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 showed it had put the $1300’ in its wake yesterday as it moved up. The Fix in London this morning was at $1,414.50 and €1,025.59. After the Fix, it stood at $1,416.65 and €1,028.27 ahead of New York’s opening.
While gold did rise in the euro it was a small gain of €1 on yesterday afternoon’s Fix. The rise in the dollar price was due to a falling dollar now standing at $1.3768 against the euro and down against the Japanese Yen and the Swiss Franc.
Gold – Very Short-term
London lifted the gold price to $1,414 and we expect New York to hold it there or take it better. It depends on how New York handles the $: € exchange rate. If the dollar keeps falling, gold will keep rising in New York today.
Silver – Very Short-term
Silver Fixed in London at $33.28 slightly down on yesterday’s Fix. Silver pulled back as gold rose. Perhaps silver is ahead of itself momentarily. We do expect it to hold these levels or to rise today in New York.
Gold Price Drivers
It is beginning to look more and more like inflation is taking off. The market believes that the Eurozone will begin to lift interest rates first, ahead of the U.S. This is taking the dollar down on foreign exchanges. With the rise in interest rates being driven inflation we fully expect real interest rates to stay at zero or negative. A rise in interest rates at this time is for the wrong reasons and may well extinguish growth in the developed world as energy and oil prices absorb much of the discretionary spending in those worlds.
This may lead to ‘hot money’ used by the ‘carry trade’ to slosh from one market to another hurting emerging economies as they see cash flee their shores. This process will also hurt global growth producing Capital Controls on outflows on the one hand and the lessening of long-term capital investments on the other.
This takes us into the market cycle when cash is king. But in this global village of a world, it is not enough to say ‘cash’. We need to know which country’s cash? Cash is vulnerable to the exchange rate of the nation that printed it, but the cash that produces a capital gain and is acceptable to all nations is gold. That’s why it is rising in all currencies right now.
When ‘cash is king’ equity and fixed interest markets fare badly.
Currently, we are presenting in the Gold Forecaster, a series called “Financial Earthquakes”, covering the main crisis areas in the financial world and what they could lead to.
[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].
