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

To: John Hunt who wrote (28745)	2/22/1999 8:02:00 AM
From: Rarebird	Read Replies (2) \| Respond to of 116866

Last Gasp of The Bull? contrarianinvesting.com

To: John Hunt who wrote (28745)	2/22/1999 9:15:00 AM
From: Alex	Read Replies (2) \| Respond to of 116866

Gold Sales From Private Hoard Keep Lid on Price, Analysts Say By NEIL BEHRMANN Special to THE WALL STREET JOURNAL LONDON -- Gold sales by central banks are down. Global interest rates are at their lowest levels in decades. Asia, a key market for precious metals, is slowly reviving. So why isn't the price of gold surging? The answer, according to some analysts, is that sales from a huge private stockpile held by disenchanted former gold bugs around the world are keeping a lid on the price. Kevin Crisp, precious-metals analyst at J.P. Morgan & Co., says the stockpile, which was built up during the decades when gold was fashionable, is a depressing influence on price just as important as central-bank inventories. In New York on Friday, spot gold rose $2.40 to $289.50 an ounce, but analysts such as Mr. Crisp fear that any rally won't last. They expect gold to remain stuck in a trading range of $280 to $300 an ounce. Above-ground gold stocks amount to 135,000 metric tons world-wide. Three-quarters of that, or around 100,000 tons, is in private-sector hands, estimates Mr. Crisp. Major holders in Asia began selling their stocks last year, he says, and if the price rallies further, they will unload gold once again. Massive unloading of gold hoards in Asia in the first three quarters of last year caused total 1998 global demand to drop 11% to 2,712 tons, says George Milling-Stanley, a New York-based manager at the World Gold Council, a producer association. However, he thinks the worst is over. The fourth quarter of 1998 saw a revival in orders, he says, except in North Asia. The gold market also was helped by an 18% surge in U.S. demand, raising total gold sales in that country to a record 428 metric tons last year, says Mr. Milling-Stanley. Sales of gold coins in the U.S. soared 109% to 75.4 tons in 1998, exceeding the levels seen in the gold boom of the late 1970s, says Mr. Milling-Stanley. He believes investors are buying coins ahead of the new millennium, and as an antidote to a possible stock-market crash. But others are skeptical of the potential for gold's price to rise. The market is amply supplied, says Mr. Crisp of J.P. Morgan. In addition to the mountain of private and central-bank gold stocks, mine production is near record levels. Producers in Australia as well as in Africa, Latin America and other emerging markets were saved by a slump in their currencies, which raised the price of gold in local-currency terms, he says. Demand for gold in the U.S. and Europe also is likely to fall as economies slow down, many traders predict. Meanwhile, analysts point to India, the world's biggest gold buyer, as a prime example of the possibility for change in buying trends. In the past few years, gold purchases have soared, and last year orders jumped 11% to 815 tons, or 22% of global demand, according to the World Gold Council. But in January the Indian government raised import duties on gold by 60% to counter the drain on foreign-exchange reserves, analysts say. Smuggling is likely to continue, but the Indian economy and rupee are expected to weaken this year and Indian gold imports could fall by 10% to 15%, predicts Mr. Crisp of J.P. Morgan.