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Gold/Mining/Energy : A to Z Junior Mining Research Site -- Ignore unavailable to you. Want to Upgrade?

To: 4figureau who wrote (3264)	2/13/2003 10:07:05 AM
From: 4figureau	Respond to of 5423

UBS Warburg: The behaviour of gold over the past thirty-six hours is, at first glance, rather perplexing; risk aversion factors continue to worry equity markets, the dollar has weakened yet gold has fallen sharply. This sell-off is purely a function of technically driven long liquidation from a very long market. Once this activity has finished we expect gold to recover some of its recent losses as slightly longer term factors take over as drivers of the market. Gold: News: Two major gold companies reported results over the past twenty-four hours, each with a large (but declining) hedgebook. Barrick gold reported that “Overall for 2002, the Company reduced its total position by 6 million ounces… The Company will manage the position with the goal of reducing the size of the program over time; however, the timing is dependent on spot gold prices.” Ashanti simplified and reduced its hedgebook in 2002. Protected ounces (ie puts + forwards) remained steady at about 5 million ounces while committed (calls + forwards) fell by 1 million ounces to 6.5Moz. Ashanti made no comments about its plans regarding the hedgebook. Trading: In New York, gold had another ten-dollar range as heavy speculative selling was seen on the Comex floor. Once the $360/oz level was pierced constant but non-panicked selling was seen all day and the $352 support level just about held. We noted reasonable buying from investors on the move lower. In Asia, Tocom long liquidation again dominated the gold market, as we had expected. Tocom moved to a limit down position in the afternoon and remained there until the close, which probably means that some Tocom speculators remain stranded long from higher levels. Once Tocom closed gold rallied sharply on dealer short covering and a weaker dollar and has traded up to around the $365 level in early European hours. Options: Short dated implied gold volatility has moved higher, understandable considering the sharp moves in gold over the last couple of days. With gold well below recent highs, however, there is no sign of any major stresses in the gold options market. View: Gold remains fully in the grip of a long-liquidation frenzy although the early European rally points to the probable direction in gold once the Tocom selling has ended. Since Tocom futures spent a good proportion of the session, including the close, locked limit-down there is probably some more selling to be done from Japanese general public who are currently penalised by the Tocom exchange rules. Silver: Trading: Silver opened under pressure on Comex (whats new) with commission houses steady sellers but once this had been absorbed and gold rallied, silver headed higher in what was a comparatively quiet day. View: Silver has failed to hold its risk aversion gains and while the metal will continue to takes its direction from gold, further underperformance looks likely. Silver should further benefit from the weaker US dollar (as will all dollar-denominated commodities), but since silver’s applications are largely industrial in nature the metal will continue to be hit by slowing economic activity. thebulliondesk.com