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Gold/Mining/Energy : International Precious Metals (IPMCF) -- Ignore unavailable to you. Want to Upgrade?

To: Bruce McGaughey who wrote (29226)	12/13/1997 7:44:00 PM
From: Bob Jagow	Respond to of 35569

Bruce, Fairly positive gold take in current Barron's FollowUp: (Thought source would paste-NOT!) There has been no golden parachute for owners of gold during its rapid descent over nearly two years from above $400 an ounce. Last month, the price crashed through the $300 barrier, and last week it neared its lowest level since 1979: Current prices in the mid-$280s mark a 12 1/2 -year trough. The price of the precious metal has also fallen about $40, or 12%, since Barron's described the gold market's woes and offered several reasons the price probably would continue sliding ("Precious Little Upside," July 14). The psychological cause of the bearish behavior is the dumping of gold by the world's central banks. But, as noted in the article, that's more symptom than cause of what ails the yellow metal. Rather, the "demonetization" of gold is the flip side of the U.S. dollar's ascendancy as the reserve of choice and of the world's firm confidence in the ability of central bankers to attain price stability. Indeed, the disinflationary upending of financial systems in Asia did nothing to counter this faith in Alan Greenspan and his colleagues. As currency after currency was knocked flat and investors scrambled for safety, it was U.S. Treasury securities that rallied while gold's tumble went on. Asian individuals and central banks, seen as the steadiest buyers of gold, were suddenly much poorer and unable to give the gold market a decent bid. As to where gold is headed from here, it depends on what analytical discipline one prefers. The technical analysts, armed with gold's wretched-looking price charts, tick off lower resistance levels that gold is likely to test: $281, then $250, even $215. The economists at I.D.E.A., a London-based consultancy, foresee slippage to $268. They focus on the likelihood of more selling by European central banks, citing a looming 90-million-ounce overhang. That's a scary number, but still only two days' worth of average turnover of bullion on the London market. On the whole, the long drop in gold seems to have run most of its course (allowing for additional spurts downward powered by the shorts) and now the scenario of gold optimists is slowly unfolding. Mines are closing as prices make less-efficient ones unprofitable. And CPM Group, the New York metals-research house, reports that private investment demand is now projected to be 9.3 million ounces this year, up 129% from 1996 and higher than in any year since 1993. All in all, a good case for a stabilizing gold price. But until investors' infatuation with financial assets flags or the integrity of the dollar is compromised, don't look for too much upside in gold just yet. -Michael Santoli