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Gold/Mining/Energy : Naxos Resources (NAXOF)
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To: Kim W. Brasington who wrote (8592)1/27/1998 9:51:00 AM
From: Henry Volquardsen   of 20681
 
The major purchasers of Indonesian oil in order are Japan, Singapore, Korea and Taiwan. Singapore may be misleading as they did a lot of processing and that oil could have been sold elsewhere.

Also the recent rise in gold had little to do with Asia as new gold buying by Asian sources has been very muted. The main source of buying we have seen in the gold markets came from three factors. The first was the high profile reports of additional mine closings. Second were some unconfirmed rumours out of Europe that there would be lower central bank gold sales in '98. The final factor was dollar weakness in response to the Clinton situation. The thinking on this is that with some nervousness re the dollar some money was looking for a new home and didn't like the yen because of the ongoing difficulties there and was leery of the deutschmark because of concersn regarding EMU. All three of these elements were working their way through the market within a 48 hour period and prompted hedge fund buying. Frankly the only one of these three factors that I deem realistic is the impact of the mine closings. It is way to soon to know what we will see this year in central bank gold sales. Also whatever happens with Clinton the basic economic situation in the US will be very little changed, there are very few parallels between the economy now and in '74.

FWIW you know I am not a gold bug. However I do believe that markets ALWAYS overreact (contrary to recently stated opinions that the current price of whatever is under discussion reflects everything that is known on the subject). I believe gold is currently undervalued and equilibrium will eventually be found back in the 350 to 400 range.
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