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Gold/Mining/Energy : Gold Price Monitor

GDXJ 106.68

-0.3%

Dec 5 4:00 PM EST

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To: goldsnow who wrote (39636)	8/26/1999 1:58:00 PM
From: Alex	Read Replies (1) of 116798

Is the significance of gold overrated? <Picture: Bruce Hockman>``Central banks have a great deal of gold in reserve, far more than they need. In the modern world of floating exchange rates, you don't need gold as an asset to back your currency if you're prepared to accept market-set exchange rates. Gold won't fall much below the $US240 band because production will be cut back if the price gets too low. But the market tends to overstate the importance of gold quite a bit. Our work suggests the dollar moves more independently of the gold price than it used to - it now takes a fall of about $US50 in the gold price to give a one-cent change in the exchange rate. The dollar is tied to a variety of forces. Although gold is still our second-largest export, it makes up less than 2per cent of the Australian economy. Our economy no longer stands or falls by what happens in the gold market - the consumer sector is much more important.' Bruce Hockman associate director Deutsche Bank theage.com.au

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