 |
 |
|
|
  |
|
 |
|
The Gold Price?
Our Opinion
It may come as a surprise that we do not often venture a strong opinion as
to the future direction of the gold price.
We do not pretend to be experts at prediction of market prices, indeed we
believe that there are very few people who could claim consistent success
at predicting future gold price movements.
We also prefer to point out obvious and potential fundamental factors, and
allow our customers to form their own judgements.
As at February 2000, we believe we can envisage one important factor which
may have a significant effect on the gold price over the next few years.
First, The Past!
In any attempt to foresee the future, it is necessary to look at history,
to see what insights we may be able to glean from the past.
We do not intend to give here a full analysis of past gold prices, but we
will attempt to give a brief summary.
From 1100 AD to 1931 AD, when
In 1935 the US Treasury fixed the price of gold at $35 per ounce, although
the aim was to stabilise the dollar.
In December 1971 (we have seen a date quoted as August 15th), the dollar was
devalued to $38 per ounce from $35, and again in February 1973 to an "official"
price of $42.22, and even this was abandoned by November 1973. From then the
dollar "floated" although "sank" may be a more accurate
description, until gold reached $850, just under £400, per ounce in 1974.
As with most huge price upheavals, this increase was overdone, and gold has
since fluctuated down to about $270, back to $350, and is currently around
the $300 per ounce level.
Until the past few months, our view of gold trends is that the price would
stay in the recent range for the next few years and more.
Central Bank Sales
During the last decade, many central banks have been reducing the proportion
of gold held as part of their currency reserves. We believe that this is probably
a reasonable, sound move in keeping with modern theories of currency and foreign
exchange management, after all most currencies are now token currencies,
their value being related more to the general perception of their worth, dictated
by trade imbalances and supply and demand. Whether it proves to be a completely
sound principle will probably not be fully known for another fifty years or
so.
We are aware that the World Gold Council has consistently argued against Central
bank sell-offs, but as it is financed by the gold producers, this is only
to be expected. The effect of the Central bank sales has been to significantly
increase the supply to the market, and it has understandably has the effect
of reducing gold prices. Within the next few years, we believe that Central
bank sales will slow down, perhaps stop, and it is entirely possible that
they may eventually return as net gold buyers, particularly on any weakness
in the gold price. Obviously the reduction or cessation of a flow of Central
banks gold onto the market will exert an upward pressure on prices.
Producer Hedging
Although prices recently rose on announcements that several gold producers
were to stop or reduce their hedging activities, whereby they borrow gold,
sell it, invest the proceeds, and repay the gold from future production, we
believe that this probably reflects their longer term views of market fundamentals,
rather than being in itself a prime influence on market prices. If the gold
miners believe that it will in the near future be advantageous for them to
stop short-selling, then presumably their analysts believe that firmer prices
are likely.
An Upward Trend
As the world demand for gold has absorbed quite large quantities of Central
banks gold stocks over the past decade, with only a fairly small downward
effect on prices, we believe that gold prices are more likely to increase
over the next few years than to decrease. Certainly the upside potential must
now be considerably stronger than the downside potential.
===========================================================================
Kontakta oss gärna och diskutera just dina investeringsplaner. Använd gärna vár “INTRESSE-ANMÄLAN”, skicka email = gold@mirolcentre.com Eller ring +34-695-924862. Mycket välkommen att kontakta mig. Jag ser fram emot att höra från dig. Hans Olof Savasen. Investeringsrådgivare
|
 |
|
|
Where do you like to go from here ? |
