Monday, February 13, 2006


Gold Prices, Costs Hit Mining Sector

Bloomberg covers the days trading action. "Gold prices fell to a three-week low in London and New York after the dollar strengthened against currencies such as the euro, diminishing the metal's appeal to some investors as a hedge against declines in the U.S. currency."

"The dollar rose to its highest in almost six weeks against the euro on speculation U.S. government reports this week will indicate a strengthening economy. Gold has dropped almost 5 percent in seven trading sessions as investors sought to take advantage of a 25-year high reached Feb. 2."

"Gold for immediate delivery in London fell as much as $6.85, or 1.2 percent, to $544.15 an ounce, the lowest compared with intraday prices since Jan. 19. The metal traded at $548.70 as of 1:49 p.m. local time. Gold futures for April delivery fell $1, or 0.2 percent, to $552.50 as of 9 a.m. local time on the Comex division of the New York Mercantile Exchange, after dropping to $546.50, also the lowest since Jan. 19."

"The correlation coefficient for gold and the euro is 0.4. That measures the coincidence of closing daily gains and declines in the past year using a scale from -1, meaning prices move opposite each other, to 1, meaning they move in lockstep. The correlation coefficient was 0.7 in the previous 12-month period."

"Hedge-fund managers and other large speculators decreased their net-long positions in New York gold futures in the week ended Feb. 7, according to U.S. Commodity Futures Trading Commission data. Net-long positions fell by 11,901 contracts, or 9 percent, from a week earlier on the Comex division of the New York Mercantile Exchange."

"Gold's decline through $547 an ounce triggered automatic sell orders that traders place to close a bet that is showing a loss, said Gordon Cheung. 'The selling seems to have come from all over the place, Tokyo, Far East and New York,' he said."

"The metal may rebound this week as investors buy bullion as an alternative to stocks and bonds, a Bloomberg News survey shows. Twenty-two of 40 traders, investors and analysts surveyed from Melbourne to New York on Feb. 9 and Feb. 10 advised buying gold, which fell $17.90 last week to $551 an ounce in London. Nine respondents advised selling gold, and nine were neutral."

"Among other precious metals for immediate delivery in London, silver fell 7 cents, or 0.8 percent, to $9.31 an ounce. Platinum dropped $7.50, or 0.7 percent, to $1,030 an ounce, while palladium slid $1, or 0.4 percent, to $281.50 an ounce."

And the South African mining shares are cheaper. "South African stocks plunged more than 2 percent on Monday as weaker metal prices pummelled miners and Harmony Gold tumbled on disappointing earnings. The top-40 index of blue-chip stocks, which has struck a series of record highs in recent weeks, fell 2.46 percent. Investors sold equities across the board and every stock on the top-40 ended the day in either negative or neutral territory, but miners took the biggest beating."

"'Platinum and gold stocks are underperforming along with the metal and we are following a commodity stock sell-off in Asia and Australia,' said one Johannesburg-based trader."

"Harmony Gold on Monday said higher costs stopped it swinging to a quarterly headline profit as analysts had hoped, sending its stock down 7.18 percent to 97.00 rand. Harmony, which had predicted stronger results for the December quarter, only narrowed its headline loss per share to 75 cents versus a loss of 86 cents in the previous quarter, helped partially by the higher gold price and more production. 'The gold price helped quite a bit to boost profits, but corporate overheads and capital expenditure sliced a lot of that away,' said Nick Goodwin at securities firm T Sec."

"Gold mining companies had been expected to post bumper results but AngloGold Ashanti also missed expectations and ignited fears about rising costs when it reported on Friday. 'All eyes are on the rest of the earnings from the mining sector now after a few disappointments,' the trader said."

is it going to be hard for us to make money in SA stocks if the rand keeps appreciating?
Daily Pfennig said the Rand run up was artificial because SA was hoarding USD which they admitted to last week.

It might start its down cycle. I'm rolling my Rand CD into another currency during maturity in light of this news.
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