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A report by Growth Equities & Company Research
Allied Gold, the Pacific Rim gold miner, has announced impressive quarterly results, with 34,107 ounces of gold produced in the March quarter – a 9.4% improvement on the December quarter. Gross cash costs for the three months also fell by 11% to $1,099 per ounce. The board reaffirmed not just the 2012 production target of 180,000 ounces but also the gross cash cost target of $850 per ounce by the year-end. Frank Terranova, the MD and CEO, commented that “An improvement in operational performance was achieved in the first quarter, resulting in a solid increase in production, and a healthy decline in cash costs. Production in the quarter was the second highest on record and the Company remains on track to achieve full year output of 180,000 ounces. That compares with 108,000 ounces in 2011, and confirms that Allied Gold is moving firmly in the right direction, with strong production growth leading to reducing cost profile. The remainder of 2012 will be an exciting period for Allied as we put in place the various expansion programs and cost reduction initiatives that will boost margins, and lift profitability. With over 3.0Moz in reserves and 8.0Moz of resources, Allied Gold continues to provide the market with an attractive opportunity to invest in a rapidly growing mid-tier gold producer with declining costs and expanding margins.”
Allied Gold Mining - Strong Buy at 102.5p with a 276p target price
From Growth Equities & Company Research 17 May 2012
Dawn Call - Wednesday 16 May 2012
From Growth Equities & Company Research 16 May 2012
Gold – Again
by Tom Winnifrith
Gold fell last week. I guess that spooked a few folk. But in some senses it did not fall quite as much as it may have appeared. It fell in dollar terms simply because the dollar was strong as those holding Euros rushed for the exit for all too obvious reasons. Right now it is the Euro under the cosh but the dollar’s problems are in many ways just as acute. As soon as the Presidential election is over (handy tis it not) the US debt ceiling will be breached again and there are no signs that the US deficit will be controlled by either Obama or Romney.
As such the case for gold is as strong as ever. I received this the other day from the Cobden Centre. It says it all:
In recent weeks, while the eurozone has suffered escalating levels of systemic stress in government bond markets and its banking system, the gold price has fallen under $1,600. One would have thought that – but for the occasional fat-finger trade – gold would rise in all this instability, not fall. Putting aside short-term considerations, the simple reason has to be that the investment establishment, which has bought into the bond market bubble, does not believe that gold is any longer an alternative to paper money.
We can understand why they think this. Though the Keynesian vs Austrian economic debate is attracting increasing attention, financial services companies recruit economists who have been trained in the traditions of Keynes and Friedman. They are thus immersed in economic disciplines that assume gold is old-fashioned and has no meaningful place in a modern economy. While they might accept that gold has an historical attraction for some investors, they see it as a “risk-on” investment. This is jargon for something you buy when you want to take risks, the opposite of gold’s traditional role.
For further proof, you need look no further than the average level of portfolio exposure, which across the global investment management industry is said to average less than one per cent. This is certainly not compatible with the level of risk in today’s markets, with many nations on the edge of bankruptcy. The result is that flaky gold bulls are experiencing the discomfort of rising panic.
Let us go back to fundamentals. The Keynesians and Friedmanites are oblivious to the debt trap faced by all major currencies. Central banks are printing money to fund government deficits at the lowest possible interest cost. The inevitable consequence of printing money is price inflation, and price inflation always leads to higher interest rates. Higher interest rates exacerbate budget deficits.
You cannot put it more simply than that. The alternative is to stop printing the money and jack up interest rates, but in that event at the head of the insolvency queue is government itself, so this can be ruled out as a deliberate policy. That is what a debt trap is all about: whichever way you turn, there is only one outcome: bankruptcy.
When a government goes bust, its paper is valueless: not just its bonds, but its fiat currency as well. On the surface it is different in Euroland, because the nation states do not issue their own currency. On this basis the demise of the euro is an event one step removed from the bankruptcy of individual nation states. The relationship with the other major fiat currencies is direct.
The destruction of fiat currencies themselves is becoming more likely by the day. Meanwhile, the weakness of “risk-on” gold has led to a serious mispricing in the market. This has happened because the financial community, sucked into the bond market bubble, has not even begun to discount the debt threat to government paper from sovereign bankruptcies.
When this mispricing is inevitably resolved, it is unlikely to be gradual. It will be so swift that those old-fashioned enough to own gold for insurance purposes will have the protection they sought. Those that fall for modern neo-classical economics will learn a very sudden lesson about what gold is actually for.
Enough said.
Tom Winnifrith

Hello Share Mates,
Europe is in a fine old mess. The Greeks are having another election. The French have a left leaning president. Neither country likes austerity measures and think they hinder their chances of re-gaining growth.
But the Germans favour austerity measures. I reckon they can afford to have them and not suffer too much of a drop in living standards.
The Spanish are in something of a mess. Italy hasn’t really got out of a mess. And Ireland and Portugal are holding their own – but only just.
In Britain, there have been cuts and slashes. Inflation is higher than it should be and house prices are moving downward, if anything. Meanwhile, the USA is improving, they say, and it hasn’t had the tough programme of cuts that the UK has.
France and Germany seem to be trying to make friends. But will it last? And how can we get growth without cutting so hard that people all over Europe will find life tough – and even, in some cases go hungry and homeless?
All this mess is having a nasty effect on share prices. I had hoped that things would get better – assisted by non-European countries, which are still notching up decent growth figures. Well, this might still happen. Europe is not the only continent.
And surely the European leaders, who’ve not really done enough to put firewalls in place, will get down to it now. I’m not holding my breath – but there is a chance that Europe will pull itself together now. Time, everybody realises, is running out, if the Euro is to be saved. And if the Euro is not saved, they say, Britain, though not part of the failing currency, will suffer. Rocking on.
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