Moody’s jumps on the gold bearish wagon

---

Moody’s jumps on the gold bearish wagon Posted: 08 Jan 2014 07:56 AM PST Most investment and bullion banks are predicting a decline in gold and silver prices. Moody's Investors Service said Wednesday it has reduced its 2014 forecast for average gold price from $1,200 to $1,100/Oz and from $20 to $18/Oz for silver. The announcement doesn't come as a surprise, as most investment and bullion banks predictions for the precious metals prices this year don't vary much in that they predict a decline. The rating agency said the new prices would be used as a baseline approximation when analyzing the credit condition of gold and silver producers. The downside gold price is now $900/oz (revised from $1,000/oz) while silver's is $15/oz (revised from $17/oz). Perhaps more than any other assets, gold depends on investors' faith on it. They drive the price of bullion depending on how much or how little they buy and sell bars, coins or bullion-backed exchange traded funds. This is not the case in other commodities, where speculators generally avoid owning physical supplies. Analysts, such as Moody's, keep trying to provide logical explanations for gold's moves: Operating costs for gold producers increased significantly over the past several years as mining companies chased new production in response to rising prices. Costs rose, in part, as producers mined lower-grade ore (which is economic to mine at higher prices), but producers also saw significant increases in other key cost inputs, including wages, power, consumables, exploration, environmental spending requirements and government royalties. Including sustaining capital expenditure requirements, Moody's believes the rated-industry's all-in average cost of gold production is currently at least $1,100/oz comprised of about $850/oz of cash operating costs and a minimum of $250/oz of sustaining capital costs. The agency, however, has some positive observations to share. It says that, while the industry's retreat from growth will inevitably cause production to fall, it will also yield benefits, such as making equipment less expensive and consumables more readily available. In addition, the US dollar appreciation against currencies in major gold producing countries has been benefiting local production costs while the sale of non-core assets or other capital raising events could give a boost to the liquidity of certain producers. Gold prices dropped in London today, extending the previous session's loses, as upbeat US jobs data made the dollar climb and boosted the appeal of cyclical assets such as stocks at bullion's expense. Spot gold was down 0.7% at $1,223.40 an ounce at 1335 GMT, while U.S. gold futures for February delivery were down $6.30 an ounce at $1,223.30. The precious metal is still up 1.8% this year after plummeting 28% in 2013, its first annual loss in 32 years. Image via Rumble

At least 26 killed in attack on Congo’s mining hub Posted: 08 Jan 2014 06:54 AM PST Katanga, home to some of the world's largest cobalt deposits and the second biggest African provider of copper, has seen periodic violence over the past two years. At least 26 people were killed Tuesday in the Democratic Republic of Congo (DRC) as Congolese soldiers tried containing a rebels' attack to the city of Lubumbashi, located in the copper-rich southeast province of Katanga. Police told Press TV a separatist militia known as the Mai Mai Kata Katanga (meaning "cut out Katanga" in the Swahili language) launched the assault that cost the life of government soldiers and insurgents alike. Although the mineral rich province has been spared most of the rebellions that have simmered in the DRC over the last decade, the area, home to some of the world's largest cobalt deposits and the second biggest African provider of copper, has seen periodic violence. Several died in March last year in a similar outbreak, considered one of the largest ever registered in Lubumbash. A total of 245 rebels armed with bows, arrows and machetes fought with the army and police before forcing their way into a UN compound and surrendering. In June, the United Nations peacekeeping mission based in the country, known as Monusco, decided to deploy Special Forces in Katanga to support the peacekeeping forces already in the province. Major miners, such as giant commodities trader and miner Glencore Xstrata (LON:GLEN) and Freeport-McMoRan (NYSE:FCX), have operations in the area, which exports about half a million tonnes of copper a year. Image: Congo rebels, WikiMedia Commons.

You are subscribed to email updates from MINING.com To stop receiving these emails, you may unsubscribe now.	Email delivery powered by Google
Google Inc., 20 West Kinzie, Chicago IL USA 60610