-Caveat Lector- from: http://www.aci.net/kalliste/ <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- Gold Market Australian Gold Producers in Price Squeeze The conspiracy to hold down gold prices. The Australian gold price is trading at its lowest level since February 1985 and local producers are feeling the effects. However, most are coping with the squeeze because they have sold significant quantities of gold forward at much higher levels than current spot prices. Australian gold prices have been hit by a weaker US dollar gold price and a stronger Australian dollar. These combined to push the price of Australian dollar gold to A$412 per troy ounce last week. "With average Australian total cash production costs at US$264/oz (A$400/oz), the average Australian gold mine is just breaking even," said Paul Gooday, gold analyst with AME Mineral Economics, a Sydney-based commodity consulting and research group. But that's the average. A lot are losing money. "For the March 1999 quarter, 24 per cent of Australia's gold was produced at a cost higher than the current Australian dollar gold price," said Mike Chester, gold analyst with Salomon Smith Barney in Melbourne. This is despite cost-cutting by Australian gold producers. Since March 1997 cash operating costs have fallen by almost 17 per cent, from A$379/oz to A$316/oz in the December 1998 quarter. Australia's big gold producers' cash costs vary dramatically. Australia's largest gold producer, Normandy Mining, produced 1.6m oz last year at an average cash cost of US$194/oz; Great Central Mines, the second largest producer with 734,183oz had average cash operating costs of US$192/oz; Newcrest produced 576,800oz at US$234/oz; Acacia 510,518oz at US$171/oz; Delta Gold 378,648oz at US$108/oz; Sons of Gwalia 483,127oz at US$230/oz; and Normandy NFM 209,680oz at US$193/oz, according to AME. These producers account for 45 per cent of Australia's gold production However, from these lower cost levels, further reductions will be more difficult to achieve. "We do not anticipate any further sustainable reductions," said Mike Chester. He estimates the average cash operating costs for Australian gold producers to be A$318/oz in 1999. "This environment makes Australia's gold sector ripe for rationalisation," said Mr Chester. However, Australian gold producers are still highly profitable, with average net profits before abnormal items for the 18 key producers estimated at A$492m over 1998/99, according to Salomon Smith Barney. ------------------------------------------------------------------------ John Willson, president and chief executive of Canadian gold group Placer Dome, avoids words such as conspiracy, but believes malign forces are depressing world gold prices, writes Gillian O'Connor. "I find it difficult to believe, given what [Alan] Greenspan said in the middle of last year, concerning the central banks' intention to maintain a low gold price, that there is not some concerted action going on between central banks to hold inflation down through holding down the price of gold," Mr Willson says. "I personally cannot see [this] but many economists believe holding down gold prices holds down inflation." He added that Placer's expansion plans, which could have involved equity funding, had been shelved because of the sharp fall in its share price that followed news of a UK Treasury gold auction. The Financial Times, May 18, 1999 Asia Recovery Tied to US Boom Asia Recovery Tied to U.S. Boom Recovery, recovery, everywhere; and not a bite to eat. LANGKAWI, Malaysia - Gathering dust in a trinket shop in northern Malaysia is a poster that seems to lose its relevance by the day. It reads: ''Due to the current economic climate, the light at the end of the tunnel will be turned off until further notice.'' The light is back on in Southeast Asia these days and ''recovery'' is the word on economists' lips. But amid the rising markets and cheery economic data there is nervous hand-wringing inside the offices of the very companies that have helped the region out of its slump. Business people and government officials in Southeast Asia are focusing their attention across the Pacific. They say they are worried that if U.S. markets reach their peak and begin to contract - and many believe that will happen soon - recovery in Asia could be the first casualty. ''Basically we think America is going through the same thing that we went through in 1993,'' said Paul Low, the head of the Federation of Malaysian Manufacturers, which represents 2,000 companies in the country. ''The wealth created in the stock market is not realistic. We are definitely worried about how long the market can sustain itself.'' The relevance for Asia is clear. The fate of many companies here - especially small, export-oriented ones - is directly tied to the health of the U.S. economy. Take Golden Pharos Bhd., a Malaysian company that manufactures doors and furniture. Some 60 percent of the 25,000 doors the company ships every month are sold in the United States to stores like Home Depot. ''We are very concerned about the U.S. market,'' said Arief Nasran, a top manager at Golden Pharos. If the U.S. economy slows, he said, ''anything relating to the construction industry will be hit first.'' The plunge in U.S. share prices on Friday and Monday only serves to underscore those concerns. But it is not just potentially volatile stock prices that worry Asians: Wall Street's headline numbers are taken as a barometer of the health of the U.S. economy as a whole - and an indication of the sustainability of the longest expansionary period in U.S. postwar history. Most worrying for officials here in Asia is knowing that the region's recovery has relied to a large extent on the ability of the U.S. market to absorb imports from Asia. Japan, its economy still mired in recession, can no longer play its traditional role as economic locomotive. When markets close to home went sour nearly two years ago, Asian exporters turned to the United States to sell their television sets, sneakers and furniture. Faced with cheap goods from these Asian countries with newly devalued currencies, America went on a buying spree. Last year the United States bought $168.6 billion of goods and services more than it sold - the worst annual trade deficit on record. Three fourths of that trade imbalance was with Asia. Those numbers have not improved. In February, the deficit reached $19.44 billion, another record. In other words, the United States, every day, was buying $680 million of foreign-made goods more than it was selling. Most of that deficit was with Japan and China. Most vulnerable to a U.S. downturn are not Asia's giants but the smaller, crisis-hit countries of Southeast Asia. ''We are 52 percent dependent on two countries in terms of our exports - the U.S. and Japan,'' Edgardo Espiritu, the Philippines' finance secretary, said on the sidelines of a meeting of Asia-Pacific leaders here over the weekend. ''If anything happens to the U.S. or Japan, it will have an impact on our growth prospects.'' The Philippines is not alone. The United States is the largest trade partner for most countries in Southeast Asia. In 1997, the latest year for which region-wide figures are available, the United States bought about a third of Malaysia's exports, a fourth of Thailand's and a fifth of Singapore's. ''Obviously all of us are concerned with the continuing health of the U.S. economy,'' said Richard Hu, finance minister of Singapore, another heavily trade-dependent country. ''They are the main engine of imports for the world.'' The world's two other major developed markets - Japan and Europe - are not in a position to absorb Asia's excess capacity, analysts say. Japan is mired in a persistent recession With recovery still very tenuous in many Asian countries, a slowdown in the United States could hurt Asia more than it does the domestic economy. Worst hit in Asia would be heavily export-reliant companies. But a U.S. slowdown could also, through reduced demand, undermine oil and commodity prices, hurt countries such as Malaysia and Indonesia that rely heavily on both. ''Asia will be hit much worse than America,'' said Mr. Low of the Federation of Malaysian Manufacturers. ''If we can't export our way to recovery, what else can we do ?'' The long-term answer, according to Mr. Low and others, is to cut high savings rates in the region and to stimulate demand at home. But that will take years, analysts say. The more immediate concern in Asia is divining what a U.S. slowdown will look like and when it would happen. On this count government officials hopefully echo a term used in the recent meetings of the International Monetary Fund in Washington: ''soft landing.'' ''If it's an orderly correction, that won't shake Asia,'' said Hubert Neiss, the director of the Fund's Asia Pacific operations. ''What some people worry about is if there is some massive correction. But nobody seriously expects that.'' Then again virtually no one predicted the Asian crisis that surfaced two years ago - not to mention the long list of unexpected market crashes that fill history books. ''Markets are markets,'' Donald Tsang, Hong Kong's financial secretary, said here Sunday. ''They all follow some sort of cyclical pattern. ''How long exactly this particular run is in upswing I do not know,'' he added, referring to the bull market on Wall Street. ''But everyone is watching.'' International Herald Tribune, May 18, 1999 Chips R Us Cambridge Laboratory Announces Chip Breakthrough Moore's Law Lives An Anglo-Japanese team of scientists funded by Hitachi, the electronics group, has made a breakthrough in semiconductor memory technology paving the way for lightweight computers, mobile phones and entertainment systems. The advance is the first commercially exploitable development from 10 years of investment in Cambridge by the Japanese company. If the new memories prove successful, Hitachi would lead the way in semiconductor manufacturing. Hitachi established a laboratory in the city in 1989 and forged a partnership with Cambridge University's Cavendish laboratory. The university stands to gain from royalties on commercial products developed by the partnership. The innovation makes possible the fabrication of a memory chip the size of a thumbnail capable of storing all the sounds and images of a full length feature film. The new chips are so powerful that it is thought they will replace present day storage devices such as computer hard disc drives. The Cambridge development also promises to overcome problems of physics which are beginning to slow the development of more powerful conventional memory chips. The partnership has resulted in a number of discoveries in pursuit of the "single electron" memory chip capable of storing 1,000bn bits of information. Haroon Ahmed, professor of microelectronics at the university, said yesterday's announcement was a significant step on the road to high-speed single electron devices. The fastest and most quickly accessed memory chips currently store about 256m bits of information but they "forget" this information if the power is switched off. Physical laws make it hard to design more powerful versions. In particular, faster, smaller chips need power levels which can be difficult to control. The Cambridge chips consume very little power, making them suitable for use in palmtop computers, mobile phones and other portable electronics devices. Furthermore, they retain their memory for up to 10 years when the power is switched off. The new chips are set to be commercially available in 2005. Hitachi technologists in Japan are converting the technology into a form suitable for mass production. The Financial Times, May 18, 1999 ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, Omnia Bona Bonis, All My Relations. Adieu, Adios, Aloha. Amen. Roads End Kris DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance—not soapboxing! These are sordid matters and 'conspiracy theory', with its many half-truths, misdirections and outright frauds is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRL gives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credeence to Holocaust denial and nazi's need not apply. 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