Gold Miners Gear Up for Dealmaking

Even with the recent fall-off, gold is up about 30% for the year. Yet the miners have been laggards. Consider that the Market Vectors Gold Miners ETF (NYSE:GDX) is up about 2.50%.

Why the disconnect? There are several reasons. First of all, there are continuing concerns about escalating costs, political risks and reserves. But perhaps the biggest issue is that generally all equities fall when there is a correction – even if a group has strong prospects.

Interestingly enough, the relatively cheap valuations in the mining sector could spur mergers & acquisitions (M&As). For example, on Monday AuRico Gold (NYSE:AUQ) agreed to pay $1.5 billion to buy Northgate Minerals (AMEX: NXG) at 14.7 times EBITDA. According to Bloomberg, it’s the cheapest deal since 2004. Read More at Forbes

U.S. Moves to Block AT&T Merger with T-Mobile

The Justice Department sued on Wednesday to block AT&T’s proposed $39 billion acquisition of T-Mobile, a deal that would create the largest carrier in the country and reshape the industry.

“The department filed its lawsuit because we believe the combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for their mobile wireless services,” said James M. Cole, the deputy attorney general.

AT&T said it would “vigorously contest this matter in court.”

The Justice Department’s complaint, which was filed in United States District Court in Washington, said that T-Mobile “places important competitive pressure on its three larger rivals, particularly in terms of pricing, a critically important aspect of competition.”

Read more at New York Times DealBook

Analysis: China Keeps World Guessing on Yuan Plan

Figuring out what the People's Bank of China is doing can be as perplexing as parsing a statement from Alan Greenspan, the notoriously opaque former U.S. Federal Reserve chairman.

Now that the U.S. central bank has made it clear that any further economic assistance will have to wait until September -- if it comes at all -- the world is even more reliant on China, the second largest economy, to do what it can to support growth. Read More at Reuters

Damages From Hurricane Irene Won’t Foster Economic Growth

Hurricane Irene ripped through the East Coast through the weekend, losing steam as it arrived to New York City, making it seem that damages were pretty limited. Insured losses should be modest, according to UBS, estimated at about $3 billion and causing no real effect on insurers. On the data side, Irene is expected to cause sizable disruptions on initial claims and, particularly, on jobs, with hurricanes generally pushing back hiring, shipments, and affecting trade flows. Read More at Forbes

Long-Short Opportunity: Gold or Gold Miners

In his speech at Jackson Hole, Bernanke failed to increase the probability of another round of quantitative easing, though his language did not rule it out. This is generally negative for the gold trade as gold bulls were hoping for some form of dollar-debasing, inflation-producing program that would continue the metal’s historic rise. Standard & Poor’s chief technical strategist now puts gold prices into a correction that will take it to around $1,500 or a drop of -16.5% from current prices.

While I would not normally step in front of a speeding train, I will on occasion jump in front of the unstoppable asset. In a recent article presenting ways to protect your portfolio in volatile markets, I warned investors of using gold as a safe haven investment. Granted, many investors are moving into the asset as a store of value and consumer demand in emerging markets is increasing, but the number of speculators and ‘arm-chair’ investors has also increased greatly... Read More at SeekingAlpha