Gold -- Sharefin, 08:50:51 10/14/02 Mon Gulf states push for single currency Six Arab Gulf states have turned to the eurozone for advice in how to successfully launch a single currency. At this week's meeting of Gulf central bankers in Riyadh, the six Arab states vowed to press ahead with plans for monetary union and the launch of a single currency. Hamoud al-Zadjali, governor of Oman's central bank, opened the meeting in Riyadh by urging all the states to exert more effort in ensuring that the timetable is met. And he warned of the "dangerous political and economic developments" taking place in the rest of the world, and the negative impact on gulf economies. As an important step towards economic integration, the states have brought forward the launch of a planned customs union to the start of next year. They aim to achieve monetary union by 2005 and launch a single currency by 2010. Gold -- Sharefin, 08:44:57 10/14/02 Mon AurionGold caves in, backs Placer bid Australia's AurionGold Ltd caved in on Monday to a takeover bid of A$1.35 billion, or $740 million, by Canada's Placer Dome Inc, bowing to the inevitable as Placer edged towards majority control of the country's largest gold miner. The aboutface effectively delivers to Placer an additional one million ounces of gold a year, worth $318 million at prevailing rates. By acquiring AurionGold, Placer will assemble the world's fifth largest gold producer and assume greater control of mines it operates in partnership with AurionGold in Australia and Papua New Guinea. Periodic Ponzi Update PPU -- $hifty, 23:05:08 10/13/02 Sun Periodic Ponzi Update PPU Periodic Ponzi Update PPU Nasdaq 1,210.47 + Dow 7,850.29 = 9,060.76 divide by 2 = 4,530.38 Ponzi Up 196.23 from last week. First time up in six weeks. Thanks for the link RossL. Go GATA ! Go Gold ! $hifty  International Forcaster -- Sharefin, 18:41:59 10/13/02 Sun As JP Morgan Chase descends into lower rating levels the question is: how will counter parties react to the risk? Commercial and central banks probably will start moving their business elsewhere. They just won't assume the added risk of failure of their insurance cover. JP Morgan will make less profit on previous loan commitments because their cost of capital is rising and assumably that of their competitors is not. Those JPM counter-parties who have longer term commitments will probably want out for fear that JPM may not be able to meet their obligations. That reminds us of the 15-year JPM-Barrick spot deferred gold deal. Can ABX opt out? What happens if JPM goes under? Does the central bank, which lent the gold, demand the gold back, or does it get zeroed out and then ABX is obliged to return the cash? ~~~~ As we predicted, second quarter jewelry demand was off 1.7% to $5.84 billion, while investment demand rose 3.6% to $570 billion. Perhaps now professionals and investors will begin to understand that in turbulent times, gold represents a flight to quality. Gold has always been the ultimate currency, as people turned away from fiat currencies. Golds' primariy historical function has and always will be that of a financial asset. We caution you that this flight to quality has only just begun. Silver is scarce and getting harder to find, but you wouldn't think so looking at the price of silver. We, David Morgan and Ted Butler have spoken of the large illegal silver short on the Comex but have not mentioned the fact that major short positions exist on the five leading silver producer stocks of Silver Standard, Hecla, Coeur d'Alene, Pan American and Apex. We believe above-ground inventories of silver will be exhausted by next summer and this short selling of physical silver and shares has suppressed prices so that little new production is being brought on stream, which means sooner or later there'll be a silver explosion. Much of the price suppression is the product of derivative use, which allows manipulation. The demand for silver remains strong as does demand for Silver Eagles, which makes the US government a perpetual buyer of silver. This coming year will be a big one for silver. Get your positions because 2003 should be a big year for the metal. According to the Swiss National Bank's annual report, over 300 tons of gold has been leased out. Their remaining gold is in different places stored domestically and abroad. One of your fellow subscribers in Zurich has asked the National Bank questions about it, but they will not tell him where the gold is. Rumor has it that the US is buying silver from Mexico at well above spot and secretly transporting it to the Comex. A third-quarter drop in production by Mexican mines would seem to support this rumor. As you can see the gold manipulation has included the gold and silver shares, the antithesis of a falling stock market and world fiscal and monetary chaos. These are major unhedged gold and silver stocks. The bad news is, there are unbelievable short positions that have contributed to falling share prices. The good news is they are going to have to eventually cover. At some point these shorts will put a floor under prices. These volume positions represent many weeks trading volume, thus if gold breaks out there will be an explosion to the upside that will be indescribable. Stk---Oct-2001---Jan-2002---Mar-2002--June-2002--Sept-2002 AEM --1,528,891--2,491,493--3,366,534--3,839,396--5,081,776 GG -----146,524----513,012--2,688,668--4,601,437--5,731,613 GLG -----80,200----108,594----778,728--1,961,058--1,812,717 MDG ----120,754----596,847----297,764--2,260,617--2,865,722 HGMCY --306,696--1,088,323--1,516,221--2,610,722--3,510,799 DROOY ---22,579----102,630----166,046----642,191----810,310 SIL ---------------280,036----268,367----614,131----791,665 HL ----------------103,500----105,500--1,130,654--2,405,148 PAAS ---------------11,672------4,509----519,723--1,002,105 SSRI ---------------37,843------5,060----461,810----874,062 The World Bank has killed a $250 million loan to Gabriel Resources to back a project creating the largest open-pit gold mine in Europe. The $400 million Rosia Montana project would displace more than 2,000 people and tear down 900 homes. They could have had a 1,000-acre reservoir to collect cyanide tailings. The Romanian government backed the project but environmentalists obviously have more clout. The mine would produce 10 million ounces of gold over 15 years. We'd expect the project to proceed but the World Bank's politically correct withdrawal is disgusting. Newmont is threatening to walk away from the big Uzbek project. CENTRAL BANK OF RUSSIA OFFERS MORE ZODIAC COIN MOSCOW, October 7. /RIA Novosti/ - The Central Bank of Russia will issue more coins of the Zodiac series, starting tomorrow. It will be Scorpio now-silver two-rouble pieces and gold 25 roubles. Up to 20,000 silver coins will appear in circulation, and up to 50,000 gold, say Central Bank PR. Of 925 standard, the silver coins contain 15.55 grams of pure silver each. Gold coins are of 999 standard, with 3.11 grams of pure gold. Every coin bears on the obverse a bold relief emblem of the Central Bank--two-headed eagle, wings down-in a bead frame. The reverse represents a scorpion in bold relief, against a background of stars, under the zodiacal symbol of Scorpio. ***** Hello Subscribers, This is what I was hinting at in the October issue. The potential for using silver in this application is 100 million ounces on an annual basis according to the press release below. In an earlier article from the Silver Institute the estimate was up to 200 million ounces annually which is just about equal to the photography industry. Speaking of photography, most subscribers know that color film uses very little silver, in fact, none on a theoretical basis. So all this talk about digital killing silver needs to be examined carefully. First, if digital is replacing the public's 35mm color camera there is no loss. Digital is having some impact in the Newspaper publishing field, but the digital boogeyman is much more hype than fact. Silver remains under pressure and it looks like it will test 4.20 short term, Eric Hadick as long term readers know, is one excellent technician and Eric feels silver needs to test $4.01. The following press release should help us to keep the faith. Silver will have it's day. Sincerely, David Morgan http://www.silver-investor.com U.S. Congress Looks to Silver-Based Biocides for Wood Preservation - Harmful Arsenic-Based Solutions Targeted for Government Ban October 10, 2002 ------------------------------------------------------------------------ (Washington, D.C. - October 10, 2002) - Senator Larry Craig (R-ID) has introduced legislation directing the Secretary of Agriculture to conduct a study of the effectiveness of silver-based biocides as an alternative treatment to preserve wood. Senator John Ensign (R-NV) has cosponsored the bill. S.3062, the "Wood Preservation Safety Act of 2002," introduced in the U.S Senate on October 4, directs the Forest Products Laboratory in Madison, Wisconsin to conduct a study on the effectiveness of silver-based biocides as a wood preservation treatment. Earlier this year, the Environmental Protection Agency (EPA), the chemical industry and the home-improvement industry negotiated an agreement to phase out the use of arsenic-based wood preservatives in pressure-treated wood by December 31, 2003. This transition affects virtually all residential uses of wood treated with chromated copper arsenate (CCA), including wood used in play structures, decks, picnic tables, landscaping timbers, residential fencing, patios and walkways/boardwalks. Beginning January 1, 2004, the EPA will not allow any CCA products in these residential uses. Corporations such as Home Depot and Lowe's have announced they would stop selling lumber treated with an arsenic-based preservative in concert with the EPA announcement. "Since ancient times silver has been used as a treatment to prevent the spread of bacteria and has acted as a purifying agent. Its healthful properties are well known, and it's projected that by 2006 silver's use as a biocide in various applications could grow by 600%," said Paul Bateman, Executive Director of the Silver Institute. "However, if silver-based biocides were used as an alternative to harmful arsenic-based preservatives, over 100 million ounces a year would be consumed in this application alone, adding significantly to overall worldwide fabrication demand," Bateman added. The Silver Institute is a nonprofit international association. Established in 1971, the Institute serves as the industry's voice in increasing public understanding of the value and many uses of silver. *** Dear Ross, (Beaty, President of Pan American Silver) Ed Steer sent me a copy of your response to his letter, which included my article, "The Silver Producers Are The Problem." In that article, I specifically cited you, in your dual role as CEO of Pan American and President of the Silver Institute, as being negligent in your responsibilities to your shareholders and to silver investors in general. I stand by my words. The COMEX crooks continue to rig the price, causing damage to your company and silver investors, and you are "very very upset" with my words. Grow up. Just like the CFTC and the COMEX, you wrote a lot of words, but managed to avoid my two very clear and specific allegations. One, where is the silver backing up the 350 million ounce net short sale by the 8 or less COMEX traders at the top of the recent price rally? Two, why are their no legitimate speculative position limits in place in COMEX silver? My God man, it is you who should be asking these questions, not me! Obviously, you don't have the answers, and neither do they. Ask them - coming from a silver producer and President of the Silver Institute, it could make all the difference in the world. Look, we don't care for each other, but so what? Instead of threatening silly slander suits, do something productive - make the COMEX show you the silver backing the 350 million ounce short sale and ask them why are there no legitimate speculative position limits in silver. When they don't answer, get a simple court injunction to enforce legitimate limits, as the law dictates. Just attempting to get such an injunction will probably set the price free. Or just sit there and pretend there's nothing you can do. Your choice. Ted Butler ------ SUBSCRIPTION INFORMATION: 1-year $99.95 U.S. Funds. Make check payable to Robert Chapman, (NOT International Forecaster), and mail to: P. O. Box 510518, Punta Gorda, Fl 33951. Please include name, address, telephone number and email address. We accept VISA and MasterCard charges. Please provide us with your card number and expiration date. We will charge your card $99.95 for a one-year subscription. Please note, we publish twice a month by surface mail or 3-4 times a month by email. Our email is: bif4653@comcast.net or info@intlforecaster.com. For new or renewal subscriptions please contact 941-639-0619 or the above email addresses. Gold -- Sharefin, 18:08:45 10/13/02 Sun So Close, Yet So Far Away Today the majority of the gold crowd sees gold and it's representative shares as just another kind of Tech.com trading vehicle. After three decades have passed, during which gold was not mentioned along with the word "investment" for fear of labeling yourself as a barbaric relic, there have been eleven months of a resurgence. That resurgence however has resulted in a strange phenomena wherein the gold share crowd is totally devoid of any professional participation; while gold bullion has appreciated approximately $60 without any public interest, even of the commodity public. Gold is money when money fails. I can go at this fact from many different ways, but maybe it is useless to try because the majority of you see gold as just another form of Tech.com. That probably secures a huge price for gold when all the magic juju of our financial leaders fails. That also probably says that after gold violently balances the balance sheet of the USA at $1450 to $1700 in a massive short cover, it will come down faster than it went up. The net result of that should sell a lot of books for Mr. Prechter, but in that order. Too bad. Gold could have saved the day and given a platform for a multi-generational regeneration of solid, long-term non-inflationary growth. But hey, there would be no Tech.coms to deliver instant gratification in that scenario. Gold -- Sharefin, 18:05:33 10/13/02 Sun To The Gold Community from James Sinclair The present reaction in gold and gold shares coming so soon on the heals of the June-September experience has caused many of you, most certainly those new to this field, significant discontent. I understand that. However, I stake my 43 years of experience and my hard won reputation on what I am about to say to you. Take heart. This decline is short-term and only a natural reaction in gold shares which will run its course on the downside, IMO, by October 19th to October 23rd. Many of these share will establish new highs thereafter. Four of the five required fundamentals are in for a long term gold bull market. I am convinced that the "5th Element," a long-term top in 30-year US Treasury bonds will join before much longer. IMO, having not acted to reduce your exposure by 1/3 on my 9/23 VIP on this site, you should hold your fully paid cash positions in gold equities. I say this because I believe it and I am concerned by your many messages to me seeking my help. My advice to you is my advice to myself. Regards, James E. Sinclair October 10, 2002 Gold -- Sharefin, 18:02:42 10/13/02 Sun Central Banks Can/Will Control POG Forever. WRONG! The greatest concern of gold investors is the gnawing suspicion that manipulation of the gold market can and will control the price of gold (POG) forever. Gold -- Sharefin, 18:00:07 10/13/02 Sun Gold Leasing Rates Are Higher - Why?  Gold -- Sharefin, 17:51:30 10/13/02 Sun Suggestions for Scared Gold Fans Gold -- Sharefin, 23:53:01 10/11/02 Fri White Paper on Islamic Bimetallic Currency Gold and silver restore social equilibrium The dinar and the dirham can be the world currency of all free people Headlines The schism that divides the defenders of gold and silver and their adversaries is not only utilitarian but also philosophical. The defence of gold and silver is solidly based on some fundamental considerations of political philosophy that the defenders of artificial currency cannot ignore. "Money is not an invention of the State" wrote Menger, "nor is it the product of a law-making act. For its existence the sanction of political authority is not even necessary" Money is the product of the division of labour and of the economy of exchange that man has established. When the traders intended to exchange their goods and services for other more commercial goods the precious metals appeared as the best choice and became the currency for the majority of people. Gold and silver had value because they satisfied the needs of man. Contrary to what happened to other useful merchandise, they were easy to fraction, could be transported at low cost and kept safe with relative ease. For around 2,500 years the universal currency was made up of small pieces of gold and silver called coins. They survived for two millenia despite the numerous attempts by many governments that tried to manipulate them and replace them with their own medium of exchange. This perception of the very nature of currency and the characteristic of precious metals at the service of the economic exchange leads us to think that gold and silver will probably survive another two thousand years, and somehow or another, the gold standard will prevail a long time after the present eruption of artificial national currencies have been forgotten, or only remembered in the museums of numismatics. Giovanni -- Sharefin, 23:09:21 10/11/02 Fri I've long thought that perhaps they would pool all the debt under one roof & then let it burn. Then tax the people for money to ressurect a new and shinier version. So far they've pooled quite some debt under JPM's roof.  Gold -- Sharefin, 23:01:25 10/11/02 Fri The Drums of War Beat For Gold Since the beginning of the year, markets have been faced with the uncertainties of war. The drums of war have been beating for months with only the timing in question. Because the Gulf War in 1991 was short-lived and paid for by the Kuwaitis and Saudis, there was little economic impact. Gold was a one-day wonder spiking to $345 an ounce and the oil price briefly touched $35 a barrel. In fact the economy soon fell into a recession ruining the election hopes of George H. Bush. This time it will be different. Just as the countdown has taken months, the actual war and its impact is likely to be protracted with huge political risks (conflict spreading throughout the Middle East) and economic risks (oil, currencies and global recession). Unlike the last war when the allies only had to push out Saddam's troops from Kuwait, this time the Americans must replace his regime, which will take longer. Mr. Hussein has nothing to lose and he might very well use the odd scud or unconventional weapon to destabilize America's allies. Sure the Iraqi army is not a match against the Americans, but it has fought the Iranians for eight years. And, this time the battleground will not be the desert but the cities of Tikrut and Baghdad. Equally worrying is the fragile state of the global economy and the risk of a double dip recession in the United States should the war spread. So far, a built-in war premium has caused higher oil prices crimping growth at the very least. The drums of war must be paid for and gold is a good thing to have. This has been a terrible year for the stock market and the US dollar. The Dow Jones, for example, is down 24 percent since year-end amid Wall Street scandals, a war discount and intensifying geopolitical tensions. For many years, foreign investors rushed to dollar-denominated investments such as US Treasury Bills, when war or bad economic news made the world seem dangerous. But this year, the US dollar fell 8.4% in the second quarter of this year on a trade-weighted basis, the sharpest decline since the fourth quarter of 1987. The main reason for the decline was the loss of appetite for US assets and dollars at a time when the current account deficit was widening and the stock market was dropping. This time many investors, including foreigners bought gold instead. Gold during this period went up 18% to a three year high. The need for foreign money is important since for two decades, the Americans bought and consumed far more than they produced. According to the International Monetary Fund, the United States absorbs 6 percent of the world's savings to finance its deficit. Foreigners now control 43 percent of the outstanding US debt, and almost 25 percent of all corporate debt. Net direct equity investment dropped to $8.6 billion in the second quarter and the Commerce Department said the current account deficit hit a record high of $130 billion in the same second quarter, up from $112.5 billion for the first three months of the year. At gold's peak almost 23 years ago, the Dow and gold once sold at the same price. Today the Dow/gold ratio trades at about 23 times the gold price. In 2000 at the top of the bull market in paper asset, the ratio peaked at 45. Historically, that ratio has been 10-12 times. The Dow/gold ratio was at 1 in 1897. A reversion to historic patterns would either see gold go up or the Dow down. At 10 times, the Dow would be 5000 and gold at $500. The bursting of the US stock market bubble has led many to draw parallels with the Japanese situation at the end of the 1980s. But are the Americans to suffer a decade of lost growth, just as Japan did during the 1990s? Both Japan and the United States have lost control over real short-term interest rates. For Japan, this is because nominal rates are near zero. For the US, rates are poised to fall again, also to near zero levels. Both enjoyed asset price booms fueled by excess credit but are now unable to kickstart their economies, despite an accommodative fiscal stance. And the financial sectors in Japan and the United States are similar, insofar as both banking systems are laden with too much debt leftover from their respective bubbles. Like the Bank of Japan, the Fed is in a state of denial and avoided the blame game explaining the Fed can't anticipate bubbles, it can only soften the impact when they pop. But there are differences and the main one is that foreigners own a greater portion of US debt than they own Japanese debt and that is a problem. The other difference is that the drums of war might exacerbate the trend in the United States. Twin Deficits Against the backdrop of war, Fed Chairman Greenspan is again warning that twin deficits call for the need for fiscal discipline since a failure to reign in a rising budget deficit would drive interest rates and borrowing costs higher. The ever-expanding budgetary deficit, particularly in the wake of an Iraqi war, together with the bloated current account deficit is one of the major factors behind our bearish outlook for the overvalued dollar. The fundamentals remain weak. The stock market slide is now almost three years old, and there is little incentive for foreign investors. Wall Street's accounting scandals have also fueled the negative tone in the equity markets and investor confidence is at a low. The other war, the War on Wall Street also does little to bolster confidence in American capital markets. The US dollar has lagged the trend in the US equity market, and therefore it is expected the dollar will experience a similar long-term slide - a slide that we believe has just begun. Mr. Greenspan, having accommodated the bubble, now appears more than willing to accommodate the inevitable repercussions, with an easy money policy. And, that is good for gold. Countdown To War But what about this Iraqi War? How bad is it for the economy? The Street recalls the short-lived Persian Gulf War, which only helped the arms manufacturers and had little impact on the US economy or gold. We believe it is different this time and that the situation is more like the protracted Vietnam War rather than the short-lived Gulf War. In the 60s, Lyndon Johnson financed huge social programs as part of his "Great Society" while fighting a lengthy war in Vietnam, which added to the twin deficits triggering the devaluation of the dollar and an $850 gold price. Today, the Afghanistan War and a War on Terrorism has crowded out other spending and comes at a time when Americans are again faced with twin deficits. The White House National Economic Council has estimated that the price tag to fight Iraq could cost between 1 percent to 2 percent of US GDP or $200 billion (the Persian Gulf War only cost $50 billion, which was paid by the Gulf States). However, this time, the Americans must pay for this spending, which will add to an already bloated deficit. The indirect impact could easily be more far reaching if the battle spills beyond Iraqi borders. To date, a war premium is built into oil prices and the war itself will almost certainly push prices higher, undermining an already weak economy. At the very least, the market uncertainties will only lift when the last bullet from Iraq is fired. War was not cheap then, nor is it now. Gold is a good thing to have. ~~~ Of more concern is that the massive hedging market is based on the central banks lending out to creditworthy counterparties and the doctrine of "too big to fail". There is in effect, no ultimate lender of last resort if there is a problem. Transactions are done on a one-to-one basis. Obviously central banks deal and lend only to financially strong institutions. However the recent collapse of the financial markets has shrunk the pool of AA-rated financial institutions. JP Morgan and CIBC for example recently lost one of their As, following losses in the latest quarter. The Comptroller of the Currency reported JP Morgan held gold derivative notes outstanding of a little more than $40 billion, considerably in excess of the bank's book value and market capitalization. ~~~ Investors are disappointed with gold and the gold stock's lackluster performance in recent weeks. Gold has actually done well and outperformed relative to the slumping stock market. Gold has an inverse relationship with the dollar, which has stabilized in recent weeks. Our view of the dollar sees a resumption of the downtrend, which will further help to support gold prices. Finally, our work suggest that gold's volatility will pick up once it moves above $330 per ounce, a level of resistance. We continue to believe that we are in the second upleg for gold with a $375 per ounce near-term target likely when the first cruise missile is dropped on Iraq. Next year, we see a $510 per once target supported by Middle East tension, strong investment demand, a hedging debacle, a sharp depreciation in the US dollar and favourable supply/demand fundamentals. Our gold recommendations remain focused on those producers with potential to grow production and reserves. In addition, balance sheets and quality of plays are important. Fiat -- Sharefin, 21:02:07 10/11/02 Fri Dark Days for German Banks A dark period continues to shroud the German banking community With forced reductions in workforce numbers, worrying drops in share prices and terminally ill financial results, the light at the end of the tunnel still seems a long way off for German banks. Commerzbank's latest revelation this week that its shares have fallen to their lowest level in over 20 years has added to the already depressive state of the German banking industry. News of the mass sell-off of shares comes after Standard and Poor's, the credit rating agency, slashed Commerzbank's credit rating due to fears about the bank's finances. With the top German banks shedding jobs like a sinking ship bails water, the news that the country's third-biggest publicly listed bank has lost the confidence of its shareholders deals yet another blow to the ailing money institutions. Commerzbank shares fell more than 7 per cent to 5.04 euro this week after creditors said that the fall in the value of the bank's equity reserves would destabilise its financial flexibility. Signs indicate rival banks are reluctant to do business The ebbing confidence of its shareholders was mirrored by that of Commerzbank's competitors in the sector as signs emerged that rival banks were becoming less inclined to do business with Commerzbank and the other German banks, especially when it came to dealing with credit derivatives. Commerzbank maintains that relations with traders of derivatives have not been damaged by the news of falling shares and the current instability in the German money market, despite having lost more than 71 per cent of its stock market value in the past six months. With trepidation creeping into the banking community with regard to the worrying state of German banks and with shareholders and customers showing clear signs of no confidence, it seems that the long journey to stability is far from over. JPM, Derivative Exposure, & the Fed -- giovanni dioro, 12:27:17 10/11/02 Fri People should be cautious about assuming JP Morgan will fall under its derivative exposure. JPM owns ( in a substantial part ) the Federal Reserve Bank. My take on the situation is that if JPM was in serious difficulty, then the Fed could just buy up JPM's bad loans, derivatives, etc. and just write it off. This would be referred to as an open market operation. JPM won't fail unless the Fed wants it to fail, and since JPM owns the Fed, how can it fail? Gold -- Sharefin, 06:25:45 10/11/02 Fri Placer Dome comments on South African socio-economic empowerment charter; Reports Porgera mine back on line Placer Dome Inc. responded today to the release by the South African government of a revised socio-economic empowerment charter for the mining industry. The company also announced the resumption of operations at the Porgera mine in Papua New Guinea, which has been shut down since mid-July following a series of election-related vandalism incidents. Gold -- Sharefin, 06:22:53 10/11/02 Fri Anglogold Says Will Not Sign Away Assets South African mining firms will not simply hand over the 100 billion rand ($9.6 billion) they must raise to help black people enter the crucial sector, the head of the country's largest gold miner said on Friday. AngloGold CEO Bobby Godsell was speaking two days after South Africa released plans negotiated by the government, industry and unions for 15 percent of local mine assets to be in black hands within five years, and 26 percent in 10 years. Gold -- Sharefin, 06:19:06 10/11/02 Fri Standard & Poor's reports on European metals and mining credit quality "Among precious metals, gold is benefiting from a 'flight to safety' and the unwinding of some producer hedge books." -- Gold, where the outlook for ratings on companies remains stable to positive, as gold prices, currently $320 per ounce, remain well above `the $271 per ounce average in 2001. With global equity markets continuing to remain depressed and turbulent, and concerns about the political instability in the Middle East remaining high, investors seeking a safe haven have buoyed demand and the price of gold. Furthermore, gold producers, through a recent spate of mergers and acquisitions and a positive view of longer-term industry fundamentals, are unwinding or liquidating price-restrictive hedge books. Gold -- Sharefin, 06:17:26 10/11/02 Fri Cracks start to show over mining charter Proposals hit mining, resource stocks NEW racial rifts began to emerge in the mining industry yesterday as black companies took their more established counterparts to task for "overreacting" to leaked government proposals for a mining empowerment charter. The proposals hit mining and resources stocks on the JSE Securities Exchange SA last week, and continued to take their toll yesterday, despite government assurances that they were intended as nothing more than discussion documents. The FTSE/JSE Africa platinum index was off 4,8%, while the FTSE/JSE Africa gold mining index slid 3,93%. Gold -- Sharefin, 06:13:22 10/11/02 Fri Romanian Gold-Mine Loan Blocked by World Bank Chief International Finance Corp., the bank's private-sector lending arm, was negotiating with Toronto-based Gabriel Resources Ltd. to back a project creating the largest open-pit gold mine in Europe. The $400 million Rosia Montana project would displace more than 2,000 people and tear down nearly 900 homes where the mine is planned. Environmentalists also opposed plans to build a 1,000-acre reservoir to collect cyanide tailings left over from the mining process. Mr. Wolfensohn, in an unusual intervention, directed IFC head Peter Woicke to drop loan negotiations two weeks ago during the World Bank's annual meeting, according to a bank official. The IFC, which was still studying the project's possible environmental impact, began formally advising involved parties of the decision Thursday. The bank's involvement wouldn't have exceeded $100 million. Mr. Wolfensohn decided against the project after talking briefly with two Romanian environmental activists who met the bank president at the end of a seminar, the bank official said. The Romanian government, which supports the project, fought to bar the activists from attending the World Bank meetings, the official said. Gold -- Sharefin, 06:10:27 10/11/02 Fri Cutting through Barrick's hedge In what is often called the "Taliban" or "fundamentalist" wing of the goldbug movement, Barrick Gold is reviled as the Great Satan, intent on driving down the gold price through its derivatives activities, in league with either the Federal Reserve, or the Illuminati, or both. Barrick's position, with which I have agreed over the years, is that all it did with its gold short sales was hedge its exposure to fluctuations in the gold price. Its lenders, seeing more stable cash flows than those produced by other mining companies, provided the money for new mine development at a low cost. This has all been blessed by Standard and Poor's, which gives Barrick a highly respectable A rating. The goldbug fundamentalists, however, believed that it was Barrick's short sales that depressed the gold price. Holders of physical gold (which they perhaps keep in the dugout with their year's supply of canned food and AK-47 ammunition) were thus deprived of profits, along with share owners in those gold mining companies who did not hedge their production. Even as gold, the metal, continued its long bear market, Barrick prospered. The gold "Taliban" were forced into the caves of occasional conferences and internet chat rooms. Now, for whatever combination of macroeconomic or geopolitical reasons, the faith-based gold investors have been doing well this year, with both the metal and the stocks of lightly hedged gold mines rising in the double-digits. The rise in the gold price alone should not be unwinding the Barrick story. If all the company was doing was locking in future cash flows to meet fixed expenses, then it still had much gold production available to sell at the new, higher, spot prices. As Randall Oliphant, Barrick's chief executive, says, "We are happy with a higher gold price. That's what we live for." A higher price is what any gold miner lives for. The catch is that Barrick is only partly a gold mining company. The other part is a large investment company whose accounting codes probably cannot be broken by the National Security Agency, let alone investors or journalists. And here is the perceived trouble. Because there is a circularity to Barrick's good credit rating, which allows loosely covenanted hedging contracts that provide much of its liquidity. If the banks who lend it gold bullion (for the short-selling programmes), or cash, should decide to rein in the terms of their lending, that could, in turn, reduce the earnings, which support the rating . . . and so on. That process might have already begun. I have been studying the company's public announcements over this year, an endeavour that would tax even a Jesuit professor of logic, and my findings are as follows. Barrick began using its Premium Gold Sales Programme more than a decade ago. When most people sell gold short, they have to leave the proceeds of the sale, earning low interest, as collateral with the bank that lent the short-sold gold. Barrick convinced the gold lending banks to let it manage the investing of gold sale proceeds. It has been doing this in the "investment company" wing of the corporation. For most of the past decade it was not hard to beat the interest rates offered to other gold short-sellers on their proceeds. Barrick bought bonds, including corporate bonds, using what are known as "total return swaps" sold by investment banks. These allowed it to earn higher interest rates without requiring Barrick to book timely mark-to-market losses on the value of the bond portfolio. Barrick also earned option premium income by writing (selling) gold calls against its gold production, because its banks didn't tie up that production as collateral. In the Premium Gold Sales Programme, the extra-high interest and option premium earnings were laid on to the price per ounce that the company received on physical gold sales. Rather than break out the earnings from its investment activities as a separate operation, Barrick distributed them over each ounce of gold sold. Then they were revealed as a higher "realised price" than the rest of the gold industry could earn. Earlier this year, Barrick started to back off from its corporate bond investment programme. Holding corporate bonds has become a little dangerous. Instead, the company has had to hand over the cash proceeds from forward sales to be managed by its banks and invested in vanilla interest rate products. Someone, perhaps the banks, also decided to curtail the option premium selling, maybe because it reduced their own potential collateral. In September, Barrick announced it had to lower "guidance" for its 2002 outlook from 42-47 cents a share to 33-35 cents a share owing to operating problems. At a minimum, Barrick must break out its investment operations in complete detail, along with the terms, including margin requirements, for its hedge programme. @ Kapex - Gold Stocks Short Interest -- Greg, 22:11:15 10/10/02 Thu Very interesting comments concerning the rule change scenario on Kitco. I also believe that such rule change is to be expected at some point in the future, but perhaps not at this stage where Gold lies in the 300's and Fiat is still more than acceptable as currency. However, with a Gold price several hundreds of dollars higher and currencies highly depreciated, something of that nature should eventually occur, if not a return to some new form of Gold Standard or an outright confiscation scheme. But this is not what I would expect for the very near future. I believe gold will first have to start being recognized over again as a store of value by the general public. And this Baby Bull is still far too young for Joe SixPack to start getting interested in hard assets. He is still way too confident that the Nasdaq Bubble will somehow reflate again in the near future. And what does he care about gold ? He's been so professionnally brainwashed by CNBC about Fiat and its ability to provide countless cans of beer for his evenings in front of da Big Screen... What I do believe may be at play here is a professional attempt to shakeout weak hands from the Gold Share Markets before the $330 level is broken for the first time. This could happen near term, specially when many Joe SixPacks realize that this Nasdaq Bubble is NOT going to reflate anytime soon, or perhaps with the onset of war. Since we could be just a few weeks away from Gold's next major wave up, it may be a priority to get as many players out of the market by creating a maximum level of pain and making sure disgusted investors don't return to this market in time for the party. The elites may just want pick up as many shares as possible near the bottom. They might just reverse their shorts quickly and go long prior to some event they know will take place in advance and trigger an important reversal in the POG. That way they make money both ways and Mr. GoldBug gets to be shaken out again, thinking the SM Crash is going to bring down the entire house of cards. Pretty basic financial psychology I guess... I'm simply convinced that this C wave is for the very short term and its rapid progression should lead us to a low on the HUI much faster than I was originally anticipating. Another convincing chart for this baby bull...I've just plotted some H&S targets for Newmont and this is telling me that however painful this correction is going to be in the short-term, the long-term looks pretty promising. They might manage to influence the price of some shares in the short-term...but when you have a confirmed Reverse Head & Shoulders formation with a potential dual layer on a 5 year chart, something tells me price breakdowns of any kind ain't gonna last for very long... we are not out of the woods yet BUT... - Just as a matter of full disclosure, I do own some warrants of Newmont, but it isn't even remotely my favorite gold stock as I would really love to see this company close out its Normandy Hedge Book. I'm just presenting this chart because I find it is one of the most convincing to suggest that rule changes, price manipulations etc. just might not work for very long, that is, IF one believes in TA...  Fiat -- Sharefin, 20:28:07 10/10/02 Thu No Boundaries - To Bond Spreads Wednesday's Heard on the Street column in the Wall Street Journal discussed the recent trading in Ford bonds. The article mentioned that some dealers were starting to price the paper in dollars and cents, not as a spread above Treasuries, which investment grade bonds are usually priced. Spreads have widened dramatically over the past week and it continued on Wednesday. Today as Treasuries lost 6.6 basis points, the yield on Ford 10-year bonds jumped 30 basis points. This 36 basis point widening over treasuries caps off an historic week that so far has seen the spread to treasuries widen 111 basis points in the last four trading days to 580 basis points over Treasuries. For a little prospective, Ford bonds traded around 200 basis points above Treasuries over the past 18-months before starting a complete decoupling this summer. General Motors' bonds have widened a similar 109.9 basis points since Thursday, with 42.5 basis points just today. It is not confined just to the automakers, Household's spreads have also widened dramatically. Its bonds widened 44.5 basis points today and 103.2 basis points since Thursday. Looking at the spread historically it is amazing how wide they moved considering how low government bonds are yielding. Last year, Ford paper traded 200 basis points above Treasuries when Treasuries yielded 5%, making the spread about 40% of the Treasury. Now Treasuries yields are at 3.5%, so the 9.4% yield Ford traded at today is 270% above the Treasury. This does not make for a good trade if you shorted Treasuries to buy Ford paper. If a hedge fund put this trade on in mid-July when the spread was 250 basis points, which was the high side of a one-year trading range (200 to 250 basis points), the fund would have expected a standard deviation of 35 basis points. In the past four days it would have seen a three standard deviation move. For more prospective, during the Russian collapse in 1998. Ford bonds widened 47.7 basis points over a one-week span. As you might remember the Russian default set in motion the wheels to send LTCM over the edge. During this whole financial meltdown, Ford bonds widened from about 120 basis points over Treasuries to about 220 basis points, 100 basis point of widening. I'll repeat, Ford's bonds have widened 111 basis points in the last four trading days. There is definitely something brewing in the credit markets. We also think the same stress is in the asset backed securities (ABS) market. All three of the above companies are also involved in the ABS market. If the ABS market is undergoing the same stress as the lower grade corporate bond market is displaying, it will not be long until the easy financing that consumers have grown accustomed to is withdrawn. Fiat -- Sharefin, 20:14:47 10/10/02 Thu J.P. Morgan Cut by Moody's, Affects Debt Moody's Investors Service on Wednesday cut J.P. Morgan Chase & Co.'s JPM.N long-term debt ratings, reflecting concern about the No. 2 U.S. bank's near-term ability to maintain "acceptable profitability" as investment banking revenue falls and loan losses mount. The downgrade, affecting about $42 billion of debt, follows a similar downgrade on Sept. 17 by Standard & Poor's Ratings Services. J.P. Morgan shares fell nearly 7 percent on Wednesday, suffering most of that decline after Moody's early afternoon downgrade. Fiat -- Sharefin, 20:02:21 10/10/02 Thu J.P. Morgan Cut by Moody's, Affects Debt Moody's Investors Service on Wednesday cut J.P. Morgan Chase & Co.'s JPM.N long-term debt ratings, reflecting concern about the No. 2 U.S. bank's near-term ability to maintain "acceptable profitability" as investment banking revenue falls and loan losses mount. The downgrade, affecting about $42 billion of debt, follows a similar downgrade on Sept. 17 by Standard & Poor's Ratings Services. J.P. Morgan shares fell nearly 7 percent on Wednesday, suffering most of that decline after Moody's early afternoon downgrade. Fiat -- Sharefin, 20:00:43 10/10/02 Thu Print money, Forbes urges U.S. Deflation is a 'threat' Deflation presents a "threat" to the U.S. economy, and to combat the problem, the U.S. Federal Reserve should be prepared to print more money, says Steve Forbes, former U.S. presidential candidate and editor-in-chief of Forbes magazine. Mr. Forbes, who spoke to about 2,500 investors and brokers in Toronto last night, said the United States has seen mild deflation since 1997, brought on by a collapse in commodity prices. Failure to fight deflation could result in a downturn similar to what Japan has experienced over the past decade, he warned. "The question is, 'Has the Fed learned from Japan?,' and that's an open question," said Mr. Forbes in an interview prior to his speech. "It's very easy to misinterpret the numbers if you don't understand deflation. It's a threat. And if you don't fight it, you could find yourself tumbling into it." He said it will take more than just rate cuts to stop deflation -- it will require Alan Greenspan, the Fed chairman, to pump out more money. "You have to supply liquidity, general liquidity, so people feel safe in using the money, instead of hoarding it. And businesses feel safe in investing it," he said. "Banks in the U.S. are very reluctant to make loans now, outside of housing and consumer durables. That's one reason capital spending has taken the hit that it has." Gold -- Sharefin, 19:42:37 10/10/02 Thu Gold Fields on low road to China South African-based Gold Fields, the world's fourth largest gold producer, has made another investment foray into a growing Australasian exploration sector. The company spread its wings into China today, taking a 10 percent stake in the country's first foreign owned gold producer, Sino Gold, which plans to list on the ASX next month. Sino was spun out of China's mining parastatals, Sino Mining International, two years ago. Gold -- Sharefin, 19:41:22 10/10/02 Thu John Hathaway, Tocqueville Gold Fund On Iraq - I think it's a diversion from the point of view of the gold investor. I don't think that's why gold is going up. I suppose gold would go up if we had open hostilities there. But it certainly is not central to my thesis in any event. It's my view that there is a surplus of dollars all over the world, the dollar is in my opinion over-valued, it's over-owned. We have a huge trade deficit. We also were beginning to have a lot of deficit spending in this country. It's the highest level it's been in a couple of decades. So the issuance of dollars continues to be very, very high. And, at some point, foreign investors, in particular, who hold a huge amount of bond market, stock market and corporate bond market, may begin to question the attractiveness of those assets. Certainly, after three bad years in the stock market, you are already seeing that sort of thing take place. And when that sort of exodus starts to pick up any sort of momentum, the dollar will lose exchange value and that could be a self-eating process. When you look at the alternatives, the euro and the yen, in terms of big liquid currencies, there's not a whole lot to get too excited about. In fact they have issues in each case. So, at some point, that outflow from the dollar will find its way into gold and the amount of flows relative to the liquidity of the gold market are enormous, and that's why I think we could see a substantially higher gold price. Deflation is definitely the concern. There's too much debt, and in a really deflationary spiral people have to sell good assets to service their debt. And that's what the policymakers around the world are afraid of. The scarier it gets, and I have to say, it's getting fairly scary, the more they will resort to measures that would ultimately be very inflationary. So I've always thought that deflationary pressures beget or spawn inflationary policy measures. And it's that sort of thing that will scare people into gold. Gold -- Sharefin, 19:35:07 10/10/02 Thu Canada's Goldcorp shines in gloomy stock markets While global equity markets sink ever lower, stocks in a mid-size Canadian gold producer Goldcorp have outperformed some of the world's best known companies, the firm's top executive said on Thursday. Speaking to potential investors at a gold forum in London, organised by Canada's Sprott Securities, Robert McEwen said his company was the "ultimate gold stock", boasting a compound annual growth of 36 percent since 1993. "We have significantly outperformed the market over the past few years," he said. McEwen said that $100 invested in Goldcorp in 1993 would now be worth $1,773, compared with $1,275 for Microsoft, $679 for IBM and a paltry $251 for the Nasdaq index. Goldcorp's success stems from its discovery of giant high grade gold deposits in Canada's Red Lake mine in Western Ontario -- now considered as the richest gold mine in the world. With no debts, no hedge book and rising gold prices, cash rich Goldcorp even started to hold back some of its 600,000 ounces of annual production in inventory last year. The company has also bought gold and McEwen said Goldcorp now has more than five tonnes of gold in its inventories. "We have a strong belief that gold prices are going higher," McEwen said "We have a positive leverage to gold which is unrestricted to the upside." Hedging, a standard financial tool aimed at locking in profits if prices dip by pre-selling unmined gold at forward, has fallen out of favour with major producers as gold prices have firmed to their highest level in 2-1/2 years this year. "What's very clear is that the market dislikes hedgers," he said, adding that two-thirds of the gold industry world-wide hedges its production. "When there is no confidence in the market...buy gold," he said, adding that over the last 18 months, the yellow metal has been the best performing asset class. Gold -- Sharefin, 19:28:44 10/10/02 Thu Porter Still Positive On Gold Outlook Mutual fund investors can't reproduce the past year's typical 50% to 60% gold-fund gains without another jump in the yellow metal's price. But those who missed out shouldn't shrug off gold as a lost opportunity, says Craig Porter, manager of the C$38 million Altamira Precious Metal Fund. Porter said he's still positive on the outlook for gold, but bullion is waiting for some new direction. Economic and stock-market conditions remain weak, the U.S. dollar has slipped "although it seems to have bottomed for the moment," plus there's the threat of war and low real interest rates. "All these factors force people to buy gold, and they're still there," he said. But he isn't as keen on silver. The fund doesn't own any silver stocks, though it has in the past. "The problem with silver is the fundamentals always look good on the commodity," Porter said. Gold -- Sharefin, 19:24:48 10/10/02 Thu Placer rides bumps Savaged global equities markets and an aimlessly wandering gold price have wreaked havoc on the share prices of Placer Dome and its takeover target AurionGold, casting a pall over yet another offer extension. The extremely bearish mood of world financial markets and the sluggish performance of the gold price in response (because of investors' flight to other preferred “safer” havens such as government bonds) have certainly overshadowed the long-running takeover battle and knocked the wind out of Placer's sails just as it seemed the finish line was in sight. After having picked up a steady swag of acceptances over the past three or four extensions, the company might struggle to push its stake in AurionGold much above 45 per cent (currently 44.86 per cent) by the end of business today (Friday) given investors' nervousness. Conversely, that very same edginess might persuade Aurion shareholders to get out before the bottom falls out of the US sharemarkets. Gold -- Sharefin, 19:23:01 10/10/02 Thu S. Africa mines welcome ownership charter South Africa's mining industry said on Thursday that a new draft charter to give blacks a bigger stake in the sector should dispel any doubts around the industry's plans to correct the wrongs of apartheid. Global heavyweight Anglo American, the country's biggest company, threw its weight behind the new deal, calling it a practical approach to achieve change in an industry that is still white-dominated eight years after minority rule ended. The draft charter -- thrashed out between the government, industry and labour and released late on Wednesday -- says 15 percent of local mine assets must be in black hands within five years, and 26 percent in 10 years. The Chamber of Mines, which represents local mining houses, said the draft reaffirmed "the mining sector's...willingness to facilitate and promote wealth creation opportunities for historically disadvantaged South Africans". Mining shares moved off early Thursday lows as investors digested and approved the charter, although stocks remained subdued amid weak global markets and an uncertain world economy. Minerals Minister Phumzile Mlambo-Ngcuka said on Wednesday that although industry, government and unions had agreed on the final draft, they would fine-tune it over the next few months and implement it early next year. A version circulated on Thursday said stakeholders agreed that to pursue their targets, black participation would be increased beyond 26 percent "on a willing seller, willing buyer basis, and where the mining companies are not at risk". Gold -- Sharefin, 19:19:32 10/10/02 Thu Don't look to tech for leadership He is also bullish on gold stocks. "I think everything is suggesting that the gold commodity price is in a secular uptrend." He thinks the price of bullion, which closed yesterday at $319.60 (U.S.) an ounce, could stand at $340-$350 or even higher 12 months from now. Mr. Sehgal said the shares of the Vancouver-based gold mining concern are trading at a "huge discount" to where they should be, given their net asset value of $9 or $10 (U.S.) a share. He has a 12-month target of over $20 (Canadian) on the stock. Placer is close to gaining control of Australia's AurionGold Ltd., which will be "a huge asset" for Placer, he added. Furthermore, he said that given the consolidation taking place in the gold mining industry, Placer could be a takeover target.  Greg & Cobra -- kapex, 08:46:32 10/10/02 Thu The urge, or should I say the want is to have the pattern be one that you can say, "HEY!, it's and A-B-C so the correction is over." When in reality, the a-b-c could all just be an A wave finishing and the move up was a B wave that faked you out. The chart you posted Greg says that to me. You can clearly see that it went up in an a-b-c for a B. I know that it doesn't portend anything nice happening for the near future but it appears that it will be the case. Please read my thoughts on what the short interest means, or could mean at kitco on Wend the 9th begining at 13:30 or so. Re: large increase in short position of mining shares. Professional shorts discount gold -- Greg, 07:52:13 10/10/02 Thu Either these people know something to the effect that the FED, Treasury, IMF or other entity is about to announce a liquidation of their Gold Reserves, or it's just some sort of desperate attempt to reverse the gold market's psychology. In any case, one has to be pretty sure that the POG is going to tank to take on such positions. With the current geopolitical climate and economic uncertainty, this is one very dangerous bet. A panic short covering could be in the works anytime soon. Professional shorts discount gold Greg--Backatcha RE: 20:22:35 10/08/02 -- Cobra, 07:25:22 10/09/02 Wed The action on 10/08 appeared to be a "C" wave in the HUI, it has declined down as low as 108.37, or 30.46 of the 46.01 previous advance. 30.46 divided by 46.01 = 66%. It reversed just above the 200 day ma at 107.45 today. The ma is rising .25 cts a day.The whole sideways correction now looks like a complex series of A-B-C's and a Two wave in the making. As long as support's hold above 92.82, I still give the Bull the benefit and think a Huge Upmove may be coming, just as your great chart indicates, patience has been the key for a couple of years. ABX has Awful chart action and looks dreadful. Greg -- Sharefin, 01:10:42 10/09/02 Wed Here's the link you posted on the Short Interest in Gold Stocks Gold -- Sharefin, 23:12:04 10/08/02 Tue New mining charter and the controversial leaked version are like chalk and cheese BARRING any last minute glitches, a charter for the SA mining industry, presenting guidelines for empowerment and upliftment in the context of the new Minerals and Petroleum Resources Development Bill, will be approved at a cabinet meeting today . Gold -- Sharefin, 23:10:14 10/08/02 Tue Gold Fields, Three Banks Buy 40% of Sino Gold's Stock Gold Fields Ltd., the No. 4 gold producer, and three banks paid A$36 million ($20 million) for a 40 percent stake in China's first foreign gold miner Sino Gold Ltd. before an initial share sale next month. Gold Fields and Standard Bank Group Ltd. -- both based in South Africa -- and Australia's Colonial First State each acquired 2.7 million shares, or 10 percent of the company's capital, Sino Gold said. The World Bank's private investment arm International Finance Corp. agreed to a convertible loan of $5 million. Sino Gold is raising money to develop its second gold mine in China to treble output within three years. The investment gives Gold Fields production from China, one of the world's top gold- mining nations, just as it opens up to foreign investment. Sino Gold produces 100,000 ounces of gold a year from the Jianchaling mine. The company's second mine, Jinfeng, will produce 200,000 ounces a year, it said. Gold -- Sharefin, 23:06:45 10/08/02 Tue “He who ignores History is doomed to repeat it” - A re-look at Gold's history A present - formal role for Gold? So much has been written by so many competent nay, brilliant men about the role gold should play in the monetary system. A gold Standard? - not a gold Standard? - or a modified Standard? The assumption always being made that gold's re-entry to the system has to be within a clearly defined set of rules which will dominate its use and relationships with paper money and its controllers - governments. Unfortunately, because of this dominant set of restraints - Gold has frequently found itself clashing with Governments over their misuse of Paper! It is clear that there will be NO formal set of rules re-instituted to bring gold back to anything like its former role in the Monetary system. Just as the Currency markets are bound only by the national interests of each particular currency - so too - gold will be used to back currencies as each government sees fit to have it in support. Right now the average percentage of the world's nations Reserves stands at 11% with the larger key nations having considerably more gold in their reserves than this figure. Indeed the European Central Bank target reserves of Gold is 15%. There is no fixed formula for nations gold reserves. None are seriously foreseen on a world-wide basis. However, individual nations will - as it suits them handle their gold situation as their governments see fit to do so - without any reference to other nations. Certainly in a safe, secure and economically successful world gold need not have a role. The last twenty years testifies to that. The winds of change have begun to blow and the dark clouds of insecurity have gathered. A realistic - informal role for Gold! Unfortunately, the only way Gold can have a successful role is when its key qualities are allowed to reign. Most agree that these shine in stormy times of stress - breakdown - war. There is no doubt that a great number of highly competent observers have realised we are about to enter at least one - if not all three of these situations and that gold cannot lie dormant in the shadows of international finance for much longer. For gold to serve us well - we need to look back in history - to a time when gold was a successful, vital element in the world of money in the dark days of history . Indeed the use of gold in the time we are about to examine was perhaps the most effective, pragmatic demonstration of just how Gold should be used in the difficult days we foresee in the near future. Conclusions * Gold's role will increase seamlessly - as turbulence in Macro-economics increases and pressures on the Monetary system rise. * Individual nations will write their own rules for gold within their own nations. * They will follow the road of pragmatism in gold dealing such as India's use of gold in their International financial affairs * Official transactions such as seen between Brazil / Mexico and the I.M.F. will cease to be exceptions. * Gold cannot have an effective role in the World's Monetary system except at a significantly higher price. * The Washington Agreement was the key to an orderly market restructuring. * The I.M.F. and the B.I.S. will play a significant but unobtrusive role in gold's functioning in the Monetary system - as always. * New supplies of gold could well be managed to the producing countries benefit. * Gold will fit into the objectives of its Political masters - so it is hoped. However, their may be times when they attempt to quash gold again. A prime objective will be to ensure gold silently supports fiat currency and buttress the impression that they have a substantial gold backing. * Both Inflation and Deflation is good for gold as is war and any other tragic time of man's history. Gold -- Sharefin, 23:00:02 10/08/02 Tue Vietnam Liberalises Gold Market The next step after reducing quotas a week ago is to set up the country's first representative body for gold trading businesses in Vietnam. Hoang Dinh Ngu, chairman of the state-run Vietnam National Gems & Gold Corp, one of the largest gold processing and trading firms in Vietnam, told Reuters on Monday the body would represent more than 7,000 gold businesses in the country. It's planned to be helpful both for gold traders and for the central bank, the regulator of the gold market, as it will have an official line from the gold industry through the association instead of the central bank having to deal with individual claims. The first meeting this week will include representatives from about 70 to 80 traders from across the South-east Asian country. The congress would also discuss membership possibilities for the 14 foreign-invested enterprises in the country, which import about $50- $60 million worth of bullion gold annually and export the finished products. Vietnam produces less than two tonnes of gold per year and imports between 35-40 tonnes for local consumption. Vietnam's main gold export markets are France and Switzerland. Gold -- Sharefin, 22:56:30 10/08/02 Tue Russia Gaining Pace in Gold Production Race A record 150 tons of the precious metal were exported by commercial banks this year an increase of about 15% RUSSIA's commercial banks are dominating this year's gold dealings with domestic producers, while the state stockpile agency Gokhran has so far bought no gold at all the first time it has ever stayed out of the market altogether. Russian production of gold was the sixth largest in the world last year with 165 metric tons: well behind the leader, SA, with a total of 394 tons. The data provided by Gold Fields Mineral Services are 11 tons higher than official statistics issued by Gokhran, which estimated last year's Russian output at 154 tons. This year could see Russia moving into fifth position, ahead of China (173 tons last year), and challenging Indonesia (183 tons). Fiat -- Sharefin, 22:52:44 10/08/02 Tue Financial sector's stability alarms HSBC Europe's biggest bank, HSBC Holdings Plc, voiced worries yesterday about the stability of the financial sector, joining a chorus of concern about the impact of the market downturn on banks and insurers. "We do worry about systemic risk," Douglas Flint, chief financial officer, told a conference organized by investment bank Merrill Lynch. HSBC, Europe's largest bank by market value, stressed its own capital base and liquidity position remained strong, but voiced unease about large losses on other banks' loan books. "It's something we are concerned about because of its systemic implications," Mr. Flint said. He did not elaborate, but his comments come at a nervous time for the markets and could revive concerns that wobbles at one or more big banks or insurers could unsettle the entire industry because of the close links that knit it together. Germany's third-biggest listed bank Commerzbank AG was forced on Saturday to deny rumours of a liquidity crisis, after the Financial Times quoted a private e-mail to credit ratings agency Standard & Poor's querying its financial health. Gold -- Sharefin, 22:43:02 10/08/02 Tue Top analyst lowers gold forecast A leading global gold analyst has revised downwards his gold price forecast for the whole of calendar 2002 to an average US$310 an ounce due to the recent patterns in price performance suggesting positive market dynamics were being largely offset by negative factors. Associate director of metals and mining at Macquarie Bank in London, Kamal Naqvi, listed the positive influences on the gold price as producer dehedging, weak equity markets, low interest rates, industry consolidation, global security fears and high oil prices, which were currently being nullified, in varying degrees, by poor physical demand, the resilient US dollar, disinflation, supply surplus, potential for economic recovery and low contangoes. In Macquarie's latest gold market outlook from the bank's Commodities Forecaster report, Naqvi claims that despite the major drivers of gold price increases, such as producer dehedging, global macreconomic uncertainty and geopolitical (war) tension, there were few investors who felt the US dollar - another key indicator of the gold price - would depreciate much further from current levels or who imagined inflation would play a role, therefore weighing down the gold price. Few speculators believed “a 10-plus per cent fall (in the US dollar) is likely given both economic fundamentals and likely global central bank response to a potentially destabilising fall in the US dollar”, Naqvi contended. In addition, rising inflation, which traditionally has tended to underpin sustained rallies in the gold price, was missing in action. “Not only is inflation already at historically-low levels but the trend is for further disinflation, with even some fears of deflation,” he said. Shattered global, and especially US, equity markets have continued to support the gold price and gold equities in the past quarter, and have also kept the heat on the US dollar. “Should there be negative developments that result in even more stark equity market losses, then this could see gold challenge higher levels, but signs of economic recovery and of peace in the Middle East could see prices challenge the lower bounds,” he said. “Overall, we expect that gold will continue to trade, with occasional volatility, in a broad US$300-330/oz range.” As for supply-demand fundamentals, they can have only a negative bearing on the gold price. “Even leaving aside the fact that market-ready inventory (let alone other above-ground stock) is far too high for a physical supply/demand balance to have any impact on the gold price, gold bulls are still wrong to be optimistic about the impact of any physical market deficit,” Naqvi argued. Macquarie research points to a the market remaining in surplus out to at least 2006 based on steady mine production, debunking the mine output collapse theory, and an anticipated increase in central bank sales versus a gradual demand recovery. “Overall, we continue to see gold strongly supported in a US$305-325/oz range … given the real potential for further serious deterioration in either the global financial and/or geopolitical environment,” Naqvi predicted. “Do not be short gold.” Gold -- Sharefin, 22:39:08 10/08/02 Tue AngloGold CEO projects growth outlook for company Speaking at the Denver Mining Investment Forum conference today, AngloGold (NYSE:AU) CEO Bobby Godsell announced that the company was on track to produce 6 million ounces of gold in 2002 and that AngloGold was looking to increase production over the next three to four years to a possible 6 .5 million ounces as anticipated expansion projects came on stream. Godsell also indicated that the company's successful organic growth intiatives had the potential to increase AngloGold's total proven and probable reserve by as much as 20% by year-end. As part of this increase, he indicated that reserve increase on South African assets could be as high as 30% when reserves are restated at the end of the calendar year. Fiat -- Sharefin, 22:27:23 10/08/02 Tue Why J.P. Morgan Chase has the market panicked The complex instruments known as derivatives are meant to hedge risk. But they may raise the odds of a collapse at the storied bank -- and, say many, for the market as a whole. Could a failure at J.P. Morgan Chase crash the entire financial system? That's a scenario with credibility on Wall Street, which helps explain the recent trouncing of financial stocks. But the problem is that no one -- not me or any other market commentator, not the bulls or the bears, and not even the people on Wall Street who invented these financial tools -- can tell you what those odds are. Because with stock prices so low and corporate balance sheets so leveraged and damaged, we're in territory that the people who packaged these derivatives didn't consider as possibilities when they ran their tests to see how their strategies would behave. It's exactly at this point in a major market decline when unintended consequences are most likely to pop up. You need to understand this potential risk because the stock market is taking it seriously. The financial sector is under such heavy downward pressure lately because some investors feel there's another very big problem out there. And the most commonly mentioned problem is derivatives. Enormous market Exactly how big is the market for derivatives? The Bank for International Settlements puts the global over-the-counter market for derivatives at $110 trillion. The U.S. Comptroller of the Currency, the federal official in charge of tracking these markets in the United States, puts the notional value of derivatives held by U.S. commercial banks in insurance portfolios alone at around $50 trillion. That dwarfs the U.S. gross domestic product of $10.4 trillion. (Notional value is a figure that represents the amount used to determine the fees paid for the derivative. It isn't a measure of value at risk, the Comptroller notes.) Let's look at just this U.S. part of the global portfolio because it has some important peculiarities, according to the Comptroller's second quarter 2002 report. First, it's highly concentrated in the hands of just a few banks: seven banks hold 96% of derivatives. One bank, J.P. Morgan Chase, accounts for $26 trillion of derivatives all by itself. Second, the vast majority of these derivatives -- 85%, or $43 trillion -- represent interest rate contracts; they are designed to protect against the risk of interest rate changes. And, third, 90% or so were individually tailored to meet the needs of specific clients with specific risks, and the terms are anything but simple or standard. All these peculiarities are important, but let me start with concentration because that one puts the spotlight directly on J.P. Morgan Chase, the company that comes up most frequently when analysts conjure up a derivatives disaster scenario. Cobra - E-wave Analysis -- Greg, 20:22:35 10/08/02 Tue Glad that we see the same patterns and share the same counts! However, I guess our hopes for a series of 1-2 waves have just faded with today's HUI downside breakout, well below critical support. That leaves us with the only conclusion that the rally was a three and therefore either a second X wave or a plain B wave. Most likely, the correction becomes a huge 3-3-5 Flat and we are in the C wave. We may just have completed wave 1 of C targeting the 80-90's area - not a pretty thought unfortunately. Luckily, Wave 2 up should soon be on it's way and retrace part of Wave 1 down. But guess what...There is still some sort of hope for the short-term! As of today, one can count 5 waves down from the latest top. These 5 waves could have completed the ENTIRE C Wave if we are in some odd type of Running Flat. Support for this thesis can be found because we have just tested the HUI's 200 day Moving Average and that the RSI is just about as oversold as it was at July's bottom. Running Flats, specially those with a weak B wave are a rare species BUT take a look at the evolution of short interest in gold stocks (just took the data from tonight's Metropole Cafe's comment). 
Well, nothing quite certain at this point so all we can do is wait and see but if worse comes to worse, November might provide the greatest buying opportunity for Gold Stocks. Magnetic sterling silver -RIP -- Galearis, 12:05:57 10/08/02 Tue Recently my hard drive crashed and I would have posted here sooner. The magnetic sterling jewellery question would seem to be explained. I can now, with permission, post some emails I received from the Nickel Development Institute on the subject. This may put to rest any kernels of disbelief out there about this. He graciously gave me permission to post his emails on this forum: ***snip One of our fellows here, Bruce McKean., took this issue further , and it ended up with the Competition Bureau. The results: "My message to JVC Canada was forwarded to the Competition Bureau, Industry Canada. The Competition Bureau is responsible for trademarks and precious metal claims. They contacted me this morning. They were aware of the issue and have tested one suspected article: a light sterling silver link chain. Although the nickel content was almost 2% (and was weakly magnetic), it was deemed acceptable. The explanation they advanced - and it seems reasonable - is that the light chain is plated with nickel and then is given a top-coat of rhodium. This is done to prevent tarnishing of the sterling silver but also, I suppose, imparts a certain look to the product. We agreed that any further inquiries on this topic could be refered to the Competition Bureau through their website (www.competition.ic.gc.ca) or their consumer hot line (1-800-348-5358). Regarding the United States market, I received a short and cryptic message from JVC USA saying that they were aware of the issue and were dealing with it." The nickel plating will be respond to a magnet, whereas only a small amount of nickel in silver would not. Gary Gary Coates Technical Director Nickel Development Institute Toronto, Canada e-mail: gcoates@nidi.org website: http://www.nidi.org *****unsnip AND: ***snip You are quite right about the potential health issue if and when the rhodium wears off either by wear in use or by abrasion or perhaps cleaning. In conjunction with the European Nickel directive aimed at jewelry, there is a wear test for coatings, after which the nickel release rate is measured. Because of the complexity of the issue with coatings of all types on top of nickel, NiDI has neither a position for or against coatings, other than they should meet the applicable specifications and be safe for the consumers. NiDI has taken the position that all countries should adopt some sort of consumer protection (either through legislation or voluntary industry standards) to safeguard consumers against direct and continuous contact with nickel. Feel free to quote part of our correspondence, either with attribution to NiDI or specifically to Bruce McKean or myself. Regarding nickel contact dermatitis, you may also want to point people directly to our website e.g. http://www.nidi.org/index.cfm/ci_id/208/la_id/1.htm Take care Gary ***unsnip R.I.P. I received a less detailed communication from the Competition Bureau, but the message is the same. Although this seems to end the story, there is still a health concern question to which the NiDi people will be watching carefully. There are also many headaches to come with retailers of used jewellery and small recyclers who will be rejecting some of these items because they are magnetic. But this would not be a concern of the manufacturers. Best regards, Galearis Fiat -- Sharefin, 02:37:38 10/08/02 Tue Market carnage hits $8.4 trillion The Dow Jones industrial average, Standard & Poor's 500 and Nasdaq composite are now at their most depressed levels in half a decade. The slide has brought total bear market losses to $8.4 trillion, Wilshire Associates says. Last week, investors could find some solace in the fact that the S&P, considered the broadest market gauge of the three indexes, had not set a bear market low. But Monday, the S&P hit a fresh low in unison with the Dow and Nasdaq, leaving it at a level not seen since April 1997. The bear market is now close to becoming the USA's worst ever. Behind the slide: * Non-stop destruction. Investors who thought the market would have to recover after $4.5 trillion in value disappeared through 2001 have had their confidence crushed as they watched an additional $3.9 trillion get wiped out so far this year. * Aggressive selling by large investors. Big mutual funds are selling into the rallies to make sure they have enough cash to handle redemptions, says Ed Wedbush, CEO of brokerage Wedbush Morgan. The swings are amplified by computerized trading - which triggers selling or buying when stocks hit preset levels, he says. Up to half of the New York Stock Exchange's trades are coming from automated programs vs. the typical 20%, he says. * Bad earnings news. There have been 30% more earnings warnings this quarter than last. * No panic. Investors are less fearful than they were when the market last bottomed, according to the Chicago Board Options Exchange volatility index. That's bad because rather than getting the slide over with a crash, the declines are gradual and constant, says Todd Salamone of Schaeffer's Investment Research. "There are still more bulls than bears," he says. Gold -- Sharefin, 02:29:10 10/08/02 Tue Asset models require radical surgery Many dismiss cash, gold, commodities, silver "We are either going to inflate out or deflation will (persist)," says Michael A. Berry, a former professor of quantitative analysis who favors radical shifts in asset allocation for ordinary investors. "The U.S. equity market is, by historic standards, still significantly overvalued even with the declines in the spring and summer of 2002. It is still replete with the psychology of hope each time a bear rally occurs." In real life October 2002, this means most Americans, snow-stormed by a decades-long rush into stocks, have "forgotten to diversify, forgotten asset allocation, forgotten that markets always revert to their mean value," says Berry. Wall Street doesn't make life any easier. The big banks and brokerages routinely ignore gold, silver and agricultural commodities in their asset allocation models. "Gold has been such an under-performing asset class for so long (last 20 years) that it has been forgotten," says Kevin Lane at Technimentals Research in New York. "Not to mention not too many gold and silver companies pay banking fees." In these days of double-dealing Wall Street banks, there is no business reason for a J.P. Morgan or a Goldman Sachs to advertise gold in their portfolio models. Greg---Your HUI Chart -- Cobra, 11:52:07 10/07/02 Mon Great work on the HUI chart, you have the same count that I do, today, Monday, 10/07/02 HUI has came right down to the 50% retracement area, I'm labeling the rally since 92.82 as a one--two---one--two.....the next move Could be the Big one. We have gone from 92.82 up to 138.83...50% pullback area is 115.82, this may be the bottom, Gold is holding Strong here. Gold -- Sharefin, 08:48:07 10/07/02 Mon Bull Market Gains Momentum So far, so good. The steps are in place and the next important hurdle for gold is breaking clearly above $325. Once that happens, a more bullish phase of the bull market will begin. This level is very important because it's the 1999 high. Since 1980 the only decent gold rises, in 1985-87 and 1993-96, failed to rise above the previous peak. This means if $325 is clearly broken, it'll be the first time since 1980 that gold has risen higher than the previous peak. This is the next important step and gold is currently close to that level. Gold will gain bullish momentum above this level, and it could then easily jump to $340 as the next medium-term target before the current A rise is over. If the A rise accomplishes this, then the major bull market will be strong and well on its way as the steps continue to fall into place.  HUI - Long Term Chart and Analysis -- Greg, 07:32:47 10/07/02 Mon To follow up on yesterday's comments, here is a chart for my long-term analysis of the the HUI index (Thanks Sharefin for storing it on your server): HUI Ewave Count One can clearly see that July's low fell on an important long-term support trendline and that the retracement was a perfect Fibonacci 0,618 from November 2001's rally. Such retracement is more typical of a 2nd wave than a fourth wave, allowing us to speculate that the next wave up (which may already have begun), should be a third of a third. Such wave would validate the hypothetical reverse Head & Shoulders pattern on an upside breakout of 160 and target the 270 area. With Fibonacci, a third wave is typically 1,618 times Wave 1. This targets the 245 area. So here we are with a possible scenario that could be validated with both Elliott and Dow analysis. As mentioned, this does not imply that July's correction is complete since a break of 111.84 would strongly suggest that the correction is still in force and becoming more complex towards a new low. Also, always keep in mind that TA is NOT a perfect science and only hints at the probabilities for a move to occur. The market tends to come up with surprises so expect the unexpected to occur. Any comments - questions welcome!  Gold -- Sharefin, 22:42:42 10/06/02 Sun Gold breaking out in Canadian Dollars  Gold breaking out in Aussie Dollars  Periodic Ponzi Update PPU -- $hifty, 21:57:29 10/06/02 Sun Periodic Ponzi Update PPU Periodic Ponzi Update PPU Nasdaq 1,139.90 + Dow 7,528.40 = 8,668.30 divide by 2 = 4,334.15 Ponzi Down 116.15 from last week! 4,334.15 Ponzi is a New All Time Low ! Also this was the 6th consecutive week down. We haven't see 7 weeks down YET ! If it continues to slide this week it would also be a new record . Thanks for the link RossL Go GATA Go Gold $hifty ChartsRus -- Sharefin, 19:28:33 10/06/02 Sun Poised to tumble? Global Sharemarket Indices Global SM Sentiment ChartsRus -- Sharefin, 19:27:13 10/06/02 Sun Gold Fibo charts Gold ready to blast off.  Gold -- Sharefin, 19:23:37 10/06/02 Sun Gold attracting general funds TIM WOOD: You know, Stewart, it's interesting - there was a week separating the New York Institutional Gold Conference, which is a bit of a misnomer because it was far more focused on the retail gold investors, and that was incredibly bullish. You had lots of people talking about gold soaring to many thousands of dollars. The mood in Denver was a lot more circumspect, but nevertheless there is an overriding sense that the market has turned very much for the better and that we are going to see a steady increase in the gold price. And I guess the consensus target that I came away with from the analysts and a lot of the fund managers is that they're targeting $340, to $350 to $360 in the next two to five years. TIM WOOD: Yes, there is. It goes back to the period from 1969 to 1980, as well as the Great Depression. We see the bubble that we've come out of, we're seeing the graphs all slope back at that point where there is great potential for the Dow and the gold price to cross over again. Now, whether it will be Dow at 4,000 and the gold price at $4,000 an ounce is another story, but I guess that $1,000 an ounce is not improbable. But the good news Stewart, is John Hathaway has agreed to talk directly to the Classic Business audience and he should be on air on Wednesday evening, so he'll be able to tell you a lot more in his own words. It really is a fascinating story and he's put a lot of research into it. MINEWEB: Like you say, good news for gold bugs if John Hathaway's theory actually comes into being. Seeing a gold price above $1,000 an ounce? The previous record was close on $850. The gold bugs will certainly be celebrating when that day comes along. ------ I am amazed to see the slip of tongue from Tim Woods. Fancy him saying "But I guess that $1,000 an ounce is not improbable" That has to be the quote of the week. Fiat -- Sharefin, 19:12:38 10/06/02 Sun Global crash fears as German bank sinks Stockbrokers around the world are braced for a potentially calamitous week as alarm mounts over a looming, Thirties-style global financial crisis. A leaked email about the credit-worthiness of Commerzbank, Germany's third largest bank, yesterday increased fears of the international stock market malaise exploding into a fully-fledged banking crisis. Commerzbank lost a quarter of its value last week, raising the spectre of Credit-anstalt, the Austrian bank that collapsed in 1931, sparking global depression. US stock markets have fallen for six consecutive weeks, to their lowest levels in five years. European markets have collapsed even further, wiping out nearly half of the value of European corpora tions in this year alone. Japan is struggling to put together a plan to save its banking system, riddled with bad debt after a decade of recession and falling prices. Now the German economy threatens to follow. 'There are strong parallels to the Thirties after an unsustainable "new era" boom,' says Avinash Persaud managing director for economics and research at State Street Bank. 'Then, the stock market decline was not just steep, it was long, taking three years to reach the bottom.' RE.: Gold Market's Elliott Wave Pattern -- Greg (a technical analyst and goldbug), 14:30:49 10/06/02 Sun I truly enjoy reading this forum and many of the great articles that are posted so I thought it would be time for me to make my own contribution...thanks Sharefin for sharing all this great info. Truth of the matter is EWI's most recent analyses consider gold's Elliott Wave Pattern to be ambiguous since this spring's top. Even though they tend to be bearishly inclined, they can't seem to "guarantee" a bearish scenario is actually unfolding for Gold, eventhough they remain bearish on the basis of the XAU. I think they should consider studying the HUI since it's Elliott wave pattern appears a lot clearer for the Gold Market. I personnally believe that the patterns, both for gold and the HUI, are in fact corrective and that july's low marked the completion of a double-zig-zag (A-B-C-X-A-B-C). Many major stocks such as MDG and GLG have made new highs since july's bottom eliminating outright the fully bearish case, since a second wave cannot retrace more than 100% of the first wave. The 3rd wave down scenario must therefore be entirely rejected. There is a high probability that the rally since july's bottom is actually a series of 1's and 2's, suggesting that once this present correction is over (and this could be very close at hand), wave 3 of 3 up would be on it's way carrying the HUI and Gold significantly above this spring's highs. Conventional technical analysis also suggests that a huge Reverse Head & Shoulders pattern may be completing since early november 1997 on the HUI. Should the 160 level be broken on the upside, the pattern would be validated and would point to a medium/long term target of 270 (a perfect scenario for a wave 3 of 3)!!! However, for the short-term, and although I do not truly believe this scenario will unfold, we must watch very closely the HUI for a downside break of 111.84. This would suggest that the latest rally may in fact have been an additional three wave X wave. In this case, the entire correction since this spring's high would unfold into a rare triple-zig-zag pointing towards a new low, possibly for late november and targeting the 80's area. Happily for us goldbugs, quatruple zig-zags do not exist, so such hypothetical low should be final for quite some time! Wish I could post some graphics of my analysis, however, I do not have a site to upload them unto... Gold -- Sharefin, 08:10:25 10/06/02 Sun As good as gold SOUTH Africa's only two pure gold funds - Old Mutual Gold and Standard Bank Gold - trounced the rest of the field in the year to September, delivering returns in excess of 120%. Over one year, gold and resources walked away with the performance Oscars, occupying the top 11 spots and delivering returns in excess of 47%. The JSE Gold index shot up 142% over the year to September on a 10% rise in the dollar metal price and a 26% rise in the rand/gold price. Reserve Bank selling of gold is more predictable than in years past, global production of gold is declining at a time when demand is rising, and gold mines are unwinding hedge positions (which has the effect of reducing supply to the market). Given the deteriorating US economy, the dollar is no longer a safe-haven currency. All this is positive for gold, says Tunnington. Manager of Liberty Resources Ian Woodley says resources stocks were devastated by the leaked black mining charter, which called for 50% black ownership of new mining ventures. It sent chills down the backs of foreign investors, who now own more than half of SA's top resources shares. "The macro-economic environment has not been conducive to strong share price performance this year. On a 12-month view we're cautiously optimistic. Gold -- Sharefin, 06:48:52 10/06/02 Sun Wallpaper charts  RE: The Earlier Post "The Bear Case for Gold" -- Cobra, 18:57:59 10/05/02 Sat Re: Msg @ 1.26.32----10-02-02 Funny how Elliott Wave TA's can look at a chart and see completely different counts. I think Gold is on the verge of a break-out above $330 and has entered a 3rd wave from the July low's. The July sell-off was not a 5 wave count, it was a 3 wave A-B-C, hourly,daily,weekly,monthly,and quarterly. Expect Up-side fireworks at Any time and New high's for Gold. That's my story and I'm sticking to it. Gold -- Sharefin, 16:58:53 10/05/02 Sat Jim Sinclair And Thebulliondesk.com Lock Horns Over Gold's Future Jim Sinclair, currently chairman of Canadian listed Tan Range Exploration which has a portfolio of highly prospective projects in Tanzania and before that chairman of Sutton Resources which sold out to Barrick for US$325 million a couple of years ago based on its discovery of the world class Bulyanhulu gold deposit in that same country, is a man unafraid to give his opinion on gold. In some places he has been given the title ‘Mr Gold' which is not altogether surprising as he has never been just an explorer. Before joining Sutton he was an international commodity expert and had headed one of the largest precious metals trading firms on Wall Street. At a time when a lot of people are starting to worry why gold is not performing better, given the political and economic background, he still clings to his opinion that the price will go up. Just for the record, Sinclair is said to have made US$15 million back in 1980 by selling gold when it hit a high of US$887.50. He then predicted it would languish in a 15-year slump, but is at pains to point out that his decision was not based on fear or psychology, but on a series of measuring sticks. “The only reason to invest in gold is that there are five market fundamentals," says Sinclair. These include: 1. The U.S. current account (the broadest measure of the economy's competitiveness with the world) must be in deficit and growing ever larger. The U.S. current account deficit is 4.5 percent of the gross domestic product. Markets traditionally become nervous about the deficit when it hits 5 percent. 2. The U.S. dollar must have hit a high and be on a downward trend. 3. The prices of general commodities must be going up. 4. Confidence in paper assets must be falling. 5. The bond market must have hit a high and be on the way down. Sinclair said in an interview with Miami.com that all five conditions must be in place to be assured of a bull market for gold. "Of the five requisites, four are there," Sinclair said, noting that the only one still absent is falling bond prices. At this point Minews would like to make the point that there is not too much evidence that commodity prices are going up either, and for good reason as Rob Davies has been pointing out in his weekly commodity articles. Sinclair then goes on to claim that the gold market has changed from earlier times as big banks and to a lesser extent mining companies have large derivative positions in gold. Mining companies routinely sell unmined metal forward at fixed prices to protect themselves against further price drops and banks have huge gold derivatives, ranging from deferred-sales contracts to hedged instruments, swaps and futures-linked devices that were devised during the 1990s to generate extra income while gold prices descended. Basically this leaves them short of gold and, as Sinclair points out, this should stimulate them to run for cover whenever the gold price rises. This should accelerate the upward movement, but for some weird and wonderful reason it does not seem to be doing so. Ross Norman of Thebulliondesk.com has tried to analyse why gold is not moving in the direction everyone seems to expect and comes to the conclusion that the gold market itself has failed to attract the attention of the investment community - and this despite the fact that leading investment advisers such as Ewan Cameron-Watt, the chief strategist at Merrill Lynch Investment managers, has recommended that institutions shift 5 per cent of their risk positions into gold related assets. ---- Seems to me that Norm is looking at today whilst Jim is looking to tomorrow. Gold -- Sharefin, 16:54:45 10/05/02 Sat Gold Flat, Eyeing Equities Dealers said that as no clear signal came from the data with regard to the health of the economy, most players were content to remain seated on their hands for the time being and await further clues and hints down the road. However, the equity indexes showed signs of leaning lower as the session progressed, which offered some uplift to Dec gold. Any further stock market slippage is seen as increasingly supportive for gold prices over the coming days. That said, with the speculative community already hosting a hefty net long position in gold futures of over 42,000 contracts, little in the way of fresh speculative buying interest is expected while prices remain off recent lows but within the recent $320-$330 range. In addition, bank selling is widely expected on the approach to the recent resistance area of $329-$330 which is expected to be viewed as an additional deterrent to fund buyers up around current levels. "There's a feeling from the funds that there's not much to be gained by adding to their long positions around here if the resistance around $330 is going to hold again. Only if $330 breaks do I think the funds will buy aggressively again - and more of them," said a floor dealer with a precious metals trader and refiner. Gold -- Sharefin, 16:52:43 10/05/02 Sat Minerals Bill signed into law President Thabo Mbeki has signed the Minerals and Petroleum Development Bill into law. At a press conference in Pretoria, Mbeki disclosed that a charter on empowerment in the mining industry had been completed. The charter would be ratified by both the Chamber of Mines and the Cabinet next week and then released to the public either Wednesday or Thursday, he said. The completion of the charter is likely to restore some of the damage done to South Africa's reputation as an investment destination after a draft charter came to light earlier this year. It proposed black business own up to 30% of the country's existing mining industry and 51% of new operations within 10 years. Mbeki said the mining charter to be released next week dealt with a number of issues: human resources development, employment equity, migrant labour, housing conditions for miners, procurement, ownership and beneficiation. - At the same conference, Minerals and Energy Minister Phumzile Mlambo-Ngcuka said the government was looking to complete the Money Bill, which deals with mining royalties, by the end of 2002. Foat -- Sharefin, 16:40:37 10/05/02 Sat J.P. Morgan set to fire 4,000 bankers J.P. Morgan Chase & Co, the second-largest U.S. banking company, is set to fire 4,000 of its 20,000 investment bankers later this month, according to a published report. The cuts will be made across the bank including its divisions handling mergers and acquisitions and equity and debt underwriting, a Bloomberg News article said on Friday. A J.P. Morgan spokeswoman declined to comment on the report. The company indicated last month, however, that it might have to cut jobs, as it wrestles with steep loan defaults by cable and telecommunications firms as well as wrong trading bets. Last month, J.P. Morgan warned that its third-quarter earnings would be well below their second-quarter level due to weak trading results and bad loans to telecommunications and cable firms. J.P. Morgan, along with other investment banks, has been stung by the slack economy and weak markets, after a boom in initial public offerings and mergers and acquisitions fueled bank expansion during the late 1990s. In addition, J.P. Morgan has been tarred by financings it set up for bankrupt energy trader Enron Corp, as well as losses in Argentina. Its shares fell $1.08, or more than 6 percent, to close at $16.54 in Friday trading on the New York Stock Exchange, its lowest level since 1995. Its shares are off 54 percent this year. Gold -- Sharefin, 16:35:43 10/05/02 Sat Godsell upbeat at gold week in Denver Although AngloGold still insisted as recently as the beginning of last month that Newcrest was too expensive, analysts are again talking of a possible AngloGold bid for the Australian company. From the far side -- Sharefin, 18:56:29 10/04/02 Fri Jim (and John) on Bonds (Falcor_III) Oct 04, 17:28 Jim Sinclair and John Crudele that is. Jim Sinclair: The 5th Element Shows Signs of Emergence By James Sinclair As you know from my various postings, I have been focused in on the US dollar and the US Treasury Bond Market, looking for any sign that non-US holders of US Treasury Securities were becoming concerned over their profits being eroded by lower dollar levels. Well, today was the first sign of that possibility as the stock market declined significantly in the first five hours of trading. Surprisingly, when the market was off considerably and showing no sign of recovery, the long-term US Treasury Bond Market was also in a decline. This is the first break in the multiyear profile of this market, which has been rising in tandem with every significant stock market sell-off. Today, US Treasury bonds, rather than rising, were falling as the stock market marched towards a Dow at minus 300. What makes me focus on this phenomena was that there are rumors that the Exchange Stabilization Fund entered into the US dollar Forex cash markets to support the dollar as the Dow went minus 200. I am therefore of the mind that this reaction from Washington was a reaction to the beginning of a liquidation of US Treasury Bonds by non-US holders. We shall see? However, all efforts to stop a dollar decline here except in the shortest-term are a waste of time & money because of the concomitant events of US Budget Deficit - US Trade Deficit - US Current Account Deficit and the dollar reaction. The bonds did rally on the rally in the US dollar as did the stock market. Regardless, today, Friday, October 4th, should be noted as the first time the bond market fell out of its inverse relationship with the stock market since March of 2000. That would be right on time if I am to be correct in my assumption that the 5th Element necessary for the fundamental conclusion that we are in a long-term gold bull market was to fall into the equation, which is a top in the bond market before the end of November 2002. Of course, I put out an exploratory short again on the 30-year bond with a 32/32 stop loss. And John Crudele in the NY Post comments: "Bonds get hurt. Stocks slide. It's only a matter of time before those dots are connected. " John Crudele Fiat -- Sharefin, 18:53:47 10/04/02 Fri Merrill e-mail sparks European bank fears A damaging seven-line e-mail from Merrill Lynch, the investment bank, on Friday stoked fears of financial difficulties at Commerzbank, one of Europe's largest banks. The e-mail added to the market's already heightened sense of anxiety about the health of Europe's banking sector, with analysts anxious about the stress levels in the financial system. "Again the market is flooded with rumours that Commerzbank, amongst all its other problems, has sustained large trading losses in credit derivatives," wrote Maria Anastase, a member of Merrill's corporate credit department. The e-mail was sent to the Standard & Poor's credit rating agency, with Merrill asking for a comment "as to the validity of this and the likely impact to the bank's health". It went on: "Apparently, a number of banks have begun to shut down credit lines." It is not known how, or whether, S&P replied to the e-mail. Separately, the Fitch rating agency revised its outlook on the bank to negative from stable. Details of Merrill's e-mail quickly filtered into the London and Frankfurt markets and Commerzbank's share price fell 6 per cent to €6.02. Credit default swaps on the bank traded above 200 basis points - a level that prices the German bank out of the market. Guido Versondert, credit analyst at Barclays Capital, said: "Everyone is so on edge that they're prepared to believe the worst and . . . this is affecting equity and credit markets." Speaking to the Financial Times, Mehmet Dalman, head of investment banking at Commerzbank and group board member, said: "I don't see why we should be going bust." He said the bank's credit derivatives business was profitable and that the bank had no plans to raise fresh capital in the markets. Paul Roy, co-president of global markets and investment banking at Merrill, said the e-mail was not a piece of research but merely "part of the normal process of inquiry that any firm's credit department would make". He added that Merrill continued to do business with Commerzbank as normal. Concluding a brutal week for bank shares, others in the sector suffered from widespread investor fears about credit ratings, bad loans and the possibility that lower interest rates would erode profit margins. US banks fell sharply after profit warnings on Wednesday from the Bank of New York and Comerica. For the week, Comerica was down 24 per cent and Bank of New York 22 per cent. Deutsche Bank shares dropped 6.3 per cent to €42.17. French banks were similarly hit, and Credit Suisse dropped another 9.5 per cent to SFr9.54. German insurer Allianz fell almost 8 per cent to €79.65 after JP Morgan cut its full-year forecasts for both dividend and net profits to zero because of a further rise in loan loss provisions at Dresdner Bank and lower revenues from investment bank, Dresdner Kleinwort Wasserstein. The damaging email Fiat -- Sharefin, 08:49:50 10/04/02 Fri Treasuries Lower on Better Equity News Treasuries at the short and long end of the curve posted losses, thereby lifting yields, which had been trading near record lows in recent weeks. The benchmark 10-year note edged lower but remained within Thursday's range. Treasuries got a leg up overnight with help from large swings in European share prices with the FTSE share index leaping six percent at one stage only to lose almost all the gains in a wild 20 minutes of trading. The volatility left some investors reluctant to trade. Meanwhile, rumors of terror and security scares swirled in the U.S. market Friday morning, but none could be confirmed. The talk offered yet more reason for investors to stand aside. Treasuries took a hit overnight in sympathy with Japanese government bonds which plunged after a government bond sale in Tokyo was undersubscribed for the first time ever. The shortfall reflects investor concerns about the Bank of Japan's plan to buy stocks from Japanese banks and sent JGB yields surging to 1.285 percent from near 1.00 percent earlier this week. All of which stirred speculation among traders in the U.S. that Japanese investors might have to take profits on their U.S. assets to cover losses suffered on JGB holdings, particularly as the first half of the fiscal year will close in only a couple of weeks. Gold -- Sharefin, 21:05:23 10/03/02 Thu AngloGold plans to to raise output and reserves South African gold mining giant AngloGold Ltd said on Thursday it hoped to increase annual output to 6,5-million ounces over the next three to four years as expansion projects came on stream. Chief Executive Bobby Godsell also said organic growth initiatives may increase AngloGold's total proven and probable reserves by as much as 20% by the end of the year. As part of this increase, the reserve increase on South African assets could be as high as 30% when reserves are restated at the end of the calendar year, he said.  Fiat -- Sharefin, 21:02:47 10/03/02 Thu At Enron, turning dross into gold The criminal complaint filed Wednesday against Enron's former chief financial officer lays bare an ugly truth about what was once the seventh-largest U.S. corporation. During the years it was celebrated for its ingenuity, Enron Corp. was fundamentally mismanaged, entering into absurd business deals that could be hidden from the marketplace only by manipulations the government now says were crimes. ~~~ But in the end, Enron and its executives were given a harsh lesson in the realities of market discipline. By failing to promptly take their medicine for the mistakes they had committed over the years, the executives allowed Enron's business problems to build up. Then, last year, when errors discovered in the partnerships required certain of them to be moved back onto Enron's books, the marketplace suddenly saw years of bad business and mismanagement emerge. In response, the market exerted some four years' worth of discipline onto Enron, all in a matter of days. Within weeks, the company was bankrupt. ------ Wait till they peel back the layers on JPM Gold -- Sharefin, 20:56:39 10/03/02 Thu Hedging Deflation - In Gold We Trust A subscriber writes: "You've mentioned deflation a number of times in your newsletter, but at no point have you told us how the average investor should prepare for this period. For example, what asset classes one should concentrate on to prevent major damage to a portfolio. Gold? Sincerely, Nigel." Nigel, I've written on this topic in the newsletter and in the column I freelanced for years to the Sunday San Francisco Examiner column, but perhaps it's time to revisit it for the benefit of those who have subscribed only recently. First, let me say there is no easy way to profit from a deflation; it will be challenging enough simply to preserve one's capital on the way down. Many otherwise sage bargain-hunters are destined to lose their shirts as they try to bottom-fish a decline whose depths, it must be assumed, lie almost beyond the bearish imagination. My guess is that even the geniuses will need luck to come through it with 50% of their current assets intact. Among asset categories, the biggest losers will necessarily be stocks and residential real estate; but making money on falling stocks is relatively risky, and making money on collapsing home prices next to impossible. I brainstormed the latter scenario with Howard Hill, an expert's expert on mortgage markets, but we failed to come up with a promising game plan. Let me say that if an intergalactic financial genius like Howard Hill cannot come up with a good way to "short" the housing market, there is probably no way to do it. I expect a decade of deflation, and this one is likely to be far trickier for investors to navigate than deflations of the past, since it will be the first to run its course with the backdrop of a bogus global money system. The dollar and most European currencies were sound when the U.S. entered the 1930s deflation, and this helped to stabilize their economies, albeit it at a moribund pace. This time, however, with hollowed-out money all but universal, and a relative dearth of hard collateral to settle debts, there is no predicting how deflation will play out. But it is an unassailable fact that the dollar, the euro, the yen and pound sterling have been rendered intrinsically worthless by a vast infusion of credit money from the world's central banks. Which is to say, money is no longer "money," but rather a form of debt -- an IOU from the respective governments that printed it. $100 Equals $1 If the logic of this statement seems obscure, try pondering one of its implications: The $100 bill in your wallet is intrinsically worth no more than the $1 bill next to it. The conceptual basis for this assertion may be difficult to grasp right now, but you must trust that it is fundamentally true. The logic will be easier to understand, I am sure, when all forms of debt begin to implode. In such circumstances, it will become apparent that even the U.S. government is insolvent and unable to pay its debts. Facing default, there will be just two possible avenues of escape: hyperinflation, or deflation. Hyperinflation would have the effect of reducing the real burden of debt, but it would also destroy savers as a class. Imagine being able to pay off your mortgage with the $10,000 bills you'd be carrying in your wallet at that time to buy groceries. That might sound appealing, but consider the other side of the equation: Every mortgage lender in the country would be in bankruptcy, bond markets and all other lending agents and institutions would have ceased to function, and the stock of Fannie Mae, whose bankruptcy would dwarf the total of all others up to that point, would be trading in reorganization at two cents per share. The other escape route would be deflation -- essentially, allowing bankruptcies to take their course, with no help to debtors from cheapened dollars. This would crush debtors, lay waste to tens of thousands of businesses and wipe vast assets from the balance sheets of lenders. But it would have the virtue of leaving our financial institutions -- the banks and bond markets most significant among them -- more or less intact. In Gold We Trust So how to secure one's nest egg against the gathering storm? A good rule of thumb is to make safety a paramount concern, sticking with low-yielding but relatively safe Treasury paper that matures in 2-5 years. Some have suggested German bonds, in part to hedge the dollar's fall, but I believe euroland's statist, fiat economies will be in worse shape than ours once there is no U.S. consumer to lean on. As a corollary, I think that the dollar's impending collapse will be relative to gold rather than to other currencies. Because euros, yen and sterling are worthless, there will be no discriminating as to degrees of worthlessness. Real estate investments should not be ruled out, although the only winners will be companies with rock-solid tenants and positive cash flow. Speaking of cash flow, the ideal investment in a deflation might be a casino. Not Bellagio, Mirage or some other bloated Shangri-La that needs to attract billionaire baccarat players to make money, but a grind joint with ten thousand slot machines and a huge parking lot for buses. In the end, though, there is only one investment that qualifies as an absolute no-brainer. In a world whose currencies have been gutted and hollowed to the core, that investment is gold: coins, ingots, mining shares and all other forms of the asset that until recently had been shunned for more than two decades. Gold -- Sharefin, 20:50:31 10/03/02 Thu Gold tries again but some caution still warranted - pdf file Although gold showed some signs of life when stock markets and/or the USD were particularly weak, it lost much momentum in June-August. Indeed, at worst, prices in both EUR and JPY terms slumped almost back to where they began 2002, USD prices lost half their gains to early June, and the USD average price will be up only marginally in Q3. More recently, prices have rebounded on a new factor, the risk of war in Iraq, but it is still be worth reiterating the reasons for caution we expressed last time. Physical fundamentals still less than persuasive Although firm figures are not available as we write, we can be fairly confident that, as in Q1, jewellery and industrial demand was poor in Q2. Jewellery's price sensitivity has been a key factor but we believe the sector is structurally weak too. It was never a given that the surge in Japanese bar hoarding of Q1 2002 would be repeated and recent signs of back-tracking by the government over dropping bank deposit guarantees makes this less likely for early 2003. With prices having been above USD 300/oz for six months now, scrap supply is likely to have leapt ahead and the contention of some that gold mine output would soon drop sharply looks less and less plausible. Throughout this year, big central bank sales have quietly continued and the probability of even greater disposals after September 2004 has grown. The hedging story positive though becoming less so By no means all fundamental developments this year have been negative, however. Perhaps the most consistently supportive influence on the gold price has been producer action to cut hedge positions. More trimming has been seen of late and further moves to reduce the size of the global hedge book are probable in the coming months. Moreover, the prospect of interest rates staying exceptionally low for longer than previously expected should ensure that the price contango remains narrow, thereby keeping producer forward selling (and indeed short selling) relatively unattractive well into next year. Yet we suspect there may be less scope for hedge buy-backs than in H1 2002 and we still think it unlikely that hedging will be abandoned altogether. Renewed safe-haven price gains probable A major factor in the stalling of the gold bull market was undoubtedly the broad stabilising of the USD, contrary to widespread expectations, after its earlier big losses. If, as we expect, the currency regains some of it poise in the months ahead, gold could well slip again. However, the USD does appear to have lost its lustre and some of its safe-haven status, which suggests that gold instead could, as in H1 2002, benefit from fresh political, economic and financial turbulence, for which there is ample scope. But they may not last Drawing together all the above influences, we are still inclined not to take a strong stance in either direction on the gold price. Further upward spikes are possible, perhaps even probable as the ‘war premium' increases, and we do not expect slippage towards the lows of recent years thereafter, but the indifferent physical fundamentals and any strengthening of the USD could weigh on the metal next year. Our forecast price averages are unchanged, although the risks remain predominantly on the upside. Gold -- Sharefin, 20:45:07 10/03/02 Thu Gold's information gap Absolute garbage and nonsense!!!!! Well, OK Tim: If "who's right matters", then who's right? Fiat -- Sharefin, 20:36:00 10/03/02 Thu Knock, Knock, Knockin' on Heaven's Door Lenny's Corner -- Sharefin, 20:19:59 10/03/02 Thu GENERAL COMMENTS The past two days of market action has indeed proven that the gold market is now seeking its price direction from the equities markets, in almost a perfect negative correlation. As the stock market in the USA floundered on Monday, gold prices had a sharp rally to test technical resistance levels at the $325 or better level. On Tuesday, as the DJIA rose in excess of 4%, gold prices declined back to their technical support levels of $320ish. The gold market seems to always take its direction from some external financial barometer, and with most of the foreign currencies locked in rather tight trading ranges, the gold market has decided to take its cues from the equities market. Now, please understand that while the above noted correlation is most strong at present, the gold market has the uncomfortable tendency to shift its focus almost at will. From a longer-term perspective, this bull market is gold is very different from others seen historically. In researching past rallies in gold, the one almost virtual constant is that lease rates have risen either as a precursor, or coincidentally, with gold prices. Not in this case, not in this case at all. Gold lease rates, especially the shorter maturities, are at virtually zero and have stayed at historically low price levels for months now even as gold prices have moved consistently higher. Such statistical evidence only gives further justification to my hypothesis that this bull market is fueled solely by the investor/speculator and that physical offtake, or physical demand, is rather unimportant in the establishment of the gold price. Such investment buying takes place in the most efficient marketplaces available, the futures and derivatives marketplace, and shuns the high cost inefficient physical market. It is critical for a trader to understand the inherent structures and the "drivers" of a market in order to effectively trade it, and participants in the gold market must take to heart that gold is now, more than before, a speculative vehicle at these prices levels and prices will be governed by the psychological mindset of the investor, not the commercial/industrial user. The number of speculative longs on the floor of the exchange in New York is approaching historic highs, not seen since May of this year. While traditional analysis would say that this could be a dangerous impediment to rising prices, perhaps it is wiser to say that perhaps the global economic and political landscape is now more dangerous that before, and that such interest in gold can be highly justified. Comparing the overbought conditions of the past to perhaps the "overbought" conditions of the present, without compensating for external influences, must yield faulty conclusions. The gold market, perhaps the best barometer of global fear and concern, is always difficult to forecast, as it is impossible to pinpoint the quickly changing level of investment and speculative concern. I would guess that it is more important to judge the resoluteness of the speculative longs in the market in maintaining their positions, rather than the absolute number of speculative longs. Another quite fascinating fact about the secular bull market in gold that we have been experiencing is that the biggest buyers have not been the industrial/commercial users, as their demand has dropped mightily as gold prices have risen, as global stock markets decline, and as economic conditions deteriorate. While investment in gold has risen a bit over the past few years, it is still at paltry levels, even though gold prices have risen some 30% off their lows. The biggest buyers of gold have been the gold producers, who are buying back their previously-sold forward contracts. And now for the good news, industry sources estimate that there is still about 3000 tons of gold still resting on producer's hedge books that could, theoretically, be bought back. With the current hatred of hedging by producers, their purchases will continue to be a most supportive factor to the market, especially on dips.  Gold -- Sharefin, 20:16:09 10/03/02 Thu Prophesies of Mahendra Sharma Why I want to do gold predictions on daily basis is because, it a very important period for gold. I am predicting that from today 3rd October to 9th October, gold will move up everyday. There are very strong chances that gold will stabilize by about $330 per ounce next week. So watch this current period until the 9th of October 2002 for Gold. Also I want to predict that gold will cross $360 to $370 before the end of 27th November 2002 !!!!!testing time for my prophecy!!!!! --- Maybe if he gets it wrong he'll go into a new business. I think more goldbugs have predictive ability than this guy's got in his little finger...... But then I'm a cynic..... Gold -- Sharefin, 20:10:30 10/03/02 Thu Placer Dome closing in on AurionGold Placer yesterday said it has won control of 44.86% of Aurion and has extended the expiry date for its bid to Oct. 11. A merger of Placer and Aurion would create the world's fifth- largest gold miner with annual production of about 3.5 million ounces. Rex McLennan, Placer's chief financial officer, told the Denver mining conference that Placer will reduce its hedge book to 6.8 million ounces by the end of the year, down from a current level of 7.2 million ounces. Gold -- Sharefin, 20:07:43 10/03/02 Thu Gold crowd says it's 'growth' crowd Miners accelerate efforts to boost production, reserves The world's gold miners are confident their industry will become the next great growth industry of the world's battered stock markets. Gold companies are seeking prime properties in faraway places in an effort to boost operating cash flows and poise themselves for another leg up in a year-long rally for gold prices. "If you don't have land you're nothing but a rag picker," says Jeff Huspeni, a vice president of mineral district exploration for the world's largest gold miner, Newmont Mining Gold -- Sharefin, 20:03:56 10/03/02 Thu Factors Bode Well For Gold Newmont Chief Executive Murdy also told Dow Jones that the company sees factors that bode well for the future price of gold, and it will continue to reduce its hedge position. As the company has said before, it will deliver into its hedges and "opportunistically accelerate that," Murdy said. One is supply. Because of the low investment in new projects the last few years, and declining production from old mines, global production of gold is expected to drop 2% to 4% a year for the next several years, he said. Second, companies have been closing or reducing their hedge positions, thus delivering gold to the gold lender involved in the hedging rather than selling into the market. That has also tightened supply. Third, the relative weakening of the U.S. dollar and the current investment climate, in which investors are seeking investment alternatives, are helping the price of gold, he said. Gold -- Sharefin, 20:02:04 10/03/02 Thu Precious Metals Fund Rises On Weak Dollar Culling the cream of the crop seems easy when the harvest is bountiful, but even managers of top-performing mutual funds like the USAA Precious Metals and Minerals Fund need a trained eye in order to pick stocks wisely. The gold market, in this case, is the land of plenty, and while market watchers are groping for a rebound in the U.S. economy, USAA Precious Metals and Minerals fund manager Mark Johnson isn't counting on it. He expects the fund to reap the benefits of the persistently weak dollar that's behind the fund's 50% year-to-date return, according to Lipper, and its 31% return in 2001. The dollar won't soon come out from under the yoke of falling interest rates and the large current account deficit, according to Johnson. This is the first time in recent history the current account deficit has risen to 5% of the gross domestic product, or GDP, he noted. "A Federal Reserve Bank study ... showed that every country that's seen a current account deficit greater than 4% of GDP has seen currency subsequently devalued," Johnson said, adding, "With the spending spree that's going on in Washington, the protectionist policy of the Bush administration, the steel tariffs ... it fundamentally weakens the U.S. economy and makes the dollar decline." Gold -- Sharefin, 19:53:46 10/03/02 Thu SA golds must grow smaller The benefits of further merger and acquisition activity by South African gold producers has been questioned by a major banking group which believes the challenge for gold producers is to deploy cash sensibly and "grow smaller". Deutsche Bank, in its recently published gold book, says accelerating cash flow can translate into higher share prices in the short-term; but the longer reinvestment risks are increased. This is particularly true of Gold Fields and Harmony Gold. Gold -- Sharefin, 07:06:56 10/03/02 Thu Boosters Offer Glittering Forecast for Gold Prices Gold boosters, ever the optimists, offered a glittering forecast Monday for gold's investment potential. Gold prices could reach as high as $1,000 an ounce in the next five to 10 years, up from the current $325, said John Hathaway, manager of the Tocqueville Gold Fund in New York. He said the turnaround in gold could occur as investors become increasingly wary of stocks, bonds and other traditional financial investments. "When gold gets to four digits (in price), it won't be because investors love gold. It'll be because they despise other assets," Hathaway said at the Denver Gold Group's Mining Investment Forum, an annual event that brings top gold companies, investors and analysts to Denver. "Gold investment demand has been surprisingly subdued given what has happened in the markets," Birch said. That may be starting to change. Investor demand for gold almost doubled in the first half of the year to 182 metric tons from 93 tons a year earlier, according to a report last week from Gold Fields Mineral Services, a London-based consulting company. Gold -- Sharefin, 08:41:50 10/02/02 Wed IN DEPTH: Bobby Godsell, CE, AngloGold IN DEPTH: Randall Oliphant, President and CE, Barrick Gold Barrick sways but stays Newmont exploration machine in motion From here Gold -- Sharefin, 08:31:07 10/02/02 Wed 'Four digit gold price in 5-10 years' - Hathaway Hathaway is also watching the share prices of the "money center banks", alias JP Morgan, the trade weighted dollar, the housing GSEs, mortgage insurer share prices and the slope of the yield curve. All told, he's looking for shudders along the spine of a zombie political economy. That four digit gold price? He thinks we'll see it when the Dow Jones Industrial average and price of gold cross over once more. The Dow at 5,000 isn't likely to trigger the golden stampede (after all we're going to see Nasdaq wend its way below 1,000 points), but 1,500 points on the big industrial board may yet do the trick. Ouch; unless you've allocated some of your portfolio to gold. Graham Birch wrapped up the luncheon with just that advice. He is the brain behind Merrill Lynch Investment Manager's world beating gold fund, which is a great advertisement for the firm's advice to allocate 5% of a portfolio to gold. So far there has not been much uptake on the idea, but when it happens it should be significant considering MLIM assets under management are worth 6 times the combined value of the world's public gold companies. A hedge fund manager I spoke to on the sidelines of the event agreed that acceptance of gold in the "traditional" community was slow, but warned not to be misled by the pedestrian pace. He said he had seen a vastly increased level of interest from sectors that would not previously have touched gold with a barge pole. "This takes time to work though the committees, but it is happening," was his encouragement. Gold -- Sharefin, 08:17:06 10/02/02 Wed Barrick chief describes timing snafu The chief executive of the world's second largest gold company, Barrick Gold Corp., blamed failed communications between executives and operating managers for a missed earnings forecast. "We now have much more regular discussion with our senior officers," Oliphant told a standing-room only audience of fund managers and gold industry executives on Tuesday. "What was staggering was that this was four or five or more problems at different mines," said Adrian Day, president of asset manager Global Strategic Management in Maryland. "Don't they have weekly reports for these?" Gold -- Sharefin, 07:53:58 10/02/02 Wed Miners seek golden snitch in quest for bullion Precious metal miners are chasing the golden snitch: the perfect mine at the perfect price. ~~~~ A senior Merrill Lynch portfolio manager says he's seeing sharply increased demand for gold investments. Speaking at the Denver Gold Group's Mining Investment Forum, managing director Graham Birch of Merrill Lynch Investment Managers said about $150 million of new money came into his unit's London-based gold funds in the month of September. "That's a record," Birch says. He manages about $1 billion in the natural resources sector for Merrill. Cumulative money flow into the firm's gold investments, largely gold mining companies, has been creeping up since early 2001, when about $300 million was flowing out of the London-based Merrill gold funds. Birch said he is seeing an increase in the share of money from large investors and an increased number of participants looking to diversify their holdings. "I think it's crucial that asset allocators start to recommend gold," he said. As it stands, gold (in its physical form) often is absent from the traditional asset allocation lists of the world's largest investment banks. Institutions such as pension funds that want to buy physical gold on behalf of clients must overcome custodial challenges and a herd mentality that still favors paper investments, even with stock markets across the world approaching six-year lows. "Gold (in past years) became a pariah investment," said Birch. "It's not in any benchmarks." Speaking to about 350 fund managers and mining executives, Birch said just $25 billion of new money into bullion would about equal one year's total global production of gold. In this year's first six months, against a backdrop of a weak economy and fiscal turbulence, investment demand for gold doubled to $2 billion, Birch said, using figures from consultants Gold Fields Mineral Services. "It has come to the point where it is safe to talk about gold to the kids," said Chris Thompson, chairman of the World Gold Council If gold executives have their way, investors soon may have more choices than mining shares. Several groups, including the gold council, are said to be working on instruments that would act as pure proxies for physical gold, perhaps in the form of an exchange-traded fund that changes hands in real time, like an equity. On Monday, GoldMoney.com said it is working on a Canada-traded security that would allow instantaneous gold ownership. Called the XGG, "It would be the first listed gold bullion security," said GoldMoney.com Chairman Clifford Press. Despicable -- Sharefin, 01:26:32 10/02/02 Wed The Bear Case for Gold --- The author of this article is an affiliate of Elliot Wave and is using his arguement to boost sales by drawing his viewers to the ELliott Wave site. Talk about a shallow myopic view with the intent to profit at the expense of his readers. SHEEESHH!!! Gold -- Sharefin, 20:14:40 10/01/02 Tue Gold companies turning against hedging Hedging, a standard tool of financial management aimed at locking in a profit if prices fall, is almost a dirty word for major gold producers now that prices for the precious metal are close to three-year highs. "The industry says 'don't worry about a hedge, we can roll it over and avoid a margin call.' But if the price of gold rises $70 an ounce you're wiping out shareholder value," he told Reuters. He rejected the idea that with gold prices recently doing better it may be time to reinstate hedges. "It's too early. We're going to have another eight years of a strong market," he said. He said about two-thirds of the industry was hedged. Silver -- Sharefin, 11:18:11 10/01/02 Tue Another Letdown for Silver Real silver prices haven't been below $3 an ounce since Camelot, so going long at the then-prevailing price of $3.29 in 1983 dollars seemed like a good idea, and in a pure sense it was. The price is now $3.42 in 1983 dollars. Too bad we have to trade in 2002 dollars.  In addition, silver has a strong gold market going for it: The Philadelphia Gold and Silver Index is up 26% on the year. This is well below the high at the end of May, when it was up 62%, but up nevertheless. Gold prices have risen close to 15% in 2002 in response to low short-term interest rates and the weakening dollar. Global silver stocks have performed well, too. The Hong Kong and Shanghai Bank Global Silver Mining Index is up a tidy 38.8% since January. Copper is even more significant for silver than gold is. This sensitive coincident indicator of global economic activity just hit a nine-month low. Most silver is produced in association with either copper or lead and zinc. As copper production falls, silver production falls, and that should support silver prices. However, the weak economic conditions depressing copper prices also are depressing silver prices. Gold -- Sharefin, 11:13:02 10/01/02 Tue In Depth: Ian Cockerill, CE, Gold Fields Is Gold Fields fated to be a pawn of Anglo American's dealing, with odds on an eventual merger with AngloGold and then absorption by one of the North Americans? MINEWEB: Gold Fields is a fierce "anti-hedger". Don't you see value in laying in some hedges, especially puts, at these prices? IAN COCKERILL: No. Our shareholders approve of our strategy regarding hedging and we respect that. Gold Fields does not hedge its product. MINEWEB: Anti-hedging has become synonymous, rightly or wrongly, with the "gold conspiracy". Do you believe the gold price is being suppressed? IAN COCKERILL: While it is obvious that there are, from time to time, interventions in the markets by different players, as there are in most markets, we do not believe that there are a few shady people in dark smoke filled rooms, conspiring in a grand fashion to keep a lid on the price of gold. The markets are efficient and in the end they always prevail. We have confidence in gold. Gold -- Sharefin, 11:09:38 10/01/02 Tue Newmont Mining Corporation Invites You to Join its Presentation to the Mining Investment Forum AngloGold Limited Invites You to Join its Presentation to the Mining Investment Forum Ashanti Goldfields Co. Ltd. Invites You to Join its Presentation to the Mining Investment Forum Placer Dome Inc. Invites You to Join its Presentation to the Mining Investment Forum IAMGOLD Corporation Invites You to Join its Presentation to the Mining Investment Forum Freeport-McMoran Cooper & Gold Invites You to Join its Presentation to the Mining Investment Forum Goldcorp Inc. Invites You to Join its Presentation to the Mining Investment Forum Silver -- Sharefin, 11:03:51 10/01/02 Tue Hecla ups silver output to 8.2-mil, gold to 235,000oz US gold and silver miner Hecla Mining increased its gold and silver output estimates for 2002 to 235,000oz of gold from 215,000oz and 8.2-mil oz of silver from 8-mil oz, the company said Tuesday. Fiat -- Sharefin, 11:00:38 10/01/02 Tue Making the World Safe ...for Bankers International bankers live in fear. Not of starvation, disease or war. These are the concerns of children in the Third World. Bankers are terrified we might object to paying them billions each year in interest for money they create out of nothing, guaranteed by our taxes. (The Federal Reserve Board, a private cartel of mostly foreign banks, finagled this monopoly in 1913.) The bankers are frightened that, like the homeless man's dog, we might say "I can do this myself." They are scared the government might go even further and "default" on trillions of make-believe "debt." They are frightened of losing "control." In order to sleep more soundly, the bankers have taken "steps." These precautions help us to understand the world we live in, why it is becoming safer for bankers but less safe and more bizarre for everyone else. First, people with money machines tend to have a lot of friends. The bankers helped their friends establish monopolies in oil, chemicals, pharmaceuticals, transportation, media,etc. and took a healthy stake. As you can imagine, these people are thick as thieves. Lawyers, journalists and intellectuals all vie for a piece of the action. (Servicing this cartel of cartels is what passes for success these days.) The bankers' first precaution is to buy all the politicians. The second is to buy the major media outlets in order to promote the illusion politicians make decisions and represent our interests. The third precaution is to take control of the education system, ensuring that people stop thinking at an early age. Then the bankers use the government and media to convince us that religion, nationalism and nuclear family are unfashionable, and WE want what THEY want. We "want" world government ("globalisation"). The bankers need to eliminate nation states, freedom and democracy in order to streamline their business and consolidate their power. The UN, the IMF and World Bank, -- glorified loan sharks and collectors -- will make the laws. Gold -- Sharefin, 10:24:53 10/01/02 Tue Pundits ratchet up gold outlook Bullion is back in autumn fashion for Northern Hemisphere investors running scared from the carnage which continued to rip through European, Asian and US equity markets. Amid the chaos on the world's stock markets, analysts broadened their trading forecasts for the metal, expecting it to break through the key $325/oz barrier and settle in a new band between $318/oz and $328/oz. Gold -- Sharefin, 10:20:09 10/01/02 Tue Phumzile's Pari Passu Paradox This talk will centre on the efforts to achieve "black empowerment" in the minerals industry of SA from the perspective, primarily, of a foreign-based potential investor or financier. I run a small boutique finance and investment house in London where about half of our business is mining and mineral related. We are long precious metals, but only lightly exposed at present to South African equities. My emphasis will be on the coming decade, rather than the short or even medium term. My viewpoints are independent and will be largely personal, though influenced by discussions with my colleagues at Loeb Aron. Gold -- Sharefin, 10:16:26 10/01/02 Tue Newmont Presents Combined Pro Forma Reserves of 87.3 Million Ounces of Gold for Year-end 2001 and Announces Denver Gold Show Webcast Newmont Mining Corporation (NYSE: NEM; ASX, Toronto: NMC) presented its proven and probable reserves on a combined pro forma basis for year-end 2001 of 87.3 million equity ounces of gold and non-reserve material (NRM) of 1.66 billion equity tons at 0.035 ounce of gold per ton. The information included updated reserves and NRM for the acquired Normandy Mining Limited, which last reported equity reserves of 26.4 million ounces at June 30, 2001, and for Franco-Nevada Mining Corporation Limited. Gold -- Sharefin, 10:11:56 10/01/02 Tue SOG falls from grace Once the pre-eminent blue chip gold stock in Australia, Sons of Gwalia [ASX:SGW] has become the ugly duckling of the gold equities market. A recent exhaustive field trip by leading analysts to SGW's Western Australian gold operations has done little to lift its ailing share price and, if anything, has probably reinforced the investment fraternity's negative perceptions of the gold and tantalum producer. As one analyst put it: "If you seek exposure to the gold industry there are many better alternatives." Aside from the global anti-hedging sentiment that has hurt one of the world's hedging groundbreakers, the company's operating cash flows and mature mines have been the major bones of contention for analysts and fund managers following the stock. Patersons maintained its "hold/underperform" recommendation on the stock largely on the back of the broker's expectations of margin erosion of both SGW's gold and tantalum business units, continued tight free cash flows, and downwards revision of gold ore reserves. Hedge commitments spoke for about 70 per cent and options 30 per cent of group reserves. Managing director Mark Cutifani told Mineweb earlier this year that if the spot price went above A$585/oz, then SGW might let some options lapse and sell some production at spot, therefore providing SGW shareholders with some leverage to gold price upside potential. Gold -- Sharefin, 10:05:56 10/01/02 Tue Beware of companies bearing promises Barrick Gold is the latest market favourite to suffer the wrath of investors for overpromising and then under-delivering. The mining giant just finished boasting to anyone who would listen about its expanded global production capabilities just over a week ago - only to turn around and warn on Thursday that some of those expectations will not be met after all. Analysts say the problems are short-term, but the disappointment that investors feel might take Barrick a little longer to overcome. Ingram: Beware of companies bearing promises -------------------------------------------------------------------------------- Advertisement Title: Director: Actor: -------------------------------------------------------------------------------- Interactive • Web Sites: Mathew Ingram's past columns, bio By MATHEW INGRAM Friday, September 27, 2002 Barrick Gold is the latest market favourite to suffer the wrath of investors for overpromising and then under-delivering. The mining giant just finished boasting to anyone who would listen about its expanded global production capabilities just over a week ago - only to turn around and warn on Thursday that some of those expectations will not be met after all. Analysts say the problems are short-term, but the disappointment that investors feel might take Barrick a little longer to overcome. The gold miner has no shortage of company: Nortel and Bombardier are just two of the other former market stars that have handed out depressing revenue forecasts or slashed their operating numbers, after assuring investors that everything was humming along just fine. In fact, Nortel deserves some kind of special award, given its almost unprecedented run of reassurances followed by disappointments - a pattern that has been going on for over a year, and has driven Nortel's stock well below $1. Barrick isn't in that category, obviously. The company is still one of the leading players in the gold sector, with an enviable portfolio of mines and a sterling balance sheet. So why did the market knock the stock down by more than 13 per cent at one point on Thursday - its biggest fall in more than 10 years - and continue to hammer it on Friday? Because Barrick has traditionally been given a premium multiple compared with other stocks in the same sector, in part because of its solid track record. The problem is that Barrick just got finished trumpeting its planned expansion a little over a week ago. It was a fairly major marketing effort - designed in part, no doubt, to counterbalance the merger of Newmont and Normandy, which is expected to create the world's largest gold miner. In any case, Barrick went to some lengths to promote the fact that it is spending $2-billion (U.S.) over the next five years to double its production from various mines, and thus reclaim its rightful place as industry leader. Why would the company go to that kind of effort only to turn around a week later and roll back many of those ambitious assumptions? For some investors, it raises the possibility that the company knew the information was coming, but withheld it until the marketing push was over. Others will assume that Barrick simply got hit by a number of unknown negative factors - but neither conclusion is all that appealing. Either the company was trying to manage the release of the news, or it didn't really know what was going on at some of the mines it was busy boasting about a week ago. Gold -- Sharefin, 10:00:53 10/01/02 Tue Gold bugs revel in slide of fly-in-ointment Morgan Obviously, a gold company that wants the peace of mind of knowing how much money it's going to make -- or one that's willing to bet gold doesn't rise -- can content itself selling gold still under ground for future delivery. The producer would be long unmined gold and short future gold. Whereas it can make sense for commodity producers to protect part of their future revenues while sacrificing the upside, they aren't the only ones trading gold futures. Speculators betting on a drop in bullion could sell it forward a year at, say, $340 and then, if the price is say, $290 when the contract is due, buy spot and deliver or, more likely, settle up in cash, cancelling the contract. Either way, the profits can be handsome. The losses, in the event of a bad bet, can be destructive. That, to return to J.P. Morgan, is what some gold enthusiasts believe is in store for the bank. The numbers make for a scary case. J.P. Morgan had $43-billion in equity and $581-billion in assets at the end of the second quarter, a little more than Bank of America. But Morgan's derivatives exposure amounted to a notional $26-trillion, compared with $10-trillion for its rival, according to the Office of the Comptroller of the Currency. In some cases, a bank can also be on the hook for a derivative trade it engineered, in the event one party goes bankrupt. This, conspiracy agents contend, is a great reason to avoid such bank stocks and buy gold shares. The point needs a few refinements, however. Notional values are not equal to the amount of risk the banks take on. Theoretically, a bank with lower notional derivative exposure can be much more at risk than one with greater exposure. Also, most of the bank's exposure comes from interest rate derivatives, which shouldn't be as potentially lethal as leveraged commodity plays. That said, there's no question that you take on a great deal of risk investing in shares of a company massively exposed to the volatility of various markets when those markets are behaving as no one thought they could. Derivative bets are only as good as the assumptions behind them. It doesn't help that the disclosure is so poor you don't really know what you're buying. A 7-per-cent yield won't do much if J.P. Morgan ends up being the bank implosion of the current market tumble (economic cycles always end with a financial debacle). But what about the prescribed alternative? Central banks are still dumping gold and consumer demand is weak and getting weaker. Is that a good reason to buy lousy gold stocks (most of them are; only a few are gems) that trade as though gold were worth $400 an ounce? The biggest driver behind gold and especially gold stocks is a bet that we're on the verge of an economic calamity. So which is the more speculative of the two bets -- the bank or the gold stocks? Gold -- Sharefin, 04:29:51 10/01/02 Tue Whistleblower raises doubts over ore bodies Questions reserve levels: 'This is the mining world's equivalent of aggressive accounting' A majority of Canadian mining companies are using a form of statistical "geo-engineering" that permits them to inflate proven and probable reserves by up to 25%, says the man who raised the spectre of fraud at Bre-X Minerals months before it became public. Jan Merks, who has written a textbook on mineral sampling, says geostatistics can be manipulated as easily as financial statements to present a deceptively favourable view to investors. "This is the mining world's equivalent of aggressive accounting," said Mr. Merks, president of Matrix Consultants Ltd. in Vancouver and something of a controversial figure in the Canadian mining world. "If you put inventories that you don't have on the books, then it is just as wrong." It is a technical debate that has smoldered at the edges of the geological world for years, without attracting investor attention. But Mr. Merks' claims, in the wake of the accounting scandals that have shaken faith in North American securities markets, are bound to have new relevancy for an investing public soured on overly optimistic projections. Canadian mining executives contacted by the Financial Post say the methods they employ to map ore bodies are proven to be reliable, and constitute the industry standard. There is no allegation the companies are doing anything illegal. However, if Mr. Merks is correct -- and he has some high-profile supporters -- it means the value of the deposits that underpin the share prices of this country's publicly traded gold, silver, copper, platinum, nickel and coal mining companies may be inflated. It also implies that world inventories are lower than believed. "I have no doubt Jan Merks is extremely credible," said Norman Anderson, the former chief executive and chairman of Cominco Ltd., as well as a longtime former director of Toronto-Dominion Bank and Homestake Mining Co. "I would believe his statistics over many others." "The companies, the investment bankers, the lawyers, they just don't want to hear about it because it limits their ability to raise money," he said. "The industry doesn't want limits. It wants room to manoeuvre." The problem, according to Mr. Merks, is that the geologist entering the data from drill holes is required to make assumptions about the size and shape of the ore body -- including whether mineralization is continuous between drill holes.  Gold -- Sharefin, 01:37:59 10/01/02 Tue DOUG CASEY says Gold Conspiracy Advocates are Trailer Park Hillbillies Gold -- Sharefin, 10:24:04 09/30/02 Mon GOLD - The Final Solution A lower US Dollar in Forex Market As a result of a new decline in the dollar below the first low of 104 as measured by the USDX index, non-US holders of US Government Securities will begin to reduce their purchases. The shift in momentum of purchasing reverses the previous up trend in this market, which will result in a surprise, increase in interest rates in the environment of weak business conditions internationally. This results in a further drop in general equities from any recovery level or from the present levels as we have always seen that declining US equity prices are accompanied by further declines in the US Dollar. Therefore a further drop in the US Dollar occurs. And therefore the down spiral marches on and on. This economic spiral will continue to push gold higher and the dollar lower. Each time it impacts upon itself, the factors in the Down Economic Spiral further impact the holders of US Treasury instrument producing the 5th Element of a Long-term Bull Market in Gold by creating the most unexpected Long Term Bear market in US Treasury instrument due cyclically and fundamentally, as explained above to occur. Historically US interest rates are not made by the Federal Reserve. Rather, US interest rates are a product of the market level of US Treasury instruments. That is a key concept to keep in mind. John -- Sharefin, 10:22:04 09/30/02 Mon It's already started - some time ago. What we're currently seeing is all the fools rushing to one side of the ship. Trouble begins when they all try to rush back to the other side. Then the lifeboats will become swamped. What is lying dead ahead is far different from what we saw in the 80's & multiples more than we saw in the 30's. One could imply that it's a tsunami the likes of which the financial world has not seen before. I've a hunch that once it's rolled on by that many goldbugs holding paper gold will be severly burnt. Ponzi link test -- $hifty, 04:50:30 09/30/02 Mon Fiat -- Sharefin, 22:25:41 09/29/02 Sun States may be allowed to go bankrupt Anticipating Wall Street complaints, IMF managing director Horst Köhler said the bankruptcy court would make debt defaults less painful while "not undermining the credit culture in the global economy". He added: "It is a last resort." $hifty -- Sharefin, 22:22:53 09/29/02 Sun $hifty - can you please use the code to link in Ross's page or not bother at all. You obviuously know enough code to link in the graphic so doing so for the url would be of benifite to all the viewers. How about linking in it in like this. Thanks Nick ---- Periodic Ponzi Update PPU Nasdaq 1,199.16 + Dow 7,701.45 = 8,900.61 divide by 2 = 4,450.30 Ponzi Down 153.25 from last week. Thanks for the link RossL This was the 5th consecutive week down for the Ponzi. The record for consecutive down weeks is 6. Also the Ponzi is at an all time Ponzi low! Should be another interesting week ahead! Go GATA Go Gold $hifty Periodic Ponzi Update PPU -- $hifty, 21:45:03 09/29/02 Sun http://home.columbus.rr.com/rossl/gold.htm Periodic Ponzi Update PPU Nasdaq 1,199.16 + Dow 7,701.45 = 8,900.61 divide by 2 = 4,450.30 Ponzi Down 153.25 from last week. Thanks for the link RossL This was the 5th consecutive week down for the Ponzi. The record for consecutive down weeks is 6. Also the Ponzi is at an all time Ponzi low! Should be another interesting week ahead! Go GATA Go Gold $hifty Fiat -- Sharefin, 21:36:39 09/29/02 Sun IMF Admits Bankruptcy; Wall Street Alternatives a Fraud Fiat vs Gold -- Sharefin, 08:38:19 09/29/02 Sun Dow Drops on GE Outlook; Bonds, Gold Up Investors fleeing the stock market bid up prices for safe-haven U.S. government debt. Treasury yields, which move in the opposite direction of prices, ended at half-century lows. The dollar fell, in sympathy with plummeting U.S. stocks. Gold -- Sharefin, 08:35:19 09/29/02 Sun Gold prices poised to move higher Gold futures prices have risen 16 percent since the start of the year and analysts predict that the precious metal will shine more brightly in the next few years. The most commonly cited reason for the climb is that traders have sought out a safer investment. In an unstable stock market stemming from the September terrorist attacks, as well as the corporate scandals that kicked off with Enron's demise late last year, gold is seen by many as one of the safer places to park money. See Scandal Sheet. And then there's the threat of war. More recently, prices have been supported by the rising likelihood of a U.S. campaign against Iraq that could disrupt oil supplies, sending crude prices skyward and placing pressure on the economy. "Basically, people are nervous at the moment and don't want to be caught short of gold if anything does kick-off, which it could well do at the moment," said James Moore, an analyst at metals commodity information provider TheBullionDesk.com. But the "safe haven" concept isn't the only thing gold has going for it. "We feel gold is certainly headed higher on fear of war, but the problems run much deeper," said Kevin Kerr, an analyst at financial market information provider Weiss Research in Palm Beach Gardens, Fla. Analysts attributed their expectations for higher gold prices to investors' changing view of the precious metal and its potential as a currency substitute, historical trends in the market as well as supply and demand issues. Changing view Investors have felt gold's attraction for centuries, said Kerr, but these days, "the allure is in its intrinsic qualities." Investors understand that they can turn gold into cash quickly because it always has real value, he said, so "expect gold prices to rise sharply as investors begin to consider the metal as a substitute even for currencies." Frank Holmes, chief investment officer of asset managers U.S. Global Investors pointed out that gold is "not dependent on any corporation or government's 'promise to pay'." It's also a hedge against bank failure, foreign exchange controls and currency devaluation, he said. The change in investors' view of gold is apparent when you consider that individual investors have moved $650 million into gold funds in the past twelve months, a rise of 37 percent in the flow of money into the yellow metal's funds, according to Kerr. "We expect this flow to turn into a flood over the next year," he added. Gold -- Sharefin, 08:20:48 09/29/02 Sun Mr. Gold's rules for investors Although he has been dubbed ''Mr. Gold,'' James Sinclair wears his mantle as the precious metals expert almost as a burden. ''What did you do to pull this duty?'' he laughs before he starts to talk the glitter out of gold investing. Gold funds and gold stocks are among the very few shining stars of the tumbling markets this year, but Sinclair believes investing in the precious metal is all about immutable requisites of the market. The price of an ounce of gold has risen from of $267.70 in the second quarter of 2001 to $312.70 in the second quarter of this year. But most brokers and financial advisors are still not suggesting gold investments. For Sinclair, who personaly made $15 million in 1980 by selling gold when it hit a high of $887.50 and then predicted it would languish in a 15-year slump, gold is not about psychology but about a series of measuring sticks. ''You should do nothing because of fear,'' said Sinclair, who is chairman and CEO of Tan Range Exploration, a publicly listed gold mining company. ''If it's based on fear, you are in the wrong arena and should see a psychologist,'' he added. ''The only reason to invest in gold is that there are five market fundamentals,'' said Sinclair who lives on a Connecticut estate and answers his own telephone at his office. These five market fundamentals include: • The U.S. current account (the broadest measure of the economy's competitiveness with the world) must be in deficit and growing ever larger. The U.S. current account deficit is 4.5 percent of the gross domestic product. Markets traditionally become nervous about the deficit when it hits 5 percent. • The U.S. dollar must have hit a high and be on a downward trend. • The prices of general commodities must be going up. • Confidence in paper assets must be falling. • The bond market must have hit a high and be on the way down. Sinclair said that all five conditions must be in place to be assured of a bull market for gold. ''Of the five requisites, four are there,'' Sinclair said, noting that the only one still absent is falling bond prices. Gold closed Friday on the New York Mercantile Exchange at $319.70. ''For gold to make a new high about $330 -- which seems to be the Maginot Line now in the minds of those who have involvement in that field -- it's got to have No. 5 come in,'' he said. MARKET CHANGE But Sinclair also notes that the gold market has changed from earlier times. Big banks and to a lesser extent mining companies have large derivative positions in gold. The mining companies routinely sell unmined metal forward at fixed prices to protect themselves against further price drops. Banks have huge gold derivatives, ranging from deferred-sales contracts to hedged instruments, swaps and futures-linked devices that were devised during the 1990s to generate extra income while gold prices descended. This is a technicality of the market that will affect the price of gold, Sinclair said. Gold derivatives are also part of the question mark. If the price of gold rises above a certain level, then the automatic risk-control systems that tell banks when their risks are getting too high alert traders and spark nearly automatic moves to cover short positions. There is a certain danger for the entire trading system, since nearly all the derivatives have shorted gold and any risk alert will trigger all banks to cover their shorts. Covering of the shorts in a market -- where the actual amount of physical gold is small compared to all the derivative positions and where daily trading is small compared to exposure -- will cause prices to rise. This technicality -- banks' automatic risk control systems -- could affect the price of gold. BONDS ARE KEY But the bond market is the key condition that investors can watch out for, Sinclair said. ''The investment decisions of the non-U.S. holders of U.S. government securities is the singular most fundamental characteristic that will determine if there is a long-term bull market in gold,'' he concluded. After putting millions of dollars of his own money into what he hopes will become a rich gold vein in Tanzania, the rise of the price of gold is more than academic for Sinclair. But he focuses on the fundamentals. ''My own conclusion is, yes, gold will go higher,'' Sinclair concludes. But Sinclair does admit that he has not always been correct about gold. For instance, the 15-year price slump he predicted. ''I was wrong. It's been 22,'' he said. Gold -- Sharefin, 06:36:27 09/29/02 Sun Is the Gold Standard History? In the 19th century, notes Murray N. Rothbard, debates on monetary issues were highly public and intensely controversial. Do you favor the national bank? The gold standard? Bimetallism? What is your opinion of the free silver movement? What is most important: a highly liquid money stock that can prop up commodity prices, or a sound dollar that promotes thrift and discourages debt accumulation? Should the monetary system reward debtors or creditors? These were issues debated in the nation's newspapers, discussed in political meetings, and raged on the streets. Every educated man had an opinion. Part of the reason is that, frankly, people were much better educated in those days. It is astonishing to think of today, but average people had the mental equipment to enable them to understand these complicated issues, if not always to arrive at the right conclusions. The federal government had long been involved in money precisely because this is one of the first areas a government likes to get its grubby hands on when it takes power. The US government was no exception, despite constitutional provisions that would appear to restrict its monetary power. Matters are radically different today. It is very rare to ever see an article addressing the money question in the nation's newspapers. Debates and discussions are left to the academic journals or the self-published tracts of money cranks-with the major exception of the Austrian economists, who continue to believe that the money issue is both academically important and politically crucial. This is why, for twenty years, the Mises Institute has been sponsoring research and writing on the gold standard, and promoting an idea that most public intellectuals find absurdly anachronistic: that a gold standard is better than our current monetary system. What's more, we not only believe that the gold standard had a better record historically. We believe that we ought to institute a gold standard right now. Gold -- Sharefin, 05:57:47 09/29/02 Sun The Behavior of Gold Under Deflation - PDF file Gold prices topped out at US$287 in 1864  Gold -- Sharefin, 05:39:05 09/29/02 Sun The Behavior of Gold Under Deflation - PDF file The behavior of gold under deflation has received little serious study in recent years. As most investors consider gold a hedge against inflation, many extrapolate that since gold performed poorly under the 1980s disinflation: surely it must do even worse if we actually experienced an outright deflation. As we have discovered through a detailed review, the conventional wisdom ignores the lessons from history. It is the impact of deteriorating economic activity on credit quality - not whether we operate under a fixed or floating rate exchange system - which is the operative factor driving gold's behavior under deflation. Executive Summary · Deflation is defined as falling levels of both economic activity and falling price levels on an absolute basis. The contraction of economic activity is generally preceded by an unsustainable boom period and is usually kicked off by an event which causes economic confidence to be lost. Deteriorating credit quality, the shift from capital growth to capital preservation, and the hoarding of capital are characteristics of most deflationary periods. Deflations typically end after crisis conditions force policymakers to enact large-scale inflationary policies designed to counteract deflationary conditions. · In historic US deflations, individuals had the choice between paper currency or gold as hoarding vehicles. The historical record demonstrates that loss of confidence in the issuer of paper currency is often a sufficient reason for individuals to choose gold over paper currency. We attach a detailed review of the behavior of gold under each US deflationary period since the Post-Jacksonian deflation of 1837-1843. · In a prospective deflation, the existence of large foreign exchange reserves and a historic accumulation of financial assets means the magnitude of capital flowing to hoarding vehicles is large. With a limited pool of hoarding vehicles in today's marketplace, prices of scarce hoarding vehicles would be bid up. · Compared to widely available cash-substitutes, gold's relative attractiveness boils down to relative credit quality. Competing against foreign currencies, the role of gold as a preferred hoarding vehicle will depend if deflation is limited to the US or spreads internationally. Under the global deflation scenario, foreign currencies would also be negatively impacted by deteriorating credit quality. · Because of cultural conditioning, Americans may ignore gold as a currency alternative in the early stages of deflation. Considering the importance of Asian investors to gold demand and the favorable cultural conditioning Asian cultures have towards gold, this may be a mistake. Asian investors may gravitate towards gold much earlier in a deflationary spiral, leaving American investors behind. From: Sun Valley Gold Gold -- Sharefin, 23:19:13 09/28/02 Sat Gold - Its Role within the Modern Investment Strategy There have been numerous people who have argued that gold is THE hedge against inflation. Many will tout their fancy statistics and point to all sorts of charts in support of their case. Others will argue that gold rises during geopolitical uncertainty and at the first outbreak of war it should be bought. And yet there are still others who claim that gold has LOST its luster and is a throw back to ancient times. In their boasts, they claim that inflation has been vanquished and that gold is no longer needed to stabilize the world monetary system. In an effort to answer these questions in hope of separating the MYTH from REALITY, it demanded that a very long database be constructed. Looking at gold's performance over the past 20 or 30 years is simply NOT enough historical perspective to come up with a realistic outcome untainted by subjective theories and biases. ~~~~~~ Conclusion The illustration of gold's rise in the face of declining confidence in government is endless. The hoarding of gold was so severe during the Great Depression that Roosevelt ended up outlawing the private ownership of gold and confiscated everything the government could find. Quite a drastic police state tactic. Nevertheless, it did happen here in the United States! In this brief overview of financial history, one striking common theme arises from the trials and tribulations of man - gold rises NOT as a hedge against mere inflation, but as a hedge against the UNSOUND PRACTICES OF GOVERNMENT and/or POLITICAL UNCERTAINTY. Steady rising inflation DOES NOT act as an underlying support mechanism for gold. Its role within the modern investment strategy is a hedge against political and economic uncertainty. Gold has always risen the MOST when the confidence in the government is at its LOWEST! Gold -- Sharefin, 17:02:24 09/27/02 Fri How the Central Banks have engineered the coming Bull Market in Gold Fiat vs Gold -- Sharefin, 07:46:28 09/27/02 Fri Changes To LBMA Management Committee - PDF file At a meeting of the Management Committee held yesterday, Rick McIntire of Deutsche Bank was elected Vice Chairman, replacing Clive Turner of NM Rothschild & Sons, who has resigned from the Committee. Rick first joined Deutsche Bank in New York in 1997 and transferred to London in 1998. He has been a member of the Management Committee since 1999. There were four candidates for the vacancy on the Committee, which according to the Constitution is reserved for a Market Maker. Following a secret ballot held at yesterday's meeting, Paul Copsey of NM Rothschild & Sons was elected. Fiat vs Gold -- Sharefin, 07:42:33 09/27/02 Fri Gold steady but vulnerable "Gold is demonstrating a negative correlation with equities at the moment," UBS Warburg analyst John Reade said in a daily report. "Gold remains vulnerable to further weakness if equities continue to recover." ----- Likewise gold is strongly positioned to rise when stocks continue south after this bear market rally fades. Gold -- Sharefin, 07:40:01 09/27/02 Fri The RBA Gold Vault is Empty The Reserve Bank of Australia has stated that their official gold holdings was 79.9 tonnes of bullion at the end of 2001(World Gold Council stats), this was after they sold off about 167 tonnes in 1997. Their gold holding is worth about $1.5 billion on today's gold price During research for a television advertising campaign for Gold Report, in June 2002, the RBA was asked if it would be possible to shoot some footage beside their gold holding and Gold Report was told that, “we only have about 20 bars left”. It was then explained that the RBA leases their bullion to Bullion banks and Producers. The bullion banks or producers then take physical delivery, sell the bullion on the open market and reinvest the proceeds in a higher yielding investments or use the proceeds to fund a mining venture (in the case of producers). The idea is that at a later date the lessors will buy back the bullion from the market and return it to the RBA vault. To back this information up, the RBA released their Annual Report on Wednesday, 28/8/02. This report states that the RBA has made $22 million from its leasing arrangements. To make a $22 million return, they must have 100% of their gold holding (still $1.5 billion) leased at an average of 1.47%, which has been approximately the average lease rate for the last year. As the gold price continues to improve, this looks like creating a problem for the RBA, bullion banks and producers, by making it increasingly expensive to buy back the RBA bullion and return it to their vault. If the large bullion banks go to the wall, where does this leave the RBA? Still empty, that's where! (luckily, the RBA still has the bullion on paper!) Gold -- Sharefin, 07:35:51 09/27/02 Fri New Educational & Research Website for Investors in the Australian Gold Sector Gold Report's website contains a long list of benefits including a free e-book, “Demystifying the Australian gold sector”, the largest, most up-to-date and comprehensive database on ASX listed companies that have exposure to gold projects, Daily, Weekly and Monthly newsletters, a weekly watch list of companies that are drilling on good projects, a live Market Monitor that gives information on the best 30 performing companies on the ASX for the day, three new Australian gold indices that cover the producers, large explorers and the small cap explorers and a new International gold index, a forum and the largest mining and exploration glossary on the Internet. Lenny's Corner -- Sharefin, 07:28:16 09/27/02 Fri GENERAL COMMENTS As we suggested in recent commentaries, the precious metals markets could not muster the needed strength to push through rather significant overhead technical resistance, and have since fallen, and quite sharply. With investors and speculators now enjoying a much enhanced role in the establishment of the price of gold, all it takes to move gold some $10 lower is the slightest change in the psychological expectations of these players. With a sudden and rapid rally in global equities markets, and with growing expectations that the war between the US and Iraq will be slightly deferred in time, both the gold and silver market has seen significant selling from the liquidation of long positions. As the gold market has evolved from one where fundamental analysis of supply/demand characteristics have been paramount in price forecasting (lets call this an “industrial” market), to one where the price is determined, to a great extent, by speculators and investors (lets call this a “monetary” market), several important intrinsic changes occur. One such change is the volatility of the market, creating both greater risk and greater potential reward. Experienced traders should now be reducing their outstanding positions carried, either long or short, as potential risks have increased. Increased volatility has also exaggerated the premiums on options, both puts and calls, making the selling of these very favorable for the trader who is experienced at their use. I continue to recommend the selling of “covered calls” on futures positions owned in the gold and silver market, and also judicious selling of out-of-the-money puts. These strategies have worked famously of late and look to continue their track record. The gold market also experienced some negative news these last two days, neither of which had even the slightest bit of fundamental value, but was enough to change investor's expectations. The first piece of news was the announcement by a major gold producer that their usually robust earnings would be injured in the short term by both higher costs and a lower gold price. This piece of news quickly forced a rapid drop in the gold stock index, which then rolled downhill to affect the price of gold as investors liquidated long positions. Not very sensical, but markets have no duty, nor any responsibility, of making logical sense. Yesterday, the Swiss National Bank announced that it will sell an additional 283 tons of gold in the coming year. The very language of the proclamation gives the impression that MORE gold than the market expected will be forthcoming. However, such is not the case. As Switzerland is a signatory to the Washington Accord, the members of the group can sell a maximum of 400 tons per annum cumulatively. The market already has factored in such disposals, but the announcement, and its language, was enough to turn psychological expectations. Gold -- Sharefin, 07:21:22 09/27/02 Fri Mining industry gets draft charter South Africans negotiating a mine charter to boost black participation in the industry have finished a second draft of which details could be released next week, a top government official said on Friday. The government wants to keep the draft under wraps to avoid a repeat of the July leak of a first draft that spooked investors with calls for drastic industry changes, keeping the market on tenterhooks over what it will contain. The charter aims to set targets and deadlines for changing an industry that is still white-dominated eight years after the end of apartheid. The initial draft suggested that control of all new mining projects should rest with black business within 10 years. Billions of rand were wiped off the local bourse, with market bellwether Anglo losing almost a fifth of its value, when details of the first draft emerged in July. Gold -- Sharefin, 07:14:28 09/27/02 Fri Swiss central bank plans to sell further 283 tonnes of gold The Swiss National Bank plans to sell a further 283 tonnes of gold by the end of September 2003 under its plan to dispose of 1,300 tonnes of unneeded reserves, the central bank said on Thursday. --- I wonder which CB is on the receiving end of this tonnage? Gold -- Sharefin, 07:08:11 09/27/02 Fri Barrick keeps dropping a second shoe Bad news follows good There was a time when Barrick Gold Corp.'s earnings were as reliable as clockwork, but yesterday's massive profit warning has added to a sense of distrust tightening its grip on the stock. The world's second-biggest gold producer yesterday warned that a series of production problems at three of its mines will reduce earnings through the rest of this year by as much as 30%. It's the latest in a series of missteps that have driven Barrick's shares (ABX/TSX) down 2.3% in 2002, even as the price of gold has surged 14.7%. And though the current production problems have little impact on estimated asset values, growth rates and future cash flow, they are exacerbating what analysts say is a slow erosion in the market's faith in management. When Barrick could be relied on to consistently meet its earnings targets quarter after quarter, the stock attracted a premium valuation. But as investors drove Barrick shares down 11.4% yesterday, its worst day since 1999, it became clear that the days of Barrick holding a privileged place in the market are history. "Barrick has always been a company that, if it said X, it always delivered X-plus ... Now they're delivering X-minus," said Barry Allan, mining analyst with Research Capital. "It's that perceptional issue that's really on people's minds, not the actual impact." More recently, the company announced a five-year development plan that included higher exploration spending and reductions in its hedging program. But the optimism ignited by that plan was completely undone by yesterday's surprise profit warning. "This is the second time now that Barrick has come out with good news/bad news," Mr. Allen said. "There's a sense that people are being managed. And if Barrick comes out with positive news in a month's time, people are going to ask, 'What's the second shoe to drop?' " That suspicion was everywhere yesterday as investors tried to reconcile the optimism of last week, with this week's stumble. As usual much of the speculation focused on what impact, if any, the company's complex hedging strategy is having on its performance. "We don't know anything about the hedge program, and we really wonder if there's something more there that we should know," said Rolie Bradley a fund manager with Maison Placements Canada. "They don't reveal what the obligations to the counter parties are, and we think it's very germane to the profitability of the company." The company has said repeatedly that the hedging program is not threatened by rising gold prices. Its recent move to scale back its hedging portfolio was aimed at easing these concerns. But that hasn't satisfied many critics. Mr. Bradley recently sold his Barrick shares in part because of the hedging issue. "There is distrust out there right now of anything hedging or derivative-related," Research Capital's Mr. Allan said. |
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