The week ended March 15, the eleventh trading week of 2008, was capped by a powerful rally in gold prices stemming from the political and market tumult rippling out from world’s financial centre in Lower Manhattan.
• It was a historic week for gold as the spot price traded above US$1,000 per oz. for the first time ever at 10:35 a. m. on March 13 in New York, and then closed out the week with an afternoon fix of US$1,003.50 per oz. in London.
In inflation-adjusted terms, gold still has to trade above US$2,300 per oz. in today’s dollars to match the panic-fuelled all-time high attained in 1980.
Gold and other U. S.-dollar-denominated commodities have benefited from continued, intense attention from investment funds concerned about the health of the U. S. economy and the liquidity of credit markets. Oil also set more records last week, trading above US$110 per barrel despite a large buildup in U. S. inventories.
• Overshadowed by gold’s glory, tin prices reached an all-time high of US$20,050 per tonne on March 13 and then peaked the next day at US$20,900 per tonne. Prices have risen more than US$3,000 just in the last month, even as the Indonesian government allowed Koba Tin to resume tin mining. The company was forced to halt operations in January on concerns it was processing tin bought from illegal miners.
• New York State Governor Eliot Spitzer, who famously dubbed himself “a f—ing steamroller” because of his aggressive criminal prosecutions, was himself flattened by the wheel of karma, putting an end to a remarkably brief political career. The former “Sheriff of Wall Street” resigned March 13, soon after it was revealed in The New York Times that he was a regular client of a high-priced prostitution ring, possibly even at the same time he was prosecuting pimps and prostitutes as the state’s attorney general.
•With America’s mortgage crisis deepening, Wall Street’s spitzenfreude didn’t last long, however, as brokerage house Bear Stearns ended the week teetering on the edge of bankruptcy, before finally being rescued by JPMorgan Chase with help from the U. S. Federal Reserve.
On March 16, JPMorgan bought Bear for just US$2 per share, or US$236 million in total. This was in sharp contrast to Bear’s market cap of US$3.5 billion two days earlier and US$20 billion a year ago. Almost to the end, Bear Stearns claimed that its book value was around US$80 per share.
The Fed played a big part in the deal by providing as much as US$30 billion in financing for Bear’s less liquid assets, a move thought to be the Fed’s biggest-ever advance to a single company.
And the karmic wheel rolls on: Bear Stearns had stood out in 1998 as one of the few large Wall Street institutions that adamantly refused to lend a hand in bailing out Long Term Capital Management.
Meanwhile, even as it slashes interest rates, the Fed has been allowing securities firms to borrow money under terms normally reserved for regulated banks, and has offered to lend Wall Street up to US$200 billion in return for similar amounts of mortgage-backed securities.
• The iron ore scene in Quebec and Labrador got a major shot in the arm, as the Iron Ore Company of Canada (IOC) unveiled a $500- million budget to increase its annual production of iron ore concentrate to 22 million tonnes. This is only the first phase of an expansion that may see a 50% increase in production capability by 2011. IOC is owned by Rio Tinto (58.72%), Mitsubishi (26.18%), and the Labrador Iron Ore Royalty Income Fund (15.1%).
• PriceWaterhouseCoopers tallied some telling stats on the fading appeal of an AIM listing in London for Canadians. PWC noted that the number of Canadian initial public offerings on AIM fell to seven new listings during 2007 raising 93 million, compared with 13 new listings raising 186 million in 2006.
Only two listings occurred during the second half of 2007, and only one mining company was newly listed on the AIM in 2007. Out of the 42 Canadian companies now listed on the AIM, 26 are mining or energy companies.
• At their Heruga deposit In Mongolia, Ivanhoe Mines and Entree Gold tabled an impressive inferred resource of 760 million tonnes grading 0.48% copper, 0.55 gram per tonne gold plus moly, for a contained 8 billion lbs. copper and 13.4 million oz. gold.
Send your Letters-to-the-Editor and other op-ed submissions to the Editor at: tnm@northernminer.com, fax: (416) 510-5137, or 12 Concorde Pl., Suite 800, Toronto, ON M3C 4J2.
Since 1915
The Northern Miner is published by Business Information Group, a division of Glacier Ventures International Corp., a leading Canadian media company with interests in business-to-business information services. From time to time we make our subscription list available to select companies and organizations whose products or services may interest you. If you do not wish your contact information to be made available, please contact us by one of the following methods: Phone: 1-800-668-2374; Fax: (416) 442-2200; Mail to: Privacy Officer, Business Information Group, 12 Concorde Place, Suite 800, Toronto, ON M3C 4J2
Be the first to comment on "Gold tops US$1,000 per oz."