Gold Nears 10% Monthly Gain Ahead of Fed Decision as US Economy Surges, Inflation Flatlines

London Gold Market Report
from Adrian Ash
Wednesday, 31 July 09:15 EST

The PRICE of wholesale gold fell back to $1320 per ounce Wednesday lunchtime in London as new data showed the US economy expanding faster-than-expected.

 Second quarter GDP rose 1.7% in real terms from a year earlier, the Bureau of Economic Analysis said.

 Inflation in consumer goods and services fell to 0.0%.

 Falling almost $20 from an earlier 1-week high, the gold price at $1320 dropped back to its crash low of mid-April, when prices tumbled $250 per ounce in 3 sessions.

 The US Dollar had today already jumped half-a-cent against both the Euro and Sterling – and driven the Brazilian Real to 4-year lows – after strong jobs growth was reported by the private-sector ADP Payrolls report.

 Official non-farm payrolls data for July are due this coming Friday.

 Ten-year US Treasury yields jumped Wednesday to 3-week highs at 2.66% as bond prices fell.

 Washington’s creditors have now lost money for three months in succession, lagging world stock markets by well over 5 percentage points according to Bloomberg data.

 “The influence real US interest rates have on gold has receded over the last few decades as demand has shifted from West to East,” says a new research paper from market-development organization the World Gold Council today.

 The relationship between the gold price and real US interest rates, adjusted for inflation, “is less clear when viewed in the context of other fundamental factors,” the report goes on, pointing to movements in the US Dollar, equities, and gold-price volatility.

 Gold in Dollars has rallied nearly 10% in July after losing 25% to hit 3-year lows over the April-June quarter.

 Versus Euros and Sterling, gold this month added more than 6%.

 Silver meantime failed to break back above $20 per ounce Wednesday morning, holding 5.6% higher for the month of July on the London Fix but then slipping back to $19.44 after the US data.

 Over in India, “We hope to contain gold imports at a level well below last year’s total imports,” said finance minister P.Chidambaram on Wednesday.

 Imposing yet more new restrictions on gold importers in July – and already doubling Indian premiums over world benchmark gold prices – “[That will] save considerable amount of foreign exchange,” says Chidambaram, “which will have a positive impact on the current account deficit.”

 Investment bank and bullion dealer Standard Bank of South Africa was meantime reported by a source to be close to selling its London commodity trading business to China’s giant ICBC bank.

 Standard’s largest shareholder, ICBC was recently ousted by the US Wells Fargo as the world’s largest bank by stock-market value.

 “Institutional investors in the Western Hemisphere [have] revealed strong negative feelings towards gold,” says a note from London market maker UBS.

 “In contrast, retail investors in Asia – who account for the bulk of physical buying – have found good value in this year’s lower gold prices.”

 US hedge-fund manageer David Einhorn was quoted Tuesday telling clients that his bullish view on gold “has not changed” and that Greenlight Capital continues to split its exposure equally between physical gold bullion and mining stocks.

Adrian Ash


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Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver in Zurich, Switzerland for just 0.5% commission.


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Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.


Fort McMurray Evicts Oil Sands Companies that Helped it Grow


The Canadian town of Fort McMurray, population 76,000, is the heart of Alberta’s oil sands largesse–but the town is bursting at its seams with nowhere to expand because the land surrounding it is owned by oil companies.

The government’s answer to this is to cancel all the leases on 22,000 hectares of land surrounding Fort McMurray—effective immediately.

In an agreement announced on 26 July, the government promised lease-holders fair reimbursement, with the municipality purchasing the land from the province over the next five to 15 years.

This acreage is more than twice the size of Fort McMurray today, and the idea is to make the town two-thirds the size of Calgary.

For Fort McMurray—whose population is expected to double by 2030 thanks to the very oil sands industry is must now evict—it is a necessity. The town needs more housing and infrastructure, but has nowhere to put it.

“This lack of land has tied our hands when it comes to planning future development, but it’s also led to all sorts of challenges from sparse housing options, limited commercial retail entities and a non-existent space for social profit groups: churches, community halls, store fronts, just to name a few,” Mayor Melissa Blake told reporters on 26 July, when the decision was announced. “Today that all changes.”

Oil sands companies have mixed feelings about the deal. Though the purchase of their leases will be based on fair market prices, some are not convinced they’ll be compensated for all the money they’ve spent developing oil sands here—just to lose their leases.

The most affected will be Value Creation Inc., which holds leases on the largest swathe of territory slated for Fort McMurray’s urban development. According to the Edmonton Journal, the company had planned to develop oil sands reserves here and then return the land to the Fort McMurray authorities—along with newly laid roads—in 10 years. But Fort McMurray can’t wait.

Value Creation says the decision, at least, removes any uncertainty about what is going to happen with these leases. Company advisor Rick Orman noting that the government had been stringing it along for four years while the company continued to spend money on development. Orman also questioned the need to expand Fort McMurray to such an extent, calling it ” excessive“.

Alberta Oilsands Inc. (AOS), however, is less wary. While it’s invested $50 million developing its Clearwater assets here since 2007, it’s getting all its money back, plus interest, and some potentially sweet replacement property thrown into the deal.

AOS CEO Binh Vu told “While we are disappointed at not being able to move to production at Clearwater, with the malaise in the junior markets AOS is trading today at a market capitalization of only half of what the government remuneration will be based on our expenses at Clearwater and interest–so it will be a real boon for current shareholders and investors.”

Do companies having their leases cancelled have anything to worry about and should their shareholders be concerned? We don’t think so – we copied the below from the Mines and Mineral Act which clearly states how companies will be compensated:

The Mineral Rights Compensation Regulation (Alberta Regulation 317/2003) establishes the compensation payable by the Crown for cancelled agreements. Compensation includes at least the following:

1. Cost of acquiring the lease including annual license fees and application fees;
2. Wasted exploration and development expenditures;
3. Reclamation costs;
4. Interest of approximately 5 per cent (calculated as Alberta Treasury Branch prime plus 1 per cent).


By. James Stafford of


The One Investment Obama Hates, But I Love


Forget about being universally shunned. Coal is downright hated.

As I told WSD Insider subscribers back in May, sentiment is so bad, in fact, that corporate executives are turning into obituary writers.

At The Wall Street Journal’s ECO:nomics Conference in March, NRG Energy’s (NRG) CEO, David Crane, said, “Natural gas is in the process of wiping out the coal industry.”

Talk about a dire prediction.

At the same time, President Obama is unofficially declaring a war on coal via his advisors.

Last month, Daniel P. Schrag, Director of the Harvard University Center for the Environment – and part of the science panel that helped advise the White House on climate change – told The New York Times, “Politically, the White House is hesitant to say they’re having a war on coal. On the other hand, a war on coal is exactly what’s needed.”

No wonder investors are “beginning to write off much of the industry,” as Zacks’ analyst, Eric Dutram, recently observed.

To this contrarian, though, all the negativity smacks of an opportunity. And the most recent earnings report from industry bellwether, Peabody Energy (BTU), suggests that I could be on to something.

Sparking a Comeback

Last week, Peabody made analysts look foolish beyond belief. The company reported second-quarter profits of $0.33 per share, while expectations called for a loss of $0.05 per share.

We can credit aggressive cost-cutting efforts for part of the surprise, which is an indication that the industry is still facing headwinds. But the rest of the credit goes to (shocker) improving fundamentals.

Year-over-year, Peabody actually sold 3.6 more tons of coal.

As Peabody Energy Chairman and CEO, Gregory H. Boyce, said, “U.S. coal generation is up significantly year to date [11%] and natural gas generation has declined sharply.”

Come again? I thought coal’s days were numbered and that natural gas was in the process of “wiping out the coal industry.” Maybe Boyce misspoke.


Elsewhere in the report, he says, “Both U.S. and global coal demand continue to grow.” Ultimately, this underscores a key misconception about coal. And it’s time to set the record straight.

Newsflash: Coal Still Makes the World Go Round

Even the White House is in on the ruse that coal has no future for electricity generation in the United States. Total hogwash.

Sure, in recent years, utilities aggressively transitioned to using natural gas. But the move was purely economical. Not to mention, the magnitude of the change was perfectly consistent with history.

According to a recent U.S. Energy Information Administration (EIA) study on the “elasticity of substitution,” price is the primary factor in determining the mix of fuels that will generate electricity over time.

As you can see in the chart, during the late 1960s, coal use dropped as petroleum use increased. The cause? “Low and stable oil prices” and “concerns about emissions,” says the EIA.

Fast forward to the late 1970s, and we see coal rebound to almost 80% of power generation. The cause? Again, price. Two oil price shocks during the period made oil the unattractive option. At the same time, coal prices dropped, thanks to a large capacity buildout.

You get the point. Although coal has been the predominant fuel used in power generation for over 60 years, demand is cyclical. And the latest downturn for coal merely reflected market forces at work.

But these forces are now turning back in coal’s favor…

With natural gas prices up sharply over the last year, Boyce notes that “coal has regained significant market share from natural gas.”

What We Don’t Use, We’ll Export

Let’s ignore reality for a moment and assume that coal use is, indeed, in terminal decline in the United States.

It still wouldn’t matter. Why? Because coal demand is on the rise everywhere else. Since the beginning of the 21st century, it actually represents the fastest-growing global energy source.

And over the next five years, global demand is expected to increase by at least one billion metric tons.

No surprise, the emerging markets of China and India account for the majority of the past and future growth. From 2000 to 2011, the two countries accounted for 95% of coal demand growth, according to the International Energy Agency (IEA). And over the next 20 years, the Asian Development Bank says it’s a forgone conclusion that Asia’s use of fossil fuels is only going to keep rising.

Make no mistake, coal is the fossil fuel of choice in rapidly expanding Asian economies. Why? Because it’s cheap, abundant, easily transported (since it doesn’t require a vast pipeline infrastructure) and less combustible.

Heck, even Europe, which has some of the most ambitious emissions-control efforts in the world, can’t curb demand for coal. And that’s simply because natural gas isn’t an option. While it’s cheap in the United States, it can cost almost five times as much overseas.

So even if we have no use for coal in the United States anymore, there’d be more than enough global demand to pick up the slack. That means we’d export our coal, which we’re starting to do more often, anyway. (Last year, U.S. coal exports hit a new record, reaching 120 million tons. That’s double the amount in 2009.)


Bottom line: Any talk about the death of coal is completely overblown. Even if it’s coming from the highest office in the land.

Based on the latest fundamentals, the hard-hit industry actually appears to be bouncing off the bottom. So I recommend adding some exposure to your portfolio before yet another contrarian opportunity passes you by.

Ahead of the tape,

Louis Basenese

The post The One Investment Obama Hates, But I Love appeared first on  | Wall Street Daily.

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Original Article: The One Investment Obama Hates, But I Love

Chris Berry: Rare Earth Stocks Show Signs of Life, but Will the Uptrend Stick?

Source: Alec Gimurtu of  The Metals Report (7/30/13)

Prices for rare earths and some rare earth mining stocks are showing positive price action following China’s crackdown on illegal mines. But is this the beginning of a sustained recovery, or just a temporary blip on the screen? House Mountain Partners founder Chris Berry explores these questions in this interview with The Metals Report and shares his macroeconomic outlook. As Berry reminds us, V-shaped recoveries are preferred, but rare. That means investors must cultivate patience and courage.

The Metals Report: What economic indicators are most valuable to your analysis? Which indicators are less useful?

Chris Berry: Because the industrial metals are my primary focus, I pay close attention to metrics geared toward industrial activity. This includes Purchasing Manager Indices (PMI), industrial production data and capacity utilization data. I also look at the velocity of money as a signal of inflation. These data points are forward-looking indicators and are a reasonable gauge of the expansion or the contraction in an economy’s industrial base. Additionally, the PMI data in particular gives a more granular look at economic activity including new orders, inventory, prices and output. This granularity is helpful in accurately gauging the expansion or contraction of an economy’s industrial base.

While recent PMI data released out of China confirms that the economy continues to cool down to a more sustainable growth rate, the PMI data in the Eurozone and the U.S. surprised to the upside, which is a hopeful sign going forward.

I tend to focus my attention less on some of the macro indicators like gross domestic product (GDP) and unemployment figures (UI). However, there is still value in GDP and UI numbers, especially in showing the rate of change over previous months. I tend to give more credence to past monthly revisions of this data as it is more accurate. Despite the fact that it is “backward-looking,” the data gives a clearer idea of the trends, and the trends are my main focus.

TMR: Besides economic indicators, what other factors do you keep your eye on to get an idea of trends that might be developing?

CB: Personal experiences can help to gauge trends outside of official statistics. When I’m on the road, I stop into all types of businesses to get a gauge of the health of that business and, by extension, health of the local economy. On a recent trip to Paris, I happened to go into the flagship Hermès store on the rue du Faubourg Saint-Honoré, and was very surprised at what I saw. What really took me aback was that the company had hired salespeople who were fluent in Mandarin and were helping Chinese customers, all of whom were buying. This reinforces one of my core investment theses—that there will be amazing growth in the market that services the increasingly large and affluent, global middle class that has exposure to the international economy. This example in Paris is a single instance and does not make a trend by itself. But experiences like this are valuable pieces of evidence of the rising power of the consumers and the implications for commodities going forward.

TMR: How do you reconcile that with the uprisings or social volatility in Egypt, Turkey and even Brazil? How is the social unrest linked to the commodity supercycle?

CB: When you begin to experience a higher quality of life, it means now you now have something to lose. You’re typically earning more money, paying taxes and you have skin in the game. You have assets and you have expectations of your government to provide basic services. A higher quality of life is like a Pandora’s Box—once it’s been experienced, there is expectation for maintaining, if not improving, quality of life in the future. There is no going back. It is incumbent on governments to do whatever it takes to make sure that their populaces can continue to experience these creature comforts at a reasonable cost.

The uprisings in each of these countries that you just mentioned all stem from different issues. The case of Brazil is instructive. The uprising in Brazil is a surprise to many people, as this country has been one of the powerhouses of global growth, and the middle class has expanded there greatly over the last 10 or 15 years.

Brazil is an example of uprisings happening in a democratic regime. The uprising emanated from an increase in bus fares—approximately a $0.09 fare increase. Tiny in the grand scheme of things but with Brazil set to host the World Cup and also the summer Olympics, the government is spending lavishly on public works. Many Brazilians feel left out and unhappy with having their quality of life impinged upon for the sake of Brazilian authorities worried about public relations in the eyes of the global elite during these sporting events.

The New York Times recently published an article discussing this further, stating that a cheese pizza costs $30 in Brazil due to a host of factors. This is another example of why the average Brazilian citizen is upset.

The inability of governments to manage the demands of their citizens has serious implications for foreign direct investment. Citizen demands for more wealth can also drive resource nationalism, which has been a major problem for mining companies in recent years. As a commodity investor, this is a serious consideration and is why I favor miners with deposits in the safest geopolitical jurisdictions.

TMR: Based on most economic data, growth in China is slowing. What are the implications of an economic downturn in China for the junior resource sector?

CB: We’ve seen the effects of a China slowdown in the commodity complex since 2011 when many commodities topped. Since then, commodity prices of all types have suffered. With China as the world’s largest producer and consumer of numerous commodities and the Chinese GDP growth rate targeted for 7.5%, down from 10% just a few years ago, this implies lower demand for commodities.

It’s important to keep in mind that China, growing at 7.5% a year today, is a much bigger economy than China growing at 10% a few years ago. It’s growing from a larger base despite the lower growth rate. China is slowly rebalancing and opening its economy, which is another plus in the longer term. We can see this in a number of ways, most recently with the increasing number of currency swap deals that the country is entering into with other countries like the UK, Australia, Brazil, Singapore, and South Korea. The goal is to begin to establish the Chinese yuan as a trading and, ultimately, reserve currency. This is a positive development in the long run. It’s a positive development for the entire commodity complex.

Let’s also not forget that the emerging middle class extends well beyond China. Although economic growth has slowed in other countries like Brazil, as we have talked about, or Indonesia, the long-term picture for the average citizen in these countries, striving for and attaining a higher quality of life, is still very much intact. I’m a firm believer in the thesis that no middle class has either sustained itself or increased its standard of living without access to reliable and affordable energy. This is why I’m so optimistic about commodities over the longer term, in particular the energy metals that I tend to focus on. This is despite the current economic headwinds.

TMR: And China is not the only story out there, is it? There are also the other BRIC and developing countries.

CB: A lot of ink has been spilled about the commodity supercycle being over. I just don’t believe it. The commodity supercycle is evolving toward being more consumer centric.

We’re on the verge of witnessing what I call “the acceleration of affluence.” By this, I mean more people than ever are experiencing a higher quality of life, and they’re experiencing it faster than ever before. To date, the commodity supercycle has been dominated by infrastructure investment, and I don’t expect that to stop outright. But I think you’ll see consumer demand become an increasingly large part of this supercycle in the coming years.

Due to the ubiquity of technology, anybody with an Internet connection can access high-quality education for free on websites like or I think it’s important to remember that quality of life is about more than just owning a car or an iPhone. It’s about self-worth and a longer and healthier life. Advances in technology are allowing this to happen for more people than ever before in human history. This paints a very positive picture for commodity demand going forward—if you can handle the volatility.

TMR: The metals prices are pretty transparent compared to unemployment and GDP numbers. Do you think investors pay too much attention to metals prices and especially to the bottoming of metal prices?

CB: Prices are certainly less convoluted than macroeconomic data. I think your question speaks to the ability to accurately time the market. Calling a bottom can be very lucrative, but it is very difficult. I prefer to look at economic data in metals or minerals usage to understand when a cycle has turned. It’s possible to bottom and stay there a long time. V-shaped recoveries are preferred, but rare. The quote attributed to John Maynard Keynes comes to mind: “Markets can remain irrational longer than you can remain solvent.” So this implies the need for patience and courage in your investing discipline today.

One of the most beneficial indicators I use is statements from end users of given commodities and participants along the entire supply chain. As an example, I pay particular attention to statements made by management from Rockwood Holdings Inc. (ROC:NYSE), the largest lithium compound producer in the world. Or I look at a company like GrafTech International Ltd. (GTI:NYSE) or SGL Group (SGL:XETRA) to gauge any imbalances in supply and demand for graphite. Right now, for most industrial metals, I just haven’t seen enough evidence of a turn to convince me that a new metals cycle has begun. With earnings season in full swing, I’m anxious to hear what a number of CEOs across different commodities are seeing in their respective markets.

TMR: If GrafTech International is your graphite bellwether, what companies would you consider as potential investments in this space?

CB: Despite the underperformance of graphite shares in 2013, the long-term value proposition is still intact. That said, there likely won’t be a need for more than a couple of new deposits to integrate into global supply chains, so speed is of the essence for graphite companies. GrafTech released its Q2/13 earnings this morning and discussed a very challenging environment dominated by declining steel production and overcapacity in the graphite electrode business. Pricing power is a problem and this presents a stern near-term challenge for graphite juniors.

As investors, you can either invest in early-stage companies with lots of question marks that may make discoveries and dramatically increase their share prices, or you can exert patience and invest in more sustainable stories with proven management, advanced studies on their deposits and clarity around capital expenditures. Both methodologies have their pros and cons.

We know a great deal about Northern Graphite Corporation (NGC:TSX.V; NGPHF:OTCQX) and its Bisset Creek deposit. While the company awaits approval of its mining lease, we can also anticipate an updated bankable feasibility study to enhance the overall economics. A new resource model and mine plan will be included as well.

Northern Graphite has also proven to the marketplace that its graphite concentrate can be used to produce spherical graphite—ideal for use in the lithium-ion battery business. This value-added processing is a way that the company can enhance its margins in the future. Many people who invest in graphite are hung up on the importance of grade, but I think there are more important issues to consider, such as what is the composition of the company’s deposit, what will it be producing, who will it be selling it to and in what volumes? These issues really drive the economics of a graphite company more than anything.

Flinders Resources Ltd. (FDR:TSX.V) has rebounded nicely due to the fact that it has recommenced sales of previously mined graphite to customers in Sweden and Germany. So we now know that the processing portion of the operation is functional. This validates Flinders’ product and is a major positive catalyst. The company also announced that the metallurgy of the Woxna deposit has exceeded expectations by demonstrating very strong recoveries (96%+), as well as larger flake sizes and higher purities than the past operators could achieve. As the company prepares to publish a preliminary economic assessment, news like this will help the overall economics and we’ll have an initial sense of capital and operating costs.

There are still literally dozens of graphite juniors in existence and for any of them to survive and prosper, they must demonstrate to the marketplace that they can produce a product that end users want at a price that allows juniors to generate positive cash flow. Northern Graphite and Flinders face their own challenges, but they are two primary examples of companies that have proven their staying power in the graphite space.

TMR: In his recent interview with The Metals Report, Alex Knox said, “I see a dramatic need for development of heavy rare earth element (HREE) deposits in the Western world, now that China’s crackdown on illegal mining has presumably cut into its production of HREEs.” Do you agree that shifting politics in China will lead to an increased interest in HREEs in North America?

CB: Interest in HREE deposits in North America is still quite strong. In fact, you could make a compelling argument that investors have completely disregarded light rare earth element (LREE)-dominated deposits in favor of the rarer and more valuable HREEs. This is likely a mistake, though, as there are still substantial end markets for products that require LREEs.

Investors and politicians alike have become much more educated about the import dependence issues we have in North America regarding access to REEs and their necessity for domestic supply chains. The real challenge that exists today is the same that existed before REEs became a household name in 2009: successfully exploration, discovery, development and commercial production of a deposit on North American soil. The capital expenditure numbers and metallurgical challenges associated with some projects have combined with the relative scarcity of capital today in the junior space to bring us no closer to solving this problem. However, companies like Quest Rare Minerals Ltd. (QRM:TSX; QRM:NYSE.MKT) and Ucore Rare Metals Inc. (UCU:TSX.V; UURAF:OTCQX) have been able to successfully raise capital in recent months.

It’s true that China appears to be taking steps to consolidate its REE industry, but those changes will benefit China first, no matter what the World Trade Organization (WTO) tries to do.

China is pushing forward aggressively with its own technological development as urbanization continues, albeit at a slower pace than in recent years. China’s old export-led growth model utilizing low-cost labor is changing—and it must. The new model that emerges will focus more on the consumer who will demand a higher quality of life through increased disposable income among other metrics. REEs will play a crucial role in this development and this foretells a tightness of supplies of most types of REEs in the future. If you believe this thesis as I do, then yes—Mr. Knox is absolutely correct.

TMR: Rare earth prices show signs of improvement, and even mining stocks are showing signs of life. For example, Tasman Metals Ltd. (TSM:TSX.V; TAS:NYSE.MKT; TASXF:OTCPK; T61:FSE) climbed over 25% this month, up $0.17; Medallion Resources Ltd. (MDL:TSX.V; MLLOF:OTCQX; MRD:FSE) climbed to $0.40 from below $0.10 in May. Do these price movements signal a meaningful shift in market dynamics?

CB: As China moves to clean up the environment and reign in illegal mining, this will eventually help put a floor under REE prices. The global economic slowdown is also compounding efforts at an REE revival of sorts, and so I really do not see any shift in market dynamics at this point. That said, companies in the REE space that can achieve positive catalysts should reap share price gains and Medallion Resources and Tasman are two such examples.

Medallion recently raised capital and has entered into two agreements with institutions based in Jordan and Oman to jointly research ways to construct a monazite heavy mineral sands processing facility. The company continues to execute its strategy of constructing a supply chain focused on low-cost production of REEs and the share price has responded. Medallion offers a much different take on investing in early-stage REE companies—one that I have liked for some time.

Tasman, which I visited recently, has received its mining lease at Norra Karr that will be in effect for 25 years. The company also recently received a permit for test mining on site. This will allow the company to further the metallurgical studies and get a handle on potential costs. Additionally, Tasman received funding from the European Commission through the EURARE project to conduct processing and metallurgical research on Norra Karr and another Tasman project known as Olserum. There were apparently only four projects selected for funding here, so acknowledgement of these projects’ significance is a positive long-term catalyst for Tasman.

TMR: Avalon Rare Metals Inc. (AVL:TSX; AVL:NYSE; AVARF:OTCQX) is seeking funding for Canada’s first REE mine. Do you believe Canada is the next big REE frontier?

CB: Not necessarily. The advantages that Canada has are undeniable including the rule of law, and clarity of the permitting process, but a number of other deposits in other jurisdictions like Africa are making well-deserved headlines lately, including Namibia Rare Earths Inc. (NRE:TSX, NMREF:OTCQX). Namibia has quietly pushed forward with exploration of the Lofdal deposit and recently was able to show that it can produce an attractive HREE concentrate there.

We’ve known for some time that REE deposits are not “rare” at all. What is rare is the ability to find economic deposits in reliable geopolitical jurisdictions with sound metallurgy. There are a number of countries throughout the world where this could be the case, but Canada is certainly near the top of that list.

TMR: Chris, thank you so much for speaking with us.

CB: It’s my pleasure.

Chris Berry, with a lifelong interest in geopolitics and the financial issues that emerge from these relationships, founded House Mountain Partners in 2010. The firm focuses on the evolving geopolitical relationship between emerging and developed economies, the commodity space and junior mining and resource stocks positioned to benefit from this phenomenon. Berry holds a Master of Business Administration in finance with an international focus from Fordham University, and a Bachelor of Arts in international studies from the Virginia Military Institute.

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1) Alec Gimurtu conducted this interview for The Metals Report and provides services to The Metals Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Metals Report: Northern Graphite Corporation, Tasman Metals Ltd., Medallion Resources Ltd. and Namibia Rare Earths Inc. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Chris Berry: I or my family own shares of the following companies mentioned in this interview: Northern Graphite Corporation. I personally or my family am paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.

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Europe shares drops: Fed decision expected

By HY Markets Forex Blog

The European stock market traded flat at market open on Wednesday as investors focus on the outcome of the Federal Reserve’s two-day meeting, with possible hints on when the central bank would begin to scale back its bond-buying program.

Futures of the European Euro Stoxx 50 dropped to 0.09% lower at 2,758.50, while the German DAX futures declined 0.21% at 8,260.80. The French CAC 40 futures were seen 0.14% lower, as the UK FTSE futures fell 0.10% to 6,529.30.

A statement from the two-day policy meeting is expected to be released by the Federal Reserve (Fed) later this afternoon.

The US growth data and private job reports are also expected to be released later this afternoon. The report is expected to show a growth of 1% in the US economy and an 180,000 addition of new jobs in the month of July in the private job reports.

The expected US non-farm payroll report is expected to show an increase of jobs in the month of July by 185,000, while the unemployment rate is expected to show a slight drop from previous record of 7.6% to 7.5%.

In Germany, the Federal statistical office reported the retails sales had an unexpected fall in the month of June, as sales dropped 1.5% on a monthly basis. While the German unemployment data for July is expected to remain unchanged after unemployment dropped by an adjusted 12,000 in the month of June.

Italy’s Consumer price index (CPI) preliminary report for the month of July , is expected to be released as well , with expectations of an increase in prices by 0.3% on a monthly basis and edged up by 1.4% on a yearly basis .

Spain’s retail sales dropped 4.7% in the month of June on a yearly basis after a 4.6% drop in the month of May.

The post Europe shares drops: Fed decision expected appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

Gold declines ahead of Fed meeting

By HY Markets Forex Blog

Gold Futures were seen trading low on Tuesday as investors focus on the two-day Federal Reserve (fed) meeting, where they could get a possible hint as to when the central bank intends to start scaling back on its stimulus program.

The yellow metal futures fell 0.46% lower, trading at $1,323.40 an ounce, while the silver futures were down 1.36% at $19.595 an ounce at the time of writing.

Gold correlates inversely with the US dollar and dropped after trading flat as the European trading hours began. The US dollar index has had a slight advance due to investor’s assumptions ahead of the Federal Reserve meeting.

The US dollar index slightly strengthened against some of its major counterparts, adding 0.06% to 81.710 at the time of writing. The US dollar index remains low compared to the near three-year high of 84.75 as of the beginning of the month of July.

Holdings in the largest gold-backed exchange-traded fund SPDR Gold Trust remained unchanged at 927.35 tonnes on Monday. Volume of the holdings dropped just under 1,000 in the month of June.

With worries regarding the Fed’s decision on scaling back the monetary stimulus program, the yellow metal dropped by more than 20% this year. Gold futures reached a three-year low in the month of June.

Prices of the yellow metal reached a five-week high of $1,347.69 an ounce on July 23rd & July 24th.

The post Gold declines ahead of Fed meeting appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

Central Bank News Link List – Jul 31, 2013: India seeks new central bank governor as Subbarao’s term ends


Here’s today’s Central Bank News’ link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don’t miss any important news.

USDCHF stays within a downward price channel

USDCHF stays within a downward price channel on 4-hour chart, and remains in downtrend from 0.9535, the rise from 0.9264 is likely consolidation of the downtrend. Resistance is located at the upper line of the channel. As long as the channel resistance holds, the downtrend could be expected to resume, and another fall to 0.9200 area is still possible. On the other side, a clear break above the channel resistance will indicate that lengthier consolidation of the longer term downtrend from 0.9751 is underway, then further rally to 0.9450 area could be seen.


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The News Gets Worse, So We’re Buying Resource Stocks…


If you own resource stocks, you don’t need us to tell you it has been a torrid two years.

The gold price is 30% below the 2011 peak, and the S&P/ASX 300 Metals & Mining index has lost a whopping 40.6% since April 2011.

And with headlines in the press talking about the ‘Economy at a turning point’ and ‘Mining sentiment in free fall’, only a lunatic would even consider looking at mining stocks today.

That’s where we come in. This is exactly why we’ve just tipped three mining stocks in the past six weeks.

As a contrarian investor, those are exactly the headlines to give us confidence that a rebound in resource stocks is on the way…

But not everyone agrees with our view.

You can probably imagine that we’ve received plenty of mail from readers who think your editor is a traitor because we’re not calling for the market to crash.

The gist is they aren’t happy with our view that the Australian share market is heading towards a record high of 7,000 points in 2015.

These readers say we don’t understand that the world economy is stuffed and that we’re foolish for buying stocks when a crash is imminent.

All we say to those folks is that they don’t understand investing. The stock market doesn’t care what any one individual thinks. The market merely reflects the views of the investors who transact on any given day.

And right now, our view is that market sentiment is changing and resource stocks will be one of the best opportunities through the rest of this year…

No Wonder Resource Stocks Have Fallen So Much

We’ll give you an example. If we had stuck our head in the sand and kept saying ‘the market is crashing’, Australian Small-Cap Investigator subscribers wouldn’t have backed the small-cap uranium stock we tipped last month.

That would have been a shame because it’s up 42.9% in just a few weeks.

And if we had been too scared to back two metals stocks just two weeks ago, Australian Small-Cap Investigator subscribers would have missed out on gains so far of 8.6% and 4.3%.

Not to mention the 121.9% gain on a specialist medical stock we tipped last September. That was before stocks began their yield-chasing rally. Folks called us mad back then, and they call us mad today.

But that’s fine. We’re thick-skinned.

After all, we see it as our role to give you our best useful, actionable investment advice. Right now, our best investment advice is to buy resource stocks.

We’ll admit that flies in the face of conventional wisdom. Take these charts from yesterday’s Australian:

Source: The Australian

In 2012 all mining companies surveyed by Newport Consulting were either increasing or maintaining capital spending on mining projects.

One quarter of those firms were ‘significantly increasing’ capital investment.

Roll forward to 2013 and things have changed. Now 86% of firms are either reducing or not increasing capital spending. That’s bad news for the resource sector…very bad news.

And it’s not the only report to paint a bad picture of the resource sector. Take this from the Age:

The mining investment boom is winding down sharply, with the next few months set to be a turning point for the Australian economy, a report by a leading business advisory group has found.

The value of planned projects, those under consideration or possible, fell 14.3 per cent, or $68.3 billion, from the last quarter, said Deloitte Access Economics in its Investment Monitor June-quarter report, published on Tuesday.

With that news, it makes sense that resource stocks have fallen so much. But let’s look at it another way. Let’s say you knew nothing about investing and someone asked your opinion on what effect that news would have on mining stocks.

Our guess is you’d say, ‘Sell.’

And that would be a fair answer. But what would you now say when we showed you this chart:

S&P/ASX 300 Metals & Mining Index

Source: Google Finance

We bet there’s a better than 50% chance that you would say, ‘Buy.’ At the very least you’d stop and think about it.

Have the Markets Already Priced In the Bad News?

After all, isn’t the object of investing to buy low and sell high? And if you agree that markets are forward-looking, anticipating future good or bad news, isn’t it fair to say that resource stocks began pricing in this week’s bad news two years ago?

Of course, we don’t know that for certain. We thought the mining rout had ended about three months ago. We got that wrong. And we could be wrong this time too.

But we don’t think so. If you’re a speculator or a contrarian investor you should always look out for opportunities to buck the market trend…and get in on a turning market before the rest of the crowd gets the same idea.

We won’t kid you, it’s a risky move. And it’s not for everyone. If you’re the type of investor who prefers surer things then you should probably wait until it’s clear that mining stocks are trending higher.

And that’s fine. It just means that if we’re right, you could miss out on some of the biggest gains if this is the resource rebound we’ve been waiting for.


From the Port Phillip Publishing Library

Special Report: The Sixth Revolution

Daily Reckoning: Australian Property: Crazy Bullish or Just Crazy?

Money Morning: Why You Should Be ‘Hands On’ When Investing Your Money

Pursuit of Happiness: Save Now to Avoid the Government’s Retirement ‘Labour Camps’

Australian Small-Cap Investigator:
How to Make Big Money from Small-Cap Stocks