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

To: long-gone who wrote (15843)	8/13/1998 6:30:00 PM
From: Giraffe	Read Replies (2) \| Respond to of 116814

From the Financial Times. Usual Merril Lynch gold bashing ... GOLD: Price forecast at $200-$300 over five years By Kenneth Gooding, Mining Correspondent The gold price will range between $200 and $300 a troy ounce in 1998 dollar terms during the next five years, according to Ted Arnold, analyst at Merrill Lynch, the investment bank. Long-term forecasts of this type are unusual, but Mr Arnold, who said Merrill was asked to produce one for a client, gives some of the reasoning behind the predictions in Merrill's latest Base & Precious Metals Monthly publication. He suggests prices significantly below $200 an ounce would cause drastic production cuts and even closures. "It would also spark a considerable volume of investment buying in the west on the view that gold is 'dirt cheap' and should rise in the medium term for a useful capital gain. Sub-$200 prices would certainly produce an awful lot of investment buying interest in the price sensitive demand centres of the world: India, the Middle East and Asia." However, prices substantially above $300 an ounce would encourage disinvestment from these regions and renewed bouts of forward selling by gold producers. Prices above $300 would also encourage central banks to sell much more from their gold reserves. Mr Arnold suggests that, at some point in the next five years, the International Monetary Fund will sell some of its gold reserves. Mr Arnold, reputed to be one of the market's big "bears", suggests the European Central Bank will be a "filter" for other central bank sales. "We are looking at some 12,000 tonnes of 'free' central bank gold eventually available for sale to the market." Other analysts involved in long-term forecasting are not as pessimistic as Mr Arnold. Philip Klapwijk, at the Gold Fields Mineral Services consultancy said that if the dollar remained strong and there were no international political upheavals, $300 an ounce in real terms was "reasonable" but "$200 is excessively bearish. I would be more comfortable with a forecast of $250 to $350." Looking further ahead, Mr Arnold suggests the Asian crisis will stimulate economic reform in the region similar to that in Europe after the second world war, since when French and Germans have progressively sold their gold holdings.