Monday 11th December 2017

Resource Clips


November, 2014

Nein, non, no—Switzerland votes against central bank gold referendum

November 30th, 2014

by Greg Klein | November 30, 2014

Gold bugs lost decisively in a November 30 referendum as the Swiss turned yellow on metal. Some 77% of voters rejected a proposition that would require the country’s central bank to convert at least 20% of its assets to gold, the Telegraph reported. The proposal would also have required the bank to repatriate its gold, none of which it could ever sell.

Nein, non, no—Switzerland votes against central bank gold referendum

“The people have decided against the initiative,” said a statement by the Save Our Swiss Gold campaign. “This means the Swiss franc is now strongly tied to the euro and ECB policy. It is now up to the [Swiss National Bank] to prove the people right and manage its way.”

The group maintains that the defeat will cause more money-printing and steeper inflation, while the SNB will hold at least 400 billion francs in EU bonds “that could become worthless.” A franc is worth about $1.18.

Voters also rejected two other referenda—a proposal to remove tax benefits for rich foreign residents and another to limit immigration. The latter initiative came from an environmental group.

Read more about the Swiss gold referendum.

TSX Venture marks its 15th anniversary

November 28th, 2014

by Greg Klein | November 28, 2014

“There is no other public venture market like TSX Venture Exchange anywhere in the world,” said TSXV president John McCoach. His boasting was prompted by the Venture’s 15th birthday on November 28.

The institution began in 1999 when the Vancouver and Alberta stock exchanges merged to form the Canadian Venture Exchange (CDNX). The Canadian Dealing Network, Winnipeg Stock Exchange and equities portion of the Montreal Exchange later merged with CDNX, which was acquired by the Toronto Stock Exchange in 2001. The following year CDNX was renamed the TSX Venture Exchange.

TSX Venture marks 15th anniversary

Since 1999 TSXV companies have raised $81.5 billion, the TMX Group stated. The Venture now hosts nearly 2,000 issuers with market caps totalling $28.9 billion. As of October they pulled in $4.3 billion. Over 600 companies have graduated to the big board since 2000.

But the Venture has faced stronger competition from the Canadian Securities Exchange after Ned Goodman joined CNSX Markets as a strategic investor and chairperson last year. An outspoken critic of the TSXV, he called it “a feeding source for the legal community.”

Around the same time CNSX Markets CEO Richard Carleton said, “All of the alternative market operators are in favour of change and my colleagues at the TMX Group, who will lose money and improve the visibility of their competition, are not.”

Earlier this month the Ontario Securities Commission approved the Aequitas Neo Exchange, which is expected to begin operations in the first half of 2015. The new exchange plans to deter high-frequency traders by subjecting them to processing delays and higher fees.

Last month the TMX Group announced its Alpha exchange would also get a “speed bump.”

The TMX Group describes the Venture as “a global leader for mining and energy finance, as well as technology and innovation financings.”

In other stock exchange news on November 28, China has once again overtaken Japan as the world’s second-largest bourse, Bloomberg reported. The Chinese exchange’s total market cap comes to $4.48 trillion, a 33% increase this year, according to the news agency. The Japanese exchange fell to $4.46 trillion, a 3.2% drop since the end of December.

November 28th, 2014

The Indian graphite industry—why we need to take notice Industrial Minerals
Hunting for giants: An introduction to ZTEM surveys in mineral exploration Geology for Investors
Uranium best energy performer amid recovery from Fukushima slump NAI 500
Frank Holmes: Solar shines on silver demand Stockhouse
Senate report shows how easily banks can rig gold, copper and other markets GoldSeek
How a limo ride with Paul Krugman changed the course of Abenomics VantageWire
Thomas Drolet: Finding gold dollars in Nevada Streetwise Reports
The last resort when monetary policy fails Equedia

Gold goes to a vote

November 28th, 2014

Is the Swiss referendum a battle of monetary theories or competing faiths?

by Greg Klein

A Yes vote in Switzerland’s November 30 gold referendum should accomplish three goals—the country’s overseas bullion would come home, the Swiss National Bank would convert at least 20% of its assets to gold and the bank would be forbidden to sell any of it, ever. That’s all in the name of a stronger currency. The fact that citizens can vote on ideas now considered so radical has supporters delighted and opponents terrified. Not surprisingly, pre-plebiscite debate shows the two sides poles apart in a campaign with potentially international ramifications.

Is the Swiss referendum a battle of monetary theories or competing faiths?

That might explain why the Swiss National Bank made its case in English as well as German, French and Italian. To protect Swiss exports from an excessively strong domestic currency, the SNB buys and sells foreign exchange to keep its franc no higher than €1.20. The proposed changes, the bank argues, would destroy its flexibility to do so.

Gold supporters prefer bullion to the fiat euros the SNB has accumulated. The bank counters that it would lose potential profits from holding interest-bearing foreign bonds. Forced to raise money by issuing interest-paying debt, the SNB says it might have to print more money itself.

In a worst-case scenario, the central bank would be stuck with an increasing supply of “unsellable gold.”

Of course a 20% minimum wouldn’t turn the franc into a gold-backed currency. But there’s considerable creepage potential in the no-sale requirement. Any increase in the SNB’s overall assets would require a proportional increase in gold reserves. That proportion would increase beyond 20% when the overall assets decrease.

This intrinsically useless form of money in the Isle of Yap is in all essential respects equivalent to gold today in the wider world. Another example would be pet rocks, as long as the rock in question is rare and costly to get into its final shape.—Willem Buiter, chief economist
for Citigroup Global Markets

And it would be worthless. So says one especially blistering polemic. “The gold stock can never be used for foreign exchange market interventions and it cannot be used as collateral,” writes Citigroup Global Markets chief economist Willem Buiter. “The gold becomes useless as a store of value of any kind. The gold has no consumption value to the central bank. Its value is therefore zero.”

He’s just warming up. Whether sellable or not, gold is intrinsically useless, he maintains. A fiat commodity vastly inferior to fiat currency, “gold is very close therefore to the stone money of the Isle of Yap.”

Buiter describes Yapese currency as “large doughnut-shaped, carved disks, consisting usually of calcite, that can be up to 4 m (12 ft.) in diameter, although most are much smaller.” A Wikipedia entry agrees, coincidentally in almost exactly the same words.

“This intrinsically useless form of money in the Isle of Yap is in all essential respects equivalent to gold today in the wider world,” Buiter declares. “Another example would be pet rocks, as long as the rock in question is rare and costly to get into its final shape. Another is Bitcoin, a fiat virtual currency.”

He does offer gold bugs some encouragement, however. “Until the risk of serious inflation is removed from the medium-term outlook for the U.S., the UK and other fiat currencies, gold could be a relatively attractive store of value despite the cost of storing it.”

Furthermore, “if gold has positive, albeit wildly fluctuating value, it is because we are in a benign bubble for gold…. The gold bubble is, of course, pretty impressive. Intrinsically useless gold has positive value. It has had positive value for nigh-on 6,000 years. That must make it the longest-lasting bubble in human history.”

Deficit spending is a method for expropriation. Gold stands in the way of this insidious process. It should stand as a protector of property rights. If one understands this, there should be no difficulty understanding the hostility of the financial planners against a gold standard.—Lukas Reimann,
Swiss People’s Party MP

Even so, “that bubble may well be good for another 6,000 years,” Buiter concedes. “Its value may go from $1,200 per fine ounce to $1,500 or $5,000 for all I know. Investing a vast amount of money in something whose value is based on nothing more than a set of self-confirming beliefs will make for an exciting ride. Whether that is enough to impose it as a requirement on one’s central bank is another matter.”

Among those who wouldn’t be surprised by the intensity of Buiter’s remarks is Lukas Reimann. An MP for the Swiss People’s Party that triggered the referendum, he told Switzerland’s Federal Assembly, “Deficit spending is a method for expropriation. Gold stands in the way of this insidious process. It should stand as a protector of property rights. If one understands this, there should be no difficulty understanding the hostility of the financial planners against a gold standard.”

The SNB attributes 1,040 tonnes to Switzerland’s gold reserve. Various commentators estimate that to be somewhere between 7.5% and 8% of total SNB assets. A Yes vote would require the purchase of roughly 1,560 additional tonnes by the five-year deadline, assuming stability in the value of the SNB’s overall assets.

Last year’s global mine production came to 2,982 tonnes, according to Thomson Reuters GFMS. Scrap and implied net disinvestment brought 2013 supply to a total of 4,736 tonnes.

About five million people qualify to vote in a plebiscite that, unlike most of Switzerland’s many referenda, will be watched all over the world. Gold supporters need to win a majority of Switzerland’s 26 cantons, as well as a majority of votes cast.

November 27th, 2014

Hunting for giants: An introduction to ZTEM surveys in mineral exploration Geology for Investors
Uranium best energy performer amid recovery from Fukushima slump NAI 500
Frank Holmes: Solar shines on silver demand Stockhouse
Senate report shows how easily banks can rig gold, copper and other markets GoldSeek
How a limo ride with Paul Krugman changed the course of Abenomics VantageWire
Thomas Drolet: Finding gold dollars in Nevada Streetwise Reports
Selective financing to snag pace of mine development Industrial Minerals
The last resort when monetary policy fails Equedia

Rio Tinto sets Diavik’s fourth pipe for 2018 production, Dominion Diamond reports

November 26th, 2014

by Greg Klein | November 26, 2014

Rio Tinto NYE:RIO boss Sam Walsh hinted the announcement would be made next year. But the news came out in a November 26 announcement from Dominion Diamond TSX:DDC: The Diavik mine’s fourth kimberlite pipe should start production in late 2018.

Rio Tinto sets Diavik’s fourth pipe for 2018 production, Dominion Diamond reports

A fourth pipe will help the NWT’s Diavik
mine maintain diamond production.

One of four pipes discovered in the mid-1990s, A-21 got the go-ahead from project operator and 60% owner Rio. Dominion holds a 40% stake in the mine. The latter company will pay US$140 million of an estimated US$350-million capex.

The first equipment should arrive onsite via ice road early in the new year. Four years of dike construction and pre-stripping for the lake-covered deposit are expected to be followed by about five years of open pit mining.

A-21 will ensure “continuation of existing production levels,” Dominion stated. The company has said Diavik’s reserves can last at least until 2022.

The pipe has a December 2013 resource showing:

  • measured: 3.6 million tonnes averaging 2.8 carats per tonne

  • indicated: 400,000 tonnes averaging 2.6 carats per tonne

Rio estimates the pipe will average $145 per carat. Different sources estimate world average prices for rough diamonds between about $100 and $120 per carat. Diavik’s updated resource and reserve estimates are scheduled for Q1 next year.

A fiscal Q3 production and sales report issued November 20 showed the company’s 40% share of Diavik production came to 589,000 carats, down from 727,000 for the same three-month period last year. Blame was pinned on a lower proportion of high-grade ore being mined.

At the company’s 88.9%-held Ekati mine, however, higher-than-expected grades increased total production to 975,000 carats, from 609,000 in last year’s Q3.

Dominion’s 40% share of Diavik sales came to $80.4 million, at an average of $115.50 per carat. Ekati’s total sales came to $141.9 million, averaging $309.80 per carat. Combined, the loot came to $222.3 million, over 50% more than last Q3’s $148.1 million.

Both mines are in the Northwest Territories’ Lac de Gras region, also home to De Beers’ Snap Lake mine and the De Beers/Mountain Province Diamonds TSX:MPV Gahcho Kué joint venture, scheduled to open in 2016. The NWT region ranks third in global diamond production by value.

Read about diamond supply and demand.

November 26th, 2014

Uranium climbs to highest since January 2013 amid utility demand NAI 500
Frank Holmes: Solar shines on silver demand Stockhouse
Asteroid mining: Not as crazy as it sounds Geology for Investors
Senate report shows how easily banks can rig gold, copper and other markets GoldSeek
How a limo ride with Paul Krugman changed the course of Abenomics VantageWire
Thomas Drolet: Finding gold dollars in Nevada Streetwise Reports
Selective financing to snag pace of mine development Industrial Minerals
The last resort when monetary policy fails Equedia

Resource Works executive director Stewart Muir emphasizes the importance of resource industries to Canada’s wider economy

November 25th, 2014

…Read more

November 25th, 2014

Asteroid mining: Not as crazy as it sounds Geology for Investors
Senate report shows how easily banks can rig gold, copper and other markets GoldSeek
How a limo ride with Paul Krugman changed the course of Abenomics VantageWire
Thomas Drolet: Finding gold dollars in Nevada Streetwise Reports
Uranium climbs to highest since January 2013 amid utility demand NAI 500
The Swiss gold initiative and why it may affect bullion prices Stockhouse
Selective financing to snag pace of mine development Industrial Minerals
The last resort when monetary policy fails Equedia

Western Potash presents Milestone to India

November 24th, 2014

by Greg Klein | November 24, 2014

A company with a development-ready potash project in Saskatchewan is taking part in a trade show at one of the commodity’s largest markets. Western Potash TSX:WPX forms part of Saskatchewan’s delegation at the Agro Technology and Business Fair 2014 in the northern India city of Chandigarh. The event expects to attract over 85,000 visitors.

Having reached full feasibility and cleared all permitting, Western “anticipates that the financing and development of Milestone will likely include the involvement of a multi-party consortium, with participation divided between a number of fertilizer industry players alongside financial institutions providing project finance,” the company stated.

Western Potash brings Milestone to India

The Indian event follows Western’s participation last month at the IFA Crossroads Asia-Pacific 2014 in Singapore and, in September, the 2014 World Fertilizer Conference in San Francisco and the International Fertilizer Association Production and International Trade Conference in Beijing.

Saskatchewan Premier Brad Wall joined his province’s delegation in Chandigarh to deliver a keynote speech. Saskatchewan’s potash and uranium reserves are expected to encourage closer trade relations with India.

In a September report, the Saskatchewan-Asia Advisory Council advised the province to identify “at least 10 major in-province investment opportunities for Asian investors” and to triple exports to Asia by 2020 “through enhancements to the Saskatchewan Trade and Export Partnership.”

Earlier this month Wang Hui joined Western’s board to represent CBC (Canada) Holding Corp, a joint venture of fertilizer producer China BlueChemical and Benewood Holdings, a subsidiary of Hong Kong investment firm Guoxin International Investment Corp. CBC has invested $31.98 million in Western with a 20-year offtake agreement. Hui serves as CEO/president and party secretary of China BlueChemical as well as chairperson for CBC.

Read more about Western Potash here and here.

Disclaimer: Western Potash Corp is a client of OnPage Media Corp, the publisher of ResourceClips.com. The principals of OnPage Media may hold shares in Western Potash.