TALKING POINT/GOLD
The price of gold bullion and share
prices of North American gold stocks are benefiting from
continued weakness in the U.S. dollar, analysts said.
    "There's been a tug of war between the (currency)
speculators and the central banks over the U.S. dollar and it
looks like the game has gone to the speculators," said John Ing
at Maison Placements Canada Inc.
    The dollar remained close to post-World War II lows today
against the Japanese yen despite buying by several central
banks, including the Federal Reserve, dealers said.
    A drop in the dollar means uncertainty and gold is the
traditional hedge against uncertainty, Ing noted.
    Another analyst, Richard Cohen at Brown Baldwin Nisker Ltd,
noted that "a lot of foreign investors are holding U.S. dollars.
If they see they are losing money, they move back into gold."
    A dollar decline also has inflationary implications, Ing
said, adding that Maison Placements sees inflation rising to a
four pct annual rate from the current level of about three pct.
    Ing predicts gold will peak at 510 dlrs this year from its
current level of about 416 dlrs per ounce. Cohen sees an
average price of 425 dlrs, and another analyst, Michael
Pickens, at Yorkton Securities, puts the average at 450 dlrs,
with a possible spike above 500 dlrs.
    However, gold stocks in the U.S. and Canada have risen far
faster in recent months than the price of the metal itself,
causing concern among analysts that a correction lies somewhere
in the future. But for now, all analysts say there is no sign
the buying pressure is slowing down. "The stocks have run an
incredible way," Cohen said.
    On U.S. markets today, ASA Ltd <ASA> rose 4-1/8 to 61-1/2,
Campbell Red Lake Mines <CRK> was up 1-3/8 and Newmont Gold
<NGC> increased 1-1/2 to 31-1/4.
    The Toronto Stock Exchange gold index today was up 268
points at 8067.90. Hemlo Gold gained 1-1/4 at 26-3/4, LAC
Minerals was up 1-5/8 at 41, Placer Development rose 1-1/4 at
43-3/8 and Lacana Mining gained 1 at 18.
    Ing pointed out that the TSE gold index has gained 51 pct
since December 31, 1986, while the price of bullion has
increased six pct. "Canadian golds have been the top performing
index this year," he noted.
    In the U.S., there is "too much money chasing too few
stocks," Pickens said. And many investing institutions such as
pension funds and insurance companies still have excess cash,
he added.
    Cohen also noted that today's silver price break through
six dlrs an ounce indicates small investors are entering the
precious metals market and he expects the ratio between gold
and silver prices to narrow.
 Reuter
