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 and silver broke through resistance on Friday at $1,380 and just a business day later sits at $1,397.30 ahead of the London Fix. The dollar is slightly weaker only at $1,3697 leaving gold in the euro at €1,020. Again the dollar is not an issue today. Gold is independent of both right now, walking its own road. While SPDR gold ETF holdings fell half a tonne on Friday it has not affected gold prices.
Just ahead of New York’s opening the dollar gold price was at $1,386.0.
Gold – Very Short-term
Gold gulped down resistance at $1,380 and now stands close to $1,400 again. Its direction is clear. We expect a vigorous upward day in New York as the shorts have been caught on the bull’s horns.
Silver – Very Short-term
Silver too, chewed up resistance and spat it out and now stands at $33.40 and is free and clear of the $20’s. For those who have been forecasting pullbacks for so long it is times to look at the basic reasons they forecast so. We expect a strong day in New York.
Gold Price Drivers
We do not accept that gold is moving up on the Middle East crisis, but feel this is the work of excellent fundamentals in the market globally, but higher oil prices contribute indirectly to the rises. We wrote a pair of articles on the ‘validity of Technical factors’ as they applied to the precious metals markets and now see our conclusions borne out in the market already.
This is a very different market to that of the last century and the first decade of this one. Those who depend on the Technical picture to the exclusion of all other factors are paying a heavy price now and will continue to do so. Much more is involved in the precious metal markets that the factors that drive the Technical picture now. Ignore this to your further cost!
This week does see an extremely heightened start to the global markets due to the global changes happening in quick succession now. As we said last week, “Uncertainty in the global economy would rise dramatically, alongside oil prices.” And it is uncertainty that drives the gold and silver prices as much as the growing demand for them is, in Asia, where the motive is to secure financial security. In the developed world uncertainty and the search for profits is the driver. We would think that simply the cessation of selling in the developed world alongside the continuing demand from the East is sufficient to continue to drive gold and silver prices.
Now that Libya, at the moment, looks as though it is about to fall, Middle East revolutions are affecting oil prices. This will affect developed world growth should these higher prices be sustained. We feel for all those central bank governors trying their best to help their economies recover as international factors such as energy and food inflation mucks up their efforts. A sustained high oil price does have the capacity to bring on deflationary forces again. The new dose of uncertainty now added to previous levels will support the prices of precious metals.
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].
