Gold hits new all-time highs

September is usually a good month for gold prices, with jewelry makers stocking up on gold ahead of the Indian-wedding and Christmas gift-giving seasons, and growing sobriety in the capital markets as businesses start to look more seriously at the year ahead.

• This September has already proved the rule, with spot gold prices hitting another new all-time nominal high of US$1,265.50 per oz. in the London PM fix on Sept. 14. The intra-day spot-price peak was just shy of US$1,275 per oz. in New York around noon locally.

Silver prices also showed strength, popping up above US$20 to a London fix of US$20.31 per oz. on the same day. Platinum and palladium followed the trend, fixing at US$1,569 and US$544 per oz., respectively.

Gold market consultants GFMS chimed in with a new forecast that gold will rally through the US$1,300-per-oz. barrier this year. GFMS cites the usual arguments for its bullishness: the “extraordinary monetary and fiscal policies being enacted by the industrialized world’s governments in the face of sluggish economic growth, the spectre of a double-dip recession and already uncomfortably high unemployment.” GFMS says this toxic combination will undermine the value of equities or other conventional assets, ensure the maintenance of low interest rates and stoke potential future inflation.

Billionaire investor George Soros commented to Reuters that gold “is the only actual bull market currently” and that it will be “very interesting to see if there is a decline in the next few weeks. . . It’s certainly not safe and it’s not going to last forever.”

• In a sign of growing confidence in the huge Oyu Tolgoi project in Mongolia, Rio Tinto once again boosted its share in project developer Ivanhoe Mines, this time by 5.3% to 34.9% on Sept. 13.

A week earlier Ivanhoe declared that Oyu Tolgoi was now on track to begin processing ore in the fourth quarter of 2012, leading to the attainment of commercial production in 2013.

Under its current investment agreement with Ivanhoe, Rio Tinto is eligible to acquire up to 46.65% of Ivanhoe’s common shares, of which it presently owns 184.7 million.

• The canny investment banking house Endeavour Financial completed its transformation into a mining company, topping it off with a name change to Endeavour Mining.

While completing its acquisition of gold producer Etruscan Resources, Endeavour has simultaneously sold its 43% stake in Crew Gold for US$215 million to a subsidiary of Russian steelmaker Severstal. The sale crystallizes a 124% return on investment for Endeavour shareholders, and brings Endeavour’s cash on hand to $180 million.

Endeavour’s flagship producing asset — for now — is its 90%- owned Youga gold mine in Burkina Faso, where in the past year or so the company has boosted monthly output by 20% to 7,667 oz. gold and chopped cash costs by 29% to US$495 per oz.

• Among the base metals juniors, HudBay Minerals exercised its option to acquire 51% in Aquila Resources’ Back Forty volcanogenic massive sulphide project in Michigan’s Upper Peninsula, having spent the requisite US$10 million on the project.

HudBay becomes operator of the project, and can boost its stake to 65% by completing a feasibility study and submitting a mine permit application to the state of Michigan. The partners expect to have a new resource estimate for Back Forty in a few months, which should incorporate much of this year’s exciting drill results on the property.

• On the Canadian side of the border, the spunky Aussie junior Magma Metals unveiled a robust resource estimate for its Thunder Bay North platinum-palladium-copper-nickel project near Thunder Bay, Ont.

The total indicated resource, most of which is exploitable by open-pit, now stands at 9.1 million tonnes grading 2.43 grams platinum-equivalent per tonne for 708,000 platinum-equivalent oz., and is based on 97,000 metres of drilling.

A scoping study should be ready by year’s end, after which we may just see some kind of takeover offer in the manner of Stillwater Mining’s recent bid for Marathon PGM.

• Near Matachewan in northeastern Ontario, provincial mining dignitaries turned out to celebrate a groundbreaking ceremony at Northgate Minerals’ planned Young-Davidson gold mine.

Gold production is slated to begin in 2012, and Young-Davidson is expected to produce 2.5 million oz. gold over an initial 15-year mine life. During the construction phase, Northgate reckons the project will create 600 new jobs and directly employ 275 people once it’s in operation.