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.
With the year showing some evidence in both Europe and the States that the recovery is gaining real traction, the weaker holders of gold sold gold down to €1,039 at the afternoon Fix, down €22 from its peak and $1,368 down from $1,420 from this year’s peak. This we do not see as a change in trend yet as it is contained within the consolidation trading range of the last few weeks.
There are a number of gold investors that believe that a recovering U.S. economy warrants selling gold. Memories seem to be short for gold rose from $275 to $1,200 while the U.S. economy was strong up to 2007.
The Sovereign debt crisis is back with us with Portugal Greece and Ireland still in the firing line. A look at Ireland’s rescue package is telling us all that it is becoming increasingly likely that the country will have to renegotiate the accord. Irish Finance Minister Brian Lenihan said a default would “destroy” the country. It is felt that the ceiling before a default of capital to be put into the banks is €10 billion. But there’s a high probability a government would have to renegotiate on sovereign debt if the bank costs move beyond that. A new opposition government would want to negotiate interest rates down anyway. The next government “is bound to repudiate the current arrangements,” said George Soros. Failure to do so “could lead to the destruction of the political and social cohesion of the EU.” Greece is not out of trouble either as Greece unofficially informed EU officials and the European Central Bank that after 2013 it will seek an extension on all outstanding debt and a reduction in interest charges.
The Gold price Fixed in London at $1,376 up from $1,368 but with a stronger dollar it Fixed in the euro at €1,050.7 up from €1,038.12 yesterday afternoon.
Apart from covering the gold and silver markets Gold Forecaster and Silver Forecaster are structured in a way that gives perspective to macro-economic factors from oil to currencies covering the pertinent global gold markets that directly affect the gold price and some that simply influence it. It is a “must-read” for all who want to understand why the gold price is moving as it is and why. It also aims to help you understand why currencies and today’s national economic problems are influencing the global economy and the precious metal prices [we cover platinum in the Silver Forecaster too]. Subscribe at www.GoldForecaster.com or for silver at www.SilverForecaster.com].
Gold – Very Short-term
The gold price is likely to steady at current levels with an upside bias in New York today.
Silver – Very Short-term
The silver price is likely to steady at current levels with an upside bias in New York today.
Gold Price Drivers
The fact that the ‘recovery’ appears to be gaining a real foothold is good for all. But it won’t solve the monetary problems the world faces. We do see interest rates rising too. But is that a sufficient reason to sell gold? We think not. When an overspent over borrowed man offers you higher interest payments on a loan he wants from you, is that sufficient to make him a good borrower? Gold’s driver will not be national economies it will be the structure of the international money scene and the financial relationship of each nation within the global economy to others. Warren Buffett has the right idea – issue low fixed rate notes as you expect rates to rise then buy them back at a much lower price once interest rates rise and prices drop. Then the reason why rates rise doesn’t matter! We think interest rates will rise for the wrong reasons.
We suggest you subscribe to the Gold Forecaster and Silver Forecaster where we will explain our reasons why we feel so and continue to detail the when and the why the gold and silver markets will continue to thrive. There too, we will publish reports on companies like Coeur d’Alene [silver and gold] and other attractive junior mining companies in the gold and silver worlds.
