According to this there are strong buys out on ABX PDG etc.
Wonder what sort of buy on ARP?? Barrick wants price of gold up.(Previous message)Intersting.
209.53.120.100
This was put out this morning by a Canaccord analyst:
GOLD UPDATE
Several fundamentals could lift gold in 1999-Maintain positive outlook
with a US$325/oz. estimate
In today's retail call, we pointed out several factors that we view as
being constructive fundamentals for gold in 1998, including the
following:
* Comments by Wim Duisenberg, Governor of the European Central Bank
ECB) and former Governor of the Belgium Central Bank (which had been a
staunch advocate of gold sales) said late last week that the gold
belonging to the ECB member States is part of the European reserve,
which are to be held, not spent. In addition, he said that any such
sales would be under the ECB's guidance.
* Over the weekend Sirkka Hamalainen, the ECB board member responsible
for market operations (including gold) and the former Governor of the
Finnish Central Bank told a panel discussion at the World Economic
Forum that the ECB and the national central banks (NCBs) in the 11
European Union countries that have adopted the euro, have no interest
in dumping their bullion on the market, for fear of hurting the price.
In addition, she said that if any of the 11 central banks were to seek
to sell their gold, they would need prior approval from the European
Central Bank, and that any decision on the future of gold would be
very gradual, very long-term, and very transparent."
* There was an enormous increase in scrap sales by about 20M ozs. in
late 1997 and 1998, which occurred so that Southeast Asian's and South
Korean's could raise foreign exchange following the collapse of their
economies. Table 1 shows Gold Fields Mineral Services supply/demand
data, with our estimates provided for 1999 and 2000. A focus on Gold
Fields 1998 estimates shows that scrap sales amounted to about 35.2M
ozs., up 15.6M ozs. from what we consider to be an inflated 1997 total.
This increase in scrap supplies is enormous, representing about 25% of
annual global gold production. We believe that as the weaker
economies stabilize, less gold is likely to be divested. As such, the
supply/demand imbalance between gold production and scrap on the
supply side and fabricated demand and bar hoarding on the other, which
narrowed to only 9.7M ozs. in 1998, should widen significantly in the
years ahead. Note that this deficit was by far the smallest in many
years and occurred directly because of the net increase in scrap
supplies.
* Figure 1 shows that there has been an enormous 84,661contract
increase in net-speculative short positions in gold on the COMEX
division of the NYMEX. The two positive aspects that we derive from
this figure are that: 1) gold managed to remain rather buoyant despite
the large volumes of speculative selling; and 2) a short covering
rally could provide a lift to US$300/oz. or higher in coming weeks.
Gold declined by only about US$12/oz. from early October to late
January. By comparison, gold fell by about US$40/oz. when a similarly
large 87,674 contract increase in net-speculative short positions
occurred in the May-August 1998 period.
* Other constructive features for gold in the year ahead include the
potential for continued US dollar weakness, a possible increase in
investment demand for gold as a hedge against potential risks
associated with Y2K computer malfunctions, and further declines in
South African gold production.
While all of the above mentioned factors are unlikely to occur, some
of them should. Given the enormous number of negative fundamentals
that plagued gold in late-1997 and 1998, it seems to us that "the
winds of change" (see the Canaccord Gold Bullion report for details)
are being felt, which could send gold prices higher. As such, we are
maintaining our 1999 and 2000 average gold price estimates of
US$325/oz. and US$350/oz., respectively. We are also maintaining our
BUY rating on Barrick Gold (ABX), Placer Dome (PDG), Goldcorp (G.A) or
CSA Management (CSA.A), Vengold (VEN), Ashanti Goldfields (ASL),
Meridian (MNG), Franco-Nevada (FN), and Euro-Nevada (EN). We believe
diversified portfolios should increase to overweight their gold
holdings. The market appears to provide excellent fundamentals from a
risk-to-reward perspective.
Figure 1: The net speculative short position has increased
sharply-look for a short-covering rally (chart not available in email
version)
Larry Strauss |
