Rare Earths Gold Blog

China Again Hints At A Reduction In Exports of Rare Earths Elements and Lithium

rareearthsgold — Tue, 16 Mar 2010 01:17:44 +0000

A Chinese politician has urged for a curb to be placed on the export of rare earths elements and lithium.
Hu’ercha, a deputy to the National People’s Congress and mayor of Inner Mongolia’s Baotou city, home to 75 percent of China’s rare earths reserve urged the country to work out policies to support the development of rare earths-related industries and set up a development fund to strengthen basic research on rare earths.
Though China supplies about 90 percent of the world’s rare earths, it has little say on international pricing due to inadequate industrial innovation and slow development of high tech products.
The rare earths elements are 17 elements on the bottom right hand corner of the Periodic Table with names like e.g. lutetium (Lu), dysprosium (Dy) terbium (Tb), thulium (Tm), and yttrium (Y).
However commercial mining of the rare earths elements isn’t easy. Firstly there is the environmental problem in that rare earth elements are normally found in conjunction with uranium deposits. That tends to complicate mining especially for the heavy rare earths elements like disprosium and neodymium.
Secondly mining is very expensive and capital intensive. Lastly, China dominates the rare earth elements mining as it produces 95% off the world’s rare earths elements. China has built a stranglehold over the rare earths elements.
What are the rare earths elements used in?
Neodymium, a heavy rare earths element, is a super magnet used by the automotive industry in small electric motors, including brake systems, seat adjusters and car stereo speakers.
In fact, super magnets made of neodymium are nearly 10 times stronger than regular magnets! This is because the rare earths element’s do not heat up like ‘normal magnets’ and maintain their magnetism under extremely high temperatures. And this rare earths element’s ability to withstand extremely high temperatures makes it ideal for deep oil drilling. They’re also used in MRI’s and proved crucial in the miniaturization of laptop computers and audiovisual recreational equipment.
Without sufficient quantities of these rare earths element’s, production on these and hundreds of other products that we take for granted—such as iPhones, BlackBerries, computers, TVs and even missile guidance systems – could suddenly stop!
Unbelievably, companies and governments all over the world that rely on rare earths elements are just now becoming aware of these facts and a mad scramble is under way to gain access to the 5% of rare earths elements production not under China’s grasp.

Rare Earth Deposit Holdings of Utah-Based U.S. Rare Earths, Inc. Ranked Highly in Global Listing by the U.S. Geological Survey (eon.businesswire.com)
Why China Will Rule the Electronics World (everyjoe.com)

China’s forex chief not too keen on gold as investment (why we don’t believe him)

rareearthsgold — Wed, 10 Mar 2010 01:26:25 +0000

This was the headline on MarketWatch.com (the words added in brackets are mine).
Apparently the Chinese would rather buy T Bills than buy Gold.
Do you really believe this?
Famed gold trading legend Jim Sinclair says, do what the Chinese do and not what the western media quotes them as saying.
Jim Sinclair’s father was none other than Bert Seligman, a close associate of Jesse Livermore. Jim learnt enough from his father to become one of the biggest gold traders.
Jim should know, as Jim’s Tanzanian mining company Tanzanian Royalty Exploration company (TNX.TO) has Chinese partners.
Here’s what is really happening… The Chinese got beaten to the IMF sale by the Indians, who bought a huge quantity of gold at approximately $1045 per ounce.
The Chinese apparently were caught off guard by the Indians and will have ‘lost face’ if they buy higher then them.
They are trying to jaw bone the price of gold down so they can acquire the rest of the IMF gold at either the same price or better than the Indians.
The chart action indicates that the price of gold could move down further here under $1100 per ounce.
A ‘death cross‘ has just come into effect – this is where the 50 DMA (day moving average) crosses below the 100 DMA especially if both DMA’s are above the 200 DMA as shown below:
Gold should be a great short term buy over the next week once the current pullback completes.
I only ever buy gold when it pulls back and sell it when it goes up … see The Secret and Only Way To Trade Gold.

Tanzanian Royalty Announces Participation of Jinchuan Mining In Program to Explore and Develop Kabanga Nickel Licenses (eon.businesswire.com)

‘Buy farmland and gold,’ advises Dr Doom

rareearthsgold — Wed, 03 Mar 2010 02:53:35 +0000

Mark Faber advised hedge fund managers to buy gold and live on farmland away from cities.
The bleak warning of social and financial meltdown was delivered today in Tokyo at a gathering of 700 pension and sovereign wealth fund managers.
Speaking today, Dr Faber said that investors, who control billions of dollars of assets, should start considering the effects of more disruptive events than mere market volatility.
“The next war will be a dirty war,” he told fund managers: “What are you going to do when your mobile phone gets shut down or the internet stops working or the city water supplies get poisoned?”
His investment advice, which was the first keynote speech of CLSA’s annual investment forum in Tokyo, included a suggestion that fund managers buy houses in the countryside because it was more likely that violence, biological attack and other acts of a “dirty war” would happen in cities.
He also said that they should consider holding part of their wealth in the form of precious metals “because they can be carried”.
One of Dr Faber’s darker scenarios involves growing military tension between China and the United States over access to limited oil resources.
Dr Faber, who advised his audience to pull out of American stocks one week before the 1987 crash and was among a handful who predicted the more recent financial crisis

Marc Faber Warns Of 20% Fall In US Stocks (benzinga.com)

Is Sprott Physical Gold Trust Responsible for Gold Move Higher

rareearthsgold — Wed, 03 Mar 2010 01:10:42 +0000

Sprott Asset Management is involved with a new physical gold bullion trust now trading in the States with the ticker symbol “PHYS.”
The IPO for the fund was last Friday 26 February, with a reported 40 million shares outstanding at 10$Cndn.
There is no hard news yet on how much of the IPO was held by underwriters.
In fact, most of the news on it is a bit dated.
There is still some key information missing.
The cash assets less expenses of the trust are not yet listed.
I have not seen a detailed release on the results of the IPO yet. And more importantly, the trust lists only 13,686 ounces of gold owned, with a market value of approximately US$15 million.
This would imply that Sprott could possibly be in the market looking for up to 10 tonnes of gold.
Could they be buying this in the market or form the IMF?
Either way this may be a factor in the rise of the gold price.
Especially since the dollar has not really taken a significant hit.

Sprott Launches Physical Gold Trust: Now You Can Store Your Gold in Canada (seekingalpha.com)
Gold Steady Despite Dollar Strength (online.wsj.com)

Chinese Baogang Group to build rare-earth reserve projects – Increase in rare earths prices

rareearthsgold — Mon, 01 Mar 2010 16:25:23 +0000

The People’s Daily Online reported that Inner Mongolia Baotou Steel Rare-earth (Group) Hi-tech Co., Ltd announced recently that one of its subsidiaries was approved to carry out a rare-earth strategic reserve program.
The company will build 10 rare-earth oxide reserve projects with over 200,000 tons of total capacity.
Since the beginning of 2008, global financial crisis led to a sharp decline in rare-earth prices. And Japan’s massive rare-earth reserves guaranteed the country’s pricing rights in the world rare earth market.
Xu Guangxian, a 90-year-old chemist with Peking University, known as China’s “father of rare-earth”, suggested that China should “establish a national reserve system for rare-earth.”
China’s Ministry of Industry and Information Technology (MIIT) has disclosed its specific plan for the development of China’s rare-earth industry from 2009 to 2015.
Baotou Steel Rare-earth Group will manage the fund rising for the reserve system, while Inner Mongolia autonomous regional government, Baotou municipal government and Baogang Group will provide interest subsidies.
This could be the start of the hoarding of rare earth elements by the Chinese.
There could be a corresponding decrease in exports of the rare earth elements which could lead to price increases of the rare earth elements in the intermediate term.

Concern as China clamps down on rare earth exports (independent.co.uk)

China Must Be Long Term Gold Buyer – Official

rareearthsgold — Fri, 26 Feb 2010 14:14:29 +0000

A recent Reuters article states:

BEIJING – China has to keep buying gold over a long period and any price fall will present a good buying opportunity, Xia Bin, head of the financial institute of the Development Research Centre, a think-tank under the Cabinet, said on Friday.

“The long-term strategy should be very clear, that is, China has to keep buying gold; but the detailed timing should be decided by the price curve,” Xia told reporters.

China had to increase its gold reserves to underpin the yuan’s international role, he said.

But he declined to give details on when China should buy.

“It is not my job to judge whether the price is low or high,” he said. “But price is a relative thing – the price is high now compared with before, but for the future, who knows? It may rise to $2 000, who knows?”

He had no idea if China would buy the 191 t of gold being offered for sale by the International Monetary Fund, but said China should be open to both buying in the international market and investing in overseas gold mines.

His call for investment in foreign mining projects echoes comments by an official from the China Gold Association, who was quoted by the China Daily on Wednesday.

Why China’s Rumored IMF Gold Purchase, If True, Would Be Highly Significant (seekingalpha.com)

Dead Cross in Gold

rareearthsgold — Wed, 24 Feb 2010 04:05:17 +0000

There are the possible makings of another downdraft in gold as exhibited by the relatively rare occurrence of a Dead Cross.
This is when you get the 50 DMA (moving average) turn below the 100 DMA.
And especially when the 200 DMA is below both the 50 DMA and the 100 DMA.
We shall watching closely for this signal in gold.
However it is important to note that the Gold Miners Index GDX normally leads gold itself and the Dead Cross has already been exhibited in the GDX.
This would lead us to surmise that gold could take a fall here assuming the $1100 level is breached.
The next level of support is $1075.

The (Gold) Company You Keep

rareearthsgold — Wed, 24 Feb 2010 01:00:23 +0000

The smart money is buying gold.

In the past few days, renowned investors have filed quarterly 13F disclosures of their equity positions. The 13F’s give us a view as to where some major investors have been putting their money to work.

Soros Fund Management increased its stake in SPDR Gold GLD in the fourth quarter to 6.2 million shares, or $664 million, from 2.5 million shares, or $245 million in the third quarter.

Then there’s the mighty John Paulson of New York-based Paulson & Co. hedge fund, who raked in mega riches betting hard against subprime mortgages.

The hedge fund manager remains a dedicated gold bull: GLD is the biggest holding in his fund.

Finally, David Einhorn of Greenlight Capital, whose bearish bet against Lehman Brothers proved prescient, also revealed he’s enamored by gold.

His filing reveals that Einhorn did cut back his position in Barrick Gold (ABX), but he continues generally to like the gold miners, maintaining a stake of 3.2 million shares in Market Vectors Gold Miners (GDX), an ETF with holdings including Eldorado Gold (EGO), Goldcorp (GG), and Kinross (KGC), worth $147.9 million.

In October 2009, in a speech before the Value Investing Congress, Einhorn shared why he thought gold could be a worthwhile investment, looking ahead.

“I have seen many people debate whether gold is a bet on inflation or deflation,” he said. “As I see it, it is neither. Gold does well when monetary and fiscal policies are poor and does poorly when they appear sensible. Gold did very well during the Great Depression when FDR debased the currency. It did well again in the money printing 1970s, but collapsed in response to Paul Volcker’s austerity. It ultimately made a bottom around 2001 when the excitement about our future budget surpluses peaked.”

Einhorn added, “Prospectively, gold should do fine unless our leaders implement much greater fiscal and monetary restraint than appears likely. Of course, gold should do very well if there is a sovereign debt default or currency crisis.”

More interesting news for gold bulls: Dennis Gartman, editor of The Gartman Letter, notes that Russia’s central bank has again increased its holdings of gold a bit in January compared to December, having added 800,000 ounces of gold.

This is one more bullish endorsement for gold, notes Gartman: “Russia has long said that it intends to bring its holdings of gold eventually to 1,200-1,300 tonnes. As of the end of January it has approximately 640 tonnes of gold on hand. It has a long way to go to reach its goal.”

The yellow metal’s move in the past few months has been a twisty one: Gold surged to a record high of $1226.56 an ounce on December 3, but has now slipped to $1001 by year-end as the greenback strengthened.

But gold’s recent pop is in trouble, according to Tom McClellan of The McCllelan Market Report (by way of Minyanville.com).

In a recent note to clients, the technician pointed out that, when gold prices move upward but GLD ounces move downward, it’s a sign that the gold rally isn’t likely to continue. When GLD ounces move up along with gold prices, he emphasizes, that provides confirmation of the move.

Examining GLD assets can also be a means of gauging investor sentiment on a larger time scale, McClellan says. GLD, he writes, is now the easy way for the average investor to get invested into gold, without having to rent a safe deposit box.

“So when the assets grow or shrink too much on a larger time scale than this,” McClellan notes, “that can be a sign of a sentiment extreme. For now, I see the tepid response in GLD ounces as a sign that gold’s pop is in trouble.”

I would tend to agree with McClellan assessment as gold’s daily stochastics are curling over from the top signaling an overbought situation. It is is possible if $1000 does not hold, then 1075 and next 975 come into play.

Either way our playbook remains the same – we buy gold in pyramid fashion all the way down and sell it as it rises.

What Would China Rather Buy – T Bills or Gold?

rareearthsgold — Sat, 20 Feb 2010 20:23:33 +0000

China just sold $34 billion worth of T Bills.
What’s it going to do with its reserve stockpile of over $2 trillion?
We have an inkling of what China is going to invest in, thanks to the holdings of China Investment Corp., the country’s $200 billion sovereign wealth fund.
More recently, CIC has turned toward natural resources, in 2009 buying 17% of Teck Resources Ltd. (TCK) and 13% of Singapore-based Noble Group. Teck Resources is a major diversified mining company, while Noble is a global commodities trading/supply-chain manager with $36 billion in sales.
This indicates that China is going to buy natural resources…….
And gold.
China already owns some gold, but not much, compared to the size of its reserves – 1,054 tons at March 2009, worth about $37 billion at today’s prices.
At 1.5% of its reserves, that’s pathetic, though it’s up 76% since 2003.
On average, international central banks hold 10.2% of their reserves in gold.
To get to that level, China would have to buy more than $200 billion worth – about two years’ global mine output.
Nevertheless, it seems unlikely that China will be willing to retain above average confidence in the eternal value of Western fiat currencies, and so it’s probable that considerable Chinese gold buying is taking place on a confidential basis.
China and for that matter the rest of the BRIC nations are seen to be increasing their gold reserves.
They are some ways off in catching up to the developed world’s holdings.
Got gold?

Soros never said Gold is ‘in’ a bubble

rareearthsgold — Fri, 19 Feb 2010 23:14:40 +0000

Soros’ Bets

The 13F filings are out for George Soros’ Soros Fund Management. According to Reuters, the billionaire more than doubled his bet on the gold ETF (GLD), taking his prior stake of 2.5 million shares from the end of the third quarter to 6.2 million shares. His other bets include a 7.7 mln share stake in Brazilian oil giant Petrobras (PBR) as well as an increased position in oil company Hess Corp (HES).

Soros was merely talking his book and needed to get gold down to where he could accumulate it. Soros merely said gold is the ultimate bubble and not that gold is in a bubble as illustrated by his investment decisions.

Soros Doubles Down on Gold (businessweek.com)
Soros Doubles Gold Holdings: Expect Others to Follow (seekingalpha.com)

Rare Earths Gold Blog

China Again Hints At A Reduction In Exports of Rare Earths Elements and Lithium

Related articles by Zemanta

China’s forex chief not too keen on gold as investment (why we don’t believe him)

Related articles by Zemanta

‘Buy farmland and gold,’ advises Dr Doom

Related articles by Zemanta

Is Sprott Physical Gold Trust Responsible for Gold Move Higher

Related articles by Zemanta

Chinese Baogang Group to build rare-earth reserve projects – Increase in rare earths prices

Related articles by Zemanta

China Must Be Long Term Gold Buyer – Official

Related articles by Zemanta

Dead Cross in Gold

The (Gold) Company You Keep

What Would China Rather Buy – T Bills or Gold?

Soros never said Gold is ‘in’ a bubble

Related articles by Zemanta