The Roadmap From A Gold Bottom To A Mania

On the heels of historic movements in key global markets, today 40-year veteran, Robert Fitzwilson, put together another tremendous piece. Fitzwilson, who is founder of The Portola Group, laid out the roadmap from a gold bottom to a coming mania. Below is Fitzwilson’s outstanding and exclusive piece for KWN.

Fitzwilson: On June 27th, in a note to clients and friends of the firm, we suggested that the panic in the metals and mining sectors was so extreme that it had to be a bottom by everything we have experienced and studied in our careers. The chart below suggests that our call was correct, at least based upon what has ensued so far.

The top line is the Amex “Gold Bug’s Index” (HUI) which represents a basket of gold mining companies. The bottom two are for the S&P 500 and gold. The returns in the chart are for the period since our call to the close of trading last week. As you can see the Index nearly tripled the return of gold itself….

“It is also interesting that the Index nearly tripled the return of the S&P 500 Index in that same period. Hardly a trading session goes by without the headline being “The S&P 500 and the Dow Jones Indexes hit new highs”. The reality is that the bulk of the stock market strength that had been so loudly touted occurred during the first quarter of this year.

Source: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/7/21_The_Roadmap_From_A_Gold_Bottom_To_A_Mania.html

South African gold output continues to fall – how much further?

LONDON (Mineweb) -

How the mighty have fallen! Not so long ago South Africa dominated global gold output with the rest coming nowhere in comparison, but the country’s gold output has been on the decline since the 1970s.

It fell to fifth largest gold producer in 2012 when it was overtaken by Russia and on the latest output figures the country has drifted downwards towards being now only the world’s sixth largest gold producer, having been overtaken by Peru as well – however that is on production so far this year.

In yesterday’s publication of minerals output and revenues, Statistics South Africa noted that the country’s gold output fell again in May commenting that its ‘overall mining production decreased by 0.7% year-on-year in May.The largest negative growth rates were recorded for ‘other’ metallic minerals (-32.3%), diamonds (-19.7%) and gold (-14,6%). The main contributor to the 0.7% decrease was gold (contributing -2.4 percentage points). Manganese ore (contributing 1.5 percentage points) was a significant positive contributor.’

But will there be any recovery in South African gold production ahead? The short answer is that, barring a huge gold price increase, the country’s gold output will likely continue to decline at a rapid rate.

South Africa has some of the world’s highest cost producing gold mines – a recent estimate has suggested that at current gold prices around half the industry is operating at a loss – and this would suggest that gold production could continue to decrease at an escalating rate as companies will no longer be able to afford to keep unprofitable mines and shafts open.

Add to this the pressures on the companies from massive wage demands brought on by mining union competition for membership between the NUM and AMCU, and this is a recipe for the potential annihilation of the country’s gold mining sector in its current form.

Some of the production fall may be mitigated, though, by selective mining of higher grade ore to try and maintain profitability at the expense of mine longevity.

South Africa’s gold sector though is not the only part of the country’s vitally important mining industry to be affected. The platinum miners are facing many of the same problems as the gold sector although this year’s figures may end up being a little better than in 2012 given the levels of labour disruption that year.

South Africa’s gold sales have now for some time lost their dominant position in terms of revenue. The country’s No.1 revenue earner nowadays, according to Statistics South Africa, is coal, followed by platinum group metals with gold languishing in third place – and could even be knocked into fourth place by iron ore sales if the production decline continues.

The relative figures in terms of unadjusted sales in April – the latest available – according to Statistics South Africa are as follows:

Metal Mineral Sales Value (million ZAR) Sales Value (million US$)
Coal 8 506.6 847.1
Platinum Group 5 612.6 558.9
Gold 4 877.6 485.6
Iron Ore 4 875.3 485.4

Between them these four accounted for almost 80% of the total value of South African metals and minerals sales in April.

The South African government has to be particularly concerned about the fall off in the volume and value of the minerals produced, particularly with regard to gold and pgms, given that it is very much a resource economy and heavily dependent on the sector for its export earnings. Both the gold and platinum sectors are in crisis and with the mining unions set on what the industry will see as untenable demands and prone to unacceptable militancy and inter-union rivalries, things may well get worse before they get better.

Source: http://www.mineweb.com/mineweb/content/en/mineweb-gold-news

The Complete Story Of How Gold Is Mined And Refined

south africa gold mine

Gold prices have tumbled since their $1,900 peak in 2011. The yellow metal slumped into a bear market in April, and now prices are just above $1,200.

Investors have warned that the correction in gold prices has meant that miners are producing gold at cost or are losing money.

Last year, CNBC‘s Bob Pisani traveled to South Africa to show us how gold goes from particles to gold bars.

He followed AngloGold Ashanti’s gold mining process from start to finish. Workers there pull up 5000 metric tons of earth per day, which yields as much as 1,700 ounces in gold.

Pisani also visited the Rand Refinery, which has refined nearly a third of the gold mined since 1920.

In light of the recent sell-off in gold, we decided to revisit Pisani’s tour of the gold mine and see just how complicated and dangerous the process is.\

Source: http://www.businessinsider.com/how-gold-is-mined-photos-2013-7