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

To: baystock who wrote (70471)	5/27/2001 8:40:07 PM
From: baystock	Read Replies (4) \| Respond to of 116759

ARTICLE IN THE FINANCIAL TIMES says to sell gold: Published: May 24 2001 19:49GMT \| Last Updated: May 24 2001 19:52GMT Poor goldbugs. The price of gold, which has been rising steadily since the start of April, hit an 11-month high this week with an afternoon fix of $291 per troy ounce in London. With stirrings of renewed concern about inflation, enthusiasts were starting to talk up a sustained rally. Then that nasty Vladimir Putin spoilt everything by saying Russia might sell some of its stocks to help flood victims. His intervention brings a welcome dose of reality. In the context of a two-decade long decline, the 14 per cent increase in the price of gold since April 2 barely registers as a blip. It has more to do with technical factors - a tightening in the illiquid leasing market - than concerns about inflation, which still looks reasonably benign. And it is not likely to last any longer than other recent price spikes, given the overhang of gold held by private investors and governments not bound by agreement to ration gold sales. That said, it does look as if a floor price is being established at around $255 to $260 per troy ounce, with a trading range above. This might reflect a new equilibrium of supply and demand, following the 1999 pact between 15 European governments to limit sales, and the resulting shift in mining companies' hedging strategies during 2000. After years of relentless decline, any hint of price stabilisation is significant. But the new equilibrium is fragile, and all the risks lie on the downside. Given the opportunity cost, there is still no reason to buy gold, and every reason to sell.