Posted: 08 Sep 2014 07:00 PM PDT

15-Apr-14	Price	Change	% Change
Gold Price, $/oz	1,252.70	-13.10	-1.03%
Silver Price, $/oz	18.89	-0.20	-1.02%
Gold/Silver Ratio	66.33	-0.01	-0.01%

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3 Day Silver Price Chart

30 Day Silver Price Chart

Franklin will be vacationing 8-12 September, and won't be publishing commentary during this time.

Aurum et argentum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger
The-MoneyChanger.com

© 2014, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down.

WARNING AND DISCLAIMER. Be advised and warned:

Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures.

NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps.

NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced.

NOR do I recommend buying gold and silver on margin or with debt.

What DO I recommend? Physical gold and silver coins and bars in your own hands.

One final warning: NEVER insert a 747 Jumbo Jet up your nose.

Gold Price at $1,500 by Christmas? :: The Market Oracle :: Financial ...

Posted: 08 Sep 2014 01:02 PM PDT

Commodities / Gold and Silver 2014 Sep 08, 2014 - 10:02 PM GMT

By: The_Gold_Report

Gold and silver prices are being repressed by central banks, but Sprott Asset Management's Charles Oliver argues that demand pressure will cause this dam to burst sooner rather than later. As a result, he expects big increases in the prices of gold and especially silver, with a corresponding recovery of small- and mid-cap precious metal equities. In this interview with The Gold Report, Oliver discusses several companies likely to prosper thereby, most of which will be profitable now, even at current bullion prices.

The Gold Report: Gold continues to languish under $1,300 per ounce ($1,300/oz), even as full economic recoveries in the U.S. and the European Union (EU) have yet to occur, despite trillions in new debt and stimulus. Meanwhile, we have two wars in the Middle East that could escalate, as well as reports that Russian troops are in Ukraine. With all that in mind, do you think that gold's fundamentals are less important than they once were, or is the price of gold being held back by other factors?

Charles Oliver: Gold is just as valuable today as it was 100 years ago. There was an orchestrated takedown of gold in April 2013. It has since traded between $1,200/oz and $1,400/oz, and this flies in the face of the conditions you mentioned.

We're going to have to be patient. We have gone through a bottoming process. We've had similar conditions before. In 1974, after the oil embargo, U.S. inflation was increasing dramatically, yet gold fell from about $200/oz to about $100/oz in 1976. Then over the next four years gold subsequently rallied to over $800/oz. In this decade, gold has fallen from $1,921/oz to $1,180/oz, but the fundamentals remain intact, and gold will regain its reputation as a unique store of value.

TGR: You used the phrase "orchestrated takedown." Do you agree with the thesis advanced by the Gold Anti-Trust Action Committee (GATA) that gold and silver prices are manipulated downward by central banks?

CO: A decade ago I was on the sidelines. Then, after 2008, when the Federal Reserve gave us quantitative easing (QE) 1, 2 and 3 and increased its balance sheet by $4 trillion, effectively fixing the bond market and price, I became convinced that GATA was correct. All the price-fixing scandals we've seen are not isolated incidents. The gold market is a relatively small one. When 400 tons of gold rapidly came onto the market in April 2013, I was persuaded that this was definitely an orchestrated takedown.

TGR: Can this gold repression be maintained, or is it a dam about to burst?

CO: I like that metaphor. Eric Sprott did an analysis that suggested that a fair amount of the gold putatively held by the Federal Reserve may not actually be in its vaults. Footnotes in the Fed's records indicate possession of about 8,000 tons but also suggest that some of that might have been loaned out. We don't know how much, but supply-and-demand numbers suggest it could be a very significant amount. I believe that the gold exchange-trade funds (ETFs) were raided because gold could not be found where it was supposedly held, so it was taken from the ETFs instead.

Much of the gold sold out of Western vaults has found its way into Asia, China in particular. To run a trading platform requires a certain amount of physical bullion to meet delivery demands. If deliveries cannot be met, confidence in the system will fail, and paper trading will dry up. I must say I was quite surprised that after Germany asked for its gold back from the U.S. and it was informed that delivery would take seven years, the market did not suddenly unravel. Nevertheless, I believe the central banks are running out of bullets, and when they do, we could see a very significant rise in the gold price.

TGR: Is control of the gold bullion market shifting from London to Shanghai?

CO: The amount of trading in Shanghai is increasing, and I would imagine that the gold bullion repositories in London are diminishing. Over time, control of many components of the world economic system will shift to Asia as it becomes a more powerful entity on the global stage.

TGR: As mentioned earlier, central banks continue their attempts to force demand, yet economic recoveries remain elusive. How will this play out?

CO: QE was a dirty word five years ago, but today governments tout it as a triumph, even though the economies are still not that healthy, while record-low interest rates and record-high stimulus will continue. The U.S. is currently winding down QE, but the EU looks as if it may start up. I do believe that the U.S. may once again ramp up QE because its interest rate policy hasn't worked.

Countries are debasing their currencies, which leads to investors moving into hard assets, as confirmed by U.S. stock indexes reaching record levels. We saw this in the Weimar Republic in Germany, when stocks soared because they were inflation hedges. A collapse in confidence in paper money is not something I want to see. If that happens, all bets are off. In the meantime, currency debasement should lead to a recovery in the values of gold, silver and other precious metals.

TGR: Do you anticipate higher gold and silver prices following the historic return of market interest in September?

CO: I think there is a very real chance that gold might hit $1,500/oz by the end of the year.

TGR: It is has been reported that higher tariffs on gold buying in India have resulted in the substitution of silver for gold there. Do you think this will spur a higher silver price and that the current gold/silver ratio of 1:66 will fall as a result?

CO: We have seen in India an increase in silver purchases. That said, the gold purchase figures from India do not include smuggling, which soared in the 1990s and is rising again.

At Sprott, we believe very strongly that the next decade will see the gold/silver ratio move toward its historic rate of 1:16. The last time this happened was in 1980, when the gold price was $800/oz and the silver price was $50/oz. Under this scenario when the gold prices rise to $1,600/oz, I could expect silver to hit $100/oz. That would be a 500% increase in the silver price, versus a 30% increase in the gold price. I have taken a fairly significant weighting in the silver sector.

TGR: Gold equities outperformed bullion by a significant margin earlier this year. Can we expect more of this, or is the value of gold equities now constrained by the current gold price?

CO: The gold price bottomed out in December 2013, and as a result, gold equity valuations were destroyed. To some extent, the outperformance we've seen in 2014 is a return to more normal valuations, but a continuation of this trend will require higher bullion prices.

TGR: When the Sprott Gold & Precious Minerals Fund considers the companies it holds, which qualities are paramount?

CO: We look first to management. We want management teams with track records of performance, teams with share ownership of their companies. A deposit's geology is just as important. Without the geology there is no mine, there is no cash flow, there are no profits. We evaluate ore bodies by all the various parameters: quality, strip ratios, underground versus open pit, access to water and power, ease of permitting and local taxation regimes. Finally, we examine a company's valuation and how it compares to its peer groups. That includes dividends, cash flow, cash-flow growth and many other aspects.

TGR: Which gold and silver companies are your favorites?

CO: Within my top 10, I have Osisko Gold Royalties Ltd. (OR:TSX) and Tahoe Resources Inc. (THO:TSX; TAHO:NYSE). They both have great management. Tahoe is run by Kevin McArthur, the ex-CEO ofGoldcorp Inc. (G:TSX; GG:NYSE) and Glamis. Osisko is run by Sean Roosen, who discovered and built the Canadian Malartic mine in Québec.

Among explorers, other companies in my top 10 include Guyana Goldfields Inc. (GUY:TSX), run by Scott Caldwell, whose CV includes Kinross Gold Corp. (K:TSX; KGC:NYSE) and Freeport-McMoRan Copper & Gold Inc. (FCX:NYSE), and Dalradian Resources Inc. (DNA:TSX), run by Patrick Anderson, who built up Aurelian Resources, which was sold to Kinross.

TGR: Why do you like Tahoe and its Escobal silver mine in Guatemala?

CO: I visited the mine in March and was very impressed. The company has ramped it up over the last year, and the process has been almost flawless. Tahoe has delivered what it promised and is exceeding guidance. It looks to produce 20 million ounces (20 Moz) silver equivalent at below $5/oz for over a decade. This is one of the largest producing silver mines on the planet, and to accomplish that in the first year of operations is outstanding.

TGR: How does Tahoe's balance sheet look?

CO: Tahoe is going to be paying down the debt it took on to build Escobal. It should announce a dividend sometime this year.

TGR: Does operating in Guatemala negatively affect Tahoe's valuation?

CO: There is a discount, no question about it. There was local opposition to Escobal, and there are still holdouts, but I think the company has done a good job with community relations and brought most of the population to its side.

TGR: Guyana is another burgeoning mining jurisdiction. What impresses you about Guyana Goldfields and its Aurora gold project?

CO: I've been a shareholder for many years. The management and board of directors are large shareholders and have participated in the most recent round of financing to a large degree. Guyana Goldfields has a nice asset in Aurora: 6.54 Moz Measured and Indicated, and 1.8 Moz Inferred. The after-tax internal rate of return (IRR) is great at 31%, as is the net present value (NPV) at $735 million ($735M). Aurora is fully funded, and the engineering, procurement and construction management contracts are complete. Guyana Goldfields is building the mine.

TGR: When will mining begin, and how much gold will be produced annually?

CO: Commercial production is scheduled for mid-2015. The number of ounces per year will depend to a certain extent on whether they go underground or not, but first-year production is estimated at 126,000 oz (126 Koz), ramping up to about 300 Koz by year six or seven. Aurora has a 17-year mine life, and all-in sustaining costs will be lower than $700/oz.

TGR: If Guatemala and Guyana are burgeoning jurisdictions, then Northern Ireland is virgin territory. What impresses you about Dalradian's Curraghinalt gold project there?

CO: The management has been buying into the company, and Curraghinalt is an exceptionally high-grade underground deposit. The after-tax IRR and NPV are exceptional as well. Based on $1,378/oz gold, they are 41.9% and $467M, respectively. There is some concern about opening a mine in Northern Ireland, but they are gaining the goodwill of the people, and permitting is moving forward.

TGR: The company closed a $27M financing at the end of July. How does it stand for cash?

CO: That placement gives Dalradian the cash and permits it needs to fund its current underground exploration bulk sample program. I think this stock is extremely undervalued.

TGR: Let's talk about some of your fund's other holdings.

CO: Asanko Gold Inc. (AKG:TSX; AKG:NYSE.MKT) is in my top 15 companies. It features top-notch management, including much of the ex-team of LionOre Mining International Ltd., which was bought out by Norilsk Nickel (GMKN:RTS; NILSY:NASDAQ; MNOD:LSE) after a bidding war with Xstrata Plc (XTA:LSE). Asanko's team paid about $30M to take over Keegan Resources, which merged with PMI Ventures and now owns two Ghana deposits within 10 kilometers of each other. They can be processed by the same plant. The company has begun construction of its first phase of the Asanko gold mine at Obotan.

This is a very cheap stock. In fact, before the merger with PMI, Keegan was trading very close to cash. It has great assets, and I have a big position in it.

TGR: Asanko announced Aug. 27 it has eliminated a 2% net smelter royalty (NSR) on the Asanko gold mine. Is this good news?

CO: I am always happy when companies can buy back royalties at a reasonable price, because NSRs skim the cream off the top.

TGR: Your fund holds Pretium Resources Inc. (PVG:TSX; PVG:NYSE). In June, the Supreme Court of Canada awarded substantial, yet undefined, rights to native Indians on British Columbia's Crown Lands. This was followed in August by the tailings spill at Imperial Metals Corp.'s (III:TSX) Mount Polley mine. What implications do these two events have for mining in British Columbia?

CO: They are very negative. It will be more costly, time consuming and challenging to build mines in British Columbia. That said, Pretium's Brucejack has a great many positive attributes. It is a very small, very high-grade gold-silver mine with a very small environmental footprint. So tailings will be a relatively smaller issue for Pretium. Indeed, it is so high grade that dry-stack tailings may be possible.

On permitting, Brucejack was a historic mine as recently as the 1980s, which will make approvals easier to get. The project is going underground, so Brucejack will not have one of those big open pits that some people do not like.

TGR: Pretium's gold and silver assays have been spectacular for several years, but many people point to this resource as being nuggety. Could you speak to this issue?

CO: They're absolutely correct, but many nuggety gold deposits have been produced successfully in the past, and they will continue to be produced successfully in the future. Brucejack has the advantage that it has seen a surprisingly large number of high-grade nugget hits. The resources are there. Mining this project may result in some lumpy quarters, but I do believe that the mine will be permitted and will be very profitable.

TGR: Let's discuss gold explorers in your portfolio.

CO: Unigold Inc. (UGD:TSX.V) is one of them. The company is drilling a very prospective land package, the Neita concession, in the Dominican Republic. Unfortunately, there is not much financing available to the small-cap sector. For companies like this to recover, we'll need higher gold and silver prices.

TGR: The company announced in November 2013 an initial Inferred resource of 2 Moz. Yet shares are trading at $0.04. Can this be attributed to the specifics of Neita?

CO: No, it's the market, which currently is paying nothing for ounces in the ground.

TGR: This bear market in junior precious metals companies is now 3.5 years old. How long will it continue?

CO: As I said at the beginning, we could have $1,500/oz gold by Christmas. Should gold reach that price, interest in juniors will revive, and valuations will come up quite dramatically.

TGR: Do you see any potential takeover targets among the companies we've discussed so far?

CO: Dalradian, Guyana and Asanko could all be targets.

TGR: The gold and silver royalty/streaming sector has done quite well compared to the general market. Will this continue?

CO: This sector will continue to grow and prosper but is somewhat countercyclical. The best time for such companies is when the general market dries up, when companies cannot access capital and are forced to sell royalties or streams. And so the last two to three years have been very good for royalty streaming companies. Higher gold prices will result in higher profits for this sector, but I expect the mid- and small-cap mining companies will do better in relative terms.

TGR: Pierre Lassonde of the World Gold Council told The Gold Report in May he believes that the relatively small size of its market will compel silver streamers to move into gold contracts. Do you agree?

CO: I do. I have long thought that limiting a company to gold or silver is not completely logical, although I don't believe it's in the interest of gold and silver companies to move into base metals. I would expect that over time we will see companies such as Silver Wheaton Corp. (SLW:TSX; SLW:NYSE) take on more gold transactions.

TGR: What's your opinion of Silver Wheaton?

CO: It has been one of the best performers over the last few years. Silver streamers do not run much risk of operating overruns and higher costs. It's a nice business when you know you're going to get a profit, and the only question is how big it will be.

TGR: Are you bullish on Silver Wheaton going into the future?

CO: I am, but given the higher bullion prices I'm expecting, my preference is for increasing my weights in some of the midtiers.

TGR: Osisko Gold Royalties is a newcomer to the streaming sector. It has a 5% NSR on the Canadian Malartic mine and 2% NSRs on the Upper Beaver and Kirkland Lake properties and on the Hammond Reef project. Will it aggressively seek further streams?

CO: The management team has significantly invested in the company, and I think they will take their time and do what they think is appropriate. I do expect, however, that significant assets will be acquired in the next year.

TGR: Even before the takedown of the gold price, precious metals valuations collapsed, and the last few years have been dire for many investors in gold and silver companies. What are the reasons for investors to feel positive?

CO: We've seen an awful lot of capitulation. Barrick Gold Corp. (ABX:TSX; ABX:NYSE) just announced it will eliminate its entire corporate development team. I've lost a lot of good friends and analysts who have left the industry. These are all signs of a bottom.

I look around the world and see European Central Bank President Mario Draghi talking about rolling out QE. I see the continual debasement of currencies. And I see China buying gold left, right and center. I am convinced that gold and silver and precious metals equities will recover in the not-too-distant future.

TGR: Charles, thank you for your time and your insights.

Charles Oliver joined Sprott Asset Management in 2008. He is lead portfolio manager of the Sprott Gold and Precious Minerals Fund. Previously, he was at AGF Management Limited, where his team was awarded the Canadian Investment Awards Best Precious Metals Fund in 2004, 2006 and 2007. His accolades also include Lipper Awards' best five-year return in the Precious Metals category (AGF Precious Metals Fund, 2007) and the Lipper Award for best one-year return in the Precious Metals category 2010.

Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

DISCLOSURE:
1) Kevin Michael Grace conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of Streetwise Reports: Tahoe Resources Inc., Guyana Goldfields Inc., Asanko Gold Inc., Pretium Resources Inc., Unigold Inc. and Silver Wheaton Corp. Goldcorp Inc. is not associated with Streetwise Reports. Streetwise Reports does not accept stock in exchange for its services.
3) Charles Oliver: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. Sprott funds hold all of the companies mentioned. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
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Macro Factors Dominating Gold Price As US Dollar Outweighs ...

Posted: 09 Sep 2014 05:11 AM PDT

by GoldCore

Macro Factors Dominating Gold Price As US Dollar Outweighs Physical Demand And Investor Flows
With gold trading in a narrow range below $1,300 and remaining relatively weak, it is worth pausing at this juncture to look at the combination of factors that are affecting its price formation.

A current snapshot of the world gold market and its near term outlook can be gauged by examining four sets of influences on the market, namely the macro/geopolitical environment, investment demand flows, physical demand in the major markets (using India as an example), and finally the technical picture.

Macro Economic/Geo-Political
Overall sentiment in the gold market continues to be set by the global geopolitical and macro environment.

The relative strength of the US economy compared to other economies is currently creating relative dollar strength, even despite the fact that the monthly US non-farm payrolls for August came in at 142,000 new jobs last Friday, this was substantially lower than the consensus predictions of 200,000.

This is because other major currencies are making the US Dollar look good. The British pound is weakening due to the heightened uncertainty over the outcome of next week's Scottish independence referendum, while last week's European Central Bank (ECB) cut in interest rates and expectations of sovereign bond buying by the ECB later this year are weighing on the Euro. Therefore, with pressure on the Pound and the Euro, the US Dollar is displaying relative strength.
As gold price discovery on world markets is in US dollars, and most pricing and trading is in US dollars, as the dollar strengthens, gold purchases become more expensive for non-US dollar denominated investors. This is just a fact of the market.

Globally, while there are not as of yet very strong expectations of interest rate rises in the major economics, interest rate expectations are strongest for the US economy. This was illustrated yesterday when the San Francisco Federal Reserve cited a study which indicated that investor interest rate expectations are currently lower than those of the Federal Reserve. The San Francisco Fed seems to be signalling that investors should expect an interest rate hike sooner than expected.

With the recent ceasefire in the Ukrainian-Russian conflict, the relative demand for gold as a safe haven asset has dwindled in the last week. Today a report by Dutch investigators into the downing of Malaysian Airlines flight MH 17 only stated that the flight was likely downed by an outside impact. Since the report's conclusions appear to be deliberately ambiguous, this does not appear to change anything as far as the ceasefire or the negotiating position of any peace negotiations.

Investor Demand
The flows of investment into and out of physically backed gold Exchange Traded Products (ETPs) are also helpful in gauging sentiment in the world gold market.

In August there was a net 17 tonne outflow from physically backed gold ETPs, with an outflow of 6.5 in the last week of August. ETPs include the GLD (SPDR Gold Shares) and the IAU (iShares Gold Trust) products. The total accumulation of gold in these products then stood at 1,726 tonnes at the beginning of September and was down 36 tonnes compared to the beginning of the year.

While this year-to-date drop is not much compared to the 800 tonne outflow in 2013, it is still a sign that investors who use the ETF/ETP route, are not, on a net basis, allocating new money to gold.
In first week of September there were 13 tonnes of outflows from physical gold ETPs. In GLD, the total holding is now at 785 tonnes, and total ETP holdings (in all tracked products) are now down to 1,713 tonnes (as of September 4), nearly 3% lower than the start of the year. Thus, ETP flows are slightly bearish at the moment but overall quite neutral.

Investor sentiment in the gold futures market as well as coin demand for the bullion coins of the major Mints are also used as additional gauges for investor demand flows, but at the moment, these gauges, along with the ETPs are just neutral to slightly bearish.

Physical Demand in India
Physical demand in the large consumer gold market of India has been weaker than expected because the newly elected government has not yet reduced gold import restrictions despite the trade balance having improved.

Last year, the fall in world gold prices saw a surge in gold imports into India which had a large negative impact on the trade balance and weakened the Indian Rupee. Import duties on gold rose to 10% and import restrictions were imposed specifying that of all the gold officially imported, 20% had to be re-exported. Other import restrictions were also introduced for banks and trade houses that usually import gold.

These restrictions on gold demand worked as expected however they led to a sharp increase in gold smuggling into India. Although official figures on gold smuggling are just estimates, the World Gold Council speculates that for all of 2014, Indian gold imports via smuggling could reach 200 tonnes. This is about the same amount as was imported into India officially during Q2 of this year.

It remains to be seen how the new Indian government views the current import restrictions on gold. They may wait in the near term before tweaking with economic policy that has helped to improve the trade balance.

The Indian festival and wedding season is fast approaching however, which is always seen as a positive factor in the annual cycle of Indian gold demand. The major festival of Diwali is on October 23, while the end of year wedding season peaks in November and December.

The wedding season is important since in traditional Indian society, gold is given as wedding gifts as well as being a source of demand for wedding jewellery.

Another factor impacting gold demand in India is the monsoon season since this affects crop production and dictates how much disposable income is available to rural Indian society to save in the form of gold. If a monsoon season is weak then sometimes saved gold is even used to raise cash to balance household incomes.

Technical Factors
Support that had existed at $1,270 has now been breached. The next major support level is at $1,240, but before that the psychological support level of $1,250. There is major support near $1,180.

Resistance is now at $1,277 and $1,297. If gold did manage to go above $1,297 it could trade up to $1,325 or even higher to $1,345. A resumption of an uptrend in the price would be clear if gold broke above $1,520.

Interesting, Jim Sinclair, the well-respected gold expert and technical analyst said yesterday that gold cycles which turned gold back from the $1,900 level in 2011, have now turned up and are indicating that the gold price which is now in a major support area, will now aim to reach a $2,100 target area.

MARKET UPDATE
Today's AM fix was USD 1,256.00, EUR 974.78 and GBP 779.79 per ounce.
Yesterday's AM fix was USD 1,267.25, EUR 978.87 and GBP 786.57 per ounce.

Gold fell $13.20 or 1.04% to $1,255.60 per ounce and silver dropped $0.17 or 0.89% to $19.03 per ounce yesterday.

Gold is currently trading near a three month low at $1,255, but unchanged from close of trading in New York yesterday. Specifically, the three month low was in June 2014 at $1,240. Yesterday in New York trading, gold fell more than $10 from $1,265 but recovered to close in New York at $1,255. In Singapore overnight trading, gold finished trading near $1,255.

The US Dollar Index is currently trading near its 14 month high which was reached in July 2013.

Silver is trading at $19.19, unchanged from yesterday. Platinum is down 1.05% at $1,395 while palladium is down 1.45% at $887.

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