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

To: PaulM who wrote (11583)	5/13/1998 9:31:00 AM
From: Enigma	Read Replies (1) \| Respond to of 116834

Indian sanctions - presumably the negative action on gold and silver is related to this - perceived to be bad for both - whether it is, who knows?

To: PaulM who wrote (11583)	5/13/1998 5:31:00 PM
From: Alex	Respond to of 116834

Hedging Helped Drive Down Gold Prices? Central Bank Gold Loans The dramatic growth in the use of hedging by gold producers in the past 10 years undoubtedly played a part in the fall in the price of the metal - which in December sank to its lowest for 18 years - according to a new study from the World Gold Council. Ironically, the relatively low price has produced a growing consensus in the gold industry in favour of hedging in some form, the study suggests. A year ago a successful hedge programme in most cases simply increased a producer's profitability, but today the survival of many gold mines depends on hedging, it points out. The authors, Ian Cox, a former head of precious metals trading at Samuel Montagu, the UK merchant bank, and Ian Emsley, an economist and analyst with Anglo American Corporation of South Africa, say producers gradually realised gold prices were on an extended downward path last year and accelerated their hedging activities. This resulted in an estimated additional 500 tonnes of gold supply reaching the market, roughly equivalent to all the new gold mined in South Africa, the biggest producer. Hedging on this scale is not likely to be repeated in the short term, they say, partly because many new gold projects are being put back because of low prices. Nevertheless, in the "longer term, the situation could be different as the development of low-cost gold projects will bring new volumes of hedging to the market at lower prices than are currently acceptable". The growth of hedging was made possible by the increasing readiness of central banks to lend gold from their reserves to provide the liquidity for funding hedge transactions. In the past 10 years central bank lending has risen from an annual 400 tonnes to about 4,000 tonnes. The WGC is a promotional organisation financed by some gold mining groups. The Financial Times, May 13, 1998 Foreign Exchange Market