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.
With a regularity that begs some questions, gold again rose overnight, this time to $1,341 before London opened after Fixing yesterday afternoon at $1,331 and in the euro at €969.68. This morning in London it was Fixed at $1,337.00 only 50 cents down on yesterday morning, and in the euro at €966.59. It is difficult not to conclude that a large seller of the shares in the SPDR gold ETF is then buying physical elsewhere and holding it away from the U.S.A. The euro seems set to keep strengthening, while gold consolidates.
The Middle East revolutions continue with unrest now appearing in Yemen. That makes three revolutions in a week and one more to go. Whose next? Provided none of the oil producers gets sucked in [and Libya is in the firing line] the oil price is unlikely to be affected. In the 1968 Suez crisis and back as far as 1955 ships were sunk in the Suez canal. This seems unlikely at the moment, but some ships are re-routing not just for logistical problems but for the fear of the cost of being gridlocked in the canal.
Gold – Very Short-term
The trading range in gold’s consolidation period is holding between $1,333 and $1,342 now with a slight upside bias in the dollar and a slight downward bias in the euro as the euro looks set to tackle $1.40 shortly. We expect a quiet to slightly positive day for gold, in New York.
Silver – Very Short-term
Silver was Fixed in London this morning at $28.27 and is trading higher at $28.37. We expect small movements around current prices with a slightly upwards bias, in New York today.
Gold Price Drivers
The Middle East revolutions [three so far this week] will not affect the gold price unless one of the oil producers finds itself with one on its hands, such as Libya. The subsequent ‘spike’ in the oil price will bring more uncertainty then. Let’s be clear on oil though. Demand is very high as the east grows and the ‘recovery’ slowly grows [10% growth in the auto market expected in 2011 in the U.S.] and this is a long-term growth. Once oil does breach the $100 level [Texas prices] we expect O.P.E.C. will increase supply and keep on doing so until supplies are overtaken by demand. This will come with global growth and not because of revolutions.
It seems that many investors feel that the gold price should go down if the economic recovery gains traction. We would like to reiterate that it was during the boom years of 2000 to 2007 that gold had its greatest percentage growth period. We are of the opinion that that is not lost on the average gold investor who continues to hold gold. Given that there have been almost no changes to the monetary system until now, we can see no reason why the fractured monetary system should attract more confidence than now?
Currently, we are presenting in the Gold Forecaster, a series called “Financial Earthquakes”, covering the main crisis areas in the financial world and what they could lead to, as well as our gold forecast for 2011.
[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.]
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