Precious Metals: the rush is still on

13 09 2009

Last week I got a hand on a Mergent report on precious metals in North America. I went through it thinking that I would post a summary online but with the long week end taking off you can guess where my motivation went. This week there was a lot of news coverage (as always!) on gold and silver. There was also a great deal of speculation about Xstrata’s Lonmin bid which stole the spotlight from other platinum metals group news but coverage was mainly dominated by gold.

Since the financial crisis kicked off last year gold has established itself as the top choice of investors as it soothes worries about inflation, the falling value of the dollar and other risks in financial markets. Gold treated investors well this week as it rose above 1000$ per ounce which made producers wonder whether to hedge or not. Higher prices are mainly attributable to a weaker USD (for more info about the gold/dollar relationship click here). Still, some analysts don’t see gold prices rising much higher than USD $1000 an ounce in the short term.

“I’m a bit sceptical about this move, I must say, because I believe speculative positioning is already long. Commodity prices in general are overbought,” he says. “There’s room for a correction. I don’t sense this is the long-awaited, decisive push through $1,000 an ounce.” Philip Klapwijk, chairman, Gold Fields Minerals Service quoted in MSNBC.

There has been some dissent with this generally shared view lately as the consumer price index (down 0.2% in July) has declined (due mainly to lower oil prices) and the value USD lowering but not doing too bad at this moment. The rising price of gold could also reduce jewellery sales as it is the buying season in India. Australian gold miner, Focus Minerals expressed concerns that speculative investment in new mines might also expand the gold supply and could lead to price crashing down.

As for silver, it is doing well (so well!). It has been an excellent performer in the past weeks and my impression is that everybody wants to be a Coeur D’Alene Mines shareholder. Seeking Alpha has made a few articles on this company and the Mergent report that I mentioned earlier presented it as a leading company in the US for silver.

Well that’s it for precious metals this week.

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2 responses

15 09 2009
Miche

Super intéressant mademoiselle ! 😉

16 09 2009
Martha Black

Merci beaucoup 🙂

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