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.
Global markets have decided that the situation right across the Middle East is going to get worse and may well threaten even Saudi Arabia. As a result the oil price is still rising, despite the reassurances of O.P.E.C. that they will supply any shortfalls that may arise due to these situations. Middle Eastern markets continue to fall too. At the same time one must be cautious not to be distracted from the ‘big’ picture. Britain is in the process of entering a double-dip recession, and may well be followed by some Eurozone nations. This will place additional pressures on these other countries in terms of the repayment of their ‘rescue packages. In Ireland a coalition government will immediately want to renegotiate the interest rate and term of their loans from the E.U.
This morning Asia took the gold price up from New York’s close on Friday of $1,405 to $1,414 before slipping slightly to $1,410. Again, because of the weakening dollar, the gold price in the euro fell further to Fix in London, this morning at €1,019.19 €2 down on Friday’s p.m. Fix. Against most currencies the dollar continues to weaken and stands against the euro now at $1,3837. Ahead of New York’s opening the gold price stood at $1,412.
Gold – Very Short-term
We believe that the froth has now gone from this market and that the gold price will better reflect fundamentals again. We expect, in New York, the gold price give a strong showing overall in New York.
Silver – Very Short-term
After Fixing at $32.44 on Friday silver is now trading at $33.44 up strongly again. We expect silver to give a strong showing in New York today.
Gold Price Drivers
With Middle East regimes under persistent threats now [which grow worse with each government that falls] the question of the dominance of the U.S.A. and the U.S. dollar pricing of oil will move to center stage. This points to a potentially major, structural monetary change that will affect the global monetary system. While the threat has been there for several years now, these regime changes may well accelerate the process.
As we move forcefully into “the age of consequences”, investors will slowly but surely start to think more like Asian investors, skeptical of any reliance on government or banks, indeed of anyone who wants to ‘control’ their money. In Asia we doubt that they will depart from investments completely under their control, for at least a generation. In the developed world that distrust still has to be developed. There is a long way to go before that happens. Meanwhile, the influence of Asia on the gold price alongside emerging nation’s central banks is growing by the day and will eventually dominate the gold price. The same will happen in the silver market too except central banks have not yet turned buyers of silver.
As it is the influence of traders and speculators on the gold and silver prices is waning as corrections prove shorter lived and shallower.
It seems that China imported nearly 100 tonnes more than expected in 2010 at over 300 tonnes, which added to their local production of 340 tonnes, making 640 tonnes used in China in 2010.
As we are all well aware the fundamentals for both gold and silver remain positive.
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