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Friday
May072010

Gold Prices Forecasts for 2010 as per The London Bullion Market Association

The London Bullion Market Association Logo.jpg


LBMA Logo

Team,

If you haven't already seen this table you might want to pit your wits against the some of the best in the industry in terms of forecasting gold prices for the year of 2010. The first chart tabulates the people and which organisation they represent and the second chart shows their predictions for the year, the high, the low and the average price for gold.

List of Forecasters for gold prices 07 May 2010.jpg


To go to The London Bullion Market Association please click here and to go to the table please follow this link.

Forecasts for gold prices 07 May 2010.jpg

Have a truly sparkling weekend.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

Over on our sister site, silver-prices.net we have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.




















Thursday
May062010

Gold Prices Rock Up

Gold Chart  07 May 2010.jpg


Every picture tells a story and for gold bugs the above chart is a pretty nice one.

Gold prices jumped $30.00 bursting through the $1200/oz level as the broader markets hit the wall with the DOW dropping 997 points before recovering to close 347 points down.

Silver prices gained 13 points to trade at $17.63/oz and the gold bugs index, the HUI put on 7 points. It looks as though the stocks have been caught by the surprise as gold prices rocked up and left the stocks waiting at the station, tomorrow may see them playing catch up should gold prices hold at these levels. Oil also dropped around 3%.

The reasons vary for the fall in the DOW from a glitch in the system, programmed selling, etc, however, we tend to lean towards the fear factor emanating out of the financial mess that is now eurozone. Can the Greeks meet the austerity measures being imposed on them? In a word NO! And this situation is spreading like a virus, which in posh circles is now called contagion. One thing that it has brought home to us is that the European administrators are incapable of acting with speed and have dithered with this dilemma. They are now victims of their own inability to act and are no longer in the driving seat, in that they are reactive instead of being proactive and putting some of these problems to bed. The worst of this sovereign debt fiasco is not behind us, it is still to come so hold on to your hard hats and your hard assets.


The break up of the European Union is not far away.

Meanwhile back at the ranch our recently held competition has been won. On the 23rd February 2010 we posed this question: Will gold prices reach $1000/oz or $1200/oz first?

This competition was loosely based on the challenge made by Peter Grandich when we wrote:

We are conducting a poll on where gold will go next, to $1000/oz or to $1200/oz.

As you are probably aware Peter Grandich has recently doubled his bet with this release:

Posted by Peter Grandich at 8:25 PM on Sunday, February 21st, 2010
Hello Perma Bears!!!  I’m doubling my wager to $100,000 and its good for the next 72 hours.
I hope they can learn of my offer before they head for the hills.
 
Go Gold!


Well, our readership voted 75% in favour of gold prices reaching $1200/oz first and so they are the victors, which is pleasing to us as it shows that our readership is well and truly switched on to just what is going on, well done to you, the team.

Stay on your toes as things are really warming up and opportunities will arrive thick and fast so we must be wide awake and ready to move once they have been identified.

As for today, well have a truly sparkling time.





Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

Over on our sister site, silver-prices.net we have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.













Wednesday
May052010

Doug Casey on the Russian Bear


(Interviewed by Louis James, Conversation with Casey)

L: Doug, I'm in Belarus this week, a pit stop to help some of my students with their various business ideas. I'm struggling with my Russian, but getting along. And that has me thinking about Russia's role on the global economic stage. I know this is something you've given some thought to… What do you think? Is Putin out to take over the world? What do investors need to keep in mind?

Doug: Well, the first thing to keep in mind is that any time you're talking about a large group of people, I think it's about 150 million in Russia's case, it's hard to generalize. Russia makes headlines, being one of the BRIC countries (Brazil, Russia, India, China), which are "emerging" economies seen as a sort of wave of the future. But I have to say that Russia doesn't really belong in this group. We may lose some Russian readers by my saying this, but while Russia has a lot of resources and should have a bright future, I don't think it will.

L: Whoa, I didn't see that one coming. Why?

Doug: There are many reasons, and it's hard to tease out which one is the most important driver, but taking it all together, including Russia's history and resulting culture, I just don't see that Russia has The Right Stuff. That culture, which is transmitted explicitly, verbally, and more subtly, attitudinally, is one shaped by centuries of state oppression. It has strong streaks of isolationism, collectivism, and brutal authority. Russia's long history is full of sadness, fear, and violence. It's been relatively calm for the last few years, but that's a drop in the ocean of Russian tears.

L: Hm. They suffered under the Tsars, threw them out, only to get a greater tyranny in the form of a totalitarian socialist regime, which actively suppressed the kind of individual creative virtues that make for success on the global economic stage. I guess I could see that as a cultural handicap…

Doug: Think of it this way – if you keep mowing down the tallest poppies in a field of poppies, pretty soon you don't get many tall poppies. It's a not a survival trait to stand out in a field like that. It would be politically incorrect to suggest that various cultures have encouraged and suppressed different character traits to such a degree that there are now subtle genetic differences between people of different cultures – but I think it's possible.

It's like Darwin's finches in the Galapagos. And breeds like the poodle, dachshund, and shar-pei – which are all pretty different – that evolved in historic times. Vive la difference. Thousands of years hence, when mankind has spread throughout the galaxy, we'll undoubtedly evolve into different species. Just as there were numerous different hominids on the planet until homo sapiens sapiens decisively started taking over perhaps 40,000 years ago.

L: Well, I could imagine decades of brutal selection under the Soviets resulting in a greater incidence of timidity and acquiescence among Muscovites, and a greater tendency towards independent, rebellious thinking among the survivors in Siberia and other places the Soviets sent troublemakers they didn't kill outright.

Doug: I don't think there are any statistics on this sort of thing, but that's my general impression. I first went to Russia in 1976, which was right at the peak of the Cold War. At the time, the whole place had the feel of an armed military camp. I've been back three or four times since then, and there have been great improvements, at least in the big cities.

But once you get out of Moscow and St. Petersburg, it's really still pretty backward. Shiny new buildings in the capital don't alter the fact that most of the people across the country live in towns and villages that are aging, run-down, depressing, and poor. It seems like most of the smart, upwardly mobile Russians have emigrated long ago. Or at least moved to Moscow.

To make things worse, there's a big problem in that culture with alcohol abuse, especially among the men.

L: I've seen that in my travels in Eastern Europe, but you're such a bon vivant, it's a bit surprising to hear you pointing to this as an important variable.

Doug: You've seen me drink, but you've never seen me drunk.

L: That's true.

Doug: I'm far from a prude, but many of these people don't just drink too much, they drink way too much. I'm not talking about having a great party; I'm talking about alcoholism, which is a real fault. And chronic, widespread alcoholism is a serious social problem.

L: Sure enough.

Doug: And that's not all. The population seems to have fallen into a terminal decline curve. It takes about 2.2 children per female to maintain a stable population, and in Russia, the birth ratio is down to something like 1.2 - 1.4. This is not just a decline; the population is actually collapsing. That's true of most of Europe, Japan, and other relatively advanced countries as well, so it's not just a Russian problem, but when you add this factor to Russia's other problems – like a high death rate – the future looks considerably less bright.

L: That fits, I guess… I just hadn't thought of it. I'm told that in Belarus, I would be considered a "Hero Father" by the state and eligible for extra benefits because I have five children. Minsk isn't Moscow, and I find Belarusians to be quite different from Russians, especially on moral issues, but Belarus still has a very state-controlled economy – perhaps the most Soviet-style economy left in the world today.

It's hard to create new businesses here and most young people simply don't see many opportunities. So they put off having children… If that's the culture in Russia too, I can definitely see the problem.

Doug: I don't know how much the population collapse relates to perceived lack of opportunity, the alcoholism, a remnant culture of fear from the Soviet era, or any number of other variables, but it's a very serious problem.

L: And this isn't a problem for which one can look to history for solutions. Effective, widespread birth control is a recent innovation. And in the agrarian economies we've known for most of history, having a lot of children was a good thing; they helped on the farm.

Doug: That's right, kids were financial assets then. They were your pension plan if you had enough that some might survive to look after you, if you were lucky enough to reach old age. In an industrial, urbanized setting, they are expensive liabilities – at least from an economic point of view. And in the modern world, the state is supposed to steal money from everyone else to take care of you in your old age. So, if people feel less economic necessity and, perhaps subtly or not so subtly, that their world is not the nice place they want to have kids in, it's hardly surprising to see birth rates falling across the developed world.

L: Hm. As you say, this doesn't apply to Russia alone. I wonder why we don't hear more about this problem?

Doug: Well, since Paul Ehrlich wrote his famous book, The Population Bomb, and perhaps farther back, since Malthus' paradigm-shifting 1798 Essay on the Principle of Population, overpopulation has been the bugaboo of intellectuals around the world.

L: Radical environmentalists have taken up the cause as well; too many people making too much trash. We're going to bury the rain forests in Styrofoam cups – if we don't chop them down first to make toilet paper.

Doug: Hysteria is the ruling psychological state in today's world. But population decline is something intellectuals approve of because, I believe, they basically hate people. The chattering classes want to see, but don't particularly want to report on, terminal population decline in the developed world. That might lead to the conclusion humans aren't going to destroy the planet after all. It's the elephant in the room nobody's talking about.

And, back to Russia, the other big issue there is that it's what's left of an empire, put together by force, encompassing many very different people from very different predecessor cultures. They lost the Baltic states and southeastern Europe when the Soviet Union broke up, but whatever the odds are for Chechen independence, and so forth, there's still a lot of stress within the Russian Federation. Just a few days ago, there were those bombings in the Moscow subway, perpetrated, I understand, by widows of slain Muslim rebels. This sort of thing is likely to continue and push the country towards further disintegration, one way or another.

L: This is not how I expected this conversation to go. When I asked you, I thought we'd talk about Putin's KGB past and his probable desire to be king of the world, etc. But with all these structural issues, what you're saying is that it almost doesn't matter who's at the helm. Russia's in trouble going forward, regardless.

Doug: Another echo of Rome, perhaps. After a certain point – arguably about 180 A.D., and certainly by the 4th century – it wouldn't have mattered who the emperor was; larger trends were going to take it down.

Demographics are as important, or even more important, than any other megatrend you can point to. They are, for example, the factor that will ultimately result in the demise of Israel. One of the more shrewd things said by a leading political figure in recent history was Yasser Arafat's comment that the most potent weapon the people of Palestine had was the womb of the Palestinian woman. And he's right, because, as in most advanced cultures, the rich, urban Israelites aren't reproducing quickly, but the Palestinians are. There's really not much they can do to overcome the demographic trend; it is what it is.

The same is true for the Russians, who also have a rapidly growing Muslim population, among other rapidly growing minorities.  Demographic trends are huge factors that carry a lot of momentum; they change slowly over long periods of time and rarely respond to the feeble efforts of officialdom. The whole world is going to look very different in 100 years – even if we don't first go through something resembling World War III, which I think we will.

L: Sounds like "the dismal science" should be demographics, not economics.

Doug: Right. But no one will talk about this. It's partly because the chattering class doesn't want to admit that it was wrong about the population bomb. Just as the same people won't ever own up to the scam of global warming. But also because the places where there is explosive population growth are among the poorest populations, which goes beyond social and cultural to racial implications. And it's a total no-no to even talk about that, as people like Charles Murray and Philip Rushton have discovered.

L: But facts are facts, and the current trends indicate that the average skin color will be much darker in each succeeding generation for the foreseeable future.

Doug: That's just the way it is. During the 19th century, it seemed the whites were going to take over the world. Now non-Europeans are in the ascendant. Some people don't want to talk about it, but I don't see that as being a problem in any way. The chances are good that races on this planet will meld together. Who knows? Maybe people will speciate on different bases in the future.

L: Not being particularly white has only mattered a few times in my life, but I'm glad it never mattered at Casey Research.

Doug: You know I form my relationships based on what people's values, ethics, spirituality, etc., are. And these things have absolutely nothing to do with race.

L: Okay, so back to Russia. I visited Moscow two summers ago, and I came to two very strong impressions of the people I met. First, they were very hungry for better lives. Everyone everywhere wants a better life, but apathy and sloth are also common human traits. Russians impress me as highly motivated and intensely focused on getting ahead. That's normally a very good thing.

But their traditional ethics were paved over by the Soviets, and whatever collectivist ethics they tried to instill have blown away on the wind with the Soviet empire itself, leaving most of the people with no moral compass. Many are turning to religion again, but the old Orthodox Church doesn't seem to have much impact on moral choices made by modern Russians. This is not a good thing; ambitious people with few ethical constraints on what they are willing to do to get ahead can be very dangerous.

Added together, this gives me an impression that feels like new barbarians at the gates of Rome. It's no surprise to me that people fear new Russian military expansion, Russian hackers, Russian pirates, etc.

Doug: That's a good analogy, but these barbarians are highly educated barbarians. They're using computers and mathematics, rather than clubs and swords. On the other hand, I'm not sure they are much more thoughtful than the barbarians of the Middle Ages.

Another thing about barbarians; they don't manufacture much. Production is mostly in natural resources, which is certainly the case with Russia. They do sell some high-tech spin-offs of old defense industry research and development, but that's nothing compared to the oil and gas exports, minerals, and other resources. There's a lot of truth to the joke that in places like Russia the chief import is stolen cars, and the chief export is prostitutes. Did you see anything else going on there?

L: That was pretty much it. Gazprom rules. Lukoil is coming to America (I'm sure we'll have more to say on the implications of all this in our energy newsletters). Some people see a new world order in which Russia supplies the resources, Chindia the labor and manufacturing, and the West the high-tech applications. I suspect that may be giving the West too much credit and perhaps the Chinese too little, but the Russians should prosper regardless, with all the resources they have to deliver to a hungry world, shouldn't they?

Doug: Well, there are groupings within the Russian Federation that may do well, but for all the reasons we cited above, I think the whole cobbled-together society won't last. But even among those groups, abundant natural resources may not be a blessing. When such riches fall into the laps of people who don't have a culture for putting them to productive use, the kleptocrats in charge get rich while the masses continue to suffer.

Look at Nigeria, for example, or Saudi Arabia, for that matter. Oil is the worst thing that's ever happened to Venezuela. Without a culture that respects individual rights and productivity, upholds the sanctity of contracts, honors honest effort and achievement, etc., inequality and misery just get worse. They'd be better off if all anyone had in such a society were sand and rocks. And, in fact, that's why Hong Kong and Japan, to name just two places, prospered. They had nothing, except what they created.

Actually, it was the commodities boom back in the 1970s that helped make it seem at the time that communism would triumph. There were high metals prices, high oil prices, and that was stuff they had. What little capital this accumulated was directed into their space and military programs, which made them look like a formidable power. But it didn't last, of course. Commodities cycled down and knocked the last leg out from under their stool.

L: What about the barbarian propensity for plunder? Do you see no danger of renewed Russian militarism?

Doug: No. The chances of Russia going on the march in some sort of new effort aimed at conquest are almost zero. They have enough on their plates, they're busting apart at the seams as it is.

Another thing: backward cultures don't usually understand the importance of sustaining capital, and the Russians were no exception. Most of their submarines and other military hardware turned into junk shortly after the collapse of the Soviet Union.

Putin may want to be a new tsar. That sort of thing is just natural for the kind of sociopath who rises to the top in such political environments. But I don't think it will go anywhere. For all the reasons we've been discussing, the place is on a one-way slope downhill.
This gets back to our starting point: Russia doesn't belong among the BRIC countries. It's simply not headed in the same direction.

L: Well, whether you like China or not, it's certainly true that they have a powerful, almost Yankee can-do attitude that gets things done in a third of the time it takes to do them in the West. And they certainly don't have a collapsing population there, nor in India, nor in Brazil.

Doug: Right, and the workers in those places will work two jobs, will save for the future, and so forth. None of those productive Confucian values exist in Russia. You mentioned that they are focused on getting ahead – but that's not the same thing as having a work ethic and an appreciation for the importance of accumulating capital through greater production than consumption. The Chinese will eventually take over Siberia, demographically.

L: So… In spite of the great wealth of resources Russia has waiting to be developed, you're not investing in Russia. Not even a high-stakes speculation?

Doug: No, I'm not interested in investing in Russia. Maybe at some point in the future, when the place has really melted down and the stock market gets very, very cheap, it might be worth a punt. But I don't see the country as a growth environment in which you can count on steady average growth rates. There might be occasional hit-and-run speculative opportunities, but good ones will be rare indeed. It's a place to watch, but not one to enter, financially, without great caution.

L: If that changes, I'm sure you'll let readers know in The Casey Report. What might you advise our Russian readers who have not already stopped reading our obviously hateful and slanderous conversation?

Doug: The smart ones will take their education and training and leave. Russia just doesn't have the capital to make the best use of them or provide them with the best opportunities. Most of the capital accumulation seems to flow to the oligarchs, who don't reinvest it in ways that produce more; they just spend it to consume more.

That's why there are these jokes going around about Russians, like the one about Yuri and Boris who go to London. Yuri tells Boris, "Look at this new tie I bought for £1,000." Boris replies: "You should have asked me first; I could have shown you a place where you can get the exact same tie for £2,000!"

Look, I had a friend, an American of Russian background. He decided to go back to the old world and scrambled around for years trying to get into one business or another. It's not easy. I don't want to be negative, but in general, I have to say that trying to make any serious investments in Russia is a mistake. The Russian stock and bond markets are worth watching, but you'd need to dedicate yourself to becoming an expert in them, so you can identify exceptional opportunities – it's like speculating on penny mining stocks, but even riskier.
I'm not really looking to buy in the current global economic environment, but I could be talked into buying and holding select Chinese, Indian, or Brazilian stocks much more easily. Not Russia. They're just hot potatoes, and the country is heading for trouble.
Time to get out of Dodge.

L: Okay then. Noted and logged. Thanks.

Doug: You're welcome. Till next week.

Receive Conversations with Casey fresh off the presses every Wednesday! Just sign up here – nothing is easier or more convenient… and it’s FREE. Click to get started now.





Have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

Over on our sister site, silver-prices.net we have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.













Tuesday
May042010

Kinross Gold Corporation First Quarter Results

Kinross logo 01 March 2010.jpg


First quarter results for Kinross Gold Corporation (KGC) show Margins increase by 26%; revenue up 23%, Adjusted net earnings increase by 38%, the highlights are follows:


Highlights

•  Production(1)  in the first quarter 2010 was 544,134 gold equivalent ounces, an increase of 3% over the same period last year. Consistent with previously stated guidance, the Company remains on track to produce approximately 2.2 million attributable gold equivalent ounces in 2010.  

•  Revenue for the quarter was $657.6 million, compared with $532.7 million in the first quarter of 2009, an increase of 23%. The average realized gold price for the quarter was $1,065 per ounce sold, compared with $897 per ounce sold in Q1 2009, an increase of 19%.

•  Cost of sales per gold equivalent ounce(2) was $461 for Q1, an increase of 10% compared with Q1 2009. Cost of sales per gold ounce on a by-product basis was $417 in Q1. Cost of sales per gold equivalent ounce is expected to be approximately $460 - $490 for the full-year 2010, consistent with previously stated guidance.

•  Kinross' attributable margin per ounce sold(3) was $604 in Q1, a year-over-year increase of 26%.

•  Adjusted operating cash flow(4) in Q1 was $226.3 million, a 5% increase over Q1 2009. Adjusted operating cash flow4 per share in Q1 was $0.32 per share, consistent with the same period last year.

•  Adjusted net earnings(4) were $97.4 million, or $0.14 per share, in Q1, compared with adjusted net earnings of $70.7 million, or $0.10 per share, for the same period last year, an increase of 38%. Reported net earnings were $110.6 million, or $0.16 per share in Q1, compared with reported net earnings of $76.5 million, or $0.11 per share, for Q1 2009.

•  On April 26, 2010, Kinross announced that it had been successful in its bid to acquire control of Underworld Resources Inc. by way of a friendly acquisition. The Company now owns a total of 42,663,059 common shares of Underworld, representing approximately 81.6% of Underworld's common shares on a fully-diluted basis, and plans to acquire the balance during the third quarter.

•  Pursuant to a private placement, Kinross has subscribed for 24 million common shares of Red Back Mining Inc. representing approximately 9.4% of Red Back's issued and outstanding common shares. The subscription price is CDN $25 per common share for an aggregate purchase price of CDN $600 million.


Tye Burt, President and CEO, made the following comments in relation to first quarter 2010 results:

"Kinross had a strong first quarter, with significant year-over-year increases in revenue, margins and adjusted net earnings. We are pleased with the progress being made at our Paracatu expansion plant, as its performance to date in 2010 continues to exceed plan.

"We continue to advance our organic growth projects at existing operations while making good progress at the major development projects. At Fruta del Norte in Ecuador, we have completed an 18,000 metre drilling program ahead of schedule, while at Lobo-Marte, we are advancing our drilling program and permitting activities.


To read the article in full please click here.

Not a lot to add to this news release other than so far so good, so we will watch and see what the market makes of it.



Kinross Gold Corporation trades on the TSX under the symbol of K, and on the NYSE under the symbol of KGC.

Have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

Over on our sister site, silver-prices.net we have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.













Tuesday
May042010

Gold Prices Update 05 May 2010

Gold Euro correlation breaks down 05 May 2010.jpg
Courtesy of the Bullion Weekly

Today we saw the broader markets take a battering with the European Stock Exchanges taking hits and the DOW dropping 225 points, silver lost $0.94 and gold prices were down $10.00 having flirted with $1190/oz earlier in the session.

As we checked out the various news agencies we found that the BBC World Service, Business bulletin used the phrase 'blood bath' in summing up the days activities, a tad strong for them.

The reasons for todays demise would appear to involve some of the following:

Australia intends to introduce a new tax on the mining industry, ouch! The oil spillage in the Gulf of Mexico and the ramifications emanating from this disaster, the Greek Debt crises which appears to be escalating as other countries are drawn into this mess.

This is a short excerpt from the Bullion Weekly:

We noted last week that, while activation of the €45-billion EU/IMF loan package to Greece may offer some temporary respite, the threat of default and further downgrades remained and would continue to undermine eurozone confidence. Indeed, the scale of the issues facing Greece increased over the week after IMF managing director Dominique Strauss-Kahn told German and ECB officials that the beleaguered country would need as much as €120 billion over the next three years, forcing another round of emergency meetings over the weekend at which EU and IMF officials agreed a new €110-billion rescue deal.


The chart above is also courtesy of the Bullion Weekly and depicts the divergence of the Euro and gold prices.

In fact, the only beneficiary today was the US Dollar which rose to 83.299 as investors look for a safe haven to weather this storm.

USD Chart 05 May 2010.jpg

The Sydney Morning Herald had this to say on the proposed new taxes:

The Henry tax review has recommended scrapping the state-based royalty taxes applying to mining projects and replacing them with a uniform national resource rent tax set to raise billions more.

The tax, most likely to be set at 40 per cent, would be modelled on the existing petroleum resource rent tax levied on petroleum products including crude oil and natural gas mined in Commonwealth waters other than the North-West Shelf and the jointly developed area between Australia and East Timor.


Treasury calculations suggest that if the PRRT formula had been applied to resources such as iron ore and coal and to companies including BHP Billiton and Woodside Petroleum over the past three years it would have raised an extra $14 billion.



RTT News noted BHP Billiton's disappointment as follows:

Australian mining giant BHP Billiton Ltd. (BHP: News ,BHP.AX: News , BBL, BLT.L) said Sunday that it is disappointed with the Australian Government's proposal to impose new resource rent tax from July 1, 2012, which will make investments in Australia much less attractive. The proposal to impose 40% resources super profits tax would reportedly see a 19% cut in profits.




No doubt about it we have entered a period of volatility with turbulence in just about every market sector. However, we remain firm believers that both silver and gold and their associated stocks offer a sound basis for financial survival going forward. Australia's mining industry has been dented but not destroyed, however the new tax proposals remind us of the possibility of political intervention, which can happen in any country in the world. The volatility aspect aspect will throw up opportunities for trading options in this sector for those who are on their toes.

Have a good one.


Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

Over on our sister site, silver-prices.net we have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.













Monday
May032010

Agnico-Eagle Mines Limited: Update 04 May 2010

AEM on BNN 04 May 2010.jpg


Agnico-Eagle Mines Limited (AEM) one of our favourite gold producers has seen its stock price trade in a lacklustre way recently, Sean Boyd, CEO, Agnico-Eagle explains the company's mining projects and future prospects.

The recent blip in the stock price is attributed to the fact that the Agnico have built and commissioned five new mines which has resulted in the capital expenditures of around two billion dollars over the last three years. This expenditure has hit the bottom line significantly, however, it now declines to a fraction of what it was, so hopefully we will see the dividends improve as the profits roll in.

The acquisition of Comaplex should be all done and dusted shortly, enabling the company to concentrate on optimizing their mining operations to once again improve the bottom line and also to further explore and expand their properties. The cash costs are forecast to come in at $400/oz, so we have another reason to smile.

Sean also notes that the EFTs have been outperforming the stocks of late, however, he expects that this situation is about to change in favour of the mining industry. This is something that we have wrestled with for some time as the HUI, for instance has not been offering the returns that we believe are necessary for taking such risks which are inherent in the mining industry.

If you can find the time this clip is worth watching on BNN, please click here.

Sean Boyd AEM 04 May 2010.jpg

Now, turning to our recent options trade on Agnico we made the purchase of the MAY 2010 series Call Options at a strike price of $60.00 on Agnico-Eagle Mines Limited, for which we paid a price of $4.64 per contract. These contracts are currently under water at the moment having closed today with the bid at $3.75 and the ask at $3.85 for a loss of around 19.00%.

We made the purchase on the 11th February 2010 when Agnico-Eagle was trading at around $58.00 area, when we purchased both the stock and the Call Options. The stock has rallied a little and then fell back and rallied again to close at $62.79 today. We should note that these contracts expire on 22nd May 2010, so we really need to dispose of these contracts fairly soon. Today was a disappointment as both silver and gold prices trended up but the stocks did not respond. We will look to sell into the next rise hopefully at small profit, if not then will just have to take it on the chin and sell at a loss.

Agnico-Eagle Mines Limited trades on the NYSE under the ticker symbol of AEM and on the Toronto Stock Exchange under the symbol of AEM.TO.

Agnico-Eagle has a market capitalization of $9.84 billion, a 52 week trading range of $43.29 - $74.00, an EPS of 0.54 and rather high P/E ratio of 116.08.

Over on our sister site, silver-prices.net we have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.




Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.


If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


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Sunday
May022010

Greek Austerity for European Aid

Lifesaver 03 May 2010.jpg


The numbers are huge, the lenders are reluctant and the recipients are hostile, just how successful can this proposal be? We turn to the Wall Street Journal for the latest update on the rescue package for Greece:

Euro-zone countries and the International Monetary Fund, seeking to halt a widening European debt crisis that has threatened the stability of the euro, agreed to extend Greece an unprecedented €110 billion ($147 billion) rescue in return for Draconian budget cuts.

Under the three-year agreement announced here late Sunday, Greece would receive €80 billion in loans from other euro-zone members and €30 billion from the IMF. The planned rescue is the largest ever attempted by the IMF and a first for the 16-member euro zone. It still requires final approval from national governments.


So, this package still needs final approval from the individual governments who are expected to front up with the funds, well that could be easier said than done so we will wait and see just what shape the final package takes.

On the other side of this deal are the Greek people who as far as we can ascertain are none to pleased with the proposed austerity package which they will have to live with for years to come.

Greece's major unions, already vocal critics of the IMF, have vowed to take to the streets to protest the austerity measures. "We will start our new struggle with protests on Monday, Tuesday and the strike on Wednesday," said Spyros Papaspyros, president of the public-sector umbrella union ADEDY, referring to a general strike set for Wednesday. "We will fight for as long as it takes against this giant injustice."

However, the current Prime Minister is a supporter of this deal and wants the Greek people to embrace it.

The bailout removes the worry that Greece won't meet its immediate funding needs—€8.5 billion in borrowings due May 19. But it introduces fresh questions, among them whether the country can bear the harsh budget-cutting measures that are the price of the aid.

"We have no other choices and no time," Greek Prime Minister George Papandreou said in a televised speech on Sunday. He vowed that his government won't "allow the country to become bankrupt."

In conclusion the rescue package could be approved by this coming Friday, however, acceptance of it in Greece is another major hurdle to be overcome.

Politicians like it, but they think that big is beautiful and they are not the ones under the gun. We are still of the opinion that Greece should have backed out of the European currency and started again with their own currency, albeit a devalued one.

Watch this space, the fat lady isn't singing yet.

To read the article in full please click here.


Footnote: The US Dollar has opened brightly in Sydney, Australia, this morning and as we write it stands at 82.202, up 0.336 on the US Dollar Index and gold prices were steady at $1178.10/oz.

Got a comment then please add it to this article, all opinions are welcome and

Over on our sister site, silver-prices.net we have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.













Saturday
May012010

The Euro Is Screwed

Gold Prices in EUR oz 02 May 2010.jpg


By Kevin Brekke and David Galland, The Casey Report

On April 22, Eurostat, the statistical arm of the European Union, released figures on EU member states’ government deficits and debt for 2006-2009. The European Commission requires member states to report certain data every April.

The timing of the report’s release could not be more problematic for Greece, which has been in discussions with the IMF and other EU states over possible bailout assistance. In a note to the report, Eurostat expressed reservations about Greece’s accuracy in its numbers from last year, saying:

Eurostat is expressing a reservation on the quality of the data reported by Greece, due to uncertainties on the surplus of social security funds for 2009, on the classification of some public entities and on the recording of off-market swaps. Following completion of the investigations that Eurostat is undertaking on these issues in cooperation with the Greek Statistical Authorities, this could lead to a revision for the year 2009 of the order of 0.3 to 0.5 percentage points of GDP for the deficit and 5 to 7 percentage points of GDP for the debt. [emphasis mine]

If these “reservations” prove correct, it will catapult Greece into the debt-to-GDP leader at 122.1%, leap-frogging Italy, which is currently at 115.8%.

But perhaps most telling is the report’s title, “Euro area and EU27 government deficit at 6.3% and 6.8% of GDP, respectively.” Recall that the EU’s Stability and Growth Pact mandates a budget deficit ceiling of 3.0%, and we see that the 16 euro area members are, in aggregate, in gross violation of the pact. Even more alarming is the rate of change in the aggregate budget deficit figure from 2008 to 2009, growing 230%.

And lastly, the aggregate euro area debt-to-GDP ratio climbed from 66.0% in 2007 to 78.7% in 2009, a stunning rise. If this annual rate of growth continues, the euro area debt-to-GDP ratio will zoom past 100% in two years, a level at which many think it begins to exert significant strain on fiscal budgets and spending.

The report, on the whole, paints a picture of an experiment in currency sharing and cross-border “normalization” of fiscal order that has gone terribly wrong. The old saying that a camel is a horse designed by committee seems to be underway here. It will be amusing to watch into what sort of “animal” the EU morphs in the coming years.

As one would expect on reading news that is less than cheery for the eurozone, the U.S. dollar has been moving up, sending gold lower. So, perversely, you have gold and the euro moving together.

While the current rebound in the dollar may be discomfiting to some gold investors, especially in that gold has been facing headwinds again, in our scenario of a broad-based crisis in the global fiat currencies, the major currencies will come under pressure individually before coming under pressure collectively.

Today, safe-haven seekers reflexively run from the euro to the U.S. dollar, which in turn sends a signal to the trading community to sell gold for no better reason than the historical inverse connection between the dollar and gold. This is only temporary, as you can see in the following chart plotting the euro against gold over the last troubled year.

This is all just part and parcel of the secular trend that will lead to the end of the fiat currency experiment as the world wakes up to the full implications of the institutionalized monetary abuse engendered by a fiat system. As is so clearly evidenced in the drama now playing out in Greece, when a government is forced to solve its debt problem by issuing more debt, the end is nigh.

With the global economy still in the tank, concurrently layering on yet more taxes in order to try and keep the whole mountain of cards from blowing its top like Iceland’s Eyjafjallajökull* volcano will only prove counterproductive in the extreme.

This is no time to be complacent, or cavalier, about your financial affairs. Now is the time to be both cautious and, selectively, opportunistic. Because along with risk, big market moves also bring big opportunities.

And analyzing imminent, big market moves is the forte of David Galland, Doug Casey, and the other editors of The Casey Report. Every month, they investigate economic trends in the making and find the best investment opportunities arising from them. Learn more about their accurate predictions and how you can profit – click here.



Got a comment then please add it to this article, all opinions are welcome and

As a suggestion for those who do want leverage to the precious metals bull, the gold and silver funds together with the careful application of options trades could be a possible solution for you. This way we are exposed to any movement in gold prices which in turn is magnified by the effect of the option. Do remember that loses are also magnified in the same way so its not a strategy for the faint hearted. On the other hand the quality stocks are not performing as anticipated and a non-producing junior stock is a shot in the dark, however, its your money and its your call.


If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.














Friday
Apr302010

Fronteer Developments Group: Sold our Holdings

FRG Chart 01 May 2010.jpg


On Friday we decided to dispose of our position in Fronteer Developments Group (FRG) for an average price of $6.20 per share, taking the cash to sidelines for now. The stock price appears to be running a little ahead of itself at the moment and the divergence between the stock price and the 200dma looks a little too stretched so a breather may follow. We do like this stock very much and hopefully we will be able to re-purchase it at a slightly cheaper price in the not too distant future.

For the record, as stated in our portfolio, Fronteer was originally bought as both a uranium and gold play as FRG owned the lion’s share of Aurora Energy Resources making it a gold/uranium play. On the 24th September 2007 we sold 50% of this stock for an average price of $10.44, banking a profit of 122%. By selling Fronteer now at US$6.20 we are able to lock in a small profit of around 32% with this portion of the purchase as our original purchase was made on the 15 July 2006 at around the $4.70 level, overall Fronteer has been good to us.

Fronteer Development Group Inc., acquired all of the remaining common shares of Aurora Energy Resources Inc. So this investment is well and truly a two pronged attack via both gold and uranium.

We will now place FRG on the Watch List and monitor its progress.

Over on our sister site, silver-prices.net we have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit. We are looking for similar opportunites in the gold space at the moment and will post as soon as we are ready.

Got a comment then please add it to this article, all opinions are welcome and

As a suggestion for those who do want leverage to the precious metals bull, the gold and silver funds together with the careful application of options trades could be a possible solution for you. This way we are exposed to any movement in gold prices which in turn is magnified by the effect of the option. Do remember that loses are also magnified in the same way so its not a strategy for the faint hearted. On the other hand the quality stocks are not performing as anticipated and a non-producing junior stock is a shot in the dark, however, its your money and its your call.


If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.











Thursday
Apr292010

Gold Prices Update 30 April 2010

Bankruptcy 30 April 2010.jpg
Courtesy of www.thepoliticalclass.com


No doubt about it we live in very interesting times as the speed of change does appear to be accelerating right before our very eyes. The European credit based party is coming apart at the seams as Spain gets the thumbs down from the S&P.

The Sydney Morning Herald had this to say:

SPAIN became the third European country in two days to have its bonds downgraded by credit ratings agency Standard & Poor's, as contagion from Greece's debt crisis spread through the euro region.

The risk premium investors demand to hold Spanish bonds surged to the highest in more than a year and the price of insuring Spanish bonds against default reached a record as concerns about Greece's ability to pay its debt spilled over into Spanish and Portuguese markets.

S&P's move on Spain follows downgrades of Portugal and Greece on Tuesday. Greece became the first euro region country rated less than investment grade since the start of the euro.

The growing fear is that the troubles in those two countries - which together compose just 5 per cent of European economic activity - could be a mere sideshow if Spain has difficulty repaying its debt.



We draw your attention to the words a 'mere sideshow' which tells us to head for the bunker or at least to wear a hard hat. The spot light is in the hands of the rating agencies at the moment as the investment community sucks air through its tightly clenched teeth and braces itself for the next bad news hammer to come thundering down. After Spain there is the possibility that Italy could be the one in the firing line and the UK is not looking too clever. Talking of the UK why would any political party want to win the general election in the UK, a poison chalice if ever we saw one. It would appear that the attraction of power is more magnetic than the dangers to ones reputation of taking on such a daunting challenge. Its akin to wanting to be a sea captain on the Titanic, never mind the ship, its the captains cap that counts.

Over in the oil patch WTI crude is trading at $85.32/barrel, the spillage in the Gulf of Mexico now appears to be much larger then first anticipated. Having spent twenty odd years working in the oil space I start to twitch a little when the solution involves burning the oil, lets hope the powers that be can get a grip on this problem and soon.

Fire Fighting the gulf oil slick 30 April 2010.jpg

The latest snippet on this disaster comes from Reuters:

The leak, after a rig leased by BP exploded last week, is spewing five times more oil than previously estimated and heightened fears of severe damage to fisheries, wildlife refuges and tourism in Louisiana, Mississippi, Alabama and Florida.

The U.S. military began mobilizing for a major effort to try to prevent environmental damage to Gulf coast states, notably Louisiana, which is still recovering from the ravages of Hurricane Katrina in 2005.

Louisiana Governor Bobby Jindal warned the slick "threatens the state's natural resources," declared a state of disaster and asked the U.S. Defense Department for funds to deploy up to 6,000 National Guard troops to help clean up.

Janet Neopolitano, head of the Department of Homeland Security, declared it "a spill of national significance," meaning that federal resources from other regions could be used to try to fight it.



The other major player in the global economy is of course the US Dollar, which having jumped on the back of the plight of the Euro is now easing back a tad to trade at 82.04, down from its high of 82.60 yesterday. However, as the rain clouds gather in the euro zone, the dollar, along with gold and silver will be seen as places of safety and a place to run to. Even though the euro story will run and run, sooner or later the spot light will will land on the dollar, which is not a pretty sight. Eventually, the penny will drop and gold prices will push relentlessly higher, a position that we have held since starting this site.

Gold prices 30 April 2010.jpg

A quick look at the above chart captures gold prices on the rise after the close of trading in New York, which hopefully can follow through to the European Stock Exchanges and hit the New York Stock Exchange in a bullish mood.

Finally some good news, over on our sister site, www.silver-prices.net, we have just closed out one our options trades placed on Silver Wheaton with a profit of 106% made in just over two months.

Keep smiling you're a precious metals bug!




Got a comment then please add it to this article, all opinions are welcome and appreciated.


As a suggestion for those who do want leverage to the precious metals bull, the gold and silver funds together with the careful application of options trades could be a possible solution for you. This way we are exposed to any movement in gold prices which in turn is magnified by the effect of the option. Do remember that loses are also magnified in the same way so its not a strategy for the faint hearted. On the other hand the quality stocks are not performing as anticipated and a non-producing junior stock is a shot in the dark, however, its your money and its your call.


If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.