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

To: goldsnow who wrote (7971)	2/28/1998 11:39:00 PM
From: Alex	Read Replies (1) \| Respond to of 116764

More pieces for gold's never-ending jigsaw puzzle GEORGE Milling-Stanley, the World Gold Council's manager, gold market analysis, told a somewhat familiar story to a Johannesburg audience this week: the usual paradox about record demand for gold yet to translate into a robust dollar price-recovery. Milling-Stanley's brief is to report on gold demand trends and not to make a forecast of the gold price. In a nutshell, almost every region demanded more gold during 1997. Annual demand climbed another 9% to 2 935 tons and sales of 754 tons in the fourth quarter of 1997 were the highest on record. The WGC monitors perhaps 80% of the world's total gold demand. Milling-Stanley admits it would be nice to know a little more about the holdings of investment portfolios in industrialised countries. "There's a veil of secrecy about this and other aspects of gold-holding," he notes, "but in a very informal survey of about 50 of the estimated 18 000 investment funds managed in America, we found around 150 tons of gold. This could be just the tip of the iceberg," he says. Should we be worried that there is probably even more gold above the ground that was thought, or reassured that so many fund managers regard gold as a useful portfolio diversity? Milling-Stanley excels at restoring balance to rather distorted perceptions prevailing in the gold market, no better illustrated than on the cover of this week's Investors Chronicle ("Why the gold price won't go up") and citing the nauseating story of central bankers' dissatisfaction with gold. Says Milling-Stanley: "Estimates of central-bank gold sales have been grossly exaggerated. Only Australia's 167-ton sale and Argentina's 125 tons have been confirmed for 1997 although there are rumours of others. These sums are insignificant compared with producer forward-selling and speculators' short positions. In the year before, Belgium and the Netherlands sold about 700 tons. Canada has been a long-term seller of gold since 1981, ceasing in 1996. "This makes five central-bank sellers, suggesting that the other 150-plus central banks are reasonably happy with their gold holdings. The only complaints I hear are that they want more gold." The apparent fall in Austria's gold reserves is due to treasury-management operations and Philharmonika coin-manufacture rather than outright sales. Milling-Stanley says Russia is adding 100 tons a year to its gold reserves, China is a buyer and the South Korean government is not selling the gold it has rallied from patriotic citizens to help it in its economic crisis, preferring to lodge it with the central bank. He outlines the likely policy of the fledgling European Central Bank, whose format will be binding on members. Germany and France will be the driving force and they both like gold in their reserves. Polls of the Swiss show them to be against the country selling of gold for reparations. And even the Bank of England concedes that the returns on gold in recent years have matched that on the Deutsche mark and far exceeded that on the yen. These just happen to be two of the three currencies into which Australia placed the proceeds of its gold-reserve sale. Serves 'em right.