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Toronto Globe and Mail quotes GATA chairman in gold survey
Recent Slide Fails to Squelch Gold Bugs
Yesterday's rally confirms their optimism
as geopolitical jitters stir safe-haven focus
By Wendy Stueck
The Globe and Mail, Toronto
Wednesday, June 21, 2006
VANCOUVER -- Gold may have been beaten up in recent weeks, but true believers are not losing faith.
"A $740 [U.S.] per ounce gold price is nothing -- it should be double that," said Bill Murphy, chairman of the Gold Anti-Trust Action Committee, a Dallas-based group that tirelessly promotes a gold-price suppression theory involving central banks, trading houses, and governments.
"This is Mickey Mouse stuff; the real action hasn't even happened yet," Murphy said.
Mr. Murphy and other gold fans would have taken heart from the precious metal's performance yesterday, when gold prices climbed on reports of weapons testing in North Korea and continuing jitters over nuclear programs in Iran. Prior to that, gold prices had fallen for five consecutive weeks.
But yesterday, gold futures for August delivery rose $8.10 to close at $580.50 an ounce on the New York Mercantile Exchange.
Prices, which hit a high of $732 an ounce on May 12, are still up 30 per cent from a year ago despite the recent slide.
"The market's gotten enough of a liquidation. It's coming back to look at core fundamentals," said Frank McGhee, head metals trader at Integrated Brokerage Services LLC in Chicago. "Gold will start refocusing on North Korea, Iran, and the hurricane season."
With its reputation as a safe-haven investment, gold tends to rise in times of political turmoil or tension.
Mr. Murphy, who was in Vancouver this month to share his version of the gold gospel at an industry trade show, says that the recent sharp correction in the gold price reflects a concerted effort by what he labels a "cartel" to drive prices down and calm a market that looked ready to explode.
His take on the gold market puts him among the most outspoken and controversial of so-called gold bugs. But while other gold players may take a more measured tone, many echo Mr. Murphy's general theme: that the underlying case for higher gold prices remains strong.
"We still see a lot of reasons to continue to own gold for the short, medium, and long term," said Robert Cohen, manager of Dynamic Precious Metals Fund, which describes gold as "fire insurance" for investors' portfolios.
Mr. Cohen expects volatility to continue through the summer but expects the gold price to firm up in the fall and to hit the $650-700 range by year-end.
"We still feel the U.S. dollar will continue its downward path. We're just seeing a recent correction, with the fed rate hiking," Mr. Cohen said, referring to interest rate increases in the United States.
"I think it will probably muddle along over the summer and we would be surprised not to see a [gold] bull market in the fall."
Mr. Cohen said he has made only minor adjustments to his portfolio.
Peter Marrone, chief executive officer of Toronto-based miner Yamana Gold Inc., also believes the long-term outlook for gold is strong, adding that the price had moved too high over too short of a period.
"I think we'll see a reconsolidation around this level, and then see gold make another move."
One area in which the gold price is having an impact is on financings for junior companies. Deals are taking longer to put together, and featuring prices that might be a little lower than had the deal come to market even a few weeks ago, said Gordon Keep, a spokesman for Vancouver-based Endeavour Financial, a merchant banking and advisory group.
Some companies may take a breather and wait to see how market conditions play out in coming weeks, he said. "We haven't seen any deals disappear, but there are not as many coming in the door."
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