Stephen Roach -- Sharefin, 17:53:19 02/11/02 Mon Global: When the Tide Goes Out The operative view in financial markets is that this is just another cycle. If that's the case, then there's little reason to be seriously dismayed over the angst now unfolding with respect to credit and earnings quality. After all, so the logic goes, every cycle goes to excess in one way or another. That's what recessions are all about -- the rocks that get uncovered when the proverbial tide goes out. History tells us that such shakeouts actually invariably lead to an over-shooting in financial markets. For disciplined investors, those are the excesses that invariably set the stage for great buying opportunities. Is that the case this time? The risk is, it's not. For starters, I continue to harbor the belief that this is not just another business cycle. I remain convinced that the US economy is only in the early stages of what could turn out to be a protracted post-asset-bubble shakeout. America's current recession is, first and foremost, about purging of excesses on the supply side of the macro equation -- the overhang of capital and labor that was put in place as the bubble inflated in the late 1990s. The downturn had little to do with the demand-side adjustments that are typical by-products of a Fed-inspired anti-inflation battle. If that's the case, the classic business cycle model offers little insight into what now lies ahead. It then follows that a US-dependent global economy will have to face the repercussions of America's post-bubble adjustments for years to come. Therein lies the biggest risk. In the post-bubble era, the emergence of systemic risks could well be the most powerful force shaping the global economy. Sustained recovery won't be easy in such a climate. Systemic risks have a way of feeding on one another -- perpetuating the bottoming process, keeping the economy vulnerable, and inhibiting the subsequent recovery. In that context, I must confess to being struck by the preponderance of systemic risks that have emerged in this downturn. Yet, for the most part, these risks are being dismissed in the markets as event-specific, rather than symptomatic of broader underlying problems. For example, the aftershocks of this cycle have now drawn both income and balance-sheet integrity into serious question. Yet income risk is still seen largely in the markets largely as a "credit event" -- a post-Enron shakeout with limited contagion into the broader corporate community. Maybe I'm naïve, but I must confess to being amazed at how little we in the macro community know about the possibility of more Enrons. The same is true of the markets. Our credit research group notes that "spread dispersion" is currently near an all-time high, with the latest outbreak of concerns more Tyco-driven than anything else. By contrast, AAA corporate spreads are little different than they were in early 1999; this tiering finds most utilities, consumer products, and even banks still outperforming the so-called troubled names. Yet, at the same time, there can be no mistaking the broader excesses of corporate leverage in the system; corporate debt currently stands at a record 65% of US GDP. While that doesn't guarantee that there will be more Enrons to come, it does speak of a business culture replete with risk -- one that is ill-prepared to handle a broader contagion that would raise borrowing costs and/or result in a significant restatement of the underlying earnings stream that is required to service such obligations. The same can be said of household sector leverage in the United States. Total consumer indebtedness currently stands at a record 73% of GDP. This, in my view, is an unmistakable legacy of the asset bubble. First stocks, now homes, American households have been unusually aggressive in borrowing to support lifestyles. In doing so, of course, they have depleted traditional saving balances and relied increasingly on readily available credit to extract newfound income from inflated asset values. The overhang of excess debt, however, remains a troubling aspect of the post-bubble hangover. Should income continue to weaken, or interest rates suddenly increase, it would be exceedingly difficult for the household sector at large to keep servicing this debt. The problem, of course, would be even more acute if the US were ever to experience a whiff of deflation. The debt-deflation trap is one of the most intractable dilemmas for any economy. Just ask Japan. In the end, excess leverage is the ultimate breeding ground of systemic risk. It leaves economies exposed to the diffusion of risk that often follows from seemingly isolated credit events. For the moment, the markets have been successful at segmenting the fallout. Should that change in the face of further balance-sheet and/or income integrity revelations, the stage is set for a far more serious macro shakeout. Which brings the final dimension of America's systemic risks into consideration -- a looming balance-of-payments financing crisis. Not only are US businesses and households overextended, but the United States has never been more dependent on foreign capital to finance its economic growth. Unfortunately, that dependence is very much like a drug. The more you deny it's a problem, the worse the problem becomes. After hitting a cycle "low" of 4% of GDP in 2002, we expect the current-account deficit to rise to a record 6% in 2003 -- an external financing gap that can only be filled if America attracts nearly $2 billion of foreign capital a day. Under the specter of a seemingly ever-rising dollar, most believe that the daisy chain of ever-mounting external indebtedness can exist in perpetuity. Yet, in the end, it obviously cannot. If the world stays locked in its current US-led growth dynamic, America's current account deficit will only widen further -- pointing to the absurd endgame of foreign ownership of all the productive assets in the United States. That obviously will not happen. Our task is to figure out how this conundrum will be resolved. I have argued previously that two possibilities come to mind -- a crash in the dollar and/or a realignment of the mix of global growth away from the US and toward the rest of the world (see my 30 January dispatch, "Global Decoupling"). Whether it's one or the other -- or a combination of both -- the broader macro implications are clear: A weaker dollar probably spells higher US interest rates, thereby exacerbating the debt-servicing associated with excess leverage. Conversely, if the current-account adjustment were brought about by a slowing of domestic consumption, the resulting income shortfall would also prove problematic for America's debt-servicing capacity. In short, America's looming current-account adjustment underscores the perils of further systemic risks in the years ahead. The United States hardly has the only claim on systemic risk in the world economy. Japan is obviously at the top of the heap, with its dysfunctional banking system, the perpetuation of "zombie-like" businesses, and risk of yen depreciation. For emerging markets, the fault-line currently lies with Argentina. But the lack of post-crisis reforms in East Asia since 1997-98, in conjunction with only disappointing progress on reforming the international financial architecture, is hardly reason to breathe easy in this chronically crisis-prone segment of the world economy. While I don't want to minimize the potential problems of systemic risk elsewhere in the world, I continue to believe that those in the United States are worthy of special attention. As long as the world is lacking in an alternative growth engine, the character of any recovery in the US economy could well be decisive in determining the sustainability of recovery in the broader global economy. On that critical score, it pays to be wary; it may well be premature to celebrate the arrival of recovery in the world at large. That's because the equity bubble of the late 1990s ended up infecting the real side of the US economy. Consumers levered up their balance sheets to extract incremental purchasing power from what was perceived to be a new and permanent source of wealth. Businesses followed the same script, with the excesses of debt going hand in hand with the rapidly emerging overhang of installed capacity. And foreign investors wanted a piece of the action, more than willing to serve as a permanent source of external financing to a nation that was running up a massive current-account deficit -- in effect, living beyond its means. In a post-bubble US economy, this movie must now run in reverse. As the tide now recedes, the unmasking of systemic risks holds the key to a sustainable recovery in the global economy at large. London morning gold news -- Donald, 05:31:21 02/11/02 Mon click here Gold -- Sharefin, 00:33:04 02/11/02 Mon US, gold to fire markets "The recovery in gold reflects several factors including gold's status as a safe haven amid the current bout of equity market uncertainly," said AMP Henderson Global Investors senior Australian economist Simon Doyle. "Investors are also reassessing gold's prospects against very low interest rates and returns from other assets that are likely to be modest over the medium term." Gold -- Sharefin, 00:31:08 02/11/02 Mon Gold shares: shining future beckons Local gold shares are set to continue their merry rise this week after the gold price consolidated its move beyond $US300 an ounce in overseas markets on the weekend, with expectations of reduced producer selling and Enron-inspired financial concerns underpinning the gains. Gold -- Sharefin, 00:29:56 02/11/02 Mon INDIA: Best time to sell gold BOMBAY, 11 February - This week, Indian investors have a dream run not only on the Indian bourses but also on the Indian bullion markets. While Indian bullion bankers were sitting pretty with not a single sale having taken place during the past week, the Indian investors made a quick buck. Prices of gold on Friday were at Rs.4,970 per 10 gram (22 carat) in the Bombay market, while it was Rs.4,980 and Rs.4,720 respectively in Kolkata and Chennai. In Delhi, the prices zoomed to cross a five-year record level at Rs.5,080 per 10 gram as against Rs.5,050 on Jan. 3, 1997. Gold prices were quoted at Rs.58,000 per bar in Ahmedabad and there were no buyers at that level. The weakness in the Indian rupee against the dollar, down 1 percent since the start of 2002, also has made the metal costly in the domestic market, which depends largely on imports. Traders attributed the sharp gain in prices to concern from Japan's general public over safety of the country's banks, and from stock investors over weak equity performance. International gold market may have been buoyed by South African gold producer Gold Fields' announcement that its earnings had tripled in the past quarter due to a weaker rand and an 11 percent increase in gold production. This recent seesaw movement in the yellow metal prices has unnerved Indian buyers and they are now just content to trade scrap metal or recycled gold ornaments. This increase in prices has led to a standstill in gold imports and trade in India, the largest gold importer in the world. While the family-run jewelers are hugely affected by the rise in prices, the branded jewelry market is not worried. Indians had begun buying at around $278-$280 per troy ounce. But the jump in prices which is now at $297.75 to $298.75 a troy ounce, has completely halted the business. The current scenario in the Indian gold markets is that there has been a huge deluge to sell off but on the other hand, there has been no demand at all. There has been a complete halt on the buying, given the current rates. Indians have become very cautious, it's an unfamiliar price band for them. It will take some time for both importers and retail buyers to reconcile. Indians are very price sensitive and now traders are waiting for some indication on the level at which prices would sustain. Imports of the metal into Ahmedabad, India's leading bullion market, has come to naught compared with about 4,000 bars (of 116.64 gm) imported daily about a week ago. India's annual gold demand is around 850 tons with 600-650 tons met through imports. India imported 359.3 tons of gold in the first half of 2001, up from 267.2 tons in the same period of the previous year, according to the World Gold Council. Gold demand in the country rose to 490.4 tons from 417.8 tons in the same period. The gap between demand and imports are met by recycled and smuggled gold. So what happens in the coming days? Analysts across the globe opine that global prices may be headed lower but are unlikely to return to $270 to $275 per ounce, a level attractive for Indian importers. They say that the bullion prices are moving to a new comfort level of $279-$285 per ounce. Pertaining to the Indian markets, traders agree that the buying has definitely come down but since the marriage season is on, people would have to buy. However, the quantity of purchases will reduce. This current phase of high prices was labeled as a medium-term effect‚ and was likely to continue till July-August. There is no doubt that the Indian bullion market is bullish and traders are expecting further gains in the coming days. It is expected that in the coming days, the prices of gold could easily move $10 in a day right now, and could trade back to $295 or go up to $315 a troy ounce. So what does an investor holding a lot of gold do right now? The writing on the wall is quite loud and clear - sell now, sell all that you have! Infact JP Morgan's Nick Moore has gone on record stating that this was the best time to take profits in gold, look for retracement, buy the dips. “With a wobbly dollar, wobbly equity markets, toxic corporate balance sheets and crumbling banking regimes ... holding gold is a great way to preserve capital,” says Moore. In the current scenario, gold is the anti-currency, and when there are concerns with the financial system, gold tends to go up, that has always been the historical trend. This is the time to bring out all our shining yellow metal and sell it to make a killing in the markets. Gold is right now the safest investment haven and you should make hay while the sun shines!! Platinum -- Sharefin, 00:27:43 02/11/02 Mon Volatile equity markets seen driving gold price Platinum -- Sharefin, 00:25:15 02/11/02 Mon Aquarius Platinum confirms takeover talks with Placer terminated Gold -- Sharefin, 00:23:59 02/11/02 Mon Banking fears trigger gold rush in Japan Gold -- Sharefin, 00:18:13 02/11/02 Mon UK counts cost of Brown's gold sales THE bill for Chancellor Gordon Brown's decision to sell more than half of Britain's gold reserves has hit £250m as the bullion price rises. It closed at over $305 an ounce in London on Friday, its highest for two years. The Chancellor has sold 375 tons of the metal - more than 12m ounces - at an average price at least $30 (£21) an ounce lower than this. Had he held on to the gold, it would be worth over £250m more today. That is before losses made on converting the proceeds into euros - previously reckoned at over £50m. Brown announced his plan in 1999 and the intention was to invest 40% of the proceeds in euros, 40% in dollars and 20% in yen. Dollar holdings have increased in value but the euro and yen have fallen sharply. Neither Brown nor his officials can have foreseen the new interest in gold after Enron and other accounting related scandals. A UK fund manager said last week: 'Gold is nice and shiny and above all, it doesn't have to be audited'. The Treasury and the Bank of England have scaled down the sale plan slightly. Initially 415 tons were to be sold of a total of 715 tons held in reserves. That has been reduced to 395 tons. All but 20 tons of this has been auctioned. The final auction is due on 5 March. The best price raised at the auctions was $293.50 an ounce but some gold was sold as low as $255.75. Brown was criticised for depressing the price by announcing his sale plan in advance. Asked about the £250m loss, the Treasury said: 'Obviously there have been movements in the markets. This is about realigning the portfolio for the benefit of the long term.' Gold -- Sharefin, 00:03:23 02/11/02 Mon Gold steals spotlight from state of the nation address as investors think global President Thabo Mbeki's state of the nation address was treated as a "non-event" on the local stock market on Friday, with investors opting to focus on gold as a buffer against more bad news expected from the US and the global economy. Paul Marais, senior analyst at Barnard Jacobs Mellet, said the market was dominated by a sectoral rotation which saw investors buying precious metals and selling base metals, on expectations of a more pronounced dip in the US markets and a concurrent depreciation in the value of the dollar.  Gold -- Sharefin, 00:01:58 02/11/02 Mon Jumpy Japanese join gold rush With uncertainty in economy and banks, investors seek security in bullion JAPAN is experiencing a gold rush as fears the banking sector may collapse drive ordinary Japanese to invest their savings in bullion, experts say. Nori Mochihara, a trader at Mitsubushi Materials, said: "Normally people would come to our shop asking for 5kg of gold. Now they produce ¥10m or ¥20m and ask: How much gold can I buy with this ?" Osamu Ikeda, spokesman for the president of gold and platinum company Tanaka Kikinzoku Kogyo, says his company's customers and sales have doubled since July-August. There were 10 times more visitors than usual in the days immediately after the September 11 terrorist attacks, with one couple loading 30kg-to-40kg of gold into their car, he remembered. "Gold's popularity has always increased in times of social or financial insecurity, or during a war," Ikeda said, pointing at gold crazes after the Soviet army invaded Afghanistan in 1979, or the great Kobe earthquake of 1995. Images of golden nuggets gleaming from inside safes found in the ruins of houses destroyed by the quake, remain ingrained on people's minds, Ikeda said. But this latest gold fetish was not triggered by a natural disaster. Incessant, "sensational" coverage by the media of Japan's deepening recession and speculation over an imminent collapse of banks, crippled by a mountain of bad loans, has sent people exchanging money for gold, he said. "If you have a plunging stock market, weakening banks and no security blanket from the government, you would be worried of losing your money," he said. "In the Far East gold proved its worth in the currency crisis of 1998." Gold -- Sharefin, 23:57:03 02/10/02 Sun Gold is looking like a haven again World markets seem to be stuck in a time warp as the "traditional wisdom" surrounding gold, the dollar and the precious metals haven status makes a return to the markets mind. Gold surged above $300 an ounce this week, and traditional wisdom suggests that the yellow metal has regained its haven status as doubts about US accounting standards and the dollar's strength abound.  Gold -- Sharefin, 23:55:17 02/10/02 Sun Golden Eagle secure financing for development of Bolivian Gold Project Golden Eagle International, Inc. (OTCBB:MYNG - news) announced today that it has received an investment of $1.3 million to build the first phase of its recovery plant and complete the interior infrastructure of its gold mine in the Tipuani Gold Mining District of Bolivia. Golden Eagle's President, Terry C. Turner, said, ``Turn the page on Golden Eagle, because this is a brand new chapter beginning for us today. We have placed orders for significant pieces of equipment for our 1,000 ton-per-day initial plant. However, our ultimate goal is to expand up to our projected 11,000 ton-per-day operation on our Tipuani Valley gold deposit, to take advantage of higher volume and economies of scale to lower our estimated cost of producing gold to below $75 per ounce. That expansion will depend upon further financing, which we project, but cannot guarantee, will come in during 2002. This first phase is exciting for us because it opens the door for our development of a deposit that has produced an estimated 32 million ounces of gold in its known 500 year history.'' Lenny's Daily Commentary -- Sharefin, 23:17:37 02/10/02 Sun Prospector Asset Mgmt Last week was certainly a week to remember for long suffering bulls in the precious metals. Our highly exuberant and bullish posture was well rewarded as gold convincingly traded through the $300 price level, for only the fourth time in as many years, and rang up a gain of about $17.50 for the week of February 1st through the 8th. Silver, which truly did not have a life of its own this week and simply traded in the shadow of gold, was up over 3% or about 14 cents. In the last few weeks, this commentary had been recommending long positions in platinum, and traders who follow our recommendations were rewarded with a rally of $26 in prices last week. All in all, I still look for the gold and silver markets to go higher, although I do not foresee a runaway market due to some internal pressures. Some of the proprietary technical indicators that I follow show these two metals to be dramatically overbought at present. But 25+ years of trading experience has taught me that such signals are simply tools and should not be followed blindly. Such cautionary signals will, in my opinion, only dampen the current rally, and will not end it. All week long, gold and silver were very supported in the market, with every dip in prices being bought. If forced to predict the coming week, I would guess that the gold market will enter into some manner of consolidation at current levels or slightly higher, with a strong bias to the upside. Silver will most probably follow. Market analysts cite many reasons for the current rally, and each individual ascribes various ratios of importance to each reason. I would believe that the most important factor is now the growing reluctance of gold producers to forward sell their production. This change in the fundamentals of supply of demand is the reduction of hundreds of tons of gold per annum hitting the current marketplace. We also have the growing mistrust of investors with the accounting standards and public disclosures of public companies, which has been highlighted by the Enron debacle. Another well publicized factor has been the recent surge of buying of the precious metals by Japanese investors, who fearful of their economy, the value of their local currency, and imminent changes in deposit insurance coverage in their nation, has just begun to take a shine to the inherent stability of gold and platinum. While the actual purchases of investment related by the Japanese are still rather meager in terms of absolute size, the trend is accelerating. In the first half of last year, they purchased about 3.5 tons per month. In the second half of the year, this number was pushed to a bit over 7 tons of gold. And in January, the last month for which estimates are available, about 10 tons were taken down. With $11 Trillion USD in savings, the market rightly anticipates more of the same. Please note that gold, priced in Japanese Yen, has risen about 25% in the past year, beaconing the way for further interest. With the imminent change in deposit insurance coverage for bank accounts, the market is looking for a massive rise in investment demand. Such demand is already being seen, to a great extent, by volumes in gold trading on Tocom, which has seen records set day after day for trading. This highlights of the recurring trading themes of this commentary. It is not the facts that determine the value of a commodity, but the perception of those facts. The psychology of a market has been, and will most probably always be, the driving factor behind price movement. And, speaking of psychology and perceptions of the gold market, conditions are changing quickly in the USA. Gold mining stocks are mentioned repeatedly on CNN, the current rallies in gold are news events, and the beginning of resurgence in interest in this commodity is now taking place. Please remember that many "Western" investors tend to be "momentum driven", which is to say that they disdain buying "value" in a stock or commodity, but would rather buy into rallies, hoping to buy high to sell even higher. And, gains in those funds which specialize in the precious metals, have gained 46% over the last year versus a 17% loss in the average diversified US equity fund. Gold may undergo a cataclysmic transformation in investor psychology, from the ugly duckling to the absolute belle of the ball. While the above verbiage is unabashedly bullish, there are, of course, many cautions to this market. "Value" investors, such as consumers in India and others have turned from buyers of gold to sellers. From talk in the trade, imports of gold into India have just about totally ceased, as those buyers are unwilling to chase this rally. During good times, India consumes about 70-80 tons of gold a month, a quite sizable amount in this market. Another noted bearish sign for the gold market has been noted, by some analysts, as the continuing decline in lease rates during this recent rally in gold. I have not been overly concerned as to this fact as I had believed that liquidity would remain excellent as many gold producers announced that they would be delivering into their forward sales this year, adding physical gold to the marketplace. And, perhaps, it could be that current level of low lease rates depicts another, completely opposite, signal. It is possible that the demand for borrowed gold is declining as short positions in the market become more and more unattractive. Please remember that in many markets, an investor has to borrow gold, then sell it...hoping to buy it cheaper, in order to go short. If fewer investors in those markets wish to go short, demand for leased gold declines. However, I do see the lease rate environment in gold changing quite rapidly in the coming weeks and months, which will create a superb trading opportunity. Just last week, the calendar spread (long June 2002 gold/short June 2003 gold) narrowed sharply as 1 year lease rates in gold jumped 25 basis points, or about 20%. Clients who followed our earlier recommendations for this spread benefited from this move. And, I look for lease rates to now begin to climb higher, and perhaps a substantial move higher. If this occurs, and I think it will, it will substantially reinforce the current opinions of the bull market in gold. I strongly urge clients of the firm to call for discussions of the risk/reward profile of this trade. One of the reasons that I believe that lease rates in gold will go higher is due to the positions held by the bullion banks for producers. Please remember that many producers have sold call options in gold to these bullion banks. As gold goes higher, these bullion banks get longer and longer gold (due to the need to delta hedge their risks) and they will be sellers in the spot market as prices rise. In order to sell in the spot market and make delivery, they will need to borrow the gold, thus placing significant upward pressure on the price of leases in the gold market. My parents instructed me never to insult a lady, but the "Old Lady of Threadneedle Street", the Bank of England, deserves it. As we reach their final auction of gold reserves shortly, it is best to examine their track record and market timing. With gold at $305 per ounce, had they just kept the gold, instead of auctioning it over the past several years, the value of such reserves would be 350 MILLION POUNDS (close to $500 Million USD) higher than the actual value received. In other words, they sold at the bottom of the market. Gold now makes up just about 7.5% of total British reserves compared with 55% for the USA, 46% in France, and 37% in Germany. In absolute terms, Britain now has smaller gold reserves than Venezuela, India, and Taiwan. Gold -- Sharefin, 22:59:11 02/10/02 Sun Has Gold Regained Its Long-Term Luster? Has Gold Regained Its Long-Term Luster? It took a beating in the '90s, but a host of uncertainties has sent prices soaring as anxious investors seek refuge in the precious metal Printer-Friendly Version E-Mail This Story Economic Insight Archive • Find More Stories Like This Is Tyco Looking at a Fire Sale? Warning: A Headless FDA Is Dangerous Don't Bury Tyco Just Yet Enron Shareholder Suits? Not So Fast Has Gold Regained Its Long-Term Luster? Tricon's Fast-Food Smorgasbord Decoding GE Capital Still Some Catches on the Net Tom Ridge's Bureaucratic Battlefield Running the Fuel-Cell Marathon Taiwan's Tech Tea Leaves • More Headlines The price of gold has been on a tear recently, surging $25, to $305 per ounce, as investors seek a safe haven from a variety of worries, including Argentina's debt default, Japan's shaky banking system, and Enron-fueled stock market woes in the U.S. Especially now, in the aftermath of the Enron disaster, there's an elegant simplicity to investing in gold. You don't need a congressional hearing to decipher its balance sheet or income statement. It's worth what the market says it's worth. Gold is by nature a cyclical asset, though its appeal as a hedge against inflation had dimmed in the 90's era of waning inflationary pressure. During that period, the market price of the precious metal has been in a relentless downdraft, falling from a high of over $462 per ounce in 1990 to a low of $251.70 on August 18, 1999. But gold's long losing streak may finally be at an end. Along with the gradual recovery in the U.S. economy, a combination of aggressive monetary and fiscal forces may set the stage for higher inflation ahead -- boosting gold's appeal. The Federal Reserve's 11 rate cuts since January, 2001, have pumped massive liquidity into the U.S. financial system. And President Bush's fiscal 2003 budget signals an inevitable return to deficit spending, though the shelved U.S. stimulus bill and the global lack of pricing power should help temper gains ahead. A PREMIUM ON SAFETY. Add to this the increasing nervousness about the health of world economies and banking systems, and nervous investors could once again pile into the perceived safety of gold. The list of concerns that could drive gold's price even higher is daunting. Corporate defaults reached record levels in 2001, and, despite signs of an economic recovery, are on pace to break that mark in 2002. Argentina defaulted on its sovereign debt and its banking system has plunged into chaos. Japan is in the grip of deflation, and its banking system is coming under increasing pressure. (Indeed, recent press reports indicate that worried Japanese investors have been buying gold bars.) The latest worry: the viral spread of accounting irregularities among previously high-growth energy and telecommunications companies. These events can only enhance gold's safety premium. Sure, gold investors have been burned before -- the price has run up sporadically in recent years, thanks to short squeezes, only to drift back down again -- and recent gains may be just another flash in the pan. But some fundamental signs suggest that the metal's latest comeback could prove more durable. The past decade was brutal for gold bugs. In the late '90s, even central banks, spurred by budget surpluses and monetary union in Europe, opted to pare down their stockpiles -- among the biggest in the world -- and lend out reserves for a nominal return of 1% to 2%. And gold producers themselves seemed to put little apparent faith in the market's value of their stock-in-trade. They have been utilizing vast and complicated forward-hedging schemes -- through the derivative markets -- to lock in a price for their output. In fact, as demand exceeded their production on occasion, they found themselves caught short -- needing to purchase some of the gold required to satisfy their hedges. Now those produces may be in line for a reversal of fortune. ECONOMIC MIRROR. Buy-and-hold gold investors are ready. They've always been a hardy breed, willing to forego interest or dividends -- and incur storage costs -- for the perceived benefit of security and the possibility of price appreciation. Gold-mining stocks, which hit record highs recently, are probably a more efficient way of investing in the metal (as opposed to, say, storing several thousand ounces in your basement). But they can be subject to company-specific country or political risk -- with mining giant Freeport McMoRan's recent misadventures in Indonesia being the most recent example. To be sure, gold is at best only a loose proxy for the economic cycle and market instability. And the precious metal, the classic insider's asset, is costly to hold and subject to impulsive, volatile price moves -- and supply-demand dynamics that are often mystifying, even to market veterans. So while a new golden age may indeed be dawning for the metal, investors lured by its recent ascendancy would do well to remember those caveats. Gold -- Sharefin, 22:53:23 02/10/02 Sun Gold rally likely to last for sometime, say analysts Gold's current rally is likely to last for some time yet as it is based on structural changes within the market, according to analysts. They said the current gains might appear to have been triggered by a cutback on hedging positions by gold producers and by strong demand in Japan, but these were contributing factors at best. “We expect that this rally may prove to be less of a temporary blip and more of a trend,'' Howard Patten, analyst at Barclays Capital in London said. Gold -- Sharefin, 22:51:07 02/10/02 Sun Riding The Bull Market When does the "bell ring"? The bad news is that no one knows. The good news is that a twenty-year bear market in gold is unlikely to be followed by simply a 2-month, 14-month, or even 24-month bull market (depending on ones' interpretation we have been in a gold bull for roughly 2 months or 14 months). In November of 2000, I told some of my confidantes to expect the gold market to outperform the broader market for five years so far so good. It is entirely possible that "the bell will not ring" until the precious metals are a daily topic of conversation in not only the media, but also in the conversations of the majority in their everyday life. If this is so, the golden bull is indeed in its' infancy.  Hong Kong has 38th consecutive month of deflation -- Donald, 13:53:22 02/10/02 Sun Real estate prices have fallen 60% since 1997 Japanese plan to fight deflation by govt. purchase of stocks; restricting short sellers -- Donald, 08:51:51 02/10/02 Sun click here Banking experts shocked to learn Irish bank with $750m loss had no internal auditor. -- Donald, 08:33:41 02/10/02 Sun click here Robert Chapman - Gold Commentary -- Sharefin, 06:23:10 02/10/02 Sun Gold DEMAND is going UP. Gold SUPPLY is going DOWN: SANTIAGO, Chile, Feb 1 (Reuters) - Canadian miner Placer Dome Inc. (PDG) said on Friday it does not plan to begin construction of its Cerro Casale gold project in northern Chile, even after obtaining approval from local environmental authorities, because of low gold prices. Chile's state environmental agency authorized on Thursday the $1.43 billion project, which would produce 975,000 ounces of gold annually. "We are not going to develop the mine until gold prices improve," Felipe Ruiz, Placer Dome's regional director of public affairs, told Reuters. "Three-hundred-fifty dollars per ounce is the gold price we are waiting for. There has to be a trend indicating that prices are heading toward that level and that is not happening," Ruiz said. Who is a dwarf? Enron is a dwarf. That is compared to what's coming at JP Morgan Chase. They only seem to have lost $2.6 billion with Enron. We ask what is there derivative exposure? Morgan does have $30 trillion in derivatives. Morgan is the leader of the gold manipulation cartel. They have many gold loans outstanding and they are mega short. It now comes out, as we guessed, that Morgan as reported by the Comptroller of the Currency, as of 9/10/01, held 80% of the gold derivatives the COC reported. It looks like Morgan could have been dumping short gold derivative positions on Enron to lower its exposure and this explains the mega loans Morgan made to Enron as it was going under. This also means Morgan and probably Citigroup are left to defend the gold manipulation position. They don't have that kind of strength left, which means anything can happen. The big question is will the central banks throw their remaining gold reserves at the market? If we had to guess we'd say yes, but that would only be temporary. The game is on, be long. This is only the beginning of a wild ride. Incidentally, if Morgan unloaded a large portion of their derivatives on Enron and Enron is defunct, that means all their counter-parties either lose their money of their gold, which has already been sold into the market. This is explosive, be a buyer. If Enron did anything it made it unfashionable to hedge or be a heavy derivative player. This means current buying in the $280's could be hedgers covering their positions and even if it isn't, there has to be pressure on Barrick, Placer Dome, Anglogold and the Australian managements to at least cutback, if not wipe out hedge positions. We still believe Enron was leasing gold and silver; they were too close to JP Morgan to not have done so. We'll find out sooner or later. Gold, silver and their shares charts look super. Be long, long, long. The shorts and hedgers have to be shivering in their boots as major gold and silver buying persists and the annual shortfall of production to demand maintains at 1700 tons annually. The key of course is JP Morgan. Their exposure on gold is colossal, but as congress digs into Enron, Morgan will get deeper and deeper into the financial quagmire. Morgan could go bankrupt and that means these gold shorts and derivatives could implode. That would give very serious upside velocity to gold, which would pull silver and platinum with it. We had predicted $300 gold by the end of January and that prediction was neutralized by the gold cartel at $290 an ounce. It still could be we are only a few weeks off. Reports say the Japanese normally buy 1kg to 5kg gold bars. They are now buying huge amounts and they are taking it home not putting it in safe deposit boxes. How's that for confidence in your government, the yen and the financial system. Customers say that even if the price of gold falls, it will never fall to zero. They are very concerned for the safety of their savings. If hedgers cut back on hedging there will be less gold for the bullion banks to sell into the market and that's happening. Worse yet, gold production is down and few projects are coming on stream. The evidence for gold is mounting and will become insurmountable. All we can say is buy with both hands, we are. The investment world may finally be catching on that gold is the investment of our time. Low interest rates have been helpful and Japanese buying, up over 50% recently, has propelled the metal forward. The deposit insurance situation has been compounded by new lows on the Nikkei Dow, which we re-shorted at 10,800. We covered our 21,000 short at 9500. Of course, the yen is a lock to move lower to 142, a perfect environment for gold and silver. Who will be the next Enron or Argentina? The current account deficit is horrendous and will be over 4% this year. The stock market will soon penetrate its interday low of 8160. The dollar is being artificially manipulated and its days at lofty heights will soon be over, as are the days of a hyper-inflated money supply, which will now reverse into a full-blown depression. The elitists have killed America's physical economy. The real estate, debt and derivative bubbles are about to collapse. Gold is money, gold is real, gold is wealth and gold is no one's liability. It is difficult to bring such bad news of our future, but these are or will be the facts. Prepare yourself financially, spiritually, and economically because the next several years are going to be nightmare. We view markets on fundamentals and the distortions caused by psychological warfare. We try to figure out what our adversaries are going to do before they do it. That doesn't preclude us from looking at many other indicators. That is why we bring to your attention the average NAV premium for senior and intermediate tier gold shares. Their valuation premiums, in spite of hitting new highs, are still a long way from levels seen before 9/99, when valuation premiums dropped steeply, following the announcement of the Washington Agreement. NAV premiums have been increasing at the same time as the gold price, which is contrary to the normal pattern. Current valuation levels have not even reached the bottom of the range that had existed prior to the Agreement. This means money has been flowing into gold shares since late 2000. The sector is still only discounting a gold price that is at the bottom of the range that existed prior to its downward revaluation. That means gold shares are about to assume much higher multiples even though they perceive gold at about $350.00 an ounce. We remember in 1969 and 1979 when gold shares sold at 150 times earnings and silver shares up to 300 times earnings. Better yet, today they have far smaller capitalization. There are only $35 billion worth of gold shares traded. The upside possibilities are enormous. Any material inflow of funds in just a week could rocket these issues. We haven't even begun to finish phase one of four upside phases. Based on estimated 2003 earnings' projections at $300 an ounce gold could double during this year just from alternative investment flows that will be fleeing the general stock market trying to find a profitable home. We have seen this happen four times in the last 40 years. This analysis does not take into consideration higher or much higher gold prices, nor major negative financial events. These two issues and others will replicate what Homestake did from 1930 to 1936, and that is appreciate from $48.00 to $458.00 a share. Once the criminal activities of the gold cartel are exposed, the entire financial system will be shaken to its core. When Americans, Germans, the Swiss and others find out that their gold, the only thing of monetary value has been sold, they will be outraged. If not lynched, officers of J. P. Morgan Chase, Citigroup, Goldman Sachs, Deutsche Bank and others, including officials of government and the FED, will be charged with criminal acts. We are getting close as rumors persist that J. P. Morgan Chase has derivative or gold bullion problems. There is also word that Morgan was hiding short gold positions offshore in secret accounts in order to keep them off the balance sheet. If the central bankers want to stop the present upward move in gold they will have to sell the remainder of their physical gold in the market. They may stop the rally temporally, but when the public discovers what they've done all hell will break loose and we could have a collapsed financial system. Golds fundamentals and the enormous structural supply demand deficit is overwhelming. Owning gold shares, coins and bars are the way to participate in this chance of a lifetime, not only to protect your wealth but also to profit. Date: 2/8/2002 7:04:17 AM Central Standard Time Gold surged over $306 early this morning as the Japanese public bought hugely on Toccom. Volume exceeded 1mm ozs again (eg 100,000 comex contracts) and open interest jumped 1.15 Mm ozs. The normally laconic Mitsui-Tokyo said: "What a day! Japanese public investor's buying supports gold market strongly today. Friday, February 8, 2002 Gold Prices Hit 3-Year High As Japanese Seek Out Havens TOKYO (Nikkei)--Gold is becoming more popular among individual investors looking for a safe investment, with the price of the precious metal going above 300 dollars per troy ounce on Wednesday on international markets for the first time in two years. Gold prices also rose to a three-year high on the domestic market on Thursday, with high prices in Japan helping to push up the price abroad. A downtown Tokyo retail shop run by Mitsubishi Materials Corp. (5711) offering gold for sale was so crowded during business hours on Thursday that sales staff could barely get away for lunch. "Gold sales since the start of this month have been 100% higher than those seen in January," one shop employee said. Tokuriki Honten Co., a large gold bullion trader, said that total Thursday gold sales at its domestic retail outlets, including some 80 affiliated retail stores, were the highest since the beginning of January last year. "The number of first-time buyers who purchase 1-3kg is rising, in addition to a widening range of buyers in terms of age," an official at Mitsubishi Materials said. At the same time, say some retailers, there have been a number of cases where large-lot buyers purchase more than 30kg (retailing for about 42 million yen) of gold at retail stores. Trading volume on the Tokyo Commodity Exchange reached a 28-month high of 340,647 contracts for 1kg of gold on Thursday. Individual investors bought, while large traders sold contracts for arbitrage trading on overseas markets. Many traders are selling gold in Japan and buying it abroad. "Small-lot gold purchases in Japan are one of the major factors boosting international gold prices," says one official at Mitsui & Co. (8031). (The Nihon Keizai Shimbun Friday morning edition) The Reality of Buying COMEX Silver Anyone reading this newsletter knows that silver is the most explosively potential investment you can make in February 2002. It is NOT a good idea to store your silver no matter how secure the storage facility or what country it is in. The best way to own silver is to physically own it. You can buy 1000-ounce bars but they weigh about 70 pounds apiece and must be assayed before resale. UPS cannot ship these and the usual way to ship them for individuals is by first class, registered insured mail for about $100 a bar. An armored car service wanted $4,000 to ship 20 bars from Texas to Tennessee and the customer still had to drive to the armored car facility with a truck, as they do not deliver to homes. Another way is to buy bags of junk coins with $1,000 face value containing about 720 ounces of actual silver. These are about the size of a bowling ball and weigh about 50 pounds. They sell at a premium. Another way is to buy 100-ounce bars that are stamped and trade freely without assay. It was suggested to us that I get my silver directly from the COMEX and take delivery. Here is the reality of that experience. We paid in full for four COMEX contracts of 5,000 ounces each for a total of 20,000 ounces. At $4.50 this came to $90,000 plus commissions. I then had the four certificates sent to me. The broker had never before had a client request delivery and take the certificates. The silver was at the HSBC Bank in New York City. I called them and asked that the silver be sent. The armored car service wanted about $4,000 for the 20 bars. And I would have had to drive 200 miles to their secure facility to pick them up myself. Most armored car services will NOT do this but Brinks Inc. will. HSBC said UPS will not carry silver and I called to verify that. They refused to mail them first class by USPS because there is a 70-pound weight limit and with packaging the bars would have gone over that limit. So we literally had to fly to New York City, rent a one-way cargo van and drive ten hours back home without stopping at a motel. Find a discount coin and metals dealer that will give you a good price. Compare prices and call several. You must pay with a cashiers check or send a personal check a week ahead of time so it will clear. For God's sake don't pay cash or you may end up in prison (minus your money) for being a criminal. It doesn't matter if you filed a tax return on your cash as paying for anything in cash now seems to be vaguely illegal. Buy an airplane ticket for cash in the airport and the DEA will have you in custody before you can get to your terminal. How you store your silver is your business and not anyone else's. Use your imagination. If you live in an apartment building you have a problem obviously. When- not if- silver goes to $50 an ounce or more you'll be glad you did this whether you buy 1000 ounces or ten metric tons of it. And please remember that when silver went to the moon about 20 years ago there was plenty of silver and $50 back then is now $100. Don't be surprised to see $100 an ounce silver in the next four years. Go to www.butlerresearch.com if you would like to see factual reasons for this. Giving another boost to gold was AngloGold's disavowal of forward hedging as they announced they wouldn't renew hedge positions until it has reduced its book by another 6 million ounces. Old Mutual Sells AngloGold, Buys Gold Fields, Harmony Gold By Jonathan Rosenthal Johannesburg, Jan. 31 (Bloomberg) -- Old Mutual Asset Managers, South Africa's biggest investor, said it is selling shares in AngloGold Ltd. and buying its rivals, betting they'll gain more from an expected rally in the gold price. AngloGold, the No. 2 producer, has commitments to deliver 14.6 million ounces of gold at preset prices, limiting its benefit if gold gains, Old Mutual said. Gold Fields Ltd. and Harmony Gold Mining Co., South Africa's second and third-biggest producers, sell at current prices. ``Harmony and Gold Fields are more geared to the gold price,'' Alwyn van der Merwe, senior portfolio manager at Old Mutual, said at a press conference. ``For Harmony the gearing is phenomenal because they are not hedged at all.'' Old Mutual manages assets worth 215.2 billion rand ($18.8 billion) in South Africa. Gold producers and other miners were among South Africa's best performing stocks last year, benefiting from the rand's 37 percent decline against the dollar. Miners pay most of their costs in rand, but sell their products for dollars, boosting profits. AngloGold gained 6 rand, or 1 percent, to 474 rand, while Gold Fields rose 5.2 rand, or 8 percent, to 72.7 rand and Harmony increased 4.2 rand, or 5 percent, to 89.2 rand. Last year Gold Fields was South Africa's second-best performing company, gaining 124 percent. Harmony ranked third with a 123 percent gain and AngloGold seventh at 91 percent. Gold, which has halved in price since 1980, is set for a rebound, said Michael Schroder, who manages Mutual's resources funds. The gold price will likely gain as producers have bought back gold they had sold at pre-set prices, reducing the supply. ``In the medium term we think there is still some upside potential for the gold price,'' Van der Merwe said.Old Mutual also cut its holdings in Cie. Financiere Richemont, Anglo American Plc, Sasol Ltd. and its own parent Old Mutual Plc, van der Merwe said. It is buying stocks including South African Breweries Plc Standard Bank Investment Corp. and South African Breweries. “We have mentioned the Prudent Bear Fund numerous times over the last two years as an excellent way to play the market in these unusual and confusing times. Unusual inasmuch as deep recession/depression have not been as frequent in this past century as they were in previous centuries. Confusing because of the mammoth propaganda machine operated by GE, CNBC, Wall Street and government. You seldom get the truth and that is confusing. We believe this is the perfect time to purchase the Prudent Bear Fund and the Safe Harbor Fund. The market has just experienced a strong 30% bear market rally and precious metals stocks seem poised to go higher. The Prudent Bear Fund shorts the market and goes long precious metal stocks. As the market falls and gold and silver move higher those shares will also move higher. It is a perfect and simple way to invest during these troubling times for those who don't have the experience and fortitude to pick individual stocks. The Prudent Safe Harbor Fund (PSHFX), which invests in high quality debt instruments, denominated in currencies other than the dollar, gives you an exceptional alternative to a falling dollar. You may purchase these funds though Rich Radez at 800-285-1700.” Subscribe to THE INTERNATIONAL FORECASTER by emailing Bob Chapman Charts to view -- Sharefin, 05:51:45 02/10/02 Sun PM Point & Figure Charts Gold Fibo Series M/A Gold Volatility & Cycles Charts to view -- Sharefin, 05:38:33 02/10/02 Sun Breakouts abound!!! Sentiment & hybrid indexes: Gold Sentiment AG/AU/PL Sentiment Index PM Mutual Fund Sentiment XAU Hybrids GGSSI Index Charts to view -- Sharefin, 05:33:27 02/10/02 Sun Breakouts abound!!! Global Gold Indices Global Gold Indices In Local Currencies FTSE Goldmines Indices Charts to view -- Sharefin, 05:29:20 02/10/02 Sun Breakouts abound!!! Dabchick's Index Charts to view -- Sharefin, 05:27:24 02/10/02 Sun Breakouts abound!!! The Price Of Gold In Major Currencies Argentina considering full dollarization of the economy -- Donald, 03:41:50 02/10/02 Sun This story is in Spanish Gold is rising by default because none of the alternatives are safe. -- Donald, 03:21:22 02/10/02 Sun Investors appear to have lost confidence in other investments. Gold -- Sharefin, 02:01:22 02/10/02 Sun Treasury blows £350m in great gold sale gamble The surge in the price of gold could leave the Treasury's two year sell-off of its reserves, which ends next month, nursing a loss of hundreds of millions of pounds. The sell-off caused a storm of public protest when it began in 1999. At the current gold price of $305 an ounce, the value of the 375 tonnes of gold auctioned by the Bank of England on behalf of the Treasury over the past two years is $3.7 billion (£2.6bn). According to Bank of England records and a recent House of Commons Public Accounts Committee report, the Treasury received just £2.25bn in 16 auctions between July 1999 and last month. The total Treasury 'loss' compared with the situation if the Treasury had kept the gold would be around £350 million at current levels. The 'loss' does not take into account proceeds from the purchases of dollars, euros and yen funded by the sell-off. Gold has surged in value in recent weeks as investors seek a safe haven from worries about the world economy and accounting standards in corporate America. Japanese consumers have also been flocking to banks to convert the rapidly depreciating yen into gold bars. There are fears that the banking system could collapse when government deposit guarantees lapse in March. The World Gold Council is compiling a report on the effects of the UK auctions. An existing WGC analysis shows that gold makes up just 7.4 per cent of British foreign exchange reserves. In the US it is 55.6 per cent, in France 45.8 per cent, and Germany 36.8 per cent. In absolute terms the UK now has smaller gold reserves than Venezuela, India and Taiwan. All That Glitters Is Not Gold -- Sharefin, 18:59:29 02/09/02 Sat All That Glitters Is Not Gold Even though Enron employees and the company's accounting firm, Arthur Andersen, have destroyed mountains of documents, enough information remains in the ruins of the nation's largest corporate bankruptcy to provide a clear picture of what happened to wreck what once was the seventh-largest U.S. corporation. Obfuscation, secrecy and accounting tricks appear to have catapulted the Houston-based trader of oil and gas to the top of the Fortune 100, only to be brought down by the same corporate chicanery. Meanwhile, Wall Street analysts and the federal government's top bean counters struggle to convince the nation that the Enron crash is an isolated case, not in the least reflective of how business is done in corporate America. But there are many in the world of high finance who aren't buying the official line and warn that Enron is just the first to fall from a shaky house of cards. Many analysts believe that this problem is nowhere more evident than at the nation's bullion banks, and particularly at the House of Morgan (J.P. Morgan Chase). One of the world's leading banking institutions and a major international bullion bank, Morgan Chase has received heavy media attention in recent weeks both for its financial relationships with bankrupts Enron and Global Crossing Ltd. as well as the financial collapse of Argentina. It is no secret that Morgan Chase was one of Enron's biggest lenders, reportedly losing at least $600 million and, perhaps, billions. The banking giant's stock has gone south, and management has been called before its shareholders to explain substantial investments in highly speculative derivatives - hidden speculation of the sort that overheated and blew up on Enron. In recent years Morgan Chase has invested much of its capital in derivatives, including gold and interest-rate derivatives, about which very little information is provided to shareholders. Among the information that has been made available, however, is that as of June 2000, J.P. Morgan reported nearly $30 billion of gold derivatives and Chase Manhattan Corp., although merged with J.P. Morgan, still reported separately in 2000 that it had $35 billion in gold derivatives. Analysts agree that the derivatives have exploded at this bank and that both positions are enormous relative to the capital of the bank and the size of the gold market. It gets worse. J.P. Morgan's total derivatives position reportedly now stands at nearly $29 trillion, or three times the U.S. annual gross domestic product. Wall Street insiders speculate that if the gold market were to rise Morgan Chase could be in serious financial difficulty because of its "short positions" in gold. In other words, if the price of gold were to increase substantially, Morgan Chase and other bullion banks that are highly leveraged in gold would have trouble covering their liabilities. One financial analyst, who asked not to be identified, explained the situation this way: "Gold is borrowed by Morgan Chase from the Bank of England at 1 percent interest and then Morgan Chase sells the gold on the open market, then reinvests the proceeds into interest-bearing vehicles at maybe 6 percent. At some point, though, Morgan Chase must return the borrowed gold to the Bank of England, and if the price of gold were significantly to increase during any point in this process, it would make it prohibitive and potentially ruinous to repay the gold." Bill Murphy, chairman of the Gold Anti-Trust Action Committee, a nonprofit organization that researches and studies what he calls the "gold cartel" (J.P. Morgan Chase, Deutsche Bank, Citigroup, Goldman Sachs, Bank for International Settlements (BIS), the U.S. Treasury and the Federal Reserve), and owner of www.LeMetropoleCafe.com, tells Insight that "Morgan Chase and other bullion banks are another Enron waiting to happen." Murphy says, "Enron occurred because the nature of their business was obscured, there was no oversight and someone was cooking the books. Enron was deceiving everyone about their business operations - and the same thing is happening with the gold and bullion banks." According to Murphy, "The price of gold always has been a barometer used by many to determine the financial health of the United States. A steady gold price usually is associated by the public and economic analysts as an indication or a reflection of the stability of the financial system. Steady gold; steady dollar. Enron structured a financial system which put the company at risk and eventually took it down. The same structure now exists at Morgan Chase with their own interest-rate/gold-derivatives position. There is very little information available about its position in the gold market and, as with the case of Enron, it could easily bring them down." In December 2000, attorney Reginald H. Howe, a private investor and proprietor of the Website www.goldensextant.com, which reports on gold, filed a lawsuit in the U.S. District Court in Boston. Named as defendants were J.P. Morgan & Co., Chase Manhattan Corp., Citigroup Inc., Goldman Sachs Group Inc., Deutsche Bank, Lawrence Summers (former secretary of the Treasury), William McDonough (president of the Federal Reserve Bank of New York), Alan Greenspan (chairman of the Board of Governors of the Federal Reserve System) and the BIS. Howe's claim contends that the price of gold has been manipulated since 1994 "by conspiracy of public officials and major bullion banks, with three objectives: (1) to prevent rising gold prices from sounding a warning on U.S. inflation; (2) to prevent rising gold prices from signaling weakness in the international value of the dollar; and (3) to prevent banks and others who have funded themselves through borrowing gold at low interest rates and are thus short physical gold from suffering huge losses as a consequence of rising gold prices." While all the defendants flatly deny participation in such a scheme, Howe's case is being heard. Howe tells Insight he has provided the court with very compelling evidence to support his claim, including sworn testimony by Greenspan before the House Banking Committee in July 1998. Greenspan assured the committee, "nor can private counterparties restrict supply of gold, another commodity whose derivatives are often traded over the counter, where central banks stand ready to lease gold in increasing quantities should the price rise." Howe and other "gold bugs" cite this as a virtual public announcement "that the price of gold had been and would continue to be controlled if necessary." According to Howe, "There is a great deal of evidence, but this is a very complicated issue. The key, though, is the short position of the banks and their gold derivatives. The central banks have 'leased' gold for low returns to the bullion banks for the purpose of keeping the price of gold low. Greenspan's remarks in 1998 explain how the price of gold has been suppressed at times when it looked like the price of gold was increasing." Furthermore, Howe's complaint also cites remarks made privately by Edward George, governor of the Bank of England and a director of the BIS, to Nicholas J. Morrell, chief executive of Lonmin Plc: "We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore, at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control, but we have now succeeded. The U.S. Fed was very active in getting the gold price down. So was the U.K. [United Kingdom]." Whether the Fed and others in the alleged "gold cartel" have conspired to suppress the price of gold may, in the end, be secondary to the growing need for financial transparency. Wall Street insiders agree that as long as regulators, analysts, accountants and politicians can be lobbied and "corrupted" to permit special privileges, there will be more Enron-size failures. Securities and Exchange Commission Chairman Harvey L. Pitt, well aware of the seriousness of these problems, recently testified before the House Financial Services Committee that "it is my hope there are not other Enrons out there, but I'm not willing to rely on hope." Robert Maltbie, chief executive officer of www.stockjock.com and an independent analyst, long has followed Morgan Chase. He tells Insight that "there are a lot of things going on in these companies, but we don't know for sure because much of what they're doing is off the balance sheet. The market is scared and crying out to see what's under the hood. Like Enron, much of what the banks are doing is off the balance sheet, and it's a time bomb ticking as we speak." Just what would happen if a bank the size of Morgan Chase were unable to meet its financial obligations? "It's tough to go there," Maltbie says, "because it could shake the financial markets to the core." Enron -- Sharefin, 18:53:53 02/09/02 Sat MULTI-TRILLION DOLLAR FINANCIAL SCANDAL Gold -- Sharefin, 17:47:14 02/09/02 Sat Gold's floodgates open, finally Adrian Day, a Maryland money manager who has specialized in gold mining companies for 30 years, swore to himself years ago he would bite his tongue if he ever caught himself saying, "This time it's different." Yet there Day was, watching from his Annapolis office as the spot price of gold this week pierced the $300 level for only the fourth time in four years. "What really is different this time is the previous runs were provoked by a single instance, like Placer Dome buying back its hedge book," says Day, president of Global Strategic Management, which has $60 million under management. "This is not a short, sharp rally. It has been a nice slow trend up since January 2001, and it has not been provoked by one incident." Gold's longtime believers are hoping the metal's rally this time around will be different. Some, like mutual fund manager John Hathaway, predict gold will surpass $1,000 an ounce in coming years. Others, like Pierre Lassonde, soon-to-be president of industry leader Newmont Mining (NEM: news, chart, profile), see gold mining stocks, already the best-performing sector in most of the world's stock markets, doubling again as gold goes to $350 an ounce. See Lassonde interview. Normally, investors turn to the safety of U.S. bonds when they're seeking refuge from the kind of fiscal distress that is storming across Japan, Argentina and threatening Washington. However, a growing number of economists and currency specialists expect gold, not Treasury securities, to benefit this time. Japan, which holds about 12 percent of the supply of U.S. debt, is facing what may become its biggest fiscal challenge ever. "The meltdown of a G-7 economy is rare," says Carl Weinberg, chief economist of High Frequency Economics in Valhalla, N.Y. "Things like the big oil shocks of the '70s caused a flight to gold, and that was an unprecedented event." This time, say gold's optimists, who remember fondly when gold was last at $400 (January 1996) and $800 (January 1980), it really is different. "If you look at the popular press, every article you read on gold is that gold is no longer money, that it is finished," says Lassonde, a co-founder of Canada's Franco-Nevada Mining, one of two gold producers that will merge to form the world's largest gold miner, Newmont, later this month. "In the past two months, I have started to see more positive articles on gold," Lassonde says from his Toronto office. "As gold breaks the $300 barrier and goes to $325, that will drive the bull market in gold." Petty or pretty? For those unfamiliar with the world of gold and gold-mining stocks, the metal's slow grind to $300 an ounce from $265 one year ago must seem petty. Yet the small gain has propelled gold share indexes to five-year highs in Australia and record highs in South Africa, where a wave of mergers and weak local currencies are boosting the mining industry's prospects. Gold fever? In Japan, gold prices are up 25 percent against the ailing yen in the past 12 months. Japanese consumers have quadrupled their hoarding of gold ahead of this spring's limit on government-guaranteed bank deposits. An ounce of gold is now worth 600 Australian dollars. Australia's newspapers are starting to complain that foreigners have commandeered the nation's gold industry, with almost two-thirds ownership after Denver-based Newmont's $2.5 billion purchase of Australia's crown jewel, Normandy Mining. See Australia gold mining index. The Financial Times Africa Gold Mines Index, meanwhile, has gained about 65 percent the past 12 months. Close to 50 money managers, a modern record, this week listened in on a quarterly update from South Africa's second-largest gold miner, Gold Fields Ltd, which raked in $67 million in its December quarter. That was triple what Gold Fields earned the previous three months. See Africa gold-mining chart. Even in America, where most investors turn up their noses at gold and prefer to dabble in technology stocks, gold's gains have boosted the metals industry's mutual funds by 46 percent in 12 months vs. a 17 percent loss for the average diversified U.S. equity fund. See related story. Economists and analysts, in the United States and abroad, are mostly pointing to fiscal distress as a reason for gold's climb. After all, jewelry and designer demand for gold, which accounts for about 75 percent of the metal's use, fell last year. "Gold is the best leading indicator of monetary conditions," says currency analyst Kenneth Landon at Deutsche Banc in Tokyo. "It is also one of the least understood factors. That's what makes it so fascinating and potentially profitable for people who truly understand gold's significance." Gold: an obsession Newmont's Lassonde, who has been in the mining business for three decades, believes gold's rally this week above $300 will usher in a long bull market in the metal. In some cases, however, the belief among other gold bugs is a swaggering one that comes from a decade or more of frustration. "Has a bull market in gold shares begun? Is the Pope Catholic?" notes Bill Bonner of The Daily Reckoning, one of dozens of investment newsletters that are promoting bullion's rise. His comments came just as the spot price of gold this week closed above $300 for the first time since February 2000. That was back when mining company Placer Dome asserted it would reduce the amount of gold it sold forward in a controversial practice known as hedging. Alas, "when another gold company, Barrick, said they weren't buying back their hedge book, the market fell back," recalls Day, the fund manager. Gold quickly dropped below $300. This time, large gold mining companies are more likely to reduce forward sales, which gets them a higher price for the metal but also encourages loose lending of gold by central banks and other entities. At least, that's what the gold aficionados believe. South Africa's Anglogold, the largest of the notorious hedgers, and other companies almost certainly could lose an appetite for selling their product forward. "We believe a protracted bull market will lead to more buybacks, thereby reducing the amount of gold which needs to be borrowed," Barclays Capital precious metals analyst Matthew Schwab said from London. See related story. If gold prices threaten to rise further, a hedger could find the extra few dollars an ounce it receives by selling into future little more than pile of beans compared to the spot price of the metal. Besides, as money manager Hathway of the Tocqueville Gold Fund points out, falling interest rates around the globe mean miners are no longer guaranteed a nice return when they take the cash from their forward sales and put it in an interest-bearing piece of paper. Even scarier, hedging, which involves fancy financial footwork and the use of futures and sometimes derivatives contracts, could upset shareholders as the witch hunt for accounting irregularities sweeps Wall Street and Washington. "The premium for safety is high again," says Hathaway, whose musings on the subject of gold come in the form of inches-thick manuscripts that he sends to shareholders of his fund, which like most gold mutual funds is up by almost a third since Jan. 2. "The new blood sport will be pointing fingers at companies who abuse pro forma earnings and other accounting methods." Most Americans, and investors around the globe, don't own gold as an investment. Those who do own gold via mining stocks, not the actual metal as is preferred by consumers in Japan and India. For ordinary folks, the burning question about gold isn't about hedging or fiscal distress or even declining production of the metal in the top-three producing regions: Australia, North America and South Africa. No, for most ordinary folks, the big question is: When will gold make it to the front page of the local newspaper? "It hasn't made the cover of Time magazine yet," says Lassonde in Toronto, where he and other top Newmont Mining executives will preside over the production of 5 million-plus ounces of gold a year, more than any company in the world. See our metals report. In the U.S. stock market, major gold mining companies trade for as much as 10 to 12 times pre-tax cash flow. That seems expensive, but as Caesar Bryan of the Gabelli Gold Fund explains, "Gold shares provide you the earnings and the dividends and the cash flow. But there is another thing, and that is the option value of the gold (miners) have in the ground. That is why they trade at high multiples." Still crazy, after all these years Investors in the U.S. stock market are willing to pay the highest prices for shares of the world's largest gold mining companies since February 2000. The Philadelphia Gold and Silver Index that represents shares of Newmont, Barrick, Placer Dome, Anglogold and others approached 70 at week's end. Anything above that could spark a mania for gold shares, the metal's believers say. "After all these years, it's not hard to imagine that gold stocks could become a lot like Internet companies were a few years ago," said Robert Bishop, the longtime editor of Gold Mining Stock Report who has been analyzing gold mining companies for more than two decades. "Of course, I say that with my fingers crossed." Bishop points out that each $10 move in the price of gold magnifies operating margins for gold companies. Many miners, thanks to improved techniques, haul the metal from the ground at a cash cost far less than $200 per ounce. Companies such as Gold Fields and Harmony Mining of South Africa, because they refuse to hedge their production, easily could see their share prices double if gold were to rise another $30 an ounce. Six-month gains for shares of Gold Fields have far outpaced those of its hedged competitor and neighbor, Anglogold. See comparison chart. Like many of his colleagues in the industry, Bishop is headed to Capetown in South Africa next week to attend a yearly mining conference that could provide evidence of mining consolidation and further gains for gold. Attendance is up 30 percent from a year ago, conference organizer Sandy Lawrence, president of International Investment Conferences, says. "I think this is where you will see the new bull market in gold starting to take off," Lawrence says. The spot price of gold rose as high as $307.80 Friday in New York. A London fix of the metal's price at $305.10 was the first setting above $305 in two years. In Tokyo, as rumors swirled about a possible government freeze on bank deposits, December's gold contract hit its highest price, in yen, since August 1998. If the rally continues, gold's believers may soon be calling themselves the next investment craze. Bill Murphy, the former Boston Patriots football player who founded what may be the world's most rabidly fanatic gold Web site, www.LeMetropoleCafe.com, this week was flashing the message, "Gold headed for $600 an ounce." Murphy, a former Wall Street specialist in commodity futures for Shearson Hayden Stone and Drexel Burnham, also chairs the Gold Anti-Trust Action Committee (www.Gata.org). GATA is a Delaware corporation that believes the U.S. Treasury, New York Federal Reserve Bank and some of Wall Street's largest banks, including Goldman Sachs (GS: news, chart, profile), conspired to keep the price of gold depressed in the late 1990s as a way of manipulating economic signals. Some economists use gold as an advance indicator of commodity inflation, the enemy of the world's central banks. "My guess is we will not see gold at $300 bid for very long. It could go $350 to $400 bid in a week as the short-sellers panic," Murphy told me confidently from his Texas office. "That will shine the light on GATA big time." Lassonde at the merging Newmont/Franco-Nevada/Normandy, while well aware of the gold-conspiracy crowd, prefers to put the metal in a more clinical light. Lassonde says gold is unfettered by any company or nation's liabilities, unlike a Nasdaq-traded stock or a government's Treasury bonds. "The ultimate definition of a gold market is when gold is rising in all currencies," he says. "And that is happening now." Crash Alert -- Sharefin, 16:51:58 02/09/02 Sat George Ure - Urbal Survival Biggest Collapse in History: WITHIN 2 MONTHS? This weekend, in a special edition for both subscribers and casual readers, I am going to really go out on a limb and make a forecast - supported by the web bot outputs that were given to subscribers last week, and supported by one interpretation of Elliott Wave Theory. The forecast is this: The potential for the BIGGEST CRASH in the history of the WORLD is shaping up in the charts and it should arrive inside two months. Dow/Gold Chart -- Dave Brooks, 12:16:27 02/09/02 Sat The Dow/Gold chart makes me want to do the happy dance in anticipation. Thank you Nick, for this post. On the other side of this coin however, it will be TEOTWAWKI... It's probably a good thing that you cannot open the windows on tall buildings, but roof jumping is going to be very popular on wall street. What a story, Does this auction herald the New Bull in Numismatics? -- Dave, 09:34:08 02/09/02 Sat A 1933 Double Eagle gold coin that never went into circulation is being sold by the federal government at auction this summer, with experts predicting it could fetch millions. ``We expect that this coin may become the most valuable coin in the world,'' said David Pickens, associate director of the U.S. Mint. Sotheby's auction house and Stack's, a numismatic firm, are planning a July 30 auction of the coin, believed to be one of only a handful of 1933 Double Eagles to have survived when all 445,000 struck that year were ordered melted down. Double Eagles were first minted in 1850 with a face value of $20. The ones that were minted in 1933 were never put into circulation because President Franklin Roosevelt decided to take the nation off the gold standard. Before the coins were melted down, two were handed over to the Smithsonian Institution for historic safekeeping. But one other somehow survived. It suddenly surfaced in public in 1996. http://www.startribune.com/stories/535/1609091.html COMEX FRAUD TEST IS ON!!! -- dan, 08:50:55 02/09/02 Sat I believe the depressed price of silver relative to gold is the result of market manipulation to pillage long march call option positions. Now that those options have expired a clear indicator would be a rise in the price of silver. Low silver prices Fact or Fraud The Test Is On!!! India has got to love this. -- Dave, 08:22:19 02/09/02 Sat Pakistan, US Sign Defense Pact Ahead Of Musharraf's Visit http://www.nasdaq.com/asp/quotes_news.asp?symbol=9999&selected=9999&news=MARKET As Martha would say, -- Dave, 08:07:12 02/09/02 Sat It is a good thing. Silver Polymer™ batteries exhibit best in-class peak power which is critical for digital photography. Recently, a leading digital photography editor averaged 6X more digital shots with Silver Polymer™ cells as compared to comparable weight primaries and rechargeables. http://www.zincmatrix.com/spusers.htm Lance Lewis -- Sharefin, 07:53:29 02/09/02 Sat Shorts Get Cold Feet Gold was up almost $8 overnight but came in a bit as we approached the NY open. We opened above $300 and proceeded to vault up all the way to just shy of $310 on the April contract before we experienced a bit of a swoon into the close to end up $3.80 and well above $300 for the week. The HUI rose 2 percent but also ended well off its highs. Lease rates rose by over 50 percent in the one-month to .66 percent, which is the sharpest rally we have seen since September 11th. The COT report released this afternoon is a little disappointing for gold bulls as it appears commercials have almost doubled their net short position in gold since last week, which is somewhat bearish. The US dollar index slipped a touch to end at the low of the week. The yen fell back to a new low for the week, but failed to break to a new low. The euro rose a hair and back above the 87-cent level. Treasuries were higher as the yield on the 10yr fell to 4.87%. This weekend we have the G7 meeting as well as the beginning of the Olympics in Salt Lake City. Today's action was not exactly what I would have expected to see if we were going to have some sort of big news concerning the dollar this weekend, but who knows? The vocal pressure on the dollar has been increasing as we approached this weekend's meeting. US automakers sent the White house a letter last week complaining about the strength in the dollar. On Wed, Ford was a little more vocal in complaining about the strong dollar, and then today in the Wall Street Journal, even the president of Honda Motor was quoted as saying the yen had weakened "too far." Gold shares rallied strongly once again today and many pushed to new highs with the metal ending the week above $300. Stocks rallied but still remain in their immediate short-term downtrends. Volume and breadth both stunk during today's bounce and had all the hallmarks of shorts simply getting a little cold feet ahead of the weekend. The bonds didn't do much though either way. So, the stage is still set for something to happen in currency land, but there is no overwhelming evidence from the market that it will. Nevertheless, trouble continues to be on the horizon, and the market may break the dollar all on its own with the way things are progressing. Gold feeds on a general lack of confidence. The action of the last few weeks both in gold and stocks confirms to me that the market is finally losing the stubborn bullish confidence in stocks that it has held for the last 20 years of the bull market and amazingly during the first couple years of the current bear market as well. The market is losing confidence in companies' financials, confidence in the recovery, confidence in analysts, and confidence in the widely held belief that setbacks in the market are always met with rallies back to new highs once the Fed has worked its "magic." A lack of confidence in the dollar is the next shoe to drop I think. The risk continues to be to the downside regardless of what happens or doesn't happen this weekend. So, keep those helmets close by… Kissed, -- Dave, 07:49:57 02/09/02 Sat Well didn't them Politicians, Banks and Judges Kiss or apply vaseline to them Argentinians first?? Argentina -- Sharefin, 07:32:33 02/09/02 Sat Argentines in New Protest of 'Gov't of Thieves' Thousands of Argentines took to the streets in the early morning hours on Saturday, banging pots and pans in the latest peaceful protest against a "government of thieves" unable to end a chaotic recession in its fourth year. "We've been raped by politicians, banks and judges," read one giant homemade banner held up by protesters as they streamed down Buenos Aires' elegant avenues after midnight. How many tons of Silver will this application consume?? -- Dave, 07:30:40 02/09/02 Sat CHICAGO and SANTA BARBARA, CA, June 21, 2001-Silver Polymer™ Batteries newly developed by Zinc Matrix Power Inc. (ZMP) are in routine use on the Chicago Mercantile Exchange Inc. (CME) trading floor. This innovative new rechargeable battery allows hand-held wireless network connected trading computers to run all day. Previously, floor traders had to use bulky belt mounted battery packs with power cords or swap out lithium ion batteries throughout the trading day. In addition to their use at CME, ZMP Silver Polymer™ batteries are in pilot testing by a brokerage on the New York Stock Exchange (NYSE) trading floor. Mike Cheiky, the Chief Technology Officer at Zinc Matrix Power Inc. (ZMP), which invented this new technology, says; "The Silver Polymer Battery has an energy to weight ratio comparable to today's state-of-the-art rechargeable lithium batteries, but, because the silver and zinc reactants are much more dense than lithium and graphite, the Silver Polymer Battery packs much more energy and power into a given size, a feature which is very important in hand-held devices. Silver Polymer prototypes have achieved well over 2 kilowatts per liter, several times the power level of current lithium batteries. This ultra high peak power ensures that a trading floor hand-held can sustain continuous high speed wireless communications with its very demanding pulse power requirements right up to the closing bell, every day." http://www.cme.com/news/printit.cfm?NewsID=0000111A-E9A1-1B41-87E580EDBEFB0000 Japanese price charts -- Sharefin, 07:18:37 02/09/02 Sat Gold  Silver  Platinum  Palladium  Also good Japanese futures charts here: Daifugo Futures Gold is the sixth row and silver the seventh row. auspec -- Sharefin, 22:22:12 02/08/02 Fri It was Donald (who posts here) that first introduced me to that chart and long I've thanked him - thanks again Donald. It tells a strong story and defines a cycle which passes through all of humanity's lives. I don't know where the low will come in but it should fall between a ratio of 5:1 all the way down to 1:1 and err to the extreme (since the build-up was so extreme). It's a meter of value that oscilates between fiat & physical. For the Dow to get so low means that confidence is gone, so gold will go high. I would guess something like Dow 3000 & Gold $3000 at a 1:1 ratio sounds approximately right. It could well vary - say Dow 5000 & Gold $1000 at a 5:1 ratio if the coming depression is not so nasty or say Dow 2000 & Gold $6000 at a 1:3 ratio. It's impossible to predict the extremes but I think that it's possible to predict the timeframe. It almost seems weird to be able to be able to say that the extremes in the Dow & Gold prices will be met within the next few years. So gold somewhere between $800 & $3000 & Dow somewhere between 6000 & 2000 within the next couple of years would be my guess. Broad in scope & short in time. Sharefin/"Eventually" -- auspec, 21:51:06 02/08/02 Fri THAT was a pretty awesome chart, Sir Host! No, GATA could never have done this alone, all they can accomplish is a little daylight and the corresponding *acceleration* of the inevitable. That will suffice for the time being, thank you, and let's get some more. They have also taken an important stand as far as being willing to jump up and down on a table top, screaming bloody murder, "this aint right". Enough folks like that can turn ANY issue, and this gold market is an issue. "Seems to me those who thought up these hedging plans years ago weren't looking forwards enough and now they're stuck." Couldn't help but repeat that one, excellent. They hedge short, we position long. They want to take it to an extreme? We make sure they get punished for folly. Cycles? That's sufficient reason, yet the core reason, for assuming a huge position in this market. Mr Market would have it no other way. only the EXTREME folly of man would try to do away with cycles. LOL. Viva indeed! From the Far Side -- Sharefin, 21:25:19 02/08/02 Fri Leigh (02/08/02; 17:53:17MT - usagold.com msg#: 69652) Waiting for Springtime 'Tis eventide along the Trail A chilly night descends Our garden tilled, we search in vain For our Trail Guide and our friend. He's left us now; he's gone apace He walks the Trail alone We weary travellers must find The strength to carry on. Lo! News comes in from lands afar They're buying gold en masse! From our vantage on the mountaintop We watch, and raise our glass! Soon our good Trail Guide will appear The spring will burst in bloom The Golden Trail will sparkle by day And glow by light of moon. Dear goldbugs, though the wait is long And hearts may break with pain Ne'er fear, for gold's a precious thing We suffer not in vain. auspec -- Sharefin, 20:44:00 02/08/02 Fri Kinda makes me laugh(:-))) as for years there was a contention re to hedge or not to hedge over on Kitco. It didn't matter who was right or wrong just that the biggest mouths prevailed. Now regardless of opinions the market has answered & is currently telling us the way forwards for the gold miners. Hedging has been profitable for some, preserving/conserving for others, but downright damning for the industry. It allowed massive amounts of off-market gold to come to the markets. Fine whilst the price was declining but rather a worry in a rising market. Now those who were unwise in selling forward or leasing out their stocks will have to climb the wall of worry and cover their butts or loose them. The actions of the leasers/hedgers has actually been to their downfall as it created a short term abundance of gold but has made a long term decline in stockpiles. It has hurt as it pushed the price lower. But on the other hand has accelerated depletion of stocks. It gained them short-term profits at the expense of long term capital. They have gained short to loose long. Demand has obviously been large enough to completely swallow all that could be put forwards and as such has grown considerably. Now as we watch those who seek to cover go out into the market place and pay expensively for what they are able to get. We wonder about those who follow in their footsteps. Where will this additional supply come from? Who will supply it? The miners need to cover so they produce or purchase. In either event it is drying up liquidity as their supply is taken off-market. The CBs/BBs need to cover their leases so must roll forwards or go out into the marketplace. This also dries up liquidity. So we have a market place that has exhausted stocks & raised demand. And it this same marketplace that is expected to provide normal demand plus feed those who wish to cover. Seems to me that those who thought up these hedging plans years ago weren't looking forwards enough and now they are stuck. So now we have the market as being short stocks/stockpiles - sold them already. Hungry for more demand - after helping raise the demand through lower prices. Unable to supply - lowered production, lack of liquidity So up prices must go. The more who seek to cover the more the demand will increase. As for GATA - I've long supported them and believed that they have been instrumental in spreading the knowledge of the deception going on. But to believe that they alone have turned the price of gold about is folly. These markets would have turned by themselves eventually even if GATA never existed. These markets are turning (like the equities markets) as they must as they go through the Long Wave. Men are but mice who flatter themselves if they think that they can cause such & such to happen. One chart readily points to this happening. Click here It is a process in motion where society has built up to much capacity and values it too highly. All cycles swing from high to low and so on & on we must go. Praise GATA and others also for spreading word of the wrongdoings but never forget to respect Mr Market as it is up to him to dictate the way forwards. Those who don't understand the supply/demand equation for the PM's won't have a clue going forwards. But to those who do and hold the metals long then their rewards are coming. Viva the newfound gold bull market!!!! Venezuelan currency has third day of heavy losses -- Donald, 20:14:06 02/08/02 Fri click here Gold in Japan -- Sharefin, 19:55:35 02/08/02 Fri Trying to find the open interest & volumes for the TOCOM. Here's some revealing data from the TOCOM website. The explosive growth in turnover these last few days is stunning. Daily Sale & Purchase - Gold Daily Sale & Purchase - Silver Yearly trading volumes If the purchase of gold by the Japanese these last few days is the beginning of a trend then what's coming should be awesome. The Japanese have a month left to purchase what they can and looking at the acceleration of the above numbers and thinking that there's a month to go and most all Japanese yet haven't caught onto this trend. WOW!!! This could become a huge source of demand - quickly depleting stocks of gold & silver. Please also note the rate at which silver sales are also accelerating. As a ROC (rate of change) the acceleration behind these numbers is amazing. And there's still a month to go during which this trend should accelerate. Hamilton's Gold Stock Performance/Sharefin -- auspec, 19:52:32 02/08/02 Fri I think that is an awesome looking chart, yet Hamilton decries it. How do you see it? It tells exactly what has happened these last 12+ months, which we all experienced, yet failed to se so clearly. Three cheers for the HUI {and the mysterious stocks contained therein}! Durby, what can I say? You have thrown a major wrench into the cabal machinery, they tried to bury/repay you last June, and to the victor goes the spoils. Screw em indeed! You blazed the path. Now we got IAm Gold speaking out, joined by Nova, Samex, and a gaggle of avowed non-hedgers. Can you believe Samex guys are asked by the 'authorities' to explain their extensive price movement and CEO replies it is the failing gold suppression, hahaha. KUDOS! Here's the opportunity; the shares are currently leading the POG, as they historically do, lets turn these profits into an accelerated POG upside. HOW? By supporting those that gave us the share upside in the first place, GATA. We're looking at $200 POG w/o these guys, must never forget that. The brightest minds in the gold industry agree with that statement. These guys are putting their butts on the line for all of us and we can really make a difference, right now. You get your Feb statement and things are really looking good? Think GATA. These guys have accomplished great things on a shoe-string budget, what'll they do with some real funding? Multiplier, this is the most volatile market on the planet, no?- Never supported GATA? Now's your chance, these are real people working on your behalf, 18/6+. wouldn't have happened w/o them! This site is renowned for its GATA contributions and its activist stance, thank you heartily! Time for each of us to do even more and nail this coffin shut!! Screw em, indeed! Housing bubble -- Sharefin, 19:15:28 02/08/02 Fri Housing - The Next Bubble? Banks take more knocks -- Donald, 19:02:20 02/08/02 Fri click here Risk -- Sharefin, 18:46:58 02/08/02 Fri Who can understand, let alone manage, credit risk? Gold Commentary - excellent reading from Adam Hamilton -- Sharefin, 18:41:17 02/08/02 Fri Gold Challenges $300!  Enron -- Sharefin, 18:36:40 02/08/02 Fri Enron: Ultimate agent of the American empire Tom -- Sharefin, 18:09:24 02/08/02 Fri Then I'd better get onto the charts. Cheers Gold -- Sharefin, 18:02:53 02/08/02 Fri Gold Rallies Higher, Profit-Taking Looks Unlikely The sustainability of $300-an-ounce gold remains to be seen, but the yellow metal's tenacious refusal to back off that level despite stock market gains and the temptation to take profits didn't fail to impress many participants. The benchmark April contract on the Comex division of the New York Mercantile Exchange climbed a further $3.80 Friday to $304.40 a troy ounce, after having broken free of a consolidation pattern around $300. Dealer Frank McGhee at Alliance Financial LLC in Chicago expressed concern that now that the over-the-counter options expiration seen pushing prices higher had passed, the market could plummet to the low $290s if traders with $25 gains over the past week opt to take profits on their longs. Options give holders the right, but not the obligation, to buy or sell the underlying futures if they expire in the right price range. Long positions are bets on higher prices. "I'm cautious. I'd be a buyer $10 below here and $10 higher," he advised. "The prudent move is to take profits on longs and come back in later if it gets above $310." But profit-taking is a temptation only for those looking for short-term satisfaction and many commodity fund managers have now shifted to a longer-range perspective on gold, according to Leonard Kaplan, president of Prospector Asset Management in Evanston, Ill. He cited the pullback from $290 in mid-January as an example of this. "When the market fell from $290 to $282, the long speculators never got out because they never changed their minds," he explained. "They believed we were going higher and I don't see any rationale for them to get out at $305 or $310. They're in for the longer-term trend." With the psychological brick wall at $300, he said it was unlikely they would choose to sell just three inches past the brick wall. That wasn't to say they wouldn't give in to temptation if prices reach as high as $320 or $325 an ounce, however, he added. Precious metals analyst Brian Christie at Canaccord Capital in Toronto agreed the market would continue higher, but saw the need for a more measured advance than the meteoric rise of the past week. Kaplan at Prospector said he doubted this was a runaway bull market and expected to see consolidation of the sort seen in the past few days on the way up. "All the (price) dips seem very well-supported. Look at the hourly action. It's very positive," he noted. "You don't see sharp breaks that make new lows. The market is well-bid underneath." A range of ideas have been floated to explain what distinguishes the present rally from previous ones that fizzled all too soon in the last three years, including producers' plans to reduce their forward hedge positions, or the amount of production they have sold forward in anticipation of falling prices. Earlier this week, it seemed the widening concerns of how many more Enron-type debacles might be lurking behind unreliable balance sheets was contributing to the shift into the yellow metal. But U.S. equity markets rebounded fairly strongly Friday, with the Dow Jones Industrial Average adding 119 points to close at 9744 and the Nasdaq Composite index up by 37 points at 1819. That suggested that confidence remains firm in the majority of U.S. corporate share valuations. Although Alliance's McGhee agreed that Japanese investors' flight to quality amid concerns about the viability of their banking system was underpinning elevated gold prices, he said the lack of response in gold lease rates disturbed him. Lease rates are charged on loans of gold and are viewed as an indicator of supply tightness. "If lease rates aren't supporting the move in the market, something is out of whack," he said. "I'd be much happier if I saw 2% to 3% lease rates in gold (instead of the current 1%). There's a disconnection between the flat price of the metal and the general trend in lease rates and unless those two are together, it's going to be tough to sustain the rally." Gold lease rates have stayed low because the market knows that producers' plans to deliver into their hedged positions will provide added liquidity, according to Prospector's Kaplan. Another factor keeping lease rates from rising is the psychology of industrial users, he added. "Industrial users are like Indians, East Indian," he explained. "There's a price (of gold) they feel comfortable at and a price they don't feel comfortable at." Jewelry fabricators haven't been participating in this rally, because they shy away from price instability and volatility, preferring to wait until a modicum of order and a clear price floor have been re-established. Kaplan said there were many sell orders waiting to be executed between $307 and $309 an ounce next week and he guessed there were probably pre-placed buy orders in place above $310. April gold peaked this week twice at $309. Gold -- Sharefin, 17:59:41 02/08/02 Fri CFTC Commitments: Gold Nearing Top Heavy, Silver Bearish Large speculators piled into the gold market this week and were heavily involved in the buying spree that catapulted Comex prices to their recent 18-month highs, according to the latest Commitment of Traders Report released Friday. The CFTC data as of Feb. 5 showed that large speculators held 53,810 long positions and 19,722 short positions in gold, jumping their net long positions by over 20,000 contracts to 34,088 contracts. As at the previous reporting period, large speculators' net long position was 12,434 contracts. According to Tim Evans, analyst at Pegasus Econometrics, this sizeable increase in net long exposure increases the likelihood of long liquidation in the near future. He noted that as of Feb. 5, the 34,088 net long position was the largest exposure held by the large speculators since late September, and that since Feb. 5, "it is quite likely that that long position has been added to." He argued that while this rush of fund buying has been very supportive for the market over this past week, the total speculative buying "is within 2,000-10,000 contracts of the likely extreme." As a result, he expected long liquidation to occur into any further price strength in due course. "Gold may have become the trendy investment choice as a store of value relative to currencies, bonds or the stock market, but we don't think it will take that much change in those markets to send the gold bulls stampeding for the exits again," he said. In silver, large speculators headed in the opposite direction and reduced their net long exposure by 3,374 contracts to 25,221 contracts. The data indicated the large speculators held 30,712 long positions and 5,491 short positions, versus 32,428 long and 3,833 short positions at the previous reporting period. Evans argued that some speculators may have indulged in some opportunistic selling over the week as silver prices rose in sympathy with the gold price rise. Despite this lower net long exposure, Evans argued that "this market composition still poses greater risk of long liquidation than of fresh buying, as it would take only 11,000 contracts of purchases to bring the risk back up to the recent 36,208 contract extreme. "Which we see may depend on gold, which could tow silver higher if it can extend its own gains, or send silver back to its lows if it puts in a quick top and then falls." Gold -- Sharefin, 17:54:33 02/08/02 Fri WGC Commentary - PDF File The market remains extremely active with dips being bought with aggression, but also some selling from the trade coming in towards the highs. Some of the buying has a consistent pattern to it, which suggests that it is of a professional nature, while retail demand in Asia, especially Japan, remains very strong and, if anything, is accelerating; in addition there are signs of retail interest developing also in Europe. The move from $300 to $307 was concentrated in Asian hours, aided by some slippage in the dollar. Although this recent move has been very rapid, which has led some commentators, notably technicians, to comment that the current leg is over-extended, underlying market sentiment remains bullish. The volatility in the price action has seen the bid:offer spread widen this morning to $1.50. Activity this weekend will be interesting as the Hong Kong market will be closed from Monday to Thursday inclusive for the celebration of the Chinese New Year. Gold -- Sharefin, 17:52:07 02/08/02 Fri Gold rush is on as fear takes a hold Evy Hambro at Merrill Lynch is the first to admit that until recently, the gold market had been in the doldrums for many years. At the end of the 70s the price shot up to $700-$800 an ounce, and since then it's mainly been down, down, down. In late 1999 the price surged above $320 after central bankers met in Washington and agreed a moratorium on sell-offs. But then the price fell again, dipping below $260 a year ago before starting its upward ascent. "Every move prior to this has been very sudden, but this has been a very gradual rise," says Mr Hambro. Fuelling this is the current surge in demand for gold among the Japanese public, triggered by the decision of the government there to ditch rules that guarantee people's savings in the event of a bank collapse. With the Japanese stock market in turmoil and the yen falling, many people have been pulling their money out of accounts and buying jewellery and gold coins. Added to that, gold production is starting to decline, which suggests the supply of gold will fall. Merrill Lynch reckons that these factors along with unstable stock markets and low interest rates mean that "the outlook for gold remains positive". Gold -- Sharefin, 17:47:54 02/08/02 Fri Gold regains investor favour to reach two-year high This has brought cheer to the gold miners in South Africa and Australia, many of whom have closed their mines in recent years due to depletion of the mineral and rising costs. In addition, the surging gold price, which is quoted in US dollars, is giving a boost to the miners' bottom line against the backdrop of the weak South African rand and the Aussie dollar. Share prices of gold mining firmsin the two countries have also risen in tandem. Trading volume of yen-based gold futures on the Tokyo Commodities Exchange soared to a new high of more than 326,000 lots yesterday, reflecting the “gold rush” in the Japanese market. Gold -- Sharefin, 17:45:30 02/08/02 Fri Party time marks bounce in bullion GOLD companies were in a celebratory mood yesterday as bullion prices finished the week at $US307 an ounce and the spectacular week-long run showed few signs of slowing. Across the eastern Goldfields companies reported an upbeat mood with many believing this could be the rally that would wake gold from its near five-year slumber. But there was also some reluctance to be too bullish because many times in the past the gold price has disappointed by retreating quicker than it has risen. Senior industry member Peter Lalor, the executive chairman of WA's biggest gold miner Sons of Gwalia, said that while history would show the rise was not sustainable, some of the signs this time around were positive. "The fact that the three or five major companies who are consolidating the industry are first of all saying they are going to knock out high cost production and secondly saying that they are going to cut back on hedging is a very positive sentiment," he said. "We are not finding anywhere near the gold we are producing. "On a global basis the industry is working closely with the World Gold Council and we've just agreed to have the biggest spend we've ever had on a global basis on marketing gold for jewellery purposes, you've got financial market worries, Enron etc, so you put all those things together it's a reasonably positive story. "But you still have to ask the fundamental question of is it sustainable on the physical supply-demand equation?" "The drought is over after so long - we are getting calls from London, Europe and the eastern States institutions are now interested," he said. "It certainly looks like it's got some legs this time, but every time we say that we live to regret it, but you sense it's going to stick around these levels." You do realize that this is Donald's job to post these links -- TYoung, 17:42:14 02/08/02 Fri sorry to have messed up the previous post Gold -- Sharefin, 17:38:42 02/08/02 Fri Gold Rush Gold -- Sharefin, 17:37:30 02/08/02 Fri Dubai gold prices could rise further Jim Puplava-ANOTHER reason glod may be arisin' -- TYoung, 17:36:52 02/08/02 Fri Storm Watch  Gold -- Sharefin, 17:35:57 02/08/02 Fri Gold's present glitter could prove but a fleeting flash Jim Puplava-ANOTHER reason glod may be arisin' -- TYoung, 17:35:34 02/08/02 Fri Gold -- Sharefin, 17:33:55 02/08/02 Fri Structurally Unsound - PDF File Option granting during the 1997 - 1999 bear market, has resulted in a structural condition where the dealer market becomes increasingly long gold as it rallies. As this is hedged by selling spot, it results in an increased borrowing requirement. n Therefore, although we believe that a higher price will result in lower lease rates, until gold finds a new plateau, one should expect lease rates to tighten. If gold has entered a protracted bull phase, then we believe that lease rates will fall. That being said, however, there is the potential for a spike in lease rates as gold moves higher. Why? Simple - bullion bank options positions. Notwithstanding the fall in hedging since 1999, many of the options positions which exacerbated the move following the Washington Agreement remain. These positions are too long dated (5-10 years) to have matured in the ensuing 3 years and buybacks have tended to focus more on buying outright forward than on buying back options positions, as the latter would require paying premium. Hit by a declining gold price in 1997-1999, producers significantly increased the size of their hedge books. As the price continued to fall, producers had to look for ways to enhance their forward price beyond the simple contango. This resulted in an explosion in options positions as producers granted upside calls to generate premium. Although options also exploded in complexity, fundamentally all positions involved granting upside optionality as a result of the upward sloping price curve (which means that calls struck at a given price increase in value as you extend the maturity). Both simple upside calls and convertible multi touches or “Parisian” options (which are essentially long put positions which convert into the same or larger amount of forward or call positions if a barrier is triggered on multiple consecutive dates) have the same result - if they are triggered the granter of the option becomes short and the buyer becomes long. Therefore, as the price rallies, bullion banks become long gold. To hedge this they sell spot. In order to accurately hedge the exposure, they then need to borrow gold to the maturity of the option. In reality these positions will often be mismatched (i.e. the bank will borrow gold on a shorter term basis). Either way, the rising price will generate additional borrowing demand, therefore pushing up lease rates. So one can reasonably expect lease rates to tighten as the spot price rallies. Does this change our view that a protracted bull market would result in lower lease rates? No. We believe that a protracted bull market will lead to more buybacks, thereby reducing the amount of gold which needs to be borrowed. That being said, until gold finds a new plateau, one can expect these structural positions to exacerbate lease rate moves in an already thin and nervous market. Gold -- Sharefin, 17:24:41 02/08/02 Fri Gold Mining Stocks: A Risky “Safe Haven” Gold humour -- Sharefin, 17:14:01 02/08/02 Fri Top 10 signs of a gold market top for Gold Bugs Gold -- Sharefin, 17:11:34 02/08/02 Fri Those Old Golden Ducats I fondly remember an earlier era When shiny gold coins were well hid ‘neath my floor. The eagle, the rooster, the sovereign, the panda, I squirreled them there so I'd never feel poor. If stock markets tanked I'd just smirk at the panic, Inflation-swamped bonds made me chortle with glee. A country defaulted, investors went manic, But I had my ducats, it never touched me. Those old golden ducats, those precious bright nuggets, Financial worlds shook but it never touched me. On long winter nights I took out my gold treasures And sprinkled them freely o'er pillow and sheets Then rolled amidst coins that gave me kinky pleasures The kind you don't get from T-bills or from REITs. For what is an asset that's nothing but paper? A government's promise, a company's plea, Whose worth swings each time they devise a new caper Unlike my gold ducats, whose worth ne'er did flee. Those old golden ducats, those precious bright nuggets, Financial worlds shook but it never touched me. Now times they have changed and uncertainty risen As metals most precious have lost their cache. With currencies sprung from their hard asset prison It's markets not metals that have final say. All money is funny, and central banks love it They set true worth's compass, they're happy, they're free! Alas in my mattress, my lumpy life savings, Are shriv'ling away, oh woe, woe is me! Those old golden ducats, my less precious nuggets, Financial worlds changed-and it sure has touched me. GATA -- Sharefin, 16:56:54 02/08/02 Fri The Price of Gold is Going North of $600 Per Ounce! Shadowfax -- Sharefin, 16:53:31 02/08/02 Fri Interview on Global Tyranny Galearis -- Sharefin, 16:50:33 02/08/02 Fri The few errors I've pointed out of late appear to be more so involved with price tampering rather than data spikes. On this chart you can readily see a couple of samples of data spikes. The earlier errors I pointed out where when silver rose over $4.80 to $4.86 and Bart's chart showed the rise and then later didn't show the rise. It appeared that someone had seen the rise and wanted it removed and took the prior 30 minutes data and pasted it into the time frame where silver rise was. This was so obvious as to make one wonder why. (You can see the charts of this event in the archive.) The other errors I've noted are when Bart's chart flat-lines whilst a rally in the price is occurring. This has happened twice of late right when the price was rising sharply in Japan. The price rises were clearly evident on other live feeds yet on Bart's they didn't show up do to a flat line. It seems to me that there is some dubious goings on, though I don't really have a clue. I am just one who is noting the obvious. When you supply a live chart with 24 hour coverage then one expects timeliness & accuracy. This of late has proven to be a problem and I have been pointing out the obvious to others so that they can look & see and make up their own minds. One reason glod may be moving -- TYoung, 16:29:48 02/08/02 Fri The Credit Bubble Bullitin-Noland Panning Barrick and the XAU -- auspec, 16:25:18 02/08/02 Fri The following was extracted from an Adam Hamiltom essay called "Gold Challenges $300". No link at current time, but his essays are usually put up at GE shortly after coming out. As gold stocks bear far more risk than owning the Ancient Metal of Kings itself, they should offer far higher returns than physical gold to compensate for their higher risk, leveraging the gold price. Incredibly, the gold stock with the largest market-capitalization on the planet by far, Barrick Gold (ABX, in red above), actually only returned 11.2% since early 2001, not even matching gold's return! A major gold stock that does worse than gold itself in the most substantial gold rally in six years?!? This should be a scandalous revelation to the gold world! Why on earth would any prudent investor in the world want to own a gold stock that underperforms gold in a major gold rally? Barrick Gold is the most notorious gold hedger on earth, having sold-out its very soul and its shareholders' best interests to greedy bullion bankers through complex derivatives hedging contracts not unlike Enron's that attempt to lock-in future gold prices for the huge company. Barrick has already contracted to sell at fixed prices something on the order of every single ounce of gold it will mine for the next three and a half years. Talk about counting your chickens before they hatch! If gold continues to rally, Barrick shareholders will eventually actually lose money on every single ounce of gold sold as the company will be contractually bound to sell gold below the spot price, incurring vast opportunity costs and killing shareholder returns. The once-proud Barrick Gold has degenerated into such a derivatives-laden nightmare that it actually, in reality, is more of a de facto hedge fund than a gold mining company, and its horrible performance in the midst of the recent gold rally emphasizes this point. If you are an investor who is bullish on gold and either own Barrick stock directly or own a gold mutual fund that maintains a position in Barrick Gold, you would be doing yourself a huge favor if you sold it immediately with extreme prejudice. Rather than taking on the enormous Enron-like risk of owning a complex derivatives quagmire like Barrick that underperforms gold, you would be far better off owning physical gold itself with that capital. You could also instead buy a real gold-mining company that actually benefits from a rising gold price, as gold mining companies should! If, like us, you are gold bulls, avoid Barrick Gold like the plague and invest in quality gold mines that haven't sold away any potential upside in gold rallies to benefit the bullion bankers at the expense of shareholders. Interestingly, the XAU has yielded a respectable 30.0% return since early 2001, about 2.7x gold's return. While 30% is a great return in any market, especially a huge and brutal secular bear market, the XAU's return is far inferior to that of the quality unhedged gold stocks for one big reason. Yes, you guessed it, Barrick Gold again! Mega-hedger Barrick Gold constitutes a third of the total value of the XAU and has the same bloated influence on the index's level. As long as a hyper-hedging dog like Barrick anchors the Philadelphia Stock Exchange Gold and Silver Index, its performance will only be a fraction of what it should be. Without Barrick, the XAU might have performed almost twice as well in 2001, a huge difference. If I ran the Philadelphia Stock Exchange, I would kick hedge-fund Barrick out of the XAU and concentrate on real gold mines that derive income from gold mining and not complex hedging contracts. If the Philadelphia Stock Exchange wants to improve its business and increase the popularity of the XAU in the futures and options markets, it could make quantum leaps in increasing its revenue on that front in an XAU that booted Barrick and concentrated on real gold miners that benefit from a rising gold price and not convoluted hedge funds that thrive with a falling gold price. Newmont Mining (NEM, light blue above) is the best large American gold miner and its management is very bullish on gold and strongly philosophically opposed to selling away future upside through hedging. Newmont, thankfully, is the second heaviest-weighted component of the XAU at 16% and it has achieved an incredible 35.4% in the last year or so. Interestingly, Newmont will be the largest gold miner on earth in terms of ounces produced annually once its three-way merger with the largest gold miner in Australia, Normandy Mining, and awesome Canadian gold royalty company Franco Nevada is consummated, probably this month. Skipping-up the food chain a little, we find that the fantastic HUI index (pink in the graph above) of unhedged gold stocks has roared-up a spectacular 105.3% since early 2001. This is an even higher one-year return than the breathtaking NASDAQ explosion of 1999 which garnered so many headlines and adoration! The HUI is the American Stock Exchange Gold BUGS (Basket of Unhedged Gold Stocks) Index. The HUI is what the XAU should be if the hedge-funds-in-drag like Barrick were removed and only the honest gold miners were left in the index. I am very encouraged that the HUI is gradually gaining more acceptance in the gold world and I will rejoice at the day when the HUI finally replaces the XAU as the gold stock index of choice. That day is definitely coming if the Philadelphia Stock Exchange doesn't clean up the XAU and cast out the hedge-funds! For risk-loving gold investors who enjoy skydiving on the weekends and vacationing in war zones, the American Stock Exchange also offers trading in HUI options, a far better bullish gold index pure speculative bet than the options on the flawed XAU index! Last, but certainly not least, the three major unhedged South African gold mines, Gold Fields (GOLD, orange above), Harmony Gold (HGMCY, green above), and Durban Roodepoort Deep (DROOY, white above) have yielded legendary returns since early 2001. HGMCY is up an awesome 105.2%, GOLD is up a fantastic 135.2%, and DROOY continued its assault on the heavens this week roaring up to a stupendous 308.4% gain in a little over one year! And you thought the dot-com boom was fun, wait until the neo-gold bull really gets galloping! Of course, the cratering South African rand currency I discussed in our recent “Who Ransacked the Rand?” essay has been a tremendous boost to the unhedged SA miners, but even before the rand's implosion in 2001 the South African unhedged gold mines were easily leading the gold-stock performance pack. END OK...my url won't go in and I used all the funny little symbols -- shadowfax, 14:48:31 02/08/02 Fri So here is the url....gotta go get it yourself http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=23642 Lets try again...lost my url -- shadowfax, 14:45:42 02/08/02 Fri Now for the Url: again... Empowerment, Empowering, Empower ,anyway you cut it! -- shadowfax, 14:23:28 02/08/02 Fri Empowering the United Nations with vast legislative, judicial and executive powers, backed up by military and police force. Well worth the read.... United Nations and "effective control" -- FOG, 12:09:23 02/08/02 Fri United Nations UNSD - System of national accounts 1993 (updated) Notes /2 Monetary gold will normally consist of the gold to which the central bank and the central government actually hold title. In some circumstances, other institutional units such as financial corporations may hold title to gold that can only be sold with the specific consent of the monetary authorities. In such restricted circumstances, the concept of effective control can be applied to the gold holdings of other units. The same criterion of effective control can also be applied to other components of reserves. http://esa.un.org/unsd/sna1993/toclev8.asp?L1=11&L2=5&print=yes Now the question be, "Who is stumbling around the parapet with their head tucked beneath their arm?" the concept of "Effective Control" -- FOG, 10:58:17 02/08/02 Fri "…in some circumstances, other financial corporations MAY HOLD TITLE TO GOLD THAT CAN ONLY BE SOLD WITH THE SPECIFIC CONSENT OF THE MONETARY AUTHORITIES. In such restricted circumstances, the concept of effective control can be applied to the gold holdings of financial corporations other than the central bank." http://europa.eu.int/eur-lex/en/lif/dat/1996/en_396R2223.html $300 -- auspec, 10:48:20 02/08/02 Fri There has to be a raging battle to keep gold under $300 going into the weekend, NY at its best. Will it be good enough? In the long run this is simply a minor skirmish, but those are clearly cracks showing in the facade. Friend Tai is with the chartists saying April Gold must fill the $290 gap before possibly advancing higher. I don't doubt that this MIGHT be the ultimate outcome and according to past gold assaults, likely is the outcome. BUT, when the evil axis {Ha} runs out of ammo the charts are likely to have a 'lot of splainin to do', no? There must be, at least for short periods of times, when the charts are of little value, specifically at the inevitable end of a failed manipulation. What say you Gents? $300 -- auspec, 10:28:33 02/08/02 Fri There has to be a raging battle to keep gold under $300 going into the weekend, NY at its best. Will it be good enough? In the long run this is simply a minor skirmish, but those are clearly cracks showing in the facade. Friend Tai is with the chartists saying April Gold must fill the $290 gap before possibly advancing higher. I don't doubt that this MIGHT be the ultimate outcome and according to past gold assaults, likely is the outcome. BUT, when the evil axis {Ha} runs out of ammo the charts are likely to have a 'lot of splainin to do', no? There must be, at least for short periods of times, when the charts are of little value, specifically at the inevitable end of a failed manipulation. What say you Gents? Gold, the foreign currency -- FOG, 08:39:51 02/08/02 Fri Financial assets in foreign currency . . . financial assets denominated in gold. "Financial assets in foreign currency include financial assets denominated in a currency basket, for example SDRs, and financial assets denominated in gold." http://europa.eu.int/eur-lex/en/lif/dat/1996/en_396R2223.html REPURCHASE AGREEMENTS (RPs) FR 2415 OMB No. 7100-0074 Approval Expires June 30, 2003 For purposes of this report, EXCLUDE the following: - RPs on ANY asset OTHER THAN U.S. government and federal agency securities - RPs denominated in foreign (non-U.S.) currencies. - (Note: A distinction is made between the denomination of the RP itself and the denomination of the securities underlying the RP. All RPs denominated in foreign (non-U.S.) currencies are excluded from this report.) www.federalreserve.gov/boarddocs/reportforms/forms/FR_241520000607_i.pdf Pertinent Question: Does a government issue its paper in a foreign currency from a position of strength? Or does such issuance suggest weakness? What if??? -- shadowfax, 07:33:43 02/08/02 Fri From: "cxpowell" Date: Fri Feb 8, 2002 10:09 am Subject: A speculation on what happens if gold reaches $320 Thursday, February 7, 2002 Hi, Chris: I'm a currency strategist and have read a lot about GATA. I would like to know what you think would happen in the short term (this year) if gold spot clips $320. In simple terms, do you think banks would start to default in large? This will have a huge impact on spot forex medium-term strategy. Most of us are already short yen on the potential of bank default. If you have time, I would like to have your comment. L.W. South Africa * * * 4:55a ET Friday, February 8, 2002 Dear L.W.: Thanks so much for your inquiry about what is likely to happen if spot gold reaches $320. That is, are the bullion bank shorts likely to default? GATA has no inside information on this point, but I long have argued that, if, as we think, the bullion banks have been encouraged and even underwritten by governments, and particularly by the U.S. government, in the gold carry trade, and if some bullion banks, particularly Morgan/Chase and Goldman Sachs, are considered by the U.S. government to be "too big to fail," then they will be rescued from a gold run by the U.S. government's allowing them or arranging for them to buy the leased gold at prices well below spot, or by the government's greatly extending the terms of the leases, thereby preventing the worst of a short squeeze in gold. That is, in case of a gold run, the U.S. government effectively will expropriate the American public of its gold reserves, and expropriate the gold reserves of the other peoples of the world, for the private benefit of the bullion banks. As the Enron scandal has indicated, that's pretty much how Wall Street and the U.S. government have been working together all along: crony capitalism fleecing the world behind the mask of free markets, when those markets aren't really free at all. With good wishes. CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. -END- Dropped data on Kitco charts -- Galearis, 05:58:06 02/08/02 Fri Hello Sharefin, Lately a lot of attention has been paid to Kitco charts not recording daily high spikes that happened. I have always assumed that the software over there that Bart uses is perhaps not as sensitive as it should be and that for every tick that is missed to the high side, there are some not registering on the low side either. Today was a case in point. About 5 minutes ago the kitco chart showed gold at $303 but with a vertical down to $299.80. The next minute it was gone. That's a FWIW to this forum. Japan -- Sharefin, 23:43:09 02/07/02 Thu Japanese, Fearing End Of Guarantee On Savings, Buy Gold "The end of the government insurance on savings is a big factor," jewelry company spokesman Masakazu Tanaka said. "People are looking for a secure place to put their money." They refused to give specific figures, but said some customers have bought as many as 40 of the 2.2-pound bars. "Many people don't know about the change yet," Inoue said. "Who knows what will happen once it kicks in?" "In Japan right now, paper assets are under attack, the Nikkei is getting slammed, and there is little to no faith in domestic policy," Leonard Kaplan -- Sharefin, 23:39:58 02/07/02 Thu Leonard Kaplan Commentary Yesterday's commentary was as unabashedly bullish as I have been in perhaps 10 years, but, I would like the market to prove itself to me. BHP -- Sharefin, 23:38:18 02/07/02 Thu BHP Billiton pulls out of Ok Tedi copper mine Gold -- Sharefin, 23:37:06 02/07/02 Thu Investors pause but gold soars In hectic overseas trading on Wednesday, gold futures climbed as high as $US309/oz, the highest level since February 2000. Gold -- Sharefin, 23:33:53 02/07/02 Thu Gold's safe haven status causes havoc on the JSE Johannesburg - Gold's status as a safe haven has caused havoc on the JSE Securities Exchange, first helping the bourse to outperform its peers in Europe on Wednesday and then dragging it down as profit-taking took centre stage. The most dramatic effect, however, was in the derivatives market, where warrants traded at record levels over the past two days and investors either doubled their money or burnt their wallets. Gold -- Sharefin, 23:32:17 02/07/02 Thu Gold leaves other metals at the shade of its rally JP Morgan -- Sharefin, 20:22:57 02/07/02 Thu Card-House of Morgan TRADING NOTES: It is hardly a coincidence that bullion prices zoomed to $300 on the day that J.P. Morgan Chase shares came crashing through their September lows. As I wrote here the other day, Morgan's problems could eventually dwarf those of Enron. They are bound up together right now, to the extent Morgan -- the largest lender in the world to U.S. firms -- supposedly has Enron exposure that exceeds $2.3 billion. However, as my recent note here suggested, the banking giant's risk in the derivatives markets could be considerably higher, since it holds leveraged debt paper with a notional value exceeding $30 trillion. You'd think things could not get much scarier than that, but on Tuesday -- with gold prices soaring -- they did. As it happens, Morgan is a big player in the gold market, mostly by way of bullion loans that work best when gold prices are weak. Those of you who went to the article I flagged last week by DeTocqueville Fund's John Hathaway will already know this. But for those of you who did not, here is the salient part of it concerning J.P. Morgan Chase: The concentration of gold derivatives in the hands of one institution cannot be comforting to central bankers who had originally lent their gold reserves to a wide array of bullion dealers. JP Morgan Chase, also a major counter party to Enron in a variety of energy derivatives, held 80% of the gold derivatives reported by the OCC (Office of Controller and Currency) as of 9/30/01. Although total gold derivatives reported to the OCC have declined from the peak levels of $87.6 billion at year-end 1999, JP Morgan held only 40% of the total that time, which was prior to the merger with Chase. The decline in OCC-reported gold derivatives from the 1999 year end peak is most likely due to an offloading of positions to a non-OCC reporting entity such as Enron, an Enron-like organization, or a foreign bank. Now that many have abandoned the gold derivatives trade, it appears that JP Morgan Chase has become the rear guard to defend the derivatives universe against higher gold prices. A "rear-guard" defense? If so, Da Boyz will have their hands full today, since gold's assault on $300 during yesterday's (Tuesday's) session hardly looked like it was going to subside quietly overnight. I had projected a short-term target for the April Comex gold contract in the range 305-306, but practically speaking, anything could happen. Morgan has friends in high places, as we all know, and they have proven many times in the past that they have both the resolve and the muscle to keep the gold price from drifting upwards of $300. Sooner or later, though, even more powerful forces than Morgan and its friends were bound to prevail. Will it be this week? Stay tuned. Gold -- Sharefin, 19:22:47 02/07/02 Thu Gold Directors Applaud Metal Surge Reasons given for the run have been varied and include AngloGold and other gold producers pledging to reduce hedge books, increased physical demand from Asian, especially in Japan. Dow Jones Newswires reported that Japanese investment demand for gold had risen 91 percent year-on-year in the third quarter of last year, as well as general economic uncertainty. Gold -- Sharefin, 19:20:50 02/07/02 Thu Stampede for Gold Sets Price Alight Gold -- Sharefin, 19:17:06 02/07/02 Thu Japanese go for gold Fears are growing again about the health of the Japanese financial system. On 1 April the government begins to phase out its guarantee to reimburse all deposits in the event of bank failures - a decision which is adding to an already nervous mood. Stocks and property have proved disastrous investments over the last decade, and the continuing recession leaves little prospect of an upturn. That is why private investors are seeking out other options - such as gold bars. 'Dangerous state' You do not see many smiles in Tokyo's financial district these days, but in gold shops the staff can hardly contain their glee. Sales of gold bars are up five-fold  Sales of gold bars are up five-fold on this time last year, says the shop manager of the Tokuriki Honten gold shop, Masahiro Arai. "In Japan trade in gold is usually done with cash - people come in here with paper bags full of money and then they take the gold and go home, often by train or taxi. They're buying in large quantities, up to 30m yen at a time," he says. That is more than $200,000. Understandably there is a rather furtive atmosphere in the shop. Many of the customers are shabbily dressed - deliberately - so they do not attract attention on the street. An elderly woman who produced $25,000 in cash said she was very worried about the economy. "I'm buying Euros and dollars as well as gold. something disastrous could happen to the economy. I'm very anxious about the yen it's getting weaker - that's why I'm buying gold for the family." Worried wives Makoto Miki, the manager of another gold shop also reports a big increase in demand and he says the type of customer is changing. You're seeing a lot of people who are jittery... that in itself could push the current situation over the edge Kana Norimoto, banking analyst "Several months ago, usually one old or middle aged man came in and bought gold, but recently the number of people who are accompanied by their wives is increasing." Mr Miki thinks the wives are coming in because they "have power to decide or control the money at home". "I think the wives are also worrying about the safety of their money," he says. Concerns about the health of the Japanese economy are coming to a head. Jitters The stock market is plunging to new depths and that puts intolerable pressure on the banks, which rely on huge stock portfolios. They are already groaning under the weight of loans that will never be repaid. Concerns about the Japanese economy are coming to a head On top of all that, the government begins to phase out its guarantee to reimburse all bank deposits at the end of March. Kana Norimoto, banking analyst at Nikko Salomon Smith Barney, says the timing could hardly be worse. "I actually don't agree with them taking the deposit cap off at this point. I think that the government needs every policy it has in place right now to cope with a growing crisis. "You're seeing a lot of people who are jittery and I think that that in itself could push the current situation over the edge." Good option? Out on the streets - the mood is increasingly jittery. Many Japanese lost huge sums on the stock market when the bubble burst 10 years ago - it is still more than 70% below its peak. Now people are questioning the banks. "Even banks go bankrupt nowadays - it's a different era. We're responsible for protecting our own savings. It can't be helped," says one man. Another adds: "The banks are so unstable and I'm very confused about how to keep my savings. We don't know which ones are reliable." Some are seeking refuge in the state owned post office. There are predictions that in the end the government will have to nationalise the entire banking system and sort out the bank loan problem with public funds. So is gold a good option ? Maybe from a retail depositor's standpoint it seems to be a very safe investment. Obviously there is something very tactile about gold, you can probably stick gold bars under your mattress, but it renders monetary policy ineffective for the government. The Japanese Government and the economists may not like it - but the yellow stuff is likely to remain in demand for the foreseeable future. FBI say no arrest and no swift conclusion to $750 mil Irish bank loss -- Donald, 19:01:20 02/07/02 Thu click here Gold -- Sharefin, 19:00:03 02/07/02 Thu Gold prices hit two-year high  Gold prices have risen sharply on the financial markets, rising above $300 an ounce for the first time in two years earlier this week. It may be a sign that investors have lost confidence in the real value of shares as a result of the scandal over accounting practices at the bankrupt energy group Enron. There has also been a surge in demand in Japan, where investing in the metal is seen as a potentially safer option than putting money in the country's ailing banks. Changes in policy by mining companies on the amount of gold they sell in advance of production - to reduce the risk of adverse price movements - has also affected the price. Safe haven Enron managed to hide losses through clever accounting. Investors are worried that other big firms may have done the same, which means their shares could slump in value once the truth is out. With so much uncertainty around, investors have suddenly recovered their appetite for gold - it has regained some of the safe haven status it had for centuries as an asset that can be relied on to retain its value in troubled times. Its safe haven status also accounts for its increased popularity in Japan where the government will end a scheme at the end of March guaranteeing that depositors will get their money back if a bank fails. Temporary enthusiasm? Gold prices have languished in recent times partly because Central Banks have flooded the market by selling off their reserves, and partly because investors believed they would make more money from trading shares and currencies. But with many of the world's leading share indexes losing value last year, savers have been returning to more traditional forms of investment. But there's no guarantee that current high prices for gold will last - there have been temporary bursts of enthusiasm for the metal before. Ashanti/Gold Fields -- Sharefin, 18:50:00 02/07/02 Thu COMEX gold consolidates rally above $300/oz FRONT PAGE NEWS Dow, Nasdaq see fifth straight session of losses Skilling defends his actions as Enron CEO EDS sets revenue record in Q4 Cisco shares sink after detailing results, outlook Sign up to receive FREE e-newsletters: Get the latest news 24 hours a day from our 100-person news team. "Overall it stayed in a fairly tight range, compared to what we've seen the last couple of days," said James Pogoda, vice president of precious metals at Mitsubishi International Corp. "But I think the bullish argument is still intact. I think the reasons behind it are all still valid." "I'm still quite friendly to it, although I do not see it running away," said Leonard Kaplan, president at Prospector Asset Management, who said longer-term gold could head for $340-$350. "I do think the average for the year will be well in excess of $300," he said. "The reports out of Japan are indicating some accelerated buying in both gold and platinum," Kaplan said. "Platinum being a thinner market, we're seeing a greater effect in platinum and palladium by currency hedge buying out of Japan." Ashanti/Gold Fields -- Sharefin, 18:48:04 02/07/02 Thu Ashanti/Gold Fields: the Truth Behind the 'Deal' Enron Report -- Sharefin, 18:41:48 02/07/02 Thu Report Of The Special Investigation Committee - PDF File 218 pages long DRD -- Sharefin, 15:43:32 02/07/02 Thu DRD directors making hay while gold shines Donald -- Sharefin, 15:31:52 02/07/02 Thu Great to see you putting your charts online. If you wish to post them into the body of this page then there's linking instructions above here in the header. Keep them coming.... Cyclist -- Sharefin, 15:29:42 02/07/02 Thu Thanks for your reply. I don't have any stocks so aren't watching them to closely. I'm out of the debt cycle & into the physical cycle.(:-))) I'll leave the paper trading to you guys and sleep well on my physical. cyclist, thanks for your answer last night -- miro, 15:01:05 02/07/02 Thu I though that you were talking about gold stocks, jut wanted to be sure. I am with you, yet, I think that the trend is up and at times like these I don't dare to trade, I go with trend. Of course I am ready to change my opinion and trade when trend has changed. As far as your remarks about general SM, I see some opportunities, yet, I have a hard time to decide as I think gold stocks have a good chance to go up ... yet I may move some money into other issues later this spring. Yes, oil related issues are on my list but also some hight tech (biotek, etc). It's gona be a hard decision which way to play it ;-) cheers Retry -- Prometheus, 13:04:13 02/07/02 Thu World Bank Satire Tongue firmly in cheek -- Prometheus, 12:56:50 02/07/02 Thu World Bank Wants to Help Afghans Amass Staggering Debt Burden abx short covering -- Cyclist, 12:08:36 02/07/02 Thu riding the wave XAU/Spot Gold Ratio Life of Index -- Donald, 11:17:03 02/07/02 Thu click here SWC -- Cyclist, 09:38:29 02/07/02 Thu looks to have made its bottom this morning,cycles are favourable. Sharefin -- Cyclist, 09:14:52 02/07/02 Thu Cycles will keep you in a systematic time frame and keep your outlook in perspective,bull or bear market. Trading psychology is critical in this environment and not suited for everybody. However for the longtermtrader,whoever was listening that time(July 2000),I gave ample time for the bottom of a generational gold cycle for the second/third week of October 2000. Take care..:) Date: Fri Jul 14 2000 00:52 cyclist (Cycles and seasonals) ID#33490: are giving a major sell end next week for the gold stocks. No reprieve in sight until first/second week of October. Target objective 38/40 on the XAU with an explosive rally to follow. Conserve capital,short or hedge. The above FYI FWIW. Main market following a presidential election script,making a high in August with a sharp decline into October with an inflationary bull market of 9 to 12 month to follow. and Date: Fri Jul 14 2000 02:19 cyclist (circular) ID#333265: Copyright © 2000 cyclist/Kitco Inc. All rights reserved A powerful 29 year cycle comes into play,where gold will be kept in a tight band and inching higher. I believe 272 has been the bottom for this year,the XAU still has to make make a bottom based on its earnings and will track the main market in its slide. I will give you the years 72,43,14,1885,1856 where the miners made a combined low with the mainmarket based on its earnings valuation,every rally that ensued was indeed a powerful one. The present financial health of most miners is tenious and will be translated in lower prices yet to come in conjunction with the rest of the markets. Cash is king for now.Personally I'm out of goldstocks and only hold physical,complementing my cash position as indicated before in previous posts.The disparity will widen between gold and goldstocks. NEM and PDG as the majors have a weak financial picture. NEM has an interesting chart where it made three declining tops it broke its trendline at 21 from its 98 low.This tells me we have a lot further to go on the downside. Gold -- Sharefin, 08:55:47 02/07/02 Thu Deja Vu - pdf file  Japan -- Sharefin, 08:46:15 02/07/02 Thu The Panic Spreads JP Morgan -- Sharefin, 08:39:25 02/07/02 Thu BANK'S $29 TRILLION DERIVATIVES BET IS VERY RISKY IS J.P. Morgan Chase too big to bail? Last week I posed the more common question: Was the bank too big to fail, or allowed to fail by the government. It's a logical question since J.P. Morgan Chase has had a string of bad luck recently, including involvement with Enron. The bank says its luck hasn't been as bad as it looks, and I'll get to that in a minute. But J.P. Morgan chief exec William Harrison admitted publicly yesterday that the bank had assumed too much risk in dealings with Enron. But I saved potentially the most ominous and admittedly most confusing of J.P. Morgan Chase's bets for last - derivatives. Lot and lots and lots of derivatives. Enough derivative exposure, in fact, to dwarf the entire gross domestic product of the United States. What are derivatives? They are investments - gambles, really, like those made by Enron - on things that are "derived" from other investments. The dollar, interest rate spreads, stocks, livestock - you name it, because your guess will be as good as anyone else's outside of J.P. Morgan. J.P. Morgan declined a request to discuss its massive derivative position even as it was defending its streak of bad luck. Just how massive is Morgan's derivative gamble? Get this - it has a potential, or notional, value of $29 trillion. That is in addition to net credit exposure of $94.7 billion. Trillions in derivatives. As in three times the nation's entire annual gross domestic product. Here is another comparison to consider: Citigroup, another giant bank, only has $9 trillion in derivative exposure. Says Jim Grant of Grant's Interest Rate Observer: "So dominant is Morgan Chase in the derivatives market that its exposures look like typographical errors." Adds bank analyst Charles Peabody of Ventana Capital, "It's an incredible figure and it's very dangerous. There's no exit." On the bright side, J.P. Morgan Chase's derivative position has been growing steadily for years, so far without an apparent mishap. But, then again, the country and the banking industry hasn't been through a recession in recent years. As for its bad luck in loans to companies like Kmart, Global Crossing, Enron et al, as well as Argentina, J.P. Morgan Chase says that its losses on commercial loans are equal to less than 1 percent of its total portfolio. And it promises that it isn't hiding any losses off the balance sheet - like PNC Bank is accused of doing. And apparently taking one from the Ken Lay quote book, J.P. Morgan Chase says I'm relying too much on a small group of bank industry analysts in my critique. I hope the bank is right, because J.P. Morgan Chase's dabbling in derivatives makes it too big for even the Federal Reserve to bail out. CB2 -- Sharefin, 08:36:53 02/07/02 Thu Thanks for your kind comments. I believe that gold will take out it's old highs in this bull run and I expect this rally to top out in the next two years. So that means that we've just begun our run and all the fun is ahead. What more could a goldbug want. Gold speaks. Are you listening? -- Sharefin, 07:59:22 02/07/02 Thu Gold speaks. Are you listening? Newmont Info -- Sharefin, 07:55:22 02/07/02 Thu Normandy cannot happen soon enough for Newmont Counterparty's! -- CB2, 07:49:50 02/07/02 Thu @ Sharefin - would like to humbly express my appreciation of this great new site. Have been looking out for your posts on Kitco, while lurking and sadly missed your posts. After the Enron debacle I'm waiting for the first counter-party to collapse under the weight of their bad bets. Al's misguided pumping is just flooding the wrong side of the equation. Liquidity problems may just surface at some of the mega hedgers, though I would feel the Mega-Banksters are starting to feel the crunch. A phenomenon, which is not only surfacing in the US. JPMC, Citi may be the most obvious; But then you have the Japanese Banks and believe it, UBS and DB may also find themselves as victims to their ballooning derivative bets. If this comes to fruition, you've ain't seen anything yet in the POG. Thanks again for all your efforts and regards cb2 (and a friend of auspec) Gold Surge -- Sharefin, 07:49:13 02/07/02 Thu Gold surge: flash in the pan or an extended run Few analysts willing to forecast a retreat to 250-280 range IS GOLD's sudden surge through 300 just a flash in the pan as it was in the immediate aftermath of September 11? Or, this time round, are there sufficient fundamentals in place for the rise to be not only maintained, but extended? There were few analysts this week prepared to forecast an imminent retreat to the $250-280 trading range that predominated for most of the past year. This time, they argue, the fundamentals have changed. Rhona O'Connell, an economist at the World Gold Council the gold industry's advocacy organisation is confident that the breakout from the $250-280 range will be sustained. In the US there are concerns over equities in the wake of the Enron collapse and the outlook for corporate earnings, leading hedge fund managers to hunt for a secure reserve asset. Technical factors are triggering buying orders as short positions are closed out. And the physical side of the supply-demand equation has been changing sharply. Blame the Americans. Aggressive federal fund rate cuts by the Federal Reserve have slashed interest rates and narrowed gold's contango the difference between gold lease rates and quoted interest rates to 1% or less. In other words, forward buyers can count on getting only today's spot price plus 1% for their trades by year's end. At that rate it is hardly worth trading. Couple this with the latest decisions of the likes of AngloGold and Normandy to start reducing their hedge books, and the physical outlook becomes more problematic. As the producers start to believe gold may be in for a solid advance, they too are less willing to sell forward. Newmont has already had Normandy unwind 1,3-million ounces from its forward sales book. And AngloGold announced just last week that its hedge book would be cut to 10-million ounces by year-end from its current 14-million ounces. The mines are expressing their view that the gold price is more likely to strengthen than weaken over the year. And the result in the futures market has been an abrupt squeeze on short sellers, traders who have been betting that the price will fall. On a more fundamental level, the longer-term outlook for new mine production is not great. Many of the world's gold mines are reaching mature stages in their lives, resulting falling output. And the prospect of mine closures is underscored by consolidation in the industry worldwide, leading to an acceleration of mine closures. Positive sentiments arising from these supply-side influences are being augmented by strengthening demand-side sentiment. On an immediate level, expectations that the US recovery will be stronger and sooner than expected only a month or so ago, appears to be starting to boost physical demand. Perhaps people are buying gold because they feel good about their disposable incomes. But in something of a fundamental change in sentiment, there is the developing view that gold is, once again, a safe haven. The Enron debacle and questions about the true value of corporate earnings reported by creative accountants have led to insecurity. And this anxiety, according to one Johannesburg analyst, is creating some serious momentum that could carry gold well above $300. Where might it end? With much of the nonphysical trading being driven by technical factors, since the metal's surge through the wellentrenched $298 technical barrier, there has been a sharp scramble to close short positions and a simultaneous move for hedge funds to go long on gold and gold shares. The picture in SA is muddied by the rand's decline. Virtually all of the advance in gold mining shares last year was driven by the rand's weakening against the dollar. Now the picture has changed worldwide. The most recent sharp surge in the price of gold shares has been driven by the dollar price of the metal itself, a huge sentiment shift. It may be trite to say that gold share prices are an indicator of where the metal is heading. But analysts say the market has not seen the sort of moves just experienced since the 1993 surge. Overseas, the likes of Lehman Brothers are positively bullish on gold's immediate prospects, pointing to concerns about equities and currencies. In Japan, nervous investors are withdrawing money from their banks and protecting themselves from further yen weakness by buying gold. In Europe, the euro honeymoon has ended, with similar results. And there are also signs of jitters over the dollar itself. If gold is regaining its status as a store of value, the price picture may very well have changed and any price run could be sharp. Nevertheless, those with longer memories will recall the early 1980s, when gold was hitting $800 an ounce and New Yorkers were forming long lines to buy bullion and coins from the traders on Manhattan. That bubble eventually popped, as all bubbles do. Email chatter -- Sharefin, 07:39:40 02/07/02 Thu THC (Special gift from Japan) ID#376327: Guess what, glod bugs? What do ya think I saw on nationwide news at 6 PM here in Japan??? A rather LONG news clip showing how GOLD IS HOT here in Japan....it featured housewives pulling their cash out of bank accounts and buying KILO BARS.......average was 7 KILOS per purchase!!!!!! I think this one has legs, folks...... Cheers, THC London morning gold news -- Donald, 05:44:26 02/07/02 Thu clivck here Housing bubble -- Sharefin, 05:24:54 02/07/02 Thu Administration Concerned About Excessive GSE Debt The administration report also stated that, “Furthermore, the hedging transactions transform credit or interest-rate risk into counterpart risk (the risk that a counterparty of a hedging transaction fails to honor the contract). Thus, the GSEs management of counterparty risk is of increasing importance.” Derivatives, gold & Enron -- Sharefin, 05:22:47 02/07/02 Thu Olympic Special: Will the Enron Tar Baby Go for the Gold? Are hidden forces coalescing to pin a gold scandal long in the making on the sitting administration? Is there a plan to tar George W. by putting a new Sheen on gold? Stay tuned for future episodes. Nothing makes better fiction than the truth. AG -- Sharefin, 01:49:54 02/07/02 Thu  Gold -- Sharefin, 22:05:46 02/06/02 Wed Gold Rises on Concern About Accounting Fraud, Weak Japanese Yen Gold rose above $300 an ounce for a second day because of demand from investors switching out of stocks on concern accounting fraud may have hidden losses. Gold yesterday surpassed $300 for the first time in two years. Some investors also bought gold after the Japanese yen's decline reduced the value of their stock holdings. Accounting practices at Enron Corp. and Global Crossing Ltd., the biggest and fourth-biggest U.S. bankruptcies, are being investigated. ``The ongoing concerns of corporate accounting, and equities weakened by debt, are sending people looking for a safe haven,'' said David Thurtell, an economist at Commonwealth Bank of Australia in Sydney. Gold rose as much as $4.75, or 1.6 percent, to $301.75 an ounce. Yesterday, it rose to $306.65, its highest level since Feb. 22, 2000, and closed at $297. Gold recently traded at $300.15, a gain of 7.6 percent this year. Thurtell said gold may rise to as high as $330 an ounce within four months. Still, price gains may be capped if they lure sales from central banks, among the biggest owners of physical gold, and miners, he said. Declines in the yen and euro against the dollar have heightened gold's attraction for investors wanting a hedge against dollar-denominated assets, analysts said. Japan's currency has slid 9.7 percent in the past three months, making it the world's third-worst performing currency. The Japanese yen weakened to as low as 134.06 against the dollar, from 133.69 in New York yesterday, on speculation the country's central bank will dilute its value by pumping more money into the economy. Accounting Revelations Allied Irish Banks Plc, Ireland's biggest bank, yesterday said it lost $750 million because of illegal currency trading, adding to the string of corporate accounting revelations since Enron filed the largest U.S. bankruptcy Dec. 2. The Federal Bureau of Investigation is examining accounting practices at Global Crossing, a fiber-optic network operator, which on Jan. 28 filed the fourth-largest Chapter 11 bankruptcy in U.S. history, people familiar with the investigation said. Investigators are probing claims by former Global Crossing Vice President of Finance Roy Olofson, who said the company overstated revenue and misreported costs, the people said. Concern about companies' books has helped send the U.S. S&P 500 Index down 5.1 percent this year, while London's FTSE 100 has lost 2.4 percent. ``Gold is asserting a dual role, both as a reserve currency and a reserve asset and is attracting attention accordingly,'' said Rhona O'Connell, an analyst at the producer-sponsored World Gold Council, in a daily note distributed by e-mail. Gold industry takeovers have meanwhile raised the prospect of a cut in supply, with the biggest miners planning to shut or sell less profitable operations as they absorb smaller rivals. Gold -- Sharefin, 21:59:58 02/06/02 Wed Gold Consolidating Support, Getting Ready For Next Hike Spot gold is attempting to establish a support base around the psychologically important US$300 an ounce mark, market participants say, adding that the yellow metal looks capable of additional gains during Thursday trade in either London or New York At 0420 GMT, spot gold was trading around $300/oz in Hong Kong. Despite the currently choppy nature of the Asian market, spot gold is seeing active two-way interest and moving within a US$297-US$305/oz range, a Hong Kong trader said. "Things are really starting to get interesting, and most of the market is looking hard at US$306/oz resistance. We haven't been this high since October 1999 and the Washington Agreement," he said, referring to an accord between 15 European central banks to limit their sales of bullion. A Sydney dealer added that gold has already been able to come well up from US$297.25/oz late Wednesday in New York on mainly Japanese buying. The benchmark December gold futures contract on the Tokyo Commodity Exchange is currently up Y13 a gram at Y1,287/gram and enjoying a very healthy volume of 192,000 lots after Wednesday's restricted limit-up trade. Cliff Droke -- Sharefin, 21:57:08 02/06/02 Wed Gold, the dollar, and the economic outlook Gold futures on the COMEX have soared impressively over the past two days and have broken above benchmark $300 resistance, on an intra-day basis, even before we anticipated in our last commentary. This shows the urgency of buying in the gold market right now and proves to the "gold is dead" camp just how explosive gold rallies can be in the face of runaway deflation and bad economic news. Samex -- Sharefin, 21:46:45 02/06/02 Wed CORPORATE UPDATE - GOLD IS PRECIOUS The Canadian Venture Exchange has requested that SAMEX Mining Corp. issue a news release in response to the increased trading volume and price of the Company's shares. SAMEX confirms that there are no material changes in the Company that have not previously been announced, though in recent weeks Management has observed a dramatic shift in market perception and interest concerning gold/silver which appears to be turning investor's attention to companies mining or exploring for precious metals. In spite of the lackluster gold price of recent years, SAMEX has persistently maintained and declared its strong belief that gold prices are significantly undervalued. This motivating principle is summarized in the following excerpt from the Company's 2000 Annual Report: "Is mineral exploration worthwhile considering the depressed metal prices of the past several years? Should a company continue to explore for gold and silver when popular opinion has rejected these metals as a "store of wealth" in favour of stocks, bonds and paper currencies? GOLD IS PRECIOUS - Precious metals have been the standard of real value for many centuries. SAMEX is motivated by a strong conviction that gold and silver are valuable "hard assets" particularly during times when confidence in paper investments is shaken. SAMEX has survived the boom and bust of the technology bubble and management plans to continue the business of exploring for precious metals and other valuable resources in the earth." In addition, SAMEX has also been an outspoken supporter of the Gold Anti-Trust Action Committee (www.GATA.org ), a US based "not for profit" organization, which contends that a hidden scheme exists to manage and even manipulate the US dollar price of gold for the benefit of certain knowledgeable parties to the detriment of others. GATA has researched, documented and is now supporting ongoing US Federal litigation against certain international banking, government and quasi-government institutions. SAMEX also applauds several more senior companies within its sector, who have embraced the concept that "gold is honest money" and publicly endorsed policies such as holding back excess gold production in bullion instead of cash, and further, offering shareholders the opportunity to receive dividends in certain gold instruments. It appears the increased volume and price of SAMEX shares may in part be attributed to investors who recognize that the mining/exploration sector may be undervalued as compared to other investments, and further, are supporting companies motivated by the aforementioned convictions. SAMEX holds several quality exploration prospects within one of the most prolifically mineralized regions of the earth, the Cordillera Occidental of Bolivia and Chile. The Company is currently working to secure financing for the ongoing exploration of several of its key properties namely the Eskapa and Wara Wara prospects. (See news releases, photos, maps etc. at www.samex.com ). Gold Stock Indices -- Sharefin, 21:16:48 02/06/02 Wed The various gold indices across the globe all look stunning. Gold Stock Indices Gold -- Sharefin, 18:35:59 02/06/02 Wed Investors seek out higher risk miners in gold rally Investors seeking to cash in on this week's gold rally will get the biggest bang for their buck from producers that have not hedged sales and those with mines that are profitable only now that the precious metal's price has reached two-year highs. Gold -- Sharefin, 18:34:07 02/06/02 Wed Gloom all round - but gold strengthens Gold -- Sharefin, 18:32:47 02/06/02 Wed Bullion price charges Gold -- Sharefin, 18:28:02 02/06/02 Wed Who is pulling gold's strings? Gold market experts say the latest run in the gold price bears the hallmarks of the spike in May and September last year. Suspicion centers on three large hedge funds, any of which may also have been involved in the recent sting against the Bank of England's gold auction. Gold -- Sharefin, 18:26:48 02/06/02 Wed What Glitters ... Is Gold For a long time, gold seemed to have lost luster as an investment. But in recent days (months actually), gold has been a shining beacon in an otherwise dark time. As expected, gold's recent rally has so-called gold bugs in a tizzy, including those who believe the metal's recent advance is going to continue skewering those entities they believe have conspired to keep gold subdued lo these many years. Like most good conspiracy theories, the gold-collusion one is enticing, but it's also nearly impossible to prove, as I discovered long ago Additionally, those interested in gold should also set aside questions of whether gold's move is a sign of investors' desire for safety -- perceived or actual -- or views about inflation and/or the dollar's future. There are elements of each in the gold story, but "the bull case should be based on supply," Moore said. "With any commodity you have to make a case [that] supply is going to be tight," rather than trying to project what demand is going to look like. "Supply is more powerful." For example, Japanese retail investors have been buying gold because of concerns about their nation's financial straits and forthcoming caps on bank-deposit insurance. But Japanese retail buying of gold isn't the cause of gold's big rally, Moore stressed. "Big swings are generally caused by producers," he said. "In commodity markets, it's the actual players" who determine prices. Mining accounts for roughly 60% of the gold supply, with 20% each from central banks' sales and scrap markets, according to Daniel McConvey of Goldman Sachs. "After going up for two decades, [mine supply] is leveling off and starting to fall," McConvey said. "Once it does, it will fall consistently over the course of several years because the turnaround time" for finding new deposits, building mines and getting it out of the ground is five to seven years. In 2001, gold mining production rose less than 1% after falling fractionally in 2000, the first year of falling output since 1995, according to Gold Fields Mineral Services, a London-based commodity research and consulting firm. Gold producers have been doing less mining and less exploration for the simple reason it was unprofitable to do so. Most producers, especially those in North America, require gold prices well above $300 per ounce to operate existing mines profitability. A similar development occurred in the energy sector in the late 1990s, much to the delight of those who owned energy stocks from 1999 until mid-2001. Finally, the supply of gold is being crimped by a reduction in hedging, or forward-selling, by gold producers. Notably, South Africa's AngloGold, which had previously hedged up to 50% of its production, recently announced a reduction in its hedge book and plans to continue scaling back such practices. For some time now, gold has been in contango, where futures prices were higher than the metal's spot price. But gold is approaching backwardation, when spot prices are higher than the futures, nullifying an incentive for producers to sell forward their current production. Additionally, the dramatic lowering of the fed funds rate in the past year means there is no incentive to sell forward because the trade -- shorting gold, going long dollars -- is not as profitable, Jurika & Voyles' Moore said. For that reason, Newmont Mining is "the last thing I would sell," Moore said, describing the company as an unhedged, low-cost producer, a liquid name and "quality in an iffy business." Jurika & Voyles also has long positions in AngloGold and some smaller players, although Moore declined to name them. "We could end up where gold has significant investor demand" because of investors' lack of confidence in corporate earnings, weakness in the dollar, or stagflation or inflationary pressures," Moore said, getting back to the original point. (Notably, he argued Treasury Inflation Protection Securities are a far superior inflation hedge than gold). "Maybe we're going to have a commodity bull market vs. a stock bull market," he said. "I wouldn't rule it out if people are uneasy about holding electrons." But when that demand arises is "anyone's guess" and based on emotional factors, he said, advising investors to view gold as a commodity in which those dealing with the physical assets are responsible for large moves. From that perspective, "this is when [gold] should work." Gold -- Sharefin, 18:22:34 02/06/02 Wed Gold: Safest of Havens Sparkles "The sustained desire for hard assets as a risk hedge has underpinned gold's recent activity," said Rhona O'Connell of the World Gold Council, in a note Wednesday. "This is a bull market for gold, but investors should exercise caution," said Caesar Bryan, manager of the Gabelli Gold Fund. "A dramatic movement tends to correct itself in some manner." Gold -- Sharefin, 18:20:19 02/06/02 Wed Investors rush for solid gold THE price of gold leapt above $300 to its highest level for two years yesterday as the precious metal became the latest market to be hit by "Enronitis", or investor nerves following the collapse of the giant US energy trader. Peter Hambro, who runs his own gold mining company of the same name, said: "This is all about risk. Everybody has discovered that the world is a risky place after all. All these traders who thought they had reinvented gravity in the derivatives market are now being proved wrong. The basic point is that gold is not anyone's promise to pay." Mr Hambro added: "With the yen weak, the euro weak and worries over American companies, gold is a natural safe haven. I think the Treasury selling the Bank of England's gold now looks very stupid." Lenny Kaplan -- Sharefin, 18:18:28 02/06/02 Wed DAILY COMMENTARY The gold market defied the odds today and after many repeated failed attempts to cross the $300 level in the past, traded as high as $309.00 in ACCESS overnight trading, only to be sold lower throughout the rest of the day. Although I would have preferred a close over $302.50 in spot, I remain resolutely bullish on the price. The $295 to $296 in spot appears to have become some support for this market and a break of those prices would give the longs some reason for concern. All in all, the metals closed today within a hair's breadth of yesterday's closing prices, but the mood and the tenor of the markets was quite good. Silver held its technical breakout level of $4.33'ish and platinum and palladium closed relatively unchanged for the day. In conversations with the trading floor this morning, I was informed that the "decks had been cleaned out." which means that all the old orders, whether they be buy or sells, stops or new trades, had been executed. What this says to me is that NEW buying is going to be required to get this market going higher, that all the stop loss buying is, more or less, over for now. I would now expect a decrease in volatility in the gold market over the next week or so as gold may have to "work" its way higher. Some of the technical indicators in the gold market show gold to be overbought at current levels and I would expect to see some consolidation at current or just slightly higher levels. Any clients of the firm who are "long volatility" should consider selling their options and replacing them with the equal delta of futures at this time. The gold market is responding quite positively to many factors at present. There is the growing concern about the validity of accounting and financial disclosures of companies, there are continuing stories about increased buying from Japan, but the real "mover" of the markets is the rapidly growing structural change in the supply and demand fundamentals as more and more gold producers shun forward selling. I would guess that we are still at the beginning of such a trend as those firms who renounce forward selling are seeing immediate benefit in the value of their shares. And, please note that the market takes such things quite seriously. I would believe that it has been proven that "safe haven" buying of gold is but a fleeting and ephemeral positive influence to the price of gold. After the most horrific events of Sept. 11th, gold prices ran up only to come back down very shortly. I would believe that "currency hedge" buying of gold is also rather unimportant in the grand scheme of things, as buying of gold by Japan and other nations embroiled in currency turmoils has not seemed to have much influence on the price. But, a structural change in the supply and demand fundamentals is really what moves the price of gold. And that we have at present. Please understand that I am not downplaying the possibility of investment buying of gold forcing a major change in the price of gold. But, it remains only a possibility at present, not a reality. The quantities being demanded by investors are not yet enough to make a difference. But this is the chance that they could, and perhaps soon. As conditions in Japan continue to deteriorate, the purchase of precious metals could indeed become serious. In talking about investment buying, it is simply fantastic that we now crossed the $300 barrier in gold. Western investors have shunned gold for decades as its price was declining. It is now "front page" news and has gained much credibility. Western investors want to buy high prices hoping for even higher prices, they rarely buy "value" or when things are cheap. They are driven by momentum, and gold's recent rallies can now attract such funds. What's with Kitco prices? -- Sharefin, 18:15:46 02/06/02 Wed Currently I have two different live feeds showing physical at over $301 and Kitco has their live chart as well (as the price on their front page) flat-lining at 299.5 Yesterday their plot flat-lined when the price was surging in Japan. Same again today.......hmmm.....  Cyclist -- Sharefin, 17:36:09 02/06/02 Wed I would consider these markets as not the same as before. There's a wall of worry over financial stability and it's very hard to guess as to what's going to come out ahead. I understand the cycles side of the equation and agree that stocks got too far ahead of themselves and time for consolidation before moving ahead. But where I beg to differ is that what we are now observing is a global phenomnia that hasn't happened for many many years. Gold is being 'sought' as we climb that wall of worry. It would not surprise me that the POG climbs this wall of worry and that she doesn't act as one would suppose. That she confuses & confounds the best analytical approach. I fully expect the POG to come under attack from those who wish to keep the price contained but I also expect the POG to act as it hasn't before. I've seen more people wrong in their guesstimates this last week than I've seen right. And my guess is that this will increase as we climb this wall of worry. Cheers Gold -- Sharefin, 17:25:18 02/06/02 Wed Gold price nears two-year highs Spot gold broke above $300 a troy ounce for the first time in nearly two years on Wednesday amid bullish sentiment towards safe haven assets following recent stock market jitters. Gold was fixed at $297.45 per troy ounce on Wednesday morning in London, the highest fix since it hit $299.90 on February 24, 2000. But spot gold was at $304.30 per ounce by 1215 GMT. Earlier, gold trade on the Tokyo Commodities Exchange was held up after a flood of buy orders overloaded the system and delayed the execution of trades. The benchmark December gold contract traded limit-up at Y1,274 per gram. The move followed a spike higher in gold futures in New York trade on Tuesday. The weakness in global equities, particularly in Japan, where Standard and Poor's downgraded seven banks has prompted a flight into safe haven investments. "The Japanese government plan to remove state guarantees on bank deposits from April, which appears to be contributing to to the buying of gold as a safe haven investment," said GNI in a research note on Wednesday. Gold also continued to benefit from fears that the collpase of US energy trader Enron could be followed by more revelations of irregular accounting at US blue-chip companies. Gold -- Sharefin, 17:21:21 02/06/02 Wed Gold soars higher, breaches $305/oz Gold -- Sharefin, 17:18:34 02/06/02 Wed Newmont sold 1.4-mil oz of gold in Q4 2001 Gold -- Sharefin, 17:14:52 02/06/02 Wed Gold Prices Surpass $300 an Ounce in London, a Two-Year High Gold surpassed $300 an ounce for the first time in two years as the $750 million alleged trading fraud at Allied Irish Banks Plc and investigations of Enron Corp. stoked concern about investing in stock markets. The loss attributed by Ireland's biggest bank to illegal currency trading continued a string of corporate accounting revelations since Enron went bankrupt in December. Concern about companies' books has helped send the U.S. S&P 500 Index down 5.1 percent this year, while London's FTSE 100 has lost 2.4 percent. ``It was bound to happen,'' said Fidelis Madavo, an analyst at Investec Securities in Johannesburg. ``Investors are wary as to where to put their money.'' ``Gold is asserting a dual role, both as a reserve currency and a reserve asset and is attracting attention accordingly,'' said Rhona O'Connell, an analyst at the producer-sponsored World Gold Council. ``There's a lot of hedge buying'' from investors not specializing in precious metals, said Kjeld Thygesen, managing director of Lion Resource Management, a London-based adviser to mining funds, before the price rose above $300. Gold -- Sharefin, 17:10:47 02/06/02 Wed Gold soars as Enron fever rises JP Morgan -- Sharefin, 17:04:38 02/06/02 Wed JPM Saying they didn't 'lose any money' is the same as Kenneth Lay saying 'Enron is a good buy' or Citigroup saying 'these bonds you're buying are worth more than you're paying for them'. Now which of the above three statements resembles the truth? I guess when you've lost billions of late you can justify anything.... Miro -- Cyclist, 14:33:05 02/06/02 Wed When I talk stocks,I mean gold stocks on this forum. Look for Hui to bounce off the 80 mark tomorrow or the day after,for a retrace to 84.Seasonals are still supportive this week. Hui will most likely settle at the end of March into the lower seventies. Since you were curious about the general market,my read still sees a bounce at the end of the month/beginning of next month.With rising long term treasury rates. We going to see a lethargic and anemic market in March and possibly April.Oil starting to smell another US military action this spring,with a 5th wave coming.Expecting to see 45 bucks for a barrel of crude this year. So take your pick...:) Cyclist on stocks will go down or stay flat till end of March -- miro, 13:25:42 02/06/02 Wed you mean gold stocks or generic stock market? Today -- Cyclist, 11:46:01 02/06/02 Wed probably see a retrace in the final hour. Stocks will as of Monday go down or stay flat till the end of March.FWIW.. JP Morgan -- Sharefin, 09:33:53 02/06/02 Wed JP Morgan says suffered no gold trade loss ``We had a very good day yesterday,'' said a senior bank official with knowledge of the bank's bullion trading operations. ``There is no truth to the rumor that we have a short position in the market, and I don't know where that came from.'' He emphasized, ``We did not lose money.'' Gold -- Sharefin, 08:57:54 02/06/02 Wed Gold begins preliminary phase of bull market RANGY AND DROOY -- Holden, 08:21:48 02/06/02 Wed RANGY has a lot of the same assets as DROOY. Should be trading at RANGY 2x the price of DROOY, or $6 and it closer to $4 today. Rangold was $25 when gold over $350 (DROOY at $8 at same time). Will see again soon enough. We are long DROOY and RANGY, and ready to sell DROOY for move into RANGY. Robby -- Sharefin, 08:19:35 02/06/02 Wed Looking through the page it seems similar to this forum. But it looks too complicated for me. I don't know any code outside basic html. Thanks Midas -- Sharefin, 08:00:20 02/06/02 Wed Le Metropole Members, It has just come to my attention that word is spreading in the bond pits in Chicago that J.P. Morgan Chase is in trouble because of their GOLD DERIVATIVE POSITION. Expect that word to spread as the week goes on. Stay tuned! Sharefin....the term labour of love comes to mind :-) -- Robby, 07:54:57 02/06/02 Wed FYI.....found this the other day while looking for a email system,I think they are from your neck of the woods....have an interesting free forum script called Vizbook....I may use it on my other page Eaglesup....I don't think another gold chat page is needed :-) Vizbook Robby -- Sharefin, 07:30:57 02/06/02 Wed Looks good - I've already got it linked in to my front page.(:-))) Looks like it'd keep you busy. Robby -- Sh, 07:29:10 02/06/02 Wed Japan -- Sharefin, 07:16:09 02/06/02 Wed Japan's Death Spiral? Rick Ackerman -- Sharefin, 07:13:19 02/06/02 Wed Six hours ahead of its time Card-House of Morgan TRADING NOTES: It is hardly a coincidence that bullion prices zoomed to $300 on the day that J.P. Morgan Chase shares came crashing through their September lows. As I wrote here the other day, Morgan's problems could eventually dwarf those of Enron. They are bound up together right now, to the extent Morgan -- the largest lender in the world to U.S. firms -- supposedly has Enron exposure that exceeds $2.3 billion. However, as my recent note here suggested, the banking giant's risk in the derivatives markets could be considerably higher, since it holds leveraged debt paper with a notional value exceeding $30 trillion. You'd think things could not get much scarier than that, but on Tuesday -- with gold prices soaring -- they did. As it happens, Morgan is a big player in the gold market, mostly by way of bullion loans that work best when gold prices are weak. Those of you who went to the article I flagged last week by DeTocqueville Fund's John Hathaway will already know this. But for those of you who did not, here is the salient part of it concerning J.P. Morgan Chase: The concentration of gold derivatives in the hands of one institution cannot be comforting to central bankers who had originally lent their gold reserves to a wide array of bullion dealers. JP Morgan Chase, also a major counter party to Enron in a variety of energy derivatives, held 80% of the gold derivatives reported by the OCC (Office of Controller and Currency) as of 9/30/01. Although total gold derivatives reported to the OCC have declined from the peak levels of $87.6 billion at year-end 1999, JP Morgan held only 40% of the total that time, which was prior to the merger with Chase. The decline in OCC-reported gold derivatives from the 1999 year end peak is most likely due to an offloading of positions to a non-OCC reporting entity such as Enron, an Enron-like organization, or a foreign bank. Now that many have abandoned the gold derivatives trade, it appears that JP Morgan Chase has become the rear guard to defend the derivatives universe against higher gold prices. A "rear-guard" defense? If so, Da Boyz will have their hands full today, since gold's assault on $300 during yesterday's (Tuesday's) session hardly looked like it was going to subside quietly overnight. I had projected a short-term target for the April Comex gold contract in the range 305-306, but practically speaking, anything could happen. Morgan has friends in high places, as we all know, and they have proven many times in the past that they have both the resolve and the muscle to keep the gold price from drifting upwards of $300. Sooner or later, though, even more powerful forces than Morgan and its friends were bound to prevail. Sharefin....found you :-) -- Robby, 06:58:08 02/06/02 Wed Put together a new page.....a mixture of politics and finance....got the idea from you :-) AllAmericanGold Gold -- Sharefin, 03:15:01 02/06/02 Wed Yen Gold -- Sharefin, 01:55:23 02/06/02 Wed Yen-Gold: Nearing Long-Standing Fibonacci Target Tocom - email chatter -- Sharefin, 20:20:01 02/05/02 Tue Tocom gold has restarted trading........all limit up, with the exception of the nearby contract (not subject to 40 yen limit of other contracts) Tocom Gold -- Sharefin, 20:09:11 02/05/02 Tue Gold bugs light up as bullion soars to 2-year high Gold watchers gave three main reasons for the recent surge in bullion prices: Investors, worried about Enron and other accounting irregularities, are choosing hard assets like gold as a safe haven. South African gold giant AngloGold announced Monday it would cut its hedged position by about 6 million ounces this year (some believe that the practice of hedging - selling gold forward - holds down prices). There are expectations that recent consolidation in the gold mining industry will lead to lower production. National Investor Update -- Sharefin, 20:07:31 02/05/02 Tue By far the biggest POSITIVE investment story in an otherwise treacherous environment has been GOLD. In just the first five weeks of the year, gold mining shares have about matched the overall return for all of 2001--and remember, folks, that they were the leading sector last year. And--depending on how the next day or two go, this hot group might be about to add even more significantly to its recent strong gains, which now see a host of companies trading at or near 52-week highs. The bullish environment for gold has been slowly building, leading to the highest closing price for gold today ($299.10 on the April contract) in a year. As I've discussed in recent weeks, Newmont's successful acquisition of Normandy Mining and Franco-Nevada helped stoke some of this bullishness earlier, as the market cheered the non-hedging policy of NEM as opposed to South Africa's Anglo Gold, its competing bidder. Newmont has already promised to begin unwinding Normandy's hedge book in an orderly fashion. (NOTE: For those still a bit confused by this, Anglo, Normandy and Barrick Gold have been among the biggest gold hedgers in the industry in recent years. Their practices, boiled down, have been to sell FUTURE gold production at current prices. While this served to "lock in" a decent price in a declining market for gold in the late 1990's, gold bugs have hated the practice, as it served to do little more than strengthen the bearish grip on gold. Giving credit where it's due, though, these hedging companies have generally enjoyed much better cash flows and profits for having engaged in the practice, even if it hurt the non-hedgers pocket books--and gold bugs' feelings.) In recent days, Anglo seems to have adopted the reverse of the old adage, "I'd rather fight than switch." In their case, having lost the bidding for Normandy and seeing the handwriting on the wall where Newmont's longer-term intentions are concerned, Anglo has now said that it, too, will begin unwinding its hedge positions. This bet on a rising gold price by the big South African miner is a key reason why even more bullishness has crept into the gold arena. Added to this is that--can you believe it, folks?--gold and, in particular, gold mining stocks are being viewed by a slowly growing number of people as a safe haven in an environment of stock market queasiness, foreign conflict, Argentinian debt and currency concerns, and more. Remember also that I wrote a few months ago that one reason I believed the bull market in mining shares would continue is that many investors--even institutions--invest their money according to hindsight. In this sense, some are piling into gold for all the above reasons, yes--but also to some extent simply because they've been the best game in town. Another notable thing about gold's latest run is that it has occurred during a time that the U.S. dollar remains near all-time highs against other currencies. While the nitwits on CNBC and elsewhere in the financial press haven't figured it all out yet (though last week's issue of Barron's had a good item that hit this nail right on the head) gold has already been in a major bear market in virtually every land save the U.S. Take Japan, for instance--the country is seeing its currency fall apart, its banks are about to take away deposit insurance, and the country remains mired in deflation. Yet, the Japanese still have a fairly high level of savings, that they'd like to be able to put some place to make it grow for a change (that certainly won't happen in Japan's stock market, which is now at its lowest level in 18 YEARS.) In dollar terms, gold over the last year is up a respectable 15% or so as of today. Not bad. However--if you're Japanese, and used yen to buy gold a year ago--you can add to this nominal return ANOTHER 20-25% due to the dollar's rise against the yen. Thus, the total return on gold bullion alone (forget even more outsized gains for gold equities) for a Japanese investor over the last year approaches 40%, better (and arguably safer) than any other available alternative. THE QUESTION NOW is whether gold and gold stocks will immediately add to these gains, or pause for a while to catch their breath. Previously, the $292 area was key for gold; some thought the yellow metal would find stronger resistance here. Mid-day today, however, when gold pierced that level and selling didn't materialize quickly, a number of "programmed" buys came into the market and quickly pushed gold to within a whisker of $300 per ounce. The next important level is believed by some to be at around $305 per ounce. At this level, considerably more miners and hedge funds will be forced to begin covering short positions for fear of losing their shirts. If we get above $305 in the next day or two, gold will quickly sprint much higher. This outcome could come about as early as tomorrow, depending on how DISORDERLY the removal of restrictions on bank depositors and a few other things go down in Argentina. A fiasco there could further unsettle markets, cast aspersions against the dollar, and give a big boost to gold. This will bear close watching. Absent this or some other major unsettling news, gold SHOULD flutter back down for a little while, most likely getting back to the low $290's and establishing that level now as SUPPORT prior to making another run at $300. We'll see. Another remark I made a while back is that--for the first time in recent memory--there was actually more risk being OUT OF the gold area than being IN it. This--believe it or not--is still true. We are in a decidedly different environment now than we were from time to time in our trading into and then out of brief rallies in gold shares over the last few years of the 1990's. Those rallies--which, by and large, we did very well on--were primarily technical. Fundamentals were still not on gold's side. They are much more so now, however. In addition, a far more bullish sentiment is evidenced in the industry itself. Further still, the behavior of many of the JUNIOR producers in recent days strongly suggests that an increasing numbers of institutions are sold now on gold's improving prospects. The majors such as NEM, ABX, PDG and others have all done nicely, to be sure. However, if you have witnessed as I have the huge volume and correspondingly huge jumps lately in shares of smaller companies like Claude and Bema, you know that some serious, committed money sees something much different in this sector than the malaise of the late 90's. And they're putting some money down. The only question in my mind this evening is whether it's wise to take some money back off the table now, in the hopes of getting back into gold stocks at lower levels if the metal itself does indeed correct for a while. Frankly, that's a decision we can't make until tomorrow or a little later, depending on how gold behaves early on. The PRUDENT thing to do would indeed be (unless gold goes higher at the outset) to sell perhaps a third to a half of your holdings of the majors, and lesser amounts of Claude or Bema. You'll never go broke taking profits, after all. Keep in mind here though that what we're dealing with here is NO LONGER a technical rally in a gold bear market. At most, a sell-off would represent a CORRECTION IN A BULL MARKET FOR GOLD. So unless you are going to watch carefully, sell some holdings if appropriate tomorrow, and then be prepared to jump right back in, my advice is to sit tight and not try to be too cute in timing this market right now. All gold stocks we're in are now an "Accumulate" officially, though you need to exercise the judgement I lay out above. If, for instance, gold keeps sprinting ahead and especially if it breaks above $305, you might want to load up even more--THOUGH KEEP IN MIND THAT GAINS FROM THAT POINT WILL BE ERRATIC, AND THAT WE MIGHT THEN SEE THE FEDERAL RESERVE ACT TO SHORT-CIRCUIT THE SHORT SQUEEZE THAT WOULD DEVELOP, JUST AS IT DID IN OCTOBER, 1999. gold -- Sharefin, 20:05:15 02/05/02 Tue Gold bulls charge on bullion rally gold -- Sharefin, 20:02:55 02/05/02 Tue Gold rally to 18-mth high buoys NY precious complex Gold -- Sharefin, 20:01:06 02/05/02 Tue Surge in world gold prices has little impact on markets Gold index fires -- Sharefin, 19:42:28 02/05/02 Tue Gold index fires Factors driving the extended rally, which began with a $US3.90 an ounce jump on Friday, included weaker US stock prices and growing concerns about accounting procedures and equity valuations in the wake of the Enron collapse. The Australian Gold Council also pointed to a reduction in gold supply and more activity in the spot market as producers close out hedge books on the back of low US interest rates which are currently at 1.75 per cent. The precious metal was given a boost earlier this week when the world's biggest gold miner AngloGold announced it would reduce its hedge books by 10 million ounces, while Newmont foreshadowed a reduction in the short-medium term. The AGC said safe haven buying in Japan and imminence of Chinese New Year also contributing to the two year high. Black Box Forecasts -- Sharefin, 19:41:24 02/05/02 Tue Six hours ahead of its time Yesterday's rally, spectacular as it was, stopped just shy of the $300 barrier that I'd predicted would fall on the first charge. Perhaps buyers thought twice about going home long overnight while the bullion bankers and their cohorts at the Federal Reserve were regrouping to meet the rally head-on this (Wednesday) morning? At any rate, the futures were sitting higher at the close than at any time since February of 2000, so it should be a good match-up. My immediate target remains 305-306, but there is enough evidence to try for something more exact, so let's make it 305.30. Regardless of where the pullback begins, it's bound to be breathtaking, since the forces arrayed on both sides of this battle are quite powerful and determined. GG (16.35 ): Goldcorp, Inc. makes its first appearance in my trading notes today, supplementing the somewhat limited opportunities we've had in the Comex. The stock's chart reminds one of Cisco's during the glory days, and GG's price will have tripled since early 2001 if the current rally can eke out another point or so's gain. If the stock merely beats 16.61, however, it will exceed the highest hidden pivot I am currently able to project for it without resorting to tricks. More whispers from Tocom -- Sharefin, 18:51:58 02/05/02 Tue I just read the official explanation -- "a huge number of buy orders that exceeded the processing capacity of the trading system" -- they say it will be up and working again in the afternoon...............but who will sell to the buyers? I guess that's what limits are for......LIMIT UP!  Forum archives -- Sharefin, 18:24:54 02/05/02 Tue There's a problem with this forum in storing messages and everytime it stuffs up all the prior posts are archived. To look for prior posts choose the archive #1 link in the top right hand corner. Email chatter - Whispers -- Sharefin, 18:08:48 02/05/02 Tue I smell a rat!!!!! I just tried to issue an order to trade gold on the Tocom, and it was rejected. I called to see what was wrong, and I found that they have a "problem" with the system, and all gold trading is shut down for the morning. The stinky part is that ONLY gold trading is stopped. All other commodities, even palladium, are trading normally. The timing is altogether too weird.............the limit up move must have made someone nervous.......... ------ Kind of reminds me of the underhand way Tocom stopped trading in Palladium when it was going up too quickly. |
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