Gold Mines In South Africa See Strikes As Industrial Unrest Spreads

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Today’s AM fix was USD 1,686.00, EUR 1,341.72 and GBP 1,061.65 per ounce.
Friday’s AM fix was USD 1,657.75, EUR 1,319.03 and GBP 1,047.68 per ounce.

Silver is trading at $31.78/oz, €25.38/oz and £20.09/oz. Platinum is trading at $1,546.70/oz, palladium at $629.50/oz and rhodium at $1,025/oz.


Gold Price August 28th- September 3rd – (Bloomberg)

Gold surged $36.50 or 2.21% in New York on Friday and closed at $1,691.80.  In volatile trade, gold hit $1,663.47 then fell back to $1,649.19 immediately after Bernanke’s Jackson Hole speech was released, but soon afterwards it climbed back higher to hit $1,692.70 late in the session and finished with a gain of 2.21%.  Silver surged to $31.745 and finished with a gain of 4.56%.

It means that gold was 1.3% higher for the week and 4.5% higher for the month of August.

Silver was 3.5% higher for the week and a massive 12.5% higher for the month of August.


XAU/EUR – August 29th–September 3rd – (Bloomberg)

Gold has consolidated on Friday’s gains and remains near its 5 month high today.  US Fed chairman, Ben Bernanke gave a gloomy assessment of the US economy on Friday which means that some form of QE is now almost certain.

The gold price has surged 5% over the last few weeks as investors see that more bond buying and money printing policies by the US Federal Reserve are imminent.

Market watchers await the ECB policy meeting on Thursday September 6th and how it will lay the foundation for the US Fed meeting the following week on the 12th and 13th.  

Coordinated action is possible and Mario Draghi will take centre stage at the ECB policy meeting Thursday with guidance regarding a possible interest rate cut and the possibility of bond market intervention.

Today’s Eurozone manufacturing sector PMI (Purchasing Managers’ Index) contracted for the 13th successive month in August.  

Today is a holiday in the USA, investors await data on Friday for the key US nonfarm payrolls report. It is expected to show payroll growth at only 100,000 which signals how weak the US is at present. 


XAU/GBP – August 29th–September 3rd – (Bloomberg)

The European Stability Mechanism has yet to be ratified and is in the hands of the German Constitutional Court.  Next Wednesday September 12th, the 16 judges that sit on the FCC of Germany will deliver their ruling on the fund’s constitutionality in order to make the fund operational. Rejection by the FCC could lead to volatile markets.

China’s PMI surprised on the downside with 49.2 in August dropped from 50.1 in July, said data released on Saturday showing the increasing fragility of the Chinese economy.

Some 12,000 workers at a gold mine operated by Gold Fields have gone on strike, in the latest industrial strife to hit South Africa’s mining sector.

Julius Malema, the expelled leader of the youth wing of South Africa’s ruling African National Congress, will address Gold Fields Ltd. workers who started an illegal strike at the continent’s biggest gold-mining complex.

About 12,000 employees at the East section of Gold Fields’ Kloof-Driefontein operation started a strike on Aug. 29, demanding the immediate replacement of union branch leadership.

Illegal strikes have been spreading across South Africa’s mining industry after 44 people died in violence associated with a stoppage at Lonmin Plc’s Marikana mine in the North West province last month. Malema addressed miners at Lonmin after police shot dead 34 of the protesters gathered near the mine.

A decline in support for the National Union of Mineworkers, South Africa’s largest labor union, is opening space for other organizations to recruit, leading to unrest at operations and divided, protracted pay talks.

The KDC mines, which employed 26,685 workers including contractors last year, produced 1.1 million ounces of gold in 2011, or 31 percent of Gold Fields’ output. The East section produces 1,660 ounces of gold daily, spokesman Sven Lunsche said by phone on Aug. 31. This is the biggest unprotected stoppage Gold Fields has faced in at least three years.

“We’re not letting any outside political parties onto the property,” Lunsche said by phone today. “It could endanger the security of the mine in a very volatile situation.”

The South African political situation is destabilising an already fragile economy and this has led to the rand falling in value recently. 

The mass of people in South Africa remain desperately poor including the lot of the miners, while improved since Apartheid times remains very tough. 

There is a new corporate scramble for Africa’s natural resources. Pundits predict that foreign investment in mining across the continent is set to increase by an astonishing 40 per cent this year and the top 40 mining companies in the world achieved record profits last year of $133 billion between them. 

The World Bank and others continue to flag the mining industry in particular as the engine of Africa’s future economic growth – the auditor Ernst & Young issued a report last year entitled "Africa: A Golden Opportunity".

Resource nationalism is an increasing response to this across the developing world and could result in the nationalisation of extractive industries in Africa and around the world.

Some fear that the stage is set for Resource Conflict 2.0 which could result in supply issues with regard to certain key commodities.

NEWSWIRE
(Bloomberg) — U.S. Mint Gold-Coin Sales Increase 28% in August From July
U.S. Mint sales of American Eagle gold coins rose 28 percent in August, the third gain in four months. Silver-coin sales also increased.

Sales of gold coins climbed to an estimated 39,000 ounces from 30,500 ounces in July, data on the mint’s website showed today. The figures compare with 112,000 a year earlier.

Gold futures in New York rose this month by the most since January amid speculation that U.S. policy makers would signal that further stimulus measures may be at hand. Federal Reserve Chairman Ben S. Bernanke said in speech today in Jackson Hole, Wyoming, that more bond purchases are an option to boost the economy, lifting demand for the metal as an inflation hedge.

“August has been a big month for gold,” Scott Carter, the chief executive officer at Los Angeles-based Lear Capital, said in a telephone interview. “A lot of it was on anticipation of what was announced today. Investors have been trying to get in ahead of that.”

Sales of silver coins increased to 2.87 million ounces from 2.28 million ounces in July.

(Bloomberg) — Silver Gains to Highest in More Than Four Months, Erasing Drop
Silver for immediate delivery gained as much as 0.5 percent to $31.895 an ounce, the highest price since April 20. The metal last traded at $31.795 an ounce, erasing an earlier decline of 0.6 percent.

(Bloomberg) — Silver Is Biggest Gainer After Bernanke: Commodities at Close
The Standard & Poor’s GSCI gauge of 24 commodities rose 1 percent to 673.24 at 4:59 p.m. in London. The UBS Bloomberg CMCI index of 26 raw materials was up 0.5 percent at 1,597.698.

PRECIOUS METALS
Gold futures climbed the most in a week after Federal Reserve Chairman Ben S. Bernanke said he wouldn’t rule out further bond purchases to boost economic growth, lifting demand for the metal as an inflation hedge.

Gold for December delivery rose 1.5 percent to $1,682.30 an ounce on the Comex in New York. Silver jumped 2.9 percent to $31.325 an ounce.


Cross Currency Table – (Bloomberg)

NEWS
Gold near 5-month high on stimulus hopes – Reuters

Gold Wagers Jump to 5-Month High as Fed Spurs Rally – Bloomberg

US ‘will return to gold standard’, says Euro Pacific Capital chief Peter Schiff – The Telegraph

Commodities Beat Stocks, Bonds For Second Month In August – Bloomberg

COMMENTARY
Bernanke should return the Fed to its golden roots – The Washington Post

US ‘will return to gold standard’, says Schiff – The Telegraph

Central bank gold buying: Much more than just a driving force – Mineweb

New dollar standard is only fool’s gold – The Financial Times

First Platinum, Now Gold: As South African Miners Strike Spreads, Thousands Of Ounces Remain In The Ground – Zero Hedge


Mark OByrne

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