GOLD PRICE NEWS – The gold price rose toward $1,600 per ounce, rising as high as $1,594 early Thursday morning. The price of gold is on pace to rise for the ninth consecutive trading session on the back of a surge in investment demand for gold bullion, gold exchange-traded funds, and futures contracts tied to the gold price.
This morning’s news on inflation was a mixed bag and gold prices showed a muted response to the data. The June Producer Price Index (PPI) fell 0.4% month over month against market expectations of a 0.2% drop. Versus the previous year the PPI rose 7.0%, while the core – excluding food and energy – climbed 2.4%. Speculation over the possibility of a new round of quantitative easing from the Federal Reserve has helped send the gold price to a series of new highs, however, rising price pressures are likely to prevent QE3 from being implemented in the near term.
On Wednesday, the gold price surged as much as $21.20 to a new all-time high of $1,588.90 per ounce. Silver rallied alongside the gold price, gaining $1.93, or 5.3%, to $38.07 per ounce. Precious metals equities were propelled higher by gains in the price of gold and silver as the Philadelphia Gold & Silver Index (XAU) climbed 2.7% to 215.85. Three of the top performing names in the sector on Wednesday included Harmony Gold (HMY), Randgold Resources (GOLD), and Silver Standard Resources (SSRI). HMY, GOLD, and SSRI finished higher by 6.1%, 3.7%, and 6.6%, respectively. Gold and silver stocks moved higher Thursday morning.
In his semi-annual testimony to the U.S. Congress, Chairman Ben Bernanke provided his latest thoughts on the economy and monetary policy. Along with reiterating a considerable amount of information from last month’s FOMC meeting, Bernanke discussed additional measures the Fed could take in light of the recent string of worrisome economic data.
“The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support,” according to the Fed Chairman. “The Federal Reserve remains prepared to respond should economic developments indicate that an adjustment of monetary policy would be appropriate.”
Bernanke’s comments, which fueled further QE3 speculation, coincided quite closely with the time at which the gold price surpassed its previous record high of $1,577.40 per ounce. Later, as Congressman Ron Paul asked “Helicopter Ben” if he monitors the price of gold, the yellow metal reached its latest all-time high. The Fed Chairman acknowledged that he did, and noted that he thinks the gold price “reflects a lot of things. It reflects global uncertainties. The reason people hold gold is its protection against what we call tail risk.”
Dr. Paul, who intends to run for President in 2012, went on to ask Bernanke if he thinks gold is money. After a long pause and appearing like a deer in headlights, Bernanke simply said “No.” Paul followed that up by asking if gold is not money, then why do central banks hold it in their reserves. Bernanke responded that it was a “long term tradition,” but refused to elaborate.
While Bernanke may not believe gold is money, many individuals and investors clearly disagree. With gold prices at new highs and on pace for their 11th consecutive annual advance, it is clear that the marketplace has sided with over 5,000 years of history that suggest gold is in fact money, rather than with a central banker who believes money can be created with a printing press.
In terms of the gold price outlook moving forward, TD Securities’ Andrew Spence wrote in a note to clients that “Gold reached a marginal new high this morning and the basic chart set up for the market looks quite constructive from a technical point of view…Trend momentum, as reflected by the DMI oscillator, suggests strongly bullish trend strength across a range of timeframes. That suggests an ongoing bias towards strength and that counter trend dips are likely to be relatively shallow and short-lived.” As a result, the firm predicted the gold price may “extend towards $1800 in the next 3-6 months.”
Platinum Group Metals Advancing to Production
The start of underground tunneling is scheduled for late July 2011. Full commercial construction is budgeted at $443 million and is expected to involve project loan financing once a full mining rights are approved and concentrate off-take terms are established. Full Platinum Group Metals News Release.
- In March 2011, Platinum Group Metals received the consent of the South African Department of Mineral Resources (DMR) for the Company’s plan for underground development of decline access for Project 1 and related environmental management program.
- In April 2011, the Company filed a mining right application and social and labor program with the DMR for the Project 1 Platinum Mine. This application was later accepted for processing by the DMR.
- In May 2011, construction for Phase 1 on surface infrastructure, excavation and construction began – it is proceeding safely and is on schedule.
- In early July 2011, the Company announced that underground mining contractor JIC Mining Services was awarded the contract for Phase 1 underground development of twin 1,200 meter central decline tunnels into the Project 1 platinum deposit for the purposes of retrieving a bulk sample and information for further mine design. JIC is now mobilizing to site.
