Gold -- Sharefin, 05:03:56 06/22/02 Sat Real Rates and Gold Fiat -- Sharefin, 05:01:16 06/22/02 Sat Dollar's woes threaten fiscal fabric "The fear of losing money is even greater than the greed factor right now," said Richard Gotterer, senior vice president of investment strategy at Gibraltar Bank Wealth Management. "Money is flowing out of the stock market, in some cases leaving the U.S. permanently and going to safer markets." Earlier in June, Roach raised the probability of a dollar crash to 15 percent from 5 percent. His scenario is just as ugly as Thursday's trade report. A "dollar crash would have a devastating impact on U.S. financial markets that could well be amplified in other capital markets around the world. Foreign investors would continue to reduce their exposure to dollar-denominated assets, and US investors would undoubtedly rebalance their portfolios in an effort to seek greater exposure to non-dollar-denominated assets," Roach wrote. All you need do is read Roach's words to understand why overseas investors are fleeing America's financial markets. The scary part is that three-quarters of central banks' currency reserves around this fiber-optic world of ours are held in dollar-linked assets, mostly Treasury bonds and notes. That's a lot of dollar-selling ahead of us. Gold -- Sharefin, 04:56:30 06/22/02 Sat Changing Preferences: The Velocity of Money & The Short Seller's Nightmare - Part 2 Gold's Ascendancy As local currencies depreciate, the price of gold in that currency rises in direct proportion to the fall in the value of that currency. In effect, gold is once again taking on its historical mantle as real money. Investors worldwide are increasingly returning to gold as a means of safety from the growing perils that surround them. Faced with wars, sagging economies, falling stock markets and growing deficits, governments and central banks have resorted to rapid money creation in one form or another. That is the message of gold markets. Gold's rise is a barometer of the financial system and the shape of things to come. It is flashing a warning that goes on unheeded by most holders of paper money. The upside potential this time around, I believe, is much greater. There are several reasons, fundamentally and technically, why I believe gold and silver prices are headed much higher. There are others, more knowledgeable than I, who have written extensively about the numerous reasons why precious metals are headed higher -- much higher at that. However, I believe that they can be boiled down to four key arguments for higher prices: supply deficits, a record short position in gold and silver, currency debasement and what I call, "Brave Hearts and Strong Hands." War, government budget and trade deficits, faltering financial markets, distrust of the financial system, and a declining U.S. dollar are background noise and will only accelerate its rise. Those who own precious metals are aware of its 5,000-year track record. They own it because of strong convictions held through a very long and protracted bear market. Gold and silver investors represent a different class of investors. They think long-term, just like the durability of the metals they own. Those shares of precious metals stocks or the bullion will not be relinquished. Any pullback will only be used to buy from those who are foolish enough to sell at today's multi-decade lows. This is something to ponder if you are short, thinking of selling, or just now thinking of buying. For those who own bullion or shares in gold and silver equities, patience and persistence are about to be rewarded. For those who have sold short, a nightmare is slowly unfolding. ~ JP Gold -- Sharefin, 04:52:55 06/22/02 Sat Stepping Forward to $1,254 Gold For North American investors, and those others with significant investment exposure to North America, the beginning of 2002 was an important time. The Gold market added further confirmation to the notion that the era of financial assets had ended. That confirmation also suggested that a new era for Gold was coming. The time of a depreciating U.S. dollar was soon to be at hand Gold -- Sharefin, 04:50:55 06/22/02 Sat Rising gold price self-fulfilling A rising gold price is self-fulfilling as central banks become less inclined to sell as they hold out for a higher price, Jeremy Gardiner, director at Investec Asset Management, said on Thursday. "The gold price is certainly not at an all-time high," he said. A significant contribution to recent strength included an over-priced dollar, fuelling concerns of a significant fall in the world's leading currency. "During the late nineties, America attracted more than their fair share of global capital flows as a result of their rampant economy and stock market bull market. "However, times have changed, and with the outlook for US equity markets boring at best, capital is leaving the US at approximately US$1 billion per day."  Gold -- Sharefin, 04:47:07 06/22/02 Sat Gold bugs masquerading as pinstripe bankers The money management arm of one of Canada's most prestigious banks, RBC Global Investment Management, has issued a no-holds barred punt for gold. It is thought that top-rated professional gold investor, John Embry, authored the report. RBC is the first mainstream international investment house to sign on to the gold conspiracy, at least publicly, casting the current "suppression of the gold price" as a covert version of the nonsense of the late 1960s and early 1970s when central bankers colluded to hold gold at $35 an ounce. The RBC writer doesn't pull any punches: "[Gold] will more than rally; it will explode spectacularly to the upside", thanks to an accumulated short position in physical gold, overlaid by a mountain of derivatives. The report faithfully reproduces much of the evidence compiled by Reg Howe, the Boston counselor who almost single-handedly tried to sue the treasury-finance complex in Federal Court and Gold Anti-Trust Action Committee supporters like James Turk of GoldMoney. The key strands of the conspiracy case are tied together in a succinct, useful way for the first time so they are worth reproducing in their entirety: a. Aggressive gold lending, which from an economic perspective is indefensible, has filled the supply/demand gap. b. NY Federal Reserve gold has been mobilized when the gold price is rising. c. Timing of Exchange Stabilization Fund gains/losses corresponds to gold price movements. d. Audited reports of U.S. gold reserves show unexplained variances. e. Minutes of Fed meetings confirm officially denied gold swaps. f. Rules on gold swaps revised but subsequently denied. However, individual central banks have repudiated the denial. g. U.S. gold reserves have recently been re-designated twice, initially to "custodial gold" and latterly to "deep storage gold." h. Statistical analysis of unusual gold price movements since 1994 indicate high probability of price suppression. The invalidation since 1995 of Gibson's Paradox -- that gold prices rise when real interest rates fall -- suggests that the real manipulation began then. i. NY gold price movements versus London trading defy odds. j. Timing of huge increases in bullion bank gold derivatives is consistent with gold price declines. k. Rapid decline in U.S. Treasury holdings of gold-backed SDR certificates is not explained. The report goes on to trash gold bears betting on a continued flood of central bank gold. "The shibboleth of central bank sales will undoubtedly be trotted out again, but it is losing its sting, particularly if the possibility that as much as half of all the central bank gold may already be in the market starts to become more widely recognized." Fiat -- Sharefin, 09:05:17 06/21/02 Fri Paperman and Goldman Gold -- Sharefin, 09:01:57 06/21/02 Fri The fix is in William Rees-Mogg, editor of the forthcoming book "The Case for Gold," recently wrote in The Times of London, "The price rise in gold is telling us the truth, not about gold, but about the U.S. dollar. The U.S. external deficit has to be reduced. That means the dollar has to fall further. There is no early prospect of a return to confidence in the U.S. stock market. There is no point in the U.S. raising interest rates, which would weaken the U.S. economy and only postpone the necessary realignment of dollar exchange rates. Gold will continue to out-perform stock markets, as it has for the past two years. Pension funds are going to be in serious difficulties." Rees-Mogg, a successful British investor, newsletter editor and prolific financial author, went on to say, "All of this does not look like a short-term adjustment. We may find the decline of the dollar is the most important global movement of the decade." Gold -- Sharefin, 08:58:48 06/21/02 Fri Gold believers wage war against dollar Give the gold bugs credit, they know a theme when they see one. Gold's believers, some of them held in high regard in financial circles, this week are waging all-out war against the dollar, which they sense is close to a decline of epic proportions. Miro -- Sharefin, 08:56:08 06/21/02 Fri I would guess at this stage of the game that leasing is not far different than selling. When so much has been leased that it can't be replaced then additional leasing is tantamount to selling as you're at the end of the line when replaement comes along. Perhaps they have special deals with protection I don't know. But there's so much owed in front of them that it makes a mockery of the term leasing. Have you seen the Moscow Times Index? After topping out at over 5300 it is now back down around 4300 in quick smart time. The Moscow Times Index has been the best performaer across the world in this bubble. From a low of 185 in 1998 the index peaked out at 5307 for an increase of 28.7 times the starting number. Makes the Nasdaq look lame.... Gold -- Sharefin, 08:15:11 06/21/02 Fri S&P says gold market downturn could be over "Concerns about the Japanese banking system, the Argentine crisis, and heightened anxiety over the ongoing conflicts in the Middle East, including tensions between Pakistan and India, have reinvigorated gold's long dormant flight to safety characteristics," added Mr. Watters. "Also, a recent slide in the U.S. dollar has made gold cheaper for non-U.S. buyers and should, in the absence of a global economic recession, provide support for weak fabrication demand." Moreover, investors disillusioned by the poor performance of global equity and financial markets are shifting investment focus into gold. Lastly, gold producer announcements of reductions to hedge books continue to drive price improvement. However, Mr. Watters cautioned, "If political tensions ease and fabrication demand continues to remain sluggish, further price appreciation may be unrealistic." Given the current pricing environment, credit quality outlooks are decidedly stable for the eight gold companies rated by Standard & Poor's. Still, Mr. Watters views the medium- and long-term outlook for gold somewhat favorably, driven by improvement in supply and demand fundamentals-quite possibly a supply crunch. Ongoing consolidation, reduced forward selling, and unwinding of hedge books will serve to reduce the amount of mine supply delivered into the market. Furthermore, the cumulative effects of four to five years of low gold prices has led to capital deferrals and reductions in exploration spending, which will surely lead to a decline in production. As many global producers face declining reserve bases, a sustained gold price of approximately $330 per ounce will be needed to prompt producers to increase exploration and development spending because it takes five to seven years to get a gold mine up and running. Standard & Poor's believes the industry will begin to see a decline in production after 2003, with significant acceleration after 2005 as output from mature mines in North America, South Africa, and Australia declines meaningfully. "Nevertheless, concerns about central bank liquidation of their vast gold holdings totaling 31,000 metric tons continues to remain the wild card in all this," Mr. Watters said. It is currently unclear if central banks will renew their commitment to the 1999 Washington Agreement when it expires in 2004, he added. Gold -- Sharefin, 08:12:46 06/21/02 Fri The Very Big Picture Gold -- Sharefin, 08:08:24 06/21/02 Fri Andy Smith, The Analyst Who Called Gold Right, Is Now Hoist On His Own Petard. Gold -- Sharefin, 07:59:21 06/21/02 Fri Dollar Falls for Fourth Week on Concern About U.S. Recovery The dollar, at a two-year low against the euro, fell for a fourth week as concern over a slowing U.S. recovery hurts demand for assets in the world's biggest economy. ``The weakness in U.S. equity markets is continuing to supply pressure on the dollar,'' said Steven Saywell, a currency strategist at Citigroup Inc. ``The market remains in dollar selling mode -- parity (with the dollar) is possible'' for the euro, he said. Gold -- Sharefin, 07:57:17 06/21/02 Fri Equity, Dollar Falls Pull Gold Higher Much will depend on the performance of the dollar. Although the possibility of a bounce against the euro and other local currencies is apparent, most financial analysts are calling for concerted losses longer term. Some have even suggested the euro will soon be at parity against the dollar. Howard Patten of Barclays Capital in London said recent key breaks higher for the euro have not had corresponding effects on the gold price and this could suggest dollar weakness will now deter selling rather than promote fresh buying. "Until gold breaks out of the $320s speculative fund activity will likely fall back from the levels reached in recent weeks," he said. News of the announcement of another producer hedge reduction, although small, has also helped to boost sentiment. Rio Narcea Gold Mines Ltd. said Thursday it has closed out its $365 gold calls from 2003 onwards, representing 58,244 ounces, due to its improved financial position and the more positive gold market outlook. Gold -- Sharefin, 07:50:38 06/21/02 Fri Newmont stands to gain 10-bagger on triple gold deal Gold -- Sharefin, 07:46:53 06/21/02 Fri What if hedging came back to bite Barrick? Gold bugs have railed for years against the perceived evils of bullion hedging and they've reserved their deepest contempt for Barrick Gold Corp., the biggest and most successful hedger of all. To their thinking, it would be divine justice if Barrick's hedging policy came back to bite it. Gold has enjoyed a breakout but gold bugs have company in the main investment community in saying this is just the beginning of huge bullish run. So what would happen to a major hedger if it got caught short? The chief investment strategist and founder of Sprott Securities Inc. recently laid out the case against hedged producers and warned clients in no uncertain words to be extremely cautious. While he is a gold bull, Mr. Sprott is short Barrick in his hedge fund. Gold -- Sharefin, 07:41:51 06/21/02 Fri Placer holds firm over level of AurionGold bid Placer Dome was under increasing pressure yesterday to improve its A$1.78bn (US$1bn) hostile bid for AurionGold after the Australian gold group announced a 25 per cent increase in its reserves. jyske bank offering risk free investment in metals -- giovanni dioro, 08:38:08 06/20/02 Thu Jyske Bank is offering an investment in a metal account with Gold, Silver, Aluminium, and Copper. The investor can choose whether he wants to denominate in euros or dollars and capital is guaranteed over the 2 year duration of the bond. A risk-free way to participate in the metals. click on metals account jyske bank Aurion Increases its Reserves ... What Next from Placer? -- Delta.au, 06:22:56 06/20/02 Thu SYDNEY ( Dow Jones ) --Australian gold miner AurionGold Ltd. ( A.AOR ) announced Thursday a 25% jump in its reserves to 7.7 million troy ounces. That is an increase of 1.6 million ounces, which more than replaces its 2001-02 production of 1 million ounces, company chief executive Terry Burgess said in a statement. The company also announced an increase in resources to 25 million ounces. "The increase in reserves by 25% since December 2001 and the increase in resources to 25 million ounces is a strong indication of the continued growth of AurionGold," Burgess said. http://asia.news.yahoo.com/020620/5/ds9p.html @Lenny Kaplan on Russia selling on lending gold -- miro, 20:56:02 06/19/02 Wed Len, I can attest to that (at least from my experience in economics in “Eastern Block”). Gold always played important role in Russia economy, due to unfavorable exchange rate from their currency to “hard currency” aka. $US or these days Euro. Swaps were always part on international business for Russia. I was thought the intricacies of its work while majoring in economics in Czechoslovakia, and it's still used as far as I know. Confusion about “Russia selling their gold” usually comes from a lack of knowledge, projecting western countries behavior on Russia. Oh well when you have easily exchanged currency, using gold means a different thing in international business as when your currency is in a shambles. There aren't many companies who would except Russian Ruble as a payment method, thus swaps are necessary. Fiat -- Sharefin, 19:51:19 06/19/02 Wed Germany's Teetering Banks Gold -- Sharefin, 16:19:45 06/19/02 Wed DRD to pay first dividend in 107 years Durban Roodepoort Deep, South Africa's fourth-largest gold miner, confirmed on Wednesday it would pay the first dividend in its 107-year history when it reports full-year earnings next month. The statement came as the company said it was seeking a full listing on the Australian stock exchange, raising speculation that it may be planning acquisitions in Australia. Gold -- Sharefin, 16:18:41 06/19/02 Wed Gold converts coming thick and fast Gold -- Sharefin, 16:12:06 06/19/02 Wed Tech stocks, Euro to gold's rescue US tech stocks came to gold's rescue last night with a raft of profit warnings from leading NYSE listed technology companies - Apple, Oracle, Intel and AMD - pushing bullion over the key $320/oz mark. Traders said the breach of the resistance level triggered technical buying orders and short covering by speculators, spurring the metal still higher to this morning's spot price of around $322/oz. With the recovery this year of the US economy looking more and more tenuous with each new profit downgrade, the allure of the low-inflation European Union is becoming stronger for investors seeking low risk alternatives to the US. According to Bloomberg, traders' key focus today will be on the release of European factory production figures, which are expected to post healthy gains. This should be a stark contrast to poor retail sales and consumer confidence numbers published in the US last week, as well as the continued fall of profits from Wall Street's blue-chips. To add to this global glut of bad-news, the Palestinian-Israeli cycle of violence continues unabated, with news of more suicide bombings and land occupations dominating world news headlines. Gold -- Sharefin, 16:01:13 06/19/02 Wed Canadians set for face off Analysts suggest the AurionGold takeover battle could take an interesting twist, of even grander proportions.  Gold -- Sharefin, 15:53:03 06/19/02 Wed Newmont, AngloGold Standoff May Be Solved by Rising Gold Price Placer Dome Inc. last month offered to buy Newcrest's rival AurionGold Ltd. for $1.1 billion, following the acquisition of Normandy and the takeover of Hill 50 Gold NL by South Africa's Harmony Gold Mining Co. Newcrest and Lihir Gold Ltd., with market valuations of A$2.2 billion and A$1.6 billion are the last middle-ranking gold companies left in Australia. Gold -- Sharefin, 15:49:15 06/19/02 Wed Gold price surge is short-term event Gold -- Sharefin, 15:46:39 06/19/02 Wed Placer Dome May Be Target for Rival Barrick Gold Placer Dome Inc., which is trying to acquire Sydney-based gold producer AurionGold Ltd. for $1.1 billion, may be a target for bigger rival Barrick Gold Corp., the Australian Financial Review reported. Toronto-based Barrick, the world's second-biggest gold miner, sent a team of executives to Australia to examine information on mines Placer and AurionGold own in joint ventures, the newspaper reported, citing an unnamed person close to the companies. Credit Suisse First Boston is advising AurionGold. Lenny Kaplan -- Sharefin, 23:22:21 06/18/02 Tue General Comments Late last week, it was thought, based upon some news releases, that Russia had SOLD some 40 tons of gold into the market. This was most distressing news to the professionals in the market, as, all of a sudden, a major accumulator of gold, had suddenly turned into a seller. There was report after report on the Internet that perhaps, like the Swiss, they would sell a major portion of their reserves. Worry and concern was quite evident and translated into lower prices for gold. Now, it is certain that this gold was simply swapped, or lent into the market, NOT SOLD. Russia has been swapping precious metals for gold (much akin to a regular USD loan) for many years and is not news to the market. Think about it. They put their gold up as collateral with Western Banks, and receive USD or perhaps Euros or perhaps another currency. They then take this currency and lend that, and benefit from the higher interest rate inherent in that financial vehicle. It just makes good sense and good business and has nothing to do whatsoever with the sale of gold. There really isn't much new to speak of in the market but I thought I would end with a quote from Caesar Bryan, manager of the Gabelli Gold Fund. "I wouldn't be surprised in a year's time to see gold in excess of $400 an ounce." There is an old Polish expression that my mother used to use when I was young that is quite pertinent at the point..."From your lips to God's ear...."  Gold - email chatter - no link to post -- Sharefin, 23:20:49 06/18/02 Tue Fork in the Road: Appeal of Right or the Right Appeal Winston Churchill once observed: "The farther backward you can look, the farther forward you are likely to see." As discussed in prior commentaries (see, e.g., Gold: Can't Bank with It; Can't Bank without It!), gold banking as presently conducted violates prudential rules developed over several centuries of experience. When the pyramid of gold derivatives collapses, as it inevitably must, existing players in gold banking -- the central banks and most major bullion banks -- will be deservedly discredited and gold banking ripe for substantial restructuring, quite possibly outside the confines of existing or traditional banking institutions. The gold mining industry may well have the first opportunity since the ancient goldsmiths to build an entirely new system of gold banking. Just as war is too important to be left exclusively to generals, banking with real money is too important to be left entirely to bankers. The Constitution does neither. All participants in the gold mining industry -- managements and investors, analysts and miners -- should prepare to seize what could be an historic opportunity to move public policy in the constitutional direction of greater economic freedom and the right of all people everywhere to the use and benefits of specie. Gold -- Sharefin, 23:08:49 06/18/02 Tue Gold teed up for speculative punt The gold price has been relatively stable in recent days with the sector teeing itself up for a speculative punt in either direction. Gold -- Sharefin, 23:06:30 06/18/02 Tue A Quick Guide As To How Private Investors Buy Physical Gold The most romantic way of investing in gold, and undoubtedly the best value, is to buy it direct from a gold producer. Harmony Gold, the big South African company has its own refinery and produces 10 tola bars which weight around 2 ozs as well as smaller 1 troy ounce bars. It was also the company quickest on its feet to react to the success of the film Lord Of The Rings by producing 18 carat rings inscribed in the Elvish language invented by Tolkien with the words, "One ring to rule them all, One ring to find them, One ring to bring them all and in the darkness bind them." The company is going to present at the 7th Minesite Mining Forum in September, but why wait until then when orders for rings and bars can be placed direct on www.harmonygold-direct.com. Just imagine the stunned silence produced by slapping a bar of gold down on the table when all those present are moaning about the performance of the FTSE All Share Index. Possession of gold can make a character out of an individual. Gold -- Sharefin, 23:03:24 06/18/02 Tue Last throw of the dice for gold The World Gold Council's hopes of rejuvenating pedestrian investment interest in gold have been pinned squarely on the traditional demand powerhouses of India, Japan, China and the US. Few industry specialists openly dismissed the Council's chances of success at last week's LBMA conference, but most agreed that a failure to lift investment appetite for the metal in the current economic and socio-political climate, would be an ominous signal for bullion's future in more certain times. The council's plans to stoke demand by an additional 300 tons a year has been labelled by some critics as simplistic and ambitious. But others believe the confluence of bad economic, corporate, social and political news currently dominating the headlines present the ideal opportunity for the Council to establish a new high water mark for investment demand, breaking the disappointing annual trend of about 300 tons a year for the past 20 years. Of course, if the WGC can not pull off a major increase in demand in the current circumstances, few will believe the metal can ever regain its position as the ultimate safe-haven investment. Gold -- Sharefin, 23:01:19 06/18/02 Tue Bank Of Russia Interested In Gold Assets The Bank of Russia is still interested in gold assets despite fluctuating world prices on gold, the Bank's First Deputy Chairman Oleg Vyugin told Interfax on Monday. The Bank of Russia can always buy gold from mineral developers on the domestic market, he said. "We will buy gold from miners, but it cannot be said that the Bank of Russia will stress the amassment of gold reserves," Vyugin said. Regarding press reports about the Bank placing $400 million in gold on deposits in foreign banks in May, Vyugin said, "it is absolutely normal practice." "Gold remains a reserve asset. Our desire to have this asset, the same as any other, work for us and reap profits is natural," he said. The Bank, however, will not make its operations on the market of precious metals public, Vyugin said. "Not a single central bank says when and how much gold it plans to sell. We will not do that either, because such information is confidential and may have an effect on the market," he remarked. Gold -- Sharefin, 22:59:51 06/18/02 Tue Gold seen losing lustre during sowing season Gold -- Sharefin, 19:45:12 06/18/02 Tue Gary North's Gold Archives Gold -- Sharefin, 19:42:54 06/18/02 Tue Gold's future hinges on luring more big investors Attracting investment to gold as an alternative asset will be the key to sustaining the 2002 bullion rally in coming years, according to senior mining executives, refiners and dealers gathered here for a global forum on the future of gold. Reduced gold production as the mining industry consolidates could help hold up prices. But gains must be orderly to avoid scaring away price-sensitive buyers from the jewelry sector, the bedrock consumers of the gold supplied by producers, said industry professionals attending the annual conference of the International Precious Metals Institute (IPMI), which sponsored the all-day round-table event Tuesday. Gold -- Sharefin, 19:36:11 06/18/02 Tue Golden days are behind us as the dollar declines The price rise in gold is telling us the truth, not about gold, but about the dollar. The US external deficit has to be reduced. That means the dollar has to fall further. There is no early prospect of a return to confidence in the US stock markets. There is no point in the US raising interest rates, which would weaken the US economy and only postpone the necessary realignment of dollar exchange rates. In Britain, stock markets are likely to remain weak; probably the housing market will turn down without the need for an increase in interest rates. Gold will continue to outperform stock markets, as it has for the past two years. Pension funds are going to be in serious difficulties. All of this does not look like a short-term adjustment. We may well find that the decline of the dollar is the most important global movement of the decade. Skolnick on Gold -- Giovanni Dioro, 14:49:01 06/18/02 Tue Chicago conspiracy guru Sherman Scolnick gives an overview on Gold in the past couple hundred years Skolnick - The Gold Gamecocks - Part 1 Gold -- Sharefin, 03:10:07 06/18/02 Tue A Top in Gold at $330 or simply a Chapter in Gold's "Long-Term Bull Market?" BUYING!!! -- SilverDragon, 22:14:42 06/17/02 Mon Durban ... BUYING!!! (SilverDragon) Jun 18, 01:08 Appears... Durban Directors... BUYING!!! http://www.tradekdata.co.za/JSE/data/001040/Notes.asp Anyone ready fer 'UP TOMORROW'??? SilverDragon Fiat -- Sharefin, 19:16:01 06/17/02 Mon Dark Vision for the World Economy Editor's Note: Every once in awhile an article comes along by a commentator/analyst who has found the key to a clearer understanding of the forces at work in the world economy. This article by AIG's chief global strategist, Bernard Connolly, offers that degree of insight. The picture he paints is an interesting one. Far from a world moving toward global world government and co-operation precisely orchestrated by the G-3 (Japan, Europe and the United States), Connolly describes a world perilously at odds with itself, fracturing along old pre-World War II fault lines, and heading toward a catastrophic inflation in all three nations -- a circumstance brought by their own inability to reconcile long-standing differences among themselves and the failure of each to come to grips with their own internal problems. In a world of three structurally weak currencies, gold, he says, will be the primary beneficiary because it is the one asset which stands apart from this governmental and central bank currency destruction. We would like to thank theminingweb.com and Mr. Connolly for permission to reprint this important contribution to the current analysis and we highly recommend that USAGOLDers take the time to thoroughly digest it. This article will be a source of discussion and support documentation for some time to come. Beyond that, Mr. Connolly provides some very convincing reasons for gold ownership on the part of citizens in all of the three G-3 nations. MK Gold -- Sharefin, 19:06:33 06/17/02 Mon Bob Chapman, The International Forecaster The FED has completed its monetization of 9/11 as it has done in every crisis since 1987, when they not only force fed aggregates, rigged the stock market, but also destroyed the gold market knocking it down $100 an ounce in one day. We expect once the FED is again forced to raise rates then the monetary spigot will again be opened with greater force than ever. That will not make the economy recover; it will send the stock market lower and gold higher. The ongoing complicating factor is perpetual war for perpetual peace, which is economically unproductive and will create massive unsustainable debt. Even risk and political uncertainty is tailor made for higher gold prices, so you cannot be out of gold and silver related assets. If for no other reason than what George W. Bush will do next in the elitist plan for world government. And all of you out there who know and see a conspiracy and cannot recognize its ultimate goal of world government are either afraid to be politically incorrect or you are dumb. This time the FED and other central banks have no intention of printing their way out of depression. They want it and they have planned it. The rest is disinformation and psywar. We will end up like Argentina and you can take that to the bank, unless the mobs have burned it to the ground. Another undiscussed factor is the dollar crisis has made the euro, that political unit, viable because it has 15% gold backing. We don't know what gold dollar backing is, our government refuses to tell us. Since the planned event of 9/11 the reason to hold gold and silver is more important than ever. The elitists have made the world a very unstable place. The program of war in the Middle East has shifted dependency of the US and Europe for oil from Saudi Arabia to Russia. This is a major mistake. The name of the enemy may no longer be Soviet but Russia is still the enemy. They have been arming themselves to the teeth for the past ten years, massive underground facilities and all. All currencies are suspect, now even the dollar. If you remember bad money drives out good and so it will happen again as it has for centuries. Americans are going to pay a terrible price by not having a currency guaranteed by gold. That means Americans have to use their own initiative and use their fiat dollars and buy gold related assets. Last week the gold manipulators pulled another stealth attack overnight in Australia with a follow-up in London. They then pounded the US market but could not put the gold price under $318 an ounce. JP Morgan in an attempt to look unbiased predicted a price in 2002 of $305 and in 2003 of $310 to $325 an ounce. This of course is disinformation, but it does show the gold cartel has given up trying to keep prices under $325 an ounce. The anti-gold propaganda as we predicted is all over the media, 99% one-sided. If anything, they have to fight the growing notion that gold has resumed its safe haven role. This, while the dollar declines and gold production falls. In 1999 the gold producers hedged over 500 tons, but this year they will probably buy in 400 tons. That effectively takes 900 tons out of the market a swing of 23% in a total market of 3,850 tons. The best part is that the hedgers have just begun to cover. Between them and the shorts we are looking at 15,000 tons. The ball has started rolling and it is only going to pick up momentum. The momentum has shifted and those hedges and shorts have finally given gold an underpinning it hasn't had since 1985. Producers know no matter how much they make hedging it won't stop the investing public from not buying or selling their shares and that is what this is all about. Share price appreciation. The hedgers are in a zero sum game they cannot now win. Small and medium sized central banks have no gold left to sell or hedge. The only leasors or derivative participants left are the major central banks and leasing due to low interest rates is no longer viable. Now that gold is firmly in the low $300's many new participants have entered the long side of the market. Thus we see much higher gold prices. You do not want to be out of this market. Those who trade out could get left behind. An absolute worst-case scenario for gold over the next year is $512 an ounce. We are headed toward a lower stock market and lower bond prices due to lack of earnings and higher interest rates and when historically these things have happened, gold has moved higher. As the dollar devalues and deflation expresses itself the price of gold has to rise. Remember gold is a currency and it becomes the only refuge in the flight to quality from the dollar. In holding gold shares, bullion and coins don't attempt to trade the market unless you are a professional. Go long and stay long. You only trade in the futures and options arena and again if not a professional get first class assistance. Foreign capital is fleeing the dollar and there are few real viable alternatives and gold is one of them. The trend in gold is up and the trend is your friend. Costa Rica's President Abel Pacheco has decreed a moratorium on operating open pit gold mines. He specifically opposed the open pit gold mining plan of Industrias Infinito SA and its present firm, Vannessa Ventures located near the San Juan River in northern Costa Rica. The moratorium is indefinite. At today's gold prices that will cost Vannessa $650 million. LeMetropoleCafé says, the Vatican financial managers were told by Goldman Sachs in September 1999 to sell all their gold. They also report that an Indonesian Consortium has 126 tons of gold in Zurich. They have tried to take delivery and were denied. Anglo-Gold continued to reduce its hedge book by 52 tons in the first quarter and 53 tons in the previous quarter. That puts a floor under current prices. Word is the Treasury sold $52 billion worth of gold in the first week of June. We love our country, but we despise our government. The average monthly increase in gold prices over the last 13 months was 1.7% versus a 3% monthly gain in the late 1970's. This surely is no bubble, as Wall Street would have us believe. Australian gold producers are being urged to cover their hedges because they are toxic besides being fatal by the man who wrote them. He told this to us personally. There are big fireworks brewing. Gold producers are only doing slight covering contrary to belief. They are under enormous pressure by their lenders - bankers. Wait until the full story is finally told. Will they be lucky and just go to jail or will they be lynched? Buy, Buy, Buy. According to the Comptroller of the Currency, as of 12/31/01 JP Morgan Chase held $41.4 billion of gold derivatives of all maturities. The total held by US commercial banks last year was $63.3 billion. We find it of great interest that GATA contributor Gold Fields when interviewed by the Miami Herald upon its NYSE listing hosted by Marxist Nelson Mandela, its investor relation's person Cheryl Martin said in reference to GATA “the company does not comment on the conspiracy theories in the market”. This is the politically correct attitude of many mining companies and the duplicitous position taken by Gold Fields. We know the mindset, which is, don't rock the boat. The management of Gold Fields disgusts us. You certainly won't see us buying their stock when alternatives exist. The evidence of manipulation is overwhelming and we can't prove it because our so-called court system won't let us go to discovery. The FED and Treasury are leasing gold and refuse to admit it. Two weeks ago we reported a rumor from the Venezuelan press, which stated, Spokane-based Gold Reserve (GLDR) was told to drop its concession for the Las Brisas project and leave the country. This rumor was entirely untrue. We apologize, but we can't be responsible when a wire service prints falsehoods. The largest silver horde in history will be gone in two months and legislation before Congress would enable the federal government to become a net silver buyer primarily from US mines. If the government wants to continue to mint Silver Eagles, the world's most successful silver coin, they'll have to buy silver on the market. If Congress approves the program it would consume 20% of US silver production. Kinross, Echo Bay and TVX are going to combine plus TVX agreed to acquire from Newmont Mining a 49.9% interest in the TVX- Newmont Americas joint venture for $180 million. Kinross is the acquirer making it the seventh largest producer. Newmont will own 15% of the merged entity. The group will produce two million ounces of gold a year. This is a marriage by high priced producers on the lower rung of the middle -sized producers. Short term there is no excitement as Kinross' stock fell 21% on the news. After we see all the numbers we'll comment further. The hedges had best cover their shorts or run for the hills, the squeeze is on. Barrick, AngloGold, Placer Dome and assorted others particularly Australians had best extricate themselves or they'll be in deep trouble. If their plight wasn't difficult enough they only comprise some 11% of shorts. They have massive competition trying to cover as the gold price moves ever higher. We don't expect much covering, they are too committed and it's almost too late. They'll either get dollars or bankruptcy debts. The gold corner they created is about to consume them. That gold is gone forever. Some producers and some gold bullion market manipulators will try to cover and in the process gold will catapult upward. Wait until the public of each country finds out they have little or no gold left, in some countries the perpetrators will go to jail, in others they'll be lynched. In England Gordon Brown just might be castrated if he's not stoned to death. We are not overstating this crime because as gold climbs the world economy is going to slide into depression and the public is going to demand they be told how this happened and who was responsible. We also strongly take exception to trying to convince producer hedgers to cover or buy in their hedgers. These companies are the antithesis of the mining business. They have almost ruined an industry, destroyed hundreds of companies and thousands of jobs and are responsible for billions of dollars in individual losses. They have destroyed people's lives with their greed. Why should we advise and help them? Let them go under so the non-hedged gold companies can buy their assets on favorable terms. The hell with them, they deserve everything they have coming and then some. The destruction and pain they have caused is inestimable. There are no technical barriers to gold and silver as it climbs to the upside. They are going to go where they are going to go and when they have reached their peak only the informed and lucky will get out near the top. We are very close to an explosion. A bullion bank is going to go bankrupt, probably JP Morgan Chase and you can be sure the other elitists who control our government will ride to the rescue with our taxes to bail them out, which will expedite the depression. We envision legislation in the US to do away with the privately owned Federal Reserve and the return to a US National Bank. The lock on monetary creation by elitists will be over and their dreams of a new world order will be crushed, but not easily. Once the exposure is made we must then pursue these people so they can't easily repeat their evil designs. Even as exposure is evident don't expect the public and Wall Street to plunge into gold and silver. They'll come in gradually because the propaganda barrage will be enormous. We believe the elitists are already preparing for these events. They may be criminals but they are not stupid and they are in control. As Gold rises the financial system will come unglued and they'll desperately try to hold it together. This process has at least three years to go. This is just the beginning so climb aboard for the most profitable, wild adventure of your life. This opportunity comes only once every 50 to 100 years. Buy gold and silver related assets now. Gold -- Sharefin, 18:32:00 06/17/02 Mon Bush war has heart of gold Central banks all over the world have supposedly conspired to maintain furiously high, Enron-type derivative short positions against gold to keep it in an artificial bear market for, oh, say, the last couple of decades. Independent sources say the problem is the value of gold reserves in nearly all the world's central banks is about even with the derivative shorts held by roughly the same banks, at $320 per ounce. So, theoretically, if a margin call were to come in today, central banks would have to pay out all gold in all their reserves worldwide. According to a recent International Monetary Fund survey, commercial banks in 48 top nations reported holding risky derivative positions on 900 million troy ounces of gold. (The Golden Pot note: 900 million ounces is almost 28,000 tons or 100% of ALL global Central Bank holdings) The actual worldwide gold production is just 50 million troy ounces. With each passing year, the real value of gold becomes increasingly more difficult to suppress artificially and so requires more funds in the derivative market. The game of keeping gold supply artificially high is alleged to serve central banks in keeping their inflated paper currencies artificially valuable, but the buck has to stop somewhere. It doesn't stop there. Insiders correctly point out there are only three economic means out of such a debacle: to print money, to default or to borrow. Traditionally, banks have chosen to sell debt and delay decisions in similar cases. But the debt market has dried up, along with the bank accounts of would-be investors. For example, some say there is five times as much public and private debt in the United States as total dollars in the money supply, at $35 trillion and $7 trillion, respectively. Printing money to meet debts largely owed to the privately owned foreign banks that make up the U.S. Federal Reserve would be economic and political suicide, obviously, and so would be a default, but there is one long shot reportedly in the works: A highly collusive war that engineers a massive wealth transfer, much like Desert Storm but on a larger scale, might just save our economies. Whoa, wait a minute. Aren't we at war against terrorists? How did all this get started? The answer is that our world is a dynamic reality where multiple events flow together as streams to a giant river. Unbeknownst to our friends in the mass media, most of our world's problems can't be reduced to a single target or personality. Alas, complex issues don't sell airtime. Global currencies fluctuate against each other based on emotion and backed by psychology, not by assets as they once did. That is why the U.S. Federal Reserve puts psychology before economics every time. And so, the reasons the central banks would gain by keeping gold artificially low becomes more obvious from this perspective. As long as alternative investments to paper currencies are kept artificially unattractive, as in gold's 22-year bear market, people will hold paper currency, keeping demand high and inflation at bay. The clincher is this: The price of gold useful for industry is said to be valued at $350 by the market today, due to inflationary values that have not been figured into the price of gold for more than two decades. If that is true, and if central banks around the world are now losing their hedge against undervalued gold - threatening their very existence - then the price of gold will slingshot up and currencies all over the world will melt to 30-60 percent of their current values. Could we really be at the beginning of a gold boom and concurrent currency meltdown? Can a controlled conflict save us from a certain collapse? Is the possibility of a controlled conflict in the Middle East even possible? And what sensational attack against which political personality will take place when the mass media resume their blame game? These and other questions are being answered by events playing out right now. Fiat -- Sharefin, 09:33:47 06/17/02 Mon Wilshire 5000 The right hand side of the right shoulder has finished it's formation.  Fiat & 911 -- Sharefin, 09:29:22 06/17/02 Mon The below four charts show how poised the European markets are. Note the highlighted tick which is when 911 occured and the markets stopped trading. The formation prior & the markets today look almost identical. FTSE CAC DAX SWISS Fiat -- Sharefin, 09:04:43 06/17/02 Mon Tokyo fights to stave off bank crisis to save 'payoff' plan FEARS of a banking system crisis have begun to re-emerge in Japan as the stock market tumbled on Friday and as corporate bankruptcies threaten to hit record levels. But the government is desperately trying to keep a lid on the situation until the end of the current financial year, when it hopes to shift much of the potential liability for bank failures off its own shoulders and onto those of bank depositors. Gold -- Sharefin, 09:02:16 06/17/02 Mon 10 Questions With Gabelli Gold Fund Manager New forum -- Sharefin, 08:45:06 06/17/02 Mon Endgame Gold & Silver Stocks -- Sharefin, 08:23:13 06/17/02 Mon This site is well worth a look at and to download the spreadsheet. Gold & Silver Mining Stocks Spreadsheet The spreadsheet contains info on over 180 stocks: trading symbols recent quotes performance quartiles shares outstanding market caps production figures hedging information website hyperlinks instructions on how to import quotes Charts online -- Sharefin, 07:54:57 06/17/02 Mon Lots of changes in the last two weeks. Charts Online Gold -- Sharefin, 04:31:57 06/17/02 Mon Has gold had its run - or is the next stop $US440? Market experts are divided over the future of the gold sector - some say the run has only just begun while others believe it is time for other metals to take over the running. In a research note released last week, UBS Warburg believes gold equities have already achieved 93 per cent of the historical average gain compared with one-third for other metals, under half for diversified resources and just one-tenth for energy. The findings are based on the average OECD industrial cycle. By contrast, the team at independent research house Fat Prophets - a supporter of the gold sector - believes the story is about to unfold. "We believe that the current rally in gold is sustainable and that, over the medium to longer term, the precious metal will trade at significantly higher levels ... above $US440/oz," said Angus Geddes and Jason McIntosh in a recent note. "The fundamentals for gold have not been this positive for quite some time. Periodic Ponzi Update PPU -- $hifty, 18:28:20 06/16/02 Sun http://home.columbus.rr.com/rossl/gold.htm Periodic Ponzi Update PPU Nasdaq 1,504.74 + Dow 9,474.21 = 10,978.95 divide by 2 = 5,489.475 Ponzi Down 73.095 from last week. This should be another interesting week! The last 4 weeks have been down! A trend that should continue! Thanks for the link RossL To steal a line from Neil Young " In the field of opportunity its plowing time again!" Go GATA Go Gold $hifty  Nick, Regarding Robert Prechter -- Cobra, 14:22:32 06/16/02 Sun I'm going to acquire his latest book also, I have his other books, His degree is in physchology. He has always very clearly presented what the world is faced with right now. He wrote in his 1978 book what today would look like and what will happen as a result. He is not a perfect prognosticator but there are not many of those around either. Cobra -- Sharefin, 23:47:46 06/15/02 Sat Thanks for your support & good wishes. I know I get plenty via the web for what I enjoy doing. I'm almost back up to scratch and should be back producing charts real soon. Currently I'm recompiling my datasets & processing the last two weeks worth of data so nearly there. No thanks to the ass who has cost me so much time & effort. I've had to completely rebuild three computers but am basically finished with this now. I've also had the pleasure of reviewing Robert Prechter's latest book "Conquer The Crash" and heartilly recommend it to all who play these markets. I think his section on Gold & PMs (short term) is way off the mark but the rest of it is excellent reading. He's touting Dow under 1,000 and property @ 10c in the dollar in the next few years, so even if the Dow/Gold ratio goes back to 1:1 sending gold up to $1000, the gold purchased today will be worth a lot more than what $1000 dollars are worth today in buying power. His scenarios & reasoning for this coming depression are well put together and captivating reading. The Last Two Weeks -- Cobra, 06:34:41 06/15/02 Sat Nick, we have seen a great opportunity to accumulate Real assets the last two weeks, the window won't be open much longer tho I don't think. Thanks again for all of your tireless efforts and great work. There are many who appreciate it, I know I do. "Be fearful ... -- SilverDragon, 13:22:39 06/14/02 Fri "Be fearful when others are greedy and greedy when others are fearful." Warren Buffett. Fiat -- Sharefin, 08:52:47 06/14/02 Fri Please understand this time it is truly different Never before has a Mania become so large as to suck in the whole world. Of all the past manias, the size and scope of the U.S. Stock Mania is without precedent, in this regard. Al Newman's great work documents this. History indicates that ALL the past manias eventually correct back to about where they started. The NIKKEI has dropped from 39,000 to 11,000. NASDAQ is down to 1,500 from 5,000, after starting up at 300!. DOW and S&P indexes appear to be magically held aloft with PE ratios of 45, with 15 the norm. Never seen before. Crash of 1929 PEs were only 33. The mantras out of the sell side are these: “I believe in the Market, I believe in me, ” “The bottom is in buy the dips,” “Be patriotic, buy stocks.” Mr. Schwab counsels, “Leave your funds with us, just relax, stay diversified.” Why not push bonds or gold? Simple. Everyone knows what bonds and gold are worth, relative to the particular currency. The unknowing are still buying equities in bankrupt companies at PEs in the stratosphere; they will be severely punished for rewarding the marketers of the bull market propaganda. If it looks like a Mania, walks talks and acts like a mania, it probably is one. Silver Dragon -- Sharefin, 01:54:56 06/14/02 Fri Thanks for your comments. You are safe to email me so drop me a line. Nick Fiat -- Sharefin, 01:37:53 06/14/02 Fri The Cat is Out of the Bag Gold -- Sharefin, 01:19:37 06/14/02 Fri Rich mining stocks to get richer Here's the question of the year: When the investing public, already headed for the exits, runs screaming from the U.S. stock market, how will gold mining stocks, and gold, benefit? Gold -- Sharefin, 00:52:25 06/14/02 Fri Japan gold investors shrug off geopolitical fears Gold -- Sharefin, 00:48:06 06/14/02 Fri Reports of Gold's Demise May Be Premature Second to calling a bottom in the stock market, the favorite pastime of many market participants these days is calling the top in gold and related shares. Of course, there's a connection between the two calls, as gold's ascent has run counter to the slide in equities, a pattern particularly evident since February 2001. Another successful gold fund manager Jean Marie Eveillard, manager of the $38 million First Eagle SoGen Gold fund, wasn't as brazen as Holmes in declaring an end to gold's recent slide. The metal could suffer further losses near-term and that would certainly diminish investors ardor for related shares, especially among those momentum players who've only recently glommed onto gold's ride, he said. "I think we're in a bull market for tangible assets," he said, recalling recent comments about inflation's path by PIMCO chieftain Bill Gross. "I happened to read what Bill Gross writes and find it very interesting, more than what Abby Cohen writes," Eveillard quipped. A bull market for hard assets is "not consensus" because investors compare the 1980s-1990s to the past two years and believe the 1980s and 1990s were the norm, he said. "I think they're wrong." Further evidence of the trend comes from Richard Russell, editor and publisher of Dow Theory Letters. In a recent report he looked at a historic ratio of the Dow Jones Industrial Average to the price of gold. The ratio peaked in September 1929 at 18.4 (meaning the Dow could buy 18 ounces of gold) and again in May 1969 at 28.2; in retrospect, those were pretty good times to sell stocks, and buy gold and other hard assets. Conversely, the Dow's buying power relative to gold bottomed in September 1885, April 1942 and January 1980, all junctures when it would have been prudent to buy stocks and other financial assets. Most recently, the Dow-to-gold ratio topped at 44.7 (its highest in history) in July 1999, Russell reported. Perhaps that was a bit early to start buying gold and selling stocks, but the history of the ratio suggests gold's rally has only just begun. Dow/Gold Ratio Chart Value of an ounce of gold, a gentleman's suit? -- Hoori, 13:16:58 06/13/02 Thu RATIOS AND PREMIUMS With gold back in vogue investors are dusting off their price charts and looking for links between it and other investment vehicles to try to be a step ahead of the market. "People have used all sorts of measurements and ratios, the gold-silver ratio or the Dow-gold ratio," said David Rowe, director at NM Rothschild in Sydney. http://www.forbes.com/newswire/2002/06/12/rtr630256.html But although a variety of methods are used, they don't all point to the same forecast for gold. The gold-silver ratio shows a wide link has existed between the two metals over the past eight years, although silver has generally played catch up to any movement in the gold price. Over the eight years gold has been valued between 55 and 65 times greater than silver. The ratio is currently topping out at 65-66 times, suggesting little upside for the gold price. Using a ratio between gold and the Dow Jones industrial average points to little upside potential as well. The ratio peaked at 42-43 times in February 2001 and proved to be a good time to buy gold, which was $259 an ounce at the time. Gold slipped to $254 in early April, but has rallied since. However, the ratio with the key Wall Street stock benchmark has dropped below 30, suggesting the upside potential is waning. Apart from its status as a safe investment in times of turmoil, gold has always been considered a hedge against inflation and interest rate trends. Interest rates are at the core of all investment strategies because they suggest the lowest safe returns that are possible. "The decline in yields, representing a fall in inflation, has been matched by the depreciation in the gold price," Darby said, referring to the latest interest rate cycle in which rates worldwide tumbled as global economic growth slowed. A ratio between the benchmark U.S. 10-year treasury note and gold has fallen to 1.57 times, based on a yield of 5.07 pct and a gold price of US$322. The ratio converts the yield into basis points, which is divided by the gold price. In the past 20 years, the ratio has rarely broken below 1.6 times and has never gone below 1.4 times. This suggests the opposite trend could now be underway, that interest rates, bonds yields, inflation and the gold price have bottomed out. Silverado ... 10th largest Alaskan nugget -- SilverDragon, 08:26:28 06/13/02 Thu Check this nugget out… 42 ounce nugget (10th largest recorded in Alaska) http://www.silverado.com/s/PhotoGallery.asp?page=2 SilverDragon Moderation & my website -- Sharefin, 03:17:11 06/13/02 Thu Due to the attacks sustained upon my machines I will be leaving this forum on moderation for the time being. Gold news related posts will be passed, all others vetoed. Perhaps I will leave it this way I don't know. Since my first attempt to get back on the web I have been hacked again with another PC being taken out in the same manner as the first one. This is now my 3rd PC to be taken out!!!! So no joy in re-installing my system as yet and all my backed up data is still unobtainable. So at the moment I have zero contact with my website Gold Charts R Us No data access with my website and zero ability to do any charting. I have zero clue as to when I'll be back to normal especially if I continue to get hacked. Fiat -- Sharefin, 02:57:16 06/13/02 Thu US Bear Market Commentary Gold -- Sharefin, 02:51:40 06/13/02 Thu Gold Stock Investing 101 Gold -- Sharefin, 02:48:06 06/13/02 Thu Why is Gold Leading Charge vs the Dollar "This spells, potentially, a gigantic short squeeze as short positions are equal to one-year mine supplies. Favorable price action should also awaken investor interest: Last year's divestment and source of supply would turn into this year's demand. The sudden change in the gold equation has the potential of causing a veritable price explosion." If our assumption that hedging is no longer fashionable or profitable or both (mostly because of bullish prospects for the metal) is valid, which we think it is, the implications are extremely bullish. Here's why. The world supply and demand for gold is finely balanced, with total supply (including official sales of over 500 tonnes per year) at 3,868 tonnes, and total demand (including bar hoarding, but no allowance for investment demand) at 3,722 tonnes. Hedge lifting makes up the difference (last year, as we said, 147 tonnes). The hedgebook totals 3,067 tonnes. A slight acceleration in the pace of hedge lifting, say a 10% reduction of the book, would, ex ante, overwhelm supplies by 150 tonnes (that is, over and above last year's 150 tonnes reduction). This would be accommodated by rising prices, which admittedly would decrease fabrication demand but which would increase, by presumably a far greater factor, investment demand. One hundred fifty tonnes represents the equivalent of 45,000 COMEX contracts. To assess the market impact of this buying, one needs to compare the 45,000 contracts with some measure of market liquidity. Because volume includes heavy day-trading activity on the part of "locals" and substantial spread trading, both of which have little or no net price impact, we discard average daily volume. Instead, we submit that the more significant figure is the average daily change in the open commitment over some recent period. Changes in the open commitment reflect genuine "ownership" changes. In fact, ownership trends tend to parallel price movements (whether new buying or short-covering) and can thus be thought of as price-making transactions. Since December 1, prices have advanced $48/ounce on an open interest increase of approximately 90,000 contracts. The absolute average of daily changes of open interest works out to 2,374 contracts. Hence, the 45,000 contracts of potential short-covering represents nothing less than 19 days of trading, a mighty prop to prices indeed! Consider, however, a more catastrophic scenario (a la Ashanti, September 1999): Gold producers are forced out of their hedges by their bankers because cash flows are mis-matched, i.e., marked-to-market losses are immediate, and revenues are years away. In such a case, hedge lifting can easily represent multiples of 45,000 contracts. For example, a 50% reduction (1,500 tonnes) in the hedgebook represents the staggering sum of 450,000 Comex contracts, or 190 days of trading, probably enough to drive up prices by hundreds of dollars if executed in some rush. Not only could a Middle East and/or Indo-Pakistani conflict trigger such a catastrophic scenario but, we suggest, so could the simple continuation of the present advance moving through, for example, the 1997 (a year of record hedge selling) highs of $368/ounce. Watching the tape, we have taken note of the recent "tightness" of daily ranges, bounded by substantial buying on all dips coupled with careful bidding on upticks, a clear attempt not to frighten sellers. This "controlled" action is typical of hedgers and commercials (who may be trying to wiggle out of short positions), not of speculators. In fact, our sense tells us that this market is being driven by hedge lifting, with speculators (futures traders, Japanese savers) playing a much more reduced role. If our intuition and our math are correct, gold prices are poised to explode on the upside. Fiat -- Sharefin, 02:36:44 06/13/02 Thu Workshop on Central Banks What we want to do is to involve ourselves in the international debate on how gold has been mobilized over the years by central banks. If we look at a few figures. Central Banks are holding 30-34,000T of gold. The ECB are holding 14,000 tons of gold and the issue is that gold has come to the market in the form of lending and the demand has come from mining companies who started new projects and needed financing. It has come from the jewelry industry and those processes. the mobilization of gold as far as we can see. An informal survey: the deposit market has grown from 1300 tons in 1990 to 3.5 to 4,000 tons in 1994. In 1995, it has grown quite sharply to round from 2,000 tones to 3,500 tons. I think as a central bank we would from a producing country call for international based practices to be applied to gold transactions. It is everybody given to transact with gold what they want to transact. Lending of gold--that gold linked be singled out by a central banks balance sheet to a separate category, not simply in the vault. The BIS has done that successfully. This will give the market a clear assessment of how much gold has been linked , how much has been sold and which will be reproduced in the future and will be the market a degree of certainly saying "well the market is reasonably oversold or is not oversold..." We have accurate, up to the minute figures on the futures market activity and one can assess the futures markets is or is not oversold and if you want to have a look you can do that. We don't have the same certainty when it comes to how much gold is being lent into the market. In terms of selling programs. It is not the effect that central banks are wanting to dispose of gold it is the fact that there could be a lot of rumormungoring around these activities because there is no clear intention...we think we should be selling and will be selling x amount over x time. --- I'm here to tell you that I do not believe that it is in the interest of owners of hundreds of billions of dollars of reserves which the European Central Banks do hold in terms of gold, it cannot be in their interest, divorced as they may be from the dirt of the reality of commerciality in contract to us, to see the benign neglect to having no one speak on behalf of this currency a reduction of constant erosion of value or making it worse, transferring billions of dollars worth of value from taxpayer ownership , after it is taxpayer money which you people are guarding, the New York speculators. Because what you are doing in the interim period while you are waiting for the bureaucratic administrative detail to finalize the formation of the proper sportsmen for the new European Central Bank, the people who own 13,000 tons of this product--while you are waiting for the spokesman, the media, the speculators and the ...... Gentlemen, please understand, while you are the guardians of billions of dollars worth of public funds, today the explosion of global markets and finance today is such that George Soros, I don't mean him--- and his ilk today control billions if not trillions of dollars and if they notice if the feel sense, any weakness in coffee beans, Asian ringits, they go for the jugular. In going for the jugular, when they go for the jugular, they mobilize billions, trillions and what happened last year was not the fundamental supply and demand distorting the market value--we did not see the erosion of 1/3 of the gold price because supply has increased and demand has dried up, in fact the opposite has happened. Supply today is some 25% less than demand yet the prices have collapsed by 1/3. Now gentlemen, what we need to do is establish that the market should prevail in terms of market supply and demand and that requires for you people, you the owners of the largest stock to speak. We do not want to include or be included in the decision as to whether you decide to buy, sell or hold, but please speak. If you want to sell, then let us get together. Nobody can do a better job of monetizing your holdings than us. Us the producers because we are not bankers, the World Gold Council, I on behalf of my little company, we have a shortage of some $4B dollars. We are short 11 million ounces. We could sit down and monetize your reserves if that is what your desire is. I would like to suggest to you that European banks ---would be interested in new currency, the most important task you have is credibility. Whether you decide to hold or sell, it is in our common interest to maintain stability and stability can only be maintained by someone being transparent and speaking. If you do not speak, all those lilttle...who guides the media and who don't have an Asian Crisis so they jump on someone else, will highlight the gold crisis because they will say Mr. George or Tietmeyer of the Bundesbank--and soon you will have the little George Soroses in Brooklyn shorting gold. All you have to do is sell 1 million ounces, collect $400M if you have a line of credit and buy U.S. Treasury and you have a positive spread of 3.5% because all we have to pay you is 1.5% and we collect form the U.S. Treasury 4.5%. Now surely it is not in the interest for you to lie in silence. Do not be overcome the reluctance of betting together and saying the ECB have said they are going to sell 1/3, or sell nothing or reduce it to nothing....whether you sell, buy or hold, so we can sit down and do a deal with you. It must be in our common interest to keep the price up and to keep a stable market. And that is all I as a supplier can ask you to do. I ask you to help us and help yourself. Q. how do you see the ECB working to enure transparency? A. I would say for speaking for all institutions, that it is not our intention. The third highest level of gold is France, the second is the Bundesbank and the U.S. is the first. Gold is 28% of central bank aggregate reserves. About $330 oz is break even. --- Q. Several years ago the IMF said gold gave their balance sheet strength. Do you think central banks still take that view? A. It is a difficult questions to answer since we have had quite a few more central banks in the last 10 years dispose of gold that we have seen today. If you look at Central Bank holdings over the years... Fiat -- Sharefin, 02:29:20 06/13/02 Thu "Pass the Parcel" Money Fiat -- Sharefin, 02:27:53 06/13/02 Thu Something Big in the Offing Fiat -- Sharefin, 02:26:08 06/13/02 Thu Something Big in the Offing Gold -- Sharefin, 02:24:11 06/13/02 Thu Transformation of gold sector continues Three-way merger: Big guys growing so it makes sense for little guys to create new big guy So all the rumours were true. Kinross Gold Corp. really is putting together a three-way merger with TVX Gold Inc. and Echo Bay Mines Ltd. Gold - email chatter - no link to post -- Sharefin, 02:16:46 06/13/02 Thu Why Gold? by Llewellyn H. Rockwell, Jr. As with all matters of investment, everything is clear in hindsight. Had you bought gold mutual funds earlier this year, they might have appreciated more than 100 percent. Gold has risen $60 since March 2001 to the latest spot price of $326. Why wasn't it obvious? The Fed has been inflating the dollar as never before, driving interest rates down to absurdly low levels, even as the federal government has been pushing a mercantile trade policy, and New York City, the hub of the world economy, continues to be threatened by terrorism. The government is failing to prevent more successful attacks by not backing down from foreign policy disasters and by not allowing planes to arm themselves. These are all conditions that make gold particularly attractive. Or perhaps it is not so obvious why this is true. It's been three decades since the dollar's tie to gold was completely severed, to the hosannas of mainstream economists. There is no stash of gold held by the Fed or the Treasury that backs our currency system. The government owns gold but not as a monetary asset. It owns it the same way it owns national parks and fighter planes. It's just another asset the government keeps to itself. The dollar, and all our money, is nothing more and nothing less than what it looks like: a cut piece of linen paper with fancy printing on it. You can exchange it for other currency at a fixed rate and for any good or service at a flexible rate. But there is no established exchange rate between the dollar and gold, either at home or internationally. The supply of money is not limited by the amount of gold. Gold is just another good for which the dollar can be exchanged, and in that sense is legally no different from a gallon of milk, a tank of gas, or an hour of babysitting services. Why, then, do people turn to gold in times like these? What is gold used for? Yes, there are industrial uses and there are consumer uses in jewelry and the like. But recessions and inflations don't cause people to want to wear more jewelry or stock up on industrial metal. The investor demand ultimately reflects consumer demand for gold. But that still leaves us with the question of why the consumer demand exists in the first place. Why gold and not sugar or wheat or something else? There is no getting away from it: investor markets have memories of the days when gold was money. In fact, in the whole history of civilization, gold has served as the basic money of all people wherever it's been available. Other precious metals have been valued and coined, but gold always emerged on top in the great competition for what constitutes the most valuable commodity of all. There is nothing intrinsic about gold that makes it money. It has certain properties that lend itself to monetary use, like portability, divisibility, scarcity, durability, and uniformity. But these are just descriptors of certain qualities of the metal, not explanations as to why it became money. Gold became money for only one reason: because that's what the markets chose. Why isn't gold money now? Because governments destroyed the gold standard. Why? Because they regarded it as too inflexible. To be sure, monetary inflexibility is the friend of free markets. Without the ability to create money out of nothing, governments tend to run tight financial ships. Banks are more careful about the lending when they can't rely on a lender of last resort with access to a money-creation machine like the Fed. A fixed money stock means that overall prices are generally more stable. The problems of inflation and business cycles disappear entirely. Under the gold standard, in fact, increased market productivity causes prices to generally decline over time as the purchasing power of money increases. In 1967, Alan Greenspan once wrote an article called Gold and Economic Freedom. He wrote that: An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense perhaps more clearly and subtly than many consistent defenders of laissez-faire that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other… This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. He was right. Gold and freedom go together. Gold money is both the result of freedom and its leading protector. When money is as good as gold, the government cannot manipulate the supply for its own purposes. Just as the rule of law puts limits on the despotic use of police power, a gold standard puts extreme limits on the government's ability to spend, borrow, and otherwise create crazy unworkable programs. It is forced to raise its revenue through taxation, not inflation, and generally keep its house in order. Without the gold standard, government is free to work with the Fed to inflate the currency without limit. Even in our own times, we've seen governments do that and thereby spread mass misery. Now, all governments are stupid but not all are so stupid as to pull stunts like this. Most of the time, governments are pleased to inflate their currencies so long as they don't have to pay the price in the form of mass bankruptcies, falling exchange rates, and inflation. In the real world, of course, there is a lag time between cause and effect. The Fed has been inflating the currency at very high levels for longer than a year. The consequences of this disastrous policy are showing up only recently in the form of a falling dollar and higher gold prices. And so what does the Fed do? It is pulling back now. For the first time in nearly ten years, some measures of money (M2 and MZM) are showing a falling money stock, which is likely to prompt a second dip in the continuing recession. Greenspan now finds himself on the horns of a very serious dilemma. If he continues to pull back on money, the economy could tip into a serious recession. This is especially a danger given rising protectionism, which mirrors the events of the early 1930s. On the other hand, a continuation of the loose policy he has pursued for a year endangers the value of the dollar overseas. How much easier matters were when we didn't have to rely on the wisdom of exalted monetary central planners like Greenspan. Under the gold standard, the supply of money regulated itself. The government kept within limits. Banks were more cautious. Savings were high because credit was tight and saving was rewarded. This approach to economics is the foundation of a sustainable prosperity. We don't have that system now for the country or the world, but individuals are showing their preferences once again. By driving up the price of gold, prompting gold producers to become profitable again, the people are expressing their lack of confidence in their leaders. They have decided to protect themselves and not trust the state. That is the hidden message behind the new luster of gold. Is a gold standard feasible again? Of course. The dollar could be redefined in terms of gold. Interest rates would reflect the real supply and demand for credit. We could shut down the Fed and we would never need to worry again what the chairman of the Fed wanted. There was a time when Greenspan was nostalgic for such a system. Investors of the world have come to embrace this view even as Greenspan has completely abandoned it. What keeps the gold standard from becoming a reality again is the love of big government and war. If we ever fall in love with freedom again, the gold standard will once more become a hot issue in public debate. Source: Concord Coalition on the National Debt Gold -- Sharefin, 01:57:36 06/13/02 Thu Wall Street Dive Stokes Gold Bulls ------------ The $24 Trillion Derivatives Monster The huge derivatives exposure at JPM has been the subject of a number of articles over the past few months. First its sheer size is enough to catch anyone's attention and secondly when one puts it beside the number of collapses over the past several months it seemed that every time one occurred JPM was at or near the top of the list of credit holders. Enron, Global Crossing, Kmart, Argentina were all amongst JPM's holdings that went down. JPM have said that so far all of the high profile collapses are only about 1% of its total portfolio. Still it is a concern. But when it comes to derivatives it brings up visions of Long Term Capital Management (LTCM) the hedge fund that collapsed in 1998 and that required a bail out from the Federal Reserve and a cadre of banks including JPM; and, Nick Leeson, the derivatives trader that brought down Barings Bank PLC in 1995; and, the Orange County, California collapse in 1994. Indeed derivative collapses have been behind numerous stories over the past decade. The most recent was the collapse of Enron where the energy giant was hiding transactions in subsidiaries using derivatives. As well stories have come to light about significant manipulations in energy derivatives by Enron that had a negative impact on energy prices during the California energy blackouts. But JPM as a subject of articles has put it in the category of "too big to fail" (Is J.P. Morgan Chase too big to fail? John Crudele, New York Post, February 7, 2002). Jim Grant's Interest Rate Observer termed JPM's derivative position as so huge it looks like a typographical error. The next largest exposure is with Bank of America at US$ 9.3 trillion outstanding. So the almost US$ 24 trillion at JPM does look like a monster. One of the more curious exposures is gold derivatives. JPM has been the subject of considerable scrutiny by the Gold Anti-Trust Committee (GATA) as one of the chief culprits behind the alleged gold manipulation. JPM certainly does have large outstandings in gold derivatives. According to figures from OCC JPM had over US$ 41 billion of gold derivatives as at December 31, 2001. This represented almost 65% of all the gold derivatives held by US banks. It also represents the equivalent of 149 million ounces of gold assuming the closing price of gold on December 31, 2001 at US$ 279. Of course what we don't know is the net exposure position as the figures are only the gross outstandings. And we don't know whether their position is long or short gold and how it might relate to physical holdings. Still it did represent a drop of US$ 14.8 billion or 26.5% from the outstandings at the end of the second quarter. Quite a drop. JPM has been referred to as a house of cards because of the huge outstandings in derivatives. But of course we only know the gross position and not the net position that may be offset with physical holdings in bonds, loans, equity and gold. The vast majority of the positions are termed in JPM's annual report as trading positions as opposed to hedging positions. That could mean almost anything although oddly enough in twenty plus years in the investment industry many of them spent as a derivatives trader, trading positions meant speculative leveraged positions. The so-called rogue trader Nick Leeson who made a huge derivatives bet on the direction of the Japanese Nikkei Dow brought on the aforementioned collapse of Barings Bank PLC. The collapse of Long Term Capital Management (LTCM), a hedge fund that had a former derivatives and bond dealer from Salomon Brothers and two Nobel Prize winners in Economics as principals, collapsed because of huge leveraged bets in currencies and bonds. Finally a lot of the problems of Enron were brought on by leveraged derivatives and using derivatives to hide problems on the balance sheet. Annual reports say nothing about the leveraged positions of JPM. More questions have come to JPM since the supposed mysterious leaving of Dinsa Mehta, JPM's former head of global commodity risk management and global foreign exchange. Mr. Mehta had been with JPM for 26 years. One of his responsibilities was JPM's gold portfolio. Rumours had persisted that there was something wrong in their precious metals book. After the financial debacles of Enron, Global Crossing and Argentina all we can say is that the "House of Morgan" is still around. As for Mehta all he says is that "Conspiracy theorists are doing what they do best; provide entertainment from the sidelines". JPM is being sued in conjunction with lawsuits brought against Enron and Mr. Mehta has been named along with others to appear and provide documentation on matters related to Enron to the House Committee on Energy and Commerce.  Gold -- Sharefin, 01:51:35 06/13/02 Thu Hedge edge may spark mad scramble Wall Street banks' gold derivatives in danger zone As gold's polar opposite, Nasdaq, gets blasted, bullion investors expect miners' risky hedge books to further boost the metal. By some estimates, gold mining companies are hedging, or selling forward, about 4,000 tons of gold. Some analysts say it's far more. As gold prices continue to rise in the face of a weak stock market and a declining dollar, most of the world's largest hedgers are looking for ways to reduce the hedge risk from their books. Yet critics of the practice long have pointed out how hedging by gold miners battered the gold price, mostly by encouraging the lending of central banks' gold reserves to investment banks, which then design hedge programs. Essentially, hedging of any type is a short-sale against the price of gold. Now that gold is flirting with $330 an ounce in the spot market, gold's most outspoken investors see the hedge-rush adding speed to the gold rush. "I see $340 and $360 an ounce as the danger zone for banks, that is where hedging and the hedge book problems start to have an impact," said Ian McAvity, editor of Toronto newsletter Deliberations on World Markets and a director of gold and silver closed-end fund Central Fund of Canada (CEF: news, chart, profile). "I expect to see a $25 up day for gold one day, largely due to someone getting skewered by their hedge book, either the bank that extended it or the mining company." A rapidly rising gold price is the worst enemy of hedged miners and the banks that designed their derivative strategies. A powerful gold rally could force some miners, or the banks behind the hedge books, to engage in a mad scramble to locate gold and deliver it to the original lenders. McAvity points to the largest investment banks, among them JP Morgan Chase (JPM: news, chart, profile), as facing the most risk from the continuing gold rally. Gold's spot price is up about 20 percent since Jan. 2. Figures from the Office of the Comptroller of the Currency show JP Morgan Chase having the largest exposure to gold derivatives among U.S. banks and trusts, as of Dec. 31. JP Morgan Chase held $41.04 billion of gold derivatives of all maturities as of Dec. 31, according to the Comptroller of the Currency. The total amount of gold derivatives for U.S. commercial banks and trusts last year was $63.3 billion. McAvity sees the declining dollar and the move away from Nasdaq and other expensive company shares as positives for the gold price. The euro is zeroing in on 95 cents vs. the dollar for the first time since January 2001. The dollar has lost about 7 percent against the currencies of its major trading partners thus far this year. "The financial asset mania of 1982 to 2000 is now giving way to a return to tangibles, and a precious metals trend that should run for many years," McAvity says. The gold fund manager most outspoken about the evils of hedging, John Hathaway, sees fiscal distress for many parties as gold prices rally. "There is a huge outcry against hedging among investors," says Hathaway. "Mine company managements have received a loud message from the investment world to cover their hedge books, and all but the most obtuse will be doing so." Hathaway sees gold mining companies issuing new shares to buy physical gold that they use to ameliorate, or cover their forward sales of bullion. "Durban Deep was the first to do it, and I believe there will be other, bigger players," he said. Durban is a South African company whose shares have gained 290 percent since Jan. 2. Hathaway estimates each $10 rise in the gold price "means the collective bullion dealers have extended another $1.4 billion to the gold mining industry, based on a 4,000-ton position." Hathaway warns, "A $50 move, which is certainly in the cards, would be $7 billion. What does this mean? It means a serious squeeze on the bullion dealers, not the mining companies for the most part. Central bankers who have lent the gold to JP Morgan, Morgan Stanley, Goldman Sachs and others would not be happy with this situation." What can the bullion dealers do about it? "Not a whole lot, other than buying gold to cover their short, which is what they are starting to do," says Hathaway from his Tocqueville offices in New York City. "Most mining companies, especially the big ones, have margin-free trading agreements with their various dealers. This means they do not have to advance cash when the gold price rises. It is too late for the bullion dealers to go back to the mining companies to change the deal, so they have no choice." Hathaway sees Wall Street clean-up crews at work, frantic in their efforts to erase the gold derivatives. "There are all kinds of crazy, exotic deals made in the past that will come to light -- exploding puts, knock-in calls, etc., which had high fees originally but are now viewed as toxic waste by the dealers who sold them." The fund manager points out that actual gold supplies do not move around as freely as those who need to cover their hedging strategies would like. "Physical gold is illiquid relative to short covering demand. This will take gold a lot higher, unless the central banks step in, which I expect them to do when the gold market gets really disorderly, like gapping $10-$20 a day or more." Gold -- Sharefin, 01:43:03 06/13/02 Thu Gold rally running on hope Few of the world's bullion elite, gathered at a two-day meeting, could afford to take their eyes off the stage, tempted as they were to sneak peeks at a slipping gold price. Gold -- Sharefin, 01:39:14 06/13/02 Thu Cambior negotiates 50-per-cent reduction in mandatory hedging with creditors Gold producer Cambior Inc. has negotiated a 50-per-cent reduction in its mandatory gold hedging agreements with its lenders, the company said Wednesday. Montreal-based Cambior's hedging requirement is now fixed at 35 per cent of production from its existing mines until 2005. Hedging is a complex strategy where companies negotiate future contracts to protect themselves against falling gold prices, but can also create losses if prices rise. In 1999, Cambior was forced to lay off employees and sell assets to restructure after a gold-hedging disaster where bullion prices soared suddenly, leaving the company with heavy debts and gold delivery obligations. Gold -- Sharefin, 01:33:45 06/13/02 Thu Gold: Underlying bullishness shines The contrarian case for gold remains strong. The Hulbert Financial Digest's gold sentiment index currently stands at 29.2 percent. This represents the average gold market exposure among gold timing newsletters that communicate their thoughts daily with their subscribers. This latest reading, which reflects gold timers' opinions as of the close on Tuesday, means that the average gold timer tracked by the HFD is allocating more than 70 percent of his portfolio to cash. This index had risen to as high as 45.3 percent in early June, as gold rallied to near $330 --a level not seen in years. But in the face of gold's correction over recent days, gold timers quickly pulled back. In fact, the HFD's gold sentiment index is now back to where it stood in mid-May, well before the latest leg of gold's bull market. Contrarians interpret this sort of action bullishly, for several reasons. First, it is a positive sign that gold timers in recent days were so quick to retreat. This betrays an underlying skepticism on the part of advisers, an emotion on which bull markets thrive. Further evidence of this underlying skepticism: The HFD's gold sentiment index is no higher today than it was a month ago, despite bullion itself being significantly higher. On May 13, for example, June Comex gold closed at $307.60, more than $12 per ounce lower than where it closed on Tuesday. But perhaps the most bullish aspect of the current reading of the HFD's gold sentiment index: It is not off the charts. Gold timers went wild every other time in recent years in which gold rose above $300, falling over themselves to jump on the bullish bandwagon. When gold eclipsed the $300 level in early February, for example, the HFD's index soared to 90 percent, more than three times its current reading. Over the last two months, however, the HFD's gold sentiment index has not even come close to this 90 percent level. Even at its 45.3 percent level in early June, it still was only half the level that in the past has marked extreme optimism. All of which suggests that the contrarian foundation of gold's bull market remains as strong as ever. Gold -- Sharefin, 01:30:14 06/13/02 Thu Should you be buying silver and gold? Many pros believe precious metals will continue to shine. Here's a primer to help you decide if gold and silver belong in your coffers -- and how to put it there. Investors are also seeking safety from a falling dollar. “When you have strong currency of choice among investors, they tend towards that currency,” notes Jeffrey Christian of CPM Group, a New York research firm. “When there is no flavor of the month in the currency market, investors park assets in gold and silver.” Christian, who advises professional investors on the outlook for prices of gold and silver, believes both are in a sustained uptrend. “We think that gold and silver have made major bottoms over the past few years and are likely to rise. For the first time in a while, we are able to say gold will be higher two years out and silver will be a lot higher.” Gold -- Sharefin, 01:24:54 06/13/02 Thu Gold needs to pierce $350 for the long haul, says Newmont It was too early for struggling gold producers to get complacent about the recent strength in bullion prices because the industry could not sustain itself over the long haul if gold remained under $350 an ounce, Wayne Murdy, the chief executive of Newmont Mining, said on Monday. According to Murphy, a price of $350 has been the long-term average at which the mining industry can replace itself profitably by bringing new projects on line. The head of the world's largest gold mining company, who was addressing the 2002 conference of the London Bullion Market Association "We've gone through a period of huge cost cutting, but as a result the industry is not replacing its depletion [of gold reserves]," Murdy said. He said it was clear higher prices in the short term would not change these declining production trends soon. "The shortfall in production is exacerbated by the reversal of the producer hedging trend." Murdy said gold rose faster than he had accounted for during the acquisition process. "We think it's got a lot of room. In 1996 gold was over $400. That's what I want to reinforce - it's up from a very low base." Gold -- Sharefin, 01:22:20 06/13/02 Thu Dutch cenbank move supports gold A move by the Dutch central bank to reduce its gold lending is additional support for the world gold price which has shadowed its highest level in more than 2-1/2 years this month, metals analysts said on Tuesday. De Nederlandsche Bank, a regular gold seller under the 1999 agreement regulating European central bank disposals, said on Monday it had started to withdraw bullion reserves it had loaned out to provide liquidity for industry sellers in the market. The bank made the move because of low returns in lending the gold into the market. Jan Lamers, a manager of the Dutch central bank's gold investments and sales, said in a speech at the 2002 London Bullion Association conference in San Francisco that the bank responded to increased demand for gold borrowing from mining firms and other forward sellers in recent years by raising the amount on loan from 10 tonnes a year to 140 tonnes currently. The move to rein in its lending would further discourage forward selling - or hedging - by miners, removing a traditional cap on gold prices. "The announcement by the Dutch Central Bank concerning a marked reduction in its gold lending is positive," said Kevin Norrish, minerals economist at Barclays Capital. Gold -- Sharefin, 01:16:33 06/13/02 Thu SECURELY IN THE VAULT A sea change in sentiment restores precious metal's safe-haven status. With gold having breached US330/oz this week, even the nonbelievers are being forced to accept that there has been a sustainable sea change in the metal's fortunes. Australian investment bank Macquarie believes gold is finding "tri-pronged support from the threat of further US dollar weakness, security concerns in the US, Middle East and India/Pakistan and reductions in gold producer hedge books". The reductions in hedge books are, as predicted (Economy & Markets May 17, Companies May 3), reducing gold supply to the market as producers deliver current production into their hedges and close out remaining hedges. Other constraints on the supply side include the limits imposed on gold sales by central banks in line with the Washington Accord, and a forecast drop in world gold production. There were sharp cut-backs over the past five to 10 years on exploration programmes to find replacement reserves. On the demand side, investors are rediscovering gold's traditional "safe haven" investment status as the US dollar slides against other hard currencies. The prospect of war in the Middle East and India is intensifying investment jitters. Macquarie says gold could push towards $340/oz in the coming weeks, but expects its performance to be tied to the dollar. Gold -- Sharefin, 01:13:29 06/13/02 Thu Newmont targets 10 per cent debt The world's largest gold producer, Newmont Mining Corporation, today provided the slightest hint it wasn't about to take a back seat in the rationalisation of the global gold industry just because it was focused on the integration of Normandy Mining and Franco-Nevada Mining. Murdy highlighted the company's net debt to market cap ratio had fallen to 23 per cent following the Normandy and Franco-Nevada acquisitions this year. He added that the global gold major was targeting a ratio of less than 20 per cent by calendar year-end and below 10 per cent over the next three years. This would be a welcome relief for Newmont shareholders, who were the holders of highly geared paper last year. According to BNP Paribas Equities head of research Geoff Bell, in calendar 2001 Newmont's debt to equity ratio was a whopping 76 per cent. Murdy deflected the fact that Newmont had the third or fourth largest hedging volumes in the world. "Over time, we will streamline, simplify and reduce the hedge book we inherited from Normandy so that our shareholders can benefit even more from rising gold prices," he said. "Currently, for every $25/oz increase in the gold price, we generate $160 million in after tax cash flow. With the unwinding of the hedge book, this leverage will increase." Murdy estimated the effect a $25/oz jump would have on the bottom line was about $110 million. Newmont reduced the former Normandy hedge book by 250,000 ounces to 7.3 million oz committed in the March quarter. It has around 11 million oz in total of forwards, puts and calls, according to BNP figures. Although Newmont's hedge position equates to about 15 per cent of reserves, BNP's Bell said about 30 per cent of annual production is expected to be delivered into the hedge book in the next few years. As for yesterday's dip in the gold price, Murdy said there were going to be short-term corrections, but the underlying demand fundamentals are extremely strong. "It's currently rising in every currency and that's a measure of a real bull market," he said. "We think it has a ways to go yet, but we can't predict where that's going to end up." Gold -- Sharefin, 01:09:42 06/13/02 Thu Kinross, TVX, Echo Bay in $2bn merger Kinross, Echo Bay, and TVX have unveiled a three-way merger creating a North American gold miner with a market capitalisation of $2 billion. Gold -- Sharefin, 01:02:22 06/13/02 Thu US punters climb into SA golds South African gold shares surged an average 14 percent on Wednesday, one of the biggest leaps in a single day for years, as US investors piled back into the market. Gold -- Sharefin, 01:00:39 06/13/02 Thu Smith's rescue plan for gold Gold super-bear and Mitsui metals precious metal analyst Andy Smith, delivered the wake-up call to the world's gold industry at the LBMA conference in San Fransisco today. After a day and a half of back-slapping and all-round bullish forecasting by some of the brightest minds in the industry, gold bugs were delivered some home truths about the long term future of the gold industry by the analyst introduced as "the gold industry's one-man demolition derby". He said the industry should challenge the assumption that gold jewellery demand growth was endless and central bank indulgence, in their reticence to further diversify their reserve portfolios, was perpetual. "Things can go very, very wrong in this industry unless we ask the right questions. We've already lost a couple of years by not doing that, and that upsets me," Smith said. But far from relegating the metal to total ignominy, Smith said there was a meaningful role for gold as a re-insurance instrument against financial fall-out from terrorist attack - what he called a "backstop for terror insurance". This role for gold, said Smith, had been reinforced since the September 11 attacks. He said this was a credible use for central bank gold. If governments did not put the official sector gold to good use, Smith said, the "positive discrimination" in favour of gold by Central Banks would come to an end, with disastrous repercussions for the gold market. One of the more sensational of Smith's ideas was the suggestion that vast central bank stores of gold made a strong case for closing down the industry's gold mines and feeding world demand for the metal from reserve bank vaults. When asked for his opinion on Smith's suggestion by Miningweb, Wayne Murdy, chief executive of world number one gold producer Newmont, said Smith would make a good addition to the company's board. "We'd sure get a lot more laughs at board meetings," Murdy. Gold -- Sharefin, 00:56:21 06/13/02 Thu Newcrest takes currency hit Australian gold miner Newcrest Mining [ASX:NCM] has been forced to take an A$80 million pre-tax bottom line whack because of its so-called "surplus" currency hedging position. The miner intended to maintain its existing currency and gold hedging positions. "With only 20 per cent of anticipated reserves hedged, and in light of the emerging Telfer project, the company retains substantial flexibility in its future hedging strategy and a significant exposure to the gold price in the years beyond 2003/04," the company said. "Newcrest is currently an asset play rather than an earnings play," Paterson Ord Minnett analyst, Rob Brierley, told Miningweb. "Earnings are going to be held back by gold and currency hedging for some time." He guessed a few years. Newcrest's latest overall reserves inventory stands at about 28-29 million ounces. A lot of Newcrest's upside potential rests with the proposed A$1 billion Telfer project actually proceeding as it accounts for 19Moz of total reserves. Not only that but the troublesome hedge book is made to look more bearable with Telfer reserves factored in. Gold -- Sharefin, 00:52:11 06/13/02 Thu DRD outlines growth plan The company's expansion plan links an ambitious two-pronged exploration and resource conversion programme in Papua New Guinea and Australia, with an optimisation of its South African deep level operations. Gold -- Sharefin, 00:50:53 06/13/02 Thu Placer bid loses A$250m in value A softer Australian gold equities market on the back of a correction in the gold price has conspired to shave about A$250 million from the originally pitched value of the hostile all-scrip takeover bid for AurionGold by Placer Dome. Gold -- Sharefin, 00:46:02 06/13/02 Thu Ron Paul - Gold and the Dollar Mr. Speaker, I have for several years come to the House floor to express my concern for the value of the dollar. It has been, and is, my concern that we in the Congress have not met our responsibility in this regard. The constitutional mandate for Congress should only permit silver and gold to be used as legal tender and has been ignored for decades and has caused much economic pain for many innocent Americans. Instead of maintaining a sound dollar, Congress has by both default and deliberate action promoted a policy that systematically depreciates the dollar. The financial markets are keenly aware of the minute-by-minute fluctuations of all the fiat currencies and look to these swings in value for an investment advantage. This type of anticipation and speculation does not exist in a sound monetary system. But Congress should be interested in the dollar fluctuation not as an investment but because of our responsibility for maintaining a sound and stable currency, a requirement for sustained economic growth. The consensus now is that the dollar is weakening and the hope is that the drop in its value will be neither too much nor occur too quickly; but no matter what the spin is, a depreciating currency, one that is losing its value against goods, services, other currencies and gold, cannot be beneficial and may well be dangerous. A sharply dropping dollar, especially since it is the reserve currency of the world, can play havoc with the entire world economy. Gold is history's oldest and most stable currency. Central bankers and politicians hate gold because it restrains spending and denies them the power to create money and credit out of thin air. Those who promote big government, whether to wage war and promote foreign expansionism or to finance the welfare state here at home, cherish this power. History and economic law are on the side of the gold. Paper money always fails. Unfortunately, though, this occurs only after many innocent people have suffered the consequences of the fraud that paper money represents. Monetary inflation is a hidden tax levied more on the poor and those on fixed incomes than the wealthy, the bankers, or the corporations. In the past 2 years, gold has been the strongest currency throughout the world in spite of persistent central bank selling designed to suppress the gold price in hopes of hiding the evil caused by the inflationary policies that all central bankers follow. This type of depreciation only works for short periods; economic law always rules over the astounding power and influence of central bankers. That is what is starting to happen, and trust in the dollar is being lost. The value of the dollar this year is down 18 percent compared to gold. This drop in value should not be ignored by Congress. We should never have permitted this policy that was deliberately designed to undermine the value of the currency. There are a lot of reasons the market is pushing down the value of the dollar at this time. But only one is foremost. Current world economic and political conditions lead to less trust in the dollar's value. Economic strength here at home is questionable and causes concerns. Our huge foreign debt is more than $2 trillion, and our current account deficit is now 4 percent of GDP and growing. Financing this debt requires borrowing $1.3 billion per day from overseas. But these problems are ancillary to the real reason that the dollar must go down in value. For nearly 7 years the U.S. has had the privilege of creating unlimited amounts of dollars with foreigners only too eager to accept them to satisfy our ravenous appetite for consumer items. The markets have yet to discount most of this monetary inflation. But they are doing so now; and for us to ignore what is happening, we do so at the Nation's peril. Price inflation and much higher interest rates are around the corner. Misplaced confidence in a currency can lead money managers and investors astray, but eventually the piper must be paid. Last year's record interest rate drop by the Federal Reserve was like pouring gasoline on a fire. Now the policy of the past decade is being recognized as being weak for the dollar; and trust and confidence in it is justifiably being questioned. Trust in paper is difficult to measure and anticipate, but long-term value in gold is dependable and more reliably assessed. Printing money and creating artificial credit may temporarily lower interest rates, but it also causes the distortions of malinvestment, overcapacity, excessive debt and speculation. These conditions cause instability, and market forces eventually overrule the intentions of the central bankers. That is when the apparent benefits of the easy money disappear, such as we dramatically have seen with the crash of the dot-coms and the Enrons and many other stocks. Now it is back to reality. This is serious business, and the correction that must come to adjust for the Federal Reserve's mischief of the past 30 years has only begun. Congress must soon consider significant changes in our monetary system. Congress must soon consider significant changes in our monetary system if we hope to preserve a system of sound growth and wealth preservation. Paper money managed by the Federal Reserve System cannot accomplish this. In fact, it does the opposite. Le Metropole -- Sharefin, 08:05:45 06/11/02 Tue EXPOSE: Banks own mines? The ultimate irony is looming, ie, that the gold banks (or their holding companies) will end up owning most of the gold mines! (This expose written by James E. Sinclair & Harry D. Schultz) (copyright; see below) It is already happening in the ASHANTI case. It is matter of public record! Goldman Sachs or their assigns (as one of many gold bank's parent investment banking holding co) via their subsidiary in London, J. Aron, has received substantial amounts of the shares of Ashanti gold mine in settlement for restructuring & extending the Ashanti debt rather than making the margin call in industry standard form. Simply review the SEC filed settlement made with lenders in exchange for the lenders making concessions to Ashanti on their debt. . U will also see how there was a migration in the public announcements from the original definition as margin debt holders to lenders to Ashanti to exchange for shares of Ashanti for restructuring but not for forgiveness of the debt. One needs to focus on the legal precedent in the So. District of NY Fed Court that if a margin call is not exercised in an industry norm, that the commodity contract can be considered a sham. Although the Fed Court system of the US does not have jurisdiction over a Ghanian firm such as Ashanti, it does give basis for other courts consideration & possible decision on a key technical point on complicated, complex transaction. That means it carries international clout. . This means most of the so called hedged mines (who are really short gold, not hedged) will get margin calls as gold moves from 325 to 335 to 340 & then to 354. They will not have cash enough to cover as the rising gold price puts their shorts in deep red ink. They will notify the stock exchanges, & the stocks will stop trading. Negotiations will go on between the banks & the thunderstruck CEOs & CFOs. The price of the stock will drop by 50-75% (a la Ashanti) before trading is halted. When negotiations are complete, the banks will take on treasury stock of the mines, thus diluting the stock. Banks will have defacto control. Stocks will resume trading, but at the down 50-75% price. Stockholders will have taken a bath in share price & dilution of stock, a double whammy. . This is why we will personally act & advise our followers to exit all hedged stocks as the gold price rises, unless they move very quickly to exit their hedges. That will be costly for them, but not as costly as losing control of the company. Some lawsuits by stockholders will be filed against CEO/s & CFOs for mismanagement. Thats the future. Cope with it. . The Harry Schultz Letter & Gold Charts R Us will alert readers to the price levels at which each gold share should be sold, vs their remaining (& changing) hedge position from week to week. . This expose is copyright material but may be reproduced with full credit & email addresses, after June 10, 2002. . www.Tanrange.com and www.HSLetter.com Gold -- Sharefin, 07:57:04 06/11/02 Tue Controlling Gold with Paper Gold -- Sharefin, 07:21:00 06/11/02 Tue Bugged by gold: A simmering debate on the economics of gold has taken a turn As Gold Fields Ltd. moved up in the world last month -- debuting on the Big Board -- the South African mining company tapped anti-apartheid crusader Nelson Mandela to help ring in what they hope is a new era in the world of gold. Once the source of the riches of kings, in recent years gold had ceded its spot as a financial hedge in troubled times to the mighty dollar and bubbling Nasdaq. Those championing gold were not the go-go traders on Wall Street but more like Mandela, partisans fighting a long, uphill battle to shine the spotlight on the precious metal. Enter the Gold Anti-Trust Action Committee, a group of financial advisors and gold market participants, who have waged a three-year effort to prove that the unusually low gold prices since 1995 were not the result of market forces, but instead the product of price rigging that included governments and big commercial banks. The charges are hotly denied by those involved and dismissed by other analysts as the stuff of conspiracy theorists. GATA, as the group is known, lost a round when a lawsuit against the Bank of International Settlements -- the central bank of central banks -- several Treasury and Federal Reserve officials, and a number of commercial banks was dismissed in late March by U.S. District Judge Reginald Lindsay in Boston. 'This case involves allegations of `an unholy alliance of high public officials' and 'large bullion banks,' '' Lindsay wrote. But he dismissed the suit on the grounds that Reginald H. Howe, the attorney who filed the GATA-supported complaint in December 2000, lacked antitrust standing and that Treasury and Fed officials had qualified immunity. GATA has gained supporters and exposure on the Internet as well as mining, monetary and investment circles, where its chairman, former Miami entrepreneur turned financial analyst Bill Murphy, gives speeches. Suddenly gold and the falling dollar have become hot issues -- talk for Main Street and not just Wall Street. To the delight of gold partisans, gold prices are on the rise. The precious metal, which hit a low of $252 an ounce in July 1999, has risen by 20 percent since Jan. 2, closing at $325.40 on Friday. Share prices in mining companies and gold funds have soared: an 81 percent jump in the Tocqueville Gold Fund and a fivefold increase in Durban Rooderpoort Deep's share price so far this year. As a corollary to the rise in gold, the dollar has fallen, losing 7 percent against the currencies of its major trading partners this year. The dollar index closed at 111.58 on Friday, still overvalued against other major currencies since 100 is considered par, but down from former highs of 120. Chief among those celebrating are companies like Gold Fields, which brought the 83-year-old Mandela to New York to ring the opening bell on May 9, the day the stock moved from the Nasdaq to the New York Stock Exchange. ''We believe the gold price was very undervalued. The dollar is overvalued,'' said Cheryl Martin, vice president of North American investor relations for Gold Fields, which has headquarters in Johannesburg, South Africa. Martin said the company does not comment on ''the conspiracy theories'' in the market. UNUSUAL BEHAVIOR But few dispute that the gold market has behaved abnormally for several years. Historically gold rises when interest rates go down, and vice versa. For seven years or so, it has dropped along with the Fed rates. The explanation given by many Wall Street analysts is that gold is a monetary relic and simply stopped being the haven worried investors ran to as protection against price inflation and political and economic uncertainty. The listless gold price became a tenet of the New Economy, which said that inflation was a problem of the past, and the strong dollar and rising stock market offered higher returns than a piece of metal better suited to jewelry. The Howe lawsuit claims the low gold price stemmed from the practice by some central banks of leasing gold to commercial banks at low rates (around 1 percent), which then sold the borrowed gold and invested the proceeds. Mining companies, faced with declining prices, sold future gold production on the forward market to hedge against a price drop. They used leased gold to make up the short fall, flooding the market and driving down the price further. But such hedging becomes risky when the market turns, as it appears to have now, and companies or banks are forced to buy gold at a higher price to fill contracts -- cover their shorts -- at a lower price. The Office of the Comptroller of the Currency reports that commercial banks and trusts held $63.3 billion in gold derivatives on their books as of Dec. 31, with two-thirds of this amount on the books at JP Morgan Chase. The big banks deny there is evidence of such a pricing scheme. ''There is no basis to infer the existence of a conspiracy to fix gold prices from the simplified statistics alleged by the complaint,'' said a court filing by Citigroup, one of the banks named in the suit. The lawsuit alleged the gold price was manipulated to keep interest rates low and the dollar strong. ATTRACTED TO STOCKS This attracted international funds to the United States, where the money poured into the stock market, not only fueling the boom but also financing the ever widening trade deficit and allowing Americans to live beyond their means. ''We're saying part of the strong dollar policy was to rig the gold price,'' said Murphy, who lived in Miami from 1993 to 1996. ''They (government officials) wanted to have a strong dollar to get people to invest in the United States, to keep Wall Street strong and to keep the interest rates here lower than they would be,'' Murphy said. Many on Wall Street disagree that gold prices are unusually low. Analyst Daniel McConvey of Goldman Sachs issued a report to clients last week predicting gold prices would not rise over $324 levels because the demand for gold jewelry was weak. Some financial experts say they are intrigued by the lawsuit, but not totally convinced. ''It's undeniable that gold had strange price movements during its period of sub-$275 weakness,'' said Walker Todd, a monetary expert who formerly served with the Federal Reserve Bank of Cleveland. ''Every time during that period when gold seemed to make a move above $275 along came massive moves with selling into the market to bring down the price,'' Todd said. ''Did the government intervene in the market along the way?'' Todd said. ``It has not been proven to a certainty but the plaintiffs have some interesting evidence.'' GATA argues that governments admitted they regulate the gold market with the ''Washington agreement'' in September 1999, when central bankers announced they would limit the amount of gold leased to 400 tons a year. The Federal Reserve and the Treasury have insisted that the United States does not lease or sell its gold reserves, the largest in the world, and this has been one of the government's chief defenses against the lawsuit. But Murphy insisted that the gold industry is finding it harder to dismiss their charges as wild claims. ''Over three years, not one person in the gold industry has analyzed our evidence and said we are wrong,'' Murphy said. 'Yes, they say that `it is conspiracy' and 'you are nuts.' But one of the big gold companies donated $70,000 to GATA. You don't donate that kind of money to conspiracy nuts.'' Whew!!! -- Sharefin, 07:19:33 06/11/02 Tue Back on deck again (just) but still have lots of work to do. Running on a shell machine with no backup restored as yet. It'll probably take me til next week till I get around to updating my charts so please be patient. Normal correction -- Mike Stewart, 05:23:25 06/11/02 Tue 25% corrections in the XAU are normal during a gold bull. 33% for large South Africans is common. Prices have gone too far, too fast in juniors and South Africans. Momentum players are here and they hate volatility. FWIW, the XAU/gold ratio is nowhere near historical tops, nor is the Toronto Golds/gold ratio. Bull markets are usually good for 3 years in gold shares. We could consolidate for two weeks or two months.I am moving back into more shares as prices come down. So far, so good. Cheers! Periodic Ponzi Update PPU -- $hifty, 23:52:49 06/09/02 Sun http://home.columbus.rr.com/rossl/gold.htm Periodic Ponzi Update PPU Nasdaq 1,535.48 + Dow 9,589.67 = 11,125.15 divide by 2 = 5,562.575 Ponzi Down -207.92 from last week. Is that an UGLY chart or what! RossL : Stay ready to excavate the bottom of that chart! Also: Thanks for the link! Go GATA Go Gold $hifty gold manipulation exposé -- giovanni dioro, 13:07:50 06/09/02 Sun click here "You will know it's time to sell when ... -- SilverDragon, 17:34:45 06/08/02 Sat "You will know it's time to sell when you see a plug for gold on the front cover of Time magazine or the Economist," http://www.theglobeandmail.com/servlet/GIS.Servlets.HTMLTemplate?tf=tgam/common/FullStory.html&cf=tgam/common/FullStory.cfg&configFileLoc=tgam/config&vg=BigAdVariableGenerator&date=20020608&dateOffset=&hub=business&title=Business&cache_key=businessNetWorthHeadline¤t_row=1&start_row=1&num_rows=1  Japan ... -- Delta.au, 04:47:15 06/07/02 Fri TOKYO, June 7 (Reuters) - Around this time three years ago, Japan stunned the financial markets by announcing annualised first-quarter economic growth of a whopping 7.9 percent. Eventually, the figure was revised down to minus 3.9 percent. That might explain why nobody, not even government ministers, were popping the champagne corks on Friday when the Cabinet Office reported Japan had posted its fastest economic growth in two years in January-March -- 5.7 percent on an annualised basis. That put Japan on a higher growth trajectory than the United States. But it's not only questionable figures that are a worry. Weak capital expenditure, reluctant consumers and a suddenly resurgent yen are putting the damper on hopes the economy is really on track for a long-term recovery. The government's official position is that the economy has bottomed out, but it has yet to declare that a recovery is under way. "The figures underscore our economic assessment is not mistaken," Economics Minister Heizo Takenaka said, noting the potential negative impact of a strong yen on exports. Exports rose 33 percent in the quarter from October-December and overseas sales -- while accounting for just 10 percent of the economy -- contributed 0.7 percent to first quarter growth. The yen has risen some eight percent since early April, largely due to a loss of confidence in the U.S. dollar, prompting Japanese authorities to spend an estimated $20 billion over the past three weeks to buy dollars in the market to weaken the yen. Economists share Takenaka's concerns, and many doubt if the government can even meet its ultra-modest target of zero growth in the fiscal year ending March 2003. "We see a strong possibility of negative growth in April-June and fiscal year 2002 as a whole," said Mamoru Yamazaki, chief economist at Barclays Capital Japan. UBS Warburg also sees zero growth on average for the two quarters of April-June and July-September. MORE: http://biz.yahoo.com/rf/020607/economy_japan_gdp_4.html selloffs real reason? -- shell, 21:02:39 06/06/02 Thu from hschultz &jsinclair-----"that sounds to us as if the downdraft was caused not by the Cartel but rather by Dr. No and Hung Fat themselves to slow down the gold move in order to ease the tensions now building within the central bank community over gold's rapid ascent." ie, to avoid provoking them--a calmer rise would do that A Decisive Breakout, a Long time in the works. -- Cobra, 06:34:38 06/06/02 Thu Nick your Longterm charts below tell the tale, $310--$330 area Was a decisive breakout, it would be entirely normal chart action to go back and kiss the breakout line again in a short pullback to that area and it looks as tho we are seeing that in the last day or two. What a wonderful opportunity to Load the wagon for those who have been hesitant to do so. Your Gold--Dow Ratio charts have been telling us for many months to make plans for the changes that lie directly ahead. The Next few years are going to be interesting. CEF -- Sharefin, 22:43:31 06/05/02 Wed Gold -- Sharefin, 22:41:15 06/05/02 Wed Indexers pushed on to gold wagon Gold bullion cracked a four-and-a-half year high yesterday and the run in gold stocks means the sector is rebuilding its presence in Canada's major stock indexes. That's good for gold bugs who want more exposure in their index products, but it leaves doubters to wonder if pension funds will be screaming foul if this mini goldrush ends up collapsing like the tech boom that preceded it. Closet indexers, and fund managers who openly admit to mimicking the index, are in a tricky predicament, much like they were when Nortel comprised more than 35% of the index. Whether they like it or not, they have to buy gold stocks or risk getting creamed by the index and losing business because of it. "At the end of the day, it is the investor and speculator who continue to buy and push price levels higher, day after day ... I still see a very blue sky ahead with little difficulties," said Canaccord Capital Corp. analyst Brian Christie in a note to clients.  Gold -- Sharefin, 19:25:36 06/05/02 Wed The "New Blanchard" Blasphemy But until only a few months ago, his organization, which continued after his passing, was best known for its unswerving allegiance to and admiration for gold. Even after the many wildly violent and chaotic markets after the 1980 bust (when gold topped at $887 in January), JUB held fast to his faith and support for every person to maintain a core holding in gold. Investors were encouraged to have larger positions, as his outlook was relentlessly a bullish one. One might fault him for becoming a bit too grandiose, sometimes given to spasms of imprudent hyperbole and commercialism, but no one could fault his affection for what started his whole career - gold. That is not until years after his death when his firm's "benefactors" saw fit to, in so many words, condemn gold, pronouncing it, essentially, as a fraud to its long-held supporters. Often was the time when JUB would recommend exchanging one's gold bullion coins for U.S. $20 Double Eagles. Sure, that was largely a marketing ploy to drum up extra business during the dark days of an inactive gold market and to benefit from much beefier margins selling the $20 gold pieces. But it's the lengths to which the firm has now gone that strikes me as over the top. Gold crashing below $200? Gold no longer an inflation hedge? JUB must be spinning in his grave! Gold -- Sharefin, 19:21:52 06/05/02 Wed Gold: Pause That Refreshes If the Junes launch from any bottom above that number, however, it would imply that the strength percolating beneath the surface is formidable. Bull markets do not usually consolidate down to the lows where everyone hopes to buy them, but instead tantalize eager believers by remaining just out of reach. The exception is when a pullback smashes through bids after bull-market cockiness gets out of hand. We are nowhere near that point, though, so consider the current wave of selling a plain-vanilla correction. Gold -- Sharefin, 19:05:43 06/05/02 Wed Profit-Takers Knock Gold Off Lofty Perch The recent bull run in gold futures suffered a setback Wednesday as traders sold the metal down to a one-week low, taking profits on a string of fresh multi-year highs. "It is my suspicion that the bull market is still intact," said Leonard Kaplan, president of commodities brokerage firm Prospector Asset Management in Evanston, Ill. "But this bull phase, which is the recent run from about $315.00 to $330.00, is over." The market has now come back to a level which represents the midpoint of the recent upswing, "and we'll consolidate for awhile and then move higher later," Kaplan said, adding that prices could easily trade lower in the next few sessions. Most traders decided to sell gold at the higher price levels to lock in profits made over the last couple of weeks, market analysts noted. "It got to a point where profit-taking came into the market," said David Rinehimer, futures research director at Salomon Smith Barney in New York. "We've had a pretty sustained run to the upside with not much of a correction, and still the focus is on the financial markets and their direction and what might propel some investor demand for gold," he added. Factors that have been supportive for gold recently - a weak dollar and a faltering stock market - reversed course Wednesday and actually pressured gold prices. As recently as Tuesday, gold notched a fresh four-and-a-half-year high of $331.50 on some of those very factors. Many traders thought the gold price breakdown was long overdue considering the market's recent pattern of forging new highs at nearly every session lately. "The market is tremendously overbought," said a Comex floor trader. "We're due for a correction, and this is a good correction - it's healthy." Salomon's Rinehimer concurred. "This just appeared to be a long-awaited correction to the downside after the market had made a series of multi-year highs over the last couple of weeks," he said. Prospector Asset Management's Kaplan noted that the market's fundamentals haven't changed despite Wednesday's setback. "If the external situations (surrounding the gold market) were different, I would have a different opinion," he said. For example, if the stock market were up 300 points and the U.S. dollar were "screaming higher then I would have said some of the fundamental reasons have changed but really they haven't," Kaplan said. "Bull markets don't go straight up. Bear markets don't go straight down." Fiat -- Sharefin, 19:00:18 06/05/02 Wed From the prior post. "Estimated total volume was a frantic 65,000 contracts." 65,000 contracts = 6,500,000 ounces of gold 6,500,000 ounces of gold @ $320 = $2,080,000,000 or slightly over $2 billion dollars of paper gold traded in a matter of a few hours. Fiat is unreal....^o-o^... Gold -- Sharefin, 18:55:51 06/05/02 Wed NY precious metals beat retreat on profit-taking Profit-taking punched the wind out of gold's sails in New York futures trade Wednesday, with silver taking an even steeper fall as a firmer U.S. dollar eroded one incentive to extend the 2002 precious metals rally. London traders returned from a four-day recess to find bullion traded above $330 an ounce for the first time since October 1999 while they were out. "It was overdue. Then all the stop losses went off," said George Gero, a veteran of the precious metals futures trade and director of International Precious Metals Institute. "All the things that put it up yesterday, the same things put it down today except in reverse -- the dollar and a little bit of an easing in tensions in India-Pakistan." August gold fell $6.70 to $322.10 an ounce, trading from $328.50 to $321.10. That was down more than $10 from Tuesday's contract high at $331.50. But the metal still gleamed almost 15 percent higher than where it started the year. The selling started at the New York close Tuesday and continued in the after-market, where the roughly 5,400 lots traded was unusually heavy business for the ACCESS electronic trading system. Estimated total volume was a frantic 65,000 contracts. "I heard it was an equity fund that took a punt in gold, made a few bucks and took their profit," a dealer said.  Charting 101 -- Sharefin, 18:36:59 06/05/02 Wed Broken resistance becomes support....... Gold -- Sharefin, 18:21:11 06/05/02 Wed Gold broke out above the long term resistance at $316   Gold -- Sharefin, 18:18:28 06/05/02 Wed BOTTOM LINE WHY GOLD WILL RALLY Gold -- Sharefin, 18:12:13 06/05/02 Wed Hedgers still underperforming Gold -- Sharefin, 05:50:12 06/05/02 Wed Gold timers still skeptical Despite continued strength in the gold market, the gold timers I track remain largely skeptical that this is the beginning of a gold bull market. And that's bullish. As of Tuesday's close -- after a day in which the nearby futures contract briefly rose above $330 and closed up $1.10 -- the Hulbert Financial Digest's gold sentiment index stood at just 45.8 percent. This index is calculated by averaging the gold market exposure among gold timing newsletters that communicate their thoughts daily with their subscribers. The current reading therefore means that the average gold timer is advising that subscribers allocate more than half their gold portfolios to cash. It's nothing short of amazing that the gold timers are not exhibiting more exuberance. After all, that is exactly what they did on every other occasion in recent years in which gold showed even a fraction of its current strength. But not this time; over the past month, during which gold has climbed by more than $20 per ounce, the HFD's gold sentiment index has risen just 16 percentage points. In early February, in contrast, the HFD's gold sentiment index shot up to 90 percent after bullion briefly eclipsed the $300 level. Today, in contrast, with gold trading nearly $25 per ounce higher, this sentiment index is only half as high. Or consider the HFD's gold sentiment index in the fall of 1999, the last occasion prior to this week in which gold traded above $320. It shot up then to over 70 percent, more than 25 percentage points above today's level. Though there are myriad individual reasons why various gold timers are skeptical of this rally, their collective mood reminds me of Charlie Brown after one too many times trusting that Lucy wouldn't pull the football away at the last minute: He decides never to trust her again. It similarly would seem that, after having been burned countless times by false gold rallies, many timers vowed never to trust another gold rally -- even one as strong as the current one. Ironically, this may prove to be the very rally they should have trusted. Fiat -- Sharefin, 02:31:42 06/05/02 Wed Stephen Roach - What If the Dollar Crashes? Largely for those reasons, we feel it's appropriate to ponder the low-probability ramifications of a hard landing for the dollar. By Stephen Li Jen's reckoning, a dollar landing would qualify as "hard" when the greenback's monthly declines against other major currencies exceed 3% (see his 30 May dispatch, "A Defining Moment for a USD ‘Hard Landing'"). In keeping with this metric, we have examined a hard-landing shock framed around a 20% drop of the dollar against both the euro and the yen by the end of 2002. Relative to levels prevailing on May 24, when we first began to ponder such a scenario, this shock would be sufficient to take the dollar/euro cross-rate to 1.15 and the yen/dollar to 100. What would be the implications of such an outcome? Alas, there's more to the story of hard landing for the dollar than macro terms-of trade effects. In my view, a dollar crash would have a devastating impact on US financial markets that could well be amplified in other capital markets around the world. Foreign investors would continue to reduce their exposure to dollar-denominated assets and US investors would undoubtedly rebalance their portfolios in an effort to seek greater exposure to non-dollar-denominated assets. The result would be lower prices for equities and bonds, alike. This could have significant negative consequences for a wealth-dependent US economy. It would undoubtedly deal a devastating blow to consumer confidence, finally sealing the fate of the long-awaited consolidation of the American consumer. The negative asset effects would also result in a higher cost of capital that would most likely impede business capital spending. Moreover, an increase in precautionary saving could be expected under a dollar-crash scenario. With currency volatility likely to lead to increased pricing uncertainty, businesses would be exceedingly reluctant to make major commitments to new capacity expansion programmes. Consumers would also tend to boost personal saving in response to increased uncertainty of purchasing power. In short, under a hard landing, wealth and saving effects driven by further downward pressure on asset prices could swamp the positive benefits of the income and price effects. That would spell tough news for the US economy -- more than enough to stoke renewed fears of a double-dip. Nor would the rest of the world -- still overly dependent on the US, in my view -- take kindly to wealth-induced shortfall in America. If the world's growth engine gets hit by a currency-related wealth shock, the global reverberations would come at a fast and furious pace, in my view. All this suggests that a dollar crash should be viewed as a negative-sum game for the global economy. With negative wealth effects likely to outweigh terms-of-trade effects and with currency volatility likely to encourage risk aversion and higher precautionary saving, a dollar shock would undoubtedly result in a significant haircut on world GDP growth. A back-of-the-envelope guesstimate suggests such a scenario would lower global GDP growth by at least 0.5 to 1.0 percentage point over a four-quarter time frame beginning in 3Q02. Yes, a hard landing of the dollar is a low-probability event. But so, too, is the creation and subsequent popping of any asset bubble. In many respects, the strong dollar was the linchpin of the virtuous circle of the late 1990s. Yet in the post-bubble era, complete with a massive and ever-widening US current-account deficit, the strong dollar has remained largely unscathed -- at least until recently. But suddenly the bloom is off the rose. Fears of a profitless recovery raise serious questions about returns on dollar-denominated assets. America's recent protectionist forays -- especially steel tariffs and increased agricultural subsidies -- hardly instill confidence in the dollar as the mainstay of global commerce. Nor does the Bush Administration get high marks in the international community for its recent handling of geopolitical crises. Moreover, there is a general perception that US foreign policy has become increasingly ineffective by spreading itself too thin on three fronts -- the war against terrorism, the Middle East, and India-Pakistan. Suddenly, all that looked so virtuous about America now looks increasingly vicious. The odds of a dollar crash scenario, while still low, suddenly look higher. Normally, we would assign a 5% probability to such an outcome. Today, we would raise that probability into the 10% to 15% zone. For an overvalued currency, the increased odds of a hard landing spells trouble -- not just at home but elsewhere around the world. If the dollar crashes, the global economy could be in serious trouble. Let's hope it won't. ---- United States: The Why and How of a Dollar Crash But a hard landing in the dollar, as our global team recently noted in a suite of essays assessing the implications of a dollar crash, would be a different matter altogether (see "Dollar Crash Alternative," Weekly International Briefing, Week of June 3, 2002). While we judge the probability of a crash to be only 10% to 15%, here's where Steve Roach and I are shoulder-to-shoulder in agreement: The implications of a dollar crash would be serious. My task here is to examine the implications of such an event -- defined as a 20% decline by year-end -- for US markets and the economy. Before simply assuming a crash in the dollar, however, it's helpful for understanding the impact to ask what it is, and what circumstances would trigger it. In my view, a crash is a flight from all asset classes that triggers declines in stock and bond prices (see Stephen Jen's "Defining Moment for a USD Hard Landing," June 3, 2002). Thus a crash would inherently be a negative for both markets and the economy. Deterioration in Stephen Jen's four fundamental drivers of the dollar's fair value -- relative productivity, terms of trade, fiscal position, and net foreign indebtedness -- are not enough to promote a crash. In my view, the single most important catalyst for a crash would be a loss of confidence in US policies or fundamentals, be they macro or micro, in the context of markets that are overvalued. Gold -- Sharefin, 02:14:08 06/05/02 Wed How often do they knock down gold $4.50 between New York closing & Australia opening?  They also hit silver at the same time.  Gold -- Sharefin, 01:29:48 06/05/02 Wed The Gold Industry and Hazen The alluring beauty and enduring value of gold have been instrumental in shaping the course of human history. The inspiration for innumerable conquests, wars, and other adventures, man's craving for the soft yellow metal also provided impetus for the discovery and exploration of the Western Hemisphere. The voyages of Columbus, Magellan, and other explorers were motivated at least in part by the expectation of finding gold. Spanish conquistadors plundered the sixteenth century Latin American empires, and later other European settlers began to tap the resources in the northern part of the continent. Today, despite the fact that gold is less of a geopolitical force, the quest for new deposits and recovery methods continues unabated in North America and throughout the world.On a tonnage basis, the entire mass of gold extracted from the earth throughout history is roughly equivalent to half of the steel produced in the United States in a single day. According to recent U.S. government statistics, the world reserves of gold economically recoverable by present methods may total only about 44,000 tons. Wlavio -- Sharefin, 00:25:46 06/05/02 Wed Your posts basically have no place here and would be better suited elsewhere. So could you please find an intraday forum on the sharemarkets to post your comments at. Avid Trader would be a far better place for your posts and the timing of them. This forum is moreso for the posting of gold relevant information. I used to run a webpage posting Articles of Note But it got too long and plenty of times the articles just disappeared off the web. So there was no past reference of news articles relating to gold & the PMs on the web. So I thought that with “The Golden Pot” I could post the article link and also post the relevant context of the article as well so there's an archive of quotes & comments. To this end the forum is doing well with 95% of the content an archived list of gold info & facts as they fall. This forum is a private one in the sense that I moderate it and I intend to keep it that way. I don't intend for it to be an open forum as there are plenty of others on the internet for that. This forum is dedicated to the archiving of gold & sharemarkets & their movements as we pass along the way of the Golden Bull. Thanks Nick NASDAQ, DOW, Gold on June 5, 2002 -- wlavio, 23:20:29 06/04/02 Tue DOW - pretty low rate and the minimums of the day at 11:10 (NY) and at 11:32, the maximum at 12:36, and then we will see, what is going to happen. NASDAQ will have less luck in the future, than Dow, though on May 5th it will raise. The maximum of the day at 11:32 (NY), and then we will see… The gold will be falling in June and maybe… But June 5th begins with falling and only starting from 12:35 it goes up, but for how long? Wait as everybody else does… and we will laugh at all this... Gold -- Sharefin, 22:42:22 06/04/02 Tue Newmont CEO Says Won't Up Gold Output, Sees Higher Prices Major world gold producer U.S. -based Newmont Mining Corp. won't push to lift production to take advantage of a higher gold price, chief executive Wayne Murdy said Wednesday. This, plus a host of other positive factors, in part driven by recent global consolidation in the industry, bodes well for the price of the yellow metal, he said. Gold production rose sharply during the 1990s, when many producers were blinded by a bull market for the metal and lifted output, he said. But this caused prices to fall sharply, driving the industry into what has been a five-year bear market, he said. But now this trend has reversed, with prices improving, he said. "We are finally seeing the fundamentals for gold turn around, as mine supply is projected to fall between 2% to 4% annually over the next several years," Murdy said. "We believe we're at the beginning of a gold upswing." "For the same reason that we (Newmont) have a non-hedging philosophy, we won't push for an increased mine supply just when the market is rallying," he added. Murdy noted that at the current spot price of around US$326 a troy ounce, the price is up 22% from year-ago levels. "Uncertain global financial markets, low interest rates, a weakening U.S. dollar and political instability have combined to turn investor attention to the yellow metal," he said. "This in turn has led to reduced forward selling" and "all of this bodes well for the price of gold," he added. But Murdy warned that investment discipline will be the key to prices going forward, essentially warning producers to weigh increased production careful against investment costs. "This industry isn't sustainable below" a US$350/oz gold price, he said. Gold -- Sharefin, 21:04:17 06/04/02 Tue Gold price gives miners hope Gold -- Sharefin, 20:46:47 06/04/02 Tue Declining dollar set to boost gold Experts at JP Morgan had expected a similar sequence of events in that improved corporate earnings would equate to stock market strength followed by a rise in consumer confidence, economic stability and finally a resurgent dollar. But that seemingly tried-and-trusted formula seems to have run its course. American investors are no longer being wooed by corporate earnings reports. The stupendous demise of Enron has brought with it suspicion of the audit industry and, for the time being, investors are treating "good news" with an understandable degree of circumspect. That lack of investor confidence has been evidenced on most global major bourses in recent days with the Dow Jones Industrial Average shedding over two percent yesterday while the Nasdaq fell to its lowest level in eight months. Markets in Germany and France have also suffered significantly this week while London's FTSE will almost certainly play catch up when that exchange opens for business on Wednesday after taking a two-day sojourn to celebrate the Queen's Gold Jubilee. Even the Bank of Japan is at pains to curb its own yen's strength against the US dollar having reportedly spent in the order of $10 billion on Friday in an attempt to offset the yen's surge towards the end of last week. It is a strategy that has paid off so far with the yen subsiding from its highs of 124.60 yen/dollar to current levels of 123.29 yen/dollar. But if JP Morgan's highly regarded technical strategy team's latest hypothesis is anything to go by, the Bank Of Japan could be shelling out plenty more in the years ahead if it is to retain a policy of keeping the yen under wraps. Like SG, JP Morgan had expected the dollar to attract support once it dipped to key levels. Now JP Morgan's technical analyst, Craig Ferguson, says there's a case to be made for a complete and total retracement of the seven-year rally in the US dollar. He does add important caveats and says the comments should be viewed with the "cool perspective we think they deserve." According to Ferguson most "currencies are yet to break their major pivots," which would confirm a trend change but that "the weight of evidence against the US dollar is growing." His in-depth analysis considers the US dollar's relationship with all of the euro, pound, yen, New Zealand dollar, Swiss franc and Canadian dollar and says that already some key levels have been breached while others are on the verge of doing so. According to Ferguson a change in trend, if fully confirmed, could see the Euro rally to 1.45 against the US dollar and commodity currencies retrace to levels last seen in 1996. Says Ferguson: "This is going to be a momentous 1-2 week period for currency markets. Who said they were dead?" Gold bulls will certainly hope that Ferguson's suppositions do in fact ring true as sustained dollar weakness is almost guaranteed to send bullion hurtling back through the $400 mark. Gold -- Sharefin, 20:44:39 06/04/02 Tue Gold tops $330 after 30 months Gold -- Sharefin, 20:41:23 06/04/02 Tue Gold Rises to 2 1/2-Year High as Investors Seek Better Returns Investor Skepticism ``Most of the buying has been small-scale,'' Day said. ``We definitely have not seen what I would call a rush of enthusiasm. There's still a lot of people who don't believe the rally. A lot of existing shareholders have been burned before.'' Gold -- Sharefin, 20:28:00 06/04/02 Tue BOJ stalls gold rally in NY Gold's rally stalled in New York on Tuesday after the Bank of Japan put a floor under the weak dollar and war clouds over India and Pakistan seemed to dissipate. Gold -- Sharefin, 20:26:55 06/04/02 Tue NY gold and silver match race to new highs Gold led silver to new bull market highs in New York Tuesday, but the yellow metal stalled after the Bank of Japan put a floor under the weak dollar and war clouds over India-Pakistan seemed to dissipate a bit. "How high it can go is depending on how low the dollar can go," said Edward Jette, director of gold, energy and commodities for global capital markets at Westdeutsche Landesbank Girozentrale. He said $340 was possible given the bullish fundamentals and technicals for gold. It hit $331.40, the highest interbank price since Oct 5, 1999, the day gold peaked at $338 after its spike on the back of the September 1999 agreement capping central bank sales. Precious metals are shining with the stock market unnerved by geopolitical tension, irregular corporate accounting and poor earnings. "It's a different kind of market than most people in the industry have seen in their careers," Jette said. "There was a 20-year bear market and someone who's been in here for 10 years has never seen this thing go up this much." He continued, "We still see equity funds disinvesting and buying alternative assets, i.e., gold or gold stocks." "Silver is making new bull move highs this morning, as it continues to draw strength as a more attractive alternative to the USD," wrote independent commodity analyst Gregory Weldon in a client commentary. Weldon said silver is headed for $5.60 an ounce. Gold -- Sharefin, 20:24:18 06/04/02 Tue Golden years return for precious metal But while investors may have been pumping money into gold mining shares, they certainly haven't been buying the metal itself to keep in a safe deposit box or under the bed. "That just doesn't happen any more," Bothamly said. David Morris, managing director of Morris and Watson, one of the country's leading gold refiners and dealers, said there had not been any increase in people wanting to buy gold bullion in expectation of further price rises. "People have lost interest in it," he said, adding that most of the company's customers were jewellers or other manufacturers. ------ The above I find excellent news because it means that gold as an investment has not yet registered in the minds of Mums & Dads. This bull will not die till the masses are as entranced with gold as they are with their paper assets. Gold -- Sharefin, 20:20:23 06/04/02 Tue Peruvians file federal suits against Newmont Mining Attorneys for more than 1,000 Peruvians have filed two lawsuits against Newmont Mining Corp seeking damages stemming from a poisonous mercury spill near the company's Yanacocha gold mine, in a renewed bid to get a hearing in U.S. courts. Lenny's Commentary -- Sharefin, 20:17:12 06/04/02 Tue The precious metals have continued their bull run over the last two days, with gold trading over $330 per ounce, basis spot, during last night's session, and silver rising inexorably day by day and closing today in New York at $5.125 on the July contract. Platinum and palladium have also risen a bit in sympathy with the gold market. This afternoon gold and silver have sold off sharply in after-hours trading, with gold, at one point, down about $4, in rather illiquid conditions. I had calls from rather emotional clients, who were naturally quite concerned about their long positions in the market. From what I can gather, a major newsletter advisor advised his clientele to sell their gold today, and the electronic newsletters arrived late in the day. Perhaps I am wrong, but I see the large drop in prices in both and silver, late in the day, as an aberration. Separating emotion from intellect, nothing has substantively changed in the market. The USD was still lower on the day, the stock market was still lower on the day, and I still believe that the gold and silver markets are headed higher. The age-old emotions of hope, fear, and greed still, and always will, rule all the markets. But a professional trader must vacate any vestige of these unwelcome influences to be successful. Anytime a trader succumbs to the "dark side", decisions become based upon emotion rather than intellect and intelligence. And, in my experience, decisions based upon emotional influence are almost always wrong. Yes, ideally one should marry due to emotional influences, but one should never ever make financial decisions on the same basis. Thinking about it, perhaps emotional influences should not even be given much weight in marriage, given the divorce rate in many countries of the world. Well, enough said. Let us remind ourselves of the confluence of events, circumstances, and financial trends that have caused us to be bullish and then let us contemplate as to whether any have really changed. We believe gold is rising due to: *The depreciation of the USD, which has fallen about 8% so far this year and is almost universally forecast by analysts to continue its trend. *The continuing decline in global equities markets, which is encouraging investors to seek other investment arenas. It would appear that a paradigm event has occurred, that investors are now seeking "hard assets", rather than paper assets. *Historically, when inflation rates have exceeded interest rates ( i.e., we have a negative rate of return on all debt instruments) gold has rallied sharply. Currently, consumer prices have risen at an annualized rate of 3.8% per annum while 1-year interest rates are only 2.6% based upon LIBOR quotes. Such an economic environment encourages investors away from traditional debt instruments into hard assets. *The continuing political strife in the world, with India and Pakistan on the brink of unthinkable horrors, and MidEast violence continuing. *Gold producers now buying back their previously sold forward contracts, or in most cases, no longer selling gold forward. *Western investors seeking investment venues in which to invest, looking at gold and silver which have rallied sharply this year. These investors seek markets "on the move", those in which a speculative or investment return of size can be realized. *Gold production dropping over the next few years even while investor interest is rising. These factors are probably the reason why investors and speculators have gone "gold". And, has there been a substantive change in any of the above reasons? The answer is no. Definitely not. When trading, use your head, not your heart. There are continuing reports that gold demand in India, the world's largest consumer, is plummeting. Demand for imported gold fell 40% to about 150 tons in the first quarter of the year over last year, and looks to fall about that amount in the second quarter. Please note that such numbers reflect IMPORTS into India, and not real demand. Anecdotal evidence and conversations with traders in the industry has Indians buying large amounts of gold for delivery in New York or London, and not into India. Think about it. If you were Indian, or Pakistani, would you really want the gold delivered to you when the horror of nuclear, or conventional, war is possible? No, you would want it in a safe place, outside your country. While I do believe that total or real demand in the Indian subcontinent may drop significantly, I would bet that demand from Western investors, and the public in Japan, may far outweigh the loss seen. The Swiss National Bank has apparently stepped up its sales of late, although not to a significant extent. In the 10-day reporting period to May 31st, they sold about 11.1 tons of gold. This is a bit higher than their average of about 2/3 of a ton per day. Nasd, Dow and Gold 2 -- Wlavio -- Bill Togstad, 16:16:00 06/04/02 Tue What on earth are you talking about? Why does a bear market in general equities have any negative impact on gold? The oscillation of Sharefin's gold/dow ratio tells us that just the opposite is the case. Silver -- Sharefin, 09:24:06 06/04/02 Tue Market mover: Silver Silver's bull run began two weeks ago after the predictions of a leading metals research company, CPM, that global industrial demand would rise 3.7 per cent this year. The rally began in the futures market, where silver futures have soared 21 per cent since an eight- year low in November. CPM's predictions were based on the gradual recovery of the electronics and telecoms equipment markets, both large silver consumers. There is a global mismatch of silver supply and demand. Industrial use outstrips combined mine production, recycling and government sales by 16 per cent. The solution has historically rested in the hands of private investors, who hold around 400 million ounces. Gold -- Sharefin, 06:57:12 06/04/02 Tue the price of gold has always been a fever thermometer The Swiss weekly Weltwoche (World Week) says the price of gold has always been a fever thermometer for financial markets. On top of inflation worries and the Middle East conflict, there has been a loss of confidence into the US recovery and the US dollar. Aggressive gold purchases by the central banks of China, Russia and Japan in order to reduce US dollar dependency of their currency reserves, have also contributed to the rise of the gold price. That spells big trouble for JP Morgan Chase in particular and UBS, Deutsche Bank, Citigroup, Goldman Sachs and AIG, which for years have borrowed large amounts of gold from central banks betting on a steadily falling gold price. They sold the gold and bought high yield securities. That gold carry trade is now dead due to low interest rates and a rising gold price. The situation is even more precarious as the banks are also exposed to complex financial derivatives as part of their gold trading. The banks could therefore run into another disaster like the collapse of the LTCM hedge fund in 1998, and that's the reason they are not willing to talk about their gold operations. We agree with Elaine Garzarelli, "a close under 111.50 in the US dollar index is technically devastating and negates my long term bullish outlook." Once it breaks gold and Eur/Usd will go ballistic. Gold -- Sharefin, 05:03:47 06/04/02 Tue Gold Hovers At $330 Level On Thin European Trading "I can imagine that gold moves above $330 but I personally believe all good things come to an end. People may be parking money in precious metals, but when stock markets find their feet again a lot of money will flow back into stocks. But this could take some time." Gold -- Sharefin, 05:02:39 06/04/02 Tue Gold: soaring prices drive buyers away Soaring gold prices are dousing demand in India, the world's largest consumer market. Traders estimate demand could slide 40-50 per cent in the April-June quarter from about 240 tonnes in the same period a year earlier. Demand fell 40 percent to 149.8 tonnes in January-March from a year earlier, according to the industry-funded World Gold Council, chiefly because of higher prices and higher opening stocks. Gold -- Sharefin, 05:01:20 06/04/02 Tue Gold and Debt Reflect Mood Swing Gold -- Sharefin, 04:43:39 06/04/02 Tue Where to find cheap golds Gold -- Sharefin, 04:42:09 06/04/02 Tue Gold now in uncharted territory Gold entered what traders were calling uncharted territory last night as investors dumped equities and the US dollar in favour of bullion's safe haven qualities, driving the metal over $330/oz. After a cataclysmic day for US equities - with each of the major indices taking a bath on a slew of worrying political and corporate governance news - gold broke through the $330/oz resistance level and traded up to $330.55/oz in New York, its highest level since October 1999. Gold -- Sharefin, 04:36:30 06/04/02 Tue Newcrest puts Boddington in play Gold -- Sharefin, 04:22:35 06/04/02 Tue Record Scottish Gold Find The nugget, which weighs 6.1 grams (0.21oz) and is worth up to $900, proves that there is still gold in the stream that runs through Wanlockhead. ------ At $4,500 an ounce either this is special gold or the owner know something about where the gold price is going. Gold -- Sharefin, 04:17:01 06/04/02 Tue Asian bourses spooked by U.S. slide, but gold soars Gold -- Sharefin, 04:10:47 06/04/02 Tue Eldorado Gold Corp cancels hedge book Gold -- Sharefin, 03:53:31 06/04/02 Tue Twin Bubbles Gold Charts -- Sharefin, 03:11:50 06/04/02 Tue The earlier link for the Wallpaper Charts was no good. Here's the correct one. Wallpaper Charts Email chatter -- Sharefin, 02:53:19 06/04/02 Tue From an astrologist "If you think this is hot for gold, wait until we get into August. From this Aug to next Aug, gold looks like it could go big while Jupiter is in Leo, the sign of gold." New webpages -- Sharefin, 02:38:15 06/04/02 Tue Watch gold & silver around the clock live. 24 Hour Live Gold & Silver Charts Right click on these charts to set them up as your wallpaper. Wallpaper Charts Gold -- Sharefin, 21:10:42 06/03/02 Mon Sellers of Gold CONCLUSION The tide seems to have turned for gold's price. As the truth about the one-way direction of the central banks' gold leasing programs becomes clear to a minority of investors (but very few voters and legislators), gold holders and entrepreneurs will conclude that gold's supplies are far more limited than previously imagined. When they recognize that the overhang of gold is based on a statistical fraud - that the gold is gone and will not be coming back - the upward pressure on gold's price will accelerate. The gold leasing phenomenon could become an international Enron. I think it will. What one company got away with temporarily, with the connivance of its accounting firm and the regulatory agencies, will be regarded someday as a minor event. What the central banks have done with their accounting systems dwarfs anything in the history of accounting. The stock market eventually exposed Enron as a gigantic accounting fraud. There will be a similar day of reckoning for the central banks. Gold -- Sharefin, 21:09:02 06/03/02 Mon Gold is on a Roll A tried and true maxim in the markets is that bullion and gold stocks often do well in times of turmoil. The performance of small cap Canadian gold equities in the past few quarters may have rendered the axiom an understatement. The rally in the gold equity markets has gone from the majors, to the mid caps and now of course it's migrating down to the junior explorers. Arch Crawford -- Sharefin, 18:27:58 06/03/02 Mon ARMAGEDDON Some of the Most Powerful astronomic combinations in ALL OF RECORDED HISTORY will be culminating over the next Three Weeks! The party will begin in earnest with the depressive effect of Saturn conjunct the Moon's Node (mourners attending a funeral - Ebertin) on June 6. The BIG DAY is the SOLAR ECLIPSE on the evening of June 10, conjuncting Saturn and the Node (and Uranian Hades for good measure), and opposing Pluto. For the U. S. East Coast, the period from 7pm to 8:30pm EDT includes contact by these forces to the Ascendant/Descendant axis (horizon) for New York/Washington. If you are EVER going to pay attention to the "Gloom & Doomers" and "Chicken Littles" of the world, this might be a good time to start taking them seriously. Some who have been WRONG for 20-30-40 years may turn out to be RIGHT during this time period. They say: "Even a stopped watch is right twice a day." From the looks of the skies, it appears that the "minute hand" is fast approaching the point where their clocks are stopped! When it gets there, this month, you had BEST be PREPARED. In military training, we were taught to "Keep a low profile, Shoot first & ask questions later, and Cover you A_ _." Those basics have served us well in markets in addition. This is not a time to live in fear. This is Not a time to live in Hope. It is a time to take drastic and immediate defensive postures in markets, and in life! If you are not willing to Sell Investments, at least call your broker and give them points at which a Sell Order becomes effective (STOPLOSS Orders). The purpose is to STOP LOSSES at some predetermined point, hopefully predetermined while one is in a relatively rational state of mind. Before this is all over, there will be few indeed retaining a Rational State of Mind Remember: "The prudent man forseeth the evil and hideth himself; but the simple pass on, and are punished." My cousin, Arch Hicks, is a better regular astrologer than I (as is my wife Carolyn, who had her own local TV show in the Detroit area years ago). I was very negative on the Grand Cross Eclipse of Aug. 11, 1999. Cousin Arch warned that the effect might not be as bad right away, but might require a "triggering mechanism" at a later date. He was correct, as the day Saturn triggered the Uranus in that chart was the TOP DAY EVER of the S&P500 and the NDX(100). The DJIA topped on Jan 14, and the NASDAQ on March 10 (2000). As Saturn successively activated the Mars, Saturn & Eclipse point of that 1999 event, we encountered a series of Extreme down days, and the exact low day of the first leg down (Apr 24, 2000). In this Current Case, Saturn will "trigger" the Eclipse point by conjunction on June 20th - NO WAITING!! Therefore - we are very serious in our warnings, particularly for the period June 6-28. Best to figure at least a temporary low for July 7-14, perhaps a summer rally, then a retest of the lows which MUST prove the ability to hold, or markets will suffer a further tumble in the Fall. We wrote this on page 3 last month. This month, it is deserving of page ONE: "IN OTHER WORDS, WE ARE RIGHT BACK TO THE CONDITIONS OF SEPT. 4, 2001! The S&P500 price must rally back to 1177 (new rally high) to reinstate its "uptrend" status. Other Major Points: Valuations remain unrealistically high, Funds Cash low, Insiders Selling 5 to 1, Sentiment = Complacent, Astro-cycles extremely negative, Major Indices below Moving Averages, VIX & VXN breaking up thru resistance, Oversold Markets Unresponsive to indicator levels, Patterns forming major tops, Scary Tape Action, Dollar weak, GOLD strong, Corporate officials leaving office, Political Brinkmanship, growing Fear levels worldwide." Gold -- Sharefin, 08:44:43 06/03/02 Mon Neil's Projections Well worth a look at the moment - gold & fiat. Gold -- Sharefin, 05:39:11 06/03/02 Mon Asia Precious Metals: Gold Aims For $330 After Correction Spot gold retreated slightly Monday in Asia in what some observers described as a short-term pullback needed to consolidate recent gains before making a run at the key $330 level. Traders said that gold continues to enjoy very strong support due to active short covering by miners and the numerous political hot spots around the globe. "I think everyone agrees that gold has taken a bullish turn, but some people get nervous when the gains come a little too fast," said this dealer. This dealer went on to say that gold could make a move over $330 this week and then gradually rise to around $350 later in the year. A trader in Tokyo said he expects gold will continue to be snapped up by mining companies looking to close out hedge positions and by investors drawn to gold's status as a "safe haven" asset. Friday, the Bank of Japan intervened in the foreign exchange market to stem the recent rise in the yen against the U.S. dollar. Still, many expect the greenback will continue to lose ground to the yen and other major currencies, which would be a plus for gold. "The Bank of Japan may be able to slow the yen's rise, but I think it will still keep rising against the dollar," said the Tokyo trader, adding that this should support Japanese demand by making U.S. dollar-denominated gold a little cheaper in yen-terms. Gold -- Sharefin, 04:59:26 06/03/02 Mon AurionGold decision sparks bid speculation AURIONGOLD's decision not to recommend that its shareholders immediately accept Placer Dome's bid for the company has many analysts wondering who might enter a bidding battle with Placer. Gold -- Sharefin, 04:58:13 06/03/02 Mon The Gold Bugs Are Lighting Up Gold -- Sharefin, 04:15:59 06/03/02 Mon Conquer the Crash: You Can Prosper and Survive the Coming Deflationary Depression JIM: I want to talk about the issue of gold because we've seen this recent rise in gold. You believe that it's possible that gold will drop to 200. I want you to address those issues because we've gotten a lot of e-mails on that one particular point about gold's going to 200. I would have to say in defense, I could think of two reasons, or two ways that could happen. Number one, there's an outright war against gold fought by central banks dumping their reserves. Or number two, in this market crash that you address in your book, a liquidity issue comes up. I can remember buying shares from a hedge fund manager that got caught with a margin call. So, I wonder if you might address the issue of gold in the short-term and longer-term. BOB: Well, there are two things to consider. One is market opinion and the other is what you should do. They don't necessarily always follow precisely 100% one for the other and I'll tell you what I mean as we go along here. In the depression of the 30's, silver prices were free to float. Gold was not. It was fixed by the government. Silver had a nice sharp rally in 1931 that lasted most of the year. But, by the time the economy bottomed in early 1933, silver had made a new low for the entire fifteen year period preceding and it bottomed, finally, in December 1932. A lot of people in 1931 thought that silver would be a hedge against the depression. That's why they bought it and that's why it had the rally but, eventually, it went down and finally bottomed with stocks. I think that's likely to happen to all of the precious metals because today none of them are fixed by any government prices. What usually happens in a severe deflation is that people have to survive and they have to survive financially. When they're in tremendous debt and they have to make that one more payment, they'll begin to sell things off in order to make the payment. That means even selling things that are valuable. I think that's one of the reasons why commodities go down and goods go down. That's going to include the precious metals. However, one important aspect of the Bear Market is that most of it has occurred. I've been bearish throughout the Bear Market. This isn't anything new. Back when gold was at $700 an ounce, I said it's going to go way down under $400 and maybe eventually under $200. So, that trend is still in force, but, look at silver, down from $50, all the way down to $4. That is a tremendous Bear Market. So, in one sense, you might say who cares if it's going to go down to $2.50 or $3.50 an ounce, this is cheap stuff. So, I really recommend that people do own some gold and silver. Not only because we're very late in the Bear Markets, but also because it's real money. Real money currently is legal to own. That's crucial because when deflation takes hold and depression really gets underway, governments begin to look around for ways to survive, and they're ruthless when they do it. So, if clamping down on the ability to own real money is going to be part of that scenario, you want to make sure that you already have your investments in place. Because, if they don't allow for the transactions, for example, you wouldn't be able to buy it at that point. Opportunity is an important part of the precious metals picture. JIM: Now, one thing about the markets, and of course Elliott Wave follows this, is this psychology that plays such an important role in the financial markets. Part of that is greed and the other is fear. I wonder if we might talk about this fear element, because fear to me, is a much more powerful emotion. It can drive things more to the extreme. Ultimately, where do you see the markets going? It would be hard for some people, right now, to say that the stock market could lose 90% of its value, but that's exactly what happened during the Great Depression in the 30's. -- not just after the crash in 1929. Where do you see the stock market going on the down side and then on the opposite side, where do you see gold going long-term? BOB: You're absolutely right that fear is a stronger emotion than hope. It certainly is more concentrated and that's why it appears stronger. For example, commodities go up on fear. That's why you have tremendous price spikes in commodities. But stocks go down on fear and that is the reason that they can fall so precipitously, such as they did in the 1987 crash or the 1929 crash. The key is the overvaluation because that is the benchmark that tells you what the risk is. In 1929, the overvaluation was substantial. When we say stocks went down 90%, that's really a complete understatement. What went down 90% is the Dow Jones Industrial Average, all of which were the premier industrial companies of the day. But a huge mass of stocks during that time went down far more than that by 99% or 100%. People forget about those because they don't know the names anymore. I think we have achieved an overvaluation, as we already discussed earlier, with respect to dividends and the P/E ratio and book value and so on, but it's far greater than it was at the 1929 high. So, I think there is more risk than we had then and eventually, as the decline snowballs, it will be caused by fear and feedback and will generate more of it until it's all cleaned out and stocks are the bargain of a lifetime. You know, one thing I hope we can get to before this interview is over, is what a tremendous lifelong, life saving, opportunity that people are going to have at the ultimate bottom. They can only get that if they've saved their purchasing power during the Bear Market. JIM: Well, what about gold? Where do you see that going? BOB: Like I say, I was unequivocally negative on gold for 20 years. But last year I published a paper and I said the psychology in gold has turned too negative. This was when it was down at $265 an ounce. I said I can see it, we are either at or we're approaching the bottom, and the most likely occurrence to me is that immediate period of rally to be followed by one last leg down. But, if I'm wrong, then we're making the bottom now. So, I think we've had the rally that I've talked about, that it was going to occur one way or another. We're seeing signs right now that gold is getting a little tired. There seems to be a lot of bullishness about it. There is actually vehemence. As you said, if you try to suggest gold could have another leg down, people are screaming and arguing with you. That generally is not the case early in a Bear Market, usually there are a lot of skeptics at that point. So there's some anecdotal evidence that the scenario of one rally and one final decline, which is exactly what we saw in 1931 and 1932, is on schedule. But, I don't think it's that crucial of a question for most people. If you're very wealthy, you should have a fair amount of your money in gold and silver. If you're a speculator, I wouldn't chase it, unless it got to a point where you couldn't ignore the fact that a new Bull Market has started and that's at least $70 off on the upside. So I'm keeping my powder dry as far as getting completely into gold and I think most people should. As far as how low it can go, I think it could really get under way, it could get down to about $180 an ounce, which would be the buy of a lifetime. But, we're running out of time and I don't want to be too cute about it. I wasn't too cute with the stock market. I got out early on that because I didn't want to stay in with the crowd and I don't want to do the same thing here. Sometimes you can catch a market for 90% of it's move and if you're too cute at the end, you're going to miss the turn. So, that's why, in this book, I say you really should have a fair amount of gold and silver, it's real money. Shell -- Sharefin, 04:14:15 06/03/02 Mon Sorry Shell - topping out is the wrong turn of phrase. Rather I should have said that they are more-so taking a breather. I don't think this rally is over by a long shot but in those gold sentiment charts you can see that they are taking a pause. Like with the XAU/HUI/GOX there's a short term pause and some stocks are retracing before the next leg. This is showing up in these indices. The Fibo Indicator I use is a home grown indicator which I designed off a set of Fibonacci numbers. It's basically a set of exponential moving averages with the day intervals staggered in a Fibonacci series. The indicator gives a type of oscillascope image which highlights tops and bottoms and velocities within the dataset. It's more like an echosounder on a fishing boat and gives an impression of where the market is poised & heading. topping out? -- shell, 23:04:23 06/02/02 Sun could you explain even briefly why you say the sentiment index looks like its topping out-i'm embarrassed to have to ask, but what is it on the chart you are looking at? also a short explanation of the gold fibo series chart-what am i looking at? Periodic Ponzi Update PPU -- $hifty, 22:32:31 06/02/02 Sun http://home.columbus.rr.com/rossl/gold.htm Periodic Ponzi Update PPU Nasdaq 1,615.73 + Dow 9925.25 = 11,540.98 divide by 2 = 5,770.49 Ponzi Down 112.38 from last week. They were able to push the Ponzi back above 5,750 line once again this past week. This could be the week we see the Ponzi fall below the well defended 5,750 and stay there. Thanks RossL for the link! Be ready to excavate that chart my friend ! Go GATA Go Gold Go Afrikander Lease ! $hifty Charts Online -- Sharefin, 21:05:05 06/02/02 Sun Sentiment Indices look to be topping out. Swing chart looks set for a fall Global Sharemarket Sentiment Index Wilshire 5000 Charts Online -- Sharefin, 21:03:13 06/02/02 Sun Sentiment Indices look to be topping out. Gold Sentiment PM M/F Sentiment Breaking to new highs - very strong AU/AG/PL Sentiment GGSSI Sentiment Charts Online -- Sharefin, 21:00:33 06/02/02 Sun Dabchick's Gold Index breaking out. Dabchick's Index XAU Hybrids Charts Online -- Sharefin, 20:59:01 06/02/02 Sun Japanese TOCOM charts. Gold & Silver look ready to break out. Japanese TOCOM charts TOCOM Stockpiles Charts Online -- Sharefin, 20:48:48 06/02/02 Sun A major breakthough!!! Note that this indicator is set to monthly so very powerful here.  From here. Gold Fibo |
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