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Wall Street Journal misses the point about gold twice in one day

Section: Daily Dispatches

10p ET Thursday, March 22, 2012

Dear Friend of GATA and Gold:

Today The Wall Street Journal published two stories about efforts by governments to hinder the acquisition of gold by their people. The first, about Turkey, was dispatched to you earlier: The second, about India, is appended.

Despite GATA's many hectorings of its reporters, some done in person, the Journal refuses to acknowledge the big underlying story here, the danger to government power that is posed by an independent, competitive, supra-national currency, a currency whose suppression by Western central banks is a matter of long public if largely unreported record.

But as always Kitco's Jon Nadler is on speed dial when it's important for journalists to miss the point.

"The permanently bullish gold crowd has banked on salvation to come from India," Nadler says, "and what do we do when it's not very active?"

No, the permanently bullish crowd is banking on exposure of the massive naked short position in gold that is maintained by the big bullion banks at the behest of Western central banks. But the mainstream financial journalists at the Journal and elsewhere adhere religiously to the Nadler rule of gold market analysis: Never, never, never put a critical or even relevant question to the biggest participants in the market, central bankers.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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Indian Gold: Its Worth and Its Wait

By Biman Mukherji, Debiprasad Nayak, and Tatyana Shumsky
The Wall Street JOurnal
Tuesday, March 22, 2012

MUMBAI -- The world's biggest gold market is on strike.

In India, gold sellers closed up shop last Saturday to protest the government's decision to boost levies on sales of the precious metal. India accounts for more than a quarter of global consumer gold demand. The sudden halt in trading is sending gold prices lower.

Gold futures have declined 1% since last Friday, when India's finance ministry issued an order to double the import duty on gold to 4% and instituted a 0.3% tax on most gold-jewelry sales.

In India, gold has deep cultural significance: Parents buy it for daughters' weddings, and the metal is given as a gift on some religious holidays. It also is a common vehicle for investment. Buying by Indian consumers is so substantial that any sustained reduction in demand would remove a key pillar of support to gold prices, analysts say.

"The permanently bullish gold crowd has banked on salvation to come from India, and what do we do when it's not very active?" said Jon Nadler, senior analyst with Kitco Metals Inc. North America.

Gold futures on Thursday fell $7.70 a troy ounce, or 0.5%, to $1,642.30. That brings the losses this month to 4%, although gold still is up for the year.

... Dispatch continues below ...


Sona Discovers Potential High-Grade Gold Mineralization
at Blackdome in British Columbia -- 13.6g over 1.5 Meters

From a Company Press Release
November 22, 2011

VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling.

"We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company."

Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered.

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

Trade groups estimate about 300,000 proprietors, who employ millions of artisans and clerks, are affected by the tax changes. In a note to clients Tuesday, Standard Bank said "physical buying out of Asia has evaporated" as a result of the shop closures. The protest was initially planned as a three-day action, but industry leaders extended it to Saturday. On Thursday in Mumbai, a few shops reopened temporarily.

"If the government doesn't listen to our demands, we may continue," said S.K. Jain, president of New Delhi-based Chandni Chowk Jewellers' Association.

The government is seeking to raise revenue to plug a budget shortfall. It also wants to encourage Indians to diversify into other investments, like stocks. In a speech Monday, Indian Finance Secretary R.S. Gujral said domestic savings needs to be directed to more productive assets.

Additionally, policy makers increasingly are targeting gold demand -- and imports -- as an easy way to attack the growing current-account deficit, which is weighing on the rupee. The current-account deficit, a measure of a nation's indebtedness to foreign creditors, has been rising as India's gold imports outpace its earnings on exports, raising questions about India's ability to manage its debts.

There are early indications the tactic is working.

"We had ordered jewelry before the tax hike. But today, when we came to the shop, the jeweler quoted us a higher price," said Shilpa Seth, a 36-year-old housewife, in Mumbai's Zaveri Bazaar gold hub. "So we want to postpone our purchase for the time being."

Prithviraj Kothari, president of the Bombay Bullion Association, said the levies could cause India's annual gold demand to fall more than 30%, to 600 tons, and local gold prices could rise. "Imports have almost stopped," Mr. Kothari said.

Others say claims of a steep plunge in imports amount to little more than fear mongering. The strike comes at, seasonally, a slow time for imports, as retailers and wholesalers buckle down to reconcile their books for the fiscal year, which ends March 31.

The fundamental reason to buy gold in India -- "culture and weddings" -- hasn't changed, said Ajay Mitra, managing director of the World Gold Council for India and the Middle East. He added that, "in the longer term, the tax increase will not substantially affect demand." Some analysts say that if gold prices decline enough, it could offset the taxes, and Indian buyers will re-enter the market.

Moreover, savvy gold traders are likely to circumvent the new rules by taking advantage of a loophole that taxes imports from Thailand at a lower rate.

While the order to raise taxes already has been issued, it is possible that the Indian government, which has flip-flopped in the past on economic issues, such as cotton exports, could revise the rules so they are more favorable to gold sellers.

"While the initial announcement has raised concerns over a drop in demand for gold, we would await the release of the final details before drawing any overly bearish conclusions," wrote Standard Bank analyst Marc Ground.

Some jewelers are worried the introduction of the new tax on the gold sold in small shops would add uncertainty over how to comply with the tax code. Until last week, the tax was applicable only on gold jewelry sold by big companies, such as Gitanjali Gems Ltd. or Titan Industries Ltd.

"All these taxes could lead to big chaos," said Dinesh Jain, director of the All-India Gems & Jewellry Trade Federation.

* * *

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Prophecy Platinum (TSXV: NKL) and Ursa Major Minerals
Sign Combination Agreement

Company Press Release
Friday, March 2, 2012

VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) and Ursa Major Minerals Inc. have signed a binding letter of agreement for a business combination through a proposed all-share transaction. In doing so Prophecy and Ursa have acted at arm's length and the transaction has been negotiated at arm's length.

Prophecy will issue one common share in exchange for every 25 outstanding common shares of Ursa. Ursa options and warrants will be exchanged for options and warrants of Prophecy on an agreed schedule.

Prophecy's offer represents a value of about $0.15 per each common share of Ursa based on Prophecy's share price of $3.70 as at March 1, representing a premium of 130 percent to Ursa's March 1 closing price of $0.065.

Prophecy is to subscribe for $1 million common shares of Ursa by way of private placement financing at $0.06 per share, subject to regulatory approval. Upon placement completion, John Lee and Greg Hall, current Prophecy directors, will be appointed to Ursa's board.

Prophecy thus will become a mid-tier resource company with a robust and
diversified pipeline of platinum nickel projects, including:

-- The fully permitted open-pit Shakespeare PGM-Ni-Cu mine close to Sudbury, Ontario, infrastructure with near-term production capabilities.

-- The flagship Wellgreen (Yukon) PGM-Ni-Cu project with more than 10 million ounces of Pt-Pd-Au inferred resource. Drilling is under way and a preliminary economic assessment study is pending.

-- Manitoba's Lynn Lake Ni-Cu project with more than 262 million pounds Ni and 138 million pounds Cu measured and indicated.

For the complete announcement, please visit Prophecy Platinum's Internet site here: