Gold finds support
Gold fell 20% in September, but now the technical picture for Gold is improving. In September, Gold tapped a record nominal high just above 1,920, and then saw some profit taking and new margin requirement causing a decline to 1,540.
The move spooked some speculators and offered a great buying opportunity for investors in Gold. Gold prices have recovered to 1,750 oz. The recovery has been fueled by central bank monetary easing, and strong buying support across the board.
Last week the US Federal Reserve teamed up with 5 other central banks around the World and put Gold on pace for its biggest weekly gain in over a month, and Gold demand continues to be Strong.
In the past I have reported how hedge fund managers like David Einhorn purchased 1.35-M/shrs of Barrick Gold in Q-3, along with a new 1.9-M/shr stake in the Market Vectors Jr. Gold Miners ETF.
As hedge funds are buying gold, so central banks continue to buy Gold. The central bank of South Korea announced that it purchased 15 tons of Gold in November, which brings its Gold reserves to 54.4 tons. The purchase shows the changing sentiment towards the safety of Fiat currencies.
Earlier this year, South Korea's central bank purchased Gold for the first time in 13 ys when it bought 25 tons of it in June and July.
Lee Jung from Korea's central bank said, The Bank of Korea purchased Gold last month in a bid to diversify its portfolio of foreign exchange reserves. Demand for gold is increasing as a hedge against Global inflation amid the persistent sovereign debt crisis in Europe.
Market prices do not tell the whole Gold story, but often reflect the mood of buyers and sellers. As the chart below shows, Gold has Strong short-term support between 1,600 and 1,680. After bumping up against 1,680 throughout October, Gold prices cracked the resistance there, and now that price mark is support.
South Korea is not the only central bank supporting gold prices; Mexico has bought 98 tons of Gold this year, followed by Russia and Thailand, which purchased 63 tons and 53 tons, respectively, with the total official acquisition of Gold reaching around 350 tons. Stay tuned...
Gold bounced back above $1,700 after the worsening euro zone debt crisis and the failure of U.S. policymakers to agree on a budget reduction plan sent spot prices down to as low as $1,665.88 earlier in the week.
Shayne Heffernan Expects to see Gold over $2500 in 2012 as the USA Debt level increases and interest rates stay low.
With Spain's bond yields rising to 14-year highs, the IMF beefed up its lending instruments and launched a six-month liquidity line, throwing help to countries with solid policies that may be at risk from the euro zone debt crisis.
Gold will continue to gain on strong central bank buying, Gold, up 19 percent this year, climbed to a record $1,921.15 an ounce in London on Sept. 6 and is heading for an 11th consecutive annual increase amid concerns about Europe's debt crisis and slowing economic growth. Central bank gold demand for 2011 may be the most since at least 1970, the World Gold Council said Nov. 17. Central banks may buy 450 metric tons this year, signaling about 100 tons may be bought in the fourth quarter, the council estimated.
Governments, Institutions and Individuals are still buying Gold for the long term. Longer-term investor interest remains stable with physically backed Gold ETPs edging up by a tonne to 2185 tonnes and taking flows for the month to date into neutral territory.
Meanwhile, the latest weekly ECB statement showed selling activity remains subdued with gold holdings remaining unchanged across the Euro-system banks during the week-ended 14 October.
26 September 2011 marked the end of the second year of the third Central Bank Gold Agreement (CBGA3). European central bank signatories to the agreement sold a gross 1.1 tonnes of gold during the year, the lowest annual sales since the agreement began in September 1999. The current agreement permits signatories to sell 400 tonnes of gold collectively per annum.
European signatories showed a similar unwillingness to sell gold in the prior year of the agreement, selling just 7.1 tonnes of the permitted 400 tonnes ceiling.
Total sales in the latest year of the agreement reached 53.3 tonnes, due to the additional 52.2 tonnes of gold sold by the IMF as part of its limited gold sales programmes. The IMF completed its gold sales programme in December 2010.
Gold prices have seen huge gains yet gold companies have not, eventually we must follow the pattern after the 1980 gold surge to the then record of $US850 an ounce. Gold by HCM estimates has to hit $2500 to equal that rally, inflation adjusted.
But what was surprising back then was that gold shares barely ticked upwards even at the height of the gold frenzy. Looking at the main gold equity index of that time - the Johannesburg Stock Exchange's - that share price take-off happened several months later when companies began publishing their profit results and the (gold) penny dropped. Investors suddenly saw the effect of the high gold price on bottom lines.
Gold futures for December delivery gained $US11.60, or 0.7 per cent, to settle at $US1,653.20 an ounce at 1:40 p.m. on the Comex in New York. The precious metal is heading for the first weekly gain in five.
Futures reached a record $US1,923.70 on Sept. 6 as investors sought alternatives to equities and some currencies. The metal has climbed 16 per cent this year. Spot gold is in the 11th year of a bull market, the longest rally since at least 1920.
Silver futures for December delivery climbed $US1.653, or 5.4 per cent, to $US32.005 an ounce, the biggest jump since July 13. The price has advanced 39 per cent in the past 12 months.
On the New York Mercantile Exchange, platinum futures for January delivery gained $US25.20, or 1.7 per cent, to $US1,508.10 an ounce.
Palladium futures for December delivery climbed $US28.45, or 5 per cent, to $US598.80 an ounce, rising for the second straight day.
AngloGold Ashanti Limited (ADR) NYSE:AU
AngloGold Ashanti Limited (AngloGold Ashanti) is a mining company. AngloGold Ashanti has 20 operations consisting of open-pit and underground mines and surface metallurgical plants in 10 countries on four continents. As of December 31, 2010 the Company's ore reserves totaled 71.2 million ounces. During the year ended December 31, 2010, it had a gold production of approximately 4.52 million ounces. AngloGold Ashanti's main product is gold. In addition to the six deep-level mines and one surface operation in South Africa, AngloGold Ashanti has surface and underground mining operations in the Americas, Australia and the African continent. The Company's revenues are primarily derived from the sale of gold and also uranium, silver and sulfuric acid. On August 1, 2010, AngloGold Ashanti sold Tau Lekoa Mine to Simmer & Jack Mines Limited (Simmers).
Harmony Gold Mining Co. (ADR) NYSE:HMY
Harmony Gold Mining Company Limited (Harmony) is engaged in underground and surface gold mining and related activities, including exploration, processing and smelting. As at June 30, 2010, its mining operations reported total probable reserves of 48.1 million ounces, primarily from South African sources. During the fiscal year ended June 30, 2010 (fiscal 2010), the Company processed approximately 19.8 million tons of ore. In fiscal 2010, 96% of its total gold production took place in South Africa. In fiscal 2010, approximately 91% of its South African gold came from underground mines, and approximately 9% came from its surface operations, which include the Kalgold opencast operation and the Phoenix operation. The majority of exploration and evaluation done during fiscal 2010, has been focused on Papua New Guinea (PNG). Exploration in South Africa focused on the Evander South project, Joel North, Poplar and Tshepong.
Zijin Mining Group Co., Ltd. SHA:601899
Zijin Mining Group Company Limited is principally engaged in the exploration, mining, smelting and sale of gold and other metal minerals. The Company's main products are gold products, including mineral gold, standard gold bullions, gold ingots and gold concentrates, among others; copper products, including copper concentrates and cathode copper; zinc products, including zinc concentrates, associated zinc and zinc ingots; iron products, including iron concentrates; silver products, including associated silver and standard silver bullions, as well as other products. The Company also involves in the geographic survey business. During the year ended December 31, 2010, the Company obtained approximately 62.51% of its total revenue from gold distribution.
Arizona Gold and Onyx Mining Co, PINK:VGCP
Exclusive Interview with Micheal Mitsunaga - President, CEO and DirectorArizona Gold and Onyx Mining Co PINK:VGCP
Arizona Gold and Onyx Mining Co PINK:VGCP is pursuing exploration and development on its polymetallic property, known as the Mayer Project, located in Arizona, the leading mining state in the U.S.A. Initially, the Company intends to commence production of high grade onyx from a large deposit on the property and to also investigate the occurrences of Gold, Silver, Platinum Group Metals (PGMs) and Copper that have been discovered on the property.
While a variety of onyx occurs on the project, the largest portion of the deposit consists of rare and beautiful Honey onyx, widely used in kitchens, baths and in many other interior and exterior décor. As well, pure black onyx coveted by the jewelry trade and other high-end users, and commanding a premium price in onyx markets worldwide, occurs on the property.
With rising demand and prices for high quality onyx, as well as for precious and base metals globally, Arizona Gold and Onyx is enthusiastic that its Mayer mining project in Arizona represents excellent potential and a compelling opportunity for profitable minerals production during the new global paradigm of the 20th Century in which mineral commodities are the foundation for economic growth.
What is the VGCP Estimated Reserve Today:
Currently, VGCP's estimated reserves are: $238 Million of onyx, and $18.7 Million of gold. These reserves do not include other precious metals, such as silver or copper.
What do you expect in reserves by year end:
Due to probable acquisitions, the estimated projections by the end of 2011 are: $1 Billion in onyx and between 18M and 24M ounces of gold. These projections do not include other precious metals, such as silver or copper.
Is funding in place for production:
The Company is has funding for our needs on an ongoing basis.
When will the company be producing Gold:
Aggressive estimates have the Company producing gold by year's end; conservative estimates put production out nine months to one year.
What $ value do you put on the Onyx reserves:
Current value of the onyx reserves is $238 Million.
When will Onyx production begin:
Onyx production is estimated to begin somewhere between twelve and eighteen months.
Where are the Gold Sites:
Currently, VGCP has the right to gold deposits in Arizona near Flagstaff at its Mayer Mine. VGCP is also reviewing two separate acquisitions in Arizona and Nevada. In the event that the Company is able to finalize either mine, the gold reserves would jump to between 18M and 24M ounces of gold reserves.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.