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Gold/Mining/Energy : Gold Price Monitor

GDXJ 126.27

+3.5%

Jan 12 4:00 PM EST

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To: Enigma who wrote (39299)	8/19/1999 9:44:00 PM
From: Bob Dobbs	Read Replies (1) of 116853

DoubleD: I think Ken wants to drive home the point that the producers that hedge are responsible, willingly or unwillingly, in large part, for the drop in the gold price. I couldn't agree more although I think the point he's inferring(if I'm reading him right) that new production can be bought by Central Banks and mobilized through forward sales is not a weighty one. What are the statistics on the demand side? About 75% of demand is for jewelry. 0.75 x 4000 = 3000 tons which is greater than production! There is a small percent that's dental and other industrial demand, about 10%. That leaves about 15% for bars and coins. So lets say the bar/coins demand is about 600 tons. Lots of that will get scarfed up by private investors (all the coins and a good bit of the bars). The rest can theoretically go to CB coffers. Now I ask you and Ken - just why would a CB who's buying gold today buy it and then lease it out? If you're really convinced that paper is king then you'd sooner buy some govt bonds right? If you do think gold is a good long term asset then you'd buy it and hold it, right? Do you think those CBs buying gold bars now would then turn around and lease it out? For what? If they believe in gold, then the protection that gold affords would naturally turn up during a time of great market distress, ala when counterparties to your forward sale are insolvent! That's exactly when you'd want your gold back! So you see there's a great contradiction for those CBs who might consider buying gold in the open market now only to lease it back out. The CBs leasing out gold today are those who have held it long enough and want a return on it. They're not increasing their holdings. So I really doubt Ken's latest point is that weighty. Gold bought today is being bought by strong hands. It's the weak hands presently WITH the gold that are "mobilizing" it. Bob

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