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Tower''s View: Buying panic will continue
10p EDT Tuesday, September 28, 1999
Dear Friend of GATA and Gold:
I'm sending along tonight the daily market wrapup from
Reuters because of the remarkable comments it offers
from mainstream analysts favorable to gold, comments
that predict a gold price of $340-$350. Perceptions
sure have changed fast.
On the other hand, we'd all do well to note Steve
Kaplan's remarks tonight at www.goldminingoutlook.com.
Kaplan announced this afternoon that he had just sold
most of his gold shares, and it seems that he came
close to catching the XAU at its daily top, before it gave
back all its gains. Kaplan says this leg up for gold
shares is done and that it's down for a while now.
I imagine that we will see pullbacks on the way to an
equilibrium price that is much higher than today's.
Gold is back, and as the general U.S. equities market
continues to fade, stock market investors suddenly are
going to be thinking about gold as an alternative. That's
completely new. There is also some speculation
tonight on Internet bulletin boards that day-traders may
switch their hourly speculation to gold shares from
Internet shares and greatly increase gold share
GATA Chairman Bill Murphy said today that he couldn't
be more bullish for junior mining company shares, and
some of those scored more huge gains today even as
the XAU slipped a bit in the end. I hope to have more
word from Bill later tonight or tomorrow.
Please post this as seems useful.
CHRIS POWELL, Secretary
Gold Anti-Trust Action Committee Inc.
* * *
Gold fever continues unabated in hectic market
By Martin Hayes
LONDON, Sept. 28 (Reuters) -- Spot gold roared to 16-
month highs on Tuesday in Europe, as waves of
shortcovering lifted a feverish market above the $300
an ounce level, dealers said.
Bullion gold was fixed on Tuesday afternoon in London
at $301.50 an ounce, up from the morning fix of
$288.25, and the highest setting since October 8, 1998.
Trading was active in early-afternoon, with the spot
price touching $305.10/$306.10 at one point, well above
Monday's New York close of $282.50/$283.00. This was
also more than 19 percent up on the $255.75 Britain got
for the 25 tonnes sold at the UK auction exactly a week
The fierce upward move today encompassed heavy
technically-related covering, as well as frantic buying
against expiring OTC (over-the-counter) options.
quot;We've seen stop-loss buying all the way up, really.
Once it took out $283/286 resistance there were not too
many places to hide,quot; one dealer said.
Gold's rise began after last week's auction, although
the price took off with Sunday's unexpected pledge by
the European central banks to limit annual sales to 400
tonnes for the next five years -- effectively putting a
moratorium on central bank sales not already agreed.
quot;This is continual short-covering although I suspect we
are seeing some buybacks from producers as well,quot;
another London dealer said.
quot;Today is also options expiry day which would have made
a difference,quot; he added.
Bullion banks scrambled to cover over-the-counter
options positions written when gold was in the $250s
only days ago.
Those banks that sold $290 and $300 call options a few
days ago, giving counterparties the right to buy metal
at those prices, scrambled to cover their exposure as
prices rocketed higher on Tuesday.
Gold prices subsequently settled back from their highs
as the buying subsided and traders paused to take stock
of the rapid reversal in market sentiment.
Spot finished at $302/$302.50, up from Monday's New
York close of $282.50/$283.00.
Also, there has been little solid fresh buying, because
of the speed of the advance.
quot;Effectively, the first wave of short-covering has been
done, and now there is resistance at $305/308. You
might see it retrace back to $286. If it holds there,
you're looking at $315/340,quot; the first trader said.
Much higher levels can be attained if the market can
extend its move into the mid-$300s, technical analysts
quot;The gold price should probably stabilise around $350
before it moves to the next upside level,quot; Raynard
Chang of Bank One London said on Reuters Television.
Other precious metals were caught up in the euphoria on
Tuesday, with silver bullion racing up to seven-month
highs against a background of tightening swap rates.
Silver ended at $5.65/$5.67 cents an ounce, up from a
previous close of $5.33/$5.36 cents.
The PGMs were carried along as well, with platinum
vaulting above the $400 an ounce level to record its
highest levels for 14 months. Platinum closed at
$402.50/$404.50, up from a $384.50/$386.50 previous
However, this would appear to be merely a knee-kerk
reaction to the strong trend in gold, analyst Andy
Smith of Mitsui Global Precious Metals said.
quot;The last I heard there were no central banks making
friendly statements about platinum, because they do not
hold any,quot; Smith said on Reuters Television.
Palladium closed at $373.50/$378.50, up from