GOLD PRICE NEWS – The gold price slid Tuesday morning, sliding $6.00 to $1,421.50 per ounce. Gold prices continue to consolidate in the $1,400 to $1,450 range despite a flurry of geo-political uncertainty. Violence in Libya has moved off the front pages, but the situation remains tenuous. Precious metals showed a similar muted reaction to the disaster in Japan – events which have lead to additional fiat money creation from central bankers.
Despite being marginally weaker this morning, silver continues to outperform gold. Silver prices have surged 16.1% in 2011 while the gold price is virtually unchanged. In a note to clients this morning, Macquarie Securities noted that silver ETF demand has been waning. Their research team noted that “the lack of fresh buying should lead a significant gap in demand, but with prices holding firm, it suggests there must be significant buying elsewhere.” The research piece went on to postulate that “it is questionable how long this may last, with silver looking increasingly stretched against its precious metals peers.”
While gold has been unable to make much progress this year, CEOs of two of the world’s largest gold mining companies recently reiterated their bullish outlooks on the price of gold. In exclusive interviews at the Reuters Global Mining and Steel Summit, the heads of Newmont Mining (NEM) and Agnico- Eagle Mines (AEM) each cited a myriad of factors that they believe will continue to support the gold price.
Richard O’Brien, President and CEO of U.S.-based Newmont, contended that until governments implement policies to fight inflation, the path of the gold price will remain higher. O’Brien stated that the yellow metal’s effectiveness as an inflation hedge could lead to a gold price of $1,750 per ounce or greater as soon as next year. According to O’Brien, “It just depends on how well governments respond to inflation…on whether there are counteracting activities that governments take to forestall the rise in inflation.”
In addition to the rising demand for gold, the Newmont CEO noted several supply constraints that are likely to lead to higher gold prices. Although the ascent in the gold price has induced some companies to expand production capacity, any new supply is likely to have a small impact on the price of gold. O’Brien pointed to the lack of accessible new mine sites, the extended time it takes a new discovery to go into production, and the limited life of existing mines as factors expected to limit the supply of gold.
Sean Boyd, CEO of Canadian-based Angico-Eagle Mines, asserted that a $1,600 gold price within the next 12 months would “not be a stretch.” Boyd cited several factors, including demand for gold as a monetary asset, its desirability as an investment in developed economies, and jewelry demand in India and China.
Boyd also pointed to the fact that “We saw for the first time (in recent history) net central bank buying last year. I think that’s going to continue.” As for silver, the Agnico-Eagle CEO noted that a higher gold price would have bullish implications for gold’s sister precious metal and predicted silver could reach $40-$50 per ounce.
(Source: http://www.goldalert.com/2011/03/gold-price-slides-back-to-1420/)
Posts
0 comments