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Gold shines as Swiss franc's haven appeal dims
By Jan Harvey and Jessica Mortimer
Reuters
Monday, August 22, 2011
http://www.reuters.com/article/2011/08/22/us-gold-currencies-idUSTRE77L2...
LONDON -- Moves by the Swiss National Bank to curb strength of the Swiss franc will fuel investors' insatiable demand for gold, adding to its relentless rise to new record highs as confidence in the franc as a safe store of value dwindles.
Analysts say this could help gold vault $2,000 an ounce within the coming weeks, with the potential for very large spikes if risk aversion on financial markets gains momentum.
The Swiss franc has fallen sharply from record highs since the SNB bank vowed on August 10 to take steps to curb franc strength. The Swiss central bank has flooded the franc market with liquidity and sold the currency via swaps on the forward market to dim its appeal.
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Prophecy Platinum Reports 10.97 Million Ounces Inferred
and 1.04 Million Ounces Indicated PGM+Gold in Yukon
An independent resource report on the Wellgreen project in the Yukon Territory in Canada has just confirmed that it as one of the largest platinum group metals projects in Canada and one of the few outside South Africa, Prophecy Platinum Corp. Chairman John Lee says.
The report, compliant with Canadian National Instrument 43-101, was written by geologist Todd McCracken of Wardrop Engineering Inc., a Tetra Tech company. It incorporated drill data from 701 diamond drill holes (182 surface and 519 underground) totaling more than 53,222 metres. Using a 0.4 percent nickel equivalent cutoff grade, the Wellgreen deposit now contains a total inferred resource of 289.2 million tonnes at an average grade of 0.53 g/t platinum, 0.42 g/t palladium, 0.23 g/t gold (1.18 g/t PGM and gold), 0.38 percent nickel, and 0.35 percent copper. Separately, the deposit also contains an indicated resource of 14.3 million tonnes at an average grade of 0.99 g/t platinum, 0.74 g/t palladium, 0.52 g/t gold (2.25 g/t PGM and gold), 0.69 percent nickel, and 0.69 percent copper.
Prophecy Platinum Corp. trades on the Toronto Venture Exchange under the symbol NKL, on the pink sheets in the United States as PNIKD, and in Frankfurt as P94P.
For the complete press release on the Wellgreen report, please visit:
http://prophecyplat.com/news_2011_july14_prophecy_platinum_new_resource_...
Since that date, gold priced in Swiss francs has spiked. This reversed a trend over recent months when Swiss franc-denominated gold stayed relatively steady as gold in other major currencies hit a string of record highs.
"While gold in euro, sterling, and dollar terms was really skyrocketing, gold in Swiss franc terms wasn't doing much, and that's telling us that the Swiss franc was being seen as a proxy to gold," said Stephen Gallo, head of market analysis at Schneider Foreign Exchange.
"Now we've seen an enormous spike in Swiss franc-denominated gold, which may indicate that the SNB has succeeded in causing the Swiss franc's proxy status to gold to become unhinged."
Swiss franc-priced gold has risen nearly 20 percent since the SNB's announcement, hitting a record high for the first time since June 2010 near 1,500 francs ($1,908) an ounce. Spot gold has climbed just over 8 percent to record highs just below $1,900 an ounce in the same period.
With concerns about high U.S. debt and a weak economy denting the appeal of the dollar and intervention by Japanese authorities weighing on the yen, the SNB's measures remove the franc as the remaining accessible safe-haven currency, boosting demand for gold.
"Given that even the Swiss are considering adding liquidity to the market, gold as a currency that can't be printed has a certain attraction," said David Jollie, an analyst at Mitsui Precious Metals.
Maurice Pomery, an analyst at consultants Strategic Alpha, said that now the SNB have "turned off the safety valve," gold could surpass $2,000 an ounce within two weeks, while silver will also gain.
Analysts say gold's appeal is enhanced as the SNB's actions have caused short-term deposit and money rates in Switzerland to turn negative.
"Gold usually does well in currencies that cut rates and have negative real rates," said Tobias Merath, an analyst at Credit Suisse. "If you get a negative nominal yield on government paper and a zero yield on gold, then gold looks more attractive."
Once seen as a hedge against weakness in the dollar, gold is increasingly perceived as an alternative to paper currencies in general as central banks seek to keep their currencies weak via quantitative easing or through intervention -- described by some as "currency wars."
Central bank intervention in currency markets typically has a significant effect on gold prices. Gold priced in Japanese yen rallied nearly 9 percent to a then-record high near 140,000 yen ($1,836) an ounce in the week after the Bank of Japan intervened to curb strength in the currency on August 4.
Gold prices have hit record highs in recent weeks in all major currencies -- U.S. dollars, yen, euros and sterling -- as well as major commodity currencies such as the South African rand, Canadian, New Zealand and Australian dollars.
The devaluation of major currencies cannot be seen in currency rates -- except until recently against the Swiss franc -- because all currencies have been losing value, but it can be seen in their value against gold.
Bank of New York Mellon currency strategist Simon Derrick argues that gold's long-term ascent that began in 2001 coincided with the Bank of Japan's quantitative easing program that began that year and went on until 2006.
"Gold is a flight from currency debasement," BNYM's Derrick said. "It's not gold going up, it's developed currencies going down."
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Golden Phoenix Q2 2011 Conference Call Posted at Company Internet Site
The second quarter 2011 conference call of Golden Phoenix Minerals Inc. (GPXM) has been posted at the company Internet site for immediate playback. The call includes updates on the start of gold production at the company's Mineral Ridge gold project in Nevada, the letter of intent to acquire the Santa Rosa gold mine in Panama, and the company's due-diligence efforts to secure a senior stock exchange listing.
The conference call is 18 minutes long and you download an mp3 of it here:
http://www.goldenphoenix.us/audio/GPXMCC071211.mp3
Or play back the call here:
http://goldenphoenix.us/conferencecalls/
Golden Phoenix is a U.S. mining company with international exposure to gold, silver, and strategic metals. The company's business model combines project generation and royalty mining that offers the potential for exploration upside, coupled with the backing of production and future royalty streams. View company videos here:
