Showing posts with label EU. Show all posts
Showing posts with label EU. Show all posts

Thursday, December 20, 2012

EU regulators drop Rio Tinto antitrust case

European Union regulators dropped an investigation into metals company Rio Tinto Alcan on Thursday, saying they were satisfied with commitments made by the firm to ensure it does not favour subsidiaries when purchasing supplies.

The ruling means the European Commission, the EU's antitrust authority, will impose no penalty against the firm.

"Rio Tinto Alcan's commitments will open up the market for equipment used in aluminium smelters. As a result, the customers of aluminium technology and equipment will have more choice," EU competition commissioner Joaquin Almunia said in a statement.

The EU launched its investigation into the unit of Anglo-Australian mining group Rio Tinto over concerns that its tying of sales of its own smelting technology to plans to buy speciality equipment may have breached EU rules.

Rio Tinto Alcan offered to provide flexible licensing terms to rivals to end the investigation and avert a possible fine.

Edited by: Creamer Media Reporter

Saturday, November 24, 2012

Gold Market Report 23 November

 

"Exciting Week" Ahead for Gold as Silver Hits 6-Week High, US Prepares $99Bn Bond Sale

 

The DOLLAR PRICE of physical gold rose back to $1734 per ounce in London on Friday morning, nearing the top of the last 5 weeks' trading range as so-called "risk assets" also crept higher.

Asian and European stock markets were slightly stronger, while the single Euro currency pushed back above $1.29.

Commodity prices added 0.5% on the broad GSCI index. Silver touched its best Dollar-price in 6 weeks above $33.50 per ounce.

"Activity is muted," said one London dealer, with US markets due to re-open but many traders extending the Thanksgiving holiday.

"[The
gold price
] is stuck between $1715 and $1740 area for now," Reuters quotes Ronald Leung at Lee Cheong Gold Dealers in Hong Kong.

"But speculators are still bullish on gold, as uncertainties about the 'fiscal cliff' hang around and they believe that central banks around the world will stay loose on monetary policy."

On a technical analysis, the gold price "is just a few dollars shy of its 50-day moving average sitting at $1741," says a note from Swiss investment and bullion bank, UBS.

"More importantly, a key technical level [is] lurking at $1739.10...A break above this level, which is the month’s high, would be a crucial bullish development.

Again citing the US holiday, "Market participants may have to wait until after the weekend to see some action," UBS adds. "[European] investors still have the day ahead to position for what may be an exciting week."

Next week the US Treasury will seek to raise $99 billion in new debt, according to Bloomberg data.

Treasury bond prices rose Friday, pushing interest rates down to just 1.67% on 10-year debt.

"Pimco is avoiding, or trying to keep a low weighting, on maturities beyond 10 years," said Tony Crescenzi, a portfolio manager at the giant bond-fund group, in an interview. "Because we know the Fed’s intent is to reflate a deflated economy."

Nearer-term, he believes, "Treasuries provide good insurance against macro risk."

British Gilts and German Bunds also rose Friday morning, reducing 10-year German yields to just 1.42% – despite stronger-than-expected Ifo business confidence data – after the S&P ratings agency cut the status of 3 more Spanish banks.

Spain's sovereign debt prices fell, nudging 10-year interest rates up to 5.68%.

Spain's wealthiest region, Catalonia, goes to the polls on Sunday for elections which local president Artur Mas has called a referendum on independence from Madrid.

Over in Athens meantime, negotiations continued over €31.2 billion in bail-out funds which Greece has been waiting for since June from the International Monetary Fund.

The IMF said this morning that Greek debt would be "viable" if cut to 124% of GDP by 2020. It is currently on track to hit 190% by 2014.

"It's natural [we] look out for other types of assets," today's Financial Times quotes a Brazilian economist after new data showed the central bank adding more than 17 tonnes of
gold bullion
to its national reserves in October.

That took Brazil's total reserves to 53 tonnes, an 11-year high.

The latest gold reserves data from the IMF also show Turkey, Kazakhstan and Russia again raising their national holdings as well.

 

Adrian Ash

BullionVault

 

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Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on $3 spreads and – starting this Sunday – just 0.5% dealing fees.

 

(c) BullionVault 2012

 

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Thursday, November 22, 2012

Euro crisis: Major implications for investors

The euro crisis has begun to feel like an everlasting steeplechase with high hedges and water obstacles blocking the path to economic resurgence on the Continent. Each time a hurdle has been cleared another problem emerges to potentially block the track. The latest developments involve ugly anti-austerity riots across the southern tier and open rifts emerging among the creditors, most notably between the International Monetary Fund and northern nations. Despite the difficulties, I believe that ultimately the horse will pass the finish line; the Continent has too many economic bright spots to simply slip into irrelevance. The big question should be whether the monetary jockey (the euro) will be thrown off the mount before that happens. Investors should prepare for both eventualities. But while the race is ongoing, the uncertainty over the euro currency is galvanizing the push for full political union of the Eurozone and providing effective camouflage for the weakness of the world's reserve currency, the U.S. dollar.Future historians of the European Union likely will ponder how democratically elected governments of once proud empire nations willingly surrendered their sovereignty without full and open discussions. The answer lies in greed and fear. By 1950, Western Europe had been ravaged by two horrific Continental wars in 35 years and had been tossed about like a tennis ball in the Cold War match between the United States and the Soviet Union. In light of the situation, the impulse for greater European unity and cooperation was natural.

The key founders of a united Europe were France and Germany. The French sought security by attaching themselves to Germany, while the Germans saw an opportunity for the political hegemony that the two wars could not deliver. But had the idea of European Union been originally presented as a means to empower Germany, few European peoples would have accepted it, least of all the British.

To that end, Jean Monet, one of the early architects of the Union, is alleged to have said, "Europe's nations should be guided towards the superstate without their people understanding what is happening. This can be accomplished by successive steps each designed as having an economic purpose, but which will inevitably and irreversibly lead to political union." He suggested patience in waiting for "opportunities" to progress the idea. As a Member of the UK Parliament, I witnessed such deception first hand.

Gradually, the innocent sounding European Coal and Steel Community (EC&SC) evolved into the European Common Market (ECM), European Economic Community (EEC), the European Community (EC) and now the European Union (EU), a budding superstate, dominated by Germany.

In perhaps one of the most foolhardy moves in recent decades, the euro currency was launched in 1999, long before the political or fiscal unification had taken hold in earnest. In retrospect, the creation of a currency in the absence of a unified state with coordinated fiscal policies seems doomed to failure. And failing it appears to be.

With each stumbling block, the invariable solution offered has been increased political integration and austerity. On November 7th, German Chancellor Angela Merkel flew to London apparently to 'persuade', if not compel, Prime Minister Cameron to tone down or delay his objections to increased EU budget expenditures. She felt so confident that, for the first time, she exposed the covert plans for the European Superstate.

According to the UK Telegraph, Merkel said, "Of course, the [unelected] European Commission will one day become a government, the [unelected] European Council a second chamber and the European Parliament [which currently has no effective power] will have more powers."

Clearly, a failing euro provides all the ingredients needed to knock down barriers to unity. As evidenced by massive public demonstrations in Portugal, Italy, Greece and Spain, the southern tier is desperate for rescue funds. In order to preserve bloated pensions and early retirement, many citizens would gladly accept lost sovereignty.

The failure of the euro also has provided cover for the severe debasement of the U.S. dollar. Prior to the crisis, the euro had established itself as the world's second currency. Its threatened failure has resulted in massive flights of capital into U.S. dollars. The result is that the colossal currency and debt crisis threatening the U.S. dollar and Treasury markets has been largely obscured. Today, most investors appear to be blissfully unaware that the United States faces debt problems that are worse than many countries in Europe.

However, if European politicians are successful in imposing the political unity needed to save the euro, money will flow out of the U.S. dollar. Alternatively, should the euro fail, other currencies such as a reconstituted Deutsche Mark could rise in its place. Either way, a resolution of the euro problem likely will signal a weaker U.S. dollar and higher interest rates.

Those investors who are overweight in U.S. Treasuries (or the government securities of other debtor nations) could likely suffer when either resolution is reached. Investors should prepare by acquiring assets that will stand and fall on their own merits. Being the least ugly contestant at a beauty pageant is not a strategy for long term success.

John Browne is a Senior Economic Consultant to Euro Pacific Capital. Opinions expressed are those of the writer, and may or may not reflect those held by Euro Pacific Capital, or its CEO, Peter Schiff.

Tuesday, May 8, 2012

Not a gold bull or bear, but a gold agnostic: Eric Coffin

As a contrarian, all the doom and gloom tells Eric Coffin the market is about to pull out of its tailspin and he talks about why the Yukon is an area play he still believes in. Gold Report interview

The Gold Report: Eric, the gold bears recently outnumbered the gold bulls in Bloomberg's weekly Gold Bull/Gold Bear Sentiment Survey for the fourth time in a year. Are you a bull or a bear?

Eric Coffin: I think the gold price is going to end the year higher, so I guess that makes me bullish, but I think of myself as agnostic.

There needs to be a return of calm to Europe for the gold price to move much higher. The currency pair trade between the euro and the dollar is going to be a big determinant to the gold price. There's been more noise about the EU providing stimulus funds to offset all the government budget cuts in Europe. All of those countries have to deal with their debt loads. But it's not realistic to think that they can cut their deficit and 3% off their gross domestic product year after year and realistically get any net growth.

The other side of that equation is that the U.S. has slowed down. That'll help the gold price because a lot of goldbugs are riding on there being another round of quantitative easing. I'm not sure it's going to happen. But as long as Federal Reserve Chairman Ben Bernanke keeps saying it might happen, that's good enough.

TGR: Stagnant gold prices are translating to equities. Canaccord reports that "sector weakness in the gold equities over the last six years has typically ended with 'V'-shaped corrections to the upside." Do you believe that's what will happen this time?

EC: I sure hope so because I'm on the buy side, not the sell side. I'm going to feel pretty dumb if it doesn't happen. We're still in a bull market for gold. In a secular bull market, generally speaking, coming out of a dip tends to be an impressive move.

TGR: Many Yukon junior mining companies are starting their 2012 exploration programs after completing off-season financing on buyers' terms. What types of companies are getting financing?

EC: The only financings I've seen in the past five months are either relatively new deals where investors have a lot of respect for management-which is a roundabout way of saying that investors figure management will figure out a way to make money regardless-or companies that have something pretty definitive with a bunch of drill holes. Companies that didn't take the opportunity to raise money last year are going to have to pull a rabbit out of their hat. The Yukon is an expensive place. There's no getting around it.

Outside of companies with discoveries, nobody's really done large financings and that's going to be tough. About 60% of the companies are going to have a hard time undertaking any significant programs this year. If the market gets better, which I think is going to happen, they still have a shot, but it's at buyers' terms.

I suspect a lot of companies are going to say, "Let's just wait and see if next year is better." You haven't seen many announcements. Quite a few of those companies that were talking last year about doing $4, $6, $8 million exploration programs-many of those programs aren't going to happen.

TGR: Desjardins Capital reports that 26 mergers and acquisitions worth a combined $30 billion (B) took place during 2010 and 2011. There are about 120 more companies operating in the Yukon. Are other junior explorers going to be forced to merge?

EC: I think there will be merger activity at the junior level. There are a lot of companies with decent but not spectacular projects where they haven't done enough work and are not in a position to raise money. A merger is one way out for them.

TGR: Is it still fair to call the Yukon an area play when the shares of most of the juniors operating there have declined considerably, often by more than half? Even good results often don't tangibly move share prices.

EC: It still is an area play. This is a fairly common path even for a successful area play. The easy money has been made or, as is the case here, the market's just lousy and there is a lot of consolidation. The Yukon is getting to that point. The few companies that have done well will have the ability to pick up a lot of projects. In any area play, anywhere from a third to a half of the companies involved are piggybacking on the play to help raise money. Those companies tend to disappear quickly if they don't find something large right away or if the financing environment gets difficult. The bad market has exacerbated things but a large number of drop outs from an area play at this stage is not an unexpected development.

TGR: What are your thoughts on what's happening in Peru?

EC: The political landscape has shifted a lot in Peru. It's made it very difficult for anybody outside of Peru-and maybe even inside Peru-to get a handle on what's a good spot and what isn't. There are a lot of South American countries where mining companies just shouldn't go because they're bound to face a political or indigenous population problem and they won't get permitting. Now no one seems to know what the good areas and the bad areas are. That's going to make it tough for everybody in Peru until this stuff gets clarified.

TGR: Do you have some parting thoughts for us on the market and how it translates to the retail investor?

EC: I'm fairly comfortable that the U.S. is going to do OK over the next couple of years. It's going to have another political fight at the end of the year when tax cuts die. Europe has the capability to pull itself out of its problems. In a large measure, it's political decision-making. I certainly appreciate northern Europeans and Germans that don't really see why they should be footing the bill, but they can afford to foot the bill.

We're not particularly worried about China. It's trying to rebalance its economy. China's in a different boat from Europe or the U.S. in that it's got $3 trillion in reserves and can open the taps anytime it wants. China will increase the growth rate when it feels it's the right time to do it.

The world economy will do OK as well. I know it feels like the end of the world for investors that own a lot of resource stocks as I do. The secular bull market hasn't ended. Ironically, all the political problems in different producing regions are going to extend that secular bull market in metals because it's that much harder to grow production to a point that knocks metal prices down.

I'll just leave you with a contrarian thought: Everybody's so negative right now because this is what bottoms look like. Everybody thinks the world is coming to an end. Everybody thinks it's the worst market they've ever been in. Everybody thinks nothing is ever going to go up. That's what a bottom looks like. It's not fun to go through. There's so much negativity everywhere that it's telling me as a contrarian that there's probably not a lot more pain to go through before things start getting better.

If readers would like to download HRA's new company report on Precipitate Gold Corp., HRA has set up a special free report offer for a limited time. Simply click here and they will send you the report.

Eric Coffin is the editor of the HRA (Hard Rock Analyst) family of publications. Responsible for the "financial analysis" side of HRA, Coffin has a degree in corporate and investment finance. He has extensive experience in merger and acquisitions and small-company financing and promotion. For many years, he tracked the financial performance and funding of all exchange-listed Canadian mining companies and has helped with the formation of several successful exploration ventures. Coffin was one of the first analysts to point out the disastrous effects of gold hedging and gold loan-capital financing in 1997. He also predicted the start of the current secular bull market in commodities based on the movement of the U.S. dollar in 2001 and the acceleration of growth in Asia and India. Coffin can be reached at hra@publishers-mgmt.com or the website www.hraadvisory.com.

Source: The Gold Report