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Agnico Eagle Mines Limited: A Fast-Growing Gold Mining Company We Shouldn’t Ignore

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There is a chance that you don’t know Agnico Eagle, one of the most promising mining companies in the world. It has been around longer than many, yet it has remained partially in the shadows.

Truth be told, Agnico Eagle Mines Limited has brought attention to its operations recently due to the fast-growing numbers that the company is enjoying. In fact, Agnico Eagle reported US$1,896.8 million in revenue by the end of 2014, representing a whooping 15.8 percent increase.

For this and other reasons, paying more attention to this Canadian mining colossus would be a good idea for investors thinking about the future.

A Decades-Old Gold Mining Company

It’s true that Agnico Eagle Mines Limited isn’t a new player. In 1953, Cobalt Consolidated Mining was born in Canada as a merger of five different mining companies that were facing important challenges. Four years after that, the group decided to change its name to Agnico Mines.

Again, six years later, Agnico Mines merged with Eagle Mines Ltd, a company that was mostly dedicated to gold exploration with modest success. This merger allowed the growing company to fruitfully develop projects based on the yellow metal, which can supply the ever growing technology sector along with selling to gold bullion refiners sectors. A decade later, Agnico Eagle would acquire Dumagami Mines Limited’s assets, including the mine that is now called LaRonde mine, which is currently the company’s main operation.

During the 90s and 00s, Agnico Eagle continued its expansion steadily, acquiring operations in Canada, Mexico, and Finland. Other remarkable acquisitions by the company were the Meadowbank gold project, the Meliadine property, and Rubicon Minerals’ participation.

Active Mining Operations

Nowadays, Agnico Eagle has remarkable mining ongoing operations with no cease at sight. The magnitude of these greatly varies, with LaRonde mine being the biggest one for the company and at the same time, the deepest mine in America.

Now, let’s get into the details.

LaRonde: This underground mine has an estimated life from 1988 to 2024, reporting productive numbers around 305,788 ounces of gold, 988,000 of silver, 4,687 tonnes of zinc, and 4,416 of copper in 2016.

Lapa: A considerable smaller underground mine, it’s located near to LaRonde site. This operation has an estimated life from 2009 to 2017, reporting a production of 73,930 ounces of gold during 2016.

Goldex: In the same region as the previous two, the Goldex operation consists in a multipurpose underground mine. While Agnico Eagle is the operation’s owner, the national government joined the activities to progressively restore the Manitou mine tailing site. Its estimated life is between 2013 and 2025 and 2016 operations produced 120,704 ounces of gold.

Meadowbank: This open pit mine is expected to complete its operative life by 2018 while it produced 312,214 ounces of gold and 221,000 of silver in 2016.

Pinos Altos: Outside Canada, we have the Pinos Altos mine in Mexico, with an estimated life between 2009 and 2023. In 2016, it produced 240,068 ounces of gold and 2.7 million ounces of silver.

La India: Also in Mexico, La India mining operation produced 115,162 ounces of gold and 486,000 of silver in 2016. This open pit mine is expected to be fully operative until 2022.

Kittila: The Kittila mine is the only Agnico Eagle operation outside America. This mine is located in Northern Finland and its one of the largest gold deposits in Europe. It produced 202,508 ounces of gold in 2016 and the estimated life is between 2009 and 2034.

The Volcker Rule and its Effects on the Precious Metal Industry

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Before moving on into the topic of how the Volcker rule affects the precious metal industry, it is crucial that the Volcker rule itself be understood first. The Volcker rule is basically a reformation act that restricts the banks in the United States from taking high risk investments, especially high risk investments that do not benefit the customers of the bank. In view of the major scandals involving banks using people’s money to make short term gains that saw profit flow into the banks but not to the customers, but when things go wrong, the customers bear the burden of the loss.

In other words banks are prohibited from investing in short term or long term hedge funds, speculative markets that are highly risky and it also prevents banks from investing in the precious metals industry (gold bullion / silver bullion). Banks are currently actually looking for loopholes in the legislation rather than comply to it, but according to the legislators the loopholes do not exist. How this would affect the precious metal industry is multi tiered, as some analyst say that banks are the biggest buyers and sellers in the precious metal commodity trade industry and that they are the main ‘market forces’ applied through hedge fund managers and their absence would create a huge void in demand and drive prices down. On the other hand there are those who believe that the absence of these speculative strong forces would provide stability to the prices of gold as most of the trading done by these market forces are for short term gains and in retrospect most of the gold bought by them are never held fopr more than a few days.

Looking into the average investor who looks towards the shiny yellow metal as a safe haven to secure wealth, the absence of these speculative forces will actually bring about the true essence of the gold value and allow the average investor to sleep peacefully knowing that there are no hedge fund managers trying to manipulate the gold market prices. Many have applauded this move, especially the savers, as many have seen what has happened in recent years to big financial institutions that were financially ruined and in the process ruined many other lives of individuals who had trusted these financial institutions to keep their life saving safe.

The reformation brought about by the Volcker rule is expected to bring confidence back into the precious metal industry as smaller investors will no longer have to contend with big players who use other people’s money to fill their coffers. Nevertheless, prior to this there have been numerous other ‘so called’ rules that were supposedly supposed to protect the small people, however in light of what transpired during the global financial meltdown and other similar situations, how long this rule lasts before it is overwhelmed or manipulated by the powers that be would not be long, and those who want to place themselves within the safe zone amidst a financial crisis would typically be the ‘Average Joe’ with a fistful of gold.

High Prices Could Affect Indian Gold Jewellery Business Next Year

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Having increasing prices in gold isn’t always a good news for producers and investors. A recent announcement from the World Gold Council said that there is a high chance of Indian gold demand dropping to 750-800 tons by the end of this year in comparison with 860 tons from 2015.

The main reason for this is that gold prices have been going up steadily, making it too expensive. While investors are quite happy about the bullish market, this situation could reverse performance by the end of this year and the first semester of 2017.

As you might know already, India is the second gold consumer in the world, only behind China, which is also decreasing its gold demand for the upcoming years.

The gold market has been positively bullish, stimulated by uncertainty regarding US economy, Europe’s decisions on monetary policies, and other geopolitical events of great relevance. But massive changes in Indian gold consumption could be a decisive factor for the precious metal’s prices.

Jewelers Strikes

But a higher price isn’t the only factor affecting demand. In recent months, India’s jewelry industry was on a strike, demanding big changes in the tax system. The government increased taxes on this sector, causing great unrest and leading jewelers to an indefinite strike.

Another inciting factor for the strikes was the imposition of a Pan Card number for every jewelry purchase above 200,000 Indian Rupees. According to jewelers who went on strike, this imposition would greatly affect the consumer, ultimately leading to losses.

Monsoon Benefits All

Conversations between the jewelry industry and the government led to positive changes, getting producers go back to work. But don’t think that this was the decisive element changing jewelers’ minds.

This year monsoon was flourishing all across in the country. Just like always, monsoon performance is translated into gold demand during Dewali and wedding seasons, both starting soon.

The jewelry industry isn’t capable of being absence during these seasons, even if the circumstances were different. With a highly positive monsoon, gold demand from consumers will exceed expectations.

The Risk is Still There

With the jewelers strike out of the equation, Indian economy is only facing high prices. The gold market remains bullish and most forecasts indicates that it isn’t going to change.

In fact, with the great uncertainty that is being experienced on a worldwide scale, gold prices are more likely to increase. With the US elections, unclear FED’s plans for the future, the Brexit, and actual monetary policies being used by the European Central Bank, many investors have their doubts regarding Forex and stocks.

So far, the yellow metal seems the most suitable alternative. Even with China and India decreasing their numbers, gold is could remain bullish. In comparison, India’s expectations about demand are more negative than the Chinese ones.

Recent official reports told the media that China is planning to decrease demand growth, instead of demand itself. This means that the sector will continue to expand, despite the blow coming from India.

Sources:

http://www.firstpost.com/business/gold-demand-likely-to-fall-to-750-ton-in-2016-on-high-price-3027088.html

Jim Rickards is Telling Investors to Buy Gold Now

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Investors often feel overwhelmed by the many personalities forecasting the market trends on the media. The emotional side of investment is always affected by this matter.

Now is the turn for Jim Rickards, who spoke about the gold upcoming opportunities during CNBC’s Squawk Box last Monday. He recommended investors to put physical gold among the priorities.

The main reason he claimed for such a thing was that many central banks all around the world are taking desperate measures in order to increase inflation. This is having a deep impact on physical gold’s prices.

So according to him, this is a smart move backed up by central banks’ ongoing and future plans to work with the damaged economy.

No Distractions

Mr. Rickards told CNBC that low interests, which are a hot matter right now by the way, allows the gold holder to be relaxed, because there aren’t other better alternatives to analyze closely.

In fact, during the interview he gave a straightforward advice, telling that everyone should have a 10 percent of their portfolio in physical gold. This is a pretty detailed recommendation that many investors may be applying now.

In order to back up his own point of view, Mr. Rickards also made emphasis on the recent comments from seasoned investors like Gorge Soros and Bill Gross, who told the media that people should put gold among their short-term priorities for investments.

Establishing a Difference

Mr. Rickards made a clear distinction between physical gold and futures. He claimed that the former is the winning player for this scenario, while paper gold would not perform even close to it when the proper time comes.

This is an advice that is really hard to ignore. Jim Rickards is a well-known gold expert with several publications on the shelves. These same publications have enjoyed popularity among analysts and investing experts.

He graduated from The Johns Hopkins University with a Bachelor of Arts degree before getting its Master in International Economics.

A fruitful career allowed him to gain fame among financial institutions and media. He worked on Wall Street for more than three decades. Also, Mr. Rickard has testified before the U.S. House of Representatives to present his point of view and opinions about the risks the economy was facing after 2008.

People are Losing Faith

While Mr. Rickards is talking so positively about acquiring physical gold, other analysts are convinced that the bullish trend this precious metal is enjoying is actually cooling down. They are suggesting that it’s time to go out before gold start losing big points.

According to a recent publication from Bloomberg, many hedge funds and speculators are getting out from the gold rally because they are losing faith in the metal. The negative forecasts are talking about a weakened market, which is not going to report gains like during previous weeks.

A solid part of this forecast is that investors have more interest on the upcoming economic reports that are about to be released by the FED. The last time, these reports were positive at some degree, so some observers have chosen to trust in the economy indicators for the third quarter over the yellow metal.

While this can be partially true, the central banks still are on their quest to increase inflation. Even when this isn’t going so well, gold is still benefiting.

Today’s trading session closed at US$1350.90, representing a 2.50 percent gain. A few days have passed since both Mr. Rickards’ declarations and Bloomberg’s forecast, but the gold rally is still there, making some investors really happy.