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

To: Richnorth who wrote (84326)	4/9/2002 1:48:39 PM
From: long-gone	Read Replies (1) \| Respond to of 117024

Investing Pendulum Swinging Back to Gold Stocks Tue Apr 9,12:11 PM ET By Lesley Wroughton TORONTO (Reuters) - A higher gold price, low inflation and fading memories of the nightmare Bre-X mining fraud have sent North American gold stocks surging in the past few months, whetting investor appetites again for mining and exploration companies. "People remain cautious but it is still the most positive sentiment we have seen in about four years in mining investment generally," said Gordon Bogden, managing director of Beacon Group Advisors Inc. in Toronto. Gold stocks were almost forgotten for nearly half a decade as investors were swept up in the tech-stock bubble. The bubble burst in March 2000, and now, for the first time since about 1996, the investment pendulum has swung back toward gold-mining stocks as bullion tests levels of between $295 and $300 an ounce. That's up from around $252 in 1999 -- a 20-year low. The Bre-X scandal threw a big scare into investors, but after five years the nightmare memories appear to be fading, helped by tighter stock-market disclosure standards, especially the way in which mining firms report resources and reserves. The darling of the Canadian stock market in the mid-1990s, Bre-X shook the investment community in 1997 when its gold stake in Indonesia, touted as incredibly rich, was found to contain no gold at all. The collapse wiped out more than $3 billion in investments and has haunted the mining sector ever since. At the core of the change in sentiment is a rising bullion price and market opportunism -- shares are reflecting where the market thinks the gold price is going and not the where it is now. Spot gold was last indicated at $298 an ounce in London. Martin Murenbeeld, a Vancouver-based gold and currency analyst, is betting on 2004 as the turning point for the gold price, when pressure piles up on central banks to extend an agreement that limits their gold sales. TRENDING HIGHER He said containment of central bank gold sales, the potential for the U.S. dollar to decline, and low inflation have already caused gold producers to cut forward sales to increase their exposure to higher gold prices. "We are in a nice phase trending higher," said Murenbeeld, who believes the current gold rally has staying power. "I don't see the factors that could drive gold lower as being a high probability and that goes into the stocks." Murenbeeld's sees the gold price at around $299 an ounce for 2002 and $315 an ounce for 2003. Factors contributing to a stronger gold sector are future declines in gold output and a rash of major mergers in the mining sector that led to the faster scrapping of unproductive mines. After four years of decline, exploration is also on the rise. "With gold there is always fear that you buy now and gold prices come down, so since gold has been going down so long, it is going to take quite a while for the public to develop confidence that this is solid," Murenbeeld said. Gold is also once again attracting the attention of brokers, with equity financing activity up dramatically this year, prompted by the spike in gold prices. Toronto mining financings are up five-fold to C$112 million ($70 million) so this year from C$19.4 million in the same period last year. A further C$84.9 million in financings for Toronto-listed companies were announced in January and February but have not yet closed, according to official statistics. On the Toronto Stock Exchange, home to the only pure Standard & Poor's gold index, the gold sector is up 35 percent since January 2001, outperforming a 10 percent decline in the general equities index. At the Philadelphia Stock Exchange, the benchmark XAU North American Gold and Silver Mining Index is up 31 percent, beating the overall Dow Jones industrial average, which has slumped 4 percent since January 2001. Meanwhile, the Gold Bugs index has sky-rocketed 130 percent in the same period. FEEL-GOOD ATTITUDE A feel-good attitude about resources is clear in the value of mining shares traded in Toronto in the first three months of this year. It has almost tripled to C$14.5 billion so far in 2002 from C$5.1 billion in the same period in 2001. The bulk of that trading volume was in Toronto's gold and precious metals index, up 190 percent in the first three months of the year from the same period in 2001, according to Elaine Ellingham, manager for mining services at the Toronto bourse. Value traded in gold and precious metals for the three-month period in 2002 is up 197 percent against 13.3 percent in the same period last year. Base metals and minerals volume is up 15.4 percent in the first three months this year. Shares in gold sector giants such as Newmont Mining Corp. have risen 160 percent in the past 12 months. It that period it acquired two competitors, Australia's Normandy Mining and Canada's Franco-Nevada. The world's second-largest producer, Barrick Gold Corp., has climbed 18 percent, and Placer Dome Inc. has risen 29 percent. Small and mid-tier gold miners have been big winners in the gold rally. Among them Kinross Gold Corp. shares have climbed 166 percent year to date, Goldcorp Inc. is up 123 percent, Agnico-Eagle Mines Ltd. has climbed 106 percent and Meridian Gold Inc. has risen 98 percent. ($1=$1.60 Canadian) story.news.yahoo.com