March 7, 2011
As the world continues to burn, gold hits a new all time high of $1,437 as silver is en route to pass $36. Whatever shorts did not cover on Friday night are strongly urged to postpone their “market top” speculation until another day. Elsewhere Bernanke is still confused by what the relentless march to daily all time highs in gold means…
Reuters has some additional reasons why gold may be poised for much more upside:
Gold should push higher from its near-record levels due to its appeal as a safe haven, while iron ore should regain its upward momentum on the back of red-hot industrial demand from Asia, forecasters told the world’s largest mining conference on Sunday.
Copper, an economic bellwether due to its industrial versatility, should be well supported at its current lofty levels but may have trouble pushing significantly higher as mine production races to catch up to demand growth, they said.
Addressing the Prospectors and Developers (PDAC) conference in Toronto, forecaster Philip Klapwijk said he saw a “stronger case for investment in precious metals as a safe haven” as demand for base metals declines due to slowing global growth and political turmoil.
Klapwijk, chairman of metals consultancy GFMS, also said he expected global GDP growth to slow slightly this year as compared with last year.
Prices for gold and silver have risen sharply since the outbreak of violence in the Middle East and North Africa earlier this year as buyers turned to precious metals as a haven from risk.
Gold is holding within $10 of the record above $1,440 an ounce it set on Wednesday, while silver extended 31-year highs above $35.40 an ounce on Friday.
JPMorgan analyst Michael Jansen told a room packed to overflowing with more than 500 delegates — from corporate chief executives to geologists to fund managers — that he expects gold prices to average $1,465 an ounce this year.
His year-end target for gold is $1,500, he said, adding the gold production outlook was strong going forward.
“We think mine supply is easily on track to grow 3 to 4 percent year on year,” he said.”
His forecast is slightly more subdued other predictions, such as by Barclays Capital, which said in January it expects the metal to average $1,495 an ounce this year, and range as high as $1,620 an ounce.
GFMS said in a January quarterly forecast that gold may top $1,600 an ounce by the end of 2011.
Klapwijk said gold and other precious metals will also get some impetus as investors exit other traditional safe havens.
“We expect the sovereign debt crisis will not be confined to Europe and it will eventually spread to the U.S. and Japan … It seems to be inconceivable that the U.S will be able to continue on its current path and maintain its ‘AAA’ rating,” Klapwijk added.
More than 20,000 people are in Toronto this week for the annual PDAC conference. Attendance grows every year at the event, a barometer of mining investment appetite. This year it has also attracted a handful of top government ministers from important mining jurisdictions.
As presenters rolled out their outlook from everything from gold to iron ore, and uranium to potash, there was one key word was in almost every presentation — China.
Demand from the world’s most populous country will help underpin demand for iron ore, the main steelmaking ingredient, said Phil Newman, chief operating officer of consultancy group CRU.
This article was posted: Monday, March 7, 2011 at 5:57 am