Gold continued its record breaking surge this week, posting a fresh all time high at US$1,364/oz as risk aversion increased in anticipation of higher inflation and further quantitative easing (QE) from the Fed.
Back in September, the Fed said it was prepared to inject more stimulus into the economy, expressing concerns about the pace of the economic recovery and low inflation.
The Bank of Japan cut its interest rates from 0.1% to a range between 0% and 0.1% early in the week, while the government later passed a US$61 billion stimulus package. Speculation that the Fed will follow suit and go for anther round of quantitative easing got another boost from US employment data, which came out on Friday.
The Labor Department reported a larger than expected drop of 95,000 in non-farm payrolls, while the unemployment rate was unchanged at 9.6% in yet the latest sign that the recovery is quickly running out of steam.
Anticipation of more QE increases gold’s appeal as a safe haven asset and an inflation hedge.
In addition to that, anticipation of more QE has pressured the US dollar, driving the EUR/USD rate above 1.40.
Gold is seen as an alternative investment to the greenback and usually moves inversely to the American currency.
Gold fell on profit taking closer to the end of the week, however it took the yellow metal less than a day to rebound after getting strong support from the jobs data and mining major AngloGold Ashanti (NYSE:AU, LON:AGG), which closed its hedge book months ahead of schedule at a cost of US$2.6 billion.
The elimination of forward sales agreements clearly indicates that AngloGold expects gold to rise further and wants to have full exposure to the market prices.
AngloGold’s chief executive Mark Cutifani said that a range between US$1,200 and US$1,500 seemed like a sensible forecast for 2011.
Gold ended the week at US$1,347/oz, while silver and platinum reached US$23.22/oz and US$1,701/oz respectively.
Major mining were headed in different directions this week. Gold miner Randgold Resources (LON:RRS) edged higher from 6,510 pence to 6,515 pence and platinum miner Lonmin (LON:LMI) rallied from 1,716 pence to 1,819 pence, while silver miner Fresnillo (LON:FRES) retreated from 1,270 pence to 1,248 pence.
African Barrick Gold (LON:ABG) rose from 599 pence to 616 pence.
Likewise, midcaps were mixed. Petropavlovsk (LON:POG) declined from 1,099 pence to 1,020 pence, while silver producer Hochschild Mining (LON:HOC) rose from 438 pence to 465 pence and Aquarius Platinum (LON:AQP) advanced from 338 pence to 372 pence.
Small Cap News
Electrum Resources (LON:ECR) shares spiked over 30% higher reaching 1.675p per share, after the group announced that it acquired two gold-base metal exploration projects in Argentina. Electrum has also acquired two gold-base metal exploration projects in Argentina: the Sierra de las Minas and the Los Aquirres projects, both situated in the La Rioja Province.
KEFI Minerals (LON:KEFI) shares advanced almost 20% after the company secured funding for initial gold exploration work in Saudi Arabia. Unveiling plans for a £625,000 cash call, managing director Jeffrey Rayner also gave a particularly bullish assessment of the company's prospects in Saudi. This week, the company unveiled plans to raise £625,000 as managing director Jeffrey Rayner gave a particularly bullish assessment of the company's prospects in Saudi Arabia. The company is expecting the first of twenty-one exploration licenses it has applied for to be granted imminently.
The share price says it all: in just three months the value of explorer Beowulf Mining (LON:BEM) has more than doubled. The catalyst for this movement has been a series of bullish updates on iron ore exploration in the remote and inhospitable region of northern Sweden. The stock was up 10% on Friday after an upbeat appraisal of its Kallak iron ore project. The news confirmed “extended mineralisation” at Kallak North, which has an estimated resource of 150 million tonnes, with grades above 30 per cent.
Forte Energy (ASX: FTE, LON:FTE) is preparing for intense field activities at its main uranium projects, with a new drilling campaigns starting near Bir Moghrein in Mauritania, and with activities resuming at Firawa in Guinea after political issues that hampered progress were resolved.
Mariana Resources (LON:MARL) has appointed Canadian Randy Turner to the board as a non-executive director ahead of its listing on the Toronto Stock Exchange (TSX). The company said the appointment was in line with its strategy of bolstering its Canadian exposure ahead of the listing.
Finders Resources (LON:FND, ASX:FND) finance director Mike Stirzaker will stand down at the end October. He has landed a new senior role at a Sydney-based natural resource focused fund manager. Stirzaker will stay on at Finders as a non-executive director. The company's capital placing has received “overwhelming” shareholder support, raising funds for the development of its flagship Wetar copper project in Indonesia.
Prosperity Minerals Holdings (LON:PMHL) expects its full year performance to be in line with market expectations. In a trading update before entering a close period ahead of November’s interim results, the company said it is looking forward with confidence.
African Eagle Resources (LON:AFE) has reported a 13% increase in the nickel resource at the Dutwa nickel project in Tanzania, as well as a 6% increase in average nickel grade to 0.93% Ni. The news boosted African Eagle’s share price with a 16% rise in early trading.
Herencia Resources (LON:HER) shares shot up nearly 25% on AIM in reaction to the news of a significant upgrade to the Paguanta project’s underground inventory.
Greatland Gold (LON:GGP) said that the first results from its maiden drilling programme at the Ernest Giles project in Western Australia signalled the potential for a large scale mineralisation.
Shares in Titanium Resources (TRG, LON:TXR) skyrocketed 55% on news it resolved a dispute with the government of Sierra Leone relating to funds loaned to its subsidiary Sierra Rutile Limited (SRL).
Avocet Mining PLC (LON:AVM) has closed the sale of several non-core exploration assets and investment interests. The disposals comprise the sale of Avocet's residual equity interests in Merit Mining Corp (TSX-V:MEM), expected to complete in late October 2010, and Monument Mining Ltd (TSX-V:MMY).
African Aura Mining (LON:AAAM, TSX-V:AUR) reported the results of metallurgical testwork on the Putu iron ore project in Liberia, indicating substantially improved recoveries and concentrates. African Aura is now debt-free, after holders of 2.3 million worth of convertible debt notes opted to convert the notes to shares at a price of 112 pence per share.
Shares in Gemfields (LON:GEM) shot up 83 per cent after the group posted a maiden profit and revealed that production at the Kagem mine in Zambia hit record levels in the first month of the new financial year.
EMED Mining (LON:EMED) gave an overview of the progress made at its key gold and copper projects in Spain and Slovakia during the past quarter. The company’s key asset is Proyecto Rio Tinto (PRT) in Spain with its efforts currently focused on restarting the major copper mine.
Medusa Mining (LON:MML, TSX:MLL, ASX:MML) has reached a new milestone as a public company, after shareholders approved its proposal to start paying dividends.
Nyota Minerals (LON:NYO, ASX:NYO) has begun an airborne geophysical survey over its exploration properties in Ethiopia. The company is undertaking the extensive assessment after it acquired an 80% stake in a portfolio of exploration tenements in June. This week, Nyota unveiled more encouraging test results from its flagship Tulu Kapi gold project in Ethiopia. Test work carried out on samples taken in July reveal they contain gold grades ranging from 8.16 grams per tonne right the way down to 0.14 grams.
Minera IRL (LON:MIRL, TSX:IRL) told investors that the feasibility study and key activities at its Don Nicolas project in Argentina are on track.
Niger Uranium (LON:URU) shares advanced on London’s AIM market after it unveiled plans for a new South African nickel business. The company has agreed a new joint venture with South African Nickel (SAN), with Niger providing up to US$3.6 million to advance potential open-pittable nickel projects over the next 20 months.
Orosur Mining (LON:OMI, TSX-V:OMI) shares soared over 30% on London’s AIM market following ‘excellent’ drill results from the Vaca Muerta project, which may boost the San Gregorio mine plan.
Astaire Securities thinks that Sunrise Resources (LON:SDS) could heavily benefit from an anticipated shortage in the diamond market, while praising its decision to diversify.
Evolution Securities published a note on Cluff Gold (LON:CLF, TSX:CFG) following interim results, saying it sees considerable upside potential if resources and reserves are increased at the existing mines and as the Baomahun project in Sierra Leone nears production.
Norseman Gold (LON:NGL, ASX:NGX) has raised £11.25 million to help bring the North Royal Open Pit into production. The new capital was raised through a private placing which was organised by Ocean Equities and Seymour Pierce.
Landore Resources (LON:LND) has defined an exploration target containing up to 50,000 ounces of gold at the Lamaune deposit at its Junior Lake property in Ontario.
Shares in Creat Resources Holdings Ltd (LON:CRHL) were boosted by news that Galaxy Resources Ltd (ASX:GXY), in which Creat has a 19.99 percent stake, has started lithium concentrate (spodumene) production at Mt Cattlin in Ravensthorpe, Western Australia.
Noventa (LON:NVTA) provided investors with more details on its planned listing in Toronto, announcing the appointments of Canaccord Genuity as joint broker. The Mozambique focused tantalum miner has also named Computershare its registrar in Jersey with a branch register in Canada.
Leyshon Resources (LON:LRL, ASX:LRL) shares advanced over 10% in early London deals after it revealed plans to acquire highly prospective coal assets in South West Mongolia.
Red Rock Resources (LON:RRR) is set for a significant cash boost as its investment in Kansai Mining (TSX-NEX:KAN) is about to realise a massive C$10.4 million gain. Last week Kansai agreed to sell its interests in two subsidiaries to a private equity group for C$40 million.
African Diamonds (LON:AFD) has recommended a takeover offer from Lucara Diamonds Corp (TSX-V:LUC) which values the company at C$82 million, approximately £51 million.
Large and Mid Cap News
Copper miner Kazakhmys (LON:KAZ) chairman Vladimir Kim has sold 58.8 million shares, 11% of the company, to a Kazakhstan sovereign wealth fund. Kim will bank £836 million through the sale.
Rio Tinto Alcan (LON:RIO, NYSE:RTP, ASX:RIO) said it has invested an additional US$140 million in its aluminum smelter in Straumsvik, Iceland, bringing its total invesment in the ISAL smelter to US$487 million.