Barrick Gold could take $5.5B hit over Pascua-Lama project

Mining trucks sit parked on the facilities at the Barrick Gold Corp's Pascua-Lama project facilities in northern Chile.

Barrick Gold Corp., the world’s biggest gold miner, may take a writedown of as much as $5.5 billion on its Pascua-Lama project in the Andes after the price of the metal plunged close to a three-year low.

Barrick is also likely to take other “significant” impairment charges for the second quarter as it reviews goodwill and other assets, the Toronto-based company said yesterday in a statement.

Barrick now expects first production from the mine on the Chile-Argentina border in mid-2016, compared with a previous target of the second half of 2014. It will provide an updated capital cost estimate during the third quarter, after finalizing a new construction schedule. Barrick raised the cost estimate twice last year to as much as $8.5 billion.

Gold futures in New York have plunged 27% this year and slipped below $1,200 an ounce on June 27 for the first time since August 2010. A “storm of writedowns” is coming from the gold mining industry, Jefferies analyst Jake Greenberg said in a June 19 note.


Mass Protests Due to Heavy Currency Printing: Future Prophesy for Gold

Argentina is just the latest example of a nation who prints currency to pay for a government that has overtaken the free market private economy. The power grabs have finally devolved into outright mass street protests, as the Argentine goverment bans recourse against the government via the court system, with the exception of loss of health or life (even that was given a six-month limit).

The effects of the government printing currency, rising food prices, are estimated at over 25% this year, and have persisted for a few years, similar to the period for the U.S. in the mid-to-late 1970’s. Continued below…

South America Price Inflation

When grocery prices rise faster than the population expects, families begin to fear they may not be able to make ends meet the following week. Governments often respond with the moronic idea of making the sale of goods above some specific price illegal, otherwise known as price controls. Investopedia remindsreaders to “consider the price controls placed by the Nixon and Carter administrations on gasoline, which led to long lines at the pump and restrictions on how much gas could be purchased during the 1970s.”

Argentina is following the script to a tee:

1.    Print currency to pay for a burgeoning government (lie about the rate of rising prices).

2.    Capital controls limit transactions out of the local currency (your labor and the purchasing power you have earned can’t be transferred into a new medium for protection).

3.    Price controls limit prices of staples using force (shortages develop, and rationing begins as for-profit production cannot continue, and a true shortage appears for staples such as gasoline).

Here in the U.S., businesses have had troubles accepting payments from Argentinian citizens who want to save in silver and gold coins to preserve any of their remaining purchasing power. These are capital controls and are the final stage in suppression of natural rights. Here is what Austrian economist and Nobel-prize winner F.A. Hayek had this to say on what these controls do to the natural rights of the working family:

The extent of the control over all life that economic control confers is nowhere better illustrated than in the field of foreign exchanges… experience of most Continental countries has taught thoughtful people to regard this step as the decisive advance on the path to totalitarianism and the suppression of individual liberty.

It is, in fact, the complete delivery of the individual to the tyranny of the state, the final suppression of all means of escape—not merely for the rich but for everybody.

It should not go without note that F.A. Hayek was very well respected by London School economist Karl Popper, who said he has learned more from Hayek “than possibly anyone else alive.” While at the London School, George Soros studied under Popper, adopting the Austrian idea that expectations matter as much as present conditions in price formation. The fact that there exists significant “reflexivity,” or circular feedback, between market participants and the ultimate outcome of market events is no special surprise.

Hayek is best known for his book, The Road to Serfdom (here’s a short picture version). Argentina has driven down this road to serfdom before, and as Austrian economists emphasize, the public’s expectations for the rate of future price rises mattered here. Argentina’s last currency crisis was in 2002, so the public readily understands how, as currency is printed, prices rise. For that reason the expectations of the Argentinean public are much further advanced; they expect, and thus act, in a manner that accelerates the ultimate outcome at a pace unmatched in regions where price “inflation expectations [are] anchored” (such as the U.S., or Japan).

Argentina’s populist female president, Christina Kirchner, recently ordered a price freeze on food products. This price freeze “was levied against the largest food retailers in the country, and it is just the latest example of utterly insane economic policies made by populist leaders who inevitably end up causing massive suffering and economic damage to the nations they claim to lead.” These types of policies have led to food shortages and riots and can bring some pretty harsh questions into sharp focus as one searches for answers.

·  What would you do if the currency suddenly crashed?

·  Would government imposed price controls again mean shortages?

·  Would you be prepared for store shelves clearing quickly?

·  What would you do if, like tens of millions of others, you found yourself out of a job?

These questions seem removed from reality, but this is simply because the media does not want to focus on the real issues at hand. Right now in Greece there are conditions more severe than in the Great Depression; school children are foraging in garbage cans for food, bent over in hunger.

“What’s frightening is the speed at which it is happening.” When the hunger comes… “It’s simple,” she said. “You get hungry, you get dizzy and you sleep it off.”

This economic collapse resulted from planners messing with currency, rather than letting the free market balance out prices, and allowing bankruptcy to balance out bank insolvency.

The process of “becoming Argentina” is still underway in the U.S., slowed dramatically as printed currency can bid on assets overseas, creating rising prices abroad, because the U.S. still maintains the world reserve currency status.

As this ploy becomes increasingly unacceptable, currency will return to our shores, confidence will wane, and local prices for staples will begin to approach the double-digit rates of increase last seen over 30 years ago.

Those who prepare today, for the events seen time and time again throughout history (in some places more frequently than in others), will reap the biggest financial reward in recorded human history because the biggest debt-currency bubble in human history is being blown.

Except that this time, it is a global experiment. What could possibly go wrong?


Turkey’s Silver Imports Surge 31% And Gold Imports Climb To 8 Month High

Turkey’s Silver Imports Surge 31% and Gold Imports Climb to 8 Month High

Today’s AM fix was USD 1,568.50, EUR 1,222.81 and GBP 1,038.40 per ounce.
Tuesday’s AM fix was USD 1,597.75, EUR 1,244.64 and GBP 1,051.64 per ounce.

Gold fell $23 or 1.45% yesterday while silver fell 76 cents or 2.7%.

Cross Currencies Table – Bloomberg

Gold has fallen to $1,570/oz as irrational exuberance continues in international markets with investors piling into equities as the U.S. stock market ‘crack up boom’ continues … for now.

Risk appetite remains recklessly high with the Dow Jones Industrial average up another 90 points yesterday to 14,662 and now targeting 15,000. This risk appetite is continuing to pressurise gold.

Gold’s lower quarterly close may also be leading to momentum players continuing to sell further pressurising gold. Gold’s fundamentals remain sound though and smart money will continue to buy on the dip.

Geopolitical risks in North Korea, between Japan and China and in the Middle East remain remain heightened and could intensify which could be the catalyst for gold bouncing from oversold levels.

Platinum in USD (5 Years) – Bloomberg

There are also still very significant sovereign risks with Slovenia and Luxembourg in the EU now under the spotlight and the risk of a major default in Argentina now looming.

Physical gold and silver demand remains robust in many markets internationally. Demand from the Middle East remains robust as seen in the near record imports of gold and silver into Turkey.

Palladium in USD (15 Years) – Bloomberg

Turkey’s gold imports climbed to an eight-month high in March as prices averaged the lowest since May, according to the Istanbul Gold Exchange. Silver imports rose 31% from a month earlier according to Bloomberg.

Gold imports increased to 18.26 metric tons, the most since July. That’s up from 17.34 tons in February and compared with 2.91 tons a year earlier, data on the exchange’s website show. The country shipped in 120.8 tons last year.

Turkey was the fourth-biggest gold consumer in 2012, according to the London-based World Gold Council. Bullion averaged $1,593.62 an ounce last month and is trading about 17% below the record nominal high of $1,921.15 set in September 2011.

Silver in USD (3 Years) – Bloomberg

Silver imports advanced to 6.19 tons in March, the most since January, according to the bourse. The nation imported 142.2 tons last year. Silver averaged $28.8157 in March, the lowest since July and remains well below the record nominal high of nearly $50/oz seen in April2011.

Gold and silver’s inflation adjusted record highs from 1980 of $2,400/oz and $140/oz have been our long term price targets since 2003 and remain so.

Platinum was down 1.4% to $1,568.50%, while palladium fell 1.6% to $766.75/oz but with large deficits expected for both PGM metals this year, weakness is likely to be fleeting.