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Gold/Mining/Energy : MIRANDOR-MIQ ON MONTREAL -- Ignore unavailable to you. Want to Upgrade?

To: Bob Tate who wrote (1913)	5/18/1998 6:55:00 PM
From: jocko	Respond to of 2635

Hi Bob.....Thanks again.....Maybe all has not seen todays bulletin from venerosa associates (I don't write them I just read them :-) > We received two reports late last week that there has been selling of gold by one or more European central banks. One report indicated that we are in a late stage of a presumed long term selling program. We understand that several dealers who are often involved in official sector sales and who were very bearish in 1996 - 1997 have turned bullish on the gold market. At the same time we hear more comments on producer buybacks. All the above reports hang together. There has been sustained undisclosed European official selling for some time. This is coming to an end and the dealers know this. As a consequence, the dealers are advising their largest producer clients to reduce their hedges. As we have stated repeatedly in recent reports, if this picture is correct it is decidedly bullish. At some point such undisclosed sales will end and will be announced. Official selling pressures which have led to the current low gold price will abate and the price will rise. Market participants will notice that the gold market has been able to absorb more metal than they thought. It will become clear that global gold demand and the gold market deficit exceeds consensus estimates. This will imply a higher price needed to clear the market once official supplies abate. In our opinion, the gold market cleared at $385 - $388 in the period 1994-1996 with total flows of official sales and mobilizations of 1000 tonnes per annum. If the unusually heavy official supplies of 1997 recede to 1994 - 1996 levels and there is a recovery in emerging Asia - both of which we expect - the gold market should clear once again in the $375 - $400 range. Because of short run sticker shock abatements in physical demand on price rallies, bouts of scale up producer hedging, and perhaps 4 quarters to restore end use Asian demand, this price recovery may take perhaps a year, traversing in both price and time the Nov 96 - Nov 97 price decline.