U.S. Mint Sales of Gold Coins Jump to Highest in Three Years

Sales of gold coins by the U.S. Mint rose to the highest since December 2009 after the price of the metal in April fell the most in 16 months.

Last month, sales totaled 209,500 ounces, up from 62,000 ounces in March, data on the mint’s website show. The amount for December 2009 was 231,500 ounces. Silver-coin sales rose to 4.2 million ounces from 3.36 million in March.

May 1 (Bloomberg) — David Lennox, a resource analyst at Fat Prophets in Sydney, talks about the outlook for commodities including oil and gold. He also discusses Federal Reserve and European Central Bank monetary policies with Zeb Eckert on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

Demand surged at mints from Australia to the U.K. and the U.S. after futures slumped 13 percent in two days through April 15. Gold futures tumbled 7.8 percent last month and dropped into a bear market as some investors lost faith in the metal as a store of value. Perth Mint, which refines almost all of the nation’s bullion, said that demand jumped to the highest in five years after prices plunged, with the factory kept open through the weekend to meet orders.

“People are flocking to buy physical gold,” Todd Dutkevitch, a senior account executive at Los Angeles-based American Bullion Inc., said in a phone interview. “The price drop has made it possible for many retail buyers to add gold.”

Futures for June delivery rose 0.1 percent to $1,473.30 an ounce on the Comex in New York today. The metal is down 12 percent this year, even after advancing 11 percent from a 26- month low of $1,321.50 on April 16.

The U.S. mint said April 23 it suspended sales of coins weighing a 10th of an ounce after demand more than doubled from a year earlier.

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The mint sells 22-karat American Eagles of 1 ounce at a 3 percent premium to London “p.m. fixing” prices. A half-ounce coin is set at 5 percent above, a quarter-ounce coin is 7 percent above, and one weighing a 10th of an ounce fetches a 9 percent premium, according to Michael White, a Mint spokesman.

“The 1-ounce gold bullion coins are the most popular,” White said last week.

In Australia, buyers were waiting in lines half a kilometer (0.3 mile) long to get minted coins, and jewelry shops in India and China ran out of gold in a single day, Jason Toussaint, the managing director of investments at the London-based World Gold Council, said in an interview. India and China are the world’s largest consumers of bullion.

Surging demand from Dubai to Istanbul has pushed physical premiums in the region to levels not seen in years as the biggest price slump in three decades lures consumers, according to MKS (Switzerland) SA.

Shanghai Trading

Trading for the benchmark contract on the Shanghai Gold Exchange surged to a record last week, while premiums to secure supplies in India jumped to five times the level before the slump. China and India are the world’s largest buyers.

Consumers in Singapore and Hong Kong are paying premiums of about $3 an ounce, compared with about $2 just after the rout, according to Ng Cheng Thye, the head of precious metals at Standard Merchant Bank (Asia) Ltd.

Still, holdings in exchange-traded products backed by the precious metal tumbled 174 metric tons in April, a record drop, according to data compiled by Bloomberg.

“This drop has made physical gold much more attractive than paper gold,” Dutkevitch said.

Source: http://www.bloomberg.com/news/2013-04-30/u-s-mint-sales-of-gold-coins-at-three-year-high-on-price-drop.html

Bloodletting in SA gold stocks and some opportunity

The performance of the JSE’s mining counters since the Marikana massacre of August 2012 can, at best, be described as flat if one uses the FTSE/JSE Resources 10 index as a proxy, but it would belie the extent of especially gold stocks’ downward spiral and limited prospects of a nearby turnaround.

The Resources Index closed at 47,941.06 points on August 16 2012, the day of the massacre and again stood at 46,084.04 points on Thursday, following a rally which climaxed on February 13 at 53,995 points.

The fact that the index was able to keep within touching distance of its pre-Marikana levels at all could be attributed to the performances of BHP Billiton and Sasol, shares which respectively has very limited exposure to South Africa and whose core business do not resemble that of a typical mining company.

According to financial services firm Satrix, provider of an exchange traded fund which tracks the FTSE/JSE Resources Index, Sasol and BHP Billiton had a collective weighting of 52.7% of the entire index on December 31, and have respectively gained 3.4% and 10.4% since August 16.

The only other group in the index of ten stocks to increase in value over the same period was its smallest member, diversified miner African Rainbow Minerals, with gains of 12.7%.

Others in the group include Anglo American, down 9.9%, as well as its platinum subsidiary Amplats, down 9.8%. Impala Platinum, the world’s number two producer of the metal, lost 2.8% in value.

Most of the blood shedding, however, took place among South Africa’s major gold stocks which were hammered by investors’ increasing scepticism over escalating costs; the quality of South Africa’s remaining ore body, labour disruptions and regulatory concerns.

AngloGold Ashanti (29.8%) , Gold Fields (32.3%, including Sibanye Gold) and Harmony Gold (35.9%) all lost around a third in value during the period and, with many analysts of the belief that gold’s prospects are fading, are seemingly destined for a prolonged time in the wilderness.

Diversified miners
BHP Billiton Date Price Movement (since 16 Aug 2012)
16 Aug ’12 R254.18


02 Jan ’13 R307.49


04 Apr ’13 R263.07


Anglo American 16 Aug ’12 R254.44


02 Jan ’13 R277.42


04 Apr ’13 R229.18


Exxaro Resources 16 Aug ’12 R176.18


02 Jan ’13 R174.40


04 Apr ’13 R155.00


African Rainbow Minerals 16 Aug ’12 R161.00


02 Jan ’13 R191.00


04 Apr ’13 R181.50


Two stocks with potential upside are Lonmin and Anglo American.

Focus Graphite Power Partners into Brazilian Graphite

Brazil_amazon_space-300x250Focus Graphite Inc. (‘Focus’, TSX VENTURE: FMS) (OTCQX: FCSMF) (FRANKFURT: FKC) has signed a Definitive Option Agreement (the “Agreement”) with Lara Exploration Ltd. (‘Lara’, TSX VENTURE: LRA) for the latter’s wholly-owned Caninde graphite project in the northeastern Brazilian state of Ceara. Under the Agreement, Focus, subject to due limitations and for an exploration expenditure commitment of five years, has gained two options to acquire up to 60% of Lara. Focus will act as the official operator of the Caninde project for the extent of the agreement (five years).  Lara’s business approach is to generate a prospect and develop it through partner funded joint ventures, which has enabled it to build a diverse portfolio of alliances and deposits. The Canindé Graphite Project is well connected by paved road to Fortaleza, the state capital of Ceara State. Lara’s initial exploration has identified significant flake graphite mineralization in specific areas as well as a long 16 kilometre long stretch of lower grade graphite within the property. Lara reported that eight flake occurrences from the property, during its early exploration efforts, in the spring of 2011, indicated graphitic carbon content reaching of over 40%. This is very high considering that 20% graphitic carbon content in some noted flake graphite producing areas in Ontario and Quebec is considered high.

Brazil is the world’s third largest producer of graphite (China and India precede it) and one of Brazil’s three large graphite producers, Nacional de Grafite, a private company, claims to be the world’s single largest producer of natural crystalline graphite. Brazil is the only producer of graphite in South America and moist of the deposits have been identified in the States of Minas Gerais and Bahia not far from Ceara. Brazil is also an end user for value added graphite products such as electrodes and aerospace composites, thanks to Embraer SA, one of the world’s largest and most advanced aerospace companies. For instance, the third largest manufacturer of refractories – used in the production of steel and other applications requiring high resistance to heat – Magnesita Refratarios has expressed an interest launching a new graphite mine in order to become entirely self sufficient for its graphite sourcing and in order to avoid having to rely on the Chinese graphite supply chain, describing it as ‘unreliable’.

The Lac Knife graphite property in Quebec represents Focus’s principal project, the expansion into Brazil can be considered a strategic move to expand in an important graphite mining and processing region with domestic and international market opportunities. The deal with Lara is a stepping stone to Focus’ aim to strengthen its position in the graphite space. Brazilian graphite value added graphite companies have been increasingly interested in domestic sources of mineral graphite.

Alessandro Bruno Alessandro is Senior Editor at ProEdgeWire. He holds a BA, MA. Alessandro has worked for the United Nations in Libya and specialized in Middle Eastern, African, and South American affairs. Alessandro has worked as an industry analyst, lived and worked abroad extensively and is fluent in English, Italian, Spanish and French with a working knowledge of Portuguese, Arabic and German.