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Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: craig crawford who wrote (814)	9/23/2001 7:28:51 PM
From: craig crawford	Read Replies (1) \| Respond to of 1643

Seeking a Safe Haven in Gold Has Advantages, Drawbacks public.wsj.com By Sarah McBride Staff Reporter of The Wall Street Journal That makes a safe-haven gold argument sound tempting, but abundant stocks of gold around the world argue against a sustainable price spike anytime soon. Still, there are good noncrisis reasons to buy gold, argue fund managers, who prefer the mining companies to the metal. "We have an overweight position in gold and precious metals for two reasons," says Vincent Leurquin, who runs a global metals and mining fund for ING Investment Management. "If you compare gold to other industries where commodities are important, the resilience to a slowdown in the economy is better. The end users, of course they will be impacted by a slowdown, but less so." Second, he likes the consolidation the industry is undergoing. "Recently, we've seen some movements in that direction, and I think it will continue," he says. That consolidation is part of the reason that before the terrorist attacks of Sept. 11, the FT Gold Mines Index had risen 18% this year. ............................................................................................................................ As for the actual metal, experts remain divided on whether the higher prices are sustainable, but one thing seems certain: It will be years, perhaps decades, before gold regains the prices of more than $650 an ounce seen in 1980. ............................................................................................................................ In the very long term, gold bugs say, there are some reasons why the price may regain some luster. Chiefly, current demand is about 3,150 metric tons a year, but mine production is just less than 2,250 metric tons. The difference is met by large sellers such as central banks. Because central banks still have about 31,500 metric tons of gold cluttering their vaults, it seems unlikely the shortage in production will cause problems anytime soon. About 80% of purchased gold goes right to jewelry manufacturing, with the rest split among electrical and electronics applications, dental fillings and other uses. India is by far the world's largest consumer, gobbling up 25% of total gold production last year. However, the Indian market is also extremely price sensitive, analysts say.