Monthly Archives for December 2018

Making sense of Chinese gold demand

News - Patrick - December 28, 2018

There is no doubt at all that Chinese demand for physical gold is having, and will continue to have, a huge impact on global gold flows and on the supply/demand balance, but making sense of the various figures quoted by the media is difficult and often counter-intuitive.

For the serious follower of gold, perhaps there are two statistical analysts whose handles on Chinese data should be an absolute must to follow as they look far deeper into the statistics that are available to view – the Hong Kong net gold import figures into mainland China and the withdrawals from the Shanghai Gold Exchange (SGE) – the true indicator of Chinese physical gold demand. SGE figures are published weekly in Chinese so tend to be ignored by most of the global media while Hong Kong gold import/export figures are released monthly (in English) and are seized upon, misleadingly of late, by the press as a proxy for what is actually going on in terms of total Chinese gold demand.

 Two of the best statistical analysts for understanding what is really going on in Chinese gold demand are Netherlands-based Koos Jansen, who has his own website ingoldwetrust.ch, but nowadays writes mostly for Singapore gold dealer bullionstar.com, and Australia’s chart king, Nick Laird, who again publishes his data on his own site sharelynx.com, and many significant gold-related ones on goldbroker.com. Do take a look at these sites for an understanding of what is actually happening now in terms of Chinese gold demand, as ever since the second quarter of the current year Hong Kong import/export statistics have become further removed from being a true indicator of Chinese demand and imports. This is because the Middle Kingdom has hugely eased the path for gold to be imported into China through other ports of entry which are now handling the major part of the country’s gold coming in from abroad.

This becomes hugely apparent if one views Nick Laird’s latest chart showing Hong Kong net gold exports to China, SGE withdrawals and the ratio between the two. As can be seen from the chart (shown below) from the period between mid 2011 up to April of the current year there was a strong correlation between the two main sets of statistics, but for the past four months the two sets of figures have drifted hugely apart as the new gold import routes have opened up. As the chart showing the correlation between the two shows, Hong Kong net gold export figures into the Chinese mainland are currently running at only around 15% of SGE withdrawals and falling – yet still some of the mainstream media has taken these falling Hong Kong figures as a direct indicator (and a very misleading one at that) of an enormous drop in Chinese gold demand.

If one looks at SGE withdrawals on a month by month basis, it is also true that these do show a mid-year decline in Chinese demand – but not by nearly as much as a reliance on the Hong Kong figures would suggest – with a climb back to around 2013 demand levels in August, and from data picked up by Koos Jansen (and no doubt by Nick Laird too) this demand has been accelerating. For example the latest available weekly withdrawal figure from the SGE was a very large 44 tonnes, following on from an even larger 50 tonnes the previous week. These figures were immediately ahead of China’s Golden Week holiday so will probably have been distorted higher but taken with the prior weekly figures the indication is that total Chinese SGE withdrawals during September will have been around 190 tonnes plus. This, of course, equates to an annual rate of over 2 200 tonnes. This annual level will not be achieved in 2014 due to the weaker mid-year demand, but is an indicator that full year Chinese demand remains at a very high level indeed and the gloomy mainstream media talk of a 40%-50% downturn this year should be taken as absolute rubbish. At current demand levels – and the final quarter of the year tends to be strong in China – we are looking at perhaps as little as a 10%-15% decline from the huge 2013 record.

But how much should be read into these figures in terms of likely gold prices ahead? In 2013, for example, the gold price fell back sharply despite the huge demand from the East and Middle East. This was primarily because of the very large outflows from the gold ETFs which primarily took place in the main gold price-setting markets of the West. This year Eastern demand may have fallen back a little, but has picked up strongly in the past few weeks, and although we have seen some gold liquidations out of the major ETFs in the West this has been nowhere near on the scale we saw a year ago – indeed in some months the ETFs have actually seen small inflows.

With the latest Reuters reports of rising gold purchasing in China and India again – the two biggest global markets for gold – and increasing gold premiums in both countries over and above the London price – we could well be poised for a significant turning point in the gold price based on fundamentals at least. By all accounts gold mine production is peaking while demand still continues to rise and gold supply, which is calculated by precious metals analysts Metals Focus as having been in deficit last year, could be heading that way again this year too.

There is considerable geopolitical turmoil in the world which has to boost safe haven demand, at least in some areas and it is becoming increasingly apparent that the global economy is not recovering as fast as many had hoped. The US Fed is getting nervous about the idea of allowing interest rates to rise, while the Eurozone is looking at more Quantitative Easing.

All these factors might be seen as positive for gold, and all things being equal would probably lead to a sharp rise in the gold price in the months ahead. But then all things are not equal. The western commodity markets are hugely distorted by the big money playing the futures market with amounts of paper gold enormously in excess of physical gold availability perhaps by as much as a factor of 100 or more. Should market participants start demanding settlement in physical gold there would be a massive increase in gold price and undoubtedly some of the big short position holders would be bankrupted. But, unfortunately for the pro-gold sector, this seems very unlikely to happen.

However there has also been a move in the East to set up new international commodity exchanges which will deal only in physical metal – notably in Shanghai with the international arm of the Shanghai Gold Exchange (SGEI) located in the Shanghai Free Trade Zone, and in Singapore with the Singapore Precious Metals Exchange (SGPMX). There are also reports that CME Group will launch a physically deliverable contract in Hong Kong later this year and in the Middle East, Dubai is said to be preparing to launch a physical contract too. The effect of these new trading options will be limited initially, but as they gain traction and physical gold continues to move from West to East, which shows no signs of coming to an end, then there could be some dramatic gold price moves ahead in the medium to long term.

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Multi-mine future takes shapes for GoGold

News - Patrick - December 26, 2018

Multi-mine future takes shapes for GoGold

If GoGold (TSX:GGD) keeps to its aggressive – and so far pretty accurate – mine-building plans in Mexico by the end of next year there will be a new gold-silver junior producing, on an annualized basis, nearly 2-million ounces silver-equivalent from one mining project and 56,000 ounces gold from another.

GoGold has recently said that it is on track for full production later this year at its Parral silver-gold tailings project – where it is reprocessing tailings that hold some 35 million ounces silver equivalent in resources – and that numerous aspects of the project from recovery, cyanide consumption to grade reconciliation were turning out, at least so far, better than expected. Here, at full production, GoGold expects to produce 1.2 million ounces silver and 11,000 ounces gold a year, on average, over a 12-year minelife at, net of gold, $6.48/oz Ag in cash costs. By the looks of things so far, it may beat that score.

Multi-mine future takes shapes for GoGold

To this looming production, GoGold has outlined the potential of the Santa Gertrudis project. Recall that GoGold picked this up earlier this year after a takeover of Animas Resources. At Santa Gertrudis – a past producer that failed amidst low gold prices in the early 2000s (i.e. ~$300/oz Au) – GoGold expects yearly production of 56,000 ounces gold over a 12 year minelife. This, like Parral, will be a heap leach operation, but involve actual mining rather than re-mining, with total costs projected @ $622/oz gold. The operation, as set out in GoGold’s preliminary economic assessment, an outline of which the junior released today, is built around multiple open pits that hold about 22 million tonnes in indicated resources @ 1.06 g/t Au in oxides. Assuming $1,200/oz gold GoGold estimated a 53.5% internal rate of return (IRR), after tax, though it headlined 57.8% IRR at $1,250/oz gold, which not so long ago might have been deemed conservative. Not today with gold dipping under that count.

At any rate, the economics as set out are not pie-in-the-sky. The project appears to hold up at much lower gold prices as well, with IRR dipping to a still strong 34 percent at $1,000/oz gold. All this asssumes a strip ratio of about 6:1 and a capital cost of $32 million.

Multi-mine future takes shapes for GoGold

GoGold has set mid-2015 for production at Santa Gertrudis. Couglan told Mineweb he expects permitting on the brownfield’s project to take three months when it starts. If it holds close to that forecast then next year there will be a serious silver-gold junior/intermediate to contend with among gold-silver producers with important Mexican operations, joining the ranks of Argonaut Gold, AuRico, Fortuna Silver, Endeavour Silver and Gold Resource and others. If the plans hold true for GoGold, or at least near to, I would expect GoGold garners quite a bit more attention from the market. GoGold is not exactly flying below the radar – it’s marketcap is over $200 million which for a pre-commercial/ramping up gold producer can’t be sniffed at this days – but then again it will certainly gain greater scrutiny – and possibly respect – with two modest-sized silver and gold mines in production with very decent mine life (for a junior) and low costs on the horizon assuming a plus-$1,000/oz gold world.

Parral’s timeline, for the record, has come close to company projections. Back in mid 2013 GoGold co-founder and President and CEO Terence Coughlan told Mineweb to expect initial production in early 2014 after it received financing from Red Kite and CAT to build the mine. It would, in fact, come a bit later – June – so not quite early 2014 but very close nonetheless. It’s impossible to say if the same fairly accurate scheduling will hold true at Santa Gertrudis, but it can be said Coughlan and GoGold’s other co-founder, Brad Langille, are pretty steady hands at Mexico mining. They have been key backers of several other mining endeavours in Mexico that have sold for substantial sums over the years, including Gammon Gold, Nayarit Gold and Mexgold.

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Cloud vs. On-Premise: Which Is Right for Me?

Tech & Science - Patrick - December 26, 2018

Cloud vs. On-Premise

Cloud vs. On-Premise“Should I move my business to the cloud?” is a question many business owners, executives and staff are asking themselves in today’s age. The truth is there are many advantages to doing so, but it may not be the right choice for every business. There isn’t a right or wrong answer, but I am here to provide you information needed to make an informed decision.

First, let’s talk about the benefits of moving your business to the cloud. With cloud services, you will have lower capital expenses than you would if you were investing in new on-premise infrastructure. You are not purchasing hardware, which often times can cost hundreds of thousands of dollars up-front. Typically, cloud services operate on a “pay-per-use” model, and are very scalable up or down, which is great for companies with fast growth, or even companies that decide to reduce their footprint. Your potential for downtime with cloud services is significantly reduced because equipment is typically hosted in a telco-grade co-location or data center with significant power backup and redundant network connections. With cloud services, you also have the benefit of your provider doing data backups for you.

In addition, businesses (especially SMBs), may also want to invest in cloud services if they have the lack of technical resources on-site to build or maintain the technical infrastructure. Moving businesses to the cloud puts the responsibility on the service provider to make sure systems are updated with proper security patches and software updates, allowing your internal staff to focus on one thing: your core business.

Cloud vs. On-Premise

Moving your business to the cloud may seem very attractive, but the decision should go far beyond costs. If you are an organization that has strict compliance regulations, keep in mind that third-parties will now be in control of your confidential data. If you are an organization that handles credit card information, it is important to ensure that the cloud provider is compliant with all PCI standards. If you have complex systems, like a home-grown billing system for example, integration with a cloud based provider could prove to be costly and time consuming. If you are a business that relies on a 99.99% uptime, it’s important to calculate your downtime cost per hour when evaluating your decision.

Moving your business to the cloud may not be the right decision for your business, and an on-premise infrastructure may be more beneficial. For example, if you have large capacity file shares, or operations that use significant Cloud vs. On-Premisebandwidth, on-premise infrastructure may be a better solution. Businesses that do not have sufficient bandwidth to the Internet to support cloud services will either need to upgrade bandwidth or keep services on-site.

Finally, when considering moving your business to the cloud or keeping it on-premise, keep in mind the “5 year rule”. Organizations are typically replacing on-premise equipment every 5 years. This is a hidden cost that is not often considered in these decisions because it is not an immediate concern. Looking at Total Cost of Ownership is a better way to evaluate this decision, as it will include upgrade costs, recurring monthly costs, CAPEX costs, and puts it all into perspective.

To wrap it up, there isn’t a right or wrong decision. Whatever you decide, it’s most important to make an informed decision on what is right for you business today and moving forward into the future.

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Things to Do in South Padre Island

Travel - Patrick - December 24, 2018

Things to Do in South Padre Island

South Padre Island and spring breakers are inextricably linked. However, the Texas hot spot has plenty of must-see attractions that lure travelers year-round to its picture-perfect beaches, ecological sites and water-centric establishments.

Hit the Beach

Beaches in South Padre Island are among the best in the United States. Stretching 34 miles, they’re rimmed by the Gulf of Mexico on the east and Laguna Madre Bay on the west. Amidst the sand, sun-seekers work on tans as well as check out waterfront restaurants and shops. On the north end, the beachfront remains largely undeveloped, making it a great locale for anyone looking to escape the mayhem. Wherever you settle in, expect to be tempted by activities such as surfing, dolphin watching, scuba diving and windsurfing.

Things to Do in South Padre Island

Gladys Porter Zoo

This area zoo is a relaxing oasis set amidst 26 tropical plant-laden acres where 225 species of flora flourish. Showcasing more than 1,600 animals (and 377 species), the zoo has seen success breeding endangered wildlife. Among the most popular attractions is its Tropical America exhibition where Galapagos tortoises, Caribbean flamingos, spider monkeys and Cuban crocodiles elicit amazement from visitors. The Africa exhibit, which is loaded with zebras, lions, chimps and white rhinos, is a crowd-pleaser as well.

Gladys Porter Zoo
500 Ringgold St.
Brownsville, TX
(956) 546-7187

Schlitterbahn Beach Waterpark

Although it’s unlikely you’ll get sick of the sand, this action-packed water park makes a good case for a detour. Interconnected waterways, rides and slides—not to mention a 5-story “sandcastle,” uphill water coaster and surf waves—give families loads to do. The park also has direct beach access to the Gulf of Mexico. Upping the ante further, there’s a swim-up bar, hot tub and wading pool. On-site dining means you can make a day of it.

33261 State Park Road 100
South Padre Island, TX
(956) 772-7873

Things to Do in South Padre Island

Tip Some Back

It’s practically a crime to come to South Padre Island without sipping a cocktail or two or three. Coconuts Bar & Grill is the quintessential place to hit the sauce, just be prepared for a raucous scene. Belly up and dive into fried grouper, jerk chicken and peel and eat shrimp. Wave runner and parasailing rentals are offered on-site.

2301 Laguna Dr.
South Padre Island, TX
(956) 761-4218

Learn About Sea Turtles

Sea Turtle Rescue is an enjoyable (and educational) destination where visitors can learn about marine conservation, sea turtle rehabilitation and marine turtle life worldwide. A range of species is on display, from flatback to Pacific black and loggerhead species. Experts give talks and guests can view feedings. Those who get attached to the creatures can consider adopting a resident sea turtle.

6617 South Padre Island Blvd.
South Padre Island, TX
(956) 761-4511

Things to Do in South Padre Island

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Things to Do in Ireland With Kids

Travel - Patrick - December 23, 2018

Things to Do in Ireland With Kids

The beauty of Ireland and its rich folkloric history is well documented, but many people are unaware of the fun and adventure that is available for kids and entire families on vacation. Ireland has taken an impressive step to combine exciting outdoor sports and activities with educational content for kids of all ages, providing a fun time for all and plenty to think about afterward.

Castle Archdale Country Park

Castle Archdale Country Park is located ten miles north west of Enniskillen and stretches along Lower Lough Erne for about 230 acres. The park is part of the Castle Archdale Caravan Park and Camping Site, which hosts carnivals, festivals and activities for all ages. The Country Park contains monastery sites, a deer enclosure, ponds, a wildflower meadow, trails and butterfly gardens. Kids and adults enjoy bicycling, hiking, boating, and pony trekking. The park also contains a museum and visitor center with exhibits and information about the historic and ecological nature of the site. The park is open to the public everyday from 9 a.m. For more information call +44 28 68621588, or go to www.fundays.ie.

Things to Do in Ireland With Kids

Kart City

Kart City is a sports activity facility established in 1993 in Dublin that offers fueled kart racing, urban paintball, a large hobby shop called BoyZ Toys for model cars and vehicle enthusiasts and a diner. Kart racing is available on their junior track for kids ages six and up and on their two pro tracks for people ages 16 and up. The facility has six race types to choose from: Arrive and Drive, Mini Grand Prix, Mini Enduro, Kids Party Special, Full Grand Prix and Endurance Race Meet. Upon signing up, drivers are fitted with gloves, helmet and a racing suit. The park is open to the public Tuesday through Friday from 12 p.m. and weekends from 10 a.m. Go to www.kartcity.net for more information and pricing, or call 01 842 6322.

Things to Do in Ireland With Kids

Dublin Zoo

The Dublin Zoo is an all-around adventure center for kids and families. The zoo has animals ranging from Asian elephants to zebras, fantastic grounds for kids to explore, an African swamp and educational programs for tourists and entire classrooms. Zookeepers give daily scheduled presentations on animals such as orangutans, lemurs, penguins, giraffes and reptiles and offer additional lectures and talks on Sumatran tigers, elephants and chimpanzees. The zoo hosts birthday parties and promotes its own Adopt An Animal program. The zoo is open to the public year round from 9:30 a.m. More information is available at www.dublinzoo.ie, or call 353 (0) 1 474 8900.

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