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  1. #31
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    Default Gold output sinks to 18-year low

    Matt Chambers | September 01, 2008


    GOLD output in Australia sank to an 18-year low last financial year -- and not even a better fourth quarter could avert the poor result.
    What the high metal price gave to producers, soaring energy costs took away.
    The drop in output comes as a dramatic increase in costs in the past quarter threatens production at the nation's second-biggest mine, the Kalgoorlie Super Pit.
    Added to that was the gold price starting the current quarter with its biggest nominal monthly drop in 25 years.
    Australia produced 232 tonnes, or 7.46 million ounces, in the 12 months to June 30, down 7 per cent from the previous year, according to industry analyst Surbiton Associates.
    Production in the June quarter remained in the doldrums -- up just 2 tonnes (3 per cent) from the 19-year low reached in the March quarter, to 55 tonnes, or 1.77 million ounces.
    That is still 13 per cent lower than last year's June quarter.
    Surbiton's Sandra Close said the Australian gold industry had suffered a 20 per cent increase in costs last quarter as oil and West Australian gas prices surged, marking a big acceleration in costs, which had already been moving higher for some time.
    "Higher energy costs have contributed to the cost increase," Dr Close said. "You can't draw too many conclusions from one quarter's figures, but there is cause for concern."
    That concern was voiced by Super Pit part-owner Newmont last month when it said it was reviewing operations at the iconic open pit, which mines the outback town's old Golden Mile.
    Despite higher costs and gold prices dropping $US89 an ounce in August to $US835, production could have bottomed as Newmont's huge $2.4 billion Boddington mine in the south of Western Australia prepares to fire up. The mine is due for first production late this calendar year or early 2009.


    http://www.theaustralian.news.com.au...07-643,00.html
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  2. #32
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    Default There's gold in Japan's landfills

    September 8, 2008

    Japan's enormous high-tech rubbish dumps have become a natural resource for precious metals including gold, silver and indium

    Leo Lewis, Asia Business Correspondent

    Japan's high-tech rubbish dumps - the vast “urban mines” of landfill outside every big city - have grown so huge that the country now ranks among the biggest natural resource nations in the world.
    Tens of millions of defunct mobile phones, discarded televisions, PCs and MP3 players conceal a “virtual lode” of hundreds of tonnes of precious metals. An even greater seam may be lurking forgotten - but not yet discarded - in Japan's attics and garages.
    According to new calculations by the National Institute for Materials Science (NIMS) in Tsukuba, Japan has unwittingly accumulated three times as much gold, silver and indium than the entire world uses or buys in a year. In the case of platinum, Japan's urban mines may contain six times annual global consumption.
    The institute's leading urban mine expert said that if these electronics-rich treasure troves were properly tapped, supposedly resource-poor Japan would suddenly join the likes of Australia, Canada and Brazil in the top five producers of some elements.
    The mines have been accumulated because of the extraordinarily high speed at which Japanese consumers replace gadgets. Of these, the 20million mobile phones replaced by the Japanese each year are especially attractive “ores” for urban miners. Only 13 per cent, about 550 tonnes a year, are recycled, with the remainder thrown away or stored in drawers and cupboards.
    The circuit boards of each phone contain a smorgasboard of precious metals: in minute quantities there are silver, lead, zinc, copper, tin, gold, palladium and titanium.
    Although other developed countries - particularly the United States and Britain - are thought to have very substantial untapped urban mines of their own, Japan leads the world as an assessor of what its dumps and attics contain in the way of metal resources. Koumei Harada, the director of the institute's strategic use of elements division, has pioneered the calculation of Japan's potential urban mine resources.
    By comparing the quantities of metals imported over the past 60 years with what has left Japan inside its electronics, cars and other exported goods, Professor Harada arrived at basic reserves. From this were subtracted theoretical quantities of metal that remain in use.
    According to the professor, decades at the forefront of the global consumer electronics industry had left Japan with a tantalising legacy: it has invisibly accumulated stocks of some metals to rival proven worldwide reserves in the ground, but it knows where only about half of it is. Worse, that half is difficult to process.
    Now the Ministry of Economy, Trade and Industry is pushing for nationwide collections of old electronics from homes and for ideas about how best to excavate the landfill. Companies such as Asahi Pretec already run urban mines at various plants in Japan. One of its plants retrieved about 15 tonnes of gold last year from a variety of industrial waste.
    Professor Harada is part of a team working on establishing “artificial ore” factories at Japan's waste dumps and landfill sites. By his estimates, a tonne of ore from a real goldmine might produce only five grams of actual gold, while a tonne of artificial ore made from reduced mobile phones would yield about 150 grams.



    http://business.timesonline.co.uk/to...cle4698917.ece
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  3. #33
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    Default

    Martin Armstrong told me a couple of months ago that he could see gold moving down to around the 730 area before resuming its move up to 1500 I'm going to start to accumulate now and load up at 730

  4. #34
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    Hi Craig

    Good to hear Martin is still following his passion.

    The weekly chart is showing both a Gartley and a BF on old resistance, so
    the turnaround should not be far away.

    How do you trade your gold there - physical or what?

    rgds - arco
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    Hey arco,
    I use gold etfs in particular dgp is double long and dzz is double short

  6. #36
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    Default Gold, silver up over 2 pct on US financial worries

    Thanks Craig


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    Sun Sep 14, 2008 8:51pm EDT


    SINGAPORE, Sept 15 (Reuters) - Gold and silver gained more
    than 2 percent on Monday buoyed growing concerns about
    brokerage firm Lehman Brothers and the stability of U.S.
    financial markets.

    Gold <XAU=> rose 2.3 percent to $780.85 an ounce at 0043
    GMT from Friday's nominal close in New York. Silver <XAG=>
    gained 2.6 percent to $11.11.
    News that talks to rescue Lehman Brothers Holdings
    faltered, fueled concerns about the stability of the U.S.
    financial system and sparking talk of a possible rate cut
    there, boosting gold's safe-haven appeal.
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  7. #37
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    Default When the Gold's all Gone, the Market will go Nuts!

    The Gold Report: In our last interview you said gold would unquestionably detach from the dollar. Ten months later, gold is still tethered.

    John Embry: The downturn in both gold and silver was literally preposterous in magnitude relative to the rise in the dollar. This was a violent intervention by the paper players. Three U.S. banks on COMEX shorted something like 8,000 contracts in a very short time. That's more ounces than all the world's miners produce in a month.

    TGR: Can they keep doing that forever?

    JE: No, they can't. This is similar to what happens when you compress a spring. You hold it down but when it comes up, it springs back hard. We'll see a violent reaction in the gold price soon.

    TGR: Will we have to wait six months or six weeks?

    JE: If gold hasn't moved up by the end of this year, I would be very surprised. People don't realize how distressed the gold mining industry is. Even at $1,000, miners weren't doing very well. At $800, the entire industry is in crisis. Costs have risen so much, nobody's making any real money. In fact, some mines are starting to close.

    TGR: Could mines reopen when gold reaches $850 or $900?

    JE: Gold would have to be at least $1200 before mines reopen.

    TGR: Is now the time for the majors to start acquiring?

    JE: I don't understand why the majors aren't acquiring because I've never seen anything like the discrepancy in value between the big cap stocks and the small stuff. Many interesting smaller companies are trading for a song; whereas, Agnico-Eagle and Goldcorp and Kinross are aggressively valued.

    TGR: Some of the juniors have lost 80%.

    JE: If you had told me we'd see this kind of carnage in the juniors while the gold was still north of $800, I would have said impossible. One of the reasons is that investors are giving up and gold funds, ours included, are under redemption pressure. This creates forced selling with insufficient buying and that leads to the most depressed prices since this cycle began in 2000.

    TGR: How long can this go on?

    JE: I don't know but I've got some that actually are selling below the cash on their balance sheets.

    TGR: Do you want to give us some names?

    JE: Orvana Minerals Corp, has an extremely efficient mine and has generated a lot of cash from it—considerably more cash than the stock's trading for. There is $75 million in the bank with a $60 million market cap. Orvana has a very profitable mine plus another ore body that would be easily developed and they are both in the good part of Bolivia.

    TGR: You said they couldn't even afford to mine with gold around $800?

    JE: You can't get into production because it's hard to attract capital and the capital costs have risen so much, but an existing mine with a good orebody is fine. This credit problem will significantly impact gold production over the next three or four years. There's a bunch of mines coming off the table as they get depleted and the high-grade ores run out. Without new mines, production is going to fall regardless of the gold price. The supply-demand gap, which is already yawning, is growing wider and wider. Central banks will do what they can to fill the gap but if they can't, the price is going to explode.

    TGR: You said Orvana has an efficient mine, and money in the bank that exceeds the market cap. Can they bring gold out of the ground profitably?

    JE: They're making an extraordinary profit.

    TGR: So they have cash flow.

    JE: The problem is that it's a short-life mine with only a couple of years left. They do have other assets, although they're being valued at less than nothing.

    TGR: Should investors wait for gold to go above $1,000 before investing in the juniors?

    JE: Things have gone much farther down than I could have imagined in my worst nightmare. If you are confident that the gold price is going higher, this is an ideal time to be picking away and buying a diversified list of very good quality, cheap juniors. I've made the most money in my life buying things that are out of favor because there's no downside risk, certainly from a fundamental standpoint. When the worm turns, these things could double very quickly. When that happens it'll be hard to buy. Start picking away now, as long as you share my opinion that the gold will see a hefty price rise over the next 12 months.

    TGR: How does an investor determine which juniors merit a closer look?

    JE: It all revolves around the people and the asset. I look for companies with strong financial support, a legitimate project with a 43-101 resource and sound management. Using those criteria, you can make a reasonable evaluation of what the net asset value is. You can put in your own gold prices while knowing that they're not going to be cash-starved.

    TGR: Do we have to work through this panicked selling before stocks will change?

    JE: As long as people are abandoning the sector and taking money out of these funds, then there's a lot of irrational selling. The fund manager has no choice but to sell. This is creating a phenomenon where prices don't make much sense. The larger cap stocks are the ones being bid up; they trade because generalists buy them. There's a far bigger pool of capital prepared to buy them. That's why you've got this remarkable discrepancy in valuation between the little guys and the big guys.

    TGR: Other people we've interviewed are concerned about a real crash in the overall markets.

    JE: We've already had the crash in the junior gold shares. That brings up the naked short selling of these stocks. I think there are grounds for a suit. A lawyer has been phoning me on this subject. Someone is trying to bring a suit against the perpetrators. There has clearly been nefarious activity in these stocks because they get driven down to a level where they can't put their head up without getting pounded back down again.

    TGR: If the market crashes, it'll pressure the gold funds.

    JE: That assumes that the gold price doesn't explode. If the market crashes, the authorities are going to pour so much money into the system to try to avert economic disaster. Money has to go somewhere. Some of it will go to gold. If the gold price heads higher, you've got the cheapest gold stocks in history. Maybe they won't get dragged down in the crash. Maybe the big caps are going to crash.

    TGR: Big caps gold stocks?

    JE: Big caps period. Investors have already abandoned the illiquid stocks and huddled in the big caps.

    TGR: A lot of people are saying that they see a slowdown in deflation. Do you agree?

    JE: I think the problem is potential deflation because I am a great believer in Austrian economics and we've had the greatest credit abuses in history. There's an awful lot of debt and you're stuck creating more of it to keep the momentum going. The real issue here is, can you do it? There is a good argument for a deflationary spiral like the Great Depression. On the other hand, this time paper money isn't anchored. Everything's fiat and the government can create it with the stroke of a pen or the touch of a computer key. If you really want to pin me down, I'd say we're going to have a hyper inflationary depression. The value of money will be destroyed and economic activity will grind to a halt. It'll be the worst of all possible worlds— a South American meltdown. If that happens, the one thing I want to own is gold. I have been investing more in bullion recently than in stocks. I already own some stocks. But I do believe that if bullion performs as I expect it to, the stocks will do well. If you go back to the 1930s, the best performing things on earth were the gold stocks.

    TGR: They went down in the beginning.

    JE: They did, but these have already gone down. That would make the case that we had the bear market in gold. I guess they could go down 90% from the peak prices, but still the risk/reward heavily favors the reward side. That is not true for large cap stocks, particularly those that make up the indices.

    TGR: But if the price of gold doesn't turn around, don't a lot of juniors risk bankruptcy?

    JE: If they're not in production and are fairly careful, they can gear back. The ones in production and losing money are at the greatest risk of bankruptcy. If gold doesn't turn soon, they won't be able to finance their operations. A lot of these guys lose money and just kept going out and raising more. They just keep losing money, so they close the mines. That's also very bullish for gold. We're going to have less and less gold in production.

    TGR: What about the juniors that aren't in production?

    JE: I'm not worried about the ones that have real ore bodies and have gotten pounded down to where they're trading at $10, $15, or $20 an ounce in the ground.

    TGR: Because they'll be taken out?

    JE: They'll be taken out or they've hit bottom and, as long as they have enough capital to move forward, they can gear down. Small, quality gold shares are proxies for a higher gold price. The problem is that the gold price is so severely suppressed vis a vis other commodities that the whole business has become uneconomical.

    TGR: What percentage should an investor have in bullion and in what form?

    JE: Central Fund of Canada Limited , and Central GoldTrust are really excellent vehicles in which to hold gold. I'm very leery of funds that have no allocated gold. Whereas, in Central Gold Trust, which I'm involved with, it's a sort of sister company of the Central Fund— so I know the Spicers that run it very well. I know for a fact that you can go look at gold in the vault. So they are perfect vehicles in this environment. If the worst happens and everything goes to hell in a handcart, you want bullion. So the core of your portfolio has to be bullion. Depending on how much money you've got, you can decide what percentage you want to wager on the upside. If the gold price goes where I think it's going soon—to $2,000—then some of these gold stocks will look pretty good. They're depressed enough that they will move faster than gold. They could go up three to five times when gold goes doubles.

    TGR: So you recommend a core holding of bullion. Do you believe people should have coins?

    JE: Absolutely. I'm a big believer in coins and actually have them in addition to physical gold as part of my position.

    TGR: Would the balance be in producers and exploration companies?

    JE: I can't pound the table for any of the large cap producers because they don't represent terrific relative value. However, when the gold price goes up, they're going to go up in price. My view is that some of the smaller ones will go up a lot more. It depends on what your goal is. If you only want to protect yourself, own nothing but bullion. But if you want some leverage and to make some money, then you should probably get some intermediate and smaller gold stocks that have been really taken to the wood shed and pounded.

    TGR: Do you want to talk about a few of those?

    JE: One that I've been a great fan of for quite a while is Wesdome It has performed horribly. It has two operating mines, one in Quebec and another in Ontario. The high Canadian dollar beat them up quite a bit and they were in the red, but now both mines are cash flowing positively. This stock trades around $.85, so it has a market cap of $85 million. If the gold price goes to $2,000, these two mines will spin money and I suspect the stock will go up fivefold. A stock like that at these prices is a gift. It's in production, so you don't have to spend any more money. Quebec is probably the best place on the planet to mine.

    TGR: Where are their mines located?

    JE: This one is located in Timmins in Ontario.

    JE: Going a little further afield just got annihilated. They have four million ounces in the Central African Republic. It was at $1.40 and is now down to $.15. You're buying the people because they discovered the Geita Mine, now in production in Tanzania, which is one of the more successful mines in Africa. This is the best exploration team in Africa. They've got this project in the Central African Republic with a proven reserve and, then another one in Ghana and a third in the Sierra Leone, which they're moving forward. The stock has been blasted, but they've got Audax Petroleum, one of the big Swiss oil companies, which owns 50% of this company, to back stop to any extent required. There's no financing risk; they have assets; and the best mine-finding team in Africa. You get all this for $30 million.

    TGR: And it just got clobbered.

    JE: I don't understand why. I talked to the company and we went over everything. It's simple. There are more sellers than buyers.

    TGR: People are panicking. They're selling anything and everything.

    JE: You can come up with a zillion reasons why a stock is going to go lower, but at some point you've got to put the pin in and say, this is really a great value. I believe the gold price is going up a lot. If I buy something and with 10% or 15% on the downside worst case, and I can make five times on the upside, that represents a good investment.

    TGR: That brings the buyers out. Everybody's hoping investors return from their summer vacations and start focusing on the values of some of these companies.

    JE: It's going to take a fairly significant advance in the gold price. If there's a major stock market debacle and gold moves in the opposite direction that will shine more light on the gold shares and the money will go there.

    TGR: You talked during our last interview about African Miners Do you have any comments on them?

    JE: Gold Fields, for example, just reported 80 million ounces in reserve and another 246 million ounces in resources. Sure, South Africa is an issue but half of their production is outside of South Africa. I think Gold Fields, for a big cap stock, is literally a gift at these prices. The other ones like African Gold have gotten pounded, I'm not quite sure why – it's just a thin stock and when you get forced selling, it gets driven down. It's got legitimate projects in Ghana and Mali.

    TGR: How much lower can they go?

    JE: That's the big question. You do the metrics. Calculate how many ounces of resource. What're you paying for it? These stocks are so low I've seldom seen anything cheaper in my career. It's odd that the gold picture is so remarkably bullish, even with this price hit, which I don't think was necessarily a natural hit. I think it was assisted. If the bottom's not near, then my whole thesis on gold is wrong and I don't think it is.

    TGR: Could the powers that be continue to drive gold down?

    JE: They have a financial crisis of epic proportions and the last thing they want is for gold to become the go-to asset, so they've been throwing everything at it but the kitchen sink. That strategy has resulted in unprecedented shortages of physical gold. Half the bullion dealers and coin dealers in America can't get it.

    The U.S. Mint suspended production of Gold Eagles. They claimed it was due to a shortage of blanks. I don't believe that. I think it's a physical shortage. COMEX has created an irrationally low price and people are coming out of the woodwork buying it.

    TGR: And they can't replace it.

    JE: The fact is that all this stuff at central banks has been leased and swapped and sold into the market. It's gone; it's not coming back. So we're running out. The question is when will it be completely gone—that's when the market will go nuts.

    TGR: Are you forecasting that for January of 2009?

    JE: That's when we'll have four-digit gold—maybe higher four digits. As this credit crisis unfolds, the gold market can come into its own again. Attempts to discourage people by pounding the gold will end. When everyone realizes what's going on, I think it'll have a salutary effect on the gold price.

    TGR: What would be in the top ten holdings?

    JE: Aurelian Resources is an interesting one—arguably the best find in the new century. It has a minimum of 10 to 13 million ounces. Because it's in Ecuador they're having all the problems with Correa's government. Kinross has put in a bid to take them out. The bid has given the stock a lift, but it's a remarkable asset and I hope this deal doesn't go through.

    TGR: Another company we've been hearing a lot about recently, too, is Minera Andes Inc.

    JE: Rob McEwen put a lot of money into Minera and they have a solid asset in South America. It remains a solid company.

    TGR: John, as usual, we appreciate your time.

    JE: It's always best to talk when things are at their worst because I think that's when the opportunity is the greatest. When we have another conversation six months from now, I think it'll be a much happier one.

    John Embry is chief investment strategist at Sprott Asset Management. Embry, an industry expert in precious metals, has researched the gold sector for over 30 years and has accumulated industry experience as a portfolio management specialist since 1963. He joined SAM as Chief Investment Strategist in March 2003 with focus on the Sprott Gold and Precious Minerals Fund and the Sprott Strategic Offshore Gold Fund, Ltd. Prior to joining Sprott, Embry was Vice-President, Equities and Portfolio Manager at RBC Global Investment Management, a $33 billion organization where he oversaw $5 billion in assets, including the flagship $2.9 billion Royal Canadian Equity Fund and the $250 million Royal Precious Metals Fund.



    http://www.tiscali.co.uk/news/newswi...e-reuters.html
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  8. #38
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    Default

    Quote Originally Posted by arco View Post
    The Gold Report: In our last interview you said gold would unquestionably detach from the dollar. Ten months later, gold is still tethered.

    John Embry: The downturn in both gold and silver was literally preposterous in magnitude relative to the rise in the dollar. This was a violent intervention by the paper players. Three U.S. banks on COMEX shorted something like 8,000 contracts in a very short time. That's more ounces than all the world's miners produce in a month.

    TGR: Can they keep doing that forever?

    JE: No, they can't. This is similar to what happens when you compress a spring. You hold it down but when it comes up, it springs back hard. We'll see a violent reaction in the gold price soon.

    TGR: Will we have to wait six months or six weeks?

    JE: If gold hasn't moved up by the end of this year, I would be very surprised. People don't realize how distressed the gold mining industry is. Even at $1,000, miners weren't doing very well. At $800, the entire industry is in crisis. Costs have risen so much, nobody's making any real money. In fact, some mines are starting to close.

    TGR: Could mines reopen when gold reaches $850 or $900?

    JE: Gold would have to be at least $1200 before mines reopen.

    TGR: Is now the time for the majors to start acquiring?

    JE: I don't understand why the majors aren't acquiring because I've never seen anything like the discrepancy in value between the big cap stocks and the small stuff. Many interesting smaller companies are trading for a song; whereas, Agnico-Eagle and Goldcorp and Kinross are aggressively valued.

    TGR: Some of the juniors have lost 80%.

    JE: If you had told me we'd see this kind of carnage in the juniors while the gold was still north of $800, I would have said impossible. One of the reasons is that investors are giving up and gold funds, ours included, are under redemption pressure. This creates forced selling with insufficient buying and that leads to the most depressed prices since this cycle began in 2000.

    TGR: How long can this go on?

    JE: I don't know but I've got some that actually are selling below the cash on their balance sheets.

    TGR: Do you want to give us some names?

    JE: Orvana Minerals Corp, has an extremely efficient mine and has generated a lot of cash from it—considerably more cash than the stock's trading for. There is $75 million in the bank with a $60 million market cap. Orvana has a very profitable mine plus another ore body that would be easily developed and they are both in the good part of Bolivia.

    TGR: You said they couldn't even afford to mine with gold around $800?

    JE: You can't get into production because it's hard to attract capital and the capital costs have risen so much, but an existing mine with a good orebody is fine. This credit problem will significantly impact gold production over the next three or four years. There's a bunch of mines coming off the table as they get depleted and the high-grade ores run out. Without new mines, production is going to fall regardless of the gold price. The supply-demand gap, which is already yawning, is growing wider and wider. Central banks will do what they can to fill the gap but if they can't, the price is going to explode.

    TGR: You said Orvana has an efficient mine, and money in the bank that exceeds the market cap. Can they bring gold out of the ground profitably?

    JE: They're making an extraordinary profit.

    TGR: So they have cash flow.

    JE: The problem is that it's a short-life mine with only a couple of years left. They do have other assets, although they're being valued at less than nothing.

    TGR: Should investors wait for gold to go above $1,000 before investing in the juniors?

    JE: Things have gone much farther down than I could have imagined in my worst nightmare. If you are confident that the gold price is going higher, this is an ideal time to be picking away and buying a diversified list of very good quality, cheap juniors. I've made the most money in my life buying things that are out of favor because there's no downside risk, certainly from a fundamental standpoint. When the worm turns, these things could double very quickly. When that happens it'll be hard to buy. Start picking away now, as long as you share my opinion that the gold will see a hefty price rise over the next 12 months.

    TGR: How does an investor determine which juniors merit a closer look?

    JE: It all revolves around the people and the asset. I look for companies with strong financial support, a legitimate project with a 43-101 resource and sound management. Using those criteria, you can make a reasonable evaluation of what the net asset value is. You can put in your own gold prices while knowing that they're not going to be cash-starved.

    TGR: Do we have to work through this panicked selling before stocks will change?

    JE: As long as people are abandoning the sector and taking money out of these funds, then there's a lot of irrational selling. The fund manager has no choice but to sell. This is creating a phenomenon where prices don't make much sense. The larger cap stocks are the ones being bid up; they trade because generalists buy them. There's a far bigger pool of capital prepared to buy them. That's why you've got this remarkable discrepancy in valuation between the little guys and the big guys.

    TGR: Other people we've interviewed are concerned about a real crash in the overall markets.

    JE: We've already had the crash in the junior gold shares. That brings up the naked short selling of these stocks. I think there are grounds for a suit. A lawyer has been phoning me on this subject. Someone is trying to bring a suit against the perpetrators. There has clearly been nefarious activity in these stocks because they get driven down to a level where they can't put their head up without getting pounded back down again.

    TGR: If the market crashes, it'll pressure the gold funds.

    JE: That assumes that the gold price doesn't explode. If the market crashes, the authorities are going to pour so much money into the system to try to avert economic disaster. Money has to go somewhere. Some of it will go to gold. If the gold price heads higher, you've got the cheapest gold stocks in history. Maybe they won't get dragged down in the crash. Maybe the big caps are going to crash.

    TGR: Big caps gold stocks?

    JE: Big caps period. Investors have already abandoned the illiquid stocks and huddled in the big caps.

    TGR: A lot of people are saying that they see a slowdown in deflation. Do you agree?

    JE: I think the problem is potential deflation because I am a great believer in Austrian economics and we've had the greatest credit abuses in history. There's an awful lot of debt and you're stuck creating more of it to keep the momentum going. The real issue here is, can you do it? There is a good argument for a deflationary spiral like the Great Depression. On the other hand, this time paper money isn't anchored. Everything's fiat and the government can create it with the stroke of a pen or the touch of a computer key. If you really want to pin me down, I'd say we're going to have a hyper inflationary depression. The value of money will be destroyed and economic activity will grind to a halt. It'll be the worst of all possible worlds— a South American meltdown. If that happens, the one thing I want to own is gold. I have been investing more in bullion recently than in stocks. I already own some stocks. But I do believe that if bullion performs as I expect it to, the stocks will do well. If you go back to the 1930s, the best performing things on earth were the gold stocks.

    TGR: They went down in the beginning.

    JE: They did, but these have already gone down. That would make the case that we had the bear market in gold. I guess they could go down 90% from the peak prices, but still the risk/reward heavily favors the reward side. That is not true for large cap stocks, particularly those that make up the indices.

    TGR: But if the price of gold doesn't turn around, don't a lot of juniors risk bankruptcy?

    JE: If they're not in production and are fairly careful, they can gear back. The ones in production and losing money are at the greatest risk of bankruptcy. If gold doesn't turn soon, they won't be able to finance their operations. A lot of these guys lose money and just kept going out and raising more. They just keep losing money, so they close the mines. That's also very bullish for gold. We're going to have less and less gold in production.

    TGR: What about the juniors that aren't in production?

    JE: I'm not worried about the ones that have real ore bodies and have gotten pounded down to where they're trading at $10, $15, or $20 an ounce in the ground.

    TGR: Because they'll be taken out?

    JE: They'll be taken out or they've hit bottom and, as long as they have enough capital to move forward, they can gear down. Small, quality gold shares are proxies for a higher gold price. The problem is that the gold price is so severely suppressed vis a vis other commodities that the whole business has become uneconomical.

    TGR: What percentage should an investor have in bullion and in what form?

    JE: Central Fund of Canada Limited , and Central GoldTrust are really excellent vehicles in which to hold gold. I'm very leery of funds that have no allocated gold. Whereas, in Central Gold Trust, which I'm involved with, it's a sort of sister company of the Central Fund— so I know the Spicers that run it very well. I know for a fact that you can go look at gold in the vault. So they are perfect vehicles in this environment. If the worst happens and everything goes to hell in a handcart, you want bullion. So the core of your portfolio has to be bullion. Depending on how much money you've got, you can decide what percentage you want to wager on the upside. If the gold price goes where I think it's going soon—to $2,000—then some of these gold stocks will look pretty good. They're depressed enough that they will move faster than gold. They could go up three to five times when gold goes doubles.

    TGR: So you recommend a core holding of bullion. Do you believe people should have coins?

    JE: Absolutely. I'm a big believer in coins and actually have them in addition to physical gold as part of my position.

    TGR: Would the balance be in producers and exploration companies?

    JE: I can't pound the table for any of the large cap producers because they don't represent terrific relative value. However, when the gold price goes up, they're going to go up in price. My view is that some of the smaller ones will go up a lot more. It depends on what your goal is. If you only want to protect yourself, own nothing but bullion. But if you want some leverage and to make some money, then you should probably get some intermediate and smaller gold stocks that have been really taken to the wood shed and pounded.

    TGR: Do you want to talk about a few of those?

    JE: One that I've been a great fan of for quite a while is Wesdome It has performed horribly. It has two operating mines, one in Quebec and another in Ontario. The high Canadian dollar beat them up quite a bit and they were in the red, but now both mines are cash flowing positively. This stock trades around $.85, so it has a market cap of $85 million. If the gold price goes to $2,000, these two mines will spin money and I suspect the stock will go up fivefold. A stock like that at these prices is a gift. It's in production, so you don't have to spend any more money. Quebec is probably the best place on the planet to mine.

    TGR: Where are their mines located?

    JE: This one is located in Timmins in Ontario.

    JE: Going a little further afield just got annihilated. They have four million ounces in the Central African Republic. It was at $1.40 and is now down to $.15. You're buying the people because they discovered the Geita Mine, now in production in Tanzania, which is one of the more successful mines in Africa. This is the best exploration team in Africa. They've got this project in the Central African Republic with a proven reserve and, then another one in Ghana and a third in the Sierra Leone, which they're moving forward. The stock has been blasted, but they've got Audax Petroleum, one of the big Swiss oil companies, which owns 50% of this company, to back stop to any extent required. There's no financing risk; they have assets; and the best mine-finding team in Africa. You get all this for $30 million.

    TGR: And it just got clobbered.

    JE: I don't understand why. I talked to the company and we went over everything. It's simple. There are more sellers than buyers.

    TGR: People are panicking. They're selling anything and everything.

    JE: You can come up with a zillion reasons why a stock is going to go lower, but at some point you've got to put the pin in and say, this is really a great value. I believe the gold price is going up a lot. If I buy something and with 10% or 15% on the downside worst case, and I can make five times on the upside, that represents a good investment.

    TGR: That brings the buyers out. Everybody's hoping investors return from their summer vacations and start focusing on the values of some of these companies.

    JE: It's going to take a fairly significant advance in the gold price. If there's a major stock market debacle and gold moves in the opposite direction that will shine more light on the gold shares and the money will go there.

    TGR: You talked during our last interview about African Miners Do you have any comments on them?

    JE: Gold Fields, for example, just reported 80 million ounces in reserve and another 246 million ounces in resources. Sure, South Africa is an issue but half of their production is outside of South Africa. I think Gold Fields, for a big cap stock, is literally a gift at these prices. The other ones like African Gold have gotten pounded, I'm not quite sure why – it's just a thin stock and when you get forced selling, it gets driven down. It's got legitimate projects in Ghana and Mali.

    TGR: How much lower can they go?

    JE: That's the big question. You do the metrics. Calculate how many ounces of resource. What're you paying for it? These stocks are so low I've seldom seen anything cheaper in my career. It's odd that the gold picture is so remarkably bullish, even with this price hit, which I don't think was necessarily a natural hit. I think it was assisted. If the bottom's not near, then my whole thesis on gold is wrong and I don't think it is.

    TGR: Could the powers that be continue to drive gold down?

    JE: They have a financial crisis of epic proportions and the last thing they want is for gold to become the go-to asset, so they've been throwing everything at it but the kitchen sink. That strategy has resulted in unprecedented shortages of physical gold. Half the bullion dealers and coin dealers in America can't get it.

    The U.S. Mint suspended production of Gold Eagles. They claimed it was due to a shortage of blanks. I don't believe that. I think it's a physical shortage. COMEX has created an irrationally low price and people are coming out of the woodwork buying it.

    TGR: And they can't replace it.

    JE: The fact is that all this stuff at central banks has been leased and swapped and sold into the market. It's gone; it's not coming back. So we're running out. The question is when will it be completely gone—that's when the market will go nuts.

    TGR: Are you forecasting that for January of 2009?

    JE: That's when we'll have four-digit gold—maybe higher four digits. As this credit crisis unfolds, the gold market can come into its own again. Attempts to discourage people by pounding the gold will end. When everyone realizes what's going on, I think it'll have a salutary effect on the gold price.

    TGR: What would be in the top ten holdings?

    JE: Aurelian Resources is an interesting one—arguably the best find in the new century. It has a minimum of 10 to 13 million ounces. Because it's in Ecuador they're having all the problems with Correa's government. Kinross has put in a bid to take them out. The bid has given the stock a lift, but it's a remarkable asset and I hope this deal doesn't go through.

    TGR: Another company we've been hearing a lot about recently, too, is Minera Andes Inc.

    JE: Rob McEwen put a lot of money into Minera and they have a solid asset in South America. It remains a solid company.

    TGR: John, as usual, we appreciate your time.

    JE: It's always best to talk when things are at their worst because I think that's when the opportunity is the greatest. When we have another conversation six months from now, I think it'll be a much happier one.

    John Embry is chief investment strategist at Sprott Asset Management. Embry, an industry expert in precious metals, has researched the gold sector for over 30 years and has accumulated industry experience as a portfolio management specialist since 1963. He joined SAM as Chief Investment Strategist in March 2003 with focus on the Sprott Gold and Precious Minerals Fund and the Sprott Strategic Offshore Gold Fund, Ltd. Prior to joining Sprott, Embry was Vice-President, Equities and Portfolio Manager at RBC Global Investment Management, a $33 billion organization where he oversaw $5 billion in assets, including the flagship $2.9 billion Royal Canadian Equity Fund and the $250 million Royal Precious Metals Fund.



    http://www.tiscali.co.uk/news/newswi...e-reuters.html
    Interesting article, thanks Arco

    I believe Silver will follow even stronger than Gold when it does start to move
    Disc holding - GOR, IGO, LYC, SES

  9. #39
    Guru peat's Avatar
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    you've been posting about gold a bit lately arco. I presume you've been buying. I closed out this morning just now after holding some for a few days...
    For clarity, nothing I say is advice....

  10. #40
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    Yes Peat.....quite an explosive move. Nice when a plan comes together.

    I had to re-buy a few that stopped out last week just near the bottom.....but its been looking pretty positive (and silver as well).

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    Default Panic grips credit markets

    .......................Gold also benefited from safe-haven buying, with bullion prices heading for their largest one-day gain for 20 years, leaping 11.2 per cent to a three-week high of $864.70 a troy ounce.

    http://www.ft.com/cms/s/0/8058d308-8...0779fd18c.html
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    Heres a quote from Friday (I'm back home and catching up on the news a bit)
    Quote Originally Posted by ABN Amro
    As the crisis on Wall Street deepens, retail investors, who can't afford the high cost of trading in the futures markets, have been increasing their holdings of gold coins as a safe haven. The U.S. Mint said last week it was temporarily suspending sales of American Buffalo gold 1-ounce bullion coins after soaring demand depleted inventories. The Mint had previously halted sales of American Eagle 1-ounce gold coin in August. Gold held by the SPDR Gold Trust, the largest gold ETF, surged 16% in September to 755.26 tons. That would rank the fund as the eighth-largest worldwide in gold holdings. The U.S. government, the biggest gold holder, has 8,134 tons in reserves as of September.


    For clarity, nothing I say is advice....

  13. #43
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    Hi Peat

    Similar info and more here


    http://www.moneyandmarkets.com/Issue...Parachute-2364
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    Quote Originally Posted by arco View Post
    Hi Craig


    How do you trade your gold there - physical or what?

    rgds - arco

    Apart from GLD as an ETF in the NYSE, I suggest you look at GOLD in the ASX. I bought some bullion through NZ Mint but I think that GLD and GOLD are the way to go. Less hassles and more liquidity.
    God - Please give us just one more bubble....

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    Quote Originally Posted by patsy View Post
    Apart from GLD as an ETF in the NYSE, I suggest you look at GOLD in the ASX. I bought some bullion through NZ Mint but I think that GLD and GOLD are the way to go. Less hassles and more liquidity.
    Golds on the move & looking promising...

    Currently at $US877.90/oz & with the FX at .7165 = $A1,225/oz

    Gold & Silver to rally hard thru the end of 2008 & into 2009
    Disc holding - GOR, IGO, LYC, SES

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