Precious metals in focus -- Gold falls for the first day in four

Gold and dollar denominated gold assets have been on the rise recently. People have long looked to the metal as the classic safe heaven investment in bad times, and now is no different. Check out Kitco's 1 year chart. As the financial world came crumbling down back in Oct-Nov 2008, Gold started to climb back up towards its high of $1011.25/ ounce.


A nice four day rally in gold came to a close today. Falling from the highest level in about seven months as investors decided to take some profits and readjust their investments into stocks and oil.

It will be interesting to see if gold can get back above $1000/ ounce. A lot of investors seem to think it will. I've been trying to keep up to date with gold (see posts on Jan 26 and Feb 2) and I think it will. I don't feel it will move above $1300 as the readers of Mineweb believe, but I definitely see it retesting the $980-1050 in the next few months.

Click here for today's Market Watch report on Gold

The end of China's boom years -- perspective from Reuters Melbourne, Australia office

Ending China boom to boost BHP, Rio profit but big writedowns expected

Author: Sonali Paul
Tuesday , 03 Feb 2009

MELBOURNE (Reuters) -

Global miners BHP Billiton and Rio Tinto should post solid six-month earnings growth, but results will feature hefty writedowns and mark the end of a China-powered boom.

Brokers have cut their forecasts for the world's biggest and third-biggest diversified miners following their production reports, and investors are now focused on how cost reductions and spot sales of iron ore might have helped them shore up profits.

Rising costs had been a major problem over the past two years, in face of labor shortages and soaring energy and steel prices, but those have now eased...

Click here to access the full article from Reuters via Mineweb

News line: commodities in focus

China looks to African metals and minerals for the long term -- Mineweb
Chinese investment is replacing that from the West in many key sectors, especially with regard to metals. Minerals and energy and Chinese businesses are prepared to take the long term view.

Sharp decrease in copper, moly prices result in 4Q08 loss for Southern Copper -- Mineweb
A sharp decline in metals prices and a tough economy has prompted Arizona's Southern Copper Corporation to put all capital expenditures on hold for this year

January gold jewellery sales off 70% in Abu Dhabi -- Mineweb
Sales of gold jewelery in Abu Dhabi have fallen some 70 percent in January compared with a year ago as high prices, coupled with the global economic situation, have combined to keep buyers away.

Copper falls to one-week low on signs global slump is deepening -- Bloomberg
Feb. 2 (Bloomberg) -- Copper fell to the lowest price in more than a week on signs the global economic slump is deepening, reviving concern that metal demand will decline further.

Corn, Soybeans decline as deepening recession cuts global use -- Bloomberg
Feb. 2 (Bloomberg) -- Corn and soybeans fell to the lowest prices in more than two weeks on speculation that the deepening global recession will reduce demand for U.S. crops used in making food, animal feed and alternative fuel.

Peru mining unions call for nationwide strike -- Mining Journal Online
Peru's largest federation of mining unions said over the weekend it has agreed to call a nationwide strike starting on March 15, to protest mounting job cuts and to pressure Congress to lift caps on profit sharing.

Brazil's 8th Oil auction suspended until petroleum laws change -- Dow Jones New Wires via Rigzone
No decision will be made on restarting Brazil's suspended eighth-round oil and natural gas concession auction until likely changes are made to the country's petroleum laws, Brazil's National Energy Policy Board said Monday.

Horizon Oil, partners to deliver China oil project Development Plan in May - Dow Jones New Wires via Rigzone
Australia's Horizon Oil Ltd. said Monday that partners in an oil project in the South China Sea will submit a revised development plan to China National Offshore Oil Corp. in May.

Oilex joins ranks of international oil producers with Cambay start-up -- Oilex Ltd via Rigzone
Australian-based oil & gas group Oilex has formally marked its transition to cash flow and production by delivering a strong December Quarter performance by starting up oil production from its Cambay Oil Field in October in India with 16,800 barrels of oil produced during the December 2008 quarter from two wells.

Japan discovers new source of mineral wealth -- Reuters via Mineweb
Resource-poor Japan just discovered a new source of mineral wealth -- sewage. The country's sewage yields more gold than top mines.

Commodities in focus – Gold prices rise above $900/oz

The spot price of Gold rose above $900/oz on Monday for the first time since October 10, 2008.

Gold ETF's also benefited. New York's SPDR Gold Trust GLD, the world's largest gold EFT allows investors to invest in physical gold like they do normal stocks. This is accomplished through issuing securities backed by physical gold stocks. SPDR said its security backed gold holdings rose 1.6% percent to an all-time high of 823.57 tonnes during Friday trading.

The ETF isn't doing all that bad either. Year-to-date it is up 4.92%. Take a look at the ETF's performance over the year year. The chart truly does justice to the age old concept of investing in gold as a safe heaven. With interest rates so low, investing in Gold, even at yields of 4.92% will become even more enticing as banking woes persist in developed world.




The Royal Bank of Scotland's head of commodity strategy, Nick Moore told Reuters factors including falling interest rates, the re-inflation of Western economies and the prospect of lower supply both from mines and via central bank sales were supporting gold.

“In times of economic crisis, falling equity markets and mounting aversion to risk, physical gold is preferred as the safest form of investment,” Commerzbank analyst Eugene Weignberg said.

Below I have included two links. The first link directs you to a informative analysis and perspective on the gold market by Lawrence Williams who, along with his “expert panel” are forecasting gold prices to reach a high of $1074/ oz.

The second is a article about how gold miner Red Back has managed to successfully raise capital on the Toronto Stock Exchange, further indication of the support for gold.

Forecasting the gold price – expert panel predicts $1074 high, Mineweb readers $1305 – Mineweb

Gold miners still able to raise capital from the markets – Mineweb