Commodities In Characteristic Selloff

Once again at the end of 2011 we heard the voices of negation sounding the fear of the bursting of the commodities bubble. The naysayers come out with their Cassandra calls whenever commodities go into a characteristic and salubrious selloff. They never really learn to respect the importance of gold (GLD) and silver’s (SLV) role in the long range secular multiyear ongoing rise.

We emphasized the importance of avoiding knee jerk reactions when precious metals experience healthy pullbacks. The first week of January 2012 saw commodities (DBC) rising across the board as they return from the premature grave to which the naysayers have assigned them.

One wonders how the short sellers are enjoying this periodic resurrection in vital metals such as gold, silver, rare earths (REMX) and uraniums (URA).

Transparent Horizon Of Record Low Interest Rates

Attendant to a new rise in these vital commodities, the economic base should be prepared to receive them. On January 24th-25th the Federal Open Market Committee will be meeting once again in Washington. One of the areas on which they will be focusing is the travails of the U.S. housing market and new methods to bring down the high unemployment rate. The Fed is promising a transparent horizon of record low interest rates to provoke the banks to lend money.

It is important that the Eurozone malaise undergo corrective measures in order to restore Europe to health. Recently Christine Lagarde, Head of the International Monetary Fund, has expressed broad generalities toward the need of fiscal reforms. It is hoped that Lagarde will not be a laggard in the birth of the “EuroTarp” by whatever stimuli to be applied.

Euro Hitting New Lows

The weak euro is attracting foreign capital to purchase cheap European natural resource assets. Our research team is looking for undervalued gold assets in the Eurozone as these countries are looking to rapidly develop mines to provide high paying jobs and growth. The euro has broken the 2011 lows as Merkel and Sarkozy meet to rescue the moribund Eurozone economy.

It is important that a coherent plan of attack be formulated rather than the indiscriminate printing of euros (FXE), which we are currently witnessing. The euro is rapidly losing value. This procedure of currency devaluations is counter-productive unless corrective measures are instituted such as serious spending restraints, permanent tax rate cuts and regulatory relief. In plain language, the Europeans and the Americans can’t print more dollars (UUP) without building on a base of budgetary restraint.

Recovery In Rare Earths, Uranium and Precious Metals

How does this affect our selected precious metals stocks (GDX), rare earths and uraniums? This week the rare earths are emerging from their second half 2011 slumber. It is felt that they will lead the upcoming recovery. This week certain of the rare earths are producing impressive percentage gains as an augury of things to come.

China is playing a dual role not only for their own domestic needs but in establishing a quota system for exports to other nations. This emphasizes the importance for the West and Japan to establish an independent role in their own destiny. No matter what happens in the pending appeal with China at the World Trade Organization, the West has learned a valuable lesson in geopolitics as the external industrial nations recognize the importance of rare earth independence.

The uranium sector is enjoying a profitable week as well. No other area has had to come up from taking a count so many times. The press has obscured, misrepresented and sensationalized the true story about the role of nuclear energy (NLR) in a modern, industrial world. The media has relegated uranium mining to the status of selling newspapers and TV commercials. The truth be damned. Imagine when the true story is finally told. Not once have the talking heads mentioned that reactors that are being built are portable, economical and safe. The truth can not be suppressed forever.

Swiss Franc Scandal Highlights Investing In Tangible Assets

Important news is just coming over the wire. The Swiss National Bank Chief has resigned in shame after it is revealed his wife was selling Francs (FXF) to buy U.S. dollars long before the central bank sold Francs to slash the value. The Swiss franc is rising against the dollar. One wonders how many others were involved in that trade to push the weak dollar higher?

In conclusion, our sectors and recommendations are once again emerging from their long bases. Reiterating the long ascendance of these sectors especially in light of all the bullish forces, patience is paramount albeit painful. We have been advising our readers that this correction in commodities would be far from terminal and that it represents a classic buying opportunity.

Disclosure: I am long GLD, SLV, GDX.

Read at Seeking Alpha

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Rare Earths, Uranium And Precious Metals Will Likely Lead Recovery

Bloomberg reports shipments in the 10 months ended October totaled 95.6 metric tons, according to Takahiro Morita, the Japan director of the World Gold Council, who cited Ministry of Finance customs data. The previous high was 95.5 tons in 2008.

Japan’s selling spree stands in stark contrast to the situation in India and China.

MINING.com reported yesterday according to the research by Australia’s Macquarie, Indian households are hoarding 18,000 metric tonnes of gold worth over $950 billion, representing 50% of the country’s GDP. Indian households own 11% of the global total and it is estimated that 7% – 8% of India’s 329 billion households held their savings in gold in 2009 – 2010.

Read more about how Indians’ love affair with gold may be destroying their economy…

MINING.com reported in November China topped Indian gold jewelry demand for first time according to the World Gold Council’s Gold Demand Trends report for the third quarter. Chinese jewelry demand was 13% higher year-on-year at 131.0 tonnes as Chinese jewellers expand outside the bigger cities.

Read more about surging gold sales in China here and here…

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The Japanese are melting down the family jewels… gold exports reach 95 tonnes, most since 1985

VANCOUVER, BRITISH COLUMBIA and JOHANNESBURG, SOUTH AFRICA–(Marketwire – Nov. 9, 2011) - Platinum Group Metals Ltd.(TSX:PTM)(NYSE Amex:PLG) (“Platinum Group”) is pleased to report drill intercepts grading 3.47 g/t Platinum, Palladium and Gold (2 PGE+Au) over 3.5 meters and 7.00 g/t 2PGE +Au over 5.0 meters at vertical depth of approximately 660 meters. The high grade, thick, layered intercepts are located in an area north of the previously mapped North Limb of the Bushveld Complex. This Northern extension of the Bushveld Complex was first discovered by the Company in early 2011 under cover rocks by drilling based on detailed geophysical and geochemical work. Drilling is continuing and the drill program is being immediately expanded. The intercepts are located on the 137 square kilometer Waterberg Property and the new zone has a projected, potential strike length distance of 7 kilometers.

Rhodium, nickel and copper assays for the announced drill intercepts are still pending. Other drill hole intercepts on the property with assays pending confirm that the T1 and T2 mineralized layers appear to be true layers or reefs.

Platinum Group Metals acquired the Waterberg Property by making a Prospecting Permit Application. Platinum Group is the operator. In October 2009 the Company entered into an agreement with JOGMEC (Japan Oil and Gas Mineral Exploration Company) whereby they can earn a 37% interest in the Waterberg Project from Platinum Group Metals by funding exploration and drilling costs totaling US $3.2 million by 2013. Detailed surface exploration commenced in 2009 and drilling commenced in 2011. Mnombo Wethu Consultants CC (“Mnombo”), a Black Empowerment Company holds a 26% participating interest in Waterberg.

Platinum Group Metals also announces today, it has agreed to acquire 49.9% of Mnombo. Platinum Group will pay Mnombo 1.2 million Rand (US$150,000) and has agreed to fund Mnombo’s 26% share of costs on the Project to feasibility. Platinum Group will therefore hold 37% of Waterberg directly and a further 12.97% indirectly, through Mnombo, for a total of 49.97%. Mnombo is owned by Mr. Mlibo Mgudlwa. Mnombo has held an interest in Waterberg since 2009. On November 1, 2011 it was announced that Mr. Mgudlwa, a lawyer, was appointed as Vice President of Platinum Group Metals RSA Pty Ltd. The discovery at Waterberg was made after his appointment as Vice President.

The property is located 70 kilometers north of the Anglo Platinum Mogalakwena Open Pit Mine (55 million ounces Reserves 4E) and 82 kilometers north of the Ivanhoe Nickel and Platinum Project (Platreef Resources (Pty) Ltd). The North Limb is receiving increased exploration interest following the $ 280 million investment for 10% of Ivanhoe by Itochu and JOGMEC of Japan in 2011.

Waterberg Background

Waterberg is a part of a group of exploration Projects that came from a regional target initiative of the Company over the past two years. Platinum Group Metals targeted this area based on its own detailed geophysical, geochemical and geological work along trend, off the north end of the mapped North Limb. The detailed geophysical and other work indicated potential for a large embayment or thickened package of Bushveld rocks under the Waterberg formation cover rocks. Embayments or pockets in the floor of the North Limb have been modeled and shown to be an important ore control. Exploration on the North Limb in embayments and to depths of up to 2,000 meters has resulted in significant new discoveries including the Akanani Deposit, which resulted in the takeover of Afriore by Lonmin. Exploration at the Ivanhoe Nickel and Platinum project is currently proceeding with more than 20 drill rigs recently reported on site.

The Waterberg drilling program, with two machines currently, is being expanded to four machines. Hole WB003 has not yet reached the depth and stratigraphic position of the typical Platreef mineralized layer near the floor rocks of the Bushveld Complex, and this hole is still in progress. Assays received and reported for WB003 above are from upper zones only. The T1 Reef is in a harzburgite while the T2 Reef is in a norite host.

Qualified Person

The non-Independent Qualified Person for this News Release is R. Michael Jones, P.Eng. He is non-independent and the Company CEO and a significant shareholder of the Company. He has relevant supervision experience in South Africa since 2002 and has experience with feasibility studies and supervision of precious metals mine operations. He has verified the data through checking the calculations, checking samples of the core and by visiting with the qualified employees that have completed the work in South Africa. QAQC procedures include blanks, standards and chain of custody processes and previously reported.

About Platinum Group Metals Ltd.

Platinum Group holds mineral rights in both Canada and South Africa and the Company owns 74% of the WBJV Project 1 Platinum mine where a $ 100m development phase and underground work has commenced. A full Mining Right Application has been filed with the government of South Africa for the WBJV with a production target of 275,000 ounces 4E platinum group metals.

On behalf of the Board of Platinum Group Metals Ltd.

R. Michael Jones

This press release contains forward-looking statements within the meaning of Canadian and U.S. securities laws. Forward-looking statements are typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. All statements that are not statements of historical fact are forward-looking statements. Forward-looking statements in this press release include, without limitation, statements regarding the timing, size and use of proceeds of the proposed private placement and the potential to increase the Company’s interest in certain of its projects. In addition, the results of the feasibility study may constitute forward-looking statements to the extent that they reflect estimates of mineralization, capital and operating expenses, metal prices and other factors. Although the Company believes the forward-looking statements in this press release are reasonable, it can give no assurance that the expectations and assumptions in such statements will prove to be correct. The Company cautions investors that any forward-looking statements by the Company are not guarantees of future results or performance, and that actual results may differ materially from those in forward looking statements as a result of various factors, including, but not limited to, variations in market conditions, the nature, quality and quantity of any mineral deposits that may be located, the Company’s ability to obtain any necessary permits, consents or authorizations required for its activities, the Company’s ability to produce minerals from its properties successfully or profitably, to continue its projected growth, or to be fully able to implement its business strategies and other risk factors described in he Company’s Form 40-F annual report, annual information form and other filings with the SEC and Canadian securities regulators, which may be viewed at www.sec.gov and www.sedar.com, respectively.

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Platinum Group Metals announces a new discovery extending the North Limb of the Bushveld Complex

With regard to the recent summit in Brussels the key issues agreed on were, that the euro currency remains at the core of the European project of peace, stability and prosperity. The leaders also outlined certain steps that have to be taken in order to solidify the economic union. And, commensurate with the monetary union, they agreed on certain key issues.

They all agreed that the Greece’s debt to GDP ratio with should decline to 120% by 2020. They also agreed that the European Financial Stability Facility (EFSF) resources can be leveraged. The leverage could be up to 4 or 5, which is expected to yield around 1 trillion euro (around 1.4 trillion dollar).

It was also agreed that it was necessary to raise confidence in the banking sector by (i) facilitating access to term-funding through a coordinated approach at EU level and (ii) the increase in the capital position of banks to 9% of Core Tier 1 by the end of June 2012.

The agreement also included a deal between Eurozone leaders and banks to force private investors to take a 50% loss or “haircut”, slicing 100 billion euros off the 350-billion-euro debt pile hampering Greece.

There was also an unequivocal commitment to ensure fiscal discipline and accelerate structural reforms for growth and employment.

As far as I am concerned the deal clinched in Brussels offers nothing but a short-term reprieve and is unlikely to be enough to stop the crisis from spreading in the long run. Now, governments can’t even afford to service their own debts without having to resort to trickery such as suspending “mark-to-market” accounting rules and printing more money to buy their own bonds (effectively a Ponzi scheme). Frankly, all they are doing is perpetuating the chaos that is already occurring in the currency markets.

According to Jim Rogers, a world-renown commodity advisor, who has been consistently correct about precious metals since the beginning of the bull market in 2001. “Politicians have delayed addressing the problem yet again.”

“It will come back in a few weeks or a few months and the world will still have the same problem, but this time only worse because the European Central Bank and other countries will be in deeper in debt.”

Rogers reiterated that widespread haircuts across Europe are necessary to truly resolve the crisis. “Greece is bankrupt, but others are too, and these haircuts will have to come back and be wider,” he says, adding that this morning’s global stock market rally had the potential to last for a while.

“There has been a major overhang, so we will see the easing of some pressure, but the problem will come back because the Western world still has not dealt with its debt,” says Rogers.

“Most European countries are increasing their debt rather than decreasing their debt. Until that changes, the problems are going to continue, just as they will in the U.S.,” he added.

Even though global markets surged after the summit deal was announced, contagion in Spain and Italy remain a real risk. Italy’s debt alone is €1.8 trillion which in itself is larger than the €1 trillion bailout fund. And, their 10 year bond has risen to close to 6% in recent days.

The deal “has the merit of validating a European framework, not to resolve the debt crisis, but at least reassures and (tries) to convince markets of Europe’s collective will,” said Barclays Bourse analyst Frankin Pichard.

The crisis that started in Greece two years ago has successively hit Ireland and Portugal and threatened to spill over to the euro area’s third and fourth economies, Italy and Spain.

“The next meeting on November 3-4 (at the G20 summit in Cannes) should provide more details on how the new formula EFSF will function,” said Pichard.

“We’re also waiting for further indications on states’ credibility, notably Italy and France, concerning their ability to reduce their budget deficits. Chaos has been distanced but the path is still long before crying victory.”

The head of the European bailout fund Klaus Regling said that he expects the Eurozone’s economic problems will last two to three years, and long-term issues will remain. Regling’s remarks suggest Europe still faces a long road to recovery from its sovereign-debt crisis.

“I think the European problems will be well-tackled and overcome over the next two to three years,” Dow Jones quoted Regling as saying during a talk at Beijing’s Tsinghua University.

“But it does not mean that all problems in this world will have disappeared,” the chief executive of the European Financial Stability Facility (EFSF) said.

Longer-term challenges include: a “big structure shift in financial markets” caused by the damaged appeal of sovereign debt among investors, and boosting competitiveness in some countries, Regling said.

“Sovereign debt, which for decades or centuries was the predominant risk-free asset, may be losing that status, not only in Europe but also in other countries,” he said.

Far from gold being in a bubble, the real bubble is the Eurozone, US and global debt bubble which is unravelling right in front of us. And, as central bankers try to manipulate the markets in attempt to escape the inevitable, the outcome will be a massive financial collapse just as Ludwig von Mises once stated:

“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”

Japan intervened in the currency market on Monday morning for the third time this year, sending the U.S. dollar and the euro climbing sharply against the currency. The intervention came after the dollar touched a record low of 75.31 yen and pushed the world’s main reserve currency up past 79 yen within two hours.

“We started currency intervention this morning in order to take every measure against speculative and disorderly moves and to prevent risks to the Japanese economy from materializing,” Prime Minister Yoshihiko Noda told parliament.

Noda, who took over as Japan’s sixth premier in five years last month, served as finance minister in the previous cabinet and led three past interventions between September 2010 and August, including joint action with G7 partners in March 2011. The September 2010 intervention was Japan’s first in six years.

Azumi said that while Japan acted solo on Monday, he remained in close contact with his international counterparts.

As central banks print more money to pay, the outcome is going to be a further depreciation of the major currencies, an escalation in global currency wars, increased capital controls, exchange controls, tariff hikes etc. All of this action is going to cause more volatility and uncertainty in global financial markets as well as an increasing loss of confidence in fiat currencies. And, as this happens, more individuals will turn to gold and silver to protect their wealth. Gold has always been the oldest form of sound money. It has endured countless economic collapses and has retained its purchasing power through the decades. On the other hand, every single fiat currency has ended in failure.

Both the FOMC and the ECB meet this week, and neither is expected to make changes to short-term interest rates. FOMC members Tarullo, Yellen, and Dudley made dovish comments a week ago which suggested that QE3 was a possibility in the long-run but gave no indication that changes would be made at this week’s meeting. Given the 2.5% growth in US GDP reported last week, the Fed appears to have some breathing room.

The ECB had been expected to make a 25 bps rate cut several weeks ago. However, that may also be pushed back in the wake Thursday’s agreement on Greek debt and bank recapitalization. Some expectations now put the next ECB rate hike into December.

In the meantime, I remain extremely bullish on gold and urge investors to accumulate or add gold to their investment portfolios.

TECHNICAL ANALYSIS

The recent break of $1700/oz (R) suggests that gold prices are gaining upward momentum and that a bottom of the correction was posted at $1600/oz. However, I would like to see prices remain above this level for at least another week before I declare this a decisive break.

About the author

David Levenstein is a leading expert on investing in precious metals . Although he began trading silver through the LME in 1980, over the years he has dealt with gold, silver, platinum and palladium. He has traded and invested in bullion, bullion coins, mining shares, exchange traded funds, as well as futures for his personal account as well as for clients. 

Information contained herein has been obtained from sources believed to be reliable, but there is no guarantee as to completeness or accuracy. Any opinions expressed herein are statements of our judgment as of this date and are subject to change without notice.
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As Governments continue to perpetuate the chaos that is already occurring in the currency markets, make sure you own some gold.

Necklaces that contain gold and titanium are starting to catch on with professional athletes who believe wearing them can help improve their performance.

Phiten markets the necklaces, as well as wrist bands, athlete’s tape and other products. The company started in Japan whose founder, Yoshihiro Hirata, was seeking ways to alleviate chronic pain. The company says that metals like gold and titanium are broken down into microscopic particles dispersed in water and then added to its materials.

There was no mention on the company’s website about how much metal Phiten’s products actually contain.

The necklaces seem to follow the lineage of copper bracelets and other forms of magnet therapy, an alternative medicine treatment that claims health benefits from magnetic fields created by metal.

Ars Technica runs a thorough take down of Phiten’s “magical necklaces”:

Having metal near or in contact with your skin isn’t going to change the flow of any energy unless there happens to be electrified wires hooked up to that metal. It isn’t going to work through magnetism, either (although very similar claims were made about magnetic bracelets). Titanium and gold aren’t magnetic. And, even if they were, they’d be too weak

Image from Phiten’s YouTube video
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Maybe some World Series product placement will give gold a boost

Many have blamed the unfortunate S & P ratings agency for the market dramas in the last two weeks, but they were simply the boy who said ‘the emperor had no clothes on.’ For months now, we have known and commented on the fact that the debt crises on both sides of the Atlantic would lead to trouble. One hopes that the news is not as bad as it seems, but we all knew it was. The build-up of parallel crises added weight to the drama so when the Dow suddenly sank it was simply a postponed reaction. The fact that a ‘head-and-shoulders’ had completed its formation made the market ripe for fall.

Everybody reacted all over the world as this postponed reality was publicly accepted. The oil price fell to below $80, the dollar and the euro fell like a stone, the Swiss Franc and the Yen soared to economy-destructive levels and eventually the Fed confirmed that the U.S. economy should see no growth for another 2 years. The Chinese government called for a new global reserve currency to replace the dollar.

All in all, the global economic scene experienced a gear-shift, down to a darker investment climate…

The$1,555 gold price had already signaled that it was going to take off in June, but the S & P trigger sent it soaring effortlessly to $1,800. Only now are these new realities being properly absorbed, although slowly…

Why?

We see the S & P downgrade as a judgment on the Congressional inability to properly assess the dire nature of the U.S. credit situation because of their fixation on party politics. It is the first time that the U.S. Congress has had to see the rest of the world react to the declining U.S. global economic dominance. It had to happen for the U.S. Congress to understand that the U.S. is responsible for its behavior and will face consequences if it does not adjust. It’s a change that has not happened for 40 years.

We do not see a change in the political behavior of Congress until more consequences force that change. There may be considerable economic pain before this happens, and the future brightens for the U.S. During this time the U.S. has to see that it is no longer the world’s economic axis, allowed to extract advantage from the rest of the world through its ‘exorbitant privilege’ of printing money to pull itself out of economic decline. As we forecast at the beginning of this year, 2011 would be a year of consequences!

The Future

As we move towards QE3, more dollar printing and the consequential inflation, we fully expect the reaction of the dollar to weaken much faster. QE3 will confirm that they have chosen inflation as a way out of a double-dip recession or deflation. The interdependence of currencies will prevent exchange rates from highlighting any currency’s weakness. We have seen this last week in the actions of Japan and Switzerland to weaken their safe-haven currencies. History will record that the announcement by S & P was simply a trigger for a new era of currency instability and the loss of currency values.

Only the gold price is now truly capable of measuring the weakness of currencies. The jump in the gold price over the last decade has been screaming this to all, but few outside of gold were listening. The leap since June of $250 reflected the acceleration in the speed of declining values.

It is natural for us to assume that the global monetary authorities will agree to a reformation of the monetary system that effectively addresses the mess it is in right now. Certainly we expect the mess to worsen considerably before this is accepted.

 After that, who will be responsible for putting it right?

What obstacles will they face?

 v  Politicians will have to please those who put them in power and cannot act independently of this power base, no matter how necessary a departure may be. It would be political suicide to do anything else –a consequence of democracy.

v  Politicians or Monetary Officials likewise will have to ensure they act in the interests of their nation even if it goes against the greater good of the international community.

v  The international pecking order will weigh in to give priority to measures put forward by the most powerful. The battle will likely impact the voting rights in the I.M.F. where the 16.83% of the U.S. –the I.M.F. needs an 85% vote to pass any measure—will come under fire and China will be given a share of the voting commensurate with its growing economic power.

v  All of the above has to be decided before China’s request for a new global reserve currency can even be contemplated.

v  A new global reserve currency would require either the diminishing of the dollar’s role in the global economy or its removal as its sole reserve currency.

The obstacles will prevent the much-needed structural monetary reform. Are the current powers-that-be impartial enough or be franchised to formulate a globally reformed effective monetary system? Not yet, if we look back at the efforts of the U.S. Congress to cut their budget deficit.

What is next? History shows that willing change, when not forthcoming gives way to unwilling change! Unwilling change climbs out of wars or rupturing, destructive, crises that remove the above barriers and which license the powers-that-be to undertake needed, sweeping reforms.

Bild Zeitung, is Germany’s biggest- selling newspaper, is the best-selling newspaper outside Japan and has the sixth-largest circulation worldwide.

Bild encouraged German people to invest in gold as the global debt crisis continues to deteriorate and cause turmoil in global markets.

“While the companies listed on stock exchanges have lost over the past 14 days, about $8 trillion dollars in value, the price of gold climbed to a record high.”

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German newspaper tells its readers to buy gold