Golden Snouts In The Trough

December 15, 2007 | By | Reply More

Spot gold traded at $793.50 at the close on Friday ahead of the weekend.

That elusive break into the anticipated $850 and beyond is not now going to happen until at least well into the New Year.

With gold production continuing to fall in South Africa, the added cost of meeting revised safety measures and the increasing likelihood of militancy among mine workers with the SA National Union of Mineworkers (NUM flexing its muscles added to reports that the demand for the yellow metal is continuing to rise it seems evident that the bullish scenario is only temporarily halted.

Remember also that added to the extreme volatility being experienced by the stock markets virtually on a day to day basis, the onset of the Xmas holiday season followed by the annual adjustments to portfolios to keep the tax man at bay, it is hardly surprising that the US investor is aware of the dangers of being short of liquidity.

Meanwhile silver is likely to mirror the rise and fall of gold and the PGMs will be subject to the demands or otherwise of their industrial users.

It is worth repeating a word of warning concerning PGMs.

To all intents and purposes the demand for platinum palladium etc, (with the exception of osmium) continues to grow and out pace production but it should be borne in mind that the principal uses of these metals are as catalysts.

They do not alter in composition or weight during the processes that they are used for.

The prime example is catalytic exhaust systems, whatever the age or condition the vehicle to which they are fitted, the PGMs in the exhaust can be recovered IN FULL and used over and over again.

Of course the same applies to the other major application in jewelry.

Sooner or later it is possible that if PGMs decline in use as possibly they might if, for example, the automotive industry suffers a severe downturn then the recyclers and miners might throw up a surplus to demand.

Mr Greenspan, who should know a thing or two about economies, this week revised upward his previous observation that the US had a 33% chance of entering a recession although this time he did not go out on a limb and give the odds.

Despite its changing global status it is still a given that if the US goes into recession then the rest of the world is likely to follow.

On the bright side such a scenario cannot fail to benefit holders of gold and silver and their producers.

Despite a poor week for the gold price, demand remains at record levels.

The biggest bullion backed ETF, streetTracks Gold Trust, reports that it held its highest ever level of vaulted gold yesterday at 616 tons.

Despite being in some choppy waters that are likely to persist for a while yet, gold is still managing to maintain its course. 

 

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