Another 20% predicted for gold shares

Section:

9:30a EDT Monday, September 27, 1999

Dear Friend of GATA and Gold:

Here's this morning's good news. Let's be thankful for
it. But vigilant too -- the bad guys surely still have
some tricks up their sleeves. We'll be watching them.

CHRIS POWELL, Secretary
Gold Anti-Trust Action Committee Inc.

* * *

GOLD SOARS AS CENTRAL BANKS
ANNOUNCE SALES RESTRICTIONS

LONDON, Sept 27 (Reuters) -- Gold surged 6 percent to
five-month highs on Monday after European central banks
said they would restrict bullion sales for the next
five years.

Gold stopped a dramatic overnight run just short of
$285 a troy ounce, leaving August's 20-year lows far
behind and staking out $300 an ounce as its next
target.

Gold mining shares in Australia, South Africa and Great
Britain also powered higher after the 15 central banks
said they would cap annual gold sales at 400 tonnes.

The five-year 2,000-tonne total is just enough to
satisfy world demand for six months. Market worries
that many more central banks would sell gold as global
inflation eased had driven the price down from an early
1996 peak of $418.

"This particular announcement is such a significant
change in policy it's going to provide (price)
support," said Bob Beasley, a technical analyst at
Barclays Capital.

In one fell swoop, the European central bank
announcement late on Sunday reshaped the troubled
outlook for bullion, a store of value for centuries. It
had seemed destined for more sharp losses after it
plumbed 20-year lows when Britain announced sales of
some 58 percent of its reserves in May.

But one by one, the official threats to the market --
huge gold sales by the International Monetary Fund, the
Swiss National Bank, and other central banks -- have
fallen away amid cries from mining nations that the
sales, meant in part to finance relief programmes,
would hurt them by hitting prices.

Together, the European Central Bank, the 11 national
central banks in the euro zone, as well as the Swedish,
Swiss and British central banks, control about half the
world's official gold reserves.

Their decision effectively removed any lingering fears
of major official sales.

"I think we will see $300 gold this year. It may come
slowly, it may come quickly. I think we are in a new
environment for gold now," Chase Manhattan precious
metals analyst Martin Fraenkel told Reuters Television.

Other key holders of gold reserves do not plan sales.
The world's largest holder is the United States, with
8,139 tonnes, which has not proposed selling reserves.
It is followed by Germany with some 3,500 tonnes and
the IMF with 3,200.

With bullion soaring, mining shares stormed higher
across the globe. In Australia, the gold index jumped
16.5 percent by 1200 GMT while in Johannesburg, the
South African Gold Index, which houses the world's two
biggest bullion producers, bounded up 15 percent.

Shares in AngloGold, the world's largest producer, rose
13 percent, but the company cautioned that while the
gold price rise was positive, an accompanying climb in
the rand might hit revenues for the country's embattled
miners.

"We must understand that the price is back to what it
was not that long ago and, coupled with a strong rand
(this rally) puts additional pressure on rand revenues
from gold sales," AngloGold Finance Director Jonathan
Best said.

In London trading, Anglo American, which controls
AngloGold, rose 10 percent and analysts believe the
gold equity bull run will spread to North America when
markets open.

Africa's hard-pressed gold mines should be among the
biggest winners from a sustained improvement in the
gold price, given their lowly rating against peers in
North America and Australia.