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Gold/Mining/Energy : Corner Bay Silver (BAY.T) -- Ignore unavailable to you. Want to Upgrade?

To: TheBusDriver who wrote (1593)	11/7/2000 10:22:16 AM
From: kidl	Respond to of 4409

From today's Globe & Mail Gold bulls pinning hopes on the U.S. dollar falling With bullion trading near a 20-year low, a weaker currency could lift the metal Allan Robinson 03:16 EST Tuesday, November 07, 2000 Beaten-up gold bulls are pinning their dwindling hopes on a weakening of the robust U.S. dollar as the spark that could help bullion rise. Rise from the dead, that is. The bulls have been crushed. With bullion trading at close to its 20-year low and with the Toronto Stock Exchange's gold and precious minerals index trading at levels not seen since 1986, it seems there is nowhere for gold to go but up. "The survivability of some of [the gold mining] companies today is in question," said John Ing, the president of Maison Placements Inc. "Even the big ones -- with gold trading at $264.50 (U.S.) an ounce -- are having trouble making a dollar." It is just these dire circumstances that some suggest indicates a bottom is forming. "At current bullion prices gold production cannot be sustained in the long-term," CIBC World Markets stated in a recently issued 168-page report on gold. "With little capital for development and dwindling exploration budgets, a crash in production is coming" beyond 2002. Companies have cut costs, shut down marginal operations and mined high-grade ore as prices have fallen, but times remain tough. "We believe that the industry has done about all it can and now must rely on the gold price to offer improvements going forward," CIBC World Markets said. Making a bullish case, CIBC suggests it's the looming supply shortage that might eventually trigger a recovery for gold with a price surge of $100 possible. But not all are convinced. "Indeed, it is essentially only the dollar that makes us mildly bullish for next year -- the decline in mine output that is projected for the next several years being too marginal to make much of a difference" said Martin Murenbeeld of M. Murenbeeld & Associates Inc., the author of the Gold Monitor, an industry newsletter. A decline in the U.S. dollar would make gold relatively less expensive around the world thereby boosting jewellery demand, and some think investors outside of the United States might shift money to gold as an alternative to the U.S. dollar. "What we need is the generalist [fund manager] to look back at this sector," said Catherine Gignac of UBS Warburg. "That will take a fundamental move in gold." She believes a decline in the U.S. dollar could spark the rise in gold needed to attract investor attention. "Gold has been wallowing like the Canadian dollar and the euro," Mr. Ing said. Both have been hurt by the overwhelming strength of the U.S. dollar. Gold, when priced in Australian dollars, the South African rand and the euro, looks strong because of steep declines in those currencies. But there remain plenty of reasons for the concerns about gold. There are few signs of inflation: interest rates remain high, prospects of slower economic growth reducing demand and continued selling of bullion by central banks. As a result, analysts are taking a conservative approach, recommending investors stay away from marginal gold producers, which will need a rally in gold, and stick with more conservative gold plays. Their favourites among the smaller companies are Toronto-based Agnico-Eagle Mines Inc. and Goldcorp Inc., both of which are starting to mine new rich orebodies. Nevada-based Meridian Gold Inc., with its rich El Penon mine in Chile, is another they like. Topping the list of the majors is Barrick Gold Corp. of Toronto, which has seen its share price slump along with the industry's. Barrick made more money from gold hedging profits than it made from mining, Mr. Ing said. "I don't think Peter Munk [Barrick's chairman] would have believed his stock would be where it is today." UBS Warburg has been "looking for defensive ways of playing the gold sector," Ms. Gignac said. The company likes Agnico-Eagle because it mines a polymetallic deposit that lowers its average gold cost and Newmont Mining Corp. for its copper, which comes along with the gold.