Engineering & Mining Journal

JAN 2019

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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56 E&MJ • JANUARY 2019 www.e-mj.com MARKETS There is probably no more irritating an adage than the old Wall Street one which says "no one rings a bell at the bottom or top of a market" … but it does highlight the purpose or value of making a trading call — or if you prefer (as it is the season for it) … in making a forecast. No one wants to be too early in calling a bottom in gold as your ca- reer would then be aligned with those slightly unhinged permabulls that have been calling for a massive move up in gold year after year — and been per- mawrong. Nor do you want to be too late — because that would make you, well plain dull. So, let me try and defi ne a "ding dong" moment for you. When can we say that gold is quite defi nitively in a bull run…? Firstly, let's just accept that gold does go into very extended periods of hibernation and these can be very lengthy — who can forget the 19 year stretch between 1980 and 1999 with prices and volatility eroding together? And the seven-year period from the all-time high in September 2011 has been no less painful, with gold variously described in the media as 'unloved' at best, or 'disdained' at worst. It's kind of hard to shake off the winter or the sense that anything resembling a recov- ery is anything other than a temporary retracement … then fooled again. While the bright start to the year has been en- couraging, we aren't hearing any bells just yet. Asset allocators often tend to throw a pile at assets like gold in Janu- ary, before moving onto other things — and gold fl at lines again. In December 2018 Sharps Pixley saw gold price strength in GBP being sold into — this is normal in the early stage of a bull run. Tired investors of- ten take advantage of a price spike to take profi t. And then there comes the increase in scrap sales — both fully ex- pecting the price to revert south again. 2019 has started differently for us … we continue to see some good sell- ing but also some large buying coming through. This suggests to us that inves- tors may be starting to see the price strength as being a more semi-perma- nent thing, just as it was from 2000 to 2011. And buying on price strength would be confi rmation to us that senti- ment towards gold has seen a seismic shift. Sadly, we can only be wise after the event, but it's certainly looking very 'constructive.' And, then in come the momentum algos, the self-fueling good news stories … and off to the races we go with year-on-year double digit gains. But we are not there yet. Where are we going with this? Oh yes, what's the number where we can say that gold has quite defi ni- tively broken out? Well, we would sug- gest $1,360/oz, which would be top- ping the recent highs seen early last year and in 2015. In John Donne's (1572-1631) ser- mon (perhaps his name rings a bell?) he said, "Any man's death diminishes me, because I am involved in mankind; and therefore never send to know for whom the bell tolls; it tolls for thee." In other words, the ringing of the bell is for us all — no man is an island. Now there's a gold price forecaster ahead of his time - so at $1,360/oz, we should be all in. Ross Norman is the CEO of Sharps Pixley, a retail gold broker, located at 54 St. James St. in London, www.sharpspixley.com. For Whom the Golden Bell Tolls By Ross Norman Gold and silver prices provided by KITCO Bullion dealers (www.kitco.com). Platinum group metals prices provided by Johnson Matthey (www.platinum.matthey.com). Non-ferrous base and minor metal prices provided by London Metal Exchange (www.lme.co.uk). Iron ore prices provided by Platts Iron Ore Index. Currency exchange rates were provided by www.xe.com. (December 31, 2018) Precious Metals ($/oz) Base Metals ($/mt) Minor Metals ($/mt) Exchange Rates (U.S.$ Equivalent) Gold $1,282.10 Aluminum $1,869.50 Molybdenum $26,000 Euro (€) 1.146 Silver $15.47 Copper $5,965.00 Cobalt $55,500 U.K. (£) 1.276 Platinum $788.00 Lead $2,009.00 Canada ($) 0.733 Palladium $1,260.00 Nickel $10,595.00 Iron Ore ($/dmt) Australia ($) 0.705 Rhodium $1,260.00 Tin $19,500.00 Fe CFR China $69.20 South Africa (Rand) 0.070 Ruthenium $270.00 Zinc $2,510.00 China (¥) 0.145

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