Gold
Jim Rogers: I Will Hold Gold Till $2,000
Gold futures increased more than 1% today. Gold for August delivery added $14.80 to settle $1,213.50 an ounce on the New York Mercantile Exchange. Prices reached a record high last month ending at $1,264.90 on June 21. On January 4, 2000 the price stood at $281.50 an ounce. As the global economic conditions continue to be volatile, investors are attracted to the yellow metal like never before.
In an interview with Outlook Money, the famous American investment guru Jim Rogers expressed his concern over the massive stimulus packages that governments have injected into their economies in the past few months. The following is the excerpt of the interview:
“What mainly drives gold prices?
There’s enormous debasement of money all over the world. Every government is printing huge amounts of money and running up huge debts during economic turmoil.So some people are looking at gold as a refuge as they have done throughout history. Governments are spending money they don’t have and printing money they don’t have.That,throughout history, has always led to problems with paper money. And paper money is just paper.Many politicians take advantage of people by printing more and more money, and so paper money becomes less and less valuable. So some people look for real assets, whether it’s silver, cotton or natural gas to protect themselves.
How do you see gold as an investment now?
I own gold and don’t plan to sell it now.I expect gold to be much higher over the next decade.However I don’t know if I would buy it today, given it’s making all-time highs as we speak. I think if you are buying precious metals right now, you might think of buying silver, platinum or palladium as they are down from their all-time high these days, in contrast to gold, and therefore make a good purchase.
How long do you plan to stay invested in gold?
At least till gold is over $2,000 [current price $1,246/oz-Ed.]. Who knows, it could go very, very high if governments continue to debase their currency.I hope I am smart enough to sell my gold, because someday gold will be in a mania phase.But that is a long way from now.
Might gold come off if there’s a global economic recovery?
Of course, there are always corrections in every market.Nothing goes up every week or every year even. And you know gold has gone up every year for the past nine years, it needs a correction and let’s hope it has a correction. A couple of years ago, gold went down 40 or 50 percent. It wasn’t the end of the bull market, it was just a major correction.
What is the best way to own gold?
I own gold coins and gold futures.If you want small denominations coins are a good way.And if you have lots of money and you know what you are doing, you can use leverage and have gold futures. But it really depends on what an individual prefers. There are ETFs now, which makes it extremely easy for many people to own gold.”
Note: The above interview appears in the print edition of the magazine.
The current U.S. Total Public Debt Outstanding is: $13,194,523,014,378.23
The Interest Expense on the Debt Outstanding for June, 2010: $106,661,088,328.82
Since 2006, the U.S. Federal Reserve stopped publishing the Money Supply (M3) number. Hence the accurate figure is not available.
List of Large-Cap Gold and Silver Mining Stocks Traded in US Markets
The table below lists 32 gold and silver mining stocks trading in the US markets. These companies have market capitalization of at least $1 billion:
| S.No. | Name | Ticker | Market Capitalization (in US $ billions) |
|---|---|---|---|
| 1 | Barrick Gold Corporation | ABX | $40.80 |
| 2 | Goldcorp Inc. | GG | $31.00 |
| 3 | Freeport-McMoRan Copper & Gold Inc. | FCX | $29.50 |
| 4 | Newmont Mining Corporation | NEM | $26.40 |
| 5 | Rio Tinto plc | RTP | $21.50 |
| 6 | AngloGold Ashanti Limited | AU | $15.30 |
| 7 | Kinross Gold Corporation | KGC | $11.80 |
| 8 | Compania de Minas Buenaventura SA | BVN | $9.30 |
| 9 | Gold Fields Limited | GFI | $9.30 |
| 10 | Eldorado Gold Corporation | EGO | $9.10 |
| 11 | Agnico-Eagle Mines Limited | AEM | $9.00 |
| 12 | Lihir Gold Limited | LIHR | $8.30 |
| 13 | Yamana Gold Inc. | AUY | $7.80 |
| 14 | Randgold Resources Ltd. | GOLD | $7.80 |
| 15 | IAMGOLD Corporation | IAG | $6.30 |
| 16 | Silver Wheaton Corp. | SLW | $6.20 |
| 17 | Harmony Gold Mining Co. | HMY | $4.10 |
| 18 | Pan American Silver Corp. | PAAS | $2.60 |
| 19 | New Gold Inc. | NGD | $2.40 |
| 20 | Royal Gold, Inc. | RGLD | $2.30 |
| 21 | Semafo Inc. | SEMFF | $1.80 |
| 22 | Detour Gold Corporation | DRGDF | $1.60 |
| 23 | NovaGold Resources Inc. | NG | $1.50 |
| 24 | Silver Standard Resources Inc. | SSRI | $1.40 |
| 25 | Allied Nevada Gold Corp. | ANV | $1.40 |
| 26 | Coeur dAlene Mines Corporation | CDE | $1.30 |
| 27 | Seabridge Gold, Inc. | SA | $1.30 |
| 28 | Hecla Mining Company | HL | $1.20 |
| 29 | Silvercorp Metals Inc. | SVM | $1.10 |
| 30 | European Goldfields Ltd. | EGFDF | $1.10 |
| 31 | Golden Star Resources Ltd. | GSS | $1.00 |
| 32 | Gammon Gold, Inc. | GRS | $1.00 |
Some of the ADRs listed above are Rio Tinto (RTP), AngloGold Ashanti (AU), Compania de Minas Buenaventura SA (BVN), Gold Fields (GFI), Lihir Gold (LIHR), Randgold Resources (GOLD) and Harmony Gold Mining(HMY). The top two firms by market cap are Canada-based Barrick Gold(ABX) and Goldcorp(GG).
Gold Prices Have A Long Way To Go Before Becoming A Bubble
Gold prices closed at $1,219.10 an ounce yesterday in New York. Some gold bulls are foreacasting prices may go above $5,000. They may be correct.
The chart below compares the Nasdaq tech bubble, the US housing market bubble and gold:
Source: MoneyWeek
Based on the above chart, gold has a long way to go before reaching bubble territory.
The Top Five Gold Producing Countries
As the Euro dipped to a four-year low and stocks fell further today gold prices rose. Gold for August delivery rose 0.6% to reach $1,217,90 an ounce on the New York Mercantile Exchange.
South Africa no longer holds the title of the world’s largest gold producer.Currently China is the world’s top gold producing country. The total global output is 2,350 metric tons.
The world’s top five gold producing countries with the share of their global output are listed below:
- China - 12.8%
- Australia - 9.4%
- South Africa - 8.9%
- USA - 8.9%
- Russia - 7.9%
Source: UPI
Peru is the sixth largest producer with 182 metric tons or 7.7% of the total output. However the country is producing more gold than last year due to government policies towards the mining industry and is poised to take the fifth position. In 2009 gold exports brought in revenues of $6.8 billion.
In the first quarter of this year, gold has replaced copper as the leading Peruvian export. Gold exports reached $1.4B in first quarter. From a recent CEIC Macro Watch article:
“Gold and copper are the more important commodities exported by Peru. Together these account for approximately 50% of the total revenue from exports of traditional products.
Gold prices have been on an upward trend for a long time. For that reason, gold has become a serious alternative for investors keen on protecting their investments. Recent worries over the economic outlook for Greece and Portugal have generated some concerns among investors, which it is likely to mean that gold prices will continue to climb.
As a consequence, gold is becoming the leading Peruvian export product. Up to now, copper has been Peru’s main export product, but this is now changing.”
Related ETFs:
iShares MSCI All Peru Capped Index Fund (EPU)
The List of Global Tier 1 Gold Mining Companies
In this post, let me list some of the Tier 1 gold miners and a few copper miners. But before we get into the list, here are some interesting facts about gold:
- US Gold Reserves totaled 8,133.5 tons in September 2008, accounting for 76.5% of its forex reserves
- Japan holds 765.2 tons of gold which accounts to 1.9% of its forex reserves
- China’s gold reserves amounted to 1,054 tons in 2009 which was a 76% increase in six years and accounts for 1.9% of its forex reserves
- China surpassed South Africa as the world’s largest gold producer in 2007
- China beat India as the world’s largest gold consumer in 2009
From the World Gold Council:
“The value of gold, in terms of the real goods and services that it can buy, has remained largely stable for many years. In 1900, the gold price was $20.67/oz, which equates to about $503/oz in today’s prices. In the five years to end-December 2008, the price of gold averaged around $606. So the real price of gold has endured a century characterised by sweeping change and repeated geopolitical shocks and more than retained its purchasing power. In contrast, the real value of most currencies has generally declined.”
Some of the Global Tier1 Gold Miners are:
1. Company: Yamana Gold Inc (AUY)
Country: Canada
2. Company: GoldCorp Inc (GG)
Country: Canada
3. Company: Polyus Gold (OTC: OPYGY)
Country: Russia
4. Company: Harmony Gold Mining Company Ltd (OTC: HGMCF)
Country: South Africa
5. Company: Lihir GOld (LIHR)
Country:Papua New Guinea
6. Company:AngloGold Ashanti(AU)
Country: South Africa
7. Company: Zijin Mining Group Ltd
Country: China
8. Company: Barrick Gold Inc (ABX)
Country: Canada
9. Company: Newcrest (OTC: NCMGY)
Country: Australia
10. Company: Gold Fields
Country: South Africa
11. Company: Kinross Gold Corp (KGC)
Country: Canada
12. Company: Newmont Mining Inc (NEM)
Country: USA
13. Company: Compania de Minas Buenaventura SA (BVN)
Country: Peru
14. Company: Freeport McMoRan Copper and Gold Inc (FCX)
Country: USA
For investors that prefer to invest in gold via an ETF, the SPDR Gold Shares Trust (GLD) offers one option. This ETF tracks the price of gold. The Trust’s allocated gold bullion is kept in the form of London Good Delivery bars with custodian HSBC Bank USA in its London vault or in the vaults of sub-custodians. The fund has $39B in assets and the expense ratio is 0.40%. Zijin Mining Group Ltd is one of the largest gold producers in China.
Charts from the GFMS Gold Survey 2009
The price of gold continues its upward march. It has reached $1,060 an ounce on Tuesday October 20th due to the weak US dollar and investors choosing gold as an alternative to holding dollars.
Reuters reports:
“U.S. gold futures for December delivery GCZ9 were at $1,065.6 per ounce, up nearly 1 percent from $1,058.10 in the COMEX division of the New York Mercantile Exchange.
Last week, spot gold soared to an all-time high of $1,070.40 an ounce, while New York gold futures hit a record peak of $1,072 on the greenback’s weakness.
Near-term resistance is seen around $1,068, a level it took time to break through, when it hit a record high of $1.070.40 on Oct. 14. Support is seen at $1,055.43, the 10-day moving average.”
London,UK-based precious metals consultancy GFMS released the Gold Survey 2009 - Update 1 last month. Some of the charts from this report are presented below:
Gold Production
Gold Production - Winners and Losers
Gold Investors’ Net Positions
Top Gold Stocks Market Caps.
Top Gold Stocks’ Performance
The chart below shows the performance of the world’s top gold producers in the past ten months:
Source: GFMS Quarterly Newsletter, September 2009
To download the full presentation click: GFMS-Quarterly-Newsletter,September 2009
