$778 US gold price / .7784 exchange rate = $1,000 Cdn
Who knows how long it will last, especially if they decide to hammer the price down on the COMEX (as they have done over the past couple of months, be it due to heavy deleveraging or people with agendas). Regardless, it's just good to see $1,000 Cdn gold again, especially with the oil price taking such a massive hit.
2 comments:
Good day Production!
I agree with you that price of gold is being manipilated/driven down (as it has always been) down to satisfy some obscure and antiquated agenda by the international group of Central Bankers, but the only present reason that the Canadian price is $1,000. is due to the drop of value in the Canadian dollar.
As you indicated, the Gold price is $778./US, a far cry from the $1,040./US of this past summer, even though gold has historicaly been percieved as a haven for wealth storage during turmoil.
I belive the reason that gold and silver have fallen to this level, is very largely the result of most hedge funds and other investment vehicles, being forced to sell anything that is readily liquid and which has retained most of ther value, simply to maintain their level of collateral with their lenders.
Given the vast amounts of new US$ created by the US Treasury, does it make any sense what so ever that the US$ is climbing to levels which is not rational nor sustainable.
The deleveriging that is now taking place is creating a huge demand for US$, all, in my opinion due to repatriation of those US$. Once that delevering is complete and the US$ is no longer in such high demand, the US dollar will plunge like a rock, thus increasing the value of the C$ and as a consequence, a drop in the Canadian gold price.
This potential scenario will cancel each other out. ie. the US$ will drop in value thus increasing the official price for gold, the C$ will incease against the US$, thus lowering the Canadian price for gold.
Under that scenario, the Canadian price for gold will increase only if the official gold price rises higher than the present ratio of gold/US$/C$. Which in my opinion will happen, simply due to the return of the mass hestiria of blood-letting in the world stock markets caused by the ever increasing severity of the now "official" world-wide recession, the continuing media facination with the frequent mentioning of a potential "Depression looming"
and the "unknown quantity" of the new US president.
It totaly baffels me why a country (mainly their politicians), in such dire straits economicaly as it is, will not temporarily forego their by-partisinship and rally behind their newly elected president.
It does not matter wether you like him or not, for the next four years , the man is your new president and as such should be wholly supported, especially in these hard times. The harder the job is made for him, the harder and longer this dissaterous ecconomy last last.
NSX001, thanks for the thoughts.
I agree with all of the points you highlighted. They are all excellent points, and echoes my thoughts exactly.
Actually, everyone tends to focus entirely on the US dollar gold price, I suppose due gold being priced in US dollars. However, I prefer to focus on the local operating currency (Peruvian sol) and the reporting currency (Cdn $) for operating analysis and for reporting purposes.
As a result, I see the $1,000 Cdn gold price right now as being essentially the same (or better) than the $1,000 US (reached earlier in the year). Here is why, operationally:
1) The Peruvian currency has been weakened (vs US $) by 9 - 10% from Q2'08 vs right now (not necessarily vs the avg for Q4, but vs right now). This means an automatic 9 - 10% reduction in US cash cost per oz (not necessarily for Q3 though, as the global crisis didn't explode until around mid Sept).
2) Major decreases in fuel:
* Diesel - 30 to 35%
* Gasoline - 40 to 45%
* Crude oil - 50 to 60%
3) General consumables - prices have decreased for all consumables, including dynamite.
As such, this current deflationary type environment is very positive for gold production. This is why $1,000 Cdn can still be very profitable for gold miners - best of both worlds $1,000 Cdn with .78 currency rate or $1,000 US with currency at par.
Granted, a large portion of Century's overhead (Blaine, Wa) is paid in US $, but not all of it - some of it should be in Cdn $ (out of Lamaque). Nonetheless, it is likely that some of the operational savings (highlighted above) might partly offset the exchange rate difference for Blaine overhead).
On a side note, Kalahari released some drill results from their own Lamaque property. They say their property is located 700 meters east of the Lamaque mine. Their drill results were decent, but it looks like one of their zones is cut off to the east - still has potential at depth and to the west though. This cut off doesn't impact our Lamaque property though, as we are located on the west side.
Nevertheless, Kalahari says that they have (what appears to be) about 240,000 of 43-101 compliant ounces (via previous work that was done). Of course, this is small compared to our 4.6M (43-101) current resource ounces on our Lamaque property (and counting), but it is still good to see our neighbours finding gold. It's just more data that demonstrates that gold is still very prominent in the Val d'Or area (we still have a large exploration land package with significant gold showings, even beyond the Lamaque area). By the way, the grade of Kalahari's resource base appears to be consistent with our grades.
Here is the NR:
KALAHARI INTERSECTS 0.86 OPT OVER 6 FT
ON LAMAQUE PROJECT
HIGHLIGHTS: O.863 OPT GOLD OVER 6 FT * (minimum mining width)
0.709 OPT GOLD OVER 6 FT AND 0.621 OPT GOLD OVER 6.6 FT
VANCOUVER - Kalahari Resources Inc. (TSX.V: KLA) is pleased to announce assay results from a recent drilling program designed to test for extensions along strike and down-dip of known gold zones on the 3,800-acre Lamaque Property near Val d’Or, Quebec. The wholly owned property is situated one km south of the prolific “Cadillac Break” and immediately south of the Lamaque and Sigma Mines, which have collectively produced more than 9 million ounces of gold since the 1930s.
The recently completed program included 22,923.33 feet of NQ diamond drilling in 29 holes testing the No. 10 Vein and Parallel Zones, which lie about 700 meters east of the Lamaque Mine and 1 km south of the Sigma Mine.
• Results for holes DDH 10-08-16 to 08-29 indicate that the zone is cut off to the east, while holes V10-08-01 to 08-15 show potential to depth and in a westerly strike direction. (See results listed below).
• Results from recent drilling will be combined with results of historical drilling by Teck Cominco
(the previous operator) to produce an updated resource estimate for the No. 10 Vein and
Parallel Zone.
“We are pleased by the results of the recent drilling program, which together with results of previous
drilling confirm the potential to expand resources at the Lamaque Property,” said Don Cross, P. Eng.
“The next phase of drilling will be designed to extend the zones to depth and in a westerly direction.”
Since acquiring rights to the Lamaque Property from Teck Cominco in 2003, Kalahari Resources has
conducted exploration programs designed to test priority zones and expand resources. Two of the
zones, the No. 4 Plug and the No. 10 Zone, collectively have an Inferred Mineral Resource of
1,365,000 tons grading 0.186 oz. Au/ton (cut*) or 0.275 oz. Au/ton (uncut) as audited and reclassified
by a Watts Griffis & McOuat’s NI 43-101 Technical Report dated September 2004. (*High gold values
cut to 1 oz Au/ton). *(high gold values cut to 1 oz Au/ton)
Zone, Tons, Tonnage Grade (oz/t)*
No. 10 Zone, 216,000, 0.224
No. 4 Plug, 1,149,000, 0.179
Inferred Historical non-compliant NI 43-101 tonnage estimates for four other zones are shown below:
Zone, Tons, Tonnage Grade (oz/t)
Parallel Zones, 98,000, 0.386
No. 4 Plug, 152,000, 0.185
No. 1 Vein, 164,000, 0.26
No. 6 Vein, 117,000, 0.20
The No. 10 Zone and the Parallel Zones are in close proximity and could potentially be serviced from
the same decline or shaft. Other important advantages are good road access and the availability of
milling facilities in the immediate area that will process ore on a custom-milling basis.
The latest drill program has provided the Company with very encouraging results and has excellent potential to add to the inferred resources referenced above. In addition to eight known zones, the property encompasses more than 20 exploration targets generated by either deep-penetrating VTEM geophysical surveys or MMI (mobile metal ion) geochemical surveys conducted during the past two years.
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