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

To: long-gone who wrote (20663)	10/5/1998 8:53:00 AM
From: Rob Seligson	Respond to of 116795

By Marius Bosch LONDON, Oct 5 (Reuters) - Gold indices on global stockmarkets are soaring, ignoring the world-wide trend of falling equities as the outlook for the world's economy becomes gloomier by the day, analysts said on Monday. Boosted by a strong rally in the gold price and better management of forward sales from gold producers, most gold indices have shown growth since the beginning of the year. "Soaring gold mine indices around the world are showing a clean pair of heels to sharemarkets. The quiescent gold sector, so long scorned and orphaned, is back with a vengeance," Flemings Global Mining Group analyst Nick Moore said. With gold reverting to its reputation as a safe-haven asset, gold shares were benefiting and outperforming most other stocks. Gold mining companies' share prices have posted big gains since the start of the gold rally at the beginning of September. The world's biggest gold producer, South Africa's Anglogold Ltd ANGJ.J, has seen a 51 percent increase in its share price since the beginning of September. Shares in North American gold giants Barrick Gold ABX.TO and Newmont Mining NEM.N rose respectively by 67 percent and 93 percent over the same period. According to Flemings, the Financial Times Global Gold Mines index on the London Stock Exchange has gained 9.8 percent since the start of the year, the Johannesburg Stock Exchange's gold index 46 percent and the S&P Gold index 9.6 percent. The Toronto Stock Exchange's Gold and Silver index also gained and by last Friday, it was up 8.5 percent. In the same period, the Dow Jones Industrial lost 3.5 percent, the Johannesburg All Share index 20.6 percent and the Toronto Composite index 18.8 percent. Analysts said gold's strong rally in the past six weeks which added $30 to the price was the main reason for the sharp increase in global gold shares. Most gold stock indices have risen sharply since the beginning of September, mirrored in sharp increases in share prices of the world's major gold producers. "We certainly believe that the portents for gold look their best for some considerable while and continue to recommend that investors seek exposure to the sector," Moore said. Despite fears of sales by central banks, analysts expect gold to remain at its present level of around $300.00 a troy ounce for some time and many believe gold might even try higher towards $310.00. Stockbrokers T Hoare & Co said in a recent report a rise from the mid-September price of around $291.00 an ounce to $310.00 would only be a seven percent increase. "On the back of this seven percent rise in gold, we would expect to see a rise in the FTSE Gold Index of almost 40 percent. With most other equity market sectors looking shaky this would be a dramatic move for the gold shares and would no doubt generate a high level of interest in the market," the report said. However, T Hoare & Co analyst Roger Chaplin said it should be kept in mind that most gold indices had come off a very low base and they had moved a little ahead of the gold price at present. Analysts said the increases in the gold indices were not surprising, given the fact that gold has broken out of a major technical downtrend on the charts. "We have broken up from a serious downtrend and the market looks a little more confident than it looked four weeks ago," said Bank of America analyst Peter Hillyard. With prudent and progressive forward sales from gold producers adding to a rosier outlook for gold, analysts expected gold to remain at present levels for the rest of the year, which would see gold stocks continue to rise. Hillyard said with past rallies in gold, producers bought back their hedges thinking that the price will rise further and they could make more profit by selling the hedges at a higher gold price. In the present rally, the market was seeing producers selling at the top of the price move which indicated producers did not see gold moving much higher. Mercury Asset Management said in a recent report it would advise against bailing out of shares into cash after the first 50 percent increase in the share price. "Some of our longer-term holders may remember that bull markets in gold shares have historically tended to plough on, well into triple figures," the investment fund said. REUTERS Rtr 08:43 10-05-98 Copyright 1998, Reuters News Service