Why Gold Is Going Higher
David Galland, Casey Research
While there are many reasons that gold and silver are going to keep moving higher as the fiat currencies trend lower, at our recent Casey Research Summit in Boca Raton, faculty member Mike Maloney pointed out a fact that, while obvious in hindsight, I had never heard mentioned previously.
Namely that during the last major precious metals bull market in the 1970s, only about 10% of the world could own gold - either due to legal restrictions or a lack of liquid capital.
Today, few countries prohibit gold ownership, and a far higher percentage of the world's population has transitioned out of poverty.
China provides the most germane example, having legalized gold and silver ownership for private citizens in 2004, and through the explosive growth in national GDP that has caused Chinese gold purchases to skyrocket.
Confirming the point, the following is an excerpt from a recent Wall Street Journal article:
Chinese investors are snapping up gold bars and coins, buying more than ever before in the first quarter of 2011 and overtaking Indian buyers as the world's biggest purchasers of the metal.
A growing middle-class in China is raising the appetite for gold there.
China's investment demand for gold more than doubled to 90.9 metric tons in the first three months of the year, outpacing India's modest rise to 85.6 tons, the World Gold Council said in its quarterly report on Thursday. China now accounts for 25% of gold investment demand, compared with India's 23%.
The report underscores the rising appetite for gold among the growing middle-class in China. Fears of the country's soaring inflation, as well as a search for new investments, is luring investors to gold, and marketing of the precious metal has also increased in recent months.
"I think people will be surprised by the strength in the Chinese demand, but we think this is a trend that is set to continue," said Eily Ong, an investment research manager at the gold council.
Notoriously active savers, stashing away on the order of 50% of their income, the Chinese are increasingly opting for gold over the renminbi to stash their wealth.
For those wondering just how big a development this is, consider that in 2007, just before investing in gold became "the thing to do," gold demand in India was 61% of the world's total while China's gold demand was only 9%.
In other words, India is no longer the only elephant in the gold vault. And they are not alone - investors around the world are now able, and willing, to buy gold as a way of protecting their wealth from the inevitable decline of the fading fiat currencies.
I still don't think we are out of the woods on a commodities correction, but there are so many black swans floating overhead that literally anything can happen, at any time. Thus buying in tranches on pullbacks over the next four to six months still makes a lot of sense.
But in the longer term, gold has almost nowhere to go but up.
Caledonia, which produced around 17 700 oz of gold in 2010,
expects to ramp up to its targeted 40 000 oz/y
by around the third quarter of this year,
and should see costs move down to around $550/oz,
Learmonth said.
The company has commissioned a new 10 MVA diesel-powered plant,
which it can use to power the mine and facilities
if the grid power is interrupted.
Caledonia, like other miners in Zimbabwe, signed a special
agreement with local utility Zesa to guarantee uninterrupted
power supply, in return for a big premium on electricity prices.
The new system is working well, and the company has lost only
around a “couple of hours” all year, but saw the need for
the generators because of broader concerns over the power
supply situation in Zimbabwe, Learmonth said.
“And obviously it's vital that we keep going,
because if we don't produce we lose money hand over fist.”
The Blanket mine
was halted from October 2008 to April 2009,
because of "continuing nonpayment" of foreign exchange
by the country's Reserve Bank, for the sale of gold
delivered to the Bank's Fidelity Printers and Refiners.
But the mine reopened after the government approved a new policy
under which gold producers can market and sell their gold
directly and are also allowed to keep the payment
for their gold in foreign exchange.
COPPER
As for the Zambian prospects, the company is reluctant to talk
about the copper potential until it has some drilling results
to rely on, Learmonth said.
“Everyone wants to know about the copper, but as soon as we
have something we will tell them,” he said.
"For now all we are saying is that there is copper to the right
of us, the Vale/ARM joint venture, there's copper
to the south in Konkola and then there's also
copper to the north.”
Caledonia would look to take any base-metals discovery
as far along as it could by itself, he said.
“We're not just going to sit around waiting for someone to come
tickle our tummies.
We've got the competency to do it ourselves."
http://www.caledoniamining.com/nam1.php
Edited by: Creamer Media Reporter
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=63720508
http://www.caledoniamining.com
http://www.proactiveinvestors.com/companies/news/14915/caledonia-mining-lots-of-progress-scant-reward-14915.html
LMPA thanks for good info
David Galland, Casey Research
While there are many reasons that gold and silver are going to keep moving higher as the fiat currencies trend lower, at our recent Casey Research Summit in Boca Raton, faculty member Mike Maloney pointed out a fact that, while obvious in hindsight, I had never heard mentioned previously.
Namely that during the last major precious metals bull market in the 1970s, only about 10% of the world could own gold - either due to legal restrictions or a lack of liquid capital.
Today, few countries prohibit gold ownership, and a far higher percentage of the world's population has transitioned out of poverty.
China provides the most germane example, having legalized gold and silver ownership for private citizens in 2004, and through the explosive growth in national GDP that has caused Chinese gold purchases to skyrocket.
Confirming the point, the following is an excerpt from a recent Wall Street Journal article:
Chinese investors are snapping up gold bars and coins, buying more than ever before in the first quarter of 2011 and overtaking Indian buyers as the world's biggest purchasers of the metal.
A growing middle-class in China is raising the appetite for gold there.
China's investment demand for gold more than doubled to 90.9 metric tons in the first three months of the year, outpacing India's modest rise to 85.6 tons, the World Gold Council said in its quarterly report on Thursday. China now accounts for 25% of gold investment demand, compared with India's 23%.
The report underscores the rising appetite for gold among the growing middle-class in China. Fears of the country's soaring inflation, as well as a search for new investments, is luring investors to gold, and marketing of the precious metal has also increased in recent months.
"I think people will be surprised by the strength in the Chinese demand, but we think this is a trend that is set to continue," said Eily Ong, an investment research manager at the gold council.
Notoriously active savers, stashing away on the order of 50% of their income, the Chinese are increasingly opting for gold over the renminbi to stash their wealth.
For those wondering just how big a development this is, consider that in 2007, just before investing in gold became "the thing to do," gold demand in India was 61% of the world's total while China's gold demand was only 9%.
In other words, India is no longer the only elephant in the gold vault. And they are not alone - investors around the world are now able, and willing, to buy gold as a way of protecting their wealth from the inevitable decline of the fading fiat currencies.
I still don't think we are out of the woods on a commodities correction, but there are so many black swans floating overhead that literally anything can happen, at any time. Thus buying in tranches on pullbacks over the next four to six months still makes a lot of sense.
But in the longer term, gold has almost nowhere to go but up.
Caledonia, which produced around 17 700 oz of gold in 2010,
expects to ramp up to its targeted 40 000 oz/y
by around the third quarter of this year,
and should see costs move down to around $550/oz,
Learmonth said.
The company has commissioned a new 10 MVA diesel-powered plant,
which it can use to power the mine and facilities
if the grid power is interrupted.
Caledonia, like other miners in Zimbabwe, signed a special
agreement with local utility Zesa to guarantee uninterrupted
power supply, in return for a big premium on electricity prices.
The new system is working well, and the company has lost only
around a “couple of hours” all year, but saw the need for
the generators because of broader concerns over the power
supply situation in Zimbabwe, Learmonth said.
“And obviously it's vital that we keep going,
because if we don't produce we lose money hand over fist.”
The Blanket mine
was halted from October 2008 to April 2009,
because of "continuing nonpayment" of foreign exchange
by the country's Reserve Bank, for the sale of gold
delivered to the Bank's Fidelity Printers and Refiners.
But the mine reopened after the government approved a new policy
under which gold producers can market and sell their gold
directly and are also allowed to keep the payment
for their gold in foreign exchange.
COPPER
As for the Zambian prospects, the company is reluctant to talk
about the copper potential until it has some drilling results
to rely on, Learmonth said.
“Everyone wants to know about the copper, but as soon as we
have something we will tell them,” he said.
"For now all we are saying is that there is copper to the right
of us, the Vale/ARM joint venture, there's copper
to the south in Konkola and then there's also
copper to the north.”
Caledonia would look to take any base-metals discovery
as far along as it could by itself, he said.
“We're not just going to sit around waiting for someone to come
tickle our tummies.
We've got the competency to do it ourselves."
http://www.caledoniamining.com/nam1.php
Edited by: Creamer Media Reporter
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=63720508
http://www.caledoniamining.com
http://www.proactiveinvestors.com/companies/news/14915/caledonia-mining-lots-of-progress-scant-reward-14915.html
LMPA thanks for good info
My opinions are my own and and DD I post should be confirmed as unbiased
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