Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: The Fix who wrote (2577)	10/27/1997 10:01:00 PM
From: rdww	Read Replies (2) \| Respond to of 116857

Gold Mining Outlook by Steven Jon Kaplan Maybe Alan Greenspan was right. Updated @ 6:15 p.m. EDT, Monday, October 27, 1997. COMMENTS OF THE DAY: Commodities ended the day slightly higher, while gold recovered from an early drop as it retested Friday's spot low of $307 per troy ounce before ending the day with a gain of $3.90. Silver rose half a cent, platinum plunged $11.80 and palladium dropped fifty cents. Analysts' and investors' sentiment has turned extremely bearish, as evidenced by the dumping of gold mining shares worldwide even as the yellow metal's price was recovering. Understandably, investors were not particularly sector-selective in their selling pattern; some may even have dumped gold mining shares to meet margin calls on their "good" stocks that are "sure to recover." The latter pattern would mark an exact repeat of the behavior during the 1987 stock market crash, when gold mining shares dropped sharply during and immediately after the Dow plunge, then recovered most rapidly thereafter. The recent volatility in the financial markets at home and abroad will make it much more difficult for the Federal Reserve to raise interest rates. Therefore, even if inflation accelerates, as long as the stock market is declining, there will be no brakes put on the economic engine. The implications are strongly bullish for precious metals and their shares, since rising inflation and artificially low interest rates are the ideal combination for spurring investment in gold. The most significant development on Friday was the increase in COMEX gold open interest of 25,829 contracts to 204,484, possibly the single largest day of commercial accumulation in history, which of course was accompanied by an equal amount of speculator short selling. The world financial markets are showing exactly the kind of price movement and volatility that after a suitable delay generally precedes a sharp rise in precious metals prices. If, as bearish analysts have been fond of saying recently, gold and silver are "just" commodities (i.e., not true inflation hedges or recognized proxies of monetary worth), then the traders' commitments should be the predominant item of importance; thus, gold should be poised for an imminent rally. Remember that the market was created for the benefit of the commercials. The currency/equities crisis continues to spread, as investors begin to blur the distinction between "safe" and "unsafe" zones as the almighty U.S. equities market actually drops, to the shock and amazement of today's baby boomer investors who in several recent surveys indicated that their median expectation was that aggressive growth funds would return "somewhere above thirty percent per year" for the next decade or two. Just in time for their retirement, of course. On the New York Stock Exchange there were 22 new highs and 169 new lows, with 159 stocks advancing and 2974 stocks declining. The index put-call ratio was a moderately pessimistic 1.54, while the equity put-call ratio was a very strongly pessimistic 0.69. The 350-point circuit breaker gave traders an extra half hour to place unimpeded sell orders, thus spurring the drop to 550 Dow points. Monday's COMEX gold estimated volume was a moderate 39,000 lots, as weakness in technology shares triggered actual technology failure on the COMEX floor. Friday's cleared volume was the highest ever at 140,726 lots. Total COMEX gold open interest on Friday rose 25,829 to 204,484 contracts, sharply intensifying a recent trend of persistent commercial accumulation combined with speculator short selling. COMEX gold warehouse stocks rose 7,684 ounces to 769,952 ounces, while COMEX silver warehouse stocks remained at their 12-year low of 133,227,192 ounces. The Johannesburg gold index closed Monday morning at 894.9, down 62.1, with the U.S. dollar quoted at 4.7735 rand.