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Silver ends at 8-year high; gold climbs;
dollar, stock market lose ground; mining shares mixed
By Myra P. Saefong
Tuesday, March 9, 2004
SAN FRANCISCO -- Silver futures ended Tuesday's session
above $7 an ounce for the first time in over eight years, and
gold futures closed at their loftiest level in over two weeks.
A general weakness in the dollar and broader stock market,
as well as a new plan for certain European central banks to
limit gold sales, sent investors back to the precious metals
quot;As silver futures sliced through contract highs taking out
buy stops, gold was not to be left on the sidelines and it
confidently rallied,quot; said Erik Gebhard, president of Altavest
quot;Investors and funds appear compelled to chase prices
higher for fear of missing an even more substantial move,quot;
Silver for May delivery climbed 19 cents to close at $7.18 per
ounce after peaking at $7.20. Futures prices haven't traded at
a level this high since February 1998.
Gold for April delivery traded as high as $406.40 an ounce on
the New York Mercantile Exchange before closing up $3.60 at
$404.50, its highest closing level since Feb. 24.
Central bank pact aids gold's climb
quot;Fears of dramatically higher central bank sales have now
eased thanks to the latest accord,quot; said Peter Grandich,
editor of investment publication The Grandich Letter.
Twelve European central banks agreed to limit their total
combined gold sales to 500 metric tons per year for the
next five years. The agreement commences on Sept. 27,
when a previous pact, known as the Washington Agreement,
With that in the backdrop, and quot;after several weeks of high
volatility, gold is attempting to re-establish its march
toward $500 an ounce,quot; said Grandich.
Overall, quot;ups and downs of the euro remain gold's largest
influencing factor,quot; he said.
The U.S. dollar was modestly weaker against its currency
rivals Tuesday. The fall in the dollar aided gold's climb.
The U.S. presidential race and inflation fears will likely
drive daily movements as the market moves into spring and
summer, Grandich noted.
And looking further ahead, quot;the fiscal health of the United
States in regard to budget and trade deficits, combined with
a continuing loose monetary policy and substantially higher
oil prices ... should become important factors gold bulls and
bears will toss around going forward,quot; he said.
In a class of its own
With Tuesday's climb, quot;gold is proving itself to be the asset
class belonging in investor's portfolio,quot; said John Person,
head financial analyst at Infinity Brokerage Services.
quot;Gold investors feel the market is ripe for a new move higher
as the trend for higher commodity prices does not look like it
will end soon,quot; he said.
Additionally, billionaire Warren Buffett revealed that he
invested in foreign currencies and still sees a chance for a
lower dollar, Person said, and quot;buying gold is a different way
to play the anticipation of another drop in the dollar with less
quot;If the relationship of a weaker dollar causes gold to
appreciate, it would make more sense to buy gold and that
is what you are seeing today,quot; he said.
All the while, futures traders continue to quot;take advantage of
silver's relative cheapness in comparison to the other base
and precious metal despite the overbought indicators,quot; said
James Moore, an analyst at TheBullionDesk.com, in a note
quot;Prices have risen dramatically over the past months as
speculators, both large and small, have piled into the
market,quot; Leonard Kaplan, president of Prospector Asset
Management, said in a research update.
quot;Prices have risen over $1 per ounce over the past three
months, even as the fundamentals of the silver market
deteriorate rapidly,quot; he said.
May copper, however, closed down 2.5 cents at $1.272 per
quot;The doubling of copper prices in the past nine months was
accompanied by sharply declining inventories in London and
other locations -- bearing full justice to the rally,quot; said Kaplan.
But during that period, silver inventories were generally rising
as the price moved higher, he noted.
On the supply end, copper supplies were down 1,001 short
tons at 236,357 short tons as of late Monday, according to
Nymex. Silver stocks were down 491,347 troy ounces at
123.4 million troy ounces.
Gold inventories stood at 3.53 million troy ounces, up 34,937
troy ounces from the previous session.
Platinum for April delivery rose $3.20 to closed at $897.20 an
ounce. June palladium shed $5.40 to end at $261.45 an ounce.
Equities end mixed
Many mining equities followed gold and silver higher, but others
posted modest declines on the heels of copper's decline.
The Philadelphia Gold amp; Silver index (XAU) and the Amex Gold
Bugs Index (HUI) each rose by 0.1 percent to close at 100.98,
and 229.31, respectively.
The CBOE Gold Index (GOX), however, shed 0.2 percent to
close at 87.05.
Leading gainers among the indexes were shares of Durban
Deep, up 3.4 percent, and Apex Silver Mines, up 3.3 percent.
Among the decliners were shares of Meridian Gold, which fell
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