The last time the S&P 500 out performed Gold Miners (and Gold) by as much as it currently has, Gold miners became the best performing asset class for the next 12 years. At the 2000 credit cycle top, miners became a very

good hedge to long term financial portfolio’s returning 1,000% over the next credit cycle. In 2000 Gold was despised by Wall Street and politicians as much as they are today; indeed, Gordon Brown sold half of Great Britain’s Gold at what is still called the Brown bottom. At the 2008 credit cycle top Gold miners were heavily

owned and were a poor hedge; however, coming off the 2009 bottom the miners were one of the best performing asset classes. U.S. Treasuries proved to be the best hedge in 2008 making all weather funds the toast of the town. With $18T in debt outstanding and priced off of 0% T-Bills, it is not clear that Treasuries represent as good of a

hedge as in the past? Treasuries capital gain potential may be limited, or even worse could correlate with equities going forward. With many miners selling at a fraction of book value, cash flow positive and long life reserves, deep value investors need to at least analyze the sector. A 5% position in the miners at current depressed levels

could prove to be a solid diversification decision to long term financial portfolios.

S&P 500 performance vs. the HUI from summer of ‘00. The HUI returned 1,000% off of the 2000 lows (the last time Gold was as universally dismissed by

Wall Street as it is today)!

The structural set up in the Gold futures markets (swap dealers long, speculators record short) is more bullish than the 2008 bottom at $700 an ounce. On 7/24/2015 Bloomberg reported that Hedge Funds are net short

Gold for the first time since CFTC records have been published. Meanwhile, swap dealers (an important part of commercial positioning) have recently established their largest long positioning on record. The correlation

between hedge fund positioning in Gold futures and the performance of the HUI Gold stock index is unmistakable. When Gold and the HUI peaked in the fall of ‘11 Hedge Funds had their longest net exposure to Gold on record. At the bottom of the financial crisis in “08 Hedge Fund’s exposure to Gold was extremely low as

was the HUI Gold stock index.

While some investor’s agree global demand is deteriorating, global debt is too high and central banks are aggressive, few investors understand that the U.S. demand is also weak. The American Staffing Index

(temporary help) latest reading of -2.9% YOY is at similar readings to the summer of ‘08 and the summer of ’11, warning of volatility ahead. Meanwhile, the temporary help component of the BLS NFP payroll report

was plus 6.4% YOY in the June report. This is an incredibly large divergence and of extreme importance since temp help is considered one of the best leading indicators of employment. Other weak economic indicators

include Business Sales, Retail Sales, Rail Car Loadings, Industrial Production & Corporate Profits; the 2 bright spots currently are housing and healthcare. PCE is at levels consistent with previous recessions.

ASA staffing index currently -2.9 % YOY 7/12/15.

The financial markets are starting to figure this out. The divergence between credit as represented by the High Yield Index and the S&P 500 is as large as it has been at previous major tops in equity markets. Multinational earnings in the S&P 500 have been weak and guidance is weak. With emerging market currencies performing

poorly and commodities in free fall this trend is not likely to change if the Fed aggressively raises interest rates. Indeed, the Federal Reserve has never begun a period of tightening with corporate profits down,

business sales down, industrial production weakening and temporary staffing falling. Any move by the Fed to raise rates may prove to be a mistake not only from an economic perspective but also from a financial perspective. There is no evidence that the U.S. economy will benefit from a higher dollar. While a higher

dollar may continue to effect capital flows globally, it will only accelerate the current emerging trends. Thus, the IMF recommendation to the Fed to hold off on any interest rate increases. With Gold swap dealers going

long the first time in reported history, it is possible they share this view.

Common perception about monetary policy can change very rapidly. The bull market in the ‘80’s was driven by a massive fall in interest rates. Likewise, the current bull market has been driven by a massive increase

in global liquidity as well as Zero Interest Rate Policies. Throughout the year of 1987 bonds sold off as equity prices rallied. By September the divergence between bonds and stocks became quite large. During

September of ‘87 the bond market went into free fall as everyone prepared for Alan Greenspan’s first interest rate increase (back then the Federal Reserve moved the Fed Funds target frequently). Many bond houses

suffered significant losses and reduced liquidity to the market. The perception in the stock market was the economy was very strong (it was) and the economy and the markets could handle any interest rate increase.

Indeed, stocks had outperformed bonds by so much that this young broker moved his 401k from balanced to all equities in September (bad mistake). During September retail sales faltered and the high flying leadership

of the then darling specialty retailers Limited and Gap Stores plummeted. Montgomery Securities suffered enough losses that they stopped trading reducing liquidity to the momentum stock sector. Alan Greenspan did raise rates and one month later bonds had out performed stocks by historical percentages. In the end

the positioning of the crowd was more important than common perception; fortunes changed hands as the common perception of how the market would handle the first interest rate increase was wrong.

“The time to buy is when there’s blood in the streets.”The HUI index is currently down 30% YTD and 82% off of it’s 2011 top. Meanwhile, miners have acted prudently to cut capital spending, streamline operations and are benefiting from plunging mining and energy costs. Many

miners are discounting bankruptcy even though they have positive net cash and or positive cash flow! Many experts predict that mine production has peaked since there has been very few high grade finds, almost no mine

construction and high cost mines are being closed.

(A major lesson to all investor’s should be learned from the recent carnage in the Mining ETF’s. ETF investor’s do not know what they own! This writer believes there is an opportunity developing for research oriented investors in paired trades inside ETF’s. My personal mining holdings have significantly outperformed

the index, because I do know what I own!)

Newmont Mining Corp. (NYSE: NEM), one of the world’s largest gold producers, Wednesday reported that adjusted earnings in the second quarter ROSE from a year ago as lower operating costs and the impact of foreign-exchange rates more than the offset lower prices received for metals. Adjusted net income was $131 million, or 26 cents per share, compared to $101 million, or 20 cents, in the second quarter of 2014, Newmont reported after the stock market closed. The all-in sustaining cost (AISC) fell to $909 per ounce of gold compared with $1,063 per ounce in the prior-year quarter, while the copper AISC fell to $1.61 per pound compared to $3.69 per pound. The cost applicable to sales (CAS) for gold was $638 per ounce, compared with $744 per ounce in the prior-year quarter. The comparable figure for copper was $1.20 per pound, compared to $2.53 in the second quarter of 2013, Newmont said.

“Favorable oil prices and exchange rates largely offset the impacts of lower metal prices,” said Gary Goldberg, president and chief executive officer. “Based on this performance, we are improving our full-year outlook for both production and costs. “We also strengthened our portfolio with the accretive acquisition of the Cripple Creek & Victor (CC&V) mine, while also continuing to divest certain non-core assets. Further, our strong operating performance allowed us to pay down an additional $75 million in debt and return cash to shareholders.”

Gold production totaled 1.24 million ounces for the April-June period, compared to 1.22 million in the second quarter of 2014, Newmont said. Copper output rose to 41,000 metric tons from 20,000.Attributable gold production is expected to increase 3% from previous guidance to between 4.7 million and 5.1 million ounces in 2015, with the outlook for further gains to between 5.2 million and 5.5 million ounces by 2017. In 2015, the higher outlook is primarily due to the inclusion of CC&V as well as improved productivity and mill utilization at Tanami and higher production at Batu Hijau, Newmont said. The acquisition of CC&V is expected to close in early August. The company projected AISC of between $920 and $980 per ounce for this year, and CAS of between $630 and $680 per ounce.

The average net realized gold and copper prices were $1,179 per ounce and $2.41 per pound, respectively, compared with $1,283 per ounce and $3.01 per pound, respectively, in the prior-year quarter. Revenue totaled $1.9 billion, up from $1.8 billion in the second quarter of 2014, primarily due to higher copper production and sales at Batu Hijau that helped offset lower metal prices and asset sales, Newmont said. During the second quarter of 2015, Batu Hijau mined higher-grade ore and operated and shipped at full capacity. Cash flow from continuing operations was $441 million in the second quarter, up from $378 in the same period a year ago. Free cash flow was $119 million, slightly below $124 million in the prior-year quarter. Capital expenditures for the second quarter were $322 million, including $170 million of sustaining capital.

Why SEMAFO’s Weak Stock Performance Is An Opportunity In Disguise

One of my 4 West African holdings all of which are performing well financially, I could not have written a better summation and agree with this author:

http://seekingalpha.com/article/3322455-why-semafos-weak-stock-performance-is-an-opportunity-in-disguise

Summary

• SEMFF is rapidly improving its production and reducing costs, achieving more than 50% reduction in AISC last quarter. • SEMFF’s should improve its performance further as it has replaced the shell of its semi autogenous grind-ing mill at the Mana mine, which will lead to higher ore processing. • SEMFF’s Orbis acquisition has strengthened its production profile further as low all-in sustaining costs, indicating a better margin performance going forward. • SEMFF carries low leverage on its balance sheet, while its operating cash flow has improved rapidly in the past year, indicating robust fundamentals.

Gold miner SEMAFO (OTCPK:SEMFF) has lost nearly 45% of its market capitalization in the past one year on account of weak gold pricing. But, in my opinion, this massive decline in its stock price is an opportunity in dis-guise for investors since SEMAFO’s financial performance is improving at a fast clip, driven by higher production and lower all-in sustaining costs. Additionally, the company has a robust balance sheet with low leverage, which will be another positive for the stock price in the long run.

In this article, we will take a closer look at the reasons why investors should consider capitalizing on SEMAFO’s weak stock price performance in the past year by buying more shares. An improving cost and production pro-file will be a tailwind In the last reported quarter, SEMAFO’s average realized price of gold fell around 6% on an year-over-year basis. But, an 86% year-over-year growth in gold production, coupled with lower fuel prices, pos-itively impacted its financial performance. In fact, due to higher production and lower costs, SEMAFO’s revenue nearly doubled to $74 million, while adjusted earnings rose to $0.03 per share as compared to a loss of $0.04 per share in the same period last year.

Apart from a decline in fuel prices, a key factor behind the improvement in SEMAFO’s bottom line was a rapid fall in its all-in sustaining costs. In fact, the company’s all-in sustaining cost per ounce sold more than halved to $646 as compared to $1,410 last year. For 2015, SEMAFO expects its cost profile to improve further on the back of production growth and cost reductions, as shown in the chart below.

Garic

's Mini

ng Un

iverse

*this i

s not

a soli

citati

on to

buy o

r sell

secu

rities

since

Garic

is no

t regis

tered

; this i

s sim

ply pr

ovide

d for

inform

ation

al pu

rposes

.

Comp

any (

U.S. o

r CAN

)Pri

ce (U

.S.)

Enter

prise

Value

(MM)

Cash

(MM)

Debt

(MM)

All In

Cost

Reso

urces

(MM

OZ)

Produ

ction

EV

to Pr

oEV

/Res

Price

to Bo

okOF

F ATH

Off 5

2 WK

Agnic

o Eag

le (AE

M)23

.886,1

9816

613

7894

139

1,600

,000

3.52

14.45

%1.1

372

%43

%Ala

mos (

AGI)

3.32

816

403

313

1050

19.7

400,0

001.8

63.7

7%0.4

283

%70

%Arg

onau

t Gold

(AR)

0.95

107

445

883

15.5

140,0

000.7

00.6

3%0.1

591

%84

%AT

AC Re

sourc

es (AT

C)0.2

7516

190

Exp

Exp

Exp

Exp

Exp

0.34

97%

83%

B2 Go

ld (BT

G)1.1

61,3

9812

838

398

520

.952

0,000

2.44

6.08%

0.58

67%

67%

Ende

avor

Gold

(EDV)

0.36

386

3226

094

68.9

500,0

000.7

03.9

4%0.2

488

%60

%Fir

st Ma

jestic

Silve

r (AG)

3.59

417

500

13.88

395

16,20

0,000

1.74

7.15%

0.63

87%

71%

Goldc

orp (G

G)13

.2814

,031

420

3442

900

108

3,400

,000

3.75

11.81

%0.5

176

%54

%Go

ldfiel

ds (G

FI)2.9

23,7

6344

419

4410

7418

12,2

00,00

01.5

51.8

9%0.7

584

%35

%I A

m Go

ld (IA

G)1.3

829

288

963

611

1328

.479

0,000

0.34

0.94%

0.20

94%

68%

Kirkla

nd La

ke (K

GI)3.4

936

180

120

1070

4.516

0,000

2.05

7.29%

0.94

83%

37%

Lakesh

ore (L

SG)

0.897

410

7796

810

5.217

5,000

2.13

7.17%

0.82

78%

28%

Mc Ew

en M

ining

(MUX

)0.7

820

533

011

2515

145,0

001.2

81.2

4%0.5

291

%78

%Ne

w Go

ld (N

GD)

2.19

1,716

365

876

876

4560

0,000

2.60

3.47%

0.50

85%

67%

Newm

ont (N

EM)

17.8

13,77

717

7866

7399

517

45,2

00,00

02.4

17.2

0%0.8

775

%35

%Pa

n Ame

rican

Silve

r (PAA

S)6.4

474

829

265

14.25

1866

38,60

0,000

1.31

2.72%

0.49

59%

28%

Perse

us (PR

U)0.2

541

930

1100

8.420

0,000

0.18

0.44%

0.24

94%

50%

Seab

ridge

(SA)

3.55

163

250

Dev

114

Dev

Dev

0.13%

0.89

91%

69%

Sema

fo (SM

F)2.1

159

111

590

730

8.726

0,000

2.07

6.18%

0.88

85%

57%

Silve

r Cres

t (SVL

)0.7

374

3515

12.5

186

4,900

,000

1.03

2.71%

0.49

76%

74%

Silve

r Stan

dard

(SSRI)

5.58

434

295

204

14.6

1467

23,90

0,000

1.23

2.01%

0.60

85%

53%

Teren

ga (T

GZ)

0.425

121

390

1075

8.422

0,000

0.50

1.31%

0.25

86%

61%

Timmi

ns Go

ld (TM

M)0.3

2287

2510

1162

6.412

0,000

0.66

1.24%

0.21

90%

83%

Yama

na (A

UY)

2.05

3,452

360

2000

830

501,4

50,00

02.1

66.2

8%0.3

190

%77

%