-- Posted Monday, 2 February 2009 | | Source: GoldSeek.com
Investment bankers smell a big run up in the gold price coming. They are raising money for gold companies like there is no tomorrow. Look at some of the money pouring into the sector right now:
Newmont announced a $1.2 billion equity issue
Kinross Gold – $360 million
Silver Wheaton - $250 million
Red Back Mining - $150 million
Endeavour Financial - $100 million
Alamos Gold - $75 million
Money is still very tight around the world. Everywhere in the western world you read about layoffs, you read about how low the bank stocks are, how business lines of credit are still tight, despite LIBOR (London Inter Bank Overnight Rate – how much the banks charge each other to lend amongst themselves – this is the backbone of the money flows around the world) now just over 1%. Money is tight, tight tight.
And yet the gold industry is raising billions of dollars right now. Why? This kind of money is being raised in expectations of an upside breakthrough in the gold price.
Retail investors don’t know where to put their money. They are still looking back four months; their minds and hearts are still in the mire of October 2008 when we didn’t know if the financial world would collapse. But the institutions are more disciplined; they’re looking forwards. Money managers clearly believe gold is moving higher. And they’re putting their money where their mouth is.
They also know to buy strength, not weakness. And gold has been one of the strongest sectors since the October collapse.
Endeavour Financial’s new powerpoint was very succinct in the opportunities they see in the sector:
-Junior producers rejoining Senior producer valuation levels
-All gold producers rejoining Gold price
-Gold price moving higher
So you can bet there will be a lot of mergers and acquisitions with this money – and in a bull market, companies must pay PREMIUMS to shareholders to get deals done. All in all, it should mean 2009 is a profitable one for gold investors.
-- Posted Monday, 2 February 2009 | Digg This Article
| Source: GoldSeek.com
