Australian Gold Producers by Market Cap

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These are in order of descending market capitalization as of June 2012.  Not that bigger is better – it’s not – but it’s a handy way of sorting these that provides more information than alphabetization, which is all you’re getting when you look up lists of who’s listed on the ASX (Australian Stock Exchange).

1. Newcrest Mining (ASX: NCM) – Now the world’s 5th largest producer of gold after its Lihir Gold acquisition in 2010, Newcrest currently trades around $24.57 (with a 52-week range of 23.56-41.50).  $18.78 billion market cap.

2. Oz Minerals (ASX: OXR) – Formerly known as Oxiana, Oz Minerals is focused on copper and gold exploration and production. Currently trades around $8.49 (with a 52-week range of 7.99-14.45). $2.65 billion market cap.

3. Kingsgate Consolidated Ltd. (ASX: KCN) – Claiming to operate the “safest gold mine in the world” and in the lowest 20% of costs of all gold producers, Kingsgate is focused on Australia but also runs operations in Thailand. Currently trades around $5.61 (with a 52-week range of 4.92-9.50). $790.7 million market cap.

4. Evolution Mining Ltd. (ASX: EVN) – This gold and silver producer runs four mines in Australia and is also branching out into copper production in Queensland. The company was created in 2011 as a merger of Conquest and Catalpa Resources. Currently trades around $$1.71 (with a 52-week range of 1.25-2.18). $304.9 million market cap.

5. Norton Goldfields (ASX: NGF) – Norton is a mid-tier, unhedged gold producer focused on Western Australia with current projects possessing over 10 years of life and another 120 prospects in the pipeline.  Currently trades around $0.23 (with a 52-week range of 0.12-0.25). $195.4 million market cap.

6. Straits Resources (ASX: SRQ) - This is a gold and copper produced focused on Australia (NSW) and Indonesia, with additional exploration projects in South Australia. Currently trades around $ 0.45 (with a 52-week range of 0.45-0.83). $146.1 million market cap.

7. Unity Mining (ASX: UML) - Unity is a gold producer with operations in Tasmania and West Africa.  Currently trades around $0.13 (with a 52-week range of 0.10-0.17). $66.29 million market cap.

8. Citigold Corporation Ltd. (ASX: CTO) - Operating in Northeastern Australia, this company boasts one of the highest grade goldfields in Australia and has no hedging risk. Currently trades around $0.05 (with a 52-week range of 0.05-0.09). $55.3 million market cap.

9. Mutiny Gold (ASX: MYG) - Mutiny is a diversified resource company, (gold, nickel, copper) in Western Australia with a goal to become a significant gold producer.  It currently trades around $0.065 (with a 52-week range of 0.06-0.14). $30.16 million market cap.

10. Heemskirk (ASX: HSK) – Heemskirk runs four different business units, with projects in Australia, Canada and Europe. Some of these are production-based and others are investment- and financier-focused. Currently trades around $0.098 (with a 52-week range of 0.09-0.17). $15.46 million market cap.

11. Hill End Gold (ASX: HEG) - On track to become a mid-tier gold producer, Hill End is focused on New South Wales production but is also exploring in Laos. Currently trades around $0.023 (with a 52-week range of 0.02-0.05). $13.01 million market cap.

12. FE Limited (ASX: FEL) - Another diversified resource investment and production company, FE Limited produces iron, gold and nickel in over 300 projects in Western Australia. Currently trades around $0.035 (with a 52-week range of 0.04-0.12). $4.04 million market cap.

As you can see, many of the gold producers on the ASX are basically penny stocks – quite different from the much larger TSX, which sequesters the penny stocks to the TSX-V (TSX Ventures Exchange).  And of course, all price amounts are in Australian Dollars (AUD).  There are other Australian mining stocks, too – but these are some of the less well-known ones.

For something still a bit different, check out these Kenyan blue-chip stocks or think about investing in Brazilian forestry!

Over the weekend the World Bank sent out a tweet about Kenya’s “tipping point” – by 2020, Kenya will be a full-fledged middle-class country.  Since 2001, many gains have been made in areas like sending electricity to households and other political and economic reforms.  Transportation times between major centres are decreasing and there are still significant gains in access to water and proper sewage.

Coupled with the fact of being an English-speaking country with a long history of connections to the London Stock Exchange, and the fact that Kenya is not dependent on foreign aid - and Kenya is hardly akin to investing in Zimbawbwe or Sierra Leone.

The Really Emerging Markets in 2012-2013

Invest in Kenyan Growth

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All that said, there are still structural problems holding Kenya back, such as prohibiting a more active export market.  I would be ahead of this game if I were you and concentrate instead on the direction of individual Kenyan companies.

Although the World Bank cites a lingering amount of political and business corruption in the country (despite good overall economic governance), it should be noted that labor costs in Kenya are lower than they are in China.  Repeat that, folks.  And then think again about the massive Chinese presence in Africa right now.  China signed an oil exploration contract with Kenya already back in 2006.

Kenya’s biggest industries include tea, tourism and horticulture – with a lot of growth potential in textiles, chemicals and telecom.  The following companies all trade on the Nairobi Securities Exchange, which is Africa’s 4th largest in terms of market capitalization.  Take a look at the NSE-20 for a full list of Kenya’s blue-chips.

Are You in These Frontier Markets Replacing Emerging Markets?

Kenya’s Blue-Chip Companies

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1. KenGen (Kenya Electricity Generating Company) (NSE: KEGC) – A state-owned corporation that trades on the NSE, KenGen provides the country with over 80% of its electricity.  The company is well invested in alternate sources of energy, including wind farms and geothermal plants.  Don’t confuse this one with the Kenya Power and Lighting Company, which was split off from KenGen in 1998 (although it also still trades on the NSE).

2. Safaricom (NSE: SAFCOM) – Founded in 1997, Safaricom is the leading internet and mobile solutions provider in Kenya, with an urban subscriber base of over 12 million and a workforce of 1500.  Vodafone now has a 40% stake in the company.  Main competition is Airtel Kenya.

3. Kenya Commercial Bank (NSE: KNCB) – Quite a long history, founded in 1896. Part of KCB Group, which is the largest network of branches in Kenya, KNCB is one of the three largest financial banking divisions in the country.

4. East African Breweries (NSE: EABL) – Founded in 1922 and declaring its first dividend in 1926, this fully-integrated beverage company was the first Kenyan company to reach a USD market capitalization of over $1 billion.  The company trades on every exchange in the East African region.

5. Express Kenya (NSE: EXPL) – Founded in 1918, this integrated service management company controls most of the logistics for transport in Kenya – land, water, air terminals, ports, customs documentation, warehousing, packing and removals, etc.

Cashing In On the African Gold Rush

As East and Central Africa’s largest economy, Kenya has maintained good levels of inflation and has kept its debt under control.  Coupled with lower labor costs than China and I think you would agree that Kenya is a smart place to look at for some direct investment of your own.

Since China might still be too risky a play for many of you, and since I’ve already written quite a bit about Canadian resource companies, I thought it would be a good time to focus on Australia’s mining and resource sector.

What Does Australia Mine?

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You should already know that mining is one of the largest sectors in Australia (20% of the ASX by capitalization; one-third by companies listed).  Currently, much of that sector’s activity is undertaken on behalf of Chinese investments and purchases of Australian minerals and other mining products.

Like Canada, Australia also exports iron ore, silver, copper, lead, nickel, diamond, opal (the world’s largest producer of it), zinc, uranium (world’s third largest uranium producer after Russia and Canada) and, of course, gold – which was found in 1851.  So much so that during the 1850’s, 40% of world gold production came from Australia!

Interestingly, Australia is also the world’s largest exporter of coal.

Largest Global, Diversified Mining Companies

Top 5 Australian Mining Companies

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So if you want to get some exposure to Australia but you want to bypass the fees and index-tracking that go with ETFs, here are 5 great companies to take a look at and invest your money in for direct benefit.

BHP Billiton (ASX: BHP) -You’ve heard of BHP Billiton but did you know that it is now the world’s third-largest publicly traded company by market cap? That tells you how significant a role basic resources play in the global economy.  No growth is going to happen without moving through BHP first. Stock up.

Rio Tinto (ASX: RIO) - Technically British-Australian ownership, with headquarters in London and the management office in Melbourne.  Rio is the 4th largest publicly traded mining company in the world.

Newcrest Mining Ltd (ASX: NCM) -Newcrest is Australia’s leading gold miner, specializing in gold and gold-copper concentrate, most of which is exported to Japan.  It also now has operations in Indonesia, adding to its international profile (Papua New Guinea, Ivory Coast and Chile).  Canadians can invest in it directly via the TSX with the ticker of NM.

Oil Search Limited (ASX: OSH) – For something different, Oil Search Limited (founded in 1929) is Papua New Guinea’s largest oil production and exploration company, operating all of Papua New Guinea’s oilfields and alone represents a whopping 13% of Papua New Guinea’s gross domestic product. It also has a significant international portfolio which includes Egypt, Iraq, Yemen and Libya.

Alacer Gold Corp. (ASX: AQG) – This company was only listed in 2011, but already has a good market cap – much higher than the many penny mining stocks that populate the ASX.  Rapidly-growing Alacer has 80% ownership of some Turkish gold mines to fill out its international portfolio and is expected to grow almost 200% (organically) between 2011 and 2015.  Currently trades at $6.52 (ASX) and $6.92 (TSX).

Investing in Rare Earth Metals

For Americans (and Canadians), you’ll need to invest in these through the NYSE or TSX – just look up their names and you will get their ADR tickers (in the case of TSX-listings, it will be a direct investment). You will receive an ADR dividend where relevant, along with a withholding tax that will be taken out of the overall dividend.

First Rate Cut Since Lehman

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Yes, China is cutting interest rates for the first time since the Lehman Brothers fiasco in September 2008.  So much for the global engine of growth, right?

The rate cut of 25 basis points initially pushed U.S. markets higher, but one head of a Chinese consulting firm believes it is going to take one more rate cut to spur continued Chinese growth amid current global headwinds.  And Chinese sentiment clearly matters – the head of China’s largest sovereign wealth fund, the China Investment Corp., sees the likelihood of a breakup of the Euro zone.  As a result, China has lowered its European exposure, and this is hurting Spanish banks.

China has also recently cut back on exposure to the USD by implementing direct trade between the yuan and yen – a historic move.

In light of this unexpected interest rate cut, however, all Asian markets reacted quickly by sinking past the prior day’s lows.  Meanwhile, the yuan made slight gains against the USD.

Who Cares About the Rate Cut?

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What does this mean for you and your portfolio?  Well, if China is the commodities engine of the world, and commodities fuel global trade, it means less growth globally all the way on up to housing starts and building in central Africa.  It means it is an especially good time to buy gold.  It means it is time to learn Mandarin (to the extent that the Chinese rate cut is having serious ripple effects).

Maybe it is time for you to bump up your BRIC investing, invest in Latin America ex-Brazil or you’d like to get more specific with your agricultural investments.  If so, you might have already heard about agroforestry, aka tree farms, and specifically, the wealth of Brazil’s eucalyptus plantations.

Agroforestry and Brazilian Tree Farms

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Brazilian-based afforestation projects are conducted on previously misused or pasture land in order to help supply the global demand for timber.  Eucalyptus forests are preferred over other forest types because they grow up to 15 times faster than traditional forests per hectare, so they are ideally suited to supplying timber needs.  Many of these eucalyptus projects are centered in the Bahia region of Brazil, and they generally conduct operations so as not to disturb local land or wildlife, but support it.

One leader in this subniche of agroforestry is Greenwood Management, a Danish multinational that has been in the Bahia region since 2009.  They are still a young company, and not publicly traded, so it is not possible to invest with them on an exchange or through your broker.  But such companies do still accept direct investment. You would have to look at their sites and learn about the individual guidelines on how to invest with each company, as they all might have different regulations and requirements.

The Latin America-China Connection

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Of all the emerging markets, Latin America is still hot.  They have ramped up bilateral trade with the Asia-Pacific, especially China, and both regions have established direct currency trading and/or alternate currencies to the USD for regional trade purposes.  Investing in Latin America is thus a good way to indirectly benefit from Chinese growth, too.  Just as investing in Chinese companies benefits from African resources (those are the facts, like it or not).

You might also like to review which nations were projected to have the most GDP growth in 2012: three are in Latin America; several are in Africa.

This so-called deposit flight has prompted Northern and Southern European banks alike to set up various incentives to attract new customers – either in spite of, or in order to take advantage of, the uncertain monetary situation (will Greece leave the Euro? Will the Euro collapse?).

A year ago, worries over Europe’s finances looked more like a red herring or useful straw man vis a vis the debt ceiling wars in the U.S.  Today, however, it’s a more serious matter.  As it turns out, there are several obvious early warning signs that Europe’s banking system as a whole should be cause for equal concern amongst investors, savers and depositors.

Europe’s Faltering Banking System

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In the wake of the Greek elections and speculations about the #grexit (Greece leaving the Euro), “billions of euros’ worth of deposits” began to trickle out of the Greek banking system.  Then, the Spanish government decided to nationalize Bankia SA, the Spanish lender that had already begun losing a number of deposits over a period of several weeks.

As if this were not clue enough, a consumer group in Italy, Altroconsumo, has apparently been advising clients since December 2011 to take precautions by transferring their money out of domestic banks and into foreign banks with branches in Italy.

Since then, Northern European banks such as Barclays and HSBC have been championing themselves as safer havens (offering as much as 3.5% on 6 month-deposits and giving all the interest to them upfront!) and some have been offering freebies of everything from flat-screen TVs and free English classes (one Spanish bank is now extending this offer of a free flat-screen TV indefinitely to anyone who opens an account and has their unemployment checks deposited with them).

In one bizarre twist of irony, a smaller Greek bank, the Agricultural Bank of Greece, has set about opening a new branch in Frankfurt and offering depositors a higher rate (3%) than local German banks (who are behind the Greek bailout itself).  If you like the sounds of this, you can bet on Greece with a Greek-only ETF.

In all respects, there is a race on for everyone’s money in Europe at the moment.  It is not just happening in one direction.

Will There Be Runs on European Banks?

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If you read the above warning signs, it’s clear that in some gradual sense, we’re already witnessing runs on European banks.  Last week there was a report of an effective (if small) run on a Swedish bank (a very unusually long line at a single ATM).

Given this, it isn’t surprising to see Barclays offering products such as its “solvency deposit” programs in Spain, where it has picked up quite a bit of new, stressed capital.

Those who can remember back to 2009 post-crisis, however, will recall that even banks like Barclays were at one time quite troubled for liquidity and thus even now should still be considered cautiously by prudent investors and shareholders.

And, given all of this, it is also no wonder that so much money is still finding its way into Treasurys, where at least it is obvious that failing is impossible (more money will always be printed), and on top of that security you will make at least 1.5%.  More than Japan and Germany.

So you need to stay tuned, the warnings are serious – but at the same time it doesn’t mean that Treasuries are the only other option for your money.  Look to Brazil, Canada, Australia and China in the meantime.  It’s commodities that you need to pay attention to.  But take advantage of the historic lows on the Euro, too.  But I’m still not betting on a disintegration of that currency.  It’s politically and economically unviable – in the same way that not increasing the debt ceiling in the U.S. was never a real option, either.

Nevertheless, the “Eurobond” is what Italian Prime Minister Mario Monti has proposed as a way out of the European debt situation.  Perhaps a Eurobond offering would calm global markets over European uncertainty. Eurobonds are just what they sound like – a counterpart to the Euro; a bond that represents the collective debt of the European Union member countries.

Watch the German Bund Yield

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There certainly seems to be room for it.  Right now the German bund yield is falling fast as more investors move their money in from surrounding countries, to the perceived safety and strength of Germany, which is able to get deeper into debt itself as a result.

If the German Bund yield starts to rise, however, it would indicate a change in sentiment, perhaps a sign that investors have stopped thinking that Germany will be able to carry all of the EU’s problems on its shoulders.  If so, it could be an indication of Eurobonds coming – or at least the perception that they might come as a stop-gap measure to come in and help Germany.  In reality, they will certainly help the weaker economies, which is why Monti is a Eurobond advocate.

Apparently, most European leaders have shown signs that they would be open to the idea of a Eurobond that would be representative of the collection of all Euro members’ debt.  These would trade in addition to individual nations’ bonds.  The Eurobond proposal in general, then, is obviously also a vote on the integrity of the European monetary and political union.

Do you buy it? Would you buy it? Would it still be a success in the wake of a possible “Grexit”?

The aim here is to encourage bilateral trade and investment between China and Japan (the world’s second and third-largest economies, remember), and, some speculate, the risks involved with the USD and costs associated with extra exchange transactions.  Scholars of history will take special note for several reasons, one of which is that it is the first time China has allowed the Yuan to trade directly with any currency besides the US dollar.

Zero Hedge posted an excellent chart as a reminder that over the centuries, major reserve currencies have come and gone several times, just as empires never last – neither does the predominant currency of global trade.  Portugal, Spain, the Netherlands and France have all been world-dominant economies at earlier points in time.  Does the average American even know what this means?

It’s a very good time to begin learning Mandarin, if you have not already.

The best time to clean up is after there is blood in the streets, as they like to say.  A Greek ETF makes straightforward plays on public perception about Greece’s status much easier.  Institutional investors already have several options for direct investment in Greece, but a Greek ETF ensures the opportunity to play directly on retail investment in Greece.

New Global X Greek-Only ETF

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The Global X FTSE Greek 20 ETF (GREK) began trading on the NYSE Euronext Arca exchange on Thursday, December 15, 2011.

This may be the perfect time to invest in Greece, as troubled as it is.  The MCSI Greek Index is down at least 90% from October 2007 levels (i.e., a year before Lehman!), and between 35-60% from the beginning of 2011.

This fund tracks the FTSE/ATHEX 20 Capped Index – the top 20 companies on the Athens Stock Exchange (ranked by market cap).

20 Largest Greek Companies

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By market capitalization, these are the top 20 companies that comprise the FTSE/ATHEX 20 (and the Global X GREK):

1. Coca-Cola Hellenic (EEEK)
2. Greek Org of Football Prognostics (OPAP)
3. National Bank of Greece (ETE)
4. Hellenic Telecom (HTO)
5. Titan Cement (TITK)
6. Hellenic Petroleum (ELPE)
7. Public Power Corporation (PPC)
8. Bank of Cyprus (BOC)
9. Marfin Laiki Bank (MARFB)
10. Jumbo S.A. (BELA)
11. Motor Oil (Hellas) (MOH)
12. Viohalko Hellenic Copper (BIOX)
13. Marfin Investment (MIG)
14. FF Group (FFGRP)
15. Mytilineos Holdings S.A (MYTIL)
16. Piraeus Bank (TPEIR)
17. Alpha Bank A.E.(ALPHA)
18. Ellaktor (ELLAKTOR)
19. EFG Eurobank (EUROB)
20. TT Hellenic Postbank (TT)

The GREK ETF might also be capitalizing off the media exposure that Greece’s troubles have been given over the past two years.  More attention to the Greek market means more potentially interested investors in that market.

Given all these factors, it is actually a little surprising that until now there hasn’t been a dedicated Greek ETF.  There have been Europe-focused ETFs with partial exposure to Greece, of course, but this is the first Greek-only ETF.

Based on forecasts from the WTO and The Economist, here are ten key facts about the growth of the emerging market economies, some of which you should be nothing less than shocked by.

Amazing Facts About the World’s Developing Economies

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1. Emerging economies already produce 50%+ of the world’s exports
2. In 2012, emerging economies will also handle 50%+ of world imports
3. Almost 60% of U.S. exports will go to emerging economies in 2012
4. The total real GDP of the developed economies in Jan 2012 will be no higher than it was in Jan 2008, but the same figure for the emerging economies will be up 25%
5. Emerging markets combined GDP will account for 40% of world GDP in 2012
6. Emerging markets will comprise about 50% of total global retail sales in 2012
7. Emerging markets already purchase the majority of the world’s automobiles and cell phones
8. China will surpass the U.S. as world’s biggest importer in 2014
9. In as little as 10 years, emerging market revenues might be as much as 50% of those of the biggest multinationals

This means that emerging markets should, perhaps, comprise a proportionate amount of your investment portfolio if they don’t already.

While U.S. multinationals will certainly benefit and ride the wave of emerging markets growth for at least the decade to come, don’t place all your eggs in that basket, but start keeping an eye out for emerging blue chips abroad.

It also means that it is definitely time for aggressive investors to have a foothold in the frontier markets (Africa, the Middle East, Eastern Europe), which are rapidly emerging as the new emerging markets.

• Frontier Markets Replace Aging Emerging Markets
• Learning From the G20 - Investment Guidance for Markets Over the Next 6 Months
• Peter Schiff's New Book: (1) The Little Book of Bull Moves in Bear Markets: How to Keep Your Portfolio Up When the Markets are Down
• Nations With Lowest GDP Growth Rates for 2012
• Biggest Foreign Buyers of U.S. Debt

• Currency Trading: The New Global Investing Game
• Internet Marketing Flaw
• Is The Economy Recovering?
• How I Lost $40,000 Yesterday
• Debt and the Credit Crisis