Rio (RIO), Turquoise (TRQ) Gets Power at Oyu Tolgoi

Rio Tinto (NYSE: RIO) and partner Turquoise Hill Resources (NYSE: TRQ) had good news to announce Monday as the challenge of obtaining the required power to run the mine was successfully navigated. The partners are now set to begin production on the mine in the early part of 2013.

The agreement put in place is a $6 billion deal with Inner Mongolia Power Corp. The deal was held up by differences between Mongolia and China, where much of the power will be provided from.

In as early as six weeks the first ore from Oyu Tolgoi will be processed by Turquoise Hill Resources. The company confirmed its projections of commercial production beginning sometime in early part of next year.

Goals for Turquoise Hill are to have the Oyu Tolgoi mine in full production by 2018. Estimates are it'll cost from $3 billion to $4 billion for the company to accomplish the task.

Underground mining is expected to start in 2016, after a feasibility study is released by Turquoise Hill in 2013.

Annual production estimates for the mine are for 1.2 billion pounds of copper, 650,000 ounces of gold and 3 million ounces of silver.

Turquoise Hill Resources, which owns the mine with the Mongolian government and Rio Tinto, hold a 66 percent stake in Oyu Tolgoi. Rio is running the operations.

Rio and Turqoise still face some uncertainties as the government has asked for Turquoise Hill to renegotiate the contract in place, something the company at this time has refused to do. Until that is solved, a cloud will of uncertainty will hang over the deal.

Once the uncertainty is removed and commercial production begins, Turquoise Hill Resources, especially, should take off in a major way on its share price. It could be one of the biggest mining success stories for many years, bringing shareholders some major success.

Jim Rogers: Recession Coming in 2013, 2014

Jim Rogers continues to reiterate his economic outlook going forward, which isn't a pretty one in his estimation, and he's surely right.

In an interview with Breakout, Rogers said about every 4 to 6 years America has gone through contraction and slowdowns since the beginning of the nation, and that isn't likely to change in light of the lack of results from endless simulating from central banks around the world, including the Federal Reserve in the U.S.

"Every four to six years since the beginning of the Republic we have had slowdowns in America," Rogers noted. "It's always happened and it's going to happen again."

Rogers said he sees 2013 and 2014 being difficult years, and recommends investors to plan accordingly.

In the third quarter in the United States, the growth rate was significantly downwardly revised from 1.7 percent to 1.3 percent, signaling things are already slowing down, with little to show that it will change any time soon.

Rogers said, "2013, 2014 you should be very worried and you should prepare yourself."

The global economy also looks weaker than anticipated as the International Monetary Fund (IMF) also downwardly revised its global economic growth numbers from 3.6 percent to 3.3 percent.

Some areas Rogers sees as important to invest in are gold and silver, as well as his main focus now: farmland. He recently invested in farmland in Australia, and continues to look for other farm assets to own.

Along with agriculture, which Rogers sees as being one of the top performers for years ahead because of the need to boost food production; saying that there is no more land being grown while the global population continues to rise.

Because of the turmoil in the markets, Rogers is long some currencies, including the U.S. dollar, which he has called a "flawed" currency in the past.

There he's investing in the U.S. dollar not because he sees it as being strong, but because he knows with the coming turmoil that investors will flock to it because of perceived safety. So he's investing in the U.S. dollar in relationship to the inevitable migration of capital there, which will push the value of it up in the short term in his estimation.

Why Jim Rogers is Long U.S. Dollar

When listening to the wisdom of Jim Rogers over the years, especially as to how the failed policies of the Federal Reserve have debased the U.S. dollar to the point of being valued at over 95 percent less than it was when the Fed was instituted almost 100 years ago, it's surprising to some to hear him say he's long the U.S. dollar.

Rogers continues to be long on gold, but because the U.S. dollar usually goes in the opposite direction, it seems counter intuitive as to the realities connected to the relationship between the U.S. dollar and gold.

Because Rogers believes there will be much more turmoil in the markets going forward, he sees people throwing their money at the U.S. dollar because it is perceived as a place of safety for capital.

But Rogers notes that his being long the dollar has nothing to do with the strength or safety of the dollar, but rather upon the fact that is is perceived to be a place of safety by the vast majority of investors.

So there is no doubt when the chaotic conditions of the market are reflected in the performance thereof, people and institutions will pile into the U.S. dollar, making it appear to be strengthening, even as the failed policies of the Federal Reserve continue to undermine and debase it.

In other words, Rogers is essentially investing in the guaranteed behavior of the stampeding crowd as it relates to the U.S. dollar in uncertain markets, and because of that he can be long gold and the U.S. dollar at the same time, and make money on both.

Ron Paul on "Gold is Good Money"

Ron Paul continues his decades-long assault on the Federal Reserve creating money out of thin air, saying on his congressional website that gold is in fact, "good money," against the anemic quality of paper or digital money.

According to Paul, "Fiat money is not good money because it can be issued without limit and therefore cannot act as a stable store of value."

Also of significance is Paul's exposure of the central banks, government/media axis, which continues to speak badly of gold because the "defamation of gold wrought by central banks and governments is because gold exposes the devaluation of fiat currencies and the flawed policies of government. Governments hate gold because the people cannot be fooled by it."

Paul has had other allies for years, including those associated with the Austrian school of economics, but he cites others who are apparently starting to get the message, such as the Bundesbank president, who recently stated that gold is "a timeless classic."

Also noted are a couple of analysts at Deutsche Bank (DB), which also said gold is good money.

According to Paul, gold should be considered good money because it offers everything the market (people) demand, "it is divisible, portable, recognizable and, most importantly, scarce - making it a stable store of value. It is all things the market needs good money to be and has been recognized as such throughout history," says Paul.

Contrary to the assertions of central banks around the world concerning gold not being real money, they continue to acquire more gold holdings in response to the outrageous boost in fiat money into the global economy.

Ron Paul concludes this on the evil of fiat money: "A fiat monetary system gives complete discretion to those who run the printing press, allowing governments to spend money without having to suffer the political consequences of raising taxes. Fiat money benefits those who create it and receive it first, enriching government and its cronies. And the negative effects of fiat money are disguised so that people do not realize that money the Fed creates today is the reason for the busts, rising prices and unemployment, and diminished standard of living tomorrow."

He is right. Among other things, as mentioned above, inflation is always the hidden tax associated with the creation of money out of thin air.

It has already been shown to be ineffective to boost the economy, as evidenced by the anemic results of QE1 and QE2, and will be the same results of QE3 and beyond.

People should have the option to choose what money they want to use for transactions, savings and investing, and the central banks and governments around the world fight this because it knows if that were to happen, it would expose the negative effects of fiat money, as those holding gold would wildly prosper in contrast to those using paper and digital funny money.

Why Metals, Energy Look Attractive Going Forward

With the misguided commitment from major central banks around the world to "stimulating" the economies of the countries or regions they are based in, especially the euro zone, United States and Japan (China will probably stimulate soon), it predicates the probability that energy and base metal commodities, along with gold and silver, should push up in price over the next several years, with some possibly extending even longer, such as in the case of silver.

Even if there is a further global economic slowdown, the fallout from the stimulus efforts will start to point to resources and resource companies as one of the few viable places to place one's capital.

As measured by inflationary pressures, oil, gas and other commodities get more attractive as the U.S. dollar falls in value, as it will continue to do as money continues to be created out of thin air.

The caveat will be how much competing currencies fall in relationship to the U.S. dollar.

Successful commodity investors in the near future will be those who properly analyze the valuations of a particular commodity; getting in before it begins its upward run in price.

Some commodities at this time are overbought, while others are still available at a good price.

For example, natural gas appears to be at, or close to a bottom, so there is, for the most part over time, only one place to go, and that's up.

And even if there is still a little room to move down, the price of natural gas for long-term investors is very attractive, and those entering now should reap significant rewards over the next several years.

Oil on the other hand may be in for some rough times, as it may be on the opposite end of the spectrum, possibly ready to pull back significantly after years of high prices.

The geopolitical situation will weigh more on the prices than other factors, as many energy companies have improved operations to the point where there is a lot of oil available at lower costs than in the recent past.

So with the certainty the Europe and the United States will continue to inflate through fiat money, and Japan continuing on the course it set a couple of decades ago, there is little reason to believe a number of commodities won't continue to be among the best performers going forward, especially in precious and base
 metals, as well as in some energy segments.


 

Spain on Verge of Being Bailed Out

Spain moved one step closer to being bailed out after the German Parliament voted to allow the plan to go forward on Thursday, and then the finance ministers of the 17 member countries using the euro gave their approval to the terms offered in the bailout, which stands at an offer of just under $123 billion.

As usual in the news cycle, Europe's horrendous economic problems flow out of the eye of the public for a week or two before again appearing in the news, reminding everyone listening of the dire circumstances continuing to unfold there.

Reminders of the economic turmoil in the region hit the stock market, led by the banking stocks getting hammered, as they are the most vulnerable initially to such news.

The KBW bank index (.BKX) dropped 1.9 percent, ending the week down 2.3 percent. All the major American banks closed down on Friday.

Gold and silver on the other hand were able to finish slightly up on the day, as growing anticipation of another round of quantitative easing is slowly pushing the price of the two precious metals up even as bears attempt to pull them down.

There isn't enough conviction on either side of the trade to allow for major moves lately, and so both metals have been trading in a narrower range lately until more clarity emerges. The failing global economy will pressure the Federal Reserve, Ben Bernanke, and other central bank officials in certain parts of the world to take steps. It's only a matter of when, with each passing day of bad news gradually turning the sentiment in that regard.

Gold and silver should gradually move up until we're hit with the first big announcement. This one helps, but it'll take one more big push to send gold and silver prices soaring again. Most think it's likely to happen in the latter part of August, but it could easily happen earlier as negative economic news continues to mount.

One of the major obstacles for gold and silver is when announcements like this come out of Europe the euro takes a big hit against the U.S. dollar, keeping the prices temporarily in check. That happened again Friday when the euro dropped to about a two-year low against the U.S. dollar, falling as low as $1.2143.

For Spain, the 10-year bond soared to new highs as measured by the introduction of the euro, now bringing yields of 7.3 percent; a number experts see as unsustainable.

The Spanish government also slashed its economic growth projection, revealing the certainty Spain will continue to be in a recession at least through 2013, and quite probably beyond.

For the Spanish banks and the bailout money, there will be assessments of the needs of the banks in the country, and from their stress tests applied to guide the allocation of the funds. That should be completed sometime in September.

How much of the available funds that will be used by the Spanish won't be known until that time.

While the IMF has no administrative or official relationship to the funding proposal, it did say they are available to give "independent advice" concerning the bailouts of the Spanish banks, and if there are no objections, will publish reports concerning the progress the financial firms make toward recapitalization.

The reports won't point out any specific banks, but will focus on the overall progress of the banking industry in Spain.

Bank of America (NYSE:BAC) Sees $1 Trillion QE, Goldman (NYSE:GS) - $2 Trillion

What's a trillion here or there for the Federal Reserve, which is drunk on printing money, and depending on who's right - such as Bank of America (NYSE:BAC), which sees them printing $1 trillion, and Goldman Sachs, which sees them printing $2 trillion - the fallout will even crush American more during the long term, as the company teeters on the precipice of insolvency.

Goldman and Bank of America see the Fed buying up government debt incrementally in order to keep the huge amount from being digested immediately by ordinary Americans. Both expect a $500 billion plan to be initiated immediately after the meetings held on November 2 and November 3.

This will push up the price of gold and other commodities, which will cause inflation to rise, as far as commodities used for industrial purposes. Some agricultural commodities will continue to rise as well, or at least maintain support at fairly high levels.

Morgan Stanley (NYSE:MS): US Dollar (USD) Selling to Increase

Morgan Stanley's (NYSE:MS) Calvin Tse says he sees the U.S. Dollar (USD) being sold off at a quicker pace, with the pressure to sell remaining on the greenback.

Tse said, "As has been the theme, we saw continued USD selling this week. Indeed, USD has been sold for the fourth week in a row. Bigger picture, this represents USD selling for 14 out of the past 15 weeks. Moreover, last week’s flow was in the seventh percentile, indicating that USD net selling has only been greater than this amount 7% of the time over the past two years.

"On the back of strong USD selling on high volume, our gauge is indicating that USD selling momentum has entered into significant levels. Our reading is close to -3.0, which signals heavy USD-bearish momentum. The last time we’ve seen levels as extreme as this was in mid-August."

Everyone is looking toward the Fed meeting tomorrow to see what is said as well, with gold investors and U.S. dollar investors ready to make decisions if quantitative easing is even hinted at.

Why Goldman's (NYSE:GS) "Conflicting Gold Advice" is Irrelevant

Some people obsessed with Goldman Sachs (NYSE:GS) have nothing better to do than attempt to dig up dirt to portray them in a negative light, and in some cases that is well-deserved, but the recent faux scandal, where they're accused of offering conflicting gold advice to clients based on their wealth is an exercise in ignorance concerning the overall money-management sector and how it has always operated.

Of course clients are offered differing advice in general, as everyone has completely different risk and comfort levels, as well as goals.

The gist of the story is Goldman advised wealthy clients they the possibility of deflation makes it better to get rid of gold, while telling people with less net worth that the price of gold could rise as high as $1,300 over the next six months.

The highly unlikely deflationary scenario was a reference to the Federal Reserve standing back, along with other central banks, and staying on the sidelines in the current economic conditions.

Goldman said, "We see gold as being vulnerable to central bank inactivity in the face of rising deflation risk."

What is going on here, is high-net-worth clients are always more concerned about preservation of principle than those with lower net worth.

So any threat or possibility of losing money is part of the strategy of managing their accounts. Others aren't so worried about that, as they're willing to take more risk in order to build their net worth, as it's not to the level of their goals.

With that in mind, this isn't contradictory whatsoever, but laying out possibilities to two completely different mindsets and goals of people and institutions with different financial strategies.

Strategies of preservation deal with protection, while strategies of growth deal with more risk. It's not exactly rocket science, and only the clueless and those outside the financial management industry could make the silly, unwarranted and ignorant statements made in this case.

Goldman may deserve castigation in a number of areas, but this is one which reveals the writer has no idea of how the industry works, and makes him and his media outlet look stupid.

Gold Bullion Worth $550,000 Stolen from Museum

A gold bar from the Santa Margarita, a Spanish galleon, recovered by treasure hunter Mel Fisher in 1980, was stolen from the Mel Fisher Maritime Museum in Key West, Florida. It was valued at $550,000.

The gold bar reportedly weighed in at 74.85 ounces, and was stolen on Wednesday, according to executive director Melissa Kendrick.

Similar to other displays, the gold bar was placed inside it where visitors could then reach their hands in and lift it up to get a feel for it.

Security cameras did capture the image of the two culprits, and the FBI and local law enforcement are investigating the incident.

The gold bar has a number of distinctive markings, which will probably make it hard to sell, although it could be cut down into smaller pieces if the thieves go that route.

Industrial Metals Lead Commodities Down for Quarter

Commodities experienced their worst quarter in over a year, as industrial metals plummeted in price on an extremely weak U.S. economy, China urban property inflation concerns, and the sovereign debt crisis in Europe.

The worst of the industrial metals was zinc, which fell 25 percent for the quarter, its worst performance since the latter part of 2008. Nickel was much better, dropping 22 percent for the quarter, followed by lead, which was down 19 percent, copper declining 17 percent, and aluminum falling 15 percent.

Heading into the fourth quarter doesn't look much better for commodities, as estimates from Barclays Capital have prices dropping even more, according to a recent report, especially copper and aluminum, which are used heavily in building homes.

With the bottom falling out from the U.S. housing market after the tax break was ended, along with the Chinese battling property inflation in their urban areas, the demand for industrial commodities are under extreme pressure until those situations turn around, which they don't look likely to any time soon.

Gold will continue to be a strong performer, and silver will probably shine when measured against other industrial metals.

Afghanistan: New Commodity Capital of the World?

Almost $1 trillion in mineral deposits have been found in Afghanistan, generating the question of whether there is an industry the people of Afghanistan can give themselves to in order to take their mind off of war and give hope to the region.

For years many outsiders have noted the country has little to offer in natural resources, and so had small chance of laying a foundation for a more prosperous future.

This isn't something that can be developed overnight, as it usually takes 10 years to get a mine going once the project is discovered.

Still, Afghanistan's future isn't one that can be looked upon as anything that will be successful in the short term, so it does not only give hope, but should put in place plans which will hopefully being the process sometime soon.

Some of the larger veins of minerals discovered include copper, cobalt, iron, lithium and gold.

The potential is evidently so great that it is expected significant investment could be brought to the country even before the mines are deemed profitable, although that is somewhat standard in the mining industry in general, this seems to imply proven reserves before operations even begin, making the potential for early investment a real possibility.

China Platinum Demand Driving Prices Up

Gold is of course grabbing the majority of the headlines lately, and rightly so, but that hasn't kept some of the other precious metals performing strongly so far in 2010, and that includes platinum and palladium, which have outperformed gold by a wide margin so far this year.

Platinum has ralled by 17 percent and palladium has performed even better at 25 percent gains in 2010. On the other hand, gold has been struggling at gains of about five percent.

With the possibility of increased demand in China for platinum and palladium for use in catalytic converters, and what seems to be a growing and new demand in the jewelry sector, there are expectations there will be a shortage of platinum in 2010, in contrast to a surplus last year on lower demand.

China has become the largest car market in the world now, which of course will be the primary driver of platinum and palladium prices, as it is with other raw materials it needs to grow its economy.

Some platinum and palladium companies have been performing strongly recently, as the market attempts to sort out whether or not the seeming growing demand for platinum and palladium is real and sustainable, which means it needs to be seen that China is continuing to grow, especially in the auto sector.

That news has been confirmed as far as pace of growth, now it'll need to be broken down more to find out the details.

Assuming the demand for platinum and palladium from China is real, and it does seem to be, that should continue to push prices up throughout 2010.

Taseko Mines (AMEX:TGB) Downgraded, Still Soars

Investors shrugged off the downgrade of Taseko Mines Limited (AMEX:TGB) by UBS AG analyst Phillip Huang, who cut his rating from a "Buy" to "Neutral."

The major reason for the downgrade by Huang was the recent success of Taseko, which has surged 21 percent from mid-December through April 7.

On the other hand, analyst Craig Miller of Toronto-Dominion Bank, made the opposite move, upgrading Taseko Mines from a "Hold" to a "Buy," saying he based his decision on his expectation that Taseko won't be selling shares to finance the Prosperity gold and copper project.

Either way, Taseko seems to be holding strong is positioned pretty strongly for a possible nice run.

Gold Continues to Ignore Dollar

Gold ignoring U.S. dollar

Maybe more than any other time in recent history, gold has decoupled from its usual inverse relationship to the U.S. dollar and is standing on its own as an alternative form of currency.

While most say that will change when interest rates change in the U.S. and the dollar strengthens, I'm not sure that will be completely true.

I'm not saying it won't happen, but something has changed in the mindset of investors in reference to paper currencies, and it remains to be seen whether that change holds or not when circumstances change to favor the dollar. What remains to be seen is if gold has a floor under which will last for years into the future, no matter what happens to the dollar.

Investors and the general public are gradually learning the weakness of continuing to print money out of thin air, and even when interest rates increase there's the likelihood that inflation will too, adding another element to the overall performance of gold, and that doesn't take into account the potential European fiasco that may unfold in the next year or two, of which Greece is only a small part of it.

There are too many variables because of the economic and banking crisis which are unique to our time, and we really don't know where things will end up, and that makes gold even more attractive going into the cloudy future.

Greek Debt Crisis Weighs on Market

The Greek debt crisis continues to be a pull on the markets, and depending on the particular sector pushes it up or pulls it down.

We're in for a long ride with this one because there's no end in site as to what is going to pan out with the troubled country, one way or another.

What that does is keep an element of uncertainty in the market, which continues to remind investors we're far from the economic crisis being over, and we're not into any type of sustainable recovery.

For the U.S. dollar, it's not a sign that it has a lot of confidence in it, just that in contrast to other currencies, it looks good. The yen also has that as part of its attraction to investors.

Gold should continue to move up as more people gravitate toward it for safety and begin to think of it as an alternative currency.

NovaGold Resources Inc. (TSE:NG) Completes Stock Offering

NovaGold Resources Common Shares Offering

NovaGold Resources Inc. (TSE:NG) announced it has completed and closed it common share stock offering, raising $100 million ($99,999,999) from the $5.50 a share they received for them.

Paulson & Co. bought the shares in a non-brokered deal. The financing will officially close on March 11.

NovaGold said they'll use the capital primarily for development and exploration of several of their properties, Ambler property, Donlin Creek, Galore Creek and Rock Creek.

Some of the funds could be used for future acquisitions by the company as well.

NovaGold Resources Common Shares Offering

New Gold (AMEX:NGD): Gold Production Increasing

New Gold Production

Gold production from New Gold (AMEX:NGD) has been revised upwardly from between 330,000 to 360,000 ounces for 2010. That is in contrast to 310,773 ounces in 2009.

New Gold has operational mines in the U.S. and Australia, and projects are being developed in Canada and Chile.

In their recent quarterly report, New Gold said gold production in the fourth quarter reahced 111,672 ounces, an increase of 41 percent from the year before at the same time.

Revenue exploded for the company in fourth quarter, surging to $131.8 million, a big increase from the $36.7 million. Much of that was attributed to higher gold prices and increased production at their Mesquite mine.

New Gold Production

Marc Faber: Buy Gold Forever

Marc Faber on Dollar and Gold

In an interview on CNBC today, Marc Faber told interviewers that he recommends investors to buy gold on a monthly basis forever.

Part of Faber's reasoning is the ongoing printing of U.S. dollars which will continue to weaken the currency going forward.

Faber also recommends for investors to look toward emerging market stocks rather than shares in U.S. companies.

For the U.S. dollar, Faber says it won't necessarily go down like it may have under normal circumstances, because foreign government are also printing money, essentially competing with the dollar on the downward spiral in value of their currencies, making it harder to predict than in the past.

Marc Faber on Dollar and Gold

Rio Tinto (LON:RIO) Investing Ivanhoe Mines (NYSE:IVN)

Rio Tinto Investing in Ivanhoe Mines

Now that Ivanhoe Mines (NYSE:IVN) has landed the big deal in Mongolia, Rio Tinto (LON:RIO) has decided to invest in the company to the tune of 15 million shares, making the overall stake in Ivanhoe by Rio Tinto at 22.4 percent.

Per the deal, Rio can now acquire up to 44 percent of Ivanhoe Mines, along with other securities in the future to maintain its equity interest if needed.

This is the result of the Oyu Tolgoi project in Mongolia, considered the largest known gold and copper mine in the world yet to be worked.

Rio Tinto Investing in Ivanhoe Mines