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 Thursday, safe haven buyers continued to boost the gold price, lifting the metal to its highest level in more than two months.
Gold futures in New York for delivery in December, the most active contract, jumped to a high of $1,293.80, up 1% from Wednesday’s settlement price. It was another day of heavy volume with 23m ounces traded by lunchtime. Gold is up 12.3% so far in 2017.
Don’t let traditional biases, rather than an excellent analysis, stand in the way of you doing this (and if you do have an excellent analysis of why you shouldn’t have such an allocation to gold, we’d appreciate you sharing it with us.)
Gold’s rally was sparked by comments from US President Trump who said in response to reports North Korea has developed miniaturized warheads, that further threats from the country would be met with “fire and fury like the world has never seen.” The totalitarian state then threatened to fire ballistic missiles towards a US military base on the island of Guam west of the Philippines.
Gold bulls also received support from the world’s largest hedge fund – Bridgewater Associates – advising clients to invest 5% to 10% of their assets in gold. Business Insider quoted from the note written Wednesday by the founder of the $160 billion fund Ray Dalio and staffers Bob Elliott, Steven Kryger and Neil Hannan:
Most immediately, during the calm of the August vacation season, we are seeing 1) two confrontational, nationalistic and militaristic leaders playing chicken with each other, while the world is watching to see which one will be caught bluffing, or if there will be a hellacious war, and 2) the odds of Congress failing to raise the debt ceiling (leading to a technical default, a temporary government shutdown, and increased loss of faith in the effectiveness of our political system) rising. It’s hard to bet on such things one way or another, so the best that one can do is be neutral to such possibilities.
When it comes to assessing political matters (especially global geopolitics like the North Korea matter), we are very humble. We know that we don’t have a unique insight that we’d choose to bet on …We can also say that if the above things go badly, it would seem that gold (more than other safe haven assets like the dollar, yen and treasuries) would benefit, so if you don’t have 5-10% of your assets in gold as a hedge, we’d suggest you relook at this. Don’t let traditional biases, rather than an excellent analysis, stand in the way of you doing this (and if you do have an excellent analysis of why you shouldn’t have such an allocation to gold, we’d appreciate you sharing it with us.)
2 Comments
Goldfinger
Wait for the monkey hammer. Its coming. The gold price will not be allowed to reach its natural level and threaten the USD or the Euro.
PRINCE A D GAISIE
Like President Trump is saying North Korea has been tounting the Asia neighbours for 25 years and no body has called them to order. So he has come to call North Korea to order. The world would see something it has never before. The conditions are choatic and the raising of tensions is impacting economics that is why Gold Price is on the roller coaster.