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Peter Brimelow: Is gold heading to $4,500?
By Peter Brimelow
MarketWatch.com
Thursday, August 23, 2012
http://www.marketwatch.com/story/is-gold-heading-to-4500-2012-08-23
NEW YORK -- Gold makes its move. The bugs are rampant.
The yellow metal made life very difficult for commentators trying to keep a regular schedule on Wednesday.
MarketWatch's Claudia Assis can hardly have hit the send button on her story headed "Gold ends lower as other metals gain," which dealt with the close of floor trading -- the December gold contract was down $2.40 -- when the Fed minutes set the market roaring.
By the stock market close, gold had risen over $17 to stand 1% above Tuesday's stock market closing level and at the highest since early May.
... Dispatch continues below ...
Prophecy Platinum Announces Wellgreen Preliminary Economic Assessment:
38% Pre-Tax IRR, $3.0 Billion NPV, and a 37-Year Mine Life
Company Press Release
VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) reports the results of an independent NI 43-101-compliant preliminary economic assessment for its fully owned Wellgreen nickel-copper-platinum group metals project in the Yukon Territory.
The independent assessment, prepared by Tetra Tech, evaluated a base case of an open-pit mine (with a mining rate of 111,500 tonnes per day), an on-site concentrator (with a milling rate of 32,000 tonnes per day), and an initial capital cost of $863 million. The project is expected to produce (in concentrate) 1.959 billion pounds of nickel, 2.058 billion pounds of copper, and 7.119 million ounces of platinum, palladium, and gold during a mine life of 37 years with an average strip ratio of 2.57.
The financial highlights of the preliminary economic assessment, shown in U.S. dollars, are as follows:
Payback period: 3.55 years
Initial capital investment: $863 million
IRR pre-tax (100% equity): 38 percent
NPV pre-tax (8% discount): $3 billion
Mine life: 37 years
Total mill feed: 405.3 million tonnes
Mill throughput: 32,000 tonnes per day
Prophecy Chairman John Lee says: "We are pleased with the preliminary economic assessment results. The numbers indicate that Wellgreen is one of most exciting mineral projects in the Yukon. The company is drilling to upgrade and expand the resource base. The infrastructure is excellent as the project is only 1,400 meters in altitude and 14 kilometers from the paved Alaska Highway, which leads to the Haines deep seaport. Discussions are under way with support from local stakeholders regarding permitting and logistics."
For the complete press release, please visit:
http://prophecyplat.com/news_2012_june18_prophecy_platinum_announces_res...
Gold shares too came surging out of negative territory to finish with strong gains. The NYSE Arca Gold Bigs Index (HUI) closed up 2.21%, the highest since June 19 and up 17.2% since the recent low on July 24.
This late development followed a strong day on Tuesday, which saw a floor close in the CME December contract of up $19.90 (1.23%) and a 1.69% gain in the HUI.
This was enough to stimulate exuberant commentary by the Aden Forecast's GCRU service, published early Wednesday morning: "And. they're off! The markets have taken off. The train has left the station, and another leg up in the bull market is getting started."
"Whether it be gold shares on their own, compared to gold, versus bonds or versus the stock market, gold shares are rising from the dead."
GCRU had a particularly kind world for silver: "Silver broke above its 75-day [moving average] for the first time in four months, showing impressive strength! Silver's rise is the strongest it's been since the rise earlier this year."
GCRU's prognostication: "Silver must break above $30 to confirm strength that could push it to the February highs near $37."
The silver situation is exciting particular interest. Letter editors have noted that the metal had been achieving technical objectives earlier than gold during this move.
Furthermore, according to Bill Murphy at the LeMetropoleCafe website, rumors of large silver purchases in London have been followed by stories of delivery problems being experienced by London Bullion Market Association members.
Stories of this type, unfounded or not, could have an explosive effect on the thin silver market.
The gold action caught the attention of market veteran Richard (Dow Theory Letters) Russell.
Using a point-and-figure chart with a 2:30 p.m. Eastern Time cutoff, he noted: "Gold may finally be on its way to higher levels. Gold has risen to fill the $1,640 box, which is constructive. The next bullish action would be a rally to the $1,650 box. This would take gold clear out and above its consolidation base, and would put it in line to try for $1,680." (By 4 p.m., gold had cleared $1,650).
Russell concluded his Wednesday evening note: "If gold takes off, the gold miners will look dirt cheap."
The Got Gold Report last weekend quantified an expectation about the HUI: "A print above 445 would be very convincing to skeptics and set up a test of the 40-weekly moving average currently near 474."
Wednesday's close was 454.44.
And further? The Golden Truth website, reportedly written by a gold-market professional, says on Wednesday after a detailed chart discussion: "From both a fundamental and technical standpoint, the indicators for gold to make a run to new highs have not been this bullish in the 11-year bull market."
At JSMineset, ultra-experienced old gold hand Jim Sinclair confines himself to republishing an Aug. 1 essay from technician Alf Fields: "The bottom line is that we now have a really strong probability that the correction which started at $1,913 on Aug. 23, 2011, has been completed both in terms of Elliott waves and also in terms of time elapsed."
"If this is correct, the gold price should soon be expressing itself in violent upside action as it moves into the third of third wave, which is still targeted to reach $4,500.”
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