Gold & Precious Metals

2011 #1 Gold Timer's Prospective Course For Gold

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Posted by Stephen Todd - The Todd Market Forecast

on Tuesday, 04 December 2012 09:25

2 Time #1 Gold Timer says:

The weekly chart of gold futures has been consolidating since the third quarter of 2011. If May-June of 2011 was truly the bottom, then the correction was comparable to that experienced in 2008. 

Since the election there has been a mad rush by the public into gold coins. Conventional wisdom says that when the public gets excited about an investment, it's a top or at least a danger signal. But, like so many old market tales, the truth is somewhat different. The investing public isn't as stupid as some one make them out. 

For instance, I remember that the public was wild about real estate starting in the 1960s, but that didn't stop property values from increasing for decades. 

The last time we had such enthusiasm for gold coins was in 2008 and as the chart below shows, the price of gold more than doubled after that. 

Screen Shot 2012-12-03 at 10.23.32 PM

Will it happen this time? I doubt we'll get a double in four years, but I do know that Mr. Bernanke is dedicated to printing money as is European Central Bank. 

Just recently, the Bank of Japan promised to do the same thing. I suppose that they figured since Bernanke has been so successful in turning the U.S. economy around, they would try the same thing. I hope you note a bit of sarcasm in that last statement. 

Irresponsible central bankers such as Bernanke and Mario Draghi who flood the World with paper currency will cause gold to go up over time as the public gradually loses faith in dollars, yen, euros etc. 

This, plus the fact that they ain't making it no more is a longer term positive for the yellow metal, but also note that gold can go into a funk for an extended period so hopefully, we can time our way to profits although it's been very tricky lately with massive moves back and forth.

We're bullish on gold, but the recent break below a previous low (arrows) makes us a bit nervous.

Screen Shot 2012-12-03 at 10.41.50 PM

By 2 Time #1 Gold Timer Stephen Todd - (The above an Excerpt from his Dec. 2012 Issue which covers all markets)


Since 1993, we have given instructions to mutual fund investors to be either 100% invested or 100% on the sidelines. According to Timer Digest, of Greenwich, CT, which monitors over 100 advisory services world wide, we are only one of four
services to have beaten the buy and hold over the past ten years.

We were rated # 1 for the past ten years at year end, 2003, 2004 and 2005. In 2006, we slipped to # 3. At the end of 2007 we were ranked # 4.

Since then, we have dropped out of the top ten for stocks, but we were bond timer of the year at the end of 2007 and 2008 which means we were ranked number 1 both years. We were rated # 1 in gold timing for 1997 and again in 2011.


TODD MARKET FORECAST (Excerpt from the Dec. 2012 Issue)

Stephen Todd P.O. Box 4131 

Registered Investment Advisor Phone 909 338 8354 Crestline, CA 92325-4131 

www.toddmarketforecast.com Issue 12 Year 27 e-mail -toddmarketforecast@yahoo.com 

Due the first Tuesday of each month.



Gold & Precious Metals

Gold: Is Another Big 'Smackdown' Being Orchestrated

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Posted by Mark Leibovit - VRTrader

on Monday, 03 December 2012 09:56

Gold moved lower Friday as traders are still nervous about the large sell orders that materialized during Wednesday's sharp decline ('smackdown') which was likely government induced. Spot gold fell 10.60 to settle at 1715.20 after hitting an intra-day high of 1727.20. Silver fell .83 to settle at 33.44 on Friday.

Do you subscribe to the Leibovit VR Gold Letter? I hope so. Here is the link: www.vrgoldletter.com.

Most Survey Participants See Higher Gold Prices Next Week - Friday November 30, 2012 12:01 PM

A vast majority of survey participants in the weekly Kitco News Gold Survey see higher prices for the yellow metal, based on the likelihood that the debate over the "fiscal cliff" in the U.S. will drag on.

In the Kitco News Gold Survey, out of 33 participants, 25 responded this week. Of those 25 participants, 18 see prices up, while two see prices down, and five are neutral or see prices moving sideways. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts. The "fiscal cliff," which is the term given to the package of automatic spending cuts and tax hikes that will occur in January unless U.S. lawmakers agree to prevent it, has occupied headlines and is likely to do so until either a compromise is made or 2012 comes to an end. "The main risk would be of Washington suddenly coming to their senses and coming up with a comprehensive plan to cut runaway government spending and entitlement programs in order to balance the budget. On second thoughts, that's not much of a risk. No doubt there will be soothing words as the problem is pushed further into the future, and gold could react negatively in the short term t o that, but fundamentally things are still positive for gold," said Adrian Day, chairman and chief executive officer of Adrian Day Asset Management. Others suggested seasonal trends remain in gold's favor. Those who see prices unchanged or are neutral on gold all said they expect the market to be range-bound, with the $1,700 area acting as strong support and the $1,735 to $1,750 area as resistance. "The breakout was a fake-out. Whoever bought gold last Friday as the market pushed to a five-week high realized they had a problem when there was no follow to start this week and liquidated those positions as the market started to move against them. Most markets are now hostage to the fiscal cliff debate as it is now risk on or risk off at any moment and no one really knows how the situation will turn out. There is also some end-of-year profit taking and tax selling going on, but until there is more clarity on this issue, I expect gold to chop around in a range, so look for prices to be steady," said Frank Lesh, broker and futures analyst at FuturePath Trading. The participant who sees lower gold prices said gold's inability to take out $1,750, combined with Wednesday's break to $1,700 suggests that the market might try to test the downside further.

Ed Note: Mark has changed his short term position on Gold, but I cannot include that change as it would be unfair to his paying subscribers
If all contract purchases and sales had to be backed by the physical metal (proven and documented), believe me you wouldn't see these type of 'out of the blue' bear raids. Basically, the CFTC and the CME continue to host a live ponzi scheme. How can a market be legitimatewhen in one day trades represent more than a full year's production in the metal? It's paper chasing paper and, folks, that is NOT the reason the futures markets were created. It's not too late to close or severely restrict the ability of the CME and other futures exchanges from doing business. One bright spot, however, is the fact Asian and Indian markets are out there taking physical delivery of their gold which will ultimately spoil the paper chasing game. Some sovereigns are also now beginning to question the legitimacy of where their gold is being stored and whether it is truly there as represented. The tide is slowly turning and the financial press will be soon thrown into the fray when it becomes app arent they cannot continue to provide cover for the U.S. government illicit activities. .

Theoretically, a seasonal low should have formed and with volume coming back into the upside. Typically we should see a decent rally into December with potential into February. The caveat is that if we cannot take out the 1796.70 high (35.32 in silver) during this period, watch out below! MORE IMPORTANTLY! The first warning of a 'problem' comes with spot silver under 30.73 and spot gold under 1673.80. I would likely than switch to a SELL signal for gold and silver.

My 'gut' feeling is that another big 'smackdown' is being orchestrated, so personally I'm keeping my power dry just in case.

Taking a bigger picture view, if you don't own the precious metals, anytime is a good time to buy them. Dollar-cost-average! The expression goes: 'Don't wait to buy gold - buy gold and wait'!


Gold & Precious Metals

Who Actually Owns The Worlds Future Gold Supply

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Posted by Rick Mills- Ahead of the Herd

on Friday, 30 November 2012 13:33

As a general rule, the most successful man in life is the man who has the best information

In 2001 and 2002 miners were producing gold for sub-$180 cash costs - the operational cost of the mine divided by the ounces of production. By 2005 cash costs had risen 45 percent to US$250. Data from GFMS shows world gold production costs for the first half of 2009 averaged $457/oz. Average cash costs in 2011 were US$657.

According to the Thomson Reuters GFMS’s Gold Survey 2012 global gold mine production was flat (output rose 0.1 percent to 1,366 metric tons) in the first half of 2012. The average grade of ore processed globally dropped 23 percent from 2005 through the end of last year and is forecast to decline another four percent in 2012.

The report also said the average cash cost across the gold mining industry for mining an ounce of gold is a record $727 per ounce. The average cash margin dropped to $872 an ounce in the second quarter from as much as $1,032 an ounce in last year’s third quarter

Operating costs, the bullshine the industry is publishing as cash costs, are increasing, yields are declining and total expenditure has grown in line with the gold price.

Average operating/cash cost figures include only those costs directly associated with the production of the gold such as;

  • Wages
  • Cost of energy
  • Raw materials such as steel, explosives etc


image004But there’s more, a lot more to costs than most realize.

A complete breakdown of costs, an all-in cost figure, courtesy of CIBC, shows cash operating costs pegged at $700 an ounce, sustaining capital, construction capital, discovery costs and overhead at $600. Add in $200 for taxes and you get US$1500.00 as the replacement cost for an ounce of gold. Using the all-in figure provides a more accurate and definitive picture of actual mining cost and profit. Also, according to CIBC World Markets, the sustainable number gold miners need is $1,700/oz. As I write this gold is trading at $1726.00/oz.

It’s obvious that its very expensive to operate a gold mine and it’s not going to get any cheaper. The reasons behind flat-lining gold production, and record cash and all-in costs, are numerous:


  • Production declines in mature mining areas
  • Slower than expected ramp-ups of output
  • Development time up
  • The entire resource extraction industry suffers from a lack of skilled people
  • Extreme weather
  • Labor strikes
  • Protests


Additional challenges include:

  • Increasingly more remote and lacking in infrastructure projects
  • Higher capex costs
  • Increased resource nationalism
  • Increased environmental regulation
  • More complex metallurgy
  • Lower cutoff grades


The biggest worry the industry has is that despite a significant investment in exploration (a record $8b in 2011) there’s a lack of discovery with few large high grade deposits being discovered.



Here’s some excellent insight from Brent Cook, explorationinsights.com.

Major gold mining companies are facing a big problem. They are unable to find and develop enough ounces to keep up with demand, for the simple fact that economic gold deposits are extremely rare. Production shows a very simple trend: it rose until about 2000 and has fallen since then. This reduced production occurred even as the price of gold has increased nearly 400% in the past ten years. This incongruity tells us something fundamental: there’s a problem.

There are three main reasons why gold production increased up to 2000 despite declining gold prices.

  • The first is the advent of new mining and processing technologies that made previously uneconomic low grade deposits economic. This was mostly a result of heap leach technology and bulk mining methods. Meaning, mining companies could now scrape up large areas of low grade mineralization and sprinkle a cheap solution of cyanide on the rock to recover the gold. This primarily worked on near surface oxidized deposits in relatively dry climates.
  • The second is that vast regions of the world that had previously been closed for various reasons were opened up to exploration. These new areas include much of Latin America, Africa, and the former Soviet Union. I was part of that movement; we were able to walk onto obvious deposits with new eyes and rapidly drill out those resources. It also became markedly easier to get into these areas, so we were able to go deeper into the jungles and deserts.
  • The third is that geologists had a whole slew of new exploration tools with which to scan the earth. These include satellite imagery, geophysics, and more sensitive chemical tools.

The net result was that new technologies kept old deposits going longer and made previously uneconomic ones viable, thereby ramping up production into the early 90’s. New deposits in previously unexplored and off-limits areas kept that production going until about 2000. All well and good but the industry is not finding as many new deposits as they need to in order to maintain current production levels. And, although we can expect incremental technological improvements in processing, mining, and exploration, there is nothing revolutionary on the horizon.

This is a worrisome slide for major gold producers—they are unable to sustain themselves. For the most part they are surviving via old deposits that are running out of ore and newer deposits that are quickly headed into the “old” deposit category. Reserves from these aging deposits are not being replaced by new discoveries. Producers’ problems are further exacerbated by rising exploration and development costs, plus the significant time it now takes to permit and finance a new deposit.”

Here’s Paul van Eeden (paulvaneeden.com) on reserve replacement, this was written in 2001:

“Worldwide gold production from mining is approximately 80 million ounces per year. A few years ago, a world-class gold discovery, which rarely occurs, would have been anything over a million ounces. Perhaps a few such deposits are discovered in a decade yet we mine the equivalent of 80 such deposits a year. Due to recent mergers and acquisition in the mining industry, the bar has been raised and the major mining companies now require deposits to be in excess of 5 million ounces before they become excited. Perhaps only one or two such discoveries are made in a decade. 

Anglogold mines over 6 million ounces of gold a year. Newmont mines roughly 4 million ounces of gold a year, Barrick 3, Harmony almost 3, Normandy 2, you get the picture. Each of these companies need to make a world-class discovery every year, and some of them need several, just to prevent the natural depletion of their mineral reserves from retiring the entire business. Note that mergers and acquisitions do not add any new resources to the mining industry, it merely changes the ownership of mines. The gold mining industry needs to discover 80 million ounces of gold every year just to prevent it from shrinking and it is highly unlikely that we will ever discover 80 million ounces in any given year, never mind do so on a continuous basis.”

Barclays Plc predicts global gold mine output may increase 0.7 percent in 2013, the slowest pace since 2008, while forecasting total physical supply may shrink 0.4 percent in 2014.

Gold miners have been able to survive rising costs because of rising gold prices – if gold prices do not start going up marginal projects are not going to get funded and a whole lot of forecasted gold production is not going to come on stream.

Global gold demand in Q3 2012 was 1,084.6 tonnes (t), slightly above the five year quarterly average of 984.7t, according to the World Gold Council's Gold Demand Trends Report.

“Gold is beginning to re-establish itself as part of the fabric of the financial system. In the medium term, the quantitative easing initiatives in the West and the continuing growth story in the East, particularly in India and China, coupled with the seasonally strong quarter coming up in Asia, are excellent indicators for further growth in the gold market…it is clear from five year rising demand trends that gold's fundamental property as a vehicle for capital preservation continues to endure, as evidenced by this quarter's increase in global ETF investment, up 56% and continued purchasing by central banks, the ultimate long term investors.”Marcus Grubb, Managing Director, Investment at the World Gold Council

From Sy Harding, over at streetsmartreports.com, comes some important information on the state of the U.S. economy:

“The CFNAI is an index comprised of 85 established economic indicators and trends drawn from all areas of the economy. It was first compiled in 1967 and has a remarkable record for identifying early on when the economy has entered a recession.

The numbers are reported monthly. A positive level for the index indicates the economy is growing, while a negative number indicates the economy is slowing.



The index has been of concern for a while. The monthly reading of the index was in negative territory for five consecutive months before improving to the flat-line at 0.0 in September.

Unfortunately, that improvement lasted only one month. The report this week shows a sizable drop to -0.56 in October.

More ominously, it’s more important 3-month moving average also dropped to -0.56 in October from -0.36 in September. It was its 8th straight month of negative readings, and getting ominously close to the -0.70 level the Fed considers “an increasing likelihood that a recession has begun.” It is the solid line in the Fed’s chart.

The index has only dropped beneath the recession warning level of -0.7 eight times since 1967. That was in 1970, 1974, 1980, 1981, 1989, 1990, 2001, and 2008. Each time the economy was indeed in a serious slowdown, usually a recession, and seven of those eight times the stock market was already in a bear market or soon rolled over into one. The most recent occasions were in 2001 and 2008, certainly not pleasant memories for the country.

The financial media and investors don’t pay much attention to the CFNAI, and most of the time it is not of much importance.

But with the 3-month moving average in negative territory for 8 straight months, and now at -0.56, so perilously close to -0.70, it should have everyone’s attention.”

From Axel Merk, over at merkinvestments.com, comes three key reasons to support an investment in gold:

  • A form of protection against inflation
  • Safe haven investment
  • Minimize downside deviations in the value of an overall portfolio, reduce overall volatility, and enhance returns

“Over recent years, gold has performed remarkably well relative to other asset classes, in terms of both absolute performance and risk-adjusted performance. Over the preceding 10 years, an investment in gold would have significantly outperformed a corresponding investment in the S&P 500 Index or U.S. bonds, not to mention international and emerging market equities. Over the past 10 years, gold outperformed U.S. equities by over three times.

On a risk-adjusted basis, gold has produced superior returns, as measured by the Sharpe ratio. Over the 10-year period ended September 30, 2012, gold’s performance generated a Sharpe ratio of 0.85. In comparison, the S&P 500 Index generated a Sharpe ratio of just 0.30, as did international equities.

Gold’s Sharpe ratio was nearly as high over the five year period, as it was over the 10-year period ended September 30, 2012, while comparable equity indices produced negative Sharpe ratios. In fact, over each time period analyzed, gold outperformed domestic and international equities on a risk-adjusted basis.”



The disadvantage of fiat money [.i.e. non-convertible money], relative to commodity money, rests precisely in the fact that its scarcity, being thus contrived, is also contingent. A matter of deliberate policy only, it is subject to adjustment at the will of the monetary authorities or, if those authorities are bound by a monetary rule, at that of the legislature. Consequently, although a fiat money can be managed so as to not only preserve its purchasing power over time, but also so as to achieve the greatest possible degree of overall macroeconomic stability, there is no guarantee that it will be so managed, and market forces themselves offer no effective check against its arbitrary mismanagement.” economist George Selgin


It’s very clear that over the last decade gold has been a very good investment, and will continue to be so for the foreseeable future, but there is one asset class that will do even better than bullion, a lot better.

As mentioned previously, producers are not able to replace their reserves because there’s a lack of discovery, few large high grade deposits are being discovered and most of those that have been discovered aren’t owned by producers …

“Today, the major producers and their majority-owned subsidiaries hold 39 percent of the reserves and resources in the 99 significant discoveries made in the past 15 years.” Metals Economics Group (MEG)

Only 39 percent, so who owns the other 61 percent, who actually owns the worlds future gold supply?

A Junior exploration company’s place in the food chain is to acquire and explore properties. Their job is to make the discoveries that the mid-tiers and majors takeover and turn into mines. Junior exploration companies own the majority of the world’s future gold mines.

But the bottom line is, new exploration, despite a record amount of money being thrown at it, is not keeping up with reserve depletion. Juniors are not getting enough funding to do the necessary exploration to keep up - from June 2011 to June 2012 funding for juniors has dropped by $9b.

It’s time to be a stock picker, you need to find the quality management teams with money in the treasury, the ability to raise more and having the advanced projects that are well along the development path towards a mine. A mine that is going to be a long life, lowest quartile all-in cost producer. These companies are the world’s future gold producers and of course most will be in the sights of mid-tier and major producers for takeover candidates as reserve replacement targets.

I’ve got several precious metal juniors that fit that very specific bill on my radar screen, do you have any on yours?

If not, maybe you should.

Richard (Rick) Mills



Richard is the owner of Aheadoftheherd.com and invests in the junior resource/bio-tech sectors. His articles have been published on over 400 websites, including:

WallStreetJournal, SafeHaven, MarketOracle, USAToday, NationalPost, Stockhouse, Lewrockwell, Pinnacledigest, UraniumMiner, Beforeitsnews, SeekingAlpha, MontrealGazette, CaseyResearch, 24hgold, VancouverSun, CBSnews, SilverBearCafe, Infomine, HuffingtonPost, Mineweb, 321Gold, Kitco, Gold-Eagle, The Gold/Energy Reports, Wealthwire, CalgaryHerald, ResourceInvestor, Mining.com, Forbes, FNArena, Uraniumseek, FinancialSense, Goldseek, Dallasnews, SGTReport, Vantagewire, Resourceclips, Indiatimes, ninemsn, ibtimes, jsmineset and the Association of Mining Analysts.

If you're interested in learning more about the junior resource and bio-med sectors, and quality individual company’s within these sectors, please come and visit us atwww.aheadoftheherd.com


Legal Notice / Disclaimer

This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.

Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified.

Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission.

Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.









Gold & Precious Metals

Gold Stocks Approaching a Crossroads

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Posted by Jordan Roy Byrne - Daily Gold

on Thursday, 29 November 2012 08:58

"An absolute treasure of analysis".

Recently, the Erste Group published a 120 page report covering precious metals. The report contains an absolute treasure of analysis, figures and charts concerning gold and the gold stocks. I have selected a few of the charts which help us explain the current status of the gold stocks. Essentially, there is a huge divergence between financial performance and valuations. Ultimately, the performance of the shares over the coming months will answer the question as to the resolution of that divergence.

We often hear how difficult of a time some mining companies are having. Although that is true, the reality is present conditions for gold miners have never been better. Rising costs are a problem but margins for the large unhedged producers are at bull market highs (and likely all-time highs).


The rising margins explain the consistent increase in cash flow and net income (with a few bumps) as the chart below depicts. Cash flow and net income for 2012 will also reach a bull market high.


Given the high margins, cash flow growth and record earnings why are the stocks struggling and trading well off their highs? A major and often forgotten explanation is the current low valuations. Several months ago, the price to cash flow valuation of senior producers was equivalent to valuation lows seen in 2000 and 2008. No chart better illustrates valuations then this one from BMO Capital Markets.


Now let’s examine the current technicals and draw a comparison between today’s bull market and the bull market from 1960 to 1980. Below we plot the current bull market in the HUI (red) and the Barron’s Gold Mining Index (BGMI). There are some differences but also some similarities. Note that the level 170 was key support and resistance for the BGMI for nearly five years. Once the Bgmi broke 170, it was headed much higher.


One can better view the current key pivot point from the chart below. The 52-55 range has been key support and resistance for GDX since late 2007. If and when GDX makes a weekly close above 55, you can bet that the prognosis will look quite bullish.


The market is at an interesting crossroads. Financial results have been strong but valuations are weak. The market believes earnings and cash flow will decline and has priced in that outcome to some degree. Ultimately, this will resolve itself in one of two ways. Producer margins can decline which would impact cash flows and profitability. That would eventually lead to lower share prices and GDX could threaten a break below 40. On the other hand, should margins increase then share prices will explode higher from a compounding effect. Rising margins will generate stronger cash flow and higher profits and the low valuations will rebound as sentiment would normalize. This is the fundamental case for the next major breakout in the gold shares.

Given the technical damage from the recent selloff (which went a bit further than expected) one should not anticipate this crossroads to be resolved anytime soon. Think months rather than days or weeks. Ultimately, the shares will break 55 to the upside in 2013 thanks to the combination of a breakout in Gold combined with stable costs in 2013. In the meantime the shares will consolidate providing you time to do your research and find the companies that will lead the next leg higher and outperform. If you’d be interested in professional guidance in uncovering the producers and explorers poised for big gains then we invite you to learn more about our service.

Good Luck!

Jordan Roy-Byrne, CMT






Gold & Precious Metals

Gold Dropping Like a Brick

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Posted by Ben Traynor - Mark Leibovit Comment

on Wednesday, 28 November 2012 10:12

Mark Leibovit warned he was going neutral in his "Gold & Silver Action Alert"  9 trading days ago. Further that if we approached a figure we are nearing now he would switch to a trading SELL. Click on that link above or HERE  to review that advice. 

If you are a short term trader, paying attention to a favorite of Mike's and a  #1 Gold Timer like Leibovit makes sense on days like these:

Screen Shot 2012-11-28 at 7.46.25 AM

Ed Note: Gold closed at 1716.9 after hitting 1705.5 this morning.  Silver at 33.66 after hitting 32.9 this morning. 

Larry Edelson warned just 2 days ago when Gold closed at 1749.6 "I do expect gold to turn back down sharply and head toward the $1,600 level in the short term" in  "Watch Out For Gold! - Stocks!  on this site. Now here's Ben Traynor on why that pullback might be occuring:

Bullion at One-Week Low on Fiscal Cliff Concern

The dollar gold price fell to a one-week low below $1,735 per ounce Wednesday, as stocks and commodities also edged lower while the dollar and US Treasuries gained despite ongoing uncertainty over how the US will address its deficit problems. 

Silver fell to $33.73 an ounce, also a one-week low. 

"We are bullish silver, looking for a retracement back to the $35.35 [an ounce] high from early October," says the latest technical analysis from bullion bank Scotia Mocatta. 

Bullion held to back shares in the world's largest gold exchange traded fund SPDR Gold Shares (GLD) rose to a new all-time high yesterday at 1,345.8 tonnes. 

On the currency markets the US Dollar Index, which measures the dollar's strength against a basket of other currencies, extended gains this morning despite ongoing uncertainty over the so-called fiscal cliff of tax rises and spending cuts due to kick in at the end of the year. 

"I haven't seen any suggestions on what [the Democrats are] going to do on spending," said Republican senator Orrin Hatch Tuesday. 

"There's a certain cockiness that I've seen that is really astounding to me since we're basically in the same position we were before." 

"I think they feel somewhat emboldened by the election," added Republican Congressman Tom Price. 

"How could you not when your president is re-elected after running four straight years of trillion Dollar-plus deficits?" 

Senate majority leader Harry Reid, a Democrat, said yesterday he hopes the Republicans can agree to proposed measures to raise additional tax revenue as a way of reducing the federal deficit. 

"And as the president's said on a number of occasions, we'll be happy to deal with entitlements," Reid added, though he did not elaborate on where spending cuts might be made. 

"If the talks drag on," says today's commodities note from Commerzbank, "this could result in significant increases in the gold price." 

The US Treasury meantime did not brand China a currency manipulator Tuesday, contrary to press reports predicting that it would. The Treasury Department did however say the renminbi "remains significantly undervalued". 

Over in Europe, the European Court of Justice, Europe's highest court, yesterday rejected a challenge to the legitimacy of the Eurozone's permanent bailout fund the European Stability Mechanism.  

The ECJ rejected Irish politician Thomas Pringle's argument that the ESM contravenes Article 125 of the European Union Treaty, which states that EU members states "shall not be liable for or assume the commitments...of another Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project." 

"The court has clarified that euro-zone creations such as the ESM and other bailout funds are not an EU fiscal system by the backdoor," says Hugo Brady, analyst at think-tank the Centre for European Reform. 

Elsewhere in Europe, the number of unemployed in France rose to its highest level in 14 years last month, official figures published Wednesday show. 

French president Francois Hollande warned Tuesday that an ArcelorMittal steelworks in northern France could be nationalized. The company has given the French government a deadline of Dec. 1 to find a buyer for two blast furnaces or it will close the plant, which employs 629 people. 

"The president reaffirmed his determination to guarantee permanently the employment at the site," a statement from the Elysée said. 

The central bank of South Korea meantime may buy more gold before the end of this year, according to local press reports. Korea added 16 tonnes to its gold reserves in June, on top of the 40 tonnes it bought last year, according to data published by the World Gold Council. 

BullionVault: the safest gold, the lowest price...

About Ben Traynor

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVaultBen Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.Ben Traynor


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