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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Hawkmoon who wrote (36718)	7/6/1999 9:59:00 PM
From: Tomas	Respond to of 117011

GOLD: Analysis. Price sinks to 20-year low - Financial Times, Wednesday July 7 By Gillian O'Connor, Mining Correspondent The price of gold hit a 20-year low yesterday after the Bank of England auctioned off 25 tonnes of its reserves. Market participants had been hoping the price, which had fallen 10 per cent in the two months before the sale, would recover. But three hours after the sale, it sank to $257.60 per ounce - $3.60 below the $261.20 realised by the Bank of England. "A disaster for the bullion market," commented the World Gold Council, a producer-funded lobby group. The market is now waiting to see whether the anti-gold sales lobby in the US can stop the International Monetary Fund's planned sale of 300 tonnes of gold. This needs to be approved at the IMF's September meeting, and could be blocked by a US veto. The gold price has been in decline for three years, largely because of central bank sales. It has fallen by a tenth since the Bank of England announced on May 7 that it planned to sell 415 tonnes of gold, more than half the UK's gold reserves, in the medium term. The South African Chamber of Mines has said that 40 per cent of South African gold production would become unprofitable if prices remained below $260 per ounce, and that more than 80,000 people would be thrown out of work. Yesterday, East Rand Proprietary Mines, a 100-year-old gold mining company, announced that it was going into liquidation. Other gold producers prepared for a "gold crisis" starting tomorrow. In the US lobbyists against the IMF gold sale are becoming more hopeful that it may be blocked by Congress. In the London auction, the Bank sold 804,000 ounces (around 25 tonnes) at a price of $261.20, and announced that it had had offers for 5.2 times this amount. The total amount bid for was higher than expected - the market had been going for cover of around three or four times. But the bid price and market reaction were worse than expected. Analysts had predicted a price of around $265 for the auction, and optimists had expected the market price to bounce to $270 or even $275 afterwards. But yesterday's afternoon fix of $257.60 was the lowest since May 18 1979. The price stayed down in early trading in New York. "At this price the people of Britain are being short-changed by the chancellor," said Haruko Fukuda, chief executive of the World Gold Council. "Any interest earned over the next two years will be dwarfed by the scale of losses already incurred on the value of the gold in the reserves."