Gold and Silver Blog

It's snowing in Washington, DC right now! Great news for natural gas prices!

An extremely interesting article about Barrick Gold's (NYSE: ABX) hedging strategy (or lack thereof) appears in today's Globe and Mail (see Alas, poor Barrick. Hedges can't survive gold's rise).

Barrick has been the biggest hedger in the gold indusry, and was much hated by goldbugs because of it. The article speculates about why Barrick and its chairman Peter Munk had an about face on this issue. The article speculates that a nervous creditor demanded that Barrick stop hedging (the creditor thinking about derivitives disasters such as Enron and Long-Term Capital Management).

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Investors in South African mining stocks are still feeling pain as the Rand continues to rise (see Mineweb: Rand sounds panic alarm). At the moment I write this, the Rand is trading at 6.23 to the dollar. Ouch. Link to current Rand quote.

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If you invest directly in gold, don't keep the gold in the trunk of your car. A couple from Arizona had their life savings, in gold nuggets, stolen from the trunk of their car. (See The Arizona Republic: Couple's life savings in gold stolen.)

By now you probably know that gold finally closed in New York above $400/oz. Gold stocks did well today. Unfortunately, a great deal of the price rise had to do with the weak dollar and not gold being stronger. The South African Rand is now quoted at 6.34 to the dollar, which is not so good for S.A. gold mining companies.

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Ian Cockerill, chief executive of South Africa's Gold Fields Ltd, had some bullish words about gold in an address to the Melbourne mining club (see Herald Sun: Gold's a currency, to coin a phase). He points to the following factors: (1) U.S. Dollar weakness due to easy Fed policy; (2) Asian banks diversifying out of U.S. dollars and into other currencies, including gold; (3) gold purchases by China; (4) declining gold production from mature mines.

On the negative side, he mentioned Central Bank sales of gold continuing. He also mentioned the problem of the strong Rand and A$.

India's gold consumption is up 16%, despite the high gold prices (see VOANews.com: India's Gold Consumption Continues to Rise). The wedding season is said to be busy.

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The World Gold council is being sued for $450,000 in damages (see Mineweb: WGC gold fund hits another legal trip wire.) "Gemini Diversified Holdings, which is owned by finance raconteur and one-time prodigy pianist, Dan Ascani, accuses the WGC and BoNY of breach of contract and misappropriation of trade secrets under the Trade Secrets Act of the State of Georgia."

There isn't any indication that this will delay the new exchange traded gold fund. The WGC says the complaint is without merit.

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There is an article at The Independent, Gold and silver turn our heads, but what price a spot of metal bashing?, that has some interesting analysis of the current gold market.

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In the Elecronic Investor column in Barron's this weekend, is a useful list of places on the web to get information about gold. I am insulted because the Gold and Silver Blog was not listed.

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As I write this, gold is trading at over $398/oz, I hope it finally closes above $400 tomorrow.