Gold follows euro higher but fervor tempering

In the Lead: “Children at work”

US unemployment benefit filings fell substantially last week, with 50,000 fewer applications tallied and they reached a near-four-year low at 352,000. US wholesale inflation was down 0.1% while America’s core inflation rate was up 2.2% over the past year. Consumer prices remained flat in December. Apparently, hyperinflation remains a bogey that is still largely confined to the pages of alarmist financial publications which have been waiting for it to ravage your wallet for half a decade now. They are still waiting.

Spot silver opened with a gain of 26 cents at $30.75 and then fell to $30.44 showing a loss of eight pennies by the time the Dow opened for action in New York. Morgan Stanley recently cuts its 2012 silver forecast by 29% to an annualized average of $35.48 and Credit Suisse trimmed its own silver projections to $32.80 for this year.

None of that kind of level-headed forecasting has stopped the calls/promises for triple-digit silver “just around the corner” coming from quarters that ignore the reality that at least 55% of silver’s demand is industrial in nature and that the white metal-judging by perhaps only four central banks owning any-has lost its former monetary attributes. Platinum advanced by $4 to $1,527 while palladium rose by $8 to reach $674 per ounce. Rhodium remained bid at $1,300 the ounce. The best gain (aside from palladium) this morning was noted in crude oil values, which climbed 1.15% to the $101.75 per barrel.

The US dollar narrowed its earlier losses on the trade-weighted index and was quoted at 80.33 (down 0.20%) at last check. Technicians opine that the maintenance of the 80.23 level is fairly important for the moment and that a breach thereof could extend the greenback’s corrective pullback from the 81.50 level that it touched on the 9 of the month. Recall that the US currency reached lows near 72.70 last spring and near 74.72 last fall amid firm declarations that its days were numbered and its fate totally sealed.

We close today with not the most pleasant of topics, but with one that merits your attention provided you wish to know more than the superficial facts extant in the gold market. We have all heard of “blood diamonds” and now even of “blood gold” when it comes to certain African countries (Congo). However, now, another side of the price equation of gold has been brought to the attention of Marketwatch’s readers by award-winning broadcast journalist Jeanette Pavini.

Ms. Pavini would like us all to be aware of the sources of our shiny stash of bullion. She recommends that bullion buyers can support “fair trade” jewelers and bullion dealers when opting to purchase gold. This, because the UN estimates that about 20% of the world’s gold might be coming from so-called ASMs (artisanal and small-scale mining) which entail child slave labor and human trafficking. For example, in Mali, it is estimated that some 20,000 children work in gold mining. As many as 50,000 kids might be digging for gold in Peru. Sadly, some ill-informed commenters on the Marketwatch site have summed up such tragedies as “Well, at least they have a job…”

Small steps are however being taken to rectify the situation in this niche. Marketwatch reports that “Beginning this year, under the California Transparency in Supply Chains Act, major companies — not only those based in the state, but also many that do business there — are required to post information on their websites regarding their policies and some of the steps they’re taking to address human trafficking within their supply chains. Currently some companies only monitor labor issues at their first- or second-tier suppliers.

As well, “The Dodd-Frank Act includes a provision that companies that have gold or one of three other minerals in their products are required to tell the Securities and Exchange Commission in their annual filings whether those minerals — known as “conflict minerals” — came from eastern Congo. If they did, the companies must explain the acquisition process to ensure there was no illegal or abusive armed groups profiting from the mining. This provision of the act will go into effect after the SEC issues clarification on the regulations, which have been delayed. Enforcement details are expected sometime in the coming weeks.”

Until tomorrow,

Jon Nadler is senior metals analyst with Kitco Metals Inc. in Montreal.

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About the Author
Jon Nadler Jon Nadler is a Senior Analyst at Kitco Metals Inc. North America
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