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

To: Al Cern who wrote (4159)	12/11/1997 5:20:00 PM
From: Dwight Taylor	Respond to of 116872

Thursday December 11, 9:08 am Eastern Time Investment demand for gold doubles in 1997 - CPM NEW YORK, Dec 11 (Reuters) - Private investment demand for gold bars and bullion coins has more than doubled in 1997, as gold prices have tumbled to their lowest level in 18 years, but the economics of the gold market now suggest higher prices may not be far away, New York-based industry consultants CPM Group said in their latest bi-weekly newsletter. ''Investors in the Middle East, North America, Western Europe and China began accelerating thier purchases of gold bars and coins in late October, as equity markets around the world, and currency markets in Asia, came under selling pressure,'' CPM Group managing director, Jeffrey Christian said. ''And as gold prices continued to move lower throughout November and early December, investors increased the pace of bullion purchases,'' he said. A total of 84,000 ounces of American Eagle gold coins were sold in November, up 282 pct from 22,000 ounces in November 1996. Year-to-date sales of American Eagles totaled 621,750 ounces, up 205 pct from 204,000 ounces sold in the first eleven months of 1996. Net private investment demand is now projected to total 9.3 million ounces in 1997, up 129.2 pct from 4.1 million ounces in 1996, CPM Group said. And investors could add a net 12.4 million ounces in 1998, up another 33 pct, CPM Group said. ''The rekindling of private investor buying in 1997 may be the start of a reversal in the gold market, similar to the conditions in the final four months of 1992 and first quarter of 1993,'' Christian said. ''In late 1992 investment demand rose due to lower prices, European currency market and interest rate turmoil, Chinese and Indian currency market unrest and inflation, and financial market anxiety over U.S. economic conditions and election politics,'' he said. Smaller investors reportedly are already heavy buyers in North America and Europe this year, while demand from large and small investors in south Asia, China and the Middle East is said to be strong. ''Dealers in Europe and North America are reporting tight supplies of small bars due to the sudden sharp increase in demand,'' Christian said. ''Large institutions in the industrialized economies appear to be the only group not buying at this time.'' Gold prices fell to 18 year lows this week at $283.25 an ounce, as fund short selling, producer hedging and central bank sales and lending continued to weigh on the market. This year net official central bank gold sales are projected to have totalled 20 million ounces (622 tonnes), double the amount sold in 1996, CPM Group said. Central banks have been steady net sellers since 1989, as attitudes to gold changed and higher returns were demanded of gold and currency reserves. Net official central bank gold sales are expected to remain high in 1998, CPM Group said. ''As gold prices fell there was also an increase in gold forward selling by some mining companies acting independently and by others obligated to hedge if prices fell below certain threshold prices under previously established bank loan arrangements,'' the report said. In early December the Australian dollar dropped to a new four year low against the U.S. dollar, prompting some Australian gold producers to increase their foward selling, CPM Group noted. The drop in gold prices also has led to an increase in delta hedging by banks involved in forward sales via the purchase of puts, which applied additional downward pressure on gold prices, the report said. Help