Purchase physical bullion

In Australia, these are the two main (safest) ways to purchase physical bullion.

West coast of Australia – Perth Mint – http://www.perthmint.com.au/gc/

East coast of Australia – Australian Bullion Company – http://www.ausbullion.com.au/

You can also purchase gold from jewellers and successful prospectors, if you can find one. Look at a local pub in a town near an old goldfield, as some great specimens can be bought from prospectors and people with metal detectors

The Australian gold sector – the trains leaving

The average person doesn’t realise that the Australian gold sector is the fourth largest export earner for the country, at $6 billion per year, behind oil & gas, coal and iron ore and that the future of the gold sector has essentially been ignored by the Federal government. 

The treasurer, Peter Costello, wasn’t interested in the introduction of a Flow Through Share Scheme to ensure the gold sector would remain strong and continue to add significantly to GDP, but instead decided to introduce the Managed Investment Scheme, a similar product giving tax benefits to investors, that has led to companies, especially in the forestry industry, seeing exceptional growth since it’s inception. 

The massive wealth creator, that is a countries gold sector, has been embraced by China, which is set to take the lead as the top gold producing country in the world through the dramatic liberalisation of their sector over the last four years. China is already the world’s fourth largest gold producer behind America, Australia and South Africa and the top three have essentially remained stagnant due to the lack of large-scale exploration in the past 10 years. 

Since the gold price started to move upwards in 2001, China put measures in place that allowed large-scale foreign investment in China’s gold sector, removed bans on private ownership of bullion and more recently started marketing gold as an investment category and store of wealth to the Chinese people. 

The Chinese government also realised that modern exploration, development and management techniques were the key to the successful development of their gold sector and have put systems in place that is producing a quantum leap in its development.With Australian companies being rated as some of the best in the world when it comes to finding and developing mineral resources, it’s no accident that the best performing foreign gold company in China is Australian. 

What has the federal government done to ensure that one of Australia’s largest export industry’s remained strong? Absolutely nothing! 

Throughout the late 1990’s when exploration funding had declined to critically low levels, professionals and the skilled labour force were leaving in droves to pursue more lucrative careers. At the same time the industry was constantly lobbying the government about the need for support, to at least retain status quo with its labour force. Now the costs associated with finding and developing resources have blown out dramatically because of labour shortages. 

So, what’s ahead for the Australian gold sector?

It’s a good bet that share prices in Australian gold companies will see more growth as the gold price continues to climb. Fund managers entering the market again in the same fashion as in Q2 this year, could see US$1000/oz broken for the first time signalling an increase in demand for shares in both producers and explorers as retail investors scramble to take advantage of rising profit margins and exploration success.

It’s no doubt that the Australian gold sector will survive, but the days of this country being one of the top three largest gold producing countries in the world, including the economic benefits and steady growth in research and development of technologies that made the Australian gold sector what it is today, looks set to decline rapidly over the next 10 years.

If the Australian federal government had taken the initiative, as China did four to five years ago, the benefits that will be gained in the paper boom to come could have been exponentially greater and the future of the industry would have been ensured for generations to come.

Australia didn’t become the nation it is today on the back of a sheep. It was the minerals industry in general, with the Australian gold sector playing a major role in our development and we shouldn’t forget it.

Gold Report Australia

Gold Price

We expect short term consolidation around the current level and a new upward movement late this week or early next week.

Gold Report Australia

Gold Grades

The following are considered break even and high grade for each type of operation

Open cut – A break even grade is about 1.5 grams per tonne gold (g/t Au), depending on the tonnage, depth and amount of over burden. Above 3.5 g/t Au would be considered high grade also taking into consideration the same factors.

Underground – A breakeven grade would be around 8 g/t Au, also taking into consideration mining dilution and depth. Above 10 g/t Au would be considered high grade.

These can only be considered a ‘rule of thumb’ as a lot of other factors also need to be taken into consideration to reach a final break even figure.

Gold Report Australia

GRA Portfolio

The GRA portfolio for the week ending 10-11-06 (after about 6 weeks)

Investment 1 - even at 17 c

Investment 2 – Up to 83 c, from 54 c

Investment 3 – up to $1.49, from $1.13

Investment 4 – up to 34 c from 27 c

Investment 5 – up to 35 c from 31.5 c

Our bullion warrant position is up almost 80% for 2 weeks

Gold Report Australia

Gold price winner

Well we got another win on the gold price, with it passing the test…just. We expect $650 will be passed quickly and maybe even $700 in a week or so.

We expect it to keep going now that the Chinese central bank has announced that they will be buyers of gold. For China to lift their bullion holding to the international average, they need to buy 2 years of global production

Gold Report Australia

The three asset classes in the gold sector

There are three asset classes in the gold sector and the potential gains that can be made with these can be measured in their percentage upside.

1. Bullion and related products (% gains = 10’s)

2. Quality gold mining companies (% gains = 100’s)

3. Quality gold exploration companies (% gains = 1000’s)

Gold Report Australia

Gold price being tested now

We were spot on with the last price rise. About $30 in three days.

Wait and see what happens tonight as it needs to stay up above $618 for another day

 Gold Report Australia

Gold breakout?

It looks like gold may have broken the resistenance line. Keep watch for an explosion in the price.