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

To: Giraffe who wrote (42953)	10/14/1999 9:42:00 AM
From: Giraffe	Read Replies (2) \| Respond to of 116764

Beware, the gold bugs are on their mettle SWATTING gold bugs could make some people feel very clever. For 20 years pointy-headed investment gurus sauntered between Wall Street and the City without fear or favour, making themselves jolly rich by betting the price of gold would fall. For a long time, they were right, as gold dropped from $850 in 1989 to below $300 earlier this year. "Take that Gold Bug!" they would say, knocking passing fogeys on the head. "Gold's finished. It's just like any other commodity." Sometimes, they might quote Keynes, and describe the precious metal as "a barbarous relic", but then Keynes too became pass‚. They could look so brilliant because in the mid-1980s central banks suddenly started lending their gold out about 1pc per annum. They borrowed gold, sold it, invested the proceeds, waited for the gold price to fall, bought it back, and then paid back the central bank. For 10 years, along with borrowing yen at almost zero per cent, this has been one of the many hidden wires pulling the bull market in equities higher. Then along came Gordon Brown. As a New Labourite, he loved the idea that history could be over. "May 1, 1997, that was Year One," he told his officials. So he thought he would sell over half Britain's reserves. Mr Brown called the bottom of the market, nearly to the day and helped the price collapse further to $250. This made central bankers cross. Secretly, they are all gold bugs, not least because they own a third of all the world's supply. Chief among them is Eddie George, governor of the Bank of England, who was once photographed holding two huge gold bars in his pincers. These super bugs got fed up with gold falling in value, so in Washington two weeks ago they announced there would be no more sales and leasing would be restricted. The effect was spectacular and the price shot up $70 in three days. Sure enough, somebody got caught as huge short positions were exposed. The witch doctors at Ashanti - who should have had more faith in their product - are facing margin calls of around $230m which they cannot meet. Who do they owe this to? Why, 17 bullion banks, the biggest financial names in the business. Gold has risen from the ashes, and as it rises, people are getting burned. Behold the gold bugs' revenge. telegraph.co.uk