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.
May Day in Europe is a holiday as was Friday, so the current market is thin and volatile not truly reflecting the gold and silver markets. The moves in the gold price are even attributed to the death of Osama bin Laden, although there are few men of investment prowess that would buy or sell gold and silver on that news. In Asia some speculators thought that a bear raid was in order in such a thin market, taking silver down below $43 but this raid petered out ahead of New York’s opening as silver moved back above $45.50. Of more importance is the sight of the dollar continuing to slip, now at $1.4845. There is no gold or silver Fix today. The gold price in the euro continues at higher levels of €1,047.98.
Please note that holidays are times of thin trading with speculators and traders having the run of the markets, but once the full global market is back in action then prices do truly reflect demand and supply.
After the Fix, but ahead of New York’s opening gold held at $1,556.25 and the dollar stood at $1.4850. This left gold in the euro at €1,048.
Gold – Very Short-term
The gold price is volatile today as Europe is on holiday so New York will be volatile and could show a negative bias today.
Silver – Very Short-term
Silver is recovering from the weekend ‘bear raid’, and should be volatile in New York, perhaps showing a negative bias in New York today.
Silver & Gold Price Drivers
Asia and New York are open today, Europe is not.
Asian speculators and traders took advantage of thin market conditions to ram the price down, but on small volumes. These days this can be a clever move for them, because they trigger stop-loss protectors. It does produce a false picture of the market, which can rattle the nerves of even the hardened traders. The sharp ones place buy orders below market levels in the hopes that these unrealistic prices are reached and allow them to buy into the markets at excellent entry points. But with thin markets comes small volumes. These are great for the day traders, but not for the large professionals. Hopefully, they don’t spoil the holidays of the average gold investors.
The big story for gold remains the falling dollar. This is and will cause havoc to so many markets and to global trade. The longer this persists, the smaller role that the dollar will have in the future in global trade.
In countries like South Africa the strong Rand is hurting the mining industry a great deal as profitability of metal sales is lowered. The bulk of South Africa’s international trade is conducted in the euro, hence that country’s imperviousness to the falling dollar. But as we can see over the last few years, South Africa is attracting less and less mining investment [the South African political scene contributes to this as well as the Black Empowerment movement overrules good investment sense]. In non-resource producing nations, dependent on the U.S. for the bulk of their international trade [such as Japan], the damage the falling dollar is doing is hurting the Japanese economy badly.
We cover the implications for gold in macro-economic and currency events in all the issues of the Gold Forecaster and the Silver Forecaster for subscribers. [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].
