Wednesday, March 19, 2014

Will the price of gold reach $5000 per ounce or higher?

Sample of high grade gold. picture of a nugget from NL
Gold and the price of gold gets plenty of attention and it is a subject that is gets regular coverage from media sources. Every day there are reports, articles and commentaries from industry stakeholders, stock market gurus and financial advisors etc.

Some are bullish on gold, some are bearish and some promote having a contrarian approach. It is can be difficult to take a side on either opinion as there are good points being made each way.

As a gold prospector I am in the camp that cheers on the price of gold and would relish seeing the price increase. I think that the price will gradually edge up to higher levels that better correspond to the true value of the metal when compared to fiat money, as has been seen in history.

Charles Oliver from Sprott Asset Management LP believes that the price of gold may reach $5,000 per ounce or higher within a few years and maybe even go beyond that. He focuses on gold and silver investments as a portfolio manager for the Sprott Gold Precious Minerals Fund and the Silver Equities Class. Below are some quotes from a recent article by Henry Bonner in which Charles makes his case for higher gold prices.

When Henry Bonner spoke to Mr. Oliver last summer, he said the weakness in the gold price in the face of unprecedented money printing from the Fed had taken him by surprise.

Quotes from the March 11, 2014 story:

Have we passed a decisive point since then? Is gold heading up? (Bonner)

“I believed throughout 2013, with the price of gold coming down, the fundamentals were only getting better,” he answered. “During that time, the Chinese bought like mad and the Fed printed another trillion dollars through QE. Nonetheless, heavy selling took the gold price down.

“Today, the difference is that the sellers are exhausted, and physical demand is catching up. One of the numbers we are looking at is the quantity of registered inventories on the COMEX for gold. That’s the amount of physical gold that is available when someone asks for physical delivery instead of a cash settlement.”

Mr. Oliver continues: “One day, we might see someone try to break the market on the physical side, by demanding delivery of more tons than can be supplied – hence driving the price up.

“Because of this threat, I would tell investors in the metals to stick to ‘fully-allocated’ products, where you have a claim to a specific amount of metal that is physically held in a vault, not lent out or hypothecated.”

So have we reached a point where physical demand will drive the price up? (Bonner)

“The demand coming from China boggles the mind. Imports of gold through Beijing were somewhere on the order of 100 tons a month last fall. Assuming this trend continues, China might import 1,200 tons or more this year. That is nearly half of the world’s annual mine production of around 2,600, whereas 5 years ago, they hardly imported any. I believe a good portion of the 800 tons that were sold from ETF holdings subsequently were shipped to Asia.”

Could gold head lower in the near-term? (Bonner)

“As far as the price going down again, we already saw gold bounce off from $1,180 in December, which represented a 39 % retracement from the peak – a significant number from a technical perspective. Certainly another powerful support level would be around $1,000. There were several times before 2008 when gold hit that level and came back. I believe that would be a very firm support level for gold if it dropped again.”

Where is gold headed a few years out? (Bonner)

“In 1980, when the gold price peaked at $800, it took 1 ounce of gold to buy the Dow Jones Index. After 1980, financial assets took the lead over hard assets. In 1999, it took 44 ounces of gold to buy the Dow Jones, at a gold price of $250. If gold were to regain the position it held in 1980, we could easily see a 3:1 ratio – gold at $5,000 given the current level of the Dow Jones, or even $15,000 if gold returns to the 1:1 level.

“Ultimately, I believe that the gold price could reach $5,000 within a few years, and perhaps go well beyond. Deficits and rising debts, exacerbated by demographic issues, are here to stay. And money printing and higher gold demand along with them.”

The Full Article from Sprott Asset Management is available here

How does the price of gold effect the propsector and the value of his / her claims ? Read More here 

Monday, March 17, 2014

Island of Newfoundland: An emerging Gold District on the East Coast of Canada

Specimen of gold in quartz undisclosed location in Nl

Exploration and development for gold is gaining momentum on the Island of Newfoundland. Much of the recent and current production of the precious metal is linked to the beginning of modern gold exploration, led by Noranda and a host of juniors. These efforts which peaked in the 1980s, quickly resulted in significant gold discoveries, many of which are associated with major crustal structures across central Newfoundland’s greenstone terranes. Richmont Mines’ Nugget Pond and Hammerdown Mines and BP-Selco‘s Hope Brook Mine were the direct result of these early finds.

Since that time, exploration has been sporadic, carried out by local junior miners and prospectors, supported by government surveys. Nevertheless, key gold discoveries have been made in a wide range of environments prospective for world-class deposit types. These occurrences include well-documented examples of high- and low-sulphidation epithermal deposits, bulk tonnage intrusion and sediment-hosted deposits, and gold-rich volcanogenic massive sulphide deposits.

These highly prospective yet underexplored environments represent opportunities for significant new discoveries, in what is becoming an emerging gold district. The following projects reflect some recent success stories in this region.
  • New resource estimates were reported on several advanced gold projects in central and southern Newfoundland; Preliminary Economic Assessments are in progress.
  • Rambler Metals & Mining plc is producing from newly defined high-grade copper and gold lenses from a historic Au-rich VMS deposit in the Baie Verte mining district of northeastern Newfoundland.
  • Anaconda Mining Inc. is operating the open-pit Pine Cove mine, a mesothermal (orogenic) gold deposit associated with a major structural feature, the Baie Verte Line. The company processed 287,747 dry tonnes of ore, and sold 14,879 ounces of gold in the fiscal year ending May 31, 2013.
  • Marathon Gold recently reported total measured and indicated resources at the Leprechaun Deposit of 10.5 million tonnes grading 2.28 g/t gold for 775,000 ounces of gold and 1.5 million tonnes at 2.79 g/t for 140,000 ounces of gold.
  • Benton Resources Inc. has assembled a large land package covering the highly prospective Cape Ray Fault Zone. Benton now owns six separate deposits having either 43-101 compliant or historic resources totalling more than 448,000 ounces of gold, with silver and base metals.
  • Maritime Resources Corp. is exploring the Hammerdown and Orion orogenic gold deposits, and several other gold zones. An initial Independent NI 43-101 compliant Mineral Resource Estimate released in June 2013 estimates the property to contain more than 400,000 ounces of gold in the measured and indicated category and over 600,000 ounces in the inferred category, both are at a 3 g/t cut-off grade.
  • Coastal Gold Corp. is exploring the historic Hope Brook gold mine on the south coast of Newfoundland. An updated NI 43-101 Mineral Resource Estimate released December 2013 reports 19.9 million tonnes indicated at 1.93 g/t Au for 1,239,000 ounces of gold and 1.3 million tonnes inferred at 3.22 g/t for 138,000 ounces of gold.

Despite the current weakness in financial markets, greenfields gold exploration continues on the Island of Newfoundland, with significant results. Notable amongst these has been the recognition of new areas of widespread epithermal gold mineralization in eastern Newfoundland by Silver Spruce Resources and Puddle Pond Resources. Bonanza-grade, gold-bearing quartz veins were found by a local prospector in a little-explored silicic volcanic terrane on the Baie Verte Peninsula. These claims have since been optioned by Bowmore Exploration.

Newfoundland and Labrador is a highly attractive exploration destination and a globally competitive mining jurisdiction, with world-class deposits of iron, nickel-copper-cobalt and zinc-lead-copper.

The province ranks ninth worldwide in the most attractive jurisdictions for investment in mining, according to an annual global survey of mining executives recently released by the Fraser Institute... Read more at this link