Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
YouGov's MRP Poll Final Tory Seats Forecast Revised Down From 359 to 338, Possibly Lower? - 10th Dec 19
What UK Economy (Average Earnings) Predicts for General Election Results 2019 - 10th Dec 19
Labour vs Tory Manifesto's UK General Election Parliamentary Seats Forecast 2019 - 10th Dec 19
Lumber is about to rally and how to play it with this ETF - 10th Dec 19
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19

Market Oracle FREE Newsletter

UK House prices predicting general election result

Countries at Risk as Investors Rush Towards Safehaven's

Commodities / Gold & Silver 2009 Mar 09, 2009 - 05:13 PM GMT

By: The_Gold_Report

Commodities Best Financial Markets Analysis ArticleGold miners, because the number of discoveries was falling and existing deposits were being quickly depleted, have had to diversify away from the traditional geo-politically safe gold producing countries, i.e. Canada and the U.S. The move out of these “safe haven” countries has exposed investors to a lot of additional risk.

One only has to compare a share price chart to news release dates to see the effect Mongolia's ridiculous windfall profit tax and other political games have in the past had on certain company's share prices. Uzbekistan claimed Newmont owed the government taxes so they stole cash and bullion and when that wasn't enough to pay off the supposedly owed taxes they expropriated a gold mine. The government in Uzbekistan also annulled Oxus Gold's license to develop the Khandiza polymetallic deposit.

In many parts of the world, capitalist-hating Marxist governments are becoming greedy. Here's an example of a news release an investor doesn't want to read - “The Venezuelan government plans to nationalize the Las Cristinas gold mine, which is estimated to have the largest gold deposits in the country and is currently conceded to the Canadian company Crystallex.” Minister of Basic Industries and Mining (MIBAM), Rodolfo Sanz.

The military government in Fiji seized the Vatukoula mine belonging to Australia's DRDGold and Russia got into the act with their environmental agency, revoking two mining licenses owned by Peter Hambro, the London-listed gold producer.

Many countries might come to mind as places where shareholders could, without warning, receive news that their operations have been taken over by the government and/or its friends, or that permits are suddenly suffering delays or have been cancelled outright.

One of the most serious and unpredictable risks facing mining operations and investor interests is "country risk" - where the political and economic stability of the host country is questionable and abrupt changes in the business environment could adversely affect profits or the value of the company's assets.

We've seen far too many instances of companies losing assets that were lawfully theirs. If the management side of the companies we invest in is so important, then maybe we should start regarding the management of the country they operate in as at least as important? There is nothing quite so heartbreaking to an investor as having his company's flagship project taken over, nationalized, by the "El Presidente for life" of the country they're working in.

The Fraser Institute, in conjunction with the Prospectors and Developers Association of Canada (PDAC), has just released their excellent must read annual “Survey of Mining Companies 2008/2008.” (

“Since 1997, The Fraser Institute has conducted an annual survey of metal mining and exploration companies to assess how mineral endowments and public policy factors such as taxation and regulation affect exploration investment. Survey results represent the opinions of executives and exploration managers in mining and mining consulting companies operating around the world. The survey now includes data on 71 jurisdictions around the world. The companies participating in the survey reported exploration spending of US$3.4 billion in 2008 and of US$3.02 billion in 2007. Thus, survey respondents represent 24% of total global nonferrous exploration ofUS$14.4 billion in 2008 and 30% of US$9.99 billion in 2007.”

Social Turmoil

If a country's economic fundamentals weaken, then social problems cannot be avoided. Economic slowdown and rising unemployment cause massive social turmoil. The current worldwide economic meltdown has already caused many tens of millions to become unemployed and worldwide hundreds of millions, potentially billions of people, could be facing starvation.

Socio-economic turmoil - lawlessness, poverty, lack of adequate medical facilities and attention, low to no employment, low wages, disease, no clean drinking water or water for irrigation and shortages of food or unaffordable food are all causing socio-economic pressure to build in many countries that were once stable environments for investment.

The riots that erupted in Mexico early in 2007 in response to rising corn prices were but a harbinger of what's to come. Given the “dust bowl” droughts (and other conditions in Third World and developing economies) now gripping countries that make up almost two thirds of the world's breadbasket - the U.S., many countries in South America, Australia, China and parts of Canada, the price of food staples - wheat, rice, corn etc., will again rise to riot-causing levels in the coming months.

And this is happening just when tens of millions of people are being laid off and billions of people in the developing world are sure to see their already well below poverty-level incomes drop further or cease to exist altogether due to the worldwide ongoing economic collapse and lack of investment in developing countries. “The whole global picture is flagging up signals that we're moving out of a period of abundant food supply into a period in which food is going to be in much shorter supply,” said Henry Fell, chairman of Britain's Commercial Farmers Group.

Developing economies stand to lose most. These countries rely on imports to sustain themselves, and on average their citizens spend a much larger percentage of their wages on food than do their counterparts in developed nations. Some published estimates are as high as 50% to 60% of income going towards food, Britain was recently surveyed and 13% was the norm.

When you combine no economic growth with rising food prices you have a perfect recipe for unrelenting massive social turmoil. Food prices will soar and in countries with food deficits, millions will be facing starvation. Food riots and social unrest seen in 2008 are going to seem like a walk in the park compared to what might be in store for 2009 and beyond if these epic droughts and worsening economic conditions continue.

Crops allocated for biofuels, epic caliber widespread droughts, the high price of fertilizer, the high price of fuels and a growing global population are all conditions that have pushed up the cost of food. And if we get hit by a particularly bad harvest or if a severe El Nino strikes, food supplies could get totally out of control in many countries. If this happens then almost any city, and almost any countryside, could be aflame with strikes, riots and civil disobedience.

From the Headlines

In January 2007, three months of price rises for corn in Mexico culminated in riots. The cost of imports of corn from once cheap American supplies was up some 400%, rendering a staple Mexican food item unaffordable.

In Indonesia, government officials and police have been forced to clear the streets in an emergency action after food riots broke out Indonesia over rising soybean prices.

Increasing demand in China, reduced U.S. capacity as more farmers plant corn for ethanol, and poor harvests in Brazil and Argentina fueled the protests, the largest since Mexican protests and riots over rising tortilla prices last year.

Deadly clashes over higher costs for staple foods have broken out in Egypt, Haiti and several African states.

Bangkok, Thailand - - Rice farmers here are staying awake in shifts at night to guard their fields from thieves.

In Peru, shortages of wheat flour are prompting the military to make bread with potato flour, a native crop.

In Italy, merchants from Milan began clamoring about the cost of pasta.

The FAO has reported popular unrest over rising food prices in Burkina Faso, Cameroon, Indonesia, Ivory Coast, Mauritania, Mozambique, Bolivia and Uzbekistan, among other countries.

The Philippines, the world's biggest rice importer, moved to head off protests after global prices doubled in a year.

Temporary Respite

It's my opinion the relief we're currently seeing from this food driven social unrest is very temporary. Worsening economic conditions, a shortage of fresh clean water for irrigation and drinking and extremely expensive or non-existent food supplies for emerging and developing nations are going to be the coming norm. The citizens of many of these countries have been given a taste of the good life. They have seen what we have and they want it for their families. The increase in living standards they've recently tasted has been reduced or completely taken away.

Regime change could be a reality for many countries, and social unrest could breed an upswing in regional militancy and insurgency. There's a storm brewing on the horizon. Keep a weather eye on developments in the countries you've invested in.

If you're interested in the junior resource market and would like to learn more please come and visit us at

Richard (Rick) Mills

Want to read more exclusive Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Expert Insights page.

The GOLD Report is Copyright © 2009 by Streetwise Inc. All rights are reserved. Streetwise Inc. hereby grants an unrestricted license to use or disseminate this copyrighted material only in whole (and always including this disclaimer), but never in part. The GOLD Report does not render investment advice and does not endorse or recommend the business, products, services or securities of any company mentioned in this report. From time to time, Streetwise Inc. directors, officers, employees or members of their families, as well as persons interviewed for articles on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.

The Gold Report Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules