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Central Bank Gold Sales
390 tonnes actual YTD; 110 tonnes short...
a few reasons for hope on gold:
1) Ramadan starts 9/23, the Muslims do not appear to be getting either kinder or gentler... Ramadan pretty much ignored by the press thus far, but any type of terrorist incident or even speculation of same could move gold up...
2) October Gold Options and Futures expiration on 9/25, could be weakness until expiration and then gold moves.
3) New deadline for Iran on nuclear postponed to early October (first week of Oct it appears), so bound to be a few tensions in the world leading up to that...
Currently see this more as a short term move on gold, not a long term move... Plan on being back into mostly cash in early Oct before Ramadan over on Oct 22nd.
Have most of my position in GLD rather than gold stocks, although I did buy some EPM as discussed. Gold stocks may not participate as much as physical gold/GLD.
Last item, looking very much forward to Martin M gold presentation next week at Denver Gold...
Not sure yet, but believe may then start investing in NatGas stocks in Nov/Dec. Monitoring Robry data closely, especially the supply side...
http://www.investorshub.com/boards/board.asp?board_id=5931
well, I found the geopolitical angle new for Faber...
also, Faber recommending Agricultural Commodities now..., such as this one below... called a biofuel commodity but anything invested in sugar, corn and soybean oil as well as 5 other commodities should be termed foodstuff... FWIW Jim Rogers apparently has invested in this fund below.
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Q: Are there any ETFs or other vehicles that offer a diversified investment in agricultural products?
A: I am not aware of any “easy” vehicles to invest in sector, and there are currently no ETFs based on agriculture-related stocks. However, for the more sophisticated global investor, hedge fund expert Eric Roseman, editor of The Global Mutual Fund Investor, offers this suggestion:
“In my mind, there is no other sub-sector of the commodity complex that offers better values than agricultural commodities. For those willing to buy on a foreign exchange, we believe that ABN Amro Markets Agriculture Basket Index and ABN Amro Biofuel Commodity Index are the best risk-adjusted commodity investments at this stage of the bull market. Both allow you to invest in a basket of agricultural commodities in Europe.
“Both indexes – which are traded on the Swiss stock exchange - can be purchased for less than $150 per unit and hold incredible upside potential as rising demand continues to put pressure on existing and new supplies, especially for ethanol-related fuels and Asian demand for foodstuffs.
“Since we don’t know which commodities will eventually be most sought out for mass ethanol and biodiesel production, investors must spread their risk across the three largest candidates – sugar, corn and soybean oil. The ABN Amro Biofuel Commodity Basket invests in eight commodities.
“This Open End certificate tracks the performance of the ABN Amro Biofuel Commodity Basket and trades in U.S. dollars. must be purchased through a European private bank. The index Both AIB Austria and Jyske Bank in Copenhagen can trade the ABN Amro Biofuel Commodity Basket for your account. The ISIN code is CH0024803642.”
Faber transcript, partial...
Alignment To War: Asian Commodity Demand Versus The US Printing Press
20/09/2006
Marc Faber has a PhD in economics and a famously contrarian view of the world. He is the author of the popular "Gloom, Boom & Doom" report and became a best-selling author in 2002 with his book "Tomorrow's Gold".
At the invitation of fund manager US Global Investors, Faber last Friday spoke live on the internet to the topic "Investing in a world of rapidly changing geopolitical and economic trends". This is a summary of that presentation.
Taiwan is more vital to the delicate game of geopolitics than most would realise.
While never particularly amiable, relations between China and Japan have deteriorated in recent years and a lot of that has to do with Taiwan. The US has a policy of supporting the independence of Taiwan (a sort of quasi-independent Chinese state inhabited by those who escaped the Maoist revolution) while China has long wished to rope the renegade back in. Japan has aligned itself with the US.
The US is the world's largest consumer of oil, with China second. As the US is 40% self-sufficient in oil production, China is actually the world's largest net consumer.
Japan has no oil. 75% of Japanese oil imports come from the Middle East (compared to the US with 20%). The Middle East also supplies the bulk of Chinese oil imports. Tankers which leave the Persian Gulf en route to China and Japan sail through the Straits of Malacca, between Malaysia and Indonesia, and up through the South China Sea ? right past Taiwan.
Says Faber: who controls Taiwan controls Chinese/Japanese oil.
China and the US create a fragile dichotomy. While once clear enemies on an ideological basis, China's capitalist evolution has meant relationships have become more co-operative, but not particularly less strained. While China has become the factory for the manufacture of US goods, it has also become the largest foreign investor in US financial assets. While US businesses are happy to invest in China, US Congressmen are calling for protectionist policies.
The US is bordered by two friendly nations ? Canada and Mexico. Both are significant suppliers of oil and other commodities to their neighbour. China is bordered by 14 nations of various levels of influence and ideology. They include Russia, India and North Korea.
China enjoys a friendly relationship with Russia. They have formed an alliance with each other known as the Shanghai Co-operation Organization (SCO), which includes members Uzbekistan, Kirgizstan, Tajikistan, and oil and uranium-rich Kazakhstan. Aside from these members, the SCO includes "observing members", being Mongolia, India, Pakistan and Iran. If these countries became full members, the SCO would represent 45% of the world's population.
Faber notes it is US foreign policy that has pushed China closer to Russia. The SCO has set a timetable for the US to withdraw its central Asian military bases.
Central Asia boasts significant amounts of oil and gas. Under its alliances, China can contemplate direct overland access through to Iran, which currently supplies 15% of Chinese oil imports. Already India is building an oil pipeline from Iran, through Pakistan (with Pakistan's co-operation).
From Iran it is a hop, skip and a jump to Sudan ? another exporter of oil to China. Faber notes Africa today is similar to China pre-industrialisation ? little industry, but vast resources and population.
To date the US and the rest of the West has been interested only in exploiting African oil and other resources. The US has also been globally criticised for pricing vital, patented drugs out of the reach of the average African. In the meantime China has been creating alliances in Africa ? building infrastructure and commencing agricultural projects.
You can see where Faber is heading with this. Slowly but surely the world's most populous nation is setting up ties with the rest of the non-Western world.
[What Faber didn't include here is South America. The oil and gas-rich northern part of the continent has been undergoing a transformation towards self-rule and nationalisation of industry. Led by Venezuela's charismatic president Hugo Chavez, Bolivia and Peru have fallen into line and Ecuador has been teetering. Mexico remains loyal to the US, for now. This alliance is mentored by Cuba's Fidel Castro.
China has been very busy organising export alliances in South America. One goal is to bring Venezuelan oil across the continent to the Pacific, for easier sea-access to China. The US has declared Chavez an enemy.
A summit has just concluded in Cuba, and as the Sydney Morning Herald reported "Heads of state and government from 56 countries and delegates from 118 countries were due to adopt a voluminous final declaration backing Iran's right to nuclear energy; urging UN reform to give greater weight to poor countries; opposing terrorism and what they see as US interventionism". The draft also condemns Israel's "unlawful" policies in the Palestinian territories and the recent intervention in Lebanon.]
As China, then India, and other developing nations, move to industrialisation, resources are becoming more scarce. Notes Faber: most of the wars throughout history began over scarce resources.
This does not mean Faber is warning of World War III on the horizon. He simply intends to put things into perspective. There is little doubt that global tension has increased significantly of late. How the US deals with this tension becomes very important from an economic point of view.
The last time the prices of oil and gold were at their highs was in 1980. Between 1980 and 2000 the Cold War ended, global tensions eased (if you discount the first Gulf War) and commodity prices fell. The resources sector went into the doldrums.
Since 2001, global tension has reared again, and at the same time China has accelerated its extraordinary economic growth. Commodity prices have skyrocketed. It is usual for commodity prices to skyrocket in times of war, and for military spending to increase, funded by borrowings from capital markets.
When the technology boom collapsed in 2000, the US moved to an ultra-easy monetary policy in order to reinvigorate the economy. 9/11 evoked more of the same determination. Since then the US has tightened monetary policy significantly, but Faber suggests that from such a low base, policy is currently still expansionary.
In response to the oil shocks of 1979-80, then Fed governor Paul Volker responded by squeezing the system. This ushered in a period of high interest rates. Volker was able to do this, notes Faber, because US debt levels were contained. Current governor Bernanke does not have that option open to him.
US debt levels were 120% of GDP in 1980. They are at 300% today. Between 2000 and 2005 the expansion of US debt ran at six times the rate of GDP growth.
The bulk of that debt has gone into buying real estate. Housing prices as a percentage of US GDP are now at all time highs. Households have then extracted money from home values to finance consumption. Despite a drop in the US housing market, such extraction and consumption continues today. Household drawdown of funds for the purpose of investment in real estate, and the stock market, has led to US savings becoming negative and has fuelled the economic boom.
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Thus the system has become more vulnerable. The economic recovery post 2000 has not been driven by capital creation and employment gains, but by credit creation and easy monetary policy. Asks Faber: how can this be sustained?
Despite the apparent growing wealth of Americans, median household income has actually fallen by 4% since 1999. The cost of household necessities ? for example energy and medical services ? has risen substantially.
The US regards itself as the economic engine of the world, yet its share of global exports is falling. While the US has fallen, China's exports have grown astronomically. The US now carries trade deficits with every major region of the world.
In 1987, the ratio of US foreign investment turned negative, such that today foreigners hold US$12.7 trillion worth of US assets while the US holds only US$10.0 trillion of foreign assets. The US current account deficit (CAD) is growing annually, having commenced its significant blow-out post 2000.This has been due to easy monetary policy which has led to strong consumption growth but not strong investment growth.
[Note that the growing US CAD has many economists predicting disaster ahead, while others show little concern. Noted bears such as Faber, and Morgan Stanley's Stephen Roach and Nouriel Roubini believe the growing US CAD spells imminent disaster for the US dollar. Other economists suggest the dollar cannot collapse because no other currency provides an alternative. Yet other strategic thinkers, such as Charles Gave, suggest CAD measurements are deceptive as they do not account for the consequent rise in US profits. As long as the US has assets to sell, says Gave, the CAD can safely blow out much further.]
Production and investment have shifted away from the US, to China and other developing nations. While China may have exported its deflation to the rest of the world, it has also promoted deflation at home. Faber notes it wasn't long ago that the Chinese were buying their first locally-produced car for US$20,000 in real terms. Today the equivalent car (everyday sedan not dissimilar to those which GM produces) costs US$3,700.
At US$20,000, roughly one million Chinese could contemplate owning a car. At US$3,700 this figure rises to 50 million. China is now the second largest car market in the world behind the US. In the US, first-time car buyers represent 1% of the market. In China that figure is 84%.
Similar price deflation has occurred for other items the West takes for granted, such as TV sets and mobile phones. While the US boasts the largest economy in the world, Faber suggests the Chinese economy is actually far bigger than anyone realises.
Officially, the current size of the US economy is US$12 trillion and China's US$2 trillion. But if you measure not in monetary terms, but in volume of goods produced, then China represents 60% of the global economy. And the Chinese economy is growing at the rate of 13-15% per annum in industrial production and 20% in capital spending.
China is now the biggest consumer of the world's commodities. Yet Chinese per capita consumption of commodities is much lower than the West's. India's is much lower still. Faber notes India is still probably twenty years behind China.
The history of oil consumption provides a revealing example. Prior to industrialisation, the US consumed one barrel of oil per capita. Today it consumes 27 barrels. Japanese industrialisation in the 1950s took its consumption from one barrel to 17 barrels today. China's current consumption is 1.7 barrels per capita. India's is 0.8.
Today all of Asia (including Japan) consumes 22 million barrels of oil per day. This is consumed by 3.6 billion people. The US also consumes 22 million barrels of oil per day, with a population of 300 million people.
Asian oil consumption will double at some point in the future. Can current oil production (84 million barrels per day) be sufficiently increased to meet that demand? Says Faber: oil prices simply must keep going up.
Commodity prices in general in the 1990s were at their lowest level, in real terms, in the history of capitalism. Commodities price cycles can last 45-60 years, notes Faber. We are only at the beginning of the bull market.
This does not mean there cannot be, and won't be, major price corrections along the way ? even in the order of 50%. The price of copper, for example, has risen from US30c/lb to US$4/lb. Faber would not be surprised to see the price of copper reaching US$2/lb in the current correction. Or oil reaching US$50/bbl. History is littered with major corrections in ongoing bull markets.
The price of gold moved from US$30/oz in 1970 to US$175/oz by 1974. In 1976 it fell to US$103/oz before hitting US$850/oz by 1980.
In 1987 the Dow Jones index fell 40%. It is now seven times higher. In 1987 the Hang Seng index fell 50%. It is now ten times higher.
If commodity prices rise, interest rates rise and consumer prices rise, and vice versa. Between 1960 and 1980 the price of oil rose, and interest rates rose. Between 1980 and 1999 the price of oil fell, and interest rates fell. Today the oil price has risen to new highs, but interest rates remain low. What is wrong?
Bond prices are wrong, says Faber. And why are bond prices wrong? Because the US is printing money.
Even if the economic growth of China and India begins to slow, notes Faber, there will not be a pullback in oil consumption. Fed governor Bernanke has stated that declining asset prices strengthen the system. He is the money printer. In fact, he has said that as long as asset prices are declining "you could throw dollar bills out of helicopters".
Faber entreats his audience to buy at least one US Treasury bond to frame and hang on the wall. That way, he says, you can show your kids how the US dollar became worthless.
The US has not experienced a real bear market in equities since 1929-32 when the Dow Jones fell 90% in nominal terms. Between 1964 and 1982 the Dow Jones moved basically sideways in nominal terms, but in real terms it lost 75%. Notes Faber: you can make the Dow go wherever you like by printing money.
So how should an investor respond to Faber's dissertation?
Firstly, he notes, the prices of agricultural commodities have barely moved.
Secondly, the price of gold is now inexpensive compared to other commodities ? particularly oil. The gold price may yet go to US$500-550/oz, but there it should be bought. If the Dow Jones continues to rally, as many expect it will, and it does so because the US is printing money, then the price of gold must rally.
Buy gold, says Faber.
my opinion, there are at least 2 possible variables:
1) EPM will be incorporating the new 43-101 resources into their mine plan and thus be producing more gold each year. This would involve more capex. This would also involve renegotiation with their lenders to approve the new mine plan.
This is somewhat likely in my view. However, I doubt EPM would issue new shares for the new capex at the current share price. Nonetheless, I believe EPM would like to negotiate this point with its lenders now to allow EPM to spend new capex/produce more gold ounces during the next 1-2 years without triggering anything in this "renegotiated" financing agreement. In fact, a new financing agreement may spell out the lenders may wish to debt finance some of this new capex.
This is all speculation on my part, but appears to be supported by the facts.
2) The lenders have seen recent development in the other Stans and are now getting cold feet. This is less likely, but certainly possible.
Your basic assumption is correct. There is over 90% chance EPM will get debt financing via its existing agreement, IMO.
Central Bank Gold Sales by Country as of 9/16/06
http://amarks.homestead.com/files/cbgoldsalescountry.jpg
Central Bank Gold Sales by Country as of 9/16/06
http://amarks.homestead.com/files/cbgoldsalescountry.jpg
Yes, Jim Rogers was negative about all the Stans in his book... Personally, I believe Kazakhstan is a decent political risk, especially compared to the other Stans. Moodys and S&P have Kazakhstan at much higher credit rating than the other Stans, same as Mexico...
EPM likely will execute debt finanncing for the remainder of the project, not equity. This has been plan all along and I would estimate 95% confidence that it will be debt financing. EPM must get some financing (either debt or equity) to complete mine construction.
We'll see.
mostly as a trade, looking for C$.75 and will sell 50% of position if it gets there, maybe more...
here is the rationale, posted at SI http://www.siliconinvestor.com/readmsg.aspx?msgid=22810610 :
FWIW, below is minesite article on EPM which came out 9/12/06. No new developments and certainly no report of anything gone astray. This minesite article is consistent with what I was told/learned at the AGM. Below is repost of my annual shareholder meeting notes. Really not much has changed here either. Be sure to read item 5) again on 43-101 and mine expansion economics.
Continue to think its the PP warrants and options coming due in October. Here is my message to Detective T a few days ago:
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Looking to add to EPM as well. However, please note the October options and warrants coming due in Oct.
3M shares at C$.75, Oct 11th
2.6M shares C$.41 on Oct 1 and Oct 15
Am waiting for a large 2M+ share cross in late Sept or Oct, and will add then.
_________________
FWIW, I decided not to wait and added to EPM today at C$.69 and C$.70. Anything below the C$.75 should work out okay, IMO. Will look to add more in next few days/weeks, especially if EPM gets to $.65/$.66 which should be support if C$.69 is not... My rationale is EPM will release news before October so that those PP warrant holders can exercise at prices above C$.75. We'll see...
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In regard to my Annual Meeting final remarks, nothing has changed my mind here either:
"Within the next 4 months, we should get news on 43-101 new resource estimate, debt facility being finalized, and the new mine expansion economics."
[4 months would be Nov 1, 2006]
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European Minerals Awaits News Of Progress From Banks
http://www.minesite.com/storyFull5.php?storySeq=3787
By Rob Davies
Varvarinskoye is a gold-copper deposit being developed by AIM and Toronto listed European Minerals in north-west Kazakhstan. Construction of the mine is well underway, pre-stripping of the overburden has commenced already and the company expects to encounter ore this month. Virtually all of the mining fleet has been delivered and the bulk of the concrete work is in place and work on the tailings dam, leach tanks and workshops is going according to plan.
However, as Chairman Tony Williams said in his June update “We have successfully overcome numerous financial and operational challenges and we are still on schedule to become a significant gold producer by mid 2007. Our debt facility lenders continue to be extremely supportive and we hope to finalise the conditions to allow debt drawdown soon.” This statement refers to the problems the company faced after its initial contractor, MDM, encountered financial difficulties relating to a totally separate project in Africa. As a result European Minerals had to find a new contractor, which it has with Senet, but it also meant that it set the clock back with the banks, Investec and Nedbank, who are providing the project finance.
Over the last few months the company and its consultants have been working hard to recover the situation and Tony Williams is pleased with progress since the new arrangements were put in place. Part and parcel of the financing is a gold hedge it took out in December 2005 for 445,000 ounces of gold at US$574.25 an ounce. At the time it was hailed as a fantastic deal, but trying to forecast the gold price, currently US$590/oz, has made more than one trader look embarrassed. That hedge lasts for eight years and at the time was hailed as an innovative way of raising the finance for the mine development. Those funds are tied up in the total US$75million project financing and to keep things moving along the company raised US$65million in an equity placing earlier this year and that is enabling the mine to be built.
Production at the mine is due to start in the second quarter of 2007 at an annual rate of 4.2 million tonnes a year and the current plan is for a 15 year life. The reserve estimate is based on a copper price of US$1 /lb for copper and US$375/oz for gold. While these figures look outdated, and the market is eagerly awaiting a revised estimate using more up to date metal prices, in reality a new estimate will not make a large difference to the project but will ensure that mine planning is accurate. In particular an increase to the gold reserve will give everyone more comfort that the company has not given away too much of the upside by hedging half the gold originally estimated to be in the ground.
One point in the company’s favour is that it is working in Kazakhstan and not in one of the other countries in the region where ownership and tax disputes are making life troublesome for foreign investors. Currently capitalised at £117million with US$55million in the bank, the market is keenly waiting on news of progress from the banks, no one more so than the management. In the meantime mine construction continues apace.
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EPM Annual General Meeting Notes
Attended the AGM in London on 6/23/06. EPM had enough coffee and pastries for 50 people, but my daughter and I were the only shareholders that attended the meeting… About 12 people showed up altogether, with most being EPM management, bankers, and Canaccord Investor Relations.
EPM appeared disappointed with the turnout. Besides having enough Danish for 50 people, EPM had a new presentation and was fully prepared to respond to shareholders questions. But I was the only one asking questions and making comments.
1) Debt Facility/SENET - EPM very confident that this debt facility will be finalized and this project debt furnished. With SENET taking over from MDM, all the paperwork and bank review had to be redone completely. Also, my impression is the S African Export Credit for this debt facility may also be slowing down the process (both SENET and MDM are S African firms, so EPM entitled to S Africa export credit on this contract). If you were to put a gun to my head, then I would predict debt facility to be finalized before 2Q06 financials are out (around Aug 15).
2) In the unlikely event the debt facility is not finalized, then EPM will issue $30M of more stock via a PP and finance the mine 100% equity. One way or the other, this mine will be brought into production in early 2007.
3) In hindsight, EPM somewhat regrets not going 100% equity finance in the first place. Not having the debt facility in place has delayed mine completion by 4 months or so, primarily by not timely ordering some certain capex needs like steel for the process plant. EPM is very happy with the Kazakh construction company (JSC Consolidated Development Corporation) performing the work.
4) EPM will be updating 43-101 with new gold and copper prices that will thus show a healthy increase in reserves.
5) Concurrent/after completion of new 43-101 EPM will consider mine expansion to increase annual production by deepening the pit operations or by other means. This would require only marginal capex increase relative to the new gold ounces produced. Thus, I was concerned about a new PP and voiced my opinion that internally financing mine expansion would be much preferable. EPM stated they currently had no plans for any new PP to finance mine expansion and would first have to get results of the 43-101, economics of revised mine plan for expansion, gold prices, EPM share price, etc. Mine expansion economics should be complete about Sept 06. The good news is EPM can likely increase annual production with only a modest capex increase and apparently EPM has no plans for mine expansion financing at current low share price.
6) When asked why Charlemagne Capital not present at AGM, was advised that Charlemagne calls them at least once per week to get an update, they had called this week, and apparently Charlemagne increased their shareholding very recently (not confirmed by London AIM news release as of today).
7) In regard to copper hedging, EPM is actively pursuing hedging its copper production which is quite significant in the early years. Was advised that copper hedges, unlike gold, cannot be rolled forward easily. If you have copper hedge for June 07 delivery, then you bloody well better have the copper delivered in June, since you cannot simply roll over the contract to the next month. My impression is EPM will likely hedge some of its copper if and when copper production delivery is 95+% assured. Personally, I hope EPM hedges some copper and buys $750 gold calls with the proceeds to reduce their gold hedges.
8) In regard to consumables and maintenance, a very key concern of mine given harsh cold winter climate, we discussed tires, consumables, and CAT maintenance contract. This is still a key concern of mine but EPM is aware of the problem and is actively managing this potential problem.
9) When modeling EPM copper concentrate revenue, one can use 80% of the copper price.
The EPM presentation that included many powerpoint slides, lasted about 40 minutes and was interrupted several times (about 15 minutes of the 40) by my questions and comments seeking clarification. Am disappointed that EPM has not put this AGM presentation on their website, as EPM obviously spent a great deal of time on preparing this presentation which included several new slides. Was hoping this AGM presentation would be on website by now to jar my recollection on certain of my other questions. In any event, was happy EPM went to all the trouble to prepare the AGM for my sole benefit and EPM was happy to answer all my questions.
EPM appears to be currently undervalued and I remain very confident that the drawdown of its US$75 million debt facility is a done deal. Just my opinion… Within the next 4 months, we should get news on 43-101 new resource estimate, debt facility being finalized, and the new mine expansion economics.
Frank, any opinion on EPM here...? Got lucky thus far, bought at C$.69 and then C$.65 at the bottom... Nice volume.
Any thoughts on EPM?
http://stockcharts.com/c-sc/sc?s=EPM.TO&p=D&yr=0&mn=6&dy=0&i=t59248735614&r=....
central bank gold sales
heavy sales, 33 tonnes, this past week. up to 378 tonnes for the YTD.
http://www.investorshub.com/boards/read_msg.asp?message_id=8327291
Martin M at Denver Gold Forum on 9/26/06, so I will defer to Martin M's annual forecast next week on both Gold and US$.
Tuesday, September 26, 2006
Times Auditorium
7:00 - 8:00 ................................. Gold Breakfast with Dr. Martin Murenbeeld
Martin M sightings...
"We're only within a few dollars of the last correction in June," notes Vancouver-based gold watcher Martin Murenbeeld. It closed at its last low of $562.30 on the New York Mercantile Exchange on June 14.
The culprits include the U.S. dollar — which usually moves in the opposite direction of gold — showing some surprising recent strength and tensions on the world political stage easing up a bit, he explains, noting gold is always more attractive in times of uncertainty.
Declining oil prices have also fuelled speculation that demand for raw materials may be easing.
"We would need a geo-political shock to get back to $700. I don't think the market is in the mood to hit that price level right now," says Murenbeeld. "We'll just have to wait this out."
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The recent strength in the U.S. dollar, worries about an economic slowdown and the plunge in commodities such as oil have all contributed to the drop in the price of gold to $583 (U.S.) an ounce from more than $700 an ounce in May, said Martin Murenbeeld of Victoria-based M. Murenbeeld & Associates Inc., publisher of the Gold Monitor.
There is a certain sense that the strength in the U.S. dollar is not sustainable, Mr. Murenbeeld said. “But right at the moment, the U.S. dollar is looking pretty darn good.”
Ortega Gets 15-Point Edge in Nicaragua
September 18, 2006
- Former head of state Daniel Ortega is the clear frontrunner in Nicaragua’s presidential election, according to a poll by Zogby International and the University of Miami School of Communication. 34 per cent of respondents would vote for the Sandinista National Liberation Front (FSLN) member.
Eduardo Montealegre of the Nicaraguan Liberal Alliance - Conservative Party (ALN-PC) is second with 19 per cent, followed by José Rizo of the Constitutionalist Liberal Party (PLC) with 13 per cent, Edmundo Jarquín of the Sandinista Renewal Movement (MRS) with 10 per cent, and Edén Pastora of Christian Alternative (AC) with one per cent.
In 2001, the PLC’s Enrique Bolaños won the presidential election with 56.3 per cent of the vote. The PLC and the FSLN have traditionally been the dominant parties in the Central American country’s political scene. Montealegre once belonged to the PLC, and the MRS was assembled by former FSLN members.
In March 2005, 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.
On Sept. 14, Bolaños urged young voters to not vote for a "has-been." These and other references from the current president have been interpreted as direct criticisms of Ortega.
The election is scheduled for Nov. 5. In the event no presidential contender receives 40 per cent of all cast ballots, the first place finisher can only avoid a run-off by reaching the 35 per cent mark and holding a five-point advantage over the closest rival.
Polling Data
If the presidential election were held today, for whom would you vote?
Daniel Ortega (FSLN)
34%
Eduardo Montealegre (ALN)
19%
José Rizo (PLC)
13%
Edmundo Jarquín (MRS)
10%
Edén Pastora (AC)
1%
Other
1%
Not sure
23%
Central Bank Gold Sales articles
http://www.resourceinvestor.com/pebble.asp?relid=23760
http://news.goldseek.com/GoldForecaster/1158332520.php
Faber, 44 minute interview
http://www.usfunds.com/landingpages/fallwebcast/
your comment:
"If the republicans win, it's because some nutcase decided to blow himself up in the name of Allah."
well everything I read suggests Republicans will win the Senate although likely lose the House...
RE: $WTIC, could be the US elections are only 7 weeks away...
low gas prices make for a more happy electorate...!!
central bank gold sales
135 tonnes short of target thus far YTD
345 tonnes YTD actual
Am expecting central banks to reach 380 tonnes (absolute minimum) to 400 tonnes instead of 500 tonnes this fiscal year, thus we should have 35-55 tonnes to be sold in next 2.5 weeks, well above recent sales. (380 tonne absolute minimum = 500 tonnes less 120 Germany). This past week 7.5 tonnes were sold. Thus expect minimum of 15 tonnes to be sold for each of the next 2 weeks plus 5 tonnes in the half week stub period.
From yesterday news:
"The Bank of Portugal announced today that it sold 20 tonnes of gold since it announced a 15 tonne sale in July. It claims the selling program is now complete."
With only 7.5 tonnes reported this week, it is obvious little if any of Portugal's 20 tonnes was sold last week, so must be this week.
Was all set to read Grandich's great article on the pros and cons of Mexico. What a disppointment...
Agree:
"$540 - $550 - good area to start buying again."
$541 would be at the 65 week moving average which has always held before... But I will start buying at $560 assuming it gets there
Great Basin moves ahead with R1bn Burnstone project as rights approved
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Canadian miner Great Basin Gold, which received all three new-order prospecting rights for its Burnstone project, near Balfour, from South Africa's Minerals and Energy department said it planned to apply for a mining right by the end of next month and would proceed with the development of the R1-billion gold project.
The conversion of the last two old-order prospecting rights also enabled Great Basin to move ahead with its mine development and CEO Ferdi Dippenaar said in a statement that the company had started construction on the mine access decline. The excavation of the underground decline had also advanced to some 55 m and a bulk sample was planned for next November.
The project was being developed on farms near Balfourt on the South Rand portion of the Witwatersrand Basin.
Great Basin's prospecting rights had been granted for a period of five years and cover a major portion of the Area 1 mining area, which had the potential to produce some 214 000 oz of gold a year for 14 years.
“The development of the Burnstone mine, in South Africa, marks an exciting milestone in the history of Great Basin. With production forthcoming from both Burnstone and our Hollister development block project, in Nevada, in the next few years, the company is on track to establish itself as a mid-tier gold producer,” Dippenaar said.
The May feasibility study indicated that the underground mine had the potential for robust returns. It planned to use flexible, mechanised materials-handling and conventional narrow-reef mining, in combination with a decline and a vertical shaft for access.
A 4,5-m-wide by 4,8-m-high decline is being developed to enable early access to the orebody for mining. A confirmatory 26 000-t bulk sample will be extracted and processed. Thereafter, the company will develop a 7,5-m-diameter vertical shaft.
Employees and equipment will use the decline for access and the shaft will be used for hoisting ore and waste rock to surface. It is anticipated that the mine will commence commercial production in 2009.
Meanwhile, Great Basin also said earlier this week that it planned to start trading on the JSE later this month. Initially, Great Basin had hoped to complete its secondary listing on the JSE in July, but later said that it would only list in mid-August.
When looking at India, most important that the Monsoon is delivering the rainfall. The KEY factor on rural Indians buying gold is the monsoon rainfall so their crops can be harvested. This monsoon season looking normal, which is good for the rural Indians and hence gold.
http://www.imd.ernet.in/section/hydro/dynamic/seasonal-rainfall.htm
could be overbought, but my contrary indicator never changes...
An Interview Worth Its Weight In Gold
8/31/2006 12:44:08 PM
The timing was excellent -- Anne Evers, the editor of The Gold Report wanted to interview Bob Prechter, and Bob was in the midst of publishing his new book about how he has used the Wave Principle to forecast gold and silver over the years. The Gold Report published the interview last week on its web site (theaureport.com), and Anne graciously gave us permission to publish some excerpts from it. To find out more about How to Forecast Gold and Silver Using the Wave Principle, please click here.
The Gold Report: Historically, gold has risen as the dollar has declined, but the correlation has not been as strong recently. Where do you believe the US dollar is headed, and how do you think it will affect gold and silver?
Bob Prechter: On the contrary, I think gold and the Dollar Index have been acting pretty well in concert. The correlation is not exact, but market correlations rarely are. Gold tested its low in 2001, and the dollar topped in 2001, five months later. The dollar bottomed in December 2004, rallied and then tested its low in May 2006, the same month that gold topped. Under the Wave Principle, psychology is typically very bearish at the low of “wave 2,” which is essentially a test of the previous low. The sentiment towards the dollar in 2006 was nearly as bearish as it was in 2004 at the low, and the final surge in the gold rally was an expression of that sentiment. I think if you study the historical record, you will see that gold and the Dollar Index are generally in no stronger sync than they have been recently. All that aside, though, there is no reason why the two markets have to trend together. If the euro and other currencies were to inflate faster than the dollar, and if the psychology of the markets were such as to reflect the difference, then the Dollar Index could quite easily go up while gold was going up.
The Gold Report: More than three years ago (in February 2003), in an interview with Financial Sense Online, you said: "We are more in debt now than in any time in the history of the country. That is setting the stage for the problems we face." Since then, both the government and consumers have continued to dig themselves deeper and deeper into debt. Do you still believe, as you did then, that the markets and the economy are headed for a crash? And what impact will that have on the gold market?
Bob Prechter: I believe more than ever that a crash is how the debt bubble will deflate. If you plot the DJIA in terms of gold, you will see that the stock market has been crashing relentlessly since 2000 and recently hit a level equivalent to Dow 4000. In other words, if we had begun pricing the Dow in terms of gold in January 2000, it would have fallen by 2/3. It wouldn’t be sitting near its high. So the only place I’m wrong about a crash is in the nominal figures. But I think that is coming, too. If I am correct that the crash will be deflationary, it won’t make gold go up. People will be scrambling for dollars to pay interest and principal on those debts you mentioned.
The Gold Report: Exchange Traded Funds are relatively new – in fact the first silver ETF was only just recently launched. How do you think these affect the gold and silver markets? Do you believe these are good investment vehicles for precious metals?
Bob Prechter: The new ETFs will have no impact on the level of pricing. But their creation does say something about market psychology. Usually—although not always—financiers create trading vehicles when a market has been hot. The only advantage I see to trading gold ETFs instead of gold futures is when a trader doesn’t trust himself to stay off leverage. Otherwise, it’s just another scorecard for the Great Asset Mania.
The Gold Report: Do you recommend that investors buy bullion or stocks in precious metals companies? Or both?
Bob Prechter: Right now I think gold is in a bear market, so I’m not recommending either. But generally speaking, the best time to buy gold shares is when you are bullish on the stock market along with gold. Aside from the 1970s, there is a more persistent correlation between gold stocks and the DJIA than there is between gold stocks and gold bullion. The time to own bullion over stocks is when you are bullish on gold and bearish on the stock market.
The Gold Report: How much gold and silver should investors have in their portfolios right now?
Bob Prechter: I always want to have a ready mechanism to buy gold if I think it’s going to enter or extend a bull market and also to own some gold as a hedge against draconian measures by the money monopolists. In extreme monetary times, when one needs a real asset that is not an IOU and is not easily manipulated, gold is the top choice.
The Gold Report: What else can you tell me that I won’t hear elsewhere?
Bob Prechter: I think it’s vitally important that gold, silver and the DJIA peaked within the same 24-hour period in May. The Dow topped on May 10, the metals on May 11. I have been making the case that liquidity has been driving all the hot markets together, and that includes real estate, copper, oil, foreign currencies and junk bonds. I further contend that when deflation hits, these markets are likely to go down together. So there will be no “hedge” investment, no markets in which to get rich while other suffer as there were in the 1970s. The only refuge will be safe cash equivalents, and they are few and far between. If you want to get safe from the crash, I spelled out how to do so in Conquer the Crash. Look around. Real estate is slumping fast. Gold and silver are down from their highs. The S&P is still 15 percent below its 2000 high, and its rally from 2002 looks tired. The hype on oil is relentless and deafening, but its net gain for the past year is zero. Despite massive credit inflation, grain prices have been falling. I think these are warning signs of the crash I’ve been talking about. Gold bugs say that the Fed can inflate the economy out of any difficulty. I guess we’ll soon find out.
Editor's note: Remember, you can find out more about how to order How to Forecast Gold and Silver Using the Wave Principle.
tungsten price update
http://amarks.homestead.com/files/tungstenprice.jpg
central bank gold sales
133 tonnes YTD short of quota
http://www.investorshub.com/boards/read_msg.asp?message_id=8327291
CKG
ECA
WHIT
SHY.v
The Great Energy Game
http://www.usnews.com/usnews/biztech/articles/060903/11game.htm
Updated NatGas board
http://www.investorshub.com/boards/board.asp?board_id=5931
Still appears too early to devote any additional money toward NatGas stocks. Believe NatGas prices will keep between $5 and $6 for the next 2 months and storage will be at FULL capacity by middle of October. Will likely be buying more natgas stocks in late Sept and early Oct as "fears" of a cold winter start...
From Robry data, natgas demand is quite high as adjusted for degree days. All that is needed for NatGas stocks is a normal winter this year and NatGas prices will be over $10.
In short, biding my time.
THANKS!
Ortega Leads by Six Points in Nicaragua
September 1, 2006
- Former head of state Daniel Ortega remains ahead in Nicaragua’s presidential race, according to a poll by CID-Gallup published in La Prensa. 29 per cent of respondents would support the Sandinista National Liberation Front (FSLN) candidate in this year’s ballot, up six points since June.
Eduardo Montealegre of the Nicaraguan Liberal Alliance - Conservative Party (ALN-PC) is second with 23 per cent, followed by José Rizo of the Constitutionalist Liberal Party (PLC) and Edmundo Jarquín of the Sandinista Renewal Movement (MRS) with 14 per cent each, and Edén Pastora of Christian Alternative (AC) with one per cent.
In 2001, the PLC’s Enrique Bolaños won the presidential election with 56.3 per cent of the vote. The PLC and the FSLN have traditionally been the dominant parties in the Central American country’s political scene. Montealegre once belonged to the PLC, and the MRS was assembled by former FSLN members.
In March 2005, 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.
In an interview with the Associated Press published on Aug. 30, former Nicaraguan president Arnoldo Alemán acknowledged Ortega’s recent success, saying, "It is very possible that the FSLN will win, unless the Liberals unite."
In 2004, Alemán—who governed the country from 1997 to 2002—was sentenced to 20 years in prison for fraud, money laundering and embezzlement. The former president has been kept under house arrest due to medical reasons.
The Nicaraguan presidential election is scheduled for Nov. 5. In the event no presidential contender receives 40 per cent of all cast ballots, the first place finisher can only avoid a run-off by reaching the 35 per cent mark and holding a five-point advantage over the closest rival.
Polling Data
Who would you vote for in the presidential election?
Aug. 2006
Jun. 2006
Apr. 2006
Daniel Ortega (FSLN)
29%
23%
16%
Eduardo Montealegre (ALN)
23%
17%
22%
José Rizo (PLC)
14%
11%
13%
Edmundo Jarquín (MRS)
14%
--
--
Edén Pastora (AC)
1%
1%
--
None / Undecided
19%
32%
28%
central bank gold sales
125 tonnes short of max agreement (500 tonne target)
http://www.investorshub.com/boards/read_msg.asp?message_id=8327291
In regard to NG, much depends upon whether NG owns 70% or 30% of Donlin. If ABX cannot deliver the completed feasibility report, permits, construction schedule, etc., then 70% (majority stake) of Donlin makes NG worth $30.
The crux of valuation depends on who gets majority control over Donlin... Majority control means everything since you can control your own destiny...
New NG presentation:
http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=4356955
'How to Hypnotize a Man'
http://vili.us/hypno.html
central bank gold sales
117 tonnes short of "goal"
http://www.investorshub.com/boards/read_msg.asp?message_id=8327291
CERA's Rosy Oil Forecast – Pabulum to the People
By Randy Udall and Matthew R. Simmons
(Note: Commentaries do not necessarily represent ASPO-USA's positions; they are personal statements and observations by informed commentators.)
At a moment when a tank full of gasoline costs $75, the Chinese are eagerly trading bicycles for cars, and Americans are consuming their body weight in petroleum each week, it would be nice to know how much oil will be readily available a decade from now. In a thirsty world, will supply be adequate to satisfy demand?
A new study from Cambridge Energy Resources Associates, a prominent research firm, says not to worry. “Capacity growth will accommodate rising world oil demand so long as there are no major disruptions in the actual flow of oil,” said CERA’s Chairman Daniel Yergin. Global supply could increase 25% by 2015 to 110 million barrels a day, he says. This surge of new oil would meet forecast increases in demand, with a surplus to spare, putting downward pressure on prices, the study notes.
The report might be reassuring if CERA did not have a checkered forecasting record, and if its findings were not hedged six ways to Sunday. “Our focus is on physical capacity, not actual production which can fluctuate for political, economic, or technical reasons,” Yergin explains. In CERA’s feel-good scenario, “there are no problems below ground” and the myriad problems aboveground, although real, are likely to be short-lived, and thus can be ignored in their Reference Case. This is an absurd and dangerous nostrum, false on both counts.
In truth, the energy business is plagued by problems in Nigeria (violent insurgency), Venezuela (Chavez), Alaska (pipeline corrosion), the Gulf of Mexico (hurricane damage), Canada (cost overruns), Iraq (civil war), Sudan (ditto), Mexico (declining production), the North Sea (ditto), and Iran (new project delays, saber rattling). While prices should remain volatile in the short term, it’s exceedingly difficult to foresee a return to anything resembling CERA’s orderly market, abundantly supplied with a surplus of cheap oil for the next decade. Indeed, we think oil will be in shorter supply and much more costly in 2015 than it is today.
For the past decade, CERA, the U.S. Energy Information Administration, and the Paris-based International Energy Agency have produced important forecasts whose predictions would be comic if they hadn’t been so tragically misleading. In an effort to reassure politicians, these groups have become purveyors of petro-prozac.
In 1998, the IEA, struggling to balance its forecasts of future demand with supply, created a mysterious new category of “unidentified unconventional” oil which would supposedly provide 19 million barrels a day by 2020. When independent analysts ridiculed this fudge factor, the agency deleted the category, but continued to insist that the 11 OPEC nations could double supply, a geopolitical improbability and a geological impossibility, since production in half of them has already peaked.
At home, the EIA has surrendered serious credibility since its late 1990s predictions that natural gas would sell for $2.50 +/- in 2015. Tell that to grandma in Duluth, since the futures market expects gas to bring 12 bucks next March. For its part, in 2002 CERA forecast that North American gas supply would increase by 15 percent. In reality, production has fallen by 4 percent, forcing CERA to admit that “gas production in the United States appears to be in permanent decline.”
These erroneous forecasts are not just embarrassments, they have had profound real world impacts, misleading politicians, misallocating capital, and obscuring the growing dangers that energy shortfalls pose to national prosperity. The EIA’s don’t-worry, be-happy forecasts of cheap natural gas prices helped entice independent power producers to spend $150 billion on gas-fired power plants, some of which have now become too costly to operate. IEA and CERA’s forecasts of long-term cheap oil have misled automakers like Ford and GM into believing their markets for gas guzzling SUVs were secure, even as Toyota and Honda hit the market with fuel thrifty, gas-electric hybrids. .
What's going on here, how can so many bright people get it so wrong?
In the EIA’s case, it turns out that the computer model it used to forecast natural gas supplies lacked serious resource constraints. CERA, too, seems to have difficulty grasping the havoc that declines in production are wreaking on aging oil fields. Petroleum engineers are intimately familiar with depletion; it’s what keeps them awake at night. But depletion is inexhaustible; it’s an implacable foe that never sleeps, yet grows stronger each day. Even if CERA’s forecasted 21 million barrels a day of new supply were to appear, world oil supplies might grow only a bit or perhaps not at all due to depletion in existing fields.
Despite a growing body of evidence to the contrary, CERA has concluded that world oil production will not peak until after 2020, that “peak oil remains firmly out of sight.” Meanwhile a long list of informed observers, including T Boone Pickens, Henry Groppe, Charlie Maxwell, Jeremy Gilbert, Tom Petrie and Chris Skrebowski, have come to believe that a peak is likely between now and 2015. The Chinese agree, and there’s nothing inscrutable about what they are doing, in their race to secure petroleum assets all around the world.
At peak, the world will not be “running out.” Indeed, more than half the world’s conventional oil and a larger share of its unconventional oil will remain to be extracted. . What the world is running out of is cheap oil, the $20 oil we built our civilization around. Suggesting that there are no insurmountable problems for the oil industry above or below ground and that a return to inexpensive oil and orderly oil markets is in the cards is a fool’s forecast. Taking such Pollyannish scenarios at face value threatens economic prosperity and national security.
Abe Lincoln once said, “I’m a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts, and beer."
CERA offers us a stout panacea, but on closer inspection it’s not so much a forecast as a vision in search of reality. Its predictions for Russian additions are larger than those of the Russian government, its forecast for OPEC higher than OPEC's own.
What are the real facts? Today, twenty nations produce 85% of the world’s oil, and production in half of these nations has already peaked, as it did in the United States 35 years ago. Despite new production in places like Angola, Kazakhstan and Brazil, two thirds of the world’s remaining conventional oil is in the tinderbox of the Middle East. Oil is becoming more difficult to find; 2005 was the worst exploration year since World War II. Globally, new discoveries turn up only one barrel for every three barrels we use, which is the reason large oil companies continue doing much of their prospecting on Wall Street. As Chevron notes in its recent ad campaign, “the era of easy oil is over.”
As they struggle to afford the next fill-up, Americans deserve a frank appraisal of our energy circumstances, not pablum and happy talk. With respect to petroleum, America has been sleepwalking toward disaster for twenty years. The nation desperately needs a wakeup call, not a fairy tale masquerading as a forecast.
Randy Udall directs the Community Office of Resource Efficiency in Aspen (CO) and co-founded ASPO-USA. Matthew R. Simmons is Chairman of Dallas-based Simmons & Company International—an investment bank specializing in the energy industry—and a member of ASPO-USA’s Advisory Board.
~~~~~~~~~~~~~~~ Editorial Notes ~~~~~~~~~~~~~~~~~~~
Contributor Steve Andrews writes:
ASPO-USA is preparing a more detailed rebuttal of the CERA report; this commentary precedes that effort.