COMMENTARY: Gold and silver miners saw a flurry of trading in the last 20 minutes of trading on Friday that lifted the industry to a 1.3% gain. The triple witching day volume came in the absence of any company specific news, but higher commodity prices and a notable dollar decline may have registered on traders at the close of the week. The top gainers on Friday were CDE (+11.3%), GSS (+7.0%) and NSU (+6.9%). Short covering may have been responsible for the late session gains. Coeur D’Alene (CDE) has a hefty short interest ratio of 5.7 days.Macro data including the May PPI (+1.4%), and price indices from the NY Fed and Philly Fed this week indicated high and accelerating inflation almost across the board. For the week, the gold and silver industry added 4.5%; the active August gold contract rose 3.6% to $904.40; and the dollar index fell (1.6%).

On Thursday, June 19, Knobias noted the quiet rebound in the gold industry (click for story). Below is an excerpt from the story:

DUBAI: Dubai’s gold jewellery sales volume rose 18% last month on relatively less volatile and lower gold prices, a senior gold industry executive in the Gulf Arab emirate has said.
“So far prices are OK for buyers and not as high as they used to be in March,” Tawhid Abdullah, managing director of the Dubai Gold and Jewellery Group told Reuters.
“Looking at the market now, I would say that the 18% increase we saw in May is a sign that Dubai gold sales will continue to grow for the rest of the year,” he said.
Gold powered to a record of $1,030.80 an ounce on March 17 on record crude oil prices, fears of inflation, and expectations of more interest rate cuts in the US, making the metal more attractive as an alternative investment.
Lower gold prices and strong Indian demand have pushed the volume of gold jewellery sales in Dubai in April 17%.
Dubai is a long-established market for gold bullion and jewellery – wholesale and retail – fuelled by strong demand from the Arab world and India.
Tax-free jewellery in Dubai, one of seven members of the United Arab Emirates federation and the Gulf’s commercial heart, lures many Gulf Arab and Western tourists.
Demand in the UAE fell 19.3% to 24.2 tonnes in the first quarter of 2008, the industry-funded World Gold Council said in May.
The value of gold sales in the UAE rose 15.1% to $862mn during the same period.
In UAE capital Abu Dhabi gold sale volumes were steady in May.

By Lewa Pardomuan of Reuters

SINGAPORE — Gold has rebounded, as investors sought bargains after prices dropped to near a six-week low the previous day on a firmer US dollar, but the $US900 resistance level remains a tough one to crack.

Gold rose to $US871.45/872.45 an ounce from $US867.55/869.55 late in New York on Thursday, when it fell to as low as $US856.80, its lowest since May 2.

Gold has lost more than 4 percent in value this week since hitting a near two-week high of $US908.70 on Monday. It is well below a record high of $US1,030.80 hit in mid-March.

Bullion was likely to track movements in the currency and energy markets, where record crude prices have boosted its appeal as a hedge against inflation. Silver was also off a six-week low, while platinum and palladium firmed.

“Given that inflation is a global problem at the moment, I suspect there’s a chance for gold to remain well bid and then possibly push back up towards $US900 at some point,” said Darren Heathcote of Investec Australia in Sydney.

“Unless, of course, the dollar manages to add a significant amount of strength to its current position.”

The dollar fell from a nearly four-month high against the yen as investors booked profits from this week’s rally before a gathering of Group of Eight finance ministers in Japan this weekend.

But investors expect more dollar-supportive comments from US Treasury Secretary Henry Paulson at the G8 meeting. They also await the US Labor Department’s May consumer inflation data at 2230 AEST.

“There’s a bit of Japanese buying, but it looks like people don’t want to do much ahead of the G8 meeting. We don’t hear much interest from other regions,” said a bullion dealer in Hong Kong.

“I guess $US875 will be a tough barrier for the upside, while $US868 will the downside. That’s the range,” he added.

The market barely reacted to news the Tokyo Stock Exchange [TSE.UL] will list a gold exchange-traded fund (ETF) that is backed by bullion on June 30.

Gold futures for August delivery on the COMEX division of the New York Mercantile Exchange added $US2.0 an ounce to $US874.0.

US crude oil was off one cent at $US136.73 a barrel, still within sight of last week’s record $US139.12.

“I think we’ve support around $US862-$US864 an ounce. As far as today is concerned, probably around $US869-$US870 is the current support level,” said Investec Australia’s Heathcote. “The reason gold has remained relatively buoyant in the last year or two is still there. Inflation is a big concern.”

The most active Tokyo platinum contract for April 2009 delivery on the Tokyo Commodity Exchange rose ¥63 per gram at ¥6,898.

Spot platinum rose to $US2,022.50/2,042.50 an ounce from $US2,010.50/2,030.50 late in New York.

TORONTO, ONTARIO–(Marketwire - June 12, 2008) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES

FNX Mining Company Inc. (TSX:FNX) (”FNX”) is pleased to announce that the Company and Kadywood Capital Corp. (”Gold Wheaton”) (TSX VENTURE:KDC.H) are launching Gold Wheaton Corp., a new gold stream company, and that FNX and Gold Wheaton have entered into a binding agreement whereby Gold Wheaton will purchase, for consideration of cash and securities totaling Cdn.$400 million, 50% of the contained gold, platinum and palladium metal in ore mined and shipped (the “Production”) from: (i) the PM and 700 Deposits at the McCreedy West Mine; (ii) the Levack Footwall Deposit, Rob’s Deposit and 1900 Deposit at the Levack Mine; and (iii) the 2000 and North Deposits at the Podolsky Mine. In connection with the transaction, Kadywood intends to change its name to Gold Wheaton Corp.

Gold Wheaton will issue to FNX:

- up-front cash payment of Cdn$175 million

- 350 million Gold Wheaton common shares valued at Cdn$175 million representing approximately 43% of Gold Wheaton’s basic shares outstanding pro forma its planned financing

- Cdn$50 million deferred payment in Gold Wheaton warrants, shares or cash six months following closing of the transaction

- the lesser of (a) US$400 per gold equivalent ounce (subject to an inflationary adjustment three years after the anniversary date) and (b) the then prevailing market price per ounce. The gold equivalent ounces delivered to Gold Wheaton will be calculated based on spot gold, platinum, and palladium prices at the time of delivery.

Prior to or at the closing of the transaction with FNX, the board of directors of Gold Wheaton will be reconstituted and comprised of four directors initially; David Cohen, Frank Giustra, Terry MacGibbon, and Francesco Aquilini. David Cohen, currently Chairman of Eastern Platinum Ltd., will be appointed as Chairman and Chief Executive Officer of Gold Wheaton.

Terry MacGibbon, Executive Chairman of FNX, stated: “For some time we have been looking at ways to monetize and crystallize the value of our growing precious metal stream from our high-grade Sudbury footwall deposits and were delighted when presented with the opportunity to become involved in the launch of Gold Wheaton. In addition to receiving US$400 per gold equivalent ounce, we will receive a significant upfront cash payment that will allow us to continue our aggressive growth plans in Sudbury. In addition as the largest Gold Wheaton shareholder at approximately 43%, this transaction will also allow us to fully participate in the upside of gold, platinum, and palladium prices through our ownership in Gold Wheaton, the first primarily gold stream purchaser in the world. This new, unique, growth-focused vehicle will aggressively seek out other by-product gold stream opportunities around the world.”

“Gold Wheaton will be a pure play on gold and related precious metal by-product production. We will have immediate strong income and cash flow and it is our intent to grow this business aggressively. Upon completion of these initial two transactions and the proposed equity financing, Gold Wheaton will be well positioned for growth with current cash flow and a project pipeline.” commented David Cohen, Chairman and Chief Executive Officer of Gold Wheaton. “We welcome FNX as a major shareholder and look forward to their ongoing contribution as we grow the company”.

John Lill, President and Chief Executive Officer of FNX, added: “This is an excellent transaction for FNX as it provides us with upfront cash proceeds and on-going precious metal revenues to continue our aggressive Sudbury development plans to double our 2007 production by the end of 2010 and to fund the development of our high-value copper-nickel-precious metal deposits with the continued ramp up of production at the Podolsky Mine, which is expected to reach full production by year end and the commencement of production from our high-grade Levack Footwall Deposits in 2009.”

The transaction is conditional on Gold Wheaton financing the cash portion of the purchase price. In connection with the transaction, Gold Wheaton intends to sell, on a best efforts basis, by way of private placement, a minimum of 400 million subscription receipts at a price of Cdn$0.50 per subscription receipt for gross proceeds of a minimum of Cdn$200 million with an over allotment option of up to 15% of the issue.

This agreement does not include future precious metals production from new discoveries FNX may make on its Sudbury properties. FNX has agreed to grant Gold Wheaton a right of first refusal on any future gold stream agreements or similar arrangements proposed to be entered into by FNX with respect to its properties in the Sudbury Basin.

FNX will be granted pre-emptive rights for the next 18 months to participate in future Gold Wheaton financings to maintain its pro rata interest in Gold Wheaton as long as the Company holds at least a 10% interest in Gold Wheaton calculated on a non-diluted basis.

Gold Wheaton has completed all technical and operating due diligence. Closing of this transaction is subject to Gold Wheaton completing the required financing as noted above, confirmatory environmental, permitting, and legal due diligence by Gold Wheaton, execution of definitive documentation, receipt of all regulatory approvals, third-party consents and acceptance by the Toronto Stock Exchange. It is expected that the transaction will close in July 2008.

BMO Capital Markets is acting as financial advisor to FNX. The Company’s legal counsel is Cassels, Brock, and Blackwell LLP.

About FNX

FNX operates, develops and explores its mining properties located in the prolific Sudbury mining camp, Ontario, Canada. The Company produces nickel, copper, cobalt, platinum, palladium and gold ores from its McCreedy, Levack and Podolsky Mines, crushes and samples the ore on surface and trucks it to third party facilities to be milled, smelted, refined and marketed. FNX has aggressive plans to significantly increase ore and metal production over the next few years. Well financed and generating strong cash flow, FNX is well positioned to implement its ambitious growth plans.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful. The securities have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

Forward-Looking Statement

This news release contains certain forward-looking statements, including statements about the sale by FNX to Gold Wheaton of certain assets, the proposed terms and timing of the transaction and the anticipated benefits of the acquisition to FNX and Gold Wheaton. These forward-looking statements are subject to a variety of risks and uncertainties beyond the ability of FNX and Gold Wheaton to control or predict, which could cause actual events or results to differ materially from those anticipated in such forward-looking statements, including risks relating to the parties’ ability to complete the transaction and to obtain the necessary approvals, risks relating to either company’s ability to realize the anticipated benefits of the transaction and other risks disclosed in filings with the Canadian securities regulators made by FNX and Gold Wheaton. Accordingly, readers should not place undue reliance on forward-looking statements.

TORONTO, ONTARIO–(Marketwire - June 12, 2008) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES

FNX Mining Company Inc. (TSX:FNX) (”FNX”) is pleased to announce that the Company and Kadywood Capital Corp. (”Gold Wheaton”) (TSX VENTURE:KDC.H) are launching Gold Wheaton Corp., a new gold stream company, and that FNX and Gold Wheaton have entered into a binding agreement whereby Gold Wheaton will purchase, for consideration of cash and securities totaling Cdn.$400 million, 50% of the contained gold, platinum and palladium metal in ore mined and shipped (the “Production”) from: (i) the PM and 700 Deposits at the McCreedy West Mine; (ii) the Levack Footwall Deposit, Rob’s Deposit and 1900 Deposit at the Levack Mine; and (iii) the 2000 and North Deposits at the Podolsky Mine. In connection with the transaction, Kadywood intends to change its name to Gold Wheaton Corp.

Gold Wheaton will issue to FNX:

- up-front cash payment of Cdn$175 million

- 350 million Gold Wheaton common shares valued at Cdn$175 million representing approximately 43% of Gold Wheaton’s basic shares outstanding pro forma its planned financing

- Cdn$50 million deferred payment in Gold Wheaton warrants, shares or cash six months following closing of the transaction

- the lesser of (a) US$400 per gold equivalent ounce (subject to an inflationary adjustment three years after the anniversary date) and (b) the then prevailing market price per ounce. The gold equivalent ounces delivered to Gold Wheaton will be calculated based on spot gold, platinum, and palladium prices at the time of delivery.

Prior to or at the closing of the transaction with FNX, the board of directors of Gold Wheaton will be reconstituted and comprised of four directors initially; David Cohen, Frank Giustra, Terry MacGibbon, and Francesco Aquilini. David Cohen, currently Chairman of Eastern Platinum Ltd., will be appointed as Chairman and Chief Executive Officer of Gold Wheaton.

Terry MacGibbon, Executive Chairman of FNX, stated: “For some time we have been looking at ways to monetize and crystallize the value of our growing precious metal stream from our high-grade Sudbury footwall deposits and were delighted when presented with the opportunity to become involved in the launch of Gold Wheaton. In addition to receiving US$400 per gold equivalent ounce, we will receive a significant upfront cash payment that will allow us to continue our aggressive growth plans in Sudbury. In addition as the largest Gold Wheaton shareholder at approximately 43%, this transaction will also allow us to fully participate in the upside of gold, platinum, and palladium prices through our ownership in Gold Wheaton, the first primarily gold stream purchaser in the world. This new, unique, growth-focused vehicle will aggressively seek out other by-product gold stream opportunities around the world.”

“Gold Wheaton will be a pure play on gold and related precious metal by-product production. We will have immediate strong income and cash flow and it is our intent to grow this business aggressively. Upon completion of these initial two transactions and the proposed equity financing, Gold Wheaton will be well positioned for growth with current cash flow and a project pipeline.” commented David Cohen, Chairman and Chief Executive Officer of Gold Wheaton. “We welcome FNX as a major shareholder and look forward to their ongoing contribution as we grow the company”.

John Lill, President and Chief Executive Officer of FNX, added: “This is an excellent transaction for FNX as it provides us with upfront cash proceeds and on-going precious metal revenues to continue our aggressive Sudbury development plans to double our 2007 production by the end of 2010 and to fund the development of our high-value copper-nickel-precious metal deposits with the continued ramp up of production at the Podolsky Mine, which is expected to reach full production by year end and the commencement of production from our high-grade Levack Footwall Deposits in 2009.”

The transaction is conditional on Gold Wheaton financing the cash portion of the purchase price. In connection with the transaction, Gold Wheaton intends to sell, on a best efforts basis, by way of private placement, a minimum of 400 million subscription receipts at a price of Cdn$0.50 per subscription receipt for gross proceeds of a minimum of Cdn$200 million with an over allotment option of up to 15% of the issue.

This agreement does not include future precious metals production from new discoveries FNX may make on its Sudbury properties. FNX has agreed to grant Gold Wheaton a right of first refusal on any future gold stream agreements or similar arrangements proposed to be entered into by FNX with respect to its properties in the Sudbury Basin.

FNX will be granted pre-emptive rights for the next 18 months to participate in future Gold Wheaton financings to maintain its pro rata interest in Gold Wheaton as long as the Company holds at least a 10% interest in Gold Wheaton calculated on a non-diluted basis.

Gold Wheaton has completed all technical and operating due diligence. Closing of this transaction is subject to Gold Wheaton completing the required financing as noted above, confirmatory environmental, permitting, and legal due diligence by Gold Wheaton, execution of definitive documentation, receipt of all regulatory approvals, third-party consents and acceptance by the Toronto Stock Exchange. It is expected that the transaction will close in July 2008.

BMO Capital Markets is acting as financial advisor to FNX. The Company’s legal counsel is Cassels, Brock, and Blackwell LLP.

About FNX

FNX operates, develops and explores its mining properties located in the prolific Sudbury mining camp, Ontario, Canada. The Company produces nickel, copper, cobalt, platinum, palladium and gold ores from its McCreedy, Levack and Podolsky Mines, crushes and samples the ore on surface and trucks it to third party facilities to be milled, smelted, refined and marketed. FNX has aggressive plans to significantly increase ore and metal production over the next few years. Well financed and generating strong cash flow, FNX is well positioned to implement its ambitious growth plans.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful. The securities have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

Forward-Looking Statement

This news release contains certain forward-looking statements, including statements about the sale by FNX to Gold Wheaton of certain assets, the proposed terms and timing of the transaction and the anticipated benefits of the acquisition to FNX and Gold Wheaton. These forward-looking statements are subject to a variety of risks and uncertainties beyond the ability of FNX and Gold Wheaton to control or predict, which could cause actual events or results to differ materially from those anticipated in such forward-looking statements, including risks relating to the parties’ ability to complete the transaction and to obtain the necessary approvals, risks relating to either company’s ability to realize the anticipated benefits of the transaction and other risks disclosed in filings with the Canadian securities regulators made by FNX and Gold Wheaton. Accordingly, readers should not place undue reliance on forward-looking statements.

By Miho Yoshikawa

TOKYO, June 13 (Reuters) - Japan’s largest bourse plans to launch the nation’s first bullion-backed, gold exchange-traded fund on June 30, in a bid to draw more investors and help enhance Tokyo as a financial centre.

The Tokyo Stock Exchange [TSE.UL] said on Friday that it will offer the SPDR Gold Shares ETF, which is sponsored by a subsidiary of the World Gold Council and whose marketing agent is State Street Global Markets (STT.N: Quote, Profile, Research, Stock Buzz).

It is currently traded on the New York Stock Exchange as well as bourses in Mexico and Singapore.

The Tokyo bourse has been studying the possibility of listing such ETFs as a means of offering a broader variety of listed financial products and attract more investors.

Friday’s move was welcomed by Japanese market participants.

“Many investors have been waiting for this launch for a while. It will draw a lot of attention from investors,” said Tatsuo Kageyama, an analyst at Kanetsu Asset Management.

The Tokyo bourse had been waiting for a new legal framework. A bill passed by Japan’s parliament last week allowed for the creation of ETFs for commodities, and made it possible for banks and other firms to engage in emissions trading.

NEW YORK (MarketWatch) — Gold futures lightly pared their losses after the government reported core inflation rose 0.2% in May, while the overall consumer price index climbed 0.6%. Down $6.00 earlier on, gold futures for August delivery fell $2.00 to $870.00 an ounce on the New York Mercantile Exchange. Silver futures for June delivery gained 13 cents to $16.61 an ounce.

NEW YORK (MarketWatch) — Gold futures lightly pared their losses after the government reported core inflation rose 0.2% in May, while the overall consumer price index climbed 0.6%. Down $6.00 earlier on, gold futures for August delivery fell $2.00 to $870.00 an ounce on the New York Mercantile Exchange. Silver futures for June delivery gained 13 cents to $16.61 an ounce.

It is impossible to extrapolate anything from a single data point, however careful observation usually pays dividends especially when looking for certain clues that financial markets may signal. Today, Thursday June 5, 2008 I noticed that gold was down on the day and yet gold stocks were up. Silver actually had a rather positive day overall and many silver equities were up two to three percent on the day. Normally, when gold is off even slightly and gold stocks show mild strength it is a result of short covering. In fact this is most likely the cause of today’s price action.

Many in the precious metals investment arena have bemoaned the fact that the metals have performed better than the mining stocks and far better than the junior mining companies.

In the May edition of The Morgan Report I wrote: “Earning season is here and many of the producers have reported very good margins, far superior to what they reported last year during the first quarter. The market is taking a big yawn at this excellent news and we need to comment. It is only a matter of time before Wall Street wakes up to the fact the many of the leading gold and silver companies (like those we feature each month in the top asset allocation model) are making profits. Earnings drive stock prices eventually, so the point is simply that these earnings will not be ignored forever.

For example, Silver Wheaton Corp. (TSX, NYSE:SLW) announced record net earnings of US$27.9 million (US$0.13 per share) and operating cash flows of US$33.1 million (US$0.15 per share) for the first quarter of 2008. Newmont and others had excellent earnings. As I stated in August of 2007 when the credit crisis surfaced in the financial markets, some companies have hit their (intermediate) bottom and now is the time to buy. At the time I honestly thought that some of the better juniors had probably hit bottom as well. During this month’s review it appears that mainly the top tier companies bottomed in August. It is very difficult to find any junior resource stock that is not close to or below the August 2007 low.

Last month we focused on the probability of the current corrective phase in the precious metals. Some are still of the opinion that the correction is almost over and we can expect to see silver and gold move toward their recent highs in short order. We do not see that taking place and expect at least a three to six month corrective phase to develop. This is the time to build or accumulate stocks you favor.

One of the clearest signs that the bottom is complete will be the precious metal mining equities refusing to move down further in spite of the fact the metals themselves may continue to find lower prices. In other words, I fully expect to see the mining stocks form a bottom before the metals themselves. If we are wrong and this sell-off is short-lived, we will send an alert to our readers. The problem will be filtering out a quick move to the upside that might last for a very brief time. We will employ the rules and discipline that have served us so well in the market so far.”

So, today could be the day and then again it may not be. The point however, is to use the traditional summer weakness in the precious metals complex to your best advantage because the months and years ahead are going to prove to be a time when great fortunes are won and lost based upon investing in what the market values and what is does not value.

We are still climbing the wall of worry and many that have put their investment toe in the water of precious metals found the temperature uninviting and have left the pool. There is plenty of “reasons” to get out because many of the most notable in the industry are calling this a commodity bubble.

To my analysis it is not a bubble but verification that most investors are still skeptical of gold and silver. Still worried about the overall financial landscape but do not have any real conviction to their investment strategy. They simply want to play it “safe” and therefore stick with the general stock market and avoid the commodity sector. This will change, and I expect far more interest in the gold market once the metal of kings moves over the $1000 USD level.

As an interesting aside I will also go out on a limb and forecast that more gold will be purchased between $1000 and $1500 than was purchased between $500 and $1000. Investors do not buy low and sell high, most wait until things are well underway and then gain the confidence to invest accordingly.

Want verification? Simply look at the tech wreck or technology bubble, most jumped on the Nasdaq after it hit 8000 on the way up. As far as I am concerned it will be similar for the precious metals, most investors will find gold and silver irresistible during the optimism phase, and during the final euphoric phase (mania) most everyone will be screaming it is different this time.

Remember, the more things change the more they remain the same.

David Morgan

If Americans feel they are being pick-pocketed by inflation, they should take a look overseas. With the United States pushing its trade deficit and dollars on the rest of the world, many world central banks thought they could grab a “free lunch” by buying US Treasuries to hold the exchange rate of their currencies down, and paying for them by printing up free local currency. This so-called free lunch has turned out to be mighty expensive.

Currently, over 3 billion people are experiencing what it feels like to be robbed by inflation. While free trade and globalization initially pushed up the standard of living in many developing countries, increases in the demand for basics like food and fuel, fueled by an over-supply of money and credit, have goosed inflation in a big way. So much so, the middle class and poor in many countries are literally being wiped out. Starving, desperate, and angry people are appearing in the headlines daily as they try to bring this dire situation to the attention of their leaders through violent demonstrations and riots. (What you don’t see in the press every day, but should, is in the chart below):

Year-Over-Year Inflation

As of June 2008 (1)

In Argentina and Vietnam, as one example, panic-stricken residents are swapping their currencies for dollars and Euros. But given the double-digit growth in M3 for the dollar and euro, these inflating currencies may prove to be a dangerous place to hide from inflation. Even for the currencies that are touted as being stable, interest rates are still below the rates of inflation wherever you look.

Unless interest rates are increased materially above the rate of inflation, prices will continue to rise. But with the high level of bad debt in the world banking system, the financial system would not survive the strain of a significant interest rate increase. For a period of time, stagflation will become a new way of life for many of us.

Clearly, if you reside in one of the countries mentioned in the chart, and want to avoid being wiped out entirely, one of the safest hedges against inflation is to buy gold and silver. Because I’m patriotic and know that preserving my capital will help America preserve its capital, I’ll continue to buy them too.

1. The statistics indicated are as recent as possible and were taken from articles appearing in The Financial Times, Economist, and other publications in the financial press.
2. On June 9th, The Financial Times published an article that suggested official inflation statistics are not to be believed and inflation expectations show rates of 25% to 30%.

Richard Benson
President