January 21, 2004

- unedited version -

Bundesbank Seeks To Sell 600 Tons By 2009

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Gold remained under pressure today perhaps due to a news report which stated the German CB’s wish to unload some 600 tons of gold by 2009. This would be part of the renewal of the Washington Agreement set up for signing as it expires this September. It is quite likely the accord will be renewed but the question remains as to if the 400 tons per annum will be increased to a higher amount. Estimates place a possible renewal amount around 450-500 tons. Over the next weeks, expect more reports/news releases by various central banks with their stated intentions on the gold they wish to contribute to the demanding market from their holdings.

Last weekend, a report was released in a German newspaper citing senior officials who said only 3 out of the 8 Bundesbank members were in favor of selling off the gold held by the German Central Bank. What citizens of these countries should be worried about is losing their gold at these near record-low market prices. Remember the English CB auctioned most of “its” gold near the $250 level just years ago. Perhaps more citizens of countries depleting their gold reserves will realize how foolish this idea truly is and stand up to the politicians and CB officials who wish to sell their gold reserves.

In today’s trading, gold was unable to positively respond to early morning losses in the U.S. Dollar, which continued its slide after yesterday’s plunge. Helped out slightly with a weaker Canadian Dollar (whose CB yesterday cut their prime rates to 2.5% in an effort to weaken their currency) the Dollar index still closed the day lower with the Euro continuing its climb higher. Some ECB officials overnight talked down the EU economy, possibly in an effort to stem the rapid rate in rise of the Euro. The EU does face serious issues of its own as noted by an annual survey released. - read

Gold did sell-off hard around 10 am ESTN at which point it reversed regaining a large portion of its losses. At the close, gold lost about 1/3^rd of yesterday’s nearly $6 gains. Silver mimicked gold closely today as it maintained a $6+ price level.

The HUI took the cue from gold and sold-off quickly for the first hour. At around 225 HUI, the shares reversed and rallied rather nicely. By 14:00 ESTN, the HUI was just about 232 before selling off to 230 by the close. Volume was moderate to slightly heavy. Investors are waiting for clearer direction from the metals increasing volatility in the share prices. Until a more comfortable and stabilized price level is achieved, expect this high volatility to continue.

Of important note, in yesterday’s production update from Barrick Gold, it noted that unlike its Q3 performance, it did cut its hedge book by about 600,000 ounces by delivering into the forward contracts. ABX still has about 15.5 million ounces still remaining and stated its intentions recently to no longer participate in this action. Of note, their average hedge book price is set at nearly $100 lower than today’s gold price closing.

- Company News -

Barrick trims hedge book, beats output forecasts "Keeping a promise made to investors last year, Barrick Gold Corp. (Toronto:ABX.TO) said on Tuesday it trimmed its unpopular gold hedge book by 600,000 ounces in the final quarter of 2003."
Reuters   Wednesday, January 21

Judge tosses $25 million lawsuit against Newmont Mining over South American gold mine. "A federal judge has thrown out a French businessman's $25 million racketeering, fraud and libel lawsuit against Newmont Mining Corp., saying he has no jurisdiction to handle the allegations."
AP   Wednesday, January 21

Goldcorp Declares Second Monthly Dividend Payment For 2004 "GOLDCORP INC. (NYSE:GG; TSX:G) is pleased to declare its second regular monthly dividend payment for 2004 of $0.015 per share. Shareholders of record at the close of business on Thursday, February 5, 2004 will be entitled to receive payment of this dividend on Tuesday, February 17, 2004. Goldcorp intends to make twelve (12) monthly payments of $0.015 per share in 2004 for a total annual dividend payment of $0.18 per share."
BW   Wednesday, January 21

Gold Reserve Inc. Appointments "Gold Reserve Inc. (TSE:GRZ; AMEX:GRZ) announced today the appointment of James H. Coleman as the Chairman of the Board of Directors and A. Douglas Belanger as President of the Corporation. Rockne J. Timm proposed these changes due to the growth the Company is experiencing and corporate governance purposes. Mr. Timm will continue in his role as Chief Executive Officer, direct the overall strategy of the Company and work closely with Mr. Coleman and Mr. Belanger."
BW   Wednesday, January 21

Caledonia Updates Recent Activities "Caledonia Mining Corporation ("Caledonia") of Toronto (OTCBB:CALVF; TSX:CAL) is pleased to report that the Zambian Minister of Mines and Minerals Development has approved an application from Caledonia Western Limited, on behalf of the Mulonga Plain Joint Venture, for a Large Scale Prospecting Licence over the Lukulu Area of Zambia's Western Province."
BW   Wednesday, January 21

S.African gold profits to be weighed down by rand "Earnings from South African gold producers next week are expected to remain under pressure from a strong local currency, although a recent reversal in the rand should brighten the outlook."
Reuters   Wednesday, January 21