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.
On Friday the gold price managed to hit $1,357 in New York but then fell back to $1,347 where it held through Asia and into London on Monday, where it was Fixed at $1,347.00 after Fixing on Friday p.m. at $1,355,00. In the Euro it pulled back to Fix in London’s a.m. at €992.19 after the Friday p.m. Fix at €999.93.
Ahead of New York’s opening it was trading at the same level. Again the London Fix is where the gold price is being determined. There seems to have been a change of mood with the purchasing of 2.5 tonnes of gold on Friday to the positive on gold.
We expect Asia to remain quiet until the holidays are over, when we expect the gold-positive tone to return to their markets.
Gold – Very Short-term
After an initial fall in New York, we expect gold prices to recover leaving the gold price relatively unchanged to weaker in New York today.
Silver – Very Short-term
Silver was Fixed in London this morning at $29.21 after the Friday Fix at $28.91. We expect it to continue to consolidate but with an upside bias, again, in New York today.
Gold Price Drivers
The great concern over the Egyptian revolution continues to be the fear of contagion. All eyes are on Egypt to see which way events will go. After the initial shock and retreat by the government the two sides will see a polarization and a measuring up against each other. Events can still go any way at all. So far, Egypt is not affecting the oil price or the gold price. We do expect oil prices to continue rising, because of global demand [our views on the oil price are in the latest issues of the Gold Forecaster] growing at a steady and continuous pace.
What is of growing concern particularly in the emerging economies, such as India and China is inflation. While growth in India [8.6% projected] and Chine [double digits projected] inflation is being driven up by food and oil prices. We believe that mistakenly, interest rate increases will not tame this type of inflation, but simply curb growth. But inflation is taking both the Chinese and Indians towards the precious metals and will keep doing so for 2011 at least. Gold is not bought there simply for an inflation hedge, but for financial security. Inflation serves simply to emphasize that currencies offer no such protection there. It reinforces the positive views on gold and silver in those parts of the world. As that is where growing and already major demand for precious metals exists, this is good for the dollar and the euro gold and silver prices.
We are keeping our eyes on the gold ETF, SPDR to see if the selling has stopped as this was an influence last week on the gold price. It does appear that the selling in the U.S.A. did lead to that gold being absorbed in the east. We expect this to be the case in future days, but at what price?
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, as well as our gold forecast for 2011.
[Apart from covering the gold and silver markets Gold Forecaster and Silver Forecaster are structured in a way that gives perspective to macro-economic factors, from oil to currencies, covering the pertinent global gold and silver market influences that directly affect the gold and silver prices. It is a “must-read” for all who want to understand why the gold and silver prices are moving as they are and why.]
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