I believe Roulston will be proven rightMar 14 2008 10:29AM
Huge Gains for the Metals
The metal prices are soaring; share prices are just starting to move.
At $970 an ounce, the gold price is well into record territory. Some might argue that the 15% move in gold this year is due to investors fleeing to a safe haven in the midst of economic uncertainty. There is an element of truth to that. However, the reality is that metal prices are gaining across the board. Much (or even most) of the impetus for those gains is coming from basic supply/demand fundamentals.
Silver, at $19.75, is at the highest level since 1980 when the Hunt brothers tried to corner the silver market.
Platinum, at $2,141 an ounce, is just under the all time record high set earlier this month. Palladium, at $560 an ounce, is up 50% from the start of the year. Rhodium is up 80% in the past couple of months and now fetches an astonishing $9,000 an ounce.
Silver, platinum, palladium and rhodium are precious metals by virtue of their high values. However, demand for all of those metals derives mainly from their industrial applications.
Consumers around the world are buying stuff at a greater rate than ever before and industries are using metals at a faster pace than the mining industry can deliver. There is no sign of that situation changing any time in the foreseeable future.
Share prices for the exploration and development companies, on average, have barely moved from their lows at the start of the year. However, select companies are showing signs of life. In fact a few companies have had substantial moves as favorable developments catch the attention of investors.
The fundamentals in the metals industry are so strongly bullish that it is only a matter of time until investor sentiment shifts solidly into the sector. Clearly, some investors are already coming back into the markets. As always, the first movers stand to realize the largest gains.
by Lawrence Roulston