By Kishori Krishnan Exclusive To Gold Investing News
Gold prices had an excellent run last week, led by the extensive fall in the US dollar and strong rally in the equity markets. The rise in crude oil prices also resulted in lifting bullion.
The US currency showcased the biggest decline in a month against euro last week as US data showed that the world’s largest economy contracted lesser than forecasts, which hinted that the recession is fading and gave rise to investor demand in riskier counters such as commodities and equities.
The outlook is bright - the most active benchmark contract at the Comex has pulled off a strong recovery, ending at $953.70 near the resistance at $960, a break and close of which will take prices towards new highs of $966.70/oz and $970.40/oz, state traders.
Guess who else is buying gold - Touradji Capital Management LP, the $2.7 billion hedge-fund firm founded by Paul Touradji, bought shares of a gold exchange-traded fund in the second quarter and sold stock in EnCana Corp (ECA) and other energy companies.
The firm purchased 126,000 shares of the SPDR Gold Trust, the biggest ETF backed by bullion, according to a filing on Monday to the U.S. Securities and Exchange Commission. The shares were worth $11.5 million as of June 30, or 51 per cent of New York-based Touradji Capital’s equity portfolio.
Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets, bet on falling as well as rising prices and participate substantially in profits from money invested.
Gold has drawn other hedge-fund investors in 2009 as bullion prices climb for a ninth straight year. Paulson & Co., run by billionaire John Paulson, became SPDR Gold Trust’s largest holder in the first quarter. It bought an 11.3 per cent stake in AngloGold Ashanti Ltd (ASX:AGG), the biggest African miner of the metal, from Anglo American Plc for $1.28 billion in March.
Touradji Capital had equity holdings worth $22.4 million as of June 30, compared with a year-earlier value of $494.2 million for its 10 largest stakes, filings show. The firm sold many of his positions and moved to more than 80 per cent cash in 2008’s second half, according to Touradji.
On Tuesday, gold for immediate delivery rose 0.8 per cent to $926.60 an ounce in the second quarter, the third advance in a row. Bullion slipped $2.42, or 0.3 per cent, to $954.382 an ounce in London.
The gold price was not to be denied on Tuesday, with a steady climb upward from opening bell to Comex close and beyond to $970.05, then settling down to mid US$ 960’s support. The gold price rose $10.90 to close on Comex at $967.50. This has crushed resistance at $960, so the next logical gold price target, probably within two days, is US$ 990, state traders.
Yamana Gold (YRI.TO) said on Tuesday its second-quarter profit fell 77 per cent as its results were hit by lower copper and silver prices, a $34.1 million unrealized loss on derivatives and a foreign exchange loss of $28.5 million.
The Canadian gold producer earned $9.6 million, or 1 cent a share, in the quarter ended June 30. That compared with a profit of $42.1 million, or 6 cents a share, in the year-before period. Stripping out foreign exchange and derivatives losses, adjusted profit was 13 cents a share, Yamana said.
During the latest quarter, Yamana agreed to sell three of its non-core mines in Brazil and Honduras to exploration company Aura Minerals (ORA.TO) for about $200 million. The company expects to produce 1.2 million gold equivalent ounces this year.
Orvana Minerals Corp (TSX:ORV) said Monday it is extending the deadline for its all-cash offer to buy junior miner Kinbauri Gold Corp (TSXV:KNB). Toronto-based Orvana said its offer, valued at $44.5 million, or 75 cents per share, is now set to expire August 17.
The company said the extension is being granted at the request of Kinbauri shareholders, who asked for more time in which to tender their stock after the collapse of a rival takeover bid.
The all-stock offer from ATW Gold Corp (TSXV:ATW) had previously been favoured by Kinbauri’s board and management, but ATW terminated the bid Friday, saying Kinbauri’s board had not declared its unanimous support to shareholders. The Kinbauri-ATW merger proposal was worth about $43 million when it was announced.
Orvana has already secured the support of Kinbauri’s largest shareholder, Jaguar Financial Corp. (TSX:JFC), which previously announced that it has conditionally agreed to tender its 10.3 per cent stake to the offer.
“While we are disappointed with the termination of the Kinbauri agreement, we will continue to seek opportunities which will further promote the company’s growth and move it closer to its goal of becoming a mid-tier gold producer” commented ATW chairman, Graham Harris. “We continue to focus on increasing production from the Burnakura Mine and on advancing the Gullewa Mine toward production.”
Shares of Quebec-based Orex Exploration (TSX: V.OX) climbed 14 per cent to 16 cents Tuesday, as the company announced new mineral resource estimates on its Goldboro Gold Project in Nova Scotia. The company says the report covers the ramp area and eastern section of Goldboro over a 1.5km strike length, with 97 per cent of the MRE located within the first 350m from surface.
“At a 1.5 g/t gold cut-off are 2,711,000 tonnes grading 4.56 g/t gold, totalling 397,200 gold ounces in the measured + indicated resources categories, with an additional 3,438,000 tonnes grading 3.67 g/t gold totalling 405,926 gold ounces in the inferred resource category,” says the company.