rr on gold...

"GOLD

As for the gold price, I have some difficulty in seeing how it could continue to rise, other than as a means of maintaining a constant price of gold in the other large world currency, that is the Euro. The current fashion, it seems to me, is that gold is moving with the weakness, or otherwise, of the US dollar. Last week’s gold price rise to US$354 odd reflects very little more than the Euro’s rise against the US dollar. Equally, since the Australian dollar is tracking the Euro more than it tracks the US dollar currently, the AUD gold price rose substantially less than the USD gold price. Of course, gold can keep rising if the US dollar keeps falling, and so it would not really surprise me if the US dollar fell another 5% or so, and therefore, would see another rise in the gold price of 5-8%. Whilst it would not necessarily increase the AUD gold price by that amount, no doubt we too would tend to drift upwards in the Aussie dollar towards the US60c mark, which would take some of the benefit away from the rising gold prices, but that should probably mean that gold stocks will continue to represent reasonable investments over this period. In my subscribers’ case, I have been advising holding Gindalbie Gold and Highlands Pacific for this possible eventuality. Over the next week or so, I expect to be lunching with the managing director of Highlands Pacific and I will also be having a chat with David McSweeney, the managing director of Gindalbie Gold, who I expect will come out with an update on GBG in the next few weeks for the quarter ending December 2002. Certainly, keep holding both stocks. I have sold some HIG in some of my portfolios; merely because the profits are quite healthy at this stage and I was looking for a fall back in the price of gold, which could well happen should the US dollar have a pullback from its negative direction. If I am wrong and the price of gold continues to rise, the HIG shares that my portfolios still hold will benefit. This was merely a defensive position.'