terry, some bullish news today. milton freedman says that the euro is a mistake. abx is buying 10% of their shares and gold coin and bullion sales are soaring. read all about it. and they said the south will rise again. now it is time for gold to rise again.
Gold Mining Outlook
by Steven Jon Kaplan
Silver touched $6.22 in the active March 1998 contract on Wednesday evening, the highest price
for the active silver contract since March 23, 1989. Gold touched $281 per troy ounce at 10:57
a.m. EST Tuesday, its lowest spot price since June 4, 1979.
Updated @ 5:25 p.m. EST, Friday, December 12, 1997.
COMMENTS OF THE DAY: Commodities, including precious metals, closed mixed on
Friday. Gold dropped $1.20, silver rallied 6.8 cents, platinum hit a new post-February low
of $354 in the active January contract but recovered nearly all of its gains to end down
twenty cents, and palladium sank $6.00. Bearish opinion about gold remains at a near
consensus. The U.S. long bond hit its highest intraday spot price since December 29,
1995, with an effective annual yield of 5.934%.
American Eagle gold coin sales totalled 84,000 ounces in November 1997, up 282% from
22,000 ounces in November 1996.
The London Bullion Market Association said Friday that average daily cleared turnover
for gold in November was 40.8 million ounces, compared with a record high of 42 million
ounces in October, and up 32% from 1996.
Swiss National Bank directorate member Jean-Pierre Roth stated on Friday that the
bank intends to continue to hold onto a significant portion of its gold reserves and that it
has no intention of reducing its gold stocks rapidly. He added that "in the eyes of many,
gold is a synonym for stability and security."
Due to the low gold price, Getchell Gold of Canada is cutting its workforce by 20% and
suspending the use of low grade stockpile ore.
South African gold producers no longer have to market their gold through that nation's
central bank, representing a further relaxation in exchange controls, according a report
on Friday by the Finance Ministry. South Africa "will also not be altering its exposure to
gold as a consequence of the revised arrangements."
Barrick Gold of Canada, often a trend-setter in the gold mining industry, announced today that they
will buy back ten percent of their outstanding common stock in the open market. CEO Peter Munk
stated, "The shares are trading in a price range that does not reflect the value of the company's
mining and financial assets and future business prospects. We have the financial strength to
undertake this program."
According to New York-based CPM Group, private investment demand for gold bars and bullion
coins has increased sharply over the past two months as gold prices tumbled. Net private
investment demand is projected to total 9.3 million ounces in 1997, up 129.2% from 4.1 million
ounces in 1996, with 1998 demand predicted to rise by an additional 33%. CPM found that the
closest historical parallel was with the end of 1992, just before a major gold rally in 1993. CPM
noted that large institutions in the industrialized economies appeared to be the only group not
buying at this time, instead waiting for prices to start rising forcefully before they make the bulk of
their purchases.
Gold mining analyst John Tumazos raised his estimated gold price for the years 2001 and 2002
from $400 to $425 per troy ounce. According to Mr. Tumazos, the current deep decline provides
the foundation for a stronger recovery in the early years of the next decade. "Short covering, the
forced liquidation of bullion loans or voluntary liquidation of bullion loans could cause violent
reversals in the gold commodities markets, which may cause a $50 per ounce reversal in a brief
interval such as one month." Mr. Tumazos also stated that "Federal Reserve chairman [Alan]
Greenspan's December 2 remarks provide a basis of optimism for gold or other commodity
investors. For the first time he acknowledged 'deflation' as an economic problem. A reversal in Fed
Chairman [Paul] Volcker's priorities to fighting unemployment rather than inflation in June 1982
was the turning point in the 1982 gold market bottom."
On the New York Stock Exchange there were 103 new highs and 95 new lows, with 1465
stocks advancing and 1427 stocks declining. The index put-call ratio was a neutral 1.25,
while the equity put-call ratio was a significantly pessimistic 0.63.
Friday's COMEX gold estimated volume was a very light 17,500 lots. Total COMEX gold
open interest on Thursday rose 352 to 192,527 contracts. COMEX gold warehouse stocks
fell by 385 ounces to 674,894 ounces, while COMEX silver warehouse stocks plunged by
1,199,164 ounces to 123,029,705 ounces, their lowest total since June 25, 1985. The
Johannesburg gold index closed Friday morning at 682.6, down 4.4, and is just above its
lowest closing level since 1985, with the U.S. dollar quoted at 4.8915 rand after touching a
new all-time intraday high of 4.8960 on Thursday morning.
I will attempt to give an unbiased outlook on the intermediate-term prospects for worldwide gold
mining shares, based upon a collection of the most important fundamental and technical indicators.
The objective will be to indicate critical turning points in the market. The indicators are listed in
order of importance, most important first. Information in boldface has been recently updated.
The current outlook is MODERATELY BULLISH, primarily because of strongly bullish traders'
commitments for gold and slightly bearish traders' commitments for the "white" metals; relatively
recent modest interest rate increases by several of the world's important central banks; a generally
negative technical chart for the yellow metal as it continues to retest its 1985 bottom; extremely
pessimistic analysts' and investors' behavior; and a powerful correlation between the early years of
a major worldwide bear market in equities and a corresponding sharp rise in precious metals.
we still have hope. at least my silver bullion is in a bull market.
vargas |
