Dan, What did I buy? You ready? I'm going to shock you...as the say at the World Series of Poker..."All in..." WHT, BGO, NG, NXG, NEM, RGLD, VGZ...heaviest in NG and BGO. 100% in now. Might even margin a little once we get started. 40% HUI haircut is about done. Not bearish anymore since all double top targets have been reached. ===============================================================
Hi ld, Nice selection.... I own the first four on your list so I'm wishing you a double portion of the best of luck in the coming days.
Though the HUI haircut may indeed be about done, what, iyo, is the catalyst that will start the USD backsliding again?
Fwiw, I still don't feel that there can be a very spirited or lengthy rally w/o a commensurate weakening of the Dollar and I don't get the impression that the unwinding of the varied carry trade activities has come to an end.
On the other hand, Friday's gold CoT report was the friendliest set of numbers to the bullish cause that I have seen in the 30 or so months that I've been following them.
The net short "smart money" commercial trader position has dropped from 191K to 69K contracts (brown line) in the past four weeks while the net long "smart money" commerical trader position jumped more than 35K contracts in the same four week period. The % of commercial bullish posiitons has doubled from 17% to 35% since April 12th.
What may be more bullish, in my view, is that the theoretically "weak handed" small bullish speculators (yellow line) have reduced their net long positions by 21K contracts while the large speculators net longs positions (blue line) have dropped from 139K to 38K contracts in the same four week period.
Tho these 'trends' can continue for an indeterminate period, I tend to believe that we are near the bottom w/r to the PoG, but with the strong feeling that a weakening dollar is needed to complete the picture we gold buffs are longing (pun intended) to see, I'm prepared to wait it out, come rain or come shine. <vbg>
"Mo Town’s Mr. Lee” sees clearly the doers of the dirty deed when he says: “COT is the least short of gold since July of 2003. Largest speculators are the least short of gold since July of 2003. The positions held by both parties are at a point of reversal along the trend line defined at both the Up Trend line and Power Down Trend lines of the herewith faxed chart. These guys are using this decline - in all probability sponsored by them - to cover their shorts, reverse their stance and go long.
Well, let me say this Mo Town: "This game is for billions. People commit crimes for $50. What do you think is going on?"
Golden Comet “Mad Jack MyMoney,” reviewing these same figures, says: “COT has recognized the fundamentals of gold and is reversing their positions and getting long and longer. COT is joining Dr. No, Chung Phat and ABX on the buy side. How many more contracts does COT have to buy to start pushing the price of gold higher? They have increased their long position by 31,122 contracts since the price of gold dipped under $380."
From Dan Norcini @ The LeMetropole Cafe:
"Commitments of Traders this week is astonishing. A massive change is occurring in the composition of the gold market participants. As of this Tuesday, the fund category sold over 16,500 contracts, 11,578 of them being brand new shorts. The funds are now down to their smallest net long position since last July 2003 when the gold price was trading near $350. At that time the fund net long position was at 39,409. With today’s release their net short position is at 38,016. In looking back over the last year the lowest level the fund net long position reached was 21,000 or so in both April 2003 and July 2003. Both times saw that as the bottom for the gold price. We are about 17,000 contracts from that point and if the fund longs continue to liquidate at this rate and the fund shorts continue to add on at the current rate, we will be at that level within the next week or so. That should be interesting to watch to see if the pattern holds and the market then begins to move up.
Another very significant point - The commercial category DID EVERY BIT OF NET BUYING in the gold pit from May 5- May 11. That buying was to the tune of nearly 20,000 contracts. That is huge and I mean HUGE. They too are now down to the smallest net short position they have had since July 2003. The kind of buying now taking place is quality buying by jewelry and refining interests and such not to mention mining outfits who are eliminating hedges. The reason I state this is because the COMMERCIAL LONG category is now carrying the largest long position (83,705 longs) they have had in over a year and a half. As a matter of fact, the last time they were anywhere near this loaded on the long side was back in March 2003 when they were carrying a bit over 73,500 longs. That was two weeks before gold bottomed near 319 and then went directly to 372.
From where I am currently sitting, gold is coming to an important crossroads. If the composition continues to change the way it has been doing for some time now with the funds moving off the long end to the short side and big commercial interests either covering shorts or going long, gold needs to find a bottom here fairly soon. We certainly do not want to see the funds completely on the short side of gold since their selling could then push the market considerably lower. I do not expect that to happen but then again I did not expect gold to break under $380 either.
Open interest has increased some 8,300 contracts since last Tuesday’s release through this Thursday. What is significant in my opinion is that if you start at Friday of last week and take the numbers through yesterday, open interest has basically gone nowhere. It was at 253,594 last Friday and as of Thursday this week it is at 255,231; not much in the general scheme of things but significant in this regards -
New buyers and new sellers are slowly entering the arena as it appears the drain in open interest has stopped for now. This is symptomatic of a market in a range trade that is deciding which way it now wants to move. It is now attracting both fresh longs and fresh shorts to replace those who are bailing out and liquidating positions. We will need to keep a close eye on any continued build in Open Interest especially if it occurs while gold continues to move back and forth within its current range between 371 and 385. The longer it can maintain this chop without violating either downside support or upside resistance as more and more buyers and sellers join the battle, gold will be poised for a significant move in one direction or the other as a great deal of pent up energy will be released. Either the shorts will panic if we break thru the topside resistance or the longs will throw in the towel if support near 371 is taken out. If the former, then we will see $395-$400 gold fairly quickly in my opinion. If the latter, I would prefer not to even think about that.
One side note – with the beating gold has taken of late, in Euro terms, it is now nearly the same price it was at the beginning of 2002! Another way of looking at this is that every single European investor who might have bought gold in January 2002 as a hedge against terrorism or simply in an attempt to retain value has gotten a measly 8 Euro gain per ounce as of today in his gold holdings in the last 2 ½ years. That is how thorough a job the cartel has done in clocking the yellow metal." -Dan Norcini
Bema Announces Preliminary Economic Assessment for the Kupol Project/Commences Phase II Drill Program
Wednesday May 26, 4:05 pm ET
VANCOUVER, British Columbia--(BUSINESS WIRE)--May 26, 2004--Bema Gold Corporation (AMEX:BGO - News; TSX:BGO - News; AIM:BAU) is pleased to announce the results of a Preliminary Economic Assessment (PEA) for the Kupol gold and silver project located in Chukotka, North Eastern Russia. The PEA demonstrates that Kupol can be developed as a high grade, low cost gold and silver mine with robust project economics. Bema is earning a 75% interest in the project, from the Government of Chukotka, through cash payments and work requirements. All dollar figures are in United States dollars unless otherwise indicated.
The PEA has been completed following one summer season of exploration at the Kupol Property, where Bema has identified a Preliminary Mineral Resource (see table 1) containing 1.8 million ounces of gold and 19 million ounces of silver in the indicated category and a further 4.2 million ounces of gold and 56 million ounces of silver in the inferred category. This PEA is the beginning of the planning process for conducting mining and milling operations at Kupol. While some parts of the study including Metallurgical Design, Logistics, Plant and Infrastructure are advanced well beyond what is required for a PEA, the study has been based on the Indicated plus Inferred resources which therefore reverts it to a PEA by definition.
The PEA contemplates an initial 12 year mine life based on the drilling to date. The total pre-production capital cost is estimated at $280.1 million, which includes $221.3 million for construction of the plant facilities, tailings pond, owners costs and pre-stripping, and $58.8 million in working capital as it is expected that all consumables and supplies required for a 12 month period will be purchased and shipped to site prior to start up. Open pit mine equipment, as well as an initial underground mining fleet is assumed to be arranged by way of a capital equipment lease at a total cost of $58.7 million.
The following tables outline the various production scenarios on a 100% basis, using a gold price of $375 per ounce and a silver price of $5.50 per ounce. Recoveries have been calculated at 93.5% for gold and 83% for silver.
Using $375 gold and $5.50 silver Bema has calculated a preliminary, after tax, Net Present Value (NPV) at a 0% discount, of approximately $734 million for the life of mine. At a 5% discount the NPV has been calculated at approximately $472 million. Repayment of all pre-production capital is estimated at approximately 22 months.
Using $400 gold and $6.00 silver, with a 0% discount, Kupol has a preliminary, after tax NPV of approximately $841 million for the life of mine. Using the same metal prices at a 5% discount the project NPV is $551 million.
The Preliminary Economic Assessment includes Inferred resources that have not yet been sufficiently drilled to have economic considerations applied to them to enable them to be categorized as reserves. Until there is additional drilling to upgrade the Inferred resources to reserves, there can be no certainty that the preliminary assessment will be realized. Tom Garagan, VP Exploration for Bema is the Qualified Person overseeing this PEA.
The study recommends a 4,300 tonne per day open pit operation for the first two years, processing 3,200 tonnes per day and stockpiling lower grade ore. From years 3 to 7 the mine will continue to process 3,200 tonnes per day from a combination of open pit, underground mining and stockpile with daily throughput projected to decrease during 8 to 12 to 2,200 tonnes per day from underground mining. The decrease in throughput in later years is due to the limitation within the current underground plan, which only includes Big Bend and the North Zone, plus the extension. With further drilling, management feels that other areas will be sufficiently defined to be included in the underground production plan. Bema is currently conducting trade off studies, examining different combinations of open pit and underground mining which could maintain the daily throughput rate of 3,000 tonnes per day for the ultimate life of the mine. The result of the trade off studies could also substantially reduce the capital expenditures for the project development.
A second phase exploration drilling program is now underway to determine the ultimate potential of the Kupol property. The program will utilize 7 rigs to drill 57,000 metres to infill the area defined in the Preliminary Mineral Resource and further test the Kupol vein structure to the north and at depth. The potential for this program is both to enhance the project economics and increase the ultimate mine life. Management's target at Kupol remains up to, or in excess of, 16 million tonnes with similar gold and silver grades to those stated in the Preliminary Mineral Resource.(ii)
* (ii) The potential quantity and grade is conceptual in nature and there has been insufficient exploration to define this target at this time and it is uncertain that further exploration will result in further discoveries on the property. The target referred to is based on follow up to currently untested, known strike length and down dip potential.
The Preliminary Economic Assessment was prepared by an integrated engineering team which included Bema personnel, Orocon Incorporated and SRK Consulting.
Table 1
The flowing tables outline the Kupol Indicated Mineral Resource and the Inferred Resource at a 6 g/t gold cutoff. Due to wide drill spacing, a 10% metal loss was applied to the resource
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