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Noranda stops negotiating exclusively with China''s Minmetals
10:57p ET Tuesday, November 16, 2004
Dear Friend of GATA and Gold:
This CBSMarketWatch story is interesting
for its comment that, as Jim Sinclair has
been saying, rising interest rates are no
threat to gold, since they always trail the
true inflation rate and make more trouble
for gold's competitors, paper investments.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Gold Futures Climb Back to 1988 Levels
By Myra P. Saefong
CBSMarketWatch.com
Tuesday, November 16, 2004
http://cbs.marketwatch.com/news/story.asp?guid=%7B6E3031FF%2DD5F8%
2D42F9%2D967C%2D15F403AEAAAD%7D&siteid=mktw&dist=
SAN FRANCISCO -- Gold futures climbed above $440 an
ounce to close at their highest level since 1988 Tuesday,
as signs of inflation sparked fresh investor interest in the
precious metal.
"Gold has legs to move," based on the reported 1.7
percent climb in the producer price index last month --
the most since January 1990, said John Person,
president of National Futures Advisory Service.
"Interest rates are still relatively inexpensive, which
makes gold a favorite hedge against a rise in the U.S.
dollar," he said. "The Fed raises rates to combat
inflationary pressures, but they risk choking off the
economy's growth momentum, so this makes buying
gold even that much more attractive as many doubt
they will be overly aggressive in their interest
rate-hiking campaign."
Against this backdrop, gold for December delivery
closed at $440.50 an ounce on the New York
Mercantile Exchange, up $3.20 for the session
after tapping a high of $441.40 earlier. Prices
haven't traded at these levels since July 1988.
"Earnings last quarter for companies in the S&P
500 Index rose about 17 percent based on the
share-weighted average of the 462 companies that
released results by Nov. 12" -- that's the smallest
increase since the second quarter of 2003, said
Person.
"This shows that earnings are decelerating, and that
shows the economy is definitely going to be
struggling," he said.
Combined with the PPI data, it all "spells trouble
ahead for the Fed, which must try to balance inflation
while not curtailing the economy's growth momentum,"
said Person.
"If the Fed sees inflation as a threat, they will
aggressively raise rates -- that is bad for stocks and
bonds, but supportive for gold," he explained. The
situation would make gold more attractive "as a hedge
against losses in paper assets, until the Fed takes
control of the situation."
From here, Kevin Kerr, president of Kerr Trading
International, expects prices to climb to $475. "Interest
rate fears are driving this market and it looks like little
will put the brakes on the rally," he said.
If prices break through the $446 to $450 level, "there's
little doubt that the market will continue on its track for
$500 and beyond," said Dale Doelling, chief market
commentator at Bullion.com in Chicago.
All in all, the factors are "ripe" for a continued increase
in gold, said Michael Cuggino, portfolio manager of
Permanent Portfolio Funds.
Elsewhere in metals futures, silver and copper ended
mixed Tuesday. December silver rose 2 cents to close
at $7.592 an ounce. December copper closed at $1.369
a pound, down 1.85 cents.
Tracking inventories, copper supplies were down 160
short tons at 41,861 short tons as of late Monday,
according to Nymex. Silver stocks were unchanged at
102.2 million, while gold inventories stood at 5.35 million
troy ounces, also unchanged from the previous session.
Meanwhile, the January platinum contract lost $8.40 to
end the day at $868.90 an ounce after a report from
metals refiner and marketer Johnson Matthey said
platinum supply will likely outpace demand in 2005 for
the first time in six years.
For the current year, platinum demand will likely grow
less than 1 percent to 6.47 million ounces while supplies
will be up 230,000 ounces at 6.43 million ounces.
December palladium closed at $222 an ounce, up $2.50.
The palladium market is set for another 1 million-ounce
surplus in 2004, the Johnson Matthey report said.
In equities, metals mining shares recovered from
Monday's declines, pulling key indexes for the sector to
fresh highs.
The CBOE Gold Index closed at 98.66, up 1.8 percent
for the session. It closed at its highest level since
mid-1997.
The Philadelphia Gold and Silver Index rose 1.5 percent
to end at 108.68 and the Amex Gold Bugs Index closed
at 240.89, up 1.7 percent. Both indexes traded around
their highest levels since January.
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