Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Politics-Nicaraguans Seem Eager to Kiss Old Guard Goodbye
Voters in the Central American country are turning their attention to younger leaders, and away from two controversial presidents.
(Angus Reid Global Scan) Mario Canseco – In this month’s CID-Gallup poll, 78 per cent of Nicaraguan respondents said their country is on the wrong track. With just over a year to go before the next presidential election, the actual direction of the Central American nation remains unclear.
In 2001, Enrique Bolaños—candidate for the ruling Constitutionalist Liberal Party (PLC)—was elected with 56.3 per cent of the vote over Daniel Ortega of the Sandinista National Liberation Front (FSLN).
Nicaragua’s political scene has been unstable since Bolaños lost the support of the PLC in January 2002, when his government decided to take legal action against former president Arnoldo Alemán. Last year, Alemán—who governed the country from 1997 to 2002—was sentenced to 20 years in prison for fraud, money laundering and embezzlement.
While the current head of state enjoyed a brief approval surge following Alemán’s incarceration, few Nicaraguans are now openly supporting his government. Only 29 per cent of respondents approved of Bolaños’ performance in this month’s CID-Gallup survey.
The president’s problems intensified last November, when PLC and FSLN lawmakers at the National Assembly introduced a series of constitutional reforms that restrict presidential powers, by allowing the legislative branch to ratify, summon and dismiss government ministers.
In January, the Central American Court of Justice (CCJ) unanimously ruled that the Nicaraguan legislative branch must not go ahead with the proposed reforms. Bolaños has so far refused to sanction the amendments.
Bolaños must now deal with his own legal problems. On Aug. 9, a National Assembly special commission recommended removing Bolaños’ immunity for alleged electoral offences. Lawmaker Orlando Tardencilla said the commission "corroborated the existence of bank accounts under the name of Enrique Bolaños that were not reported to the electoral commission." The current president has denied any wrongdoing, claiming that the charges are a ploy by lawmakers who hope to release Alemán. The issue will be thoroughly reviewed when the National Assembly reconvenes on Sept. 5.
The Alemán-Ortega alliance has dominated because of its strength in the National Assembly. Still, the two men are not particularly revered in Nicaragua. When respondents were asked by M&R in November 2004 about a prospective Alemán comeback, only 10.9 per cent expressed support. Earlier this month, 81.6 per cent of respondents to another M&R poll said they would not vote for Ortega next year.
In March, the FSLN officially designated Ortega as its presidential nominee. Ortega governed from 1985 to 1990, but was a losing candidate in the 1990, 1996 and 2001 ballots. The decision seemed to put an end to the aspirations of Herty Lewites. The former Managua mayor had topped several voting intention polls, but was expelled from the FSLN in February.
In June, Lewites teamed up with former Constitutionalist Liberal Party (PLC) member and presidency secretary Eduardo Montealegre to criticize the current state of affairs. The two leaders reserved harsh words for the former presidents. Lewites called Alemán and Ortega "mafia figures," while Montealegre expressed his intention to rid the country of "a two-headed dictatorship."
The ratification of the Central American Free Trade Agreement (CAFTA) with the United States has also been a casualty of recent political wrangling. Bolaños has urged lawmakers to pass the deal "to attract investment, create more jobs and combat poverty." The FSLN’s Ortega said the agreement would "only create temporary, low-paying jobs." More than half of all respondents to a recent M&R survey said the deal is beneficial for the country and should be ratified.
In the CID-Gallup poll, Lewites was the first choice in voting intention for the November 2006 ballot with 25 per cent, followed by Montealegre with 21 per cent, Ortega with 12 per cent, and Alemán with four per cent.
Lewites has already garnered the support of FSLN splinter group Sandinista Renewal Movement (MRS) and Christian Alternative (AC) for his presidential bid. For his part, Montealegre has assembled the Nicaraguan Liberal Alliance (ALN). Next year’s election seems likely to feature four key groups, two from the right and two from the left, where the younger generation—at least for now—holds the upper hand.
SLW taking it on the chin the past 2 days...
any opinion on whether to buy more now or wait...?
Politics-Lewites, Montealegre Early Leaders in Nicaragua
(Angus Reid Global Scan) – Former Managua mayor Herty Lewites heads the list of presidential hopefuls in Nicaragua, according to a poll by CID-Gallup. 25 per cent of respondents would vote for Lewites in next year’s election.
Former Constitutionalist Liberal Party (PLC) member and presidency secretary Eduardo Montealegre is second with 21 per cent, followed by former president Daniel Ortega of the Sandinista National Liberation Front (FSLN) with 12 per cent
Support is lower for former head of state Arnoldo Alemán, former PLC secretary and current Liberal Nationalist Party (PLN) member José Antonio Alvarado and former first lady María Fernanda Flores de Alemán. The next presidential election is scheduled for November 2006.
Lewites headed the government of Nicaragua’s capital from 2001 to 2005, but was expelled from the FSLN in February. In March, the party officially designated Ortega as its presidential nominee. Ortega governed from 1985 to 1990, but was a losing candidate in the 1990, 1996 and 2001 ballots.
In June, Lewites and Montealegre announced the formation of a unified front during an assembly of the Conservative Party (PC).
In 2001, the PLC’s Enrique Bolaños won the presidential election with 56.3 per cent of the vote. The president lost the support of the PLC in January 2002, when his government decided to take legal action against Alemán. Last year, the former head of state—who governed the country from 1997 to 2002—was sentenced to 20 years in prison for fraud, money laundering and embezzlement.
Polling Data
If the presidential election took place today, who would you vote for?
Herty Lewites
25%
Eduardo Montealegre
21%
Daniel Ortega
12%
Arnoldo Alemán
4%
José Antonio Alvarado
4%
María Fernanda Flores de Alemán
1%
None
13%
Undecided
20%
Source: CID-Gallup
Methodology: Interviews to 1,258 Nicaraguan adults, conducted from Jul. 25 to Jul. 30, 2005. Margin of error is 2.7 per cent.
Politics-Few Nicaraguans Would Vote for Ortega
8/16/05
(Angus Reid Global Scan) – Many adults in Nicaragua are unhappy with the presidential nominee chosen by the Sandinista National Liberation Front (FSLN), according to a poll by M&R published in La Prensa. 81.6 per cent of respondents say they would not vote for Daniel Ortega.
The FSLN was originally assembled in the 1960s as an armed group that opposed the dictatorial regimes of the Somoza family. After the government of Anastasio Somoza Debayle fell in 1979, the Sandinistas formed a transitional administration and later won a mandate in the 1984 presidential and legislative elections.
In March, the FSLN officially designated Ortega as its presidential nominee. Ortega governed from 1985 to 1990, but was a losing candidate in the 1990, 1996 and 2001 ballots. The next election is scheduled for November 2006.
Former Managua mayor Herty Lewites had topped several voting intention polls, but was expelled from the FSLN in February. In June, Lewites and former Constitutionalist Liberal Party (PLC) member and presidency secretary Eduardo Montealegre announced the formation of a unified front during an assembly of the Conservative Party (PC).
Polling Data
Would you vote for Daniel Ortega in the next presidential election?
Yes
10.5%
No
81.6%
Not sure
4.4%
No opinion
3.5%
Source: M&R / La Prensa
Methodology: Telephone interviews to 801 Nicaraguan adults, conducted from Aug. 5 to Aug. 7, 2005. Margin of error is 3.5 per cent.
a justifiable rant...
If RNC cannot turn around La Libertad, then it has a real problem. La Libertad must produce 70K ounces/yr to get its cash costs down below $300/oz. More fixed costs being spread over less ounces produced is the cause for its 2Q05 higher cash costs. This is readily resolved only via increased production... The current valuation is cheap only if one accepts La Libertad can produce 70K ounces/yr. RNC was /is overvalued (until today...?) at its current annual run rate this quarter of 35K ounces/yr.
Now RNC has year-end tax selling pressure until Dec 05. In addition, production will disappoint for this quarter as contract miner production will not begin in earnest until 4Q05.
Moreover, RNC gets double whammied today via its disappointing drill results at Bonanza in addition to its poor earnings/production results.
FWIW, I do not believe RNC top management are liars or incompetent per my discussions with them many times including today. However, RNC La Libertad mine operations have been mis-managed, so this may qualify as incompetence in your view. My understanding is:
1) the 30K/oz year Bonanza mine is operating at a decent profit and should continue to do so
2) La Libertad mine is a disaster in regard to digging and hauling the ore to the leach pads. That is, keeping its fleet of trucks and digging equipment working.
3) There are no problems with La Libertad processing the ore into gold from the leach pads. That is, crushing, agglomeration, leaching, and carbon in column recovery system.
It is indeed frustrating that RNC La Libertad cannot use its excavators, bulldozers, and trucks to load ore onto its leach pads. One would think this would be the easiest part of the operation, how hard can it be to dig and truck ore to the leach pads... For whatever reason, RNC La Libertad employees have not been able to do this.
To solve this problem, RNC will hire a contract miner for these digging/hauling operations. This contract miner is primarily in the road construction business and has confidence it can get the ore onto the pads at about the same cost as RNC budget, i.e. RNC cash costs should be below $300/oz. This contract miner has its own employees to replace RNC employees as needed, has an existing fleet of equipment which will supplement the RNC fleet, and can get the tires and other consumables necessary to keep the fleet running.
Likely this is not the time to be buying RNC stock, wait until Sept-Dec tax loss selling has ended. If the contract miner can get the tonnage onto the leach pad at La Libertad, then RNC will be profitable.
2Q05 Financials
Terrible...
The real problem is La Libertad. Annualized production of 35K ounces vs. 70K budget. This operation has to be turned around since RNC cannot generate meaningful cash flow and EPS without production at this mine over 60K ounces. La Libertad operations continue to be a disaster.
Bonanza production came in on target albeit at higher cash cost. Bonanza operations appear ok and profitable but this mine contributes only 30K ounces/yr.
Bonanza exploration drill holes a disappointment, results yet to be released. Looks like we can forget about the large bulk tonnage target. Hopefully, RNC proved up some high grade gold so this exploration program not a complete disaster.
RNC has to turn La Libertad around, that is the bottom line.
james taylor, don't go for jimmy buffet much..., saw JT in concert a few days ago, great concert...
don't worry about me chasing LRR, still having a heart attack over paying $100+/oz = market cap per resource ounce!!
LRR theme song ==>Mexico.mp3
http://download.xdrive.com/s/6217485119a7i6cRgg6G6hFDJxn3?partner=plus
WHAT'S THIS...
a Grandich comment without mention of ARQ/ANO, that's a first!!
The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 3-1/2 percent.
The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. Aggregate spending, despite high energy prices, appears to have strengthened since late winter, and labor market conditions continue to improve gradually. Core inflation has been relatively low in recent months and longer-term inflation expectations remain well contained, but pressures on inflation have stayed elevated.
The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.
Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Richard W. Fisher; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.
In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 4-1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
How about Silver Wheaton...
GBN = Right place + Right time???
How about those fundamentals, do not forget all those S Africa NUM union workers on strike today! Certainly this will hurt GBN's Burnstone current production in S Africa!! Why else have all the SA gold stocks such as GFI, HMY, Anglo and GBN declined recently!!! I predict GBN S Africa production will be 0 for the remainder of this year!!!! Ignore such fundamentals at your own peril!!!!!
ok, purchased some LRR as a speculation @ US$4.88
Like Mexico, like the chart, but LRR needs additional positive drill results, best I can determine LRR has about 700K ounces at Ixhuatan/Campamento and needs to prove up 1M ounces for viable project -- would have a great IRR given high grade thus far and near surface gold/open pit mining.
All the research reports here:
http://members.shaw.ca/dsk.consulting/lgc/
extrapolated the existing holes to get their 1+M ounces. Most recent holes were not as high grade thus I estimate about 700K ounces proved up thus far at Ixhuatan/Campamento. Resource estimate should be completed by year end -- LRR has 6 drill rigs on site so we should know very soon whether 1M ounces is achievable.
ok, which of these do you favor most...!! and why...
IAG
AUY
MFN
EDV
NG
thanks..., what are other 2nd tier stocks...
any opinion on EPM...? using your 20 day MA...
thanks for your comments... EDV goes ex-dividend on 8/16:
"cash dividend of CDN$0.035 per share, payable on August 31, 2005 to shareholders of record at the close of business on August 16, 2005."
see that the 20 day moving average currently at 2.81
Frank, any comments on EDV...?
http://www.endeavourminingcapital.com/nav.php
Nicaragua Politics
Ortega's Comeback Schemes Roil Nicaragua
By Mary Anastasia O'Grady / The Wall Street Journal
August 5, 2005 wall st jo / MANAGUA / Daily life took a holiday here Monday as the city feted its patron, Santo Domingo. Thousands lined the parade route, under a sweltering tropical sun, to view a diminutive image of the revered saint atop a huge, ornate flower arrangement shouldered through the streets by some 20 men.
Only death and politics refused a day off. Tragically, on the same day, President Enrique Bolaños and his family were receiving condolences at the wake of the president's son Jorge, who died suddenly last week of a brain aneurysm. Elsewhere the rest of the country's politicians were working overtime, maneuvering for a new presidential election scheduled for November 2006.
Nicaragua is in the midst of a constitutional crisis. Its frail democracy was born only 15 years ago of an election outcome that shocked the Cuban-sponsored Sandinista dictatorship of Daniel Ortega and brought Violeta Chamorro to power. But real democracy, with truly independent institutions, competitive markets and a secure rule of law, is yet to emerge. Now Ortega, who has made it no secret that he envies the one-man rule of Venezuela's Hugo Chávez, wants to strangle constitutional government in its crib.
If poverty reduction and commitment to democracy are more than slogans voiced at rich-nation summits, the international community ought to care. Ortega's rule after the Sandinista takeover in 1979 became a Cold War issue as the Soviet-backed Sandinistas sought to destabilize the rest of Central America. Those years destroyed this country's economy, leaving it far behind its neighbors. Investors are just now beginning to eye the place for its low labor costs, untapped human capital and unexplored business opportunities. Growth is picking up. Crime is low relative to the region and Nicaraguan democracy is showing signs of maturing past the oversimplified politics of Sandinismo versus contra-Sandinismo.
If Ortega is allowed to bully his way back to the executive office where he will seek to impose his caudillo-style "capitalism," much will be lost. As if to make the point, this week the Sandinistas in congress reiterated their opposition to the Central American Free Trade Agreement. Equally alarming is Ortega's hateful class warfare and his virulent anti-Americanism. If Nicaragua falls under his control, the Yankee-hating Latin axis that already joins Cuba and Venezuela will have extended its reach.
Much will depend on the effectiveness of an emerging and widening popular resistance movement that links Nicaraguans across the political spectrum and has pledged to take to the streets a la Ukraine's Orange Revolution to stop Ortega's effort to regain power.
For most of the last 15 years the Liberal Constitutional Party (PLC) has held the presidency but never fully dislodged the Sandinistas from their power base. Mrs. Chamorro was forced into a tacit understanding that granted the Sandinistas immunity from prosecution, control of the army and ownership of the many properties they had confiscated at gunpoint when they realized they would lose the 1990 election.
During the presidency of Arnoldo Alemán (1997-2002) the PLC became more corrupt and yielded even more ground to Ortega. The two dons crafted a pact in 2000 that gave Alemán a congressional seat with immunity from prosecution in exchange for changes to the electoral law that favored Ortega's effort to resume power. One of those changes was to lower the percentage of the presidential vote needed to avoid a runoff to 35% from 45%.
Pres. Bolaños succeeded Alemán but broke with the PLC machine and managed to strip Alemán of his congressional immunity. The former president was convicted of embezzlement in 2003 and is now serving a 20-year sentence under house arrest. But with the Supreme Court now evenly divided between Sandinistas and the PLC, Ortega holds the keys to Alemán's release, yet another source of political leverage.
In January, congressional Sandinistas teamed up with the PLC to pass constitutional changes to strip Mr. Bolaños of his executive powers. The president chose to ignore the Congress, so, in effect the country is now operating under two constitutions. Last week a Nicaraguan judge with links to the PLC released Alemán from house arrest, granting him limited parole. Several days later an appellate court with Sandinista connections reversed that decision. The case will now go to the Supreme Court. Many Nicaraguans believe that Ortega's price for Alemán's re-release is PLC cooperation in assuring an Ortega presidential victory.
With such powerful leverage, Ortega would seem to have what he needs to freeze out any political competition "legally." What remains unclear is whether this despised political elite can bear the grass-roots pressure against them. Polls indicate that Alemán and Ortega are Nicaragua's two most unpopular political figures. On June 16, an estimated 50,000 Managuans turned out to protest their "pact," or what one nongovernmental activist describes as the "two-headed dictatorship."
In a fair election, Ortega's worst nightmare is a popular challenger and former Sandinista mayor of Managua, Herty Lewites, who told me this week that Ortega wants nothing less than "total control" of power in Nicaragua. At a minimum, the ex-mayor could spoil Ortega's chances to capture the 35% he needs for a first-ballot success by allying left-of-center defectors from Ortega's extremist wing of the Sandinista movement. Ortega's minions are now seeking an indictment against Mr. Lewites for corruption.
A similar strategy is being used against one of the country's popular right-of-center candidates, Eduardo Montealgre, who threatens to siphon off much of the PLC's natural base, now fed up with Alemán corruption. Nicaraguans fear that the Sandinista-PLC coalition will try to disqualify such candidates on technical grounds or employ fraud on election day.
Some democrats here are relying heavily on the Organization of American States to force the country's institutions to hold a free and fair election. But judging by the OAS's failure in the Venezuelan recall referendum and in municipal elections here last year, that may be folly. A better strategy would be to rely on Nicaraguans themselves to finally secure a democracy that has been too long in the making.
When Will India Kick Its $200 Bln Gold Habit?: Andy Mukherjee
Aug. 3 (Bloomberg) -- If John Maynard Keynes were alive today, he would be horrified to see gold rallying again, and for a reason very familiar to the British economist: India's ``ruinous'' love of the ``barbaric relic.''
Almost 100 years after Keynes used those words to chide India for its extravagance, the billion-people nation shows no signs of losing its fondness for the metal. India accounts for 18 percent of world demand, more than any other country.
With the U.S. dollar looking vulnerable again against the euro and the yen, it's fertile ground for speculators to drive up the precious metal. Demand for gold, they reckon, is bound to rise amid the resumption of the Hindu wedding season in two weeks following a month's hiatus for religious reasons.
Prices have risen 4.1 percent to $437.40 an ounce in the past week on the Comex division of the New York Mercantile Exchange. Three out of four traders, investors and analysts in Bloomberg's latest weekly survey advised buying gold.
Gold traders aren't the only ones betting on Indian wedding demand. General Motors Corp.'s Indian unit is trying to whip up demand by throwing in a free gift of 30,000 rupees ($690) worth of gold jewelry for every purchase of its Chevrolet Optra sedan.
``Plush leather seats, jewel-effect headlamps and heaps of gold for your wife,'' says the GM ad line.
What's surprising to modern economists is that gold demand in India is on the rise when most of the traditional reasons for hoarding the metal -- high inflation, persistent rupee depreciation, rapacious taxation and low penetration of banking services -- are fading.
$200 Billion Locked Up
With increasing modernization and urbanization in the nation, the proportion of gold in the bridal trousseau should also have been on the wane. However, India's gold consumption rose 57 percent from a year earlier in the 12 months ended March 31, on top of a 63 percent jump in the previous year.
``Gold holdings among Indian households at current market value are about 2.5 times the current equity holding of $80 billion,'' said Chetan Ahya, a Morgan Stanley economist. In other words, some $200 billion, or the equivalent of 29 percent of India's gross domestic product, is locked up in jewelry.
Economists continue to debate whether Indian demand is excessive; social activists ask what it'll take to end the continual harassment of brides for dowry more than four decades after the practice was outlawed in 1961.
The question for gold traders is whether Indian demand will stay strong enough to push prices even higher. Investors such as Marc Faber in Hong Kong have predicted $5,000 an ounce. Much before prices scale those scary heights, the metal's appeal to Indians may start to diminish.
Fooling the Taxman
After all, Indians are no longer living in the 1970s when they were hard-pressed to protect their savings. Inflation averaged 9 percent a year then, and the income tax rate was as high as 97.75 percent in 1974. Gold jewelry was a handy option to store wealth and hide it from the state.
It was also a smart investment: Gold prices rose more than eightfold between September 1976 and January 1981, when they soared to a record $873.
India is now the world's 10th-biggest economy. The top tax rate is a reasonable 30 percent, while local inflation has averaged 5 percent since early 2000.
The Indian rupee, having weakened from about 7.5 to the dollar in 1966 to 49.06 in May 2002, has risen 11.5 percent against the U.S. currency since then.
Bollywood Smugglers
India has also liberalized gold imports, reducing smuggling of the metal and rendering anachronistic the plot lines of '70s era Bollywood movies that featured gold-smuggling heavies.
Why, then, are Indians still so enamored of gold?
Blame it on the government.
Over the past five years, the Indian government has added 16 percentage points of GDP to its public debt and spent 65 percent of the borrowed money on expenditure that doesn't create new capital such as salaries and pensions.
That inefficient allocation of savings by the government may have prompted individuals to become more risk averse and stock up on gold, Morgan Stanley's Ahya says.
``Instead of investing its annual savings in gold, if India were to invest this in productive business assets,'' said Ahya, ``GDP growth would be higher by 0.3 percent to 0.4 percent.''
A true test of Indian consumers' love of gold will be when the country fully opens its capital account and citizens are free to hold their wealth in any currency.
Wedding Season
Since that's at least a few years away, focus in the interim will be on more ostentatious weddings, bigger dowries and perhaps stronger gold prices. Most of all, the focus will be on India's youth bulge.
According to India's latest census, more than 47 million girls in the age group of 15 to 29 have yet to marry. Assuming 80 percent of them do so in the next five years, that's 38 million weddings. At a very modest 10 grams per wedding, or slightly less than one-third of an ounce, that would translate into 76 metric tons of demand a year, enough to buy a fifth of all gold mined in South Africa last year.
It's a good thing Keynes isn't around to see that.
ok Louis, any chance we break that -1400 trend line in the next few weeks/months...
and hopefully any news release does not mention tires (lack of consumables have been cited far too many times!@!!...)
"The global commodities boom has caused a worldwide squeeze on the massive tires needed by mining trucks and other heavy equipment, and officials of the Fording Canadian Coal Trust [NYSE:FDG; TSX:FDG.UN] expressed unease Monday that a lack of tires could deflate production.
''The risk of a shortage of tires continues to be high,'' Popowich said.
''Obviously, a lack of tires will impact the ability to produce coal, and Elk Valley Coal is working hard to prolong tire life at its operations through increased emphasis on haul-road maintenance,'' he added.
''New technologies are also being tested to monitor tire pressure and temperatures at the mines, with some good results. We're also testing a new two-piece tire that has the potential to reduce tire costs in the future.''
The tire pinch is likely to continue for the next year, Popowich indicated, noting that tire makers have said they expect to increase supply in the third quarter of 2006."
Dr Martin Mureenbeeld reminds clients that the 2% revaluation isn’t nearly going to satisfy the baying voices in Washington who want to pretend that but for China, every American would have a job; and only one mind you because it would pay so well.
Murenbeeld, renowned for his canny predictions, remains bullish on gold based on a revised forecasting model that has upweighted oil’s influence. He says oil is one of the more important factors tugging on the gold price.
Seen from the perspective of a Saudi oil merchant, there’s a potentially good trade underway. The cash proceeds from selling a barrel of oil buy more gold than at any time since WWII. Since this ratio swings about, it would hardly be imprudent to convert petrodollars into bullion.
From the vantage point of a gold miner, an ounce of gold buys precious little fuel for the mining fleet and processing plant, or the myriad oil derived and dependent ancillary products such as lubricants and tyres.
Murenbeeld says the medium term technical picture is “inconclusive”. Downside is seen at $415 and upside is $450. Murenbeeld & Associates recently issued a longer-range forecast for a fourth quarter gold price of $450 with a 25% probability of a run through $480.
From: loantech
Hello amarks,
I talked to Randy about a week ago. Here is what he said in no particular order.
1.Drilling started at Gitana about the 25th of July.
2.Don't expect assays until October.
3.They have staked a tremendous amount of land to the south. Said there may be news the third week of September or so on Pena Blanca or and another area of interest in what he is referring to as the Gitana district. <g>
4.Said he was very pleased with the first round of drilling. Said all the core contained gold and he was pleased with the broad dissemination of gold.
5.Ramping up drilling and at some point will get a 2nd rig. Drilling to 250-300 meters on next holes.
6.Will try to wrap up two JV's by years end.
7.Said they have found multiple feeders, they expect higher grade at lower elevations and at depth. Do not expect to drill the highest grade zones until spring.
8.Mentioned off hand that they have had several very pleasant surprises is how he worded it.
9.Drilling to the north of the last holes now and in two months or so will move to the south and south east.
(Amarks by looking at any maps etc do you make anything of that?)
10.Said they are pleased with ounces found so far but are not going to throw out any numbers for some time.
Sort of a basic update. But I am very happy with his tone and the fact he keeps repeating of tonnage, size, new district etc.Sure we are in the early stages but as I have said before if I had to pick a grass root stock that might become a mine I would put my money on CKG.
tom
well, I beg to differ somewhat...
R Martin stated in January that RNC was likely to do a PP, and they did..., so he was telling the truth. You are correct that any talk about "great access" to financial markets certainly did not apply to the March PP. Clearly R Martin wrong in implying any great access given PP results which was NOT a bought deal, rather a Canaccord screw job...
Dilutive financing is subject to debate since this PP has clearly made all those Dec 05 warrants out of the money permanently, and RNC management/insiders had a huge chunk of those warrants which will expire worthless. Net, net the Mar 2005 PP was anti-dilutive given that more warrants will expire worthless than the new shares+1/2 warrants issued...
Jury is still out in regard to RNC hitting cash cost and production targets for 2Q/3Q/4Q as well as R Martin's comments on Bonanza bulk target. Certainly investors do not give much credence to these remarks but I still await the jury verdict via the news releases this next week or two...
Thanks for your comments, the crap has surely been beaten out of us...
RNC, still waiting for RNC news releases...
Well, back from vacation and RNC continues to underperform with apparently no news... London PM fix POG averaging $426 for 3Q05 thus far. More than adequate for RNC to book EPS of over $.04 for the 3rd quarter, IMO.
Only 3 fundamental factors that could account for the dismal share price performance so far this year:
1) Bonanza drill results are dismal and somehow investors have gotten news of this prior to any official news release.
2) A new PP required for San Andres/Honduras acquisition. Such a PP would have to be non-accretive to EPS and cash flow per share for this to be a negative, fundamentally.
3) Jitney trading.
We should soon find out which of these 3 fundamanetal factors, or combination thereof, is driving the price down correctly or incorrectly... Stay tuned..., we will soon find out whether this man has been truthful or not, see post:
http://www.investorshub.com/boards/read_msg.asp?message_id=6460736
On the positive side, we have POG averaging over $425 and the CAFTA bill has passed into law in USA. CAFTA passing should be a siginificant positive event IMO, if for nothing else than all the NGO's were against CAFTA and the "neo liberal/colonialist" policies of mining companies in Central America. Appears Bolanos will remain in office until 2006 and hopefully Nicaragua can have another round of free and fair elections...
Yes, I enjoy investing in a stock with an interesting political scene. RNC Gold has 100% of its current mining operations in Nicaragua at present but will begin operations in Panama and Honduras here soon.
Not sure if you have seen this, this is a GREAT political risk map:
http://www.sovereignbermuda.com/Downloads/SovPRMap05.pdf
Well, I am off on vacation for the next 2 weeks, so don't expect much reading if you bookmark...
No way: "I would guess Aleman unless he has completely severed himself from U.S. support." US certainly not going to support Aleman, not a chance. Aleman rightly found guilty of corruption, most Nicaraguan people do not like him
US would likely prefer Eduardo Montealegre, but he appears politically inept and unlikely to win...
It will take some skillful political movements, but believe Herty Lewites most likely to be eventual winner. Ortega outlawed Sandanista primary elections which Lewites would have easily won over Ortega. Lewites is most popular Nicaraguan leader, with over 70% of Nicaraguans favoring him for President. His greatest problem will be outmaneuvering Ortega and his party machine to actually become President...
Believe US would not mind Lewites as President. Believe US position is anyone but Ortega and to have fourth successive Nicaraguan free and fair election.
Here is a nice post, also review RNC board for more posts on recent Nicaragua political developments, Nicaragua has very interesting political scene...
http://www.investorshub.com/boards/read_msg.asp?message_id=7078193
just my opinion...
taking another vacation, will be back Aug 4th...
did you notice ARQ today...
Marc Faber
first part is history lesson, his new comments after that...
Marc Faber writes:
EVERY DAY I GET numerous e-mails from well-informed readers of my newsletter commenting on the housing market. Some support my view that Anglo-Saxon countries rein a colossal home price bubble, while others argue articulately that there is no such bubble.
As a result, I continually have doubts about my own views and concede that, as John Dewey remarked, "Self-conceit often regards it as a sign of weakness to admit that a belief to which we have once committed ourselves is wrong. We get so identified with an idea that it is literally a 'pet' notion and we rise to its defense and stop our eyes and ears to anything different."
I occasionally try to forget my economic background and rationalise investment bubbles. We all know that investment bubbles involve easy money, excessive credit growth, lax lending standards, leverage, "new era thinking", and a loss of touch with reality, excessive expectations about future profits, and so on.
However, often bubbles also involve a loss of faith in the value of paper money. Let me explain.
In the late 1970s, investors became increasingly concerned about accelerating consumer price inflation. Since consumer prices were rising at more than 10% per annum, the then prevailing view was that cash was depreciating by approximately 10% per annum.
People rushed into precious metals and drove the price of gold and silver to US$850 and US$50, respectively, in January 1980. At the same time, investors were dumping bonds, which became known as "certificates of confiscation". US long-term government bond yields soared to more than 15% in September 1981. I would argue that there was at the time a real panic about the role of paper money as a store of value.
Loss of Paper Money's Purchasing Power as a Result of Asset Inflation
Today, we have a similar situation. However, people are not concerned about paper money losing its purchasing power as a result of consumer prices rising, but as a result of paper money losing its value because of rising asset prices.
If, on given income of 100, consumer prices rise from 100 to 110 the real income will have declined by 10%. But if on an income of 100 and cash assets of 1,000 which only yield 2%, real-estate prices rise by 10%, both the income and the cash assets will have lost their purchasing power compared to real estate.
Therefore, if real estate prices rise for an extended period of time at a faster rate than incomes and interest rates on cash deposits, it is only natural that people become concerned that they won't be able to afford to purchase their own home in future.
Their concern about future affordability, which is nothing else than the fear of their income and savings losing their purchasing power, then induces them to purchase their homes now rather than later.
This incremental demand drives prices even higher and attracts speculators who want to capitalise on the rise in prices, which is driven first by the genuine buyers and later by themselves as well.
As a result, prices then overshoot and lead to even deeper apprehension about the loss of purchasing power of paper money on the side of the household sector. A general rush from liquid assets to" illiquid assets" inevitably follows and creates a bubble.
This is nothing new. The first well-documented instance of such a loss in the purchasing power of paper money was John Law's Mississippi Scheme. In 1716, John Law had opened, under the patronage of the French regent, a bank (Banque Generale), which issued paper money backed by gold. With the help of the regent, the bank became an immediate success. Its banknotes were very convenient, since the government accepted them for tax payments.
Based on this first success, in 1717 Law managed to convince the regent to grant his new venture, the Mississippi Company, a monopoly on all commerce between France and its French territories in North America, which included the present states of Louisiana, Mississippi, Arkansas, Missouri, Illinois, Iowa, Wisconsin and Minnesota, in return for accepting outstanding notes of the French government in payment for the Mississippi shares.
This arrangement basically amounted to nothing other than a partial conversion of France's government debt into shares of the Mississippi Company.
The operations of the company didn't prove to be profitable, partly because when it issued shares it hadn't received cash, but debts of the French government, which had been converted into shares of the Mississippi Company, and partly because very few French wanted to emigrate to the territories in America.
Still, the shares of the Mississippi Company performed well after the regent took over Law's bank and began to run its money printing press around the clock. (Presumably, Law gave him the bank in exchange for having obtained so many privileges.)
But, whereas John Law had always maintained a small balance of gold reserves to back up the paper money the bank issued, he now advised the regent that the public had gained sufficient confidence in paper money and, therefore, gold reserves in the bank's vault were no longer necessary.
As a result, in 1719, the government increased the money supply dramatically and lowered interest rates by lending money for as little as 1-2%.
The vast increase in the supply of paper money, combined with the ability to purchase shares in the Mississippi Company on margin, led not only to the shares rocketing towards the end of 1719 to over 20,000 livres (from 300 at the beginning of the year), but also to rapid price increases across France.
The cost of bread, milk, and meat had risen six-fold, while cloth was up by 300%. The horrendous inflation made the holders of Mississippi Company shares and of paper money nervous.
In January 1720, just two weeks after John Law had been appointed as comptroller general of finance(minister of finance), a number of large speculators decided to cash out and switch their funds into "real assets" such as property, commodities, and gold. This drove down the price of the Mississippi Company shares since the speculators could only pay for real assets with banknotes.
As confidence in paper money was waning, the price of land and gold soared. This forced Law, who still enjoyed the backing of the regent, to take extraordinary measures. He prevented people from turning back to gold by proclaiming that henceforth only banknotes were legal tender. (By then the Banque Generale had practically no gold left.)
Thus, payments in gold and silver above 100 francs were prohibited; in addition, the ownership of gold exceeding 500 livres in value was declared illegal.
(Severe penalties were imposed on people who hoarded gold. To enforce this most blatant expropriation, Law encouraged the public to turn informer by handing out large rewards to those who assisted in the discovery of gold, which was then confiscated.)
At the same time, he stabilised the price of the shares of the Mississippi Company by merging the Bank Generale and the Mississippi Company, and by fixing the price of the Mississippi stock at 9,000 livres.
With this measure, Law hoped that speculators would hold on to their shares and that in future the development of the American continent would prove to be so profitable as to make a large profit for the company's shareholders.
However, by then, the speculators had completely lost faith in the company's shares and selling pressure continued (in fact, instead of putting a stop to the selling, the fixed price acted as an inducement to sell),which led the bank once again to increase the money supply by an enormous quantity.
The result was another round of sharply escalating prices. (In four years, the supply of circulating medium had been trebled.)
John Law suddenly realised that his main problem was no longer his battle against gold, which he had sought to debase, but inflation. He issued an edict by which banknotes and the shares of the Mississippi Company stock would gradually be devalued by 50%.
The public reacted to this edict with fury, and shortly after Law was asked to leave the country. In the meantime, gold was again accepted as the basis of the currency, and individuals could own as much of it as they desired.
Alas, as a contemporary of Law's noted, the permission came at a time when no one had any gold left. The Mississippi Scheme, which took place at about the same time as the South Sea Bubble, led to a wave of speculation in the period from 1717 to 1720 and spread across the entire European continent.
When both bubbles burst, the subsequent economic crisis was international in scope.
Still, although accounts are not available about real estate prices during the monetary inflation and the subsequent bust of John Law's experiment with paper money, I suppose that early buyers of real-estate fared better than the holders of paper money, which lost all its value.
The economist Richard Cantillon fared even better. He kept his wealth intact, which he acquired from successfully speculating in the shares of the Mississippi Company, by converting his profits into gold and moving to Holland.
By doing so, Cantillon inadvertently followed an important investment wisdom, which states that once an investment mania comes to an end, the best course of action is usually to exit the country or sector in which the mania took place altogether, and to move to an asset class and/or a country that has little or no correlation with the object of the previous investment boom.Modern Day John Laws
I have no faith whatsoever in the Federal Reserve Board, nor in any other central bank around the world, doing anything other than printing money over the long term.
In fact, I believe that, given the very high levels of debt we have in the US and other industrialised countries compared to the size of their economies, the central banks have no other option now but to print an ever-increasing quantity of money.
I am a firm believer that Mr. Greenspan, Mr. Bernanke, and their colleagues in other central banks around the world are modern-day John Laws who, like him, will not only manipulate and intervene in markets but, over time, will also totally destroy the value of paper money.
Whereas John Law tried to fix the price of the Mississippi Company by printing money, the Fed chairman has tried (and managed - at least so far) to inflate asset prices through an extraordinary money and credit expansion.
Therefore, while long-term US government bonds could rally somewhat further in the near term, as the economy slows down, I very much doubt that they will provide a satisfactory return over their future life span, as money printing will lead to a loss of purchasing power of money.Future Loss of the Dollar's Purchasing Power
Countless speculators and future funds have lost much money this year by betting that the US dollar would depreciate against the Euro and other currencies. The mistake these speculators made was failing to understand that a currency can also depreciate or lose its purchasing power against other assets than just other currencies.
Thus, if all the central banks in the world were to increase their money supply in concert annually by, say, 20%, currencies could remain stable against each other but lose in value against consumer prices, precious metals, commodities, art, real estate, and so on.
I point this out because, although I have been positive for the dollar for the last six months, I remain a firm believer that it will go down or continue to lose its purchasing power, as it has done since the establishment of the Federal Reserve Board in 1913 - however, not necessarily against the Euro.
I recently had the pleasure of being on a panel with Jimmy Rogers, founder of the Rogers International Commodity Index (RICI) and cofounder of the Diapason Rogers Commodity Index Funds. The subject of the discussion was commodities.
As my regular readers will know, I am presently not particularly positive about industrial commodities (see also below), whereas I believe that agricultural commodities offer significant upside potential with about 15% downside risk.
Jimmy, however, argued that he was the world's worst market timer and that in his view this commodity up-cycle would last for at least another 10 to 15 years.
Based on the past, commodity cycles (Kondratieff price cycles) tend to last 45 to 60 years. Therefore, if we assume that the last peak of the cycle was in 1980 rally somewhat further in the near-term, as the economy slows down, I very much doubt that they will provide a satisfactory return over their future life span, as money printing will lead to a loss of purchasing power of money.
Hence, if Jimmy Rogers is right in saying that we are in the early stage of a commodity bull market that will last for another 10 to 15 years, a view that I share, then we should also assume that consumer price inflation will gather steam in the years ahead.
Needless to say, rising CPI inflation would further reduce the purchasing power of paper money and be negative for long-term bonds as well as for the valuation of equities (P/E contraction as a result of rising interest rates).
And while I don't think this will happen right away, as I shall argue below, in the absence of one's ability to time market events, the risk is obviously that even industrial commodity prices could continue to rise without much of a correction. This could be particularly true of oil.
We have argued for a number of years that oil prices (and uranium as well) have a significant upside potential. We based this view on Asian demand (3.6 billion people)doubling from 21 million barrels a decurrently to around 40 million barrels a day in the next 10 years or so.(Current daily global oil production is around 84 million barrels a day.)
Recently, however, I sounded a note of caution about oil prices, because some froth had developed as oil prices, at around US$55 to US$60 a barrel, were clearly not as inexpensive as they were a few years ago.
In 1998, the S&P was expensive and oil ridiculously inexpensive. Today, however, when about 20 barrels of oil are required to buy one S&P index, the undervaluation of oil compared to the S&P 500 is less compelling.
Still, we shouldn't rule out that we could go back to the S&P 500/oil ratio, which prevailed in the 1970s and early1980s, when less than five barrels of oil were required to buy one S&P index .
At the last major oil peak in 1980, it took less than three barrels of oil to buy the S&P 500!
If this were to happen again, it would imply - assuming an S&P 500 index of 1200 - an oil price of US$400... I mention this because I recently came across a paper by Eric Sprott, of Sprott Securities in Toronto.
Eric analyses the oil market with particular emphasis on the supply side. As our readers will see from Sprott's study ( Greg's note: I will soon publish this study if I can obtain the requisite permission ), if he is right about the supply of oil diminishing and I am not totally out of line with my forecast of Asian oil demand doubling over the next 10 years or so, then prices will rise dramatically.
As energy prices rise, geopolitical tensions will increase and lead to even higher prices. Eventually this will lead to World War III in the 2010-2015 period, as energy shortages become acute.Few Bargains and a Volatility Spike
In the 1970s, money's purchasing power was eroded by high consumer price inflation rates. Since the early1980s this loss of purchasing power of paper money has continued as a result of asset inflation. In particular, over the last few years, depositors have been penalised as real short-term interest rates have been negative
As we have maintained for some time, there are very few bargains in today's world of inflated asset prices. In fact, I only find relative values. Asian property prices ex Japan and Hong Kong are inexpensive compared to US and European property prices.
Asian shares are reasonably valued compared to equities in Western industrialised countries. Asian currencies are cheap compared to the US dollar and especially the Euro.
Grains are a bargain compared to oil and copper (farm product prices are at a 200-yearlow compared to energy) I should like to remind our readers that in drought periods grain prices can rise dramatically.
From their lows in 1968/69 to their highs in 1973/74, wheat rose by 465%, soybean oil by 638%, cotton by 317%, corn by 295%, and sugar by 1290%. Gold is also relatively cheap compared to oil. It now takes only seven barrels of oil to buy one ounce of gold.
These relative values aside, I continue to be concerned about several issues. Despite the fact that I always question my own views, it increasingly looks as if we have a gigantic bubble in selected real estate markets.
All the symptoms typically associated with an investment mania and bubbles are there. Can the bubble become even larger?
Possibly, but the end result will be even more painful than if the bubble begins to deflate shortly. The Economist concluded the editorial I referred to above by stating: The whole world economy is at risk.
The IMF has warned that, just as the upswing in house prices has been a global phenomenon, soapy downturn is likely to be synchronised, and thus the effects of it will be shared widely.
The housing boom was fun while it lasted, but the biggest increase in wealth in history was largely an illusion. (The Economist , June 18 -June 24, 2005) assets such as homes and commodities have risen substantially in value.
Given the propensity of central bankers to print money, I find it difficult to envision an environment in which paper money would not continue to lose its value over the long term. The only question is: against what will paper money lose its value in future?
The US dollar remains vulnerable, but possibly not so much against the Euro as against gold and silver and other commodities such as oil and grains. At the same time as we have had a housing boom in the US, we have experienced an unprecedented investment boom in China.
If both turn down at the same time, the global economy could weaken more than is now perceived. Such a synchronised downturn in the US and China would almost certainly badly depress industrial commodity prices. This would, however, not alter our long-term favourable opinion of the commodities complex.
In a global downturn, the bond bulls might very well have the upper hand for a while longer. But I have no doubt whatsoever that central banks, led by the US Fed, would, faced with economic weakness, print money like never before. However, this time the money printing operation may not work.
In the same way that asset price inflation - unexpectedly, I might add - replaced CPI inflation in the early 1980s, in the near future CPI inflation and rising commodity prices could begin to exceed asset inflation rates, and in particular home price inflation.
This would likely depress long-term bond prices and lead to a very unappealing global economic and financial environment and eventually discredit central bankers and bring about the end of central banking as we know it today.
Given these uncertainties and the potential for oil prices to continue their ascent, I am surprised at the low-level of volatility. Low volatility, we pointed out at that time, tends to lead to big market moves, whereby the direction of the move isn't indicated by the low volatility.
Still, looking at the shape of stock markets around the world and at industrial commodity prices, some significant downside volatility wouldn't surprise us.
Regards,
Marc Faber
Nicaragua Politics
found this posted, dated June 2005...
Take all the anti-Bush, pro-Sandinistan, and anti-Sandinista BS out and here is what is going on:
First, a primer in all parties of power:
1. The Sandinistas: Even when not in power, they have worked behind the scenes by creating alliances and by using their legacy power in the judiciary to maintain power.
2. The Liberal Constitutionalist Party (PLC): The current "ruling" party that has held a leadership role in the Union of political parties that has trumped the Sandinistas since 1992. Even though the first elected President in decades, Mrs. Violeta Chamorro, was from the Conservative Party, the PLC really has ruled from within that alliance since then.
3. The Liberal Democratic Party (PLD): The other liberal party that is gaining in power in opposition of the happenings with the PLC.
4. The Conservative Party (PCN): The dark horse in Nicaraguan politics, which represented the opposition to Somoza, led the growth of the revolutionary movement with the Sandinistas, and was part of the initial government with the Sandinistas, until they were ousted violently by the Sandinistas.
There are at least 6 other parties, but none wield as much power.
Ortega desperately wants to finally win an election and has managed to split the biggest opposition party, the liberal constitutional party in two (more on that in a second).
What is a disgrace in Nicaraguan politics is that the history of the country is littered with people who received the trust of the people that go on to betray them by becoming corrupt or allowing corruption to happen. The Conservative Party leader, which is the party that my family belonged to historically, betrayed that trust in 1967, when it was wielding the most power, by becoming part of a pact with the Somoza dictatorship. Then in 1992, When Mrs. Violeta Chamorrow won that historic vote, several of her cabinet members and government ministers went on what is now called "the pinata" that resulted in huge corruption. Things got worse when Arnoldo "el gordo" Aleman was elected. Although he was viewed as a hero of the resistance against the Sandinistas, a reformer, and a school builder, it was found that he as well as a great number of his ministers (cabinet level assignees) had stolen great amounts of money or obtained great amounts of money by wielding influence.
Aleman's VP, President Enrique Bolanos, was then elected in a landslide over Ortega on an anti-corruption campaign that many though would be a non-starter. But he came up swinging, and his government convicted, in Sandinista courts, the former President. The former president went to jail, and everyone was happy, that is until Ortega came calling.
Ortega saw an unprecedented opportunity in the jailing of Aleman. He saw that the rest of the corrupt parts of the government in the PLC were running scared, and that he could build a coalition with those folks by finding ways for them to not pay for their sins. But the only way to do that would be thru a pact where the PLC members that were with Aleman would yield power to him, and he would keep them out of jail.
The Sandinistas have used this new found power to strip the constitutional power given to the executive branch, resulting in a bloodless coup (some call it brilliantly executed), where he rules from the national assembly. By the time that all this goes to court and gets struck down, Ortega will be president thanks to him splitting his biggest opposition party in half.
Sorry for the history lesson, but as you can tell, I find very little good in any of the political players (except maybe Bolanos) up to this moment.
Now, enters the wild card that might keep Ortega, yet again, from winning a single election: Popular former Managua Mayor Herty Lewites. Lewites, a fervert Sandinista, also desperately wants to be president and wants to use the established democratic principles of the consitution (like he should) to be elected. His candidacy has been rejected by the establishment Sandinistas, who take their orders from Ortega, and we have a pretty serious Sandinista versus Sandinista fight in our hands. Lewites is infinitely more popular than Ortega, but Ortega runs the country and is not about to give up power.
On the PLC side, the heir to Bolanos is Eduardo Montealegre, who is smack in the middle of a fight with the followers of Aleman (known as Arnoldistas or Gordistas). He seems to be gaining in popularity by his constant campaigning thru the country.
Now, it looks like Lewites, Montealegre, and the Conservative party might create a very temporary alliance to provide support to Bolanos against the destruction of the Nicaraguan democracy taking place in the Assembly by the Sandininsta/Arnoldista union.
So, yes, Ortega might win without much popular support, but he might also be in the fight of his life against a significantly more popular figure in his own party.
Hello again Amaunet, here is a good link if you want to better understand Nicaragua Politics...
http://www.investorshub.com/boards/read_msg.asp?message_id=7049737
Now anticipate 2Q05 financials will not be released until early August. My understanding is RNC preparing 2Q05 financials to comply with US GAAP which adds an extra week or so to the process. US GAAP reporting is required to enable AMEX listing which RNC expects to have before April 2006.
Political situation in Nicaragua appears to be improving. The key here is to have free and fair elections, IMO, regardless of who wins. Even better news would be for Ortega not to win, but free and fair elections are more important. The best news would be for the Nicaraguan people to "“rescue” their country that had been “hijacked” by the country’s leftist and rightist party bosses (“Caudillos”) former President Daniel Ortega, of the Sandinista National Liberation Front (FSLN), and former President Arnoldo Aleman, of the Liberal Constitutionalist Party (PLC)." This would likely involve either Herty Lewites and/or Eduardo Montealegre forming a new government.
See prior post, best article I have read on current Nicaragua situation.
http://www.investorshub.com/boards/read_msg.asp?message_id=7049737
Another factor I had not thought about before comes from a Trotsky post citing Antal Fekete:
http://www.siliconinvestor.com/readmsg.aspx?msgid=21500659
Trotsky makes a valid point:
"as Antal Fekete has frequently pointed out, gold is useful as money ( inter alia ) precisely BECAUSE it has such a large stock-to-flows ratio."
Gold having a large above ground supply makes it a currency, investors can buy gold readily in large quantities simply because a large above ground supply exists. Such a large above ground supply does not exist for base metals or for silver. Should fiat currencies ever go back to a standard backing them up, it would have to be the gold standard. Not that I necessarily believe fiat currencies will ever go back to a gold standard, BUT the fear factor/investor sentiment will price this into POG given enough fear...
FWIW, my fundamental opinion is POG will exceed $600 and can go much higher as you suggest on sentiment...
Two critical supply factors vs. demand:
1) Gold supply from producers will be stable at best for next several years until POG in SA Rand exceeds R110,000 per kg.
http://www.investorshub.com/boards/read_msg.asp?message_id=7073198
SA will have to reopen closed mines and new mines brought on stream before any meaningful impact on supply of gold from producers. It will take at least 2 years to reopen and develop these SA mines.
2) Supply via recycled gold will have to hit the market. You will know recycled gold is hitting the market when you see pages of newspaper ads offering to buy your gold jewelry for melt value... But most important will be how those Indians react to higher POG and if and when their recycled gold hits supply.
Demand will be driven by fear factor which you describe as sentiment. I do not believe we will see "non-sensical $3000" for POG, but $1,000 is feasible, given enough fear. Believe Turk's Fear Index is a viable means to measure this as well as the Dow:Gold ratio:
http://www.goldmoney.com/en/commentary/2004-12-04.html
hmmm, per your quotes it appears you are once again solidly in the 700 Club camp...
"that said, taking Martin's information and handing it over to Van Eeden, he somehow calculates a $770 fair market value for gold"
"as for myself, I'll trade the sentiment-- if the man on the street want to take gold up to a non-sensical $3000 I'll be there to sell my positions to him."
Top Gold Miners Reprieved as Rand Weakens
By Charlotte Mathews
22 Jul 2005 at 07:17 AM
http://www.resourceinvestor.com/pebble.asp?relid=11536
CAPE TOWN (Business Day) -- South Africa’s major gold producers are expected to report improved results for the June quarter compared with March as the rand gold price has strengthened on the weaker rand.
But the industry was some way off from making substantial profits, analysts said yesterday.
Quinton George, CEO of asset manager Trinity Holdings, said the average rand gold price for the June quarter was about R88,000/kg and has since risen to about R90,000/kg.
“This is definitely a turnaround quarter but the effect may not be seen as dramatically in the bottom line,” he said.
A second analyst, who asked not to be named, said SA’s gold mines lost R700 million in the March quarter and would probably earn R250 million in the June quarter. He expected total gold production would rise about 3% in the June quarter compared with March, while costs could be about 2% lower, mainly because there are far fewer holidays in the June than the March quarter.
Margins were likely to be better because of the improved gold price, and capital expenditure is also expected to be higher.
Capital expenditure tends to peak in the December quarter ahead of the year-ends of the big producers such as AngloGold Ashanti [NYSE:AU]. It slackens in the March quarter and picks up again in the June quarter.
“But the mines are not making great profits,” the analyst said.
“There will not be any new projects coming on stream until the price reaches R11,0000/kg and the mines are convinced that this level is sustainable, because projects have an eight- to 10-year life span.
“People think the industry has turned around because the rand has weakened and the gold price has gone up. But the mines need more than that.”
George said there were signs of an improving environment with a number of small deals and restructuring of marginal mines, including Simmer & Jack buying DRDGOLD’s [Nasdaq:DROOY] North West operations and Aflease doing deals.
Afrifocus analyst Mark Madeyski said all the mines would show an improvement in the June quarter because of increased revenue. Mines such as Durban Deep were still likely to be unprofitable but Harmony [NYSE:HMY] should break even, and AngloGold Ashanti and Gold Fields [NYSE:GFI] would do better.
“But they are not in the clear at the moment,” Madeyski said.
“I believe the days of deep-level mining are over as the technical and labour costs are too high. Mines that already have a deep-level shaft, like Western Areas, can keep on mining but it is not viable to start new deep-level projects. There may be small extensions by some groups such as Gold Fields and AngloGold but new projects will have to be shallow.”
Both Madeyski and George expected that a higher-than-inflation wage settlement would emerge from current tough negotiations.
George said that the inflation experienced by the miners was above the consumer price index but in SA’s environment of high unemployment and marginal mines, the unions were not in a strong negotiating position.
what exactly is right in your opinion... if as you assert Martin M is wrong
PS edited this post with his additional comments, so read the rest if you have not already...