What about Gold?

We've moved house

2009-05-28T13:41:00.000-07:00

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Record demand for gold coins

2009-05-25T03:48:00.000-07:00

May 24 2009 10:21

Johannesburg - The demand for gold coins has hit an all time high, the SA Gold Coin Exchange said on Friday.

"The rapidly growing demand for gold coins strongly suggests that the gold bull market is well set to extend itself strongly into the future," said chairperson Alan Demby in a statement.

An increasing number of analysts and commentators were predicting strong gold price advances, Demby added.

He said during the course of 2008, the value of the exchange's sales of gold coins, primarily Krugerrands, was a substantial 80% higher than in 2007.

"I accept that exchange has grown its market share, but this has played no more than a minor role in our headlong revenue growth, which I am convinced emanates from a belief that gold is the ultimate hedge against the uncertainty generated by the global financial meltdown," Demby said.

In the past few weeks the legendary Warren Buffet had expressed himself strongly in favour of investing in the yellow metal.

Furthermore, Demby said, UBS Investment Research forecasts gold to hit $2 500 an ounce in the next five years as prospects of either deflation or inflation become more extreme.

He added that Citigroup analysts Alan Heap and Alex Tonks had raised their gold forecast to an average $925 an ounce in 2010, from a previous estimate of $900.

Demby also noted that in the fourth quarter of 2008 compared with the equivalent 2007 quarter, total bullion demand in India, the world's largest gold market, was up 84%.

He added that gold demand in Greater China was up 21% while demand in Thailand soared over 100% and Middle Eastern gold bar and coin demand rocketed 139%.

"Record demand has also spilled into the first quarter of this year, sending total global demand for gold in the form of exchange-traded funds (ETFs), coins, bars and futures past the $100bn mark - for the first time ever," Demby said.

Moreover, gold demand via ETFs shot up by 469 tons - a full 223% over the previous record set in the third quarter of 2008.

According to Demby, coin and bullion demand was expected to be just as strong as the 396% surge in the fourth quarter of 2008. "It should be no surprise, then, that the price of gold continues to trade above its 1980 high of $850 - and rising.

"All the data clearly reveal that we are looking at a bull market more powerful than almost anyone is ready to admit - so powerful that it would not come as a surprise if the price hit US2 000 before the end of next year," Demby said.

[Fin24]

Alan Demby on CNBC 22/05/09

2009-05-25T00:29:00.000-07:00

Gold supported by weak dollar

2009-05-22T07:32:00.000-07:00

Gold supported by weak dollar

May 22 2009 09:24

Tokyo - Gold held steady on Friday near a two-month high, with investors turning to the safe-haven asset as the dollar remained weak and as US data on jobless claims and business conditions dented hopes for a quick return to growth.

Gold has risen about 2.6% this week, and traders said its upside was likely to become more limited as current prices prompt investors to take profit while wary investors halt investment in gold-backed exchange-traded funds.

Spot gold was steady at $952.65 per ounce at 02:42 GMT, little changed from New York's notional close of $953.40. Gold rose as high as $955.95 on Thursday, its highest since March 23. In March, gold prices rose as high as $966.

US gold futures for June delivery edged up 0.2% to $953.40 per ounce from $951.20 on the COMEX division of the New York Mercantile Exchange on Thursday.

Speculators have been boosting their holdings in US gold futures, another reason the market may be getting a bit stretched given that buying has been driven by external factors such as the currency and stocks, said a senior dealer at a Japanese trading house.

"The market is now at a level where technicals will set the direction, with traders watching if stop-loss orders above the highs for March will be hit," the dealer said, saying trend-following commodity trading advisers (CTAs) have been placing such orders at various levels.

The dealer said while players may wait to take action until the June gold futures contract rolls over next month, the dollar's further slide or sharp stock losses could hit the technical triggers.

Gold's relative strength index (RSI), a measure of whether the metal is overbought or oversold, stood at 76 at Thursday's close. The market views an RSI of 30 or less as oversold and 70 or more as overbought.

The Obama administration is preparing to steer General Motors into bankruptcy next week, The Washington Post reported on Thursday, citing sources familiar with the discussions.

Traders said the US automakers' bankruptcy, a factor which would normally spur more safe-haven buying of gold, was likely to have been factored in by market players and could even trigger profit taking given gold's current high price.

They also said gold had been weighed down by selling from India, the world's largest gold consumer, and Vietnam, when prices jumped.

But supportive of gold was data on Thursday suggesting that the US economic recovery, when it arrives, will be a long slog, with a key factory index showing only marginally less weakness and unemployment tipped to hit double-digit levels. Markets were also slammed by suggestions of the unthinkable - that the United States could lose its coveted triple-A credit rating.

Also buoying bullion was the dollar, which fell to its weakest in almost five years against a basket of currencies as concerns about growing US government debt prompted investors to sell dollar assets from stocks to bonds.

Cash flowing into the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, has paused since rising on May 13 for the first time since they began declining after hitting a record high on April 9. Its holdings were unchanged at 1 105.62 tonnes on May 21.

- Reuters

[fin24.com]

Gold coin demand soars

2009-05-22T07:29:00.000-07:00

Gold coin demand soars

Fri, 22 May 2009 10:27

The demand for gold coins has hit an all time high, the SA Gold Coin Exchange said on Friday.

"The rapidly growing demand for gold coins strongly suggests that the gold bull market is well set to extend itself strongly into the future," said chairman Alan Demby in a statement.

An increasing number of analysts and commentators were predicting strong gold price advances, Demby added.

He said during the course of 2008, the value of the exchange's sales of gold coins, primarily Krugerrands, was a substantial 80 percent higher than in 2007.

In the past few weeks the legendary Warren Buffet had expressed himself strongly in favour of investing in the yellow metal.

Furthermore, Demby said, UBS Investment Research forecasts gold to hit US$2500 an ounce in the next five years as prospects of either deflation or inflation become more extreme.

He added that Citigroup analysts Alan Heap and Alex Tonks had raised their gold forecast to an average $925 an ounce in 2010, from a previous estimate of $900.

Demby also noted that in the fourth quarter of 2008 compared with the equivalent 2007 quarter, total bullion demand in India, the world's largest gold market, was up 84 percent.

He added that gold demand in Greater China was up 21 percent while demand in Thailand soared over 100 percent and Middle Eastern gold bar and coin demand rocketed 139 percent.

Moreover, gold demand via ETFs shot up by 469 tons – a full 223 percent over the previous record set in the third quarter of 2008.

According to Demby, coin and bullion demand was expected to be just as strong as the 396 percent surge in the fourth quarter of 2008.

"It should be no surprise, then, that the price of gold continues to trade above its 1980 high of $850 – and rising.

"All the data clearly reveal that we are looking at a bull market more powerful than almost anyone is ready to admit – so powerful that it would not come as a surprise if the price hit $2000 before the end of next year," Demby said.

Sapa

[Via Iafrica]

Gold to trade above $1,000 next year - Mark Cutifani, AngloGold

2009-05-21T07:51:00.000-07:00

Gold to trade above $1,000 next year - Mark Cutifani, AngloGold

| Tue, 19 May 2009 11:01In an interview on ClassicFM @ 18.15 on 15 May[miningmx.com] -- AngloGold Ashanti believes it delivered on its promise to give shareholders a leverage to the gold price in its financial results and CEO Mark Cutifani is optimistic about the future of the yellow metal.

"We’ve come off a big year of restructuring and we promised that shareholders would see leverage to the gold price. They’ve seen it with a significant increase in realised gold price itself and so from our point of view, a big change in earnings so we’re very happy to report that leverage we’ve been promising," Cutifani said on ClassicFM's Classic Business.

He said there have been significant improvements in the gold holdings in exchange traded funds. "Demand for our product has been significant. People are now starting to recognise that if you don’t have gold in your investment portfolio, you’ve made a big mistake," Cutifani said.

AngloGold has seen a strong gold price, despite it traditionally being the weakest part of the year.

"We’re very optimistic about gold and I wouldn’t be surprised to see gold trade above $1,000 consistently next year," Cutifani said.

[mining mx]

German firm to install Gold ATMs

2009-05-21T04:49:00.000-07:00

This post is a little more offbeat than our usual posts, but totally amazing!

German firm plans gold ATMs to feed explosive growth in physical gold demand

A German asset management firm plans to set up 500 gold automatic teller machines across Germany, Austria and Switzerland as appetite for physical gold surges.

Author: Peter Starck
Posted: Wednesday , 20 May 2009

FRANKFURT (REUTERS) -

Private investors should hold up to 15 percent of their wealth in physical gold, according to a German asset management company which plans to set up 500 "Gold-To-Go" ATMs in Germany, Switzerland and Austria this year.

A gold-dispensing automatic teller machine (ATM) was on display at Frankfurt's main railway station for a one-day marketing test on Tuesday.

A one-gram (0.0353 ounce) piece of gold, the size of a child's little fingernail and about as thin, cost 31 euros ($42.25) -- a 30 percent premium to the spot market price.

The flat rectangular piece, bearing the imprint of Belgian metals and speciality materials firm Umicore (UMI.BR: Quote), came out of the cash-only ATM in a tin box, including a certificate of authenticity.

"This is more than a marketing gimmick," said Thomas Geissler, chief executive of TG-Gold-Super-Markt.de, the company planning to set up the 500 gold ATMs at a cost of 20,000 euros apiece.

"It is an appetizer for a strategic investment in precious metals. Gold is an asset everyone should have, between 5 and 15 percent of your liquid assets in physical gold," he told Reuters in an interview.

DEMAND

Private investor demand for gold is on the rise in Germany and elsewhere as a result of the financial markets crisis, which has made many investors wary of holding traditional assets such as equities, bonds or mutual funds investing in such securities.

"In absolute numbers, the demand for physical gold is still tiny in Germany," Geissler said. "But in relative terms, the growth is explosive, inquiries have been doubling every six weeks," Geissler said of the trend in recent months.

TG-Gold-Super-Mark.de's main precious metals business idea is based on online commerce.

The gold ATMs to be set up at central locations such as airports, railway stations and shopping malls are intended to gradually accustom people to the idea of investing in physical gold, Geissler said.

The ATMs will dispense 1-gram, 5-gram and 10-gram pieces of gold as well as Krugerrand gold coins. Each ATM can hold up to 1,500 pieces, he said.

The company's internet website (www.gold-super-mark.de), through which investors can purchase units between 1 gram and 1,000 grams, is updating precious metals prices every 10 minuntes.

The ATMs will be equipped with technology ensuring that the prices charged by the ATMs keep pace with those on the website.

TG-Gold-Super-Markt.de is a subsidiary of German online investment fund company INFOS GmbH founded in 1994. INFOS now manages 170 million euros worth of assets on behalf of about 5,000 customers.

[via mineweb] [pics from goldismoney.info]

2009-05-20T06:30:00.000-07:00

Gold Demand Surges 38% on Investment, Council Says (Update1)

By Claudia Carpenter

May 20 (Bloomberg) -- Gold purchases rose 38 percent in the first quarter, led by investment demand that exceeded usage by jewelers for the first time since at least 2004, according to the World Gold Council.

Global demand increased to 1,015.5 metric tons, from 733.9 tons a year earlier, the London-based council said today in a report based on figures from research company GFMS Ltd. Investment purchases more than tripled to 595.9 tons while jewelry demand fell 24 percent to 339.4 tons.

Gold rose to an 11-month high of $1,006.29 an ounce on Feb. 20 as governments spent trillions of dollars to fight recession, sparking speculation inflation will accelerate. In India, the world’s largest gold buyer last year, jewelry demand was the lowest in at least 20 years and net retail investment turned negative for the first time as holders sold metal for recycling, the council said. Chinese demand was six times that of India.

“In the current environment, investment demand is part of the diversification of assets in portfolios and therefore is less sensitive to price than jewelry demand,” said John Meyer, research director at Fairfax IS in London.

Investment demand for coins, bars and exchange-traded funds was the highest since at least 2004, when GFMS began tracking them, and “could well be” a record, GFMS senior metals analyst Philip Newman said. Jewelry demand had accounted for about two- thirds of gold demand in the past 30 years, he said.

Investment Flows

“Investment flows in the first quarter of this year were unprecedented and, based on an analysis of the past 30 years of the gold market, probably unsustainable in the long term,” UBS AG analyst John Reade wrote in an e-mail. Concerns about inflation and currencies “are likely to continue for the next year or so and this should keep investment flows strong, if not perhaps at the super-strong levels seen in the first quarter.”

The U.K. Royal Mint used 75 percent more gold in the first quarter than a year earlier and the U.S. Mint’s sales of 1-ounce American Eagle gold coins more than quadrupled in January.

Gold for immediate delivery climbed $2.98, or 0.3 percent, to $928.04 an ounce by 8:24 a.m. in London.

Total demand from India fell 83 percent to 17.7 tons, from 107.2 tons a year earlier. In Thailand, total usage was a negative 16.9 tons, compared with net demand of 2.1 tons a year earlier. Purchases in China rose 1.8 percent to 105.2 tons from 103.3 tons. In the U.S., demand rose 15 percent to 55.2 tons.

‘A Bigger Role’

“Certainly over the long run, you’re going to see China permanently taking a bigger role,” said Rozanna Wozniak, London-based investment manager at the council. “Across the world, there has been an increase in recycled gold sales, due to a combination of profit taking and distress selling due to difficult economic conditions.”

Demand in Germany for bars and coins expanded fivefold in the first quarter to 59 tons, according to the report.

“Throughout the western world, the safe-haven motive to buy gold was very strong due to economic uncertainty,” Wozniak said. “In Germany, it also appears to be motivated by inflation.”

Owners of gold sold a record 558 tons of metal back into the market, with net retail investment a negative 17 tons in India and 19.9 tons in Thailand, according to the report.

Gold mine production rose 2.9 percent to 560 tons from 544 tons. Central bank sales slumped 55 percent to 35 tons from 77 tons.

To contact the reporter on this story: Claudia Carpenter in London atccarpenter2@bloomberg.net

Last Updated: May 20, 2009 03:52 EDT

eGOLI report 18 may 2009

2009-05-18T03:13:00.000-07:00

By David Levenstein

Although many gold commentators including myself have been expecting to see the gold price soften in the short-term, the price of the precious metal has been extremely resilient over the last few weeks, and is showing signs of good support at prices around $900. Each time gold has dipped below $900 it has recovered very quickly, even though there are certain fundamental reasons which should, under normal circumstances, put pressure on the gold price

Despite the fact that certain central bankers have indicated that there are some encouraging signs of a recovery and despite the fact that risk appetite for equities has made a comeback over the last several weeks, gold has remained steady. Often, investors tend to sell gold to raise cash when they expect higher returns in other markets, such as equities and currencies, there has not been any evidence of any major selling of gold.

On Thursday 07, 2009 US Treasury yields soared after a 30-year government bond auction saw poor demand, highlighting the balancing act facing central banks seeking

to keep interest rates low while selling record amounts of debt. The lukewarm investor response to the sale of $14bn of US Treasury debt came after European central banks intensified efforts to combat recession. The European Central Bank cut its main interest rate by a quarter percentage point to 1 per cent, the lowest yet, and announced plans to buy €60bn of covered bonds, which are backed by mortgages or public sector loans. Separately, the Bank of England said it would pump a further £50bn ($75bn) into the

UK economy through its programme of quantitative easing.

What has this got to do with gold? Well, yields influence the value of currencies which in turn influence the price of gold. Right now, as the yields offered by most major industrialised countries are close to zero, investors are looking at equities as an alternative. This is one of the reasons we have seen a rally in global equities.

The latest jobs report which came out last week gave a mixed picture of employment in the US, leaving investors without any clear sign that the economy is improving. The pace of layoffs slowed in April when employers cut 539,000 jobs, the fewest in six months. But the unemployment rate climbed to 8.9 percent, the highest since late 1983, as many businesses remain wary of hiring given all the economic uncertainties. And, later in the day, the Euro gained more than 200 pips against the dollar, which boosted gold prices. The precious metal is used as a hedge against inflation, which can be triggered by a weak currency, so it often moves opposite the dollar.

In the meantime latest reports show that the demand for gold coins in the UK have soared to unimaginable levels. The UK mint, which is based in Wales, used 75 per cent more gold in the opening three months of 2009 than it did a year previously. It produced 28,496 ounces of gold coins in the first quarter, compared to 16,317 ounces in the same period in 2008, while production last year also increased 30 per cent.

Technicals

The Gold market continues to remain in a pivotal position from last week, warning for a positive turn from its sideways congestion. Short-term traders might well be using this range ($875 -$935) to trade but in the mid-term, a close over $929.90 on the June contract will fully turn this market back to the bull camp projecting up to $950.00. Only a close below $910.00 will void the bullish bias. But any drop to $875 - $885 should be used to add to your positions. However, it appears that the downward channel has been broken and the trend is beginning to turn positive.

With gold showing new signs of strength and as it is probable that the Rand will weaken, it is time to include/add krugerrands in you investment portfolios.

If you would like to speak to a broker for more information about Investing in gold, or how to structure a gold coin portfolio contact 011 784 8551 or email online@sagoldcoin.com

Be wary of the markets - gold still offers the best insurance

2009-05-12T02:55:00.000-07:00

FALSE GREEN SHOOTS?

Be wary of the markets - gold still offers the best insurance

Past major bear markets have seen false new dawns which have tended to be short lived and the recent big uptick in stock markets could be another of these, so don't disinvest from gold yet.

Author: Lawrence Williams
Posted: Monday , 11 May 2009

NEW YORK -

In a week that has seen global stock markets continuing to perform positively, gold has done remarkably well given that many experts are predicting the start of a new bull market. There has been little, if any, disinvestment from gold over the period, which suggests there are many out there continuing to hedge their bets.

And indeed they may well be wise to do so. Major bear markets of the past have seen big upswings during their progress, sucking investors back in, only for the upturns to end dramatically as some further major financial collapse spooks the markets again and prices tumble.

The global economy remains unstable enough for there still to be some nasty events out there which could do this. The duration of these upswings in past major bear markets has tended to be for periods of between five and seven weeks, which suggests we could be near another major downturn if history repeats itself - as it frequently does.

The global debt position is still an enormous cause for concern and many of the noises coming from politicians talking of "green shoots" and "safety nets" seem to be little more than hot air designed purely to try and build general confidence. In itself this is perhaps a justifiable position, but the whole deck of cards can equally come crashing down when a single significant event occurs belying the political rhetoric.

So gold, which thrives on economic uncertainty, should continue to play a major part in wealth preservation. It thus makes sense for at least a significant portion of one's wealth to be invested in gold and gold stocks - and maybe also in silver which tends to follow gold, but in a more volatile pattern.

Remember silver came back a huge amount more than gold as both fell back from their peaks, and it could thus increase in value faster than gold. (But also bear in mind that silver investment tends to be riskier than gold because there is a much greater industrial element in silver demand and usage than for gold and industrial growth is currently flat to negative in most parts of the world.)

At the moment the US dollar is holding up reasonably well in relation to other currencies, and inflation is proving to be minimal, but the whole system of pumping money into the economy at unprecedented rates developed to shore up world economies has to be inflationary sooner or later - and may even become hyperinflationary in some countries. Should the dollar start to fall back and inflation pick up, this would be a double whammy in terms of boosting the gold price and this could soar while the purchasing value of other investments, of salaries - and of pensions in particular - could dive dramatically. This may be almost a doomsday scenario, but one does need to protect oneself against such an eventuality.

There has also been some talk of revaluing gold as a neat way of boosting global monetary reserves and stabilising the global economy, but this may be politically a nightmare and probably won't come about. But again, if more and more people turn to gold amidst continuing economic shock and uncertainty the markets alone could make this revaluation fact and save the politicians from having to try and push through what could be a perhaps unacceptable move.

Overall, therefore, gold looks to have more of an upside potential than a downside. Maybe one should sell one's stock market investments in May and go away as the old adage advises, but it may be foolish to sell your gold!

[mineweb]

Warren Buffett's good news for gold

2009-05-07T07:53:00.000-07:00

Warren Buffett's good news for gold

OMAHA -

In the 44 years he's been building a reputation as the world's savviest investor, Warren Buffett has rarely offered any good news on gold. Until now.

The two key messages he delivered to 35,000 shareholders at Berkshire Hathaway's AGM in Omaha over the weekend were inflation is coming back; and the US Dollar is headed lower. Both predictions, if fulfilled, are powerfully positive for gold.

Buffett, who has delivered compounded returns exceeding 20% a year to shareholders for more than four decades, did not mention gold by name. But that will matter little to the yellow metal's continuously growing group of supporters. They are sure to interpret this as further evidence that gold's best days lie ahead.

After dabbling in precious metals in the 1960s, Buffett ignored them until a well publicized (but poor) trade in silver between mid-1997 and early 1998. The decision to accumulate 130m ounces was based on factors specific to silver's supply and demand at the time.

Once he'd closed out the position, Buffett jokingly describing it as "the perfect trade - except that we bought too early and sold too late." Since then he has publicly and consistently shunned precious metals, mainly because he prefers assets which generate dividends.

Despite his gloomy forecasts for inflation, Buffett hasn't exactly signed up to gold-supporting groups like GATA. Rather, he suggested to Berkshire shareholders their best protection was "invest in yourself; and as a second option, buy stock in a well run company."

Buffett explained that in the wake of the global financial sector meltdown, State officials have been forced to take the world into uncharted territory. Nobody knows the exact impact of unprecedented bailout and stimulation packages.

But he is convinced of one definite consequence: "You can bet on inflation." History suggests that higher inflation is an important trigger for a rise in the gold price.

During Saturday's six hour question and answer marathon, Buffett (78) and Berkshire Hathaway's vice chairman Charlie Munger (85) once again belied their advanced years through sharp wit and focused minds. They also referred often to their view that the US Dollar is headed south - another bull factor for gold.

Buffett believes US Government Bonds are one of the poorest choices for investors today, especially non-Americans. As he put it: "Anybody who holds (US) Dollar obligations from outside this country is going to get back less in purchasing power in future."

In his view the US is following policies that are bound to have inflationary consequences. Heading these is the heavy borrowing from, especially, the Chinese to fund the bailout and stimulus packages.

Says Buffett: "It's wrong for politicians and others to keep saying they're using (US) taxpayers money. My taxes haven't gone up and neither have yours. What we aredoing is borrowing from the rest of the world and building up Government debt. The classic way of reducing the impact and cost of foreign debt is by reducing the value of the dollars you're going to repay them with."

He added: "The people who are really going to pay (for the bailouts) are those who are buying fixed interest (US) Government bonds that will be worth less when they redeem them. The AIG bonuses," he quipped, "were actually paid by the Chinese."

While warning that shareholders should expect to see "plenty of inflation", Buffett said there was no need to despair: "The best protection against inflation is your own earning power. If you are the best at what you do, you will get your share of the national pie no matter what inflation does. The second best protection is owning a wonderful business that does not need capital. With these guidelines, I'd say invest in yourself. It's always been the best investment you could make."

Alarm bells ring for Gold

2009-04-11T10:23:00.000-07:00

Alarm bells ring for gold

Johannesburg - Investment in gold will be the driver to push the price to $1 100 or more this year, further damaging an already battered jewellery sector and increasing scrap supplies into the market. Prices will come off over the next five years as that investment dries up and retreats, says GFMS CEO Paul Walker.

It's difficult to be too definitive about what will happen in the gold market, with a number of variables feeding into forecasts for the price. What benefits one side of the equation has a negative consequence for the other.

Investment in gold in a period of tremendous economic upheaval pushes the price up to record highs but the consequence is that a "bedrock" sector of the market, the jewellery making and retail business, takes a pounding as buyers look for cheaper alternatives or stay out of the market until prices come back down.

"Over the last two or three years, the only thing that sustained the gold prices we've seen has been investment demand," Walker said. "Investment demand has been strong and consistent enough to take metal off the market to sustain those prices."

Indian scrap sales have been modest on expectations of higher rupee gold prices, but there have been relatively heavy flows in the Middle East, North America and Europe, made up of distress selling or people needing to raise cash, and from trade stocks, Walker said.

"This is where we start to sound the alarm bells for the long-term sustainability of high gold prices because the supply chain for gold jewellery, which is still the bedrock of this market, is slowly but surely being eroded by these high prices," he said.

GFMS, the London-based metals consultancy, forecasts that scrap, which has increased substantially in the year-to-date, will most likely be higher for the full year compared to 2008.

According to GFMS data, scrap supply in the first quarter of 2009 has surpassed the sharply lower amount of gold used in making jewellery, the first time in nearly 30 years.

"That tells you that jewellery fabrication has contributed negative demand for the first quarter. It's a remarkable and frightening prospect. Does this continue or doesn't it? If you're forecasting where the market is going you have to make a judgment call on this particular dynamic," Walker said.

Wall of scrap

"What's happened in the first quarter of 2009 is an absolute phenomenal wall of scrap coming back onto the market. It's come from everywhere," Walker said. "It does start to sound the alarm. Is this a once off?"

"I think the second quarter will be very revealing if we see the gold price move back over $1 000 and above. It's absolutely critical as to what happens to scrap as to what the sustainability of this is."

Stripping out scrap flows into the gold market, Walker argued that there was not enough demand - be it jewellery fabrication or industrial offtake, which has taken an "absolute kicking" - for the gold currently being mined and that the excess was being mopped up by investors seeking out a safe haven for value.

"I believe investment will be a key feature in this market for the balance of this year and possibly 2010," Walker said. "But when that turns there is only one thing that brings that brings this market into equilibrium."

He said prices would have to drop - something that is likely if investment demand stops growing and becomes neutral if sentiment towards equities and bonds changes - to bring in physical demand for the metal to return to the market to equilibrium. "There lies the challenge for gold. It's not the story for the next year or two but the next four to six years."

He argued that gold prices will be "a lot lower" than they are now in the next four to five years, which raises the possibility of the Chinese government diversifying its massive reserves to incorporate gold. It is thought to have largely held off doing so because of the high gold price and for fear of disrupting the gold market.

The large flow of scrap gold is generally ending up in vaults, predominantly in London, Walker said, estimated the private holdings over the past eight years have grown to be twice that of the 1 600 tonnes held in gold-backed exchange-traded funds.

He told an anecdotal story of JP Morgan advising a client in Japan that it was restricting silver storage to one container per day. "There's a wall of silver coming back into London," he said.

GFMS forecasts mine production will rise this year by between 20 and 30 tonnes, mainly on increased output from Australia, Asia and West Africa.

Central bank gold sales are expected to remain weak this year, with the International Monetary Fund sales of 403 tonnes of gold through the Central Bank Gold Agreement, which caps official sector sales at 500 tonnes, not expected before 2010.

"The IMF sales are already priced in and they don't really concern me. I don't think it will have that much of a price effect and won't be massively influential," Walker said.

He said he expects the Central Bank Gold Agreement, which expires in September this year, to be renewed and for the cap of 500 tonnes a year to remain in place. "I'd be extremely surprised if it's not renewed."

- Miningmx.com

G20 supports IMF's plan to sell 403 tons of gold

2009-04-03T01:07:00.001-07:00

G20 supports IMF's plan to sell 403 tons of gold

Endorsement signals plan likely to be approved by member countries this year

NEW YORK (MarketWatch) - Leaders from the Group of 20 nations Thursday endorsed the International Monetary Fund's plan to sell 403 tons of gold to raise funds to support the world's poorest countries.

The announcement from G20 leaders helped add pressures to Thursday's gold trading. Gold futures fell $20.30, or 2.2%, to $905.80 an ounce in recent trading on the Comex division of the New York Mercantile Exchange. See Metals Stocks.

The G20 vowed in its statement to "use the additional resources from agreed IMF gold sales for concessional finance for the poorest countries." Read more on G20.

The endorsement suggests that the IMF's gold sales plan is likely to be approved by its member countries later this year.

The IMF has been planning to sell gold since as early as 2007 to diversify its revenues and strengthen its balance sheet. But the plan needs to be approved by an 85% majority vote from its 185 members.

The U.S., which has 17% voting power in the fund, essentially holds veto power. The U.S. government has informed the IMF that Congressional authorization by law is required before it is able to support the plan.

The U.S. Treasury announced last year that it will seek authority from Congress.

Hussein Allidina, an analyst at Morgan Stanley, said in a note Thursday that he expects the IMF to implement the sales over the next few years, "but do not believe that this presents a strong negative risk to gold prices - as it will be 'orderly' and maybe even off market."

The US administration has seemed supportive, both for expanding the IMF's role as well as helping its long-term funding challenges. This makes the proposed IMF gold sales much more likely, as the US Congress effectively has a veto on this decision, with the US having a 17% vote on an IMF decision that needs 85% to pass.

Minimize market impact

The IMF, which holds more than 3,200 tons of gold, is the third-largest holder in the world after the U.S. and Germany.

Most of the IMF's gold holdings come from the fund's member countries, which are required to commit 25% of their quota in gold. The fund can't sell those holdings into the markets.

But an additional 403.3 tons of gold the fund acquired through off-market transactions in 1999 and 2000 - such as interest payment from countries that received IMF loans - are not subject to the restriction.

If member countries approved the gold sales, the IMF can find ready buyers in countries with low gold reserves, especially Russia and some Asian countries such as China, Taiwan, and India.

China, with less than 1% of its $2 trillion reserves held in gold, has expressed interest in buying more gold, crude oil, and other strategic commodities.

According to the IMF's plan, the gold selling will be implemented in coordination with major central banks to minimize the impact on the market.

The European Central Bank said Wednesday it had completed the sale of 35.5 tons of gold.

The gold sales were in full conformity with the second Central Banks Gold Agreement, which was signed in 2004 by the ECB and other European major official gold holders.

The second CBGA, which caps total gold sales of the signatories at 500 tons a year, expires in September. Some analysts expect a third CBGA to be signed before September.

Moming Zhou is a MarketWatch reporter based in New York.

Gold in line for a run

2009-03-27T00:41:00.000-07:00

Gold set for 'decisive move'
March 26, 2009

Johannesburg - Gold is poised for a decisive move upwards, the SA Gold Coin Exchange (SAGCE) said in a statement on Thursday.

The SAGCE said the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund had identified a chart pattern showing that gold's short-term downtrend was about to clash with its intermediate-term uptrend.

The clash pointed to a decisive near-term price move - either up or down.

"We’ve noticed a similar picture on our charts," said Alan Demby, executive chairman of the SAGCE.

He added that it was his prediction that the gold price would move up.

Several factors, he said, prompted such a decision.

This included the fact that the intermediate-term uptrend has been tested on two occasions - in November last year and mid-January this year - with the likely result that it would hold again on this occasion.

Demby said there had been an unprecedented surge in demand for gold coins, which had resulted in the US Mint having had to stop producing its 2009 American Gold Eagle coin for collectors, reflecting determined global buying.

Demby said that as a proven inflation hedge, gold was starting to offer itself as a safe haven from the trillions of fiat dollars that had been created by the world's leading central banks. - Sapa

2009-03-23T03:40:00.000-07:00

It is clear now that central banks are buying gold for their reserves. Here is a brief history leading to today and the present position of central banks as they turn to buying gold.

Massive Gold Sales!

From the early 1980’s and for the next 20 years gold was under the threat of massive sales from the world’s central banks. Many commentators reported that the overhang of gold above the ‘open’ market was so great that such sales would eventually lead to central bank reserves in the developed world having no gold at all. Central Banks had further worsened the situation by loaning gold to mining companies, through the bullion banks, allowing them to finance gold production to a far greater extent than warranted by the price of gold during that time. This acceleration in the production of gold allowed the gold price to be pressed down $850 to $275, the point at whichBritain, at the instruction of the current Prime Minister Gordon Brown instructed that Britain sell the bulk of its gold reserves. From the turn of the millennium this perspective changed dramatically.

Limitation of gold sales by central Banks!

In 1999, through the establishment of the Washington Agreement, the signatories announced to the world that it need not fear uncontrolled sales of gold reserves for the next 5 years. While the U.S. and Japanwere not signatories, they gave tacit agreement to such a limitation. Since then neither of them have sold gold on the open market. Following the end of the ‘Washington Agreement’, a second agreement, called the Central Bank Gold Agreement, extended the situation for another five years. This agreement ends on the 26^th September this year. Sales were limited to the sales previously announced by the signatories, with the exception of Belgium and Spain who made no prior announcement to their sales. Under the Washington Agreement these were limited to 400 tonnes a year. Under the second Agreement the sales were limited to 500 tonnes a year. These limitations have not been met under the second agreement as sales are below this limit so far.

The halting of Central Bank Gold Sales!

Of great significance has been the actual slowing of gold sales from European banks, which appear to have lost all appetite for gold sales. Indeed France was an unwilling seller, but under Presidential instruction has done so. Italy has had no plans to sell any of its gold. Germanyhad the option to sell 600 tonnes but has not taken this option up. Switzerland took some of this but has ceased selling now. It would be surprising if the signatories sold more than 150 tonnes of gold let alone the ceiling amount of 500 tonnes by the 26^th of September this year. And next year, we expect no such sales [the I.M.F. sales are potential sales that are not part of a central bank gold selling policy] from central banks.

Central Bank buying of gold for reserves!

Just as the tide turned from damming gold in the monetary system in 1999 it appears we are rapidly approaching another watershed in the history of gold in the monetary system.

Countries not seen as an important part of the global monetary system have, in the last few months, turned buyers of gold. Ecuador [28 tonnes - 920,000 ounces - doubled its reserves from 26.3 tonnes], Venezuela bought gold [ 240,000 ounces - 7.5 tonnes - taking it up from 356.4 tonnes] , but this is not deemed of great significance.

Russia at last, after talking about it for over one year has begun to buy gold. It was reported that Russia has bought as much as 90 tonnes of gold for its reserves, lately [Previously it held 495.9 tonnes]. This is much more significant as it is a large figure in the small gold ‘open market’. Prime Minister Putin is reported to have said thatRussia wants to see gold forming 10% of Russia’s reserve. The slow process of getting them up to that level could have begun. Even soRussia has little influence on global central bank thinking, so such increase are not thought to directly influence the principles behind gold as a reserve asset. So as not to minimize such purchases, if Russiawere to keep up this pace of acquisition, it would be able to buy 360 tonnes a year and have a very significant impact on the gold price.

But the principles behind gold, as a reserve asset, are affected far more by the following news. Last week the European Central Bank reported that one signatory to the Agreement purchased gold [which for the first time we have seen them do it], because the purchase was not simply of gold coin [which has happened before – seemingly for good housekeeping reasons] but simply “of gold”. In other words the ranks of central bank selling in Europe have been broken and one has turned buyer!

We feel more positive now in our belief that European Central Banks are unhappy sellers and are inclined to change their views to the buy side. The very fact that one central bank in Europe has turned buyer confirms this. There is little doubt in our minds that there are conflicting views now amongst the heads of the leading European central banks on gold now.

Major changes taking place in central bank policies on gold!

According to the World Gold Council’s new chief Executive AramShishmanian, in the Middle East the new monetary union there intend to have “gold play a prominent role in Gulf CC economies.” He said, “It may play a role in that basket of currencies on which the GCC common currency will be pegged”. Of course, please bear in mind that the inclusion of gold in a basket of currencies, would simply be for valuation purposes and does not, of itself, imply that these central banks will buy gold for their reserves.

He continued, “Gulf central banks, along with the central banks ofBrazil, Russia, India and China are expected to increase their gold reserves. Central banks with low reserves of gold are looking to increasing their reserves. They are trying to analyze what the right balance should be. They are becoming aggressive. Currently the belief is that if more than 20% of a central bank’s reserves are in gold, it is overweight, but this perception is changing! The metal is becoming an assert class in the region and Gulf investors are looking at long-term investments in gold as a hedge against inflation.” We are certainly not in a position to contradict what he says. After all he has the resources and contacts to be authoritative on the matter.

However after nearly 30 years of opposition to gold by central banks ands occasionally governments, it is a remarkable turnaround that tells us that gold is returning to the monetary arena again! [The gold world has expected this for so long it feels a bit like seeing an oasis in the desert.]

If right, expect to see both Russian and Chinese gold production go straight into those countries reserves and not even reach the open market. That will account for nearly 600 tonnes of supply disappearing. Now add to that the halting of sales from European central banks, a perceived 500 tonnes a year. If this trend continues gold, as an investment, will be fully rehabilitated.

Institutional demand will follow!

But this is by no means the largest effect that this change of heart will bring about. The recognition by central banks that gold has a role in the monetary system will influence investors, both institutional and individual. Should that happen and say 5% of funds placed in gold by funds such as Pension funds, then an amount of $920 billion, in the States alone, could head gold’s way. Only a five figure gold price could accommodate that volume of money in the gold market. Now add to that the same inclination in the rest of the world. Any such rise in price will stunt the demand for sure, but be certain that gold is not simply in a bull market.

If the World Gold Council’s CEO is correct, then he will have confirmed that 2009 and 2010 will be the year that heralds the return of gold to the global monetary system!

“Gold is always accepted and is the ultimate means of paymentand is perceived to be an element of stability in the currency and in the ultimate value of the currency and that historically has always been the reason why governments hold gold.”

Click here for the original article

The Gold and Silver Bull Market Won't End Before 2014 or 2015

2009-03-23T03:32:00.000-07:00

It's more than a little odd and bewildering that both SILVER and GOLD PRICES have been correcting for more time than the 2004 and 2006 crashes, but so far at less price loss. In other words, the correction ought to be complete in time, but not in price. This jumps to the conclusion that 2008's correction has finished, and will be shallower in price than 2004 and 2006.

By way of comparison, the gold price has dropped 15.4% so far from its 18 March 2008 high, against 12.4% in 2004 and 21.9% in 2006. The silver price as of 1 May had dropped 21.6% from its high, but in 2004 dropped 32.8% and 35.4% in 2006.

Trying to mesh this with the metals' seasonal patterns leads to more bewilderment. Usually metals drop into end-June/July for a low after a high in May, then make another high in October/November. Sometimes, just to mess with your mind, they peak & trough in the opposite seasons. This year they peaked in mid-March(huh?) and looks like they will trough by mid-May, end-May latest. Will they then rise into the summer, the usual seasonal low? Or will they trade sideways until August and then begin climbing?

About the only near-certainty here is that this correction will have ended by May 31. Mercy -- it may have already bottomed. Proof of that will only come, however, by a successful test of the lows so far.

Now everybody has his head turned down, so what are the maximum lows we might expect? US$785 on gold and $13.29 on silver. But I've been through this enough times to know that bending over looking for a bottom you'll get a crick in your neck that puts a crick in your trading. You are looking for a bottom so hard that you miss it when it comes, looking for one further down. That's silly. Silver & gold are in a bull market. What if you buy today and they drop another 10%? The bull market's rising tide will bail you out. I've worried and vexed myself about every one of these drops since 1999, and now the difference between $4.05 and $4.50, or US$342 and US$310 seems like no difference at all.

Of course, this sort of weather also brings out the really gigantic croakers. They're now singing that the deflationary depression is coming that will take gold down to $35 again and silver to 25 cents, etc., etc. and the bull market in silver and gold has ended. Well,suum quique, to each his own, but I doubt it. The metals bull market began in 2001. It won't end before 2014 or 2015, if then. Stay with your positions, add to them while metals are correcting and low, and shut your ears to the croakers like Ulysses shut his crews' ears to the Sirens. His own he left open, but he tied himself to the mast.

STOCKS are rallying, and the Dow industrials should carry to 14,000. Dow Transports made a new all-time high on 30 April, and whether the Industrials confirm that or not, for now that fuels stock optimism. Rallying stocks helps silver, so don't complain, just don't get suckered into buying or keeping stocks. Stock rally seems destined to carry into summer, again, differing from the usual flat summer pattern.

The US DOLLAR INDEX is just a-rallyin' and a-rallyin', picking up all the easy money off the inflexible & unwary shorts. Look for this rally to work its way toward 77 before it ends, but it won't hurt silver or gold too much. They've already established themselves as the alternative currencies to all fiat national currencies.

By : Franklin Sanders

www.the-moneychanger.com

Shining golden week

2009-03-23T03:30:00.000-07:00

According to Alec Hogg, this week has been all about gold.

Felicity Duncan
19 March 2009 17:15

With all the chaos in the world - big banks blowing up, normally responsible governments printing trillions with abandon, and even pirates trawling the high seas - it's understandable that investors are looking for the safest assets they can find, and this is where gold comes in.

As safe harbours go, gold is an all-time favourite. The gold price has rocketed upwards ever since the disaster-riddled nature of the global financial system became apparent. Right now, gold is trading at $950, and it's tapped to head upwards as the real economy sputters.

According to Moneyweb editor-in-chief Alec Hogg, speaking in the weekly Boardroom Talk Podcast, there can be little doubt that this week, gold has held centre-stage.

On the gold price, Hogg said: "[Thursday] was a big day for gold, [Wednesday] night when the Fed decided it was going to spend a whole lot more money, pulled out of thin air, gold bulls got excited, pushed the gold price up $35 and as we're talking right now, coming from a level of around 890, it's now trading 935 to 950."

"The Americans, certainly the mid-Americans or middle Americans, tend to love gold and they're going for it in a big way. Nick [Holland, CEO of Gold Fields (JSE: GFI)] said he'd just returned from America and he heard some fairly reputable commentators over there now talking about $2 500 an ounce."

"But what was interesting was the reasoning behind Nick Holland's view. He didn't say it would go to $2 500, but he also felt that it would go north of $1 000 in the not too distant future. He felt that the inflationary boosts that are going on in the United States are likely to have a direct impact on what he produces."

Mark Cutifani, CEO of AngloGold Ashanti (JSE: ANG), took a similarly bullish view.

"What was interesting and more supportive of this view, we had a ten minute chat on Wednesday ... after John Paulsonhad made an investment of 11%, or he paid just over $1bn for 11% of AngloGold [we had a chat with] Mark Cutifani."

"And what is interesting here, and Mark said he met John Paulson in the past, John Paulson, when you start digging into his background, is quite an incredible investor. Forbes magazine rates him as one of the top three. Steve Forbes said that if we were to have a Mount Rushmore for investors, in the United States - Mount Rushmore which you well know because you've been there, have got the heads of presidents on a mountain - and if we had them for investors, he said, it would be Bill Gross of Pimco, Warren Buffett and John Paulson. So that puts him right up in the very top league."

Paulson shot to fame after his hedge fund took a large bet against the sub-prime debt holders and house price.

Explained Hogg: "Personally he made billions of dollars. Last year he went from position 175 to a position in the top 75 on the billionaires' list and the primary reason for that is that his company, which has come from nothing, has now got assets of $35bn."

Given Paulson's investing acumen, and the prestige he now has, it's very interesting that he has chosen to get in on the gold game.

"He's betting on gold and more specifically he's betting on Mark Cutifani's firm, AngloGold Ashanti. So that's a very strong tip for us. John Paulson, who is like a Warren Buffett, makes [a] substantial investment in a South African-based company that is in the gold market."

"And we had [further] support of that as well in another of the podcasts with market commentators through the week - the one that is always the best read is with the Allan Gray commentators - and [Allan Gray director] Delphine Govender was explaining that they are overweight gold in the Allan Gray portfolios and overweight AngloGold in the gold side of the portfolios, so AngloGold is also their favourite."

For Hogg's insights on the Huge Group (JSE: HUG) SSF debacle, and the troubles of Super Group (JSE: SPG), check out the Boardroom Talk Podcast.

The Boardroom Talk podcast: All about gold

2009-03-20T07:11:00.000-07:00

Interview with Moneyweb and Alex Hogg: All about gold

MONEYWEB [Felicity Duncan]: Hello and welcome to Boardroom Talk Podcast. It is Thursday, the 19^th of March and I'm sitting in the studio with Alec Hogg who is going to give us some insight into the events of the week. Alec, let's start talking about the gold price because there were some very interesting moves this week in that area.

ALEC HOGG: Hmm, all over the place. Today was a big day for gold, last night when the Fed decided it was going to spend a whole lot more money, pulled out of thin air, gold bulls got excited, pushed the gold price up $35 and as we're talking right now, coming from a level of around $890, it's now trading $935 to $940. It was interesting on the radio show and the interaction we had with a couple of chief executives from the, well in fact the two biggest South African gold mining groups, both of whom are very bullish on gold. Most bullish is Nick Holland, the chief executive of Gold Fields Ltd. It's interesting to note, I was going through our YouTube channel, that the interview we had with Nick Holland has been very well watched, in fact it's one of our top five interviews.

MONEYWEB: Those gold bugs out there, they just love it, they can't get enough!

ALEC HOGG: Well the Americans, certainly the mid Americans or middle Americans, tend to love gold and they're going for it in a big way. Nick said he'd just returned from America and he heard some fairly reputable commentators over there now talking about $2 500/oz.

MONEYWEB: It's amazing. You know, I heard this week that a Krugerrand back in '79 was R200.

ALEC HOGG: And it's now over R10 000.

MONEYWEB: Like that is serious asset depreciation.

ALEC HOGG: Well in fact it has been probably the best investment that you could have made, certainly in the last couple of years. But what was interesting was the reasoning behind Nick Holland's view. He didn't say it would go to $2.5 thousand, but he also felt that it would go north of a thousand in the not too distant future. He felt that the inflationary boosts that are going on in the United States are likely to have a direct impact on what he produces, but it was interesting, perhaps even more interesting and more supportive of this view, was our discussion with Mark Cutifani, we had a ten minute chat on Wednesday and this was after John Paulson had made an investment of 11% or he paid just over a billion dollars for 11% of AngloGold - Mark Cutifani, the CEO of AngloGold. And what is interesting here and Mark said he met John Paulson in the past, John Paulson, when you start digging into his background, is quite an incredible investor. Forbes magazine rates him as one of the top three. Steve Forbes said that if we were to have a Mt Rushmore for investors, in the United States Mt Rushmore which you well know because you've been there, have got the heads of presidents ...

MONEYWEB: Great big ones, ja.

ALEC HOGG: ... on a mountain and if we had them for investors, he said, it would be Bill Gross of Pimco, Warren Buffett and John Paulson. So that puts him right up in the very top league and not surprisingly because he's only 53 and he's very much a self-made man , started his business in 1995, a hedge fund, his hedge fund bet against the subprime bank owners...

MONEYWEB: Good bet!

ALEC HOGG: Fantastic bet! Well personally he made billions of dollars. Last year he went from position 175 to a position in the top 75 on the billionaires' list and the primary reason for that is that his company, which has come from nothing, has now got assets of $35bn and he's betting on gold and more specifically he's betting on Mark Cutifani's firm, AngloGold Ashanti. So that's a very strong tip for us.

MONEYWEB: Yes, it's fascinating. I heard the interview and Cutifani, when you asked him if he was going to drop the Anglo part of AngloGold, said that they were actually looking around and considering buying more assets.

ALEC HOGG: It is interesting that they are going on that kind of approach. He said nothing imminent yet, which is a bit of a giveaway for us journalists, to say that they're looking clearly quite seriously at some assets and likely to do, again it will be a high quality gold asset, you know that they have sold a few Bardington assets in Australia and one here in South Africa, to Simmers. But to me the big part of this whole thing is that John Paulson who is like a Warren Buffett, makes substantial investment in a South African based company that is in the gold market. And we had support of that as well in another of the podcasts with market commentators through the week and the one that is always the best read is with the Allan Gray commentators and Delphine Govender was explaining that they are overweight gold in the Allan Gray portfolios and overweight AngloGold in the gold side of the portfolios, so AngloGold is also their favourite.

MONEYWEB: They don't miss a trick, although ...

ALEC HOGG: Neither should we!

MONEYWEB: ... they've missed one trick, haven't they, with the news out of Super Group this week and they turned down, was it R17 a share offer ...

ALEC HOGG: It was R10 two years ago.

MONEYWEB: Ja, and then there was the one previously to that... Anyway, they turned down a lot of money for a stock that's now looking bad.

ALEC HOGG: Well it is. It just shows that no matter how clever they are and how good people like Allan Gray are, even they are fallible and I like their approach because they don't hide behind it. It's almost like the Warren Buffett approach that you trumpet your disappointments and speak quietly over your successes and she was very vocal in our discussions about Super Group, explaining that, yes, they didn't do the right thing two years ago when they had the offer for Super Group to be delisted, looking and back on what happened as recently as October where there was R500m was raised by shareholders, put into Super Group at a share price of R4. Allan Gray was one of the biggest of the supporters there...

MONEYWEB: Yes, they followed it, I remember.

ALEC HOGG: Now you've got to put this in context, that was R500m in fresh capital that was put in in October. The market capitalisation of Super Group today is 278, so ...

MONEYWEB: Value destruction...

ALEC HOGG: ... not only has half of that money, the fresh money that was put in, gone, but whatever it was worth at that stage when the rights issue was done, has disappeared. I thought Larry Lipschitz was disingenuous when he was on the radio, saying that everything started going wrong when there was a $5m liability from an Angolan operation that went bad. Now $5m doesn't collapse a whole firm...

MONEYWEB: No, it's not big enough.

ALEC HOGG: This firm's been going bad for a long time and Delphine is convinced that with the operations now having been cleaned up with all of the problems being taken out, that Super Group is in a position where it's going to make money, the management have got a long, long way to go to rebuild any credibility, as you would imagine, from a company that's come from R22 a share, to 45c.

MONEYWEB: Now he signalled that he might be leaving, Lipschitz, I mean he was a bit evasive about it, but he did seem to say that it was a possibility.

ALEC HOGG: Well if you presided over value destruction on that scale, I'm surprised that he actually sticks around and he did say he's doing that because of the 12 000 employees, he feels a sense of loyalty towards them and he wants to see this thing through and to his credit - there were many who felt as recently as six weeks ago, there was a strong rumour in the market that the banks were going to pull the plug on Super Group. So they've somehow miraculously managed to stay afloat. It looks with the billion rand extra that's going - now remember, a company worth R278m today, another billion has to be put into it just to keep it afloat...

MONEYWEB: It just shows...

ALEC HOGG: But with that going in, they feel that they will be able to turn the ship.

MONEYWEB: And it's a dilutive offer, right, four to one at 45c, so if you don't follow your rights, you're going to be vastly diluted.

ALEC HOGG: Well if you take it back to where you were in October last year and this brings in the black economic empowerment partner, Peu, Peu borrowed money from Deutsche Bank internationally, it had to sell a whole bunch of shares in October 2007 to pay part of the interest one presumes or, well who knows, but anyway, if you borrowed money to buy Super Group shares anywhere north of R5, you've got to be in big trouble now. So one doesn't know, is Super Group going to lead to the destruction of Peu? Well we've heard nothing from Peter ...... and his people. All Larry Lipschitz could say to me yesterday was he believes the Super Group shares are unencumbered, which is not surprising because they're not worth a whole lot anymore, but if you've got so much capital and you're trying to develop it and grow it, you would presumably be using that as collateral in other areas. So I think we are going to see some spectacular BEE collapses - Peu must be one of the favourites.

MONEYWEB: Absolutely. Now, there was a lot of nefarious corporate news out this week and one of the most interesting was the Huge Group, I know there was a huge story about their single-stock future misbehaviour. Do you want to maybe explain that?

ALEC HOGG: It's a very good story and it's one that shows so easily how you can confuse the public. I know they are trying their best, the two fellows behind Huge, to put a positive spin on it, but in essence what happened was that the two of them decided to cash in part of their shareholding. It was something that was offered to me in fact here at Moneyweb as well, when things were going up, the perpetrators of this kind of nefarious crime because that's really what they were, came to me and said, take part of your Moneyweb shareholding, sell it and then take single-stock futures to offset the amount that you sold and in that way you can release capital that you've got tied up in the business and of course single-stock futures, you buy them in at a pretty low level, so as they go up, you make your money.

MONEYWEB: Voila! And you hold your shareholding, you don't get diluted or ...

ALEC HOGG: And in theory it sounds good and of course as the share price went up, what happens with futures is that you get credited every day with the value of the growth. So all of a sudden from being worth maybe 10m or 20m, these guys were worth 40m, 50m and the money comes into your bank account, which you then presumably spend and it's happened in a lot of cases. But when the reverse occurs, where are you going to find the money to repay the cash that has come from you? Because as share prices go down, you have to keep topping up the margin and this is exactly what happened with the Huge Group. They did some kind of a deal with a stock broking company called Watermark, where the Huge company bailed out effectively the two directors at a price of 362c a share. That share today is trading at R1.20. The stock exchange has forced Huge Group to go back to its shareholders and ask them, "Would you be prepared to endorse the decision by these two directors for the company to buy these shares at 362c", and no shareholder who has got any sense whatsoever, is going to endorse that.

MONEYWEB: Absolutely, using the company money to protect your own...

ALEC HOGG: Some would say that it's fraud. The stock exchange is certainly throwing the book at these guys and it's not going to have a happy conclusion.

MONEYWEB: Well that's all we have time for, unfortunately, this week, but we will definitely hear some more from Alec Hogg next week, Thursday. So from the Moneyweb Boardroom Talk podcast, we hope you enjoyed it.

Geniuses with gold

2009-03-20T07:07:00.000-07:00

Shining golden week

According to Alec Hogg, this week has been all about gold.

Felicity Duncan
19 March 2009 17:15

According to Moneyweb editor-in-chief Alec Hogg, speaking in the weekly Boardroom Talk Podcast, there can be little doubt that this week, gold has held centre-stage.

Mark Cutifani, CEO of AngloGold Ashanti (JSE: ANG), took a similarly bullish view.

"What was interesting and more supportive of this view, we had a ten minute chat on Wednesday ... after John Paulson had made an investment of 11%, or he paid just over $1bn for 11% of AngloGold [we had a chat with] Mark Cutifani."

Paulson shot to fame after his hedge fund took a large bet against the sub-prime debt holders and house price.

Given Paulson's investing acumen, and the prestige he now has, it's very interesting that he has chosen to get in on the gold game.

For Hogg's insights on the Huge Group (JSE: HUG) SSF debacle, and the troubles of Super Group (JSE: SPG), check out the Boardroom Talk Podcast.

'Gold-en' times may endure as dark days loom over commodity markets

2009-03-19T07:57:00.000-07:00

MO's Bart Melek observes investors are migrating into cash, government paper and gold at the expense of industrial commodities and equities.

Author: Dorothy Kosich

RENO, NV -

While safe-haven buying has lifted gold to historic highs in recent weeks, BMO Capital Markets Global Commodity Strategist Bart Melek cautioned Tuesday that a correction may be coming before the rally resumes.

The picture is bleak as Melek warned "it looks quite probable that base metals and bulk commodities will be under siege for the first nine months of the year."

"With investors continuing to be quite risk averse through the worst of the recession (which is likely to stretch into Q4/09), base metals, bulks and mineral equities are expected to remain relatively lackluster-but ready to move to the upside," he added.

In his analysis, Melek observed that the $200 per ounce rally of gold to just over US$1,000/oz last month "suggests that the good times for gold may continue into 2009."

However, he warned, it may be choppy near term for gold, noting "there is a risk that prices may correct somewhat in the near term if there is a return to relative stability in the financial market, particularly the financial sector."

"Gold appears to have run ahead of its main drivers: the U.S. dollar is strengthening and disinflationary risks are growing in the short run. It is possible that gold will retrench materially below US$900/oz, before trending up toward US$1,000/oz later in 2009."

Despite Melek's prediction of "more dark days before commodity markets turn," he also forecasts a turnaround in commodity-based stock valuations and earnings multiples will accelerate "once markets start seeing better economic times and firmer commodity and gold prices. This is expected to occur sometime in the latter part of Q2/09."

"Investors should look for signs of an economic bottom, developments in seaborne trade and an end to downward price pressures as signals for better times to come for material-based equities," he advised. "Stocks on average tend to rebound well ahead of a real economic recovery and improvement in earnings."

Melek asserted the commodities correction seems overdone, and claimed the credit-lead commodity sell-off "has left metal prices too low." He suggested that the market for many bulk and metal commodities could operate in an "auction-pricing" mode again, as opposed to a "marginal cost" mode under a balanced situation if demand materially outpaces supply.

"It is easy to envision metal prices testing recent cyclical highs if supply growth is destroyed by the credit crisis and low prices," he predicted.

Gold market will remain robust as economic and financial risks remain paramount --Citigroup

2009-03-19T07:55:00.000-07:00

Although investments in other commodities have collapsed, Citigroup says surging investment demand is keeping the gold market robust.

Author: Dorothy Kosich

RENO, NV -

In an analysis published Wednesday, Citigroup notes that physical gold investment is heading toward record levels this year.

The broad-based increase includes coins, bar hoarding and identified retail. "The increase is particularly remarkable given that it is occurring during a period of USD strength and when investments in other commodities have collapsed," Citigroup metals analysts Alan Heap and Alec Tonks said.

The analysts also noted the increase in gold ETFs have been even more dramatic with ETF holds rapidly approaching yearly physical demand and half of the world's annual mine supply. "Based on our estimates, if ETF inflows continue at current rates, investments will be 1900t in 2011e with the implied price of US$1300/oz. "

While COMEX futures open positions are increasing, CIBC said, "We believe the different dynamics between ETFs and futures reflects investors desire to get as near to physical gold as possible. The desire for physical gold is also reflected in the sharp increase in demand for coins and bars.

Emphacizing that it is important to consider the technical outlook for gold, Citigroup predicted that gold will test the $935 mark in the next month "and the success and failure of that move should determine whether another attempt at $1,000 proceeds."

"In the current environment of economic meltdown and systemic threats to financial markets safe haven demand will continue and gold prices will remain elevated, potentially moving much higher," Citigroup forecast.

However, the analysts cautioned "bullish gold is a very crowded trade and any sign of stability and a return of market confidence will precipitate a sharp reversal in gold prices, indeed a period of weakness is probably already underway."

Nevertheless, the analysts concluded the weakness is likely to be short-term "and gold market strength will be a continuing force until there are signs of economic and financial stability, which we expect in 2H10."

Finally, Citigroup also forecast that silver investment remains buoyant, especially from silver ETFs and physical demand. The analysts suggested that silver mine supply growth "will likely be curbed, especially by zinc production cuts."

posted by jb

2009 Wealth Preservation Guide

2009-03-16T07:40:00.000-07:00

2009 Wealth Preservation Guide Building a Fortress of Protection Around Your Life Savings

The perfect financial storm we predicted over three years ago arrived in 2008, catching millions of Americans by surprise, and it continues to destroy wealth in a way not seen since the Great Depression. It was a year when every major asset class from Stocks, real estate, and commodities to high-yield bonds suffered double-digits losses as over $30 Trillion of wealth disappeared.

As the financial world fell off a cliff, millions of Americans lost 30% to 40% of their life savings due to a failure to focus on wealth preservation.

Lack of Government oversight, greedy Wall Street bankers, and irresponsible Stock brokerage firms have destroyed confidence in the financial system. That’s exactly why Gold survived the Stock Crash of 2008 and actually increased in value by 6%.

Consumer-Driven Economy is Dead
We see little reason for the economy to come back to life soon. The $700 Billion taxpayer bailout has done little to avoid the worst recession since the 1930s. Despite massive Government spending, saving the economy will be like using a teacup to bail out the Titanic!

Corporate profits will continue to fall and we feel Stocks will have a tough year. The consumer-driven U.S. economy, based on borrowing and spending, is over. Stores are closing, the malls are emptying out. Today, investors need safe havens to park money in for the long haul. Too few investments have weathered the global financial crisis so far. However, Gold is one bright hope! Gold traded $46 higher in 2008 as the precious metal resumed its traditional “wealth preservation” role.

Stocks Need Decades to Recover After Crashes
Far too many investors have been brainwashed to believe “stocks always go back up” and quickly. That's not always true, stocks don't recover quickly after a "bubble and bust."

• After the 1929 crash, U.S. Stocks lost 80% and the Dow did not recover to pre-crash levels until 1954.
• 19 years after Japanese Stocks hit all-time highs, the Nikkei closed 2008 trading 78% below the record.
• The NASDAQ hit 5,132 at the height of the dot-com bubble in March of 2000 and trades nine years later at 75% below the all-time high.

WARNING: There’s a real possibility that before the current banking crisis ends U.S. Stocks
could fall in value another 20% to 40% and not recover for decades.

Prepare Now– The Worst is Yet to Come
We believe this is not the time to bet your life savings on Stocks or Bonds alone. The world economy entered 2009 in the worst shape ever. Something is terribly wrong with the banking system and won’t be fixed for years. Despite the U.S. Government’s $8 Trillion promises and corporate welfare, the taxpayer bailouts won’t fix what’s really broken. America must learn we cannot borrow our way out of debt! Nor can the government create paper money and spend our way to prosperity.

There will be a day of reckoning. The U.S. economy, based 70% on consumer borrowing and spending, has ended. We face years of sharply rising unemployment, soaring bankruptcy rates, a deep recession, and in the midst of it all comes inflation– with a vengeance.

In these harsh economic times, we remain convinced investors will need to own Gold to survive, thrive, and prosper. What's the best private and non-reportable gold? How can you buy gold?

Ask ga or jb now!

4 bad bear markets.

2009-03-13T06:49:00.001-07:00

This interesting graph shows you the 4 worst bad bear markets inrecent history, the worst being the great depression. have a look, while we can say where it is going, we can see how deep in the shit the markets really are!

Second Financial crash coming

2009-03-06T01:26:00.000-08:00

Seccond financial crash coming - slightly old video but amazing insight into the US mortgage's. Try look past the dody frame rate

How to go for Gold

2009-03-06T01:22:00.000-08:00

How to go for gold

Mar 03 2009 15:28Helena Wasserman

Johannesburg - Amid all the misery and gnashing of teeth in the investment world, there is still one merry little corner of the market.

The gold price has more than doubled in the past five years and recently broke through the level of $1 000 an ounce. While some analysts expect it to top its record of $1 030 soon and others think it might even double, it has since fallen back somewhat.

But with no sign that the markets are getting less tense - last week, the US stock market fell to its weakest levels in 12 years - gold shouldn't go out fashion soon.

Gold does well in times of uncertainty, when share prices plummet and panic is a daily occurrence. Gold gives investors the reassurance of holding something physical, which won't evaporate like so many share prices.

There are other reasons why gold is doing well.

Gold mines, particularly those in South Africa, have not been churning out the stuff at the same rate as in the past. There are concerns that supply won't keep up with demand.

The world's central banks, which own huge stockpiles of gold and have been big sellers in past years, are holding on to the yellow metal because of increased international volatility.

Shelter against weak rand

For South Africans, investing in gold (which is priced in dollars) also provides some shelter against the weakening rand.

Over recent years, the boom in Indian and Chinese economies has also created a huge demand for gold jewellery.

But not everybody is convinced that gold will continue to head north.

As China and Indian cool down along with the rest of the world, jewellery demand is decreasing.

Two other factors that traditionally boost the gold price - a weak dollar and global inflation fears - are also not featuring now.

Some analysts therefore expect the gold price to retreat once volatility has died down and markets stabilise.

One of the main drawbacks of gold for investors is that unlike shares and bank accounts, gold doesn't pay out an income.

Given its limitations, many investment experts therefore advise against investing more than 5% to 15% of your savings in gold.

Still, the benefits of gold - price stability and a safe haven in volatile times - should make it something to consider.

This doesn't necessarily give you the perfect excuse to go on a bling buying spree. Jewellery is not the ideal way to go for gold. It can be hard to sell for a profit and you need to make sure of the quality of the metal and the attractiveness of the design (read more)

did you know 3.0 WOW fact about the internet

2009-03-05T23:25:00.000-08:00

This Video doesnt have anything to do with gold or anything that we usually post on this blog but it is a must see for everyone.

Gold is one merry little corner of the market

2009-03-05T00:59:00.000-08:00

Gold is one merry little corner of the market
Helena Wasserman
Posted: Wed, 04 Mar 2009

[miningmx.com] -- AMID all the misery and gnashing of teeth in the investment world, there is still one merry little corner of the market.

The gold price has more than doubled in the past five years and recently broke through the level of $1,000 an ounce. While some analysts expect it to top its record of $1,030 soon and others think it might even double, it has since fallen back somewhat.