Yellow metal loses position

The attention of investors are largely drawn to the gold market. We know that it has always been a financial tool used by investors to hedge financial risks. Began recently falling price of this precious metal plunged in confusion investors to place bets on the movement of prices to new peaks. In this situation is useful to refer to the views of the world's leading analysts of commodity markets.

Jewelers refuse Au

According to consulting company Gold Fields Mineral Services (GFMS), the growth in demand for gold in 2003, which analysts estimate the company's 4%, was caused by a sharp rise in investment in the precious metal, a lot of speculative transactions. However, in key industries related to gold demand, in contrast, decreased by the same 4%. It is connected with decrease in the use of gold in the traditional «zolotoemkih» industries as jewelry and dentistry. Nevertheless, the whole of 2003 analysts GFMS predicted rise in the price of gold.

The largest drop in demand for jewelry made of gold last year experienced jewelers of Europe (especially Italy) and East Asia. At the same time, increasing production of gold jewelry in Turkey - the beginning of 2004, she became the world's third producer of this production after Italy and India.

According to GFMS, the demand for gold in the current year will grow after the fall in the past due to the correction of the prices of the metal. However, analysts predict that the mass closure of the hedge positions in the stock market gold mining company in an amount up to 13 million troy ounces of gold. Usually this happens when the players expect the market to price increases.

The bad of an investment

Some experts believe that in the foreseeable future, the largest importer of gold could be China. According to China Association of Geological Van Yuntsina in the next 10 years China will be released in the first place among the world market for gold. Potential sales of jewelry in the country projected the Chinese experts in the $ 24 billion a year. The main rival, GFMS, nyuyorkskaya company SPM Group, on the contrary, predicts disservice trend in the global market in gold. If GFMS forecasts for the second half of 2004, prices in the region of $ 400 per troy ounce, the CPM Group predicting price declines of up to $ 370 mark. According to the company's Jeff Christian, in any case, $ 380 mark by the end of the year will be over. CPM provides a neutral rating interest of investors to gold if the American economy «improve, but not very much». In spite asserts that the restoration of the American economy will cause higher prices for gold, Christian is confident that the market will be bearish trend, and the proof recalls examples of reflation of the currency does not serve as a positive factor for the gold market. Thus, according to Christian, and monetary reform in Mexico in 1982 did not have a positive impact on the market of yellow metal. In general, CPM Group cautioned that investment demand generally fall after a two-year peak. «The market of gold It was the third year of experiencing a peak in demand from investors. It is too early to draw conclusions that the peak price was good and the price will hold at a level above $ 400 per troy ounce ».

Canadian economist Martin Merenbild at the European Gold Forum in Zurich, also spoke on the topic. In his view, the U.S. dollar remains one of the most critical factors in determining the trend of gold, so investors need to know whether his conduct in recent days, just a correction or fundamental bovine factor. The analyst is confident that this is a correction after a long depreciation. There is no convincing reason to believe that fund managers on the brink «perebrasyvaniya» money from Asia and Europe in the United States. Another Canadian analyst, Chris Mallon (Dynamic Investors) calls the gold «antidollarom». «If you ever listened to the calls of investors in the market of gold, you should hear what they call a gold money. This was correct, while the U.S. dollar is not gone from the gold standard for about 30 years ago. Since then, gold, alas, was antidengami ». According to K. Mallon, gold historically has proved to be a bad investment object. After a speculative surge in the gold market in the 1970's. prices fell in the collapse and was in a bear market for almost 20 years. At that time, the index S & P 500 grew by 11% annually. If you look earlier, in 1933, an ounce of gold cost the same $ 35 as in 1970, and index Dow Jones Industrial Average in the distant days of the Depression was worth about the same. «Where would you rather have agreed to invest?» - Asked a rhetorical question Mallon.

Dr. Richard C. Eppel of the company Kitco is paying more attention to technical analysis. He noted that the price of gold was at 15% above the 200-day moving averages, which emerged the current correction. In late April, gold once again returned to the 200-day moving average at 4%. «More than 30 years, I analyzed the market of yellow metal, and always a 200-day moving average was a strong level of support for the bull trend and resistance - with the bear», - said the doctor.

Securities of the major producers of gold broke below key support levels: XAU Breaks level 93, and HUI - 208. This technical factor has caused sales in the market. «Technical analysts were rage, believing that the lower levels were already in their hands. This triggered further declines in the shares to their recent levels - 87 and 192, respectively ».

According to James Steel, a senior market analyst of metals and energy of New York office of brokerage firm Refco, there is the geopolitical assumptions that the market wanted the new maximum. Mr. Steele believes that it can count on $ 430 per troy ounce of gold at the end of 2004, and even expected to raise up to $ 450 in the first quarter of 2005, «When the U.S. policy for any reason does not receive the approval of abroad, as when something at the end of the campaign in Vietnam and now in connection with the invasion of Iraq, it is always a positive impact on the gold market ». As to the Chinese gold market D. Steele noted that the yellow metal - is «swan song» the presence of China in world commodity markets: «We (United States - approx. Author) until there is a very high demand for gold in most countries, and China - minor player ».

Gold no longer warms?

According to the chairman of the British Association of the mining industry analyst Michael Kulsona, precious metals market only makes breathing space, and prices could begin to rise soon. He criticized those analysts who believe that the market is overheated and is now in perekuplennosti, calling them people, «reshivshimi ignore history». According to M. Kulsona, one of the key factors is the behavior of bull market in China. «Of course, the Chinese government will take certain steps to curb the rise since the economy is overheated. But a lower rate of growth, it still does not preclude the continuation of China's increasing demand for metals. All this takes time and does not change the situation in the next few years ». Analyst Andy Smith said that after 11 September 2001 the index of gold bullion was the collapse of companies such as Kroll. He said that after the attacks in New York almost all other products have shown more growth than gold. «Gold can not be a panacea for the geopolitical risks - added E. Smith. He quoted the manager of a gold mining company: «The good news is, if the price of gold - $ 600 per troy ounce, and the bad - if someone bombed Islamabad. I am not sure that this is a world in which I would like to live ».

Referring to Europe's central bank gold sales, Smith said that in 1985 only to sell Canada's gold reserves. But now Norway, Oman, United Arab Emirates, Israel and New Zealand sold their gold reserves. If the miners refused to take gold money and using it to hedge financial risks, then why do banks and investors? In any case, most analysts agree in one thing: time to take gold money went. Investors have to look for new financial instruments for hedging. Vladimir Lenin asserted that socialism in the gold will make toilet bowls. Maybe his prediction will come true soon?