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Gold demand seen soaring in Vietnam amid devaluations, stock slump
Coming soon to a Western country near you.
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From Bloomberg News
Thursday, August 26, 2010
http://www.bloomberg.com/news/2010-08-27/gold-demand-to-soar-in-vietnam-...
Gold demand in Vietnam, which consumes more of the precious metal per head than India and China, is set to surge as the third devaluation [of the dong] in the past year and a stock market slump combine to spur sales.
"People will switch to gold as a shelter," said Le Xuan Nghia, vice chairman of the National Financial Supervision Commission, which advises Prime Minister Nguyen Tan Dung. "The current situation with the dong will spur people to increase their gold holdings."
The government devalued last week to boost exports and shore up the nation's trade deficit, driving the dong to a record low. Vietnam's benchmark stock index has slumped into a so-called bear market, plunging by more than 20 percent from a May high. Gold priced in dollars reached a record in June on concern that the global recovery may falter.
... Dispatch continues below ...
Prophecy to Become Coal Producer This Year
with 1.5 Billion Tonnes of Resource
Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen.
For Prophecy's complete press release about its production plans, please visit:
http://www.prophecyresource.com/news_2010_may11.php
"Gold and strong foreign currencies, like U.S. dollars, will draw investment from Vietnamese people, especially with the recent declines in the stock market and the devaluation of the dong," said Nguyen Hoang, an analyst at Vietnam Gold Business, which trades the metal for banks and companies.
Immediate-delivery gold surged to an all-time high of $1,265.30 an ounce on June 21 on concern that the economic recoveries in the U.S. and Europe were losing momentum. The metal traded today at $1,234.85 an ounce and is set for a 10th annual gain this year, buoyed by central-bank purchases and increased investor holdings in exchange-traded funds.
"The dong's depreciation, which has been about 5 percent already this year, plus declines in stocks and uncertainty in the property market, will prompt investors to put their money in gold," said Dinh Nho Bang, chairman of Vietnam Gold Traders' Association, which has more than 100 members. "We've seen some economic growth, but it's still not certain enough."
Vietnam's central bank set the daily reference rate for the dong 2 percent lower at 18,932 per dollar on Aug. 18, citing the need to narrow the trade deficit. The currency traded at a low of 19,500 per dollar today, according to Bloomberg data.
Local gold prices jumped to a record 29.95 million dong per tael on Aug. 25, the Thanh Nien newspaper reported yesterday, referring to the unit that is about 1.2 ounces. "The Vietnamese public will continue to conserve and protect their assets by hoarding gold tael bars," Albert Cheng, managing director for the Far East at the World Gold Council, wrote in an e-mail.
"They've been hit by three devaluations in the last year and no one can be certain there won't be more," Tim Condon, Singapore-based chief Asian economist at ING Groep NV, said by phone. "Gold buying is an alternative to U.S. dollar buying."
Vietnam's gold offtake last year was 73.3 metric tons, with per-capita consumption of 0.8544 gram and average income of $2,900, according to the Gold Council's Cheng, citing data from GFMS Ltd., the International Monetary Fund, and the World Bank.
India, the world's biggest gold user, took 578.5 tons, or 0.4874 gram per head, and had average income of $3,100. China's figures were 457.8 tons, 0.3418 gram, and $6,600, Cheng wrote.
For almost the same level of income per capita, Vietnam consumed almost twice as much gold as India, Cheng wrote in the e-mail. Compared with China, Vietnam's demand relative to income was about five times higher, he wrote.
"People will increase their gold holdings, definitely," said Lam Minh Chanh, chief executive officer of Ho Chi Minh City-based Vang The Gioi (World Gold) Co. Ltd. "Gold prices will continue to rise in Vietnam."
The VN Index, the benchmark equity index, has slumped more than 20 percent from this year's high on May 6, and Nguyen Duc Hai, head of research at Hanoi-based Vietcombank Securities, said on Aug. 24 that there was "no sign of a bottom."
The trade deficit narrowed to $900 million in August from $978 million in July, according to preliminary figures from the General Statistics Office in Hanoi. The Southeast Asian nation's economy expanded 6.4 percent in the second quarter, after advancing 5.8 percent during the first three months. Inflation this month is 8.18 percent, in line with July's 8.19 percent.
"I've seen more people selling than buying gold in the last few days to get some profit," said 47-year-old Nguyen Thi Hoa, owner of a gold shop and money changer in Ly Thuong Kiet Street in Hanoi, the capital. "However, talking about long-term prospects, the dong's been devalued twice this year, as well as its depreciation every year, and that will prompt people to switch their dong savings to gold or foreign currencies."
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Sona Resources Expects Positive Cash Flow from Blackdome,
Plans Aggressive Exploration of Elizabeth Gold Property
On May 18, 2010, Sona Resources Corp. (TSXV: SYS, Frankfurt: QS7) announced the release of a preliminary economic assessment for gold production at its flagship Blackdome and Elizabeth properties in British Columbia.
Sona Executive Chairman Nick Ferris says: "We view this as a baseline scenario for gold production. The project is highly sensitive to the price of gold. A conservative valuation of gold at $1,093 per ounce would result in a pre-tax cash flow of $54 million. The assessment indicates that underground mining at the two sites would recover 183,600 ounces of gold and 62,500 ounces of silver. Permitting and infrastructure are already in place for processing ore at the Blackdome mill, with a 200-tonne per day throughput over an eight-year mine life. Our near-term goal is to continue aggressive exploration at Elizabeth and develop a million-plus-ounce gold resource, commencing production in 2013."
For complete information on Sona Resources Corp. please visit: www.SonaResources.com
