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

To: Dwight Taylor who wrote (2704)	11/1/1997 9:54:00 AM
From: Sergio R. Mejia	Respond to of 116822

No haloween treat: "Swiss add to gold market's tarnish" Saturday, November 1, 1997 By PAUL BAGNELL Mining Reporter The Financial Post For the second time in seven days a committee of the Swiss government has thrown cold water on the gold market, sending the price of bullion down by US$5.10 an ounce on Friday. Gold closed at US$311.30 in New York, close to a 12 1/2-year low. The Toronto Stock Exchange's gold and precious minerals subindex fell 1.6%, or 122.42 points, to 7548.04 points. Investors sold gold on news a Swiss government committee is recommending the government sell 800 tonnes of gold, instead of the 400 tonnes it has pledged to unload to help finance a fund for Holocaust survivors. In another proposal, made public Oct. 24, the Swiss finance ministry and national bank approved in principle a plan from another committee to sell 1,400 tonnes of gold. That plan will be put to voters in a referendum in 1999. The two proposals have convinced many in the gold market a large Swiss gold sale is on the horizon. Central banks, including Canada's, sold record volumes of gold in 1996 and 1997. The fear more such sales are in the works has cast a chill on the gold market. Most market watchers expect gold to fall below US$300 an ounce later this year or early in 1998, said Walter Baici, a gold trader at Bank of Nova Scotia in Toronto. Meanwhile, the chief executive of a major Canadian gold company said Friday he expects depressed prices for at least two years. "I think it's a very real possibility that gold will be undervalued for a couple of more years," said Pierre Lassonde, president of Franco-Nevada Mining Corp. Franco-Nevada and its sister company Euro-Nevada Mining Corp. Ltd. are gold royalty companies, holding profit interests in other companies' mines. The problem of central bank sales, Lassonde said, is being made worse by excessive hedging by gold producers themselves. In his view, the producers have shot themselves in the foot this year by increasing their sales of gold in futures contracts. Gold miners, able to earn higher prices in forward sales, have sold about 400 more tonnes of gold this year than during 1996 in futures contracts, he said. The stepped-up forward sales add to a market already beset by a historic high level of central bank sales and the 2,300 tonnes of gold the producers will turn out this year. "The central banks are to blame and the producers are just as much to blame." The gold market will firm up when the spread between spot sales and futures sales closes, Lassonde added. "But I don't believe it's going to happen in the short term."