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 week started with a quiet Asia until just before London opened when it moves to $1,360 before gently slipping back until the morning Fix came in at $1,356.75. Again it was seen lower in the dollar but higher in the euro as the euro slipped back. In the euro the gold price was Fixed at €1,008.06 up almost one euro on Friday’s Fix. The euro in turn slipped to $1.3454.
Gold continued to be sold from the SPDR gold ETF in the States with sales on Friday of 2.4 tonnes. The gold market appears to be absorbing this amount easily. In fact it looks as though this is becoming part of the shift of the western wealth to the east. There appears to be little chance of the emerging east’s appetite for gold being satiated in the foreseeable future. The buying central banks have made that clear too. Of course, if this SPDR gold selling is either redemption of the gold to move it overseas or a sale to re-buy in a Jurisdiction outside the States then the gold will remain in Western hands.
Just ahead of New York’s opening the dollar gold price began to move higher at $1,362.70 in the middle.
For the chart Technicians this presents a slightly confusing picture, but we suggest that if you follow the line of the head of the World Bank, you see the currencies moving against gold. Quite an adjustment, but one we are highlighting in our work in the Gold Forecaster now.
Gold – Very Short-term
We repeat that Gold still has room to fall without affecting the consolidation process, as it is sitting at the top of its trading range. We expect a quiet day today in New York, but if SPDR gold shares sales continue it will have a downward impact on the gold price. It now appears that despite these sales the gold price is trying to move up, so we expect it to continue to attack overhead resistance in New York today.
Silver – Very Short-term
Silver is sitting at $30.13 ahead of New York’s opening. Again we expect little movement today, but if there is, it is likely to be on the upside in New York today.
Gold Price Drivers
One of the tribulations facing a financially tired world is the prospect of food inflation in the world. The most dramatic impact is in the poor parts of the world. With the weather aberrations this year adding to those of last years [droughts and floods in particular] we continue to expect food prices to rise. It was this that sparked the riots in Tunisia. No doubt we have not heard the last of them this year. Any government that does not take care of their poor’s food needs is likely to see social unrest. We have seen just how easy it is to topple a government. China in particular is fully aware of the dangers of food shortages. They are expected to double food imports of wheat this year. Russia is still on the ropes because lf last year’s droughts and fires too.
This type of inflation is insidious as it cannot be tackled by the raising of interest rates. It is likely that this issue will remain on our screens through 2011 and should the floods and droughts continue this year it can only get worse. Just how much this situation is due to global warming is impossible to measure. It is gold positive though.
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.
[The Gold Forecaster and Silver Forecaster are 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].
