Edelmetalen Terug naar discussie overzicht

Goud en zilver Rockin & Rollin

1. [verwijderd] 14 januari 2006 11:58

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   Posted to the web on: 13 January 2006
   Whither the gold price? Thoughts for 2006 - hold onto your hats
   Ross Norman - www.resourceinvestor.com
   
   
   LONDON - Gold prices and indeed volatility fell for a generation (between 1980 and 2000) and they have subsequently bounced and recovered roughly half that ground over the last five years. It is perhaps tempting, after such a slow and painful decline, for gold analysts and traders now considered mainstream and in the sexier end of the investment world to anxiously call the top of the market too early. A recent poll of leading bullion analysts seems to think so … we don’t.
   
   Perhaps more disconcertingly the market appears to have migrated from something that one could readily measure and weigh according to a fairly reliable set of fundamentals into one where the tide shifts less to natural market forces and more to what may be described as the “madness of crowds”. This brings with it higher degree of forecasting uncertainty and in this article we try to identify some of those features that the new participants to gold may be looking at and its possible impact on the price outlook for the next 12 months.
   
   Broadly one could divide ones thinking into the two distinct areas – those external to the gold market – such as geopolitical tension, inflation, U.S. trade deficits, U.S. dollar outlook and the performance of other investments and indeed commodities – and those internal to the gold market – that is its supply/demand balances. The former is open to wider conjecture and speculation while the latter is reasonably well-defined and know-able – but with some surprises.
   
   The External Factors
   
   As we near the end of 2005 the dollar – like an aging junkie - seems to have found temporary strength through the repeated injection of interest rate rises. The perception amongst many leading economists is that we may be nearing the top end of the rate cycle and such stimuli to the dollar cannot be guaranteed into 2006. Trade data suggests that the U.S. dollar is considerably overvalued and the burgeoning U.S. trade deficit (currently running at over $700bn) is likely to further diminish overseas investors appetite to hold U.S. assets in 2006. The world currently absorbs nearly $4bn of U.S. debt per day through the foreign exchange markets with much of this capital flow taken by (Asian) central banks buying U.S. dollars with their own currencies in order to stop their own currencies from falling and the dollar from rising and hence maintaining their competitive position for exports. This support cannot continue indefinitely.
   
   It is possible that we shall see further revaluations in the Chinese Yuan (the U.S. has a $180bn trade deficit with China) or worse the U.S. may plunge us into a protectionist trade war. The most likely outcome is a continued weakening in the dollar and many analysts suggest that this could be a fall of between 15% and 25%. While this is evidently very bullish for gold, it is perhaps even more so than it at first appears - during Q4 2005 the gold price lost patience with the dollar and managed to rally to 18 year highs despite prevailing dollar strength. Indeed a reversal in the dollar could prompt a significant spike higher into fresh 24 year highs (above $510) and beyond.
   
   The U.S. has also swung from a budget surplus of $255bn in 2000 to a budget deficit of $430bn in 2004. Corporate and personal debt is also running at levels, savings are at record lows and the U.S. debt is at levels not seen since the Great Depression - when GDP contracted sharply.
   
   Problems are compounded not only by rising interest rates to service the debts, but by higher oil prices which are feeding the potential for rising inflation. The key issues are how the U.S. government is likely to deal with these issues ? Renege on promises, cut services, raise taxes or perhaps most likely - print more money - as it has historically. The latter is certainly the most expedient – the lazy mans way out of trouble, with inflation reducing the real value of debt. Almost irrespective of the choices made – gold is likely to be one of the beneficiaries. Certainly the correlation between G-7 money supply growth and gold prices has remained strong and is likely to hold true.
   
   Looking wider - what is your own personal view on the main global political issues – these matter for gold - are North Korea and Iran going to fall in line – are fears over Avian Flu going to evaporate? Is the Bush government foreign policy going to become dovish? I fear not.
   
   And what of oil and rising Asian demand/stagnating supply - are oil prices going to revert to $35/barrel which, assuming the long term gold/oil ratio holds, would mean that gold is fairly valued at $490 – or is a new long term mean oil price closer to $55/$60 per barrel - in which case gold would need to correct itself higher to between $880 and $960 per ounce.
   
   The Internal Factors
   
   If the external factors are supportive, then the internal ones are perhaps more so. Let us look at some of the more pertinent ones.
   
   Global mine supply has peaked and, despite five years of price strength – it is showing very little sign of recovering. Many of the leading producing countries are suffering deeper and declining ore grades partially sustained by the higher gold price. Increasing political involvement in the minerals process in South Africa and in South America are making the ability to open new mines – in the few cases where they do occur – slower and more expensive to bring onstream.
   
   Jewellery has for years provided gold with significant price elasticity – not so now ; rising gold prices might formerly have caused lower jewellery sales coupled with more primary and secondary material comes into the market – correcting the market lower again. A (hitherto) self-balancing gimballed market – now it is different. Record high gold prices in important consuming countries such as India have seen fresh buying on price strength and weaker holders of scrap material will almost certainly now have sold out their long positions.
   
   Equally, producers are less inclined to sell forward into price rallies (because of the small premium that attaches to such a transaction in a low interest rate environment) but perhaps more importantly, because of a gathering consensus that the bull run has legs to run – a self-fuelling argument albeit. The result is that the gold market is becoming perfectly inelastic with buying prompting further buying – a bubble in the making to you and I. The prospects of currency inflation in non-dollar currencies may also be fuelling ambitions to park saving in a readily available commodity priced in dollars that will best protect your savings. Couple with this the recent opening of new trading markets in India, China, Dubai, Pakistan and Vietnam plus the widely available raft of bullion ETFs on stock exchanges around the world and you now have the powerfully explosive situation where there is ready access to an attractively performing to a wider number of participants.
   
   As if this were not enough, the LBMA Conference in Johannesburg in November 2005 saw a number of Central Bankers - who have been erstwhile sellers of gold – looking to possibly increase their holdings. For example, if China and Japan were to adopt the widely held policy of maintaining 15% of the reserve assets in gold then they would still need acquire 17,000 tonnes of gold between them. Currently Asian central b
2. [verwijderd] 14 januari 2006 11:59

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   central banks hold just 1.68% of their assets in gold.
   
   I am running out of space and I have not even had the chance to explore our thinking on the exciting new industrial and chemical applications for gold under development ; nor come to that the theme that the new breed of investment managers who are buying into gold are so much more “buy and hold” than some of the COMEX floor traders who trade gold like a child high on e-numbers, banging the market this way and that.
   
   Normally we do not put our minds to forecasting 2006 until late in December – this article has prompted us to bring it this job forward. Thinking it through it seems there are many reasons to be bullish across the whole front – and very few bearish elements. Our expectation is for gold in the near term to test $500 and possibly the 24 year high of $510 in late 2005 before year end profit-taking kicks in and the market retraces – next year promises something bigger and better. Over the last five years gold has risen 1%, 23%, 22%, 5% and 15% respectively – we see now reason why gold should not repeat the performance of recent years and achieve a rise – outlandish though it may sound - of 20% in 2006 – that would see it between $580 and $600/oz in 12 months time. Time to hang onto your hats because it is going to get bumpy from here on.
3. [verwijderd] 16 januari 2006 09:29

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   The World's Cumulative Gold and Silver Production
   Part 1
   www.gold-eagle.com/editorials_05/zurb...
   David Zurbuchen www.silverinscripture.com
   Free Silver Stock Investment Newsletter
   
   This is the first installment of a planned 7-part series:
   
   Part 1 - The World's Cumulative Silver and Gold Production. Documenting the total amount of silver and gold produced since recorded history.
   
   Part 2 - The Silver Deficit. Documenting the silver production/consumption deficit since 1939.
   
   Part 3 - The Real Silver Deficit. Answering the questions of "How much silver has been consumed by industry?" and "In what potentially marketable accessible forms does it remain?"
   
   Part 4 - The Illogical Performance of the Gold to Silver ratio Since 1848. Looking at silver and gold's production growth since 1848, and contrasting both this measurement and that of their shrinking ratio of comparative rarity to the ever-widening market price ratio between the two.
   
   Part 5 - Why the Depressed Prices? A brief look at the amount of silver stockpiles held in the early 1900's, as well as some interesting quotes dating back several decades that made the bullish case for silver, unwittingly or not.
   
   Part 6 - What Happened in 1980? Did production increase? Did extraordinary amounts of scrap silver come to market? -- What to expect in any future stratospheric price rise.
   
   Part 7 - The Future of Silver. An overview of silver's fundamentals, focusing in on industrial usage and it's growing number of applications. Also included will be my own short and long-term outlook, together with price predictions for 2006 and beyond.
   
   Preface
   
   I'm a relatively new face in the gold and silver bug community, and while attempting to conduct research of my own I found it frustrating that there did not seem to be any sort of comprehensive data source dealing with the subjects of silver and gold production and consumption. In an effort to change this, I've spent several hundred hours this past month perusing through thousands of pages of documents (namely, the Minerals Yearbooks (1933-2004)). It is my hope that this series of articles will serve as reliable reference material for all future writers, researchers, believers and skeptics, saving them all much time and effort better spent breaking new ground in the ever thickening plot behind…
   
   Those precious two, Of gold and silver hue,
   "You missed them too?" "Boy, how they flew!"
   
   Cumulative World Silver Production
   
   Source 1
   
   USGS (United States Geological Survey)
   pubs.usgs.gov/of/2004/1251/2004-1251.pdf
   
   "Total silver production from pre-history till 2001 is estimated by the U.S. Geological Survey (USGS) to have been about 1.26 million metric tons (Mt), one half of which was mined in the last 62 year period." (Page 8)
   
   1.26 Mt x 32,150.75 ounces/ton = 40.51 billion ounces + 2.46 billion
   (production from 2001-2005) = 42.97 billion ounces
   
   Cumulative Silver Production = 42.97 billion ounces
   
   Source 2 (multiple)
   
   The History of Silver (3000BC-1493AD)
   
   Bureau of Mines Minerals Yearbook (1493-1930)
   (Billions of Ounces)
   Bureau of Mines Minerals Yearbook (1931-1993)
   The Silver Institute (1995-2004)
   (millions of ounces)
   *Free World:
   In the years 1939-1991, total world production numbers are not exact in nature due to a lack of data coming from the communist world:
   
   Listed in order of estimated silver production, the Communist World consisted of: U.S.S.R, East Germany, Czechoslovakia, Romania, China, North Korea, and Poland.
   Russia contributed the vast majority of the above group's silver production, mining an estimated 80% of their cumulative total (25M ounces).
   
   Russia's share increased to 38M ounces/year by 1970 (the others remain much the same)
   Russia's share increases to 43M ounces/year by 1975 (the others remain much the same).
   Russia's share increases to 46M ounces/year by 1979 (the others remain much the same).
   Russia's share increases to 48M ounces/year by 1989 (the others remain much the same).
   Beginning in 1991 Russia's share begins to decrease, and in 2004 they produced only 37.9 M ounces.
   All these numbers are added to the above total, I just wanted to make this issue more clear. In truth, I wouldn't be surprised if the above world cumulative total should actually be a little less due to a possible over estimation of communist Russia's mining productivity, as is evidenced by their declining production numbers since the fall of the Berlin Wall in 1991.
   
   Compiling All of the Above Data…
   
   Cumulative Silver Production = 42.62 billion ounces
   
   Source 3 (multiple)
   
   From: "Silver Products and Production". Encyclopedia Britannica, 1974 Ed.
   
   "Total world production up to 1970 was just under 30 billion accumulated ounces." (Let's use 29.5B)
   
   If we add to this the 15.25B ounces that were produced since then (1970-2004) based upon the data from Source 2 then…
   
   Cumulative Silver Production = 44.75 billion ounces
   
   Source 4 (multiple)
   
   The History of Silver (3000BC-1492)
   Continuing from The History of Silver (1493-1900)
   United States Geological Survey (USGS) Data (Link)
   The Silver Institute (1995-2004)
   Compiling All of the Above…
   Cumulative Silver Production = 48.87 billion ounces
   
   Source 5:
   
   Marion Butler estimated in 1999 (Link) that a total of 40.4 Billion ounces of silver had been produced since 3000BC. If you add to this the amount of silver produced between 1999 and 2004 (3.05B) you get…
   Cumulative Silver Production = 43.50 billion ounces
   A Complete Summation of the Silver Data
   Average Cumulative World Silver Production
   = 44.542 billion ounces
   Cumulative World Gold Production
   minerals.usgs.gov/minerals/pubs/usbmm...
   
   Pg. 88 Minerals Yearbook 1942 "Normally, 5 to 10 percent of world gold output is consumed by industry; the remaining 90 to 95 percent is used for monetary purposes."
   
   minerals.usgs.gov/minerals/pubs/commo... (Look under: Mineral Commodity Summary)
   
   "Of the estimated 150,000 tons of all gold ever mined, about 15% is thought to have been lost, used in dissipative industrial uses, or otherwise was unrecoverable or unaccounted for."
   
   Therefore, the average amount of gold consumed by industry or lost = 11.25% based upon the above sources.
   
   Source 1 provides it's own percentage of attrition (i.e. lost gold), so this value of 11.24% will only be used to evaluate Sources 2 and 3.
   Source 1 (multiple):
   www.fgmr.com/gold.htm
   Click HERE to View the Pie Chart
   
   From Above Chart (Link):
   
   "113,571 tonnes historical production less 10,854 total attrition =
   107,717 tonnes." (Year-end 1996)
   
   Below: Production numbers obtained from www.dailyfutures.com/metals/
   
   107,717 tonnes x 32,150.75 ounces/tonne = 3.4632 billion ounces
   
   3.4632 billion ounces + (651.7 million ounces x 90.846%%*) = 4.06 billion ounces
   
   *100% - 9.154% attrition (calculated from the text within the above pie chart).
   
   Cumulative Gold Production = 4.06 billion ounces
   
   Source 2:
   
   www.gold.org/value/markets/supply_dem...
   
   "The best estimates available suggest that the total volume of gold mined over history is approximately 153,000 tonnes, of which around 63% has been mined since 1950. The upward trend in annual production is now leveling off, due not least to a considerable slowdown in exploration spending in the late 1990s. Independent analysts are of the belief that mine output will remai
4. [verwijderd] 17 januari 2006 08:34

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   What Clouds Loom on the Horizon for Precious Metals? By Philip Klapwijik 16 Jan 2006 at 03:46 PM
   
   LONDON (GFMS) -- At the beginning of the year analysts are busy trotting out their forecasts of how it’s going to be this time round. Probably the most comprehensive listing of who thinks what in the precious metals’ world is the annual forecasting exercise sponsored by the LBMA.
   
   Last year’s consensus turned out to be insufficiently bullish right across the precious metals complex. Although I’m still positive towards gold, silver, palladium and platinum – in that order and even from current levels – it worries me that this time around the consensus is likely to be an extremely bullish one. What might go wrong?
   
   The biggest threat is that, far from continuing to grow, the investor inflows that have driven precious metals prices begin to reverse. That could happen for a number of reasons. A key one though is that U.S. short-term interest rates rise much further and for longer than expected. At present there is a widespread view that the Fed will stop at 4.75% or 5.00% and that Ben Bernanke is an “inflation dove.”
   
   But what if U.S. economic growth surprises to the upside this year and Mr. Bernanke and his colleagues therefore have the motive and opportunity to raise rates beyond expected maximum levels? In such case, we could see a gold contango of over 5%. That fact coupled with spot gold prices at a 24-year high could test the nerve of the longs and encourage some enthusiastic short selling; possibly even some producer selling at the margin.
   
   A continued rise in U.S. short-term interest rates could kick away another expected prop for precious metals this year, namely the long-awaited slide in the U.S. dollar. Last year the focus on interest rate differentials, as opposed to the twin deficits story, did a lot to boost the U.S. currency, much to the surprise of many analysts, including myself.
   
   My view remains that inevitably the dollar’s poor fundamentals will reassert themselves but, regarding 2006, this is partly based on U.S. rates topping out and even starting to fall before year-end. If, instead, U.S. rates continue to rise and, especially, at a faster pace than in either the Eurozone or Japan, then it’s not inconceivable that the dollar’s slump is once again postponed. Notwithstanding some occasional de-coupling of gold and the dollar, that could spell trouble for the yellow metal and by extension, the rest of the precious metals complex.
   
   The Devil’s Advocate also has some evidence in favour when looking at precious metals’ supply/demand fundamentals. Taking first the demand side and gold, here GFMS is forecasting a price-induced fall in fabrication demand in the first half. This is mainly due to an expected year-on-year slump in high carat jewellery sales in developing countries, in particular India. And, price-sensitive India could also prove problematic when it comes to silver jewellery demand.
   
   Meanwhile, last year’s star performer in the jewellery firmament, palladium, would be highly vulnerable to any setback in the Chinese market. As for platinum, at prices above $1,000/oz this metal is being forced back into a niche jewellery category.
   
   On the industrial front too questions would be asked about the sustainability of demand for, especially, the white metals. With over 40% of its demand now in industrial uses, silver is more vulnerable than ever to slower global industrial production growth. And as for the PGMs, what if forecasts of increasing auto production turn out to be wide of the mark? That, plus the impact of continued thrifting, could see less PGMs than expected end up in autocatalysts this year.
   
   On the supply side of the metals, gold mine production after a flattish trend in recent years now looks to be starting a period of fairly strong growth. As with the other precious metals, this will not be enough in 2006 alone to create a supply shock but if investors start to perceive that the outlook for mine production has changed, then that alone could be a big negative for prices. Supply from above-ground stocks may also be an issue this year, at least for gold, silver and palladium.
   
   GFMS are expecting some reduction in official sector gold sales in the first half, mainly due to some moderate buying from outside the Central Bank Gold Agreement. Though, what if this does not materialise and, instead, other sellers emerge to take advantage of $500-plus gold? In silver too, we could see a higher than expected level of government sales if prices remain closer to $10 than $6/oz. And, finally, in palladium, there are large stockpiles in both Russia and Switzerland that could come into play at the right price.
   
   In conclusion, the supply/demand risks cited above are material ones but on balance are likely to be tempered by, for example, demand gradually adjusting to higher prices or countervailing buying emerging on price dips. Sentiment, after all, remains very positive and setbacks to precious metals prices – this year at least – are more likely to attract bargain hunters (both investors and end-users) than to signal a general rush for the exits by existing longs. This is particularly likely to be the case if, as I expect, both U.S. short-term interest rates and the U.S. dollar decline before the year is out.
   
   So, in spite of some clouds on the horizon, the bull market in precious metals looks set to continue in 2006.
   
   Philip Klapwijik is Chairman of GFMS.
   
   
   © Copyright 2006, Resource Investor.
   Printed via the AbsolPublisher content management system.
   
   
5. [verwijderd] 17 januari 2006 09:06

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   wat denk je Gung, voorlopig maar weer even afscheid nemen van de turbo's long op de edelmetalen. of is het nu nog genoeg sentiment gedreven?
   grt roos
6. [verwijderd] 17 januari 2006 17:37

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   Beste Roos 2000,
   
   Ik ben geen Turbo voorspeller maar ik verwacht nog steeds dat Goud En zilver nog aanzienlijk kunnen stijgen alleen wannner blijft natuurlijk altijd de hamvraag. Zoals ik al eerder heb vermeld zit er in beide metalen altijd een behoorlijke voltiliteit
   (understatement). Dus let altijd goed op wat voor serie je neemt mbt het uitstoppen. Niet iedereen werkt realtime en/of is daytrader dus dan wellicht beter minder hefboom en wat meer veiligheid inbouwen tegen de te verwachten mogelijke uitslagen qua volatiliteit naar beneden toe. Ga er voor het gemaak vanuit dat de fans van centraal geleide economie helemaal niet blij zijn met goud op dit nivo boven de $ 550.
   
   Succes
   
   GH
   
   

   quote:

   roos 2000 schreef:

   wat denk je Gung, voorlopig maar weer even afscheid nemen van de turbo's long op de edelmetalen. of is het nu nog genoeg sentiment gedreven?
   grt roos
   

7. [verwijderd] 17 januari 2006 21:59

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   cnn besteedt vandaag/vanavond in worldbusiness today ook aandacht aan goud.
8. [verwijderd] 18 januari 2006 15:30

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   How to Value a Mining Stock January 16, 2006
   I received an interesting question about company valuations from one of my newsletter subscribers that I thought I would address as a Commentary. It is a multi-part question that will take more than one Commentary to address; this week is part one: Valuing Mining Stocks.
   
   Mining is a finite business. Mineral deposits contain a certain amount of ore and when that ore is mined out the deposit is depleted, no matter what you do or wish.
   
   That is in stark contrast to say, an auto parts manufacturer, who can adapt to new demands and specification changes and (hopefully) stay in business for many decades. When you value an auto parts company, you can compare the company's price to earnings, price to cash flow, operating margin and net profit margin (among other things) to the company's peers to assess whether the stock in question is relatively cheap, or relatively expensive. You can also get a sense of whether the stock is cheap or expensive in an absolute sense by looking at the book value per share and comparing things like the profit margin and dividend rate to prevailing interest rates. But, embedded in all this (except book value per share) is the implicit assumption that the earnings and cash flow are for all intents and purposes infinite. When you are dealing with a business that can be reasonably expected to continue in a similar fashion for many decades, earnings per share, cash flow per share, dividend rate, etc. are meaningful. That is not the case with mining.
   
   Take a hypothetical mining company that has only one mine as an example. Let us assume that mine is going to produce for another five years before the ore will be depleted. Now, let us say that the company's price to earnings ratio is ten. A hypothetical auto parts manufacturer also has a price to earnings ratio of ten. Based on just this one metric, we cannot differentiate between the two stocks. Let us also assume that the prevailing ten-year interest rate is five percent.
   
   This means that you can invest your money in a ten-year bond and earn five percent per year while taking relatively little risk (other than the risk of interest rates rising, which could negatively impact all the investments under consideration and is therefore not considered).
   
   The auto parts manufacturer has a price to earnings ratio of ten. That means for every dollar's worth of stock you buy, you expect to earn ten cents, or ten percent, in earnings. It does not really matter for our purposes whether those earnings are retained by the company or paid out as a dividend since, either way, the earnings accrue to the benefit of shareholders. Furthermore, you can reasonably assume that the auto parts manufacturer is going to be in business for several more decades and, because you have done lots of due diligence, you can also assume that the future earnings are likely to be the same as the current earnings. So, if you buy the auto parts stock, you will earn ten percent per year as opposed to five percent on your bonds. The auto parts stock is probably riskier than a bond; however, if you can make twice as much money it might be tempting.
   
   Then you look at the mining stock and notice that it, too, has a price to earnings ratio of ten and, therefore, you can also make ten percent a year if you bought that stock. But you would be wrong. The mining company's mine only has a five-year life ahead of it. So, if it has a price to earnings ratio of ten it means that for every dollar of stock you buy you get ten cents in earnings. But the earnings are only going to last another five years, so your total earnings per dollar of cost will only be fifty cents -- half of what you paid for the stock -- and then the mine is depleted. That's why comparing a mining stock to other investment opportunities on the basis of price to earnings, price to cash flow, or dividend yield is complete nonsense. It is just as futile to compare mining stocks to each other based on these metrics because mining companies have different mine lives in their operations.
   
   The only reasonable way to evaluate a mining company is to look at the net present value of the potential future cash flow, discounted at an appropriate discount rate. You have to take into account not just the cash flow that the mine(s) is generating, but also sustaining capital costs (including future exploration and development costs) associated with keeping the mine in production. Assuming you can derive a suitable cash flow model for each mine that a company owns you can then calculate the net present value of future cash flow by using an appropriate discount rate to represent the geological, political, social and financial risks. If you sum all the net present values together, add any other assets on the balance sheet and subtract any debt, you will arrive at the net asset value per share. In a rational world you would expect to pay no more for a mining stock than its net asset value per share -- how do you expect to make money if you consistently pay more for stocks than what they are worth? But, in the real world, mining stocks almost always trade for more than the net asset value of their constituent mines, and for a good reason.
   
   Mining stocks also offer leverage to commodity prices. Take a gold mining company as an example. Assume we have a company that mines gold for a total cost of $400 an ounce, and let us pretend the gold price is $500 an ounce. The net present value of the mine would be calculated based on the $100 margin. If the gold price increases by 20% to $600 an ounce the net present value of the mine will double, since the margin would now be $200 an ounce. Thus the value of the company increased five times more than the increase in the gold price. Most people buy mining stocks because of this leverage.
   
   What should be immediately evident is that if you pay more for mining stocks than what they are worth, on the speculation that the price of the underlying commodity will increase, you are merely gambling on the commodity price. Fortunately there is a way to quantify the premium that one should pay for a mining stock to incorporate the leverage it has to the underlying commodity price. There is a formula called the Black-Scholes Model that can be used to calculate the "option" value of a mining stock. What should be done is to calculate the discounted net present value of the all the company's mines and then add the "option value" of the mines as calculated by the Black Sholes formula to obtain a more realistic asset value per share. By adding the optionality of mining shares to the net present value of the mines themselves we can account for the fact that mining shares trade at a premium to their net asset value because of their leverage to the underlying commodities.
   
   If you calculate the net asset value of a mining stock as described above you will get a result that can be used to compare different mining companies to each other, and mining companies to investments in other sectors. Unfortunately, very few mining analysts employ the Black Sholes model to calculate mining net asset values, so for most people buying mining stocks really comes down to blind speculation on commodity prices.
   
   Next week we will look at exploration companies, which are much more subjective to analyze than mining companies.
   
   Paul van Eeden
   
   P.S. I may in future stop publishing these commentaries on Kitco so if yo
9. [verwijderd] 19 januari 2006 08:22

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   Matthew Turner: Virtual Metals, London
   Belinda Anderson '19-JAN-06 06:00'
   
   MINEWEB: Matthew Turner is an analyst at Virtual Metals, and is on the line from London. Matthew, we’ve seen the gold price running like a scalded cat in the past few weeks and months, and then, all of a sudden, a $20 correction in the space of 24-odd hours. Is that something that you expected to see happening?
   
   MATTHEW TURNER: I think we did, because you have to understand this price decline in the context of the huge increase we’ve seen since September. I think we’ve seen a $130/oz increase since the start of September, and today’s price, although as you say is $20 an ounce lower, is still much higher than it was at the start of say December. So really, markets don’t go up and up and up. They do correct occasionally, and I think this is what today’s movement was.
   
   MINEWEB: How far further could it correct?
   
   MATTHEW TURNER: If [indistinct] and we think it will probably go higher from here. But I really think we need to understand how fast it has risen, and a larger correction is certainly possible.
   
   MINEWEB: Just perhaps let’s go into some of the factors as to why it has risen to the extent that it has?
   
   MATTHEW TURNER: I think there are sort of two separate things. First, the fundamentals of the market did improve throughout 2004 and 2005, and investors have bought gold on that basis – for example, jewellery was very strong, we know that central bank sales have been constrained, we also know that there has generally been a move towards commodities. But I think perhaps the last few months were more speculative flows in investment, partly based on the fundamentals, but also partly perhaps based on hopeful rumours that may not be true – for example, the hope that the Chinese Central Bank may buy gold, or any of the other central banks.
   
   MINEWEB: What’s your view in terms of the impact that could have on gold, if they do start buying gold as an alternative?
   
   MATTHEW TURNER: We don’t think they will. We think the volumes of gold they need to buy will be so large that it would really not be possible for the gold market to supply the gold without the price shooting up so high that would, we think, leave the Chinese Central Bank with a problem in terms of how to actually sell it again. So we don’t think that will happen, although their foreign exchange is so large you can’t rule a small gold purchase out.
   
   MINEWEB: What about investment demand? You spoke about some of the fundamentals and obviously jewellery is the big one for gold. But investment demand has been driving the price as well. What’s the outlook for that?
   
   MATTHEW TURNER: Yes, I think certainly investment demand has been very important. The gold exchange-traded funds, of which there is in one in South Africa, but mainly the one in America, have been growing in size throughout the last quarter 2004 – and this year I think the American one added nearly 30 tons. This is clearly proper investment money. There is also of course the Comex and Tocom markets. And so far, I think this investment [indistinct] has to be in the context of other flows into other sort of non-standard markets, such as emerging market equities and even perhaps the Nikkei index. That’s maybe why we saw the correction which followed the big decline on the Nikkei.
   
   MINEWEB: Going back to the jewellery front and the prices, surely consumers aren’t happy to pay the high prices that we have seen gold rising to? At what point do you think jewellers will come back into the market?
   
   MATTHEW TURNER: Well, this is the major concern. I mean, we follow quite closely the level of Indian imports and, as you know, India is the largest single gold jewellery market. And these seem to be running about one-third the level that they usually are, and one-fifth of the level that were at the start of 2005. The big question of course is, is it just consumers postponing their consumption and then they will buy again when the price steadies, or are consumers switching their consumption to other products? Now, as the price of gold has rallied over the last two years, each time it’s gone up quickly there has been a pause, and then the buying has come back in. We’ve heard some evidence in the Middle East that consumers are switching to diamonds, for instance. However, most of the traders we spoke to, did think that $500 an ounce, for example, would be a level where jewellers would start buying again.
   
   MINEWEB: You mentioned that you do think the price is going to carry on up after this correction. What’s your long-term view on the price of gold?
   
   MATTHEW TURNER: We think it will go higher in the short term. We are somewhat more pessimistic for the medium term, because of the fundamental movements – partly the jewellery demand, also the lack of central bank buying and the continued central bank selling. And also, the other thing that is concerning us is we’ve heard that this price spike has led to a large amount of scrap being returned in the form of jewellery, and therefore we think this [indistinct] demand fundamentals of the market are changing and this could take the price down in the medium term.
   
   MINEWEB: Matthew Turner is from Virtual Metals in London. He’s quite cautious – he’s probably the most cautious analyst we’ve had on gold, David?
   
   DAVID SHAPIRO: I suppose it pays to bring some caution into the market. Everybody is talking about $600, $700, but after the run-up that we’ve had, I think there’s a breathing space that needs to gather momentum again. I understand it’s run very hard. Look, they’re all bullish, even in the short term. I think very few analysts would actually call a major pull-back. And I was wondering what might cause a major fall in that gold market, what would really cause it, because nothing seems to be on the horizon that would actually cause a complete collapse of the gold price.
10. [verwijderd] 20 januari 2006 09:19

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    Gold supply expected to contract in first half of 2006 Rhona O'Connell '19-JAN-06 12:00'N (Mineweb.com) -- In its second update of the Gold Survey 2005, GFMS, the London-based precious metals consultancy, estimates that net official sales during 2005 were at the highest level on record, but more significantly that net sales will drop substantially in the first half of 2006.
    
    Elsewhere on the supply side mine production was up by 30 tonnes while de-hedging amounted to 195 tonnes, meaning that net mine supply actually increased by 263 tonnes to 2,299 tonnes against 2,036 tonnes. Scrap return was up slightly, at 840 tonnes against 834 tonnes in 2004. This takes total net supply from these components for 2005 to 3,802 tonnes from 3,341 tonnes in 2004.
    
    The high level of net central bank sales was a function of the higher sales volume coming through under the second Central Bank Gold Agreement, along with the collapse of gross purchases plus some opportunistic sales from outside the CBGA.
    
    GFMS does say that it is possible that the estimate of 663 tonnes for 2005 may be revised downwards as there is evidence of some purchases from outside the CBGA in the latter part of the year, but these are as yet unconfirmed. The fact that the market was able to absorb a 185 tonne increase in central bank sales during a time of rising prices is testament to the strength of demand from fabrication and investment over much of the year.
    
    In addition, the group believes that the smaller level of sales in the second half of the year (240 tonnes against 423 tonnes) was supportive of the price and certainly contributed to the rally of the last few months of the year.
    
    Gross sales from non-CBGA countries in 2005 remained essentially flat, while gross purchases collapsed. Looking forward, GFMS expects gross non-CBGA sales to decline and gross purchases to increase as the “anti-gold” sentiment that has been pervading the sector in recent years appears to have moderated. This is a result of the weakening of the US dollar and a more aggressive US foreign policy that has made some developing nations wary of holding too much of their reserves in US instruments, along with the improved performance of both gold and alternative investments in general.
    
    Gross sales are estimated at 677 tonnes with France the biggest seller at 144 tonnes through to November, followed by the Netherlands with 76 tonnes over the same period. Switzerland has now completed its sales programme, while Spain, Portugal, Belgium, Sweden, Germany and Austria were all sellers at a smaller scale. In addition the European Central Bank sold 47 tonnes of its own reserves. Outside the CBGA the largest declared sale came from the Philippines.
    
    Gross purchases were substantially down during 2005 against 2004, reflecting the fact that Argentina had been a sizeable buyer in 2004 but not last year. Gross purchases were only 14 tonnes, coming in the main from Mongolia, Kazakhstan and Belarus, while other nations, largely in the developing sector, bought small amounts.
    
    Official sector lending continued to decline and with lease rates remaining at unprofitably low levels there is an increasing tendency for central bankers to withdraw metal that they have on deposit and some have left the lending market altogether. As far as lease rates are concerned, this withdrawal of metal has been overpowered by increasing supplies of liquidity from investors’ long positions continued producer dehedging and rates, accordingly, remain low.
    
    Net dehedging itself last year (the sixth consecutive year of dehedging) was much slower than in 2004, with the delta-adjusted hedge book contracting by 195 tonnes. This actually reflects a return to more sustainable levels after the extreme reductions of 2002 and 2004 in each year as a result of corporate activity with non-hedgers acquiring hedgers, along with corporate failure and the consequent forced unwinding of hedge books, plus some shifts in hedging policy, notably Barrick’s adoption of a zero-hedge policy.
    
    Dehedging in 2005 was more or less equally weighted across the two halves of the year, with 92 tonnes in the first half and 102 tonnes in the second. The composition of the book was broadly unchanged at the end of the year with forwards and loans comprising 70% of total, vanilla options 27% and non-vanillas 3%. GFMS is not expecting the composition to change much in 2006 – subject to any major book restructuring by Barrick. The survey carries an assessment of Barrick’s bid for Placer Dome.
    
    The top de-hedgers in 2005 were Placer and Newcrest, which accounted for 23% (33 tonnes) and 21% (30.2 tonnes) respectively, resulting largely from delivery into existing positions as they fell due. GFMS also estimates that there were roughly 20 tonnes of fresh hedging in the nine months to September from a small number of companies in a combination of project finance and price protection.
    
    Finally on the physical supply side, GFMS reports that scrap supplies rose only slightly in 2005 despite higher prices in almost all currencies. The flow of scrap into the Indian market actually fell by 12% and this is thought largely to be due to the rapid adjustment of price expectations (there were frequent reports on-the-ground of purchases increase in as prices rose in the expectation of more increases to come). In addition, local scrap dealers reported that the average weight of metal being sold back fell markedly last year. In both East Asia and the Middle East the picture was mixed, resulting in a modest increase in scrap overall, although patterns changed over the course of the year. In Europe the overall return increased, but here the picture is skewed. Apart from a boost in metal returned by Italian fabricators selling unsold inventory, along with higher supplies from Italian pawnbrokers, scrap return declined.
    
    GFMS thus reports a 461 tonnes increase in net supplies from the physical sector in 2005 against 2004. For the first half of 2006, supply calculated on the same basis (i.e. mine production net of hedging, scrap and net official sector sales) is expected to be lower than in the first half of 2005, largely as a result of reduced net official sector sales.
    
11. [verwijderd] 25 januari 2006 11:40

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    Mines in decline, small ones not enough - Mike Schroder, Omam
    
    In an interview on Radio 2000 @ 18:00 on Tuesday, 24 January 2006
    [miningmx.com] -- THE rapid decline of large, mature gold mines is one of the reasons behind the current improvement in the gold price, said Mike Schroder, who is head of equity research at Old Mutual Asset Management.
    
    “Gold output levels are down in South Africa, in the States, in Australia and in Canada. This is because the big mineral deposits are very mature and therefore declining fast," Schroder said.
    
    "There are smaller ones coming up but they are not enough.” Schroder was talking on the Moneyweb Power Hour, a week nightly business radio show broadcast on Radio 2000.
    
    There are several other reasons for the rise in the precious metals price, said Schroder.
    
    “At the same time there is a lack of projects and a scarcity of mining equipment, such as tyres, and of course there is the energy crisis.”
    
    Schroder was bullish about the gold price.
    
    “There is a new angle and that is speculative demand. Commodities and especially gold are gaining favour. There is a lot of appetite. We have heard some estimates of $80 million going into commodity funds of which most will go to oil but some will go to gold.”
    
    “The outlook for gold is improving and that makes us more bullish,” said Schroder.
12. [verwijderd] 26 januari 2006 07:35

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    Barclays' Silver ETF Takes One Giant Leap for Bull-kind By Jon A. Nones 25 Jan 2006 at 04:08 PM
    
    St. LOUIS (ResourceInvestor.com) -- After months of waiting, wondering and anticipating, Barclays proposed silver ETF, iShares Silver Trust, officially made some headway at the U.S. Securities and Exchange Commission (SEC) late last night – and silver bulls took notice. With no word since its submission in June, the SEC today advanced the silver ETF one step forward.
    
    March silver finished up 28.2 cents, or 3.1%, at $9.51 an ounce, but traded as high as $9.54 - a level not seen since mid-1987. Resource Investor contacted Christine Hudacko, advisor at Barclays Global Investors, for the scoop.
    
    “The SEC has made one decision on the product,” she said.
    
    According to Hudacko, the SEC informed Barclays last night that it had approved the AMEX listing of iShares Silver Trust and initiated the 21-day public comment period.
    
    However, Hudacko made it clear that this does not mean the silver ETF has been approved or indicate that the SEC has established any sort of timeline.
    
    “This is indicative of movement at the SEC, but we are not at a point where a launch date can be determined,” she said, reiterating that there is no time limit for this process.
    
    The next step, Hudacko said, will entail answering questions submitted by the SEC about the product.
    
    “The SEC will either have questions about the product or they will reach their conclusion,” she said.
    
    Hudacko previously told Resource Investor that “it’s a slow process, and even when you’re going through the process, it’s hard to guess.” But she concluded today by saying that once Barclays gets the word, it will release the product ASAP.
    
    Not so fast, says the Silver Users Association (SUA).
    
    Executive Director Paul Miller told RI today that the SUA has plans to fully utilize this 21-day public comment period to get its point across to the SEC – and the point is ‘no go.’
    
    “We are going to produce a statement for the SEC,” he confirmed, but could not supply a date or give any information in advance.
    
    To recap, the SUA represents the interests of companies that make, sell and distribute products and services related to silver. The Association’s members process 80% of all silver used in the United States.
    
    Miller previously told Resource Investor that the silver ETF would remove so much physical silver that it would have a negative impact on industry-specific companies.
    
    “So much silver would be taken out of the market place, which in turn, means higher costs to companies that use silver,” he said.
    
    Today, Miller said that the SUA has spent a lot of time trying to educate its members and the public about these concerns. Now it’s time to communicate these concerns to the SEC, he said.
    
    But David Morgan, independent precious metals analyst and author of “The Morgan Report,” told RI that the announcement implies that the SEC is indeed moving ahead with the ETF.
    
    “The Wall Street Examiner today stated that the silver ETF is coming, and also stated it is the purpose of the market place to determine price,” he said, once skeptical about the its approval by the SEC.
    
    According to Morgan, the amount of existing .999 fine silver bullion is probably under 500 million ounces total, which is less than $5 billion dollars at today's price - a mere pittance in today's world of finance. However, he agreed that the market should determine the price.
    
    “Bring on the silver ETF and let all the pent up demand from larger investors, pensions, hedge funds, money mangers and even some savvy banks come into the silver market!!” Morgan said.
    
    
    © Copyright 2006, Resource Investor.
    
    
13. [verwijderd] 27 januari 2006 08:37

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    Gold Share Close at Bull-to-Date Highs - Where to From Here? By Michael J. DesLauriers
    26 Jan 2006 at 06:31 PM
    
    TORONTO (ResourceInvestor.com) -- Investors in gold shares had good reason to smile today as the HUI rallied 2.5% to a new bull-to-date high of over 322, even as gold consolidated its recent gains. Although the day started off in negative territory for gold shares, as the yellow metal rallied off its lows, the HUI showed its mettle, with investors seemingly more certain than ever that upside remains.
    
    Despite the remarkable resilience of both the metal and the shares of late, one wonders how much further this leg of the bull can possibly take us?
    
    Back in late December, after gold bounced sharply off $492 and the HUI:Gold Ratio narrowed to 235, RI noted that “Many analysts are targeting somewhere just north of 300 as the next top for the HUI, and now that investors have worked up the nerve to go long, that may well be attainable in the near future. The likelihood of a top in the first quarter or even the first month of 2006 is quite high given the fact that bull markets spend the majority of their time correcting and consolidating.”
    
    Well, the 300 level has certainly fallen convincingly, and investors have quickly forgotten what it’s like to tread water for two years amidst calls of doom and gloom, and the end of the bull. While we are certain that this bull is the real thing, it should also be kept in perspective. In a little over six months the big gold stocks have doubled, scarcely pausing for breath and leaving their long-term moving averages in the dust. At some point a healthy retracement will be needed to shake out the weak hands and momentum players, and allow the market to gather its strength for the future. When will that happen?
    
    In an alert to RI readers yesterday, Gene Arensberg made mention of the ever increasing physical gold holdings of streetTRACKS, noting that if gold should “challenge its recent high water mark further advances could be dramatic as most short positions in the metal are underwater.”
    
    The perplexing issue for market players trying to determine where things will top out is the sheer, unrelenting strength in the metal itself. The demand for gold, both speculative and as a means of global diversification is staggering at the moment, and is clearly supporting gold shares by association. For the moment it would appear that we haven’t seen the top, and both gold and the HUI seem destined to test higher levels, albeit in the context of ongoing volatility.
    
    Conclusion
    
    Therefore, while the bias would appear to remain to the upside, investors would be well advised to pay close attention to their holdings and not get greedy. Things have a way of turning very quickly in this game and there is no question the market remains overheated. Given the choice between the classic options of buying, selling or holding, the latter two probably seem the most logical at this juncture. Investors deciding to hang tight for the time being should do so while actively keeping an eye on price movements, perhaps with a view to selling high and buying back lower (although there is certainly nothing wrong with turning off the computer for a while, because ultimately prices will still be a great deal higher than today).
    
    
    © Copyright 2006, Resource Investor.
    Printed via the AbsolPublisher content management system.
    
    
14. [verwijderd] 28 januari 2006 10:27

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    Silver ETF Packs Punch
    Todd Stein & Steven McIntyre
    The Texas Hedge Report
    January 28, 2006
    Courtesy of www.texashedge.com
    
    In our articles titled "Silver ETF: Shock & Awe" and "Powerful Silver ETF", we highlighted how the introduction of a silver ETF would send shockwaves through the financial markets. We used the introduction of the U.S. gold ETFs (tickers: GLD & IAU) as a model of what would happen to physical silver demand once the silver ETF (proposed ticker: SLV) starts trading on the Amex. Now that a little more than one year has passed since the gold ETFs were introduced, let's take another look at just how much demand for silver could be impacted.
    
    In their first twelve months of trading, GLD & IAU (the two gold ETFs) accumulated well over 7 million ounces of gold in their vaults. Then, in the following three months, an additional 3 million ounces have poured in. At $558/oz, this means that nearly $6 billion of new demand has been created by the two U.S. gold ETFs over their first fifteen months. Some shifting from physical bullion to the ETFs may have occurred, but near as we can tell, it has been negligible as most of the demand created by the ETFs is truly new.
    
    If silver, through its ETF, can add over time in dollar demand what GLD & IAU did in just 15 months, we are talking about an additional 600+ million ounces being taken off the world market. With silver trading at around $9.60/oz, $6 billion in incremental investment demand would translate more precisely into about 625 million ounces of the grey metal. This would almost certainly wipe out the entire world's identifiable supply of above ground silver (about 550 million ounces according GFMS). Is it any wonder why the SUA (Silver User's Association) is trying to cry "uncle" to the SEC in the hopes of putting the kibosh on the silver ETF?
    
    Now before you back up the truck and start hoarding silver bars, please realize that we do not expect 600+ million ounces to be sucked up anytime soon as a result of the silver ETF. Furthermore, we are skeptical that GFMS is able to pin down the above ground silver supply at 550 million ounces when there could theoretically be large unknown amounts of silver sitting in China and India and/or private hoards.
    
    With all that said, we do think the 500-600 million ounces in relatively easily liquidated above ground ounces is a conservative place to start for liquid silver inventories. The real question then becomes how much silver is likely to be consumed over the next year or two by the impending silver ETF which, thanks to recent rumblings by Barclays and Amex, appears closer to getting approved by the SEC.
    
    Below we have built a ballpark estimate of what we think is possible in silver ETF demand over its first 15 months:
    
    Although this is mainly guesswork, our conclusion is that 76 million ounces give or take a few million ounces is a reasonable conservative estimate for silver demand over its first 15 months. To arrive at this estimate, we have simply taken the U.S. gold ETF market capitalization of a shade under $6 billion and divided it by the annual $68 billion of total gold demand. This works out to about 8.7% of annual gold demand having been diverted into U.S. gold ETF vaults in the last 15 months. Assuming the silver ETF were to attract the same percentage of ETF demand versus annual total silver demand, that would equate to the silver ETF reaching a market capitalization of about $736 million in 15 months or, at today's prices, about 76 million ounces of silver.
    
    Considering that total silver investment demand was estimated in 2004 at only about 40 million ounces, an incremental 76 million ounces could have a profound positive impact on silver as it would eliminate at least 15% of the world's identifiable above ground supply in what is already a very tight market.
    
    Finally, if you were to ignore all of our ETF demand assumptions and look at the big picture, you should be even more bullish. The fact is that the entire dollar value of annual silver demand is peanuts. If SLV approaches anything close to the popularity of the other ETFs, then silver's run-up may be more spectacular than anyone can imagine.
    
    January 28, 2006
    Todd Stein & Steven McIntyre
    Archives
    Texas Hedge Report
    email: info@texashedge.com
    
    For more information, go to www.texashedge.com
    
15. [verwijderd] 29 januari 2006 10:42

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    Gold glows in China's Year of the Dog
    
    Publish Date : 1/27/2006 1:39:00 AM Source : South Asia News Onlypunjab.com
    
    High prices are spurring Chinese interest in gold, as new investment tools add to the metal's traditional New Year lustre. Sunday is the first day of the Lunar New Year, a time when Chinese traditionally wish each other wealth in the year ahead.
    
    This year, instead of the usual greeting of ''Gong xi fa cai'' (Be happy, make money), Mandarin speakers are wishing each other ''Guo nian wang wang'' -- a play on ''All's wealth in the Dog Year'' that also sounds like barking.
    
    No wonder, then, that gold prices near 25-year highs haven't deterred shoppers from buying golden bars with a dog motif or the ''paper gold'' investments offered by China's banks.
    
    ''Gold is selling very well this year. It's too early to do the final count, but sales are certainly better than last year,'' said a sales manager at Caishikou, Beijing's top gold retailer.
    
    Gold hit a 25-year high of $567.60 an ounce last Friday, lifted by growing consumption in China and India, and by hopes that Asia's central banks would increase their gold holdings.
    
    China's gold jewellery consumption grew by 9 per cent in the year to September, according to the World Gold Council.
    
    Rising incomes and the glory of getting rich are responsible for the gold statues in the windows of First Asia Jewelry in Shanghai, like a 35-gram dragon playing with a ball that retails for 7,560 yuan ($938).
    
    A foot-high, elaborately detailed Goddess of Mercy is good for the religiously minded, said saleswoman Zhang Fuqin, while zodiac animals might be welcome on a birthday.
    
    A golden ruyi sceptre, shaped like the ancient symbol of a noble's power, would be an appropriate gift for an official's promotion, she said.
    
    INVESTMENT TOOL After a hiatus under Communist rule, when gold hoarding was forbidden, gold is back as an investment tool in China.
    
    State-owned banks offer ''paper gold'', in which depositors can invest in certificates that track the price of gold. The Shanghai branch of the Industrial and Commercial Bank of China goes one step further, allowing account holders to take delivery of the metal.
    
    ''Although stock markets have recovered a bit recently, there are still relatively few investment options for Chinese,'' said an official at the Bank of China.
    
    Late last year, the Bank of China's Shanghai branch offered 24-hour trading in paper gold, a move which doubled trading volumes over the last three months, the official said.
    
    Gold trading volume at the Shanghai Gold Exchange rose 36 per cent in 2005, to 906.42 tonnes, the exchange said.
    
    But gold bugs pin their greatest hopes on the Chinese government, which still has relatively low gold holdings.
    
    Central Bank officials have indicated China wants to diversify its $818.9 billion in reserves away from the U.S. dollar, which analysts estimate now accounts for about 70 percent. They rejected speculation of dollar sales, but didn't rule out ploughing new reserves into other currencies or assets.
    
    Mainland China's gold reserves are the world's tenth largest, at 600 tonnes, the World Gold Council estimated in September, but accounted at the time for only 1.1 per cent of China's foreign reserves. By comparison, Germany has 50.5 per cent of its foreign reserves in gold.
    
16. [verwijderd] 30 januari 2006 17:57

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    The Key to Silver's Next Big Move
    goldmoney.com/en/commentary.php#current
    
    In my alert this past January 7th I explained that precious metal bull markets "are caused by people looking for a safe haven from national currency". I went on to note that during these bull markets, this "rising monetary demand on the margin will have a greater positive impact on silver than on gold". In other words, during precious metal bull markets it takes a declining number of ounces of silver to buy one ounce of gold. This relationship can be seen from the gold/silver ratio.
    
    The gold/silver ratio rises during precious metal bear markets, and falls during bull markets. The ratio has been in a long-term downtrend since reaching its high of 101.8 on February 22nd, 1991.
    
    The following chart presents the ratio's daily value since 1995. It shows the number of silver ounces needed to purchase one gold ounce.
    
    There are several important observations that can be made about the above chart.
    
    The ratio dropped precipitously from mid-1997 to early 1998. This was the period and the immediate aftermath of Warren Buffett's huge 130 million ounce silver purchase.
    After reaching 41.3 on February 5th, 1998, the ratio began a correction. The ratio formed a pennant (red lines) from 1997 to 2000, but broke out of this pennant to the upside. This counter-trend breakout showed weakness, and therefore indicated a need for further consolidation.
    This additional consolidation occurred within the uptrend channel marked by the green lines.
    Note that the ratio thereafter retraced all the way back to the level it was trading before Mr. Buffett's purchase. This test of overhead resistance was successful, and the ratio began falling once again.
    The sharp drop in the ratio in early 2003 was similar to the drop which occurred during Mr. Buffett's purchase six years earlier. Note too that I have drawn a parallel trend channel (green lines) marking these two important low points as well as the key overhead resistance levels.
    Since 2003, the ratio has formed another pennant formation. The ratio has been consolidating the big 2003 decline.
    The important question now is: will the ratio break-out of this pennant to the downside?
    
    We'll find out soon enough, but I expect the ratio to break out from the pennant to the downside. Note how the ratio is back below its 200-day moving average. This chart has a bearish appearance, i.e., the ratio looks ready to fall, which of course is bullish for the precious metals. A falling ratio means that silver is outperforming gold, which is what we normally see in precious metal bull markets. Both gold and silver will climb higher, but a falling ratio will mean that silver is climbing faster.
    
    What's more, shortly after the downside break-out from the pennant occurs, I also expect the ratio to break-out to the downside from the rising trend channel. If that occurs, then the picture will be very bullish indeed.
    
    So in summary, watch the gold/silver ratio closely here. It's the key to silver's next big move, and here are the important points to watch. If the ratio moves below 58, it is breaking out of the pennant. If it moves below 55, it is breaking out of the rising uptrend channel. When that happens, I expect both metals will be soaring, with silver clearly leading the way.
    
    ___________________________________________
    
    Published by GoldMoney
    Copyright © 2006. All rights reserved.
    Edited by James Turk, alert@goldmoney.com
    
17. [verwijderd] 31 januari 2006 14:58

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    January 31, 2006 The Times They Are A Changing
    by Rob Kirby www.safehaven.com/showarticle.cfm?id=...
    
    Bob Dylan wrote about this, perhaps unwittingly - and in doing so immortalized the saying, "and the times they are a changing". Amazing how words written so long ago are and can be so relevant today, no?
    
    Another thing that can be duly said about change is that it's a highly ambiguous term: it could be positive or negative, adequate or inadequate, substantive or nominal. Positive, negative, adequate and inadequate - most would agree - are all terms that people can calibrate in their conscious minds. Substantive or nominal, on the other hand, present a bigger challenge.
    
    At the extreme end of nominal change, for instance, we might speak of imperceptible or negligible variances that would perhaps be chalked up to either rounding error or lack of precision in the instruments doing the measuring.
    
    At the other extreme - substantive - we find quantum change. Quantum change is sometimes described as occurring when epiphanies and sudden insights transform ordinary lives.
    
    Well folks, thanks to the opaque policies of central banks where precious metals [gold and silver] are concerned - [even when clued in] one really has to "really dig" and connect a few dots to get to the core or truth of matters in this regard. In an un-backed fiat monetary system - with central banks around the world working in concert toward a common end [covertly selling, leasing, double counting and otherwise misreporting their stocks of metal] - it's no wonder the average Jane and Joe have little idea as to the fraud, namely unchecked, deliberate, uncontrolled printing of money being foisted upon them.
    
    Uncontrollably rising metal prices are the chief SYMPTOM of excessive money printing/credit creation - period. This symptom has been repressed by perpetrators - unquestionably. The body of evidence supporting this assertion has grown to the point where it is quite simply "overwhelming". In fact, this body of evidence is so large - it's quite simply beyond the scope of this article, but I digress.
    
    From where I sit folks, it would appear that the leadership of Saudi Arabia has had an epiphany. Of this - I am quite certain [though I'm certain it will never be publicly admitted] - let me explain:
    
    Perhaps as far back as 2002, anecdotal evidence suggests that Saudi Arabia bought a significant quantity of physical silver on the LBMA [London Bullion ex-change] - most likely as a means to prudently hedge their significant U.S. dollar exposure/vulnerability. The spike in silver lease rates [see 2002 in chart below] are highly consistent with this assertion.
    
    Rest assured, this spike was a result of a major, strategic and concentrated accumulation of metal in a tight physical market - just as the huge spike in lease rates back in 1998 was perfectly correlated with Warren Buffet's now legendary "massive" physical silver purchase. This categorically means that this particular accumulation was NOT MADE BY a Western Central Bank. Funny thing, due to the size of the accumulation - major players in the trade would necessarily have been aware of what was going on.
    
    Because large quantities of silver are very heavy and cumbersome to ship around the globe - this physical metal was deposited at the Bank of England - in their vaults. Some time afterward, the Saudis requested that this metal be physically "shipped" to them. The Bank of England balked [refused to comply] at this request - because they did not have the metal - it had been leased out - [physically removed from the vault] and subsequently sold again to maintain/continue the active price suppression of silver bullion.
    
    Ed. Note: Has anyone stopped to take stock of how soon thereafter - industry heavyweights Rothschild and AIG exited the precious metals trade, lock stock and barrel?
    
    The Saudis became incensed with this action [epiphanies sometimes have a way of doing this] and "sold the lot" - in effect taking a forced cash settlement and began buying silver again in other jurisdictions where they felt assured of getting delivery of their purchases.
    
    For the uninitiated, what I've outlined above is a precise of this account as it first came to me via Bill Murphy's Lemetropolecafe.com:
    
    **You will recall our London silver source feeding us information about Saudi buying and recently (two and three weeks ago) about small supplies of silver constantly showing up. Here's the story on this as this same veteran dealer knows it ...**
    
    **Twelve to 18 months ago the Saudis acquired sizeable amounts of silver and stored it England. However, when they asked for delivery the Bank of England balked because they didn't have it to ship, or would not ship it out of the country because it may have been used for other (dual) purposes.**
    
    **The angry Saudis dumped this stash in England and began buying elsewhere ... probably Dubai, Turkey, etc., and have been accumulating silver in areas where they have been assured of delivery.**
    
    **The London silver shorts have been dribbling this Saudi silver into the market whenever silver rallied, which is probably why silver has not been able to gain traction until the past few days. Word is this supply has run out. This might account for why the price of silver has finally done what many of us thought it would do earlier. **
    
    **We know the gold shorts are experiencing their own Commercial Signal Failure and a number of them have begun to become panic buyers. It is very likely we are now seeing the same drill in silver. The silver shorts are going to get their lunch handed to them. Makes my day!**
    
    And here's metals lease watcher/expert Rhody's take on the situation:
    
    This is clearly a default in silver by the BANK OF ENGLAND. When I first read this, I thought the Saudi's had bought futures and then were denied delivery. Nope. The bought actual silver and deposited the metal for safe keeping with the Bank of England. Then they wanted to remove it again, and wonder of wonders, it was no longer there! Could the Saudis have made the mistake of storing their metal in an unallocated account????? If they did, the Bank took the opportunity and leased out the metal, perhaps only on short terms, but the point is, the Bank no longer had the actual metal. The Saudis then wanted their silver, found it was gone, got mad and sold the lot. It looks like the Bank of England took back the leased metal and then sold it again. This capped the silver market at the $8.90-$9.20 range for the last year. Notice the double sale. It was the same metal, but it was first leased and sold, and then got back, and then sold again. You can bet that the metal that the Bank of England did finally get returned was leased from a third party. See how leasing caps prices?? It always entails a double selling of the same ounce, all the while claiming the metal is still in the original vault. In this way, world stockpiles appear stable, yet a hoard of selling manipulates precious metal prices. Add to this the 50 fold selling in the futures markets and it's a marvel that gold prices didn't reach $50/oz back in 1998. I heard Wall Street analysts predict this! I also heard 50 cent silver bandied about.
    
    Well here's the reality. Gold central bank stockpiles are likely down to 12,000 tons, not the 32,000 tons they say they have, and world silver stockpiles are under 200 Moz, and very little of it is held in the offi
18. [verwijderd] 31 januari 2006 15:09

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    Beste Gung Ho,
    Bij deze nogmaals mijn hartelijk dank voor de artikelen die u hier regelmatig op het forum plaatst.
    Gr/brj
19. [verwijderd] 1 februari 2006 18:54

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    MIDAS GOLD ALERT:
    
    A Fast Fund sold 8,000 to 10,000 contracts earlier, driving
    the gold price down $8 to key support at $563. Goldman
    Sachs and JP Morgan Chase turned huge buyers on that
    break.
    
    The open interest dropped another 5500 contracts yesterday,
    confirming the MIDAS/GATA analysis the bad guys, and other
    major shorts, are DESPERATLY doing all they can to cover
    their MASSIVE SHORT POSITIONS.
    
    More later.
20. [verwijderd] 2 februari 2006 07:50

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    Credit Agricole brokerage endorses GATA and warns clients: Start hoarding gold
    
    Dear Friend of GATA and Gold:
    
    Cheuvreux, the equity brokerage house of Credit
    Agricole, the huge French bank, today distributed
    a 56-page report that completely endorses in detail
    the findings of the Gold Anti-Trust Action Committee
    that the price of gold has been surreptitiously
    suppressed by Western central banks and that
    those banks do not have the gold they claim to
    have.
    
    The report, written by Cheuvreux's mining sector
    analyst in London, Paul Mylchreest, is titled
    "Remonetization of Gold: Start Hoarding." It
    repeatedly cites GATA by name and foresees an
    "unprecedented" rise in the gold price, possibly
    accompanied by a spike to as much as $2,000.
    
    The report's executive summary says:
    
    "We are raising our mid-cycle gold price estimate
    to USD900/oz from USD750/oz and see the
    possibility of a spike to USD2,000, or higher. Covert
    selling (via central bank lending) has artificially
    depressed the price for a decade.
    
    "Central banks have 10,000-15,000 tonnes of gold
    less than their officially reported reserves of 31,000.
    This gold has been lent to bullion banks and their
    counterparties and has already been sold for
    jewelry, etc. Non-gold producers account for most
    and may be unable to cover shorts without causing
    a spike in the gold price.
    
    "There is a supply deficit in the gold market of around
    1,300 tonnes per year before any central bank selling
    and perhaps 700 tonnes per year after 'official' sales
    but before covert selling. This compares with world gold
    mine output of only 2,500 tonnes per year. Some
    central banks, notably Russia, are starting to buy gold.
    
    "Gold acts as an early warning of potential crisis such
    rising inflationary/deflationary pressures and general
    confidence in paper currency, especially the U.S. dollar.
    A strongly rising gold price could have severe
    consequences for U.S. monetary policy and the U.S.
    dollar. History suggests that gold always wins against
    an inflating paper currency (that is, one subject to
    excessive supply growth).
    
    "Gold and gold mining stocks are poised for an
    unprecedented rise in prices and profile. Investors in
    UK/European equities need to assess the implications
    for their portfolios. ..."
    
    The Cheuvreux/Credit Agricole report details GATA's
    findings in Chapter IV, "Analysis of the Gold Market,"
    and concurs in them as "broadly correct."
    
    No financial house in Europe could be more part of
    the establishment than Credit Agricole, and now its
    endorsement of GATA is circulating among other
    big financial houses in Europe and around the world.
    
    This evokes what Adam Fleming, former chairman of
    Harmony Gold, now chairman of Wits Gold, said at
    GATA's Gold Rush 21 conference in Dawson City,
    Yukon Territory, Canada, last August, just hours
    before the current sharp rally in gold began: that just
    a little investment demand could take the central banks
    out of their gold "in the blink of an eye."
    
    A LITTLE investment demand? Credit Agricole's
    brokerage house has just declared: Start hoarding!
    
    Gold Rush 21 was truly historic and decisive; it
    gathered the world's top experts on gold to spell out,
    explain, and publicize the gold price suppression
    scheme, and the conference issued the Dawson
    Declaration, an appeal for free markets in the precious
    metals as a matter of basic human rights.
    
    You can obtain a two-DVD set of the proceedings
    of the Gold Rush 21 conference, including a
    dramatic 25-minute video summarizing the
    conference, produced by the brilliant Vancouver
    videographer Trevor Johnston, at this Internet link:
    
    www.goldrush21.com/
    
    And you can obtain the Cheuvreux report on the
    gold market at GATA's main Internet site here:
    
    www.gata.org/CheuvreuxGoldReport.pdf
    
    As for gold itself, you can get some from the
    coin and bullion dealers listed at the end of this
    dispatch. But as the Cheuvreux report gets
    around, there may not be much left.
    
    CHRIS POWELL, Secretary/Treasurer
    Gold Anti-Trust Action Committee Inc.