http://www.kitco.com/charts/livegold.html

cheers GF.

he may not be wrong, isnofar as bullion has suddenly dropped $35 for no obvious reason, with POG (and others?) not really reacting to same

Surely there's an obvious reason? If we're heading for deflation, then holding an inflation hedge (gold) doesn't really make much sense. Not that anything makes much sense in these markets at the moment!

In my opinion.

Strawbs.

Gone back in long.

Hoping the speculators of recent days are now out.

Following is a piece by Ed Jackson over on iii dated 26th Nov - may be of interest.



''The ongoing global financial turmoil means investors should keep gold under review, for portfolio balance. Latest figures from the World Gold Council show that investment demand for gold rose 56% to 382 tonnes for the third quarter of 2008, as investors sought a relatively safe haven from stockmarket turmoil.

In terms of US dollars, gold demand reached a record $32 billion, 45% higher than the previous record set in the second quarter of this year. The Council believes a lot of this is scared retail investors in Europe, fleeing to gold bars and coins. It is interesting to consider how this may spread, especially in Asia and the Middle East.

Yet the price trend of gold is by no means easy to judge, in relation to events. You can usually find a newsletter or website by 'gold-bugs', regular enthusiasts for the yellow metal who predict higher prices. Yet since it achieved a record peak of $1,023 in March, and as the storm broke in financial markets last summer, the gold price fell below $750. This may have been linked to leveraged hedge funds unwinding, since gold is a relatively liquid market, and weaker buying from the electronics industry. It may however point to upside once forced redemptions of assets has taken its course.

You can investigate gold bars and coins if you like however this is an equities column hence I am alert for a share with recovery potential.

Peter Hambro Mining (POG) is interesting on several grounds besides medium-term upside potential in gold.

Its shares are listed on AIM; a market which has taken its own battering, especially in mining shares since sentiment turned down with commodity prices last summer. Yet Peter Hambro is no typical AIM blue sky miner, it has become Russia's second largest gold producer, mainly as a result of the eponymous Mr Peter Hambro's capability at developing sound relations with commercial partners in Far Eastern Russia. At about 300p per share, the group is capitalised at a relatively substantial 240 million.

This is a double-edged sword for stockmarket sentiment, however, as investors overcame wariness of Russia to buy into Peter Hambro, especially with the boom in smaller miners, then took fright as fears crept back that assets might be reclaimed or commercial terms forcibly adjusted. Russia's economic context, geared to volatility in oil prices, has not helped.

It is also respected as a low-cost producer (despite costs inevitably increasing across the mining industry). You can learn more about its operations at peterhambro.com.


Questions raised
More recently, questions have been posed over the company's reserving and ability to fund its production On 11 November, HSBC Global Research asserted its analyst's view that a technical report on the company's projects showed a sharp decline in resources and reserves at the key Pokrovskiy and Pioneer projects in Far Eastern Russia. HSBC estimated the company would fall well short of its stated production goals, and be unable to fund the Malomir development; hence the analyst downgraded his share price target to 2 from 7. This triggered a recent low around 175p.

Peter Hambro responded with a 14 November announcement citing "potential misunderstandings" of the company's reserves and resources in recent market analysis, which were being discussed with the relevant parties.

Seymour Pierce, another broker which is independent of commercial relations, has taken the opposite stance to HSBC arguing that Peter Hambro Mining shares are trading at a significant discount to global peers, in terms of estimated value per ounce of total reserve and resources. The broker has also confirms the company is among the lowest cost producers globally with one of the strongest growth rates of production.

This recommendation, together with BlackRock Investment Management raising its stake above 13%, has helped the shares back above 200p. The fund involved is managed by a member of the Hambro family, however Baring Asset Management has also bought into the weakness to hold 7.4%.

All this helps to explain the four-year rollercoaster, with Peter Hambro shares soaring from 75p to about 16 a year ago, only to slump back to about 175p. Even while writing this piece, the shares jumped well over 50% to 340p. Volatility is likely to be ongoing, offering opportunities.

Peter Hambro himself bought 40,000 shares at 213p on 13 November although this was modest in relation to his holding of 5,283,179 shares or 6.5% of the issued share capital.

Recent operating results were sound despite inevitable disruptions any miner is liable to, and rising costs which are a current feature of the industry.

First-half 2008 results showed good financial progress with underlying operating profit up 41% to $58.1 million on revenue up 57% to $146.4 million. (Note the industry standard reporting in US dollars.) The modest disparity reflects inflationary pressures in the mining industry: higher costs of labour, energy and raw materials. Strengthening of the Russian rouble against the US dollar has also slightly added to reported costs.

Slow progress
The operational review was a sombre read however with slower than expected progress at the new Pioneer operation and a "disappointing" further delay to the start of production at Malomir (with the first half of 2010 now targeted). There were delays in receiving equipment and possible changes to production schedules after exploring "newly discovered enriched areas", albeit quite normal disruptions for mining companies. (In fairness, note that the 5 November third quarter results showed group production up 32% overall, with Pokrovskiy/Pioneer up 20%.)

A 7.5p per share maiden interim dividend has also been paid, underlining the company's cash generation.

The interim statement had an uneasy paragraph regarding "country risk": "The group is monitoring the progress and implementation of new legislation on strategic assets in order to determine what steps will be required to be taken and what effect it may have on the current and/or future operations of the group."

The statement noted that Wardell Armstrong International had reviewed the group's mineral resources and ore reserves in line with 2004 guidelines for the industry standard JORC Code (see jorc.org), as of August 2008. These were estimated at about 107 million tonnes of ore containing about 4.4 million ounces of gold, with an additional 4.5 million ounces of inferred resources.

So shareholders are having to come to terms with classic risks in the mining industry, more easily overlooked during the stockmarket party - such as controversy over reserving, country risk and operational delays. Unfortunately for holders - or usefully for buyers - this has all coincided with a sharp downturn in wider investor sentiment.

The top-down influence of gold prices is probably the most important factor and if we are looking at a medium-term uptrend (as looks likely) there is scope for a strong re-rating of the shares not just on this but a reversal of the negative sentiment on other issues that have come altogether.

You need to appreciate the speculative aspect of mining shares, that the investment rationale may not be so well defined as in other situations. Yet this makes them prone to sentiment swings that appeal to enterprising traders able to stomach the risks.''

EK is shorting POG....!.

Yep I know.

Hes also told me why and I dont buy his argument.

There is a real scandal with Sibir Energy today....knock on effect ? hope not as I'm in Petroneft for the longterm !.

Looks like EK is right sp down 11% today

It's good that EK is shorting POG

Is it time to buy..?

no

what price cynic..?

don't know, but would be more inclined to short still ..... gold has been heading south for a while now and has lost a further $15.00 today to $752

It was 400p last week and now back to 230p incredible movement..

Gold may go $700 but in 2009 I reckon it could double.

Got to wait for forced sellers eg, hedge funds unwinding positions and then we will be back in action.

Do we go for explorers or producers that is the question.

Any here with thoughts on this?.

Well there's CEY (production soon), AVM (production in the far east), and loads of small explorers with their sp's in the pennies !, also LRL (out in China....small explorer with gold sticking out of the ground from what I gather but needs help from a major).

I think that if gold recovers CEY will rocket : 13 million ounces or so in the ground or close to that and production to start soon....getting in at the right time will be the tricky bit.

I am waiting for 200p before buying I'm sure cynic will tell me..I guess 100p is the 2003 low.

200 may be ;marginally early to expect at least a bounce, but not that far out ....

Whats your thoughts now cyners after the rally today?.

gold further up and shorting figs for november in POG just out...

GB0031544546 PETER HAMBR ORD 1P 7117860.10 61081415.35 11.65

11.65% stock on loan.

Would support buyers drive the SP northwards on closing out positions. Looks like TA argument is taking a back seat at the moment.

May go for a short term punt in the morning but wait for 30 mins because spread is ludicrous on this one first thing.

You tempted???.