Excerpts From - "Gold Forecaster - Global Watch"

By: Julian D. W. Phillips | Tue, Feb 14, 2006
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HIGHLIGHTS in "Gold Forecaster - Global Watch"
Silver - COT, Gold : Silver Ratio EDR.V, SSRI, PAAS, SIL, SLW / Platinum.
SHARES: HUI, XAU, NEM, FCX, DROOY, NG, VGZ, GSS, GOLD, AU, HMY, Western Areas, TRDM, WEX.v, MMRSF, CAU Portfolio Update, 3 New Buy Orders, Notes.

1-2. Market Forecasts / Short-term forecasts across the Board!
2-3. Comex Update
3-11. Central Bank Sales / De-Hedging in 2005 / China - Private Buying?/Indian demand this week / The Oil crisis / The U.S. economy and the $ / Gold: Oil Ratio / Dow Jones / Technical Analysis of the Gold Price: Long / Gold price drivers 2006 / Short term in the U.S. $ / Treasury Notes / CRB Index
11 - 33. International Gold Markets / Silver / Platinum/ Silver & Gold Shares

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The Oil Crisis

What crisis?

In summing up OPEC's current head, Dr. Edmund Daukoru, Nigeria's Minister of State for Petroleum Resources said the organisation had "reviewed the oil market outlook, including the overall [supply and demand] expectations for the year 2006. In particular the first and second quarters, and observed that market fundamentals have remained in balance since its last meeting, in Kuwait in December 2005, with comfortable stock levels. It also observed that the world economic performance continues to be resilient."

The market has accepted $60+ a barrel, global growth remains intact, so why fix what ain't broke? O.P.E.C. is making stunning profits alongside the oil producers so why complain? O.P.E.C. can point a finger at refining bottlenecks while oil companies try to belittle record profits. Crisis over! Not so fast, this story is not over by a long shot. The whittling away of the surplus available is steady and unrelenting. A major oil crisis is inevitable if we extrapolate this picture.

China - Private buying?

China plans to establish its first-ever gold investment fund this year to boost liquidity in the local gold market, China Gold Association said. The fund, which is planned to be issued through private placement or a public offering, will have a size of anywhere between CNY500 million and CNY1 billion. The fund will be managed by China Gold Investment Fund Management Co., jointly being promoted by China Gold Association, several Chinese commercial banks and some of the large gold companies in the country. The management company will be set up within this year.

The fund will invest in 99.95% and 99.99% purity gold bullion, both traded under the deferred-settlement method on the Shanghai Gold Exchange.

It is difficult to conclude other than to think this has not only the regulatory backing of the government but the direct support too? We get the distinct impression that the Chinese government wants gold to flow into China but under their direct and accessible control, not within the full public domain.

Indian Demand this week

February the 14th is the last day for marriages until March 16th this year.

India still waits for lower prices. The sudden drop in the gold price is yet to spur the sleeping giant. This drop will bring buyers and more as the price drops further. So far the first $25 drop did generate business not seen in last four months but far below what we did in February last year.

Once Gold's volatility has subsided, if it does, expect the market to come to life again!

So far despite the talk of VAT changes, which have been agreed, have not yet been implemented by the errant states. Politics steps in as always and spoils the party. We wait to see action still.

The gold industry meanwhile is suffering heavily as a result of these disparities as well as because of the state of the gold market. The cost of idle businesses is heavy particularly when margins are small.

The 2005, year-end Balance Sheet of the gold industry in India ended in the red despite all the hard work done and the profitable first seven months of 2005. These profits disappeared in the last five months of the year taking with them a large proportion of built up reserves with them too, just to maintain the industry and work force. This has been the worst overall year for more than 9 years.

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Julian  D. W. Phillips

Author: Julian D. W. Phillips

Julian D. W. Phillips
Gold Forecaster

Julian D. W. Phillips

"Global Watch: The Gold Forecaster" covers the global gold market. It specializes in Central Bank Sales and details, the Indian Bullion market [supported by a leading Indian Bullion professional], the South African markets [+ Gold shares shares] plus the currencies of gold producers [ Euro, U.S. $, Yen, C$, A$, and the South African Rand]. Its aim is to synthesise all the influential gold price factors across the globe, so as to truly understand the global reasons behind the gold price.

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