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Russian central banker cites GATA, says gold market may be less than free
8:30p ET Sunday, October 3, 2004
Dear Friend of GATA and Gold:
The weekly Bloomberg News survey of gold traders,
appended here, is interesting not for its predictive
value -- the survey notes that the traders get it
wrong as often as they get it right -- but because
of a few other things:
* It quotes the CEO of Barrick Gold as expecting
inflation to lift the gold price. Having shared
control of the gold price with Morgan Chase for
years, Barrick might be expected to know.
* It notes that the Tocqueville Gold Fund is
seeking approval from shareholders to start
buying a lot more bullion, and quotes Tocqueville
manager John Hathaway as saying that
Argentina's central bank isn't the only central
bank buying gold -- that Middle Eastern central
banks are buying gold as well.
* It quotes Alliance Financial's head gold
trader, Frank McGhee, as saying oil producers
will be buying gold and euros to defend their
earnings against the decline in the U.S. dollar.
Don't bet that these guys will be right this week
in particular, but pay heed to the underlying
trends they're talking about.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Gold May Top 15-Year High as Dollar Falls vs Euro, Survey Says
By Claudia Carpenter
Bloomberg News
Monday, October 4, 2004
http://quote.bloomberg.com/apps/news?pid=10000080&sid=agB1AxUjojeA
NEW YORK -- Gold prices may rise above the 15-year
high of $433 an ounce this week on speculation the
dollar will decline and spur investor demand for the
precious metal, a Bloomberg survey showed.
Twenty-seven of 44 traders and investors surveyed
Sept. 30 and Oct. 1 predicted prices will rise for a fifth
week. Ten forecast a decline and seven said prices
would be little changed. Gold reached a five-month high
of $421.90 an ounce Oct. 1 and had its biggest weekly
gain since mid-August.
"There is a good chance gold will break out to a new
high given weakness in the dollar," said George Ireland,
48, who manages about $100 million at Boston-based
Ring Partners LP, which trades in bullion and shares
of gold-mining companies.
Gold has climbed 13 percent from a six-month low of
$371.30 in early May on speculation that record-high
energy costs will curb U.S. economic growth, reducing
demand for the dollar. The U.S. currency's decline
against the euro last week was the biggest since the
five days ended Sept. 10.
The majority of gold investors and analysts correctly
predicted the market's direction in 12 of the 24 weeks
since the debut of the Bloomberg survey, including
the past five weeks.
Eighty-five percent of the time, gold moves in the
opposite direction of the dollar, said Gregory Wilkins,
chief executive of Toronto-based Barrick Gold Corp.
Gold has benefited from speculation that the dollar's
decline will help accelerate inflation, which erodes the
value of assets such as stocks and bonds.
"There is a lot more latent inflation going forward,
which I believe will be beneficial to the gold industry,"
Wilkins, 48, said last week during a presentation at
a gold conference in Denver.
Gold for December delivery rose $11.50, or 2.8
percent, to $421.20 an ounce last week on the
Comex division of the New York Mercantile Exchange.
Prices are up 9.4 percent in the past year.
The Tocqueville Gold Fund, with about $500 million
in assets, is seeking shareholder approval Oct. 22
to double its allowable purchases of gold bullion to
20 percent of total assets, partly because of
declines in the dollar.
"We're going to see new highs in gold before year-end,
certainly next year," said John Hathaway, 63, who
manages the New York-based Tocqueville fund.
"Owning physical metal is a more conservative way
than owning higher-risk gold shares to participate in
the favorable macroeconomic environment for gold,
including a falling dollar."
Matthew Turner, an analyst in London at Virtual
Metals, is among the 10 survey participants who
expect gold to fall this week. Gold's 7.9 percent
rise in March to the 15-year high on April 1 was
followed by seven straight weekly declines.
"The price hasn't been very comfortable at these
levels all year," Turner said.
Prices topping $433 this week would be a sign that
any demand for gold is speculative and "would not
be constructive" for the rally, said Carlos
Perez-Santalla, president of Hudson River Futures
in New York. He expects a rise this week that will fall
short of the 15-year high.
Hedge-fund managers and other large speculators
are betting prices will keep rising. They increased
their net-long position in New York gold futures in
the week ended Sept. 28, the U.S. Commodity
Futures Trading Commission said Oct. 1.
Speculative long positions, or bets prices will rise,
outnumbered short positions by 82,118 contracts
on the Comex, the most since Aug. 27, the
commission said. Net-long positions, which peaked
this year at 144,253 on April 9, rose by 17,791
contracts, or 28 percent, from a week earlier.
Goldman Sachs Group Inc. in a Sept. 28 report said
gold will trade in a range of $390 to $450 an ounce in
the next six to 12 months as the dollar falls and
mining companies reduce their fixed-price sales
contracts, limiting supply. Gold last traded at $450
an ounce in July 1988.
"Gold prices are likely to remain between $414 and
$425," said Prithviraj Kothari, director of Riddhi Siddhi
Bullion Ltd. in Mumbai. "There is interest from hedge
funds and gold prices may remain in the higher range
of $420-$425 if oil prices move further up."
Crude oil prices that reached a record $50.47 a barrel
last week are forecast to rise this week, according to
a separate Bloomberg News survey. Higher energy
prices probably will help send the dollar lower on
expectations for slower economic growth, another
Bloomberg survey showed.
Rising oil prices and a falling dollar are positive for
gold, said Frank McGhee, head gold trader at
brokerage Alliance Financial LLC in Chicago.
"If oil prices continue to rise, I would expect that you
will see Arab buying of both the euro and gold as
they look to defend the value of the petrodollars they
are receiving," McGhee said.
Central banks in the Middle East, source of about a
quarter of the world's crude oil, as well as Argentina,
have been buying gold, Tocqueville's Hathaway said.
Central banks are the largest holders of bullion.
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