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.
Overnight gold moved up to $1,376 but pulled back slightly to Fix at $1,374.50 up $1.75 on yesterday afternoon’s Fix. In the euro it was down €1.5 on yesterday afternoon’s Fix of €1,016.78 to Fix at €1,015.14. These are small moves at the Fix but warn us that the longer the Fixes hold these levels, the greater the subsequent moves that will be made by gold and silver.
Another 1 ½ tonnes of gold was removed from the SPDR gold ETF yesterday, but it did not affect the gold price. The change in gold prices was really due only to currency moves in the exchange rate between the euro and the dollar.
Just ahead of New York’s opening the dollar gold price was $1 higher and up $10 on yesterday at $1,372.87 in the middle.
Gold – Very Short-term
Gold has intensified its attack on remaining resistance, but the outcome is not a foregone conclusion. Gold remains in a high-risk area where large moves could be made and very quickly. Which way? It could be either way in the very short-term. We did not see a vigorous day in New York yesterday so our expectations may well be seen today or even tomorrow.
Silver – Very Short-term
Silver was Fixed at $30.72 yesterday and is trading slightly above that level now at $30.76. The fact that New York did not see a vigorous day in New York yesterday tells us that the longer it trades at these tight levels, the greater the move it will make, but either way. As with gold, silver is in a high-risk area at the moment with a clear direction about to be given. Be ready for a vigorous day, if not today sometime this week.
Gold Price Drivers
We must beware of a mindset that tells us that reality occurs only in our country. We live in a global economy where so many countries face the global common denominators, such as the debt crisis. With Illinois facing a more difficult plight than Greece, we expect the paw-paw to hit the fan sometime this year. Other States are in a similar situation. With the likelihood of the two sides of the U.S. government unable to agree over budgets, politics is being treated as more important than finance. The harsh realities of life will bring home to the U.S. that other people don’t think that way. With the visible reality that fixed interest markets of all types are at their peaks and interest rates due to rise eventually, politicians should be ensuring that they will rise for the right reasons. Rising rates because of falling confidence is not good for the U.S. and we are seeing both local and foreign sales of Treasuries now. Rising rates to tame vibrant growth [once it is well established] is the right reason. Watch for the average life of Treasuries to shorten as a warning! It precedes a move to cash. Gold remains international ‘cash’.
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].
