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The Australian Nugget 1 ounce

Monday, December 16th, 2013

The Australian Gold Nugget is a popular series of Gold bullion coins issued by the Perth Mint. They
have legal tender status in Australia and are one of the few legal tender bullion coins to change
their design every year, the most notable other being the Chinese Panda.

Details

Australian Nugget 1 ounce

Australian Nugget 1 ounce

Australia issued its first Gold Nugget coins in 1986. From 1986 to 1988, the reverse of  these coins featured images of various Australian Gold nuggets, hence the name. From 1989, the design changed to feature different Kangaroos, a more world-recognised symbol of Australia. The coins are sometimes referred to as Kangaroos but the name

Nugget seems to have stuck. The coins up to 1 Toz change design each year. Each year, a Proof edition is issued and that design becomes the bullion coin design for the following year.

The coins have a unique market niche for two reasons; a “two-tone” frosted design effect and individual hard plastic encapsulation of each coin. Provided they remain as they came from the mint, the quality is maintained and thus premium.

The initial sizes offered were 1/20 Toz, 1/10 Toz, 1/4 Toz, 1/2 Toz and 1 Toz. In 1991, the 2 Toz, 10 Toz and 1 Kg sizes were added. These were created with the intention of using economies of scale to keep premiums low. The face values of the two larger coins were lowered in 1992 in order to bring them more in line with the smaller sizes.

In October 2011, the Perth Mint created a one tonne Gold coin to break the record for the biggest and most valuable, previously held by the Royal Canadian Mint. It is approximately 80 cms diameter and 12 cms thick. The face value is A$1 million but at the time of minting, the Gold price made it worth over A$53 million.

As mentioned, the reverse of the coin features in the early years a Gold nugget and thereafter a Kangaroo. It states the year of the coin, the weight and Gold fineness.

There is also a mintmark ‘P’ which signifies the Perth Mint.

The obverse features a profile view of Queen Elizabeth II designed by Ian Rank-Broadley. The portrait is surrounded by her name, the denomination of the coin and the word AUSTRALIA.

The Australian Gold Nugget coins should not be mistaken for the Australian Lunar Gold Bullion coins. Both coins are minted by Perth Mint and have 999.9‰ fineness but Lunar coins use different animals from the Chinese calendar instead of the Kangaroo.

Investment Advice

There are various grading systems in use around the world. However, the British system is as follows:

All Nugget coins are issued as pure Gold finewness, 999.9‰ and in theory have a low premium just above the value of the Gold.

However, their intrinsic beauty makes them very collectable and they attract good premiums.

As with any coin, the best quality grades will attract the best premiums. The three early years in particular will be those with the highest premium. Although the coins

were issued in Proof form, many were unpacked and have thus been damaged and are at lower gradings. The mintage figures for all sizes of Nuggets are in general quite low, thus every coin will have numismatic premium value also. All round, the Nugget is both a collectable and investable product.

Specs

The British Sovereign

Friday, November 29th, 2013

The Gold Sovereign is a highly collectable investment coin first introduced in Great Britain in 1489 at the request of King Henry VII. In 1816, there was a major reform of coins in Great Britain which resulted in The Coin Act. This laid down in law, amongst other things, the specifi cations and dimensions of Gold Sovereigns produced from 1817 onwards which have remained in place to this day. The Sovereign weighs 7.99g and is 22 carat Gold (or 916.667‰ fineness).

SOVEREIGN AVERSE AND OBVERSE

Details

The first Gold Sovereign was struck in 1489 for King Henry VII. Sovereigns continued to be issued by monarchs up until the end of the reign of Elizabeth I in 1603. As part of the coin reform of 1816/1817, the Sovereign was re-introduced. A young Italian engraver, Benedetto Pistrucci, was appointed to create the reverse design coming up with the beautiful image of St George slaying the dragon. This design saw many alterations over the years but is essentially the same. As a testament to the design, it still appears on the very latest 2013 edition. Other reverse designs have at times been used during the reigns of William IV, Victoria, George IV and Elizabeth II. The obverse of the Sovereign followed the trend established by the original and portrays an image of the reigning monarch, which remains the case up to the present.

Gold Sovereigns were withdrawn from circulation at the start of World War I in 1914 although production continued at the Royal Mint until 1917. They continued to be produced at other mints of the then British Empire but at lower quantities than before. Sovereigns which were not produced at the Royal Mint carry a mintmark showing their provenance, hence one finds coins referred to as Australian Sovereigns or South African Sovereigns. This “foreign” production stopped in 1932.

In 1957, the Royal Mint began again producing Sovereigns in order to meet world demand and to stop the booming counterfeit production which had become rife since the Royal Mint stopped producing in 1917. They were not however reintroduced into everyday circulation. Prior to 1979 only Gold bullion coins had been issued and it was this year that the fi rst Gold proof Sovereigns were issued. Between 1983 and 1999 the Royal Mint ceased producing Gold bullion Sovereigns and only minted proof Sovereigns. Gold bullion Sovereigns were re-introduced in 2000. There are several special designs but essentially, the George & Dragon design remains with the wheel turning full circle where Pistrucci’s design (which was on the Sovereign when the current monarch was crowned) has been re-introduced for the 2013 edition to mark the 60 years reign of Elizabeth II.

Investment Advice

There are various grading systems in use around the world. However, the British system is as follows :

SOVEREIGN 1

Whilst older Sovereigns were produced in much larger quantities than those produced today, it is much more diffi cult to source a good quality Sovereign from those times. Sovereigns from the reigns of George III, George IV and William IV are extremely rare in good quality and thus command high premiums. EF quality can be found but are still quite rare. For example, a UNC George IV Sovereign from 1825 made £14,950 at a sale in March 2004! Early Victorian shield Sovereigns are highly sought and therefore an EF quality coin would fetch a high premium. Indeed anything UNC or FDC from the reign of Victoria is a high premium coin.

Edward VII and George V are fairly easy to obtain in EF quality as they were produced in very large numbers. As with Victoria Sovereigns, any UNC or FDC coins would attract a high premium.

The majority of coins on the market is from the reign of Elizabeth II and has lower premiums than earlier editions. However, the quality again affects the premium and the investor should look for the highest grades. Any coin will always fetch a higher premium anyway than the price of Gold and can only become more sought after in the future. There follows a list of certain rare Sovereigns to seek out if possible – finding one of these will command an excellent premium:

SOVEREIGN 2

– 1817, the first year of the modern Sovereign

– 1838, the first Victoria Sovereign

– 1841, the rarest Victoria Sovereign

– 1917, London-minted Sovereigns, not Australian or South African

– 1989, 500th anniversary of the Sovereign edition

– Anything from George II, George III and William IV – FDC, UNC and even EF grades

Specs

SOVEREIGN 3

Detailed reading: http://goldcoin.org/numismatics/the-british-gold-sovereign-the-world’s-most-sought-after-gold-coin/4103/All investment coins sold by LinGOLD.com are EF quality or above.

For further information:   +44 (0)203 318 5612     or email : info@lingold.com

How much does 1 gram of pure gold cost ?

Thursday, November 28th, 2013

Who said that only wealthy people could afford buying gold ?

  • Save from 1 gram of gold per month
  • Secure storage in Swiss vaults – FREE*
  • No administration or signup fee
Sign up for the LSP for free

Gradually build your wealth by simply buying each month a minimum of 1 gram of physical gold, for your LinGOLD Savings Plan (LSP) and benefit from freestorage in Swiss vaults outside the banking system.

How to save with the LSP?

  • Connect to your LinGOLD account or create a new account
  • Signup free to the LSP programme
  • Buy each month a minimum of 1 gram of pure gold
  • The gold you have bought is fully referenced : bar code, photograph, certificate of ownership
  • The gold is stored in a Swiss vault outside the banking system
  • You are free at any time to increase or reduce the amount of your savings, or you can unsubscribe from the LSP with no charge or prior notice.
Minimum Purchase 1g pure gold per month*
Maximum Threshold Unlimited
Storage Charges Free*
Signup Fee None
Availability Immediate Resale
Minimum Engagement None

*The storage charges levied on your gold stored in the LSP are FREE, on the condition that you buy a minimum of 1 gram of pure gold per calendar month, before the last day of each month. If the minimum monthly purchase is not made, storage charges will be applied, currently £4 per month per 200g total weight stored.

What are the products that fall within the LSP?

  • All the fractions of pure gold (1 g, 10 g, 100 g) issued from bars or gold investment coins (Britannia, Sovereign, Napoleon 20F, Napoleon 10F, Panda, Vera Valor, etc)
  • A whole coin : Vera Valor 1 ounce
  • A 1kg bar of pure gold

For further information on the LSP.

GOLD: THE BOOK OF THE MOMENT

Monday, April 29th, 2013

livre3DReview by Mark Rogers

Gold, A Different Point of View by Paul McGowan

With a Preface by Bill Bonner

Published by Ferrington in association with LinGold.com

Following the drop in the price of gold a few weeks ago, record sales of gold coins were reported (see here, and here for a rise in its price). The publication of this little book is therefore timely and pertinent.

There may be many people who would like to hold some gold but are dissuaded by the thought of large and expensive ingots. But bullion is not the only way in which to invest in or purchase gold. Yet as the author states: “Gold is not just ingots. The common response to gold is that it is only for the wealthy: those heavy bars, alluring though they may be, are simply unaffordable.”

This book argues that this view of gold is misguided and misinformed: there are affordable routes to investment in gold.

Although short the book contains a wealth of information. There is an introductory chapter giving a brief history of gold’s 6,000 history, which includes its denigration by politicians and academics in the twentieth century; Keynes for example thought it a “barbarian relic”. Proudhon, Marx, Lenin, Hitler all denigrated it, and to this day it troubles the likes of Ben Bernanke and George Soros.

Gold’s function as a stabiliser of value and its use over time as actual currency coin in circulation suggest that gold is today an alternative currency, and this first chapter ends with a comparison of gold with modern economies, noting that the latter are not working, while attempts to remonetize gold are afoot in, for example, Utah.

There is also discussion of the vexed problem of clean extraction with some useful information about the certificating process that reassures investors that their gold has been mined under the highest standards.

Chapter Two, “Gold, the last bastion of individual freedom”, examines the role that gold may play in hedging one’s investment portfolio, as well as its potential as a regulating device, controlling the whims of politicians and central bankers. This chapter contains a concise guide to the problems of paper currency unsecured against tangible value, with the inevitable consequence that savings are eroded and destroyed and more and more paper is required to purchase fewer and fewer goods. In other words, paper currencies are a direct attack on people’s individual control of their lives, rendering it harder and harder for them to provide for themselves, their families and their futures. We have been here so many times in history, with the latest example being the eurocrisis, that it is nothing short of scandalous that the political and academic classes cannot see the lessons to be so plainly learned.

Gold on the other hand “observes a constancy. With one ounce of gold you can almost buy today the same quantity of basic goods as at the time of the Roman Empire or Egyptian civilization. Inder the Pharaoh Tutmosis III, one needed the equivalent of 2 ounces of gold to buy an ox. Today, 2.5 ounces would be needed. Inflation has been rather weak in 4,000 years!”

This is a salutary reminder of gold’s stabilising power, which is just the very thing that the modern politician resents about it.

A strong bullish potential

The importance of gold in the contemporary world is underlined by an examination of those countries which invest heavily in it, both at the national as well as the individual level. Russia, China and India are at the forefront of this investment, with others, such as Vietnam, making significant moves in this direction. There is a useful digest of information about these countries, the role gold has traditionally played in them and how they are managing their portfolios at present. This analysis clearly establishes trends which are not going to vanish: China indeed buys enormous quantities of it, even though she also produces it.

These markets ought to assure the potential gold investor that while prices do indeed fluctuate, bullish potential is always there in gold, and has been for most of human history. Any falls in the market have identifiable causes – for example, the wedding season in India sees a rise in prices. Indeed, this analysis is testimony to the fact that we have had 6,000 years to observe people’s behaviour with gold and make it one of the easiest assets to manage.

An Investment Portfolio

Nevertheless, the author does not argue that gold should be the sole asset in one’s portfolio, far from it. Instead it should be looked on as the preserver of a portfolio’s value, that depending on the scale of one’s other investments a relevant proportion should always be kept in gold to support the rest of the portfolio.

There is a very useful chapter on investments other than gold, such as arable land and forestry, fine art and fine wines. These all have valuable potential (after all, we all need to eat), but each has significant drawbacks which are clearly and carefully spelled out. Gold’s position as being free of such drawbacks means that it is essential to invest in it, as a hedge against the dormant disasters in the rest of one’s investments.

And gold enjoys an enormous potential over any other investment, including in things such as diamonds that might seem to share some of gold’s economic potential. Gold is superbly versatile. Cut a diamond, and much of it is waste; melt an ingot of gold, and you still have the same amount of gold.

Gold Coins

The heart of the book is in its last chapter which really gets down to brass tacks – or gold coins! Coins represent gold at its most versatile, allowing even those who do not have huge fortunes to start saving in gold. While one ingot is beyond the reach of most, a single coin, perhaps purchased at the rate of no more than one a year, is a realistic and feasible option.

The book contains a wealth of information on tax regimes; storage; what to do and what not to do in actually physically handling coins and how to transport them; what to look out for as enhancing a rare numismatic coin’s value and what depletes it – all fascinating information in itself, and eminently practical.

“If we had to state only three reasons to buy: gold is a recognized and accepted safe haven throughout the world, demand from the emerging countries is strong and the total demand over the mid to long term is reliably forecast as being higher than the supply.”

The book is available on Amazon in a Kindle version (price: £5.14). Those readers who would like the printed version, should send a cheque for £12.50 (includes p+p) made out to: Ferrington, and send it to: Ferrington, Bookseller & Publisher, 24 Shipton Street, London E2 7RU. The book is also available as Buy It Now on eBay.

AMAZON, GOOGLE AND TAXES FOR AID

Thursday, December 6th, 2012

By Mark Rogers

In the wake of the concerns raised here, it appears that The Times has a few readers who are more analytical than some of its editorialists. The day after the somewhat sententious leader about the moral duty of multinational companies, the Letters to the Editor pages carried some very sensible observations.

First, Amazon’s sales to UK customers are made by a Luxembourg based company, and all buying and selling and pricing decisions are taken there. All that is operated in the UK is a delivery system, and, comments the writer of the letter, Heather Self, a chartered tax advisor based in Cheshire, “it is not surprising that profit margins are small”. As one who knows the publishing industry, I know exactly what she means.

She goes further: “The report [“Taxman targets Google”, The Times, December 3] also refers repeatedly to ‘revenues’ (ie, turnover), when – as every small business knows, this is a very different number from profit, on which tax is charged.”

As another reader points out, corporation tax is only one of a host of taxes that corporations pay, none of which are avoidable and so no-one tries: “VAT, excise duties, business rates, PAYE, employers’ and employees’ national insurance,” Julian Pilcher, Hampshire. While the PAYE is tax taken on behalf of the taxman from the employees, this is done so at the corporation’s expense.

WIND FARMS IN AFRICA – AT BRITISH TAXPAYERS’ EXPENSE

As if the hollow moralising of MPs was not enough, on December 4, the Telegraph ran a story on how delighted Nick Clegg, the Deputy Humbug, I mean Prime Minister, is that £2 billion pounds of British aid money is finance Third World “green” projects, including wind turbines in Africa. This, says Clegg, is fantastic news.

Just the week before, some industries had some “fantastic” news: they are to be shielded from green energy costs, while households are not.

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

THOMAS MALTHUS

Sunday, July 22nd, 2012

By Charles Sannat, Resident Economist at Au Coffre

The first in a summer series of articles on the great economists

Thomas Robert Malthus was born near Guildford (Surrey) on the 13th of February 1766 and died in Bath (Somerset) on the 29th of December 1834 (at the age of 68);  he was a British economist of the Classical School as well an Anglican priest.

He is known in particular for his work on the relationship between the dynamics of population growth and production, analyzed from a “pessimistic” perspective, in full opposition to the Smithian concept of harmonious and stable equilibrium.

His name gave rise to a new adjective in common parlance, “Malthusian”, often viewed with negative connotations (describing a somewhat conservative frame of mind, anti-investment or fearful of scarcity) and a doctrine, Malthusianism, which includes an active birth control policy to control population growth.

In 1798, he published anonymously An Essay on the Principle of Population, which was hugely successful as well as controversial. Malthus then committed himself to deepening his research and travelled the continent, visiting Denmark, Sweden and Russia. In 1803, he published a new edition of his Essay, much expanded, and signed it by name. The repercussions were significant. In 1809, the fourth edition of the Essay was translated into French, in Geneva.

He met David Ricardo for the first time in 1811, the two men subsequently maintained an extensive correspondence which enabled him to develop new methods of analysis of demand.

He wrote other works, in particular Principles of Political Economy, published in 1820.

He died in 1834 and was buried at Bath Abbey, in Somerset.

Malthus and the relationship between population and production

The works of Adam Smith and David Hume soon attracted him toward political economy. He attempted to apply the theories of William Godwin, an 18th century rationalist, influenced by the thought of Jean-Jacques Rousseau and Condorcet, who believed in a perfectible society. The priest Malthus was charged with assistance to the poor in his community; the poor harvests from 1794 to 1800 resulted in misery and distress, and struck a chord.

In 1796 he wrote an essay on the crisis which England was undergoing, an essay which adopted a position in favour of social justice and proposing to expand the system of public assistance to the poor, but he did not publish it.

However, the student of Godwin rebelled against his teacher upon reading Social Justice (1793). In this utopian work, Godwin described a society where an increasing population will encounter prosperity and justice. The gap between Godwin’s ideas and the brutal reality that he observed lead Malthus to radically alter his perception.

His Essay on the Principle of Population, published in 1798, was a lampoon reacting against these ideas.

In opposition to the “moral” reformers who blamed the government for the ills of society, Malthus wanted to demonstrate that they actually arise from natural and inescapable laws. He adopted a theory put forward by Joseph Townsend in A Dissertation on the Poor Laws in 1786 or by the Italian Giammaria Ortes.

An Essay on the Principle of Population

Malthus mathematically predicts that without barriers, population grows in an exponential or symmetrical manner (for example: 1, 2, 4, 8, 16, 32…) while resources grow only in an arithmetical manner (1, 2, 3, 4,5, 6…). He thus concludes that demographic catastrophes are inevitable by nature, unless population growth is prevented.

He also advocated the ceasing of all help to the needy, in opposition to the Speenhamland laws (a precursor of the modern welfare state, which produced many of the problems that we now experience) and the proposals of William Godwin who sought to expand assistance to the poor.

Policies of population control influenced by Malthus are known as “Malthusian”.  His fears revolved around the theory that population growth is faster than the increase in resources, resulting in impoverishment of part of the population. As the old regulators of population (wars and epidemics) were no longer playing their parts, he imagined new barriers, such as restricting the size of families and the deferring the legal age of marriage. These proposals are only currently applied in  the People’s Republic of China, which indeed views itself as being forced [not neutral] to severely restrict its population.

Malthus’s pessimistic prediction was set back, as the world experienced a large increase in resources and agricultural production (the “green” revolution),  new international means of exchange of subsistence goods and the emigration of part of the excess population to the United States or the colonies, where modern agricultural methods created new resources.

We thus went from two thirds of the world’s inhabitants suffering from malnutrition in 1950, to one in 7 by the year 2000, while over the same period the global population grew from  two and a half billion to over six billion.

Nonetheless, natural constraint re-emerged from 2009 onwards: the green revolution has resulted in the depletion of soils and groundwater aquifers.

The prospect of an exhaustion of fossil fuels in the short and medium terms is considered by many increasingly likely, particularly as a consequence of a large increase in the production of goods and services.

However, it is interesting to compare two historical cases:

1960: 3 billion inhabitants, 2 billion suffering from malnutrition (i.e. 66%).

2000: 6 billion inhabitants, 800 million suffering from malnutrition (i.e. 13.3%).

Malthus’ pessimistic predictions were promptly set back by the industrial revolution and the green revolution. Whether his analysis remains structurally valid in the long term remains to be seen.

Under the conditions as set out by Malthus, mathematically, it is maintained that it will not be possible for the global population to increase constantly and that governments will eventually have to  intervene, one way or another – demographic transition being less painful, but requiring two or three generations.

In Malthus  we find the idea that infinite growth in a finite world… could end.

THE CHINESE GOLD RUSH

Thursday, February 23rd, 2012

By Mark Rogers

This street 观前街 Guan Qian Jie, in Suzhou, near Shanghai, is full of Gold shops

This street 观前街 Guan Qian Jie, in Suzhou, near Shanghai, is full of Gold shops

During the seven days of the Chinese New Year’s holidays, people have bought 3.62 billion yuan’s worth (0.5761 billion dollars) of gold in Beijing, 15.5% more than last year. It was also reported that just two shops in Beijing during this same period managed to shift 1.5 tonnes (GoldCoin.org Chinese source). At GoldCoin.org we have previously reported on the expansive buying of gold in China in our article “Chinese queue at malls to beat Bernanke’s inflation with gold“.

John Stepek, editor of Money Week, recently pointed out that “Chinese citizens don’t have many options as far as saving their money goes – you can’t get an above-inflation return from your bank account, and the local stock market is a casino.”

What is happening? And why is it happening?

As with the eurozone, the flight – on this scale – into gold indicates extreme economic uncertainty and a desire to shore up one’s savings in the only real safe haven. Yet isn’t China supposed to be an economic powerhouse? Isn’t Beijing planning to float the renminbi (yuan), in an attempt to replace the dollar? Isn’t the Chancellor of the Exchequer actively working with the authorities in Hong Kong to make “sure that London is the western trading centre for the Chinese currency”, turning “the City into an offshore trading centre for the renminbi” (The Financial Times, 16 January, 2012)? The renminbi is about to become fully convertible this year – isn’t it?

Well, perhaps not: “capital account liberalization looks off the table … At the moment, the transfers out of China are manageable, but then again the economy has only begun to falter. No officials, even ones less obsessed about control than Beijing’s, would open up a capital account in a quickly deteriorating economic environment. Therefore, events are working against Zhou Xiaochuan [Governor of the People’s Bank of China], and so is Chen Deming, the boss of the Ministry of Commerce. Chen has tenaciously defended the interests of exporters by blocking currency liberalization, and with the country’s trade surplus set to decline—to about $150 billion last year from $183.1 billion in 2010 and $196.1 billion in 2009—it is unlikely that Chen will now let central bank reformers get their way. … If Beijing opens the currency wall and the markets are not ready, flows of investment cash could—and probably will—lead to a catastrophe. At this time, it will take years to get China’s banks and markets in shape for unregulated flows of currency. So don’t expect capital account convertibility this year or even next.” This is the analysis of Gordon Chang (author of The Coming Collapse of China, and Forbes contributor, here: “China says Yuan will be fully convertible soon”).

Declining demand for Chinese exports

Certainly the Chinese economy gives plenty of reasons for this degree of pessimism. One of the most important indicators of China’s burgeoning woes is the troubled eurozone: Europe was China’s biggest export market, but Europe has practically ceased importing. The immediate consequence of this is that recession is perceptibly looming in China, indeed there are, for example, reports that China’s steel industry is seriously struggling with the potential closure of many mills (The Economist, Jan. 23-Feb. 3, 2012). Add to this the optimism expressed at the recent Davos summit by American business leaders that the coming on stream of shale gas in the United States is going to dramatically reduce manufacturing energy costs there, thus enabling American manufacturers to repatriate production.

So does this explain the Chinese flight into gold?

Inside a typical gold retailer in Suzhou, China

Inside a typical gold retailer in Suzhou, China

See a previous article on Goldcoin.org called “1 Billion to buy gold as Chinese gold rush grows” for some facts and figures.

The figures are certainly impressive – not to say astonishing. But is it certain that these figures represent only concerned citizens anxious to preserve their wealth? The active encouragement of the People’s Bank of China, referred to in the cited article, that “1 Billion Chinese citizens buy gold as a way of preserving and protecting their wealth against inflation, economic crisis and the falling values of major currencies” could bear another interpretation: namely that the Chinese authorities are contemplating at some future tipping point to announce a patriotic handing over of individual gold holdings to the state – i.e. confiscation.

Moreover, let us look again at the declared intention of that same People’s Bank of China to make the renminbi fully convertible this year. The massive purchases of gold may have yet another interpretation: as a means of supporting the value of the renminbi when it floats in spite of the problems that both Mr Chang and Mr Stepek discuss in their articles cited above. And that raises another enigma.

China remains, politically, a Communist state, and remains fundamentally unfriendly to the Western powers – witness its recent active unwillingness to censure the Syrian butchers. That it has liberalised its economy since the reforms of Deng Xiaoping, and that this has opened trade barriers and brought prosperity to millions of Chinese is not to be doubted; but this has all taken place in terms of a closed political system that holds the whip hand over the economy, “state capitalism” interpreted in the interests of the Chinese Communist Party, that is, a fascist-corporatist economic model.

This raises intriguing possibilities in terms of those thousands of purchasers of gold. For while there are corporations that clearly function under the rubric of the Chinese State there are many more enterprises that appear to be private corporations but are in fact shells for the State (the Chinese corporate structure emulates in many ways the systems of incorporation that for a long time successfully hid the fact that ultimately it was the shameless and cruel King Leopold II of Belgium who owned the Congo Free State). And just as this operates at the corporate level, so may it operate at the individual level: there is simply no way of knowing how many of those individual or smaller-scale enterprises who are buying up gold may in fact be agents of the state.

A Chinese Gold Standard?

Remember that according to the World Gold Council and GFMS reports, China is the World’s largest producer of gold and is second only to India for gold consumption (but catching up fast). No coincidence here either!

So to answer the questions raised at the beginning of this article: What is happening? We don’t actually know. And why is it happening? One shudders to think….
…. But then imagine if one day the Chinese government “requires” private investors to place their gold in the People’s Bank for the good of the Nation – the national gold stock would swell considerably – maybe enough to back the Yuan with a Gold Standard and thus achieve its ambition to be the World’s Reserve currency?

A young investor contemplates the potential of gold

A young investor contemplates the potential of gold

UNCLEAN GOLD AND ECO-CRISIS

Monday, January 30th, 2012

Earlier this month on Goldcoin.org, we looked at hazardous gold mining operations in South America (Unclean Gold). The context was the Peruvian economist, Hernando de Soto’s findings that the vast majority of the world’s poor operate in economies that give them no access to title and other capital-realizing legal arrangements. There will be a great deal more to say about these insights, but here I want to address an important distinction that needs to be made about eco-crisis and the environment. This is to clear up some of the misapprehensions voiced by critics of capitalism and free trade, such as “Occupy” and many of the rancidly left-wing organizations financed by Soros.

The anti-globalization movement has global ambitions far in excess of those entertained by the merchants and manufacturers who drive globalization. The latter want to acquire or produce their goods at the best possible costs and sell them for the best possible prices. Not only are these relatively modest ambitions, but they are also perfectly normal: merchants and manufacturers down the centuries have always traded on these assumptions.

A main platform of anti-globalizers against the despoliation allegedly caused by capitalist enterprise is environmentalism, and this vision is entirely holistic – i.e. global! They also embrace goals far in excess of what any economy can bear, especially a developing one: the grandest is the demand that carbon emissions are reduced by an improbable amount in an unachievable time…

The reason: “global warming”. However, this is an ideology and can have no bearing on what real people struggling in real economies must do to survive and prosper. Hence the refusal of India and China to sign up to carbon quotas; hence the puzzlement of Africans and South Americans that they should be sacrificed, denied the possibility to improve their lot because of the perceived “fate of the earth”.

Global warming is now a legislative fact, and it is so because the wrong science is used: the study of the “greenhouse effect” is based on the composition of gases, i.e. chemistry. However, what drives the climate is convection, i.e. physics. The Earth is 70% water, and the land mass that makes up the rest contains high mountain ranges: the effect is the creation of a planetary climate which helps regulate temperatures over time.

“Environmentalism” is merely another attempt by those who despise wealth creation, and all the benefits that flow from it, to reduce western economies and suppress emerging ones.

Yet are there not serious ecological problems such as the unclean and illegal gold mines discussed earlier? Of course there are, but refusing to be blinded by environmentalism means approaching such eco-crises more circumspectly. That is, each crisis must be seen on a case-by-case basis, and not dove-tailed into a wider and misleading perspective. Why should what needs to be done – and more to the point that can be done – to alleviate a local problem, be deferred until globalization and the environment are “fixed”? The attempt to co-opt the unclean gold mines into a productive framework, would demonstrate that such problems can be solved on their own terms – and give true value not only to the gold extracted but to the lives and work of the extractors.

By Mark Rogers

The other side of Gold mines in Peru

Friday, November 11th, 2011

Open mine in Madre de Dios

Mother Nature has been extremely generous with Peru, and has presented it with a valuable treasure such as its exuberant Amazon Forest and in the depths of its earth, the presence of the coveted golden mineral, which has given rise to the existence of numerous mines and gold washing places in the country.

Over the years, many national and international companies have heard of the treasures which may be extracted in Peru and have settled in its provinces. In this process methods have evolved and they have the Escuela de Minas, whose object is to train competent professionals, capable of offering a better organisation in order to guarantee the optimum achievement of the mining companies’ aims.

But there is another side to the story, beside the great mining companies and their expensive equipment and potential, sits the illegal extraction of this mineral in far away areas of the Amazon Forest, where control by the Government environmental and financial agencies has proven difficult. There are different reasons why this illicit activity has arisen such as shortage of employment in rural areas, increase in the gold price and tax avoidance which in turn results in an increase in profits. But all this is being done without control and the heads of these illegal extraction operations do not take into consideration environmental conservation issues provoking in turn further erosion (than that caused by any mineral extractions, even when using appropriate means) and an increase in the contamination of rivers as mercury and cyanide are being poured inappropriately into water sources.

In this scenario, problems are not only environmental but also social. According to studies undertaken by Peruvian authorities, the business of illegal extraction creates problems such as child prostitution (in the area known as Madre de Dios, it is thought that over 300 children work in prostitution in bars near the illegal mines) and that others are subject to child labour, having to work from a very early age without being paid for it. Other consequences of illegal extractions are smuggling and illegal trafficking of arms.

It is not just a matter of gold. In these crossroads, the wish of the few to quickly enrich themselves provokes serious problems, which may be more difficult to eradicate than illegal mining itself.

Article by : Lizette Paternina

Gold set to Breakout, Dollar takes a dive

Tuesday, April 12th, 2011

Here at Goldcoin.org we regulalrly feature expert Analysis from Bill Downey of Goldtrends.net to keep readers up to date with possible moves in the market.

Bill’s comments are drawn from a wide variety of sources and provide an up to date overview of the evolution of the gold price.

Here what Bill is saying:

In Sunday nights website update — resistance for today was listed at 1483-1490 and the high so far is 1476.50 — support was listed at 1458-1463 and the low so far is 1464.50

London Gold Fix $1469.50 -$1.00

Late Sunday night in the US and early in the Asian Monday trade saw commodities on the rise. However, news of a possible Peace deal in Libya and another 7.1 earthquake in Japan seemed to prompt a pause in oil price upside and in other commodity markets.

News of ongoing inflows into gold derivatives at the end of last week is lending to gold support so its generally a sideways choppy action we are undergoing this morning. The reversal in oil prices seemed to shift the attitude in a number of commodity markets this morning to a more sideways movement. With the big rise last Friday in commodities, it looks to be profit taking at the moment and not a start of a downtrend.

The Bretton Woods meeting hosted by George Soro’s over the weekend has calls for the US dollar replacement — but that was to be expected. The G20 meets in Washington DC on the 15th of the month and it would be interesting to hear the conversations that will take place there. With that meeting coming up at the end of the week — it is possible that gold may stay have some restraint later in the week, but the overall short term trend is still up.

The US Dollar is slightly bouncing this morning back to the 75 level but remains at key levels on the long term charts.

The Commitments of Traders Futures and Options report as of April 5th for Gold showed Non-Commercial traders were net long 230,758 contracts, an increase of 16,775 contracts. The Commercial traders were net short 287,091 contracts, an increase of 23,006 contracts. The Non-reportable traders were net long 56,332 contracts, an increase of 6,229 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 287,090 contracts. This represents an increase of 23,004 contracts in the net long position held by these traders.

A 7.1 magnitude earthquake hit near the Tokyo area today, causing water pumping at the Fukushima plant to be shut down for 50 minutes. Major banks in the UK were told to raise their capital levels and separate their retail operations from investment banking activities. Chinese Exports during March were up 35.8% year-on-year, while Chinese Imports during March were up 27.3% year-on-year, both of which were above market expectations.

Going to the gold chart — the breakout from a five month trading range last week is in play and while there is consolidation today from last Friday’s upmove — it does not look like a downtrend is beginning at the moment.

A new red line on the chart shows the short term FIRST support for this weeks action near the 1455 area on a closing basis. Additional support would be the 1444-1450 area on intra day pullbacks. THus the two key areas are the red trend line —and the lower purple line on the up channel. As long as price is above those price areas — the trend remains up. Resistance is the upper purple line near the 1490 – 1492 area.

In summary, todays consolidation in the 1460 area is normal after a nice upmove from last Friday and the bulls still have the short term advantage. First support will be the Red trend line — and resistance for the remainder of today looks to be in the 1473-1478 area. A pullback in the 1445-1455 area this week might provide an area for finding initial support. The bulls still have the advantage at the moment and the action does not at this point indicate that the trend has turned down — but rather is consolidating in the 1460 zone.

by Bill Downey

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The dawn over the Empire of the Setting Sun

Thursday, April 7th, 2011

An unfettered pack of lies

When we tell young people that in 1986 we were naive enough to believe the authorities who told us that the radioactive cloud had stopped at the French border, you attract, and rightly so, a few sniggers and mocking smiles.

When I tell these young students that it will perhaps be their turn in 20 years time to be the object of derision by their own children, surprise quickly gives way to incredulity and a certain amount of concern.

Let’s look again at the facts. Facts have this annoying tendency to be difficult to change although…

On 14 March 2011, a terrible earthquake ravaged Japan, following by a devastating Tsunami. Among the areas affected was the Fukushima Daiichi Nuclear Power Plant composed of 6 reactors which have since been experiencing difficulty. Chernobyl only had a problem with 1 reactor. We can therefore summarise the situation as Russia 1, Japan 6.

Since 14 March, the information provided by the Japanese authorities has been very limited, perfectly controlled and little short of the communication methods we used to see in the former USSR.

Let’s recall the accident at the Swedish nuclear power plant in 2006. The operators almost lost the nuclear reactor in less than 30 minutes owing to a fault in the cooling circuit allied to an electricity power failure (which really takes the biscuit for a nuclear power plant which is supposed to produce electricity), which was in turn linked to maintenance work. The safety systems (to keep things simple the back-up generators) were simply not turned on. A catastrophe was assured in 30 minutes this being the time needed for the start of fusion within the core of the reactor according to the articles and the experts who were at the time in agreement about the seriousness of this incident. For 15 days, the cores of the nuclear reactors in Japan have no longer been truly cooled…..but of course this does not cause any problem.

There is smoke escaping on virtually a daily basis from one or other of the damaged reactors, but of course this does not pose any problem.

The drinking water in Tokyo is from time to time unfit for consumption but the next day when the shops have run out of bottled mineral water and the entire population can no longer be supplied…the water becomes drinkable again. The sad alternative is to either let the population drink irradiated water or to die of thirst.

In brief, this accident which is jeopardising the “survival” of nuclear reactors potentially risks being more serious than the accident at Chernobyl. As stated by the Japanese prime minister: “the situation at Fukushima is unpredictable”.

But let’s get back to our little retrospective. Check it out for yourselves by calling on your memory (you will see that this works well) or by searching the internet for all the podcasts for this period which are to a large extent still online).

On Tuesday 15 March the European Commissioner for energy stated that it is “the apocalypse”.

Financial markets across the planet are in free fall. The mega crash is fast approaching and it risks making the subprime crisis in 2008 seem like a mere trifle.

The next day, on Thursday 17, there was a great change in how information was broadcast and managed. A helicopter took off with some buckets of water to pour onto the smoking reactors “trusting to luck” (look back over the videos to understand the accuracy used).
Thanks to these wonderful images, the Press unanimously spoke with effect from Thursday of “Glimmers of hope at Fukushima “. The markets are rebounding, the main thing is safe (our money).
The Japanese can calmly go on exposing people to radiation.
Using the following link you can see around ten good definition aerial photographs of the various buildings at the Fukushima power plant. They are not very reassuring.

On Friday 18, some tankers from the Tokyo fire service also arrived to hose down the smouldering ruins which, I remind you, officially did not explode. In fact there were huge explosions witnessed by the entire planet, but they were not serious. Obvious they were just controlled degassing activities (hydrogen) which exploded but nothing to be alarmed about, the reactors are fine, honestly!. Thanks to this, the Press were unanimously able to lead with headlines such as “Encouraging Progress at Fukushima”!
I advise you to read the report entitled, “the Battle for Chernobyl” which provides an exhaustive clarification on the risks and challenges faced by the ex-Soviet empire in order to limit the extent of this nuclear catastrophe. It is important to note that hundreds of helicopters, thousands of armoured vehicles and more than 500,000 men were used to construct the sarcophagus around the damaged reactor. At Fukushima the problem is multiplied by six. How are they going to deal with it?

It is therefore certain at the time that I am writing these lines. We are faced with an unfettered pack of lies which we are forced to watch powerless as it unfolds. Except for the fact that the internet exists today and we have more chance to keep ourselves informed. We are experiencing a real Chernobyl 2 !!

Multiple under-estimated economic consequences

Is there any hope left? Doubtlessly there is, and being an optimist by nature, I want to believe that solutions can be found. Nevertheless, the official radioactive pollution is now spread over more than 100 km. Tokyo, the capital, is situated less than 250 m from the Fukushima nuclear plant. The entire North of Japan has been substantially affected, not to mention all the areas which have been wiped off the map by the double whammy of the earthquake and the tsunami.

The French government has just set up a special unit in order to plan as best as possible for the shortage of components which will certainly affect France starting from April leading to certain production stoppages and probably measures of technical unemployment in certain industries.

Apart from the losses in human lives, the cost of this double catastrophe (natural and nuclear) is far from being known and is certainly currently be played down. The last assessment talks about more than 28,000 who are dead or missing. There is more than 350,000 left without shelter in the North-east of Japan, 70,000 people have been evacuated within a 20 km radius around the plant. Between 20 and 30 km, 136,000 other people are waiting to be evaluated after being confined to their homes for more than 15 days.

Japan as the second largest economy in the World (or the third according to how China is classified) is a vital link for globalisation. Japan is heavily affected and faces a number of major challenges:

– A nuclear catastrophe which is absolutely not being overcome and which may eventually lead to a drama in the event of any worsening of the situation in one of the affected reactors.

– debt of more than 200% of GDP (by means of comparison, France has a debt ratio of around 80% to GDP whereas that of “bankrupt” Greece is 120%). At the time of the Kobe earthquake, the debt ratio of the Japanese state was only 85% of GDP (this was in 1995). The reconstruction effort risks leading to an unsustainable increase in this country’s debt which will speed it towards unprecedented economic difficulties. On 15 May 2010, the alarm bell was also sounded by the IMF and the rating agencies on the non-sustainability of Japanese short-term debt.

– Industry virtually at a standstill. The Japanese are the inventors of the Just in time methods which, even if they have convinced the World, demonstrate their limitations in the event of catastrophes. The consequence of the total absence of any stock is the halting of numerous production activities leading to massive shortages on supermarket shelves which still remain empty at the present time. No more water, less and less food, major power cuts which no longer make it possible to manage stocks of fresh or deep-frozen products.
With regard to the major international companies the example of aircraft manufacturer Boeing is striking with Japanese companies building 35% of some models of aircraft.

– A currency value which is spiralling upwards. The massive purchases of the Japanese yen and companies who are liquidating their overseas assets in order to repatriate them to cope with the National reconstruction effort have propelled the Yen towards an historical high. Added to the “natural” appreciation of the currency is major market speculation on fund repatriation forecasts.
The consequence is that a currency which is too strong triggers a significant decrease in exports, given that a brutal increase in the value of the currency cannot be offset by an increase in productivity especially in a country ravaged by a natural catastrophe of this size. Nevertheless, in the medium term and bearing in mind a expansionist monetary policy, the Yen should find a more acceptance exchange rate.

– Japan is a country with a very heavy population density. Many people but not many habitable spaces. On average, the price of real estate is the most expensive in the World. Banks therefore there have particularly large outstanding real estate loans. In the region of Fukushima, more than 70,000 people have already been evacuated. In Ukraine, next to Chernobyl, the town of Pripiat is still a ghost town 25 years after the explosion of the reactor. There the banks did not have any loans. There were only 45,000 inhabitants. What will become of bank debts in this case? How will the losses (because they are large) be managed? Might we again face a major international banking crisis as the extent of the Fukushima nuclear catastrophe appears? Imagine the extent of the impact on real estate debts in the event of the evaluation of Tokyo which houses 35 million people…..a situation which it is quite simply unimaginable from a financial perspective. The economic system could not cope, or would cope with great difficulty. Perhaps this is why the situation in Fukushima is no longer alarming after 17 March 2011.

– Japan is an aging country, whose current population of 127 million has been decreasing since 2005 and is set to be halved between now and the end of the century to reach 60 million inhabitants.
But how can these debts be repaid without economic and demographic growth, Mechanically and mathematically, the less the number of inhabitants the bigger the total debt per head of population.

– The Fukushima nuclear accident has revived the fear about nuclear power. In the United States, no nuclear reactor has been built since the accident at Three Mile Island in 1979. After Chernobyl, there has been no further development of any nuclear power plant in USSR, the same will be true of Japan after Fukushima. In German 7 reactors have already been halted because they were deemed to be too dangerous.
The only rapid and credible replacements for energy in the short-term are Gas and obviously Petrol whose prices might be propelled to highs in the coming weeks. Economist are agreed, however, that a barrel of petrol whose price exceeds 120 dollars leads the World economy into a recession. As at 4 April the price of a barrel of petrol was still rising and seemed to have sustainably settled at over 110 dollars.

Towards an acceleration of changes which are already being felt

It is therefore to be feared that all of the cumulated factors discussed present a global systemic risk to the global economy which might be hard to redress in the aftermath of Fukushima and the slow agony of this nuclear cataclysm being witnessed in Japan. Perhaps we are witnessing the premature disappearance of a Nation, of the slow dawn on a Empire.

You wanted to save money in the short-term despite the life of mankind, you will lose mankind and you will lose money because there is no wealth without mankind.

Indeed, even oysters risk deserting our New Year’s dinner tables. Affected and decimated by a mysterious illness, our producers have ordered spats from Japan in Sendau. Japanese producers are also lacking our oysters.

It is still not time to make the tally. Having said this, the Fukushima accident may well be the signing of the death warrant for the nuclear industry which is a dangerous industry and about which we neither know how to manage the dismantling work nor how to manage waste and whose costs are not taken into account in the operating prices for this energy which is more expensive than people think when all this indirect costs are included. This is not to mention the price to be paid in terms of a catastrophe which are quite simply unbearable both in financial terms as well as in human suffering. The “‘homo economicus ” will have to learn another form of sobriety.
From Peak Oil to the depleting of raw materials, from the challenges faced by agriculture in feeding our planet to the sharing of water (threatened resource) the World is changing.

The Japanese cataclysm will undoubtedly hasten these changes.

Translated from an article by Charles SANNAT

Gold Trends Intra Day Gold Update – April 4th

Monday, April 4th, 2011

In last nights update resistance in gold was listed at 1437.50-1446 and the high so far is 1439. Support for today was listed at 1419-1425 and the low so far is 1427.60

London Gold Fix $1432.50 +$1.50 LME

While the Dollar is slightly higher early, the Greenback remains within striking distance of last week’s lows. With the gold market overnight seeing a rather hot ECB inflation reading and seeing crude oil prices claw out another fresh new high for the move and a host of commodity prices trading higher, the gold bulls feel somewhat confident to start the new trading week.

Some players in the market expect some dovish comments from the Fed’s Bernanke today and after dovish dialogue from the Fed’s Dudley at the end of last week, the threat of rising US rates may become an issue but so far — it seems to be just talk. There is a G20 meeting mid-month so that’s something we’ll have to keep in mind.

Some players think that news of a release of RAD into the ocean in Japan is a limiting issue for gold, but one could also suggest that development could ultimately be inflationary if Japan is forced to seek alternative protein in the grain and livestock markets.

The Commitments of Traders Futures and Options report as of March 29th for Gold showed Non-Commercial traders were net long 213,983 contracts, an increase of 3,448 contracts. The Commercial traders were net short 264,085 contracts, an increase of 1,242 contracts. The Non-reportable traders were net long 50,103 contracts, a decrease of 2,205 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 264,086 contracts. This represents an increase of 1,243 contracts in the net long position held by these traders.

While equity markets in Asia and Europe were mixed during overnight trading, early indications are for the US stock market to open today’s session with moderate gains.

The Bank of Japan’s Tankan survey of Japanese manufacturers projects that business conditions in Japan will worsen during the next three months as a consequence of the Sendai earthquake.

A Libyan envoy has traveled to Greece to begin discussing an end to hostilities in that nation. The US State Department is flying their employees out of Syria due to continued unrest.

Euro zone PPI during February was up 6.6% year-on-year, in line with market forecasts.

Going to the charts ……………..

On Friday’s update we discussed the tendency for gold to move higher after the USA unemployment data and after hitting a low of 1412, gold rallied back to the 1430 area for the close.

Coming into today and the 1439 high — it really comes down to whether gold is going to burst through the 1444 area this week. A WEEKLY Friday close above 1436 — and 1444 is needed to add to the upside potential. Although the trend is still up — the stronger trends we watch are due to peak here between today and Wednesday and a weaker trend is scheduled to begin and last into mid-month. Price always rules — and turn points are secondary — so we would want to see price begin to react and show weakness before we consider that the weaker trend has kicked in. But it’s something we need to be aware of should gold begin to trade lower. First Targets for this coming week to watch for is the 1440 to 1453 area. I’m looking to sell 1/2 my long short term gold positions from 1406 and 1418 should we trade up to the 1450 area.

The chart shows two red arrows —- the lower arrow shows the Feb lows how the market pulled back to 1325 on four occaisions in one week but was not able to break lower. The same condition happened last week — where there were four pullbacks to the 1410-1412 area — all of which produced a nice bounce back up. The lows were right on the lower purple channel line on the chart. This kind of action usually favors higher prices.

Thus, from a swing trade standpoint — as long as we remain above the 1408-1410 price area on a closing basis — the trend is still up.

Resistance is the 1439-1447 area today and first support is the 1427-1432 area.

In summary — the gold market trend is still up. A daily close above 1436 and/or 1444 would be helpful and favor higher prices into Tuesday/Wednesday. Going forward —- as we mentioned — the potential for gold to peak this week and begin a sideways to lower trend into mid month is a consideration when we look at short term cycles. However the seasonals do favor higher overall into the month of May so an April pullback — should still garner higher prices into month end and early May should we get a pullback. The trend is still up.

by Bill Downey

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Natural Disasters heighten Global Economic Crisis

Monday, March 14th, 2011

The impact of the growing number of recent natural disasters will inevitably provoke a deepening of the global economic crisis.
Our thoughts and hopes are definitely with the people of Japan, New Zealand, Australia, Chile, Sumatra, Brazil, China, Pakistan and all of the other regions affected in recent times by catastrophic natural disasters.

The sheer scale of these events and especially those in Japan reminds us of the fragility of humankind in the face of nature’s wrath. The trauma and tragedy of all these events are beyond comprehension unless you have survived one.
As hope still prevails that survivors may be found, what will the economic impact be of these events?
Profound!
The Nikkei has already dropped over 6% in the first day of trading. The central bank has injected over $180 billion to provide liquidity.
Remember that Japan was already struggling with a debt crisis on an enormous scale. Concerns will be that Japanese foreign interests and reserves will be liquidated to service the rebuild and to try and control the debt. There is over $5 Trillion of Japanese foreign investment and any significant moves to pull out large quantities would have a serious knock-on effect around the world.
Now whole areas of the economy will be affected. Manufacturing production in Japan’s most important industries and major corporations will be hit either directly or indirectly because of suppliers disappearing. This too could have an effect on Japanese industries abroad.
Infrastructure rebuild costs will be huge and the time to undertake this will also be an influencing factor. First guestimates indicate years or even decades will be required for Japan to rebuild and recover after the Japanese Prime Minister declared the disaster as big if not bigger than that suffered during World War II.

Japanese exports will be greatly affected and Japan will have to import much more to cope with deficiencies.

Nuclear Meltdown?

The unknown is now the increasing possibility that a nuclear incident will further worsen the impact and could have environmental issues for other countries.
The human cost, trauma, lack of labour will be another factor.
Many of these factors affect all areas hit by disasters and the pressure on economies is mounting.
But in a world already at odds with itself and unrest spreading through other parts of the world where does this leave us.
Nobody knows the real costs or the real impact of any of these tragedies. Experts make a best guess.
One thing can be sure is that collectively they present the global economic picture with additional demands for investment that it simply cannot meet.
Maybe Bernanke can introduce QE3 and print more dollars for US efforts to help their neighbours but as we know this if anything is compounding the world’s problems and bits of paper are not real money or wealth.

Financial Meltdown

What will happen to the large insurance groups who will be hit for claims on a colossal basis? Will they be able to pay? Will they indeed survive?
Are they not part of the global cycle for investing, hedging, banking etc?
Their pain will be shared and passed on but in doing so we will finally see the world wide web of debt come undone.
The fact is there is not enough money on the planet to repay all the hedges, spreads, bonds and loans.

This latest natural disaster is a forerunner of the man-made one to follow. The world is heading for financial meltdown and we are powerless to stop it.

The only thing you can do now is start to plan for the inevitable.
Ditch toxic assets, currencies and investments.

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Get out of “paper promises” and get into tangible & real.
Look for a safe refuge or haven to park some “money” or wealth that may see you through the hardest times.
Don’t wait too long as hindsight is not an option.
Your insurance now rests with gold as the safest way to preserve your wealth and to survive the crisis we are facing.
Be safe, be prepared and buy now.

How Gold is Produced

Tuesday, March 9th, 2010

This chart illustrates the general steps in open-pit gold mining. The specifics of the process vary from mine to mine.

1. Geologists use the latest technology, such as satellite surveys and geochemistry, to locate an ore deposit.

2. Computers are used to design the mine, which requires precise and accurate measurement of the ore deposit. Construction begins following the lengthy process of receiving permits.

3.3 Samples of ore are examined to determine grade and metallurgical characteristics. Broken rock is marked by type for efficient processing.


4. Based on its metallurgical makeup, a dispatcher directs truck operators to deliver the ore to the correct processing location.


4b

5abtrans

6. The gold is absorbed (collected) out of solution onto activated carbon. The remaining cyanide solution is recycled.

7. 7The gold loaded carbon is moved into a vessel where the gold is chemically stripped from the carbon which is then recycled.

8. 8Gold is precipitated from the solution electrolytically or by chemical substitution.

9. The pure gold is then melted into dore’ bars containing up to 90 percent gold. Dore’ bars are then sent to an external refinery to be refined to bars of 999.9 parts per thousand pure gold.

Reclamation is a long-term investment made by every gold mining company, and can cost anywhere from $2,000 to $10,000 per acre. It is the cornerstone of every mine plan and is considered the first and last step of the mining process.

Gold is produced at some mines as part of the process of mining and refining other metals, such as copper. At those operations, gold is refined to an acceptable purity as part of the copper production process. At most gold mines, the gold “dore” is sent to a refinery for further processing.

low grade material

High grade material

Russia – Gold mining in some of the harshest conditions in the world

Tuesday, March 9th, 2010

Every winter, an ice road is laid across 400 km (250 miles) of tundra to carry supplies to one of the world’s most isolated gold mines.

kupol-mine

Kupol Russian Arctic Mine

There is no other way for heavy machinery to reach Kupol, the $700 million Arctic mine behind a resurgence in Russian gold production after five straight years of decline.”It’s one of the harshest climates I’ve worked in, and I’ve worked in the Atacama desert in Chile and at 15,000 feet in Indonesia,” said Patrick Dougherty, general manager at Kupol. “But I don’t get to pick where the gold is.”

Only South Africa holds more gold than Russia, but Moscow’s fragmented industry has struggled to access vast reserves in its inhospitable Far East. The region was first mined in the 1930s by prisoners of the Gulags set up by Soviet leader Josef Stalin.Russia is the world’s biggest energy supplier, but falling prices and reduced demand have cut income from natural resources to about 8 percent of its gross domestic product in the first quarter of 2009, from nearly 11 percent a year ago.

Gold, on the other hand, has been helped by recession. Its safe-haven appeal has shielded it from a demand slump that shredded other commodity prices, lifting it to over $1200 an ounce in December 2009

Chukotka, a region revived in the last eight years by the $2.5 billion investment of Chelsea soccer club owner Roman Abramovich, produced a fifth of Russia’s gold in the first half of this year. Gold is the region’s passport to growth after Abramovich quit as governor last July.Russia ranked fifth among the world’s gold miners last year, between Australia and Peru, with an 8 percent share of output. Production rose 13 percent in 2008, the first increase in six years, and jumped another 25 percent in the first half of 2009. “This was solely due to the commissioning of Kupol,” said Olga Okuneva, mining analyst at Deutsche Bank in Moscow. “If other large projects in the Far East start producing gold, this will be a major growth driver for the Russian gold industry.”

Kupol — meaning dome in Russian — is named after a rounded outcrop of rock that juts skyward from the tundra in central Chukotka, over 200 km (125 miles) from the nearest settlement. The mine took five years to build. It is the largest tax payer in Chukotka, a land twice the size of Germany where reindeer outnumber people four to one. “With a deposit as large as Kupol, mining’s contribution to the regional economy is expected almost to double to 37 percent this year,” said Roman Kopin, the 35-year-old who took over as governor when Abramovich resigned.

Kinross Gold Corp, the Canadian miner which owns 75 percent of Kupol, is unusual among foreign investors for holding a majority share in a major Russian mineral deposit. The government of Chukotka owns the other 25 percent. Untangling the red tape that stifles some foreign investors in other parts of Russia was one of the main achievements of Abramovich’s more than seven years as governor, Kopin said. “The investment climate here, perhaps, is a little bit different, because we understand that it’s very difficult to work in Chukotka,” he added.Kinross has been the top performing gold stock on the New York Stock Exchange for the last three years, when the company’s value rose more than 160 percent. Kupol will supply about a third of its total output this year and 15 of 24 equity analysts polled by Reuters retain a bullish rating on the stock

ARCTIC CORRIDOR

About 1,400 jobs are related directly to Kupol, and Chukotka’s population totals around 50,000. Miners and catering staff spend four weeks on site and four weeks off, earning an average monthly wage of 50,000 roubles, 25 percent above the regional average. “We have equipment that works here,” said Alexander Puzovets, 48, a drill rig operator who works 10-hour shifts at the pit face. “I’ve been in mines where we’ve used hammers.”The mine’s in-house electricity plant could generate enough to power the regional capital, Anadyr.In winter, miners walk the purpose-built Arctic Corridor — an enclosed, 900-meter tunnel from camp to mine — to avoid temperatures that drop more than 50 degrees Celsius below zero (minus 58 degrees Fahrenheit).

About 60 percent of Kupol’s gold is mined underground. Zurab Samteladze, a 55-year-old Georgian more than 7,000 km from home, hauls 45-tonne rock loads to the surface in a Caterpillar truck.In deeper parts of the mine, skilled operators maneuver drill rigs by remote control. This avoids the need for miners to work long hours beneath areas vulnerable to rock falls.

“With all the video games they play, the younger generation has a better chance of operating these units,” said Dougherty, a native of Arizona. Alcohol is banned. Miners pass their time playing pool, in the gym or watching television. Popcorn is a popular snack, while eight tons of reindeer meat was served up last year. “I play guitar — they have a music room. I like basketball — they have a sports hall,” said Andrei Aksanov, 34, a mechanic in the truck shop.Like 80 percent of the miners at Kupol, Aksanov comes from Magadan, the port city 1,500 km (940 miles) to the southwest.

russia miner

A worker cast an ingot at the Koylma refinery Magada

This is where mining began in Russia’s Far East. Stalin, needing bodies to unearth new-found gold reserves, sent hundreds of thousands of prisoners to slave in the region’s labor camps over two decades from the early 1930s.From such grisly beginnings, Magadan has developed into the hub of gold processing in the Russian Far East. Kupol flies its dore  (bullion bars)  to be processed into almost pure metal to be refined at the Kolyma Refinery to the north of the city. Vladislav Feoktistov, the refinery’s 71-year-old director, raised a glass of vodka to visiting officials from Kinross Gold. Supplies from Kupol will guarantee the plant’s biggest turnover in its 11-year history, he said.”This a business that’s only as good as its suppliers,” he said. From here, 15 kg (33 pound) gold bars worth more than $450,000 each at current prices are delivered to Russian banks.

Kinross report – The production at Kupol mine was started during the second half of 2008. During the second half of 2009, Kupol mine reported production of 234,265 gold equivalent ounces. Out of this, Kinross has produced 75% or 175,699 gold equivalent ounces. The production includes 151,327 ounces of gold and 1,633,673 ounces of silver. Kinross says that, with a cost of sales of about $205 per ounce on a co-product basis using a gold price of $400/oz and a silver price of $6/oz, Kupol will become one of the lowest-cost gold and silver mines in the world.

Processing – The Kupol mill is a conventional gold/silver cyanidation plant that incorporates a CCD thickener washing circuit and Merrill-Crowe zinc precipitation because of the high silver ore grade. Cyanide destruction is accomplished with calcium hypochlorite. The Kupol mill is designed to process about 3,000t of ore per day (1,100,000t per year). Run-of-mine ore is crushed in a jaw crusher and conveyed to a crushed ore storage bin. The crushed ore is ground in a SAG grinding mill followed by a ball mill. Gravity separation of free gold and silver will be carried out with a Knelson concentrator in the grinding circuit.

MORE GOLD TO MINE

There should be more to come. Polyus Gold, owned by billionaires Mikhail Prokhorov and Suleiman Kerimov, plans to launch Natalka, the world’s third-largest gold deposit, in 2013. Annual production of between 25 and 30 tonnes will put Natalka on the same scale as Kupol. Beyond 2017, Polyus plans to raise output to more than 40 tonnes a year. “It’s a deposit with reserves of more than 1,000 tonnes that will create jobs, infrastructure and become a major center for Magadan region,” said German Pikhoya, Polyus Gold’s deputy chief executive for strategy and corporate development. If Chukotka is to retain its leading position, it must do more. Current reserves at Kupol will last only until 2016. To extend the mine’s life beyond this date, more reserves must be found, mapped and registered with Russian authorities. Kinross and others are already exploring. “Chukotka is definitely a key gold-producing region, particularly in the long term,” said Vitaly Nesis, chief executive of St Petersburg-based miner Polymetal. His company plans to launch the Mayskoye gold deposit in Chukotka by 2011.

Maurice Hall from Sources Reuters, Kinross and mining-technology.com