"The best place to be is in commodities"

[drillinto]

October 12, 2013

>>> That Was The Week That Was ... In Australia <<<
By Our Man in Oz

Minews. Good morning Australia. Your market seems to have been infected by U.S. political and debt worries.

Oz. Until Friday we were weighed down by the U.S. uncertainty, and whether it would lead to a default with potentially disastrous consequences for global growth - and demand for our resource exports.

Minews. And have those concerns dissipated?

Oz. Up to a point. Next week will probably start with a spot more selling, with some investors preferring to sit on the sidelines until a budget and debt-ceiling deal is done in Washington.

One sector in our market almost certain to be whacked again early next week is gold, because the price continued to drift lower after we had closed on Friday.

At the close last week the gold index was already down by 6.5 per cent as the gold price slipped through the US$1,300 an ounce mark. That fall compared with an absolutely flat metals and mining index which opened and closed the week at 3,164 points. The all ordinaries managed a rise of 0.4 per cent, as bank shares bounced on Friday.

Minews. It seems that international events rather than domestic political turmoil are what’s driving the Australian market.

Oz. Good point. Many of the local issues which had been dogging investors in our market are being washed away by the change of government and a growing belief that the new conservative administration will be able to get all of its policies through Parliament with the help of like-minded independent political groups.

Minews. So, that really does mean the end of the mining super-tax and carbon tax.

Oz. It seems so, but probably not until mid-next year when the new Senate sits for the first time.

Minews. Enough chit-chat, it’s time for prices. Let’s start with iron ore, as that seems to have been the strongest performing sector, despite concern about an imminent price fall.

Oz. Iron ore has certainly become the most-watched part of the mining market, with an even split between optimists and pessimists.

The optimists were in the ascendant last week, bidding up stocks in the belief that a sharp fall is not around the corner.

The pessimists, though outnumbered, were able to point to a report by the investment bank UBS which forecast a very sharp fall in the iron ore price sometime over the next six weeks, with the price potentially dropping from US$130 a tonne to US$70 per tonne as Chinese buyers pull back after a burst of re-stocking.

Minews. That’s certainly a gloomy forecast, which will either make UBS look perceptive, or foolish. Let’s go through last week’s prices.

Oz. Atlas (AGO) led the way up, putting in a rise of A11 cents to A97.5 cents and shrugging off a few weeks of heavy selling. Centaurus (CTM), the Aussie explorer with its best assets in Brazil, was also in demand, adding A3 cents to A20.5 cents, meaning it has risen by A6 cents (42 per cent) in two weeks.

Other upward moves included: Fortescue (FMG), up A21 cents to A$5.00, BC Iron (BCI), up A7 cents to A$4.64, Iron Road (IRD), up A2 cents to A25 cents, IronClad (IFE), up A2 cents to A16 cents, and Mt Gibson (MGX), up A1 cent to A75 cents.

A handful of iron ore stocks lost ground, but none too severely. Kogi (KFE) slipped A0.3 of a cent lower to A8.7 cents. Gindalbie (GBG) was half-a-cent weaker at A12 cents, and Northern Iron (NFE), lost A1 cent to A18 cents.
...

Source > www.minesite.com
*****

 

[drillinto]

>>>>> October 07, 2013

What Happens To Miners After Economic Recovery In The West?
By Rob Davies

A good deal of evidence is now building that recovery, albeit weak, is now established in the developed Western world.

Economic forecasts released over the last few months are either unchanged or are being edged up rather than down.

It doesn’t help that the US budget stand-off has prevented the world’s largest economy from collecting and publishing current data.

Indeed, the shutdown will slightly reduce economic activity in the current quarter.

Even so, the picture of modest economic growth in the developed world remains intact and looks as if it has returned to more normal levels.

What is clear from the latest OECD report is that growth momentum is moving from the emerging economies to the mature economies.

And that does not have positive implications for metal demand.

Well established countries rely more on the service sector while emerging ones are still at the infrastructure construction stage.

You need lots of metal to build a bridge, not much to establish a website.

This change in outlook has already been discounted by the markets and is why equities and commodities have both doubled from their lows.

The world did not end in 2008, but it has taken a long time to recover. Moreover, as the stand –off in the US and the stresses in Europe demonstrate, many risks still remain.

Even so, investors now face the challenge of pricing risk assets in a less volatile and racy environment.

Commodities have already retraced some of their progress this year and the 0.4 per cent decline in the LME index last week to 3124 is consistent with that trend.

Mining equities too have had a poor month or so.

Sentiment has often mattered more in valuing metals and miners because they are so sensitive to economic cycles, but right now sentiment seems to be at an inflexion point.

Few would argue that this is the peak of the cycle, and we are demonstrably no longer at the bottom. So maybe we are in what might be considered a more “normal” environment.

In such a scenario we would not expect metal prices to be much out of line with their long-term marginal cost of production.

Indeed, the relative stability of base metal prices over the last year suggests that the industry is not too far from equilibrium.

It is true that aluminium and nickel are currently too low for most producers, while copper generates healthy returns and lead and zinc are both reasonably priced.

Bulk commodities have already retraced quite a long way but they are not desperately oversold and, arguably, maybe have more to concede.

Few too, would postulate that all the world’s problems have been solved, but there is a consensus that nothing is too badly out of kilter.

In this environment, where large capital gains or losses seem less probable, investors will be focussing on the cash generative properties of the different metals and their associated producers.

On that basis the miners might not be spectacular, but they ought to pass muster as cash cows.

>>> Source: www.minesite.com

 

[drillinto]

October 10, 2013

A Fair Slice Of The Pie: The Complicated Relationship Between Emerging Economies And Foreign Miners
By Ryan Jackson in Vancouver

According to Ernst & Young’s assessment of the global mining industry in 2013, resource nationalism is the most worrisome risk threatening miners.

If you’ve been reading the papers over the last year, this may not come as much of a surprise.

But when you consider that resource nationalism has rapidly climbed from the bottom of the list of 10 factors included in Ernst & Young’s yearly report to the very top, it clearly illustrates a worrying trend.

“There is no doubt projects around the world have been deferred and delayed, and in some cases investment withdrawn altogether, because of the degraded risk/reward equation”, writes Ernst & Young’s Global Mining and Metals Leader Mike Elliott.

“The uncertainty and destruction of value caused by sudden changes in policy by the governments of resource-rich nations cannot be understated”,

In many ways, mining companies are victims of their own success.

The strong commodity prices and high reported profits seen in years past have spurred politicians and local stakeholders in some resource rich nations to demand a larger piece of the pie.

The tragedy though is that bureaucracy moves slowly and the policy response to the mining boom has begun to take effect after the good times have passed and the industry has fallen into recession.

And it’s not just the emerging economies that present risks to investors. While a number of South American and African states have been in the headlines for resource nationalism of late, Ernst & Young identify Australia’s proposal of a “super profits” tax in 2010 as the catalyst for the recent round of nationalistic tax reforms.

The proposal later evolved into the Minerals Resource Rent Tax which came into effect on the 1st July 2012 placing an additional 30 per cent tax load on profits generated by iron ore and coal companies making over A$67 million.

That development in Australia prompted Chile and Peru to enact similar taxes targeting profits rather than simply production.

Following, India has created a taskforce to work on the creation of new levies on minerals. The initiative followed demands raised by several provinces in India for a new mineral resource rent tax with a minimum of 50 per cent on “super profits” earned by miners.

A number of host governments are also now seeking to have minerals beneficiated in-country prior to export. That’s a fair enough aspiration, but the cost of constructing new refineries or smelters and, often, the lack of affordable power, skilled labour, competitive tax regimes, and the loss of flexibility in their global supply chains are all areas for concern.

So far, South Africa, Zimbabwe, Indonesia, Brazil and Vietnam have announced beneficiation strategies.

Still, Ernst & Young points out that the majority of growth in the global mineral supply has come from emerging economies.

The rise of mineral exploration and supply from emerging economies has coincided with a slowdown in developed nations. This dichotomy is seen most sharply in the copper, aluminum, and steel sectors.

In these sectors growth has certainly been driven by emerging economies.

Meanwhile, according to Metals Economics Group, between the year 2000 and 2010 mineral exploration spending in the developing world increased from 40 to 60 per cent of the global total.

With so much of the exploration funding being spent in emerging markets, international mining companies and the governments of emerging economies must find a workable compromise in order to keep the industry on track.

But there are examples of countries where the local government is eager to facilitate the expansion of mining.

A notable example of this is Nicaragua where foreign direct investment has grown at an average compounded rate of 23 per cent since 2003, from US$186 million to over US$1 billion in 2012.

While mining does not account for all of the investment growth in Nicaragua, gold mining within the country has been one of the biggest growth industries and the government has set up a targeted agency to promote the sector abroad.

To that end, the government is keen to point out that Nicaragua has a favourable tax regime, with a corporate tax rate of 30 per cent, and mining investment credits in place.

What’s more, companies enjoy the freedom to expatriate all capital and profits, enjoy full international ownership, and maintain full protection of intellectual property rights, patents, and brands.

In fact, Nicaragua now has the second lowest labor market risk in Central America and, according to the Doing Business 2013 report put out by the World Bank, is the top jurisdiction there in enforcing contracts, resolving insolvency, and protecting investors.

One company making the most of Nicaragua’s favourable policies is Condor Gold. The company’s La India project already hosts an NI 43-101 compliant resource of 2.4 million ounces of gold grading 4.6 grams per tonne.

And the company has recently announced the completion of a 23,598 metre drilling program which is designed to provide an upgrade to the resource figure with an emphasis on defining open pit resources.

Source >>> www.minesite.com
*****

 

[drillinto]

October 14, 2013

China Consumes 489 Kilogrammes Of Steel Per Person, And That Could Rise Still Further
By Rob Davies

Politicians seem to take it in turns to try and do the most damage to their countries.

Right now US Congressmen are doing their best to derail the world’s largest economy and giving the markets all sorts of reasons to react violently.

Given that China now owns US$1.3 trillion of US government debt, congressmen should probably be a little less cavalier with their attitude to paying their debts.

But despite these macro-economic concerns it is uplifting to read some research from Société Générale that argues that investors should position themselves for an upswing in global metal demand.

In a comprehensive 116 page report, SocGen argues that China is not collapsing and that the iron ore market is still in deficit.

As with everything in China the numbers are always large.

The Chinese Government has set a target of renovating 10 million houses over the next five years, of which over three million will addressed this year.

That cannot happen without the use of raw materials.

SocGen’s report cites evidence for the vibrancy of the Chinese economy by pointing to the 14 per cent increase in Chinese electricity production in August, the 12.9 per cent rise in steel production and the 8.8 per cent increase in cement production.

In a particularly fascinating study the report examines current per capita consumption of key commodities in China, using as comparisons historic averages for other parts of the world.

Right now, says the report, China consumes 489 kilogrammes of steel per person.

That sounds a lot, and obviously reflects the massive infrastructure boom that’s still underway, but it is considerably less than the 752 kilogrammes recorded for peak consumption by the peer group.

Japan at its peak was using 801 kilogrammes of steel per capita.

The data shows a similar pattern for other commodities.

China currently consumes just 6.1 kilogrammes of copper per head while the median for the US, Japan, South Korea and Malaysia at their peaks was 11.8 kilogrammes, almost twice as much.

In zinc the relevant figures are 4.1 kilogrammes per capita for China compared to 5.9 for its peers.

In the case of aluminium the disparity is not quite so large at 15.5 kilogrammes per capita for China and 21.6 for the peer group.

Even so the message is clear: China has got a long way to go before hitting the straps.

Although China is the most important element in the commodity business it is not the only player.

Other countries are industrialising as well, and that trend is driving the market for bulk commodities, most especially iron ore.

In a detailed analysis SocGen predicts that this key market will remain in deficit for the remainder of this year and next year before going into a small surplus in 2015.

As a consequence it expects prices to stay over US$100 a tonne until 2014 and then only decline to US$95 in 2015.

As with all forecasts they are subject to a whole range of potential events which may render them incorrect.

But, given that no one knows if the US will be paying its bills next week, these are probably the least of our worries.

Source >>>>>>>>>>> www.minesite.com
*****

 

[MARKETWINNER]

Despite government shutdown, debt ceiling debate, and economic uncertainty, there were number of very good commodity stocks globally in all types of markets such as developed, emerging and frontier markets. Recently we saw the extremes of undervaluation for commodity stocks and some emerging markets. Later they had rally. We may see large Gains ahead in some commodity stocks including cyclical Commodity Stocks in the coming months. They should outperform the broader stock market.

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions

 

[drillinto]

Cattle better bet than softs, or grains - Goldman
Goldman Sachs became the second bank in two days to warn on arabica coffee futures, cautioning over cocoa and sugar prices too - but foreseeing a bright outlook for cattle investors.
...

Source >>> http://www.agrimoney.com/news/cattle-better-bet-than-softs-or-grains---goldman--6392.html

 

[drillinto]

>>> October 19, 2013 <<<

That Was The Week That Was ... In Australia
By Our Man in Oz

Minews. Good morning Australia. You seem to have had a reasonable finish after a wobbly start to the week.

Oz. It was a bit hairy for a while when the potential US debt-default was hanging over the market, but the real pick-up came with the stronger Chinese growth data.

Minews. The net result being renewed strength among iron ore and gold stocks.

Oz. They were the best performing sectors. Iron ore thanks to Chinese demand which is keeping the price up, and gold thanks to what seems to have been a spot of panic covering by short-sellers caught out by the US budget solution.

Overall, the Australian market as measured by the all ordinaries shrugged off the early uncertainties to add a respectable 1.8 per cent. Mining stocks, as measured by the metals and mining index rose by 1.7 per cent, while the gold index was two per cent higher.

Minews. Those are not really very strong rises.

Oz. No, they’re not, but it was a curious week. There was a fair degree of fear around that the far right faction of the Republican Party in the US really was determined to push the country into a debt default, with unimaginable consequences.

As it turned out the climb-down could represent a turning point, with the likelihood that there will not be a repeat of the brinkmanship when the debt question comes up again in February.

Minews. So much for international affairs, it’s time for some share prices.

Oz. Because the indices really didn’t move far, let’s start the call of the card with a selection of stronger moves from across the field. One of the better performers was possibly influenced by a presentation at last week’s Minesite forum.

King River Copper (KRC) attracted quite a following after a presenting at Minesite in London, adding A3.6 cents (48 per cent) for the week to close at A11 cents, in reasonably heavy turnover. Punters liked the prospect of exploration success on its copper play in Western Australia.
...

Source >>> www.minesite.com
*****

 

[drillinto]

>>> October 21, 2013 <<<

At US$4.2 Trillion, China’s National Savings Are Now Significantly Higher Than Those Of USA
By Rob Davies

The news last week was dominated by the Mexican stand-off north of the Rio Grande by politicians in Washington.

But there were some other developments that were more significant for the mining industry.

Chinese growth for the third quarter was reported at 7.8 per cent, the first increase for three quarters and encouraging news from the largest metal consumer in the world.

While this wasn’t enough to increase metal prices as a group for the week it did keep the LME index flat at 3,130.

Underlying the events last week were some larger trends.

Few observers, still less investors, can have watched the political events in the US with equanimity.

Knowing the process will be repeated in three months is not a bull case for holding US debt.

How long the US will be able to throw its weight around simply because it is the world’s largest economy will surely be questioned more and more.

In a thoughtful note from Lombard Street Research, Diane Choyleva points out that while US national savings amount to US$2.7 trillion, those of China are a staggering US$4.2 trillion.

She argues that once China feels strong enough to open up its capital account a wall of money will migrate from China as a way of reducing the overvaluation of its currency.

In a small way this financial liberalisation process is already underway.

Last week the Dalian iron ore futures exchange for physical delivery started trading. Since it is backed by 90 million tonnes of the stuff sitting on Chinese quays there shouldn’t be any issues about deliverability.

This news is quite timely as it coincided with a report from Anglo American disclosing that its iron ore production in the third quarter was down 24 per cent because of continuing problems at its Sishen mine in South Africa.

No wonder Dalian iron ore futures price increased to 979 yuan (US$159) for May delivery. Right now prices at Tianjin are US$134 a tonne, up 22 per cent from the lows in May.

Chinese imports of iron ore rose to a record 74.7 million tonnes in September.

Bloomberg points out that in 2012 China accounted for two thirds of the 1.18 billion tonnes of this vital commodity traded by sea.

At an average annual price of US$128.3 a tonne that makes it second only to oil in terms of value as a traded commodity.

On a brighter note, Anglo American was able to report a 32 per cent increase in copper production in the quarter.

This, though, was outweighed by a 23 per cent fall in copper output from Rio Tinto.

Inventories of copper at the LME have now dropped back to 497,500 tonnes and that decline was enough to push copper prices up 1.5 per cent over the week to US$7,232 a tonne.

Miners, it seems, are struggling to cope with the relentless demand from China, and that must be good for margins.

And investors are desperately seeking alternative investments to US debt.

Lombard’s Choyleva argues that Chinese capital will avoid US debt and instead target US, UK and Australian real estate, private equity and, eventually, quoted stocks.

If she is right, and that pincer movement does happen, the squeeze on commodity producers could be intense

Source >>> www.minesite.com
*****

 

[drillinto]

>>> Caterpillar’s Earnings Highlight Mining Industry’s Challenges <<<
OCTOBER 24, 2013
by Daniela Pylypczak

On Wednesday, Caterpillar (CAT)–one of the biggest manufacturers of construction and mining equipment–posted lower-than-expected quarterly results and cut its full year forecast. The bellwether cited weak demand from its mining customers, its most profitable product category, as the primary source of Caterpillar’s sour quarter. In 2014, Caterpillar estimates revenue will be essentially flat to +/-5% compared to 2013. For the year, the company now expects revenues to come in around $55 billion versus the previously forecasted $58 billion figure.
...

http://commodityhq.com/2013/caterpillars-earnings-highlight-mining-industrys-troubling-state/

 

[drillinto]

Cool website

China Econtracker is a free one-stop shop for Chinese economy data

http://graphics.wsj.com/econtracker-china/index.php#ind=gdp
***

 

[drillinto]

>>> October 27, 2013 <<<

That Was The Week That Was ... In Australia
By Our Man in Oz

Minews. Good morning Australia. The recovery in your market seems to have spread across most sectors last week.

Oz. There was a pleasingly positive tone in places neglected for some time. Nickel stocks for example attracted fresh attention as a result of a stronger nickel price. Gold stocks also reacted positively to the higher gold price, and should do better on Monday with another US$10 an ounce added to the price after we closed on Friday.

Overall, the Australian market, as measured by the all ordinaries, added 1.2 per cent last week, a modest upward move which failed to capture the full impact of a 3.5 per cent rise in the metals and mining index, and a 4.8 per cent rise in the gold index.
...

Source >> www.minesite.com
*****

 

[drillinto]

October 28, 2013

>>> Caterpillar’s Words Of Woe Are Bad News For Suppliers, But Good News For Mining Investors
>>> Rob Davies

If there was any doubt that a period of a huge expansion of capacity is coming to an end it was dispelled by the comments from Caterpillar last week.

This heavy machinery manufacturer is the bellwether of the mining industry and its warning that revenue and profits will be lower this year than previously expected confirms what many have suspected.

Mining companies are no longer building new mines and expanding or upgrading old ones, as they have been doing for the last decade.

That hits equipment suppliers right between the purchase orders and is the best evidence that the industry is optimising output to slightly lower growth expectations.

Bloomberg reported that the mining industry is set to decrease capital spending by 16 per cent in 2013 and 12 per cent over two years.

While that is not great news for suppliers it is good news for mining investors.

Last week the LME index of base metals edged up 0.5 per cent to 3,146 as the market recognises that the supply tap is slowly being tightened and will not be allowed to race ahead of demand.

Another indication that conditions remain vibrant is the healthy state of bulk freight rates - at least for carriers if not consumers.

Since April, iron ore freight rates have increased from US$1,200 to US$4,000 in September and industry observers are forecasting a further rise of 23 per cent.

That said, Platts reported that iron ore prices fell in September even as mills restocked. Trying to separate noise from signal is one of the hardest problems in this industry.

The supply story is not just about Western production though. Bloomberg is reported as saying that Chinese refined copper production will be 6.6 million tonnes this year, 700,000 tonnes more than last year.

Quite how long that rate of increase can be maintained however is a big question. Lombard Street Research believes that the yuan is about 30 per cent overvalued and unit labour costs are rising by 14 per cent.

Data like that suggests that Chinese copper production may be as uneconomic as a lot of its aluminium output.

Despite being a semi-market economy China has shown a noticeable reticence to close loss-making capacity in the mining industry for fear of social unrest.

In its latest Asset Allocation report Lombard Street Research is still expecting a debt crisis in China in three to five years’ time. It also says that that the next few years will not be good for metal bashers.

In a way though that is exactly why the mining industry is doing what it is doing now - cutting back on new investment to anticipate future changes in demand.

Since mines typically have planned lives of 10 to twenty years the industry has already factored in a five to 10 per cent reduction in supply.

So the total loss of future capacity could be as high as 20 per cent.

If it is as high as that the conditions are already being established for the next upturn.

It is the long lead time on large expensive projects that is the key reason for the price volatility in the sector.

Add to that the sharp variations in demand that can occur in response to economic policy and it is easy to see why this industry has a unique ability to surprise everyone involved, whether manager, customer or shareholder.

SOURCE >> www.minesite.com
******

 

[drillinto]

For your consideration >> http://uraniuminvestingnews.com/

 

[drillinto]

October 29, 2013

The Gold Industry Contributes $210 Billion A Year To The Global Economy, Says PwC
>>>>>>>>>> Ryan Jackson in Vancouver


With the deterioration of the gold price in 2013 and the weak mining markets, many investors have lost faith in the yellow metal.

But until recently it has been difficult to quantify the impact which the global gold industry has on the world economy.

While it was clear that the impact was great, studies with transparent methods presenting clear results were few and far between.

It’s for this exact reason that the World Gold Council, a prominent trade body for gold companies, commissioned PwC to put together an all-encompassing study entitled The Direct Economic Impact of Gold.

“The report is both ground-breaking in scope and timely in its analysis”, says Randall Oliphant, executive chairman of New Gold and chairman of the World Gold Council.

“It addresses, for the first time, the direct economic impact of gold on the global economy, and is unique in looking at an entire value chain, including gold mining, refining, and fabrication and consumption. It helps us understand the fundamental role that gold plays in advancing economic development and ultimately the needs of society.”

Previous reports have had a more limited scope, and typically examined the economic impact in a certain jurisdiction or in relation to only one segment of the industry.

Taking a more holistic approach, the World Gold Council hopes to illustrate just how large of an economic influence the global gold industry has and to prove that it is a powerful engine of wealth generation around the world.

According to the report, the global gold supply reached 4,477 tonnes in 2012 with approximately two thirds coming from mining and the remaining third from the recycling of gold.

At that level, the sector contributed more than US$210 billion to the world’s economy in 2012, which is approximately the equivalent of the GDP of Ireland, the Czech Republic or Beijing.

The 15 largest gold producing countries accounted for around three quarters of global output, and directly generated US$78.4 billion of gross value added (GVA) in 2012, which is roughly equivalent to the GDP of Ecuador.

The study finds that gold is a significant source of exports for many countries and a large proportion of the exports of some resource-rich developing countries. In particular, gold accounted for 36 per cent of all Tanzanian exports and 26 per cent of the exports of Ghana and Papua New Guinea.

The impact on developing nations is clear in terms of GDP as well. In Papua New Guinea 15 per cent of GDP derived from the activities of the gold industry. In Ghana and Tanzania the figures were eight and six per cent respectively. So, although more economically developed countries such as China, the USA, Canada, and Australia produced more gold, the impact in smaller economies can be even more pronounced.

In a video discussion presented by the World Gold Council accompanying the article, Jason Burkitt of PwC explained that gold does make a “significant impact” in all of the countries in which it is produced. “But that impact becomes very substantial in developing countries.”

Jason also pointed out that the industries servicing mining operations as well as artisanal mining could not be analyzed in the report but no doubt add significant value over-and-above the figures quoted in the PwC paper.

While mining accounted for the majority of the gold supply, recycling accounted for a third of global supply and the estimated gross value added of the recycling industry was calculated to be between US$23.4 billion and US$27.6 billion in 2012.

Per tonne, the gross value added of recycled gold clocks in at US$16 million compared with approximately US$36 million for gold produced from mines.

With so much gold being produced from mines and recycled, it’s natural to inquire where this gold is ending up. In 2012, jewellery accounted for the largest portion of demand at 41 per cent. Following hot on its heels was investment demand, which came in at 35 per cent of global demand. From there, central bank gold purchases accounted for 12 per cent while industry consumed 10 per cent.

The total economic impact is around US$110 billion. US$70 billion of that is associated with jewelry and US$38 billion is associated with investment demand.

Of the global demand, the 13 largest gold consuming countries in 2012 accounted for 75 per cent of gold used for fabrication and 81 per cent of gold used for (final) consumption, either in the form of jewellery or investment products such as small bars and coins.

Topping that list are India and China, which together make up more than half of the global demand picture.

This year, lower demand coming from India ahead of the Diwali gift-giving season this year has got some in the industry worried. But pundits point to the active measures taken by the Indian authorities to curtail gold buying as the major driver. If the restrictions are rolled back, many in the industry expect to see Indian consumers re-enter the market.

Meanwhile, Chinese demand has grown to take up some of the slack from India and the expectation is that 2013 demand will outpace the 776.1 tons recorded in 2012 by a wide margin.

“On the demand side, we’ve seen continuous growth driven by shifts in wealth creation, patterns of saving, and spending”, explains Aram Shishmanian, chief executive of the World Gold Council. “That shift, from west to east, is unstoppable.”

Source >>>>>>>>>>>>> www.minesite.com

 

[drillinto]

>>>>>>>>> November 02, 2013

That Was The Week That Was … In Australia
By Our Man in Oz

...

Minews. Not a bad collection of moves, but perhaps not enough to lift the overall mining market.

Oz. No, the market, as measured by the metals and mining index ended down a marginal 0.8 per cent, which was fractionally worse than the 0.4 per cent fall from the all ordinaries, with both moves indicating how flat the week was when looked at over the full five trading days.

Gold, given the price retreat back to around US$1,325 an ounce when we closed, was the weak sector, and will be weaker again on Monday after the price kept sliding in London to around US$1,316 per ounce.

Minews. It seems that apart from the handful of exceptional performers mentioned earlier that the overall market barely moved, so let’s fly through the sectors, starting with gold.

Oz. After Tribune there was really only one more strong rise, and that came from the New Zealand gold miner, OceanaGold (OGC), which benefited from investor support after the release of its quarterly report, and added A37 cents to A$1.79.

Other gold moves, all down, included: St Barbara (SBM), down A7.5 cents to A45 cents, Evolution (EVN), down A4.5 cents to A81.5 cents, Papillon (PIR), down A5 cents to A$1.10, Perseus (PRU), down a thumping A20.5 cents to A41.5 cents, Silver Lake (SLR), down A6 cents to A73.5 cents, Troy (TRY), down A8 cents to A$1.30, and Northern Star (NST), down A10 cents to A81.5 cents, despite a burst of publicity about a coal discovery close to its Paulsens gold mine.
...

Source >>> www.minesite.com

 

[drillinto]

>>>>>>> November 04, 2013 <<<<<<<

The Capital Markets See-Saw Is Likely To Continue Swinging Up And Down For Some Time To Come
Rob Davies


Last week an encouraging Chinese PMI figure of 51.4, the highest for 18 months, once again reminded investors of the of sheer power of China as a positive force in the world economy and hence on commodities.

Less prominence is given to the other end of the see-saw - the negative effect arising from the seemingly never-ending recession in Europe.

A report from Lombard Street Research quantifies this by pointing out that the Eurozone has moved from a €140 billion deficit five years ago to a €190 billion surplus now.

This, it says, has sucked a massive amount of demand out of the world economy.

It is fortunate therefore that China has acted to counter-balance the malign effect of Europe.

Its power was demonstrated again last week when Bloomberg quoted the Beijing Antaike Information Development unit as forecasting a 6.3 per cent increase in Chinese lead consumption next year, to 5.26 million tonnes.

This will create a deficit of 13,000 tonnes, since local production is only expected to increase five per cent to 5.24 million tonnes.

This encouraging news helped push lead prices up one per cent on the London Metal Exchange to US$2,170 a tonne.

There was also encouraging news from China for zinc.

The same research unit forecasts a five per cent increase in Chinese zinc consumption to 5.93 million tonnes.

That will require 800,000 tonnes of zinc concentrates to be imported to feed domestic smelters. A forecast of a five increase in local production to 5.5 million tonnes will still leave the domestic market undersupplied.

As with lead, this news was enough to add 1.2 per cent to the zinc price and take it to US$1,916 a tonne.

After a period in which LME zinc inventories had dipped below one million tonnes they have now started to creep back up again and currently stand at 1,027, 375 tonnes, about 13,000 tonnes less than last week.

Despite the good news on these two metals other base metals had weaker returns and, overall, the LME index ended the week down 0.2 per cent at 3,140.

In part though that was due to a resurgent dollar as news of further weak growth in Europe was digested.

It is this contrast between strong demand in the East, weak consumption in Europe and the US somewhere in between, that is dominating capital markets.

Lombard Street Research feels that these conditions will prevail for some time to come and because of that, does not expect interest rates to rise during 2014.

When they do it expects Europe to lead the way, although it is likely that the US will have started to taper its QE programme before that happens.

This cheap money is helping to keep forward prices subdued as contangos in all the base metals are modest.

What will happen as the recovery gathers strength and interest rates start to rise is the big quandary.

Base metals should fare well as they will be demand-driven, but speculative assets, such as high risk equities, might suffer as the opportunity cost increases.

However, along the way the capital markets see-saw is likely to increase its oscillating frequency. That will be good news for some, less good for others.

Source >>> www.minesite.com
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[drillinto]

>>> Keep an Eye on the Dollar Index <<<
Nov 1, 2013

If you haven't noticed, the US Dollar has had a nice rally this week.
...

http://www.bespokeinvest.com/thinkbig/2013/11/1/keep-an-eye-on-the-dollar-index.html
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[drillinto]

Commodities blog, for your consideration >> http://spilpunt.blogspot.fr/

 

[drillinto]

>>>>>>>>>>>>>>>> November 09, 2013

That Was The Week That Was ... In Australia
Our Man in Oz

...

Oz. Price movements were generally modest, as can be seen in the 1.2 per cent rise in the metals and mining index over the past week, a 0.3 per cent fall in the all ordinaries, and a 2.5 per cent fall in the gold index.

What’s more, the gold index is likely to cop another hit on Monday because the gold price crashed back through the US$1,300 an ounce market after we closed on Friday.


Minews. Time to look at the gold sector, bearing in mind your comment about Monday shaping as a tough day for gold stocks.

Oz. The annoying part about the gold price moving sharply after we close on Friday is that any prices mentioned here are an historic snapshot of a point in time. Having said that the overall trend among the smaller gold companies was mixed, possibly even trending up.

Gold stocks to gain ground last week included Kingsgate (KCN), up A6 cents to A$1.47, Intrepid (IAU), up A2.5 cents to A29.5 cents, Papillon (PIR), up A5 cents to A$1.15, OceanaGold (OGC), up A4 cents to A$1.83, and Scotgold (SGZ), up A0.3 of a cent to A1.8 cents.

Gold stocks to lose ground last week included: Northern Star (NST), down A1.5 cents to A80.5 cents, Evolution (EVN), down A2 cents to A79.5 cents, Alacer (AQG), down a sharp A51 cents to A$2.51, Beadell (BDR), down A5 cents to A87 cents, Regis (RRL), down A17 cents to A$3.27, and Troy (TRY), down A5 cents to A$1.25.

...

Uranium moves, as mentioned, were very modest. Paladin (PDN) added half-a-cent to A40.5 cents. Greenland (GGG), fell A1.5 cents to A28.5 cents. Berkeley (BKY) lost half-a-cent to A22.5 cents. Manhattan (MHC) added one-tenth of a cent to A5.4 cents, while Uranex (UNX) added the same miniscule amount to end the week at A7.4 cents.

...

Source >>> www.minesite.com
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[drillinto]

November 09, 2013

That Was The Week That Was ... In London
By Robert Tyerman

Upbeat economic news competed for investors’ attention with fears that the upshot might be the ending of US monetary stimulus.

The FTSE 100 Share index marked time, closing the week 0.25 per cent lower at 6,708.42.

Mining shares proved more robust, taking the FTSE Mining Share Index 2.25 per cent forward to 16,518.48.

However, gold slipped US$15.85 to US$1,307.95 an ounce, while platinum, copper and aluminium were also weak.

Anglo American gained a modest 32.5p to 1,450.5p, against a 12-month peak of 2,072p and a 1,207p low, after completing the sale of its Amapa iron ore operation in Brazil to Dubai-based Zamin Ferrous.

The price was an initial US$134 million with up to US$130 million on top over five years, depending on the iron ore price.

Now valued at £20.8 billion and yielding three per cent, the mining giant said it would use the proceeds to pay down debt. The company also announced the recruitment of investment manager Jim Rutherford as a non-executive director.
...

Source >>> www.minesite.com
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