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

To: bobby beara who wrote (15072)	7/30/1998 11:21:00 PM
From: DennyKrane	Read Replies (1) \| Respond to of 116756

canoe.ca Resource prices on the rebound: TD study TORONTO (CP) -- Since last fall, Canadian economists have been using an odd, little phrase to describe their gloomy outlook for the country's natural resource industries. "If it's in the ground, it's going down." Though stock prices have been hammered by reports of slack demand from Asia, a TD bank study released Thursday shows prices for oil, lumber, gold, base metals and natural gas have in fact enjoyed a recent upswing. "There are some that are going up and some that are going down," said Teresa Courchene, TD's director of economic research. "So we're not looking at an across-the-board decline in July... That's important because for a while every single bit of news was bad for commodities." The numbers are crucial to Canada's economic well-being because the country is highly dependent on international trade, with commodities making up more than 40 per cent of Canadian exports. The most encouraging news is from the oil patch, where production cuts by major crude oil producers raised prices for West Texas intermediate crude to just over $14 US per barrel in July. "There was a lot of concern earlier in the year when prices went close to $13 US," said Courchene. "Prices back above $14 is a little reassuring, especially for producers in the West." Laurie Stretch, spokeswoman for Petro-Canada in Calgary, agreed. "We're not thrilled with price levels now, but we're encouraged that they're beginning to rebound," she said. Stretch noted the low prices for oil haven't caused panic in the oilpatch largely because the bigger players have diversified into natural gas, which has enjoyed strong gains. "It's not like the '80s," Stretch said. "Companies have the cash-flow to withstand periodic drops." In the base metal market, prices are also creeping higher. The price of zinc, for example, has jumped eight per cent in the last month alone. The story is much the same for copper, nickel and aluminum. That comes as good news to giant mining companies such as Inco, Noranda and Falconbridge. Other findings in the TD study: Strong demand from the booming U.S. house construction pushed lumber prices up in July. Natural gas prices also gained ground in July as hot weather in the United States boosted demand for electricity to power air conditioners. Gold and silver prices increased in July. Though base metal prices declined slightly in the month, there are expectations the recent change in political leadership in Japan could lead to economic reforms that would boost demand from overseas. Indeed, base metal prices actually increased in the second half of the month after it became clear that Japan's parliament would declare Keizo Obuchi the country's new prime minister Thursday. Since Obuchi has pledged to accelerate changes aimed at lifting Japan out of a deep recession, there is widespread belief that Japanese demand for Canadian commodities will soon boost exports. But the sudden rally in some resource prices represents only a small spike in a long, downward slide, analysts say. The average price for the 18 commodities TD surveyed was down in July by 0.3 per cent. And the bank's commodities index has fallen by 13 per cent overall when compared with the first half of last year, hitting the lowest levels recorded since 1993. The problems in the resource market can best be seen in the gold industry, which has wallowed in the dumps longer than most sectors. "Most of the gold (stocks) have not been part of the rallies in the last year-and-a-half," said Mike Curran, gold analyst at Midland Walwyn. "So, if you're looking for a sector that has been underwater longer than anyone else, gold and base metals are pretty well it...(especially) if you're looking for a beaten-up sector to put some money into." Curran acknowledges that even gold stocks are expected to gain ground by the fall, but that won't happen unless there is steady improvement in Asia's battered economies. The TD study also noted the decline in world commodity prices, which are measured in U.S. dollars, has been tempered somewhat in Canada by the steep drop in the value of the loonie, relative to the American greenback. In fact, the average price for commodities has actually risen in the last two months when measured in Canadian dollars, the study says.