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Gold/Mining/Energy : Silver prices -- Ignore unavailable to you. Want to Upgrade?

To: TD who wrote (2592)	2/18/2000 12:21:00 PM
From: long-gone	Respond to of 8010

He has the voice to "take it to the masses", we are preaching to the choir

To: TD who wrote (2592)	2/19/2000 8:10:00 AM
From: long-gone	Read Replies (1) \| Respond to of 8010

OT The Financial Times, Fed Governor Ed Gramlich, and now the Economist all have had something to say very recently about the "funny things going on in the gold market." The pot has been stirred. I have said it before and I say it again. When all is said and done, GATA will eventually instigate an inquiry that will uncover one of the great financial scandals in American history. Stay tuned and be sure to stay on top of what Frank Veneroso has to say via his Cafe commentary from time to time. From the most recent issue of The Economist: FINANCE AND ECONOMICS The gold market Yellow peril L O N D O N A N D N E W Y O R K GOLD bugs are a long-suffering yet romantic breed. Despite years of declining prices, they remain devoted to the glittering metal. Until recently, it has been easy to dismiss them as flat-earthers, clinging to outdated ideas. Now, however, it is harder to explain why the gold price remains so low. This month, some of the world?s leading gold producers, including Canada?s Placer Dome and Barrick, announced the scaling back of their hedging programmes. Hedging involves entering contracts to sell gold in the future for fixed prices?normally in anticipation that prices will fall. Since the reduction in hedging, producers, for the first time in years, have been bullish about gold?s prospects. A deal between Ashanti, a troubled producer, and its hedging partners also removed a big uncertainty from the market. At the same time, turmoil in the bond market and a belief that gold was no longer destined to fall forever have prompted many hedge funds to unwind gold ?carry trades?. Under these, the funds borrowed gold for a small fee from central banks, sold it short in the expectation that it could be bought back for less in future, and invested the money in other higher-yielding assets. Despite all this, gold prices have edged up by only about 10% this month (see chart). Putting aside the gold bugs? favourite argument?that gold is a good hedge against inflation?the underlying supply and demand for gold suggest that prices should be rising more strongly. In Asia, a big gold market, improving economies have brought stronger demand; likewise, soaring oil prices have boosted demand in the Middle East. Most important of all, European central banks, which had been busily selling their gold hoards, last October announced that they would tightly restrict their gold sales and lending during the next five years. Expected sales of gold reserves by the IMF were also blocked. America?s Federal Reserve, which holds most of the remaining official stocks of gold, said it would not be selling. The market?s expectation that the 20,000 tonnes or so of official gold reserves would be sold has long depressed gold prices. Usually, when prices have risen, some central bank has taken the chance to sell, thus killing any optimism in the market. Without this central-bank supply overhang, the equilibrium price of gold would now be around $600 an ounce, calculates Frank Veneroso, author of the influential ?Gold Book Annual?. He says the combination of increasing demand and reduced selling by producers and hedge funds means that, left to the private sector, the gold price would now be soaring. But the overhang is still there, leading to rumours that some central banker is covertly selling gold. Alan Greenspan, the Fed?s chairman, has issued strong denials that it is he. But another thing gold bugs love is a good conspiracy theory. And, after all, if not the Fed, then who? All the best, Bill Murphy