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Gold/Mining/Energy : Gold Price Monitor
GDXJ 105.33+5.2%Nov 26 4:00 PM EST
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To: Zardoz who wrote (21664)10/14/1998 9:59:00 PM
From: E. Charters  Read Replies (4) of 116770
 
The thing is 8000 tons is not a small amount. It is many years of world supply. It is worth 70,000,000,000 dollars. That ain't hay.

The producers sold it to the people who borrowed more gold from the central banks. Those borrowers sold this borrowed gold in turn. So a bunch of bankrupt borrowers owe the banks 8,000 tons of gold. What are they to do? The producers cannot deliver at these prices. The amount sold after they bought the producer's gold forward exceeds the amount deliverable. It is a classic short squeeze. Barrick and Dome's production exceeds 6 million ounces in 1999. That is 205 short tons. But it is far far short of 8,000 and this 205 tons equals' the United State's entire output for one year. To put it in perspective South Africa used to dominate world supply, producing 75% of the worlds gold at a rate of about 750 tons per year. That means we are at least eight years short of the world supply rate right now. This is not just disturbing, it is staggering. When the market was short 75 tons in 1985 the price rose 50 dollars in three days.

Something is very strange in the market. The pressure downward on gold is political as it would make the world's largest economy look very weak if gold hits it true value, of between 700 and 1200 dollars an ounce.

EC<:-}
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