Gold’s recent price movements have created a new breed of investor in Asia. With many Chinese shut out of their favored investment, the real estate markets, by increasing government regulation, they are looking for new avenues. Gold is now being sold in more banks, and Chinese investors are snapping it up.
To the South West, in India, buyers are paying as much as $160/ounce premium to buy gold after the government put limits on its import. Smuggling seems to be rampant.
In Singapore, a Brink’s general manager told Bloomberg “We need additional capacity, so we have to take further space. There’s a surge in demand for precious metals in Asia, and one can see the focus and movement from the west to the east.”
But gold isn’t the only precious metal gaining some traction. Platinum mining unions are demanding a doubling of the wage paid to miners. Negotiations over a deal have been start-and-stop and a deal may not be reached soon. The fractured negotiations are pushing up palladium prices as well. In any case, the wages of miners are going up. According to Global Post “Employers had offered to raise salaries by a minimum of seven percent each year for three years.” Yesterday it was reported that talks had broken down:
South African platinum producers said that talks aimed at ending a crippling two-week-old strike by miners had broken down Wednesday, with no date set for further negotiations.
Government-brokered talks with the Association of Mineworkers and Construction Union (AMCU) “have been adjourned as the parties have been unable to reach a settlement,” three top producers said in a statement.
Blasting AMCU for unwillingness to negotiate, the CEO’s of Anglo American Platinum, Impala Platinum Holdings Limited (Implats) and Lonmin said the union’s demand of a minimum $1,125 monthly wage was not feasible.
Higher wages for miners will inevitably mean higher costs for production and increased spot market prices for the platinum group metals.
Meanwhile, silver has also rallied on weak U.S. economic data and the ECB’s decision to hold rates steady at .25 rather than dropping them to the anticipated 0.10%. This was enough to give the euro some extra strength against the dollar and therefore boost the price of silver in dollar terms.
Precious metals can act as a counterbalancer to inflation in portfolios, and as a safe haven investment when markets are unstable or unpredictable. Many market participants are taking positions to diversify against future risk.
