IF YOU HOPE YOUR INVESTMENT WILL GLITTER, DON'T LOOK TO GOLD

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, January 15, 1993                   TAG: 9301150178
SECTION: BUSINESS                    PAGE: A-5   EDITION: METRO  
SOURCE: Associated Press
DATELINE: NEW YORK                                LENGTH: Medium
IF YOU HOPE YOUR INVESTMENT WILL GLITTER, DON'T LOOK TO GOLD
If King Midas were around today he might have to take out a loan.
Gold is selling near a seven-year low. Gold-based investments were some of the worst performers of 1992. The soft gold market, flush with huge selloffs by European and other central banks, does not appear set to improve anytime soon.
Few Western investors want the metal, which bears no interest and pays no dividends, at a time when paper investments such as stocks and bonds are providing far higher returns.
While demand is strong in parts of the world either plagued by high inflation or lacking sophisticated financial systems, gold's history as a major investment vehicle in North America and Europe may be just that - history.
"Gold has not performed well, and that's what you have to put on its tombstone," says Robert Brusca, chief financial economist at Nikko Securities Co. International. "In investment circles it's become the quintessential four-letter word."
The metal has lost its sheen even for speculators, who once reaped huge profits when it was flying high. Now, daily price swings exceeding $3 per ounce are considered large, said Al Posnick, a vice president and senior gold trader for MTB Banking Corp.
In the late 1970s and early 80s, skittish investors fled to gold as a hedge against double-digit inflation and worldwide instability. Gold also helped soak up abundant Middle East oil dollars.
But the factors that at one point drove gold to nearly $700 an ounce have largely evaporated. The era of low inflation has not been kind.
Since topping $500 an ounce after the 1987 stock market crash, gold prices have tumbled more than 30 percent. Gold ended last year down 6 percent. Prices this week have hovered around $327.50 an ounce, the lowest since 1985.
Few people are predicting a surge in the gold market in 1993, and the main debate among gold watchers is whether prices will stabilize or fall below $300 per ounce.
Much will depend on the activities of Western banks with huge gold reserves - more than 33,750 metric tons or 900 million ounces, says the International Monetary Fund. In 1992, banks dampened the market by dumping more than 520 metric tons, representing nearly a quarter of total Western production for the year.
"The sentiment from central banks is that they're tired of holding gold," says PaineWebber Inc. senior precious metals analyst Bernard Savaiko.
However, Savaiko and others caution that there could be some shocks to the market, particularly if increased federal spending in a weak economy arouses new fears of inflation.
"The only thing we can say with certainty is that it's going to be a turbulent and unpredictable year," he said.

by Bhavesh Jinadra by CNB