Gold surged 2.5 percent on Friday, bouncing $40 per ounce off session lows as fears that unrest in Egypt will spread across the Middle East prompted investors to buy the precious metal as a safe haven.
Egypt's president Hosni Mubarak imposed a curfew and ordered troops to back up police as they struggled to control crowds who flooded the streets of Cairo and other Egyptian cities on Friday to demand that he step down.
"All things Egypt. There is a major flight to quality...a stronger dollar, and flight into bonds, flight into gold," said Frank McGhee, head precious metals trader of Integrated Brokerage Services in Chicago.
"Gold is benefiting more than bonds at this particular point. People are looking at gold as a safe haven in times like this, and it's certainly showing it," he said.
Investors often turn to gold as an insurance at the expense of paper currencies during times of political and economic uncertainties.
Spot gold rose 2.3 percent to $1,343.01 an ounce by 11:58 p.m. EST (1658 GMT), the largest one-day gain in nearly 3 months. U.S. gold futures for February delivery rose $24.7 to $1,343.10 an ounce.
The metal had touched a four-month low of $1,308.00 an ounce, having fallen 2.6 percent on Thursday on a run of firmer than expected U.S. economic data which boosted confidence in the recovery.
Gold initially weakened after data showed the U.S. economy gathered speed in the fourth quarter with the biggest gain in consumer spending in more than four years.
"Though the GDP data came in slightly below expectations... (its acceleration) was driven by two factors which are very important when looking forward, and that is the more important factor in assessing the future course of the U.S. economy," said Quantitative Commodity Research consultant Peter Fertig.
The dollar and U.S. Treasuries rose on as Egypt's protests drove investors to seek safer assets. Stocks fell around the world and crude oil prices rose.
"The market is a little sensitive when people take to the streets as it reminds them of the riots in Greece a year ago, and that did lead to a flight into the safety of U.S. Treasuries," said Chris Rupkey, chief financial economist at Bank of Tokyo/Mitsubishi UFJ in New York.
ETF INVESTMENT EASES
Investment demand for gold has been soft this year, with holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, down another 3 tonnes on Thursday.
London's ETF Securities reported a 1.3-tonne outflow from its gold exchange-traded products on the same day.
The Wall Street Journal said on Friday hedge fund SHK Asset Management liquidated a U.S. gold futures position this week valued at over $850 million, more than 10 percent of the main U.S. futures market.
Spot silver rose 3.9 percent to $27.92 an ounce. Holdings of the world's largest silver-backed ETF, the iShares Silver Trust, fell to 10,426.43 tonnes on Thursday from 10,447.70 tonnes.
Platinum climbed 1.1 percent to $1,800.99 an ounce and palladium gained 1.5 percent to $814.47.
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Standard & Poor's cut in Japan's credit rating could spur more buying of gold from some retail investors in the country, though most will continue to view a recent rally in the precious metal as an opportunity to cash-in.
Analysts and bullion house officials said the ratings cut will not cause an immediate, visible shift in the behaviour of Japanese households, which typically view gold as a tool to make profits from, rather than as a currency alternative or a safe-haven asset.
"It's not realistic to think the S&P move will prompt a change in Japanese perception of gold, namely as a way to earn interest, and not a risk management tool," said Naohiro Niimura, a partner at Tokyo-based research and consulting firm Market Risk Advisory Co.
With Japanese household assets at some $17 trillion, there is low risk of Japan defaulting as the government has a huge pool of domestic deposits to fund its debt issuance. This prevents a sense of urgency growing among investors, analysts said.
But as the country's investor base diversifies and as fiscal reform is not expected to yield anything effective in the near-term, Japanese household selling of gold could slow this year, reducing Japan's net exports of the yellow metal, even if prices rise.
And some retail investors could be tempted to buy.
"A number of retail investors have been increasingly concerned about Japan's fiscal future, and stepping up to buy gold," said Wakako Harada, a senior bullion trader at Mitsubishi Corp.
"Such investors are still a minority and are overwhelmed by the selling power from those looking to cash in," she said. "The downgrade could accelerate buying on Japan's debt woes."
S&P's first cut on Japan's long-term sovereign debt since 2002 helps raise public awareness of the country's lack of consistent and comprehensive fiscal policy to tackle ballooning national long-term debt, which amounts to 181 percent of gross domestic product, or over $10 trillion.
An official at Tanaka Kikinzoku Kogyo, Japan's biggest bullion house, said its gold purchases from households and sales to them were active despite a rallying market in 2010.
"Japanese people generally still lack the notion of holding gold in times of crisis. But the fact that more investors were buying gold last year despite rising prices suggests a change in their behaviour may be taking place," the official said.
Japanese households slowed their sales of gold to bullion dealers last year, resisting the temptation of record prices to hold out for the possibility of greater profits in 2011.
Analysts say the government may use the fiscal woes to increase the country's consumption tax, last raised to 5 percent from 3 percent in 1997, which will likely temporarily boost gold buying as investors seek to make profits from the difference in tax rates.
Key gold futures prices on the Tokyo Commodity Exchange rose to about 1.4 percent and gold priced in yen rallied to session highs after S&P's downgrade.
"The downgrade does help turn investors' attention to Japan's fiscal woes," said Koichiro Kamei, managing director at Tokyo-based researcher Market Strategy Institute Inc. "It could be a trigger for heightened awareness of the issue, but it will take a couple of more years to attract wider attention."
($1=82.88 Yen)
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(Reuters) - U.S. copper futures briefly dipped into negative territory midday Friday as mounting unrest in Egypt spurred more investment flows into safer-haven assets like the U.S. dollar and gold.
COMEX copper for March delivery HGH1 dipped below Thursday's settlement at $4.3385 per lb, as the U.S. dollar index .DXY jumped above 78 and U.S. gold futures extended gains. [USD/] [GOL/] (Reporting by Chris Kelly)
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Newmont Mining Corp, the world's No. 2 gold producer, expects gold prices to rise in 2011 as a hedge and on demand from emerging countries, such as China, its chief executive said on Friday.
Newmont's CEO Richard O'Brien told Reuters Insider at the World Economic Forum in Davos that it expected gold prices to hit $1,400-$1,500 an ounce this year, even up to $2,000 in the future.
Earlier in January, Denver-based Newmont reported 2010 gold production at the high end of its previous outlook and said operating margins for the precious metal had increased.
Newmont operates mines in North and South America, Australia, Indonesia and Africa.
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Oil prices jumped more than 2 percent on Friday as investors reacted to accelerating growth in the United States in the fourth quarter of 2010 and increasing unrest in Egypt.
Protests in Egypt and the government's response intensified, making investors more wary about the unrest.
Earlier, oil prices received a boost from news that the U.S. economy gathered speed in the fourth quarter, fueled by the biggest gain in consumer spending in more than four years and strong exports.
"There is growing concern about the situation in Egypt and Yemen and there may be worry about not going into the weekend being too short," said Phil Flynn, analyst at PFGBest Research in Chicago.
U.S. crude oil for March delivery rose $2.25, or 2.6 percent, to $87.89 a barrel at 11:35 a.m. EST (1635 GMT).
In London, ICE Brent crude for March rose $1.05 to $98.44 a barrel, reaching $98.95 earlier.
The smaller gains squeezed Brent's premium over its U.S. counterpart, which had stretched to more than $12 per barrel, its widest since January 2009.
Total U.S. crude volume was above 822,600 lots traded just after 11:30 a.m. EST (1630 GMT), according to Reuters data, 19 percent above the 250-day average and already surpassing Thursday's 789,077-lot total.
Total Brent trading volume was above 387.000 lots traded, according to Reuters data, 1.5 percent above the 250-day average.
(Additional reporting by Gene Ramos in New York and Christopher Johnson in London; Editing by David Gregorio)
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Crude oil prices fell on Friday as traders speculated about whether China may impose more restrictions to control the growth of its economy, and looked for more signs that the US economy is headed for better days.
Benchmark oil for March delivery fell 48 cents to settle at $US89.11 a barrel on the New York Mercantile Exchange.
Oil and other commodities have taken a hit from news that China's economy defied expectations to speed up in the fourth quarter while inflation remained elevated.
Traders speculated that means China's government will take further measures to control cost of living increases. China has had a robust appetite for commodities from oil to soybeans as its economy has boomed in the past year.
Oil prices were restrained by the Energy Department's weekly report that showed growing US stockpiles of oil, gasoline and distillates, which include heating oil and diesel fuel. All are higher than the five-year average, an indication that energy demand remains tepid.
In other Nymex trading, heating oil rose 2.76 cents to settle at $US2.6508 a gallon, and gasoline added 3.64 cents to settle at $US2.4589 a gallon. Natural gas for March delivery gained 5.1 cents to settle at $US4.743 per 1,000 cubic feet.
In London, Brent crude rose $1.02 to settle at $US97.60 a barrel on the ICE futures exchange.
PRECIOUS METALS
Gold prices fell for a second day on Friday as a stronger appetite for riskier assets such as equities and an improving economic outlook diminished safe-haven buying, more than offsetting a weaker dollar.
Bullion notched a third consecutive weekly loss, its longest since July, and that called into question the metal's lengthy bull run due to signs that the economic recovery is taking hold and as fears about an European debt crisis have subsided for now.
Spot gold fell 0.2 per cent to $1,343 an ounce by 2 pm EST (1900 GMT). US gold futures for February delivery settled down $5.50 at $1,341 an ounce.
Bullion hit a low of $1,337.50, their weakest price since Nov 18, as financial markets opened in New York. US traders cited an increase in margin requirements for precious metals futures as a reason for the decline.
Silver inched up 0.2 per cent to $27.53 an ounce.
The gold-to-silver ratio - the number of ounces of silver needed to buy an ounce of gold - rose back towards 50, its highest level since late November, as some traders believed gold is becoming increasingly expensive relative to silver.
Friday's turnover was modest as COMEX gold and silver futures volumes on the New York Mercantile Exchange were largely in line with their 30-day averages.
Gold's slide was limited on Friday by a retreat in the dollar to two-month lows versus the euro, with the European single currency reaching its highest level since late November, helped by improving confidence in region.
Silver prices had earlier hit a seven-week low at $27.10 an ounce, pressured by a further outflows from the world's largest silver-backed exchange-traded fund, the iShares Silver Trust.
Holdings of the trust fell by just over 10 tonnes on Thursday, after recording their biggest one-day drop since late November in the previous session. It has seen outflows of more than 346 tonnes so far this year.
Investment demand was a major driver in silver's price gains of more than 80 per cent last year.
Platinum rose 0.8 per cent to $1,822.24 an ounce, while palladium climbed 1.4 per cent to $819.50.
INDUSTRIAL METALS
Copper bounced nearly one per cent on Friday, snapping a two-day slide that dragged prices to their lowest level in a month, as the dollar weakened and on worries about more monetary tightening in top-consumer China abated.
Copper prices - down as much as five per cent from all-time record peaks at $9,781 per tonne in London this week and $4.4980 per lb in New York earlier this month - found their footing on Friday, as investors reassessed global demand prospects for the industrial metal.
London Metals Exchange (LME) copper for three-month delivery rose $86, or 0.92 per cent, to end at $9,441 a tonne.
COMEX March copper firmed 3.70 cents to settle at $4.3090 per lb.
Copper also benefited from a weaker US dollar, which fell to a two-month low against the euro amid improving confidence in the euro zone.
A weaker US currency makes dollar-priced commodities more affordable for holders of other currencies.
One area where substitution could increase is air conditioning, with aluminium piping replacing copper.
Aluminium stocks jumped by 64,000 tonnes to 4,550,325 tonnes, up by more than six per cent so far this year alone.
Lead stocks last fell 175 tonnes to 264,175 tonnes, after touching their highest level since May 1995 on Wednesday.
The backwardation on lead - a premium for cash material over the three-month contract - rocketed to $80 a tonne, its highest since October 2007. This compared with a backwardation of $31 earlier this week.
Data on Friday continued to show a dominant position controlling 80 to 90 per cent of the stock warrants and cash contracts on LME lead.
Lead closed down $12 at $2,425 a tonne.
Tin rose to touch a record of $27,750 as investors focused on supply deficit expectations and the weaker dollar. The metal climbed $845 to end at $27,745.
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In a week that saw inflation re-emerge as a global challenge, the FTSE 100 index dropped back below 6,000 to close at 5,896. But despite these inflation concerns, gold, the traditional store of value during economic difficulties, also edged lower, to close the week at US$1,343 per ounce. Silver also suffered heavy falls on Thursday, and closed at US$27.46 per ounce. Base metals were also weaker. Copper closed lower, at US$9,455 per tonne, or US$4.29 per pound. Nickel fell to US$25,900 per tonne and zinc closed lower at US$2,354 per tonne. The one bright spark was in PGMs. Platinum and palladium both climbed, platinum to US$1,831 per ounce and palladium to US$814 per ounce.
The mining majors also closed lower. Rio Tinto slipped 3.7 per cent lower to 4,272p as it released a fourth quarter operations update in which chief executive Tom Albanese emphasised the importance of running operations at full capacity while commodity prices remained strong. The company’s iron ore operations set a new quarterly production record of 50 million tonnes attributable and new annual record of 185 million tonnes attributable. The company also stated that its Queensland coal mines are operational, although a force majeure declaration remains in place. Rio has not yet been able to estimate the full impact of the adverse weather in Australia. In the meantime, the company has just added to its coal capability away from Australia - late in the week, Australia’s Foreign Investment Review Board approved Rio’s acquisition of Riversdale Mining which has coal licences in Mozambique.
Meanwhile, BHP Billiton eased 2.74 per cent lower to 2,410p as it announced half-year production figures. The company achieved record iron ore production in both the quarter and the half year but, like Rio, its Queensland coal operations were significantly disrupted by the rains and flooding there. BHP commented that robust growth from developing economies continues to drive commodity demand, although industry-wide cost pressures are impacting a range of projects. Elsewhere, Anglo American slipped six per cent to 3,102p and Xstrata slipped 6.4 per cent to close at 1,400p.
Amongst precious metals miners, African Barrick Gold slipped 7.9 per cent to 529p as it reported fourth quarter production of 179,730 ounces. This represented an increase of nine per cent higher over the third quarter, meant that the full-year total came in at 700,934 ounces.
At the smaller end of the gold market, Tertiary Minerals leapt over 19 per cent to 13.4p on the back of positive analyst notes and the announcement that the company is a rig to start test drilling its gold project in Finland. That rise made for an interesting contrast with the fall that came from Philippines-focused gold producer Medusa Mining, which closed 3.6 per cent lower at 442p. Medusa had good news of its own, and announced that drilling continues to return encouraging intersections that indicate additional growth potential at and around the Co-O mine. The market was more concerned about the impact of gold price, though.
Also weaker was silver miner Hochschild Mining, which closed 9.4 per cent lower at 489p, even as it announced full-year production of 26.4 million attributable silver equivalent ounces, which was in line with expectations. The company stated that it’s looking for future growth from the Crespo, Azuca and Inmaculada properties.
Amongst junior iron ore miners, London Mining slipped 2.7 per cent to 365p, despite announcing a 70 per cent increase in the primary resource at its Marampa mine in Sierra Leone. Additional resources mean that the operation now looks capable of supporting production at a rate of 16 million tonnes per year.
Meanwhile, diversified junior African Aura Mining edged 0.6 per cent lower to 177p as it neared completion of a maiden resource estimate at its Nkout iron ore project in southern Cameroon. A 33-hole drilling programme has now been completed at Nkout. The maiden resource statement is expected early next month.
Also in iron ore, Beowulf Mining continued a strong recent run to close up 0.5p at 49.5p. The company recently added to its ground in Sweden when it acquired the Kallak South project for C$40,000 in Beowulf shares. That new ground now looks as though it might hold upwards of 400 million tonnes of iron ore, which, when added to the 175 million tonnes that Kallak North is expect to show, means that whole area has the makings of a tidy little project.
In zinc, Griffin Mining gained over seven per cent to close at 68p after it significantly increased its estimate of the resource within Zone III and doubled estimates of the contained tonnes of metal within Zone II at its Caijiaying zinc, gold, and lead mine in China.
It was a mixed picture amongst the nickel companies. European Nickel slipped 10.4 per cent lower to 21.5p as an operational update confirmed previously-announced plans to focus resources on its Acoje project in the Philippines. The Çaldağ mine in western Turkey is to be put on care and maintenance in light of the further delays encountered in the company’s quest for a forestry permit.
But Horizonte Minerals closed 30 per cent higher at 26p as it signed heads of terms to acquire 100 per cent interests in the Vila Oito and Floresta nickel projects in northern Brazil in return for the issue of 8.5 million new shares in the company.
And it was a good week, too, for Bezant Resources, which gained 11.8 per cent to close at 68.5p following the completion of a positive independent conceptual study for its Mankayan copper and gold project in the Philippines. The study confirms the technical and economic feasibility of the project and estimates a pre-tax net present value of US$459 million and lifetime pre-tax cash flow of some US$5 billion.
However, Stratex International eased 3.9 per cent lower to 9.38p as it announced positive initial copper, gold, molybdenum, and rhenium intersections from recent drilling at the Muratdere project in Turkey. The company also confirmed that further funding would be forthcoming from joint venture partners for the exploration programmes at the Öksüt and Hasançelebi prospects in Turkey.
Uranium juniors also had a busy week. Berkeley Resources edged 0.9 per cent lower to 113p as Severstal’s right to subscribe for shares and undertake an agreed bid for the company lapsed, although the two companies remain in discussions over other possible arrangements. Meanwhile, Berkeley raised A$55 million through a placing, and pressed the green light on its Salamanca uranium project. And Forte Energy closed 4.5 per cent higher at 9.38p as it raised A$15 million through a placing. The money will be used to accelerate exploration and feasibility work on its West African uranium portfolio.
Also offering uranium exposure, VANE Minerals gained 5.6 per cent to 3.7p, although this week it was gold and silver that drove the shares. The company has now concluded a joint venture to expand gold and silver production in Mexico.
Diamond miners enjoyed a good week too. Petra Diamonds closed 8.8 per cent higher at 180p as it announced the acquisition of South Africa’s second largest diamond mine by production, the Finsch mine, from De Beers. The acquisition will be funded by a 150p to raise £205 million.
Also better off was Stellar Diamonds, which closed 2.3 per cent higher at 11.5p after reporting further positive news from its Droujba kimberlite pipe in Guinea. Recent drilling has intersected a significant new zone adjacent to the known pipe. Results from the first two sample batches are expected shortly.
And sub-sea miner Nautilus Minerals soared over 27 per cent to 176p as the government of Papua New Guinea granted the company the world’s first deep sea mining licence in respect of its Solwara 1 project in the Bismarck Sea. The government has an option to take up to a 30 per cent stake in the project, exercisable within one month, and Nautilus is pressing ahead to conclude discussions over strategic partnering to develop the 2.2 million tonne seabed resource.
Finally, Kenmare Resources, which was recently forced to suspend production at its Moma mine in Mozambique after a tailings wall breach flooded a local village, confirmed higher second half production. The company also added that production expansion remains on schedule. The shares responded by rising 9.5 per cent to close at 33.12p. The company has also negotiated significant price increases with customers for 2011.
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It was certainly tough for most of the miners, but there was also the odd outbreak of optimism, just to show that the speculative spirit is alive. All of the major indices ended down. The gold index was hit hardest, and shed 4.4 per cent. The metals and mining index dropped by three per cent, and the all ordinaries held up rather well, losing just one per cent.
Apart from the gold price weakness, was there any other reason for the sell-off?
China worries seem to be a factor across all sectors. Despite the strong growth figures still coming out of China, there is concern that the government over there will soon crack down on inflation by means of further interest rate rises and reduced bank lending. If that happens it might dim demand for Australian exports. The Queensland and Victorian floods also had a negative effect on sentiment, but the financial cost seems manageable, even if it leads to a one-off tax levy to raise A$20 billion, or so.
Enough of the big picture, let’s have some prices.
Right. Good news first, fallers later. That way our London readers will be starting out with a look at the smaller companies which caught the eye of traders down this way, and there was quite a selection.
Good news is always welcome. Let’s hear it.
The prize for biggest rise of the week went to Mt Isa Metals (MET) which at one stage came close to doubling as the shares ran up from A48 cents to a 12 month high of A80 cents during trading on Friday. Mt Isa eventually closed the week at A70 cents, a gain of A22 cents, a rise that following in the wake of a a suite of excellent assays from its Nabanga gold project in Burkina Faso. The best result, reported on Thursday, was eight metres at 14.01 grams a tonne from a depth of 26 metres, followed by three metres at 24.62 grams per tonne from 59 metres. Gold mineralisation of more than 0.5 grams per tonne has been noted over a 3,600 metre line of strike, with the average coming in at 4.6 metres grading 5.66 grams per tonne.
Impressive results. Did they get much coverage in your news media?
Barely a mention. Only a couple of trade publications picking up the story, which is interesting for a number of reasons. The company itself is approaching the A$100 million market capitalisation level, and it has skilled management led by John Bovard, an old hand who some of your readers might remember as the man in charge, in its early days, of the Kalgoorlie Superpit gold mine, and then later on, at Greenwich Resources.
Indeed. What else is going on?
Other stocks which do not often get a mention in the mainstream investment media, but which did well last week, included two coal explorers, Attila Resources (AYA) and Universal Coal (UNV). Atilla only listed late last year, with coal in Western Australia as a target, but this week it jumped A16 cents higher to A77 cents, and did get as high as A80 cents on Friday, double its opening day price on December 8th. Universal Coal, meanwhile, is the latest Australian explorer to try its luck in South Africa’s coalfields, and added A11.5 cents to A57 cents.
The gold explorer which caught the eyes of traders, though we are yet to discover why, was Jaguar Minerals (JAG), which effectively doubled from A2.6 cents to A5 cents. Jaguar has projects across Australia, and at the moment its Mt Darlot joint venture with Barrick Gold looks the most promising. Among the other upward movers was Atomic Resources (ATQ), which is looking for gold and uranium in Tanzania. It added A4 cents to A57.5 cents. Also better off was Voyager Resources (VOR), which is exploring in Mongolia, and which rose by A3.5 cents to A55 cents, but did trade up to A66 cents on Friday. Elsewhere, Uramet (URM), which has switched its focus to gold in the South American country of Guyana, put on A1.5 cents to A17 cents, a 12 month high. Sovereign Gold (SOC) added A3.5 cents to A24.5 cents after completing its first drill hole in the historic Rocky River-Uralla goldfield in New South Wales, but with no assays to report yet. And one of Minesite’s old favourites, Scotgold (SGZ), shot up by A2.8 cents to A9.6 cents after reporting encouraging assays from its Auch project in Scotland which, fortunately, lies outside the national parks which stopped its flagship Cononish project last year.
Thanks for that burst of good news, which probably took a bit of prospecting on your part.
It did, but the results were worth it because they showed that hidden gems can always be found in the market if you look hard enough. A couple of other risers also merit a mention, because their share price movements, courtesy of speculators, could be pointers to future news. Prairie Downs (PDZ), one of the lost souls in the sickly zinc sector, attracted a bit of attention and put in a sudden upward move to a 12-month high of A25 cents on Friday. At the close it had slid back to A18.5 cents, for a gain over the week of A1.5 cents. Meanwhile, one of Minesite’s quieter members, Sabre Resources (SBR) recovered recently lost ground with a rise of A4 cents to A22 cents, but did trade as high as A24 cents on Friday, perhaps due to a revival of interest in its Namibian copper exploration project..
I think we’re now sufficiently softened for the bad news. Let’s start the call of the card, starting with gold.
Apart from Scotgold’s revival there were only three other gold companies that finished in the black, alongside one interesting producer which held its ground. Ampella (AMX) managed a rise of A3 cents to A$3.00. Silver Lake (SLR) recovered recently lost ground, and delivered a rise of A8 cents to A$2.18. Thor (THR) also continued to recover, putting on A0.3 of a cent to A4.7 cents. Apex (AXM), which almost disappeared from view thanks to trouble at processing plants in Western Australia, held its ground at A2.6 cents after reporting increased resources at its Wiluna mine, production of 19,500 ounces of gold in the December quarter, and a 30 per cent fall in costs to A$890 an ounce.
Now for the falls. Adamus (ADU) fell A6 cents to A75 cents, despite pouring first gold at Nzema. Kingsgate (KCN) fell A59 cents to A$10. Resolute (RSG) fell A3 cents to A$1.44. OceanaGold (OGC) fell a sharp A38 cents to A$2.88. Newcrest (NCM) fell A$1.58 to A$36.71, in the wake of problems at three of its mines. Gryphon (GRY) fell A23 cents to A$1.65. Perseus (PRU) fell A17 cents to A$2.95. Kingsrose (KRM) fell A9 cents to A$1.45, and Medusa (MML) fell A36 cents to A$7.19.
Time’s short. Let’s move quickly now, with base metals next.
Apart from the rise from Sabre, which we mentioned earlier, there were only two copper companies that gained ground. Rex Minerals (RXM) rose by A23 cents to A$2.97, but did get as high as A$3.12 on Wednesday. And Exco (EXS) added A1 cent to A52.5 cents. After that there was a long list of fallers, led by Sandfire (SFR), down A43 cents to A$7.36, Bougainville (BOC), down A22 cents to A$1.77, OZ Minerals (OZL), down A6 cents to A$1.67, Altona Mining (AOH), also down A6 cents to A38 cents, and Marengo (MGO), down A3 cents to A34.5 cents.
All nickel companies fell. Mincor (MCR) fell A6 cents to A$1.85. Panoramic (PAN) fell A11 cents to A$2.37. Western Areas (WSA) fell A24 cents to A$6.45, and Independence (IGO) fell A71 cents to A$7.01.
All zinc companies, apart from Prairie Downs, also lost ground, but not much, which is what you might call an interesting negative. Meridian (MII) was down A1.5 cents to A11.5 cents. Ironbark (IBG) fell by A2.5 cents to A27.5 cents, while Perilya (PEM) and Bass (BSM), both slipped half-a-cent lower to A59.5 cents and A37 cents respectively.
Iron ore next, please.
Mainly down, but with a few handy rises. Best performers were BC Iron (BCI) and Grange Resources (GRR). BC Iron accepted a takeover bid from Hong Kong’s Regent Pacific Group, and added A13 cents to A$3.28. Grange Resources reported strongly profitable production from its Savage River mine in Tasmania, and rose by A7.5 cents to A85 cents. The fallers were led by Fortescue (FMG), which fell A36 cents to A$6.69 following the exit from its share register of Singapore’s sovereign wealth fund, Temasek. Other movers included Iron Ore Holdings (IOH), down A4 cents to A$2.25, Mt Gibson (MGX), down A5 cents to A$2.14, and Brockman (BRM), down A30 cents to A$5.00. Moly Mines (MOL) also fell, down a sharp A26 cents to A$1.16, after it hit fund-raising problems
Now for the fuel twins, coal and uranium.
Coal remained popular with local investors, and uranium should have done better as the spot price is now up to US$68 a pound. Among the coal companies Aspire (AKM) continued to rise, adding A12 cents to A73.5 cents. Aston (ATZ) rose A16 cents to A$8.55. Carabella (CLR) shot up by A23 cents to A$1.62. Coalworks (CWK), added A3.5 cents to A94 cents, and Bathurst (BTU) put on A16 cents to A$1.04. The only significant decline came from Coal of Africa (CZA), which lost A19 cents to A$1.60.
Uranium companies failed to respond to the higher spot market, though most falls were modest. Berkeley (BKY) slipped A3 cents lower to A$1.79. Manhattan (MHC) lost A4 cents to A$1.38. Uranex (UNX) was A4.5 cents weaker at A69 cents, and Paladin (PDN) did worst of all with a drop of A37 cents to A$5.04 after it reported an expected production shortfall.
Minor metals to close, please.
Rare earth companies were sold off, apart from Alkane (ALK), which added A8 cents to A$1.14. Lynas (LYC) lost A6 cents to A$1.97, and Arafura (ARU) fell A16 cents to A$1.40. Lithium stocks also suffered, and Orocobre (ORE) fell A60 cents to A$3.40. The same fate was suffered by the tin twins, Venture (VMS) and Kasbah (KAS). Venture fell by A5 cents to A48 cents and Kasbah by A2.5 cents to A31.5 cents. Best of the minor metals, or other minerals, was South Boulder (STB), which added A19 cents to A$3.70 as interest grows in its potash project in the Eritrea.
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Oil prices fell on Monday, with Brent crude falling toward $97 a barrel and U.S. crude sliding below $88, as dealers focused on weaker equity markets and rising U.S. oil inventories.
Brent crude for March was down 30 cents to $97.30 a barrel by 1449 GMT. It reached $99.20 on January 14, the highest since October 2008. U.S. crude for March lost $1.27 to $87.84.
"The dollar strengthened and the stock market looks a little tired so this looks like crude testing support after last week's losses and the inventory builds," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
Earlier in the session, Brent rose to above $98 on renewed confidence that developed economies are recovering and as Saudi Arabia's oil minister predicted strong oil demand in 2011.
The Saudi minister, Ali al-Naimi, said he expected global oil demand to rise between 1.5 million and 1.8 million barrels per day (bpd) this year -- more than forecast by the International Energy Agency.
Brent's premium to U.S. crude, also known as West Texas Intermediate or WTI, reached $9.71 on Monday, its highest since February 2009, on tight North Sea supplies and strong emerging market demand.
"There are bearish factors on the WTI side and bullish factors on the Brent side," said Mike Wittner, analyst at Societe Generale. "Put the two together and you have the basis for a wide spread."
High inventories at Cushing, Oklahoma, the delivery point for U.S. futures contracts, have depressed U.S. crude, while North Sea production glitches have helped to bolster Brent.
GOLDMAN SEES BULL MARKET
Saudi Arabia is by far the largest oil producer in the Organization of the Petroleum Exporting Countries and holder of the bulk of the world's unused oil production capacity.
Speaking at an industry conference, Naimi declined to say whether Saudi Arabia's production was in line with its OPEC target of 8.05 million bpd.
The IEA said in a report last week that the OPEC leader was making more crude available to the market.
Naimi said Saudi Arabia was set to hold about 4 million bpd of spare crude oil capacity in 2011. The kingdom has capacity of 12 million bpd, or 12.5 million bpd including the neutral zone.
Oil is still a long way from the record high of $147 a barrel it reached in 2008 and while analysts do not expect that to be revisited any time soon, some prominent voices see the rally running further.
Goldman Sachs said it believed a "structural bull market" would return to the oil market as OPEC used more of its idle capacity to meet demand.
"As OPEC spare capacity is drawn down, we expect a structural bull market to return to the oil market, with substantially higher prices," Goldman said in a report on Monday.
(Reporting by Alex Lawler, Robert Gibbons and Florence Tan; editing by William Hardy and James Jukwey)
For more information, plase read from source
Merger mania continued to be the central theme on the Canadian markets, with investors speculating which companies will be next on the takeover list. On the macro side, the Bank of Canada held interest rates at one per cent and that left the Canadian dollar trading near par with its United States counterpart. So, once all the trading was done, the TSX Ventures Exchange, home to more junior exploration companies than anywhere else in the world, had lost a modest 0.24 of a per cent, while the TSX Gold Index had dropped 1.54 per cent.
Let’s start off on the deal making front.
Well, it looks like NovaGold Resources is trying to enhance the prospects of its 50 per cent-owned Galore Creek project in British Columbia by making a bid to take over neighbouring Copper Canyon Resources. Under the deal, Copper Canyon shareholders would get 0.0425 of a NovaGold share for each Copper Canyon share. That values Copper Canyon at around C$0.60 per share. Copper Canyon's principal asset is its 40 per cent interest in the Copper Canyon copper-gold-silver property adjoining the Galore Creek project, which is held equally by Teck Resources and NovaGold.
The huge Galore Creek project has been stalled for some time because of capital costs.
True, and if Teck can’t find a way for it to work at these commodity prices, one has to wonder if it will ever work. So it would be no surprise to learn that NovaGold is aiming to beef up the resource even more with the addition of Copper Canyon’s ground. The bid looks low, though, because Copper Canyon closed out the week down C$0.04 at C$0.81, while NovaGold closed down C$0.66 at C$12.83.
What else is going on?
Political risk continues to plague the long stalled out OceanaGold’s Didipio copper-gold project in the northern Philippines. The word is that a resolution issued by the Philippines Human Rights Commission recommends the withdrawal of the Didipio mining permit. OceanaGold remains committed to developing project, which is on schedule for production in the first quarter of 2013. Despite that commitment, OceanaGold closed down C$0.34 at C$2.77.
Meanwhile, shares of Moly Mines fell after the company cut revenue forecasts for its prospective Spinifex Ridge molybdenum-copper project in Australia 25 per cent. The cut is due to strength in the Aussie dollar. Moly Mines closed at C$1.23 for a C$0.18 loss.
So a down week for some recent favourites, but an up week for some in iron ore?
Adriana Resources was one winner, after it inked a deal with a unit of China's Wuhan Iron and Steel to advance the Lac Orelnuk and December Lake iron ore properties in Quebec. The Chinese company will pay C$120 million for a 60 per cent stake in the properties and take down a 19.9 per cent interest in Adriana through a private placement. Adriana closed up C$0.09 at C$1.48.
And the strength wasn’t just in iron ore. Shares of Rockgate Capital added C$0.31 to close at C$2.80 after the company announced an updated resource for the Falea uranium-silver-copper project in Mali. The contained uranium now stands at 27.8 million pounds with silver at 40.6 million ounces and the copper coming in at 55.4 million pounds.
You’ve also had some news from under the sea?
Yup. Shareholders of Nautilus Minerals were a happy lot after the company announced that it has been granted the world's first deep-sea mining lease for the development of its copper-gold Solwara 1 project in the Bismarck Sea. Nautilus ended the week up C$0.60 at C$2.80.
In drilling news, Newstrike Capital cut an impressive 214 metres grading three grams gold per tonne and 5.5 grams silver per tonne at its recently acquired Ana Paula project in Mexico’s Guerrero Gold Belt. Not surprisingly, shares in Newstrike rose, to end the week up C$0.20 at C$1.25.
Sticking to the Guerrero belt but flying under the radar screen, Torex Gold Resources tagged 48.8 metres grading 4.5 grams gold per tonne outside the known resource area of its multi-million ounce Morelos gold project. Despite some nice numbers, Torex ended the week down C$0.06 at C$1.49.
Over to diamonds, where Lukas Lundin-led Lucara Diamond has announced a C$60 million non-brokered private placement comprised of 60 million shares priced at C$1.00 apiece. The new funds will be used to develop the AK6 diamond mine in Botswana and the Mothae diamond mine in Lesotho. Lucara ended the week up C$0.16 at C$1.15.
And still in diamonds, Charles Fipke-led Metalex Ventures tabled preliminary macrodiamond results from the first of 11 holes testing the U2 kimberlite pipe in Ontario’s James Bay Lowlands. The results came in at 18.1 carats per 100 tonnes, not far off the 23 carats per 100 tonnes tallied at the nearby Victor diamond mine of De Beers. Not enough for the market, though, and Metalex ended the week down C$0.01 at C$0.62.
With the uranium spot price creeping up towards the US$70 per pound mark, it wasn’t a bad time to be making a uranium discovery. Southern Andes Energy added C$0.12 to close at C$0.67 after announcing a uranium discovery on its Tupuramani property in Peru. Surface sampling returned 0.32 per cent U308 over 20 metres.
The overall market was a bit choppy but the economic outlook for Canada suggests that the setting for now is steady as it goes. We will see what next week has in store.
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Gold edged up toward $1,350 an ounce in Europe on Monday as lower prices attracted buyers after the metal's third consecutive weekly loss, but a more optimistic view of global growth limited fresh investment.
A dearth of safe-haven demand means the precious metal could struggle to make fresh headway after rising to a record high above $1,430 an ounce late last year, analysts said.
Spot gold was bid at $1,347.90 an ounce at 5:48 a.m. ET, against $1,342.25 late in New York on Friday. U.S. gold futures for February delivery rose $6.20 an ounce to $1,347.00.
The precious metal fell 1.4 percent last week to its lowest since late November as a spate of firmer-than-expected economic data, primarily from the United States, boosted interest in assets seen as higher risk at gold's expense.
"We have got a pretty robust macro backdrop despite some potential for European sovereign issues," said RBS analyst Daniel Major. "Our economists aren't in the camp that that is going to derail global growth and the global risk story."
"The safe-haven argument, which was the dominant theme last year, is unlikely to be repeated this year," he said. "We have already seen slowing interest in exchange-traded funds."
"In the near term there seems to be good physical buying in China and India on price weakness and that is providing a bit of support around the $1,350 level, but certainly the Western investment story has started to wane somewhat."
Prices took a boost from fresh investment in gold-backed ETFs after several weeks of outflows, with holdings of the largest, the SPDR Gold Trust, rising by more than 20 metric tons on Friday.
They are still down some 9 metric tons this year, however.
Bargain hunting helped gold shrug off gains in the dollar, which usually weigh on prices. Strength in the U.S. unit curbs gold's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
EURO RETREATS
The euro backed off a two-month high against the dollar, with political turmoil in Ireland highlighting uncertainties facing heavily indebted euro zone countries.
Ireland's junior coalition party withdrew from Prime Minister Brian Cowen's government on Sunday, signaling the end of a crisis-riddled administration and hastening an election due on March 11.
Meanwhile data released Friday by the Commodity Futures Trading Commission showed a third successive drop in the net speculative position in gold, bringing the net non-commercial long to its lowest since the week of July 26, 2009.
The data showed the silver speculative position rose last week by about 1.3 percent, partially offsetting the previous week's fall, while the platinum net non-commercial position staged its largest weekly rise in at least four years.
Platinum was at $1,818.99 an ounce against $1,824.00, while palladium was at $816 against $819.75. Silver was bid at $27.55 an ounce against $27.47.
Holdings of the world's largest silver ETF, the iShares Silver Trust, fell by 181 metric tons on Friday, their biggest one-day outflow since late November.
They are down by more than 527 metric tons since the beginning of the year, worth some $468 million at today's prices.
HSBC analyst James Steel said in a note that despite strong sales of silver coins by the U.S. Mint, prices were unlikely to ride out falling ETF holdings. "Strong coin demand is unlikely to make up for weaker ETF demand," he said.
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Gold and silver prices are falling on Thursday, breaking support at significant technical-chart levels, pressured by asset allocation and some concerns of further interest rate tightening in China.
Stronger U.S. economic data is in turn lifting the dollar and weighing on commodities in general, too. In the short term, losses are expected to mount until both precious metals can find support under current prices, market watchers said, but the long-term picture hasn’t changed.
At 11:40 a.m. EST February gold futures on the Comex division of the New York Mercantile Exchange are at $1,348.70 an ounce and March silver futures are at $27.56 an ounce.
February gold futures broke through support at two key price levels: $1,360 and $1,350, and that helped to trigger selling, said George Gero, vice president and precious metals strategist with RBC Capital Markets Global Futures.
Silver, meanwhile, broke through support at $28 as gold dropped, also encouraging sales.
Both gold and silver have seen investment outflows from the exchange-traded funds lately and this reallocation of assets to other markets has pinched these precious metals. Stephen Platt, senior account executive with Archer Financial Services, said some of this money is moving to other undervalued commodities after the big price run-ups gold and silver experienced in late 2010.
The investment outflow has not been solely confined to the ETFs, as the commitment of traders data from the Commodity Futures Trading Commission shown an exodus of investor bullish activity. Anne-Laure Tremblay, precious metals strategist at BNP Paribas, said net non-commercial positions on the Comex are 32% under the October peak.
She also noted short-term investor sentiment is shifting toward gold when looking at the options market. She said the implied volatility for call options near the money has moved below that of similar puts for maturities up to August 2011, so a negative skew has developed.
“With a negative skew present over a number of near-dated deliveries, this can also represent a sign that there is increasing risk aversion and the desire to buy insurance against a price correction,” she said. Tremblay added that open interest is rising for near-dated puts on closely watched strikes, such as the $1,300 level.
Calls are the right, but not the obligation to buy, a security at a specific price and a specific time. Puts are the right, but not the obligation, to sell.
Like Gero and Platt, Bart Melek, global commodity strategist with BMO Capital Markets, said there are concerns about more potential monetary tightening in China, which would have the goal of limiting inflation. Economic data from China Thursday showed continued breakneck growth, which could mean more interest rate hikes.
“I would think there is probably a big element of profit-taking here, which shouldn’t be a big surprise,” he said. “We’ve seen this kind of stuff before. But gold still has very strong fundamentals, mainly because you still have systemic risks out there.”
Thursday’s U.S. economic data also weighed on precious metals, as jobless claims saw a 37,000 decline. “Good economic figures today jobless claims (negate the) need for haven,” Gero said.
Although gold prices are holding in the mid-$1,340s, Gero said he is expecting margin-call selling to show up and that could mean more losses. He added he is not seeing any bargain hunting yet and instead is seeing dealer hedging. All of these actions are putting weight on prices. The February futures contract is under pressure as traders roll positions from the front-month contract to the April and other deferred contracts ahead of first-notice day.
If more margin-call selling materializes, that might mean buyers could stand on the sidelines hoping for cheaper prices. Gero said it might not be until late Friday that buyers return.
Platt said silver futures found weakness Thursday morning from sales in the cash side of the market.
Support For Gold, Silver Under Market
Both Gero and Platt put near-term support for gold at $1,325 and Platt said beyond that area, support is seen at $1,300 and $1,275. In silver Platt said $25-$26 should offer support.
Melek and Tremblay both said the long-term view for gold remains bullish as underlying worries about Europe and the U.S. remain unchanged.
“You still have massive U.S. debt and you still have potential for a blow-up in the sovereign-risk side of things in Europe. All of those things will get people into gold,” Melek said.
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Barclays Capital declined to comment on Friday on market talk it was the holder of a dominant position controlling 80-90 percent of lead stock warrants and cash contracts on the London Metal Exchange (LME).
Data on Tuesday and Wednesday had shown a dominant position at more than 90 percent, while data on both Thursday and Friday showed it lower at 80-90 percent.
Two market sources, who declined to be named, said Barclays Capital held the dominant position.
"Talk around the market is it's Barclays," a trader said. "Probably not for themselves, (it) could be for a client."
A spokeswoman for Barclays Capital, the investment banking arm of British bank Barclays (BARC.L), declined to comment on whether it was holding the dominant position.
The backwardation on lead -- a premium for cash material over the three-month contract MPB0-3 -- rocketed to $80 a tonne, its highest since October 2007. This compared with a backwardation of $31 earlier this week.
There was a contango on lead of $0.5 in late December -- a discount for cash over three-month material.
LME lead for three-month delivery traded at $2,456.50 a tonne at 1336 GMT versus a close of $2,437 a tonne on Thursday.
"...with the market displaying a dominant position holder in the stocks the nearby backwardation continues to widen at odds with the rest of the market and is clouding the picture still further," RBC Capital Markets said in a report.
Cash for next-day delivery changed hands at $12.65, the highest in more than two years, signalling a lack of available supply for the metal.
STOCKS WATCHED
However, data this week showed a climb in lead stocks at LME warehouses, as market sources said the backwardation was drawing metal into warehouses. Lead stocks last fell 175 tonnes to 264,175 tonnes, having earlier this week touched their highest level since May 1995.
Data on Friday showed a dominant position holding 50-80 percent of LME lead stock warrants, while data from the previous two sessions showed no dominant positions here.
The LME has the power to step in and force dominant position holders to make metal available to other market players by imposing its lending guidelines, which are aimed at ensuring orderly markets.
Under these guidelines, if an LME member or client holds 50 percent or more of the warrants or cash positions, it should be prepared to lend at a premium that is no more than half a percent of the cash price for a day.
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Gold prices fell sharply to a two-month low Thursday, pounded by the stronger dollar which benefited from better than expected employment and housing data.
February gold prices lost $23.70, or 1.7 percent, to $1,346.50 an ounce on the Comex in New York. Prices ranged from a high of $1,370.90 to a low of $1,342.40 — the lowest level since November 19.
While housing starts data was bearish on the previous day and dragged the greenback down, existing homes sales data released Thursday showed a jump of 12.3 percent in December to an annual rate of 5.28 million. That combined with an unexpected 37,000 drop in weekly U.S. jobless claims were supportive of the dollar which weighed heavily on precious metals. News that China’s GDP advanced 9.8 percent during the fourth quarter was also cited for pressuring metals.
"Investors are hitting the sell button on gold today," Adam Klopfenstein, a senior market strategist at Lind- Waldock in Chicago, said and was quoted on Bloomberg. "China’s going to take more steps to tighten and that’s going to be bearish for commodities."
"The price of gold bullion fell hard in the wake of the Chinese news, and after the yellow metal was unable to stage an assault to successfully overcome resistance barriers at higher levels over recent sessions," noted Jon Nadler, Senior Analyst at Kitco Metals Inc. "Gold is evidently reflecting the shifting market sentiment that has been manifest since near the end of last year."
U.S. gold prices soared 29.7 percent last year, marking their 10th annual gain. The yellow metal is down 5.3 percent in 2011 and on track to record its first monthly loss since July.
Silver prices for March delivery plummeted $1.328, or 4.6 percent, to $27.473 an ounce. They ranged from $27.375 to $28.780. Silver soared 83.7 percent last year but it has plunged 11.2 percent this year.
Platinum prices for April delivery lost $19.50, or 1.1 percent, to $1,818.60 an ounce. The metal has gained 2.3 percent in 2011 and rose 20.9 percent in 2010.
Palladium prices for March delivery declined $3.90, or 0.5 percent, to $815.85 an ounce. Palladium is up 1.5 percent this year following an increase of 96.5 percent in 2010.
In PM London bullion prices, the benchmark gold Fix declined $26.50 from the previous PM fixing to $1,345.50 an ounce. The silver fixing was $28.410 an ounce, falling 91.0 cents. Platinum was $1,809.00 an ounce, dropping $36.00. Palladium was lower by $19 with its fixing at $805.00 an ounce.
U.S Mint bullion coin sales figures remained unchanged for a second straight day. For an analysis of recent bullion and numismatic U.S. Mint sales
U.S. Mint 2011 Bullion Coin Sales
Daily Gain January Totals
American Eagle Gold Coin (1 oz) 0 73,000
American Eagle Gold Coin (1/2 oz) 0 1,000
American Eagle Gold Coin (1/4 oz) 0 2,000
American Eagle Gold Coin (1/10 oz) 0 15,000
American Eagle Silver (1 oz) 0 4,588,000
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Norilsk Nickel (GMKN.MM) said on Friday it had increased the size of its share buyback, aimed at twisting the arm of major shareholder RUSAL (0486.HK) into selling up, because of strong demand from investors.
Its Corbiere Holdings unit said the world's largest nickel and palladium miner had raised the buyback to 13.9 million shares -- or 7.3 percent -- from 11.9 million, as bids from 13.1 million shares had already been submitted.
Norilsk management and 25 percent owner Vladimir Potanin are locked in a row with Oleg Deripaska, whose aluminium company RUSAL also owns a quarter of the world's biggest nickel and palladium miner.
Corbiere Holdings Ltd had initially offered to buy up to 6.2 percent of shares and American depositary shares (ADS) for $3 billion, in a move analysts said was aimed at further reducing Deripaska's influence.
According to Reuters calculations, the offer increase could cost Norilsk an extra $500 million
The price was set at $252 per share, with a premium of $32.59 to the closing price of the shares at Dec. 27, on the eve of the offer. Norilsk shares rose since then and were traded at 7,502 roubles ($250.5) a share at 1434 GMT on Friday, after rising as high as 7,519 roubles after the Corbiere announcement.
The buyback offered shareholders a quick profit and the sale of stakes in a company whose future prospects risk being harmed by the raging shareholder row.
However ahead of the results some bankers and fund managers had said demand could be curbed by the fact that the offer price is close to market levels, and expectations of further share price gains on the back of high copper prices.
Copper CMCU3, one of Norilsk's main products, hit a record high of $9,781 on Wednesday, but has retreated since to $9,447 at 1253 GMT on the London Metals Exchange.
Those who expect higher copper prices to boost Norilsk will have the opportunity to sell their shares to Norilsk later in the year, with the second stage of the buyback plan featuring $1.5 billion of purchases on the open market.
It was not immediately clear if the amount to be spent on open market purchases would be reduced as a result of the increased offer on Friday.
"This is not the end of the story," Vadim Astapovich, an analyst with the VTB Capital bank, commented.
"Now Corbiere has four days to calculate the pro-rata and how many shares it will actually buy."
TWISTING ARMS
Deripaska's RUSAL has filed three lawsuits demanding the overturning of some Norilsk board decisions aimed at strengthening rival Potanin's position -- including the buyback and the sale of an 8 percent stake to trading company Trafigura.
All three deals were opposed in board votes by Deripaska, who lacks sufficient representation to block major transactions.
The buyback is widely seen as a means to force Deripaska, who is at odds with Potanin over the ways to manage the company, to sell RUSAL's stake.
Norilsk offered last year to buy RUSAL's stake for an above-market $12 billion, but Deripaska refused to sell, although Norilsk had hinted it could increase its offer.
A source close to the talks told Reuters on Wednesday that Norilsk is unlikely to pay a dividend for 2010, as it spends cash on the buyback instead.
This would not make RUSAL happy, as the company needs cash to repay its debts. Deripaska has been a vocal proponent of higher dividends at Norilsk, while the management has preferred to invest more into the business.
RUSAL reduced its net debt to $11.75 billion as of Sept. 30 last year, down from $13.63 billion at the end of 2009.
RUSAL (0486.HK) and Interros, an investment vehicle of tycoon Vladimir Potanin, will not participate in the buyback.
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U.S. gold settled down at $1,341 on Friday, after earlier falling to a two-month low under $1,340 an ounce on word the New York Mercantile Exchange raised the margins requirements for gold and silver futures investors.
The metal is heading for a third consecutive weekly loss and its weakest monthly performance since July as a more optimistic view of global economic growth and stability boosted investment in stocks and other assets seen as higher risk at gold's expense.
Spot gold [XAU=X 1342.22 0.03 (+0%)] was last bid around $1,343 an ounce, against $1,345.40 late in New York on Thursday.
U.S. gold futures [GCG1 1341.6 -4.90 (-0.36%)] for February delivery settled down $5.50 to end at $1,341 an ounce.
Spot prices hit a low of $1,337.50 an ounce as financial markets opened in New York, their weakest since Nov. 18, tracking losses in U.S. gold futures. Traders cited a rise in margin requirements for precious metals futures.
More broadly, analysts say outflows from products such as physically backed exchange-traded funds suggest investor appetite for gold is slackening after a run of firmer-than-expected U.S. economic data and as concerns over euro zone sovereign debt levels recede.
"There is a real lack of catalysts to provide any sort of support," said Macquarie analyst Hayden Atkins. "Day-by-day the data does seem to be supportive of the theory that activity is pretty good for now, and the expectation is growing that things will be okay through the year."
"There is nothing definitive either way to push it, and at the margins (investors) are maybe putting their money somewhere else rather than putting it in gold."
Gold's slide was limited on Friday by a retreat in the dollar to two-month lows versus the euro, with the single currency reaching its highest level since late November, helped by improving confidence in the euro zone.
Stock markets moved higher, meanwhile, in both Europe and the United States as strong earnings from key U.S. companies lifted appetite for equities.
"Gold used to be a fear indicator, and as this fear appears to be leaving the market, the gold price is under pressure," said Commerzbank analyst Eugen Weinberg.
Indian Buying Resumes
Some fresh demand emerged in India, the world's biggest consumer of the precious metal, as prices hit their lowest since late November, according to dealers in Mumbai.
"I may have booked for 200 kgs of gold from yesterday at $1,346-$1,349," said one. "Buyers all want to take maximum advantage of falling prices."
Meanwhile silver prices extended losses to a fresh seven-week low at $27.10 an ounce, pressured by a further outflow from the world's largest silver-backed exchange-traded fund, the iShares Silver Trust [SLV 26.83 -0.02 (-0.07%)].
Holdings of the trust fell by just over 10 tons on Thursday after recording their biggest one-day drop since late November in the previous session. It has seen outflows of more than 346 tons so far this year.
Investment demand was a major driver in silver's more than 80 percent price gains last year.
"Industrial demand for the metal remains at risk from substitution, given recent price gains," said Barclays Capital in a report. "Investor interest is critical for silver given its poor supply and demand dynamics."
The gold: silver ratio — the number of ounces of silver needed to buy an ounce of gold — rose back towards 50 on Friday, its highest since late November, showing gold is becoming increasingly expensive compared to silver.
Silver [XAG=X 27.47 -0.01 (-0.04%)] was last bid around $27.32 an ounce against $27.48. Elsewhere, platinum [PLC1 1813.7 --- UNCH (0)] was last near $1,820.74 an ounce against $1,808.50, while palladium [PAC1 813.85 --- UNCH (0)] last touched $805.72 versus $808.47.
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Iron ore spot prices in Asia remained strong on Friday and looked set to hit $200 a tonne soon, buoyed by demand from top buyer China and fewer high-grade cargoes.
The rally that began at the start of the year lifted key price indexes to record levels on Thursday and traders say the momentum could extend to at least next week before the Chinese week-long Lunar New Year holiday starts.
Chinese New Year kicks off on Feb. 2.
"There's not much high-grade cargo available and that's the reason why prices are rising," said an iron ore trader in Singapore.
"And the Chinese have no option so the buying activity will continue until next week. If supply remains tight when they are back from holiday, prices will continue rising."
Iron ore supply has been tight, with fewer cargoes out of Brazil due to rainy weather and Indian exports hampered by logistical problems and a ban on shipments from its Karnataka state since July.
Brazil and India are the world's second- and third-largest exporters of the steelmaking material. Chinese imports from the two countries fell in 2010.
Rising prices of iron ore as well as coking coal, another ingredient in producing steel, after floods hit top supplier Australia have pushed up Shanghai rebar futures to a record level for a fourth time in a week, although volumes have steadily fallen from November.
The most active May rebar contract on the Shanghai Futures Exchange rose as high as 4,956 yuan a tonne, before closing at 4,950 yuan, up 0.7 percent.
SWAPS FALL
Indian ore with 63.5 percent iron content was being offered at $188-$190 a tonne, cost and freight delivered to China, on Friday, steady from the previous day, said Chinese consultancy Mysteel.
"My company has decided to save some material for selling after the (Chinese New Year) holiday and we have stopped offering now as we can't see any signals for prices to ease," said a Beijing-based iron ore trader.
"It seems prices will hit $200 per tonne soon."
The Platts 62 percent iron ore index hit a record of $186.50 a tonne on Thursday, while the Steel Index 62 percent benchmark .also touched a record of $185.40.
Global miners including Brazil's Vale , the world's biggest iron ore producer, use the Platts index to decide prices for quarterly contracts, which analysts say are likely to rise again in the second quarter after an estimated 7-8 percent hike in January-March.
But a sharp decline in forward swaps on Thursday suggested prices could ease in the near term.
The Singapore Exchange-cleared February contract dropped 1.9 percent to $177.38 a tonne and March fell 2.8 percent to $172.38.
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Bullion prices have lost further ground over the course of the week with the yellow metal currently at its lowest in nine-weeks. Silver has been under similar pressure, dipping to a seven-week low with AU/AG ratio edging above 49.5 this morning, the first time since November 30th.
The current corrections are, with a degree of hindsight, a little overdue, and giving the gains posted by both metals last year, particularly silver, not a particularly major shock. But, what is interesting is the market perception of the corrections. Previous start of year pull-backs have been met with scepticism with bears predicting the end to the bull-trend and the return to lower levels. However, the strength seen in both metals over the past few years has created an increasingly bullish air with the poll of LBMA forecasters predicting gold to average $1,457/oz this year and silver almost $30/oz.
The accompanying chart gives an indication as to why the metals are currently under pressure, as ETF investors curb some of their exposure and look to switch either to riskier asset types or to take advantage of the recent rise, albeit modest, in treasury yields. However, while the cynic in me is beginning to think the weight of interest in bullion is an indicator to turn bear the amount of pent-up demand lurking below will, for the time being, continue to underpin bullion prices, and ultimately propel the metals to fresh highs above $1650/oz in gold and $40/oz for silver later in the year.
One indication as to the level of demand below the market has been the rush for coins with the US Mint reporting the sale of some 4.5M/ounces worth of Eagles so-far this month compared with 1.77M/ounce for the whole of December. With interest rates set to remains at, or near historic lows for some months to come; Europe and most Western nations struggling with burgeoning deficits and inflation becoming an increasing concern the expectation of strong returns from safe-haven assets seems likely to remain appealing to investors.
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Gold rose for a second day on Tuesday, drawing strength from a weaker dollar and demand from key Asian consumers, along with a degree of uncertainty over a permanent resolution to Europe's debt crisis.
Gold has fallen more than 3 percent this month, under pressure from investors eager to cash in on the 30-percent price gain of 2010 and also from a waning need for safe-haven assets as data paints a picture of a more robust global economy.
The dollar extended losses against the euro after a measure of German business confidence hit its highest since July, outstripping expectations.
Spot gold rose 0.5 percent to $1,369.20 an ounce by 1145 GMT, while U.S. February gold futures rose 0.6 percent to $1,369.00.
In light of the stronger data and expectations for robust fourth-quarter U.S. earnings, gold could encounter more pressure and Societe Generale analyst David Wilson said ultimately monetary policy in the United States would be the deciding factor in the direction of the bullion price.
"It really all depends on whether (Federal Reserve Chairman Ben) Bernanke gets his way and there is further quantitative easing, which is still being talked about," Wilson said.
"If there is further quantitative easing there would be more upward support for gold."
The Federal Reserve's $600 billion bond-buying programme to stimulate economic growth in the United States has ignited concern about an unwelcome pickup in inflationary pressures and a broad-based decline in the dollar, both of which would prove beneficial to gold.
EURO FIRM
Meanwhile, euro zone finance ministers have decided to take their time over reinforcing the currency area's rescue fund, while debt-stricken Greece denied a minister's comment that it should stretch out all its debt repayments.
Yet the euro remained firm, pushing euro-priced gold near 1-1/2 month lows around 1,020 euros an ounce.
"The debt crisis bubbles up and then pulls back and, at the moment, it's on the backburner again and not really seen as a major issue," Wilson said.
This week's U.S. banks earnings, expected to be strong, could give investors more reason to be optimistic about the sector and the economy in general.
Reflecting the improved consumer appetite for gold in Asia, premiums for gold bars rose on Monday to hit another two-year high as jewellers from China rushed to buy ahead of the Lunar New Year, while purchases from the electronics sector helped stir up physical trading in Japan, dealers said.
"We will see quite a bit of bargain hunting if price dips below $1,360. Prices are unlikely to drop much, because the physical demand ahead of the Lunar New Year will help support the prices," said Li Ning, an analyst at Shanghai CIFCO Futures.
Spot silver rose by nearly 2 percent to $28.80 an ounce, yet after 2010's 80-percent gain, investors have punished silver more harshly than gold, bringing the losses for the month so far to about 8 percent and analysts expect more declines.
"... we are at a loss to explain silver's relative and absolute price surge from a fundamental standpoint. Accordingly, we expect silver to be a slight underperformer in the current year," wrote Swiss commodity fund manager Tiberius in a monthly report.
In the platinum group metals, palladium gained another 1.8 percent to reach $804.47 an ounce, pushing the price close to last week's ten-year highs, while platinum was last up 1.2 percent at $1,819.99. (Additional reporting by Rujun Shen in Singapore; editing by Keiron Henderson)
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Gold prices are currently in a slump, coinciding with expectations that the economy is recovering in the U.S. and the European Union. Is this an indication that investors are gaining confidence in the economy by taking their money out of historically safe gold and into more speculative ventures, or merely a small correction in a continuing upward trend?
In the second week of January, Bloomberg reported that gold fell on the New York Stock Exchange to the lowest settlement price in seven weeks on speculation that European Union leaders will stabilize the region’s economy, eroding the appeal of the metal as a haven.
The article quoted Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter, who said that gold was “toppy” and recommended cutting holdings of gold and silver by a third. “Gold has run its course for a while,” Gartman said
In the wake of economic recessions which primarily hit Europe and the United States, investors began pulling their investments out of currency and putting it into gold. In December 2010, gold prices in New York hit an intraday record high of $1,432.50 per ounce. As of January 14, 2011, the price of gold closed at $1,361.80, a decrease of about 5 percent. Now, analysts are speculating whether this slump will be part of a long-term trend in the midst of an economic recovery, or a simply a small correction in the market.
In an interview with The Gold Report, Mark Lackey with Toronto-based financial services company Pope & Co. predicted that although there may be some correction in the price of gold in the near future, he expects this should really only be a short-term decline. “I don’t think the strength of the U.S. economy is so much an issue with gold,” said Lackey. “The bigger issue is that investors will look at the debt problems in the U.S. and ask themselves how those are going to be resolved. The underlying factor is that some investors in the world aren’t comfortable with any paper currency and they’re more comfortable owning gold.”
Meanwhile, others are even predicting gold will continue its upward trend, possibly reaching $2,000 in the near future. In a speech at the Empire Club in Montreal, Nick Barisheff, CEO of the Bullion Management Group gave his outlook for gold in 2011 as being positive, based on three longer term “irreversible trends” he says will likely continue to put downward pressure on currencies resulting in upward pressure on gold for decades: Central bank buying, movement away from the U.S. dollar, and China.
“I will say that both mid-term and long term trends are in place to ensure Gold and Silver will continue rising through 2011 and well beyond,” Barisheff said, predicting that gold prices will reach between $1,700 and $2000 in the coming year.
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Gold rose for a second day on Tuesday, buoyed by a fall in the dollar and a stream of demand from key Asian consumers, along with a degree of uncertainty over a permanent resolution to Europe's debt crisis.
Gold has fallen by more than 3 percent this month, under pressure from investors eager to cash in on the 30-percent price gain of 2010 and also from a waning need for safe-haven assets as data paints a picture of a more robust global economy.
The dollar extended losses against the euro EUR= after a measure of German business confidence hit its highest since July, outstripping expectations. [FRX/]
Spot gold XAU= rose 0.4 percent to $1,367.75 an ounce by 1035 GMT, while U.S. February gold futures GCG1 rose 0.5 percent to $1,367.80.
In light of the stronger data and expectations for robust fourth-quarter U.S. earnings, gold could encounter more pressure and Societe Generale analyst David Wilson said ultimately monetary policy in the United States would be the deciding factor in the direction of the bullion price.
"It really all depends on whether (Federal Reserve Chairman Ben) Bernanke gets his way and there is further quantitative easing, which is still being talked about," Wilson said.
"If there is further quantitative easing there would be more upward support for gold."
The Federal Reserve's $600 billion bond-buying programme to stimulate economic growth in the United States has ignited concern about an unwelcome pickup in inflationary pressures and a broad-based decline in the dollar, both of which would prove beneficial to gold.
EURO FIRM
Meanwhile, euro zone finance ministers have decided to take their time over reinforcing the currency area's rescue fund, while debt-stricken Greece denied a minister's comment that it should stretch out all its debt repayments.
Yet the euro remained firm, pushing euro-priced gold XAUEUR=R near 1-1/2 month lows around 1,020 euros an ounce.
"The debt crisis bubbles up and then pulls back and, at the moment, it's on the backburner again and not really seen as a major issue," Wilson said.
This week's U.S. banks earnings, expected to be strong, could give investors more reason to be optimistic about the sector and the economy in general.
Reflecting the improved consumer appetite for gold in Asia, premiums for gold bars rose on Monday to hit another two-year high as jewellers from China rushed to buy ahead of the Lunar New Year, while purchases from the electronics sector helped stir up physical trading in Japan, dealers said.
"We will see quite a bit of bargain hunting if price dips below $1,360. Prices are unlikely to drop much, because the physical demand ahead of the Lunar New Year will help support the prices," said Li Ning, an analyst at Shanghai CIFCO Futures.
Spot silver XAG= rose by nearly 2 percent to $28.73 an ounce, yet after 2010's 80-percent gain, investors have punished silver more harshly than gold, bringing the losses for the month so far to about 8 percent and analysts expect more declines.
"... we are at a loss to explain silver's relative and absolute price surge from a fundamental standpoint. Accordingly, we expect silver to be a slight underperformer in the current year," wrote Swiss commodity fund manager Tiberius in a monthly report.
In the platinum group metals, palladium XPD= gained another 1.4 percent to reach $801.65 an ounce, pushing the price close to last week's ten-year highs, while platinum XPT= was last up about 1 percent at $1,816.25.
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A mixed trend was witnessed in the precious metals market in Mumbai on Tuesday, with silver sliding for the fourth session on lack of buying enquiries from stockists. Gold, however, continued to be steady.
Traders at the Bombay Bullion Association (BBA) said the white metal had plunged rather a lot in the last four sessions, while a stronger dollar dimmed the yellow metal's appeal as an alternative investment.
One of the well-known relationships in currency markets is the inverse relationship between the US dollar and the value of gold. ``Gold is typically used as a hedge against inflation through its intrinsic metal value. As the dollar's exchange value decreases, it takes more dollars to buy gold, increasing the value of gold,'' said Bhadresh Shah of the BBA.
He went on to add that while the dollar's value is at risk of fluctuation through shifts in the monetary policy, gold's value is largely determined by supply and demand, without interference from shifts in monetary and corporate policies.
Like all prices, ``the gold price reflects not only the inherent value of gold, but also the relative strength of the currency in which it is quoted,'' he said adding that there remain many challenges in the coming months, ``as gold prices in the global market are still unstable.''
Bullion trader Samrat Jog is, however, convinced that an upswing is in the offing. He urged speculators to be extra careful when investing in the gold market, as the prices could fluctuate throughout the year.
Noting that global gold prices have decreased in the face of the increasingly stronger greenback, Jog said that unlike last year which saw the price of gold steadily increasing, this year could see a correction.
``Commodity prices have begun to move despite the fragile conditions in the overall macroeconomic environment. This indicates that individual commodity market fundamentals are beginning to assert themselves,'' said Santosh Sevai, an analyst and bullion dealer in a nationalised bank.
Noting that the precious metal was highly volatile at the moment, Sevai said the trend may last till this week, ``before consolidating. Gold prices are likely to correct by Friday this week,'' he said.
Financial services firm Religare Commodities' metals and energy analyst Sreenath Debu said trading sentiments for gold bolstered after it gained in the overseas markets as concerns that the European sovereign-debt crisis may linger.
Gold in international markets, which normally sets a price trend on the domestic front, climbed 0.2% to $1,364.93 an ounce.
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The contrast between activity during the first full trading week of 2011 and the corresponding week in 2010 couldn’t be more marked. Back in January 2010, Minesite was struggling to find news stories of any kind, as chief executives were still hunkered down, waiting for the dying embers of the credit crunch finally to disperse, and still wary of anything the future held. Gold was not much north of US$1,100, copper was slightly shy of US$7,500, and finance was scarce. Fast forward exactly a year, and the news stories are coming in thick and fast, gold is at US$1,360, and copper is at US$9,591, close to its all-time high. There’s money around too, though the banks haven’t recovered their poise completely.
But China’s still motoring along, and whisper it softly, there are even hints that the US economy may be on the road to recovery too. However, inflation remains stubbornly high, not helped by sky-high oil prices and increased food costs around the world. So the case for gold remains as strong as ever, particularly in the US, where quantitative easing is still the order of the day, and in the UK, where all the latest data shows inflation as increasingly rampant.
All in all then, not a bad time to be a small cap miner, and already several companies are making the most of the attractive 2011 trading environment. In the gold space, shares in Archipelago closed up a penny at 64p after the company announced that it had secured a US$55 million loan from an Indonesian bank to help it get construction of its Toka Tindung gold project over the line. A further US$55 million will be made available in nine months’ time, if required. Under the terms of the loan, Archipelago must make provision for what it calls “revenue protection”, through put options over 100,000 ounces of production, priced at US$900 per ounce. The company will remain exposed to all upside in the gold price.
Sticking to the gold theme, GGG Resources continued its recent stellar run with a further 2p rise to 25.75p. The company is now well and truly clear of the ranks of the penny dreadfuls, amongst whom it had been firmly ensconced, until GGG managing director Jeff Malaihollo secured ownership of a stake in the Bullabulling gold project in Western Australia for the company. Resources at this project rapidly went past the talismanic million ounce mark, and the latest news from the company is that 58 of the most recently drilled 59 holes have intersected mineralisation, in a pattern consistent with the existing resource model.
Other gold companies in the news included the South American-focused producer Orosur, which released a good-looking set of financial results, and which initially rose from 87p up to 91.5p as a result. However, the market then elected to take profits, and the shares closed out the week down 2.5p at 84.5p. Elsewhere, an update from perennial struggler Hambledon Mining failed to set pulses racing, as it revealed that it had produced just under 6,500 ounces in the most recent quarter, and the shares eased by a few fractions of a penny to 7.5p. Vatukoula’s news, by contrast, that in the year to August 2010 it had produced nearly 60,000 ounces from its mine in Fiji met with a much more favourable reception. Vatukoula’s shares closed up just over 8p at 180p.
Away from gold, a clear sign for London market watchers that the future for nickel looks bright came in the form of the completion of a previously agreed royalty deal etween those canny accountants at Anglo Pacific and the owners of the Lontra nickel deposit in Brazil, Horizonte Minerals. Under the terms of this deal, Anglo Pacific has paid Horizonte US$500,000 for a six year option over a 1.5 per cent net smelter royalty on 30,000 tonnes of yearly production. To exercise the option, Anglo Pacific will need to find a further US$12.5 million. But given how its shares have raced away lately, up from around 245p this time last year, when Minesite picked out the company as a tip of the year, to recent trades of over 350p, that shouldn’t be too much of an issue. On the week Anglo Pacific was up by just over 7p to 449p, while Horizonte rose 3p to 20p.
Sticking with nickel, African Eagle’s Dutwa laterite project in Tanzania continues to show promise, as the company upgraded indicated resources at the Wamangola Hill portion of Dutwa to 430,000 tonnes. The shares closed up by more than 3p at 15.5p.
In the diamond space, Petra Diamonds released a trading update revealing that the company generated US$90 million in revenue during the six months to December, from the production of just over 584,000 carats, up two per cent on the corresponding period the previous year. In his commentary, chief executive John Dipenaar spoke of continued strong demand from emerging markets such as China and India, and of a steady recovery in the US. The market liked the news, and the outlook, and the company’s shares closed up by more than 20p, at 165.5p.
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Gold edged higher on Tuesday, extending gains in the previous session, with healthy physical demand out of Asia and a lower dollar lending support, though an improved global economic outlook has dampened the price outlook.
Euro zone finance ministers discussed on Monday having more money in their rescue fund and cheaper emergency loans as part of a package of measures to end the sovereign debt crisis, but they made no firm decisions.
Spot gold edged up 0.3 percent at $1,365.85 an ounce by 0642 GMT, after dipping to an intraday-low just below $1,360.
U.S. gold futures gained 0.4 percent to $1,366.
This week's U.S. banks earnings, expected to be strong, could give investors more reason to be optimistic about the sector and the economy in general.
"Positive sentiment in the market could reduce some safe-haven demand for gold," said Ong Yi Ling, an analyst at Phillip Futures. Ong said that $1,350 would be a strong hold for gold.
According to Wang Tao, a Reuters market analyst, spot gold will be rangebound between $1,354 and $1,370 for one trading session before plunging again towards $1,349 per ounce, as the downtrend is still intact.
"We will see quite a bit of bargain hunting if price dips below $1,360. Prices are unlikely to drop much, because the physical demand ahead of the Lunar New Year will help support the prices," said Li Ning, an analyst at Shanghai CIFCO Futures.
Premiums for gold bars rose on Monday to hit another two-year high as jewellers from China rushed to buy ahead of the Lunar New Year, while purchases from the electronics sector helped stir up physical trading in Japan, dealers said.
"Demand for physical gold from Hong Kong, Indonesia and Thailand are very good. We see some good buying from Thailand," said a Singapore-based dealer, adding that premium for gold bar in Singapore stood at $1.90 an ounce above London spot prices.
The dollar index inched down on Tuesday.
"Euro zone's economy has gradually entered the recovery track. As a result, we may see euro stabilising this month. Meanwhile, the market lacks the momentum for the dollar to rally in the first half of the year," said Li of Shanghai CIFCO.
After rallying 30 percent in 2010, gold has lost about four percent so far this year, being the second worst performer of the complex just after silver.
The medium- to long-term outlook on gold remains bullish, but gold is seen losing steam after economic outlook in the U.S. and Europe improves, luring investors to riskier assets, analysts said.
Spot silver gained more than half a percent at $28.42 an ounce, down eight percent so far this year.
Precious metals prices 0642 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1365.85 3.45 +0.25 -3.78
Spot Silver 28.42 0.16 +0.57 -7.91
Spot Platinum 1810.49 11.64 +0.65 2.43
Spot Palladium 793.72 3.39 +0.43 -0.72
TOCOM Gold 3635.00 -8.00 -0.22 -2.52 34368
TOCOM Platinum 4855.00 -25.00 -0.51 3.39 12980
TOCOM Silver 75.50 -0.20 -0.26 -6.79 1266
TOCOM Palladium 2116.00 1.00 +0.05 0.91 498
Euro/Dollar 1.3331
Dollar/Yen 82.45
TOCOM prices in yen per gram. Spot prices in $ per ounce.
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Commodities enthusiasts are investing five years too late, according to legendary fund manager Anthony Bolton.
"The best time for commodities was in 2006, when the whole world was growing above trend," said Mr Bolton, who manages the Fidelity China Special Situations investment trust.
"Western economies are anaemic at the moment, and I am not sure emerging market growth is enough to keep commodities going."
Despite many managers believing that commodities are a key part of the emerging markets story, Mr Bolton holds only one commodities stock in his fund, a gold mine.
It is uncertainty about America that is keeping Mr Bolton from increasing his exposure to commodities. While China is experiencing a bull market, he warned that the "stars of one bull market are not necessarily the stars of another".
He continued: "Commodities are measured in US dollars and the US dollar has been weak for the past couple of years. If commodities were measured in a stronger currency, the recent rallies might have been different."
The exception to this rule, according to Mr Bolton, is gold. He said he considered it a good investment while the West was experiencing slow growth.
"Gold is more like a currency than a commodity," he said. "Only a small fraction of gold mined is used – for jewellery and the like. The way it is held as an asset in central banks is not a feature common to other commodities.
"Almost every country has a big budget deficit at the moment so it is in their favour to see their currency depreciate. Countries hold gold as a protection against that."
Chinese investors have also started to take an interest in gold, he said, where previously they were buying American bonds.
Mr Bolton, who formerly ran Fidelity's hugely successful Special Situations fund, which is predominately invested in the UK, also warned British investors that they might be in for a few more disappointing years yet.
He quoted Jeremy Grantham, the American fund manager, who likened economies in the West to the biblical story of Pharaoh's dream of seven fat years followed by seven lean ones.
"I don't think it will be as long as seven years of slow growth, but I'd say the UK was two years into a five-year cycle." He believes that Europe and the US face similar challenges but that we will all just have to "sit tight" through the recovery.
Mr Bolton was much more confident about China's growth, now that the country has begun to distance itself from dependency on the US.
"The global financial crisis was a wake-up call for China. It has driven them to be less reliant on the US economy. It won't happen overnight, but there will be a big change over the next five to 10 years," he said.
Last week Mr Bolton issued £162m worth of extra shares in his trust to meet demand from investors and to reduce the trust's premium (where the value of shares is higher than the net asset value of the trust).
If all the shares are bought it will take total funds under management to more than £732m.
Read the source
That’s an interesting point because while the human suffering has been high the reality is that the floods are a routine business phenomena, given that flooding occurs at regular intervals in that part of the world. The reaction of coal companies is the perfect example. While newspapers focussed on the force majeure declarations of some exporters the share prices of all the coal companies we follow rose during the week – thanks to the force majeure cuts which pushed the price of coal higher.
Tough world, isn’t it?
It is, but that’s business. Overall, the Australian market had a fairly good week. The all ordinaries added two per cent. The minerals and metals index rose by 2.5 per cent, while the gold index was the weak link, creeping just 0.2 of a per cent higher following the fall in the gold price. Further share price falls for our gold companies can be expected on Monday, as the gold price dropped quite sharply after our Friday close. As has been the case in recent weeks we had a number of very strong companies, even in weak sectors, with the exception being zinc which just can’t develop any traction for a sustained recovery.
Let’s start with gold, as that seems to be attracting the closest attention.
Most gold companies managed to gain ground, which raises a question over that very small rise in the gold index. The gold index was held back because Newcrest (NCM), easily the biggest Australian gold producer, slipped by around one per cent to A$38.29, a fall linked to its exposure to the troubles in Ivory Coast where it now runs the Bonikro mine. If you shift Newcrest to one side it’s arguable that the overall gold sector was up by the same percentage as the metals and mining index, around two per cent.
Top of the gold heap last week was an old friend of Minesite, Medusa Mining (MML), which earned a speeding ticket from the ASX after an A81 cent rise to A$7.52. Along the way, on Thursday, it hit a 12 month high of A$7.71. Naturally, management knew of no reason for the price spike, but a move like that at a time when the gold price is a bit wobbly smells of corporate activity.
Kingsrose (KRM), which has a similar appearance to the Medusa of a few years ago, in that its working a high-grade epithermal vein system in the tropics, also hit a 12 month high, adding A16 cents to A$1.54. Noble Mineral Resources (NMG), one of the new players in West Africa, also performed well, adding A13 cents to A71 cents, after briefly setting a new high of A73 cents, following an excellent set of assays from its Bibiani project in Ghana. Elsewhere, Elemental (ELT) gained A7 cents to close at a fresh 12 month high of A39 cents as interest grows in its La Puerta discovery in Argentina. Dragon Mining (DRA) reported a solid resource upgrade at its Kuusamo project in Finland, adding A10 cents on the market to close at A$1.70. YTC (YTC), reported bonanza grade assays from its Hera project in New South Wales, rising by A4.5 cents to A57 cents, and PMI (PVM) made its first solid upward move after a lacklustre listing late last year, rising by A9 cents to A65 cents on the strength of good drill results from Ghana.
Most other moves were modest either way. Gains were posted by Gryphon (GRY), up A9 cents to A$1.88, Avoca (AVO), up A10 cents to A$3.35, Resolute (RSG), up A9 cents to A$1.47, Catalpa (CAH), up A12 cents to A$1.97, Nyota (NYO), up A3 cents to A46.5 cents, and Ampella (AMX), up A8 cents to A$2.93. Losses were posted by Silver Lake (SLR), down A2 cents to A$2.10, Sirius (SIR), down A1 cent to A30 cents, Crusader Resources (CAS), down A10 cents to A$1.17, and Adamus (ADU) down A3.5 cents to A81.5 cents. Also weaker was Reed Resources (RDR), which fell A8.5 cents to A66.5 cents after taking the courageous step of buying the Meekatharra gold project which has broken the back of at least five previous owners, including the London-listed company formally known as Mercator Gold.
You think Reed might be taking a step too far?
The jury is out, but going back into gold when you seem to be doing well with a lithium project and a re-emerging vanadium project, might be a stretch for a small company.
The fuel twins, coal and uranium next, please, as they seem to be heating up.
Coal companies did well, following the flood-induced export cuts, while uranium companies benefited from a US$3.00 increase in the spot uranium price to around US$66 per pound. Aspire (AKM) was the best of the coal companies after it reported a fresh discovery in Mongolia. It rose A14 cents to a 12 month high of A61.5 cents. Bathurst (BTU), the New Zealand coking coal developer, rose A10 cents to A88.5 cents, but did hit a 12 month high of A91 cents during Friday trade. Other coal movers included Coalworks (CWK), up A12 cents to A90 cents, Carabela Resources (CLR), up A25 cents to A$1.39, Aston (AST), up A20 cents to A$8.39, Coal of Africa (CZA), up A8 cents to A$1.79, and Continental Coal (CCC), up A0.6 of a cent to A8.7 cents. Riversdale (RIV) was the only major coal company to lose ground, shedding A29 cents to A$16.48 as reports surfaced that Rio Tinto might drop its takeover bid.
Most uranium companies rose, and those that didn’t were steady. Pick of the pack was Northern Uranium (NTU), which jumped A14 cents to a 12 month high of A53.5 cents, though interest was perhaps driven by its growing exposure to rare earths. The oddly-named U3O8 (UTO) also set a new high of A21 cents on Friday, before closing up A2.5 cents at A20 cents. Berkeley (BKY) shook off uncertainty about its deal with a Russian suitor, rising by A10 cents to A$1.82. Uranex (UNX) resumed its upward movement with a rise of A4.5 cents to A73.5 cents. Deep Yellow (DYL) also put on A4.5 cents to end the week at A36.5 cents, and Greenland Minerals (GGG) rose by A6 cents to A$1.28.
Iron ore next, please.
Like the other sectors, iron ore had a few stars that shone, amid a general upward trend. The stand-out performers, reaching new 12 month highs, were Northern Iron (NFE), the Norwegian magnetite exporter, which added A13 cents to A$1.91, and BC Iron (BCI), which is getting ready to make its first shipment of ore to Asian, and rose by A29 cents to A$3.15. African Iron (AKI) delivered a strong performance after re-listing with an old Cape Lambert asset as its centrepiece, and added A18 cents to A42 cents. Equatorial Resources (EQX), another of the Australians making waves in the African iron ore sector, delivered a sharp A60 cent rise to A$3.95, while and FerrAus (FRS), one of the takeover targets of the mysterious Wah Nam International (WNI) gained A11 cents to A$1.04.
Wah Nam was also the focus of the news event of the week, copping a stop order from the Takeovers Panel in regard to its second target, Brockman Resources (BRM). A preliminary finding from the Panel found that companies associated with Wah Nam might have breached the Australian Takeovers Code. A full hearing is scheduled for the next week. On the market, Brockman added A5 cents to A$5.30. Other iron ore movers included Iron Ore Holdings (IOH), up A4 cents to A$2.29, Atlas (AGO), up A26 cents to A$3.29, Giralia (GIR) up A40 cents to A$4.88, and Fortescue (FMG), up A28 cents to A$6.85.
Base metals and minor metals to finish.
Base metal stocks were flat, but minor metals continued to generate excitement, especially the rare earths. Among the coppers there was one outperformer, Hot Chili (HCH), which shot up to a 12 month high of A58.5 cents on Friday before closing the week at A54 cents, for an overall gain of A3.5 cents. Other copper companies to rise included OZ Minerals (OZL), up A4 cents to A$1.73, Discovery Metals (DML), up A3 cents to A$1.41, and Resources and Investment (RNI), up A5 cents to A$1.12. Fallers included Altona (AOH), down A2 cents to A44 cents, Equinox (EQN), down A16 cents to A$5.92, Sandfire (SFR), down A10 cents to A$7.79, and Bougainville (BOC), down A3 cents to A$1.99.
Nickel companies did slightly better. Western Areas (WSA) reported strong production numbers for 2010, and added A46 cents to A$6.69. Mincor (MCR) continued its slow recovery, putting in a rise of A5 cents to A$1.91. Panoramic (PAN) rose A10 cents to A$2.49, and Independence (IGO) gained A21 cents to A$7.74.
Zinc went nowhere, as we’ve already mentioned. Most moves were a cent or two either way. Meridian (MII) lost A1 cent to A13 cents. Bass (BSM) rose half a cent to A37.5 cents, and Perilya (PEM) lost A2.5 cents to A60 cents.
Arafura (ARU) was the top rare earth company after it reported on higher market prices for its cocktail of odd metals, adding A15 cents to A$1.56. Lynas (LYC) rose A12 cents to A$2.03, and Alkane (ALK) went back over the A$1.00 mark to end the week at A$1.06, up A8 cents.
The handful of platinum companies listed on the ASX reacted positively as platinum rose through the US$1800 per ounce barrier. Platinum Australia (PLA) added a sharp A18.5 cents to A80 cents, and Zimplats (ZIM) put on A45 cents to A$15.20.
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