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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: dennis michael patterson who wrote (23187)	8/17/1999 10:35:00 AM
From: Les H	Read Replies (1) \| Respond to of 99985

New York, Aug. 13 (Bloomberg) -- Goldman, Sachs & Co. has amassed $124 million of gold bullion, saying it expects demand to improve in the months ahead. Goldman has taken control of half of the gold in New York Mercantile Exchange warehouses, according to the exchange records. Goldman described the transactions as normal business activity, though some traders speculate that a shortage may be developing. ''People smell a rat here,'' said John Brimelow, head of international equities research at Donald & Co. in New York. ''Nobody else seems to believe this is at all normal.'' Goldman turned more positive on the gold market in late July amid expectations that reduced mine output will lead to higher prices. Prices fell almost 13 percent after the U.K. Treasury said in May that it would sell about 60 percent of its gold reserves. The decline forced two gold companies in South Africa and Sweden to file for bankruptcy and led six South African mines to say they intend to fire 11,700 miners. Yet gold has rebounded 3.5 percent from a 20-year low on July 19 and this week alone it gained 1.7 percent, the biggest one-week rise in 10 months. ''We are seeing strong physical demand,'' said Goldman's spokeswoman, Kate Baum, in New York. Goldman had taken delivery of 473,500 ounces of gold as of Thursday through 4,735 August futures contracts, according to the exchange's Comex division, where gold, silver and copper are traded. That's about half of the warehouse total of 948,973 ounces. The gold still is in Comex warehouses. The firm has been increasing its gold holdings all month, the exchange said. The metals market has attracted other big investors in the past few years. Tiger Management, the New York-based hedge fund, is estimated to have bought as much as 1.5 million ounces of palladium, or about one-fifth of world supply, while billionaire investor Warren Buffett's Berkshire Hathaway Inc. last year said it had accumulated 130 million ounces of silver, equal to about a quarter of annual mine output. Gold for August delivery closed unchanged at $261.70 an ounce on the Comex. The most-active December contract rose 20 cents to $263.20 an ounce. It was the highest closing price since July 2, just before the U.K. sold the first of several 25-ton lots of bullion.