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

To: long-gone who wrote (32275)	4/21/1999 8:10:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116762

FOCUS-1998 gold supply dip masks wider changes 11:53 a.m. Apr 21, 1999 Eastern By Patrick Chalmers LONDON, April 21 (Reuters) - Gold's mixed year in 1998 saw world supply dipping 100 tonnes as soaring scrap sales were balanced by sharp falls in miners' price hedging activity, industry consultants GFMS said on Wednesday. Total gold supply hit 4,123 tonnes in 1998 compared to 4,228 tonnes the year before, Gold Fields Mineral Services (GFMS) said in its annual market survey. South East Asia's economic crisis sparked massive dishoarding from South Korea, Indonesia and Thailand, which together accounted for more than half of total scrap sales of 1,098 tonnes in 1998 versus 629 tonnes in 1997. Net hedge plays by gold miners and others involved in forward selling, options trading and gold loans dropped year-on-year from 472 tonnes to 58 tonnes. Slightly lower supplies were of little help to average spot prices, which dropped from 1997's $331 per troy ounce to $294 -- their lowest in real terms since 1972. Poor prices did nothing to discourage miners from digging up the metal according to GFMS, which logged increased production to 2,555 tonnes in 1998 against 1997's 2,480 tonnes. At the same time, miners slashed cash costs by 18 percent to a weighted average of $206 an ounce for Western World producers. Paul Walker, a GFMS director, told an analysts' briefing that miners' cost-cutting record would be hard to maintain. ''When looking forward, the sustainability of the decreases we have seen, the sustainability of the miners' ability to reduce their costs...seems questionable,'' he said. That said, miners had survived well enough with gold at $294 an ounce, a level at which only two percent of mines ran on a ''cash-negative'' basis, according to GFMS. Central bank and other official sector sales, a major price depressant of recent times, rose year-on-year to 412 tonnes versus 376 tonnes the previous year. Walker said that among the unannounced central bank sales last year were ''de facto'' sales out of China via Hong Kong. On the demand side, jewellery fabrication dropped five percent year-on-year to 3,145 tonnes on falls not only in East Asia but also in China and the Middle East. Set against that were robust fabrication markets in Europe, up four percent to 881 tonnes, North America, up 13 percent to more than 350 tonnes, and the Indian sub-continent, up from 740 tonnes to 815 tonnes. GFMS Managing Director Philip Klapwijk gave a mixed outlook for gold during the year ahead, with the price-dampening effects of low world inflation and growth set against a likely net decline in central bank sales and possible dollar weakness. ''The outlook for the year is not uniformly negative,'' he said in an accompanying statement. ((London newsroom, +44 171 542 8057)) Copyright 1999 Reuters Limited.