what gold companies are worth considering?, page-9

A couple mentioned here....

Golden lining for yuan as China stocks up on price slump by: ROBIN BROMBY From: The Australian December 02, 2013 12:00AM

FOR gold to make it a 12th straight year of rising prices, the yellow metal would need to add $US427 an ounce between now and December 31. Fat chance, you might say. And you would probably be right. For 11 consecutive years the yellow one was worth more (a lot more in some years) on December 31 than it had been the previous January. On January 1 this year trading closed at $US1678/oz. To get back to that over four weeks would require a market miracle.

While you can still find analysts who believe the gold price will stage a meaningful recovery, there might be quite a different story to tell. Perhaps we should stop being too fixated on price (a suggestion that will fall on deaf ears with every punter reading this) and look instead at demand for physical metal (and leave aside the $US250 billion -- $274.4bn -- in daily trading of various gold instruments). First, though, Puru Saxena on price. This Hong Kong-based wealth fund manager and familiar talking head on cable business channels says precious metals are in a secular downtrend and this is not the time to swim against the tide. The party ended in 2011, he adds. Both gold and silver topped out two years ago and prices have fallen since. "Unsurprisingly, this downtrend has stunned most gold bugs as well as their cheerleaders and these folk are still in denial," Saxena says in his latest note. And blind faith is not a sound investment strategy. Gold is now trading below the 40-week moving average, a bearish omen.

The other news concerns demand. ANZ Bank commodity strategist Victor Thianpiriya forecasts softening demand for gold and a 2014 average of $US1269/oz. This involves a drop to $US1150 in the March quarter, followed by slow recovery.

Part of his forecast is based on Chinese demand falling. ANZ is expecting total gold imports of 1050 tonnes this year, which would be a 80 per cent increase on last year. He sees it dropping back to 900 tonnes in 2014, which is roughly one-third of world mine output and in addition to the 420 tonnes China is expected to mine this year.

China may be the biggest producer of gold, but still has to import 70 per cent of its needs. Thianpiriya, in concluding imports will drop next year, argues there are signs that much of the overall consumption for this year was front-loaded to the first half.

No doubt that was written before Wednesday's Reuters report that "China's net gold imports from Hong Kong climbed to their second-highest on record in October" at 131.19 tonnes, the sixth straight month of imports over 100 tonnes.

Not much sign of "front-loading" there: if that October figure was annualised, that would make 1574 tonnes, or half the world's mined production.

But we also know that unknown tonnages of gold enter China through Shanghai and Singapore.

Then there's China's own mine production. Plans have been announced to lift national output by 10 per cent next year, even though at one of its main producing areas, Zhaoyuan in Shandong province, mines are showing marked declines in production grades.

So here's the latest Pure Speculation gold theory: there will be no gold surplus in 2014 (as there never has been, unlike with most metals), China will keep taking advantage of the subdued price to buy both metal and the foreign mines that produce it, and one day, probably too late, Western investors will wake up to the fact that China controls so much of the world's gold and is using it to back the yuan as a reserve currency.

On the local gold front, Deutsche Bank has a buy on Independence Group (IGO), saying that lower production at the Tropicana mine is a short-term issue. IGO has 30 per cent of the mine, Anglogold Ashanti (AGG) 70 per cent. The analysts say the slower ramp-up is disappointing but that it is a quality asset with expected annual production of 487,000oz by 2015.

And Trent Barnett at Hartleys is not fazed by lower guidance from Millennium Minerals (MOY) at its Golden Gate operation, which comprises seven high-grade pits, seeing this as a still undervalued gold producer and therefore a buy.

And it was an interesting week for Strategic Elements (SOR), Australia's only listed pooled development fund. It is working in New Zealand's South Island. On one day it announced sampling grades up to 35.8grams/tonne gold at the old Aorangi mine, which in its heyday produced gold at an average 36g/t. On the next day, there were panning results from a creek draining Mt Rangitoto which returned 16.4g/t gold, as well as respectable levels of tungsten and rare-earth elements.

And at Waihi in the North Island, New Talisman Gold Mines (NTL) has received government permits for work at its historic Talisman mine which, up to 1919, produced a million ounces of gold and three million ounces of silver. All part of NZ's mining revival

http://www.theaustralian.com.au/business/opinion/golden-lining-for-yuan-as-china-stocks-up-on-price-slump/story-fnciihm9-1226772537609#sthash.ZVRc3XvT.dpuf