Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: energyplay who wrote (60011)	1/16/2010 7:19:48 PM
From: TobagoJack	Read Replies (1) \| Respond to of 218539

just in in-tray Another reason to own gold.Rising cost curve supports rising output prices.Cost curve of fiat currencies remains flat (about $.07 per $ 100 printed). From: Cecilia Sent: Saturday, January 16, 2010 9:14 AM To: ws Subject: Fw: RBSM: Rising costs support gold, even more so platinum Hi ws, Fyi, especially with regards to the south african gold mines cost has gone up a lot. Regards, Cecilia Sent from my BlackBerry® wireless device From: nick Date: Fri, 15 Jan 2010 09:33:32 -0500 To: Cecelia Subject: RBSM: Rising costs support gold, even more so platinum Rising costs support gold, even more so platinum Stubbed toes avoided. The week started on high note with bullish flash Chinese trade data, and base metal prices then held up pretty well considering what was thrown at them. For now at least, copper is excluded from the CFTC's proposed position limits. The annual commodity index rebalancing has been completed without having done any major damage (it is of note, though, that the best performer of the week, tin, is not a constituent of the indices). Prices have also bounced back from a hit on 12 January when the Chinese central bank raised its required reserve ratio by 50bp. However, RBS expects the PBoC to raise its key policy rate in Q2 09 (see Alert China), and we believe this would constitute a stronger headwind for base metals. By then too other headwinds may be blowing harder. We expect bulk commodities to fare better than base metals this year. Indeed, coal and especially iron ore (spot up 20% ytd) are already going great guns (see charts on page 12). In its fourth quarter 2009 operations review, Rio Tinto stated that it achieved record iron ore sales from Pilbara in Q4 09, driven by continuing high demand from China. In the coming week it will be the turn of BHP Billiton and Freeport-McMoRan to report; it will be particularly instructive to see if Freeport is confident that global copper demand is picking up. Gold production costs escalate. One of the striking features of GFMS's Gold Survey 2009 Update 2 published this week was its conclusion that last year, for the first time since at least 1980, what it terms 'World Investment' exceeded gold jewellery demand. The former more than doubled, whereas the latter slumped 23%. Noteworthy on the supply side was the shift of central banks from net sellers to net buyers in H2 09. Against this, world gold mine production is estimated to have recovered last year by fully 6%. But more than a third of this was accounted for by just one mine, Grasberg. South African output continued to decline (by 5%), leaving it in third place with a global share of just 9% compared with 18% as recently as 1999. Worryingly too, South African production costs escalated through 2009 to reach nearly $650/oz (cash costs) in Q3. This dragged world average production costs up towards $500/oz, or well over $600/oz on a full cost basis. It is hard to see anything other than a further rise in South African costs in 2010 and beyond. This is certainly supportive for the gold price, although cost pressures in South Africa are of much more significance for the platinum market.