Welcome to Defining the line

1st February 2014 – Taking a break from blogging
By Ben Turney posted on February 1, 2014

On Monday I will be taking up a new role acting as editor for www.shareprophets.com.

I’ll continue to write regularly for ShareProphets, but will just update my twitter account with pieces I publish.

Lazy I know, but with a three month old to look after, time is precious.

Recent Posts

27th December 2013 — A Christmas cracker from Black Mountain Resources Part 1
By Ben Turney posted on December 27, 2013

It is always amusing to see which companies try and sneak out unpalatable RNS announcements on Christmas Eve. This year it was the turn of Black Mountain Resources (BMZ). Over the coming days I plan to write a few pieces analysing what Black Mountain had to say, as it had a few little Christmas crackers for existing shareholders.

The last time I wrote about Black Mountain was in July and the title of my piece was “Black Mountain Resources; Ho, Ho, Ho”. It couldn’t have been more apt.

 

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18th December 2013 — Bang on the money; will Santa now carry the FTSE to 7,000
By Ben Turney posted on December 18, 2013

It’s always nice being on the money and today I have been bang on it.

I wish I could claim some particular personal insight led me to position myself in the manner I did, ahead of the FOMC’s meeting, but the truth is I am standing on the shoulders of others. Once again, Jon Hilsenrath has been the Sage of the Federal Reserve. My only hope is that he manages to strike up as good a relationship with Janet Yellen as he has obviously had with Ben Bernanke.

This is by no means certain and we can’t really know what direction Yellen will take in leading the Fed until she takes over. Bernanke’s softly-softly consensus building approach, for all the criticism it has received, has meant we’ve had warning in advance of the FOMC’s decisions. Even September’s non-taper, which wrong-footed everyone (me included), was signalled in the days before by Hilsenrath.

 

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18th December 2013 — Can the FTSE make it to 7,000?
By Ben Turney posted on December 17, 2013

This is turning into a bit of a crunch time for the FTSE100. The Santa Rally has faded and the index has been treading water since the start of December. The hopes of the bulls to see 7,000 before the year end are currently hanging by a thread. Today’s possible taper decision by the FOMC is almost certainly behind this month’s lacklustre performance and the question now is how will the market react to whatever is announced this evening?

From a technical point of view, the MIDAS Method provides an extremely clear view of the current state of play. It is just up to MIDAS users to decide what to do. Below is my plan.

 

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16th December 2013 – Europa Oil & Gas; Ouch!
By Ben Turney posted on December 16, 2013

 

Another day, another deeply discounted placement on AIM…This morning it was the turn of Europa Oil & Gas (EOG) to act out its own interpretation of building “substantial value for shareholders”.

Now I don’t know about you, but conducting a placement at 6p, when your stock was trading at 10.5p just under a month ago (ahem, after a well timed presentation or two…), doesn’t really strike me as building shareholder value. But what do I know?

 

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13th December 2013 – The Baltic Dry Index surges back to life
By Ben Turney posted on December 13, 2013

Since the early summer, I’ve been following the Baltic Dry Index (BDI) closely. Tracking twenty three of the world’s busiest shipping routes, the BDI is one of the purest indicators of genuine economic activity out there. It has acted as a superb leading indicator for the general mining sector over the years and I’ve been watching for any sign of a turnaround, as a precursor for getting back into these battered stocks. My original target was for the BDI to regain and hold 1,500, the minimum level I associate with genuine global growth.

 

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6th December 2013 – The ancient Hebrew approach to avoiding boom & bust
By Ben Turney posted on December 6, 2013

“This fiftieth year is sacred—it is a time of freedom and of celebration when everyone will receive back their original property, and slaves will return home to their families.”

—Leviticus 25:10

A few years ago, I came across a really interesting idea about property rights. I was listening to a radio programme, broadcast from a church in the City. It was an ecumenical discussion, involving different faiths and examined the morality of debt driven economies. I wish I had kept the podcast, but one contributor was a Rabbi, who introduced me to the ancient Hebrew idea of a “jubilee”.

 

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6th December 2013 – MIDAS support for gold at $1,206/oz
By Ben Turney posted on

So, this been quite a week for the precious metal.

To say the trade has been choppy would be quite an understatement. Four of the five trading days have seen 30-40 intraday moves. We’ve tested some of the lows set earlier in the summer and there is a feeling something significant is going on in this market at present. Earlier today, our proprietor, Richard Jennings, wrote another bullish call on gold, pointing to further evidence that a bottoming process is playing out. A cursory glance over the chart below, strongly suggests he could be right:

 

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4th December 2013 – Another day another massacre
By Ben Turney posted on December 4, 2013

Following on from my last piece about the current collapse in gold and gold mining stocks, this is starting to look more and more like a capitulation event. And as we all know, for a market truly to bottom it first needs to capitulate.

To recap what I wrote yesterday, I believe that the market for gold is going through a fundamental change. Gold itself is fast transforming from a crisis trade, in anticipation of the financial system collapsing or blowing up in a hyperinflationary boom, to a fundamental play supported by the true cost of production. An investment company, called Hebba Investments, has been publishing a series of research reports on Seeking Alpha for the last few years. They have developed a model to calculate the all-in production costs of the world’s largest listed miners. In their latest note they estimated that the average all-in production costs for these companies (accounting for more than 25% of the world’s supply) were $1,221.75/oz during Q3 2013.

At this very moment gold trades at $1,215/oz.

 

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3rd December – Is this it for gold?
By Ben Turney posted on December 3, 2013

Gold bulls are getting massacred.

The market euphoria that has gripped the main boards and taken hold of the “all is well, bravo the Fed!” crowd has a nasty sting for any pragmatist who knows that a debt crisis cannot be solved by yet more debt. That the latter group will almost certainly be proven right in the long run will do little to cheer them if they are wiped out in the meantime. This could well prove to be the bitter irony of what is happening now. What was it Keynes said about the market remaining irrational longer than he could stay solvent?

Anyway, back to today and gold mining stocks and associated ETFs have been crushed under heavy volume selling, and the price of the yellow metal looks almost certain to retest its 52 week lows (note I said “almost”). If this happens and the decline continues then serious technical support looks well over $100 away.

 

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