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

To: Rick McDougall who wrote (8008)	3/2/1998 7:01:00 PM
From: CuriousGeorge	Read Replies (2) \| Respond to of 116836

THE FOOTSTEPS OF GIANTS: postings of ANOTHER Advanced copies are available at the pre-publication of $25. usagold.com MARKET UPDATE (3/2/98) AM-----Gold meandered in early trading this morning on news that lease rates were higher and confirmation that a European central bank chose not to roll over its lease position. Rumors persist that the Belgian central bank took back its 3 million ounce lease position putting additional pressure on already thin supplies of bullion. "People are a bit nervous about gold supply, " said a Hong Kong trader, "the borrowing cost has become quite expensive." Reuters reports the gold lease rate to be 5% -- up from 2% last week. Central bankers issued a public statement at the recent Davos, Switzerland conference that most banks are holding onto their gold in advance of Maastricht implementation this summer, according to a World Gold Council press release summarizing the conference. After implementation, it will be very difficult for European countries to sell gold since it would take a majority vote to authorize sales. Investors increasingly are looking more at the gap between mine production and fabrication demand -- some 1600 tons according to the latest Gold Fields Update -- and wonder how that gap is going to be filled with the central banks essentially out of the picture and a large percentage of the world's production closing down at these prices. The rising lease rate is confirmation of the developing gold shortage just as it was to silver a couple of month's ago. An interesting story that surfaced in Canada over the weekend has ex-prime minister, Brian Mulroney going to work for the World Gold Council lobbying the central banks to keep them from selling gold, or otherwise, acting to depress the price. This may be icing on the cake since the central banks have already declared their withdrawal from the gold market. Perhaps the World Gold Council feels we need to keep the fire lit in this regard. We concur. Reuters London reports tight physical supplies, rising lease rates, strong European physical demand and "some short covering" in that market. Said one London trader, "the implications of a reduction in lending are important. As seen last week, a fall in liquidity increases lease rates and therefore the cost of short positions. This negative impact is compounded if gold remains in a stable trading range. As a result, short covering and perhaps closing out of forwards can be expected if the trend continues. The gold borrowing pool is estimated to be at least 4000 tons, of which central banks are estimated to contribute 3700 tons." 3700 tons comprises about 25% of the G-7 gold reserve. With the United States holding about one-half G-7 gold reserves that leaves only 25% lendable gold not already committed. As a matter of practicality we may have reached the end of the road on gold loans. That's it for today. More later if gold breaks to the upside which is entirely possible under the circumstances. ------------------------------------------------------------------------ We are now taking advance orders for "THE FOOTSTEPS OF GIANTS: The Inside Story of the Gold-for-Oil Deal that Could Rock the World's Financial Centers" -- a collection of the remarkable and mysterious internet postings of "ANOTHER" with commentary and analysis by Michael J. Kosares, author of The ABCs of Gold Investing. Advanced copies are available at the pre-publication of $25. Reg. Price $34.95 Please call for details. Ask for Marie. 1-800-869-5115. Or E-Mail by returning to Home Page and click on E-Mail.