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    Iraqi Quagmire Could Push Gold Over $400/Oz In Near-Term

    By Jim Hawe
    Dow Jones Newswires
    Tuesday, September 9, 2003

    TOKYO (Dow Jones) -- Concerned that the mounting costs
    to rebuild Iraq will shackle the U.S economy for years to
    come, more investors are now hedging their portfolios with
    a touch of gold -- a trend that could push this traditional
    safe-haven asset over $400 an ounce before long, industry
    insiders said.

    John H. Mesrobian, president of Virginia-based
    Constantinople Advisors, sees a few different price movement
    scenarios developing on the gold market.

    "A close above $380 will point to a quick move to $400-plus.
    Or gold will consolidate first before moving higher. In both
    cases $400 is going to be breached -- and soon," he said.

    Spot gold was quoted at $377.50 a troy ounce Tuesday in
    Asia, up from $375.25/oz late Monday in New York.

    Mesrobian, whose firm advises investors on currencies,
    bonds, and commodities, said gold is being driven by
    improving fundamentals and moves on the currency markets,
    particularly the slumping U.S. dollar.

    "The dollar is toast," he said, predicting a further slide in

    Michael Kosares, the president of Denver-based bullion
    brokerage Centennial Precious Metals, has seen investors
    hedging their portfolios against potential losses in stocks
    and bonds, as well as against a further deterioration in the
    U.S. economy.

    "Gold investor concerns these days are more centered
    around some of the negative fallout from the war on terrorism
    such as rising deficits, bond market problems and deteriorating
    relations with key trading partners," said Kosares.

    Kosares agrees that gold stands to benefit from a further slide
    in the value of the greenback, especially if the dollar printing
    presses keep rolling to finance the war on terror, which now
    carries a $87 billion price tag.

    Kosares said most portfolio planners are adopting long-term
    strategies that account for any fallout from the efforts to
    rebuild Iraq, as well as the possibility of further terrorist
    acts at any time.

    So is there anything else investors should be adding to their
    portfolios other than gold?

    Mesrobian believes the euro, Swiss Franc, and Canadian
    dollar are all headed higher, and says copper deserves a
    second look.

    He also said shares in many junior mining companies offer
    nice profit potential.

    Conversely, he warns against too much exposure to the
    U.S. dollar and stock markets.

    "The bottom line is that the U.S. dollar and markets will
    see bottoms in 2004 and it is going to be very nasty," he

    By Dominic Hall
    The Bullion Desk
    Tuesday, September 9, 2003

    As gold toys with the $380 level at mid-morning in London,
    a broad consensus appears to be forming among market
    professionals for a move well beyond recent trading highs.

    At 11:40 BST spot gold was quoted at $379.80/380.40 a
    troy ounce, while the euro was quoted at $1.1126/29.

    A source of constant nagging concern among gold market
    pundits, the record speculative long position in New York
    gold futures appears to have been grudgingly accepted
    as sustainable in the short to medium term by many
    observers overnight. Fresh money has continued to flow
    into the precious metal as investors sought to diversify
    their portfolios, forcing a rethink of the markets' long-held
    reference points for judging the scale of the speculative

    UBS Warburg in a report this morning added: "An
    all-time-high in spec longs does not necessarily point
    to an immediate sell-off in gold."

    Meanwhile, gold gained additional support from a strong
    euro as forex market participants were careful about going
    overly long on the dollar amid nervousness ahead of the
    September 11 anniversary.

    Regional reports also pointed to continued healthy demand:
    "We're seeing buying from the Japanese, but also locally,"
    said a Hong Kong-based trader who believes gold will break
    overhead resistance at $379 that has thus far held firm.
    "With all the safe haven interest lately, I'm targeting $380,
    maybe $385, by the end of the week," the trader said

    Similarly, ABN AMRO said in a client note that; "We will
    probably see more support ahead of Sept. 11 this week,
    and a break of $379 will see gold heading toward $390
    reasonably smartly."

    How long this mood of optimism will last all depends on
    the continuing influx of new money. In an interview with
    Mineweb, John Hathaway, manager of the $500 million
    Tocqueville Gold Fund said of the current rally, It's very
    early days yet." He drew particular attention to the new
    class of gold securities, such as Gold Bullion Limited,
    which trades on the Australian Stock Exchange, and the
    eagerly awaited U.K. and U.S. versions: "They're going
    to draw money, physical money, into the gold market in
    a way that nobody can imagine,"

    In a report this morning, Standard Bank cited support
    levels of $375, $371 and $369, with key overhead
    resistance at $381.00.

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