You are here

Newmont sees dollar slipping more and gold at $425-$475

Section: Daily Dispatches

By Jonathan Fuerbringer
The New York Times
Thursday, February 24, 2005

http://www.nytimes.com/2005/02/24/business/24dollar.html

The dollar's plunge Tuesday and its small rebound yesterday
underscored how vulnerable it is right now to a further decline.

The vulnerability can be traced to a fear that the United States
will not be able to attract the funds from abroad needed to cover
its current-account deficit, which is expected to set a record for
2004 of more than $600 billion.

The dollar rallied modestly yesterday after several Asian central
banks said that they were not selling dollars or intending to sell
dollars to diversify their reserves into other currencies.

The dollar's small rebound came after it plunged 1.5 percent against
the euro and 1.4 percent against the yen Tuesday, after reports,
later denied, that the central bank of Korea was planning to
diversify some of its reserve holdings out of dollars and into other
currencies. The dollar sell-off also sent stock and bond prices
lower on Tuesday and helped push interest rates higher.

Yesterday, stocks rebounded modestly and interest rates slipped
slightly, as the dollar rose 0.2 percent against the euro and 0.7
percent against the Japanese yen. The euro was valued at $1.3226,
down from $1.3257 Tuesday, and the dollar was worth 104.85 yen, up
from 104.09 Tuesday.

Central banks are major contributors to the flow of funds from
abroad to cover the current-account deficit, which is the gap in
trade and services with the rest of the world. A slowing of that
flow could send the dollar lower, analysts say. In 2004, purchases
of United States stocks and bonds by official government agencies,
which is mostly done by central banks, totaled $236 billion, or a
quarter of the total inflows.

But some analysts said that it was not in the interest of central
banks, especially those in Asia, to sell dollars now -- sudden
selling could cause the dollar to plunge, disrupting world financial
markets.

In addition, Asian central banks want to keep their currencies from
rising further against the dollar so that their countries'
currencies and exports can continue to be competitive with China's
currency and exports and in markets around the world. China's
currency, the yuan, is pegged to the dollar, which means the Chinese
must sell yuan to buy dollars, which simply increases their dollar
reserves.

"I don't think they will be out there leading the charge in selling
the dollar," Steven Englander, chief foreign exchange strategist for
the Americas at Barclays Capital, said of the central banks.

On Tuesday, analysts immediately dismissed the idea that the Korean
plan would lead to significant dollar selling by that or other
central banks. But the dollar still plunged.

"The market has its heart on selling the dollar," said Robert
Sinche, global head of currency strategy at Bank of America, "and
found in what was really a quiet market a reason to sell dollars."

Yesterday's rally was not enough to make up Tuesday's losses,
although the central bank of Korea denied any plan to diversify its
dollar holdings into other currencies.

In addition, the director of the foreign exchange markets division
of Japan's ministry of finance said that Japan had no plans to shift
its foreign currency reserves from dollars to other currencies,
according to Bloomberg News. The central bank of Taiwan said in a
statement that it was not selling dollars.

In its statement, the Bank of Korea said, "Recent reports by the
foreign media that the BOK is selling U.S. dollars are not true,"
according to Bloomberg News. The statement said that the bank, in a
report for the National Assembly, was planning to "diversify
investment targets."

Analysts said Tuesday that it appeared that the plan was to set up a
money-managing entity that would be responsible for investing a
portion of the reserves held by the Bank of Korea. One goal would be
to increase the return on the reserves by investing in fixed-income
securities with lower credit quality and higher yields.

One reason that the dollar can fall sharply on news like Korea's
announcement, even when analysts said immediately that it had been
misinterpreted, is that currency traders and speculators thrive on
market volatility. In addition, many traders have sell or buy orders
already set up at certain dollar levels to protect their profits or
reduce their losses. When these levels are passed, a dollar move can
accelerate, as it did on Tuesday.

"The market sentiment is very pro-price action these days," Mr.
Englander of Barclays Capital said.

----------------------------------------------------

To subscribe to GATA's dispatches, send an e-mail to:

gata-subscribe@yahoogroups.com

To unsubscribe, send an e-mail to:

gata-unsubscribe@yahoogroups.com

----------------------------------------------------

RECOMMENDED INTERNET SITES
FOR DAILY MONITORING OF GOLD
AND PRECIOUS METALS
NEWS AND ANALYSIS

Free sites:

http://www.jsmineset.com

http://www.cbs.marketwatch.com

http://www.mineweb.com/

http://www.gold-eagle.com/

http://www.kitco.com/

http://www.usagold.com/

http://www.GoldSeek.com/

http://www.GoldReview.com/

http://www.capitalupdates.com/

http://www.DailyReckoning.com

http://www.goldenbar.com/

http://www.silver-investor.com

http://www.thebulliondesk.com/

http://www.sharelynx.com/

http://www.mininglife.com/

http://www.financialsense.com

http://www.goldensextant.com

http://www.goldismoney.info/index.html

http://www.howestreet.com

http://www.depression2.tv

http://www.moneyfiles.org/

http://www.howestreet.com

http://www.minersmanual.com/minernews.html

http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html

http://www.goldcolony.com

http://www.miningstocks.com

http://www.mineralstox.com

http://www.freemarketnews.com

http://www.321gold.com

http://www.SilverSeek.com

http://www.investmentrarities.com

http://www.kereport.com
(Korelin Business Report -- audio)

http://www.plata.com.mx/plata/home.htm
(In Spanish)
http://www.plata.com.mx/plata/plata/english.htm
(In English)

http://www.resourceinvestor.com

http://www.miningmx.com

http://www.prudentbear.com

http://www.dollarcollapse.com

http://www.kitcocasey.com

Subscription sites:

http://www.lemetropolecafe.com/

http://www.goldinsider.com/

http://www.hsletter.com

http://www.interventionalanalysis.com

http://www.investmentindicators.com/

Eagle Ranch discussion site:

http://os2eagle.net/checksum.htm

Ted Butler silver commentary archive:

http://www.investmentrarities.com/

----------------------------------------------------

COIN AND PRECIOUS METALS DEALERS
WHO HAVE SUPPORTED GATA
AND BEEN RECOMMENDED
BY OUR MEMBERS

Blanchard & Co. Inc.
909 Poydras St., Suite 1900
New Orleans, Louisiana 70112
888-413-4653
http://www.blanchardonline.com

Centennial Precious Metals
3033 East First Ave., Suite 807
Denver, Colorado 80206
1-800-869-5115
http://www.USAGOLD.com
Michael Kosares, Proprietor
cpm@usagold.com

Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
http://www.ColoradoGold.com
Don Stott, Proprietor
1-888-786-8822
Gold@gwe.net

El Dorado Discount Gold
Box 11296
Glendale, Arizona 85316
http://www.eldoradogold.net
Harvey Gordin, President
Office: 623-434-3322
Mobile: 602-228-8203
harvey@eldoradogold.net

Gold & Silver Investments Ltd.
Mespil House
37 Adelaide Rd
Dublin 2
Ireland
+353 1 2315260/6
Fax: +353 1 2315202
http://www.goldinvestments.org
info@gold.ie

Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
http://www.gloomdoom.com
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889
gwestgaard@investmentrarities.com

Kitco
178 West Service Road
Champlain, N.Y. 12919
Toll Free:1-877-775-4826
Fax: 518-298-3457
and
620 Cathcart, Suite 900
Montreal, Quebec H3B 1M1
Canada
Toll-free:1-800-363-7053
Fax: 514-875-6484
http://www.kitco.com

Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
Merrimack, New Hampshire 03054
http://www.certifiedcoins.com
Ed Lee, Proprietor
1-800-835-6000
leecoins@aol.com

Lone Star Silver Exchange
1702 S. Highway 121
Suite 607-111
Lewisville, Texas 75067
214-632-8869
http://www.discountsilverclub.com

Miles Franklin Ltd.
3015 Ottawa Ave. South
St. Louis Park, Minn. 55416
1-800-822-8080 / 952-929-1129
fax: 952-925-0143
http://www.milesfranklin.com
Contacts: David Schectman,
Andy Schectman, and Bob Sichel

Missouri Coin Co.
11742 Manchester Road
St. Louis, MO 63131-4614
info@mocoin.com
314-965-9797
1-800-280-9797
http://www.mocoin.com

Resource Consultants Inc.
6139 South Rural Road
Suite 103
Tempe, Arizona 85283-2929
Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877
Metalguys@aol.com

Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
http://www.swissamerica.com
Dr. Fred I. Goldstein, Senior Broker
1-800-BUY-COIN
FiGoldstein@swissamerica.com

The Moneychanger
Box 178
Westpoint, Tennessee 38486
http://www.the-moneychanger.com
Franklin Sanders
1-888-218-9226, 931-766-6066

----------------------------------------------------

HOW TO HELP GATA

If you benefit from GATA's dispatches, please
consider making a financial contribution to
GATA. We welcome contributions as follows.

By check:

Gold Anti-Trust Action Committee Inc.
c/o Chris Powell, Secretary/Treasurer
7 Villa Louisa Road
Manchester, CT 06043-7541
USA

By credit card (MasterCard, Visa, and
Discover) over the Internet:

http://www.gata.org/creditcard.html

By GoldMoney:

http://www.GoldMoney.com
Gold Anti-Trust Action Committee Inc.
Holding number 50-08-58-L

Donors of $1,000 or more will, upon request,
be sent a print of Alain Despert's colorful
painting symbolizing our cause, titled GATA.

Donors of $200 or more will receive copies
of "The ABCs of Gold Investing" by Michael
Kosares, proprietor of Centennial Precious
Metals in Denver, Colorado, and "The Coming
Collapse of the Dollar" by James Turk and
John Rubino.

GATA is a civil rights and educational
organization under the U.S. Internal Revenue
Code and contributions to it are tax-deductible
in the United States.