Gårdagens Late edition om guld i Sydafrika

Last year we saw the immense magnitude of fiscal irre- sponsibility from the majority of government’s which caused immense market turmoil. This year, investors are looking to these governments as to how they will eliminate, or at least slow down, the degree of deterioration happen- ing, specifically getting their debt levels under control. Lit- tle’s been done by any of them, be they in Europe or the US as it has been mostly chatter to date.
With all the money governments are printing, gold bugs have been disappointed that the price of gold has not cata- pulted into the $2000 to $3000 range or higher. When you look at the 5 year chart, gold has been a great hedge against the markets, just not as much as the gold bugs would like as conspiracy theories abound. Now if you have invested in gold companies, you have truly been disappointed as they have in no way mirrored what gold has done as these charts show. Standard issues mining companies face include con- trolling costs, commodity price fluctuations and environ- mental issues to name but a few

IAMGOLD CORP. SEMAFO INC. OREZONEGOLD RIVERSTONE RES. AFRICAN GOLD VOLTA RES.
(T-IMG) $8.74 +0.09 (T-SMF) $2.83 -0.03 (T-ORE) $1.58 -0.04 (V-RVS) $0.425 -0.01 (V-AGG) $0.17 -0.015 (T-VTR) $0.40 -0.02

One area of the world that used to be a hot bed for gold was Africa and African gold companies will likely continue to face severe challenges...where’s the bottom?
Mining industry big-wigs gather in Cape Town, South Africa this week between Feb 4th to 7th for the 19th an- nual “African Mining Indaba”, billed as the “world’s larg- est mining investment conference.” There will be a lot of discussion on social and environmental issues, so much so, due to the recent deterioration of conditions, the final day of the event is devoted to this.
According to US broker JP Morgan (JPM), Africa’s mining industry (specifically the South) is in crisis with its gold producers facing another tough year.

In an overview of the sector this past Monday, JPM said it can see few catalysts for a rise in the valuations of major South African gold miners even though it expects the price of gold to rise steadily over the year.

There’s a migration out of South Africa towards West Africa, even though it’s more virgin territory. While the grade of the gold in West Africa is not as high as in South Africa, there are other big advantages. Government rela- tions are better, labour conflicts are fewer, taxes and roy- alties are often lower and costs are more predictable.
Mining production in South Africa is falling steeply with a 13-per-cent decline last year alone and new inves- tors are looking to West Africa instead. Burkina Faso (West Africa) has a reputation for political stability with the same authoritarian government in power since 1987. But there could be cracks in that stability.
JPM expects the gold price to trade up toward $1,800/ oz by mid-year and average US$1,763 over the year. When we asked our Nicholas Campbell what his thoughts were on a recent report from Credit Suisse that discussed, “Gold, the end of an era?” he doesn’t buy it. Nicholas tells us, “I don’t really think it is an end of the era for gold. If anything, we continue to see everybody trying to devalue their currencies and that should be supportive for gold.
The other thing is Central Banks continue to be signifi- cant net buyers of gold and again, that’s going to have an impact in the gold market. There is a lot of physical gold that’s going to get moved around in the next year or so, as an example, you have Germany repatriating all or most of its gold. That suggests to me that gold is in demand. Now can gold go down? Absolutely it can. Are we going to see new highs this year? I don’t know, but generally speaking the whole reason why we’ve been bullish on gold has been because of the amount of money that’s been pumped into the system.
The other aspect is obviously the devaluation of cur- rencies in general and improved outlook for gold as an alternative currency which I think is supported by the Central Banks continuing to add to their holdings.

Some African specific issues include:
• “He who has the biggest gun has the power”. This is why one of my clients in the Canadian military won’t go near anything associated with Africa after spend- ing time there. It’s amazing how many African states/ territories are currently involved in a war or experi- encing post-war conflict and tension. The one getting most of the news of late is France battling to weed out al-Qaeda & its allies out of Mali. Last we checked, out of the 54 recognized states/territories in Africa, at least 17 were involved in some kind of war or conflict. • Over 30 South African gold companies, including big names such as AngloGold Ashanti, Goldfields and Harmony Gold, face class action litigation that alleges they knew of the dangers posed to miners by silica dust for more than a century.
• Deadly strikes left 44 dead at Lonmin's Marikana platinum mine in South Africa highlight "structural problems" in the country which could damage investment, Fitch rating agency said.
It all makes you wonder why one would consider working/investing in Africa. Oh yes, greed...is there an opportunity staring right at us in all this turmoil?