₪ David Pescod's Late Edition June 21, 2007
VANCOUVER HOUSING PRICES
As we’ve mentioned frequently, to us, Don Coxe is must-reading when his monthly report “Basic Points” comes out. Two points that he makes in his latest issue stand out. First of all, he writes, “The stock market keeps postponing the inevitable correction” and secondly, he suggests, “Inflation is back and we could see Treasury Bills 2% higher easily in the next two years.”
Or put that another way. What could do that to your mortgage and people’s perception of the stock market, should suddenly their mortgage payments be significantly higher.
As our banker tells us, if she likes you, you could currently get a 25-year, $400,000 mortgage, five-year term for 5.84% or a payment of $2521.00 a month. Many people in places like Vancouver or Toronto have decided that almost one partner’s sole income goes to paying the house, utilities, taxes, you-name-it and a second partner pays for life. So does the house own them or do they own the house?
If suddenly mortgage rates were to go up 2% to 7.84%, your mortgage payment is suddenly $3012.11 a month or $500.00 more a month. Does that mean the housing boom is over? We think some of the prices people are paying for houses these days is a little bit silly.
Here in Edmonton, which has, for most of the last two decades, been one of the most affordable locales in North America to own a home, suddenly things have gotten stupid. In the last year, according to recent newspaper articles, Edmonton has had the biggest price increase in housing in the last year...an amazing 47%, closely followed by Saskatoon.
We’ve gone right through the silly prices people are used to in other major cities and on to stupid. Sometimes if prices for anything go too far too fast, you see a correction and I suspect something that could change that would be higher mortgage rates, which could really put a crimp into many things.
LATIN AMERICAN MINERALS (V-LAT) $0.85 -0.10
EXETER RESOURCES (V-XRC) $3.16 -0.79
OUCH! It’s called “Country Risk” and it refers to the fact that once you are outside say, North America, one is just never sure of what those various countries might do to your investment in mining oil and gas or whatever.
As of June 20th, Latin American Minerals lets the market know that the Provincial Government of Mendoza in Argentina has passed legislation banning the use of any chemical substance used in mineral processing. Needless to say, that will have a direct affect on exploration in the Province and does not reflect well on the future of mining there. Latin American Minerals has its Cerro Amarillo gold and copper project in Mendoza Province...not good.
However, Latin American has a large portfolio of properties throughout Latin America and in a press release today, Dr. Waldo Perez, Sr. VP Exploration states, “he is concerned about the impact the new legislation will have on exploration in the Province of Mendoza; but adds the Company currently has three other projects of higher priority and a great depth of experience in all of Latin America.”
While the company will suspend their work on Cerro Amarillo, they will continue to focus their assets on the Paso Yobai gold project in Paraguay, La Carolina gold project in San Luis Province, Argentina and its Tendal zinc, copper, lead, silver project in La Rioja Province, Argentina.
One does note that Latin America has a big interest in projects in Argentina. Other stocks such as Exeter with assets in the Province of Mendoza are also being affected today.
SOUTHWESTERN RES. (T-SWG) $6.10 -0.07
OUCH! We’ve written more than a few times about the interesting correction gold stocks have seen over the last six months as we’ve witnessed gold prices hanging in there rather well, but gold stocks seemingly losing interest as people flee to sectors—be it uranium, moly or potash—that seems to be more the story of the week if not the day.
One of those that we have followed along the way has been Southwestern Resources which has taken more than its share of bruises in this correction, but now we have Canaccord analyst Wendell Zerb downgrading the stock from $12.85 to $10.00 as Southwestern has released updates on their Boka project in Yunnan, China.
Analyst Zerb writes, “Pre-feasibility will be delayed by six months to determine proper metallurgical processing for the project, particularly for the sulphide portion of the mineralization.” He notes “that prior to yesterday’s announcement, a conventional milling circuit and carbon-inleach process were being considered; preliminary tests by independent consultants indicate that due to low recoveries of the sulphide portion of the mineralization, biooxidation or pressure oxidation may be required.”
Because of this, he adds, “We have adjusted our model to account for more complicated metallurgical processing and have assumed a one-year delay to production (now late 2010”).
The ouch part is that he is lowering his target price to 10.00 (from $12.85) while maintaining a speculative buy.
Ouch!
For those wanting copies of the report, e-mail Jennifer at Jennifer_lagdamen@canaccord.com. |
