Gold and silver watching political “gangs”

In the Lead: “Gang Warfare”

On the platinum production front, our friends at the analytical desk over at Standard Bank (SA) note that “More threats to South African platinum production emerged after the National Union of Mineworkers rejected Eskom’s (the country’s electricity provider) wage offer. This raises the probability of industrial action which could threaten the already constrained electricity supply, and consequently mining production. Currently, the country is in the grips of widespread industrial action across various industries.”

“Fuel shortages have occurred in parts of the country, which the SA Chamber of Mines has already warned could disrupt mining output. Current negotiations in the platinum mining industry are likely to continue until end July. With a large disparity between employee demands and what the mines are offering, some disputes have already been declared. This could escalate into strike action by mid-August.” One more reason we noted on Bloomberg Radio this morning that the PGM niche remains in a far superior fundamentals’ based statistical market position than gold and silver are in, presently.

Platinum added $5 to rise to the $1,778.00 mark while palladium climbed $3 to open at $796.00 on the bid side. Rhodium was bid at $1,950.00 per ounce after having shed $25 in slow action on Wednesday. In the background, the US dollar was off by 0.27 on the trade-weighted index, trading at $74.42 while the euro remained above the 1.426 level, and crude oil nudged 25 cents higher to the $98.62 per barrel price tag.

US jobless claims rose by 10,000 filings last week (to 418,000) but the four-week moving average of such claims fell to 421,250, which was a three-month low. Continuing jobless claims declined by 50,000 and ended at 3.7 million as of July 9th. Networking equipment maker Cisco Systems made unwelcome headlines this week as it announced the planned shedding of about 6,500 positions (9%) from its full-time workforce in order to save $1 billion in annual costs.

Upcoming US economic data might be signaling that the country’s recovery could be on the muted side in the second half of this year. Analysts keep pointing fingers towards what they call a labor market “in a funk” and peg a spike in consumer spending to the need for employment growth. Maybe they can call in the self-proclaimed “job creators” to help the situation. Then again, their record says otherwise, so forget it.

Meanwhile, S&P has said today that it might downgrade the US’ long-term debt if the “two sides involved in the policy stalemate remain at odds on fundamental fiscal issues.” Warning number 117 from source 43 and counting…Hello? Gang of Six? S&P gives the downgrade’s odds as one in two. Fitch’s ratings firm will decide on the US’ rating status next month. Its decision is also one of ‘keep’ or ‘cut’ at this point. Faites Vos Jeux.

Something else that might be worth taking into consideration when making bets (especially in commodities) is the specter of Chinese economic slowdown. Whilst the propaganda about insatiable demand for ‘stuff’ continues unabated, the reality shaping up on Chinese ground is…at odds with it. To wit; China’s factory sector shrank for the first time in one year this month.

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