China Demands on Gold and Other Metals Will Change Dynamically

After a tough year for the Chinese economy, politicians seems to have a clearer panorama for upcoming seasons. While this country remains as the biggest gold buyers in the world, indicators could be changing due to the influence of local industries.

A recent announcement from the Chinese Ministry of Industry and Information Technology said that gold demand growth is expected to decrease to an annual average of 4 percent regarding the four upcoming years.

This still means that China will consume more gold than never before, only with a slowdown in growth. The same announcement shared with the media some estimates regarding consumed tons.

The Ministry expects to consume 1,200 tons in 2020, representing an increase in comparison with 2015, when 986 tons were consumed. The domestic output is also expected to increase, with an estimated included. In 2020, 520 tons are expected to be produced, in comparison with 450 tons during 2015.

Relevant Economy Changes

The same announcement from the Chinese government exhibit estimates not only for gold consumption but for others metals as well. The data includes copper, aluminum, lead, and zinc.

These changes come from a plan for non-ferrous metals’ needs, applying more control on what the country truly demands. This plan is a response to the wild backlashes suffered by the Chinese economy in previous years, linked to poor control on the productive mechanisms and slowing exportations.

Copper annual growth for the 2011-2015 period was at 8.9 percent. The new estimate for the upcoming five-year period is around 3.3 percent. For aluminum, annual growth will go down from 14.4 to 5.2 percent.

For lead, annual growth will go down from 0.8 percent to 0.6 when comparing 2011-2015 period with the upcoming 2016-2020 one. Zinc demand growth will cut down in half, going from 3.5 percent to 1.7.

What Does This Mean for the Markets?

Pessimist investors will see a tragedy here but there is nothing massive happening, actually. Demand is not decreasing, only its growth rate. China will require massive amounts of minerals, more than the country is requiring right now.

In fewer words, the Chinese industry will still have a growing demand in the upcoming five years, only slower in comparison with the actual one.

Gold and other metals prices will have the window same to keep raising if the investors have enough interest. The markets could receive this news as a bad one but notice that the domestic output will go down as well, making China buy more than before.

Numbers aren’t lying. The panorama remains very positive. With a decreasing production output and a still-growing demand, the country is headed to demand more metals during the five upcoming years.

The data at the beginning of this article is a valid proof. Domestic industry will have to demand more gold in comparison with previous years, where production was higher. This will directly influence commodities and mining stocks.

Investors also have to remember that China is suffering mineral shortages, partially caused by several mines’ closure. This is an important factor that will gain relevance in the upcoming years when the demand increases.

The Agua Rica Gold Mine Project

The Canadian based gold producer Yamana Gold recently signed an Agreement with the provincial Government of Catamarca, Argentina which extends the 2014 MOU that allows the mining company to consolidate mining projects especially the Agua Rica project. According to credible reports the Agua Rica project mineral deposit is estimated to be at least 3 times larger than the most lucrative mine in the region which includes, Bajo de Alumbrera, which is located roughly 35 kilometres away from Agua Rica.

The rich deposit site which was initially explored by Northern Orion and BHP Billiton more than 2 decades ago however has drawn flak from engaged mining companies as well as the local populace and hence the mine has yet to be productive. Although Yamana Gold Inc had been given the green light to start construction work, local communities, environmentalists and assemblies have successfully prevented mining activities from taking place despite heavy handed crackdowns from the authorities.

The violence had prompted international attention and as of 2010 any mining related activity was put on hold at Agua Rica. Most of the concerns to halt mining activities were centred on public health concerns that were related to air pollution, water supply and soil contamination as the mine’s location is approximately only 17 km from Andalagá city flanked by 3 rivers which is the main source of water supply to the communities in the region.
The mine is reported to hold vast reserves of copper and gold and the current situation has led the company to implement strategic frameworks to increase its value via a joint venture with XSTRATA and Goldcorp would collectively be paying Yamana using that theoretical spot price of $1,400 for gold enhancing their revenue streams which has caused the stock option for this company a gold mine in itself. Although the spot price component which has been incorporated into the deferred value of the company which may take a few more years to materialise, the potential for the company’s stock options to sky rocket is golden if not epic.

The company’s decision to monetize their holdings in Agua Rica is within the interest of its shareholders and thus the company has been careful about its strategic implementations pertaining to Agua Rica. Yaman would effectively be enjoying cost reductions with the proposed ventures due to 12.5 % stake and in retrospect the revenue stream would actually be enhanced as the mine reportedly holds a minimum of 6.56 million ounces of gold, which based on current spot gold prices multiplied by the percentage of holding and minus mining costs would increase the company’s net worth rather significantly.

The mine is also reported to hold a minimum of 102.2 million ounces of silver, 9.79 billion pounds of copper (largest on the planet), and 629 million pounds of molybdenum which are all governed by the same payout structure and processes. To find out more about how Yamana Gold Inc has structured its Agua Rica dealing please visit:  http://www.fool.com/investing/general/2011/03/09/the-biggest-gold-deal-of-2011.aspx

Valuable Metals Mining – Sluicing for gold

Sluicing for gold is a medium scaled strategy for mining valuable metals that are saved at the slants of slopes or good country with free rubble. This mining operation is typically incited not long after the searching for gold (placer stores) has been depleted downstream. As the miners who prospect placer stores at the streambeds work their way up to the source or birthplace of the stream at the slope or mountain slants which are generally the wellspring of the gold placer stores up and down the waterway or stream bed.

This mining “operation” of sluicing (which is characterized as ‘washing or cleaning’ in the oxford lexicon) includes a container (a floodgate box) that is apportioned and riffled. The riffles arrive to trap the heavier components that don’t stream out of the allotments as the current is backed off by these parcels. The floodgate box is generally set or assembled inside of the restrictions the stream (for the most part in the centre) as the specialists load material scooped from the waterway overnight boarding-house earth around the conduit box and drop it into the ‘heap compartment’.

The streaming water flow then helps the slime through the floodgate box, as the allotment moderates the ebb and flow the heavier “more” denser material sink down and is caught by the riffles and the lighter particles float away. The caught materials in the riffles are then assessed for mineral or other alluvial components that are then isolated by the suitable classifications.

The isolated material is then sent for purifying or extraction to gold refiners or by and large purchasers who purchase the conduit gold as per substance of the metals at a discount of twenty to thirty percent of the spot gold cost at the given time. A large portion of these people who purchase gold from the mineworkers then offer gold to gem specialists who then make gold gems after the gold ‘is extricated’ from the crude express that they found in.

The administration specialists who purchase these gold mineral likewise send it to the refiners just that the gold they purchase are rather executed to the gold stores in the wake of being changed over into gold bars, gold bullion or gold coins.

The sluicing for gold strategy has however been in decay in the course of the last half century as a large portion of the areas this mining technique was connected to are presently ‘gold free’. More propelled procedures have been supplanting this old mining strategy that soon will be never polished and be esteemed as a ‘chronicled technique’ that will never change.

The Bullion Secret

Although there are banks that are honest about their gold bullion reserves, there are some who are not only secretive about their bullion reserves, but misreport it. It is a common fact that most central banks keep the actual amount of gold reserves a secret, some are even believed to not have any and the US Fed is one of them, and the incident with Germany wanting their gold bullion bank and the US central bank being unable to deliver (citing transportation as the problem – while they sent people to the moon without much problems) – the issue only got bigger.

Some banks are more tactical about the amount of gold bullion reserves that they have and they usually cite that it is against bank policy to divulge such information, while other banks beat around the bush with some just ignoring the question entirely. So, the question that needs to be asked here is – WHY? Why are these central banks so secretive about how much gold they have? The answer is actually very basic, if a central bank does not have sufficient gold reserve, what is their money backed up with? Thus, if a central bank declares that it has very little gold, the value of that banks domestic currency falters as in, people lose confidence in it despite the fact that the gold standard has long been abolished.

The fact that these central banks are expecting the gold standard to return in the near future is almost undeniable. The fact that most countries are printing money with anything to back up their currencies is the core of the problem. If we were to take a gram of gold for every 100 units of paper money for any given nation, the stark truth is that these countries would have dispose of more than half of their printed money or reduce its value according to how much gold they have. This was the primary reason that the US was the first country to divorce the gold standard, it was simple because they did not have enough gold reserves to back their currency up based on the pegged value at that time.

Gold bullion is fundamental to currency systems or the world’s financial system risks collapsing under its own weight. The current situation attests to that fact as we may observe the volatile conditions of the current financial systems. This situation cannot go on as money has become meaningless and a false economic environment has enveloped the world, an environment that advocates a financial system that is practically meaningless. The prices of gold that are based on the dollar is currently at what most people are ‘believing’ to be the ‘real value of gold’ when in actual fact, gold is gravely undervalued, if we were to take the amount of currency that is in circulation. So for those of you who would like to secure your future, your best bet is to buy physical gold or silver bullion and keep them safe until the time comes.

For more info visit: https://www.bullionstar.com

Gold Industry Is Getting Stronger Despite Low Prices

With a bearish gold market, investors are losing their nerves. Many already bet against the precious metal. But, some can see further than the negative (are pretty naive) forecasts that are pretty common on the internet. The low prices are just an effect of the investors taking odd decisions.

Surely you already hear or read that “gold is the preferred safe-haven during financial crises”. Well, there are several crises going on worldwide but, this time investors choose the growing United Stated Dollar. The usual behavior wasn’t followed. So, prices are dropping.

Despite all the drama produced by the falling gold prices, great things are occurring in the precious metal’s industry. Two countries are the main characters of the good news: Australia and India.

More Investments In The Search Of Effectiveness

With an everyday-stronger US Dollar and a dropping Australian currency, gold miners have found the perfect opportunity to boost their profits. By now, the taken decision was to make several investments. Investments seeking major efficiency and better opportunities. This money is now destined to expand their projects in a smart way, taking advantage of the actual low costs of exploration and technical studies.

Mr. Jake Klein, chairman of Evolution Mining, said to The Australian Financial Review that “in a strange way the tougher times get, the more opportunity presents itself.” Said that, many big miners are now buying promising projects with 150.000 – 250.000 ounces-per-year estimations.

If gold prices go up in the next months and the Australian Dollar remain low, domestic companies would get extremely high profits, allowing further purchases and technical improvements.

India’s Growing Importation

These days, India seems to be the gold’s savior. After China’s market collapse, Asian imports decreased in a relevant way but, the Hindu country still buy gold in big quantities and the demand keeps growing. In fact, it’s calculated that 400 metric tonnes were imported to the India since the start of the year. That represents an increase of 100 metric tonnes from the same period of time the past year.

What seems odd is that the demand keeps growing despite reports about massive inventories of the precious metal. Local experts declared to the international media that dealers and jewellers already have huge stockpiles of gold. Some think that is because the Hindu festival is coming and the merchants are preparing themselves to this season.

But dealers and jewellers have the minor representation on the demand scale. 60 per cent of the gold’s importations and consumption belongs to the farmers. Hindu farmers rarely have a comfortable access to the nation banking system. So, they use the precious metal to store their wealth in a way they see appropriate.

Back to the commerce topic, the Hindu festival season represents the most volatile period of gold consumption in India. Thanks to tradition and family rites, gold sales sky-rocket during this time of the year, which starts in September. That can be a good reason of why dealers and jewellers are demanding and hogging all the gold they can afford in times like these when gold consumption is low.

Metal’s Rising

As always, gold doesn’t remain low for many long. Yes, gold prices are falling. But, with severe financial problems in sight, investors will think again. By the other hand, the mining industry is getting more effective at the same time that cost is dropping. Australian miners can (and will) use that domestic surplus to take a step further is their business.

Aligned with miners’ desire, Hindu traditions take relevance again (according to local observers), which can make India the biggest gold importer in the world in a few years in the future. The financial world must remember: gold always survives.

Gold Mining in Africa: Supply analysis of the region

Gold mining is as robust as ever and most of the gold in the world is mined by large corporations that are among the richest in the world. However, there are many people (estimates show that there are close a 100,000 people who work gold fields independently) who are independent gold prospectors. These independent smaller, artisan operations, are actually a huge force collectively in rival with the mega gold mining corporations.

The Galamseys in Ghana alone for instance are estimated to number approximately anywhere between 20,000 to 50,000 individuals that are in the gold mining trade, directly or indirectly. In neighbouring francophone countries, such workers are called Orpailleurs these miners also number in the thousands. These prospectors are mostly legit gold miners but in some instances they have been known to cross legal boundaries in the quest to mine for gold. In Brazil, such workers are called Garimpeiros who have a consortium of gold buyers and gold sellers who control the cash for gold trade.
Whatever or however said, gold mining is a risky business. Based on this insurance companies normally demand high premiums on insuring these operations and the individuals involved in such industry. The high risk nature of such ventures was seen in the collapse of an illegal mine at Dompoase, close to the Ashanti Region, in Ghana, the incident that took place on the 12th of November 2009, claimed the lives of 18 gold miners who were killed which included 13 women. Women who work at most mines normally are involved in house – keeping activities of the mining vicinity some who work at the mines act as porters. This tragic incident was considered the worst mining disaster in Ghanaian history. The illegal aspect of the mining disaster caused uproar when some of the rescuers that were also working at the mines were later arrested and jailed for their role in being active in the illegal mine.
The gold business in Ghana is an essential trade for the country that is mostly in poverty. Buying gold and selling gold in the black market feeds approximately 30% of the population. There are still many more illegal gold mining operations that are conducted under the radar of the authorities. The gold obtained from these mining factions are normally quickly extracted and converted to gold jewellery that are sold far below the market value to keep the whole operation in a ‘low profile’ state. Gold mining will be without doubt an industry that will be controversial as long as mining operations persist.

Gold Mining Companies – A Basic Guide for New Investors

There are numerous gold mining companies out there ranging from independent family run mining companies to mega corporations that make billions of dollars annually. However, how gold companies are ranked is dependent on a few different gauging methods. Primarily most companies are ranked based on their annual production; however this may not be the best criteria to gauge a company’s stability or market positions as many companies are known to manipulate the production figures based on gold spot prices.

The best method for gauging a gold mining’s company is to assess their overhead cost to produce a single ounce of gold. This is due to the fact that the prices of gold are standardized worldwide and thus, the lesser their cost for mining an ounce of gold, the more profit they make. Another common approach to assess a gold mining company’s stability is to evaluate the total capital holdings of that company and compare that to other companies of similar size. This is very important as a larger company would look much better when placed beside a smaller company in terms of figures, when the actual fact would be that the smaller company would be more profitable.

If it so happens that you would like to compare companies that are of different sizes (for example a large company against a SME) then the best method to approach the assessment is via using financial ratios such as ROI (Return on Investment), ROE (Return on Equity), Liquidity Ratio and ROA (Return on Assets). However there are 3 giants among the mining companies of the world and they are Fresnillo, Buenaventura and Freeport-McMoran, however they are more dependent on mining other precious metals such as silver more than they are on gold.

The low price of gold is starting to affect gold mining companies worldwide due to the increasing cost of production and the stagnant price of gold. Many analysts attribute the decline in gold production by 50 tons to this fact. Even Barrick Gold has been sluggish over the past few quarters – as sluggish as the price of gold.
Based on these factors, it would actually be a good time to invest in gold as analysts are predicting that the recent changes in Indian law that allows the import of Gold into India and China would stir demand and when the law of demand and supply takes over coupled with the increased cost of production, gold prices are bound to rally.

So, in plain words, if ever there was a time to invest in gold or gold related industries – the time is now!