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.
Today we are writing this section from the euro gold price point of view to illustrate what’s happening to gold; the gold price continued to pull back as the euro price of gold stood at €1,030.41 ahead of the gold Fix. It has pulled back from €1,041 over the last couple of days and still is far away from its peak at €1,065.
However, across the Atlantic the dollar continues to fall against the euro and ahead of the first London Fix stood at $1.4631 and continues to look anemic. Consequently, gold stood at $1,507.65 before the first London Fix.
The London Fix continues to dominate the gold price in both currencies and reflects London and Asian demand accurately. The London afternoon Fix continues to reflect both European and U.S. demand for physical gold and the main global open market supply of gold. Prices outside the Fixes reflect the local conditions of each market where they are quoted. Physical supplies to those markets usually come either direct from individual suppliers or from London.
At the Fix in London gold was set at $1,507.00. In the euro it fell to €1,028.95, down €4 again on yesterday afternoon’s Fix.<
In silver, prices continued at a gallop, fueled by Asian demand. Up $1.50 on yesterday silver stood at $45.90 ahead of its London once-daily Fix. The silver Fixing was at $46.26, $1.5 up from yesterday. In the euro we saw a Fix at €31.65 up 80 cents.
After the Fix, but ahead of New York’s opening gold held at $1,504.85, but the dollar weakened back to $1.4556. This left gold in the euro at €1,033 again up from the Fix by €5. Meanwhile, Silver also held its high ground at $45.90.
Gold – Very Short-term
The gold is being directly helped by the falling dollar, which may well continue to fall. In the euro gold may be lackluster on the day. The U.S. dollar will dictate the gold price in New York today.
Silver – Very Short-term
Silver continues to outperform gold as it sees a greater wealth protection capability in Asia, at affordable levels. Asia should continue to dictate prices going forward with New York following in thin trade as supplies are shortening, in New York today.
Silver & Gold Price Drivers
We find that U.S. investors struggle to have a global view of gold and silver markets. There, gold is seen as having a pre-dominantly dollar price, whereas the euro price of gold more accurately describes demand and supply. As a result U.S. investors are excited by record U.S. dollar prices and fear they may fall back. U.S. dollar record prices are not due to record gold demand but to the falling dollar. A record price in the euro was seen a while back at €1,065. Should the U.S. dollar fall to $1.50 against the euro we must see the dollar price of gold stand at $1,597.50 if gold were to just equal record euro prices. If the dollar continues to fall thereafter, the gold price will move up through $1,600 and more, without moving up in the euro!
Until U.S. investors adjust to these realities, we expect only the more globally focused U.S. investors to value gold as a protection against a falling dollar.
We will issue an article on how the U.S. and Eurozone debt problems will continue to benefit the precious metals for a long time to come, in the next issue of the Gold Forecaster and Silver Forecaster.
[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
