Beiträge von Schwabenpfeil

Regardless of the recent hoopla over the Iraq elections, the situation there is deteriorating and not indicative of democracy flourishing in the Middle East. Today’s headline says it all. The real story behind today’s headline (what we are not hearing about) is extremely disturbing.

Two Marines, 26 Iraqi Soldiers Killed in Attacks

SPOOKY:

From: http://www.truthout.org/fyi

The Story of the Ghost
By William Rivers Pitt
t r u t h o u t | Perspective
Monday 31 January 2005

"United States officials were surprised and heartened today at the size of turnout in South Vietnam's presidential election despite a Vietcong terrorist campaign to disrupt the voting. According to reports from Saigon, 83 percent of the 5.85 million registered voters cast their ballots yesterday. Many of them risked reprisals threatened by the Vietcong. A successful election has long been seen as the keystone in President Johnson's policy of encouraging the growth of constitutional processes in South Vietnam."

- Peter Grose, in a page 2 New York Times article titled 'U.S. Encouraged by Vietnam Vote,' September 4, 1967.

***

Rhody on leasing:

Good morning Bill:
As you can see from the included chart, the backwardation in the gold lease rates has disappeared, although the rate curve is unusually flattened and still remains elevated. Silver rates surged across all terms this morning. Gold and silver were both hit today, beginning in London and continued into the COMEX session. Since gold's rates are still elevated, some of this gold dump was leased, but it is satisfying that the monetary interests finally resorted to leased silver to trash that spot price. That cost them some serious metal. Note how they used lease terms right out to one year to avoid backwardation. The big question is why???? Spec funds, according to COTS are sold out, so why is there such great need to suppress gold and silver right now at a time when the usual response of a sold out market is to rebound? As stated twice already this week, I think the G7 meeting this weekend is critical for the US dollar. Gold (and silver) must be hammered down to portray a tippy dollar as better than gold. I think this presents an opportunity. If "they" hammer gold down to $400-$410 and silver down to $6-$6.30 I will be compelled to back up the truck.
Best regards, Rhody.

Mainstream quid pro quo:

05:25 Sakakibara ("Mr. Yen") expects dollar/yen to stay around Y103 -- Asian WSJ
The forecast is more bullish for the dollar than prior comments by the former Finance Ministry official, who had said as recently as 1/24 that he expected the dollar to continue to decline vs. yen. Sakakibara said the U.S. economy seems "very strong."
* * * * *
…………..

Lehman Hires Former Vice Finance Minister Sakakibara
Feb. 3 (Bloomberg) -- Lehman Brothers Holdings Inc. said it appointed Eisuke Sakakibara, the former vice finance minister for international affairs, as a member of its Japan advisory board.

Sakakibara, 63, known as ``Mr. Yen'' when he directed Japan's foreign-exchange policy from 1997 to 1999 at the Ministry of Finance, is now a professor at Tokyo's Keio University anddirector of its Global Security Research Center.

``Sakakibara's extensive network and experience will enable us to offer even better service to partner with our Japanese clients,'' Akio Katsuragi, president of Lehman Brothers in Japan,said in a statement. ``His insights and advice will prove invaluable as we continue to grow our business in Japan.''

-END-

A change of thinking in Euroland?

LONDON, Feb 3 (Reuters) - The strength of the euro against the dollar has become less of a concern and is not considered recessionary for the euro zone economy, a European G7 source said ahead of a meeting of the Group of Seven rich nations.

"The exchange rate is no longer the cause for concern that it was a few months ago," the source said. "It's not considered a recessionary factor."…

A major factor behind the dollar's slide late last year was investor concern over the ballooning U.S. current account and budget deficits, which many analysts see as a threat to overall economic stability.

The G7 source said the euro zone was eagerly waiting "to see if the commitment (by U.S. President George W. Bush) to halve the current account deficit in the next five years is backed up by policies."

-END-

What changed in two months? This "source" makes little sense. Perhaps someone wants to minimize the obvious. The US financial situation is deteriorating, not improving. The Europeans, to live up to their demands of the US, are going to have to cut back on their financing our debt. Perhaps they are weenying out?

The Bush Administration will not increase taxes, nor cut spending. Their plan is for US economic growth to increase revenues, which will reduce the fiscal deficit. Yet, recent US economic reports (GDP, productivity, monthly numbers) have all been on the soft side with the trend weakening. The measures taken two and three years ago to stimulate the economy have run their course. What lies ahead is not pretty.

This USAGold posting will surprise no one in the GATA camp:

Copperfield (2/3/05; 05:28:52MT - usagold.com msg#: 128814) Wellink

Heard this from a reliable source: Nout Wellink, president Dutch CB, stated off the record: Central banks must lie about interest rates and gold. He also stated that this monetary system one day will implode..

***

ISM NonManufacturing

Many of members' comments regarding business in January indicate continued positive business conditions but with continued concern for inflationary pressures. Specific comments include: "We have begun to feel the effects of the projected inflation in many areas as prices are going up for a variety of commodities"...."Sales continue to increase above budget and prior year, but costs are going up even more. Sales are up 9.4 percent above the prior year and 4.4 percent above budget"; "Seasonal business slow start to new year, raw materials still high"; and "Cautious optimism on near-term economy tempered by fears of protracted war and associated costs, inflationary increases in fuel and interest rate surges."

-END-

CARTEL CAPITULATION WATCH

As so often is the case, the DOW pulled another Hail Mary later on in the day to come back from at 40+ point deficit to close at 10,593, down only 4. The weaker DOG, led lower by Amazon’s disappointing results, sank 17 to 2058.

The US economic news was decidedly on the negative side:

08:30 Jobless claims for w/e 1/29 reported 316K vs. consensus 330K
Prior week unrevised at 325K.
* * * * *

08:30 Q4 Non-farm Productivity reported 0.8% vs. consensus +1.5%
Unit Labor Costs +2.3% vs. consensus +2%. Prior unit labor revised to +1.6% from +1.8%.
* * * * *

WASHINGTON (Reuters) - U.S. business productivity rose at just a 0.8 percent annual rate in the fourth quarter, an unexpectedly slim advance that was the smallest in nearly four years, according to a government report on Thursday that could fan inflation fears.

For the year as a whole, non-farm business productivity, or worker output per hour, grew 4.1 percent, the Labor Department said. While the annual growth rate is healthy by historic standards, it nonetheless marked the smallest increase since 2001.

The slowdown in productivity caused unit labor costs, a key gauge of inflation or profit pressures, to jump. They rose at a 2.3 percent rate, the biggest increase since a matching gain in the second quarter of 2002 and a step-up from the third quarter's downwardly revised 1.6 percent pace.

Economists had expected productivity growth to slow only a touch to a 1.7 percent pace from the third quarter's 1.8 percent rate. They had forecast unit labor costs to rise at a 2 percent rate.

Fast productivity growth allows businesses to pad profits or boost pay without facing a need to raise prices for their products or services.

As productivity slows, firms are forced to hire more workers to increase production, which helps employment growth and provides an underpinning for the economy's expansion. But profit margins would erode unless businesses can pass along their increased payroll costs to consumers.

-END-

10:01 Jan. ISM Non-Manufacturing Prices Paid 66.6 vs. Dec. 73.6
New Orders index 60.5 vs. Dec. 61.3.
* * * * *

10:00 Jan ISM non-manufacturing reported 59.2 vs. consensus 61.5
Prior reading revised 63.9.
* * * * *

10:00 Dec. Factory Orders reported 0.3% vs. consensus 0.6%
Prior reading revised to 1.4% from 1.2%.
* * * * *

WASHINGTON, Feb 3 (Reuters) - U.S. factory orders rose a smaller-than-expected 0.3 percent in December, as orders for transportation equipment reversed a hefty gain the preceding month, a government report showed on Thursday.

Orders rose to a record $379.085 billion in December from $378.047 billion in November, the Commerce Department said. November's 1.4 rise was an upward revision from an originally reported 1.2 percent. ..

-END-

The John Brimelow Report

The IMF: any fire to this smoke?

Thursday, February 03, 2005

Indian ex-duty premiums: AM: $8.28, PM $8.37, with world gold at $420.90 and $419.95. High; ample for legal imports. A bullion dealer in India has complained to me via email that his business is suffering because suppliers tell him that there are no inventories of 1kg .995 gold!

Commentators freely agree physical demand is remarkable. Mitsui-NY:

"Physical consumption remains extremely upbeat, with strong demand from India, Turkey and the Middle East."

TOCOM is not interested. Volume did rise 32% to equal 11,970 Comex lots with the active contract closing up 5 yen and world gold edging up 30c from the close in NY, but open interest slipped 708 Comex equivalent, and Mitsubishi remarks that the public was a seller. Ominously in view of subsequent developments UBS sensed a seller during Asian hours:

"in early Asian trading …good offers were seen via Access. For the rest of the day buying interest from Tocom was matched by offers in the OTC market."

Quite probably a Western Hemisphere seller. ( NY yesterday traded 24,057 contracts; open interest slipped 186 lots.)

Some seller sprang into action when Europe opened, sending gold sliding in Euro terms, not just in $US. Reuters from London actually found a trader willing to blame the official sector:

"There seems to be a programme of selling in gold – it may be central banks…The market is seeing lots of offers…"

IMF gold sales seem to be the popular theme, with a good supply of leaks from alleged G-7 sources. Of course, if the proposal the British say they are putting forward – revaluing the gold holdings to facilitate write- offs of basket-case country debt – actually comes about, there will be no impact on the gold market. UBS would be correct in its argument:

"we see no chance of any IMF gold sales hitting the gold price. If IMF gold is to be used to help fund debt relief, it makes much more sense to revalue the entire 100 million ounce holding by a couple of hundred dollars per ounce than to try and sell some into the market. While the gold market is quite liquid, a sale of such a quantity would depress the price considerably."

Logically, it is possible that the selling in the past couple of days is coming from sources who misunderstand this.

The problem is that those who believe gold is subject to malign influences emanating from certain Central Banks also provide a logical possibility: that this persistent IMF story is not about 3rd World debt relief at all, but about circumventing the Washington Accord and accessing a new large supply of bullion. This would obviate the UBS argument.

Only two months ago after all, gold was making 16 year highs. And the peculiar UK sales decision in ’99 comes to mind.

Gold’s friends can take comfort from two thoughts. A small minority of Central Banks can block any IMF decision. The IMF website points out:

The IMF may sell gold outright on the basis of prevailing market prices, and may accept gold in the discharge of a member's obligations at an agreed price, based on market prices at the time of acceptance. These transactions in gold require an 85 percent majority of total voting power. The IMF does not have the authority to engage in any other gold transactions—such as loans, leases, swaps, or use of gold as collateral—nor does it have the authority to buy gold.

( http://www.imf.org/external/np/exr/facts/gold.htm )

Not all the Washington Agreement signatories can be expected to appreciate their own restraint being offset to their disadvantage.

The other comforting factor is that the noted gold bear is not laying much emphasis on the outright sales possibility. This usual bear triumphed in ’96-98 by being aware of the shift in Central Bank behavior which precipitated that ghastly experience. He would be delighted to publicize another.

JB

A Café member suggests a minor positive:

Bill,
This headline is from Reuters this morning:
"Europe gold slips on possible central bank selling"
When even the establishment stooge Reuters speculates about covert CB selling, it is clear that the GATA message is being tacitly acknowledged by the financial world. That headline could never have been written without GATA's work. I don't think it would have been written a year ago, either. Something to smile about on an otherwise not-so-golden morning.
Best wishes,
Peter R.

Once The Gold Cartel engineered spot bullion through key support, the funds turned significant sellers and the cabal and friends turned buyers. Today’s trading fits right into what we have witnessed so often the past few weeks. The crooks do their thing to draw in spec sellers so they can cover their own shorts at lower and lower prices.

To give you some idea of the effort they have made to bury gold, one only need review how little the dollar has risen compared to the fall of the gold price since the beginning of December:

March dollar
http://futures.tradingcharts.com/chart/US/35

April gold
http://futures.tradingcharts.com/chart/GD/45

In the first few days of December the March dollar was around 81.70 with April gold right below $460. April gold closed today $418.30, down $4.70 with the dollar closing at 84.03. The euro dropped .68 today to 129.78.

Silver refuses to break down.

Revaluation is better than gold sales from every perspective. And if the IMF can't or won't revalue gold then selling gold makes no sense. It is impossible to sell enough to make a meaningful difference to debt relief without hitting the gold price and punishing gold producing poor countries.

John Reade
UBS Precious Metals and EMFX Analysis

-END-

Hi John,
You are correct. Of course selling gold makes no sense. As you say (like GATA), gold sales would do more harm than good to many of those the sales would be purported to assist. However, do you think The Gold Cartel or the IMF cares a hoot about these people? The Gold Cartel’s AGENDA is what all this talk for the poor is all about via gold sales or IMF revaluing their gold. They know exactly what they are doing and it is already working. Despite soaring demand for gold around the world, the price keeps plummeting.

Some things never change. Most people refuse to acknowledge the truth.
Bill Murphy

Let’s hear it for the South African mining minister who stands next to SA finance minister Manuel as another patsy for the cabal. Why don’t we hear of the mining minister decrying such talk of sales in the most stringent of fashions?

The following was sent out by UBS' John Reade this morning on this matter:

Subject: Debt Relief and IMF Gold - We expect no sales

Some gold investors may be concerned that there may be an announcement about IMF Gold-funded debt relief ahead of or at the G7 meeting. Recent comments from the governments of the UK, Germany, Canada and South Africa support this notion.

This morning Gordon Brown has said that he expects a deal on IMF gold reserves in the next few weeks. Gold fell about USD2/oz on this news during
London trading.

I expect some revaluation of IMF gold closer to market- they hold about 100 million ounces, currently on the books at about $50/oz. BUT I DO NOT EXPECT ANY GOLD SALES. We believe that the IMF would have to change its constitution to sell gold. Also, the IMF can clearly make more money revaluing all the gold than trying to sell a smaller amount into the open market.

Based on regression analysis we have done, 1 million ounces of Comex long liquidation drops gold by about 3 dollars in the short term. So selling a meaningful amount of IMF reserves would cause a very large price drop and trigger other sellers from investors and funds.

Remember that the UK sold less than a million ounces of gold per auction every two months.

Also I doubt that the members of the IMF would support gold sales as many poor countries (Mali, Tanzania, Ghana, PNG, Indonesia) and other not rich countries (South Africa, some South American) depend on gold mining for a good chunk of export revenue, investment and even GDP.

But I wonder if some investors have simply become wary about the whole issue and it could see gold lower into and after any possible announcement. We were stopped out of our long XAUEUR trade for a 1% profit on Monday and we have not jumped back in suspecting possibly a reaction post G7 if there is any such news. But once the dust settles gold should be a good buyshort/medium term - physical demand continues to flood out of the door with India, Japan and other Asia very strong and Europe.

Conclusion: Sales make no sense

REVALUATION OR SALES?

The G7, which includes the world's richest countries, is split over how a move to write-off poor nations's debt should be financed.

The United States sees the World Bank, to which poor countries also owe huge sums, funding its own debt relief with grants.

Any proposal to revalue or sell IMF gold would need 85 percent majority of total voting power, giving the U.S. a strong hand as it holds more than 17 percent voting power.

HSBC metals analyst Alan Williamson said that revaluation could be the easiest path to take.

"It would enable the IMF to create extra revenue without disrupting the gold market or the revenues that a lot of the developing countries get from their gold sales," he said.

Between December 1999 and April 2000, the IMF conducted separate but closely linked gold revaluation transactions with Brazil and Mexico, which did not release the IMF's gold holdings on to the open market.

A spokeswoman from the industry-backed World Gold Council said it was aware of Brown's proposal, but would need full details before being able to assess the potential impact on the gold market.

Naqvi, of Barclays, said sale instead of revaluation was quite possible, and would be a negative factor for the market.

"Revaluation means little impact on the market and given that this issue has been hanging over it in recent weeks -- it could be price-supportive," he said.

"You had the South African mining minister saying quite clearly that sales are possible -- that's a pretty strong suggestion that sales are much more possible this time round."

-END-

Golden key to unlock Third World debt on G7 agenda

By Veronica Brown

LONDON, Feb 3 (Reuters) - A plan that seems to spin money out of thin air to pay poor countries' debts by revaluing IMF gold reserves is gathering steam ahead of this weekend's G-7 meeting of the world's richest nations, analysts said.

"This (proposal) has a lot of moral momentum going for it at present. Standing in the way of this is not going to be very popular," Barclays Capital precious metals analyst Kamal Naqvi said.

Under the proposal, backed by Britain's Chancellor (finance minister) Gordon Brown, reserves of the International Monetary Fund, the world's third biggest holder of gold bullion with more than 100 million ounces, would be revalued to levels achieved in the recent boom market in gold and other precious metals.

With current spot gold prices at about $415 an ounce, the value of some 90 million ounces of the IMF reserve, pegged at just above $40 an ounce under a 1971 agreement, would soar tenfold.

As part of a larger debt relief plan, that huge increase in value would be set against the hundreds of millions of dollars impoverished countries owe to the IMF.

Talk of the plan has overhung bullion markets this week.

"We believe that there could be more statements of support for the UK's plan, which proposes using IMF gold to fund poor country debt relief, from other G7 members ahead of, at or even after the G7 meeting in London this weekend," UBS Investment Bank analyst John Reade said in a daily report.

If you are long gold and the shares, more on why you lost money today:

Europe gold slips on possible central bank selling

Thu Feb 3, 2005 07:34 AM ET LONDON, Feb 3 (Reuters) - Gold slipped in Europe on Thursday on possible central bank selling but losses were held in check by tightly traded currencies ahead of U.S. jobs data and a Group of Seven rich nations meeting this week, dealers said…

"There seems to be a programme of selling in gold -- it may be central banks (under Europe's Central Bank Gold Sales Agreement)," a dealer said, adding that this had been countered by continuing heavy physical buying interest.

Traders noted that Friday's G7 meeting was set to discuss a UK-led proposal to revalue some of the IMF's gold reserves to help write off poor nations' debt.

-END-

For many weeks I have made mention how soaring costs are making life very difficult in terms of making profits for many gold producers around the world. Yesterday the focus was on the South Africans. Some companies will not make it over the next year or two unless the gold price rises a fair amount from present levels. Many of these companies will also not expand production (at a time when it is most needed) and will cancel their exploration plans.

The bottom line is the talk of utilizing IMF gold is hurting many of the economies and the people this hypocrite Brown says he is bleeding for. What he is doing is an outrage and should have the gold industry up in arms. Instead, we get the usual silence. It is beyond pathetic.

Gold Falls to 3-Month Low on Dollar Gains, Concern of IMF Sales

Feb. 3 (Bloomberg) -- Gold prices in New York fell to the lowest in more than three months as a gain in the value of the dollar eroded the appeal of the metal as a hedge against U.S. stocks and bonds.

Gold, sold in dollars, has dropped 4.8 percent this year on concern that rising interest rates will boost demand for the U.S. currency. The metal also fell after U.K. Chancellor of the Exchequer Gordon Brown said he hopes the Group of Seven will agree in the next few weeks to have the International Monetary Fund's gold reserves revalued.

``Gold is following the euro lower,'' said Leonard Kaplan, president of Prospector Asset Management, a money-management company in Evanston, Illinois. ``When you revalue the gold, there is a temptation of selling it down the line,'' he said. ``It would add to supply if they sell.'' ….

The IMF held 3,217 metric tons of the metal as of January 2005, according to the World Gold Council. That's worth over $43 billion at current market prices. The IMF has kept the value of its gold at less than $41 an ounce since 1971. The revaluation of gold would enable the IMF to forgive debts or suspend loan repayments to combat poverty in Africa.

``If they value the gold at $400 and the price goes lower, there's a chance they would sell,'' Kaplan said. ``What you have is basic uncertainty.''

-END-

Gold came in $4 lower on the Comex, well below key support, and then was hammered down to $413.80, or nearly $7, before struggling back to close a bit lower than where it opened. After some bearish US economic reports were released (see below), the dollar staged a quick, sharp rally??? Once again, gold broke first, followed later by an UP move in the dollar. The Gold Cartel traders get their heads-up before the rest of the market participants and get in their money-making licks ahead of time. Let’s hear it for democracy and our free markets.

You want to talk about ludicrous. The talk for weeks by The Gold Cartel apologists like British Finance Minister Gordon Brown has been to tout an IMF gold revaluation with the proceeds from this maneuver to help the poor. This proposed revaluation is not supposed to affect the market. So why has gold been savaged ever since Britain’s "Charlie McCarthy" was sent out on the circuit to give this proposal visibility?

What Brown and The Gold Cartel are doing is to talk the market down by scaring market participants. The innuendo keeps surfacing the IMF is actually going to sell gold and is causing longs to jettison their positions. Gold Cartel apologists Bloomberg and the clueless Leonard Kaplan carry the cabal ball in this regard:

February 3 – Gold $416.20 down $4.40 – Silver $6.66 down 5 cents

Gold Cartel/England's Brown Scaring Market

The moral test of government is how that government treats those who are in the dawn of life, the children; those who are in the twilight of life, the elderly; and those who are in the shadows of life - the sick, the needy and the handicapped...Hubert Horatio Humphrey, US Vice President (1911-1978)

What more does anyone need to see that the gold market is all about The Gold Cartel, period? Each time we think the manipulation cannot get more blatant, it does. The cabal’s orchestrated effort to take the price down is plain as day. Yes, it is a farce and makes a mockery of the notion gold is a freely traded market.

This morning the pound was higher and the euro slightly lower, yet after a modestly lower AM Fix of $419.80, gold was pounded as the London morning wore on. It had nothing to do with the dollar. It was The Gold Cartel going into action after the President’s State of the Union Speech and pre the G-7 meeting this weekend.

How about that Aflease! Nice to have a big winner and one brought to your attention months ago when it was half the price it is now.

Aflease (65 cents, unchanged)
http://new.stockwatch.com/swne…utilit_snapsh_result.aspx

The gold/silver shares still can’t get out of their own way. The XAU gained .66 to 92.34, while the HUI dinked its way up .57 to 203.46. At least HUI 200 continues to hold.

The gold/silver tedium goes on, yet the set-up for a dramatic move higher in the prices of both precious metals is staring us in the face.

GATA BE IN IT TO WIN IT!

MIDAS

This is what The Gold Cartel hath wrought. It is time for South African gold producers to get behind GATA and help us expose these crooks before it is too late for some of them. Who would’ve thought gold would rally $175 an ounce and the SA gold shares would go in the tank? Durban Deep has sunk to $1.30. Time for the South Africans to wake up and shake up. The status quo doesn’t cut it any more.

Could the need for GOLD RUSH 21 be clearer?

Speaking of SA. From a veteran fellow Café member:

Shaka Jr.,
This morning I had an interesting conversation with an old colleague of mine who retired from the Wall Street analyst circuit many years ago. The dialogue eventually came around to "what's new in the market" et al. Of course I soon delved into the body of evidence collected by the "WW GATA Army" that exposes the current fictional financial facade, pieced together through a Matrix of manipulations, to provide a veneer of functionality which defies all fundamental reality, to the eventual detriment of all unsuspecting investors. (In short ... Myrtle, I didn't see this storm coming 'cause my dang barometer is busted).

His response was as soothing as aloe-vera to a burn, as he went on to describe a number first hand experiences of his own from several decades ago that corroborate, in a general way, the currently observed modus operandi of the "authorities" (read state dept. + wall street insiders (bankers)) to manipulate strategic markets (read commodity (particularly oil, gold, copper), currency, bond etc.) to the advantage of the "empire-state" et al.

Of course none of this is really new to the veteran GATA soldiers but one thing jumped out at me. He mentioned an article published in the Wall Street Journal by Alan Greenspan on September 21st, 1981. The essay apparently elaborates Alan's belief that, as fundamentally honorable as it would be, the US could not return/institute the "gold-standard" again because there simply was not enough physical gold available to facilitate such a venture. Therefore the authorities needed to make the dollar "as good as gold" (read strong-dollar policy). Alan then goes on to lay the intellectual background and mechanical foundation for how this could/should/would be done, including management of the gold market.

I realize that the past six years of toil has established the above as redundant, but, when one is courageously standing against the crowd and the corrupt, it is intellectually fortifying to habitually consume such nutritious fodder. It may be that a GATA soldier somewhere has access to a microfiche library and can exhume the aforementioned cadaver for further forensic festivities.

Stay Long and Be Strong,
Buena Fe

2/2/05 Business Day

Rand puts DRDGOLD's SA mines at risk'

--------------------------------------------------------------------------------

Resources Editor

DRDGOLD may have to close its South African operations unless it can cut costs, Merrill Lynch warned yesterday.

The warning highlights the crisis facing SA's marginal gold mines as the rand remains strong.

The financial management and advisory firm's warning was contained in a note to investors by mining analyst David Hall, sent out last month but released to the media yesterday.

Hall said DRDGOLD had "underperformed the sector for the past six months" as the strong rand cut margins.

Hall said DRDGOLD was " a company in two parts". It had profitable Australasian assets, while 60% of its gold was being produced in SA, at a loss.

"Remedial action on the South African assets involves drastically cutting costs," he said.

Hall said it would not be sustainable for the company just to mine its high-grade local ore bodies while awaiting a rebound in the rand-gold price.

He said the outcome of DRDGOLD's cost-cutting efforts should be clear by next month.

"The cost-cutting programme has yet to bring them into the black at the operating level."

Hall noted that DRDGOLD ceased producing quarterly results after June last year, and the latest available results showed the company had cash costs of R92814/kg with a gold price of R85811/kg a loss of R7003/kg.

"Clearly, losses cannot continue indefinitely, and if the mines are not returned to profitability, closure may be the only option."

Closure of the South African mines would involve "significant retrenchment and other costs".

DRDGOLD spokesman Ilja Graulich said yesterday: "We are currently in a closed period so we cannot comment on the company's financial position.

"Our most recent results are being reviewed by our auditors in the normal course of events and will be released on February 24.

"However, we are not aware of any causes for concern."

In November, DRDGOLD CE Ian Murray said the company had restructured its local operations and the "cash burn" was over.

-END-