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Twice in a week, Financial Times pays grudging respect to gold

Section: Daily Dispatches

All That Glisters

Financial Times, London
Friday, November 18, 2011

Some commodities bewitch investors, then lose their appeal for ever. Tulip bulbs will probably never again arouse the passions they did in 1636; anti-comet umbrellas are unlikely to regain the popularity they enjoyed in the heady days of 1910. Bursts of enthusiasm for gold, however, recur again and again.

The latest group to succumb to the urge to gobble up ingots are the world's central banks. Even with the gold price close to all-time highs, central bankers in Russia, Thailand, and Bolivia have been snapping up the metal and central banks as a whole have become net buyers for the first time since 1988.

Some economists think that gold is in a bubble. But by the standards of past speculative frenzies, this is mild stuff. Speculators in the Mississippi Bubble that engulfed France in the 18th century were so desperate to exchange contracts that an enterprising Parisian hunchback was reputedly able to earn considerable sums by renting out his hump as a writing surface. During the South Sea Bubble a company was listed to "carry out an undertaking of great advantage, but nobody to know what it is."

... Dispatch continues below ...


Prophecy Platinum Drills 120.9 Meters
Grading 1.26 g/t PGM+Au at Yukon Wellgreen Project

Company Press Release
Monday, September 26, 2011

VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) has announced the drill results received from its 2011 drilling Wellgreen platinum group elements, nickel, and copper project in the Yukon Territory.

Borehole WS11-188 encountered 457 meters of mineralization grading 0.47% nickel equivalent (including 0.72 grams per ton platinum, paladium, and gold) from surface to the footwall contact. Within this larger swath of mineralization, the hole encountered a high-grade section of 17.8 meters of 3.14 grams per ton platinum, palladium, and gold, 1.03% nickel, and 0.74% copper (1.77% nickel equivalent).

The hole was drilled completely outside of current resource boundaries, between the East Zone resource and the West Zone resource that was reported in the company's press release no July 14, 2011.

The high-grade intercept located between the two resources not only demonstrates that the East and West Zone resource form a single, geologically contiguous body but also indicates that the higher-grade material in the East Zone continues to the west and at depth at Wellgreen.

For drill result tables and maps, please see the company's full press release here:

Today's central banks, by contrast, are buying more in sorrow than in madness: Their purchases are largely a response to the persistent fall in the dollar's value.

Nonetheless, along with their enthusiastic gold sales over two decades, the central banks' recent spree has the makings of an unorthodox sell-low-buy-high strategy. For investors with more conventional tastes, now is probably not an obvious time to be buying gold.

Unless, of course, one believes that there is a large enough supply of goldbugs to keep the gold price rising for some time yet -- or if one believes that the crisis in the world economy presages a monetary armageddon, in which gold bars were one of the few remaining stores of value. This may comfort central banks -- but in that case they will have far weightier issues to worry about.

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By Lex
Financial Times, London
Thursday, November 17, 2011

"Tradition" -- that was Ben Bernanke's succinct reply recently when asked why central bankers continue to hold so much gold even while insisting that it is not money. Now, after a decade in which official gold reserves shrank continuously -- outpacing growth in exchange-traded funds nearly twofold -- there may be a change in the air. Central banks made the largest purchases of gold in decades in the past quarter, says the World Gold Council.

Given the sums involved, Mr. Bernanke could be forgiven for just shrugging. Even at near-record prices, the purchases, at about $8 billion, amount to a rounding error in the scope of global reserves. Indeed, all the gold controlled by the US government, which has by far the world's largest official reserves, equals just 3 per cent of America's official debt, which just passed the $15,000 billion mark. Even Italy, a particularly large holder of bullion (in third place globally with the 10th largest economy) would be able to retire less than 6 per cent of its enormous sovereign debt if it were to dump its 2,451 tonnes.

But while the dollar amounts may be paltry, Mr. Bernanke must grasp that the symbolism is anything but. It is a mark of creeping distrust in the unofficial reserve currency, which nervous central bankers see being printed by the trillions even as America's political leadership shows no sign of dealing with its daunting fiscal challenges. Fiscal worries are even more acute for the number two and three reserve currencies, the euro and the yen.

Central bankers are late to the gold party. Private buyers of ETFs alone have accumulated 15 times as much since their advent a decade ago as governments bought last quarter. But their shift should be of far more concern.

Does this mean that Mr. Bernanke is wrong and that gold really is money? Not at all -- paper is money and that particular innovation, however recent, will be difficult to reverse. What it does mean is that some very influential people fear that one day it may no longer be worth the paper it is printed on.

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Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit,
Extending the Mineralization of the Southwest Vein on the Property

Company Press Release, October 27, 2010

VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:

-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.

-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.

-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.

Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface.

"The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."

For the company's full press release, please visit: