By John Waples Sunday Times, London August 26, 2001 http://www.sunday- times.co.uk/news/pages/sti/2001/08/26/stibusagn03001.html? Don't throw your gold trinkets away just yet. As an investment, the metal may have been horribly out of fashion for the past decade, but with world economies continuing to slide, gold could be about to stage a revival. There are already signs that sentiment may be changing. The big gold miners, Barrick, Newmont, and AngloGold, have this year been among the better performing stocks on the New York Stock Exchange. So far this re-rating has not fed through to the physical price of gold, which remains stubbornly stuck in a $255 to $285 per ounce (L 177 to L 198) trading range. But some metals analysts believe it could soon break through the $300 barrier and climb to $350. Since the late 1980s, when gold hit $800 an ounce, the price has been in steady decline. It has suffered from the serial dumping of gold reserves by central governments and the International Monetary Fund in favour of bonds and other financial instruments. The physical price may have fallen but, fortunately, consumers, particularly in India, have not lost their appetite for gold. Jewellery demand -- which accounts for 85% of the market -- has risen 35% over the past decade. Bobby Godsell, chairman of the World Gold Council, says it is hard to find another sector where retail demand has been as robust. For 5,000 years gold has enjoyed the status of a "store of value," but when measured against the surge in equities over the past decade the metal has lost its sheen. In the more sober economic landscape we are now seeing, gold could again recover its place in investors' portfolios. There are other reasons why it could stage a revival. Of all metal markets, the one for gold remains the most fragmented. However, there are signs that it is starting to consolidate, which will result in producers, refiners, traders, and fabricators working more closely. Ultimately, this could lead to two of the big producers, AngloGold and Barrick, merging, which would create a L 7.5 billion powerhouse. Ross Norman, an analyst at TheBullionDesk.com, says such consolidation has already taken place with platinum, where four producers now dominate 90% of the market. He believes gold needs to go the same way and forge a closer relationship with its customers. On top of this, he says there should be an increase in the budget of the World Gold Council, whose role is to promote jewellery and investment demand. This year it has doubled to about $50m but still remains woefully inadequate, at just 0.15% of the value of gold produced each year. New industrial applications need to be found for the metal and there are signs that this is starting to happen. Possible uses being explored include using gold as a catalyst in the filters of cigarettes to mitigate the harmful toxins in tobacco. If these take off, the central banks that are still sitting on 32,000 tonnes of gold will immediately stop jettisoning more reserves. And if the dollar weakens further, some may even start buying it back. -END- ------------------------ Yahoo! Groups Sponsor ---------------------~--> <FONT COLOR="#000099">FREE COLLEGE MONEY CLICK HERE to search 600,000 scholarships! </FONT><A HREF="http://us.click.yahoo.com/zoU8wD/4m7CAA/ySSFAA/WfTolB/TM";><B>Click Here!</B></A> ---------------------------------------------------------------------~-> Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
