Gold -- Sharefin, 08:43:17 10/17/02 Thu MARKET SWITCHES FOCUS FROM AURIONGOLD TO AUSTRALIA'S NEWCREST Shares in Newcrest Mining Ltd shot two per cent higher as the market switched its attention from AurionGold Ltd to the most attractive stock left standing in Australia's gold sector. The corporate manoeuvering has left just three major gold producers in Australia: Newcrest, Lihir Gold and Sons of Gwalia. The market is already speculating about which one will go next, but most analysts agree Newcrest, with its long life, low cost operations in New South Wales and the massive Telfer project in Western Australia is the most attractive target. Gold -- Sharefin, 08:40:26 10/17/02 Thu Why you should not believe in yesterday As the most jittery and reactive of commodities, precious metals only do well when there is consistently bad news on business pages. The rest of the time they are the most volatile equities you can find. When non-mining stocks are showing growth, precious metals are underperformers. Over the past five years, Gold Shares shows a negative 13.70 per cent annualised return, underperforming 99 per cent of all funds. The fund has lost money in eight out of the last 10 years. Gold -- Sharefin, 08:35:42 10/17/02 Thu What if the bull comes back? Rising stocks aren't good news for everybody. Some unsuspecting investors could be headed for a bull market backlash. Investors who retreated into so-called defensive securities like government bonds and gold to avoid the bloodbath playing out in stocks, could be about to learn that safety isn't always what it's cracked up to be. Most of those investors may be unprepared for the serious damage they could sustain when the market and economy turn around and major institutional investors move to get more exposure to more speculative and economically-sensitive securities. "We think the 10-year treasury is just wildly overdone," said Andrew Martyn, a fund manager at Davis-Rea Investment Counsel in Toronto. "I'd be frightened to be in those securities." The unrelenting slide in world stock markets has forced vast amounts of cash into the government bond market over the past year as investors looked for any stable investment they could find. That eroded the the yield on the benchmark 10-year U.S. government bond to a 40-year low of 3.57% last week. To many strategists, bond prices have been pushed to such extremes that they are anything but "safe." Only a long-term deflationary cycle will hold bond prices this low over the next decade, analysts said, and when a correction occurs, it's likely to be sudden. Last November, bonds sold off in anticipation of an economic recovery and yields on the benchmark U.S. 10-year bond rose from about 4.1% to 5% in two weeks. For investors who bought at that trough, almost a quarter of their yield was wiped out in just 10 trading days. By the end of March, yields had reached 5.42%. Analysts at BCA Research in Montreal warned recently that the same situation may develop again, only this time the reversal could be even more violent because bond prices are so much higher. "The equity meltdown and seizure in the corporate bond market have fuelled an unprecedented stampede into government bonds," the analysts said in an e-mail bulletin to clients. "Watch for an explosive reversal once the panic ends," the message said. Gold -- Sharefin, 08:31:50 10/17/02 Thu Placer Dome Needs Control To See Aurion Gold Hedges Canadian gold producer Placer Dome Inc. (PDG) expects to get a close look at AurionGold Ltd.'s (A.AOR) hedging contracts after it obtains controlling interest or 50.1% of AurionGold, a Placer Dome spokeswoman said Tuesday. "We don't have management control, so once we hit the 50% mark, that would be a realistic time for us to expect to have access," spokeswoman Meghan Brown said. "It could be any day now, or it could be a little while yet." AurionGold's gold hedge book, which had a negative A$392.9 million mark-to-market value as of June 30, is an issue of concern for some analysts that follow Placer. It contains dozens, possibly hundreds, of individual contracts with counterparties, and analysts have said a portion of those could be difficult or expensive to close out. AurionGold also maintains foreign-exchange hedges which had a mark-to-market loss of A$44.9 million at June 30. So far, Placer has only had access to public information about AurionGold's hedging contracts. "We're quite keen to get in there and have a look," Brown said Tuesday. Kerry Smith, a mining analyst with Haywood Securities in Toronto, figures there will be "some warts" in the AurionGold contracts. "I think they would want to get a look at that book as quick as they could," Smith said of Placer management. The best time to fix any potential problems in the AurionGold hedge book - or to "remove those warts with a scalpel" - is when the gold price is falling off, as it has in recent weeks, Smith said. "When the gold price is going up, it just costs you more money to do it," he said. Placer is stuck with whatever it finds in the hedge book, because its AurionGold bid is free of all conditions. But Smith noted that Placer management has assured the market that AurionGold's hedges in combination with Placer's own hedge book will be manageable. Placer has been reducing its own hedging activity. In August, the company said it will cut hedged ounces to 6.8 million ounces by the end of 2002. That would represent about 15% of published reserves, down from 20% of reserves, and would also represent less than 40% of expected production over the next five years, Placer said. By acquiring AurionGold's production of 1 million ounces a year, Placer expects to produce 3.8 million ounces a year, moving it up to fifth in world gold production rankings. Gold -- Sharefin, 08:28:54 10/17/02 Thu The medium to long term outlook for gold Virtual Metals Research and Consulting report - PDF File Gold -- Sharefin, 08:25:03 10/17/02 Thu Gold down, but not out Martin Jankelowitz, the head of economic and market research at South African-based fund manager Investment Solutions, says leading indicators are blaring out warnings to investors. He says US bond yields are the clearest of the warning signals. “For the last two years (the bond market) has been giving a very clear warning as to that equity market investors are being far too optimistic on the likely outcome, far too optimistic in terms of earnings prospects, economic growth prospects, the extent of them and the sustainability of them. Those yields are currently down to 1967 lows,” says Jankelowitz. “The economic recovery is not going to be as good, as solid or as smooth as a lot of people are anticipating,” he says. The over-optimism is clear on the part of equity investors, who last year followed the advice of economists predicting a recovery toward the end of this year; it's now October and the bounce in the global economy seems more remote than ever. The technology-heavy Nasdaq index is down 35 percent on the year, while the broader S&P 500 index has shed close to 20 percent. European and Asian indices have also taken a bath since January and recent downgrades in base metal prices – a crucial leading indicator of world industrial demand - by both Deutsche Bank and Merrill Lynch, indicate there is little chance of an imminent about-turn. Looming war in the Middle-East and the ever-present threat of large-scale global terrorism have also put the screws on hopes of a rebound. Debt spreads Jankelowitz warns investors to look carefully at corporate debt spreads and credit spreads in the US, when contemplating investment decisions. “In other words, the differences between what the US government can borrow money at and what a typical US corporate can borrow money at had risen sharply – in other words a big risk premium,” says Jankelowitz. “There's a lot of corporate malfeasance, lack of trust, high risk. To give you an idea, those credit spreads are currently double their long-term average. They are higher than they were in the 1980 emerging market crisis,” says Jankelowitz. He says the recent performance of banking shares - which lost more than 10 percent in September alone – along with the widening credit spreads, signalled that “systemic risk was very high”. Jankelowitz said that although this did not guarantee a world-banking crisis, it begged caution from equity investors. He also pointed to the performance of the Korean stock market, as another good indicator of the health of the world economy. Jankelowitz says the Korea's was the strongest proxy for manufactured export side of the global economy. The Kospi, the main Korean market index, fell 13 percent in September alone and almost 33 percent in the last six months. So are the bear-signals strong enough to justify a move back into “out-of-fashion” assets like gold. “Absolutely. I think it's difficult to say gold's still out of fashion, because it's becoming increasingly more in vogue, and those shares have had a very good run. So the gold market is gaining in prominence in that area…and I think it'll continue to do so,” says Jankelowitz. ~~~~~ John Hathaway, manager of the US Tocqueville Gold Fund, also advises clients to switch 5 percent to 10 percent of the general portfolios into gold shares amid continuing equity market chaos. Hathaway, speaking last week on Mineweb's sister radio show Classic Business, backed up his recommendation with his ‘Dow Gold Ratio' calculation: “That is simply the Dow Jones Industrial Average which today is 7400, divided by the price of gold, which to make it easy, is around $300/oz, or a little bit more. So the Dow gold ratio was around 30 times. At three times in the last 100 years, that ratio has been 1:1 and it wouldn't surprise me to see us get into single-digit territory within the next five to ten years,” says Hathaway. “And it's simply a measure of risk-aversion or risk-tolerance. When the Dow is trading at 40 times the gold price, which was an all-time record high, it indicated that people were very risk-tolerant and that was the middle of the dotcom boom. But the last time we had a crossover was around 1981, and then you had very high inflation and very poor returns in the stock market, and people were risk-averse. So these are cycles that go for decades, 20 years or more. They don't get reported every day in the press because the change is so glacial, but that is the direction we are headed in, towards risk-aversion.” Gold -- Sharefin, 08:21:34 10/17/02 Thu The bear case for gold Tonight's top story, just when David Shapiro thought it was safe to go back into the gold market, we have a man in London to tell him why it's not. Andy Smith is the precious metals analyst at Mitsui Metals in London and he is with us. Now Andy, you are highly respected by analysts across the globe, your colleagues, the industry respects you, you regularly do get standing ovations at presentations I'm told, but you're also a committed gold bear and have been that way for years. Gold -- Sharefin, 08:12:47 10/17/02 Thu 'Gold back in fashion' - fund manager MARTIN JANKELOWITZ: Yes, it's even more negative than that. I think first of all there are quite a number of variables. I think it's also very important to know which variables to analyse at different points in time, because there is a lot of noise and you need to be able to strip these out. But I think the bottom line is probably the first and foremost one is US long bond yields. MINEWEB: Just explain what that is. MARTIN JANKELOWITZ: OK, it's the debt market in America, and the longest duration. So it's effectively, if you're buying a government bond, the most risk-free investment will be like the USA government. In other words, the USA Government borrowing money from the investment public out there. They would issue those. So you could call it the most risk-free investment or asset class there is out there – almost, except for a fixed deposit, I should say. Now that's tended to be a very reliable indicator and forecaster for the economic performance going forward and for the last two years it's been giving a very clear warning as to that equity market investors are being far too optimistic on the likely outcome, far too optimistic in terms of earnings prospects, economic growth prospects, the extent of them and the sustainability of them. And you've seen it – those yields are currently down to 1967 lows. In other words, as you buy bonds and the yield declines. MINEWEB: What did it show in 1967, what was it warning in 1967? MARTIN JANKELOWITZ: Well, I go back to 1967 because that's how far the data goes back. So it's actually the lowest on record, you could actually argue. You probably have to go back to the World War II, Great Depression, times for a more extreme things. But essentially what it's telling us is that the economic recovery is not going to be as good, as solid, as smooth as a lot of people are anticipating. There's going to be a lot of bumps out there, a lot of potholes and it's telling you to exercise caution. MINEWEB: When you say yields are low, does that mean demand for capital is low as well? MARTIN JANKELOWITZ: So in other words the demand for those bonds is very high. So the demand for, let's call it … MINEWEB: Borrowers, from the borrowers, is very low. People don't want to borrow money to invest for the future. MARTIN JANKELOWITZ: There's a couple of things. But that would be more in the corporate debt market, which actually gets us on to the next major indicator. Corporate debt spreads, credit spreads, have actually surged. In other words, the difference between what the US government can borrow money at and what a typical US corporate can borrow at has risen sharply. In other words, a big risk premium. MINEWEB: Is that because people don't trust companies any more? MARTIN JANKELOWITZ: Correct. There's a lot of, you know, corporate malfeasance, lack of trust, high risk. It's very important. To give you an idea, those credit spreads are currently double their long-term average. They are higher than they were in the 1980 emerging market crisis. MINEWEB: Doesn't that mean, though, if something is double its average, that it's eventually going to revert to the mean. MARTIN JANKELOWITZ: Could be, you could argue that it's ... MINEWEB: Which way would it go? MARTIN JANKELOWITZ: A person could argue well, maybe the worst is priced in. What I'm saying is that, hold on, these indicators are actually telling us there's a lot of stress in the system. These things are where they are. There is a lot of stress. Sure, if they start easing, that will be a very positive signal. But linked to this as well, in September, amongst the worst-performing sectors around the world were actually banks and broader financials. Global banks or financials actually declined by 10% during September alone. So that, together with your increase in credit spreads, is actually telling you there's a lot of stress in the system. The systemic risk is very high. MINEWEB: Systemic risk meaning a bank going bust? MARTIN JANKELOWITZ: Correct. The risk of its going bust, and also taking, obviously, if it does – it spreads, those wings get spread and unfortunately it impacts a lot of related things. Now, I'm not saying you're going to find that, but the risks of that happening have increased and definitely caution is needed. They're telling a story. Gold -- Sharefin, 08:07:41 10/17/02 Thu Returning to the bosom of gold Today we examine that monster called deflation. Rob Oellerman is a portfolio manager at Coronation Fund Managers and we've asked him to give us some ideas on deflation and the possibilities of that happening. Rob, just in layman's terms, what is deflation? MINEWEB: Now you talk about the bubble. We've had, surely, a bubble of 1929 proportions over the last ten years in the United States, where asset prices were going one way and that was up. Do you feel that the table is laid for potential deflation coming in to address that huge bubble? ROB OELLERMAN: I think it's imminent. Well, when I say it's imminent I think we've already had the first two or three years of it and it's an ongoing process, Gold -- Sharefin, 08:02:43 10/17/02 Thu Golden during deflation A report by JP Morgan's gold research team raises the spectre of deflation in the US economy, a development that would throttle consumer spending and pile the pressure on equities. But gold stocks and physical gold will probably survive the effects of deflation better than most asset classes, says JP Morgan's John Bridges. The fear of a new world economic order, shaped by woes in the US economy, was recently mirrored by Merrill Lynch which advised that as much as five percent of general investments should be in gold. JP Morgan's Bridges and Merrill Lynch agree there's nothing less porous than gold, the metal widely reviled during the tech boom and which suffered a highly public sell-down by the world's central banks, most visibly the Bank of England. How eccentric it now seems for central banks to have disposed of gold – and the Swiss still selling theirs - when JP Morgan, among others, is recommending the metal for its ability to resist the vortex of deflation. Gold -- Sharefin, 07:56:39 10/17/02 Thu Inflation to crimp SA golds The consolidated third quarter result for South African gold companies is expected to resemble those dreams where frantic running can't quite deliver you from the advancing menace. In the case of gold quarterlies, the menace is factory-gate inflation which, according to a report by Bloomberg, touched a 13-year high of 15.4 percent in the year to end-August. As a result, gold producers are likely to show signs of narrowing operating margins following the windfall effects of weak rand-dollar exchange rate and improved dollar gold price. Gold -- Sharefin, 21:17:28 10/15/02 Tue Iran sees large inflow of gold and capital Iran has experienced a net inflow of capital and gold bullion for the first time since the 1979 Islamic revolution. It has been drawn by domestic investment opportunities and driven by financial insecurity outside the country following the September 11 attacks on the US. Bankers say the amounts returning to Iran probably totalled several billion dollars over the past year - although they are not on a scale comparable with the outflow of Saudi capital from the US. Official figures have not been disclosed. The fear of collapsing stock markets is considerable but, more significantly, so is the danger of private assets being frozen by a hostile US government that has branded Iran as part of an "axis of evil". That sense of insecurity, according to one banker, persuaded the Iranian government to repatriate all or most of its gold bullion from the vaults of central banks in Europe. "They were worried that the post-September 11 world order had changed and that it was safer to have the gold at home," he said. Iran's central bank, has refused to comment. According to official figures, Iran's gold is valued at around $2.5bn. Much of that was deposited in the Bank of England, which also declined to comment. Banks in Trouble? -- giovanni dioro, 11:29:19 10/15/02 Tue sharefin, I wanted to add that I have been very surprised over the past 5 years or so that more banks haven't gone under. With the Asian crisis, Russian crisis, LTCM failure, the Argentina/Brazil/Uruguay financial collapses, why aren't the banks failing? It seems that what we are seeing is that the banking cartel doesn't want to see banks forced into liquidity which would in turn force the banks to foreclos on its debt and cause a depressionary contraction. We have seen the french govt bail out Credit Lyonnais to the tune of $20 Billion, the German govt bailed out its banks who lost money in the Russian meltdown, and depositors' money was frozen in Argentina. As I said earlier, central banks can buy the bad debts and worthless portfolio's of various banks in its banking system. Moreover, other central banks, like the Bank of Japan, can buy up US treasuries to ensure that the dollar doesn't collapse. It seems what we have is a globalised collusion of central and international banking that seems intent on keeping the status quo. --------------- PS I read (link below) that the Fed's internal study shows that non-performing loans to businesses by US banks has risen to 13% from only 9% a year earlier. Jyske's Bond analysis - pdf Fiat -- Sharefin, 05:51:00 10/15/02 Tue A Potential Pothole on Rally Road "I will venture there is an outside chance that in the very near future, during a momentous market upheaval, a major financial participant will face complete and instant annihilation," Fari Hamzei of Hamzei Analytics in Los Angeles commented recently. For some time now, J.P. Morgan has been the name most often cited as a potential trouble spot. In an interview Thursday, Hamzei said J.P. Morgan is on his short list of financial firms about whose "annihilation" he is concerned. Admittedly, that's a dramatic description for what others contend may be a forced sale or, at the very least, more pain for J.P. Morgan's stock and bondholders. Specifically, concerns remain about the bank's exposure to derivatives, financial instruments that derive their value from other securities and are designed to offset risk -- although history suggests they often have the opposite effect. Gold -- Sharefin, 20:45:54 10/14/02 Mon My last prediction on Gold + Silver This prediction on the flash news section will be my last for gold and silver for sometime because my prediction especially on gold and silver went wrong. Gold -- Sharefin, 20:43:21 10/14/02 Mon Richard Russell Dow Theory Letters Gold has outperformed the market (the S&P) since September 2000. On August 2002 the gold/S&P ratio broke above its 50-month moving average, suggesting that gold's action in out-performing the S&P could be part of a major and extended trend. In March of 2001 gold turned up against the Dollar Index. In April of 2002 the gold/Dollar Index broke above its 50-month moving average again suggesting that gold will outperform the Dollar Index (or advance in terms of dollars) for quite some time. These long-term trends are often invisible on the daily charts. They are more apparent on weekly charts. But when they show on the monthly charts you know they are long-term trends, not likely to end in a month or two after they start. So quietly, subtly, and a bit erratically, gold is now outperforming both the Dollar Index and common stocks. How about the gold stocks? From November 2000 to May 2002 the gold stocks (XAU) outperformed gold, the metal. But since May 2002 the metal has outperformed the gold stocks. In due time, the stocks and the metal will move together. As for Dec. gold, its rising 200-day moving average stands at 309.00. Its rising 50-day MA stands at 317.40. The problem for Dec. gold is to get above 325 and stay there. If gold can hold above 325, the real test would be to rally and hold above 330. So far, there is strong resistance at the 325 level. Every time Dec. gold gets near 325, sellers come out and knock gold down. However, a hopeful indication for gold is seen in the following intra-day low figures for Dec. gold. Lenny's Corner -- Sharefin, 20:37:11 10/14/02 Mon GENERAL COMMENTS In a week during which global tensions subsided, to some degree, and the global equity markets staged an absolutely huge rally, gold prices dropped by over $6 as investors/speculators were seen as significant sellers. As it may be argued that the gold market pricing is now more than ever before dependent upon the market psychology of those seeking refuge from economic and political risk, it was to be expected that gold would fall in price as external stimuli, and political news, was rather positive. While the price did indeed fall, this drop was not enough to warrant much concern for longer-term investors or speculators, as technical support price levels for gold did contain the decline in value. There was no real surprise that gold prices retreated back to the $315- $316 price level, a level at which most analysts assume major support. Silver, being a much thinner market and the "darling" of the large speculative funds, fared much much worse, falling 17 cents in heated trading to levels not seen since earlier this year. Although a bit of skepticism is always warranted in regards to rumors and stories emanating from the floor of the exchange, I was told that some of the large speculative funds had not only liquidated ALL of their long positions, but some were actually going short this metal. Now, for the life of me, I cannot understand why anyone would want to go short silver when these price levels have historically been strong buying levels. The gold/silver ratio is now near 73.5 to 1, a number not seen in decades and argues that silver, in relative value to gold, is dramatically oversold. But, markets don't always make sense; they have no responsibility for logical or rational behavior (especially these days!!) and there is, of course, the risk that large speculative commodity funds, with their billions of USD in assets, and with "black boxes" dictating their trading strategies, could force silver prices lower as physical demand for this metal wanes due to the poor global economic environment. Platinum was up $21 for the week as this market is being squeezed by several commodity funds attempting to take advantage of the rather large Japanese general public short position. Current prices, and perhaps those of the next week or two, do NOT represent any fundamental value but are only the result of the game being played. The Japanese public is short close to 500,000 ounces of platinum, and being short, are paying the current lease rates for the privilege. Some European and US commodity funds, smelling blood, have rocketed platinum prices higher, while at the same time borrowing the metal short term, making the Japanese players pay lease rates of perhaps 15-20% per annum, while the underlying price of the metal rises. They are hoping to force the Japanese "players" to cover their short positions, or buy, at these rather high prices while the funds accommodate their buys at this exalted price levels, by selling previously bought platinum for a very significant profit. I have seen this game played out hundreds of times before, and usually, it doesn't last very long as producers and long term investors are more than happy to sell at what seems to be irreconcilably high prices. Reports from the floor of the exchange on Friday had the funds already selling a bit. Watching this play out will be most interesting. Palladium was up $5.50 for the week, largely in sympathy with its precious sister. In last week's commentary, was a discussion of the role of lease rates in the context of a bull market, which happened to be extremely timely as Friday's market saw a MOST unusual circumstance. Thirty day lease rates for gold have been amazingly stable this entire year, with rates continually trending lower and lower, plumbing historic lows, from a very low rate of .29% on April 1st of this year, to even lower levels seen recently of .15% per annum. But the most striking characteristic was that rates were extremely stable, completely ignoring the large rallies, and precipitous declines in the gold price that we have experienced this year. Well, on Friday, lease rates tripled, going from .19% to .46% in one day for the 30-day tenor. One-year rates were up 50%, going from .60% per annum to .90%. Now, it remains to be seen whether this is a "one-day wonder" or whether it portends a fundamental shift in the internals of the market. My goal is to make you aware of the facts, and I believe it is best to see some continuity before any analysis is warranted. The South African government released its final version of the mining charter, demanding various levels of black ownership of the mines within various time periods. Upon reading it, it is not as bad as the earlier leaked version of this body of law, but still, horrible. A complete analysis of the law, and its consequences, is largely unwarranted as this commentary only speaks to the fundamentals of gold, and not to the probable future of any gold producers. I still maintain my position that production levels of gold from that nation will continue to decline, and at an accelerated rate in the coming years, and, as such, will largely be supportive of the price of gold in the long run. I read some quotes from Mr. John Hathaway, a noted gold analyst, and found them to be quite perceptive and thought provoking. In comments to the Miningweb, in regards to the ratio between the DJIA and the price of gold, to quote, "That is simply the DJIA which today is around 7400, divided by the price of gold, which to make it easy, is around $300, a little bit more. So the Dow gold ratio was around 30 times. At three times in the last 100 years, that ratio has been 1:1 and it wouldn't surprise me to see us get into single digit territory within the next five to ten years. And it's simply a measure of risk-aversion or risk-tolerance (emphasis added). When the Dow is trading at 40 times the gold price, which was an all time record high, it indicated that people were very risk tolerant and that was the middle of the dotcom boom. But, the last time we had a crossover was around 1981 and then you had very high inflation and very poor returns in the stock market, and people were more risk-averse." Read all Please consider such long range thoughts in today's global economic, political, and financial markets, and it becomes clear that the overwhelming likelihood is that risk-aversion will increase, rather than decrease, and what this means to the precious metals prices. The long-term fundamentals of gold continue to look better and better as new sources of physical demand come on stream. Firstly, the often-delayed and greatly anticipated, Chinese gold exchange may open this month in Shanghai, after some taxation issues were finally resolved. While this exchange is closed to foreign interests, at this time, it does signal the liberalization of the gold trade in China and could, if some analysts are correct, rocket gold demand in that nation to 500 tons per annum from 200 tons, the difference being over 10% of global production, not an insignificant amount. Secondly, the Central Bank of India is continuing, albeit at a snails pace, to liberalize the gold market in that nation. Common hedging and deferred pricing plans have not been allowed in that nation, and may soon be changed. A greater availability of financial arrangements can only accelerate actual physical demand. Gold -- Sharefin, 20:32:05 10/14/02 Mon The forum has just rolled all prior posts to a new archive Check here for older posts Gold -- Sharefin, 20:29:33 10/14/02 Mon Festival spirit, price fall spurs gold demand in India The mood of celebration in view of the festival season and falling prices will give a boost to the demand for gold in India, which is the world's largest consumer of the yellow metal. The demand for gold records a rise during this festival season, with the Navaratri followed by Dushera and Durga Puja and the festival of light, Diwali, that falls on November 4. adding up to the gaiety. A drop in global prices is also stimulating buying. Prices have fallen to about $ 318 per ounce from $ 322 a week ago. But they are still much higher than the $ 288 of a year ago. India imports 70 per cent of the gold it needs. Gold -- Sharefin, 20:28:21 10/14/02 Mon Silver zooms up by Rs 100 on heavy buying Mumbai, Oct 14 (PTI Silver recovered sharply on the bullion market here today as it zoomed up by Rs 100 per kilo following heavy industrial and local demand ahead of Divali fesival along with a steep rally in London prices. Gold also showed fresh rise on fresh buying. However, closure of Hong Kong markets due to local holidays made activities restricted, dealers said. Gold -- Sharefin, 20:27:11 10/14/02 Mon Gold futures rise, shares mixed The car bombing in Bali that killed more than 180 people Saturday provided support to gold prices Monday as investors moved to buy the precious metal as a defensive measure. But the news of the terrorist attack weighed on some metals companies with investors concerned over the effects of metals exploration and mining in Indonesia. "The bombing in Bali was a reminder that terrorism hasn't gone away, and that even idyllic and isolated tropical islands are not immune to attack," said Erik Gebhard, an analyst at Altavest.com. See CBS News story. "This was likely partially responsible for the bounce in gold, as investors have fresh cause to run to the relative safe haven the yellow metal supposedly provides," he said. Leonard Kaplan, president of Prospector Asset Management, said in a note to clients Monday that "the value of the U.S. dollar and the movements of the stock markets will continue to have a major effect on prices." He added that "the safest strategy is to be a buyer on dips." Gold -- Sharefin, 20:26:01 10/14/02 Mon Deutsche Bank Still Bullish On Miners Deutsche Bank retains overweight rating on metals and mining sector even though says base metals outlook has deteriorated. "We believe the bias remains to the key diversifieds and gold stocks, with share prices already discounting a low-growth world. Gold -- Sharefin, 20:24:46 10/14/02 Mon Platinum leaves Tokyo short Investors betting on a fall in platinum suffered a double whammy this week in Tokyo as the price of the metal went against them and the cost of borrowing it soared. New York investors were luckier, as the US market has been positioning itself for a rise in platinum. Investors who were "short" platinum in Tokyo suffered as the London spot price rose from $557 an ounce last Friday to $592 at yesterday's afternoon fix. Worse, still, platinum lease rates shot from 9 per cent on Monday to 20 per cent yesterday. Gold -- Sharefin, 20:22:07 10/14/02 Mon Shanghai gold trade center to start business Shanghai Gold Trade Center is scheduled to start operations at the end of this month, a spokesperson for the center said Monday. The center would start business on a trial basis from October 17. The center has 108 member companies, including 13 commercial banks, two gold producing companies and 61 companies dealing in gold, eight gold foundries and two mints from 26 provincial areas across the country, said the spokesperson. The spokesperson said the gold produced by the member companies accounted for 75 percent of the country's total, 80 percent of the gold consumption and 90 percent of the country's gold smelting capacity. During the initial period of operation, only spot transactions will be allowed and buyers would have to deposit a certain amount of money in an account at a bank designated by the center, and the sellers would put the gold for sale in designated warehouses. Gold -- Sharefin, 20:16:25 10/14/02 Mon Gold shines through the gloom Gold has provided some much-needed sparkle in an otherwise bleak investment market in recent months. Britain's only gold fund, Merrill Lynch Gold & General, has outperformed every other UK unit trust over the past year, and is beaten by only one over three years. Gold -- Sharefin, 20:06:02 10/14/02 Mon Gold and the Perfect Financial Storm We are headed into the mother of all stagflations, a stagflation I predicted as early as 1996, but one that was "deferred" as a consequence of the Clintonites' covert rigging of various markets, most notably the precious metals and currency markets via the precious metals carry trades and currency carry trades. It is patently impossible that we are headed for a pure deflationary spiral simply because there are too many infrastructural deficits (e.g., impending national medical care crisis, which will send medical costs soaring; impending insurance industry crisis, a consequence of September 11, plus the insurance industry's financial devastation as a consequence of failing equity investments; impending utilities crisis, a consequence of the Enron failure and the resultant negative multiplier effects, etc.), not to mention the obvious fast developing commodities deficits (e.g., platinum, palladium, silver, natural gas, etc.). The most likely causes of a rate hike will be as follows: The need to protect the US dollar, as foreigners increasingly repatriate funds into their domestic markets. They are doing so from a crisis of confidence in the safety of US investments, not to mention increasingly favorable yields in those foreign countries in comparison to ultra low yields in US financial instruments. The need to suppress sectoral hyperinflations within the United States, even as other sectors deflate rapidly. I alluded to those various sectoral hyperinflations in my second paragraph, and again, I restate that is why we are headed into the mother of all stagflations. For those whose memories are reasonably good, the last time we had such a stagflation occurred in the Carter years and gold exploded through the roof, along with gold stocks too. Despite the existence of an unprofitable gold carry trade today, rapidly rising interest rates are NOT favorable to increased gold loans if those interest rates succeed in devastating the value of investments utilized by the gold carry trade (treasuries, bonds, stocks, etc.) Unfortunately, those favored investments of the gold carry trade practitioners will not fare well in a climate of rising interest rates -- and nobody will wish to engage in a gold carry trade if the safety of alternative investments to gold are entirely in doubt. You see, the first rate hike will cause an immediate tremendous negative effect in the super-bubble US real estate market, along with a tremendous negative effect in the super-bubble US bond market. With both markets collapsing simultaneously, there will be an immediate negative effect in the stock market too, especially since the implosion in US real estate will trigger a rapid selloff of US equities purchased upon a leveraged basis, those equities purchases having utilized bubble real estate values as the foundation for their origination. Furthermore, the implosion of bond values will create immediate crises for the financial sector, given the huge movement of capital out of stocks into bonds during the bear market to date. The further deterioration of key financial companies (insurance, banking, etc.) will create even greater devastation in their equities, and the financial sector's implosion will lead other equity sectors into a downward spiral. In effect, a rate hike, although designed initially to strengthen the US dollar and preclude foreign capital outflows, would have the exact opposite effect and create the "perfect storm" in US financial markets: falling US bond market, falling US real estate market, falling US stock market, falling US dollar. @sharefin -- giovanni dioro, 13:03:40 10/14/02 Mon Sharefin, I have thought of that as a possibility also - That is that they could easily let one big bank fail and then screw all the people who are owed money from that bank. The real wealth is in central banking. |
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