II. Answer the following questions:

1. What are the traditional arguments for buying commodities?

2. Do a few also cling to the argument that commodities are a hedge against inflation?

3. Does China - the world's sixth largest economy, according to Merrill Lynch - now account for between a fifth and a third of the world's consumption of alumina, iron ore, zinc, copper and stainless steel?

4. Are China's exports exceeded only by those from three nations: the US, Germany and Japan?

5. May China be pouring money into expanding production and capacity?

6. Will the rising costs of bringing on new capacity in many metal markets, as a result of environmental pressure and the long lead times between discovery and production, keep the lid on supply?

III. Complete the following lines with the words from the text:

1. To hold on, to adhere to, to stick to...

2. Fad, mania, obsession...

3. Keen, enthusiastic, ardent...

4. Insatiable, unquenchable, compulsive...

5. Restriction, control, limitation...

6. Connection, link, interaction...

7. Plummet, fall, decrease...

IV. Match the words from the text with their definitions.

1) endemic	a) to advertise or make known
2) tout	b) regularly found and common among a particular group or in a particular area
3) clamor	c) become interested in/connected to
4) cite	d) having the stated number of parts
5) fold	e) likely to change suddenly and unexpectedly
6) latch onto	f) to make a loud complaint or demand
7) volatile	g) to praise/ to mention
8) inventories	h) something that is exacting, oppressive, or difficult to bear
9) burden	i) a forced unnatural manner; inhibition
10) constraint	j ) a detailed list of articles, goods, property, etc

V. Read the text and point out the main ideas which are discussed in it. Text II. Gold Market

Gold's great virtues of malleability, ductility, reflectivity, resistance to corrosion and unparalleled ability as a thermal and electrical conductor mean it is used in a wide variety of industrial applications consuming close to 300 tonnes annually.

The prime use is in electronics. The production of plating salts accounts for 70% of the more than 150 tones of gold used annually in electronics. Gold consumption has been maintained because of the myriad new electronic applications.

Japan is the major fabricator of electronics products in the western world, accounting for over 45% of gold consumption, followed by the United States with nearly 30%. The United Kingdom and Germany are the only other significant contributors at about 6 and 7% respectively although South Korea is growing.

Dental gold is the second important sector. Gold has been used in dentistry for almost 3000 years. The Etruscans in the 7th century BC used gold wire to fix substitute teeth when their own were lost. In the 16th century an early dental textbook recommended gold leaf for filling cavities.

Gold's malleability and resistance to corrosion render it eminently suitable for dental use, although its softness means that it must be alloyed to retard wear. Japan is the leading dental gold fabricator, accounting for roughly 28% of the market, followed by Germany and the United States. There is significant unrecorded use, however, in Asia and Latin America where it is not unknown for dentists to melt down gold coin to make their own alloy.

Other applications for gold include decorative plating of costume jewellery, watchcases, pens and pencils, spectacle frames and bathroom fittings. Gold-based points are used for decoration of china and glass. Demand for gold from this sector is around 90 tonnes per year. The gold is used in various forms, such as rolled gold and gold fill, although both of these are under competition from new techniques. On the other hand, the use of gold electroplating in watchcases and similar products is increasing.

Visually, the most spectacular use of decorative gold is gold leaf which has been used for centuries to adorn the domes or ceilings of public buildings, because its resistance to corrosion means it will outlast paint by many years. Gold's ability to reflect heat in summer and help retain it in winter has also led to the use of glass coated with a thin film of gold in several modern buildings, especially in North America; one ounce of gold covers typically one thousand square feet of glass. This reflective glass can cut cooling and heating costs by 40%.

The major consumption of decorative gold is in the United States and Japan. All told, the industrial uses of gold provide a very steady element in gold demand, requiring more than the equivalent of all Australian gold production annually.

2003 was a particularly difficult period for the South African gold mining industry as the combined effect of the stronger rand, the lower rand gold price and cost pressures eroded margins and resulted in a number of shafts and mines becoming loss making. Given the financial pressures and the exhaustion of certain older shafts, South African gold production declined in 2003 by 4.7% to 375.8 tons.

For Chamber member gold mines the 6.8% improvement in average grade could not offset the 16.2% decline in tons of ore milled and hence production fell by 10.4% to 311.3 tons. The gold sector remained the mining industry’s largest sector by value and South Africa’s largest export contributor. Total gold sales were R33.1 billion in 2003 – a decline of 20% on 2002.

Despite the 17.3% increase in the US dollar gold price to US$364/oz in 2003, the 28.2% appreciation in the rand exchange rate resulted in the rand gold price falling 15.8% to R87 952/kg.

The key reason behind the rise in the US dollar gold price in 2003 was the continued dehedging by producers and a surge in investment demand. The change in US dollar prices was partly reflective of the weaker US dollar against the Euro with the gold price in Euro relatively unchanged in 2003. Other factors providing a supportive environment for gold include the global commodity boom, producer dehedging and geopolitical issues, which assisted investment demand.

According to GFMS the total supply of gold rose by 4.3% to 4142 tons in 2003 on the back of a marginal 0.1% increase in global gold production and slightly higher levels of central bank sales and old gold scrap. New mine supply accounted for 63% of total supply while scrap and central banks sales accounted for 22.7% and 14.6% respectively. The extension of the European Central Bank gold agreement from 2004 to 2009, which caps sales to 500 tons/year will continue to provide certainty to this aspect of supply. Given the consolidation of the global mining industry during the 1990s and the decline in exploration expenditures for gold in the late 1990s and early 2000s, the likelihood of increases in new mine supply in the short-term is moot.

However, the pick-up in global exploration in 2004 will probably feed through into new production in the emerging producer sector in the mediumterm. A marginal increase in other fabrication demand and a surge in investment demand by 391% to 600 tons offset the third year of consecutive decline in demand for jewellery fabrication of 5.5% to 2533 tons. The increase in the number of patents registered and increased research for industrial applications for gold in areas such as nano-technology and catalytic converters bodes well for future demand