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Peter Brimelow: Gold gets some powerful friends
By Peter Brimelow
MarketWatch.com
Monday, September 10, 2012
http://www.marketwatch.com/story/gold-gets-some-powerful-friends-2012-09-10
NEW YORK -- Fridays seem to have become toxic for gold bears.
Aug. 31 saw the metal spoil the long weekend by jumping $30.50, or 1.8%, on a CME Dec gold floor close basis. Sept. 7 saw another big jump -- $34.90, or 2.1% on the Dec. contract, to $1,740.50.
The effect was to push the magisterial $US5X3 point and figure chart maintained by Australia's The Privateer into the most bullish posture this year, smashing decisively above the downtrend line in place since last summer:
http://www.the-privateer.com/chart/gold-pf.html
Perhaps the bears will get their rumored powerful friends to abolish Fridays. Radical gold bugs have long argued that these friends do exist. See:
http://www.marketwatch.com/story/gold-fizzles-or-gold-fixed-2012-08-06
The idea got a much-discussed airing this week in a long interview with Gold Anti-Trust Action (GATA) Committee Chairman Bill Murphy on the Russia Today TV channel:
... 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...
Even the eminently respectable institutional service, The Gartman Letter, expressed sympathy with the GATA bullish view of the silver market on Thursday.
The Privateer summarized the significance of gold's move: "In a bit more than two weeks, since Aug. 22, spot future gold is up $100. Almost all of that rise has in fact come since August 30 when gold closed at $1,657.
"On Sept. 7, it closed at $1,740. Gold's high for 2012 is $1,789, the spot future close on Feb. 23. A couple of more rises like the one on Sept. 7 and that will be comfortably taken out."
The Got Gold Report, in a nice phrase, said: "The gold market has been as strong as an acre of garlic." It published on Saturday in the free area of its website a useful chart-based discussion on gold in other currencies:
http://www.gotgoldreport.com/2012/09/got-gold-report-euro-close-to-all-t...
GotGold's conclusion: "Clearly gold is once again gaining purchasing power in most or all fiat currencies. The charts above are irrefutable proof of it. Put simply, the collective market has been anticipating that governments would attempt to 'print their way out of a giant debt hole.'"
Gold enthusiasts who like being lone rebels are having to adapt.
LeMetropoleCafe's Friday wrap-up included quotations from a remarkable Bloomberg interview with the famous bond fund manager Bill Gross of Pimco that expressed a preference for holding gold: "Gold cannot be reproduced. It can be taken out of the ground at an increasing rate, but there is a limited amount of gold. There has been an unlimited amount of paper money over the past 20 years to 30 years…
"Central banks got out of the gold trade a few years ago. Just recently they are coming back into that market. ... I think for the most part it is not a crowded trade yet even though the price has accelerated in recent quarters and recent years."
These views, while quite normal for a guerilla gold bug, would have been career-ending heresy for an orthodox Wall Street not so long ago.
Another LeMetropoleCafe appearance was by fabulously successful macro-hedge fund manager Ray Dalio of Bridgewater Associates (via his latest client letter): "Gold is primarily an alternative to fiat currency and a storehold of wealth. The main advantage that gold has over other currencies is that it can't be printed. ... Deleveragings strongly favor shifts from financial assets into gold and other tangible assets."
All this company could be unnerving. Gold veteran Jim Sinclair offers some insight at JSMineSet: "One of the weaknesses of the 'gold writer' community is that they seem to be always in competition with one and another for some assumed popularity. Early in 2000 I complained to Harry Schultz that the opinions of bullish gold commentators who knew gold was headed much higher yet constantly called tops was injurious to the market. That was the means then of gold writers competing to try to prove their advice was superior."
Schultz, who recently retired at the age of 87, was one of the earliest and most creative gold bugs. He apparently brushed Sinclair's complaint aside, saying, "You cannot herd cats."
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