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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
 Posted - 07/13/2007 : 18:48:57
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Lots of news, need more space...
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10 Problems that Gold Mining Faces
(Gold mining problems = less metal above ground = higher prices for gold.)
Commodity Online Special
Project Underground, a Berkeley-based organization, lists 10 problems that gold mining faces globally.
1: Genocide 
Every major gold rush has meant death and devastation for local people at the hands of fortune-seekers. California's Native American nations were decimated first by the diseases the 49ers brought with them, then by the new California state government, which put bounties on the heads of native people.
Today the Galamsey of West Africa, the Igorot of the Philippines, and the Macuxi and Yanomami of the Amazon are similarly endangered.
2: Water
Damage to water and water resources is the worst environmental consequence of gold mining. From California's Sierra Nevada in the 1850s to the lands of the Pemon in Venezuela today, people have ruined rivers by using high-pressure hoses to spray down the banks and sifting through the sediment for gold. Runoff flows downstream, destroying plant and fish life.
But modern mining is even more destructive of water resources: the gold industry in Nevada - where most gold in the United States is mined - consumes more water than all the people in the state. The water table has fallen as much as 1,000 feet around some of the largest open-pit gold mines in northeastern Nevada, according to the U.S. Geological Survey.
3: Waste Rock
To make a simple gold wedding band, at least 2.8 tons of earth are excavated. The gold-mining industry generates an enormous amount of waste compared to its product: The 2,402 tons of gold produced in 1997 resulted in 725 million tons of waste, which was contaminated with metals, acids, and solvents, according to Worldwatch lnstitute.
The standard ratio of waste production in the U.S. gold-mining industry is one to three million, meaning that for every ton of gold produced there are three million tons of waste rock.
4: Corporate Welfare
In many countries, gold-mining companies are allowed "free entry" to public lands for mineral exploitation. In the United States, it is not entirely free - but the companies only pay $5 an acre to "patent" a patch of federal land and open it to mining. Since 1872, the government has "sold" land equivalent in size to the state of Connecticut under this law.
5: Indigenous Rights
In the United States - the world's second biggest gold producer - more than 70% of gold is ripped from native lands. The Western Shoshone, whose traditional domain covers most of Nevada, are the unhappy hosts to more than three dozen open-pit gold mines on their land, many at least a mile wide and a mile deep, with toxic ponds at the bottom.
6: Cyanide 
Cyanide is the chemical of choice for mining companies to extract gold from crushed ore. Very low-grade ore, with minimal residues of gold, is crushed and piled on the ground, then sprayed with a cyanide solution. No mine has ever avoided leaking cyanide into the ecosystem. In 1998, a cyanide spill on a Canadian-owned gold mine in Kyrgyzstan resulted in four deaths and the evacuation of thousands of people living downstream. At one southern Colorado mine, Summitville, taxpayers have already paid out $100 million for the Environmental Protection Agency (EPA) to simply contain - not clean up - contamination of local rivers.
7: Mercury
For centuries, mercury has been used to chemically separate gold from ore, leading to major public-health problems for miners and communities around mining districts. During the California Gold Rush, 7,600 tons of mercury were released into local rivers and lakes, resulting in neurological disorders and deaths amongst people exposed to this deadly toxin.
8: Dowry
Nearly 80% of gold is sold as jewelry, most of it in India. In 1998, the country's gold consumption added up to 815 metric tons, nearly twice that of the United States. This is not, however, a simple tale of vanity or excessive consumption. It is part of the dowry women pay for a man's hand in marriage. Activists working around the gold industry aim both to redress the abuses of mining for communities living in mineral producing areas, and to challenge the patriarchy that forces women to hold gold as their only fallback in times of scarcity.
9: Dud Investment 
According to Merrill Lynch, gold is "the duddest of dud investments." Ever since the U.S. dollar went off the gold standard. gold has had no special value as a commodity, with only 280 tons going to industrial uses per year. Yet some people continue to hoard it. The price of gold has been slowly dropping and is now well below the price of its production at many modern mines, which means companies mining new or "virgin" gold are a bad investment.
10: Ecosystem Impacts
Contamination and waste of water, destruction of habitat and biodiversity, industrialization of wilderness, road-building, and waste-dumping in mined areas all negatively impact the environment around gold mines. "Frontier forests" - the last remaining old growth stands - are under siege from gold exploration.
Fisheries suffer from heavy siltation and toxic run-off into waterways from gold mines. Today, mines scrape away and dig up more earth than do the world's rivers through natural erosion! The impact on wildlife is hard to calculate, but between 1980 and 1990, seven thousand birds were found dead near cyanide-laced ponds at gold mines in California, Nevada, and Arizona - the tip of the iceberg of gold mine-related wildlife deaths.
...It seems to me that the author of this piece has an anti-gold and anti-mining slant. However, for all the arguements against gold (and mining) there will still be a demand for gold and metals in the future, and where there is a demand, there Will be a supply, whether the anti-mining forces like it or not.
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Why India plays dismal role in global gold trade
By Nandita Jain/Commodity Online
MUMBAI: India may be the largest consumer of gold in the world; but not only that the quantity of gold that the country produces is dismal, but it plays no influencing role in determining the pricing of the yellow metal.
According to a study from the Associated Chambers of Commerce and Industry of India (ASSOCHAM), India will continue to remain the largest consumer of gold while projecting that domestic gold demand is expected to rise to 980.83 tonnes by 2010 and to 1152.64 tonnes by 2015, against the current demand of 800 tonnes.
India imported an estimated 443 tonnes of gold during in the first six months of the current fiscal, valued at $5.82 billion. But the country’s domestic gold production was at 3.05 tonnes during the financial year 2006, as compared with 3.53 tonnes during 2005.
“India as of now estimated to hold nearly 14,000 tonnes of gold, accounting for 9 per cent of the world's comeulative production of around 153,000 tonnes. India's import percentage of gold bars in 2005 stood at 7.4, while the figure up to July 2006 is 6.6, making it one of the largest purchasers of coins and bars for investments,” the ASSOCHAM study states.
But it is surprising that though India consumes almost a fourth of the world's gold production, the country plays only a marginal role in influencing policies pertaining to the precious metal's pricing, output or quality.
Experts point out several factors behind this dismal state of affairs in India’s global gold trade.
First, they say the Indian government and the top policy makers have taken a negative role regarding the role of gold in the domestic setting. Some of them have articulated vehemently that gold is unproductive investment.
The thinking by policy makers is that the purchase of gold by households for jewellery is not productive and therefore should be discouraged.
....(And how many times has the Rupee been devalued due to inflation? How many times have the poeple of India see their gold holdings go up in value while their paper assets went down in buying power?)
Secondly, all these years India has been unable to occupy the high table in global gold trade.
Thirdly, look at the statement made by Deccan Gold Mines Ltd (DGML), the country's first publicly listed gold exploration company.
Accroidng to Sandeep Lakhwara, Director, DGML: "The whole process of application for the mining activity in India is too complicated. Starting from small offers to senior officers in the forest departments, wherever it is concerned, we have to approach each and every authority, which is very time consuming.”
...(India inherited British bureaucracy and is paying the price for it to this day.)
“We have to deal with at least 20 government authorities for the process of reconnaissance permit, prospecting license and mining lease. If the government can fast track the process, we can fast track implementation,” he said.
"There is a lack of adequate 'reverse circulation' drilling facilities in India. Hence, the equipment has to be imported for which 120 per cent duty is imposed, which should be reconsidered," Lahkwara adds.
Therefore, it is high time India classified gold an attractive investment and allowed more private players into gold mining.
It is also high time that India, the largest purchaser of gold, like any large purchaser of a commodity, should leverage on its `buyer power'.
China leverages its position as a major consumer of many industrial goods. India needs to do that with gold, fast to ensure that the country is an influencing factor in world gold trade.
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Qatar Central Bank raises gold holdings again – what’s going on elsewhere?
Although Qatar has increased its gold holdings 15 fold in a year there is still little evidence that the Middle East as a region is increasing its holdings. Elsewhere the picture remains mixed
Author: Rhona O'Connell
Posted: Friday , 13 Jul 2007
LONDON -
It has attracted the attention of the Middle Eastern Press that the Qatar Government increased its gold holdings by a factor of fifteen between April 2006 and April 2007. The central Bank of Qatar is carrying out a reserve diversification policy and stated last year that the euro would be one of the alternative currencies into which it would diversify. Gold is clearly also another element of this programme, with the holdings amassed to date amounting to 0.28 million ounces or 8.8 tonnes. At $650/ounce, these holdings comprise 3.4% of Qatar's gold+foreign exchange holdings combined.
Based on the latest figures from the International Monetary Fund, the world average level of gold holdings at the end of April, at $650/ounce, was 10.4%. Stripping out the holdings of the supra-national organisations, then the average holding among the central banks of IMF members was 13.6%.
Meanwhile in the rest of the Middle East, where it must be allowed that information is patchy as some member countries have not reported their gold holding levels for some time, the IMF reports that gold holdings amount to 956 tonnes, and have increased by just over eight tonnes over the twelve months to April, with reactions in holdings reported from "oil-exporting countries" and a small increase in Omani holdings.
Neither is the other important region with respect to dollar reserve holdings; the Far East. There have been regular suggestions that the Chinese Government, with reserves of over $1.1 trillion, should raise gold as a component of its foreign exchange in order to diversify risk. As the Chinese Government has pointed out more than once, however, the amount of gold necessary to make a substantial difference is hugely disproportionate to the size of the gold market overall and this, therefore, is not really a viable option. At present, gold comprises 1.1% of Chinese gold and foreign exchange combined. To raise this to the world average of 10%, at current foreign exchange levels, China would have to hold 200 million ounces of gold, or 6,220 tonnes. Current holdings are 19.3 million ounces or 600 tonnes, a shortfall of 5,620 tonnes. Given that this comprises more than twice world annual mine production it is clear that such a policy would massively distort the gold market - although the upward impact on the price would mean that total purchases could not have to be that high.
The same argument applies to the rest of the Far East. Between them, China, Hong Kong, Japan and South Korea held $2.42 trillion at the end of April and combined gold holdings were 44.4 million ounces or 1,380 tonnes. At $650, this comprised 1.2% of gold and foreign exchange holdings combined. The only recorded change in holdings among these nations was a small reduction of 40,000 ounces from Korea.
Meanwhile over the twelve months to the end of April, world gold holdings in the official sector fell by 12.4 million ounces or 385 tonnes. Over that period, sales under the second Central Bank Gold Agreement amounted to approximately 355 tonnes, leaving a net 30 tonnes of disposals from the rest of the world, although over the calendar year, estimated net sales amounted to just 328 tonnes as the result of marginal acquisitions from non-CBGA signatories. These sales wre substantially lower than the 674 tonnes of net disposals in 2005.
There has been something of a sea-change in official sector attitudes to gold, with official sector holders now generally having firmer hands than hitherto, and with some banks looking to add to their gold holdings. The numbers are comparatively low, however, and the sector is likely to continue to be a net seller for some time to come, albeit at lower levels than in recent years.
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(comment - found on a subscription site that allows 3 day old reports to be made available for public viewing. Very interesting article about pig nickel)
Cut Stainless Production And Excessive Nickel Scrap Cause Turning Point For Chinese Ni - Pig Iron -
"A boom to produce nickel-contained pig iron in China is now facing a turning point. The companies to produce nickel-contained pig iron in China are estimated to be more than 30 producers and many companies in China are still considering to launch this business as new producers.
However, in view of the facts that major 4 stainless steel companies in China have entered into cutback of stainless steel production by 20% and price of nickel-based stainless steel scrap has fallen sharply, nickel-contained pig iron produced in China has been now felt with an excess of the cargoes."
(The Chinese pig nickel supply is increasing, Chinese steel makers are producing less & scrap steel (containing nickel) is coming into china cheaper than before = glut of pig nickel that might not sell too well.)
Courtesy/copyright Dow Jones Newswire - "The surge in ferrochrome contract prices, agreed between chrome producers and stainless steel mills, to a record $1/pound for 3Q 07 shows how desperate steel-makers are to cut costs, says Fortis Metals.
Short term, strikes at platinum mines in South Africa could impact supply as nickel is a byproduct of these operations, the bank says.
CVRD's promise to double its nickel output to 500,000 tons in 5 years seems bearish,
but most of it will be through acquisitions, the bank notes.
While the high LME nickel price has irked stainless producers,
many key industrial applications still demand high-grade, nickel rich stainless, the bank says, forecasting a short term price outlook at $32,000-$38,000/ton."
...(Now there is a neat fact, nickel is a byproduct for platinum, usually nickel is the primary metal with byproduct metals coming from nickel mines.)
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I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly.
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Edited by - pencilvanian on 08/31/2007 19:30:17 |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 07/17/2007 : 20:17:10
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Gold Exchange to Debut in 2008
By Lee Hyo-sik
Staff Reporter
The government plans to establish an exchange for gold as early as next year to make gold transactions more transparent and discourage the smuggling of the precious metal.
According to the Ministry of Finance and Economy, the government will set up an exchange, an organization to manage and supervise gold distribution, next year to stem any illegal transactions and distribution of gold.
It will expand the exchange into a comprehensive commodity exchange, like New York Mercantile Exchange (NYMEX), to deal with not only gold, but diamond, crude oil and other commodities as well.
The exchange will operate separately from the Korea Exchange (KRX) on which stocks, bonds and derivatives are traded, the ministry said.
Finance and Economy Minister Kwon O-kyu said the government will eventually develop the gold distribution management body into one of the internationally competitive and advanced commodity exchanges such as the NYMEX and London Mercantile Exchange (LME).
At an initial stage, the government plans to exempt gold bars traded in the exchange from excise taxes to help stimulate trading, while reducing income taxes for gold traders.
In a move to stop gold smuggling and encourage good transactions through a normal market process, it will also scrap a 3 percent tariff on imported gold in 2008.
``The exchange will likely deal with primarily spot trading of gold at first but will later include a broader range of items, such as diamond, copper and crude oil. We also plan to allow the commodity futures transactions,'' a ministry official said.
Also, the ministry said it will consider abolishing excise taxes levied on precious metals and jewelry items from 2009 through the revision of the relevant tax laws next year.
The government is contemplating providing tax breaks and low interest loans for raw material purchases to the local precious metal processing industry to help strengthen its competitiveness.
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China's gold output up 15% in first half
BEIJING, July 17 (Xinhua) -- China's gold production rose 15.26 percent in the first half over the same period last year boosted by record prices, the nation's top economic planning agency announced on Tuesday.
Gold output was 122.2 tons from January to June, according to the National Development and Reform Commission (NDRC).
The NDRC stated the average global gold price in the first six months stood at 658.75 U.S. dollars per ounce, higher than the annual record of 614.5 U.S. dollars in 1980.
Technological advances and discoveries of new gold reserves also contributed to the increase, it said.
The gold sector earned 3.47 billion yuan (458.7 million U.S. dollars) in net profits over the past six months, 40.35 percent higher than the same period last year, said the NDRC.
Industrial output soared by 43.83 percent to 31.86 billion yuan (4.2 billion U.S. dollars) during the same period.
The NDRC said China discovered 162 tons of gold reserves in the Yangshan Gold Mine in the northwestern province of Gansu and large reserves of more than 50 tons in the same province as well as in the eastern province of Shandong and northeastern province of HeiLongjiang.
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UPDATE 2-Gold bounces after dip, Tokyo launches mini-gold
SINGAPORE, July 17 (Reuters) - Gold rebounded on Tuesday, with the U.S. dollar at near record lows against the euro, but investors were careful about buying the metal too strongly ahead of a testimony by Federal Reserve Chairman Ben Bernanke later in the week.
Trading resumed in Tokyo futures after a holiday but all gold contracts fell in sympathy with declines in New York's COMEX market and a generally firm Japanese yen.
Spot gold hit an intraday high of $666.15 an ounce before slipping to $664.60/665.30, still higher than 664.00/664.80 an ounce late in New York on Monday, when it fell more than $2 on technical sales.
"The short-term trend is still technically biased to the upside and the market is trading above the key 100 moving average," said Pradeep Unni, analyst at Vision Commodity Services in Dubai.
"The only risk is the stiff resistance around $670 levels in the spot gold chart. Once the market breaks the resistance, expect a rally in spot gold to $674 to $680," he said.
Most active June 2008 gold futures on the Tokyo Commodity Exchange ended 20 yen per gram lower at 2,634 yen, having risen to its highest in five weeks to 2,656 yen last Friday.
Tokyo dealers shrugged off Monday's earthquake that killed nine people and injured around 1,000, and instead focused on the launch of a new "mini" gold contract to revive turnover.
TOCOM's mini gold futures contract started trading, with high volumes which reflected strong demand from retail investors for the handy, less costly alternative to the existing contract.
The most active December contract closed at 2,624 yen per gram after opening at 2,625 yen and hitting a high of 2,627 yen.
The contract's trading unit is 100 grams a lot, one-tenth the size of the existing gold futures contract. Its initial margin is 87 percent less than that for the existing version.
"It's the first day and trade is fairly active," said Kaname Gokon, deputy general manager at Okato Shoji Co. Ltd.'s research section. "Whether this trend continues on the second day and in the future will depend on the consistency of prices."
Turnover of the mini gold contract, the first derivatives contract listed by Japan's top commodity exchange in three years, totalled 22,258 lots at the close. That compared with 38,737 lots for normal gold futures.
The euro edged up to $1.3786, hovering near a record high of $1.3815 hit on Friday, according to electronic trading platform EBS, as concerns about problems in the U.S. subprime market pressured the U.S. currency under selling pressure.
The dollar was flat at 121.80 yen, having recovered from a one-month low of 120.99 yen hit last week.
"Although market participants do not expect any surprising comments from the Fed on inflation or the subprime fallout, investors and traders will scrutinise the comments to discern the economic status from the Fed's standpoint," said Unni of Vision Commodity Services.
But any signs of concerns from Bernanke about problems in the subprime market when he delivers his semi-annual testimony on monetary policy on Wednesday and Thursday may prompt more selling in the dollar, said dealers.
In addition to Bernanke's testimony to the U.S. Congress and the Senate, dealers also await data on June consumer prices on Wednesday and the June figures on housing starts and building permits.
Platinum fell to $1,306/1,310 an ounce from $1,313/1,317 late in New York. Palladium <XPD=> eased to $365/370 an ounce from $366/369.
Silver edged down to $12.92/12.96 an ounce from $12.94/12.99 an ounce.
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I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 07/18/2007 : 19:17:16
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Nickel market in deficit from Jan-May on tight fundamentals - WBMS
LONDON (Thomson Financial) - Robust nickel demand at a time of critically low supply sent the market into a deficit in the first five months of this year, said the World Bureau or Metals Statistics (WBMS).
A WBMS report today showed the nickel market recorded a deficit of 8,700 tonnes from January to May this year compared with a 5,500-tonne surplus in the same period a year ago.
Prices of the metal rose sharply from the start of the year up until the end of May on critically low stocks which, at times, were so low they would not satisfy eight hours of global consumption.
An 8 pct rise in mine production to 632,500 tonnes and a 10.4 pct rise in refined production did little to alleviate market tightness during the January to May period. Canada, China and South Africa were largely responsible for the increase in refined production, said the WBMS.
World demand was 51,000 tonnes higher than the previous year.
The WBMS data does not take into account unreported changes to stocks held in China's strategic reserve bureau, but does include low grade ferro nickel produced in China from imported ores.
London Metal Exchange prices are currently trading at around 32,000 usd, down about 40 pct after hitting an all-time high of nearly 52,000 usd in May, as weaker demand in response to the high prices helped supply tightness to ease.
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China to allow overseas bids for country’s biggest gold deposit
What is thought to be China's biggest gold resource, at Yangshan in Gansu Province, will be thrown open to bids from both domestic and overseas companies.
Posted: Wednesday , 18 Jul 2007
SHANGHAI (Reuters) -
China will allow overseas firms to bid for exploration rights at the country's largest potential gold deposit, state media said on Wednesday, citing a senior official at the National Development and Reform Commission.
The company with the latest and best technology that can ensure minimum waste of the precious metal is likely to win the bid for the gold deposit in Yangshan, Gansu Province, the China Daily reported.
"Any company from home and abroad, as long as it has the mining technology and is able to work out a detailed mining plan without harming the environment, can take part in the bid," the newspaper cited Xiong Bilin as saying.
The potential gold mine has at least 160 tonnes in proven reserves, and is in a convenient area with a national highway passing near it, the newspaper said.
International gold prices , which have gained 5 percent so far this year to $666 an ounce, have spurred miners to ramp up output and exploration. The precious metal hit a 26-year high of $730 an ounce in May 2006.
China's gold output rose 15 percent in the first six months of the year to 122 tonnes, extending a 7 percent increase in 2006. The country produced a record 240 tonnes of gold last year.
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Metals - Gold rallies on Bernanke's US sub-prime concerns for US economy
07.18.07, 1:16 PM ET
LONDON (Thomson Financial) - Gold rallied after the dollar weakened when Fed Chairman Ben Bernanke highlighted the dangers of the sub-prime fallout to the US economy in his semi-annual testimony to Congress.
Gold tends to move counter to the dollar, as it is seen as an alternative asset to the world's most common currency reserve.
'The dollar is weaker and that is the main driver for gold right now,' said Calyon analyst, Michael Widmer. 'Now it's slipped below 1.38 versus the euro, everything seems to be pointing to the problems in the housing market and the potential for lower (US) interest rates weakening the dollar further.'
At 4.45 pm, spot gold was trading at 672.90 usd an ounce, compared with 665.00 usd in late New York trade yesterday.
Some analysts believe gold is asserting its position as a wealth guarantor in times of market volatility, following Bear Stearn's announcement that two of their stressed hedge funds are now essentially worthless after investing heavily in the US sub-prime market.
'Gold hasn't just risen because of the dollar, it's risen against sterling as well,' said BullionVault.com analyst Adrian Ash. 'A lot of people are concerned about Bear Stearns (nyse: BSC - news - people ), and the level of fear you're seeing in the market is bringing people back to gold.'
Gold is further supported by oil prices trading close to all time record highs. Prices have received a further boost from falling US inventories today.
Bullion often rises in line with oil as it is used as an inflationary hedge against higher fuel costs.
The lack of buying by jewellers, turned off by high prices in the historically quiet summer period, has limited some of gold's gains.
Among other precious metals, platinum is up to 1,318 usd against 1,308 usd after reports that South African mine workers rejected a pay offer from Northam Platinum, increasing the likelihood of strike action.
Its sister metal palladium fell to 365 usd against 366 usd.
Silver was up to 13.17 usd against 12.93 usd.
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I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
Edited by - pencilvanian on 07/18/2007 19:39:39 |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 07/20/2007 : 19:55:36
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Silver junior news…
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China's stainless steel market stepping out from the complete domination of nickel - "Since July, the steel supply has been decreasing gradually as the mills have started the practice of reducing output which is expected to have large influence towards the steel market."
More on the story below
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Metal Prices May Get Hit Hard By A China Slowdown -Dresdner - "Demand for base metals in China, the industry's biggest growth engine, may slow in the second half of the year and put an end to the rally in prices this year, Dresdner Kleinwort said in a recent report."
Funds Back Base Metals But Ignore Warning Signs - "The funds are back in the base metals markets with a vengeance, but this time they're playing the dangerous game of choosing to ignore the subprime tremors effecting the world's biggest economy in order to play up the positive."
Base-metal bargains may be good as gold: experts - "Nickel and zinc prices have dropped from their recent peaks, but the future for both points to strong demand and short supplies, say experts. Copper, tin and lead have potential as well."
Mining groups are emboldened by notions of a 'super-cycle' - "As the boom in commodities prices stretches into its fifth year, mining company executives are more bullish than ever."
Opinion - So what has suddenly turned the nickel market around? And will it stick?
Wednesday's report from the World Bureau of Metal Statistics stating nickel remained in the deficit column, appeared to take many by surprise.
This was immediately followed by news today that China's economy was not only not showing any signs of slowing,
but had increased last quarter by its biggest margin in 12 years.
Red hot just doesn't seem to adequately describe the economic picture in China.
Where have those 'experts' gone, that were claiming the growth in China was artificial and only due to the country's preparation for the 2008 Olympics?
When explaining yesterday's sudden turnaround in the nickel market, one respected bank stated it was completely due to news that "Shanghai Baosteel Stainless Steel Co had suspended purchases of low-cost nickel pig iron due to fast-falling nickel prices".
While we agree this verifies the "great unknown factor" in the supply picture has possibly shown us the price where it becomes vulnerable (and if so, higher than originally thought), the news from Baosteel should not have come as a complete shock. Interfax reported last Friday, in an article we posted on Saturday, that "many small nickel pig producers in the provinces of Shandong, Sichuan and Fujian have been forced to reduce or suspend production"
and that an official with privately-owned Zhejiang Huaguang Group, China's largest nickel pig iron producer, was quoted as saying
"We are considering cutting nickel pig iron production in the coming months, as downstream demand has shrunk with the price of nickel."
With trading on Monday and Tuesday taking nickel down another $1500/tonne, this news appears to have meant little to nickel traders.
That is, until Wednesday, when news came out that
even with pig nickel production running full out during the first 5 months of 2007,
the market had remained in a deficit situation.
This is very troubling.
With the price of nickel down dramatically from this reporting period,
and news that producers are cutting back on pig nickel production,
the growth of nickel inventories into LME warehouses becomes somewhat confusing.
For a market that had grown accustomed to less than a day's supply of stored inventory over the past year, today's nearly 11,000 tonnes appears to reflect a market in surplus.
Now, it could mean a couple of things, depending on whether you are a half-full or half-empty kind of analyst.
Either the slowdown in demand is so extreme, that the nickel market has moved into surplus, or demand remains strong, and buyers are only waiting for price stability to return to the market.
We will have to wait and see which proves out, but the market, at least for the last few days, is betting on the latter.
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China now No 3 gold consumer and producer(07/20/07)
China's gold production and demand are forecast to continue rapid growth over the coming years as local incomes rise and the precious metal is more widely purchased for jewelry and investment.
According to the Gold Survey 2007 published by Gold Fields Mineral Services Ltd (GFMS), a London-based precious metals consultancy, though global gold output dropped slightly last year, China's production of the precious metal increased 8 percent year-on-year to hit 247 tons and overtake Australia as the world's third-largest gold producer.
The National Development and Reform Commission (NDRC), China's top industry regulator, said that the country produced 122 tons of gold in the first six months of this year, up 15 percent, from the same period a year earlier.
NDRC said in February that the nation's 2007 gold production will reach 260 tons, which would be another 8 percent annual increase.
The NDRC projected that total gold production in China will be 1,300 tons from 2006 to 2010.
Philip Klapwijk, executive chairman of GFMS, said that the surge in China's gold output is stimulated by robust domestic demand and rising global prices.
China is now also the world's third-biggest gold consumer, following the United States and India. Demand for gold totaled 259.6 tons last year, up 3 percent from 2005.
Demand in 2006 included 244.7 tons for jewelry, up 1 percent, and 14.9 tons for investment, an increase of 27 percent.
"Consumer demand for gold in China will continue to grow this year following consecutive increases over the past four years," said Klapwijk, due to rising disposable incomes, the Chinese tradition of valuing gold and the further opening up of the domestic gold market.
The World Gold Council, a London-based marketing organization funded by the world's leading gold miners, earlier forecast that consumer gold demand in China will reach 600 tons annually in coming years.
Albert Cheng, managing director of the World Gold Council Far East, said that jewelry consumption is still the dominant use for gold, taking 90 percent of the market.
Yet GFMS's survey showed that Chinese interest in gold bars and coins, especially commemorative ones for China's Year of the Pig and 2008 Beijing Olympic Games, is very promising.
"They (the gold bars and coins) are regarded as safe and reliable investment tools, amid fluctuations in the nation's stock market and rising property prices," said Sun Zhaoxue, head of the China Gold Association. He said he believes individual gold investment will grow faster than jewelry purchases.
Growth in both gold production and demand in the country is also spurred by rising prices on international markets.
Official statistics show that the average price of aurum-99.99 gold in China jumped by 32.35 percent, or 37.95 yuan a gram, last year over 2005.
Domestic gold prices began fluctuating in line with changes in the world market in 2001 when the Shanghai Gold Exchange, China's sole national bourse for the metal, was formed in a move to open up market for the precious metal.
Trading volume at the exchange, where there are 149 members making spot transactions in renminbi, increased by 37.81 percent last year over 2005 to a total of 1,249.3 tons.
The survey forecasts that world gold prices will exceed $700 an ounce by the end of this year compared with the current $640 to $680, and might rise to $850 an ounce next year.
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Russian gold miners look forward to big production increases
If forecasts come true, Russian gold production is in for a big increase by 2015, but output may fall in the interim.
Author: Robin Paxton
Posted: Thursday , 19 Jul 2007
SEVERO-YENISEISKY, RUSSIA (Reuters) -
Cutting the ribbon at Russia's largest gold mill this week, local governor Alexander Khloponin forecast a huge increase in production by the time gold medals are handed out at the 2014 Winter Olympics.
Russian miners are investing billions of dollars to turn reserves second only to top producer South Africa's into gold. If its top three miners fulfil their promises, output will more than triple by 2015, a year after the country hosts the games.
But investors, awaiting evidence these long-term plans will bear fruit, have become more conservative as gold prices draw breath after rising over 50 percent in the last two years.
Polyus Gold , which produced 23 percent of Russia's gold last year, built the new mill at its Olimpiada mine from scratch -- an achievement that CEO Pavel Skitovich believes bodes well for future projects.
"The important thing is proving to the market that we can build plants, and will continue to do so to keep on target," the 42-year-old chief executive said after the opening ceremony.
Polyus plans to more than triple output to 3.9 million ounces by 2015, becoming one of the world's top five gold miners, by developing several large fields in remote regions. Yet its London-traded stock is down 13 percent this year.
"This is the Polyus story: great reserves, but issues with execution. If people believed all the reserves will be taken out of the ground, the valuation would be higher," said Vladimir Zhukov, senior metals and mining analyst at Alfa Bank.
Second-ranked Peter Hambro Mining has the opposite problem, Zhukov said -- a strong track record of production but less certainty about conversion of its resources into reserves.
DIGGING DEEPER
Olimpiada, 500 km (313 miles) north of Krasnoyarsk near the remote Siberian town of Severo-Yeniseisky, is Russia's largest gold mine, contributing 16 percent of national output last year.
Three times a week, rock is blasted from the pit face and scooped into trucks with wheels that dwarf their drivers. A new lighting system guides excavators around the pit after dark.
"We've been through a difficult period. Now, I think the mining sector in Russia is getting better," Vladimir Sushkevich, who heads the technical department at Olimpiada, told Reuters at the base of the 400-metre-deep pit.
Russian gold output has declined in the last two years. The country has slipped behind Peru to sixth place in the world rankings in terms of production.
In the short term, output will fall further as open-pit alluvial deposits -- where the metal is found close to the surface -- are depleted. Miners are going to have dig deeper to find the gold on which their growth forecasts are based.
The Russian Gold Industrialists' Union forecasts output will drop by between 2 percent and 4 percent in 2007 from 164.32 tonnes (5.28 million ounces) last year.
"We see growth starting from 2009," said Valery Braiko, the union's head. "I can't speak for every single project, as there are many, but the plans announced by Polyus and Polymetal are very reliable projects."
Polymetal , Russia's third-largest producer, sees output rising 56 percent to 400,000 ounces by 2010.
HIGHER PRICES?
Gold prices <XAU=rose 23 percent last year. More gains are expected in 2007 on a weak dollar, slowing sales by central banks and investors' appetite for commodities, although analysts polled by Reuters forecast the pace would slow to 10 percent.
Investors are also becoming more selective when it comes to Russian mining stocks. GV Gold, Russia's seventh-largest gold miner, whose only production asset is a mine in eastern Siberia, has twiced pulled plans to float shares in London this year.
But conditions at the large mines are improving. Foreign firms, including Caterpillar Inc. , supply equipment to Olimpiada, where the average monthly wage of 30,000 roubles ($1,178) is more than twice the national average.
Nearly 5,000 people earn their living at the mine. When the Blagodatnoye complex 25 km (16 miles) away starts operating from 2010, another 800 to 1,000 will be needed, Sushkevich said.
Finding personnel, however, is not easy. Russia's mining sector is not immune from a worldwide shortage of young, skilled labour to replace the current generation of technical staff…..
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I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 07/21/2007 : 18:52:28
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Copper hits 1 1/2-mnth peak on tight global inventory
Copper rose to its highest price since mid May and held firmly above 8,000 usd, a key psychological level, as falling global stocks sparked tight supply jitters.
Earlier, the Shanghai Futures Exchange in China, the world's top consumer, said its copper stockpiles fell 0.89 pct to 91,182 tonnes in the week to July 20.
Stocks stored in LME certified warehouses fell 1,350 tonnes to 98,675 tonnes, said the exchange in a daily report.
'The Chinese market is steadily absorbing a large amount imported between March and May,' said JP Morgan analyst Michael Jansen. 'There's still strong supplies of the metal in China but the excess supply is slowly fading.'
At 10.23 am, LME copper for three-month delivery was trading at 8,083 usd a tonne against 7,971 usd at the close yesterday. Earlier prices struck 8,090 usd, its highest price since May 10. Copper has gained some 5 pct since the start of the month.
Meanwhile, talks at Codelco's Chile mine to end a strike failed to pressure prices lower. Codelco, the world's biggest copper miner, said production is now 10 pct short of normal levels.
'There's all sorts of different parties involved so it (the strike) is difficult to conclude,' said JP Morgan's Jansen.
All other base metals extended yesterday's gains on increased fund buying following strong Chinese GDP growth reported yesterday which rose above market expectations, and as a weak US currency made dollar denominated commodities cheaper for foreign currency holders.
'Base metals prices put in a strong performance across the board yesterday with fund buying lifting prices in what is usually the seasonally slow summer period for the complex,' said Barclays Capital analysts.
Lead struck yet another all-time high this morning, rising to 3,480 usd before easing slightly to 3,475 usd from 3,336 usd yesterday. Lead has jumped to a series of all-time highs this year, benefiting from supply shortages and rising demand.
Lower shipments both from China and the Magellan mine in Australia together with rising Chinese demand have stretched supply. A 10 pct export tax levied on Chinese lead issued in a bid to address a domestic shortfall has further squeezed the market.
'These overall bullish fundamentals brought significant amounts of non-commercial money into the market,' said Calyon analyst Michael Widmer.
Tin was up at 15,550 usd against 15,400 usd. Prices for the metal, used extensively in electronics soldering, rose to its highest point since the new contract started in 1989, at 15,700 usd yesterday.
Elsewhere, nickel was up at 34,800 usd from 33,905 usd, aluminium was higher at 2,856 usd from 2,833 usd and zinc was also up at 3,650 usd from 3,570 usd.
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LME base metals advance; lead at new record high
London Metal Exchange base metals finished the week on a strong note, with record lows for the U.S. dollar fueling technical momentum and gains seen extending into next week, market participants said Friday.
LME lead jumped some 5% to a fresh record $3,500/metric ton, more than double levels seen at the start of the year, while copper and aluminium both hit multi-month highs.
LME zinc and nickel regained lost ground, each climbing 4%, while tin consolidated the week's gains close at record levels.
The U.S. dollar was the culprit, touching a fresh record low against the euro of $1.3845, before easing.
"Assuming the dollar continues to weaken, more metal- related buying will take effect," said one LME broker, as consumers soften record prices with favorable forex trades.
Adding to bullish sentiment this week has been a ramp up in the pace of Chinese economic growth, with second-quarter growth coming in at the highest level for 12 years. The rate hike Friday was as expected, and had little impact on market sentiment, analysts said.
LME copper has found renewed strength on reports that Chinese smelters may cut copper output in the second half as domestic prices fail to cover the cost of buying and processing imported raw material.
"Output reductions of between 10-15% were reportedly discussed at a meeting of nine smelters in Shanghai last weekend," said Man Financial's Edward Meir.
LME inventories still below 100,000 tons and weekly Shanghai data showing a draw added to the positive tone.
In addition, a clampdown by the Chinese authorities on "smuggling" of copper scrap into China has fueled a pickup in physical demand, said Max Layton of Macquarie.
Gold at two-month highs and crude approaching record levels are further supporting prices, market participants said.
The International Aluminum Institute showed world aluminium output for June at 2.034 million tons, down 56,000 tons on the month.
I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 07/21/2007 : 19:48:33
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#11: gold doesn't rust so that means we will not need so much of it in the future. (sarc.)
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Fanaticism is doubling one's efforts, yet forgetting one's purpose.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 07/23/2007 : 16:06:01
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First try with tinyurl, hope it works OK.
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Gold prices, technology, new reserves boost China's gold output
China’s gold production increased 15.6% during the first six months of the year. Meanwhile, the nation also announced tax increases on lead, zinc, copper and tungsten.
Author: Dorothy Kosich
Posted: Wednesday , 18 Jul 2007
RENO, NV -
China's National Development and Reform Commission (NRDC) reported Tuesday that the nation's gold production increased 15.26% to 122.2 tonnes for the first six months of this year compared to the same period of 2006.
Meanwhile China's State Administration of Taxation announced that China will raise the resources tax on lead and zinc mines, copper mines and tungsten mines on August 1.
NDRC said the technological advances and discoveries of new gold reserves contributed to the increase, along with higher gold prices, according to official Chinese news agency Xinhua.
The commission said the gold sector earned 3.47 billion yuan (US458.7 million) in net profits over the past six month for a 40.35% increase over the first six months of 2006. Industrial gold output increase 43.83% to 31.86 billion yuan (US$4.2 billion) during the first six months of 2007.
Meanwhile, Interfax-China reported Tuesday that China will raise the resource tax on August 1, and also create five new tax brackets for lead and zinc mines and for copper mines. Brackets will also be created for tungsten mines. The difference resource tax brackets will be allocated according to metal grade, reserves, mining company ore production and sales revenues, according to the State Administration of Taxation.
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(this seems short enough url lengthwise)
Numbers for the crunchers or curious - There has been, and will be, a lot of talk about the importing of pig nickel ore into China and we thought we would supply some numbers to you. Here are some current market prices in China for this ore. From Indonesia, .9 to 1.1% nickel content ore, is running $60-$70/MT. This same ore was bringing $98-$105/MT five weeks ago. 1.1-1.5% nickel content ore, is bringing $90-$100/MT, compared to $153-$160/MT before. Jumping up to 2.1-2.4% nickel content ore costs producers $150-$160/MT compared to $205/$235/MT just five weeks ago. Comparable prices shown from Philippines. Ore from Indonesia shows containing 30% H2O, and from Philippines, 35% H2O. Which means even good mud will make you money these days! Also, noticed some chrome ore selling figures, showing imports from Pakistan, Indonesia, Zimbabwe, Oman, Philippines, and South Africa.
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Sumitomo Metal Mining Co., Japan's largest nickel producer, is quoted in China media as saying Friday, it is now forecasting a 23,000 tonne surplus for the world nickel market in 2007, instead of its earlier prediction of a 12,000/tonne deficit, due to slowing demand. (You must be logged in to see this link.)
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. Inventories continue to gain, over 10% in last week. In reference to the potential strike in Los Angeles, KESQ is stating the union and shipping companies have agreed to resume discussions tomorrow, but we are unable confirm this story with a second source. (Bloomberg
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Weekly Monday morning review of Chinese analysts forecasts for nickel price in upcoming week (Shanghai NonFerrous Metals) - Last week the analysts dropped the ball, with all of them forecasting a down market, when in fact, nickel prices ended higher. This week, uncertainty returns with an apparent equal split on votes. Of 32 analysts submitting opinions, 11 (35%) felt the price would rise in the coming week, 7 (22%) feel the price will stay about the same, with the remaining 13 (41%) predicting the price will fall.
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Miners going nuts over Brazil - "BRAZIL is a big player on the world mining scene and its iron ore giant CVRD is up there on the global stage with Rio Tinto and Anglo American. But, for all that, the country derives only 1 per cent of its GDP from extracting minerals."
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I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
Edited by - pencilvanian on 07/23/2007 16:21:00 |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 07/24/2007 : 20:23:56
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(Again, thanks beercritic for telling me about tinyURL)
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Haywood confident on gold, bullish on silver, nickel, uranium and lead
In their recent “Mid-Year Update,” Canada’s Haywood Securities said gold ETF holdings will test the 21-million mark during the second half of this year as world gold production declines and gold investment continues to gain momentum.
Author: Dorothy Kosich
Posted: Monday , 23 Jul 2007
RENO, NV -
In their recently released "Mid-Year Update," Canada's Haywood Securities Metals and Mining Team declared, "We remain confident in the outlook for gold with a near-term rebound in the in the price of both gold and gold equities."
Meanwhile, Haywood analysts also remain bullish on silver, nickel, uranium and lead.
PRECIOUS METALS
Haywood analysts Andrew Kaip, Eric Zaunscherb, Nicholas Coutoulakis and Deanna McDonald asserted that "support for gold as an investment continues to gain momentum, with an increasing number of announcements of purchases by non-Western governments. While ETF holdings declined marginally, holdings remain above the 20 million-ounce level, with an H2/07 rebound set to test the 21-million ounce barrier."
"We expect world output to decline marginally from the forecasted 2,500 tonnes of mine production in 2006. With the long-term prospects for gold intact, we forecast gold to sustain US$700 per ounce through 2008, before moderating to US$650 per ounce in 2009 and US$600 per ounce long-term," they predicted.
The analysts also noted that "in the last week of Q2/07, there was a significant withdrawal of funds from silver ETFs, a decrease in the non-commercial (speculative) net position on COMEX, and a coincident break of the 200-day moving average for silver. Despite the apparent short-term ‘loss of interest', historically related to summer, we note that each time silver has approached or gone slightly below its 18-month moving average since mid-2003, it has been a buying opportunity."
"Overall, a positive mix of the main silver price drivers indicates a balance or slight increase in the current silver price, further supporting the view that recent changes in interest may be simply a result of a thin, volatile summer market," Haywood suggested.
BASE METALS OUTLOOK
Haywood's analysis indicated that "the supply-demand fundamentals of the nickel market continue to shine. This 1.3 million-tonne market is at best balanced, and demand is growing at 5% to 7% per year as China and the Western world go on consuming nickel. At current growth rates, the market needs a new 50,000-to-60,000-tonne-per-uear nickel mine (i.e. a Voisey's Bay) each year to maintain the status quo."
"Over the long term, we expect higher nickel prices will be driven by increasing capital (and operating) costs, in part associated with the industry's move towards large nickel laterite development where capital costs are typically in excess of US$1.5 billion and processing technology is notably more complex. Without a higher nickel price regime, these much needed ‘mega' projects could be shelved owing to a lack of the economic return needed, on the order of at least 10% to 15% to justify development."
Haywood forecasts a global surplus of 275,000 tonnes of refined copper this year in an 18-million tonne annual market. "Hence, we anticipate prices will decline modestly from current levels of US$3.50 per pound through H2/07, but have increased our 2007E copper price forecast to US$3.10 per pound from US$2.75 per pound. ...Our long-term (2011+) outlook remains unchanged with a US$1.50 per pound copper price."
Nevertheless, Haywood admitted that "this arguably bearish outlook is not share by all market participants, noting that Bloomsbury Minerals Economics recently forecast that global copper consumption will exceed output by 237,000 tonnes this year, compared with a 54,000-tonne surplus in 2006."
Meanwhile, Haywood predicted that lead demand in 2007 will grow 4.4% to 8.4 million tonnes, and "the lead market should be balanced or in slight oversupply this year."
"We expect the lead market will remain tight over the next 18 to 24 months, supporting high prices. We have increased our 2007 lead price assumption to US$1.00 per pound from US$0.80 per pound, and our 2008 lead price to IS$0.80 per pound from US$0.65 per pound. Looking further ahead, we have maintained our long-term (2011+) lead price of US$0.50 per pound."
Although Haywood anticipates lower molybdenum prices over the longer term, the analysts do not expect prices to fall back to levels experienced in the 1980s and 1990s. "A preliminary review of Greenfield molybdenum projects currently under consideration suggests that a long-term molybdenum price of approximately US$8 to US$10 per pound is required for most of these projects to achieve an economic return on investment," according to analysts Kerry Smith, Stefan Iaonnou and Josh Clelland.
"Our formal price forecast includes a long-term (2013+) molybdenum price of US$12.50 per pound-in line with the metal's average price of about US$12.40 per pound over the past 25," they concluded.
Analysts Jim Mustard and Chris Thompson said, "Our future outlook for uranium continues to be bullish, as commitments by government around the world to consider, and in many cases commit to, additional generated capacity increase. This unprecedented global interest will clearly entrench demand growth for the next decade as preliminary production struggles to catch up. ...China's growth will be key to increasing demand, as it is not expected to significantly expand domestic production to keep pace with its current or forecasted growth in requirements."
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Supercycle prompts Citigroup to raise copper price forecasts
Citigroup analysts on two continents hiked copper price forecasts Monday, asserting that “nowhere are the drivers and determinants of the commodity supercycle more clearly on display than in copper.”
Author: Dorothy Kosich
Posted: Tuesday , 24 Jul 2007
RENO, NV -
Highlighting a "super cycle shining on copper," Citigroup Global Markets metals analysts Monday revised their copper forecasts up to $3.50/lb in 2008 and $3/lb in 2009/2010.
The long-term copper price assumption was increased by 32% to $1.45/lb.
Based on their Australian counterparts' recent in-depth analyst of the copper supercycle released Monday, Citigroup metals analysts John H. Hill and Graham Wark of San Francisco and Sydney's Alan Heap hiked the target price for copper-gold producer Freeport-McMoRan (FCX) to $120/sh. The analysts also raised EPS estimates for mega-gold miners Barrick (AFX) and Newmont (NEM), based in large part on their copper operations.
In their report, "Copper-A Super Cycle Sheen," Citigroup Sydney, Australia-based Research Analysts Heap and Alex Tonks proposed that "the copper market is enjoying a repeat of its performance in the supercycles of 50 and 100 years ago. Demand is strong and supply is struggling to keep up. Structural change is underway in consequence."
The analysts defined a commodity super cycle as an extended period (10-plus years) of trend rise in price, "driven by a major economy as it urbanizes and industrializes." During the past 150 years, Citigroup indicated that there have been two previous commodity super cycles.
"We believe three factors will support high long-run returns: strong demand growth; a steep cost curve; and high barriers to entry," Heap and Tonks declared. "There is no shortage of large copper deposits, but they tend to be in regions of high political risk, and are low grade, thus increasing barriers to entry."
Citigroup asserts that the copper market will be close to supply demand balance until 2010. Meanwhile, they also forecast that copper prices will soften in the second half of this year "as the end of restocking by Chinese fabricators impacts the market, and strike concerns abate."
Nevertheless, the analysts also suggested that a steeper cost curve to produce copper, increasing barriers to entry and strong demand growth "will support higher returns in the future." In the meantime, sustainable high copper prices "can be expected to attract new market entrants," they advised. "The Chinese are the most notable, driven by strong domestic demand, a shortage of domestic resources and a smelter industry which is short of supply."
SUPPLY/DEMAND BALANCE
Nonetheless, Citigroup's analysis suggested that the intensity of Chinese copper use may be peaking. "High production composition of income (i.e. an economy driven by manufacturing and exports, rather than the consumer and services) in China is the driver of the super cycle," the analysts put forward. "However, material composition of product is lower now: less copper is used in many applications than in the past. ...In China electricity intensity may be reaching a higher plateau."
Heap and Tonks advocated that "lower than expected supply has been the most important factor supporting [copper] prices above forecast levels. It remains a key uncertainty, both in the short and long term. Short term concerns center on the impacts of possible strikes. Long term issues center on the timing of new supply."
"We now expect persistent tightness in the copper market through 2009," the analysts advised. "From 2010 the market moves into surplus as supply increases to meet continuing strong demand growth. The smelter bottleneck also eases, allowing smelter utilization rates to recover."
"Our central forecast points to an excess in mine supply from 2012. In the forecast this is reflected in a build up of concentrate stocks, as there is unlikely to be sufficient smelter capacity to process the concentrate. If sufficient smelter capacity does become available surpluses would be expected to build in the metal market."
A higher proportion of new copper supply is expected to come from high political risk regions, including Central Africa, which Citigroup advises will add at least 10% of new supply "and potentially much more." Despite the risk, "large mining companies are increasingly comfortable operating in such regions however, relying on technology and surveillance to ensure the safety of personnel," the analysts indicated.
Citigroup advises that Chile will continue to dominate copper mine supply, but that Central Africa "is potentially a center of much greater future growth."
Citigroup was adamant in its assertion that "there is no shortage of large copper deposits," citing a recent Brook Hunt study identifying more than 100 projects with measured and indicated resources of more then 200Mt of copper at 0.68% Cu, equating to 25 years of supply. Of the 100 projects, 30 have more than 2Mt contained copper.
In its analysis, Citigroup projected costs forward to 2014, forecasting that the industry average cash cost of production will be 80-cents per pound.
Citigroup also forecasts "extreme tightness in the concentrate market continuing until the next decade as a consequence of modest growth in concentrate supply and increasing smelter capacity. TC/RCs will remain under pressure. ...Looking further forward, the market will ease after 2010 as concentrate supply increases, and assuming no new smelters are built beyond those already committed."
The analysts proposed that two critical issues will shape the copper demand outlook in the short and medium term: the Chinese inventory cycle and the U.S. economy." They suggested that U.S. demand may be bottoming even though housing is in a downturn and auto sector demand is also weak.
"Overall our demand forecast is for growth to average 5.1% year until 2010," Citigroup said.
U.S.-based Citigroup analysts Hill and Wark said, "We are re-setting copper forecasts significantly higher across the board to levels broadly in-line with the future curve and well above forecasts embedded in consensus earnings for the mining companies. "
"It is becoming clear to us that the legacy of a decade of under-advancement, frictional barriers to new capacity, and voracious demand in both developing and established economies have overwhelmed supply, while frustrating prophesies of imminent cycle surplus," they declared.
"We expect copper supply/demand to remain very tight and see little chance that inventories can be meaningfully rebuilt before 2010," they wrote. "Fundamental drives we point to include: 1) A higher/steeper cost curve; 2) Resource nationalism restricting access; 3) Increasing difficulty in permitting; 4) Shortages of equipment and technical staff; and 5) Falling ore grades and resource depletion."
Despite the declining Chinese intensity cited by their Australian counterparts, Hill and Wark advised that they expect Chinese demand will average 12% per year, and global trend growth will increase from 2.5% to 4.5%."
COPPER FORECASTS BENEFIT GOLD MINERS
Citigroup's analysis suggests that high copper price forecasts benefit gold mines, such as Barrick and Newmont, "who each have significant exposure. We continue to be ardent believers in gold, based on a mix of supply/demand and macro/monetary drivers. ...Our sense is that as investors query, ‘What's big, important, and profitable in metals, and where the shares haven't run?', the answer will be ‘gold.'"
Noting that the Freeport McMoRan Copper & Gold model is "heavily leveraged to copper" and commodity forecasts above $3/lb have had profound effects, the analysts said, "We are raising EPS estimates by 80-100% in 2008/09." Citigroup lowered target multiples for the New Orleans based mega-miner, but are taking the FCX target to $120/share.
Meanwhile, the analysts suggested that the "aggressive valuation and commodity framework employed by Rio Tinto in its friendly bid for Alcan, casts Freeport in a favorable light. This is particularly true from the margin and relative resources scarcity perspective. While it seems premature for Freeport to be ‘back in play,' there might eventually be a good fit with CVRD or others."
Citigroup also hiked its EPS estimate for Barrick, particularly highlighting the "unsung yet highly profitable" Zaldivar copper mine in China. "With the global re-rating of the hard rock miners, Barrick's non-gold assets are increasingly attractive," the analysts said. "Also, gold has shrugged off the central bank sales and assorted pessimists, to regain the $670/oz level, while gold equity multiple compression appears to have run its course."
Finally, Citigroup also slightly raised EPS estimates on Newmont to reflect the impact of higher copper prices at the Batu Hijau mine in Indonesia. "This is offset by expectations for a flower ramp-up at the ‘new' Phoenix mine in NV. Material cashflows are unlikely before the PRB-fired power plant can supply cheaper electricity (-50%) in mid-2008."
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China imported 42,598/tonnes of refined nickel in first 6 months of 2007, 15.5% higher than similar period in 2006.
Outokumpu webcast -Points made by Juha Rantanen CEO) Believes user demand for stainless steel consumption will maintain a 5-7% annual growth. In market dynamics, distributor behaviour presently in de-stocking mode, accelerated due to nickel prices falling, which has huge impact on stainless steel production, as they make up 50% root market for stainless
Chinese production of ferronickel, will add about 100,000 metric tons to overall nickel supply this year and is now the marginal source of nickel production, says Goldman Sachs. Notes that China has been aggressively importing very low grade ore from the Philippines and Indonesia to smelt in facilities originally intended to produce steel. This is high cost due to shipping and energy costs and results in a relatively poor grade of ferronickel, which competes with scrap. "The long-term motivation price for production at the margin is now $23,000/ton," Goldman adds, up from $15,000/ton previously.
LME nickel prices "may overshoot" to as low as $25,000 a metric ton on the downside but are seen fluctuating around $35,000/ton over the medium term, says Goldman Sachs.
Recent sharp falls in London Metal Exchange nickel prices have forced cuts in Chinese nickel pig iron production, which should boost demand for primary nickel in the coming months, Macquarie Bank said in a report Tuesday. As a result of the 30% slump in nickel prices since the start of June, Macquarie has lowered its 2007 nickel pig iron forecast to possibly less than 85,000 metric tons, down from 95,000 tons of recoverable metal."
.....(Up, down, sideways, nickel is getting as bad as gold and silver, hence the reason for the new name for nickel, silver junior.)
Zimbabwe to open new nickel mine shortly -
...(Good luck on that venture Zimbabwe.)
"A nickel mining company in Zimbabwe said Monday it planned to open a new mine in the central region of the country containing approximately 36.4 million tonnes of the mineral."
Also from the stainless teel site, the following commentary-
"We have followed the metals theft stories since we began this site and have recorded some remarkable feats of theft. The stories have become so common and mundane, that we don't give the stories the coverage we used to.
How could anyone top stealing an entire bridge, ora complete radar tower, as they did in Russia a few years back?
And while we told you last fall to expect to hear a lot more about thieves stealing the inner workings of air conditioners (now making headlines in the mainstream media), we haven't seen this story - yet. But we are betting you will. We stumbled across an article called "Battery Toxicity" and found the following statement ..."Toyota and Honda place decals with a toll-free number on their hybrid battery packs. Toyota offers a $200 bounty to ensure that every battery comes back to the company. In a press release, Toyota states, "Every part of the battery, from the precious metals to the plastic, plates, steel case and the wiring, is recycled." - With catalytic converters the current hot item for thieves, stealing a hybrid battery would be much easier, with a much higher return on a crooks risk-of-jail investment."
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I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 07/25/2007 : 16:08:43
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Plunge Protection Team must have come back form their summer vacation…
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Dollar Gains vs. Pound & Euro...
Excerpt:
Good day... It had to happen. The currency markets have been all one way for the past few weeks, with several currencies hitting new highs vs. the US$ on a daily basis. So the dollar was bound to bounce back at some point. I find it strange that currency traders picked this morning to rally the dollar, but it happened and the euro and pound sterling are both off about a cent in early European trading.
I have searched for a reason for this quick rally in the US$ vs. the euro and pound and found they sold off due to a drop in the national stock benchmarks of all the 18 Western European markets.
There was also technical pressure on the currencies vs. the US$. The euro's drop accelerated at $1.38 where there were orders to sell the currency. In addition, the dollar index closed last night within a rat's breath of 80, which has been touted as a key support level.
A bounce back up from this support is normal.
But the timing of this $ rally is still somewhat odd due to the fact that today we will get data which will show Existing Home Sales in the U.S. fell for a fourth straight month in June. We started off this morning with the weekly MBA mortgage application number which was off 3.6%. Home resales will likely show a monthly drop of 2.1% to an annual rate of 5.86 million, the lowest since April 2003. Yes, the housing market is going to continue to be a drag on the U.S. economy and put downward pressure on the US$.
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The Price Of Gold Closes Sharply Lower Due To Profit Taking
7/25/2007 2:51:55 PM The price of gold showed a steep decline during trading on Wednesday, pulling back well off its recent highs. Gold for August delivery closed down $11 at $673.80 an ounce after ending the previous session at a two-month closing high.
Profit taking contributed to the pullback by the price of gold, with some strength in the value of the U.S. dollar inspiring traders to move their money out of the previous metal and into the currency, which is moving off record lows.
The strength in the value of the dollar came even though a report from the National Association of Realtors showed that existing home sales fell 3.8 percent to a seasonally adjusted annual rate of 5.75 million units in June. Economists had expected a more modest decline.
Other metal prices moved lower along with the price of gold, with the price of silver showing a notable decline. Silver for September delivery closed down $0.293 at $13.15 an ounce after ending Tuesday's trading at its best closing level in over a month.
Additionally, copper for September delivery closed down $0.064 at $3.555 a pound, while platinum for October delivery closed down $2.70 at $1330.90 an ounce and palladium for September delivery closed down $1.60 at $368.30 an ounce.
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TOO LITTLE?
Zimbabwe official gold price raised tenfold in attempt to cut smuggling
Posted: Wednesday , 25 Jul 2007
HARARE (REUTERS) -
Zimbabwe's central bank raised on Wednesday the local price of gold nearly 10-fold in a bid to curb smuggling and boost sagging deliveries.
The precious metal is the main source of hard currency for the struggling southern African nation, accounting for a third of its export earnings. Producers will get $3 million Zimbabwean dollars per gram ($199.97 at the official exchange rate or about $20 at the black market rate), compared to $350,000 Zimbabwean dollars before the change, Central Bank Governor Gideon Gono said in a statement.
Gono said the new price was effective immediately. The central bank is the sole purchaser and refiner of gold in Zimbabwe, and it pays producers mostly in Zimbabwe dollars.
"As a country, our gold production levels have lately fallen victim to escalating operating costs, as well as elements of indiscipline, side-marketing and smuggling," Gono said.
"Against this background of escalating operating costs, it has become imperative that the current gold support price be further enhanced," he added.
The move came about a month after Zimbabwe's mining chamber warned that gold producers were operating below 20 percent capacity and that some had suspended operations due to the low local gold price and the impact of electricity cuts.
It said that Zimbabwe's gold output was expected to be about 8,700 kg this year, a 23-percent drop from the 11,354 kg output last year. Deliveries of gold have been falling since the beginning of 2007.
Gold miners have been hard hit by Zimbabwe's massive inflation of more than 4,500 percent which has pushed up costs. Shortages of foreign currency and fuel also squeezed the sector.
But President Robert Mugabe's government has vowed to maintain regular deliveries of gold which accounts for 52 percent of Zimbabwe's mineral production.
Mugabe, in power since 1980, has accused some producers of smuggling gold in an effort to sabotage the economy and has warned that his government would seize mines, fueling fears of possible nationalisation.
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(That’s a neat url that tinyURL made.)
The Monsoon factor. What impact on the gold price
The rainy season in India is underway and looking good for gold – though buying patterns may differ this year from last.
Author: Rhona O’Connell
Posted: Wednesday , 25 Jul 2007
LONDON -
For those of us living in the UK it rather feels as if we have been living through a monsoon in recent weeks. The people who really know about monsoons, however, are those who live in India, where the monsoon proper is now underway.
According to the Indian Meteorological Department, this year's South West Monsoon advanced over the Andaman Sea on May 11th, which is almost ten days earlier than the normal date, and reached Kerala on May 28th, four days earlier than usual. By June 10th, it covered most parts of North-East India and by the end of June the majority of the country had been affected. The monsoon withdraws in a south-easterly direction, with typical withdrawal dates running from early September in the north west through to mid-October in the South-east.
Probably most importantly, the rainfall over the country as a whole over June was 107% of the average and the Department estimates that this year's season as a whole will be 93% of the long period average, although this is not evenly distributed and some areas, notably in the Delhi area, have received considerably less rain than usual. The forecast for the season as a whole is split as to 90% over the north-west (where Delhi is located), 98% over the north-east, 96% over the centre and 94% over the south Peninsula (although these models carry errors of ±8%). Mumbai sits halfway up the western coast while Hyderabad is south-centre.
Why is this significant? Because some 70% of the Indian population lives in rural areas and the quality of the harvest is a direct function of the monsoon. Some 66% of India's cultivated land area is directly dependent on the monsoon and so it impinges on local affluence and by extension, gold purchases. India typically accounts for 20% of the world's total gold demand in any one year and gold market watchers thus have to take account not just of the dollar, geopolitical risk and a host of other factors, but also of the weather in South Asia! If the rainfall from the monsoon season comes in at only 94% of the long-term average this year then the harvest is also likely to be below the long-term average, but any shortfall is likely to be small and the general prognosis is that the harvest will be a good one. The 2006 monsoon, for example, was unevenly distributed, but the food grain harvest increased by approximately 3.6% while sugar cane and cotton increased by 20%.
Gold purchases in India over calendar 2006 as a whole (for jewellery and small investment bars) amounted to 522 tonnes and 194 tonnes respectively, a combined total of 716 tonnes, compared with 587 tonnes and 135 tonnes in 2005, a total of 722 tonnes. In 2006, India thus accounted for 23% of the world's jewellery and investment bar purchases, while in 2005 the proportion was 24%. In rupee terms, the value of the contained gold purchased during those two years amounted, very roughly (i.e. on an annual average basis) to 454 billion rupees in 2005 and 629 billion rupees in 2006, an increase of 38%. Clearly this is by no means solely due to a good harvest but a vast range of other factors as the Indian population came to believe in high and rising gold prices.
Whether that kind of gain can be registered this year must be open to doubt. According to figures compiled for the World Gold Council by GFMS, jewellery and investment bar offtake in the first quarter of this year was 211 tonnes against 141 tonnes in the first quarter of 2006, a sizeable 39% increase by weight and a whopping 74% increase in rupee terms. Whether that rate of offtake can be sustained has to be open to doubt.
On the basis of a forecast good harvest, however, and all other things being equal, the gold market should be able to look forward to healthy purchases over the latter part of this year and into the early part of 2008. Whether there is a strong seasonal upturn, however remains to be seen as the "dry" weather in northern India so far this year has meant that bullion dealers have been able to continue shipping gold into the country at reasonably high rates. It is not yet clear whether this means that the appetite for gold that surfaces later in the year has been sated by earlier purchases than normal.
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I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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dpwozney
Penny Sorter Member
Canada
50 Posts |
Posted - 07/26/2007 : 17:43:06
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Violence escalates in Chile copper strike
26 Jul 2007 22:22:41 GMT
Source: Reuters
By Gideon Long
SANTIAGO, July 26 (Reuters) - Protesters derailed a train and hurled rocks at buses carrying miners to their shifts on Thursday as a strike at the world's largest copper miner, Chile's Codelco, reignited after days of relative calm.
Codelco said the disturbances were the most serious yet in the month-long standoff between the state-owned company, which supplies 11 percent of the world's copper, and subcontracted workers demanding improved pay and conditions.
For the first time in weeks, the protests had a significant impact at Codelco's El Teniente division, home to the world's biggest copper mine. The company halted all output at the plant, high in the central Chilean Andes.
"The workers decided not to go up (to the mines) because they couldn't," a Codelco spokeswoman said.
"They said they weren't going to put their lives at risk with this security situation, because the subcontracted workers were throwing stones this morning at the windows of their buses."
El Teniente, 50 miles (80 km) south of Santiago, produced 418,300 tonnes of copper last year, accounting for around 25 percent of state-owned Codelco's total output.
A prolonged stoppage at the division would almost certainly hit the price of copper, which has remained firm this year despite slipping from an all-time high in May last year.
Copper for delivery in three months <MCU3> ended at $7,760 a tonne on the London Metal Exchange on Thursday. In New York, copper for September delivery <HGU7> ended down 3.30 cents, or 0.93 percent, at $3.5225 a lb.
TRAIN DERAILED
Some 100 miles (160 km) north of El Teniente, a train transporting copper concentrate from a Codelco mine was derailed in what the company described as an act of sabotage linked to the strike.
It said the train and seven wagons came off the tracks, shedding some 500 kilograms of copper concentrate.
Further north, the smallest of Codelco's mining divisions, Salvador, remained out of action as protesters continued to picket the plant, refusing to let staff enter.
Chilean media reported clashes between protesters and police outside Salvador, which accounted for less than 5 percent of company output last year.
Crucially for Codelco -- and for the supply of copper to world markets -- the strike has had virtually no impact on the company's biggest division, Codelco Norte, which last year accounted for 56 percent of company output.
As the strike has gone on, the issue has become political.
The government has urged Codelco to resolve the dispute as quickly as possible while the company has refused to submit to what it says are unreasonable demands.
"The offer put forward by the company on Monday is the definitive one," Codelco said in a strongly worded statement on Thursday evening, referring to talks which have dragged on without resolution in Santiago this week.
"Today, the acts of violence reached their most serious point yet," it said. (Additional reporting by Rodrigo Martinez) |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 07/26/2007 : 18:21:18
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DJ PRECIOUS METALS: NY Gold, Silver Fall Sharply On Liquidation
Thu, Jul 26 2007, 18:36 GMT
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DJ PRECIOUS METALS: NY Gold, Silver Fall Sharply On Liquidation
By Allen Sykora
Of DOW JONES NEWSWIRES
Recent long liquidation continued in gold and silver futures Thursday, with technically oriented selling accelerating the declines, analysts said.
They cited profit-taking in connection with the sharp loss in U.S. equities,
plus an unwinding of so-called carry trades. Market watchers also cited general risk aversion. One added that Comex gold and silver options expiration appeared to add to the selling pressure.
December gold fell $11.40 to $675.10 an ounce on the Comex division of the New York Mercantile Exchange. As pit trade was closing, the December contract at the Chicago Board of Trade was down $11.30 to $675.30.
A couple of traders reported that sell stops were hit.
"It's really more liquidation," said Mike Zarembski, senior commodities analyst with optionsXpress.
"We went through a couple of key moving averages -both the 100-day average and the 20-day moving averages. That kind of set thetone for a lower market. As well, there is the weakness in the stock market."
Late in the session, the 100-day moving average for Comex December gold passed through $684.60, while the 20-day average passed through $678.50. Furthermore, the market fell through the 50-day average around $675.90 and 200-day average at $674.20.
Another key technical level that failed was the July 17 low of $678.50, said Patrick Fearon, precious-metals analyst with A.G. Edwards. He put the next support around $660, after the December futures held at $660 on July 5 and $659 on July 6.
December gold fell to a low of $666.30 and September silver to $12.755, their weakest levels since July 6. At the session low of $666.30, December gold hadfallen $31.20, or 4.5%, so far this week.
Meanwhile, Comex September silver fell 20 cents to $12.95. As it was closing, CBOT September silver was down 19.7 cents to $12.945.
Comex September silver fell through its 20-day average that was around $12.99 after previously falling below the 50-day average that was at $13.17 late in the session.
Yet another area where technical selling appeared was the July 17 low of $12.925, said Fearon. He put the next key support areas around $12.49 and $12.24.
Historically, said Zarembski, a sell-off in equities might have meant investors shifted funds into gold. In recent months, however,
there appears tobe a tendency for investors to liquidate gold holdings in order to raise cash when stocks fall dramatically, he pointed out.
"Some people may be in trouble and trying to get liquid again," saidZarembski. "And one of the best places to get liquid is to get rid of positions, and gold was a nice performer for a lot of these players. Some money is definitely being taken off of the table."
As the gold pit was closing, the Dow industrials were down by around 275 points.
Jon Nadler, analyst with Kitco Bullion Dealers, pointed out that the sell-off in gold occurred even though the dollar index was softer and crude oil firmed -factors that tend to underpin the metal.
"Gold's feeble attempt at making positive headway overnight made a sharp U-turn, becoming a hefty slide as the trading day unfolded," Nadler said.
"Additional factors weighing on bullion were also seen in the more than 200-point drop suffered by the Dow, and the implications that such a decline may portend for margin call liquidations and the resurgence of generalized riskaversion - both of which were negative factors in gold's spring-time slump."
Zarembski and Fearon also cited unwinding of carry trades. Carry trades occur when investors borrow money in a country with low interest rates and then invest in other assets, including gold. Evidence of this unwinding is the strength in the Japanese yen and Swiss franc, said Fearon.
"Japan and Switzerland are currently the main sources of carry trades. As those trades are unwound, whatever investments implemented by those trades are taking a hit," he explained.
Worries about the U.S. sub-prime market persist, Fearon added.
"With those concerns, people are thinking the U.S. economy might slow more than currently expected, and that might bring down inflation concerns. That is probably also weighing on the precious metals."
Some investors buy gold and silver as a hedge against possible inflation.
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Excerpts:
HARMONY'S RESERVES DECLINE - BLOOMBERG
Source: Business Report
Posted: 26/07/2007 Reserves of the metal in ore at HARMONY GOLD's deposits dropped 4% as it sold off mines. The company said yesterday that the reserves, a measure of the metal that the company reckoned it could mine at a profit, declined to 53.6m ounces in the year to June from 56m ounces a year earlier. Chief executive Bernard Swanepoel plans to snap three consecutive full-year losses by concentrating on newer, more profitable mines and disposing of those with smaller profit margins. HARMONY said shaft closures and sales of assets, including a stake in Western Areas, cut reserves by 5.3m ounces. The Evander South project and Golpu in Papua New Guinea are among the new projects that lifted reserves. Shares in HARMONY fell 4.12% to R98.75, with the gold sector down 2.99%.
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Same story, same link, different viewpoint
HARMONY'S GOLD RESERVES DROP - Fin24
Source: Finance24.com
Posted: 26/07/2007 HARMONY GOLD's gold reserves at the end of June stood at 53.6m ounces, the company said on Wednesday. HARMONY said in a statement the reserves reflected a year-on-year depletion of 2.4m ounces while asset disposals, shaft closures and the loss of its stake in Western Areas accounted for a further 5.3m ounces decline in reserves.
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Silver, Gold dips on weak global advice
Mumbai, July 26: Both the precious metals dipped further for the third consecutive day today in view of bearish advices from global markets with Silver declining by Rs 90 per kg and Gold by Rs 55 per ten gm, traders at the Bombay Bullion Association said today.
Silver fineness .999 opened low at Rs 18,105 per kg on thin buying support. Later, it drifted further lower and closed at Rs 18,085 per kg with a major loss of Rs 90 from its previous day's close. The White metal has crashed by Rs 200 in the last three days.
In London, silver was lower at USD 13.07/13.09 per troy ounce as compared to its last close of USD 13.20/13.22 per troy ounce.
Similarly, spot standard gold (99.5) and pure gold (99.9) also opened weak at Rs 8,850 and Rs 8,900 per ten gm respectively.
Later, the yellow metal came down and closed in the red at Rs 8,830 and Rs 8,880 respectively with a big loss of Rs 50 for standard mint and for pure gold by Rs 55 from their last close. Gold prices have fallen by Rs 120 each in the last three sessions.
In the London market, gold was down at 672/674 per troy ounce against 678/680 per troy ounce, traders said.
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A little video for the bears out there who might be yelling the sky is falling for raw materials. MegaBuilders 4 part video on the Burj Dubai "complex" - video here
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And PBS broadcast a segment on "The Sand Castle" this week, which touches on what is happening in Dubai, but addresses a nearby Emirate that plans to outdo them - here
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(and this isn't China or India)
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I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
Edited by - pencilvanian on 07/26/2007 18:31:17 |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 07/26/2007 : 20:40:46
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Gold Falls as Banks May Increase Sales; Silver Falls (Correct)
By Claudia Carpenter
(Corrects sales by Switzerland in fifth paragraph.)
July 25 (Bloomberg) -- Gold fell in London on speculation European central banks will increase sales of the precious metal. Silver also dropped.
The European Central Bank said yesterday three members of the Eurosystem of national banks sold 288 million euros ($397 million) of gold last week, equal to about 18 metric tons and up from 88 million euros the week before.
European central banks may sell 157.6 tons in the next nine weeks, or an average of about 18 tons a week, according to World Gold Council figures.
``We may need to get very used to the fact that 18 metric tons of gold are going to become commonplace for the next two- and-a-half months,'' Dennis Gartman, trader and editor of the Virginia, U.S.-based Gartman Letter, said in his daily report today. That amount will ``make it difficult for gold.''
Gold for immediate delivery dropped $4.41, or 0.7 percent, to $676.59 an ounce at 2:17 p.m. in London. Silver fell 10 cents, or 0.8 percent, to $13.14 an ounce. On the Comex division of the New York Mercantile Exchange, gold futures for August delivery fell $8.20, or 1.2 percent, to $676.60 an ounce.
European central banks have sold 342.4 tons of gold as of July 20 under an agreement that caps annual sales at 500 tons through Sept. 26, London-based World Gold Council investment research manager Natalie Dempster said. That includes 13.9 tons sold by Switzerland in June, she said. They were the biggest sales by the Swiss National Bank since March 2005, according to figures on the bank's Web site.
The Eurosystem comprises the ECB and the national central banks of the countries using the euro.
.......(Question, if the banks keep selling gold and never replenish it, isn't there a chance that someday the banks will have no gold to sell when they may want to? Also, who is doing all of the major buying? China? India? Russia? The Middle East/OPEC? Where is all the gold going?)
I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 07/26/2007 : 21:24:59
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I hear that they are really only selling to each other. With all that extra gold on the market one might expect that gold jewelry prices would be falling. I don't see that happening at my local China Mart.
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Fanaticism is doubling one's efforts, yet forgetting one's purpose.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 07/27/2007 : 19:35:33
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Dow was at 14,000 a few days ago, now it has fallen over 700 points. This has had a downward push on metals, possibly due to traders selling off their PM holdings to cover their losses (PMs seem to be the reserve of choice to cover one's bets when things go bad.)
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Gold futures close at a three-week low
Prices lose almost $25 for the week on a stronger dollar, weaker stock market
By Myra P. Saefong & Polya Lesova, MarketWatch
Last Update: 4:12 PM ET Jul 27, 2007
Excerpt:
SAN FRANCISCO (MarketWatch) -- Gold futures fell Friday to close at their lowest level since early July, finishing the week with a loss of almost $25 an ounce, with pressure coming from renewed strength in the U.S. dollar and sharp declines in the broader stock market.
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As far as the "Strong dollar" is concerned, we get this tasty tidbit,
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Daily Pfennig 7/26/07:
Excerpt:
Before getting into today's expected numbers, I want to expound on something which I just touched on yesterday.
The rebound in the US$ vs the euro and pound was a normal reaction in a market which had been going in one direction for too long.
Both Chuck and a Pfennig reader emailed me yesterday to tell me this $ rally had all the signs of normal profit taking. The charts for the dollar index, euro, and pound sterling all suggested the dollar decline to a record level was too rapid and a sell-off was needed.
Also, with all the negative moves in the equity markets, money managers were looking to book profits where they had them.
What I'm driving at is this move by the euro and pound doesn't mean the overall trend is over. In fact, it is a very good sign we have further to go, as the profit taking occurred without a sustained rally in the dollar.
I would look to range trade at these levels for a while before the next major move down by the US$.
.....(These guys are currency traders so they should have a better idea of what is going on in the realm of currencies than most talking investment heads or the Fed. After all, if they didn't know whats what with currencies they would be unemployed and flat broke real fast.)
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All Market Relationships and Attitudes Affect Metals
Excerpt:
"Volatility within market sector groups creates a pushing and pulling in prices that often times seems irrational but in fact is both quite normal and understandable. The longer term view, and by that we mean years, not weeks or months, are for continuing bull markets in precious metals."
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Irate workers disrupt operations at Zambian copper/cobalt producer
Workers at Chambishi Metals on Wednesday shut down power to the plant at Zambia’s biggest cobalt producer after they rejected an 8.5% pay rise offered by management.
Author: Ronald Mwila
Posted: Thursday , 26 Jul 2007
NDOLA -
Operations at Chambishi Metals Plc, Zambia's largest cobalt producer, were disrupted for about seven hours on Wednesday after irate workers switched off the power supply to the plant.
According to union officials, the workers' action came after they rejected an 8.5% pay rise offered by management. The workers felt disrupting operations would force management to give them a higher raise, but leaders of both the National Union of Miners and Allied Workers (NUMAW) and Mine Workers Union of Zambia (MUZ) declined to reveal the workers' demand.
The workers shut power to the leaching and smelter plants at 10 am and called off the protest later in the day after NUMAW president Mundia Sikufele addressed them.
Although the labour leaders were unwilling to disclose the raise employees were asking for, some workers indicated that the majority would be comfortable with the rate awarded their colleagues at Konkola Copper Mines (KCM) Plc.
Recently, KCM awarded its employees a 20% pay rise.
The Chambishi Metals protest is the second to hit the Zambian mining sector in as many weeks after miners at First Quantum's Kansanshi Mine protested after discovering that management had allegedly reneged on an agreement to effect a 21% pay rise effective this month.
MUZ general secretary Oswell Munyenyembe said the workers were protesting against "poor conditions of service" being offered by the mining firm. He said it was difficult to blame the workers over industrial unrest because mining houses were making huge profits but continued subjecting employees to poor condition of service.
Chambishi Metals management could not immediately comment on the issue.
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Comment - What a difference a few months make.
A while back we posted some enquiries from China of business' looking for low grade laterite nickel ore (pig nickel ore).
Now it appears the sellers far outnumber the buying enquiries. Here are just a few we found listed. Albania miner with over 1,000,000 tonnes of 1.05%. A UAB miner with access to 70 million metric tonnes, can ship 50-100,000 tonnes per month, 2% and up. Kalimanta, Indonesian miner can ship over 500,000 metric tonnes per month of 1.5% to 2.5%. Indonesia miner has 60,000 metric tonnes of 1.65%+. Another Indonesia miner can ship 50,000 tonnes per month of 1.2%. A Philippines miner can ship 50,000 tonnes a month of 1.4%-1.6%. All listed in the last 5 weeks. And on Monday we said China was paying $60-$70/tonne for .9 - 1.5% grade ore. That same grade is fetching $48 -$55/tonne today.
....(Supply of pig nickel has exceeded demand. Will this effect the price of pure Ni?)
I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 07/29/2007 : 17:09:01
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Liquidity Crisis Hits Markets and Gold
By Chris Laird
Jul 27 2007 11:13AM
For the last several years, corporate buyouts, corporate stock buy backs and such, the Yen carry trade, and the mortgage derivatives markets have added tremendous liquidity to world financial markets. In tandem with this, the market analysts came to view a ‘world stock bull’ emerging, and even the most conservative market bears started to get into this world stock bull theme in their writings. The total amount of these sources of financing and liquidity in the last 2 years is over $5trillion, and has been one of the major supports for stock markets.
All of a sudden, these sources of liquidity are vanishing so fast, that market experts are amazed. This all came together in about 3 or 4 weeks after the Bear Stearns mortgage derivatives mess revealed how illiquid structured finance (derivatives in mortgages and such) can become – instantaneously. After that, investors started to flee from billions of dollars value of structured finance offerings in the last several weeks, and in the blink of an eye, almost the entire derivatives financing universe lost liquidity across the board. This is a prime cause of the latest world stock crashes.
Right now, virtually all sources of liquidity are drying up faster than anyone would have thought. Or, put another way, with corporate buy outs and stock buybacks at over $1 trillion in the last year alone – that is now almost gone as support for the markets. Investment banks such as Morgan and Goldman have had to park about 40 huge deals planned this year, as they have not been able to sell of the bonds and financing for these deals. This picture emerged in only about 3 weeks.
Continuing, the now well known debacle with mortgage derivatives – structured finance packaging risky mortgages into so called AAA rated tranches – have led to financial crises at Bear Stearns, Italease, killed deals with Morgan, and Goldman and others, and caused that sector to lose liquidity to zero basically, in a mere two or three weeks after the problems with Bears two now worthless hedge funds emerged. Now, the almost the entire mortgage derivative universe is tanking – and huge margin calls by banks to counter parties are happening- and no one wants to buy.
Then, the long threatening unwinding of the Yen carry trade is afoot, the Yen strengthening significantly now for two weeks, and as that continued apace, world stock markets finally started to fall apart – or crash – this week. Lots of cheap Yen are borrowed at about 1% and invested in every financial market imaginable. As the Yen rises, investors have to sell out stocks and whatever, and then pay back Yen at higher exchange rates – a sure loser. This effect is magnified by a factor of ten by hedge funds who use 10 to 1 or more leverage.
And the list of liquidity drying up goes on, but, only a few weeks after the Bear Stearns CDO (mortgage derivative mess) showed that no one wanted to buy CDOs any more, that rumbled through credit markets, and now, as one trader said, ‘there is a full blown liquidity crisis at hand in world financial markets’. This is not just about CDOs, but has now scared almost the entire structured finance (derivatives) universe because it showed how illiquid they can become- basically instantly illiquid.
And, as, in the case of Bear, or Italease, bankers have to call in loans from counterparties who hold their structured finance derivatives, and find that their counterparties cannot fulfill the ‘margin’ calls in many cases – read as a liquidity crisis.
Then, as this all is occurring, world financial markets are crashing, as the easy liquidity for corporate buyouts and buybacks, and mortgage financing, all of a sudden vanishes in only about 3 weeks. The speed which this liquidity crisis is emerging is amazing many.
Gold suffers because it is sold as a liquid asset by funds and investors to make margin calls among other things. As losses cascade in this latest world stock crash in Asia – down 2 to 4% last night, Europe – down about 2%, the US down 2% or so yesterday, gold (and precious metals) is dragged down with them.
I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 07/31/2007 : 19:34:09
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Silver junior news...
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Commentary from steel site-
News that nickel inventories fell by 120 tonnes overnight, spread like Paul Revere announcing the arrival of the British to the colonies.
Ok, it wasn't quite a 1% drop, but traders took it,
along with news that Eramet's New Caledonia facility would not meet production goals, and ran up the battle flag.
And yes, there was news that production had increased at Norilsk,
and yes, Sallay Malay announced its production had increased 23%, and well,
there is a real good chance that CVRD/Inco will announce it accomplished production increases later on this evening...
but dang it man, this is war!!
Good news has been hard for the bullish trader to come by recently, so the news was welcomed.
So how did the inventory figures add up?
No LME warehouse received any nickel in Monday. None.
And three warehouses registered shipping nickel out - Busan, South Korea, shipping 42 tonnes, Rotterdam, Netherlands, shipped 18 tonnes, and Singapore showed shipping 60 tonnes.
Tomorrow's inventory figures could prove very interesting, and determine whether the price holds on to today's gain, or succomebs to the negative trend.
Cancelled warrants will need to increase before we can say any corners have possibly been turned. That is, unless the new LME rules, has made that old clue obsolete.
Nickel went green early this morning, and while it waffled a bit in afternoon trading, it maintained much of its gains. Why? Different analysts give different reasons, although the most logical is fund money came pouring in on the last day of the month. We also have our own opinion. While watching the market over the past few years, we have noticed that when it approached the big psychological dollar figures, the market tended to stall, and even recoil a little, before inevitably breaking thru. This was especially true on the climb, and the bull would act as if he was approaching a farm fence with an electric line strung along it. He knew he was in for a jolt, but eventually, he would have to suck it up, take the zap, and charge thru the fence. It is possible we are seeing the same with the bear on the slide. $30,000 per tonne is a big psychological barrier, maybe even as big as the $50,000/tonne mark was a few months back. And while stainless steel producers are on the sideline cheering the bear on, those who mine and trade nickel, really would rather this fence not get crossed....
Stainless, Nickel Consumers Drawing Dn Stockpiles-Eramet - "Stainless steel and nickel consumers are using stockpiled inventories in an attempt to limit their exposure to metal prices and benefit from more favorable prices later on, French metals and mining group Eramet SA (13175.FR) said Tuesday."
Lithium ion battery using 3M cathode technology containing nickel, manganese and cobalt makes batteries last longer and give off less heat. This patented technology is currently being used in lap top batteries, as well as rechargeable tools, with the company believing hybrid electric vehicles are a future market.
Copyright/courtesy Dow jones Newswire - "LME nickel prices may drop further over the next month, says UBS. Adds nickel stocks are expected to grow with the seasonal summer stainless steel output slowdown and stainless steel buyers reportedly on the sidelines. Says nickel prices could come under further pressure.Longer-dated nickel is approaching "value territory" with further downside limited, says UBS. It believes some nickel pig iron producers are scaling back production because of profitability issues. Sees $25,000/ton as a point where producers would half production."
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No major news in the world of silver & gold, prices changed, everybody had a guess as to why, prices will fluctuate in the near-future. No specific news, just guesswork.
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Zambia reports sluggish copper output but big increase in cobalt
Excerpt:
Zambia posts improved cobalt production but copper output hit by aftermath of heavy rains and temporary closure of DRC border.
Author: Ronald Mwila
Posted: Tuesday , 31 Jul 2007
NDOLA -
Zambia's central bank has reported a 66.1% increase in the country's cobalt production for the second quarter of this year, which was boosted by favourable international prices.
But Zambia's copper output during the quarter posted only a marginal increase of 4.6% and was 15.3% lower than during the corresponding quarter last year....
....On copper, the country's economic lifeblood, he said preliminary data showed that output during the quarter was 117,124.67 metric tonnes, up from 111,977 metric tonnes the previous quarter.
"However, this level of output was 15.3% lower than the138,372.25 metric tonnes produced during the same period during the same quarter in 2006. this was on account of higher water levels in the mines and the closure of the border with the Democratic Republic of the Congo (DRC), which adversely affected production at some mines," Dr Fundanga explained.
Between November 2006 and April this year, Zambia experienced an unusually wet rainy season that resulted in floods across the country.
I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 08/01/2007 : 18:11:01
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Italy Considering Gold Sales to Pay Off Debt
By Jon A. Nones
31 Jul 2007 at 05:38 PM GMT-04:00
St. LOUIS (ResourceInvestor.com) -- After hording its gold for years, the Italian parliament Tuesday approved a reserve plan allowing the government to look into using the Bank of Italy's substantial gold reserves to cut the country's huge debt. Such actions could have widespread implications for the gold market in 2008.
The reserve plan, known by its Italian acronym DPEF, was inserted at the last minute by Parliament into the 2008 budget outline, which was previously approved by Minister Romano Prodi's government a month ago.
The plan aims to cut Italy's debt to 103.2% of gross domestic product (GDP) in 2008 from 105.1% of GDP this year - about EUR27 billion ($36.9 billion) - using the central bank's gold and foreign exchange reserves. Italy's debt is the world's third highest in absolute terms.
In 2006, the Bank of Italy's gold reserves amounted to EUR38 billion, up from EUR34 billion in 2005. The central bank's foreign exchanges stood at EUR24 billion last year, unchanged from 2005. Thus, Italy has some 62% of its foreign exchange reserves value in gold at about 2,452 tonnes.
Italy has the fourth largest holding of gold after the U.S., Germany and France, excluding the International Monetary Fund. If the country were to reduce its percentage to a modest 30%, it would have to sell about 1,300 tonnes of gold. At current gold prices, this would come to about EUR22 billion.
Matt Turner, commodities analyst with Virtual Metals, said Italy hasn’t sold any substantial amount of gold in many years, since “possibly the 1970s.”
“It seems real enough, and there's perhaps a long way to go until it’s definite, but I think sales from Italy within the next two years seem pretty likely,” he said.
However, previous attempts by European Union governments to use proceeds from central bank reserve sales have met with resistance.
In February 2006, the Bundesbank affectively blocked the German government’s hopes to sell gold to fund research and development projects.
Yet, the Swiss National Bank announced plans in June to sell 250 tonnes of gold reserves over the next two years. With 42% of its total reserves in gold, the bank intends to lower its gold holdings by 20% to 1,040 tonnes.
Turner previously told RI that some central banks feel gold as a percentage of reserves have gotten too high, with many central banks content with about 15%-20%.
Greece has 80% of its reserves by value in gold, Portugal 79%, Germany 63%, Netherlands 56% and France 56%. If these banks were to reduce their reserves to 30%, Germany would have to sell 1,802 tonnes; France 1,273 tonnes; Switzerland 394 tonnes; Netherlands 311 tonnes and Portugal 235 tonnes.
According to the Central Bank Gold Agreement (CBGA) of 27 September 2004, European central banks within the agreement can only sell up to 500 tonnes per year. Last year, signatories failed to meet the sales quota for the first time since the original agreement in 1999, missing the mark by more than 100 tonnes.
World Gold Council data shows that 355 metric tonnes have been sold as of July 27 with only about two months remaining in the 2006-2007 agreement year.
So far this year, the Bank of Spain, France and the European Central Bank (ECB) have been the main sellers. The Bank of Spain cut its reserves by 108 tonnes from March to May, representing 25% of its total reserves. France sold about 91 tonnes, while the ECB sold a total of 60 tonnes.
However, Germany has announced no sales will take place in 2007 and has yet to decide about 2008, Italy has sold no gold in the life of either agreement, Switzerland and the U.K. have now completed announced sales programs and the U.S. has no immediate plans to sell.
RI calculates reported gold sales of about 335 tonnes. At this point, central banks would have to sell about 20 tonnes per week to make the 500-tonne quota this year, well above the yearly average of about 8 tonnes per week.
In an e-mailed note, Jon Nadler of Kitco.com said increased official sector sales could negatively impact the gold price leading up to the end of the agreement year on September 27.
He said an average of nearly 20 or more tonnes possibly hitting the market for the next eight weeks “may put pressure on prices at a time when traditional seasonal demand has not yet commenced.”
Dennis Gartman, editor of the Gartman Letter, agreed that banks have been selling gold at a “heady pace” in recent weeks.
“That has been sufficient to stop gold from advancing, and so the weekly figures shall have our interest,” he added.
James Moore, metals analyst for TheBullionDesk.com, noted that gold had worked its way above the 100-day moving average of $665.80, but warns of possible weakness in the near term.
With “Central Bank sales still overhanging the market and the summer months generally leading to slow physical demand, rallies will still struggle for traction and may keep gold in consolidation mode around $650-75 before demand picks up towards the end of the quarter,” he said.
Gold for August delivery closed up $2.80 at $666.90 an ounce on the New York Mercantile Exchange today. December gold gained $2.70 to close at $679.30.
I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 08/02/2007 : 18:08:35
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Fire halts ore supplies to Eramet nickel smelter - "Fire has severely damaged a conveyor belt at the Thio nickel mine of French non-ferrous metals firm Eramet , halting all ore shipments to its Doniambo smelter in New Caledonia, officials said on Thursday."
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Eramet nickel mine hit by accident; no injuries - "A concrete cylinder ruptured last night at the Tiebaghi nickel mine in northern New Caledonia owned by Eramet unit Societe Le Nickel, management at the subsidiary said."
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(Bad news price wise for nickel)
Courtesy/copyright Dow Jones - "LME nickel slipped through the $30,000/ton level to hit an 8-month low amid muted trade in the summer slowdown period, says an LME broker." - (indications at 10:30 am CST show nickel is selling below the $30,000/tonne mark)
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Nickel price slide will cut stainless prices, soon - "The first question isn’t “whether nickel is getting cheaper?” but “how low will nickel’s price fall?” And that brings up the second buyer-vexing question of “when will stainless steel start its slide?” After all, two-thirds of all processed nickel goes into stainless steel."
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China close to turning point - "AUSTRALIA'S most influential economist, Ross Garnaut, forecasts in a report that China is at an historic economic and social turning point that will lead to an even bigger appetite for resources at higher prices."
More on the story here
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Antam's FeNi III smelter to resume operations Sep after repairs - "Indonesian ferronickel major PT Antam's third smelter in southeast Sulawesi, FeNi III, will resume operations in September following repairs, the company said late Wednesday."
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2007-08-02 12:27:41
China’s new rules to hit metal imports
Commodity Online
MUMBAI: China’s new rules may hit imports of metals from countries like India.
Recently, China’s ministry of finance announced new measures to limit export of processed goods, discourage investment in low-value-added products and ease the trade surplus.
This announcement is expected to have a significant effect on Chinese metal imports.
It will try to limit exports on more processed goods in the second half of 2007.
Over 1,800 types of commodities,
including copper, lead, zinc
and cloth, are added to the category.
Importers will have to deposit half of their payable levies (including import duty and VAT) at the customs when they import raw materials.
The deposit will be remunerated following the re-exports of the finished products within three months.
The new deposit system will be effective from August 23, although existing export contracts will continue until October 23.
Under the tolling agreements, metal fabricators can import the refined metal duty-free if it is for processing into semi-finished products including rod, bar and profile for re-exports.
Otherwise, these imports are subject to 2-3 per cent (2 per cent for copper and 3 per cent for lead and zinc)
import tariff and 17 per cent VAT.
The announcement, it is widely expected, will have an effect especially on copper.
Some are expecting a jump in refined copper imports in July and August because fabricators may rush to export their finished products before the imposition of the deposit system effective in October this year.
According to government statistics, during January-June 2007, Chinese copper imports accounted for 33 per cent of total imports of 895,000 tonnes.
In 2006, 440,000 tonnes of copper were bought under the tolling agreement, accounting for 53 per cent of total imports.
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Aluminum Corporation of China Buys Peru Copper Inc.
02 Aug 2007, 04:07 PM ET
Peru Copper Inc.: Aluminum Corporation of China (Chinalco) announced the culmination of its offer to acquire all of shares of Peru Copper Inc. in circulation for a price of US$6.60 per share. The amount of shares in the offer is 113,403,528 and Chinalco is expected to pay for them on August 3, 2007.
...............(Looks like the Chinese found a use for their US Dollar reserves.)
I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
Edited by - pencilvanian on 08/02/2007 18:14:26 |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 08/03/2007 : 18:55:50
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Albidon draws down finance for Munali nickel project
Low cost high quality Zambian nickel mine is under construction and due on stream next year.
Author: Rhona O’Connell
Posted: Friday , 03 Aug 2007
LONDON -
Excerpt:
Albidon Limited is listed on AIM (ticker symbol ALD) and the ASX (ticker symbol ALB) with market capitalisation of Ł179 million (US$364 million) and is concentrating on developing projects in Africa, with the emphasis on nickel, while developing platinum projects and working with joint venture partners to develop uranium and zinc prospects.
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Collahuasi copper mine output to double
Xstrata plans to more than double production at the big Collahuasi copper mine in Chile it owns in a joint venture with Anglo American.
Author: Pav Jordan
Posted: Friday , 03 Aug 2007
SANTIAGO (Reuters) -
Excerpt:
Copper production at Chile's Collahuasi mine will be more than doubled by 2014 to produce more than 1 million tonnes of the red metal per year and become the world's second-largest copper mine, an executive for one of the mine owners told Reuters.
Jon Evans, vice-president for the North of Chile division of Xstrata Copper, said the plans are born of a months-long business evaluation of the mine together with joint venture partners Anglo American Plc
In a first phase of expansion to be completed in 2010, Evans said Collahuasi will be producing 650,000 tonnes of copper in concentrate and cathodes per year, compared with about 440,000 tonnes per year currently.
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Eramet says New Caledonia mine accident won't affect nickel output before 2008 - "Mining company Eramet said the rupture of a concrete cylinder at its Tiebaghi nickel mine in New Caledonia earlier this week will not affect output before 2008, and the extent of the impact then is still being evaluated." - (more here) Eramet: Accident May Affect Start-up Of Tiebaghi Nickel Plant - "French non-ferrous metals producer Eramet SA (13175.FR) said Friday a recent accident will push back the start-up of its new nickel ore enrichment plant at Tiebaghi, New Caledonia, but said current production at its ferro-nickel facility at Doniambo won't be affected."
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Platts is reporting Japanese stainless steelmaker Nisshin Seiko has announced a 30% production cut in chrome and nickel stainless steel thru August and September.
Chinese media suggests 25% increase forecast for next years iron ore price is entirely speculative, but admit they are negotiating with three major companies, Australia's Rio Tinto, Brazil's CVRD, and Australia BHP Billiton, who not only control around 75% of the world's iron ore production, but work as a team during the negotiations.
The Albanian nickel ore industry, which has been in a deep sleep for the last 15 years, is expected to export 350,000 tons of nickel ore this year -
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Base Metals Mkt Conditions Still Supportive -Anglo - "Anglo American PLC is "bullish on everything" it's in, Chief Executive Cynthia Carroll said Friday, and she singled out base metals and iron ore for special mention."
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Taiwan's stainless steel mills to slash stainless steel output - "Taiwan’s main stainless steel manufactures, including Yusco has announced to reduce the August production by 50 percent, after the reduction in July. Tang Eng said it also will cut 50 percent of production due to the furnace maintenance."
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Barcap increases commodities appetite - "Investment bank Barclays Capital has sharply increased its appetite for risk-taking in the first half of 2007, with all the new risk being taken in the commodities segment, according to Barcap reports."
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I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 08/06/2007 : 17:56:00
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As seen on DW TV, the railway workers are set to go on strike.
(And how does this effect metals prices? German railways deliver 70% of the iron ore for Germany's steel mills. No iron ore, no steel production. This should reduce the demand for iron & nickel until the strike is over)
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Jinchuan Upgrades Nickel Price Again - "On August 1, Jinchuan Group Limited (JNMC), Asia's largest nickel manufacturer, upgraded the factory price of its nickel products from CNY 261,000 to CNY 265,000 per ton. It is the first time for Jinchuan to adjust upward its nickel price after downgrading for five times."
Nickel Prices to Remain Close to $30,000 Per Tonne - Norilsk Nickel - "The cost of nickel could hover around $30,000 per tonne in the medium-term, Viktor Tomenko, head of Norilsk Nickel's Arctic branch, said on Thursday."
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Turkey’s record July gold demand may not last
Turkey's gold imports jumped to 45.7 tonnes in July, more than quadrupling compared to a year earlier to hit the highest monthly figure ever, but may be tailing off again.
Author: Humeyra Pamuk
Posted: Monday , 06 Aug 2007
LONDON (Reuters) -
Recent dollar weakness against the Turkish lira boosted Turkey's gold bullion imports to a record high in July but it is not likely to last, traders and jewellers said.
Turkey's gold imports jumped to 45.7 tonnes in July, more than quadrupling compared to a year earlier to hit the highest monthly figure ever.
A weaker dollar makes gold cheaper for local currency holders and leads investors to unwind their dollar/lira positions and buy gold instead.
"Because of the dollar's recent fall, people have started to buy gold...Coin purchases also increased due to weddings," Istanbul-based dealer Serafettin Ince at Aycan Gold & Forex said in a recent interview.
"But as of August that strong demand is no longer there," he added.
A dip in world gold prices and the wedding season have contributed to soaring demand, which is expected to slow down towards September, when the Muslim holy month of Ramadan kicks off.
"The wedding season boosted physical demand. But now the dollar has recovered, demand has already slowed down," a gold trader in Istanbul said.
Gold coins and jewellery are used as traditional gifts at Turkish weddings.
The Turkish lira <IYIX=> has climbed sharply against the dollar in recent months to touch a six-year high on July 23 on a decisive election win from the ruling AK Party and anticipation that it would press ahead with its pro-business reform agenda.
It last stood at 1.2800 versus the dollar, after falling to 1.3100 last week and compared with the peak of 1.2455 in July.
The trader said domestic gold prices had risen $7-8 above the international gold price <XAU=> in July, a sign of strong demand in the internal market, but now those prices have also eased too.
"The spreads have already come off. The domestic price is now only around $1-2 above the international price," he added.
Spot gold prices touched a high of $683 an ounce in July but have traded between $655-666 an ounce for most of the month.
Prices are around $674.10, having gained six percent since the start of this year but still more than $50 below its 26-year high of $730 in May 2006.
Turkey's gold imports reached a record high of 270 tonnes in 2005 but dropped to 192 tonnes in 2006 as high and volatile world gold prices curbed demand. Imports for the first seven months of 2007 total 150 tonnes.
Jewellers and traders expected Ramadan to have a detrimental impact on gold in September as economic activity slows down.
"The domestic market has been very active over the past few months. We are seeing a better summer period than that of last year's," Mehmet Yagli, Export & Import Director at Atasay, one of the top jewellery producers in Turkey.
"But in Ramadan, domestic market activity will significantly slow down," he added.
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Another false dawn for gold?
The latest kick in the gold price through the $670 level on Friday could be the start of another jump upwards, or just a blip.
Author: Lawrence Williams
Posted: Sunday , 05 Aug 2007
LONDON -
As was pointed out during the week by the commodity analysts at Natixis in London, base metals are in a volatile phase with big fluctuations particularly in copper lead and zinc (Base metals 2007 - Learning to live with volatility), but precious metal prices have been, in comparison, fairly stable. But the end of the week saw an upwards shift in the gold price to over $670 an ounce, where it has remained on Monday, and the question in gold watchers minds is does this represent the next stage in the runup to significantly higher price levels, a new slightly higher trading range, or yet another false dawn?
This year, the price has fluctuated between $608 and around $680, but most of the time it has rested in the $640-$660 ranges with the occasional breakout above. It has breached $670 before - in February, April, May and June - but has always so far been brought down back to the earlier trading range, often through rumours of, or actual, Central Bank sales, or occasional bursts of dollar strength, movement in the oil price, or any other factor which makes the markets nervous. So, is this another case of the same old story, or are we going to see a sustained price increase taking the yellow metal up to perhaps the $690s, with breakouts to $700 or above?
If I knew the answer, I should probably be a gold trader rather than a commentator! But one can take a stab at the scenario.
Gold fundamentals remain positive for the price. Jewellery demand seems to have accepted higher price levels and appears to have stabilised, or increased. ETF gold investment has continued to rise and now is at record levels. Mine production is flat at best and the price has ridden some pretty high levels of Central Bank sales. The 200 day moving average price has been rising consistently.
To set against this is, almost certainly, the desire of the international monetary authorities worldwide to not see a huge depreciation in the value of the US dollar which would destabilise the world's economic system and the US economy itself, which is still by far the world's largest. It seems likely therefore that, as I have said before, that any upward movement in the gold price (which correlates with dollar depreciation) is likely to be stage managed as far as the monetary authorities are able to do so. Gold will almost certainly continue to rise, but it may take some kind of catastrophic incident affecting the US economy directly, to trigger a major breakout.
So the scenario is, as I see it, an upward price movement through the remainder of the year - but a gradual one. $700 may be breached, but perhaps not yet, but I still believe the $1,000 gold price is an awful long way ahead, and if it is not, then that would suggest collapsing economies on a scale that would be in no-one's interest. Gold may rise sky-high, but if it does the rest of your assets may be worth little!
So, maybe not a false dawn, but perhaps the start of a move to the next gold price plateau unless there is some more heavy handed action by monetary authorities to stabilise the dollar and keep gold in its cage.
As for gold stocks, this is, of course, not particularly good news. Costs are in general rising faster than the gold price and the latest run of half yearly statement from the gold mining majors are hardly encouraging in this respect. Just as higher gold prices can lead to a fall-off in production as miners work lower grades which are thus made economic, so the rising costs and flat gold price scenario may lead to higher gold production as the miners revert to mining higher grades and perhaps this could lead to higher output in the years ahead assuming this situation continues. But, this takes a fair amount of time to work through the system.
But, coming back to basics, fundamentals for gold are currently strong and the general consensus appears to be that a continuing increase in the gold price is definitely likely, but whether this will be slow and managed, or a fast move to higher levels, remains to be seen. My personal view is that the former is more likely than the latter, but there are plenty out there with far more experience than me in gold price predictions who would plump for the big breakout scenario.
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Citigroup upgrades copper price forecasts
With strong commodity prices and limited avenues for capital investment, Citicorp has forecast a significant cash build-up for copper miners.
Author: Dorothy Kosich
Posted: Monday , 06 Aug 2007
RENO, NV -
The combination of strong global demand and a struggling supply, Citigroup envisions a structural change in copper markets, which convinced London-based analysts to upgrade 2008-2010 copper price forecasts to US$3-3.50/lb.
In their recent report, "Metals and Mining Strategy Copper Look at These Prices," analysts Craig Sainsbury, Heath R. Jansen and Liam Fitzpatrick increased their local-term copper price forecasts from $1.10/lb to $1.45/lb. The 32% increase is driven by the combination of structural costs increases for existing producers, combined with increasing capital and operating cost hurdles.
The analysts also predicted that UK-based copper miners will deliver 1.4mt of new copper production, representing 25% of additional global supply. "Therefore copper bulls, the better leverage will be in growth stocks such as First Quantum, Antofagasta, Vendanta and Xstrata," they asserted.
Meanwhile, Citigroup recommended First Quantum Minerals (FQM) as its preferred pure play copper exposure, "given the longer-term strategic upside (exploration/development potential in Africa) as well as our belief that FQM is a prime potential takeover target."
The analysts asserted that further upside value in equities would need to be driven by exploration success; further copper price upside; cost reduction; improved profile; and M&A activity. Based on these drivers, Sainsbury, Jansen and Fitzpatrick highlighted "Xstrata and First Quantum as the two most likely companies to deliver."
Citing FQM's early-mover advantage in the Zambian/Congolese copper belt, and projects such as Kashimie, the expansion of Guelb Meghrein and Frontier, the analysts noted "there is a potential for FQM to be a 600ktpa-plus producer by 2010.
Meanwhile, the analysts declared that "Xstrata has one of the best stables of copper projects among its global peers. Projects such as the debottlenecking of Collahuasi, Las Bambas, Tampakan and El Pachon have the potential to add 500kt of new production for XTA by 2012/"
Citigroup noted that "cash generation remains a strong theme for all the miners. Between now and 2010, we see the copper-exposed equities generating 70% of their current market value in surplus." The analysts explained that "with the strong commodity prices and limited avenues for capital investment, we see significant build up of cash on the balance sheet."
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I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 08/07/2007 : 18:43:31
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Maybe Spain will be happy when the last gram of its gold is sold...
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Spain's Central Bank sells another 25 tonnes of gold; what next?
The Central Bank of Spain has renewed its gold disposal; what implications does this have for the near to medium term?
Author: Rhona O'Connell
Posted: Tuesday , 07 Aug 2007
LONDON -
The latest figures from the Bank of Spain show that, after no gold sales cleared during June, gold reserves were reduced by another 800,000 ounces or 25 tonnes during July. This takes the Bank's disposals during this current calendar year to 134 tonnes and disposals under the second Central Bank Gold Agreement year-to-date to 4.8 million ounces or 149 tonnes.
It had originally been suggested that the Bank of Spain would, having sold roughly 100 tonnes between February and June, stop there. Clearly this was not the case and begs the question as to how much more the Bank is proposing to sell. The Bank has not publicised its intentions, although there have been some suggestion that it has been able to utilise the quota allocated for Germany, which has specified that it will, in this year at least (as was the case for the last two years) be selling only minimal amounts. The German option for the full five-year period is for up to 600 tonnes of gold sales, of which ten tonnes were completed in the first two years of this CBGA agreement. Remember though, that the rules of the Agreement specify that while a total of 2,500 tonnes may be sold across the whole membership over the five year period, sales should note exceed 500 tonnes in any one year.
This year's Agreement closes on 26th September, leaving us with seven more weeks of sales. Figures from the European Central Bank suggest that sales in the CBGA year to date amount to 353 tonnes (compared with 340 tonnes in the second CBGA year, when sales amounted to just short of 400 tonnes for the year as a whole). This means that if the full 500-tonne quota were to be met this CBGA year then the average weekly rate of sale from now on would have to amount to 21 tonnes, against an average to date of eight tonnes.
The average during July was 17 tonnes, with the resumption of Spanish disposals and the start of disposals from the Swiss National Bank, which is proposing to sell up to 250 tonnes over a period of time in order to rebalance its gold within its foreign exchange reserves to roughly 33% as against 42% at the start of May, when the first gold fix for the month was $677.50. The fix this morning (Tuesday 7th August) was $669.25, at which price the average gold holdings across the world (i.e. including supranational organisations) amounted, to approximately 14.5%. It is not possible to be absolutely precise due to the lag in publication of reserve figures.
The average holding across the members of the European system of Central Banks (not just the ECB itself) amounts currently to approximately 14%, although within that system some of these figures are markedly higher, with Germany at 63% and France at 57%. Spain is currently at 38%. In the United States, of course, (which is not a signatory to the CBGA although along with Japan, it has agreed to abide by the spirit of the Agreement), gold comprises a much higher degree of foreign exchange, at 76%.
At the other end of the scale are the Asian nations, among whom are the world's largest holders of foreign exchange reserves. China's holdings, at a reported 600 tonnes, still amount to just less than one per cent of China's total foreign exchange, while India has 4% and Japan, 2%. It has been regularly suggested that these countries should diversify away from dollars and it is clear that this is underway in a variety of ways (including, for example, China's proposal to set up a separate fund for part of its future foreign exchange accrual, to be invested in alternative assets away from currencies and government instruments). The gold market is too small for a meaningful acquisition in terms of rebalancing currency portfolios, a point that has often been made by some of the governments in question, although there is little doubt that a number of governments are looking more favourably at increasing the level of their gold holdings over a period of time.
Meanwhile the Italian Parliament now has to consider the possibility of reducing gold holdings, although whether it would be allowed to do so for its stated purpose, i.e. to reduce government debt, is not yet clear. Certainly the proposal, when mooted in Germany, some years ago, was not permitted on constitutional grounds
Finally the proposed disposal of 400 tonnes from the IMF would come under the auspices of existing or future Central Bank Gold Agreements and should not worry the market. Indeed the fundamentals of the gold market are easily strong enough to absorb this metal. As the markets became only too well aware over the course of the 1990s, it is not the volume of metal that hits the market that is important, it is the timing and the surrounding levels of uncertainty that is disruptive. This is why the Central Bank Gold Agreement is in place and why we should expect that it will be renewed in two years' time.
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Bullish new gold prediction $1000 an ounce and beyond
..........I HATE headlines like this.
Why? Because every time someone speaks or prints a headline like this the price of gold somehow someway gets knocked down.
There is a saying about mentioning anything out loud...
If you want something good to happen and you mention it, it never happens.
When you Don't want something to happen and you mention it....
it happens.
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Copyright/courtesy Dow Jones Newswire - "Nickel prices likely to continue to slide in August as demand remains weak, but lower prices will gradually start to limit marginal production of Chinese nickel pig iron, says Morgan Stanley. Notes poor demand from mills, service centers, which continue to de-stock; though announcements of cuts to stainless steel surcharges suggest demand could recover soon, hints at further cuts in September may delay return of buyers to market. However, Chinese nickel pig iron producers being hurt by higher energy costs, which make up more than half of their costs; estimates break-even costs close to $30,000/ton, more than current LME 3-month nickel."
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Stainless Producers Cut Nickel Use On High Prices - Xstrata - "Record high nickel prices combined with limited additional metal availability have resulted in numerous stainless producers increasing production of ferritic grades and reducing nickel-bearing austenitic material output, Anglo-Swiss miner Xstrata PLC (XTA.LN) said Tuesday."
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Global Commodities Demand Strong, Led By China, India-Xstrata - "Global demand for commodities remains very strong, led by China and, increasingly, India, where imports of coal, iron ore and zinc are escalating on the back of ambitious plans to invest in infrastructure and industrial growth, Xstrata PLC (XTA.LN) said Tuesday."
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Saudi Arabia, Egypt and UAE to dominate MEA steel markets - "According to a report by the Metal Bulletin Research, Saudi Arabia, Egypt and the UAE will dominate steel demand in the Middle East region. The report said that by the year 2010, Saudi Arabia will have an added capacity expansion of 5 million tonnes followed by Egypt with nearly 2 million tonnes and the UAE with 1.5 million tonnes."
....(As goes demand for steel, so goes demand for nickel. Looks as though, much like blue chip stocks, nickel is a long term play with ups downs and sideways moves along the way. Keep hoarding and keep happy.)
I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 08/09/2007 : 20:36:58
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Nickel Leads Metals Lower on Concern Subprime Losses May Spread - "Nickel fell to a 10-month low in London, leading other industrial metals lower, on concern investors will curb their demand for commodities as banks tighten lending following U.S. subprime mortgage losses." Reuters
India revises 2006 steel production to become No 5 in the world - "India has moved up two places in global ranking to 5th place in production of crude steel."
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Gold, Silver Tumble on Investor Sales to Counter Credit Rout
By Pham-Duy Nguyen
Aug. 9 (Bloomberg) -- Gold and silver tumbled in New York as some investors sold precious metals for cash to cover losses related to the U.S. subprime-mortgage collapse.
European stocks and U.S. equity index futures dropped after France's biggest bank halted withdrawals from three investment funds. The European Central Bank loaned 94.8 billion euros ($130.2 billion) to help ease a credit crunch. Before today, gold had gained 7.6 percent this year.
``It's the fear of the subprime losses and the collapse of the credit market,'' said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois. ``They're selling gold to cover margin calls and to get rid of all risky assets.''
Gold futures for December delivery fell $12.30, or 1.8 percent, to $674 an ounce at 9:56 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest percentage drop since June 8.
Silver futures for September delivery plunged 37.5 cents, or 2.9 percent, to $12.795 an ounce. Before today, the metal had climbed 1.8 percent this year.
In early March, gold dropped 6.2 percent, the biggest weekly loss since July 2006, after a sell-off in global equities erased $2.4 trillion in market value.
`Easiest Choice'
``When markets have an initial or sudden difficulty, you many times see a move toward Treasuries instead of gold,'' said A.C. Moore, who manages the $500 million Dunvegan Growth fund, which has about 20 percent in gold and gold-related stocks. ``That's the easiest choice. Short-term Treasuries also provide income where gold doesn't.''
The fund is based in Santa Barbara, California.
U.S. Treasuries rose today, led by short-maturity notes, which are more sensitive than longer-maturity debt to possible changes in monetary policy. Yields on the two-year note fell 18 basis points. The benchmark 10-year note's yield declined almost 11 basis points to 4.77 percent. Prices move inversely to yields.
Rising Treasuries also drove the dollar higher against a basket of six major currencies. Gold generally moves in the opposite direction of the dollar.
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I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 08/10/2007 : 18:39:33
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NY precious metals rally, copper turns up by noon
10 Aug 2007 12:29
NEW YORK, Aug 10 (Reuters) - The following are New York
midsession prices and market updates for precious metals and
copper:
GOLD
Gold futures rally 2 percent by midday on safe-haven buying
and as the Federal Reserve provides liquidity to keep financial
markets operating smoothly after Thursday's tumultuous sell-off
on liquidity fears. COMEX gold for December delivery <GCZ7>
surges $12.70, or 1.9 percent, to $685.50 an ounce by 12:06
p.m. EDT (1606 GMT), trading from $668.80 to $687.40 an ounce.
COMEX estimated 10:00 a.m. volume at 55,187 lots. Spot gold
<XAU=> rises to $673.30/674.00 an ounce, up from its late
Thursday's quote at $661.20/662.00. The London afternoon gold
fix was set at $668.50 an ounce.
SILVER
COMEX September silver <SIU7> jumps 25.0 cents, or 2.0
percent, to $12.955 an ounce, trading between $12.605 and
$13.060. COMEX estimated 10:00 a.m. volume at 13,177 lots. Spot
silver <XAG=> at $12.91/12.95 an ounce, compared with a late
Thursday quote of $12.62/12.67. London silver was fixed at
$12.690 an ounce.
PLATINUM GROUP METALS
NYMEX October platinum <PLV7> gains $7.70 to $1,283.00 an
ounce. Spot platinum <XPT=> at $1,272/1,276 an ounce. September
palladium <PAU7> decreases $7.95, or 2.2 percent, to $354.25 an
ounce. Spot palladium <XPD=> at $351/355 an ounce.
COPPER
Copper for September delivery <HGU7> rises 1.45 cents to
$3.3755 a lb by midsession, rebounding from an earlier
8-1/2-week low at $3.2850, as some end-of-the-week
short-covering boosts prices following sharp declines that saw
the benchmark contract slide 19.40 cents, or nearly 5.6
percent, for the week, traders said. London Metal Exchange
copper warehouse stocks fell 950 tonnes to 114,500 tonnes on
Friday, while COMEX stocks held steady at 21,655 on Thursday.
Copper inventories in warehouses monitored by the Shanghai
Futures Exchange fell 1.7 percent to 89,968 tonnes in the week
ended on Thursday, from 91,563 tonnes the previous week. By
10:00 a.m., futures volumes estimated at 9,170 lots. London
copper for delivery in three months <MCU3> last traded at
$7,450 a tonne, up $15 from Thursday's close. Earlier in the
day, it hit a six-week low of $7,275.
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Eramet resumes nickel exports from New Caledonia - "Eramet SA, operator of the world`s largest ferronickel plant, resumed exports on Friday from New Caledonia after delays caused by fire damage to a conveyor belt used to load ships." -
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Gold futures close with gains on safe-haven buying
By Polya Lesova, MarketWatch
Last Update: 4:24 PM ET Aug 10, 2007
NEW YORK (MarketWatch) -- Gold futures rallied Friday, as traders recognized the metal's allure as a safe haven amid worsening credit market troubles that prompted a fresh injection of cash by several central banks.
"Suddenly, the world is realizing that gold is still a safe haven asset," said James Moore, metals analyst at TheBullionDesk.com. "We've seen pretty substantial losses in equity markets."
"I think this is genuine safe-haven buying," Moore said.
Gold for December delivery rose $8.80 to close at $681.60 an ounce on the New York Mercantile Exchange. However, the contract posted a loss of $2.80 on the week.
"Gold investors breathed a collective sigh of relief today as signs of 'proper' behavior in the metal finally emerged," said Jon Nadler, analyst at Kitco Bullion Dealers, in emailed comments.
"The massive injection of liquidity that is taking place globally was also followed by the Fed in an attempt to stabilize values and nerves," Nadler said. "Gold benefited from that action but also from being directly in demand."
Central banks in Europe, Asia and the U.S. injected billions of dollars into banking systems Friday, moving to further boost liquidity in markets suffering the ripple effect of the subprime-credit crisis and saying they stood willing to provide more cash. Read more.
The Federal Reserve said Friday it's providing liquidity "to facilitate the orderly functioning of financial markets." In a brief statement, the Fed said it will provide reserves "as necessary" through open market operations to promote trading in the federal funds market at rates close to 5.25%. See The Fed.
"You are starting to see some bargain-hunting buying coming here," said Charles Nedoss, gold analyst at the Peak Trading Group. "What the Fed did in terms of pumping liquidity into the markets is bullish for the metals. You're going to see some flight-to-quality type buying."
On Thursday, gold fell $13.50, or 2%, to close at $672.80, its weakest closing level since July 27. Read more.
"We saw the market sell off in a global liquid crunch as funds exited gold trades to meet cash margin requirements and to free up capital in general," said Zachary Oxman, senior trader at Wisdom Financial, in emailed comments. "This move was not in the direction of the primary trend and was, more than anything, a temporary move."
"Fundamental factors that support this market continue to be unchanged, which is another reason why I feel that the gold moves of this week to the downside were nothing but short-term liquidity plays that will not hold," Oxman said.
"The market is seeing a re-investment of fund money, strength in the Indian rupee, a positive seasonal pattern and concerns over labor issues in South Africa."
Asian and European equities posted steep declines.
On Wall Street, U.S. stocks crawled back from earlier steep losses, with the Dow Jones Industrial Average ending 58 points, or 0.4% higher, for the week. See Market Snapshot.
Other metals prices ended mixed on Nymex. September silver gained 16.50 cents to close at $12.870 an ounce and October platinum rose $4 at $1,279.30 an ounce.
September palladium fell $4 to end at $358.20 an ounce and September copper edged down 0.15 cent at $3.3595 a pound.
The dollar traded slightly lower against most major European currencies. Japan's yen was steady against the dollar but rose against most high-yielding currencies as investors sought to unwind positions on risky trades ahead of the weekend. See Currencies.
Crude-oil futures pared most of their losses. See Futures Movers.
Inventories and indexes
Gold warehouse inventories fell by 9,864 troy ounces to 7.14 million troy ounces as of late Thursday, according to Nymex data. Silver and copper supplies were both unchanged to stand at 133.3 million troy ounces and 21,655 short tons, respectively....
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Gold commentary
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Full Blown Liquidity Crisis Hits Gold and Stocks
By Chris Laird
As news of new subprime losses emerges around the world, stock markets are selling off. What began as the first string of losses at Bear Stearns has now become wider. In fact, it is beginning to look like a developing world liquidity emergency.
This week, the large French bank Paribas froze 3 funds worth about $2 billion after it became clear they cannot value the mortgage derivatives held by the funds. Soon after this news, EU banks and institutions started to flee to cash. The ECB had to lend an unprecedented $130 billion to stave off a banking/liquidity crisis. European investors said the ECB was acting on an emergency basis.
EU Bankers said it was not just concerns about Paribas, but like the Bear Stearns situation, investors were very worried about how many more losses are developing. The mortgage derivatives market is literally frozen, and no one will buy either the derivatives, nor buy mortgage originations, which is now paralyzing the US mortgage market. US lender Country Wide is having trouble selling its new mortgage originations – and having to carry them. Country Wide accounts for a huge 25% of the US mortgage market.
Mortgage lenders are stating that the mortgage market is in worse shape than they have ever seen. Investors are not buying mortgages, causing lenders to have to carry their own loan originations – which is going to totally kill the US mortgage market if things are not fixed soon. Alt A and sub prime mortgages (30% of US mortgages) are not selling – investors want nothing to do with them.
As these mortgage markets become illiquid, the trillions of dollars of mortgage derivatives – which EU banks have bought heavily – cannot be valued – which caused Paribas to have to freeze redemptions in their 3 funds which held those derivatives.
The implications of that situation is having broad and very bad ramifications to the world banking/financial industry which is wondering how bad things will get. Things are quite bad now, to say the least.
You cannot have multi $trillion markets just stopping – with out major building losses.
Of course, this spills over to stock markets as well as gold. The Yen is rising, and adding to the huge selling in general, as carry trade is being unwound in everything. The USD, which had been moderately rising again, rose over .40 on the USDX (US dollar index) Thursday as investors fled to US Bonds. Libor rates in Europe rose an amazing half point. (Libor is private short term money banks and institutions use). It is said that will harm brokerages and other institutions who need short term money.
Gold and precious metals are selling off again because funds and institutions are fleeing into cash, and gold is a liquid asset that they can sell. There was so much demand for cash in the EU that the ECB had to lend $130 billion, and said they will supply unlimited money if necessary.
The ramifications of the US mortgage derivatives losses are snowballing, and it is being said that this is unprecedented. The present situation has already been compared to the 1987 financial crash in severity.
I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 08/13/2007 : 18:38:30
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Gold, Silver May Decline as Dollar Strengthens Against Euro
By Pham-Duy Nguyen
Aug. 13 (Bloomberg) -- Gold and silver, little changed in New York, may fall as a gain in the value of the dollar reduces the appeal of the precious metals as an alternative investments.
Gold generally moves in the opposite direction of the U.S. dollar. Before today, gold had gained 6.8 percent this year while the euro had climbed 3.8 percent against the dollar.
``Dollar strength is a limiting factor for gold now,'' said Frank Lesh, a trader at FuturePath Trading LLC in Chicago.
Gold futures for December delivery fell $1.20 to $680.40 an ounce at 12:12 p.m. on the Comex division of the New York Mercantile Exchange.
Silver futures for September delivery fell 3 cents to $12.84 an ounce. Before today, the metal had fallen 0.5 percent this year.
The euro traded as low as $1.3606 after the European Central Bank lent emergency funds to banks for a third day to ease concern over a credit crunch, and stocks rallied worldwide. The euro reached a record $1.3852 on July 24.
The ECB, the U.S. Federal Reserve and other central banks injected $154 billion into money markets on Aug. 9 and $135.7 billion on Aug. 10 amid fears that U.S. subprime mortgage losses will curtail lending.
Gold may gain should investors lose confidence in the dollar and other currencies, analysts said.
``During periods where investors question credit quality, gold's monetary characteristics become more appreciated,'' said Gregory Orrell, who manages $120 million, including mining stocks, at Orrell Capital Management Inc. in Livermore, California.
Lower Interest Rates?
Central banks may lower interest rates should the subprime- mortgage collapse lead to a slowdown in the economy, Orrell said.
The Fed has kept its overnight lending rate at 5.25 percent since June 2006. The ECB's benchmark rate is 4 percent after two increases this year.
Gold hasn't rallied more this year because the Fed hasn't cut rates, disappointing bullion investors, said Chip Hanlon, president of Delta Global Advisors Inc. in Huntington Beach, California.
``Gold investors believed that at the first sign of trouble, the Fed would step on the monetary gas pedal by slashing rates, and they haven't done that,'' said Hanlon, whose firm manages $1 billion in investments. ``The elevated gold price indicates inflationary pressure still remains, but gold isn't rallying because the Fed is aware of that.''
Gold has had six straight annual gains. The metal climbed 23 percent last year as the dollar fell 10 percent against the euro.
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Brazil: the land of iron. And of nickel, of copper, of gold... - "With growing exports of iron ore and betting on other metals, such as copper, to attain self-sufficiency, Brazil is more and more proving its vocation to the mineral industry. From 2003 onwards, the Mineral Trade Surplus – exports and imports – has been positive. And the surplus is rising ever since."
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World commodity prices slump - "Global commodity prices slumped this week as speculators rushed to bank profits amid concern that demand for oil and metals will slide should the world economy dampen because of the US housing crisis."
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Courtesy/copyright Dow Jones Newswire - "LME nickel remains under pressure, and support from pig iron prices will be gradually removed, says JP Morgan analyst Michael Jansen. The marginal cost of producing low nickel pig iron is $22,000 a metric ton to $25,000/ton of refined nickel equivalent, Jansen notes, but should steadily head under $20,000/ton in the next 6-18 months."
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Resources Sector - A Decade of Even Higher Prices - "Following a review of their commodity price assumptions a little over two months ago, Macquarie Research Equities (MRE) analysts have again reviewed these forecasts and returned with further conviction that the duration of higher prices is extended.
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I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 08/16/2007 : 18:43:50
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Bad news & more bad news, and they say august is a slow news month.
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Gold and other metals end with sharp losses
Silver ends down 8%, copper is down 7%, palladium down 6%
By Polya Lesova, MarketWatch
NEW YORK (MarketWatch) -- Gold futures tumbled 3% Thursday in a broad commodities sell-off, coming under heavy pressure amid a global stock rout fuelled by deepening troubles in the credit and subprime markets.
"You're facing a serious and under-appreciated global liquidity crisis," Zachary Oxman, senior trader at Wisdom Financial, said in emailed comments.
"This is a serious problem and it's time for the powers that be to recognize the size and scope of this issue and step in -- an epidemic," Oxman said. "Right now, parties are all running for the door to get any and all the cash that they possibly can on their books to cover calls and redemptions."
Gold for December delivery tumbled $21.70, or 3%, to close at $658 an ounce on the New York Mercantile Exchange.
Other metals futures also declined sharply, with silver selling off 8%, copper dropping 7% and palladium dropping 6%. Energy futures also tumbled. See Futures Movers.
"You are seeing a global liquidation of all markets regardless of market trend," Oxman said. "Gold, crude, grains, softs, everything is getting hit and will continue to do so until the market is able to purge this sub-prime nightmare that we are living in right now."
Metals stocks decline
On Wall Street, U.S. stocks staged a dramatic reversal in the final hour of trade, helping the Dow industrials to recover from a 340 point deficit to finish slightly lower. The Dow Jones Industrial Average closed down 15.69 points, or 0.1%, at 12,845.78 points.
Stocks worldwide dropped, with losses from Korea to Turkey to Britain, in the wake of the unfolding credit-market downturn, started by problems in the U.S. subprime mortgage market.
"Gold's slide into negative territory took an a new and decidedly ominous dimension on Thursday, as price support after price support gave way in the wake of mounting massive liquidations from all quarters," Jon Nadler, analyst at Kitco Bullion Dealers, said in emailed comments.
"A wide range of commodities were being badly sideswiped in the frenzied quest to raise cash in order to mitigate stock losses by individual and institutional investors alike," Nadler said. "This was a very ugly day across the board."
By the time metals trading closed in mid-afternoon, U.S. stocks were still suffering sharp losses.
"All commodity markets are down on follow-through from the equities [markets]," Nedoss said Charles Nedoss, analyst at the Peak Trading Group. Also, technical selling is driving prices down, he said.
"Some of the safe-haven buying is going into Treasurys," Nedoss said. "People are [also] buying dollars in safe-haven type buying," he said.
Indexes tracking mining and metals stocks closed with sharp losses.
The Philadelphia Gold and Silver Index declined 4.6% at 126.40 points.
The CBOE Gold Index tumbled 5.1% at 126.30 points and the Amex Gold Bugs Index shed 5.1% at 300.14 points...........
Other metals also tumble
Also on Nymex Thursday, October platinum fell $41.50, or nearly 3%, at $1,230 an ounce.
September silver tumbled $1.06, or 8%, to close at $11.495 an ounce. September palladium dropped $22.65, or 6%, at $327.85 an ounce.
September copper fell 24.20 cents, or 7%, at $3.09 a pound.
With worldwide stocks sharply lower, "the initial thought is slowing industrial demand," Nedoss said about the decline in copper prices. "Crude oil is telling you the same thing."
The yen surged to a 13-month high against its rivals Thursday, while the dollar made gains against the euro and British pound in response to continued turmoil in the credit markets.
The Dollar Index, which tracks the greenback against a basket of the world's major currencies, edged down 0.1% at 81.745. See Currencies.
Gold warehouse inventories fell 46,655 troy ounces to stand at 7.08 million troy ounces as of late Wednesday, according to Nymex data. Silver supplies rose 251,304 troy ounces to stand at 134.3 million troy ounces, while copper supplies fell 97 short tons to stand at 21,244 short tons.
........(And my gold stock fund is currently less than what I bought it for, though the monthly dividends soften the loss somewhat.)
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Industrial metals drop on falling equities - "Industrial metals fell sharply on Thursday as sliding global equity markets dampened sentiment and investors liquidated positions to cover losses in other markets, analysts and traders said." -
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Industrial Output Increases 18%, Slowing Slightly - "Growth in China's industrial output slowed last month, but not enough to ease the pressure on monetary policy, analysts said."
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Courtesy Reuters - "Credit market conditions are now analogous to a secondary banking crisis. Equity markets have moved to signal a global economic slowdown, driven by a worsening financial crisis. The equity markets appear to be expecting a much worse outcome for credit than the credit markets themselves are discounting," Tim Bond, the head of asset allocation at Barclays Capital said.
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Headlines say it all this morning. A torpedo of terror apparently found its mark, and nickel traders can't abandon the boat fast enough. Indications at 7:45 am CST show 3 month nickel down by $.64/lb . LME metals across the board this morning are in the red. And a glance at worldwide financial exchanges this morning tells more.
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Metals - Risk aversion hammers base metals; nickel down more than 2 pct - "Equity market turbulence continued to hammer base metal prices, with nickel down more than 2 pct and copper lower despite supportive signs of tightening supply."
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Metals - Nickel sinks to 11-month low amid rising fears of global credit crunch - "Nickel sank to its cheapest price since last September while aluminium hit a ten-month low amid rising fears of a global credit crunch and as overbearing risk aversion continued to weigh on sentiment."
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Courtesy/copyright Dow Jones - "There is still value in selling puts in nickel at the back end of the LME price curve in order to build length on further price declines, says JP Morgan's Michael Jansen. Notes support at $25,000 a metric ton as this is the marginal cost of low-nickel pig iron, used as a substitute for refined nickel. But traders need to keep a close eye on refined nickel supplies from "conventional sources" as back end values over the long term will depend largely on "whether mine supply in its own right has the ability to balance demand," Jansen adds."
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Or as The Mighty Mogambo would say, "UGH!"
I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
Edited by - pencilvanian on 08/16/2007 18:51:04 |
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 08/21/2007 : 17:53:07
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August 19, 2007 Sunday Sha’aban 5, 1428
Metal prices slump, oil rises
LONDON, Aug 18: Metals prices plunged this week as traders sold heavily investments in gold and copper owing to fears of a global economic slowdown caused by the ongoing US housing crisis.
But a move Friday by the US central bank aimed at easing market worries helped push up crude futures.
Losses in the US subprime mortgage market -- high-risk property loans to which many US banks and investment funds are exposed -- has spread to other regions and affected equity, commodity and foreign exchange trading since August 9.
The biggest risk to the commodity market has been and continues to be fund liquidation, Goldman Sachs analysts noted on Friday.
In a move aimed at tackling fears of a global credit crunch, the US Federal Reserve on Friday slashed the lending rate it charges commercial banks.
The decision by the US central bank, to cut its so-called discount window rate by 50 basis points to 5.75 per cent, helped world share prices to recover from losses over the past week and led the euro to rebound against the dollar and yen.
OIL: Oil prices rebounded, with Brent crude bouncing back above $70 a barrel in London, lifted by the Fed’s monetary policy change on Friday and fears that Hurricane Dean could damage energy facilities in the Gulf of Mexico.
If by some miracle the damage from Dean is not that bad and the stock market is (again) lousy we could see a big drop in (the crude) price next week, Alaron trader Phil Flynn said.
It was a roller-coaster of a week for oil prices, as they fell steeply on Thursday when hefty declines on world stock markets left traders fretting about potentially risky investments in the commodities markets.
Traders had said that some speculators and investment funds were moving cash into more secure investments and out of riskier holdings, and that some of this movement had dented the oil market.
Oil prices rebounded Friday, however, owing to the Fed action and news that Hurricane Dean was forecast to become a major hurricane within the next 24 hours.
Crude futures won support also from news that crude inventories had fallen last week. The US Department of Energy said Wednesday that US crude inventories slumped by 5.2 million barrels last week -- more than double a fall of 2.5 million forecast by analysts.
The Organisation of the Petroleum Exporting Countries meanwhile increased its forecast for world oil demand growth in 2007. Opec said in a monthly report that it would hit 1.3 million barrels per day, slightly higher” than the estimate given in July.
By Friday, Brent North Sea crude for October delivery advanced to $70.51 a barrel on Friday, compared with $69.70 for the September contract a week earlier.
New York’s main oil futures contract, light sweet crude for delivery in September, gained to $71.92 a barrel, from $70.68.
PRECIOUS METALS: Gold, silver, palladium and platinum prices all dropped owing to the financial uncertainty.
Gold fell despite traditionally being seen as a safe store of value in troubled times, while the other precious metals mirrored its downward spiral.
Gold is being sold to pay for losses in other markets, UBS analyst Robin Bahr said.
Gold is the ultimate safe haven ... If you believe it’s the end of the world next Friday, then you’ll buy gold, Bahr added.
On the London Bullion Market, gold fell to $657.50 an ounce at Friday’s late fixing, from $670.50 a week earlier.
Silver declined to $11.69 an ounce, from $12.69.
On the London Platinum and Palladium Market, platinum slipped to $1,245 an ounce at the late fixing Friday, from $1,269 a week earlier.
Palladium decreased to $334 an ounce, from $349.
BASE METALS: The prices of base metals slumped.
Base metals prices are likely to continue tracking movements in the financial markets, which could mean further short-term losses, Barclays Capital analyst Gayle Berry said.
On Friday, the price of copper for delivery in three months tumbled to $6,930 a ton on the London Metal Exchange, from $7,400 a week earlier.
Three-month aluminium prices fell to $2,498 a ton, from $2,599.50.
Three-month nickel prices dropped to $25,900 a ton, from $26,100..
Three-month lead prices slipped to $2,498 a ton, from $2,785.25.
Three-month zinc prices fell to $3,075 a ton, from $3,250.
Three-month tin prices dived to $13,565 a ton, from $16,352.50.
SUGAR: Sugar prices plunged to a two-year low of 273.50 pounds a ton in London on Friday.
White sugar futures declined to two-year lows as the sharp sell-off in global equities undermined virtually every commodity market, said Fimat analyst Jim Cassidy.
By Friday on the LIFFE, the price a ton of white sugar for October delivery shrunk to 280.50 pounds, from 281.00 pounds a week earlier.
On the NYBOT, the price of unrefined sugar for October delivery decreased to 9.37 US cents a pound, from 9.54 cents a week earlier.
COFFEE: Coffee prices weakened further.
These prices clearly look more attractive to the industry (buyers) and they are buying, but whether there is more of a sell-off to come first, is impossible to tell, Sucden analyst Ralph Hawes said.
By Friday on the LIFFE, Robusta quality for November delivery slid to $1,693 a ton, from $1,817 one week earlier.
GRAINS AND SOYA: Maize and soya prices fell owing to rainy weather in the United States which increases supply.
“Weather is still going to play a key role going into next week for soya beans,” Allendale analyst Joe Victor said.
By Friday on the Chicago Board of Trade, the price of maize for September delivery dropped to $3.22 a bushel, from $3.33 a week earlier.
Wheat for September delivery firmed to $6.68 a bushel, from $6.67.
WOOL: The price of wool rose in major producer Australia this week on strong foreign buying despite a lack of interest by key consumer China.
Purchases were again widely spread, with the reduction in activity by buyers for China again evident, but to a lesser extent, the Australian Wool Industry Secretariat said.
The secretariat said the issue of whether China has reached its Australian wool quota for the year was still unresolved.
The Australian wool market finished 2.0 per cent higher on average, with the Eastern Index closing at 9.25 dollars a kilo.
—AFP
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