The case for higher US interest rates AND higher gold |
- The case for higher US interest rates AND higher gold
- Signs of Chinese import surge lifts iron ore price to 6-week high
- Endeavour Silver production jumps 26% in Q1
- Barrick Gold shareholders advised to back miner’s pay plan
- Report: Guinea will strip Vale, BSGR of all Simandou rights
- Moly Mines plunges as suspension from ASX trading looms
| The case for higher US interest rates AND higher gold Posted: 09 Apr 2014 05:19 PM PDT A number of gold market analysts have made the case that the one major factor influencing the price of gold is US inflation-adjusted interest rates. Some analysts go so far as to say that the correlation is so strong that the gold price can be used as a predictor of interest rates, serving as an early warning system of both the direction and magnitude of the move in rates. In a new research note Julian Jessop Head of Commodities Research at Capital Economics published a graph showing just how strong the inverse correlation is between US 10-year real yields (Treasury Inflation Protected Securities or TIPS) and the price of gold: The underlying reason for the relationship is that as yields rise – as is expected in the US – the opportunity costs of holding gold increases because the metal is not income producing. Higher rates also boost the value of the dollar which usually move in the opposite direction of the gold price. The independent macro-economic research house notes that "taking this first chart entirely at face value, the eventual return of US real yields to more normal levels of around 2% would be consistent with the gold price falling back below $1,000 per ounce." That said, Capital Economics argues that there are a sufficient number of other factors at play in the gold market that improves the outlook for gold:
"The upshot is," writes Jessop, "we are sticking with our end-2014 forecast of $1,450."
Image by artemuestra  |
| Signs of Chinese import surge lifts iron ore price to 6-week high Posted: 09 Apr 2014 03:21 PM PDT
 The benchmark price of iron ore tracked higher again on Wednesday and is up more than 14% from lows suffered early March. According to data from the The Steel Index, the import price of 62% iron ore fines at China's Tianjin port added $1.20 to $119.40 per tonne as imports from top consumers China is expected to resume its record breaking pace. After a steep drop off in February of more than 25 million tonnes mostly attributed to seasonal factors, Chinese steel mills and traders probably made the most the most of the fall in the price to a near 18-month trough to pick up the raw material. So far this year Chinese imports have already jumped 21% compared to January-February 2013 and Wood Mackenzie forecasts China iron ore imports to reach new record high in 2014 rising 12% to 921 million tonnes compared to last year. The surge in imports come despite record-setting stockpiles of the steelmaking ingredient at China's ports which according to state news agency Xinhua grew to 108.3 million tonnes this week. As an indication of what may be expected, iron ore exports to China from Australia's Port Hedland, which accounts for roughly 20% of the seaborne trade, jumped 27% in March from February to 27 million tonnes. China's steelmakers have been substituting domestic supply with so-called "lump" ore from Australian, South African and South American producers that lower costs and cut pollution by reducing the need for sintering. According to Reuters many mills also prefer to buy imported ore as the use of letters-of-credit allowed them to delay payments, helping to improve their cashflow. About 40% of stockpiles at China's ports are part of finance deals according to some estimates. Using inventories as collateral for loans has long been the practice in the Chinese copper trade, but more recently spilled over to iron ore as the market moved away from contract pricing to a spot market. |
| Endeavour Silver production jumps 26% in Q1 Posted: 09 Apr 2014 11:49 AM PDT  Cataloguing core samples at Bolañitos mine. (Courtesy of Endeavour Silver) Vancouver-based Endeavour Silver (TSX:EDR) (NYSE:EXK) said Wednesday its first quarter silver equivalent production jumped up 26% compared to the same period a year ago driven by increased output of both gold and the gray precious metal. The company, which operates three silver mines in Mexico, said the figures are already well ahead of its production plan for 2014, despite not planning any production increase for the year. Pure silver production increased 26% to 1.89 million ounces, while gold output rose 23% to 18,519 ounces. Endeavour sold 1% more silver, and 5% more gold during the latest period, it said. The results posted today come only a few days after the deaths of two company employees due to a rock fall underground, which prompted the company to implement a full safety retraining program at its three mines: Guanaceví, Bolañitos and El Cubo. CEO Bradford Cooke said in the statement that the mines would shut down for two days so each shift can receive a two-day refresher course on safety policies and practices. In addition, Cooke added that the company will retain an underground mine safety specialist to review Endeavour's safety programs and implement any recommended improvements. Despite the positive results, equities researchers at The Street downgraded the company stock from a "hold" rating to a "sell" rating. According to the report, "the company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself." Shares were trading slightly lower in Toronto on Wednesday, down 0.41% to $4.86 at 2:00 ET pm. |
| Barrick Gold shareholders advised to back miner’s pay plan Posted: 09 Apr 2014 09:35 AM PDT  ISS believes Barrick's proposed plan respons to shareholders' concerns. Barrick Gold Corp. (TSX, NYSE:ABX) shareholders, who last year protested against the gold giant's executive pay scheme, were advised Wednesday to approve the company's latest compensation plan and director nominations. Proxy advisory service Institutional Shareholder Services Inc., Reuters report, said in a note dated April 8 that Barrick has responded to shareholders' concerns, and that its revamped executive compensation plan should improve disclosure and better link the long-term interests of management and investors. This is the same firm that last year called shareholders to vote against the Toronto-based company's approach to compensation. Last month the Toronto-based gold miner unveiled a strategy to pay the largest part of top executives' compensation in units that convert into the company's shares. The new scorecard system would not allow executives to sell the shares until they retire or leave the firm. The latest compensation plan and director nominations in March followed a major a board shake-up in December. Barrick is scheduled to hold its annual shareholder meeting and release its first-quarter earnings results on April 30. |
| Report: Guinea will strip Vale, BSGR of all Simandou rights Posted: 09 Apr 2014 09:35 AM PDT The Simandou mountains in Guinea holds some of the richest iron ore deposits in the world and has the potential to transform the fortunes of the impoverished West African nation. World number two miner Rio Tinto is developing the southern part of the vast mountain deposit with first production from the massive $20 billion project not expected until late 2018 at the earliest. The northern part of the Simandou concession is held by BSG Resources, a company in the stable of billionaire diamond magnate Beny Steinmetz, and Brazilian giant Vale (NYSE:VALE), , the world's top iron ore producer. All work on the section awarded to BSGR by a former Guinea dictator in 2008 and 50%-sold to Vale has been halted as the government of Guinea revisits all mining contracts entered into under previous regimes. Businessweek reports the technical committee set up by Guinea said it found evidence of corruption in the award of the licenses for Simandou's blocks 1 and 2 and the Zogota project and that both BSGR and Vale be stripped of their rights: "These corrupt practices tarnish and thus void the mining titles and the mining convention," it said." Although the committee found no evidence that Vale was involved in corruption, in the latest annual report filed to the US Securities and Exchange Commission by Vale the miner said it is bracing itself to lose all its investment in the project. Vale acquired the interest in Simandou from BSGR for $2.5 billion in 2010, but stopped payments after the first $500 million was forked over because certain progress milestones were not met. BSGR pegs the money spent on Simandou with Vale so far at about $1 billion. Vale was not accused of any wrongdoing and BSGR has all along denied the claims maintaining that the review was a pretext to illegally seize the company's assets in Guinea. BSGR was awarded the rights days before the death of Guinea dictator Lansana Conté in 2008 after spending more than $160 million exploring the prospect. Conté had not long before stripped the Simandou blocks from Rio Tinto which had held the exploration rights since the late 1990, ostensibly over the Anglo-Australian company's failure to develop the deposits. The awarding of the rights are also the subject of a separate Swiss, UK and US anti-corruption and fraud investigations. |
| Moly Mines plunges as suspension from ASX trading looms Posted: 09 Apr 2014 08:05 AM PDT  Moly cashed up at A$80 million last year after the sale of Spinifex Ridge Iron Ore Mine was complete. Canadian Moly Mines (TSX, ASX:MOL) shares fell almost 26% in Sydney Wednesday after the company announced it expects be suspended from trading later this month, as it anticipates a failure to secure a suitable new asset and so comply with listing rules by April 22. The company said it had missed a six-month window set out by the Australian Securities Exchange to prove sufficient operational activity after the company disposed its main undertaking, Spinifex Ridge iron ore mine. The exchange allows companies that have disposed of their main undertakings a six-month period within which to satisfy ASX that the company has a sufficient level of operations to justify continued quotation of the company's securities on the ASX.
The company also announced that acting CEO David Pass would be replaced Graeme Kininmonth, currently health, safety and environment manager. Riccardo Vittino, in turn, will take over Allen Howells as acting CFO. Shares in the company were down in Toronto as well this morning, hitting an almost 17% drop to 0.0750 by 10:38 ET. |
| 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 | |
0 Comment for "The case for higher US interest rates AND higher gold"