Precious Metals Underlying Strength

February 26, 2010 | By | Reply More

Despite stock markets looking increasingly fragile as the dawning realization by investors that the underlying problems of unemployment and weak housing have not been placated by quantative easing (aka money printing), gold, silver, platinum etc. have shown their underlying strength as the recession looks set to continue.

All the hyperbole produced by the mouthpieces of the US and other Western governments that the worst is over is not convincing Joe Public who is rapidly losing faith in our great leader, President Obama.

Signs that inflation is getting a grip are becoming more evident although a strong argument can be made that this may turn out to be temporary for the time being.

A miracle of fiscal probity will have to occur if eventual hyperinflation is to be avoided, and who among our politicians and their advisors has shown any indication that they are capable of tackling such a vote losing task?

The dollar had a respite from its recent popularity as a preferred currency to the stricken Euro and an even worse scenario to come for the British pound. This, together with all the other usual factors gave our precious metals a small boost as the S&P, Dow and European markets faded for a second day.

Still hanging over the gold market, and its close ally, silver, is the 191 tonnes being sold by the IMF. We would probably have seen significant gains yesterday if that package had been sold off. As an aside interesting to note that the IMF have decided to sell on the open market, unlike the previous disposal of 200 tonnes.

Could this be bowing to the Feds who basically control the IMF, in a bid to undermine the market price? If so last Friday’s option expiry date did a far better job!

Right now seems a good time to stay out or get out of all stocks and shares with the exception of precious metals and their producers. However we reiterate our warning concerning platinum.

We pass on an observation made by the CEO of Stillwater Mining to the effect that platinum (circa $1500 an oz.) and palladium (circa $420 an oz) were becoming interchangeable in their principal use as catalysts in exhaust systems and as a result the difference in their price would decrease perhaps by as much as half.

Guess which way the price of platinum will go if, as seems a distinct possibility by some commentators, the Chinese bubble bursts.

We have held on to our shares in Coeur D`Alene mines for over two years with an occasional indulgence in a little averaging in order not too lose faith. The Company has just announced that they mined 47% more silver and 56% more gold in 2009 than 2008 but managed to make a $31.9 million loss against a loss of only $ 600,000 in 2008.

Now is that a matter of bad stewardship, over commitment to exploration and development, bad luck or do they just despise their shareholders interests. We will stick with our holding for the time being and try to work out what is going on and, if we are encouraged, we will pass on the good news.
We hope that our followers took note of our earlier comments concerning the renaissance of the nuclear industry. An upbeat statement by the CEO of Cameco, one of the worlds` largest uranium producers where it is planned to double output to meet expected demand from up to 50 new nuclear plants due on stream by 2015 and many more in the pipeline from China, India and South Korea.

Even Obama has managed to get his head around the necessity for nuclear power, closely followed by Prime Minister Brown of the UK who has never had a constructive original thought of his own but is a past master at both taking credit from others or passing on blame.
We urge you to investigate the resurgence of the nuclear industry and its profit potential in these increasingly problematical times for the average investor, and as always, have faith in gold for asset safety and silver for an eventual bonanza.

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Category: Precious Metal Investment News

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