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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: long-gone who wrote (6008)	5/13/1999 11:36:00 PM
From: Greg Ford	Read Replies (2) \| Respond to of 80859

Bill, I haven't been active in gold discussion groups for a while but I certainly have been following the gold market carefully. You are to be applauded regarding your work with GATA. I do think however that you are somewhat misguided in assuming that J Aron (Goldman Sachs) is short gold or that there is a large short position relating to LTCM. There has been no concrete evidence to support these conclusions. J Aron appears to be a very aggressive trader which acts for both producers and hedge funds. When they are selling or buying they are more than likely doing it on for another party. As far as LTCM, all I have seen is misleading statements that they were short gold. Nothing has been clarified regarding this. Itf they were short gold some central bank would be quite concerned and we would have seen an increase in lease rates as the banks sought to recover their gold. This has not happened. In fact lease rates have gone lower, particularly longer dated ones. The problem with this market is clearly one of sentiment. The low gold price has created an environment where producers are hedging at lower and lower levels. This is bring additional supply on to the market. Witness that Anglo increased their hedge book by 6 or 7 million ounces in the 4th quarter of 1998. Unhedged or underhedged producers could be as much of a problem to the gold market as central banks. Companies like Battle Mountain, Kinross, Newmont and Homestake have little or no hedge books. They will become under increasing pressure to hedge if the price continues to stay low. Hedgers such as Barrick and Placer have not shown any inclination to wind down their hedge books. In fact they are more active then ever. So how does gold crawl back above $290? I think we need to continue to see improved financial conditions in Asia and perhaps a weakening of the US dollar. This with a little inflation from the recent base metal and energy rally should help support gold. But don't think that we have seen the end of central bank sales. IMF and Swiss sales seem relatively certain although their timing is in doubt. Don't be surprised if we see some Latin American sales as well. Greg