mining


DENVER GOLD FORUM
$5,000/oz gold? Rob McEwen says it’s coming in 2014 or 2015
Über gold promoter Rob McEwen has also developed a taste for silver mining.
Author: Dorothy Kosich
RENO, NV -
When über mining investor Rob McEwen makes predictions on gold prices or appears to have developed an interest in silver mines, retail investors heed his clarion call and place their bets that the gold price is about to soar.
In a presentation to the Denver Gold Group on U.S. Gold Monday, McEwen was somewhat subdued as he only briefly mentioned he thought gold could hit $5,000 an ounce before the end of the gold cycle As this reporter scrambled for a clarification of his remarks in a brief interview, McEwen stuck by his prognostication, forecasting the end of the gold cycle would occur either in 2014 or 2015.
McEwen is so dedicated to the power of gold, he told his audience of fund managers, analysts, investment bankers and miners that he personally owns 21% of U.S. Gold. In comparison most major mining CEOs own a mere pittance.
He is steadfast in his belief that the Cortez Trend-which hosts Barrick’s massive Cortez Hills gold project-will yield millions of gold ounces for his U.S. Gold company.
But, McEwen also has developed a fondness for silver, albeit he lacks the same passion for the precious metal as he feels for gold.
He declared to his audience Monday that “El Gallo, Mexico is becoming one of the world’s great silver discoveries. ” With a 540,000-acre position in what he called “highly mineralized lands,” McEwen’s U.S. Gold is spending $10 million in exploration over 12 months. He anticipates an initial resource and heap leach test during the first quarter of 2010.
Though he told Mineweb his interest in silver has been stimulated more by individual mining properties rather than a newfound passion for silver, McEwen has also become active in Minera Andes, which he says owns 49% of the world’s ninth largest silver mine, San Jose in Argentina. By 2010, McEwen forecasts that San Jose will have 7.5 million ounces of silver and 95,000 ounces of gold. He also predicts the operating cash costs will go lower than the 29% drop to $4.99/oz achieved in the first quarter of this year,
He also believes that Minera Andes’ Los Azules project is “one of the largest undeveloped copper discoveries in the world. And in keeping with his philosophy as Minera’s Chairman and CEO, McEwen owns 33% of the company’s shares.
As the years roll by, McEwen’s legendary penchant for marketing to the max remains intact as he offered audience members trillion dollar notes as an impromptu raffle prize at the conclusion of his talk.
Dear Friend of GATA and Gold:
National Geographic‘s January issue has what has been the usual “global” sort of article about gold mining, written by Brook Larmer, accompanied by stunning photographs taken by Randy Olson, and predictably enough headlined “The Real Price of Gold.” The article’s thrust is that gold mining is a dirty business with enormous costs to the environment and human health and that these costs are borne largely by poor people.

This is, of course, only half the story, and National Geographic should tell the other half:

— That the environmental and health costs of gold mining can be remediated, but only with a higher price for the product.

— That government price-suppression schemes not only impede the development of poor countries with natural resources but also push the less-regulated gold mining there into the irresponsible practices cited in the National Geographic article.

— That gold is money and that the alternative form of money — government-issued currency without any direct convertibility into gold, silver, or some other valuable commodity — has infinitely greater environmental and human costs that somehow never get inventoried, including much easier resort to war, such as the U.S. invasion of Iraq, which probably would not have been undertaken if it had had to have been financed by direct taxation rather than borrowing and printing; overconsumption; and the general expropriation of the producing class by the financial class.

You can find the National Geographic article on “The Real Price of GoldHERE

Let’s see how long we have to wait for the colorful magazine spread on “The Real Price of Fiat Currency and Central Banking”

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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By Frank Tang
Reuters
Thursday, September 25, 2008

NEW YORK — The U.S Mint said Thursday it was temporarily suspending sales of American Buffalo 24-karat gold one-ounce bullion coins because strong demand depleted its inventory.

“Demand has exceeded supply for American Buffalo 24-karat gold one-ounce bullion coins, and our inventories have been depleted. We are, therefore, temporarily suspending sales of these coins,” the Mint said in a memorandum to authorized American Buffalo dealers.

The Mint also told dealers that it would work to build up its inventory to resume sales shortly.

In mid-August, a shortage of American Eagle one-ounce gold coins due to “unprecedented” demand had also forced the U.S. Mint to temporarily suspend sales of the popular coins.

The Mint said Thursday it would continue to supply the American Eagle 22-karat gold one-ounce and American Eagle silver bullion coins on an allocation basis to coin dealers.

In addition, the half-ounce, quarter-ounce, and 1-10th ounce American Eagle gold coins and American Eagle platinum were also available, the Mint said.

Coin dealers from the United States to Canada have recently reported a surge in buying of bullion coins and other gold products as troubles in the financial markets prompted people to seek a safe haven in precious metals.

On Thursday, the U.S. gold contract for December delivery ended down $13 or 1.5 percent at $882 an ounce on the COMEX division of the NYMEX, while spot gold traded at $873 an ounce.

Bullion hit an all-time high of $1,030.80 an ounce on March 17.

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…and a snippet from BullionVault:

“…Longer-term, says Roland Duss – co-chief investment officer at Gonet & Cie, the Swiss private bank based in Geneva – the price of Gold Bullion could reach $2,000 or more per ounce over the next decade.

“We are still in a commodities bull market,” Duss told London’s CityWire news service on Wednesday.

“The growth in demand from emerging economies is such that it will exceed supply, so we are bound to have price hikes for another five to 10 years.”

Duss says 95% of additional demand for energy, metals and other raw materials is coming from emerging economies. Developed OECD countries simply don’t have an impact.

“On the supply side [in contrast] there is a lot of destruction. For metals, there are too many cost increases, which means that some mines are not going to be there.”

World gold mining output peaked in 2003. Ian Henderson, head of J.P.Morgan’s $5bn Natural Resources Fund, believes we need “a sustained price level of over $1,200 an ounce before we see any significant new mine build.”

The CEO of world No.4 gold miner Gold Fields, Nick Holland, says his company’s assets would require a market-price of $2,000 and above “if you tried to build these mines today” to justify the investment.

“Already at cost levels between $600-700 an ounce,” notes the latest Precious Metals Weekly from Wolfgang Wrzesniok-Rossbach at Heraeus – the German refining group – “many mines will find it difficult to continue production.

“This should put a check on fresh supply. At lower prices, the feasibility of processing ‘scrap gold’ [meaning old jewelry and electronic bonding wire] will also be severely tested – and at the same time it should significantly encourage jewelry demand.

“As such, in the next 15 months, we do not see the gold price falling for any extended period of time below these levels”

***

MineWeb chief Lawrence Williams speculates that central banks may attempt major sales of gold to support the fading U.S. dollar — an acknowledgement that central banks undertake to sell gold not to diversify their reserves or relieve themselves of the expense of storing a supposedly dead asset, long their cover stories, but to manipulate the currency and government bond markets…

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Possibility of big Central Bank gold sales to help try and stabilise the dollar

The prospect of new Central Bank sales of gold to try and contribute to dollar stabilisation is likely to be under consideration. Will this happen, and, if it does, what will be the likely effect on the gold market?

Author: Lawrence Williams
Posted: Thursday , 17 Jul 2008
LONDON –

Following various pronouncements in Washington and elsewhere there seems little doubt that moves are being discussed to try and halt the greenback’s seemingly ever-spiralling downturn now that the Fed is beginning to concern itself with inflation. This may just mean US interventions in the markets to buy dollars, but could also be the prelude to some concerted sales of gold into the market as higher gold prices are themselves seen as an indication of dollar devaluation (which indeed they are) and so the feeling among some Central Bankers is that a gold sell-off will in turn help stabilise the dollar.

This may well occur. Be warned. There are enough gold disbelievers in the sector to make it happen. But one suspects it will be of little use in the medium to long term. The U.S.’s economic malaise cannot be halted by selling the best indicator out there of dollar weakness. The weakness goes far deeper structurally into the American dream which up until the second half of last year had been boosted by virtually unlimited credit, a significant proportion of which was being taken up by those who could least afford to repay it in a downturn. Unfortunately the American dream has de facto become a global dream as the world’s economic powerhouse has aggressively exported its ideas of capitalism (behind the smokescreen of democracy) all around the world – sometimes by force where it has seen its economic interests and security threatened.

The banking and investment sector – particularly the former – has to take a huge amount of responsibility for what has occurred. Traditionally an ultra-cautious sector, this caution seems to have been thrown to the winds in the name of ever increasing profits as enormous sums of money are moved around and where even a fraction of a percentage turn on which is worth billions of dollars. Perhaps the problem is that investment banking these days is largely populated by the young and overly-aggressive, dazzled by riches beyond belief and corresponding greed, with corporate bonuses running into sums which seem to exceed the GDP of some countries! Most of all they are those who have no prior experience of a really serious downturn.

The culture is alarming to the person in the street who only earns a tiny fraction of the kinds of sums available to those with few scruples and mega incomes and who may look down with disdain on those who have not selected careers which can generate such extremes of wealth.

Perhaps this is a little unfair and is only painting a picture of the extremes in the sector. There are still plenty of traditional conservative bankers around who are probably just as horrified at some of those they have to rub shoulders with and whose warnings have gone unheeded. They are taking command now and some of their cautions in dealings with fellow banks are perhaps at the root of the credit crunch which means that almost all risk elements have to be removed before loans – corporate and personal – are approved.

But there is still a debt mountain out there and credit card issuers have to be the next area where some financial collapses have to be on the cards as more and more individuals default on credit card debts – a worrying parallel with the mortgage defaulters who have dominated the analyses so far and who have precipitated runs on banks and savings and loans (building societies to us Brits).

But we digress. Will the bankers sell gold to try and reverse the dollar slide? And if they do will it make any serious difference to the gold price, or the dollar, anyway? Short term negative gold price impacts may result, but overall the fundamentals behind the dollar weakness cannot be undone by such an artificial procedure. Indeed if such sales are made openly, and the gold price is not significantly affected, which has to be a possibility, then the dollar may be seen as being even weaker still.

What is likely to be the dollar saviour in terms of currencies like the Euro and perhaps the Yen, is that the US has very successfully exported many of the problems it is currently facing to the Euro zone and elsewhere and only now is the true impact of the financial crisis in these areas beginning to sink in. We are seeing housing price collapses in some European countries – the trigger behind the US downturn – and as the US economy begins to stabilise, which it probably will, the downturn is beginning to get under way elsewhere and other economies will weaken. That may be what truly halts the dollar slide.

Another factor which could impact the dollar positively, and gold negatively, is a bursting of the oil price bubble. Gold has moved up with the oil price and it may move down with it too until it eventually is likely to decouple and find its own way. This has already been seen in the past couple of days and something we warned about here only a couple of weeks ago. See: Is gold too low compared with oil – or is it that oil is just too high?

Although Paul Walker of GFMS recently told Moneyweb/Mineweb his research group is not seeing a decline in gold production worldwide, it is not seeing an increase either which would seem strange given the big rise in the gold price over the last few years. Indeed it would appear that the gold mining sector is facing difficult times and if the returns are not there we are going to see production decline anyway. It’s a fine balance between price and production and with bankers being over-cautious with their loans we are certainly going to see a number of what would have seemed to be probable new gold mine developments and expansions curtailed, deferred or postponed indefinitely.

This alone would help mitigate the impact of any Central Bank sales, while the investment take-up of physical gold through ETFs has become an almost overnight phenomenon. It is again becoming respectable (and much easier) to hold a direct investment in gold bullion and with more and more institutions beginning to recognise the value of holding gold as part of a balanced portfolio there is likely to continue to be growth in this sector of the market.

So, should Central Banks sell gold to try and help stabilise the dollar, apart from some short term dips around the gold sales themselves, it is likely the markets will absorb whatever is thrown at them. This would be either through a decline in production and continuing increasing investment demand, not to mention some likely purchases by some central banks which a) believe in gold and b) feel they need to hold more of their foreign exchange reserves in some currency other than the US dollar – and in this respect gold definitely counts as a currency.

While there may be a negative impact in that gold might not move upwards as fast as some would predict, longer term fundamentals look good for gold and with economic instability likely to continue for some time one has to remain positive on the price.

In a 60 page Special Report on gold, Austria’s Erste Bank analyst, Robert Stoeferl reckons that in spite of the recent correction the yellow metal “remains in a secular bull market and that the positive fundamental outlook will not change a lot over the remainder of the year and beyond.

With seemingly massive support seen around the $850 level, the report suggests that the price will remain in the $850-$950 band during the summer months with the $1000 mark being clearly passed again later in the year. Passing $1200 is seen as the first target and in the long run the price is seen as passing the inflation-adjusted all-time high of $2,300.

As if to place emphasis on the remonetisation aspect of gold, Stoeferle concludes his report with the J.P. Morgan Satement to the U.S. Congress in 1913 – “Gold is money, and nothing else“.

To access the 60 page Gold Report, please click HERE

Gold: the precious laggard that will hit $2,000

By Ian Williams, Charteris Treasury Portfolio Managers
Last Updated: 4:25pm BST 04/07/2008

In 1999 when oil was $10 a barrel, I suggested that the price would ride fivefold to $50 a barrel in real terms over the next few years. This forecast was dismissed with incredulity at the time. Almost 10 years later with the price over $130 a barrel, my original forecast turned out to be rather timid – with mainstream commentators now forecasting $200 a barrel.

My forecast was based on an analysis of long term future supply-demand trends, combined with a study of ultra-long term commodity cycles.

What is striking about ultra-long term commodity cycles is how seemingly unrelated commodities appear to rise and fall together.

Price data shows that around 1999-2000, virtually every single commodity hit a significant low before turning up sharply. Nickel hit a low before proceeding to rise ten-fold in the period up to April 2007. Similarly copper also bottomed around this time before an eight-fold rise up to May 2006. Copper is once again challenging its all-time high and looks set to move into new high ground.

The reasons for this stellar performance are now well-trodden – the emergence of China, India and Russia – as major consumers of scarce and in some cases increasingly finite resources.

This commodity super-cycle phenomenon shows no signs of abating. But to profit from it, investors need an understanding of the leads and lags within the commodity family to avoid being caught buying a particular commodity at a short-term peak in its price. I would be very wary about buying oil assets at present – simply because the price of oil in relationship to other raw materials is becoming very stretched….CLICK FOR MORE

Gold Getting Scarce
MoneyNews
Wednesday, April 2, 2008

PERTH — Discovering the next mother lode is not as easy as it used to be, the world’s second-largest gold producer, Newmont Mining Corp (NEM.N: Quote, Profile, Research) said on Wednesday, as it plans to spend nearly a quarter of a billion dollars on exploration this year.

There has been shrinking number of gold finds above five million ounces, Newmont’s general manager for Australia Adriaan van Kersen told a gold mining conference in Perth.

“Newmont depletes its reserves at 10 ounces a minute and needs a replacement discovery rate of near 14 ounces a minute,” van Kersen said.

Newmont counts about 86 million ounces of gold in reserves at its mines worldwide and has earmarked between $220-230 million for exploration in 2008, he said.

“Exploration is not only becoming tougher and riskier but more expensive and it is becoming more and more difficult to find gold in any surface quantity,” van Kersen said.

Van Kersen, cited Newmont’s lack of a big discovery recently as indicative of the plight of the gold industry as the whole.

Only 4 percent of gold deposits in the world hold more than five million ounces in reserves, he said.

“As an industry, we are spending more and more on exploration but even in a high demand and high price environment, and more drilling happening, the gold sector is not discovering the same ounces as it used to,” van Kersen said.

At the same time, costs for everything from buying trucks and fuel to hiring workers, up 24 percent in the last year, are biting into operations, he said.

Newmont plans to mine between 5.1 million and 5.4 million ounces of gold this year, he said.

World No. 1 gold miner Barrick Gold Corp said recently it held 124.6 million ounces in reserve as of December 31, 2007 and would spend $200 million exploration in 2008.

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