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

To: C Hudson who wrote (28957)	2/24/1999 11:14:00 PM
From: Giraffe	Read Replies (1) \| Respond to of 116789

GOLD: Surge in supply and demand By Gwen Robinson in Sydney Surging production in the Australian gold industry coincided with record global gold demand in the fourth quarter of 1998, according to Australian data from the World Gold Council. "The big story of 1998 was of a growing appreciation for the role of gold as a monetary asset," said George Milling-Stanley, the council's market analysis manager. In the US, fear of the "millennium bomb" and concern over a possible stock market correction drove bullion coin purchases to record levels. In Japan, "big bang" financial reforms triggered renewed interest in gold's value in portfolio diversification, while there were signs of recovery in gold investment demand in some troubled Asian economies. Soaring fourth-quarter demand set a recovery trend after a poor start to the year. Demand in countries monitored by the council - the 27 countries covered account for 80 per cent of global demand - reached 806.6 tonnes, up six per cent from a year earlier. Another happy coincidence for gold producers worldwide was the advent last week of the Lunar New Year, which could significantly lift gold consumption in Chinese communities, according to Mr Milling-Stanley. Under the 12-animal Chinese zodiac, the Year of the Tiger, which ended last week, was a "traditionally inauspicious year to give gold gifts", he said. Aggregate demand in China, Hong Kong and Taiwan fell 23 per cent in 1998 to 314.6 tonnes. The new Year of the Rabbit may reverse that trend. Australia, meanwhile, produced a near-record 312 tonnes of gold in 1998, said Surbiton Associates, a Melbourne-based industry consultant. Fourth-quarter production of 81.1 tonnes brought the year's tally close to 1997's record yield of 314.5 tonnes, said Sandra Close, Surbiton managing director. Miners increased yields by treating higher grade ore in the final quarter, while production from new projects outweighed the impact of operations winding down or closing, she said. Weighted average costs were stable in 1998 after falling sharply in 1997, while the higher Australian-dollar spot gold price for most of 1998 helped improve margins for gold miners. ft.com

To: C Hudson who wrote (28957)	2/24/1999 11:16:00 PM
From: Giraffe	Respond to of 116789

METALS: Silver expected to reach $7.50 By Gillian O'Connor Mining Correspondent Silver prices are expected to reach $7.50 an ounce in the second half of this year and $8-$10 an ounce by 2000, according to an annual silver survey released yesterday by CPM Group, a New-York research group. CPM estimated that stocks of silver bullion declined by 217.2m ounces in 1998 to about 359.8m ounces at the end of the year, more than two years' cover for the expected shortfall. The net deficit in the bullion market amounted to 192.2m ounces last year, more than 11 per cent down on 1997, and is expected to fall to 144m ounces this year. The price target for the second half represented a rise of over one-third on the price fixed in the London bullion market yesterday. Mr Jeffrey Christian of CPM acknowledged in the silver survey that he had been a touch premature in some of his forecasts a year ago. Mr Christian said silver inventories continued to be drawn down, and that silver inventories were approaching critically low levels, although he reckoned the firm's basic analysis still held. "The evidence is everywhere in the market, from the price and contango performance to the degree of difficulty fabricators are reporting in finding metal at times to the behaviour of refiners and dealers," he said Mr Christian said last year's mere 12 per cent rise was due to more factors than just a simple supply and demand mismatch. First, he blamed the considerably larger than declared stocks of silver, which can be used as collateral by people selling silver short. For example, the silver in catalysts used in hundreds of ethylene oxide plants around the world is largely owned by bullion banks and dealers and leased to the chemical companies, running the plants. The companies in turn used the silver as collateral for trades. On top of this supply, the vast majority of activity in the silver market - some 98 per cent - does not relate to physical trades. Any price derived from supply-demand sums based solely on annual physical transactions without considering the remaining 98 per cent paper transactions did not reflect the true state of the market. Mr Christian also commented on the efficiency with which Warren Buffett's Berkshire Hathaway group had quietly accumulated 129.7m ounces between July 1997 and January 1998. The market is waiting eagerly to see what Mr Buffett says about this holding in his chairman's statement next month.