-- Posted Tuesday, 29 May 2007 | Digg This Article
ECB sales figures were updated this morning showing a little more than 12 tonnes of sales by ECB banks into the market last week. While not as high as some previous weeks, 12 tonnes is still higher than the average run rate and shows that we're still in a period of increased sales. No word as to who these sales have been coming from out of the ECB in May, but our guess is that it's still a mix of the Banks of France and Spain. In the last 11 weeks, we have had over 133 tonnes of gold sold into the market. So in less than three months, ECB banks have sold 20 more tonnes of gold than they had in the previous 6 months (112 vs. 133 tonnes). No one expected this increase of sales after seeing some very paltry numbers out of the ECB sales figures in the first six months of the fiscal calendar. The Bank of Spain has not announced why they have ramped up sales so much, but should this bulk of selling still be coming from them, they're getting close to having sold 35-40% of their gold reserves into the market over a 3 month period. That isn't diversification, that's a fire sale to raise capital as quickly as possible. If the gold reserves are being sold off to stave off a meltdown in their banking and housing markets, we could see the first cracks in the fiat currency marketplace showing up.
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Australia and South Africa officially updated mining production totals this past weekend for the first quarter of 2007.
Australian production was down nearly 2% at just over 60 tonnes of production compared to last year.
South African production was down 7.8% compared to 1st quarter last year. Perhaps even more importantly is the nearly 20% increase in costs the mining companies have seen in this year over year period. Margins aren't expanding with increased prices and the bruising labor talks are sitting right on the horizon. Union and company discussion on wages are set to begin in mid June.
These are figures for the long term investor. Prices have nearly tripled in the last five years and production is still slumping in the #1 & 2 producing countries in the world.
Only one country, China, in the top 10 producing countries has shown an increase in production over the past five years. This is why we've had a 7% drop in mine production from 2001 to 2006. There is no reason, with reports like these from Australia and South Africa and with mining company CEOs stating lower production should be expected, to believe the production profile will somehow miraculously be saved by the increased production in one country.
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AngloPlatinum resumed wage talks with their unionized workers and Impala Platinum is scheduled to resume talks next week. Just like the gold industry talks, it'll be important to keep an eye on the progression of these discussions. Again, clients need to be made aware of the only avenue readily available to play these PGM markets is the physical metal or opening up a futures trading account. While we want to inform all on each opportunity, futures and options are the playground of the professional investors and the average investor can get hurt quickly via margin calls in futures contracts.
US platinum ETF 'unlikely' 29th May 2007
It has been claimed that a platinum exchange-traded fund (ETF) in the US is unlikely to materialise in the near future.
Following the high-profile launches of platinum ETFs in London and Zurich, there had been some suggestions that the US would soon follow.
However, ETF Securities, which was the first to launch a platinum ETF, has announced that it is not preparing to list its fund in the US.
Speaking to Reuters, ETF Securities Chairman, Graham Tuckwell, said: "I am of the view that it would be difficult to obtain the SEC [Securities and Exchange Commission] approval and hence a listing of a platinum or palladium product in the US market."
Mr Tuckwell then went further, speculating that other companies would not be interested in introducing a platinum ETF into the US market, commenting: "I don't think there will be a listed platinum or palladium ETF in the United States."
Platinum mining companies had been concerned that the launch of a platinum ETF in the US would result in demand outstripping supply, causing prices for the precious metal to jump considerably.
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