In what could be described as a provocative move, gold mining companies in South Africa are considering locking out workers. The aggressive move is being considered if labor unions fail to accept a revised pay offer.
The four unions in the gold industry have until 12 p.m. local time today to accept an offer from the chamber, which represents gold mining companies, to increase the wages of some categories of workers by 6.5%. Workers in the automotive, construction and aviation industries are already on strike to demand pay increases in excess of the considerable inflation rate of 6.3% in July.
The chance of a South African gold strike is ‘highly likely’ said Solidarity Union General Secretary Gideon du Plessis, in a speech in Johannesburg.
Citigroup Sees Gold at $3,500/oz; Silver Jumping to $100/oz
Respected Citigroup strategist Tom Fitzpatrick said in a telephone interview from New York with Bloomberg that gold and silver should surge in the coming years as the precious metals continue to benefit from the easy monetary policies adopted by central banks.
Fitzpatrick, who has a good track record, said that gold has put in a low for the year and will rise to about $1,500-$1,525/oz this year. A gain of over 6.3% from today’s prices.
He said that silver is in a strong uptrend and will likely outperform gold as the gold silver ratio will drop from its current level at 58.1.
Separately, in an interview with King World News’ Eric King, Fitzpatrick elaborated on why he believes gold could reach $US3,500:
“So we believe we are back into that track where gold is the hard currency of choice, and we expect for this trend to accelerate going forward. We still believe that in the next couple of years we will be looking at a gold price of around $US3,500.“
“As the gold/silver ratio plummets near 30, this would also suggest a silver price above $US100.”
Silver in USD - 10 Years, Weekly (Bloomberg)
Despite the recent gains, gold remains down 16% this year and this is leading to contrarian buyers buying gold at what they still see as discount prices.
Gold appears to have bottomed in June and is rising due primarily to strong physical demand for jewelry, coins and bars globally.
Gold is heading for a second monthly gain which is very important technically and from a momentum perspective.