The Golden Truth: Newmont Mining Raises A $2 Billion Dollar Blind Pool

Wednesday, September 16, 2009

Newmont Mining Raises A $2 Billion Dollar Blind Pool

In what I believe is the largest bond deal ever issued by a mining company, Newmont just raised $2 billion in what essentially amounts to a blind pool, as they have not indicated any specific use for the proceeds. Here's the link to the announcement:

Ten-year and 30-year Tranches - High Credit Quality Pricing

What is most significant about this deal is that it shows just how much money is on the sidelines and looking for investment opportunities in the precious metals and mining stock sector. When I heard about this deal coming yesterday I expected, based on my experience in the bond market, maybe a $500 million deal. The fact that big money is willing to give $2 billion to Newmont on these terms is a harbinger for the kind of capital that is starting to rush into the sector.

The bull market in precious metals and mining stocks is just beginning to enter its second stage. If you position yourself correctly with gold, silver and mining stocks you will experience a change-of-lifestyle increase in wealth.

2 comments:

EconomicDisconnectWednesday, 16 September, 2009
I thought I posted this comment before, try again!
Dave,
An offering of 2Bln seems a bit aggressive. What do you think this will do to NEM stock near term? One of my arguments against a bubble in metals is due to the low participation rate. 2Bln is a lot of participation! I am not being difficult, you know I am way long metals (gold/silver) just wanted some input.
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Dave in DenverWednesday, 16 September, 2009
Hey gyc. This is just the start. Institutions are just starting to move capital into the sector - the ABX and NEM deals show the growing demand. It's mainly hedge funds at this point. Just wait until pensions and big insurance companies start allocating even just 1-2% of their capital to the sector.

The second stage of long term bull market is characterized by big institutions moving into the market (the 1st being smart money, like us). The 2nd stage is usually the longest and has the biggest move percent-wise.

A good friend and colleague of mine was an oil and gas analyst at Salomon Bros from 1996-2005. He pointed out the real boom in oil and gas exploration stocks didn't start until the big companies were issuing massive bond deals (I remember that because a lot of them were junk bond deals and I was junk bond trader in the 1990's).

While I expect some nasty pullbacks along the way, like the one we just went thru from really March '08 to mid-Oct '08 - and really from May '06 to Oct '08 in the juniors - I think the ABX and NEM deals are sign of things to come.

As for participation rate, the sentiment measures are still very low given the move over $1000 for gold, and how many new precious metals mutual funds have you read about lately? I have not heard of any. The public still can't even spell "gold."
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Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.