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

cheers GF.

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/8635523/How-to-invest-in-gold.html

Investors Inteligence tip this morning...

Petropavlovsk - The long-term downtrend may be coming to ending. One, no more lower highs. Two, a relative base breakout (see right). Overweight short-term.

Broker Recommendations from Digital Look. SP here looks way undervalued......

Date Broker name New Price Old price target New price target Broker change

21-Apr-11 HSBC Overweight 910.00p - 1,200.00p New Coverage
25-Mar-11 Citigroup Hold 1,070.00p 1,290.00p 1,100.00p DownGrade
22-Mar-11 Evolution Securities Buy 1,046.00p 1,600.00p - Reiteration
14-Dec-10 UBS Buy 1,151.00p - - Reiteration
07-Dec-10 Arbuthnot Securities Buy 1,165.00p - - Upgrade
24-Nov-10 Bank of America Buy 1,072.00p - 1,700.00p New Coverage

.

Newsletter - Issue 27, July 2011

Gold at Record High - You Ain't Seen Nothing Yet!


So we have seen a new record high for gold. You aint seen nothing yet. In a few months time $1590 the peak seen this week will be a distant memory. We expect $1700 to be topped this year and $2,000 in 2012. Others are far more bullish than that.

So what has caused the recent jump in the gold price. In the US ,the Federal Reserve gave a leg up with talk that some members are potentially in favour of additional monetary policy accommodation if economic growth and unemployment fail to improve. The latest US Jobs statistics were the worst since the 1930s. Meanwhile Congress and Obama are still in deadlock over whether the US Government goes bust on August 2nd. Of course the current $14.3 trillion debt ceiling will be lifted but it will do so via shoddy compromise and everyone will know that it is a shoddy compromise. US Government finances are bazookered!

Meanwhile over in Europe, the EU debt crisis worsened as credit rating agency Moodys sent yet another Eurozone member to the Junkyard. Ireland followed both Greece and Portugal to non investment grade status shortly before the close of the US markets on Tuesday. Where is next? Italy? Spain? This crisis is not over and will only end when the Euro as it now stands is scrapped.

The Irish downgrade is one thing, the majority of astute investors realise that as the country is insolvent and all but frozen out of the debt market, a second EU bailout will be needed at some point. However, Italian debt whisperings should be seen as a developing problem likely to rattle global markets further as debt contagion will now inevitably be likely to engulf the country, followed by Spain. It will be interesting to see the results of the stress tests on the 91 EU banks which are set to be published after the close of the EU markets today. Taking this into account the big three rating agencies are still reeling from the bad press received following the fall out of the 2007/8 crisis, and their rating AAA rating of toxic debt, so it is more than likely that all three will take a harder stance this time around. We have just seen S&P follow Moodys by putting the US on credit downgrade watch.

Certainty is currently short lived and it is likely that some of the focus on Europe will transiently dissipate when the earnings season across the Atlantic gets fully underway. We saw on Thursday how Bernankes comments to the Senate let some air out of the stimulus balloon. But the elephant in the room (which is not going away) is the developing US debt crisis. If the debt limit is not raised by 2nd August the Worlds largest economy will quite simply default on its debt. This will send the global markets into madness, lending will dry up and we will almost certainly enter a period of complete uncertainty in regard to the future. In reality this will not happen as the debt ceiling has already been raised circa 90 times since inception, and once a year since the beginning of the century. What should, and inevitably will, be realised is that, like the indebted EU nations, the US has a structural issue. Put simply it spends far more than it earns. 40 cents of every Dollar spent is borrowed.

This is not to mention that in June unemployment ticked back up to 9.2% but in reality more than 15% of the country is unemployed. US jobless claims did in fact surprise on the upside this Thursday but put in the context of the continued lack of robust hiring (the majority of hires have been on the low income side which will generate lower revenues for the Government) an additional 18,000 jobs goes no way to remedying the issue. Over the past year in the US, private employers have added 1.7 million to their bank role. However the net result of 659,000 cuts in government jobs (roughly half of those were temporary Census workers) means total U.S. payrolls were up by only 1 million over the last year. This leaves the country with 7 million fewer jobs than when the recession started in late 2007. This subpar job growth will continue to restrain domestic consumer spending, preventing the US economy from gaining any real traction. A jump in US inventories again on Thursday, coupled with declining sales indicates this clearly.

Less than one month after the end of the last bond buying programme there is already whisperings and hope for a third bout of stimulus. Although Bernanke has stated that there is no immediate plan to widen the Fed balance sheet further we suggest that this is an act of containment. The Fed knows too well that any uttering of QE3 will see the next sugar rush ensue. In reality in one form or another we can expect the US to step in to hold up its economy and subsequently equity markets.

Despite the price of Gold having consistently held above $1,500 throughout the past two months mining equities have struggled. Markets are short sighted and despite an uncertain environment and a developing global debt crisis, as we have detailed previously, the valuation gap between Gold itself and the rating of equities has continued to widen dramatically. We have subsequently seen the valuations of a number of our holdings marked down by forced/panicked sellers with buyers relatively nonexistent, sitting on the side lines. According to Barclays Capital, July is set to be the worst month in regard to trading volumes so far this year, with year on year volumes down 23% (arguably even more across the small cap market)! This has simply compounded the issue over the last two months but we have very recently enjoyed an uplift in the prices of the majority of our holdings. Over just the last three trading sessions we have seen our NAV tick up by 3.4% (Source: Financial Express). The key point however is that the value in this sector is now, in our view, quite stunning. You do not get to buy gold producers on less than two times cashflows. You can now.

Erste Group recommends that in a typical scenario five to ten percent of a portfolio should be allocated to Gold with scope for further diversification into mining equities, citing currency devaluation and negative real interest rates as the main drivers for pushing Gold higher. We would argue that even on the upper side of this range a portfolio would be underweight Gold/mining equities given the wider risks to investors currently. Admittedly the argument that Gold does not provide an income stream is valid but we believe that in this inflationary environment the modest yields offered by even the big FTSE payers are not adequate. Strong capital growth is far more attractive and this is what we aim to provide.

Despite having ticked up over the last few days the team at T1ps Investment Management (IoM) remains of the view that, having absorbed a lot of downward pressure over the last two months, the portfolio is significantly undervalued. We have purchased more of what we already own, notably Ariana Resources, and just yesterday Senior Tom Winnifrith took taken advantage of the low valuations and made a further investment into the Fund at a personal level. We are confident that we are invested in the right places and that the outlook for our underlying investee companies remains bright.

Ross Jones

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8638644/Return-of-the-Gold-Standard-as-world-order-unravels.html

From Minesite:-

July 14, 2011

Petropavlovsk Announces Ambitious Plans For Pressure Oxidation Plants In Russia, Just As Gold Breaks Into A Canter.

By Charles Wyatt

Some mining companies find that it takes time to recoup a reputation for efficiency when they miss production targets on one or more occasions in a row: others find that investors can be very forgiving.

PETROPAVLOVSK is just such a one, as last year the company produced 508,600 ounces, which was just shy of the production target of between 510,000 and 530,000 ounces. Not much of a miss, I hear you say, but a miss is as good as a mile when pessimists compare it with the top-end target. Anyway Peter Hambro took it on the chin and forecast 600,000 ounces for this year, a forecast has always looked entirely realistic given that no account was previously taken of the Albyn mine, due to commence production in the fourth quarter, nor of the Malomir mine, where the plant expansion will come on stream in the second half of this year. And, now that the company has confirmed that it is on track to beat this target, the share price has pulled sharply out of the long downtrend which started back in February.

In fact Peter Hambro is so determined not to fluff a forecast again that the target actually looks pretty easy, especially as mine planning has been revised to cut out some of the likely peaks and troughs of stripping works and mining. Some of the high grade areas will now be left until 2012 to make sure the company always has something in hand to meet unexpected difficulties.

According to John Meyer of broker Fairfax, gold production from April and May from the companys three key mines, Pokrovskiy, Pioneer and Malomir, rose to 83,500 ounces. That took production for the first five months to 158,900 ounces which is ahead of forecast and 33 per cent up on the same period in 2010. The annualised rate is 501,000 ounces on current production but improving weather conditions, says John Meyer, should enable gold production to rise significantly through the summer and second half till winter sets in. In addition, alluvial and heap leach operations will also boost production during the summer.

The most significant bit of news to be found in the recent production update is that feasibility study work on pressure oxidation plants for treating refractory ores, which go by the somewhat dubious acronym of POX, has now been completed. These plants will now be added, where appropriate, to the mining operations. The basic plan is to have the POX plant itself as the hub at Pokrovskiy and to have flotation plants at the other two mines. Without wishing to get drawn too far into the technicalities, high-pressure oxidation of refractory gold ores and concentrates is performed in order to enhance their amenability to cyanide leaching. Oxidation conditions are critical to the chemistry within the autoclave and can significantly affect gold extraction. Important parameters in the oxidation of refractory gold ores under oxygen pressure are the fineness of grinding, the pressure, temperature, density and pH of the slurry in the autoclave, and the total retention time.

The Petropavlovsk plan is to develop the whole plant at Pokrovkiy in two stages. The first four vessels for processing concentrate from Malomir should be in place by the first quarter of 2013, and the two vessels for Pioneer concentrate by the third quarter of that year. Final capacity of the Pokrovskiy POX plant is estimated at 600,000 tonnes of concentrate per year and the capex will be US$181 million spread between now and 2015. The POX plants at Pioneer and Malomir are unlikely to boost operating costs from the current levels, which is great news as the market will generally have assumed that costs may have come in higher for this form of more complex processing. Examination of some other users of this processing technology shows that production can be done effectively at economic rates, says John Meyer.

Peter Hambro is very bullish about the POX programme saying: The creation of a pressure oxidation hub at Pokrovskiy will propel the group into a new and exciting phase of development and give Petropavlovsk a strong competitive advantage in this highly prospective field. Russia has a significant reserves and resources base, which primarily consists of deposits containing refractory ore. We see our future Pokrovskiy hub, located in close proximity to excellent infrastructure, as the key to unlocking the value in a number of dormant, inexpensive assets requiring this technology. As the birthplace of our business, Pokrovskiy was a natural choice for the proposed POX hub. We already have a large workforce employed there and established infrastructure, including haul roads, milling and smelting facilities and a plentiful power supply. Situated just 14 kilometres by road from the nearest station on the Trans-Siberian railway, we will be able efficiently to transport flotation concentrate to the site, not just from the Amur region but, looking ahead into the future, also from other regions in the Russian Far East.

A pretty ambitious plan, especially when followed by the claim that when built, the sheer scale of the hub means that it will be the largest operating in Russia. Russia is a pretty big country, but Peter Hambro has always been one of the foremost promoters in the gold industry there. He does things his way and this time he has effectively set new targets over the next four years. Some old stagers will remember when he was talking back in 2006/7 about production of one million ounces by 2010. He now argues that he has built a sturdier company with plenty of future potential.

Not bad timing in a world where gold seems to be one of the only currencies that can be trusted

POG tipped in this article........

http://www.fool.co.uk/news/investing/2011/04/08/why-im-keeping-hold-of-gold.aspx

London Mining among JP Morgans favoured small and mid-cap miners -

2:28 pm London Mining

http://t.co/J3zrkJw

is among JP Morgan's favoured group of small to mid-cap miners
London Mining (LON:LOND) and Petropavlovsk (LON:POG) have emerged as JP Morgans top picks following a fresh review of the UK small and mid-cap miners covered by its analysts. The broker believes that with commodity prices set to remain strong, this end of the sector offers interesting upside potential for investors.

The review by JP Morgans mining team is based not only on stock specific newsflow but also the brokers latest commodity and foreign exchange assumptions.

While commodity prices are not rising at previous rates, the brokers analysis indicates the UK small and mid-cap mining sector in general boasts stocks that are delivering strong production growth rates. In certain cases they are also potential direct beneficiaries of the substantial cashflow being generated at the senior end of the industry as they become eyed up as possible bid targets.

The broker reckons there is an especially strong case for optimism over iron ore and precious metals plays.

London Mining looks particularly well placed to benefit from JP Morgans forecast strength in iron ore markets over the near to medium term. At the moment, the company is working towards a September start-up for its flagship project, the Marampa iron ore mine in Sierra Leone.

Only late last month the company assured investors that Marampa remains on track for first shipments in the fourth quarter of this year thanks to a recently-agreed shipping deal.

For JP Morgan, Marampa offers near-term growth at low capital intensity and competitive operating costs.

Marampa was once a major iron ore producing operation in Sierra Leone. It operated for 42 years from 1933 until low iron ore prices forced its closure. Continuing weak markets and civil war in Sierra Leone prevented redevelopment of the mine until London Mining obtained a licence over the property in 2006.

From an historic tailings resource plus a primary iron ore target of 85 million tonnes at 37% iron just over a year ago, Marampa, has certainly grown in London Minings hands: current resources, as of January 2011, stand at 37 million tonnes of tailings running at 22% iron, and 906 million tonnes of primary ore grading 32% iron.

London Mining development plan for Marampa envisages the production of 3.6 million tons per annum of sinter concentrates from a blend of tailings from previous operations and soft, highly-weathered ore in its first phase.

The second phase expansion is aimed at producing 16 million tons per annum of concentrate from the remainder of the Marampa ore body over a 25-year mine life.

JP Morgans latest upbeat view on prospects for London Mining follows on from its very positive initiating note on the company back in May. Even then the broker was advising investors to begin building positions on the stock immediately adding that 2011 could prove to be a transformational year for the company.

The broker noted at the time that there were two potentially important catalysts for its share price going forward: initial production from Marampa, marking London Minings transition from developer to producer; and secondly, any deal to secure funding for Marampa Phase 2.

It currently rates London Mining at overweight with a price target of 520 pence.

Meanwhile among precious metals groups, the unloved gold miner Petropavlovs finally appears to be on the right track, says JP Morgan.

Petropavlovsk (formerly Peter Hambro Mining) is focused on Russia and has a number of production and exploration assets across Russia, with its principal operations located in the Amur Region, in the Russian Far East.

Investor sentiment over Petropavlovsk has been heavily undermined because of its persistently missed guidance over 2010.

On 22 June 2011 the company assured in an update

EPS forecasts from Digital Look, anyone think these look very good but will actually be better due to price of gold rising.

Petropavlovsk ForecastsYear Ending Revenue (m) Pre-tax (m) EPS P/E PEG EPS Grth. Div Yield

31-Dec-11 609.35 221.22 87.45p 9.3 0.0 +464% 9.15p 1.1%

464% rise in EPS to results in December and thats without the new high in Gold SP being taken into account.

Goldfinger - Can you enlighted a mere novice as to why over the last two trading sessions namely Friday and today (Monday) that after the Gold spot price reached a record level on Friday then reaching a new record today. The POG price finished down at the end of both trading days!! And yet when I look at both:

African Barrick Gold (LSE: ABG)
Randgold (LSE: RRS)

They have both risen at end of trading and yet POG goes in the opposite direction?

The US and Euro economies are in a mess. Everyone is backing Gold and POG is sitting at just over 8.00 even after their bullish market update on the 21st June.

Surely if the price of Gold is increasing then this should have a direct correlation with GOLD mining stocks? Or am I looking at it too simplistically?

Post 1144 will explain your query Ian. cheers GF.

Trading update thursday the 21st aswel. Looked like MMS collecting stock for the books today of POG. One can only guess that they are looking towards a favorouable update come thursday.

Going lioke the clappers this morning. Was subdued yesterday amid some strange MM dealing.

sp certainly been performing well in horrid markets, but by golly the management needs to start producing some rabbits after its dismal forecasting record over the last couple of years

Trading statement thursday cyners, followed by another 25th of August. Should lift the SP if all goes to plan.

and THAT has always been the problem!

how r u keeping young sticky?

Thanks GF - I had read that particular post and have just re-read it.

Better finish to the day :-)

Excelent half year results.

http://moneyam.uk-wire.com/cgi-bin/articles/201107210700147770K.html

And we have another update to come in late August.

Yep, with a jorc update still to come.....