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Today’s
AM fix was USD 1,730.50, EUR 1,345.86, and GBP 1,080.75 per ounce.
Yesterday’s AM fix was USD 1,691.75, EUR 1,321.58, and GBP 1,058.80 per
ounce.
Silver is
trading at $32.01/oz, €25.18/oz and £20.12/oz. Platinum is trading at $1,559.50/oz, palladium at $614.00/oz and
rhodium at $1,120/oz.
Gold soared
$32.10 or 1.91% in New York yesterday and closed at $1,716.20. Silver surged
to a high of $32.25 and finished with a gain of 2.76%.
Gold in USD – Gold’s Performance in the First 4 Years of
Obama’s Presidency
Gold fell
slightly in Asia prior to eking out further gains and rising above $1,730/oz in early European trading after President Obama was
confirmed as the next President of the U.S.A.
Obama’s
election means that quantitative easing, ultra loose
monetary policies and currency debasement are set to continue in the
world’s number one economy which is bullish for gold – and indeed
silver.
Precious Metals Performance in USD in the First 4 Years of
Obama’s Presidency
The scale of
the economic, fiscal and monetary challenges in the U.S. are so great that
whether Obama or Romney was elected, gold and silver were set to continue in
their bull markets.
However, some
market participants believe that Romney would have been more conservative -
fiscally and monetarily.
Romney may
have talked a good game rhetorically but there may not have been a whole lot
of difference in the fiscal and monetary approaches of both men and any
differences would likely be a matter of degree.
U.S. and
global economic data suggests that we are on the brink of a severe global
recession and or Depression and there is a real sense of rearranging the
chairs on the Titanic about the U.S. election.
Chart via SmartKnowledgeU via Gold Seek (see
Commentary)
US Consumer
Credit numbers for September are released at 2000 GMT and expected at $10.6
billion.
Eurozone
contagion risk remains real as seen in both Spain and Greece. The general strike continues in Greece as MP’s debate and are
set to vote this evening on the 13.5 billion euro austerity plan.
November
ushers in the festival season in India with Diwali and during this time many
weddings are planned. Physical buying in Asia is expected to pick up due to
the consumer demand in India and as China again begins to stock up for
Christmas and the Chinese New Year.
Chart via SmartKnowledgeU via Gold Seek (see
Commentary)
Investors
should prepare for rising prices and more expansionary monetary policy now
that President Barack Obama has won re-election, investor Jim Rogers told
CNBC on news of the election.
The co-founder
with George Soros of the Quantum Fund said he expected Obama’s policies
to drive up commodities and drive down the U.S. dollar.
As the Federal
Reserve moves to ‘stimulate’ a stalled economy through debt
purchases, Rogers says markets should expect the status quo to remain the
same.
“If
Obama wins, it’s going to be more inflation, more money printing, more
debt, more spending.” Rogers told CNBC, saying he expected to sell U.S.
government debt and buy precious metals, such as silver and gold.
“It’s
not going to be good for you me or anybody else.”
“It
looks to me like the money printing is going to run amok now, and spending is
going to run amok now,” Rogers stated. “I have to invest based on
what’s happening and not what I would like.”
Rogers said
that he didn’t vote for either Romney or Obama, saying that “they’re
both evil as far as I’m concerned.”
With the
re-election of Obama absolutely nothing has changed and we are likely to see
precious metals perform as they did in Obama’s first term – gold
rose 136% and silver 223% (see chart and table). Much of those gains were
seen in the first 2 months, November and December 2008, after Obama was
elected and prior to him taking office and we may see that again given the
strong seasonal factors and very strong fundamentals today.
With regard to
the economy, Obama is strong on hope which he has yet to deliver.
As ever we
believe it is best to hope for the best but be prepared for less benign
scenarios.
Cross Currency Table – (Bloomberg)
NEWSWIRE
Moscow (AP) -- Divers Find Sunken Russian Ship Carrying Gold Ore
Divers have found a Russian ship carrying 700 tons of gold ore that sank
off the Pacific coast last month. The freighter Amurskaya
had been missing since Oct. 28 when it sent a distress call from the Sea of
Okhotsk, an arm of the Pacific.
A statement
from the Transportation Ministry said its 11 crew members remain unaccounted
for.
The ship was
found by divers in about 75 meters (230 feet) of water on Wednesday, the ITAR-Tass news agency reported. Police have lodged
criminal charges against the ship's owner, who also is director of the Nikolaevsk-on-Amur port, where the ship is registered,
for allegedly instructing the ship to sail despite bad weather and improper
cargo procedures.
No details on
how much gold the ore could contain have been released.
(Bloomberg) --
Pentagon Challenges Chinese Monopoly on Rare Earths: Commodities
The Pentagon and Toyota Motor Corp. are trying to crack China’s
global monopoly on mining the most valuable rare earths used in unmanned
military drones and electric-car motors.
The U.S.
Department of Defense and Asia’s biggest carmaker are working with
Canada’s Ucore Rare Metals Inc. and Matamec Explorations Inc., which are developing North
American mines that would boost supplies of so-called heavy rare earths.
Those are the less-abundant members of a group of 17 chemically similar
elements critical to make a host of products from wind turbines to
high-performance magnets for cars and weapons.
Foreign buyers
are being driven to find alternative producers after China slashed exports in
2010, partly to conserve material for its own industries. The Asian nation today
supplies about 95 percent of global demand, triple
its market share of 1990, presenting a risk for foreign makers of the next
generation of wind turbines and environmentally friendly lighting technology.
“People
won’t make a decision on manufacturing something if they don’t
know their supply is reliable,” said Jack Lifton,
a senior fellow at the Institute for the Analysis of Global Security, which
studies the links between energy and security. “If you had a reliable
American supply of heavy rare earths, General Electric might decide to make
magnets in the U.S.”
‘Incredibly
Complex’
Of more than 400 proposed rare-earth mines around the world that are tracked
by Technology Metals Research LLC, only five or six have enough heavy rare
earths and are sufficiently advanced in their development to have a shot at
making it into production, said Gareth Hatch, a co-founder of the
Carpentersville, Illinois-based firm.
“The
race is which deposit will be first at the finish line,” said Andre
Gauthier, chief executive officer of Montreal-based Matamec.
There are
risks in early-stage mining projects like those planned by Matamec and Ucore. Development
requires raising hundreds of millions of dollars of funding. Mining rare
earths is “incredibly complex,” said Chris Berry, founder of New
York-based researcher House Mountain Partners LLC.
“The
major risk is the understanding of the metallurgy and successfully separating
each of the rare-earth elements,” he said.
Price
Volatility
Rare-earth prices and stocks have been volatile over the past two years. The
commodities have slumped since mid-2011, having surged as much 10-fold
following Chinese export curbs. Molycorp Inc.,
which plans to produce rare earths in California, quintupled in less than a
year after a July 2010 initial public offering. The Greenwood Village,
Colorado-based company now trades below its IPO price. Australian producer Lynas Corp. tripled in 2010 and since then has dropped 65
percent.
That
hasn’t stopped exploration companies outside of China touting their
potential for producing heavy rare earths such as dysprosium and terbium, all
of which are harder to find and therefore pricier than so-called light rare
earths.
Toyota Tsusho,
Toyota’s trading unit, has a 49 percent stake in a joint venture with Matamec and is funding the feasibility study at the Kipawa project in Quebec. Toyota will harvest dysprosium
from the mine, while other deposits on the same property also could be
developed, Gauthier said.
Kipawa’s initial heavy rare-earth output will be
about 2,000 metric tons and may rise with further exploration on the
property. Matamec is operating a pilot plant at the
site. Estimated capital expenditure will be about $315 million, according to
Edward Otto, an analyst at Toronto-based Cormark
Securities Inc.
Alaska Mine
“We think there are places for two to four heavy rare- earth deposits
in the world outside China,” Gauthier said in a telephone interview on
Oct. 26. “The first can reach better agreements with end-users.”
Ucore’s Bokan Mountain
deposit in Alaska may produce about 3,000 tons a year of rare earths by 2016,
including enough dysprosium to meet domestic needs, CEO Jim McKenzie said.
The project
will likely get the permits it needs as Alaska is a mine-friendly state and
the project has the backing of Senator Lisa Murkowski and Governor Sean
Parnell, said House Mountain’s Berry, who has previously consulted for Ucore. The mine will cost about $150 million to build,
according to Jon Hykawy, an analyst for
Toronto-based Byron Capital Markets Ltd.
Pentagon
Accords
The U.S. Department of Defense may already be forming a nascent non-Chinese
supply chain for high-performance magnets used in weapons systems that
require heavy rare earths, said Jeff Green, president of Washington-based
lobbying firm J.A. Green & Co.
Ucore said in October that the department
initiated an exploratory partnership. Also last month, Canadian magnet maker
Great Western Minerals Group said it was chosen by the department to study the
supply of yttrium oxide, which is used in jet engines, while closely held
U.S. magnet maker Thomas & Skinner Inc. said the Pentagon will invest in
a study of neodymium-iron-boron magnets.
Green lobbied
the Pentagon on behalf of the three companies. Hitachi Ltd.’s patents
for the magnets expire in 2014, he said in an interview.
“The
floodgates should open then,” Green said.
China consumes
two-thirds of global rare earths supply, while the U.S. consumes about 10
percent, data from Technology Metals Research shows. Demand for dysprosium,
yttrium and terbium will exceed supply, according to the firm. Heavy rare-
earth production has remained almost unchanged over the past five years at
around 1,700 tons a year, Lifton said.
Auto Demand
“There will never be enough heavy rare earths, and the prices are going
to be strong,” Lifton said.
“That’s where we’re stuck.”
The Matamec and Ucore mines may
lead non-Chinese projects in expanding production of heavy rare earths by 60
percent by the end of the decade, according to Byron’s Hykawy.
The growth
will be needed to satisfy expanding demand from cars and consumer electronics
in emerging markets, according to Lifton. Ucore’s McKenzie says the biggest demand for heavy
rare earths will come from the automotive and aerospace industries.
China
hasn’t identified new rare-earth resources and could exhaust its own in
five to 30 years, while non-Chinese rare- earth supply is projected to
increase fivefold to 31 percent in 2016, Lifton
said.
“China’s
demand is going to be rapacious, and if the U.S. has these materials, China
could be a net importer,” McKenzie said. “The U.S. can turn the
tables now.”
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