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!

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

Gold price may rise further

Investors find ‘safe haven’ in precious metal

By CHOONG EN HAN (The Star)

KUALA LUMPUR: The price of gold may surge further following Standard & Poor's (S&P) downgrade on US credit ratings as investors look for a “safe haven” in the precious metal.

The price of gold climbed above US$1,700 an ounce yesterday following the downgrade of long-term US credit rating.

“The unprecedented S&P downgrade sent shock waves over global equities and commodities markets, driving gold prices to record highs as investors sought the bullion as a safe haven,” said Phillip Futures Pte Ltd analyst Ong Yi Ling.

The next key focus would be on the Federal Open Market Committee meeting scheduled for today. Investors are looking for indications from the Federal Reserve's policy setting committee on its next course of action.

“We expect the Fed to continue its low interest rates, but the wild card would be hints of possible future quantitative easing measures which would benefit gold prices,” said Ong.

Singapore-based Phillip Futures also raised its year-end target of gold to US$1,800 an ounce, with anticipated slower US economic growth coupled with Europe's sovereign debt problems.

“Gold price has gone up by 14% since July, and the market may claw back some of its gains in the near term as the sudden surge in price may just be a knee jerk reaction towards recent developments,” Ong said.

Meanwhile, a Singapore-based head of bullion said gold price might still have some upside amid global economic uncertainties, with the price for the precious metal likely to hover around US$1,800 an ounce by year-end.

“Market talk is that prices may hit US$2,000 by year-end, but personally I would not be so bullish, as we are currently at the crossroads; if the economy starts to shrink, gold prices would follow suit,” he said.

Investors seeking safe haven bet on gold

PETALING JAYA: Gold prices are on the way up again as concerns over debt levels in the United States and the eurozone prompt investors to move their funds to safe-haven assets.

Investors were also betting that rising agriculture commodity prices would mean higher food prices after the Standard & Poor's GSCI Spot Index, a measure of 24 commodities, rose for the third consecutive week.

Gold, also seen as a hedge against inflation and volatility, has seen gains since 2009 as an impasse over how to lower the US deficit continued.

Investor fears have also heightened amid concerns that deficit levels in eurozone members Italy and Spain could not be sustained in the long term.

A Bloomberg report said gold futures climbed for nine straight sessions to July 15, which is the longest rally since November 2009.

Analysts who spoke to StarBiz said prices would rise above the US$1,600 per ounce level in the near term due to inflation in China and the debt crises in the United States and the eurozone.

Singapore-based Phillip Futures Pte Ltd analyst Ong Yi Ling said gold was likely to rise to US$1,650 in the August to September period as demand was traditionally strong during that time.

She said that with Federal Reserve chairman Ben Bernanke not discounting another round of fiscal stimulus, this signalled to the markets that the recovery in the world's largest economy could still be a drag on global growth.

Ong added that demand for gold in China was high as both an investment and retail purchase. Investors like it as a store of value and hedge against inflation while rising incomes have allowed retail customers to buy the metal, according to Ong.

She, however, noted that price volatility would increase as prices rose.

Meanwhile, a Singapore-based gold trader attached to a bank said gold prices would likely rise to US$1,615 in the next one to two weeks before the market rebalanced from the price rise.

“Funds are flowing to gold from securities due to the volatility of the US and European markets but may return to the US market as second-quarter financial results may beat expectations,” he said.

According to Brad Durham, an EPFR managing director, there was fear in the markets of a potential downgrade of US debt and more negative news from the eurozone.

“It was a good, old-fashioned flight-to-safety trade,” he said in a Bloomberg report.

Data from the US Commodity Futures Trading Commission also showed hedge funds and other money managers lifted their net-long gold position by 25%, which is the biggest jump since the week ended Sept 8, 2009.

Another Way to Look at Cheap Gold Stocks

I got this article from my friends,Alfian..i just want to share...good article

By Jeff Clark, editor, S&A Short Report
Friday, May 20, 2011

The gold sector looks ready to bounce.

It's been a rough year for gold stocks. Even though the price of gold is up 5% so far in 2011 (near $1,500 an ounce), gold stocks are underwater. The Market Vectors Gold Miners ETF (GDX), for example, is down about 10% for the year.

And as my colleague Steve Sjuggerud pointed out, you see the same pattern over the longer term, too:

Over the last three years, the price of gold is up over 60%... But gold stocks (as measured by the big gold stock fund GDX) are up less than 20%.

This action has a lot of gold stock investors scratching their heads.

With the commodities complex selling off a bit recently in reaction to a bouncing dollar, many gold bugs are throwing in the towel. They're selling their stocks. And in the process, they're creating some bargains in the gold sector.

Lots of big-name gold stocks like Newmont Mining (NEM) and Agnico-Eagle Mines (AEM) are trading at historically low valuations. The gold sector itself trades at a discount to the S&P 500. The dividend yields on many of the larger companies are higher than the rate on two-year Treasurys.

You don't often see gold stocks trading this cheap. The sector is approaching oversold levels and is at least due for at a short-term bounce.

Take a look at this chart of the gold sector bullish percent index (BPGDM)...

A bullish percent index (BPI) is a measure of overbought and oversold conditions for a market sector. A sector is overbought when the BPI runs above 80, and it's oversold when the BPI drops below 30. Typically, the best time to buy into a sector is after the BPI has reached oversold levels and starts to move higher.

As you can see from the chart above, the best buying opportunity of the past two years for gold stocks was in February 2010 (the blue circle).

Of course, we don't always have to wait for the "best" time to buy to take advantage of opportunities. The red circles on the chart indicate "good" spots to jump into the gold sector. Each spot occurred right after a deep decline in the sector and proceeded with a sharp rally higher. The BPI dropped sharply each time, but didn't quite fall to "oversold" levels.

Look at how GDX behaved each time...

So while the best time to jump into the gold sector is when the BPI drops below 30 and turns higher, the BPI can point out other good times to buy, too. I believe we're approaching one of those times right now.

The gold sector bullish percent index is acting similar to how it was last year. It bottomed in late January/early February... ran higher for a few months... then dropped hard in May. That action led to a bounce in the sector that popped GDX 15% higher in one month.

That's the sort of bounce we should see this year as well.

It's certainly possible, however, that the gold sector will just keep dropping until the BPGDM drops below 30 and the sector becomes officially oversold. You'll want to have plenty of cash available to buy gold stocks if we ever get to that point.

But given the bargain basement pricing of many gold stocks, it's worth it to take a small bullish position in the sector right now.

Best regards and good trading,

Jeff Clark

Dont: Use paper currency, not gold dinar

KUALA LUMPUR: Islamic countries should continue to use paper currency instead of gold dinar, said professor of comparative economic history at International Centre for Education in Islamic Finance Dr Murat Cizakca.

History had shown that the return to coinage system could increase interest rates and inflation would be difficult to control, he said.

Speaking at a public lecture on Islamic Gold Dinar: Myths and Reality organised by Association of Chartered Islamic Finance Professionals and Inceif yesterday, he said money should serve as a medium of exchange, not as a commodity.

“We need to continue with paper currency, and the central banks controlling paper currency should have full autonomy,” he said.

He added that gold supply was dominated by non-Islamic countries.

“The gold dinar will be exposed to speculation as the gold price also has its ups and downs. Islamic countries should continue to use paper currency and increase trade among each other,” he said. - Bernama

Prof. Dr. Murat Çizakça
Professor of Islamic Finance at INCEIF
Member of PDP(Senate), Kuala Lumpur, Malaysia

Prof. Murat Cizakca received his B.A degree in economics from the University of Leicester in England (1968) and M.A. and PhD degrees also in economics from the University of Pennsylvania in the U.S.A (1978). His main specialisation is economic history and he is known for his application of the principles of economic history to Islamic business and finance.

Umar Ibrahim Vadillo - Interview 1 - Gold Dinar