GOLD PRICE NEWS – The gold price rebounded Friday morning, climbing $9.70 to $1,768 per ounce. The price of gold rose alongside oil, copper, and the bulk of the commodities complex. Risk appetites, which have fluctuated wildly over the course of the week, expanded heading into the weekend. S&P 500 stock futures rose 11.80 to 1249.20. University of Michigan consumer confidence survey will be released at 9:55am eastern time. The U.S. Treasury market is closed in observance of Veteran’s Day.
Today’s bounce in the gold price follows yesterday’s $11.59, or 0.7%, drop, which came as financial markets stabilized. The spot price of gold initially dropped to as low as $1,734.60, but recaptured the majority of its decline as the U.S. dollar retreated against a basket of foreign currencies. Other precious metals finished fractionally lower, with silver down 0.1% at $34.03 per ounce and platinum falling 0.4% to $1,622.50 per ounce. Silver traded unchanged early Friday.
Precious metals shares posted modest losses alongside the price of gold and silver on Thursday, as the Philadelphia Gold & Silver Index (XAU) retreated 0.4% to 205.59. One gold producer in the news was South African-based Gold Fields (GFI), which reported third quarter earnings of $0.40 per share. Although Gold Fields beat the consensus estimate among analysts, the Company lowered its full-year production guidance from 3.6 to 3.5 million gold equivalent ounces. GFI ended lower by $0.24, or 1.4%, at $17.14 per share.
Among silver mining companies, Silver Standard Resources (SSRI) plummeted $4.01, or 21.0%, to $15.13 per share after announcing particularly disappointing third quarter results. Silver Standard’s adjusted earnings came in at -$0.36 per share – far below the -$0.09 per share analysts were expecting. The Company also reported a 52% reduction in gold resources at its Pirquitas mine in Argentina. UBS analyst Chris Lichtenheldt placed his Buy rating and $27.50 target price on SSRI “under review” for potential changes.
In contrast to gold shares and the gold price, the broader equity markets rebounded as euro zone sovereign debt concerns subsided somewhat on Thursday. According to the Associated Press, “Expectations that respected economist Mario Monti will lead a new interim Italian government helped calm market fears Thursday the country was heading for a Greek-style crisis that would threaten the existence of the entire eurozone.”
Speculation regarding Monti’s appointment helped Italian bond yields recover modestly from a substantial spike earlier in the week. However, the yield on Italy’s ten-year bond remains above 7% – considered to be a very critical level indicative of severe financial stress. Markets clearly remain in doubt that Italy can continue to fund its own debt obligations at these levels. If the country cannot do so, it may need to seek assistance from the European Financial Stability Facility (EFSF), the International Monetary Fund (IMF), or some combination of both.
Any scenario in which Italy ends up requesting financial aid is likely to put further pressure on the euro currency and strengthen the case for additional money printing in Europe. This concept is not lost on the gold price, which despite Thursday’s decline remains higher by 23.7% on a year-to-date basis.
Commenting on the longer-term outlook for the gold price, legendary investor Jim Rogers stated in a CNBC interview that the yellow metal’s bull market is far from over. The price of gold “will easily go to $2,000 but it will reach $2,400 over the course of the bull run, which has years to run.”
As for when the gold price bull market will eventually end, Rogers – famous for managing the Quantum Fund with George Soros and for his bullish stance on commodities over the past decade – admitted that he has little to no idea. “It will end in a bubble when this is over. The way bull markets work is they go up and up and then by the end they turn into a bubble and that will happen to gold… That could be five years, 18 years or six years.”
Rogers went on to disclose that he continues to hold positions in both gold and silver, although he presently prefers the white metal because it is cheaper on a historical basis. In contrast to the gold price, however, Rogers did not provide a specific silver price target.
Crocodile Gold Achieves “Excellent” Recovery Rates at Union Reefs
Crocodile Gold also noted that it produced record quarterly tonnage and achieved “excellent” gold recovery rates at its Union Reefs production facility in the Northern Territory of Australia. The Company reported that on the exploration front, drilling results have confirmed the short to mid-term potential of Union Reefs to bring high quality ounces to its production profile. Full Crocodile Gold News Release.
- Milled a record total of 559,447 tonnes of ore at an average grade of 1.09 grams per tonne (g/t) and a recovery rate of 92.8% to produce 18,186 ounces of gold
- Maintained net working capital of $50.9 million, including cash and cash equivalents of $49.2 million or $0.16 per share
- Completed 589 meters (m) of development at the Cosmo underground mine, in addition to the 543m in the previous six months, with a third mining level now accessed