Gold -- Sharefin, 00:21:41 01/20/03 Mon Felix Zulaf in Barron's - no link ------------ - But the one really long-term theme I'm recommending is gold. Historically, it's been a hedge against inflation and fiat currencies. Q: Mostly, it's been a hedge against capital gains. Zulauf: That's been true in the past 20 years, but it's changing. The price of gold moves in steps. From 1971 to 1980, the price went from $35 an ounce to $850. From '80 until the past few years, it fell from $850 to $250. Having put in a bottom around $250 an ounce, it's now trading $100 higher. We all know the history. Now the central banks in the U.S., Japan and, later, in Europe are trying to solve our economic problems by throwing money at the system. The end result will be more and more new money, without a counterbalance in the real economy. They created money out of thin air, which means the value of paper currencies goes down. That's the history of fiat currencies. The whole process has been accelerated by the problems in the U.S. Personal consumption has been going up over the past 20 years. Instead of solving the problems of underinvestment and rebalancing the economy, which would be painful for a while, the central bank just throws money at the system and entices consumers to take on more debt. At best, the U.S. is in for a long period of stagflation, very low growth or worse. At some point, the world will begin to understand that the U.S. economy is fundamentally much weaker than generally believed. Q: Then what? Zulauf: The U.S. is the largest debtor nation. About $3 trillion are held by foreigners, if calculated at the purchase price, and foreigners are still buying U.S. assets. Last year they bought about $45 billion of U.S. equities, but that will change at some point. When people realize there are fundamental problems in the U.S. economy, the dollar will begin to decline in a major way. The process actually started in 2001. Other central banks will at some point then try to support the dollar, because if it declines too much, it hurts their exports. They will be forced to adopt the same policy as the U.S. central bank, and you will have the whole world creating more fiat currencies. That's when gold will really run. I use a timing model -- gold versus stocks, or the Dow Jones Industrial Average divided by the price of one ounce of gold. In 1929 you bought gold and sold stocks. The ratio was at 15 to 1. In 1942 you sold gold and bought stocks. The ratio was 3 to 1. In 1966 you bought gold again and sold stocks. The ratio was 28 to 1. In 1982 you sold gold and bought stocks because the ratio was 1 to 1. In 2000 you bought gold and sold stocks, because the ratio was 45 to 1. It's now 25 to 1. I don't know exactly how low it will go, but I'd guess somewhere between 1 to 1 and 1 to 3. We'll see in 10-12 years. That's why gold is my long-term call. Q: Are you talking about buying gold itself, or futures? Zulauf: You buy real gold. In real terms, after accounting for inflation, it's about at the level where it sold in the 1930s. In actuality, it's where it was in the early 1970s. It's dirt-cheap. Q: But you've got to store it. You've got to pay interest for the storage. You don't get any cash flow from it. Zulauf: If owning gold is not attractive, you buy gold stocks. But that's a different ballgame because you have corporate risks, managements that could mess things up, companies with liabilities. There is not much gold around. All the gold mined in the world equals 143,000 tons. That's a cube of 20 meters. At current prices, that gold is worth $1.5 trillion. Compare this to the U.S. debt of $31 trillion, and it's tiny. It's peanuts. Gabelli: The last time gold was at $400 an ounce, the XAU [the Philadelphia Stock Exchange Gold and Silver index] was about 180. Gold today is $355 an ounce, and the XAU is at 80. The contracts haven't moved. Zulauf: Well, the XAU is composed of different sorts of gold companies, and the heavyweights are those that hedge. They don't benefit from the rise in gold prices. Placer Dome and Barrick Gold hedge. They do not move up with the price of gold. Among the large-cap stocks, Newmont Mining has started taking its hedges off. It wants to go fully unhedged. Gabelli: The index has changed since 1994 because of mergers. Black: Isn't there one fallacy in your reasoning, Felix? Let's assume M2 or M3 [measures of money supply] grew by 7% or 8%, which is what happened in the past year. What happens when you're getting productivity gains of 4% and 5%? Ultimately, you're not going to have inflation. Zulauf: The policy of the U.S. central bank is going to destroy the dollar. Confidence in the U.S. currency at some point will collapse, and you'll have a run on dollars. Money can't go to other currencies, because they have to support the dollar. Gold will act as a monetary currency -- a currency without the liabilities of ill-guided central bankers. Another way of looking at it is to say the U.S. has underinvested in capital investment to supply the goods that U.S. consumers are demanding. You have spent your money by buying on credit instead of investing. The Chinese are investing. They are building an empire. Samberg: With our money. Q: Felix, do you like any gold stocks? Zulauf: I am not a stockpicker in this field. I would just go with names that don't hedge -- for instance, GoldFields, Meridian or Newmont. Buy them and hold them. They will all be 10-baggers over the next 10 years. Gold -- Sharefin, 00:18:41 01/20/03 Mon Murenbeeld gold model still flashing green For those not familiar with the work of Dr Martin Mureenbeeld, his consultancy has established a name for itself forecasting the gold price. His latest projection is for a “narrow risk range of $340-70 and a wide range of $320-85” per ounce. The forecasts are derived from a proprietary statistical model that has the ability to determine the gold price with 88-92% accuracy depending on the time frame used. Another way of looking at the risk ranges is that if you bought your gold securities at a price below $340 per ounce you should be okay to hold, and if you paid for them below $320 then you're almost bullet-proof. For the top ranges, $370 is a more risk averse person's sell signal and $385 a point where speculators might examine their positions. Murenbeeld's measured weekly analysis has patiently built the case for higher prices since 2001, catching the turn in the market almost to the day. For the London Bullion Market Association 2003 forecast roundup, Murenbeeld has submitted a range of $315-415 per once, with the average pegged at $355. That makes him $20 per ounce more bullish than Mitsui's Andy Smith for this year. Gold -- Sharefin, 00:11:16 01/20/03 Mon Mitsui metal forecasts for 2003 Seems like Tim & Andy sleep in the same bed & talk in the same language & use the same drugs (one would think reading the diatribe). This article supposedly coming from respectible analists is the biggest load of crappola I've ever seen. It's got bias's on top of bias's & reeks of negativity. Tim needs to get his head back into perspective & cut out the kids talk and par back on his anti-gold bias. He'd be far better off holding back his bias's and not trying to inject his opinions into his articles. The more that Tim presents his opinions instead of just reporting the facts, the more the gold community shakes their collective heads & wonders why. His narative is a sad mistake for factual information & worsens as the POG rises. Truly a sad state of affairs. ps Don't forget to read the letters at the bottom for entertainment.  Gold -- Sharefin, 23:41:10 01/19/03 Sun Gold's Demand, Scarcity Indicates Share Price to Continue to Rise Last year, when gold was around $300 an ounce, I forecast we would enter a multi-year bull market in gold with a one-year target of $365 an ounce, rising as high as $600 on a two- or three-year view. Contrary to popular belief, in 2002 the major buying impetus for an upward move was mining companies buying back hedges rather than investor interest, which was then very muted. But now that we have had two years in which gold and gold assets have outperformed everything else, investor interest is re-emerging as a powerful force, increasing pressure on the mining companies to repurchase outstanding hedges, which are still in excess of one year's supply of gold. A huge gap opened up in the last 12 months between the share performance of the few companies which are unhedged, such as Harmony and Goldfields in South Africa, both of whose prices roughly tripled in dollars, and Barrick in Canada, the most notorious hedger of them all, whose price fell 1 percent. The more the price rises, the greater the pressure on management to repurchase, which perpetuates an even bigger rise in the gold price -- a classic virtuous circle. Who are the major new buyers, then? China, for one. The opening of a new gold exchange in Shanghai in December allows China's 1.2 billion citizens the opportunity to buy gold as an investment for the first time in 53 years. India, for another. With its population of 900 million, India is now the biggest buyer of gold in the world; it purchases 700 tonnes per annum. Arab countries are also anxious to reallocate bank reserves because of the pressure on the dollar. But the most significant change is that US hedge funds have woken up to the importance of gold. Last Wednesday alone, 5,000 contracts were taken out in Comex, sending gold prices soaring by $10 an ounce. US investors, concerned about potential inflation after recent speeches about the Federal Reserves, are now flocking to gold. There is now an annual shortage of 1,000 tonnes, and gold's scarcity suggests the share price over the next three or four months will rise to $420 an ounce, before stabilising over the rest of 2003 to between $380 and $420. Such pressure on gold prices hasn't been seen for 20 years, and it's difficult to see how the upward move can be restrained. Gold -- Sharefin, 23:38:32 01/19/03 Sun Gold rally relies on committed investors, not spike speculators Stronger demand for gold from individual investors would be needed to extend the metal's 25 percent rally of last year, according to Gold Fields Mineral Services (GFMS). The surge in bullion to its highest prices since 1997 was sparked mostly by speculators, the London-based research firm said in a report. Private investors must step up purchases to keep prices from falling in the aftermath of a US invasion of Iraq. But GFMS managing director Philip Klapwijk said they were "just not playing". Prices would average $330 an ounce during the first half of this year, trading in a range of $310 to $370, Klapwijk said. The closing price of $355.10 on February 13 2002 was the highest since March 1997. Private investors and funds last year were net purchasers of gold for the first time in three years, with demand indicated at 103 tons. The figure included both buying and selling of the metal. Much of the demand for gold from hedge funds "has come from those looking to make a quick return on a spike in the price", the report said. "The industry's challenge is to bring in a more committed type of investor." Gold would be buoyed during the first half of the year by reduced sales of future gold production by mining companies as a hedge against falling prices, the report said. ~~~ Hedging by gold companies declined last year, with producers purchasing a net 352 tons of gold as they bought back sales positions. The reduced hedging helped boost gold last year, along with declines for equities and a weaker dollar, which made the metal more attractive as an investment. A weaker dollar made gold cheaper for buyers using other currencies. ~~~ Global demand for gold from jewellers tumbled 12 percent last year to 2 704 tons as high prices discouraged purchases by consumers, particularly in India. Demand in India, the largest user of the metal, was further eroded by drought, which slashed farm income and reduced buying of bullion as a form of savings. Demand for gold bars rose 2.9 percent to 252 tons and mine production fell 2.3 percent to 2 543 tons, the first decline since 1995, the report said. Gold -- Sharefin, 22:58:02 01/19/03 Sun Inflation fighter's Pimco champ Commodity Real Return leaves every other fund in the family in the dust. Bill Gross, pessimistic about the economic outlook, says there's a good reason for that. In a nutshell, Gross thinks the coming years are going to be tougher ones for investors in products like Total Return - and very good ones for investors in alternative investments like gold and other commodities or mutual funds, like Commodity Real Return Fund, that invest in them. Gross believes the U.S. dollar, which fell last year to a three-year low against the euro and five-year low against gold, will continue to lose its value. That, he says, will lead to a reckoning for the U.S. economy, which has become reliant on foreign investment. (He is also sticking with his prediction, first made last September, that the Dow will fall to 5,000 - though he's cagey about when it will hit that level.) ~~~~ The 24 percent return in six months undoubtedly helped attract investors, too. How did fund manager Brynjolfsson manage this coup? Rising precious metal and energy prices - especially crude oil and natural gas - were key, pushing up the Dow Jones-AIG Commodity Index. That's the index whose ups and downs the fund largely reflects. In the coming years, Gross thinks the inflationary pressures will only intensify as Alan Greenspan and the Fed, and President Bush and his Treasury, make good on their promise to avoid a Japanese-style recession by whatever means necessary, including turning on the government printing presses and flooding the economy with money. Such a move could be devastating for savers, with foreigners scrambling to make sure they're not the last one out of the U.S. market. The upshot would be ugly, since a good chunk of the invested savings in the United States comes from foreigners. (They hold $7 trillion in our assets in all, Gross says, 35 percent of Treasury bonds, 25 percent of corporate bonds, and 15 percent of U.S. stocks.) "Foreigners aren't going to let us off the hook easily," Gross says. And any exodus out of U.S. assets could have a "real fire-in-the-theater potential," he says. Of course, the Fed could try to forestall a disastrous run by buying up the domestic assets that foreigners sell - a move that Gross admits would soften the blow temporarily. "But ultimately," Gross says, "if the Fed has to do those sorts of things ... that's a perversion of capitalism as I know it and it would not be conducive to the long-term health of the economy." Fiat -- Sharefin, 22:34:40 01/19/03 Sun The Grand Scheme of Things The economic world's disparate interests are currently aligned because it has a common enemy: deflation. Born and bred out of the bowels of (1) globalization, (2) excessive buildup of "good times" debt, and (3) a demand-stifling demographic imbalance, the world is now threatened by deflation and its 21st century poster boy - China. And so the times are changing - not via a back room, cigar smoke laden plot, but step-by-step, month-by-month, policy-by-policy. The pieces are beginning to form a coherent whole but there is no giant, behind the scenes, puzzle maker - only individual countries trying to survive and, if possible, thrive during these darker deflationary days. ~~~ In recent months we have been informed of additional measures which would hopefully eliminate the D word from our current economic lexicon: Bush's Republicans are convinced that the election gave them free rein to cut a myriad of taxes when in fact it was a homeland security referendum. We will, however, have lower taxes in addition to internal security. Japan is about to appoint a new central bank governor who may more aggressively reflate via inflation targeting. Europe is getting serious on structural reforms, as well as considering further interest rate cuts. And of course Fed Governor Bernanke has delivered the coup de grâce of anti-deflationary policies by threatening the use of seldom if ever used maneuvers such as buying Treasury and corporate bonds to keep the good times rolling. While in last month's Investment Outlook I shouted that I "believe them," it's still not clear if ultimately they or any other government will succeed. Japan is proof that deflation once it takes hold is a behemoth to be reckoned with.  This final playing card, however, must be viewed as just one of a multitude in an anti-deflationary deck that can and has been dealt in recent months and years by rather independently minded global poker players. Japan, Europe, and the U.S. may be employing rather similar strategies at different times but they do so independently in order to defend their own economic interests. Together, these disparate steps represent a grand scheme to defeat the deflationary Dragon now represented by China but created by globalization, high debt, and ongoing demographics tilted against consumption. Investment ramifications remain uncertain if only because the ultimate winner remains in doubt. What I think I do know however is that every weapon in the global arsenal will be fired at some future point to prevent declining prices and a concomitant economic collapse. With such resolve, and with U.S. Treasury yields already near rock bottom, the odds favor bear market Treasury trends if only because - as last month's Genie observed - when yields can't go down they must eventually go up. The Grand Scheme of Things points towards reflation over the next several years and higher Treasury rates but the Dragon will not go down easily. Periodic Ponzi Update PPU -- $hifty, 22:06:03 01/19/03 Sun Preiodic Ponzi Update PPU Periodic Ponzi Update PPU Nasdaq 1,376.19 + Dow 8,586.74 = 9,962.93 divide by 2 = 4,981.46 Ponzi Down 134.84 from last week. Thanks for the link RossL Go GATA ! Go GOLD ! $hifty   Gold -- Sharefin, 20:28:57 01/19/03 Sun Portugal: The news that the Portuguese Central Bank lost gold through the exercise of a derivative deal, now commonly acknowledged by bullion bank commentaries to be capable of being followed by more, and from other Central Banks, lifts the rug from an area out of which could crawl some interestingly unpleasant sights. It also materialized that 70% of Portugal's gold is anyway compromised by involvement in loans and swaps. From the point of view of the flow of gold to the market, a call exercise has been long preceded by the related physical transactions, and therefore does not constitute a new threat. Could it be possible that the Washington Accord C Banks might be forced into a humiliating admission that they cannot hold to their nominal ceiling as these arrangements trigger? Or could it be that the next entity to "go Ashanti" (discreetly, of course) will be some (no doubt outlying) Central Bank rather than the obvious producer candidates? --- Bill Murphy of GATA [Gold Antitrust Action Group -- www.leMetropoleCafe.com] points out that the Bank of Portugal in its Annual Report admits that 70 percent of Portugal's gold has in effect already been sold. The insinuation is that this is not the only central bank involved. Murphy argues that there is a strong probability of a 15,000 ton+ net short position which will have to be bought in by central bankers if the Gold price gaps higher than the $350's. Counter-contracting parties will have serious difficulty in buying physical gold if they cannot get it from producers, central bankers and multinational bankers' reserves - unless of course a huge premium is paid. Production has since about 1996 been less than demand. The shortfall has come from central bank reserves - banks which have been net sellers. I believe that the evidence is mounting that Murphy is right -- when the news gets out -- the Gold price can go ballistic. The wise words on TV and in newspapers about how the Gold price is being driven primarily by Middle East war risks -- just does not make sense -- why would there be extensive institutional buying at current levels -- based largely on war risk -- when there have been several examples from the past which show that the threat of war in itself has seldom sustained higher gold prices? Gold prices often retreat as a war starts -- hardly the stuff that motivates the type of large volume and active buying seen in recent weeks. ~~~~ Thanks Bill (:-))))  Gold -- Sharefin, 20:25:01 01/19/03 Sun 2003 - the year of gold Last week the question whether the gold vaults - source of bullion that has been keeping the gold price in check - are running empty was discussed. From what happened last week, the answer is becoming more certain. Yes, the supply of gold to keep demand in check is running low. Perhaps non-existent. The vaults just might be empty. From early 1996 to mid 1999 the gold price knew only one way - down. With statistics showing that demand exceeded natural supply from gold mines and scrap, the source of the excess supply that kept the price moving lower could only have been gold from the central banks. The converse is that when the gold price started it bull market 22 months ago, it could only have been that supply began to fall short in the face of demand. There are of course two possible reasons for this change in the demand-supply situation; either demand picked up substantially or supply started to dwindle - or a combination of the two factors. News that demand had picked up on a global basis, very much so from private investors and with less information available of what institutions and governments were doing, seem to suggest that demand had taken off as uncertainty about the financial markets began to increase. ~~~ With the change in the daily trading pattern, we may well see gold moving higher above $ 350 quite soon - perhaps only a week or two? In the past, New York was the graveyard of the gold price - after showing signs of life during Asian and European trading, the metal almost invariably got buried during US trading, often getting slammed down in a decisive manner during the last half hour of trading. While the Comex futures market was a key utility in this maneuver , it still called on at least some supply of physical gold to implement the tactics. And now the pattern has changed. While Asia and Europe more often do little more than digest what is happening to gold, it has been the New Yorkers who have taken the price higher, ironically often during the last hour or so of trading, to leave gold at the session highs for the rest of the globe to make sense of what has happened. Only two explanations are likely: the powers that be are no longer interested in keeping a cap on the gold price or, secondly, because demand is now outstripping whatever supply can be mustered, they no longer have firm control of the price. My guess is the latter. And if correct, it means we will see gold rising in a consistent and accelerating fashion from now on. Gold -- Sharefin, 20:21:57 01/19/03 Sun How far can the gold price go? Increasing demand and depletion of gold reserves moving the gold price now. The theme of the past two essays was that it would appear from the behaviour of the gold price that the vaults from where the gold had come to satisfy the excess demand and keep the gold price under pressure are running empty. A combination of gradually increasing demand and depletion of gold reserves night well be the reason why the gold price has been in a bull market since March 2001. For six months from May 2002 the price was kept below $325/oz, establishing in the process a large triangle on the gold chart - a kind of pattern that in about 80% of cases acts as a continuation formation. When a price breaks out of a triangle, as gold has recently done, it extends the original trend, which in this case is the bull market. Gold -- Sharefin, 20:14:59 01/19/03 Sun Illusion of Reserves We won't notice anything: our gold and FOREX reserves are already in other people's pockets It might seem that the Russian government is truly proud of the Central Bank's speedily increasing gold and FOREX reserves. Of course, the reserves are some kind of a guarantee against any economic upheavals. When necessary, the government has a right to make use of the reserves. In fact, it's almost never mentioned that the reserves are stored not in Moscow, not in the deep armored depositories of the Central Bank guarded by special purpose troops. And it is likely that at the moment when the Russian government urgently needs the reserves, someone may say Stop! as it will turn out that the reserves are frozen until particular “clarification” is done. The RF gold and FOREX reserves reached a record showing of about 48 billion dollars in January. The reserves are mostly invested in the government securities of Germany and the USA, Deputy Chairman of the Bank of Russia, Konstantin Korishchenko said in an interview to Russia's newspaper Trud. He says that a smaller part of the reserves is on bank accounts of the USA, Great Britain and Switzerland, the banks are with a very high rating. The Russian Central Bank prefers foreign government securities “as they practically don't differ from deposits regarding the earnings yield, but the securities are of a higher liquidity.” The earnings make up a bit more than 2-3% at that. On the one hand, it may seem that the situation isn't dangerous as all: it is quite reasonable to place money where it will return a sure income. But this is good in case if the situation in the world is quiet. But currently, the situation is quite different. The USA is obviously experiencing a crisis, not to speak of Germany, where the crisis is evident. By the way, the whole of the world is already anticipating a war. And nobody knows whether seizure of Iraq will put an end to this war. What was the reason to store the gold and FOREX reserves somewhere far from Russia? It is quite logical that the Central Bank bankers are thinking in a manner different from other people's. The way of their thinking is even different from that one of commercial bankers. Konstantin Korishchenko agrees that this way of money placement is unprofitable for commercial structures, as the assets are not paying. However, the situation is different concerning the state bank. “We keep such gold and FOREX reserves because they “earn” trust to Russia's economic policy, the trust that is mostly determined with the currency volumes on the Central Bank's accounts.” Indeed, as soon as we give the guaranteed reserve to foreign countries, they immediately treat us respectfully. Of course, they think that Russia has no place to go in this situation. When problems arose in the relations between the Arab nations and the USA, they immediately started withdrawal of their assets from American banks. Why? Because today nobody can say for sure how the situation may develop tomorrow. And assets kept in the banks of such an aggressive country as the USA may one day become not only unobtainable, but can be even used against the owners. It seems that the Russian authorities are not scared with this prospect. What is more, it turns out that Russia's gold and FOREX reserves are open investments in the American economy. This situation is probably not strange at all from the point of view of a banker: money is always kept where it is safer. But average Russian citizens don't approve of this point of view. We know that the bank system is poor, that simple market mechanisms don't work and that officials may make off with any sums of foreign currency. Isn't it possible that the gold and FOREX reserves were hidden somewhere so that nobody could steal them? It is impossible to imagine how Russia would change if the whole of the sum was invested in the national economy. It would make the developed countries “trust us without any billion-size pledges.” The life of ordinary people would be different as well. It seems that it's currently an inconvenient moment for this scenario. In the same interview, Konstantin Korishchenko said that gold and FOREX reserves were no guarantee by themselves. The state runs economy with the help of two basic instruments: budgetary-taxation and monetary and credit politics. That is the reason why, he says, a crisis may occur in the country irrespective of the currency rate. Contradictions between both politics often become the reason for a crisis in the country. Gold -- Sharefin, 20:09:59 01/19/03 Sun Gold to outperform silver, platinum and palladium Gold prices will outperform those of other precious metals such as silver and platinum as political tensions, a weakening dollar and concerns of stagnant economic growth spur demand, analysts said. "The factors that drew gold higher in 2002 shall continue to prevail in 2003," said Frederic Panizzutti, a director at Geneva-based GoldAvenue, a trading and marketing service. "There is a threat of further terrorism and the risk for a military intervention in Iraq combined with volatile stock and currency markets." Fiat -- Sharefin, 20:02:36 01/19/03 Sun N.Y. Fed President Departing William J. McDonough, the poor Irish orphan from Chicago who grew up to become one of the world's most influential bankers, announced yesterday that he will step down after a decade as president of the Federal Reserve Bank of New York. On the Fed's interest-rate-setting committee, McDonough has been a staunch ally of Fed Chairman Alan Greenspan, voting to keep interest rates low during the 1990s as the economy boomed and stock prices soared. In a statement yesterday, Greenspan said McDonough's retirement "will leave a pronounced void" at the central bank. ~~~~ It is through the trading desk at the New York bank that the Fed buys and sells the Treasury bills that allow it to control short-term interest rates and, indirectly, the supply of money in circulation. And during financial crises, when the U.S. Treasury decides to intervene in global currency or debt markets, it is the Fed's New York desk that serves as the eyes and ears and keeps a watchful eye on global currency flows. The world's largest stash of gold lies in the bank's basement. Bob Chapman -- Sharefin, 18:28:27 01/19/03 Sun The International Forecaster The Shanghai Gold Exchange is preparing the way for overseas bullion dealers and individual investors to trade on the exchange. Chinese gold demand exceeds locally mined supply, so there is scope for foreign numbers, allowing direct sales to consumers. A cash only market at spot, presently the exchange is working toward deferred settlement. JP Morgan Chase and the rest of the gold manipulation criminal cartel are not the only ones short gold bullion. We know there is a distinct possibility that Morgan will get bailed out, but there will be many others that won't be. You know I've believed that the short was 15,000 to 29,000 tons for three years. In fact, there may be little gold left in central banks. There will be covering of short positions coming and it will blow the top off the gold market. That is why we see $840 by June or by year-end. Remember we called for $350.00 an ounce last year and it happened. Shortly, hedge positions for the last quarter will be reported and will bring warmth and joy to your hearts. You are looking at disaster for many companies. Barrick, AngloGold and Placer Dome will be smashed. They are about to find out they have been in a street fight and lost and that they are no longer the masters of the universe. By the time we finish with them they'll be masters of nothing. We implored shareholders of Barrick and other hedgers to throw out their management in the early 1990's but we were a lone voice in the wilderness. Then came that giant Bill Murphy and GATA to lead and show us the way to expose the problem and these crooks. Finally our labors are going to show fruit and the cabal is about to go down in flames. All of you don't forget, don't just take your money and run, make sure these evil people pay for what they have done. The Chinese central bank increased its gold reserve by 100 tons in the last quarter of 2002. That should go well with the 300 ton projected increase in public Chinese consumption in 2003. That 400-plus ton off-take wipes out the total official sales under the Washington Agreement. China will need gold because it faces a serious shortage of mineral resources. We then add to the mix a 1500 ton shortfall of production to usage, falling production and 15 to 29,000 tons either sold or short by central banks and you have a potent concoction that could send gold soaring. The game is over and we won. Watch the price soar and watch the failure and scandals that ensue. Next we pass into the illiquidity phase and that is when the shorts panic and pandemonium sets in. February will be a monster month for gold following an excellent January. Low interest rates certainly make gold a more attractive investment. The opportunity costs are close to zero. Thus low rates are also causing negative interest rates. That is inflation at 1.8%, which is higher than the Fed funds rate of 1.25%. That is a negative return of .55%. Rates wont go up until later in the year due to the fragile economy, but when they do it will be due to a flight to quality. February through year-end gold's performance will be spectacular. We are still in an accumulation phase for gold as we begin phase two. This is the most stealth move in gold and shares in history. There are hundreds of funds with no gold shares at all, which is really mega-bullish, because they are supposed to be leading phase two. Not only does the public live in darkness but so do many of the professionals. They don't understand that gold is real money and is about to again replace the dollar as the world's pre-eminent currency. Foreigners understand but Americans don't. Then again, their media is freer than ours and they do get some of the truth, we get none of the truth except through newsletters and the Internet. That is why the market cap of gold shares is still only $75 billion up from $45 billion two years ago. Wait until only 5% of investors and money managers catch on. Once the shares move the gains will be colossal. Gold producers and bullion banks are still short and they have to eventually cover, which is an explosive situation. As you can see gold and gold shares are a lock and silver will follow, but remember you have to be in the game to win. We believe there are three possible reasons that the US Government may return to a gold exchange standard. We believe the elitists were the shadow purchasers of the gold sold by central banks at their direction, the Malaysian Gold Dinar, which will be actively trading by June and an Islamic Arab Dinar to follow. This will force western governments to again back their currencies with gold. We also believe the euro to be a mitigating factor with its 15% gold backing. As gold prices rise so will the value of the gold backing the euro, thus the percentage of gold backing will rise. There is no question that Islamic countries are putting financial pressure on the US, UK and Germany. The Muslims believe they can destroy capitalism by forcing gold to the forefront and we agree that this could and probably will be successful. We then also have other mitigating events such as new gold exchanges in Dakar and China as well as rampant anti-American sentiment forcing the gold backing issue. Now we can better understand Sir Alan Greenspan's comments regarding monetary policy, unleashed from the constraint of domestic gold convertibility, has allowed a persistent over issuance of money He realizes that the US will have to return to a gold exchange standard to compete with other currencies. We would not expect a US or Fed move in this direction until gold traded higher than $1,500 an ounce. Once the dollar's value was reset against gold then economic recovery could begin. Then these criminals, if still in power, would begin the financial debauchery again. Portugal sold 15 tons of gold. Its report reflected a 606 ton reserve now 591 tons with a swap of 381 tons and leased 52 tons or over 70% of reserves. They are probably the second biggest gold lender in the world and that really means 70% of reserves have already been sold. As we said before the game is over and we have won. Just wait and see. It will soon be public knowledge that most of the sovereign gold reserves are gone and all these countries have been lying about their gold reserves for a long time. UBS Warburg says it expects gold to average $353 an ounce in 2003 and $356 an ounce in 2004. They also upgraded their opinions and price targets of several gold companies, one of which was our favorite *Goldcorp (GG-NYSE). The bank sees a favorable supply-demand balance, a weaker US dollar and continuing geopolitical uncertainty. Deutsche Bank also weighed in with a 2003 gold price target of an average $340 an ounce. Both estimates are plain stupid. They are devised to cap gold in this price range, but it won't work. The biggest scandal in financial history is about to break and when the shorts are forced to cover the price of gold will explode. As we predicted long ago, as gold prices rose jewelry consumption would fall and investment demand would increase. That is just what has happened as GFMS reports that investment demand increased in 2002 from 117 tons to over 400 tons. This comes as production continues to fall. The fundamentals couldn't be better. Gold closed up for the seventh week in a row, a truly phenomenal performance. Anyone who doesn't recognize that gold is in a bull market is just plain stupid. The gold manipulation cartel are buyers probably for themselves. Then there are the producers who are hedged, speculators who are short, banks and central banks that are short and the mega shorts in the gold shares that really haven't moved yet. As we told you at the beginning of the year gold will be $500 an ounce by the end of February and $840 an ounce by June or December. There is somewhere between 15,000 and 29,000 tons either short or sold and we are about to see a demolition derby that will last for at least two years. Silver is soon going to follow gold in a secession of lock-limit up days, and the specialists on the CFTC will be wiped out. Do we hear force majeure? The commercials are about to be decimated. While the biggest gold and silver bull market in history gets underway Wall Street ignores it, CNBC lies about it and the Fed and the Treasury are frozen in the headlights. Gold now has a mind and life of its own. GFMS says gold will average $330 this year and may hit $390.00. All they have done is talk gold down for years. They say after the Iraq war gold will return to $310 an ounce. They remind us of the touts on Wall Street who seldom tell the truth. The World Gold Fantasy Council is little better. How do they explain that the US Mint Gold Eagle sales were 33,500 ounces by the 15th of January, up from 9,500 for all of last January? Silver Eagles minted in January's first two weeks were 1,115,000, which is 200,000 more than in all of January 2002. The days of disinformation by the above criminals are over. The 15-year suppression of gold is over and the crisis of confidence begins. The elitists are about to have a Custer experience. Gold -- Sharefin, 18:12:05 01/19/03 Sun Thar She Blows Again! Gold takes out $355 - The bears could be in trouble Gold stock players suffer from Rear-View Mirror Syndrome Meanwhile Gold Stock players have spent the last couple weeks selling their stocks, convinced that the relative underperformance of the stocks to the metal price is paramount to the end of of the world. Every other post on Kitco these days reads like: "I sold out today", or, "Dumped half my golds today." They are fearful and bearish, here in mid-January, very early in the bullish portion of the six month seasonal cycle and well before the best expected gains in the cycle - and with everything else in the world so bullish for gold right now. I can't ever recall witnessing such irrational bearishness. They just can't seem to shake the "Rear-View Mirror Syndrome" - resulting from the June/July correction that dragged out to November. They are convinced the end is nigh, that gold stocks will never, ever outperform again, and this ironically in the face of the most bullish overall scenario I have ever seen for gold. Maybe I am getting over exuberant. A short sharp pullback, correction, whatever, is most certainly due anytime. Technical indicators are overbought. The RSI is bearish. Every other time the price has rallied last year like this, it did correct for painful months at a time. A single piece of positive geopolitical news could trigger it. On the other hand, think about this: The MARKET - always eventually fools most of the people. Right now the majority are bearish and nervous. Commercial traders are so hugely short, they have only been more short one other time in history. IF, and it's admittedly a pretty big if because the commercial are usually right - but if the price of gold manages to hold 50% of Thursday's gains and finds support around say $354.50 - the shorts will become extremely nervous. It could even violate fleetingly the $354.50 level - but pop right back up again. Then the shorts will be offside. The horror. They will only go so long before covering. It's one thing to be offside on a long position - but another entirely to be offside on a short. If enough of them start covering - watch out. A massive short position like this cannot be covered in today's gold market. A covering panic could ensue. Relative underperformance of gold stocks could end as abruptly as it began And then the nervous Nelly gold stock players who have been profit taking will be left with a bleak prospect as well. Either: 1.start jumping back in at higher prices now, or, 2. risk being left behind for the rest of the seasonally strong period lasting until the end of May. Not to mention a collapsing US Dollar Index, war and who knows what else that could happen between now and then. This relative weakness of the gold stocks to the gold price that has so disturbed the gold stock players would abruptly end. The weak hands will lose. Strong hands (i.e.: like EGS readers who bought last year and patiently waited) will win big time. I'm not saying it's a sure thing. This is new territory. Betting against the Commercial players is foolish. You have to be out of your mind to do such a thing since they are almost always right. I'm not for a minute suggesting going long here. We did that long ago when prices were lower and safer. What I am saying is, that if ever the conditions were in place for such a rare event as a short squeeze, this could be it. Or at least, the conditions are starting to come together very nicely for such an event. Fasten your seatbelts, just in case. All last year subscribers will recall how I practically drooled over the powerful and rare "poetic symmetry" in the gold charts. Since of June of last year - we have witnessed extreme Underperformance of the stocks relative to gold prices (correcting the previous year of extreme Over performance). This has been one of the most dynamic "Wall's of Worry" I've ever seen. Now, we may soon witness something else I have mentioned offhand lately. The "Perfect Storm" in favour of gold prices - a buying panic and a price melt up. Fair Play to you Sharefin -- Giovanni, 18:06:19 01/18/03 Sat I agree with you. There is nothing wrong with presenting factual material that relates to gold. Whether it personifies a racial, ethical, or social group in a disfavourable way shouldn't get in the way of ignoring or covering up what is an important aspect as it relates to gold. Gold -- Sharefin, 05:44:54 01/18/03 Sat Some people seem disturbed of the racial overtones in the article on The Jewish Hold In Switzerland & have complained to me of it. Please note that this site has little interest in religion or racial matters & that the posting was made because of the gold news content & as such the article shall stay. Indeed all goldbugs should be aware of the Swiss gold connection through the reading of Ferdinand Lips excellent book The Gold Wars. Like with much in the financial world of today there are underhand dealings where the intent is not ethical of nature when it comes to greed & wealth. Joe F Rocks -- Sharefin, 05:39:51 01/18/03 Sat Please note that this is a forum for archiving gold news & not one for publicising your website nor short term market moves. Please refrain from posting your site here.  HUI Stochastics Flashed Buy This Week -- Joe F. Rocks!, 03:04:06 01/18/03 Sat HUI appears to have bottomed near 137 last Wednesday. Joe F. Rocks! Growth Stock Investor & Market Strategist Gold -- Sharefin, 01:06:42 01/18/03 Sat The Jewish Gold in Switzerland Jewish organizations claimed that Swiss banks were holding onto assets deposited by wealthy Jews in the 1930s and 1940s who later perished during the Second World War and so were never able to retrieve their money. Jews demanded that this money be put into a special fund for so-called "Holocaust survivors." More information has come to light about this Jewish extortion campaign, and I want to share it with you today, because it helps us to understand better the situation all of us are in. In the first place, let us be clear on the point that what we are talking about is not simply an effort by Jews to get back what rightfully belongs to them. It is not a matter of aging "Holocaust survivors" David and Sarah Goldblatt in Miami Beach trying to get their hands on an account their late uncle Abe set up in Switzerland before he was hauled off to Auschwitz in 1943 and never seen again. It is, in fact, a massive campaign of criminal extortion, complete with threats, deception, and fraud on a huge scale and criminal collusion by the Clinton government and the racist jewish controlled news media. The initial response of the Swiss to the Jewish demand for money was that Jewish depositors always had been treated just like all other depositors, and that Swiss bankers already had investigated their dormant accounts and looked for rightful owners, and that there was at most a few million dollars in such accounts which might belong to relatives of Jews who had died during the war. All David and Sarah Goldblatt had to do to claim uncle Abe's money was present evidence that it was rightfully theirs. This, of course, wasn't what the Jews had in mind at all, and so they began applying pressure and making threats. Switzerland's president at the time, Jean-Pascal Delamuraz, angrily accused the Jews of "blackmail" and "extortion" in trying to pressure Switzerland to turn money over to them without any evidence that they had a legitimate claim. But, unfortunately, Mr. Delamuraz was leaving office at the end of 1996, and his successor was more willing to pay blackmail in order to avoid trouble. Just to make sure that the Swiss got the message the Jews persuaded some of their Christian collaborators to join their campaign. Willing church leaders in Switzerland organized a public demonstration in Zurich by 15,000 churchgoers who demanded that the Swiss government and the Swiss bankers give "God's Chosen People" whatever they wanted and stop accusing the poor, persecuted Jews of blackmail. The Swiss bankers and the Swiss politicians are a bit more hardheaded than these pale, soft, hymn-singing churchgoers, however. Arguments that God's Chosen People deserve whatever they want because the Bible says so have little effect on them. The real pressure was being applied to them out of the public's eye. On January 10, billionaire Jewish liquor merchant Edgar Bronfman, head of the World Jewish Congress, met with the Swiss ambassador to the United States and threatened him that unless Switzerland coughed up $250 million immediately, upcoming Congressional hearings by the House Banking Committee would be made as embarrassing as possible for Switzerland. And other pressure was being applied behind the scenes. A group of New York Jews, claiming to be "Holocaust victims," brought a class-action suit against three of Switzerland's largest banks and petitioned the Federal Reserve Bank of New York to suspend the banking licenses of the defendant banks pending the outcome of the lawsuit. If such a petition were granted it would cause the banks to lose billions of dollars. Fiat -- Sharefin, 00:53:18 01/18/03 Sat Housing market a Ponzi scheme Economist Robert J. Shiller yesterday likened today's housing markets to Holland's tulip mania, the 1920s and 1990s stock market bubbles, various Ponzi schemes and other situations in which investments became overinflated due to excessive enthusiasm. ~~~ Shiller opened his remarks by offering several definitions of the term “bubble,” then presented his own definition: “In popular discourse, a bubble seems to be a situation in which news of price increases spurs investor enthusiasm which spreads by psychological contagion from person to person bringing in a larger and larger class of investors who despite doubts about fundamental value are drawn to the investment partly through envy of others' success and partly through a gambler's excitement.” A number of these factors are in play and the housing market “doesn't have to have all these elements to be bubbly,” he said. Shiller mentioned the “Madness of Crowds” book written in 1841 about the 1630s tulip mania that bankrupted prominent families in Holland and said author Charles Mackay's classic words are still relevant: “Many individuals grew suddenly rich. A golden bait hung before them enticingly…At last, however, the more prudent began to see that this folly could not last forever. Rich people no longer brought the flowers to keep them, but to sell them again and make a profit.” Shiller linked the “bubble” concept to Ponzi schemes, in which later investors are attracted by the profits of early investors who are given later investors' money. “Real world bubbles are like Ponzi schemes even through they are not fraudulent,” he said. Fiat -- Sharefin, 00:38:26 01/18/03 Sat The physics of financial catastrophe Sornette's fractal model suggests that the current rally will stall shortly and that prices will subsequently retreat much lower over the next 12 months to 18 months, punctuated from time to time by strong countertrend rallies. After the S&P 500 Index reaches the low- to mid-600s from its current perch around 925, his model predicts a multiyear period of convalescence for U.S. stocks before a new bull phase pushes prices back toward and beyond their 2000 highs. Fiat -- Sharefin, 00:34:29 01/18/03 Sat U.S. war on deflation threatens global economy However, before long, the dollar may become an overvalued currency, with an unsustainably large current account deficit and falling import prices fueling deflation. Thinking the unthinkable, the real concern for the global economy at the start of 2003 is that the United States will be the last and largest economy to suffer an emerging market crisis, in which foreign capital inflows become outflows and the dollar collapses. To defend the currency, Fed Chairman Alan Greenspan would have to raise rates, causing Wall Street to crash and the property bubble to burst, and other negative side effects. One prescription for such a U.S. crisis would be an International Monetary Fund-style package. The IMF approach to crisis-hit developing economies says that the elimination of a current account deficit must be achieved through deflation rather than through devaluation. The IMF would almost certainly mandate that the Fed raise interest rates even further, and the budget deficit be cut to reduce excessive domestic demand. In reality, of course, the opposite is poised to happen. This is because the Fed's primary focus is the opposite of the IMF prescription. It wants to inflate and will do so in a clear, decisive and ruthless manner. Too much has been learned about the collapse of asset bubbles and the threat they pose in destabilizing the financial system and unleashing unpredictable forces of deflation through negative wealth effects. No, the most likely response to a crash on Wall Street is that rates will be slashed even further and the world will be flooded with U.S. dollars. The yen could shoot to 80 yen to the dollar or even higher. This really would kill any hopes of a global recovery. Clearly, the United States will not lift a finger itself to stop the dollar's fall. It has not got sufficient foreign currency reserves to do so. If private borrowers of nondollar currencies go bankrupt, the U.S. government will not take responsibility for these private foreign liabilities--it will simply allow them to default. Gold -- Sharefin, 00:11:33 01/18/03 Sat Reaction Time Running Out for The Reaction Why, Jim? Well, it is simple. There is in the cash gold market a significant offering above the market. The cash market is a secret market that you can only know if you know the personalities in it and the major position takers. Something quite unusual is happening. There is a significant overhang of platinum supply for the platinum industry. However, translated into gold, that above-ground supply is not really that big. There appears to be a very large take-down of that supply for which I cannot at this time offer a sound fundamental reason. Be that as it may, it has happened. The last time I saw anything like this in platinum was right before a $500 move started in the late 70's. Of course I am intrigued. Well, so is a major holder of gold with about a $70 profit. The reason gold has been rising to nip at the bottom of the overhead is that the seller of gold has been selling some significant lots to a buyer willing to step up close to his offering price; thereby reducing the overhead supply. The market fell away as primary dealers knowing of this offering sold their positions; while offsetting them via Comex future sales against long cash bullion positions. The market did not fall away as it did the last time up in these lofty areas. Each day the overhead is being reduced. If this action continues, I believe the entire block will be sold by late Friday or late Monday at the present rate. If this occurs, you can expect that the dealers who sold Comex contracts against their long positions will cover those contracts taking this chop into the high side of the range between $357 and $362. So you see, it is not all lines and squiggles. Lines and squiggles are simply representations of real bids and offers. Timing comes from knowing the size of what is out there and if it is being reduced or increased. Chops come from dealers offsetting their positions in front of bid and offers coming into them. Knowing one without the other is knowing half or less of the actual story. Silver -- Sharefin, 23:23:18 01/17/03 Fri SilverFinger - Nelson Bunker Hunt IN THE SUMMER of 1979, an invisible hand reached out from an island in the Atlantic and quietly began tightening its grip on the world's supply of silver. The fingers of that hand extended to London, New York, Dallas, Zurich and Jidda. But the only visible clue to its existence was a newly formed Bermuda shell corporation called International Metals Investment Company Ltd. That dull-sounding little trading company was not just another offshore tax scam but the operating front for a secret partnership seemingly capable of controlling the world price and supply of silver. Appropriately enough, two of the principals in that cosmic alliance were Saudi Arabian businessmen with connections to the Saudi royal family. But another principal, the real genius behind the deal, was an American oil billionaire, the head of a clan sometimes referred to as “the royal family of Texas.” Though not quite as rich as the Saudi royalty, this man was one of the few private individuals in the world capable of playing in the same league. A lover of intrigue, in the past he had made international headlines with his mysterious wheeling and dealing. Before long, he would again blaze across the front pages. But for the time being, he remained in the shadows, operating behind the corporate veil of International Metals. His name: Nelson Bunker Hunt. ~~~ With the world apparently crumbling all around him, Bunker decided to go heavily into silver. This time, he and his brother Herbert-aided by second-family in-law Randy Kreiling, a commodities expert-began buying into the market with what would soon come to be known as the typical Hunt style. The key elements in their strategy were size, secrecy and surprise. Working through Bache and a variety of other brokers, they purchased not just penny packets but also millions and millions of ounces. Their first huge order was a 20,000,000-ounce December 1973 contract. Other big orders followed, and by early 1974, the Hunts had accumulated contracts totalling 55,000,000 ounces, or about seven to nine percent of the total estimated world supply. That gave them more silver than anyone on earth save the governments of a few countries and the silver exchanges themselves. Bunker and Herbert placed their orders with more than the usual concern for confidentiality. Secret buying strategies are common in the commodity futures markets, where leaks of a big purchase can send prices skyrocketing. But most silver trader's deal only in paper, not actual metal. The Hunts, however, were taking delivery on their contracts, all 55,000,000 ounces' worth. That meant they had to put up roughly $160,000,000-in cash. Taking delivery on all that silver also meant that they had to store it somewhere and that, in turn, necessitated the second and more secret phase of their silver-buying scheme. Most of the details of the Hunts' great silver roundup are still secret, but sources familiar with the operation say it began with a shoot-out at the Circle K ranch. The property of H. L's second family, the Circle K is a 2500-acre spread located east of Dallas. As straw boss for the operation, Kreiling recruited a dozen cowboys from the Circle K by holding a shooting match to see who were the best marksmen. The winners received a special assignment: riding shotgun on the Hunts' hoard of silver. With guns in hand, the Circle K cowboys flew up to New York aboard three chartered 707s the planes came from a nationally known charter company, but the name of the firm was covered with tape so that the only visible identifying marks were the planes' registration numbers. The aircraft landed at La Guardia in the dead of night. A short time after their arrival, a convoy of armoured trucks arrived from the New York Commodity Exchange warehouse. Inside were 40,000,000 ounces of silver bullion. The transfer took place almost wordlessly. There was no joking or grabassing, just serious loading. When the planes were full, the cowboys climbed in and the pilots got clearance for takeoff. Their destination: Zurich. Gold -- Sharefin, 22:53:28 01/17/03 Fri Greg Palast: Beat the Press For those of us who've long suspected that our democracy is up for sale to the highest bidder, award-winning investigative journalist Greg Palast has uncovered disturbing evidence confirming as much. Palast's exposés of the theft of the 2000 election, the financial ties between the Bush and the Bin Laden families, and how these connections kept the FBI from perhaps preventing the horrific events of 9/11 have thrown fear into the hearts of media pundits. There has been a near-complete news blackout of the explosive findings documented in Palast's book, The Best Democracy Money Can Buy. First released in England, where he reports for the BBC and The Guardian, Palast's collection of writings is finally being published in America by Penguin/Plume books with 40% new material. In an exclusive HUSTLER interview, the author discloses the truth on high crimes in high places that the mainstream media is afraid to touch. HUSTLER: Tell us about your new book. I know you've been able to get your groundbreaking exposés published in England and Europe, but, up until now, your stuff has been too controversial for the American media to touch. PALAST: Not a chance in America, until now, thanks to the book. HUSTLER: What kind of material do you have in the book? PALAST: How about this for an example: After Daddy Bush left the White House, he went to work for a company called Barrick Gold Corporation in Canada, something you haven't read in the United States. The first thing he does is pick up a big, fat check and stock options from Barrick Gold Corporation for, essentially, selling them the presidential seal and the presidential Rolodex. And he writes letters to dictators like [former president of Indonesia] Suharto, saying, "Give these nice guys gold-mining concessions." HUSTLER: What is Barrick Gold? PALAST: It was founded with money from Adnan Khashoggi, the arms dealer. You may remember that Adnan was the bagman in the guns-for-hostages, Iran-Contra scandal. The sheikh got out, then Bush got in. You have to ask yourself a question: What would a Canadian gold-mining company do with a used president? Well, it turns out that before he left office, Daddy Bush put in motion an expedited process for laying claims to gold in the United States. It allowed Barrick Gold Corporation and a couple of other operators to lay claim to the largest gold mines in America. To stake a claim on $10 billion worth of gold ore, Barrick paid the U.S. Treasury less than $10,000. HUSTLER: I would have gone for that, myself. I could have scraped together $10,000. PALAST: All I can say is that Barrick was very, very grateful for the gold mine. But the public got the shaft, and Daddy Bush got the job. And George W. got the donations. That's the other thing that has been unreported here: People don't realize how much easy squeezy [campaign money] is flowing in. That includes things like parallel spending and soft money and hard money, which, by the way, hasn't ended. You know that our Congress has passed campaign-finance reform, so-called. What they did was eliminate soft money, but they doubled the amount of hard money. It's just Viagra for campaign donations. Our big problem is that we held something closer to an auction than an election in America. A lot of the reason [George W.] Bush raised all that cash-that easy squeezy-is because of his father's business connections. You're never quite sure where the Bush family's bank account ends, and the campaigns and our American policy begins. HUSTLER: Did Barrick get anything else from Bush Sr.? PALAST: He helped Barrick secure a gold-mining concession in Tanzania. Now the gold-mining concession was owned by another Canadian company, named Sutton, which Barrick hoped to get the rights from. But there was a problem: The land was worthless, because there were Tanzanian miners already on it who had the rights to the mine. That's why, in the first week of August 1996, Sutton bulldozers ran across that property with military police firing guns to chase off the miners. In the process, they sealed up the mine pits and, unfortunately, there were 50 miners still in the mines, buried alive, say witnesses. That's information that has not been reported in the United States. You can't get that word out for nothing, because Bush's gold-mining company terrorizes journalists who dare breathe a word about it. They terrorize newspapers; they've been terrorizing wire services, and so you don't get the story. Fiat vs Gold -- Sharefin, 21:13:56 01/17/03 Fri The technicals: Gold at 96% buy US Dollar at 100% sell Silver at 48% buy Gold -- Sharefin, 20:07:36 01/16/03 Thu Late to the gold rush Bank's embracing of metal, miners seen as a plus How important is Wall Street's fresh round of upgrades for the gold industry? To many longtime gold investors, Wall Street's embracing of the metal, which in 2002 rose about $66 an ounce, or 24 percent, is par for the course: a sign that sales-driven analysts are late to the profits in any market rally. Still, even the most cynical of observers acknowledges the importance of professional support for a metal that Main Street investors mostly shunned during the most recent boom years. This week, Wall Street and London banks upgraded their gold price forecasts and their ratings on several mining stocks. All see higher prices for the metal, which is attempting to surpass $360 an ounce for the first time since early 1997. See: Gold gets respect on Wall Street. "These reports are good trend indicators, but they are lagging indicators -- not coincidental ones," says James Turk, editor of Freemarket Gold and Money Report. "It indicates that the trend is well enough established for them to consider changing their estimates." The fresh round of positive forecasts for gold and the mining companies -- from the likes of UBS Warburg, Deutsche Bank and J.P. Morgan Chase -- follows moves by investment banks to reduce clients' holdings of stocks. In December, Merrill Lynch's chief U.S. strategist, Richard Bernstein, reduced his recommended stock asset allocation to 45 percent from 50 percent. As it stands, gold (the physical version of it, that is) often is absent from the traditional asset allocation lists of the world's largest investment banks. Institutions such as pension funds that want to buy physical gold on behalf of clients must overcome custodial challenges and a herd mentality that still favors paper investments, even with stock markets across the world approaching six-year lows. ~~~ Naturally, the question investors are surely asking themselves, as gold's price continues to notch new highs, is: Invest in the metal or the mining stocks? Cooper at CIBC World Markets says there have been only six spans in the past 30 years when holding bullion produced better gains than holding gold equities during periods when the gold price (38099902: news, chart, profile) was rising. The most significant was the 15 or so months in 1979 to 1980, when gold rose 165 percent while the S&P Gold Index rose 106 percent. Wall Street analysts are slowly, perhaps too slowly, beginning to understand the positive effect that a declining U.S. dollar has on the gold price. About four-fifths of gold production and consumption actually happen in currencies other than the dollar. A weakening dollar stimulates demand and depresses supply. Gold -- Sharefin, 20:02:14 01/16/03 Thu Gold, miners get Wall St. attention JP Morgan technician sees $430 an ounce possible Wall Street is starting to upgrade its opinions of gold and gold miners, a forlorn group that is trying to shake off years of torpor. UBS Warburg says it expects gold to average $353 an ounce in 2003 and $356 and ounce in 2004. While the price levels are very near the current spot price for the metal, they represent a 10 percent and greater revision from previous forecasts from the investment bank. Analyst John Reade at UBS in London said in his report that the volatility of the gold price is making his job of forecasting "harder than usual." Reade said if the dollar, which declined 16 percent in 2002 against the euro, were to "fall sharply" during a period of Middle East or Korea tension, gold's price could reach $400 an ounce. "The rally in gold that began in 2001 ... has been considerably assisted by the weakening of the U.S. dollar," he said in his report. ----- In other Wall Street developments, a JP Morgan technical strategist said gold, flirting with six-year highs, most likely reached a bottom when it hit $254 an ounce in February 2001. The technician, Jordan Kotick, said the metal could approach $430 an ounce in coming years. The price of the metal holding "above the monthly trend channel upper limit at $348 suggests that the market is consolidating its breakout," Kotick said. "These factors give increased credence to arguments that the market has in fact made a double-bottom pattern at $252/$254. Such a pattern would project a rally to $430 in coming years." Kotick said the metal's price in the past week or so had contracted its daily range to $3 swings from $7 swings in price. "In the short term, the range contraction -- from $7 to $3 -- over the last few days portends a breakout in coming days/weeks," the JP Morgan analyst said. In a telephone interview, Kotick said from New York that he was "cautious" about the gold price. If the price were to fall to below $345 an ounce, "then the short-term correction is under way and we could see it go to $325 to $330. This would be a good buying opportunity." Kotick said his concern centers on the fact that market sentiment, or the view of fund managers and Wall Street professionals, "was the most bullish it's been in 15 years." A sharp rise in support for an investment can sometimes portend a short-term peak. Still, Kotick on Wednesday said the market appreciates "a supported story," and the Middle East turmoil was lending a floor to the gold price. Deutsche Bank also increased its price estimate for 2003, saying the metal would average $340 an ounce this year, a 6 percent rise from its earlier forecast. The bank noted political turmoil in the Middle East and North Korea as contributing to a probable flight to gold. John C. Doody, editor of Gold Mining Stock Analyst, said the outpouring of professional support for gold was a significant development for the metal. "Their upgrades are sure to bring more investment dollars to gold," Doody said Wednesday. Gold -- Sharefin, 19:56:28 01/16/03 Thu The Gold Derivatives Neutron Bomb Today's sharp move higher is the biggest one in memory on a closing basis. And yes, we have another GATA coincidence. It seems that every time GATA pops off about the real gold story, gold bolts to the upside. It happened GATA's African Gold Summit in Durban, South Africa, on May 10, 2001. It happened when Reg Howe and I spoke at the Mining Analysts Association's seminar in London on May 23 last year. It happened right after the report by Howe and Mike Bolser, documenting the 15,000-tonne central bank short position in gold, was released on December 4. And it happened today, 12 hours after GATA disclosed that Portugal's central bank had lost most of its gold. Coincidences all! Somebody is paying attention to what GATA has to say. Today's gold action was classic. Morgan Stanley turned aggressive buyer right after the opening, taking on the other bullion banks. They kept at it and gold remained firmly higher all morning, creeping up to the critical $354.50 gold price. Then, out of the blue and late in the trading session, Goldman Sachs turned aggressive buyer, taking gold up sharply on the day. Over and over again these past weeks I have been reporting Goldman on the buy side, not the sell side. What we don't know is who they are buying is for. But for Morgan Stanley and Goldman Sachs to be the featured buyers on a dramatic up day for gold is very significant. It is an indication that the rats are leaving the gold-rigging ship. "Every man for himself" must be the new deal. Word is circulating in the bullion dealer world: * The central banks have written more gold calls than they have gold to deliver. Good grief! * Aussie gold hedgers are getting hit with knock-in calls. Some say their exposure is 160 percent of their mine life. Good grief! * Barrick is grousing that they are going to accelerate their hedge covering. Good grief! How quaint! What do you think is going to happen when those major forces all try to cover at the same time? It is called the Gold Derivatives Neutron Bomb. It goes off. There is no way that players of that size can cover without driving the price of gold way up. You can't cover massive positions like that in a market that has a huge monthly supply/demand deficit and little gold supply around. That is very bullish news in the aggregate. Perhaps the Morgan Stanley and Goldman Sachs buying is for the central banks, Aussie gold producers, and Barrick. If it is, they have a long way to go. But it is amazing. I am hearing that veteran traders still want to go short gold, not go long. If the paid attention to GATA, they wouldn't dream of it. GATA stretcher-bearer: Prepare for active duty, please. Gold has cleared all resistance and will now head for $419 per ounce. Today's close is particularly bullish because gold consolidated for three weeks in the low- $350 area. All those sellers are losers at the moment. The close also tells traders that the Gold Cartel has lost control of their fraudulent manipulation. All they can do now is rear-guard action to slow down the price advance as best they can. That means we are very close to that Commercial Signal Failure I keep referring to. The trapped commercial shorts (the Gold Cartel and others) are going to have to give up the ghost soon, which will lead to a short-covering buying panic. There are no gaps to fill in this gold market. That is very bullish, as we still have the breakaway gap ahead of us. The gold news is bullish all the way around: * The dollar closed in new low ground by a good margin. March closed at 101.12, down .57. * The CRB closed in new high ground at 241.58 with oil rising to $33.66 per barrel. * Iraq war news heated up as chemical containers were found. * The stock market is starting to roll over. What a beauty of a gold chart: http://futures.tradingcharts.com/chart/GD/23 If gold holds today's gains, it will give us the seventh higher weekly close in a row. Markets seldom do that. That tells you how bullish gold is. That kind of action is setting up an upside move of epic proportions. Those moves occur when few people understand the fundamental dynamics that are moving the market (early in the move). That is the case with gold. The gold world refuses to tell the gold truth. How many investors out there know the GATA story and all we have distributed about gold? How many realize that the price was suppressed for years? How many know about the 15,000-tonne short position? Very few. Someday they will know that story. Gold will be $450 to $550 bid by then. Your gain, other investors' loss. Fiat -- Sharefin, 19:53:18 01/16/03 Thu Federal Budget Deficit Expected to Reach Over $300 Billion Next Year "The White House said Wednesday that the federal budget deficit will exceed $200 billion in this fiscal year and probably go over $300 billion next year, with deficits continuing for the next decade," reports The New York Times. Gold -- Sharefin, 19:49:43 01/16/03 Thu Goldcorp war chest remains unspent Goldcorp[GG], the sassy Canadian mid-tier gold producer, is sitting on a war chest of $327 million dollars as its rich Red Lake Mine continues to throw off cash and thanks to the rising value of its gold bullion stockpile. Goldcorp's physical gold holdings, amounting to 196,000 ounces, more than half of which it has bought in the market, have increased in value by a further $2 million since the end of the year when the final London Gold Fix was $342.75. It was fixed at $353.10 on Tuesday afternoon. Gold -- Sharefin, 19:47:36 01/16/03 Thu War final arbiter in gold price GFMS, the independent precious metals consultancy, said politics would be the ultimate arbiter in directing the gold price this year which could settle anywhere between $370 to $310 per ounce. “If the Iraqi crisis blows up into a lengthy war, we could easily see the market over $370 per ounce. On the other hand, if the whole thing turns out to be a damp squib and investor bail out, below $310 is on the cards,” said Philip Klapwijk, managing director of GFMS. However, the average price in the first half of the year was expected to be $330 per ounce, 4 percent higher on the H2, 2002 average. Commenting on gold's appreciation last year, the UK consultancy said investment holdings was a major driver although the increase in interest was only from a relatively small pool of high net worth individuals. “The industry's challenge is to get more institutional investors on board who'll allocate investment to gold on long term considerations, not just to take advantage of a price spike,” Klapwijk said. The increase in investment holdings in gold, although small in actual dollars, was owing to heightened political tension. Other aspects sending investors back to gold was falling stock markets, corporate fraud, low interest rates and a weaker UK dollar. Low interest rates were also thought to be behind the ongoing high level of producer de-hedging as this limits the advantage to be gained from forward sales. Interestingly, the possibility of a higher gold price was one of the reasons for reducing hedge books, GFMS said. “De-hedging could prove important this year for price support if investors prove as fickle as some fear and fabrication remains poor,” Klapwijk said. Fabrication of gold fell by as much as 10 percent in 2002 largely owing to the increase in the gold price. There will be a partial recovery this year but Klapwijk warned that if the gold price did not settle to below $330 per ounce this year first half fabrication levels could fall to below last year's levels. Mine supply holds less importance in determining price changes this year: “Mine production was down but by less than 60 tonnes. We'll probably have to wait until at least 2004 before falls in mine supply get more interesting,” Klapwijk said. Official sector sales were thought to be flat last year though there is a possibility that sales in 2003, outside of Europe, could see an uptick in response to recent price gains. Gold -- Sharefin, 19:44:48 01/16/03 Thu Indian wedding gold jewellery orders seen down Gold jewellery demand in India's current "wedding season" is down 15-20 percent year-on-year as gold prices have soared, Indian jewellers said on Wednesday. But orders could pick up later in 2003, depending on events in Iraq, the jewellers told Reuters at the Vicenza fair in northern Italy, the world's main gem and jewellery trade show. India is by far the world's largest consumer of gold and silver jewellery, importing around 850 tonnes of gold a year, about half of which is used for jewellery, as well as recycling some gold, jewellers say. "Demand in the present wedding season is off 15-20 percent because of the price of gold which has gone up by about 15 percent over the past year," P.K. Jain of Diastar Jewellery Limited, based in Mumbai in western India, told Reuters. "This could be a temporary phenomenon: everything depends on what happens in Iraq in the next two months." Krishna Goyal, managing director of Jaipur-based Dwarka's Jewellers, estimated that orders in the current wedding season in India were off around 20 percent from this time last year. "Fluctuations in gold prices are high, so the consumer is afraid," he said. "As soon as the uncertainty over Iraq ends, the market will pick up." He added, "Gold imports will be lower this year -- maybe 15 to 20 percent less -- because of the higher prices." --- Note the difference between these numbers & what the WGC is releasing. Gold -- Sharefin, 19:30:04 01/16/03 Thu Precious metals glitter Equity funds that invest in precious metals charged ahead again in December as the price of gold soared. The category's funds jumped an average of 23.8 per cent last month to bring their average one-year gain to 76.2 per cent. The price of gold, which is viewed as a haven in times of trepidation, hit five-year highs last month as investors feared a U.S.-led attack against Iraq and a revival of North Korea's nuclear weapons program. At the same time, the U.S. dollar weakened against the euro and the yen, and U.S. equities fell, making the precious metal more attractive as an alternative investment. Early in the month, Merrill Lynch & Co. Inc., the world's largest brokerage, also enhanced gold's allure when it advised clients to reduce their U.S. stock holdings. ~~~ John Embry, portfolio manager for the Royal fund, said he built its portfolio on his strong conviction that the gold price would rise. In Mr. Embry's opinion, the U.S. stock market looked vulnerable, and the U.S. dollar was "an accident waiting to happen." He also thought the economy south of the border was in worse shape than the consensus opinion of it. Meanwhile, the financial community was speculating that governments might move to stave off deflation -- which could in turn spark inflation. "This is the ideal climate for gold." As a result, Mr. Embry loaded up on shares of smaller players with developing ore bodies and relatively cheap stock prices. Since investors had been ignoring smaller names, Mr. Embry reaped the benefit when the gold price started to rise and those beaten-down stocks were suddenly back in favour. "There was a revaluation because [the shares] were really cheap." Meanwhile, Mr. Embry eschewed shares of producers whose hedging strategies forced them to sell gold at a previously locked-in price and therefore miss out on much of the metal's rise. Those big, blue-chip companies had also already had a good run in their stock prices so they did not offer the same upside, he noted. Gold -- Sharefin, 19:26:44 01/16/03 Thu GO WITH THE TRENDS Gold broke through the important $330 level in mid-December and it hasn't looked back since. It's currently at a six year high over $350, it's risen more than $27 in the past month and the bull market is now in a stronger phase for the first time since 1980. ~~~ As you know, we've been taking gold's bull market one step at a time, so let's review the steps. The first important trend identifier is the 65-week moving average. This simple tool has identified the major trend since the 1970s. When gold is above it, the major trend is up and when gold is below the 65-week moving average, the major trend is down. Gold rose above this average a year ago August where it has stayed since then. This means the major trend is up as long as gold stays above $307. ~~~ Many have been asking for gold's upside potential. The stepping stones are our targets and now that the 1999 high has been broken, our next target is the 1996 high near $415 (see the 1996 #1 peak on Chart 2). This is a level that can be attained this year. But first, the current rise is nearing our target in time and price near $360. This means we'll likely soon see a downward correction, and then gold near $400 possibly during the next rise in a few months. Once the $415 level is surpassed, the bull market will strengthen even more and the 1987 high near $500 will then be the next target (see Chart 2). If this occurs, the gold market would be hot because the current #1 rise would result in the best percentage rise in gold since the surge of 1980. And if gold breaks above $510, it would enter an explosive phase of the bull market where it could then surge to the $850 peak and beyond. All of this can be attained as long as the bull market remains in process. And if it does, the upside for gold is wide open. HUI May Have Bottomed Yesterday Near 137 -- Joe F. Rocks!, 10:33:00 01/16/03 Thu Stochastics reached oversold yesterday and HUI is firm today. Joe F. Rocks! Market Strategist Fiat -- Sharefin, 09:01:03 01/16/03 Thu Gold Futures and Options "Expiration occurs on the second Friday of the month prior to the delivery month of the underlying futures contract. Beginning with the expiration of the December 2002 contract, options will expire on the fourth business day prior to the end of the month preceding the options contract month. If the expiration day falls on a Friday or immediately prior to an Exchange holiday, expiration will occur on the previous business day." --- New Option Expiry Dates!!! Midas -- Sharefin, 02:04:16 01/16/03 Thu Portugal says most of its gold is gone and people are coming for the rest Longer term, the most important news of the day comes from Mitsui. Their Sydney commentary, speaking of yesterday's announcement by the Portuguese of a 15-tonne sale, observes "We think they got exercised on some calls granted as part of a collar back in the 97/98 area. There may be more and with different central banks. Gold didn't flinch." According to the Bank of Portugal's 2001 annual report, out of its 606 tonnes of gold reserves (now 591) Portugal swaps 381 tonnes and lends 52 tonnes; that is, over 70 percent in the lease market! They may be the second biggest gold lender in the world. Might option sales "structures" conceivably lead to some further withdrawals? Are tighter lease rates coming? The footnote that discloses the distribution of the Bank of Portugal's gold is at: http://www.bportugal.pt/publish/relatorio/Chap_IV_01.pdf (Scroll down to the nine page.) The information that the Bank of Portugal has been so specific in its annual report is, I think, new to the market place. The news that 70 percent of Portugal's gold has, in effect, already been sold, lends powerful support to the view that much of the global central bank 30,000+-tonne hoard is gone. This insight into a central bank's gold option activity -- with the insinuation others are also involved -- further advances this case. And, once again, the new spectacle of junior bullion banks being willing to be so candid about (possible) clients suggests that they think that the era of central bank domination of the gold market is drawing to a close. Gold -- Sharefin, 22:10:14 01/15/03 Wed JP Morgan says risk exposure in gold derivatives less than 10 Million US$ JP Morgan Chase, answering charges by a pressure group that it may be facing excessive risks in the gold market but not disclosing them, said its exposure to gold including derivatives is less than 10 mln usd. JP Morgan was responding to allegations by the two-person Gold Anti-Trust Action Committee (GATA), a pressure group which alleges bullion banks and central banks are conspiring to rig prices in the gold market. The US Securities and Exchange Commission (SEC) is now being asked to arbitrate a long-running spat between JP Morgan and GATA which has generated a steady flow of conflicting claims, rumors, accusations and denials with few hard facts. Both sides are calling on the securities regulator to investigate their claims about the other party. GATA asked the SEC last week to investigate its suspicion that JP Morgan has a higher risk exposure to fluctuations in the price of gold than what it has acknowledged publicly. GATA's letter to the SEC spelling out its allegations followed JP Morgan's request to the regulator on Jan 3 that it investigate rumors the bank was trying to keep the price of gold down and covering up losses incurred from the recent rise in gold prices. JP Morgan Chase has registered 41 bln usd in gold derivative contracts as of the third quarter last year in its filings with the US Office of the Comptroller of the Currency. This is the notional value, or the sum of the value of different contracts of the bank's clients holding different positions, long or short, on the contracts. Derivatives are financial instruments that derive their value from another underlying asset, like gold. The most common derivatives are futures and options. "On any given day, JP Morgan's exposure to the gold market including derivatives is less than 10 million dollars," a bank spokesman told AFX Global Ethics Monitor. "The risk of contracts is held by our clients and we actually don't have any risk associated in the contracts." ~~~ But analysts agreed the information provided by JP Morgan is not enough to understand the actual risk involved. "There are two things that are absolutely critical to know which make it impossible to conclude anything really powerful," said Vandervliet. "First, is the net trading position long or short? We don't know. Second, how much of these contracts are held by JPM versus held for customers supporting a trading book and therefore not presenting JPM with a material risk. This is a weakness of the disclosure and makes firm conclusions very difficult." Gold -- Sharefin, 20:00:10 01/14/03 Tue Six Abu Dhabi gold retailers close shop Gold traders in Abu Dhabi are in a major bind as they battle bad debts and poor sales due to high prices. Not surprisingly, the beehive activity at the capital's gold souq is at a lower pitch as traders come to grips with the prospects of a less than rosy future until business picks up again. "If Dubai is bad, Abu Dhabi is worse," is the terse comment of Tushar Patni, chairman of the Abu Dhabi Gold and Jewellery Group. Saddled with losses, some six retailers shut shop in 2002. And, if the dull phase in demand continues some more are likely to exit the business. "Some of the retail traders are in bad debts and if business continues to be bad, they may be out of business," he said. The current dull phase in demand in the otherwise vibrant gold market of Abu Dhabi is mainly due to the sudden rise in the price of the yellow metal. According to Patni, the current price of gold is some $348 per ounce, but it might go up to $375 to $380 if market rumours are to be believed. "If the price goes up further, sales will come to a standstill as buyers are now only waiting and watching." A wholesale trader said much of the wholesale trade has stopped since the last few days. "The old payments are not coming and when sales are flat, why should one stock gold," he said. An Arab trader (asking not to be named) in the old souq who has been in the business for the last 22 years seemed optimistic. "We are used to such cyclical trends. We also saw poor offtake during the Gulf War. A shrewd businessman should make provisions for the ups and downs of his business. Gold has a knack of attracting customers again," he said. Most traders said they get only two to three serious customers a day and that the future depends on the price. "Right now there's no movement in our trade and business is down by more than 50 per cent. Only those who need to make urgent purchases are taking home gold," said the manager of Safa Jewellery. Gold -- Sharefin, 19:58:18 01/14/03 Tue Gold Falls as Speculators Sell From Biggest Holding Since 1996 Gold futures fell for the first time in three sessions on selling by speculators who had amassed their largest holdings in seven years. Gold retreated from its highest price since 1997 on the round of speculator sales, traders said. Hedge funds and other large speculators as of Jan. 7 had bought 63,563 more gold futures contracts than they had sold, the largest ``net-long'' position since February 1996, a report last week from the U.S. Commodity Futures Trading Commission showed. ``We've moved up quite quickly, so it's not surprising that we would see a little bit of selling,'' said Raymond Chung, a partner at Crown Commodities Inc. in New York. ``We're still trying to build a base so maybe we can take this market higher.'' Fiat vs Gold -- Sharefin, 19:55:18 01/14/03 Tue Gold outperforms major currencies, markets in '02 The performance of gold's price during 2002 largely reflects the fact that the professional investor has returned to the use of gold as a risk management tool, a World Gold Council (WGC) report noted. In the 1980s and for much of the 1990s, the economic, political and financial environments were, in the main, seen as benign and there was no assumed need in the 'professional sector' for the use of gold as a hedge against risk. Over the course of the year, gold outperformed the dollar by 25 per cent, the yen by 14 per cent, sterling by 13 per cent, the euro by 9 per cent and the Swiss franc, the other major recipient of 'safe haven' funds (notably from the Middle East), by 7 per cent. The search for alternative assets is reflected in the relative performance against the major equity markets. Over the year, gold outperformed the FTSE by 52 per cent, the Dow by 47 per cent,the Nikkei by 44 per cent and the European index by 36 per cent. Early background: The price started to improve in 1999 and 2000 on the back of strong physical regional demand and speculative short-covering. The former stabilised the price in mid-1999 just above $250/ounce and then took it slowly higher; the latter developed because of stable gold prices and falling money market interest rates. The fact that this was happening in a period of relative political and financial calm, when there was no perceived need for substantial risk management, did bring gold to the attention of some money managers and other investors in the 'professional' arena. If there was no perceived need for the professional to be hedging against risk, then why was the gold price rising? Consequently, when global economic political and financial conditions did start to deteriorate, gold had already to some extent made its case for fresh attention. A solid fundamental backdrop was already in place. Recent developments: Invest-ment in the latter part of 2002 and at the start of 2003 has been driven by geo-political concerns but the underlying background is more complex, and reflects currency concerns, along with the desire to hedge against risks in the equity and bond markets and, notably in the case of Argentina and Japan, risks in the banking sector. Corporate governance problems also played a strong part during the first part of 2002, as a deepening mistrust of corporate reports and accounts augmented some investors' desire to hedge against equity exposure. Gold thus reasserted itself as an alternative asset class, enabling the professional investor to diversify his risk. With concerns also swirling in the markets about the destiny of the dollar, the euro and the yen, gold and the Swiss franc came into play as reserve currencies. As a consequence, the professional investor is once again looking at gold as a hedge against risk - something that many individuals in developing nations have never ceased to do. These individual investors in the Middle East, Indian sub-continent and the Far East have remained loyal to gold as a safe haven, or an 'ultimate investment' as a portable anonymous form of money and it is this sustained activity which has formed the foundation of the change in sentiment in the rest of the world. The 'retail' investor in the so-called first world is also aware of gold's resurgence and there has been a noticeable rekindling of interest in coins and bars from this quarter as well interest in gold in other forms from other investment pools. Offsetting this fresh demand to some extent is the fact that the slowing global economy had a negative effect on purchases of gold in the jewellery sector, and the poor Indian monsoon meant that Indian offtake, the world's largest, was particularly badly hampered. This is one of the answers to the question: 'Why didn't the price rise further, given all the other uncertainties in the world?' One of the important features of gold is that more often than not, a reason for one man to buy it is the same reason for another man to sell it. It is this that helps make it an attractive alternative asset class as it has characteristics all of its own and a negative, if any, correlation with many of the other major asset classes. In this case, the slowing economy hindered jewellery purchases, but prompted purchases from investors concerned that stock market valuations were too high given the deteriorating outlook for earnings. It is worth pointing out also that if the price had rocketed, the integrity of the demand side would have been severely undermined and such a rally would have proved unsustainable, as well as generating considerable resale of secondary metal and damaging new demand for the longer term. Intermittent periods of volatility in gold's price last year generated the usual reaction from the regional buying centres - i.e. in times of volatility they moved to the sidelines. What was significant, however, was that there was little resistance on the part of these purchasers to return to the market at higher price levels once conditions had stabilised and the support lent from the physical market has thus been at steadily rising prices. The market has therefore benefited from a solid underlying fundamental base, combined with a cocktail of influences that have led to steady investment activity from hitherto absent friends. The recent moves, in the last few weeks of 2002 and early 2003, have been predominantly concerned with increasing tension in parts of the Middle East and north Korea and the recent rapid upward moves have choked off physical demand in the near term. As we go to press the price is looking to consolidate between $345/ounce and $355/ounce. There is clear evidence of speculators in the market as well as investors looking for value and for risk management and this is currently generating a degree of caution in the expectation of profit taking. The panoply of uncertainties in the external environment, however, is underpinning the tone in the market as gold is once again sought out as an insurance policy. There may be those in the market who will either wish or need in future to cash in their insurance;others will wish to hold on in case of further rainy days. Gold has been seen as a currency and as an investment for thousands of years. During 2002, while other sectors showed signs of fear, gold offered the sheltering arm of a reliable elder brother. Gold -- Sharefin, 19:50:19 01/14/03 Tue Marriage season seen lifting India's gold imports Gold imports by India, the world's largest consumer, are likely to start increasing from this week despite high prices with demand driven by the marriage season, dealers said on Monday. But the high prices will dent appetite for imports, traders said. Local prices follow global trends as India imports most of its requirements. "It's difficult to further postpone imports," said Narendra Singh Rathore, a gold trader based in Jaipur. "But it is going to be a hand-to-mouth situation as no one will like to stock more than the urgent market needs since gold prices are touching the skies." ~~~ "High world prices are discouraging traders to buy gold from the banks which are designated to import the metal into India," said Suresh Hundia, president of the Bombay Bullion Association. But imports were likely to pick up because supply of recycled gold, very high in recent weeks, was slowly drying up and demand was increasing, trade sources said. "Traders prefer recycled gold due to its lower price than the fresh metal, but sustained supply of the old material is a problem," said H P Rajdev, a trader based in Gujarat. Gold demand in India totalled 116.4 tonnes from July to September, down 8.5 percent from the same period a year earlier. Imports fell 12.4 percent to 87 tonnes, according to the World Gold Council. ----- It appears from this report that scap supplies are drying up. With demand @ 116.4 tonnes & imports at @ 87 tonnes the gap that must have been filled by scrap was approx 30 tonnes. So the last few months where we experienced far higher prices have only drawn 30 tonnes of scrap from an estimated 11,000 tonnes of total holdingsSource. It seems to me that most Indian's don't want to part with their gold & that scrap sources are drying up..... Gold -- Sharefin, 19:39:03 01/14/03 Tue In 2002 gold and currency exchange reserves have increased by almost 40% The gold and foreign exchange reserves of Russia have increased by 38,5% to $47,792 bln in 2002. Gold and foreign exchange reserves are high fluid financial assets; they include monetary gold, special rights of borrowing, reserves position in IMF and foreign currency. Gold -- Sharefin, 19:36:27 01/14/03 Tue China's end-2002 gold reserves 19.29 mln ounces China had gold reserves of 19.29 million ounces at the end of 2002, up from 16.08 million ounces at the end of November, the central bank said on Monday. Gold -- Sharefin, 19:33:45 01/14/03 Tue Shanghai Gold Exchange to extend afternoon session The Shanghai-based newspaper said the session extension is aimed at meeting increasing trading demand. Gold -- Sharefin, 19:31:23 01/14/03 Tue ECB Sells EU37 Million of Gold Assets; Currency Reserves Fall The European Central Bank said one of its member banks sold 3.5 tons of gold worth 37 million euros ($39.2 million) last week. The sale was ``consistent with the Central Bank Gold Agreement of Sept. 26, 1999,'' the ECB said on its Web site. ---- Add this to Portugal's gold & you have 18.5 tons of gold that has presumably gone to feed London's insatiable demand. Demand is strong as usual. Where else do they have stocks left to raid..... Gold -- Sharefin, 19:14:53 01/14/03 Tue Cambior cuts gold hedging program Prompted by rising gold prices, gold producer Cambior Inc. chopped its hedging program by 32 per cent last year and will slash it by nearly 40 per cent this year, the company said yesterday. A mid-sized producer based in Longueuil, Que., Cambior said it would reduce its hedging commitments from 1.3 million ounces at the end of 2002 to 800,000 ounces by the end of 2003, a reduction of 38.5 per cent. The lower level is the minimum required by lenders over the five years of a proposed new $65-million (U.S.) credit facility the firm announced in November. Hedging is a complex strategy gold companies use to protect themselves from falling prices by selling future production and using other tactics. The strategy works well when prices are falling but can create problems if gold prices suddenly climb. Cambior ran into trouble in 1999 when prices soared unexpectedly and the company had to buy gold on the market to meet its delivery commitments. Gold prices climbed by 25 per cent last year and have recently been trading at levels last seen in 1997. Spot gold closed yesterday at$354.70. Cambior said yesterday it expects gold output of 522,000 ounces in 2003, down from 568,900 ounces in 2002. Gold -- Sharefin, 19:12:32 01/14/03 Tue Deutsche Raises Forecasts on Gold, Platinum, Cuts Palladium Deutsche Bank AG increased its 2003 gold price estimate because of investors seeking a haven, less producer hedging and a declining U.S. dollar. The bank also raised its platinum forecast and lowered its palladium estimate. Gold will average $340 an ounce this year, 6 percent more than previously forecast, the bank said in a note to investors. Platinum will average $610 an ounce, 9 percent more than previous estimates, while the palladium forecast was cut 15 percent to $247.50 an ounce, the bank said. The supportive factors for gold will be more potent in the first half of the year because ``the uncertainties associated with political crises in the Middle East and North East Asia.'' the bank's analysts said in their note. Gold -- Sharefin, 19:11:23 01/14/03 Tue Bank Of Portugal Sold Gold Under Central Bank Agreement The Bank of Portugal Tuesday said it sold 15 metric tons of gold in December in a bid to diversify its foreign-exchange reserves. The Bank of Portugal said the sale was under the terms of the Central Bank Gold Agreement of September 1999. In that agreement, which includes the central banks of the Eurosystem, the U.K., Sweden and Switzerland, the central banks agreed to limit gold sales to a total of 400 tons a year over five years. The Bank of Portugal is traditionally a large holder of gold, with around 600 tons, or around 47% of total reserves, the bank said. It said gold is usually an asset with low return and since it no longer serves a monetary function that percentage "is excessive and doesn't allow optimal long-term profitability of the country's foreign-exchange reserves." Gold -- Sharefin, 19:08:01 01/14/03 Tue Trading and Investing in Gold Stocks - Myth, Reality and Changing Trends - pdf format “Gold that's put to use more gold begets” Shakespeare The biggest increases in demand have come from countries along the ‘Old Silk Road' - from Turkey through to newly emerging Asian countries. In the 1970's and 1980's, the most rapid economic growth occurred in the so called ‘City States' - Seoul, Hong Kong, Taipei, Kuala Lumpur, Bangkok and Singapore, small countries dominated by their capitals. In the 1990's, development moved to the continents of Mainland China and India, where economic development caused a large increase in gold jewelry consumers. If China imported as much gold as the rest of S.E. Asia, in relation to its GDP, the country would have to import 2,000 tons per annum. In both India and China when government restraints on gold ownership were lifted consumption doubled. ~~~ There has been a quantum leap in demand from Asia. In 1984 Beijing lifted the ban on the sale of gold jewelry. Today, the average Chinese consumer consumes a fraction of a gram versus over 10 grams per capita in Hong Kong and Taiwan. In a typical year India imports 800 tons, 95% of which goes into gold jewelry. In the industrialized countries the typical markup is 200 to 400%. In Asia and the Middle East, a 10 to 20% markup is standard. A Western wedding ring contains approximately 4 grams of gold, while in India it can contain 100 grams. The average wedding in India involves at least a kilo of gold. Gold -- Sharefin, 18:50:45 01/14/03 Tue Investors flee from equities into gold INVESTMENT in gold almost trebled to £4 billion in 2002 as global investors sought a solid alternative to tumbling equities. The precious metal is set for another boost from the World Gold Council, which is working on plans to make it easier for private investors to buy the asset. Investors who have gambled on gold in recent years have been handsomely rewarded. It surged by 24% last year, while British shares lost a quarter of their value. The World Gold Council said: “Investment in gold is being driven by fears of war in the Middle East and a desire to hedge against the risks of holding shares and bonds. The lack of trust in corporate accounts, after the WorldCom and Enron scandals, has deepened the perceived risks of holding equities.There are also concerns about the dollar, the euro and the yen, so gold has come into play as a reserve currency.” The council has seen strong demand for gold from investors in Japan and Argentina, where there are growing fears about the banking sector. Gold -- Sharefin, 18:38:53 01/14/03 Tue SKI Gold Stock Prediction Note that this sideways pattern is likely to continue for 9 more trading days until the 92-96 index back prices move to their 4.96-5.03 highs and the 16-20 back prices move up into the current range of 5.22 and above. This expected sideways action might be enough for many overbought technical indicators to reach neutral or oversold territory. At that point, prices will either blast up out of this area (over 5.51) or they should fall hard and fast (below 5.21 to about 4.90), dropping 9-12% in 5 trading days to generate the 16-20 and 92-96 index signals together at the very end of January. Theoretically I'd love to see that fall: if/when prices held there (as they are supposed to based upon the secular triple buy signal from the first week of December), the 92-96 index would then generate a pure bull market buy signal and we'd be sitting prettier than the 1978-1979 period. Emotionally it would be a lot nicer for prices to simply rise and rise. Silver -- Sharefin, 18:34:50 01/14/03 Tue Why Silver After hitting a multi-year low in November of 2001 around $4/oz, the silver price moved into an up-trend, much in sympathy with the gold price. Contrary to the gold price, the silver price fell out of its up-trend last summer but found support above the low of last November around $4.25. The silver price has established a double-bottom from which level it is trending higher again, signally that a major turn-around has indeed been established. A break of the resistance zone will be crucial and once achieved will act as powerful support.  Gold -- Sharefin, 18:27:20 01/14/03 Tue Central Fund of Canada Offers Exposure To Gold And Silver For Those Who Do Not Mind The Mix Since then the management's position has simply been that it will maintain the maximum backing for the shares at all times and the assets of the company are 98 per cent invested in gold and silver bullion. The balance is held in cash and mining shares. The pity is that no actual split in terms of ounces between gold and silver as silver has failed to achieve the sustained performance of gold. The balance sheet, however, for the year to end October 2002 shows that net assets were dominated by gold bullion at a market average cost of US$89.7 million and silver bullion at a market average cost of US$89.04 million. These two figures compare with US$55.75 million in 2001 for gold and US$62.75 million for silver which confirms that gold performed slightly better. However the disparity between the prices per ounce of the two metals, which is of the order of 70:1 in favour of gold, brings with it an interesting mathematical problem. Which is easier, for silver to advance 10 per cent from US$4.80 to US$5.28 / ounce or for gold to move from US$350 to US$385/ounce? ~~~ Central Fund's shares qualify for inclusion in retirement accounts, pension and insurance plans and mutual funds that are otherwise precluded from hold physical bullion directly. The shares are listed on the American Stock Exchange as well as Toronto so investors can obtain direct exposure to gold and silver simply by calling their stockbroker. It will be interesting to see if the World Gold Council's securitised gold instrument is going to be backed by allocated, segregated and insured gold bullion or by paper gold. The likelihood musts be that it will be backed by physical gold, though James Burton, the new CEO of the Council , is proving a bit elusive at the moment. What is quite clear, however, is that it will not be mixed in with silver. Gold -- Sharefin, 18:18:37 01/14/03 Tue Goldcorp Bullion Holdings Grow to 196,000 Ounces Goldcorp Inc. said on Tuesday its bullion stocks increased by 17,000 ounces during the fourth quarter to about 196,000 ounces, valued at $67 million. The mid-tier Canadian gold producer said the market value of the bullion holdings was based on a gold price of $342.75 an ounce. The company's bullion holdings have been accumulated by retaining a portion of the production from its Red Lake mine in northwestern Ontario. It also periodically buys gold bullion. The company has said it expects the gold price to move higher over the next few years and has no intention of selling the bullion at current prices. Gold -- Sharefin, 04:57:49 01/14/03 Tue Bill Murphy - Coffee, Orange Juice & GOLD! -TRANSCRIPTION OF INTERVIEW Gold -- Sharefin, 20:20:30 01/13/03 Mon Interesting replies... GATA's Unwilling Ally (Ed Steer) Bill Murphy has it right for once. GATA is clueless enough now. (Bob Moriarty) GATA and Gold (Peter Spina) Gold -- Sharefin, 20:13:45 01/13/03 Mon Open Letter To the Authorities of the Silver Markets: My letter was about the comments by Mike Gorham that clearly show that the silver market would, indeed, be manipulated by the large short positions if they don't have silver to back up their positions, and if they cannot deliver silver to the longs who intend to take delivery. And you did not answer my key question, which is, "Do they have the silver to back up their short positions and deliver silver?" Gold -- Sharefin, 19:59:53 01/13/03 Mon Here's an excellent release by Bill Murphy The fever builds....^o-o^... Gold -- Sharefin, 19:33:35 01/13/03 Mon Finding the top gold stock picker In the newsletter business, it is exceptionally unusual to find a publisher who maintains a waiting list, more so when the subscriber list is just 500 strong. That discipline remains despite the temptation and capacity to grow the report a hundred times in a gold bull market like this and after picking two of the top three gold stocks in the world last year. Had you invested $1,000 in Nevsun and Seabridge at the start of the year - companies Bob Bishop's Gold Mining Stock Report had fingered for profit - you would have gained an additional $17,000 by the end of the year (+858%). In addition, GMSR told clients to go long on Glamis Gold (+214%) and Goldfields (+191%) among some of its best picks. --- He has gained a reputation as one of the biggest stock movers in the business, making his endorsements heavily sort after. However, it's not just another dog-and-pony Public Relations exercise the likes of which we see all too often nowadays. Bishop has no hesitation telling subscribers to sell, guiding them through each opportunity. He's also unusually forthright about his own interests and makes it clear that he won't recommend what he is selling -- When prices had appeared to race too far in early 2002, Bishop coached investors as follows: “Price revisions have been widespread and are perhaps daunting to those just beginning to consider the sector, but in a gold market that continues to advance, these and other share prices seem certain to build on their already impressive gains.” Bishop, a genial fellow who self-deprecates by saying he has made money on every commodity except gold, remains confident that we'll see more gains despite lofty valuations. However, he does warn that increasing Internet exposure for particular stocks (not all of it kosher in terms of author's conflicts of interest) has made the game more interesting because prices and volumes are becoming detached from their fundamentals as the herd takes over. Likewise, the increasing use of technical analysis - thousands of people making decisions based on the same patterns - is driving stocks away from meaningful valuations. Finally, a lot of the momentum is second and third-hand, with newsletter subscribers having gained an advantage of hours and days. “I saw enough of the self-fulfilling prophecy phenomenon in the last cycle, and hope to be able to continue to find stocks you can buy, not stocks you have to chase,” he tells subscribers in his most recent weekly bulletin. Gold -- Sharefin, 19:31:29 01/13/03 Mon Bush's gift to SA golds South African gold majors look set to receive assistance from an unlikely quarter in their quest to outperform their larger North American rivals this year; President George W Bush's economic stimulus package. The cornerstone of the $670 billion economic rejuvenation package - and the shot in the arm for South African golds - is the proposal that the archaic double tax on company dividends be halted, which if approved will spin out more than $364 billion to US taxpayers over 10 years. Once the din from the growing number of near-bankrupt US states opposed to the deal dies down - they fear the proposed cuts will reduce the attractiveness of their tax-free municipal bonds - analysts expect punters to start hunting for high dividend-yield shares; and that's where the South African gold heavyweights Harmony, Gold Fields and AngloGold, come in. Gold -- Sharefin, 19:28:41 01/13/03 Mon GATA's unwilling ally Schroeder says: “Central Banks are the key risk for the downside. Most of the key holders are presently colluding to limit their annual disposals and I would expect them to continue to do so.” ----- Haven't the big boys always colluded? Hasn't the gold price always been managed? Tell me it ain't so..... Don't forget to read the posts at the bottom of the page for more amusement.(:-))) Gold -- Sharefin, 19:24:12 01/13/03 Mon Blanchard & Co.'s astounding flip-flop on gold The Blanchard case has been warmly embraced by gold bugs despite Doyle declaring little over a year ago that gold prices had declined because it had lost its intrinsic value. “Gold bullion is no longer a hedge against inflation or falling stock prices. It is no longer a store of value. The very idea of gold's intrinsic value - value that is not dependent upon the actions or promises of any government - publicly questioned by central bankers and by the heads of major financial institutions. Perhaps most importantly, gold is no longer insurance against economic, monetary and political crises, including war, that diminish the value of financial assets.” That paragraph ranks as one of the very worst calls on gold, especially since the metal, spearheaded by its equity derivatives, had been leading investment returns along with other real assets since late 2000. Gold -- Sharefin, 19:22:43 01/13/03 Mon Maybe some can help with this thread. US & Canadian Gold stocks wanted for new Indices Essentially what I am looking for is lists of stocks which would qualify to be in an index. They need to be well traded, soundly run & viable members amongst their peers. I am after A dozen Canadian gold producers A dozen Canadian gold explorers A dozen Canadian gold juniors A dozen US gold producers A dozen US gold explorers A dozen US gold juniors As well as a dozen "unhedged" gold producers And a list of pure silver stocks Once I have the lists I'll construct indices from them similar to the ones I already have. Thanks in advance for all help offered. Gold -- Sharefin, 19:18:12 01/13/03 Mon 'Gold runs on fundamentals, not war' Since the beginning of the year, the gold price has rallied from $275/oz. to $350/oz., a rise that is now widely attributed to the Iraqi situation. However, while there might well be some kind of war premium built in at the moment, I believe that there are several other factors working in the metal's favour, especially when one considers that the price had risen to $320/oz. even before Iraq really became an issue. Economic uncertainty, choppy equity markets and concerns about the US dollar have all served to highlight the yellow metal's status as a “safe haven”. What do I expect from gold in 2003? Assuming that the UN weapons inspectors' searches for items of mass destruction in Iraq continue to remain fruitless, I would like to hope that the Iraqi situation gets resolved peacefully. In that case, gold may well soften a bit, but my feeling is that the metal will continue to move higher thereafter (thus possibly offering a buying opportunity). By historical standards, the gold price is still low and the fundamentals are looking very positive: After many years of capital starvation, the global gold mining industry will not be able to maintain present levels of output, which I expect to fall sharply in the medium term. Structurally, this market has already been in a deficit since 1989, when demand from the jewellery fabrication sector overtook new mining supply. Nevertheless, dishoarding by central banks, producer hedging and speculators' short selling prevented the price from rising and actually caused extremely poor performance during the late 1990s. In my view, these times are over now. Low interest rates have caused the gold contango to all but disappear, which has removed the incentive for producers to hedge and for speculators to sell short. In fact, the reversal of the price trend itself, gold's gradual rise over the past two years, has actually caused the exact opposite, namely speculators, who are now holding record long positions and producers, who are extremely keen to close out their hedges. That leaves central banks as the key risk for the downside and it is obviously difficult to predict what they, as a group will do. However, most of the key holders are presently colluding to limit their annual disposals and I would expect them to continue to do so. History has also shown that central bankers are not really good at it, as they tend to sell when the price is low and change their mind when it is going up. At the moment, they are facing a very tricky situation with an unprecedented general unattractiveness of all the world's major currencies. The US dollar is overvalued, the yen is zero yielding and the politically constructed Euro is in danger of failing. So, maybe we will see the Bank of England repurchase that gold soon, which they sold at the bottom, now that the price has gone up?? Gold -- Sharefin, 17:56:46 01/13/03 Mon Investors chase the wrong shiny object Leg up in gold fishnet stockings Now for some thoughts about one of the most topical subjects these days, gold. In the past few weeks, it has seen a pretty good-sized move from around $325, a level at which I observed the noteworthy buying taking place. (Gold was above $350 an ounce at week's end.) I think that the critical question is whether the gains that we have seen in the last week or so comprises just the tail end of the recent move, or whether it marks the start of a whole new leg up in gold. I do not know the answer, but I will be trying to determine this for myself in the next couple of days. My hunch is that it might be the time to take some trading profits (but not to touch one's core position). However, I don't want to prejudge that until I see the information. In any case, I think it makes sense to take a step back to talk about gold itself. There seems to be a fair amount of misperception about what an investment in gold stands for. In my opinion, a gold purchase represents a lack of confidence, or fear. People buy gold because they lack confidence in their government or their currency, or they fear for their safety. Obviously, in the mania, people didn't perceive a need for gold, because what could express confidence better than valuing worthless companies like Internet stocks at valuations in the tens, twenties, if not hundreds of billions of dollars. It's no surprise that when people were doing that, they had no use for gold. But the stock mania was a false reference point. Today's world is nowhere near what people believed it was when phrases like "new era" and "new economy" were being bandied about. The world is a dangerous place, with plenty of risk to go around. We are at a moment in time where people appear to understand that given the risks, an insurance policy position in gold is warranted. Not paper-trained Here I am not speaking of the risks of terrorism or a war with Iraq. What I am referring to are the risks associated with paper money. The money that you carry around in your wallet or use via your credit card obviously is created at warp speed by the government. The Fed has told you in no uncertain terms that it will do everything to fight deflation. It is not alone. The heads of the European Central Bank, the Bank of Japan, and the Bank of England will all be run by new people in the course of the next six months, and they appear to be of the same mind as Fed Governor Ben Bernanke, aka Mr. Printing Press. So, while credit cards and cash may be good mediums of exchange, they are pretty pathetic stores of value. Gold, for those of you who aren't aware, has been money for several thousand years. It's pretty tough to find a paper currency regime that has lasted for more than 50 years, and that's giving some of them the benefit of the doubt. In my opinion, then, what stands behind the move in gold is the recognition by many investors around the world that all this paper -- whether one is speaking of paper currencies or paper stock certificates -- is not what it was cracked up to be. Mining metallic molasses Gold-mining companies cannot increase supply very easily. With low gold prices threatening to drive companies out of business, there has not been a tremendous amount of exploration in the last four or five years. And, once a potential new property is found, it takes time (measured in years) to prove it up, get the financing, and bring it into production. If it happens to be in America, you have the EPA to deal with, which takes even more time. So, new production cannot be brought on easily. Further, not only are gold miners not in a position to bring on new production readily, but many have already sold giant amounts of their future production forward already. At present, they are probably being squeezed, as those positions are marked to market. The most ready source of gold is the central banks, which have been busy puking it up for some time. There is never a better group to be on the other side of, ultimately, than bankers, and nobody better to take the other side of, on that score, than central bankers, even though they do have a fair amount of ammunition they can bring to any subject. Of course, in discussing supply, it must also be noted that virtually all the gold that has ever been produced still exists, since very little of it is ever destroyed. I should add that, when talking about gold, I also am referring to silver, that being a much smaller market. In the coming weeks, I hope to have a chance to talk more about silver, a market I like even better than gold. No-lode funds I think we are very early in this process, and gold has a long way to go, both in time and price, before it's time to take the other side of the gold market in a major way. When people start bragging to you about the gold stocks they own (the way they bragged about Internet stocks, or stocks in general, or the way they talk about their real-estate holdings), then it will be time, perhaps, to leave the party. But we're certainly not there yet. Fiat vs Gold -- Sharefin, 17:39:39 01/13/03 Mon The US Dollar - Al Qaeda's Target of Choice? Gold -- Sharefin, 10:06:07 01/13/03 Mon Also of note in the charts below is the ROC of the deficit. As can be seen the red line is continually rising. The deficit is a huge hungry maw which destroys stockpiles forever. And by now most all have gone - never to return - never to be counted twice again. Gold -- Sharefin, 10:02:42 01/13/03 Mon Why gold & silver will rise into a major bull market regardless of other stimulai. The following charts are of mining production & total demand & highlight the yearly deficit. Though supplies come to the market to meet the deficit ie scrap & CB sales/leases these supplies once used cannot be reused yet again. Once the known stockpiles have been removed then that's it. Then the deficit will raise it's head and scream for higher prices. Now for the deficits; For gold there has been an accumulative deficit of 19.7 tonnes or 633.5 million ounces over a 30 year period. For silver there has been an accumulative deficit of 133,000 tonnes or 4.3 billion ounces over a 20 year period. (Note that most all silver is consumed) Now that these numbers have been taken from stocks where does the next twenty years deficit come from? Include declining production & increasing demand with nearly exhausted stockpiles & you have all the necessary ingredients for much high prices. Add in the US Dollar, falling equities & disenchanted investor sentiment, sprinkle in some war fears & voila - all the ingredients for a major bull run. Also add in the traders hunger for the next bull sector to take over from equities, real estate & bonds. Gold is likely to become more of a mania than the Nasdaq was. On to the charts which are self explanatory;     Gold -- Sharefin, 02:02:24 01/13/03 Mon Bully for bullion Gold continues to dominate investor sentiment - and some analysts predict that the bull run is far from over The past five years have provided some happy memories for gold bugs, but how long will the party last? Some veteran analysts, such as Clive Roffey and Victor Hugo, say the good times have only just begun - and their views are cautiously supported by the managers of the best-performing local and offshore unit trusts. ~~~ Michael Schroder, head of equity research at Old Mutual Asset Managers, says the gold price is still low by historical standards, and the fundamentals are positive. "Central banks are the key risk for the downside. Most of the key holders are presently colluding to limit their annual disposals and I would expect them to continue to do so," says Schroder. "History has also shown that central bankers are not really good at it, as they tend to sell when the price is low and change their mind when it is going up. At the moment they are facing a tricky situation, with an unprecedented general unattractiveness of the world's major currencies. The US dollar is overvalued, the yen is zero-yielding and the euro is in danger of failing. So, maybe we will see the Bank of England repurchase that gold soon - which they sold at the bottom - now that the price has gone up." Gold -- Sharefin, 00:20:01 01/13/03 Mon Thank Promey - gold is certainly the hot flavour. Don't ya luv it.(:-))))) Gold -- Sharefin, 23:29:06 01/12/03 Sun Why gold is gaining in a world awash with dollars A terrible fear-provoking thought is gaining ground among the guardians of the US economy. It is that the man in the street, who for decades has enabled the economy to remain on a long, upward path by consuming more than he produces, may be reaching the limit of his capacity for excess consumption and its corollary debt. ~~~~ In an attempt to boost money supply, the Fed may aggressively buy Treasury Bonds from the banks, thus forcing down long-term interest rates and leaving the banks with vast sums of cash to do with what they will. ~~~ The Fed, by contrast, is prepared to think outside the box. Ben Bernanke, a recent arrival at the Fed from the academic groves of Princeton, has declared that the Fed will do all within its not inconsiderable powers to "print" its way out of trouble before deflation becomes entrenched. We should not underestimate the efforts that will be made to prevent deflation. With the US trade deficit nearing 6 per cent of GDP, the US is already pumping out so many billions of dollars that it needs to attract about 80 per cent of all the world's savings just to maintain the value of the dollar. With US interest rates already lower than those in Europe, and US share valuations still close to historic bull market highs, attracting capital flows into the States is becoming mighty onerous, further pump priming will only add to the difficulty. The dollar has been able to remain fundamentally and seriously overvalued for years because the rest of the world was gullible enough to believe that the US economy would always outperform and thus its bonds and shares deserved a premium rating. Some 75 per cent of central bank reserves, plus a great deal of non-US private wealth, is held in US dollar assets. Now that the Fed has declared it will "print" as many dollars as it takes to combat deflation, holders of US dollar assets would have to be extraordinarily naïve not to realise that an unlimited increase in the supply of US dollars means dollars will inevitably be worth less. Thus, far from attracting the 80 per cent of world savings required to maintain the dollar's value, fear of the bomb bays being opened and the world being showered in paper dollars is likely to cause liquidation of dollar investments. In a deflationary world every country thinks its currency overvalued and, although the demise of fixed exchange rates has removed "beggar-thy-neighbour" competitive devaluations, if countries resort to the printing press to try and avert deflation all of their currencies become debased. There is one standard against which this debasement of currencies can be measured and one asset which investors can own to protect themselves: That standard and that asset is gold. Periodic Ponzi Update PPU -- $hifty, 20:50:41 01/12/03 Sun Preiodic Ponzi Update PPU Periodic Ponzi Update PPU Nasdaq 1,447.72 + Dow 8,784.89 = 10,232.61 divide by 2 = 5,116.30 Ponzi. Up 121.92 from last week. Looks like they have just about run out of upside. Thanks for the link RossL Go GATA ! Go GOLD ! $hifty Congratulations -- Prometheus, 17:52:30 01/12/03 Sun Hear that you're getting a million hits a day. Guess someone out there is checking out gold. Yours is a great place to do it. Gold -- Sharefin, 17:43:22 01/11/03 Sat GOLD: Follow the Money Gold -- What's the best rule in investing? Here it is dear subscribers, it's FOLLOW THE MONEY. I'll give you an example. I'm going to use gold. Around January 2001 when gold was selling at 255 there was almost no interest in gold. Then, as gold began to rise, old-timers like Richard Russell noticed the rise, noticed the moving averages looking bullish, and we advised buying gold. We were simply following the money. But Wall Street's experts talked gold down and told us that the central banks was "selling the junk" so why in the world should anyone buy it? But as gold continued to rise, gold began to elicit interest from other more-intelligent experts, and today on CNBC World I heard a ten minute serious discussion on gold. Why the discussion on gold at this time? Only one reason. The reason is that gold has been rising in price, and despite all the stupid and uneducated comments, the rising price of gold is now starting to generate serious interest. It's simply a case of FOLLOWING THE MONEY. The world is beginning to follow the path of real money. Here's another interesting example of 'follow the money.' Saudi Arabia is beefing up its forces. Newsweek reports that to strengthen its ties with the White House, the Saudis have retained the services of a high-powered law firm. Which law firm? Well, surprise, surprise, it's the law firm of former Texas GOP congressman Tom Loefler, whose firm will be paid $720,000 a year. Loefler is one of Bush's top moneymen. In fact, Loefler headed up fund-raising for Bush's first gubernatorial campaign. Loefler is also close to VP Cheney. History shows that gold travels in the direction of the most powerful nations. For years the US attracted the world's gold. Then gold started to leave the US during the '60s, and in 1971 President Nixon shut the gold window. Foreigners were no longer allowed to call in US gold. So who is accumulating the world's gold now? Where's the money going? The word I hear is that the money is going to China and Asia in general. Recently (coincidence?) China opened the Shanghai Gold Exchange, and it seems that China is now encouraging its 1.3 billion population to buy gold. Now why would the Chinese, who have been gold-savvy for thousands of years, do that? Then we hear the Gold Dinar has been instituted by Malaysia and soon all Muslim nations may be doing their transactions in gold. Hey, why would the Muslims be so interested in a gold currency. Competition for the dollar? Gosh, there's a thought. As I write this morning the dollar has fallen to a new low and gold is fluctuating around its high. But gold has a technical problem. Looking at the stochastics, I can see that gold is heavily overbought. It needs a rest. True, an item can stay overbought, particularly in a bull market. But the overbought status of gold may act as a brake on gold at the present time. Furthermore, as I have explained, the Commercials have taken a huge short position against gold. In view of the above, I would say that if gold can simply hold above 345, and in doing so work off its overbought position, it will be doing very well. I want to add a few more words about gold. I realize that most of my subscribers now hold some kind of gold, the stocks, the metal, options, futures, I can't know for certain. But here's what I want to say. Gold is in a primary bull market. Gold, real money, is a very emotional item, in that the central banks are afraid of it, the Austrian economists love gold, people who believe in the US Constitution love gold, inflationists hate gold, certain nations sell gold, other nations lust for gold, men throughout history have lived and died for gold, armies have fought for gold. The reason, gold is the only money that has held its value over the course of history. Gold represents permanent wealth. This has occurred in the face of the fact that every paper currency in history has ultimately sunk to worthlessness. In other words, gold has its detractors and its admirers, millions of them on both sides. But gold is in a very peculiar position today. The central banks of the world are frightened of gold because if gold rises, if it takes an increasing amount of the central banks' paper junk money to buy an ounce of gold, then what the hell is wrong with their fiat paper money? It's a question and a situation that scares the devil out of the central banks. So we can expect a lot of erratic action from gold as the various factions use their propaganda and their arguments for or against gold. But the Russell position is this -- Gold is real money -- while dollars and euros and yen and kronos are man-manufactured pseudo-money. If central banks can generate "money" without sweat, then we know that their money is a lie. If it takes the sweat of thousands of men and multi-millions in capital to dig gold out of the ground, we know that gold is something more than a fantasy "legal tender" item produced by the central banks. So here's what I'm getting at. Now is the time to accumulate gold and gold stocks. The hard part will be to sit with our gold and gold stocks while the great battle rages. Declines in gold will represent opportunities to accumulate more gold and gold items. Time is on the side of those of us who accumulate gold because in a bull market a given item will appreciate through time. As the Fed generates an increasing amount of credit and paper in their battle to offset the forces of world deflation, the value of gold will increase. It's simple -- central banks are generating vastly more paper than the gold mines can produce in comparable gold values. As gold climbs, be prepared to listen to the propaganda of the gold haters and those who fear gold. "It's too high," "It's being manipulated higher," "It's being bulled by war scares," "It's just a short squeeze." Get used to it -- there's a huge contingent who have a vested interest in gold going nowhere. They possess loud voices, but they're losers. They're losers because they're on the wrong side of the truth. Fiat -- Sharefin, 17:16:21 01/11/03 Sat Pictures of a New Bull Market?! Other than the rare token three-minute appearances of Robert Prechter and David Tice on CNBC, the coverage of the secular bear market and potential for further dis-investment by the American public just doesn't seem to rate much attention by the nation's most visible purveyor of financial news. As if it just wasn't that important for folks to know. Of course, we all know that ratings are the key to advertising revenue and in a bear market, interest in stocks must wane... and with interest, ratings.... and with ratings, advertising revenues. So the trick becomes one of focusing on the good, rather than the bad. Or stressing the possibilities offered by the future without considering any of the lessons taught by the past. By continuing the policy of pushing hope for investors, CNBC attempts to survive. Not that we can fault the need for survival - we cannot - but unless we have just plain lost our editorial mind, we see anything less than unbiased and full coverage of the bear market as deceitful. The public needs to be reminded every day that even now, valuation measures are far from what history has shown is sustainable. Although we certainly cannot claim infallibility nor are we blessed with an innate ability to forecast with precision, we are nevertheless pleased to offer you a few perspectives that you will not find elsewhere in the financial media. The pictures tell a continuing story. The bear market is intact. Incredibly, the mania is intact as well. Gold -- Sharefin, 21:02:22 01/10/03 Fri Gold - The Closest Thing to a Sure Bet for 2003 Of all the markets/asset classes out there, the closest one to a sure thing for a profitable 2003 is gold. In fact-though I've been dead on where my beginning-of-the-year forecast for the broad stock market is concerned now for six years running-I am not even making a call on stocks for 2003 in my January newsletter. The reason is simple: though the Fed's monetary stimulus should turn 2003 into a modestly positive year for the market and give us a pleasant-but deceptive-interlude in what REMAINS a multi-year, secular bear market-NOBODY can know what will happen until we know whether we're going to be in a war or not. Maybe things will turn out all right, maybe they won't. But there are far too many "maybes" this year to make a stock market prediction. If you're listening to anyone who is doing so under such completely uncertain circumstances, you deserve what you get if their predictions go awry. But gold should, at least, grind ahead in almost any scenario. It's been nearly a generation since so many factors have combined to push gold steadily upward, in spite of economic weakness that has already hit jewelry demand somewhat. Jewelry demand will still be an element to watch closely in 2003; after all, this accounts for three-fourths of all physical gold demand. Without investors taking over for lower fabrication use of the metal, prices could get hit still. However-though I'll mention here a few things to watch that might give us warning of a nasty correction in this sector-too many things are still in gold's favor longer term. Last Spring, when I wrote at length about why gold had broken out of its multi-year bearish trend, I spoke of factors that you now know well; among them, reduced central bank selling, the virtual end to the so-called "carry trade," greatly reduced forward selling by producers and other "demand-side" issues. Gold -- Sharefin, 20:42:48 01/10/03 Fri Islamic Gold Dinar Will Minimize Dependency on U.S. Dollar Malaysia will start using the Islamic gold dinar starting mid 2003 in its foreign trade section with some countries replacing the U.S. dollar in a first step move toward unifying the currency used in commercial dealings between Islamic countries. The success of this idea, according to several western newspapers, may lead to minimizing the U.S. dollar hegemony as an intermediate tool in commercial dealings in the world. The idea was adopted by Malaysian Prime Minister Mahathir Mohamad who conducted bilateral talks during the year 2002 with several Islamic countries, including Bahrain, Libya, Morocco and Iran, to convince them of using the Islamic dinar as a way of payment in their commercial dealings with Malaysia. This move is considered from one side a way to recall a currency related to the history of Muslims and their monetary heritage since the time of Prophet Muhammad (peace be upon him), and from the other side, the ability to find the Islamic alternative to the dollar at a time the calls to boycott all what is labeled as American starting from goods to currency, are intensified. The idea of the Islamic gold dinar belongs to Professor Omar Ibrahim Fadillo, founder of the Morabeteen International Organization founded in 1983 in South Africa where it is widely known as well as in Europe. The organization believes that the unity of the Islamic world can not be achieved except through the unification on the economic level. It also calls for the establishment of a united Islamic market using one currency which is the gold Islamic dinar used by the Morabeteen members, hoping it will replace the U.S. dollar. "The idea of the Islamic gold dinar aims at minimizing the hegemony of the U.S. dollar and to use the gold once again as an international currency because the value of the paper currencies is in continuous fluctuation unlike the stable gold currency which preserve its value through the value of the metal itself. The system is built on the idea that the Islamic governments keep the gold in a central bank and use it in settling their commercial dealings instead of depending on foreign fund markets and foreign financial corporations. Dinar Online The first Islamic gold dinar, equivalent to 4.25 grams of 22-karat gold, was issued in 1992 on a very limited scale between the member of the Morabeteen. In 1997, the idea developed to be implemented into an exchange framework through launching what was called the electronic dinar, a system based on using the gold as fund through transactions made on the internet. According to the e-dinar limited company based in the Malaysian island of Lapoine, the electronic transactions using the gold Islamic dinar currently reached what is equivalent to 4 tons of gold and that the users are increasing with 10% monthly. The number of users through the electronic dinar website www.e-dinar.com, launched in 1999 after 7 years of issuing the Islamic gold dinar, reached 600,000 and that number is increasing, the company announced. Several countries around the world are currently dealing directly with 100,000 Islamic gold dinars and 250,000 silver dirhams issued by the company, hoping that one day it will replace the U.S. dollar in the dealings of the 1.3 billion citizens of the Islamic countries. Benefits of Dinar for Islamic countries The success of the gold dinar as a united Islamic currency will depend on the level of demand of the countries that want to deal with it as the primary currency in the international commercial dealings. Islamic countries will benefit if they implement this new currency in many ways, the most important of which is that these countries will not need reserve of foreign currencies to finish commercial trading, Dr. Mohamed Sherif Beshir said. "Consequently, the gold dinar will be the ideal currency to facilitate and increase international trade and minimizing speculation in paper currency that lead to the Asian currency crisis in 1997," he said. The existence of a fund unity between the countries of the Muslim world will increase the amount of trade between them and will help in increasing the economic development if the conditions for the success of the gold dinar were provided, he added. Gold -- Sharefin, 20:40:30 01/10/03 Fri I forgot the link to the prior article. Here it is GUTS - The BigFisherman Gold -- Sharefin, 20:20:11 01/10/03 Fri If it Keeps on Rainin' the Levee's Gonna Break The Elliot wave camp is expecting pure deflation, where credit implodes, prices collapse, and gold plummets to $200. Or less. If gold goes to $200 in a deflationary collapse, it will still likely buy more goods and services than gold did at $350. Prices of less precious stuff will command fewer dollars. True, the fiat that survives the debt implosion would initially perform better than gold. Banks would collapse. Paper dollars would reign. But the definition of money will have changed. The credit component will have vanished, leaving only the tiny cash component. If you have cash on hand, if the price stays down, if there is not an immediate panic into gold, if you have a reliable source of supply, if regulatory measures have not been invoked, then you might be able take delivery of one ounce for every $200 you have left. And the end game would still be gold and silver. The hyperinflation camp's extreme alternative considers gold replacing fiat entirely. Gold would be $30,000. Or more. If gold goes to $30,000 in a hyperinflation of the US dollar, it will likely buy less goods and services than one might expect. Especially those goods and service for which cash is the primary medium of exchange. Would milk be $10, $100, or $1000 a gallon? Will we see DOW 30,000? Maybe DOW 100,000 before the wheels come off. Will housing prices double, treble, or more? What forms of debt would be monetized? What assets will be purchased by the Fed? Will prices be confiscatory? Once again, this is all unknowable, because the definition of money will change along the way. The debt component will swell. The cash component will diminish. Perhaps even relegated to the black market. As Gold. Gresham's Law in extremis. The dollar would then become what the monetary authorities decide and be distributed to whom they decide. After all they will have monetized, and hence own, literally everything. And we will have morphed into something new. Not communism, not socialism, not fascism. But some new form of -ism. More terrible than anything that has gone before. And the end game would still be gold and silver. At least for the border guards. Gold -- Sharefin, 19:38:43 01/10/03 Fri Surging gold prices reach pivotal point Gold, snubbed by investors for more than a decade, made a spectacular comeback in 2002. Bullion prices climbed steadily from about $280 (E268.6) an ounce last August to highs of more than $345 in December. But while analysts agree the rally is based on sound fundamentals, such as less producer hedging, volatile stock markets and a weak dollar, there is uncertainty about how much higher bullion can go. "Gold has reached a pivotal point," said investment bank JP Morgan last month. "It will either stall at the major $350 resistance area, signalling that the three-year range and the 15- year downtrend is intact, or will blast higher, sustaining its recent gains." Gold's proponents argue it is a useful portfolio diversifier at times of stock market upheaval as it tends to move in the opposite direction to shares and bonds. Unlike most financial assets, it does not represent anyone else's liability. ~~~ Gold bullion is tricky to get in the Republic. The Central Bank of Ireland holds just E62 million of gold and that is on paper only. Gold -- Sharefin, 19:34:11 01/10/03 Fri No gold's barred: Now, it's peak selling time The glitter of gold is always tempting. However, this time round, the allure is not so much for buying as for selling. Going against old habits, Indians are queuing up to sell old jewellery, thanks to a spurt in gold prices during the past few months amid looming war clouds in the Gulf. “Gold once again proves to the best bet in times of political and economic crisis. It has again demonstrated that it is a low-risk, reliable store of value, which serves as an asset of last resort in times of uncertainty,” Gold -- Sharefin, 19:31:51 01/10/03 Fri Many See Gold At $400 Realistic Though analysts see risk of gold price pull-back if Iraq war fears fade, many think there's good chance of $400 being hit this year, and the most conservative expect floor at $300. Some even think gold could reach $400 if there's no war, given strong Chinese demand after China liberalized its gold market; H.K.-based trader with a market-maker says technicals indicate $400 quite possible - "the bull in gold has just awakened." Silver -- Sharefin, 19:17:57 01/10/03 Fri World Gold Council To Announce New Securitised Gold Instrument Next Month World Gold Council To Announce New Securitised Gold Instrument Next Month. Interesting to note that the dollar took no notice of Bush's US$647 million fiscal stimulus package and fell to its lowest level against the euro for three years. It was no coincidence that gold once again challenged the US$354.50/oz level because gold is the only alternative investment that many people can see to a weak dollar. The possibility of a war in Iraq, problems with North Korea and hopes that Wall Street will recover in 2003 are mere sideshows. This is a fact that many find difficult to swallow. The Times in London published an article yesterday in which it reported that net investment in gold had just about trebled from US$1.5 billion to US$4 billion in 2002 compared with 2001. These figures had been assembled by Gold Field Mineral Services, but presumably it was not GFMS which told the journalist that the figures represented a ‘profound disillusion with global stock markets and growing political tensions worldwide.' ~~~ Not if you look at it from the aspect of the once almighty dollar, there ain't, mate. What one has to ask oneself is how long foreign investors are going to support the dollar. Already they are questioning the fact that last year the US ran a deficit of close to 5 per cent of GDP and had net external liabilities of 25 per cent. The actual figures at the end of 2001 were US external assets US$6,860 billion, valued at market prices, while external liabilities were US$9,170 billion. It does not require a genius to realize that this position cannot be sustained unless there is evidence that future income is going to more than match future expenditure. ~~~ There is a long way to go, however, as the move away from the dollar is only in its infancy. So many traders and investors in the west have never experienced a major currency crash yet that they cannot grasp the full implications, and they have been stuffed with doubts about gold by their mentors. Only when they realize that the Islamic countries as well as China are organizing a strategic withdrawal from the US dollar and that this puts all paper currencies under pressure, will they come to appreciate how badly they have been misled. Fortunately for them the World Gold Council is expected to announce next month that it has obtained all the necessary regulatory approvals for a new securitised gold instrument . This will, hopefully, make investment in gold a lot simpler than buying physical bullion or derivatives and fund managers will be able to revert to the tried and tested way of managing portfolios with 5 to 10 per cent in gold without having to do a complete U- turn. ~~~ Oh, one last thing. At US$355/ounce of gold Mr Brown has lost this country 1.3 billion dollars which is very nearly £1 billion at the rate the dollar, into which he reinvested a large slice of the money , is going. Congratulations to our Chancellor of the Exchequer on such shrewd investment tactics. Silver -- Sharefin, 19:13:11 01/10/03 Fri Silver may beckon as gold shines Strategist lists top silver explorers Metal trails gold, but small miners finding success The silver story will capture the imagination of American investors -- just not right away, says an authority on asset allocation and quantitative analysis. ~~ Berry has been a silver fan for years. His work on the subject, presented in several papers and speeches, identifies a wide range of new demands for silver, an industrial metal. The top strategist at small-stock market maker Leeb Brokerage chronicles research that shows silver as a possible replacement for the bacteria-battling agent chlorine. Medical uses as disinfectants and anti-bacterials are also growing. Berry also points to anti-microbial silver compounds that combat pathogens, such as Legionnaires Disease, salmonella and e-coli bacteria. Silver solutions that could prolong the life of lettuce and other produce are also in the works. See: Asset allocations need surgery, silver. Worldwide silver inventories of 400 million or so ounces are a fifth of what they were in 1990, says Berry. The former business school professor at James Madison University and the University of Virginia favors radical shifts in asset allocation for ordinary investors. These include silver and gold. ~~ Berry is a believer in silver. He tells me, "Warren E. Buffett purchased 129.7 million ounces of silver in 1998. He must believe in its worth. George Soros and his Quantum Fund own 32 percent of Apex Silver Mines. Bill Gates owns at least 10 percent of Pan American Silver." Even with demand for silver increasing about 4 percent a year, most investors are giving the metal Man of La Mancha treatment, Berry says. Gold -- Sharefin, 19:09:18 01/10/03 Fri Getting in on the gold rush Gold stocks could continue to shine in 2003 and might outperform the market for the third year in a row, says Bill Belovay, vice-president and portfolio manager at Toronto-based Jones Heward Investment Counsel Inc., who specializes in precious metals and resources stocks. "Bullion has been in an upward trend since April, 2001, and this move has fuelled the advance of gold stocks." After gold's recent spike above US$350 per ounce, the price could consolidate for a while, he says, before continuing to advance. "Its progress will not be in a straight line and investors should expect ongoing volatility in the commodity." Gold -- Sharefin, 19:07:57 01/10/03 Fri Gold Charts R Us Naturally, U've noticed bullion has been leading gold shares. Some thought shares always lead; some thought bullion always leads. Neither is correct. They take turns, as I've mentioned off&off over last 39yrs. I have positions in both so I don't mind. If U have only shares, cheer up; charts say shares will soon catch up. But also note that U have another option for buying the actual bullion. Not only taking delivery from Comex but also U can buy a smaller size bar (1 kilo) from Chicago (CBOT). See "The Midas Touch" by Jim Sinclair for details, on most web sites [click]. Or ask your gold broker. A loyal but impatient reader, MG, asks why derivatives didn't kick in & slaughter the hedgers as we said it will at price levels recently touched? Answer: 1st, it takes time for bank wheels to grind. If U miss a car payment they don't take the car away the next day. 2nd, we've only just reached the critical derivative level. It has to HOLD here for some time to impact the miner's banks. Bullion banks probably assume gold will slip back below critical levels, & allow some leeway. And they're trying to make that happen! 3rd, How do we know that it is not occurring? Hedged mines can shut down their risk control programs & just slowly go broke. How do U know what's happening inside a subsidiary of Goldman Sachs by the name of J. Aron & company in London? They don't hold a press conference to tell U they're nailed to the wall. Isn't a $400mil loss (& growing) for NEM enough of an example? But they changed their accounting rules so U can't see it! Didn't U recently see Ashanti (biggest hedger) on NYSE "biggest loser" list recently, down 8% on the day? It's starting to happen! Rome didn't fall in a day. But it fell. The dominos are starting. PS: just heard Oz mine Sons of Gwalia is imploding due its hedge position. PPS: the rising gold price may be partly the result of hedgers covering in panic. It's happy days in the unhedged gold world & for U & I. Gold bless U. Your personal alchemist, Uncle Harry Gold -- Sharefin, 18:59:35 01/10/03 Fri Gold To Rise Again In 2003 To Average US$345/Oz Gold prices are set to rise again in 2003, to average US$345 a troy ounce, but an anticipated recovery in the U.S. economy in 2004 will weigh on gold, ANZ Global Institutional Bank said Friday. Singling out weakness in the U.S. dollar as the key driver of a higher gold price this year, the bank said in a report how far gold will rise depends partly on how much weaker the dollar can fall against the euro. "The weak U.S. dollar essentially reflects concerns over the level of the U.S. current account deficit and over the prospect of an economic recovery in the U.S.," the report said. Although the prospects of war have helped gold by increasing its safe-haven appeal and weighing on the U.S. dollar, "the gold investment story has more to do with fears of economic growth in the U.S. than the likelihood of war." Gold -- Sharefin, 18:56:50 01/10/03 Fri Rising Gold Price Gives Small Miners a Big Boost Only a few years ago, junior gold producer McWatters Mining Inc. was almost wiped out by low gold prices and a resounding lack of investor interest. Now, after a successful restructuring in 2001, Claire Dermone, McWatters president and chief executive, says she can hardly believe the attention small gold companies like hers are getting, as investors turn from the big producers to undervalued small-cap firms. All this has been driven by the rise in the gold price to $350 an ounce amid one geopolitical crisis after another and the decline of the U.S. dollar. "What you are seeing are investors going down the chain to more junior companies," Dermone told Reuters. "Gold picked up more than 18 months ago, but it was a really slow move, and the first companies that benefited from the increase were the larger and intermediate ones. "But now people are coming in to look for value, they're looking at smaller companies, so our timing has been good," said Dermone. ~~ "The way the cycle has worked in the past is that when the gold rally starts investors move into the large producing companies, and as the cycle develops over time and companies become overvalued, investors roll down the market cap curve to the more junior producers in the search for value," he said. "Those companies with large resources, which were uneconomical at lower gold prices and are now economical at a higher price, are the ones that will outperform," he said, adding, "Also those with advanced stage exploration stage." Fiat -- Sharefin, 22:59:40 01/09/03 Thu Understanding Inflation and Deflation Originally, inflation meant an increase in the supply of money and credit. Then it morphed into: a rise in the general level of prices caused by an increase in the supply of money and credit. And now it has come to mean the CPI (Consumer Price Index). This had caused much confusion. It can also lead to flawed analysis and some very bad policy decisions. In my opinion, the currently accepted definition of inflation is full of assumptions, fallacious reasoning, and faulty conclusions. This piece will attempt to point out the reasons why the current definition is wrong, why it's so important that we return to using the original definition, and then comment on some possible outcomes in regard to inflation and/or deflation. Fiat -- Sharefin, 22:56:30 01/09/03 Thu LIMBO LIMBO, HOW LOW CAN IT GO? In order to determine "How low this stock market can go", all you have to do is to determine if this is a normal bear market. If you do, you might want to use historical averages (the average of the troughs). If you are as bearish as we are, you might want to use the lowest historical troughs since we believe this is the greatest bubble of them all. Lastly, if you are bullish (a new paradigm thinker) pick the average of the prior market peaks, or even the highest market peak. The various indices used in this study will have to fall another 50% from here to reach any of the bear market troughs. Any way you want to look at it... you will be shocked at how low it can go. Silver -- Sharefin, 20:50:25 01/09/03 Thu SILVER REVIEW AND OUTLOOK The following essay was written by silver analyst Theodore Butler. Investment Rarities does not necessarily endorse these views, which may or may not prove to be correct.) The silver market in 2002 was somewhat uneventful. Certainly, from a price perspective, things were not too exciting (unless you used the opportunity to accumulate). Prices ended the year where they began, at roughly $4.70 per ounce. That's where they were in 1990, and about what the price has averaged since then. Because the vast majority of people buy as prices move up, silver is not yet on the public's radar screen. That means the public hasn't bid the price up. Since they have not yet accumulated silver, they are not in a position to dump it and drive down the price. The continued low price of silver suggests a low level of risk to the downside. This subdued price pattern for silver has lasted almost two decades. (I claim that the leasing and COMEX short selling manipulation began in 1983.) Most folks are not aware that, in the decade prior to 1983, silver was the most volatile commodity. Since then it has become the least volatile of the metals. This has occurred despite continued physical deficits, and the depletion of some 1.5 billion ounces. This swing from most to least volatile, amid a documented deficit, provides clear proof that the price has been manipulated. Nothing else in economics can explain this phenomenon. Even though the price action was subdued, 2002 was a remarkable year in silver. For one thing, the U.S. Government finally exhausted the last of its once-gigantic silver stockpile. It dropped from six billion ounces to zero in 60 years. Never again will the government be able to manage the silver deficit by subsidizing the silver industrial users with taxpayer owned material. Never again will Uncle Sam be able to sell, or even threaten to sell, real silver to thwart a price rally. From 2002 until eternity, the U.S. Government can only be a buyer or a bystander, but never a seller of real silver. Sure, they can assist and sanction rule changes hurting paper holders of silver, but they can't hurt those who own real silver. Gold -- Sharefin, 20:44:03 01/09/03 Thu Gold $354.50: The Maginot Line Similarly, the $354.50 line, which is not a resistance point, will be breached out of the blue, all of a sudden, as if there was in fact no one to defend or stop the rising price onslaught of the gold monetary disciplined troops. Normally at this juncture, I would be cautioning the gold community. It is clear that the Gold Cartel and Exchange Stabilization Fund would like to see $354.50 function as did $330, albeit with more staying power. The Federal Reserve and the White House are expending great efforts to not let this equity market decline below the present 8700 Dow Level (so as to keep their instant gratification troops somewhat happy). There is, however, a rat (or three) in that economic and political woodpile. The key rat is the weakness of the US Dollar. This is incurable in the light of the negative US Dollar plans being utilized by both the Federal Reserve and the White House to maintain the level of the equity markets and therefore the mood of the public. All of their efforts are in hopes of igniting economic recovery. It is simply a contradiction of desires for a strong market to be produced in this environment by means of dollar-weakening economic techniques. The second rat is Iraq. Informed opinion states that plans for a war and war rhetoric have gone on too long. If the US does not launch an attack by the end of January then the growing support for Iraq in the Middle East, even by certain NATO nations, is going to strengthen Saddam's position to a point of a lost opportunity. I have heard this from serious, well-placed and knowledgeable sources. The third rat is North Korea which is saying: "If you want to pick on someone for making atomic weapons, come on, we are ready." Yes, they have openly challenged the fundamental reasons for the Bush administration's basis for an invasion of Iraq (remember- no nasty grams to the messenger: me). When the White House suggested that the North Korean problem could be solved by diplomacy, North Korea answered saying that they had no interest in discussions with the US or anyone else for that matter on their renewed atomic weapons program. I am told that after January is over, if the US has not invaded Iraq, not only will this resistance and challenge accelerate but also other less friendly nations to the US will join the chorus of those who are cozy with Iraq for business reasons. So, at this time do you really want to be without your gold position, or even, for that matter, with less of a gold position as long as you are not over extended? If the gold market weakened somewhat would you really want to throw your shares or bullion into the market questioning if the thesis of gold has failed? I really do not think so. The problem is that trading here is not warranted in my opinion. That is because the "Bridge" when the gold market gets it into its mind to go over $400 could do it right from here and tomorrow. There will be no Black Knight able to keep gold from crossing the bridge. There will be no Maginot Line in the right place when gold ignites and runs over $400. It is very close to that gold move, regardless of today's Presidential and Fed inspired stock market rally. Therefore, I cannot recommend reductions in positions here. There simply is too much gunpowder on the ground and the firing officer is standing too near the fuse with a "Churchill" type cigar ignited and dropping sparks. He might fire even before the commander yells "Fire" and there goes gold. Gold -- Sharefin, 20:13:10 01/09/03 Thu Gold Market Thoughts The TOTAL NET OPEN INTEREST which I will post shortly, (after my "Wall Street Journal" daily totals come in for my checksums check) is now starting to shape up to one massive "STRADDLE" The floor being 300 dollars per ounce, and the ceiling being 400 dollars per ounce. Gold right now is just about in the center at 350+. The NET PUT OPEN INTEREST at 300 is 21,414 contracts, and the NET CALL OPEN INTEREST at 400 is 25,078 as of today's data for yesterday. The zero-point is now in the process of shifting higher, but I suspect will take several more days if not several more weeks to completely shift. When the dust settles I am expecting to see a zero-point very close to 350. Right now we only have the following points of resistance to deal with on the net call side of the equation, that have more then 10,000 net call options, they are: 330 strike price with 10,737 with the trend decreasing in numbers, about a month ago this figure was 23,000 more or less. 350 strike price with 12,498 with the trend increasing in numbers, about a month ago this figure was 11,600 more or less. 360 strike price with 18,452 with the trend increasing in numbers, about a month ago this figure was 13,200 more or less, this is now the second largest net call strike price after the ceiling at the 400 dollar strike price. 370 strike price with 16,516 with the trend increasing in numbers, about a month ago this figure was 12,100 more or less. All the other strike prices generally have options with contract totals near or way below 5,000 contracts. The 330, 350, 360,370 and 400 are the primary points of resistance to the upside. The second FLOOR strike price is now starting to take shape at 310, but has a long way to go before it' influence will take hold. ALL the net call strike prices below 350 are now decaying at a very rapid rate, and I would expect to become net puts by the end of this option cycle. What we will have in about two weeks or so, I believe will be a huge near normal option distribution. Folks this is a huge straddle, which suggests, that the insiders are preparing for gold to go either way. This has to be based on the "world view" of the US projection of power, and the "pending war" that the world is well aware that the U.S. currently can't afford to pay for with out a massive "inflation" to the U.S. money supply. Thus this is becoming the basis of a potential major "gamma spike" that could well take gold well over 400 dollars. Clearly the next several weeks, all eyes will be looking at Washington, and at the "new Congress" very closely. President Bush is now under a world microscope, probably far more than any other President has ever been, in history. The key to the OPTION CUBE now will be to watch and see this "normalization" of this massive straddle continue to get built, once completed D-Day should be upon us. IF this straddle gets aborted, then we will know that the gold bull market is at it's top for the time being, and you can expect a correction and or a massive sell off to follow. Gold -- Sharefin, 03:50:31 01/09/03 Thu GOLD & SILVER POTPOURRI Young Japanese are flocking to gold in unprecedented numbers reminiscent of their fathers and grandfathers in the past. Their faith in stocks is gone as are the quick profits of three to six years ago. The young are becoming risk conscious, as they realize they may not have a job in the future. If you recall we have said over and over as gold rose jewelry sales would fall but investment in gold would rise by an equal amount or more. Well, that is exactly what is taking place. It is the first-time buyers that are really bolstering Japanese demand, they are worried about job security or their pensions, something that was unheard of three or four years ago. In 2001 investment demand was 64.8 metric tons but in the first three quarters of 2002 it was 80 tons. Soon the same thing will be taking place all over the world. ~~ Gold resistance has been broken at $330 - $336 - $350 and now the 1987 downtrend line at $355 is about to be broken. Once that is broken it is clear sailing to $840 an ounce. The gold price has already breached the 15-year resistance line and will soon break the 20-year resistance line at $470. In late December open interest was 285,668 contracts or 28.6 million ounces, up 91% from August 2001. Since April 2000, non-commercial net short positions have increased from 56,000 to 60,000 contracts. Virtually zero interest rates have caused a strong inverse relationship between the price of gold and short-term interest rates. As rates have fallen gold has risen. Low rates reduce the opportunity cost of holding gold and producer hedging is not attractive at low interest rates. We have followed gold for over 42 years and we know once interest rates rise gold's trajectory accelerates on the upside. We don't see interest rates higher for nine months to a year, so gold should move to $840 an ounce during that period. The last major move to $1,500 to $3,000 an ounce will come as interest rates rise again. Governments lie so much we don't know whether any of them have any gold left at all. We also don't want to forget the hedged producers who are very short gold and the derivative-banking cartel that is short gold. They have to be in the process of covering their shorts. Hedging is not profitable with 1% interest rates, particularly in a rising gold market, thus that will no longer be a detriment to rising gold prices. That leaves many reasons for higher gold prices and they are the breaking of the bubbles in real estate; debt; pensions and derivatives; a possible terrorist attack in Europe or the US; a major political scandal; botched or protracted military action in Iraq, North Korea or Israel; a continued fall in the value of the dollar; a collapse in consumer spending and a collapse in the stock market. All of these are imminent and plausible. It's only a question of which one when. There is no chance of a surge in gold production. It takes a minimum of a year or two to get any mine up and going and in two years gold will already be going where it's going. In fact, it takes five to 10 years to bring mines into production. As you can see it is absolutely inevitable that gold will move to higher prices. Strong gold buying is now coming out of the Middle East. We also heard the Australians, who are mega-hedged, are feeling pain, especially the Sons of Gwalia. Wall Street and CNBC avoid talking about gold and silver as if it were akin to the plague. The CRB index hit another high at 240.19. By the time you read this gold should be through $355 an ounce on its way to $500. Load up on the metals and stocks now. This is the last time they'll be cheap. The base for both gold and silver is monumental. It's already obvious Asians, Indians, Chinese and those of the Middle East don't trust the dollar. When will Americans and Europeans wake up? They will wake up and when they do the buying volume will knock your socks off. This is such an incredible opportunity for you subscribers. It's truly once in a lifetime. We are in transition from paper fiat money back to gold-based currencies. This is a return to ancient cultural roots. That is why Asians, Indians and Middle Easterners are in the vanguard. They are far more suspicious of fiat money than we Westerners. These people in these gold-buyer regions have been accumulating gold since the advent of the suppression period beginning in 1987 while Westerners have been sitting on their hands. They have been accumulating the real wealth, gold. Wait until you see a stampede out of the dollar. Everything is in place and it is now beginning to happen. The fraud that has been perpetrated by Barrick and other hedge producers and gold bullion banks such as JP Morgan Chase, Goldman Sachs and the US Treasury will soon be at an end. We are entering one of the most turbulent times in the history of mankind and many of us won't make it. We are not disturbed about that because finally this time once and for all we expect to defeat the forces of evil. We have been told that the US Mint has no gold coins available. JP Morgan Chase, due to its credit rating, can no longer deal with Deutsche Bank. We find it laughable when JPM management says they have no gold exposure and all you have to do is go to the Office of the Comptroller of the Currency and you can see JPM's derivative positions in living color. Yet there is no challenge from the media. We know Morgan lies; there are e-mails to prove that. Of course JPM has gold exposure. They have $41 billion in precious metals derivatives; they have $39 billion exposure in other commodities and $199 billion in equity derivatives. That is 45% of total assets and 6.5 times core capital. JPM may have dodged a fatal bullet with the assistance of the US government on the Enron caper and insurance payoffs, but it only buys time. Morgan will go down because gold is going higher due to a falling dollar, and no economic stimulus package can save the US economy. Don't get fooled by the game playing. Keep your eye in the big picture and that is there is no way out of a purge of the world's economic and financial system. ChartsRus -- Sharefin, 09:04:53 01/08/03 Wed Here's two charts suitable as a backgound image for your PC. Right click on the images and choose "Set As Background" Then next time your neighbour pops in you can show him how good gold is going. ChartsRus -- Sharefin, 09:03:13 01/08/03 Wed Why the traders are buying. Technically gold has broken out long term. But will the next leg be similar to the 1970-80 one?  The forum has just rolled over into it's archive. Click here to view earlier postings. |
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