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Strategies & Market Trends : Coming Financial Collapse Moderated -- Ignore unavailable to you. Want to Upgrade?

To: smolejv@gmx.net who wrote (789)	6/12/2002 7:05:26 PM
From: TobagoJack	Read Replies (1) \| Respond to of 974

Thanks DJ, as usual, for now I do not have to pack up until Euro reaches USD 1.16, and I can buy more gold at EURO ___/oz. Chugs, Jay mips1.net >Smith's rescue plan for gold By: Stewart Bailey Posted: 2002/06/11 Tue 19:00 ZE2 \| © Miningweb 1997-2002 SAN FRANCISCO – Gold super-bear and Mitsui metals precious metal analyst Andy Smith, delivered the wake-up call to the world's gold industry at the LBMA conference in San Francisco today. After a day and a half of back-slapping and all-round bullish forecasting by some of the brightest minds in the industry, gold bugs were delivered some home truths about the long term future of the gold industry by the analyst introduced as "the gold industry's one-man demolition derby". He said the industry should challenge the assumption that gold jewellery demand growth was endless and central bank indulgence, in their reticence to further diversify their reserve portfolios, was perpetual. "Things can go very, very wrong in this industry unless we ask the right questions. We've already lost a couple of years by not doing that, and that upsets me," Smith said. But far from relegating the metal to total ignominy, Smith said there was a meaningful role for gold as a re-insurance instrument against financial fall-out from terrorist attack – what he called a "backstop for terror insurance". This role for gold, said Smith, had been reinforced since the September 11 attacks. He said this was a credible use for central bank gold. If governments did not put the official sector gold to good use, Smith said, the "positive discrimination" in favour of gold by Central Banks would come to an end, with disastrous repercussions for the gold market. Smith also addressed unanswered questions about the potential collapse of physical demand in the all-important Indian Market, which had accounted for 40 percent of physical gold demand over the past 20 years. He said the Indian market was becoming more sophisticated, with the effect of the billion-strong population being offered "higher calibre alternatives to gold", by financial services and telecommunications sectors with larger marketing budgets. "This market has ridden the Indian elephant for too long and the beast of burden is crumbling under the pressure; it's becoming an endangered species," said Smith. He said Indians would inevitably shift from gold as a financial asset, to other, more sophisticated financial instruments. Wealth migration to Asia, he added, would also sap demand. "The fact is that people spend less on gold when they get richer," said Smith. He said the increased penetration of cellphones and information technology in general into the Indian market had also taken a bite out of gold demand. "The gold habit has hit the information virus and lost," he said. Solutions But what answer to the danger signs Smith has flagged? He suggests the World Gold Council's approach to stimulating gold jewellery demand at the top end of the market with its 'Glow with Gold' campaign is misdirected. He said, instead, the Council would be better served trying to fan demand for the metal at the bottom end of the retail market, among lower income consumers. "The average gold consumer…is more like an English football hooligan than a renaissance man. Look at what the high taste countries, like Italy, are spending their money on and it's not gold," said Smith. "If you look at the top 10 jewellery outlets in the US, only three are jewellery outlets…gold should be stacked high and sold cheap," he said. Smith suggested gold should be sold at low prices by retailers with large networks; McDonalds was top of his list of candidates. "Forget 'Glow with Gold', we need to go 'Low with Gold'," said the analyst. While gold producers dismissed the suggestion with a chuckle, at least one silver producer attending the conference said it had given him pause for thought. Sensational One of the more sensational of Smith's ideas was the suggestion that vast central bank stores of gold made a strong case for closing down the industry's gold mines and feeding world demand for the metal from reserve bank vaults. When asked for his opinion on Smith's suggestion by Miningweb, Wayne Murdy, chief executive of world number one gold producer Newmont, said Smith would make a good addition to the company's board. "We'd sure get a lot more laughs at board meetings," Murdy.