To:John Barendrecht who wrote (287) From: William Jones Monday, Jul 7, 1997 6:27 PM Respond to of 80032
John, I particularly liked this posting, analyst Jim Steel at Refco added " We have had persistent years of low inflation, good economic growth and fiscally conservative governments." I wonder which fiscally conservative government he's talking about. ROTFL willyum
To:Bobby Yellin who wrote (281) From: mikesloan Monday, Jul 7, 1997 7:05 PM Respond to of 80032
Sellers wipe $1.35bn off gold shares By markets writer WAYNE ADAMS The Australian July 8/97
July 8: Disillusioned investors panned gold stocks again yesterday, taking losses in the sector to $1.35 billion ($US1 billion) in the two trading days since the Reserve Bank shocked the market by announcing it had sold two-thirds of its gold reserves.
The gold index shed 93.7 points, or 6.84 per cent, to 1275.5 yesterday, taking its two-day loss to almost 11 per cent. The purge in the gold sector dominated share market sentiment, pushing the all ordinaries index sharply lower.
The local spot price also plumbed 12-year lows, tumbling $US5.30 to $US318.70. Since the start of the year, the price has lost almost $US50, or 13.5 per cent. The selloff continued in early London trading last night, with gold falling as much as $US7.15 to $US317.35 an ounce in early trade, its lowest level since November 1985.
Bell Securities gold analyst Keith Goode said the drama surrounding the gold sector "was something akin to a crash".
He said there were similarities with the 1987 stock market crash, with private client investors "accepting any price" for their gold stocks.
"When you see these kind of values, fundamentals have clearly gone out the window," he said.
Resources dealer with Austock Brokers Oliver Messenger agreed there was "a bit of panic" in the market.
Not one gold stock moved forward yesterday. The big losers included Normandy, down 9c to $1.32, Resolute, down 23c to $1.91, Centaur, down 18c to $1.40, Newcrest, down 18c to $3.02, Sons of Gwalia, down 30c to $4.60, and Acacia, down 16c to $1.40.
The broader market also suffered, with the all ordinaries index down 20.4 points to 2713 and the mining index off 28.2 points, or 3.2 per cent, to 867.5.
"Frankly, I don't think the RBA looked hard enough at what the reaction would be to what they have done," Mr Goode said.
The Association of Mining Exploration Companies yesterday refused to comment on industry concern about Hugh Morgan, the head of one of Australia's biggest miners, WMC, also being a member of the RBA board.
Some dealers now predict the gold price may dive as low as $US300 by the end of the year.
Dresdner Australia associate director of bullion Richard Horton said some selling from the United States kept the pressure on the gold price yesterday.
However, he said the next resistance level was hard to determine.
"It is very difficult to pick where that support would be but a lot of people are picking $US300," he said.
"I can see no reason why, over the next three months, it won't get to $US300."
While he was bearish on the short-term outlook, he said any decline could be punctuated by short-covering rallies.
The RBA stunned the market late on Thursday with an announcement that it had sold 167 tonnes of its 247-tonne gold reserve, opting for the anticipated greater earning power of foreign currency equivalents.
The price of gold, a traditional haven for investors in times of high inflation, has also been under pressure as central banks around the world, satisfied that inflation was not the threat it has been, sell some of their holdings.
According to analysts from Dresdner's Frankfurt office, further gold sales by central banks cannot be ruled out after the RBA's action.
"The concern is, if other central banks want to sell, at what price are they going to sell," Mr Messenger said.
Head of resource research for Macquarie Bank Greg Roder said critical factors for equity investors would be production costs and hedging level issues.
Among stocks likely to show more resistance were Normandy, which had a large hedging book in place, and stocks offering growth opportunities such as Acacia and Sons of Gwalia, while small developing miners might not be as hard hit, he said.
"Anybody who has got higher costs, and perhaps not so much hedging in place going forward, are going to find it a lot tougher," Dr Roder said.
Market Data 
Markets 
AI
