Gold -- Sharefin, 06:13:48 06/12/03 Thu Factors that affect the gold market To repeat, from an earlier essay, the widening imbalance between supply and demand can be due to either of the following factors - decreasing supply, as central bank vaults run empty, or because demand is increasing as nervous investors, after years of hearing that ‘gold is dead', again seek out the safe haven of last resort. Most likely both these factors are contributing to the current more volatile market. This nervousness among investors - US and foreign - is fueled by a number of factors. Keep in mind that investors look for a return on their money and would prefer to have their funds invested in whatever delivers the best return, compared to risk. This implies that risk has to be mounting in most available markets before investors will think of gold as the safe haven. If, for example, only US markets are at risk, intrinsically and through the dollar - then investors could switch to investments in Europe or Japan or elsewhere. The dollar is telling us that foreign investors are concerned about the future state of US markets, but the gold price action over the past two years is also saying that Japan and Europe and the other suitable places are not without their own risks. In Japan there is a declared policy of weakening the Yen and of pumping money into the system to extend the decade long effort to revive their economy. Japanese households have no access to a forex futures market to protect themselves against devaluation of their currency, so they have been buyers of gold in good quantity for some time. In fact, there are chains of gold shops where one can walk in off the street and purchase physical gold in bar form - and walk out again to where one had parked with little risk of being robbed! These shops have been doing good business, rising quite steeply whenever there is news of problems with the banking system and its bad debts. China has become a more open and relaxed market for gold; where previously gold was rigidly controlled, there is now a gold exchange in Shanghai and more and more shops are opening gold counters where private citizens can buy gold. The proportion of Chinese households that can be rated as middle class is rapidly increasing and demand for gold will keep pace. Elsewhere in the world the anti American sentiment engendered by the Iraq war has led many individuals and institutions to sell dollars for other currencies, and also for gold. A number of central banks are on record that they will be reducing their dollar denominated reserves in favour of Euro's - with the Chinese and Russian central banks having stated openly that they are in favour of adding gold to their reserves. Perhaps some others are also doing so, without trumpeting the fact to the media. According to reports, India is still a heavy buyer of gold, despite the marriage season - when gold demand increases substantially - being nearly over. Indian families tend to hold to the tradition that gold is a real store of wealth, preferable to having money on deposit in a bank, and even lower middle class households can own a kilogram or two of gold. With India's economy in high gear, middle class wealth is expanding and part of this wealth is being accumulated in the form of gold. No wonder India takes in about one third of global annual production. It is not possible to predict with any certainty when this growing demand for gold will overwhelm the available supply from mines and elsewhere. However, the way the gold price keeps coming back soon after being subjected to a sell-off, means that it cannot be too long now. Perhaps a new and even mild crisis can spark a fresh run into gold to send the price skywards. Or perhaps we have to wait a few more weeks - not too many months - for the natural trends to run their course and trigger a steep rise in the price. Whichever way it turns out, it seems highly unlikely that demand for gold will fizzle out and cause the price to enter a new bear market. Silver -- Sharefin, 06:02:14 06/12/03 Thu THE MERITS OF BUYING $ILVER NOW Presented is the $ilver "story" with many website references. It encompasses the use of logic and common sense to analyze the factors which help determine the value of $ilver. Gold -- Sharefin, 05:54:11 06/12/03 Thu Rothschild plans to enter energy business NM Rothschild & Son, the investment bank with a long involvement in the gold market, plans to enter the oil trading business. Advertisement It is setting up an oil risk management business focused on the over-the-counter market, with products such as swaps and options. Rothschild hopes to attract customers not only from the oil industry, but also from power generation, as electricity and gas prices are influenced by oil prices. ~~~ The move is a logical step for the 193-year old bank, given that oil is the largest traded commodity, while gold accounts for less than five per cent of all commodity trading. ~~~ Rothschild focuses on precious metals, having quit base metals trading about two years ago. The move is also an extension of its business as adviser to some of the world's leading energy companies. Rothschild ranked 10th in the world for merger and acquisition advice, according to Dealogic. Oil trading is dominated by Goldman Sachs, Morgan Stanley and JP Morgan Chase, which each have an extensive presence in exchange traded energy products on the New York Mercantile Exchange and the London-based International Petroleum Exchange, as well as a significant share of the energy OTC market. Rothschild's history is steeped in gold. It was founded in London in 1810 by Nathan Mayer Rothschild, who helped finance the Duke of Wellington's army in the Napoleonic wars through gold trading. The expansion into oil by Rothschild comes at a time when investment banks such as UBS Warburg and Bank of Nova Scotia have folded their bullion desks into the foreign exchange trading units, reflecting gold's reduced role in investment markets. Rothschild holds the chair at the London Bullion Market Association, the clearing house of physical gold trade, and was also one of the first London bullion banks, along with Mocatta & Goldsmid, now part of the Bank of Nova Scotia. Rothschild helps fix the price of gold in London each day through the LBMA in the bank's office in St Swithin's Lane, a role it has held since the gold-fixing method was first introduced in 1919. Gold -- Sharefin, 05:52:05 06/12/03 Thu Gold sinks on selloff, U.S. dollar The price of gold tumbled by nearly $10 (U.S.) yesterday, driven down by a more stable U.S. dollar and selling by hedge funds and other big speculators. "It's just a market that was overbought and what you are seeing is a correction," said George Parrill, the director of precious metals trading for Scotia Mocatta, the precious metals trading arm of Bank of Nova Scotia. Hedge funds and other speculators had in recent weeks built up long positions to record levels, Mr. Parrill said, and higher gold prices in recent weeks likely prompted some of them to liquidate their holdings. "There's reducing of positions, some lightening up of positions -- I don't see anything else that would trigger it." Fiat -- Sharefin, 05:34:00 06/12/03 Thu U.S. Attorney, SEC Probe Freddie Mac WASHINGTON ( Reuters) - The U.S. government has launched an investigation into Freddie Mac (FRE.N), the country's second largest mortgage financier, the U.S. Attorney in Virginia said on Wednesday. ``The United States Attorneys office in the eastern district of Virginia has initiated an investigation involving Freddie Mac,'' U.S. Attorney Paul McNulty said. He gave no further details and officials would not say what the exact investigation would cover. The Washington Post reported on Wednesday that prosecutors were looking into alleged irregularities at the mortgage giant. The article cited one official who said the probe focused on possible violations of federal securities fraud. Acknowledgment of the investigation came just as Freddie Mac announced that the U.S. Securities and Exchange Commission had begun a formal investigation into the company. Freddie Mac, which manages a $1.29 trillion portfolio of home loans, on Monday announced it fired President and Chief Operating Officer David Glenn for failing to fully cooperate with a review of earnings statements from 2000 through 2002. It also announced the departure of the chairman and chief executive, Leland Brendsel, and Chief Financial Officer Vaughn Clarke. Gold -- Sharefin, 05:11:55 06/12/03 Thu What Goes Up Will gold's rally persist? Only if panic sets in. Since early April gold prices have been rising, most notably in dollars but in other currencies as well. This might make sense in terms of the greenback's recent swan dive, but it is surprising in light of gold's traditional place as a hedge against inflation. With growing worries about deflation--the polar opposite of inflation--you would think the price of gold would be falling, all things being equal. Gold -- Sharefin, 05:08:50 06/12/03 Thu Bullion bulls rate gold's next move Metals stocks will see vast gains, says Calandra Can gold build upon a two-year rally that took it as high as $390 an ounce earlier this year? Will gold mining stocks join the rally that has propelled shares of both small-cap growth mutual funds and individual companies, largely in the technology sector? Which exploration companies are most likely to be scooped up by the industry's giants in the never-ending balance-sheet quest to increase provable reserves of bullion? Most importantly, analysts, executives and money managers will be debating whether several new forms of "paper gold" scheduled for release this summer can lead investors to stake part of their stocks-dominated portfolios to bullion. Gold these days resembles a critically acclaimed Hollywood film that's barely breaking even at the box office. Investors are counting on the sequel for the real fireworks. Gold -- Sharefin, 05:02:49 06/12/03 Thu Neither a borrower nor gold lender be The religious war in the gold market reached a climax this week with the announcement by Newmont Mining that all but one of the gold lenders to its Yandal mines in West Australia had agreed to take 50 cents on the dollar to liquidate their claims. Newmont's buy-out offer, which effectively saves the Yandal operation $77m, is a stunning blow to the gold banking business. For the past two decades, gold mines have been developed using the gold lending market. Roughly speaking, banks borrow gold from central banks and lend it to mining companies. The mining groups sell the gold, use the capital to develop mines, and pay the loans back from their production. Since gold interest rates are far below rates for borrowing in dollars or other main currencies, this has been a cheap way to build capacity. But some gold investors, along with some gold mines, have believed that when mines "hedge" their gold production by borrowing, then selling the gold, they depress the price and cannibalise their ability to profit from future price rises. The "hedgers" believe they are only following prudent practice for commodity producers. This hasn't been a gentlemanly dispute. Newmont, now the biggest gold producer, has become the leader of the anti-hedging group. It acquired Yandal when it bought out Normandy Mining. Yandal, which is comprised of three mines in the Western Australian desert, has repeatedly seen its ore reserve numbers reduced by management, the engineers and the accountants. According to Newmont, the most recent and relevant numbers showed proven and probable reserves of 2.12m ounces at the end of last year, against which 3.5m ounces of gold had been sold in hedge contracts. As a quick pass with a supercomputer will show, 3.5m is larger than 2.1m. Therefore the hedge contracts were insupportable. Fiat vs Gold -- Sharefin, 04:41:44 06/12/03 Thu TAINTED RESEARCH Lysenkoism - American Style It was thought that the freedom of expression for the individual guaranteed by the American Constitution would prevent lysenkoism from spreading to the United States. Sadly, this hasn't been the case. As the American government repudiated its domestic gold obligations in 1933 and, again, its foreign gold obligations in 1971, new generations of economists were all too eager to comply with the request to justify the breach of faith or, to put the matter somewhat less charitably, to find excuses for the government to have declared bankruptcy fraudulently. I use the adjective "fraudulent" advisedly. In both 1933 and 1971 the American government had ample gold resources to meet its obligations, as later auctions of U.S. Treasury gold would convincingly demonstrate. When asked by Franklin D. Roosevelt of his opinion regarding the matter, the great blind senator from Oklahoma, Thomas P. Gore, replied: "Why, that's just plain stealing, isn't it, Mr. President?" (See: Economics and the Public Welfare by Benjamin M. Anderson, second edition, 1979, Indianapolis: Liberty Press, p 317.) Roosevelt, using the excuse of the banking emergency, and appealing to the patriotic feelings of the citizenry, recalled the gold coins in circulation against payment in Federal Reserve notes. He stressed that the measure was to be "temporary", and the gold should be returned to the rightful owners once the emergency has passed. But after the citizenry complied, Roosevelt cried down the value of Federal Reserve notes (that is, he wrote up the value of gold in terms of paper) and nothing further was ever said about returning the gold to its rightful owners. This, and the later episode of dishonoring gold obligations under President Nixon in 1971 (also described as "temporary"), were instances of deliberate sabotage of the gold standard with the aim of "making America safe for socialism." Fiat -- Sharefin, 04:30:17 06/12/03 Thu The Bankrupting of America America is bankrupt. This from Jagadeesh Gokhale and Kent Smetters. No, these men are not a Saudi terrorist or Southern right wing extremist respectively. Instead the former is the Senior Economic Advisor to the Federal Reserve Bank of Cleveland, and the latter is a full professor at the Wharton School of the University of Pennsylvania. Credentials notwithstanding, the men's conclusion would seem preposterous. America has never seemed more prosperous. Even this recession has been minor. On the other hand, their source seems reliable: Gokhale and Smetters got their data from the U.S. Department of Treasury. And they performed their present value calculations on the order of then Secretary of the Treasury Paul O'Neill. Smetters was, until recently, on staff there, as the Deputy Assistant Secretary for Economic Policy. The Treasury needed new numbers because the Office of Management and Budget's numbers have almost no connection to reality. (For example, OMB projects a constant 75-year average lifespan in its Social Security and Medicare cost estimates even though the average lifespan in America is already 78...and increasing at the rate of three months every year.) When you look honestly at our government's future obligations, the numbers in the red quickly become so large they require entirely new measures to describe them. Gokhale and Smetters invent the term "financial imbalance," to measure Uncle Sam's impending bankruptcy. Financial imbalance means: "current federal debt held by the public plus the present value of all future federal non-interest spending minus the present value of all future federal receipts." Or, in other words, Gokhale and Smetters use FI (financial imbalance) to estimate how broke Uncle Sam is when measured in constant dollars, today. FI is how much Uncle Sam owes now and will garner in the future versus how much he is on the hook for now and later. And the number? "Taking present values as of fiscal-year-end 2002 and interpreting the policies in the federal budget for fiscal year 2004 as current policies, the federal government's total fiscal imbalance is equal to $44.2 trillion." Gold -- Sharefin, 04:20:25 06/12/03 Thu Newmont closes book on Yandal gold hedges Newmont Mining Corp.'s (NYSE:NEM - News) $77 million payout to six of its bullion bankers in Australia may close the book on a gold hedging predicament that has dogged the world's largest gold producer since it merged with Australia's Normandy Mining last year, analysts said. All but one of the counterparties to the money-losing hedge positions of Newmont's Australian mining subsidiary, Newmont Yandal Operations Ltd. (Yandal), agreed to accept 50 cents on the dollar before the offer's Tuesday evening deadline. A hedge position is a commitment to sell future production at prices set in long-term contracts. Hedging can protect a company from falling gold prices but has backfired on many producers during the rally in gold prices since last year. The Australian hedges have complicated Newmont's relations with its shareholders and kept gold traders on edge about the timing of large buybacks in the open market. It still is not clear whether the Yandal hedges have already been unwound. "It seems that the crisis, if there ever was one, is now over," said Victor Flores, mining analyst with HSBC Securities. "From Newmont's point of view, they've had to write some checks, but they've fulfilled their pledge to reduce hedge books and it cost them potentially half of what it would have cost them." Denver-based Newmont said it accepted the assignments from six bankers for all their gold contracts with Yandal. These represent 94 percent of the ounces in the Yandal hedge book and 76 percent of the negative mark-to-market value, due to the high price of gold in Australian dollar terms. "The remaining counterparty alleges a right to terminate its gold hedge contract with Yandal before its respective maturity, based on the alleged occurrence of an early termination event under the contract," Newmont said. It acquired Yandal's substantial portfolio of forward gold sales and derivatives in a three-way merger in Feb. 2002 with Australia's Normandy Mining and Canada's Franco-Nevada Mining Corp, vowing to close all its Australian hedges as market conditions allowed. It inherited about 10 million ounces of gold sales and derivatives commitments from Normandy. Gold bankers and traders have been whispering about supposed "right to break" clauses in Yandal's gold contracts. Dealers said these unusual covenants allow the bankers to call in contracts early and were linked to the perceived counterparty risk of Yandal, formerly Great Central Mines Ltd. Great Central Mines was part of the collapsed gold empire of the colorful Joe Gutnick, a rabbi and mining impresario. "It's just a dramatic finish. That hedge book is gone with the exception of that one position," said a New York bullion trader. "Its going to severely limit the pace of buybacks. "It's definitely going to alleviate the upside pressure for gold, once the market digests what happened," he said. ~~~~ "It's ironic that Newmont, which has all along had a non-hedging philosophy, has found itself in the middle of the hedging issue," Flores said, "Whereas the Barricks of the world and the Placers have been often maligned for being hedgers and haven't had to face any of these problems." Gold -- Sharefin, 04:17:11 06/12/03 Thu Gold bears hijack LBMA 2003 Gold market players looking for an upbeat finale to this year's London Bullion Market Association conference in Lisbon were sorely disappointed. The last session of the two-day industry shindig presented delegates with a panel headlined by Mitsui precious metals' indomitable gold analyst Andy Smith, who presented a characteristically apocalyptic outlook on the gold market as a whole. Second on the list was Dresdner Kleinwort Wasserstein commodities analyst Kevin Crisp, who has a less entrenched view on gold and was widely expected to balance Smith's out-and-out bearishness. That was not to be. Instead Crisp, one of London's most respected analysts, followed through with a stern warning that gold is in grave peril of falling off the radar screens of international investors - for good. ~~~~ Even if investment demand mushrooms, it will not be cure-all for the industry. “It's a two way business; investors buy but they also sell,” said Crisp. Smith concurs, calling gold investment ‘boomerang demand'. “It's a momentum play. They'll buy while its going up, but its real test is going to be when it turns down,” he says. So, is it all doom and gloom for the gold market? Perhaps not, says Smith. “There is a lot of paralysis by analysis in this market, but we could get lucky. That's my forecast actually,” he says. --- DOH And these guys get paid for what they do..... Gold -- Sharefin, 04:10:26 06/12/03 Thu Gold renaissance in doubt The $100 per ounce gain in the gold price since 1999 could count for little according to analysts and fund managers. Speaking at the London Bullion Market Association (LBMA) conference, Macquarie Bank's UK-based precious metal analyst, Kamal Naqvi, said, by way of example, that above ground stocks of gold were so vast that it was illusory to think that a fall in physical demand would add further sustenance to the gold price in the future. --- Gobblydegook & spiel...... Richard Russell -- Sharefin, 04:05:16 06/12/03 Thu Gold As for gold, I think it has been holding fairly well, and is probably now working off an over-bought situation. I've said all along that I believe gold is in the accumulation phase and that the gold bull market has a long way to go. We're not in the "hard part" of the gold bull market -- when you buy the stocks or the metal, and the two work back and forth, wavering with every rumor, when every inch higher seems like a great effort, when every point feels like "work." At this point, you must think of your gold holdings as insurance. You don't call your insurance company every day and ask them what your policy is worth. You don't even call your realtor every day and ask him what your house is worth. Gold is real money, and the gold stocks are the producers of real money. Countless billions of dollars are now being "magically created" by the Fed in its efforts to revive the US economy, and our ultimate protection against the Fed's inflationary machinations is real money -- gold. Through decades of propaganda, the Fed and its advocates have convinced the American public that "paper is good" and "gold is bad." And the incredible thing is that they've damn near got the US public believing it. It's as if the Fed has convinced the world that black is white and white is black. Incredible, but as Goebels, the sinister Nazi minister of propaganda stated -- repeat a lie, a big lie, often enough, and in time people will believe it. Gold -- Sharefin, 04:03:34 06/12/03 Thu Randgold denies it made bid for Ashanti Goldfields Ghana said on Friday South African gold miner Randgold Resources Ltd. (London:RRS.L - News) had made an offer for miner Ashanti Goldfields Co. Ltd. (AGC.GH), but Randgold's chairman said no bid had been made. The contradictory statements sowed confusion about the fate of Ashanti, which is already in merger talks with Randgold's larger South African rival AngloGold Ltd. (ANGJ.J) but needs the government's green light to commit to any deal. A senior Ghana government source told Reuters that Randgold executives met government officials in Ghana's capital Accra again on Friday and expressed an interest in talking to Ashanti. However, the source said no "specific proposals" had been made during the Friday afternoon meeting -- remarks that seemed to row back from earlier statements by government officials. Fiat -- Sharefin, 03:52:16 06/12/03 Thu Treasury denies report that deficit paper was 'shelved' The Treasury Department Thursday denied a report that the White House suppressed a paper estimating the United States is facing at least a $44.2 trillion deficit due to future health care and pension obligations. London's Financial Times said in its Thursday edition that the Bush administration "shelved" the report "commissioned by then-Treasury Secretary Paul O'Neill" and written by former Treasury official Kent Smetters and former Treasury consultant Jagdessh Gokhale. According to the Financial Times, the report shows the U.S. government is threatened with being overwhelmed by the future health care and retirement costs of the "baby boomer" generation. The study concludes, according to the report, that sharp and permanent tax increases or massive spending cuts -- or a combination of both -- are unavoidable if the United States is to meet the health care and retirement benefits promised to future generations. Gold -- Sharefin, 03:43:57 06/12/03 Thu Investors turning to gold Gold may climb above $400 an ounce for the first time in seven years as investors seek better returns than they expect from stocks and bonds and a falling U.S. dollar makes the metal cheaper for overseas buyers. "We are at the early stages of another bull market for gold," said Jean-Marie Eveillard, whose $215 million First Eagle Gold equities fund doubled in net asset value last year as gold prices jumped 25 percent, the largest gain since the 1970s. Gold -- Sharefin, 03:40:16 06/12/03 Thu Gold soft in Europe, vulnerable to further falls PRODUCER ACTIVITY Some gold miners were starting to return to the market as sellers, having spent the last year or so de-hedging -- buying back forward sales due to rising gold prices. Andy Smith, precious metals analyst with Mitsui, said that longer term it would be interesting to see how miners behaved in the market. "I think we have the makings of a classic turning point...but it will depend on what the producers want to do. At the moment they are buying dips and not really selling rallies," he said. Only this week, the world's biggest gold miner Newmont Mining Ltd said it would offer to pay up to $219.4 million in outstanding debt and gold hedge liabilities of its Yandal operations in Australia. A spokeswoman said the offer supported Newmont's position to eliminate hedging. But since prices zoomed up to 15-week highs on Tuesday, borrowing activity in the forward market has picked up, indicating some selling. "I think the Australians certainly have been in there. You've seen borrowing in the forwards which does suggest producer selling," one bullion trader said. Gold -- Sharefin, 03:25:16 06/12/03 Thu Newmont offers $220-million to pay off unit's obligations Yandal's hedging contracts a problem Newmont Mining Corp. has offered almost $220-million (U.S.) to pay off notes and hedging contracts held by Australian subsidiary Newmont Yandal Operations Ltd. Denver-based Newmont, the world's biggest gold producer, had been widely expected to come up with a proposal to close the troublesome Yandal obligations, which Newmont acquired in February, 2002, through its takeover of Australian producer Normandy Mining Ltd. "Newmont has been an ardent anti-hedger, and [Yandal] has been the one hedge contract that spoiled the pudding," said John Ing, president of Maison Placements Canada Inc. in Toronto. Earlier this year, Newmont disclosed that Yandal had more gold committed under hedging obligations than it owned in proved and probable gold reserves. Some of the contracts had "right-to-break" clauses that gave counterparties the right to get cash immediately for the value of their contracts instead of accepting gold at an agreed-upon date. In March, Newmont chief executive officer Wayne Murdy said Yandal could be pushed into insolvency if those rights were exercised. The obligations were non-recourse to Newmont, but Newmont reported the liabilities on its balance sheet. Analysts said Newmont legally could have walked away from Yandal and allowed hedging counterparties to take over the asset, but that such a move would have soured relations between Newmont and major bullion banks, and so was not likely. Newmont said yesterday it would offer, through a subsidiary, $118.6-million to acquire notes and $100.8-million to close out hedge positions. The offers amount to 50 cents on the dollar of outstanding principal for note holders, and 50 cents for each dollar of liability under the hedge contracts. Hedge counterparties also have the option to transfer their agreements, at 40 per cent of their existing value, to Newmont. In a statement, Mr. Murdy said Newmont believes the offers "represent significant premiums to the alternative of an insolvency administration." Gold -- Sharefin, 03:21:56 06/12/03 Thu Gold is Sparkling As Ashanti Goes Places Last week the government of Ghana tantalisingly informed Ghanaians that it had been "notified about talks for a merger between Ashanti Goldfields, in which the state is a major shareholder, and AngloGold Limited of South Africa." The government's statement which was signed by the Minister of Information gives the hint that the Government of Ghana might be salivating and looking forward to such a merger. Nicol degll Innocenti of the Financial Times says Gold has regained its sparkle. His article on the proposed mega-merger has been taken from The Financial Times. The resurgent gold price has sparked a chase for small mining assets by junior mining companies but it is now bringing some of the sector's greyer heads closer together. Ashanti, Ghana's biggest company, and AngloGold, South Africa's largest gold producer, are locked in merger talks for a deal worth close to $1bn (600 million pounds) that would create the world's biggest gold miner. The pan-African mining company would topple the US-based Newmont from number one position. Ashanti's Sam Jonah, an icon of the industry and the only black chief executive of a large gold company, is pushing a deal that is building confidence into the sector. Consolidation in the top tier of gold companies, which after a flurry of activity had been relegated to the back burner, is simmering again. Other deals could follow on the strength of the positive outlook. Underpinning the AngloGold and Ashanti merger strategy is a belief that the higher gold price is here to stay. The "war premium" a price surge in the run up to the conflict in Iraq pushed gold to a six-and-a-half-year high of $389 an ounce in February. It then fell to $318 an ounce. Bullion is now strengthening again to about $370 an ounce. The deal would create a producer with mines in South Africa, Namibia, Zimbabwe, Tanzania, Mali, Ghana and Guinea. Production from Africa would make up 80 per cent of total output. But analysts believe Canada's Barrick and PlacerDome may attempt to spoil AngloGold's bid for African dominance by making counter offers for Ashanti. ~~~ The most traditional of havens is regaining its reputation as a refuge against dismally performing equity markets, a week dollar, global economic uncertainty and security concerns. "Fundamental forces are at work which continue to promise price upside", says Mr. Godsell, "Mine production is flat to declining, central bank selling is stable at low levels and investor interest is back. The negative sentiment has gone away. Gold -- Sharefin, 03:14:52 06/12/03 Thu Gold industry reviews its future Johannesburg - Gold mining companies are having to change the way they do business as world demand falls and new mining laws come into effect. Eric Lilford, a mining analyst with Investec, said: "The fall in demand for gold and new laws have forced South Africa's gold mining companies to consider their long-term future." The average spot price of gold was $310 an ounce last year, $40 higher than the average in 2001. But the latest figures show that world gold demand, excluding institutional investment, was 779.8 tons in the third quarter of last year, down 7 percent from a year earlier. South Africa's mining charter calls for the transfer of 15 percent of the sector to black ownership in five years and 26 percent in 10 years. The Mining Royalties Bill calls for a levy on gold mine turnover of 3 percent. Lilford said: "The mining charter is forcing some major miners to sell some of their assets to black empowerment groups or into mergers. "The royalties bill on the other hand will increase the net taxation rate, which means it will shorten the life of an operation." Gold -- Sharefin, 03:12:25 06/12/03 Thu Stronger dollar may curb gold rise Australian gold production is on the rise but continued growth through expansions and new developments could fall victim to the continuing strength of the dollar. Gold -- Sharefin, 03:04:33 06/12/03 Thu Gold is shining, but how should investors proceed? It's been pretty ugly out there over the past couple of years, as U.S. Federal Reserve Board chairman Alan Greenspan acknowledged last week in a presentation to Congress. "Since the middle of 2000, our economy has withstood serious blows: a significant decline in equity prices, a substantial fall in capital spending, the terrorist attacks of Sept. 11, confidence-debilitating revelations of corporate malfeasance, and wars in Afghanistan and Iraq," he told the Joint Economic Committee. And there has been more bad news this year: weak economic activity, poor levels of employment, oil prices that surged to $40 (U.S.) a barrel in the lead-up to the war in Iraq, and insipid levels of business and consumer confidence. To Mr. Greenspan, the fact that the economy has weathered these shocks shows how flexible and resilient it really is. And while he blandly concluded that the fundamentals point to a healthy future, signs of deflation are keeping the Fed on high alert. But the most important feature of this mixed landscape has been the rapid descent in the value of the U.S. dollar, which has wide-ranging consequences for the U.S. and global economies, and for investors everywhere. For years there had been predictions that the seemingly unstoppable greenback would eventually come to a screeching halt, and now that has happened, thanks to the massive U.S. current account deficit (which is more than 5 per cent of gross domestic product), a burgeoning fiscal deficit, a weak economy and financial markets that lack the allure to attract foreign capital. Gold has been one of the leading beneficiaries of the fall of the greenback because the yellow metal is priced in U.S. dollars. And as luck would have it, there are a number of other important considerations that have kept gold in a bull trend for the past several years, boosting the price from a low of $255 an ounce at the beginning of 2001 to last week's close in New York of $368.80. First, weak global growth suggests that central banks will boost the money supply in an attempt to reflate the system, traditionally a positive for gold. Second, because gold was in the doldrums for so long, mining companies basically gave up on exploration beginning in 1994, with the result that mine production has been in decline, losing almost 3 per cent in 2002. Third, sales by central banks, which held down the price of gold for a number of years, have been capped by the Washington Agreement of September, 1999, which runs for five years. Lastly, hedging activity by producers, another negative, has declined. Fiat -- Sharefin, 03:01:00 06/12/03 Thu Dollar's Drop May Spoil Street's Mood Just when you thought it was safe to get back into stocks, Washington finds a new weapon of mass destruction -- a bunker-busting policy change for the dollar. Much of Wall Street's outlook hangs on the dollar's prospects. Proof: Stocks suffered their biggest loss in almost two months on Monday after Treasury Secretary John Snow suggested over the weekend the United States had abandoned its eight-year policy of using rhetoric to support the dollar. Stakes are high. A free-falling dollar could trigger an exodus of foreigners from American markets. The Street may no longer be the investment "hot spot" if foreign money shifts to regions with stronger currencies and better returns. At an economic meeting in France, Snow described the dollar's slump of nearly 20 percent against the euro since the year began as "fairly modest" and indicated the dollar had more room to fall. Washington no longer gauged the dollar's strength by its market value against other major currencies, he said, implying financial markets should set exchange rates. ~~~ Behind the scenes, inflation lurks. For nearly a decade, the strong dollar has curbed the price of imported goods. Americans will now be importing inflation as prices rise for German cars and South Korean high-tech toys. As inflation rises, so will interest rates, now at 41-year lows. "The immediate negative of a depreciating currency is it could come with higher interest rates and lower stock prices as foreign investors bail out on positions, while the longer- term concern is it will boost inflation," says Rick MacDonald, senior economist for MMS International. DOLLAR MELTDOWN: THE SEQUEL The big question is: How much more of a drop would Snow tolerate? Just as troubling: How much more risk will foreign investors accept before dumping stocks they already own? There's speculation of a repeat of the dollar's meltdown between 1985 and 1987, when it lost up to half its value against leading currencies. By some estimates, offshore investors own 45 percent of U.S. government bonds, 35 percent of corporate bonds and 12 percent of stocks. The Street, hoping for a stock market rebound, has another worry. The market will be unsettled by the possibility it may not have turned the corner because of an eroding dollar. Foreigners have plenty to be skittish about the health of the world's biggest economy. Many are already parking their money in less risky places outside the United States. Gold is among the few dollar-denominated assets still luring investors, a no confidence vote in the nation's future. The loss of offshore money could slam the economy, which needs more than $2 billion a day in foreign funds to finance the nation's massive current account deficit of almost $600 billion. The United States has run up a huge current account deficit because it consumes more than it produces. Gold -- Sharefin, 21:08:08 06/10/03 Tue Gold Technicals Summary Holding at 362 would signal early resumption of the uptrend targeting 478 later this year, with interim resistance at 451 expected to produce a sharp 28-point drop back to 423. Along the way to 451, look for pullbacks from 383 to 375 and 430 to 417. An immediate downside breach of 362 would signal a deeper correction to 347 (with interim support at 354) without impairing the bullish outlook. Fiat -- Sharefin, 17:52:25 06/10/03 Tue The government's $43 trillion secret Long before the latest tax cut, the government got word that its long-term obligations are 10 times the amount previously thought -- and promptly buried the study. So why did the stock market sink that day? Why did it plunge the following Monday, losing 2.5% of its value? One possible explanation is Treasury Secretary John Snow and his comments on the dollar. Another is concern about new terrorist attacks. But let me suggest a third possibility: In spite of efforts to suppress it, word is getting around we can't afford a tax cut. The story starts one night in January, only days after Treasury Secretary Snow had replaced Paul O'Neill. Two men were leaving a restaurant in Santa Fe, N.M. A cell phone rang. The caller told Boston University economist Laurence J. Kotlikoff that six months of work by two economists was going to be deleted from the president's budget. The budget was due to be published in February. I know this happened, because I was the second man: Professor Kotlikoff was in Santa Fe working on a book project with me. The material to be deleted from the budget document was an updating of generational accounting. Former Treasury Secretary O'Neill had requested an estimate of the true, long-term obligations of the U.S. government. The estimate would include the formal debt of the U.S. Treasury plus equally serious government promises to provide retirement income and medical care. (Readers who think promises of Social Security and Medicare aren't as serious as U.S. Treasury bond promises should visit the nearest elderly person.) The resulting information might easily have been lost in a document whose online girth is measured in megabytes. Except for one thing. The new accounting shows the United States is broke. Buried, but not forgotten The study shows the true obligations of government were 10 times larger than Treasury debt held by the public. It shows the present value of these unfunded obligations is a mind-numbing $43 trillion. In a recent telephone conversation I asked one of the project economists, Jagadeesh Gokhale, why he thought his work was cut. Dr. Gokhale, a senior economist for the Federal Reserve Bank of Cleveland, was circumspect. He suggested the figures were a surprise to the new Treasury secretary. Here's another interpretation: Treasury Secretary Snow's first task was to sell the president's tax cut. The sales job would be awkward if an official government document announced we were already $43 trillion in the hole. (The Federal Reserve, by the way, recently put the net worth of all households at $39 trillion. This problem goes way beyond taxing the rich, the poor or the middle class.)  Back online again -- Sharefin, 17:47:56 06/10/03 Tue Sorry for the lack of posts of late but what with moving house & my PC crashing twice I've hardly been online or had the time. Hopefully I'll be back on track within a few weeks & life will return to normal. update -- Cyclist, 08:12:44 06/10/03 Tue Rangy hit in text book fashion its daily uptrend line and will make its rightshoulder in the ensuing days. Bonds cracking 4.25 will make a strong move to 4. All FWIW Periodic Ponzi Update PPU -- $hifty, 20:25:55 06/08/03 Sun Ponzi Chart Periodic Ponzi Update PPU Nasdaq 1,627.42 + Dow 9,062.79 = 10,690.21 divide by 2 = 5,345.10 Ponzi Up 122.02 from last week. It's amazing the things they can do with "HOT AIR" today ! Thanks for the link RossL! Go GATA ! Go GOLD ! $hifty Whew -- Sharefin, 05:03:43 06/02/03 Mon Finally back online after the PC spat the dummy while shifting home. Lots to catch up on. --------- Unique book goes on display The world's oldest multiple-page book - in the lost Etruscan language - has gone on display in Bulgaria's National History Museum in Sofia. It contains six bound sheets of 24 carat gold, with illustrations of a horse-rider, a mermaid, a harp and soldiers. The book dates back to 600BC The small manuscript, which is more than two-and-a-half millennia old, was discovered 60 years ago in a tomb uncovered during digging for a canal along the Strouma river in south-western Bulgaria.  Periodic Ponzi Update PPU -- $hifty, 23:47:38 06/01/03 Sun Ponzi Chart Periodic Ponzi Update PPU Nasdaq 1,595.91 + Dow 8,850.91 = 10,446.17 divide by 2 = 5,223.08 Ponzi Up 167.35 from last week. Thanks for the link RossL ! Go GATA ! Go GOLD ! $hifty FND of June gold -- Cyclist, 15:34:12 05/29/03 Thu Could be interesting fire works tomorrow.  Help me Find Article -- Giovanni Dioro, 08:40:36 05/29/03 Thu Can someone help me find an article. I read some weeks ago an article which said that the Fed would do everyting in its power to keep the Money Supply (M2) expanding at 6% per year. Anything below that would be dangerous to the banking system - so the author believed was the Fed's view. Did anyone else read this article and know of a link to it? Thanks in advance Giovanni thanks to all who tuned in Friday... -- scopper, 23:40:01 05/26/03 Mon We wanted to thank all those who made last Friday's MoneyRadio program so highly rated. For those in NY asking where to find Mr. Soltez's "Only in America" (we're told it's of particular interest to gold investors) if Amazon.com is sold out: we suggest starting with Gotham Book Mart at 41. W. 47th St., off of 6th. They seem to have mostly everything in print. (MoneyRadio airs each Friday at 6 in NY on DJ AM 970) Periodic Ponzi Update PPU -- $hifty, 21:57:15 05/25/03 Sun Ponzi Chart Periodic Ponzi Update PPU Nasdaq 1,510.09 + Dow 8,601.38 = 10,111.47 divide by 2 = 5,055.735 Ponzi Down 53.015 from last week! Looks like a long way down . Thanks for the link RossL ! Go GATA ! Go GOLD! $hifty Gold -- Sharefin, 06:26:57 05/25/03 Sun With the recent rise in the price of gold, one wonders what price the Australian, Canadian & South African gold prices would have risen to, had the currencies not been jiggered. Imagine the hedging problems that would have felt the price rise..... Australian Gold Price Canadian Gold Price South African Gold Price Gold -- Sharefin, 06:20:31 05/25/03 Sun The Japanese Gold price has just broken out on volume.  Gold -- Sharefin, 16:42:53 05/24/03 Sat Golden dreams and assets come to dust Late this week, in a filing with the US Securities and Exchange Commission, a Newmont Mining subsidiary, Newmont Yandal Operations, indicated that the final chapter in a story of unbridled optimism and costly disillusionment is about to be played out. The dry tone of the filing didn't reflect the underlying drama. Yandal, once the heart of Joseph Gutnick's golden ambitions, stated that on May 21 it had notice from a gold hedge counter party alleging a right to terminate a contract before its scheduled maturity. Yandal estimated the payment required under the contract would be $US46 million ($82 million). Yandal also said that it had received notice that same day from Newmont that it intended to make an offer to acquire all Yandal senior notes not already owned by Newmont and all gold hedge counter party contracts between Yandal and counter party banks. The genesis of those filings was in 1998 when, with a string of acquisitions that consolidated his hold on the Yandal belt around the Bronzewing project in Western Australia, Gutnick decided to make a $US300 million junk bond issue. There was great optimism about the prospects of the Yandal belt, and Gutnick then entered a series of complex gold hedges designed, it appears, to lower the 8.875 per cent cost of servicing the notes and, perhaps, to increase the amount he could effectively borrow. The effect was to create a highly leveraged exposure to the Australian dollar gold price. If the $A gold price rose, the liability associated with the contracts rose exponentially. Fiat vs Gold -- Sharefin, 16:28:32 05/24/03 Sat Two posts from another forum. -------------------------------- Subject re: jpm+newmont fight from gold eagle Posted 24/05/03 19:01 - 85 reads Post #23984 - in reply to msg. #23981 I know of the mine in question and I can tell you now that I believe Newmont will ultimately appoint receivers to get out of the mess they're in. The mine has 3.6M ounces hedged at approximately US $280 (AUD $430). Production costs average around AUD $500 and on top of that there is AUD $300M owed to bond holders. To make matters worse, two of the 3 mines will close in the next 12 months, which leaves the one site (Jundee) which is currently producing 250K ounces per year to deliver into this enormous hedge which is due in June 2005. Another problem with this hedge is that whilst it is due in 2005, the bullion bank has the right to demand delivery in bullion or cash at any time prior to this date. The way the 3 mine are structured, Newmont is not legally bound to support them and can walk away from this mess. The consequences are that their credit rating will be effected. S&P have downgraded the bonds to junk status recently and Newmont transferred US $10M into an account to be used to pay creditors to keep the markets happy. But!! They stipulated that the funds were not to be used for the satisfying of any hedges. The question I ask myself is " why would Newmont pay AUD $600M ($300M Bond / $300M hedge) for a structure that would be lucky to fetch $150M from the receivers"???? And I might add, still have their jobs after informing US shareholders that they did this! Time will tell!! ---------------------- Subject re: jpm+newmont fight from gold eagle Posted 24/05/03 19:08 - 80 reads Posted by fox0 Post #23986 - in reply to msg. #23984 Here is some more Newmont Tells JPM: "It's Yours" The importance of keeping gold below $370 is evident. Cabal forces took bullion lower as soon as trading began in Australia. Gold then rallied back and traded up on the day for a brief moment in New York before it was slammed. Nothing unusual about the pullback, however. It's a normal correction after a $19 straight run up from the $354 area. One indication of the ferocity in which The Gold Cartel intends to defend $370 was the open interest build up yesterday. It rose a whopping 9133 contracts to 205,371. Were Morgan Stanley and Goldman Sachs buying for clients? That sort of build up indicates new longs, not short-covering. Somebody was selling a lot of gold to keep it from exploding above $370. The big gold news of the day concerns gold derivatives. There is a commotion going on behind the scenes in the bullion-banking world. Word has it that Newmont Mining is taking it to one of the Hannibal Cannibals, JP Morgan Chase. It has to do with their Yandal operation in Australia, which Newmont inherited when it took over Normandy. That property has 3 million ounces of gold reserves with a 3.7 million ounce hedge on - one that is going underwater as the gold price soars. Morgan has called Newmont for a margin call. Supposedly, Newmont is telling Morgan to stuff it, or more appropriately, if you insist on the margin call, the property is yours. I'm told that Newmont is willing to buy back their hedges from Morgan, but only for so many cents on the dollar. In other words, they are playing hardball. Newmont can walk because the property is "fully encircled," meaning it is a stand-alone project. Of course, it won't do much for their bullion-banking relationships. The following was filed yesterday with the SEC: Newmont Yandal Operations Limited ("Yandal") advises that on May 21, 2003, it received a notice from a gold hedge counter party alleging a right to terminate a gold hedge counter party contract with Yandal before its scheduled maturity, based on the alleged occurrence of an early termination event under the contract. Yandal estimates the payment required to be made under the contract would be approximately U.S. $46 million based on an assumed spot gold price of A$560 per ounce. In addition, Yandal also received notice today from Newmont Mining Corporation (NYSE: NEM) ("Newmont") that it intends to make an offer to acquire all of the 8 7/8% Senior Notes currently not owned by Newmont, in addition to all of the gold hedge counter party contracts entered into between Yandal and counter party banks. -END- The problem is not a small one for Morgan if Newmont walks. The hedge is 700,000 ounces more than their reserves and that's if someone is mining them. 700,000 times $370 gold is $259 million. At $470, it's $329 million. If the mine somehow becomes inoperable, the problem could become catastrophic. It serves Morgan right for allowing that kind of hedge in the first place. That's not a hedge, it's a speculation, put on back in the Hay Day of the gold rigging operations. What goes around comes around. Chase influenced Newmont to put on a big hedge at the bottom of the market around $265 gold, right before the Washington Agreement was announced. The ramifications for the gold industry could be dramatic if Newmont sticks it to Morgan. Gold is only at the $370 level. What happens when gold rises hundreds of dollars per ounce? There is liable to be one counterparty risk problem after another. Ever hear this one before? GOLD DERIVATIVES BANKING CRISIS! It's coming. The last time gold ran up to these levels earlier this year, we heard groans from the Daughters of Gwalia. All quieted down as gold was beaten back by the cabal. Now it's Newmont and Morgan. We should see some serious gold derivatives fireworks once gold stays above $370 for more than a few days. Gold -- Sharefin, 21:35:22 05/23/03 Fri As the Dollar Dims, Gold's Luster Grows That said, "the primary trend is bullish in gold, bearish in stocks and the dollar," he said. "Those trends tend to go for very long times." Fiat -- Sharefin, 21:01:36 05/23/03 Fri 'Strong Dollar' Hides Weak Policy But Bill Murphy, chairman of the Gold Anti-Trust Action Committee, a nonprofit organization that researches and studies the gold markets and reports its findings at www.LeMetropoleCafe.com, claims to have taken a good look into the shadows. He tells Insight that "asking this question is important because the strong-dollar policy isn't just an empty phrase. It started with a paper written by former Treasury secretary Lawrence Summers entitled Gibson's Paradox and the Gold Standard, which stated 'gold prices in a free market should move inversely to real interest rates.'" In other words, Murphy explains, "what has been happening is that a policy to hold down the dollar price of gold was instituted to keep the dollar strong. The idea was to hide inflation, keep interest rates low and attract money to U.S. markets. This kept the average investor from getting any hint that something was wrong with the dollar itself. The strong-dollar policy amounts to little more than secretly using U.S. bullion and claims on it to manipulate the gold market. By keeping the gold price down, keeping it low, they made even gold uncompetitive to the dollar, reassuring the world that all was well." Murphy asks: "If this administration supports the so-called strong-dollar policy - the same alleged policy as Rubin and Summers - why is the dollar tanking? That is, how has the 'policy' changed? I've been asking this for two years and no one has been able even to tell me the mechanics of the original strong-dollar policy. If they can't tell you what it is then how can they possibly tell you how it has changed?" According to Murphy, "It's going to be quite a story when this thing finally blows. Just look at the Enron mess. No one knew what was going on there and how bad it was until it blew up, and only then did everyone find out what a fraud it was. The same will be true of the strong-dollar policy. It's just a lot of nonsense." Whether the strong-dollar policy is "nonsense" is yet to be seen. What is clear, however, is that no one in officialdom seems willing and able to provide a cohesive explanation of what the "policy" consists of, or how it is implemented, leaving the economists and pundits to speculate and surmise. In the meantime, the "strong" dollar has become "soft," down almost 26 percent against the euro and 21 percent against the Swiss franc. From the Far Side -- Sharefin, 20:53:57 05/23/03 Fri The below is posted for interest and discussion. Accuracy is un-known, and source in also un-known, but interesting in view of the JPM-Newmont situation. ^^^^^^^^^^^^^^^^^^^^ Sent: Friday, May 23, 2003 12:09 PM Subject: shares in hand? ///bgm [ECON] Rumors of TEOTWAWKI There are rumors (with some legs and truth to them) that Newmont Mining told JPMorgan/Chase (the govt's banker and illegal activities agent) to go 'fukthemselves' when JPM informed Newmont that it was raising margin requirements on a hedged gold operation that Newmont acquired when it took over another gold company. The gold mine in question has 3 million ounces of gold estimated to be in the ground. They sold, under contract, years ago, before being acquired by Newmont, 3.7 million ounces of gold at a specific price which allowed JPM to use the paper ownership of that gold to supress the price of gold during 2000 - 2002. Now, JPM has told Newmont that they want more money for the 'hedge' on that property. (as they are desperately trying to force the price of gold down below certain levels.) Newmont is playing hardball and told JPM, 'you want it, well, you got it.....the property is yours.....have a good time trying to recover the gold in the ground.' This is significant in two ways: 1) the mere fact that JPM has initiated higher margin requirements on its gold hedges shows how desperate they are (i.e. the gold price supression scheme is collapsing around their ears). 2) that Newmont told them to go 'shitgoldbricks for all the money you'll get out of us' means that the power that JPM had had in the past to intimidate (mafia style) the gold industry has evaporated. Further, for those who read French and German, the newsletters in Europe today are making a huge deal about this as proof that JPM/Chase (and by extention, Citi and BoA) are broke and underwater on 44 trillion dollars of derivatives mostly keyed to the price of gold and interest rates. These various newsletter writers are advising their readers to demand physical delivery of any shares in any company which they bought through the brokerages of these banks. Why? Well, so that they will actually be able to sell the shares. They (newsletter writers) a re saying that once it becomes known that the biggest bankruptcy in history is going to occur in June (JPM/Chase is expected to start a cascading counterparty failure among the top 15 banks in the US in derivatives based collapse), that any shares held 'in the trader's name' will not be available for those who actually own them. The rumor being that the bank is using those shares it holds in your name for their own loans, shorting activities, and as collateral on other loans. Be warned, TEOTWAWKI starts in June. Look to Argentina to see what we face in the US of A. Gold -- Sharefin, 20:52:52 05/23/03 Fri Cambior faces $2-billion (U.S.) suit Residents of western Guyana are suing for $2-billion (U.S.) in damages from a Canadian gold mining company responsible for a massive spill of cyanide-tainted waste into a major river in 1995 The suit, filed this week in Guyana's High Court on behalf of 23,000 people living along the Essequibo River, charges Omai Gold Mines Ltd. with negligence in allowing a dam to collapse and pour 764 million gallons (2.9 million cubic metres) of cyanide-tainted slurry into the river. It also says the Essequibo, the main waterway of this South American country, is still tainted and its fish contaminated, though residents have no scientific evidence, prosecution lawyer Peter Britton said Friday. The company, majority-owned by Montreal-based Cambior Inc., has said it completed its cleanup and continues to monitor waste levels in the river. Fiat -- Sharefin, 20:29:39 05/23/03 Fri Repurchase Agreements and the DOW This report briefly examines the Federal Reserve's Repurchase Agreement [RP] mechanism and its near-term relationship to the DOW Jones Industrial Average. The RP issuance and expiration schedules create a pool of temporary investment funds available to select financial entities that can exceed $30 Billion. A correlation between the RP pool totals and the DOW is found and charted since December 2002. In addition, a sharp August 2002 increase in RPs is noted with an apparent correlation to changes in the Major Currency Dollar Index [MCDI]. Finally, the debt-trap dynamics of Japan, proposed re-flationary solutions and similarities to the US are briefly discussed. Background The New York Federal Reserve Bank issues or buys repurchase agreements to qualifying members of the banking community [primary dealers] in order to manage the money stock. Purchasing securities from a primary dealer and paying for them with cash adds liquidity to the banking system. Temporary Open Market Operations [TOMOs], bearing maturity ranges from over-night to as long as 28 days are posted each day by the Federal Reserve Bank of New York. ~~~~ So it seems that the accelerated monetary debasement prescription apparently in progress at today's Federal Reserve runs afoul of history and the principles of a free market. Unfortunately, a runaway world currency disaster can only be avoided by the continued inappropriate sale of a dwindling western central bank resource-gold. This is the dark legacy of misguided interventional planners who drifted from the Constitution's stipulation for sound money. Judging by the rocketing Fed repurchase agreements, falling M3 growth rates, a vulnerable DOW and a falling Major Currency Dollar Index, the Federal Reserve may finally appreciate that it is nearly out of viable paper options. Gold -- Sharefin, 20:21:56 05/23/03 Fri U.S. Troops in Iraq Find $34M in Gold American troops confiscated gold bars valued at $34 million from a truck in northern Iraq, defense officials said Friday. The truck carrying 1,600 gold bars was stopped at a military checkpoint near Qaim, a northwestern city near Iraq's border with Syria, Pentagon officials said. Two men were taken into custody, but there were no details on who they were, their nationality, nor where they got the gold. Gold -- Sharefin, 20:20:19 05/23/03 Fri Gold firm before holiday as euro tops launch price Dealers were trying to figure out any implications from U.S. troops seizing, in a truck on Iraq's border with Syria, what the Central Command said in a statement may be $500 million worth of gold bars. "I believe that they did have some gold in their currency reserves and were a lender like other central banks are," said one. "But don't know if they had anything recently." ~~~~ Markets have not been so on edge about economic growth and global political instability since the end of the war in Iraq early last month. The United States went on Orange terror alert this week, its second highest level, after a wave of suicide bombings against foreigners in Middle East countries. Al Qaeda is in the headlines after its No. 2 leader purportedly called for Muslims to wage holy war on Americans, raising anxiety that more attacks were in the works. "The physical market remains quiet with most of the action concentrated in professional hands," wrote Rhona O'Connell, market research director at the World Gold Council. "Traders are aware of the possibility of correction, but are reluctant to be short given the political backdrop." Gold -- Sharefin, 20:17:43 05/23/03 Fri £300m in gold falls off the back of a lorry AMERICAN troops in Iraq seized a shipment of 2,000 gold bars as it was being driven toward the Syrian border yesterday, prompting renewed fears in Baghdad and Washington that Saddam Hussein may have escaped the country. The 40lb bars, worth up to £300 million, were found hidden in the back of a Mercedes lorry by soldiers carrying out a routine military checkpoint search in the border town of al-Qaim on a notorious smuggling route into Syria. The drivers, whose nationalities were not disclosed last night, told the soldiers that they had been paid 350,000 dinars - about £200 - to pick up the lorry in Baghdad and drive it to an unnamed individual in al-Qaim. The pair said they had been told that they were hauling bronze. The gold bars, each measuring 4 in x 5 in x 10 in, were in the custody of the US 3rd Armored Cavalry Regiment and were being tested for carat weight and purity. If of good quality, they could be worth as much as £300 million. The spectacular find, which follows the discovery of more than $1 billion in stolen cash stashed away in several of Saddam's palaces, prompted speculation over the whereabouts of the former dictator and his sons, Uday and Qusay. Six weeks after the collapse of Saddam's regime, and after more than 20 of his most senior officials have been captured or killed, US officials were forced to concede that few people apart from Saddam and his immediate family still had the wealth, contacts and power to order the movement of so much gold. Most of the cash stolen from Iraq's Central Bank by Qusay on the eve of the war was found in Baghdad, and the fact that the gold was heading for Syria raises the possibility that the most senior members of Saddam's regime have left Iraq and are now seeking to fund their exile. Fiat -- Sharefin, 19:42:08 05/23/03 Fri Prediction: The Future Of The USA Stock Market Based on a theory of cooperative herding and imitation working both in bullish as well as in bearish regimes, we have detected the existence of a clear signature of herding in the decay of the US S&P500 index since August 2000 with high statistical significance, in the form of strong log-periodic components.   Gold -- Sharefin, 07:43:12 05/23/03 Fri Gold is Shining Again Throughout the ages governments have had a love-hate relationship with gold. Most of the time they sought to amass it in their treasuries and monopolize its use. They claimed and brutally enforced a monopoly of the mint. At other times governments waged war on gold, seeking to ban it under penalty of fine, imprisonment, or even death. During the French Revolution hundreds of businessmen died on the guillotine because they had dared to calculate prices in gold or ask for gold. In the United States of 1933 to 1975, it was a crime punishable by fine and imprisonment to own standard gold coins. At the present, the U.S. government, while clinging to a sizeable hoard buried in Fort Knox, seeks to disparage it and make little of it as an unimportant metal. We are living in an age in which all governments, regardless of the system of political and economic organization, whether interventionistic, socialistic, democratic or dictatorial, are occupying an economic command post. Most of them work through central banks issuing legal-tender notes and through government mints manufacturing coins. In 1971 they all suspended gold payments and made the most important and most stable currency, the U.S. dollar, take the place of gold. The world has been on a dollar standard ever since. For the federal government the dollar standard has been a magical guide to cheerful spending and soaring debt. It released the Federal Reserve System from the shackles of gold and set it free to finance federal deficits no matter how large. In 1971 the federal government deficit amounted to $23.033 billion and the federal debt stood at $409.5 billion. By now, the 2003-2004 federal budget calls for expenditures in excess of $2.1 trillion and a debt of some $7 trillion. Since 1971 the American dollar has lost almost 70 percent of its purchasing power and is losing more every day. It makes it difficult to project future debts and deficits, but it is likely that the dollar standard will disintegrate if foreign investors should ever lose their confidence in the U.S. dollar. For the American people the world dollar standard has been, and continues to be, both a welcome boon and a dreaded affliction. It is pleasant and beneficial as it permits the Federal Reserve System to engage in massive credit creation that generates unprecedented trade deficits now running at a rate of over half a trillion dollars a year. At some five percent of gross national product (GNP), the trade deficits actually have lifted the levels of consumption of the American people while they depressed the levels in creditor countries. Moreover, the dollar standard has enabled the U.S. Treasury to place much of its new debt with foreign investors and thereby shift much of the burden of debt to foreigners. The dollar standard also has been a dreaded affliction as it allowed the Fed to depreciate the American dollar every year and finance a frightful expansion of government functions and powers. Dollar savings have lost some 70 percent of purchasing power while the number of government rules and regulations probably has risen by a similar proportion. Many economists are convinced that the current pattern of Treasury deficits and Federal Reserve money and credit expansion is not sustainable. They call for large tax increases or drastic spending cuts that would allow the Federal Reserve to decelerate its money fabrication. But they also are aware that large tax increases at this time of economic stagnation and rising unemployment would depress economic activity even further. Spending cuts, on the other hand, probably would bring relief to the ailing economy but undoubtedly would be unacceptable to the political forces that benefit from the spending. They usually cite old notions and theories that advocate deficit spending as a panacea for economic evils and difficulties. The huge budget deficits may yet be solved in another way: the Federal Reserve may continue to cover them with new money and credit, which may depreciate all dollar debt as fast or faster than it can be added. A five-percent inflation depreciates the purchasing power of a $7 trillion federal debt by $350 billion a year. At the 1980 rate of inflation of 12.5 percent the federal debt would shrink by $875 billion in purchasing power, and at the 1990 rate of inflation of just 6.1 percent by $427 billion. But such a solution may cause a crisis of confidence in the integrity of the American dollar and precipitate the end of the dollar standard. For most of a generation the almighty dollar has been a great object of confidence and trust throughout the world. It brought honor, friends, influence, and possession to the United States. As a symbol of power and prestige it answered all things. Although we do not know what the future has in store for us, we are fearful that the age of the world dollar standard may some day draw to a close. Huge federal government deficits and chronic Federal Reserve inflation may destroy it. The deficits force the Fed to generate ever more money and credit which in turn weaken and erode the dollar's trustworthiness in the eyes of the world. Its present weakness toward many other currencies, such as the euro, the Swiss franc, and the British pound, is an early symptom of the erosion. No other currency, national or international, can conceivably take the place of the American dollar. They all suffer seriously from the same ideological malady: they are the creation of political concern and authority. Whatever we may think of gold, it always looms in the background, beckoning to be used as money, as it has been since the dawn of civilization. Richard Russell -- Sharefin, 22:15:15 05/22/03 Thu Market Comments The study of the stock market is always a matter of "will it" or "won't it." It's an endless study, because no sooner is the "will it" or "won't it" puzzle solved, then the next set of puzzles arrive. Here's the way I see it. We're in a primary bear market. And overall, the stock market is overvalued. How do I know? I know because the S&P is selling at just over 34 times earnings. This is an absurd statistic. Almost all bull markets in history have topped out when the S&P sold at as high as 20 times earnings. And here's a bear market in which the S&P is selling at 34 times earnings while yielding a piddling 1.74%. Believe me, this market is overvalued. Does that mean that the market has to turn around and plunge 50% or 70%? Obviously not. But what it does mean is that if you buy stocks here and hold those stocks, over the next 10 years you'll be very lucky to average as much as 5% total return. Furthermore, somewhere in those 10 years, you're very likely to experience a huge decline, a decline which will take stocks below "known values." That means that anything you buy here, you must be buying on a trading basis. The conditions for "buy and hold" are extremely unfavorable at this point. In other words, whatever you're buying you're buying to sell to a "greater fool." All stock holdings at this point are speculative and risky. ~~~ Gold -- While I write I've been watching gold do its slow climb. Gold's not going up fast enough to excite the masses. Gold is not going up fast enough to disturb the Administration. But I note that the 50-day MA of gold, which is bullishly above its 200-day MA, has now turned up. The 200-day MA of gold stands today at 335.10 and it's rising. The 50-day MA of gold today stands at 337.70 and is now rising. Therefore, gold is now in its full bullish mode. On-balance-volume for gold is rising and my 21-day rate-of-change index is rising. And I like this slow, persistent advance. I like an item that rises slowly while not drawing attention to itself. Of course, the gold-bugs are giving gold plenty of attention, and by June 1 a billion Chinese will be paying attention to gold (on June 1 it will be legal for the Chinese populace to buy and own gold). Gold -- Sharefin, 21:52:00 05/22/03 Thu Streetwise Ashanti takeover talks could change course of Barrick, Placer How serious is Barrick Gold's pledge to steer clear of takeovers? Is Placer Dome too preoccupied with its latest acquisition to contemplate another big takeover? Ashanti Goldfields is about to answer both these questions. Ashanti is one of the few quality, independent, mid-sized gold miners around. It went into play on Friday, when the Ghana-based company revealed it is in takeover talks with AngloGold. The terms of the offer are already out, and it values Ashanti at $948-million (U.S.). Ashanti is expected to get sold. It has a proud 105-year history, but as mining analyst John Bridges at J.P. Morgan wrote yesterday, "stakeholders cannot eat history." "As a stand-alone African miner, Ashanti's reserves are worth about $50 an ounce, yet as part of a global gold portfolio, the same ounces are worth about $100," Mr. Bridges said. "The math is compelling and we expect a deal will be done, although Anglo may face competition." Major competition is likely to come from Barrick, now under the leadership of Greg Wilkins, or Placer Dome, which is still digesting last year's marathon $1.1-billion (Canadian) takeover of Australia's AurionGold. Both of these Canadian companies are duty bound to take a look at Ashanti. And to answer the rhetorical questions posed above, neither company would feel precluded from bidding by their recent activity. What's known as a "golden share" in Ashanti held by the government of Ghana will make this contest intriguing. Ghana owns 17 per cent of the company, plus has the power to allow a takeover to go forward. If the government does choose to open things up, analysts expect it to encourage a bidding war. Gold mines have a history of ending up in the hands of the second or third bidder. Barrick has won contested takeovers by bidding big, late in the game, while AngloGold was recently outdone by Newmont in the battle for Normandy. Fiat vs Gold -- Sharefin, 21:40:45 05/22/03 Thu Dollar flickers, but gold glitters Gold futures rose yesterday, extending a three-month high, on speculation that the U.S. currency's decline will increase demand for the dollar-denominated metal among overseas buyers. Gold prices have jumped 15 percent from a four-month low in April, largely because the dollar's slide against the euro and the yen has made the metal cheaper for investors in Europe and Asia. Buyers may also look more to gold as a haven from any disruption to financial markets from terrorist acts in the Middle East and the United States, an investor said. "The dollar is permanently in a lower trading range, and I think that's going to help gold for a long time," said James Vail, who manages approximately $100 million in gold-related equities in the ING Precious Metals Fund in New York. "Any terrorist incidents will be a short-term boost." ~~~ Comments Monday by Treasury Secretary John Snow suggested the United States is abandoning its policy of a "strong" dollar, prompting billionaire hedge-fund manager George Soros to sell the currency. "I have a short position against the dollar because I listen to what the secretary of the Treasury is telling me, so who am I to stand in the way?" Soros, chairman of Soros Fund Management, said in a CNBC interview. The Treasury "wants the free market to determine what the dollar is, and you can read into that they welcome a weaker dollar." Soros heads the world's biggest hedge-fund group. Richard Russell -- Sharefin, 21:38:12 05/22/03 Thu Gold and bonds are strange bedfellows Why are gold, bonds doing so well? Here's today's brainteaser: Why would an inflation hedge like gold be performing so well at a time when the markets otherwise seem to be more worried about deflation? Consider: So far in May, for example, gold bullion has risen by some $30 per ounce, or nearly 10 percent. Yet, at the same time, the long bond -- which is incredibly vulnerable to inflation -- has had one of its best months ever. When was the last time bonds and gold had moves like this in tandem? ~~~ But a few newsletter editors, such as Dow Theory Letters' Richard Russell (See HFD data), are beginning to entertain the following possibility: Gold is rising not so much because of any increased threat of global inflation but because of the sharp drop in the value of the dollar in the foreign exchange markets. That means that buying gold is a bet on a continuation of the dollar's decline rather than on an uptick in inflation. ~~~ Russell concedes, "some Fed governor tells us every day that they won't stand for deflation." But Russell is more inclined to listen to the markets than to the Fed. And he is convinced that deflation is "just where we're heading." Richard Russell -- Sharefin, 21:35:35 05/22/03 Thu Should we, as investors, be in gold or in common stocks? As for gold, I noted that the metal has risen rather far above its 200-day moving average, and that it might be time for a consolidation or correction. That could be what we're seeing now. However, a correction here could form the "right shoulder" of the "head-and-shoulders" bottom that I've been talking about. A backing off here for a week or two, and then a renewed rally above the 374 level on June gold would complete the head-and-shoulders bottom pattern. ~~~ You can't switch your gold to the S&P and back every few months. My position is that you stay with the primary trend. As I see it, the primary trend of the stock market is long-term bearish, and the primary trend of gold is long-term bullish. Gold -- Sharefin, 21:33:41 05/22/03 Thu The 'Hardly Noticed' Rally in the Gold Market Which brings us to the "Question of the Day": When Should Gold Be Sold? I asked one middle-aged-investor-type why he was selling. He admitted he didn't need the dough and wasn't guessing that the price of gold was going lower. He sheepishly confided that the only reason he was selling was to take a profit on something. It had been a long time. Here is my advice on when to sell gold: this counsel may be considered single minded or myopic. Hold your gold, sell ONLY when you need the dollars. When, for instance, you are buying a house, helping the kids, paying for your brain surgery. Never sell gold to use the dollars for another investment UNLESS it's a business venture you know something about (preferably YOUR business). And then we have those dramatic instances when you are forced to liquidate your gold. For example, you're thirsty, I'm the only one with water, and it's going to cost you a gold coin per bucket. Or, the LAST TRAIN is leaving the station and the price for a ticket is a gold coin. I trust this message is clear. When should you NOT be selling gold? When the price goes up too high or down too low. When someone tries to convince you that the bullion type gold coins you own = Bad and the collector type coins he wants to sell you = Good. In fact, he will try to persuade you that the bullion type gold coins are so bad that the government will come and take them. Sometimes people will sell just for "the action." Resist such temptations. My granddaddy once advised me never to run after a trolley or a woman. There was always another one coming. I have no idea what grandpa's wisdom has anything to do with the above, but the rhythm of his words seemed appropriate. still believe in the American Dream? -- scopper, 22:13:28 05/21/03 Wed "A Must Read... For those who are total believers in the American Dream, this book may just change your mind." --Dead Trees Review, No. 22 John Soltez, author of "Only in America" (Amazon.com four stars) will be featured on "Money Patrol" this Friday May 23 on WWDJ AM 970 (New York) between 6 and 7 pm. The story of an apathetic young American's struggle with economic and social decline, the book has developed a growing following. Discerning readers are invited to find out more... Note: "Only in America" deals with the American electoral process, monetary policies, finance plus matters of civil liberties. You can "find out more" on its Amazon.com page, or by doing a google search (has several nice reviews). Fiat -- Sharefin, 22:19:49 05/20/03 Tue An economic 'menu of pain' OUR GOVERNMENT is going broke. The feds face bills that are far beyond our capacity to pay -- by $44 trillion to be precise. The longer we ignore them, the bigger they get. Yet President Bush is working overtime to deepen our fiscal trap. This $44 trillion figure is not ours. Nor is it some other academics' calculation. It was produced last fall by economists and budget analysts at the US Treasury, the Federal Reserve, the Office of Management and Budget, and the Congressional Budget Office. The study was ordered by then Treasury Secretary Paul O'Neil and was slated to appear in the president's budget, released in February. O'Neil instructed his team, led by Jagadeesh Gokhale, Federal Reserve senior economist, and Kent Smetters, then deputy assistant secretary for economic policy at the Treasury, to answer the following question: Suppose the government could, today, get its hands on all the revenue it can expect to collect in the future, but had to use it, today, to pay off all its future expenditure commitments, including debt service net of any asset income. Would the present value (the value today) of the future revenues cover the present value of the future expenditures? The answer is no, and the fiscal gap is the $44 trillion. Now, that is big bucks by anyone's definition. It's four times current GNP and 12 times official debt. Imagine everyone in the country working for four years and handing over every penny earned to pay this bill, and you'll grasp its size. ~~~ Why are the nation's fiscal affairs in such a mess? The reason is straightforward. Baby boomers are just five years from starting to collect Social Security retirement benefits and eight years from starting to collect Medicare benefits. When all 76 million boomers are retired, we'll have twice the number of elderly beneficiaries, but only 15 percent more workers to pay their benefits. If the fiscal gap and its associated menu of pain are unfamiliar, there's a reason. You can scour the thousands of pages of the president's FY 04 budget, and you won't find the analysis. It never made it in. When Secretary O'Neill was replaced last December, the analysis was yanked from the budget. To be clear, limiting our need to know is not just a Republican responsibility. When it came to publishing a generational accounting analysis in the FY 92 budget, President Clinton's political watchdogs overruled OMB and pulled the same trick. And bankrupting has been a collective effort of all postwar administrations, each of which has cared more about the next election than the next generation. Gold -- Sharefin, 20:11:45 05/20/03 Tue Morning Summary A few observations on the current situation in the dollar and gold: 1/ Major US establishment banking organizations in Europe forecast a Euro at 1.45 per US dollar. 2/ US Treasury Secretary Snow says that the US Treasury is not concerned over the decline in the US dollar. 3/ Snow says that currency values are better determined by the market place, signaling that the absence of the Exchange Stabilization Fund from the dollar market for five consecutive sessions last week (which is under Snow's management) is not a single week's aberration but rather the ESF's obedience to the instructions of its boss. Forex traders interpret absence of market intervention by the Exchange Stabilization Fund as the official abandonment of the US strong dollar policy. 4/ Terrorists in Pakistan, who have made 21 attacks on businesses, announce that they are targeting US interests. In the last week, three attacks are clearly al Qaeda and two possibly look like al Qaeda with one major terrorist event in Israel. One need not be a rocket scientist to see that the Iraq War was only the "End of the Beginning of the World War Three," the War on Terrorism. 5/ Gold is trading on the continent at $360. Gold is coming into the US market now at $359.50 bid, $360 offered. The gold producer hedgers are looking at some "Hum Dinger" losses on their hedges. The Gold Cartel of Common Interest is dead meat waiting to be road kill. The next objective for gold is $380 as per the maximum break out target from the April 4th down wedge. Conclusion: If the decline in the dollar, which is only one of the major methods of fighting DEFLATION, is an example of the strategy of the Bush Administration to avoid losing the presidency in 2004, God help us all when the Fed turns the FOMC loose with its "Electronic Money Printing Press." There is hope in Washington that a super weak US dollar will turn the economy around but that is purely economic whistling in the dark. Europe is in more trouble than the US with the super low US dollar. Who is going to buy all our Fords and Chevrolets, the Saudis? The major impact of the "Snow Super Dumper Dollar" is going to be in the commodity market, primarily for edible commodities and of course metals. It is there that necessary commodities for human consumption and the manufacturing process are being offered at a 30% discount. If the European Citicorp Forex department is correct in their prediction for the Euro, the discount might reach 40%. Therefore, any one of those commodities that might be in a neutral position with regard to supply and demand is going much higher. Gold bullion is wearing a $380 price tag on it now. That is before gold puts on its $410 $416 price tag. Gold -- Sharefin, 20:08:21 05/20/03 Tue Gold hits 3-1/2 month high Falling dollar, violence in the Middle East draw nervous investors to the precious metal market. The dollar's weakness, combined with gathering tension in the Middle East and ongoing global economic woes, has enhanced the metal's reputation as a safe haven in troubled times. "All the planets are lining up for gold," said David Thurtell, commodities strategist at Commonwealth Bank of Australia. "While gold is continuing to gain support, it should be noted that larger fund involvement tends to lead to higher price volatility, although gold is enjoying a coalescence of supportive factors at the moment," Ingrid Sternby of Barclays Capital said. Gold -- Sharefin, 20:04:18 05/20/03 Tue Gold Fields faces $5bn lawsuit Gold Fields, the world's fourth-largest gold producer, is facing a lawsuit of $5 billion in the US for negligence towards its workers. The class action claim, representing 500 miners, says: "Tens if not hundreds of thousands of Gold Field labourers suffer from long-term effects from conditions they were forced to endure, toxic substances to which they were exposed and injuries they sustained." Ed Fagan, the US lawyer who is prosecuting the case, has written to Gold Fields demanding that the company provide documents relating to the exposure of its workers to uranium, chemicals and dust. Asked why they were suing in the US, the South African lawyer, John Ngcebetshe, said: "We looked at where we would get the best measure of justice, and having considered all the options we saw the forum in the US as the best. Gold -- Sharefin, 20:02:42 05/20/03 Tue AngloGold deal triggers SA shakeup Proposals for a merger between AngloGold and Ashanti Goldfields, unveiled today after months of speculation, may trigger a wide-ranging ownership shift in the South African gold market. This is because AngloGold parent, Anglo American, is seeking to maintain control of its gold unit - a step it hopes to achieve by having AngloGold buy its stake in Gold Fields and Western Areas. In a stroke, this will see AngloGold extend its influence in Ghana, Tanzania, Guinea, Senegal and South Africa. Gold -- Sharefin, 20:00:25 05/20/03 Tue AngloGold moves to take over Ashanti AngloGold Ltd. and Ashanti Goldfields Co. are in talks to create the world's biggest gold producer. While a firm offer has yet to emerge, AngloGold confirmed yesterday it is in talks aimed at swapping 0.26 of its shares for each Ashanti share. That values Ashanti at about US$1-billion. ~~~~ Still, investors figured out AngloGold was up to more than just drilling. The company's stock has risen more than 50% climb this month. Ashanti, meanwhile, has also been active, rising about 40% since the beginning of the year. Things reached a head yesterday when both companies issued cautionary statements that revealed the discussions. "[T] he boards of Ashanti and AngloGold Limited are in discussions regarding a proposed merger of the two companies," the statement from AngloGold said. Each company warned there is no certainty the talks will result in a proposal. Among possible hurdles is the government of Ghana, which owns 20% of Ashanti and can veto any deal. London-based Lonmin PLC, which owns 32% of AngloGold, is also participating in the talks. ~~~ WORLD'S LARGEST GOLD COMPANIES: In '000 oz. of gold 1. Newmont 7,914 2. Anglogold + Ashanti 7,577 3. Barrick 5,585 4. Gold Fields 4,452 5. Placer Dome 3,573 6. Rio Tinto 3,215 7. Harmony 3,069 8. Freeport 2,541 9. Kinross 1,674 10. Buenaventura 1,335 *Production in the 12 months ending March 31, 2003 Gold -- Sharefin, 19:56:25 05/20/03 Tue Gold guru review - the $700 bullpen Van Eeden also notes what anyone in South Africa or Brazil could tell you - the greatest defence against their week currencies and mediocre governments was gold. “Gold has been in a bull market for more than 5 years… on average the gold price worldwide has increased 70% and no one knows it because most people are too fixated by the US dollar denominated gold price.” The International Speculator model suggests that gold was actually worth $700 an ounce in 2002 and van Eeden expects the gap to close as it has in the past - by gold rising in dollar terms. “The inflation of the dollar, the debunking of the American economic miracle, the arrogance of American Foreign Policy and, perhaps most importantly, the detrimental impact that the War on Terrorism is bound to have on American Liberty - not to mention the misallocation of capital and increase in debt that go hand-in-hand with war - are all virtual guarantees that the dollar is going to lose some of its superhero status.” ~~~~ From now on, International Speculator says there are only two options. Either gold is headed to $700 an ounce or the US money supply is going to shrink 50%. The latter is impossible which is why the newsletter is betting on a sharp increase in the gold price. “Buying gold now is the lowest risk investment you can make. And the upside is an once-in-a-lifetime opportunity,” van Eeden concludes. Gold -- Sharefin, 19:50:47 05/20/03 Tue Gold guru review 'Shock and Eeyore' - Andy Smith “In practice, the gold market seems to have usurped ‘dollar weakness' as its own private correlation,” "the true impact for the metal is not in its status as a refuge, but as an interest rate story" “Shorting gold - whether you're a forward-selling producer or futures market speculator - remains less fun than Pooh Sticks.” “Gold is a bet against Bush. Now with longer odds.” “shocking and awesome weakness outside America” “Watch out for the biggest fiscal Piglet in the world?” Gold -- Sharefin, 19:41:36 05/20/03 Tue Gold stocks running to standstill One year ago, the gold price was just slipping above $310 per ounce as it prepared for a breach of $320 per ounce. That took gold stocks to stunning multiples through to mid-June. Those multiples soon went into retreat and have never been recovered; even when gold pushed to $380 an ounce. The reasons are quite plain to see.  Gold -- Sharefin, 19:37:47 05/20/03 Tue Gold producer quarterly summary Q1Golds.pdf Gold -- Sharefin, 19:29:41 05/20/03 Tue Euro pumps gold through $360/oz Gold continued its deliberate march upwards today, pushing through the $360/oz barrier as the euro surged ahead against the dollar and as investors cowered in the wake of fresh terror attacks. Driven by what one South African bullion trader called a “horrific weekend” of bombings in Morocco and Israel, gold broke the key $360/oz technical level, supported by a strong euro move to $1,17 against the dollar this morning. A South African currency trader at a major local bank said the euro was now targeting $1,20, in the very near future, which would have been unthinkable six months ago. “We could see the euro at $1,20 in the next three days,” the trader said. Currency traders said global concerns about escalating terror attacks had teamed with new developments around stability in North Korea, Indonesia and travel advisories on Kenya, to create widespread uncertainty which was feeding gold's strength. Undeterred by the attacks, which currency traders said would ordinarily have supported the dollar, the euro surged through $1,17 in early Monday trade on the back of a US Treasury statement seen as supporting a weaker dollar. Gold -- Sharefin, 19:25:43 05/20/03 Tue Newmont Mum As Its Top Gold-Miner Rank Threatened Newmont Mining Corp. said on Friday a merger between AngloGold and Ashanti Goldfields Co. would be good for the gold industry, but refused to say if it was considering a competing bid for Ashanti to keep its ranking as the world's top gold company. South Africa's AngloGold said on Friday it was in talks to buy Ghana-based Ashanti, known for gold mines in four African countries, for about $1.015 billion in shares. It would make AngloGold the world's biggest gold producer, with annual output of around 7.6 million ounces. The Ghanaian government has a 20 percent stake in Ashanti and would have a veto on any deal. The country has been a low-profile gold producer but interest in it has grown recently since the government began pushing more flexible mining laws. Denver-based Newmont bought Australia's Normandy Mining and Canada's Franco-Nevada gold royalty company on Feb. 15, 2002, making it the world's top producer and plumping up its output to an estimated 7.1 million to 7.3 million ounces this year. Gold -- Sharefin, 19:06:15 05/20/03 Tue WGC gold fund faces legal threat The World Gold Council has finally filed a registration statement and Red Herring with the SEC for its proposed Equity Gold Trust [GLD] that could be worth up to $2 billion at current gold prices. Even before the fund trades, it must overcome a potential challenge from a rival who thinks it has been cheated. The filing reveals that a “major third party financial institution” may take action against the WGC after being spurned as the trustee and for alleged intellectual property infringements. Rumours are that the institution was rejected because of its central role in gold forward sales though this could not be confirmed independently. Having a prolific hedger controlling a fund meant to reward gold bugs would have been inappropriate. ~~~ It will be interesting to see whether Equity Gold sucks or gives oxygen to this market. Where it may do the most unintended damage is in coin sales. Costs are going to favour the fund in the longer run, as will liquidity. Indeed, Blanchard & Company's current advertising campaign in the US may end up driving customers into the arms of Equity Gold. It's hard to see large institutions taking much interest in Equity Gold for their own portfolios since they can surely lay their hands on the real metal just as cheaply. That is not necessarily a bad thing since retail investors are not likely to trade their shares in the way institutions watching the spot price might. However, there will be interesting spread games played in the hours between Comex trading. A gift to hedging? Another potential unintended consequence is that the blue chip status of Equity Gold may entice a savvy swap. Our expert says: “If I were a Euroland central bank I would sell all physical immediately knowing that this paper thing allowed me to buy in the market at any time if I needed.” It also solves a problem with storing gold which can effectively be subcontracted at a fraction of the cost. At the same time, if the fund swells in size and does attract a large institutional base, it could exacerbate volatility. When prices are rising it may spike them further as momentum players make their bets. Conversely, the downside could be precipitous. The fund could accelerate declines as investors cash out, requiring gold to be dumped into the market, supplying it at the worst time. Gold -- Sharefin, 19:02:57 05/20/03 Tue AngloGold, Ashanti to create new number one African gold producers AngloGold and Ashanti Goldfields today said they were in merger talks aimed at producing the world's largest gold producer. If successful, the deal would create a pan-African gold company with production of around 7.6 million ounces, making it comfortably larger than North American producer Newmont, which at a shade over 7 million ounces if the world's current number one. The joint statement released by the two this morning came after a run in Ashanti's share price in recent weeks, on speculation that it was a takeover target for one of the world's gold majors. Gold -- Sharefin, 18:38:56 05/20/03 Tue Q1 dehedging slashes 4.6m oz - GFMS Gold producers have continued to champion their product in the first quarter of this year, reducing the global hedge book by 6 percent or 4.6 million ounces, says commodity research outfit Gold Fields Minerals Services (GFMS). One Johannesburg-based gold analyst said the reduction was impressive. “That's a pretty big decline if you consider that gold peaked at $382/oz last quarter. If producers are not taking out fresh positions at those prices it means they're still very positive. They're putting their money where their mouths are, so you've got see it as a good sign,” he said. The total outstanding gold producer hedge now stands at 75.4 million ounces, which GFMS says is equivalent to 91 percent of 2002's new mine production. GFMS, which will release its Quarterly Gold Hedge Book Analysis tomorrow (16 May), says miners have reduced the overall hedged position of the industry for 18 months on the trot. Fiat vs Gold -- Sharefin, 18:12:15 05/20/03 Tue Soros Says He's Selling the Dollar Billionaire investor George Soros, in an interview with cable television station CNBC on Tuesday, said he was selling the dollar against most major currencies. In the wide-ranging interview in which he assailed the Bush administration's policies, Soros said he was buying the euro and the currencies of Australia, Canada and New Zealand against the dollar, as well as gold. Gold -- Sharefin, 06:18:14 05/20/03 Tue India Gold-Imports lose lustre as world prices soar India, the world's largest gold consumer, has virtually stopped importing the yellow metal, with global prices soaring in the past week and domestic demand falling after the marriage season, traders said on Monday. Gold demand in the country, which accounts for one-fifth of global consumption, is now almost entirely met by recycled metal and sales by small investors who had bought stock when prices were much lower, they said. "There is hardly any import demand at current prices. Supply of recycled metal will keep growing if global prices rise further," said Suresh Hundia, president of the Bombay Bullion Association. India imports an average of 1.6 tonnes of gold a day to meet 70 percent of its annual needs of about 800 tonnes. Fiat vs Gold -- Sharefin, 06:13:52 05/20/03 Tue The beneficiary of this gathering economic nightmare is real money The Dollar -- Our uncomfortable Treasury Secretary Snow is providing the world with a new definition of a "strong dollar." Snow said that his understanding of a strong dollar is the people should have confidence in it. "You want them to see the currency as a good medium of exchange, you want the currency to be a good store of value, something that people are willing to hold, you want it hard to counterfeit." Hey, what about the dollar compared with gold or other currencies? Mmmm, well, the Treasury secretary didn't get into that. Along those line, it should be noted that the Treasury has dreamed up an exciting addition to our currency. Yes subscribers, the Treasury will be adding color to the twenty-dollar bill. On Snow's encouraging words, the dollar slumped another 20 points today, while the euro rose to within a penny of its all-time high of just over 1.17. It should be noted that not all is well on the part of President Bush's economic team. Receiving their walking papers, so far, have been the Secretary and the Deputy-Secretary of the Treasury, the head of the National Economic Council, the Chairman of the Council of Economic Advisers, the Director of the Budget, and the head of the Securities and Exchange Commission. In the meantime, the IMF warns that Germany is at high risk of deflation and that Japan might suffer further price declines. The IMF added that Hong Kong and Taiwan are also experiencing deflationary pressures. The IMF appointed a special task force to study deflationary risks in the world's 35 largest economies in December amid rising concern about global price declines. So what's really happening? The world is suffering from too much in the way of goods -- and consumers are exhausted from too much debt and too much spending. A major problem aside from over-supply and under-consumption is the vast differential in wages between the developed nations and China, India and the Asian nations. The fact is that China alone could easily supply the entire world with all the manufactured goods that it needs -- but even that would not solve chronic Chinese unemployment. All this puts a frightened US Federal Reserve in a difficult spot. The US is confronting a half-trillion dollar (or more) budget deficit, a half-trillion dollar (or more) current account deficit, a dragging economy, and in the face of this the Bush Administration is pushing for major tax cuts and stepped up spending. No currency can hold up in this kind of climate. Something had to "give," and that something is the dollar. The Fed has little choice but to open the spigots of the money supply and warn of even lower rates to come. At the same time, the Fed, almost daily, predicts that some of the surging liquidity will somehow be spent by consumers who are already "spent up," and by manufacturers who don't need to build new sources of supply. The more the forces of deflation press on the US economy, the more panicky the Fed, and the more the Fed will work the liquidity spigots while warning of lower interest rates to come. The beneficiary of this gathering economic nightmare is real money -- better known to you and I as gold. Sharefin "chatter" -- Cyclist, 14:39:48 05/19/03 Mon You are right and it is not my intention to create hysterics,whether people see the new dynamics that bonds and gold rise in tandem or not.I'll leave it at that. Periodic Ponzi Update PPU -- $hifty, 00:51:22 05/19/03 Mon Ponzi Chart Periodic Ponzi Update PPU Nasdaq 1,538.53 + Dow 8,678.97 = 10,217.50 divide by 2 = 5,108.75 Ponzi Up 46.38 from last week. Thanks for the link RossL ! This should be an interesting week! Go GATA! Go GOLD! $hifty Chatter -- Sharefin, 19:53:23 05/17/03 Sat Mark - Cyclist Please can you refrain from chatter on this site as my intention is for it to be a gold based news archive. You are more than welcome to chat over on The Bullion Bar T-Bonds -- Mark, 14:55:32 05/17/03 Sat To be even more specific - IT IS VERY LIKELY THAT T-BONDS TOPPED ON FRIDAY!!! That is what the charts and TA are saying for those that understand it. AS THE YIELD CURVE SPREAD WIDENS, GOLD WILL BEGIN ITS ASCENT OVER $416 FINALLY SUBSTANCIATING THAT IT'S IN A BULL MARKET! If the top was in on Friday, Gold will begin its rise in about 6 - 7 weeks from Monday or 6-7 weeks from the top to occur within 5-7 trading days. The dollar will put in a bear market rally during this time. On gold stocks: For any RANGY fans - THE TOP IS IN - SELL ON MONDAY! T-Bonds -- Mark, 12:46:35 05/11/03 Sun UPDATE!!! -- Mark, 14:35:38 05/17/03 Sat T-Bonds -- Mark, 12:46:35 05/11/03 Sun Stay long T-Bonds at your financial peril! "we're within a few weeks of hitting the top of the channel around 118-119." UPDATE: For those of you betting the farm that T-Bonds won't be topping until November - be prepared to lose your shirts! For your sake, I hope you will come to understand that T-Bonds are within 5-7 trading days of a top! Long rates are headed up when this occurs. As pointed out to you 6 days ago, ALL THE TECHNICALS ARE YELLING - IT'S CLOSE TO A TOP!!! The fundamentals are even more compelling that the top is in or almost in!!! FOR YOUR FINANCIAL SAKES - DO NOT LISTEN TO CYCLIST THINKING BONDS ARE HEADED UP INTO NOVEMBER! THIS IS COMPLETE LUNACY!!! Gold -- Sharefin, 22:12:07 05/16/03 Fri Drum roll, please, for NYSE gold New fund will revolutionize bullion ownership More than a year after word leaked of a new security that could transform the way North American investors buy gold, the exchange-traded fund is headed to the New York Stock Exchange. The new piece of paper, if approved by the Securities and Exchange Commission, looks like it will live up to the drum-roll that preceded it. See: Organizers look for approval of gold ETF. The World Gold Council's Equity Gold Trust (GLD: news, chart, profile) marks the second commodity-linked security to grace the floors of a stock exchange. The first, Gold Bullion Ltd.'s Australia-traded security (AU:GOLD: news, chart, profile), is already meeting brisk demand for so-called "paper gold." The down-under gold fund, which allows investors to own one-tenth of an ounce of gold for each share of stock they buy, is structured much like the World Gold Council's proposed fund. The Australian-traded one started with five 400-hundred ounce bars when it debuted earlier this spring. As of mid-May, the Gold Bullion trust shows 150 bars, or about 61,000 ounces worth $21.3 million in U.S. dollars. That's a good showing for the security's first 35 days. "That's 450,000 ounces in a full year of 261 working days," Andy Smith at Mitsui Global Precious Metals tells me. Prorated for a U.S. population that is 15 times as large as Australia's, the proposed NYSE product could spark demand of 205 tonnes, or about 6.6 million ounces, says Smith, a well-known gold analyst. That's about the yearly production of a dozen or so mid-tier producers of the metal. ~~~~ Yet in the course of the past 12 months, more than one gold mining executive has told me they see the price of gold rising in the short term to $600 an ounce after the launch of the NYSE-traded ETF. What is the short term? A year or less. The World Gold Council in its filing says it will scrap the new fund if gold in the trust's London-based vaults amounts to less than 1 million ounces at the end of a year. ~~~ "For the first time in history, investors of all descriptions will be able to invest in physical gold through brokerage firms and other mainstream financial market channels," Hathaway says. "The ETF will eliminate the past inconveniences, uncertainties and bureaucratic hassles that have long stymied a free flow of capital from retail and institutional investment portfolios into the physical metal." Fiat vs Gold -- Sharefin, 18:02:34 05/16/03 Fri Asia, its reserves and the coming dollar crisis During the 30 years since the breakdown of the Bretton Woods International Monetary System, the global economy has been flooded with dollar liquidity. International reserves are one of the best measures of that liquidity. During the quasi-gold standard Bretton Woods era, international reserves expanded only slowly. For example, total international reserves increased by only 55% during the 20 years between 1949 and 1969, the year Bretton Woods began to come under strain. Since 1969, total international reserves have surged by more than 2000%. This explosion of reserve assets has been one of the most significant economic events of the last 50 years.  Today, Asian central banks hold approximately $1.5 trillion in US dollar-denominated reserve assets. Most of the world's international reserves come into existence as a result of the United States current account deficit. That deficit is now $1 million a minute. Last year, it amounted to $503 billion or roughly 2% of global GDP. The combined international reserves of the countries with a current account surplus increase by more or less the same amount as the US current account deficit each year. So central bankers must worry not only about their existing stockpile of dollar reserves, but also about the flow of new US dollar reserves they will continue to accumulate each year so long as their countries continue to achieve a surplus on their overall balance of payments. With the depreciation of the dollar rapidly gaining momentum, Asian central bankers are scrambling to find alternative, non-dollar denominated investment vehicles in which to hold their countries' reserves. Consequently, this is a topic that is attracting considerable attention in the press. There is a related issue of much greater importance being entirely overlooked, however. The surge in international reserves has created unprecedented macroeconomic imbalances that are destabilizing the global economy. The global economic disequilibrium caused by these imbalances is the subject of this article. It is also the subject my recently published book, THE DOLLAR CRISIS: Causes, Consequences, Cures (John Wiley & Sons, 2003). Since the breakdown of Bretton Woods, dollars have replaced gold as the international reserve currency. The international monetary system now functions on a Dollar Standard rather than a Gold Standard.  The primary characteristic of The Dollar Standard is that it has allowed the United States to finance extraordinarily large current account deficits by selling debt instruments to its trading partners instead of paying for its imports with gold as would have been required under the Bretton Woods System or The Gold Standard. In this manner, The Dollar Standard has ushered in the age of globalization by allowing the rest of the world to sell their products to the United States on credit. This arrangement has had the benefit of allowing much more rapid economic growth, particularly in large parts of the developing world, than could have occurred otherwise. It also has put downward pressure on consumer prices and, therefore, interest rates in the United States as cheap manufactured goods made with very low-cost labor have been imported into the United States in rapidly increasing amounts. Eerie correlation -- Cyclist, 10:23:23 05/16/03 Fri between the long bonds and gold. Got out of the bonds as we have reached a temporary floor. Long bonds gives advance notice ,ideal for future trading in gold. Just a thought ,I have been watching and trading on. Gold -- Sharefin, 19:59:48 05/15/03 Thu No Link -------- Goldcorp to load up on bullion Financial Post - Thursday May 15, 2003 By Wojtek Dabrowski By withholding production, McEwen looks to increase shareholders' exposure to gold: Doubling holdings: Sagging greenback seen driving gold price higherGoldcorp Inc. chief executive Robert McEwen's plan to more than double his company's bullion holdings within the next 12 months received praise from analysts who also agreed with his prediction that prices will rally substantially in coming years. "In a small way, he is tightening the market, and thus reinforcing the price-up trend," said John Ing, analyst with Maison Placements Canada in Toronto, of Mr. McEwen's plans.Mr. Ing described as "brilliant" Goldcorp's intention to bulk up its holding to 500,000 ounces from the 230,000 ounces it currently holds. Mr. McEwen also said yesterday at a mining conference in Dublin that he foresees the price of gold hitting US$800 an ounce within six to eight years, with a rally spurred by declining production and mounting investor interest.One of the reasons behind the recent rise in the spot price of gold -- which closed at US$352.30 yesterday -- is the flagging U.S. dollar, currently "the worst currency in the world, even worse than the Iraqi currency," Mr. Ing quipped. And with the dollar expected to slide further, the gold rally will likely continue, Mr. Ing said.He added gold needs to break US$400 per ounce before companies are stimulated to invest in exploration -- "something the industry desperately needs" -- and before that happens, the supply will continue to tighten.Also, investors burned by the equity markets and in search of security from further losses are turning to gold as well, spurring demand."The only reason to buy gold stocks is to get exposure to gold," said Douglas Pollitt, a gold analyst with Pollitt & Co. "It's tough for the average investor to go out and buy metal." By ramping up Goldcorp's bullion holdings, Mr. McEwen is increasing his shareholders' exposure to the metal."He's demonstrating he understands what drives gold investors," Mr. Pollitt said. "I think it makes a lot of sense."A weak U.S. dollar and investors' concerns about equities were also cited by Agnico-Eagle Mines Ltd. chief executive Sean Boyd as factors which will take gold to US$400 per ounce this year.He pointed to declining mine output and very low U.S. interest rates."This is the perfect environment for gold," Mr. Boyd said yesterday in Dublin.Agnico-Eagle, which owns the LaRonde mine in Quebec, has said it plans to produce 300,000 ounces this year.Goldcorp, Canada's fourth-largest gold producer, withheld about 10% of its production last year and plans to do so again this year, Mr. McEwen said."If you have a positive outlook on gold, withholding production is another way of getting increased exposure to gold without the merger and acquisition risk that is the route normally taken," Mr. McEwen said.The company expects production of 600,000 ounces this year, down from 607,919 last year.However, it is expanding production to about 740,000 ounces a year within three years by building a second shaft at its Red Lake mine in northern Ontario. Gold -- Sharefin, 19:48:48 05/15/03 Thu The Case For Gold  Gold -- Sharefin, 19:45:47 05/15/03 Thu GOLD SOLID, SAYS MINING CHIEF The recent tumble in the US dollar, coupled with the sharp falls in equity markets, have seen gold come back into fashion as an investment. The price recently hit a two-month high of $352 an ounce. The chief executive of Goldcorp, the company which owns the world's richest gold mine in Canada, is in Dublin this week for a mining and metals conference. Rob McEwen believes the gold price will go a lot higher, and the company has put its money where its mouth is, by keeping around seven tonnes of the metal in its own reserves. He thinks we are at the beginning of a seven to eight year bull market, and says the price could reach around $800 an ounce. McEwen says the price of gold moves up as the dollar falls, and that the metal is coming back into fashion as a lower risk investment option. Gold -- Sharefin, 19:42:20 05/15/03 Thu The Gold Equity Share: An Idea Whose Time Has Come The World Gold Council (WGC) launch of a gold exchange traded fund (ETF) promises to revolutionize the gold market. It was filed with the SEC 5/14/03. After reviewing the document and considerable thought, we conclude that the new Gold Equity Share is a highly significant milestone for gold. For the first time in history, investors of all descriptions will be able to invest in physical gold through brokerage firms and other mainstream financial market channels. Previously, investment in gold meant withdrawing money from a brokerage or bank account in order to pay a coin dealer or a bullion dealer. The ETF will eliminate the past inconveniences, uncertainties, and bureaucratic hassles that have long stymied a free flow of capital from retail and institutional investment portfolios into the physical metal. The WGC Gold ETF will be listed on the NYSE once it has received final SEC approval. Each share will represent 1/10th of one ounce of gold, and at current gold prices, will trade at around $35. More important, each share will be backed by 1/10th of one ounce of physical gold, deposited with Hong Kong Shanghai Bank in London. The gold will be allocated which means that it cannot be lent to bullion dealers and/or used in the gold derivatives trade. The introduction of a gold ETF will finally integrate physical gold with other financial markets and thus end its isolation based on the archaic and creaky conventions subject to which it has historically traded. The gold market's antiquated architecture has much to do with the metal's substantial undervaluation. By creating simple access to physical metal, the WGC ETF will begin to freely tap capital market flows and thereby diminish the heretofore undesirable influence of central banks on the price. Expanding the borders of the gold market beyond the collective mentalities of central bankers, bullion dealers, derivative traders, commodity funds, and jewelry buyers, Middle Eastern souks and Asian bazaars will contribute substantially to its price. ~~~~ The market capitalization of the gold mining sector is a relatively tiny $50-60 billion. The “market cap” of the amount of physical gold available for investment, excluding central bank holdings, is very approximately $ 1 trillion. Even after making the extreme assumption that all central bank gold is in play, the investment gold market cap is only $1.4 trillion. World financial wealth in the form of bonds and equities exceeds $50 trillion. An allocation of only 1/10th of 1%, (by the way, a much smaller allocation than we are recommending) would equate to 5000 tonnes of physical metal, the equivalent of two years' supply of newly mined gold. Such an allocation would in time cause gold to trade comfortably in excess of 4 digits in terms of US dollars, Euros and just about any other currency as well. Ample research testifies to the fact that gold is either non-correlated or inversely correlated to all other asset classes including equities, bonds, and currencies. Research also shows that gold tends to perform well during periods of financial market stress. During stressful periods, the correlation between major asset classes other than gold becomes more positive. Portfolios designed for plain vanilla risk might not survive less frequent but more serious risk. Efficient frontier analysis suggests that a small (5%) allocation to gold stabilizes portfolio returns. As stated in a recent research paper published by Nik Bienkowski of Gold Bullion Limited, “a portfolio designed for the long-term may not survive to generate long term performance unless it can withstand all market conditions.” No academic studies are needed to demonstrate the superiority of gold relative to paper in terms of maintaining value throughout generations and even centuries. Given the sorry record of paper assets in this regard, why should derivatives fare any better? Derivatives of all kinds now total $141.7 trillion, according to the Bank for International Settlements, and are by far the most rapidly expanding asset class. They are fatally skewed in that they came into prominence during the historical oasis of the last two decades. They were conceived in a yankee-centric fantasy world of a permanently strong dollar, low inflation, falling interest rates, and high equity valuations. When stress tested, even in this best of all possible worlds, derivatives have failed abysmally to provide liquidity. Despite the fact that the gold mining industry hedge book has been reduced by 504 tonnes (or 15%) over the past two years, the notional amount of world gold derivatives have increased by 50% since 2001, according to the BIS, to $315 billion. The netted amount or gross market value has increased by 25% to $28 billion, the equivalent of one year's supply of newly mined gold. In our view, the global derivatives book continues to be offside in a world of shrinking gold production, declining hedge activity, and rising gold prices. While not central to the case for a substantial rise in the gold price, the continuing reduction of hedge books by the mining industry along with the increasing paper claims for physical gold represented by derivatives reinforce the prospect for volatility and instability in a rising price trend. Derivatives, designed to disseminate risk, have in fact become a source of systemic risk. Interest rates, currencies, share prices, credit risks and commodity prices are now intermediated by complex financial products which Warren Buffet described as financial weapons of mass destruction and time bombs that threaten the financial system. The financial markets and their central institutions have become mega betting machines that are indecipherable to outsiders and to participants alike. Designed to perform in what their architects presumed to be “normal” circumstances, derivatives will fall apart in a climate of sinking confidence. Gold, a bystander to the intellectual foolishness at the core of derivatives, will be welcomed by the financial markets as a premier financial asset incorruptible by such nonsense. It will be sought after vigorously by investment managers for whom long term outcomes and the well being of their investment constituents truly matter. From the Far Side -- Sharefin, 19:37:23 05/15/03 Thu JPM/Barrick Anti-Trust Violation (Nate_33) May 15, 13:13 Keyzer. That press release is improtant enough to be posted in its entirety for the benefit of those too lazy to click the link: ******************************************************** Blanchard and Company Reveals Previously Undisclosed Anti-Trust Violation By Barrick and J.P. Morgan Thursday May 15, 10:43 am ET NEW ORLEANS, May 15 /PRNewswire/ -- Blanchard and Company, Inc., the largest retail dealer in physical gold in the United States, filed today with the U.S. District Court for the Eastern District of Louisiana, a motion for leave to supplement and amend their anti-trust complaint to present new information further supporting Blanchard's claim against Barrick Gold Corporation and J.P. Morgan Chase & Co. These new filings include previously undisclosed information about J.P. Morgan's ownership interest in Barrick and Morgan's monopoly position in the U.S. market for gold derivative contracts. After numerous attempts by Barrick to discredit Blanchard's case in the news media, Blanchard has brought Motions to Compel information from Barrick and J.P. Morgan about their joint efforts to manipulate gold prices and to share in the spoils of that manipulation. The TrizecHahn Revelation TrizecHahn Corporation was formed in 1996 from the merged interests of Argo Partnership L.P. (a J.P. Morgan & Co. / J.W. O'Connor fund) and the Horsham Corporation. This newly formed corporation included several directors present on Barrick's board as well as its Chairman, Peter Munk. Through this combination, TrizecHahn became the controlling shareholder in Barrick Gold Corporation. Also in 1996, according to SEC records, J. P. Morgan Capital Corporation's Managing Director, Thomas S. Quinn III, was named to the Board of Directors of TrizecHahn, and sat on its Audit and Executive Committees. J.P. Morgan became a beneficial owner of Barrick through its controlling shareholder, TrizecHahn. Blanchard and Company CEO, Donald W. Doyle, Jr., stated that, "Blanchard's discovery of the Argo Partnership documents linking J.P. Morgan to a beneficial ownership interest in Barrick helps to explain why J.P. Morgan provided Barrick with derivative contracts that virtually guaranteed it a risk free profit. Even Barrick's Chairman, Peter Munk, recently stated that its 'hedging program' with J.P. Morgan 'was almost too good to be true.' We believe J.P. Morgan has benefited financially from its ownership of Barrick, and from Barrick's manipulation of the price of gold." TrizecHahn (and its affiliates, including J.P. Morgan) realized more than $1.3 billion in profits from Barrick Gold Corporation stock. Gold -- Sharefin, 19:35:06 05/15/03 Thu Blanchard files to amend complaint against Barrick U.S.-based gold dealer Blanchard and Co. Inc. said on Thursday it had filed a motion with a Louisiana district court to supplement and amend its antitrust complaint against Barrick Gold Corp and commercial bank JP Morgan Chase. ~~~~ It alleged in a lawsuit filed in mid-December that Barrick, the world's second-largest gold company, and J.P. Morgan Chase made $2 billion in short-selling profits by suppressing the gold price at the expense of investors. "These new filings include previously undisclosed information about J.P. Morgan's ownership interest in Barrick and Morgan's monopoly position in the U.S. market for gold derivative contracts," New Orleans-based Blanchard said in a statement. Richard Russell -- Sharefin, 19:30:59 05/15/03 Thu The next goal for the universe of gold Today's massive debt mountain has one fearful enemy. That enemy is deflation. In deflation debt become more difficult to carry, dollars become harder to come by, and lenders become much more conservative about making loans. So it's easy to see why the Fed is terrified of even the hint of deflation or "declining inflation" as they prefer to call it. This whole picture is not lost on gold. In order to stave off the forces of deflation, the Fed is literally being forced to move to a super-inflationary mode. The Fed will do everything in its power to re-inflate the US economy. Gold -- Sharefin, 19:29:40 05/15/03 Thu Luxury Goods Special - GOLD Golden days, golden child, as good as gold, heart of gold, golden oldie - from the cradle on, gold plays an important part in our language and imagination. The word ‘gold' is used in praise, celebration, congratulation and reward. Yet few of us have any notion of where it comes from, or even why gold is so admired. For centuries gold was a symbol of romantic adventure, excellence and wealth. Sadly, it is increasingly a symbol of vulgarity and crass ostentation. This was epitomised by Gerald Ratner's famous admission in 1993 that his 9-carat jewellery was ‘crap'. These days, it is more likely to be associated with new money, ‘gold-digging' footballers' wives and gangsta rap stars. All in all it seems that gold, if it can be seen and touched, has an image problem. ~~~~ I believe that the global economy is set to face its sternest test yet on the long road back to economic recovery. After the great boom and bust of the 1990s, there is a real risk of us slipping back into an unplanned recession, an extended hangover from the mother of all parties. Moreover, it is the US economy that lies at the heart of the trouble, with the dollar (the safe-haven asset of the last century) likely to be a casualty on the path back to economic wellbeing. This bodes well for gold. The US is in debt, up to the eyeballs in hock, and with inflation so low that the burden is here to stay. One way out of the problem would be to pull the plug on the debt overhang, to devalue the dollar. In a speech given last November, the federal governor Ben Bernanke discussed just that, saying, ‘The US government has a technology called a printing press that allows it to produce as many US dollars as it wishes at essentially no cost. By increasing the number of US dollars in circulation, or even by credibly threatening to do so, the US government can also reduce the value of a dollar.' Forget poker; this is the real thing! Here we have a senior custodian of the largest repository of global savings (the dollar) arguing that, if push comes to shove, the government will keep the US economy going by devaluing that very supposed store of value. The last time the dollar was devalued (in 1933), private ownership of gold in the US was outlawed because of the crippling demand. The British love to mock the French for many things, but perhaps we should learn from them by adding gold to our portfolio of assets. A few sovereigns or Krugerrands in the attic may have looked stupid in the Nineties but, now we are in the Noughties, a bit of diversification out of property and the stock market would be prudent. As for me, I am off gold-panning in a few weeks - looking for the nugget as big as a Brazil nut. Gold -- Sharefin, 19:25:12 05/15/03 Thu Blazing golds fire S.Africa bourse rally South Africa's mercurial gold shares took centre stage at the Johannesburg stock market on Thursday, scaling more than eight percent as bullion blazed higher and the rand maintained its losing streak on the dollar. Marketcap rangy/gold -- Cyclist, 10:45:54 05/15/03 Thu ratio 265/185 gives a NAV of Rangy a discount of a whopping 30%.Rangy lags in price appreciation with Gold by two weeks. The stock looks better all the time IMO Silver -- Sharefin, 20:54:19 05/14/03 Wed War on germs gets cutting-edge weapon from ancient world technique Ancient Egyptians used it to keep food supplies safe from fungus and mold. The Phoenicians used it to keep water from being spoiled by germs. Today silver is a key ingredient in new high-tech, powder coated finishes that hospitals and doctor's offices are using to protect walls, counters and other germ-gathering surfaces. Tomorrow those finishes may be used in home kitchens, bathrooms and on a wide variety of surfaces such as doorknobs, handles and push panels. "These new finishes are an important tool in preventing the growth of microbes in or on commercial and consumer products such as HVAC systems, food service equipment, refrigerators and humidifiers, for use in hospitals, commercial buildings and homes," says Dr. Ravi Bhatkal of AgION Technologies, Inc. The new finishes have been developed by the manufacturers of powder coating, an advanced method of finishing a wide range of materials and products. In powder coating, often called “dry painting,” tiny dry particles of pigment and resin are given an electric charge, then sprayed on to a wide variety of consumer and industrial products. The electrostatic charge makes the powder particles stick to the surface. When heated in an oven, the powder is permanently fused into a uniform, durable, high-quality coating. Long praised as a virtually pollution-free process that protects products from chips, scratches and stains, the new germ fighting powder coatings use silver as their key antimicrobial ingredient. Silver's protective benefits have been known since ancient times. And it's especially useful today, when germs are becoming increasingly resistant to modern antibiotics. ~~~ “These powder coatings just give us one more weapon against germs,” says University of Arizona Microbiologist Dr. Charles Gerba, “They literally create self-sanitizing surfaces that require less time in cleaning and give us all greater peace of mind.” These uses appear to be just the start. Bosch and Siemens in Munich, Germany, is applying antimicrobial powder coating to the interior of refrigerators. Honeywell Corporation, in this country, is using powder coating to coat portable, air-blown humidifiers where wicks soak up water, which can provide a breeding ground for germs. Gold -- Sharefin, 20:50:25 05/14/03 Wed Randgold leads world's gold & silver stocks London and New York listed Randgold Resources [GOLD] has been the gold stock to beat over the past twelve months, putting on 131%. Taking up last place was Johannesburg and New York listed Durban Roodepoort Deep [DROOY] which has been stung by the appreciating rand and corporate dramas (see table below for details). Newmont [NEM] remains the most valuable gold company in the world, managing to grow the gap between it and Barrick [ABX] which suffered banishment from the S&P 500 in the past year and has become synonymous with hedging. Barrick has given up considerable ground to AngloGold [AU] which has shown remarkable resilience to rand, the world's best performing currency that is crushing earnings among South African gold producers. Crash through the 4.6 % long bond rate -- Cyclist, 09:42:38 05/14/03 Wed is historic,the weekly MACD is pointing now to lower rates to come. Tightening of NG in the coming summer month set the stage for a price explosion in the winter months,Canadian gas/oil unit trusts are in a price appreciation mode plus giving 20% rate of return.Its like having your cake and eating it too. Rangy ,on the hourly chart ,broke out in an upward move on its MACD reaffirming its daily and weekly one.Rangy lags its sister companion Gold usually by two weeks and has its sights set at the 15 marker. Gold is entering into a strong surge for a two week period, with a levelling off in the first part of June and a rebound at the end of a June with the closing of the June contract. Canadian dollar is now into a heavy resistance area of 72/73 cents. Interesting times. As always,all the above FWIW Gold -- Sharefin, 20:53:26 05/13/03 Tue A Dose of Reality Interestingly, although the S&P500 Index in US dollar terms (the way it is typically reported) has broken out to the upside from its 3-year channel, the S&P500 in terms of hard money (gold) has NOT broken out. As the following chart shows, the S&P500/gold ratio appears to be 'rolling over' below its channel top. In fact, in terms of gold the S&P500 is below its 21st March peak.  Gold -- Sharefin, 20:50:44 05/13/03 Tue The Federal Reserve: "Moral Hazard's Best Friend" Moral Hazard is a fact of life in the business world. Actually, it is more accurately a fact of death, in the business sense. Too much risk and fraud causes businesses to fail. In the insurance industry, a business that is failing might have a sudden fire that burns up all types of bogus inventory and magically the business is saved. Remember Nick Leeson formerly at Barings Bank? He taught the world a lesson when he was allowed to mark his own trades to market, and the miss-marked trades amounted to a cool $833 Million and the collapse of Barings Bank, a 233 year old institution (we wonder if the traders in the $150 Trillion derivatives market have some surprises for the world). Moral Hazard occurs anytime the system encourages effective fraud or accounting magic that allows those in charge to benefit in the short run, leaving others holding the bag. Think about Enron, WorldCom, Ahold, Tyco, National Century, Salomon, Bludgett, Rigas, Martha, etc. Anyone who reads the press can imagine hundreds, or even thousands, of people whose pictures belong in the post office, but not on stamps. Gold -- Sharefin, 20:27:19 05/13/03 Tue The Good, the Bad and the Ugly There are a multitude of forces at play behind the current bull market in gold. So, I think it misleading, that so much attention is given to the daily gyrations of the gold price, which in turn takes focus away from the true nature of the forces behind this bullish trend. Commentators, both bulls and bears, are quoted daily on the reasons for that particular day's price move. Invariably, most attribute the recent moves to either the fear of a messy war with Iraq or the dissipation of those fears. My reaction to all this daily noise - is to ignore it. We are in a secular bull market in gold that is driven by macro-economic events that have little to do with the immediate Iraqi situation. This trend will continue for a number of years, and while the daily ups and downs of the gold price may make bulls suffer anxiety and give the bears opportunity to declare the end of the bull market on a regular basis -- the trend is clearly up. Gold -- Sharefin, 20:17:25 05/13/03 Tue Junior Mining Stock Report The first issue of Junior Mining Stock Report will be released on Tuesday, May 13 Gold -- Sharefin, 20:13:44 05/13/03 Tue De-regulation Of Chinese Market Heralds Huge New Demand For Gold. As gold sweeps through the US$350/ounce barrier, bolstered by the falling dollar, the World Gold Council has produced a very timely note on the de-regulation of the Chinese gold market. Until the start of this decade the Chinese gold market was tightly controlled by the Chinese government. Last October , however, the Shanghai Gold Exchange formally opened for business after a gap of 50 years and just over a month ago the State Council altered the rules governing both domestic and international participation in the gold fabrication market within China. It has been clear for some time now that the growth in China's GDP is the fastest in the world and it has overtaken the US in terms of foreign investment. On a purchasing power parity basis it is now the world's second largest economy at US$5.1 trillion which makes it equivalent to 52 per cent of the size of the US economy. At the same time, and as a result of its history, the jewellery offtake worked out on a per capita basis is well below the majority of other nations, whether they are nations who buy high-purity low mark-up gold jewellery as in India , Asia and the Middle East, or those who buy jewellery of variable caratage such as the UK the US and Germany, demand for which is less responsive to the price of the underlying metal. Chinese demand per capita last year according to the WGC was approximately 0.16 grammes against a world average of 0.7 grammes. The more telling comparison is with Hong Kong where the offtake was recorded as 2.7 grammes and this is where it gets interesting. Agreed the inhabitants of Hong Kong have a considerably higher per capita income and the figures may be fuzzed by tourist purchases and cross border smuggling, but there are only 8 million people in Hong Kong compared with 1,288 million on the Chinese mainland. If all the Chinese bought 2 grammes of gold during the next ten years it would amount to 82 million ounces which is equivalent to 2,645 tonnes of gold. By coincidence this is exactly in line with world annual gold production, so China could assimilate one whole year of production during the next ten years and what would this do to the demand/supply situation? The answer is obvious and this theory is not beyond the bounds of credibility given the love they have for gold. Some years ago a small Welsh gold mine which provided gold for the Royal family's wedding rings had a Christmas party in a Chinese restaurant. When the proprietor discovered the company was a gold producer he tore up the bill on the basis that it would bring him luck. Gold -- Sharefin, 20:11:32 05/13/03 Tue Gold mine success breeds anger in dirt-poor Mali Mali's Morila mine is one of the biggest successes in the recent history of the world's gold industry, according to a presentation from AngloGold, one of the two South African firms running it. Over the past two years, the mine has consistently beaten output forecasts and in 2002 it produced more than one million ounces of gold, thanks to a particularly high-grade patch of ore. Yet the mine's very success has stirred anger and resentment among local workers and poor people in nearby communities, who say they have yet to see their share of the windfall. Gold -- Sharefin, 19:59:14 05/13/03 Tue June Gold Another suspected terrorist bombing, this time is Saudi Arabia, kept pressure on world financial markets and gold languished, and the revelation that our trade gap is widening certainly didn't console investors. The US dollar gained just a few points, but it's still hovering near four-year lows and the yellow metal is still near two-month highs. Just the other day Treasury Secretary Snow commented that the recent devaluation of the US dollar was actually beneficial to our economy, as it would kick-start exports. Today however, he said that a "sound currency" is a benefit to an economy, and traders inferred that perhaps Greenspan and the Bush administration might react with an effort to support the dollar. It's also interesting to note that global investor and "Market Wizard" Jim Rogers recently said that Greenspan is making a terrible mistake (actually, I think he called him a fool!) by printing money, as no country has ever debased their currency and successfully sparked their economy into prosperity. His money is long Euros, but he also cautions that the recent spate of action mirrors that of a frenzy, and he wouldn't be buying them now. So, for the near term, the inference is that he feels the DX is due for a correction, and that would infer gold is too! On the other hand, he's not a short-term trader, and even though he may disagree with Greenspan's current policies, perhaps the fact that he remains long Euros is proof that he feels those bearish dollar policies will stay in place. Gold -- Sharefin, 19:57:29 05/13/03 Tue Weak U.S. dollar boosts gold The price of gold yesterday broke $350 (U.S.) an ounce for the first time in two months, driven higher by a weakened U.S. dollar and speculation that further declines may be in store. Much of the speculation concerned comments made by U.S. Treasury Secretary John Snow, who in a weekend interview on U.S. television said he continues to support a strong dollar, but that a weakening of the U.S. currency is good for U.S. exporters. "That Snow is going around saying he could see and imagine a softer dollar, is certainly a change from months and years past," said Douglas Pollitt, an analyst with Toronto investment dealer Pollitt & Co. Inc. "That's the reserve currency, that's what everybody has their savings in -- what happens when the bottom begins to fall out of that?" ~~~ Analysts said gold's most recent gains reflect a renewed focus on currency developments, rather than "safe haven" buying that drove prices higher earlier this year. "I believe that the underlying bull market for gold that started a couple of years ago has resumed, now that we have this correction out of the way," said Victor Adair, a senior vice-president and derivatives portfolio manager for Refco Futures (Canada) Ltd. in Vancouver. Gold watchers said a weak U.S. dollar and concerns over reflation -- which would see central banks of the world printing money to avoid deflation -- could aid gold prices in coming months. Buying by hedge funds and other large speculators has helped drive up gold prices in recent days, said George Parrill, a director of ScotiaMoccatta, the precious metals trading arm of Bank of Nova Scotia. "Funds are covering some short positions and also going long," Mr. Parrill said. Gold -- Sharefin, 19:53:34 05/13/03 Tue Gold looks forward to Washington Accord renewal High-ranking South African government officials will head the drive to renew the key Washington Accord, which has helped underpin so much of gold's strength over the last three years. Treasury director general Maria Ramos was one of the architects of the original accord Accord, signed in September 1999, which ensured that 15 European central banks would not sell in excess of 400 tonnes of gold a year. At the time of the agreement the gold price was floundering around $260/oz, but the accord helped the metal higher by stemming the tide of Central Bank sales - famously started by the Bank of England's ill conceived gold auction programme - that had until then put gold under pressure. Ramos told Mineweb in an exclusive interview that she would resume her attempts to secure the extension of the Accord on central banks' gold sales. The agreement expires next year. ---- The accord helped shift the tone of the market from one wary of central banks pushing huge amounts of gold onto the market, to smaller, but nonetheless important drivers like currencies and de-hedging. South African players said the market has not forgotten the importance of the accord, and is looking forward to its renewal. They said the market was expecting Ramos to at least push for the retention of the 400 ton a year sale limit. Gold -- Sharefin, 19:49:19 05/13/03 Tue Gold kicks off on high note South African analysts reckon gold is preparing another assault on $360 per ounce this week after investors drilled through $350/oz in early Monday trade. Gold seems to have rounded up the technical and sentiment backing to move through $360/oz in the coming days, they said. The metal has set a higher trading range since last year, positioning gold for a healthy performance in the coming week. This range has created the framework for gold to head up to $360/oz, with support seen at around $345/oz - the metals' 100 day moving average, they said. Currency action remains the primum mobile in the metal's fortunes. As the US dollar takes a hammering from all sides and demand stays bouyant in key markets, gold built on a 7.5 percent gain last week, using the euro's move to 1,1585 points to cruise through the $350/oz level in early trade. Another recurring theme is the vote of confidence producers are providing the market. Production continues to be delivered early into hedge books - a clear sign that positive sentiment has filtered through to all levels of the market. Gold -- Sharefin, 19:47:41 05/13/03 Tue Russian gold mining take off to be self powered Russia and China, remain the largest unexploited regions for goldmining in the mining world. But compared to China, Russia has two immediate advantages. Much of the country's gold reserves have already been identified; and at a current cash cost of production of between $120 and $150 per troy ounce, Russian production can be managed on one of the lowest - and most profitable - cost bases in the world. In theory then, with low geological risk and manageable economic risk, Russian gold should be attracting a rush of mining capital to stimulate production. Indeed, with mine output of gold rising by more than 12% per annum, and Russia challenging Indonesia for fourth place on the world producers' table, the pace of development here is moving much faster than in the world at large, where total mine output is falling, and will continue to fall for the foreseeable future. Gold -- Sharefin, 19:19:48 05/13/03 Tue Decline in gold exploration not a problem Members of the London Bullion Market Association are mulling over research which apparently overturns the widely held theory that the dearth of exploration expenditure in recent years will lead to a substantial fall in gold production in the near future. The research, in contrast, indicates that the rise in the international gold price to levels of US$350 an ounce and above has introduced a new variable in the form of potential production from known, but undeveloped, deposits. These deposits “may now play a significant role in the dynamics of primary supply,” says Paul Burton, who has compiled and analysed the research data for the LBMA's publication Alchemist. Using the data he has drawn up a list of the top ten potential gold mines, ranked by the size of the known resource. Burton concludes: “If and when the top ten projects do bear fruit, the market can expect to see some 7m to 7.5m ounces a year of new gold. That's nearly 10 percent of current world production.” ~~~~ He also recalls that in 2000 a thesis completed by South African mining analyst John Handley identified and catalogued global gold resources in the ground amounting to about 55,000 tonnes, or roughly 20 years of production, “which gives some idea of the overall potential.” --- Short term myopia. What are we going to mine in twenty years time & at what production rate. Like in oil with the Hubert Peak we have the same resources problem in gold looking forwards a few decades. Fiat -- Sharefin, 19:15:56 05/13/03 Tue Remarks by Chairman Alan Greenspan Greenspan Discusses Risks of Derivatives By REUTERS CHICAGO, May 8 (Reuters) - The chairman of the Federal Reserve, Alan Greenspan, expressed concern today over the risks posed to financial markets by the concentration of the $142 trillion derivatives market in the hands of a few investment banks. Derivatives are contracts based on underlying securities or other variables, ranging from interest rates and currencies to energy and weather. They allow investors both to spread risk and to make big leveraged bets. Mr. Greenspan, as he has done in the past, praised derivatives, saying their benefits materially outweighed the risks and had insulated the financial system from the stock market crash and economic downturn. But, for the first time, in a conference organized by the Chicago Fed, he detailed the potential dangers to financial markets if a big derivatives dealer had to exit the market, and he called for more meaningful disclosure. Mr. Greenspan repeated his opposition to regulating derivatives, but said heavy concentration in the market "gives me and others some pause." "If a major dealer exited and other dealers were unwilling to fill the void, the liquidity of the market likely would be impaired," Mr. Greenspan said. According to the Swiss-based Bank for International Settlements, the global over-the-counter derivatives market had grown to nearly $142 trillion by the end of last year. In his speech, delivered to the conference by satellite, Mr. Greenspan said that a single dealer accounts for about a third of the global market in both interest rate and credit derivatives, and a few dealers account for more than two-thirds. Gold -- Sharefin, 19:12:36 05/13/03 Tue Trading The Gold Bull As the insta-bulls continue to frolic on Wall Street, blissfully oblivious to current valuation and sentiment extremes conspiring to deftly eviscerate their aging war rally, the stealth bull market in gold continues to gloriously unfold. Unlike the troubled US equity markets, gold has been in a powerful bull market for over two years now. The Ancient Metal of Kings has managed to gallop up an impressive 48% from trough to peak while the S&P 500 has horrifically hemorrhaged 26% of investors' scarce capital over this same period. Gold -- Sharefin, 19:08:24 05/13/03 Tue Claims aim to cause alarm - Gold Fields Gold producer Gold Fields said yesterday that "certain claims seen in the press" against the company were clearly used to create a false impression that there were significant liabilities against the company, aimed at alarming investors. The statement follows media reports that former Gold Fields employees had filed a lawsuit in a US court claiming the company enslaved black workers and exposed them to dangerous mine conditions and toxic substances. The suit does not specify the time period of the alleged abuses. Gold Fields chief executive officer Ian Cockerill told shareholders and employees yesterday that "claims and unsubstantiated and general allegations being aired in public" against the company without any attempt to substantiate them in court could be injurious. Fiat -- Sharefin, 19:06:37 05/13/03 Tue The dangers of derivatives Structured notes, also known as hybrid instruments, which are the combination of a credit market instrument, such as a bond or note, with a derivative such as an option or futures-like contract, are used to circumvent accounting rules and prudential regulations in order to offer investors higher, though riskier, returns. Viewed at the macroeconomic level, derivatives first make the economy more susceptible to financial crisis and then quicken and deepen the downturn once the crisis begins. Fiat vs Gold -- Sharefin, 18:59:50 05/13/03 Tue No link for this story - DEFLATION.... ------ The Federal Reserve warning about a minor, but increased, risk of deflation rippled through financial markets Wednesday. This is a quote from the May 8th, 2003 Investors Business Daily, commenting on the brand spanking new stance from the Federal Reserve that deflation is now a reality. This is the first time since the Great Depression that the Fed has publicly acknowledged deflation as a threat. Deflation is the most dangerous of all economic conditions. Cases of deflation have occurred so rarely in the last 200 years that the political, economic and business leaders are completely unable to cope. This is a quote from my September 30th, 2002 column. I grabbed onto the deflation idea a few years ago because of two things. The first was the post-bubble environment of 1930's America and modern Japan. The second was the chart of inflation from 1980 until today. These presented very strong pictures as to why we would be unable to avoid some deflation now. Our leaders immediate reaction to deflation will be to claim that it will be mild and over quickly. They will tell us they have tools to combat the situation, and there is nothing to worry about. The Federal Reserve discount rate currently stands at 1.25%, and the experts say the Fed will lower rates to keep things calm. At 1.25%, they can't go much lower. And Japan has been at 0%, to no avail. People also say the Fed will print dollars to avoid deflation. Flood the system with cash to get things pumped up. If the Fed starts printing dollars, run, don't walk, to your nearest gold store and load up on the metal. Printing more money to get us out of this situation is a monumental mistake, and I really do not believe the Fed will go that route. And lowering interest rates isn't going to be very helpful. In other words, the reality is deflation; let's deal with it. And deal with it you must. If not, you will be run over by it. At first, deflation seems ok. Prices are going down, that's good right? Not when your competitors are dropping their prices faster than you can drop yours, and they steal all of your business. You have to constantly look for ways to reduce your overhead. Our entire economy will be threatened by deflation for at least a few more years, and the companies that cut their prices and expenses the quickest will win. Entire nations are using their currencies as a weapon against deflation. The Japanese government is constantly saying it doesn't want the Yen to go higher because that would hurt sales of Japanese companies. Europe just lowered their interest rates in order to decrease the value of the Euro. They are hoping that will stimulate sales. And have you seen the US dollar lately. It has been getting whacked. Watch for falling prices at Wal-Mart, and everywhere else you shop. Gold -- Sharefin, 19:54:56 05/12/03 Mon Bullion for a billion Chinese reforms could lift gold's fortunes ~~~~ For decades the country severely restricted the buying and selling of gold, which put a heavy damper on demand. Now, however, China is liberalising. When India did likewise in 1996, it promptly overtook America as the world's largest consumer. China, now in third place, might also begin to climb the league. ~~~~ A far bigger change is planned for June, when individuals will be allowed to invest in gold, either by buying ingots or by opening gold accounts at their banks. China has one of the highest savings rates in the world, officially about 40%. But its mutual-fund industry and stockmarkets are fledglings, so the Chinese keep most of their money in humdrum bank deposits, which pay a miserly 2% in interest before tax. If India's experience is a guide, many will now shift their money into gold. This will drive up prices inside China. Since Chinese demand (200 tonnes) already outstrips domestic production (190 tonnes), it will also lead to more imports. International trade, however, is one aspect that the central bank is not eager to liberalise. Its biggest task during this decade is to prepare the yuan for convertibility. But until that happens it will be wary of free international flows of gold, which could serve as a proxy for hard currency. Fiat -- Sharefin, 18:23:25 05/12/03 Mon US dollar's slide is a calculated move IT NEVER rains but it pours in the forex market. And if you were caught long on the United States dollar, there wasn't enough time to run for shelter. In just the past week, the US dollar fell 1 to 2 per cent against the euro, Japanese yen and Singapore dollar. The sudden change in mood is generally attributed to two men and a twin deficit. ~~~~~ But the really intriguing question is whether the Fed has started to use unconventional weapons in preventing deflation. Morgan Stanley's Dick Berner is one economist who believes so. He suggests: 'The Fed is already quietly using another key weapon in its deflation-fighting arsenal, namely a weaker dollar... It has brought US interest rates lower than most on the planet, and in a world of single-digit returns, yield-hungry investors are looking elsewhere.' And what the US wants, it gets. The Fed has long indicated its awareness of the potential problems of deflation. In a widely publicised research report by Federal Reserve economists in June last year, 'Preventing Deflation: Lessons from Japan's Experience in the 1990s', they argued the lesson to be learnt from Japan was that the best way to fight deflation was to avoid it. The danger is in being too complacent. Deflation in Japan was almost entirely unanticipated by both foreign and Japanese observers. Federal Reserve governor Ben Bernanke's speech to the National Economists Club in Washington on Nov 21 last year laid out the broad strategy. He argues that as 'deflation is in almost all cases a side effect of a collapse of demand, the Fed should try to preserve a buffer zone for the inflation rate - that is, during normal times, it should not try to push inflation down all the way to zero'.' The idea of maintaining an inflation buffer zone is to reduce the risk that a large and unexpected drop in demand does not tilt the economy into deflationary territory and drive interest rates to zero. So central banks should not allow the inflation rate to fall below some agreed minimum rate. In fact, Mr Bernanke only recently renewed his call for an inflation target. In an interview with the German newspaper Frankfurter Allgemeine Zeitung on April 10, he said: 'The Fed has had considerable success in fighting inflation. Now our task is to anchor the public's and the financial markets' inflation expectations.' A possible range he suggested for 'acceptable' inflation could be for a rise in an agreed consumer price index of between 1.5 and 2.5 per cent. Cyclist - -- Mark, 14:02:40 05/12/03 Mon I understand where you're coming from. But believe me when I tell you that you should be very cautious. I know charting and have been doing exceedingly well timing the various markets. Many cgarts will confirm my view. For example take a very careful study of the Ten-Year T-Note Yield chart. Using a variety of the technical indicators - they're agreeing that rates are in the process of bottoming. The RSI is touching oversold, the stochastics are oversold and have criossed over turning higher, the MACD is in negative territory and starting to turn up, etc. I can tell you're long treasuries and greed is going to get the better of you if you do not heed the charts (AND FUNDAMENTALS). I wish you the best and hope you don't lose too much. Also, now is the time to be taking some profits on your trading portion of your gold stocks. Sell into strength, buy into weakness. RANGY has been a great performer and it's been a part of my portfolio also. It too is approaching a short term top, and I would advise selling a portion sometime this week and buy it back later after a correction. Good luck. Mark -cash 30 year bonds -- Cyclist, 08:36:48 05/12/03 Mon gave a nice break out April 15 with confirmation from the MACD. This week we are again approaching the 4.6 % on the long bonds.If this bottom gets broken it will be confirmed on the weekly MACD as well. The market always speaks when you want to listen. Canadian dollar has hit today a massive resistance at the 72/73 level. With cyclical, technical indications,and stops trailing you are riding the wave. Incidently I only own the physical and Rangy (bought last year April at 3.80)in case the world goes to pot in a hurry. Competitive devaluation of one's currency is to happen as all the countries are hostage to the US treasuries they hold.If they signal and sell the US treasuries it will make their currencies that much more expensive,i.e they sitting between a rock and a hard place. Eventually the gold standard will come back until we see a fire storm in the paper currencies. Right now ,everybody are holding their breath. FWIW Periodic Ponzi Update PPU -- $hifty, 22:03:24 05/11/03 Sun Ponzi Chart Periodic Ponzi Update PPU Nasdaq 1,520.15 + Dow 8,604.6 = 10,124.75 divide by 2 = 5,062.37 Ponzi Up 19.59 from last week. Thanks for the link RossL ! Well it looks to me like they go down from here. Time will tell ! Go GATA ! Go GOLD ! $hifty  Gold -- Sharefin, 20:49:24 05/11/03 Sun Gold Bullion Website The establishment and launch of Gold Bullion Limited is the result of an initiative undertaken by the World Gold Council and Investor Resources Limited. Gold Bullion Limited has developed a product whereby, investors can invest and trade in gold bullion on the Australian Stock Exchange (ASX). Gold -- Sharefin, 20:11:11 05/11/03 Sun Gold-Backed Shares Considered for U.S., South Africa The World Gold Council, which helped launch trading in shares backed by gold bullion in Australia last month, is now exploring the possibility of trading in similar gold-backed shares in the U.S. and possibly in South Africa. ~~~ Australian Gold Bullion Could Be Model for U.S. Any U.S. push would be part of a broad effort by the council to enable gold- bullion-backed shares to be traded throughout the world on a 24-hour basis. "We are considering something in South Africa," said Mr. Thompson. "Whether that takes root or not, we'll know in the next couple of weeks." Gold Bullion Chief Executive Graham Tuckwell wouldn't comment specifically on prospects for share listings in the U.S. or South Africa, but he said the council wants trading on enough exchanges to ensure 24-hour availability. Mr. Tuckwell expects Gold Bullion Ltd. to eventually be listed on stock exchanges in other countries besides Australia -- he is considering a proposal for a listing in Europe -- but he doesn't foresee his company being listed in the U.S. "The best way to tap the U.S. market would be to have a U.S. vehicle," he said. Mr. Tuckwell expects more than one vehicle for trading, with each vehicle probably listed on more than one exchange. "I believe that it will be the World Gold Council vehicle, or vehicles, that will be the cornerstone of the investments," he said, "but how that's done over time, I don't know." One bullion-backed security not tied to the World Gold Council is expected to be launched by Gold Corp., the operator of the Perth Mint, on the Australian Stock Exchange later this month. Each Perth Mint call warrant entitles the owner to acquire one-hundredth of an ounce of gold prior to 2013. But that Perth Mint development appears to be more local in scope than the World Gold Council's efforts. Gold Bullion's activity in Australia will serve as a test for other markets, said Mr. Thompson. About $500,000 worth of Gold Bullion shares are trading each day, Mr. Tuckwell said. That amount is building, but still doesn't reflect the potential trading volume, he said. The trading so far is all from retail investors, he said, because of the way the product was launched. The company had a press conference March 27 and its bullion shares started trading on the Australian exchange March 28. Gold Bullion didn't have the typical four- to six-week selling period to institutions that is typical before shares are listed, he said. So it is now going through that selling period. Mr. Tuckwell said he is already had unsolicited inquiries about investments of $10 million to $30 million from institutions, and the company has received thousands of hits from the U.S. to its Web site. U.S. retail investors aren't allowed to buy the shares, but U.S. qualified investment buyers may be permitted to do so. Share Represents Tenth Of An Ounce Of Gold Gold Bullion shares can be bought through the Australian Stock Exchange or outside the exchange, directly through Gold Bullion and the trustee, Gold Bullion Nominees Pty. Ltd. The holder of a share holds both a Gold Bullion security and a beneficial interest in one-tenth of an ounce of gold, held by custodian bank HSBC Bank USA in London vaults. "This is basically an ETF (exchange-traded fund) in gold," Mr. Tuckwell said, with open-ended creation or redemption of shares. An investor could buy $50 million in shares straight from the company and trustee, and could also sell his position outside the exchange. He would simply present the shares for redemption and, depending on what he wants, receive either gold from the vaults in London or cash. If he wants cash, the trustee would sell the gold on the London over-the-counter gold market to get it, Mr. Tuckwell said. So the liquidity of the gold-bullion shares is far greater than the trading volume on the Australian exchange would indicate. "I'm absolutely certain that there will be at least a billion dollars in this thing within 12 months of the listing," Mr. Tuckwell said. That compares with $3 million to $4 million in the trust today, he said. Big institutions "can create huge demand that would obviously have a price impact (on gold)," said Mr. Tuckwell. Doug Hock, spokesman for gold-producing behemoth Newmont Mining Corp. (NEM), said of the bullion shares, "It's something we see as very positive. Anything that helps promote investment in gold is something we see as very positive for Newmont and for our product." "I think it'll broaden investment," Mr. Hock said. Gold -- Sharefin, 20:02:15 05/11/03 Sun "C" Day: A Watershed Event for Gold Twenty days from now, for the first time in the memory of many Chinese citizens, it will be legal to buy, own, store privately and sell gold bullion. You may recall in the mid-70s how the legalization of gold in the US had a profound affect on gold. The US is not now nor was it then a country of savers. Gold as a means of saving was not common to US citizens then nor is it now. The United States is a country of spenders of not only what they have but more than they have. Debt is more common to the US citizen. The Chinese on the other hand are the world's greatest savers. They actually save 40% of their wealth for a rainy day. The Chinese also have very long memories and the demise of their currency in the past is something even children know about. Gold bears make little of this event, saying that because China controls the importation of gold and produces 190 tonnes versus a demand 200 tonnes the net impact will be neutral. Little do these commentators know of gold or the industrious nature of the Chinese. Assuming internal Chinese demand increases, the internal Chinese gold price will come under pressure, perhaps boosting it above the world price. Believe me, gold bullion will find its way into China like ants find their way into an open syrup dispenser. The advent of the freedom to own, store, buy and sell gold for the Chinese citizen is going to have a significant effect on gold's price by absorbing internal production and increasing demand for gold on the open market. Without a doubt, that will help gold rise above $400 per ounce in the not too distant future. There has never been nor will there ever be a national border that prevents smugglers from meeting demand for gold and currencies and making a tidy profit in the process. Gold -- Sharefin, 19:59:23 05/11/03 Sun Long Con: Mother of Bank Runs Mother of Bank Runs. Ponzi schemes and other long cons that try to take advantage of not just one or a few marks but a much broader public always hit the wall described in a famous but unauthenticated quote regularly attributed to Abraham Lincoln: "You can fool all the people some of the time and some of the people all the time, but you cannot fool all the people all the time." When a long con unravels in the world of gold banking, it is well to remember that there's no run like a bank run, and no rush like a gold rush. Then the key to financial survival is found in two bits of common sporting advice: Go for the gold. He who hesitates is lost. In the era of free banking under the gold standard, bank panics were typically rather local events unless they occurred in important financial centers. With the advent of central banking, major bank panics took on more national importance, and in the most severe instances could lead to devaluation, going off gold, or other extreme measures, e.g., gold confiscation as happened in the United States in 1933. All these problems were supposed to have passed into history with the breakdown of the Bretton Woods system and the effective removal of gold from the international and nearly all national monetary systems. See Second Amendment to the IMF's Articles of Agreement (effective April 1, 1978), which prohibits members from linking their currencies to gold and commits the IMF and its members to "the objective of avoiding the management of the price, or the establishment of a fixed price, in the gold market." The recent con pulled by the central banks to suppress gold prices did not merely violate this provision. Rather, it demonstrated that the provision itself was unrealistic, and that whatever governments may say or order, gold remains in fact what it has always been: permanent, natural money and the standard against which all paper money must eventually be judged. Indeed, by suppressing gold prices, the central banks (and certain finance ministries) were trying to perpetrate and maintain a far grander illusion: that today's dollar-based reserve currency international monetary system with floating exchange rates remains sound; that they can successfully manage any major financial crises that occur; and that they have both the tools and the ability to guide the world economy to satisfactory levels of growth and prosperity. These assertions have long been questioned in numerous commentaries at this site. See, e.g., The Greatest Con: The Rubin Dollar (February 8, 2000). What is much more important is that they are now being more widely questioned, as several interesting articles from the past few days illustrate. See, e.g., John Dobosz, "Guru's Still Going For Gold," Forbes.com (May 7, 2003); Marshall Auerback, "Is Dollar Weakness Signalling Problems Ahead," PrudentBear.com (May 6, 2003); Bill Fleckenstein, "The dollar is on borrowed time," MSN.money (May 5, 2003). Two of these articles pointedly discuss how individual investors can use gold to protect themselves from an imploding dollar. In many ways a more interesting question is how foreign central banks -- stuffed to the gills with dollar-denominated paper -- can accomplish the same objective. And the answer is the same: with gold, their traditional reserve asset. When the central banks realize that too many are not just wise to their scam but also are taking advantage of it, that the gold con artists themselves have become the marks, the greatest bank run in history will shift into high gear. It will be a run not just from dollars, or even from paper currency in general, but from modern central banking itself as the lenders of last resort succumb to the resurrected worldwide preference for the financial asset of last resort. Gold -- Sharefin, 19:40:02 05/11/03 Sun A Time Revisited I want to drive home as strongly and as clearly as possible that the announcements made by the leadership of the US Federal Reserve and the European Central Bank are going to POSITIVELY and SIGNIFICANTLY change the character of both gold shares and gold. Up to now it has been the choir buying and selling to the choir. The Gold Community has been trading back and forth with itself totally devoid of new blood entering into that exchange. This is why gold shares have been tired - even those that have ethical management and good assets. The Gold Community grew out of the slumber of those who were latently positive on gold. When all those potential gold share buyers had entered the market, it was the faster gold positive share traders selling to the slower gold positive share traders that created each market high until the gold market participants just tired of buying and selling to each other. Now an entire, richer and much larger public is about to enter into gold investments. ~~~~ Now comrades in arms, the absolute opposite event has taken place and has been reported to you in detail. So, today as the US Treasury long and medium bonds are surging into the uncharted stratosphere of new high prices, yours truly, after a full 22 years since the Washington Post article was printed, go on record as saying: "For the long term investor BUY Gold, Buy Quality Gold shares and get ready to go long puts on the 30 year and 10 year US Treasury bonds. Good luck, have courage. James Sinclair." Gold -- Sharefin, 19:10:45 05/11/03 Sun Fundamental New Development in Gold The leadership of the US Federal Reserve and the European Central Bank recently made a watershed announcement that signals a major shift in monetary policy. No longer is control of inflation the marching order for their monetary policy. Monetary policy is now tasked to increase inflation by expansive, inflationary monetary policy. That means that in the US, the activities of the Federal Reserve Open Market Committee will include instructing the New York Federal Reserve Bank's trading department to purchase government securities on their behalf from the commercial banking community. When the commercial banks receive bank wires for those securities from the Federal Reserve, new money is created in the system equal to that transaction.This is governor Bernanke's "Electronic Money Printing Press" at work. The Federal Reserve is also saying that there is little possibility that the "Discount Rate" will rise in the future nor will "Bank Reserve Ratio Requirements" be increased as both of these negatively affect the creation of new money. What this all means is that a clarion call has now registered within the international "establishment" investment community that says that the most powerful ally of the gold shorts - the major gold producers hedgers, the gold shorts, the gold carry trade and the gold derivative operators - no longer support the short side of gold. Cyclist - Stay long T-Bonds -- Mark, 12:46:35 05/11/03 Sun My reply: Stay long T-Bonds at your financial peril! From a technical standpoint, please take a few moments to view a yearly T-Bond chart and notice the uptrending channel in place since October of last year. Then it becomes very obvious that we're within a few weeks of hitting the top of the channel around 118-119. In other words look for T-Bonds to peak within a few more weeks. From a fundamental standpoint, 1/3 of our treasuruies are owned by foreigners and of that amount Europeans are the oone holding the T-Bonds whereas Asians are holding the shorter term treasuries. (China for example buys the short term maturities to peg its currency to the UD dollar for the obvious trade export purposes). Europeans on the other hand are not only receiving a paltry return on their long term treasuries - they're losing their shirts on the dollar depreciation! The main point to understand is that no matter if the Fed tries to cap T-Bond rates - this would not work for very long because the dollar would really start to fall! The US dollar NEEDS the long rate to start rising!!! So after a short upward retracement in the dollar, it will continue is next down leg in spite of the fact that long term interest rates will begin to rise after a T-Bonds top by the end of this month. Bottom line for gold & gold stock investors is that after a short term correction, gold stocks will begin there next big leg up later this summer and fall as the Interest rate yield spread continues to widen!!! Bonds will be a TERRIBLE investment as yields climb this summer and fall!!! For example, who in their right mind would buy a US T-Bond when you can take your money and buy a Canadian T-Bond, receive a relatively much higher percentage AND BE IN AN APPRECIATING CURRENCY???!!! Buy US T-Bonds at your FINACIAL PERIL!!!! Bonds I love them..:) -- Cyclist, 12:31:19 05/10/03 Sat Competitive currency devaluation through lowering interest rates on a global scale is about to happen. That leaves the US dollar as a reserve currency to gasp for air. Lower valuations of RE in the Western world will become the true deflationary catalyst. Monthly cycles give the US 30 year bonds a high in the October/November months,with a projected interest rate of 1.5 to 2%. Accidently the stockmarket has its Zenith point in the November/December months. It is a rare occasion that monthly cycles are so close together. Initially people tend to gravitate to cash or treasuries and when those instruments are in doubt ,gold will start its ascendency. Goldstocks will be trending lower to the end of the year while physical will hold firm. 2004 will be the strongest move for gold and energy including goldstocks. Again Natural gas is the place to be as it has the hallmarks to hit 15 a thousand this coming winter,making the pipeline a viable proposition. In conclusion:Stay long in the bonds,short the market in July, play the NG futures in the fall,and buy the PM's in December.Silver is my preferred PM as it will finally move out of its slumber. All the above FWIW. Gold -- Sharefin, 20:20:38 05/08/03 Thu Gold Increasingly Viewed as a Safe Heaven Investment Gold's generally upward trend seems very likely to continue and it is increasingly being viewed as a safe haven investment, experts from ABN AMRO Bank said here Wednesday. "Even though it's done some consolidating recently, the metal's generally upward trend seems very likely to continue," he said. ABN AMRO Asset Management Head of Investment Fund Services, Carol Wong cited several factors which lend credence to that forecast. "First, we continue to see investors moving away from equities -stock markets are sluggish and interest rates are near their floor so the opportunity cost of investing in gold is attractively low,"she said. "Second, with continuing geopolitical uncertainty in the MiddleEast, Asia and elsewhere, gold is increasingly being viewed as a safe haven investment," she said. "Third, gold production is expected to decline materially after 20 years of depressed prices, so demand looks likely to drive the price of scarce gold supplies. And last but not least, the US dollar continues to weaken against other currencies--and that trend should impact gold positively,"she added. Gold -- Sharefin, 20:17:59 05/08/03 Thu Strong rand pressures SA gold miner's profits South Africa's second-biggest gold miner, Gold Fields, yesterday reported slightly lower results for the quarter, mainly due to the stronger local currency and warned that the rand's strength could further affect its earnings in the next quarter. Gold -- Sharefin, 20:16:35 05/08/03 Thu SA gold major to face $7bn lawsuit Workers at South Africa's second-largest gold mining company were tortured, enslaved and poisoned with uranium, according to a $7,4-billion lawsuit filed late on Tuesday in a New York court. The suit was filed in Manhattan Supreme Court on behalf of Zalumzi Singleton Mtwesi and more than 500 former employees of Gold Fields. Gold -- Sharefin, 20:08:41 05/08/03 Thu Gurus Still Going For Gold The greenback is down more than 5% since early April. Gold is trading near a two-month high. Is there life yet in gold's three-year run? Yes, say both resident goldbugs and more diversified gurus tracking the metal. "With the dollar dropping like this, gold demand is growing and growing," writes Bill Murphy on his online forum, Le Metropole Café, a site popular with hardcore gold aficionados. "Pile an overbought and overvalued US stock market (the S&P 500 P/E is 30, double the historical average) on top of that. . .and you have a recipe for an explosive gold launch in the very near future--like any day," he adds. Murphy also points to technicals to make the bullish case for gold, observing "a very tight reverse head-and-shoulders pattern" following the break from its high in February. Spot gold topped out at $382 an ounce on Feb. 5 and now trades for about $340. Another gold member, James Dines, editor of the Dines Letter, says that the Fed's fear of deflation has prompted a highly stimulative monetary policy. Dines says that the excess credit creation could even ignite "hyperinflation" that will eventually destroy the currency. Gold -- Sharefin, 20:06:25 05/08/03 Thu Newmont Sticks With '03 Cost View, Despite 1Q Rise Newmont Mining Corp. Chief Executive Wayne Murdy slightly raised the company's guidance on gold production for 2003, but most of the company's 2003 guidance remained the same in a conference call Wednesday discussing first-quarter results. ~~~ Executives also stressed that the 10 million ounces of gold hedges inherited with the acquisition of Normandy Mining of Australia in February of 2002 have mostly been eliminated. The exception is about 2.6 million ounces of hedges of the Yandal Operations unit in Australia. Those Yandal hedges are non-recourse to Newmont and have a negative mark-to-market value of $140 million. Newmont President Pierre Lassonde said the company is bullish about the price of gold. One reason is the deregulation of the Chinese gold market, he said. China has savings of $1 trillion a year, he said, and only one-tenth of 1% of that savings into gold would represent 100 tons of gold per year. The Chinese deregulation has a "very large potential impact on the gold price," Lassonde said. In addition, an increased use of gold, as opposed to dollars, by central banks for reserves could boost demand for gold, he said. He pointed to the strained geopolitical situation between the U.S., France and Germany regarding policies toward Iraq as a possible spur to such activity. Gold -- Sharefin, 20:02:39 05/08/03 Thu Gold disappoints, misses chance at $360/oz Gold continues to tread water around the mid $340/oz level, ignoring traditionally bullish macroeconomic indicators which traders and economists say should have seen it hurtling through $360/oz by now. Top of the list of drivers which should have propelled bullion through $350/oz resistance levels, is a bruised dollar, which is flirting with record lows against the Euro. Despite gold's somnambulant trading range over the past fortnight, it is nevertheless the omnipresent link between dollar weakness and gold strength which is providing the basis for a forecast trading band of $330/oz and $350/oz for the next 3 - 6 weeks. Gold -- Sharefin, 19:58:46 05/08/03 Thu Market missing gold signals - Lassonde Pierre Lassonde, president of Newmont [NEM], said investors had paid insufficient attention to two developments likely to positively impact the gold market. Providing his customary colour commentary on the gold market during the company's first quarter conference call, Lassonde said Chinese gold market deregulation and tensions in the Cold War alliance were significant factors. “We have a tailwind with a very strong commodity price. There are some events that have occurred in the last few months that have been largely ignored by the investing community, but are very significant longer term for the gold price.” “The first issue is the deregulation of the Chinese gold market. China has annual savings of $1 trillion and for the first time the Chinese population can access gold in any form. If you look at one tenth of one per cent of those savings going into gold, that represents 100 tonnes of gold per year. It has a very large potential impact on the gold price. “The second aspect is gold as a currency. Gold has been one of the best performing currencies against the US dollar over the last fifteen months. When you look at the Central Banks holding US dollars and paying 1.5% interest, gold only has to go up $5 to beat that.  Gold -- Sharefin, 19:53:12 05/08/03 Thu Perth Mint Gold Quoted Product (PMG) The Western Australian Government-owned Gold Corporation, operator of The Perth Mint, today released full details of its new Perth Mint Gold Quoted Product (PMG), which will quote on the Australian Stock Exchange (ASX) on Friday 16 May. The unique product will enable investors to buy gold through their stockbrokers. The gold will be stored at The Perth Mint under WA government guarantee, according to the PMG Product Disclosure Statement. "Investors will be able to trade gold on the Australian Stock Exchange knowing their investment has the security of a government guarantee," said Mr Don Mackay-Coghill, Chief Executive Officer of Gold Corporation. The ASX price of PMG will track the international over-the-counter market spot price of gold and will be based on the market value of gold backing a PMG at the time of purchase. Each PMG will be fully backed by one hundredth of a troy ounce of fine gold owned by Gold Corporation. Every 100 PMGs will entitle investors to one troy ounce of fine gold on exercise. PMG is structured as a call warrant under ASX Business Rules and will trade under the ASX Code ZAUWBA. Gold Corporation will appoint market makers, one of which is Deutsche Bank AG, to ensure PMG market liquidity. Computershare Investor Services Pty Limited will be the PMG Registrar. Fiat -- Sharefin, 19:51:48 05/08/03 Thu Greenspan alludes to JP Morgan's derivatives risk JP Morgan Chase found itself under the spotlight on Thursday when Federal Reserve Chairman Alan Greenspan alluded to the bank's massive derivatives portfolio and the threat it may pose to markets. JP Morgan's $28 trillion share of the more than $100 trillion derivatives market makes the bank almost too big to fail, experts said. The No. 2 U.S. bank is by far the leader among the handful of banks that dominate the derivatives market, and Greenspan warned that troubles like credit rating downgrades at one of the firms could lead to disorder in financial markets. JP Morgan declined to comment on Greenspan's remarks. The bank's role in the derivatives markets means it has financial relationships that extend well beyond Wall Street, reaching deep into Corporate America and around the world. Fiat -- Sharefin, 19:50:20 05/08/03 Thu Greenspan Praises Role of Derivatives Federal Reserve Chairman Alan Greenspan, taking issue with the warnings of billionaire investor Warren Buffett, said Thursday that the growing use of complex financial instruments known as derivatives does not pose a threat to the country's financial system. Greenspan said that financial market participants who purchased derivatives, including banks, had been able to spread their risks and this had helped to lessen the severity of the 2001 recession. "Even the largest corporate defaults in history - WorldCom and Enron - and the largest sovereign default in history - Argentina - have not significantly impaired the capital of any major financial intermediary," Greenspan said in remarks delivered by satellite to a banking conference in Chicago. "The benefits of derivatives, in my judgment, have far exceeded their costs," Greenspan said. Greenspan used his speech as a rebuttal to warnings about the use of derivatives issued by Buffett, the president of Berkshire Hathaway Inc., in March in his annual letter to shareholders in his company. In this year's letter to shareholders in his company, Buffet contended that derivatives were "financial weapons of mass destruction" saying that they posed grave risks to the financial system. Fiat -- Sharefin, 19:47:06 05/08/03 Thu Mark Looking at my Swing chart this latest rally looks to be finished. The last major sell signal was in March last year & it's just given it's latest sell signal this year so the markets should head down here to new lows.  Clyclist on Deflation -- Mark, 18:16:22 05/08/03 Thu Cyclist, 08:31:41 05/07/03 Wed "June bonds ready to break out ,116 is the number. This will be the signal ,a flight to treasuries and the start of Deflation." Historically, bonds and stocks have trended in the same direction. Since 98' they've trended opposite one another. You've probably noticed they've been trending in the same direction recently. Therefor either the bond markets are completely wrong or the stock market is wrong. In most likelyhood the bond market or the stock markets are about to diverge in the near future with a sharp drop in stock prices or a sharp drop in bond prices. The US Dollar on the otherhand has been in a bear market since the summer of 2001. As you would see after studying the historic charts of the US Dollar bear and bull markets, that currently we have another 5-6 years for the current US Dollar bear to run its course. Without a panic that seeks low-risk treasury bond investments, the US bonds eventually weaken as a result of the depreciating US$. If you've been watching the VIX numbers, it's glaringly obvious the financial markets are NOT currently in a panick. The NASDAQ is outperforming the DOW showing just how optimistic the investing public has been over the past several months. However, we're within a few weeks / months of the stock markets resuming there down trends. Sooner rather than later, bonds will once again trend in the same direction with stocks. Long tern rates will head up as the dollar continues its downward slide. Governments will pay off debt with depreciated currencies. Stagflation will once again rule the financial landscape. Deflation in today's debt laden world would lead to world wide depression and will be avoided at all costs by governments around the world. As US Federal Governor Bernanke remarked last November, the Fed has a weapon to fight deflation, it's called the printing press. And they will use it. Deflation is definitely not good for gold but that is the topic of another discussion. Richard Russell -- Sharefin, 08:32:27 05/08/03 Thu Royal Mint May Start Minting Gold Dinar Coins By Oct KUALA LUMPUR, May 6 (Bernama) -- The Royal Mint of Malaysia, Asean's only coin minting company, is targeting to begin minting the Gold Dinar before October this year as commemorative coins. "I think before October we can start the minting," its managing director, Datuk Megat Mohamed Abdul Wahab, said here, Tuesday. "We hope to produce the Gold Dinar not as a currency but as commemorative coins for the payment of zakat (tithes) or mas kahwin (dowry)," he told newsmen here, Tuesday, after the launching of the Kuala Lumpur International Money Fair 2003. He also said that Royal Mint was in the midst of preparing a proposal to mint the dinar and expects to make the submission next week to Bank Negara Malaysia. Megat Mohamed disclosed that Royal Mint was talking with Islamic scholars from the International Islamic Universtity to standardise pegging of dowry to gold dinar. At present, dowry varies between states in Malaysia. If the dinar could be standardised as a dowry in Malaysia, it has the potential to be used in neigbouring countries like Indonesia, Brunei and Singapore, he said. On the planned denomination of the dinar, he said that it would be up to the central bank to decide. As for Royal Mint's plan to produce coins for Asean countries, he said that the company was in serious discussion with "a big Asean country" on the matter. "We are supposed to go there and talk but because of the Severe Acute Respiratory Syndrome (SARS), we have to postpone it for a while," he said. Royal Mint's venture to produce coins for other countries would be backed by the company's RM20 million investment in a totally new facility at its Shah Alam plant. The new facility allows the company to produce two billion pieces of blank coins per year. Megat Mohamed said that after another RM16 million investment, Royal Mint could now produce 1.2 billion pieces of minted coins per annum compared with 400 million pieces of minted coins per year prior to its privatisation from Bank Negara. The Royal Mint of Malaysia, established in 2000, is the country's sole minter of coins and medallions. Its main customer is Bank Negara Malaysia, which accounts for about 80 percent of its total business. Richard Russell -- Sharefin, 08:29:26 05/08/03 Thu Monstrously More Monetary Creation Richard Daughty The Mogambo Guru May 08, 2003 The Daily Reckoning " ... Money inflation leads to price inflation. Price inflation is historically bad news for anybody experiencing it. And... and this is the part that makes me scream in my sleep and awake in a sweat-soaked panic to empty whole banana-clip magazines of expensive high-powered ammo at anything that moves in the shadows... not only have we HAD monetary inflation for at least six years, not only are we HAVING monetary inflation right freaking now, but we have Alan Greenspan and Ben Bernanke explicitly promising to do even MORE monetary creation! And everybody else is, too! And we are monstrously deficit-spending at the end of a long, long boom where there is zero pent-up demand! Gaaaaaaahhhhhh!.. ." The jackasses at the Federal Reserve pumped up raw credit in the system by another $6.5 billion dollars last week, continuing that particular filthy fraud. Actually, $6.5 billion is not that bad by recent Fed standards, but still, it is a new record. I hope you'll pardon me if the typing gets weird right here, as my eyes seem to be glazed over, and several circuits in my tiny little brain have seemingly popped their fuses. Apparently they were wired to the circuits that control bladder and bowel functions, because when I read that the banks soaked up an incredible $56 billion in government debt last week, I might have had a little accident. My hygiene problems aside, this is, as far as I can tell, a new record for a one-week feeding frenzy. Perfect. Just freaking perfect. But, you may be relieved to know, I also plan to lay in a supply of Depends adult diapers for the NEXT time I go snooping around in the banking system. Richard Russell -- Sharefin, 08:03:40 05/08/03 Thu Inflate or Die! Deflation- Why is deflation so feared by the Fed? It's feared because in the debt-logged US, any deflation could bring down the house. The US system is based on debt and the ability to service that debt. In deflation, dollars are worth more and harder to come by. If the US was to lapse into deflation, the mountains of debt that reside in ever crevice and corner of the US economy could give way to mass bankruptcy -- and paralysis at the Fed. Real interest rates could sink below the zero level, making the Fed impotent, and unable to work its "inflation magic." This reveals the Fed's fear of gold and even a partially gold-back currency. A system based on gold would force discipline on the Fed. It would prevent the Fed from increasing liquidity at will. Such a system would stymie the Fed and put a brake on debt creation. Since rising debt is a cornerstone of US prosperity, you can see why the Fed will fight to the death the inclusion of gold into the system. The Fed in its anti-deflation policy has a huge problem. The US depends on roughly $1.5 billion in foreign money coming into the US every day. This is the money that off-sets the US's chronic current account deficit, which is running at half a billion dollars a year. Lower rates or a declining dollar make US investments less attractive. How do you keep foreign money coming in? That's going to be a terrific problem. The essence of the whole situation is this -- the Fed will to anything and everything to stave off deflation. One thing they are doing now is buying bonds as part of their policy of holding long rates down. Rising rates are deflationary. The war is on. I have for years labeled this war -- INFLATE OR DIE! Never since I first started using this phrase has it been more true, and more urgent. Gold -- Sharefin, 08:01:21 05/08/03 Thu Thievery, Corruption & Shenanigans Gold-- When the subject of corruption comes up, my thoughts always turn to the foundation of our whole economic system -- our currency. And, of course, our currency is a product of an unconstitutional system known as the Federal Reserve. The Fed can create liquidity at will. As a result, the currency that you and I work our tails off for -- loses its purchasing power year after year after year. If I sneaked into your home and stole 2% 3% or 4% of your goods or merchandise every year, you'd call me a criminal and either call the police or possibly take the law in your own hands and reach for your Remington 12 gauge shotgun. But the Fed is doing roughly the same thing, and it's legal. Every year your money buys less and less. In fact, since the early 1940s the Federal Reserve Notes that you and I call "dollars" have lost 95% of their purchasing power. Some call it inflation, some call it legalized thievery -- the Fed calls it, well, they just call it "the Federal Reserve system." And 99% of Americans in the "great sleep" which they call their lives don't call it anything. They don't even realize that they are being systematically robbed of the fruits of their labor and their savings. Gold -- Sharefin, 07:56:40 05/08/03 Thu W Australia Govt Backs Listing Of Gold Warrant On ASX The Western Australian state government backs the listing of a gold call warrant on the Australian Stock Exchange May 16. The government-owned Gold Corp., which operates the Perth Mint, Wednesday issued details of the product called Perth Mint Gold Quoted Product, or PMG. Each PMG, structured as a call warrant, will be fully backed by one- hundredth of a troy ounce of fine gold owned by Gold Corp., the company said in a statement. Investors will be able to buy gold through their stockbrokers, and every 100 PMGs will entitle them to a troy ounce of fine gold on exercise. The gold will be stored at the Perth Mint under the state government guarantee, Gold Corp. said. The ASX price will track the international over-the-counter spot gold price and will be based on the market value of gold backing a PMG at the time of purchase, it said. Gold Corp. will appoint market makers, one of which is Deutsche Bank AG., to ensure liquidity in PMG trading. Currently, gold bullion securities backed by the World Gold Council are trading on the ASX, with each security representing one-tenth of a troy ounce of gold. <2> Forum archived -- Sharefin, 07:54:49 05/08/03 Thu The Forum has just archived itself & prior posts can be viewed here. |
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