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| Updated: Sep 19,2004 |
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The 27th of September marks the day which the Central Bank Gold Agreement will be renewed, which in effect, renews the expiring "Washington Agreement of 1999", for a period of 5 years. The limits of maximum annual gold sales was increased by 25%, to 500 tons per annum. All 15 original parties to the Washington Agreement are on board for the new agreement, agreed to on March 8th, 2004. This accounts for 14,395 tons held by signatory countries, and the 8.000 tons of gold held by the USA, as well as 5,000 tons or so, held by other like minded countries not inclined to dump it on the market, realizing it's value as an asset. Eighty seven percent of official gold holdings are going to be accounted for, with only around a 500 ton per annum sales from existing government holdings, should make for smooth sailing for the yellow precious metal in the next few years. As demand perks up, and supply continues at reasonable levels, not over supplying a market with relatively predictable demand, is $500/ounce gold out of the question? No, it is very much a possibility. The key instrument is demand and its Siamese twin, supply. The good news is China and Japan have indicated that they might desire to increase their holdings in gold, since both currently have about 2% of reserves in Au. This move, alone, could keep the demand for the precious metal growing at a respectable pace. Then there is the individual and investment conglomerates, that are keen on acquiring the yellow precious metal at elevated rates. All of this is good for gold, and silver should also ride it's coat tails to elevated values ($8/ounce), as well. And to further stimulate demand, the industrial uses of those gold researchers are turning to such uses, as gold nanotubes for the current energy generator craze, fuel cells. One method uses gold nanotubes and carbon monoxide to produce energy in a reaction, which increases the efficiency of traditional fuel cells, since CO is a current waste product of fuel cell reactions. Unfortunately, "nano" denotes such a small volume, it will take "giga" quantities of these nanotubes to have an impact, but as the development proceeds, and turns commercial, the quantity will be many exponential multiples of "giga". This is assuming all continues to show favorable and cost effective results, of course. I'm not uncorking the Champagne yet, to toast my favorite precious metal, but a toast may be due New Years Eve. We shall see. However, not being one to keep a cork in a bottle of bubbly, here's to the European Community, for realizing the value of gold, and coming to an agreement which will create a favorable climate for the gold producing industries, and contribute a bit of stability to the global economy, in a time of turmoil. Cheers! |
| But that's just my opinion. Charles Kubach Mine-Engineer.Com |
