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

To: AltLar who wrote (32209)	9/5/2003 8:09:01 AM
From: rolatzi	Respond to of 36161

For a different view on world bank: mips1.net >World Bank's incompetent gold dirge By: Tim Wood Posted: 2003/09/04 Thu 21:00 EDT \| © Mineweb 1997-2003 NEW YORK -- Gold bugs have been in uproar since the World Bank released Global Economic Prospects, its annual forecast for just about anything with a price tag attached to it. This year’s exertion carried 43% more pages than last year, but quantity is no substitute for quality. The Bank is customarily down on gold for 2004. It’s churlish to fault the basic logic which is that higher gold prices damp demand, as we’ve seen in India, whilst the pace of gold dehedging has to slow simply because there is less of it. At the same time, official gold sales are set to continue and possibly increase. Then the Bank worries that higher interest rates will stimulate renewed hedging, which is bearish on metal prices. Consequently, the Bank sees a continued, sizeable surplus. “Over the medium term prices are expected to fall below US$300/oz as supplies from all sources exceed demand. Logic is one thing, but forecasts have a singular problem – eventually they turn into history. For the Bank, history is particularly unkind to it. In its 2002 report, the Bank got it hopelessly wrong. “Once calm returns to world markets [in the wake of 9/11], gold prices should revert toward previous levels, as gold demand will be adversely affected by higher prices and the slowing global economy.” The obvious point is that there was no previous “level” – prices had been sliding for months to multi-decade dollar price lows. On top of that, there is outright confusion since in the very next sentence the Bank warns that existing higher prices are stimulating new supply! Similarly, the Bank keeps touting $300/oz as the iron law of gold pricing. On what basis does it make the claim, especially through several years of violent price swings? None, we suspect, beyond near-sightedness. It is apparent that the World Bank bureaunomists who compile the report are guilty of the oldest trick in a freshman’s book – the cut-‘n-paste. The Bank’s barracking of gold has nothing to do with cabals, cartels or conspiracies; just old fashioned incompetence and the professional economists disdain for and annoyance with gold. Compare and contrast these verbatim extracts: 2001: Price movements above $300 per troy ounce will probably face reduced demand, provide greater incentives for producers to sell forward, and encourage central banks to increase sales. Real prices are expected to decline by about 1.8 percent per year between 2000 and 2010. 2002: As has been the case for some time, higher prices will stimulate new supplies, encourage producer sales, and lessen demand, while low prices will reduce investment and encourage consumption. Mine production is expected to continue to increase moderately, as new lowcost operations come on-stream. An important determinant of prices will be the decision by Central Banks whether to further stem official gold sales when the Washington Agreement expires in 2004. 2003: Even when prices fall below $300 per ounce, mine production is expected to continue to increase moderately as new low-cost operations come onstream. An important determinant of medium-term prices will be the decision by central banks on whether official gold sales should be stemmed further when the Washington Agreement expires in 2004. 2004: Even below US$300/toz, mine production is expected continue to increase moderately as new lowcost operations come on stream. Finally, official central bank sales continue to take place. An important determinant of medium-term prices will be the decision by central banks whether to further stem official gold sales when the Washington Agreement expires in 2004. Mr Wolfensohn and Mr Stern, sirs, you have a problem, and it’s not gold. Meanwhile, do have pity on us peons who are subject to the high minded vacuity of World Bank expertise that will inform the upcoming WTO Trade Minister's meeting in Cancun, September 10-14. We hope the beaches are nice, because the information is lousy.