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Goodbye Oil, Hello Gold. China Mineral Company Report.
Political turmoil in the Middle East has an obvious, direct effect on oil prices. But what about the indirect consequence on commodities like gold?
Gold, in a “healthy” market traditionally trades at fifteen times the price of oil. With the recent sharp peaks in oil prices, some analysts have predicted gold to trade as high as $1,500 an ounce in the coming weeks. While the situations in Tunisia and Egypt appear to have begun to take the long, gradual turn towards stability, Libya leaves room for vast speculation. The process of stabilizing the region, thus bringing oil prices down to their mid-2010 prices could take months, perhaps years, leaving gold floating at a record high.
Other geopolitical events, aside from the crisis in the Middle East, are making gold more appealing to foreign investors. The continued gradual decline of the dollar has made investors especially wary of currencies as an investment, and more and more have been looking to “old world” commodities like gold.
All this spells out great news for those who already pumped a ton of capital into the proverbial gold mine, but what about those still thinking about investing? Well, the truth is it is not too late to jump on the bandwagon. Not only will the rise of oil directly artificially inflate gold prices, but the oil trade is directly related to so many other industries such as shipping, banking that will all be taking a hit over the next year or so. Many investors who are trying to ride out the storm that is the unraveling of the Middle East are likely to jump ship as well after the first quarter losses of 2011 are posted, DE-vesting their assets in the form of EU bonds and looking for hard commodities. By early summer of this year gold will continue to rise, and many speculators state off record they would not be surprised if gold finishes at $2,500 an ounce in 2011.
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About China Mineral Company:
China Mineral Company Ltd. was formed in 2007 to explore unallocated tracts of land abutting the Yashan gold mine, where there was expected to be an abundance of silver. After initial surveys found not just silver, but extractable gold, the Company launched its initial round of fundraising. The company has since come to agreement with the Chinese government and was able to begin operations in the middle of 2008.