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Gold/Mining/Energy : Gold Price Monitor
GDXJ 106.90+0.1%4:00 PM EST
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To: Ken Benes who wrote (69403)5/18/2001 12:29:16 PM
From: Greg Ford  Read Replies (2) of 116795
 
I agree with you Ken. Look at how the stocks have moved relative to a 10 to 15 dollar move in gold. We are only talking about $275 gold. The problem for gold is who will buy it.

1. The shorts on Comex have covered.
2. Hedge funds are flat to long gold.
3. Demand will fall off as prices move higher.
4. Hedgers who are holding back will sell gold at the first sign of weakness.
5. Don't forget the central banks.

The key to a sustained price higher will be reduced production and possibly a weaker dollar. Producers have to reduce marginal production. Hedging will continued but will be affected by the high lease rates and lower interest rate environment. What could take gold higher. The GATA and short gold conspiracy crowd are dreaming if they think it is short covering by bullion banks.

I have a tough time seeing gold sustain these levels let alone move higher. Even if it does where is the higher price $285 maybe. The last time we saw that was in July 2000.

We need less production. We need to see marginal producers out of business. We need two to three years before we can see sustained higher prices.

That being said I hope I am wrong and all the gold bulls are right.

Just call me pragmatic.

Greg
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