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 Today – The gold price consolidation is pointing higher with New York closing around $1,390, where it held through Asia and London’s morning ahead of the ix. It Fixed at $1,385.25 down $0.75 on yesterday’s Fixing and in the euro at €1,068.948 down €6.0, while the euro was slightly changed at €1: $1.2959 up 75 cents against the U.S. dollar. Ahead of New York’s opening it stood at $1,391.00 and in the euro at €1,073.18.
Silver Today – Silver closed at $22.50, in New York yesterday. Ahead of New York’s opening silver stood at $22.50 again not reacting to the gold’s moves.
Gold (very short-term)
The gold price should continue to consolidate below $1,400, in New York today.
Silver (very short-term)
The silver price will follow gold, with a steady bias, in New York today.
Price Drivers
Gold & Silver – The SPDR gold ETF saw sales on Thursday of 2.703 tonnes making 25.783 tonnes sold this week so far from the SPDR gold ETF. The selling was sufficiently small to allow the gold price to remain strong in New York holding at $1,390 until the Fix in London on Friday. Today the strength of gold persisted ahead of New York’s opening. We are now looking not only to see when the selling from the SPDR gold ETF halts, but whether bold buying is overwhelming the selling from there now. Currently it seems as if it is. This is positive for the gold price.
Elsewhere in the world demand for gold remains strong. Central banks bought 109 tonnes of gold in the first quarter of 2013. But the heavy demand for gold still comes from Asia.
In India May 16th is the time the marriage season ends, despite the ‘official’ extension of the season into July. This affects all Indian Hindu gold buyers, even with increased urbanization, removing the seasonal impact on cash flows to investors to a large extent. The Monsoon season is now almost upon us and in the past affected 70% of Indian gold buyers. With rapidly increasing urbanization that number had fallen quite substantially. It is the religious influence of the ‘auspicious’ times to buy that dominates all Indians. We expect demand from them to return with gusto in September. Wholesalers [if they are allowed to do so now] buy through the summer, ‘on the dips’ ready for the Fall. Smuggling of gold is now gaining momentum. We expect to see a growth in the imports of silver into India as this facilitates gold smuggling.
But Chinese buying of gold is very robust presently and growing as the gold price stands at present low levels. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]
On the supply side as we have highlighted before we are seeing a rapid contraction from scrap sellers as well as from newly mined gold, barely breaking even now in some mines.
Silver – The silver price remains steady waiting for a clear direction from gold. It will take a breakout from gold to make silver move strongly, either way.
