Here at Minesite we believe we will see US$2,000 gold this year, and US$2,500 within five years. In a week when gold moved down towards the US$1,650 mark, that that might seem a trifle optimistic.
But the sellers in the market seem to be citing a potential economic recovery as a good reason to ditch gold, forgetting that gold's greatest gains in the past decade or so came during the height of an economic boom.
The gold price rose because demand rose, and demand rose for three reasons. One, the developing world was getting richer and could afford to buy more gold, which it duly did, pushing up the price. Two, there an across-the-board commodities boom, and gold is the daddy of all commodities. And three, there was increasing global uncertainty, politically and economically, as the US grip on the edges of its empire began to slip.
All three factors are still in play. Add in the effects of the global currency wars, with Japan the latest major economy to take the offensive, and the simple truth that trusting in the value of paper money is no longer an option becomes apparent. And you don't have to be a financial analyst to see it.
So why the fall then? Jim Sinclair talks of a "wicked game being played by sociopaths" bent on destroying value. He might be right. But more likely, the market is simply pausing for breath. Gold has gone out of style a little bit, and gold equities a lot.
But they'll both be back. And when they come there'll be money to be made in physical gold and in equities. Which is why, as always, we look at several interesting gold companies in this week's newsletter, including Mwana Africa, SolGold, Volta, Endeavour, Amara, Mutiny, Sovereign Mines of Africa, Pan African, and Exeter. Most had interesting news releases out, which we report on in detail.
Next week we'll look at Archipelago's recent production numbers and Ormonde's exploration success amongst others. The equity markets may be down for the gold juniors, but they are not out. Not by a long shot.
93rd Minesite Forum - Wednesday 20th March 2013 |
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Wednesday 20th March 2013
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