Gold
After weeks of strong signals that gold was ready for a surge upwards,
it finally broke through several levels of resistance yesterday. In a
very short period of time, gold moved from $955/oz to $975/oz and has
already climbed to $978.30/oz this morning. Uncertain equity markets, a
weak dollar and the state of the markets in general saw investors buy
gold. It would appear that some investors' patience regarding reports
of recovery in the market has worn thin and they have retreated into
the safe haven, financial insurance and currency hedging attributes
that gold offers. Financial problems are far from over (informed
speculation regarding a very large hedge fund default - Cerberus
Capital Management, where investors asked to withdraw $4.77 billion
from the firm's original hedge funds, or 70% of the assets and rumours
regarding the Chinese Sovereign wealth fund selling dollars and buying
strategic natural resource assets and gold are not helping jittery
markets) and $1,000/oz looks guaranteed. Further pushes higher in the
autumn months and the rest of the year seem very likely.
Silver
Silver has outperformed gold, smashing through $15/oz yesterday, and is
already up over 1% this morning to $15.55/oz. Silver usually hangs on
gold's coattails with short term market moves but its recent
de-coupling could see silver continue to outperform gold as investors
take advantage of the silver price. Furthermore, commentators believe
that the gold silver ratio remains very high (980/15.5 = 63) and this
augurs well for the long term prospects of silver. The long term
historical average is 15:1 and this is because it is estimated that
geologically there are some 15 parts of silver in the ground for every
one part of gold. It is important to note that silver, unlike gold,
besides being a safe haven investment is also heavily used in industry
and it is believed that since the dawn of the industrial revolution
some 95% of the world's silver has been used up in industrial
applications. Because of gold's much higher value, it gets recycled and
all the gold mined in the world ever is still with us but photography,
mirrors and other industrial uses makes silver like oil - when used it
is consumed and gone forever.
Platinum group metals
The wage negotiations at Impala seem, in part, to have been
successfully negotiated and platinum is trading at $1,239/oz. Over the
past 2 days, an average of 500kg of platinum has been trading on the
Shanghai Gold Exchange, providing good support. Palladium gained
slightly yesterday, moving to $288/oz and rhodium is $1,625/oz.
