Gold Watch
Veneroso Associates
May 21,1998 Issue 05.04
The Gold Market
"Never sell a quiet market short"
The Gold Market is Not Just Quiet, It Is Completely Silent
A Precursor Of A Major Upmove?
The technical position in the gold market is intriguing.
The overall price pattern is constructive. There are
positive noises coming from the big dealers. Yet, sentiment
on the part of market participants has become one of
avoidance, indifference,neglect and despair.
* The Comex open interest is 154,467. This is almost as low
as it gets. In the last three days it dropped 5,095
contracts. In the "new era", gold is viewed as a relic from
a bygone era. It is as though gold as a subject has fallen
off the edge of the earth.
* The American Stock Exchange had a conference recently
for the Amex listed gold companies. Only five showed up to
give presentations. The Amex has not yet given us the number
of investors or brokers who showed up, but attendance was
sparse. By one account, excluding staff from the presenting
companies, there may have been only a dozen attendees versus
one hundred a year ago.
* Ango Gold is the largest gold company is the world. It is
the result of a merger between two giant producers - Anglo
American and Gold Fields. It accounts for more than 10% of
global mine supply. Even at today's depressed gold share
prices, it has a market cap in the billions. The merger is
complete. The new company will be listed on the NYSE. A debut
luncheon was held for top management to tell their story. Six
people showed up. One was our own representative - John
Brimelow. It is our guess that the total money under
management by the attendees was less than $100 million.
* From the World Gold Council, the market got very bearish
global demand numbers for Q198. Yet, the market took it in
stride and closed slightly higher. We will deal with this WGC
gold demand survey in a forthcoming Gold Watch.
* We have a huge pennant formation building. Formations such
as this often result in big price moves
* The market is having trouble above $300. The big central
bank gorilla is still feeding out its final tranche of supply.
* All of these considerations and anecdotal evidence are
consistent with our belief that a massive six month base is
near completion. As soon as the big gorilla finishes
this last tranche of selling, the market should move up, and
maybe sharply at first, just when everyone has lost
interest in this market. |
