Good news on the gold mining production side
November 9, 2006
More good news on the gold mining production side, SA just reported monthly numbers and production is down 5% this September compared to last year. The gold price could go up several hundred more dollars and South Africa couldn't ramp up production to meet renewed demand if they tried. I'm going to keep banging on this drum about how the easy mines have been found and the cheap gold has been mined out already. There are no cheap and easy mine plays left out there! This is yet another long term change for our market that will continue to push prices higher in the long run.
We put out a note two days ago about how a Democrat win would destabilize the dollar in the near term and be gold price positive. Looks like other analysts are agreeing with us.
Also, RBC (Royal Bank of Canada) has released predictions on where they see the gold price heading.
BUSINESS NEWS
Gold production falls again
Thu, 09 Nov 2006
South Africa's gold production fell 5.1 percent but and non-gold mineral production inched up by 0.5 percent year-on-year in September, Statistics South Africa said on Thursday.
Gold Rises on Speculation Democrat Poll Victory May Hurt Dollar
By Feiwen Rong and Debarati Roy
Nov. 9 (Bloomberg) -- Gold rose in Asia on speculation the Democrats takeover of Capitol Hill may hurt the dollar, boosting the precious metal's appeal as an alternative investment.
Democrats won control of the Senate and the House of Representatives in U.S. midterm elections held on Nov. 7. Gold, sold in dollars, generally moves in the opposite direction of the U.S. currency.
A divided U.S. government, with a Republican president and a Democrat-controlled Congress, may "destabilize the dollar," Stephen Orr, chief executive officer of Oceana Gold Ltd., said in an interview today. "The gold price will be strong for the next two years."
Gold for immediate delivery gained as much as $3.10, or 0.5 percent, to $618.90 an ounce. It traded at $618.10 an ounce at 11:32 a.m. Mumbai time.
"Gold is still trading on the back of dollar in the short term," said Ron Cameron, resource analyst at Ord Minnett Ltd. in Sydney.
Gold predicted to break record high
By Chris Flood, www.FT.com
Published: November 8 2006 19:08 | Last updated: November 8 2006 19:08
Gold prices and gold equities are likely to enjoy another three to five years of solid growth, according to RBC Capital Markets, which hosts its annual gold mining conference in London today.
Stephen Walker, director of global mining research at RBC, will tell the conference that the summer correction in gold prices has run its course. Bullion will test this May’s 26-year high of $725 a troy ounce early next year, during the period of higher jewellery demand from India, he will say.
In 2007, investor appetite for gold and other base metals is expected to be lifted by rising global liquidity as the Federal Reserve cuts interest rates in response to slowing US economic growth.
RBC said gold could challenge its all-time peak of $850 a ounce, reached in 1980, helped by bullion’s growing importance as an alternative investment and rising risk aversion among investors.
The expansion of the middle classes in China, India and the Middle East is having a positive impact on demand, ending an extended period of de-stocking by jewellery manufacturers.
RBC forecasts that jewellery demand will rise 20 per cent next year to 2,700 tonnes, and will be the main driver behind a 10.6 per cent increase in total demand to 3,924 tonnes.
Total supply is forecast to climb by 9.2 per cent to 3,980 tonnes, with mine production expected to rise by 6.4 per cent to 2,655 tonnes. Mine output is expected to peak at 2,898 tonnes in 2008, with a steady production decline projected beyond 2009.
The world’s five major gold exchange traded funds have seen growth in their bullion holdings stagnate since breaching the 17m ounces level in mid-summer. But RBC said fund redemptions had been minimal, indicating that demand remained firm.
“Gold remains an attractive alternative asset for investors seeking alpha [above market returns] and for central banks wanting to diversify their reserve assets,” said Mr Walker.
Foreign exchange reserves are growing rapidly in Asia, the Middle East and China.
RBC said gold’s outperformance since 2000 of the main alternative foreign exchange assets (the euro, yen and sterling) would encourage these central banks to raise their gold holdings from the current average level of 3 per cent.
RBC also said gold equities offered good risk-to-reward ratios at current levels as they were pricing in a long-term average bullion price of $570 to $580 a troy ounce.
The Financial Times Limited 2006
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