A recent article published to Fat Prophets’ readers reminds us in rather scathing terms that it was P Costello who sold off 2/3 of Australia’s gold reserves in 1997 for a song and cost Australia around $6 billion dollars….

With all the hype surrounding the possible return of P Costello to replace the current leader of the Libs (“All wick no bang” as aptly described by P Keating) it is worthwhile to remember that Costello was NOT very good at his job. The old maxim of not diving into shallow murky waters should be at the foremost of people thoughts … especially those that seek to return the libs to power……

Excerpt:
Since our initial recommendation in 2007 at USD 650, gold outperformed almost every other asset class. The gold bull market has been running with an annual performance of 16% since 2001. Gold closed the year 2008 with the eighth annual increase in a row. And in the year to date, the performance has been outstanding as well: the gold price has recorded an increase of 7% (in USD) and 8% (in EUR) 1, respectively. The average price in 2008 was USD 872/ounce, i.e. 25% higher than in 2007 (USD 695).

read full article

Gold explorer Andean Resources is expected to announce a capital raising to help develop its flagship Cerro Negro project in Argentina.

Shares in the company have been placed in a trading halt while the company finalises the details.

They last traded for $1.77.

The company has estimated it will cost about $434 million to bring the project into production within three years.

Last year, a pre-feasibility study suggested a low-cost operation producing up to 350,000 ounces of gold a year with cash costs of $US198 per ounce.

Recent upgrades have pushed Cerro Negro’s total resource to 2.6 million ounces of gold and 23.2 million ounces of silver.

STUART McKINNON

Interesting divergence AUD trending strongly upwards… Gold going sideways….

I’ve been on this one for a fair time now…. Have a look at the price chart…

Nice grades:

Note that only a small part has been drilled… KOKA

Australia finally seems to be producing more Gold and there even seems to be some increased exploration beginning to happen. Quite a relief as the Australian Gold Miners and Explorers took a huge hit after the Costello mis-adventures… see earlier posts…

Australian gold output seen up in 2009 – Surbiton
31/05/2009 12:00:14 PM

SYDNEY, May 31 (Reuters) – Australia’s annual gold production is set to rise for the first time in 12 years in 2009 as new mines start up and existing operations expand in response to the precious metal’s price soaring towards $1,000 an ounce.

The country’s output of the precious metal rose 3 percent in the first quarter this year from the same quarter a year earlier to 54.5 tonnes or 1.75 million ounces, gold industry consultancy firm Surbiton Associates said in a report released Sunday.

Read full article: http://money.ninemsn.com.au/article.aspx?id=820046

Definitely worth a read if you are a gold investor…

WORLD’S 100 HOTTEST GOLD STOCKS: Gold, and gold stocks, fever

Gold vs. Silver: There Is No Debate
by: Market Sniper May 28, 2009
Market Sniper picture Market Sniper

It is mildly amusing that when the precious metals markets are in confirmed uptrends, the perennial debate of whether it is best to own gold or silver always comes to the fore.

Both gold and silver, historically, have been money (merely utility in exchange). Gold in nature is approximately 15 times as scarce as silver. All the gold mined since the dawn of man, if molded into a cube, is said to fit inside a baseball diamond. Silver would nearly fill the stadium. China, now the world’s largest gold producer, had a silver standard as gold was more plentiful in China than silver, a bias that the west took full advantage of up through the 1870s. Silver imports by the Spanish Empire from their New World holdings were so large that it collapsed the European silver market. England, then on a bi-metalic standard, quickly switched to a pure gold standard. The Spanish Empire never recovered from the experience.

In the United States, the debate raged incessantly as to how the ratio would be “fixed” after the discovery of the Comstock Lode with western mining interests’ best known champion, Senator William Jennings Bryan, being the foremost proponent of a lower ratio. Seems it is an old debate. The good news is, you can own both. If/when the world returns to honest, stable money, you will need both: gold for the larger acquisitions and silver to make change.

While we await such an event, ratio trade the two metals to increase your holdings of precious metals.The ratio fluctuates wildly over time. In the 1970s and 1980s I used 28:1 and 40:1 as points that I would switch. At 40:1, I would be in silver. When the ratio dropped down to 28:1, I would exchange silver holdings for gold. Each time I switched, my stack of precious metals would increase in size even after dealing with the spread.

Find a precious metals dealer who will work with you on that. You maybe able to locate one that will only charge the spread on one of the metals and not both when you switch. Since then, the ratio has moved up. At one point it was even at 100:1. I now use 45:1 and 70:1 as switch points. See your tax accountant as to the benefits of such a program. Think 1031 Tax Deferred Exchange.

For those who do not want to break the rear axle of your automobile moving your silver when it comes time to switch, think about using ETFs that only reflect the price of the two metals. There are a variety of ways to accomplish this, from being in just one or the other to being long one and short the other. IF your objective is to accumulate the actual physical metals, do not use ETFs as a substitute for physical ownership. Rather, take profits from your switching trades and purchase the actual metals themselves. Gold vs. silver? No debate. Accumulate both.

Disclosure: long physical silver and gold