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 gold price rose overnight to $1,432 and €1,012. Initially London tried to pull it down a dollar and a euro, but just ahead of the Fix gold started to climb again. The gold world is still fixated on the Fix. The apparent stability in the dollar euro exchange rate is misleading. The dollar continues to fall as is shown by the dollar index, moving well below last support. This time however, on the back of Portugal’s impending bailout the euro is falling at the same pace. Meanwhile gold appears to be on the rise in the dollar and did hit a record at the afternoon Fix yesterday of $1,447.00. In New York it then fell back to $1,432 at the close. The gold Fix this morning was at $1.434.00, in euros €1,012.35 with the $: € and trading at $1,435.30 after the Fix. The dollar moved to $1.4172 against the euro.
The gold price just ahead of New York’s opening was trading around the Fix of $1,434.00 and the dollar at $1.4127.
Gold – Very Short-term
Gold looks as though it will tend stronger in New York today.
Silver – Very Short-term
Silver was Fixed at $37.78 yesterday and is now trading at $37.60. a very robust performance even against gold. Silver is continuing to trade stronger than gold and is rising today too. We expect it to hold current levels or show a stronger bias in New York today.
Gold Price Drivers
The Eurozone bailout fund has been agreed at €550 billion. This will accommodate Ireland, Greece and Portugal. If Spain then joins the party they, being twice the size of Ireland, Portugal and Greece put together, then that €550 billion will have been used up. Thereafter, the future composition and financial credibility will be on the line. Economists and bank currency strategists are split on whether Spain is in danger of needing a bailout. If global problems worsen, if growth in Europe wanes, then Spain is in trouble for sure, with a decimated building industry and a lackluster tourist industry [the backbones of the economy]. Of course by then we expect to see similar tales from the U.S.A.
This weekend will see the E.U. leaders attempt to bed down the ‘rescue fund’. No doubt they are aware of the need to take it even further if Spain stumbles.
The developed world needs what China has now. But the Chinese are wise enough, in the midst of the most fantastic boom, to buy gold, buy silver, buy gold, buy silver…..
What we do need to point out is that giving Portugal and Spain a bailout to carry them through does not solve their problems. It simply passes the buck to a friendlier creditor, with more to lose on their default than current creditors. Whether they like it or not the Eurozone is now a political animal not just a financial animal and as the performance we have seen to date does not inspire the confidence that the political master of the zone have the willingness or the competence to resolve Eurozone problems. We therefore expect to hear of Eurozone problems for years to come.
What’s really driving the gold price? Well, it’s not about gold! We are covering this in the next issue of our newsletters.
[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].
