Hi Vandek,
I agree with you that some people in the know are shorting some gold stocks. I believe some of them are investors who had lost big time on Bre-X. The shorters are taking advantage of several factors (mentioned in the Business Section of June 24th's Globe and Mail):-
1. continued strength in the stock market (making gold less attractive as an investment,
2. continuing low inflation (making gold less attractive as a hedge),
3. a high U.S. dollar (making gold more expensive for foreign buyers)
4. continuing fears of European central bank selling gold (sparking fears of a 'oversupply'.
Even the two top gold producers (Barrick (ABX) and Placer Dome (PDG) were not immune to price drops. It looks like we just have to wait for the turnaround. Everything goes in a cycle!
The following snippet taken from Merc.com echoes the factors mentioned above.
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COMEX and NYMEX precious metals futures ended lower Tuesday on
moderate volumes, with the exception of palladium, as the U.S.
dollar rose, and confidence returned to equity and debt markets
following Monday's sharp fall in the Dow Jones Industrial Average.
"There's probably good reason to still be bearish about gold, as
the cloud of central bank selling hanging over the market is not
dissipating," Chase Manhattan global managing director of
commodities, Dinsa Mehta, said. "It's questionable whether gold
will go significantly lower, but it may be that we'll finally see a
break of the $340 level in a spike lower," he said.
"With the bulls running wild in the equity markets during most of
the last two years, it has been easy for gold bugs to stay in
hibernation," one investment bank analyst said. "The lingering
threat of additional central bank sales, increased producer
hedging, low inflation, a surging dollar, and gold's recent
inability to get a boost from political turmoil, have all
contributed to sharply negative sentiment toward gold."
But the bearish mood was briefly interrupted late Monday by
comments by Japanese Prime Minister Hashimoto suggesting Japan had
been tempted in the past to sell U.S. Treasuries and switch
reserves into gold. IMF data shows that as of June 1996 Japan's
gold reserves totalled 754 tonnes, well below Germany's 2,960
tonnes, France's 2,546 tonnes and the U.S. holdings of 8,140 tonnes.
Meanwhile, COMEX July silver ended down 6.2 cents at $4.745 an
ounce Tuesday. First notice day for the July contract is June 30.
July silver is still seen trapped in its $4.65-4.90 range of the
past six weeks.
NYMEX July platinum lost $5.80 to close at $409.50, but NYMEX
September palladium gained $2.35 to end at $179.00. In news
Tuesday, the deputy director of Almaz, Russia's precious metal
export agency, would not say when deliveries of platinum group
metals (PGM) would resume and reiterated that 1997 exports would be
lower than in 1996.
Russian PGM exports, suspended for five months, were expected to
resume in late June. Russia supplies about 60 pct of the world's
palladium and 20 pct of its platinum. But the platinum market is
likely to swing into a supply/demand deficit in 1997 for the first
time since 1985, while the palladium market surplus is seen
shrinking, as supplies contract for the first time since 1988, New
York-based industry consultants CPM Group said in its 1997 platinum
group metal (PGM) market survey published Monday.
For the full text story, see
merc.com
---------------------------GOLD------------------------------
COMEX - 100 troy oz _ dollars per troy oz.
CONTRACT OPEN HIGH LOW CLOSE CHANGE HIGH LOW
Jun97 338.70 338.70 338.00 337.80 _1.60 497.50 336.50
Aug97 340.80 341.20 339.40 339.50 _1.60 414.50 338.50
Oct97 343.30 343.70 342.40 342.00 _1.60 426.50 341.10
Dec97 345.70 346.10 344.40 344.60 _1.60 456.50 343.60
Feb98 348.20 348.20 347.60 d347.10 _1.60 424.00 347.90
Est. Sales 27648
--------------------------SILVER------------------------------
COMEX - 5,000 troy oz. _ cents per troy oz.
CONTRACT
CONTRACT OPEN HIGH LOW CLOSE CHANGE HIGH LOW
Jul97 477.50 479.00 473.00 475.00 _6.20 631.00 462.50
Sep97 483.00 484.00 478.00 479.90 _6.10 576.00 467.50
Dec97 491.00 491.50 485.00 486.80 _6.10 701.90 475.00
Mar98 496.00 496.50 494.00 493.60 _6.20 573.00 485.00
Est. Sales 37697
----------------------HIGH GRADE COPPER-----------------------
COMEX - 25,000 lbs. cents per lb.
CONTRACT
CONTRACT OPEN HIGH LOW CLOSE CHANGE HIGH LOW
Jun97 117.80 117.80 112.50 112.70 _5.90 122.50 82.50
Jul97 117.60 118.00 111.60 112.15 _6.05 123.10 83.40
Aug97 116.10 116.30 110.50 111.15 _5.75 120.90 84.10
Sep97 115.50 116.00 110.30 110.75 _5.45 120.50 83.00
Oct97 112.70 112.70 109.20 108.95 _5.05 117.20 84.50
Dec97 111.60 111.60 106.70 107.05 _4.55 114.80 83.75
Mar98 103.50 104.00 103.25 103.35 _3.75 109.30 85.00
May98 102.50 102.50 102.00 101.35 _3.50 106.75 85.00
Jul98 100.00 100.10 100.00 99.35 _3.15 104.10 84.80
Est. Sales 13767
-------------------------PALLADIUM----------------------------
NYMEX - 100 troy oz _ dollars per troy oz
CONTRACT
CONTRACT OPEN HIGH LOW CLOSE CHANGE HIGH LOW
Jun97 200.00 205.00 198.00 203.90 _2.65 225.00 118.25
Sep97 176.50 179.50 175.00 178.90 +2.35 192.00 128.75
Dec97 172.00 172.00 171.00 172.55 +6.00 182.50 120.25
Est. Sales 535
--------------------------PLATINUM----------------------------
COMEX - 50 troy oz _ dollars per troy oz.
CONTRACT
CONTRACT OPEN HIGH LOW CLOSE CHANGE HIGH LOW
Jul97 409.50 413.00 406.00 409.40 _5.80 473.80 353.50
Oct97 400.00 403.00 398.00 400.40 _.80 429.00 355.50
Jan98 393.50 393.50 392.00 394.90 +1.70 424.00 360.00
Est. Sales 1932
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Richnorth |
