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.
Gold grew stronger overnight as high as $1,245 before pulling back to $1,334 ahead of the Fix. When the Fix was set, it was higher at $1,337.50 and at €975.22 only €2 higher than yesterday’s afternoon Fix. Ahead of New York it rose over $1,339.29. The euro remains strong at $1,37.21. Once again the rise in the dollar gold price was entirely due to the fall of the dollar against the euro. No further sales from gold ETF’s took place during the last day.
Heavy physical demand is coming into the market from $1,320. In particular Indian buyers have always favored buying gold ‘on-the-dip’.
Gold – Very Short-term
Gold has moved into its consolidation mode and could well go either way within the trading band it is shaping now with $1,320 at the bottom. Today is an up day though. We expect it to tend to consolidate at around these levels today in New York.
Silver – Very Short-term
Silver struck support in the mid-to-high $26 level and is now at $27.5. Like gold today is an up day, but we expect the consolidation mode to persist this week in New York.
Gold Price Drivers
The World Gold Council issued its fourth quarter report for 2010, but not for the full year [we expect that to come out in February]. A significant feature of the gold market in the last year has been a rise in Jewelry demand of 19% and a rise in technology and industrial usage of a similar amount. This is in the face of a high gold price. The acceptance of the high gold prices tells us that we should see a full recovery and rise in its use, particularly as spenders recover from the financial beating they have taken over the last few years. We have to qualify that by saying that if there is a good price rise in 2011 then we may see Jewelry demand slow, but be replaced by more investment demand. Once we have the full year’s report we will be analyzing it and extrapolating our conclusions.
We may well see more debt-drama in 2011, but this time coming from the U.S. of A. The ratings Agency will be including the state of the states pension situations. In a large number of states these are indicating that the states are in reality bankrupt. While the Fed has indicated they will not bailout the states, we expect them to do so. Nevertheless, the experience is likely to be equally if not more dramatic than the present Eurozone experience.
The Fed gave a sobering report on the U.S. economic situation saying that the recovery is disappointingly slow’ and insufficient to have a large impact on joblessness. With interest rates staying at current levels going forward, this was gold positive.
[Apart from covering the gold and silver markets Gold Forecaster and Silver Forecaster are structured in a way that gives perspective to macro-economic factors, from oil to currencies, covering the pertinent global gold and silver market influences that directly affect the gold and silver prices. It is a “must-read” for all who want to understand why the gold and silver prices are moving as they are and why.]
Subscribe at www.GoldForecaster.com or for silver at www.SilverForecaster.com].
