Gold Investing News

By Kishori Krishnan - Exclusive to Gold Investing News

The results are daunting. Barack Obama’s victory in the U.S. presidential election and Democrat gains in Congress did not do much for the yellow metal. Gold declined in Asia on speculation that the move would speed the dollar’s recovery against the euro. The currency climbed against the euro, the British pound and the Australian dollar. “The outlook for the dollar and gold is still not clear”,  Anderson Cheung, deputy managing director of precious metals at Mitsui Bussan Precious Metals Ltd., told Bloomberg.

Obama has proposed a $175 billion package. Analysts predict that gold may test $800-$805 after recent volatility, given the prospect of an improved economy. All of this may boost gold prices in the long-term, as demand for the precious metal may rise on expanding industrial production.

But there was more dampening news from other parts of the world, since trading sentiment has turned bearish following reports of  crude oil, gold and copper falling on signs that demand for fuel and commodities will be eroded as the global economy slumps. The worst financial crisis since the Great Depression has curbed demand from builders and carmakers, damped prices.

In London, gold fell to $737.65 an ounce from the previous level of $754 dollar. Ditto in New York, where gold futures erased earlier gains, closing down 1.4 per cent amid slumps in U.S. stock markets and crude-oil prices. Gold for December delivery fell $10.20 to end at $732.20 an ounce on the Comex division of the New York Mercantile Exchange. It jumped to $761.30 earlier.

So where do we go from here?

If you are inclined to trade on the bullish side this month, use a tight stop or buy a put to give yourself some protection. Analysts argue that most US investors aren’t out of the woods yet in terms of the economy. While uncertainty tied to the U.S. election is now past, the post-election reality is that it will be a long road, and the U.S. economy won’t get out of the recession/depression pit for awhile.

What is worth noting is a Bloomberg report that tracked data on the stock market’s performance following the U.S. elections,  and found that since 1900, the Dow Jones Industrial Average rose 9.8 per cent in the 12 months after the Democratic Party captured the White House. Only twice did the index drop, after Wilson’s victory in 1912 and Jimmy Carter’s in 1976. The big question is: will the big players embrace risk again?

Stop production

Zimbabwe’s position as a major gold producer continues to slide as its once mainstay gold mining industry continues to decline as a result of political and social unrest. Gold contributes 35 per cent of Zimbabwe’s foreign currency earnings. But gold mines are shutting shops in this African country. Reports say several gold mines in Zimbabwe have stopped  operations as a result of inadequate capital. Metallon Gold, the largest gold producer in Zimbabwe with five mines, has since stopped production.

There was some cheer at Fosterville mine, an operation in the Australian state of Victoria, that is owned by the Canada’s Northgate Minerals Corp. (TSX:NGX) Northgate managed to sell 3,500 ounces at A$1180 an ounce - an act that brought a smile to the face of Peter MacPhail, the Canadian boss of the local operation. “It’s a great day. Our best day ever,” said a beaming MacPhail, Northgate, which has also operated the Kemess gold mine in B. C. for the past eight years. MacPhail has been in Australia since last  February, when its $260-million takeover of Perseverance Corporation Ltd. was approved.

Results

Kinross Gold Corp., (TSE:K) Canada’s third-largest producer of the metal, may add 30 cents to C$15.25. Third-quarter profit excluding one-time items was 13 cents a share.

Yamana Gold Inc (TSE:YRI)(NYSE: AUY)(LSE: YAU) announced its November 2008 monthly dividend of $0.01 per share. Shareholders of record at the close of business on Friday, November 28, 2008 will be entitled to receive payment of this dividend on Monday, December 15, 2008. The dividend is an “eligible dividend” for Canadian tax purposes.

Bright spots

Venezuela plans to build mines at its largest gold deposits with Russian help, its mining minister said,  ending a year-long bid by two Canadian companies to operate the projects.

Minister Rodolfo Sanz said that a memorandum of understanding would be signed with Russian-owned Rusoro (TSX:RML) to operate the Las Cristinas and Brisas projects with the government. Las Cristinas, one of Latin America’s largest gold projects, is currently operated under contract by Canada’s Crystallex, which had waited in vain for years for an environmental license to start mining.

North Queensland Metals Ltd. has secured forward sales of 3,240 ounces of gold at $1,153 an ounce for the next three months from its Pajingo mine in north Queensland. The amount represents a third of the company’s share of forecast production from the 60 per cent owned mine. CEO John McKinstry said, “We do not regard the use of forward  sales as being a large part of the company’s ongoing strategy…however, we saw the opportunity to lock in a portion of our production at a high price with minimal risk on delivery.”

Shouldn’t the same hold true for you, dear investor?