Market Update

Good afternoon

I fear something might be wrong with these markets..whether it´s a US-recession coming, whether we have a huge China problem , a maniac US president, or whether some large US oil-company is going bust ( that apparently was the rumour last night in Australia ) - something is feeling very odd! And amid all this volatility - not to call it turmoil ?! - gold is steadily finding more friends against a stronger US$ - that´s unusual as well. Gold stocks as measured by the GDXJ have run 44% since the low on the 20th of Jan - not a bad effort, but that leaves another 700% to test the old highs from 2010/2011 - well, theoretically!

The PMI for services has been very weak in the States, as have been New Home Sales...recession, I can hear you coming??

Perhaps a good time to raise cash levels outside of gold? or even to switch into gold?!

Saudi´s oil minister´s comments yesterday about the oil market, and his agressive comments towards US shale producers, took any speculation about an impending production ceiling- or even cut out of the market, and sent oil into free fall again. As some analyst said about a week ago: if oil averages 35 US$ this year, sovereign wealth funds will have to sell double as many investments this year vs last year! And if that´s about right, this selling will meet markets, which are everything else but confident, further increasing the impact of heavy selling.

Still - there are always opportunities, and you might find one or two at our AUSTRALIAN RESOURCES CONFERENCE in Zurich, on the 4th of March. If you have not seen an invitation, just go on our web page and register ! 

Breaker - hmmmm...finally, he might have gotten on to something? Early indications from his potentially large project called Lake Roe indicate the presence of a large gold deposit. The latest drilling program has started 2 weeks ago, and assays will need another 2-3 weeks. Even though BRB have been a stunning performer lately ( IPO´d under much fanfare from us and others in mid 2012 at 20ct, the stock has traded as low as 2.5ct in early 2015 ), they ave not yet caught the imagination of many - and I have to say, that an investment at current levels is highly speculative. But as a holder since the IPO, we are holding out for the big one, and are praying for some luck! There are not many managers like Tom Sanders, and he would deserve to win! This anything-but-dormant exploration company is being run at 88.000 A$ Quarterly administration costs, a good part of which would be stock exchange fees - and it includes Tom´s salary!

St Barbara - came out with half-yearly yesterday - as expected, excellent result, and like Evolution, a good example of just how much money ( and free cash! ) you can actually make with a good operation, in the righjt currency! Their net debt is now down to just 285 Mill A$, and at the current gold price, it will take them just 2 years to pay it all back....The company is now looking for growth options, and one of them is the development of the sulphide resource at Simberi. Capex would be about 100 Mill US$, for production of 140.000 oz over 7 years at ASIC of around 950 US$/oz. Those parameters are not outstanding - but at a gold price of 1250 US$+, I think it´s a more than viable project - especially, as it can easily be financed from cash flow. BUT having said all these positive things - the stock has had an unbelievable run, and the EV of just over 1,1 bill A$ leaves little upside except for upside from the gold price. More interestingly perhaps, this is also a company, which very soon will look for growth and aquisitions?

Have a nice evening and enjoy the run of the gold price, which is showing me 1250 US$ as I am finishing !

Wilhelm Schröder


Schröder Equities GmbH


80538 München


Tel. +49-89-4613440-0

Fax +49-89-4613440-10




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Geschäftsführer: Wilhelm Schröder


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