Gold - The Weekly Global Perspective

By: Julian D. W. Phillips | Fri, Mar 25, 2005
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HIGHLIGHTS from "Global Watch - The Gold Forecaster"
Market Action / Short-term forecasts across the Board!
Inflation & a steady $! - China threatens 30 million jobs in Textiles
Gold Mining in S.A. moved to Intensive Care - Chile - The Royalty Tax
The present Gold Price Drivers.
Technical Analysis of the Gold Price: Long/Short term.
International Gold Markets. Rand Gold Price Downtrend Ends
Silver / Platinum
SHARES analysed -INDEX - CRB, HUI, NEM, AEM, PDG, HMY, NG, VGZ, GSS, SSRI

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Gold mining in South Africa moved to Intensive Care.
What a contrasting week for South Africa this week was. On the one hand, primarily due to falling differentials between South African interest rates and rising U.S. interest rates, the Rand buckled somewhat to fall 4% down to R6.24 to the U.S. $1. This impacted well on both the Johannesburg Stock Exchange and the S.A. Rand gold price. As the U.S. gold equities fell up to 10%, S.A. gold equities held steady, with the Index holding well above support [at 1600] at over 1700.

But both Harmony and DRD Gold hit very troubled waters. The amputations began at DRD Gold who have closed the doors on their troubled North West Operations around Stilfontein [The company is called Buffelsfontein]. After an earthquake threatened to add to their losing R231,000 a day, by a significant amount, [The No 5 shaft of the North West Operations accounts for approximately 11% of North West Operations total gold production suffered serious damage as a result of the earthquake] they faced a belligerent and rapacious Union, who would not only accept these difficulties but amid insults, demanded a wage increase at least 4% over inflation at 10%.

As a publication we are apolitical, taking no sides, but hold to non-prejudicial reporting. We want you to have price accurate reporting, always, but it has to be said, in South Africa, under the guise of putting right the iniquities of the previous "Apartheid regime", scant regard is given to good business sense, whilst destructively aggressive attitudes dominate! It would seem therefore, that the Unions will press for this increase, despite the foreknowledge that it will cost over 5,000 jobs at Harmony alone.

The placing of the North West Operations of DRD Gold in Provisional liquidation, will place this operation in the hands of, at best, a judicial manager, who will carry the operation at the expense of the companies assets. DRD Gold in turn will stem the haemorrhaging of cash flow through this part of the company, leaving the remaining local South African Operations in better condition, alongside the profitable foreign operations. The completion of the payments from JCI to DRD Gold of 37 million lifts the company out of danger of further liquidations, it seems.

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China threatens 30 million jobs in Textiles alone!
In the first month after the end of all quotas on textiles and apparel around the world, imports to the United States from China jumped about 75%, according to trade figures released by the Chinese government. The statistics bear evidence that China's booming textile and apparel trade, unhampered by quotas, could be on the brink of dominating the global textile trade.

In January, the United States imported more than $1.2 billion in textiles and apparel from China, up from about $701 million a year ago. Imports of major apparel products from China jumped 546 percent. Last January, for example, China shipped 941,000 cotton knit shirts, which were limited by quotas; this January, it shipped 18.2 million, a 1,836 percent increase. Imports of cotton knit trousers were up 1,332 percent from a year ago. Even these figures may be understated because China ships a large part of its goods through Hong Kong, and those shipments are not included.

Already, in January, the first month after global quotas were lifted, 12,200 jobs were lost in the United States apparel and textile industries, according to the Bureau of Labor Statistics. China could capture as much as 70% of the American market in the next two years. Before the end of quotas, about 16% of apparel sold in the United States came from China.

The impact of China's apparel exports is felt in every other country in the world. The 25 countries that are part of the European Union also registered big increases, importing about $1.4 billion worth of textile and apparel goods from China, up from about $975 million a year ago, a jump of 46%. Countries as far away as South Africa are seeing their vulnerable textile industry decimated in the same way. Eventually, 30 million workers around the world and perhaps 500,000 in the U.S.A. will be affected.

The U.S. trade gap widened in January to the second largest ever, as imports of foreign-made automobiles and other consumer goods swamped record U.S. exports. China and their textile exports accounted for more than a quarter of the shortfall!

This is the beginning of the swamping of world trade by China, emulating Japan over the last 50 years.

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Julian  D. W. Phillips

Author: Julian D. W. Phillips

Julian D. W. Phillips
Gold Forecaster

Julian D. W. Phillips

"Global Watch: The Gold Forecaster" covers the global gold market. It specializes in Central Bank Sales and details, the Indian Bullion market [supported by a leading Indian Bullion professional], the South African markets [+ Gold shares shares] plus the currencies of gold producers [ Euro, U.S. $, Yen, C$, A$, and the South African Rand]. Its aim is to synthesise all the influential gold price factors across the globe, so as to truly understand the global reasons behind the gold price.
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