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Endeavour Completes Sale Crew Gold & Conf Call

Endeavour Financial Corporation is pleased to announce that it has completed the previously announced sale of 46,203,403 common shares of Crew Gold Corporation representing a 43% interest to Severstal Gold for US$215 million in cash.

As announced on September 8, 2010 — Management has scheduled a presentation for Wednesday September 15, 2010 that will be webcast by V-Call at 11:00am Eastern Standard Time and can be accessed from the Corporation’s new website at www.endeavourmining.com or by calling the operator at 201-689-8567 or toll free 1-877-407-0782 prior to the scheduled start time. The call will be archived for later playback on Endeavour’s website until September 15, 2011.

Nine Bullish Arguments for Gold

By Frank Holmes, Sept 10

Dr. Martin Murenbeeld, chief economist for Dundee Wealth Economics and one of the smartest gold minds around, recently released his latest chart book – hundreds of useful visuals to help him tell the gold and commodity stories.

Dr. Murenbeeld also outlines his nine bullish arguments for gold.

  1. Global fiscal and monetary reflation – The world’s major economies have taken on extensive amounts of debt to keep their economies afloat. The struggles of Greece and other nations in Western Europe haven’t gone away. The U.S. has spent hundreds of billions of dollars in stimulus money and is still losing jobs.
  2. Global imbalances – The dollar has benefited from the troubles in other countries in its role as a relative safe haven. “Relative” is the key word – roughly $10 trillion is expected to be added to the U.S. federal debt burden through 2019 and the U.S. trade imbalances are huge. These trends stand to weigh on the dollar and support gold’s safe haven status over the longer term.
  3. Global foreign exchange reserves are “excessive” – Global foreign exchange reserves have expanded exponentially in just the past few years, reaching $8.17 trillion in April 2010. Meanwhile, the gold reserve ratio has dropped significantly since 1980.
  4. Central bank attitudes to gold – Under the current central bank selling agreement, only the International Monetary Fund has been a seller of gold. Latin American countries, who were net sellers of gold up until 2002, are now buying gold again. India purchased 200 metric tons from the IMF in the fourth quarter of 2009, setting a floor under gold just above $1,000. China has increased its gold reserves from 395 metric tons in 2001 to 1,054 metric tons as of the end of the first quarter—a 166 percent increase in less than a decade.
  5. Gold is not in a bubble – Gold’s run has been slow and steady. As I mentioned last week, we’re not seeing large price spikes that are typical with bubbles. The chart below illustrates just how different gold’s current bull run has been from previous ones. A key difference today is that we’re seeing greater affluence in the developing world, where people have traditionally turned to gold to store their wealth.
  6. Mine supply is flat – World mine production is about 2,500 metric tons—roughly 25 percent higher than it was in 1990—but net mine supply is less than it was 20 years ago. Dehedging, increased scrap supply, lower grade discoveries and higher replacement costs will continue to constrain supply. We’re already seeing this affect the marketplace. During the second quarter of 2010, gold demand rose 36 percent year over year, while supply was up just 17 percent.
  7. Investment demand – Investment demand in the second quarter of 2010 more than doubled compared to the same period in 2009, and accounted for more than half of total global demand. Investors bought the most gold since the first quarter of 2009, at the depths of the Great Recession.
  8. Commodity price cycle – Commodity price cycles tend to last multiple decades. Going back to 1800, the shortest gold cycle is 10 years and shortest copper cycle is 14 years. The current bull cycle began in 2001.
  9. Geopolitical environment – Historically, gold has performed well in times of political and financial turmoil. Gold hit an all-time high (inflation adjusted) in 1980 amid the Iran hostage crisis and the Soviet invasion of Afghanistan. Today’s geopolitical climate is also volatile given the ongoing wars in Iraq and  Afghanistan and the pursuit of nuclear arms by Iran and North Korea.

 

With these nine factors, Dr. Murenbeeld makes a strong bullish case for gold and others seem to agree. A Bloomberg survey of 29 analysts last week reported that they see gold prices averaging $1,500 in 2011—a 20 percent jump from current levels.

Does the Fed Ultimately Control Interest Rates?

By Michael Pento, September 13, 2010

In forecasting the consequences of current economic policy, many pundits are downplaying the risks associated with the surging national debt and the rapid expansion of marketable Treasury securities. Their comfort stems from the belief that a staggering debt burden will be manageable as long as interest rates remain extremely low; and, as they believe the Fed is in complete control of setting rates across the yield curve, they see no danger of rates ever rising past the point of comfort. Those who subscribe to this fairy tale forget that, in real life, there are many more hands on the interest rate steering wheel.

The Congressional Budget Office estimates that the 2010 deficit will exceed $1.3 trillion and total US debt now stands at $13.4 trillion (92% of GDP). That’s a lot of debt that needs floating. Yet, the 10-year note is yielding 2.8%– which is 4.5 points below its 40-year average of 7.3%! Experience teaches that even moderately long-term investors should be expecting rising rates. Regardless of the extreme and obvious misalignment of fundamentals and bond prices, the mantra from the dollar shills remains firm: “The US dollar will always be the world’s reserve currency, and the US bond market will always be regarded as the safe-haven depository for global savings.”

With interest rates having been so low for so long, it’s understandable that many people have forgotten that central banks are not ultimately in control of interest rates. It is true that the Fed can be highly influential across the yield curve and can be especially effective in controlling the short end. But, in the end, the free market has the last word on the cost of money.

Although the Fed has certainly created enough new dollars to send prices higher, recessionary forces are, for now, disguising the evidence of runaway inflation. But when inflation finally erupts into the daylight, it will be impossible for borrowing costs to stay low. No one can realistically be expected to loan money below the rate of inflation. To attract buyers, the Treasury will have to offer a real rate of return.

Since our publicly traded debt level is increasing while our personal saving rate is not, we must inevitably rely more and more on foreign creditors to purchase our bonds. The problem is that the Chinese have been net sellers lately, and the Japanese saving rate is chasing ours down the tubes. Europe is also clearly suffering through their own sovereign debt issues. If not the Fed, who then will buy?

At this point, many economists breathe a sigh of relief. Since the Fed has no investment objectives, it could care less how much it loses by buying low-yielding Treasuries. Given that the Fed has an unlimited supply of dollars to buy such debt, it could simply choose to pressure rates lower indefinitely, so long as that policy stance is deemed necessary for a weak economy.

I concede that the Fed can always place bids for US Treasuries, and keep those rates low, but does that mean all debt markets will follow suit? Will private banks continue to offer rock bottom mortgage rates if housing defaults soar or inflation rises? What about the corporate bond market and municipal debt? Can the Fed order a bank to loan to a company at a rate the bank does not find profitable? The only way to keep rates in all debt markets in line would be for the Fed to buy all kinds of debt, not just Treasury debt. Such a policy has never been considered, let alone attempted, by any major economic power.

And what will our foreign creditors think about such a strategy? Anyone with the ability to move investments outside the US dollar would clearly do so, to avoid the wholesale debasement that such an inflationary policy would create. Once you take the argument to its logical conclusion, it is plain to see how futile, ignorant, and dangerous an attempt to hold all rates down would be. Americans can only hope Fed Chairman Bernanke isn’t as foolish as his groupies.

Ask any historian of Germany, Argentina, Bosnia, or Zimbabwe why interest rates skyrocketed during their respective battles with hyperinflation. Why were their central banks unable to control borrowing costs?

In the end, central banks can only temporarily distort the savings and demand equation. The more the Fed prints, the higher the eventual rate of inflation will be. If mainstream pundits truly believe the Fed can supplant the entire public and private market for debt indefinitely, then I don’t want to be around when that fantasy inevitably becomes a nightmare.

This article is written by Michael Pento of Europac and with their kind permission, O B Research has been privileged to publish their work on our website. To find out more about Europac, please visit:

Endeavour Agrees to Sell 43% Interest in Crew Gold for US$215 Million Cash

Endeavour Financial Corporation is pleased to announce that it has signed a binding agreement for the sale of its shares of Crew Gold Corporation to Severstal Gold N.V. for US$215 million in cash. Endeavour had acquired its investment in Crew Gold at a total cost of US$134.5 million such that the sale of this investment realizes a profit of US$80.5 million.

Neil Woodyer, Chief Executive Officer commented:
Endeavour has accepted the opportunity to exit its investment in Crew Gold at a significant profit which is a superior alternative to remaining in a minority shareholder position. The capital derived from monetizing this investment will be used to fund our growth and build value for Endeavour shareholders. Following this transaction Endeavour has approximately US$180 million of cash and access to a US$100 million Acquisition Facility. We are now in a position to aggressively seek acquisition opportunities in the gold sector

Full release

Orvana Announces Preliminary Economic Assessment for Copperwood Project

Orvana Minerals Corp announced today the highlights of their 43-101-compliant Preliminary Economic Assessment of the Copperwood copper project, Upper Peninsula, Michigan, USA.

The study contemplates a 10-year underground operation that applies room-and-pillar mining. A trade-off study determined that the most economic mining method is the use of a continuous miner, which is commonly used in coal, salt, trona, and potash underground mines. Processing would be by froth flotation.

Copperwood is an attractive copper project and we will work towards applying for a mine permit next spring, said Roland Horst, Chief Executive Officer of Orvana.
The state of Michigan considers mining essential to their future economic growth, and Copperwood can definitely be a part of that growth. We are encouraged by the communities’ support to develop the deposit and look forward to working with them to put the mine into production

Full release