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

To: menanna who wrote (10873)	4/28/1998 6:57:00 PM
From: goldsnow	Respond to of 116786

Bearish tales overdone on gold says WGC 09:38 a.m. Apr 28, 1998 Eastern ZURICH, April 28 (Reuters) - Overly bearish thinking about the collapse of Asian gold demand, central bank sales and investor interest is starting to turn around, helping prices to recover, a World Gold Council (WGC) official said on Tuesday. George Milling-Stanley, WGC Manager of Gold Market Analysis, said that thinking on all three had overstated the case for bearishness and attributed gold's rise from January's 18-year low below $280 to a growing realisation of this. ''Each one of these represents an area where conventional wisdom is just starting to be challenged...'' he told a gold mining industry conference. On central banks, Milling-Stanley said the market had oversold the potential likely effects of creating the European Central Bank (ECB), setting the level of its gold reserves and deciding what to do with the remainder in national reserves. He said the issue was not one of how much gold was held by the ECB but rather the new bank's power over national central banks in the euro-zone, which he said would give it control over the fate of 14,000 tonnes of gold. ''It will be for the ECB to decide what happens with these reserves, not the central banks of the member states,'' said Milling-Stanley, whose organisation is funded by producers. He said official sector holdings had fallen from 38,385 tonnes at the end of 1966 to 33,840 tonnes by the end of January this year, a decline of 4,445 tonnes or 11.6 percent. Sales by Canada, Belgium, the Netherlands, Australia and Austria in recent years were small in comparison to the 150 official sector organisations holding gold, he said. Milling-Stanley said last year's financial crises in South Korea, Indonesia and Thailand had had relatively little effect on overall demand world-wide. ''That said, there is no question that, once we put the numbers together for the first quarter of the year, we will see that developments in certain countries in Asia had a significant impact on overall gold demand,'' he said. On the third issue, that of gold purchases by Western investors, he cited strong U.S. demand for bullion coins and progress in WGC efforts to woo investment fund managers as causes for expecting increased gold uptake Milling-Stanley said that of 50 investment organisations visited by the WGC, eight had since said they had bought gold as a portfolio diversifier. ''Collectively, these eight institutions added about 50 tonnes of gold to their portfolios in 1997. And others have already been buying this year, to the tune of a further 10 tonnes or so,'' he said. ((Patrick Chalmers, conference newsroom, tel. 41 1 224 25 26)) Copyright 1998 Reuters Limited.