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.
We were waiting for a strong move and we are seeing its start. But with gold we have to stop waiting for gold itself to move. Its moves could be gold moving or the dollar or the euro moving. This time it was the dollar re-commencing its downward trail.
In the euro gold is at €1,008 having been Fixed at €1,006.47 yesterday morning and at €1,013.44 yesterday afternoon. But the dollar has slipped to $1.4211 in London’s morning. This morning the gold price was Fixed at €1,006.47 and in the dollar at $1,431.
The gold price just ahead of New York’s opening was trading a $1,435.60 and the dollar at $1.4168. In the euro gold was trading €7 higher than this morning.
Gold – Very Short-term
Yesterday we said, “Gold looks as though it will continue to consolidate around €1,010 and reflect the exchange rate of the $: € in the dollar price ahead of a strong move either way.” We expect today will see the same with more volatility and an upside bias.
Silver – Very Short-term
Silver was Fixed at $37.87 trading at $37.75 ahead of New York. We expect it to hold current levels or rise as it continues to outperform gold, in New York today.
Silver & Gold Price Drivers
The series of dramatic crises we have seen from the middle of 2007 have been aftershocks of the credit crunch, but different to aftershocks in that they have proved worse than the initial credit crunch itself. The ripples of over-borrowing have flowed through to many, many governments and will continue to do so. From P.I.M.C.O. to Berkshire, respected U.S. investors are baulking at investing in U.S. governments debt and for good reasons.
We would suggest that investors stand back and see that each of the issues we are seeing as crises is structural and has become victim to flaws in the global financial system. For instance, take the criteria that would measure an individual borrower, who suddenly needs to borrow because business is bad and his present borrowings far too high for his fallen income. He goes to his bank for more borrowings and will get what from his banker. Why should nations think they can flout the principles that govern borrowing? It’s because politics is deemed of greater importance to transient politicians. What is needed is for politicians to respect the limitations that prudent borrowing demands. Now as they find that they are way over-borrowed and insufficient cash flow to repay and service such borrowings, prudence demands drastic action. But politics tells politicians that if they impose drastic actions, they will lose votes and positions. So long as there is someone else to blame the game will continue until the system crashes again.
Investors will never demand change, simply opportunities. Falling markets provide as many of them as rising markets. Is it any wonder that both gold and silver are being called, ‘safe-havens’, ‘wealth protectors’ and the like. Is it any wonder that the skeptics turn from financial systems and their products to precious metals? So far this turning to precious metals is only a trickle in the developed world, but should it move up to a small stream, precious metal prices will go far, far higher.
What we try to do at Gold Forecaster and Silver Forecaster, is to help professional investors to understand such structural flaws, fractures and crashes in terms of how they affect gold and silver. Reportedly we have done a good job to date.
[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].
