GOLD PRICE NEWS - The gold price traded near unchanged, falling $4.00 to $1,207.50 per ounce, as markets in the U.S. were closed in observance of Independence Day. The gold price fell 3.4% last week as deflation worries led to widespread liquidation in both investments tied to the gold price as well as the broader stock and commodity markets.
Gold stocks in Canada traded with a slight downward bias as the TSX Global Gold Index was lower by 1.04 to 363.98. The world’s largest gold producer, Barrick Gold (ABX), fell C$0.20 to C$45.75 on Canada’s big board. In the small- and mid-cap arena, Andean Resources (+2.5%) and Gold Fields (+1.2%) led on the upside. Two gold stocks that made news Monday morning were Aurizon Mines (ARZ.TSX, AZK: AMEX), and Anatolia Minerals (ANO.TSX).
Aurizon announced a 35% increase in the measured and indicated gold resources at its Hosco deposit on its Joanna property, the site that will host the company’s second operating gold mine. Anatolia Minerals (ANO.TSX) also made headlines Monday morning as it delivered the first run-of-mine ore to the leach pad at the company’s Çöpler gold mine.
Despite the recent correction in the gold price and the share prices of gold mining producers, the fundamentals underpinning the gold bull market remain firmly in place. The current deflation scare cascading through global markets will likely embolden central bankers to become even more aggressive in attempting to stimulate their respective economies. With the appetite for fiscal policy waning due to sovereign debt worries, the likelihood of additional quantitative easing initiatives is increasing. These money-printing policies have been one of the chief drivers of the $1200-plus gold price.
Bill Bonner, of thedailyreckoning.com, reiterated his bullish outlook on the gold price and sounded words of warning over the consequences of the ever-expanding welfare state. According to Bonner “For the first time in history, almost all the developed nations of the world are running regular, structural deficits. They’re going deeper and deeper into debt, as though there were a war…but there is no war.”
Bonner chastised policy makers for their expansion of liberalism, exclaiming that “Most of the deficits have little to do with stimulus or bailout efforts. They are just the ordinary results of social welfare programs that have gotten out of control.” In stating the case for a higher gold price, he stated “Gold was very cheap at $260 in 1998. It will be very expensive sometime in the future - Perhaps at $2,600?”
Following in the footsteps of James Grant, of Grant’s Interest Rate Observer, Bonner calls into question the sustainability of the current international monetary order, exclaiming, “Yes, dear reader, the welfare state is another piece of unfinished business. So is the dollar-based monetary system. Both of them are approaching the end of the road.” Gold Anyone?
