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

To: Ken Benes who wrote (38397)	8/5/1999 4:27:00 PM
From: long-gone	Read Replies (1) \| Respond to of 116764

GOLD-SPECULATION ANGLOGOLD'S WILLIAMS HITS OUT AT PRE-ANNOUNCED GOLD SALES JOHANNESBURG 4 August 1999 Sapa Andrew Davidson Pre-announced gold sales, such as those conducted recently by the Bank of England, were an invitation for speculators to sell the metal short and depress the market. This was said by Kelvin Williams, marketing director of AngloGold which presented its financial results in Johannesburg Wednesday. He said:"This method of pre-announcement and sale by public auction is at odds with the nature of the traded market in gold, which operates much like a currency market where volumes of derivative trade substantially outweigh the flows of the underlying currency or metal. The pre-announcement was an invitation to speculators in that derivative market to sell the metal short, and exactly this process followed, depressing the gold price to a 20-year low of US dollars 257 per ounce." Williams added that the average price for the quarter was US dollars 273 per ounce, compared with an average of US dollars 287 for the first quarter of this year. He went on:"The opportunities provided to speculators by the public pre-announcement of the British sales, and the damage done to the gold price by this speculation, has revived a view amongst gold market commentators - reflected in the media - that widespread sales of official gold reserves are inevitable and will, in due course, push the depressed gold price substantially lower. "This view has been supported by the proposal by International Monetary Fund (IMF) management to sell some 10 million ounces of IMF gold reserves as part of a debt relief scheme for heavily indebted poor countries. In addition, Switzerland has continued to move towards its aim of selling half of the Swiss National Bank gold holdings of 2 590 tons, to be spread over a period as long as ten years. "Neither of these proposals to sell gold reserves would necessarily lead to net official sales of gold in any year in excess of the typical levels absorbed by the gold market annually in recent years. However, the damage done to the gold market by speculators in reaction to the British gold sale announcement has alerted gold producers and other constituencies in the gold market to the potential negative impact in today's fragile market of all official gold sales announcements." " Whilst the gold mining industry is absorbed currently with these immediate challenges, in the longer term it will be incumbent on all of those with an interest in this industry to find a modus operandi for interaction between major holders of gold and the traded market in the metal which avoids market dislocation. This is clearly not what has happened in the case of the British sales, where all parties with a long-term interest in gold - official institutions and individuals - have suffered, and only speculators with no long-term interest in either the metal or the gold market have benefited," said Williams. In contrast to the aggressive selling of gold by speculators, the physical market for gold during the past quarter had, he said, shown further encouraging growth in various countries. "This paradox of healthy and growing physical demand juxtaposed with aggressive short selling in the derivatives market reinforces the extent to which the current gold market has lost touch with reality, as speculators from the financial and investment sectors are encouraged to sell the metal on the as yet unproved speculation of imminent, widespread and ongoing central bank gold sales. These rumours have been used for a number of years now to depress the gold price, and yet there remains to date no support in the actual behaviour of the official sector for these views. "By contrast, of the approximately 33 000 tons of official gold holdings, we know that nearly 21 000 tons are held in the firm hands of the United States Federal Reserve, and the members of the European Central Bank, both of which institutions have given reassurances to the market in recent months that they have no intention of reducing their holdings of gold. The challenge in the market place going forward must be to convey this reality to market commentators and media alike," commented Williams. He said his group had no intention of selling gold at current prices and that the hedge position of AngloGold had increased by 6 percent to 13,6 million ounces spread over 10 years - equivalent to a year and 10 months of production. The average price of these positions, 59 percent of which are priced in US dollars, decreased marginally by 0.3 percent to US dollars 343 per ounce or R84 266 per kilogram at an exchange rate of R/US$6,00. anc.org.za Do you really believe the increase of 6% over these last two years is excessive? 1 year 10 months production Ken.