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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
 Posted - 09/11/2006 : 18:49:23
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OK, gold and silver have both hit speed bumps on their prospective price rise.
Is this time to panic?
In a word, No.
What was it that JP Morgan answered when asked “What will the stock market do?“ His response, “It’ll fluctuate.”
As so for the stock market, so too for metal prices.
Nobody has an accurate crystal ball to predict what gold and silver will do, but we should not lose sight of the reason we are buying gold and silver in the first place-
The fact that both metals will always hold their values even if the fiat dollar does not.
A dollar coin made out of gold will always be good for a dollar (minted from 1849-1889)
A dollar coin made out of silver will always be good for a dollar (minted from 1794-1935)
A dollar bill made out of paper will always be good for tinder.
Craig R Smith of Swiss America Trading Corporation put it best, “What will gold do? It will go up, sideways, then down. Up, sideways, down.”
This link helps to describe why gold took a nosedive after 1980.
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Specifically these links
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Just take this information with a grain of salt, these guys aren’t just gold bugs, they’re 24 karat bugs.
I do agree with their argument that when the interest rates spiked, gold and silver took a nosedive, but now if the FED raises rates to 18% the economy’s crash will be so loud the people up in the space station will hear it.
This link deals with the Barrik gold company, but it does put gold’s value into true perspective
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From the author Antal E. Fekete
“I learned about the life-saving properties of gold a few months later in a different context. When the Red Army placed Budapest under a siege those who had gold ate; those who didn't went hungry. My family did not have much gold, but there was a heavy gold chain that used to hold the gold pocket watch of my grandfather in better days. The watch itself had been bartered away in hard times for food before I was born during the hyperinflation following World War I. During the next hyperinflation, following World War II, dentists refused to take paper money for professional services rendered. My mother paid for dental work needed by my sister in gold. I still remember the dentist's delicate hands: he clipped off an agreed length of the chain. And his face: he had the smile of Shylock as he was preparing to take his pound of flesh.”
Gold has been in demand for over Four thousand years. Gold and silver will still be in demand a century from now. We can’t say the same for the fiat dollar.
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Canadian_Nickle
Penny Hoarding Member
Canada
938 Posts |
Posted - 09/11/2006 : 18:59:14
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| Seriously. The first thing I thought when I saw silver get back down to $11 was "Maybe it's time to buy a 100-ounce bar from the bank, instead of looking for deals on Ebay and in coin/pawn stores" |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 09/11/2006 : 19:16:54
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| What was it that the Stock Market hawkers used to push, dollar diversification? Keep buying when the price goes up, sideways and down? It applies to gold and silver too. |
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Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 09/11/2006 : 19:52:11
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News like this makes me happy that most of the commodities I own still have their face value too.
________________________
If you can conceive it and believe it, you can achieve it. -Napoleon Hill |
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n/a
deleted
146 Posts |
Posted - 09/11/2006 : 21:37:21
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Do you remember The Great Commodities Crash of last May (June?) which was supposed to be the end of the world for gold/silver? They just went right back up a few weeks later.
I hate how the news media manipulates the markets. (Though sometimes it comes in handy to smarter people - I bought some shares of a mining company that day!)
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"The best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens." -John Maynard Keynes |
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Canadian_Nickle
Penny Hoarding Member
Canada
938 Posts |
Posted - 09/11/2006 : 22:34:20
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| Naked shorts + stupid reporters = cheap silver for the taking. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 09/12/2006 : 18:23:42
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Quote from
How to Win in Wall Street published in 1881
“Who is it that supports every one of the ruddy-faced and round-bellied brokers, furnishes their brown stone houses in velvet and ebony, their tables with wine and silver, their wives and daughters....in silks and diamonds and laces? It is the lamb, the meek eyed confiding and innocent little lamb.”
Lambs to the slaughter? Silence of the lambs?
I guess that for some sheeple investors the broker’s motto is
If you can’t teach em’
Fleece em. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 09/15/2006 : 16:17:46
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I have heard some gold experts saying gold will be $700 an ounce in a years time, some say gold will hover around $500-525 per ounce. Some say gold is a short to mid term buy, some, a long term buy. I have heard some experts praise gold and some curse gold. Gold will go down because jewelers in India are buying less, gold will go up because jewelers in China are buying more. I have heard just about every argument pro and con concerning gold and silver and I have finally reached the conclusion that all successful investors eventually reach-
Nobody knows what is going on.
Meteorologists are more accurate at predicting what the weather will be like two weeks from now than the so called experts are in predicting what gold, silver and the economy will do one year, or one month, from now.
The day to day fluctuations concerning the price of gold and silver can be troubling, especially if you bought gold at $600 and now see it for less than you paid for it. Such moves can rob you of confidence to buy more or to hold what you already own.
In order to calm the nerves of gold and silver buyers, including myself, here is some information to consider-
A story told in the book “How To Invest in Gold Coins” by Donald J Hoppe 1969
When gold started a mini run up back in 1968, speculators were crowding into coin dealer’s shops buying up gold coins like there was no tomorrow.
Quoted from the book
“…right in the middle of the worst of it, this fellow comes in waiving a cashier’s check for $20,000 and saying he wanted to spend it all on gold right away.
“We will get massacred,“ I told him, “putting in an order of that size in a market as tight as this.“ but he was adamant-he wanted $20,000 worth of gold coins and he wanted them at once.
“OK,“ I said, “its your money, but we won’t be able to supply you here; we will have to get orders…from out of town dealers all over the country.“
Well, we filled him that order, but it cost him up to $90 an ounce (back in 1968) for some of the gold he got. A month later he was back, disgusted and angry, wanting to sell some of his doubles (double eagles) and the best I could give him was $60 each-a 33 per cent loss”
If this speculator had been wise, which I doubt, he could have sold some of his coins for ready cash, then put away about half of his coins, waited 5-10 years and sold them for a very nice profit. After 5 years (1973), gold was at about $100 an ounce. After 10 years gold was at $300 an ounce.
Perhaps the best thing to do with the gold and silver coins you buy is to treat them the same way you would treat a 60 or 120 month long certificate of deposit that compounds but doesn‘t pay out interest.
Buy it and put it away and cash it in in 5 to 10 years.
Just remember, gold and silver won't mind sitting in a safe for a few years as the prices go up, and inflation, deflation and speculation all favor the precious metals.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 09/15/2006 : 18:30:32
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Good link to keep in mind
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The fundamentals for gold and silver are obvious:
US Savings rate almost non-existent
Over issuance of paper fiat debt-money
US deficits expanding at alarming rates
World debt levels increasing at alarming rates
Over issuance of credit via structured finance and derivatives
The purchasing power of all fiat paper money constantly eroding
The purchasing power of the US Dollar constantly eroding towards worthlessness
The technical indicators for gold and silver are still intermediate and long term positive.
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Tourney64
1000+ Penny Miser Member
USA
1035 Posts |
Posted - 09/15/2006 : 20:08:28
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| I think gold and silver will go thru the roof, when Iran only wants to continue to talk instead of stopping their nuclear program. Israel will not wait for Iran to build a bomb before action is taken. When Korea sends their long range missles to countries that are hostile to the US. Nothing will happen in the UN. This is the calm before the storm and precious metals are ripe for the picking with this week's price decline. Not to mention a presidential election in 2 years 2 months, will bring a significant uncertainty to the world. I see much more upward pressure on prices than downward. The Friday Gold price closed at $577.30 and Silver at $10.72. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 09/15/2006 : 21:44:07
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Good point Tourney64.
I just realized one reason silver and gold are taking a hit. The inflation numbers “looked“ good so Wall Street ahs something to be happy about, investors are slipping out of metals to go back into “safe” stocks.
Ah yes, the inflation figures, straight from the Fed’s Fudge Factory. Fed Fudge. It’s full of sugar and calories, but it won’t rot your teeth or put inches on your waistline. Trust us! Buy some Fed Fudge today!
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Canadian_Nickle
Penny Hoarding Member
Canada
938 Posts |
Posted - 09/15/2006 : 22:40:02
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| mmmmmmmmmm that's gooooood fudge! |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 09/23/2006 : 10:04:59
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More reasons gold and silver are taking a hit, worth considering, investment wise
One opinion……….from The Prudent Squirrel, in a “nutshell”
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Well we can say one thing, things are different.
In the last couple of years, gold rose along with many things, oil, Mid East Chaos, the US housing bubble even.
Now... Well, one thing is for sure, gold is weaker anyway. The feel is just not like it was these last gold bullish years, at least right now.
I read 10,000 gold related news articles a year as part of my macroeconomic gold research. From that, one gets a 'feel' for what is happening. The feel now, the gestalt, is that the gold market has changed in a very fundamental way from the last few years.
The reason for that change is two fold. One, the world economy is definitely slipping. Two, the speculative froth built into commodities and energy from unprecedented housing and finance bubbles in the past 5 years in the world is spilling off.
Take a look at the recent gold action of past weeks. Following a month of horizontal gold price action between roughly 601 and 640, gold has slipped down past the 600 support, then to 580 support that held somewhat tenaciously until, now this week, we are looking at 570 support to give way. That has not happened. But we are looking at that.
Every time gold has rallied at all, within the day, all the gains were given up. Reason? Speculative froth in the gold price built up for the last year is spilling off. Hedge funds and large macro funds are getting out incrementally.
There is some base price gold is seeking which is lower than 580, right now.
A month ago, I started a string of gold short term bearish articles based on the premise that the world economy is slipping, the US in particular. -That commodities and gold would weaken significantly by Jan 2007. I got a couple of PO'd emails about that, that I am wrong etc. But, surprisingly, Prudent Squirrel subscriptions held up the same.
I also got emails that many major gold analysts are saying the opposite of what I was writing, IE that gold was 'correcting', and ready to rally right away. As I have stated, gold is not 'correcting', gold is reflecting a major change in the world economy - to recession.
OF course, that kind of made me think, maybe, I could be wrong that a short term gold bear was under way. It was not easy to continue holding to that view. But gold's price action of the last two weeks has confirmed my view. -Particularly the weakness of any rallies. Funds are selling into strength and just overwhelming any seasonal gold-bullish purchases right now.
But gold's price action this last two weeks has confirmed my suspicions. First, every major gold rally in the day of the last two weeks was rapidly sold into.
Second, gold rallied Wednesday, prior to the US Fed interest rate change window, in expectation of USD weakness if the FED paused. The fed paused, and the USD barely reacted... And gold tanked and gave back all its gains that day.
Again, the gold rally was sold into.
Speculative froth spilling off
The speculative froth in the commodity and gold markets built up particularly since January 2006 is being spilled off. That is my assessment. The reason is that a consensus is appearing that
-speculators and large macro funds are concluding that a US recession is now already underway, and is going to be commodity bearish - to include gold and oil. This will continue into 2007.
China just recently had a monthly drop in oil imports.
The US is not the only one having an economic slowdown. I very much expect that China is already responding to a slowing world economy, and in particular, to either their not insignificant monetary tightening of the last months, and or a peak of their industrial bubble.
That has created large overcapacity - yes China now has overcapacity- in many key industries, such as base metal production like aluminum and other metal industries. And China already has a housing bubble that is crashing in Shanghai that is a year old already...
And the US ? It has a weakening/crashing housing bubble, and rapidly growing corporate layoffs and very high insider selling of US stocks since the beginning of 2006. A crashing CRB Index, and Transportation Index. -All anticipating a severe US recession.
Oil is seeing large increases in inventories, partly because of a mild winter onset in the US and mild hurricane season.
The recent Ameranth hedge fund loss of $3 billion in gas, where they expected another bad US hurricane season, is a sign of recent times, IE a weakening commodity complex for different reasons. Sure, the hurricanes did not come, maybe they still will hit the Gulf. But that is not helping the CRB index either.
A Weak hurricane season in the US and mild winter onset. Dropping demand for gasoline with those stocks rising in the US. Chinese oil imports actually receding last month for the first time in years...
All are signs of a clear change in the world macro economic economy...
to weakness...
which is hitting commodities of all types, to include oil, and is causing a serious pause in the gold and commodity bull - by speculators at first, and then large macro funds- secondly.
The reason we are seeing selling into gold rallies right now is that speculative froth is being unwound. Several years worth of that.
There was an interesting article out about this of an interview with Peter Brooke, Peter Brooke is Equity Strategist at Old Mutual Asset Management:
"Month to day resources is down seven percent, while the financial and industrial index is up one. So you can see how the selling has started to come through and one of the stockbrokers just quantified it, and they estimate is being about $12-billion worth of outflows in the last month. Primarily in oil, there have been $5-billion of outflows and about $5-billion of outflows in gold."
Bruce Whitfield:
But certainly huge selling in these markets. Are these prices coming down for fundamental reasons? Are these just traders who are trying to make a margin? Is it that simple?
Peter Brooke:
I think the fundamentals are obviously the main driver, but what happens is, these speculators add momentum or power to the movement, so as commodities started doing well, through the fundamental demand from China and elsewhere and the lack of supply, traders and speculators jumped on that bandwagon and bought them up.
And there has been about $100-billion worth of net flows into pure commodities. And that obviously absorbs more of the supply and pushes the price up. Now, if we see a reverse of that trend, it will add pressure on the downside and I think that just highlights the growing risk in commodities as they get to higher and higher prices, we start to see the potential for speculators to exit out or to take profits. "
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Commodity prices unjustified by present weakening world economy
The point is that there is speculative overhang in the commodities markets that is now unjustified by the emerging macro economic situation in the US and China to recession.
Imagine a $5 billion outflow in gold in the last month.
For gold, these numbers are huge.
The gold market is actually very small compared to other markets.
So, we know here speculators are getting out, at least the by scale of the liquidations, and this was last month.
Where will this month, September, come in?
So, we can see why gold dropped from $640 to below $580.
As of Wednesday, gold was giving back all the gains earlier in the day. There is more of this to come.
Now don't panic, because the fundamental reasons for gold rises these last years are very much with us -
the inflation of US, EU and Chinese currency well above their GDP growth - monetary inflation.
For the Western economies, that money growth is about 9% a year, while the actual GDP growth is about 3% roughly. That is a 5% inflation of the money base over and above actual growth.
For China, there are figures of actual growth of the economy of roughly 10% while money growth is in the 18% range yearly!
But, while the longer term reality of fiat abuse is very much with us, what is the shorter term implication of risen interest rates and monetary tightening?
Deflating asset and finance bubbles and recession
It will be a deflation of asset bubbles and now commodities, then stocks will get it in the neck too.
Deflating asset and finance bubbles means less consumer demand and less jobs which means less profits which means less demand for commodities which means less demand for gold short term - for speculation.
The recent gold market drops have not even held up with renewed buying in Asia for jewelry- traditionally a strong time of the year now. That has picked up, but frankly let's do some math:
A $5 billion outflow of gold translates (roughly) into, 8 million ounces of gold at $600 bucks. That comes to 260 tons. Of paper gold liquidation. Last month. That is overwhelming the seasonal physical demand.
And what about this month????? That is why renewed jewelry demand for gold, which hesitated above 600, has not held gold up.
There is massive speculative overhang in commodities and gold - in paper - which has driven up the prices, and now that the world macro economy is slowing, that speculative unwinding - in anticipation that the commodities boom is over for now - is dropping prices in all of them - to include oil and gold.
I will hazard a guess that the speculative froth in gold is on the order of $100 in the price still.
There is more speculative froth to come out of commodities, and gold is tracking this.
Now, I am not saying that gold is going to drop $100 from where it is now, but I do feel confident to predict that gold will drop to between 500 and 550 by Dec 31, 2006. I hate to say this, but we could even get to below $500.
Reason overall for this? - A cooling world economy, dropping demand for commodities, and oil, and spill off of speculative froth in commodities and gold that has built up in the last several years in a very different world economic environment.
I have to point out that I am long term gold bullish. However, these issues above are causing short term gold bearishness.
In spite of a string of gold short term bearish articles, Prudent Squirrel subscriptions are at their highest levels ever, and the cancellation rate is virtually zero - about 1%.
I suspect the reasons for the ongoing success of Prudent Squirrel include my willingness to objectively observe the gold markets. Macro economic analysis has enabled me to clearly anticipate the changes in the gold market this year by a good measure.
Chris Laird
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 09/23/2006 : 10:06:24
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Another opinion……..
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Buy gold to hold, not to trade!
Dr. Marc Faber this week told Bloomberg he is a buyer of gold at and below $580 an ounce. But traders in gold have recently suffered a mauling because central banks are manipulating the market. The Federal Reserve wants to contain inflation to engineer an interest rate cut before the November US elections.
It is as plain as the nose on your face that gold market interventions of the past couple of weeks have been organized to bleed gold traders dry.
One thing that gold traders could do to help themselves is to stop publishing their latest market 'insight' on websites. The demons of the gold cartel are clearly reading everything that they write and making absolutely sure that it goes wrong!
Indeed, a section of the gold bug community has identified the existence of a cartel or cartel-like organization within the central banking system that conspires to keep gold prices down, when economic forces would suggest they should go up. This is one way of trying to control inflation, albeit it not a very good one as curing the symptoms never cures a sickness.
The gold cartel
However, there is no point in trying to fight such a powerful cartel. It is a futile exercise, and traders will be quickly wiped out if they insist on trying. Those who do this on margin are doubly foolish, as the irrepressible volatility of precious metals is going to catch them out sooner or later.
For in order to succeed in this kind of market you need to recognize the reality of a fixed gold market and buy and hold until this whole artificial construction comes tumbling down.
Then gold and silver prices will soar and the holders will make a huge profit.
So buy a little gold for your portfolio, or quite a lot if you have the cash available. For gold will protect your finances against inflation, deflation, devaluation, stock market crashes and almost any other negative economic scenario.
When it rains, it pours
It always pays to be ready for a rainy day.
Are we not now hearing many siren voices warning of a US housing downturn and a coming US recession, which will surely be accompanied by further devaluation of an already weak US dollar and a downturn in US financial markets?
What is the safe haven asset that will perform in such a noxious investment environment? Precious metals are pretty much immune from everything,
except the central banks in the short term.
So take Dr. Marc Faber's advice and do what he is doing himself and buy gold at these price levels while you can!
Lest we forget AME Info columnist and celebrated contrarian Dr. Marc Faber wrote the book, 'Tomorrow's Gold' predicting this scenario four years ago and has been consistently right on gold since then.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 09/23/2006 : 10:10:24
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| Remember, all of the advice you hear is usually more opinion than fact. Take all advice with a grain of salt since nobody has a working crystal ball or magic 8 ball that can accurately predict the future, except history can usually give us a good idea of what will happen, since history tends to repeat itself, at least fiat-money wise. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/03/2006 : 19:02:10
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Up, down, up down, metals seem to be in a yo-yo pattern.
Best bet is buy and not look at the prices more than once a month.
One bit of good news + wall street barkers = lower commodities prices.
Housing is still slowing down in spite of all the wishful thinking,
gold and silver still the metals of choice for over three thousand years plus. Only a fool on Wall Street discounts real history. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/04/2006 : 16:15:30
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Quote
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In the particular case of oil, Mr. Casey notes that the "crack spread", which is "the difference between the price that oil refiners pay for crude and the price they receive for the gasoline they produce", is, "in the words of the U.S. Energy Information Administration", at "unusually low levels." Why is this noteworthy?
He notes that the crack spread is "the profit margin that refiners make on their products. This means that refiners are selling gasoline for little more than the cost of the oil they purchase", and that "This makes no sense from a business perspective", as "generally in such a situation, refiners would simply up the sales price of their gasoline, improving their margins. However, it does make sense if the refiners are purposely attempting to keep a lid on prices."
He admits that "Of course, there's no way to prove this. But for energy investors, it's worth considering. If gasoline prices are being artificially depressed, we can expect a rebound during the last few weeks of the year. Which-judging from the historical relationship between gasoline and crude-would lift oil prices, and therefore oil stocks. If such case does present itself, now might be the time to buy oil producers, many of which are selling at fire sale prices."
Depressing the price of oil to depress inflation fears? I wouldn’t put it past the government, any government for that matter. |
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n/a
deleted
143 Posts |
Posted - 10/04/2006 : 17:11:10
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| it's bush, cheney, and their cronies at works just before the midterm election |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/05/2006 : 18:56:59
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I seem to recall in 2000, a few weeks before the Bush/Gore election that EXXON had on their website the research being done to turn coal into oil, and profitably, if prices for crude were about $28 per barrel of oil.
After Bush won, the information mysteriously disappeared.
Very interesting. Very interesting indeed.
This is interesting too..
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The Organization of the Petroleum Exporting Countries (OPEC) has agreed informally the need to cut production by at least 1 million barrels per day (bpd) to keep the price of its crudes above $50-$55, the Financial Times reported on Thursday without naming sources.
A deal could be ratified at its next meeting in mid-December.....
AFTER the November elections in the US, how convenient. |
Edited by - pencilvanian on 10/05/2006 19:06:28 |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/05/2006 : 19:01:29
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Gold is up, gold is down, gold is up, gold is down, gold is……like a ping pong ball!
This reminds me of a Three Stooges short where Larry and Curly are mixing up medicine. They add one drug, the mixture turns dark, they add another, the mixture turns white, they add a third and the mixture turns clear.
Curly tells the concoction, ”Why don’t you make up your mind?”
Gold and silver prices can’t figure out what to do next. It sure can be tough on the nerves. Best to buy and not look. The fundamentals are still in place,
gold and silver = 3,000 to 4,000 years of demand,
paper currency = rejection by the public when the politicians and economists fool with fiat scrip and its buying power falls to zero.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/08/2006 : 11:34:36
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Here is one reason gold fell, but when the central banks sell, they have to buy to back up their currencies, sooner than later.
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Banks may be behind plunge in gold price
By Ambrose Evans-Pritchard
Filed: 06/10/2006) 6th of October, 2006
Central banks may have dumped far more gold on the markets over the last three weeks than officially reported, accounting for the sudden plunge in prices that has stunned investors.
Barclays Capital said Europe's banks had sold an extra 100 tonnes from reserves in a rush to meet a quota deadline on Sept 26, but had done so by selling through forward contracts that disguised the effect.
"We have been able to infer this from trading patterns. It has had a major impact on the markets," said Costanza Jacazio, the bank's gold expert. Barclays is one of the world's three top bullion traders.
"We suspect that the Banque de France has been involved," she said.
The huge sales would help explain gold's brutal fall from $640 an ounce in early September to $559 this week, an effect compounded in recent days by hedge fund liquidation. It was up slightly yesterday at $569.75 in New York trading.
Gold typically rallies in September in the build-up to the Indian marriage season. While gold has undoubtedly been hit by the broader fears of a commodity slump, base metals have held up much better. The central banks have reported sales of just 393 tonnes of gold for the year, far below the 500 annual limit agreed under the Washington Accord, and agreement by 15 central banks in Europe.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/09/2006 : 15:48:02
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Probably won't effect the price of gold now, but it will over time.
Preparing for the future moves in gold is no different than preparing for the chance of rain in the afternoon, if others are too foolish not to carry an umbrella its on them if they get soaked.
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SA gold production declining 5% annually
JOHANNESBURG (Mineweb.com) --South African gold production fell from 430 tonnes in 2000 to 295 tonnes in 2005 as lower grades of ore are mined and reserves are seen to be being depleted, and the country is soon likely to be overtaken as the world’s largest producer of the yellow metal.
Production will see an annual decrease of 5% over the next few years as new projects will not succeed in replacing continued falling production at existing mines, says Alex Conradie, chief economist of gold and platinum group metals at the Department of Minerals and Energy.
The biggest recent drop in South African gold production took place from 2004 to 2005 when output fell by 12%.
The majority of gold mines in South Africa are projected to cease producing gold over the next 10 to 20 years, while the ultra-deep South Deep mine on the West Rand of Johannesburg has the longest projected life span of 60 years.
Lower gold production will have an impact on all the economic benefits that gold brings to the country, affecting sectors dependent on the gold mining industry and mining workers and their dependants. However, increased exports of platinum metals and coal could substitute income lost through lower gold production, says Conradie.
Gold exports are expected to earn the country some R29.7 billion (US$3.6 billion) in 2006, a rise of R5.5 billion on last year’s revenue from gold, due to the increase in price and the weaker rand against the US dollar.
Based on the department’s estimated prices of $600 an ounce in 2006 and $680 in 2007, gold would earn South Africa R34.5 billion in 2007 and R36.7 billion in 2008.
But gold production in South Africa may eventually dwindle away, as most significant unworked reserves are located too deep to be mined economically at current estimated prices.
“The gold price would not only have to increase, but the price and exchange rate will have to remain stable for a few months to a year, before decisions on projects of this nature could be taken,” Conradie says.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/09/2006 : 15:59:18
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Gold's Magic Roundabout
By: Charles Carlisle
LONDON (Mineweb.com) --The gold price has been going through a bit of a hiatus period of late. Indeed there is evidence that it is actually in the grip of a short term bear market with peaks not as high as previous peaks and troughs ever slightly lower, but the decline, such as it has been, has been relatively shallow. Some think the yellow metal’s price may continue weak until the around the year end, but longer term prospects have to be strong, as fundamentals are good, and major new discoveries are seemingly scarce as hen’s teeth.
Actually this latter statement is a little misleading. There are a relatively limited number of world class unworked gold deposits and discoveries out there, but many of these keep running into difficulties in getting going through potential logistical, environmental or governmental pitfalls, or are in inhospitable and politically uncertain locations which makes capital raising difficult. Most new exploration finds too are of gold grades which would have been unworkable only a short time ago – many old tailings (mine waste) deposits will have been of higher grades, a factor not lost on those companies which have made considerable money re-working old dumps.
…………….any new gold production out there is not doing much more than replace the fall-off in output from traditional gold producing nations.
South African output, for example, has been on the decline for years and is only around a third of what it was a mere three decades ago.
New South African reserves being attacked are nowadays of far lower grades, or considerably deeper (some more than 2 miles or 3km below the surface) and that country, still the world’s largest producer, continually struggles just to replace its production levels.
This battle to replace reserves mined is the reality behind the wave of mergers and acquisitions by the gold producing majors worldwide.
This is not new gold they are gaining.
This is gold which is already out there and taken into account in world statistical data for the metal.
They are just ‘buying’ existing reserves.........
If gold was a normal commodity, with supplies not increasing, or diminishing, and demand remaining strong, then the metal price would be going through the roof.
But it isn’t a normal commodity.
Even though current world demand comfortably exceeds mine supply one has to take into account how both demand and supply are made up.
By far the largest demand sector (over 70%) is jewelry. People buy gold jewelry for various reasons, but in some areas of the world – the East in particular – part of the reasoning behind gold jewelry purchases is as a store of wealth. This makes jewelry demand a particularly volatile market and when prices are high, as they have been of late, jewelry demand can fall drastically as it did in the first half of 2006. Recent reports, however, suggest that this demand may be picking up again. But, even at the lower levels of jewelry off take, overall world demand for the metal still exceeds mine supply levels.
There is also a new factor becoming very relevant in the demand figures. Investment demand through ETFs has become a significant taker of gold off the market, and given that ETF’s are a comparatively recent phenomenon then this is likely to grow further, putting new pressures in place on world supply. But this only puts pressure on supplies while it is held. Profit taking in times of higher prices can, of course, bring investment gold back on to the market.
But, and this is a very big BUT, still in the order of 30,000 tonnes of gold is held by Central Banks, some of which have been selling on to the market – while others have been buying to increase their holdings. Overall, though there has almost certainly been net disinvestment by Central Banks year on year. This overhangs the market providing something of a dampening factor on price rises.
The other major contributor to non-mined supply is the scrap market. In times of higher prices scrap supply can increase drastically and has helped fill the supply demand gap over the past year or so.
The gist of the above, though, is that on fundamentals, the gold price is probably in for a strong and steady rise over the next few years, with the Central Bank holding overhang perhaps mitigating against the huge increases predicted by the most avid gold bugs.
There will be times, though, as at present, when readjustments occur and the price increase stalls, or even falls back,
but it now has to be unlikely that any fall will be significant, and upside potential has to be far stronger than the downside.
There seems no likelihood of major new gold mines coming on stream of sufficient size to flood the market – indeed the miners are under pressure to even maintain output at the current rate and, barring unforeseen developments production is unlikely to increase significantly over the next few years – indeed it may well fall.
Overall the outlook for gold has to be a strong one –
but, be warned,
the metal price has often confounded all logical expectations in the past and it may yet do so again.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/09/2006 : 16:02:17
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A little silver news for a change, still, sometimes more opinion than absolute fact.
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Silver outlook is positive say analysts
Dorothy Kosich
Excerpt
…………..In a report distributed at the Silver Summit in Coeur d’Alene Thursday, UBS analyst Ioannis Drikos wrote that the continued appeal of the silver ETF, strong industrial demand and the same supply bottlenecks facing other sectors of the mining industry are combining to create a positive picture for the metal’s long term outlook. ……….
…………..Silver prices will average around $12/oz this year and $15/oz for 2007, according to CIBC’s forecasts. “Based on our expectation that silver mine supply will increase over the next couple of years, we are maintaining our long-term price of $7,” CIBC analysts predicted.
………………………………(analysts have been wrong before, silver could go higher than predicted, nobody predicted housing would slow or the internet bubble would burst, their guess is as good as yours)
“Basically, it is our view that the supply/demand picture for silver remains positive into the short to medium term. We believe that the strong trend of silver product development and investor interest will continue with very little in the way of new or expanded mine or scrap supply throughout the remainder of 2006 and into 2007.”
…………CIBC said its analysis shows that mine supply will increase only modestly in 2006 and 2007 “with most of the growth expected to begin to materialize in 2008.” By that time, several large new primary silver mines are anticipated to be ramping up to full production including Pan American Silver’s Alamo Dorado mine in Mexico, and Apex’s San Cristobal and Coeur’s San Bartolome’s mines in Bolivia.
……………………….(per Bolivia, see
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The silver mine might not be up and running in time, or the silver might go to the miners as a concession to get them to work. Higher prices in production = lower profits= less metal sold.)
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/12/2006 : 18:59:25
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………………………(This pretty much sums up why we all hoard copper, gold, silver and nickel, our currency ain’t worth the paper its printed on.)
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US$: Truth in Advertising
Enrico Orlandini
In most civilized countries, we have laws designed to protect the average citizen from unscrupulous individuals or entities desiring to separate them from their hard earned money. As best I can determine, there's only one small problem with the legal system.
Historically the biggest frauds have been carried out by governments and not individuals.
What's more, they've almost always stood behind the rule of law when they did it.
I contend that the greatest frauds in history all involved currencies and it is the greatest Ponzi scheme the world has ever known.
You start by using gold and silver coins to gain the confidence of the masses.
Then you tell them that "for there own good" you're going to convert to a 100% gold backed paper money, a/k/a fiat money. After all, it's less comebersome and a sight more convenient.
Slowly, almost imperceptivity, you reduce the percentage of gold required to back the paper money saying that it's a bad investment to have all that metal just lying around.
…….. just think of the cost to have someone come around everyday and dust those dirty old gold bars.
Most of the debasements go unpublicized and are signed into law after midnight. Finally, after much time has passed, the public is told that you really don't need any convertibility at all because the currency is fully backed by a responsible government.
There's a contradiction in terms for you: the words "responsible" and "government" used in the same phrase.
What I have described to you has taken place in every major country in the world on at least one occasion, and that includes the US.
Go and look up the 'Continental' on Google if you don't believe me.
France, Germany, Italy, and England have all had numerous fiat currencies over the last four hundred years.
Then there's Latin America.
In Peru alone, I have seen Soles de Oro, Soles, Intis, and Nuevo Soles in the last thirty years.
From an historical perspective printing money in Latin American is almost a national pastime.
Then there are fourth world countries in Asia and Africa where it's cheaper to use the local currency in the bathroom than... well, you get the idea.
If you could put all of histories monetary failures in current U.S. dollars, I have no doubt that the figure would dwarf the size of our present day world economy. Trillions upon trillions of dollars up the stack!
With that in mind, I want to take a look at the U. S. dollar. More years ago than I care to remember, I was sitting in an introductory economics class when the professor asked anyone in the student body if they knew the definition of a dollar. Being a wonderful and thoughtful person, and realizing we were all dumber than dirty, he then supplied the answer: "it is a store of value" he proudly announced!
Many people still believe that to be the correct definition, so I will begin here.
The dollar is a product of the Federal Reserve Bank created more than ninety years ago.
Congress, in their infinite wisdom authorized a private company (the Fed), to create money.
The original shareholders included Morgan and Rothschild and a number of the "owners" weren't even American (so much for national security).
Originally, dollars were required to be backed by some percentage of gold and bore the inscription "gold certificate" or "silver certificate" indicating they were redeemable in that metal.
To the best of my knowledge, no one ever audited the Federal Reserve so there is no way of knowing if the metal existed or not.
In the early 70's, Nixon made the debate a mute point when he closed the gold window.
With a swipe of the pen, gold became a barbarous relic and dollars were now backed by the full faith and credit of the U.S. government.
I suppose it's just a coincidence that the United States completed the transformation from being a creditor nation to a debtor nation at the same time. Today the U.S. holds the honor of being the world's largest debtor nation and we owe it all to the Federal Reserve.
So there you have it folks,
a dollar with no tangible assets and backed by the largest debtor nation the world has ever known!
If that's not a scam, I don't know what is.
What's more every new dollar printed is destined to service existing debt, or represents new debt, and that brings me to the present day definition of a dollar: debt!
The dollar is nothing more and nothing less than debt, generated by a Federal Reserve which is not only illegally constituted, but also has no assets.
And they charge for the pleasure!
They weren't satisfied to just defraud Americans either, they had to defraud the world by making the dollar the world's reserve currency
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/12/2006 : 19:26:36
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US Treasury website
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Lists the amount of gold the US owns.
$ 11,041,000,000 at $42.2222 per ounce or 261,497,506.1 ounces
If the price is $580 per troy ounce, then the US Gold stock is worth about $151,668,553,509.77
maybe less figuring that one troy ounce is 31.1035 grams and avoirdupois or regular ounce weighs 28.3495 grams.
Of course, look at the national debt and try to figure out how many grams of gold back up how many dollars.
And folks wonder why we hoard pennies and nickels for their melt value.
I checked the math, the US gold hoard is about 8,171 tons
in 1944 it was 21,785 tons per calculations from "How to invest in Gold Coins." Had to do the calculations myself to figure it out.
Sure its a lot of gold, but how much does Uncle Sam owe, anyway? |
Edited by - pencilvanian on 10/12/2006 19:44:17 |
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Bullion Prices, Hang Tight
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