MONDAY, 6.30PM
GOLD shares on the Johannesburg Stock Exchange rose and fell with the bullion price on Monday, before closing 12,3 points down at 1 015,1 as bullion fell to a new four-year low of $336,95/oz.
Bullion’s fall from grace has been ascribed, among other things, to the delinking of the platinum price from the gold price, and speculation that the SA Reserve Bank is considering selling some of its reserves to pay for weapons purchases.
MONDAY, 11.30AM
NEW Belgian legislation allowing the Belgian central bank to sell up to 10% of its bullion holdings hit the gold price on Friday, which fell below the key psychological $340/oz following the law’s enactment and negative sentiment in the palladium and platinum market. Gold closed in London on Friday at $388,20.
The re-entry of the Russians to the world platinum and palladium market after a five-month hiatus will likely depress that market, with a knock-on effect for gold. That, coupled with European central banks who are keen to drop gold as a reserve currency, is putting bullion under considerable pressure.
According to Lawrence Eagles, analyst at London-based commodities brokerage GNI: “Any further central bank sale over the next six months will be greeted with a sharp decline in the gold price to at least $325,10, the 1983 low, or possibly below.” Eagle said that at that level, many gold mines would become unprofitable, then allowing central banks to sell gold reserves without unduly influencing markets.
BUSINESS BRIEFS
JET II TAKES OFF THE JSE launched its long-delayed Jet II automated trading sytem on Monday, with the latest version offering increased transparency. The system will now show whether deals are asset swaps or corporate finance (previously reported together), and if foreign deals are sales or purchases. The system also allows multiple orders up to 10, with the previous ceiling of R10-million bumped up to R25-million.
FOREIGNERS BUY ON JSE DFOREIGNERS were net buyers of shares on the JSE last week, buying R2,912-billion in shares while selling equity worth R1,926-billion, to give net purchases of R985,88-million. To date this year, non-residents have accounted for net share purchases of R11,069-billion, nearly three times the R4,042 over the same period last year.
BANKS DROP RATES COMMERCIAL banks have cut short-term deposit rates, following the money market shortage’s weekend fall to its lowest level in a year. The four biggest commercial banks on Monday set three-month NCDs at 16,00% offered, down from Friday’s 16,05%.
EVERTHING’S NOT OK THE SA Commercial, Catering and Allied Workers’ Union has claimed that 95% of its members at OK Bazaars stores nationwide took part in sit-ins on Monday following the union’s declaration of a dispute in wage talks with management.