Gold takes a severe beating

April 15, 2013

Gold dropped 9.1 percent today, the most since 1983. Broader markets were also down as equity investors suffered worldwide.

The main factors cited by experts for this to occur were:

• Chinese economic growth unexpectedly lost momentum in the first quarter as gains in factory output and consumption weakened, driving stocks and commodities lower on concern global expansion will slow. Gross domestic product rose 7.7 percent from a year earlier, the National Bureau of Statistics said in Beijing today. BHP Billiton Ltd. (BHP), the world’s biggest mining company, expects annual economic growth in China to moderate toward 6 percent after two years.
• Speculation Cyprus will sell the metal to raise cash and the Federal Reserve will scale back stimulus efforts, curbing the outlook for inflation.
• Central bank may hedge or scale pack their profligate money-printing ways.
• Gold viewed as a risky asset, rather than a risk-free asset.

Commentary

Meanwhile in the real economy ....

• Victoria Gold has started construction of a small gold mine near Mayo, Yukon.
• Agnico-Eagle’s Meliadine gold project moves ahead. Advanced exploration site. The project hosts reserves of 3.0 million oz gold as well as indicated resources of 2.2 million oz gold and inferred resources of 2.9 million oz gold as of Dec. 31, 2012. Final feasibility study expected in 2014, with potential production in 2018.
• The massive Donlin gold project in Alaska is three years from construction start. Donlin Gold is one of the largest known undeveloped gold deposits in the world, with probable reserves estimated at 33.8 million ounces of gold

Even at $1,200 gold these projects would move forward. Time will tell.

Sources

• a)http://www.bloomberg.com/news/2013-04-15/gold-falls-extending-biggest-drop-since-1980-oil-slumps.html



• b)http://www.donlingold.com/our-plan



• c)http://business.financialpost.com/2013/04/15/gold-price-miners-canada/