 days moving average (dma). It's about to drop below the 200 dma if weakness continues today. We find pull backs towards a support for the HUI:Gold ratio, despite stronger gold prices. (top graph)

A round-up

Best wishes for 2011.

I started this blog back in November 2009. Initially I mainly intended to keep track of valuable postings that otherwise would get lost and snowed under on different forums.

Ambition grew over time as I realized I slowly gathered an audience. This isn’t evident, considering that the blog is bilingual and initially most postings were written in Dutch for a local public. I’m not posting on highly popular or controversial topics either: asset classes less covered by mainstream media.

There’s more blogs covering mainly gold or related assets (you find them in the right side margin). The more popular ones mainly convey a political message criticizing monetary policy and/or gold price manipulation.

"Retail-vastgoed": return en dividendrendement

“Retail-vastgoed” heeft betrekking op winkelcentra of individuele winkelpanden, meestal langs invalswegen. Bij beursgenoteerd retail-vastgoed heeft de belegger nog de keuze tussen vier Belgische bevaks en een aantal vastgoedcertificaten. Onderstaande tabellen geven de slotkoers van 21-december (of de meest recente fixing). Een tweede tabel toont de beurskapitalisatie en de return over het laatste jaar. In de derde tabel vind je dividend, ex-coupon datum en rendement. Bij de bepaling van het rendement wordt de tijd verlopen sinds de laatste coupon in rekening gebracht.

Winkelcentra leiden de certificatenmarkt hoger

De afgelopen paar maanden konden de vastgoedcertificaten opnieuw enkele procenten bijschrijven, terwijl de bredere aandelenmarkt doorheen rally’s en correcties laveert. Per saldo begint de BRECS (Belgian Real Estate CertificateS) returnindex de laatste maand van 2010 op 62.290 en dit bij een rendement van 6,04 %.


Figuur 1 : BRECS returnindex sinds 2006 (blauw, linkeras) en dividendrendement (rood, rechteras) - Klikken om te vergroten

Investors prefer turn around stories to solid track records

Technical analysis is usually aimed at market timing and determining entry, exit and/or stop-loss levels. Some volume driven technical indicators are also useful in more historic perspective for investment analysts involved in investor behaviour studies. Two of those indicators are the ‘On Balance Volume’ (OBV) and the ‘Price Volume Trend’ (PVT).

Buying an option ‘in the money’

Some traders claim it‘s foolish, others will tell you it ‘s smart.

Buying a call option ‘in the money’, you pay up the intrinsic value: the actual stock price minus the strike of the option plus a premium, mainly depending on the time left to expiration and on (implied) volatility.

Volatility persists

Historic volatility is calculated using a time series of index (or stock price) close values. It is defined as the standard deviation on the series of percentage day-to-day variations. When considering all day-to-day variations, we obtain one single historic volatility, which - while illustrative - raises a mainly academic interest.

On penny stocks

(Mineral) Explorers often expect that raising capital is easier with a low nominal stock price. This opens the door to the realm of penny stocks.

Beaulieulaan: verkoop afgeblazen

Het vastgoedcertifcaat Beaulieulaan heeft betrekking op de gebouwen Upper & Middle Building, Beaulieulaan 5-7 en 9-11, 1160 Oudergem, eigendom van NV Immo-Beaulieu en in lease gegeven aan de Europese Unie.

De lease-overeenkomst werd begin 2006 afgesloten voor een duur van 15 jaar zonder tussentijdse vervaldag.

Aangezien de lease-overeenkomst nog meer dan tien jaar voor de boeg heeft, hadden de beheerders het opportuun gevonden om vanaf juni het gebouw te koop te stellen. Het perspectief op een nog lange verhuring, maakt het gebouw attractiever voor kandidaat investeerders. De Brusselse vastgoedmarkt is nog steeds lauw en de bezettigsgraad is vooral in de periferie bedroevend laag. In dit opzicht is Beaulieulaan een gelukkige uitzondering.

De kandidaat kopers liepen mekaar niet bepaald voor de voeten en geen enkel bod werd acceptabel bevonden. De verkoopprocedure werd op 21 september afgeblazen “wegens onvoldoende geconcretiseerde belangstelling.”

Investing directly in juniors or through the GDXJ ETF?

In a recent essay, Adam Hamilton of Zeallc.com pointed to the strong performance of the GDXJ Exchange Traded Fund since it was launched hardly one year ago by Van Eck. Especially last two months GDXJ is outperforming both the large cap focussed GDX and bullion. No better praise than that of a competitor.