-- Posted 24 December, 2008 | | Source: SilverSeek.com
Note: US Markets are closed tomorrow for Christmas. Markets will be open for full trading hours on Friday, but CoT reports are delayed until Monday. Gold Seeker Reports will be intermittent or nonexistent until the New Year.
| Close | Gain/Loss |
Gold | $847.15 | +$9.50 |
Silver | $10.365 | +$0.155 |
XAU | 113.03 | UNCH |
HUI | 275.97 | -0.14% |
GDM | 842.06 | -0.17% |
JSE Gold | 2159.51 | +5.21 |
USD | 81.15 | -0.09 |
Euro | 139.67 | +0.46 |
Yen | 110.30 | +0.36 |
Oil | $37.38 | -$1.60 |
10-Year | 2.179% | +0.016 |
T-Bond | 140.46875 | -0.53125 |
Dow | 8468.40 | +0.58% |
Nasdaq | 1524.90 | +0.22% |
S&P | 868.15 | +0.58% |
The Metals:
Gold and silver traded mostly slightly higher in Asia and London before they dipped at the New York open to see slight losses at as low as $834.25 and $10.198, but they then rallied back higher for the rest of the day and ended near their highs of $848.75 and $10.45 with gains of 1.13% and 1.52%.
Euro gold rose to about €607, platinum gained $ to $, and copper fell slightly to about $1.26.
Gold and silver equities fell about 3% at the open, but they then rallied back higher for most of the rest of trade and ended with just slight losses.
The Economy:
Report | For | Reading | Expected | Previous |
Durable Orders | Nov | -1.0% | -3.1% | -8.4% |
Initial Claims | 12/20 | 586K | 558K | 556K |
Personal Income | Nov | -0.2% | 0.0% | 0.1% |
Personal Spending | Nov | -0.6% | -0.8% | -1.0% |
There are no further economic reports this week.
The Markets:
Charts Courtesy of http://finance.yahoo.com/
Oil fell for the ninth straight session to make for the longest losing streak since 2001 as economic data was weak yet again and inventory reports showed that inventories at the Cushing, Oklahoma plant were at their highest level on record. Crude inventories fell 3.1 million barrels, gasoline inventories built 3.3 million barrels, distillates built 1.8 million barrels, and natural gas inventories fell 147bcf.
The U.S. dollar index fell on more poor economic data, but treasuries also fell as the Dow, Nasdaq, and S&P managed slight gains on hopes that the worst may be behind us.
Among the big names making news in the market today were the SEC, GM, and Lehman Brothers.
The Commentary:
“Dear CIGAs.
Some say the cost of gold production per ounce has risen. Has this costs of specific mining projects risen because of the short of gold derivative hedges that lost huge money are now factored in as the newest major cost per ounce?
YES!
Simply stated, if you lose your ass on the short of gold hedge now evaluated by the strict FASB 133-155-157 terms the cost of gold production per ounce goes up, up and away!
It appears the project’s mining costs have gone wild on the upside while in truth it is the short of gold hedge that has gone deeply into the red and is now being charged to the project.
One of Tanzania’s major new projects has massive short of gold hedge taken at under $400.
Now what do you think that does to the cost of mining per ounce? My back of the envelope calculation suggests it rises by the better part of $250 per ounce at a gold price average of $825. That number is conservative - very conservative.
Now think $1650 and maybe as much as $6000.
Don’t be Fooled!
It is the massive short of gold OTC derivative hedge losses that make up the largest increased cost of mining category today.
Until recently the cost of production per ounce of gold was either cash cost or total cost.
Cash costs in mining are the costs of production at site level per unit of output. It includes operational cash costs at site level. This includes items such as transport, refining and administration costs and royalties. It excludes non-cash costs such as depreciation and amortization excludes costs not at site level (such as head office costs).
The value of the by-products is deducted from the final cash cost of the metal. For example, if a copper mine produces gold as a by-product, then the value of the gold produced will be deducted from the cash cost of the copper. This is the usual accounting treatment for by-products in most industries.
The total cost of gold produced is the sum of all costs to the point of sale, including the cost of capital, depreciation, depletion, administrative and so on.
This was all quite straight forward until the advent of the use of short of gold derivatives for non-recourse project financing in the form of clarification and additions of FASB 133 -155 – 157 and 159. These accounting standards deal with valuation of OTC derivative hedges and methods for application of derivatives to the project for which it is undertaken.
GAAP (Generally Accepted Accounting Principles) are a collection of accepted rules, conventions, standards, and procedures for reporting financial information. In the US, GAAP standards are set by the Financial Accounting Standards Board (FASB).
To make matters easier to deal with, all GAAP procedures are moving towards International GAAP.
The key element in the final analysis is that it is now required to reveal what hedge was taken for what project then apply the loss or gain from that hedge DIRECTLY to that project.
As such, the Cost of Production for gold per ounce of any given project will be influenced by the profit or loss per ounce developed on the hedge taken for that project guided by valuation of type two assets.”- Jim Sinclair, JSMineset.com
GATA Posts:
Japan should write off its Treasury holdings, credit analyst says
Exporters meet to create 'gas OPEC'
Eric Hommelberg: Extraordinarily bullish outlook for gold
The Statistics:
As of close of business: 12/24/2008
Gold Warehouse Stocks: | 8,540,002 | - |
Silver Warehouse Stocks: | 126,711,470 | -1,062 |
Global Gold ETF Holdings
[WGC Sponsored ETF’s]
| Product name | Total Tonnes | Total Ounces | Total Value |
New York Stock Exchange Arca (NYSE Arca) AND Singapore Exchange (SGX) AND Tokyo Stock Exchage (TSE) AND Hong Kong Stock Exchange (HKEx) | SPDR® Gold Shares | 775.33 | 24,927,686 | US$ 21,021m |
London Stock Exchange (LSE) AND Euronext Paris AND Borsa Italiana AND Frankfurter Wertpapierbörse (Deutsche Börse ) | Gold Bullion Securities | 116.46 | 3,744,200 | US$ 3,172m |
Australian Stock Exchange (ASX) | Gold Bullion Securities | 11.51 | 368,942 | US$ 313m |
Johannesburg Securities Exchange (JSE) | New Gold Debentures | 26.93 | 865,857 | US$ 730m |
Note: No change in Total Tonnes from yesterday’s data.
COMEX Gold Trust (IAU)
Profile as of 12/23/2008 | |
Total Net Assets | $1,796,856,436 | Ounces of Gold
in Trust | 2,146,778.536 |
Shares Outstanding | 21,800,000 | Tonnes of Gold
in Trust | 66.77 |
Note: No change in Total Tonnes from yesterday’s data.
Silver Trust (SLV)
Profile as of 12/23/2008 | |
Total Net Assets | $2,325,633,292 | Ounces of Silver
in Trust | 217,412,903.800 |
Shares Outstanding | 220,250,000 | Tonnes of Silver
in Trust | 6,762.30 |
Note: No change in Total Tonnes from yesterday’s data.
The Stocks:
Linear Gold’s (LRR.TO) and Central Sun’s (SMC) proposed business combination, Colorado Goldfields’ (CGFI.OB) delayed deal with Kinross (KGC), Central Sun’s (SMC) corporate update, Yamana’s (AUY) completed equity financing, and Randgold’s (GOLD) 2008 performance were among the big stories in the gold and silver mining industry making headlines today.
WINNERS
1. Jaguar | JAG+15.15% $3.80 |
2. Cardero | CDY +8.06% $1.10 |
3. Rubicon | RBY +5.88% $1.08 |
LOSERS
1. Apex Silver | SIL -5.50% $1.03 |
2. Solitario | XPL -5.04% $1.32 |
3. AngloGold | AU-4.54% $35.02 |
Winners & Losers tracks NYSE and AMEX listed gold and silver mining stocks that trade over $1.
All of today's gold and silver stock news:
Katanga Announces US$265 Million Mandatorily Convertible Loan Facility - More
- December 24, 2008 | Item | E-mail
Sierra Successfully Renegotiates Piggott Loan - More
- December 24, 2008 | Item | E-mail
Breakwater Enters Into Royalty Agreement - More
- December 24, 2008 | Item | E-mail
Eastmain Completes Private Placement - More
- December 24, 2008 | Item | E-mail
Northern Superior Issues Incentive Stock Options - More
- December 24, 2008 | Item | E-mail
Golden Share Increases Previously Announced Private Placement - More
- December 24, 2008 | Item | E-mail
Colorado Goldfields: Kinross properties deal on hold - "Colorado Goldfields Inc (CGFI.OB) put its plans to acquire mining properties owned by Kinross Gold Corp (K.TO) on hold, saying sufficient due diligence regarding the Sunnyside Mine could not be completed by year end.
Colorado Goldfields also said "significant environmental issues" might arise if the Sunnyside Mine was reactivated by a third-party purchaser, and these must be fully vetted before the parties could reasonably move forward." More
- December 24, 2008 | Item | E-mail
Matamec Announces the Discovery of New Rare Earth-Yttrium Showings in the Kipawa Alkaline Complex - More
- December 24, 2008 | Item | E-mail
Colorado Goldfields' CEO Lee R. Rice Announces Revised Acquisition Plan for Kinross Colorado Mining Properties - More
- December 24, 2008 | Item | E-mail
PolyMet Draws Second Tranche of Loan From Glencore - More
- December 24, 2008 | Item | E-mail
EurOmax announces $485,000 financing and director resignation - More
- December 24, 2008 | Item | E-mail
American Bonanza to Receive 6.75 Million Shares of Hawthorne Gold Corp. - More
- December 24, 2008 | Item | E-mail
Central Sun Corporate Update - "Central Sun Mining Inc. (Toronto:CSM.TO - News)(NYSE ALTERNEXT US: SMC) ("Central Sun" or "CSM") is pleased to provide the following update. The term of its US$8.0 million loan has been extended to March 9, 2009 with an option to extend to June 8, 2009. In consideration for such extensions, CSM has agreed to pay a cash fee and to issue 1,000,000 CSM common shares." More
- December 24, 2008 | Item | E-mail
Uranium One Completes Australian Joint Venture Transactions with Mitsui - More
- December 24, 2008 | Item | E-mail
Mega Uranium Provides Update on Canadian Exploration - More
- December 24, 2008 | Item | E-mail
Yamana Increases Available Cash and Credit to US $0.5 Billion Dollars - "YAMANA GOLD INC. (Toronto:YRI.TO - News)(NYSE:AUY - News)(LSE:YAU.L - News) announced today that it has completed its previously announced equity financing and it has secured a further US$200 million revolving credit facility. The facility was jointly arranged by Scotia Capital and RBS Greenwich Capital, and is being provided by a syndicate of international banks including The Bank of Nova Scotia, ABN AMRO Bank N.V. and Export Development Canada. Including its pre-existing US$300 million revolving credit facility maturing in 2012, the company now has US$500 million of available credit under revolving credit lines of which approximately US$250 million remains completely undrawn." More
- December 24, 2008 | Item | E-mail
Boring route to sparkling year for Randgold - "While most mining executives will wince when they look back on 2008 – the year in which the commodities bubble burst – Mark Bristow will have reason to toast his good fortune.
As chief executive of Jersey-based gold miner Randgold Resources, his group is one of the few mining companies whose shares have risen over the year, helped by the recent surge in the price of the precious commodity." More
- December 24, 2008 | Item | E-mail
Linear Gold and Central Sun Mining Announce Business Combination - "Linear Gold Corp. (Toronto:LRR.TO - News) ("Linear Gold") and Central Sun Mining Inc. (Toronto:CSM.TO - News)(NYSE ALTERNEXT US: SMC)("Central Sun" or "CSM") are pleased to announce that they have signed a letter agreement whereby Linear Gold will acquire all of the outstanding common shares of Central Sun in exchange for common shares of Linear Gold (the "Transaction"). Pursuant to the Transaction, CSM shareholders will receive 0.4 Linear Gold common shares for each CSM common share held." More
- December 24, 2008 | Item | E-mail
- Chris Mullen, Gold Seeker Report
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-- Posted 24 December, 2008 | |
