Gold inched down on Thursday, near the monthly low reached in the prior session under pressure from a stronger greenback as players await the European Central Bank rate decision at 1245 GMT and US initial jobless claims at 1330 GMT.
The gold price traded in a narrow range around $1,691 per ounce Thursday morning in London, rising slightly from yesterday's 1-month low. Asian and European stock markets also ticked higher, as did US Treasury bonds.
Copper mining has become an especially capital intensive industry – the average capital intensity for a new copper mine in 2000 was between US$4,000-$5,000 to build the capacity to produce a tonne of copper, now capital intensity is north of $10,000/t.
I will revisit this trade in the future. QE3 is still in-force and should work. But we need to get year-end profit taking and the election out of the way. The continued slowdown in China isn’t helping.
Although China as the second largest world economy may be in an economic slump, investors are seeking out silver as a value alternative investment. Silver climbed 15% this year and ETF’s holding silver have gained 6.5%.
These areas include global companies that are involved in the production, exploration or processing of various commodities which stand to benefit from the world’s growing population, urbanization and rising income trends.
Gold was off its seven-month high on Monday but the recent wave of central banks who started printing money and bond buying again is very supportive for the yellow metal and euro gold remains close to record highs.
The Fed and ECB make my job presenting at the Hard Assets conference in Chicago very exciting. Don’t miss my presentation on Sept. 21. I invite you to be there in person if you live in close proximity to Chicago.