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

To: goldsnow who wrote (33512)	5/9/1999 12:58:00 AM
From: Gord Bolton	Read Replies (1) \| Respond to of 116779

washingtonpost.com Nato suffering from "intelligence failure". washingtonpost.com Chinese are not impressed (favourably). Canadian Telivision News reported that they were burning American dollars in the street. THey must be really ticked.

To: goldsnow who wrote (33512)	5/9/1999 1:07:00 PM
From: Alex	Read Replies (5) \| Respond to of 116779

Gold may be down for now, but it's far from out Has gold lost its lustre? Do 'golden' opportunities still exist? GERARD KEMP, head of research at stockbroker BOE Securities, provides a layman's guide At a time of great market volatility, putting some of your wealth into gold adds to peace of mind THEY might not know it, but the average saver, small investor and retirement fund member are all affected by the gold market - even if they've never owned a gold share or taken units in a commodity-based unit trust. They are affected in a macro-economic sense because of mining's influence on our economy. They are affected via institutional investments that underpin personal savings. They are also affected if, as small investors, they follow market weightings and put about a twentieth of their investments in gold. I have good news for readers in all the above categories. Gold is down, but not out. A resurgence may even be on the cards. But before I get into that, let's look at what's been happening to gold. Two facts are key: • In the past six years, the gold mining industry has shed 200 000 jobs. • Between 1996 and 1998 the price fell by $100 an ounce. Lost export earnings and lost pay packets have cost our economy dearly. Other countries have been hurt, too. You will no doubt have read of the IMF's HIPC initiative (its plan to finance the debt relief of Heavily Indebted Poor Countries through gold sales). More than half the 41 HIPC nations rely heavily on gold mining for jobs and export earnings. How a low gold price helps gold-reliant paupers like Ghana and Tanzania is hard to say. In South Africa, we've been helping ourselves. Our mine managements have cut costs to survive. As a result, there are no marginal mines anymore. Looking at the rand cost per kilogram at the start of the second quarter of this year, most of our mines enjoyed a 20% margin. Some recognition of the turnaround has been forthcoming. Last year we saw some spectacular rises in the price of gold shares. Most ordinary savers and salary earners missed out - not because of their own failure to buy shares (the person in the street is not normally a market player), but through the failure of institutions to increase their gold exposure. In recent years, our major institutions have become gold bears. In the 1980s, about 20% of total JSE capitalisation was accounted for by gold stocks. By 1998/99 this was down to a little under 5%. In some institutions, gold shares now account for only 1% of total holdings. The gold share boom was therefore missed by most organisations that run pension funds or select investments that determine insurance policy values. When pension fund trustees report back on the generally sluggish performance of their investments in 1998/99, it will be interesting to see how many of them own up to gold market myopia. Many private investors gained from the commodity comeback of early 1999 and the 1998 price surge in gold counters. Sometimes gold's influence was a beneficial side-effect rather than the full story. For example, Nedcor Investment Bank (NIB) outperformed the market last year. Part of the reason is that NIB has better-than-average exposure to high performers in the commodity arena. What about the future? Bearish sentiment is not universal. Many private investors and some canny institutions still find a place for gold in their portfolios. One indicator is the fact that gold coin sales doubled last year in the US. At a time of great market volatility, putting some wealth into gold adds to peace of mind. Why then is the IMF considering gold sales? Because it has become politically fashionable to talk of selling gold to help the poor, though complicating factors like the gold reliance of HIPCs are under-reported. The US Congress can, in effect, veto IMF gold sales. This may yet happen. A recent survey of US public opinion found that 59% of respondents disapprove of these sales (32% strongly so). Germany (with 112-million ounces, the world's second-largest gold holder) is also against them. Also under-reported is the fact that the IMF plan has been "in the market" for two years. In other words, the current price already takes into account an IMF sale. The market, however, believes any sale will be gradual. Further falls in the price are still possible if the perception gains ground that the politicians are talking themselves into a Big Bang approach, putting, say, 300 tons of gold on sale in one year. It might happen, but it makes no sense. The IMF is the world's third-biggest holder of gold (with 103-million ounces). Why drive down the value of this asset? So what's my prediction? I'm betting sanity will prevail, prices will bottom out and a recovery in the gold price will set in before the end of the year. However, the dollar price of gold is not the be-all and end-all of the equation. Gold shares are an important rand hedge (costs paid in rands, output bought in dollars). This alone may account for renewed interest among those who believe the rand will weaken in the second half of the year. The positive margins, the strong cashflow position of many of our gold mining companies and the healthy dividends paid by these counters all argue in favour of a reappraisal. Selected gold counters represent a golden opportunity. btimes.co.za