Gold in line for a run

Gold set for 'decisive move' 
March 26, 2009

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

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

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

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

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

Several factors, he said, prompted such a decision.

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

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

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

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

 

Massive Gold Sales!

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

 

Limitation of gold sales by central Banks!

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

 

The halting of Central Bank Gold Sales!

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

 

Central Bank buying of gold for reserves!

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

 

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

 

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

 

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

 

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

 

 

Major changes taking place in central bank policies on gold!

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

 

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

 

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

 

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

 

Institutional demand will follow!

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

 

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

 

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

 

Click here for the original article

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

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

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

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

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

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

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

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

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

By : Franklin Sanders

www.the-moneychanger.com

Shining golden week

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

Felicity Duncan
19 March 2009 17:15 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Boardroom Talk podcast: All about gold

Interview with Moneyweb and Alex Hogg: All about gold

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

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

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

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

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

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

MONEYWEB: Like that is serious asset depreciation.

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

MONEYWEB: Great big ones, ja.

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

MONEYWEB: Good bet!

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

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

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

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

ALEC HOGG: Neither should we!

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

ALEC HOGG: It was R10 two years ago.

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

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

MONEYWEB: Yes, they followed it, I remember.

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

MONEYWEB: Value destruction...

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

MONEYWEB: No, it's not big enough.

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

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

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

MONEYWEB: It just shows...

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

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

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

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

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

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

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

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

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

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

Geniuses with gold

Shining golden week

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

Felicity Duncan
19 March 2009 17:15

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Author: Dorothy Kosich

RENO, NV - 

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

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

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

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

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

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

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

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

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

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

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

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

Author: Dorothy Kosich

RENO, NV - 

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

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

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

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

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

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

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

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

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

posted by jb

2009 Wealth Preservation Guide

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

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

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

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

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

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

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

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

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

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

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

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

Ask ga or jb now!

4 bad bear markets.

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

Second Financial crash coming

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

How to go for gold

Mar 03 2009 15:28Helena Wasserman

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

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

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

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

There are other reasons why gold is doing well.

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

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

Shelter against weak rand

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

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

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

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

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

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

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

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

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

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

did you know 3.0 WOW fact about the internet

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

Gold is one merry little corner of the market

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

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

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

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

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

There are other reasons why gold is doing well.

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

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

Shelter against weak rand

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

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

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

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

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

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

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

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

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

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

There are a number of other ways to invest in gold.

Shares and unit trusts

As SA is the third-biggest gold producer in the world, there is no shortage of gold companies listed on the local stock exchange.

Picking the right gold company will require a lot of homework. Buying shares will also usually mean paying a brokerage fee as well as monthly administration costs.

A more cost-effective option, which would also avoid the pressure of trying to pick the best share, is a unit trust that invests in gold companies. A unit trust pools investors' money and buys a number of different shares on your behalf. Some local unit trusts charge an annual fee of more than 1% of your investment.

Gold-backed exchange traded funds

An exchange-traded fund (ETF) invested in gold is another cheaper option.

An ETF is like a unit trust; it pools investors' money to invest in an asset. But it is listed and trades like a share on the stock exchange.

Launched only a couple of years ago, gold ETFs have been immensely popular in recent times. An estimated $40bn has been invested in this instrument.

Gold ETFs allow you to make a physical investment in the metal without ever having to make room for it in your safe. The most well-known gold ETF in SA is NewGold, which has been developed by Absa. Each NewGold "share" represents 1/100th of one fine troy ounce of gold. You can buy NewGold like other JSE share.

Another option is to buy through the NewGold investment scheme, which allows you to invest a minimum once-off amount of R1 000 or a minimum monthly investment of R300. The cost involved is 0.8% of the annual value of your investment.

Krugerrands and other gold coins

More than 55 million Krugerrands have been sold worldwide in the past 40 years.

There are two types of Krugerrands. The SA Mint sells proof Krugerrands, which are collectors' items produced in limited quantities.

More common among investors are bullion Krugerrands, manufactured by the SA Rand Refinery, which is owned by the big gold mines. The most commonly traded Krugerrand is made of 22 carat gold and weighs 31.3g.

The Krugerrand price is directly linked to the gold price. Krugerrands have recently soared through the R10 000 mark (from R27 in 1967) and sales have reached R100m a month.

You can buy Krugerrands from a number of gold coin agents like the SA Gold Coin Exchange, banks or brokers. They are usually quite easy to sell back to the institution you bought them from. The selling price will be a bit lower - for example 6.5% in some cases - than the current quoted price of the coins.

There are also a number of other coins, like Nelson Mandela gold medallions, on sale.

The disadvantage of investing in gold coins is that you have to arrange for safe storage. Also, you can only make money from gold when you sell it.

If you are unsure about your investment needs, contact an accredited financial adviser for assistance.

Via miningmx.com

posted by JB

No Paper Currency Safe

Gold bull market just beginning - Sascha Opel

Sascha Opel, former chief editor of the first newsletter about the German "Neuer Markt" (New Market) gives us his current thoughts on the precious metals market. Interview with The Gold Report.

Author: The Gold Report
Posted: Saturday , 28 Feb 2009

Vancouver, BC, Canada -

The Gold Report: Sascha, we last interviewed you in May 2008. At that time you felt that we were beginning a period of re-establishing gold as currency. Would you review your thinking on this viewpoint for our readers?

Sascha Opel: In our last interview, I said, "Long-lasting gold bull markets take place when gold's role as money is being re-established. In my opinion, we are just beginning this period of re-establishment. Those calling for the end of the precious metals bull market any time soon are sadly mistaken." Today, although nine months have passed, we are still in the beginning of that period. Look at the gold price in all currencies around the world - not only in U.S. dollars. Look at the price in Euro, Canadian dollars, South African rand, Australian dollars, British pound, Norwegian krone, Russian rubles, Swiss francs etc. Gold is now starting to establish new all-time highs in all those currencies. The masses will slowly realize that no paper currency is safe in the near future.

TGR: The world has gone thru a major deleveraging and financial turmoil since our last conversation. How have recent developments changed your view on gold as a currency or as an investment?

SO: I have not changed my view. It is still the place to be as an investor.

TGR: Do investors view gold differently in Europe than North America?

SO: I can only speak for retail investors in the German-speaking countries like Austria, Germany or Switzerland, where we have most of our clients. It was a year or 18 months ago when the first few people from the Street started talking about gold. The last precious metal show for private investors in November in Munich was very interesting: At the booth for Germany's biggest gold- and silver-coin dealer, there were five lines of people buying physical gold. I saw thousands of Euros being "changed" into real money-gold and silver.

TGR: If you see gold as a currency, what advantage has gold versus other currencies?

SO: For me, what's most important is that gold has no risk of failure, like corporate- or government loans/bonds. These have to pay interest; someone takes the risk to lend them the money. If you own gold you are completely independent from any government or any other institution in the world. You don't owe anyone anything. Because of this advantage you get no interest. But the aim of the international banking cartel and politics in general is to make you dependent. That is probably the main reason why the establishment fights against gold. In their opinion, everybody should put his money into corporate- or government bonds. Otherwise they denigrate you as "anti-American" or "anti-European."

TGR: You believed gold would remain around $800 for the short term. Some newsletter writers are calling for gold to rise above $1,500 by year-end. What is your view on the price of gold for 2009, both short term (the next quarter) and long term (through the end of the year)?

SO: In May 2008, when gold was around US$900, I thought it would go down to US$800 for several reasons I mentioned at that time. We went down to US$720 until autumn 2008. Now we are back at US$900 and will perhaps go up to US$1,000 or US$1,050 at the end of March. So I was very lucky with my prediction. But - as I told you in the answer to your first question - it is very important that gold started to climb in nearly all currencies around the world. In U.S. dollars we will make new highs this year, perhaps by the end of 2009.

TGR: What factors should investors look for as a signal for gold to "take off?" What factors should investors be looking for that gold has peaked? Should we expect gold to peak in 2009?

SO: I am absolutely convinced that we will not peak in 2009! I believe that the price of gold is manipulated. I believe that we will go over US$1,200 by the end of 2009, but I am not sure if we can defend that level. The establishment surely will do something so that the price will not go too high in too short a time. In looking back at the rise of gold from $35 to $850 during the ‘70s, the former Fed Chairman Paul Volcker said, "It was probably a mistake to allow gold to rise so high." And Volcker now is on the Obama-Team! We will not have a peak like 1980, but gold will rise constantly. Buying on dips like in autumn 2008 is the best strategy, in my opinion. Perhaps sometime later (in a few years, but not ‘09) gold will start to move US$50 or US$100 for some days in a row to US$2,500 or more. Then I would sell or hedge some "virtual" gold over the markets (futures, ETFs, short-certificates etc.), but I would not sell the physical stuff!

TGR: In our last discussion, you suggested investors own physical gold, making it at least 5% of their portfolio. Do you still feel it is important to own physical gold given the premiums required to acquire it at this time? Wouldn't owning a gold EFT do the same thing?

SO: I do not trust all these ETFs and other constructions - even if they tell the investors that the gold is held in this or that, or saved in a bank. If you want to speculate for a few months, then ETFs are fine, but not for me. I own gold for other reasons than speculation.

TGR: In May, you felt that junior producers and exploration companies had the potential for the largest returns. Do you still feel that way given that so many juniors/explorers are facing financing problems? Some of our recent interviewees have steered investors to major producers. Their logic is, with prices so beaten down on the majors, why take the risk on juniors or exploration? What is your feeling about this investment strategy? What specific investment opportunities can you recommend to our readers?

SO: I am still convinced that juniors/explorers have the potential for bigger returns. Look at stocks like Osisko Mining Corp. (TSX:OSK), which we bought for our model portfolio in September for C$1.80. Now it's trading at C$4.50. The same with good explorers like Nevsun Resources Ltd. (TSX:NSU) (NYSE.A:NSU), Premier Gold Mines Ltd. (TSX:PG) or Bravo Venture Group (TSX.V:BVG), whose Homestake Ridge Project in B.C. is one of the best discovery stories in North America!

I like well-financed explorers or "special situations" like potential takeovers - one example is Forsys Metals Corp. (TSX:FSY), a uranium explorer which will be bought for C$7 per share in cash by the end of February and is still trading at 6,25 CAD. Corriente Resources Inc. (TSX:CTQ) (NYSE.A:ETQ) is in talks about the purchase of the company (see news release, 12/16/08). We recommended our readers to buy it at around C$4, like we did in Forsys at C$3.50, because we are relatively sure that Corriente is worth much more in a take-over than the current C$4.50. The exclusive talks about the sale will end on 31st march.

I also like special stories like Commerce Resources Corp. (TSX.V:CCE) (PK SHEETS:CMRZF), a tantalum and niobium exploration company. They have substantial cash in the bank and can play a very important role in the tantalum market in the future. I also still like Miranda Gold Corp. (TSX.V:MAD); they are well financed and have a great management team. For the big ones I like Goldcorp (TSX:G) (NYSE:GG), Royal Gold Inc. (Nasdaq:RGLD) or Franco Nevada Corp. (FNV.TO).

Sascha Opel, former chief editor of the first newsletter about the German "Neuer Markt" (New Market), Sascha Opel brings a distinctive outlook to the precious metals market. He was also the co-chief editor of "Der Aktionaer" (The Shareholder), one of the biggest German Stockmarket Magazines and advisor to an investment fund that achieved an outstanding return of 700% in three years. Today his company, Orsus Consult GmbH, publishes one of the most popular German newsletters on commodities and junior mining and exploration. (www.rohstoffraketen.de)

Published by kind permission of The Gold Report - www.theaureport.com

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