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James Turk: Finance ministers won''t be changing market trends
Mining executives disagree on state of gold market
By Steve James
Reuters
Wednesday, September 29, 2004
http://reuters.com/newsArticle.jhtml?type=topNews&storyID=6371155
DENVER -- Senior executives of the world's top two
gold producers disagreed on Wednesday over the
state of the market for the precious metal, often
seen as a safe investment haven in economic hard
times.
Kelvin Williams, marketing director for South Africa's
AngloGold Ashanti, the second largest producer, was
concerned that demand for jewelry has dropped off
dramatically.
Consequently, he was guarded in his assessment of
the gold price, which has risen steadily since 2001
from around $275 an ounce to hit a 15-year high
above $430 in April this year. It has slipped some
since then. On Wednesday, December gold closed
at $414.70 an ounce, up 50 cents, on the COMEX
in New York.
In contrast, Pierre Lassonde, president of the world's
No. 1 gold producer Newmont Mining Corp., was
bullish, drawing similarities to the economic situation
30 years ago.
"We still do have a kind of half-completed rally ...
and as we all know, it is the COMEX and the trading
positions of gold that drives the price of gold,"
Williams told industry executives and analysts at the
Denver Gold Forum.
"Progressively, we haven't seen the interest in COMEX
return to the levels of April (when gold hit its high)
and we don't think there's been matching activity in
OTC (over the counter). We need to see how this plays
out toward the end of the year," he said.
"On the physical market, we've seen what we view as
a worrying situation where in the last five years,
we've seen global jewelry demand decline by almost 25
percent.
"I am almost certain that if either of our competitors
in platinum or diamonds had to face a fall of 25 percent
in their major source of consumption, I can imagine
they would be extremely concerned."
Williams said that although the market was healthy,
"in a sense, the evolutionary upward movement had
stalled."
Later, Lassonde was asked his opinion of the gold
market:
"Well, unlike my predecessor (Williams) who was
down and out with gold, we are very positive. Jewelry
accounts for 70-80 percent (of demand), but at the
end of the day, gold is a monetary asset."
The Newmont executive went on to compare the
current state of the world's economy with the early
1970s, saying the similarities were "absolutely
eerie."
"Then you had the Vietnam War; now we have the
al-Qaeda war. The Fed was printing money then and
the current account deficit in the '70s prompted the
French to get rid of dollars."
There was a negative real rate of interest then, and
we have it now, Lassonde said, and just like
1972-1978, when the dollar lost 50 percent of its value
against a basket of currencies, the dollar is relatively
weak now.
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http://www.kuik.com/KH/KH.html
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