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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (19667)	11/22/2003 8:41:41 PM
From: sea_urchin	Read Replies (1) \| Respond to of 81145

ild > Are they bringing down short term interest rates? Yes, but not nearly enough. The Reserve bank says it's more concerned about inflation than the strong rand --- so the way it "treats" inflation is by keeping interest rates high. Naturally this attracts foreign money into the country and, in turn, this drives up the money supply and so causes more inflation. If that's not a vicious cycle, then I don't know what it is. m1.mny.co.za (Read the comments at the bottom of the page) > How's inflation? Who knows? They manufacture figures to suit themselves. I have to say, however, that, despite high interest rates, property prices, foodstuffs, cost of living etc are all on the up-and-up. Gasoline, however, seems a bit cheaper but then most of that price is due to all kinds of government levies, surcharges, taxes etc and not the cost of imported oil. > Do you see prices on imports going down? Very little. Shopkeepers are still charging the same prices as when the rand was 12 to the USD. > Has there been any high profile default/bankruptcy case because of strong Rand? Not really. Some while ago DRD announced that it was retrenching 5000 workers. To this the State President retorted that the company didn't know how to run its business and was victimizing blacks. > I think that RSA gold stocks will take off big time when the Rand finally goes down (if they had not gone bankrupt before). All depends on the circumstances. If the weakening of the rand is associated with strengthening of the USD then there could easily be a flight of money from SA to the US. In the same vein, if USD strengthens then POG is likely to fall. Here's a chart of the gold price in rands. stockcharts.com[l,a]dalaynay[de][pd50,2][ilb14!la12,26,9] As you can see, for the past two years there has been a bear market in gold, priced in rands (which is what SA mining companies earn), even though, as you know, there is a bull market in gold, priced in USD. Goldfields and Harmony, amongst others, have announced lousy profits which they blame entirely on the strong rand. It's conceivable that when rand weakens, the gold price in USD will also weaken and so the price of gold in SA may remain relatively constant or even continue to drift down. Anyone's guess. But a bull market in SA gold I certainly don't envisage for some time (unless something dramatic happens to the gold price itself).