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

To: Sergio R. Mejia who wrote (3635)	11/28/1997 6:22:00 PM
From: Alex	Read Replies (1) \| Respond to of 116898

Sergio; Reason for gold flatline and some interesting thoughts from Kaplan......... Updated @ 3:55 p.m. EDT, Friday, November 28, 1997. COMMENTS OF THE DAY: Commodities and precious metals ended slightly higher on Friday, though the COMEX and many commodities floors were closed for the extended Thanksgiving holiday. After closely approaching $295 per troy ounce on Thursday in Europe, gold recovered to end in London at $296.95, up twenty-five cents from Wednesday's New York spot close, while silver gained two cents. As the third-world stock market collapse has spread to more and more nations, the reaction has followed a predictable path: capital flees from the country currently undergoing the sharpest drop in its equities, thus causing its currency to collapse in tandem. Initially this money was going to other countries in the same region, but since many were burned in the early months by shifting assets from Thailand to Malaysia or Indonesia and then to Hong Kong or Korea, the areas considered "safe" have narrowed to first-world economies. As a result, the equities and currencies of these "safe" areas have been inflated by money fleeing the financial markets of the "hit" countries. Since those places which have so far been hardest hit are those which traditionally make the largest physical purchases of precious metals, especially gold, the drop in the gold price caused primarily by a huge surge in gold loans and short selling has been further exaggerated. Since the third-world economies are fundamentally as sound as their first-world counterparts, with their GDPs increasing faster in most instances, eventually the same factor which caused the third-world financial markets to drop--excessive equity overvaluation--will hit the first world. When this occurs, the dollar and the other affected European currencies will realign themselves with their third-world counterparts in ratios similar to where they were before the crisis began. More importantly, the U.S. dollar and U.S. equities will no longer be seen as a safe haven, so the desire for alternative investments such as precious metals and shares will be most acute just as stronger physical buying re-emerges from the third world.