Readings: Gold stocks, Grain drain, Short selling
- John Mauldin @ Investors Insight: Get Ready - Here Come the Gold Stocks!
As gold began its upward move in 2002, it did so against the backdrop of an industry still in mothballs and still run by managers whose primary skills were cost cutting and frugality.
. . . it was only in February 2003, with gold trending over $350, that Barrick Gold Corp., the world’s largest gold miner, began the expensive process of unwinding its hedges. And it wasn’t until November of that year that the company announced it would stop forward selling altogether and would eliminate its entire hedge book.
Once the turning point came - when management finally realized the bull market was for real — the industry began to scramble to catch up. Which, in a choo-choo industry like mining, means hiring and training lots of people, buying or refurbishing the equipment needed to reestablish production on second-tier deposits, upgrading facilities, building expensive new mills, etc., etc. And, of course, dealing with the challenge and expense of unwinding hundreds of millions of dollars worth of forward hedge contracts.
- Businessworld: Grain drain
“There is a conspiracy in the commodities market. Nothing else can explain the current status,” says Jignesh Shah, chief executive officer and managing director of Mumbai-headquartered Multi Commodity Exchange of India (MCX), which has the highest turnover among the three national commodity exchanges. This statement, from a man who is always subdued in public forums, is an indication of a deepening crisis of credibility in the commodities market.
The markets have little depth since banks, mutual funds and other financial institutions, which are allowed to trade in the securities market, are prohibited. In fact, “Satte-baazi (speculation) rules,” says Minesh Shah.
- Economic Times: Capital gains, STT sop for short sales
Short-selling of securities on the stock exchanges, a market reform long-promised by the finance ministry and capital market regulator SEBI, is set to commence. The government has clarified that lending and borrowing of securities under the securities lending and borrowing scheme will not attract Securities Transaction Tax (STT) or capital gains tax. However, it is not clear if sale and repurchase transactions made on the basis of borrowed securities would be taxable.
Short-selling is being allowed for all institutional investors, both FIIs and domestic institutions. Retail investors are already allowed to undertake short-selling of securities.
Related Posts: