LONDON/BEIJING: Once a must-have ornament, platinum may be losing its appeal among China’s jewellery-loving city dwellers after prices for the white precious metal struck lifetime highs on supply concerns.

The Chinese became the world’s top buyers of platinum jewellery in 2002 when they stormed the platinum market, snapping up nearly 1.5 million ounces of the metal for diamond-decorated wedding rings and other designs. But as prices surged this year to hit a record $2,290 an ounce in March, four times the $500 in 2002, sales are slowing.

China is still the world’s largest market for platinum jewellery, accounting for around half of global demand, but it now consumes less than 800,000 ounces. Platinum hit a series of record highs after a power crisis stopped mining in South Africa, the world’s biggest producer. The disruption raised fears of a widening supply deficit and sparked speculative buying, adding to a rise of more than 30 percent in 2007. The metal was quoted at around $2,150 an ounce on Tuesday.

In China, platinum jewellery is often seen as a status symbol. But the soft, ductile metal is also used in auto catalysts to cleanse environmentally damaging fumes from motor exhausts. Of the 100 platinum jewellers in China in 2002, less than half remain. Many shops closed or shifted to producing other metals such as gold and palladium, said dealers.

K-gold, recycled platinum: Platinum also competes with palladium jewellery, especially in rural areas in China. Italian-made 18 carat gold, known as K-gold, has also gained popularity due to its contemporary designs and colours such as white, red, and yellow.

China’s platinum jewellery rose to 780,000 ounces in 2007 after falling 13 percent to 760,000 ounces in 2006, the lowest since 1998, precious metals refiner Johnson Matthey Plc said in its latest report. But it is unclear whether Chinese demand will still be resilient this year. Global consumption for new metal in the jewellery industry is estimated by Johnson Matthey (JM) to have fallen 55,000 ounces to 1.59 million ounces in 2007.

Palladium is also used in jewellery and auto catalysts, but at around $446 an ounce, it is much cheaper than its more glamorous sister metal platinum.

“In the first quarter of 2008, we are reporting at least 25 to 28 percent increase compared with the first quarter of 2007,” said Lee of Palladium Alliance, referring to production volume of manufacturers in China. reuters

LONDON (Reuters) - Rhodium prices are heading higher and will soon spike through $10,000 an ounce because of supply shortfalls from South Africa, the world’s largest producer, Standard Chartered said.

Prices of the minor precious metal, used by car makers in autocatalysts and by the glass making industry, are trading around $9,800 an ounce, a jump of more than 50 percent since the start of 2008.

The trigger for the price surge this year was the power crisis in South Africa, which has hit mining and metal production activity.

“We have raised our forecasts to reflect the latest market developments, particularly the supply problems in South Africa,” Standard Chartered said in a note late on Thursday.

“Problems in South Africa, which produce 85 percent of the world’s rhodium, have been the primary driver of prices.”

Mines in the country were forced to shut down for five days in January due to power blackouts and unreliable supplies.

South Africa’s state power-provider, Eskom, has been struggling to meet rising demand following years of underinvestment. The situation has been exacerbated by low levels of coal stocks.

“At the time it appeared that the crisis would only be short-lived,” Standard Chartered said.

Eskom warned last week that the risk of emergency power cuts had increased significantly as technical problems put a strain on its electricity grid.

Mines are only receiving between 90 and 95 percent supply, resulting in lower output.

“It seems likely that underlying structural problems in South Africa will persist for the time being,” the bank said.

Growing demand for autocatalytic converters because of stricter legislation will compound the problem.

Demand for rhodium, a byproduct of platinum production, from the auto industry last year was 879,000 ounces, but of that 183,000 was recovered from scrap, the world’s largest refiner and distributor of platinum, Johnson Matthey said this week.

Johnson Matthey said total net demand in 2007 was 856,000 ounces. Of that glassmakers accounted for 64,000 ounces.

The company estimated total global rhodium supply at 822,000 ounces in 2007, leaving a deficit of 34,000 ounces.

“We are looking for prices to average $12,000/oz in the fourth quarter of this year and they should remain at very high levels in 2009.”

MOSCOW -

Lord Patrick Gillford, the influential independent on the board of Polyus Gold, Russia’s leading goldminer, has warned the board that the company is in danger of an asset stripping scheme devised by chief executive Evgeny Ivanov, and his stakeholding ally, Mikhail Prokhorov.

Gillford issued a letter following a press leak to a Moscow business news service that suggested Gillford had a vested interest in the battle for Polyus Gold with Vladimir Potanin. At present, Potanin and his Interros holding control about 34% of Polyus Gold; Prokhorov and his Onexim holding control 30%. In practice, control of the board remains for the time being with Ivanov and Prokhorov.

Gillford is the sole international independent on the Polyus board, as the two other named independents, Russians, don’t qualify. An old Etonian, Tory advisor, and career PR agent, Gillford took his Polyus seat before the company’s London float in 2006. He runs Policy Partnership Ltd. at an address in southwest London. According to the firm’s website, “we provide expert advice and sound judgement to help our clients anticipate and respond to regulatory, policy and communication challenges, both domestically and internationally.” Gillford does not hold shares or share options in Polyus. The verbatim text of his letter is as follows:

“Lord Gillford would like to clarify his position as an Independent Board Director of Polyus Gold.

“His role on the Polyus Gold Board is to provide independent strategic advice and act on behalf of all shareholders. He has carried out these duties without compromise, voting as he believes is correct and, as his record shows, not voting in line with any particular shareholder or shareholder group.

“The Policy Partnership, a strategic communications consultancy, provides advice to Interros concerning the Potanin Fountation and has historically advised Onexim. In addition, Locksley Ryan, a consultant to the Policy Partnership, is the owner of the RLF Partnership advising Interros in its attempt to improve corporate governance standards at Polyus Gold. Lord Gillford has no beneficial interest in RLF Partnership.

“As is common practice in banks, financial institutions and legal firms, clear Chinese walls operate between these activities and Lord Gillford’s performance as his duties as a director.

“The Policy Partnership operates to the standards expected of a professional organisation.

“Lord Gillford has behaved entirely appropriately in his role as an independent Director for Polyus Gold and ensures the relevant information barriers are in place to safeguard this position.”

Gillford declined to speak on the record with Mineweb.

The significance of his public statement now, just before the May 21 meeting of the Polyus board, is that it adds to the pressure on Prokhorov and Ivanov, as Potanin rallies shareholder backing for a change of management, and of the company’s charter, to prevent the carve-out of the company’s exploration licences and assets, and their transfer to a separate company, controlled by Prokhorov. This new company is called Polyus Exploration, registered in the British Virgin Islands.

Ivanov has sought to sway shareholder and director support for this scheme with an offer to share 20% of the shares in the BVI company.

Mineweb has already reported on several earlier rounds of this fight. Recently, Potanin increased his stake in Polyus with the proceeds of an agreement with Prokhorov to take the Polyus shares the two men formerly shared in the KM Invest vehicle.

Another 2.5% stake has been put in contention in recent days, following an offer from the London investment fund, Kazimir Ltd., to pay $350 million for the shares, which are currently held by Jennington International. The offer price amounts to $73.45 per share. Last Friday morning, before trading began, the share was at $59.50; at the end of the day in Moscow, it was $63.75. The Kazimir offer premium was thus a premium of 15% to 24%, depending on when you start counting.

The market impact on Monday, when news of the Kazimir offer became better known, was electric:

http://www.bloomberg.com/apps/cbuilder?ticker1=PLZL:LI

Kazimir spokesman Karen Clarke declined to return a call to explain why Kazimir was making this offer at such a time of uncertainty for Polyus’s asset value. Interros would not comment, nor Polyus Gold.

The Kazimir offer ought to be tabled for a decision by the Polyus board tomorrow. However, if Prokhorov and Ivanov vote their shares to block discussion and refuse the offer, it will make dramatically clear to the market that their plans for Polyus Gold do not anticipate the preservation of long-term value.

Kazimir may therefore be wagering that, if they can buy Jennington’s 2.5%, they can add those votes to the Potanin support bloc, and put a stop to the Polyus Exploration scheme.

As Mineweb has already reported, Polyus Exploration is wholly owned by Jennington International, which turns out to be registered in BVI also. Jennington was the vehicle once used to hold the 20% stake in Gold Fields, which Prokhorov and his then advisers, Leonid Rozhetskin and Dmitry Razumov, acquired in March 2004, beginning what they thought would be a takeover of Gold Fields’s offshore assets, and a reverse listing for Norilsk Nickel. That scheme aborted when the Kremlin vetoed the deal.

Forensically, Jennington is 100% owned by closed joint stock company (ZAO) Polyus, and not by the open and listed parent. But Jennington holds a 9% shareholding in the parent. About 2.4% of those shares have been set aside by Ivanov for his management options scheme. But all of the Jennington votes can be cast for Prokhorov and Ivanov, against Potanin and the minorities.

This can happen, because ZAO Polyus Zoloto is the parent of both Jennington and Polyus Exploration (BVI). In theory, that makes the BVI unit a wholly owned subsidiary of the publicly listed parent, OAO Polyus Zoloto. But in practice, according to the current charter and corporate governance rules of Polyus Gold, Ivanov can make asset purchases and disposals through ZAO Polyus without permission, vote, consultation, or even knowledge, of the board of directors of the parent company. That means Ivanov can sell assets without telling the shareholders of the company - except for Prokhorov.

The sale of portion of the Jennington shares to Kazimir increases the likelihood that the shares would be voted to keep Polyus Gold intact. Refusing the Kazimir offer, and premium, means Prokhorov and Ivanov want to keep the shares and votes for their carve-out plan.

The past ten days have seen what could be yet another sea change in the progress of the gold price with a steady rise from the $860s up to over $930 before falling back a little and consolidating in the $920-$930 range where there seems to be a level of downside resistance.

The strong gold proponents feel that this is yet another plateau from which the price will move onwards and upwards back to the $1,000 level and way beyond, but many of the more cautious analysts also seem to be predicting strength at current levels - and a $1,000 gold price again later this year - but with the rise at a slightly slower pace perhaps picking up momentum in the third quarter when prices are traditionally a little stronger.

Reuters quotes Adrian Koh, an analyst at Philip Futures in Singapore, as feeling that there is potential upside resistance at $935-940, after which little would stop the metal moving into the $950s and perhaps beyond while David Thurtell at BNP Paribas reckons that if gold can hang on above the $915 level, it could easily push back to $950 - and then over $1,000 again in Q3.

But beware the dollar.  There are very mixed views on where the dollar lies at the moment in terms of strength against other currencies.  The big fall back to the $850s and below occurred at a time of relative dollar strength when some indicators suggested that the US economy was not as weak as many had been predicting, and the upward surge of the past ten days occurred as the oil price hit record highs - like gold, oil price strength is also a sign of dollar weakness, although there is perhaps more of a supply/demand balance element here - and the dollar falling back again.

While last year and earlier this year there seemed to be no way for the dollar to go than downwards, gold was strong.  When doubts surfaced as to whether this was indeed the case, gold became weaker again and plunged quite dramatically, but now the steadying at current levels suggest a more balanced viewpoint is coming to the fore and perhaps a more steady price level, and a little less volatility, will be seen in the next few months.

There are also mixed signals in the main consumption area for gold, namely jewellery purchases.  In some traditional markets like India, big fall-offs in offtake have been seen as dealers wait for lower prices, while in other countries, like China and Vietnam demand has remained strong or even increased as people worry about inflation and see gold as the ultimate inflation hedge.  If the gold price is seen to consolidate at current levels then even the reluctant purchasers will have to come back into the market underpinning the metal’s strength.  And with the general reckoning that any Central Bank sales will be low in the years ahead, and possibly even be offset by Central Bank purchases the overall outlook for the gold price has to remain positive for the remainder of this year, unless there is a huge pick-up in the US and world economies - which seems unlikely in the short term at least.

announced that gold trade through Dubai reached US$7 billion in the first quarter of 2008, up by 73 per cent from US$4.08 billion during the same period in 2007. Despite consistently high prices, Dubai’s gold trade has witnessed consistent growth over the last six months, registering a 42 per cent increase over the fourth quarter of 2007, when it reached US$4.96 billion. Gold price averaged US$925 per ounce during the first quarter of 2008.

According to figures compiled by the Statistics Department of Dubai World, a total of 115 tonnes of gold was exported from Dubai in the first quarter of 2008, an increase of 74 per cent from the corresponding period in 2007, and 49 per cent higher than exports during the last quarter of 2007. Gold exports from Dubai recorded 66 tonnes in the first quarter of 2007, rising to 77 tonnes in the fourth quarter of 2007.

Statistics also revealed that a total of 122 tonnes of gold was imported into Dubai in the first quarter of 2008, with imports mostly comprising scrap and jewellery. With a quarter-on-quarter comparison, this figure is an increase of 14 per cent from 107 tonnes in the fourth quarter of 2007, although imports have recorded an eight per cent decrease from 132 tonnes for the first quarter in 2007.

Ian McDonald, Executive Director - Gold and Precious Metals, said: “With global gold prices crossing the US$1000 mark and remaining significantly high throughout 2007, there has been an impact on the volume of imports into Dubai. However, in keeping with global trends, gold refining has also been on the rise. With scrap becoming an important component of imports, the Emirate’s growing significance as a gold refining centre has been further emphasized. In addition, increasing export volumes of gold bullion have given a boost to Dubai’s role as a leading physical hub for the regional gold trade.”

Gold’s midweek gains were partially given back on Thursday, as the greenback rallied from its lowest level in a month amid rising speculative bets the Fed will start raising interest rates by year-end, its current ’stand pat’ signals notwithstanding. The central bank has also signaled that rate cuts are not to be expected next month, despite the ongoing contraction in the economy, as the threat of inflation at fully 1% above its target represents a larger risk. Rising apprehensions that US demand for crude might take quite a hit in the wake of current values put a dent in oil’s rally and black gold thus fell $1.62 on the day, to $131.55 after having scaled peaks above $135.30 earlier. Whether or not the tipping point has been reached remains to be seen, but indications are that at least one such pivot may be approaching and that it could lead to some serious selling across the board. Some metals went their own way regardless, as nickel fell to a 24-month low on growing surpluses, and lead fell….like lead, down nearly 6%.

Spot gold was showing a $14 or 1.5% loss in New York at last check, quoted at $917.80 per ounce, practically mirroring the decline in oil in terms of percentage. The release of US initial jobless claims figures, (down on the week) gave the dollar a further boost (continuing unemployment claims were flat) in today’s trade, but the focus today remained firmly fixed upon crude oil as that market continues to dominate the headlines as well as determine current values seen in other assets. We reported mass demonstrations over fuel price hikes in Indonesia yesterday. Today’s word is that French fishermen will be bringing in no fish or crustaceans for their chef friends in the country, as they are shouting “Zut Alors!” over a doubling of fuel prices in a year. The government has offered them financial help.

Oil executives were slowly being turned on the rotisserie in front of a very inquisitive Congress yesterday and they expressed their opinion that crude prices would be “fair value” at anywhere from $35 to as high as $90 per barrel. Perhaps lawmakers should have invited a few traders to their interrogation room, as the picture of a classic short-squeeze is now emerging for this latest $25 rally in oil. Bloomberg reports that:

“Oil’s rally to a record above $135 a barrel came as traders bought crude to cover wrong-way bets that prices would decline, according to data from the New York Mercantile Exchange. The number of outstanding futures contracts, known as open interest, fell 8.1 percent in a week to 1.36 million at the same time that prices rose 2.6 percent, the data show. Falling open interest and rising prices are signs that traders are buying to exit so-called short positions that would profit if oil fell, and lose money as they rose.

“In a market like today, which is trending higher while open interest is falling, it’s a sign that money is moving out of the market,” said Stephen Schork, president of Schork Group Inc. in Villanova, Pennsylvania. Open interest in Nymex crude futures peaked this year at 1.5 million on March 13.”

“The fundamentals [in oil] justify a price between $80 and $100,” said Sarah Emerson, managing director of Energy Security Analysis Inc., a consulting firm in Wakefield, Massachusetts. “The run-up in prices has more to do with institutional investors coming into the market. There’s nothing to discourage them from doing so because the returns have been so high.”

Ah, the joys and wonders of ’sector rotation’ by the hedge funds. From dotcoms, to real estate, to gold, to oil. What next? All guesses welcome.

Silver lost 6 cents on the day, last showing at $17.82 and the noble metals saw profit-taking as well, with platinum down $44 at $2157 and palladium falling $7 at $453 per ounce. Other recent familiar patterns came to light in today’s background news, with reports that jewelry demand slipped 21% in the first quarter, to a fifteen year low, and news that the trade boosted scrap sales significantly, selling into the market during the latest rally to values above $900 per ounce.

Those who have held out through the agony of poorly performing gold mining shares for quite some time now, may see their resolve pay off in the not too distant future, according to analysts. At a Toronto CFA Society Luncheon in mid-January, I saw a set of compelling slides presented by one of Canada’s top technical analysts, Don Vialoux, wherein he pointed to an impending switch in performance from gold over to mining shares.

According to other observers, we could be in the early stages of the pivot point where the ratio of the gold miners ETF, (the GDX) vis a vis the gold bullion ETF (the GLD) changes course and reverses the downtrend that’s been in place since the October 2007 peak, when gold outperformed the miners for some six months. It is generally thought that during a gold bull market, due to their leverage to the metal, the miners should normally outperform gold. Lance Lewis, over at financial site Minyanville, chimes in:

“There are a number of reasons why we probably saw the metal outperform the gold shares over the six months following October 2007. But the point is, like the unusual environment during that half year, it’s equally unusual for gold to outperform the shares. And we may now be seeing the action revert back to the historical norm. This is going to catch many people, especially those who view miners as underperformers (including many hedge funds that are “long GLD/short the GDX,” a trade that has basically “worked” since October), off guard.

After all, how many times have you been told by talking heads, “If ya wanna buy gold, buy the GLD, but don’t buy the miners. They’re underperformers.” These talking heads don’t understand the gold market - and they sure don’t understand the economics of the gold miners.

If the downtrend in the GDX/GLD ratio is finally smashed, we’ll see a popular hedge fund “trade” (short GDX/long GLD) unwind as well. And the gold shares in the GDX will be the beneficiaries. Let’s see what happens.”

With at least one OPEC official raising a white flag and declaring that they are “no longer in charge” of the oil market, expect the action to get even more entertaining (except if you have to fill up anytime soon) and although a top has probably not been etched into the record books yet, the unfolding in that market will drive whatever happens in the other pits short-term. Gold needs to finish above $940-$953 before talk of higher ground has meaning. It also needs to hold $900-$915 even if oil starts to head towards, or reaches as low as $90 per barrel.

Happy Trading.

GDF - Gold Reef Resorts Limited - Dealing in securities by a director
Gold Reef Resorts Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1989/002108/06)
Share code: GDF & ISIN: ZAE000028338
("Gold Reef")
DEALING IN SECURITIES BY A DIRECTOR
In terms of paragraph 3.63 - 3.65 of the Listings Requirements of the JSE
Limited, the following information relating to the dealing in securities by a
director is disclosed:
Executive director                 C Neuberger
Company of which a director        Gold Reef
Class of securities                Ordinary shares
Transaction date                   20 May 2008
Price per share                    R20.0488
Number of shares                   25 117
Value of transaction               R503 565.71
Transaction date                   21 May 2008
Weighted average price per share   R20.2258
Number of shares                   49 883
Value of transaction               R1 008 925.45
Nature of transaction              Sale on the open market
Extent of interest                 Direct beneficial
Clearance to deal                  Yes
Johannesburg
22 May 2008
Sponsor
Nedbank Capital
Date: 22/05/2008 17:03:02 Supplied by www.sharenet.co.za
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The SENS service is an information dissemination service administered by the
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PRIME Minister Kevin Rudd is already out of touch and out of ideas to help people with rising living costs, Opposition Leader Brendan Nelson says.

Mr Rudd yesterday said the Government had done “as much as we physically can” to help families struggling with rising prices such as those at the bowser.

The price of unleaded petrol has reached record highs in recent days and is tipped to reach $1.70 a litre soon.

Dr Nelson said Mr Rudd should be ashamed of his comment and accused him of washing his hands of the concerns of struggling Australians.

“It seems to have only taken six months for Kevin Rudd to be out of touch and out of ideas,” Dr Nelson said to ABC Radio.

“As far as petrol is concerned, the one thing he can do is reduce the excise on fuel.

“Australians might not have expected a silver bullet when it came to petrol but they deserve a lot more than a Government that is firing blanks.”

Dr Nelson has proposed an excise cut of five cents a litre to ease cost-of-living pressures on households.

Dr Nelson rejected the prime minister’s argument that the upward movement of petrol prices would have negated any excise cut.

“The fact of it is that no matter what the price at the bowser, whether it’s $1.40 or $1.60, if you take the Coalition plan to cut the excise by five cents a litre, it means it’s five cents cheaper no matter what the price at the bowser.”

“Every cent a litre off the price of petrol means a huge difference to Australians, to Australian families, to pensioners, to farmers, people living in rural and regional Australia.”

Goldcorp Inc.’s annual investor day this week bolstered continued confidence from analysts, who maintained or upgraded their ratings and target prices for the company.

Canaccord Adams’ analyst Steven Butler was sufficiently impressed by the organic growth plans of Goldcorp, as well as the performance of their core development projects, to upgrade their target price for the stock from to US$50 per share from US$46.50 . “We rate Goldcorp shares as a buy on hedge-free growth in production highlighted by expansions at Red Lake and Luismin, startup at Los Filos and Penasquito, and development of Eleonore and Pueblo Viejo,” he wrote in a note to clients.

Meanwhile, “Remarkable progress” at Goldcorp’s major developments was cited by Blackmont Capital analyst Richard Gray in maintaining his buy rating and US$52 target price. He mentioned in his note that this progress had allowed management to consider further optimization options for the projects, including “…building a power plant (reduce power costs) and conveying versus truck haulage (reduce fuel costs).” His note also mentions new discoveries at the Eleonore and Escobal fields for his continued trust in the stock.
Both analysts appeared confident that the company could achieve plans to increase production by 54% (from 2.6 million ounces to 4 million ounces) by 2012.

SHANGHAI Lao Miao Jewelry Co teamed up with the World Gold Council to launch new series of the Only Gold campaign to boost 24-carat gold demand in China.

The local jeweler is adjusting its gold jewelry structure by shifting to design-driven 24 carat gold jewelry whose prices are set by piece rather than the traditional way of charging by weight.