South Africa’s miners are still on course to strike in July, likely to sustain Platinum’s continuing rise in price.

The concern here is that more labor troubles on top of power supply disruptions, coupled with skill shortages, rising transport costs etc. etc., make investing in South African producers a highly dangerous speculation.

It is not surprising that talented mining engineers are abandoning the country for the political and social stability of countries such as Australia and Canada.

 

Silver and gold just about held on to their earlier gains by Fridays NY close as the markets all around them continued their fall out.

The importance of gold staying above the $900 an ounce level for the next few weeks, a period of historical relative inactivity in the precious metal market, should not be underestimated.

Seeing out this period without a sustained drop to $850 or below will lead to a breach of the $1000 level and considerably higher by summers end.

It is our belief that we are in a buying window that may soon close. Just to show that we put our money where our mouth is, we put in a limit buy order with Bullion Vaults this morning (GMT).

Beware of mining companies attempting to resuscitate closed down mining operations to cash in on the current gold price. Escalating start up costs, lack of skilled staff and over optimistic production estimates are among the principal causes of failure leading to significant losses, in some cases companies being put into administration.

Venezuela throws more spanners into the works as mining companies in the area are to be forbidden to carry on operations in the Imataca Forest Reserve. Its eight and a half million acres have substantial mineral deposits including gold, diamonds and base metal ores.

Toronto quoted Crystallex Int. Corp. and Gold Reserve Inc. a US based producer are amongst those miners that are affected. Another company, Hecla Mining sold off its Venezuelan operations only last week to Rusoro Mining Ltd. for a reported $25 million.

Venezuela hosts the last major gold discovery in the last ten years. With world output steadily falling and Hugo Chavez latest attempt to disrupt production of his country’s wealth of natural resources, it is possible that peak gold has been passed and annual production may be unable to meet demand.

We read of one analyst talking about the yellow metal reaching $5000 an ounce within a very few years. Optimistic as we are over the investment virtues of gold as our readers are aware, this is one forecast that we will take with more than just a pinch of salt!

Palladium price finished off the week at $471/479 an ounce after hitting a high $481 earlier in the week.

This week we do not foresee any strong moves either way in any precious metals unless of course an unexpected major news story breaks that can send the markets into a spin.

 

 

 

 

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