Gold Market Commentary

• Update on Yanacocha: Yesterday, I commented on the civil disturbances that had recently led to the closure of the Yanacocha mine in Peru just a few days after mining companies operating in Peru had agreed to sign a "voluntary agreement" to a provide funding for local community projects. It appears that a settlement has been reached to end the blockade of the mine which, according to mine officials had led to daily ]lost revenues of US$1.9 million and the laying off of more than 1,000 contract workers. Not surprisingly, it was reported today at Mineweb.net that "business and mining industry leaders complained that the Peruvian Government's failure to remove protestors from blocked mine roads violated the spirit of the voluntary agreement." [http://www.mineweb.net/gold_silver/977288.htm

• China Unchecked: Looks like there is no end in sight to China's continuing economic growth with the latest Chinese estimates showing that theChinesee economy grew by 10.2% in 2005, a revisionn up from the previously estimated 9.9% pace. This despite a series of measures,includingg two Central bank rate hikes, aimed at slowing this run-away train. [http://biz.yahoo.com/ap/060830/china_economy.html?.v=7

• Hurricane Season "Disappoints": It appears that tropical storm Ernesto, briefly a category 1 hurricane, fizzled out before hitting Florida after projections last week had it possibly wreaking havoc among the oil production facilities in the central and eastern portions of the Gulf of Mexico. So far, the previously promising hurricane season has "disappointed" partly leading to the current decline in oil prices. However, the worst may yet be before us as hurricane seasonality will soon hit its peak.

• Update on USGL: U.S. Gold Corp (USGL)'s listing on the Toronto Stock Exchange was recently approved and U.S. Gold Corp started trading today on the TSX under the ticker UXG. Usually new listings for gold juniors are generally associated with a surge in the share price. Mysteriously, USGL has been down about 13.5% since last Friday, including a bizarre down and up day yesterday on 6 times regular volume.

• Odd News: Finally, in odd news of the week, Iranian President Mahmoud Ahmadinejad, challenged President George W. Bush to a television debate 2 days prior to the expiration of the U.N. deadline for Iran to cease uranium enrichment activities. While the thought of Ahmadinejad going tete-a-tete with Dubya on Larry King Live may be worth a chuckle, it also makes imminent U.S. bombing strikes on August 31 a little hard to envision in the wake of such a comical development. In any case, by consistently calling for further discussions, it appears that Iran may have maneuvered skillfully enough to possibly expose the divisions between the group of Western powers and China and Russia who do not share the West's same fervor for quick and vigorous action against Iran. This may mean that the expiration of the August 31 deadline may not immediately bring the expected fireworks that may have been a major catalyst for higher Gold prices in the short term. Nevertheless, it also reinforces Iran's position and leverage in this dispute and sets it more firmly on a Gold-bullish collision course with the West in the long run. In any case, we'll soon begin to see how this issue is likely to unfold.[http://edition.cnn.com/2006/WORLD/meast/08/29/iran.nuclear/index.html]