OzCopper

1.    I’m getting a lot of emails to do more macro analysis of the gold market, and the time is ripe to do so.
2.    “We need to continue to push for long-term capital inflows and therefore the FDI policy has to undergo a revamp….  We need to move in this direction quickly and it needs to be a paradigm shift in how we look at FDI.” – Arvind Mayaram, Economic Affairs Secretary of India, June 17, 2013, Bloomberg News.
3.    FDI refers to “foreign direct investment in India”.  The Indian government charges an 8% duty on gold that is imported into the country.  There is also a 4% sales tax. 
4.    In the short term, the Indian government is applying a lot of pressure to its gold-loving citizens, but they are also working quickly to dramatically increase foreign investment in the country.  I’m 99% sure that once FDI increases, exports will boom, the rupee will stabilize, and the government will reduce the import duties on gold.
5.    Also, Indian gold dealers have tremendous experience handling situations like this.   They are already working feverishly with partners in Dubai.  Indian gold dealers are not shrinking their operations.  They are expanding them, both at home, and abroad.
6.    “An 8 per cent duty on gold import plus 4 per cent sales tax on gold purchases has made huge price difference between India and the UAE. There is 12 per cent difference in the cost of buying gold from the UAE and India. Hence more and more Indian jewellers will be setting up shop here. We are already positioned in this market, but others are likely to follow suit,” – Sham Lal, Managing Director, Malabar Gold and Diamond, Emirates 24/7 News, June 18, 2013.
7.    More than 20% of the world’s gold already flows through Dubai.  Volume is increasing, and Indian gold dealers are expanding their operations there.
8.    Even Societe General (SOGEN), the most bearish of the Western bullion banks, believes that demand for gold jewellery will increase strongly.
9.   April 12, 2013 was the beginning of a two day “super-crash” in the gold market.  In my professional opinion, the gold bull market ended on that day.
10.   The world changed on April 12, 2013, because the Western gold bull market ended, and the Asian gold bull era began.  With all due respect to the Western gold community, it’s probably time to face the music.  On April 12, 2013, the sun began to set on the relevance of the West to the POYG (price of your gold). 
11.   I’m personally planning to boycott the FOMC minutes release on Wednesday.  I invite others in the Western gold community to join me.  If nobody in Chindia (China & India) cares about Ben Bernanke’s relevance to the POYG, should you care?  I don’t think so, and I mean that purely from a wealth-building standpoint.
12.    Fundamental events in the West, like speeches from Ben Bernanke, will continue to move the POYG, to a degree.  Traders can attempt to capitalize on those moves, but intermediate and long term investors should focus on the Asian gold bull era.  In the gold market, Asian citizens have certainly “got your back”.
13.    Chinese paper gold markets are beginning to take shape nicely, and the fund managers expect capital inflows to increase on price drops.  The decline of the Western paper gold markets is probably a good thing, because when gold falls in price, those weak markets see capital outflows. 
14.   Asian paper markets will be vastly superior entities, and I expect them to quickly overwhelm Western paper gold markets, in both size and power.
15.    India is likely to soon see a new boom in exports, as the US economy continues to strengthen modestly.  Every day, more Indians come off the farms into the cities.  Every person in India wants to buy gold regularly.  It’s just a question of whether they can afford to buy it.  In the big picture, Indian gold demand is driven not by economic booms or busts.  It’s driven by the ongoing exodus from the farms to the cities, and that has barely started. 
16.   As the standard of living increases in India, gold demand will increase accordingly.  A decline in the gold price will trigger more buying, but a rise in price will still see Indians buy huge amounts of gold.
17.   The Indian government doesn’t want to see a dramatically lower gold price, because that would cause a huge surge of buying by Indian citizens, putting greater pressure on the current account deficit.  The bullion banks need to be careful in how they handle the current situation.  Both the Chinese and Indian central banks could threaten to overwhelm comex selling with their buying, if there are further “attacks” on the gold price there.
18.   If you believe that the world changed, on April 12, 2013, a relatively minor $100 price drop is not something to be afraid of.   
19.   The West owns very little gold now, so the ability of Western investors to drive the price a lot lower, is highly questionable.   Also, the power of Asian media is something that the gold bears may be underestimating.  My main sources of news are mostly Asian, and websites like “China Daily”, are beginning to get a following in the West. 
20.    China Daily’s site is growing fast.  It reputedly has 500 million users.  There’s also a US edition.  Asian media is generally pro-gold, while Western media seems to feature a lot of “gold-haters”.  People like Nouriel Roubini are arguably making themselves look ridiculous and ant-sized, with their angry gold-bashing. 
21.   I hope this update puts a shimmer on your gold, and takes you away from a lot of the unwarranted negativity that surrounds the mightiest metal. 
22.   Let’s take a look at the charts now, and see if they support my macro analysis.  Please click here now.  That’s the daily gold chart, and you can see that my stokeillator is on a light sell signal.  Gold has broken down from a tiny triangle, likely because Western traders are betting that the Fed makes a statement that is negative for gold.  I don’t see anything on that chart that gold investors need to be overly-concerned about. 
23.   Please click here now.  Double-click to enlarge. That’s the monthly chart for gold.  Note the “buy box” between $1266 – $1155.  The two blue arrows highlight the congestion pattern that created this key HSR (horizontal support & resistance) zone.  SOGEN’s technical analysts predict that gold will fall to $1200.  I predict that I’ll buy it there, and so should the Western gold community, if it happens.  I’m not so sure that much lower prices will happen.  Note the action of the 4,8,9 series MACD green histograms.  They’ve started to turn up, which is bullish.  
24.    Please click here now.  Double-click to enlarge.  That’s the GDX daily chart.  A lot of technicians believe there is a head & shoulders bottom in play, but it may be just a shape, rather than an actual chart pattern.  Regardless, there is definitely serious resistance where these technicians have drawn the neckline, which is in the $30.50-$31.27 area.  Asia will need your miners to get them more gold than they are currently mining, in the coming years.  Technically, GDX could fall to $22 as easily as it could rise to $35.  In the longer term, the gold bull era probably began on April 12, 2013.  Asians don’t hate mining stocks.  Give them time to prove it!

 

Special Offer For OzCopper Readers:  Please send me an Email to freereports4@gracelandupdates.com and I’ll send you my free “Currency Mayhem!”  report.  Which fiat paper currencies are set to soar, and which ones could crash?  I’ll cover many of them in this extensive report!

Thanks!   

Cheers
 

Stewart Thomson

Graceland Updates

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India’s relentless search for hydrocarbons to fuel its booming economy has managed the rather neat diplomatic trick of annoying Washington, delighting Tehran and intriguing Baghdad, all the while leaving the Indian Treasury fretting about how to pay for its oil imports, given tightening sanctions on fiscal dealings with Iran.

On 7 June the US State Department reluctantly announced that it was renewing India’s six-month waivers for implementing sanctions against Iran, along with seven other countries eligible for waivers from the sanctions owing to good faith efforts to substantially reduce their Iranian oil imports. In New Delhi’s case, it is the U.S. and EU-led sanctions rather than any willingness on India’s part that has seen a fall in its Iranian oil imports. India is the second largest buyer of Iranian oil, a nation with whom it has traditionally had close ties. U.S. Secretary of State John Kerry said that India, China, Malaysia, South Korea, Singapore, South Africa, Sri Lanka, Turkey, and Taiwan had all qualified for an exception to sanctions under America’s Iran Sanctions Act, based on additional significant reductions in the volume of their crude oil purchases from Iran. Kerry told reporters, “Today’s determination is another example of the international community’s strong and steady commitment to convince Iran to meet its international obligations. This determination takes place against the backdrop of other recent actions the administration has taken to increase pressure on Iran, including the issuance of a new executive order on June 3. The message to the Iranian regime from the international community is clear: take concrete actions to satisfy the concerns of the international community, or face increasing isolation and pressure.”

But even with Washington’s beneficence, New Delhi is struggling to find ways to pay for its Iranian oil imports.

The U.S. and European sanctions have deeply affected Iran’s international oil trade, reducing its exports by more than 50 percent and costing Iran billions of dollars in revenue since the beginning on last year. Tightening the screws, the Obama administration is now attempting to reduce Iran’s oil exports even further, to less than 500,000 barrels per day through tighter sanctions. Nevertheless, despite plummeting sales overseas, Iran, OPEC’s second largest oil exporter, remains one of the world’s largest oil producers, with sales bringing in tens of billions of dollars in revenue annually.

And Iran is anxious to keep India as a favored customer. Last month Iran offered India lucrative terms for developing its oilfields, routing a proposed natural gas pipeline through the sea to avoid Pakistan as well as insurance to Indian refiners provided New Delhi raised oil imports. Making its case, Iran sent a high-level delegation led by Oil Minister Rostam Ghasemi to India to urge New Delhi to raise its oil purchases, which slid to 13.3 million tons in 2012-13 from 18 million tons in 2011-12. Heightening Iran’s concerns, later this year Indian imports are slated to fall further to around 11 million tons.

After meeting Ghasemi Indian Oil Minister M. Veerappa Moily issued a statement noting, “The Iranian side encouraged the Indian side to increase its crude purchase. “The Indian side explained that it would encourage companies to maintain their engagement in terms of crude oil purchase, taking into account their requirements, based on commercial and international considerations.”

While Iranian-Indian trade ties continue to deepen, with Indian-based Consul General of Iran Hassan Nourian predicting that bilateral trade between India and Iran will be worth $25 billion by 2017, India is hedging its bets about energy imports, and where to make up the shortfall from the increased sanctions regime.

…and what better place to look than the Middle East’s rising petro-state, Iraq?

India’s External Affairs Minister Salman Khurshid is heading for Baghdad for a two-day visit beginning 19 June.

Top of the agenda?

Oil – Iraq is now India’s second largest supplier of oil after Saudi Arabia, having replaced Iran and become a “critical partner” of India.

It is a potential marriage made in heaven. Iraq needs an assured market for its increasing crude production, having set itself a production target of 7 million bpd from its current 3 million bpd, while India is in search of a long-term partnership with a major oil producer.

While such deepening ties will thrill Washington as much as they distress Iran, there is still a wild card in the Iraqi mix – China, now Iraq’s biggest customer, already purchasing nearly half the oil that Iraq produces, almost 1.5 million barrels a day. Worse still for Indian aspirations, China is now trying for an even bigger share, bidding for a stake currently owned by Exxon Mobil in one of Iraq’s largest oil fields, West Qurna.

New Delhi’s choices are stark – make Washington happy, alienate long-time partner Iran, and keep fingers crossed that Beijing doesn’t stitch up any further Iraqi concessions.

Tough call.

Source: http://oilprice.com/Geopolitics/International/Indias-Energy-Ties-with-Iran-Unsettle-Washington.html

By. John C.K. Daly of Oilprice.com

Richard (Rick) Mills
Ahead of the Herd

As a general rule, the most successful man in life is the man who has the best information

Most of the world’s cobalt is mined in Africa and the majority of Africa’s cobalt comes from the Democratic Republic of Congo. The DRC represented about 55 percent of global mine supply in 2012 and the country contains almost 50 percent of known worldwide cobalt reserves.

The DRC wants miners to process all their mined ore in the country to encourage more value-added production. On April 5th 2013, the government gave companies 90 days to clear stocks and halt exports of unrefined copper and cobalt – export streams are to be switched from ores and concentrates to refined products.

“It (the export ban – editor) will be fully enforced by July or August in order to allow mining operators to re-adjust themselves. The government is fully aware that mining operators have electricity problems.”  DRC Mines Minister Martin Kabwelulu speaking to Reuters

The DRC has tried to impose such an export ban twice (in 2007 and again in 2010), imposition failed on both counts because of a lack of power in the country – the DRC suffers from acute electricity shortages despite a vast network of rivers.

Existing hydro plants, Inga I and Inga II, only produce about a quarter of their joint capacity of 1,700 MW because of low Congo River water levels and poor maintenance. Inga 3 wasn’t built because of concerns over the business climate in Congo. If the first phase, called Inga 3 Low Head does get built, South Africa will receive just over 50 percent of planned power output. The government actually expects power shortages to worsen in the coming years and that by 2020/21 there will be a power shortage of some 5,000 MW.

SFP Metals (UK) Limited, Cobalt Metal Production

The country’s frequent brownouts and blackouts, and an expected increase in electricity shortages, do not bode well for an increase in refining capacity. Already less than 10 per cent of the DRC’s 70 million people have access to power, and mining companies are scaling back production and expansion plans because of power shortages.

The news of the DRC’s impending export ban comes as the country is reviewing its mining code – the government is going to overhaul mining laws with an eye to boosting state revenues by increasing tax rates and raising the government’s minimum automatic stake in mining projects, proposals include:

• Enlarge governments stake from five percent to 35 percent in projects, the 35 percent would be “free and non dilutable”
• Increase royalties to gain greater state revenues from the sector
• Introduce a 50 percent levy, a windfall-profit tax, on miners’ “super profits” – when a commodity’s price rises over 25 percent compared with its level at the time of the project’s feasibility study
• Scale back the length of exploration permits to three years, from the four and five year permits available under the current code
• Exploitation phase of mining licenses to be reduced to 25 years from 30 years
• Companies be required to sign written commitments to protect the environment and help local communities
• Pay a capital-gains tax in the event of a takeover
• Projects, after production start, may no longer benefit from preferential customs rates on imports destined for use in mining

According to an Internal Displacement Monitoring Centre (IDMC) report from May 2013. “There were more highly violent conflicts in Africa in 2012 than at any time since 1945.”

The Democratic Republic of the Congo (DRC) – previously known as Zaire – is no exception to the violence flaring in many parts of Africa.

According to IDMC’s report, armed conflict in the eastern part of the Congo intensified “dramatically” during 2012. The increase in fighting drove up the number of displaced people to record levels – there are more than 2.6 million internally displaced people (IDPs) in the country.

Traditionally the DRC’s North and South Kivu regions have been the main areas of extreme turbulence over the past decades. The mineral resources contained in these provinces have provided a steady source of wealth/funding for the various factions claiming its mines.

The hugely mineral rich copper belt region of the DRC, the Congo’s Katanga Province, has also been producing industrial metals such as copper and cobalt for decades, historically the region has been very quiet and not been caught up in the vicious conflicts in Congo’s North and South Kivu.

Unfortunately conditions have deteriorated sharply in the eastern provinces, including Katanga. Very recently, hundreds of insurgents belonging to the Mai Mai Kata Katanga (“cut out Katanga” in Swahili) militia – one of several local militias operating in the province – clashed with security forces in the streets of Katanga’s capital city Lubumbashi. According to the United Nations at least 35 people were killed. The attack was the largest in the province of Katanga in more than a decade. The transport of minerals was interrupted and authorities imposed a nighttime curfew in Lubumbashi.

The DRC holds two major distinctions:

1. It is the richest country in the world in terms of mineral wealth, at an estimated $24 trillion.
2. It is the country in which the highest number of people – estimates go as high as ten million – have died due to war since World War II.

Cobalt is a strategic and critical metal used in many diverse industrial and military applications.

 SFP Metals (UK) Limited, Cobalt Metal Consumption

The growing political risk and socio-economic dissension within the DRC are creating mounting concern for the security of cobalt’s global supply chain.

“The Democratic Republic of Congo faces what is probably the most daunting infrastructure challenge on the African continent”. World Bank report on DRC Infrastructure

Jim Rogers is well known as ‘The Commodities King’, he co-founded the legendary Quantum Fund with George Soros and authored two highly respected investing books – Investment Biker & Adventure Capitalist. Mr. Rogers is very bullish on investing in Russia having been quoted in numerous publications as saying Russia’s leader, president Vladimir Putin, wants to shake his thug KGB image and Russia stacks up as a good contrarian play.

Well I’m not in the habit of investing on anybody’s say so. I do my own due diligence, make my own decisions and take full responsibility for being right AND wrong.

BUT

I have to agree with Mr. Rogers in that I believe Russia has at least one good investment, one for strategic and critical metals (including cobalt) hungry resource junior investors.

The company’s name is Global Cobalt Corp. TSX.V: GCO and it has recently started trading after a considerable halt, amazing project acquisitions, and a name change from Puget Ventures.

Global Cobalt is going to fast-track development of its world-class Karakul Cobalt Project in the Altai Republic of Russia’s southern Siberia. Having historic Soviet  C1+C2 resources estimated at 14.98 million tonnes of 0.28% cobalt equivalent Co eq. (0.21% cobalt Co; 0.09% bismuth Bi, 0.44% copper Cu and 0.11% tungsten WO2) with additional P1 resources of 46 million tonnes  containing 82,800 tonnes of cobalt – all non NI 43-101 compliant – the Karakul Project has the potential of being the largest known primary cobalt asset outside of Africa.

Global Cobalt also plans to bring on stream a solid pipeline of other strategic and critical metal projects creating a mining district with enormous potential.

Four additional assets, collectively known as the Altai Sister Properties (cobalt-tungsten), have been optioned for acquisition by Global Cobalt. The proximity of the Sister properties to the Karakul Cobalt Deposit adds the possibility of an extension to the main ore bodies providing significant upside to the creation of a new mining jurisdiction in Altai.

Conclusion

Global Cobalt Corp., with its highly qualified management team has the exploration, development and production expertise to enable timely, skilled development of their impressive asset portfolio.

Global Cobalt is the first mover into a new mining region, the mineral rich, pro-mining Altai Republic of Russia’s southern Siberia. GCO is the pioneer, the first foreign, investable, publicly traded mining company to advance the mineral resources in the entire region.

And that’s the investment opportunity, investors get to position themselves at the forefront of a move into an immense, resource rich untapped region, much like what happened with early movers into Mongolia and Kazakhstan.

Global Cobalt Corp. TSX.V: GCO should be on all our radar screens. It’s definitely on mine, is it on yours?

If not, it should be.

Richard (Rick) Mills

rick@aheadoftheherd.com

www.aheadoftheherd.com

Richard is the owner of Aheadoftheherd.com and invests in the junior resource/bio-tech sectors. His articles have been published on over 400 websites, including:

Ozcopper, WallStreetJournal, USAToday, NationalPost, Lewrockwell, MontrealGazette, VancouverSun, CBSnews, HuffingtonPost, Londonthenews, Wealthwire, CalgaryHerald, Forbes, Dallasnews, SGTreport, Vantagewire, Indiatimes, ninemsn, ibtimes, businessweek.com and the Association of Mining Analysts.

If you’re interested in learning more about the junior resource and bio-med sectors, and quality individual company’s within these sectors, please come and visit us at www.aheadoftheherd.com

***

Legal Notice / Disclaimer

This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.

Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified.

Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission.

Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.

Richard does not own shares of Global Cobalt Corp. TSX.V: GCO

Global Cobalt is a paid advertiser on Richard’s site, aheadoftheherd.com