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.
Asia found the closing New York prices a little rich for their blood and took gold down to $1,427 before London’s opening, but just before London opened the gold price moved back up to $1,430 ahead of the Fix. The a.m. Fix came in at $1,430.5 and in euros at €1,031.51. The dollar may well have seen the last of its support and stands at $1.3864 now and looking like $1.40 anytime now. [We do expect central banks to come in to take the steam out of the market soon. But this time it is likely to prove a costly exercise.
The Middle East situations look fluid right now. The difference between a civil war and a series of demonstrations is vast. Training, arming and organizing has to be done before demonstrations can evolve into civil wars. That can take months, if the revolutionaries are to be effective. Apart from Libya, the momentum in other countries is fading fast making civil wars look unlikely. As the steam disappears from many of these uprisings so the oil market will follow and prices slip in the oil market.
Gold – Very Short-term
The gold price is weakening out of London going into New York where we expect to see a lackluster day at record prices.
Silver – Very Short-term
After Fixing at $33.53 yesterday silver is now trading at $34.46 up strongly again. We expect silver to give a lackluster day at record prices, in New York today.
Gold Price Drivers
We are working on the WGC demand and supply numbers for subscribers. These numbers have enormous implications for this and next year at least. What is clear is that a strong gold price will not rely on events such as revolutions to make the price rise. Even interest hikes in the developed world won’t do that. But it’s not likely that interest hikes will come any time soon except to try to catch up inflation [the wrong reason unfortunately] as we saw today from the E.C.B. who left theirs at 1% again. What does this tell us?
To raise interest rates because of food and energy inflation [which will not be influence by such moves] would cut the feet from under recovering economies. When economies are strong they can bear this added weight, but not when confidence is low and spenders are weakened. To raise interest rates then would undermine confidence, which needs careful nurturing in the developed world. In the developed world holding rates down is gold positive, but the gold price is not rising because of European or U.S. purchases for investment. That influence is small compared to other demand factors. The gold market is changing and has changed dramatically in the last year. In 2011 it will change even more.
But changes in the gold markets will not be as dramatic as changes in the currency world, where day by day confidence in paper currencies continues to slip. Developed world demand for gold will be boosted slowly and cautiously by monetary confidence crises in the next two years, but will the gold be there to accommodated such demand?
[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].
