By MoneyMorning.com.au Edit

And still the criticism pours in.

Some days we wonder if people really want to make money or if they’d prefer to stand and wave their fists in poverty screaming ‘I told you so.’

The thing is, most of those who will say they’ve been proven right when the market collapses will have missed out on the opportunity to build a nest egg during the boom years.

And believe us, the boom years could last a long time. To such an extent that following the US Federal Reserve’s statement we’re starting to wonder if our ASX 7,000 price target is a little – how can we put it – on the low side.

We’ll explain more below…

The key phrase in the Fed’s statement was this:

‘To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens.‘

As you know, our target is for the S&P/ASX 200 to reach 7,000 points in 2015. Our view is that will signal the end of any genuine bull market. After that point it’s possible stocks could go higher but any further gains will be just the market letting off steam.

But now, we’re not so sure.

It could now be that a rally to 7,000 points is just the beginning of much bigger gains to come.

Looking into the Abyss

For that reason it’s time to revise our entire approach.

It’s clear that the US Federal Reserve looked into the abyss, didn’t like what they saw, and quickly put paid to any plans to stop printing money.

This is a key event. Because it now means for sure that no future Federal Reserve chairman will risk the same. The next chairman is likely to be Dr Bernanke’s deputy, Dr Janet Yellen.

Doubtless when Dr Bernanke looked into the abyss it was with Dr Yellen by his side. They both know what lurks beneath…and it ain’t pretty.

So, if it ain’t pretty, why go there if you don’t have to?

And that’s the thing. Right now there’s no need to. There’s no reward in the mainstream for pulling the pin on this monumental stock market rally. Drs Bernanke and Yellen may win accolades and applause from gold bugs and sound money theorists for tearing the down the printing presses.

But they won’t earn any high paying jobs from a Wall Street bank. They won’t get a call from academia to be Chair of this, that or the other. And the phone line to their new consulting business will be decidedly quiet if they do anything as foolish as stopping the printing presses.

Buy Stocks for Income and Growth

This is why it’s time to set new goals for how this stock market rally could play out.

Up until now we’ve advocated a relatively conservative exposure of 30-40% in stocks. Of that we’ve suggested you should have three-quarters in dividend stocks with the rest in growth stocks (our preference is small-caps but you should have some blue-chip growth in there too).

Well, if this rally continues as we expect, it’s time to think about lifting your stock exposure to 50%. That’s a big move, and it may not suit your circumstances…or you may already have a bigger exposure than this in stocks.

As for the type of stocks you should buy, that hasn’t changed. As we’ve told you for some time, the dividend stock rally isn’t over. It still has a heck of a long time to run. In fact, it will run for as long as the Fed and Reserve Bank of Australia keep interest rates low.

So you should use the opportunity to buy blue-chip dividend paying stocks and a selection of small-cap dividend paying stocks.

(The Australian Small-Cap Investigator buy list has a dozen cracking little dividend payers. You could do worse than consider a handful of those stocks to boost your income stream.)

Finally, growth stocks are a must. If you want the biggest gains from a share portfolio it’s time to add a mix of large-cap and small-cap growth stocks to your portfolio.

The industry these stocks are involved in isn’t as important as the potential for the companies’ to grow their businesses. The Australian market has a big exposure to the resource sector so it’s natural to think most of your growth stocks will be resource stocks.

But look at other sectors too. Look at technology, capital goods or industrial stocks. There are plenty of opportunities for growth in any of those sectors.

It’s a No-Brainer

But before you do any of this let us make one thing clear. It’s always risky to increase your exposure to stocks on the basis of a single news event. That’s why we always recommend acting slowly.

And it’s always risky investing at a five-year high. But the fact is, if stocks continue to gain you’ll see stocks continually trading at a new five-year high.

Of course, despite our belief that Australian stocks are heading to 7,000 points and beyond, there’s always the chance we’re wrong. You should consider that possibility before making any changes to the way you invest.

But just as we could be wrong, there’s an equal chance we could be right. In fact, to us it’s a no-brainer. The world of low interest rates has arrived and it’s going nowhere fast. Investors should utilise this fact to their advantage and buy quality Australian stocks while they still can

Cheers,
Kris+

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From the Port Phillip Publishing Library

Special Report: Are You Waiting for a Real Estate Crash That Isn’t Going to Come?

By MoneyMorning.com.au Edit

Last week, while tensions ramped up in the Middle East (and despite the Russia-Syria-US ballet of oddball diplomacy, tensions remain high), the price of gold plummeted.

What happened? Let’s have a look at that, and more!

Well, last week a representative from Goldman Sachs (the share price of which is about to become part of the Dow Jones Index, by the way) stated that the price of gold might drop to below $1,000 per ounce. That lowered the boom on gold.

When Goldman speaks, people listen. Then they sell or buy accordingly. Goldman moves markets. I’ll refrain from saying more on that specific point.

Other Forces Work Against Gold

Aside from Goldman, much of the mainstream media is already working against gold and other precious metals like silver, platinum and palladium. Precious metals are no longer the flavour of the month, at least like they used to be.

After a great, decade-long run, precious metals have pulled back in the past year. Is it a temporary issue for long-term investors? Or is something fundamental really changing for shiny stuff? It matters with respect to the value of physical metal that you own, and definitely for the prospects of mining companies in which you might invest.

The ‘paper price’ for gold, etc. has been on a downward slide year over year – for example, the price per ounce is down over $400. The redeeming thing is that, for much of 2013, we’ve had strong support for gold, silver, etc. in the form of physical buying on pullbacks.

Stories are now legendary about ‘Chinese housewives’ mobbing gold selling counters of Shanghai. Or great accounts of clever smugglers bringing gold into India in defiance of government controls. Are new stories like these – anecdotal evidence for the ‘love trade’ in gold – about to dry up?

Or consider news stories about how emerging, hot-running markets of the past few years are on the ropes. The bloom is distinctly off the rose for prospects in, say, China, India, Brazil, Turkey and many more former go-go lands. Their government-administered, goosed-up economies have outrun the kind of fundamentals – household savings and company profits – that make for long-term economic strength. Bad for gold, right?

Improving Western Economies

Meanwhile, developed economies appear to be improving by many metrics. Just look close to home in the US, where housing had a good summer and autos are rolling off the lots at rates not seen since before the Crash of 2008.

Also in the US, the dollar is strong relative to other world currencies. I contend that much of the latest ‘dollar strength’ is due to increased domestic oil output, courtesy of our ongoing energy revolution, aka fracking. With fracking, the US has displaced about 2.5 million barrels-per-day of imported oil.

Now instead of imports, the US economy uses domestic crude, much to the benefit of the overall economy, tax receipts, the national current account and more. Indeed, the large increase in domestic oil is one development for which Pres. Obama never seems to ‘blame Bush’.

Overseas, European economies are improving. Look at Germany, Britain and others. There’s less and less bad news from the southern rim (Italy in particular), which could be a sign that things have stopped getting worse and have found a bottom. Is there a rebound coming?

Japan is looking up too, despite lingering effects of the 2011 nuclear plant disaster at Fukushima. One Japanese highlight is that the International Olympics Committee just awarded the 2020 event to Tokyo. We can look forward to seven strong years of people in Japan pouring concrete for new stadiums, roads, rail, airports, etc. And you just know that the Japanese will want to outdo their rivals in China, who hosted the 2008 Olympics in Beijing.

So is the Gold Run Over?

With all this good news for ‘conventional’ economics, and bad news for the gold-demand side, is the gold run over? Are we waiting for a golden Godot or something?

Well, not so fast. At least, don’t rush for the exits. All is not what it seems. Let’s look at one item – just one – that could cause precious metal prices to rebound sharply.

You may know that for many months the US Treasury Department has been cooking the books on national accounts. Well, that’s what I call it when the US national debt has not budged by one dollar, while the debt level remains levelled-off at $16.7 trillion – which just so happens to be the current, congressionally-mandated debt ceiling.

Throughout 2013, the Treasury has used accounting gimmicks, tricks, fund transfers, restatements and other legerdemain to juggle the books. But in a month or so – or as soon as the debt ceiling is raised after Congress and Pres. Obama go through their Kabuki Theater – the US national debt will quickly revert upwards.

That is, national debt will soon land on some much higher number, as Treasury’s accounting tricks unwind and the debt magically appears on the federal balance sheet.

So why does Goldman Sachs believe that gold is due for another pullback to under $1,000? Do investors no longer need gold as a risk hedge? Is the modern economy past the point where savers and investors need to convert currency into something that central banks can’t create out of nothing?

You should keep these questions in mind as you watch the gyrations of gold prices. We may have a rough patch in front of us, with painful down-swings in gold prices and related mining shares. But beware trying to ‘market-time’ this.

Just keep in mind that over the long haul, gold and other precious metals are a key part of preserving your wealth. Don’t panic out. Goldman Sachs does things that are good for Goldman, not you.

That’s all for now. Thanks for reading.

Byron King
Contributing Editor, Money Morning

Ed Note: The Real Chinese Housewives Of Gold Buying, Treasury Tricks And More! originally appeared in The Daily Reckoning USA

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Article by Investazor.com

The Forex market has got a pretty bad reputation during the past several years. In my opinion this has happened because of the less transparent brokerage houses (saying it short scammers) and because the traders that get into this train believe that it is a short journey to becoming rich.

To become profitable on the Forex market you need first to study it. Learn what are the factors that move the market, how the price is made, find yourself a strategy, get some discipline and start practicing with a risk as low as possible. It can become a full time job, but if you think you will get yourself rich after a day, a week or even a year with risking too much and no discipline, you will find yourself thrown out of a running train.

Traders should try to risk as less as possible and leave the market to run in their favor as much as possible. It is easier said than done, because while trading with real money emotions like fear and greed tend to appear. When the trader is surrounded by these emotions he tends to do stupid things. We will tell you in the next paragraphs a method that will help you reduce your risk while trading on the Forex market, but no one can show you how to manage your emotions, and for this you need to practice, practice and practice.

A good strategy to diminish the risk on the trades made on FX is to buy different types of options on the same instrument. You could ask: why buy and sell on the same type of instrument? Well, it would be pretty difficult to get out of that hedge with a profit on a way or another.

A trader can use different types of options depending on the strategy that he uses and especially on the time that he expects to keep the trade opened. Let’s take some simple examples:

If a trader uses a scalping strategy and he would at some point try to catch a bigger move on a very short time interval (best example would be what happened yesterday, 18 September 2013, on the FOMC meeting), he could use a very fast binary option on the other direction. This way if the price would not go in his direction could catch a profit on the option evolution.

Let’s say that the strategy used is not a very short term strategy, is rather a system that offers signals for trades that could last up to several days. In this case the trader could use European Digital options (Above/Bellow a specific level or Inside/Outside a range) and set up an expiry date for the option close to the day that he estimates he will close the trade.

If the trader is a position trader then he would need to hedge his trades on a longer term. In this case it is recommended to be used the Vanilla type options (Call/Put options). This way he will be able to win if the trade would go against his direction.

One important aspect that should always be taken into consideration is the money management. The premium paid for the option should be less than the potential profit made on trading, let’s say the CFD. The payout for the option should be equal or bigger than the stop loss set on the CFD.

The post How to Reduce Your Forex Trading Risk with Options Hedging appeared first on investazor.com.

By www.CentralBankNews.info     Egypt’s central bank cut its benchmark overnight deposit rate by another 50 basis points to 8.75 percent, its second rate cut in two months.
    The Central Bank of Egypt (CBE) also cut the overnight lending rate by 50 basis points to 9.75 percent, the rate on its main operations to 9.25 percent and the discount rate to 9.25 percent. The CBE did not immediately issue an explanation for its policy decision.
    The CBE last cut its rate in August, reversing a rate rise in March due to inflationary pressures. The CBE has now cut rates by a net 50 basis points this year.
    In August the central bank said the downside risks to growth were outweighing the upside risks to inflation. Egypt’s economy has been hit hard by political unrest.
    Egypt’s inflation rate eased to 9.74 percent in August from 10.28 percent in July while its economy expanded by an annual 2.2 percent in the first quarter, the same as in the fourth quarter.

    www.CentralBankNews.info
   
   

By www.CentralBankNews.info     South Africa’s central bank kept its benchmark repurchase rate steady at 5.0 percent, as expected, but warned of upside risks to inflation and said it would “not hesitate to take appropriate action in order to maintain the integrity of the inflation targeting framework and to anchor inflation expectations at a lower level” if the outlook deteriorates significantly.
    The South African Reserve Bank (SARB), which has held rates steady since July last year, said a sustained breach of the central bank’s inflation target was not forecast and given the global uncertainties and downside risks to growth, its policy rate was maintained.
    South Africa’s inflation rate rose to 6.4 percent in August from 6.3 percent in July, above the bank’s 3-6 percent inflation target and though SARB Governor Gill Marcus expects inflation to moderate in the fourth quarter, she admitted the trajectory was “uncomfortably close to the upper end of the target.”
    The 2013 inflation forecast is unchanged at an average 5.9 percent but for 2014 the forecast has been raised to 5.8 percent from 5.5 percent and the 2015 forecast has been raised to 5.4 percent from 5.2 percent. In the third and fourth quarters of this year, inflation is expected to average 5.3 percent.
    “The current breach of the inflation target is still expected to be temporary, and the peak was possibly reached in August,” Marcus said, adding that the deterioration in the forecast was mainly due to changes in assumptions related to the exchange rate and petrol prices.
    Recent wage agreements have been above the inflation rate, contributing to the upside risks, but at the same time there are no demand side pressures in the economy, consumption is subdued with consumers under pressure with persistently high debt and little new employment creation.
    The Federal Reserve’s decision to delay tapering of quantitative easing has provided a temporary reprieve to the pressure on the South African rand, however, “the continued uncertainty relating to the timing of the inevitable slowdown in bond purchases and its data dependent nature, imply that emerging market currencies, including the rand, are likely to experience a protracted period of volatility,” Marcus said.
   “In the short run these developments may have moderated the risk to inflation from the exchange rate, but medium to longer term risks remain, which will be assesses on an ongoing basis,” she added.
    Like many other emerging market currencies, the rand weakened sharply in May but has appreciated since late August and rose in response to the Fed’s surprise decision on Wednesday to delay a  reduction in asset purchases.
    But since the start of the year, the rand has still depreciated by almost 13 percent against the U.S. dollar, trading at 9.685 earlier today.
    “The risks to the inflation outlook from the exchange rate remain elevated and dependent on its future trend,” Marcus said, with a sustained depreciation posing a significant risk to inflation.
    The rand is also under pressure from the current account deficit, which widened to 6.5 percent of Gross Domestic Product in the second quarter.
    The outlook for South Africa’s economic growth remains unchanged since the SARB’s last meeting in July with quarter-on-quarter growth in the second quarter below the bank’s estimate of potential output of around 3.5 percent, resulting in a widening of the output gap.
    SARB still expects 2013 growth to average 2.0 percent, 3.3 percent in 2014 and 3.6 percent in 2015.
   
    www.CentralBankNews.info

Dear Trader,

You may remember that in late 2012, corn was trading near record highs. Mainstream experts said the rally would keep going. Instead, corn went into a precipitous decline to 33-month lows.

Coffee prices have taken a similar path this year. Since January, coffee has been in a free fall to the lowest levels in four years.

One of the few bright spots for commodity bulls has been cotton — which in August suddenly exploded upwards to its highest level in one year.

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The rumored end to the Fed’s stimulus program later this month, say the pundits.

Well, here’s your chance to get a different perspective.

From September 18-24, EWI’s Senior Commodities Analyst and Trading Instructor, Jeffrey Kennedy will show you 5 online videos, each with 1 new, immediate commodity market trade set-up (market conditions permitting).

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Join EWI’s free “5-5-5” Trading Event now >>

About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world’s largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.

Source: Karen Roche of The Gold Report (9/18/13)

http://www.theaureport.com/pub/na/brent-cook-do-ni-43-101s-provide-a-false-sense-of-security

Many mining companies find themselves in a high-grading dilemma, according to Brent Cook, publisher of Exploration Insights. As companies deplete higher grade reserves, they have to acquire new deposits. But unless you are a geologist, don’t look to NI 43-101s to always give you reliable information about the quality of a resource. They often don’t provide the data needed to make intelligent decisions, says Cook in this interview with The Gold Report. Cook is interested in investing only in world-class deposits and shares some of the names on his list.

The Gold Report: Brent, in your August newsletter, you rant about high grading. For our readers who are not familiar with that practice, can you give us a brief explanation?

Brent Cook: Most mine plans or mine reserves are laid out using an economic cutoff grade based on a specific gold price and specific production cost assumptions. Using an example of 0.5 grams/ton (0.5 g/t) as a cutoff grade, any rock pulled out of the mine under 0.5 g/t is waste; you lose money mining it. That’s the difference between waste and ore. With ore, you make money. With waste, you lose money.

Say a company based its cutoff grades on a gold price of $1,500/ounce ($1,500/oz). When the price drops below that level, some of the rock that used to be ore becomes waste. To fix that problem, a company goes to its mine plan and selectively mines the higher grade portions of the deposit. That makes perfect sense and the company needs to do that. But down the road, the grade of the material that was meant to be mined but was instead left in the ground is likely to be too low to be mined economically, barring significantly higher metal prices.

The net result is that, unless gold prices go way up, a company’s stated reserves will decrease with the lower gold price assumption. The total number of ounces in the reserve will decline because the grade of the remaining rock, the rock that was left behind during the high grading of the deposit, was marginal to begin with and is now probably uneconomic.

TGR: If the reserves go down, there would be a corresponding decrease in the value of the company. Is there anything wrong with management keeping a company viable, even if the share price has to go down a bit?

BC: There’s nothing wrong with that, and it is what management has to do. But it means the ounces the company was going to mine in the future go away. Its business has shrunk. The company has to find more ounces to replace what was lost by high grading a deposit. And again, I want to emphasize this is all gold-price and production-cost dependent.

TGR: Are companies high grading just to prove out a project, to position it for sale?

BC: No. Companies like Newmont Mining Corp. (NEM:NYSE), Barrick Gold Corp. (ABX:TSX; ABX:NYSE) and IAMGOLD Corp. (IMG:TSX; IAG:NYSE) are high grading. Most active mines have the ability to adjust the mine plan to current price conditions, unless they are marginal and uniformly low grade to begin with. When the gold price changes or operating costs go up, the whole mine plan changes. What was probably scheduled future production may no longer be economic. That’s the problem.

TGR: Is that good news for advanced explorers and near-term producers?

BC: It depends on the quality of what the junior companies own. As a whole, the major mining companies are producing about 80 million ounces gold (80 Moz)/year. My expectation is that, at some point in the near future, they will be in desperate need of new economic deposits because they don’t have the reserves to keep production at the same level. This is particularly true of companies with deposits that are marginal at, say $1,400/oz gold. Those companies are high grading out of necessity now and more than likely sterilizing significant portions of their deposits.

This loss of quality reserves is leading to an ideal setup for speculators in the junior mining industry who are identifying and buying those few deposits that make money at lower gold prices. I’m convinced that once mining companies come out of their foxholes, they will want to acquire the few high-grade, high-margin deposits held by juniors.

This is an opportune time for us in the junior end of the business, even though it doesn’t feel like it.

TGR: What will motivate mining companies to get out of their foxholes, as you say?

BC: I think it will be the realization that they lack the high-margin reserves needed to keep making money. They weren’t ready for the shock of gold dropping from $1,800 to $1,200/oz. In response, they cut exploration and development dramatically and have started high grading.

All of that will bite them, because without new deposits, without new reserves, they don’t have a business. As I have reiterated many times in Exploration Insights, one day the board of directors will turn to company management and say; “All right, bring on the new high-margin deposits. We are running out of ore.” At that point management will have to explain that it fired all the geologists, shut down exploration, curtailed development and ain’t got nuthin’ new. There is only one solution: Go out and buy a good deposit.

TGR: At what gold price can lower grade mines become profitable? Do we need a $1,500/oz gold price to stop the high grading?

BC: It depends on the individual deposit. Previously, the gold industry talked a lot about cash costs—what it costs on a cash basis to produce an ounce of gold. However, cash costs don’t include all of the other costs that go into keeping a mine going: general and administrative expenses, taxes, exploration and development costs, and sustaining capital costs.

Now companies are switching to reporting all-in sustaining costs, which includes just about everything it takes to produce that ounce of gold. Depending on the company, all-in costs are between $1,300 and $1,500/oz, even $1,700/oz. You can see the problem. Companies can cut costs by laying people off, stopping exploration and development, but that kills their business. It goes back to the need for high-margin deposits.

If readers of The Gold Report contact us, I’ll send a newsletter detailing sustaining costs and cash costs, what it really costs to mine an ounce of gold. Just select the “Contact Us” tab atwww.explorationinsights.com and request the gold cost letter.

TGR: You’ve told us that before people start investing in exploration and speculative companies, they need to know what a company is looking for. That includes understanding the test results and being able to compare them to expectations. One way to do that is through NI 43-101 reports, but you believe that NI 43-101s provide a false sense of security. How do investors know what information to use?

BC: That’s a really good question, and there’s no single answer. The NI 43-101 reports are predominately intended to provide sufficient disclosure for an educated investor to make an informed investment decision. It’s a regulatory document that describes what you can and can’t say. But here’s some interesting results from a review of 50 NI 43-101 reports by the Ontario Securities Commission: Eighty percent had some sort of error; 40% had a serious error or were missing information that should have been included.

What it comes down to is that a lot of companies are not giving us the data we need to make intelligent decisions, be it detailed cross-sections, or detailed information on how costs were calculated. That needs to be addressed because all of us in the mining sector need to have confidence in a report’s conclusion based on the backing data.

In my opinion, too many resource estimates do not adequately address geological and structural controls to mineralization. Computer jockeys who are really good at plugging numbers into spreadsheets are coming up with results that do not honor the basic geology. That gives people a false sense of security that because the resource is in a spreadsheet with lots of fancy math it has to be legitimate. One needs to be careful.

TGR: What additional data would help investors make intelligent decisions?

BC: Too few NI 43-101s provide the cross-sections to prove where the company draws the line between ore and waste—what the criteria are and how these decisions were arrived at.

Admittedly, a lot of this is subjective and bear in mind the resource estimator is extrapolating the resource from very limited data that, volume-wise, represents less than 1% of the rock. For instance, I could look at 100 drill holes and come up with a different resource than somebody else. It’s tough to know who’s right or wrong and that is just the nature of the beast.

TGR: How does someone who’s not an expert make more informed decisions, short of becoming a geologist?

BC: It isn’t easy. Ultimately you do have to rely on the NI 43-101s: Is the documentation there and correct? Who did the documentation and who paid to have it done? Many reports are just sales documents and all too often an engineering firm will assign a less exciting job to its “B” team.

Essentially, you have to rely on an expert. That could be a newsletter writer, an analyst, a relative in the industry or your brokerage firm. You need the advice of someone who knows the industry.

TGR: I like the way you concluded one of your recent rants, “High-quality, high-margin metal deposits are going to become increasingly valuable as current operations are depleted and production begins to decline. This eventuality makes our jobs relatively straightforward. Own the best deposits and discoveries and hope like hell some government doesn’t steal them.” Which companies have the best deposits?

BC: There are two aspects to answering that question: The first is owning the best deposits. The second is identifying them early on and buying at the right price. There are projects that are great deposits, but are over- or fully valued now.

For example, Reservoir Minerals Inc. (RMC:TSX.V), which has a joint venture with Freeport-McMoRan Copper & Gold Inc. (FCX:NYSE) in Serbia, drilled the best copper-gold drill hole I’ve seen in decades. We recognized the potential because we understood the geologic setting and we knew what Freeport was doing. We bought Reservoir at just under $1. It’s now around $4/share. It remains a great deposit, and Freeport will, hopefully, eventually buy it out.

TGR: How much additional upside is there if the copper or gold price begins to rally?

BC: I would say a fair bit. If copper or gold rallies, anyone with a deposit stands a chance of going up. We saw that in late August when the rising tide took most companies up, good or bad.

The advantages with Timok, the Reservoir-Freeport deposit, are how rich the grade is and that it’s part of a much larger system. Freeport is spending what it will take to bring Timok to a bankable feasibility study. It’s in a known mining district and is adjacent to a smelter that can take this sort of ore. It has everything going for it.

TGR: Are there examples when you didn’t get in at the right time that could be educational for our readers?

BC: Unfortunately, yes. Midas Gold Corp. (MAX:TSX) has a great deposit in Idaho. It’s has 6.5–7 Moz gold at a good grade and will show good margins. You get a bonus kicker of some antimony production. We bought at $3.50/share in 2010 when it came out of the shoot, gold was flying and markets heading up. Since then, it has collapsed along with everything else. We bought again at $0.70 and it’s gone back up some. Our timing was wrong, but knowing that it was still a very good deposit, we averaged down and are working our way back up.

TGR: Is that an example of a project that needs a major to get out of the foxhole?

BC: I think so. The company will issue a prefeasibility study and resource update in early 2014. The study is paralleling the permitting process and assuming both turn out positive I think a major takes a run at Midas. The project is in an old mining camp that is a bit of an environmental disaster right now; old tailings, river through a pit and such. The plan, at the end of the mine life, is to fix up the whole area so the salmon can get back upstream and leave mountain meadows full of happy butterflies.

TGR: What is the timing on the permit?

BC: I think final permits are at least two years away.

TGR: What other companies are you following?

BC: I’ve owned Virginia Mines Inc. (VGQ:TSX) or its predecessor for 12 years. The company sold Éléonore, a very high-grade deposit, to Goldcorp Inc. (G:TSX; GG:NYSE), which is putting it into production. Virginia retained a 2.5–3.5% royalty on Éléonore. The mine will produce on the order of 600,000 ounces (600 Koz)/year. That royalty—probably the best royalty held by a company that’s not a major mining company—rolls straight back to Virginia.

If you’re positive on the gold price, this is the safest bet possible. Virginia is also moving forward on a number of other projects. Plus, Virginia’s CEO, André Gaumond, is the most sincere, hardworking and honest guy around.

TGR: According to Eric Lemieux of Laurentian Bank Securities, Virginia Mines has signed a strategic alliance with Altius Minerals Corp. (ALS:TSX.V). How might that help the junior miner?

BC: The two companies follow very similar business models. Both are now royalty companies that generate ideas and bring other companies in to spend the money. Virginia is in Quebec; Altius has assets in Labrador and Newfoundland. There is terrain in between that they will work on together.

Altius own 32 million (32M) shares of Alderon Iron Ore Corp. (ADV:TSX; AXX:NYSE.MKT), the owner of one of the best iron ore deposits ready for development in the Western Hemisphere, in Labrador.

TGR: What is the upside for royalty companies that go beyond precious metals?

BC: Altius owns a piece of production in the Kami iron ore mine that could generate $32M/year to Altius, depending on iron ore prices, at no cost to Altius. It also owns a royalty on the Voisey’s Bay nickel deposit, which generates between $4–6M a year.

TGR: In our May interview, you mentioned Alderon in the context of diversifying across metals. Is that the focus of this particular play or is this a buyout scenario?

BC: I think Alderon will bring in another partner, probably a Chinese or a Korean group, to develop the iron deposit. This is a world-class deposit and I want to own world-class deposits.

Earlier this year, when I was nervous of the gold price, I diversified into other metals but only into best-in-class deposits. We bought Fission Uranium Corp. (FCU:TSX.V) once it made its discovery in the Athabasca Basin, which could turn into a world-class deposit. The advantage is that it’s relatively shallow for the Athabasca Basin, so mining costs are going to be low, as the mine will be open pit. That is a big advantage. The deposit is still growing.

TGR: Is that still your strategy, to diversify out of gold?

BC: To some degree. World-class, high-margin deposits will always be valuable. If we can recognize them very early on, we’ll be OK in the long run.

TGR: Any other updates since our last interview?

BC: I visited Lydian International Ltd. (LYD:TSX) in Armenia in 2010, just as it started drilling, and bought it then. This is a large, near surface, oxidized, high-sulphidation gold deposit, which means it’s a cheap mine to run. Unfortunately, last month, the Armenian government passed regulations making it harder for Lydian to use cyanide to extract the gold.

TGR: Is it unusual for a government to come in and restrict the use of cyanide?

BC: Particularly in this case. The only way cyanide could possibly enter a drainage tunnel that supposedly poses the problem from Lydian’s planned heap-leach pads would be if you reverse the law of gravity and water started to flow uphill. Last time I checked, and you can ask the people in Colorado, water still ran downhill.

Lydian was one of five gold deposits out of 100 that we considered good enough to talk about when we reviewed it in Exploration Insights.

TGR: What were your criteria for selecting those five?

BC: It is all about margin. We found five that we felt offered the potential to be high margin and large enough to interest a major.

TGR: Have those five names stayed the same or have you made changes?

BC: We bought a sixth, an Australian company called Papillon Resources Inc. (PIR:ASX), which is developing a resource in Mali. Our timing was right this time. We bought it at $0.60/share, and it’s almost doubled.

TGR: What makes it a great deposit?

BC: It’s open pittable, there’s good continuity in grade and it’s high grade. It’s about 2.2 g/t. It’s going to make a lot of money.

TGR: Do you follow any companies in Colombia?

BC: Atico Mining Corp. (ATY:TSX.V; ATCMF:OTCBB) has a small but high-grade deposit in Colombia called El Roble. The people behind Atico are solid miners. These are the people who put together Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE). I think Atico can make money on El Roble and use it as a jumping-off point to acquire other deposits in that part of the world and make more money. I also keep a close eye on Miranda Gold Corp. (MAD:TSX.V), which is technically competent and follows a joint-venture exploration model.

TGR: Are you looking at any other new metals or projects?

BC: I looking at something every day. Nothing has come across the radar screen lately that really excites me and hasn’t been discussed in my letter.

TGR: Here’s hoping you find some excitement soon. Brent, I appreciate your time and your insights.

Brent Cook brings more than 30 years of experience to his role as a geologist, consultant and investment adviser. His knowledge spans all areas of the mining business, from the conceptual stage through detailed technical and financial modeling related to mine development and production. Brent’s weekly Exploration Insights newsletter focuses on early discovery, high-reward opportunities, primarily among junior mining and exploration companies.

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DISCLOSURE:

1) Karen Roche conducted this interview for The Gold Report and provides services to The Gold Reportas an employee. She or her family own shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Gold Report: Virginia Mines Inc., Goldcorp Inc., Lydian International Ltd., Atico Mining Corp. and Fortuna Silver Mines Inc. Fission Uranium Corp. is a sponsor of The Energy Report. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Brent Cook: I or my family own shares of the following companies mentioned in this interview: Reservoir Minerals Inc., Midas Gold Corp., Virginia Mines Inc., Altius Minerals Corp., Alderon Iron Ore Corp., Fission Uranium Corp. and Papillon Resources Ltd. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.

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Article by Investazor.com

Sunday, 22^nd of September, will be held the elections for the position of Federal Chancellor of the Federal Republic of Germany, known as the head of government, the third most important person in the state which also has the most responsibility of all the first mentioned.  Since 2005, this position was managed by Angela Merkel who now is ending her second mandate. The current Chancellor of Germany is leading the CDU/CSU (Christian Democratic Union/ Christian Social Union) grouping knows as the Union.

The main opponent of Angela Merkel is Peer Steinbrück, the Social Democratic challenger. Even if he is known as an expert in finance with potential for this position, statistics say that Angela Merkel is the favourite. Peer Steinbrück’s proposals were to raise taxes for rich people and ensure that women are fairly treated in the labour market, targeting an improvement in the percentage of women working. With respect to his potential party ally, he is rather choosing the Greens than the party of Angela Merkel.

Concerning the main challenges that the two candidates were confronted with, we heard questions about how additional funds for Greece will be obtain and which are the next steps needed in order to make progress in the banking union process, as it is one of the top priorities of the leaders of the European Union.  Also, there were raised questions about situations as the worrying unemployment rate in the Euro zone, the fragile situation of the economy of Spain, the way that Portugal will face the terms imposed by the bailout and the situation of Slovenia which is struggling not to become a country which need additional aid. Why are we mentioning these facts? Because Germany is known as the engine of the Euro zone and it has the decision-making power concerning the matters related to the European continent.

Expectations are indicating that Angela Merkel will begin a third mandate and will continue to lead the country for the next 4 years as it did so far. Considering that Germany maintained its position as the second largest exporter in the world and the biggest economy in Europe, Angela Merkel is considered to be the most appropriate person to lead Germany in the following years. The future promises to be tough, as the Euro zone needs to completely overcome the financial crisis and strength its economy.

The post The Prime Event of the Weekend: Elections in Germany appeared first on investazor.com.

London Gold Market Report
from Adrian Ash
BullionVault
Thurs 19 Sept 08:35 EST

WORLD stock markets, foreign currencies and commodities extended yesterday’s jump versus the US Dollar in Asia and London on Thursday morning, with gold regaining the $1370 level it leapt to after the Federal Reserve voted not to trim its quantitative easing program.

Defying the expectations built since April, the Fed gave financial markets what one FX strategist called “a massive green light for a risk-on party.”

 Silver hit a new 5-week low shortly before the US central bank’s announcement. It stood 9.5% higher barely an hour later.

 “We are in QE unlimited,” said money-manager and Gloom, Boom & Doom publisher Marc Faber, speaking to Bloomberg last night and stating that “I always buy gold…I view it as an insurance policy. I think responsible citizens should own gold.

 “The Fed don’t know anything else to do [but print]. They’ve boxed themselves into a corner.”

 Discussing the next likely chair of the US central bank, “Janet Yellen will make Mr.Bernanke look like a hawk,” Faber said.

 The US stock market yesterday surged to new all-time highs.

 Gold prices gained 6.4% from their earlier low, and silver enjoyed its biggest one-day jump since June 2012.

 Bond prices rose to push 10-year Treasury yields to a 3-week low, falling at the fastest pace since 2011.

 “The [failure to taper] put markets in celebratory mood,” says Commerzbank’s daily precious metals note, adding that “the development of ETF holdings over the next few days will give us a clearer picture here.

 Because on Wednesday, says the bank, “gold ETFs again saw slight outflows.”

 Investors in all markets “turned to the buy side with a vengeance,” says Edward Meir for brokers INTL FCStone.

 But “although the Fed decision is a potential game changer and may give gold a new lease on life,” Meir adds, “we would be looking for higher volumes and increased ETF buying to lend further credibility to Wednesday’s gain.”

 “I cannot get overly excited about gold up here,” agrees Marex Spectron’s David Govett.

 “This rally was as much about short covering as it was about fresh buying. Fundamentally nothing has changed. At some point the Fed will taper.”

 Silver’s 7.1% rise from Wednesday to Thursday’s London Fix was the 78th largest move in 45 years.

 Gold began rising before Wednesday’s statement, adding $20 of the $83 per ounce it would gain by this morning’s peak in late Asian trade.

 Gold rose less quickly for non-US investors, however, as the Euro and Sterling both hit their best levels since midwinter on the FX market.

 The Dollar also fell in a straight line against emerging-market currencies previously dented by taper expectations, losing 3% against the Indian Rupee, Brazilian Real and Turkish Lira.

 “We think it’s very important that emerging markets grow and are prosperous,” said chief US central banker Ben Bernanke on Wednesday.

 “We play close attention to what’s happening in those countries. It affects the United States. [But] what we’re trying to do with our monetary policy…is to create a stronger US economy.”

 Meantime in India – the world’s largest consumer market for gold – industry group the Bombay Bullion Association said it unanimously backs nationalist BJP candidate Narendra Modi as prime minister in the 2014 election.

“The bullion traders in this country are desperately looking for a change in the Indian political system,” said BBA president Mohit Kamboj.

 “Narendra Modi is the right choice,” he added, repeating how gold and politics in India were seen interacting earlier this week by BBA colleague Mukesh Mehta.

 “We wish BJP to come to power and run this country.”

 Ruling Congress Party economic affairs secretary Arvind Mayaram today said the government’s aggressive anti-gold import rules had cut inflows “drastically”.

 “Because of the measures we have taken we expect imports of only 750 tonnes [in 2013],” he said – a drop of 11% from fiscal-year 2012.

Adrian Ash

BullionVault

Gold price chart, no delay | Buy gold online

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can fully allocated bullion already vaulted in your choice of London, New York, Singapore, Toronto or Zurich for just 0.5% commission.

(c) BullionVault 2013

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

By www.CentralBankNews.info     Switzerland’s central bank maintained its ceiling on the Swiss franc’s exchange rate and its interest rate target, saying it is still “ready to enforce minimum exchange rate, if necessary, by buying foreign currency in unlimited quantities, and to take further measures, as required.”
    The Swiss National Bank (SNB), which imposed an upper limit on the franc’s exchange rate to the euro in September 2011, said the Swiss franc was still high and despite reduced tensions on financial markets, the minimum exchange rate “remains essential.”
    “It prevents an undesired tightening of monetary conditions were the upward pressure on the Swiss franc to intensify once again,” the SNB said, adding the target for the 3-month Libor rate would remain at zero to 0.25 percent, the level it has been at since April 2009.
    The Swiss franc was quoted at 1.23 to the euro earlier today, below the SNB’s 1.20 upper limit that has been defended by intervention in foreign exchange markets, boosting the bank’s holdings.
    The cap on the franc/euro exchange rate was imposed by the SNB two years ago when investors feared a breakup of the euro zone and sought safe haven in the Swiss currency, boosting its value and making Swiss exports uncompetitive worldwide.

     The SNB said the outlook for inflation had hardly changed since its previous policy meeting in June though higher oil prices and a slightly more positive assessment of the economic situation had pushed up the forecasts.
    The SNB now forecasts inflation of minus 0.2 percent for 2013, up from the June forecast of minus 0.3 percent, and 0.3 percent for 2014, up from a previous forecast of 0.2 percent. The 2015 forecast remains unchanged at 0.7 percent.
    Headline inflation has been negative in Switzerland for the last 23 months with prices unchanged at zero percent in August and July.
    The SNB said the global economy had continued to recover slowly in recent months with growth in Germany and France stronger than expected but in contrast economic activity in emerging economies has been sluggish.
    “The risk of less favourable global economic developments has decreased somewhat compared to the last quarter,” the SNB said, adding that structural problems persist in Europe and this could cause new tensions on the markets.
    Economic growth in Switzerland had exceeded expectations in the second quarter and the SNB revised upwards its 2013 growth forecast to 1.5-2.0 percent from a previous 1.0-1.5 percent.
    The Swiss Gross Domestic Product expanded by 0.5 percent in the second quarter from the first for annual growth of 2.5 percent, up from 1.2 percent.
    Imbalances on the Swiss mortgage and real estate markets may still increase though the central bank said there were signs of an easing with price growth in some segments slowing.
    “Nevertheless, mortgage lending is still climbing more rapidly than GDP. Additionally, starting at a high level, real estate prices increased further,” the SNB said.

    www.CentralBankNews.info