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 continued to be ‘Fix oriented’ and at first continued to hold between yesterday’s two Fixes, the morning Fix at $1,427.75 and the afternoon Fix at $1,432.00 at $1,429.75. In the euro, the gold price has fallen slightly [€2.5] over yesterday afternoon. This is not a sufficient move that should prompt a comment. The dollar however, continues to weaken at $1.4243. Please note that it is weakening in all the major currencies bar the Japanese yen.
The news from the Eurozone with reference to the Rescue fund to be in action by 2013 is not quite what the market had been hoping for and remains under the criticism of the E.C.B. We are worried that politicians have placed their priorities over those of the markets and will result in little confidence being expressed in their efforts. This ensures that the Eurozone will stay with us and will suppurate at some point.
In the U.K. and elsewhere inflation is rising [while some are calling it temporary] and ensuring that ‘real’ interest rates are negative. It is getting more and more difficult to see the ‘black swans’ in isolation. One has to juxtapose them now and gauge the effects of their joint impact. For gold and silver, this remains positive.
Gold was Fixed lower in both the euro and the dollar this morning in London at $1,425.50 and at €1,000.63 but then the gold price edged lower ahead of New York’s opening.
Gold – Very Short-term
Gold looks as though it will either hold these levels or tend weaker in New York today.
Silver – Very Short-term
Silver was Fixed at $35.05 and is now trading at $35.90. Silver is continuing to trade stronger than gold and is rising today too. We expect it to hold current levels or show a weaker bias in New York today.
Gold Price Drivers
Is there more to the Middle Eastern ‘revolutions / demonstrations than meets the eye in the context of the world economy and future events? The success of ‘the people’ in Tunisia and Egypt has been remarkable and even more so when you consider that these have been regions that have been ‘tranquil’ for 40 years or so then in the space of a couple of months we are seeing attempts to topple seven governments two of which have been successful to date. The principle that government is subject to ‘the will of the people’ is a major departure from the Middle East concept that governments are fully dominant over their own people. The change is a sudden precipitation that has caught everybody off guard. But it is so fundamental a change that it is irreversible. We do expect that eventually any changes that do occur will feed through to the oil market. With the oil price holding high ground, that market is confirming that it shares the same opinion.
Indeed, a look at the developed world tells us that the political divides in each country that we are seeing have emasculated political resolve so that the needed hormone level for crisis fixing, including the proposals for fixing the Eurozone debt crises is insufficient to resolve fundamental problems that have become urgent. A fair analogy would be a patient in a hospital who is becoming too weak to undergo critical surgery. The patient is now vulnerable to a host of other ailments equally as dangerous as the one that caused the initial weakness. Where next? In such an environment there is little prospect of raising confidence, lowering uncertainty and stabilizing the developed world’s economies. In such an environment which fully reasoning investor is going to exit precious metals?
[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].
