Fiat -- Sharefin, 21:55:54 11/19/02 Tue Economists' No. 1 nightmare: a downward spiral LONDON The "d" word is back. "Deflation," that is. For 20 years, the world's economic policymakers have fought a relentless war on inflation. They have gotten so good at the job that some of them now long for the days when prices in industrialized countries rose by a predictable handful of percentage points each year. Price increases are falling ever closer to zero, with inflation rates already negative in Japan and threatening to head that direction elsewhere, too. Deflation - sustained decreases in prices over an entire economy - may sound attractive to consumers hoping to snap up bargains. But to economists, it is the No. 1 nightmare scenario as the global economy struggles to bounce back from a stubborn downturn. "It's not bad if supermarkets are fighting it out over the price of baked beans," said Paul Donovan, global economist at UBS Warburg in London. "The problem is when nobody wants to buy baked beans." If falling inflation remains simply that, there is little problem. Low inflation brings stability. But if it tips over into deflation, the global economy could sink into a situation more reminiscent of the 1930s than any postwar recession and recovery, some analysts fear. In the United States, an index of inflation tied to the main gauge of economic output - the so-called GDP deflator - is already at its lowest rate since the recession that immediately followed World War II, Donovan said. In countries from Canada to Norway to New Zealand, similar measures are also at very low levels. Prices of some goods in Britain already are dropping, though robust gains in worker compensation have kept the price of services, and overall inflation, positive. In the euro zone, inflation remains stubbornly higher, but that is mostly because of big price increases in countries such as Spain and Ireland, whose economies have benefited mightily from the new currency; in core economies, particularly Germany, where the economy is in near recession, inflation is very low. In China, producer price inflation has been negative for more than half a decade, despite strong economic growth. The fear with deflation is that instead of rushing out to grab bargains, many consumers wait, assuming that falling prices mean even greater bargains down the road. Meanwhile, their paychecks shrink, too, or jobs are cut, and debt burdens from home mortgages grow heavier; at the very least, the positive aspects of modest inflation, which erodes debt burdens over time, disappear. Even worse, there is relatively little that policymakers can do through conventional steps such as cuts in interest rates, particularly as those rates push closer to zero, too, in the United States. That is why even a remote threat of global deflation - as opposed to the localized variety, such as the horror story that Japan has lived with for the better part of the last 12 years - makes the professionals nervous. And since the collapse of the technology stock bubble, the threat has grown from remote to at least possible; Donovan puts the chances at 20 percent to 30 percent. The outside chance of global deflation - or at least the talk about it - is the main thing that makes the current economic slowdown, and the sluggish recovery that most economists still predict as their main scenario, different from other economic cycles in the postwar period. "The economic profession has been surprised a little bit by the current downturn," said an international monetary official who insisted on anonymity. "They're trying to come to grips with something that increasingly looks like it will be different." Publicly, economic policymakers in the United States and Europe have stuck to forecasts that economic growth, even if subdued, will take hold next year, easing any threat of a deflationary spiral. "We are not close to the deflationary cliff," the Federal Reserve chairman, Alan Greenspan, said this month in congressional testimony, after the Fed reduced its main interest rate, the federal funds rate, to 1.25 percent from 1.75 percent. Fiat -- Sharefin, 21:13:34 11/19/02 Tue Greenspan's financial risk management - page I Greenspan's financial risk management - page II Greenspan's financial risk management - page III Greenspan's financial risk management - page IV Derivatives, by construction, are highly leveraged, a condition that is both a large benefit and an Achilles' heel. The benefits of risk dispersion are accomplished without holding massive positions in the underlying financial instruments. Yet, too often in our financially checkered past, the access to such leverage has induced speculative excesses that have led to financial grief. We are scarcely likely to reform the underlying human traits that lead to excess, but we do need to buttress our risk-management capabilities as best we can to delimit such detours from the path of balanced growth. More fundamentally, we should recognize that if we choose to enjoy the advantages of a system of leveraged financial intermediaries, the burden of managing risk in the financial system will not lie with the private sector alone. Leveraging always carries with it the remote possibility of a chain reaction, a cascading sequence of defaults that will culminate in financial implosion if it proceeds unchecked. Only a central bank, with its unlimited power to create money, can with a high probability thwart such a process before it becomes destructive. Hence, central banks have, of necessity, been drawn into becoming lenders of last resort. But implicit in such a role is the assumption that the burden of risk arising from extreme outcomes will in some way be allocated between the public and private sectors. Thus, central banks are led to provide what essentially amounts to catastrophic financial insurance coverage. Such a public subsidy should be reserved for only the rarest of occasions. If the owners or managers of private financial institutions were to anticipate being propped up frequently by government support, it would only encourage reckless and irresponsible practices. ~~~ The inevitable rise in potential systemic risks as the international financial system inexorably expands can be contained by improvements in effective risk management in the private sector, improvements in domestic bank supervision and regulation, continued cooperation among financial authorities, and, should it be necessary, by central banks acting as lenders of last resort. Fiat -- Sharefin, 20:59:44 11/19/02 Tue Greenspan on what happens to US Fed if rates dip to zero Federal Reserve Chairman Alan Greenspan said Tuesday that the Fed would not be "out of business'' in terms of stimulating the economy even if it should push a key interest rate to zero. Greenspan used his appearance before the Council on Foreign Relations to dispute worry expressed by some private economists that the Fed may be running out of ammunition to jump-start the lagging economic recovery. The central bank two weeks ago cut its target for the federal funds rate, the interest that banks charge on overnight loans, by a bigger-than-expected half point to 1.25 percent, the lowest level in 41 years. "The general view is that, as the Fed funds rate gets closer and closer to zero, that at zero we are out of business,'' Greenspan said. "That is not the case.'' Greenspan said the Fed could buy other U.S. Treasury securities with varying terms of maturity to pump cash into the financial system and stimulate economic activity. USD Paradigm Shift - Lower $ Higher POG -- Giovanni Dioro, 12:16:34 11/19/02 Tue Jyske Bank's recent analysis of the Dollar portends to a paradigm shift and perhaps the start of a multi-year downtrend in the Dollar. A lower dollar means the probability of higher inflation and a higher price of gold when priced in dollars. Also a falling dollar and rising inflation may also force the rising of interest rates in america. Rising interest rates could devastate the real estate markets that use leverage. However since people don't generally borrow money to buy gold, gold should be a good investment in this environment and should be in everyone's portfolio as insurance to a certain degree. Here is what jyske says about the dollar: Even if the movement from 99.40 to 101.73 does not look revolutionary on paper, the peak at 101.73 gave some of the market participants sweaty palms in view of their prediction that new highs of the EUR/USD rate were within reach. We admit that it is psychologically difficult to put down one's stake when the dollar scenario is changing as radically as we think is actually the case at present. However, we brace ourselves, convinced that 101.73 is not THE peak this time round; the foundation of the dollar having become far too unsteady. Generally, the dollar is on a slippery slope as clearly evidenced by the fact that the dollar has weakened across the board, and the euro has managed to gain value only against the dollar. Actually, the dollar has weakened against GBP, SEK and NOK this week. The movement towards a higher EUR/CHF rate is mainly due to Iraq's acceptance of the UN resolution about admitting weapons inspectors into Iraq again, and to the consequent easing of the danger of war. This means that CHF is becoming less attractive as a 'safe haven'. The closer we look at the economic facts that Mr Greenspan must react to, the greater seems the risk, or the chance if you will, of the dollar being used as the last weapon on the shelf to prevent a threatening economic downturn in the US. Realising that such a paradigm shift may seem unimaginable after an unbroken dollar upturn lasting no less than seven years and three months, we still think that facts point to a weaker dollar. Just look at the chart below and consider where the next five to seven years will take the dollar, if those analysts are proved right, who maintain that the dollar moves in cycles of five to seven years' duration!  Adobe file of Jyske's FX analysis Gold -- Sharefin, 02:12:39 11/19/02 Tue The Kuala Lumpur International Money 2002 Fair Opening Speech I would like to thank the organisers for inviting me to officiate the inauguration of the Kuala Lumpur International Money Fair (KLIMOF) 2002. This Money Fair is a historic event for the Malaysian numismatic community. 2. The KLIMOF exhibition and conference offers a one-stop centre for visitors and investors alike to learn about collecting and valuing coins and notes. Together with its concurrent events -- Kuala Lumpur International Investment Fair 2002 and Kuala Lumpur International Collectible Fair 2002 -- KLIMOF 2002 will certainly provide a vast range of opportunities for industry professionals and entrepreneurs to showcase their cutting-edge businesses, products and services. 3. The KL International Money Fair was initiated by the Royal Mint of Malaysia with the aim to bring together both local and foreign numismatic collectors in this world-class exhibition, the first of its kind ever held in Malaysia. 4. The coins and notes that are being displayed today illustrate how payment systems throughout the world have evolved over the centuries. Money is a medium of exchange. It determines the value of the goods or services being offered for sale or purchase. Accordingly the need to barter goods or services is eliminated. Trade becomes easier and commerce is enhanced. More wealth is created for all. 5. With the advancement of global economies and the increased sophistication of trade and financial flows and, more recently, the rapid development of the Internet and electronic commerce, the role of money in the physical form is changing. 6. Indeed, transactions of goods and services and even capital flows can take place with a phone call or the touch of a computer keyboard. There need not be any physical cash transactions. 7. These developments suggest that money in today's definition is just information which can be transmitted electronically to facilitate business transactions. As a result, the usage of coins and notes will decrease as e-commerce expands. It is perhaps worthwhile to recall that the currency which the currency traders bought and sold were mere figures on computer screens. The money when it was finally delivered involved only the change in the names of the owners of bank accounts. No real money changed hands. Clearly figures on a computer screen have taken the place of money. Yet the effect can be devastating for whole countries and businesses. 8. Credit cards and E-commerce will make the supply of physical money less necessary. Numismatists are going to find collecting money less easy. This may in fact increase the interest of numismatists and add to their numbers. Indeed, coins and notes will be transformed from an item of economic value to a collectible item, which will be treasured by coins and notes enthusiasts. Gold -- Sharefin, 02:09:33 11/19/02 Tue SPEECHES BY YAB DATO' SERI DR MAHATHIR BIN MOHAMAD PRIME MINISTER MALAYSIA AND MINISTER OF FINANCE Lots more speeches by Mahathir. Gold -- Sharefin, 02:06:35 11/19/02 Tue And here's the original speech. SPEECH BY PRIME MINISTER THE HON DATO SERI DR MAHATHIR BIN MOHAMAD AT THE GOLD DINAR IN MULTI-LATERAL TRADE SEMINAR IKIM HALL KUALA LUMPUR I would like to thank the organisers for inviting me to speak at this seminar on the Gold Dinar in Multi-Lateral Trade. I hope I can help to make clear the idea and the concept of the Gold Dinar. 2. For some time now the Muslims and their countries have become synonymous with backwardness, authoritarian and frequently unstable Governments and lately with terrorists and terrorism. Yet Islamic states were not like that before, nor were Muslims involved in acts of terror. In fact Muslim countries were where the persecuted of Europe, in particular the Jews, sought refuge. The pogroms and the inquisition in Europe forced the Jews to migrate to the Muslim countries in North Africa. Yet before that when Muslims ruled Spain, the Jews, the Christians and the Muslims were able to live together in peace. 3. If today there is so much animosity between Jews and Muslims it is not because of religious differences. The fact is that the Europeans who in the past never liked the Jews and massacred them every now and then, wanted to get rid of the Jews. Together with the Zionists they took Arab land in Palestine and gave it to the Jews for the setting up of the state of Israel. In the process the Palestinian Arabs were expelled from their homes and their land and ever since these people have been living in makeshift refugee camps in Lebanon and Jordan. 4. When the Arabs attacked Israel in a conventional war, they were not only defeated but more of their land was seized by Israel. The Israelis were able to win because they were strongly supported by Europe and then America. Every time the Arabs fought to get back their land, they actually lost more land. 5. The conflict is therefore about land, not about religion as it is made out to be. If the Palestinians indulge in acts of terror today, if other Muslims indulge in acts of terror, it is because conventional war has become impossible for them. We do not condone acts of terror by anyone. Suicide bombing against civilians must be considered as acts of terror. So are the killings of Palestinian children and civilians by the Israeli armed forces -- all are acts of terror. And the Israeli army is no less a terrorist organisation now as is Hamas, as was the previous Jewish Irgun Zvai Leumi, the Stern Gang and others, all are terrorist organisations. 6. The events of September 11 2001, have however focused the world's eyes on Muslim terrorists and this has lead to a very distorted view of Islam and the Muslims. This view has affected Muslims in all areas. They are being discriminated against everywhere. 7. This unfortunate repercussion of September 11 has resulted in the whole world's economy being unable to grow. And now, as a direct consequence we are being threatened by a war against Iraq, a Muslim country and a major oil producer. Without doubt this will make the economies of the world even less able to grow, especially those of Muslim states. 8. The West and in particular the Americans are very angry. So are the Muslims. Angry people cannot act rationally. But if we want to solve the problem we have to strive to be rational, to remain calm and not let emotions control us. 9. At the moment most Muslims are only bent on revenge. They are hitting back because of anger. They do not seem to care whether they achieve ultimate success or not. Every time they hit, the other side would hit back. And every time the other side hits back they would retaliate in kind. 10. The question is how long will we go on like this. The Palestinians have been fighting for the past 50 years. Their position has not improved. In fact it has become worse. In fact the position of the Muslims worldwide has become worse. And if what is happening now is any indication it would continue to be so for decades. The Muslims of this world, all 1.3 billion of them, will continue to be oppressed and humiliated. 11. There are of course some of us who believe that it is the fate of the Muslims to be oppressed in this world because in the akhirat we would be in heaven. If this is the fate of the Muslims, why did the Prophet strive to save the Muslims from the oppression of the Khuraish? Why did he and his followers migrate to Madinah; why did he unite the Ansars and the Muhajirin and gather them into a strong force in order to repel the enemy? Indeed the Al-Quran enjoins the Muslims to equip themselves for their defence, to educate themselves, to achieve success in life even as they must seek merit for the hereafter, so they may impress the Jahilliah and spread the teachings of Islam. In a matter of 100 years the Muslims had created a powerful Muslim world extending from Spain in the West to China in the East. 12. Did the Prophet preach to his followers that they should suffer in silence because for them there will be heaven in the next world? In fact he prepared them to defend Islam with their wealth and their lives, to defeat the enemy. He did not advocate just seeking revenge upon the enemy in anger through attacks and killings. 13. It is clear that we Muslims are openly and blatantly ignoring the clear teachings of our religion in favour of quarrelling over contentious issues and interpretations while ignoring the oppression by the enemies of Islam, while failing to prepare for the defence and safety of the ummah and Islam. 14. One of the clearest teachings of Islam is that all Muslims are brothers and that no one should question the religion of anyone as long as he takes the oath that "there is no God but Allah and Muhammad is His Prophet." The split amongst the Muslims into hundreds of different sects is due to the denial of the Islam of rival groups in order to justify the fight against them. 15. All who submit to "Allah and His Prophet" must be considered as Muslims and must be brothers of each other. Race and nations and borders should not stand in the way of Muslim unity nor should ideologies and political parties. There is only one Islam that was brought by the Prophet. The breakup of the Muslims into sects and groups all occurred after the death of the Prophet. It follows that the differences in the interpretations of Islam, differences which lead to the many splits and the formation of splinter groups, which are opposed to each other, is due to different interpretations of the teachings of Islam. But we all subscribe to the basics and it is a basic creed of Islam that all Muslims are brothers. If we can forget our differences in the interpretations of Islam, if we go back to the basics which we all accept then it is possible for us to unite. Certainly now, when the Muslim ummah everywhere is threatened and oppressed, when our holy places are being desecrated, when we are so weak and poor, particularly poor in knowledge and skills in this age of technology, certainly now we must forget our differences and unite. 16. However, our unity should not be for the purpose of futile attacks on the enemy. We should unite in order to build up our capacity and our strength. Simply by being united and strong, we would be freed from oppression. It will take time but Allah has enjoined upon us to be patient. 17. "Innallah hamaassabirin". The Prophet was patient; He did not seek revenge for the humiliation and oppression he was subjected to. He retreated to a safer place in order to build up his strength. And he created sufficient wealth among his followers to support his struggle to return to Makkah. 18. We have to do the same. The Muhajirin and the Ansars among us must unite, must build up our capacities in terms of wealth and technology, in terms of stable Islamic communities, in terms of following all the undisputed injunctions of Islam. 19. Pure materialism is abhorred by Islam but there is no injunction against the legitimate acquisition of wealth. Tithe must be paid on our wealth but we are also enjoined to be charitable. We know that the third Caliph, Saidina Othman, was wealthy. During the campaigns by the Prophet he donated camels and other supplies for the defence of the Muslims. 20. If the Muslims are going to protect themselves they must have sufficient wealth. Allah has endowed Muslim countries with inexhaustible wealth. These need to be administered for the good of the ummah. 21. But wealth can also be acquired through commercial activities, through the production and distribution of goods and services and through trade. 22. Today trade between Muslim countries is small. It is not suggested that we reduce our trade with the non-Muslims. But we should endeavour to increase the trade between Muslim countries. 23. We can trade through the exchange of goods, through barter. But today we use money. Since we don't have a currency which is strong enough and table enough in exchange rate terms, we have to use the American dollar. But the dollar is also not stable. Today the dollar has depreciated against many other currencies. This means that despite the increase in the price of oil for example, we are actually earning less due to the devaluation of the dollar. It is the same with the other currencies. It is the same with our own currencies. They all fluctuate in value. And they are all subject to speculation and manipulation as happened in Malaysia and other East Asian countries, in Russia and in Latin America. 24. The reason for this is that paper currency has no intrinsic value. You can print any figure you like on currency notes but in exchange rate terms the figure means nothing. The Malaysian Ringgit is 3.8 to one U.S. Dollar. The Turkish Lira is 1.5 million to one U.S. Dollar. The Indonesian Rupiah is 9000 to one U.S. Dollar. The purchasing power within the country is different from the purchasing power outside the country. Sometimes countries have as many as four exchange rates -- one official, one for domestic economy, one for export and one for import. 25. Clearly this situation in terms of international finance is chaotic and anarchic. But since the system benefits the powerful countries they are unwilling to correct it. 26. If we want to avoid being short-changed we must have a currency that has intrinsic value. Gold does fluctuate in price but the fluctuation is minimal. It is not possible to devalue gold by one hundred percent or one thousand percent. Nor is it possible to revalue gold by the same percentage. The fluctuation in the value of gold can only be by a few percentages, up or down. 27. When the Allied nations met in Bretton Woods to determine the principle for the rate of exchange of international currencies in order to facilitate trade, they decided to use gold as a standard. The value of the U.S. Dollar was fixed at one dollar for 1/35 ounce of gold or 35 U.S. Dollars per ounce. All other currencies were valued in gold through the rates of exchange with the U.S. Dollar. 28. This worked quite well until some countries wanted to devalue their currencies in order to become competitive in the international market. Then other countries also decided to devalue in order to remain competitive. Finally the U.S. Dollar was devalued against the Gold. 29. At this stage the gold standard could not be sustained. The market claimed that it could determine the exchange rate through the demand and supply of currencies freely traded in the market. But profiteers moved in and they manipulated the value of the currencies so that there was chaos in terms of exchange rates of currencies. Business became very difficult. Indeed many good businesses went bankrupt when the domestic currency gets devalued. The hedge Funds which claim to insure the value of the currencies made huge sums of money speculating and manipulating the values of the currencies. 30. This anarchy in the international financial regime will remain because it benefits the rich and the powerful. If we want to protect ourselves we must evolve our own payment system, our own trading currency. 31. The Gold dinar can provide the currency for trade between nations. If we value all trade items against gold, then we will have no problem with the exchange rate. We know that in the last resort we can melt the gold and sell it in the market. You obviously cannot do that with paper currency, worst still with figures on a computer. They have no intrinsic market value as gold has. 32. But gold is bulky. We cannot be carrying gold all over the world in order to pay for goods we want to import. But we need not do that. 33. It is not intended to use the gold dinar as currency for everyday transactions in the domestic market. For this we can use national currencies. If there is inflation then the currency can buy less gold and other goods. And vice versa. So there is no necessity to carry bags of gold coins for transaction within the countries. 34. But even for international trade the transport of gold bullions or gold coins would be very minimal. Through bilateral payments arrangements the imports can be balanced by the exports and the differences settled in gold dinars. The Central Bank can provide a guarantee for the gold required for the payments of the balance. In the following weeks or months the deficits may be reduced or a surplus achieved. In that case the payments of the balance can be made through accounting arrangements between the Central Banks. It is only occasionally that a necessity might arise for the actual gold dinar to be used to pay for the purchase of imports. 35. We cannot really verify the amount of money a country has. A country's own currency cannot be regarded as its reserve. But gold dinars or gold bullion or gold ingots can serve as a country's reserve. Still in the end we have to trust each other. If we are good Muslims then the cases of fraud by Central Banks would be minimal. 36. Assuming that Malaysia exports to a Dinar Area country a hundred million Dinars worth of motor vehicles and then imports 110 million dinars worth of oil, then the payment required by Malaysia would be just 10 million dinars. The ten million dinars is credited to Malaysia's trading partner. If in the following month the trading partner buys 110 million dinars worth of Malaysian cars and Malaysia buys 100 million dinars worth of oil, then no payment need to be made by either party. The 10 million dinars that has to be paid by Malaysia's trading partner for the motor vehicle can be offset by the credit of 10 million dinars from the previous month's transactions. 37. Today with computers we can close account and pay more frequently. Through this method it is not necessary to purchase or earn hard currency. 38. Of course there may be some countries which are so poor that they cannot have gold dinars. We can buy some raw materials to be paid in gold dinars. They can be helped to build up the reserves of gold dinars. 39. There will be problems. But if we begin with just a pair of countries we would be able to minimise problems and demonstrate whether it works or not. We will be able to identify the weaknesses and the faults and correct them. 40. Gold is a precious metal. There has never been a time when there was no demand for gold. It is also not so plentiful that its price will fall the way paper currency or even other precious metals can fall. Yet it is not so limited in quantity that anyone or any trader can corner it and manipulate the price. 41. In different countries the price of gold will differ in terms of the currency of that country. That is a function of the currency of the country. The value of one gold dinar is one gold dinar no matter what the exchange rate of a currency is against the gold dinar. If the value of goods or services is expressed in gold dinar, the value remains the same no matter which country is involved in the trade. 42. Thus an exporter can declare the agreed price in dinar to the importer in another country and to the Central Bank in his country. Depending on the agreement reached the Central Bank will pay the exporter the current local currency equivalent to the gold dinar price. At the importer's end, he would pay to his country's Central Bank the local currency equivalent of the agreed price in dinar. At the end of the week or month the Central Banks will total up the value in dinar of the exports and imports between the two trading countries. If they are not balanced then the country with a surplus will have a credit account against the country with a deficit. The difference can be paid in dinar or in goods or the country with the surplus can hold the dinar for future purchase from the country in deficit. 43. In multi-lateral trade, the process may be a little more complicated but it is entirely, manageable. A clearing house can be set up for a group of trading countries and the deficit and surpluses balanced. The process is not unlike the clearing of the cheques of numerous banks at a central clearing house. 44. Provided there are goods or services to be supplied by all participating countries, the amount of gold dinars that needs to be kept as reserve backing and for payment in the last resort is very small. Ideally there would be no need to transport and pay in dinars. The imports and exports in most instances would cancel themselves. The profits come from disposing of the goods or services domestically when the local currency would be used. 45. There will be problems of course. But there are problems now. Countries with no "hard currency" i.e. U.S. dollars cannot pay for their imports anyway. In addition the U.S. currency is not as stable as gold. Not only can it appreciate or depreciate widely but a country's currency can be made to depreciate so much against the U.S. Dollar that its imports cannot be paid for, priced as they are in U.S. Dollar. The gold dinar cannot depreciate much against the U.S. Dollar. 46. Gold price can also be manipulated but not as easily as U.S.Dollar or other currency. No one can sell gold at below market price because he just will not be able to deliver when called upon to do so. Short-selling will be very difficult if not impossible. 47. However local currency prices of gold can still fluctuate if left to the market. It is up to the country concerned whether to control exchange rates or not. But speculation and manipulation will not be as easy as when local currency is valued against the U.S. Dollar. 48. It must again be stressed that the Gold Dinar is exclusively for international trade. It is not to be used as local currency. In a sense it is like the U.S. Dollar now. Some countries of course use the U.S.Dollar locally for paying hotel bills by foreigners. But the dinar is heavy and cumbersome to carry. So it cannot be used as freely as the U.S. Dollar locally. This again lends credibility to the dinar and the local currency, which has to be used for local payment. 49. We should not be too ambitious as to launch the Gold Dinar for multi-lateral trade at one go. We should begin by pairing off the countries willing to use the Gold Dinar. A pair of good trading countries with a fairly well balanced trade should initiate the use of the Gold Dinar. Problems that arise can be resolved and the system improved. After the bugs have been got rid off then the trade using the dinar can be expanded gradually to involve more countries. 50. Traders in particular will be happy because their prices in Gold Dinar would not be affected by changes in the exchange rates of the importing countries or the exporting countries. In dinar, the prices will always remain the same. 51. It is not the intention to make the dinar a common currency for all countries. It is not really the Gold Standard with a fixed value against local currency. If countries print more local currency there would still be inflation within the country. But trade would be stable and enhanced. Speculators and manipulators will not be able to undermine international trade. 52. Of course the Gold Dinar can be a trading currency, for all countries, not necessarily Muslim countries. But Muslim countries are in the best position to demonstrate the viability of the system. They are in a position to manage their economies rationally and in the process show the world that they are capable of growing with stability and in peace. And this will do more towards countering oppressions by their enemies than the futile violent retaliations. Gold -- Sharefin, 02:01:48 11/19/02 Tue The Seriousness of the Gold Dinar There is an Islamic currency coming. That is a fact. There is a high chance that this is it. The Dinar is a tactic nuclear monetary weapon of self-protection in the Islamic perspective. It is a statement by them of Islamic Self Consciousness and Islamic Self Esteem. It is an Islamic rally point for all 1.2 billion of that persuasion. It is coming soon and it is real. It may not be viewed objectively by the West, in the environment of a weak dollar now existing. That weak dollar situation looks to me as if it will get significantly worse before it gets significantly better. This is not low amplitude noise. This is a NOISE that may scream soon the unthinkable word, Remonetization. Here are the words of its architect. Pay close attention to the final point in the words of this Minister of Finance's own words. They need to be understood completely in order to understand what is coming. Periodic Ponzi Update PPU -- $hifty, 23:03:53 11/17/02 Sun Preiodic Ponzi Update PPU Periodic Ponzi Update PPU Nasdaq 1,411.14 + Dow 8,579.09 = 9,990.23 divide by 2 = 4,995.11 Ponzi Up 46.91 from last week. Thanks for the link RossL. I like the Ponzi Trend chart you added! This should be an interesting week! Go GATA Go Gold $hifty  Gold -- Sharefin, 21:27:22 11/17/02 Sun Gold Dinar: An Economic and Strategic Response to Chaos Mounting concern around the world that the Bush Administration is madly threatening to drive the world into perpetual warfare, while doing nothing to address the global financial-economic collapse, has led to the introduction of a number of defensive measures by nations and groups of nations acting in concert. One such measure is the proposal for creation of a Gold Dinar, intended as a replacement for the dollar as the currency of trade among nations. With a war against Iraq looming on the horizon, and U.S. threats against Saudi Arabia escalating in the establishment's institutions and publications, it is increasingly probable that the Gold Dinar policy will be implemented in the near term, among certain Islamic nations at first, and potentially expanding to include non-Islamic nations. Gold -- Sharefin, 21:24:44 11/17/02 Sun Thailand and South Korea buying gold in dull market Asian gold demand ahead of major holidays next month appears strongest from areas with a large jewellery exporting industry, while domestic demand is mostly dull except in South Korea, dealers said on Friday. "Thailand has been buying very aggressively in physical," said CT Ng, director and head of bullion, Asia for Standard Bank London in Singapore. The demand in Thailand was coming from jewellery manufacturers producing for export as well as from various sectors of the local market, Ng said. Enquiries picked up in the second half of the week with the fall in the spot price of gold following Iraqi President Saddam Hussein's acceptance of a renewal of UN mandated weapons inspections of sites in Iraq. ~ South Korean demand for gold remains buoyant with Hong Kong- based dealers talking of an expansion of the market there in recent months. Korean demand has been volatile in the past five years, hitting a high of 82.2 tonnes in 1997 before the onset of the worst of the Asian financial crisis. It then sank to a low of just 5.5 million tonnes in 1998 as the population sold its gold to bolster the national treasury. Offtake in 2002 is forecast to be slightly higher than last year at around 68 tonnes. Gold -- Sharefin, 21:18:20 11/17/02 Sun Dubai makes its gold glint at Indians MUMBAI: A gold prize worth Rs.13 million is being dangled for shoppers at the Dubai Shopping Festival 2003 which is wooing Indians aggressively. Tawhid Abdullah, chairman of the Gem and Jewellery Group and the Dubai City of Gold, said India has emerged as the key market for the gold and jewellery trade in the United Arab Emirates (UAE). "Of the $150 million worth of gold and jewellery sold at Dubai Shopping Festival (DSF) 2002, India accounted for as much as $50 million," he said here. Abdullah said the Gold and Jewellery Group would offer a kilo of gold by way of prizes each day for all the 32 days of the Dubai Shopping Festival that will take place from January 15. In addition, a grand prize of Rs.13 million will be offered to one lucky shopper, Abdullah said. Shoppers who spend Dhs 500 (Rs.6,500) to buy jewellery from any participating jewellery outlet in Dubai will receive a coupon that will entitle them to a daily raffle for a kilo of gold, worth over Rs.450,000. The event will culminate in the grand raffle for the prize of Rs.13 million to a single winner. All raffle coupons will enter the final draw on February 15. This is the biggest grand prize ever offered by the Gold and Jewellery Group, and is almost triple the size of last year's final prize, 10 kilos of gold, worth Rs.4.5 million. A large number of winners are from India, according to Abdullah. Last year 14 Indians were among the daily raffle winners, each of them winning a kilo of gold. Abdullah noted that India is not only one of the biggest exporters of gold and jewellery to Dubai but also is one of its largest importers. Quoting figures, Abdullah stated that of the 110 tonnes of manufactured Jewellery that Dubai imports each year, India accounts for over 20 percent. India also accounted for a substantial share of the 250 tonnes of gold bullion imported by Dubai every year, Abdullah said. According to Abdullah, about half a million Indians visited DSF 2002. He predicted a rise of at least 15 percent in the forthcoming year. Gold -- Sharefin, 21:16:25 11/17/02 Sun Gold's Midas touch leaves banks cold Against a backdrop of corporate scandals and plunging stock markets, the price of gold has climbed by about 20 per cent in the past 18 months. Mining companies' profit margins have grown and anyone with a nest egg of bullion bars is feeling a little safer. Not everyone in the market is smiling, however. Business has never been tougher for the bullion banks and, while investors have a new-found enthusiasm for gold, the serious money has bypassed the metal itself, pouring instead into mining shares. Meanwhile, the bullion banks, which do business with the mining groups and central banks, have seen their profits dwindle. That is largely because of the fall in hedging business. When the outlook for gold prices is uncertain, mining companies might choose to manage the risk by locking in a future price for their gold. Bullion banks help make these forward sales possible, providing derivative products such as forwards and options. Hedging was good business for the banks during the 1990s as they designed increasingly sophisticated derivative structures for clients. But producers became more cautious after 1999 when the gold price spiked unexpectedly and Ashanti Goldfields of Ghana and Cambior of Canada's derivative positions brought them close to disaster. "By 2000 the producers were looking at much more 'plain vanilla'-type business: basic forwards, basic options," says one mining executive. "The really lucrative trades started drying up though there was continued volume in the bread and butter stuff." But as gold has pulled out of its decade-long slump, producers have stopped hedging. Some are letting contracts expire, others are buying themselves out of their positions. Conventional wisdom says this development, and gold's rally, were begun the US Federal Reserve. Falling dollar interest rates made it unprofitable for miners to hedge, or for speculators to sell the metal short. For forward sales to make commercial sense, the cost of borrowing gold must be less than the cost of borrowing money. In the mid 1990s one could have borrowed gold at 1 per cent, sold it and invested the proceeds at 7 per cent. But falling US interest rates have narrowed that gap. Not only is hedging no longer profitable, it has become anathema to investors seeking exposure to gold's rally. "In 1999, producers were adding around 500 tonnes of gold a year to supply through hedging. They are now taking back around 500 tonnes through de-hedging," says Andy Smith, analyst at Mitsui in London. Gold -- Sharefin, 21:01:57 11/17/02 Sun Russell On Gold With all this debt piling up, with all the new credit being created -- and with the threat of increasing bankruptcies looming, there will be an increased desire for something intrinsic, something that isn't created out of debt. Yeah, I'm talking about gold. And what do you know -- I've been having new thoughts about the gold situation. The new thoughts are that I don't think serious gold buyers are at all anxious to see gold surge to new highs -- at least not at this time. No, I think gold is under serious, quiet ACCUMULATION, and the accumulators are actually hoping that gold "takes it slow." One of these groups is the gold mines who are still hedged and who are anxious to get rid of their hedges. The last thing these mines want is a booming gold market at this time. Another group is the "silent accumulators," those who see the writing on the wall, and who are quietly buying gold at what they consider "dirt cheap" prices. A third group is the gold banks who have a huge short position in gold. Still another group are the Commercial shorts, part of these, of course, are the gold banks. The two immediate upside targets for Dec. gold are 325 and then 330. I don't think gold buyers are anxious to see those two targets bettered today or tomorrow. No, they'd rather accumulate gold at dirt cheap prices. Lenny's Corner -- Sharefin, 21:00:46 11/17/02 Sun GENERAL COMMENTS: While, in my opinion, the gold market remains in a secular bull market which will last many years, where fundamental supply/demand characteristics force ever higher levels of support, it is still caught in, what I term, the "jewelry cycle." As about 90% of the demand for gold is for jewelry, and as this demand is highly elastic (where demand falls about 3% for every 1% increase in the gold price), the gold market seems doomed to a slow rise, with each successive trading range being higher than the previous one. (Please note that this is NOT a negative, as the predictability of a market is essential to successful trading). There are many analysts who still, even after years of being proven wrong, forecast a "moon shot" for gold prices. Intrinsic in their hypotheses is the given of investor and speculative demand, as only such buying could create market conditions to force a roaring bull market. But the truth be told, for reasons that I cannot understand, global investors still have not discovered the gold market, even though it is perhaps the performing asset class of the past several years. Rational analysis would indicate that the gold market will continue higher in the coming years, ratcheting up from one trading range to ever higher trading ranges, but that a roaring bull is still improbable unless gold regains the interest of investors and speculators, which simply has not happened as of yet and, frankly, looks unlikely. ChartsRus -- Sharefin, 10:18:56 11/17/02 Sun Charts online Looking very bullish!!!! Link to last post -- giovanni dioro, 09:03:57 11/16/02 Sat BBC Anglo American to treat its miners Anglo-American to pay for AIDS treatment of its miners -- giovanni dioro, 09:01:42 11/16/02 Sat South Africa's mining giant AngloGold has begun providing anti-retroviral drugs to HIV-positive employees - the first such business in the country to do so. The treatment is being supplied initially to those considered most at risk of developing full-blown Aids. AngloGold estimates that up to 30% of its 40,000 workforce is infected with the virus. Its parent company Anglo American said in August it would make anti-Aids treatment available to all its South African workers...  Gold -- Sharefin, 07:13:33 11/16/02 Sat Heed the signs that gold is scarce and getting scarcer fast Dear Friend of GATA and Gold: Michael Kosares, proprietor of Centennial Precious Metals in Denver and www.USAGold.com, and host of that Internet site's invaluable forum, considers Tim Wood's recent interview of Goldcorp CEO Rob McEwen at Mineweb.com as important as GATA does, and has put an insightful preface on it in posting it at USAGold. That preface is appended here. CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. * * * By Michael Kosares www.USAGold.com Friday, November 15, 2002 In the following interview Mr. McEwen is hitting on something vital. As a matter of fact, when looking at the long-term prospects of gold, as physical owners for the interim, we should view this as perhaps the most important gold story out there. McEwen is absolutely correct, and people in the industry who have tried to acquire a large gold lot -- and I mean one to 10 tonnes, not 300 tonnes -- have found that the bullion banks cannot produce. They can talk the talk, but when the money's on the table, they can't produce. We had a call about six months ago from a trading house in Canada looking for anything of size -- 1 tonne or better. There was nothing out there. The trader, who shall remain anonymous, confided in me: "It's not supposed to come to this, eh?" But someone his firm represented needed metal and needed it fast. It happens. And it's going to happen with more frequency as more gold loans become due and mining production feels the hard downward curve associated with depleted high-grade zones. The contradiction is that it seems that there are always enough gold coins and bars for small-investor needs. Somehow the gold is found to keep mint and refinery production levels consistent with demand. Why? My own belief is that the bullion houses move heaven and earth to keep up the appearance of plentitude in order to prevent the public from finding out the gold market's dirty little secret: There's no gold in size for anyone (including nation-states) who wants it. Just think what that means when the gold loan scenario rolls out of the paper game and real metal becomes an issue for settlement. In my view, the small Third World central banks that have been depleted of their reserves in these lending schemes are going to get creamed, and there's little they will be able to do about it. Many people ask for the real reason why the top central banks curbed gold lending through the Washington Agreement. Once again it was because fractional reserve gold lending was getting out of control. The prospect loomed that all hope for the return of deposited gold would be lost in a massive default. That propect hasn't gone away. It's still out there and that's why buying gold now while the bullion houses think they've got the wool over our eyes is one of the best investment prospects I have seen in my 30 years in the gold business. Last week we had the question of how the late-1960s gold market compared to the present. It does in one important way: It's the best investment opportunity of a generation. View control of the gold price as your friend, not your enemy. The dollar market someday will break the back of the gold cartel. When it does, gold owners will look back at the beginning decade of the 21st century as they looked at the 1970s -- a time of unprecedented returns on our portfolio insurance policies. Sell the rallies in stocks. Buy the dips in gold (the rallies in the dollar). That's called taking advantage of the new reality. Gold volumes at USAGold/Centennial Precious Metals over the past three months are running near 1999 levels. The wider world is unaware of what astute investors are doing and consider their good advantage. Gold -- Sharefin, 07:07:52 11/16/02 Sat The case for gold hitting US$510 Café Tuscany is tucked away among the mostly Chinese and Korean restaurants jostling for attention on Baldwin Street in Toronto's Kensington Market area. When we meet for lunch with John Ing, president of broker Maison Placements Canada Inc., we note this Italian port in an Asian sea is akin to gold as an investment -- something different in a world dominated by paper assets. Lunch with Ing, Bay Street's most ardent admirer of gold, is getting to be a regular event on the fall Lunch Money calendar. As usual, and with a lustrous year for gold and the gold stocks he recommended last fall under his belt, he's ready as always to make a cheery pitch for the barbarous relic, which he concedes has mostly been a lousy investment for more than 20 years but which he now reckons is heading next for US$375 an ounce from US$320.70 now, and then to US$510 some time in 2003. ~~ "In a world where value is being questioned -- as in equities -- gold has resurfaced as what it has historically been -- a store of value," Ing declares. And the prospect of a war in Iraq (we lunched before Saddam Hussein gave the green light to UN weapons inspectors) and its attendant risks can only enhance what is a good basic case for owning gold -- 10% of your portfolio for insurance purposes in a risky world. The twin U.S. deficits -- budget and trade -- make for a promising backdrop for gold, as has the falling U.S. dollar, which has given bullion a lift in the past year. A year ago when we met and gold was still at US$280 despite the Sept. 11 terrorist attacks, Ing committed what was "almost heresy" in the gold investing world by telling Maison Placements' clients and anybody else who would listen to buy all or some of 10 junior gold stocks he was recommending because they were "dirt cheap." As a group, they had gained more than 100% by June at the top of the golds market and are still up 57%. By contrast, the price of bullion has risen 17%, and the benchmark Philadelphia gold index is up 25%. Meantime, the Dow Jones industrial average has dropped 20%. What he does see is that the price of gold and the level of the Dow, which were even in the gold bull market of 1980 around 850, should be more in line. At the top of the equity bull market in 2000, the Dow at 11,700 traded at roughly 45 times the price of gold. If it were to trade at, say, 10 times, Ing says, gold might be at US$500 and the Dow at 5000, from 8579 now. "I'm not saying the Dow's going to 5000, but it's not preposterous." Fiat -- Sharefin, 22:07:26 11/14/02 Thu Apparently the prior link has had the article taken down. Apocalypse Now, or Alottanukes Soon Fiat -- Sharefin, 21:12:22 11/14/02 Thu Apocalypse Now, or Alottanukes Soon "The American economy is an economy of false appearances," says al-Usuquf. "There's no real economic weight. American GNP is something around $10 trillion, but only 1 percent comes from agriculture, and only 24 percent from industry. So 75 percent of its GNP comes from services, and most of it is financial speculation. For someone who understands economics, and apparently America's Treasury Secretary Paul O'Neill does not, or cannot, the US as a whole behaves like an immense dot.com, and dollars are its stocks. The value of stocks from a given company is directly proportional to its profitability. When a company only provides services, but does not produce goods, the value of its stocks depends on its credibility. What I'm saying is if US credibility is affected, its stocks - the US dollar - will fall at tremendous speed, and the whole American economy will collapse." Fiat -- Sharefin, 21:10:37 11/14/02 Thu Specter of debt deflation looms over economy Of course, deflation of prices of goods and service is not necessarily bad news. Throughout economic history there were several periods of prolonged deflation during which the U.S. and global economy did just fine. The problem is that deflation combined with too much fixed rate debt can be an economy killer. Whether a debt deflation meltdown can be avoided is key to the 2003 U.S. outlook. Debt deflation is triggered when companies and individuals--who lack pricing power in their price strategies and wage negotiations--become unable to make interest payments on loans that were contracted on the assumption of increasing corporate sales or rising incomes. A debt deflation meltdown happens when the market value of assets falls below the par vale of the debt that was taken on to acquire the assets. This then provokes lenders to "call the loan," demanding that debts be paid back rather than rolled over. Debt deflation is about lenders demanding that borrowers liquidate themselves. In falling asset markets, that is very difficult for individual borrowers, and impossible for the entire community of borrowers. It is a fact that not all borrowers can liquidate all their debts by selling all their assets--you have got to have somebody to sell to, and when everybody is selling, nobody will buy. Bankers know all about this little truth, which actually serves to accelerate the lender's demand on individual borrowers to liquidate as quickly as possible. To get their money back, creditors will force borrowers to monetize assets before prices fall even further. This individually rational, but collectively irrational behavior is the engine of bank runs and true financial system crises. Gold -- Sharefin, 05:07:58 11/14/02 Thu Newmont roughs up gold group Bullion crowd sees miner's stumble as cheap way in Newmont Mining (NEM: news, chart, profile), at the top of the heap as world's largest bullion miner, is sparking a stampede from North American gold mining shares (XAU: news, chart, profile). Higher costs in Australia and Nevada and hedging-related losses shaved Newmont's earnings by a dime a share in the latest quarter. Several Wall Street firms punished the paltry earnings by lowering their 2003 estimates for the miner by more than 10 percent. "I think Newmont got hurt by its own success in attracting broad money managers to add exposure to gold," says John C. Doody at Gold Stock Analyst. "These (fund manager) guys focus much more on earnings and hitting consensus estimates. When Newmont missed, some sold, just as they would any other stock." Doody says tried-and-true gold mining investors "focus on ounces produced and reserves because they see the mining shares as options on gold price and are less concerned about actual profits." Like most of the grizzled crowd that follows the gold industry, Doody sees little in Newmont's quarterly report to shake an investor's confidence in the Denver-based mining company. He explains, "The 10-cent miss (on earnings per share) was not a big deal. Three cents was due to change in the portion of the hedge book that's marked to market." As gold flirts with higher prices, Newmont's executives are trying to reduce their hedge book, that portion of production that is sold forward in an attempt to increase the company's average gold price. Hedge-related costs are "impossible to predict quarterly," says Doody. He also points out that 3 more cents was due to increased depreciation wanted by the new auditors that replaced Arthur Anderson. Gold -- Sharefin, 05:05:51 11/14/02 Thu Silver lease rate spread & POS  Gold -- Sharefin, 04:58:34 11/14/02 Thu Gold lease rate spread & POG  Gold -- Sharefin, 00:05:10 11/14/02 Thu BIS Gold Derivatives Though the Notional Value of the gold derivatives rose 20.8% for the half year, the price of gold also rose to the tune of 13.4%, so the real increase in derivatives could/would be more like 7.4%.  Gold -- Sharefin, 19:37:20 11/13/02 Wed Today's blatent attack on gold coming just a few days after Richard Russell talks of gold market manipulation should open up a few more eyes to what is going on. Once again it shows how nervous & panicked the market makers are over gold breaking higher. But alas how can they stop what is written in the charts....  Prechter not that Bearish -- Giovanni Dioro, 05:16:02 11/13/02 Wed I was surprised to read what Tim Wood at Mineweb wrote about Prechter. True, Prechter does believe that according to Elliott wave that gold has one final bottom before it will be the buy of a lifetime. Perhaps he is right. Generally before there is a big multi-year move, there is a cleansing or a washing out of weaker hands. Maybe we have already seen that in 2000, maybe we haven't seen it yet. If we look at the Commitment of Traders reports we see that the institutional investors are still bearish on the metals. However Tim Wood portrayed Prechter as being absolutely bearish on gold, and that is not exactly the case. Here is what Prechter wrote in his latest book, Conquer the Crash, published earlier this year: ===================== (pp. 209-211) Buy Gold and Silver Anyway You might be surprised to find that I advocate holding a healthy amount of gold and silver anyway. There are several reasons for this stance: First, it could be different this time, for some reason I cannot foresee. In a world of fiat currencies, prudence demands hedging against a rush to tangible money. Second, these metals should perform well on a relative basis compared to most other investments…the metals are downright inexpensive compared to their top values in 1980. So even if the precious metals continue to decline, they will fall much less in percentage terms than most other assets because they have already fallen so far. Third, Prechter says whether there will be a new bear market in metals is debatable and that gold and silver have fallen, relative to the dollar, for two decades which is 90-100% of the time he had anticipated, therefore trying to finesse the final months may not be prudent. Fourth, he says the metals will soar in price once the period of deflation is over. Fifth, he says if you own it now, you will have it later when panic sets in and govts try to regulate it. He says that if you are willing to exchange the risk of a 30% fall in price versus the current availability and for the “insurance” that precious metals provide to a portfolio, and that if you want to arrange for capital safety in every way that you can manage, then diversification into real money is a necessary part of that effort. ===================== After stating the above in his new book, Robert Prechter hardly seems bearish on gold and silver. Prechter's Conquer the Crash can be purchased at www.amazon.com or www.barnesandnoble.com Otherwise you can order it directly from his website linked below, and perhaps he will autograph a copy if you so request Elliott Wave International Fiat -- Sharefin, 23:19:53 11/12/02 Tue "What Does Mr. Greenspan Really Think?" Listen to the Real Audio file by Larry Parks Mr. Greenspan is the most brilliant of anyone who has ever served at the Federal Reserve. I have found some of his speeches, especially those given out of the country, to be extraordinarily candid about the perils-such as possible systemic collapse-of our irredeemable-paper-ticket-checkbook (fiat) money system and, alternatively, the benefits of the gold standard. Mr. Greenspan is careful with his language. Sometimes he makes straightforward assertions that he believes to be true. Interspersed with these are statements that he qualifies with words such as “presumably,” “possibly as a consequence,” and so on. In these cases, I believe he is signaling that he does not share this position. Otherwise, he would leave out the qualifier. The position he holds as Federal Reserve Chairman constrains his language. At the end of his speech, he says that he has to operate within the “context of his political environment.” I take this to mean that he does not see himself as someone who can boldly oppose or overtly criticize the current system. However, he is doing us a huge service by repeatedly emphasizing the disaster that awaits us with our present fiat monetary system and the benefits that we would enjoy with gold-as-money. Mr. Greenspan has pointed the way. It is up to us to use the intellectual ammunition he has provided. It's a mystery to me why the press and others are not paying more attention to what he's been saying repeatedly for the past three years or more. Perhaps the reason lies with his arcane language. To help explain how our monetary system works and make Mr. Greenspan's views more easily understood, I have: (1) translated his FedSpeak terminology into plain English; (2) added critical comments; and, (3) suggested areas where further explanation ought to be forthcoming. Where I believe he is mistaken, I say so. In effect, by enlarging upon Mr. Greenspan's statements, I have constructed a primer about how our monetary system works to transfer wealth from poorer people (ordinary taxpayers) to richer people (bankers and those with a stake in Wall Street firms). Gold -- Sharefin, 23:13:51 11/12/02 Tue Canadian gold miner raises output target by 1m oz Canadian miner, Placer Dome this week raised its gold production target for 2003 by one-million ounces to 3,5-million ounces, as expected, as the Canadian gold miner came close to 100% control of Australia's AurionGold. Gold -- Sharefin, 23:01:41 11/12/02 Tue Newmont - now it's about faith There is no need to sugar-coat Newmont's [NEM] latest financial results - the company blew the quarter if you were relying on consensus estimates. Earnings per share were three-eighths the consensus forecast, coming in at 6 cents for the quarter versus the predicted 17 cents. Of the 6 cents, a huge chunk was income from affiliates, leaving question marks against the core operations. ~~ So what are the negatives? Mines struggling to contain costs; the Australian dollar acting up; anaemic full year earnings estimates; lumpy operating cash flow; dwindling gold reserves; soggy grades; an albatross of a hedge book; relatively high G&A costs; and no firm pipeline projects yet. There's nothing that cannot be fixed by a rising gold price, except for the hedge book. Inherited from Normandy, the book is one of the worst in the business. Despite being lightened by 28.9 tonnes in the quarter to be left at 180 tonnes (5.8moz), the book's unrealised loss grew 13% to $412 million from the third quarter. That loss is nearly identical to first quarter's, when the realised price was $292 per ounce, and the committed ounces more onerous. At least Newmont now boasts a hedge book equal to less than one year's production, and it slides under the 10% level of reserves, although it needs to achieve less than 5% to be reclassified as a light hedger, out of the league of Barrick, AngloGold, Newcrest and Placer Dome. The difference remains that their hedge books aren't leading the race to the bottom, despite being more heavily laden. Still bullish on gold Newmont President, Pierre Lassonde, remains upbeat on the gold price. “This is about the contango,” he told conference call participants as he set the scene for a $41 per ounce increase year-over-year. “Interest rates are now at a record 41-year low. The contango with gold lease rates has evaporated to nothing. That has induced our hedge producer friends to deliver into their hedge books, such that hedging is creating demand.” Lassonde also emphasised that the recent American elections would have little economic bearing: “We are in a reflationary environment in the mid and long term. Our friend at the Federal Reserve Board cut interest rates for the twelfth time, because the first eleven times it didn't do the job of reflating the economy. Do you really think it's going to work on the twelfth time? We don't think so. These… measures… only serve to sow the seeds of inflation which, of course, is very good for gold.” Another trend he is monitoring is the accumulation of gold by Asian central banks as well as private citizens in Japan. “We remain optimistic, bullish and passionate about gold,” he concluded. Gold -- Sharefin, 22:56:52 11/12/02 Tue Newmont Mining Posts 3rd-Qtr Profit on Higher Prices Newmont Mining Corp., the world's largest gold producer, said third-quarter profit rose 28 percent as it benefited from higher prices. The company's shares plunged as higher-than-expected production costs limited the gain. The earnings were ``a bit disappointing,'' several cents a share less than expected, said John Bridges, an analyst at J.P. Morgan Chase & Co. in New York. The problems are ``escalating costs with mines getting old and grades going down, and it's beginning to impact on profitability.'' Newmont said it reduced the amount of its forward sales of gold by 928,000 ounces to 5.8 million ounces during the third quarter. The company said it expected a further reduction of at least 279,000 ounces in the fourth quarter. Fiat -- Sharefin, 22:40:52 11/12/02 Tue The Burden of Past Error Worldwide the economic news is worrying. Finance Ministers and central bankers remain loath to admit it. They resemble underperforming fund managers who insist that it's the stock market that's got things wrong. This was underlined by Alan Greenspan's talk at Jackson Hole. As the US economy was clearly not in good shape, he should have told us what should be done. Instead he pleaded that he wasn't to blame. The search for excuses impedes policy. Past mistakes can't be undone, but they must be recognised. When policy makers are anxious to believe that they haven't made mistakes, they become over-optimistic. This is the situation today and it adds to the risk of recession and deflation. If the world's central bankers and finance ministers were all replaced tomorrow, economic prospects would improve. No improvement in ability would be needed. It is just that the new arrivals would not carry the baggage of past error. Imaginary Deflation -- Giovanni Dioro, 09:49:14 11/12/02 Tue People have been quick to jump on the deflation bandwagon perhaps too quickly. First of all, when there is deflation, money is scarce. This scarcity of money in turn causes interest rates rise. An example of this can be compared to 1981 with high interest rates and the resulting deflationary environment and recession. But today we have the lowest interest rates in 4 decades, therefore there is no sign of deflation by this measure, just the opposite. Second, the money supply should be contracting. Well M1 has been fairly static over the past year whereas M2 and M3 are still inflating. Thus the narrow M1 indicates that the money supply is not expanding and of course if people borrow money and the money supply doesn't expand, then they will have a hard time paying back their loans (capital + interest). We are seeing a bit of this, however the broader monetary aggregates are still expanding, and therefore it is hard to say that we are definitely experiencing deflation. The money racket Federal Reserve Bank lists monetary aggregates at its website: http://www.federalreserve.gov Third, people confuse consumer price inflation/deflation with that of monetary aggregates when they speak of inflation and deflation. We know that the consumer price index is rigged and often masks the true picture of what is going on. Moreover futures contracts can be used to manipulate prices and keep retail prices from rising whilst the money supply grows. The way I see it, we may still get a deflationary downturn, but as for now, there are few signs of true deflation (one possible exception being the high yields on junk bonds). Gold -- Sharefin, 05:14:40 11/12/02 Tue Reputations at stake in inflation-deflation debate Several reputations are squarely on the line following the investment conference here, and it all has to do with whether America is experiencing the onset of an inflation or a deflation. On one hand you have Robert Prechter, of Elliot Wave International, saying deflation will shrivel gold and silver prices, while William Bonner, publisher of the Daily Reckoning newsletter, predicts the metals will boom. It was possible to shuttle between the two guru's simultaneously hosted question and answer sessions during the Friday morning session of the New Orleans Conference, and hear Prechter advocate US Treasuries, American dollars and Swiss francs, whereas Bonner vehemently shunned the dollar in favour of gold and gold stocks. Prechter said gold is going to get flushed, Bonner says it's being groomed for big things, even as both strategise for a deflationary future. Who's right? That is not just a rhetorical question, but critical to the wealth of adherents. It should be said that neither faction is religiously absolutist. Nevertheless, a preponderance of followers will take the advice to heart which means one set of investors is going to do better than another. We can probably make the first reasonable call on the winning forecast in 18 months, a better one after three years, and a firm one after five. There can only be one winner and Mineweb looks forward to the contest. Gold -- Sharefin, 05:05:58 11/12/02 Tue IN DEPTH: Rob McEwen, CE, Goldcorp ROB McEWEN: They said, back in 1993, if you are not big, you won't be relevant in the market place. Our market cap in 1993, when we started restructuring, was $50 million; today we are over $2 billion. We have delivered one of the best performances in the entire market, not just the gold market. We have a compound annual growth rate of 37% over the last 9 years in terms of our share price. We were a tiny trader on our New York listing up until the end of 2000 we had 5% of our volume there. Today we are doing more that 50% of our volume in the US. ~~~ ROB McEWEN: I saw production profiles falling off. The feedstock from new production had all but disappeared in the form of exploration effort. Exploration dollars spent were half of what they were 5 years ago. If you think of a snake having a meal, it was half digested and it had not had another meal. Exploration projects take a while to develop. 5 years is a short time for an exploration project to get to a size to go to production. It is probably closer to ten. Depending where you are it is probably another 5 years to build, after that you have to recover your money. None of that is happening. These big companies that have gone up to 8 million ounces of gold, well they have to have a lot of projects just to feed the system. The growth curve of majors is neutral to negative right now. The intermediate sector is showing good growth. I also saw gold at a twenty year low, and the economic issues are big. There are monstrous problems out there right now. I see a repeat cycle of what happened from 1929-39 the deflationary period when gold performed well, and also the inflationary period from 1966-80. Gold did well while the market was either down or flat. Homestake was up better than sixfold in both periods. It is as though a generation or two have lost knowledge of economics and history. You have periods of extreme confidence in financial assets and then it falls. When you look back you have overcapacity of a misallocation of capital, debt at record level at all levels: consumer, corporate & government. There is no resilience in the system to keep us going and so you then have this erosion. We are at three years of what could be a twelve year system if you take the average of the two former periods. ~~~ ROB McEWEN: But you're an investor today, and you look to the future not the past. The hedgers did phenomenally well through the nineties, and actually they created their own success by increasing the amount of gold that was hedged. With interest rates where they are, going out and hedging, you could go out 5 years from now and get a 13 - 14% premium on the spot. Well, on an annual basis that is less than 3% now and we have seen gold move 3% in a day. They have given up the entire opportunity because they have committed for a year. So if anything, it is just saying, well, we have made all this money here, it has been really good for us and it is such a sure thing. If you look at Cambior; they hedged 3 times what they produced in a year because they knew the gold price was going to go down. Or Ashanti, and say okay, you've got 50 or 100 years of information. Here is the delta on gold, the probability is 0000.1% that it is going to go up by $50 in 20 days. Well that is a safe bet, put it on and bang! Eleven days later it is up $70 and they are going ‘oh no!' We owe $200 plus million on the bust to $500 million on the bet. That is the mindset, it is very common. You lock on to a strategy that is working, and you don't change it. You fail to recognise some of the major macro moves starting to occur in the environment you're operating in. They are now caught in a bind: do I cover my head and close it our and run the risk of being wrong in this assumption, and gold goes down and I've hurt myself. I've rendered all of my operations unprofitable without the protection of the shield. So they are climbing a wall of worry saying its not going any higher. It is like the gold analysts saying you know, two times or three times net asset value is far too expensive. I'd say to them did you invest in any high-tech stocks? What type of multiple were you putting on plant and equipment let alone some of them didn't even have revenue, and then they went oh, 100 times revenue. Is that possible in the gold market? If the investor becomes so uncomfortable and its not a lot of investors; as you know it's a very tiny market. So you get a swing of 1% of investors putting money into gold and that's massive. MINEWEB: Which is perhaps why there should be less consolidation - investors need diversity and choice which is increasingly a problem. ROB McEWEN: There's a shortage of product. Well you've seen some generalists move in the market, because they are not burdened by the fall that had happened, and that history. You don't see analysts saying there's a $400 gold price coming. They say $325, $350 tentatively, because they have been so badly burned so many years ago. The market just evaporated and no one wanted to listen to the story. What we are getting is there is a lost generation of investors that are looking around and saying: ‘I've never heard of gold in a good light.' But guess what, it's turned in the best performance in the last 18 months. Some of the gold share performance has been astounding. ~~~ MINEWEB: Was Goldcorp, as alleged by some, attempting to drive the gold price higher in the second quarter when it bought bullion at an average cost of $323? Were you trying to tip it past $330 with physical buying? ROB McEWEN: I was curious to see what the breadth of market was. I had had some conversations with some large bullion dealers and at one point was just asking what the breadth of the market was and I said if I was to enter into, if the Bank of England was selling I thought it would be great fun to bid for their entire allotment and I said how long would it take me to acquire 20 tonnes of gold? 640,000 ounces. They said it would take 2 days to buy physical gold. They said no problem. So 3 weeks later I went back to test that statement and I put in an order to buy 40,000 ounces. They came back and said the market is moving a little faster than normal with gold coming up to 320. The normal spread in the market is 50c, they said today it's 75c and 40,000 ounces suddenly became a big order. They gave me the wider spread and I said I would take it. They came back and said they could do the 40,000 ounces, but if I wanted any more it would take two weeks to take physical. There is something weird in this market when the assumption is the nominal liquidity is out there and broad, but when you go to physical, you have trouble getting it. So the real liquidity I think is much diminished. If we can, through our actions encourage other people to buy gold and other producers to withhold gold, maybe it would bring about a tightness that would be beneficial to the industry. I mean, 40,000 ounces! We hold over 5 tonnes today, and it's curious when you look at the piece of papers that we hold in our wallets and think that this is based on the good faith and credits of the various countries. We have more gold than 30 countries now, sitting in our vaults. MINEWEB: If you were to try and sell it, do you think there is enough liquidity to sell it quickly. Have you thought about testing it in reverse? ROB McEWEN: Not yet. But that is a good point. MINEWEB: Why isn't the low liquidity driving the price? Why are we not seeing far greater volatility? ROB McEWEN: I don't know, it is phenomenal what lease rates are 25 or 40 basis points which is probably the lowest it has been in years, yet the price of gold is going up. And there is supposed to be physical problems making physical delivery. They don't coincide? There is something peculiar happening in the market place. Gold -- Sharefin, 04:47:31 11/12/02 Tue UK says gold sales were a success The UK Treasury is brushing aside all criticism of the way it auctioned off more than half of Britain's gold reserves, a move that provoked protests from the World Gold Council, the producers' organisation, and the governments of some African gold-producing countries. In an internal review of the sale process which ended in March this year, just published, the Treasury pats itself on the back for a job well done. Gold -- Sharefin, 04:46:16 11/12/02 Tue Is The Strategy of Dr. No and Hung Fat (Asian/Islamic Gold Buying) Taking Final Form? The key factor in the Chinese event is not the fact of the initiation of a Gold exchange. That alone would not be anything much unless two other events had also occurred. The real news is that the Chinese regime is finalizing a major 360-degree turn to the right in their terms. Compare this new environment to Tienamin Square so that you will thoroughly comprehend it in terms of motion and trend. The Chinese have adjusted their legal code, removing state assets from their privileged position above private assets in legal protection under legal code for the owner. That all translates into the right of private property. The second event, as silly as it sounds, was the criminal charge against a famous Chinese actress for failure to pay taxes. Up to now, nobody of Chinese citizenship/domicile has paid taxes. Taxes exist as code, but traditionally taxes and Chinese citizens have not paid too much attention to them. This is like any celebrity criminal case at a national level. It is simply a message sent to the populace for most significant impact. These two events, plus the legalization of investment in gold and storage facilities, are a major event -- a major event because China has a history of currency collapse and their memory is culturally infinite. We now have in gold: The Five Elements of a gold bull market The Wild Card of the Islamic Gold Dinar The Long Shot of the Resuscitation of the Gold Cover Clause should the U.S. dollar drop below 90 on the USDX. A Gold-Backed (not convertible) Chinese Currency or Measure for Inter-Asian trade as part of a long term plan of Economic Ascendancy. The Gold Dinar might simply be a first launch test with quiet Chinese support. Therefore, the event in China of the initiation of Chinese open trading of gold is much more than just another exchange. It is another stitch in the cloth of what this gold market is really all about. It is a move toward the remonetization of gold by Asian/Islamic interests. Gold -- Sharefin, 04:44:38 11/12/02 Tue Shanghai Gold Exchange makes solid debut The hallmark of this week has been the opening of the Shanghai Gold Exchange. Now the opening marks the deregulation of the potentially largest investment market for bullion in the world. Gold bulls have been waiting for this event as it could take retail investment demand for gold to a new level. We have with us Albert Cheng, head of retail investment at the World Gold Council. Good evening, Albert. ~ ALBERT CHENG: The first day's volume was very good, it was about 540 kilos and the subsequent day was 110 kilos, the third day was 144. I haven't checked with them this week. I heard that this week it rose to about over 200 kilos. One has to understand that this is a physical exchange, whereby only when people have the gold to sell then somebody can buy it. It is not like other markets where there are market makers that can supply whatever amount the buyer wants to buy. So I guess this is a very good opening and the price effective in the exchange, meaning the spot Shanghai price, is actually very, very close to the international price. Of course, there is a little premium because of Asian insurance and other things but overall it is very close to the international price. MINEWEB: Now is there a culture of gold investment in China? ALBERT CHENG: There are people buying gold as investment. Unfortunately no, it is not allowed in any form of gold bars or gold coin in the last 50 years. The opening of the exchange - perhaps it will give a landmark change to this retail investment scenario, because the governor of People's Bank of China in his opening speech stated very clearly that definitely providing gold as an investment to the citizen of China is one of the things which, after the exchange opens, they will look into. And at the same time all the major banks are members of the Shanghai Gold Exchange. In fact, the four major banks are clearing members, are actually looking into offering gold bars and gold coin to their customers. I think this will happen in the very near future, and this will provide a new avenue for gold consumption in China. Gold -- Sharefin, 04:27:06 11/12/02 Tue China central bank loosens gold stranglehold The Chinese central bank has bowed to international free-market forces and ushered in a new system of physical gold trading with the advent of the Shanghai Gold Exchange (SGE). Official trading began on the SGE a week ago and in that time already more than 1,000 kilograms of bullion has changed hands. Trialled for the past year, the SGE represents the end of a half-century tradition in which the Chinese central bank had full power over gold trading in the mainland. In addition, the SGE completes the creation of China's financial market system. “It (the establishment of the SGE) is seen as a very significant move in the liberalisation of precious metals trading in China and in the reform of its financial markets,” according to the World Gold Council (WGC), which is the sole foreign adviser to the SGE. WGC chief executive Jim Burton believes the China gold market liberalisation would eventually have a material impact on gold demand in the country, which consumed 220 tonnes in 2001.  Gold -- Sharefin, 04:18:48 11/12/02 Tue Gold, China and the US Dollar Gold is being squeezed into a corner, an area of compression, which will lead to a big move before much longer. With the dollar caving in, greatly assisted by old Al's panic rate cut it seems obvious to me that this move will be to the upside. A lot of gold bulls and would-be gold bulls are concerned that the “Da Boyz”, those who have an interest in suppressing the price of gold in an attempt to preserve the credibility of their rotten fiat money system and/or to protect their bloated derivative positions, will continue to cap the POG somewhere between the current price and $340. I am myself not sure how much truth underlies these fears, but make the following observations; if the intelligence I have received is correct then approaching half of all the gold in bank vaults has been exhumed during the past ten years and quietly sold, some of it ending up in jewellery. Does it really make sense to continue selling a potentially rising asset, particularly when you take into account that rising powers, such as China, may back their currencies with gold? Banks involved in the alleged conspiracy, such as JPM, are, for various reasons, in an increasingly precarious situation, which can be expected to compromise their ability to control things. Another very important factor to take into consideration is the fact that, when a major shift in investor sentiment towards gold occurs (what we've seen so far is nothing in comparison with what is possible), demand will greatly outstrip supply. Taking these factors into consideration it seems obvious to me that any forces attempting to restrain or suppress the POG will eventually be overcome and swept away. Even without looking at a chart, it is well known to traders that there is a great wall of supply between $320 and $340, so clearly, if there is a conspiracy, this is where the parties to it are well dug in. Gold -- Sharefin, 04:10:15 11/12/02 Tue Sinclair praises GATA in New Orleans, sees Asian/Islamic gold strategy Is Strategy of Asian and Islamic Gold Buying Taking Final Form? By James Sinclair The key factor in China is not the initiation of a gold exchange. That alone would not be anything much unless two other events also had occurred. The real news is the that the Chinese regime is finalizing what in their terms is a turn to the right. Compare this new environment to Tianamen Square so that you will comprehend it in terms of motion and trend. The Chinese have adjusted their legal code, removing state assets from a privileged position above private assets in legal protection. That translates into the right of private property. The second event, as silly as it sounds, was the criminal charge against a famous Chinese actress for failure to pay taxes. Until now no one of Chinese citizenship or domicile has paid taxes. Taxes are part of the Chinese legal code but traditionally Chinese citizens have not paid much attention to them. Like any celebrity criminal case, this is simply a message sent to the populace for the most significant impact. These two events plus the legalization of investment in gold and storage facilities in China make for a major event. It is major because China has a history of currency collapse and the cultural memory of the Chinese people is infinite. We now have in gold: 1. The five elements of a gold bull market. 2. The wild card of the Islamic gold dinar. 3. The longshot of the resuscitation of the gold cover clause should the U.S. dollar drop below 90 on the USDX. In addition to these factors, we now have: 4. A gold-backed if not convertible Chinese currency or measure for inter-Asian trade as part of a long-term plan of economic ascendancy. The gold dinar might simply be a test with quiet Chinese support. Therefore China's opening of trading in gold is much more than another exchange. It is another stitch in the cloth of what this gold market is really all about. It is a move toward the remonetization of gold by Asian and Islamic interests. Now do we know the plan of Dr. No and Hung Fat? I never believed that they were buying gold just for economic reasons. Since 1995 they have been buying all the gold sold by the gold producers, the gold cartel, the central banks, and discouraged gold investors. Is their plan for huge profit now showing itself? Has their almost inexhaustible source of funds also been Chinese? Time will tell, but my sources will know. I may have to take a trip to Asia soon. Stand by, because when I am sure of what is happening, you will also know, assuming that the price of telling you is not too steep. Gold -- Sharefin, 04:07:03 11/12/02 Tue Big daddy thrown into the Placer mix On the verge of swallowing AurionGold [ASX:AOR] in Australia and Canadian-based Placer Dome [NYSE:PDG] is already being tipped to become the next casualty of the global consolidation evolution of the gold mining industry. Placer, now the fifth largest gold producer in the world behind Newmont Mining [NYSE:NEM], Barrick Gold [NYSE:ABX], AngloGold [NYSE:AU] and Gold Fields [NYSE:GFI], was the subject of intense market speculation in North America and Australia last week. According to gold analyst David Mallalieu of Toronto-based Scotia Capital, sparring partners Newmont and AngloGold were the latest majors to be touted as possible contenders. But he also suggested the concept of AngloGold parent, Anglo American [LSE:AAL], making a play for Placer was not crazy. Gold -- Sharefin, 09:26:06 11/11/02 Mon Talking Gold "Monetary history is not over," James Grant admonished attendees in his keynote address at the recent New York Institutional Gold Conference. Looking at the big picture, it hasn't been that long since the world was left with nothing other than fiat currencies. Confidence in gold, he went on, is the reciprocal of investors' confidence in Alan Greenspan and the global monetary system. If nothing else, certainly we've seen the top of Greenspan's popularity. This is welcome news, of course, to the coterie of investors who remain devoted to gold. But the devotion of true believers aside, we think the current case for the yellow metal is a good one. Gold has had a pretty good year so far undefined a fabulous year, in fact, when compared to the alternatives. The metal itself is up about 17%, while the XAU index of mining companies is up 39%. Might a correction be in store? Maybe, but many of the attendees at the gold conference think a secular bull market is just getting under way. Richard Sacks, of the Chicago-based money manager Phoenix Advisory Co., argues, similarly to Grant, that investor psychology shifted dramatically with the end of the equity bull market. But, like all secular trends, occasional setbacks will still be part of the game. Stocks were mostly flat between 1968 and 1982, a period in which the price of gold spurted ahead. In the succeeding period, the reverse was true: stocks soared while gold was relatively flat. The Case for Higher Prices The idea espoused by the bulls is that the climate may be shifting back in favor of gold, both in relative and absolute terms. Sure, we aren't likely to see a near-term repeat of the inflationary 1970s (a byproduct of the final separation of the dollar from gold). Nonetheless, the fundamentals for gold are as good as they've been for years, including: A low interest-rate structure (which, among other things, lowers the cost of holding gold); Rising demand for the metal; Declining production after years of downsizing; Reduced hedge books across the industry; Deteriorating U.S. dollar (the recent recovery notwithstanding); An unsustainable U.S. current account deficit; Growing uncertainty worldwide (e.g., corporate governance problems, the threat of war, terrorism). Rick Rule, senior analyst at Global Resource Investments Ltd., stated the obvious when he told conference-goers that gold investors must be contrarians. "Being in the business when it is going well is dangerous," Rule pointed out, remembering the 1996 peak. But now is an opportune moment, he believes, because the price has just begun its move off the bottom. Paul van Eeden, also from Global Resource Investments, added that the mining industry is simply not finding enough gold to maintain production. (Trivia fact: Gold makes up only three parts per billion of the earth's crust.) During the bear market, reduced cash flow and earnings forced companies to cut back on exploration. They fired many of their geologists, van Eeden said, and schools have sharply cut back programs to train young geologists. That doesn't mean reserves are about to run out, but annual production is declining. Despite good fundamentals and this year's price recovery, many people remain trapped in a bear market mentality, said Richard Sacks. Even some gold investors expect the metal to top out at $350 an ounce. Not so, argued John Doody, editor of the Gold Stock Analyst. Doody is forecasting $350 gold by the end of this year, and $450 next year. He noted that despite the long slide since the glory days of $850 gold, there have been six significant bull markets during that time. More to the point, perhaps, there is plenty of room for the price to rise based on a comparison of today's market with that of 1996. Back then, Doody pointed out, the market was valuing ounces of reserves and production at $176 and $2,700, respectively, vs. $86 and $1,218 now. The current account deficit was a major factor in past bull markets, he said, and will be again. Looking for Gold Stars Besides the general acclamation that the time has come for gold, various conference speakers offered specific investment advice. Rule advised potential investors to look at a mining company's worth based on today's gold price rather than what it promises for the future, and also to consider cash on the balance sheet and what the assets can be sold for, as opposed to a relative valuation. Another plus is management with a stake in the company. In fact, Rule contended, an ownership stake, not salary, should be management's primary form of compensation. For his part, van Eeden made the case for exploration companies engaged in joint ventures with mining companies, likening them to lottery tickets that you don't have to pay for because the mining companies put up the capital. Rule added the bargains are to be found in the small, albeit speculative, companies. With both Europe and Japan struggling, the dollar isn't getting much competition from the major currencies. Nevertheless, the talk is increasingly about gold. If even a small number of investors seek out an alternative to faith-based currencies, the barbarous relic may have some life in it after all. ChartsRus -- Sharefin, 06:16:40 11/11/02 Mon Wilshire 5000 The Wilshire 5000 is still in a sideways phase with a return to the downside expected soon. Lots of the global indices also seem poised as if to break down soon. And the next move down should be rather spectacular. Lots of charts, indicators etc are pointing to volatility & breaks. Some of the commodities, currencies, indices, rates are all starting to move in larger percentage moves. Turkey wins the prize of the week with their indice moving up approx 40% for the week. Global Indices Gold -- Sharefin, 06:14:11 11/11/02 Mon ChartsRus Gold looks ready to blow up through it's long term averages. And the move should be spectacular. Gold being the perfect barometer of financial confidence is signalling major moves ahead.  Gold -- Sharefin, 01:44:03 11/11/02 Mon Gold bulls gather, suspiciously Richard Russell has finally, indisputably, said it: the gold market is being manipulated. The septuagenarian technician, who has been publishing Dow Theory Letters for more than 40 years, has had a great year. He's even caught the recent stock market rebound. See my Oct. 14. But he thinks it's a bear market rally -- and was beginning to worry about it this weekend. (Of course, he worries a lot). Long-time Russellologists have been sensing for some time that their oracle was getting interested in the widely rumored gold manipulation hypothesis most forcefully advanced by Bill Murphy's Le Metropole Café. Thursday, after gold started strong and was driven back below $320 an ounce, Russell took of the gloves: "It's obvious that someone, some group, somebody, does NOT want gold above 320. Who the hell are they? Is it the Fed that wants to cover up its frantic attempts to reinflate? Is it the gold-mining companies that are still hedged and therefore don't want gold to rise until they can get rid of the hedges? Is it the Commercials who are net short? Just who are they?" But Russell takes the long view -- maybe that's the advantage of age: "Look, I believe gold and gold shares are in the early accumulation phase of a bull market... [I] tell subscribers, 'Use this area to accumulate whatever gold and whatever gold shares you want to hold. Take this obvious gold manipulation as a chance to buy gold at what I consider dirt cheap levels.'" Russell's long-standing view: all such attempts to control market forces fail. Eventually. Commenting on Friday's action, Russell wrote: "Gold now on a 'buy' signal, being well above its 50-day M[oving] A[verage]. Nevertheless, the resistance to gold moving higher is incredible. You can almost feel it." Actually, it didn't take much "feeling." The end of the week saw a huge COMEX volume spike, with kamikaze sellers crashing onto buyers, so that, after a lot of smoke and flame, the actual price barely moved. One persistent rumor is that major banks, notably JP Morgan Chase, are in trouble with their gold derivatives positions, and that their death throes are bloodying the waters. If the great 1990s bubble saw market manipulation, above all with official collusion, the resulting scandal will dwarf Enron. Meanwhile, Mark Hulbert reports a remarkable jump in the bullishness of the gold timers that he follows -- 57.69 percent invested. Many gold-timers have mechanical, trend-following systems. But this is in sharp contrast to their reluctance to get on board when gold rallied earlier this year. International Forcaster -- Sharefin, 01:39:25 11/11/02 Mon Gold & Silver Last week's gold commentary on JP Morgan Chase and the rumors surrounding them took on a life of its own. We had lots of e-mails on the subject, which ran 99% against JPM. We must have really shook them up because the NY Times and CNN called and asked for comments. We told them we don't call truces and we don't consort with the enemy. They wanted our sources and, of course, we couldn't comply. As you know JPM has a derivative position of $25.9 trillion up from $23.5 trillion in the first quarter, the largest of any bank. BofA has $10.3 trillion and Citibank $7.4 trillion. These figures are from the Comptroller of the currency. Late on Thursday there were rumors that Warren Buffett was a buyer of 2,000 gold contracts. That seems to fit, considering he has been a huge silver buyer in the past. ~ As the elitists who run our country try to dig themselves out of recession they employ lower interest rates. As you have seen in the 1930's and in Japan, over the last 13 years lower interest rates or effectively zero rates do not revive economies, but what they do do is make bond prices go higher and bring extraordinary profits to banks. Once gold was abandoned in 1933 and finally in 1971, the era of stable interest rates was over. The mooring for our fiscal and monetary system was thus destroyed. More than anything else the end of the gold standard put power in the hands of the financial world and took that power away from productive America. Over the past 60 years we have watched the denigration of American industry, which will soon put our country into bankruptcy as production is shipped to the third world under the guise of free trade. Thus, without a gold standard or a gold exchange standard we are guaranteed a depression and that is what we are about to have. Those controlling the financial world know that zero interest rates don't revive economies and as we proceed headlong into trouble the price of gold has to be suppressed because higher gold prices would be a clarion call that something was wrong with the economy. If investors do not see gold appreciating in value they think all will be well and they hold their stocks and buy even more bonds, particularly US government bonds, which subsidizes their adversary's profligacy. That is why we now have a bubble in the bond market. Once that bubble is broken and real interest rates rise there will be a flight to the only quality left, gold. Worse yet, the public doesn't have a clue as to what's being done to them and of course, writers such as we are totally insane. Soon we will have no inflation but it will be replaced by deflation and depression. This is why it is so important to be as much out of debt as possible. Complicating matters is the $150 trillion in derivatives. Derivatives are simply an insurance bookmaking operation. There wouldn't be a derivatives market of this size if we had relatively stable interest rates that are a result of a gold exchange standard. The heart of the problem is that as long as we don't have gold as the anchor to our standard we can never gain control of our economy and make it flourish again. The capping of the gold price allows the looting to continue unabated. This is what central bank leasing and gold manipulation is all about. It allows endless profits in bonds for financial entities such as banks and brokerage houses. History tells us there is an end game and that is: sooner or later the system breaks down and when it does gold reasserts its rightful place as the ultimate currency. That time is close at hand. Lenny's Corner -- Sharefin, 01:35:05 11/11/02 Mon GENERAL COMMENTS: While, in general, the precious metals markets showed modest gains in value last week, news events, actions by the Federal Reserve Board and the United Nations have changed the internal dynamics of the precious metals markets. The probabilities for a robust rally in the gold market have now increased, and the chances of us seeing significantly lower prices have greatly lessened. The decision by the Federal Reserve Board to drop short-term interest rates by a surprising ½% was certainly quite significant for the gold market. Interest rates are now at their lowest rate since July of 1961. This was the 12th consecutive mandated decline in interest rates in this cycle, and this recent action was the first taken all year. I fail to understand why this august body decided to cut interest rates, as their past 11 actions, totaling 475 basis points, has accomplished very little to stimulate the economy or to reinvigorate the stock markets. As an example, although the US Central Bank has been historically stimulative the past two years, the S&P's, a wide measure of the equities markets, has fallen 40%. Lower USD interest rates, taken in the light of the decision by the British and European Central Banks to keep their rates unchanged, will have the following effects for the gold market: **Although I remain rather alone in my opinion, I believe that gold will NOW begin to see greater investor interest. Heretofore, such demand was extremely paltry and did not match market expectations. Looking back at the last period of time when gold was in favor, the late 1970's, one could conclude that the psychological driver for investment in gold was the economic reality at that time that there was a net negative real interest rate. That is, that the interest income from shorter tenor debt instruments were less than the inflation rate. Investors were FORCED into alternative investments as anyone who bought Treasuries, certificates of deposits, and the like were accepting known losses. And please notice, that is before income taxes, which makes the losses even wider. And now…..with short-term interest rates at 1 ¼% in the USA, we have (as per the Bureau of Labor Statistics) a compound annual inflation rate of 2.5% for the 3-month period ending in September. So, any investor who, seeking safety and security in these tumultuous times, purchases any high-grade debt instrument becomes a guaranteed loser in his investment. Investors will now be FORCED into alternative investments, and perhaps the gold market, up some 30% off its lows and perhaps the best performing asset class for the last two years will begin to garner some attention. Investors have very little other choices. **The decision to lower interest rates in this nation will also have a profound effect on the value of the USD, and therefore on the price of gold. In fact, since the announcement, the USD dropped sharply in the markets, and the USD Index is shamelessly flirting with the lows last seen in July of this year. As gold is priced in USD globally, any decline in value of the USD makes gold “cheaper” in terms of the local currency around the world and will encourage demand. **Another bullish stimulus, although admittedly a minor one at the point in time, is that lower USD interest rates flatten the lease rate curve for gold. That is, gold for delivery in future years is closer in value to the spot price of gold, i.e. the contango drops. This makes it rather disadvantageous for gold producers to sell their production forward and does somewhat curtail gold supply into the market. And, this interest rate cut will also have the effect of stimulating the REPURCHASES of gold already sold forward by the producers. Let me show you why and how. Lets pretend that a gold producer sold gold forward, 5 years hence, to a bullion bank on January of 2000. With gold at roughly $277 and with the contango existent at that time (about $16 per annum), the gold producer received a price of roughly $357 for his gold. With contango rates now about $3 per year, and gold prices at roughly $321.50, with two years left on the contract, the gold producer could now repurchase the gold previously sold forward, reduce his hedge book (now a perceived curse for producers) at the price of roughly $327.50, reaping a profit of about $30 per ounce on each and every ounce repurchased, while gladdening both the market and stockholders of the firm. As it is estimated that the global hedge books of gold producers now totals about 3000 tons, this new reality of the market can not be underemphasized. At the very least, it will remain a very highly supportive factor that assures that the gold price will not go much lower. Given the above scenario, and given the fact that all short-term debt instruments are now guaranteed losers as US inflation rates are higher than current interest rates, conservative investors should give great thought to the idea of buying gold at this time, using “synthetic leases” as available in the futures markets, and entering into a option writing program by selling out of the money calls on the exchange. Dependent upon the risk/reward profile of the investor, I would estimate that one could achieve annual yields of 10% or better. Please note, however, that this strategy is not without risk. The risk is that gold prices fall in value. This strategy is relatively conservative, as no leverage is used, but is certainly not appropriate for all investors. Please call our offices for a thorough discussion. Lastly, another bullish influence for gold last week was the passing of the UN resolution against Iraq. While this matter will still play out, perhaps for months and months, a greater “war premium” has now assigned to the gold market. And it is likely that each further turn in events will only add to this premium. As predicted in this commentary, the “socialization” of the South African mining industry by the government continues unabated. Previously, the government mandated that the industry must sell, to Black Empowerment Enterprises, a goodly percentage of their firms AND must facilitate these purchases. Unashamedly, a forced transfer of wealth that any good communist dictatorship would be proud of. Now, it turns out, as per Mlambo-Ngcuka, the South African Minister of Energy and Metals, that these sales will most probably be done at a discount to the market value of the assets. I would think that the South African governmental agenda is more than clear at present, and they should just it over with, perhaps at gunpoint. These comments are meant only to argue the point, that as more and more difficulty in that nation continues in the mining industry, that the production of gold will drop markedly in the coming years, a bullish influence. In other news, the World Gold Council, in its attempt at a full restructuring of their activities, will be closing down 11 of its 21 overseas promotional offices. Over the past few years, their attempts at the promotion of gold have been a remarkable failure as they have concentrated their activities on jewelry demand, a sisyphusian task as each time gold rose by 1%, jewelry demand fell by about 3%, completely eliminating any chance for success in creating higher gold prices. However, this organization is now under new management who hopes to accentuate investment demand globally. Canada announced that, in October, it sold some 91,000 ounces of gold from its national reserves, leaving only 700,000 ounces left in the cupboard. If they continue at this rate, only 7 or 8 more sales will leave them totally bare. Although I have yet to do the research, I would guess that they are the only industrialized nation that will have NO gold reserves whatsoever. While many nations have undertaken the reduction of their gold reserves over the past years, I know of no other major nation that has totally eliminated them. With Malaysia pushing for a new global currency, the gold Dinar, amidst the derision of most main street economists, they now have found a new Islamic partner, Iran, who has offered to use this gold-backed currency in all bilateral trading. The Malaysian administration has historically blamed the global currency systems; mostly USD based, for its economic malaise and troubles, and has promoted a plan where all Islamic countries would use the above-mentioned gold-backed currency to alleviate their reliance upon Western economics and influence. While a widely backed usage of such a new currency plan would most certainly change the supply/demand fundamentals of gold, it is still too early to make a call. Finally, one of the deans of the gold industry, Mr. Richard Russell recently forecast that the DJIA will inevitably crossover the price of gold. It was reported that his best bet is for it to occur at $3000 gold. Periodic Ponzi Update PPU -- $hifty, 21:45:02 11/10/02 Sun Preiodic Ponzi Update PPU Periodic Ponzi Update PPU Nasdaq 1,359.28 + Dow 8,537.13 = 9,896.41 divide by 2 = 4,948.20 Ponzi Up 9.03 from last week Thanks RossL for the link ! I see tonight the Nikkei 225 is below the Dow! Go GATA ! Go GOLD! $hifty Gold -- Sharefin, 19:44:03 11/10/02 Sun Al's Investments or Malinvestments? - No Link Libertarian Rep. Ron Paul of Texas, who happens to know more economics than most economists, tells the story of an encounter with Alan Greenspan that is filled with irony. Paul asked the Fed chairman to sign his copy of an essay called "Gold and Economic Freedom," which Greenspan wrote for the July 1966 issue of philosopher Ayn Rand's periodical, "The Objectivist." Beginning with the feisty words, "An almost hysterical antagonism toward the gold standard... unites statists of all persuasions," the article goes on to express antagonism toward the Federal Reserve, which in the author's opinion helps foster credit bubbles via the creation of cheap money. By contrast, argues the 40-year-old enfant terrible, the far more preferable system of "fully free banking...and [a] fully consistent gold standard" would prevent bubbles from occurring. While Greenspan obligingly signed his name to the radical document, Ron Paul asked, "Would you like to add a disclaimer?" To which affable Al responded, "No, I reread this article recently -- and I wouldn't change a single word." (Paul recalls that this exchange probably occurred early last year.) So maybe Greenspan should call his memoirs, "A Subversive in Washington: How I Kept My Mouth Shut, While Enjoying Every Minute." Nary a scintilla of the idea that cheap money can foster credit bubbles crept into Wednesday's Federal Open Market Committee announcement that the targeted interest rate on federal funds was being cut by another half percentage point, to 1.25%. Gold -- Sharefin, 19:39:54 11/10/02 Sun Gold Fields denies placer bid rumour 'Absolutely no truth': Vancouver bullion producer acquires 91.2% of Aurion Gold Fields Ltd. yesterday denied rumours it will bid for assets belonging to Vancouver-based Placer Dome Inc. Johannesburg-based Gold Fields, the world's fourth-largest gold producer, said speculation of a bid was merely a "vicious rumour." "There is absolutely no truth to the rumour that we are about to make a bid for Placer Dome," said Willie Jacobsz, a spokesman for Gold Fields. Gold Fields' denial is the result of speculation the South African company might seek Placer in order to acquire that property. Under that scenario, Gold Fields would divest the rest of Placer's assets. Placer's rising position in global gold production ranks has sparked some analyst speculation it could be a takeover target. The Aurion purchase boosts Placer to fifth from seventh in terms of annual gold output. Gold -- Sharefin, 19:37:52 11/10/02 Sun The new faces of SA mining BLACK businessmen are changing the face of mining in South Africa. This was clear on Tuesday night when, for the first time, an African mining entrepreneur and an African-run mining house scooped top honours at the Business Times Top 100 companies awards. ARMgold chairman Patrice Motsepe was voted business leader of the year by the chief executives of the top 100 companies, while Mvelaphanda Resources, the Tokyo Sexwale-run gold producer, was named top-performing company. AMRgold and Mvelaphanda are the only black-owned mining companies on the JSE. And their wins are a shining advertisement for the much criticised Minerals Equity Charter. The charter, which provides for 15% black ownership of equity in existing mining operations in five years and 26% in 10 years, was harshly criticised by foreign investors after an early draft was leaked earlier this year. Gold -- Sharefin, 19:23:44 11/10/02 Sun Betting on a resurgence in gold In the investing business, you must be able to recognize a significant event and then alter your investment strategy. A significant event has the potential to cause an immediate or gradual change to the forces at work in the securities markets. The significant event is usually unforeseen and its potential influence may be underestimated by investors. The exogenous event is also unforeseen but it may not be significant. An event such as an earthquake or political assassination may cause a temporary panic that dissipates with no long-term effect. ~ Last week's big rate cut by the U.S. Federal Reserve Board, along with the mid-term election results, could be significant events. The combination of a worried Fed and a Republican agenda to cut taxes and increase spending has caused me to reconsider my outlook for gold stocks. That's because last week's events have created the possibility that actions by the Bush administration could debase the U.S. dollar. So here is the big riddle for investors: Should investors act now in response to an event that has only the potential to chase capital out of U.S. dollar assets, or should investors take a wait-and-see approach? The first thing to do is to study the beneficiaries of a weak greenback. Gold -- Sharefin, 19:13:47 11/10/02 Sun Total Saudization of gold sector by March ordered JEDDAH, 8 November - Interior Minister Prince Naif, who is also chairman of the Manpower Council, has ordered the total Saudization of jobs in gold and jewelry shops from the beginning of next Hijrah year (March 4, 2003), Al-Madinah reported yesterday. Gold -- Sharefin, 17:39:57 11/09/02 Sat GOLD OUTLOOK from 2000 to 2020 Most people who have studied and thought about the gold market in recent years have focused on important items such as: 1) above ground gold supplies, 2) mismanagement of central bank gold reserves, 3) the fact that the yearly demand for gold has exceeded yearly mine output for several years, 4) and lastly, the blatant manipulation of gold prices by world governments and large financial institutions over the last several years, in an effort to save the fiat money system which has been forced on the entire population of the world. These items are vital, but they have masked another vital piece of the puzzle. Up to now, gold market analysts have visualized an apparent endless supply of gold coming from central bank vaults to supply the needs of the world. Young central bankers came to the erroneous conclusion that this gold was no longer needed in a monetary sense, and should be worked into the marketplace for other uses for gold such as industrial uses, in dentistry, for jewelry, etc. This dishoarding of gold by central bankers has created the illusion of a plentiful supply of the precious metal with no supply problems in the future. This is a monumental blunder that will catch up with the world in the next 10 to 20 years. Why? Because of the simple truth that there is not a lot of gold remaining in the crust of the earth for future mining operations to recover. The amount remaining is less than half of the amount that has already been found and produced from the beginning of civilization. The following discussion will describe how this happened, and the consequences of this central bank folly. Gold -- Sharefin, 04:38:26 11/09/02 Sat The last thing goldbugs want to hear The new season of American money shows that tolerate resource investing is now well under way, and it is striking how elderly the audience is. The New Orleans show has been well attended, but a comparison with competing conferences illustrates how thinly spread the resource investment message is. It is more remarkable still that 18 months of significant outperformance by gold stocks has done little more than draw in more of the same crowd - people who had money in gold two decades ago, or who missed that boom and are looking for a second bite. That has enabled conference audiences to steadily swell, but it is largely the hopefuls rejoining the diehards. That could be taken as some assurance that the early investment opportunity in gold remains sound, but it is also an indictment of goldbugs' lousy image. Yes, complacency on Main Street is a factor after years of conformist prosperity, but the truth is that people, especially young people, are tired of the one thousand false dawns proffered since gold cooled from its 1980 zenith. Karim Rahemtulla, of the Oxford Club, drove home the point with little mercy during his presentation here. “How many of you think gold is undervalued?,” he asked. A forest of hands went up in response, and he chuckled at how a supposedly contrarian view is actually very mainstream. Lemmings. ------ This story carries the classic Tim Woods signature. Why does he write gold articles when his bent is to rubbish goldbugs????? A contrarian stance will be when he has to eat his own words. I wait & wonder........ Gold -- Sharefin, 04:33:09 11/09/02 Sat A most respectable call for $3,000 gold Investment newsletter guru Richard Russell has for some time been urging his subscribers to accumulate gold stocks and the metal itself as an antidote to a sorrowful recuperation from the speculative bubble of the late 1990s. The bull market that he says ran from 1974 to 2000 was unprecedented, and he believes the consequences will be just as unprecedented. The keynote speaker at this year's New Orleans Investment Conference, it was not just another gold bug message. Russell's reputation was minted through uncannily accurate trend spotting that made his followers truly wealthy, which is why the audience swelled to hear him. He is warning average investors to quit the market altogether unless they have really good advice; which will not come from Wall Street. “Wall Street is there to distribute stock to raise capital. They are worried about their commissions, not their clients.” So what does he recommend for average investors? Ultra-safe, high yield securities such as Treasuries and AAA municipal bonds. He says to buy and hold those; allowing compounding to work its magic. “You must have the discipline to reinvest as the money comes in; take the tax free income from munis and put it into gold and Treasuries.” He's so bullish on gold for no other reason than it's the best alternative to an overpriced stock market. Russell says by the the most conservative definition, the Standard & Poors 500 group of companies is priced at 48-50 times earnings. The decompression of the last two years has only made a small dent in returning that number to its historical trend. Eventually, Russell says, the market will plunge into extreme undervalue when stocks trade at averages of 6 times earnings. That's when he'll be buying again. As the correction proceeds, Russell believes a crossover between gold and the Dow Jones Industrial Average to be inevitable. He subsequently pegged his best bet - $3,000 per ounce of gold and 3,000 on the Dow. Unfortunately, that drew some applause which is, surely, the last reaction Russell would have expected or encouraged since he's not in the business of telling people things to please them. Besides, there is no iron-clad guarantee. That said, the Russell reputation is gilded and he draws heavily on his experience of living through the Great Depression. He remains adamant that America's primary threat is deflation as the bubble fallout progresses and it will all last a long time; perhaps as long as two decades “before we can buy with our eyes closed.” He turned particularly bullish on gold when the 20-month moving average for the gold price crossed above the 40-month moving average. Russell describes the problems facing the US as “more serious than in 1980”, the year in which the gold price reached $850 an ounce. Now the country must contend with the fact that it has exported its manufacturing base to China. That is partly reflected in the chronic current account and trade deficits - a tripwire for the dollar that is being earmarked for a 20% depreciation to compensate. Gold -- Sharefin, 04:26:48 11/09/02 Sat USA Gold By Michael Kosares Centennial Precious Metals Some time back I pointed out that banks would have difficulties in a low- to zero-interest-rate environment in that profits would be squeezed as interest rate differentials narrowed. For example, to make enough money to support a bank at a 0.25 percent spread, a bank's loan book would have to swell beyond any measure of prudence. To survive, banks will have to charge more for the various services they offer. That's why you saw the drop in bank sector stocks yesterday, including J.P. Morgan. But what about money market funds that do not have the luxury of charging for services as banks do? Today's Financial Times has an article titled, "Fed rate cut puts squeeze on money market funds." We learn that the 0.5 percent interest rate plunge threatens savers like you and me far beyond what we may have imagined when the cuts were announced. As we open our future money-market account statements, we are going to see something that is sure to cause a sinking feeling -- the rate of return in many cases will have fallen below 1 percent! This raises the specter of "breaking the buck" -- that is, asset values falling in money market funds below $1, causing investors to actually lose money on their money fund investments. Forget about "real rate of return." We are now courting the prospect of not even receiving a "nominal rate of return" in our savings. The Financial Times article pooh-poohs the prospect, then immediately talks of money-market funds merging to survive. Never in the modern financial structure have we had an interest rate environment near zero. This is all new ground, and no one in the banking industry has a clue where this is going to take us. According to the FT, Bruce Bent, the founder of money-market funds, warns investors "to take the opportunity to look at the quality of their funds as they struggle to maintain the status quo." Oh-oh. I can say one thing for certain: My gold holdings went up 1 percent just in the past few days. I know my money market funds are going to come in right around 1 percent, but more probably lower. These are the kind of numbers that will cause a radical shift in capital allocation all over the globe -- and in the United States among millions of savers who no longer can count on the dollar to provide a return. The very dour look of Alan Greenspan as pictured in today's Financial Times tells the story better than any words I can put on this page. As a Wall Street friend said to me yesterday, " Alan doesn't know how to walk away." By the way, I see the European Central Bank hold on interest rates as temporary -- much dissent on the ECB board, we hear. Much like the Fed before the big cut. Waiting for the nation-states to demonstrate fiscal integrity is not going to hold up in the current Euroland political environment. Gold demand will gather pace on both sides of the Atlantic as the realization sets in that no paper is good paper these days. Prechter has gone sweet on gold (and silver & platinum) -- giovanni dioro, 03:38:39 11/09/02 Sat I got Prechter's latest book, How to Conquer the Crash. I read the few pages he had about precious metals and it is quite interesting that he has changed his negative stance on the precious metals. In his earlier book, Crest of the Wave, he said that he thought gold would go to just over $100 an ounce and definitely below $200, and advised against buying the stuff. Now he says that he still thinks gold will go lower, but that trying to time it may not be worth it, and that when gold does bottom eventually it will be the buy of a lifetime. He says to try to time it just to save 30% isn't worth it and that because of its low price, and political and economic instability that people should have a core position in it. I'm glad to see Robert Prechter is coming around. I asked him for help in buying gold back in 1997, and he told me that I should wait to buy it, but if I felt I absolutely had to... then he suggested a place to buy it. Gold was $290/oz. then, and had it's ups and downs since, but in most currencies it has been a decent low-risk investment. Gold -- Sharefin, 22:50:19 11/08/02 Fri JP Morgan Begins Canadian-Listed Golds Coverage Canadian-listed mid-tier gold miners, whose stocks have recently outperformed gold seniors and easily surpassed broader market indexes, are now being touted as solid investment opportunities with strong potential. "As a group, they do offer growth. They offer younger mines with potentially more upside and so they are quite attractive," said John Bridges, a gold mining analyst at JP Morgan in New York, which said on Friday it was initiating coverage on a number of Canadian mid-tier miners. Gold -- Sharefin, 22:48:22 11/08/02 Fri Gold Fields denies Placer Dome bid rumour South Africa's second-largest gold producer Gold Fields on Friday denied market talk that it about to make a bid for Canadian peer Placer Dome Inc (Toronto:PDG.TO - News), but its share price still fell on investor concerns. "It's a vicious rumour and there is no substance to it." Gold -- Sharefin, 22:46:54 11/08/02 Fri Goldman's New York Gold Mining Equity Analyst McConvey Fired Goldman, Sachs & Co. gold mining analyst Daniel McConvey was fired after five years on the job as the securities firm halted research on the industry amid a slump in business on Wall Street. ``I was a casualty of downsizing,'' McConvey, 47, said in a telephone interview from his home in Berkeley Heights, New Jersey. Goldman spokesman Ed Canaday in New York said the company has dropped coverage of 12 gold-mining companies that McConvey covered, including Newmont Mining Corp., the world's biggest gold producer. Gold -- Sharefin, 22:20:03 11/08/02 Fri My HomeLender - Gold This is also one of the reasons for the constant rumors surrounding JP Morgan and their risk in the gold markets. As gold prices go up JP Morgan loses previous gains their "carry" trades. I will rehash carry trades again this Sunday but I don't feel like writing about here again. The bottom line is that as the world continues to slow one of the results is an increasing migration into gold to protect assets from probable reduction in the value of all other paper assets. And this is one of the very real concerns for gold carry traders. If investors begin en masse to buy gold, not out of expectations of returns, but simply to protect their principal it will become a self fulfilling prophecy. The best analogy I can think of is "a watched pot never boils". Now we know this isn't true but it brings up a good point. People watch the pot because they are anxious to get the hot water. Their expectations are very high and it seems like it takes forever to get their desired return; boiling water. BUT, if they aren't thinking about the water boiling and simply put it on the stove and then go do other things it seems like it boils in no time. Their expectations are very low and because of this their perception is that they received their desired return much more quickly. Patience is a virtue and can be rewarding as well. In other words if investors start buying gold without regard for returns and simply to protect assets it is an indication of lowered investment return expectations by investors as well as lower risk expectations. Gold becomes the best returning investment primarily as a byproduct of the fact that it is perceived to be the least risky not because investors are buying it with expectations of returns. Get it? Perhaps a better analogy although a little less friendly is the rebound date. When you are with someone you love or care for and that person decides to leave you the next person you become involved with is typically referred as the rebound. The rebound is the person you are left with by default not because you were attracted to them but because they were there. It is a reactive event rather than a proactive event. The new person becomes the beneficiary of the previous person leaving. Now, maybe you will fall in love with this new person and maybe not. Maybe once you get to know this new person you will say; huh? why did I not consider this person before? The reason you didn't was because you were "in love" with someone else or at least thought you were; and that consumed your time disallowed the consideration of others. There are plenty of people dating each other not because they are attracted to each other but because they believe that person is found to be acceptable to their "friends", attributable typically to men; or they have money, attributable typically to women. However, no matter what the reason, that relationship in general precludes the "real" consideration of other relationships UNTIL that relationship fails. Investors relationship with paper assets has failed. Now, don't get me wrong, it will eventually come back. Investors are not going to flee form paper assets forever. But right now the sheen is off and investors are open to new possibilities and new markets and new relationships. Some are still trying to "repair" their relationship with paper assets like it's a catholic marriage. To each his own. Back to the basics: Lowered investment return expectations across all asset classes by default increases the number of potential investors for those asset classes considered to be risk mitigation plays. As the number of potential investors for this expands the number of investors actually shifting into risk mitigation investments increases. A portion of those will go into gold. Gold, contrary to popular belief, is a tiny market in comparison to paper assets, i.e. stocks and bonds. Even a marginal shift in investment expectations, both risk and reward, resulting in buyers into gold could drive gold prices up dramatically. Now, here's the catch. Gold prices increasing causes a push back phenomenon to make it difficult for prices to continue rising. The two primary things that occur are known as gold carry trades and gold forward selling. Gold Carry As gold prices rise investment banks rent gold from holders of gold and then sell the rented gold in the open market to capture the increase in its price. They then take the proceeds from the sale and buy US treasuries. They use the dividend paid on the US treasuries to pay the rent on the gold. And what is left over is gravy. Pretty slick huh? Forward selling Forward sellers are typically mines that forward sell their future production as a means of ensuring cash flow stability. This is very common. Farmers do this with agricultural crops as well. Both gold carry trades and forward selling however increase as gold prices rise which acts as a counter against the gold prices going up too much. BUT, if the buyers of gold ever come into the market at a faster pace than the gold carry trades can be affected or the forward sellers can promise supply the gold price could continue to rise. If the gold price can sustain itself above and estimated $350 level for an extended period of time though the momentum begins to build in the opposite direction. In other words as gold carry trading and forward selling makes it very difficult for prices to get above $350; once this occurs theses forces actually reverse themselves and begin to force the price higher instead of lower. I will explain. The net cost of gold at JP Morgan is estimated at $350 an ounce across all of their gold carry trades. This means that they received an average of $350 an ounce when they sold the gold that they rented into the open market over the past several years. But, because they sold gold that they rented they also obligated themselves to have to buy back that gold in the future to deliver back to the organization they rented the gold from. In essence a gold carry trade is also a way of shorting. Shorting is profitable when prices are falling only. If gold prices begin rising the potential for JP Morgan to begin losing money on their trades FORCING them to buy the gold back increases. The buy back is called covering. And as they cover they drive the price further up. Get it? It reminds me of the movie "The Right Stuff". The movie is about when Chuck Yeager broke the sound barrier in the X-1. As he approached the sound barrier there was a lot of violent shaking in the aircraft as it was being buffeted by the physical forces of air putting drag on the plane. So the faster the plane went the greater the forces of drag trying to slow the plane down. But, once the plane got through the sound barrier it actually surged forward. A portion of the physical drag elements actually decreased as the plane went through the sound barrier. You can think of $350 in gold as the sound barrier for gold. Some actually estimate it as low as $335 and as high as $375. I use $350 as a ball park. The reason it is important to understand JP Morgan is because it represents over half of all of the gold carry trades in the world. They don't have a counter party to sell their positions to and even the attempt to do so could cause the price of gold to spike. All right that's enough for today. Have a great weekend and I'll talk to you on Sunday. Gold -- Sharefin, 19:07:31 11/08/02 Fri Gold's Future In a Political Environment of Republican Control of the White House, Congress and Senate As we have discussed in the past, all changes in fundamental conditions that can affect the character of the gold market must be judged by their potential ability to adjust the five fundamental ingredients that represent the foundation of any long-term bull or bear market in gold. Now, we must add the potential advent of the Wild Card, the Gold Dinar and Silver Durham, because of the fundamental gold demand this event portends. The primary result of the Republican victory will be to convince President Bush that when push comes to shove, the voters back him and his programs. This will certainly result in his increased enthusiasm for all those initiatives and programs that have been the cornerstone of his Administration. Conclusion: Nothing happened in this election to make the case for gold weaker. To the contrary, the sum of the events increases the probability that we are in a long-term gold bull market. This is because the events, in our opinion, give greater foundation to the probability that the ('til now fundamentally missing) 5th element, a long-term bear market for long rates, is in. That would be certain if assuming a top in the long US Treasury bond at 115 32/64 on the futures. We have just received the announcement of a half-point drop by the Federal Reserve in the key-lending rate. We feel this falls in completely with our analysis of the political impact of the Republican victory. As we said before, this Administration will burn the barn down before accepting the political implications of deflation. The barn is the US dollar. The War on deflation is well on its way, monetarily. Gold -- Sharefin, 18:59:28 11/08/02 Fri Financial Sense has a new forum - Wrap Up Discussion Gold -- Sharefin, 06:51:01 11/08/02 Fri Merger talk engulfs Placer Placer Dome Inc. shares have been caught up in a torrent of trading as major mining players mull possible takeover scenarios. Industry sources said a number of foreign and domestic mining companies have privately expressed interest in acquiring some of Vancouver-based Placer's far-flung international gold mining assets in recent months, but no suitor has shown interest in bidding for the entire company. Placer is the world's fifth-largest gold producer with 14 mines in countries such as South Africa, Papua New Guinea, Canada, the United States and Chile. The stock -- which has been on a tear since mid-October -- has been trading at unusually heavy volumes this week, with nearly 20 million shares changing hands over the past two days. Sources familiar with some potential suitors said a number of proposals are being floated to resolve concerns about Placer's asset mix. For example, these sources said, one tentative proposal calls for a syndicate of buyers to launch a bid. If such a bid were successful, syndicate members would divide Placer's various assets among themselves. Suitors that have been approached about joining the syndicate, sources said, include Denver-based Newmont Mining Corp., Toronto-based Barrick Gold Corp. and some unidentified pension funds and financial investors. Markets were rife with rumours yesterday that London-based AngloGold Ltd. might soon mount a bid on its own or as a joint bid with another mining company. Gold -- Sharefin, 06:42:39 11/08/02 Fri The rumour that won't die Investors keep worrying about J.P. Morgan's gold hedging exposure The rumour that J.P. Morgan Chase & Co. is facing massive losses on gold derivative exposure is the market conspiracy theory that will not die. J.P. Morgan insisted yet again yesterday that its derivative exposure remains minimal, calling the latest rumours "false and irresponsible." But that didn't stop investors from driving the shares (JPM/NYSE) down 6.6% yesterday. Despite the denials, thousands of investors and analysts suspect J.P. Morgan has more on the line than it's letting on. Just as they did when Barrick Gold Corp. and Placer Dome Inc. slipped last summer on concerns about their extensive hedging strategies, investors are complaining about a lack of transparency in derivatives trading, and a general distrust of complex financial structures. One former brokerage credit officer, now working as an independent analyst, said the market has very little faith in assurances about risk exposure when they aren't backed up by hard data. "To see what some of these companies have as real exposure and then hear their public statements, it just boggles the mind sometimes," he said. "You just don't know, and that's the point." J.P. Morgan became heavily involved in forward gold contracts in the 1990s when the commodity price was in a slow decline. Market watchers at the time said gold was going nowhere in the new global economic environment, and the derivatives market allowed banks like J.P. Morgan to extract profits from a marooned asset class. As far as most analysts are concerned, J.P. Morgan's massive derivatives program amounted to a short position on the price of gold. And with gold prices up 17.5% in the past year, speculation is swirling that the bank is now taking a serious pounding. How big the losses are, is a matter of endless debate. David Hendler, a bond analyst at Creditsights Inc., an independent research firm in New York, discussed the gold question in a Sept. 23 report to clients. He concluded that there is not enough public information released by the bank to precisely determine the risks, but there are a few clues that suggest reasons for concern. First and foremost is J.P. Morgan's extensive participation in the derivatives market, he said. In all, the bank holds about US$26-trillion in futures and options contracts, or roughly 50% of the overall market. That's more than twice the size of the entire annual U.S. gross domestic product. J.P. Morgan has reduced its gold contracts over the past year, but it is still relatively overexposed compared to other major banks, Mr. Hendler said. At the end of the second quarter Morgan's gold contracts were worth US$45-billion on a notional basis. Citigroup, the largest financial services company with about 50% more total assets than J.P. Morgan, has just US$12-billion in gold derivatives. Notional value isn't a true reflection of the bank's risk, because it refers to the potential maximum value of a contract. But even a writeoff of 5% of its total gold contract would represent a loss in excess of US$2-billion, greater than the bank's total net income in 2001. Like all banks, J.P. Morgan has stress-tested its portfolio and insists that even in its worst-case "value at risk" scenario, its gold contracts would cut just US1¢ per share from its 2003 earnings. But, like all banks, it refuses to go into the specifics of trading strategies, or how they arrive at their risk models, as these are proprietary secrets. If the denials are starting to ring hollow, it's because J.P. Morgan has had to issue so many of them in recent months. The bank is trying to recover US$965-million in losses from doomed derivatives transactions with Enron Corp. The insurance companies involved maintain the deals were tantamount to fraud and they've refused to pay. The bank also faces a variety of lawsuits arising from its role as financier to Enron and WorldCom Inc. The bank has denied all allegations of wrongdoing, and so far hasn't taken a provision for the potential losses, insisting that they'll be vindicated. Back in July, Kathy Shanley, an analyst at Gimme Credit, an independent bond research firm, said "there is no way to responsibly quantify the ultimate financial impact of the current investigations." J.P. Morgan is also at the centre of a Securities and Exchange Commission investigation into allegations that the bank forced clients to buy more shares of bank-led IPOs in the after market to ensure new issues surged in their first few days of trading. Again, executives have denied the charges, but investors are well aware that Credit Suisse First Boston paid US$100-million last year to settle similar charges. For a bank that saw third-quarter profits plunge 91% thanks to a slew of credit writeoffs, all the outstanding questions are creating an unappealing picture. In an environment like this, whispers about multi-billion dollar derivatives losses are finding fertile ground among nervous shareholders. Gold -- Sharefin, 01:11:41 11/08/02 Fri Gold Is Freedom The mission of this site is to show that economic freedom is inseparable from physical gold and silver ownership, with or without mining shares, and that without this economic freedom, all the other freedoms are diminished or rendered null and void by the money power of the State. Gold -- Sharefin, 01:06:08 11/08/02 Fri ON THE RECORD: An Examination of Evidence Indicating Exchange Stabilization Fund and Federal Reserve Gold Market Activity The Gold Anti-Trust Action Committee (GATA) believes that the Exchange Stabilization Fund, under the authority of the President and Treasury Secretary has been used to surreptitiously manipulate the price of gold. The following report is an examination of pertinent evidence against the ESF, as well as information implicating the Federal Reserve in a scheme to artificially depress bullion prices. Accounting regulations devised by the International Monetary Fund are also scrutinized. The report draws mainly from government documents, previous GATA commentaries and other publicly available material. The only reasonable conclusion is that U.S. government denials of gold market activity are false. Gold -- Sharefin, 00:54:36 11/08/02 Fri Kolkata in a rush to buy gold Gold and jewellery establishments in the city this year have been pleasantly surprised as gold buying reached a frenzy in Kolkata during Dhanteras, with the average middle class Bengali coming out in large numbers to buy gold on Kali Puja for the first time. Traders say the surge in footfall was unprecedented. Visitors crowded shops on Saturday, surpassing marriage season and Puja festival peaks. Long queue was witnessed outside jewellery shops. Trade sources said shops did business of around Rs 150 crore on a single day as compared to Rs 60 crore on a normal day. However, in a few select shops, sales were four times above normal. Bablu Dey, owner of Guinea Emporium and erstwhile secretary of Swarna Shilpa Bachao Samity (SSBC), said his shop witnessed 224 billings on Saturday against the normal level of 50-60. More interestingly, 80 per cent of the buyers were Bengalis even though Dhanteras is a north Indian festival with no relevance to Bengali culture. Yet Bengalis rushed to buy gold. Traders said the middle clas was flocking back to gold as the preferred investment option with other options losing sheen. Falling interest rate on deposits and poor stock market returns have turned Bengalis to gold. “Dhanteras acted as a trigger to utilise liquid cash for buying gold,” they pointed out. Dey said many of the buyers were first timers. “Over 40 per cent of them were new customers from all walks of life. I have never seen people queuing up with pockets full of cash to buy gold,” Dey noted. Gold coins were the normal purchase during Dhanteras but this year Bengalis rushes to buy gold jewellery. The price of standard 10 grams gold ruling at Rs 5100 did not deter purchases. Gold -- Sharefin, 20:17:22 11/07/02 Thu Gold Fields considers 26m oz projects Gold Fields is investigating capital projects to access 26 million ounces of gold, representing a third of total reserves, from its two flagship West Rand gold mines, Kloof and Driefontein. Chief executive, Ian Cockerill, said today an announcement could be made in the current (December) quarter. Production from Kloof (15 million ounces) and Driefontein (11 million ounces) will maintain existing combined annual output from the two mines for a further 8 to 15 years. “We are polishing off programmes for accessing the reserves and will be exploring further at Kloof,” Cockerill said. Kloof has steady-state annual production at about 1.1 million ounces; Driefontein produces at a steady state of about 1.3 million ounces. Gold -- Sharefin, 20:16:04 11/07/02 Thu Second minerals bill on cards The South African government confirmed it was preparing fresh legislation - currently called the Precious Metals and Diamonds Bill - as a companion piece to its recently approved Minerals and Petroleum Resources Development Act. Richard Russell -- Sharefin, 20:09:35 11/07/02 Thu Gold and Silver -- The gold situation is quite interesting here. This morning Dec. gold opened up 2.50 moving to a high of 321.00. But surprise -- a few minutes later in came the sellers, and Dec. gold dropped back just below 320 again. It was almost too cute, too automatic, too predictable. It's obvious that someone, some group, somebody, does NOT want gold above 320. Who the hell are they? Is it the Fed that wants to cover up its frantic attempts to reinflate. Is it the gold mining companies that are still hedged and therefore don't want gold to rise until they can get rid of the hedges? Is it the Commercials who are net short? Just who are they? And does it matter? Look, I believe gold and gold shares are in the early accumulation phase of a bull market. The public doesn't want gold. The hedge funds aren't interested yet. The mutual funds don't have any gold shares and won't be interested in gold shares until gold hits the headlines. Gold -- Sharefin, 19:58:53 11/07/02 Thu JP Morgan denies gold loss rumors, stock down JP Morgan Chase said on Thursday that rumors it had suffered large losses on gold trades were "false and irresponsible," but the speculation damaged its stock price. J.P. Morgan shares, a component of the benchmark Dow Jones Industrial Average, were down 7 percent, or $1.53 a share, at $20.53. The stock fell on rumors arising in Europe that the No. 2 U.S. banking company had lost between $17 billion and $70 billion on gold trades. A spokesman denied the rumors and analysts also discounted them. "It's (circulated) at least three or four times this year, and it's always out of Europe," UBS Warburg analyst Diane Glossman said of the rumor. "They should please come up with something more creative next time than recycling old rumors." Other analysts also downplayed the rumors, saying investors might be taking profits after the U.S. Federal Reserve interest rate cut on Wednesday. "I think most of this move is profit taking," Fox-Pitt, Kelton analyst Reilly Tierney said. "I just don't think there's a lot to it," he said of the rumors. Tierney also said concerns about the bank's exposure to energy merchants could be hurting the stock. Debt rating agency Standard & Poor's said on Wednesday U.S. energy merchant companies have more than $90 billion in medium-term debt to refinance over the next four years, with a large portion of maturating debt originally financed in the bank market. But Tierney said he doubted this would hurt J.P. Morgan stock a day after the S&P report's release. Gold analysts in London also said market concerns were overblown. "There have been issues over JP Morgan's gold derivative business over many months but nothing on the scale to scare the market," said one London-based gold analyst. Gold -- Sharefin, 19:45:22 11/07/02 Thu Morgan can't shake Street chatter J.P. Morgan Chase fell almost 7 percent Thursday, unable to shake early talk on Wall Street -- denied by the nation's second largest bank -- that it has suffered large gold-related derivatives losses. "The rumors circulating today are false and irresponsible," a spokesman for bank said Thursday morning. Art Hogan, chief market analyst at Jefferies & Co., said the derivatives-loss talk made the rounds before the opening of trading, but he generally dismissed them, noting that the entire financial sector was struggling Thursday and that the cloud of a civil lawsuit was also hanging over the Dow Industrials component. On Wednesday, The Wall Street Journal had reported that the Securities and Exchange Commission had notified Goldman Sachs and JP Morgan Chase that it recommended filing civil securities-fraud charges against the two over the way they allocated IPO shares. Rumors of derivatives losses at J.P. Morgan Chase have sporadically appeared in the market over the last 18 months, particularly with respect to gold. Gold Antitrust Action Committee Chairman Bill Murphy, attending the New Orleans Investment Conference on Thursday, said he lumps J.P. Morgan Chase in with several other large banks that have potentially dangerous exposure to gold derivatives. "It is only a matter of time before they explode and the gold price shoots to the moon," said Murphy, whose GATA committee believes commercial and central banks work together to depress the price of the precious metal. Murphy said central banks' gold loans and swaps amount to about 14,000 tons, mine supply is 2,500 tons and a yearly supply/demand deficit of the metal is running at about 1,400 tons. "Pile a mountain of gold derivatives on top of that and you get a gold price explosion that is just waiting to happen," he asserted. U.S. banks and their customers continued to pour money into derivatives in the second quarter, as the total value of the specialized contracts passed $50 trillion. Gold -- Sharefin, 19:09:07 11/07/02 Thu Take this rate cut and stuff it Strategists, led by Richard Russell, heap abuse on market Contrarians - the folks who refuse to believe the American economy can stage a lasting rebound this year or next -- are positively irreverent about the Federal Reserve's easing of U.S. interest rates. "This cut means the credit quality of America is going to the birds," said Mark Wellesley-Wood, chief executive of South African gold miner Durban Roodepoort Deep. "It will make junk borrowing a common practice for the American public." An icon for America's Fed-bashers, Dow Theory Letters editor Richard Russell, laid it on thick. "The Fed will fight this bear (market) tooth and nail, so this will be a long, tortuous bear market," Russell said the losing stock market that began, by his estimates, in 1999, could last "anywhere from eight to 15 years ... maybe two decades." Most ordinary investors are best advised to keep their funds in cash, allowing it to compound slowly in ultra-safe money-market accounts or triple-A-rated municipal bonds, he said. "This is going to be a very difficult period. It is going to be very deceptive," he said. "The ultimate concept to remember is that stocks won't be great buys until they are undervalued." As for gold, Russell said his data showed a 20-month moving average of gold's price moving above a 40-month moving average in July, "signaling a major bull market" for the depressed metal. Technicians use moving averages to uncover what they hope will be lasting price trends for stocks, bonds, commodities and other investments. Russell expects the price of gold, now at $320 an ounce, to equal or exceed the nominal level of the Dow average, now at 8,770, at some point. "Gold will cross at $3,000 an ounce, with the Dow at 3,000 or lower," said Russell Russell invoked the names of stock market researchers and strategists he regards as the country's best, including Elliott Wave International's Robert Prechter, in presenting his view of a sharply lower stock market. Prechter, economist Stephen Roach and a handful of others see the possibility of a horrible financial depression in coming years. "Unemployment will be a vicious problem," Russell said. "Before next year is out, we'll see another 20 percent drop in the dollar. China is at economic war with the West. I wouldn't be surprised if it backs (its currency) with gold." As for specific recommendations, he pointed to Newmont Mining (NEM: news, chart, profile), the world's largest gold producer, as the "bellwether" investment in troubled fiscal times. Russell said the 18 gold mining stocks he follows demonstrated strong accumulation this week as measured by advancing prices on rising volume. "There is going to be tremendous resistance to the idea of gold from the people who produce the junk paper. I'm talking about the Federal Reserve, of course," said Russell, eliciting applause. "The central banks want you to believe gold is junk and their paper is not. Gold has been in a bear market for 20 years. To many, it is only something you fill your teeth with." On Thursday, J.P. Morgan Chase (JPM: news, chart, profile), the nation's second largest bank, denied speculation it was suffering from large losses on gold-linked derivatives. Gold Antitrust Action Committee Chairman Bill Murphy, attending the New Orleans Investment Conference, said he lumps J.P. Morgan Chase in with several other large banks that have dangerous exposure to gold derivatives. "It is only a matter of time before they explode and the gold price shoots to the moon," said Murphy, whose GATA committee believes commercial and central banks work together to depress the price of gold. Gold -- Sharefin, 18:13:12 11/07/02 Thu Empirical Empire The almost mystical, universal belief in the U.S. DOLLAR certainly qualifies the currency for an unequaled place in the history of currencies or, further, in the history of mediums of exchange. Only the precious metals exceed the $ run in temporal terms and they are in total disrepute to the point where production is less than demand. Earlier in 2002, there was a brief resurrection of the gold bug metal but that has petered out. The mechanics of what goes on in that market are obscure but the Central banks certainly have the ammunition to move it where they want and the egregious derivative position of the beleaguered JPMorgan/Chase of some $45billion may have something to do with the collapse in price. Since there are NO reporting mechanisms to determine, in a timely fashion, transactions in such derivatives, the question is moot. Nevertheless, there are some trends of significance in the ancient metal. Producers are consolidating at a furious pace (those which survived the long downtrend in price). More and more of these producers are refusing the previously popular future sale route for their production. Demand continues to exceed net new production and scrap requiring official holders to continue sales. We are not commending the purchase of this store of value but do recommend that it be watched in the event the virtual $ empire truly embarks on one or more of the physical conquest adventures being proposed. Gold -- Sharefin, 18:04:55 11/07/02 Thu The Neutrality of Money Arguably, the devastating bust after each boom the US has experienced in the 20th century, or even before, would have been milder if there was some way banks would refrain from engaging in the lending out of money they didn't have. Ideally, the gold standard is supposed to do this job. I contend that fixing the dollar-gold ratio gives the banks a carte blanche to print as many as good as gold dollars as they could get away with. I do think we are closer to a gold standard today than at any other time in history. But instability is likely to continue so long as governments pursue policies that result in volatile gold prices. If it is possible to connect the increasing financial volatility to the inherently unsound banking policies, central or otherwise, it is the job of a gold standard to discipline the free banking system. Gold -- Sharefin, 18:00:29 11/07/02 Thu Iran Offers to Use Gold Dinar in Kuala Lumpur Deals Iran has offered to use the Gold Dinar for bilateral business with Malaysia, Deputy Finance Minister Mohd Shafie Salleh said on Wednesday, IRNA reported. He said top officials from Iran had expressed their intention to use the dinar in their business transactions with Malaysia under the bilateral payment agreement. "These officials told me of their intention during last month's Islamic Development Conference in Africa. The meeting was attended by all the finance ministers of the Islamic nations," said Mohd Shafie, who represented Prime Minister Mahathir Mohamad in the conference. The prime minister was quoted as saying recently that Malaysia planned to set up a secretariat in the country to promote the idea of using the Gold Dinar among central banks of other Muslim countries. Gold -- Sharefin, 17:58:31 11/07/02 Thu Placer Dome stock firms after major decline Shares in gold miner Placer Dome Inc. (Toronto:PDG.TO - News) rose over 5 percent in Toronto on Wednesday, recovering further from a dramatic 75 percent slide between May and July. Analysts said shares in North America's third-largest gold miner could firm more as causes for the decline abated, among them doubts over Placer's hostile takeover in May of Australia's AurionGold, which is now almost completed. Placer spokeswoman Brenda Radies said the company had recently deployed an integration team in Australia where officials were sifting through Aurion's hedge book, and financial and other operational systems. The company, which also has operations in South Africa, Papua New Guinea, the United States and Chile, launched the unsolicited AurionGold bid mostly to increase its falling gold production. Placer gold output was 2.8 million ounces in 2001, down from 3 million ounces in 2000. The buy will add about 1 million new ounces of gold to annual production and prop up reserves which fell to 44.5 million ounces in 2001 from 65.9 million ounces in 1999. Gold -- Sharefin, 17:56:11 11/07/02 Thu Gold Fields 1st qtr earnings fall, outlook positive Gold Fields reported a 54 percent drop in first-quarter headline earnings on Thursday, dented by rising costs, but South Africa's second-largest gold producer said its outlook remained positive. FED Release -- Sharefin, 19:35:04 11/06/02 Wed The Federal Open Market Committee decided today to lower its target for the federal funds rate by 50 basis points to 1 1/4 percent. In a related action, the Board of Governors approved a 50 basis point reduction in the discount rate to 3/4 percent. The Committee continues to believe that an accommodative stance of monetary policy, coupled with still-robust underlying growth in productivity, is providing important ongoing support to economic activity. However, incoming economic data have tended to confirm that greater uncertainty, in part attributable to heightened geopolitical risks, is currently inhibiting spending, production, and employment. Inflation and inflation expectations remain well contained. In these circumstances, the Committee believes that today's additional monetary easing should prove helpful as the economy works its way through this current soft spot. With this action, the Committee believes that, against the background of its long-run goals of price stability and sustainable economic growth and of the information currently available, the risks are balanced with respect to the prospects for both goals in the foreseeable future. Gold -- Sharefin, 18:44:27 11/06/02 Wed Black industrial muscle swells in SA Empowerment efforts have focused on South Africa's mining sectorBlack South Africans and women own nearly 10% of the country's top listed firms, five times as much as had been previously thought, a survey has revealed. Gold -- Sharefin, 05:52:05 11/06/02 Wed Gold's gains linked to dropping dollar Bullion bounces as elections, interest rates take toll What's wrong with this picture? Gold -- along with the shares of the companies that mine it -- is rising even as the overall stock market stages an autumn rally. More often than not, gold-related investments fall when the broader market shines because they represent low confidence in the financial system. This time, a sliding dollar is assisting gold in its gains, against the improbable backdrop of rallying U.S. stocks. In the past five days, the Philadelphia Gold & Silver Index has gained 6 percent vs. a 3 percent gain for the Standard & Poor's 500 Index, which represents the overall market. James Turk, founder of electronic payments system Goldmoney.com and a longtime gold analyst and newsletter editor, sees the seeds of a lasting gold rally in the works. "More important is gold's relationship to the dollar," Turk said Tuesday. "Normally a lower dollar means higher gold prices, which explains what is happening now. It also explains why the potential for gold looks so bullish here. The dollar is exceptionally weak." Turk says the dollar index, an indicator of the greenback's performance against a basket of other currencies, dropped 14 percent from January to July. He noted that the index has been unable to recoup more than a third of those losses in the past three months. "That's worse than a dead-cat bounce in the dollar. It also portends a major new slide in the dollar. That is bullish for gold," he says. Gold -- Sharefin, 05:48:02 11/06/02 Wed Strategists counter market optimists They advise watching yields, gold, Brazil and banks John Hathaway, manager of gold fund Tocqueville Asset Management (TGLDX: news, chart, profile): "The worst bear market in 25 years, corporate scandals, accounting heresy and all too evident geopolitical risks have caused only a modest rise in the gold price. This sort of skepticism is reassuring and supports our expectation that significantly higher gold prices lie ahead. The core safety nets that have absorbed the tide of risk-averse capital instead of gold are government bonds, real estate mortgages and credit derivatives. Pay careful attention to yield spreads, the share prices of money-center banks, particularly large derivative players such as JP Morgan Chase, the trade-weighted dollar index, the share prices of Fannie Mae and Freddie Mac the share prices of mortgage insurers ... and the shape of the yield curve." Robert Bishop of Gold Mining Stock Report: "I continue to be amazed at the lack of conviction that some have about where we stand in the current gold cycle. Despite closing in on the third year in a row with gold having advanced, while virtually everything else has declined, there exists a tentativeness that does not lend itself to the reflexive embrace of lower prices. Two decades of decline will understandably lead to such a loss of confidence, and it's clear that only much higher gold prices will make certain buyers of today's uncertain fence-sitters." Gold -- Sharefin, 04:29:17 11/06/02 Wed GOLD: The ultimate currency The fundamental case for a rising gold price is solid. It's important to remember that gold is the ultimate currency. It's been accepted as money for 5000 years. And gold's main reason to rise or fall continues to be based on the currencies. With the U.S. Dollar being the dominant currency in the world, it stands to reason that gold moves opposite to the Dollar. Economic unrest is important too. But you could say, when the Dollar is falling it's because there's trouble in the economy. And that's precisely when gold rises. Take the 1970s, for example, after Nixon closed the gold window. The Dollar began to float in the free market and the result was a falling Dollar and soaring gold all during the 1970s. Rising inflation was the problem then, which helped fuel both the Dollar fall and the rise in gold. But gold's basic reason for rising was due to Dollar weakness. Gold then rose in 1985-87 when the Dollar fell, and again in the early to mid-1990s. But thereafter the Dollar was strong. Gold was not needed during the strong Dollar era and it declined. That changed last year. The Dollar peaked 15 months ago and it's been falling in a bear market since then. In other words, gold has been rising this year primarily because the Dollar has been falling. The overall economic environment has fueled the bull market in gold, but as long as the Dollar stays weak, gold will continue to be a good investment. ~~~ Gold is looking good on a big, medium and short-term basis. We're keeping our eyes peeled because we're now at a critical point in the bull market. Gold -- Sharefin, 04:04:13 11/06/02 Wed The Russian Gold Industry Opens Up To Western Companies There is a steady flow of western gold producers into Russia that is likely to accelerate once word gets back that they are not held to ransom by Mafia-style gangsters nor brought to a halt by a bureaucracy still welded into the past. It is timely, therefore, for the Russian Alfa-Bank to have produced an excellent bit of research entitled, “Gold Industry: New Roads To Russia's Gold.”. In this Andrei Roudenko points out that gold production in Russia has increased by 11 per cent on average per year since 1999 and is expected to increase by about 14 per cent this year to 175 tonnes. This comes at a time when gold production throughout the world is expected to fall by 11 per cent as an extension of the downward trend from South Africa, the US and Australia whose combined share has fallen from 52 per cent of the total to 39 per cent over the past ten years. Russia is therefore now a significant producer with 7 per cent of world production and rising. As an indicator of how it has lagged the West, placer gold production still accounts for just over half of the total. Gold -- Sharefin, 03:51:41 11/06/02 Wed Marc Faber - Editor of The Gloom, Boom & Doom Report Financial Sense audio Gold -- Sharefin, 03:50:27 11/06/02 Wed Is the dollar done and a gold slingshot at hand? If you put any stock in technical indicators, the dollar index is worth a second look, as is the chart for gold. Gold -- Sharefin, 03:47:09 11/06/02 Wed Lihir restructures hedge book Papua New Guinean gold producer, Lihir Gold [ASX:LHG], the second largest Aussie-based gold company, has revamped its hedge book in an effort to gain more leverage to the gold price, but nevertheless hasn't escaped a profit downgrade. During the September quarter the company deferred unattractively-priced short-term hedging it previously had in place. “Contracts with relatively low strike prices have been rolled out to take advantage of the contango (in order to improve those positions),” said out-going chief executive, Alan Roberts. “This has given Lihir more exposure to the spot price over the next three years.” No contracts were closed out for a cash settlement and hedging still accounted for about 15 percent of reserves. The mark-to-market value of Lihir's hedge book was negative US$31 million at 30 September based on a spot price of US$323 an ounce. Gold -- Sharefin, 03:45:29 11/06/02 Wed Dear readers May I remind all those considering comments on the message board to take note of the following. Regards David McKay Editor Mineweb's comments facility is meant to be a way for readers to provide and glean additional information. Unfortunately, a handful of individuals have subverted our good intention and are using the apparent anonymity afforded by the Web to post libelous and defamatory remarks. Where comments are made anonymously and cross the line set by the editors, they will be deleted from public view but kept on record for legal reasons. Please be aware that your identity is not secret and can be traced quite easily if someone chooses to do so. In a recent precedent setting case against UK financial Website iii, the publisher was obliged by court order to turn over all the trace route information. This means that Mineweb cannot afford any privacy protection, assuming we might want to do so. Gold -- Sharefin, 03:43:06 11/06/02 Wed Gold in boom-bust cycle An inevitable decline in gold production during 2003 and 2004 will require more central bank gold sales to plug the short fall in supply, according to Gold Fields chairman, Chris Thompson. Commenting in the group's annual report, Thompson said this development would eventually lead to a boom-bust cycle in the gold market. However, companies with long-life reserves were well placed to survive the troughs. Thompson said the paucity of exploration and the absence of new production meant reserves were not being replaced and that the industry's reserve base was deteriorating rapidly. “An industry-wide decline in gold production starting in 2003 and 2004 is now almost unavoidable, and the consequent need for demand to be filled from further central bank sales is obvious. This may eventually lead to a boom/bust cycle - something neither the central banks nor the industry need,” Thompson said. Oversupply of gold production in the late 1990s, coupled with decisions by key central banks to sell down a portion of their total gold holdings, led to a meltdown in the gold price from levels of about $400 per ounce in 1996 to $255 per ounce at the turn of the century. However, sentiment has improved this year as the full extent of the slowdown in the US economy and fears about terrorism and world stability seeped into consciousness. Gold -- Sharefin, 03:33:57 11/06/02 Wed Pace of de-hedging gold seen falling in 2nd half A big drop in gold hedging in the first half was unlikely to be repeated in the second half, although miners continue to unwind positions in hopes of gaining wider exposure to bullion prices, Macquarie Bank said Monday. Unlike with other commodities, a glut of gold worldwide had rendered supply-side fundamentals useless in monitoring gold's performance, he said. Also, so far there had been insufficient depreciation in the U.S. dollar to spark a rush for gold among investors, he said. "People are wrong to think there has been a flood to gold," Naqvi said. Depreciation of 10 percent or more in the U.S. dollar was needed to stimulate more gold buying, he said. JB Were Ltd stockbrokering analyst John McLeod said investors were merely seeking the negative correlation to the U.S. dollar when they bought gold. "It's the hedge against the U.S. dollar they are chasing," McLeod told the conference. Hmmm -- R, 12:07:28 11/05/02 Tue CBOT chief Vitale resigns effective immed.  Hi Nick -- Greg, 08:00:18 11/05/02 Tue Indeed, I also believe that there are several possible short-term paths that could lead to the same long-term conclusion for Gold. The Elliott Wave Principle is NOT a simple concept and it does have its caveats. It is however one of the most precious TA methods for the analyst because it is the only one that can provide valuable indications of a market turn when certain rules and guidelines are respected. Clive Maund is a brilliant analyst and we have exchanged e-mails yesterday to discuss ideas based on his latest analysis. I will let you know if something interesting develops based on future discussions. Cheers and thanks again for providing this very valuable "non"-Forum to the Gold Community! ;-) Forums -- Sharefin, 07:28:49 11/05/02 Tue To one & all - here's a new forum I've just created for chatting & posting info - opinions - charts and all you want on. It's called The Bullion Bar And is linked in on the Gold Charts R Us website as well as this one. The forum will be moderated for abusive language & childish content but apart from that it's open slather to gold market prognisticators. Be it what gold or silver is going to do today, tomorrow or next year please feel free to put your thoughts down. This will free up this forum to run soley as a news archive. Thanks Gold -- Sharefin, 07:18:35 11/05/02 Tue Greg I don't do e-wave (now which count was that)(:-))) But here's another guys opinon on the current position of gold. Gold Trends - Elliott Wave Analysis Either way I see it as bullish going forwards. Lots of the gold indices are turning up strongly. Cobra -- Sharefin, 07:15:02 11/05/02 Tue Cobra - the idea behind The Golden Pot was to archive such news as it comes so that the good pieces don't get removed from the web. This way the conscientious articles remain for all to read. I had never intended this forum as a forum but moreso as a news archive to serve this purpose. One way to get the articles you mention is to log off the net and then to seach your history (Internet Explorer) and to see what's still held in the cache. That's how I retrieved the Murabitun articles. If you come across any of those posts then please post them here for archival. Thanks Nick  Gold's pattern looking better and better tick by tick -- Greg, 19:45:30 11/04/02 Mon Since my latest Elliott Wave Analysis, it has become quite probable that Gold has indeed made an important bottom at the end of October. Where it gets better is that Gold's latest move appears to be impulsive because 5 clear Elliott Waves can now be counted from the bottom. Since the worst case scenario of an A-B-C upwards correction calls for at least another 5 wave sequence up after the current short-term correction...things could get very juicy for us goldbugs!  Truth of the matter is one can clearly see a consolidation Reverse Head & Shoulders pattern forming for Gold and a breakout above the neckline would call for much higher prices!!!  Yes...these are interesting times indeed!!! Gotta be in it to win it!!! (Sorry - had to steal this one from Bill Murphy on this occasion...) Gold Dinar Info does not stay on the net long -- Cobra, 04:14:44 11/04/02 Mon At the GE board Tlaga posted some revellant information on the Islamic Dinar on Sunday November 3rd at 21:14 and also linked 3 URL's to sites that referenced his comments, All 3 URL's now can-not be accessed, his comments are worth a read tho. It would seem that information on the Dinar is being censored which will cause me to be even more persistant in learning more about Why this situation is happening. Periodic Ponzi Update PPU -- $hifty, 22:43:17 11/03/02 Sun Preiodic Ponzi Update PPU Periodic Ponzi Update PPU Nasdaq 1,360.7 + Dow 8,517.64 = 9,878.34 divide by 2 = 4,939.17 Ponzi Up 51.61 from last week. Thanks for the link RossL Go GATA ! Go Gold ! $hifty Lenny's Corner -- Sharefin, 19:32:17 11/03/02 Sun GENERAL COMMENTS: Our forecasts for the precious metals last week was right on target, with gold gaining $5.30 for the week, silver about 8 cents, while both platinum (down about $9) and palladium fell in value. There was a most definite "central theme" to the financial markets last week, and most of the financial markets moved directly in accordance with the thought that the Federal Reserve will indeed cut interest rates at their next meeting in the coming week. It has been a market dictum that the Fed has given the market what the market wants over the last few years, and a Reuter's survey of 22 "primary" dealers, those who deal directly with the Central Bank, 21 of which expect a cut in rates to occur, most forecasting a modest 1/4% drop while some expect a whopping 1/2% rate cut. The gold market benefited from such thoughts, as lower interest rates for debt instruments will offer less competition to gold (perhaps the best performing asset class of the last few years) for investment capital, and lower interest rates will also reduce the financial appeal for gold producers to sell their production forward, further reducing gold supplies. In a classical economic environment, lower USD interest rates will also lower the value of the USD against most foreign currencies, and, last week the USD plunged to close at 106.25 on the Dollar Index, threatening to fall below the lows made in early September. Please remember that since gold is universally priced in USD, as this currency continues its downward spiral, gold appears cheaper in local currency to foreign buyers. There is a very strong correlation between the USD and gold prices, and lower interest rates in this country should force the USD lower, and conversely, gold prices higher. The deterioration of the USD is a required ingredient to maintain a bull market in gold. Because investor interest in gold remains far below expectations, the gold market is still held captive to the jewelry market which gobbles 90% of global gold production. But, as a recent study inferred, a 1% gain in the price of gold creates a 3% reduction in gold demand, a condition that completely negates the possibilities of any sustained price rally. If the USD was relatively stable, we would need investment off take to exceed the drop in jewelry demand as prices went higher, and we simply have not (for reasons that still are not apparent) seen investment demand emerge to anywhere near this level. If the USD continues its decline, the above elasticity ratio will change, and perhaps dramatically, as gold prices becomes cheaper to buyers around the world. At that time, perhaps investment demand may be sufficient to drive prices higher. It is still a wonder to me that investment demand for gold remains dormant in the current geopolitical and economic environment. Certainly, the global political scene is as tumultuous and threatening of any in recent times, the global equities markets are in their third year of precipitous declines, USD interest rates are at 40 year lows, the USD looks certain to continue its bear market (down 11% or so just for the year), and gold has been perhaps the best performing investment for the last few years, and yet..global investment in gold remains paltry. After giving this conundrum much thought, I still believe that gold will indeed see its day in the sun, but the historic "triggers," events or market conditions that would have produced investment in gold, simply aren't working anymore. Rather than believing that nothing could make gold go higher, I believe that the "trigger" is simply unknown at present. Or perhaps the historic economic "triggers" for increasing gold investment are still operative, but that I am much too impatient, a common malady of precious metal bulls. Gold -- Sharefin, 19:27:45 11/03/02 Sun Minister calms fears over mining charter MINISTER of Minerals and Energy Phumzile Mlambo-Ngcuka has wound up her mission to London to quell market fears over legislation aimed at giving black South Africans a greater share in the country's mining industry. The empowerment charter, an adjunct to the Mineral and Petroleum Resources Development Act, calls for 26% of South Africa's mining assets to be in the hands of previously excluded South Africans within 10 years. Mining companies are also obliged to facilitate finance to the tune of R100-billion for empowerment over the next five years. Gold -- Sharefin, 19:25:24 11/03/02 Sun "The Jig is Up" Amazing the difference a week makes. To be specific $11 per ounce. The pull back has come back as we discussed last week to the $318 to $320 area. The fall of the dollar below the 107.50 cooked its goose. I love the soft explanations you hear on financial TV and read for the dollar weakness. Sales of dollars by hedge fund depress the currency is such nonsense. Nobody refers back to the US Current Account balance as if telling the truth about anything economic is just so politically incorrect. Well the dollar's jig is up, with a well done goose, it sets slowly in the sunset. And as the dollar sets, gold rises. With the Euro now better than 1 Euro to 1 Dollar, we can expect a challenge of the 1.20 Euro to 1 Dollar. That makes our next sell 1/3 in gold a tough one as the potential now is to test and exceed the $329.94. Keep an eye on the PUT of gold, as it is quite extreme. We should bounce around in the low to mid-twenties before we go into an overbought condition on the shares again. I will give you the heads up as usual and we will proceed to act based on TA criteria that I will give you. Gold Weekly 3 Years - A Cup with Handle??? The real question in gold is on the longer-term mid-1999 to present chart. What we appear to be doing is building the handle of a "Cup with Handle" formation. This type of a bottom formation has the ability to function as a sound foundation for quite significant bull markets. This is the type of formation you would expect if gold was on its way to no less than $529 from the present $319.20. A close above $330 will complete the handle and should key off a major bull leg in gold. It could come quite soon. The completion of a "Cup with Handle" formation is just the starting point of a bull-market. I have been telling you again and again, we are only at the starting line on a very, very long-term bull market on gold. In fact, the starter's gun is about to fire. I feel sorry for the donkeys still hedged. A 3-year "Cup with Handle" at the bottom of any item would be a very exciting formation to identify. I am betting on a chop early next week breaking into a positive period. Stay closely tuned. We are in for some excitement in gold. Cobra -- Sharefin, 19:22:12 11/03/02 Sun Thanks - an excellent find. THE ISLAMIC DINAR - Introduction The issue of the dinar relates to the prohibition of Riba, the chronic economic paralysis of Muslim countries, to the destruction of the Khalifate, the unity of the Ummah under one currency and what is most important the restoration of the fundamental pillar of zakat. This is to say, the issues that matter to the people who want to see a Dar al-Islam and the Khalifate restored again, and among this people the sufies, who care nothing except Allah, are in the first line. The enemies of the Islamic Dinar are the enemies of the Sunnah of Rasul, salallahu alaihy wa salaam. They have to denounce the practice of the Sahaba and the practice of the Ummah for all the centuries since the beginning until the fall of the Khalifate. They have tried in the past to convince all of us that the Banks were halal (like Muhammad Abdou and his followers did). Then they came with the Islamic Bank, which is like Islamic whisky. But as the fallacy of Islamic Banking, was openly revealed (by the Sufies) and as their practices have became known as fraudulent and usurious (in Islamic Law) despite their deceitful use of Islamic terminology (such as qirad, shirkat, kira, etc.), they have tried to content everybody with the cynical idea of "being practical in a sinful world". They have justified the use of paper money, even in Muslim countries, with false doctrines and meditated silence. While the Muslims all over the world are still today being cheated and robbed by a monetary system totally unjust, deceitful and contrary to Islamic practices, based banking paper-money, a methodical cover of puritanical and esoteric doctrines borrowed from decaying Christianity and a noisy silence over the important issues was spread with scientific precision, sometimes using false 'alims and false sufies, to keep the Muslims busy by a self-inflicted sense of guilt (a doctrine of 'your iman is not good enough') and trivial matters of no importance, or its opposite reaction, a fanatical radicalism deprived of real aims. --------- THE IMPORTANCE OF THE DINAR AND THE DIRHAM Ibn Khaldun wrote in his book "Al-Muqaddimah": "The Revelation undertook to mention them and attached many judgements to them, for example zakat, marriage, and hudud, etc., therefore within the Revelation they have to have a reality and specific measure for assessment [of zakat, etc.] upon which its judgements may be based rather than on the non- shari'i [other coins]. Know that there is consensus [ijma] since the beginning of Islam and the age of the Companions and the Followers that the dirham of the shari'ah is that of which ten weigh seven mithqals [weight of the dinar] of gold. ... The weight of a mithqal of gold is seventy-two grains of barley, so that the dirham which is seven-tenths of it is fifty and two-fifths grains. All these measurements are firmly established by consensus." The primordial uses of the Dinar and the Dirham are: TO SAVE Gold or silver are the most stable currency the world has ever seen From the beginning of Islam until today, the value of the Islamic bimetallic currency has remained surprinsingly stable in relation to basic consumable goods: A chicken at the time of the Prophet, sallallahu alaihi wa sallam, cost one dirham; today, 1,400 years later, a chicken costs approximately one dirham. In 1,400 years inflation is zero. Could we say the same about the dollar or any other paper currency in the last 25 years? In the long term the bimetallic currency has proved to be the most stable currency the world has ever seen. It has survived, despite all the attempts by governments to transform it into a symbolic currency by imposing a nominal value different from its weight. Reliability. Gold cannot be inflated by printing more of it; it cannot be devalued by government decree, and unlike paper currency it is an asset which does not depend upon anybody's promise to pay. Portability and anonymity of gold are both important, but the most significant fact is that gold is an asset that is no-one else´s liability. All forms of paper assets: bonds, shares, and even bank deposits, are promises to repay money borrowed. Their value is dependant upon the investor's belief that the promise will be fulfilled. As junk bonds and the Mexican peso have illustrated, a questionable promise soon loses value. Gold is not like this. A piece of gold is independent of the financial system, and its worth is underwritten by 5,000 years of human experience. TO PAY ZAKAT Zakat cannot be paid with a promise of payment Zakat can only be paid with tangible merchandise, called in Arabic 'ain. It cannot be paid with a promise to pay or a debt, called in Arabic dayn. From the begining the zakat was paid with dinars and dirhams. Most significant is that the payment of zakat was never allowed in paper money during all the ottoman period right until the fall of the Khalifate. -- TO BUY AND SELL The Dinar and the Dirham are the currency of the Islamic UmmahNo more hundreds of different paper currencies diseased with inflation. A piece of gold is equaly valid wherever you are in the world. In the past, Muslims were able to travel throughout the Islamic world and trade with dinars, as theycould at home. From the XV century onwards the Europeans started to introduce the banking promisory note in Muslim lands. Paper money gave European traders an incredible purchasing power that overwhelmed and eventually surpassed the Muslims' superiority in world trading. Gold was money well into this century, and for at least two centuries before, most bonds, including govern-mental ones, were gold bonds. But after the First World War, since the financial demands of the war led governments to print paper money in excess, the convertability to gold was first suspended for the most part, and finally terminated. --- FATWA ON PAPER MONEY Paper Money is not a legal medium of exchange If paper money is a debt representing a merchandise (dayn): The debt must have a definition of what is owed. But even if it is defined as a proper debt, a debt cannot be used as a medium of exchange. Concerning paper-money as wealth entrusted to non-Muslims, this is not allowed. If paper money is a tangible merchandise ('ayn): Its value corresponds only to its weight as paper. Equally we take the value of the dinar by its weight not by its nominal value. Either way, paper money cannot be accepted as a medium of exchange.  The Islamic Dinar, another White Paper -- Cobra, 13:16:08 11/03/02 Sun This link may disappear too, the Dinar seems to strike some fear into those who promote Fiat vs Real Money. Here's another letter that explains some more on the Dinar & Dirham http://www.zpub.com/aaa/dinar.txt The Islamic Dinar, another White Paper -- Cobra, 13:13:53 11/03/02 Sun This link may disappear too, the Dinar seems to strike some fear into those who promote Fiat vs Real Money. Here's another letter that explains some more on the Dinar & Dirham http://www.zpub.com/aaa/dinar.txt Murabitin Website -- Cobra, 10:06:07 11/03/02 Sun It seems you have the only copy of the White Paper on Islamic Bimetallic Currency. Strange that the source has vanished. Gold -- Sharefin, 09:26:15 11/03/02 Sun The International Forecaster - excerpt We repeat for new subscribers: sell the hedgers. That means Barrick, Placer Dome, Newmont, Anglo-Gold and the Australians, particularly Sons of Gwalia, which has run into a host of problems, such as lower grade, as Barrick has had. We said seven years ago that these mines, which were high grading, would run into trouble eventually and we were right. It could be with lower grade and higher gold prices that most all of these hedgers could not deliver against their derivative contracts. If that happens bullion banks will go bust and that could bring down the entire derivative structure. Gold is a linchpin and once pulled the financial carnage will be unstoppable. Why hasn't Comex gone back to regular hours over a year after 9/11? Is it because it makes it easier for the bullion banks to rig the market? What happens when one or two big players demand delivery of physical gold or silver? If the exchange settles for cash it destroys the whole market on Comex and everyone will then move to other legitimate exchanges. As we know JPM has a vested interest in lower or stable gold prices due to its preeminent position as leader of the gold manipulation cartel and that they have large short positions in gold derivatives in collusion with central banks. Elaborate schemes have been considered and used since the late 1980s to free up the value of gold in order to continue a fiat money system. Now that gold sales and leasing by central banks is less of an option they have resorted to false bookkeeping, such as, you lease your gold, which in actuality has been sold by another party, and you still carry it on your books as an asset. Not only do Morgan's derivative positions in gold and other areas look dangerous, so does the market's opinion of Morgan. When we looked at their fundamentals and the chart patterns at $56.00 a share we knew then that other large investors saw the same thing we did. They sold and we went short. We now also may be looking at the bursting of the bond bubble if the 10-year notes activities last week are any indication, having jumped from 3.59% to 4.26%. If that happens Morgan would be in additional serious trouble having written a huge number of interest rate swaps. Incidentally, we are sure the fall in 10-year notes and the rise in yield was in part caused by Fannie Mae getting its books straight. We figure they had to buy $200 billion in 10-year Treasuries. We knew they bought $60 billion worth and they may well have been a buyer as foreigners and other hedgers were sellers. We'll find out in time. All we know is it looks like yields want to go higher. As a sidestep 30-year mortgage rates have jumped by 1/2%, which kills a lot of refinancing, which in turn cuts into additional consumer liquidity. There are going to be massive debts out there that are never going to be repaid, which puts enormous volatility pressure on derivatives causing huge losses similar to what happened with LTCM in 1998. Morgan has $20 trillion in derivatives on the books. The amount is beyond comprehension. It can only be that Morgan is acting for the US Treasury and the Federal Reserve. How could any sane banker put itself at $200 billion in real risk? Morgan couldn't without the collusion of those elitists who run our country. Morgan's exposure to litigation could run easily over $20 billion. How would they pay such judgments? They'd go bankrupt of course and then be resuscitated in reorganization by the US Congress, but their failure would allow gold to trade freely again. Thus, the demise of Morgan is very important to the future of gold. From the far side -- Sharefin, 09:24:13 11/03/02 Sun Date: Sat Nov 02 2002 23:35 Winston () ID#243437: - from Barron's: fm Barrons: But now Prechter is convinced that the fifth wave mania is over and the Big Kahuna of market collapse and deflationary depression is now bearing down on an unsuspecting America. The major market averages have all been in free fall since early 2000. This Spring saw the last hold-out, small cap stocks, give up the ghost. To Prechter, the pattern is now in place and the endgame begins. Most important, claims Prechter, is the acknowledgement that over the past two decades an unprecedented bubble market extended far beyond the high-tech-dominated Nasdaq Composite. In fact the Dow -- whether measured from its low of 570 in 1974 or 777 in 1982 -- enjoyed an epic rise of 20 times and 15 times, respectively, to reach its record close of 11,750 in January 2000. No other stock market move comes close to this. The Dow only rose slightly more than fivefold in the 'Twenties, to 386 in 1929 from 63.9 in 1921; the Nikkei rose 11-fold between 1975 and late 1989, and the South Sea Bubble Market in England jumped eight-fold in just three years during the 1720s. --- The MTMS - Russia's Moscow index went from 156 in 1998 to 5307 in 2002 for a 34 fold gain. |
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