Showing posts with label silver. Show all posts
Showing posts with label silver. Show all posts

Tuesday, March 12, 2013

Peru’s gold, silver and copper output fall in January 2013—Mining Ministry

Peru’s Ministry of Energy and Mines reported increased production of iron, lead and zinc in the first month of this year.

Author: Dorothy Kosich

Peru’s Ministry of Energy and Mines reported Monday the country’s gold production plunged 25.12% in January, as total silver production declined 7.27% and total copper output dipped 4.41% during the same period.

However, the ministry also noted that iron ore production was up nearly 13%, while zinc output increased 8.83% and lead was up 6.15% during the first month of this year.

In the first month of this year, Peru’s gold production was 11,762,163 grams (378,162 troy ounces), down from 15,708,384 grams (505,036 troy ounces) in January 2012. Minera Yanacocha reported a 25% decrease in gold production in January 2013.

The country’s silver production was 266,981 kilograms (8,583,638 troy ounces) during the first month of the year, 7.27% lower than the 287,918 kilograms (9,256,778 ounces) of silver production reported in January 2012.

Peru’s copper production was reported at 93,469 metric tons in January of this year, a 4.41% drop from the same period of 2012.

The Directorate of Mining Promotion of the ministry’s mining department noted that zinc production in January 2013 was 111,308 metric tons, up 8.83% from 102,280 metric tons of zinc output in January 2012.

Peru’s lead production was 19,837 metric tons in January 2013, a 6.15% increase compared to January 2012 lead output total of 18,689 metric tons.

The ministry reported that the country’s iron ore production for the first month of this year was 589,902 long tons, up 12.91% from 522,433 long tons for January 2012.

Source: Miniweb

Wednesday, January 30, 2013

Gold Market Report 30 January

Gold & Silver Jump on Weak US Data, Big Swiss Banks Raise Gold Account Fees

 

GOLD and silver jumped to 4-session highs above $1674 and $31.65 per ounce respectively Wednesday lunchtime in London, gaining as new data showed the US economy unexpectedly shrinking in late 2012.


US stock-market indices held flat near 5-year highs, while the EuroStoxx 50 was unchanged near 18-month highs despite news that Spain's GDP shrank by 0.7% in the last 3 months of 2012.

Greek newspaper Kathimerini meantime said 30 activists from the communist PAME union briefly stormed the Athens' office of employment minister Yiannis Vroutsis.

The Euro currency this morning rose to its best level in 14 months at $1.3560.

The
gold price in Euros today hits its lowest level since May 2012 at €1228 per ounce.

"Bernanke will not be giving a press conference" after today's US Federal Reserve announcement, notes Wednesday's commodity report from Standard Bank. "So there will be plenty of reading between-the-lines of the official statement.

"[But] we feel it is important to note that the Fed's balance sheet is only one piece in a puzzle of growing liquidity and negative real interest rates.

"Strategically we remain bullish on gold over the long term. The cost of holding gold relative to cash remains negligible."

Gold account fees at Swiss banking giants Credit Suisse and UBS are being raised however in a bid to shrink their balance-sheets, says a report in today's Financial Times.

"Like their global peers, UBS and Credit Suisse are under regulatory pressure to reduce capital-intensive activities ahead of the introduction of Basel III global banking rules," says the FT.

So the two banks are hiking costs for unallocated accounts – where the customer pays full price to buy gold, but is then owed the metal, bearing credit risk if the bank fails rather than becoming an outright owner as with
allocated gold.

Unallocated gold enables the bank to lease out the metal, earning an income from the client's gold. But analysis of London Bullion Market Association
data shows that the net return on 12-month gold leasing has fallen from averaging 1.63% in the decade to Jan. 2003 to averaging less than 0.40% in the 10 years since.

Moreover, "When [gold] is on balance sheet it does create costs" in the form of capital requirements by regulators, an anonymous source tells the FT.

Gold demand in Asia meantime eased off Wednesday, according to Reuters, as Chinese wholesalers prepared for next month's Lunar New Year celebrations, and Indian wholesalers cut prices in a bid to clear stockpiles.

"Those who have built up a large inventory before [this month's new import-duty] tax hike are selling at a discount right now," the newswire quotes a bank trader in Mumbai, citing discounts to local prices of 0.5% – some $6 per ounce.

The Chinese New Year falls in 2013 on 10th February.

 

Adrian Ash

 

(c) BullionVault 2013

 

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, January 24, 2013

Pan American Silver sets 25.1m-oz. silver production record in 2012

“2013 looks to be another record-setting production year for Pan American,” says Pan American Silver’s COO Steve Busby.

Author: Dorothy Kosich

Pan American Silver reported achieving a new annual production record of 25.1 million ounces of silver and record gold output of 112,282 ounces last year, up 15% and 43%, respectively from 2011.

CEO Geoff Burns observed, “2012 was an excellent production year for Pan American. We achieved our targets for silver production and cash costs during the fourth quarter and for the full year, and in the process we set new quarterly and annual production records for silver and gold.”

“In large part this was the result of the acquisition and integration of the Delores mine,” he noted. “However, we also saw both our La Colorada and San Vicente mines establish new annual silver production records.”

“We expect 2013 to be even better, as we are forecasting increases in both our silver and gold production while our cash costs per ounce remain basically unchanged,” Burns predicted.

This year, the Vancouver-based miner expects to produce 25 million to 26 million ounces of silver, an increase of up to one million ounces from 2012, while gold production is expected to jump 34% to between 140,000 and 150,000 ounces.

Cash costs are forecast at $11.80 to $12.80 per ounce of silver, net of by-product credits.

The company anticipates 2013 base metals production of 36,000 to 39,000 tonnes of zinc, 11,500 to 12,500 tonnes of lead, and 3,500 to 4,000 tonnes of copper. Pan American produced 36,848 tonnes of zinc, 12,266 tonnes of lead, and 4,162 tonnes of copper for the full year of 2012.

Pan American Silver also reported record fourth-quarter 2012 silver production of 6.9 million ounces, an increase of 30% over the fourth-quarter 2011, as well as record fourth-quarter 2012 gold production of 32,381 ounces, an 88% increase over the fourth-quarter of 2011. Preliminary consolidated cash costs for the fourth-quarter 2012 were $11.75 per silver ounce, net of by-product credits.

Capital investments this year are expected to total $157 million, Pan American Silver COO Steve Busby said, “Our capital budget for 2013 is larger than normal, as we have several multi-year projects planned for 2013 at our operations. These include: construction of leach pad 3 at Dolores, and tailings dam expansions at Huaron, San Vicente and La Colorado, as well as a significant open pit push back at Alamo Dorado.”

“I’m expecting our capital programs to return to more normal levels in 2014 once these projects are completed,” he advised.

Source: Mineweb

Tuesday, December 11, 2012

Silver sales set to outshine gold in India

Investors in India are bullish on silver, saying the white metal is in position for a potentially spectacular move over the next year and more.

Author: Shivom Seth

Indian retailers are bullish on silver. With supplies tightening, deliveries are slowing down this week in the bullion market in Mumbai. What has also buoyed sentiment is that silver continues to lead precious metals, and sales have jumped over 24% this year.

Snapping a two day losing trend, both the major precious metals, gold and silver, bounced back in the Mumbai market on buying by retailers at existing low levels. While gold rebounded to $575 (Rs 31,205) per 10 grams (US$1788/oz), silver gained by 1.38% to $1,159.49 (Rs 62,930) per kilo ($36.06/oz).

"Strong support is expected in the Silver March contract around $1,159 (Rs 62,900) ($36.05) from the start of the week," said analysts tracking the white metal. Traders have been taking long position in the Silver March contract above $1,161.49 (Rs 63,050) ($36.13) for target near $1,178.88 (Rs 64,000) ($36.67) for this week, they added.

Silver prices have remained steady at around $32 since mid-May. "Though everybody has been gushing about the returns that gold has given over the past four years, it is the white metal that has streaked ahead," said Manjusha Madani, bullion analyst at an investment house. 

She added that silver prices have jumped from $304.39 (Rs 16,525) per kilo ($9.47/oz) in 2008 to $1,381.95 (Rs 75,020) per kilo ($42.98) in 2011, a gain of 354%. Though prices have dropped per kilo, it does not mean that the potential in silver is exhausted, she added.

An analyst report had also shown how silver had risen about 53% from December 2008 through March 2010, twice as much as gold. Silver is expected to keep beating gold. 

"More and more people are realising the value of investing in silver coins and bullion bars in India," added Jayeshbhai Shah, a bullion retailer at Mumbai's Zaveri Bazaar. "The value of silver has increased rather steadily for the last few years. People who have never invested before are now investing in silver, because they know that buying silver is a great way to ensure that their money is there when they need it," he added.

SILVER JEWELLERY 

"The white metal is now turning out to be the preferred choice for everyday wear, with exquisite silver jewellery on offer, because gold is too expensive. Besides being trendy and contemporary, the metal readily blends with a variety of clothing and other accessories, thereby offering a suite of options to the wearer," said an official at Dhanabhai Export House. 

He added that more and more consumers were looking for traditional or contemporary silver jewellery and were even looking at the white metal for classic business gifts, to be given during the festive season. 

"There are customers who comes to us asking us for heritage art, or even our temple jewellery selection, which is only made in silver. We take great pride in preserving our heritage craft and have several jewellery items that are exact replicas of antique temple jewellery," he added.

During 2011-12, silver jewellery exports grew to 44% as compared with gold jewellery exports of 30%. India is the biggest consumer of white metal jewellery, and has also found a new class of buyers in the West. 

Ketan Shroff, managing director of Pushpak Bullions said investors and jewellery-lovers prefer silver jewellery these days, as gold prices are going up constantly. Silver prices are expected to rise further, if one takes into account the demand potential.

GOLD HIGH

Retailers pointed out that the recent drop in gold prices has sparked off reasonable buying interest in both gold and silver from stockists and retail consumers across the country, given the long wedding season. The yellow metal had plunged to a one month low last Thursday, leading to frenzied buying.

However, analysts added, that after gaining around 16% this year, gold prices are unlikely to cross the $589.44 (Rs 32,000)/10g ($1833) mark in the near term, given the year end profit booking activities. This allows investors to take a better look at silver, in the near term, they added.

Meanwhile, data by GFMS, a Thomson Reuters unit, indicates that the silver markets are in for a surplus. The 2012 surplus is estimated at around 3,000 tonnes even as 2013 surplus is pegged at about 4,000 tonnes, but, of course this doesn’t take investment demand into account (see Silver surplus – what silver surplus?).

Gold and silver prices generally rise when sentiments on the economy and the financial markets are bearish or there is uncertainty over future trends. Retailers point out that silver has also gained from investment demand in the country. There has also been an increase in demand for silver jewellery, due to the fact that gold is becoming out of reach for many.

Source: Mineweb

Friday, December 7, 2012

2013’s pent-up precious metal potential - Hamlin

According to Jason Hamlin it is debt, not the fiscal cliff we should be concerned about but he says if his prediction of a split in the EU comes to pass, it will bolster the case for gold equities. An interview with the Gold Report.

TGR: Jason, you recently told your Gold Stock Bull readers that you had sold some equities. What were your reasons for selling?

Jason Hamlin: At the time, we were nearly fully allocated and decided to move to a position of roughly 20% cash. Even though this is a high seasonal period for precious metals, we sold a couple of underperformers to take advantage of any potential year-end selloff driven by concerns about the fiscal cliff and its impact on economic growth. There are also year-end opportunities for tax-loss selling and we want to have some dry powder for bargains that may materialize over the next few months in quality resource stocks.

TGR: Do you believe investors should reduce risk and take a more conservative approach until we know what are the repercussions of the fiscal cliff?

JH: I do not. It is sensible to always have some cash available for a selloff, but I do not view the fiscal cliff as some Armageddon-type event like other analysts. I think the politicians will come to a resolution before things become too explosive, but we should never discount their ineptitude.

For me, the true issue here is debt, not the fiscal cliff. Debt is the root cause of nearly all of our economic and social issues.

As it is a mathematic impossibility to ever pay off all of the outstanding debt, neither tax increases nor austerity will solve the debt crisis. As all money is created out of debt and the interest owed back does not exist in the system, the only workable solution is liquidating or forgiving the debt. As controversial as that might sound, one only needs to look up the term "debt jubilee" to see how often it has been used throughout history to clear the slate and allow for a fresh start. So, without getting too detailed, the fiscal cliff in the U.S., debt crisis in Europe, student loan crisis, home mortgage crisis and every other monetary crisis can be tied back to the fact that our monetary system at its root is unsustainable.

TGR: Do you have a calculation that illustrates how difficult that would be?

JH: One way to view that is to look at the percentage of the U.S. budget now being put toward interest on the debt and how it has grown over time. As long as that percentage keeps increasing, it means less and less money is available to spend on legitimate needs and to direct toward growing and driving the economy. This expanding debt burden stifles any type of economic growth that might otherwise be possible. Until our leaders are honest about our debt predicament, balance the budget to stop the bleeding and face the necessity of massive debt forgiveness, my forecast is for continued slow economic growth with the potential for contraction in the near future.

TGR: What are the threats to the average retail investor, especially in the precious metals space?

JH: I believe that another banking crisis could be on the horizon, driven by the large amounts of toxic derivatives and potential revaluation of assets that could render many big banks insolvent. The same kind of threat we saw in the 2008/2009 crisis is still hiding under the surface, as it was only papered over to buy time, rather than addressing the core issues. This could lead to a sell-off in all assets including gold and another rush to the perceived safety of dollars. However, I predict that the deteriorating faith in fiat currencies will translate into a very short dumping of true safe-haven assets such as gold and even quicker rebound that we witnessed following the last financial crisis. Given this outlook, I think it is wise to hold through such corrections and keep cash available to take advantage of the panic selling that will occur if such a crisis materializes.

TGR: While we are talking about the future, do you have any other predictions for 2013?

JH: On a positive note, I think the world will survive the end of the Mayan calendar.

Seriously, I think the euro will fall apart when one or more countries leave. The strong countries will only support the weaker, over-indebted countries for so long before realizing that their sovereignty is more important than the European Union. I think dissolution is absolutely the right course to take, as the concept of the European Union was flawed from the start.

TGR: But the European Central Bank (ECB) has vowed to do everything in its power to stabilize and keep the euro together. Can or should the ECB stave off disintegration at least until the end of 2013?

JH: I think the ECB will try its best, as centralized banking has much to gain from the EU staying together. This attempt will surely involve more bailouts, stimulus and money printing, which will be bullish for precious metals. Ultimately, I think the attempts will fail and we could see a split of the euro as early as next year.

The ECB has constraints that the U.S. Federal Reserve, operating in just one country and with the world reserve currency, does not have. The ECB cannot employ the same bag of tricks as Ben Bernanke and the Fed, so I think it has fewer ways to kick the can down the road. This is why we are seeing the crisis escalate first in Europe, but it will eventually come to the shores of America as we witness a loss of faith in the U.S. dollar as world reserve currency.

TGR: That makes a nice transition into gold. Precious metal investor Paul van Eeden recently said that gold was overvalued. Do you agree?

JH: Mr. van Eeden correctly pointed out that the problem in the U.S. is not inflation, but debt. And I agree with him that the predictions for imminent hyperinflation are overblown. But that is where our agreement ends.

I think his methodology for calculating money supply and gold's true value is flawed in that he incorporates worldwide gold supply, but compares it only to the U.S. dollar. Demand is strong worldwide and gold has been making new highs in several currencies, not just the dollar.

I also disagree with his notion that the Fed will be able to easily sell assets back into the market to control the inflation that is likely to occur. I'm not sure there would be many buyers of such low yielding bonds in an inflationary environment. The Fed is already forced to buy over 50% of bonds the government auctions during the current environment of relatively low inflation.

Mr. van Eeden has been calling gold overvalued for years now. I think he is a bright analyst and I enjoyed his commentary on gold earlier in this bull market, but he has now joined the ranks of a few other gold bears who have been consistently wrong about the gold price. They will eventually be correct about gold being overvalued, but I suspect it will be a number of years and a few thousand dollars higher before that happens. That being said, I could see some sell-off in gold occurring as a knee-jerk reaction by leveraged investors, but interest rates would have to rise substantially above the true rate of inflation for any serious or lasting impact. Such a move would sink the stock market, which is not something the politicians or central planners would allow. They would prefer to print more money, debase the currency and present the illusion of continued prosperity rather than take their medicine. I do not see interest rates rising any time soon.

The only way to deal with a banking system that is so overleveraged and a government so burdened with debt is to allow the free market to reprice the debt—to reprice housing and equities to their true free market value. However, that would cause the banking system—and possibly the entire world economy—to collapse.

The alternative is to fire up the printing presses, inflate away the debt and hope that the bad loans will once again become solvent. If you study history, you are likely to forecast that the government will choose this option over a deflationary collapse, which will continue to push gold higher in dollar terms.

More broadly speaking, if you take two forms of money valued relative to each other (demand being somewhat constant), the one that increases in quantity faster will lose value against the other. Growth in the gold supply is relatively flat, about 1.5% annual growth. The growth of the supply of almost all fiat currencies ranges from 8–10% on average. To me, that says that gold priced in dollars or any other currency being debased will go up in value relative to that currency.

The other factor to consider is velocity of money, which has been low and has held inflation in check thus far. But in light of quantitative easing (QE) to infinity, which is essentially what QE3 is, recent improvements in housing and the stock market, and some proposed legislative changes to get banks lending, we might see this change in 2013. If velocity picks up, we could see inflationary forces start to take hold. If just a small amount of all of the new money created over the past five years were to begin flowing through the economy, the impact could be significant

TGR: You rely on technical charts for your advice to your readers. What do your technical charts tell you gold will do in 2013?

JH: I just ran this exercise for my subscribers, and came up with a chart showing the minimum target price of gold at $2,200 an ounce (oz) and over $3,000/oz on the high end by the end of 2013. These prices represent gains in the 35–75% range from the current price. It is a much more aggressive annual return than I would usually forecast—much higher than the average annual rate over the past 10 years.

However, precious metals have been consolidating for well over a year. The chart has an incredible amount of pent-up upside potential for 2013. Plus, the gold price is now bouncing around the bottom line of its trend channel. A failure to push higher and break $2,200/oz by the end of 2013 would mean that gold has fallen out of its long-term trend channel and signal the end of the bull market. I put the likelihood of that outcome at less than 5%. Thus, I think the official, inflation-adjusted high of $2,400/oz will be taken out within the next 12 months.

TGR: Given that prediction, should investors be buying gold, gold equities or both?

JH: I recently published an article on this topic and the answer is: It depends. From 2001 to 2005, gold was up roughly 92% and gold stocks up 648%. In this period you would have seen seven times greater returns investing in gold stocks.

From 2006 to today, the NYSE Arca Gold BUGS Index (HUI) of gold stocks advanced by about 39% while gold itself is up 232%. That equals about a six times greater return for physical gold than mining shares.

However, if you combine both periods and look at the entirety of the current bull market, gold stocks have been the better investment. From 2001 through Nov. 12, 2012, physical gold has appreciated by 537%. However, gold stocks have gone up nearly twice the rate of gold for a gain of 936%. This is the leverage that seasoned investors remember and it drives our decision to allocate a significant portion of our portfolio to mining stocks. That said, I believe it is best to own both bullion and mining shares, because they serve different purposes.

Just from the start of August through mid-November, the gold price advanced 8%. Gold stocks were up 18%. That is leverage of roughly 2.4 times. It is hard to say if that will continue, but it is a positive sign for investors in mining stocks.

TGR: When you look at technical charts for precious metals equities, what do you look for, other than an upward trend?

JH: I view technical analysis as just another data point for reference, not as a panacea for forecasting price movements. In markets that are as manipulated as ours, where large firms tilt the level playing field via high-frequency trading and collocation, and banks use their leverage to push prices, I take technical analysis with a large grain of salt.

That being said, I look for the usual trend channels, support and resistance indicators, volume levels, momentum indicators, (Fibonacci) retracements, whether the stock is making lower lows or higher highs. I couple these insights with the timing of fundamental developments for miners: drill results, resource updates, upcoming preliminary economic assessments (PEAs) or feasibility studies to try to time our entry and exit points on trading positions. Our model portfolio also contains long-term holds or core positions that we do not trade.

TGR: What is your investment thesis for precious metals equities?

JH: The equities are undervalued right now relative to bullion. A lot of that has to do with distrust of the stock market and of Wall Street in general, after all of the fraud and failures in the past years. But if the market holds up for a while longer and current trends continue, I think we will see mining stocks continue to outperform gold.

TGR: Which precious metals equities are you telling your readers about?

JH: I have been an early advocate of the streaming royalty model in the mining sector. Streaming companies make an advance payment to a company with a pre-production stage mineral deposit in exchange for a negotiated percentage of the metal produced for the life of mine.

This model gives companies diversification and risk mitigation because it has agreements with several different miners. There is unlimited upside potential in that the deal is usually for a percentage of the production mine life and limited downside risk if a miner sees its profit margins squeezed as the agreed purchase price is fixed.

Streamers also enjoy an advantageous tax situation, with rates that are usually much lower than tax rates for mining companies

TGR: What other models do you like?

JH: Another business model with great merit is the prospect generator model. It has some similarities to the royalty-streaming model that has treated us so well.

TGR: You also follow the graphite space. What is the latest news there?

JH: Overall, graphite is attractive due to strong supply/demand fundamentals. Prices have come back down from lofty levels last year, but have stabilized recently and remain elevated. This means that a number of graphite projects that might not have been economic in the past are economic today.

Given that graphite is a key ingredient in so many established industries, from aviation to automotive, steel and plastic, I see prices holding up well. However, future demand growth is likely to come from the high-purity, large-flake graphite that is used in lithium-ion batteries for electric cars and such.

People talk about the big run-up in lithium a while ago, but 10 times more graphite is used inside a lithium-ion battery than lithium. There will be significant demand as we move toward electric vehicles and electric-based power.

The other exciting driver in investment demand for graphite is the potential of graphene, which is reportedly the thinnest and strongest material ever developed. Graphene is 200 times stronger than steel, several times tougher than a diamond and it conducts electricity and heat better than copper. It could even replace silicone in semiconductors. Also, graphene is nearly impossible to break. You could throw a graphene mobile phone display on the ground and it will not shatter like the glass on current phones. Researchers claim graphene is the most important substance to be created since plastic.

There is a lot of potential for graphene in the expanding cell phone and green energy markets. The military has an interest as well.

TGR: Jason, thank you for your time and your insights.

Jason Hamlin is the founder of Gold Stock Bull and publishes one of the most highly rated investment newsletters available, focused on strategies for profiting on the bull markets in gold, silver, energy, critical metals and agriculture. Hamlin has a background analyzing charts and trends for the world's largest market research company, is versed in fundamental and technical analysis and has consulted to Fortune 500 companies around the globe.

This article is an edited version of the original and is published courtesy of The Gold Report

Wednesday, November 14, 2012

Global silver market surplus in 2012 to edge up to 300Moz

The surplus in the global silver market is expected to edge up to 300-million ounces in 2012 from a year earlier, the global head of metals analytics at GFMS, a Thomson Reuters unit, said on Wednesday.

Philip Klapwijk, speaking on the sidelines of a conference in Hong Kong, also said demand for silver fabrication had weakened, although some of the decline had been offset by higher silver output in China.

"The situation this year is that we see weaker fabrication demand on two main reasons. One is industrial fabrication has slowed quite considerably this year, especially in recent months, and we see weakness especially in the electronics field and photovoltaic end users," said Klapwijk.

Silver prices would move higher for the rest of this year, with a low of $30.90 and a high of $36, he said.

"We are thinking prices will trend higher next year. I'm not convinced that we are going to $50. I think we will definitely see $40-$45 prices. I'm more comfortable with that."

Edited by: Reuters

Thursday, November 8, 2012

Gold Market Report - 8 November

Gold "Living Up to Safe Haven Reputation", Fiscal Cliff Policies "Will Reduce Value of Stocks"

SPOT MARKET gold prices hovered just below $1720 an ounce Thursday morning in London – 2.4% up on last week's close – while stocks recovered some ground following losses yesterday, and the Dollar ticked higher, as central banks in the UK and Europe left monetary policy unchanged.

Silver prices hovered close to $32 an ounce – 3.4% up on the week so far – while other commodities edged higher. US Treasury bond prices gained while those for UK and German government debt fell.

"Gold is holding up well in the face of Dollar strength yesterday and today," says commodities strategist Walter de Wet at Standard Bank.

A day earlier, the Dow Jones saw its biggest one-day drop this year on Wednesday, falling 2.4%.

The S&P 500 also fell 2.4%, the biggest one-day drop since the start of June, as focus shifted to Congress's prospects of avoiding the so-called fiscal cliff of tax cut expiries and spending cuts currently scheduled for the start of 2013.

Policies aimed at avoiding the fiscal cliff would mean that "the marginal income-tax rate is probably going to go up...from 35% to 40%, capital gains from 15% to 20%, dividends from 15% to who knows where," Bill Gross, co-chief investment officer at world's largest bond fund Pimco told Bloomberg Tuesday.

"And ultimately if dividend and capital-gains tax rates go up, then stocks are worth less and that's what you’re seeing."

In contrast with stocks, gold prices rallied yesterday after an initial drop at the start of US trading, holding onto most of their gains for the week so far.

"Gold is displaying relative strength and living up to its reputation as a store of value and a safe haven," says this morning's commodities note from Commerzbank.

"Gold ETFs tracked by Bloomberg saw their gold holdings surge by more than 4 tonnes to a new record high of 2592 tonnes."

The European Central Bank left its key interest rate on hold at a record low 0.75 % Thursday.

In a speech in Germany on Wednesday, ECB president Mario Draghi argued that Eurozone inflation "is well contained" and that the ECB expects it to fall below 2% next year.

In yesterday's speech Draghi also denied that a banking union would necessarily lead to cross-border deposit guarantees.

"Organizing and funding deposit guarantee schemes can remain a national responsibility," said Draghi, "with comparable effectiveness."

The Greek government narrowly won a vote in favor of fresh austerity measures last night. The vote was passed 153 to 128 out of a total of 300, while the two biggest coalition parties expelled seven members between them for failing to support the measures.

Spain's government meantime is considering selling 109-year-old palace Castellana in the heart of Madrid in order to raise cash, newswire Bloomberg reports, citing an unnamed source.

Euro gold prices traded just below €43,400 per kilo (€1350 per ounce) this morning, within 2.7% of last month's all-time high. Dollar gold prices by contrast are around 10% off last year's record.

Here in London, the Bank of England today voted to leave interest rates at a record low 0.5% for the 45th month in a row. The Bank's Monetary Policy Committee decided not to extend the £375 quantitative easing program, which ends this month.

"QE still has a benefit and those benefits will stay there," reckons Alan Clarke, London-based economist at Scotia Capital.

"They're not unwinding any purchases...they won't close the door on it, they'll leave their options open."

"The UK outlook and data are rather mixed," adds ABN Amro economist Joost Beaumont.

"Activity is worsening, and Eurozone problems are still lingering."

Employees at Goldman Sachs were the biggest contributors to Mitt Romney's election campaign, according to figures published by website Open Secrets. The top five political action committees (PACs) that contributed to the Republican were all investment banks. Barack Obama's biggest contributor was the PAC at the University of California.

China meantime will not turn its back on one party rule, outgoing president Hu Jintao told the 18th Communist Party Congress on Thursday. The Congress will see seven new members of the Politburo Standing Committee named, including replacements for Hu and Chinese premier Wen Jiabao.

Total credit growth in China has been 16%, according to figures published by Standard Chartered, while the economy, measured by nominal GDP growth, has only grown by 10%.

"Growth needs to be achieved through real structural reforms that lift productivity rather than by adding leverage," says a note from the bank.

"Otherwise, China will have a date with a financial crisis."

Ben Traynor

BullionVault

Gold value calculator | Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. Ben writes and presents BullionVault's weekly gold market summary on YouTube and can be found on Google+

(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.

Monday, November 5, 2012

Silver Wheaton Q3 earnings down on lower prices

The world’s largest metals streaming firm Silver Wheaton had reported an 11% drop in year-on-year third-quarter earnings as a result of lower prices.

Despite reporting record attributable silver-equivalent production of 7.7-million ounces in the quarter ended September 30, which was a 26% increase over the 6.1-million ounces, the company posted earnings of $119.7-million or 34c a share in the period, compared with $135-million or 38c a share in the year-earlier period.

Revenue was down 13% at $161.3-million, compared with $185.2-million a year earlier, mainly attributable to a 14% decrease in silver prices from a year earlier. The company realised $31.16/oz of silver in the period, compared with $36.44/oz of silver a year earlier.

Silver Wheaton said that while production was at record levels, silver equivalent sales totalled 5.1-million ounces as a result of the timing of deliveries, with the difference attributable to an increase of two-million payable silver equivalent ounces being produced in the quarter that would be recognised in future sales.

During the quarter, the company had closed the purchase from Hudbay Minerals of a precious metals stream from its currently producing flagship 777 mine, as well as a silver stream from HudBay’s $1.5-billion Constancia copper mine, currently under construction in Peru.

Initial production covering the period August 1, to September 30, from 777 totalled 733 000 silver-equivalent ounces, helping the company achieving its record production.

"With the addition of production from Hudbay's 777 mine in the quarter, we produced a record 7.7-million silver equivalent ounces, putting us on track to reach our 2012 annual production forecast of 28-million ounces," Silver Wheaton CEO Randy Smallwood said in a statement.

"Our diversified asset base once again achieved strong production, with notable contributions from Yauliyacu, Zinkgruvan, and Minto. While overall production was strong, payable silver equivalent ounces produced but not shipped during the quarter increased by two-million ounces due to the timing of concentrate shipments, negatively affecting silver equivalent sales volume.”

He added that during the quarter the company had paid out over $630-million dollars, including the first payment to Hudbay and the last payment to Barrick Gold. “And yet, we finished the quarter with $550-million of cash-on-hand. With this cash, a fully undrawn revolving credit facility of $400 million, and strong forecast annual operating cash flow, we remain very focussed, capable and excited about our potential to continue adding additional accretive ounces to our portfolio,” Smallwood said.

Based upon its current agreements, Silver Wheaton said its expected attributable production for the year is about 28-million silver-equivalent ounces, including 42 000 oz of gold. By 2016, yearly attributable production is expected to increase significantly to about 48-million silver-equivalent ounces, including 100 000 oz of gold.

This growth would be driven by the company’s portfolio of low-cost and long-life assets, including silver and precious metal streams on Barrick’s Pascua-Lama project, in Peru, and Hudbay’s flagship 777 mine and Constancia project.

The royalties and metals streaming firm was recently named Fortune magazine’s fastest-growing company after it managed to grow profit by 340% in three years.

The company’s Toronto-listed stock traded 1.88% lower at C$38.71 on Monday.

Edited by: Creamer Media Reporter

Friday, November 2, 2012

Gold Market Report - 2 November

Gold, Silver Down Ahead of Jobs Data, Gold in India Hits One-Month Low

SPOT MARKET prices to buy gold in Dollars dropped to below $1710 an ounce Friday morning, reversing gains from earlier in the week, while stocks and commodities fell and the US Dollar rallied ahead of the release of key US jobs data.

The Bureau of Labor Statistics is due to publish its monthly 'Employment Situation' report at 08.30 EDT, which will include the official nonfarm payrolls estimate for the number of private sector jobs added in October. Consensus forecast among analysts is for 125,000 jobs added, while the unemployment rate is expected to tick higher to 7.9%, up from 7.8% in September.

Silver prices meantime fell below $32 an ounce this morning, extending losses from the day before. 

"[Silver] bulls tried for a breakout [on Thursday] but were met with selling pressure," said a technical analysis note from bullion-dealing Scotiabank.

"Despite the disappointing close, downside momentum appears to have waned somewhat."

Like gold, silver traded lower Thursday following the release of a better-than-expected ADP Employment Report, a release that is widely regarded as an indicator for the official nonfarms release.

Over in India meantime, traditionally the world's biggest gold buying nation, Rupee prices to buy gold fell to their lowest in nearly a month, following gains this week for the Rupee against the Dollar.

"We are hoping for good Diwali sales," one jeweler told newswire Reuters, although trader noted that demand could dry up ahead of the November 13 festival should gold prices climb higher.

Heading into the weekend, gold and silver were little changed on the week by Friday lunchtime in London, although analysts say they expect the nonfarm payrolls release could impact on prices.

"If the nonfarm payrolls data is very good, it will be bearish for gold, as it will cut expectations for any additional quantitative easing, and it will be fairly positive for the Dollar as well," says Nick Trevethan, Singapore-based senior strategist at ANZ.

"If the payroll data is much above the 125,000 [jobs] consensus the Dollar is likely to go down," disagrees Standard Bank analyst Steve Barrow.

"The Fed is not going to respond to stronger-than-expected data with tighter policy and, more importantly, the interest rate markets are not going to expect the Fed to change course...instead, the focus clearly seems to be on the fact that firm data lifts stocks, lowers risk aversion and so tends to lift 'riskier' currencies against the 'safe-haven' Dollar."

A note from Swiss bank UBS this morning said funds tracking the DJ-UBS Commodity Index will need to buy gold and silver, since the precious metals are due to form a bigger part of the index when it is reweighted at the start of next year.

"In gold's case, its weight will be raised to 10.82% from 9.79% and silver will increase to 3.90% from 2.77%," UBS said.

"The settlement prices on the fourth business day of January will determine the final amounts to be bought."

Here in Europe, Eurozone manufacturing activity continued to contract last month, with the pace of contraction accelerating from September, according to purchasing managers index data published Friday. The single currency areas four biggest economies – Germany, France, Italy and Spain – all published PMIs below 50.

The Bank of England meantime said it welcomes three independent reviews into its operations, forecasting ability and handling of the financial crisis that were published Friday.

One review, that looked at the Bank's framework for providing liquidity to the banking system, concluded the Bank is "centralized and hierarchical...with a large decision-making burden  residing with the Governor and senior management."

The review of the Bank's forecasting capability meantime said that "recent forecast performance has been noticeably worse than prior to the crisis, and marginally worse than that of outside forecasters."

In South Africa, AngloGold Ashanti, the world's third-largest gold mining producer, has suspended operations at the TauTona mine, with 300 protesting workers conducting a sit-in.

Earlier this week two striking coal miners were shot dead by security guards at South Africa's Magdalena mine, with reports saying the two men tried to break into the mine's armory.

Ben Traynor

BullionVault

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Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. Ben writes and presents BullionVault's weekly gold market summary on YouTube and can be found on Google+

(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, October 25, 2012

Gold, silver momentum building - Charles Oliver

With gold and silver companies trading at spectacular valuations and QE providing further stimulus, Sprott's Charles Oliver says it's a great time to be heading up a precious metals fund. Interview with The Gold Report.

Sprott's Charles Oliver says it's a great time to be heading up a precious metals fund. Gold and silver companies are trading at spectacular valuations, quantitative easings by the governments of the world are poised to strengthen the metals' prices even further, and more bargains could be had soon if investors dump stocks to avoid taxes. In this interview with The Gold Report, Oliver, manager of the Sprott Gold and Precious Minerals Fund, talks about the momentum building for gold and silver.

The Gold Report: Charles, at the beginning of the summer, you forecast that gold and silver prices would go up based on quantitative easing (QE) in the U.S. and Europe. Since then gold did take a leg up and has stayed above $1,700+/ounce (oz) and silver has stayed over $30/oz. QE3 was recently announced in the U.S., but some say pumping liquidity into the system is having diminishing returns. Have precious metals reached a ceiling or is there still room to go up?

Charles Oliver: I expect precious metals prices to rise significantly over the next decade. A large part of it as a result of QE and other money printing programs. The U.S. did announce QE3 recently. Having said that, it hasn't started running up the printing press. A good rise in precious metals is yet to come.

TGR: Will the November election impact that?

CO: I definitely believe the election is impacting it. The election could delay the implementation of QE3 because the Federal Reserve doesn't want to do any tampering that would be seen as influencing the election. I believe that QE3 will take place after the election this fall or early next year-and I expect to see significant programs embarked upon.

In terms of the gold price, I have forecast that it would hit $2,000/oz this year. There's still a very good chance of that, but it's more likely that it will go through $2,000/oz next year. Some of the trend lines on the chart indicate a $2,200/oz gold price sometime next year.

TGR: Have the higher metal prices been figured into the equity prices yet?

CO: Equities have underperformed the gold price for the last couple of years and are trading at some of the cheapest valuations of this decade based on price to earnings and price to cash flow. I expect over the next year and a half that equities will play catch-up and get back to a more normal level. One of the things we've been trying to figure out is what some of the potential tipping points are for that. We've come up with several of them.

First and foremost would be the valuations. They are just incredibly cheap. Second is dividend increases. For most of the decade, gold companies didn't pay dividends. In the last few years, many gold companies initiated dividends and increased those dividends several times. Generally speaking, dividends were 1% or less for the industry seniors and mid caps. Today, we're seeing many of them reach 2% and could be at 3-4% in the not-so-distant future.

Investors in this climate are starved for yield and are looking for anything that will provide it. At some point investors will look at gold stocks as a way to receive dividends, which would be very positive for the valuations.

TGR: Those would be the two main tipping points-valuations and increases in dividends?

CO: There are other things out there, including mergers and acquisitions (M&A). A number of M&A transactions have occurred during the last couple of months. There has been a lot of commentary and interest by some of the senior folks at gold companies about the attractive valuations of gold and precious metals companies. There also seems to be buying coming out of Asia.

TGR: What's behind the Asian buying? Do you think we will see more of that?

CO: There have been a number of transactions recently. In talking with a number of gold companies, it appears that the Asian groups have been showing a significant, increasing interest in taking stakes or complete ownership in materials and precious metal companies.

It almost makes me wonder if there has been a call from the top for people to start redeploying fiat paper currency into hard assets. That would run into my thesis that a lot of countries are shunning paper assets because they're being debased by all this printing and, hence, moving into hard assets is a very logical thing to do. It would not be at all surprising to hear that Asian groups, and other countries for that matter, are trying to move away from paper assets and into hard assets.

TGR: How does Asian buying play into your gold price forecast?

CO: There should be a lot of conversion out of paper money into hard assets, including gold and gold companies. Many of the statistics out there show that over the last decade, entities, including governments and individuals, have shifted from being net sellers of real assets to playing the role of considerable buyers of hard assets and gold.

The governments of the world were selling about 500 tons (t) gold per year a decade ago. Mine production was around 2,800 t/year, so that was a fairly significant impact upon the market. Today, governments of the world are buying about 500 t. That's nearly a 1,000 ton (Kt) shift in a market that has mine production of 2,800 t. That's an absolutely huge number.

And that's just by the governments. There's a huge proliferation of coin and mint sales and exchange-traded funds for individuals. There's a huge increase in consumer demand in China. The Chinese consumer has gone from owning no precious metals about a decade ago to approaching the same levels as India, which is one of the largest consumers of gold.

TGR: The $438 million Sprott Gold and Precious Minerals Fund, which you manage, holds 7% silver bullion, 20% silver equities and 62% gold equities. Is that a shift to more silver than a year ago? What's the thesis behind that?

CO: For most of the last decade, I've had single-digit levels of silver companies within the portfolio. A couple of years ago, Eric Sprott was doing some work on the silver-to-gold ratio. Looking at the work that Eric did really opened my eyes to how attractive the valuations look for silver and silver companies going forward. The general argument is that if you look over the last 2,000 years, about 95% of the time, the silver-to-gold ratio has been at 16:1. Today, it's at 50:1, which makes silver stocks very attractive. Therefore, we have increased the weighting of silver stocks in the Sprott Gold and Precious Minerals Fund quite dramatically during the last couple of years.

TGR: The last time we talked, you said that all of the silver names were attractively valued and that the mid and large caps would move first. Has that happened?

CO: We've seen some great performance out of silver names in the last few months. Just to give you an example, a significant holding within our portfolio has gone from around $16/share to just shy of $30/share in the last four months. Also, one of the largest U.S. producers in the world has gone up from around $14/share in July to just shy of $22/share.

TGR: Were those increases based on increased profits due to the silver price, on the market changing its mind about silver or on individual news out of the companies?

CO: I think one of the most important factors was actually QE, as silly as that may sound. The market had been selling off gold and silver stocks in a fairly irrational manner. The valuations became incredibly compelling and are still incredibly compelling despite the recent lifts. In the late summer, there was a very big change in sentiment as Federal Reserve Chairman Ben Bernanke announced QE3 and European Central Bank President Mario Draghi announced that the bank would do whatever it takes to protect the European Union, which means it will print as much as it needs to.

As much as I'd like to say the rise in silver share prices was from great earnings and profits, it was really a shift in sentiment by investors. The valuations were incredibly attractive in June. They were incredibly attractive in July. They're still exceptionally attractive today. But the market seems fixated on how much printing will go on and whether or not it's risk-on or risk-off. The market seems to be taking on the risk-on trade as printing appears on the horizon.

TGR: Let's shift from silver to gold.

CO: Just like the silver names, the gold names are very attractively valued. I've been trying to focus on high-grade projects because they generally have lower capital expenditure requirements and potentially better internal rates of return.

TGR: Do you think there will be more deals out there this year than in the last few years?

CO: Prior to Bernanke's announcement of QE3, the market for financing had dried up and the small guys were in a very tough position. But in the last couple of months, we have started to see the market open up. Usually, it goes to the mid caps first and slowly starts to trickle down to the small caps. Barring any disasters out of Europe, I would hope to see this trend continue.

TGR: We're getting to tax sell-off time. How are you approaching that?

CO: One of my objectives is to minimize taxes. I have spent a good portion of the year making sure I was in a good position. During tax-loss selling there are some great opportunities as investors suddenly say, "Well, I have to eliminate my taxes," and they sell stocks at some ridiculous prices. I keep a bit of powder dry to take advantage of that. I'm hoping that the work I did earlier this year will put me in a fairly good position to take advantage of that.

TGR: Thank you for your time today.

CO: Thanks so much.

Charles Oliver joined Sprott Asset Management in 2008. He is lead portfolio manager of the Sprott Gold and Precious Minerals Fund. Previously, he was at AGF Management Limited, where his team was awarded the Canadian Investment Awards Best Precious Metals Fund in 2004, 2006 and 2007. His accolades also include Lipper Awards' best five-year return in the Precious Metals category (AGF Precious Metals Fund, 2007), and the Lipper Award for best one-year return in the Precious Metals category 2010.

This is an edited version of the original published courtesy of The Gold Report

Wednesday, October 24, 2012

What's next for 3 big silver deposits in northern Mexico?

There are some interesting possibilities for three of the more prominent silver projects in northern Mexico.

Author: Kip Keen

I'll get right to it. Here's the latest on three of the larger silver projects in northern Mexico that aren't in the hands of a producer:

Orko Silver
Durango state

Word is that the team of at least one major silver producer was recently on site at Orko's La Preciosa silver project. Perhaps this is not a surprise given Orko has signed numerous confidentiality agreements since Pan American Silver
opted out of La Preciosa earlier this year. According to Gary Cope, Orko's president and CEO, in an October conference call, three or four parties are in talks with the junior (transcript).

Potential takeover-talk aside, to watch for at La Preciosa is a redesigned mining project. Whereas Pan American saw the project as combined open pit/underground scenario, Orko now says a superpit may be possible at the project encompassing far more ounces than before. The old scoping study was for underground and open pit operations with annual production averaging 6.8 million ounces silver and 11,800 ounces gold.

The new superpit could allow Orko to significantly increase production numbers, as within it, according to a recently update resource, are 110 million ounces silver equivalent @ 110 g/t and 127 million ounces silver equivalent @ 98 g/t in indicated and inferred resources respectively. Size wise it's not clear how big Orko might go at La Preciosa in a forthcoming scoping study. Indeed that's the question Orko now faces, how best to optimize mining, get the biggest bang for its buck and at the same time not make something so elephantine it scares away investors in terms of capital costs.

The scoping study is said to be coming out in March 2013.

Silver Bull Resources
Chihuahua State

Silver Bull took the Sierra Mojada silver-zinc project back to the drawing board after a 2009-2010 merger between Metalline and Dome Ventures (since renamed Silver Bull). Under different management it had outlined 136 million ounces silver @ 149 g/t silver, inferred, in a 2010 resource estimate. But since then management has changed and it appears to be taking a more conservative approach in modelling open-pit resources. Now, after successive resources over the past couple years, Silver Bull is nearing the 100 million ounce silver mark again in an open-pit model that may get fairly strong recoveries from a cyanide leaching scenario.

In fact this is the first thing to watch for. This year Silver Bull hired its own metallurgist, which is not that common for a junior at this stage of development (without even an official scoping study out yet, for example) and under his direction Silver Bull is getting set to release more metallurgical results in the next month or so. A key development for Silver Bull would be to increase potential recoveries to the 70 to 80 percent range (or better of course) without having to resort to fine grinding. Brian Post, a Roth Capital Partner analyst, who has a C$0.90 target on Silver Bull, is looking for north of 70 percent as silver recovery. A recovery up there, would bode well for a planned economic study.

The second thing to watch for in early 2013 is an updated - and strenghtening - resource. The count now in the Shallow Silver zone is 6.7 million ounces silver @ 57 g/t; 65 million ounces silver @ 45 g/t; and 10.4 million ounces silver @ 40 g/t in measured, indicated and inferred resources respectively. Silver Bull had hoped for better grades in the last resource round, but in part didn't get them because its consultant working on the latest resource didn't accept as much of its historic data from a high grade silver zone as expected. That has spurred a more extensive twinning program of a portion of historic drilling to satisfy the consultant's appetite for quality control in the higher grade zone. With these pulled into the broader resources, among other that I spoke to, Roth Capital's Post bets that the next resource will push 100 million ounces and come in with a better grade.

Two final notes: there is a zinc component to Sierra Mojada that has yet to be pulled back into resources that are below the near surface silver resources. As Silver Bull would have it, the Silver Zone open pit could transition into those potential zinc resources down the road were Sierra Mojada ever to turn into a mine. Which makes a good segue for the second point, that Coeur d'Alenes Mines is Silver Bull's largest single shareholder having invested $10 million through two financings in 2011. So at least one silver producer is watching closely how Sierra Mojada shapes up as a silver deposit.

MAG Silver
Chihuahua State

It's fair to say MAG Silver's Cinco de Mayo project flies under the radar as so much of MAG's story has been about Juanicipio, its uber high-grade silver deposit and joint venture project with Fresnillo (44-percent owned by MAG). Here's a reminder. MAG put out a nice looking first resource estimate for its Cinco de Mayo project, in Chihuahua State, this past October that is primarily about silver but that also has a strong base metal component. Further, it has the look of something set to grow.

The maiden inferred resource was 12 million tonnes @ 132 g/t Ag, 0.24 g/t Au, 2.86 percent lead, 6.47 percent zinc for 53 million ounces silver, 785 million pounds lead, and 1.8 billion pounds zinc in contained metal. This resource encompassed two zones, the Jose Manto and the Bridge zone. But a third zone, the Pegaso zone lies between and at depth and holds much potential for added resources.

This is not my interpretation. MAG's president and CEO, Dan MacInnis is on record saying as much. "We expect to follow our exploration model and link the Bridge Zone/Jose Manto to the new Pegaso Zone discovery at depth." MacInnis pointed to a pretty looking intercept in Pegaso to illustrate his point. One intercept from this year returned 62 metres @ 89 g/t Ag, 0.78 g/t Au, 0.13 percent Cu, 2.1 percent Pb and 7.32 percent Zn.

MAG has said drilling at Cinco de Mayo is set to start again once it gets drilling permits from the Mexican government. It won't lack cash for the program as it recently closed a C$33.1 private placement back on strong terms.

Tuesday, October 16, 2012

Fortuna Silver Mines on target to beat full-year guidance

By: Henry Lazenby

Latin America-focused Fortuna Silver Mines on Thursday said it was on track to beat its production guidance for the year, having by the end of the third quarter already produced 80% of its expected full-year silver guidance and 94% of the expected gold production.

Fortuna, which operates the San Jose mine, in Mexico, and the Caylloma mine, in Peru, had produced 2.97-million ounces of silver and 16 331 oz of gold in the first nine months of the year, setting it well on its way to go beyond its full-year production guidance of 3.7-million ounces of silver and 17 400 oz of gold.

For the quarter ended September 30, the company lifted silver production by 53% to 1.02-million ounces and gold production was up by 230% to 5 348 oz. The company’s mines also produced significant volumes of base-metals by-product.

This included 4.45-million pounds of lead and 5.6-million pounds of zinc.

"Our operations teams continue to successfully execute our mine plans and capitalise on opportunities to further optimise processes at our mines in Peru and Mexico,” CEO Jorge Ganoza said in a statement.

He added that San Jose’s processing plant expansion was proceeding as planned and was expected to be complete by mid-2013. Long lead-time items such as the 800 t/d ball mill and other significant equipment had already been bought.

Fortuna expected its consolidated yearly production rate to increase to five-million ounces of silver and 26 000 oz of gold, as well as increasing its base-metal credits significantly when the expansion is complete.

At Caylloma, the tailings dam project was de-risked and the company expected to receive its final operations permit from Peru’s Mines and Energy Ministry within weeks.

The company’s stock trading on the Toronto bourse rose by 6.14% to C$5.01 apiece on Thursday.

Edited by: Creamer Media Reporter

Thursday, October 4, 2012

Morgan Stanley Backs Gold, Silver, Copper on Demand Outlook

Morgan Stanley reiterated its call for gold, silver and copper to outperform other metals as investor demand and central-bank buying bolsters bullion and supply constraints benefit the raw material used in wires.

“Central bank policies ensure conditions remain favorable for continued price appreciation for both gold and its cheaper proxy, silver,” analysts Peter Richardson and Joel Crane wrote in a report today. The bank expects gold to average $1,683 an ounce this year, rising to $1,853 in 2013. Morgan Stanley also remained bearish on aluminum, nickel, lead and zinc.

Commodities as tracked by the Standard & Poor’s GSCI Spot Index rose 11 percent last quarter in the best such performance since March 2011, as central banks in the U.S., Japan, China and Europe, took action to support their economies. Gold is rallying for a 12th year as central banks join investors buying bullion to diversify assets. South Korea and Kazakhstan are among those who added to gold reserves this year. Holdings in exchange- traded products tracked by Bloomberg are at a record.

Central banks’ expansionary monetary policies, with all their attendant inflation and currency debasement risks, are a “game changer” for gold, Morgan Stanley said. “Central banks have further underpinned the likelihood of continued growth in investment demand by emphasizing their own liking for gold as a reserve portfolio asset.”

The Bank of Japan (8301) said Sept. 19 it will expand a fund that buys assets following the U.S. Federal Reserve’s announcement of a third round of so-called quantitative easing, or QE, by buying $40 billion of mortgage-backed securities a month. The European Central Bank also gave details last month of a program to buy debt of member states.

 

Goldman, Copper

Gold for immediate delivery traded at $1,788.91 at 1 p.m. in London, and has averaged $1,654.68 this year, according to data tracked by Bloomberg. Copper may average $3.63 a pound this year and $3.90 in 2013, the report said. Copper futures in New York traded at $3.8045, and have averaged $3.6196 in 2012.

Goldman Sachs Group Inc. expects aggressive quantitative easing to be the most bullish for copper due to the metal’s “relatively robust fundamentals,” it said in an Oct. 2 report. Copper was seen by 34 percent of about 160 Credit Suisse Group AG clients as having the best 12-month outlook, the bank said in a Sept. 18 survey.

Global industrial output may grow by 3.6 percent in 2012 and by 4 percent in 2013, Morgan Stanley said. China’s industrialization is passing into a more mature phase of lower annual gross domestic product growth as the economy rebalances, with reduced rates of raw-material demand expansion, it said.

 

China Growth

Growth in China’s gross domestic product decelerated to a three-year low of 7.6 percent in the last quarter. Policy makers have taken steps to shield the economy hurt by the debt crisis in Europe. China’s central bank cut interest rates in July, after lowering lenders’ reserve requirement ratio three times from November to May, and the government last month approved additional infrastructure spending.

“Chinese growth has already slowed well beyond the comfort levels of many commodity investors, and a prolonged extension of this trend would likely send most commodity markets into significant oversupply,” the analysts wrote. “The euro zone sovereign debt crisis continues to represent the single most significant downside risk.”

Friday, September 28, 2012

Looking for a big silver score on the Veta Grande in Mexico

Defiance Silver raises some cash as it moves to spruce up a 250 tpd mill in the Zacatecas silver district and explore the storied Veta Grande vein.

The lack of lift in the junior financing market is evident in Defiance Silver's latest financing, which just closed and raised about C$900,000 in two tranches. The junior had hoped for as much as $10 million back in mid-2012, an amount that would enable it to earmark about $4 million to get its 250-tonne-per-day silver mill, under option from Impact Silver, online and "up to first world standards," as Darrell Rader, Defiance Silver's chairman put it to me a few months ago. The mill is next to the storied Veta Grande silver vein in Mexico in the Zacatecas silver district, a vein along which Defiance controls about two thirds its nine-kilometre-long strike length on grounds also under option.

While Defiance didn't hit the $10 million mark, the initial financing still marks a solid start. It's safe to say the market isn't in the habit of feeding turkeys these days. Rather, while juniors like Defiance find supporters in a financing world marked by scarcity, those unable to raise funds may find themselves as Thanksgiving menu items. Headless and roasted.

For Defiance, the funds give it cash to continue with refurbishments at its mill and, perhaps more importantly, secure it funds to make good on option payments on its main properties. The crux to Defiance is a combo of assets: a concession over much of the storied Veta Grande mine, including some historically mined portions that hold 15 million ounces silver @ 182 g/t silver in historic resources (by Silver Standard back in 1995) and then the small Santa Gabriela mill next door.

The two assets haven't been under the same junior roof before. Indeed, Impact Silver, a major Defiance shareholder, had the Santa Gabriela mill in the past, but not the almost adjacent San Acacio property, which has been in the hands of a single family for a couple decades short of a century.

The head of the Mexican family, 80 years old, has not wanted to part with the property in the past, at least at prices that may have been on offer. But Bruce Winfield, Defiance president and CEO, worked on getting a deal done with the Mexican patriarch for the better part of a year and said the octogenarian had his five children in mind in deciding to work with Defiance.
"This is in effect estate planning for him," Winfield said.

The combination is pretty logical, making for a nice package with possible near term production from dumps at the mill, and then possibly with mine backfill and other feed from the Veta Grande mine, and then the obvious exploration potential beyond. The San Acacio concessions cover about four kilometres of the Veta Grande vein to the east of mine workings, an area that is little explored, in part because of sparse outcropping.

Of course there's no guarantee Defiance will find anything along strike to the southeast, but it has good reason to hope it might. As Winfield pointed out, a few years back MAG Silver announced it had drilled the Veta Grande vein to the southeast of the concessions Defiance now has under option. The MAG Silver hits were blind targets in the sense they were under 150 metres of cover, in an area without outcrop. The drillholes, if not showing widths as broad as in parts of the old Veta Grande mines to the north, still had strong intercepts with as much as 850 g/t silver over a metre.

Given the hits to the south, the question of what lies on Defiance-controlled land is very much an open one. As Defiance spruces up its Santa Gabriela mill, maybe starting off with silver production in the 100,000-ounce range a year, it aims to find an answer.

Sunday, September 23, 2012

Goldcorp eyes Mexico joint venture with Fresnillo

The two companies are looking to jointly develop Fresnillo's Camino Rojo gold and silver deposits, adding that a feasibility study is expected to be completed by early next year.

Canadian miner Goldcorp, one of the world's largest gold producers, is considering teaming up with Mexico's Fresnillo to develop a new precious metals venture in the central Mexican state of Zacatecas.

Goldcorp Mexico's business development director, Federico Villasenor, told Reuters that Goldcorp and Fresnillo are looking to jointly develop the Canadian miner's Camino Rojo gold and silver deposits, adding that a feasibility study is expected to be completed by early next year.

Villasenor said both companies had already worked together on geological exploration of the property, but he declined to quantify reserves or expected production.

Camino Rojo is just 31 miles (50 km) southeast of Goldcorp's massive open pit mine at Penasquito.

"As neighbors, it's possible that we can create a synergy between the two companies," said Villasenor.

In addition to gold and silver deposits, Camino Rojo is believed to contain significant deposits of lead and zinc.

Fresnillo is the world's largest primary producer of silver, and is controlled by Mexican mining company Industrias Penoles . Fresnillo is also Mexico's second-largest gold producer.

Villasenor added that the Camino Rojo property is believed to feature a geological profile similar to that of Penasquito, expected to be Goldcorp's top gold-producing mine in Mexico this year.

GOLD PROSPECTING UP

Sustained high gold prices and relatively low Mexican labor costs have propelled increased production as well as added exploration investments over the past 10 years.

"Mexico's exploration expenditures have risen significantly over the last decade, reaching a record high of almost $1 billion in 2011," said analyst Ben Moore of Metals Economics Group.

He added that since 2003, exploration spending in Mexico has grown faster than the world average, boosting the country's global ranking to fourth from eighth.

Goldcorp expects to produce 380,000 ounces of gold from Penasquito this year, down 10.6 percent from the company's previous output forecast of 425,000 ounces.

The company says the downward revision is mainly due to a local water shortage caused by severe drought conditions that began last year.

Last year, Penasquito produced 254,100 ounces of gold.

Gold hit a 6-1/2 month high at $1,779.10 per ounce on Wednesday, before easing off.

"The rise (in prices) over the last few years has been so positive that there's still a fairly large margin" between extraction costs and attractive returns, said Villasenor.

The Penasquito property is currently the world's 35th-largest gold producing mine, and Mexico's second-largest gold mine after Fresnillo's Herradura property in the northwest state of Sonora, according to data compiled by Thomson Reuters GFMS.

Goldcorp also operates the El Sauzal mine, in the northern state of Chihuahua, as well as the Los Filos mine in southern Mexico's Guerrero state.

The company's three existing gold producing-properties contributed a quarter of Goldcorp's international gold production in 2011, or about 2.5 million ounces.

This year, Goldcorp expects to produce between 2.35 million and 2.45 million ounces of gold.

Source: Reuters

Monday, September 17, 2012

Patagonia's gold and silver promise shines through slew of junior announcements

Promising announcements from three junior miners and explorers on projects in Santa Cruz province highlight the continuing potential for gold and silver mining in Patagonia

New announcements from Samco Mining, Minera IRL and Mariana Resources, relating to separate exploration projects confirm the continuing high prospectivity for high grade gold and silver in the Deseado Massif in Patagonia in Argentina's Santa Cruz province.

Samco's announcement relates to its Corina project area which lies immediately to the north of the exciting Cerro Moro vein deposits found by Extorre Gold - and recently acquired by Yamana Gold. Here an initial program of mapping and chip and channel sampling following up on targets identified in a previous satellite imagery analysis has confirmed a number of exciting targets, which the company refers to as the Cerro Cubilete and Cerro de la Mina prospects.

At the former, an area of outcrop of dark quartz and quartz-iron oxide breccia has been identified over a north-south elongated area measuring approximately 250m long by up to 90m wide. Within this area, 44 outcrop samples averaged 268 g/t Ag, with a maximum value of 1295 g/t Ag. While not reported, the vein deposits in this area also tend to carry gold values as well as silver.

At Cerro de la Mina approximately 600 metres NW of Cerro Cubilete there are many small prospecting pits which expose minor barite and Mn oxide mineralization in rhyolite. Seven samples from this area assayed above 50 ppm Mo, with a maximum of 219 ppm, in a NNW linear trend 300m long. In Samco´s experience, Mo can be a useful pathfinder to precious metal mineralization in this environment - indeed the major operating gold/silver producer in the area, Anglo American's Cerro Vanguardia mine, was originally found by geologists looking for barite deposits.

The project is located some 55km for the port of Puerto Deseado and there is good road and power infrastructure in the area.

Meanwhile another miner/explorer with more advanced projects in the area, Minera IRL, has reported the discovery of a significant mineralized system at Choique, approximately one kilometre from the Martinetas Vein Field, at the Don Nicolas Project in the same general area. Don Nicolas is currently in the development permitting process and is located about 100 km northwest of Cerro Moro.

Here results from 35 holes for 2,386 meters of drilling have demonstrated substantial gold and silver intersections in a new mineralized rhyolite dome host within 50 metres of surface. Key high grade intersections include drill holes CH-D12-015 with 6.70 meters at 10.5 g/t gold and 19.8 g/t silver, CH-D12-018 with 6.10 meters at 5.43 g/t gold and 27.6 g/t silver and CH-D12-021 with 11.10 meters grading 5.38 g/t gold and 5.26 g/t silver. This is particularly significant as Choique is located only 1.6 kilometres from the planned Don Nicolas treatment plant.

Courtney Chamberlain, Executive Chairman of Minera IRL, commented, "The strong assay results from a newly recognized rhyolite dome complex at Choique unlock significant value close to the main mineralized vein system at Martinetas and represent a positive return from our recent brownfields program. Only 1.6 kilometres from the planned Don Nicolas plant, the Choique discovery not only shows immediate potential for increasing the resource base and mine life, but also provides great encouragement for more potential discoveries close to Martinetas."

A Feasibility Study for building a mine at Don Nicolas was completed in February this year. The Environmental Impact Assessment (EIA) was submitted to the Santa Cruz authorities in, thereby commencing the process of obtaining the development and operating permits for the project. In addition to the drilling at Choique, 15,905 meters of in-fill and extension drilling have now been completed at Martinetas, both of which will provide the basis for a new resource estimate scheduled for the fourth quarter of 2012.

Some 30+ km from the Don Nicolas project lies Mariana's Las Calandrias and Calandria Sur prospects where there has also been extensive, and highly encouraging, drilling, both on high grade silver/gold veins and around the edges of a rhyolite dome, which also extends into ground controlled by Minera IRL (known as the Escondida project), and which has shown lower grade bulk gold mining potential. Mariana too has just announced results from twenty-one holes drilled for 2,164m including deepening six previous holes, designed to test new targets adjacent to the current Calandria Sur resource of 519,000 ounces gold equivalent and to validate geological models derived from detailed exploration.

The company reports significant intersections made in 13 holes - mostly hosted by volcaniclastic or volcaniclastic/rhyolite rocks and these range in style from bulk tonnage, narrow high grade (in one case, andesite dyke-related) to wide zones of strongly anomalous gold.

Relating to the latest drilling results, Mariana's chairman, Chairman John Horsburgh noted, "This is a good set of results from several new targets, all of which are outside the Calandria Sur resource of 519,000 ounces of gold equivalent. Post-resource drilling to date has assessed the extent of the Calandria Sur mineralised system. Importantly mineralisation at Loma Verde, La Picaza and El Clavo is still open and adjacent covered areas, possible sub-dome feeders, the 1km dyke trend at Calandria Sur and several advanced targets within a 3km radius also remain as targets. Meanwhile,

follow-up exploration is underway in the extensive Bozal/Tongoril areas to the north and northwest with new targets emerging, for which we look forward to updating in due course."

The three announcements, which all came within a day of each other, confirm the high prospectivity for gold and silver in the region, which, as noted above already hosts one significant gold/silver mine in Cerro Vanguardia with a couple of others at the development stage and a host of significant finds, some of which, like Don Nicolas and Cerro Moro are well on the path to production. The Deseado Massif has to be one of the world's most prospective areas for gold and silver and the provincial government of Santa Cruz province, unlike some of its neighbours, has so far proved to be a very mining friendly administration although there are reports that the province is considering the imposition of new mining royalties and forcing miners to cede a 10% stake in projects to the state mining company, Formicruz, in an effort to to bring down its budget deficit.

Bernanke's QE3 - No news could be better for gold and silver

QE3 for as long as it takes undermines the value of the dollar so will look good for gold and silver in dollar terms in the medium term.

The markets got more than they expected from the Fed - QE3 for "as long as it takes" and low interest rates for three more years is today's reality. The stale fear of inflation in the States is now well and truly replaced by a major drive away from deflation and a potential depression. With politicians still emasculated in political gridlock the Fed has called on them to do what they were voted in to do. We don't think they will, so QE3 ‘for as long as it takes' is the next best thing. It targets house prices and employment, but will banks follow through?

Translated into gold and silver no news could be better because it undermines the value of the dollar. Gold confirmed this by jumping $40 overnight or 2.3% and silver up $1.6 or 4.8%. Traders and speculators either short of gold or standing on the sidelines drove the prices up. That's just overnight. What does the longer term hold?

It would be naïve to think that this is now the long awaited solution. That must come for Congress and the Senate. They won't do that for a couple of years more. Meanwhile, for the U.S. to really grow the U.S. consumer must see the value of his house rise and his job secure. That is the acid test. The cost, if that is achievable, will be at the expense of the dollar. Gold [and silver] will rise to reflect that value loss.

In India inflation has now been reported at 7.1% and the gold price in the Rupee is now over Rs.96,800 for one ounce, without any premium. Initially this will keep Indian investors out of the market, short-term. Bear in mind that the recent break upwards in the gold price has been in the absence of Indian demand. Previously, such a rise would not have happened without Indian demand.

Monday, September 10, 2012

Gold Market Report - 10 September

Gold & Silver Slip But "Set to Benefit" If Fed Begins QE3 This Week

THE WHOLESALE gold price drifted lower to $1730 per ounce Monday morning in London, some ten Dollars below Friday's six-month high.

Stock markets were broadly flat and US Treasuries fell, meantime.

The silver price dipped below $33.50 per ounce – around 20 cents below last week's close – while other commodities were broadly flat, with the exception of copper, which posted gains.

"Our economists now expect the Fed to ease further at this week's FOMC meeting, providing gold the catalyst it requires to test fresh highs for this year over the coming weeks," says a note from Barclays Capital.

"The latest price rally has been driven mainly by hopes that central banks will implement monetary easing measures," agree analysts at Commerzbank, citing last week's European Central Bank announcement of unlimited government bond buying as well as the prospect of QE3.

Friday's trading saw the wholesale-market gold price in Dollars hit its highest level since February, after a disappointing US nonfarm payrolls report led to renewed speculation the Federal Reserve could announce a third round of quantitative easing (QE3) when it makes its latest policy decision this Wednesday.

"[QE3] is likely to spark higher inflation in the medium to long term [and] lead to fears of depreciation of key trading currencies," says Commerzbank.

"This should benefit gold as a store of value and as an alternative currency."

Germany's Constitutional Court is also due to rule this Wednesday on whether or not the Eurozone's permanenet bailout fund the European Stability Mechanism is compatible with German law.

Germany must "lead or leave" the Eurozone of single currency members, billionaire investor George Soros has told the Financial Times.

"Either throw in your fate with the rest of Europe, take the risk of sinking or swimming together, or leave the Euro," says Soros.

"Because if you have left, the problems of the Eurozone would get better."

Berlin has repeatedly insisted that Eurozone governments must adhere to austerity measures in return for financial aid, a policy which Soros describes as "reinforcing the current deflationary stance".

Over in China – the world's second-largest gold buying nation last year – imports of gold from Hong Kong rose 12% month-on-month in July to nearly 76 tonnes, the second highest level this year and almost double the figure for July 2011, Hong Kong customs data show.  Hong Kong is a major conduit for Chinese gold bullion imports.

In the same month, China's domestic gold mining production rose to 31.3 tonnes, according to Ministry of Industry and Information Technology figures published Monday. Chinese gold output for the first seven months of 2012 was 208 tonnes – a gain of just over 7% on the same period last year.

"Slowing real domestic demand in China was the key factor, consistent with the soft activity data in the past few weeks," says Societe Generale economist Wei Yao.

In New York, the so-called speculative net long position of Comex gold futures and options traders – measured as the difference between the number of open bullish and bearish contracts – rose for the third week running to hit its highest level since February last Tuesday, according to weekly data published by the Commodity Futures Trading Commission.

"The change in the net position was once again driven by moves of a bullish nature," says Standard Bank commodities strategist Marc Ground, meaning the addition of bullish 'long' positions was a bigger factor than the reduction of bearish 'shorts'.

"The unwinding of short positions was similar to the previous week...a strong addition to longs was also evident, although it was noticeably lower than in the previous week."

Investment bank UBS today raised its one-month gold price forecast from $1700 per ounce to $1850 per ounce, and its silver price forecast to $37 per ounce, up from $32 per ounce.

One Citi analyst meantime says gold could rise to $2500 per ounce in the first quarter of next year, the New York Post reports.

In South Africa meantime, some 15,000 gold mining workers – a third of the workforce – are on strike at the KDC West mine, operated by the world's fourth-biggest gold producer Gold Fields. The strike comes less than a week after Gold Fields resolved a dispute at its KDC East mine, which involved 12,000 workers.

Ben Traynor

BullionVault

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Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. Ben writes and presents BullionVault's weekly gold market summary on YouTube and can be found on Google+

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