Notes
September 27, 2006
The gold price seems to be jousting with $600 today. Hopefully it can break convincingly above that mark when the London market closes in the next hour (the last two days prices have snapped upwards considerably when the London market has closed at 10 AM our time).
Few quick notes here....
Newmont reported that they will be short on their expected production numbers by 300,000 oz. or as much as 500,000 ounces this year and in 2007. (I know that Newmont is the preferred gold mining stock for a lot of our clients. If your clients need a perfect example why investing in physical metal is better than taking a chance that the mining company stock, have them pull up Newmont's stock chart over the last year. While we've certainly been in a volatile market in the last 5 months...year over year, the gold price is up over 25%. Year over year, Newmont's stock price is down 8%.)
The South Deep mine in South Africa (largest gold mine in the world in terms of reserves) has reported that production has been cut again due to underground fires at the mine.
OPEC is looking about ready to start cutting oil production. They have been running full bore on production in order to contain prices below $80 per barrel. Now that we've had a significant pull back, they don't want prices to fall below $60 per barrel . It's an interesting dance to watch and over the past few months, OPEC has been struggling to regain their sway in the marketplace. By announcing a production cut in the next few weeks, they'll do exactly that and regain their market power. In turn, this will put a nice floor in under commodity prices.
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