Market analysts Jonathan Kosares and Peter Grant of Centennial Precious Metals rebut what they call “the myth of declining gold demand.” According to Kosares and Grant, reductions in jewelry and electronic purchases are headline news, but these reductions are being more than offset by investment demand and the reversal of the posture of the central banks in the gold market.
Low-grade cobalt has been trading at $17.50-$18.50 per lb and high-grade cobalt has been trading at $18.80-$20.20 per lb since August 12. Prices have been firming steadily through the summer on better demand and more bullish sentiment.
Low-grade cobalt was trading at $12.60-13.30 per lb at the start of June, while high-grade metal was changing hands for $13.50-14.50 per lb. An increase in consumer enquiries this week has given traders and producers hope for a more active September.
“I have seen a lot more enquiries this week,” said one trader on Wednesday who has received interest for over 150 tonnes since Monday.
“I think it will go up steadily rather than rapidly. By the end of September we’ll be slightly higher, perhaps up by a dollar,” he said.
The following write-up on Geovic Mining Corp. (OTC BB: GVCM; TSX: GMC) appeared in yesterday morning’s release of Canaccord Capital’s “Morning Coffee,” a daily publication containing general market commentary.
Geovic Mining* (GMC : TSX : $0.81), Net Change: 0.04, % Change: 5.19%, Volume: 375,628
Next up…cobalt? While this rare earth metal has not yet triggered a massive rally nor inspired the same kind of media attention that lithium has, it has begun to garner some attention. According to a recent article, cobalt has became one of the two “major” minor metals in this decade’s metals cycle, the other being molybdenum. Similar to lithium, cobalt’s largest market is in the rechargeable batteries that are used in billions of electronic devices from cell phones to laptops to hybrid automobiles. Cobalt is also used in super alloys, catalysts, metallurgical (hard metals), pigments, soaps, adhesives, and magnets. Also similar to copper and nickel, the cobalt price has spiked in the last couple months, rising from lows of US$11 per pound to US$21 per pound, and according to one newsletter writer, a major Chinese supplier is now selling at US$23 per pound. Moreover, the supply/demand economics look fairly attractive as supply is typically constrained as roughly 95% of world cobalt production is a byproduct of nickel and copper mines, with the politically unstable Democratic Republic of Congo (DRC) containing half the world’s cobalt supply and representing a significant share of anticipated future cobalt supply. So will the lithium craze spread to cobalt? And if so how can investors leverage themselves to this play? Well, there are currently limited ways to play cobalt, at least until the London Metals Exchange begins trading contracts in February 2010. Geovic is one of the few Canadian stocks we could find with leverage to this metal (note U.S.-based OM Group (OMG) and Freeport (FCX) both produce cobalt). The huge scale of Geovic’s asset provides a great deal of leverage to the cobalt price. It is eveloping the largest primary cobalt deposit in the world in the African country of Cameroon. Geovic has risen steadily month-to-date, up 40%, with fairly low volatility. However, this move pales in comparison to the Canadian lithium plays, many of which have exceeded 100% gains month-todate. With cobalt prices moving higher and new LME cobalt contracts bringing greater transparently and likely increased price stability (encouraging development of new cobalt uses?) is it time for cobalt to be part of your rare element holdings?
Swedish Riksbank is the world’s first central bank to have negative interest rates, a move designed to encourage commercial banks to boost lending. Bank of England governor has hinted he may follow the Swedish example. Fears are rising of a liquidity trap, where cash from banks don’t filter to economy.
Aug 27 – For a world first, the announcement came with remarkably little fanfare. But last month, the Swedish Riksbank entered uncharted territory when it became the world’s first central bank to introduce negative interest rates on bank deposits.
Even at the deepest point of Japan’s financial crisis, the country’s central bank shied away from such a measure, which is designed to encourage commercial banks to boost lending. But, as they contemplate their exit strategies after the extraordinary measures of the past two years, central bankers will be monitoring the Swedish experiment closely.
Mervyn King, the Bank of England governor, has hinted he may follow the Swedish example as the danger of a so-called liquidity trap, where cash remains stuck in the banking system and does not filter out to the wider economy, is an increasing concern for the UK.
The U.S. Federal Reserve seeks to maintain secrecy about banks in bailout programs, urging the court not to enforce an order revealing names of banks who have participated and the sums they have received. For their part, banks believe that disclosure of said information would result in a massive loss of confidence in the banks themselves and perhaps the entire system.
NEW YORK, Aug 27 (Reuters) – The U.S. Federal Reserve asked a federal judge not to enforce her order that it reveal the names of the banks that have participated in its emergency lending programs and the sums they received, saying such disclosure would threaten the companies and the economy.
The central bank filed its request on Wednesday, two days after Chief Judge Loretta Preska of the U.S. District Court in Manhattan ruled in favor of Bloomberg News, which had sought information under the federal Freedom of Information Act.
Preska said the Fed failed to show that revealing the names would stigmatize the banks and result in “imminent competitive harm.” The Fed asked the judge not to require disclosure while it readies an appeal.
“Immediate release of these documents will cause irreparable harm to these institutions and to the board’s ability to effectively manage the current, and any future, financial crisis,” the central bank argued.
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