Gold

MetalMiner, in conjunction with The Elm Consulting Group International, has just issued a new white paper that examines how downstream organizations (companies from smelter down to OEM) have begun to implement the new conflict minerals compliance requirements.

The authors analyze the OECD Cycle 3 Final Report, “Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk.”

What Makes This Analysis Different?

  • The paper covers the practical issues involved with actual conflict minerals compliance programs. For example, the analysis discusses the growing consensus around various EICC/GeSI initiatives, particularly the Conflict-Free Smelter Program, along with the reporting template.
  • It also highlights some of the early findings around how companies have gone about identifying and gathering data from suppliers, as well as the challenges around validating supplier responses to questionnaires and templates.
  • It features how companies have taken a flexible approach to program design.

One of the more significant early findings involves the lack of overlap between REACH/RoHS regulatory compliance programs and conflict minerals implementation programs. The early pilot results suggest companies will find little to leverage in existing regulatory compliance programs.

The actual OECD report appears here. The OECD paper, 85 pages long, provides a detailed discussion and explanation of the pilot program. The white paper issued by MetalMiner and The Elm Consulting Group contains 10 pages of analysis and key takeaways on the OECD report.

Download the FREE MetalMiner/Elm Consulting Group report:







Is the fall in the gold price an opportunity to buy on a dip, or the end of the bull market?

It is probably not an exaggeration to say billions of dollars probably swing on that question.

The gold price has slumped to around US$1,580 per ounce over the last few days, down $100 on a month ago and down 18 percent from the highs of 2011. After annualized price increases of 20 percent since 2002, many are asking is this the end of gold’s decade long bull market?

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Below is an excerpt from MetalMiner’s recently published white paper, “The Definitive Guide to Conflict Minerals Compliance for Manufacturers.” If your company uses, say, HRC steel in its products, you should download this paper.

Another question raised by the SEC rules involves the purchase of what we might deem “vanilla commodities,” such as steel HRC (hot rolled coil), from mills that also produce tinplate. (Publicly traded integrated steel producers that produce tinplate are subject to the SEC conflict minerals rules).

Does an OEM buying vanilla HRC from a tinplate producer (e.g. US Steel, ArcelorMittal, Severstal, etc.) need to verify that the steel producer is certified conflict-free, or can the OEM effectively ignore that part of the due diligence process since HRC doesn’t contain tin, tungsten, tantalum and gold (3Ts/G)?

The matter becomes more complicated if the implementation 
of the conflict-free program on the part of the OEM involves what we would term this “supplier-centric” approach, as we have described, vs. a “part/product-centric” approach.

Download the complete paper for free.

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gold price chart

Source: goldmoney.com

Good question, and the answer is as much around what is driving demand as it is who you ask.

Certainly a Reuters article this week goes into considerable detail about the physical supply and demand balance expected to influence the price during 2013.

Thomson Reuters GFMS said on Wednesday that persistent concerns over the health of the US economy and pressure on the dollar will send gold prices to a record average high during 2013, predicting the metal’s 12-year bull run will then top out late in the year.

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MetalMiner's Conflict Minerals Legislative Guide

Source: Elm Consulting

It has been a few months since the SEC passed its comprehensive set of “Conflict Minerals” rules, and in that time we have covered the topic at great length.

But the steps manufacturers must take to comply with the conflict minerals legislation in 2013 and beyond are only beginning to come into the light.

As Lisa Reisman noted on the day of the initial ruling, the rules will require “companies and their supply chains purchasing the group of metals called ‘Conflict Minerals’ (this group of metals includes: tantalum and columbite-tantalite or coltan, tin and cassiterite, tungsten and wolframite, gold and their derivatives) to file annual audited statements by May 1 of each year.”

In an effort to alleviate some of the stress felt by manufacturing organizations and others affected by the new legislation, Elm Consulting created a Conflict Minerals Legislative Guide that we would like to share with you, our readers.

Within the guide, you will not only find a general overview of the new rules, but also some advice on what to your company should do in the next 12 months.

You may register to receive the guide right here:

Legislative Guide Download







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Could we be seeing the end of South Africa as a major mining country?

It would have been a fanciful question a few years ago.

South Africa’s total mineral reserves remain some of the world’s most valuable, with an estimated worth of $2.5 trillion, according to SouthAfrica.info. Overall, the country is estimated to have the world’s fifth-largest mining sector in terms of GDP value, contributing some 18 percent of the country’s GDP and 45 percent of its exports.

It has the world’s largest reserves of manganese and platinum group metals (PGMs) according to the US Geological Survey, and among the largest reserves of gold, diamonds, chromite ore and vanadium.

So the growing unrest among South Africa’s mining industry workforce, while nothing new, is a cause for concern to metals consumers due to the wide-ranging support and failure of traditional bodies such as the National Union of Mineworkers and the African National Congress to control the levels of violence.

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The day’s biggest mover was Chinese palladium bar, dropping 2.1 percent to settle at CNY 141.00 ($22.18) per gram on June 28, 2012. Japanese palladium bar prices saw a 1.7 percent decline to JPY 1,487 ($18) per gram. US palladium bar has been on the decline for eight days and is now at $571.00 per ounce.

For the eigth day in a row, the price of US platinum bar fell and is currently at $1,392 per ounce. The price of Chinese platinum bar fell 0.6 percent to CNY 310.00 ($48.76) per gram. The price of Japanese platinum bar declined 0.6 percent to JPY 3,617 ($45) per gram.

Japanese gold bullion prices inched up 0.3 percent to JPY 4,029 ($50) per gram. Indian gold bullion ended the day at INR 29,813 ($521) per 10 grams, after the 0.3 percent drop on Thursday. The price of Chinese gold bullion remained steady at CNY 323.20 ($50.84) per gram. The price of US gold bullion was unchanged at $1,543 per ounce.

US silver closed two percent lower at $26.57 per ounce. At JPY 683.00 ($8.57) per 10 grams, Japanese silver fell 0.6 percent on Thursday. Indian silver finished the day down 0.3 percent to INR 52,566 ($920) per kilogram. Chinese silver closed 0.2 percent lower at CNY 5,735 ($902) per kilogram.

Investors are a funny lot.

The phrase “herd mentality” may have been created to describe the behavior of our four-footed friends, but it applies equally well to the investor fraternity.

For months, the prospect of a slowing China and the departure of Greece from the euro have been on the cards, prompting some no doubt to pay close attention to managing their commodity risk — and yet metal prices actually rose in the first quarter. Finally it seems to have sunk in that these are real events the impact not just prices of copper, aluminum, nickel, zinc, etc. — oil, gold and other commodities have also fallen.

Source: Financial Times

Seeing this graph of the Thomson Reuters/Jefferies CRB Index, which tracks all major commodities, only in the last month have the risks of an overly slowing China and the rejection of austerity in Greece been reflected in commodity prices. As the FT reports this week, gold in particular has taken a beating down to a five-month low of $1,563.70 a troy ounce, as investors have reduced positions in “riskier” assets such as metals and moved to G-3 bonds and cash.

Interestingly, central banks remain strong net buyers of gold, monetary policy is expected to remain expansionary and, with China’s gold imports via Hong Kong at an all-time high in March, you have to wonder who has it right.

Worries about slowing growth in China have weighed on base metals, too. In particular, copper is down to the $7,800 range as demand for the balance of this year is taken as being less robust.

At what point do these prices become a buying opportunity for those consumers able to lock in prices for 3-6 months or longer?

We will be looking at aluminum in a separate article, but as a general observation one has to say it’s best not to stand in the way of the herd when it’s on the move — there’s likely more bad news out there, particularly regarding Europe, to keep the momentum going a little longer.

Closing at INR 55,345 ($1,027) per kilogram on May 10, 2012, Indian silver rose 0.7 percent to finish as the day’s biggest mover on precious metals markets. US silver prices inched up 1.2 percent to $29.27 per ounce. Chinese silver closed 0.5 percent lower at CNY 6,190 ($980) per kilogram. Japanese silver stayed flat at around JPY 743.00 ($9.34) per 10 grams.

Indian gold bullion saw its price rise 2.6 percent to INR 29,281 ($543) per 10 grams. After a 0.2 percent increase, US gold bullion finished the day at $1,589 per ounce. The price of Chinese gold bullion showed little movement on Thursday at CNY 324.60 ($51.43) per gram. At JPY 4,094 ($51) per gram, the price of Japanese gold bullion was essentially unchanged.

PGM Price Update

The price of Chinese palladium bar fell 1.3 percent to CNY 150.00 ($23.77) per gram. US palladium bar ended the day at $612.00 per ounce, after the 0.3 percent drop yesterday. Japanese palladium bar saw little change in its price on Thursday at JPY 1,581 ($19) per gram.

At $1,495 per ounce, US platinum bar fell 0.4 percent yesterday. The price of Chinese platinum bar declined 0.3 percent to CNY 325.00 ($51.50) per gram. The price of Japanese platinum bar held steady at JPY 3,859 ($48) per gram.

Every cloud has a silver lining, and for jewelers facing consumer demand destruction due to high gold prices, it would seem the silver lining is literal.

A Mineweb report notes that Indian silver exporters are experiencing a record level of demand, particularly from the US and Europe, for silver jewelry. The article quotes data from the Gems and Jewelery Export Promotion Council, which reveals that during 2011-12, silver jewelry exports grew by 44 percent compared with gold jewelry export growth of just 30 percent.

Year-on-year numbers for silver jewelry exports for FY12 stood at $694 million, against $484 million in FY11; while the buyer demographic has shifted down-market to sub-$100-per-item sales, in response (it is believed), to the state of the global economy.

In the US, the Silver Promotion Service of the Washington-based Silver Institute recently released the third of its annual surveys of silver jewelry sales with sales growing overall in 2011. Some 77 percent of surveyed jewelry retailers reported that their 2011 sales increased and 27 percent of those surveyed experienced an increase of more than 25 percent.

Intriguingly, it would seem sales of silver jewelry are running counter-sales of investment-grade silver coins, which have tumbled in the US. Coins News reported this week that US Mint distributors ordered just 20,000 ounces of Gold Eagles, off 68.0 percent from the prior month’s 62,500 ounces and down 81.5 percent from the 108,000 ounces sold in April 2011.

Although 99.9% fine Silver Eagle coin sales reached 1.52 million it was only thanks to a 200,000 pop on the final day, last month avoided a ranking of the slowest of the year and the worst since July 2008. As it stands, silver coin sales were still down 40.2 percent from the previous month and off 46.1 percent from April 2011.

So while cautious buyers are still finding favor with cheaper silver, the investment community is showing early signs of a loss in interest in both gold and silver as a store of value.

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