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April 27, 2012

(BN) #Gold Traders Get More Bullish as Central Banks Hoard More

Bloomberg News, reports:

Gold Traders Get More Bullish as Central Banks Hoard More

Gold traders are more bullish after central banks expanded their bullion reserves and hedge funds increased bets on a rally for the first time in three weeks.

Fourteen of 28 analysts surveyed by Bloomberg expect prices to gain next week and nine were neutral, the highest proportion in two weeks. Mexico, Russia and Turkey added about 44.8 metric tons valued at $2.39 billion to reserves in March, International Monetary Fund data show. Fund managers raised their so-called net-long positions by 2.5 percent in the week ended April 17, according to the Commodity Futures Trading Commission.

Federal Reserve Chairman Ben S. Bernanke said April 25 that he's prepared to "do more" if needed to spur the economy, and the Bank of Japan (8301) today expanded its bond-purchases plan by 10 trillion yen ($124 billion). Gold rose about 70 percent as the Fed bought $2.3 trillion of debt in two rounds of quantitative easing ending in June 2011. The U.K. fell into its first double- dip recession since the 1970s, data showed April 25, while the IMF predicts the 17-nation euro region will contract.

"Ultra-loose monetary policies of recent years don't look like they're going to end any time soon," said Mark O'Byrne, the executive director of Dublin-based GoldCore Ltd., a brokerage that sells and stores everything from quarter-ounce British Sovereigns to 400-ounce bars. "The problems in the euro zone don't look like they're going to end any time soon. We've had a dip, and our advice to clients is always to buy the dip."

Gold Gains

Gold rose 5.7 percent to $1,655.50 an ounce this year on the Comex in New York, and is now 7.7 percent below this year's peak. The Standard & Poor's GSCI gauge of 24 raw materials climbed 5.6 percent as the MSCI All-Country World Index (MXWD) of equities added 9.5 percent. Treasuries gained less than 0.1 percent, a Bank of America Corp. index shows.

Options traders are also bullish, with the most widely held contract on futures traded on the Comex conferring the right to buy at $2,200 by July, 33 percent above prices now. The seven most popular options give owners the right to buy at prices ranging from $1,800 to $2,300, bourse data show.

Central banks are joining investors in buying gold, adding 439.7 tons in 2011, the most in almost five decades, the London- based World Gold Council estimates. They may buy a similar amount this year, it predicts. Mexico bought 16.8 tons last month as Russia added 16.5 tons and Turkey's holdings expanded by 11.5 tons. Kazakhstan, Ukraine, Tajikistan and Belarus also raised reserves, according to the IMF.

Hedge Funds

Speculators increased wagers on price gains to 112,275 futures and options, from a three-year low the previous week, CFTC data show. The net-long position is still 56 percent below the peak reached in August. That provides "ample room" for new long positions, Edel Tully, an analyst at UBS AG in London, wrote yesterday in a report.

Investors own 2,389.6 tons in bullion-backed exchange- traded products, within 0.9 percent of the record reached on March 13, data compiled by Bloomberg show. Demand for bullion coins is weakening, with the U.S. Mint selling 17,000 ounces so far this month, compared with an average 75,917 ounces in the previous 12 months, data on its website show.

The Fed said two days ago that growth will "pick up gradually" as the labor and housing markets show signs of improvement. About $4.99 trillion was added to the value of global equities this year on optimism the world will skirt another recession. The IMF raised its global growth outlook to 3.5 percent from 3.3 percent on April 17, while forecasting a 0.3 percent contraction in the euro area.

U.S. Recovery

"If people really believe that the U.S. recovery is coming through, I think they will buy equities," said Carole Ferguson, an analyst at Fairfax IS in London. "Gold is more likely to go sideways."

Other investors may also be shunning gold. Open interest, or contracts outstanding, in U.S. futures declined to 395,389 on April 24, the lowest level since September 2009, bourse data show. That contrasts with combined open interest across the 24 commodities in the S&P GSCI, which rose 18 percent this year.

Bullion slid from a record $1,923.70 in September, taking it below the 200-day moving average, a sign of more declines to some investors. That may present a "buying opportunity," GoldCore's O'Byrne said. Prices held above the measure from the beginning of 2009 through the end of last year.

The metal will trade at $1,940 in 12 months, Goldman Sachs Group Inc. said in an April 24 report. The bank maintained a neutral outlook on raw materials in the near term, partly because of European debt concerns.

Benchmark Contract

In other commodities, 12 of 28 traders and analysts surveyed by Bloomberg expect copper to climb next week and eight were neutral. The metal for delivery in three months, the London Metal Exchange's benchmark contract, rose 9.8 percent to $8,347 a ton this year.

Six of 13 people surveyed said raw sugar will decline next week and three were neutral. The commodity dropped 9.2 percent this year to 21.15 cents a pound on ICE Futures U.S. in New York. Eighteen of 29 people surveyed anticipate higher corn prices next week, while 16 of 30 said soybeans will advance. Corn slipped 5.5 percent to $6.11 a bushel this year as soybeans climbed 23 percent to $14.8825 a bushel.

"It should be the macro factors and political uncertainties that influence the markets most, and less the fundamental factors," said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. "The sovereign debt crisis should stay in focus. I think it's premature to say that we have seen the worst."

 Gold survey results: Bullish: 14 Bearish: 5 Hold: 9 Copper survey results: Bullish: 12 Bearish: 8 Hold: 8 Corn survey results: Bullish: 18 Bearish: 5 Hold: 6 Soybean survey results: Bullish: 16 Bearish: 6 Hold: 8 Raw sugar survey results: Bullish: 4 Bearish: 6 Hold: 3 White sugar survey results: Bullish: 4 Bearish: 7 Hold: 2 White sugar premium results: Widen: 5 Narrow: 2 Neutral: 6 

To contact the reporter on this story: Nicholas Larkin in London at

To contact the editor responsible for this story: John Deane at

April 25, 2012

Power Shortage Hurts #Chile’s $100 Billion #Copper Push

Bloomberg News reports on Chile's power issues as it seeks to maintain its role as the home of the world's biggest copper mines. 

Power Shortage Hurts Chile's $100 Billion Copper Push

The biggest-ever pipeline of copper projects is under threat as Chile, the world's top producer, struggles to contain rising opposition to new power plants.

At least 5,000 megawatts of capacity, including a $5 billion coal-fired plant proposed by Brazilian billionaire Eike Batista, are facing delays or have been shelved as companies including BHP Billiton Ltd. (BHP) and Anglo American Plc spend as much as $100 billion on copper and metals projects in Chile.

The country, struck by a power blackout as recently as this week, needs to boost capacity by 47 percent within 8 years to keep pace with consumption. Protesters from fishermen to university students oppose the plants, prompting miners to consider their own projects to help meet China's copper demand.

"Chile will have to shelve many of the country's mining investments due to the high cost and scarcity of electricity," Joaquin Villarino, president of mining lobby group Consejo Minero, said in Santiago on April 19. Delays will jeopardize a "significant" part of the proposed mine investments, he said.

BHP Billiton, the world's largest mining company, may solicit offers to build a power station in northern Chile, Peter Beaven, head of the Melbourne-based company's base metals unit, said April 10. Teck is in talks with energy providers to build a power station in the Atacama Desert to supply its Quebrada Blanca mine, Santiago newspaper La Tercera reported April 21.

Chile needs to add 8,000 megawatts to its 17,000-megawatt power system by 2020, according to National Energy Commission estimates. The mining industry accounts for about a fifth of the country's energy demands.


Transmission lines damaged by an 8.8-magnitude earthquake on Feb. 27, 2010 also need investment. The grid will be prone to blackouts for years to come, Chile's former energy minister Rodrigo Alvarez said Feb. 17. The latest blackout struck this week as supply was cut from the capital Santiago to the southern region of Los Lagos on April 23.

Power prices on Chile's central grid rose from about $100 a megawatt hour at the start of 2010 to more than $150 a megawatt hour at the end of 2011, according to the Energy Ministry.

"It is a challenge that the government is well aware of the need to ensure that economic growth is not constrained by a lack of power," John MacKenzie, head of Anglo's copper business, said in an April 10 interview in the Chilean capital.

Alvarez resigned after a conflict related to fuel subsidies in the southern region of Aysen. President Sebastian Pinera then appointed Jorge Bunster on April 3 as his fifth energy minister in two years.

Environmental Opposition

Opposition from environmentalists and community groups are slowing construction of power projects, including HidroAysen in Patagonia that would become the country's biggest power generator, according to Villarino.

HidroAysen, which is being developed by Colbun SA (COLBUN) and Empresa Nacional de Electricidad SA, would generate 2,750 megawatts for Chile's central grid. State-owned Codelco, the world's largest copper producer, operates three mines in that region of the country. Last year's approval of the project sparked protests that led to hundreds of arrests and millions of dollars in damage in public infrastructure.

HidroAysen still requires approval to build a 1,900- kilometer (1,180-mile) transmission line.

MPX Energia SA (MPXE3), controlled by Batista, faces delays to its project after fishermen won an injunction to halt its development. The plant will provide power to new mines proposed by Freeport McMoRan Copper & Gold Inc. and Teck Resources Ltd. (TCK/B)

GDF Suez

In 2010 Pinera asked GDF Suez SA (GSZ), Europe's largest natural- gas network operator, to scrap plans to build a 540-megawatt coal-fired power plant on the coastal site of Barrancones after environmental opposition.

Xstrata Plc (XTA) has partnered with Australia's Origin Energy Ltd. (ORG) to develop its Energia Austral hydroelectric project in southern Chile.

"Energy risk is significant and we need to ensure that the risks are properly mitigated," Charlie Sartain, the head of Xstrata's copper business, said in an April 17 interview.

Liquefied natural gas imports can be increased to Chile through the two LNG terminals already operating in the country, BHP's Beaven said.

The government is taking a more prominent role in taking decisions to improve power supply in Chile, Codelco's Chief Executive Officer Diego Hernandez said in an April 18 interview in Santiago. Previously, the government limited itself to regulating the sector, he said.

Economic Growth

Pinera aims to achieve average economic growth of 6 percent during his four-year term as part of a goal for Chile to become a developed nation by 2018. That plan is contingent on approving power projects, according to a Feb. 28 speech.

"If we don't win this battle to have cheap, clean and safe energy, we won't become a developed country," Pinera said.

Chile will seek to "substantially" increase hydroelectric generation to solve the country's shortages, Juan Manuel Contreras, executive secretary of the National Energy Commission said April 19. Chile has 9,000 megawatts of untapped hydroelectric power generating capacity, he said.

Chile's gross domestic product expanded 6 percent last year and 6.1 percent in 2010, the fastest in more than a decade. Economic growth will slow this year to 4.1 percent as the euro- zone crisis reduces demand for exports, according to the median estimate of economists surveyed by Bloomberg.

The South American country can reduce consumption by 12 percent through power-saving measures, according to Deputy Energy Minister Sergio del Campo.

Renewable Energies

The country is considering a law that would set Latin America's highest renewable energy goal and spur $10 billion of investments in clean power projects. Dozens of companies have applied to the environment regulator to build solar farms in the Atacama Desert, the driest place on earth.

The extra yield, or spread, investors demand to hold Chile's bonds due in 2021 has fallen to 94 basis points from 116 basis points at the end of 2011. The country's credit-default swap, a measure of the cost of insuring against default for five years, fell to 97 basis points from 132 basis points on Dec. 30. The benchmark equity index has gained 9.3 percent this year.

Mining companies are considering $100 billion of projects in Chile, home to the world's largest copper reserves, according to data compiled by mining association Sonami. Peru, the world's third-largest copper producer, may get $50 billion in mining investments over the next decade, according to the country's energy and mines ministry.

Lower Quality Ore

More energy is needed as mining companies develop deposits with lower quality ore, as they need to move more earth to extract the same amount of copper.

Chile's copper output has slumped this year due to declining ore at mines including Codelco's flagship Chuquicamata that is a century old.

Codelco needs to spend more than $20 billion to boost output to 2.1 million metric tons by 2020 from about 1.7 million now, Hernandez said. Without those investments, Codelco's output will slump to 800,000 tons a year in that timeframe as the company exhausts profitable ore at its mines.

China's copper demand will probably grow more than 8 percent annually in the next five years, Andrew Harding, the head of Rio Tinto Group's copper division, said in an April 17 interview.

Copper for three-month delivery rose 0.6 percent to $8,197.50 a metric ton on the London Metal Exchange by 10:42 a.m. local time, as all six main metals traded on the exchange gained. The metal has advanced 7.8 percent this year.

To contact the reporter on this story: Matthew Craze in Santiago at

To contact the editor responsible for this story: Dale Crofts at

April 24, 2012

As investors lose faith in dollar gold will win out - #GOLD ANALYSIS -

It remains unfathomable to me just how the United States economy can sustain a healthy recovery accompanied by falling unemployment broadly defined and rising consumer spending in the face of election-year uncertainties, a depressed housing sector with foreclosures continuing apace, cutbacks in state and local government spending and more public-sector layoffs ahead, and a heavy burden of private and public-sector debt.

What America needs for long-term health is more saving by households and government - not more spending by consumers and a dysfunctional federal government unable to control its addictive spending habits.

From, Yesterday's Top Story: As investors lose faith in dollar gold will win out

Gold is currently treading water but Jeff Nichols believes that the chances of a breakout to the upside are significantly greater than the probability of a breakdown with the gold bull having five to ten years of life ahead

Author: Jeffrey Nichols
Posted:  Sunday , 22 Apr 2012

Gold has been somewhat of a disappointment to many analysts and investors who, as of a few months ago, were still anticipating higher prices again this year.  But the year is not over, nor is gold's long-term secular bull market.

With eleven years of advancing prices already chalked up on the scoreboard, the long-term secular upswing has five-to-ten years of life still ahead - and maybe more.  Along the way, expect continuing volatility, periods of consolidation, and occasional corrections, corrections sometimes so severe that some will prematurely and incorrectly call the game over.

We are now in one of those periods of consolidation when the market takes a breather and adjusts internally, preparing for the next major move.  So far this year, the yellow metal has traded well beneath its all-time high of $1,924 an ounce recorded this past September 6 and well above its subsequent low near $1,520 in late December.

Instead of forging new ground, the price in recent months has been merely treading water, seemingly stuck in a trading range between $1,620 and $1,696, awaiting some external news or internal market development to push the price beyond these temporary technical barriers.

Although I believe the odds of an upside breakout are significantly greater than the probability of a breakdown, I caution that a fall back to $1,520 - or even lower - is certainly possible before gold resumes its long-term ascent.

While physical demand from the key Asian markets - China and India - and from the official sector (that is from central banks) may fuel gold's long-term secular advance, it is developments in the macroeconomic and world financial sphere that are most likely to influence gold in the days, weeks, and months immediately ahead.


Good news for the U.S. economy - news that diminishes expectations of further U.S. central bank monetary accommodation - hurts gold at least among institutional traders and speculators on Wall Street and at financial institutions around the world.  This has been the group that has been most responsible for last September's swift correction and the subsequent ups and downs in the metal's price.

As I have written frequently in the past, these players betting in futures and other derivative markets collectively may have great sway - but only for so long.  Ultimately, it is the physical market - real world supply and demand - that determines the long-term price trend.  And, developments in the physical world have been and will continue to be propitious for the yellow metal.

Perhaps the most important reason gold has not been able to move higher in recent months - despite relatively firm physical demand - has been signs of an early springtime for the U.S. economy, particularly the improving employment, output, and consumption statistics.  As a result, talk of another round of quantitative easing (QE3) has diminished - and the short-term speculators trading paper gold, having earlier this year preferred the short side of the market have in recent weeks begun to lose interest.

Despite the political imperative to dress up the economic statistics ahead of the November elections, I think the economic news will likely be disappointing to those envisioning a rosy scenario.  The positive signs of recovery result not from any fundamental improvement or return to health in the American economy but from faulty seasonal adjustments affected by the unusually mild winter and early spring across much of the United States as well as the unusual economic performance itself in the past several years that have overpowered seasonal influences.

It remains unfathomable to me just how the United States economy can sustain a healthy recovery accompanied by falling unemployment broadly defined and rising consumer spending in the face of election-year uncertainties, a depressed housing sector with foreclosures continuing apace, cutbacks in state and local government spending and more public-sector layoffs ahead, and a heavy burden of private and public-sector debt.

What America needs for long-term health is more saving by households and government - not more spending by consumers and a dysfunctional federal government unable to control its addictive spending habits.

In the meanwhile, odds favor additional monetary accommodation, if not before the November elections, then soon thereafter . . . and as financial markets take note of the still anemic economy and rising probability of Fed easing, gold will respond with a major move to the upside.


The crisis still festering - and likely to worsen - in Europe is a long-term positive for gold although, as in the recent past, the short-term consequences could be quite the opposite.

The European Central Bank (the ECB), along with other European national banks, remains under great pressure to provide financial market liquidity and keep a lid on interest rates.  This is not an easy task with institutional investors unwilling to accept more sovereign debt unless the perceived risks are offset by higher rates of return.

Unfortunately, higher interest rates push borrowing countries - like Spain, which has been much in the news lately - into untenable fiscal deficits and strengthen the case for default among their citizenry.

Default by one or another country on its sovereign debt would probably initiate a wave of defaults among the fiscally weaker European economies - and could trigger a "Lehman-like" moment as major banks and other financial institutions holding European debt suddenly find themselves insolvent and in need of government bailouts once again.

In any event, further ECB monetary creation will debase the euro and most other European currencies - eventually producing higher rates of inflation, not just in Europe but globally, while encouraging central banks around the world to hold more gold in lieu of euro-denominated assets.

Unfortunately for gold investors, the euro-crisis may have just the opposite effect on gold prices in the short run as flight capital seeking a safe harbor in turbulent seas gives the greenback a false appearance of strength not only against the euro but against gold itself.

But, ultimately, as inflation accelerates and lenders - particularly emerging nation central banks and other institutional investors around the world - lose faith in the dollar as a store of value, gold will win out.

Jeffrey Nichols is Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital -

Read the story online here: Yesterday`s Top Story: As investors lose faith in dollar gold will win out - GOLD ANALYSIS - | The world's premier mining and mining investment website Mineweb

April 23, 2012

Some Miner & Not-So-Minor Issues | Resource Investor

The latest CFTC positioning reports indicate that hedge funds have slashed their bullish bets on commodities by the largest amount in four months in the week that ended on the 17th of the month. Such speculators appear to be exhibiting concerns that relate to the possibility that a synchronized global economic slowdown may be underway. The situation prompted one money manager to conclude that “conditions just aren’t favorable for a commodity rally.”

Read the whole article online here:

Some Miner & Not-So-Minor Issues | Resource Investor

April 19, 2012

Senior Westpac executive says gold`s bull run appears to have ended - #GOLD NEWS -

Senior Westpac executive says gold's bull run appears to have ended

A top executive at one of Australia's biggest banks has been taking a fairly gloomy view of the prospects for the gold price at a conference in Australia, which contrasts somewhat with some of the economic analyses at the European Gold Forum in Zurich.

Author: Ross Louthean and Lawrence Williams
Posted:  Thursday , 19 Apr 2012

In his address to this year's Paydirt 2012 Australian Gold Conference in Perth, Westpac Institutional Bank's Senior Economist, Justin Smirk, gave little comfort to gold miners and explorers as to where he felt the gold price was headed.  He said that while the gold price was peaking, gold continued to hold "in an economic fear environment" a pre Great Financial Crisis premium to oil - often used as a benchmark against why investors have been fleeing to gold and used what he saw as a fall-off in fabrication demand as justification for his viewpoint. 

"The reality is however that fabrication demand for gold from jewellery and industrial users is larger than investor demand for gold but fabrication demand is declining," Smirk said.

"If gold prices remain high but fabrication demand falls, then gold loses a base for its value pricing and this is why we don't see gold breaching $2,000 an ounce in any meaningful way," he said.

"Of course that is possible that prices could get there given current volatility and uncertainty but it becomes a question of how one values economic risk as gold price movements are directly responsive to economic uncertainty or conversely, certainty - and China has a big influence on that going forward, both in terms its demand for gold and its broader impact on global growth.

"Westpac's view is that gold's bottom line will settle around $1,700 an ounce as the recent round of cash injections by global central banks has not pushed the gold price higher than its peaks of 2011."

Looking ahead there was some comfort for those involved in the gold sector in that he said that Westpac was forecasting  gold will average around $A1,780 an ounce next year but that this will be the peak and prices are set to nudge back to around $A1,500 a ounce by 2014.

Of course, what the market, particularly that for mining stocks which have been underperforming the gold price even, has not seemed to recognise is that current gold price levels are still very good for most miners and explorers, and for those actually in production profit levels are mostly very strong given that most producing gold mines will have been brought to production on a predication of $1,000 gold or less!  Rising costs will be eroding the margins, but the miners are mostly still well ahead of the game.  Even current feasibility studies are put together usually assuming at a maximum a $1,300 gold price.

Per contra, at the Denver Gold Group's European Gold Forum in Zurich, the keynote speakers were mostly positive on gold, although perhaps markedly less so than a year ago.  The consensus seemed to be that the bull run is not necessarily over and that the recent fallback has been more of an overdue correction rather than a reversal of the overall upwards trend.

See the article online here: Senior Westpac executive says gold`s bull run appears to have ended - GOLD NEWS - | The world's premier mining and mining investment website Mineweb

The MasterMetals Blog

Friedland resigns as part of new Rio, Ivanhoe financing deal - MINING FINANCE / INVESTMENT - Mineweb

Friedland is out. What does that mean for the stock going forward? See the full story online here: Friedland resigns as part of new Rio, Ivanhoe financing deal - MINING FINANCE / INVESTMENT - | The world's premier mining and mining investment website Mineweb

The MasterMetals Blog

April 18, 2012

Gold investment statistics commentary Investment World #Gold Council

Volatilty and price movement in gold this quarter.

The key themes for gold during Q1 2012 were:
Rising price in all major currencies with yen investors
benefiting most:Gold prices climbed 8.6% QoQ in US$/oz on the London PM fix, despite a number of headwinds. Though the quarterly return was almost twice the ten-year average of 4.5%, similar gains in gold were seen across all major currencies with yen investors seeing a gain of 16.1% in local currency terms.
Positive volatility for gold in stark contrast to negative volatility for commodities:
While gold's price volatility was elevated, it continued to exhibit a positive (upside) skew. Gold's annualised volatility measured 20.4% during Q1, registering 21.8% on the upside and only 16.4% on the downside.
Long-term correlation of gold to equities remains statistically insignificant:
Despite higher than average short-term correlations to equities and other risk assets during the quarter, gold's performance remains independent of risk asset performance. Regression analysis shows that gold may, at times, move in the same direction as equities, but these moves are almost always related to other macro factors, such as, gold's negative correlation to the US dollar.
Chart 1: Performance of gold (US$/oz) price and volatility during Q1 2012

Chart 1: Performance of gold (US$/oz) price and volatility during Q1 2012 - click to enlarge

Gold’s long-term price trend is maintained during Q1 2012

Gold investment statistics commentary Investment World Gold Council

The MasterMetals Blog

Conservatively positive for #gold in 2012 - Murenbeeld - GOLD ANALYSIS - | The world's premier mining and mining investment website Mineweb


Conservatively positive for gold in 2012 - Murenbeeld

In his annual presentation at the European Gold Forum in Zurich, Martin Murenbeeld remains positive on the prospects for the gold price this year, but remains more conservative than the out and out gold bulls.
Author: Lawrence Williams
Posted:  Wednesday , 18 Apr 2012 

ZURICH (Mineweb) -

Economist Dr Martin Murenbeeld of Canada's Dundee Wealth Management uses the Denver Gold Group's European Gold Forum in Zurich as the annual platform for detailing his gold forecasts for the year and his reasoning behind his predictions and has come up with some pretty accurate results in the past.  He utilises three pricing scenarios and attaches an estimated weighting to each to come up with final weighted averages.  Last year he was close enough, erring slightly on the conservative side on the predicted annual average of $1476 as against an actual figure of $1571, but was much closer on his year end forecast of $1546 as against an actual figure of $1530 - a 1% discrepancy -certainly an excusable margin of error!

For the current year, although remaining bullish on gold - but conservatively so - he cited 10 reasons why he feels gold will continue its upwards path, albeit perhaps at a slower rate during the current year given that a bit of momentum seems to have fallen out of the market.  In truth, the 10 reasons are mostly those expressed by many others in these pages over the year and basically boil down to the undoubted fact that global financial difficulties remain with us and ultimately will impact the gold market in a positive manner.  His ten key points are: Monetary reflation; Global imbalances, Excessive Forex reserves; Central Banks buying, not selling; Gold not being in anywhere near bubble territory yet; Mine supply only rising marginally; Continuing investment demand; Commodity cycle having years to run; Current geopolitical environment; Inflation in emerging markets.

In many of these points he was very much in agreement with other presenters at the event who were also looking at the overall environment for gold - Philip Klapwijk of GFMS and Ross Norman of Sharps Pixley - who both emphasised some of the same specific points and who also took a relatively conservative, but positive, view of where gold is headed this year.  In general the view at the conference from the economic analysts is that last year's retracement from the yellow metal's high point at the beginning of September was far from unusual in a long bull run - indeed there have been a couple of bigger retracements experienced in gold's recent strong performance - and that it is now in a period of consolidation before moving higher later in the year.  But no-one expects gold's upwards moves ahead necessarily to be smooth.

While Murenbeeld pointed to some bearish possibilities too, he largely discounted these and came up with his three pricing scenarios for the remainder of the year ahead.  The weighted average of these forecasts came out at an overall average price forecast for 2012 of $1760, a year-end price of $1833 and an average 2013 price of $1952 - thus anticipating a continuation of the bull trend albeit at a slower rate than the approximate 17% annual increase seen in recent years.

To an extent the conservative price forecasts have largely arisen from recent indications that the U.S. economy may be beginning to pull out of recession, although many feel that the most recent figures may not represent the underlying picture, and the indications from Ben Bernanke that the Fed is perhaps not considering a third bout of Quantitative Easing.  However to the extent that the Fed still seems to be purchasing U.S. treasuries this does suggest that a stealth QE remains under way any way.  Of course European QE continues apace and there are equivalent monetary easing programmes under consideration, or already under way, in a number of countries including China and Japan.

Indeed as Murenbeeld noted towards the end of his presentation, should another ‘Lehman moment' arise and the Fed be forced to commit to an overt QE3 then gold could perform far better than his forecasts suggest.

See the whole story online here:

Conservatively positive for gold in 2012 - Murenbeeld - GOLD ANALYSIS - | The world's premier mining and mining investment website Mineweb

April 16, 2012

Junior miners partly to blame for poor price performance - #Gold JUNIOR #MINING -

Junior miners partly to blame for poor price performance

While there are a number of external factors behind the recent fall in the valuations of junior miners, there is a sense that the companies themselves should bear some of the blame

Author: Geoff Candy
Posted:  Monday , 16 Apr 2012

Junior gold stocks have had a torrid time of things over the last 8 weeks, many of their share prices falling significantly as investors battened down the hatches.

But, while there are a number of significant exogenous factors at work on the sector - from Spanish debt levels to uncertainty about whether or not the US will kick off another round of quantitative easing - there is a sense that the juniors themselves should shoulder some of the blame.

Speaking to Mineweb at the Precious Metals Summit in Geneva, Haywood Securities analyst Joe Mazumdar said that one of the problems facing the sector is that, "you've got probably an oversupply of gold equity right now. There's a lot of exploration, a lot of issuers that are just gold stocks - that's all they do and they want to be gold stocks to get that premium and so now we've got oversupply and the demand has come down."

Astur Gold CEO, Cary Pinkowski agrees, telling Mineweb, "On the junior level, there are just too many companies, it is difficult for the investor to tell what is a good project and a bad project because everyone says they have a good project and great management. Five years ago a million ounce gold deposit was rare, now it is not because they have just reduced the cut off grade and say it is economic but, costs have gone up as well. So, to find the good economic projects is difficult."

Pinkowski believes there should be some consolidation in the sector. Adding, "We have realised that with junior companies, to have one asset is ok but to have two or three is the way to go; tighter management teams, more assets."

In some respects, however, the juniors are in a catch 22 situation right now because while fewer companies with more assets would be potentially more appealing to investors, their share prices are so low that most are reluctant to embark on any M&A activity either as predator or prey.

Indeed, one of the over-riding refrains to come out of the companies Mineweb spoke to at the Precious Metals Summit was the sense that there is money out there, it is just sitting on the sidelines and waiting for a reason to come back in.

Joseph Foster, of Van Eck Gold Funds told Mineweb, "I think the market is waiting for a reason to buy gold stocks. The valuations are very attractive with these stocks and we just need a catalyst - another rise in the gold price, a move towards new highs would definitely do the trick."

Another part of this problem is that investors in the current climate, faced with a veritable smorgasbord of opportunities from which to choose is that they are becoming much picker.

As Foster says, "We'd like to see these companies do a better job of meeting expectations, and if they can meet or even better, beat expectations, I think that would go a long way towards attracting investors to the equities."

According to Mazumdar, "Before, equity investors potentially wouldn't have asked all the same questions that debt holders would; now they're asking all the same questions because it's all related - if I finance you for equity, where are you going to get the rest of the money."

He adds, "When I was looking at a report on exploration from 2011 about 2010 - a lot of the exploration funding was done by juniors but less grassroots, more advanced exploration to build resource, because that's what the investors wanted. Now you're building up a lot of companies with this resource base, but with 1) no skillset to build it, 2) not finance to build it and so now what... There are a lot of companies out there that are in that ‘now what' sort of situation."

See the article online here: Junior miners partly to blame for poor price performance - JUNIOR MINING - | The world's premier mining and mining investment website Mineweb

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April 3, 2012

British Columbia to spend C$25bn improving Asian trading opportunities - POLITICAL ECONOMY - | The world's premier mining and mining investment website Mineweb

British Columbia to spend C$25bn improving Asian trading opportunities

BC's Premier announced Monday the launch of the Pacific Gateway Transportation Strategy which aims to expand the Canadian mining exports to Asia

Author: Dorothy Kosich
Posted:  Tuesday , 03 Apr 2012

British Columbia Premier Christy Clark Monday launched the new Pacific Gateway Transportation Strategy 2012-2020 to expand international trade in coal, potash, minerals, forest products, grain, container traffic and growth in air travel.

The strategy targets Cdn$25 billion in new public and private sector investment needed to meet demand, in addition to $22 billion already committed since 2005.

"We have a once-in-a-generation opportunity to take advantage of the fastest growing economy in history," Clark said. "Asia is right at our doorstep-our ports are closer than anywhere else in North America. Our government is making sure we can get our goods to market as efficiently and quickly as possible and this strategy is a huge part of that plan."

For instance, Teck has invested more than $1 billion and hired an additional 1.000 people in British Columbia to expand its steelmaking coal, copper and zinc operations. "We're investing to meet growing demand, particularly in Asia, for the products we produce," said Teck CEO Don Lindsay. "Working with the B.C. government and the other Pacific Gateway partners, we're creating opportunities for equipment operators, trades people and professionals across the province."

Neptune Terminals' strategic investments have resulted in record terminal exports of potash and steelmaking coal, a 20% job increase at terminals, "and additions to come as we complete our expansions," said Neptune Bulk Terminals (Canada) President, James Belsheim.

The strategy will increase major road and rail capacity, rural resource transportation capacity, bulk and container terminal capacity at B.C. ports and air passenger and cargo capacity to meet projected growth through 2020.

So far, about $12 billion worth of projects have been completed. $10 billion in projects are now underway including expansion of the Trans-Canada Highway to four lanes from Kamloops to the Alberta border and Kicking Horse Pass. The highway is a main route for movement of east-west goods to B.C. ports.

Going forward, $25 billion in additional investment is planned. CN and Canadian Pacific plan to invest $2.8 billion to increase capacity on rail mainlines.

Private sector investment of between $300 million and $1.1 billion will expand coal terminal capacity in Vancouver and Prince Rupert, while up to $60 million has been committed to expand metal and mineral terminal capacity in Northwest B.C. and Vancouver.

Private sector investments of up to $700 million will be used to develop additional potash terminal capacity.

"We are building on our world-class transportation network to support the growth of exports that create new jobs and opportunities in B.C.," said Transportation and Infrastructure Minister Blair Lekstrom. "Our vision is to make B.C. the preferred choice for Asian-Pacific Trade and secure a great economic future for British Columbians."

See the article online here: British Columbia to spend C$25bn improving Asian trading opportunities - POLITICAL ECONOMY - | The world's premier mining and mining investment website Mineweb

The MasterMetals Blog

April 2, 2012

Chalco Agrees to Buy SouthGobi Stake to Gain Coal Mines (1)

(BN) Chalco Agrees to Buy SouthGobi Stake to Gain Coal Mines (1)


Chalco Agrees to Buy SouthGobi Stake to Gain Coal Mines (1)
2012-04-02 11:05:28.628 GMT

(Updates with comment from SouthGobi CEO in eighth

By Michelle Yun
April 2 (Bloomberg) -- Aluminum Corp. of China Ltd., the nation's biggest producer of the metal, agreed to buy Ivanhoe Mines Ltd.'s stake in SouthGobi Resources Ltd. to gain control of Mongolian coal production as it expands into other commodities and diversifies revenue.
Ivanhoe will tender its 57.6 percent stake in SouthGobi into Chalco's C$925 million ($928 million) offer to buy as much as 60 percent of the company at C$8.48 a share, 28 percent more than its close in Toronto on March 30, according to a statement today from Chalco, as the Chinese company is known. Should shareholders tender more than 60 percent of the stock, the amount sold by Ivanhoe may be reduced, according to a statement from Ivanhoe.
Control of SouthGobi will give Chalco coal sales from the Ovoot Tolgoi mine to bolster revenue as aluminum prices decline.
Ivanhoe, founded by billionaire Robert Friedland, said in February it was encouraged by progress of talks as it sought to sell some assets to finance the Oyu Tolgoi copper and gold project.
"It marks the most significant step by a long way for Chalco in terms of executing this diversification strategy it's been talking about for a number of years," said Andrew Driscoll, Hong Kong-based head of resources research at CLSA Asia-Pacific Markets.
The aluminum producer has also agreed to purchase as much as 100 percent of SouthGobi's production for as many as two years, Chalco said. Its shares fell 1.9 percent to HK$3.67 at the close in Hong Kong. SouthGobi surged 18.2 percent to close at HK$60.50.

Offer Premium

Chalco's offer is priced at 36 percent more than SouthGobi's weighted average price over the past 20 days, compared with a 21 percent premium for similar-sized completed basic materials deals over the past five years, according to data compiled by Bloomberg.
Chalco will use its own cash, bank loans or a combination of both for the purchase, it said. It will retain nine of SouthGobi's senior staff, including Chief Executive Officer Alexander Molyneux for 12 months from their employment termination under consultant agreements to facilitate transition, Chalco said.
"It's almost certainly going to happen as long as the regulatory approvals happen and go forward," Molyneux said on Bloomberg Television's "On the Move Asia" program today after the announcement. "You might say there's a lot more synergy having a Chinese state-owned enterprise as a major shareholder as opposed to having a very well-known exploration resource development company."
The acquisition is Chalco's biggest since it agreed to pay
$1.35 billion for a stake in Rio Tinto Group's Simandou iron ore project in Guine in July 2010. The offer is expected to open on or before July 5 and shareholders will have not less than 35 days to accept the offer, according to Chalco's statement.
SouthGobi was among the assets that Ivanhoe's advisers had contacted potential investors about last year after receiving unsolicited expressions of interest, Ivanhoe said in September.
"Depending upon the uptake of the offer by other SouthGobi shareholders, Ivanhoe could receive up to approximately C$889 million from the sale of all of its shares in SouthGobi,"
Ivanhoe said in its statement today. "A sale of 60 percent of its current holding would realize proceeds of approximately
C$533 million."

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--Editors: Andrew Hobbs, Peter Langan

To contact the reporters on this story:
Michelle Yun at +852-2977-4643 or