Interesting article below sorry about all the space.
Would be nice to see that!
Mark
Search by:
Enter keywords
IndustryNews
The Internet
Trade Events
Worldwide
Gold Price To Go Up To Us$325 By Year End
Source: Africa News Service
Harare - A South African commentator, who predicted 20 years ago that the price of gold would sky-rocket from US$266 an ounce to US$850 an ounce in six months, but was ignored by the market, says the price of gold, now currently below US$260 an ounce will rise to US$325 by the end of the year.
In an article in the Smart Investor, Clive Roffey says, demand for gold is outstripping the normal supply by about 1 500 tons a year while production has been falling, declining by 7 percent in the March quarter.
He says the combined sales by the United Kingdom, the International Monetary Fund and Switzerland will not make up this shortfall. The UK plans to reduce its gold reserves from 715 tons to 315 tons and plans to sell 125 tons this year.
The IMF which holds 3 200 tons plans to sell up to 10 million ounces for debt relief. It needs 85 percent of its members to support this move before it can go ahead. The United States, however, has 45 percent of the weighting in the vote which means if the United States congress approves the sale it can go ahead.
But some lobbyists are already arguing why the IMF should sell the gold to help poor countries when they are likely to be the worst hit by the collapse of the gold price. Switzerland plans to sell 1 200 tons over five years starting in 2002.
Roffey says since demand is higher than supply, the only reason the gold price is depressed is because there has been a well-documented attack on gold by the hedge funds that borrow gold from banks and immediately sell it to generate cash that is then invested in other markets to yield a positive return. "Ultimately, these funds have to return the gold to the banks from which they borrowed it. Provided the hedge funds can keep the price of gold down they are making huge manipulated profits." He says it is interesting to note that every time bullion starts a substantial rally, out pops a leading politician or banker to demand sales of gold.
Another commentator puts the gold price at between US$250 and US$280 but quickly cautions: "The gold price has a mind of its own. It may be very negative now, but it can easily spike up US$10, US$20 or even US$50."
Flemings forecasts the price at US$270 an ounce for this year, US$275 for next year and US$281 for 2001. It says, however, for the 1999 target to be attained the average price of gold should be US$260 for the second half.
It says on the negative side is the threat that central bank sales will continue to depress sentiment, potential IMF and Swiss sales approvals, the availability of gold loans which support short position-taking, the continued US dollar strength and the likelihood of the lowering of forward sale "trigger prices".
On the positive side though is the opposition lobby which is gaining strength, the probability that the US congress may not approve the IMF gold sales, inflation concerns which are beginning to build and gold demand which is up 61 percent.
In Zimbabwe, gold production has continued to expand in spite of the depressed prices. Output has increased by 35 percent in the past five years, from 18.5 tonnes in 1993 to 25 tonnes last year.
Barclays Bank says there was a further 5.6 percent rise in the first quarter of this year with output for the year expected to increase to 26 tonnes. It says gold has played a very large role in defending the balance of payments position in the absence of IMF funding.
In the first quarter of this year, gold sales accounted for US$57 million, or slightly more than 50 percent of all cash exports. (Copyright 1999 The Insider.) Distributed via Africa News Online by Africa News Service.
(Copyright 1999 Africa News Service)
_____via IntellX_____
Publication date: Jul 30, 1999
© 1999, NewsReal, Inc.
|
