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Friday, June 28, 2013

Gold: Approaching and breaking the miner’s operation cost

From MelakaFX's Trading Tips-Shufaad

Good day traders!
For bullion traders, I assume we have every reasons to cheer now. The slumped in the yellow metal price is quiet a blessing. As I’m writing, the lowest price for today is $1224, once a resistance area in Nov 2009.

Gold Weekly
Supports are found at $1200 (psycho level), $1150 (1 Jan 2011 resistance are and 25 July 2010 support area), $1100 (another psycho level) and $1045 (31 Jan 2010 low area) – I can simply use the round number here. And yes, I believe you guys have seen it on the chart.
More importantly is the golden question – will it strike through the $1000 level? From my humble opinion, I believe it will not. During the Gold Technical Class since 2010, I’ve been saying the same thing. It will not come near nor breaking the $1000 price mark.
What’s the basis then?
Let me brief you with some of the cost that this gold producer’s,  have to deal with.
  1. Sibanye Gold Ltd. (SGL).  Sibanye, South Africa’s second-largest gold producer by output, reported total costs including production and capex of $1,334 an ounce for the three months to March 31.
  2. Harmony Gold Mining Co. South Africa’s third-largest producer, were $1,487 an ounce, including operating costs of $1,220 an ounce and $61.07 million of capital spending on the 228,528 ounces it mined during the period.
  3. Gold Fields Ltd. (GFI) another South African based company, recorded costs totaled $2,195 an ounce as the company spent money on building its South Deep development.
  4. AngloGold, South African’s  largest gold miner, was the only South African bullion producer whose costs in the nation of $1,204 an ounce were below the current spot gold price. It posted cash costs of $896 an ounce and $101 million of capital spending on the 327,000 ounces it mined for the quarter ended March 31. Furthermore, it’s Mponeng mine is the world’s deepest gold operation with seams 2,400 meters (1.5 miles) to 3,900 meters underground. The operation could easily be inflated.
  5. Toronto-based Barrick Gold Corp. (ABX), the biggest producer, who operates mines at or near the surface and last posted output and capex costs of $919 an ounce.
Another interesting fact is that the cost of production for South African miners has been propelled much faster than for other producers, due to labor intensive mining practices combined with sharply rising wages.
Both Barrick Gold and Goldcorp Inc. (G), the biggest producer by market value, have  begun reporting “all-in sustaining costs,” a measure that for Barrick includes cash costs, general and administrative costs, rehabilitation, exploration, mine development expenditures and sustaining capital expenditures.
The question remain, how long can this low price sustain?
Happy pipping!

Monday, June 10, 2013

Gold Survey: Survey Participants Torn Over Gold Market Direction For Next Week

Friday June 7, 2013 12:04 PM


(Kitco News) - Friday’s U.S. monthly jobs report did not provide any guidance for market direction, so market participants are back to debating whether or not gold can break out of its current range. Participants in the weekly Kitco News gold survey are equally torn over next week’s price direction.
Until Friday’s sell off, gold was looking to end the week with gains, but the late-session break erased those hopes.
In the Kitco News Gold Survey, out of 36 participants, 22 responded this week. Of those 22 participants, nine see prices up, while seven see prices down and six see prices moving sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.
Last week 63% of survey participants were bullish. As of noon EDT Friday, prices on the week were down about $11. If that holds, then most survey participants forecasted incorrectly. Since May 13, 2011 when the survey started, participants have been right 44% of the time, as of May 31. Until Nov. 23, survey participants had more than a 50% accurate rate, suggesting that since then there has been a change in the trend for gold.
Participants who see higher prices next week said prices should holding above $1,350, the lows of the current range. “I think for the short-term the bottom in metals is in. We keep going back to that $1,400 area. To really flip this thing around in the short-term we need a close over $1,423, but for next week I think we’ll at least go back to $1,400,” said Bob Haberkorn, senior commodities broker at RJO Futures.
Others who see higher prices said exchange-traded fund outflows are slowing which releases some pressure on gold; additionally, they said it’s unlikely the Federal Reserve will seriously look to taper its bond purchases anytime soon. The expectation for Fed curbing some of its bond buys put gold under pressure lately.
Those who see weaker prices said a return to the downtrend is likely now that the U.S. May nonfarm payrolls report came in as expected. Ken Morrison, editor of online newsletter, Morrison on the Markets, said this week’s dollar losses did not support gold overall.
“There was ample uncertainty, largely a result of the 3-4% rally in the yen, but dollar weakness served largely to hold gold steady. We expect the dollar-weakness has about run its course and with the anxiety over the U.S.
employment report now behind us, we expect gold may attract new willing short-sellers in the week ahead. We expect the $1,360 area will be tested sometime within the week,” he said.
The jobs report did little to alter survey participants’ views on gold and many said barring any big surprises, there is nothing to push gold out of its range.
“(I’m) looking for the market to look left, right, then left again, to remain frozen, not cross the street, and not know what to do as prices bounce between the $1,425 to $1,350 zone,” said Ralph Preston, principal at Heritage West Financial.
By Debbie Carlson of Kitco News