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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: terry richardson who wrote (16894)	8/5/2002 9:18:53 AM
From: Frank Pembleton	Read Replies (1) \| Respond to of 36161

Newmont's Lassonde sees gold at US$350/oz Michael Quinn 05 August 2002 PREACHING to the converted it may have been but Newmont's Pierre Lassonde has given delegates at the Diggers and Dealers conference in the Australian gold capital of Kalgoorlie exactly what they want - bullish price forecasts for gold in the months ahead. "We are [at the beginning of] a fundamental gold bull market," the president of the world's largest gold producer said, offering US$340-350/oz as a possible price 18-24 months ahead, with the caveat that it could be "much higher". According to Lassonde, a key driver of price rises in the next few years will be devaluation of the US dollar, with recent history seen as a good guide. Lassonde said the US dollar fell against a basket of other currencies in 1985 by 33%, with gold rising in the same period some 60% from US$300/oz to US$500/oz. He noted the US trade account was about US$440 billion in the red, requiring an inflow of around US$1.3 billion daily to service the deficit. "There's a law that says what can't go on forever, stops. Well, it's stopped," Lassonde said. The US dollar has thus far fallen around 10%, and "I think its going to go further", he added. On correlations with the S&P500, Lassonde pointed to the 1930s (when the S&P fell 63% and gold went up 69%), 1960s (S&P down 34%, gold up 347%), while the current bear market sees the S&P down 35% - "and in my view has a long way to go" - and gold is up 11%. On production fundamentals, Lassonde believes prices south of US$325/oz are unsustainable for gold miners, with the weakness of the price over the last few years ensuring reduced production out to 2005. He said the return on capital by the gold industry at a US$275/oz gold price was 3% while the cost of capital was 9%. "Nobody makes money at US$275/oz," he said. Lassonde also said the days of hedging - "the bane of this industry for 10 years" - are over, with contangos reaching a mere $3/oz per year. On Lassonde's calculations, every 100t hedged/brought to market drops the price by US$5/oz. On this basis the 300-400t worth of reduced hedging expected in the current year will add US$15-20 to the gold price. At a press conference following the presentation, Lassonde mentioned Newmont was working with the World Gold Council on a new gold investment product that could take up 500-1000t of gold annually. And he said a new CEO of the WGC would be announced within months and that the appointment, which featured a well-known, credible personality, would indicate the future direction of the peak body. On operational matters, Newmont will begin grinding trials pertaining to the Boddington project in Western Australia early next year, while the review of the Superpit in Kalgoorlie should be completed by the end of 2002. And Newmont's Australasian chief John Dow said work continued to be promising at Golden Grove, where the discoveries of copper and zinc have been equivalent to around 5Moz of gold grading around half-an-ounce. miningnews.net

To: terry richardson who wrote (16894)	8/5/2002 12:36:20 PM
From: terry richardson	Read Replies (1) \| Respond to of 36161

An excellent piece (Originally dated 2002/06/11)entitled "GOLDS DEPRESSING BULL MARKET" gives an overview of the economic factors currently in play and a glimpse of what may be down the road for the US and Europe as well as Japan. A long read in 2 parts but worth the effort. Generally positive for gold. ============================================ SAN FRANCISCO – Bernard Connolly, the chief global strategist and head of research for precious metals, currency and commodity risk manager AIG, left delegates at the LBMA Conference slack-jawed today with a worrying look at the world's future. His disturbing projections left hard-core gold bugs smiling, given the metal's inverse correlation to global political and economic stability. But his forecast bodes ill for a protracted period of uninterrupted economic growth and world peace. Connolly was expelled from his position among the senior currency-policy markers on the European Union in 1995 after he published the book The Rotten Heart of Europe: the Dirty War for Europe's Money. He was also named one of the Wall Street Journal's Europeans of the year for his troubles. Earlier today he outlined a bleak global future for the world economy, complete with a forecast of the total collapse of the Euro and the European Union, accompanied by widespread racial, religious and ethnic unrest on the continent. His prediction also includes an all-out collapse of the Yen and the Japanese economy and the hammering of the dollar. The apocalyptic forecast, delivered in a paper entitled 'Gold: Silver lining to dark economic clouds?', underpinned Connolly's view that the current run in gold was only the beginning of an extended rally for the metal he calls "the least bad currency". mips1.net mips1.net