Gold should not be following the Euro - they are in a different universe
The Eurozone crisis and its effects on global currencies and gold and silver is far from over. Gold has been following the Euro downwards, but it shouldn't be doing so.
Author: Julian Phillips
Posted: Saturday , 17 Mar 2012
BENONI -
I thought we could ignore the Eurozone debt crisis for a while, but it was not to be. The tone in Europe is not good. Apart from Italy paying Morgan Stanley $3.4 billion to exit derivatives they thought would help their debt burden it is becoming clearer that the trail blazed by Greece may be the one that Spain and Portugal may have to follow to their harm.
Let's face it if the recession in Greece is a depression then the protracted debt solution now achieved for Greece just won't work. Greece must default. But at least the long negotiations allowed the banks to get rid of a lot of debt and the E.C.B. has ensured no banking crisis will occur, but solutions, still elusive!
The euro's performance this week has reflected that tone, but amazingly the gold price has moved with the euro but in a more exaggerated way. Silver has been taken along with gold.
Gold is in a completely different world to the euro so it should not be following it.
Most observers have been conditioned to believe that gold will move in the opposite direction to the U.S. dollar. That's happened this week as the rise in Treasury yields attracts ‘carry trade' business home. But there is no ‘fundamental' reason why the dollar should rise. Yield rises pose great dangers to the U.S. and its economy. That's why the Fed wants rates held down for the next couple of years. They don't want the trouble higher interest rates will bring to the world. But they are coming.
Do yourself a favor and look at the structure of Indian gold Exchange Traded Funds. We thought they would never take off because of the link between government and the banks and the distrust Indians have in their own government. But these are very different from those in the developed world. These offer physical redemption of gold to investors. This allows the lines between long-term holding investors and the gold manufacturing industry to be blurred somewhat. But this still leaves control over investor's gold firmly in the hands of the banks. The banks hold that gold in a ‘pool' or allocated state.
Julian Phillips for The Gold and Silver forecasters - www.goldforecaster.com and www.silverforecaster.com
See the article online here: Mineweb.com - The world's premier mining and mining investment website Gold should not be following the Euro - they are in a different universe - INDEPENDENT VIEWPOINT | Mineweb
March 17, 2012
March 15, 2012
Chile’s mining woe supports #copper prices - FT.com
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Commodities,
News
Chile’s mining woe supports copper prices
“Declining ore grades” is not a phrase to set the heart aflutter. Even investors in the metals and mining sector may struggle to get excited about the subject after years of hearing it being deployed as a justification for higher prices.
But the issue has rarely been such a potent force in the market. The fall-off in ore quality at ageing mines is behind a stagnation in copper production in Chile, the world’s top miner of the metal with a third of global output, since 2006.
The start of this year has seen an acceleration of the trend: Chilean copper production was down nearly 8 per cent year on year in January, and by about 20 per cent from December.
That is a shockingly large number. To put it in context: the drop in Chilean production in January is equivalent in terms of its impact on the copper supply-demand equation to a 5 percentage point acceleration in Chinese consumption growth.
Analysts have been scratching their heads ever since the headline numbers were reported a fortnight ago by INE, Chile’s statistics institute, to determine what could be behind the sharp decline.
The grim reality is that no single factor drove the fall: instead, according to mine-by-mine data recently published by Cochilco, Chile’s state copper commission, nearly every large mine in Chile suffered a fall in production in January from December. Most of Chile’s largest mines saw double digit percentage falls in output year on year.
Read the rest of the article online here: Chile’s mining woe supports copper prices - FT.com
“Declining ore grades” is not a phrase to set the heart aflutter. Even investors in the metals and mining sector may struggle to get excited about the subject after years of hearing it being deployed as a justification for higher prices.
But the issue has rarely been such a potent force in the market. The fall-off in ore quality at ageing mines is behind a stagnation in copper production in Chile, the world’s top miner of the metal with a third of global output, since 2006.
The start of this year has seen an acceleration of the trend: Chilean copper production was down nearly 8 per cent year on year in January, and by about 20 per cent from December.
That is a shockingly large number. To put it in context: the drop in Chilean production in January is equivalent in terms of its impact on the copper supply-demand equation to a 5 percentage point acceleration in Chinese consumption growth.
Analysts have been scratching their heads ever since the headline numbers were reported a fortnight ago by INE, Chile’s statistics institute, to determine what could be behind the sharp decline.
The grim reality is that no single factor drove the fall: instead, according to mine-by-mine data recently published by Cochilco, Chile’s state copper commission, nearly every large mine in Chile suffered a fall in production in January from December. Most of Chile’s largest mines saw double digit percentage falls in output year on year.
Read the rest of the article online here: Chile’s mining woe supports copper prices - FT.com
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