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.
A new week and a new world for gold and silver! Gold traded higher in Asia reaching $1,475 before London opened. At the Fix, the gold price dropped to $1,469.50 and €1,016.60, as the largest gold market in the world balanced demand and supply, the world over. The dollar is sliding against all hard currencies, but particularly against the euro where it fell to $1.4464 in the London’s morning. Yet again, the gold price is a dollar story not a jumping gold price!
The change in the market from last week was essentially ‘are we looking for it to pullback to the consolidation area?’ This week it’s, ‘$1,500 is in gold’s sights and silver has topped $40 convincingly.’ In the euro the gold price barely moved at €1,016 down from Friday’s €1,018.
After the Fix, but ahead of New York’s opening gold attacked the $1,467.75 level. >
Meanwhile, Silver moved over $41.25 after Fixing at $41.37.
The oil price is still rising, now at $112 for West Texas crude.
Gold – Very Short-term
The gold price continues to rise to record levels in the dollar, which should continue to fall. We expect dollar gold prices to continue to rise still, today in New York.
Silver – Very Short-term
Silver is amazing so many, but it may well continue to move to higher levels today in New York.
Silver & Gold Price Drivers
We are seeing record prices for gold and silver still. But these generate very little excitement except for those already invested in the precious metals, who are ecstatic. That’s because the dollar will keep falling, unless central banks move in to support the dollar [this would be foolish because they caused the shift with interest rate moves]. While the Eurozone interest rates are scheduled to rise another, at least, ½% this year still and dollar interest rates may not rise in 2011 at all [although some believe we will see a rise in June/July] the ‘carry’ trade feels safe in shoving the dollar down and the euro up. Germany has started the week informing all that Greece may need still more help. Are we cynical if we say that it serves Germany well to make statements that could cause a fall in the euro? The euro is hurting as it rises against the dollar and its export prices rise in line with these moves. We believe that the main reward for Germany in being part of the Eurozone was to escape the rises in the Deutschmark, which caused so much damage to Germany’s export pricing before the Eurozone was in existence. If we are right, don’t expect the Eurozone debt crisis to be resolved for a very long time!
The gold price rise in the euro still has to really reflect the global demand for gold, but as the east continues to see burgeoning economic growth, demand for gold and silver will steadily rise through this decade. We certainly see no froth on either the gold or silver markets.
It is remarkable how U.S. investors, in particular, are so few and far between in the precious metal markets. With the I.M.F. set to cut both Japanese and U.S. growth prospects today, the specter of ‘stagflation’ is still very much part of the developed world’s economic picture. The reason it is ‘gold positive’ is that any inflation in a world where there is little to no growth hurts far more than inflation does in a growing world. The presence of negative real interest rates is extremely pernicious to the value of savings causing many to move from deposits to precious metals. This is not only true of the Western developed world but in China where saving is a far more serious matter.
[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].
