Gold and Silver Due For A 10% Correction

By ROBERT LENZNER

My gold and silver gurus are calling for a time out correction in the  advance of these two precious metals on world markets. Silver is in a “blowoff top,”  writes Ananthan Thangavel of Lakshmi Capital this morning. He sees a “correction down to the moving averages” that would push silver back to a range of a high price of $37 or a low of $33 an ounce. Silver has run with fits and starts from about  $28 an ounce in mid-November, 2010 to almost $50 an ounce on the opening today. Too much, too soon. Unlike the steady moderate pace for gold, admittedly a larger market. “This rate of ascent certainly can’t be maintained,” Thangavel wrote me. “But I do believe we’re still in the middle of a bull market in silver.”

Post from: Gold News from Gold Editor

Gold and Silver Due For A 10% Correction

Japan Disaster Damages Supply Chains

Author: Christopher Laird
Posted: March 15, 2011

The epic 9.1 quake, Japan’s largest in its history, and the devastating tsunami damaged Japan’s infrastructure so badly that manufacturing plants had to be shut down. But more worrisome is the endless destruction of bridges, roads, electrical, and ultimately the nuclear disaster in progress.

As I speak, they just tried to use helicopters to drop water on the reactors and the spent fuel rod storage. It was just cancelled due to high radiation…does this remind you of another disaster?? Beginning with a C and in Russia?
If Japan cannot control the situation at the reactors, they ultimately could spread a big fallout cloud across half of Japan. Reports out that some minute contamination appeared in a city over 50 miles away in the tap water.

We have maybe one week left or even days before a total evacuation of that area if things don’t improve quickly. 

They have a mere 50 workers trying to control 6 damaged reactors. It is not working so far. Each reactor normally has 100 workers. They have pulled back. If the many stored spent fuel rods burn, they already had one storage pool catch fire of these, it can release enough radiation in the atmosphere to make it worse than Chernobyl. It would definitely result in millions of evacuees. Get this, the storage pools for the spent rods are stored OVER the reactors! And the bulding roofs blew off!

After the disaster, the commodity complex got hammered; even so the Japanese stocks rallied 6 % last night. Gold sold off hard and this is typical in any major market crash as people sell gold to cover margins.

Reversal of Yen carry trade
But, importantly, is a repatriation of Japanese money from abroad and also out of markets and the Yen carry trade. Considering how huge the Yen carry trade is, and that any time there is deleveraging, the Yen rises, and the Yen is rising on and off again, indicates that if this reactor mess goes more out of control, we might see some more major market action in a week. Crash wise.

This also has implications for the ending of US QE2, as the Japanese are the second largest holder of USTs. But it’s not likely they would dump them. Nevertheless, they won’t be buying much. This once again forces the Fed to be the lender of last resort, and we will see in Summer if QE3 comes into being.

The commodity currencies are taking a bit of a hit, and this is due to the expected economic slowing and lower orders for natural resources from Japan.

We had forecast a realignment (weakening) of the AUD and CAD to the USD by Summer due to expected ending of US QE2 (the Fed’s purchase programs) which might or likely would cause some significant world market deleveraging.

Well, this Japan situation just moved that up several months.

Supply chain
What if Japan has to evacuate, and say a 100 mile radius is implemented?
Japan would basically shut down if that happened. And Japan is in the MIDDLE of every supply chain you can imagine, not only for US companies, but also for half of Asia.

Half the products are made with components from other countries and then assembled in Japan or China. If the supply chain is disrupted, and a mass evacuation would do it, then countless hits to world GDP will happen.

Apple already is delaying orders for new products from Japan as we speak for example.

Full Article

Post from: Gold News from Gold Editor

Japan Disaster Damages Supply Chains

Paul van Eeden: Finding Value Amidst Volatility

Author: Karen Roche (The Gold Report)
Posted: February 23,2011

Cranberry Capital Inc. President Paul van Eeden still favors the natural resources sector above all others because they are "absolutely central to our standard of living, our quality of life and the technological progress we've made." Despite the dangers, frothiness of equities and absence of fundamentals to support current valuations, he says, "there are always opportunities in the market. . .you just have to recognize them." Find out where Paul believes investors can find good value in the current market in this exclusive interview with The Gold Report.

The Gold Report: Paul, in January 2008, you saw the impending crash and told investors to sell everything. Three years later, what are your feelings about the economy?

Paul van Eeden: A lot has changed in three years and the recession was not as deep or severe as I had expected. Many people have been adversely affected, no doubt, although it could've been much worse.

I'm not an apologist for central bankers or the Federal Reserve, and I don't believe in fiat money or that the Fed has a role to play in our economy. But in the context that they exist, and given Bernanke's job description, I think he did a good job during the crisis. Of course, what we really need is for the system to get flushed clean. But that would be far less attractive to the majority of the population to hold much hope for its occurrence. After all, a democracy is really nothing more than mob rule; and in this case, the Fed saved the mob.

TGR: Many people believe all the Fed did was kick a larger depression down the road.

PvE: I agree that it is merely postponing the inevitable, but that is the Fed's job. It's nothing new—it's what central bankers do. While central bankers are part of the banking system that debases our currency and, therefore, is partly to blame for some of our troubles, it certainly isn't solely to blame.

Part of the blame also lies with all of us—people who buy cars and houses they can't afford or go on shopping sprees with credit cards they cannot repay. Just because we have fiat money and people manipulating it doesn't mean we have to live above our means. It's very convenient to blame Bernanke for debasing our currency, banks for making us offers that sound too good to refuse and credit card companies for issuing cards to people who aren't creditworthy. But does that mean we have to partake in those activities? No. We have to take personal responsibility for our actions. Only by taking responsibility for our actions can we figure a way out of this. Stated another way, as long as we rely on others to solve our problems and live above our means with the expectation that somehow, someone will fix it for us later, we will never get out of this mess. It will only get worse.

TGR: You mentioned that you don't think the situation will get much worse. If it's not much worse, what are we postponing? The recovery?

PvE: Yes. The pain could've been worse, and I think we avoided that. But what we really postponed is the recovery. The way I see it, the central bank robs our future living standards in exchange for a higher living standard today by debasing our currency and reducing the value of our future savings and earning capacity. We do the same thing as individuals by taking on too much debt. When you borrow, all you're doing is spending today what you hope to earn in the future. You're trading a higher lifestyle today for a lower quality of life in the future.

Full Article

Post from: Gold News from Gold Editor

Paul van Eeden: Finding Value Amidst Volatility

QE2: The Road To A Gold Standard

Author: Jim Willie CB
Posted: February 22, 2011

What an incredible few weeks with global uprisings! It is not all too surprising that social eruptions over food prices come from the Arab world, since they spend up to 75% to 80% of income on food for basic needs. What proof that the global economy is not a closed system! The QE and QE2 initiatives have spread like a powerful virus, leading to global commodity prices heading upward and quickly. Even cotton is up 170% in price. The USFed has suffered even more credibility blows, calling the global food price inflation unrelated to its QE2 policy. It is obviously connected. What we have is the Western Big Banks protected from fraud prosecution, redeemed for their broken toxic balance sheets at government expense, leading to a global price tag in the form of foodstuffs and commodities. Worse, the USGovt and USFed continue to be run by fraud kings, who continue to maintain a tight strangehold on the purse of the state and the Printing Pre$$ itself that produce deficit spending and fresh phony money. Ironically, the punishment for the US banking system is chronic unending insolvency. Despite the largesse to prop them up, fund their channels, redeem their toxic debt, enrich their executive packages, they remain the same Zombie banks from late 2008. Tragically, the USGovt will continue to fund their black holes instead of restructuring like Iceland, which is back on its feet. The battle cry of Too Big To Fail for the Big US Banks is a call to sustain the corruption and to ensure no recovery ever!!

In the meantime, fast rising gasoline prices and higher crude oil price, along with a host of industrial metals like copper, have lifted the entire cost structure of the USEconomy, and the global economy since all are priced in US$ terms. The banking officials act like keeping US wages down it a noble objective with a national purpose. It is indeed a noble purpose, as the nobility remain with money, but the masses will not be capable of effectively dealing with the cost squeeze. Businesses not well placed within the Fascist Business Model will also fare poorly. The list of US companies is long that have complained of an important cost squeeze. Expect many businesses to suffer a vanished profit margin in the next few months. The process has already begun, in fact well along. Across the oceans, the untold story on the geopolitical front is not the billboard message given by the obedient US press. The Arab world does not simply demonstrate on the city streets as a result of higher cost for hummus, bread, and cooking oil. The Arab people sense the demise of the Anglo Empire. They sense the end of the US & UK support for their tyrants and royals, who have enriched themselves and their families. The Arab people sense a weakening of their leaders and their system of government, often harsh and repressive. The food prices only serve as a lightning rod to gather the people together. What is happening is the defacto Petro-Dollar Standard is crumbing ever so slowly. Many eyes are fixed on Saudi Arabia, where the royals are increasingly fearful. All hell breaks loose if the Saudis lose their grip of the Petro-Dollar device, by which the OPEC crude oil is sold in USDollar terms. THE PETRO-DOLLAR IS THE LACE ON THE CORSET THAT SUPPORTS THE THE ANGLO-AMERICAN FRONTISPIECE. Remove the Petro-Dollar practice in global crude oil sales, and the United States becomes isolated, its currency rejected, since it cannot stand on its own. Observe the US trade gap and escalating federal deficit.

Full Article

Post from: Gold News from Gold Editor

QE2: The Road To A Gold Standard

Love To Push Gold Up $200, Fear Needed For Anything Higher

Author: Geoff Candy
Posted: February 16, 2011

JOHANNESBURG - Strong jewellery demand from Asia is likely to push gold up $200 in a normal fashion but, for significantly higher move, more QE would have to take place.

While fear did much of the ruling during the course of January, it is the love trade that investors should be paying attention to.

This is the view of Frank Holmes, CEO at US Global Investors, speaking on Mineweb.com's Gold Weeklyt podcast, Holmes explained that despite a 30% rise in the gold price during 2010, jewellery demand (what he calls the love trade) was remarkably strong in both India and China.

"What's really important," he says, is "that in China, 20 million migrant workers saw their income rise 24% - you didn't see that happen in Europe or in America.

That's the big issue in America, there is still no job creation for the typical construction migrant worker.  But in China, they saw a 24% increase - and what do they do for the ones they love? They buy gold."

He adds, "Now there's a bank that allows you to buy a gram of gold every week on a silver dollar cost average programme, and they have 20 million customers.  Just start putting that on the scale over time - it's important not to dismiss the love trade and put that in context for the total demand side equation for gold."

Asked about concerns around recent monetary policy in China and, the potential that recent interest rate hikes could see a decline in interest in gold, Holmes said that he did not believe this would be a significant issue.

"Money supply is still growing rapidly in China.  It's off its 30% year-on-year growth rates but it's still very healthy and what people fail to recognise is that China has built more underground subways in 10 years than London has built in 150 years.  They're now building subways throughout China... underground means fast transportation of people.

Car sales are still massively robust and those cars are paid with cash - there's not big lending.  Sixty percent of housing is cash - not like in Europe, not like in the US where its massively leveraged and that's where the problems came from - so things are pretty good on a macro scale"

Full Article

Post from: Gold News from Gold Editor

Love To Push Gold Up $200, Fear Needed For Anything Higher

Update: Gold Price Helps African Barrick Exceed Profit Forecasts

Author: Julie Crust
Posted: February 16, 2011

LONDON - Despite a fall in production to below target, the strong gold price helped African Barrick Gold's net profits exceed analysts' forecasts.

African Barrick Gold Plc (ABGL.L) reported higher-than-expected earnings in its first full-year results since listing, as strong gold prices outweighed a decline in production and lifted its shares.

Net profit surged to $218.1 million, exceeding the $204.8 million consensus forecast from Thomson Reuters I/B/E/S, against $58.6 million a year earlier.

The gold miner, which floated in London last March, expects to produce between 700,000 and 760,000 ounces of gold in 2011.

"We have kept a reasonable range to take into account some risks ... but there are plenty of opportunities to get some growth," Chief Executive Greg Hawkins told Reuters on Wednesday.

The group said in January it had produced 700,934 ounces in 2010, missing its downwardly revised target, although output issues at the Buzwagi mine had been resolved.

The shares were up 3.0 percent by 0941 GMT, making them the top performers in the FTSE 100 index at that time.

"These results reinforce our view that African Barrick represents a clear valuation anomaly in the gold space," said Dominic O'Kane, analyst at Liberum Capital, adding that the miner's organic growth comes with lower execution risk than most of its London-listed peers.

Full Article

Post from: Gold News from Gold Editor

Update: Gold Price Helps African Barrick Exceed Profit Forecasts

An Exclusive Interview with Keith Neumeyer, CEO of First Majestic Silver Corporation

Author: Silver-Prices
Posted: February 8, 2011

Today we have an exclusive interview with Keith Neumeyer, President and CEO of First Majestic Silver Corp. (FR:TSX || AG:NYSE) so we kick off with the interview which is then followed by an overview of the company, including accomplishments to date, planned milestones and our conclusion.

Questions and Answers for the First Majestic Silver Corp.

Q. Will growth for the company be purely organic or are you on the acquisitions trail?

A. Our growth to date is a result of our aggressive approach to acquisitions. So far, we’ve purchased two publicly traded companies that we considered distressed at the time of acquisition and we’ve purchased three other assets from Mexican families. Three of our current assets are now mines and the other two are expected to be mines in the coming years. As things stand, with our current asset base, we intend to produce 16 million ounces by 2014. Our target however, is to become a 20 million ounce producer. In order to achieve this longer term objective, either a large discovery at one of our existing mines is required or we continue to acquire assets. So yes, we are open to the possibility of further acquisitions, but it has to make sense.

Q. Fronteer has just been taken out by Newmont Mining an example of the larger companies needing to replenish their reserves; do you see First Majestic as a takeover target?

A. It is a surprise to us that we have not been taken out already, after all we are the fastest growing silver producer and the purest silver mining company in the world. However, we can’t plan for such things; our focus remains to continue to build the business as big as possible.

Q. Are there any plans to pay a dividend to your investors?

A. The subject of dividends is under discussion and we hope to pay a dividend by the first quarter 2012.

Q. Stocks had leverage against the physical metal for first part of this bull market however the last few years has seen that leverage dissipate. Do you see stocks out performing silver going forward?

A. The stock price of First Majestic has increased 300% recently so you can see that we have maintained leverage against silver. However, there are many stocks that have not been so fortunate. In previous bull markets there were only stocks that an investor could turn to as an alternative to buying physical silver, which is not the case today as we now have various alternatives such as metal ETF’s. I expect this phenomenon to begin to shift back to stocks as more equity ETF’s are launched. We’ve seen some very large, high profile Mining Share ETF’s launched recently and I expect this will continue. I expect this process to create more equilibrium in the financial markets resulting in multiples of good quality mining shares going back to historic levels.

Full Article

Post from: Gold News from Gold Editor

An Exclusive Interview with Keith Neumeyer, CEO of First Majestic Silver Corporation

Gold To Average $1450 In 2011, $1600 In 2012 - Murenbeeld

Author: Geoff Candy
Posted: February 03, 2011

GRONINGEN - While there are some short term clouds on the horizon for gold, including a better outlook for equities, over the longer term, gold is still expected to do well.

The most important variable affecting the gold price is what monetary authorities are doing and, judging by the current macro economic situation, gold still looks good over the long term.

This is the view of Dundee Wealth Economics chief economist, Martin Murenbeeld. Speaking on Mineweb.com's Gold Weekly podcast, Murenbeeld said his base case forecast sees gold averaging around $1,450in 2011 and getting close to $1,600 in 2012.

According to Murenbeeld, "gold is highly correlated with global liquidity and as central banks continue to print money so, the effect will be a rise in gold prices.

Asked about the possibility of further monetary easing in the US, which, with QE and QE has pumped massive amounts of money into the global economy, Murenbeeld says there is probably about a 30% to 50% chance of that happening. And, he adds, were it to happen it would be very good for the gold price.

But, while the US is keeping interest rates as low as they possibly can to try to improve growth, emerging markets like China and India are looking for ways to slow their economies down, a fact that has some analysts concerned about just how much further gold can grow if emerging market demand decreases.

Murenbeeld, however, says, that while emerging markets are trying to slow their economies down they have yet to get ahead of the curve.

"They [emerging markets] are not tightening nearly enough to actually get ahead of the pressures that are occurring in those countries - the monetary pressures, inflation pressures." And, this is a situation he does not see changing because, although these countries are concerned about inflation, they are also worried about job creation.

Full Article

Post from: Gold News from Gold Editor

Gold To Average $1450 In 2011, $1600 In 2012 – Murenbeeld

Historical Analyses Suggest S&P 500 To Top Out at 1400 – And Then Topple to 400!

Author: Lorimer Wilson
Posted: January 31, 2011

Based on a unique comparison with the Nikkei 225 and prior mega-bears it seems evident that the S&P 500 should continue its rise to 1400 or so in the first half of 2011 before it collapses completely down to an unbelievably low of 400. Before you totally reject this possibility please read the entire article.

Bank of America Merrill Lynch Asia’s Comparison With Nikkei 225

Market strategists Sadiq Currimbhoy, Arik Reiss, and Jacky Tang of Bank of America Merrill Lynch Asia identified a pattern back in 2009 that supports the likelihood of additional gains in the S&P 500 regardless of the extent of the extent of the economic recovery in the U.S.. The analysts plotted the S&P 500 in DXY terms against the Nikkei by rebasing the S&P 500 to the same peak as the Nikkei but lagged by 117 months (i.e. 9.75 years) and uncovered an uncanny relationship as shown in the chart here.
 
Their analysis suggested that the S&P peak would be achieved by December 10th of last year but that obviously was not the case. Failing to achieve such a precise projection can be excused so the realization of such a target in the first half of 2011 should be deemed acceptable.

Doug Short’s Comparison With Previous Mega-Bears

Doug Short provides an on-going inflation-adjusted overlay analysis (see here and here) at dshort.com of the Dow crash of 1929 and the Nikkei 225 crash from its 1989 bubble high against the current S&P 500 as seen below. It clearly suggests, even without the 9.75 year time-lag as put forth by the Merrill Lynch analysts above, that the S&P 500 is due for a significant correction.

Full Article & Charts

Post from: Gold News from Gold Editor

Historical Analyses Suggest S&P 500 To Top Out at 1400 – And Then Topple to 400!

Detour Lake Increases Gold Reserves 31%, Resources 16%

Author: Dorothy Kosich
Posted: February 01, 2011

RENO, NV - With nearly a 15-million-ounce gold reserve base at its Detour Lake project, Detour Gold officials are now considering increasing annual production.

Detour Gold corporation announced a 31% increase in reserves and a 16% increase in mineral resources at its Detour Lake gold project in northeastern Ontario.

"With 14.9 million ounces [of proven and probable reserves], the Detour Lake deposit remains Canada's largest pure gold play and ranks fourth among the top ten largest gold reserves in North America," said CEO Gerald Panneton.

Detour also reported 20.5 million ounces in global measured and indicated mineral resources. Mine life has been increased from 16 years to 21 years with mill throughput ranging from 55,000 to 61,000 tpd.

Infrastructure construction at Detour Lake has already begun. Production at Detour Lake is expected to commence in early 2013. Panneton said Detour Lake "will be among the largest gold operations in North America."

Detour is initiating further economic studies to assess the potential for increasing the annual production profile once the project has reached production in early 2013.

Officials of the company have scheduled a conference call Tuesday morning to discuss the mineral resource and reserve with analysts.

Full Article

Post from: Gold News from Gold Editor

Detour Lake Increases Gold Reserves 31%, Resources 16%