The Golden Rule: Gold Rules


The Gold price set a record high above 1,624 oz in foreign trading Monday morning, and is remaining quite solid, trading above 1,617 oz at mid-day.

Silver posted a solid gain this morning, at 41.10 oz and is holding around 40.50 at mid-day.

As US policy makers wander around trying to find a way to agree on a new debt ceiling before August 2nd, players set a be-line to safe havens, and abandoned equities and commodities.

The Big Q: once an agreement is reached on a debt ceiling, is it reasonable to expect a fall in the price of Gold and Silver?

The Big A: General economic conditions often lead to sharp, quick rises in the price of Gold that take a long time to dissipate. Rising inflation in emerging economies and stress to the Global financial system caused by both the EuroZone sovereign risk issues and the US debt ceiling impasse have combined to drive the Gold price to record higs. Assuming that a deal on the US debt ceiling is reached before August 2nd, Gold prices might fall as much as 50 oz, but a new trading range is likely to have been established with a floor more than 1,500 oz.

The SPDR Gold Trust (NYSE:GLD) posted a new 52-wk high this morning of 157.80.

The Market Vectors Gold Miners ETF (NYSE:GDX) is up about 0.30%, at around 61/share, still shy of its 52-wk high at 64.62.

Arizona Gold and Onyx Mining Co PINK:VGCP

Strong interest developing here, trading Friday was over 10 times the average.

The Market Vectors Junior Gold Miners ETF (NYSE:GDXJ) is also up about 0.30% on the day.

The Giant mining company Barrick Gold Corporation. (NYSE:ABX) reports earnings Tuesday and is expected to post EPS of 1.11 on revenue of $3.32B. That's an EPS improvement of about 46% compared with the same period a year ago and about 10% sequentially.

Newmont Mining Corp. (NYSE:NEM) reports earnings Friday, and is expected to post EPS of 0.98 on revenue of $2.49B. That represents a 27% improvement in EPS compared with the same period a year ago and flat earnings sequentially.

Silver prices could be getting set for another run at 50 oz and there are some analysts who believe than 100 oz is in reach.

One of the World largest silver miners, Peru's Compania de Minas Buenaventura SA (NYSE:BVN) reports earnings Wednesday, and analysts are expecting EPS of 0.91 on revenue of US$374M. That's more than double EPS of the year ago Quarter and up about 6% sequentially.

The iShares Silver Trust (NYSE:SLV) is up nearly 1%, to 39.39, in a 52-wk range of 17.06-48.35.

The Global X Silver Miners ETF (NYSE:SIL) is up about 0.6%, at 27.87, in a 52-wk range of 14.18-31.34.

Silver does not hold the same safe haven status as Gold, but the "Devil's Metal" is responding to the US debt ceiling issue, and once it is resolved, the price could return to around 35 oz or below IMO. Stay tuned...

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.