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David Hargreaves on Precious Metals week 15 2012

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Gold and conflict free goldThe big guns still call gold higher – Paulson’s Funds fall – Equities continue to underperform – India is the catalyst – What’s about the dollar and a gold standard? Platinum Piggy-backs – Lonmin looks beyond RSA – Zim rides roughshod as the majors kow-tow – and we hear it for conflict gold.

Gold. The shouting is more subdued now and it is not for $5000/oz. The fall in a short week was only 2%, to $1628/oz, but a further fall it was. Investec, the powerful RSA finance house, is looking for a 10% uplift to around $1850/oz this year. It has a tad of a vested interest, with a heavy gold stock representation in its $100 billion of client funds. It speaks of the metal being a currency in its own right and other currencies growing faster than the supply of new gold. Let’s just dwell on that for a minute.

  • Officially held gold stocks are c. 30,000 t at $1600/oz = $1.5 x 1012
  • World GDP is c. $70 x 1012, so gold covers it 2% only.
  • World GDP is growing at c. 6% per year on average so $3.5 x 1012
  • Newly mined gold is c. 2600tpy, worth at $1600/oz, $0.133 x 1012
  • So newly mined gold cover against new money is 0.133/3.5 = 3.8%
  • Phew, we are safe unless GDP rises above 11% or gold output falls.

Good try, Investec, but you need more than scare tactics to reignite the fire. Let’s look, too, at where the gold price has come from of late:

Gold price usd/ounce - Until april 2012

Have our economic woes really doubled in less than three and a half years?

India holds the aces. Panic-buying propels most gold price surges and when the panic subsides, so does the gold price. Steady purchases underpin a base price. India imports around 900tpy, over 35% of all new production. This is from a country with a c.17% of the world’s population and less than 5% of its GDP. It is a habit which will not easily be broken, but it is seriously worrying the government. So, in January, it upped the import duty, first from 1% to 2% in January, then to 4% in March. As a result, imports fell 55% in Q1 coincident with a jewellers’ strike. Gold fabrication is a major trade in the country and these moves are also hitting silver. Gold imports were noted as 90 tonnes in January-March as opposed to 280 tonnes in Q1 2011. Q2 purchases are also called down, at perhaps 150 tonnes against 250 in 2011. The concern of course is that the general population pours into gold what could otherwise be flowing into investment and industry. The Associated Chambers of Commerce and Industry warn that imports could reach $100bn by 2015-16 unless they are arbitrarily slowed. That is an almost unthinkable 2000 tonnes at current prices.

Paulson’s Woes Continue. The manager of the $24 bn fund which bears his name is currently suffering for his adherence to gold shares. It lost 13% in March as his holdings in blue chips such as Anglo Gold Ashanti and Nova Gold took it on the chin. The fund is 25% allocated to gold-related investments.

Gold and Silver: The “Ultimate Currency”. A strong case for the precious metal is made by the Emerging Trends Report. It goes back to the late 18th Century and speaks of the USA having been on a gold standard. Not true. Very little gold circulated in the USA; it was on a silver standard as gold was a very scarce commodity until the California gold rush of 1849-51. In 1850 only Britain was on the gold standard, but by 1900 every major nation bar China was on it (T. Green, The Ages of Gold, p. 326).

Platinum. The African dominated metal continues to take its lead from gold, despite having little in common except corrosion resistance. Despite the price having dropped over 20% from its recent peak and the monopoly RSA mining sector strikes, a surplus persists as does labour unrest. The NUM clearly feels it won the last round of negotiations, as it gained double-digit wage increases and now refuses to budge from its 12% demand at the Modwika Mine, a J/V between Anglo American Platinum and African Rainbow Minerals. So the companies have withdrawn from negotiations. The union says it will accelerate the strike and spread it to further mines. It would be interesting to learn what the NUM does about strike pay.

Lonmin. The world’s No 3 platinum producer, at 22tpy, 12% of total, is spreading its wings. It is exercising its rights to enter a J/V in the Wallbridge Mining Company’s North Range properties in the Sudbury area of Ontario, Canada. Over an area of 408sq km. they are prospecting for PGMs, copper, nickel and gold. This will add some welcome geographical diversity to the group portfolio, as long as the local mumbo-jumbo tribe or whatever does not demand overwhelming first nation rights. Lonmin (1012p; Hi-Lo 1760-941p). The shares rallied 13.5p on the news.

Conflict Free Gold. Although first publicised through the antics of the West African diamond trade, the ethic of channelling the spoils of mining to the financing of wars can apply to the other inputs of portable collateral including coloured gemstones and precious metals, particularly artisanal gold. It has prompted the World Gold Council to design a conflict-free gold standard. The WGC tells us 10-15% of all newly mined gold comes from artisanal and small scale sources (260-400tpy), in locations most likely to cause problems. The five-part standard means well, just as does the Kimberley Process for diamonds. The same problems loom:

  • Those likely to join are those least likely to break the rules.
  • Governance will be almost an impossibility and the funding difficult to obtain.
  • Once processed, how can you determine the origin of the gold?

A new Platinum extraction process. Time was (here we go, rocking chair tips over backwards into the pool) they scoffed at the idea of smelting metals other than by using charcoal. Only when the forests disappeared did they hit on coking coal.

Well, now comes the Kel Process for hydrometallurgically leaching PGMs from concentrate. Patented by one Keith Liddell. It claims to slash the all-inhibiting use of electricity in smelting, to recover 99% of the platinum and 98% of the other PGMs. It consumes but 14% of the electricity that smelting does, requires no milling and emits less than 15% of the CO2. To add Kel to a 250,000 oz/year operation costs $65 millions, about the same as a two-day work stoppage at Rustenberg.

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About David Hargreaves

David Hargreaves

David Hargreaves

David Hargreaves is a mining engineer with over forty years of senior experience in the industry. After qualifying in coal mining he worked in the iron ore mines of Quebec and Northwest Ontario before diversifying into other bulk minerals including bauxite. He was Head of Research for stockbrokers James Capel in London from 1974 to 1977 and voted Mining Analyst of the year on three successive occasions.

Since forming his own metals broking and research company in 1977, he has successfully promoted and been a director of several public companies. He currently writes “The Week in Mining”, an incisive review of world mining events, for stockbrokers WH Ireland. David’s research pays particular attention to steel via the iron ore and coal supply industries. He is a Chartered Mining Engineer, Fellow of the Geological Society and the Institute of Mining, Minerals and Materials, and a Member of the Royal Institution. His textbook, “The World Index of Resources and Population” accurately predicted the exponential rise in demand for steel industry products.

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Uppgången i oljepriset planade ut under helgen

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Thina Saltvedt, energianalytiker på Nordea

Oljepriset gick upp direkt när Israel attackerade Iran förra veckan, men under helgen har prisutvecklingen planat ut trots att konflikten tilltagit. Thina Saltvedt, energianalytiker på Nordea, kommenterar utvecklingen och vad som kan hända framåt.

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Låga elpriser i sommar – men mellersta Sverige får en ökning

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Elledning

Snittpriset på el väntas landa på cirka 30 öre per kilowattimme i sommar – i nivå med fjolåret. Men i elområde SE3, där bland annat Stockholm ingår, väntas priserna stiga med 70 procent till följd av att kärnkraftreaktorn Oskarshamn 3 står still. Samtidigt pressar höga vattennivåer ner priserna i norra Sverige. Det visar Bixias elprisprognos för sommaren.

Johan Sigvardsson, elprisanalytiker på Bixia
Johan Sigvardsson, elprisanalytiker på Bixia

Väderprognoserna pekar på normala förhållanden i Skandinavien. Men det blöta vädret under förra hösten och vintern har fyllt vattenmagasinen rejält, vilket bidrar till låga och stabila elpriser under juni till augusti.

– Att vi går in i sommaren med välfyllda vattenmagasin borgar för riktigt låga elpriser, särskilt i norr. I kombination med låg elförbrukning minimeras risken för några större prischocker i sommar, säger Johan Sigvardsson, analytiker på Bixia.

Ner i norr, upp i syd

Det ovanligt stora vattenöverskottet både i Sverige och Norge fortsätter att pressa priserna norra Sverige. I  SE1 och SE2 väntas elpriserna landa på 13–14 öre per kilowattimme, jämfört med 18 öre i fjol.

I mellersta Sverige, elområde SE3, väntas elpriset i stället stiga till cirka 32 öre per kilowattimme, vilket är 70 procent högre än förra sommaren. Orsaken är att underhållet av kärnkraftsreaktorn Oskarshamn 3 förlängts till den 15 augusti, vilket minskar den planerbara elproduktionen.

Även SE4, längst i söder, påverkas av den reducerade kärnkraftsproduktionen, då kopplingen till kontinentens högre elpriser blir större. Här väntas elpriset landa på cirka 50 öre per kilowattimme vilket är i linje med fjolåret.

– Om inte underhållet i Oskarshamn förlängts hade vi för ovanlighetens skull haft full kärnkraftsproduktion i både Sverige och Finland i sommar. Nu får vi istället ett underskott som höjer priserna i mellersta och södra Sverige, säger Johan Sigvardsson.

Under sommaren väntas också många så kallade minustimmar – timmar med negativt elpris – framför allt mitt på dagen när solkraften är som mest effektiv.

– En riktigt het sommardag kan solkraften stå för 80-90 procent av det tyska elbehovet under dagtid. Då blir ankkurvan djup och vi får negativa priser, vilket såklart pressar ner dygnsmedelpriset och gör att vi i Norden kan importera billigt, säger Johan Sigvardsson.

Europa kan pressa upp priserna till hösten

Samtidigt visar prognoser att södra Europa går mot en varm och torr sommar, vilket kan påverka elmarknaden längre fram.

– Hetare väder ökar behovet av luftkonditionering och elförbrukningen stiger. Det innebär att gaslagren inte fylls på i samma takt under påfyllnadssäsongen och efterfrågan i höst lär öka, vilket kan driva upp elpriserna i Europa till hösten och påverka även oss i Sverige, säger Johan Sigvardsson.

Elpriset juni-augusti 2025 jämfört med 2024

Elområde2024 (utfall)2025 (prognos)
Systempris 27 öre29 öre
SE118 öre14 öre
SE218 öre13 öre
SE319 öre32 öre
SE451 öre50 öre
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Stor uppsida i Lappland Guldprospekterings aktie enligt analys

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Guld

Impala Nordic har gjort en uppdragsanalys på Lappland Guldprospektering, som noterades på Spotlight förra hösten, där man ser en rejält uppsida i aktien.

Lappland Guldprospektering är ett svenskt bolag verksamt inom guldprospektering med fokus på att utveckla och bedriva guldbrytning i större skala i Sverige och övriga Norden. Bolaget har som målsättning att bli en betydande guldproducent, där bolagets nyckelpersoner besitter en mångårig erfarenhet av utveckling och drift av gruvor över hela världen.

Bolaget drivs med väldigt slimmad kostnadsbas, som understiger 1 miljon kronor per kvartal. Således har bolaget en betydande runway med nuvarande kassa, som uppgick till cirka 18 miljoner kronor i utgången av Q1 2025.

”Vi ser det som möjligt att Bolaget kan etablera en gruvverksamhet i huvudprojektet Stortjärnhobben inom 3–4 år, vilket skulle innebära kassaflöden under många år framöver. Om Bolaget lyckas med sitt mål att klassificera en mineralresurs på 500 000 troy ounce (uns) ser vi potential till betydande uppvärdering baserat på värderingen av bolag som varit i liknande skede. Vi bedömer att uppsidan motsvarar ett börsvärde på minst 500 MSEK, drygt 400 % över dagens värdering.”

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Guldcentralen

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