GOLD PRICE NEWS – The gold price climbed $39.66 to $1,857.32 per ounce Thursday afternoon, rebounding from yesterday’s sharp sell-off. The SPDR Gold Trust (GLD), a proxy for the gold price and the world’s largest gold ETF, advanced $3.77, or 2.1%, to $180.85 per share. COMEX gold futures, per the December 2011 contract, reached an intra-day high of $1,868.70 per ounce and maintained the majority of their gains as trading progressed.
Although the gold price remains within 3.4% of its $1,922.20 all-time high, on two occasions in recent weeks the yellow metal has turned sharply lower after earlier in the day reaching a new record level. Volatility in gold has spiked in recent weeks. Since August 23, the gold price has posted three days of greater than 3% declines. Prior to that, the price of gold had not had a single day loss of at least 3% since October 19, 2010.
Despite the volatility and series of large declines, the gold price recently surpassed the price of platinum for the first time since 2008. On Thursday, platinum advanced $25.30 to $1,854.00 per ounce, however, gold’s outperformance continued, sending the platinum/gold ratio below 1.0 once again. Gold’s superior performance relative to platinum has been largely related to ongoing risks of renewed recessions in the U.S. and Europe.
Moving forward, however, the markets may have now priced these concerns into the price of gold and platinum – at least according to TD Securities’ Global Precious Metals team. In a recent report to clients, the firm noted that with the platinum/gold ratio below 1.0, it has neared a critical level that has not been meaningfully pierced in more than 25 years.
TD Securities went on to say that platinum has “participated in the rout for industrial metals as the Japanese recovery looks a bit less likely. It feels like the market is fully discounting the precious metal attributes” for platinum and “they are languishing near their recent lows.”
While there are many publicly-traded gold companies through which investors can gain exposure to the price of gold, only a small number of companies focused on platinum exist. One company is Platinum Group Metals (PTM.TSX, AMEX; PLG), which controls a substantial land package on one of the world’s most prolific platinum-producing belts in South Africa. Since October 2008 – when the platinum/gold price ratio previously hit 1.0 – shares of PLG have rallied 125%, providing investors with substantial leverage to the platinum price.
This morning, Platinum Group Metals announced the acquisition of 100% ownership in the Providence Lake Nickel -Copper -Cobalt-Platinum Group Metals (PGM) property from Arctic Star Exploration (ADD.TSXV). The Providence Lake property is located in the Northwest Territories of Canada, and has an established three dimensional target with sixteen drill intercepts of copper, nickel and impressive platinum group metals grades as well as regionally mapped district potential.
R. Michael Jones, President and CEO of Platinum Group Metals, commented that “We are interested in pursuing the Providence discovery… On a regional basis the target is new and is one of the best Canadian opportunities in PGMs we have seen.”
Platinum Group Metals also reported that the discovery, made during exploration for diamonds, is notable as it is a first for this part of the Northwest Territories. The platinum group metals grades are at the top end of the global ranges for the copper nickel mineralization style. The Company intends to utilize the winter season to review and model all of the extensive project data and establish supplies at the exploration camp for a drilling campaign in the spring and summer 2012.
Moving forward, the performance of platinum relative to the gold price is likely to be dictated primarily by macroeconomic developments. The most significant event this month is the upcoming Federal Open Market Committee (FOMC) meeting, where Fed Chairman Ben Bernanke and his fellow central bankers will discuss the potential for further accommodative monetary policies. While both the gold price and platinum would likely benefit from additional easing measures, the tone of the Fed’s economic commentary is likely to impact which metal outperforms in the coming months.
West Kirkland Launches Drill Program in Nevada
On September 7, 2011, Barrick announced a new discovery 24 kilometers south east of Pipeline which highlights the continued potential of the region. The target at Bullion is the north-south structures projected from the Pipeline mine and the potential flat Roberts Mountain thrust structures that control gold deposits in the region. Full West Kirkland Mining Press Release.
* The Battle Mountain Trend is one of the most prolific gold trends in North America; recent exploration has been successful in finding high grade gold in addition to the near surface lower grade types of gold deposits found in the 1980s and 1990s.
*West Kirkland Mining can earn a 60% interest in Bullion Mountain through a joint venture with Fronteer Gold (acquired by Newmont Mining) by spending $ 1.8 million over 4 years.
*Earlier this year, West Kirkland appointed Kent Samuelson to the position of Manager, Nevada and Utah; he has over 25 years of exploration and development experience throughout the western United States.