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

To: marcos who wrote (92515)	1/8/2003 4:45:00 AM
From: E. Charters	Respond to of 116825

The price of gold is near a six-year high. The yellow metal seems to have regained some of its haven status thanks, in part, to weak stockmarkets and an impending war with Iraq. But its prospects are not so bright Gold bugs like to stress the broader economic case for the metal, as well as the safe haven argument. Some argue that the case for investing in gold is just as strong now, when the world is worrying about deflation, as it is in times of inflation. This is because investors are struggling to find a happy home for their money. Shares have fallen for three years running, and some would argue that they are still relatively highly valued. Corporate bonds have lost some of their shine because of concerns about credit quality after the collapse of companies like Enron and WorldCom. And even government bonds, which typically appear more attractive in times of low inflation or deflation, are being treated with suspicion by many investors. Moreover, in India, East Asia and the Middle East gold remains in demand, not only as a store of value, but also as a form of adornment to be worn in large quantities. In recent months, the gold market has also been given a temporary lift by producer dehedging. Some of the big gold- mining companies used to sell their product in advance, or hedge, so as to lock in the price. This had the effect of adding to supply on the market, and depressing the price. Thanks to the takeover of mining companies that hedge by those that do not, this process has been curtailed. The effect has been the same as if there were increased demand. Fans of gold also like to point to the supposed limited supply of the metal—the they're not making it any more argument to justify their faith. This is especially true for older investors who like to reminisce about the gold standard, when paper notes could be exchanged for the metal at a fixed rate. However, the notion that gold supply is fixed ignores the fact that the means of extracting it from the ground are becoming ever more sophisticated, in much the same way as with oil. **************** Canada has sold much of its 21,000,0000 ounces which were on reserve in 1980. It just sold 88,000 some ounces last week, and has about 600,000 ounce left in the kitty. This is from the Post yesterday. It appears most CB's have th philosophy to divest of all their previous metals assets. But can a country do the same for copper, tungsten, titanium, vanadium, uranium etc? Say that such metals are old hat.. need not be mined? (At least by G7 countries) Silver and gold still have many electrical uses. It appears to be a political philosophy to de-emphasize gold for reasons that its supply is not dominated by co-operating players on the world scene. Can it be that resource poor countries want their paper and political cachet to make more waves than the traditional way of industrial might? Can a nation survive pushing only electrons up fibre and paper in government offices? Does it not need the odd bit of metal for at least bridges and vehicles, and the odd bit of stone for buildings? If economic clout was so powerful, why could not Hong Kong just have made its own alliances and ignored China? Its paper was worth more than all of China. These kind of paper-is-powerful philosophies seem to be hatched in predominantly resource-poor economies that in the past have tried to achieve political dominance by nefarious means. Japan, Germany, and Great Britain are cases in point. The US while not resource poor, is so dependent on foreign manufacturing and foreign money that it could not go off the imperialist paper trade without total economic collapse. Its manufacturing industry is amongst the most inefficient in the world. EC<:-}