Ann: Drilling Completed at Challa North, page-5

I am hoping to see the assay results of Challa North next week. It would be interesting to see if there were any high grade gold intersections.

Before we have received the assay results let's have a look at the gold market;

The only problem atm is the POG (Price of Gold) which is moving to the wrong direction. The POG is now US$1258 per ounce and it should have been going upwards due to the unrest in the current world economic and political conditions. However it is going down unexpectedly. The retail purchase is also week.

There should be more demand for physical gold in the market (see the reasons below).

If it breaks its resistance level at $1278 it may fly to much higher prices of 2012-2013 which was around US$1700-1900 level. That would be very profitable for the Aussie gold miners as the AUD is quite weak against USD.




The gold price always follows the silver price but it was performing better than silver in recent years. There are reasons for that;

• Under the Gold Shariah Standard, which was adopted at the end of 2016, gold trading has been approved in the $1.88 trillion Islamic finance business.
• Another monumental change is the growing importance of the Shanghai Gold Exchange (SGE). The contracts on the new exchange will be physically settled, and will be traded between bullion banks, refiners, producers and trading houses. In China, gold is money and is accepted as such by the general population.
• In November 2017, China, India, Russia, Brazil and South Africa, the major producers and users of gold, agreed to establish their own gold trading system using their own currencies, thereby by-passing the US dollar. Implementation will begin in 2018.
• While Chinese central bank holdings remain officially unchanged at 1,842 tonnes, or 1.5% of its FX reserves, China’s true holdings are unknown, as it acquires gold through its sovereign wealth fund, which does not report its holdings.
• The most important influence in 2018 and beyond is the announcement, made in 2017, that China will establish a gold-backed petro yuan. This will allow oil producers to sell oil to China in yuan, and then exchange yuan into gold via the Shanghai Gold Exchange. This will be in direct competition to the US petrodollar. Pricing oil in yuan will have a huge impact on the exchange value of the yuan, the US dollar and, correspondingly, the price of gold.

Gold supply is declining;

Annual mine supply is about 2,800 tonnes, and it has been in decline since peaking in 2016. It is projected to decline by 76% by 2029. New mines take about 19.5 years to go into production. No new major discoveries over 3 million ounces have been made since 2009.