Gold prices drop at end of good week

By Sara Lepro | Of The Associated Press

| Gold prices declined moderately Friday as the uncertainty of a bailout for the auto industry, combined with bleak economic reports, heightened investors' fears about a prolonged recession. Energy prices slumped, while agriculture futures were mixed.

Investors' concerns about the economy welled up again, sending stocks and commodities falling sharply in the early going after the Senate punted a bill to inject $14 billion into the beleaguered auto industry. But markets pulled back off of their lows after the Treasury Department said it was prepared to support the nation's top three automakers in an effort to prevent a major bankruptcy.

Stocks managed to close moderately higher, with the Dow Jones industrial average finishing up 64 points to the 8,629 level, after being down more than 200 at the open.

''Basically we sold off early on the back of this Detroit news and we saw sort of a gradual recovery in line with a firmer stock market on hope that there will be some money coming to them after all,'' said Edward Meir, senior commodities analyst at MF Global in New York. ''We really just tracked the equity markets all day.''

The fear has been that a bankruptcy of one of the car companies would lead to a surge of layoffs, which would ravage an already battered labor market and extend the recession.

General Motors Corp. and Chrysler LLC have said they could run out of cash within weeks without government help. Ford Motor Co., which also would be eligible for aid under the bill, has said it has enough cash to make it through next year.

A handful of bleak economic reports added to investors' uneasiness about the economy.

The Labor Department said wholesale prices sank in November for the fourth consecutive month, raising deflation fears.

And according to a report from the Commerce Department, retail sales fell 1.8 percent in November. The drop marks the fifth consecutive monthly decline -- a period of weakness never before seen on the government's retail sales records.

Businesses also slashed inventories in October by the largest amount in five years, and more than economists had expected, the Commerce Department said.

Gold for February delivery slipped $6.10 to settle at $820.50 an ounce on the New York Mercantile Exchange. Still, gold prices were up 9 percent for the week.

March silver shed 19.5 cents to $10.23 an ounce, while March copper futures slipped 8.35 cents to $1.4285 a pound. Silver and copper futures also finished higher for the week.

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Gold investors cash in as rates tumble

London Gold Market Report
By: Adrian Ash, BullionVault

With the Bank of England hitting the panic button, slashing the returns paid to UK savers down to three-century lows at the start of December, the clear winners from its campaign to refloat the bubble so far have been gold investors stuck with pounds to earn and pounds to spend.

Since the Old Lady began cutting interest rates 12 months ago, the number of UK investors choosing to own gold (through our service here at BullionVault, for instance) has risen by more than 130%.

And so far, at least, they look to have made a wise choice...

• Since the start of December '07, the average UK house price has dropped by 16% (Halifax data);

• The FTSE100 index has dropped by one-third;

• Tax-free cash ISAs (before inflation) have added just £3.40 to every £100 invested (according to the Bank of England);

• Government gilts – which typically benefit from lower bank interest rates – have returned just under 13% (capital + coupon);

The gold price in sterling, in contrast, has risen by more than one-third, up by 33.4% and hitting a series of all-time record highs throughout November above £550 an ounce.

Manufacturing output, meantime – a key target for the Bank's devaluation policy – has contracted by around 10% (says the PMI index), even as the pound in your pocket lost one-fifth of its international value on the currency markets.

Here at home, the pound has lost 3.7 pence of its purchasing power since base rate began its descent from 5.75%... down at a near-record pace to just 2.0% today.

Cash savers have been hammered by Bank of England policy, in short. Just like they're being hammered by sub-zero real rates of interest worldwide. And now, like pretty much all government wonks everywhere too, the "business-friendly" socialist authorities are planning to borrow the nation out of its debt-led deflation on top.

That will only hurt government bond investors in turn, of course, even if it takes hedge fund managers (or rather, their clients) a few months to catch on. Most especially those hapless fund clients being fed into 5- and 20-year gilts at near-record low yields will soon wonder how on earth their "safe haven" gilts came to destroy their wealth. And meantime, it's little wonder so many private individuals are opting out of official paper entirely, choosing un-inflatable, un-indebted gold as a bolt-hole for a portion of their wealth.

Will it continue to gain vs. the pound in 2009...? Nothing is certain beyond volatility. But the bank rate now stands at its very lowest level since the Bank of England was founded in 1694. Measured against the Retail Price Index (Oct. data), the Bank's key lending rate now offers an annual loss of 2.2 pence in the pound – the worst loss of purchasing power since May 1980.

In the last two months alone, and on a proportional basis, the Bank of England has slashed the returns paid to savers at the fastest pace since 1858.

Gold, on the other hand, has discharged its key duties for UK investors without a word of complaint in 2008 – defending them against a collapse in the currency and a fresh outbreak of idiocy in Westminster.

It is just a lump of metal, after all.

• This article was written by Adrian Ash, editor of Gold News and head of research at BullionVault

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The End of the Credit Line (or, The Trouble with Gold, Part III)

London Gold Market Report
By: Adrian Ash, BullionVault

"...To stay ahead of inflation, don't beg for a raise. Just borrow the money instead...!"

The TROUBLE with GOLD...? If you choose to use it as money, then you can only abandon it once. Once done, it's done forever. You can't keep floating the value of cash time and again.

Quitting the Gold Standard is a one-shot deal only. Unlike the Doctor in Kit Marlowe's Faustus, gold cannot be damned twice in Act One and then in every last scene that follows.

The fillip given to business, exporters and shopping is a one-shot deal, too – if it comes off at all. Britain's decision, for instance, to abandon gold altogether in 1931 sure looked a smart move from Birmingham southwards. By the mid-to-late Thirties, the UK enjoyed a house-building boom across the Midlands and Home Counties. But Northern ship-builders, however, missed out on the bounce, right up until the outbreak of WWII.

Across the Atlantic, debate still yawns today about Roosevelt's half-way house of 1933-35. Fearing no fear but Gold, he devalued the Dollar (down from 4.8% of an ounce to 2.8% of one ounce) and banned private "gold hoarding" to stop people looking after themselves. Did it boost prices, however? By 1938, the United States suffered a depression within depression. Economists in Washington were so shocked by the slump, they were forced to coin a new word – "recession" – to describe the phenomenon!

And gold...?

"The champion of free enterprise, Ronald Reagan, knew that growth of the private sector was in no small way dependent on deregulation and the lowering of tax rates," writes Bill Gross at Pimco.com.

"Now that those trends have necessarily come to an end, no rational investors should expect innovation and productivity to be unaffected. Profit and earnings per share growth will suffer."

De-regulation is just like abandoning gold, in that – even if it takes twenty years – you can only pull it off once. And is this trend towards loose lending and credit that "something" which we're now watching die, seven decades on from the bitter end of the international Gold Standard? Have we at last reached the end of the post-1970s settlement – non-stop inflation of money, enabled (and masked) by the non-stop de-regulation of credit and markets?

"Commodity prices rose strongly in recent years until mid-2008," write two data-jockeys at the Bank for International Settlements (BIS), "driving inflation up worldwide. [But] higher commodity prices have generally not spawned strong second-round effects on inflation."

Second-round "effects" in this context, of course, would mean higher wage claims – the bête noir of central bankers worldwide. "It's very important that wage rises don't pick up to compensate for the rise in inflation," said Bank of England chief Mervyn King way back in 2005. "We must ensure that second-round effects and risks to price stability over the medium term do not materialize," said Jean-Claude Trichet, head of the European Central Bank (ECB), more than two years later.

Why not let wage rises...ummm...rise? Because the '70s inflation was so clearly the fault of too-powerful unions, all demanding above-inflation wage rises – and all-too often getting their money from union-backed politicians. Or so central bankers agree, picking up where Margaret Thatcher and Ronald Reagan left off. Curbing unionized labor would cost workers (and thus voters) their bargaining power in wage claims, threatening to curb real living standards as the value of money declined.

But policy-makers had an answer at hand, even as double-digit interest rates stemmed the collapse of confidence in cash at the start of the '80s.

To stay ahead of inflation, don't beg for a raise. Just borrow the money instead!

Oliver Twist was thus saved the shame of asking for more from his boss, and cutting red-tape in the markets made debt look democratic. By 2007, even the poorest of households could owe a million on housing! Easy money gave easy terms to Western electorates. And so who needed a pay rise – not least after losing their union card – when the bank was only too willing to help? Who needed to risk "second round" pressures when credit was cheap and so freely available?

In straight Dollar terms, the US economy grew by 2.7% per year between 1996 and 2007. To help giddy things up, "broad money (M2) in the US grew by an average annual rate of 7.9% per year," write two European professors in the Financial Times' Fund Management Supplement, "well above the growth rate of nominal gross domestic product."

Here in London, the same story. The British economy grew by two-thirds in the ten years to summer '07; the supply of money more than doubled meantime, while private-sector debt – used to fuel constant expansion in housing and retail – rose faster still. It outpaced growth in the money supply by almost half-a-trillion pounds ($700bn)!

Both Washington and Westminster fell for their own myth, of course. But what we're living through now – or so we guess here at BullionVault – is the end of this seemingly pain-free inflation.

No, not simply the "death of inflation", first reported (à la Mark Twain's obituary) by London economist Roger Bootle more than 12 years ago. And certainly not the end of the "N.I.C.E decade" described by Mervyn King, chief pooh-bah at the Bank of England, in repeated speeches (all of them absurd) from autumn 2003.

"No Inflation, Constant Expansion" was a misnomer to start with, the lie of the first half undone by the scam of the second. Plenty more academics (most of them policy-wonks, too) also stepped up to put a name on that era, variously calling it "The Great Moderation" (Ben Bernanke) or "Great Stability" (Tim Besley, again at the BoE).

Fact was, however, there was nothing "stable" or "moderate" about the 10 years to summer 2007. Joy it may been to live through that phase of history, that final blow-off in the seven-decade bubble of spending and debt that followed the last Great Depression. But "non-inflationary" does not apply – not when you remember that, just like it's evil twin (deflation), inflation in truth refers to a trend in the money supply...a growth in this case, which – if it outpaces production, as the last 10 years so clearly did, winds up in prices. That then requires a deflation to get costs back to even. Unless you play Faustus, repeatedly damned, yet somehow believing that you might yet escape.

"The current weakened state of the economy is such that it could not withstand a body blow like a disorderly bankruptcy in the auto industry," said a White House press secretary after the Senate rejected the "Big Three" bail-out today. "Because Congress failed to act," chips in a Treasury wonk, "we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry."

Never mind how much it costs. This is just money after all. And there's always more to be printed in a world free of gold. Right up until the cost of the wood-pulp outstrips the value of cash, and money reverts to its base purpose once more.

Scarce resources made vivid by a rare, precious asset.

Adrian Ash
BullionVault

Gold price chart, no delay | Gold investment – simple, safe & efficient

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – where you can Buy Gold Today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2008

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GoldTraderAsia.com - Where to Buy and Sell Gold Bullion Bars, Gold Ingots, Gold Coins Collection and Gold Jewellery in Singapore.

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Gold Up 8% for US Investors as Auto Bail-Out Fails; "Hard Men" of Central Banking Choose Inflation as Solution, Not the Problem

London Gold Market Report
By: Adrian Ash, BullionVault

THE PRICE OF WHOLESALE GOLD held inside a tight $10 range early in London on Friday, nearing the week-end almost 8% above last week's close for US investors.

World stock markets sank, meantime, losing 5.5% in Tokyo and dropping 5% in Paris, after the US Senate killed a $14 billion bail-out of America's "Big Three" auto-makers.

"I dread looking at Wall Street," said Harry Reid, Democrat leader in the Senate.

"It's not going to be a pleasant sight."

Crude oil dropped more than 5% from yesterday's sharp rally, despite rumors of Opec acting to slash output quotas. News of the auto-rescue's death also sent the price of platinum tumbling below Gold Prices for the first time since late 1995.

Some 60% of annual world platinum supplies are used in auto-catalyst production (Johnson Matthey statistics). Its price has now sunk to a 53-month low, dropping by two-thirds from the record highs of Feb. this year.

"It could become familiar to see the Gold Price trading at a premium to platinum," says Mitsui, the precious metals dealer, today.

"Even if the bail-out had been approved," says Walter de Wet at Standard Bank in South Africa – the world's No.1 platinum mining nation – "we believe platinum demand will remain under pressure.

"Who will buy the cars? With the US consumer under pressure, we do not yet foresee a turnaround in sales."

Data from the Federal Reserve late Thursday showed US households paying down debt for the first time in six decades.

Up to 30% of the bulk cargo ships booked for 2009 delivery could be cancelled, reckons Martin Strothmann – head of German ship financiers Ideenkapital Marine Finance – due to the collapse in world trade.

"Shipowners are cancelling orders on a massive scale where this is legally possible," he told a Hamburg conference on Thursday, quoted by Reuters.

At the London Metal Exchange on Friday, base metal contracts sold sharply lower on what Goldman Sachs calls "substantial surpluses" for 2009.

Unlike industrial metals such as copper and platinum, in contrast, the monetary metal of Gold Bullion "is serving its purpose as a hedge of wealth in uncertain times," notes a report from the Canadian mining team at PricewaterhouseCoopers.

The consultancy's latest Gold Mining survey also forecasts a near-4% drop in global output for 2008. World gold mining output peaked in 2003, back when the gold price stood at just one-half of today's level.

Over on the currency markets Friday, the British Pound clung onto one-half of yesterday's 5¢ bounce against the Dollar, capping the Gold Price in Sterling below £547 an ounce – some 2% beneath Thursday morning's New Record Gold Price for UK Investors.

The European single currency meantime held 5% above last Friday's close vs. the Dollar, trading at $1.3330 and curbing the week-on-week gains in gold for French, German and Italian investors at 2.7%.

British gold buyers are 6.2% better off. Gold rose 5.3% this week vs. both the Canadian and Australian Dollars.

Meantime in the debt markets, government bond prices rose, pushing the yields offered to new buyers lower still – especially on short-dated Treasuries – despite fresh warnings of Quantitative Easing worldwide.

Printing money to buy government, business and banking debt, central banks Thomas Jordan, a board member of the SNB, said the bank was mulling extreme measures to stabilise the financial system and cushion the economy as it falls into recession next year.

"We could engage in quantitative easing and we could intervene in foreign exchange markets," says Thomas Jordan – a member of the Swiss National Bank, which yesterday slashed its key interest rate to just 0.5%.

"Or we could buy up bonds and try to influence long-term interest rates. All these options are open and we're not limited in any way in choosing from among these instruments."

Printing money in a bid to support asset prices and stoke fresh borrowing, "What they are saying is that inflation is no longer a problem, it's the solution," notes David Bloom, chief currency trader at HSBC bank in London.

"The SNB are the hard men of central banking; they are even harder than European Central Bank. [But] they want stimulus any way they can get it.

Adrian Ash
BullionVault

Gold price chart, no delay | Gold investment – simple, safe & efficient

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – where you can Buy Gold Today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2008

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GoldTraderAsia.com - Where to Buy and Sell Gold Bullion Bars, Gold Ingots, Gold Coins Collection and Gold Jewellery in Singapore.

To buy Hallmarked 999.9 Pure Swiss Gold Bars, Gold Bullion, Gold Ingots & 916 Gold Coins in Singapore or convert your 916 Physical Gold to physical 999.9 Pure Swiss Gold Bars, Click on Buy Gold Bullion Bars to find out more. You may Sell Gold Bullion Bars to us too.
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Significant Insider Buying at Visa and Nevada Gold

When we research stocks for our investment management clients, insider purchases play an important role in our research. Why? Quite simply because insiders almost always know more about the business than any analyst could ever know.

Obviously we cannot - and do not - rely solely on insider purchases, but we feel that it is a very good way to find potentially great companies to invest in.

Aligning incentives

Insider buying absolutely indicates an upbeat management team, but it also aligns the incentives of management with those of the owners (shareholders). Management teams that have a significant monetary stake in the performance of the company - through ownership of stock - are far more likely to increase shareholder value more effectively and efficiently than those who do not.

Here are some significant insider purchases that we ran across during our research that we believe warrant further investigation:

Visa, Inc.

Since its initial public offering (IPO) in early 2008, Visa (V) shares are currently 40% below their 52-week high of $89, but still 22% above the listed IPO price of $44 per share. Just yesterday, Visa Chief Executive Joseph Saunders re-iterated the Company’s guidance of 20% growth in 2009, and an adjusted operating margin in the mid-to-high 40 percent range.

Considering the economic conditions in the credit market - and the global economy as a whole - this guidance is extremely positive for the company. Furthermore, Visa is not exposed directly to rising defaults because it does not issue cards directly, similar to Mastercard (MA), but unlike American Express (AXP), Bank of America (BAC), Capital One (COF), Citigroup (C), and JP Morgan (JPM).

It’s no surprise, then, that in December alone, insiders - including Joseph Saunders - have purchased more than $1.1 million worth of stock on the open market.

Allied Nevada Gold Corp.

As we discussed in an earlier article, Gold to $2,000 by 2009? Citigroup Thinks So., we believe that gold could be a great investment to weather the economic downturn, and suggested investors take a look at Yamana Gold (AUY), Kinross Gold Corp (KGC), and GoldCorp (GG)or any number of individual gold stocks.

One additional gold explorer and producer that caught our attention this week was Allied Nevada Gold Corp. (ANV)when a director for the company, Robert Mackay Buchan, reported that he had bought more than $800,000 worth of the stock on the open market back in October, at prices similar to the $3.55 per share we saw on Wednesday.

As always, the companies mentioned in this article should NOT be taken as recommendations, but rather as a list of companies that merit further research.

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Dollar vs. Gold - Can We Trust This Change?

We've been watching the dollar vs. gold very carefully, and the action the past few days has been interesting to say the least. The action today, if you trust the charts, could be signaling a complete change in character. We've been saying all this printing of paper will be a disaster for the dollar (eventually), and a boon to gold (in theory)... other commodities as well (theoretically). This is the "reinflation" trade.

What has been perplexing people is the strength in the dollar since late summer, despite the U.S. being the nexis of the world's problems. In any other country where a financial crisis is born, the currency would be abandonded. Overlay this with the interest rate cuts - which should be yet another knife in the back of the dollar - all things being equal, capital should flow where it is treated better (higher rates), not treated the worst.

This is what the textbook says - however reality has given us the exact opposite. The dollar has rallied for months on end. Why? The theories have been, as bad as the US situation is, the rest of the world is even more scarier. Personally I disagree with that. I think that is thinking born over 30,40,50 years. If you look at the "balance sheet" of the US, plus the coming entitlements in the coming decades [Mar 26: Annual Spring Entitlement Warning Falls on Deaf Ears] , plus the bailout bonanza - we are heading for bankruptcy/default [Nov 12: CNBC Europe: USA May Lose its AAA Rating] or a printing spree of dollars that is going to make what is currently going on look like a tea party.

How the U.S. is "safe" versus an Australia, Canada, Switzerland is beyond me. Germany, despite a similar recession as the US in exports, does not have a country built on a housing bubble, credit bubble, and over consumption bubble. why is the US "safer" than Germany? (unfortunately there is no independent currency there anymore). But it takes a long time for people to break historic concepts and "the US is the safe haven" has been burnt into people's minds for decades. I think as we suffer the consequences of our "kick the can down the road" and "only deal with the fire on the couch we currently sit on" actions, this shall change in the coming decades.

But this is all theory. The dollar should be faltering, but everything is technical in nature and chart-driven. A trend stays a trend until it no longer does. At "some" point, these trends that have played out for months should reverse, the dollar should begin to weaken and gold strengthen. So that's the difference between "theory" and "seeing it really happen". What has been playing out the past few days has shown this reversal, and today key technical measures on the (long) dollar ETF were taken out. Can we trust it? Hard to tell, as nothing in this market seems trustworthy but this could be inning one of a long-term reversal.

This is the the bullish dollar ETF - Powershares DB US Dollar Bullish ETF (UUP). It broke its 50 day moving average today for the first time (other than a few days) since July 2008. One could say a beautiful double top (bearish) just over $27.



In theory the gold ETF - GLD should trade in inverse. We now have reached the same spot we reached two weeks ago, which is either going to form a double top (bearish) in gold (where we stand at this moment) or once we clear above that 200 day moving average, the potential beginning of a new bull market. I would say a move over $83 in GLD signals we could have the "change" here.



And the inverse of the bullish dollar ETF (of course) is now breaking out to the upside - Powershares DB US Dollar Bearish ETF (UDN) - you can quite obviously see the change in character.



If this is step one of a "real" move and not just a quant hedge fund headfake, two ways to play are the dollar bearish ETF and Double Long Gold ETN (DGP) - also sitting there with a double top (potentially). This is just double the gold chart above, so they will move in concert, but this one with double the velocity.



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ScotiaMocatta: Gold Trends to Snowball

From Mineweb comes news of a report by ScotiaMocatta, the global bullion banking division of the Bank of Nova Scotia, about the gold market.

In its December Metals Matters report, ScotiaMocatta suggests that global financial problems "seem so deep rooted that demand for gold as a safe haven is expected to escalate."
...

ScotiaMocatta's analysis revealed that gold lease rates have been soaring and "likely to put an end to the gold carry trade, at least for a while. With interest rates falling, the profit margin on gold carry trades has diminished significantly. This means that as former carry traders come to the end of their term, gold will be withdrawn from the system and returned to central banks."

"As carry trades are closed the pressure on the spot market will switch from selling pressure to buying pressure," they advised.

If people lose faith in the financial system and their currencies, ScotiaMocatta forecasts "the growing trend in wanting some gold as a store of wealth may start to snowball."

It's probably fair to say that a lot of people have already lost faith in both the financial system and paper money. Add to this the fact that winter begins next week (snow is forecast in these parts over the weekend) and you have a surefire recipe for snowballs.

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GoldTraderAsia.com - Where to Buy and Sell Gold Bullion Bars, Gold Ingots, Gold Coins Collection and Gold Jewellery in Singapore.

To buy Hallmarked 999.9 Pure Swiss Gold Bars, Gold Bullion, Gold Ingots & 916 Gold Coins in Singapore or convert your 916 Physical Gold to physical 999.9 Pure Swiss Gold Bars, Click on Buy Gold Bullion Bars to find out more. You may Sell Gold Bullion Bars to us too.
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Confused About Warrants? Using Goldcorp to Explain

Warrants are being mentioned more and more in the traditional media as the U.S. government moves to receive warrants in connection with some of the bailout/rescue plans for the Big Three auto manufactures and also with AIG back in September.

Warrants have a long history going back into the 1920s, but the average investor has absolutely no idea what this investment vehicle is all about.

So let’s make this simple and provide you with a brief understanding of warrants and why you should perhaps consider warrants in your investment plans. (After all, this is not rocket science!)

Warrants are a security issued by a company usually in connection with a financing arrangement or a public offering of shares giving the holder the right, but not the obligation, to acquire the underlying security at a specific price and expiring on a specific date in the future. Sounds a lot like a call option, doesn’t it? Yes, very similar but with a few important differences, namely, how they are issued and how they are traded.

While understanding the term warrants is essential, the next most important question is a warrant on what? The underlying company is of utmost importance because if the company does not perform, execute on its business plans and thus the shares price rising in the markets, then the warrants can not be expected to go up and we are all about making money.

A common question from investors is why would I buy a warrant when I just want to own the common shares of the company? Good question and we have a very easy answer. An investor would purchase a warrant because of the expectation of a greater gain than purchasing the common shares and this term is usually referred to as leverage. See our analysis below on Goldcorp (GG). We would normally suggest investors attempt to seek a leverage of 2 to 1, meaning if the common shares rise by 100% we would expect the warrants to increase by 200%. Another benefit of buying the warrant is that it will cost you much less money thus lowering your investment cost and potentially increasing your return on your investment.

Perhaps a detailed example would clarify any questions you may still have on warrants.

Let's say you are a believer in the return of the long term bull market in the precious metals and commodity sector and you are aware that one of the major gold producers is Goldcorp which trades on the NYSE and the TSX. As you hear many analysts commenting on Goldcorp, you are thinking maybe this would be a good addition to your portfolio. You do some more research (due diligence) and find that Goldcorp, a Canadian company headquartered in Vancouver, Canada, employs more than 9,000 people worldwide has has 16 world class operations and development projects focused throughout the Americas with over 70% of reserves in low risk NAFTA and they do not hedge or sell forward its gold production.

Now you are excited. You have found that Goldcorp meets all of your criteria and you see the potential for the shares to rise perhaps to $70 to $100 due to your bullish views on the precious metals markets within the next 2 years.

This is where we encourage investors, before purchasing the common shares, to ask the question, does Goldcorp (or any other company you are considering in your portfolio) have a long-term warrant which is trading which may provide me with a better return on my investment? We know that Goldcorp does in fact have a warrant which is trading and the issue now becomes, what is the exercise price, when does the warrant expire and does this warrant offer me great upside leverage as the common shares increase in price?

As of the close on Friday, December the 5th, Goldcorp common shares were at C$27.85 and the warrants at C$7.34. The warrants have an exercise price of C$45.75 and will expire on June 9, 2011. At a projected share price of $100 you would have a gain of 259% and with the common at $100, the warrants would have a minimum gain of 639% for a leverage of 2.5 times.

We would like to stress that this is an example and not a recommendation of the Goldcorp warrants. However with the warrant trading on Goldcorp if the answers to your questions are answered satisfactorily the warrant should then be purchased in lieu of the common shares after performing your due diligence and consulting with one's investment advisor.

Currently there are warrants trading on some of the large producers as well as many of the smaller junior mining companies with expiration dates of 2011 and out to 2017 providing investors with some incredible opportunities.

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GoldTraderAsia.com - Where to Buy and Sell Gold Bullion Bars, Gold Ingots, Gold Coins Collection and Gold Jewellery in Singapore.

To buy Hallmarked 999.9 Pure Swiss Gold Bars, Gold Bullion, Gold Ingots & 916 Gold Coins in Singapore or convert your 916 Physical Gold to physical 999.9 Pure Swiss Gold Bars, Click on Buy Gold Bullion Bars to find out more. You may Sell Gold Bullion Bars to us too.
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Gold Jumps Against All Currencies as Rate Cuts & "Crass Keynesianism" Try to Reboot the Bubble

London Gold Market Report
By: Adrian Ash, BullionVault

THE PRICE OF WHOLESALE INVESTMENT GOLD continued to rise in Asia and London early Thursday, breaking an 8-week high at $834 an ounce, gaining against all major currencies, and reaching new all-time highs for British investors – now suffering the worst Sterling Crisis in 32 years – above £552.

Down by more than 20% from this time last year against the rest of the world's money, the British Pound has now fallen at its fastest rate since the UK begged an IMF Rescue in 1976.

The Labour government then under Jim Callaghan embarked on a "deflationary package" to reduce public spending and debt, and to defend the currency.

Today's New Labour government under Gordon Brown, in contrast, has promised a record jump in public debt for 2009, while the Bank of England has slashed interest rates to an all-time low in a bid to repeat the record private-bank borrowing of 2007.

Thursday morning saw the Swiss National Bank (SNB) cut its key lending rate to just 0.5%.

The Russian central bank today devalued the Ruble for the fifth time in a month, widening its acceptable "trading band" after throwing more than a quarter of its foreign-money reserves at trying to defend the currency.

Overnight, the US Congress approved $14 billion in emergency loans to the "Big Three" auto-makers overnight, but the signature of President Bush is still required – and "Republicans will not allow taxpayers to subsidize failure," according to Senate minority leader, Mitch McConnell.

"The [UK's] switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking," said German finance minister Peer Steinbrück to Newsweek magazine yesterday, helping spark a new record high in the Euro vs. the Pound.

The Euro then rose to a 6-week high vs. the almighty Dollar today, breaking through $1.3200 as the US currency weakened against the Aussie and Canadian "commodity" plays.

"If the US Dollar continues its slide, the only way is up for gold," reckons Emanuel Georgouras, a trader at precious metals dealer Marex Financial in London.

That said, however, "It is hard to expect gold to continue its northward journey without some decent profit taking along the way."

Gold outpaced all major world currencies on Thursday, rising back to A$1,250 for Australian buyers and touching C$1,040 for Canadian investors.

The Gold Price in Euros rose to €630 an ounce, gaining almost 6% for this week so far.

Measured in the old German Deutsche Mark – the only major-economy currency to escape double-digit inflation during the late 1970s – gold ticked higher towards DM 40,000 per kilo, the key 25-year high first reached at the end of last year.

"All this will do is raise Britain's debt to a level that will take a whole generation to work off," added Germany's Peer Steinbrück of the UK's much-vaunted cut in value-added tax.

The slight cut from 17.5% to 15.0% may not stoke spending by over-borrowed consumers, who already owe 170% of Britain's annual GDP in household debt. But it will cost the Treasury at least £12.5 billion ($18bn).

Writing today at FT.com, Philip Stephens notes "a chilling sense of déjà vu" in Germany's comments, comparing them with Helmut Schlesinger's advice to journalists in Sept. 1992 that Britain's attempt to keep Sterling inside the Exchange-Rate Mechanism – the trading bands which preceded the launch of the single Euro currency were doomed.

"It was a self-fulfilling prophecy. Within 48 hours Sterling had been forced out of the ERM by a wall of speculation."

Meantime on the stock market today, London's FTSE index held flat as Frankfurt's Dax recovered from an early 1.5% slide.

German and US bond yields fell back as prices bounced from yesterday's dip.

Crude oil leapt by 5%, repeating Wednesday's huge volatility, after the International Energy Agency (IEA) said it expects the Opec oil cartel to actually action the output cuts it's already agreed to try and stem falling prices in the face of a collapse in new demand growth.

Adrian Ash
BullionVault

Gold price chart, no delay | Gold investment – simple, safe & efficient

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – where you can Buy Gold Today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2008

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Gold prices jump back above $US800

Article from: Dow Jones Newswires

TECHNICALLY oriented buying helped push gold futures sharply higher in New York, with the impetus coming from improved risk appetite as shares rose early in the session, a weaker US dollar and higher crude oil prices.

Most-active February gold rose $US34.60 to settle at $US808.80 an ounce on the Comex division of the New York Mercantile Exchange.

Initially, some of gold's strength appeared to be tied to an increased likelihood that US automakers may get a congressional bailout, said Tom Pawlicki, analyst with MF Global.

Thus, traders appeared willing to take on more risk, and this was also reflected in other markets, including equities and currencies, he explained.

"Stocks are up, so gold is up," says Dominick Cognata, broker with BCT Trading on the Comex floor. "That's been the trend. Also, the euro is up and the US dollar index is down."

Shortly after gold closed, the Dow Industrials were up by around 65 points but had been up by as many as 187.81. The euro rose as high as $US1.3050, its strongest level against the greenback since November 26 and well up from $US1.2927 late in the previous session. Shortly after gold floor trading closed in New York, the US dollar index was down 0.556 point to 85.281.

Carlos Sanchez, analyst with CPM Group, cited other factors as well. There were reports of strong physical demand on the recent pullback to the area around $US740 to $US750, he said.

And technical buying appeared to set in, especially as the futures accelerated above the $US780 area. The market moved above the psychological $US800 level for the first time since December 1.

"You have the US dollar retreating sharply," Mr Sanchez said. "And you have an up-tick in oil prices."

Gold is also still seen as a safe haven, especially with yields on short-term Treasury markets around zero, said Mr Sanchez and Gijsbert Groenewegen, managing partner of Silver Arrow Capital Management.

"That is indicating fear in the market," Mr Groenewegen said.

In fact, amid the fears of recession, he pointed out that gold has held up far better than crude oil, one of the bellwethers for the commodities complex.

Nymex nearby crude lost roughly two-thirds of its value from a record high of $US147.27 a barrel this northern summer to around $US45. Meanwhile, spot gold lost roughly one-fifth of its value from near $US1030 an ounce this spring to the $US800 region.

Mr Sanchez looks for a wide range in gold over the next several months.

The next upside resistance may lie around $US820 to $US830, he said.

Some profit-taking could push prices lower again. There is also potential for losses on any further sell-offs in equities, such have occurred a number of times this fall, he said. "That's still a possibility, given that it happened in September, October and November," he said.

Yet, Mr Sanchez said he looks for gold to eventually work higher over the next six months. There is likely to be further demand for safe havens such as gold and Treasury products amid the ongoing economic and financial uncertainty, he said.

But despite sharp run-up in the latest session, MF Global’s Mr Pawlicki looks for the metal to be held back in the next two quarters.

Mr Pawlicki noted that many gold advocates have cited expansion of the money supply as a factor likely to lead to inflation. But at the moment, he pointed out, short-term yields are near zero. And, he said, Treasury Inflation Protected Securities are only factoring in annual inflation of roughly 75 basis points per year over the next decade.

"The only way to achieve that is to have a couple of quarters of negative inflation, or deflation," Mr Pawlicki said.

He added in a research note that "inflation has yet to be seen in any government data and that the buzzword at the moment is deflation. In fact, money markets are currently exhibiting all the characteristics of a liquidity trap."

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Gold rallies above $800 an ounce as dollar falls

By Polya Lesova, MarketWatch

NEW YORK (MarketWatch) -- Gold futures rallied above $800 an ounce Wednesday, as rising oil prices and weakness in the U.S. dollar propelled demand for the precious metal.

Gold for February delivery surged $34.60 to end at $808.80 an ounce on the New York Mercantile Exchange. This was gold's highest closing level since Nov. 28.

Earlier Wednesday, the contract hit an intraday high of $813.80 an ounce.

"The bounce in oil prices is likely lending support, as is continuing robust physical demand internationally," said Mark O'Byrne, executive director of Gold & Silver Investments Ltd.

Gold gained $4.90 Tuesday to end at $774.20 an ounce on the New York Mercantile Exchange.

Oil futures rallied Wednesday, but ended below their intraday highs, as the market weighed a build in U.S. crude and gasoline supplies against speculation that Saudi Arabia may implement a big production cut in January. Rising oil prices tend to increase demand for gold as a hedge against inflation. See Futures Movers.

The Reuters/Jefferies CRB Index (CRB:) , a benchmark gauging the prices of major commodities, rose 2.9% to 221.92 points.

Dollar weakens

In the currency markets, the U.S. dollar fell against most major currencies, but rose against the Japanese yen, as progress toward a $15-billion federal bailout for the nation's auto industry buoyed risk appetite among investors.

The dollar index (DXY , , ) , a measure of the greenback against a trade-weighted basket of six currencies, fell 0.5% to 85.36 in recent trade. See Currencies.

Dollar weakness typically boosts dollar-denominated commodities such as gold.

On Wall Street, U.S. stocks rose on optimism about a bailout of the U.S. auto industry. See Market Snapshot.

House Democrats said they were planning to hold a vote later Wednesday on $15 billion in bridge loans for the struggling U.S. auto industry after they reached agreement on the aid with the White House, even as some Senate Republicans said they were wary of the plan and threatened to block it. Read more.

"The notably weaker dollar and a steady equity market helped to offset continued gloom, as Rio Tinto announced cuts in its work force, European industrial output crumbled in October" and China's exports and imports shrank unexpectedly, said analysts at Sucden Financial in a research note.

China's exports declined in November, the first such contraction in more than seven years, underscoring the severity of the global slowdown and painting a bleak outlook for the sustainability of mainland exports in the months ahead.

Exports fell 2.2% from the year earlier after they rose 19.2% in October from the year earlier, according to data released Wednesday by the General Administration of Customs. Imports fell 17.9% after rising 15.6% in October on year. Read more.

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Gold rises on dollar's fall; silver up

Bloomberg News

Gold jumped the most in two weeks on speculation a weaker dollar and higher commodity costs will boost demand for the precious metal as a hedge against inflation. Silver also gained.

The dollar fell for the second time in three days against a basket of six major currencies. The Reuters/Jefferies CRB Index of 19 raw materials climbed as much as 3.2 percent. Gold reached a record in March as the CRB headed to an all-time high in July and the dollar fell to a record against the euro.

"People are getting more concerned about inflation down the road," said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. "If the government keeps on spending and interest rates stay low, it's going to come back and bite us. If the dollar heads lower, that'll be the stimulus gold needs to put together a nice run."

Gold futures for February delivery rose $34.60, or 4.5 percent, to $808.80 an ounce on the Comex division of the New York Mercantile Exchange, the biggest gain since Nov. 21. The price is up 7.5 percent this week.

Silver futures for March delivery climbed 35 cents, or 3.6 percent, to $10.20 an ounce.

"You've got support for gold as the dollar begins to fall," said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago.

Fed-Funds Forecast

The Federal Reserve probably will lower its benchmark lending rate 50 basis points to 0.5 percent on Dec. 16, according to the median estimate of 72

economists surveyed by Bloomberg News. The federal-funds rate was at 5.25 percent in September 2007 before the Fed began slashing borrowing costs. Gold and most commodities generally move in the opposite direction of the dollar. The U.S. Dollar Index fell as much as 0.8 percent against the basket of currencies. The gauge is still up 11 percent this year, headed for the first annual gain since 2005.

"The dollar can't push any higher now," said Tom Hartmann, a commodity analyst at Altavista Worldwide Trading Inc. in Mission Viejo. "Gold is one of the better-performing commodities this year, but that doesn't mean it has more to gain. Silver is perhaps undervalued."

Gold has dropped 3.5 percent this year, while silver was down 32 percent. Gold climbed to a record $1,033.90 on March 17. Gold's decline is the smallest among 16 commodities in the CRB in 2008. Crude oil and copper are down by more than half. Only cocoa, hogs and sugar have posted gains.

"We're witnessing risk appetite returning, but it's more short-term in nature, instead of an initiation of a long-term uptrend," said Tom Pawlicki, an analyst at MF Global Ltd. in Chicago. "In this environment, where we see Treasury bills at zero, credit markets are the new safe haven, and gold is trading more with riskier assets."

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UK's Pain, Gold Owner's Gain

London Gold Market Report
By: Adrian Ash, BullionVault

"...For UK investors choosing to Buy Gold in 2008, the metal discharged itself without a word of complaint..."

WITH THE BANK OF ENGLAND hitting the panic button, slashing the returns-paid-to-UK-savers down to three-century lows at the start of December, the clear winners from its campaign to reboot the bubble so far have been gold investors stuck with Pounds to earn and Pounds to spend.

Since the Old Lady began cutting interest rates exactly 12 months ago, the number of UK investors choosing to own gold through our service here at BullionVault, for instance, has risen by more than 130%.

And so far, at least, they look to have made a wise choice...

• Since the start of December '07, the average UK house-price has dropped by 16% (Halifax data);
• The FTSE100 index has dropped by one-third;
• Tax-free cash ISAs (before inflation) have added just £3.40 to every £100 invested (according to the Bank of England's data);
• Government gilts – which typically benefit from lower Bank interest rates – have returned just under 13% (capital + coupon);
• The Gold Price in Sterling, in contrast, has risen by more than one-third, up by 33.4% and hitting a series of all-time record highs throughout November above £550 an ounce.

Manufacturing output, meantime – a key target for the Bank's devaluation policy – has contracted by around 10% (says the PMI index), even as the Pound in your pocket lost one-fifth of its international value on the currency markets.

Here at home, the Pound has lost 3.7 pence of its purchasing power since Base Rate began its descent from 5.75%...down at a near-record pace to just 2.0% today.

Cash savers have been hammered by Bank of England policy, in short. Just like they're being hammered by sub-zero real rates of interest worldwide. And now, like pretty much all government wonks everywhere too, the "business-friendly" socialist authorities are planning to borrow the nation out of its debt-led deflation on top.

That will only hurt government bond investors in turn, of course, even if it takes hedge fund managers (or rather, their clients) a few months to catch on. Most especially those hapless fund clients being fed into 5- and 20-year gilts at near-record low yields will soon wonder how on earth their "safe haven" gilts came to destroy their wealth. And meantime, it's little wonder so many private individuals are opting out of official paper entirely, choosing un-inflatable, un-indebted gold as a bolt-hole for a portion of their wealth.

Will it continue to gain vs. the Pound in 2009...? Nothing is certain beyond volatility. But Bank Rate now stands at its very lowest level since the Bank of England was founded in 1694. Measured against the Retail Price Index (Oct. data), the Bank's key lending rate now offers an annual loss of 2.2 pence in the Pound – the worst loss of purchasing power since May 1980.

In the last two months alone, and on a proportional basis, the Bank of England has slashed the returns paid to savers at the fastest pace since 1858.

Gold, on the other hand, has discharged its key duties for UK investors without a word of complaint in 2008 – defending them against a collapse in the currency and a fresh outbreak of idiocy in Westminster.

It is just a lump of metal, after all.

Adrian Ash
BullionVault

Gold price chart, no delay | Gold investment – simple, safe & efficient

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – where you can Buy Gold Today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2008

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GoldTraderAsia.com - Where to Buy and Sell Gold Bullion Bars, Gold Ingots, Gold Coins Collection and Gold Jewellery in Singapore.

To buy Hallmarked 999.9 Pure Swiss Gold Bars, Gold Bullion, Gold Ingots & 916 Gold Coins in Singapore or convert your 916 Physical Gold to physical 999.9 Pure Swiss Gold Bars, Click on Buy Gold Bullion Bars to find out more. You may Sell Gold Bullion Bars to us too.
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Gold at 1-Week High as Stocks Stall, Bond Yields Go to Zero; Europe's Largest Gold Mine Blocked "Without Appeal"

London Gold Market Report
By: Adrian Ash, BullionVault

THE PRICE OF GOLD rose steadily throughout early London trade Wednesday, reaching a one-week high above $792 per ounce as strong gains in Asian equities faded on Europe's bourses.

As the Wall Street opening drew near, the FTSE100 index stood just 0.3% higher, while the Gold Price in Sterling reached £534 an ounce, almost 3% above Tuesday's low.

The Gold Price in Euros broke up to €612 an ounce, its best level so far this week, while the single currency slipped back from a 10-session high vs. the Dollar above $1.3000.

"Banks and brokers globally are now well capitalized," says Walter de Wet in his Gold note for Standard Bank in Johannesburg today, "with total capital raised exceeding total write-downs by $41 billion.

"[But] we doubt that credit fears have subsided for good."

Here in London, today's Telegraph newspaper reports that UK banks – now part-nationalized by the socialist Labour government – will need fresh tax-payer funds if they are to deliver both greater lending to households and business as well as the improved "core capital" ratios demanded by City watchdog the Financial Services Authority (FSA).

The Financial Times says UK chancellor Alistair Darling may extend tax-funded guarantees to business loans and credit in a bid to revive corporate lending.

"Banks are being asked to lend significantly more without fully pricing in the risks," says Simon Ward, economist at the ailing New Star investment group.

"That puts their capital positions in jeopardy and may mean they need a further capital injection in a year or two."

Across the Atlantic in Washington, a Congressional vote is now widely expected on a $15 billion rescue of the "Big Three" US car makers.

Global auto sales are predicted to end 2009 more than 8% below last year's levels according to new research from the Global Insight consultancy.

A report in the Wall Street Journal says insurance giant American International Group (AIG) owes $10 billion on failed trades that are not covered by the US government's $150bn bail-out.

World mining megalith Rio Tinto said today it will slash jobs by more than one-in-eight as demand for base metals collapses. November saw China record its first year-on-year drop in exports – down 17% from the same month in 2007 – for the first time since 2001, new figures show.

Yesterday the yield paid to buyers of 3-month US Treasury bonds turned negative as the price of these so-called "safe havens" surged yet again, offering a 68-year low of minus 0.01%.

"The futures market is pricing in a 98% probability of 75 basis-points cut by the Fed next Tuesday to 0.25%," continues De Wet at Standard Bank. "We believe other central banks will follow."

But while Negative Real Interest Rates Drive Investors to Gold, low crude oil prices – holding below $44 per barrel on Wednesday – offer "little support.

"In fact," says De Wet, "crude oil might test yet lower levels towards year-end."

Gold Futures traded in Tokyo meantime rose 1.8% today, even as the Japanese Yen reversed an early dip on the currency market.

The Nikkei stock index added 3.5%, reaching its best close in three week, despite news of a shocking fall in machinery orders (down 4.4% in Oct. from Sept.) and a sharp decline in corporate goods prices (down 1.4% month-on-month).

"The precious metals are creeping higher," says the precious metals team at Mitsui in London, "but from a technical perspective we are in the middle of a consolidation phase.

"Gold is range-bound between $740-830."

On the other side of the trade, meantime, shares in Canadian Gold Mining firm Gabriel Resources fell to an all-time low on Tuesday – down by four-fifths since Jan. '07 – after a Romanian court cancelled a key license at its much-delayed Rosia Montana project.

Scarred by streams of toxic run-off since it was first mined in Roman times, the "Red Mountain" – Europe's largest gold deposit – is estimated to hold 14.6 million ounces of gold.

The high-profile blocking campaign – part-funded by Hungarian hedge-fund legend George Soros and fronted by English actress Vanessa Redgrave – yesterday won the annulment of an "archeological discharge certificate", without which Gabriel cannot disturb the historic site.

The court's decision "is final, is not appealable" said the judge.

Adrian Ash
BullionVault

Gold price chart, no delay | Gold investment – simple, safe & efficient

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – where you can Buy Gold Today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2008

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GoldTraderAsia.com - Where to Buy and Sell Gold Bullion Bars, Gold Ingots, Gold Coins Collection and Gold Jewellery in Singapore.

To buy Hallmarked 999.9 Pure Swiss Gold Bars, Gold Bullion, Gold Ingots & 916 Gold Coins in Singapore or convert your 916 Physical Gold to physical 999.9 Pure Swiss Gold Bars, Click on Buy Gold Bullion Bars to find out more. You may Sell Gold Bullion Bars to us too.
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Gold climbs 4 pct to above $800/oz as oil rallies

LONDON (Reuters) - Gold climbed 4 percent on Wednesday to a 10-day high above $800 an ounce as oil prices rallied ahead of U.S. stockpiles data, and on dollar weakness against the euro.

Strength in the industrial metals and firmer equity markets also cheered buyers, as U.S. stocks rose at the open and European shares edged higher.

Spot gold rose to a session high of $807.70 an ounce, and was quoted at $805.50/807.50 an ounce at 2:33 p.m., up from $775.50 an ounce in New York late on Tuesday.

In sterling terms it rose to 545.63 pounds, only 1 percent from the high of 550.82 pounds it reached in October.

U.S. gold for February delivery was up $32.20 an ounce at $806.40 on the COMEX division of the New York Mercantile Exchange. It reached a high of $808.70 in earlier trade, its firmest since Dec 1.

Citi analyst David Thurtell said gold's rise had been fuelled by technical factors, as key stops were triggered below $800 an ounce. "There is a little dollar weakness and oil jumped...so that is giving it a hand," he added.

Rising crude prices, which can boost interest in commodities as an asset class and in gold as a hedge against oil-led inflation, have supported the precious metal.

Oil jumped more than 5 percent to over $44 a barrel. Traders are looking ahead to U.S. stocks data later in the session and next week's meeting of oil cartel OPEC, where production cuts will be discussed.

"There is speculation that further OPEC oil production cuts could lift prices," Fairfax analyst John Meyer said.

The dollar slipped to a two-week low against the euro as a tentative U.S. plan to bail out carmakers relieved some risk aversion, which had benefited the U.S. currency. Traders sold the dollar and low-yielding yen as market volatility calmed.

Traders are also eying the equity markets, which provided strong direction to gold on Tuesday. U.S. stocks rose at the open as news of a tentative agreement to provide aid to U.S. automakers calmed investor fears.

European equities also edged higher as gains in miners, led by Rio Tinto after it announced job cuts, outweighed falling bank stocks.

"Equities are going up, and that's helping gold," Calyon analyst Robin Bhar said.

PLATINUM FIRMS

Platinum and palladium also strengthened a touch as the market awaited fresh news on a potential rescue plan for ailing U.S. automakers, which could improve the demand outlook for the metals used in catalytic converters.

Traders are eying a $15 billion U.S. plan to bail out carmakers, whose problems have knocked the metal in recent months.

The U.S. House of Representatives could vote as early as Wednesday on a plan to restructure carmakers but the project could still be blocked by the Senate, officials said.

Lawmakers fear that a collapse of any of the Big Three automakers -- General Motors , Chrysler or Ford -- could deepen the U.S. recession.

But while talk of the bailout has helped arrest the metal's sharp slide -- platinum has shed more than 65 percent of its value since its March peak -- it may not push it higher.

"Given the slowdown in demand for platinum group metals, this news is only likely to provide a temporary boost to prices," Barclays Capital said in a note.

Spot platinum was quoted at $820.50/840.50 an ounce, against $803.50, while sister metal palladium was up at $176.50/184.50 an ounce against $174.

Among other precious metals, spot silver rose to $10.14/10.22 an ounce from $9.79.

(Editing by Sue Thomas)

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Kinross Gold Leads Gold Sector Rebound

Gold stocks have been bouncing back recently, but few can challenge the extraordinary recovery of Kinross Gold (KGC), which has more than doubled since its low below $7. This is a sign that KGC is indeed one of the best gold mining companies in the world, since it has bounced back the furthest and the fastest.

(click to enlarge)

Technically some good signs from KGC are that the Relative Strength Index is moving higher having bounced up off the oversold zone at 30. Similarly, the MACD is trending northwards and is now in positive territory, but can still rise a lot further before giving an oversold signal.

If one is to have favourite shares, Kinross Gold Corp would certainly be one of ours, as it has been a holding of ours for years now, although we have traded the ups and downs when the opportunities presented themselves.

Having originally acquired Kinross at $10.08, after a large rally Kinross then went through a bit of a pull back so we signalled to our readers to “Add To Holdings” at discounted levels of around $11.66. We also gave another ‘Kinross Gold BUY’ signal when we purchased more of this stock on the 20th August 2007 for $11.48. On 31st January, 2008, we reduced our exposure to this stock when we sold about 50% of our holding for an average price of $21.96 locking in a profit of about 93.60%. On the 24th July, 2008, we doubled our holding with a purchase at $18.28 giving us a new average purchase price of $14.50.

As well as trading the stock, we have also dabbled in options contracts with Kinross, buying call options in KGC on the 16th June, 2008, paying $2.68 per contract and selling them on the 28th June 2008 for $5.30 per contract generating a 100% profit in two weeks. We then re-purchased them after they dropped for $2.50, and we are still holding them, although at a significant paper loss.

The reason we like Kinross Gold Corp so much is that it fits our criteria almost perfectly. When we look for a gold stock to buy, we are looking for solid fundamentals, a stable geopolitical situation and most importantly, leverage to the gold price itself.

As far as the fundamentals go, Kinross is a mid to large cap gold producer with a market cap of $9.47 billion. Some may consider this too large a company to offer decent leverage to the gold price, but as shown by the recent performance of the stock price, Kinross is definitely providing that leverage.

As well as leverage to rising gold prices, Kinross is also growing well as a company in its own right. Having made a gross profit of $390.40M in 2006 and then $501.80M in 2007 and with the Sep 08 quarterly profits at $269.80M, Kinross appears to be on track for another good year of record profits. There is also something in the financials that is particularly helpful in the present credit environment. In the last report from KGC, out of the $1284.80M in current assets, Kinross has a massive $322.90M in cash. This means it is well positioned to face any liquidity issues and will not be forced to try and raise money in the current difficult credit conditions.

Therefore, we continue to like Kinross and maintain our stock and option position in the company. Kinross Gold Corp is not only well positioned to benefit from rising gold price, but it is also a great company in its own right, with good growth potential. A full list of the stocks we cover can be found in our free online portfolio at www.gold-prices.biz.

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GoldTraderAsia.com - Where to Buy and Sell Gold Bullion Bars, Gold Ingots, Gold Coins Collection and Gold Jewellery in Singapore.

To buy Hallmarked 999.9 Pure Swiss Gold Bars, Gold Bullion, Gold Ingots & 916 Gold Coins in Singapore or convert your 916 Physical Gold to physical 999.9 Pure Swiss Gold Bars, Click on Buy Gold Bullion Bars to find out more. You may Sell Gold Bullion Bars to us too.
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Goldcorp Provides Update on Penasquito Project

Goldcorp Inc. (GG) provided an update for the Penasquito project in Mexico on Monday, a day ahead of its tour for analysts and shareholders.

The miner said its capital cost estimate is less than 10% higher than the original estimate of $1.494-billion and construction continues to progress well.

When engineering work is complete, Goldcorp expects an approximate increase of 30% in gold reserves and a 15% to 20% increase in silver, lead and zinc reserves for year-end reporting.

There is also the potential for initial resources to be declared for bulk mineable and high-grade underground zones, as well as the Noche Buena property nearby, noted Canaccord Adams analyst Steven Butler. He assumes reserve additions will be roughly 40% for gold and silver and around 16% for lead and zinc.

Concentrate shipments are scheduled to being in the fourth quarter of 2009 and commercial production is expected for the following quarter. Meanwhile, shipments of large trial lots are anticipated in 2009 now that concentrate samples have been provided to select smelters, Mr. Butler said in a research note.

The analyst also noted that Goldcorp’s optimization efforts are underway. They include the possibility of recovering precious metals from low-grade lead ore that was previously considered uneconomic, the potential for underground bulk mining beneath currently defined open pits, and the possibility of cheaper power from a dedicated facility through a partnership with an independent provider.

Canaccord rates Goldcorp a “buy” with a price target of $32 per share.

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The Fed Still Manipulates Gold and the Markets

In a dynamic duo of articles published last weekend, I predicted the fall of the Dollar via a Gold-based perspective, and a US Treasury-based perspective. I want to round off and perhaps even reinforce my theory with a few more opinions and thoughts, which of course may be faulty as the major decisions are still at the mercy and discretion of the Fed, whom I have learned to never underestimate. To be a real "expert" in economics today requires one to be an "expert" in predicting government interventions, so it is all guesswork unless one is an insider. I am highly interested if there are any crucial facts I am missing by the way, please leave any counterarguments below.

I own some gold and if gold goes down I'll buy some more and if gold goes up I'll buy some more. Gold during the course of the bull market, which has several more years to go, will go much higher. – Jim Rogers, famed commodities trader, last week

I have written previously how the Fed creates and destroys money, but the example I used of open market operations (OMOs) has changed dramatically in 2008. The Fed is, on a daily basis, still altering its Treasury holdings, but more importantly propping up other assets by buying them, such as mortgage-based securities, Citigroup (C), AIG, etc. The Fed balance sheets have plunged from its historical levels of ~95% Treasury securities to less than 32% Treasuries, which hampers OMOs since the assets purchased will likely find no willing buyer on the market.

It may seem like the Fed is creating lots of money (and they are) but remember that $7.76 trillion, $8.5 trillion, WHATEVER the new number will be by the end of this week, pales in comparison to the amount of financial derivatives in existence, which per the BIS at last count (and just over-the-counter!) was $684 trillion. I am not sure if I ever wrote this phrase in this column before, but I’ve always viewed the financial crisis as a "Triple-D" crisis. Dollar. Debt. Derivatives.

There is another method of money destruction that I have not overlooked and want to mention. In an economic "disintegration" or a monster of a recession, money can also be destroyed by corporate, government and private bankruptcies.

In the debt-based world we live in, I think money destruction could be seen in shocking scales far exceeding the imaginations of the Keynesian-economics-based minds of the Fed and other central bankers. For instance, comparatively there has been much less noise in the commercial mortgage markets. However, if a lot of businesses fail, which has been known to happen in any recession, how do you suppose those mortgages will be repaid to the banks? In such a scenario, central bankers have just two options: create replacement money to re-inflate supply, or revalue the currency to an asset (very likely gold, after all central bankers do not hold at least some gold for their collective health, the yellow stuff is nice life insurance for fiat currency, ain't it?).

In this eye-popping December 4 essay by James Conrad, he reasons the central bankers will revalue to some sort of a gold standard to escape oblivion, and the price of gold will go from $750 per ounce to $7500-9000. [Remember the "price" is not REALLY going up, after all 1 ounce of gold is the same from day to day. What it really means is that all fiat currencies are going to be massively devalued as the worthless scraps of paper and electrons they really are!]

There is a legal requirement that, in every futures contract that promises to deliver a physical commodity, the short seller must be 90% covered by either a stockpile of the commodity or appropriate forward contracts with primary producers… Things, however, are changing fast. As previously stated, the first major mini-panic among COMEX gold short sellers happened last Friday. As of Wednesday morning, about 11,500 delivery demands for 100 ounce ingots were made at COMEX, which represents about 5% of the previous open interest. Another 2,000 contracts are still open, and a large percentage of those will probably demand delivery. These demands compare to the usual ½ to 1% of all contracts.

Time for Captain Calculator! On December 5, the open interest was 264,796 contracts (at 100 troy ounces per bar). This equates to 823 tonnes, a very significant amount equal to about 10% of the total gold reserves claimed by the United States, the world’s largest holder. There are 26.5 million ounces in contracts and only 2.9 million ounces in COMEX warehouses to cover deliveries as Dr. Fekete notes here. Over 40% of the warehouse totals will be delivered before January 1.

Where is the gold to cover the rest of the contracts? In the ground? In central bank vaults? At the GLD London vault? I do not know the answer, but I agree with Fekete’s comment on gold’s recent backwardation and Conrad, the traders requesting delivery are skeptical there is enough.

Conrad then proceeds to outline a very convincing (to me) proof that ends with:

It is only a matter of time before gold is allowed to rise to its natural level. Assuming that about half of the current increase in Fed credit is eventually neutralized, the monetized value of gold should be allowed to rise to between $7,500 and $9,000 per ounce as the world goes back to some type of gold standard. In the nearer term, gold will rise to about $2,000 per ounce, as the Fed abandons a hopeless campaign to support COMEX short sellers, in favor of saving the other, more productive, functions of the various banks and insurers.

Revaluation of gold, and a return to the gold standard, is the only way that hyperinflation can be avoided while large numbers of paper currency units are released into the economy. This is because most of the rise in prices can be filtered into gold. As the asset value of gold rises, it will soak up excess dollars, euros, pounds, etc., while the appearance of an increased number of currency units will stimulate investor psychology, and lending and economic output will increase, all over the world. Ben Bernanke and the other members of the FOMC Committee must know this, because it is basic economics.

Hyperinflation is nasty stuff. I first wrote about it in my July article "Calling All Wheelbarrows: Hyperinflation in America? (Part 2/2)" and a fellow Nolan Chart columnist, Republicae, with far more experience than I wrote "The Hyper-Inflationary Trigger."

Jim Sinclair, precious metals expert, comments here:

I recently completed the same mathematics that helped me so much in 1980 to determine the price that would be required to balance the international balance sheet of the US.

Balancing the international balance sheet is gold’s mission in times of crisis.

I recently did the math again and was sadly shocked to see what the price of gold would have to be to balance the international balance sheet of the USA today. That price for gold is more than twice Alf’s projected maximum gold price.

Alf Field’s maximum projection is $6,000 per troy ounce. Wow, guess Captain Calculator can take a vacation! On that note I would like to end with a reminder to the republican, Republican, and the third person who is reading this:

"We renew our allegiance to the principle of the gold standard and declare our confidence in the wisdom of the legislation of the Fifty-sixth Congress, by which the parity of all our money and the stability of our currency upon a gold basis has been secured."

– Republican National Platform, 1900

"We believe it to be the duty of the Republican Party to uphold the gold standard and the integrity and value of our national currency."

– Republican National Platform, 1904

"The Republican Party established and will continue to uphold the gold standard and will oppose any measure, which will undermine the government’s credit or impair the integrity of our national currency. Relief by currency inflation is unsound and dishonest in results."

– Republican National Platform, 1932 [Above are sourced from H.L. Mencken, A New Dictionary of Quotations on Historical Principles from Ancient and Modern Sources (1985, p. 471)

"We must make military medicine the gold standard for advances in prosthetics and the treatment of trauma and eye injuries."

– the only mention of gold in the Republican National Platform, 2008. Try searching for ‘gold’ or ‘dollar’ here.

Well, the Gold Standard ended in the US in 1914 when the first unbacked and "unsound" Federal Reserve Notes were printed. Ok, I hate the Fed, but fellow columnist Gene DeNardo phrased it best in his intriguing article "MV=PT A Classic Equation and Monetary Policy":

When the economy grows in a healthy way, we all share in the profit as our currency becomes stronger and is able to purchase more.

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GoldTraderAsia.com - Where to Buy and Sell Gold Bullion Bars, Gold Ingots, Gold Coins Collection and Gold Jewellery in Singapore.

To buy Hallmarked 999.9 Pure Swiss Gold Bars, Gold Bullion, Gold Ingots & 916 Gold Coins in Singapore or convert your 916 Physical Gold to physical 999.9 Pure Swiss Gold Bars, Click on Buy Gold Bullion Bars to find out more. You may Sell Gold Bullion Bars to us too.
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