J NY Precious Metals -2: Low Gold Stocks Not Key To Rally
Leonard Kaplan, president of Prospector Asset Management in Evanston, Ill., said he doubted tightness in Comex warehouse stocks, which have halved in the past two months, was contributing to the rally.
While the June delivery month is barely two weeks away, Comex has never been an important delivery location, he said. "There's plenty of gold, just not in Comex (warehouses). If Comex developed a premium of 40, 50, 60 cents (to the price in London), believe me, it would flow in," Kaplan said. As long as Comex gold remained the cheapest to deliver and below the London price, he predicted Comex warehouse stocks would continue to deteriorate.
The possibility of a squeeze is much greater after June 15, as those holding short positions have until the end of June to source and buy physical metal to cover their deliveries, he noted. A squeeze occurs when shorts are forced to bid the price up to secure metal to make good on their deliveries when supply is tight.
O'Neill at Merrill Lynch named $282 an ounce as the top of his three-month range for gold, while Prospector's Kaplan saw $275 as a brick wall of resistance, with buy-stops above there, between $275.50 and $276 in the June contract.
Comex July silver retraced downward initially on some profit-taking but later made another attempt to break through overhead resistance. It got as high as
$4.51 before being sold back down to end at $4.495 an ounce, up 3.2 cents from Wednesday. Kaplan still regarded it as a slave to gold.
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May-17-2001 20:34 GMT
A bit stale, but of some interest... |
