Silver Rises Above $28 Resistance, Then Falls

Early-week silver market action likely provided some encouragement for a lot of silver bulls. The metal not only outperformed gold on a number of occasions, but also managed to break through and close above the lingering $28 resistance level. Sale Clinker Breaker In Europe On Monday, the metal’s New York closing price was $28.18 and Tuesday brought a close of $28. But those who missed the action may well doubt that those events ever occurred since by mid-week the market had weakened again. This week was data-heavy, but market participants were mostly concerned with central bank meetings. The anticipated two-day Federal Open Market Committee (FOMC) meeting did not produce any change. The Fed again noted that economic activity has decelerated, employment growth has slowed, and inflation has declined. As in the past, it expressed a commitment to monitor conditions and provide additional accommodation if needed. There was no move toward QE3 or to extend the low interest rate policy beyond 2012. But there was also no major loss of hope for Fed action as many market participants believe more monetary stimulus could be announced in September. On Wednesday, the closing day of the FOMC meeting, silver’s trading range was nearly $1. At one point silver was $28 and a few pennies, but it closed down $0.56 to end at $27.44. It is perhaps surprising that the steepest declines occurred ahead of the news from the Fed.Sale PCL Sand Maker In Europe Silver prices took a major dive early in the US session. The cause of this drop is not completely clear, but speculators believe that it could be due to a number of factors, including action by alleged market manipulator JP Morgan, suspicions that easing would not be forthcoming, or spillover weakness from other falling commodities such as base metals and grains. In any case, silver was trying to recover some ground when the news came from the FOMC meeting. The announcement applied another bout of downward pressure, but silver put up better resistance than gold and closed mid-range. On Thursday, the focus was on a European Central Bank (ECB) meeting. Last week, ECB president Mario Draghi committed to doing whatever is necessary to save the euro. That announcement provided support for silver and gold. It also spurred expectations that Draghi would announce fresh stimulus measures during the press conference after the meeting. This hope paved the way for a second central bank disappointment since he failed to do so. But as with expectations of QE3, many believe the ECB is likely to make a positive announcement regarding stimulus in the near future. With this week’s central bank meetings out of the way, on Friday the markets will be focused on the US jobs report. Non-farm payroll jobs are expected to rise by about 110,000. There still seems to be a division of sentiment between silver futures and silver ETF investors. The latest Commodity Futures Trading Commission report shows that 275.8 tonnes were added to speculative shorts, boosting those positions to 3,477.2 tonnes, a 12-month record. Though the addition of 44.3 tonnes of silver to ETFs was less than a third of what was seen in the previous week, holdings of 18,535.5 tonnes brought ETFs to the year’s highest level. The close September silver on the COMEX trading floor closed near the session low, last down about $0.56 at $26.97. The closing New York spot price was $27.14, down $0.30. Silver mining stocks were a mixed lot throughout the trading day. Company news Sale Combination Crusher In Europe Great Panther Silver ( TSX:GPR,AMEX:GPL) will release its Q2 2012 results on August 13 and will hold a conference call on August 14 at 7 a.m. PDT. Fortuna Silver Mines (TSX:FVI,NYSE:FSM) plans to release its Q2 2012 results on August 8 and will hold a conference call to discuss the results at 9 a.m. PDT on August 9. Junior company news Teras Resources (TSXV:TRA) announced that it now owns 80 acres of private land at its Cahuilla gold-silver project in California. The company may use the land to process ore when mining operations at the site begin. Drill results for the Cahuilla project will be reported in the near future. Vancouver-based Hana Mining (TSXV:HMG) reported that the latest drill results from the Banana Zone at its copper-silver project in Botswana indicate that the site contains high-grade mineralization of both metals. Core length intercepts include 3.63% copper equivalent (3.12% Cu and 35.0 g/t Ag) over 5.8 meters within a wider mineralized interval of 1.81% copper equivalent (1.58% Cu and 16.0 g/t Ag) over 14.3 meters in hole HA-526-D.

Copper Pressured By ECB Inaction, Eyes on US Jobs

Efficient Crushing-Type Mills In Europe Copper is facing downward pressure as Europe takes center stage once again, this time due to the European Central Bank’s disappointing decision to keep interest rates pat following its latest regularly scheduled meeting. The US Federal Reserve’s decision to stay away from new monetary stimulus also dampened appetite for the red metal, as did a decline in China’s manufacturing sector. While ECB president Mario Draghi stated last week that the central bank would take measures to ensure the Eurozone’s stability, the lack of concrete action has put a damper on investor sentiment, including that of copper traders. Granted, the ECB is expected to come up with concrete steps to get the Eurozone back on track for growth, and those steps should include monetary stimulus measures. In the meantime, Draghi’s comment at a news conference following the ECB meeting that “economic growth in the euro area remains weak, with the ongoing tensions in financial markets and heightened uncertainty weighing on confidence and sentiment” added to investor worries. The Fed’s decision not to go through with a third round of quantitative easing, made during its two-day meeting this week, also hurt copper demand. Given that China accounts for over 40 percent of the world’s copper market, a decline in its manufacturing sector has also dampened demand for the metal. The factory purchasing managers’ index fell to 50.1 in July, down from 50.2 the previous month, according to the National Bureau of Statistics. A reading below 50 indicates a contraction in the sector. Late Thursday, COMEX copper for September delivery was down 2.4 percent at $3.29 a pound. Market players will be looking to Friday’s release of the latest US jobs data for further clues on the direction of global commodities demand. Company news High Pressure Grinding Mill In Europe Copper output remains steady, with Chile’s Antofagasta (LSE:ANTO) reporting that its second quarter output rose over 16.5 percent on year to 173,200 metric tons on the back of increased output at its Esperanza mine. For the first six months of the year, copper output surged to 336,000 tons. Antofagasta’s production increase also reflects Chile’s copper output nationwide. The government reported this week that second quarter output increased by 5.6 percent to 452,690 tonnes, while first half output rose by 2.5 percent to 2.64 million tonnes. Chile produces about a third of the world’s total copper supply. Xstrata (LSE:XTA) too is planning to boost copper production, and said it will increase its output in Australia by 140,000 tonnes over the next five years as output at its Mount Margaret mine increases. Yet speculation is growing among industry analysts that BHP Billiton (ASX:BHP,NYSE:BHP,LSE:BLT) may postpone expanding its Olympic Dam copper and uranium mine in South Australia until 2014 amid the lackluster performance of the commodities market and copper in particular. The Congolese government awarded Eurasian Natural Resources (LSE:ENRC) a new mining license for its Frontier project for $101.5 million. Frontier was acquired as part of Eurasian Natural Resources’ acquisition of certain First Quantum Minerals (LSE:FQM) assets earlier in the year for $1.25 billion. As for First Quantum Minerals, the Canadian group reported that even though sales increased, its second quarter profit fell 9 percent from a year ago to $142 million due to lower copper prices coupled with higher production costs. Revenue rose by 9 percent on year to $722.3 million, with copper sales increasing by 11 percent to 72,711 tonnes. Sale Rotary Kiln In Europe Junior company news Canstar Resources (TSXV:ROX) acquired the 50 percent interest held by Freeport-McMoRan’s (NYSE:FCX) Canadian unit in the Mary March mineral properties in Newfoundland and Labrador. Vancouver-based Trevali Mining (OTCQX:TREVF,TSX:TV) said it will fully acquire the past-producing Ruttan copper deposit in northern Manitoba. The company said that the deposit “holds good to excellent exploration potential,” adding that “the majority of the former mine infrastructure remains in place including tailings management facility, water treatment plant, power, road/rail and the town of Leaf Rapids that was built to service the former mine.” Excelsior Mining (TSXV:MIN) CEO Stephen Twyerould said that the final assay results from the company’s Gunnison copper property in Arizona “confirm what we were expecting and provide more evidence that Gunnison is a robust copper deposit.” The Gunnison project has a copper resource of 3.21 billion pounds indicated oxide copper and an additional 0.88 billion pounds inferred oxide copper. Benton Capital (TSXV:BTC) has transferred all of its assets to newly-listed Benton Resources (TSXV:BEX) with the exception of its investment in Coro Mining, $730,000 in working capital, and its Goodchild project in Ontario. Benton Capital will focus on developing the Goodchild copper and nickel project, which is currently being permitted for production. The company also has 42 percent of total shares in Coro Mining (TSX:COP), which concentrates on developing projects in South America.

Gold Fizzles, Kinross Cleans House

Gold fell below the psychologically important $1,600 level Thursday after European Central Bank (ECB) president Mario Draghi failed to announce bold action to contain the Eurozone crisis. Sale Rotary Dryer In Europe Precious metals investors were optimistic that the ECB might resume its bond purchasing program after Draghi said a week ago that the central bank will “do whatever it takes” to preserve the embattled euro. That news helped gold rally to $1,629.10 an ounce, its highest level since the middle of June. On Thursday, however, the precious metal slumped after Draghi indicated that no immediate measures will be taken and that the bank will hold the line on interest rates and defer a decision on any monetary stimulus. At the close of the trading session, spot gold was down just over $1 to close at $1,588.60 an ounce, while US gold futures for December delivery were down $18.30 an ounce at $1,589. It now appears that the ECB will hold off for several weeks on purchasing bonds, a policy designed to hold down borrowing costs on countries like Spain and Italy, peripheral Eurozone nations that are becoming unsustainable. Reuters quoted a senior manager at Danish investment bank Saxo as saying, “Draghi came and failed to deliver. It shows how fragile the situation currently is that people look more towards the central bank for support then their governments.” Meanwhile, inaction was also the prevailing trend in the United States this week. The Federal Open Market Committee (FOMC) signalled that it will not, as gold investors had hoped, pull the trigger on quantitative easing (QE), although expectations that a third round of stimulus will take place next month remain. QE is considered to be bullish for gold because the new money is expected to stimulate demand and cause inflation, which makes commodities, especially precious metals, attractive as an investment vehicle. This week South Korea continued the trend of central banks buying gold to build up their reserves. The Bank of Korea bought 16 metric tons in July for its third purchase of bullion in just over a year. The country bought 15 tons in November and 25 tons in June and July of last year, bringing total reserves to 70.4 tons currently, Bloomberg reported. Company news Small Scale Iron Ore Quarry Equipments Kinross Gold (TSX:K,NYSE:KGC) CEO Tye Burt became the fall guy for the company’s dismal performance this year. The board at Canada’s third-largest gold producer decided Wednesday to dump Burt and promote Paul Rollinson, executive vice president of corporate development, to the top position. The news should come as no surprise to Kinross shareholders, who have been wringing their hands this year over Kinross losing $9 billion in market capitalization as its stock plunged 50 percent. The company has endured a number of setbacks, including a work stoppage at its Tasiast mine in Mauritania and a $2.5-billion writedown in connection with its acquisition of Red Back Mining, led by Burt, in 2010. The pain continued for Kinross on Thursday as its shares slipped 5.62 percent in Toronto. Central Asia-focused miner Centerra Gold (TSX:CG) had a terrible first half, reporting a $69.3 million loss. Centerra said its profits dove 66 percent due to cash costs at its Kumtor gold mine in the Kyrgyz Republic increasing 117 percent. Nevertheless, CEO Ian Atkinson said in a statement that he still expects the company to reach its production guidance of 450,000 to 470,000 ounces of gold this year. More bad news for Barrick Gold (TSX:ABX,NYSE:ABX) came this week in the form of a ratings downgrade from A- to BBB+ from Standard & Poor’s. The move followed last week’s announcement that Barrick, the number one gold producer, is delaying its Pascua-Lama mine in South America due to 60 percent cost overruns. Second-quarter results from most major gold miners have been disappointing, due mostly to lower production numbers and higher costs. Junior company news Small Scale Copper Ore Quarry Equipments Australian junior Alkane Resources (ASX:ALK) saw a 4.09 percent bump in its stock price Thursday after getting its Tomingley gold mine approved by the New South Wales government. The project, consisting of three open-pit mines, is expected to start up in 2013 and produce 50,000 to 60,000 ounces per year, for a mine life of 7.5 years. Yukon-Nevada Gold (TSX:YNG) reported some promising drill results from its Jerritt Canyon project in Nevada. Highlights of the eight-month underground drill program include intersections of 26.23 meters at 11.45 grams per tonne, 3.66 meters at 26.13 g/t, and 10.67 meters at 6.31 g/t.

Weekly Round-Up: Strong US Jobs Data Boosts Commodities-2

Copper Complete Crushing Plant Investors remain hopeful that a rebound in the Chinese economy, particularly through government stimulus policies including monetary easing, will help bolster demand in the world’s largest copper-consuming nation. In the meantime, the price of the red metal is struggling, particularly because Chinese manufacturing struggled in July. According to the National Bureau of Statistics, the factory purchasing managers’ index in the latest month fell to 50.1, down from 50.2 the previous month. Ivanhoe Mines (NYSE:IVN) has changed its name to Turquoise Hill Resources, and starting August 8 it will be trading on the New York, NASDAQ and Toronto stock exchanges under the ticker symbol TRQ. The name change is part of the company’s financing agreement with Rio Tinto (ASX:RIO), which will allow it complete the Oyu Tolgoi copper and gold project in Mongolia. In other Mongolia-related news, Mongolia’s former president, Nambaryn Enkhbayar, has been sent to jail for four years on corruption charges. The political uncertainties highlighted by the sentence are increasing worries about investing in the country’s mines. In the Philippines, Philex Mining (OTC Pink:PXMFF) has suspended operations at its Padcal copper and gold mine due to typhoon flooding. Government authorities reported that discharges were running out of one of the two underground tunnels that drain clear water, and the company said operations will not resume until the matter is resolved. Geologix Explorations (TSX:GIX) completed its $2.5 million private placement, having issued 12.51 million units at 20 cents a unit. The net proceeds will be used to continue exploration of new target areas and will go towards continued development of the company’s Tepal copper and gold project in Mexico, which is its primary focus. Sand Making Plant Gold Kinross Gold (NYSE:KGC) sacked CEO Tye Burt and appointed J. Paul Rollinson, executive vice president of corporate development, as his successor due to the company’s lackluster performance in recent years. Gold Fields (NYSE:GFI) warned that it may be laying off many workers at its South Deep mine in South Africa as it looks to develop a new operating model. The company remains in negotiations with the National Union of Mineworkers. Granite Processing Plant High Desert Gold (TSXV:HDG) President Ralph Fitch said the latest drilling results at its Gold Springs project in Utah “confirm our prediction that we would find new gold mineralization in undrilled areas below outcropping gold mineralization.” The company also increased its interest in the project to 70 percent, and Fitch stated that “[o]ver the year we have added to our land package in the district and with increased ownership we can drive even greater value for our shareholders in an up-and-coming gold district.”

Weekly Round-Up: Strong US Jobs Data Boosts Commodities-1

Better-than-expected US jobs data helped drive up energy and industrial metal prices across the board as investors’ hopes were raised that steady recovery in the world’s largest economy will drive up global demand. Small Scale Nickel Ore Quarry Equipments However, some uncertainties still loom, not least the still-hazy outlook for the Eurozone and continued anxieties about Chinese growth. The US Department of Labor reported Friday that July’s non-farm payrolls increased by 163,000 compared to just 64,000 in June, suggesting that employers are more eager now to hire new workers. Still, caution remains as the unemployment rate inched up one-tenth of a percentage point to 8.3 percent. Investors were rattled earlier in the week when the US Federal Reserve took no monetary stimulus action following its regularly scheduled two-day policy meeting, even though many analysts had expected the Fed to go through with a third round of quantitative easing to boost economic activity. Small Scale Lead Zinc Ore Quarry Equipments The European Central Bank’s (ECB) inaction following its own meeting also gave concern to investors who were expecting more than a verbal commitment that the ECB plans to get the Eurozone back on track. In early morning trade Friday, Brent crude is up 1.5 percent at $107.51 a barrel, while copper is 1.4 percent stronger at $3.33 a pound. Gold is 0.3 percent higher at $1,595.10 an ounce. However, strong US jobs data has decreased speculation that further monetary stimulus — which would encourage gold investors — will be provided by the Fed. Oil and gas Apache (NYSE:APA) reported that its net income for the second quarter plunged 72 percent from a year ago to $356 million. The company secured an average of $97.66 per barrel for crude oil, down 8.1 percent on year, while its North American gas price dropped 35 percent from a year ago to $3.17 per thousand cubic feet. In contrast, SandRidge Energy (NYSE:SD) reported that its second quarter net income rose 45 percent to $809 million from $196 million during the same period a year ago. Its oil and gas revenue rose 38 percent on year to $429.8 million. The company raised its production projection for the full year to 33 million barrels of oil equivalent, up from its previous forecast of 32.3 million barrels. As for offshore drilling group Transocean (NYSE:RIG), it reported a $304 million loss for the second quarter, compared to a profit of $124 million posted a year ago, largely due to the $750 million that it allocated to pay out settlements for the 2010 Gulf oil spill disaster. Nevertheless, revenue increased by 10 percent on year to $2.58 billion.Small Scale Chalcopyrite Ore Quarry Equipments Meanwhile, Canada’s Wavefront Technology Solutions (OTCQX:WFTSF,TSXV:WEE), which develops fluid injection technology to improve oil recovery, reported that its third quarter net loss increased to $1.53 million from a loss of $927,471 during the same period a year ago due to sales and research costs. Revenue, on the other hand, rose 28 percent to nearly $1.4 million.