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

To: Ken Benes who wrote (48924)	2/12/2000 3:57:00 PM
From: Crimson Ghost	Respond to of 116912

Well known investment advisor Sy Harding now is bullish on gold and gold shares. STREET SMART REPORT ONLINE Sy Harding www.StreetSmartReport.com From: Asset Management Research Corp. Our 13th year of providing research to serious investors! Column for Sunday editions, February 13, 2000. BEING STREET SMART by Sy Harding GOLD CONTINUES TO LOOK BRIGHTER. Remember those gold chains and bracelets that used to be so expensive and popular? They may soon make a come-back as a symbol of prosperity. At the height of its popularity in 1981, gold reached a high of $840 an ounce. Its long decline began shortly thereafter, and by last August gold had lost 70% of its value, hitting a twenty-year low of $253 an ounce. The long decline in gold?s value was easy enough to understand. Gold rises as a safe haven when rising inflation erodes the value of paper money, and it falls when inflation subsides and paper assets (including stocks) are healthy. Inflation has certainly been in decline since the early 1980s, allowing paper assets to flourish, and sending the price of gold in the opposite direction. But declining inflation wasn?t the only thing depressing gold prices. As its price moved lower over the years, central banks around the world, which had always maintained large gold reserves in support of their currencies, decided that was no longer necessary (after all it?s a new era). So they began to sell heavily from those reserves, hammering gold prices even lower. Gold had an even more surprising enemy - its own producers. As gold prices fell, gold-mining companies began forward-selling their production to lock in current prices. The way that worked, they would borrow gold from the central banks, at interest, and sell that gold into the market. Then they?d replace the borrowed gold with the following year?s production. That action, repeated year after year, put still further downward pressure on gold. But central banks and gold producers finally went to school on what the oil-producing countries have managed with the price of oil. OPEC countries came to realize that by flooding the world with more oil than it could use, they were driving its price ever lower. (It was close to dropping below $10 a barrel just over a year ago). By cutting back their production, the oil surplus dried up and they soon had crude oil rising toward its current $30 a barrel, almost triple what they were getting for it before. The situation with gold wasn?t quite the same. Production of new gold has not even been keeping up with demand for a couple of years now. But the selling into the market of gold reserves by central banks, and of borrowed gold by the producers, did flood the market and have supply significantly exceeding demand. As we all know, when supply exceeds demand, prices fall. Central banks were the first to come to their senses. Last September, fifteen major European banks announced they would restrict their gold sales for the next five years. The result was magical. Within days gold spiked up a huge $72 an ounce to $325. But still the gold producers, apparently with their heads down in their mines and not aware of what was going on up in the real world, continued to borrow and sell gold to lock in current prices. So gold gave back about half its rally of last fall, as gold traders figured the producers must still be expecting lower prices in the future. But, this week, gold producers finally took their heads out of the sand. The first was large Canadian miner Placer Dome. They announced they will trim their gold hedging position by 2 million ounces, and suggested that, since it now looks like higher gold prices ahead, other producers should follow suit, which several have already done. And gold has been rallying strongly since. At the same time, inflation, the long-term depressant for gold prices, seems to have also decided to become friendly toward gold again. While Wall Street continues to claim inflation is nowhere in sight, the CRB Index of Commodity Inflation has spurted up 13% since mid-1999. The National Purchasing Manager?s Prices Paid Index jumped in January to its highest level in five years. Average annual wages rose a stronger than expected 0.4% in January, an annualized inflation rate of almost 5%. The Economic Research Institute reported its Future Inflation Index rose again in January, and said, ?Underlying inflationary pressures rose sharply in the closing months of last year and continued to rise in January. There is no end in sight for the current inflation cycle upturn.? Put it all together, along with rising concerns about the safety of paper assets again, and a strong argument can be made for a buying opportunity in gold. At least you might want to dig those old gold chains out of the dresser drawer and polish them up again. They could see their value come back. Sy Harding is president of Asset Management Research Corp., publisher of The Street Smart Report Online at WWW.StreetSmartReport.com, and author of Riding the Bear - How to Prosper in the Coming Bear Market. Back to the Top Home Copyright ¸ Asset Management Research Corp. -- ALL RIGHTS RESERVED.

To: Ken Benes who wrote (48924)	2/12/2000 5:02:00 PM
From: Enigma	Read Replies (2) \| Respond to of 116912

The B of E has acted in a strange and suspicious manner - IMO the decision to implement auctions was completely political over the objections of Bank officials - and the BofE/Govt. has a lot to answer for relative to Ashanti/Ghana. A lot of the old boy network in action. As for the other CBs, it seems to me that the leasing got out of hand - after all what sense does it make to lease something at 2 % if you drive down the value of the principal? Apparently the discussions leading up to the announcement by the 15 banks started about a year ago - it must have taken all of that time to get the parties on side.. The B of E auctions have been a disaster all round. But protest against it doesn't have legs politically in the UK.