Light at the End of the Tunnel for Gold

...With governments lacking courage for fiscal discipline, I expect that interest rates will remain in negative territory for a long time. Central bankers will continue to keep the printing presses warm as policies aren’t expected to change. I believe this will keep the Fear Trade buying gold throughout 2013. In addition, emerging market central banks have been diversifying into gold. Net official sector purchases of 425 tons year-to-date is a drastic difference compared to only a few years ago when central banks were net sellers of the precious metal. Only recently, UBS reported that in November, Russia purchased nearly 3 tons of gold and Brazil bought almost 15 tons. Iraq—a notable new buyer—bought 25 tons from August through October. Given that this is the country’s first increase since the early 2000s, “having a new buyer in the central bank space and especially from a new region is an important development,” says UBS. While the Love Trade has been subdued this year, we see light at the end of the tunnel, not a train. One recent development is the increase in mutual fund flows of $32 billion into emerging markets since the announcement of the third round of quantitative easing (QE) in the U.S. This appears to be a powerful precursor for a stronger 2013, which would reignite the Love Trade in China and India. To see the full article click here

Gold Bullion Receives Positive Preliminary Economic Assessment for Granada, Proceeding to Preliminary Feasibility Study

Gold Bullion Receives Positive Preliminary Economic Assessment for Granada, Proceeding to Preliminary Feasibility Study VANCOUVER, Dec. 21, 2012 /CNW/ - Gold Bullion Development Corp. (TSX.V: GBB) (OTCPINK: GBBFF) (the "Company" or "Gold Bullion") is pleased to announce the first economic estimates for its Granada gold property located on the prolific Cadillac trend in northwestern Quebec, 5 km south of the city of Rouyn-Noranda. The proposed combination of an open pit and underground operation has the potential to move Gold Bullion into gold production at the approximate rate of 102,000 ounces of gold per year. The Preliminary Economic Assessment (PEA) was prepared by SGS Canada Inc. - SGS Geostat business unit. The PEA is based on the measured, indicated and inferred gold resource estimation provided by SGS Geostat that was press released on November 15th 2012 in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects as defined by "NI 43-101" regulations. PEA highlights are summarized below: Assumptions Gold Price (US$/oz) - 3 years trailing average 1,470 Canadian $ to US$ rate 1.0:1.0 Mineral Resources (recovered ounces) Underground Resources (1) 387,000 Open pit Resources (2) 739,000 Mine Parameters Mill feed coming from underground mine (tonnes per day) 1,000 Mill feed coming from open-pit mine (tonnes per day) 6,500 Combined mill feed (tonnes per day) 7,500 Mine plan tonnage (tonnes) 26,400,000 Underground Mine plan mill feed grade (grams/tonne) 3.51 Open-pit Mine plan mill feed grade (grams/tonne) 1.07 Open-pit waste-to-ore ratio 5.91 Estimated gold recovery (%) 94.10 Total gold recovered (ounces) 1,126,000 Pre-production period (years) 2.00 Mine life (years) 11.00 Average annual gold production (ounces) 102,000 Costs Pre-production capital ($) 259,000,000 Average Underground cash cost per ounce (US$/oz) 1,205 Average Open-pit cash cost per ounce (US$/oz) 985 Financial Return Payback from start of production (years) 6.80 Internal Rate of Return (before tax) 10.4% Net present value, pre tax, 5.5% discount ($ disc.) 74,300,000 (All dollar figures expressed in Canadian dollars, except where indicated) Resource category Tonnes Grade (g/t) U/G(1) Measured 18,000 2.79 Indicated 1,018,000 3.74 Inferred 2,635,000 3.42 Open-pit(2) Measured 20,485,000 1.05 Indicated 2,178,000 1.27 Inferred 112,000 0.78 Note: The above chart is presenting the resource as diluted material, mineral resources that are not mineral reserves and do not have demonstrated economic viability. At the prevailing gold price on December 19th, 2012 of US$1,650 per ounce and a Canadian to U.S. dollar exchange rate of 1.00, Gold Bullion has determined that the pre-tax NPV increases to $217.8 million at a 5.50% discount rate while pre-tax IRR increases to 18.8% with payback time reduced to 4.8 years (using the same mine plan). The study was prepared as a stand-alone project, relating solely to the mineral resources deposit at Granada, and accordingly does not take into account the previously outlined potential at depth disclosed on November 26th, 2012 since it is not mineral resources. Additional work is therefore required to convert the portion of potential into mineral resources. The Scoping Study mentioned herein is a preliminary evaluation inclusive of inferred mineral resources that are too geologically speculative to infer economical considerations that would classify them into mineral reserves. It is therefore uncertain that this preliminary evaluation results in the expected outcome. The complete technical report will be filed on the Company's website (www.GoldBullionDevelopmentCorp.com) and on SEDAR (www.sedar.com) in the next 45 days. "We are very pleased to release the Preliminary Economic Assessment study on the Granada gold deposit" stated Frank J. Basa, P. Eng., President and Chief Executive Officer. "Due to the dedication and diligence of Gold Bullion's technical team and consultants, we have been able to deliver this study within just four years of developing the property and are proud to see Gold Bullion progress as a potential emerging producer of gold in the near term, creating shareholder value through successful exploration and development while continuing to seek out other worthwhile opportunities for growth." The delivery of the Scoping (PEA) Study completes the first stage of Gold Bullion's Continuous Development Program at Granada, aimed at advancing the Granada Project to commercial production, by demonstrating an economic, environmental and social gain, while simultaneously mitigating the technical, financial, and environmental risks of the Project. As mineral resources could be affected by permitting and social acceptance issues, Gold Bullion plans to hold meetings with various stakeholder groups prior to the completion of the Pre-Feasibility Study and will either be incorporating those views and recommendations into the study or retaining as recommendations to be addressed in the possible final Feasibility Study. Claude Duplessis, Eng., Gaston Gagnon, Eng. and Jonathan Gagné, Eng. are acting as the qualified persons (QP) for Gold Bullion Development Corp. in compliance with National Instrument 43-101 and have reviewed the technical contents of this press release. About Gold Bullion Development Corp. Gold Bullion Development Corp. is a TSX Venture-listed junior natural resource company focusing on the exploration and development of its Granada Property near Rouyn-Noranda, Québec. Additional information on the Company's Granada gold property is available by visiting the website at www.GoldBullionDevelopmentCorp.com and on SEDAR.com. "Frank J. Basa" Frank J. Basa, P.Eng. President and Chief Executive Officer Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. This news release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, receipt of property titles, potential mineral recovery processes, etc. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. SOURCE: Gold Bullion Development Corp. Frank J. Basa, P.Eng., President and CEO at 1-514-397-4000 Source: Canada Newswire (December 21, 2012 - 10:20 AM EST)

How Gold Miners Can Leverage the Price of Gold

...The upside to gold stocks is that investors historically have received a 2-to-1 leverage by owning gold equities instead of the commodity... ...We believe that effective management can help miners gain more leverage over the metal for their shareholders. Picture the gold price as a pulley with gold company executives applying force on one side of a rope. The more disciplined and successful the management, the bigger the potential boost in gold equity returns. The muscle that gold miners can use to increase their “multiplier effect” for shareholders is three-fold: grow production volume, expand margins or optimize capital, you want to keep showing that you can increase the return on the mine and that you can increase the cash flow available for shareholders at a particular gold price... full article here

India to promote 'Paper Gold' to curb climbing imports

Asia's third largest economy India is trying everything now to stop excessive gold imports, accounted for the high current account deficit of the country. More and more gold based schemes were being planned by government to encourage investors to join schemes without investing in the physical commodity. According to India's Mid-Year Economic Analysis tabled in Parliament Monday, gold-backed products will help the investor enjoy benefits of investment in the metal without investing in the physical commodity. India is considering schemes like gold deposits, accumulation plans, gold-linked accounts and pension products to curb demand for the precious metal. The report said "Now gold backed financial instruments in the form of modified gold deposits and gold accumulation plans, besides gold-linked accounts and pension products linked with the precious metal are some measures being considered to reduce the attraction of a direct investment in bullion and jewellery in the domestic market and check a substantial rise in imports," However, gold-linked investments would have to be monitored to see whether the overall demand for the metal actually falls, it added. The Finance Ministry's Chief Economic Advisor Raghuram Rajan told reporters: "We are worried about gold imports. It is an unproductive instrument. The way to curb holding of gold is to create more attractive financial instruments. "Some gold linked instruments have been talked about by the RBI but potentially there could be other financial instruments to attract investment." Thecurrent account deficit(CAD), which occurs when a country's total imports are greater than total exports, has been rising on the back of record trade deficits, which in October jumped to a 12-year high of $ 21 billion on the back of rising oil and gold imports. The Reserve Bank has unveiled a slew of curbs on gold purchase and financing as imports touched a record high last year, pushing up the current account deficit to a historic high of 4.2 per cent in the year. In the 2011-12 fiscal, India's gold imports stood at $ 60 billion and the quantum of import was 1,067 tonnes. A Finance Ministry official said the imports have shown signs of moderation and that gives the government hope that the CAD will be lower this fiscal. The current account deficit (CAD), which occurs when a country's total imports are greater than total exports, has been rising on the back of record trade deficits, which in October jumped to a 12-year high of USD 21 billion on the back of rising oil and gold imports. In the April-June quarter of the current fiscal, however, gold imports had contracted by 18.4 per cent year-on-year to Rs 71,912 crore ($ 13 billion). Gold imports into the country has risen considerably in the last three-four years. View article here

The Fed — And The Best Time To Buy Gold…

Sometimes you don’t have to drop a quarter to see the monkey dance. Yesterday’s announcement from Federal Reserve Chairman Ben Bernanke caught us all off guard. Instead of the ho-hum, “we’re going to keep buying bonds for infinity” – we actually got a rather strange, out-of-the-blue declaration. Today I want to take a look at the details (in as quick a manner as possible) and see what this means for our economy, our currency and, of course, our old pal gold. With gold, I also want to share the perfect time to buy… But first, let’s analyze the Fed’s latest dance. In short, the Fed will continue its monthly asset purchase totaling $85 billion (a combo of bond purchases and mortgage-backed security purchases.) But here’s the kicker, the Fed will continue its monetary monkeyshines until “the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.” Ha! We traded one arbitrary, wand-waving set of monetary policy in for another. You and I would be hard-pressed to figure out which made-up government statistic we should follow – in other words, whose word is more reliable, the Fed number-crunchers that make whimsical monetary judgments, or the BLS number-crunchers that change the rules to the unemployment and inflation calculations at will? Either way, dear reader, you me and the monkey are stuck using the same paper dollars. Paper which, I don’t need to remind you, continually loses its purchasing power. Dollars in your pocket not buying what they used to? Let’s discuss… The World Is Catching On: U.S. Cash Is Cheap With each turn of the calendar month, the U.S. dollar loses its value. That is, with more stimulus hitting the market – to the tune of $85 billion a month – there are more dollars flooding the market. With more dollars hitting the market, each dollar loses its par value. I see this….you see this…and you better believe dollar-holders, like China, see it. Indeed, China is getting increasingly antsy when it comes to their large stash of U.S. dollars. And unless you’ve been hiding under a rock, you know that China has been doing whatever it can to diversify out of the dollar. You name it, China buys it. Energy resources like oil, coal and natural gas – to keep the houses heated, the lights on and the vehicle wheels spinning. China also buys building-block resources like iron ore and copper. Heck, China buys so many of these resources that it builds towns that no one lives in! [If you get a chance google “china ghost town” and you’ll see what I mean.] China is also in the sneaky business of hording precious metals. With the writing on the wall about the U.S. dollar – and Ben Bernanke re-emphasizing that text with every announcement – China looks to gold to preserve its purchase power. But China isn’t the only kid on the block doing this. It’s a global, precious metal trend that you’ll want to keep an eye on. Indeed, a lot of other emerging market players are, well, emerging in the gold market. Nations like South Korea, the Philippines, Kazakhstan, Ukraine – along with big players Brazil, Russia and India – have been ramping up gold purchases. In fact, according to the World Gold Council, central banks for the first three quarters of the year purchased over 370 tons of gold. With a little boost in the year end numbers we could see purchases totaling over 500 tons in 2012. That’s a lot of central bank buying, up over 10% from last year. Listening to what we squawk about here day-to-day, you’ll see that this central bank action portends the larger trend of wealth protection. Many emerging markets use the U.S. dollar as their de facto reserve (they don’t call the U.S. dollar the world reserve currency for nothing, eh?) So in an attempt to protect their nations purchase power, emerging markets are loading up on the de facto wealth protector: gold! Gold Protects Wealth – When Should You Buy It? The central bank buying spree portends a larger trend, which we squawk about here often: to protect your wealth with gold. Stated simply: you can’t print gold. So when Ben Bernanke and the Fed reduce the value of the dollar by printing as many billions as they choose, you can rest assure that they (or anyone) can’t create gold out of thin air. That’s why gold and silver, as a currency, have withstood the test of time. After all, gold is “the once and future money!” So is now the time to load up the truck? Well, instead of just running out and grabbing gold with both hands, we should take a detailed look at the best places to buy gold. View the article here

How Average Joe can save himself…and America

Jan Skoyles takes a look at how the decision to buy gold bullion and considering gold investment might be the best way for citizens of the US and UK to protest against politically motivated economic decisions which ultimately they bear the brunt of. Joe Biden went to Costco to fight for them. Obama visited a toy factory to speak out in support of them and House Minority Whip Steny Hoyer referred to them as hostages, kidnapped by the Republicans’ demands. Who am I talking about? The middle-classes. It seems they can’t fight their own battles anymore and instead represent a much favoured toy in this fiscal tug-of-war. Why are they being fought over? Because they’re the 90% who will suffer if the 1 Jan tax increases are allowed to go ahead. They’re the ones with the most to lose; too rich to sit in the governments’ cotton-wool cradle, but too poor to flee the country when it all goes kaput. They’re sitting ducks, who haven’t quite clicked onto who and what really caused the financial crisis. They suffered the most in the financial crisis, thanks to the housing crisis and high levels of personal debt. Between 2001 and 2007, according to a study by Edward N. Wolff, the middle classes owed 61 cents for each dollar of their wealth, a 50% increase from 2001. Yet they still believe in the American Dream, fed to them straight from Washington. They’re following a dream sold to them long before they were born, believing they can better themselves and their democratic country and elected government will help them do it. But this is rarely the case now. A recent study, by Wolff, found between 2007 and 2010 the median net worth of U.S. households fell by 47% i.e. their wealth went ‘poof!’ and disappeared. Even when incomes appear to be increasing, this is rarely the case in practice. Not only has the value of their possessions also gone AWOL but, as the most recent US census found real incomes remain the same as they were in the early 1970s. When the middle classes do eventually realise that the American Dream has moved nowhere since the 1970s and how much the government have been creaming off them in the longest daylight robbery ever seen, will they revolt? The chances are pretty slim I suspect. Every day I sit and discuss with people why more people aren’t getting really angry about what’s going on – the theft of savings, income and living standards declining. Is it because they haven’t realised yet or because they’re sheeple? Just following whoever’s barking the loudest and not making them think on their own. ..or worse, lying to them. Here in the UK, a recent survey showed 94% of those polled believed the UK government were working hard to slash the debt. They’re not, they’re increasing it. When it comes to the fiscal cliff in the US– we all know what‘s going to happen – a compromise. Everyone will compromise. Everyone that is except the people who are actually affected by it. They’ll just continue taking the beating they’ve been getting for the past few years, and why not? As Bill Bonner explained the other day – the further governments go, the further the voters expect them to go. But what happens when the government can’t go any further, what then? We can now see a near-global perspective when it comes to dealing with this crisis: fake it and print it. This is unlikely to change in the foreseeable future. In every election in the socialist Western world, the middle classes appear torn over the desire to protect themselves and the need to provide a safety net for those who have less than themselves and are really suffering right now. Someone needs to remind everyone around today that the ability to look after oneself and your sovereignty is a precious commodity, and one which is being rapidly lost and devalued by those who no longer care for it. I’m convinced however that once the middle-classes wake-up and realise the daylight robbery which is happening in front of their very eyes, they will be a formidable force. In the 1923 book The Irresistible Movement of Democracy, Jeremy Bentham’s work to educate the middle-classes during a campaign for parliamentary reform, is described. ‘[Bentham] instituted a school of thought and criticism which aimed to awaken the middle and intellectual classes to the need of reform. It taught the middle-classes that good government rests upon the basis of the sovereignty of the people.’ History shows that great change comes about when the people, those middle classes, rally together to educate themselves and campaign against government. Stop the Duke, Go for Gold! Is a story John Butler, of Amphora Capital, told me a while back which has played on my mind ever since. It’s a story of middle-classes fighting back at politicians, their weapon? Gold. In protest to the Duke of Wellington’s overturning of a majority Parliament (on the King’s orders), a campaign was started by the middle classes in May 1832, after a long and hard-fought fight against the Duke. Posters appeared overnight in the middle of London calling for people to ‘Stop the Duke! Go for Gold!’ in response the people drew $1.5 million in gold from the Bank of England. In June 1832 the Reform Bill received Royal Assent, the people had won. They had won by taking their money – gold – out of the hands of those who were abusing their sovereignty. Like all successful strategies, this can easily be replicated today. As is often said on this site, gold investment is not only your way of protecting your wealth from government policies but also from those who decide you no longer have the right to decide what happens to your money. Just over 70% of the American people hold savings accounts, so over two-thirds of the population are losing money thanks to negative real interest rates. It also means over two-thirds of the Americans are helping to prop up the US banking system – which in turn is supported by the Federal Reserve who are printing away not giving a thought to the US people’s savings and standards of living. The Occupy movement, whilst well intentioned will not work. Intelligent, covert protest by the middle-classes is what will make our governments sit up and pay attention. It’s our job to now tell people that good government rests on our own sovereignty and the most effective way to protest is to buy gold. Here is the link

The Gold Market Seen Through a Glass Darkly

...In December 2012, it is clear the bankers drew a ‘line in the sand’ in September 2011 to prevent another rapid ascent in the price of gold. To some, this ‘line in the sand’ presents a major barrier to gold’s advance. But, in reality, the bankers’ line in the sand represents the bankers’ desperate last ditch attempt to prevent the inevitable from happening. The systemic distress that drove gold’s 27 % rise between July and September to $1900 has not abated although the lower price of gold would imply otherwise. The present price of gold below $1800 is due solely to central bank emergency measures to contain the price of gold and China’s reluctance to let gold rise too far too fast before China can buy as much gold as possible before the next economic crisis. 2013: GOLD WAITS FOR THE END OF THE BANKERS’ CONFIDENCE GAME Speculation abounds as to the trigger event that will set off gold’s vertical ascent. It could be the collapse of the global derivatives market or a credit event such as Credit-Anstalt’s collapse in 1931, the Austrian bank owned by the Rothschilds or perhaps Japan’s inevitable descent into the deflationary conflagration it has resisted since 1990. It could be any number of events or causes. It could be triggered by a black swan event, a geopolitical crisis or a natural disaster on the level of the earthquake that struck off the coast of Japan in March 2011. Whatever the trigger, in the end the banker’s 300 hundred year-old con game will collapse from a simple lack of confidence. Read the full article here

FED Keeps Pumping

Just watching Bernake speak and highlights that I see Holding interest rates at near 0. New round of stimulus launched. How can Gold not skyrocket anytime soon?

Gold prices rise ahead of Fed news

Gold prices rose in Europe on Wednesday ahead of a Federal Reserve monetary policy statement due later in the day, at which the US central bank is expected to announce more stimulus measures to support the country's economy. Analysts say the Fed, which ends a two-day policy meeting later on Wednesday, is likely to unveil monthly debt purchases of $45 billion, which will come on top of mortgage bond buying of $40 billion a month the bank started in September. Further easing measures would likely support gold by stoking inflation fears and maintaining pressure on long-term interest rates, the opportunity cost of holding non-yielding bullion. Spot gold was up 0.2 percent at $1,713.12 an ounce at 12:22 SA time, while US gold futures for December delivery were up $5.10 an ounce at $1,714.70. “If the Fed comes out and says it is going to put $45 billion into long term Treasuries, on the face of it that is good for gold,” David Govett, head of precious metals at Marex Spectron, said. “However, I think a lot of that concept is priced into the market already. You'll see an initial blip... we could see gold rally up to $1,725, $1,730. If they say they are going to increase the amount, gold will rally further. “However, if they don't do it, or they decrease the amount, I think gold is vulnerable on the downside,” he said. By Reuters Financial markets traded sideways ahead of the announcement, with the dollar little changed against the euro and European shares steady after a sharp three-week rally as investors anticipated more Fed stimulus. “For us, the most important precondition for gold gains is loose monetary policy,” UBS said in a note. “We don't think gold has priced in a sizeable expansion in the Fed's balance sheet beyond current levels, but we do think that quantitative easing will again loom large in the first half of 2013. This overrides many other potential gold drivers.” ETF HOLDINGS RETREAT Reuters data showed holdings of gold exchange-traded funds retreated on Tuesday, with both London-based ETF Securities and New York's SPDR Gold Trust reporting outflows. Holdings of products tracked by Reuters fell 108,000 ounces. China, the world's biggest gold miner, produced 34.6 tonnes of gold in October, bringing total output over the first 10 months of the year to 322.8 tonnes, up 11 percent from a year ago, a government department said on Wednesday. Among other precious metals, silver was up 0.4 percent at $33.07 an ounce, tracking gold. Spot platinum was down 0.1 percent at $1,631.50 an ounce, while spot palladium was up 0.2 percent at $690.80 an ounce. The gold/platinum ratio, which measures the number of platinum ounces needed to buy an ounce of gold, fell to a two-month low on Wednesday at 1.05, and platinum narrowed its historically unusual discount to gold to around $75, well below its average this year of $122. Platinum and palladium have outperformed in recent months, rising nearly 8 percent and 19 percent respectively since late October, with the autocatalyst metals benefiting from a brighter economic outlook in China and the United States. The planned launch of a physical platinum and palladium fund by Sprott also underpinned sentiment, traders said. Sprott, which already manages physical gold and silver ETFs, plans to sell 35 million units, each worth $10, which will be split into equal halves to buy physical platinum and palladium, it said in a filing this month. The trust could buy more than 107,000 ounces of platinum and 253,000 ounces of palladium, raising the amount of metals held by ETFs by 7 and 14 percent respectively, Reuters calculations showed. - Reuters

Renewed Interest in Gold as a Financial Asset

You may be among those investors who had the opportunity, but did not seize it, to buy gold cheap in the early 2000s. You may also be willing, but hesitant, to do so at current prices, while still desiring the "anti-crash insurance" it represents. However, you should be aware that the yellow metal is increasingly valued as a reserve asset, which will tend to push the price up, independently of all other factors. Due to new regulations, you may also have to bid in the future alongside financial institutions, including several banks, to acquire it. Read the article on 321gold here

Dollar’s weakness may cap gains in Gold

CHENNAI: Hopes of the US Federal Reserve Bank announcing more stimulus measures to boost economy could drive gold higher on Tuesday. However, the dollar’s weakness against a basket of major currencies could cap gains. Economists say that the US Fed will announce purchase of bonds worth $ 45 billion after its meeting on Tuesday and Wednesday. This would mean pumping money in the US economy to improve employment prospects. This uncertainty over economy will force investors to shift to haven commodities such as gold. In early trade in Singapore, spot gold ruled steady at $ 1,710.70 an ounce, while gold futures were quoted at $ 1,713. In the domestic market on Monday, gold for jewellery (99.5 purity) increased to Rs 31,205 for 10 gm, while pure gold (99.9 purity) advanced to Rs 31,340. In the forex market, the dollar was down against the yen and euro in view of the speculation of US stimulus measures. Any weakness in the dollar will make imports cheaper. India depends on imports to meet its demand for commodities such as gold, crude oil and vegetable oils. Expectations that the US Department of Agriculture will come up with data showing lower inventories drove soyabean higher on Chicago Board of Trade (CBOT). Export enquiries also aided the uptrend. See the full article on msn here

Precious Metals Update – Intermediate Low at Hand

From financialsense.com Precious metal investors have had a rough year with gold stocks down double-digits while gold is set to log another positive year. Gold stocks bottomed this summer as is their custom, but rather than rallying into the end of the year they’ve hit another rough patch and have given back much of their fall rally. However, the overbought condition in gold stocks leading into October has been worked off and it appears we may be seeing another intermediate low. The big caveat is the obvious fiscal cliff situation where politicians may drive the whole market down as they did with last year’s debt ceiling fiasco. Politics aside, we still have the setup of an intermediate low and gold stocks may begin to show signs of strength in the weeks ahead. From Overbought to Oversold The big fall rally that saw the NYSE Gold Bugs Index (HUI) rally nearly 40% in a span of two months produced a pretty overbought condition. Our Gold Stock indicator nearly hit an extreme overbought reading near 1.0 but has since returned back to near -1.0, a level that often marks significant intermediate lows. Another view of the HUI is its rate of change (ROC) over various time frames. The 20 day ROC is great at finding short term lows while a 60d ROC is better at identifying intermediate lows. As seen below, both the 20d ROC and the 60d ROC are near their lower extremes, indicating that not only may a short term bottom have formed but also an intermediate one.

Silver gains favor as an investment asset

Last month, Thomson Reuters GFMS said investment demand will likely be the prime driver of the silver price this year. The precious-metals consultancy forecast that implied net investment would jump 82 million ounces to 234 million in 2012 from 2011, even as demand for silver in industrial applications is expected to fall nearly 28 million ounces Read the full atricle on marketwatch here.

DITCHING BEFORE THE FISCAL CLIFF

From Peter Schiff: Turn on the TV and this is what you'll hear: The US budget is heading for a fiscal cliff. If a deal isn't reaching in Congress by the end of this year, a combination of automatic tax hikes and budget cuts will sink America into economic depression. There is no escape. Of course, my readers know that the fiscal cliff is merely an example of the piper having to be paid. The problem isn't the bill, but that we ran it up so high in the first place. Any deal to avoid the cliff by borrowing even more money may allow the piper to keep playing a while longer, but when the music finally stops, the next fiscal cliff will be that much larger. My readers also know that there are several ways for investors to avoid the cliff altogether. Perhaps the most secure is buying precious metals. However, given what we know, it may seem confusing that the spot prices of gold and silver have been moving sideways. However, these headline prices have largely concealed a more important indicator: physical bullion sales are booming.

An Under-the-Radar Rally The figures are astounding. For US Gold Eagle coins, mint sales are up some 150% from the QE3 announcement on September 13th. Despite what the spot prices show, there has been a tremendous surge in people buying physical gold. But why hasn't this translated into higher spot prices? It seems clear that the spot prices of both gold and silver are being driven right now by a large pool of institutional capital moving into and out of instruments like commodity ETFs. The movements have been predictable: When there is a sign of a deal coming out of Washington, the spot prices move up. If negotiations are faltering, there is instead a major selloff. Physical bullion investors are a different breed. We are in this market for the long haul. When I increase my physical gold and silver holdings, I do it because I see the long-term fundamental picture for the US getting worse. Getting a Read on the Bullion Bull While the ETF speculators are trying to anticipate the market's - and each other's - immediate reaction to whatever 11th hour deal is struck, I believe physical bullion investors are sending a clear signal: this whole debate is out of order. A J.P. Morgan study concluded that 82% of the hit to GDP if we go over the fiscal cliff would be related to tax increases, not spending cuts. And if the legislators reach a deal? It will only result in more tax increases and much fewer spending cuts. These guys just don't get it. Looking back to the debt ceiling debate of August 2011, we saw big movements into physical gold there as well. What investors are concluding as they hear these grand debates is that whatever the result, the budget, the dollar, and the taxpayer will lose. They are deciding to get off this runaway train. Because the real fiscal cliff isn't coming on December 31st - it is coming when there is a global flight from the US dollar.

The Real Fiscal Cliff The Democrats are complaining that the fiscal cliff imposes too steep demands on those who receive entitlements. Republicans are trying to protect the military budget. What no one seems to want to address is what happens as foreign creditors increasingly decide to stop financing this bonanza. To a large extent, this is already happening. China has already become a net-seller of Treasuries and is diverting more of its reserves into gold. The Chinese government recently approved banks holding gold as a reserve asset and made it easier for banks to trade gold amongst themselves. While Japan and other Keynes-drunk governments have filled some of the gap with increased purchases, a supermajority of new issues are being bought directly by the Fed. That was the idea behind QE3 Plus, as described in last month's commentary. Because of the acute trauma in Europe and certain institutional mandates to hold Treasuries, much of this new inflation is being absorbed. This has caused what may be the most dangerous of situations. It has allowed the inflationists to paint people like me as the boy who cried wolf. It seems to them that no matter how irresponsible Congress and the Fed are, we are immune from economic consequences. In reality, all this money printing is like pulling back a spring. Pent up inflationary forces are building, and when they are unleashed, the debate will be over faster than they can say "oops." The Only Way to Win Is Not to Play Those buying into physical gold and silver see this inevitability and are getting prepared. We believe there is no sense playing Russian roulette with our savings. Every time Washington raises that debt ceiling or announces another stimulus, it's like one more click of the trigger. When the global markets finally wrap their heads around the scale of US insolvency, the response will be as fierce as it is rapid. In such a once-in-a-century scenario, physical gold and silver are among the few assets without counterparty risk. From the looks of the physical bullion sales charts, I'm not the only investor who has figured this out.

Gold And The Fiscal Cliff

As we roll into December, the clock is ticking on the time bomb that is the fiscal cliff. For the most part, markets seem confident that Congress will either reach an agreement or come up with some kind of measure to buy them more time to debate. But recent talks seem to be going nowhere, and many investors are starting to get worried. One of the most talked about assets in relation to the cliff is gold. Some feel as if the precious metal will soar to new highs in the coming weeks, while others think that the commodity will fall along with everything else. Either way, it appears as though the yellow metal will be a pivotal point to watch in the coming weeks. View the rest of the article here.

Bracing for the Extinction of 500 Juniors or an Entire Institution?

Seriously scary for anyone invested in the gold junior market. I just am not entirely sure as to where to go from here. As always as an investor in these speculative plays you have to know who you are investing in but this could really be ugly for many of these plays. There just is not enough money going into them, and there is no doubt many will disappear. Read the whole article here

Goldman Calls The End Of The Great Gold Bull Market

When you are a Goldbug like me this is music to your ears. You know the big boys are under a lot of pressure to keep the gold prices in check when they come out with statements like this. Won't last for long. View the full article here:

The world's commodity supercycle is far from dead

Studies by the World Bank covering two centuries of data sketch a pattern of 10-year supercycles, followed by a slide for the next 20 years or so as excess investment leads to a flood of supply. The long bear market can be cruel for those hanging onto to resource stocks, convinced that the rebound must be nigh.

Read full article

Global Gold Mines and Deposits Ranking 2012

Very interesting report

Intro:

Following on the success of last year’s report we have decided to make the ranking of the world’s gold deposits an annual endeavor highlighting trends in future mine supply, depletion, discoveries, and in-situ grades.
As far as we know, there has not been a similar effort to compile a comprehensive database of the world’s gold mines and deposits. Nevertheless, we rose to the laborious challenge as we knew that the industry reliance on risk capital via public markets presented an opportunity to data mine regulatory filings which would result in a high quality database.
With this research our goal was to provide quantitative answers to some of the questions we kept asking ourselves as investors in the space. Questions such as:
How many ounces of in-situ gold exist?
How many gold mines exist in Canada?
How rare is a 1.0 million ounce undeveloped deposit?
The report answers these questions and more while providing insight into the scarcity of mines & deposits. Additionally, having a granular view of the supply mix is useful as it allows market participants to ascertain the long-term supply and demand fundamentals of the metal.
We have made some important changes this year to the methodology of the database adding grade, tonnage, and government owned mines/deposits. We also partnered with Visual Capitalists, an investor website that provides rich visual content, to assist in visualizing the data we compiled. The report is free for usage and distribution with acknowledgment of the author.

Summary of Findings:

Total Mines & Deposits in over 1 million ounces in-situ: 439
Total In-Situ Ounces: 3,015,542,164      Total Tonnage & Grade of Database: 113.9 Billion Tonnes @ .82 g/t
Total In-Situ Ounces & Avg. Grade Producing Mines: 1,556,265,676 oz.  @ 1.06 g/t
Total In-Situ Ounces & Avg. Grade Undeveloped Deposits: 1,459,276,488 oz. @ .66 g/t

Global In-SITU Ranking

Mines & Deposits over 3 million Oz: 228                                        Mines & Deposits over 5 million Oz: 148
Mines & Deposits over 10 million Oz: 74                                        Mines & Deposits over 20 million Oz: 33
Producing Mines over 3 Million Oz: 120                                         Undeveloped Deposits over 3 Million Oz: 108
Producing Mines over 5 million Oz: 82                                            Undeveloped Deposits over 5 million Oz: 66
Producing  Mines over 10 million Oz: 43                                         Undeveloped Deposits over 10 million Oz: 31


You can see the full report here

GOLD BULLION DEVELOPMENT - GBB.V - GOLD MINERALIZATION AT DEPTH REPORTED

Preliminary Results from the Deep Hole Program Confirms Extension of Gold Mineralization 800 Metres Down Plunge and 900 Metres Vertical Depth

11 minutes ago - ACQUIREMEDIA

VANCOUVER, July 9, 2012 /PRNewswire/ - Gold Bullion Development Corp. (TSX-V: GBB) (OTCPINK: GBBFF) (the "Company" or "Gold Bullion") is pleased to announce preliminary drill results from holes and wedge holes located to the north of the existing mineralized area of the Granada Gold Property. The subject property is located along the prolific Cadillac trend in North-western Quebec, 5 km south of the city of Rouyn-Noranda.

Frank Basa, Gold Bullion's CEO, is very encouraged by results that consistently demonstrate the presence of widespread significant gold on the Granada property. Hole DUP-12-02 intercepted 4.15 grams Au per tonne over a 3 metre core length at 615 metres and 4.58 grams per tonne Au over 3 metres at 995 metres depth.

The drill plan initially called for three deep holes with one wedge in each hole and commenced with hole DUP-12-03. Due to excessive deviation, this hole was subsequently abandoned at the 400-metre level.  Hole DUP-12-03A, located 400 metres NNE (12 degrees North) of hole GR-11-390 was drilled just 25 metres to the west of DUP-12-03 and down to a depth of 1,323 metres. Three wedge holes W1, W2 and W3 were put into DUP-12-03A.

Hole DUP-12-02, located 830 metres NNE (24 degrees North) of hole GR-11-390, was drilled down to 1,593 metres with one wedge hole added, W1.

Due to the success of DUP-12-03A, DUP-12-02 and the associated wedges, (observation of visible gold and typical alteration zones) and in conjunction with the observation of visible gold in the western extension holes GR-11-375 and GR-11-363 in the backlog program, the drill was reassigned to the western extension to further evaluate near surface mineralization and hole DUP-12-01 drilling was temporarily put on hold.

The following table contains the highlights of the preliminary results. These additional gold fire assay results continue to demonstrate low grade, high tonnage, near surface intersections while also confirming specific high-grade zones at depth with thickness and grade suitable for underground mining.

Gold Bullion Granada
Highlight of partial results
Hole	From (m)	To (m)	Length(m)	Au g/t
DUP-12-02	607.50	610.50	3.00	4.15
including	607.50	609.00	1.50	8.23
DUP-12-02	992.50	995.50	3.00	4.58
including	992.50	994.00	1.50	9.13
DUP-12-03A	660.00	662.50	2.50	1.38
including	661.00	662.50	1.50	3.21
DUP-12-03A	906.00	909.00	3.00	2.07
including	906.00	907.50	1.50	3.58
DUP-12-03AW1	904.50	907.50	3.00	0.82
including	904.50	906.00	1.50	1.21
DUP-12-03AW2	660.00	663.00	3.00	4.12
including	661.50	663.00	1.50	8.12
DUP-12-03AW2	786.00	789.00	3.00	2.34
including	787.50	789.00	1.50	4.44
DUP-12-03AW2	814.50	817.50	3.00	2.04
including	816.00	817.50	1.50	3.13
DUP-12-03AW2	906.00	909.00	3.00	1.40
including	907.50	909.00	1.50	2.50
Â	Â	Â	Â	Â
GR-11-358	4.50	15.00	10.50	0.53
GR-11-358	149.00	339.65	190.65	0.39
including	149.00	170.00	21.00	1.19
including	149.00	150.50	1.50	6.38
including	165.50	167.00	1.50	3.86
including	237.00	246.00	9.00	0.86
including	271.50	279.00	7.50	2.61
including	328.00	339.65	11.65	0.80

Core length close to true thickness

Blanks and standards were inserted into the sequence at the QA/QC Laboratory while the 50-gram fire assay results were provided by Accurassay Laboratory prepared in Rouyn. Fire assays were conducted at their facility in Ontario.

Frank Basa, Gold Bullion's CEO, is pleased as results continue to demonstrate the presence of widespread significant gold on the Granada property in support of the hypothesis encompassing both a low grade near surface mine and a higher grade underground mine.

Claude Duplessis, Eng. is acting as the qualified person (QP) for Gold Bullion Development Corp. in compliance with National Instrument 43-101 and has reviewed the technical contents of this press release.

About Gold Bullion Development Corp.

Gold Bullion Development Corp. is a TSX Venture-listed junior natural resource company focusing on the exploration and development of its Granada Property near Rouyn-Noranda, Québec.  Additional information on the company's Granada gold property is available by visiting their website at www.GoldBullionDevelopmentCorp.com and onSEDAR.com.

"Frank J. Basa"

Frank J. Basa, P.Eng.
President and Chief Executive Officer

Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. This news release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, receipt of property titles, potential mineral recovery processes, etc. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.

 

SOURCE Gold Bullion Development Corp.

 

Rainbow Resources acquires Graphite properties

Rainbow Secures Strategic Position in Slocan Valley Flake Graphite Region

(via Thenewswire.ca)
GOLD VIKING DRILLING PREPARATIONS UNDERWAY
TORONTO, ONTARIO, May 17, 2012 -- Rainbow Resources Inc. (TSX VENTURE: RBW) ("Rainbow" or the "Company") is pleased to report that it has acquired, through staking, a strategic land position consisting of two claim blocks covering over 40 square kilometres in the heart of the Valhalla high-grade Metamorphic Complex (see attached map). This under-explored area in the Slocan Mining Division of southeast British Columbia, west and south of the Company's flagship Big Strike Gold-Silver Project, hosts the only producing natural flake graphite mine in western North America. The mine is operated by privately-held Eagle Graphite Corporation which has recently added to its large claim holdings in the Valhalla region.
Prospecting has already commenced on Rainbow's graphite claims in conjunction with prospecting on nearby Big Strike areas. Rainbow is also in possession of historical airborne survey information which will be of immense help in exploration of the graphite claims.
"From Eagle Graphite's potential world-class deposit, 21 km due west of our soon-to-be-drilled Gold Viking Property where we have numerous gold and silver targets, flake graphite occurrences have been reported over a broad area stretching nearly 30 km north-south," stated Rainbow President David W. Johnston. "It appears that this part of the West Kootenay region has undergone some very unique geological processes that have created extremely favourable conditions for high quality, near-surface flake graphite. The host rocks are ideal. There is strong potential for additional flake graphite deposits throughout this area, and Eagle Graphite's processing plant is already in place.
"Rainbow has the boots on the ground and the right geological team to take advantage of this graphite opportunity very close to our flagship Big Strike Gold-Silver Project where our near-term focus is on advancing several key holdings - past high-grade producers that have never been previously drilled," continued Johnston. "The strategic steps we've just taken have further solidified our position as an exploration leader in the Slocan Valley-
West Kootenay region with excellent opportunities for significant gold, silver and graphite discoveries."
Rainbow Graphite Claim Block #1
Rainbow holds a strategic 12.5-km-long claim block, totalling 2,100 hectares, beginning 5 km northeast of Eagle Graphite's mill site (14 km southeast of the mine site) and immediately north of Anglo-Swiss Resources' Blu Starr Property. Anglo-Swiss reported May 9, 2012, that up to 15% graphite has been mapped in outcrop over the northern part of Blu Starr and appears to be associated with a 3-km-long electromagnetic (EM) anomaly identified in an airborne geophysical survey completed in 2010. Less than 25% of the property was covered by the airborne survey.
Rainbow Graphite Claim Block #2
Rainbow holds another strategic claim block, 9-km-wide and also totalling 2,100 hectares, contiguous to the southern boundary of the Blu Starr Property.
Gold Viking and International Property Updates
Ground conditions are now favourable for drilling and initial site preparations are underway for a first-ever drill program at Rainbow's highly prospective Gold Viking Property adjacent to the Village of Slocan. Gold Viking, one of several Big Strike Project properties that Rainbow will be focusing on over the coming months, is part of the same geological system as the contiguous Ottawa Mines which produced 1.8 million ounces of silver in the 1900's at an average grade of 2,113 g/t or 61.6 ounces per ton.
Rainbow's Gold Viking and Ottawa properties have never been previously drilled despite historical high-grade production from both. A total of nine drill sites have been proposed for the north side of Springer Creek at Gold Viking to test coincident strong airborne conductors and soil geochemical anomalies across the central portion of the property where a geological contact for silver and gold mineralization trends in a north to northwesterly direction. Each of the drill sites will allow for multiple holes to be completed. Drilling will commence immediately upon receipt of permits.
Rainbow has also staked an additional 60 hectares to extend the western boundary of the Gold Viking Property which is situated at the eastern extremity of the Valhalla Metamorphic Complex, 21 km due east of Eagle Graphite's deposit. Eagle Graphite holds claims contiguous to the southwest portion of Gold Viking.
Ground conditions are gradually improving at Rainbow's International Silver Property, 70 km north of Gold Viking, where upcoming drilling will explore a potentially rich vein system dominated by quartz with irregular massive sulphide bodies of galena, pyrite and sphalerite that could extend near-surface for several kilometres.
Qualified Person
Rainbow's disclosure of a technical or scientific nature in this news release has been reviewed and approved by Mr. Jim Decker, P.Eng., a Director of Rainbow Resources, who serves as a Qualified Person under the definition of National Instrument 43-101.
Rainbow's shares are listed for trading on the TSX Venture Exchange under the symbol
RBW.V. Rainbow currently has 33,923,163 common shares issued and outstanding.
For further information: President David W. Johnston - (403) 701-2781.

GOLD & SILVER CRITICALLY OVERSOLD ON STRONG SUPPORT, DOLLAR OVERSTRETCHED...

From Clive Maund:

“Gold and silver now critically oversold at strong support, dollar overstretched…
Please be aware that we could see a really big bounce in Gold and Silver here, and possibly an important reversal…Gold and silver are right at strong support at their September lows, and critically oversold short-term as shown by their RSI indicators…the Dollar is showing signs that it is about to react after an incredible 13 up days in a row (trading days), with a very large white candle appearing on its chart on Tuesday, followed by a candle that approximates to a bearish “hanging man” – it is critically overbought on its RSI so its certainly a good time for it to take a breather…the “talking heads” on the major financial networks were starting to grudgingly acknowledge the possibility of QE coming to the rescue of the world economy, and it is quite clear that the moment the markets get the scent of the spigots being opened we could see a humongous rally, especially in the trampled down commodities sector…
Right now we are heading towards deflation – this is why the markets are going cold turkey…they are clamouring for another fix – everything now depends on how long our illustrious leaders can hold out before caving in to their demands…we must watch carefully for the first real signs of them doing so, this will be the point the tide turns…the charts suggest that there is a possibility of this occurring very soon”

You can subscribe (for a fee) to see the full article and all of Clive Maund's technical analysis here:
http://www.clivemaund.com/

GOLD BULLION DEVELOPMENT CORP WILL PAY DIVIDENDS IN GOLD!

Gold Bullion Development Corp. (TSXV: GBB) (OTCPINK: GBBFF) (the “Company” or “Gold Bullion”) is pleased to provide an update with respect to its proposed Shareholder Gold Royalty Program.

Is there any better way to get paid? What a great idea.

April 11, 2012 – Gold Bullion Development Corp. (TSXV: GBB) (OTCPINK: GBBFF) (the “Company” or “Gold Bullion”) is pleased to provide an update with respect to its proposed Shareholder Gold Royalty Program.
The Shareholder Gold Royalty is being developed so that Gold Bullion shareholders can participate in the security of gold ownership. The proposed Shareholder Gold Royalty is intended to allow Gold Bullion shareholders to receive a dividend payable in gold on a pro rata basis, based on the number of Gold Bullion shares held on the dividend record date. Shareholders who do not have a gold metal account or for other reason may not be able to receive the physical metal will be able to receive their dividend in Canadian dollars.
Gold Bullion intends to implement the Shareholder Gold Royalty if and when the Granada Gold Mine enters into production. The Shareholder Gold Royalty will be for the life of the Granada Gold Mine for all current resources, and for other resources that may be discovered through further exploration. Gold Bullion cannot guarantee that the Granada Gold Mine will enter into production or that the proposed Shareholder Gold Royalty will be implemented. The proposed Shareholder Gold Royalty replaces the Shareholder Gold Purchase Program outlined in Gold Bullion’s news release dated June 4th, 2008, and is part of Gold Bullion’s forward-looking policy of ensuring shareholder value. Gold Bullion will inform shareholders of the details of the Shareholder Gold Royalty as the program is developed.
About Gold Bullion Development Corp.
Gold Bullion Development Corp. is a TSX Venture-listed junior natural resource company focusing on the exploration and development of its Granada Property near Rouyn-Noranda, Québec. Additional information on the Company’s Granada gold property is available by visiting their website at www.GoldBullionDevelopmentCorp.com and on SEDAR.com.
“Frank J. Basa”
Frank J. Basa, P.Eng.
President and Chief Executive Officer
For further information contact:
Frank J. Basa, P.Eng., President and CEO at 1-514-397-4000 or
Progressive Investor Relations (Canada) at (604) 689-2881 or via email: info@progressive-ir.com

Here is an NPR radio interview with Frank Basa regarding the program.

Gold Stocks Ready to Bounce?

Quite an interesting evaluation on the disparity between Gold and Gold Stocks.

Their time may be coming.

"The opportunity is just too good to pass up. The last time these particular conditions came together, gold stocks rallied 121% in 12 months. "

Check it out:
http://www.stockhouse.com/columnists/2012/feb/14/gold-stocks--next-121--rally-starts-today

Warren Buffett: gold has no value -Gold Bug: Warren Buffet has no value!

From the Telegraph UK:

Billionaire investor Warren Buffett has dismissed gold as a valueless asset saying that it has no inherent value. In an article for Fortune magazine, Buffett said that gold investors were pining their hopes on future demand.

He warned that gold was a self-inflating bubble, created by investors desperate for a viable alternative to property and shares.

The infamous investor warned that investors in gold would be left with egg on their face when the price eventually crashed.

"Bubbles blown large enough inevitably pop," he said. "And then the old proverb is confirmed once again: "What the wise man does in the beginning, the fool does in the end."

Buffett's attack comes as private bank Coutts predicts that the gold price will hit "new highs" by the end of 2012.


Personally this is one bet I'd love to make with Buffet - I'll bet my pennies for his billions that he's wrong on this one!




See the full article here:

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/9074670/Warren-Buffett-gold-has-no-value.html

Plan Nord - Investing in the Future of Quebec

Interesting overview of Plan Nord, the long term sustainable mining development plan of the Quebec government.

Article from TMR (Technology Metal Research:

http://www.techmetalsresearch.com/2011/06/rare-earths-plan-nord-and-the-future-of-quebec/#.TyxGi9LtmAQ.twitter

Graphite in Focus....

More talk about graphite. Good read with Jack Lifton of the AU Report.

http://www.theaureport.com/pub/na/12484

Now that the USA and EU have both declared graphite a supply-critical material, I think that the few graphite players like Northern Graphite and Focus Metals will really have an opportunity to take off.

Gold Rises to 7-Week High as Dollar Alternative

Gold futures rose to a seven-week high as the Federal Reserve’s pledge to keep U.S. borrowing costs low drove the dollar down, boosting demand for precious metals as alternative assets. Silver jumped to a two-month high.

The greenback fell to a six-week low against a basket of currencies. Yesterday, the Fed said that its benchmark interest rate will stay low until at least late 2014, and gold surged 2.1 percent, the most in three weeks.

The central bank’s statement “was very bullish for gold,” David Meger, the director of metal trading at Vision Financial Markets in Chicago, said in a telephone interview. “The weakness in the dollar is also helping gold.”

Gold futures for April delivery gained 1.7 percent to $1,731.50 an ounce at 10:15 a.m. on the Comex in New York. Earlier, the metal reached $1,734.50, the highest for a most- active contract since Dec. 8.

The price may “test” $1,800 next week, said Ong Yi Ling, an investment analyst at Phillip Futures Pte in Singapore.

Silver futures for March delivery climbed 1.5 percent to $33.62 an ounce on the Comex. Earlier, the metal reached $33.79, the highest since Nov. 17.

See article here:
http://www.bloomberg.com/news/2012-01-26/gold-rises-to-7-week-high-as-dollar-alternative.html

India and Iran Trade Gold for Oil!

It begins!

Very interesting development. There is apparently a deal that has happened where two banks have made an agreement to use gold instead of dollars to trade in oil. The banks reportedly involved in this deal are India’s state owned UCO Bank and Turkey’s state owned Halkbank.

This is another sign that we are heading to a Gold Standard.

You can see the full article here:

http://www.forexcrunch.com/gold-for-oil-india-and-iran-ditch-dollar-report/

Top 20 Mining Picks - Caesars Report

Caesarsreport has released its Top 20 Mining picks for 2012, looks like a few winners in there. I am quite bullish on #13, Gold Bullion Development (GBB.V) and have picked up 200,000 shares. we'll see how she does.

Caesarsreport is a highly respected information and research provider specializing in junior mining companies.

You can see their website here http://www.caesarsreport.com/

You can link to the free report here:

http://www.caesarsreport.com/freereports/CaesarsReport_MiningTop25_2012.pdf

Gold Today

As of noon eastern time today, Gold is down 1% on profit taking to $1637/oz. A small pullback today is not really surprising after its biggest 2 week rise in over 8 weeks.
Coupled with the rise in the dollar amid downgrade talk of euro zone countries (the Euro is at a 16 month low below $1.27) it is a very modest pullback. We'll see what next week brings.

Is this the Next Gold Buying Opportunity?

Interesting article from Thomas Paterson.

There have been 3 great gold buying opportunities in the past 3 years… is/was that the 4th?

Read it here:
http://www.goldmadesimplenews.com/gold/there-have-been-3-great-gold-buying-opportunities-in-the-past-3-years-iswas-that-the-4th-5959/

Demand For Gold Likely to Rise in China in 2012

...Chinese wealth, in short, is going to gold, and coupled with households' fear of inflation, this new debate over actively devaluing the currency means Gold Investment demand is only likely to rise again....

See the full article here

http://goldnews.bullionvault.com/china_gold_011220111

The Financial System is a Farce

Interesting read from Sprott Management. The thing to take away is simply keep, and add to, your gold, silver and precious metals. You'll need em!

As the article says "We will maintain our exposure to precious metals equities and bullion"

You can read the full article here:

http://www.sprott.com/Docs/MarketsataGlance/2012/January-2012.pdf

Nicaragua goes back to gold

Record prices for gold have led to an influx of foreign investors and the reactivation of Nicaragua’s long-dormant mining industry. Annual gold production has more than doubled in just the past three years. Gold is now the country’s No. 3 export and has helped Nicaragua post the highest economic growth rate in Central America.

You can see the full article here:

http://www.globalpost.com/dispatch/news/regions/americas/120104/nicaragua-gold-mining-boom-is-back

Graphite Set to go Critical in 2012

Full article here:

http://www.beatthemarketstockpicks.com/2012/01/graphite-set-to-go-critical-in-2012.html

I have a large position in Focus Metals (FMS.V) and a smaller one in Northern Graphite (NGC.V) - Both are very likely to be big players in the coming year or 2 in the Graphite/Graphene market.


Graphite… Set to go critical in 2012

Graphite is set to go critical in 2012. It is listed as being a critical metal by the EU because the commodity is vital in the greenspace revolution including a major component to electric cars. The Chevy Volt uses 30kg of graphite while Tesla’s Roadster requires over a 100kg of graphite to make. Graphite is the main component in Lithium Ion batteries and can require more than 15 times more graphite than they do lithium. This distant cousin of diamonds is set to go through the roof as affordable mainstream electric cars are now on the market with what is clearly the preferred choice for the battery of the future, at least the next 10 years anyway. Graphite’s qualities of being lightweight and a great conductor of electricity make it ideal for automobiles where shaving off pounds is important for the performance and efficiency of the vehicle. Tesla’s Model S leads the competition with a range of almost 500km per charge and a 3 – 5 hour charge time. With these type of stats and a price range that starts to makes sense for early adopters (Prius type customers), electric vehicles are about to make major inroads into the retail marketplace.

Demand for Graphite Could Double by 2020… Mines Needed!!!

Lithium Ion battery demand could add a million tonnes of demand to the market over the next 8 - 10 years. A majority of this demand is from the growing electric vehicle market is where a major portion of the incremental demand for graphite is seen to come from. Without incremental demand the industry is still expected to see strong growth. It is already a robust 1Mt per year industry and is expected to grow to 1.5Mt by 2020. Graphite has a strong industrial component and naturally tracks closely the demand of iron ore which also has strong demand projections over the next 15 years. With a minimal 500,000 tonne to 1.5Mt of demand to potentially fill over the next 10 or 15 years in all ranges of quality of graphite, there are several opportunities in the industry to build graphite mines in a sector that is slowly being starved for supply.

Estimates for the amount of mines needed to supply this growing market vary greatly depending on several factors including scalability of current projects, incremental demand etc… but graphite deposits tend to be smaller in scale therefore production is limited meaning investment will be needed in several new mines. Most graphite mines will be hard pressed to produce more than 50,000 tonnes of graphite a year. Northern Graphite’s operation at Bisset Creek 2% Cg slated for production in 2013 will produce less than 20,000 tonnes per year and is scalable to around 35,000 to 40,000 tonnes. You can do the math but with most companies producing between 10,000 tonnes to 40,000 tonnes per year, there is a big need for investment in mine development in this sector.





Don’t believe graphite is going critical? Just look at what the Chinese are doing, they control at least 70% of the supply of the material and have recently moved to impose a 20% export duty and a 17% value added tax on the vital material that is essential for powering a green future. The same developments that happened in the rare earth space in late 2009 and early 2010 are now happening in the graphite sector. When it became apparent that Li Ion battery technology was winning out, prices in the sector have shot up over the past year with premium large flake graphite going for $3000 per tonne with industry analysts expecting prices to rise further in 2012 until production outside of China can come online which will start mid-2013. China is doing everything they can to secure enough supply of this metal to meet their own electrification needs as China aims to be a world leader in electric vehicle market. Recently China formed a partnership with GM to collaborate on an electric vehicle that will be mass produced in China. One major reason that may have swayed GM in collaborating with Chinese authorities other than the lucrative Chinese market is that the Chinese will assure GM of security of supply of critical materials they need to build second generation Volts. If electric automobiles are adopted at even moderate rates, it will be tough for miners to ever keep up with demand in this industry. One key driver behind early adoption rates is peak oil theory and prices of fossil fuels are expected to steadily rise over this decade as peak oil nears.

There are many conditions that are coming together to create the perfect storm in the sector that could ignite a multi-year rally in these public companies exploring and developing graphite projects.

The Perfect Storm?

· Strong demand
o Steady industrial growth
o Strong incremental demand from green technologies
· Restricted Supply
o Chinese control 70% of the market
§ Declining Chinese quality and increasing mining costs
§ Chinese 20% Export Tax
§ 17% Value Added Tax
o Declining western nation graphite production






Discovery to Mine… Better Than Average Odds

There is no other sector that currently offers a better chance of investing from discovery to mine. The graphite projects being vended right now are the most prospective of the known graphite deposits in Canada. The Canadian Shield is the best place to explore for these economical deposits anywhere in the world and with an established mining investment community behind them, have the best chance of being advanced to production. Currently there are two graphite miens in production. The Eagle Graphite Mine operated by Eagle Graphite in British Columbia which commenced operations in 2007 and Lac des Iles operated by Timcal in Quebec which has been in production since 1989. The Deep Bay West Mine, the Kearny Mine and Bisset Creek are the 3 projects being fast-tracked to production. One thing to note is that opening up a graphite mine is not capital intensive and 4 of the 5 companies here with projects either in production or slated for near term production are private companies. The capex for these projects is cheap when considering 1,000 to 3000tpd mill and the shallow open pit high grade nature of most of these projects where milled ore is at least double operating costs and much more when considering a project with 10% to 15% grades translating into high IRR projects. This is the one sector where you can be from discovery to a production decision with less than $5M investment.


The Public Sector Leaders

In June there were only two public companies in this sector, Northern Graphite NGC-V $0.85/$32M (low grade open pit 2% Bisset Creek) and Focus Metals FMS-V $0.82/$69M (high grade 15% Lac Knife project). Both projects have their merit, although I always say grade is king in mining.. especially when the deposits have similar parameters. Scalability and economies of scale offer the second best advantage in mining and can overcome a lower grade if the deposit is big enough, as may be the case with Bisset Creek although it is not price sensitive to Graphite and a 30% decrease in the price of graphite would extremely affect Northern Graphite's profitability. If you can find a deposit that has a combination of large tonnage and higher grade like 4% - 8% then you might have something with potential economics that “Beat the Market”. Fundamentals you want to see a great mining project off are its ability to be a low cost producer, its ability to be scaled up to a 5,000 - 7,500 tpd and the projects ability to operate for 20 - 30 years. These are the two industry leaders with the 2 styles that are economic at current prices. Graphite companies will be comparing their results to these companies depending on which type of deposit they have.

Rules of thumb to follow in the graphite industry...

* Minimum 2% Cg grade
* Minimum 1Mt of insitu graphite
* Minimum 40% +80 large mesh (large flake) distribution
* Minimum 1000tpd for Lac Knife style desposit 10 year mine life
* Minimum 2500tpd for Bisset Creek style 20 year mine life

Northern Graphite’s Bisset Creek at a 1.5% cut-off contains 20Mt tons at 1.99% Cg for 397k tonnes of in situ graphite indicated and another 34Mt at 1.81% Cg for an additional 609k tonnes of insitu graphite inferred. That is a million tonnes of graphite with a market value between $2B to $3B in situ resource with a relatively low cap-ex mine that offers substantial returns at $3000/tonne Cg. At a 1% cut-off where NGC feels is appropriate because current prices can support lower grades at the mill... contained metal at Bisset Creek balloons another 33%. The one knock that I have on Bisset Creek is that Bisset Creek is not sensitive to prices and needs at least $2000/tonne to be profitable.

Focus Metals Lac Knife project has 5Mt measured & indicated at 15.67% Cg for ~780k tonnes of insitu graphite and another 3Mt inferred at 15.58% for another half a million tonnes of insitu graphite. What makes FMS much more valuable than Northern Graphite is that mining and milling costs are approximately the same for both projects and FMS is milling 7 or 8 times more valuable rock at the same cost which will translate into Focus being a low cost producer and having much better price sensitivity if there is ever a flood of graphite onto the market. It also means that capex costs will be a bit lower as the can mill a third of what NGC mills and still produce more graphite. Obviously Lac Knife is the superior deposit if they can add tonnage, but Bisset Creek has the advantage of being fast tracked to production by 2013 and taking advantage of high graphite prices. Northern Graphite will be taking advantage of the higher grading mineralization in the early years to maximize returns where there are large areas of mineralization grading well over 2% to take advantage of in the early years.


There is some question if Northern Graphite's Bisset Creek will survive the flood of new graphite production over the next 10 years as deposits are discovered and advanced. It is a project that will do well over the next 5 to 7 years while graphite is in short supply, but after that I project this market will ultimately be flooded with a log jam of new graphite mines. Graphite is not a scarce mineral, but there is a lack of projects in the industry due to lack of exploration and development for over 20 years making Northern Graphite viable short to medium to producer.


Company

Deposit

M & I

% Cg

Inferred

% Cg

In-situ Cg

Market Cap
Focus Metals FMS-V

Lac Knife

4.97Mt

15.67%

3.0Mt

1.81%

1.25Mt

$69M
Northern Graphite NGC-V

Bisset Creek

25.98Mt

1.81%

33.67Mt

1.57%

1.33Mt

$32M


The New Entrants

Since it has become obvious that Li-Ion is in and NiMh is out, the sector has exploded with companies entering into the market in a big way. Strike Gold SRK-V $0.17/$7M acquired some highly prospective projects in Saskatchewan. Most notably the Deep Bay East which could be a potential high grade open pit project which could be a resource similar to FMS but have a bit more tonnage like NGC. Deep Bay East is a near surface 10 - 15Mt graphite project grading 8% - 12% Cg and could be a carbon copy of Deep Bay West, a private mine slated for production within the next couple of years. Deep Bay East drill highlights include 35.05m @ 8.58% Cg and trenches grading as high as 27.52% Cg. Simon Lake is what could be a company maker with extremely high grades estimated over long historic intervals covering a very large area on the southeast margins of the Athabasca Basin.

Please read my Strike Gold article in October for more information on the company and its graphite projects.

Beat the Market Stock Picks: Strike Gold SRK-V

OR-V Orocan Resources $0.29/$6M (Standard Graphite when the name change goes through) has acquired a package of 12 properties which make these guys the leaders when it comes to quantity of graphite projects. Orocan’s portfolio consists of a depleted mine in Ontario and some early stage properties in the right areas in Ontario in Quebec but with just samples and no trench or drill results to work off all of these projects are early stage. Quantity does not mean quality or that OR is the best early stage investment, at this stage a company acquiring one project has just as good a chance as a company acquiring a portfolio of 12 and the company with one project is focused.

Considering one needs to drill 10,000 - 20,000 meters to bring a project up to Northern Graphite type numbers (160 historic holes and 50 current ones) or at least a 5,000 meter drill to define a deposit like Lac Knife. You could spend a lot of money just drilling testing a 1000 meters on each before deciding where to concentrate your efforts. Wasting a couple million dollars just trying to find that one development project as a penny can hurt you. It is easy and cheap to get value out of one project like FMS or NGC, but when you are trying to work the value out of 12 at once, this proposition can find a company spinning its wheels. The better strategy and certainly more cost effective for junior company is to focus spending the dollars on one or two projects with quality historical leads instead of trying properly investigate 12 prospects at once in a cost effective manner. I am not saying OR-V doesn't have anything of merit, but currently Orocan lacks a flagship project.


That being said, Orocan has some intriguing targets on their Ontario projects including Black Donald which has drill results ranging in grade from 2.67% to 5.8% Cg and widths ranging between 3m and 15m. The Little Bryan property in the same region has trenches results over 1k in length indicating a wide orebody than Black Donald between 10m and 22m and ranging in grade from 3.72% to 5.15% cg.


Two Companies that are about to enter the Graphite Arena…

Lomiko Metals LMR-V $0.05/$2.7M and Solace Resources SOR-V $0.10/$1.3M are two companies that have stated intentions of evaluating and acquiring high impact graphite projects. Both companies are tight lipped about what they are up to, but are actively engaged in entering in this sector. These two companies are my top picks in this sector because they simply are the cheapest, have the highest leverage, have very little retail float to sell into the bid and make great ground floor stories going forward in a brand new theme. All of the projects being vended at this point have the same value and worth meaning the projects vended into these two companies have just as much merit or more as the projects Orocan has. Word on the street is that Lomiko's project has historical drill intercepts. It also allows these companies to be more focused in development plans. At $2M market cap or less for each company, these offer the best opportunities as an investment vehicles going forward for new projects in a brand new theme. At $0.05 LMR doesn’t get much cheaper and offers great potential speculation returns and has the added marketing value of being known for their Lithium project which gives them a great promotional angle 'supplying materials for a green age".

Since this article was written Lomiko announced a major graphite acquisition in Quebec called Quatre Milles with 26 holes drilled for 1600 and a project best intercept of 28.6 meters of 8.07% Cg. The project is said to average around 4% grade and potentially be as large as a 30Mt resource. This district is highly prospective for graphite, is in the same area where Orocan and Geomega have acquired properties. and. This 500km long graphitic trend extending from southwestern Quebec to North Bay in Ontario is host to Canada's largest graphite producer operated by Timcal, Lac des Iles and near term producers; Bisset Creek and the Kearney Graphite mine slated for production by 2013.

Lomiko Signs Agreement for Property in Quebec to Explore for Lithium-Ion Battery Grade, High Purity, Large Crystallite Flake Graphite

Geomega GMA-V $1.17/$26M has also staked a portfolio of prospective graphite properties but as a grassroots investment in a new industry is not as appealing as a company that has leverage and can easily add value to with a high $22M market cap and starting with a portfolio that is the same as a Lomiko or Solace or Orocan.

GMA entering into the graphite sector… More proof rare earth industry insiders see the writing on the wall.


Energizer Resources EGZ-V $0.175/$27M has announced a major graphite discovery on their Green Giant Property in Madagascar. Within their Ni 43-101 compliant Vanadium resource is also host to graphite that grades 4% to 17%. The graphite is of the amorphous type which commands only $850/tonne but the company has completed a exploration program outside of the resource where they have reported both larger flake size and higher carbon content than the graphite associated with the vanadium. The company has just finished a recon program with10 holes totaling 1157 meters of drilling and 16 trenches for a total of 1912 meters. An additional 19 holes for 2700 meters was completed in early January where the company has identified several graphitic trends extending off the Green Giant Property. This may very well be one of the largest graphite resources in the world and one of the higher grading resources with almost 60Mt of Vanadium defined with graphite grading 4% to 17% in addition to the graphite discovery outside of the Vanadium deposit.


Great Value… Even Better Value Creation

What makes this sector unique and a great early stage value investment is that it is early, all these companies are extremely cheap and won’t get any cheaper…

I have seen shells worth more than Lomiko and Solace!

You have a great chance at creating real value from a grassroots acquisition into a FMS or NGC type story on the fast track lane to production. These companies require little investment dollars to develop these near surface deposits and exploration is relatively low risk with these deposits sticking out like sore thumbs on cheap mag surveys. It is easy to turn a $1M – $5M investment into $30M - $60M value in market cap with these early stage but highly prospective properties being vended. With most drilling not much more than 100 meters deep; a 5,000 meter drill program will give you enough information to take you to initial resource and PEA stage. Advancing a project to a production decision will take 18 to 24 months and be the best bang for your dollar in any sector with the best chances of actually investing in a future mining operation.

One major advantage to the low cost exploration is that most investors who want exposure to this industry will have to buy at market as this sector will not be flooded with private placement funds making the demand on the market side for these companies that much greater.




Company

Location

Project(s)

Market Cap
Orocan Resources OR-V

Ont / Que

12 early projects – limited drilling 3% - 6%, trenches 3%-5%,

$8.6M
Strike Gold Corp SRK-V

Saskatchewan

Deep Bay East (35.05m @ 8.58%), Simon Lake

$5.3M
Lomiko Metals LMR-V

Quebec

Quatre Milles (advanced) 26 holes – 28.6m @ 8.07%

$2.8M
Geomega Resources GMA-V

Quebec

Early stage Mont-Laurier projects – samples up to 20%

$25.7M
Energizer Resources EGZ-V

Madagascar

Green Giant – awaiting results of drill program - amorphous

$27M