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Dec 17, 2009


Miners may finally gain if gold price stabilizes high

By Julie Crust and Jan Harvey
Thursday, December 17, 2009
LONDON -- Investors in major gold producers may enjoy some long-overdue gains next year as companies hope to cash in on the precious metal's ability to sustain historically high price levels.
Gold's pullback from record highs above $1,225 an ounce this month is seen by some analysts as a key stage in its longer-term uptrend. Sustained price gains are likely to be supportive for miners in a way occasional forays to record highs have not been.
"Once prices stabilize, whether it's at $1,000 or $1,100, you will find significant buying coming back to the gold equity market," said RBC Capital Markets analyst Leon Esterhuizen.
"I would expect people to buy the equities up to the gold price level at that time, because then you are basically gearing up for the next run."
General pricing levels for gold equities were at least $200-300 behind spot prices when the metal was trading around $1,200 an ounce in anticipation of a pullback, Esterhuizen said.
Gold has fallen more than 9 percent after surging last month on the back of central bank buying and dollar weakness, fuelling hopes the metal may be building a base at higher levels.
Most major gold miners have underperformed 2009's 27 percent rise in bullion prices. Strong local currencies have raised costs for many, outweighing the impact of higher metal prices.
South Africa's Harmony Gold, the fifth-largest gold miner, is the biggest underperformer of the world's top 10 gold producers. Its shares have dropped 19 percent this year, mainly due to the strong rand.
"Gold companies have been bad at forecasting production and costs," said Theresa Gusman, global head of commodities at DB Advisors, the asset management subsidiary of Deutsche Bank.
"As production has fallen short of expectations and costs have continued to increase, it has been very good for the gold price -- but for stock prices it has been bad."
For graphic showing the relative performance of selected gold miners and bullion, click on: here
Russia's biggest gold miner, Polyus Gold, was the only top 10 producer to outperform bullion. Its shares more than doubled helped by rouble depreciation, resolution of a shareholder conflict and good growth prospects.
"It's the company with the largest organic growth profile among the major and mid-sized gold miners," said Vladimir Zhukov, metals analyst at Nomura Research in Moscow.
Gold companies historically have not been good at delivering returns on capital compared with, say, copper producers, but analysts say majors such as AngloGold Ashanti, Newmont and Barrick may soon be delivering greater returns.
Some miners, such as Barrick, struggled to capitalize on rising prices due to unfavorable hedging deals.
AngloGold and Barrick have announced the closure of their hedging programs, under which they sell future production at agreed prices, and major producers are not expected to resume hedging even at high metal prices.
JP Morgan said it expects its South African gold share picks to outperform gold prices in the next six months. "We see upside in the rand gold price and in our South African gold share picks despite the challenging near term operating environment."
Its top picks are AngloGold and Gold Fields the world's third- and fourth-biggest gold miners.
Kate Ward, an analyst at Westhouse which mainly advises companies on London's junior AIM market, said she prefers gold equities to bullion as an investment, citing organic growth projects and takeover premiums as well as higher metal prices.
Going into 2010, a lot will depend on the outlook for the gold price. If bullion prices manage to stabilize at elevated levels, mining equities are likely to find significant support.
A poll of 34 analysts conducted by Reuters this month showed all saw the precious metal ending 2009 above $1,000 an ounce, and many predict prices will stay firm in 2010.
HSBC lifted its 2010 gold price forecast to $1,150 an ounce earlier this month, citing interest in the metal as an inflation and currency hedge. Bank of America Merrill Lynch also said it sees gold at an average $1,110 next year.
"We are not forecasting significant further gains from here into the first quarter, but also we don't foresee a massive relapse," said Daniel Major at RBS Global Banking & Markets.
"There are still fears of a spike in inflation in the background, as well as further uncertainty over the state of the economic recovery, which will likely keep marginal investors that believe in the gold story interested."

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Forbes . com : Global Newsletter

Sneak Peek 2010: The Year Ahead
Edited By Paul Maidment
Forbes editors and writers take their annual look into the coming year to give you a beat on your business and investments.

Prediction: Blue Skies Over Beijing Next Year
12.17.09, 5:33 PM ET - Gady Epstein
No, not really. A look ahead at China green tech in 2010 and at the folly of looking ahead. Ten Minutes that Mattered
Ten Minutes That Mattered: Alibaba's David Wei
12.16.09, 6:00 AM ET - Quentin Hardy
Why he joined the Web.
The World's Richest People
The Richest Man In Vegas Speaks!
12.17.09, 10:20 AM ET - Matthew Miller
Sheldon Adelson on his casino company's plans for Macau, Singapore--and, perhaps, Europe.
Forbes India
Phoenix Rising
12.17.09, 1:00 AM ET - Elizabeth Flock
A year after 26/11, the Taj Mahal Hotel is not just reclaiming a past, but also creating a new identity--room by room.
Japan's Banks Soar On Regulation Delay
12.16.09, 2:00 AM ET - Robert Olsen
Financials benefit from a possible grace period before new capital requirements are enforced.
Yes, China Has Fully Arrived As A Superpower
12.15.09, 3:42 PM ET - Shaun Rein
Three trends for 2010 prove it.
Forbes India
Warming It Up
12.15.09, 1:00 AM ET - Prince Mathews Thomas
India believes that talk of the Himalayan glaciers melting is only a myth. The world isn't convinced.
Billionaire Brothers Succeed Again
12.15.09, 5:04 AM ET - Russell Flannery
China's PCD Stores soars on Hong Kong debut on luxury sales hopes
Backseat Driver
Hyundai Goes To War
12.11.09, 4:00 PM ET - Jerry Flint
A big fight is about to erupt in the biggest of car markets: family-size sedans.
Forbes India
Chequed Out
12.14.09, 1:00 AM ET - R.N. Bhaskar
Travelers cheques, once a staple in the wallets of tourists, are making a silent exit.
Complete Coverage
New Issue Forbes Asia
5.13.09, 6:00 PM ET - Forbes staff
With features on Asia's Businessman of the Year and Indonesia's 40 Richest.
Forbes Asia Home Page
1.22.09, 6:13 PM ET - staff
For business news updates throughout the day, bookmark Forbes' Asia home page.


According to Adam Hewison, we are already in the “Silly Season” for Gold. What does Adam mean by this term? He uses this term  for a market analysis he made for most trades after December 15; stating  that most traders are not serious about the markets and they are not committed to any large positions for the balance of the year.
We better view, what he has for us now in this video, as always you can view it without any registration

All The Best,

Fernando Guzmán Cavero

The Economist : The Great Stabilisation

The world economy

The Great Stabilisation

Dec 17th 2009
From The Economist print edition

The recession was less calamitous than many feared. Its aftermath will be more dangerous than many expect

IT HAS become known as the “Great Recession”, the year in which the global economy suffered its deepest slump since the second world war. But an equally apt name would be the “Great Stabilisation”. For 2009 was extraordinary not just for how output fell, but for how a catastrophe was averted.
Twelve months ago, the panic sown by the bankruptcy of Lehman Brothers had pushed financial markets close to collapse. Global economic activity, from industrial production to foreign trade, was falling faster than in the early 1930s. This time, though, the decline was stemmed within months. Big emerging economies accelerated first and fastest. China’s output, which stalled but never fell, was growing by an annualised rate of some 17% in the second quarter. By mid-year the world’s big, rich economies (with the exception of Britain and Spain) had started to expand again. Only a few laggards, such as Latvia and Ireland, are now likely still to be in recession.
There has been a lot of collateral damage. Average unemployment across the OECD is almost 9%. In America, where the recession began much earlier, the jobless rate has doubled to 10%. In some places years of progress in poverty reduction have been undone as the poorest have been hit by the double whammy of weak economies and still-high food prices. But thanks to the resilience of big, populous economies such as China, India and Indonesia, the emerging world overall fared no worse in this downturn than in the 1991 recession. For many people on the planet, the Great Recession was not all that great.
That outcome was not inevitable. It was the result of the biggest, broadest and fastest government response in history. Teetering banks were wrapped in a multi-trillion-dollar cocoon of public cash and guarantees. Central banks slashed interest rates; the big ones dramatically expanded their balance-sheets. Governments worldwide embraced fiscal stimulus with gusto. This extraordinary activism helped to stem panic, prop up the financial system and counter the collapse in private demand. Despite claims to the contrary, the Great Recession could have been a Depression without it.

Stable but frail

So much for the good news. The bad news is that today’s stability, however welcome, is worryingly fragile, both because global demand is still dependent on government support and because public largesse has papered over old problems while creating new sources of volatility. Property prices are still falling in more places than they are rising, and, as this week’s nationalisation of Austria’s Hypo Group shows, banking stresses still persist. Apparent signs of success, such as American megabanks repaying public capital early (see article), make it easy to forget that the recovery still depends on government support. Strip out the temporary effects of firms’ restocking, and much of the rebound in global demand is thanks to the public purse, from the officially induced investment surge in China to stimulus-prompted spending in America. That is revving recovery in big emerging economies, while only staving off a relapse into recession in much of the rich world.
This divergence will persist. Demand in the rich world will remain weak, especially in countries with over-indebted households and broken banking systems. For all the talk of deleveraging, American households’ debt, relative to their income, is only slightly below its peak and some 30% above its level a decade ago. British and Spanish households have adjusted even less, so the odds of prolonged weakness in private spending are even greater. And as their public-debt burden rises, rich-world governments will find it increasingly difficult to borrow still more to compensate. The contrast with better-run emerging economies will sharpen. Investors are already worried about Greece defaulting (see article), but other members of the euro zone are also at risk. Even Britain and America could face sharply higher borrowing costs.
Big emerging economies face the opposite problem: the spectre of asset bubbles and other distortions as governments choose, or are forced, to keep financial conditions too loose for too long. China is a worry, thanks to the scale and composition of its stimulus. Liquidity is alarmingly abundant and the government’s refusal to allow the yuan to appreciate is hampering the economy’s shift towards consumption (see article). But loose monetary policy in the rich world makes it hard for emerging economies to tighten even if they want to, since that would suck in even more speculative foreign capital.

Walking a fine line

Whether the world economy moves smoothly from the Great Stabilisation to a sustainable recovery depends on how well these divergent challenges are met. Some of the remedies are obvious. A stronger yuan would accelerate the rebalancing of China’s economy while reducing the pressure on other emerging markets. Credible plans for medium-term fiscal cuts would reduce the risk of rising long-term interest rates in the rich world. But there are genuine trade-offs. Fiscal tightening now could kill the rich world’s recovery. And the monetary stance that makes sense for America’s domestic economy will add to the problems facing the emerging world.
That is why policymakers face huge technical difficulties in getting the exit strategies right. Worse, they must do so against a darkening political backdrop. As Britain’s tax on bank bonuses shows, fiscal policy in the rich world risks being driven by rising public fury at bankers and bail-outs. In America the independence of the Federal Reserve is under threat from Congress. And the politics of high unemployment means trade spats are becoming a bigger risk, especially with China.
Add all this up, and what do you get? Pessimists expect all kinds of shocks in 2010, from sovereign-debt crises (a Greek default?) to reckless protectionism (American tariffs against China’s “unfair” currency, say). More likely is a plethora of lesser problems, from sudden surges in bond yields (Britain before the election), to short-sighted fiscal decisions (a financial-transactions tax) to strikes over pay cuts (British Airways is a portent, see article). Small beer compared with the cataclysm of a year ago—but enough to temper the holiday cheer.

Readers' comments

The Economist welcomes your views.

FDIC : SPECIAL ALERT.-Counterfeit Bank Checks

Special Alert

December 17, 2009

CHIEF EXECUTIVE OFFICER (also of interest to Security Officer)
Counterfeit Bank Checks
Counterfeit bank checks bearing the name American Savings FSB, Munster, Indiana, are reportedly in circulation.

American Savings, FSB, Munster, Indiana, has contacted the Federal Deposit Insurance Corporation (FDIC) to report that counterfeit bank checks bearing the institution's name are in circulation.
The counterfeit items display the routing number 271974017, which is assigned to American Savings, FSB. The items are very similar to authentic bank checks; however, the counterfeit items have double borders on all sides with squared corners.
Authentic bank checks have borders with rounded corners and thicker dark blue lines for the top and bottom borders. The bank's telephone number, (219) 836-5870, is below the bank's name and location in the top-left corner.
Copies of a counterfeit item and an authentic check (VOID) are attached for your review. Be aware that the appearance of counterfeit items can be modified and that additional variations may be presented.
Any information you have concerning this matter should be brought to the attention of:

Ginger Watts
Assistant Vice President
American Savings, FSB
8230 Hohman Avenue
Munster, Indiana 46231-0198
Telephone: (219) 836-5870
Fax: (219) 836-5883

Information about counterfeit items, cyber-fraud incidents and other fraudulent activity may be forwarded to the FDIC's Cyber-Fraud and Financial Crimes Section, 550 17th Street, N.W., Room F-3054, Washington, D.C. 20429, or transmitted electronically to Questions related to federal deposit insurance or consumer issues should be submitted to the FDIC using an online form that can be accessed at

Forbes . com : Intelligent Investing

Intelligent Investing with Steve Forbes


Intelligent Investing Panel
The TARP Gets Pulled
Banks exiting government care are greeted with skepticism by investors.
With Alexandra Zendrian
Intelligent Investing
The Ralph Kiner Lesson For Wall Street
The old-guard brokerage industry just isn't getting the message.
With Bill Singer

Video: Intelligent Investing With Steve Forbes

Intelligent Investing With Steve Forbes
Esther Dyson: Tweet Your Fortune
Esther Dyson, founding member of Digerati, Esther Dyson, founding member of Digerati, sees space flourishing and everything aTwitter.

The U.S.D. Index

 In this new video Adam Analyzes the dollar index from March 2009 to date
The positive divergences on the MACD indicator which he discussed last time have kicked in and pushed the dollar index higher. Longer-term major trend for the dollar index continues to be negative. In this short video you’ll see what the market is doing now and what we expect it to do in the future.

As always our videos are free to watch and there is no need to register.

Fernando Guzmán Cavero