Gold sets record: Is it topping or just getting started?

On The Road With Rhodium

With simultaneous headlines blaring “Gold May Rise” and “Gold May Snap Its Run” everything the financial world this morning was as “normal” as usual. Some see the achievement of a long-standing target at the $1,600 mark as only the start of a parabola that would lift the yellow metal to its inflation-adjusted $2,300 zenith. Others warn that the wall of worry that the “gold market has been climbing in recent weeks is close to disintegrating.” Welcome to another installment of Monty Python’s “Confuse-a-Cat.” A world where experts advise and where the advisees remain as baffled about what to do as they have ever been.

For the time being, the only concrete evidence of some amount of steam being leaked from the golden locomotive was this morning’s minor opening loss of $4.10 per ounce. Spot gold was bid at $1,601.00 the ounce in New York despite (another cat-confusing item) the slightly weaker US dollar and despite the lack of a Washington budget-talk breakthrough. Overnight highs came in very near the target of $1,615.00 that was mentioned yet again in last night’s short-term update from the analytical team over at EWI. The update’s summary was that “the burst to $1,615…remains possible but it should mark the end of gold’s long rise.”

Market guru Dennis Gartman was equally…equivocal in his morning comments today. On one hand he noted that “The world is shunning fiat currencies and is rushing to embrace gold as the only long-standing currency.” Then, he added that: “A correction of serious consequence is coming. Eventually there will be a massive crack in gold and silver.” Might as well simply roll the die or toss a coin, Mr. or Mrs. Feline.

Silver prices drifted 29 cents lower this morning, opening at $40.26 per ounce. The white metal continues to ‘non-confirm’ the bull move in gold and albeit it has rallied to a new so-called ‘counter-trend’ high and has practically finished a 50% retracement of the decline it underwent from $49.91, it needs to maintain above $35.70 lest if were to restart on its way down. The potential for a hike up to the upper levels of the $43.00 area is still there at present however.

Platinum and palladium declined in sympathy with precious metals this morning in New York. The former dropped $3 to open at $1,768.00 and the latter fell $2 to start at the $792.00 mark per ounce. Rhodium remained static at $1,975.00 on the bid. The noble metal is still in ‘stealth’ mode at the present time albeit it might contain a quite decent gain potential in light of some recent developments on the market as well as the scientific fronts.

Researchers have long struggled to develop commercially viable on-board hydrogen fuel cells (see the Honda FCX). The problem ultimately remains the large-scale production and distribution of hydrogen gas, given the current global infrastructures. Just last week, we learned that scientists in Singapore have however come up with an ingenious method of using on-board mini-reactors to, in effect, “convert” gasoline into hydrogen by using two unique metals and high-temperature steam.

Ethanol (sourced from biological materials such as algae for example) can be used for such conversion purposes but it will require a catalyst that employs rhodium crystals and iron oxide nano-particles deposited on a solid substrate. Thus far, the research team has been able to generate about four units of hydrogen from each ethanol molecule they ran through this surface. No CO by-products were generated in the process; a big plus. We look forward to Mr. Luwei Chen and his co-workers at the A*STAR Institute of Chemical and Engineering Research and the National University of Singapore bringing mass-market on-board ethanol-hydrogen converters into implementation.

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