Gold Production Reported To Be On Downward Path

June 3, 2008 | By | Reply More

Gold price continues to flat line along the $880-900 boundaries and every now and again threatens to sustain a break through the $900 barrier. That this will eventually happen we have no doubt but in the meantime patience is needed.

Regular readers will know that we have reservations concerning technical analysis although we recognize that the triggering of the more popular indicators often has the ability to drive the market if for no other reason than that so many professional and amateur investors are dedicated to watching lines on graphs rather than considering the latest news.

With this in mind our favorite and respected technical analyst tells us that gold will continue to stay in the $850 –900 band for several more weeks before breaking out strongly toward $1000 an ounce and upwards.

It has been well reported that gold production is on a downward path with China taking over as the world’s number one producer.

There is no likelihood of production improving in South Africa for years ahead. In our opinion a more likely scenario is that mining in the country will go into further decline for political, a crumbling infrastructure, and labor problems to name but a few.

Further more no significant new gold finds are likely to come on stream within the next 3-5 years so it seems self evident that gold is unlikely to languish in the doldrums for much longer. The next few weeks may be the last buying opportunity before $1000 an ounce is breached.

Platinum has had a recent pull back to below $2000 an ounce and presents an even better profit opportunity than gold.

South Africa remains the number one producer accounting for around 75% of total world production despite that countries many problems.

It simply means that the amount coming to the surface is declining year on year at the same time as demand is increasing and is greater than supply.

To add to the equation this year has seen the advent of platinum ETFs being traded in the US as well as London, all adding pressure to the supply side.

We also note that the big mining companies are still lowering their hedging books. We read this as confidence that the price of metals will stay around the current levels or in general will rise further.

Finally research into the junior mining sector could pay off big time.

All the talk is of the majors on the prowl for promising miners either sitting on proven resources but not yet producing or owning leases with good potential. Very speculative but get it right and big money can be made.

    

 

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