The story below points strongly to China’s emerging/strengthening distrust of the US$ and US Debt…..
‘New funds considered’ to protect reserves
By Hu Yuanyuan
Published: Apr 26 2011 8:36

BEIJING — The central bank is planning new investment funds to diversify holdings in the nation’s $3 trillion foreign exchange reserves, to hedge against depreciation and inflation risks, according to a news report.

The proposed funds will invest some of the foreign reserves in energy and precious metal markets, the New Century Weekly said on Monday, citing unnamed sources close to the People’s Bank of China.

However, the report did not disclose the size of the proposed funds, their operation methods or the timing of their possible launch. The central bank was not available for comment.

Foreign exchange reserves jumped by $197 billion to $3.04 trillion in the first quarter, marking the second-biggest increase on record, central bank statistics show.

That fueled concern over devaluation risks and over-exposure to US debt.

“This is a positive way to diversify investment risk, especially as China holds such large amounts of US debt,” Xu Hongcai, a finance professor at the China Center for International Economic Exchanges, told China Daily.

While China has been slashing its US debt holdings since October, it still remains the largest creditor. At the end of February, China held $1.15 trillion of US debt, down $600 million from the previous month.

US debt, once considered gilt-edged, is becoming increasingly risky.

Credit agency Standard and Poor’s downgraded America’s credit outlook in April from stable to negative for the first time in history, implying that the US has been put on notice that it faces losing its AAA credit rating unless it gets on top of its yawning debt and deficit.

Earlier this month, Zhou Xiaochuan, the central bank governor, said China’s foreign exchange reserves had exceeded a “reasonable” level and the management and diversification of the holdings should be improved.

The central bank’s plan to set up new funds will diversify risk by creating new investment bodies, said Xu.

Currently, China Investment Corp (CIC), the country’s sovereign wealth fund, is mainly responsible for the overseas investment of China’s swelling foreign reserves. Established in 2007, CIC is now waiting for a capital boost plan from the State Council.

Diversifying reserves through investment agencies, such as CIC, is a possibility, Zhou said on April 18, after a speech at Tsinghua University, and also highlighted a possible option.

“One option is to consider some new types of investment agencies which focus on new investment areas.”

Xu said he believes another way to reduce risk to the foreign exchange reserves is to transfer some funds to commercial banks as long- and medium-term time deposits, so private enterprises can get them when exploring overseas markets.

“That should be a win-win deal, as the central bank can also secure a yield higher than US debt,” said Xu.

According to the New Century Weekly, the central bank is also considering a fund that could intervene in the foreign exchange market to stabilize exchange rates on behalf of the central bank.

The growth in foreign exchange reserves may affect efforts to curb inflation.

Yi Gang, deputy governor of the central bank and head of the State Administration of Foreign Exchange, said earlier that to keep the exchange rate stable the central bank had to roll out nearly 20 trillion yuan ($3.04 trillion) last year, thereby fueling inflation.

The Wall St Journal’s take on the above story

And another just published in the Financial Times

Which viewpoint you favor the outlook for Australia’s resource sector  gets brighter by the minute

Comments Off on CHINA to invest foreign reserves in energy and precious metal markets

“Silver soared more than.4 per cent to an all time high of $US49.79 in thin Asian trading today as speculation that China planned to reduce its US dollar holdings sparked a scramble for precious metals.”

http://au.news.yahoo.com/thewest/business/a/-/world/9255664/silver-hits-all-time-high/

Comments Off on Silver hits new high… China to urgently get out of the USD

Gold and Silver Prices Continue to Rise; Money Invest News Spot Gold and Spot
Learning and Finance
Once again contract gold flirted with the psychological threshold on Thursday before finally holding on to the higher price per ounce rate to finish. Precious metal gold closed over the mark for the first time to close the week. Gold and silver prices
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Canadians cashing in old coins to profit from soaring silver prices
CanadianBusiness.com
Silver is up more than 60 per cent from the lows of late January and is within sight of the record selling price of $50.36 set in 1980. Many analysts expect the price will surpass $50 and may not quickly collapse as it did 31 years ago when the price
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Why Silver Prices Won’t Quit
TheStreet.com (blog)
By Alix Steel 04/22/11 – 08:00 AM EDT NEW YORK (TheStreet) — Silver prices are up 49% in 2011. Day after day the metal keeps hitting new 31-year records. Traders keep waiting for some kind of fierce and furious correction, but so far silver keeps
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Higher gold and silver prices still to come: Canaccord
Globe and Mail
It raised its “peak gold price” forecast today to $1600, up $100, while hiking silver SI-FT to $47.50 from $30. It also boosted its 2011 average gold and silver price forecast to $1525 and $42, respectively. “We continue to believe that macroeconomic
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Soaring gold, silver prices linked to weaker dollar
Daily Times
ISLAMABAD: The Pakistan Economy Watch (PEW) on Thursday said unprecedented hike in gold and silver prices suggests that investors have lost some faith in weaker US dollar. “The development also hints at lack of confidence among investors in America’s
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One “Combination” To Unlock the “Safe” of Gold and Silver’s Price Trends
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The Squeeze is On! Silver Continues Its Climb (SLV, UDN, JPM, HSBC)
Benzinga
For example, over the past 12 months, the price of silver has risen 157.8% while gold prices have only risen 31%. The idea of someone trying to corner the market is not as farfetched as it may seem. After all, the silver market is much smaller in size
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Silver to continue its run but next big move to belong to gold – RBC
Mineweb
That said, the bank does have some “medium- to longer-term concerns due to increasing primary silver mine supply, which we believe could eventually cap the upside for silver prices.” According to RBCCM, primary silver production is expected to increase
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Silver Shines Near Old Record
PBS Nightly Business Report
Silver prices rose sharply again, up $1.60 to $46 and change per ounce. That`s the highest price in a generation. GHARIB: The run-up in silver has been spectacular. Prices have more than doubled in the past year alone. Suzanne Pratt takes a look at
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“Talisman Mining Ltd (ASX: TLM) is pleased to advise that the drilling of a single deep diamond drill hole (approximately 1,500 metres) has now commenced at its 100% owned Shelby Project in Western Australia.

The Shelby Project is located on the northern margin of the Bryah Basin approximately 30km north of the Horseshoe Lights Copper-Gold Mine (see Figure 1).

The total project area covers an approximate 100km strike length of a major structural corridor.

Evaluation of recently collected airborne magnetic data indicates excellent potential for large intrusive bodies either of mafic-ultramafic or granitic affinity that have the potential to host a range of deposit types including mafic-ultramafic intrusive related nickel-copper deposits (e.g. Voisey’s Bay (Vale), West Musgrave (BHPB)) and/or Iron Oxide Copper Gold (IOCG) deposits (e.g. Olympic Dam (BHBP))

Talisman plans to test this concept by drilling a 1,500 metre diamond drill hole into a large modelled magnetic target at Shelby (see Figure 2) and has been granted co-funding of up to $200,000 under the WA State Government Exploration Incentive Scheme (EIS).

Examination of open file records by Talisman found that BHPB had drilled a single 520 metre diamond hole to test this target in 1996. The single drill hole intersected highly altered mafic-ultramafic lithologies at approximately 450 metres further supporting the concept for the potential existence of a large intrusive mafic-ultramafic body with the potential to host magmatic nickel-copper sulphides.

The deep drill hole and associated programs of down-hole geophysics is anticipated to take approximately 6 weeks to complete.”

tlm-sfr

shelby-deep-hole

BULLSEYE?
shelby-target-huge

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Focus Commences Development of Three New Open Pits at Tindals Mining Centre
• Open pits aimed at increasing Focus’ production by 30,000oz pa
• Pits will form Focus’ third production platform in WA goldfields
• Increase in open pit probable reserves by 31%
• Drilling set to start on additional open pit targets at Tindals

Australian gold producer Focus Minerals (ASX: FML) is pleased to announce that it has started development of three open pits at its Tindals Mining Centre in Coolgardie, Western Australia, putting the Company on track to increase annualised production by 30,000 ounces.

Focus has appointed Kalgoorlie-based mining contractor Barcon to develop the pits and clearing has now commenced.

The open pits at the Tindals Mining Centre will form the third leg of Focus’ growing production strategy, joining its existing underground mining operations at the Tindals Mining Centre and its newly opened mine at The Mount, 80km to the south.

The pits will provide Focus with an important low-cost production base within 5km trucking distance of its Three Mile Hill processing plant in Coolgardie.

“This is another significant step forward in Focus’ plan to ramp-up production to 100,000oz in 2011 and then to 130,000oz in 2012,” Focus Chief Executive Campbell Baird said.

“We started 2011 with just one operating mine and in the space of four weeks we have commenced ore development from the Company’s second mine at The Mount, and now development of the third production centre at the open pits is underway.”

Focus will commence mining at the Empress, Big Blow and Dreadnought pits. Mr Baird said the three pits are among 13 deposits and prospects that Focus is developing across the 5km-long and 2km-wide Tindals Mining Centre.

The start of development coincides with a 31 per cent increase in open pit probable reserves to 505,000t at 2.14g/t for 34,700oz (Table 1). The reserve increase has been driven largely by a modest drilling programme at Big Blow that better defined shallow mineralisation to the south and almost doubled the ounces in reserve (Figure 1).

Reserve increases have also occurred at Empress and Alicia as work, including drilling, continued in preparation for mining and allowing for inferred resources to be converted to indicated and included in reserve statements. A small reserve has also been added at Cookes.

Mr Baird said off the back of the recent capital raising, new drilling programmes were about to start at a number of other targets as part of the plan to grow the open pit reserves and develop additional pits (Appendix 1).

To read more please click here

Comments Off on Focus (FML) to ramp-up production to 100,000oz in 2011 and then to 130,000oz in 2012

Nice article in today’s Mineweb that explores Ramelius’ new Western Australia Mt Magnet Mine. Couldn’t be a better time to be markedly increasing Gold production from around 90,000 ozs (Wattle Dam mine) to well above the 160,000 oz mark.

I talked at length with the RMS guys at the Brisbane showcase… they were nice people with a great story. I went home did the sums, looked at the databases and then bought in. It has been a good ride since then and now is the time to buckle up and enjoy the ride…..

Mineweb:
Ramelius gives go-ahead for its 2nd gold mine in WA
Friday , 15 Apr 2011

A second gold project in Western Australia is to be mined under a decision announced today by Australia’s highest grade gold producer, Ramelius Resources Limited (ASX: “RMS”) with mining to start in the second half of this year with first gold pours in the opening quarter of next year.The decision will see an estimated total of 520,000 ounces of gold produced over an initial six years from Ramelius’ wholly owned Mount Magnet operation – a former gold producer located 600 kilometres northeast of Perth in the State’s Murchison district.

Ramelius acquired the project for A$40 million in July last year. It hastotal resources of 3.3m ounces of gold, complementing Ramelius’ high grade >90,000 ounce per annum producing Wattle Dam underground gold mine near Kambalda, also in Western Australia.Ramelius has since announced a revised mineral resource for the Galaxy area at Mount Magnet of 20.3mt at 1.65 g/t Au for 1,075,000 ounces of gold. read the full article

Ramelius is currently around tenth place in our mid level producers and soon will be in the top four.


Looks like RMS will soon be moving markedly to the left.

rms-150000ozs

All aboard the train is leaving the station

Comments Off on Ramelius to produce >150,000 ozs per year with the addition of Mt Magnet

I’ve spent some time looking through IAU’s Indonesian assets….

Most people probably don’t realise that IAU has the second largest gold resource for our ASX listed explorers.  See http://australian-gold.com/gold-shares-explorers-10m-ozs-1m-ozs

But having looked over IAU’s recent announcements there still seems to be a lot more to come…

And pleasingly the new resources are in Java itself with good infrastructure and a trained work force and not some far off volcanic outcrop with a separatist political movement.

It seems that  others agree….. Below is the latest marketclub analysis for IAU…

iau-weloveyou

UPDATE 20/4/2011

20 April 2011: Intrepid Mines Limited (ASX,TSX: IAU) (the “Company”) is pleased to announce the results of an independently prepared Preliminary Economic Assessment (“PEA”) for a potential heap leach, open pit gold mine on the oxide resource of the Tumpangpitu area of the Company’s (80% interest) Tujuh Bukit Project in Indonesia. The PEA was prepared by Kappes Cassiday, of Reno, Nevada, based upon column leach and other metallurgical tests performed at their laboratory.

The heap leach PEA is based on the Company’s December 2010 resource estimate of the near surface oxide resource at Tujuh Bukit (see the Company’s announcement of 14 December 2010) – which is separate from the far larger, underlying porphyry resources – and produced a positive conceptual economic analysis for the project. Significantly, the PEA, based on conservative assumptions, demonstrated a life of project annual average production of 143,000 recovered ounces of gold for 9 years at a cash cost of US$376 per ounce, net of silver credits at US$16.50 per ounce. The project delivers a post-tax cumulative cashflow of US$445 million, an NPV (at a 10% discount rate) of US$180 million and an IRR of 31%, at a gold price of US$1,050 per ounce (Table 1). The production and financial numbers are reported on a project basis (Intrepid Mines Ltd holds an 80% economic interest in the project).

read the announcement

Earlier post on IAU by Sparty

Summary…. this is going to be BIG.

I hold IAU

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GFMS CEO Paul Walker

“…ultra-low interest rates, macro-economic dislocation, fears of global imbalances…the wrath of these things still remain solidly in place and that’s really the bedrock of the gold bull rally.”

gold-percentage-assets

gold-pension-funds

I doubt that the situation is much different here in Australia. Being a gold and silver bug I have been following what is happening here on the ground in Australia. Our Silver ETC (ASX: ETPMAG) has a miniscule market turnover as does our Gold ETC (ASX: GOLD).
But just in case I’ve missed something I’ve been asking all of my friends if they own Gold or Silver bullion…. I’ve only found one person and he has a gold scrap business. I’ve yet to find anyone at all that has a few thousand ounces of silver or hundred Ozs of gold. And I haven’t heard a taxi driver or a concierge talk about gold or siler for many years……So to me so far we aren’t in a bubble.

GLD

SLV

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Worthwhile to check out our Australian Gold news page

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How higher can silver prices go-$50?
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Where has Silver come from and where is it going?
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Whether we are in a boom or bust silver’s demand will remain robust. It is now needed to make all facets of an economy run well and at all levels, even down to individual needs. This secures its future and assures us that silver prices are well …

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