article: Gold rally running on hope
Industry sees metal as little engine that could
By Thom Calandra, CBS.MarketWatch.com
Last Update: 11:05 AM ET June 12, 2002
SAN FRANCISCO (CBS.MW) -- Few of the world's bullion elite, gathered at a two-day meeting, could afford to take their eyes off the stage, tempted as they were to sneak peeks at a slipping gold price.
It wasn't so much who was on the stage earlier this week, doing the talking. It was the general knowledge that gold's price, dipping below $320 an ounce after a 20 percent rally this year, might once again disappoint the bullion industry -- for the umpteenth time in the past 10 years. Better to listen for that scrap of information that could lend a head of steam to gold's sputtering rally.
Gold's price, like Luke Skywalker, or the little engine that chugged up the hill, is running on hope. Or heart. Or denial.
"Was that a one-day reversal we saw in the gold sector?" Ed Bugos, editor of The Goldenbar Report, proclaimed. "If so, the correction may already be over. Cross your fingers if you're long."
Victor Flores, the Texas-trained analyst from HSBC, was telling his audience at the London Bullion Market Association conference in San Francisco that yes, let's face it, no one knows what a gold mining stock is really worth. "We've become accustomed to the myth that gold stocks somehow are different," said Flores, precious metals analyst at HSBC's Global Mining Division.
It wasn't so much who was on the stage earlier this week, doing the talking. It was the general knowledge that gold's price, dipping below $320 an ounce after a 20 percent rally this year, might once again disappoint the bullion industry -- for the umpteenth time in the past 10 years. Better to listen for that scrap of information that could lend a head of steam to gold's sputtering rally.
Gold's price, like Luke Skywalker, or the little engine that chugged up the hill, is running on hope. Or heart. Or denial.
"Was that a one-day reversal we saw in the gold sector?" Ed Bugos, editor of The Goldenbar Report, proclaimed. "If so, the correction may already be over. Cross your fingers if you're long."
Victor Flores, the Texas-trained analyst from HSBC, was telling his audience at the London Bullion Market Association conference in San Francisco that yes, let's face it, no one knows what a gold mining stock is really worth. "We've become accustomed to the myth that gold stocks somehow are different," said Flores, precious metals analyst at HSBC's Global Mining Division.
"I think today was a great buying opportunity for the gold stocks, the first good chance to buy that we've seen for some time," longtime gold industry analyst and newsletter writer Robert Bishop was saying at the conference, just after North American mining stocks, and the gold price, reversed course and headed higher. "There was a serious washout in many stocks early (Tuesday), and strong recoveries as the day went on."
[Bishop recommends Seabridge Gold]
Bishop's Gold Mining Stock Report, perhaps more than any other investment newsletter in North America, has forged an enviable track record at choosing winners among the smallest gold producers and explorers, most of them scraping dusty pits in South America, Canada and across Africa and parts of Asia.
"Gold could prove me wrong, but my guess is that (Tuesday) was the best day to spend money on gold stocks that we have seen in some time, and perhaps the best chance we'll get for some time to come," said Bishop, who was, like everyone else, listening to every word on that London Bullion Market Association stage in California. "The fund managers who are underweight in the sector -- in other words, most of them -- have been looking for an entry point, and with end-of-quarter coming up, they need to show some of these names on their books."
To be sure, many of the 350 delegates at this bullion gathering were praying, pleading, willing gold to go higher. "This is a time of change, change in markets, change in supply," said Wayne Murdy, chairman of chief executive of the world's largest gold miner, Newmont Mining (NEM: news, chart, profile). "Fund managers are interested in different asset classes."
As Murdy spoke, Pierre Lassonde, the man seen as the linchpin of the current gold rally and the engineer behind Newmont's three-way merger this year with Canada's Franco-Nevada and Australia's Normandy Mining, sat watching, nodding his head in agreement.
Gold's spot price Wednesday morning was little changed at $320 an ounce. That price, gold's believers say, is still low enough to entice the thousands of American mutual fund managers awash in red ink this year. For the sake of Main Street investors stuck with gaping losses in their retirement mutual funds, let's hope so.
-end- |
