To:John Barendrecht who wrote (273) From: Bobby Yellin Monday, Jul 7, 1997 1:04 PM Respond to of 80032
I am waiting for a Rubin or a Greenspan to stop the bloodletting.. Rubin knows that markets go in two directions...the excessive upward movement in the NYSE must be causing them some consternation...they can't lower interest rates because the only inflation is in paper assets...one way to put a dampering effect would be to say that the sell off in gold has gotten out of hand....the whole world currently is resembling more a house of cards...so much interdependency and artificial propping up for ones own short term security...maybe that will create fundamentals rather than fundamentals dictating events.. maybe I am just dreaming...horse before the cart..wonder if that has ever worked...Canada,south Africa,Australia etc should be definitely hurting...most European countries are hurting for other reasons.. oh well.... http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=1714145
To:Bobby Yellin who wrote (275) From: mikesloan Monday, Jul 7, 1997 1:07 PM Respond to of 80032
Gold stocks take a $1.2bn bath Australian Financial Review July 8/97
By Mark Dixon
Another $700 million was stripped from the value of Australian gold stocks yesterday as the frenzied sell-off of gold bullion and listed shares continued.
The price of gold bullion shed a further $US5.60 to a new 12-year low of $US318 an ounce in Asian trading.
There was speculation that Japanese investors had taken a cue from the Reserve Bank of Australia's move to sell two-thirds of its gold reserves and were dumping their holdings.
The plunge in gold bullion accelerated the selling of Australian gold shares, which have now lost more than 10 per cent, or $1.2 billion, in value since Friday.
"All in all, it's not good -- it's pretty bloody grim," said Mr Peter Lalor, the chairman of Sons of Gwalia. Mr Lalor said the company would immediately put all its gold assets under review.
"There is no question that from today we will start looking at the higher-cost operations," he said. "All our mines are under review."
Sons of Gwalia's shares fell 30¢ to $4.60 yesterday, one of many high-profile victims.
Australia's biggest listed gold miner, Normandy Mining Ltd, had $150 million wiped from its market capitalisation, and Delta Gold and Resolute both lost nearly $50 million.
Analysts could see little hope of recovery in the short term, fearing that there would be further sales by the German and Swiss central banks and the International Monetary Fund.
The more bearish see the next support level of $US280/oz, and possible falls to around $US250/oz. In Perth, Hartley Poynton gold analyst Mr Stephen Thomas was more optimistic, saying buying support could emerge at around $US300/oz.
"This is like watching the Titanic sink," said Mr John Levin, gold trader at Mitsui & Co in Sydney. "The gold price in Asia is not down because of panic producer selling. It's falling because of Japanese speculators." He estimated that speculators in Japan probably held about 60 metric tons of gold, and with prices falling, they had finally decided to get out.
Camelot Resources managing director Mr Steven Dean said the sell-off of gold bullion was unusual because it occurred during Australian time.
"That is very unusual because normally price movements, whether they are up or down, come in New York or European time."
Industry analysts were last night waiting for trading to begin in New York, after the Independence Day long weekend. "Tonight will tell the tale," said one. Mr George Savell, the chief executive of the Association of Mining and Exploration Companies (AMEC), which represents more than 300 companies, said the industry was reeling from the RBA sell-off and from the threat by the West Australian Government to impose a gold royalty.
"In Utopian circles what would happen is the giants who run the Reserve Bank would say 'We made a mistake' and go out and buy 170 tonnes of gold -- but that ain't going to happen," he said. Gold companies are set to conduct further negotiations this week with the WA Government in the hope of staving off the 2.5 per cent tax, which Deputy Premier Mr Hendy Cowan last week said would be phased in from January 1 next year.
Chairman of the Kalgoorlie-based Croesus Mining, Mr Ron Manners, said most companies were still protected by reasonable levels of forward sales.
"In the short term it doesn't affect us at all, but you know within a couple of years you are going to run into a brick wall," he said.
Plutonic Resources corporate manager, Dr Denis Clarke, said the sharemarket had taken such a negative view of the sector that several stocks were now trading at less than net present value.
"It's disappointing when you know that the technical things are going very well but the market's perspective is that things are going badly," he said.
"But it's easy to be gloomy. Five years ago the gold price was at $US320 and it's been up over $US400 since then. So I doubt there is need to despair totally in the future of the gold price.
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