New Thread as requested by Wirral Owl.

6 Months Chart:-



10 Day Chart:-



Cheers

Ash

Avocet to merge???????????. A window of opportunity opens up.

Date : January 30, 2003

Avocet Mining Presented With Window Of Opportunity Through Retirement Of Mike Diemar At Kingsgate.


It is quite good timing for AIM listed Avocet Mining to announce that it has acquired exploration rights over another 5,600 hectares in Malaysia in joint venture with a local partner virtually on the day that Canaccord Capital promoted it to its small cap UK Mining Review. The shares of Avocet have performed well since it rescheduled its debt and got rid of the remnants of its tungsten business and became gold, pure and simple, and now it has embarked on a growth strategy. In March 2002 it acquired an 80 per cent interest in the North Lanut advanced gold exploration project from Newmont and last November bought a 44 per cent stake in the Zeravshan Gold company which is exploiting the Jilau deposit in Tajikistan.

A bit more time is needed before one can assess the brilliance, or otherwise, of these acquisitions. North Lanut should be in production by the year end and quite a lot of work has to be done at Zeravshan as it produced only 10,000 ozs in the first two months since its acquisition. Just the closure of its London office, however, is said to have reduced costs significantly which is just as well as cash costs of production of US$285 are too high to be comfortable. Now Avocet has set itself a target of annual production of 300,000 ounces of gold by 2005 which would take it into the FTSE Gold Index.

The pivot of the company is the Penjom mine in Malaysia which produced 23,990 ounces of gold in the quarter to end December. This took the total for the year to 78,370 ounces so a total of 100,000 ounces is well within reach. Only now, however, with a higher gold price and its debts sorted out, is Avocet in a position to spend some real money on exploration. It is encouraging that Malaysia is its choice as the company has a history of gold mining and Avocet is the only listed company that is producing there. As a result it has excellent relationships with the relevant authorities and so should get first crack at any new exploration prospects. Nor should it be forgotten that it was Malaysia which initiated the idea of the Islamic gold dinar, so gold has a major following. A listing for Avocet on the Kuala Lumpur Stock Exchange would therefore be a PR coup of some magnitude.

The new acreage has a history of alluvial gold mining dating from 200 years ago and continuing sporadically until the 1990s. Someone must have made money out of it as Sungei Luit translates as ‘river of money’ and Avocet clearly wants to repeat the trick. It has similarities to Penjom and could be the first of a number of new properties which the company will acquire on the historic gold belts of Malaysia. In the meantime the company is also extending exploration around Penjom as the current reserves are only sufficient to support mining at the current rate for another three years. Canaccord makes an interesting point, moreover, that the treatment of mineable reserves and resources is not reported in accordance with any recognized code such as IMM or JORC. Penjom is a geologically complex and variable deposit, but now that the company is being taken seriously it should try to conform.

Avocet also has some 80,000 ounces of gold hedged at US$296 which means that it is carrying a mark-to-market loss of around US$5.6 million. Macquarie Bank, the counterparty, has agreed to defer this hedging, but it will have to be dealt with at some stage as it clicks in when Penjom is in its last year of production. The way gold is moving now it might be better to take it on the chin as investors do not like ticking clocks. One problem may be that not all the directors are confident about gold – presumably they have been indoctrinated by Kamal Naqvi at Macquarie who gave a very bearish view of gold recently - and feel that this is a wise form of risk management. Hopefully they will not accumulate any more hedging when they come to develop North Lanut later this year.

Windows of opportunity appear at the least likely times and one has just opened for Avocet with the resignation of Mike Diemar at Kingsgate Consolidated, the Australian company producing gold in Thailand. Mike was the driving force at Kingsgate and he drove the company to success when Australian investors were ignoring projects in Asia. As a result of his efforts Kingsgate became the first sizeable gold mine in Thailand and is expecting to produce 160,000 ounces this year at a cash cost of US$74/oz. This compares with Avocet’s cash costs of US$225/oz at Penjom. A merger of the two companies, as suggested in our other story today, would result in a current producer of 300,000 ounces listed on both AIM and the ASX. It might even have a listing on Bangkok and Kuala Lupur as the leading gold producer in each country. The difficulty would be to get the directors of each company to agree merger terms for what would become a very powerful entity in the Muslim world.


GF

goldfinger, all support levels for avm

you have asked for the king's ransome, here it is:


major levels of supports/rsistances as can be gleaned from the charts.

50, 60, 83, 110, 130, 160 & the peak of 240.



fib provides numerous levels of s/r that may or may not be visible on the chart. below is a comprehensive list

12-50 range : 36, 31, 26
12-60 range : 42, 36, 30
12-110 range : 73, 61, 49
12-130 range : 85, 71, 57
12-160 range : 104, 86, 68
12- 240 range : 153, 1265, 99

pls note that if a level appears in more than one range then this level of s/r is considered more significant.

Your a genious at TA ARCH. Bloody brilliant. Fantastic work. IM now going to as non paid PA man for AVM post these all over the internet.

GF.

goldfinger, avm

first the fun bit!

-what an apt name for someone dealing with 'gold' issues!
-there was a famous latino guitarist in the 70's cald 'manitas de plata', which translated to english reads ' fingers of silver', any relation of yours goldfinger?

now for the lesser fun bit!

i am a coputer programmer self taught. i program in the language named as 'basic'. the name is an acronym. basic has often been used as the programming language for small computers,such as pocket computers, although derivatives of it is used for very advanced programming such as autocad, the engineering drafting software.

i have programmed one of my pocket computers to workout fib retracements as well as percentages. of course one can use spreadsheets to workout these, but i always find these small devises that i keep at an arm's length easier to use and instantly on tap.

charting software often include a visual fib grid that can be applied over the chart and can visually demonstrate the fib retracement as opposed to just providing the figures. with such grids you can see at an instant where the fib retracements lie. but also very importantly how they interact, co-incide or otherwise, with the support/resistance levels in the charts. like i said in my posting above, if a support/resistance level appears both on chart and fibs then the significance of the said level is corroborated. and at times the same fib derived support/resistance level may appear on different chart ranges, or may co-incide with gaps and other features of the charting landscape and by doing so their significance or otherwise further coroborated.

i am willing to post the program here should i see much demand for it from users.

New BROKER COMMENT ON AVM, from one of the BEST.

Beeson Gregory comment:

Gold Play

Investment opportunity

• Randgold and Avocet good value exposure to strong gold price

To gain exposure to the climbing gold price from a London perspective, we
believe that Avocet Mining [AVM], and Randgold Resources [RRS] provide
the best opportunities. Ashanti the largest gold play in London having
restructured their hedge book last year will likely also benefit from the
climbing price, however they are still hedged and have therefore lost some
upside.

Avocet [AVM]: The company is a pure gold play with production from
Indonesia and Malaysia and a good looking project in Tajikistan. The
company has excellent growth prospects and output last year of 100,000
ounces will be surpassed this year with the acquisition of Nelson Resources’
interest in Zeravshan gold mine, and increased milling at Penjom. The
company is well on the road to achieving its target of 300,000 ounces per year
within the next three years.

The acquisition of Zeravashan and the addition of a second ball mill at
Penjom will see the production of gold increase in the second half-year. This
output increase will allow Avocet to exploit the higher gold price. We expect
earnings in the second half to increase by 40% at the present levels but
climbing 5% for each $5 advance in the average gold price. This would give
full year earnings of 2.9p per share and a PE multiple of 11. Thus there is
room for growth in the share price.

The strengthening Rand and Australian dollar are offsetting the climbing
gold price for South African and Australian producers. Neither Avocet nor
Randgold are exposed to these currencies and offer the best value with good
upside potential for investors in London.

Macro thoughts: Gold jumped to a near six year highs on Friday due to
increased safe haven buying on discovery of warheads in Iraq by weapons
inspectors. It will most likely ease today on the more cooperative stance by
Iraq but is unlikely to drop back far.

Gold Fields Mineral Services issued an update to their annual gold survey
last week in which they conjectured an average gold price of $330 with a
possible high of $370 if there was a lengthy war with Iraq. The continued
weakness of the US dollar is also providing support to the rising gold price.
GFMS cites significant increase in investment as one of the factors that has
driven the rise in the gold price since the beginning of last year. They
conservatively estimate that there has been a doubling of investment by
hedge funds and high net worth individuals, from 172 tonnes in 2001 to 417
tonnes in 2002.

The amount of hedging by producers declined by 352 tonnes a key factor in
sustaining the price above $300. Combining this figure with the decline in
production indicates a 10% reduction in physical supply year on year. GFMS
is forecasting further decline in hedging in the first half of 2003.
Weak global economy, continuing dehedging by producers and uncertain
political climate are all strongly supportive of an escalating gold price.ENDS.


GF.

i hear nothing but good things being said about avm, be it media news or points of view expressed. yet the stock has been dropping on daily basis every day of the week last week!

what is depressing is that on many such days the stock opened the day with and up gap but ended up the day closing at a lower level than that of the closing level of the preceeding day. so if you look at a candlestick chart for last week you see a series of black candlesticks. this tells me that market makers were acting positively on the open hoping that the stock will rise only to be faced with weak demand causing them to drop the stock.

adding to this level 36 proved to have been a hard resistance to crack. it was a good day for the stock, so i thought, when it broke through this level with a gap. but the stock has now made an island reversal and closed below level 36.

none of the above would boud well for the stock. and i wounder now when it would stop falling further to find solid enough support and suggest such an act would not be an easy feat to accomplish.

Wirrall,

I am afraid short term I think AVM is a sell, head and shoulders formation shows decline neckline length 43p/36.50p ie 6.50p completed by drop to 34.50p but this support seems breached.

Hourly and Daily MACD looks bearish and worried that daily 50% RSI may be breached.

I am expecting a US$20 drop in gold price over next few weeks so expect AVM to fall to 25p to 29p range.

38.20% Fibo Retracement point around 30.75p, 50% around 27.25p, 61.80% 23.75p

Slightly concerned about twin peaks at 42p

All IMHO, NAG, DYOR etc, etc

Cheers

Ash

after the negative things i said yesterday, lets have a couple of good thins to say:

- the stock opened up today with a a small up gap of 1.5%. if it is to keep up its gains today, then it is possible that the stock has managed to evolve a rising trending channel the support line of which lies along the lines between the last bottom and the bottom created by last friday's closing price.

- i disagree with ashley on the macd dropping. yes the moving average lines were dropping throughout last week. but you can see the faster one is rising up to cross the slow one at high level, this bides well for the stock. remember macd is a lagging indicator. one one to get advance warning is to look at the histogram instead. the latter has been rising from negative territory throughout last week and is about to hit level zero. as histo hits level zero the moving lines cross each other and since these two lines currently lie well above the zero level, then they are bound to cross at well above zero level too. this indicates that momentum continues to exist.

Arch, are we at a market top with AVM considering POG has closed well down on the day from its peak??????????. Your help much appreciated.

GF

goldfinger,

not necessarily.

i was listening to mr lock, a manager of a fund called 'oyster catcher', a bear and devoute elliot wave follower and one whose been accurately forcasting falls in this market for well over a year ago when most were expecting the market to bottom up. mr lock, who is a frequent guest on cnbc, said that gold will remain bullish above $350 pe roz. so we have long to go yet.

additionally, while the war issue remains hanging in the air it is unlikely that gold prices will undergo dramatic drops.

i therefore expect the slight drop in gold price to be a technical retracement.

however the stock appears to have got stuck at its present range. so if i am a holder sitting on over 20% profit i would be contemplating bailing out until a new phase in the development of this stock has evolved. remember a stock spends 80% of its time going nowhere and only some 20% moving up or down.

Arch, many thanks for that.

GF

goldfinger,

the article below regarding gold price movement published in the ft website may be of interest to you.



Overbought gold lines up for pullback
by Vince Heaney in London
Published: February 7 2003 14:54 | Last Updated: February 7 2003 14:54


After years languishing in the lower reaches of investment performance tables, gold has re-emerged into the limelight as a hot commodity.

Reflecting the precious metals resurgence, from a list of 1,862 unit trusts and OEICs the top-performing unit trust over the last one-year, three- years and five-years is the Merrill Lynch Gold and General fund. Over one-year the Merrill fund returned 40.9 per cent, more than double the next best performing fund.

Investors in both the commodity and gold stocks have enjoyed impressive returns, but following a $100 an ounce rally in just over a year, from a technical perspective golds advance is looking overstretched.

After closing at $381.50 an ounce on February 4 the spot price pushed to news highs of $388.50 the following day. However, by the close of business on February 5 the spot price had dipped to $371.75, forming a reversal day. A reversal day is a chart pattern that can indicate an imminent change in the direction of the trend. At a market peak, prices make a new high during the day but close lower. In this instance the wide daily price range on February 5 adds weight to the potential reversal.

An upward-sloping trendline can be drawn beneath the sharp advance in gold since the start of December 2002, which has taken the spot price from $315.75 to this week's high of $388.50. Support from this trendline currently lies at $365, just beneath current close of $371. A reversal pattern followed by a drop back to trendline support suggests investors should tread warily as a larger pullback may be in prospect.

Momentum indicators show that the gold market is in a very overbought condition. The Relative Strength Index (RSI) on the weekly chart currently stands at almost 91. The RSI runs from 0 to 100 and values above 80 indicate an overbought market. A value above 90 on the weekly chart has not been seen in the last five years.

If trendline support is breached at $365 investors should look for a correction of the move up from $315.75. A 38.2 per cent Fibonacci retracement would take the spot price back down to $360.70, a 50 per cent pullback would reach $352.10 and a 61.8 per cent correction would hit $343.50. Beneath the latter level the May 2002 highs offer support just above $330.

I would buy on dips as long as we hold above $330, said Chris Locke of technical consultancy Oystercatcher BV. Mr Locke also identified $330 as an important level in his longer-term view of the market.

I lean towards the long-term bull case for gold but am very wary, he added. Mr Locke follows Elliott Wave Theory, which looks for moves in the direction of the major trend to unfold in five distinct waves.

A five-wave move is nearing completion up from the lows between $270-$280, but the wave structure does not look strongly impulsive. The waves overlap at the beginning of the move which suggests the whole move could be corrective in nature, said Mr Locke.

The jury is still out on some of the more bullish arguments for gold. A monthly close above $398 is needed to confirm the long-term bull case, being the 88.6 per cent Gann retracement of the whole move down from the March 1996 highs at $417.70.

But for now the short-term reversal pattern and the overbought nature of the market suggests a correction is needed before any assault on the $398 level can be attempted.

goldfinger,

and here is another article appearing on the cnn website in the form of reply to an investors question about selling stock and buying gold.


gn up for the Ask the Expert e-mail newsletter


NEW YORK (CNN/Money) - I'm considering selling my stocks and investing my money in gold. What do you think of this move?

-- Lucy, San Francisco, Calif.

Not much, Lucy, not much. Oh, I know that when times get scary, people rush to the security of hard assets like gold, and that prices have been booming lately as it appears ever more likely that the U.S. will go to war with Iraq.

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On the days leading up to Secretary of State Colin Powell's speech outlining the case for war last Wednesday, for example, the price of gold bullion in New York climbed to just under $380 an ounce, it's highest level since 1996.

And gold stocks have also been among the hottest performers in an otherwise dismal market. Through the 12 months ending in early February, for example, Morningstar's Precious Metals fund category (which consists mostly of funds that own gold mining and refinining stocks) was up a stunning 46 percent -- that's right, 46 percent at a time when the S&P 500's total return over the same period was a negative 21 percent.

Yes, but...
So why am I not urging you to unload your stock portfolio now (IMMEDIATELY!) and snap up some gold bullion or gold stocks or funds?

Several reasons.

First, they're notoriously volatile. That's great if you manage to buy them before one of their occasional spikes in price. Obviously, the people who bought gold funds a year ago are congratulating themselves (deservedly or not) for being geniuses.


But if past gold cycles are any indication, people usually start buying only after the runup. Prior to the Gulf War in 1991, for example, gold prices soared to just under $405 an ounce. But people who bought in expectation of further gains were disappointed, as the price of gold began sinking thereafter because investors became convinced the war would be a short one.

Big gains in gold stocks and funds have also lured investors in, only to disappoint them soon after. Gold funds gained more than 90 percent in 1993. But they lost 48 percent over the next five years.

But times are really scary...
Who knows, maybe this time will be different. Maybe gold bullion and gold stocks and funds will continue to post big gains. I wouldn't count on it, though, since gold isn't the type of investment that generates steady gains over time.

Gold funds on fire


Fund Ticker 1-year return
First Eagle Gold SGGDX 65.5%
Van Eck Int'l Investors Gold INIVX 52.4%
Tocqueville Gold TGLDX 45.4%
American Century Global Gold BGEIX 39.5%
Fidelity Select Gold FSAGX 37.6%


*Returns through Feb. 5, 2003
Source: Morningstar, Inc.

It tends to give its gains in spurts with some extended down periods in between. Buy in at a high, and you can spend a long time waiting to get back to even. Of course, maybe you'll be smart enough to know when to jump in and then get out at the right time. But to my mind, that strategy is more akin to speculating than investing.

I suppose you can make a case for moving a bit of your money into gold -- say, maybe 5 percent or so. The rationale for doing that is that gold prices move in sync with stock prices. So even though gold itself is highly volatile, adding some to your stock portfolio can lower your portfolio's overall volatility because stocks and gold don't zig and zag at the same time.


But frankly, I'm not a big fan of using gold as a diversifier because I think you can find other investments that provide decent diversification but with better long-term return prospects than gold. And if I did use gold to increase my portfolio's diversity, I'd use gold stocks or, better yet, gold mutual funds, not gold bullion, which has higher transaction costs that cut into your gains (assuming you have gains).

So if you want to join the gold rush, my advice is keep your investment small, and stick to gold mutual funds. And don't forget that the same forces that drive up gold prices and gold stocks quickly, can push them down just as fast.


--------------------------------------------------------------------------------

Walter Updegrave is a senior editor at MONEY Magazine and is the author of "Investing for the Financially Challenged." He can be seen regularly Monday mornings at 7:40 am on CNNfn.

avm,

down this morning, but gold price is up some $3/oz, so expect the avm price to improve. and while the situation in iraq remains unresolved, expect old price to rise further. i understand the next targer is $395/oz.

We seem to have had a few bad days, Arch. Will be asking Evil Knevil this evening where he thinks POG is going. Will give replt wed teatime.

regs GF.

heard chris lock this morning on cnbc: below 330 is bearish, above 398 is bullish. there has been a slight improvement in the pog and avm responded by rising a few percentage point having opened the day in the red.

Well Evil is more Bullish on Gold than he as ever been. Says the low POG price is a great opportunity to buy. Hes still looking at POG at $750 long term.
Feels dollar will weaken even further. When POG gos up he feels it will really take off.

GF.

good news goldfinger. and if this is correct then the current drops have been none other than atechnical corrections. yesterday gold rose be some $4.5 but as and avm followed in sympaty rising soem 3.5%. as i write, however, gold is down by over $5.

i would have thought as war gets closer the rush for gold wil intensify and stock sell off. the opposite appears to have happened. mind the usa market has another 3.5 hours to run during which anything may happen.

have just found out that a massive seller has just been cleaned out and that the shares have gone to a very good home , that must be one of the main reasons for depressing the share price past couple of weeks ,should be bullish from now , price ticked up after sales .

Yes BUD its good to see it ticking back up to 35p. There is speculation that the deal was a matched trade and that the buyer is indeed another Gold miner.

Do you feel that we could be on for a merger or a takeover?.
GF