Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
The gold price fell by nearly $10 on Thursday after confidence about a continuing recovery in the US economy received a boost from strong employment data.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery in after hours trade exchanged hands for $1,296.0 an ounce, up from Thursday’s regular trading session but down from yesterday’s close above $1,300.
Gold was hurt by news that the number of Americans filing for initial jobless claims fell below 300,000 a week for the first time since 2007. The news boosted the value of the dollar – the US currency and gold usually move in opposite directions.
Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, told Bloomberg the jobs numbers were “a big deal”:
“People are getting convinced that the economy is showing signs of recovery. People don’t need to invest in a safe-haven asset like gold when the economy is doing just fine.”
Not everyone was convinced that gold’s hard asset qualities were tarnished Thursday and holdings in SPDR Gold Trust (NYSEARCA:GLD), the world’s largest physically-backed gold ETF rose for the first time in over a month.
Holdings in GLD, which accounts for nearly half total holdings in the industry, jumped almost 2 tonnes to 782.25 tonnes or 25.1 million ounces on Thursday.
Allocated gold in GLD’s vaults are still 16 tonnes lower for 2014 and at levels last seen in January 2009.
After an atrocious 2013 when GLD recorded only 17 days of inflows and almost 540 tonnes left the fund, the tide seemed to have turned early in 2014 with holdings peaking at 821 tonnes in March before sentiment turned again.
Buying of gold ETFs trusts – sometimes referred to as the people’s central bank – since 2003 when the first of its kind was launched in Australia played a huge part in gold’s 12-year bull run.
Gold bullion holdings in global ETFs hit a record 2,632 tonnes or 93 million ounces in December 2012.
But last year the world’s more than a 50 physically-backed exchange-traded gold funds and scores more gold futures-based trusts experienced net redemptions in excess of 800 tonnes collectively.
