October 30, 2012 (Investorideas.com Mining stocks newswire) Gold and other precious metals treaded water on Monday as the exchanges on which they trade slowly went under several feet of water courtesy of Sandy the Superstorm. While not all was well and back to normal this morning, electronic trading quotes enabled us to round up some prices for you to glance at. Spot gold was last seen near $1,713 while silver traded at $32 per ounce on the bid-side. Platinum was up $12 at $1,748 the ounce and palladium advanced $9 to the $596 mark. Copper and crude oil were both marginally higher while the US dollar ticked a tad lower but remained very near the 80.00 level on the trade-weighted index.
Robust September US consumer spending figures helped the greenback vault to the 80.25 level on Monday but the markets were otherwise preoccupied with Sandy and were able to pay little attention to the metric. This week's US employment report may be delayed by the aftermath of the storm and thus the opportunity for the two Presidential candidates to capitalize on the numbers with just days ahead of the elections might not materialize either.
In technical terms, according to ForexPros.com, the daily chart for gold remains "firmly bearish" following the prolonged stall within the $1,740-$1,780 value zone and after having thrice failed at or near the $1,800 mark (some have called that a triple top). ForexPros opines that if the $1,700 support fails to hold then the next plausible target for gold would actually be around $1,620 per ounce. Other technicians believe that if the 200-day moving average level is taken out in gold, then a potential drop to levels as low as $1,250 could be in the cards.
CFTC reports on market positioning indicated that commodity bulls once again cut their bets last week (for a third week in a row) and that they slashed their gold-bullish bets by the largest amount in three months at the same time (almost 69 tonnes of long positions were wiped off the books and the yellow metal finished lower for a third week in a row as well). Commodities as a group erased their year-to-date gains last week as anxieties about global economic growth diverted speculative money into other assets. There was a manifest concern about the Fed as well among such players; suddenly there are less confident that the US central bank will keep doling out virtually free money indefinitely.
Turning to the physical side of the markets, we find that India's gold importers once again crossed their arms and placed orders on hold after they were seen on a few bargain-hunting sorties last week. A depreciating rupee was blamed for local price tags keeping would-be buyers at bay despite the country being in the midst of festival season (Diwali and Dhanteras arrive next month). It is worth noting that in the middle of this historically strong gold-buying period some have come out and are urging Indians to take a pass on gold as they believe that "all rationality might have exited from the price of gold and indeed other assets" in recent years.
Value Research's CEO Dhirendra Kumar, writing in India's Economic Times, agrees that the yellow metal has had an almost "matchless record" among all types of assets, particularly in the 2009-2011 period. However, the question of "How likely is it that this run of unprecedented returns will continue in gold?" is also posed and the author's reply is "Not very." It is also noted that "As has been pointed out often, gold is an unproductive asset. Unlike stocks or bonds, it's a type of asset where value depends on nothing but a shared belief that the value will rise and keep rising. However, this apparently irrational gold boom has gone on long enough for it to shake the faith of a lot of people in the basic uselessness of gold."
We know from the recent efforts of India's central bank that such a shift in attitudes towards gold in the world's hitherto largest consumer of the metal has been supported. Gold imports have made a sizeable and undesirable contribution to the expansion of India's current account deficits level. However, the hoarding of vast gold tonnage (some estimate India's mattress gold pile to be as much as 20K tonnes) is also something that certain governments have begun not looking very placidly upon, of late. At the core of such a shift, once again, the current account deficit (CAD) bogey. Read on:
Saddled with the world's second-largest CAD, Turkish officials are hard at work attempting to pry some part of an estimated 5,500 tonnes of the "precioussss" out of people's hands (or mattresses as the case may be). Local banks have launched gold deposit accounts whereby customers can utilize the metal to take out cash or loans while the lending institution may choose to sell the gold or hang on to it. Should some portion of the gold that has been lent upon find its way into world markets in the wake of a price decline-induced collateral selling wave, we could see some interesting times ahead. Nonetheless, Turkey's economic managers really want to bring that gold into daylight and out of hiding.
One Turkish bank official minced no words when he stated that "We have to get the gold that's out there into the financial system. This is going to be an important step toward solving our current-account problem." Others, of course, disagree, as they see the effort on the part of banks to become that which Turkey's jewelers have been for centuries –trusted buying or selling sources (make that: anonymous ones)-as a failure from the get-go. Nevertheless, the approximately 4,000 gold vendors in Istanbul's Grand Bazaar are sporting some very worried faces these days...
Someone else could soon be sporting some worried faces as well; some of the world's mining firms which are engaged in metal and mineral extraction-at least in Bolivia. On October 15, in a widely underreported move, that country reclassified its mineral deposits as "blessings" and the implications are multi-fold. Mining.com reports that "Bolivia, often ridiculed by the USA and Britain in the United Nations climate talks for demanding steep carbon emission cuts, has established 11 new rights for nature. They include: the right to life and to exist; the right to continue vital cycles and processes free from human alteration; the right to pure water and clean air; the right to balance; the right not to be polluted; and the right to not have cellular structure modified or genetically altered."
Those precepts are based on the Andean belief system" that views the Pachamama (meaning Mother Earth in native language) as a living being and sacred home. Evo Morales, Latin America's first indigenous President, has become an outspoken critic in the UN of industrialized countries. He has also become notorious for raising mining taxes and nationalizing the country's key natural gas industry as well as the telecommunications and electricity sectors, since taking power in 2006."
Moving on, we turn to South Africa, where the illegal strikes that have gripped that nation's mines have apparently ended. Officials at GoldFields informed the markets that full production has resumed at one of its facilities while AngloGold Ashanti reported being in the process of ramping its output up as well. Harmony Gold indicated that as of last week only 2% of its 5400 formerly striking personnel have failed to report back to duty.
Platinum producer Amplats has reportedly offered a one-time bonus and a reinstatement to the 12,000 workers it had dismissed earlier if they report to work by today's deadline. If they choose not to accept such an offer, striking workers could face permanent termination. Despite the production losses that have been incurred in precious and noble metals during the past several months, the platinum/palladium duo is apparently set to close October out with a not-so-stellar performance.
Reuters News reports that "palladium is heading for its biggest one-month drop since May in October as a weak demand picture for the auto-catalyst metal reins in gains made on the back of U.S. monetary stimulus and a sharply higher platinum price. Prices swung to their lowest since mid-August last week from the six-month high above $700 an ounce they hit in September, helped by euphoria linked to the Federal Reserve's $40-million-a-month liquidity boost for the U.S. economy."
Meanwhile, analysts over at Standard Bank (SA) report that "after holding up relatively well the previous week, this past week saw a dramatic fall in net speculative length for NYMEX platinum. With 134.000 ounces shed, this was the biggest drop since April of this year. The 91.400 ounce unwind from long positions was largely to blame for the net deterioration. However, the 42.600 ounces added to shorts was also a significant contributor. In previous weeks, the metal has been garnering support from labour unrest in South Africa. However, this support appears to be wearing thin. And now that a resolution to the six-week long stand-off at Amplats's Rustenburg mines is within reach after developments last Friday, we could see even more support for the metal withdrawn this week."
We close today with a return to...alchemy. We reported last week that some scientists have been attempting to replicate platinum's capabilities by "massaging" lowly iron particles with their magic. We can now report that a French firm is offering for sale a process for turning water into...gold (!). Well, not exactly "turning" one into the other, but extracting roughly one microgram of Au per litre out of H2O. It had previously been estimated that seawater could contain about four millionth of s gram of gold in one tonne of liquid. While that sounds infinitesimally small, consider the fact that it adds up to 5.6 million tonnes of gold floating around in the world's oceans.
While the French process yields one millionth of a gram of gold, it does so with the filtering of but one litre (!) of water –and not seawater necessarily. Magpie Polymers spokesmen say that such extraction is equivalent to "a sugar lump in an Olympic swimming pool." The firm says that "The process is based on the use of tiny pellets of plastic resin through which waste water is pumped. Gold, platinum, palladium and rhodium, the world's most precious metals, little by little stick to the pellets and are thus separated from the waste water. A single litre of this patented resin can treat five to 10 cubic metres of waste water and recover 50 to 100 grams of precious metal, equivalent to "3,000 to 5,000 euros."
Until next time, as they say in that wacky commercial, "Stay thirsty my friends!"
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