Tuesday, July 30, 2013

AngloGold to bet big on potentially huge Colombian gold deposit

August 31, 2009 by · Leave a Comment 

Despite strong objections from environmentalists, AngloGold plan to build a $2.7bn mine

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Coin Monday: “Hey, Stella!”

August 31, 2009 by · Leave a Comment 

Heritage Auction Galleries
Aug. 31, 2009
Posted By John Dale

It’s a natural joke, I suppose…

Whenever a stella – or four-dollar pattern coin – comes through the cataloging department, a certain fellow will always crack wise, “Hey, Stella!” None of us catalogers will ever be mistaken for Marlon Brando, but I always chuckle when I hear it, mostly because I can easily appreciate a bad pun done in good fun. That, and it’s a Tennessee Williams joke. Those are impossible to resist…right?
There isn’t A Streetcar Named Desire here in Dallas (the throwback M-Line Streetcar is as close as we come…it’s worth a ride if you ever come down here on a visit to Heritage), but we do have plenty of stellas (not to be confused with Stellas) that pop up here in the office. In our August 2009 Los Angeles U.S. Coin Auction, a bidder paid more than half a million dollars for an extraordinary and extremely rare 1880 Coiled Hair stella.

This time around, in our September 2009 Long Beach U.S. Coin Auction, the stella we’re offering is not so rare as a type; the 1879 Flowing Hair stella is only scarce in an absolute sense, if far more in-demand than the supply could ever hope to satisfy. In terms of quality, however, this astounding PR67 specimen has few rivals.

Few patterns have the amount of associated lore that the various stellas enjoy: Andrew W. Pollock III, in his United States Patterns and Related Issues, notes that originally, just 25 of the 1879 Flowing Hair stellas were made, to be included in three-coin pattern sets to demonstrate the coinage concepts to Congress. The various members showed considerable enthusiasm for the unusual gold patterns, and according to Pollock, another 400 of the Flowing Hair stellas were made. (Other authorities suggest that the Pollock figure, if anything, understates the mintage figures for the restrikes, which were produced in 1880.)

However much the Congressmen of the time liked the stella as a pattern, they showed little love for it as a functional coin, and the bill that would make $4 an official coinage denomination never passed. Yet numismatists continued to show enthusiasm for the stellas, and some scholars believe that additional stellas were struck off at the behest of well-connected coin collectors.

The stellas met many fates; to some, they were interesting but merely decorative objects, as the numerous stellas that were formerly part of jewelry show. Others were lovingly preserved by numismatists. Certainly, a Superb Gem proof such as the stella Heritage is offering benefited from such guardianship in its century-plus of existence. Who will be next in its line of caretakers?
To leave a comment click on the title of the post.

-John Dale Beety

$5 Lincoln Freedom Notes: Richmond, Atlanta, Chicago and Minneapolis

August 31, 2009 by · Leave a Comment 

$5 Lincoln Freedom Notes: San Francisco, Philadelphia, Kansas City and St. LouisThe final $5 Lincoln Freedom Collection installment featuring crisp notes representative of Federal Reserve Districts of Richmond, Atlanta, Chicago and Minneapolis will launch Tuesday, Sept. 1, at 9:00 AM ET, the Bureau of Engraving and Printing (BEP) has announced.

The price for each is banknote is $29.95. The entire 12-note Series 2006 $5 collection is also available through the BEP’s Lincoln Freedom Subscription Program for $299.40.

(…)
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Gold, Silver and other Metal Prices: Monday Commentary

August 31, 2009 by · Leave a Comment 

Bullion update ...Good Morning,

China’s falling equity index once again set the pace for overnight market developments around the rest of the world. Apprehensions about contracting credit and the realization that bullish speculative sentiment has been way out in front of economic realities dented the Shanghai Composite by nearly 7% last night. That would be its largest decline in 14 months.

Other equity markets followed lower in sympathy with that in Shanghai, falling by various amounts, from Tokyo to Frankfurt, albeit some analysts at least partially peg Japan’s market losses to the DPJ’s election victory. Over in Euro Zone, inflation remained looking like disinflation, for the third month in a row. Prices fell by 0.2% in August, even as the region appears to be climbing out of recession.

As for the US, a Bloomberg survey of economists finds that they see the Fed having to cope with an overshoot of its 2% inflation target in coming years. Hardly the Harare-on-the-Hudson that the hyperinflationary hyperactive crowd is warning about, but 3% per annum is still 50% above target, and the highest inflation level since 1992. Again, these are expectations, and not current reality. The struggle of the moment is to keep afloat and not sink into the opposite direction despite several recent dips under the waterline. There remains that danger, and then some, according to some sources.

(…)
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Gold Looks to Close August with Monthly High

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Mark O’Byrne submits:

Gold: Gold is currently trading at $954/oz after finishing higher last week which was important technically. Gold is looking to close the month of August with a monthly higher close (July 31st close $953.75/oz) but the shorts will as ever be attempting to paint the tape.

Expectations for gold to break above resistance at $1,000/oz in the coming months are growing and any dips are expected to be bought. Overnight, the equity markets closed down with the Shanghai market leading the way with a 6.7% plunge. The Nikkei took little comfort from the sweeping success of the Democratic Party over the lengthy rule of the LDP and closed down 0.4%. This is a big week in terms of economic releases and Friday’s nonfarm payrolls will be watched closely to see if the green shoots are being affected by an autumnal chill.

Silver: Silver rallied sharply to close the week over 4% higher and its higher weekly close (like gold) is important technically. Silver closed at $13.89/oz on July 31st and is thus up sharply for the month of August and the higher monthly close sets us up for a strong autumnal period. It is currently trading at $14.64/oz.

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Peter Hambro Offers a Golden Opportunity

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Michael Young submits:

Peter Hambro (PTHBF.PK)[LON:POG], the gold miner, has enjoyed a most satisfactory half-year to 30th June 2009. A combination of a strong gold price, a tight grip on costs and favorable exchange rate movements saw sales rise 80% and earnings per share improve a splendid 239%. Profit for the period is a shorter’s nightmare, up 400%.

Other financial highlights included an 80% increase in EBITDA (earnings before interest tax depreciation and amortization) and a cash cost per ounce reduction of 23% to US$254 oz in H1 2009 compared to $328 oz in H1 2008. This compares to an average gold price in the latest period of approximately $950 oz.

The results are outstanding and the share price responded accordingly rallying strongly on the news.

Looking forward, few analysts predict the gold price is likely to slump, though as the global economy moves into positive growth the attraction of gold as a store of wealth in time of economic chaos, will of course fade. Countering that possible selling pressure however is the impact that a weaker dollar has on gold prices.

The U.S. dollar, like gold, benefited late in 2008 as investors sought relative safe havens, but the ongoing and enormous monetary stimulus provided by the U.S. Federal Reserve is likely to support gold. The US stimulus, funded by increased government debt should prompt inflation in 2010 and beyond, decreasing the relative value of the dollar compared to less indebted nations. Also, into the recovery, investors traditionally sell the dollar. That’s because they are seeking higher growth potential currencies, such as the Australian dollar. This macroeconomic scenario should more than compensate for any gold safe-haven-selling momentum.

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Stock Market Overbought: What This Means for Silver and Gold

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Przemyslaw Radomski submits:

This essay is based on the Premium Update posted August 29th, 2009

I have to confess to a love affair that goes back a long ways with that exciting, hyper-volatile metal– silver.

This week The Wall Street Journal reported that silver has enjoyed greater price gains than gold so far in 2009. The Journal noted that silver often follows gold, although sometimes with greater moves since it is a less-active market and thus more prone to volatile price swings. Naturally, silver’s stillness is limited to many consolidation periods, and to the early parts of a particular upleg. When silver finally does move near the end of a rally, the move is likely to be substantial. So far in 2009, December silver futures have risen 26%, while December gold is up 6%, the Journal reported.

Knowing about the relationship between silver and gold can mean large profits at the right time, so I would like to revisit this topic.

Silver, sometimes referred to as “poor man’s gold,” is often bought alongside gold as a hedge against dollar weakness, inflation fears and geopolitical turbulence. But silver also has a more significant role as an industrial metal because of its application in batteries, cell phones, computers, TV’s, refrigerators, medical applications, satellites, weapons systems, electrical wiring applications, etc. In the majority of cases this silver is never recovered. Once it’s used up, it’s used up.

As mentioned earlier, the rule of thumb is that generally silver initially lags behind gold, but as gold gathers steam, speculators flock to silver and ignite the sharp moves higher for which this fidgety metal is so famous. We can also expect silver to drop faster than gold during a recession. We saw that in the recent stock panic when gold was fairly resilient while silver nose-dived. The yellow metal hit a 14-month low at its worst, while silver spiraled down to a 34-month low.

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Gold Bullion Cost

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Even though gold bullion is considerably more affordable than rare coin, there are some differentiations in gold bullion cost that investors should be mindful of. The most basic form of gold bullion is the bar, which due to the simplicity of its’ minting, and absence of numismatic value, command the lowest gold bullion cost. Bullion bars are used for physical possession, which lends financial independence to investors, especially in the event of a financial or personal emergency. They can be used to capitalize on short-term, potential gains, or for long-term financial safety, as U.S. government approved precious metal IRA contributions. Acceptable bullion bar brand names are Engelhard, Credit Suisse, PAMP Suisse, and Johnson Matthey, as they are world renowned for their purity.

Gold bullion cost goes a bit higher with bullion coins, because coins require more sophisticated minting procedures. The two most popular 22-Karat bullion coins are American Eagles, and South African Krugerrands. Krugerrands are more affordable, but aren’t acceptable gold-backed IRA contributions.

24-Karat gold bullion coins are a bit costlier than 22-Karat coins, and although they possess no numismatic value, some coins do appreciate as collectables over time. 24-Karat coins are also allowed as precious metal IRA “cointributons” (couldn’t resist the pun). These coins include American Buffalos, Austrian Philharmonics, Canadian Maple Leafs, Australian Kangaroos, Koalas, and Lunar coins, as well as Chinese Pandas. All of the aforementioned coins are also available in smaller denominations of ½-ounce, ¼-ounce, 1/10-ounce, and even some in 1/20-ounces, to fit a wide range of budgets. Investors can avoid paying retail prices for their bullion bars and coins by contacting one of our friendly specialists, who offer institutional discounts to household investors like you.

Danny Burns

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60 Minutes: The Bet That Blew Up Wall Street

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Steve Kroft On Credit Default Swaps And Their Central Role In The Unfolding Economic Crisis

Anyone with more than a casual interest in why their 401(k) has tanked
over the past year knows that it’s because of the global credit crisis.
It was triggered by the collapse of the housing market in the United
States and magnified worldwide by the sale of complicated investments
that Warren Buffett once labeled financial weapons of mass destruction.

They are called credit derivatives or credit default swaps.

As correspondent Steve Kroft first reported last fall, they
are essentially side bets on the performance of the U.S. mortgage
markets and some of the biggest financial institutions in the world – a
form of legalized gambling that allows you to wager on financial
outcomes without ever having to actually buy the stocks and bonds and
mortgages.

It would have been illegal during most of the 20th century under
the gaming laws, but in 2000, Congress gave Wall Street an exemption
and it has turned out to be a very bad idea.



While Congress and the rest of the country scratched their heads
trying to figure out how we got into this mess, 60 Minutes decided to
go to Frank Partnoy, a law professor at the University of San Diego,
who has written a couple of books on the subject.

Ask to explain what a derivative is, Partnoy says, “A derivative is
a financial instrument whose value is based on something else. It’s
basically a side bet.”

Think of it for a moment as a football game. Every week, the New
York Giants take the field with hopes of getting back to the Super
Bowl. If they do, they will get more money and glory for the team and
its owners. They have a direct investment in the game. But the people
in the stands may also have a financial stake in the ouctome, in the
form of a bet with a friend or a bookie.

“We could call that a derivative. It’s a side bet. We don’t own the
teams. But we have a bet based on the outcome. And a lot of derivatives
are bets based on the outcome of games of a sort. Not football games,
but games in the markets,” Partnoy explains.

Partnoy says the bet was whether interest rates were going to go up
or down. “And the new bet that arose over the last several years is a
bet based on whether people will default on their mortgages.”

And that was the bet that blew up Wall Street. The TNT was the
collapse of the housing market and the failure of complicated mortgage
securities that the big investment houses created and sold around the
world.

But the rocket fuel was the trillions of dollars in side bets on
those mortgage securities, called “credit default swaps.” They were
essentially private insurance contracts that paid off if the investment
went bad, but you didn’t have to actually own the investment to collect
on the insurance.

When 60 Minutes last spoke with Eric Dinallo, he was insurance
superintendent for the state of New York. He says credit default swaps
were totally unregulated and the big banks and investment houses that
sold them didn’t have to set aside any money to cover potential losses
and pay off their bets.

“As the market began to seize up and as the market for the
underlying obligations began to perform poorly, everybody wanted to get
paid, had a right to get paid on those credit default swaps. And there
was no ‘there’ there. There was no money behind the commitments. And
people came up short. And so that’s to a large extent what happened to
Bear Sterns, Lehman Brothers, and the holding company of AIG,” he
explains.

In other words, three of the nation’s largest financial
institutions had made more bad bets than they could afford to pay off.
Bear Stearns was sold to J.P. Morgan for pennies on the dollar, Lehman
Brothers was allowed to go belly up, and AIG, considered too big to let
fail, is on life support thanks to a $180 billion investment by U.S.
taxpayers.

“It’s legalized gambling. It was illegal gambling. And we made it
legal gambling…with absolutely no regulatory controls. Zero, as far as
I can tell,” Dinallo says.

“I mean it sounds a little like a bookie operation,” Kroft comments.

“Yes, and it used to be illegal. It was very illegal 100 years ago,” Dinallo says
In the early part of the 20th century, the streets of New York and
other large cities were lined with gaming establishments called “bucket
shops,” where people could place wagers on whether the price of stocks
would go up or down without actually buying them. This unfettered
speculation contributed to the panic and stock market crash of 1907,
and state laws all over the country were enacted to ban them.

“Big headlines, huge type. This is the front page of the New York
Times,” Dinallo explains, holding up a headline that reads “No bucket
shops for new law to hit.”

“So they’d already closed up ’cause the law was coming. Here’s a
picture of one of them. And they were like parlors. See,” Dinallo says.
“Betting parlors. It was a felony. Well, it was a felony when a law
came into effect because it had brought down the market in 1907. And
they said, ‘We’re not gonna let this happen again.’ And then 100 years
later in 2000, we rolled them all back.”

The vehicle for doing this was an obscure but critical piece of
federal legislation called the Commodity Futures Modernization Act of
2000. And the bill was a big favorite of the financial industry it
would eventually help destroy.

It not only removed derivatives and credit default swaps from the
purview of federal oversight, on page 262 of the legislation, Congress
pre-empted the states from enforcing existing gambling and bucket shop
laws against Wall Street.

“It makes it sound like they knew it was illegal,” Kroft remarks.

“I would agree,” Dinallo says. “They did know it was illegal. Or at least prosecutable.”

In retrospect, giving Wall Street immunity from state gambling laws
and legalizing activity that had been banned for most of the 20th
century should have given lawmakers pause, but on the last day and the
last vote of the lame duck 106th Congress, Wall Street got what it
wanted when the Senate passed the bill unanimously.

“There was an awful lot of, ‘Trust us. Leave it alone. We can do it
better than government,’ without any realistic understanding of the
dangers involved,” says Harvey Goldschmid, a Columbia University law
professor and a former commissioner and general counsel of the
Securities and Exchange Commission.

He says the bill was passed at the height of Wall Street and
Washington’s love affair with deregulation, an infatuation that was
endorsed by President Clinton at the White House and encouraged by
Federal Reserve Chairman Alan Greenspan.

“That was the wildest and silliest period in many ways. Now, again,
that’s with hindsight because the argument at the time was these are
grownups. They’re institutions with a great deal of money. Government
will only get in the way. Fears it will be taken overseas. Leave it
alone. But it was a wrong-headed argument. And turned out to be, of
course, extraordinarily unwise,” Goldschmid says.Asked what role Greenspan played in all of this, Professor Goldschmid
says, “Well, he made clear in his public speeches and book that a
Libertarian drive was part of the way he looked at the world. He’s a
very talented man. But that didn’t take us where we had to be.”

“Alan was the most powerful man in Washington in a real sense.
Certainly a rival to the president and had enormous influence on
Capitol Hill,” Goldschmid says.

“And he was at the height of his power,” Kroft adds.

Within eight years, unregulated derivatives and swaps helped
produce the largest financial services economy the United States has
ever had. Estimates of the market for credit default swaps grew from
$100 billion to more than $50 trillion, and you could bet on anything
from the solvency of communities to the fate of General Motors.

It also produced a huge transfer of private wealth to Wall Street
traders and investment bankers, who collected billions of dollars in
bonuses. A lot of the money was made financing what seemed to be a
never-ending housing boom, selling mortgage securities they thought
were safe and credit default swaps that would never have to be paid
off.

“The credit default swaps was the key of what went wrong and what’s created these enormous losses,” Goldschmid says.

“Is it your impression that people at the big Wall Street
investment houses knew what was going on and knew the kind of risks
that they were exposed to?” Kroft asks.

“No. My impression is to the contrary, that even at senior levels
they only vaguely understood the risks. They only vaguely followed what
was going on,” Goldschmid says. “And when it tumbled, there was some
genuine surprise not only at the board level where there wasn’t enough
oversight but at senior management level.”

They didn’t know what was going on in part because credit default
swaps were totally unregulated. No one knew how many there were or who
owned them. There was no central exchange or clearing house to keep
track of all the bets and to hold the money to make sure they got paid
off. Eventually, savvy investors figured out that the cheapest, most
effective way to bet against the entire housing market was to buy
credit defaults swaps, in effect taking out inexpensive insurance
policies that would pay off big when other people’s mortgage
investments failed

“I know people personally who have taken away more than $1 billion from
having been on the right side of these transactions,” says Jim Grant,
publisher of Grant’s Interest Rate Observer and one of the country’s
foremost experts on credit markets.

“If you can and you could lay down cents on the dollar to place a
bet on the solvency of Wall Street, for example, as some did, when Wall
Street became evidently insolvent, that cents on the dollar bet went up
30, 40, and 50 fold. Not everyone who did that wants to get his name in
the paper. But there are some spectacularly rich people who came out of
this,” Grant says.

“Who got richer,” Kroft remarks.

“Who got richer, who became, you know, fantastically richer,” Grant says.

A lot of them were hedge fund managers. John Paulson’s Credit
Opportunities Fund returned almost 600 percent last year, with Paulson
pocketing a reported $3.7 billion.

Bill Ackman, of Pershing Square Capital Management, said he plans
to make hundreds of millions. Both declined 60 Minutes’ request for an
interview.

Congress seemed shocked and outraged by the consequences of its
decision eight years ago to effectively deregulate swaps and
derivatives. Various members of the House and Senate have hauled in the
usual suspects to accept or share the blame.

“Were you wrong?” Rep. Henry Waxman asked former Federal Reserve Chairman Greenspan.

“Credit default swaps, I think, have some serious problems with them,” Greenspan replied.

It appears to be the first step in a long process of restoring at
least some of the regulations and safeguards that might have prevented,
or at least mitigated this disaster after the damage has already been
done.

Where do we go from here?

“We need the most dramatic rethinking of the regulatory scheme for
financial markets since the New Deal. If anything has demonstrated that
imperative, it’s the economy right now and the tragic circumstances
we’re in,” Goldschmid says.

Asked how much danger he thinks is still out there, Goldschmid
says, “We don’t know. Part of the problem of the lack of transparency
in these markets has been we don’t really know.”

To view the story, click on the following link:

http://www.cbsnews.com/video/watch/?id=5274961n

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South Africa risking losses through logistical ineptitude – Patrice Motsepe

August 31, 2009 by · Leave a Comment 

South Africa was running the risk of losing business to rival countries because of logistical ineptitude, African Rainbow Minerals (Arm) executive chairperson Patrice Motsepe said on Monday.

"The whole Transnet issue is a very, very important one," Motsepe told the Arm annual results presentation, during question time.

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