“Darren can discover the "golden fleece" and no one would care much” We will have to disagree on that one Reiner. GH was probably a big factor when the sp rose to 6.5c last year.
We already have seen evidence of strong grades and recoveries so assuming these are confirmed it won’t come as a big surprise. Neither will the ML. These will take risk out of the equation though and that should drive the sp but I think something like another GH, especially if larger and deeper next time, will have a much bigger impact on the sp as I believe it did with GH.
Sounds like I am more confident than you on POG as well. However a rising POG aside, all we need is POG to have seen its lows for ABU to do well and I am seeing increasing evidence of that in the charts like the ones I posted this morning. Also we are seeing it with China's willingness to soak up all that extra supply from investors over the last 6 months. The chart below shows the large part of that demand goes into jewellery. Most of that selling from ETF’s has been locked up in a form that is unlikely to go back into the market- ever. Yes some jewellery might be recycled eventually but that will only be a small percentage of the total. Jewellery is a much more permanent type of demand than the ETF buying that led to the 2011 high.
The chart shows a flattening off in demand in 2011 and 2012 after prices peaked in 2011 but demand rocketed much higher in the first 6 months of 2013. We saw how strong jewellery demand was in China in April so again most of that gold is probably locked away for good. Again I ask; What happens when the ETF’s stop selling? I doubt the Chinese will stop buying jewellery.
ABU Price at posting:
3.3¢ Sentiment: Buy Disclosure: Held
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