june 2011 - quarterly review, page-7

Educating Congress; gold at $1700 this year and copper strength - Michael Berry
Dr. Michael Berry talks about educating U.S. Congress on metals and minerals, $1,700 gold by year end and continuing strength in base metals. Gold Report interview.
Author: Brian Sylvester
Posted: Saturday , 16 Jul 2011

http://www.mineweb.com/mineweb/view/mineweb/en/page36?oid=131632&sn=Detail&pid=36

The Gold Report: Dr. Berry, you are going to go before the Federal Reserve and meet with Congressional representatives on July 18. Could you give our readers a Coles Notes version of what you plan to say?
Michael Berry: I go before the Federal Reserve twice a year. In this presentation on Monday, I'll talk about the geopolitics of growth in emerging countries and issues related to the dollar, gold, convergence of the rest of the world and the weak global recovery.

Monday afternoon, I'll head over to the House and meet with the Chairman of the House Natural Resources Committee and Senator Lisa Murkowski's (R-Alaska) natural resource staff to discuss extractive resource policy, natural resource exploration in the U.S., critical metals and what's really happening in the rest of the world regarding resource nationalism.

I also believe I'll be meeting with Senator Murkowski's natural resource policy representative, McKie Campbell. I'm trying to educate the Congressmen and Senators and their staffs on how important natural resources are to the U.S. and what's going on in the world with respect to critical metals, metals supply and demand and what policies we need to enact in this country.

TGR: Do you feel you've made progress toward legislation that's a bit more pro-mineral development or metal development?

MB: Yes, I think we've made some progress. It's a long education process and it's difficult to do because you have to be consistently in front of them. Congress has three bills pending now-two in the House and one in the Senate-that relate to natural resource development in the U.S. for critical metals. Not just rare earth elements, but a number of others as well. They also relate to exploration and development policy. I think we're making some inroads with Congress and others in Washington. It's very important that we keep that pressure up.

TGR: On Thursday, the price of gold for delivery in August flirted with $1,600/oz., going as high as $1,594.90/oz. before closing at $1,589.30. What is causing this continued upward climb and what does it mean for juniors going forward?

MB: There is just a tremendous amount of uncertainty regarding the debt ceiling and the U.S. credit rating. That is pushing gold and silver prices higher, which is positive for gold miners and exploration stocks. Look for $1,700/oz. gold by the end of the year.

TGR: What happens if there is no third round of quantitative easing and our elected officials come to an agreement on the debt ceiling? Does the gold price climb lose its momentum?

MB: Nothing is standing in the way of gold and silver going higher. There will be some accommodation on the debt ceiling and something will be done to try to keep the economy moving just because no one wants to see higher interest rates. In the meantime, investors have come to the realization that precious metals play an important role in the portfolios of individuals, institutions and countries, which are now buying large quantities of gold. It will continue to hit new highs as the 250-day moving average is increasing beautifully.

TGR: In the second quarter, we witnessed a significant sell-off in speculative positions in both gold and silver. Do you believe a portion of that speculative money could find its way into copper?

MB: There's tremendous pent-up demand for copper around the world because of emerging economies. It is also much more difficult to make world-class discoveries today. I think copper prices will be very strong. Metals like zinc are also really starting to look very attractive to the exploration industry. There's a lot of potential for discovery investment flows into some of the base metals, including copper and zinc, and some of the special metals such as manganese, vanadium and graphite.

TGR: Any discussion about copper has to include China. Beijing recently raised interest rates to fight inflation, but the economic indicators in China continue to improve and that ultimately means greater demand for copper there. Will supply disruptions converging with greater demand push the copper price above $5/lb. this summer?

MB: That is certainly possible. I can remember when copper was $0.65/lb., so obviously there is real upward momentum. Copper is a "quality of life" metal. Infrastructure can't be built-out without copper. I think that prices are going to be quite strong as we approach the fall season.

It is interesting to note that the Chinese started buying again as the price of copper fell in the last couple of months. Their demand is crucial. They are also bidding for copper companies around the world. I think we're in the third inning of a very long commodity supercycle in the world. Copper rightly will take its place in that cycle. Copper miners in Indonesia and Chile are experiencing labor problems as well.

TGR: Do you expect Chinese firms to take more runs at companies as a means to lower the cost of copper?

MB: I do, but I think the primary motivation of the Chinese is going to be infrastructure build out. It's a huge country with a growing middle class. Somewhere around $4 copper is probably very cheap to the Chinese.

But it will be more than just the Chinese that come into this game. Companies are going to get involved because there just hasn't been a lot of new high-grade