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’s Daily Review:
It was a strong start to the week today with gold moving up in London to Fix at $1,427.75. In the euro, gold Fixed at €1,007.94 today. The dollar is showing no strength, simply holding its ground for a while before falling lower.
What is important is that gradually the systemic faults and appearing fractures are translating into a climate [not just a passing shower] of uncertainty and instability. What appears to be, moves by governments and central banks, such as supporting a lower Yen is breeding further situations that will lead to more crises. The ‘carry trade’ had borrowed in Yen at nearly no interest rates and invested in higher rate currencies. The rally in the yen had led to an unwinding of these taking the Yen higher. With central banks defending the Y80 + level, this trade will reopen positions selling the Yen. This looks good at first but builds in a potentially huge wave of future upward pressure on the Yen if interests start to rise in Japan.
Gold had moved up to trade at $1,420.65 and €1.004.99 and the dollar at $1,421.36 just ahead of New York’s opening.
Gold – Very Short-term
Gold looks so much stronger today and we continue to expect strength in New York today.
Silver – Very Short-term
Silver is trading at $36.16 and is now trading slightly lower at $35. Silver is marking tome at the moment, bur should shortly start to move with gold again in New York today.
Gold Price Drivers
What seems to be under-reported is that the U.N. has gained some teeth and nations are feeling so much more comfortable under its wing. We expect this cooperation to grow and allow the ‘buck’ to be passed to the U.N. from individual nations. This will not detract from problems being ‘national’ but allow major problems to be handled by the amorphous U.N. We expect them to have their hands full with international problems in the future. The U.N. actions in Libya we feel, has simply reduced the prospects of an early change of regime to those of a protracted and very bloody civil war. It is possible that we will see a relatively long-term split in Libya between east and West Libya. This is oil negative, as it will ensure that the 1.6 million barrels a day will not reappear on the world market for some time. It extends time that the oil price will remain high.
What must be realized in the world economy is that regime changes without a continuation of economic stability is not only capable of economic stress but of the rise of a type of politics that may not promote stability in the oil world.
A lengthening of food and energy inflation worldwide will not serve the global economy at all at a time when interest rate rises are restricted by the damage they will do to economic growth. This is gold positive.
The fundamental picture for both gold and silver continues to be enormously positive for the foreseeable future. Further benefitting, gold and silver is that few of these are dependent on politics or transitory events, but on long-term factors that will last for a decade or more across the world.
[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].
