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Bank of England playing 'confidence trick' on inflation, MPC veteran says
Bank of England Attempting Inflation 'Confidence Trick,' Says Former MPC Member Kate Barker
By Emma Rowley
The Telegraph, London
Saturday, February 5, 2011
http://www.telegraph.co.uk/finance/economics/8304054/Bank-of-England-att...
Keeping inflation under control is a "confidence trick" that the Bank of England may fail to pull off, Kate Barker, one of its former rate-setters, has warned.
Ms. Barker, who served nine years on the Bank's Monetary Policy Committee (MPC), said rising prices may have already damaged the Bank's credibility and threaten a "more profound" loss of faith among the public.
A loss of credibility is dangerous as people begin to assume inflation will remain over target and so put up wages and prices accordingly, resulting in a self-perpetuating spiral of rising prices.
... Dispatch continues below ...
Prophecy Resource Spins Off Platinum/Palladium Venture:
World-Class PGM Deposit in Yukon
Company Press Release, January 18, 2011
VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY)and Pacific Coast Nickel Corp. announce that they have agreed that PCNC will acquire Prophecy's Nickel PGM projects by issuing common shares to Prophecy.
PCNC will acquire the Wellgreen PGM Ni-Cu and Lynn Lake nickel projects in the Yukon Territory and Manitoba respectively by issuing up to 550 million common shares of PCNC to Prophecy. PCNC has 55.7 million shares outstanding.
Following the transaction:
-- Prophecy will own approximately 90 percent of PCNC.
-- PCNC will consolidate its share capital on a 10 old for one new basis.
-- Prophecy will change its name to Prophecy Coal Corp. and PCNC will be renamed Prophecy Platinum Corp.
-- Prophecy intends to distribute half of its PCNC shares to shareholders pro-rata in accordance with their holdings.
Based on the closing price of the common shares of PCNC on January 17, $0.195 per share, the gross value of the transaction is $107,250,000.
For the complete announcement, please visit:
http://prophecyresource.com/news_2011_jan18.php
"If you believe inflation is going to come back to 2 percent, you are going to behave as if that's going to happen when you're setting wages and setting prices," said Ms. Barker.
"Once you start to think this monetary policy isn't all that it's cracked up to be, and things need to be changed in some way, then things inevitably become more difficult."
She added: "It's like a confidence trick."
Businesses and markets think the MPC has "perhaps been behaving in a different way coming out of the [financial] crisis and has tolerated inflation more than you might have expected," she said, adding that companies probably have less faith that inflation will return to the official 2 percent target "than in the good old days."
Ms Barker's remarks will increase the pressure on the Bank policy makers over their failure to keep the official rate of inflation, as measured by the consumer price index (CPI), near the target.
The annual pace of price rises was 3.7 percent in December and Mervyn King, the Bank's governor, has said that inflation is likely to be between 4 and 5 percent over the next few months.
He argues that prices are being pushed up by "temporary" factors like the recent rise in VAT, climbing oil prices, and the weak pound making imports more expensive, but expects them to fall back given the slack in the UK economy.
Others fear that the driving factors are more persistent. The issue has split the MPC, which last month saw its most "hawkish" member, Andrew Sentance, joined by Martin Weale in voting to raise the benchmark interest rate from its 0.5 percent low to curb inflation.
Ms. Barker, whose comments at an Anglia Ruskin University event were reported by Bloomberg, said the dilemma the Bank faces has worsened since she stepped down from the MPC in May.
The chance of a surprise rate rise when the committee meets next week has increased after key surveys showed the economy rebounded in January after the snow melted. That suggested the alarming 0.5 percent contraction in GDP in the last quarter was a temporary weather-related setback and that the economy may be better able to cope with a rise.
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Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property
Company Press Release, October 27, 2010
VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:
-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.
-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.
-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.
Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface.
"The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."
For the company's full press release, please visit:
http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf
