Canada & Miners ‘Guilty’ but Economy Thrives – by Jon Nadler (Resource Investor – July 20, 2012)

The final trading session of this once again indecisive week in gold commenced with a price drop. The yellow metal erased Thursday’s gains and retreated to under $1,575 in slow pre-market action as the US dollar picked up some steam following its visit to near two-week lows on the trade-weighted index yesterday. Also contributing to the decline in bullion prices were the softer euro (falling to under $1.22 against the dollar once again) and the losses in crude oil (it fell 1.4% to $91.35 per barrel). As of this writing, gold appeared set to close out the week with a half-percent loss in value but the final tally remains to be ascertained later on in the day.
The euro suffered in the wake of once again rising Spanish borrowing costs and declining demand for that country’s bonds. Major Spanish unions have called for a nationwide protest against the government’s drastic austerity measures. The post EU meeting euphoria that was in the air just a few weeks ago appears to have dissipated with the summer thermals over in the Old World.
Silver spot prices dropped by almost 40 cents to trade at $26.92 per ounce on the bid-side in New York this morning. Analysts at Standard Bank (SA) note that silver stockpiles remain high (especially in China) and that demand from the industrial sector for the white metal is tepid at best. China has only imported 779 tonnes of silver in the year-to-date as against the 1,153 tonnes that it took in last year in the same timeframe. Silver is still almost completely dependent on investment demand to not only absorb the manifest surplus in the market but to be the driver of rallies towards higher price ground (but not much beyond $30 – if that – at this juncture).
Meanwhile, platinum lost $8 to ease to $1,406 the ounce and palladium slid $6 the $576 mark per ounce. In platinum-group metals news it was reported by Reuters news agency that Anglo American Platinum (the #1 miner of the metal) tallied almost no gains in its output for the noble metal on a year-on-year basis. Moreover, Amplats also warned that its headline earnings might experience a sizeable decline owing to lower sales and lower metals prices in H1 2012.
The week that is about to conclude has once again been defined by the ebb and flow (more the former rather than the latter) of Fedspectations and by the absence of decent physical gold demand from key markets. The situation in India continued to remain unfavorable for gold demand as the monsoon season appears to be on track to be the worst one since 2009. The folks most affected by a potentially dry summer rainy season constitute 66% of the country’s typical gold buyers in a given year. Locals have actually been selling gold on approaches towards $1,580 in the yellow metal.
Spot gold prices were confined to a trading range that was the tightest in circa 100 days as the summer doldrums and the tug-o-war actions between the bulls and the bears made their presence felt in the trading patterns for the precious metal. A heavy one-day outflow of gold took place in the gold ETF (GLD) which lost nearly 290,000 ounces of metal and is now tallying its lowest balances on the books in half a year.
In mining sector news it was reported that the International Health Tribunal rendered a “guilty” verdict against mining giant Goldcorp and the Canadian government for what it calls “irresponsible mining investments in Mesoamerica.” The IHT said that “[we] find Goldcorp guilty for its activities in Honduras, Guatemala and Mexico, which we find to be seriously damaging to the health and the quality of life, the quality of environment, and the right to self-determination of the affected Indigenous and campesino communities.”
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