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Peter Brimelow: Indian gold buying seems likely to resume
By Peter Brimelow
MarketWatch.com
Monday, April 2, 2012
http://www.marketwatch.com/story/gold-bugs-think-q2-will-bring-new-rebou...
March was very cruel to gold bugs. But they think the metal will now rebound.
Gold measured by the CME active contract floor-close was down 6.5% or $116.20, measured from Feb. 28. The NYSE Arca Gold Bugs Index was down 13.8%. (Measuring from Feb. 28 represents March better. Leap Year Day, Feb. 29, saw a brutal selloff, smashing a promising rally and establishing the new month's character.)
The last month of a quarter seems to be a dangerous time to own gold instruments. Last December was gruesome too, giving gold bugs a notably unmerry Christmas.
But in January, gold rebounded. Could another new-quarter reversal be possible?
The latest of gold’s two decent attempts to rally in March peaked last Monday. Although gold then fell back, over the whole week gold gained 0.6%, and further comfort to the bulls was offered by gold's starting to rise mid-morning in New York on Thursday and adding $17 on Friday -- when the HUI closed up 1.09%.
... Dispatch continues below ...
Prophecy Platinum (TSXV: NKL) and Ursa Major Minerals
Sign Combination Agreement
Company Press Release
Friday, March 2, 2012
VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) and Ursa Major Minerals Inc. have signed a binding letter of agreement for a business combination through a proposed all-share transaction. In doing so Prophecy and Ursa have acted at arm's length and the transaction has been negotiated at arm's length.
Prophecy will issue one common share in exchange for every 25 outstanding common shares of Ursa. Ursa options and warrants will be exchanged for options and warrants of Prophecy on an agreed schedule.
Prophecy's offer represents a value of about $0.15 per each common share of Ursa based on Prophecy's share price of $3.70 as at March 1, representing a premium of 130 percent to Ursa's March 1 closing price of $0.065.
Prophecy is to subscribe for $1 million common shares of Ursa by way of private placement financing at $0.06 per share, subject to regulatory approval. Upon placement completion, John Lee and Greg Hall, current Prophecy directors, will be appointed to Ursa's board.
Prophecy thus will become a mid-tier resource company with a robust and
diversified pipeline of platinum nickel projects, including:
-- The fully permitted open-pit Shakespeare PGM-Ni-Cu mine close to Sudbury, Ontario, infrastructure with near-term production capabilities.
-- The flagship Wellgreen (Yukon) PGM-Ni-Cu project with more than 10 million ounces of Pt-Pd-Au inferred resource. Drilling is under way and a preliminary economic assessment study is pending.
-- Manitoba's Lynn Lake Ni-Cu project with more than 262 million pounds Ni and 138 million pounds Cu measured and indicated.
For the complete announcement, please visit Prophecy Platinum's Internet site here:
http://www.prophecyplat.com/news_2012_mar02_prophecy_platinum_ursa_major...
And there's possibly bullish news out of India, by far the largest importer of gold. (China is a rival to India in consumption, but it mines the bulk of the gold it needs: India mines almost none).
The Indian government doubled import duties on the yellow metal on March 17. The huge Indian gold fabricating and retailing trade responded by going on strike! Reports from bullion dealers confirm that Indian imports subsequently have been very light, despite the low gold price.
But on Friday evening HSBC gold analyst James Steel came up with something of a scoop: He reported that the strike is over. Subsequent newswire stories appear to confirm this.
There are differing opinions as to how much the increase in the gold duty -- to just over 4% -- will impact longer-term Indian demand. But in the short run, a substantial increase in imports after the drought of the last two weeks seems likely.
Gold bugs see reason for optimism from another angle too. CME gold open interest (the number of gold contracts outstanding, reflecting total public participation) plunged far more than gold in this period -- down 15.2% to Thursday's close.
Not only is this more than double gold’s 6.5% decline, but it also takes open interest down to the level of early September 2009, when gold was in the upper $900s.
The Golden Truth website points out that after the September 2009 decline, "gold began the move to its 2011 cyclical peak just below $1,900. During that run, open interest expanded to over 660,000 contracts."
Big declines in open interest on falls in the gold price normally mean liquidation by CME contract longs. A posting over at the LeMetropoleCafe website suggests the March problem was the "liquidation of some major spec involvement."
If so, the new quarter could well see a directional change.
More evidence: an interesting chart supplied on Tuesday by Standard Bank, an active bullion dealer. This was its Gold Physical Flow Index, derived from the actual metal demand it is experiencing.
Gold offtake was the highest since June last year, just before the $400 rise into August. The bank acknowledged recently weak Indian demand but reported strong interest elsewhere in Asia.
Gold bugs hope that, without continued selling, this means gold has to rise -- particularly if India indeed comes back on line.
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Sona Discovers Potential High-Grade Gold Mineralization
at Blackdome in British Columbia -- 13.6g over 1.5 Meters
From a Company Press Release
November 22, 2011
VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling.
"We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company."
Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered.
For the company's complete press release, please visit:
http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf
