For those of you concerned about the price of gold
This may be a duplicate header as my first attempt to post this failed possibly because I attempted to include a link to the article. SO alternatively do a search for an article entitled; "Gold becomes a Tier 1 asset class for banks." if you can survive the lows in this industry and have the stomach and patience to survive those lows PGLC and VGLD should both do well barring unforeseen fraud in the marketplace, which is always the case. Gold has no where to go but up considering how the US and Europe are managing their finances.
im more concerned about the price of PGLC and whats going on behind the scenes. Gold has done its part and has been in a range of 150-1700 for some time. Those are good numbers. I was hoping for a better PPS action after it hit almost 60 cents but we get 43 cents with a PEA that wasnt delivered on time and a bizare CRGC swap. And we even have had folks pump this with almost weekly articles. Not great for arguable one of the most interesting and "soon to be mining" juniors out there.
"Despite resurgence in euro area risk aversion and disappointing U.S. economic data , gold prices are unchanged over the past month, highlighting how conviction in holding gold is quickly waning," said Goldman Sachs analysts Damien Courvalin and Jeffrey Currie in the note.
The analysts cut their gold forecast to $1,450 per ounce for 2013 and $1,270 for 2014, the second cut in their price target this year.
I hope we all understand what is going on in the gold market:
"Central banks that want to support their currencies — and support the US dollar in particular — want to control interest rates and government bond prices, so they intervene in the gold market by selling their gold outright, by leasing it into the market through bullion banks and the Bank for International Settlements (BIS) and by swapping it to other central banks that will be doing these sales or leases. They also sell gold options and futures contracts through the BIS. They do a lot of shorting of gold to control the price.
It is a central bank scheme, but they operate very often through agents like bullion banks, JPMorgan Chase & Company (NYSE:JPM6) and HSBC. The BIS in Basel, Switzerland conducts much of the gold trading for the western central banks. So certainly the BIS is an agent as much as the bullion banks are.
The use of New York investment banks by the US government, particularly JPMorgan Chase, that’s public record. I’m sure if you asked for access to all the communications between the Federal Reserve and the US Treasury and JPMorgan Chase, you would get a lot of interesting information — if it was made available to you"
1. Those two analysts might be wrong. Their opinion is certainly an outlier.
2. If the price were to drop that low, most gold mining around the world would shut down. Around $1000 per ounce is the average op ex for mines. Add to that the geopolitical and labor risks of mines in Africa and South America and you have an extraordinarily tight supply situation with gold way below $1500 per ounce.
3. It appears that PGLC's op ex is around $700 per ounce. It would be profitable (though not hugely so) at $1000 gold.
4. The loss of supply with the drop in price plus the quick recovery in price due to the wash out of producers would set PGLC up to be a huge winner.
Anyway, that's the half full analysis I come up with from your article about the two Goldman guys.