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.
Gold held at New York’s closing level of $1,486 in Asia on Monday before slipping slightly in London to fix at $1,484.50. This is somewhat misleading because the dollar recovered to $1.4300 on Monday up from $1.44 on Friday. Hence in the euro gold is slightly stronger at €1,036.81 up from Friday’s p.m. fix of €1,023.81.
While most people look at gold in the dollar we expect to see demand and supply factors overlain by the dollar’s exchange rate movements against the euro. Nevertheless, gold is at record levels now having see a very short and not so sharp correction last week.
In silver, prices reached new record highs at over $43 again as it turned to the upside after last week’s small and quick correction. The silver fixing was at $42.79. In the euro we saw a fix at €29.94.
After the fix, but ahead of New York’s opening gold suddenly broke higher and rose to just under $1,500 at $1,493.85. This was a jumnp in the euro price of gold to €1,042.43. Meanwhile, silver also broke higher to $43.15 and moving higher. The dollar stood at $1.4330.
Gold – Very Short-term The gold price is sprinting again so we expect a positive day for gold in New York today.
Silver – Very Short-term Silver is in new territory so we expect prices to continue to show a positive bias, in New York today.
Silver & Gold Price Drivers The dollar-euro gyrations continue to cloud the moves in the gold price and belie that persistent force of Asian demand. So many investors are turning to the charts to try to get a fix on where the gold and silver prices are going next.
However, the new demand from Asia does not act like the developed world investor and so the technical picture is not proving as reliable as investors hope. Take last week. A good correction was expected in both gold and silver, but instead we got a short, small correction before they both resumed their upward tack. Such small reactions are also dictated by the large number of buyers, including central banks, who sit on the sidelines waiting for the “dips” to pick up all stock on offer. These buyers are not price chasers, only volume chasers. Of course, it is the dips that provide the most sellers with the greatest price flexibility. Because of the size of these buyers, they are not too demanding pricewise, so shorten the dips and lower the size of the falls.
With the increasing extent of the Eurozone problem now in play this week, the market is watching to see what Portugal will be given as a bailout.
And now the first signal for the start of the U.S. debt crises has arrived. Standard & Poor’s cut its ratings outlook on the U.S. to negative from stable while keeping its Triple-A rating. They said, “More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures. We can now expect the financial world to add to the pressures on the political world and undermine the U.S. dollar in the process. With investors in gold moving to hold allocated gold in major banks, the realization of the extent of the developed world financial crises is coming.
We will issue an article on the switch to allocated gold in the next issue of the Gold Forecaster and Silver Forecaster.
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