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 looked promising in Asia when it rose to the $1,338 level. In London is sank as the European markets cam in and the euro continued to show strength. It Fixed at $1,333.50 and €976.32 still $14.5 and €14 up on Friday afternoon’s Fix. Ahead of New York’s opening gold was trading at a slightly lower [$2] lower.
There was a report that $850 million worth of gold was sold on COMEX by a $10 million fund. This equates to 18.9 tonnes of gold. Hedge fund SHK Asset Management liquidated a U.S. gold futures position this week valued at over $850 million, more than 10% of the main U.S. futures market. This caused a fall in the number of gold contracts on COMEX futures and Options market to plunge by more than 81,000, in their biggest single fall ever. It shows you how much leverage COMEX allows. But it was the margin pressure from the exchange that forced the sale of around 81,000 contracts in the week to the 25th January as it was raised to 25% by the exchange. But we doubt whether any gold was actually delivered. After all the COMEX gold Futures & Options market is a financial market which apart from around 5% of the trades leads to cash being paid and no gold delivered.
Gold – Very Short-term
Again, Gold is in a consolidation mode still we expect it to tend slightly weaker today in New York.
Silver – Very Short-term
Again Silver is in a consolidation mode still we expect it to tend slightly weaker today in New York.
Gold Price Drivers
It was New York that took the gold price up on Friday. Once the gold price hit support at $1,310 it had gone too far. Traders closed positions taking profits and bargain hunting came in. There are many buyers who wait for such falls and take offers presented to them. Often that ensures quantity and good prices.
What we expect now is common to all consolidation phases, when buyers hold back letting prices creep up before they pay that extra and sellers realize that the drop they hoped for isn’t coming so raise the price they sell at. Eventually after a great deal of to-ing and fro-ing buyers and sellers balance out, then we see a strong move.
Of course any dramatic news affecting the gold price sets markets ablaze.
With the Asian Lunar New Year coming later this week Asian demand remains strong as gold bars in Hong Kong are trading at $4 premiums there. This is the highest level they have been for 17 years.
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