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Posted - 10/13/2006 : 01:12:11
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| "pencil". thank you for all the info |
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Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 10/13/2006 : 08:01:29
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quote:
Originally posted by pencilvanian
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?
I understand what you are saying here and I agree with it, but since President Nixon took the U.S. off of the gold standard all of the national debt is really based on Federal Reserve Notes or more IOUs. In other words, the debt is now payable with even more debt. I guess that is why they are so worried about oil being base pegged to anything other than the U.S. dollar.
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If you can conceive it and believe it, you can achieve it. -Napoleon Hill |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/13/2006 : 18:38:09
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quote:
Originally posted by Ardent Listener
quote:
Originally posted by pencilvanian
US Treasury website
You must be logged in to see this link.
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?
I understand what you are saying here and I agree with it, but since President Nixon took the U.S. off of the gold standard all of the national debt is really based on Federal Reserve Notes or more IOUs. In other words, the debt is now payable with even more debt. I guess that is why they are so worried about oil being base pegged to anything other than the U.S. dollar.
________________________
If you can conceive it and believe it, you can achieve it. -Napoleon Hill
True enough , Ardent Listener, the US Dollar really is the US Debt in paper form.
I had only wished to satisfy my own curiosity and perhaps the curiosity of other forum members as to how much gold the US supposedly has, since no government agency ever gives a straight answer about, well, anything .
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/13/2006 : 20:09:02
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Silver news, this will effect the price in the future
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China's annual silver demand will hit 3000t by 2010
The vice secretary-general of China's General Chamber of Commerce recently told silver experts that as the nation's economy develops, China's annual demand for silver will reach 3,000 tonnes by 2010.
Current world mine supply is around 20,000 tonnes.
In a paper presented to the 5th China International Silver Conference Wang Yao noted that while Chinese silver's prospects are bullish; the sector still has some problems. For instance, there are few large silver mines and not many high-grade operations.
"At present, it is still a problem that the refining capacity of silver exceeds its melting capacity and melting capacity exceeds mining capacity," he added. "The proportion of silver production from the imported lead-zinc-copper concentrate is increasing year by year and the problem of raw material supply of primary silver is more and more serious."
"In 2006, the stable and high speed development of the Chinese financial economy is pushing the development of silver consumption,"
Wang wrote. "Together with large demand for silver from jewelry, film and minting industries, silver production in China as the
third largest producer is also increasing stably."
Wang observed that the gap in silver supply is still about 100 million to 125 million ounces worldwide, and that filling that gap is up to India and China.
"For the large demand in the international market, the Chinese government has increased the export quota of silver from 3,500 to 4,000 tonnes in 2007," he added.
The secretary-general forecast that sales of silverwares and ornaments (jewelry) will comprise as much as 19% of total Chinese silver sales. "With the improvement of living standard, the big potential market of silverwares and ornaments will be opened out step by step," he said. "Secondly film consumption is also a big market in China which means big consumption of silver. Although impacted by digital technology, the wide countryside of China is also a huge potential market of photosensitive film."
Meanwhile, Wang noted that foreign electronic companies are moving their plants to China, which will also spur the demand for industrial silver.
Although Wang suggested that China has made considerable progress in expanding silver applications and increasing its added value, "there is still a big gap in comparison with development countries in its application level as a whole, for example in the sectors such as silver compounds, silver-base materials, silver-base contact materials, electronics paste and so on. It is also because of this, the prospect of silver consumption in China in very favorable." While Wang acknowledged that China abounds with silver resources, "the quality of export silver needs to be improved urgently." |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/15/2006 : 18:47:49
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News from Malaysia
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Coin scheme a political gimmick
KOTA BARU:
The launching of the gold dinar and silver dirham scheme is nothing more than a political gimmick and does not bring any value-added initiative to the state’s economy.
Deputy Finance Minister Datuk Dr Awang Adek Hussin said buyers of the gold and silver coins, issued by the Kelantan Government, must be aware that the value would depend on global and national gold and silver commodity prices.
“If the demand drops, the value would likewise go down. Those subscribing to the scheme must know when to sell and when to hold,'' Dr Awang Adek said after breaking fast with residents at Beris Kubur Besar in Bachuk near here on Tuesday.
He said it had become a habit among Kelantanese to keep gold ornaments as a form of savings and investments and that the state government was just capitalising on the trend.
In terms of enhancing the economy, it did not create any effect as it was not legal tender for any of the national monetary schemes adopted by Bank Negara, he said.
He cautioned that those who invested in the dinar and dirham might incur huge losses if they did not keep abreast of the latest value of the commodities and if sudden jolts occurred in the global trading, such as natural disasters that crippled mining operations.
He said since Bank Negara was not fully consulted on this scheme, the agents who were Syariah pawnbrokers appointed by the state would determine the sale price of the dinar and dirham.
Instead of just relying on the dinar and dirham as a form of savings or investment, Dr Awang Adek urged consumers here to invest in banking schemes where the returns and interest rates were more stable compared with the commodities trading of gold and silver.
.............(At least they’re honest enough to admit they have “banking schemes“. Of course, it figures, the Malaysian Government doesn’t want its citizens to own some form of wealth that can’t be depreciated or manipulated, what better way to control the populace by controlling the supply of money?
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Edited by - pencilvanian on 10/15/2006 18:52:58 |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/15/2006 : 19:03:16
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..........(The harder it is to get a mine started, the higher the price of metals already out of the ground, the better financially for metals hoarders. This information refers mostly to gold, so I am putting it in this topic area, although political manipulation effects all mining sectors, including silver, nickel and copper.)
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The new politics of mining
miningmx.com] -- POLITICAL risk in the extractive industries has changed in meaning since the Eighties when it was most commonly applied to building a mine in one of the emerging markets.
These days, the term has expanded in scope to include the risk of discovering native title where none appeared to exist before; or getting a feasibility study through its environmental impact assessment without winding up in the courts.
In conjunction with these risks is the declining risk of seeking metals in, say, the Democratic Republic of Congo (DRC). Miners today find that declining reserves of metals, particularly gold, make exploration in emerging markets a normal activity.
The outcome is that mining and exploration in remote locations is becoming normalised whereas the same activities in apparently safe locations is troubled with a different kind of risk.
Just ask any gold mining executive, like Pierre Lassonde, president of Newmont Mining, which is among the world’s largest gold producers.
Speaking at the London Bullion Market Association conference this year, Lassonde said the days of the free lunch for producing and exploration companies was over. Irrespective of how near or far an exploration target may appear to a mining firm, the onset of mining activities will attract the critical attention of ecologists, and non-government organisations. Guaranteed.
“In the Eighties it was a slam dunk to get anything permitted,” said Lassonde. However in mining today, companies currently face a governance nightmare before being given the right to dig a hole. “In the Eighties it took less than one year to permit a mine. Now it takes more than six years,” he said.
“In Nevada in the 1980s, there were no state mining permits required. Today, it takes at least three to five state permits to establish a mining property,” said Lassonde. “Similarly, in the 1980s, public comments were limited and legal challenges were unheard of. Today multiple significant public comment periods are required and legal challenges are almost guaranteed,” he said.
Set against this changing risk profile is the development of other ‘political’ posers which make, for instance, a new mine in Nevada a political question. Why now are protests against cyanide leaching in mid America different from the risks of working in South America or Africa? Mining regardless of its location raises political challenges, the only difference is in degree.
Take AngloGold Ashanti’s experience in South Africa, its own backyard. A hot-tempered standoff between South Africa’s minerals and energy department and AngloGold Ashanti in 2005 over granting of so-called ‘new order mining licenses’ was actually a debate over the group’s social plan rather than a fundamental question of black ownership.
Nearly two years after that debate, Sandile Nogxina, director-general of the minerals and energy department, discloses that AngloGold Ashanti was asked to submit a separate social plan for all its mines instead of the one size fits all submission.
Meanwhile, legislation contained in South Africa’s Minerals and Petroleum Resources Development Act (MPRDA) is raising crucial questions about the personal responsibility directors have in respect of the environment. Some environmental lawyers think there’s grounds for retrospective prosecution of directors who served on companies found guilty of pollution, for instance.
Not all agree. Niel Pretorius, MD of DRDGOLD’s South African mines, says aspects of the MPRDA, would be successfully challenged in South Africa’s Constitutional Court. Holding directors responsible for years after ceasing to exercise any influence over an asset is “liability without fault”.
“I think legislation is wonderful – but it’s about 120 years too late,” says Pretorius who adds that Government should act more like a partner than a regulator in the mining/environment debate.
But for politically loaded problems look no further than how mining firms and communities interplay. The best current example is the activities of Noble, Ntuli and Spoor attorney, Richard Spoor who has publicly taken on the might of Anglo Platinum and African Rainbow Minerals (ARM).
André Wilkens, CEO of ARM, was at pains recently to explain the extent of his company’s social investment plans at its Modikwa platinum mine (a joint venture with Anglo Platinum) in Limpopo province. That followed papers served on both companies by Spoor that Anglo Platinum and ARM renegotiate the deal with local inhabitants near the mine, including possibly sharing profits.
Currently, the Modikwa Community Companies own 17% of ARM Mining Consortium, which equates to an effective economic stake of 8.5% of the Modikwa mine. But Spoor, who famously won a R490m settlement in 2003 for South African workers who became ill after mining asbestos, says it’s unfair that mining companies have access to farmland to establish activities without compensation.
Wilkens says there are around 60,000 people living in four communities in the Modikwa region; they can’t all benefit from social investment, but some do. All in all, R4.2m was spent on social economic developments, such as providing water and education facilities in 2005. That doesn’t include the R259m ARM and its holding structure, ARMI, paid on behalf of the Modikwa communities in order that their shareholding in Modikwa wasn’t diluted.
Says Wilkens: “If ARM and ARMI hadn’t paid these funds over the years, the current shareholding of the Modikwa communities in the Modikwa Mine would have been reduced to anything between 3% and 5%.”
AngloPlat, a listed subsidiary of Britain’s Anglo American plc, has a more heavy-handed approach with Spoor, who has attacked it on other fronts. He mobilised members of the Ga-Tshaba community living near the R4bn Potgietersrust North expansion that AngloPlat announced in 2005. The community complained that the mining development was destroying crops.
As South African mining firms move into Africa in search of metals, so the emphasis of what AngloGold Ashanti’s Godsell calls “the social license to mine” become more important. Here there’s are less structures for governance and mining companies are more vulnerable to attack.
An example is Metorex, the JSE listed firm, which was recently accused in a BBC docomeentary of having employed children at its Ruashi mining project. Metorex argues the children were part of the informal, artisenal mining sector working on a contiguous mine. But this sort of bad press is the very last thing mining firms want when operating outside their borders.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/22/2006 : 12:17:17
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Thank you to all who are reading these posts. I am glad this topic section is not just taking up space on this forum.
This may deal with copper and nickel as well as silver and gold.
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Can You Spell Commodity?
While the Dow Jones booms, commodities like oil and gas swoon. Jim Rogers, the man who called the raw materials rise years ago, is upping his bets. Economist Stephen Roach thinks that's nuts.
In three months crude oil has fallen 20% to $60 a barrel. A price drop in natural gas severely wounded hedge fund Amaranth Advisors. Gold and sugar are in bear markets. In August the Goldman Sachs Commodities Index fell, breaking four years of month-on-month increases.
To Jim Rogers, the man who called the commodity boom seven years ago, those are mere blips. This is a great time to invest in commodities, and he's backed this up by investing more of his own money. Supply of things like base metals, oil and rubber is crimped after years of underinvestment in mines and oilfields and farms, he says, so prices are heading up. And they will go up, with some transitory hiccups, well into the next decade and perhaps even the one following. Copper, zinc and oil have all at least doubled in the past three years. You'll see more doublings in many more commodities.
That's the Rogers view. And then there's economist Stephen Roach, the Morgan Stanley bear every bull loves to gore. He thinks Rogers is dead wrong. Roach says commodity prices could fall another third from here, putting an end to silly notions of a so-called supercycle of commodity increases. The culprits: slowing growth in China, a voracious buyer of commodities, and a U.S. housing recession that, he says, will slash demand for building materials like copper and weigh down the global economy.
If you've been distracted by whether the Dow Jones stock index will stay in record-setting territory, there's a less-noticed but raging debate about the future of commodities. This, by the way, is a debate that can get personal. Rogers says Roach "couldn't even spell 'commodities' two years ago." Roach wearily responds that, yes, he used to write "commodities" with one "m" before Rogers kindly set him straight. The sparring recalls a famous exchange a quarter-century ago, during another price run up, when the ever-optimistic economist Julian Simon bet doom-and-gloom environmentalist Paul Ehrlich $10,000 that metals would fall over the next decade, ending 1990. Simon won. He wasn't a pessimist in the manner of Roach. His theory was that technology would eventually find a solution to any raw material shortage. We ran out of whale oil but found petroleum. Copper is expensive, but optical fiber is replacing a lot of it.
If the issue of resource scarcity is similar, the wagers today are a bit bigger. Hedge funds have put $70 billion into energy, double the level of two years ago, says the Energy Hedge Fund Center. Investment banks have beefed up their trading desks with commodities experts. Merrill Lynch paid $800 million for an energy trading unit after unloading a similar business a few years earlier. Bond investors are watching closely, too. Increased commodity prices usually mean inflation is right around the corner.
The peripatetic Rogers, 63, who once set a Guinness World Record by riding his motorcycle around the world, brings a lot of credibility to the bull case. A founder with George Soros of the legendary Quantum Fund, he started a commodities index in 1998 when investors were caught up in the dot-com frenzy. The Rogers International Commodities Index has since returned 16.9% annually versus 13.9% and 11.8% for rivals from Goldman Sachs and Dow Jones-AIG, respectively. This year the gap has widened. Rogers' is up 7% through August. Goldman's is down 0.4%, and Dow Jones-AIG's up 3%.
Rogers, author of Hot Commodities, says his optimism comes right out of the history books. The shortest commodity boom, which began in 1966, was 15 years, he says. The longest: 23 years. The current one: 7 years (forget the slump we're in now). The long trend reflects this fact:
Lots of commodities can't be produced quickly. By the time miners or drillers or farmers realize that demand has outstripped supply, it's too late.
New sources need to be found underground and regulators need to sign off before a shovel can even hit the ground. Food inventories are the lowest since 1972, he notes. Acreage devoted to wheat, for instance, has been falling for three decades. Cotton could also take off, he says, as clothesmakers switch to natural fabrics to avoid the rising cost of oil used in synthetics. Rogers says "soft" commodities like grains, oilseeds and fabrics, which have generally not shared in the boom, are likely to outperform.
Rogers is relatively bearish on zinc and copper, however; they could drop like an anvil after having more than doubled in a year.
Then there's China. Sure, the country's economic growth could slow, but over the long term Rogers is an unabashed bull. So much so that he's taught his 3-year-old daughter Mandarin and, in preparation for moving to a "Chinese-speaking" city with her, has put his Manhattan manse up for sale for $15 million.
Roach's response: China will be slowing, and that's a big problem. The country is responsible for half the growth in purchases of aluminum, copper and steel and more than 85% of the growth in tin and nickel. Roach says bank reserve requirements and rises in interest rates, combined with Beijing's recent "administrative edicts" to rein in investments, will throw cold water on the "China mania" gripping investors who blithely assume 11% growth every year.
..........( my footnote: China wants to spend some of their one trillion US Dollars on commodities to have strategic reserves. China is filling its oil tanks to buffer against petroleum price swings. Even if China does slow down, there is a big difference between slowdown and stop. End footnote)
It could also kill off a few of the mania's side effects--like Mandarin lessons for kids and uprooting families to Asia--what Roach calls "Rogers' whole schtick."
Roach says crude oil prices are more likely to head down than up; (???) Rogers says they will approach $100 a barrel before the commodity boom ends. Roach says cheap Chinese imports create "headwinds" against inflation and that rising U.S. bond prices wisely reflect that.
Rogers says inflation, far from retreating, is rampant, and he is shorting U.S. Treasury bonds. Roach says the influx of money into commodities means trading "technicals" with no relation to fundamentals can cause investors to "overshoot." Rogers notes that there are fewer than 50 mutual funds worldwide dedicated to commodities versus 70,000 for stocks and bonds, though he too fears man's tendency to overshoot. It's Roach's timing that's off, he says.
"Call me in 2019," says Rogers, which he considers a more likely peak-price year than today. "I will say, 'Sell commodities.' And you will laugh and giggle and say, 'Commodities always go up. You are an old fool.'"
Roach might be thinking something along those lines right now. He apparently sees opportunity in the coming real estate crash. He jokes that he put in a bid of $1.5 million for Rogers' house (eight bedrooms, five baths). Roach says, "He hasn't gotten back to me yet."
............Commodities up, down or sideways, they will always have a value.
As for fiat paper.......... |
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Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 10/22/2006 : 16:04:17
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"Thank you to all who are reading these posts. I am glad this topic section is not just taking up space on this forum.
This may deal with copper and nickel as well as silver and gold."
Keep them coming friend. Your posts are helping to take this forum to a whole new level. What once was just sorting out copper coins has become an education for all of us.
________________________
If you can conceive it and believe it, you can achieve it. -Napoleon Hill |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/22/2006 : 17:36:57
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I am only more than happy, and honored, to present my small stock of knowledge to the members of this forum, and those who are not yet members. (not a member yet? C’mon, its free. Sign up)
I just hope that forum members will be kind enough to let me know if I am hogging the discussion, which is never my intent, its just when I come up with something that I feel would be useful or vital to know I want to let others know it too.
If what I have to say is of little or no interest, just do what Americans are world famous for, just ignore it and move onto something else. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/23/2006 : 17:50:10
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Up, down, up down, prices down, demand still up, in the US and overseas
A little good news for the dollar and gold goes down
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Gold Slumps as Dollar Rallies
Concern that the Federal Reserve may reveal increased anxiety over inflation later this week buoyed the dollar and sent gold skidding Monday.
Although investors will need to wait until Wednesday before seeing meaningful data, it's clear that no one is expecting that day's Federal Reserve Open Market Committee meeting to result in an interest rate cut. Meanwhile, some see the Fed getting religion on the need to tame inflation,(??)
thus postponing the likely date of a future rate cut.
"The data continue to bear out the conflict between Fed's dual mandates," writes T.J. Marta, a fixed-income strategist at RBC Capital Markets in New York. "Inflation is at risk because core is not only above the Fed's comfort level but is also headed higher, while growth appears to be easing."
Depending on the strength of the overall economy, however, a longer pause may turn into an actual hike. The fed fund futures market is priced for 12% odds of a hike at the Jan. 31 FOMC meeting, up from 6% on Friday, according to Miller Tabak. In early September, the market was priced for a 50% chance of a cut at the January meeting.
Similarly, currency traders aren't betting on a cut, and they bid up the price of dollars. The greenback was recently trading at 119.275 yen, up from 118.69 yen late Friday. It was also stronger against the euro, which was trading at $1.2547, compared with $1.2619 previously.
The strength in the dollar sent contracts for December delivery of gold tumbling $13.50 to close at $582.90 an ounce on the Comex division of the New York Mercantile Exchange.
Lower prices help gold sales
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Gold imports jump ahead of festivals
MUMBAI: Indian importers bought more than double the quantity of gold ahead of this year's peak festival season compared to the lead-up to Diwali in 2005 as a fall in prices attracted buyers, a top industry official said on Monday.
Suresh Hundia, President of the Bombay Bullion Association, estimated that in the month ahead of October 21, the date of the Diwali festival, imports of gold rose 123 per cent to 156 tonnes from 70 tonnes in the month before Diwali last year. In 2005, Diwali fell on November 1.
Investment demand picked up after gold prices fell below $600 an ounce in September, he said.
"Many of the buyers opted for buying gold coins, rather than just traditional jewellery," Hundia said, adding the surge in imports showed that sales had also jumped.
International gold prices have traded in a rough range of $560 to $600 an ounce range so far this month, compared to a rough range of $460 to $480 an ounce in October last year.
While the gold price is markedly higher this year, buyers have been attracted by a sharp fall in gold prices from over $700 an ounce earlier in 2006. In 2005, prices rose ahead of the festival season.
"Many Indian families have a budget for buying gold. Whenever they get a chance, they seize the opportunity," said Bhargava Vaidya, a bullion analyst.
Buying of gold in India usually peaks before Diwali, as the Hindu festival of lights is considered an auspicious time to buy it. The festival is often followed by a flood of weddings where gold is in high demand for gifts.
Analysts said a good monsoon should boost incomes of a 600 million-strong rural population, who depend on agriculture and who account for nearly half of the country's gold consumption.
"We had seen, even before Diwali that the demand was building up as the prices were low. So everyone had kept good stocks," said Nayan Pansare, director of Say India Jewellers in Mumbai.
Demand was such that after gold fell below $600 an ounce in September, several bullion dealers had run out of supplies.
"Jewellers are looking happy and relieved because of the sales during the festival season, and they are hoping it stays this way," said Rajesh Khosla, a bullion analyst. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/23/2006 : 19:45:05
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Gold futures fall more than $13 an ounce
Gold futures fell over $13 an ounce Monday to close at their lowest level in more than a week, pulling other metals down as well as oil prices again retreated and the dollar strengthened ahead of a Federal Reserve decision on interest rates
Gold for December delivery closed down $13.50, or 2.3%, at $582.90 an ounce on the New York Mercantile Exchange, just above the low of $582.50 – its weakest intraday level since Oct. 12. On Friday, the contract lost $6 of its value although it scored a modest gain for the week.
The metal was hurt by weak oil prices after the Organization of the Petroleum Exporting Countries' production cut announced last week failed to convince oil traders it would be enough to halt a slide in prices. Weaker oil prices tend to ease investors' concerns about inflation, decreasing demand for gold as an inflationary hedge.
"Some technical support has emerged around $584 (the 25-day moving average), but gold still remains at the mercy of the oil market, and as such is vulnerable to further bouts of short-term weakness," said James Moore, an analyst at TheBullionDesk.com.
"The outcome of Wednesday's FOMC meeting may work in gold's favor, particularly if the Fed expresses further concern about inflation, but the trend for now remains one of weakness," he said in a note to clients Monday.
Dennis Gartman, editor of The Gartman Letter expects gold to remain in a trading range until either the dollar breaks to the upside or oil prices turn higher.
"Until one of the other of these outside markets moves materially, gold is trapped and our urge to hold anything other than our 'insurance' position is low ... and is falling," he said.
Oil prices continued to move lower Monday, with the December crude contract falling as much as 2%.
The dollar, meanwhile, rallied ahead of the Federal Open Market Committee's decision due out on Wednesday. Many economists expect Fed policymakers to stand pat on interest rates.
Expectations are that the Fed will highlight its concerns about inflation, however. This scenario got a boost from a Financial Times report suggesting that many fund managers are expecting another interest rate hike in the next six months.
Support dies down
"Many bullish impact factors have simply stopped bolstering gold for the time being," said Jon Nadler, an investment products analyst at bullion dealers Kitco.com. "Case in point: the fact that India's gold import figures show a doubling in tonnage versus one year ago, should have lent enormous support to bullion in terms of providing a basic value floor."
He cited a handful of other factors also affecting gold – conflicting impressions about whether North Korea means that it's sorry about its recent nuclear test and about whether Iran's claim of flexibility on nuclear enrichment is for real or not, as well oil's spillover effect for inflation.
These "are now all converging upon the precious metal with visible results," Nadler said.
Other metals closed lower as well. December silver futures finished down 29.5 cents at $11.67 an ounce, January platinum closed down $7.70 at $1,074.40 an ounce and December palladium lost $9.15 to end at $321.35 an ounce. December copper futures fell by 1.1 cents to close at $3.451 a pound.
On the supply side, gold inventories were down 373 troy ounces at 7.69 million troy ounces as of late Friday. Silver was down 296,643 troy ounces to stand at 105.1 million troy ounces, while copper supplies amounted to 22,467 short tons, up 261 short tons.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/24/2006 : 18:16:58
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Excerpts
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Unstoppable Chinese growth & Gold
Julian D.W. Phillips
Oct 23, 2006
………….Commodity prices lower?
Some economists have said that the encouragement of internal demand will be at the expense of export growth, itself causing a slowdown in the demand for commodities and metals
and whilst we respect these opinions, they do not make sense when one looks at the objective of the Central government's objectives.
These opinions are expressed as a reason why the commodities boom should slow as well. Again we have difficulty with this.
When a nation of 1.3 billion people reach out for development we have to track the extent of the development as it reaches more and more of the nation. We hear numbers like 400 million poor people just waiting to enter the cities for work.
That is 33% more than the entire population of the U.S. China is only now passing the U.K. to become the world's fourth-largest economy.
So the development has a huge distance to go before the all-powerful Chinese Central government reaches its targets.
In line with these aims has to be the building of consumer demand internally so the dependence on exports drops down considerably.
But this does not mean that exports will suffer, but that internal demand has to mushroom
First - The reference to the negative impact on commodities has to exclude gold and silver.
We have to emphasize that gold demand is largely separate from other metals and is a metal to be acquired as wealth, arising from the growth of the Chinese nation.
Any 'slowdown' [if it does come] is most unlikely to affect the demand for gold, which is rising steadily at around 20% per annum
[which is very slow in our opinion as the demand comes from a narrow sector of the Chinese population, close to government and not the Chinese nation per se].
Second - The criteria by which we assess the Western economies of the world have to be modified to gain an accurate assessment of the Chinese economy.
It is unlike any other………………
……………..The Chinese government wants to develop China to the point where it is a self-sufficient economy,
self-driving as well as a supplier to the rest of the world.
If it carries on at the present rate it will dominate the global economy and be one of its leading drivers, if not the main one, eventually.
Yes, that is one or two decades time,
but that is what the government of China wants and it will harness everything in its reach to achieve that goal.
The Chinese government has an iron grip on its economy
and will not be dictated to by Western economic principles,
but will dominate economic growth.
So, China's economy is not the result of the different facets of the economy evolving as economics dictates, but is the result of a central government policy, which harnesses economic forces to achieve its goals…………….
And the Impact on the Gold Price?
How will this affect the gold price? In terms of rising Chinese demand? - Very slowly until the gold distribution system in China develops to the point where small town gold prices are the same as those in Shanghai.
In terms of the evolution of the global economy, the impact of Chinese development will be dramatic as the flow of Capital to the East threatens the Balance of Power in the global monetary system.
The $30-million-an-hour pace of growth in China's foreign exchange reserves took them to $988 billion at the end of last month. The trade surplus reached $110 billion through September, already exceeding last year's total, and economists forecast the gap will widen to more than $150 billion this year. As the sheer weight of capital flows into the ownership of the Chinese [either in U.S. Treasuries or other currencies] so its control over those currency [and Treasury] markets grows…………..
……….In the meantime the potential threat from this source will encourage more and more investment in gold.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/25/2006 : 20:29:31
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Not exactly bullion news, but another use for silver.
If it works, I would expect silver’s price to go up
as darn near everybody will want to buy a few cases of this spray, (think bird flu)
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Anti-flu spray could be used on UK's trains
Main line and Tube trains and stations could be sprayed with a powerful new anti-flu disinfectant, it was revealed today.
The non-toxic disinfectant, called
nano silver-titanium dioxide coating (NSTDC),
is being introduced on the Hong Kong metro rail system by the MTR company.
MTR is part of a consortium bidding for two new UK rail franchises - London Rail and West Midlands.
MTR said today it would monitor the progress of NSTDC in Hong Kong and this would be reflected in its plans for the UK.
A Transport for London (TfL) spokesman said: "TfL, including London Underground, has developed plans for dealing with flu in close consultation with the Government and other agencies.
"We are in regular contact with other metro networks from cities around the world, including MTR in Hong Kong, and we share the best practice and technological innovations. We would, of course, be interested in any measures which could be shown to be effective."
MTR is using NSTDC on all of its trains and stations. The special nano coating will be applied to all surfaces touched by its daily 2.5 million commuters in Hong Kong.
The NSTDC disinfectant,
which has been certified as effective in killing a wide range of bacteria, viruses and mold
including the H1N1 flu virus,
will be used on escalator handrails, the buttons on ticket issuing machines, Add Value Machines, as well as buttons and handrails in lifts within MTR's stations.
Inside the company's train carriages, the extra protection will be applied to all grab poles and strap hangers.
George Lee, MTR corporation safety and quality manager, said: "Germs and diseases are most commonly transmitted through the hands. They pick up bacteria from public surfaces which may then be passed into our bodies if we rub our eyes, nose or mouth before washing our hands.
"This latest innovation is part of MTR's focus on continuous improvement and innovation through the use of new processes and new materials, in order to provide a better and safer service for our customers. We will obviously be monitoring the progress of this and reflect this in plans put forward here in Europe."
Copyright Press Association 2006. |
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n/a
deleted
17 Posts |
Posted - 10/26/2006 : 03:42:00
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pencilvanian,
Yes this is very intersting, I am more of a watch and see type person but I really enjoy your postings. Please keep it up.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/27/2006 : 03:30:26
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My thanks to one and all, glad to pass on the news so we can all keep up with what is going on.
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Gold, silver prices lifted by falling U.S. dollar
NEW YORK (AP): Gold and silver prices rose Thursday, pushed higher as the U.S. dollar fell.
December gold settled up $9 at $599.80 a troy ounce on the New York Mercantile Exchange, while December silver added 35 cents to $12.24 an ounce.
Currency analysts in turn blamed the weaker dollar on fallout from the late-Wednesday statement from the Federal Open Market Committee, which was seen as dovish on interest rates, combined with expectations for more monetary tightening from the European Central Bank.
"They (gold and silver) got off to a pretty decent start this morning on follow-through from the afternoon gains yesterday after the Fed basically sat on their hands,'' said Dan Vaught, futures analyst with A.G. Edwards.
"There was some talk maybe their statement would have a hawkish tone. It seemed pretty vanilla,'' he said, adding that the weakness in the dollar has lifted precious metals. Gold is traditionally regarded as a hedge against a weaker dollar.
Another tax on gold miners/refiners, another expense to get the metal out of the ground.
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South African mining companies assess costs of Royalty Bill
Mining companies in South Africa continue to digest the likely impact of the revised Royalty Bill, with accountants at nearly all of the country's miners working out how much the proposed new bill will cost them.
Mining companies have until January 31 to lodge formal objections to the proposals, which promise a 1.5% royalty on refined gold and 3% on refined platinum. The final proposal lowered the royalties from those mooted when the original draft was written in 2003, but remains controversial in that it is a tax on revenue sales rather than profits.
Most companies are playing their cards close to their chests, but one of the first to show its hand will be Harmony Gold next week. The world's third-largest gold producer is the miner most exposed to the royalty proposals because nearly all of its gold is produced in South Africa, a fact pointed out this week by a well-publicized Merril Lynch report.
Harmony spokeswoman Amelia Soares confirmed that the company would give its estimate of how much the new Royalty Bill could cost it when it released quarterly figures on October 31. Soares refused to give the figures in advance, but hinted at the company's overall attitude to the proposals, saying: "Our management believes that a lot of the money should be used to uplift the people in mining areas rather than going straight to the Treasury."
Platts approached Nick Goodwin, a gold analyst at T-Sec in Johannesburg, for an estimate of what a 1.5% royalty could cost Harmony. He estimated that Harmony was producing about 17.2 mt of gold a quarter. Taking the rand gold price at noon local time October 24 he estimated a price of Rand 145 million/mt ($19 million/mt); that would translate to estimated annual revenue of Rand 9.976 billion, yielding a revenue to the government from Harmony of an estimated Rand 149.64 million.
"And that is a lot less than their profits and they have to pay back capex," he said. "A lot of the mining companies are not happy about this royalty and are doing their calculations, but what can they do? The government is making it clear that it wants a royalty and it is likely to be very difficult to change their minds."
One of the institutions that will try to change the minds of government is the Chamber of Mines in Johannesburg, which represents most of the big mining houses. Officials at the COM are working on a submission to the government and aim to come up with a response by mid-January, but it too is keeping its objections under wraps.
A source in the COM said that the thrust of its counter proposal was an objection to the two-tier system, which charges a larger royalty on coal exports and the export of unrefined metals. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/27/2006 : 20:08:06
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Gold Rises, Gaining for Third Straight Week, as Dollar Drops
By Pham-Duy Nguyen
Oct. 27 (Bloomberg) -- Gold rose in New York, capping the third straight weekly gain after a U.S. report showed economic growth slowed in the third quarter, weakening the dollar and boosting the metal's appeal as an alternative investment.
Gold, sold in dollars, generally moves in the opposite direction of the U.S. currency, which today headed for the second straight weekly drop against other main currencies. Gold is up 16 percent this year, while the dollar index has fallen 6 percent against a basket of six major currencies.
``There's a big focus on what could happen to the dollar,'' said Carlos Perez-Santalla, a gold trader and president of Hudson River Futures in New York. ``I'm liking gold again.''
Gold futures for December delivery rose $1.20, or 0.2 percent, to $601 an ounce on the Comex division of the New York Mercantile Exchange, the highest closing price since Oct. 19. Prices gained 0.8 percent for the week.
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
The U.S. economy grew at a 1.6 percent annual rate in the third quarter, the Commerce Department said today. The increase was less than forecast and the slowest pace in more than three years, as housing slumped and the trade deficit widened.
Former Federal Reserve Chairman Alan Greenspan said central banks and private investors are beginning to shift holdings from the dollar to the euro.
``We're beginning to see some move from the dollar to the euro, not only in the private sector, but by monetary authorities, by central banks,'' Greenspan said yesterday at a convention of the Commercial Finance Association in Washington.
`Supporting Side'
Analysts say Greenspan's comments were bullish for gold, which usually moves in tandem with the euro. Both gold and the euro rose against the dollar from 2002 to 2004. Last year, gold gained 18 percent even as the dollar rose 14 percent against the euro.
``Mr. Greenspan's comments about migration into the euro is on the supporting side for gold,'' said Frank McGhee, head metals trader at Integrated Brokerage Services Inc. in Chicago.
The metal faces resistance at $600, analysts who study price charts said. Today is the third time gold has closed above $600 this month.
``Gold needs to get through a series of important resistances between $602 and $605 to attract substantial fresh buying,'' said Robin Bhar, an analyst at UBS AG in London.
Another use for silver, increased usage=increased demand=increased price
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Smelly Carpets, Meet Silver Ions:
Products for an Odor-Free Home
Excerpt
……….They've taken some of the home's most odor-absorbent materials, re-engineered them, and created a host of new products that promise to neutralize bad smells. Among the latest technologies: fabrics treated with bacteria-killing silver ions, upholstery its maker says is woven so tightly that smells can't get in, even drapery embedded with the same sort of enzymes found in yogurt.
……………The fastest growth segment is biocides that use electrically charged silver ions that interfere with a microbe's respiration, destroy its cell wall and squelch the smell. It's not as futuristic as it sounds. Silver has been used as a bactericide for centuries; the Egyptians threw silver coins into wooden water barrels to keep them clean. Today, silver nanoparticles are being added to everything from the watertanks of spacecraft to the linings of air-conditioning ducts, though researchers say that questions remain as to their durability and whether they can handle heavy growths of bacteria......... |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/28/2006 : 21:20:38
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I think that what I have to say would also fit in the copper and nickel news topic section.
When it comes to mining, it isn’t a simple task by any means.
Consider what has to be done before the first ounce of ore must be dug out of the ground.
1)Geologists must be called in to get samples of the ore to determine if it is worth digging or not,
2) Man made caves must be dug or blasted out of the rock to get to the mineral wealth,
3) Rail track and mine cars must be bought and installed to move the ore and waste rock out of the ground,
4) Elevators must be purchased and installed to move men and materials in and out of the ground,
5) Air shafts must be dug to provide fresh air for the mine workers and to draw bad air and methane gas out of the mine,
6) The ore has to be shipped to refiners or smelters to separate the metal from the rock,
I am probably overlooking many, many more things needed in mining.
The point I am trying to get across is, is the fact starting and maintaining a mine is not easy by any means.
It is expensive and mining is labor intensive, even with machinery, you still need someone to operate the machinery.
Lately in the news we have heard of mine disasters and cave ins in coal mines.
Mining is still dangerous work involving risks, and while we all would hope and pray that nothing bad would ever happen in any mine, (none of us would want to hear about loss of life in any mine), it would be unrealistic to expect no accidents, or worse, could ever happen.
We all hear about how the price of various metals have gone up recently. The mines are running at peak capacity. Again, none of us wish anything bad to happen to any mine worker, and none of us would wish a mine to be shut down due to disaster, but as I mentioned previously, accidents do happen, and to expect them to never happen is not facing up to reality.
We can all hope that with peak cpacity comes maximum safety, although in some countries this is wishful thinking. I don’t want to sound horrible saying this, but if the prices of some metals keep going up, don’t be surprised to see some safety measures in some mines overseas get overlooked. Greed does some pretty rotten things to one’s sense of right and wrong, Enron is proof enough of that. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/28/2006 : 21:58:24
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1 troy ounce= 31.1035 grams
Price of gold as of 10/27/06 $598.00,
divided by 31.1035=$19.226132 per gram
or $19.23 per gram, rounded up to nearest cent.
Price of silver as of 10/27/06 $12.00
divided by 31.1035=$0..85808671
Or 86 cents per gram, rounded off to the nearest cent
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Gold recovers on firm overseas trend
NEW DELHI, OCTOBER 28: Gold prices recovered on the bullion market today on emergence of buying at existing lower levels and recorded a gain of Rs 60 at Rs 8,920 per ten grams.
Buying activity picked up as gold declined in previous trading, while the overseas markets, which set the price band in domestic markets, showed some firmness.
Marketmen said buying by retail customers amid reports of a better trend in the US markets last evening, mainly drove the gold prices notably higher.
They said the bullion market received a boost as stockists also joined the buying spree to enlarge their holdings to meet the demand for year-end celebrations.
Standard gold and ornaments gained Rs 60 each at Rs 8,900 and Rs 8,770 per ten grams respectively. Sovereign held unchanged at Rs 7,500 per piece of eight grams.
However, silver remained unaltered in limited deals and settled at previous levels. Silver ready was asked at yesterday's level of Rs 18,300 per kilo while weekly-based delivery declined by Rs 35 at Rs 18,500 per kilo. Silver coins traded at the previous level of Rs 22,500 for buying and Rs 22,600 for selling of 100 pieces.
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Whither gold? Differing viewpoints on gold supply
By: Charles Carlisle
LONDON (Mineweb.com) --Last week we had Ian roostererill, CEO of Gold Fields talking of a 1 to 1.5 percent decline in mined World Gold output, while other experts predict perhaps a relatively small to medium increase in mine production. Who is right remains to be seen, although with gold, and the gold price, whether mined output rises or falls by these percentages, while not being irrelevant may also not be the defining factor as to the ups and downs of the metal price itself.
While my own views on mine supply in 2007 tend towards the roostererill prediction,
there are so many other factors to take into account in the supply and demand picture
that such analyses have to involve a wide degree of assumption or supposition rather than a clearly defined mathematical calculation.
In theory it is possible to make a calculation of mine supply based on knowledge of existing mining company plans and proposed new developments.
The ultimate accuracy of such a prediction will obviously depend on unknown, and perhaps unpredictable factors,
such as future labour strife,
equipment breakdowns
and shortages,
government interference
etc.
But overall a fairly accurate picture can be prepared in advance.
But mine output is not the only major factor affecting overall supplies – and, arguably, demand is even more unpredictable.
On the supply side such factors as scrap supply,
Central Bank sales and hedging by mining companies all play an extremely important part, and the levels of all of these can be extremely variable and highly unpredictable.
Likewise on the demand side, the biggest area by far is jewelry off take and this again can be extremely variable and unpredictable as has been seen in recent months
with firstly the high prices seen towards the end of the first half of the year apparently putting a damper on the jewelry sector purchases,
but recent reports suggest that this has now come back strongly.
Purchases, if any, by some Central Banks can take many tons off the market, while investment demand,
whether by purchases of physical gold or through the ETF route,
are also impossible to predict.
A specific viewpoint needs to be taken and it will tend to be the analyst’s overall gut feeling which predominates.
Industrial and dentistry demand is a little more assessable though, as perhaps is
de-hedging by mining companies as this does tend to follow pre-ordained statements by the companies which have big hedge positions.
So, if all these factors are taken into account,
an analyst will predict the supply demand balance for the next year – and into the future if they are really brave.
But with so many strong variables to take into account the overall prediction will probably just be down to the perhaps unconscious prejudices of the analyst concerned!
It may also be arguable as to whether any of these supply and demand figures, whether accurate or not, have any impact at all on the gold price. As has been seen over the years, the key driving force for the gold price has been the strength or weakness of the US dollar.
The recent gold price run has, perhaps, largely been because of dollar weakness,
and the perception that the greenback is going to remain weak in the foreseeable future.
The gold price has also, in recent weeks, tended to follow the oil price up and down, although whether there should be any connection between the two, apart perhaps in terms of political uncertainty over oil supplies, and the causes of this uncertainty, appears to be obscure.
What of the gold price in the past week? Well its behaved almost identically to the week before. At the end of this week again the price is bumping up against the $600 an ounce mark, after falling back sharply at the beginning of the period. There seems an unwillingness for the price to break out either upwards or downwards from its recent pattern of ranging between $590 and $600, but my view is that an upside breakout is more likely than a downside one,
but when that may occur is a little more uncertain.
Gold fundamentals are probably good in terms of supply and demand,
but there are so many largely unpredictable factors that can affect the supply demand balance that, as noted above, the general outlook can change quickly!
Where do we go from here. I continue to think positively in this respect with gold perhaps breaking out into the low to mid $600s by the year-end or shortly after,
but then I wouldn’t put my shirt on it!
……………(In other words, this guy’s crystal ball is in the shop so he can’t tell what gold is going to do. He sounds more like a politician than an analyst.)
Big players playing the market like a fiddle, but demand for the metal, industrial or otherwise, remains and is increasing.
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Silver Commercials Tale Revisited
To the perennial silver bugs, the tale of unusual commercial bullion bank short position is not new.
The story goes like this. The commercials bullion banks (JP Morgan, HSBC, Scotia etc) from the 80s to early 2000 made good money shorting the silver market. Then they got greedy and pressed the market too much and created themselves a large, un-coverable short position. When their short positions got too uncomfortable, they engineered a sell off, picking the pockets of speculative funds that follow technical indicators.
We are not here to argue the validity of such a theory. However, the commercial silver short position is obscenely large. At times the short positions have been nearly 100,000 contacts. At 5,000 oz per contract, that’s a short position of 500 million oz. The current known above ground silver inventory is generously estimated at 200 million oz. On surface, the situation is dire and ripe for a default by commercials for failing to deliver the silver they shorted.
Then I look at copper and it’s the same story repeating. Commercials are currently short 32,000 contracts at 25,000 pounds each contract. They are shorting 800 million pounds when the LME copper inventory is at 23,000 tons, or 80 million pounds.
Here, I want to use the Commitment of Traders (COT) Chart and Silver Chart to explain how they may help with timing the peaks and bottoms of the silver market. There is a positive correlation between the bottom of commercial short positions and a bottom in the silver price.
The commercial shorts reached a low in Feb 2006. Not surprisingly the silver price bottomed at $9 in February and rose to $14+ just 2 months later. Again the commercial shorts reached a low in late July of 2006. Sure enough, silver touched a low of $9 in late July, and sprang to $13+ by late September.
There are obviously exceptions to this rule, as witnessed in Nov 2005 when commercial shorts were at a peak however silver price leaped from $8 to over $12 in the ensuing 6 months.
We don’t always know the bottoms in the silver market and commercial short positions (as it always happens in hindsight), so we can’t catch the turning point precisely. However what I can gather from the current low commercial position is that silver has been given the green light to go up. Whether or when it does go up is the question.
……………..(Playing the commodities game is just like playing Monopoly, it's easy to Go To Jail or go bankrupt.) |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/30/2006 : 19:46:26
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Gold crosses $600-mark, traders see correction
MUMBAI: The sentiment on MCX was cautious among the bullion traders, as they are expecting a correction in the gold price, which saw a high of $605.70 an ounce in London, and was trading at $604.60 in New York at 7.15 pm IST on Monday. Trading was strong in international markets as gold remained steady above $600, despite crude oil dropping by over a dollar, trading just over $60 per barrel.
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US gold jumps to 7-week high, bullish breakout seen
NEW YORK, Oct 30 (Reuters) - U.S. gold futures surged above $610 an ounce for the first time in a month on Monday, as funds piled back into the market, believing last week's close above key trendline resistance was a green light to get bullish.
At 9:55 a.m. EST (1455 GMT) December gold <GCZ6> at the COMEX division of the New York Mercantile Exchange was up $11.50 at $612.50 an ounce.
It had traded as high at $613, which was last seen on Sept 11, accelerating on the break above the overnight peak at $608.20. It never traded below $600 on Monday.
Sentiment turned decisively positive after the contract closed up slightly at $601 on Friday, above the declining trendline connecting tops from gold's 26-year peak in May at $753.
"I'm bulled up," said a desk broker at a futures commission house. "I don't really know why, what with energies down and the dollar not doing anything. So, it seems to me, it's probably some short covering and other people looking at the same trendline. I'm sure a million people are looking at it."
The mood turned cautiously bullish last week as gold made several attempts to break through resistance.
But many now think that the lows for the bear market may have been put in at $557.10 on June 14, and $563.50 on Oct. 4.
But December gold faces other technical barriers, such as the 200-day moving average, which now lies at $618.30. Computer driven trend-following funds could wait for moving averages to cross over bullishly to start pumping money into gold on the technical breakout.
The 14-day simple moving average at $593.30 is rising toward the 50-day at $602.20, but the trend will have to stay positive for it to converge quickly.
Traders were waiting for Friday's open interest data to see if fresh buying occurred to end the COMEX week, after open interest fell 10,743 contracts on Thursday, when gold rose $9.
"It looks like commission house buying again," said a floor broker. "Open interest was down 10,000, so that was short covering, and you might be attracting some new longs in the market right now."
Spot gold bullion <XAU=> was quoted at $607.80/8.80, up from New York's close at $598.20/9.70 on Friday. Bullion dealers fixed London's afternoon spot reference price at $608.50 an ounce.
December silver <SIZ6> was up 11 cents at $12.19 an ounce, trading from $12.07 to $12.29, also the highest price since Sept 11.
Spot silver <XAG=> was quoted at $12.10/16, up from $12.02/09 an ounce. The fix was at $12.13.
NYMEX January platinum <PLF7> was up $13.80 at $1,093.50 per ounce. Spot platinum <XPT=> was priced at $1,089/1,094.
December palladium <PAZ6> was $5 higher at $328 an ounce. Spot palladium <XPD=> fetched $324/329 an ounce.
As the taxes of gold mining go up, expect the profitability, and the supply of gold to go down.
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Miners begin to feel the rumblings from tax-starved Tanzania
DAR ES SALAAM, TANZANIA -- Tanzania has risen to Africa's third-largest gold producer in less than a decade, and now this East African country's government wants to earn more from its privately controlled mining sector.
Mining companies say Tanzania achieved its status in record time because of investor-friendly policies after decades of state control and small-scale mining. Companies -- which mine gold, diamonds and other gems, nickel and other metals -- pay royalties but no corporate taxes until they have recouped their initial investment.
Critics, however, say that the mining companies pay low wages and cost thousands of jobs among small-scale miners, hurting local economies. They also say that Tanzania has seen comparatively little revenue go to the treasury even as gold prices have doubled since mining was liberalized here.
President Jakaya Kikwete has directed the Energy and Minerals Ministry to review mining policies and laws, but ministry officials and mining company representatives missed a self-imposed Sept. 30 deadline to conclude discussions.
"We are exploring what areas can be improved, what areas can be reviewed," said Deo Mwanyika, executive general manager for corporate and legal affairs at Barrick Gold Tanzania. The subsidiary of Toronto-based Barrick Gold Corp. is the largest mining concern in Tanzania, with three gold mines and two other mining projects in the works.
Mr. Mwanyika added his company, which has operated in Tanzania for seven years, expected to begin turning a profit and paying corporate taxes in three years.
Chris Maina Peter, a professor of law at the University of Dar es Salaam, said that he believes a major factor in Mr. Kikwete's decision to review mining was the president's landslide victory in December, 2005, polls.
"I think the new government was shocked by its own success in the elections . . . It feels it has that legitimate duty to do something to assist the people," said Mr. Peter, who has specialized in investment law.
"People had been saying, 'Our natural resources are being stolen in broad daylight and what are you [the government] doing about it?' "
While Mr. Kikwete's ultimate goal is not yet clear, events in Tanzania seem to fit a global pattern. Russia has tried to assert more control over its oil and gas resources, and Venezuela and Bolivia have moved to curtail oil companies.
Tanzania, which gained independence from Britain in 1961, adopted socialism six years after independence. The government began liberalizing the economy in the early 1990s, a time when the collapse of the Soviet empire was leading many African countries to rethink their economic models.
A new mining policy, amended financial laws offering a slew of tax and investment incentives and a new Mining Act that parliament passed in 1997, saw six large-scale gold mines opened in Tanzania between 1998 and today. Tanzania is now Africa's third largest gold producer -- after South Africa and Ghana.
"It was just like a boom," said Sauda Kilumanga, public relations manager for Barrick Gold Tanzania.
The companies are exempt from Tanzania's 20 per cent value-added tax on goods and products used exclusively for mining and can offset all equipment and machinery costs against their earnings.
The World Bank says that mining is one of Tanzania's fastest-growing sectors. It makes up at least half of the country's foreign exchange earnings each year. However, it makes up only 3.2 per cent of Tanzania's gross domestic product.
Nicholas Mgaya, a senior trade unionist in Tanzania, said that generally the mining companies are "fair" in their relations with workers, but complained wages were low. "As compared to other parts of the world, the work in [Tanzania] is very difficult so the salary does not reflect the value of the product. Workers in Tanzanian mines are paid on average 160,000 to 300,000 shillings ($128 to $240 U.S.) a month," said Mr. Mgaya, deputy secretary general of the Trade Union Congress of Tanzania.
He said that South African mine workers are paid on average 10 times that.
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Investment fever for gold could cool off soon
The gold market surplus is expected to rise to 219 tonnes (t) in 2007 as demand falls by a huge 313t while supply will shrink by only 159t, says publishers of the Yellow Book, Virtual Metals Research and Fortis Bank.
On the supply side, higher mine supply of 2 382t (up 21t) will be offset by lower central bank sales of 448t (down 51t), much lower scrap recycling of 897 (down 117t) and slightly lower hedging of 72t (down 12t), the Yellow Book, a bi-annual analysis of the global fundamentals and outlook for the international gold market said.
Three categories of demand are expected to rise – jewellery fabrication by 47 tonnes, electronics by 31 tonnes and “other” end uses of gold. However, the increased demand will be offset by Exchange Traded Fund (ETF) demand declining by 108t as investment fever for gold cools off, the absence of central bank purchases of 100 tonnes of gold and dehedging declining sharply by 186 tonnes.
The decrease in dehedging can partly be attributed to the fact that producer Barrick has finished the bulk of its planned reduction and has given indication of future plans, but also to a substantial decline in the level of outstanding hedging.
“This leaves less latitude for further buybacks or deliveries,” says the analysis.
Initial forecasts for 2007 are based on the fluctuations in various gold supply and demand factors, but will largely be predicated by the performance of the gold price during the remaining months of this year.
“As we have seen throughout 2006, a lot can happen in three months.”
The Yellow Book revised its March forecast of the gold market surplus for 2006 from 358t to 64t in October.
The smaller market surplus forecast now, is largely the result of greatly reduced net central bank sales and greatly increased dehedging.
Central bank gold sales were estimated 48t lower in October at 499 and dehedging demand was estimated 206t higher at 486t.
Jewellery fabrication demand was also 31t lower during the months to October as the high price took its toll in most markets, but especially those in the Indian sub-continent and the Middle East. ETF demand took 36t more than expected.
This year’s flows of gold implies that 2 361t of newly mined gold will be added to existing stocks by the end of the year, bringing total above ground stocks to approximately 157 000t.
The destination of gold is hard to estimate given the number of sources and the ease with which it is transferred from one use to another. But the analysis suggests that jewellery is the dominating final end-use sector, accounting for 47% of all the gold ever mined at the end of 2005. Official sector holdings follow at just under 30 500t or just under 20% of total stocks.
Yellow Book estimates that investment bars represent just less than 16% or 24 400t of total stock, leaving 17% in coinage, electronics, dentistry, and other industrial and decorative applications.
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Gold marks its highest closing level in a month
SAN FRANCISCO (MarketWatch) -- Gold futures climbed more than $6 an ounce Monday to mark their highest closing level in more than four weeks, supported by strong physical demand as the Christmas holiday season approaches.
"In recent weeks, gold has been a market in search of a direction," said Brien Lundin, editor of Gold Newsletter. "Now there's growing evidence that it has found a direction -- and it is up."
Gold for December delivery closed up $6.40 at $607.40 an ounce on the New York Mercantile Exchange. That's its strongest closing level since Sept. 28. The contract climbed as high as $613.20 Monday, its loftiest intraday level since Sept. 8.
Prices for the precious metal had gained Friday with a firmer oil price and declining dollar after a surprisingly weak U.S. third-quarter growth reading.
The physical gold market has been "experiencing enormous demand, particularly from India," for more than a month, said Lundin.
And "in addition to festivals and the wedding season there, we've seen growing demand from elsewhere in Asia, as well as from the trade as the Christmas buying season approaches," he said.
It's likely that the "physical markets will support gold through the fall, and will serve to spark a level of speculative demand that will carry us into next year," he said.
At the same time, "last week's pause in Fed rate hikes and slumping housing values were apparently enough to induce a few dollar-to-gold switches to take place," said Jon Nadler, an investment products analyst at bullion dealers Kitco.com.
"This week's abundance of economic data and next week's election tallies could further influence the short-term prospects of the dollar-gold tango," he said.
But "traders remain cautious and investors even more so, whilst both may prefer going along with the breakout once it is firmly established," he said, adding that "they may well get their cues from a turn in the equities markets -- where the going has also gotten quite a bit tougher at the now stratospheric levels."
Dollar mix
Metals traders also eyed moves in the U.S. dollar Monday for any indication of upcoming investment demand for gold. The U.S. dollar traded on a mixed note following data on incomes and spending.
U.S. core consumer-price inflation retreated slightly in September, helping to give real after-tax incomes their best gain in a year, the government said Monday.
With incomes rising faster than spending, the personal savings rate improved to a negative 0.2%, the best in more than a year, the Commerce Department reported. The savings rate has been negative for 18 straight months.
The core personal-consumption-expenditure price index -- the Federal Reserve's favored measure of underlying inflation -- rose 0.2% in September, bringing the year-over-year increase down to 2.4% from a decade-high 2.5% in August. The core rate excludes food and energy prices.
The Fed has said core inflation rates above 2% make it "uncomfortable," but officials express confidence that a slowdown in growth will relieve inflation.
Against this backdrop, December silver futures closed up 17 cents at $12.25 an ounce. January platinum rose $13.50 to end at $1,093.20 an ounce and December palladium rose $5.75 to close at $328.75 an ounce.
December copper futures were the lone losers among the key metals, closing down by 4.65 cents, or 1.4%, at $3.3585 a pound.
On the supply side, gold inventories were unchanged at 7.57 million troy ounces as of late Friday, according to Nymex data. Silver supplies were unchanged at 105.3 million troy ounces and copper supplies rose by 200 short tons to 23,363 short tons.
In equities, metals-mining shares closed mainly higher, defying overall weakness in the broader stock market to mirror strength in precious-metals futures prices Monday………. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/30/2006 : 19:54:34
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Thoughts on analysts, metals or otherwise.
Sometimes when we hear from analysts, especially “chartists”, we have to remember the different between an analysts charts
And a sea captain’s charts.
An analysts charts tells us what should lie ahead,
A sea captain’s charts tells us what DOES lie ahead.
The trouble whith charts and graphs and such, is that all it tells us is what is moving
but not WHY is it moving.
Why something happens, or should happen, gives us an advantage that chartists overlook.
The reasons behind the numbers, why such and such a thing happened, is more important than the lines on a graph, since the reasons behind the numbers are the reason the lines on a graph move in the first place.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/31/2006 : 18:56:54
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Gold is back above $600? It looks good but remember, prices fluctuate. Metals go up, sideways and down, up sideways and down.
Useful information for gold, though not exactly bullion news, worth considering nonetheless.
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keeping its citizens "stupid"
Richard Russell (big) snippet
Oct 31, 2006
Extracted from the Oct 30, 2006 edition of Richard's Remarks
"There can be no other criterion, no other standard than gold. Yes, gold which never changes, which can be shaped into ingots, bars, coins, which has no nationality and which is eternally and universally accepted as the unalterable fiduciary value par excellence." -Charles De Gaulle
Russell Comment -- De Gaulle called upon the US to settle its debt with France by shipping US gold to France instead of US paper. At that point, President Nixon shut the gold window and in so doing took the US and the world off the gold standard and into the world of fiat paper.
Lower interest rates make the US dollar less attractive. And over the last few weeks the dollar has been heading down. How far down is the big question. A lower dollar means that imports to the US become more expensive. More expensive imports in turn mean rising inflation. It becomes a vicious circle, and if it continues Ben Bernanke is going to be facing a nasty and rather puzzling situation.
A weakening dollar represents a "wake-up call" for gold. Most people don't realize it, but rising gold is a form of dollar-devaluation. It's not an official devaluation, I call it a "free market devaluation".
Question -- Why does the US government continue to keep the official price of gold at $42.22 when the free market price for gold is over $600?
Answer -- This is the government's way of denying that the dollar has been greatly devalued. It's the government's method of keeping its citizens "stupid" and unaware of what's been happening to its money.
Remember, rising gold is the free market's way of devaluing paper currencies. Since the Federal Reserve creates our fiat dollars, you can imagine that the Fed does not want to see the dollar fall apart. A dollar that is very slowly declining against gold is acceptable, but a dollar that is rapidly declining against gold (i.e., a surging gold price) is something that the Fed most assuredly does not want. This has given rise to talk of the Fed manipulating the gold price, particularly at times when gold is surging. Does the Fed really manipulate the price of gold? I honestly don't know -- I'll leave that question to others, such as the Gold Council.
Aside from the stock market itself, I think the two places that we must watch most closely are the dollar and bonds. Well, there is a third place, and it's gold. Since many of my subscribers hold gold or gold shares, let's examine the weekly chart of gold (I'm using GLD). RSI appears to be pushing higher. Gold and its 10-week and 40-week moving average all appear to be tangled at around 600.
Commentary
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Silver & Gold Demand to Soar
There is an important addition to my base and precious metal commodity thesis which I have covered during the past few weeks. China is planning to build 200 new cities for one million people each. This is a massive undertaking within the next few years, on present form I do not doubt they will do it. 200 new cities, China certainly has some momentum here and obviously intends to maintain it. Curiously momentum is measured scientifically by multiplying mass x velocity, in this case we have $2.2T (considerable mass) x 10%+ (now that’s what I call growth velocity), this simple formula adds up to one thing... DEMAND!
Two hundred million more Chinese residents into cities is a major historical movement, it is two thirds the population of the US and ten times Australia. One can not underestimate this, not that long ago (in historical terms) this would have been 20% of the whole population of earth. Japan, Korea and other developing economies went through “modernization” before China; this is nothing new, what is new however is the scale. 200,000,000 is a lot of people even in whole world “relative” terms.
This point does not need a graph; 200 more cities for 200 million more urbanized consumers. We are talking about a China with an urban population of over half a billion people and they will have a GDP roughly equal to Japan once they achieve this. The other really interesting thing about China at present is that the transition to internal consumption has been increasing and they are still churning out the infrastructure at a fantastic rate.
Developing economies follow a general pattern where infrastructure leads to internal growth and prosperity and China is only somewhere in mid cycle. Their infrastructure roll out is far from over and yet internal consumption is gathering a powerful head of steam in global terms, already with 300,000,000 consumers. As pointed out in a previous article the mathematics of compound growth at 10% per annum showed that this is proportionately more significant that the number indicates. Growing off a small base at a high rate is an easy trick yet growing a $2.2T economy (end 05 figure) at 10% is something the world has not seen in the post war modern era, if ever. Growing consistently at 10% off a high base, year after year will have an even more profound effect.
Gold and Silver Demand
Do not forget China has not standardized gold and silver retail infrastructure as yet, this will take shape over the next few years fueling massive new demand. Do not forget China has an ancient rich culture which embraces gold and silver ownership in a way the West does not understand. As the three forces of increasing average earnings, cultural affinity for precious metals and a standardized retail distribution network join together we will see a triple wave crest which will drive PM demand through the roof.
The Chinese Government and wealthy Chinese are extremely astute and this would not have escaped their attention. It is not their biggest consideration as they manage their economic plans, yet it will be on their agenda make no mistake about that. Wealthy Chinese insiders are probably loading up at current historically cheap levels, gold investment increased by 20% in China last year.
………………….India, Russia and Brazil will be taking up the infrastructure roll out slack behind them going into their major infrastructure tipping point where we all gasp about their growth. India has only just moved up to the half a trillion GDP club and yet to gather highly significant commodity consumption. She is a sleeping beauty just like China was… past tense. India is well and truly on the move and even if it never reaches the development extremes of China it will still have a significant global impact on demand over the next 10 years at least. Gold and silver are even more important in this culture than China. As wealth and consumption grow in India we will see ever growing PM demand to take up the slack whenever process dip as Indians are extremely price sensitive. Therefore the dips will see support from this geological area.
The Gold Dinah has not gone away either. There are still rumblings in the Middle East about trade in gold instead of USD for oil which would be big news for gold. The silver Libertad is not going away either, this is a natural progression for Mexico due to their financial history and large silver production base.
These stunning metals are extremely rare having been formed in the stupendous pressure and heat of a supernova, during the explosion of an ancient massive star. Gold and silver were created in exceptional circomestances and quite ironically they perform best in exceptional circomestances.
Timing is another thing and we have to do our best to read the secular trends and fundamentals to monitor for changes. Technicals assist us to time our entry and exit points however remember this, one of the main considerations to own these metals is for their value in extreme financial circomestances… as insurance. We could be sitting right on a break out in the metals right now and await this outcome. They are the truest store of wealth over time, those of us in the “know” understand this to be an absolute “no-brainer” of an investment, this is our firm opinion of course.
Other fundamentals include feedback I am getting about industry bodies, great projections… Suppliers, powerful demand and great projections… Companies, still struggling to source mill equipment etc…
Last general comment today… gold and silver markets are very small compared to other market sectors. Global gold and silver warehouse stocks, shares in companies that mine these very special metals are very tiny compared to other world markets. Any rush to this unique asset class will cause a significant price spike, there is no where enough gold to cover demand when this gets going. As this stage two bull emerges from this initial correction we will see renewed global interest and investment. Money will flow towards quality stocks in low sovereign risk mining centers; valuations can only go so high in Canada and the USA before the value seeking overflow hits destinations like Australia. The effect would be immense.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/06/2006 : 20:32:00
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Gold is up again (Yippiee!) but let us not get too carried away with the news. Gold goes up gold goes down, but gold will always be around. Let’s enjoy the good news but let us keep a little level headed about the prices. We are in for the long haul, not the quick profit.
Some analysts ay gold will do well, some say gold will do poorly.
Somebody get these guys crystal balls or tarot cards, please!
They know as much as we do as to what gold will do next.
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Gold still aiming at $1,000 an ounce - but when?
Gold futures climbed to a 26-year high above $700 an ounce back in May and haven't traded anywhere near that level since.
When gold traded near $728 in May, "there was a lot of excitement," prompting scenarios of $1,000 gold prices -- even $2,000 and higher, said Steven Jon Kaplan, a senior editor at TrueContrarian.com.
"Since then, a worldwide economic slowdown has begun [and] the anticipated increase in demand for commodities has therefore been reduced," he said.
Now prices are beginning to show some signs of life again as uncertainty surrounds nuclear activities in North Korea and Iran, and the U.S. accuses Syria of planning to topple the Lebanese government. The U.S. dollar is also losing value and experts bet on further weakness in the currency. Some analysts say the slowdown in economic growth has spurred buying in gold as an alternative investment.
With a backdrop like that, it's hard for gold analysts to give up their predictions for $1,000 gold -- and they haven't, though they admit that the level may be a bit further off -- at least a year later than some had originally predicted.
"We would not be surprised to see $1,000-plus gold from sometime in 2007 at the earliest to 2009 at the latest," said Julian Phillips, an analyst at GoldForecaster.com.
In the short term, gold is "looking to rise because physical demand is now being added to by the turnaround in hedge funds' change of heart to the upside," he said.
"The potential oil shortage and subsequent pressures of who gets what oil [and] the now more-than-likely ruptures in the stability of the global-money system when the dollar starts to suppurate" support a medium- and long-term bull market for gold too, he said.
Such crises begin to raise doubts in paper currencies. The fear of the future will create such uncertainty that investors will be spurred to hold gold 'just in case', Phillips said.
Dollar crisis
Key to the gold's rise is the dollar's demise, especially in an election year.
"The hot money that flowed into gold earlier in the year is all but gone and gold's ups and downs have basically returned to traditional matters," said Peter Grandich, editor of the Grandich Letter.
"A declining U.S. dollar is likely to grab center stage in gold's trek to new highs in 2007," he said.
And the dollar is "more vulnerable than ever," said Ned Schmidt, editor of the Value View Gold Report, asserting his belief that the "dollar bear market will accelerate after the U.S. election."
"Gold is the only defense against the results of the U.S. election," he said. "If the Democrats win, gold will go up. If Republicans win, gold will go up" with "both parties ... masters at providing a leadership vacuum."
Meanwhile, "the glut of the dollar debt in central banks around the world is approaching a critical level," Schmidt said, and central banks are slowing their acquisition of U.S. debt, which will further weaken the dollar.
And the economy will enter recession in the first quarter of 2007, he said, depressing the greenback even further.
Overall, a global shift from the dollar continues while our trade imbalance grows larger and larger, said Peter Spina, chief investment strategist at GoldSeek.com.
The greenback is "in dire trouble so investors in gold know the risk is one to the upside with only short-term fund traders taking gold lower for additional opportunities to add at discounted levels," he said.
Breaking point in the Middle East?
There's another reason for gold's likely climb that the market has mostly ignored lately: fresh tension in the Middle East.
"The strongest reason to own gold right now is the fact that we have three U.S. aircraft carriers with task forces parked opposite Iranian shores," said Ralph Preston III, an account executive at San Diego-based Heritage West Financial Inc.
With a backdrop like that, it's hard for gold analysts to give up their predictions for $1,000 gold -- and they haven't, though they admit that the level may be a bit further off -- at least a year later than some had originally predicted.
"We would not be surprised to see $1,000-plus gold from sometime in 2007 at the earliest to 2009 at the latest," said Julian Phillips, an analyst at GoldForecaster.com.
In the short term, gold is "looking to rise because physical demand is now being added to by the turnaround in hedge funds' change of heart to the upside," he said.
"The potential oil shortage and subsequent pressures of who gets what oil [and] the now more-than-likely ruptures in the stability of the global-money system when the dollar starts to suppurate" support a medium- and long-term bull market for gold too, he said.
Such crises begin to raise doubts in paper currencies. The fear of the future will create such uncertainty that investors will be spurred to hold gold 'just in case', Phillips said.
Dollar crisis
Key to the gold's rise is the dollar's demise, especially in an election year.
"The hot money that flowed into gold earlier in the year is all but gone and gold's ups and downs have basically returned to traditional matters," said Peter Grandich, editor of the Grandich Letter.
"A declining U.S. dollar is likely to grab center stage in gold's trek to new highs in 2007," he said.
And the dollar is "more vulnerable than ever," said Ned Schmidt, editor of the Value View Gold Report, asserting his belief that the "dollar bear market will accelerate after the U.S. election."
"Gold is the only defense against the results of the U.S. election," he said. "If the Democrats win, gold will go up. If Republicans win, gold will go up" with "both parties ... masters at providing a leadership vacuum."
Meanwhile, "the glut of the dollar debt in central banks around the world is approaching a critical level," Schmidt said, and central banks are slowing their acquisition of U.S. debt, which will further weaken the dollar.
And the economy will enter recession in the first quarter of 2007, he said, depressing the greenback even further.
Overall, a global shift from the dollar continues while our trade imbalance grows larger and larger, said Peter Spina, chief investment strategist at GoldSeek.com.
The greenback is "in dire trouble so investors in gold know the risk is one to the upside with only short-term fund traders taking gold lower for additional opportunities to add at discounted levels," he said.
Breaking point in the Middle East?
There's another reason for gold's likely climb that the market has mostly ignored lately: fresh tension in the Middle East.
"The strongest reason to own gold right now is the fact that we have three U.S. aircraft carriers with task forces parked opposite Iranian shores," said Ralph Preston III, an account executive at San Diego-based Heritage West Financial Inc.
The prospect of prices reeling downwards could come from a steep drop in oil prices down to $35 a barrel, a docile Islamic world, the U.S. with a trade surplus and China a trade deficit -- and the sight of pigs flying over Congress," said Phillips.
TrueContrarian.com's Kaplan doesn't believe gold can actually stage a "true, sustained rally until the Fed begins to cut interest rates."
"As the Fed cuts rates, time deposits will pay a lower rate of interest, so the real rate of return will decline -- thus making gold more competitive as an alternative investment," he explained.
Brien Lundin, editor of Gold Newsletter, views the "primary danger" to the bullish scenario for gold as "some sort of economic shock in Asia," which could lead both the physical Eastern markets and the paper Western markets to temporarily abandon gold. But he doesn't expect that to happen.
There's a possibility of a "bubble-top marking the end of the secular bull market," said Scott Wright, an analyst at financial-services company Zeal LLC, but that's "not here yet."
And "gold and gold stocks are seasonally strong in the winter time," he said.
Best approach
So what's the best way to play in the market, steer clear of some of the inevitable volatility and make some profits or at least lose less in the process?
"For the average investor, buying gold stocks is the way to go," said Wright.
He pointed out that the Amex Gold Bugs Index (HUI :
amex gold bugs index equal-$ weight
News , chart, profile, more
Last: HUI327.26, +4.16, +1.3%) has climbed nearly 1,000% in this bull market, but the "combined market cap of its 15 components is still less than a third of the market cap of Microsoft alone."
Gold-mining stocks are relatively unknown to mainstream investors, but they are "a great speculative investment as they leverage the gains of the underlying metals they mine," he said.
If people do want to buy gold stocks, "they should buy those that are outperforming the pack now," said Sean Brodrick, contributing editor of MoneyandMarkets.com. "Chances are they'll outperform going forward as gold really recovers."
As for prices, they could be anywhere between $650 and $850 by the end of this year, according to Phillips.
They may trade between $800 and $900 at the end of 2007, according to Value View Gold Report's Schmidt, and could even reach $1,400 an ounce by the end of 2010.
Then again, "we certainly do not wish for $1,600 gold," said Jon Nadler, an investment-products analyst at bullion dealers Kitco.com. "That would imply some or most of our conventional assets having gone up in a puff of smoke."
"Bottom line is gold should be thought of as the protector of previously achieved profits -- not mainly as the generator of new ones, though it may well do that if conditions are ripe," he said.
Information on Krugerrands, good to know……..
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Coining it with Krugerrands
Intellectual Property Magazine
Fri, 03 Nov 2006
Although the gold price has come off its highs, those doughty people who have invested steadily in Krugerrands have enjoyed a pleasant capital gain.
Currently the value is around R4800.
Dealers generally charge a premium on the buying and selling of the coins which have a legal tender value of the average of the previous days’ two gold fixings in London.
The Krugerrand, incidentally, is the first gold coin in the world to contain exactly one troy ounce of fine gold and as such was a brilliant concept.
It has become the most sold gold coin in the world, having long ago overtaken the British sovereign, which held this title for nearly two centuries.
To establish the intrinsic value of a Krugerrand is easy: take the gold price over the rand/dollar value and you have it.
A good offer price
Thus with gold at say $620/ounce and the rand at 7.45 to the dollar, the coin’s value is R4619.
The difference between the intrinsic value and the quoted selling value is what is called the premium — in this case R181.
If you are selling your coins back to a dealer the offer price range is around R4300. "If you can get R4500 that is a very good price," says one dealer.
Interestingly, there is an imbalance in the prices between the one-ounce Krugerrand and the fractions — the half, quarter and so on — although the percentage of gold is not out of kilter. This is because, the dealer points out, "the smaller the coin the higher the premium."
Why this should be so is known only to numismatists…
One alternative to the Krugerrand is the so-called "new" British sovereign, in which some South African coin firms deal.
The "new" sovereign is synonymous with the Queen Elizabeth II coins, first minted in 1957, as opposed to the "old" coins.
However, there have always been problems with forged sovereigns — even those with the required gold content. Krugerrands, being 22 carat, weigh 31 035 grammes of fine gold (1.00 troy ounce).
Value a sovereign?
A British sovereign, also 22 carats, contains 0.2354 troy ounces and, like the Krugerrand, it is legal tender.
How to value a sovereign? Multiply the gold price by 0.2354 and convert to rands.
Thus, using the same parameters as with Krugerrrands (the gold price at $620/ounce) the bullion value of a sovereign is $620 x 0.2354 = $145.95. With the rand at 7.45 to the dollar, the rand value of the sovereign therefore is $145.95 x 7.45 = R1087.33.
At the time of writing, dealers were offering R840 for a sovereign and selling at R1040. However, based on the above calculation R1040 is a good buy.
It is of interest to note the swings and roundabouts caused by variations in the gold price and the rand/dollar exchange rate.
Recently the gold price fell from its level of over $600/ounce, but at the same time the weakening of the rand helped keep the value of Krugerrands and its fractions relatively stable. Now gold has risen again… the rand is slightly stronger — and Krugerrands remain a good buy. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/06/2006 : 20:36:35
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Silver & Gold Demand to Soar
Excerpts
Gold and Silver Demand
Do not forget China has not standardized gold and silver retail infrastructure as yet, this will take shape over the next few years fueling massive new demand. Do not forget China has an ancient rich culture which embraces gold and silver ownership in a way the West does not understand. As the three forces of increasing average earnings, cultural affinity for precious metals and a standardized retail distribution network join together we will see a triple wave crest which will drive PM demand through the roof.
The Chinese Government and wealthy Chinese are extremely astute and this would not have escaped their attention. It is not their biggest consideration as they manage their economic plans, yet it will be on their agenda make no mistake about that. Wealthy Chinese insiders are probably loading up at current historically cheap levels, gold investment increased by 20% in China last year.
…………….you may consider the overly dramatic rise from 1977 to 1980 was also distorted because the price of gold had been fixed for 4 decades. This is a highly political metal and is still of great interest to mankind. At the start of the chart on the left you could buy a house for $20,000 in Melbourne Australia. How things have changed.
As this gold bull moved from artificial lows in the late 90’s we saw each new consolidation phase occur at higher and higher prices levels. It is all relative, and back in 2002 we would have thought $600 to be a sky high price for gold… and silver bulls would have been overwhelmed with joy to see $11 as a new base. Yet today these prices are relatively cheap compared to recent highs. Recent highs will look just as insignificant as the early 2003 Gulf War influenced high of $370 does today as we look back in a few more short years. At the time I remember clearly how huge that peak looked… at least on the day chart, not long term. Was gold expensive at $730 earlier this year, yes it was relatively… but no, not when adjusted for inflation. As we look back at the early 2006 peak it will most likely look the same as $370 does now.
No matter what this distorted chart of gold shows, these are currently cheap historic levels for gold… at a current inflation-adjusted rate this “give away” price of gold is only $600 / 2.3 = $260 per ounce in 1980 $ terms. Silver is currently trading at US$12 or US$5.20 in 1980 inflation adjusted terms. I view these inflation adjustment calculations as very conservative @ 2.3x because they are the official figures. Once the “powers that be” in China are ready the Government will increase gold holdings within their projected foreign reserve balancing act, then the retail roll out will get a head of steam and the demand for precious metals will be driven like never before in our lifetimes. This seems to have commenced.
India, Russia and Brazil will be taking up the infrastructure roll out slack behind them going into their major infrastructure tipping point where we all gasp about their growth. India has only just moved up to the half a trillion GDP club and yet to gather highly significant commodity consumption. She is a sleeping beauty just like China was… past tense. India is well and truly on the move and even if it never reaches the development extremes of China it will still have a significant global impact on demand over the next 10 years at least. Gold and silver are even more important in this culture than China. As wealth and consumption grow in India we will see ever growing PM demand to take up the slack whenever process dip as Indians are extremely price sensitive. Therefore the dips will see support from this geological area.
The Gold Dinah has not gone away either. There are still rumblings in the Middle East about trade in gold instead of USD for oil which would be big news for gold. The silver Libertad is not going away either, this is a natural progression for Mexico due to their financial history and large silver production base.
These stunning metals are extremely rare having been formed in the stupendous pressure and heat of a supernova, during the explosion of an ancient massive star. Gold and silver were created in exceptional circomestances and quite ironically they perform best in exceptional circomestances.
Timing is another thing and we have to do our best to read the secular trends and fundamentals to monitor for changes. Technicals assist us to time our entry and exit points however remember this, one of the main considerations to own these metals is for their value in extreme financial circomestances… as insurance. We could be sitting right on a break out in the metals right now and await this outcome. They are the truest store of wealth over time, those of us in the “know” understand this to be an absolute “no-brainer” of an investment, this is our firm opinion of course.
Other fundamentals include feedback I am getting about industry bodies, great projections… Suppliers, powerful demand and great projections… Companies, still struggling to source mill equipment etc…
Last general comment today… gold and silver markets are very small compared to other market sectors. Global gold and silver warehouse stocks, shares in companies that mine these very special metals are very tiny compared to other world markets. Any rush to this unique asset class will cause a significant price spike, there is no where enough gold to cover demand when this gets going. As this stage two bull emerges from this initial correction we will see renewed global interest and investment. Money will flow towards quality stocks in low sovereign risk mining centers; valuations can only go so high in Canada and the USA before the value seeking overflow hits destinations like Australia. The effect would be immense.
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Gold Bull: Believe it or not?
Excerpts
Having spent the last 5 year period learning as much as I can about financial markets and more specifically the precious metals sector, I recently delved briefly into the area of human psychology in an attempt to gain a more rounded perspective. As many of you are aware, human psychology plays a major role in financial markets. Gaining an understanding of why people believe what they believe can be of great benefit.
Many years ago I received a book written by the infamous Anthony Robbins called “Awaken the Giant Within”. Whilst reading this book a second time I came across an interesting chapter called “Belief Systems:The Power to Create and the Power to Destroy”. This in turn got me thinking about the precious metals bull market and why so few people in the world today presently identify this as a viable opportunity. I would like to share with you a few of my findings:
What is a Belief?
To begin with AR defines a belief as follows: “A feeling of certainty about something. That sense of certainty allows you to tap into resources that allow you to produce intelligent results. Once accepted, our beliefs become unquestioned commands to our nervous systems, and they have the power to expand and destroy the possibilities of our present and future”.
How do we Turn an Idea into a Belief?
AR offers a simple metaphor:
“If you can think of an idea as being like a table top with no legs, you’ll have a fair representation of why an idea doesn’t feel as certain as a belief. Without any legs, that table top won’t even stand up by itself.”
The legs AR refers to are references that support the idea. That is experiences you have had in your life which support your beliefs. The more you experience, the more certainty that exists and the more conviction you have about your beliefs. If you look at the past 24 years, we have experienced an unprecedented period of stock and property market growth. Most people have experienced substantial increases in wealth during this time, naturally solidifying their beliefs. That is in order to grow your wealth, property and shares are the natural investments of choice, “without question”.
Another concept discussed by AR is that of “Social Proof”:
“So often people believe something because everybody else believes it. This is known in psychology as social proof. The thing is social proof is not always accurate. When people are not sure what to do, they look to others for guidance.”
(As quoted in the book ‘The Money Game‘, by Adam Smith, What is everybody else doing?)
“Some of the strongest social proof that people use is information they get from “experts”. But are these experts always right?”
When you think about these concepts it is not difficult to see why Gold remains largely ignored and consequently grossly undervalued in terms of Monetary Inflation.
The so called experts are those from the main stream financial media that continue to feed market participants with what they want to hear.
The property market has only recently started to show signs of distress, whilst the stock market seems to have reluctantly been handed the baton and continues to run making new highs.
Apart from the bursting of the Dot com bubble there hasn’t been any obvious events up until now that have caused mainstream market participants to seriously question their existing beliefs.
Why Believe in a Strong Future for Gold?
If I had to highlight just one singular reference that supports my belief in a strong Gold market going forward it would have to be the concept of Monetary Inflation.
Both the property and share markets have been the major beneficiaries of this inflation over the past 25 years.
Whilst core inflation has remained low, there has been no pressure to raise interest rates, thus allowing the party to continue.
In recent years however, this has predictably changed and core inflation has started to show its ugly face, effectively gate crashing the party.
Central banks around the world have no choice but to combat this form of inflation.
If they don’t they risk people loosing confidence in money
(The very foundation of the financial system).
Back in November 2005 I wrote an article where I calculated the monetary inflation adjusted price of Gold in Australian dollar terms.
I looked at the growth rate of Australian money supply (M3) and compared this with the world average growth rates in above ground Gold inventory, to determine a Monetary Inflation adjusted price (For a more thorough explanation see: - . You must be logged in to see this link.)
…………………Pain is the Ultimate Tool for Shifting Belief
Unfortunately many people have to experience pain and loss before they start questioning existing beliefs. It is this very concept that leaves a majority of investors skeptical of the future of precious metals. Having spent the bulk of the past 24 years in a secular bear market, many people still have a negative perception, despite the healthy increases in recent times. Like I mentioned previously, property and shares have continued to provide investors with a return on investment. When one has performed poorly, the other has picked up the slack maintaining people’s confidence in the system. Gold will only start to realize its monetary inflation adjusted price in times of uncertainty, during which time investment demand for precious metals will increase as people start to question the validity of existing beliefs.
Conclusion
Some of the most successful investors and speculators of our times have been people that have had the ability to successfully pre-empt changes in people’s belief patterns, having the foresight to position themselves accordingly. These people do not require the support system of social proof and have the courage of their convictions to act accordingly in advance. They have done their homework and genuinely believe in what they are doing and their conviction is not easily shaken. For anyone interested I write a free monthly newsletter on the precious metals markets. If you are interested simply send me an email. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/09/2006 : 22:33:15
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BUSINESS NEWS
Gold production falls again
Thu, 09 Nov 2006
South Africa's gold production fell 5.1 percent but and non-gold mineral production inched up by 0.5 percent year-on-year in September, Statistics South Africa said on Thursday.
Mineral production as a whole fell 0.4 percent year-on-year in the month.
Gold production fell to 67.6 index points, and non-gold mineral production came to 133.5 points.
Seasonally adjusted gold production was down 1.2 percent to 63.7 points in the September quarter, compared to the three months to end-June, with non-gold minerals up 1.1 percent to 126.7 points over the same period.
Overall there was an increase of 0.8 percent in the seasonally adjusted total mining production for the three months ended September 2006 compared to the previous three months.
Mineral sales rocket
Mineral sales meanwhile totalled R17.564-billion in August, up 50.3 percent on the same month a year ago, Stats SA said.
Gold sales in August totalled R3.1868-billion, up 115.7 percent from August 2005, and other mineral sales totalled R14.377-billion, 40.8 percent higher than a year ago.
This was the third consecutive month that total sales topped R17-billion.
August's seasonally adjusted gold sales were however down 4.8 percent compared to July, while non-gold minerals increased by 6.9 percent in August compared to July.
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