GOLD and the predicctions

Gold may go to the bottom?

MUMBAI: Will the International Monetary Fund's (IMF) decision to sell 403 metric tons of gold drive down gold prices? Yes, gold prices will plunge to $700 or below that if and when IMF really sells its gold reserves, says legendary global commodities investor Jim Rogers.

Rogers, who left the United States to settle down in Singapore last year, and who is regarded as a commodities guru globally said he will hold on to his gold and is waiting to buy more gold because he expects gold prices to considerably come down when IMF sells its gold holdings.

”The fact is that IMF is trying to get permission from everybody to sell gold. I don’t know it will succeed or not. But if and when IMF sells its gold, gold prices may go to a bottom. Who knows? It may go down to US$700. IMF has got a lot of gold to sell. If it does, I hope I’m brave enough and smart enough to buy more,” Rogers told Bloomberg Radio in an interview.

Rogers launched the Rogers International Commodity Index in 1998. The index is a composite, US dollar-based, total return index, designed to meet the need for consistent investing in a broad based international vehicle. The Index represents the value of a basket of commodities consumed in the global economy, ranging from agricultural to energy to metal products.

Rogers who is hot on China has been investing heavily into Chinese investment and agricultural funds in the last year. According to Rogers, three billion people living in Asia, most of them in India and China, will account for a major portion of the total demand for commodities in the coming years.

Rogers, author of such famous books like Hot Commodities and A Bull in China, recently launched an agricultural commodities index focused on food consumption in China. In an interview to Commodity Online Rogers said recently: “China is a fascinating place to invest in. China is on the rise, like America 100 years ago, and the problems the Asian giant is encountering right now in certain, mainly export-driven, sectors of its economy will not alter the country’s long-term trajectory. “

Rogers who is known for a investor across various commodities has never been fascinated by gold. Recently he had stated that gold trading at COMEX was a paper game.

Rogers said that is worried that gold prices are under pressure because of the IMF decision to sell gold reserves.

He said owns own some gold. But at the same Rogers is not planning to buy any more yellow metal because IMF, which is one of the largest owners of gold in the world, is desperate to sell its gold.

Rogers’ comments come in the wake of the G20 leaders’ decision that IMF should sell gold from its reserve to help stimulate the world economy.

"Additional resources from agreed sales of IMF gold will be used, together with the surplus income, to provide US$6 billion additional concessional and flexible finance for the poorest countries over the next two to three years," G20 leaders had said.

The IMF’s board approved a proposal in April 2008 to sell 403.3 metric tons of bullion as part of a plan to close the Washington-based lender’s annual deficit. The sale of 403.3 tonnes of gold was originally proposed in 2007 after a committee chaired by Andrew Crockett recommended the IMF adopt a new funding model.

The IMF is the third-largest holder of gold reserves after the US and Germany, with 3,217 tons in deposits, according to the World Gold Council (WGC).

Countries like India and China want IMF to sue the money to invest to raise IMF liquidity or spend it to improve incomes of the poorest countries.

A large part of the IMF gold may find its way into central banks and private players. Since most of it will be out of reach for retail markets, gold prices may not get hammered.

Globally gold prices now are in the $870-$950 per ounce range. India and Turkey, traditionally big buyers of gold, have not bought much lately because of low domestic demand.

According to IMF, a recent surge in IMF lending to countries facing balance of payments crises related to the global economic slowdown and financial turmoil has led analysts to question whether the Washington-based institution will proceed with the plan.

The sale is expected to hit the gold price, which is at the peak now. Following the recession, gold prices have soared to new heights as safe haven buyings increased.

 

[vicky_600]

Gold and Silver RAtio

Well, gold seasonally runs up late summer to early spring, then up slightly or flat late spring to summer due to seasonal holiday buying for jewelry in Asia. Gold is now about $900 and silver $13 per ounce; both gold and silver are correlated and remain good hedges against inflation.

There are ample concerns of hyperinflation and since the news is out, I am a bit surprised that gold and silver prices appear within bounds of prior years' seasonal price appreciation. Part of this may have to do with the idea that monetary policy takes about 12 to 36 months to influence the economy. As the price of gold today reflects the market's future expectations, it makes one wonder whether more money is truly being poured into the system or we're seeing a reshuffling of spending in the U.S. from the states back up to the federal government.

In addition, you can look up Irving Fisher's “Money Equation” on Wikipedia: MV = PQ. "M", the supply of money, times "V", or velocity, equals "P", the price of money or inflation, times "Q", economic output. So, even if the money supply is increased, without velocity (say bank lending), you are not likely to see increases in inflation or output of goods and services. This is really where I think we are today.

The new administration wants to push for greater control via stimulus, and bankers, whose number-one concern is to protect their careers and not take risks, are not lending. After everyone takes the summer off, lenders may start lending in the fall, increasing velocity. With the addition of seasonal buying of precious metals, we could see metals up significantly in the fall.

Another thing to consider with silver is that silver is a byproduct of base metal mining. With reduced base metal production, the supply of silver is reduced. Also, historically, the silver/gold ratio is currently out of whack, so silver is particularly interesting right now.

TGR: What is your investment thesis for gold and silver equities?

MN: A couple years ago I only focused on big deposits with development potential. My thesis was that major operators needed large deposits to fill their production pipelines, and they were unable to focus on exploration and early development. This created potential upside in junior companies with large deposits.

The two I am most familiar with are NovaGold Resources Inc. (TSX:NG) (NYSE.A:NG) and Seabridge Gold Inc. (TSX:SEA) (NYSE.A:SA). NovaGold is in a 50-50 partnership with Barrick at Donlin Creek, and just produced a feasibility study with reserves of 29.3 million ounces of gold. NovaGold also has a 50-50 interest with Teck Cominco Ltd. (TSX:TCK.A) (TSX:TCK.B) (NYSE:TCK) in the Galore Creek Copper Gold project. I don’t think either of these assets is reflected in the stock price.

Seabridge is also increasing its Mitchell deposit near Barrick Gold Corporation’s (NYSE:ABX) Eskay Creek. Mitchell is big and is getting bigger, still open at depth and along strike. What's interesting to me is it steps out within the pit, encountering mineralization that may convert waste to ore, which improves economics. It also possibly connects with their adjacent Sulphurets deposit, further improving economics.

Seabridge is scheduled to produce an updated economic study and produce drill results. We also expect to hear more from NovaGold on Galore Creek and Rock Creek in 2009. Both companies now have good cash positions, which should take them through 2010. And with their large deposits, they remain leveraged to gold prices on a per-ounce basis.

TGR: How did your 2008 portfolio perform?

MN: Not so good in 2008, which is no surprise. I was expecting some flight to quality, so I focused on companies making the jump from construction to production. While this was a tough year for explorers, developers and producers, any news—bad or good—in general seemed to take stock prices lower.

It was amazing to watch the courage of management teams that worked for years and succeeded in achieving goals, yet were punished for the slightest slippage in production targets.

TGR: Can you give some specific examples?

MN: Well, Minefinders Corporation (NYSE.A:MFN) (MFL.TO) is a good example. They never got the credit for development and are now ramping production at their Dolores project in Chihuahua, Mexico. This is a good example of what I like—good management, low cost production, great underground high-grade potential, open pit expansion to the south, and a large mineralized target parallel to the pit. Most important, they broke even on an operating basis months ago and are not hedged. Minefinders is still cheap.

Another good example is Coeur d'Alene Mines Corp. (NYSE:CDE) (TSX: CDM). They took the prior owner's big pit idea at Palmarejo, Mexico, reduced the open pit and went directly underground to higher grades. This allowed for more effective blending of ore and stockpiling. They also have a dual processing of ore to increase recoveries and should be hooking up to the grid to get the benefits from low diesel prices or hydropower in Mexico.

Coeur, with Palmarejo and with production from their San Bartoleme project in Bolivia, should have a strong finish to 2009.

Investors should also take a look at Apollo Gold Corporation’s (TSX:APG) Black Fox high-grade gold project near Timmins, Ontario. This company shares many of the same characteristics of Minefinders and Coeur. This project should start processing ore in the next month and see a pop in the stock price. Like Dolores and Palmarejo, there is open pit with high-grade underground potential. We see significant opportunity to increase the resource size at Black Fox through underground drilling of the inferred resource or going deeper. Several mines in the Timmins area go down over a thousand meters and Black Fox has good potential to do the same.

In addition to production, Apollo should be producing drill results on its nearby Grey Fox target, as well as their Huizopa project in Mexico, between Minefinders and Alamos.

TGR: Mike, you mentioned that your track record in 2008 wasn't so great. How's 2009 looking so far?

MN: I like to say I am still learning and, like the professor said, 'if you are not confused, you are not informed.' I picked six developers at the end of 2008 that were up 53% at the end of the quarter. It's interesting that gold and silver were up only 4.2% and 14.2%, respectively, in the same period. This reconfirmed to me that fundamentals still mattered. Many of these stocks were beat up due to liquidity concerns and tax-loss selling.

While this included NovaGold and Seabridge, it included two other great companies, Exeter Resource Corp. (TSX.V:XRC) (NYSE.A:XRA) and South American Silver Corp. (TSX:SAC). Both had ample cash or were selling at near cash. Exeter has about $38 million in cash, and two great projects in Chile and Argentina. They are scheduled to produce additional drill results and metallurgical and economic studies in the near term.

I also just got back from South American Silver’s Malku Khota project in Bolivia. South American had the greatest appreciation of my top picks. Malku Khota has over 144 million indicated ounces of silver and may be the largest low-cost leachable silver sulfide deposit in the world. Geologically, Bolivia may be the Nevada of South America. Though political concerns may be important, many companies have successfully built mines in Bolivia, including Apex Silver Mines Ltd., Coeur d’Alene and Pan American Silver Corp. (TSXAA) (NasdaqAAS).

TGR: You mentioned six picks, but have only talked about four. What about the other two?

MN: That would be Etruscan Resources Inc. (TSX:EET) and Alexco Resource Corp. (TSX:AXR) (NYSE.A:AXU). Etruscan has one of the largest land positions in West Africa and is ramping up production at its Youga Gold Project in Burkina Faso.

Etruscan has a new strategic partner, Maxim Finskiy. Finskiy is the owner of a gold mining business in Eastern Siberia Russia. He is also a partner and the Chief Executive Officer in LLC MC Intergeo, the mining and exploration arm of the private Russian investment fund Onexim Group.

I suspect that what Electrum investment did for NovaGold, Maxim Finskiy may do for Etruscan. Good companies with strong financial backers are potentially future mid-tier or majors in the making. These investors don’t put money in unless they expect to get a return.

Also, Alexco is developing the Keno Hill silver district in the Yukon. Keno Hill could have some of the highest silver grades in the world. Silver Wheaton has purchased a silver stream from Alexco even before they have made a construction decision. This demonstrates the potential of Keno Hill. Alexco also has a legacy environmental business with very interesting world or industry-changing patents. Both of these are good investment ideas, as well.

TGR: How are you expecting your picks to perform as we move farther into 2009?

MN: I was surprised that the picks did so well in the first quarter. I think the companies that did well in the first quarter had unnecessary pressure because the market was not sure whether the companies were viable. And as good companies attracted capital, this has not proven to be the case, so they had exceptional returns in the first quarter.

I expect all these companies to have good news flow through the end of the year, and should have greater visibility. And if my thesis is correct about gold and silver prices moving up in the fall, these companies should be attractive for acquisition during the summer months, where potentially flat gold and silver prices are creating opportunities for buying good quality companies with exceptional performance potential.

 

[vicky_600]

Gold Headed for big Slump in may

So the equity markets are moving up across the globe. Then can the fall of gold be far behind. No! And true to the prediction of market analysts, gold started its hurtling down in April with right earnest.

In fact, April was the cruelest month for gold if you compare the prices.

Gold climbed down, capping the sharpest monthly drop since October, as rising equities and a stronger dollar reduced demand for the precious metal as an alternative investment. Silver also plunged, said market observers.

Gold moved down 3.7% for the month, the most since October and the second straight decline.

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The MSCI World Index of equities headed for the second straight monthly gain on mounting speculation that the worst of the global recession is over. The dollar rose 0.2% against a six-currency basket.

According to market analysts, the April slide in gold resulted from dollar strength and much-improved global equity markets.

Gold futures for June delivery fell $9.30, or 1%, to $891.20 an ounce on the Comex division of the New York Mercantile Exchange. The most-active contract fell for the third time in the past four days.

Earlier, gold touched $880.10, the lowest in a week. The price may drop as low as $877.90.

Silver futures for July delivery tumbled 45 cents, or 3.5%, to $12.325 an ounce. The most active contract slumped 5.1% this month. The metal still has climbed 9.1% this year.

If the equity markets fare well in the coming days, which is likely considering the fact that across the economies there is an upward movement, the gold prices are likely to fall further. So, the April fall may be just the beginning of a bigger slump for gold.

 

[vicky_600]

Will Gold Soar on Buffet's Speech

Did Warren Buffett ever help gold? A fast check shows that he never helped gold. But this week’s his address to the AGM of Berkshire Hathaway shareholders may help gold in a big way.

He said inflation is coming back and the US dollar will fall. Buffett, who has delivered compounded returns exceeding 20% a year to shareholders for more than four decades, did not mention gold by name. But that will matter little to the yellow metal’s continuously growing group of supporters. They are sure to interpret this as further evidence that gold’s best days lie ahead.

After dabbling in precious metals in the 1960s, Buffett, the Sage of Ohama, ignored them until a well publicised trade in silver between mid-1997 and early 1998. The decision to accumulate 130m ounces was based on factors specific to silver’s supply and demand at the time.

Once he’d closed out the position, Buffett jokingly describing it as the perfect trade — except that we bought too early and sold too late. Since then he has publicly and consistently shunned precious metals, mainly because he prefers assets which generate dividends.

Despite his gloomy forecasts for inflation, Buffett hasn’t exactly signed up to gold-supporting groups like GATA. Rather, he suggested to Berkshire shareholders their best protection was invest in yourself; and as a second option, buy stock in a well run company.

Buffett explained that in the wake of the global financial sector meltdown, state officials have been forced to take the world into uncharted territory. Nobody knows the exact impact of unprecedented bailout and stimulation packages.

But he is convinced of one definite consequence: “You can bet on inflation.” History suggests that higher inflation is an important trigger for a rise in the gold price.

In his view the US is following policies that are bound to have inflationary consequences. Heading these is the heavy borrowing from, especially, the Chinese to fund the bailout and stimulus packages.

To illustrate the challenges the nation faced last year, Buffett showed a sales receipt for $5 million in US Treasury bonds that Berkshire sold in December for $90.07 more than face value, ensuring a negative return for the buyer. Buffett said he doesn’t think most investors will see negative returns on US bonds again in their lifetimes.

 

[vicky_600]

Why gold will continue to shine?
I want to start off my first regular Money and Markets column with a simple statement: I am not a hardcore gold bug. In other words, I am not always out looking for reasons to justify owning gold. I do not even believe gold is a productive asset! However, I do think gold provides great insurance against political follies, especially those that will likely lead to inflation.

And while I consider life and investing most fun when there are no reasons to bet against the government, history has shown again and again that sometimes you have to take that position to protect your family and your wealth!

My point is simple: I think the only time to buy gold is when you’re critical of current monetary and fiscal policy.

So up until 2001, I didn’t see a reason to recommend the yellow metal.
Times were good, the financial markets were booming, the economy was doing okay, and the Fed and its international brethren were doing relatively little harm (other than fueling a stock market bubble). As long as the bubble was holding together there was no need to look for a store of value or for insurance against bad economic policy outcomes.
Besides, gold was mired in a secular bear market that started back in 1980. So my technical market analysis confirmed the unattractiveness of precious metals

Then, in 2001, I started to see an about-face happening … The Fed implemented a highly inflationary monetary policy, and the Bush administration did the same in regards to their fiscal policy.

That was a clear starting signal for a brand new gold and commodities bull market. And when I looked to my charts for technical confirmation, it looked like there was a huge bottom forming. I knew then that it was one of those times to bet on gold, and I turned out to be right …

Gold’s price quadrupled from $255 on February 21, 2001, to a high of $1,034 on March 17, 2008. But now, many are asking if gold’s bull market mas run its course? When the recession hit, stocks and commodities got clobbered. And gold’s price fell 30 percent. Now, everyone wants to know if gold’s run is dead or if we’re just witnessing a healthy correction in an ongoing secular bull market.

 

[vicky_600]

Gold Rush: Indian temples own tonnes of gold

What has gold to do with the temples, prayers and deities in India, the largest consumer and importer of the yellow in the world? Lots, in fact. Gold is the most precious religious ‘metal’ used in India’s temples and religious places of worship.

India is arguably the largest bullion market in the world. India is a country that imports around 500-800 tonnes of gold on an average every year; India has the largest number of gold jewellery shops in the world. Indian households own around a whopping 15,000 tonnes of gold. India’s post offices, banks and commodity and stock broking houses are selling gold coins like hot cakes as an investment asset.

But when business in gold in India is booming despite the high prices of the yellow metal, there is something great happening with hold in India’s religious places of worships. Yes, a number of India’s Hindu and Sikh temples get large quantity of gold coins and jewellery as donations that commercial banks have tied up with temples to process their gold holdings.

Look at the golden state of affairs in some of India’s leading temples:

**The credit for a religious place to holding the largest quantity of gold in the world belongs to the Tirumala Tirupati Devasthanams (TTD) that maintains twelve temples and shrines in the southern India state of Andhra Pradesh. The temples at Tirupati receive several hundred kilograms of gold as donations from devotees every month. It is said that the Tirupati temple has the largest gold holding that any religious place of worship in the world possesses.

**The Tirupati temple has a separate department to handle gold coins and articles received as donations. The department’s employees check if all that glitters is indeed gold. Coins are separated from currencies, gold from all else, before being deposited in banks. The assortment of golden items that the temple receives as donations include: gold coins, silver coins, gold ornaments, silver ornaments, golden handcuffs. Recently the temple even received a gold Leica camera, which is today being used by the official photographer of the temple.

**Two years back, a devotee of Hindu Lord Venkateswara for whom the Tirupati temple is dedicated donated gold puja items worth Rs 1.5 crore. Balbir Singh Uppal, an industrialist donated over seven pieces of puja items made of gold to the temple. The donation was believed to be made in fulfillment of a vow made earlier. The seven-piece ensemble comprised gold sankanidhi, gold padmanidhi, gold eka harathi, dhoopa harathi, gold nakshatra harathi, gold sankham, and gold nakshatra harati. The Tirupati temple is also giving gold to poor families in order to stop them converting to other religions. It gives out one gram of gold to each family which lives over a lakh (100,000 rupees) below the poverty line.

**On the Tirumala temple again. Recently, the Tirupati temple management announced the commencement of gold covering work of sanctum sanctorum of Sri Venkateswara temple. The temple administration has already received 60 kg of gold from devotees for the work taken up under the Ananda Nilayam Anantha Swarnamayam scheme. In the first phase of Ananda Nilayam Anantha Swarnamayam scheme, 200 kg of gold and 600 kg of copper will be used to cover the sanctum sanctorum.

**The Siddhivinayak Temple in the western Indian state of Maharashtra temple plans to sell gold ornaments donated by devotees at auction in order to pay for a medical centre. The proceeds of the auction by will be spent on a diagnostic centre, after plans for the project were approved by the state government.

** One of the biggest Hindu shrines in southern India, the Sri Puram Golden Temple a grand golden temple was built by a spiritual organization in Tamil Nadu at an approximate cost of US$160 million two years back. The temple, covering 55,000 sq ft area, has intricate carvings and sculptures in gold. Except the walking path, the entire structure has been covered with gold and copper. Some 400 goldsmiths and coppersmiths completed the architectural marvel in gold in six years. More than one and one-half ton of pure gold full of glitter and gleam has been used to build the temple which is covered fully with gold.

**The Harmandir Sahib (or Hari Mandir) in Amritsar in northern India’s Punjab state, is the holiest shrine in Sikhism. Known as the as famous Golden Temple—where once Indian army launched a military strike to flush terrorists from the temple—is a major pilgrimage destination for Sikhs from all over the world, as well as an increasingly popular tourist attraction. When the temple was re-built in rebuilt in the early 19th century, 100 kilograms of gold were applied to the inverted lotus-shaped dome and decorative marble was added! Thus the temple’s name of Golden Temple.

Analysts say the craze for gold in India has spilled over to temple because people believe that gold is the best and most precious commodity that they can donate to a deity as a form of worship. “Giving donations in cash and kind to God is a ritual that India has followed for centuries. So there is no surprise in the fact that gold is the most donated item in temples in India,” Ram Kiran, a bullion dealer in Mumbai told Commodity Online.

According to Kiran, temples in India are the biggest holders of gold as far as religious places of worship are concerned in the world. “Some of the temples in India own tons of gold that they are richer than Swiss banks,” he added.

Several commercial banks in India are wooing temples to handle their gold assets. The State Bank of India (SBI) recently launched a special gold investment scheme targeted only to those affluent and high net worth investors, temples and trusts for whom gold is just another asset class.

As per the scheme, the minimum amount of gold deposit is thus pegged at 500 grams (1/2 kg), which is probably beyond the reach of general public at large.

”Our scheme is specially targeted at large temples in India that receive huge donations in gold,” a senior SBI official said.

He said during its previous phase, the scheme had garnered 400 kgs of gold alone from Guruvayur Devaswom in Kerala. If the scheme does a turnaround this time, it may find its potential customers in famous temples across India that hold several tones of gold.

 

[vicky_600]

Swine flu hits bullion, tourism :

After bird flu and recession, now swine flu is threatening to damage this years’ tourism business in a big way.

Already several countries have issued travel advisories warning tourists from going to swine flu affected countries and urging people to undergo screening at all airports.

This has caused fear among tourists who have planned trips to the US, Mexico and several European Union countries.
Even as the tourism industry is struggling to cope with the recession, this new blow has broken the backbone of the sector with lots of bookings getting cancelled. Even airlines are now feeling the pinch with a lot of cancellations.

From countries like India, scared people who had planned trips to foreign shores during the summer school vacations, have already cancelled their trips fearing the swine flu epidemic.

Swine flu is not only hitting the travel sector it also affects other areas like hospitality industry and even bullion.

Take the case of Dubai, the city of gold. Dubai’s gold sales depend mainly on tourists coming from several countries. Even though the Gulf nations are one of the safest places to travel now, the problem is that tourists are not ready to travel now because of the fear. Iraq announced a $30-million fund to combat swine flu, although so far it has only been confirmed in Israel in the Middle East.

So, without tourists flow Dubai’s gold sales will be hit hardly due to swine flu.

However, the gold prices have surged in the international market after the outbreak of the disease. Analysts said the epidemic has improved the status of gold as safe haven. After recession hit almost all economies, gold’s safe haven status has been on the rise.

In India also people are not traveling to foreign shores now because of the scare and this has resulted in a slump in their purchases, especially jewellery, which they used to buy from Dubai or some other foreign shopping centres.

However, EU ministers have rejected a French proposal to ban all flights from the EU to Mexico.

After the World Health Organisation (WHO) raised the global swine flu alert to five, suggesting a global pandemic was imminent although not inevitable, governments around the world attempted to strengthen their defences and readiness against the disease.

In the US, President Barack Obama rejected the idea of closing the border with Mexico. EU ministers also rejected a French call to ban flights from the EU to Mexico, a move Paris had proposed in a bid to stem the spread of the virus.

EU ministers also decided to term the virus “novel flu”, stressing that it is “related to human-to-human transmission”, not caught from pigs.

Mexico itself has announced a five day shut-down of most public spaces, offices and infrastructure, with President Felipe Calderon in a TV address urging people to stay in with their families, saying there was no place as safe as your own home. The shutdown will last May 1 to 5, a public holiday in the country.

In Thailand, the Bangkok authorities green-lighted the dispersal of 100,000 free face masks, mostly for taxi drivers and foreign tourists.


Australia unveiled thermal scanners at its airports, to target incoming passengers who may be suffering from the virus.

Singapore raised it domestic alert from yellow to orange, whilst an emergency Association of South East Asian (ASEAN) countries is planned for next week.

The Philippines said it was reactivating its emergency plan from 2003, when the avian flu and SARS viruses struck.

 

[vicky_600]

Gold may plunge on US banks’ stress-test results

Risk appetite is on the rise. Equities have rebounded sharply, many emerging market currencies have strengthened, and the US dollar is depreciating.

Despite gold’s jump above $900 yesterday, the metal lacks momentum. We have seen good physical selling with gold above $900 — and this seems to be the current trend.Equity markets have almost wiped out YTD losses.

In fact, the S&P is marginally higher YTD, at 0.22%, while the Dow is down only 3.98% YTD. But the Dow has gained 29% since 9 March 2009. While we doubt this momentum in equities is sustainable, any safe-haven asset like gold, which provides no yield, will struggle to compete against the type of performance equities have been delivering.

And as long as risk-appetitive continues to linger, gold should not find major support. Gold support is at $888 and $875, with resistance at $911 and $920.We will be monitoring two events this week due out on Thursday: The first US banks’ stress-test results — hard to predict.

However, as risk appetitive has risen over the past few weeks, this indicates a market that believes all should be well with US banks. The second important event is the ECB meeting on interest rates. We expect a 50 bps rate cut, and possibly some nonconventional policy measures.

Such measures would benefit gold (and other precious metals) should they be big and bold, i.e. truly non-conventional. But the ECB is usually conservative and very conventional.

Both platinum and palladium have pushed higher yesterday on the back of gold. Fundamentally the metals remain weak.

However, the fact that the ZAR continues to appreciate against the dollar is putting pressure in ZAR-denominated revenue
for platinum producers in South Africa. This might provide support for PGM prices. However, we also believe the strong ZAR
raises the risk that some producers could increase the flow of refined metal to the market (to increase ZAR-denominated revenue).

This might make it difficult for PGM prices to find support at higher levels, as long as the ZAR is strong against the dollar.

Platinum support is at $1,097 and $1,072. Resistance is at $1,135 and $1,150. Palladium support is at $211, and resistance at $225.

Silver is trading above $13.00 again. After bouncing from $12.60 to $13.00 in just a few minutes yesterday, the metal has been very steady between $13.00 and $13.10. Support is at $12.61 and $12.18, with resistance at $13.30 and $13.57.

 

[vicky_600]

Century Aluminum Co. (NASDAQ:CENX) has exercised a 28% slash in output meanwhile it is also planning to curtail yet another production of around 200,000 tonnes on grounds of exceeding supply pushing prices below cash cost level of majority producers.

Century Aluminum Co. is engaged in producing aluminum. It got charged $24.3 million in the recent quarterly results on account of job and production cuts at Ravenswood and Hawesville facilities wherein the latter is now operating at an annual capacity of 200,000 tonnes/year.

CEO of Century Aluminum Co. Wayne Hale told Reuters that a 50,000- tonne reduction is yet in pipe-line to be initiated in near future.

CENX recently reported a loss of 52.35 in revenues year-over-year to $224.59 million. Analysts recommend to ‘Hold’ the stock and target an average price of 6.5.

Century Aluminum Co. share however gained 30.94% at NASDAQ on Friday and touched a 52-week high of 80.52 and low of 1.04. It was last traded at 5.29.

 

[vicky_600]

Sugar as a Commodity
India’s sugar and coffee output is set for a major fall this year. While the former has already affected the global market, the latter with its insignificant share in global markets may not have any widereaching consequences. As a result sugar prices in New York surged to the highest since July 2006 while Cocoa futures dropped. India’s coffee output for the crop year ending September 2009 stands at 2.6 lakh tonnes, down 5% from the earlier estimate of 2.8 lakh tonnes, according to the revised post-monsoon coffee crop estimate issued by the Coffee Board.

Wheat procurement in the country has reached 193.45 lakh tonnes till Wednesday in the 2009-10 season — 51 lakh tonnes more than the year-ago period, according to government data. Food Corporation of India, along with other state agencies had procured 142 lakh tonnes in the corresponding period of the 2007-08 marketing season.

Meanwhile, spurred by bullion and farm futures, the turnover of 22 commodity exchanges in the country rose by 41.89 per cent to Rs 2,37,503 crore in the first fortnight of the current fiscal, the commodity regulator Forward Markets Commission said. Three national exchanges and 19 regional bourses generated a business of Rs 1,67,391 crore in the corresponding period last year, the Forward Markets Commission (FMC) said in a statement.

Interestingly after a long lull, futures trading in agricultural commodities showed an improvement in the first fortnight of the current fiscal and the turnover rose by 18.40 per cent to Rs 36,400 crore from Rs 30,744 crore last year, it said.

Precious Metals
Last week, Spot Gold prices corrected sharply from its high of $918.40 to touch a low of around $880 levels, which continues to be an important support level. Profit booking was witnessed at higher levels with investors unwinding positions as global equities markets showed positive movements coupled with declining physical demand, both from the investment as well as fabrication segments. Further, the US Consumer Confidence for April jumped to 39, beating the forecast of 29.6 which also pressurized the bullion pack.

The FED left its interest rates unchanged, but markets are looking for cues from the stress tests results of leading USA banks which shall set the tone for global financial markets in this week. The flight to quality & safe-haven issue still remains on the fore-front. Bullion prices are presently tied down in a range-trade with the global equity markets & the global economy, the factors to watch out for in coming days. Spot gold prices are meeting with stiff resistance around the $920 mark. On the downside, the Spot Gold is very strongly supported around the $868 levels and further below at $860 levels. MCX June Gold has support at 14,360/13950 levels whereas resistance is seen at 14780/14950 levels.