A thread set up and dedicated to Gold and Mining stocks.

Gold could be set to bounce up again in the near future and throughout the autumn and winter. Higher oil prices and inflationary worries both here and in the states mean its an excelent hedge against the falling dollar and weaking markets.

Please post which stocks you feel may benefit other posters. Lets all try and make some money from Mining.

cheers GF.

FDI and TSG

Thanks aldwikk

Im in AFE and have been tempted by TSG and Centamin (who I rate as the best explorer of them all)but I feel you should buy the junior producers first with POG at these levels and then move onto the explorers as POG moves higher.

Producers I am in, avocet, Bema, Peter Hambro, and Golden Prospect. Ive also opened a new position in Cambrian, but that is a mining house, I suppose Golden Prospect is as well but it seems to go along with the price of POG.

cheers GF.

GF.
FDI is a producer.

Great.

Sorry but hope all you guys ok.

cheers GF.

i bought Oxus and Avocet last Dec. Avocet now is starting to move upwards and think it will got 1 plus in short term.

I still believe in Oxus although i'm well down at present. Anyone have any views on OXS

scotinvestor,

A friend of mine rang me last weeK to say he'd read that Oxus have more "problems" with the local governement.

I have not read it for myself, but these little rumours seem to emerge from time to time, and go back to the time of Oxus having difficulty obtaining an export licence for it's first gold pour.

As we know, it was eventually sorted out, but it did raise some concerns at the time, and subsequent rumours resulted in the price falling back to it's present level.

I sold as Oxus fell in order to bank the profit, and although I like the company, have not bought back yet due to these nagging little rumours.

I do hold Avocet, and I agree with you that 1 seems likely by the end of the year, if not sooner.

I intend to increase my Avocet holding as soon as I release funds elsewhere.

Interesting interview on Gold.

http://www.financialsense.com/Experts/2004/Bolser.html

cheers GF.

Any thoughts on AFG goldfinger.

Just stick with it. Looks to me like the US budget deficit will bring the dollar down and POG up. I also think we are entering the asian wedding season so physical demand for gold should be increasing.

cheers GF.

Thanks GF.

>>GF

The "asian wedding season"! Well I never - learn something every day!

rgrds
gk

galick,

I think it's normally referred to as "the Indian wedding season".

This normally results in increased demand for gold, although I think this was lessenned last year due to the higher price of POG. India is becoming more prosperous all the time, so this year may be different.

Thanks Andy - interesting.

I have a position in the JP Morgan Indian Investment trust (ticker JII). I don't know much about Indian companies, but the PE's are really low - market average is about 11 I understand. I am not really into Investment trusts but I think India is such a good play - and I was not sure how to gain access otherwise. Do you have any indian plays other than gold & commodities (which I think will continue to do well).

rgrds
gk

gallick,

No, like you, no idea about their market, too remote for me.

Commodities look the place to be for now, totally agree.

Soaring Chinese demand drives mining boom
By Jeremy Grant in Chicago

FT.COM Published: October 4 2004 03:00 | Last updated: October 4 2004 03:00

With its 2,400 horsepower engine, 300-tonne weight and bright yellow livery, Caterpillar's new dump truck makes a statement about the mining industry's health that is hard to ignore.


Caterpillar is struggling to fill advance orders for the $2m truck, which was on display in Las Vegas last week at the world's largest mining exposition. That is in spite of production of the 793D not starting until next year.

"We actually ordered 10 of them, but they could only give us five," said Laurie Voyer, general manager of Leighton Contractors, an Australian group.

Mining is booming, driven by China's seemingly insatiable demand for coal, iron ore and other commodities, and the resurgence of US manufacturing.

According to the US National Mining Association, mining is also expected to enjoy a boom year next year, building on this year's record volumes. That has created a bonanza in the mining equipment industry, spurring demand for diggers, excavators, bulldozers and diesel engines.

Clive Deary, mining sales manager for Detroit Diesel, said his company was sold out until March next year. "We had a business plan 12 months ago. We've doubled the numbers since then."

Yet the question remains whether this boom will eventually turn to bust - as so often in the chronically cyclical mining industry. However, many argue that future peaks and troughs - reflective of swings in the supply and demand of commodities - may be less pronounced.

Jim Owens, Caterpillar's chief executive, said: "I think that we are at the early stages of a fairly prolonged global expansion of mining capacity. It is going to have a good run."

Such optimism is based on two factors: a thirst for energy in emerging markets such as China and India that should create sustained demand for iron ore and coal; and consolidation in the mining industry that has created efficient operators better able to weather commodity cycles.

"In five years, South Africa's going to be running out of electricity. China's the same way," said Robert Stenger, chief executive of The Cincinnati Mine Machinery Co, which makes coal cutters and drill bits. "We're good for another 10 years."

Gerald Shaheen, Caterpillar group president in charge of North America and global mining, said: "The mining industry used to be very fractured. We now have 20 mining companies owning 80 per cent of capacity, so we've got a much better shot at rational management of capacity in this industry."

In addition, mining industries in commodity-rich countries once dependent on the health of their region are expanding globally to diversify earnings.

Ernesto Palacios, executive director of Minexport, an advisory group in Chile, said his members were seeking business beyond Latin America. "They are strategically preparing for times when there is little demand."

Yet concerns remain. Rising fuel costs are making contractors worry about the energy efficiency of their equipment.

Another worry is the effect any downturn in China might have in an industry where it now has unprecedented influence.

Furthermore, one large private manufacturer of mining machinery told David Bleustein, a UBS analyst in New York, it was "increasingly concerned about the ability of Chinese manufacturers to duplicate western mining technology".

Yup that report goes hand in hand with one on mining web yesterday that said the Broking houses were expecting coking coal to hit $80 US dollars in 2005, the last time I looked it was in the low 50s so we should have exceptional growth from the likes of Bisichi, Anglo Pacific, Cambrian and even UK coal later in 2005 when its contract prices can be moved up. I beleive al of these to be derd cheap at the moment.

cheers GF.

Any news on AFE- it seems to have gone quiet. I thought they were about to announce good drilling results? I have been told to check out Adstrata-AAA as a good long term bet. Anyone any comments? cheers MP

PM to you MP on analyst recommendations, anyone else want one let me know.

cheers GF.

Commodities
Date: October 13, 2004

Its A Record For Copper.

By Rob Davies

Copper prices reached their highest level for 15 years last week when they got to US$3,321/ tonne. The previous peak, and highest ever price, was in 1989 when they got to US$3,400 and that record looks set to be broken very soon. Inflation over that period means that in real terms the current prices are still below the US$4,500/ tonne that the previous high equates to in todays money. Nevertheless, a peak has been reached and with inventory levels still low there are few reasons why prices should not move yet higher.

Oil is one reason why metal prices might go up because diesel fuel for trucks is a vital element in the cost of mining and the concentration, smelting and refining processes are all big consumers of energy. Ore is pretty hard stuff and breaking it down it down into its component parts takes a lot of effort. Oil prices for the lighter crudes in the US have now past US$50/barrel and the heavier Brent oils are heading that way.

The oil industry, like the mining industry, is operating pretty much at full capacity so the only way prices are going to be moderated in the short term is through a reduction in demand. Despite many signs that Western economies are not in such robust health there is no evidence yet that offtake is slowing down. So, if it is costing more to produce the metal, and consumers are desperate to get the stuff, the chances are that miners will be able to pass these costs through to consumers as price rises.

However, both the oil and the metal markets are in backwardation meaning that future prices are lower than spot prices. Copper, for example is priced at US$3,030/tonne for delivery in three months time, US$2,500 for 15 months time and $2,230 in two years and three months time. That implies that a lot of the money in the market is speculative rather than commercial, and with LME stocks of only 93,000 tonnes it is easy to see why.

The attraction of hot money to the commodity market can perhaps be explained by a fear that the dollar may weaken further, a view reinforced by a statement from a US bank official that the dollar can only go down over time, it was just a question of how far. Fears of a weaker dollar were reinforced by poor jobs growth in the US in September. Only 96,000 jobs were created which is about half of what is required. While that pushed up bond prices it didnt seem to hurt equity and commodity prices, both asset markets that do well in a growth environment.

Copper was not the only metal to do well last week. Aluminium reached a new all time high of US$1,645 / tonne and nickel moved up even though it peaked earlier in the year. Zinc has got back above US$1,000/tonne for the third time and closed at $1,139 /tonne. Interestingly, zinc is the only metal that is not in backwardation suggesting that it may give the best performance of all over the medium term. While all the commodities look set to give good dollar returns in the short term, the more important question might be to ask what that will be worth in local currencies.


cheers Gf.