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For those paying attention, RNC gold production was 10% higher than gold sold.
Gold Sales=16,924 ounces
Gold Production =18,605 ounces
In prior quarters, the difference between gold sales and production was not material. However, the 1,681 ounce difference this quarter is material and was not reported in the cash operating statistics since these are based upon gold ounce sales and not production. Gold production was higher this quarter because of the ramp up at La Libertad. These 1,681 ounces will show up as gold sales in 4Q05 although produced in 3Q05. Most of these 1,681 ounces are from La Libertad production.
The RNC total cash costs for La Libertad was reported as $415 per ounce sold. However, the total cash costs per ounce produced at La Libertad was $360. That is a very significant $55 difference... For both mines, RNC reported total cash costs of $380 per ounce sold versus $345.82 per ounce produced which is the more accurate number, IMO.
For the month of September, Bonanza production was 2,725 ounces or 32,700 ounces on an annualized basis versus "budget" of 30,000 ounces. Thus, Bonanza is now operating above plan. La Libertad is still the problem child, but appears to be turning around.
As stated, I believe total cash cost of $320 is achievable this quarter if RNC can continue to ramp up La Libertad production over 12,800 ounces this quarter and energy prices remain stable.
thanks basserdan, already read it yesterday and should have posted... fwiw, my numbers are materially accurate.
thanks Frank.
usually when you advise caution, you're proven right.
thankfully, you miss on occassion.
what double top...?
or did you mean that reverse head & shoulders...
Louis, any comments on this article... do not recall any mention heretofore about gold refineries selling forward
"Gold prices look set for a spiral
Our Bureau / Mumbai November 21, 2005
Hedge funds selling energy stocks, buying gold.
Gold prices are set to rise further as hedge funds have started liquidating their exposure to energy stocks and getting into gold. They are selling energy stocks as international crude oil prices are going down.
This also establishes a new linkage between crude oil and gold in the commodity market.
Traditionally, there is a negative correlation between the greenback and gold and a positive correlation between the euro and gold. This means, gold prices go up whenever the dollar is under pressure. Similarly, gold prices and the euro move in tandem.
So, whenever the euro is invested in gold, there is no appreciation. The trend has now been reversed. Between September and now, gold has appreciated substantially even though the euro has weakened against the dollar — from $1.2325 a euro on September to $1.1718 a euro on September 18. This signals that the greenback-gold link has been broken and the euro-gold relationship has turned inverse.
“Traditionally, gold is a proxy for currency and has been a perfect hedging instrument. This is why whenever the dollar fell, investors got out of the greenback and took positions in gold. Now, gold has become an independent investment by itself and not a proxy for currency,” a commodity trader said.
In fact, the commodity market is discovering a new correlation between crude and gold. “Gold prices are moving up when crude prices are down, “said a source in a foreign institutional investor.
One of the reasons for gold prices going up is the increasing weighting being given to gold by big funds in their investment portfolios. From 5 per cent, the weighting is being doubled to 10 per cent and funds are heavily investing in gold, copper and coffee.
Another factor that has been pushing gold prices northwards is the growing physical demand from India and West Asia..
“Investors in Bahrain and Kuwait are shifting their focus from stocks to commodities as the markets have been over-stretched there. Besides, they are sitting on piles of oil money. Gold, for them, is emerging as a new asset class,” said a fund manager.
Spot gold hit yet another high yesterday, touching Rs 7,265 per 10 grams of standard gold. Analysts are predicting that the bull run for the yellow metal will continue and gold may touch Rs 10,000 over the next few months.
The bullishness on gold prices will continue at least till 2007 as capacity expansion for the yellow metal takes longer than other commodities. Gold refineries across the world are running zero hedge positions.
This means the refineries have unbound all forward contracts as the outlook on gold prices is very bullish. Traditionally, 30-40 per cent of refining capacities are sold in forward deals.
However, refineries do cancel these contracts when they are sure that prices will rise further than what has been envisaged in forward deals."
but there is a good chance we could see some unusual volatility over the next two or three trading sessions. Looking ahead at the calendar, it is very important to notice the options expiry date for December gold and silver contracts. With the shortened trading week next week due to the Thanksgiving Holiday, December gold and silver options will expire on Tuesday November 22. Investors have been buying the December calls throughout the year, and there is a MOUNTAIN of call options out there. Between the strike prices of $440 and $490 there are 49,750 call options. Each option represents 100 ounces of gold, therefore after rounding, there is well in excess of FIVE MILLION ounces of gold on option for the December contract. The $450 strike price alone has 10,510 calls against it. At $470, $475, and $480 there are approximately 6,000 calls at each strike price. In the next few trading days, every five dollars up or down is a very big deal. If the call writers can cram the price down into options expiry next week, they can save themselves many millions of dollars!
how does EPM look...?, FWIW picked some more up at C$.73
ok Louis, would appreciate your review/critique of this...
http://www.virtualmetals.co.uk/PDF/YELLOWBOOK081105.pdf
Jessica Cross: Virtual Metals Research and Consulting
Alec Hogg
Posted: Wed, 16 Nov 2005 17:00 | © Moneyweb Holdings Limited, 1997-2005
MONEYWEB: Jessica Cross from Virtual Metals Research and Consulting joins us from London. Jessica, you’ve brought out a thing called the Yellow Book. Why Yellow?
JESSICA CROSS: With much passion, Alec. And it's complements of Fortis Bank. Essentially anyone interested must just contact us. It comes out every six months. It's going to be forward-looking and the data’s available in Excel format as well.
MONEYWEB: Can we put it onto the Moneyweb website for people to download?
JESSICA CROSS: Of course you can.
MONEYWEB: So you don’t have to pay for the Yellow Book?
JESSICA CROSS: Not at all.
MONEYWEB: In fact, we’ll do that now. Barbara Mazaris is onto it as we speak. It's a very detailed document. It also looks ahead to where you anticipate the gold price to be heading – and I don’t want to steal any of your thunder, because gold has been in an upward phase. Are we going to be seeing $500/oz?
JESSICA CROSS: I think we’re going to test $500 before Santa Claus arrives. Alec, there have been amazing things happening in the market, and we always joke that the gold price rallied just after the LBMA conference, which was just completed yesterday. But, beside that you’ve got a relatively strong dollar, so the strength is coming internally from the market. You’ve got a lot of petrodollars growing into the Middle East and filtering through into very, very good jewellery demand, especially into Saudi Arabia. Comex longs, the big specs, are off their peak – about 100 tons off their peak of four weeks ago – and yet the price has still been going on up, which is amazing. There has been a decline in the rate of de-hedging. We’ve got de-hedging for the last quarter at about 31 tons, but still there’s been strength into that. and the IFS data is showing that there’s been sales, central bank sales from Europe of about 56 tons through into October. And, with that, the price has still broken $475 – and that gives you an indication of the internal strength. You know, Alec, I don’t often get excited about the price. I’m excited about the price.
MONEYWEB: Yes, you sound it. But everything you’ve told us is why the price should actually be under pressure at the moment. Yet, as you’ve explained, it's going higher. Where is it coming from?
JESSICA CROSS: Well, this is it. There is obviously this amazingly strong physical base. Primarily Middle East-driven, I’m convinced. But I think you’ve also got the investment longs. You know, you’ve still got the hedge funds in there. And you’ll see when you read the Yellow Book, we’re saying so long as the hedge funds stay committed as they have been, you’re looking for strength. But of course the spanner in the works is we don’t know how long they are going to stay committed.
MONEYWEB: The Middle East – you say you think it's from there, but is there any way of measuring how much of the oil bonanza that is going into that area of the world is now being put into gold, rather than in the past when it would have gone into US dollars.
JESSICA CROSS: Well we talked to people in Dubai, and obviously Dubai is the conduit. And we can tell anecdotally that there is a lot of strength. We talk to them very regularly and that’s giving us some security. But I was also talking to someone here in London who’s associated with one of the auction houses, and she was saying that there’s money coming into things like art work, and that’s usually an indication that there’s plenty of money sloshing about.
MONEYWEB: All right, let’s look ahead 12 to 18 months. We’re going to hopefully have $500 before Santa comers down the chimney. What about this time next year?
JESSICA CROSS: Well, you know, what goes up must come down. And if the hedge funds start to take profit once Santa Claus is down the chimney, you could see some downward pressure. And if you have continued central bank sales, which we expect, and if the de-hedging slows down, which has always been supportive – you know, the greater the de-hedging the more supported the price – that is also going to be a factor that comes away. So we’re looking for this rally, beyond which we expect the price to soften. But you know we [indistinct] the hedge book – we’re looking for an average of about $430/oz, but a lot of volatility around that. And associated with a lot of volatility and excitement in platinum, and we’re looking for platinum to break $1000 very soon. We’ve been looking for that for a while and I think now it's in the offing.
MONEYWEB: Jessica Cross from Virtual Metals Research and Consulting. And even if you aren’t invested in platinum and gold shares, what Jessica’s had to say is extremely exciting for this country because, remember, they are the two biggest export earners for South Africa. Platinum and then gold. And if the prices go up, the country gets more dollars, and if the country gets more dollars it means our economy grows faster.
RNC Production Report Analysis
Making good progress at both mines. Combined total cash costs per production ounce = $345.82. If production rises as anticipated at La Libertad, then we should see $320 in 4Q05.
total cash cost La Libertad =$359.95
total cash cost Bonanza =
Appears France and Austria are the 2 current Central Bank sellers...?
Has gold lost its war chest status?
--------------------------------------------------------------------------------
Trends indicate that international central bank's store of gold could fall further in future as yields received from the yellow metal decline, but is there another argument for investing in gold?
GFMS executive chairperson Philip Klapwijk - addressing delegates at the LBMA Precious Metals Conference in Sandton yesterday - pointed out that gold-yielding rates have declined recently, and will continue to do so.
But not all central bankers agree that that totally negates the metal's value, with many holding that gold is still a valuable asset to hold in case of emergency.
Globally, Central Bank reserves have expanded much recently, going from $2 011-billion in September 1999 to $4 335-billion in June this year.
However, gold's share of this pie has fallen from 15% to its current level of 9% with foreign exchange taking up the balance.
Globally, gold holdings are higher as a ration of reserves in the US (60%) and the Central Bank Gold Agreement countries (42%).
The rest of the world holds only a small part of reserves yet there is scope for redistribution over the next decade or so.
The trend over the last 15 years has been for reserve banks to sell off gold and this year sees reserves at record lows.
As the focus on hedging shifted towards dehedging, banks that were lending gold for yield saw yields decline, and in a bid to increase yields, extended the length of agreements.
As these agreements come to an end, the yield is now negligible at about 60 basis points.
In 1999, the volume of gold being lent by reserve banks was returning around $800-million; now, postulates Klapwijk, this figure is closer to about $250-million.
Locally, the South African Reserve Bank holds some 4-million ounces of gold in reserve.
The bank, which is not a signatory to the Central Banks Gold Agreement, nonetheless sells off gold in accordance with this agreement, notes head of the financial markets department Daniel Mminele.
This is just under 10% of reserves.
From time to time the bank does review its policy, and it is not inconceivable that it may increase reserves.
Mminele argues that holding gold is not all about yield.
If it were, he says, the bank would have sold off as yield is low and the gold price high, or would have looked to increase the yield, neither of which it is doing.
His view, that gold provides safety in times of uncertainty is one shared by many international central banks.
International view
Head of market operations at Argentina's central bank (Banco Central de la Republica Argentinia) Juan Basco agrees that yield on gold has much to do with perceptions of the metal. Gold is now considered along with any other assets.
Globally, perceptions of the metal as a worthy reserve have changed in the last decade.
Gold has the ability to protect against inflation and financial crises.
Yet central banks started to disregard the amount of gold held, partially as it became costly to hold, and looked to asset classes that would offer higher rates of return.
While it is true that other investment classes may offer higher rates of return than gold, it has also lost its traditional status as a war chest to protect against political and economic uncertainty.
With a change to floating exchange rates, higher levels of reserves were required to protect against foreign exchange-rate fluctuations, and since 1993, the bank has accumulated gold as a reserve.
The most growth has been in the last ten years, when this level reached $3,8-billion.
A higher level or reserves protects countries from capital outflows, and reserve accumulation had growth from 3% of GDP in 1970 to about 10% of GDP in 2000 in the country.
In the same time, International Monetary Funds quotes have remained flat, which led to gold somewhat regaining its status of a protection measure in volatile times.
With future currency uncertainties, and gold's delinking somewhat from the euro, gold may again be an important hedge.
Director of market operations at the French central bank (Banque de France) Isabelle Strauss-Kahn argues that yield is not the bank's the sole objective and it is currently over-weighted with gold holding 55% of reserve capacity.
France holds the highest amount of gold per person in the EU at 50 g/person. The UK, at 10 g/person, has the least amount.
In 1932 the bank held 3 000 t of gold, triple the figure held in 1928 and in the 1940s this figure dropped to 400 t thanks, in part, to the second World War.
By the end of 1966, this was at 4 700 t - 91% of reserves. A political crisis shortly afterwards saw the country sell and now there are 3 024 t in reserve, or 55% of reserves.
However, France's view that gold should play an important role in its reserves has not changed, even though it is now selling some gold in accordance with the international Central Bank Gold Agreement.
The country - which admits that central bank selling may have the effect of pushing up prices - aims to have a more diversified portfolio to protect against currency fluctuations.
Head of external reserves in the management division of Russia's central bank Maria Gueguina argues that holding gold acts as a buffer against political and economic uncertainty.
The bank said it has $4 500-billion-worth of gold at present market value.
A five-year-old report argues that the ideal ratio of gold held should be between 12% and 18% of reserves.
Now the Russian Federation keeps some 10% of its reserves in gold, which is around 500 t of gold.
The Austrian central bank, reports executive director of Oesterreichische Nationalbank Peter Zoellner, has also been selling gold off.
However, the bank, which owns a mint, has been selling some gold commercially in the form of gold coins.
Reserves are at around 307,5 t, making up between 20% and 25% of reserves, and the bank is happy with this level.
The bank's key aim is to have safety in its reserves and, once this is achieved, the gold can be put to work to earn for it.
Currently, some 220 t of gold is invested.
Zoellner argues that gold is likely to become more valuable in future as currency choices for safety and hedging purposes become constricted.
He pointed to the possibility of the Australian and Canadian currencies as an investment platform but argues that gold is likely to play a bigger role as the dollar is currently not stable.
Record central bank gold sales seen
Justin Brown
Tue, 15 Nov 2005
London-based GFMS is forecasting record net gold sales by central banks in 2005 of about 700 tons, up from over 500 tons in 2004, GFMS Executive Chairperson Philip Klapwijk said on Tuesday.
Over the past 15 years, the trend has been for central banks to be net sellers of gold, in contrast to the more variable experience in the 1970s and 1980s, when the central banking sector was often on the buy side of gold.
Since 1999, the value of gold's share of central bank reserves has declined from 15 percent to nine percent, Klapwijk said at the London Bullion Market Association (LBMA) Precious Metals conference.
Global gold holdings are very much skewed towards the US and the 15 central bank gold agreement signatories, where gold as a percentage of total reserves amounted to around 64 percent and 42 percent respectively at the end of June 2005, he added.
By contrast, according to the International Monetary Fund, China held only just over one percent of its reverses in gold and Japan with a similar percentage, Klapwijk said.
"For the foreseeable future, we expect the central bank gold agreement group will continue to reduce its, arguably excessive, gold position," he added.
ok, what is a better term than "Planned Gold Sale Tonnes"...?
your comments:
"Yup! The isuue I have is that the Basle Agreement states a maximum of 500 tons per year which is totally different from a planned sales of 500 tons per tear."
Could term it "Maximum Gold Sale Tonnes" but this appears to ignore your other comment:
"OTOH, as most papers, PRs, guru's advice are hypnotized by 14 signatories of an agreement and translate this into ALL CB sales and trading being a matter of opinion (even false) .... go with the wind."
since other Central Banks not subject to Washington Agreement could sell gold.
Please provide a better alternative term for "Planned Gold Sale Tonnes" and/or a better name for chart title "Central Bank Gold Sales" and/or a footnote. Thanks!!
“Wall of Money Coming to Commodities” - Analyst
By Tim Wood
15 Nov 2005 at 12:01 PM EST
JOHANNESBURG (ResourceInvestor.com) -- The metals analyst most respected by Newmont Mining’s Pierre Lassonde says investors can look forward to a “wall of money coming to a commodity near you.” UBS Precious Metals Analyst John Reade made the comment in a presentation to the LBMA conference in Johannesburg.
Reade said on Tuesday that the potential demand was reflected in requests starting to flow in from the mainstream investment community, and as new over-the-counter products are developed to satisfy the interest.
“Asset allocation is a top-down process. Once the actuarial consultants get comfortable with [commodities] the pension funds will follow,” Reade said.
He noted the explosion in commodity open interest positions on the futures markets with record levels achieved in gold, copper and oil. Even soft commodities such as sugar are showing astounding liquidity improvements.
At the same time prices of commodities continue to rise and are heralded by resource investors as vindication of their belief that a long up cycle in hard assets is now well under way.
“This time it’s different,” said Reade.
Interest is being spurred by low yielding alternatives such as currencies, bonds and equities though the latter has enjoyed a rise in dividend flows lately.
Reade said there was perhaps $50-$100 billion invested worldwide in commodity index funds. However, the global investment universe was $50 trillion, and Reade says even a modest shift in sentiment would have a tremendous impact on commodity markets.
The analyst believes that investment inflows to gold, along with speculative positioning, will eclipse the supply-demand fundamentals that have shaped the metals fortunes for so long.
Reade rolled out a “Keynesian Beauty Contest” showing why gold is becoming more attractive – currency problems, inflation risks, gold is uncorrelated with other asset classes, and it enjoys “extreme event” characteristics.
UBS offers several structured gold options to clients including a PM Docu, or precious metals double currency unit, and a PM GROI, or precious metals guaranteed return on investment.
Platinum to burst $1000 barrier
Allan Seccombe
Posted: Tue, 15 Nov 2005
[miningmx.com] -- THIS is a year of records for platinum with demand forecast at a new high of 6.71 million oz driven by record autocatalyst requirements. However, the bullish outlook is tempered by Chinese purchases of the white metal for jewellery which has fallen to levels not seen since 1998, the Johnson Matthey 2005 interim review has shown.
Johnson Matthey forecast platinum prices could reach as high as $1,030 an ounce during the next six months supported by fundamental issues like increased demand from autocatalyst makers, as well as fund buying, one of the key factors behind the rapid price rise since June.
The platinum price climbed to $900 in late June from around $840 in early January. It rapidly moved higher from there to $967 at midday on Tuesday.
“The primary stimulus to the price came from the speculative side of the market, with funds building record long positions,” the review said.
The net non-commercial position on the New York Mercantile Exchange (NYMEX) was 507,000 ounces by the end of September.
Johnson Matthey sees a floor of $890 over the next six months.
“We do not expect platinum to fall below $890 unless demand from jewellery manufacturers contracts more substantially than current trends suggest,” the review said.
Primary stimulus to the price came from the speculative sideSouth Africa is the dominant platinum producer, with output in 2005 seen at 5.1 million ounces out of total global supplies of 6.59 million ounces.
Local production would have been higher if it were not for an explosion at Anglo Platinum’s Polokwane’s smelter in September. Anglo Platinum says the smelter will reopen in mid-December and the group’s 2005 platinum output is expected to be lower at 2.45 million ounces instead of 2.6 million ounces. Sales ounces for the year were pegged at 2.51 million ounces.
Global platinum demand is forecast to be six percent higher than the previous year at 6.89 million ounces, the seventh year that demand has outpaced supply.
South Africa is the second-largest palladium producer behind Russia, with 2.6 million ounces.
Palladium supplies this year are seen falling five percent to 7.54 million ounces, mainly because of reduced Russian sales.
The palladium price is seen in a $190-$270 range for the next six months, and its direction will be largely determined by funds because market stocks of the metal remain substantial.
If no sales are made out of Russian stocks held by the state treasury, Gokhran, or the central bank, supplies will decline again, the review said.
Palladium stocks held by Stillwater Mining will be completely sold down by the end of the first quarter of 2006, it said.
“After five years of significant surpluses, the palladium market could move close to balance in 2006.”
the palladium market could move close to balance in 2006Palladium jewellery is one of the surprises in the review.
Chinese purchases of the metal, which costs about a fifth of sister metal platinum, is seen jumping an incredible 71% to 1.2 million ounces for jewellery manufacturing.
“For jewellery manufacturers the much lower metal costs associated with palladium compared to platinum, plus the relative stability of the palladium price, are major advantages,” the review said.
“For retailers in China, palladium jewellery has the additional benefit of carrying significantly higher profit margins per piece than platinum.”
There is increasing use of palladium in autocatalysts in petrol-powered light vehicles.
“The ongoing move away from platinum-based autocatalysts to those using palladium in North America should have a more substantial effect on purchases of the metal, while the negative effect of thrifting is expected to diminish,” Johnson Matthey said.
However, in the United States truck makers will begin making vehicles that comply with new strict emissions regulations.
“The impact of this on platinum demand will outweigh by a considerable margin the effects of the ongoing switch to palladium-based catalysts for gasoline light vehicles.”
Platinum demand by autocatalyst makers is seen growing for the sixth successive year, with demand up eight percent at a record 3.86 million ounces.
Some producers do not see the substitution of palladium for a portion of platinum in autocatalysts as a negative because it frees up platinum and could bring price stability to the metal and enhance jewellery take off.
planned sales = 500 tonnes per year per Washington Agreement
planned sales per week = 500 tonnes/52 weeks=9.62 tonnes
thus, cumulative tonnes for this YTD = 9.62*7 weeks = 70.3 tonnes
Louis has certain issues with this analysis...
I love gold!!
now please someone buy Minefinders....
_________________________
Acquisition Search as Gold Output Falls
Nov. 15 (Bloomberg) -- Gold producers including Barrick Gold Corp. and Glamis Gold Corp. are stepping up their search for acquisitions after years of reduced exploration spending eroded output and sent prices to a 17-year high.
``We are not finding gold as fast as we are mining it as an industry,' said Glamis Chief Executive Kevin McArthur, who failed last year in his $2.97 billion bid for rival Goldcorp Inc. ``This is developing into a bit of a train wreck,' prompting companies to consider more acquisitions to boost output, McArthur said.
Global production last year fell to an eight-year low of 2,464 metric tons, the second decline in three years, London- based metals consultant GFMS Ltd. estimates. The drop reflects a plunge in exploration spending after gold reached a 20-year low in 1999 and reserves became more difficult to find and develop.
Toronto-based Barrick last week made a $9.2 billion hostile bid for Placer Dome Inc. of Vancouver that would boost Barrick's output by 53 percent and create the world's largest producer, ahead of Newmont Mining Corp. Reno, Nevada-based Glamis still wants to buy assets, even as the jump in gold prices made reserves more costly to acquire, McArthur said.
``The problem with exploration is you never know if you are going to succeed,' said Ian Telfer, chief executive of Toronto- based Goldcorp, which acquired Wheaton River Minerals Ltd. for C$2.3 billion ($1.94 billion) in February. ``You can explore for 20 years and never find anything. Acquisition is much more certain.'
Goldcorp, Canada's fourth-largest gold producer, aided the Barrick bid by agreeing to pay $1.35 billion in cash for Placer's mines in Chile and Canada, including the Campbell mine located near Goldcorp's Red Lake mine in Ontario.
Likely Targets
The most attractive takeover targets are Bema Gold Corp., Eldorado Gold Corp. and Iamgold Corp., a Toronto-based producer involved in three failed mergers last year, Merrill Lynch & Co. analyst Mike Jalonen said in a Nov. 7 report.
Jalonen ``might be right,' Iamgold Chief Executive Joseph Conway said in an interview. ``We have exploration projects that look quite good and continue to be growing. The question is, Who? Other intermediate producers, potentially. We continue all the time to try to engage companies that we've identified and look interesting that would either be a merger or takeover candidate.'
Shares of Vancouver-based Bema surged 9.7 percent last week, after Barrick announced its bid for Placer. Eldorado Gold, also based in Vancouver, jumped 11 percent. Eldorado spokeswoman Dawn Moss declined to comment.
Scarcity of Gold
Barrick's hostile bid for Placer ``highlights to the market the scarcity of gold in the ground,' said Evy Hambro, who helps manage $12 billion of natural-resource funds at Merrill Lynch in London, including the $3.4 billion World Mining Fund. ``The gold industry today remains one of the most fragmented of commodity industries.'
World gold production fell 5 percent last year, as fabrication demand rose 5.7 percent, GFMS said.
Buying assets is appealing for companies that want to boost output and take advantage of higher prices because ``if you drill today and found a new ore body, it's between eight to 10 years' before a mine starts producing, Goldcorp's Telfer said.
Increased regulation and concern about environmental damage from mining also has prolonged the development process, company executives said. It can take up to three years to permit a mine, compared with a year a decade ago, Telfer said. At the current pace of production, the average mining company will run out of reserves in seven to eight years, he said.
Spending Decline
The industry's exploration spending fell to $784 million in 2002 from a record $2.96 billion in 1997, according to Halifax, Nova Scotia-based Metals Economics Group, which started tracking expenditures in 1989.
Spending slumped after gold dropped to $253.20 an ounce in July 1999, the lowest in two decades. Since then, gold has rallied, heading for its fifth-straight annual increase, and reached $483.10 on Oct. 12, the highest since 1988.
Gold exploration spending has rebounded to $1.77 billion last year, based on studies of 1,140 mining companies, and may jump to $2.3 billion this year, said Jason Goulden, director of Metals Economics' exploration study.
The rally in gold prices and mining-company shares may help finance acquisitions, investors said. Newmont has $2 billion in cash and short-term investments as of Sept. 30, up 19 percent this year, and Barrick shares before the Placer bid were up 17 percent from a year earlier.
Cheaper to Buy
``At the moment, assets are cheaper in the equity market,' said Hambro, the Merrill Lynch mining fund manager.
Barrick's takeover of Placer, which has undeveloped properties in Alaska, Nevada and the Dominican Republic, may yet be contested.
``We expect at least one other bid to be received, since Placer's pipeline of new projects is becoming an increasingly rare commodity in an industry where explorers are not keeping up with the miners shovels,' J.P. Morgan Securities Inc. analyst John Bridges said in an Oct. 31 report.
Denver-based Newmont may team up with Toronto-based Kinross Gold Corp. and AngloGold Ashanti Ltd. of Johannesburg to make a bid because each has existing mines or projects near those owned by Placer, Bridges said.
Kinross, Canada's No. 3 gold producer, is ``always looking at transactions in the marketplace and it usually comes down to price and the willingness of the buyers and sellers,' spokesman Christopher Hill said. ``We would prefer to operate the assets that we own.' Newmont and Anglogold declined to comment.
Slumping Profits
Consolidation also may help boost profits by increasing production and limiting the rise in mining costs, investors said.
Placer's profit plunged 76 percent in the first nine months of this year because of rising fuel costs, and the company's shares, before the Barrick bid, had plunged 24 percent from a year earlier. Newmont, heading for a third-straight annual production decline, last month said third-quarter profit fell 2.3 percent.
``The frustration for investors in the gold-mining sector is that the companies have not yet, despite the $200-move in gold price, reached adequate return on capital,' said Frederick Sturm, chief investment strategist for Mackenzie Financial Corp. in Toronto. The industry needs ``few competitors.'
After four Glamis acquisitions from 1998 to 2002 that almost doubled gold production, McArthur said he found friendly takeovers are better than hostile bids that ``are very difficult from a human standpoint and many times destroy value.'
Glamis' first-quarter profit fell 76 percent to $2.2 million, or 2 cents a share, because of $4 million in expenses for its failed bid for Goldcorp.
Central Bank Gold Sales
cumulative gold sold = 70.3 tonnes
planned sales = 67.3 tonnes
just a bit above schedule, this weeks sales smaller than planned
In the week ending 11 November 2005, the decrease of EUR 52 million in gold and gold receivables (asset item 1) reflected sales of gold by two Eurosystem central banks
graph here
http://www.investorshub.com/boards/read_msg.asp?message_id=8327291
"There have been 29 thousand cars burned in 2004 in France"
sure did not know that, is car burning in France some type of extreme sport there... if so, sure hope it catches on worldwide as it is very helpful to my palladium/platinum holdings....!!!
car torching still not listed here...
http://www.extreme.com/
and not listed in the Winter X Games yet either...
http://expn.go.com/expn/index
Obviously, some one at Johnson Matthey/Anglo Plat/PAL/Impala/Lonmin needs to sponsor this new extreme sport...
can then add "Extreme Auto Torch" category to this chart...
"Opinion on what?"
actually desired your opinion on whether it was easier to find a parking space in Europe today... will da boyz have to torch a few more cars to ease parking congestion.
but anyway, thanks for your off-topic comment on possible German gold sales. much appreciated.
Virtual Metals & CPM Group, unlike Martin M, do not see $500 gold...
"Virtual Metals says that this deficit represents the sum of what cannot be measured with final accuracy: “embedded in which is an indication of the levels of unconfirmable investment in gold; this deficit is currently establishing and supporting higher dollar gold prices.” The consultancy firm says the gold price will be extremely volatile in 2006 with prices testing $500/oz on the upside. It reckons that on average gold will settle at $430/oz in 2006.
Another consultancy firm, CPM Group, out of New York, has predicted that if investment demand remains above historic norms, gold prices could keep within a $370-$470 range for 2005 and 2006. CPM released its Gold Survey in August."
Louis, any opinion?
BERLIN -- German Chancellor-designate Angela Merkel's new government may sell some gold reserves and a stake in the state-owned railway to help plug the budget deficit, the country's new finance minister, Peer Steinbrueck, said.
Steinbrueck said Merkel's coalition, which brokered policy accords for the next four years on Nov. 10, aims to cut the deficit while raising investment to help the economy. Proceeds from a partial sale of Deutsche Bahn AG and some of the central bank's gold reserves may be used to set up a 25 billion-euro investment fund, Steinbrueck said.
"There may be scope to sell" central bank gold within an international treaty, Steinbrueck told reporters in Berlin, adding that Bundesbank approval is needed to sell gold. "We would want to uphold both the Bundesbank's independence and the substance of the reserves."
Germany's new coalition is gambling that spending cuts and higher taxes next year, combined with investment, will help bring the budget deficit below a European Union limit by 2007 without choking the economy. The plan by Christian Democrat Merkel, 51, and the Social Democratic Party also rests on economic growth and a record credit line to help pay for investment.
The Bundesbank has so far resisted government calls to use the world's second-largest gold reserves to help plug the deficit. The bank sold less than 7 percent of its allotment in the first year of a European agreement on central bank gold sales.
"It's early days and we have to speak about details," Steinbrueck said today.
Germany has breached an EU rule limiting the deficit to 3 percent of gross domestic product for the past three years. Merkel's coalition has pledged to bring the deficit in line with that limit for the first time in six years in 2007.
The move to run up a new net credit line that will exceed 1996's record 40.1 billion euros is "deliberate," Steinbrueck said. "`We have to let the economy breathe before 2007."
Chancellor Gerhard Schroeder's decision to call early elections on May 23 has led to a six-month suspension of proposals to help the budget, ranging from selling index-linked bonds to introducing real estate investment trusts.
Steinbrueck said he's looking into the possibility of introducing REITs, which allow smaller investors to invest in property by buying shares in the trust, providing he won't lose revenue.
The new coalition plans to channel about a quarter, or 6 billion euros, of its investment fund into research and development, Steinbrueck said. The goal may be reached in part by selling a stake of Europe's biggest rail network.
Merkel plans to sell shares in the railway as early as next year, the Frankfurter Allgemeine Zeitung reported on Nov. 3, citing unnamed lawmakers.
The SPD and the Christian Democratic Union, including its Bavarian affiliate party, the Christian Social Union, are due to vote on combined policy proposals on Nov. 14.
San Andres Technical Report
http://www.sedar.com/csfsprod/data62/filings/00850530/00000001/h%3A%5CShared%5CLONNIE%5CSEDAR%5Crnc%...
Rand Price of Platinum
Strategy: Continue buying platinum stocks on pullbacks.
Updating the chart of the rand platinum price shown here six weeks ago, we see the price continuing climbing, as expected.
The large upside target is still R6 910, which is measured as the height of the large falling wedge (lines 1 and 2) projected up.
However, in the short term the relative strength index (RSI, on top) is overbought and a pullback to R6 050 is expected soon before more upside.
Consequently, traders should keep raising their trailing stops on their platinum holdings (to lock-in profits) and then re-enter on corrections.
Because the "big picture" still looks very good, traders and medium-term players continue adopting this strategy - buying on minor corrections - until the large upside target is eventually reached. Long-term investors simply keep holding platinum stocks for the entire run to the target.
http://www.miningmx.com/platinum/540126.htm
ANO/ARQ showing volume...
Louis, do you think Dubai Metals Exchange will take significant market share from London? Imports of 525 tonnes/year PHYSICAL gold already makes Dubai a very significant market. By comparison GLD has accumulated only 207 tonnes. How will Dubai potentially impact the gold trading market? Have you thought about this any...
http://www.dmcc.ae/GOLD.htm
"Dubai is continuing its relentless march into the centre of the bullion market, with plans to start futures trading in the precious metals and other innovations proving successful.
Dubai is rightly known as the hub of the physical gold market, feeding both to the Indian sub-Continent and to the Middle East, which on average over the past ten years have accounted for 38% of gold fabrication and in 2004 accounted for 43% of total (GFMS figures). We have written before about the development of the Dubai Metals and Commodity Centre and its proactive behaviour towards the gold market with the latest development being the establishment of futures trading...
Strong demand is seen boosting Dubai's gold imports to 525-540 tonnes by the end of 2005, despite the recent jump in prices, the Dubai Metals and Commodities Exchange's gold executive director said....
The exchange will trade from 10:00am to 11:00pm local time Monday to Friday, thus overlapping with the Far East and North American markets. And a new development is that the Exchange will also open on Saturdays and Sundays as of early 2006."
As previously mentioned, LBMA daily volume/transfers of 16 million ounces equals over 11,000 tonnes per month... That's huge volume and it will be interesting to see how much of this Dubai can pick up.
http://www.lbma.org.uk/clearing_table.htm
Geopolitically, things get interesting. At least 33% of Dubai 525 Tonne is likely from Saudi Arabia/Mid East Oil petro dollars. Believe the Arabs likely desire to move their physical from London/US banks and vaults to safer vaults at Dubai exchange...
Dubai appears to be an interesting development. Have you or any of your colleagues given this any thought on how it may impact the gold trading market?
Thanks in advance for any comments.
"seems to be orchestrated, at least incited to, by all those groups who can profit"
Well, I have the answers:
This is being orchestrated by US Treasury auction officials and CIA agent code name Michael Soucie. These past 12 days are only a warmup. This European unrest to continue all the way up to a crescendo during 1Q06 when $171B of US treasuries to be auctioned. The plan is to keep Euro down and US interest rates down and then pawn off these US treasuries to unsuspecting Europeans. Michael Soucie being paid 1% of $171B placement fee...
any comments on this article..., just google searching and found this blog...
http://www.michnews.com/artman/publish/article_10232.shtml
and this blog: http://www.aina.org/news/20051108100726.htm
The Season of Jihad
By Sher Zieve
MichNews.com
Nov 8, 2005
The worldwide Islamic jihad has begun. The riots in France are not isolated incidents of “disenfranchised Muslim youths”. They are being organized and coordinated by adults. Shortly after the rioting began, French police discovered at least one warehouse facility that contained bomb making ingredients, Molotov cocktails, black masks to hide behind, motorcycles and cell phones. This “insurgency”, or more appropriately—terrorism—was planned. The Islamic mayhem in France and Denmark, and now the beginnings of the same chaos in Germany and Belgium, are neither unexpected nor are they coincidences.
On 31 October, in Denmark’s Jyllands-Posten, it was reported that riots in Denmark began at almost the same time, as did the riots in France. The newspaper wrote (translated from Danish): “For several nights in a row, there have been the worst riots in Århus for many years. "This land belongs to us", declared the young rioters. Another arson attack took place Sunday night. Sunday evening the fire department needed police escorts to get in and extinguish an arsonist fire in Søndervangs Alle. The words of the young Muslims sound like an open declaration of war against Danish society. The police must stay away. This area belongs to immigrants.” The paper further reports that the riots had been planned for three weeks prior to their implementation.
Monday, members of an Islamic terrorist cell planning what was said to be a major terrorist event were uncovered, arrested and stopped; preventing what is being called a “catastrophic act of terrorism”. There are rumblings that a major terrorist “event” is also planned for Los Angeles.
Holland and the other Scandinavian countries are now preparing for unrest within their own territories.
The “disenfranchisement” and “low-pay-for-immigrants” argument is being used—by the Left—to the hilt. Some of it, but not to the extent the leftist media would have us believe, does exist.
Note: When the ‘big lie’ is told, it’s always good to have some grain, no matter how small, of truth. That way, it sells better.
However, in regards to the disenfranchisement argument, the majority of Muslims in Europe have refused to assimilate into their adopted countries. Instead, they are demanding portions of land in these countries be ceded to them, so that they can operate separately and apart from the rest of each country’s population. They have no intention of integrating into other societal cultures. Calling them “places of sin”, in France Muslims have already been successful in closing down shops selling liquor and pork, movie theatres and dance halls; in the areas containing large Muslim populations. Considering there are at least 6 million Muslims in France (or 10% of its population) that’s a good-sized territory.
Although one French Muslim leader, Mouloud Dahmani, said “All we demand is to be left alone", it is evident to all who can see and hear that their intention is to destabilize—then take over—European governments. That is what they are now attempting. This is, after all, the bottom line of Islam—worldwide domination. And it has become evident that they plan to acquire it; via any and all necessary means and measures.
Whether it will acknowledge it or not, Europe is now at was with Islam. It is already patently evident that Islam is at war with Europe. President Bush and his supporters saw this early on. It is just taking the ultra-leftist Europeans longer to absorb the truth of what is happening. And many of these still refuse to concede it.
History continues to tell us—veritably shouting it at us—that appeasement of one’s enemies doesn’t work. Never has and never will. France, as usual, continues to learn this lesson the hard way.
One thing is crystal clear. Just as with 9/11, with the arrival of the Islamic Season of Jihad nothing on the planet will ever again be the same. Many believe that this is the beginning of the final war on the planet. If so, it is one that free societies must win over suppressive and despotic barbarism. The alternative is truly and unequivocally the end of civilization.
http://www.jp.dk/aar/artikel:aid=3354408/
http://www.jihadwatch.org/archives/008829.php
http://www.smh.com.au/news/national/
raid-prevented-catastrophe-scully/2005
/11/08/1131407633518.html?oneclick=true
http://www.nypost.com/commentary/53917.htm
Copyright by Sher Zieve
those sneaky Russians...?
"Citigroup raises palladium price forecast
Citigroup increased its palladium price forecasts on Monday mainly because it said Russian stockspiles are much smaller than previously expected.
"We believe that Norilsk Nickel's stockpile is insignificant and that the government-held stockpiles have now dwindled to just over 1 million ounces," said analyst Fidelis Madavo in a research note.
"Our view is that based on new production alone, the palladium market is presently in deficit. Prices may rally strongly once the market realises that above-ground inventories may not be so large after all." Madavo boosted his average price forecast for 2005 to $198 per ounce from a previous forecast of $191, for 2006 to $265 from $206 and for 2007 to $353 from $231."
correction:
"are a god's sent gift for the Dollar"
should be:
"are a god's sent gift for the US Treasury Auctions"
____________________
Auctions
The three-year notes were sold at a yield of 4.458 percent, compared with the pre-auction estimate of 4.463 percent based on the average forecast of seven bond-trading firms surveyed by Bloomberg News. The securities will mature in November 2008.
Dealers and investors placed bids for 2.42 times the amount of securities offered. The so-called bid-to-cover ratio was the highest since 1998 and compared with 2.31 at the most recent sale of three-year securities in August.
``The higher yields are more attractive for a lot of people,' said David Glocke, who manages about $10 billion in Treasury bond funds at Vanguard Group Inc. in Valley Forge, Pennsylvania.
Indirect bidders, the class of investors that includes foreign central banks, bought 29.9 percent of the securities, compared with 28 percent in August. Since the Treasury Department started releasing bidder-participation figures in May 2003, the share of three-year note sales won by indirect bidders had ranged from 18.7 percent to 53.6 percent, and averaged 37.5 percent.
Foreign Demand
Foreign investors own about half the $4 trillion of U.S. marketable securities outstanding, up from less than 40 percent three years ago, according to the Treasury.
The dollar's recent gain against the euro and yen will help spur demand, said Hidehiko Maejima, international bond strategist at BNP Paribas Securities Japan Ltd. in Tokyo. The dollar this quarter has climbed 2.5 percent versus the euro, rising to a two- year high today, and 3.9 percent against the yen.
``The upward momentum of the dollar will encourage foreign investors to participate in the auctions,' Maejima said.
Today's auction will be followed tomorrow by the sale of $13 billion in five-year notes, and $13 billion in 10-year notes the day after.
interesting focus on Palladium jewelry, starts on page 7
http://www.thebulliondesk.com/content/reports/tbd/fortis/FortisMetalsMonthly_November05.pdf
Central Bank Gold Sales
http://www.investorshub.com/boards/read_msg.asp?message_id=8327291
In the week ending 4 November 2005, the decrease of EUR 84 million in gold and gold receivables (asset item 1) reflected sales of gold by two Eurosystem central banks.
Actual sales YTD = 66.17 tonnes vs. 57.69 scheduled tonnes
11/04/05... € 84,000,000... € 392...214,285.7...6.67... 66.17 ... 57.69
We need a new POG breakout in Euro!! Where is that safehaven buying...
"SAN FRANCISCO (MarketWatch-- The worst civil unrest seen in France in decades entered a 12th night Monday, as riots that began outside of Paris spread to nearly 300 cities across the country and sparked similar violent outbursts in Belgium and Germany."
http://www.marketwatch.com/news/story.asp?guid=%7BD539BAE1%2DC0AC%2D4DE9%2DBD4B%2DA819FC9BBCF1%7D&am...
Louis, you okay!!? Are you getting any "civil unrest" or otherwise sleeping soundly...
Have no problem with this BEE Agreement.
As far as GBN in general, am disappointed that HL has not lived up to its JV agreement. Hollister should have been in production by Aug 2005. I was counting on the Hollister cash flow to finance Burnstone. Now it appears Burnstone may well require financing in first half 2006 and there is no Hollister cash flow to internally finance. A great disappointment to me. GBN can rely on debt financing via SA Banks for Burnstone and can likely raise most of it via debt, however some Burnstone equity financing appears inevitable now given Hollister delay. Still a possibility that GBN can joint venture with Harmony w/o a PP since there are synergies with Evander, i.e. use converyor and share the mill.
In regard to GBN, we have HL conference call tomorrow to see how Hollister is progressing. At Burnstone, we have final feasibility study which should be impressive given current Rand POG.
RNC Reports on San Andres 43-101 Reserves
11/7/05 news release
http://www.globeinvestor.com/servlet/WireFeedRedirect?cf=GlobeInvestor/config&vg=BigAdVariableGe...
BEE Contract / "Heads of Agreement"
http://www.sec.gov/Archives/edgar/data/865492/000106299305001646/exhibit4a-1.htm