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

To: lorne who wrote (45404)	11/29/1999 9:21:00 PM
From: Giraffe	Read Replies (1) \| Respond to of 116764

Level of interest in gold auctions wanes By Gillian O'Connor Mining Correspondent AngloGold, the world's largest gold mining company, bought for $88m almost 40 per cent of the gold sold by the UK government in its third auction yesterday as industry and trade buyers largely stayed away. The level of interest in the gold on offer has fallen steeply since the September auction when there were eight buyers for every ounce on sale. This time there were just over two. (cont'd below graphic) The auction, which realised $236m, is part of the Treasury's controversial plan to reduce Britain's gold reserves by more than half - from 715 tonnes to 300 tonnes - over the next few years. "The only word to describe the market now is 'glum'. The price was not brilliant, but it is the importance of AngloGold's bid that was the most sobering feature of the auction. It does suggest that the queue of non-industry buyers is very short," said Tony Warwick-Ching of Virtual Gold Research, inde pendent consultants. The price obtained by the Bank of England yesterday - $293.50 per ounce - is marginally higher than the market price before the original announcement of the disposal plan in May. It is also substantially higher than the $261.20 realised in the first auction or $255.75 in September. The quantity sold - 25 tonnes - has been the same in all three auctions. The price of the metal fell after yesterday's auction, however, because of the low level of interest shown. The allotment price was more than $3 an ounce lower than Friday afternoon's London price. By the end of trading in London yesterday, the market price had slid further to $292.25. Shares in gold mining companies fell by over 5 per cent in Toronto. Kelvin Williams, AngloGold's marketing director, said he was "surprised by how thin demand at the auction was". Mr Williams said AngloGold had bought 300,000 ounces at the auction to unwind part of its hedge book - its portfolio of gold derivatives designed to protect the company against falling bullion prices and provide supplementary revenue. At the end of September the book had forward sales totalling nearly 14m ounces, including 1.6m ounces due before the end of 1999. The UK gold will be used to meet some of AngloGold's 1999 obligations. The strategy is similar to that employed at the second auction by rival South African miner Gold Fields, when it bought 100,000 ounces. Gold Fields has now closed down almost the whole of its hedge book, because it thinks the price is going higher. ft.com