iShares MSCI Global Agriculture Producers Fund (NYSE: VEGI) targets the front end of the production chain (fertilizers or agricultural materials) while excluding exposure from companies at the end of the production chain (packaging and marketing). This is a bit similar to but nowhere near identical to the Market Vectors Agribusiness ETF (NYSE: MOO).
 
iShares MSCI Global Energy Producers Fund (NYSE: FILL) tracks the MSCI ACWI Select Energy Producers Investable Market Index.  This is similar to the ProShares Ultra Oil & Gas (NYSE: DIG), but without the leverage.

iShares MSCI Global Select Metals & Mining Producers Fund (NYSE: PICK) aims to track the MSCI ACWI Select Metals & Mining Producers Ex Gold & Silver Investable Market Index. This one is not identical to but has overlaps with the SPDR S&P Metals & Mining ETF (NYSE: XME).

iShares MSCI Global Gold Miners Fund (NYSE: RING) aims to track the MSCI ACWI Select Gold Miners Investable Market Index.  We consider this an alternative to the Market Vectors Gold Miners ETF (NYSE: GDX).

iShares MSCI Global Silver Miners Fund (NYSE: SLVP) aims to track the MSCI ACWI Select Silver Miners Investable Market Index.  We would consider its an alternative to the Global X Silver Miners ETF (NYSE: SIL).

As far as why these are different from some other ‘production’ ETFs, iShares explains that these include only companies at, or near, the initial phase of production of the commodity. Investors can target the front end of the production chain instead of including the back-end of the production chain to focus on the aspects more sensitive to fluctuations in the underlying commodity price.  Companies further down the production cycle are impacted by a number of factors in addition to commodity prices.

An ETF for just about anything… now competing ETFs for many more strategies.

JON C. OGG

Silver Wheaton Corporation (NYSE: SLW) is up 6.7% at $34.07, and the 52-week trading range is $25.84 to $47.60.

Pan American Silver Corp. (NASDAQ: PAAS) is still only flat at $21.85 but it was lower before the FOMC comments today. The 52-week trading range is $19.93 to $43.06.

Goldcorp Incorporated (NYSE: GG) is up 5.2% at $46.70, and the 52-week trading range is $39.93 to $56.31.

Newmont Mining Corporation (NYSE: NEM) is up 3.4% at $59.43, and the 52-week trading range is $50.05 to $72.42.

Kinross Gold Corporation (NYSE: KGC) up over 6% at $11.23, and the 52-week trading range is $9.96 to $18.25.

Agnico-Eagle Mines Limited (NYSE: AEM) up 8% at $37.23, and the 52-week trading range is $34.36 to $76.49.

ETFs are rocking as well.  The Market Vectors Gold Miners ETF (NYSE: GDX) is up 5.3% at $54.58 against a 52-week range of $49.22 to $66.98.  Market Vectors Junior Gold Miners (NYSE: GDXJ) is up 6.5% at $28.66 against a 52-week range of $22.58 to $42.97.  The Global X Silver Miners ETF (NYSE: SIL) is up 3.9% at $23.69 and the 52-week range is $19.05 to $31.34.

The logic is simple enough… This signals extremely low interest rates and low costs of borrowing.  It also signals that investors will have to look elsewhere yet again to seek higher returns than short-term and intermediate-term Treasuries.  As this means that rates will be low in the U.S. for longer than expected, that is going to drive a weak dollar policy as long as things remain static in Europe and in other major economic zones.  That is the perfect storm for gold and silver as they are often inversely correlated to the dollar.

JON C. OGG

After taking a look at the “GLD” chart the concerns are growing.  Since its major move at the end of 2008 there had not been a single time that the SPDR Gold Trust shares had violated the key 200-day moving average.  If you look at the mining ETF via the Market Vectors Gold Miners ETF (NYSE: GDX), the gold bulls may argue that the mining sector violated the 200-day moving average on multiple occasions and still traded higher!  Some technicians may watch other metrics on the GLD for long-term trends but many will fear that this means that the monstrous run higher at a minimum cannot recover at the same pace.  Other technicians may argue that gold has peaked outright, just like Dennis Gartman has raised concern about recently.

It is at least somewhat interesting that Goldman Sachs recently lowered the ratings of AngloGold Ashanti Ltd. (NYSE: AU) as well as Randgold Resources Limited (NASDAQ: GOLD) this morning, both were downgraded to “Sell” from an already cautious “Neutral” rating. AngloGold is somehow up almost 1% at $41.52 today and Rangold is down 0.3% at $101.50.  Meanwhile, Barrick Gold Corporation (NYSE: ABX) was recently raised to “Sector Outperform” from “Sector Perform” by Scotia Capital.

What is so confusing for many gold bugs and investors alike is that the news headlines would make you think that gold has everything going for it.  Iran flexing its muscle… The Euro Zone debt crisis… The possibility that the Euro disappears or is altered… Sovereign debt credit rating downgrades… China’s central bank buying gold… Uncertainty… and more.  It is the rise of the U.S. Dollar again that is capping gold’s positive aspects.  Besides that, gold reached the point that many market participants just cannot afford to use the metal for anything now. 

If you go back to the “GLD” as the measurement for most spot gold investors today, that would be $157.36 as to where the 200-day moving average is now versus $154.90 after a 0.2% drop today.  The “GLD” chart below from stockcharts.com shows a 3-year history for our readers.

JON C. OGG

A snapshot from Kitco shows that spot gold is down $33.90 or -1.95% at $1709.20.  The SPDR Gold Shares (NYSE: GLD) is trading down 1.9% at $166.20 so far today.  In dollar terms, this has gold challenging a floor put in just two days ago but the stock on a longer-term basis of the last three months shows that gold could just as easily rise or fall from here in the coming days. The stockcharts.com chart on the SPDR Gold (see below) shows a different story where the 50-day moving average is becoming a magnet.  For the GLD at $166.20, the 50-day moving average is $165.97.  Its key 200-day moving average is all the was down at $156.71.

The move today, along with the weak stock market today, is sending shares of the Market Vectors Gold Miners ETF (NYSE: GDX) down by 2.3% at $57.58.  As you might expect, the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) is more volatile and more leveraged since it deals with junior miners and it is down 4.3% at $28.59.

The Gabelli Global Gold, Natural Resources & Income Trust (NYSE: GGN) is down only 1.3% at $15.95 on the day.

Gold continues to trade with an identity crisis.  The dollar has become the safe haven now that gold has pulled back and likely because it is up so much from a year ago.  Gold could have traded even worse today and perhaps that 50-day moving average in the GLD is helping to keep it from getting much worse.

JON C. OGG

Northern Dynasty was named in April as a top undiscovered pick by Midas Fund manager Tom Winmill, provided an investor can wait until 2016 for the investment to pay off.  That’s no less true today, even if the price has come down significantly.

The company fully expects further legal and legislative challenges, including a ballot measure in the local taxing jurisdiction that would prohibit all large-scale development and is specifically aimed at Pebble.

A pre-feasibility study for the project is expected next year, but the current estimate for the size of the resource is 350,000 tons of copper, 12,000 tons of molybdenum, and 600,000 ounces of gold. Anglo American has committed $1.5 billion to the initial stages of the project, of which about $350 million  has been spent so far.

The total development cost could go much higher though. A joint venture between Barrick Gold Corp. (NYSE: ABX) and Novagold Resources Inc. (AMEX: NG) has raised the development cost estimate for its Donlin Creek project in Alaska from $4.5 billion to $7 billion. A total of 38 million ounces of gold has already been identified at the Donlin Creek project, but that didn’t keep investor George Soros from dumping all his shares earlier this year.

Junior miners like Northern Dynasty and Novagold have no choice but to form partnerships with the big miners on projects like Donlin Creek or Pebble because they simply can’t raise enough capital on their own. Yet a gold mine like Donlin Creek could be worth the billions it will cost, and a project like Pebble, which is primarily copper, is far more subject to commodity price swings and thus more sensitive to cost increases.

Northern Dynasty shares closed last night at $6.84, up about 6% on the day, in a 52-week range of $4.87-$21.76. Novagold closed at $7.02, up about 2.6% on the day, in a 52-week range of $5.93-$16.90. Shares in both are down about -21% over the past 12 months. The Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) closed at $29.54 yesterday, in a 52-week range of $25.22-$44.86. The Market Vectors Gold Miners ETF (NYSE: GDX) closed at $56.27, in a 52-week range of $50.42-$66.98. Neither Northern Dynasty nor Novagold is included in either fund.

The SPDR Gold Trust (NYSE: GLD) closed at $160.49 last night, up about 0.65% on the day, in a 52-week range of $127.80-$185.85. Shares are trading up another 0.85% in the pre-market this morning.

Paul Ausick

Copper prices have dropped by more than $1/pound from around $4.50/pound at the beginning of August. CME raised the copper margin by 18% on September 24th, so this is the second rise in just over two weeks. At the same time as the last rise, CME also raised the margin requirements on gold by 21% and silver by 16%. CME’s rationale for raising margin requirements is based on what it calls a “normal review of market volatility to ensure adequate collateral coverage.”

CME’s move has probably played a part in lifting copper mining stocks Freeport-McMoran Copper & Gold (NYSE: FCX) and Southern Copper (NYSE: SCCO), as well as gold miners Newmont Mining (NYSE: NEM) and Barrick Gold (NYSE: ABX), and silver miner Silver Wheaton (NYSE: SLW).

If copper margins are rising today, can requirements on gold and silver be far behind? The margin requirement for a speculative trader to open a position on a 100-ounce gold contract is $11,475. At today’s price of around $1,648/ounce, that is just 7% of the value of the contract.

The margin requirement for a speculative 5,000-ounce silver contract is $24,875. At today’s silver price of nearly $32/ounce, the value of a contract is $160,000. That calculates to a margin requirement of about 15.5%.

The rise in margin requirements last month put a damper on prices for all three of the metals. That is not happening with copper today, as the price is up nearly 5%. The news that the European Central Bank is offering essentially unlimited additional emergency loans to eurozone banks is putting some air under all markets today, and the commodities markets are not excepted.

Still, there is a nearly certain chance that CME will lift its gold and silver margin requirements again. The margin on gold contracts seems particularly out of kilter given the 15% requirement for both silver and copper. But if today’s market reaction is any indication, margin requirement increases do not play as big a role in metals trading as might be thought.

Freeport’s shares are up about 1.5%, at $34.97, in a 52-week range of $28.85 – $61.35. Southern Copper’s shares are up nearly 2.5%, at $27.04, in a 52-week range of $22.58 – $50.35. The iPath DJ-UBS Copper Total Return Subindex ETN (NYSE: JJC) is up nearly 3%, at $41.95, in a 52-week range of $38.99 – $61.69.

Gold miner Newmont’s shares are up about 0.5%, at $63.33, in a 52-week range of $50.05 – $71.25 and Barrick’s shares are up about 1.5%, at $46.98, in a 52-week range of $42.50 – $55.95. The SPDR Gold Trust (NYSE: GLD) is up about 0.2%, at $159.74, in a 52-week range of $127.80-$185.85. The Market Vectors Gold Miners ETF (NYSE: GDX) is up about 0.7%, at $55.28, in a 52-week range of $50.42 – $66.98. The Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) is up more than 3.5%, at $29.21, in a 52-week range of $25.22 – $44.86.

Silver Wheaton shares are up about 5%, at $30.81, in a 52-week range of $25.35 – $47.60. The iShares Silver Trust (NYSE: SLV) is up more than 3.5%, at $30.75, in a 52-week range of $21.97 – $48.35. The Global X Silver Minters ETF (NYSE: SIL) is up nearly 4.5%, at $21.93, in a 52-week range of $18.74 – $31.34.

Paul Ausick

Other gainers early this morning are Yahoo! Inc. (NASDAQ: YHOO), Netflix Inc. (NASDAQ: NFLX), Focus Media Holding Ltd. (NASDAQ: FMCN), Northern Dynasty Minerals Ltd. (AMEX: NAK), and Newmont Mining Corp. (NYSE: NEM).

Yahoo Inc. (NASDAQ: YHOO) is getting a boost from statements from China’s Jack Ma, founder of the Alibaba e-commerce site. Yahoo owns about 40% of Alibaba and Ma has made several offers to buy back that stake, all of which have been rebuffed by Yahoo. Alibaba would acquire all of Yahoo if Ma has his way. Yahoo’s shares opened up 4%, at $13.70, in a 52-week range of $11.09-$18.84. Volume is fairly heavy.

Netflix Inc. (NASDAQ: NFLX) opened higher this morning as well, following a Morgan Stanley analyst’s ‘tactical Buy’ on Netflix shares. The shares were already rated at long-term ‘Overweight’, but the recent dumping of Netflix shares has strengthened the stock’s valuation. The stock’s forward P/E is 17.91, much lower than its trailing P/E of 29.63, and the price/book ratio is 17.82. Not exactly bargain rates, but getting there if investors believe that Netflix’s streaming plan is going to be a winner. Shares opened up nearly 2%, and are trading up about 2.7% a half-hour later, at $116.34, in a 52-week range of $107.63-$304.79. Volume is heavy.

Focus Media Holding Ltd. (NASDAQ: FMCN) reaffirmed its third-quarter guidance and increased its share buyback program from $450 million to $650 million through December 2013. The Chinese media company guided net revenues at $175-$177 million and non-GAAP net income at $68-$70 million. The stock opened up about 3.5% and is trading now at $18.21, up more than 8%, in a 52-week range of $16.54-$37.58. Volume is very heavy.

Newmont Mining Corp. (NYSE: NEM) opened about 2.3% higher this morning on higher gold prices. Gold is up more than $35/ounce, to $1,656/ounce. One analyst thinks that gold prices have hit bottom and are on their way back up, with large miners like Newmont best positioned to benefit. Newmont shares are now trading up nearly 4%, at $65.45, in a 52-week range of $50.05-$71.25. Volume is about normal.

Northern Dynasty Minerals Ltd. (AMEX: NAK) opened nearly flat this morning, but has since risen by about 1.5%. Another gold miner, although a much more prospective stock than Newmont, that is getting a boost from rising gold prices. The stock is trading at $5.44, after tumbling to a new 52-week low this morning of $5.34. The 52-week high is $21.76.

Just for comparison, the Market Vectors Gold Miners ETF (NYSE: GDX) is up about 1.8%, at $56.19, in a 52-week range of $51.10-$66.98. The Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) is up about 1.7%, at $28.62, in a 52-week range of $27.44-$44.86. The SPDR Gold Trust (NYSE: GLD) is up about 1.8% as well, to $160.86, in a 52-week range of $127.80-$185.85.

Paul Ausick

Spot gold was down almost $60 around $1,600 on last look.  The investing community is still using the highly liquid SPDR Gold Shares (NYSE: GLD) as the benchmark for tracking gold and it is down 1.9% at $156.75 on more than 37 million shares with more than 30 minutes until the NYSE closing bell.

What will seem counter-intuitive is that the liquid ETF of Market Vectors Gold Miners ETF (NYSE: GDX) is up on the day.  The solid and established gold mining stocks are somewhat following stocks rather than following the price of gold as that ETF is up just over 1% at $57.00.  The speculative players are following the move of the metal: Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) is down 2.2% at $29.05 on more than 6 million shares.

This morning came word that the esteemed market pundit Marc Faber could see gold going back down to $1,100.00.  Regardless of who said what, you might as well expect to hear nothing but “I Told Ya’ So” calls from those saying gold was a bubble.  The price did reach silly levels, but we felt that way after about $1,600 and $1,700 on the way up.  Gold started getting so high that we even started worrying about covering it due to the high possibility of losses for readers chasing metals regardless of what was written.  It was like chasing internet stocks in January of 2000.  Regardless, Zacks issued a piece just on Friday showing the best rated precious metals mutual funds to invest in for uncertain times.

When is a bubble a confirmed bubble?  When investors lose money far faster during a price drop than they could have ever made on the way up.  Also when they can’t make up money averaging in.  It was just at the start of September that gold hit $1,900 and it hardly took three weeks to bust $1,600…

If you think this drop has been severe in gold, look at silver:  NY Silver was above $40 per ounce just last week.  We broke $30 today, even if silver is back at $30.08 today.  iShares Silver Trust (NYSE: SLV) is down 1.5% at $29.52 late in the day and was as high as $39.64 just as recently as September 21.  They call it The Devil’s Metal for a reason. 

Gold is down more than 16% from the highs in early September, but silver has lost close to 25% of its value just last week.  Honestly, both feel like the Devil’s metals now.

Here is something else that may seem counterintuitive… Tiffany & Co. (NYSE: TIF) is down 1.3% at $69.62.  Doesn’t lower gold and silver mean higher realized margins?  Apparently not.  Tiffany certainly owns gold and silver at far lower prices, but this move may have really softened the luxury jeweler’s pricing power.

Forget about us for a second.  Tell us what you think… $40+ silver to $30 silver and $1900+ gold to $1600 gold…  Share  your opinion in our confidential poll that will require a whole 20 seconds of your time:

JON C. OGG

Investors should use these more for a review rather than any quick trading ideas because anything tied to gold and silver this Friday is taking it on the chin.

Zacks has a report noting that these funds “can be a source of comfort to investors when markets are heading south and the economy is passing through choppy weather.”  The aim is for higher consistent returns that outperform stocks.  These act as diversification and as protection against inflation.  Zacks has offered a list of its top 5 rated precious metals funds this morning, all of which have the Zacks #1 Rank (Strong Buy).

U.S. Global Investors Gold and Precious Metals (USERX) invests in companies whose primary operations are related to gold and other precious metals. The precious metals mutual fund has a ten year annualized return of 26.34%. The precious metals mutual fund has a minimum initial investment of $5,000 and an expense ratio of 1.80% compared to a category average of 1.40%.  After looking elsewhere, the three month return on Google was noted as +10.2% and the year-to-date return was -6.5%.  Its top holding was listed as Kinross Gold Corporation (NYSE: KGC) at almost 7.5% of the fund.

OCM Gold (OCMGX) invests in companies in the gold mining industry and may also invest in precious metals producers. The precious metals fund has a five year annualized return of 15.52%.  Google listed its 3 month return as 17.8% and a year-to-date return of almost 6%.  More than 12% of its assets were in Goldcorp, Inc. (NYSE: GG).

Fidelity Select Gold (FSAGX) invests in companies whose principal operations are related to gold, and it also invests in gold bullion and coins. Up to 25% of the fund’s assets may be invested in gold and other precious metals through a wholly-owned subsidiary. Zacks noted a return of 20.09% in the last one year period.  Google noted a return of +14.3% in the last three months and a return of +3.3% year-to-date.  The top three holdings are each 10% or more of the weighting and they are in Barrick Gold Corporation (NYSE: ABX), Goldcorp, Inc. (NYSE: GG), and Newcrest Mining Limited (NYSE: NCM).

GAMCO Gold AAA (GOLDX) invests at least 80% of its assets in companies which engage in gold-related activities, but a large portion of its assets are in foreign securities.  Zacks noted a three year annualized return of 20.68%.  Google noted a 3-month return of +17.7% and a year-to-date return of almost +4%.  The top two assets in the fund account for more than 23% of the entire fund and they are Randgold Resources, Ltd. ADR (NASDAQ: GOLD) and Newcrest Mining Limited (NYSE: NCM).

Unfortunately for the report, this is coming on a morning that gold and silver are getting hammered and are bring down anything and everything tied to them.  Here are all of Zacks #1 Rank funds.

JON C. OGG

The other side of the mining coin is a bit more positive though. Gold miners Newmont Mining Corp. (NYSE: NEM), Barrick Gold Corp. (NYSE: ABX), and Yamana Gold Inc. (NYSE: AUY) have seen their share price rises outstrip bullion price rises for the first time in at least a year. The SPDR Gold Trust (NYSE: GLD) has lost about -5% of its value in the last month, while the gold miners are all up more than 1% and Newmont is up nearly 8%. The Market Vectors Gold Miners ETF (NYSE: GDX) is up about 1% in the past month, but the Market Vectors Junior Gold Miners ETF is down close to -5%.

In silver, the story more closely follows the copper downturn. Silver Wheaton Corp. (NYSE: SLW) is up about 1% in the last month, while the iShares Silver Trust (NYSE: SLV) is down about -9% and the Global X Silver Miners ETF (NYSE: SIL) is off nearly -5%.

Copper prices have been trending downward more strongly for about the past six weeks. Since posting a high above $4.60/pound in February, copper now fetches about $3.55/pound. Weaker economic forecasts for the developed countries have caused some of the decline, but that has been more gradual. The 600-pound gorilla is China, where Rio’s CEO said that there is evidence that the country is de-stocking as the Chinese government tightens lending in an effort to cool inflation. The side-effect of that tightening is that growth is also slowed, reducing demand for copper and iron ore.

China’s de-stocking has been developing gradually over the past several months, but Albanese’s admission is the first statement from a major player in the mining sector that the sharp upturn in commodity prices has now turned south. The question, of course, is when it will turn back north again.

Commodity prices on everything from food to oil have been falling as demand expectations are adjusted to account for nearly universal slow growth. The key for copper and iron ore producers is China. Rio’s CEO made a special note of saying that the company’s largest Chinese customers “are not showing any sign of slowdown.” But, remember, he also said that there is evidence of de-stocking. Which is it?

The signals all point to a Chinese slowdown in both manufacturing and construction. But the copper and iron ore miners are hopeful that the low price for copper will spur a new round of buying. This could be a case of finding what you’re looking for in the tea leaves.

Copper is trading down almost -6% today, and gold is off more than -2%, at around $1,765 about an hour and a half before markets open this morning. Rio’s pre-market price is now $47.96, about -6.5% lower than the new 52-week low the stock posted yesterday. BHP is also below its 52-week low, at $68.56 in the pre-market, down about -4.75% from yesterday’s close. Vale is down about -3.5%, at $24.41, just pennies above its 52-week low of $24.08. And Freeport-McMoran is down more than -4% from yesterday’s close, at $34.10, well below the new 52-week low of $35.56 that the stock posted yesterday. Southern Copper is down about -1.5% in the pre-market, at $27.50, just pennies above its new 52-week low set yesterday.

Gold miners are moving down this morning’s pre-market as well, probably following the downward move in gold. Newmont is off about -2.5%, at $66.00, in a 52-week range of $50.05-$71.25. Barrick is off nearly -3%, at $51.75, in a 52-week range of $42.50-$55.95. Yamana is off nearly -3.75%, at $15.79, in a 52-week range of $10.41-$17.47. And it’s interesting that these gold miners’ shares traded quite near 52-week highs yesterday.

Paul Ausick