Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Real Man who wrote (71762)	6/14/2001 11:58:58 PM
From: Stephen O	Read Replies (1) \| Respond to of 116790

>Gangbuster gold; key Friday session looms large mips1.net By: Tim Wood Posted: 06/15/2001 12:00:00 AM \| © Miningweb 1997-2001 NEW YORK – The bullion market has been petulant for so long that it's no wonder few investors take it seriously anymore. But things really do look different this time, even for the most ardent cynics. - Comex August gold continues to press against May's highs and closed $3.30 an ounce higher today to $276.40 an ounce. It hit an exciting intraday high of $277.90 and was well off the low of $271.50. The close was the best price since May 29. The spot gold market, open in the Far East, retained the pace and was bid at $274.90 an ounce. Friday has become something of a profit sweetspot for the New York market and if previous sessions are anything to go by, we could see fascinating action from midday onward (EDT). Certainly, a concerted charge by the bulls could stampede the market, although further moderate gains will be preferred to prove that gold has achieved a new maturity. The consistent spread between future and spot rates is a key positive signal showing that the rally still has legs. As soon as the spread narrows or even turns negative, it will be an indication that a correction is in the offing. It is particularly encouraging to see the metal making steady progress. Previous rallies have been characterised by tearaway increases that all ended in pain. Now, removing the May price spike that tested $300 an ounce, bullion charts show a methodical adjustment over the last quarter. Gold is marching up to higher trading ranges and it is not showing the fatigue it is usually derided for. Once again it was a combination of factors that supported bullion today, both technical and fundamental. The dollar slipped; Russia intends accumulating bullion; China plans to further liberalise its gold market; US investors will be able to own precious metals on a par with other securities and producer hedging continues to abate. Dollar The powerful National Association of Manufacturers put pressure on the US dollar after saying it was up to a third more expensive than it should be. Gold has a reasonably strong inverse relationship with the dollar which has tightened over the last month. One euro was worth more than 86 US cents today whereas it bought less than 84 cents yesterday. Uncertainty about the dollar seems to be a key factor in fund gold buying. Funds usually short the metal at every opportunity. Once again dealers reported active fund interest on the buy side and the net long position on Comex is expected to be retained. Toronto broker Doug Pollitt told Miningweb: "Before if you'd jabbed gold down a couple of bucks you'd run into sell-stops. Now you jab it down and you run into open buys - thick and deep. There is great back-and-fill action; great confidence building action." Treasury Secretary Paul O'Neill has repeatedly endorsed the Bush administrations strong dollar policy and so far the powers that be have managed to sustain it. However, the Republican Party will face intense scrutiny if there is a groundswell of opinion about the advantage a strong dollar gives to European exporters at the expense of local jobs. Russia The Gokhran, Russia's state precious metals and gems agency also announced that it will increase its purchases by 15 tons to 40 tons this year. That good news was offset by news that Russia's gold output will rise 10 per cent this year, rising from 145 tons to 160 tons, matching exactly the proposed purchases. That smacks of producer protection, but it may yet help to instil a sense of caution among central bankers that have been ditching gold reserves in favour of a basket of trading currencies. China Leonard Kaplan of Prospector Asset Management reported in a client note that The Peoples Bank of China has begun reporting official price changes weekly rather than biannually. This may not seem significant and only impacts the domestic market, but it is an encouraging move toward a more liquid market that might eventually trade more openly, at least from a non-smuggling point of view. Gold investing Kaplan also notes that legislation is pending before US lawmakers to will allow precious metals to be taxed on the same basis as stocks and bonds, making them more attractive to own. The application of more onerous short-term capital gains to precious metals has made them less attractive, compounding the government's official distrust of the metal that began in 1934 with the confiscation of all private holdings. Hedging Miningweb reported on Thursday that South African gold producers are continuing to reduce hedge books to take advantage of better gearing to increases in the gold price. Gold equity investors traditionally favour producers that are unhedged because share prices show greater sensitivity to bullion price improvements. Technicals As mentioned earlier, it is critical for near-date futures to stay ahead of the spot price. There's every reason to expect this to continue since the 55-day moving average is riding close to the 200-day moving average. If the 200-day average can be breached on Friday, there should be excellent action if past sessions are anything to go on. The New York market has been consistently more volatile suggesting that local funds have found a way to set off the mousetrap and steal the cheese without getting killed. Hopefully this doesn't spark a tit-for-tat war across the Atlantic where the more liquid London market can only profit by shorting the metal to get control back from New York. Implied futures volatility, a usually reliable indicator, has also continued to strengthen and bodes well for tomorrow's afternoon EDT session.