Roger Knights

Gold: Supply and Demand Continues to Evolve

"A few years ago I had a discussion with a commodities trader who was telling me why he thought gold will reverse its trend and drop to 300 dollars. His reason was that the metal is not used for a wide variety of things. It's a metal that has no value to the common man.

"Today, only a couple of years later, we are shown the intrinsic value of gold as an alternative to fiat currencies. And it's not the value to the common man that is driving the demand, it's the value to a wealthier tier of people, people who need to safe guard investments."

That wealthier tier includes central banks. They will always want it in their vaults as a store-of-value for its compactness and chemical stability, and because of the confidence it inspires in their currency. This "usefulness-to-the-wea... is what is missed by commodity-oriented gold bears.

Barrick Gold Confirms We've Reached 'Peak Gold'

"if the world is out of new gold, there will be even fewer reasons to use it as currency."

It needn't be in circulation as currency to be useful, but only to be in a central bank's reserves, partially backing the currency. It stores a lot of value in a limited volume, so it's an excellent (easily stored and guarded) store of value.

"short gold."

For the past year I've been responding to comments like this with a plea to the writers to follow their own advice, and see where it gets them after a year. (My most notable exchange was with a columnist named Alan Brochstein, who went short at about 850. about eight (?) months ago.)

Gold: It's All About the Dollar and (Yes Dr. Roubini), Inflation

I think the saying went, "When in danger or in doubt, ..."

In Search of Elephants: Purchase or Perish in the Gold Mining Industry

Seabridge Gold (SA) also has a large deposit, in BC. Here's what its website at www.seabridgegold.net/... says:

"The KSM project is one of the five largest undeveloped gold projects in the world. Measured and indicated resources now total 34.5 million ounces of gold and 8.5 billion pounds of copper."

Report from Europe: Golden Bulls Rule

"Recall that after peaking at around $850 on 18th January 1980, gold quickly slumped to $650 by the end of January and below $500 again by April."

This time there's backup--China will (?) be buying on dips.

One Way Not to Play This Market: Gold

1018

Barrick's Buy-Back Comes at a Bad Time

"We have clearly already lived through the scariest part of this recession."

Famous last words.

Barrick Gold: A $5.6 Billion Blunder

The worse blunder would be to do nothing, if the price of gold is going to hit $1200 within a year (or less). Barrick would really look foolish then. (It augurs well for gold's price that a big insider in the gold business is betting that prices will rise substantially.)

It may be that advance word or this transaction, which puts a floor under gold (for awhile), is what was behind gold's rise in the past month.

No Reason for Lag in Barrick Shares - Dundee Capital

One reason for Barrick's sluggishness is that almost a month ago Norway's sovereign wealth fund sold all its holdings of Barrick, which amounted to $186.3 million, because of its objections to environmental damages at Barrick's Pongera mine in Papua New Guinea. Here's the link to the story on the Mineweb site:
www.mineweb.com/minewe...

Comparing and Evaluating the Gold Indexes

It's too bad there isn't a junior-gold index with the status of the others, and with options traded on it. (It could be called GD2 or GDJ--if those names aren't taken.)

Typo: Change to "GDX" in "The GTX also has the advantage ..."

No Gold Bubble

"I also read an interesting piece at the beginning of the year from UBS. One of the ten surprises they have mentioned for 2009, could be Gold falling to $300 an ounce."

That wasn't UBS, but an individualistic pundit with a good track record named Kass (or something like that). And he didn't exactly "predict" it, but listed it as a possible "surprise" or contrarian event.

No Gold Bubble

"The next big thing after the current problems are solved, will be a global currency crisis and a crash in the government bond market. Not today, but in the next 3 to 5 years."

... or months.

Want a Way Out of the Economic Stupidity? Buy Gold

Sakura wrote:
"climbing beyond it's stable value"
"It's hard to find now (and expensive), yes... but that is only because of immediate circumstances that are going to go away."

But the cost of mining it is around $600+ per ounce despite falling oil prices, isn't it? That's not a bubble.

"But no government is buying gold, because it is a stupid investment. ... Smart governments should sell now."

As for the implication that governments can be looked to to make smart moves, that's a laugh. Gordon Brown followed your advice and look what it got him. It may be that governments are finally wising up and seeing the positives of gold. European central banks slowed their sales of gold last year below their quota. Russia's central bank just announced it's raising its gold holdings. The Gulf sheikdoms are setting up a gold-backed currency. There's been some talk in conventional circles of going back to a gold-ratio standard to back the dollar or a new world currency.

"gold was dropping for years because big holders were selling off their stocks. They don't sell these anymore because of lobbying by powerful forces like Barrick Gold."

Oh brother.

Will Big Money Interest Propel Gold over Its Final Hurdle?

Good article. I've noted the trend in financing of gold companies too. It’s a powerful “fundamental” in gold’s favor that big money is silently putting down its bets. I think awareness of this activity is what is stiffening the spines of the mainstream analysts from big-name companies who have been predicting much higher gold prices, something they’d previously avoided doing.

"it wins in deflation as central banks debase their currency"
Or if the Euro collapses. That’s something that could happen sooner than people think--maybe within three months. If such a prospect caused a trivial 5% of European stock and bond investments to move into gold, its price could jump by 50% in a week, the Indian scrap supply notwithstanding. Critics of gold tend to completely ignore the European angle, focusing entirely on whether there will be inflation or deflation in the US. That's too blinkered a view.

(The ironic thing is that many gold bugs, made cynical by gold's many false starts, will jump off the train just as it finally achieves lift-off (to mangle a metaphor).)

BTW, there's an apparent typo: "junior" should be inserted as the second word in this phrase:
"Even gold companies, which were pretty much left for dead "

Bailouts, Inflation and a Golden Future

"Production is dropping in all commodities as their demand drops. Gold miners are cutting back too because they gauge their future prospects correctly on demand for stuff like jewelry not on people wanting to use it as big metal bricks."

Many of the majors are actually gearing up to increase production or acquire juniors, and have completed secondary offerings, or obtained financing, in order to do so. For instance, there have been stories to this effect on SA in the last two weeks mentioning Newmont, Barrick, Yamona, and Kinross. (Maybe AEM too--I forget.)