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Manufacturing Our Economies and the Gold Coup of the Decade

Commodities / Gold & Silver Stocks Jan 08, 2010 - 04:04 AM GMT

By: Miles_Banner


Best Financial Markets Analysis ArticleThe Dollar fell against six other currencies on the U.S. Dollar Index on the back of news from Federal Reserve Governor Elizabeth Duke that “moderate” economic growth is likely to lead to sustained low interest rates.

So whilst the Dollar seems to be struggling but still afloat, the American manufacturing industry seems to be, dare I say, beginning to show symptoms of a recovery.

A report from the Institute for Supply Management, a trade group of purchasing executives, stated that U.S. manufacturing increased for the fifth month in a row, recording its highest reading since April 2006. It is believed that expansion will continue for the ensuing months vis-à-vis more demand and the creation of new jobs.

Several countries also recorded positive manufacturing results. Britains manufacturing index rose to a 25 month high, the euro currency countries collectively reached a 21 month high, whilst China reached a 20 month high.

So does this mean the economies picking up?

Well lets not get ahead of ourselves here.

The economies like an abandoned puppy, needing to be nursed back to health. This is just the milk bottle that gives it enough strength to look up and put one paw in front of the other. But it is a positive sign, one that gold investors should be aware of, considering the yellow metals relationship with fiat currency.

New gold coup

Now our attention turns to New Gold, who have predicted gold production for the coming year to be between 270,000 to 300,000 ounces, at a cost of $470 to $490 per ounce sold. News stories have circulated this week about the small mining company’s 70% acquisition in the El Morro mines.

The small mining company, New Gold, thwarted Barrick Golds attempted takeover bid of El Morro, a Chilean mining project.

El Morro mining has reserves of 6.7 million ounces of gold and 5.7 billion pounds of copper.

The Chairman of New Gold? None other than Randall Oliphant, former chief executive of Barrick gold. Yes friends, the old mucker got one over on his former employees.

How did they do it?

Well, Barrick gold made an original offer of $465million back in October. However, with New Gold owning 30% of the El Morro mining project, they received first refusal from Xstrata, the owners of the other 70%.

New Gold chose to exercise this right but couldn’t afford the fee. So they went to a major rival of Barricks; Goldcorp.  New Gold a Vancouver based mining company borrowed $463 million from Goldcorp, who, by the way, are also a Vancouver based mining company. This has allowed them to obtain 70% of El Morro.

Once the deal has been settled, Goldcorp intends to takeover the 70% from New Gold paying them an additional $50 million.

And there you have it, how the little David slew the mighty Goliath. Alright maybe slew is a strong word, but its still an impressive coup from such a small mining company.

We expect to hear more from New Gold, who’s share price has more than doubled this year, as it grows as a company in the ever competitive mining world. And we will certainly be keeping close tabs on its progression.

That’s all from me for this week.

Gold price today

P.S. If you haven’t already, be sure to sign up to my once a week FREE email, where I’ll deliver straight to your inbox all the gold news stories worth hearing about.

Gold Price Today

P.S Digger writes a weekly email analysing the gold price and the gold industry. Visit Digger at Gold Price Today (

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