Gold -- Sharefin, 09:52:30 12/30/03 Tue Gold: A Rediscovered Investment The Pharisee's Role In Gold And The Dollar Crash Since Day 911 the US dollar has fallen over 40% as compared to the Euro, the European currency “basket.” About half of that drop occurred since May 2, 2003, when hostilities in Iraq were reported to have ended. This means that had you or I been in the know we could have earned about 10 years of savings account interest in only six months, without buying a thing. We could have asked our respective bankers to convert our dollar savings accounts into Euros with a simple bookkeeping entry. Yes, there would have been a little red tape, but the international money dealers and bankers do this all the time for their own accounts. Perhaps we need to know what they know? The mysterious Euro is not the only measure of the dollar's collapse. There is hardly a currency that has not gone up against the dollar, including the South African Rand, which has more than doubled! Stories of the falling dollar are whispered in hushed tones but do not often make it into the US press, or when it does the explanation is usually murky. Few Americans as yet give any real meaning to the fall of the dollar or related it to the rise in gold prices. But it is not a coincidence, and there is reason to believe the trend has not run its course. If you were to ask your local bank VP to explain the relationship between gold and the dollar, you could expect a long and confusing answer, ending with something like this: "Nobody knows what will happen in the final analysis." Your banker's MBA or PHD degree does not equip him to understand anything as basic as what makes gold and the dollar go up and down. But the big usury-bankers (internationalists with license to print diluted money out of thin air) who own and run the Federal Reserve anti-bank and its clone anti-banks in world financial centers understand gold very well. You, too, can understand it and so can your l3-year old, if he is bright and willing. Here are a few questions: What do serial wars have to do with gold and the dollar? How is our currency diluted? What does the Federal Reserve System (FED) do? Why didn't CNN or 60 Minutes explain this? Who owns the gold? Periodic Ponzi Update PPU -- $hifty, 00:24:25 12/29/03 Mon Ponzi Chart Periodic Ponzi Update PPU Nasdaq 1,973.14 + Dow 10,324.67 = 12,297.81 divide by 2 = 6,148.905 Ponzi Up 34.285 from last week. Thanks for the link RossL ! Go GATA ! Go GOLD ! $hifty  US -- Sharefin, 09:25:37 12/28/03 Sun What Do We Do? What do we do when the society in which we live prevents us from being moral? Or from telling the truth as we see it? What do we do when our society encourages us not question statements that we know in our hearts to be lies? What do we do when our TV and newspapers tell us lies but insist we should regard this information as truth? What do we do when the vast majority of people in our society accepts these lies as truths and ridicules us when we call these statements lies? ~~~ What do we do we when can't trust the food we eat, the air we breathe, the water we drink, or the medicines we take to make us well? How are we to regard these efforts to criminalize vitamins and other health foods when the doctors we go to prescribe medicines that are less effective than those beneficial substances they have worked so hard to ban? What do we do when our nation decides to go into a state of permanent war, choosing hapless countries to attack and then obliterating them, then fleeces its own citizens with devious legislation that funnels billions of dollars to companies to reconstruct what we've just destroyed for reasons we later learn were transparent lies? How are we to regard such a country, such a group of men who would do such a thing to their fellow human beings? And how are we to regard ourselves for believing and supporting such insane and inhuman policies? What do we do when the vast majority of American citizens refuses to even recognize that anything is out of whack? ~~~ The existing political structure in America is rotten to the core, fatally polluted by a private money supply that enables perverted patricians to retain their aristocratic power across the generations. Until this injustice is eliminated, and the power over money is returned to the people, nothing will be fixed, and the unjust wars will proliferate. Instead of leading a more humane world into a new era of enlightenment, understanding and technological diversity, America is dragging the world backwards into a new Dark Ages where force of plunder is annihilating legitimate efforts toward reciprocal respect and cooperation. Under present circumstances, there is no alternative to the mass dismissal and prosecution of the entire American government — the administration, the congress, the judiciary all must be indicted for criminal corruption.  War -- Sharefin, 09:05:24 12/28/03 Sun WITH A WHISPER, NOT A BANG Bush signs parts of Patriot Act II into law — stealthily O n December 13, when U.S. forces captured Saddam Hussein, President George W. Bush not only celebrated with his national security team, but also pulled out his pen and signed into law a bill that grants the FBI sweeping new powers. A White House spokesperson explained the curious timing of the signing - on a Saturday - as "the President signs bills seven days a week." But the last time Bush signed a bill into law on a Saturday happened more than a year ago - on a spending bill that the President needed to sign, to prevent shuttng down the federal government the following Monday. By signing the bill on the day of Hussein's capture, Bush effectively consigned a dramatic expansion of the USA Patriot Act to a mere footnote. Consequently, while most Americans watched as Hussein was probed for head lice, few were aware that the FBI had just obtained the power to probe their financial records, even if the feds don't suspect their involvement in crime or terrorism. The Bush Administration and its Congressional allies tucked away these new executive powers in the Intelligence Authorization Act for Fiscal Year 2004, a legislative behemoth that funds all the intelligence activities of the federal government. The Act included a simple, yet insidious, redefinition of "financial institution," which previously referred to banks, but now includes stockbrokers, car dealerships, casinos, credit card companies, insurance agencies, jewelers, airlines, the U.S. Post Office, and any other business "whose cash transactions have a high degree of usefulness in criminal, tax, or regulatory matters." Congress passed the legislation around Thanksgiving. Except for U.S. Representative Charlie Gonzalez, all San Antonio's House members voted for the act. The Senate passed it with a voice vote to avoid individual accountability. While broadening the definition of "financial institution," the Bush administration is ramping up provisions within the 2001 USA Patriot Act, which granted the FBI the authority to obtain client records from banks by merely requesting the records in a "National Security Letter." To get the records, the FBI doesn't have to appear before a judge, nor demonstrate "probable cause" - reason to believe that the targeted client is involved in criminal or terrorist activity. Moreover, the National Security Letters are attached with a gag order, preventing any financial institution from informing its clients that their records have been surrendered to the FBI. If a financial institution breaches the gag order, it faces criminal penalties. And finally, the FBI will no longer be required to report to Congress how often they have used the National Security Letters. Fiat -- Sharefin, 18:27:27 12/27/03 Sat Who to blame when the next bubble bursts Any assessment of Alan Greenspan's long tenure at the Federal Reserve has to present the stock bubble as his biggest failure. If Greenspan had effectively and consistently warned investors of the irrationality of stock prices in the late 1990s, the bubble never would have reached such dangerous proportions. His "irrational exuberance" comment just wasn't enough. The collapse of the bubble, which destroyed more than $8 trillion in paper wealth, was the immediate cause of the 2001 recession and the economy's subsequent period of weak growth and failure to create jobs. The collapse also left pension funds unbalanced and forced millions of workers to delay retirement. After his failure regarding the largest financial bubble in the history of the world, it looks like Greenspan is now actively promoting the world's second-biggest bubble: the housing market. The basic story is simple: Over the last eight years housing prices have outpaced the overall rate of inflation by more than 35 percentage points. There is no precedent for this sort of rise in home prices. In the past, home prices largely kept even with the general rate of inflation. ~~~ Where does Greenspan fit in? He has promoted the housing bubble by reassuring people in public statements that there is no bubble. He also helped drive mortgage interest rates to 40-year lows earlier this year -- allowing people to spend more money on houses, which adds to price inflation and to the bubble. ~~~ Three years later, we face huge budget deficits. There is no reason to ask whether Greenspan -- who doesn't have to answer to anyone -- would pursue a destructive economic policy for political reasons because he has already done so.  Gold -- Sharefin, 18:20:14 12/27/03 Sat Rule eased for gold processing trade Starting from next year, approval from the People's Bank of China, the country's central bank, will not be required for import and export of gold and gold products, according to a joint circulated issued today by the PBOC and the General Administration of Customs.  Gold -- Sharefin, 18:07:51 12/27/03 Sat Gold closes at all-time high of Rs 6,210 Gold prices continued to rise on the bullion market here today and after breaking all previous records, pure gold ended at an all-time high of Rs 6,210/10 gms.  Fiat -- Sharefin, 17:58:00 12/27/03 Sat From Bad to Awful - Barron's Interview w/ Hugh Hendry In his Armageddon scenario, Hendry says the S&P 500, now hovering near 1,100, could drop as low as 304. Right now, a generally bearish Hendry thinks profit expectations are much too low for mining stocks, gold and many basic-resources companies, and he likes the return from Japanese property stocks. And, he contends, the bullish prospects for technology and big pharmaceutical stocks are significantly overestimated. How much of a bear is he? Well, in his more optimistic scenario, the Federal Reserve reflates the economy and stocks essentially go nowhere from now until 2020. In his Armageddon scenario, the S&P 500, now hovering near 1,100 could drop as much as 80% from its all-time high of 1527, putting it at 304. For more, read on. Barron's: What's your current view of the global economic picture and financial markets? Hendry: What's happening today happened 300 years ago in the French economy when John Law, another Scotsman, was allowed to launch the first government-sanctioned bank, which replaced coins with paper money. Commerce boomed. Politicians recognized this correlation between issuing more money and people liking you. They issued more and more money, but it was a false promise. Nothing intrinsically was being added to the economy except promises, which could never be redeemed. Selling by speculators caused the stock market to correct. The correction encouraged the authorities to print more funny money. Ultimately, the continued pumping of liquidity destroyed the economy, the stock market and France's currency. More recently, the U.S. came off the gold standard in 1971 and the Dow Jones Industrial Average bottomed in 1974. Over the next 25 years, the Dow goes up 20-fold because every period of economic anxiety brought forward an orthodoxy of generous liquidity. Money has to go somewhere. It seeks to perpetuate itself by going into a rising asset class. This time, it is financial assets. Just like the Mississippi stock scheme in 1720 and the South Sea Bubble in London at the same time. Fiat -- Sharefin, 17:34:04 12/27/03 Sat Dollar will plunge if Asian banks bail out Higher US interest rates should support the dollar. But for many investors, the long-term structural weaknesses in the US economy are trumping the short-term fizzle that comes from faster growth. This might keep the dollar from staging a sustained recovery in the coming years. The greater worry for US officials is not a shift in new investment away from the dollar but a more basic decision by foreign investors to reduce their huge stock of investment in the US. The more the dollar slides, the less their investments are worth, the more likely they are to withdraw en masse. If that were to happen, the dollar would collapse, taking with it the US economy. Gold -- Sharefin, 18:05:27 12/26/03 Fri Two Prominent Gold Mines to Close Down RIYADH, 27 December 2003 — Two of the Kingdom's most prominent gold mines — Mahd Ad-Dahab in Madinah and Sukhaibarat in Al-Qassim — are to be shut down in 2005. Mahd Al-Dahab, which means golden bed, has been known for 3,000 years. The mine, with a workforce of 270, produced 35 tons of gold during its 15 years of operation, with gold production ranging from 36,000 to 160,000 ounces per annum. Sukhaibarat, with 180 employees produced about 22 tons of gold during the same period. Fiat vs Silver -- Sharefin, 17:50:20 12/26/03 Fri A Truly Wide-Awake American As a free nation, the United States is done. Via the pre-planned "inside job" 9-11, and the subsequent Patriot Acts, Dept of Homeland Security, Presidential Executive Orders, and new "enforcement" laws buried deep in legislation passed by our "zombied" Congress, the peoples of the United States are being placed under increased "lockdown", and, with another pre-planned 9-11 looming on the horizon, the endgame is total lockdown. ~~~ There is a darkness which appears as light. It is Luciferian. And that is what we have in this nation and the government which rides roughshod on our lives, and which has hijacked and gutted our freedoms and liberties, and our Constitution and Bill of Rights - all in the name of "defending and protecting" our freedoms and liberties, of which what we have left is but an empty shell. And that shell is about to be broken and swept away, for another 9-11 is an obvious future contrivance, in which case, it will become a total "lockdown on America". For we have become a nation which has thrown its God behind its back! Fiat vs Silver -- Sharefin, 17:47:45 12/26/03 Fri House Prices in a Post-Fiat World Abstract: This essay discusses some issues involved in making investment decisions if the dollar is no longer available as a medium of exchange, a unit of account and a store of value. Gold and silver will step into these roles but there will be a period of adjustment as wages and prices find new levels, presenting a rare profit opportunity. I argue that an objective price exists for a "standard" rental property against which the market price can be compared, and I attempt to determine that price in silver. While there may be shortcomings to my method, I think even an imperfect estimate is very helpful as it uses something concrete and stable - real estate - to bridge the gap between the experiences of fiat versus post-fiat environments.  Auspec -- Sharefin, 17:41:40 12/26/03 Fri And a merry Xmas & HNY to you too.(:-)))) I liked the silver valuations in the top chart of this series. I rebased silver by multiplying it by 25 and as you can see silver has to rise by a three to one factor in comparrision to gold in the coming move. In past history in bull runs silver out paces gold in volatility. So if gold moves up to $1000 then I would guess silver would rise to approx $40. On the gold front I would also like to see the house to gold ratio to return to it's prior base level of 100oz of gold per average house. An average house price of say 125,000 (a 50% decline) & a gold price of $1,250 would achieve this. Average US House Prices Valued in Gold/Silver   silver scrutiny -- auspec, 20:51:45 12/25/03 Thu Just finished reading the Butler article on silver........always a good read {http://www.investmentrarities.com/12-23-03.html}. It's been nearly 10 years now that I've read most everything I could get my hands on regarding silver, this latent bull HAS worn out a lot of folks. Butler's fingering of AIG as the chief silver manipulator is most interesting as they will finally have to hold up under SCRUTINY! They won't last long. Check out Barrikk Gold for their latest defensive posturing if you care to. JPM is also going to make it as overcooked bread soon, imh&so. Those that live by the manipulation are also going to fail miserably by the very same manipulation. Silver never really had to be linked so closely to gold that it had to similarly be suppressed. Silver had a MUCH greater chance of being "commoditized" than gold ever did, but no, the two shall now be linked for the rest of our lifetimes, thanks to the greedy and fearful ones that squandered our nation's strategic silver supplies. Fearful? Yep, silver was suppressed alongside gold because they have both been money in the past and letting one slip would shed light on the other, or so they thought. The two were thus re-married as ultimate valuables by the very fools trying to keep them from again resuming this role. Of course, it is a most shortsighted goal to use paper derivatives to cover up a shortfall of silver or gold, but especially silver. Greed? Plundering US wealth is simply sport for these mega/transnational entities. Whether it's unlimited money @ 1% interest, CB gold @ similar rates or access to the US strategic stockpile of silver well below the cost of production.........this is the way of these modern day moneychangers. If AIG greed just happens to coincide with CB ideals of keeping silver under wraps, so much the better. These morons set this game up, forever linking gold and silver once more. They'll just have to deal with it according to their own folly when the silver chicken flys the coup. They'll wish silver was NEVER singled out to be any different than copper, tin, lead or zinc and they will pay dearly for this action. Exactly how clever are those that have long manipulated silver and gold? They actually are more devious than clever with all their endless lies, false accounting, derivatives and outright thefts. It's a losers game and that has been apparent to the discerning mind for NUMEROUS years. They can't handle the scrutiny and their desperation is and has been patently obvious. It is simply a matter of time until their games end as they always have historically and more and more worldwide citizens understand what can't stand. Smart money has long been positioned......BIG smart money is now entering the fray. Merry Christmas, AIG and Friends, the market is closed today.....enjoy it as there won't be many more you will be able to. ******************************************** Thanks, Sharefin, for allowing my incessant rants to be placed on your fine site. A real Merry Christmas to you! silver scrutiny -- auspec, 20:49:07 12/25/03 Thu Fiat vs Gold -- Sharefin, 06:20:41 12/24/03 Wed Congress authorizes Ashcroft to track gold in the U.S. According to HR 2417 (Section 374), which became Public Law 108-177 on Dec. 13, 2003: (a) MODIFICATION OF DEFINITION- Section 1114 of the Right to Financial Privacy Act of 1978 (12 U.S.C. 3414) is amended by adding at the end the following: '(d) For purposes of this section, and sections 1115 and 1117 insofar as they relate to the operation of this section, the term 'financial institution' has the same meaning as in subsections (a)(2) and (c)(1) of section 5312 of title 31, United States Code [...]' where the Financial Privacy Act was one of the victims of the USA PATRIOT Act (Section 358). Now HR 2417 redefines "financial institution" to match U.S. Code Title 31 Section 5312: (2) ''financial institution'' means - [...] (N) a dealer in precious metals, stones, or jewels; This could be a prelude to an FDR-style outlawing of gold possession. For more on the future of gold vs. paper money, see the Dec. 28, 2002 UnderReported.com story China deregulates gold; country's demand to double, affecting world market. Periodic Ponzi Update PPU -- $hifty, 23:57:51 12/21/03 Sun Ponzi Chart Periodic Ponzi Update PPU Nasdaq 1,951.02 + Dow 10,278.22 = 12,229.24 divide by 2 = 6,114.62 Ponzi Up 119.04 from last week. Thanks for the Link RossL ! Go GATA ! Go GOLD ! $hifty Gold -- Sharefin, 20:41:55 12/20/03 Sat Who's watching....... Japanese Gold  Gold -- Sharefin, 20:31:59 12/20/03 Sat Gold Derivatives: Hitting the Iceberg What is the size of the total short physical gold position, or put another way, how much gold from their vaults have the central banks collectively deposited, leased or swapped into the market through the bullion banks? Taking advantage of guidelines promulgated by the International Monetary Fund, most central banks report their gold reserves without providing a breakdown between bullion held in their vaults and gold receivables owed to them on account of deposits, loans and swaps, as would be required under more normal accounting practice. Thus the size of the total short physical position continues to stir controversy, with Gold Fields Minerals Services sticking to its estimate of 4000 to 5000 tonnes notwithstanding the mountain of research by the Gold Anti-Trust Action Committee and its associates suggesting an amount two to three times as large. See, e.g., T. Wood, "That gold short position," Mineweb (December 5, 2003). Summarizing material published by James Turk, Frank Veneroso and at this website, the above-cited article states: "Combining those figures [outflows of 'official' gold from the Bank of England as indicated by British export statistics uncovered by Mr. Turk] with the NY Fed and BIS data produces an outstanding gold loans number more or less in line with the original Veneroso estimates of 1998 and subsequent 'back-in' calculations by Reg Howe that put the figure at 15,000 tonnes." ~~~ Most Recent Data on Gold Derivatives. On November 12, 2003, the BIS released its regular semi-annual report on the OTC derivatives of major banks and dealers in the G-10 countries for the period ending June 30, 2003 (www.bis.org/publ/otc_hy0311.htm). The total notional value of all gold derivatives, which had risen from $279 billion at mid-year 2002 to $315 billion by year-end, declined to $304 billion as of June 30 this year. ~~~ Even at 4000 tonnes, the world producer hedge book could never seem to account for more than about a third of the total forwards and swaps reported by the BIS. Now, with that number almost cut in half, total forwards and swaps as reported by the BIS remain marginally above their year-end 2001 level and not far off their year-end 2002 peak. Taking GFMS's delta-adjusted figures, the decline in producer hedge books is not quite as steep, but still amounts to a drop of nearly 700 tonnes or almost 25% since year-end 2001. Indeed, most of this decline (436 tonnes) came in 2002 when the BIS actually reported rising forwards and swaps. Taken as whole, these numbers cast serious doubt on the widely-accepted assumption that producer hedging is responsible for the great bulk of total gold derivatives, particularly forwards and swaps. Notwithstanding the efforts of the BIS to eliminate double-counting, some have argued that its higher figures are the result of unspecified overlaps which have the effect of inflating producer hedging to much higher levels than those reported by GFMS. But if this argument were valid, reductions in producer hedge books should have operated in reverse to deflate the BIS's figures on gold derivatives by equally large amounts. That producer hedge book reductions have had little if any impact on total gold derivatives reported by the BIS suggests, as does the absolute data itself, that producer hedging never accounted for much more than the very visible tip of a gold derivatives iceberg consisting in major part of transactions related to the gold carry trade, which never could have grown to the size implied by the BIS data without the active support of the G-10 central banks. ~~~~ As the world financial system built around the paper dollar collides with the gold derivatives iceberg, the glittering jewel starring in the most intriguing subplot is Barrick Gold, the company that used some of the planet's greatest gold ore bodies to create its most notorious producer hedge book. ~~~ Facing a deeply underwater hedge book of 16 million ounces (approximately 500 tonnes) and a lawsuit charging that the company and its bullion banker, J.P. Morgan Chase, had used forward sales to manipulate gold prices, Barrick recently announced that it would discontinue its gold hedging program and bring its hedge book down to zero. ~~~ In addition to damages, the plaintiffs, led by Blanchard and Company, the largest retail dealer in physical gold in the United States, have asked for an injunction "terminating all Master Trading Agreements, spot deferred sales contracts and all other contracts through which Defendants manipulate the market for gold as alleged herein, on terms that provide for the expeditious repayment of the borrowed gold [emphasis supplied], and enjoining Barrick, J.P. Morgan and [other unknown corporations] from entering into such contracts in the future." ~~~ Not surprisingly, there has been considerable speculation with regard to what may be going on behind the scenes. For whatever reason, Barrick has effectively met the second part of the plaintiffs' demand for injunctive relief. However, satisfying the first part -- the closure and repayment of existing spot deferred contracts on an "expeditious" basis -- is not as easy to accomplish. Five hundred tonnes is a lot of gold to pull from a tight physical market without giving prices a big push higher. Large as it is, however, this amount hardly begins to melt the gold derivatives iceberg. This alarming fact lends Mr. Panizzutti's comments about future central bank gold sales the ring of a ship's officer trying to calm fears and maintain order while loading the lifeboats.  Auspec -- Sharefin, 20:21:01 12/20/03 Sat The motion in the ocean is clearly visible in the charts. What the flappers flap about is already written on the tape. Today there appears much hoomp-pa-pa, hoomp-pa-pa ramping of the psyches of the gold bug crowd. Personally I think that some caution & conservatism within the goldbuggery cheer leading squads would go down well across the board. After all gold is on her own way doing that which she does so nobly. We the barrackers need do or say little & still she would behave as she does. Gold will go where she is bound with or without the volumes of opinions expressed either which way. I for one, if I held good winnings on the fiat gold stocks would be more than keen to lock such in. One only need observe the myriad of charts available to realise the greatest gains in this leg are all behind us. Anything short term in front of us is merely icing on an already fat cake. This leg is just one in many to come as the golden bull stretches her legs over this decade. We have only begun the race & much more is yet in front of us. Rather than the hype which permeates this industry & I would turn to objective analysis & rational thinking to plan ones moves. The mania has only but begun......^o-o^...... Barrons -- Heavy Metal Sunshine, 13:55:15 12/15/03 Mon Scrutiny, Nice Post. Agreed Barrons has there own agenda, however I look at there forays into market manipulation as opportunities to make a quick buck and thus expand my portfolio. They are too big for me to fight but not to slick for me to take advantage.  Scrutinizing Baron's -- auspec, 12:31:32 12/13/03 Sat From Dow Jones Company Profile: Full Description Dow Jones & Company, Inc. is a global provider of business and financial news and information through newspapers, newswires, magazines, the Internet, television and radio stations. In addition, the Company owns certain general-interest community newspapers throughout the United States. The Company has three segments: print publishing, which includes The Wall Street Journal and its international editions, Barron's and other periodicals, as well as United States television operations; electronic publishing, which includes the operations of Dow Jones Newswires, Consumer Electronic Publishing and Dow Jones Indexes/Ventures, and general-interest community newspapers, which consists of the Company's wholly owned Ottaway Newspapers, Inc. Print Publishing The print publishing segment includes The Wall Street Journal and its international editions, Barron's and other periodicals, as well as United States television operations. The print publishing segment represented about 60% of 2002 revenues. The Wall Street Journal, Dow Jones' flagship publication, is a daily newspaper with average circulation of 1,817,000 for 2002. In April 2002, the Company debuted the enhanced Wall Street Journal (Today's Journal). Today's Journal is the cornerstone of Business Now, Dow Jones' long-range strategic plan. Barron's, the Dow Jones Business and Financial Weekly, is a weekly magazine with average circulation, in 2002, of 295,000 and caters to financial professionals, individual investors and others interested in financial markets. In 2002, Barron's tripled its color-page capacity and also launched a new Technology Week section, which has added value to readers and brought in new advertisers. The Wall Street Journal Classroom Edition is published nine times during the school year and is read by an estimated 745,000 students every month during the academic year in more than 4,600 middle school and high school classrooms throughout the United States. Individuals, organizations and corporations sponsor nearly one-half of all subscriptions and schools sponsor the remainder. 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The Company also publishes The Wall Street Journal Special Editions, which are a collection of pages in local languages distributed as part of 36 newspapers in 33 countries. The Far Eastern Economic Review is published weekly in Hong Kong and an Asian English-language business magazine, providing authoritative news and analysis on Asian business, economics and politics. The Company's publishing segment competes with Reuters Group Plc, Bloomberg L.P. and McGraw-Hill, Inc. Electronic Publishing Electronic publishing includes the operations of Dow Jones Newswires, Consumer Electronic Publishing and Dow Jones Indexes/Ventures. Consumer Electronic Publishing includes the results of WSJ.com and its related vertical sites, as well as consumer focused electronic publishing licensing businesses. Revenues in the electronic publishing segment are mainly subscription based and comprised about 20% of 2002 revenues. 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The reprints/permissions business sells print or electronic reprints of The Wall Street Journal and Barron's stories. The Wall Street Journal Radio Network produces and distributes late-breaking business reports during the week to about 200 radio stations in the United States and Canada. In 2002, the Radio group launched a one-hour morning show, which is carried on 23 radio stations. Dow Jones' electronic publishing segment competes with FT.com, New York Times Digital, TheStreet.com, Bloomberg, Forbes.com, Yahoo!Finance, CNET, MarketWatch, AOL/CNNfn, MSNMoney/CNBC, Standard & Poors, The Financial Times, Morgan Stanley/Capital International, Dialog Corp. and Lexis-Nexis. END *********************************************** Comments: So........"The Street" doesn't like gold, eh? No major surprise there. The interesting part is exactly WHO would pay any attention to Barron's within the gold community anyway. Gotta be the various institutions newly discovering gold. With crap like this being put out it's easy to see why the gold players actually need our multiple full time cheerleaders. SCRUTINY -- auspec, 16:18:59 12/12/03 Fri Scrutiny Ed Bugos, of the Golden Bar Report, recently advised his subscribers that gold stocks were getting a little frothy. This caused much consternation from Captain SinWag who blasted Bugos from on high with both primary orifices and then withdrew into the corner to allow no more infighting within the gold community. Bugos received numerous critical communications from his followers who apparently take everything JS says as gospel. This was just over a week ago. What's it all mean? I have recently stated that gold manipulators would identify themselves as they come forth with bearish market information at KEY moments in time. Very similar to what Nick the **** Guarino did earlier in 03 and Martin Weiss did as well this year. Intense gold advocate scrutiny is in order when these events transpire as there are few actions as effective as standing on a table top and screaming BLOODY MURDER!! Ask the Buttox Gold blokes if you don't believe me. See the main cause for the 'death of hedging' if you must. This is activism at its best, imho. Sinbad says $450 POG is ours IF we'll just stay out of the way. Simply one expert's opinion & he has no monopoly on truth {Sh....don't tell him}. Bugos got in his way and received some lashes. Should Bugos receive scrutiny for his bearish gold call? That's a key question. I think any honest gold prognasticator is perfectly willing to be put under the microscope and I also think Bugos will hold his own under scrutiny. Pretty good call in retrospect, no? Markets don't go straight up and Bugos makes a living making timing calls to his subscribers. Ed Bugos dsidn't move this shares market lower anyway, that feat was left to the likes of Barron's....a topic to which we will shortly return. By the way, there is a vast difference between scrutiny and a witch hunt. Personally, I think it's the height of arrogance for JS to try to stifle gold market timers. Gold bugs are a rabid lot & CAN tend to get a little carried away with themselves at times {not me of course...smile}. Bugos deserves a degree of scrutiny, that's appropriate, nada mas/nada menos. Any pro can handle it. On the other hand, hopefully we won't see multiple repeated performances? What's the differences between what Guano and Weiss pulled earlier this year and Bugos' recent commentary? You'll have to make that call for yourself, but I don't begin to trust either Nick the **** or Weiss, from past experiences. How about the Prechterroid? Lotta good & historic work by this man for sure, none of which I can see as it relates to GOLD. RP has drawn numerous lines in the sand and gold continues to cross them. His subscribers that are gold aware should be all over him about now. He's about due for a MEGA bullish gold call and it will come IF he's not been compromised somehow. Believe me, RP still moves markets and I remember well his bearish silver call resulting in a big sell off in the mid 90's. Bob, you owe us one {or 2} and we're still waiting. Now, back to Barron's. I do believe this last week's gold share large sell off was mainly due to institutions and hedge types locking in some profits {& their bonuses} prior to year end. It doesn't take a lot of selling to create more selling in this emotional market. Who exactly is Barron's target audience? It certainly ISN'T the typical gold bug, that much is for sure. Could it be some institutional types and hedge guys? The Barron's article undoubtedly had a major effect as the market did exactly what they called for....shares selling off, being overvalued compared to physical. The shares did sell off as pog REMAINED SOLIDLY ABOVE $400. Some of you will remember the hatchet job that Barron's pulled on Royal Gold earlier in the year, no? Similar effect. To me, an advisory that repeatedly comes out and quashes gold at key times deserves SCRUTINY. Is their work balanced or only gold bearish at important market positions? Who do they take orders from? CAN BARRON'S HANDLE THE SCRUTINY? Personally, fwiw, I doubt it. Could Buttox Gold handle the scrutiny? There's your answer as there is the power of scrutiny. A small and very vocal minority is capable of changing the world {one hedger/manipulator @ a time}. Now, go do the right thing......... Gold -- Sharefin, 07:47:52 12/11/03 Thu Talking Gold with Newmont's CEO - Part 2 Transcript It's hard to predict how much consolidation will occur between gold companies in the future, but in the long run, consolidation will benefit the industry says Newmont Mining Chairman Wayne Murdy Fiat -- Sharefin, 06:51:50 12/11/03 Thu In Defense of Bank Failures The American people have not seen widespread bank runs since 1933. In that object at least, the Federal Deposit Insurance Corporation has succeeded. But at what cost? To insure deposits is to invite bad banking—and worse; it is to foster reckless speculation and unsound investments, help make inflation permanent instead of intermittent, obstruct the curative powers of economic contractions, and divorce freedom from responsibility. Federal deposit insurance is part of two wider trends in government policy in the twentieth century. One was what James Grant terms the "socialization of credit risk," that is removing the risk attendant on credit dealings from the contracting parties and fastening it upon society as a whole, who were now forced to make up any losses. Governments also guaranteed mortgage loans, college loans, farm loans, and even loans to foreign governments. If it is an economic and political law that "no vast subsidy goes unexploited," the excesses of the American economy in the 1980s and 90s offered plenty of corroboration. According to Grant, The institution of the federal banking 'safety net,' intended to protect innocent depositors from the consequences of bad banking, had the unintended consequence of promoting bad banking. In the United States, but also in Japan, most of the Nordic countries, Britain, and Australia, scenes of competitive bank wrecking and fabulous real estate inflation were played out in the 1980s. Gold -- Sharefin, 06:49:12 12/11/03 Thu The Dollar Crisis The current international monetary system, based on floating fiat currencies, brings about tremendous distortions which inevitably must be corrected. This much has been known to Austrians for some time. Awareness is now starting to spread to mainstream economists. To understand how we got here requires some historical background. Under the international gold standard, the flow of gold in and out of countries responded to relative prices between countries. A country with net imports, for example, experienced gold outflows as their gold was exchanged for goods to make up the difference. Because a country's gold reserves were finite and could be increased only by becoming a net exporter, the process of gold loss had a natural limit. But even before the gold supply was drawn down to zero, a decrease in the quantity of gold circulating within the importing country would in result in falling prices. There would at the same time be an opposite effect within the countries of the trading partners—the exporting countries would accumulate more gold over time, causing a rise in prices. Eventually, a point would come where there was a discrepancy in prices between the two countries such that the goods of the chronic importer became more attractive as exports to the chronic exporter. The flow of gold thus worked to maintain rough purchasing power parity of an equivalent quantity of gold between nations and prevented perpetual trade imbalances from accumulating. Where trade occurs between nations, imports must ultimately be paid for with exports. This is a special case of the general principle that consumption must be funded by production. Within a country that had accumulated gold through the sale of past exports, imports could be funded by the loss of gold for a finite period of time.  Gold -- Sharefin, 06:31:54 12/11/03 Thu If Barrick was a Hedge Fund then GOLDCORP is an ETF Back during the heyday of forward selling and hedging by gold mines, Barrick was estimated to have the largest short position in the world. In fact, Barrick's hedging activities produced more revenue from its hedging than it did from mining operations. One analyst quipped, "We're not sure if Barrick is a gold mine or a hedge fund." For the past two years GOLDCORP has pulled the reverse maneuver on a much smaller scale. This evening the company sent out a Christmas press release to announce a bonus dividend payment of ten cents per per share. ~~~ While GOLDCORP is short-selling the dollar similar to the way Barrick was shorting gold, there is one major difference. Barrick was borrowing gold from J.P. Morgan in order to sell it forward. GOLDCORP is debt-free and is merely holding back gold from sale instead of accumulating USD cash reserves. In order for GOLDCORP to become worthy of being called an ETF, the way Barrick was called a hedge fund, it would have to hoard over 6 million ounces of gold in addition to what it already has by borrowing dollars and buying gold with them. While that might be an interesting strategy to consider, we hope that GOLDCORP will just stick to being a gold mine. Gold -- Sharefin, 06:28:20 12/11/03 Thu Global gold stock sell-off intensifies; $10-bn gone Investors cashed out of gold and silver stocks across the world again on Wednesday, taking a further $5.8 billion off the table. Cumulative sales since the peak in valuations last week is running close to $10 billion, with a big bump of $3.5 billion yesterday that set the trend firmly in motion. Fiat -- Sharefin, 06:13:44 12/11/03 Thu Talking Gold With Newmont's CEO transcript "The gold price, in our view, is really underpinned by jewellery demand globally; but investment demand is what really moves the price." Fiat -- Sharefin, 06:08:13 12/11/03 Thu U.S. Dollar Slides to New Lows After Chinese Banks Repatriate Funds The dollar slid further yesterday after the Bank for International Settlements said China's banks were repatriating funds and seeing an increase in domestic deposits. The U.S. currency hit a new low against the euro and approached its lowest level against sterling for a decade. Current trends are "implying that the surplus of funds placed in the international banking system by the Chinese banking sector that has been available for the funding of foreign government deficits is shrinking," a report from the central bankers' central bank said. Analysts said there appeared to be little chance of a dollar recovery in the near term given the absence of official resistance. A senior Bush administration official told Reuters that President George W. Bush would today urge Wen Jiabao, the Chinese premier, to take steps to move China's yuan to a free-floating currency during his visit to the U.S. The U.S. also wants China to stop slowing the import of American soybeans and other commodities. The BIS also said that members of the Organisation of Petroleum Exporting Countries were increasingly repatriating money rather than keeping it in dollars. Although the report said there was little evidence of international investors losing confidence in dollar-denominated bonds, markets focused on the more negative elements for the dollar. Oil -- Sharefin, 06:05:58 12/11/03 Thu OPEC´s Silva: OPEC evaluating trading in Euros This week there is talk on the markets that, the opinion of some OPEC ministers expressed last week concerning the decline in the value of the dollar that eroding their purchasing power, might prompt the OPECat the next meeting to reduce futher production, despite the price this week that has been in the upperside of the price band mechanism. Silva said on OPEC's price band mechanisms that it could be change if necessary. "is not set in stone" and could be adjusted upwards to protect oil prices, Silva said. Oil -- Sharefin, 06:04:22 12/11/03 Thu OPEC may discuss trading oil in euros OPEC Secretary General Alvaro Silva said on Monday that oil cartel OPEC could discuss trading crude in euros or in a basket of currencies instead of dollars in the future. ~~~ OPEC has aimed to keep oil prices within the $22-$28 a barrel band, although recently prices have been at the top of or above the preferred range. At the producer group's last meeting in Vienna last week, some OPEC members said the higher prices were fair as the falling value of the dollar had slashed their purchasing power for goods from areas such as the euro zone. Leading producer Saudi Arabia made clear at last week's OPEC meeting that it was pursuing a higher oil price target to offset buying power lost with the decline of the dollar against the euro and other currencies. Silver -- Sharefin, 05:49:24 12/11/03 Thu The Weight Of The Evidence - Silver By: Theodore Butler I have long felt that the main ringleader for the Silver Managers is American International Group, Inc. (AIG). AIG is one of the largest insurance and financial services companies in the world. It is truly a gigantic international force, that ranks by market capitalization of around $150 billion, as the 10th largest company in the US. While revenues and profits from its silver market operations represent a very small part of its total revenues and profits, AIG is the largest factor in the silver market. That's how big this company is. (Please see aig.com) How did the largest insurance company in the US come to be the largest dealer in the world silver market, or even be involved in silver in the first place? Many are surprised, at first, when they learn that such a large, well-established and connected insurance company is even involved in silver trading at all, no less the leader. Let's face it, there seems to be little compatibility with underwriting commercial fire insurance or personal automobile insurance and silver futures trading. Here's how AIG got to be the biggest trader in the silver market. When Drexel Burnham Lambert went bankrupt in 1989, the DBL Trading Group was purchased by AIG, and became the AIG Trading subsidiary, which currently operates out of offices in Greenwich, Conn. You may recall DBL Trading was the subsidiary involved in the temporary gold loan default with the central bank of Portugal at that time. Before moving over to AIG, the DBL Trading Group worked at Goldman Sachs (J. Aron) in the early 1980's, and before that began at ACLI (A.C. Leon Israel). For the sake of full disclosure, and in an interesting coincidence, I worked at Drexel Burnham Lambert in Miami, for 10 years until 1986, but had no involvement, whatsoever, with DBL Trading. The reason I've traced the lineage of AIG Trading is because in their earlier forms, they originated metal leasing, which I believe is inherently a fraudulent and manipulative financial device. In addition to being the Godfather of gold and silver leasing, AIG Trading is the dominating force on the COMEX, being the largest clearing (guaranteeing) firm. Even though I have written to top management on a number of occasions, about their subsidiary's involvement in silver, I believe they are still not aware of the extent of AIG Trading's control of the silver price. I had submitted a copy of this article to AIG's chief legal officer prior to publication to avoid unintentional misstatements. ~~~ Make no mistake - we are witnessing the death of the leasing and short selling of physical gold and silver as a form of hedging. It may take a while to die, but this "de-hedging" isn't a temporary phase, it's the end. Just don't expect anyone to say that, as it will open them up to litigation, or in Barrick's case, more litigation. Don't expect anyone to say, "yeah, this leasing was really stupid and manipulative, and we're sorry we did it." Expect instead, " it was very good, but we've decided to end it due to changing market conditions." Hogwash. With Barrick Gold, I didn't have to speculate at all, because the SEC and FASB required full public disclosure of their hedge book. With AIG, and other financial middlemen, securities law strangely protects against the disclosure of their derivatives positions. No one knows what short position they may hold. That's not right. Because the law throws up a shield, any wrongdoing is easier to hide. Commodity law, in addition, also conveniently protects against revealing the identity of anyone who might hold a manipulative position on the short side of COMEX silver. I know, because I've asked the CFTC for this information (as have many of you). This flies in the face of the long overdue current regulatory swing towards more disclosure and transparency. Barrick, for all the criticism I have given them for selling years of forward production at low prices and allowing the actual metals to be dumped on the market, was at least an actual producer of metal. Who is AIG, or other Silver Managers? Do they produce or consume actual metal, or are they just middlemen, profiting off the legitimate producers and consumers? There is no doubt in my mind that the price of silver would be well north of $20 per ounce, were AIG not dealing in the silver market. In fact, there are more questions about AIG, that hopefully the company will answer. Like - do AIG's silver short positions represent legitimate client hedging requirements, or do the company's traders also speculate on AIG's behalf in COMEX futures and options or on their own behalf or related parties? What is the size of the company's silver short position, and what has been the size over the past 15 years? How much money has AIG made from its dealings in silver? How does AIG propose that silver will be repaid on any leases they have originated or brokered, given that world silver inventories have declined dramatically over the past 15 years? Does AIG or any of its traders hold, or have they held, any financial interests in any fund or trading company that trades in COMEX silver as a counterparty to any AIG trading? Gold -- Sharefin, 05:43:41 12/11/03 Thu Gold Dealers Conscripted to Spy on You? Just forget about buying and owning gold and other precious metals in privacy, as you have been able to do until now. A new intelligence spending bill (HB 2417) has reportedly just passed Congress and is awaiting the President's signature by this coming Saturday, December 13, 2003. Tucked inside that bill is a provision that allows the FBI to serve so-called "national security letters" on a broader range of "financial institutions." National security letters require these institutions to reveal their customers' private financial as well as general information, including "tangible things.". It's no news that banks have been conscripted to spy on you. Everyone knows that by now. But this recent measure "... redefines ‘financial institutions' [a term] that was previously limited to banks, credit unions, and savings and loan organizations. Now the definition also includes brokers and dealers registered with the Securities and Exchange Commission, investment bankers, operators of credit-card systems, insurance companies, dealers in precious metals, stones, or jewels, licensed senders of money, telegraph companies, airplane and boat dealers, Realtors and estate closings, and the U.S. Post Office. http://www.washtimes.com/national/20031204-111437-5659r.htm Fiat vs Gold -- Sharefin, 05:40:29 12/11/03 Thu It's Too Late For A Dollar Devaluation The recipe for economic disaster over the last ten years has been the potent combination of three disequilibria: an asset bubble, a credit excess, and an exchange rate overvaluation. Extreme readings in any two are often enough to precipitate a financial and economic crisis; extreme readings in all three make crisis inevitable. Japan in the late 1980's had an extreme asset bubble and credit excess, but not an exchange rate disequilibrium. Mexico had an extreme exchange rate disequilibrium accompanied by something of an asset bubble and a selective domestic credit excess. Malaysia and Thailand had all three---asset bubbles, credit excesses and exchange rate overvaluations. Korea had the first two, but arguably its exchange rate was not overvalued by early 1997. Increasingly, it appears that the US economy has become a candidate for crisis. ~~~ Why does this not mark the end of the dollar decline? Quite simply, the conditions which triggered the decline in the first place – a huge and growing current account deficit, rampant debt creation, etc. – show no signs of alleviation. In an International Perspective written last year, “Helicopter Money or the Road to Weimar”, we argued that Fed Governor Ben Bernanke's paper last November on possible radical monetization by the Fed was a double edged sword. In all probability, Governor Bernanke believed that, by indicating a willingness to monetize treasury debt without limit and even private assets, he was providing encouragement to investors and that this encouragement would support private asset prices. We maintained, however, that this edge of the sword would most likely prove to be blunt: most investors would not comprehend his words of encouragement and those who did were already over positioned in equities and corporate bonds. Unfortunately for Governor Bernanke, his shocking speech extolling the “virtues of the electronic printing press” have proved to be a profoundly dangerous double-edged sword that has afflicted the dollar with ample wounds in its aftermath. By expressing a willingness on the part of the Fed to deliberately monetize to the point of currency debasement, he has clearly discomfited holders of treasury bonds and foreign holders of all U.S. dollar assets. Both of these classes of market participants were very long these assets and very vulnerable. Their discomfort has placed selling pressures on the US currency that has more than offset any buying support from the official sector, which clearly sees no virtue to a rapidly plunging dollar. ~~~ One wonders how much further the official sector can resist this broadly negative trend for the US dollar. The recent breach of $400 gold in this respect is highly significant. What is the message its strength is conveying today? The US has a massive net external debt and an unsustainable current account deficit. ~~~ Many have remarked that, if all of the world's currencies are unattractive, gold might regain some lustre as a reserve currency and a store of value. That appears to be a dynamic which continues to be operating favourably for the gold market; there is a persistent “bid” in the market, which has curbed the downward drafts one normally associates with spec long liquidations. It also helps that nominal interest rates everywhere are negligible. It also helps that, in a world of ubiquitous excessive debt, gold is the one asset that is no one's liability. But it might also be the case that gold's strength is conveying speculative or investment buying because of concern about central bank “monetization” in the future. Certainly, it seems to be reflective of a profound vote of “no-confidence” in the central banking community, a substantial shift from a few years ago, when “official sector omniscience” was in a profoundly bullish phase. But most of all, gold's rise does seem to indicate that the long reign of King Dollar is rapidly drawing to a close. Gold -- Sharefin, 05:32:46 12/11/03 Thu Goldcorp's Holiday Gift As a demonstration of our belief that gold was beginning a major new bull market we began to build a gold inventory in the 3rd, quarter (ending September 30) of 2001 by commencing a program of holding back a portion of our gold production from sale. By the end of the 3rd quarter of 2003 Goldcorp had accumulated a total of 142,913 ounces of gold in this way representing 11% of our total production over this period. The goal of this program was to sell this gold for a higher price at a later date and therefore generate increased earnings and the ability to pay higher dividends to our shareholders. This program was complimented in the 2nd quarter (ending June 30) of 2002 as we began to purchase gold and continued to do so on an opportunistic basis whenever the gold price declined to its long-term trend line. By the end of the 3rd quarter of 2003 Goldcorp had purchased a total of 123,817 ounces of gold. Our total gold inventory reached 266,730 ounces (8.3 tonnes) - more than the bank of Canada! We were right about the gold price! When we began to build this inventory the gold price was only $274 per ounce and is currently more than $405 per ounce - an increase of more than $130 per ounce! We believe gold is truly in a bull market! Generally accepted accounting principles (GAAP) do not allow us to record the earnings from this gold until time of sale. However, we wanted to demonstrate the benefits of this program and return the value it has created to our shareholders. To do so, we sold our gold inventory during the current quarter. This gold was sold for an average price of $388 per ounce. This represents an increase of $72 per ounce over the average gold price of $316 per ounce which would have been realized if all gold had been sold at the time of production. It also amounts to an increase of $66 per ounce over the average price at which the gold was purchased. ~~~ GOLD'S BULL MARKET IS JUST BEGINNING - REBUILDING GOLD INVENTORY We continue to hold two fundamental beliefs about gold, First, that Gold is money, a fact we have been able to demonstrate with this special dividend and Second, that it remains in the early stage of a major multi - year bull market. As a result of these beliefs we have begun rebuilding our gold inventory and we will again continue to hold back approximately 10% of our production from sale. This is in anticipation of higher gold prices which will allow us to continue to generate further earnings growth and increased dividends to our shareholders. HOW MUCH GOLD SHOULD WE HOLD BACK? Our shareholders have been very enthusiastic supporters of our gold inventory program. We are pleased to have been able to reward this support with true bottom line value. However, we would like our shareholders to tell us how much gold we should continue to hold back. Is 10% enough? Your views matter to us - please let us know. We would also encourage other gold companies to follow our lead and generate higher returns to their shareholders by holding back a portion of their gold production. Gold is Money and Gold is in a Bull Market! Goldcorp's Red Lake Mine is the richest gold mine in the world. The Company is in excellent financial condition: has NO DEBT, a Large Treasury and Strong Cash Flow and Earnings. GOLDCORP is completely UNHEDGED and pays a dividend twelve times a year. Goldcorp's shares are listed on the New York and Toronto Stock Exchanges under the trading symbols of GG and G, respectively and its options trade on the American Stock Exchange (AMEX), the Chicago Board of Options Exchange (CBOE) and the Pacific Stock Exchange (PCX) in the United States and on the Montreal Exchange (MX) in Canada. Gold -- Sharefin, 02:24:15 12/11/03 Thu GBS debuts, gives all investors a shot at gold Gold Bullion Securities Ltd. (GBS Investors can now buy a gold-backed security in denominations of as little as one tenth of an ounce of gold bullion. ~~~ A gold bullion security comprises a secured note of nominal value issued by GBS, which carries with it an entitlement to gold bullion held on trust. "We've had huge interest, from the man on the street to the big institutional investors," one market source said. ~~~ Village had said that the company would be able to issue up to one billion gold securities. GBS had no plans to lease the gold held in trust and would not pay a dividend. Gold -- Sharefin, 02:18:25 12/11/03 Thu London paper gold shatters Australian benchmark The World Gold Council-backed Gold Bullion Securities, [LSE:GBS], which allows investor “effectively to buy and sell gold on the London Stock Exchange for the very first time,” according to the promoters, got off to a flying start when trading started in London today (December 9). Some 8.2m units representing 820,000 ounces of gold worth US$334m were traded on the London Stock Exchange and in the secondary market. As it was the first day it is logical to assume that all the trading was done by buyers, although there some opportunity for snappy profit taking as the price peaked at $41.15 a share. Gold -- Sharefin, 10:52:27 12/09/03 Tue Shine returns to gold Vince Grimaldi remembers Jan. 21, 1980, the final day of the last big gold bubble. "It was like a Broadway opening," said Grimaldi, a salesman at the Valley Gold & Silver Exchange in San Jose. "People were lined up outside the building and around the corner. People were taking $1,000, $2,000 out of their bank accounts and running in to get some gold coins, silver, whatever. They'd buy whatever we had on hand." In that uncertain environment of inflation and high interest rates, investors abandoned stocks and bonds and turned to gold as it rose to a record $850 an ounce. The current environment would seem to be the exact opposite, except for one item: Gold prices have risen sharply this past year. "It's a trend in motion," said Robert Mish, president of Mish International Monetary in Menlo Park, Calif. "It will make new highs until the reasons why the dollar is falling and gold is rising cease to be." Many investors have heard predictions of an imminent bull market in gold for the past two decades from a devoted core of "gold bugs," even though the price of gold sank sharply and languished during the stock bubble at the end of the 1990s. The difference now is that some of the most astute international financial managers are turning to gold, as well as other currencies and commodities, as top investments while inflation picks up and the dollar deteriorates in value. Marc Faber, author of "Tomorrow's Gold" and editor of the Gloom, Boom and Doom Report, foresees a bull market for many commodities. His prediction: Gold could hit $1,000 an ounce. Gold -- Sharefin, 10:39:33 12/09/03 Tue Gold reaches 7-year high Investors take notice as price tops $400 an ounce Gold prices have shot past $400 an ounce and continue to rise, while the dollar drops in value. At the market's close Monday, gold was up to $406.15, a seven-year-plus high, and the dollar had fallen to multiyear lows against major foreign currencies. Jerry Pogue, a frequent shopper at Kempf's Jewelers in Indialantic, is telling all his friends to buy gold. "I've bought more gold jewelry this year than I have in 25 years," the Orlando retiree said. Pogue also invests in gold bullion and gold stocks. Before retiring, Pogue served as the chief executive officer of a gold-mining company in Canada, he said. Pogue believes gold will continue to increase and could double in value within the next two years, as the dollar keeps dropping against foreign currencies. If that happened, it would put gold close to values in 1980, when inflation drove an ounce of gold as high as $850. Gold -- Sharefin, 10:36:53 12/09/03 Tue Central Bank sales and the gold price It surprises me when gold investors, particularly those who believe that gold is money, denounce Central Bank gold sales. Central Bank sales are good for the gold market because private ownership of gold is a pre-requisite if gold is ever to be used as currency again. Whenever gold is ubiquitously used as money, the majority of it is in private hands simply because the private sector, as a whole, has significantly more capital than governments. Whenever the world is forced off a gold standard, it is done in conjunction with gold confiscation. This allows the government to shift to a fiat currency that it can inflate without giving the citizenry an opportunity to use gold as a competing currency. Look at Central Bank sales as a transfer of gold from weak hands (those inclined to sell, the Central Banks) to strong hands (those who believe in gold as a store of wealth and inclined to hoard, the public). This is positive for the gold market, especially since the sales don't even depress the gold price. It's proof of just how robust the gold market really is. I am on record saying that I believe the gold price will, within a few years, exceed $1,000 an ounce. While that makes people who are invested in the sector extremely happy (everyone likes their beliefs affirmed), the truth of the matter is that the bear market in the dollar is driving the increase in the gold price. We are not in the midst of a booming bull market in gold any more than we were in the midst of a bear market during the nineties (look at the above chart again). What we are facing is a bear market in the dollar. That, as I have said many times, has major implications for gold stock investors. While a lot of money could be made in this market, I suspect many investors are going to be disappointed with the performance of their gold stock portfolios. Gold -- Sharefin, 10:32:03 12/09/03 Tue Chinese residents welcome gold trade SHANGHAI, Dec. 5 (Xinhuanet) -- A resident in Chengdu city of southwestern Sichuan province bought five ounces of gold this week in the Chengdu branch of the Merchants Bank of China at the price of 16,647.5 yuan (2,000 US dollars), becoming the first investor to try physical gold trade in China. Just half a month ago, the Bank of China (BOC), one of the four major state banks in China, began selling gold-backed paper items to Chinese individuals in Shanghai. The trade was welcomed by locals with one of the largest buys reaching 2,500 grams of gold in paper. Insiders said that from "paper" to "physical" gold trade, China is now providing more investment choices for its residents. "The investment value of gold has long been screened owing to scarcity of investment channels," said Gu Wenshuo, general managerof the comprehensive section of the Shanghai Gold Exchange. In the past five decades, nevertheless, the gold market was under a government monopoly with gold consumption focused on jewelry or industrial use in China. Total gold consumption is at alow level as compared with other nations in the world. In 2002, Per-capita gold consumption in China was only 0.16 grams, far lower than 1.42 grams in the United States and the world's averageof 0.7 grams. Chinese people have traditionally had the tradition of hoardinggold as a way of securing savings against disasters, natural or man-made. Shanghai was the largest gold trade center in the Far East in the 1930s and 1940s. But gold trade was abolished with thefounding of new China in 1949. ~~~~ recent questionnaire by the Beijing Gold Economic DevelopmentResearch Center in 10 major cities in China showed 70 percent of respondents said that they would invest in the gold trade if they had money and over 20 percent of securities investors would transfer part of their capital to gold trade. Experts predicted that nearly 7.5 million investors will try the gold trade while continuing the securities trade in the future.Calculating that each one will invest 10,000 yuan (about 1,200 US dollars) of capital, the trade will attract 75 billion yuan (some9 billion US dollars) of funds in total. Astute and sharp-sighted commercial banks would never ignore potential income from the intermediate business and the huge clients resources it would bring. The other three state banks, namely, the Industrial and Commercial Bank of China, the Construction Bank of China and the Agricultural Bank of China, have all stepped up their preparations for launching gold trading.  Gold -- Sharefin, 10:24:58 12/09/03 Tue Barron's flawed case against gold stocks The problem is that conventional valuation measures don't work particularly well with gold stocks. If they did, nobody would invest in gold stocks at all because they look truly awful – compare five-year averages for return on equity, assets and invested capital with most of the S&P 500 constituents to see what a woeful investment gold stocks in general have been on a buy and hold philosophy. The best confirmation that gold stocks occupy an apparent parallel universe is the fact that the best predictor of share prices is a negative discount rate. Convention warping enough? Barron's is, in its customarily cautious way, simply reiterating Stein's Law: “Things that can't go on forever, don't.” A useful corollary might be Keynes admonition: “The market can stay irrational longer than you can stay solvent.” In the case of gold stocks, Keynes had a point. ~~~ Who knows how far investors might bid up the 150 or so public firms in the entire world that have gold to hand in reasonable quantity and quality, and about 300 more who have little of it and are exploring for more. Of the top gold stocks, just one is true mainstream investment grade in terms of the heft of its market capitalisation. ~~~ This was best described on Friday by Don Coxe, Chairman of Jones Heward Investments Inc., and Chairman and Chief Strategist for Harris Investment Management in Chicago. Hosting his weekly conference call, Coxe reminded participants that we are seeing a remarkable situation where the key interest rate is a long way below gross domestic product, “the 1:8 problem for the dollar”. “This is unprecedented in the history of monetary policy. . . to have the central bank rate one-eighth of the rate at which the economy grows. . . There is virtually always a premium . . . The idea that it trades at a gigantic discount to it is totally contrary to monetary theory and would suggest a wildly inflationary bent,” opined Coxe. “One of the factors working its way into gold . . . is that the costs of the triple waterfall era are so great; having everyone converting their mortgages into the lowest rates in a generation . . . has the makings of an explosion when the economy comes back and the Fed has to raise rates. “We saw the collapse of the mortgage backed market in 1994 when the Fed tightened rates four times. Well, they never got rates down to one-eighth the rate of growth of the economy. . . Now they're faced with the fact that mortgage backed [securities] are more than double the weight they were . . . back then and they've extended their duration from three-and-a-half to five-and-a-half years. And if they get the Fed Funds rate back to normal, say four per cent GDP next year for a rate of five per cent. . . this is the stuff of nightmares.” Gold -- Sharefin, 10:16:41 12/09/03 Tue Shiny NY platinum clears $800/oz, gold gains NYMEX platinum closed over $800 an ounce for the first time in 23 years Monday, on speculation that the amount of metal being mined will not be enough to meet rising industrial demand. ~~~ The market seemed to absorb weekend comments by Giacomo Panizzutti, former head of foreign exchange and gold at the Bank for International Settlements, who said he expected the Central Bank Agreement on gold to be renewed for another five years in 2004, with a larger cap on total sales of 2,300 to 2,400 tonnes. The current pact expires in Sept. 2004, and limited sales by the 15 European participants to 2,000 tonnes over five years, or 400 tonnes a year. Fiat vs Gold -- Sharefin, 10:09:37 12/09/03 Tue Sell US equities, buy the US dollar! by Marc Faber My position for the next month or so is to liquidate US equities, and to go long on the US dollar and bonds. Short term, commodities including gold, equities and the Euro seem to be somewhat overbought, while the US dollar and bonds are becoming oversold. Therefore, my bet for the next month or so is to liquidate US equities, and to go long on the US dollar and bonds. What worries me most at present is that even I, a skeptic, can't find any good reason why stock markets around the world would decline significantly. That's not to say there aren't a lot of issues that concern me and which I shall discuss below. But if central bankers around the world are prepared to print money and to flood the system with unlimited liquidity at the first sign of weakness in the asset markets, then it is difficult to make a very bearish case for either US real estate or US equities in dollar terms. ~~~ If, following a stock market bubble, prices retreat sharply and the monetary authorities (in the case of the US, the Fed) attempt to cushion the decline or to re-ignite the bull market by pumping excess liquidity into the system, then stock prices can shoot up again without any, or with only very little, support from the fundamentals in the real economy. In such a case, stocks rise strongly, and sometimes even reach new highs in nominal terms, purely due to the excessive liquidity that pours into the system. Examples of such stock price increases, which were based purely on monetary easing moves by central banks, can be found in the German hyperinflation period of the early 1920s, in Latin America in the 1980s, and, more recently, in Zimbabwe. In all these cases, stocks and real estate rose sharply in nominal terms, while economic conditions remained largely depressed or even deteriorated. I do concede, however, that in all these cases of excessive money creation, there was at least a temporary - albeit brief - improvement in business conditions because of the illusion of wealth that people had when additional paper money suddenly flooded the system and lifted asset prices in nominal terms. The reason business conditions only improved temporarily was that while the asset inflation boosted consumption for a while, it also at the same time rendered the production of domestic goods uncompetitive because of the inflated price level. In an environment of rising consumption but uncompetitive domestic industries, imports surge, ant that then leads to soaring trade and current account deficits and a collapse in the currency. Once currencies collapse, the market imposes some discipline on the system, which manifests itself in tighter monetary conditions and soaring interest rates. This situation, which leads to mini-crises, is then usually remedied by the central banks printing even more money, with the result that the unfortunate cycle of rising asset prices in nominal terms leading to higher consumption, but weak production, low employment, and renewed currency weakness, continues for several years until hyperinflation eventually leads to a total collapse of these systems. ~~~~ What concerns me most going forward is that in the present optimistic atmosphere and amidst very high valuations for US equities any slight disappointment could lead to a sharp market sell-off. The potential reward in holding equities at present does simply not compensate sufficiently for a large number of risk factors. Interest rates could rise more than is generally perceived, cut short the housing and refinancing boom, and could combined with the end of the stimulative impact of the tax cuts lead to flat or even lower consumer spending. The recent poor performance of retail stocks such as WalMart and Best Buy seems to support this concern. Another danger for financial markets would be soaring oil and other commodity prices – not a totally unrealistic assumption considering Asia's rising appetite for oil and other resources, and tensions in the Middle East. In fact, increased geopolitical tensions are already apparent in trade disputes and in belligerent comments by China over a proposed referendum about independence in Taiwan. But my principal concern relates to the Fed' monetary policies should renewed turbulence disturb financial markets at some point in future. For sure the money printing press would be turned on at full speed – as always in times of crises in the past - and therefore, further dollar weakness is only a matter of time. And while I am not sure that the ECB would wish to have an even stronger Euro, it should be clear that such monetary policies should lead to a loss of purchasing power of the dollar against hard assets such as real estate in countries with current account surpluses (the Asian region), commodities including gold and now especially also silver, as well as oil. Gold -- Sharefin, 09:59:58 12/09/03 Tue Gold investors hope for new central bank accord London - Since 1999 the gold price has soared by more than 39 percent even as European central banks have sold more than 1 594 tons of bullion from their reserves. What those central banks do next could determine where gold goes from here. Last Tuesday gold for February delivery rose to $407 an ounce in New York, the highest level for similar contracts since February 1996. While investors have been buying gold lately to hedge against the risk of accelerating inflation, European central banks have been unloading the metal for years to diversify their reserves. In 1999, 15 central banks - including those of Germany, the Netherlands, Switzerland and the UK - agreed to limit their combined annual sales to about 400 tons to avoid destabilising the market. That five-year agreement expires in September next year. ~~~ Respondents said the market could absorb about 484 tons of central bank gold a year. Gold -- Sharefin, 09:57:28 12/09/03 Tue Rational Expectations In gold, our simple but effective 4-indicator complex (see Going for the Gold) has shifted to a fully unfavorable stance. Our more complex and proprietary models are no different. While I do believe that precious metals have long-term merit, I am concerned that short-term traders may be playing with fire, particularly given the high volatility of gold shares and a steeply overbought condition. We currently have no position in precious metals shares. That's not investment advice or a recommendation that other investors should sell, because we're very comfortable completely missing any further advance in gold stocks that occurs in what we view as a hostile Climate. Still, the potential risks are worth noting, and investors with substantial holdings in gold here should be certain that they have a long-term horizon and a similarly patient risk tolerance. Gold -- Sharefin, 09:44:52 12/09/03 Tue Gold Prices Zoom as Demand Falls in India India and gold, these two are inseparable. It is indeed ironical, foreign papers continue showing pictures of a poor India, yet it is the largest consumer of gold. These two factors, however contrasting, are very much the truth. Indians seem to have an insatiable urge for gold. Poverty or no poverty, priority amongst Indians is to purchase gold. Though the purchase of gold is labeled as "security for the future", the tendency amongst all is to merely hoard gold. And continue buying more gold. ~~~ Demand in India increased from 14.1 tons from 13.19 tons. On the global front, the chief feature on the demand side in the third quarter was the jump in the net investment figure to 185 tons from 34 tons in April-June, a jump of more than 150 tons quarter-on- quarter. Despite substantial increase in gold prices, offtake has increased by 5 percent indicating a strong demand for gold jewelry globally. Fiat -- Sharefin, 09:27:35 12/09/03 Tue A faded green The dollar will need to fall further to eliminate America's imbalances How much further might the dollar fall? Predicting the future price of a currency is a mug's game. But there are good reasons to believe that over the medium term the dollar could drop a lot lower, especially against the euro. Whether that will have the desired effects, in reducing America's imbalances, or in causing the expected chaos in Europe's economies, is a different question. A stronger euro should be bad news for European firms, even if it means cheaper Florida holidays for their employees. A rise in the euro against the dollar causes exports from European firms to become more expensive relative to American ones, cutting into Europe's sales. Similarly, American firms' products become relatively cheaper, both for Americans and for foreign buyers. By creating more exports and curbing imports, a weaker dollar should thus help to cut America's huge current-account deficit. Or so the textbooks have it. In the past, a falling dollar has indeed reduced America's imports. In the 1980s, the last time America had such a large current-account deficit relative to GDP, an agreement to let the dollar depreciate helped to reduce America's consumption of Japanese cars and Swiss watches. This made for a fairly painless adjustment for America, if not for its trading partners. But there is reason to think that these days currency movements are not as effective as they once were in bringing economies into balance. A recent report by George Magnus of UBS, an investment bank, doubts that a sliding dollar will do much to eliminate America's trade and current-account imbalances. Fiat vs Gold -- Sharefin, 09:24:05 12/09/03 Tue The Economic Consequences of the Peace by John Maynard Keynes Fiat vs Gold -- Sharefin, 09:21:46 12/09/03 Tue John Maynard Keynes by Milton Friedman John Maynard Keynes (1883–1946) is the latest in a line of great British economists who had a profound influence on the discipline of economics. By common consent, the line starts with Adam Smith (1723–1790), whose Wealth of Nations (1776) is generally regarded as the founding document of modern economics. It continues with David Ricardo (1772–1823), whose Principles of Political Economy (1817) dominated classical economics for much of the nineteenth century, and, incidentally, provided Karl Marx with one of his central concepts: the labor theory of value. John Stuart Mill's (1806–1873) Principles of Political Economy, published in the same year, 1848, as the Communist Manifesto by Marx and Engels, became the standard textbook in the English-speaking world—and beyond—for decades. William Stanley Jevons's (1835–1882) Theory of Political Economy (1871) inaugurated the "marginal revolution," which replaced, or supplemented, emphasis on cost of production (supply) as determining value with emphasis on utility (demand). He resolved the classic diamond-water paradox—diamonds are a luxury, water a necessity, yet diamonds command a higher price than water—by showing that "marginal utility"—the utility gained from having one more unit of something—not "total utility" plays the key role in determining price. Alfred Marshall (1842–1924), Keynes's own teacher, guide, and patron, dominated economics in the English-speaking world from the publication of the first edition of his classic, Principles of Economics (1890), to the 1930s. Keynes clearly belongs in this line. In listing "the" classic of each of these great economists, historians will cite the General Theory as Keynes's path-breaking contribution. Yet, in my opinion, Keynes would belong in this line even if the General Theory had never been published. Indeed, I am one of a small minority of professional economists who regard his Tract on Monetary Reform (1923), not the General Theory, as his best book in economics. Even after sixty-five years, it is not only well worth reading but continues to have a major influence on economic policy. Fiat vs Gold -- Sharefin, 09:19:35 12/09/03 Tue Major Trend Reversal in Fear Index Is Confirmed We've been watching and waiting for several months now (see the September 1, 2003 alert), but it finally happened at the end of November. The Fear Index broke above its major downtrend line, which has confined it for more than twenty-three years.  "For the past 23 years, dollar financial assets have been outperforming gold. But when the downtrend line is broken, gold will be outperforming dollar financial assets. In other words, confidence in the monetary and banking system - after climbing for 23 years - is about to change. Conversely, after declining for 23 years because fear was falling - a result that made gold perceived to be less useful - gold will emerge as an asset of choice. People will increasingly move to the safety of gold." Gold is about to become an increasingly popular asset, just as it was throughout the 1970's. History is about to repeat, and we can use my trustworthy and reliable Fear Index to guide us through the monetary problems ahead. book -- Sharefin, 09:16:11 12/09/03 Tue Consider this Consider this -- the US over the last 30 years has possessed one incredible advantage over every other nation. What is this wonderful advantage? The advantage is that the US possesses the world's reserve currency. This has allowed the US to run up trillions of dollars in debts, and it has given the US the incredible advantage of being able to pay off those debts with irredeemable money that it prints at will and at now cost. In other words, the US has been able to take in the goods and service of the world while paying with these goods and services with paper that the world continues to accept. And the question is -- why is the world accepting our paper money? The answer is that's it's part of the big game. "We pretend to pay them, and they pretend that they're being paid." China is now running the single largest surplus with America, and as a result China is building up a massive amounts of Treasury bonds as it ships its goods to the US. And the question is -- why is China willing to take in all this US paper, paper that is sinking in value as the international value of the dollar declines. The answer is that China is on a tear, a tear to build up its manufacturing facilities and its infrastructure. According to a recent article in the International Herald Tribune, China, over the next 15 years, is planning to build a highway system bigger and more efficient than the entire US's freeway system. In other words, China is continuing to play the game, because China is playing for time. China is willing to take a loss in its US holdings so that it can continue shipping its products to the US and in so doing -- continue to build up its already huge manufacturing facilities. Time is what China is playing for -- time to build, time to research, time to harness is enormous low-cost manufacturing facilities so that China will become the undisputed economic power in the "new world" that China envisions. Somewhere ahead a cataclysmic event is fated to occur. This will materialize when nations refuse to accept the US dollar as the reserve currency. As that point, the whole game will fall apart, and the US will sink into a vicious bear market recession. That recession will spread throughout the world, and all paper currency will fall into disrepute. At that time, investors will panic into the only true reservoirs of wealth, gold and probably silver. In my opinion, at that time gold will surge higher than anyone thinks possible, taking silver along with it. If you hold gold or gold stocks and they head skyward -- please do not think you will have arrived at the promised land. Believe me, if, in a monetary crisis, gold rises to 1000, 2000 or 3000 dollars an ounce, it will be a reflection of terrifying events in the financial markets and in the world economy. Yes, gold will be our main protection, but at that time you'll have a hell of a lot more problems to deal with than you do now. book -- Sharefin, 09:15:00 12/09/03 Tue Who has Yamashita's gold? A PAGE-TURNER of a book came out in September this year. It's called Gold Warriors: America's Secret Recovery of Yamashita's Gold by Sterling and Peggy Seagrave. The subtitle says it all. The US government got most of the gold that the Japanese Army looted in the countries it occupied. Some of the treasure trove, however, has not been found and the Seagraves believe it is in the Philippines. Lenny's Corner -- Sharefin, 09:12:01 12/09/03 Tue GENERAL COMMENTS: As the USD spins ever lower in its continuing death spiral, the gold and silver markets were the perfect partner, matching each step in almost perfect unison. As the USD Index pushed below the psychological support of 90, gold prices pressed northward of the important psychological price of $400 per ounce, for the first time in 7 years. Prices were up $9.50 for the week, and most surprisingly, excellent buying was seen in the market on any dip, a most impressive performance. The gold market is seeing improving fundamental physical demand, much improved financial press coverage (mostly favorable), and seems to be moving from the hinterlands of the investment universe to an almost, but not quite, respectable choice for the global investor concerned with either adverse currency movements or just looking to plunge into what is certainly a long-term secular bull market. Gold Fields Mineral Services, probably the most respected and most followed fundamental analyst, reported that total demand for gold rose by 5% in the third quarter of 2003. Jewelry fabrication rose by 5%, and implied net investment in gold jumped from only 2 tons in the third quarter of 2002 to 185 tons in the comparable period of 2003. Producer de-hedging, their repurchase of previously sold forward sales, reversed in this quarter and actually contributed to supply, albeit very lightly, for the first time in 7 seven consecutive quarters. Official sales were marginally higher, with mining output declining by .2%. In reading the statistics above, I am struck by numerous implications for the gold market. The first being that FINALLY, after gold has run up some 60% off its lows, this market is now seeing material interest from the global investor. The political tragedies of the past years were not enough, the continuing macroeconomic maelstrom was insufficient, but finally, investors seem to be entering the market, although late to the party. Should this investment demand continue unabated, some 740 tons of gold per annum would be demanded, about 1/3 of total global production. Over the past two years, the largest buyers of gold have been the very firms who produce it, a most ironic situation. Their purchases have far outweighed investor interest and have been instrumental in the continuation of the long-term secular bull trend in gold. Many analysts had grave concerns that when the largest buyers of gold (the producers) retreated from their aggressive shopping spree, that prices could suffer. Now we have clear evidence that the baton has been passed from the producers to the investors, in a most smooth transition. And, even better than that, the new breed of gold investor/speculator, as seen in the Commitment of Trader's reports and by monitoring the recent markets, seems to have significant "staying power," unlike days of yore. Gold -- Sharefin, 09:03:43 12/09/03 Tue Price rise to hit gold trade DUBAI - The drastic rise in international gold prices, which hit its seven-year high this week, will affect the Dubai gold trade, depriving it of the projected 10 per cent increase in sales this year. Tawhid Abdullah, managing director of Damas and chairman of Dubai's Gold & Jewellery Group, said that although the group's current gold sales stood at the equal level compared to the same period of last year, the projected 10 per cent growth in gold sales will not be there by the end of this year. However, he added that the actual gold prices were "realistic". Dubai's Gold & Jewellery Group reported 35 to 40 per cent increase in gold and jewellery sales this summer compared to the same period of last year. The growth was attributed to stable prices. Since margins in Dubai gold trade are low, jewellery prices here largely depend on international gold prices. In other parts of the world, especially in Europe, where margins are large, change in international gold prices does not affect the retail price of jewels and trade. Fiat -- Sharefin, 09:02:37 12/09/03 Tue Higher Central Bank Gold Sales Likely DUBAI (Reuters) - The Central Bank Gold Agreement could raise total sales by 17.5 percent if it is renewed next year, the former head of foreign exchange and gold at the Bank of International Settlements said on Saturday. Since 1999, Giacomo Panizzutti had been in charge of the secretariat responsible for supervising the five-year agreement which limits total sales by 15 European central banks to 2,000 tonnes, or 400 tonnes annually. It runs out in September 2004. "I strongly believe the agreement will be extended, probably for a slightly larger amount of around 2,300 to 2,400 tonnes, and for another five years," Panizzutti, who retired last year after a 34-year career, told a gold conference in Dubai. "Such an increase of about 300 to 400 tonnes should not be a problem and should be easily absorbed as long as the market remains as well supported as it is just now," he said. "I would not be surprised if they were to abandon the restriction on gold lending," he added. Fiat -- Sharefin, 08:58:22 12/09/03 Tue Customers rush to sell gold The surge in gold prices in the past few days has triggered a rush to sell gold in Gujarat and, to a lesser extent, in Maharashtra. In Ahmedabad's two main gold markets, Manekchowk and RatanPol, only one out of every 10 customers wants to buy gold ornaments or any form of gold. The rest want to sell. Fiat -- Sharefin, 08:56:09 12/09/03 Tue That gold short position . . . At the recent Fall Precious Metals Conference hosted by Gold Fields Mineral Services and the Silver Institute, an interesting exchange took place regarding the purported short position in gold bullion represented mostly by metal loaned from central banks. James Turk, founder of GoldMoney, related his investigation of gold flows to and from the UK as a deductive means of confirming or refuting figures bandied about for the infamous short position that range from 8-15,000 tonnes on the high side and 4-5,000 tonnes on the low side. His conclusion was that the high side figures are most likely correct, which drew a very testy rejoinder from GFMS's Philip Klapwijk, dogmatically defending the low side figures based on his firm's investigation, and one by Jessica Cross of Virtual Metals, which he said was commissioned to “double-check us”. It's not just an academic dispute – the gap is large with important implications if the high side is in fact correct. ~~~ Whatever the actual number, even the low end of 4,000 tonnes is a lot of gold outstanding in a market that has moved more than $100 per ounce in two years. Some banks have been more reckless than others in loaning out too much of their gold unsecured and that is precisely a situation that might invoke a “too important to fail” salvage operation by fellow central banks. They do it all they time for debt and currency crises, why not for gold and/or with gold? Gold -- Sharefin, 08:46:38 12/09/03 Tue Barrick Gold's Plight About two weeks ago Peter Monk, Barrick's chairman, announced that Barrick would no longer hedge their gold production. In fact, during the past year and a half they already reduced their hedge position from its peak at about 24 million ounces to its present 16.1 million ounce level. Monk's statement was followed last week when their new CEO, Greg Wilkins, confirmed their non-hedging policy, and a few days ago when Jamie Sokalsky, their CFO, appeared on the Financial News Network. What is amazing to me is the timing of this revelation and the reason behind making it public in such a blatant fashion. They appear to be utilizing the financial press as an advertising forum! Are they doing this to promote their stock or are they frightened of something, or both? Despite the magnitude and scope of Barrick's operation, their hedging practices while greatly benefiting them when gold was in a Bear Market, are now acting like an anchor in a howling gold Bull Market storm. For each dollar that gold rises in price, Barrick now suffers a loss of $16 million. One dollar for each of the16 million ounces of gold that remain hedged. Therefore, every $10 rise in gold translates into $160 million dollars in additional losses! It is true that they also benefit by about $55 million, with each $10 gold rise due to their 5.5 million ounces of production. However, they show a net loss of over $10 million for each dollar increase in gold. Further to Barrick's advantage, their 19 counter parties have agreed to a number of extremely beneficial terms. Their gold deferred agreements allow Barrick to roll over most of their hedges; there are no discretionary “right to break” provisions, and no credit downgrade clauses. Additionally, Barrick is not subject to margin calls regardless of the gold price. In what appears to be such an enviable condition with their $1 billion of cash and equivalents and enormous gold reserves and production, why should Barrick be concerned, if indeed they are? Yet, their sudden ubiquitous visibility makes me wonder. When I delved into Barrick's most recent financial statement I may have found the answer. Their hedge book is already saddled with $1.213 billion of accumulated unrealized losses due to the rising gold price. This figure is from their September 30, 2003 quarterly report, and is based upon a gold price of $385. With gold presently trading at $403 this figure is now about $1240 billion. Next, according to their report there is an onerous provision in all of their master trading agreements that their growing unrealized hedging losses are causing to seriously pressure them. It is that, “Barrick must maintain a minimum consolidated net worth of at least $US2 billion-currently it is US$3.4 billion” (remember, this assumes only a $1.213 billion unrealized loss). If Barrick violates this ever-present clause they may be forced to either somehow repay the gold that they owe or to suffer other consequences. By Barrick's own account on September 30, their consolidated net worth was US$3.4 billion. As of December 4, it has likely been reduced to approach $3.12 billion, by their unrealized hedge losses alone. Further, if gold continues to rise in price, and to Barrick's detriment enters a period of sharp price appreciation, Barrick may find itself with its back against the proverbial “wall”. In this event, they may witness their approximate $1.12 billion cushion ($3.12 billion less the $2 billion minimum requirement) quickly evaporate and may come face to face with their counter-parties who may demand the immediate repayment of their gold. I believe that this is the likely reason for the recent frequent statements emanating from the company. They are afraid that their hedge book might explode in their faces! Even their 87 million ounces of gold in the ground won't satisfy their bankers! Barrick won't be capable of producing this gold fast enough as their bankers may demand immediate, physical gold! Gold -- Sharefin, 08:41:13 12/09/03 Tue Exploration looks for gold price boost Gold's price needs to be in the range of US$350 to $400 an ounce or above for at least five years to encourage a renewed exploration effort that is badly needed if the industry is to have a healthy future, according to Alex Davidson, executive vice president exploration for Barrick Gold. He said there had been a shortage of new gold discoveries and there was the potential for gold production to fall as a result. ~~~ Davidson said that groups of Barrick's size needed to find gold deposits containing at least 5m ounces capable of making a return exceeding their cost of capital. Between 1994 and 1998 ten deposits of this type were discovered. Since then, the discovery rate had dropped substantially and only three deposits matching the criteria needed had been discovered between 1999 and 2003. Another alarming trend, Davidson said, was that the industry was spending less on exploration research and development. In Australia there had been a 60 percent drop in three years. He warned: “For our industry the long term cost of not doing this research far outweighs the short term savings.” Gold -- Sharefin, 08:37:55 12/09/03 Tue Gold market 'overwrought' The gold market has become "overwrought," according to Dennis Gartman, editor of an influential daily market comment newsletter from Suffolk, Va. Referring to the Amex Gold BUGS Index (BUGS stands for Basket of Unhedged Gold Stocks), he said in yesterday's edition, "we've seen 'high,' and we've seen 'rising,' but this index is 'high' and 'rising' and doing so at a rate that is quickly becoming unsustainable." He added, "the public's participation is now rising to levels that we find more and more disconcerting, and even the slightest bit of U.S. dollar strength is likely to have a materially bearish impact on gold and silver share prices sufficient to shake these late longs from their positions and to restore the market to health once again." Gold -- Sharefin, 08:36:13 12/09/03 Tue US Dollar Implosion - Part II Part II of the Dollar implosion will differ substantially from Part I. If the US-China economic relationship changes or ceases, the effect on commodity prices could be immediate and dramatic. "Commodity" currencies may then no longer look quite as attractive as they do at present. In the face of spreading recession, the prices of most commodities would decline, severely denting the attractiveness of the currencies of commodity producers. This could cause a severe reaction to events of the past two years in which the Australian dollar has risen 50%, from 48c to 72c; the South African Rand that is up almost 100%, from 8c to 15.5c; and the New Zealand dollar that has risen 60%, from 40c to 64c. The feature of Part II of the US Dollar Implosion will be a recognition that even presently popular commodity currencies are mere paper, ultimately no different to the Dollar itself. There will be an awareness that, unlike the 1930's when competitive currency devaluations were made "by decree"; we are now in an era of competitive currency creation or printing. The country with the fastest growth of currency creation will have a short term trade advantage as their currency depreciates against competitive nations. As investors withdraw from the erstwhile favoured currencies, they will have a problem deciding where to invest their funds. This is when gold will be seen as a viable alternative. There will therefore be a growing awareness and recognition of the vastly more attractive reserve asset role that gold must and will play in the future. This recognition is the fuel that will fire a rocket under the price of gold, driving it to substantial new highs in terms of ALL currencies. ~~~ Throughout recorded history the average relationship between silver and gold has been 15oz silver to 1oz gold. The ratio at present is a far higher 75:1 ($400/$5.30). This is massively out of line. If gold were to double to $800 per oz, it would not be unreasonable to expect the silver/gold ratio to decline sharply, possibly as low as 40:1. With gold at $800, this would position silver at $20. Thus a 100% increase in the price of gold could possibly be accompanied by a simultaneous 400% increase (perhaps more) in the price of silver. This offers significant opportunities both in silver bullion and silver mining shares. Gold -- Sharefin, 08:34:14 12/09/03 Tue The $/Euro Struggle will Destabilise Forex Markets - Then Call for Gold's Support! The first move! In the last month, if we are to believe the German government officials, a deal has been struck to price Russian oil to Europe in Euros some time back! Russia has yet to confirm it. The Russian view of the Euro is well expressed in the climb over the last year plus of the Euro content in Russian reserves from 10% to 25%. The % of global reserves of the U.S. $ has dropped from 76% to 68% and the trend seems set to continue if not to accelerate! This alone is giving the Euro the credibility it lacked. Not too much drama at this stage you may say? On the contrary, we say! This trend has the potential to knock the $ off its perch and eventually force the U.S. Monetary authorities to give value for its currency, or see it tumble in a series of crises, the like of which has not been seen since 1968 onwards and through the early 1970's. This time the day of reckoning of the value of the $ will be the result of 30 years of over-issuing of the U.S. currency. The crises will likewise be the greater. The availability of the Euro as an alternative, not under U.S. control, will break the grip of the $ on international money flows. The attempts by the I.M.F. to have the S.D.R. take this role ended in obscure failure some time ago, despite its continued existence in the international monetary system. The game plan unfolds! The potential for a real weakening of the $'s global reserve asset role, is staggering. This pricing of oil in Euros is essentially a refusal to accept the $ in its reserve asset role. However, Russia and Europe's actions, will have several subsequent stages of reactions, all of them destructive to the present $'s role globally and each one progressively more destructive: - • The next step in this progression could well be a decision by some Oil producing countries decide price their oil and be paid, in Euros, initially to Euro related nations, then to nations who have to buy $ first, to buy oil. • The next level of instability will be reached as an actual "switch" from trading goods in $, to trading goods in Euros. Russia has started this trend with vigour. • This will inevitably lead to a capital flow away from the States and an exacerbation of the Balance of Payments deficits and further $ crises. • This, in itself, will encourage further switching of $ reserves to Euro reserves, to prevent further lessening the value of the foreign reserves of other nations. • These moves will set the basis for the global economy for decades and more, far into the foreseeable future. Gold -- Sharefin, 08:29:33 12/09/03 Tue Got gold? Notwithstanding that, I can't help commenting on the markets. It seems like everyone is back in stocks, thinking the bear market that started in early 2000 ended in early 2003. My opinion is that it hasn't ended. What we've seen for the last year is nothing more than a cyclical bounce upwards, a classic "sucker rally," similar to what happened in 1930. I don't know when the bear is going to come out again, but it's likely to be soon. And when it does, things are likely to get really ugly. Stocks are selling for outrageous prices. So I recommend you take the money and run. But run where? I think the precious metals are the only place to be. In the last month alone, the stocks on my monitored list have risen nearly 30 percent. Normally, that would scare me, and get me heading toward the exits. But I've said for years that, this cycle, gold isn't just going to go through the roof. It's going to the moon. If you don't participate in it, you're going to regret it seriously, and for a long time. Because the rationale for the move, and the cycles of the market, are clear – the knowledge of which companies to buy, and how and where to buy them, is readily available. ~~~ The market has changed. Many companies are now doing six-figure volumes – new underwritings and financings are being done daily. There's real interest from guys who've been around the block a few times. But share prices are still almost all south of a dollar – market caps still mostly average around $10 to 20 million. We've only entered the second stage of the big bull market. By the time we get into the third and final stage – and I don't expect that for a couple of years – most stocks will be trading in the $2 to $10 range, with any number going to $50 or better. Market caps will typically run to nine figures. The public will be chasing these things the way they ran after Internet stocks. How do I know? Because I've been in this market for 30 years, and I've seen it happen five times in the past (1973, 1980, 1983, 1987 and 1996, to be precise as to the peak years). But this one will be the biggest of them all, because not only will gold (and commodities, in general) be running, but the public – trained by the 1983-2000 bull market – all have brokerage accounts, and will be looking for the next hot sector. And the gold-resource story will tell exceedingly well. What's coming up is going to be a mania for the record books. So, what should you do now? These stocks have had a huge run, especially over the last few months. There have been lots of doubles and triples. Many experienced investors are shaking their heads, commenting that they're way overpriced relative to current metal values, and selling. Well, that's fine if you're in a position to reload with well-negotiated private placements. But I find that most people, once they sell a stock, never wind up replacing it. So the market runs away on them, and they wind up watching. Except for anomalous times – like a while in 1999, 2000 and 2001, which I think I amply documented in International Speculator, when many of these companies were selling for less than the cash in the bank – these companies are always "overpriced." That's because, in many ways, they're really just options on the price of precious metals. Or even lottery tickets. Options and lottery tickets have no intrinsic value, and are expensive. I think it's a mistake to try to trade these stocks. Unless you're used to making a good living in the commodities market, you'll just get whipsawed, commissioned, bid-ask spreaded, and currency conversioned into penury, when you should be making hundreds of percent in profits. And benefiting from long-term capital-gains tax treatment. The golds now are like the Internets were in 1996. Overpriced, but selling for just a fraction of where they will be in a couple of years. Weakness should be used to buy, not an excuse to be shaken out. This is just the beginning of the market. And I personally expect it to be the wildest bull market, of any sort, I've ever seen. Fiat -- Sharefin, 08:25:17 12/09/03 Tue Banksters Forum Welcome! The purpose of Banksters is to educate all regarding the Fraud of "Lenders" as they go about their business. Most believe a Bank loans you THEIR assets to you when in Truth, YOU provide the asset THEY monitize, i.e. the Promissory Note or the Charge Slip. Fiat -- Sharefin, 08:24:00 12/09/03 Tue The Golden Mega Trend ** Templeton warns of real- estate collapse *** John Templeton, interviewed in Equities Magazine: "It would be unlikely that the bear market is over when the American stock market is only down about 30%, when in the biggest boom ever, it had been up 10 times over where it had been years earlier...Following such a large increase, a 30% decrease is small." "Every previous major bear market has been accompanied by a bear market in home prices...This time, home prices have gone up 20%, and this represents a very dangerous situation. When home prices do start down, they will fall remarkably far. In Japan, home prices are down to less than half what they were at the stock market peak. A home price decline of as little as 20% would put a lot of people in bankruptcy." "Emphasize in your magazine how big the debt is...The total debt of America is now $31 trillion. That is three times the GNP of the U.S. That is unprecedented in a major nation. No nation has ever had such a big debt as America has, and it's bigger than it was at the peak of the stock market boom. Think of the dangers involved. Almost everyone has a home mortgage, and some are 89% of the value of the home (and yes, some are more). If home prices start down, there will be bankruptcies, and in bankruptcy, houses are sold at lower prices, pushing home prices down further. After home prices go down to one-tenth of the highest price homeowners paid, then buy." Fiat -- Sharefin, 08:22:08 12/09/03 Tue Ripples from a Japanese bank collapse TOKYO - The Japanese government's November 30 decision to nationalize the insolvent Ashikaga banking group has surprised investors who had expected a Resona-style bailout - in which shareholders weren't forced to take a haircut for the mess. The move means that Ashikaga shareholders' capital will be wiped out, leaving them with nothing, and the government will take 100 percent of the equity in the regional lender. Since May 17 when the government decided, in bailing out Japan's fifth largest bank, not to compel shareholders to assume responsibility for the Resona debacle, some foreign hedge funds had picked up regional Japanese bank shares in expectation of similar government relief measures. The lack of relief measures in this case leaves investors in a quandary about future government moves in event of further collapses. ~~~ What has been particularly stunning for investors is that the government decided to pump 1 trillion yen into the ailing bank, which was under the Ashikaga Financial Group holding company, and had assets of only 5 trillion yen. The bailout amount is significantly large, given that only 2 trillion yen was injected into the Resona group, which had nearly 40 trillion yen in assets. In this case, local businesses, large banks - including Mitsubishi Tokyo Financial Group, which held a 3.5 percent stake in the bank as of March - and insurance companies will take the brunt of the losses. The infusion of the disproportionately large amount of public funds into Ashikaga is thus fanning speculation that the bank may be in very bad shape indeed. When the equities markets opened on December 1, the listed Ashikaga group promptly went limit-down, plunging by the daily allowable limit of 30 yen to 51 yen. Some regional banks ran into a sell-off as well as the news dampened investor sentiment, although by and large, the bulls remained in charge of the broader market. ~~~ The BOJ action boosted the outstanding balance of private financial institutions' current-account deposits at the BOJ to 31 trillion yen, close to the central bank's maximum target of 32 trillion yen. Participants in the money market remained calm, with no banks rushing to raise money. Overnight call rates remained stable at around 0.001 percent. The central bank says it will continue supplying generous liquidity if it detects any sign of instability in the financial markets. Even without the Ashikaga problem, the domestic stock market is fragile despite the runup this year. Currency authorities bought more than 17 trillion yen (US$157.2 billion) worth of dollars in the first 11 months of this year in their drive to stem the yen's ascent, far more than the country's current-account surplus during the same period and an amount that dwarfs dramatically any Bank of Japan intervention in history. The enormous scale of intervention has had the effect of supporting the US stock market and encouraged foreign investors to purchase Japanese equities. Meanwhile, domestic institutional investors are increasingly distancing themselves from the market after suffering heavy losses in recent trading. Gold -- Sharefin, 08:17:43 12/09/03 Tue Gold futures continue ascent "I'll expect people to buy on dips," said Frank Lesh, a trader and analyst at Rand Financial Services Inc. in Chicago. "The trend is still up" for gold because of the dollar's decline, he said. ~~~ In the past month, gold has moved almost in lockstep with the euro's performance against the dollar, at a correlation coefficient of 0.93. The maximum reading is 1. The coefficient measures the degree to which variables move in unison. "The fundamentals are there for a sustainable higher gold price," Gregory Wilkins, chief executive of Barrick Gold Corp., told reporters during a mining conference in London Wednesday. Barrick is the world's third-largest gold producer behind Newmont Mining Corp. and AngloGold Ltd. Further gains for gold might be limited, though, as scrap dealers sell the metal to take advantage of higher prices, he said. Sales of gold scrap rose 18 percent last year to 835 metric tons, according to London-based research company Gold Fields Mineral Services Ltd. Sales jumped as gold futures surged 25 percent for the year, their best annual performance since 1979. Gold -- Sharefin, 08:15:42 12/09/03 Tue Gold headed for US$1,000/oz? An Aussie investment bank claims global financial markets could be entering an epoch that turns the clock back to the 1970s when paper assets fell out of favour in place of hard assets such as gold, the value of which it prophesises could test US$1,000 per ounce as a result. According to its The Alchemist newsletter, RFC Capital says if the US dollar continues to deteriorate, and now that gold has breached the US$400/oz resistance level, next year promises to be a volatile period which could see the price surge to US$500/oz. An ostensible edginess in the form of significantly reduced COMEX gold short positions was already emerging. RFC analyst Richard Harris indicated that the long-term paper to real asset shift in funds is represented in the Dow Jones/gold price index. “In the past it has traded below 5:1,” he explained. “If this ratio level is reached once again, and assuming the Dow falls from current levels of 9,900 to 5,000 (points), gold could touch US$1,000/oz if a 5:1 Dow/Gold ratio returned.” Gold -- Sharefin, 08:11:11 12/09/03 Tue Rand sounds panic alarm South Africa's mining companies continued their white-knuckle ride into the red today as the rand soared to its highest level in almost four years. During early trade in Johannesburg, the currency traded at high as R6.07 to the dollar, its highest level in 47 months, before it settled to R6.15/$ at the close of the market. The currency's move gave resource investors cause to consider lowering earnings forecasts still further and pushed resources index down three percent. Gold producers lost 2.9 percent after the gold price sunk below R80,000/kg, that despite the dollar price of gold trading near its highest point in seven years. The margin squeeze, which has led to a spate of profit warnings from commodity producers and other exporters, has kick-started a review process of marginal and loss making mines. Although major mining companies have stopped short of cutting jobs for the time being, a stronger rand would almost certainly lead to a flood of retrenchments as managers try to cauterise the unprofitable work areas at their operations. Gold -- Sharefin, 08:09:37 12/09/03 Tue Barrick: Will Not Hedge Output Even If Gold Hits $500/Oz Barrick Gold Corp reiterated Wednesday its new non-hedging policy, saying that it won't sell forward its output even if gold prices hit $500 a troy ounce. In a statement released at the Mines and Money conference in London, the Canadian senior gold producer said, "We are committed to shareholder value and want to eliminate the discount that the market ascribes to hedging." Tuesday, Barrick announced a switch to become a non-hedging gold producer, aiming to reduce its 16 million ounces of hedged gold to zero. The company said that it cannot eliminate the hedge book right away because it is evaluating a range of alternatives to reduce the hedge book down to zero over time, in a "prudent, planned fashion." "We have a unique flexibility in the terms of our forward sales commitments and we don't want to spend a significant amount of hard earned shareholders money on imprudent decisions," Barrick said. The company said it will reduce the hedge book in a timely way, using market volatility and taking advantage of opportunities as they present themselves. Barrick has not yet set a timetable for the elimination of its remaining 16 million ounces of gold hedges but it said "in light of the cyclicality in the gold market and our production level of a minimum of about five million ounces a year, we expect that there will be opportunities to deliver our gold production against forward sales commitments." Gold -- Sharefin, 08:07:05 12/09/03 Tue Gold hedge detractors find new friend in Barrick Want to get a gold miner's blood boiling? Just mention hedging, the sometimes not so simple act of selling nuggets still in the ground for a set price. Hedging has for years left miners from Australia to Argentina divided into two camps -- for and against. Barrick Gold Corp Hedges represent 20 percent of Barrick's as yet unmined gold reserves, the lifeblood of a mining company. ~~~ y vowing to abandon their hedge book, effectively buying back the gold, Barrick falls in line with other big mining houses. "Barrick was the last bastion," said Eagle Mining Research of Australia analyst Keith Goode. Hedging's detractors assert the practice artificially caps otherwise free-wheeling bullion prices and adds to supply. Proponents claim hedging guarantees revenue streams and makes it easier to obtain institutional loans to dig new mines. ~~~ Pierre Lassonde, president of the world's biggest gold miner, Newmont Mining Corp, has said hedging has no place in gold mining. ~~~ Last year, hedge buybacks removed up to 250 tonnes of gold from the market, analysts estimate. ~~~ A tally by London-based Gold Fields Mineral Services shows 71.6 million ounces of gold (2227 tonnes) -- equivalent to 86 percent of all the gold mined last year -- remained hedged as of September 30, through a mosaic of forward sales and options schemes. Gold -- Sharefin, 07:59:53 12/09/03 Tue Three signs gold will keep shining Is it too late to catch the trend? I think there are good arguments to suggest gold will keep moving up a bit more. First, there's an imbalance of supply and demand. Gold exploration fell off after the Bre-X fiasco, but demand remained steady. To fill the gap, central banks around the world have been leasing their gold reserves. But this is no longer a profitable manoeuvre. When gold prices were continually falling, financial speculators could get access to gold at a low leasing rate (0.5 to 1 per cent a year), sell it and reinvest the proceeds in a high-yielding bond or treasury bill. "The trade was viewed as a lay-up," says John Embry, president of Sprott Asset Management Inc., one of Canada's most experienced precious metals fund managers (formerly with RBC). "However, these trades make no sense with a rising gold price and declining interest rates." Second, there's the U.S. dollar. It's falling in value against other currencies, such as the Canadian dollar and the euro. Gold traditionally moves in an inverse relationship to the U.S. dollar, which is considered to be the world's reserve currency. "The story of global inflation since World War II is largely the story of the rate of decline in the purchasing power of the dollar," says BMO Nesbitt Burns U.S. strategist Donald Coxe in a recent book, The New Reality of Wall Street (McGraw-Hill). "When the dollar rose in value against the other leading currencies of the world, global inflation rates moderated or fell; when the dollar fell in value, global inflation rates and the price of gold tended to rise." The U.S. dollar went through a powerful bull market from 1995 to 2002. But since then, it has entered a bear market and could remain under pressure. Embry wrote an article last May giving 14 fundamental reasons to own gold. Among them: The U.S. authorities are on record as saying they will print money to cut the threat of deflation. This monetary debasement makes gold more attractive as an alternative currency. In just two years, the U.S. budget surplus has turned into a deficit, which keeps growing. The U.S. also has a deficit in its current account, the difference between its total exports and imports of goods and services. Interest rates are so low they're negative in real terms (after inflation and taxes). Gold traditionally strengthens when real interest rates are negative. Third, many large gold producers are moving away from hedging. This is a policy of selling gold forward, using futures contracts, to lock in prices and protect themselves from volatility. The "dehedging" trend is a sign these big companies are bullish on gold's prospects. And as they reduce their existing hedge positions, they are removing gold from the market. "We've been saying for some time the fundamentals are compelling. There's a confluence of factors favouring gold," says Vince Borg, a spokesperson for Barrick Gold Corp. of Toronto. Barrick said it would formally drop hedging as a strategy, a move that helped push bullion to a 7 1/2-year closing high yesterday. It also posted a formal no-hedging policy at its Web site, http://www.barrick.com. Gold -- Sharefin, 07:56:21 12/09/03 Tue Gold TRAKR to trade in US from Thursday American investors who want a gold security fix more urgently than the World Gold Council can supply will be able to buy a derivative bullion futures contract on the Chicago Mercantile Exchange (CME) from this Thursday. Merrill Lynch has licensed its Total Return Asset Contracts product to the CME which has engaged AIG International to act as a market maker for “Gold TRAKRS” which will trade under the symbol GLD. Retail investors are expected to pay around $25 per contract, a premium of more than 7% to the estimated underlying value. ~~~ Gold TRAKRS's marketers won't catch too many gold bugs buying the product though, not just because of the premium risk (which is a reflection of fee and cost loadings), but mostly because it's a paper derivative rather a bullion demand generator. Although Gold TRAKR is designed to mimic the spot price of gold and even pay gold lease rate based interest, it doesn't have the authentic bullion flavour that has driven product demand to date. Similarly, its expiry date is antithetical to the premise of gold bullion investments which are supposed to be timeless. Gold -- Sharefin, 07:52:28 12/09/03 Tue Barrick bows to 'today's investment climate' Barrick [ABX] has moved to clear up some of the confusion rendered by chairman Peter Munk when he spoke recently to investors in London, first passionately defending his company's hedging and then reclaiming the podium to say no new hedging would be undertaken by the world number two gold producer. Via a company statement, Barrick president and chief executive officer, Greg Wilkins, said the company was adopting a “no hedge” policy in response to shareholder pressure. “As the stock market ascribes a discount to hedging and in light of Barrick's overriding commitment to shareholder value, it will not enter into additional hedging commitments and has adopted a no-hedge policy.” This has been misinterpreted by some media as a reversal of Barrick's hedging policy. It is, rather, an affirmation of the policy announced when Wilkins took over from former CEO Randall Oliphant earlier this year. The critical change is a unified corporate message on how hedging will be presented to the public in future, and the first commitment to eliminate the hedge book altogether. Another indicated change is an attempt to restructure the hedge book ahead of its elimination. ~~~~ Firstly, the no-hedge concept is beyond stale. Almost everybody has done it and they were doing it $100 per ounce ago. Second, the timing is most unfortunate with Barrick in the opening phase of depositions related to the ridiculous Blanchard law suit – it looks like the company is capitulating. In that vein, it will stick in investor craws that Barrick management fought the market trend so long and so hard, yet have spun around at $400 an ounce when their book is deeply under water. Why are investors being listened to now only? Or are they? ~~~ The net result is that we're unlikely to see aggressive changes to the Barrick book, at least not without risking monetizing a notional loss or without a helpful dip in the gold price. The most likely option seems to be to reassign most of the book to a new asset. ~~~~ The proof of Barrick's supposed volte face on hedging remains to be seen, but this period will go down as one if its worst strategic missteps as it got caught short its primary product even when its rivals were bolting for the exits. Fiat -- Sharefin, 07:46:56 12/09/03 Tue VANCOUVER, British Columbia, Dec. 2 (Reuters) -- Barrick Gold Corp., whose name has become synonymous with selling gold on forward markets, said on Tuesday it had formally committed itself to drop hedging as a strategy, sending bullion prices to a fresh 7-1/2 high. In an interview with Reuters, Barrick chief executive Greg Wilkins said the world's third biggest gold miner would, over time, empty its forward sales book -- the biggest in the gold business -- although it was in no rush, or under any pressure, to get rid of it. "But eventually the hedge book will come to zero. We aren't qualifying the policy. We are adopting truly a no-hedging policy," Wilkins said. Gold surged to a 7-1/2 year high, hitting $405.55 an ounce, after Wilkins firmed up informal comments made by Barrick chairman and founder Peter Munk 11 days ago. Munk said then that the Toronto-based firm's commitment to hedging was a thing of the past. As promised, the firm also posted a formal no-hedging policy statement on its Web site on Tuesday. ~~~~ Tells of why, but mum on how Wilkins, who took the helm at Barrick in February, said he had spent the last eight to nine months speaking to investors and hearing their concerns about the firm's hedge book, which critics say reduces the firm's exposure to rising gold prices. Currently weighing in at 16 million ounces of gold, Barrick has reduced the hedge book from a peak of 24 million ounces 18 months ago. ~~~ Analysts said it was crucial to know how Barrick plans to cut back its hedge positions, as it could be expensive if the gold price continues to rise. But Wilkins declined to provide details, saying only that many options were being considered. Fiat -- Sharefin, 07:44:27 12/09/03 Tue Bottom of the barrel The world is running out of oil - so why do politicians refuse to talk about it? Every generation has its taboo, and ours is this: that the resource upon which our lives have been built is running out. We don't talk about it because we cannot imagine it. This is a civilisation in denial. Oil itself won't disappear, but extracting what remains is becoming ever more difficult and expensive. The discovery of new reserves peaked in the 1960s. Every year we use four times as much oil as we find. All the big strikes appear to have been made long ago: the 400m barrels in the new North Sea field would have been considered piffling in the 1970s. Our future supplies depend on the discovery of small new deposits and the better exploitation of big old ones. No one with expertise in the field is in any doubt that the global production of oil will peak before long. The only question is how long. The most optimistic projections are the ones produced by the US department of energy, which claims that this will not take place until 2037. But the US energy information agency has admitted that the government's figures have been fudged: it has based its projections for oil supply on the projections for oil demand, perhaps in order not to sow panic in the financial markets. Other analysts are less sanguine. The petroleum geologist Colin Campbell calculates that global extraction will peak before 2010. In August, the geophysicist Kenneth Deffeyes told New Scientist that he was "99% confident" that the date of maximum global production will be 2004. Even if the optimists are correct, we will be scraping the oil barrel within the lifetimes of most of those who are middle-aged today. The supply of oil will decline, but global demand will not. Today we will burn 76m barrels; by 2020 we will be using 112m barrels a day, after which projected demand accelerates. If supply declines and demand grows, we soon encounter something with which the people of the advanced industrial economies are unfamiliar: shortage. The price of oil will go through the roof. As the price rises, the sectors which are now almost wholly dependent on crude oil - principally transport and farming - will be forced to contract. Given that climate change caused by burning oil is cooking the planet, this might appear to be a good thing. The problem is that our lives have become hard-wired to the oil economy. Our sprawling suburbs are impossible to service without cars. High oil prices mean high food prices: much of the world's growing population will go hungry. These problems will be exacerbated by the direct connection between the price of oil and the rate of unemployment. The last five recessions in the US were all preceded by a rise in the oil price. ------- HMMM!!! Gold extraction is a high energy process. Will gold extraction at 1gpt be profitable with oil through the roof? Fiat -- Sharefin, 07:41:44 12/09/03 Tue The Bear's Lair: Greenspan's Ponzi Scheme Ponzi scheme requires three things in order to be (temporarily) successful: a massive source of outside money, a sophisticated PR campaign, bloviating about its glories, and a "magic mushroom" to make people believe in it. U.S. monetary policy currently has all three. For those not around in 1920, Charles Ponzi ran a scam in which money was supposed to be invested in international postal coupons (the exchange rate disruptions of World War I had made it at least theoretically profitable to buy Spanish coupons and use them to pay U.S. postage.) The postal coupons were the "magic mushroom" -- providing the hallucinogenic ingredient that people didn't really understand, but that appeared to make it possible to make fantastic returns. By publicizing the success of early "investors," paying back investors who demanded their money, and even agreeing to be audited, Ponzi created a PR campaign that attracted new money. By operating in the major money center of Boston, he maximized the access to new investors, whose money could be used to pay off old ones -- he was taking in $1 million per week at the peak, real money in 1920. Needless to say, Ponzi was imprisoned -- one of three prison terms he was to serve -- after which he emigrated to Mussolini's Italy, followed by post-war Brazil, scamming as he went. The equation of Greenspan to Ponzi does not suggest criminal intent -- just that many features of current U.S. monetary policy strangely resemble Ponzi's empire, and are likely to lead to similar painful results for all of us. ~~~ Greenspan, and the U.S. economy, could get lucky; by January 7 we will have a better idea of whether he did. That chance alone perhaps separates him from Ponzi, for whom long-run success, once the scheme took off, became impossible. But that's clearly not the way to bet. If the post-2001 "productivity miracle" disappears, or is sharply diminished by the new figures, there are two possible outcomes. One is that favored by the majority of the participants at the Cato conference, who determined that the Euro-dollar exchange rate would reach $1.60 by 2005. That would bring the U.S. trade deficit well back towards balance, at the cost of exporting a wholly unwarranted recession to the eurozone countries, whose currencies would at that point be about 50 percent above purchasing power parity with the dollar. Since the EU is unlikely to tolerate such an exchange rate lurch, there is another way to rebalance the U.S. payments position -- a devastating U.S. recession, worse than anything seen since the 1930s, probably accompanied by substantial inflation. The recession, by slashing imports, would reduce the payments deficit, while the inflation, by devastating holders of Treasury bonds (and quasi-government obligations such as those of Fannie Mae) would in economic terms balance the U.S. budget deficit. That's what comes of getting your economic policy from Charles Ponzi! Fiat -- Sharefin, 07:39:00 12/09/03 Tue The Bear's Lair: 4 Horsemen of the Economy The U.S. economy of 1999 had only one serious imbalance -- the stock market bubble. Today's economy has not one but four imbalances; four "Horsemen of the Apocalypse" which may well cause war, famine, pestilence and death in the years to come. Really the only major uncertainty is: in which order? The U.S. stock market, the screaming imbalance of 1999, is still out of kilter. The extraordinary overvaluations of tech and Internet stocks in 1999 have to some extent been corrected, in many cases by the simple expedient of the companies going bust altogether. However, all stocks became overvalued in 1999, by any traditional valuation metrics. Non-tech stocks never saw a really severe bear market. Even at the trough of October 2002, the Dow Jones Industrial Index was down only 38 percent from its peak, and still 15 percent above the level of Fed Chairman Alan Greenspan's 1996 "irrational exuberance" speech. Non-techs have now rebounded to valuation levels that are quite close to 1999's highs, bearing in mind the softening of corporate profits since that time. Reported price/earnings ratios are suppressed by funny accounting; both the non-expensing of stock options, and the surge in extraordinary items, now around 40 percent of profits. In real terms, the S&P 500 Index is currently trading at over 30 times 2003 earnings; it is thus heavily overvalued both in terms of past history and in terms of alternative investments such as Treasury bonds, which have trended higher in yield since June. Tech stocks are less overvalued than they were in 1999, but any reasonable examination of companies with price-earnings ratios above 100 and single-digit growth rates suggests that they are still heavily overvalued, having gone through a phase of near-sanity at the end of 2002. Fiat -- Sharefin, 07:36:01 12/09/03 Tue Metal Heads Up Metal Heads…It has been some time since we have formally addressed gold in a discussion, at least in more than a passing or tangential manner. To be honest, we've been afraid of simply parroting the plethora of gold related information floating around the darker corners of the investment community these days. But as we try to think in broader terms, this “plethora” of information is certainly far from mainstream or consensus thinking. Although we cannot state this in an unequivocal manner, we have the very strong feeling that most mainstream investors have very little awareness of global currency movements, outside of what they hear regarding China bashing at the moment. Most mom and pop investors have very little understanding of money and banking, monetary and fiscal policy actions of the present relative to historical precedent, and very little appreciation for our trade and budget deficits relative to prior period experience. All eyes and media attention seem to be fixated on the movements of the major equity indices this year, despite the fact that many highly visible gold stocks have outperformed the major equity averages by a mile. Moreover, the run in a large number of junior gold's this year alone has put many an internet stock to complete shame in terms of outperformance. Yet across the broad investment landscape, the bull market in gold remains relatively hidden while in plain view. The same really characterizes the larger precious metals complex. Trying to keep this discussion as simplistic as possible, we prefer to think of gold in the current environment as being driven by two basic phenomenon. One shorter term and one longer term. From a shorter term perspective, gold is keeping score regarding, and is reflective of, one of the greatest credit bubble environments ever experienced both domestically and in good measure internationally. Although the greatest global source of credit creation has been and remains the US economy, the credit bubble/reflation campaign is truly global in context at this point. Lending in an on fire economy such as China has been almost parabolic over the last year-plus. The Chinese authorities fully realize what is happening and have currently taken baby steps to cool it down. The current Japanese monetary base has likewise gone straight north in nature over the last few years as the Japanese have finally taken the advice of folks like ourselves (the US) and have created an environment of significant liquidity, basically supercharging the already accommodative trajectory of their burgeoning foreign exchange reserve position.  The bottom line is that we are smack in the midst of one of the greatest global reflation campaigns of our lifetime. This campaign directly involves money creation (credit creation), deficit spending, and currency manipulation. Academic concepts not front and center in the living rooms of mom and pop America. And gold sits quietly in the corner keeping very detailed notes on this whole escapade. The second phenomenon we believe will be very important in terms of the ultimate longevity and height of the bull market in precious metals is the evolutionary track of the global economy. This is so long term in nature that we believe its day to day influence on gold is imperceptible. That may also hold true for time measured in months and years. But as we try to look ahead decades, there is a very good chance that we sit at a significant inflection point in terms of the balance of global economic power. Fiat -- Sharefin, 07:32:33 12/09/03 Tue UK to get gold ETF before US In a blow to gold industry insiders lobbying for an American debut of the World Gold Council's network of international exchange traded gold funds, the advocacy group has been forced to proceed with the London listing of its global franchise because of ongoing bureaucratic stalemates in the US. Gold Bullion Securities launched in the UK on Tuesday and will trade on the London Stock Exchange as ‘GBS' from December 9. Fiat -- Sharefin, 07:29:22 12/09/03 Tue Market eyes the Fed -- Maybe it should be eyeing commodities prices Stocks rallied today as investors seem confident the Fed will leave rates on hold when its Open Market Committee meets tomorrow. Rates on hold seem a relatively safe bet -- for now. But with commodities prices soaring, the Fed's hand may soon be forced. Energy, grain, metal, and meat prices are soaring. On top of that, the value of the U.S. dollar relative to all the major currencies is sinking like a stone. In fact, you can attribute much of the increase in commodities prices to a weak dollar. That's because most every major commodity is priced in dollar terms. But there is more than just the weak dollar showing up in the rising commodities prices -- the fundamentals of supply and demand are kicking in. For years, the prices of many commodities drifted lower and lower. Now, most of the major commodities are now just starting to come out of a 20-year bear market. ~~~ What does it mean? It means there could be a nasty surprise ahead on the consumer price front. And if there is, the stock market won't be able to count on the elixir of low interest rates for support. Remember that in the end, the Fed is more concerned about the potential damage from soaring inflation than the damage caused by a sinking stock market. Fiat -- Sharefin, 07:27:17 12/09/03 Tue A Falling Dollar Could Spell Trouble Ahead Stocks rallied again today, despite the fact that the U.S. dollar, the world's reserve currency, crumbled to an all-time low against the euro. Bond prices followed the dollar lower, pushing yields higher, while gold rose to a near eight-year high. The Bush administration seems pleased that the dollar is heading lower. It is helping to push a "little inflation" into the economy. But because the U.S. relies on others to fund its runaway spending, pushing the dollar lower can be dangerous. We could be getting closer to the danger zone than most now realize. Over the past year, foreign central banks have increased their holding of U.S. securities by a whopping $150 billion, to $918 billion. The $150 billion increase now funds about 27% of the estimated $550 billion US current account deficit. That is double the amount funded by foreign holders just a year ago. And yet despite all this fresh money flowing to the dollar, it continues to fall lower and lower. Yikes! Now think about this logically. You are a foreign central bank, holding billions and billions in U.S. assets denominated in dollars. Each day the dollar falls in value, you loose millions and millions in value on your U.S. holdings. At some point, as a foreign central bank, with a fiduciary duty to guard your own country's assets, you will have to "cry uncle." Enough is enough. So instead of recycling all the dollars back into U.S. securities, imagine the damage to the dollar if those banks decide to buy euro- or Swiss franc- or Australian dollar- or yen-denominated bonds instead. It really is a frightening scenario -- the dollar would fall like a stone and U.S. bond prices would follow -- that would jack up interest rates. The stock market would crumble. If the dollar continues its slide, that scenario may unfold for us all to see. Fiat -- Sharefin, 07:25:06 12/09/03 Tue SOROS, BUFFETT BET vs. DOLLAR Smart money players Warren Buffett and George Soros are making huge bets the dollar will continue its slide to new lows all next year. The greenback hit its lowest level ever against the euro yesterday, dropped to a five-year low against the British pound and fell to a 10-year bottom against the Canadian dollar. Despite positive economic news last week, traders say foreign investors are skittish about making U.S. investments due to its record trade and budget deficits, which undermine the dollar. Our historically low interest rates, now at 1 percent for the key federal funds rate, are also spooking foreign investors. Buffet made no secret about his dollar bets, saying in a letter published on Fortune.com last month that his Berkshire group has made "significant" foreign currency purchases in the last year because he thinks the U.S. trade deficit will erode the dollar. Traders in London said Soros and numerous other speculators have been building substantial "short" positions against the dollar, according to the Independent.  Gold -- Sharefin, 07:21:37 12/09/03 Tue WGC holds talks to launch 'paper gold' The World Gold Council (WGC) is holding talks with a national bank in Dubai to co-operate on launching a gold accumulation plan. This would allow investors to open interest-bearing 'paper gold' accounts. ~~~ Barakat said an increasing number of investors are shifting into gold from traditional assets such as equities and debt instruments. He said: "The stock markets have been rendered unpredictable and deposits with banks are not remunerative in view of the record low interest rates." "The unfavourable geo-political situation in many parts of the world has also helped gold become the most sought after asset class." Fiat -- Sharefin, 07:17:48 12/09/03 Tue NY gold ends atop $400/oz,first time since Feb '96 COMEX gold closed north of $400 an ounce for the first time in almost eight years Monday, as New York uncorked four days of pent-up demand and the sliding dollar made the safe-haven metal more affordable overseas. ~~~ "Speaking of broadening bullishness, we note new secular bull market highs in a broad number of bullion shares," wrote analyst Gregory Weldon, publisher of Metal Monitor. "We are bullish on the whole of the precious metals sector." ~~~ Strong economic indicators helped silver, which has the double advantage of being an industrial material and a precious metal tethered to gold. ~~ "Silver is the mover today, it's really off to the races," said a bullion trader. "Platinum is not looking too shabby, either. But it's all dollar related." Fiat -- Sharefin, 07:14:50 12/09/03 Tue Engineered Extinction Imagine an America of closed factories, shuttered offices, and millions of unemployed blue-collar and white-collar workers. Imagine a United States of America that is no longer the leader in any major industrial or technological sector — a U.S. of A. that is dangerously dependent on foreign suppliers for many of its critical military supplies and weapons components. Imagine an America that depends on foreign producers not only for virtually all consumer goods but even for basic foodstuffs. Imagine an America that is no longer a land of optimism and opportunity for our younger generations because it has ceased to be competitive globally and has regulated jobs, careers and entrepreneurial activities into oblivion. Imagine a rusting and decrepit America that can no longer economically support its aging population. Imagine a dependent America with supplies of food, oil and other essentials interrupted by war or terrorism. Imagine regular electrical blackouts and brownouts similar to those that afflict developing countries. Not a pretty picture. But, unfortunately, the above imaginings are gradually becoming reality. We are witnessing the piecemeal economic destruction of the wealthiest, most dynamic economic powerhouse in human history. The American economy is dying, but not from natural causes. It is being strangled to death in a coordinated pincer attack. America's ability to survive, produce and prosper is being systematically destroyed by socialistic taxes and regulations that make U.S. production of virtually everything increasingly uneconomical. Simultaneously, the same legislators and government officials who are impeding American producers are opening the floodgates to cheap foreign goods that are not burdened with the same debilitating taxes, regulations and mandates. Gold -- Sharefin, 07:08:27 12/09/03 Tue High gold prices in India spur recycling, imports fall BOMBAY (Reuters) - Rising supplies of scrap gold in India, the world's largest consumer, have dented imports and recycling is likely to persist if prices stay high, traders said on Monday. "We have witnessed a surge in scrap supply as gold prices have gone up sharply," said Girish Choksi, a dealer in Ahmedabad, a leading gold trading centre. "Many jewellers are buying recycled metal to avoid costly imports." ~~~ Consumers have been selling old jewellery to encash on firm prices. Jewellers generally buy old ornaments from the users at slightly lower than prevailing prices. Gold imports were estimated at about 100 kg a day against a normal of 250-300 kg at this time of the year, when people buy gold jewellery mainly to gift in marriages. India imports an average of 1.6 tonnes of gold a day to meet about 70 percent of its annual consumption of more than 800 tonnes, which is one-fifth of global demand. Gold demand generally rises in India during the marriage season which begins in December and ends in May. Parents gift gold jewellery to their daughters at the time of marriage for financial security. Prithvi Raj Kothari, a Bombay-based bullion trader, said supply of scrap gold in the financial hub had zoomed to about 150 kg a day from around 30 kg a month ago. Daily imports in Bombay, which accounts for about one-fourth of the country's gold demand, were 200 to 250 kg against normal buying of about 500 kg. "We're not seeing the kind of jewellery demand expected during the marriage season," Choksi said. "It is much below the potential." Gold -- Sharefin, 07:06:31 12/09/03 Tue India's Gold Consumption Continues to Rise In India, the demand for gold continues to grow steadily, despite rising prices. Gold prices may be at a six-year high, but India's appetite for the metal remains as huge as ever. A busy wedding season has followed the festival season in October resulting in higher-than-ever sales of gold jewelry. ~~~ It is estimated that the country has private hoards of 13,000 tons of gold. India consumes 800 tons of gold annually, or about 20 percent of global consumption. About one-quarter of this is recycled gold, old ornaments, exchanged for new pieces. Although its per capita consumption of gold is lower than in several other countries, India is the world's highest consumer of gold. Mr. Agarwal says the demand for gold in India rose by about 16 percent this year even though prices have reached $400 an ounce. Last year, he says, many people just recycled old jewelry because of higher prices. "This year clearly the consumer feels that the present level of gold prices … are going to stay firm, and with this kind of mindset they have gone back to buying new gold," he said. Fiat -- Sharefin, 07:04:35 12/09/03 Tue Dollar plunges to all-time low against euro The dollar tumbled across the board yesterday, hitting an all-time low against the euro amid fears that Wall Street was betting against the US currency. The euro traded as high as $1.2018 - above $1.20 for the first time - as the dollar slid to new multi-year lows against sterling and the Canadian dollar and a six-month low against the Swiss franc. ~~~ Chris Furness, senior currency strategist at the online analysts 4CAST, said the move was "more psychological than anything else, and related at least a small extent to early US traders reading the story that both Soros and Buffett are betting on a dollar collapse". Yesterday's fall added to the massive selling of the world's largest currency, which has tumbled by 14 per cent against the euro so far this year. The financial markets are growing increasingly concerned that the US will not be able to attract enough investment to fund its burgeoning current account deficit, which is running at record levels. Lehman Brothers was the latest Wall Street bank to take a bearish stance, warning its clients the dollar remained "unattractive" while the Federal Reserve kept interest rates at four-decade lows. "By insisting that rates remain at historic lows, the central bank has only added to the doubts about the US recovery," the investment bank said in its latest forecasts. "If, on the other hand, the Fed begins hinting rates will head higher than we think, it could prove an important turning point for market confidence in the US - maybe not enough to turn the dollar's trend, but certainly enough to slow it down." ~~ Japan, which is struggling with a decade-long downturn, has repeatedly intervened to prevent the yen from rising and hurting its exporters. It has spent a record ¥17.8 trillion (£95.9bn) so far this year on keeping the yen down. Audrey Childe-Freeman, an economist at CIBC, said: "The euro is benefiting by default. People don't want to sell the dollar against the yen because of the threat of yen-selling intervention, which leaves few other options." Gold -- Sharefin, 06:59:55 12/09/03 Tue Nevada economists may grin when gold hits $400 For Nevada's gold mining industry, 400 looks like the magic number. Some think the prices of gold mining stocks and the metal itself will take off when investors see the price of the yellow metal break the $400 an ounce barrier and hold firm. It moved past $400 Wednesday but closed at $398.10. Major U.S. gold exchanges were closed Friday as part of the Thanksgiving holiday weekend. "It's going to be a psychological number," and a major area of resistance, said Michele Ashby, chief executive officer of the Denver Gold Group, which promotes gold investments to institutional investors. She believes investors have been waiting for a temporary pullback in gold mining stock prices so that they can invest in the sector. When the price of gold punches through $400 an ounce and holds, she thinks they will figure they are missing an opportunity and will stampede into the markets for gold and gold mining stocks. Other analysts believe it's too late to start buying gold and gold stocks, but, if Ashby is correct, it's good news for Nevada as well as gold bugs. Nevada is the world's third-largest gold producer behind South Africa and Australia. The state accounted for 80 percent of the total U.S. production in 2002, according to an annual economic review conducted by John Dobra, a professor at the University of Nevada, Reno, for the Nevada Mining Association. ~~~ In general, gold-mining stocks benefit from the decline in the value of the dollar, because investors use gold as a substitute currency. "It's an alternate currency," Bishop said. "It's a proxy for wealth." In addition, the Chinese have long had a fondness for the medal, and their wealth is increasing rapidly, Bishop said. Yet, he thinks individual investors have generally ignored gold stocks. "I don't see much evidence that the public is very much interested" in gold stocks yet, he said. Nor are institutional investors, a category that includes mutual funds and pension funds, Ashby said. "They are like putting their toes in the water," she said. "They want to get the temperature. The majority are about to jump into the pool." When that happens, their buying can cause gold stock prices to spike, because the size of the gold mining stock segment is relatively small, she said. Gold -- Sharefin, 06:41:47 12/09/03 Tue The Money Masters Our new 2-volume, 3 1/2 hour, fast-paced, non-fiction, historical documentary video throws back the veil of deceit hiding the origins and operations of the corrupt banking plutocracy that owns and rules America, and is gradually and clandestinely imposing a worldwide tyranny on the rest of mankind. Understand how international bankers gain control of America. Gold -- Sharefin, 06:40:46 12/09/03 Tue Can gold add more to its luster? Gold does not have to break $400 an ounce to prove that it is in a bull market. That has been clear for some time, as the price has surged 52 percent since it hit bottom in April 2001. . But $400 must be breached to prove that the rally, which many investors have probably missed, still has legs. And $450 an ounce has to appear to be within reach to offer a nice profit potential to investors who, unfortunately for them, usually do not pay attention to gold until its price is already going up. . For the gold producers and the gold faithful who lived though the dark times - in which gold fell steadily after trading at more than $800 an ounce in 1980 - there is no problem. Gold, which has been above $390 an ounce for two weeks, is going higher. Even Ian MacDonald, manager of precious metals at the New York branch of Commerzbank and a gold bear for 15 years, said, "The scary thing is we don't know how high this price can go." Gold -- Sharefin, 06:39:08 12/09/03 Tue Can gold add more to its luster? Gold does not have to break $400 an ounce to prove that it is in a bull market. That has been clear for some time, as the price has surged 52 percent since it hit bottom in April 2001. . But $400 must be breached to prove that the rally, which many investors have probably missed, still has legs. And $450 an ounce has to appear to be within reach to offer a nice profit potential to investors who, unfortunately for them, usually do not pay attention to gold until its price is already going up. . For the gold producers and the gold faithful who lived though the dark times - in which gold fell steadily after trading at more than $800 an ounce in 1980 - there is no problem. Gold, which has been above $390 an ounce for two weeks, is going higher. Even Ian MacDonald, manager of precious metals at the New York branch of Commerzbank and a gold bear for 15 years, said, "The scary thing is we don't know how high this price can go." Fiat -- Sharefin, 06:36:09 12/09/03 Tue Beginning of the end And there were scandals. First there was the foreign exchange scandal in New York involving a host of top banking institutions including employees of J.P. Morgan, Union Bank of Switzerland (UBS), Societe Generale, Warburg Dillon Read and Dresdner Kleinwort Benson amongst others. Following the Putnam mutual fund scandal that threatens to spread to numerous other mutual fund companies' consumer confidence in big financial institutions could be on the verge of taking a beating as the enormity of this slowly sinks in. And speaking of cover-ups and scandals Freddie Mac was finally forced to restate their earnings to the tune of $5 billion. Some mistake. We are sure his kissing cousin Fannie is not far behind. Why would anyone want to own these companies? Many do unfortunately and they are all in the portfolios of the major mutual and pension fund institutions. Can even others be far behind Citibank, BankAmerica, GE? Fiat -- Sharefin, 04:38:26 12/09/03 Tue Just another Indonesian bank scandal Just when investors might have been thinking it was safe to look at Indonesia a little less skeptically, the biggest banking scandal to hit the country since the central bank liquidity scandal, this one involving Bank Negara Indonesia (BNI) and allegedly fraudulent letters of credit, has shattered confidence yet again. ~~~ The BNI embezzlement involves huge losses in connection with the alleged issuance of fictitious letters of credit worth Rp1.7 trillion (US$200 million) between December 2002 and July 2003. Gold -- Sharefin, 04:33:28 12/09/03 Tue Local gold output takes on US A rebound in gold output could put Australia past the United States as the world's second-biggest producer of the yellow metal behind South Africa within a few years. ~~~ Surbiton director Sandra Close said yesterday that Australian gold production peaked at 318 tonnes in 1997-98 before falling away to 273 tonnes in 2001-02. ~~~ South Africa is the world's biggest producer, with annual output just under 400 tonnes. The US takes second spot, but its output has been on the slide because of cost pressures and environmental constraints. Dr Close said US mine production had fallen since the peak of 366 tonnes in calendar 1998, with 2002 output a provisional 298 tonnes. ~~~ "We are now living off previous successes and the rejuvenation of old mines, so it is vital to continue exploration and make new discoveries," she said. Auspec -- Sharefin, 04:04:20 12/09/03 Tue I would also guess that he's a tad ingenious in encouraging goldbugs to buy the markets up while he's heavilly leveraged & want's the prices higher so he can profit from it. He reminds me of a team driver whipping the boys on whilst standing to reap the greatest profits for himself. As for understanding the volatility of goldstocks & how they react to market forces, well, with all the studies I've done of gold stocks through market declines all I can say is he needs to go back & do some serious study. I have quite a number of datasets of goldstocks through the 1987 crash & can honestly say that these speculative stocks decline harder & faster than most in a panic driven sell off. The gold stocks tumbled hard in 1987 even though the price of gold didn't fall & held strong for a few more months. Same for other market declines & sell-off. As with all stocks the most speculative stocks rise the quickest & sell-off the fastest. To deny this is so is a lie. Periodic Ponzi Update PPU -- $hifty, 23:25:50 12/07/03 Sun Ponzi Chart Periodic Ponzi Update PPU Nasdaq 1,937.82 + Dow 9,862.68 = 11,800.50 divide by 2 = 5,900.25 Ponzi up 28.89 from last week. Thanks for the link RossL ! Go GATA ! Go GOLD ! $hifty From The Stables Apparently -- auspec, 21:55:22 12/06/03 Sat The following piece is being posted around the net at the request of James Sinclair: Trojan Horse Alert Author: Jim Sinclair Golden Comet Call to Action- Post Everywhere A well-written but improperly supported article recently appeared on the prestigious gold site, Gold-Eagle. This article, written by Ed Bugos, suggests that gold shares will decline if the general equity market heads considerably lower. It is a totally wrong assertion unless everyone in the Gold Community acts on it. Act on gold, not on anything else. Stop listening to naysayers and only listen to the market. The assumption that gold shares will drop in a declining equity market takes its root in the skewed very long term study published by the master "Trojan Horse" himself, Mr. Robert Prechter. His study fails to understand what gold shares were before the big gold bull market of the 70s. These shares represented the highest yielding industry group, exceeding even utility shares because the life of most mining companies was very short and also because people were reluctant to invest money in production outside their own country. As a result, gold stocks had to have yields in the 20% area. So for 90% of the time that Mr. Prechter's study reviewed the action of the gold shares, they tended to trade inversely to interest rates just as the utility group did. As a result, they fell along with the stock market as interest rates rose and tended to rise with the stock market as interest rates fell. The long term Prechter gold study then pronounced that gold shares over a period from the late 1800s tended to rise with an appreciating stock market and fall with a declining stock market - the exception being 1930 through 1934 which somehow was ignored. Because the majority of the Gold Community never experienced the big gold bull market of 1968 through 1980, they tend to follow whatever glitzy gold sites tell them via many so- called experts who generally have little or no history in the gold market. In my experience, there is simply no reason for gold shares to drop along with general equity shares in a major market decline as stated in the Gold-Eagle article. Gold shares no longer have the short lifespan they exhibited during the review period in the Prechter study. If during this period they did not yield 20%, gold producers could not find a single stockholder. Any failed economic recovery that would trigger a major decline in the stock market would certainly hurt the US dollar. A major decline in the dollar would cause a significant rise in the world price for gold. Selling your gold shares because you expect a significantly lower general equity market is a dumb move and you would fall victim to a Trojan Horse with a sharp pen and not much else to offer. END of JS Article ************************ Comments: I think JS is more than a tad disingenuous in the following comment in relationship to the Bugos article: "In my experience, there is simply no reason for gold shares to drop along with general equity shares in a major market decline as stated in the Gold-Eagle article." Protecting gold afficionados from self fullfilling prophecies is a great service that Sinclair is uniquely qualified to perform, but he is often prone to overreaching, imh&so. May I offer a couple of scenarios under which it is entirely appropriate for gold shares to sell off alongside the regular equity market? Thanks. 1. Margin calls, perhaps? Duh. ANYTHING with profits attached are under scrutiny during such times. If my monthly statements aren't fiction it seems there are substantial profits in gold shares these days. Greed gets turned to fear in a hurry sometimes. 2. Gold stocks, whether JS likes it or not, are prone to overall market enthusiasm alongside general equities. This can also work to the downside. I don't need to go back to the 1800's to demonstrate that gold and equities are often in synch with each other and also often out of synch with each other. Over the last ten years the golds have sometimes sold off with equities and other times not. Anyone who has been involved in the gold shares over this recent period of time will attest to the truth of this statement. Cheerleading is wonderful for those that really require it, BSing frequently goes alongside so it seems. Just like the blokes that expect a minute to minute & day to day inverse correlation between the dollar and gold {and scream to the heavens when it doesn't ALWAYS happen}, general equities and gold equities may not always follow the prescribed pattern. The markets are simply not yet that "smoothed" in spite of our current Central Planners' desires. Proactivity on Mr. Sinclair's part is admirable, his fudging the facts is not. Astoundingly, Sinclair is quick to criticize sites such as Gold-Eagle for even putting forth "negative" gold articles. So much for fair and balanced.........I guess the weak gold hands can't even be allowed to read such heresy. jsmineset is currently applying for the gold wisdom monopoly patent. There was a great quote by Chris Powell this week about efforts made to suppress gold ALWAYS directing gold interests towards gold derivatives instead of physical gold, i.e. gold certificates, options etc. Ummm..... I don't seem to remember JS advocating physical gold much lately. Mr. Paper, indeed, possibly even Dr. Paper! I'll drink to that!! Smile. Grain of salt for sure....maybe an entire silo. You are welcome to forward this to Mr. Monologue, but my efforts towards dialogue have gone unrewarded to date. There are NO sacred bulls around here... A staunch but open eyed GOLD ADVOCATE Puncturing the General's bubble is tough work, but somebody's gotta do it. I don't personally know if gold shares would sell off or not under general market stress and I'm certainly not selling now in anticipation of such an event. Proclaiming around the net that there is NO reason for such an event to happen won't play very well in Peoria if it happens once more. Much better to be fortified with the truth....it could happen, but long term it really wouldn't impact the gold bull. Look for value...think LONG TERM! Periodic Ponzi Update PPU -- $hifty, 22:49:41 11/30/03 Sun Ponzi Chart Periodic Ponzi Update PPU Nasdaq 1,960.26 + Dow 9,782.46 = 11,742.72 divide by 2 = 5,871.36 Ponzi Up 110.16 from last week. Thanks for the link RossL ! Go GATA ! Go GOLD ! $hifty Gold -- Sharefin, 17:57:09 11/30/03 Sun India's Gold Consumption Continues to Rise In India, the demand for gold continues to grow steadily, despite rising prices. Gold prices may be at a six-year high, but India's appetite for the metal remains as huge as ever. A busy wedding season has followed the festival season in October resulting in higher-than-ever sales of gold jewelry. ~~~ Sanjiv Agarwal, managing director of the World Gold Council in India, says Indians have a different view of gold from people in Western cultures. "In India we treat gold jewelry also as a financial asset, whereas in the context of a U.S. or European market, gold jewelry is purely for adornment, and it is not looked upon as a safety net or a financial asset in times of emergencies," he said. It is estimated that the country has private hoards of 13,000 tons of gold. India consumes 800 tons of gold annually, or about 20 percent of global consumption. About one-quarter of this is recycled gold, old ornaments, exchanged for new pieces. ~~~ Mr. Agarwal says the demand for gold in India rose by about 16 percent this year even though prices have reached $400 an ounce. Last year, he says, many people just recycled old jewelry because of higher prices. "This year clearly the consumer feels that the present level of gold prices … are going to stay firm, and with this kind of mindset they have gone back to buying new gold," he said. Gold -- Sharefin, 20:10:39 11/28/03 Fri Gold perks up in Europe, eyes surging euro LONDON, Nov 28 (Reuters) - Gold woke up with a start in Europe on Friday morning -- moving to within two dollars of $400.00 an ounce, with a shot in the arm from a surging euro, which makes the dollar-priced metal less expensive for holders of other currencies like the euro and the yen. ~~~ Gold hit a fresh 7-1/2 year high at $400.55 an ounce on Wednesday, fuelled by fears of fresh terror attacks after fumes hospitalised New York City subway workers. Police later said the incident was not a terror attack. Analysts said the euro would be the chief catalyst in taking prices higher. The bullion market had shrugged off a trail of strong U.S. economic reports this week and continued to focus on a weaker dollar, which had fuelled demand for safe-haven gold during this year's bull market. "Gold will continue to eye developments in currencies -- (a break on the euro) through $1.20 (against the dollar) will also encourage gold to test its most recent highs. After initial resistance around 398 this would be Wednesday's top at $400.55," said Alexander Zumpfe at Dresdner Kelinwort Wasserstein in a daily report. "If the gold price could then manage to hold above that level, fresh buying might evolve. Resistances would then be located at $406.50 and $412.00," he added. Gold has risen by around 14 percent since the start of 2003, helped by geopolitical tension following the U.S. invasion of Iraq. Fiat -- Sharefin, 19:12:53 11/27/03 Thu Greenspan's Ponzi Scheme A Ponzi scheme requires three things in order to be (temporarily) successful: a massive source of outside money, a sophisticated PR campaign, bloviating about its glories, and a "magic mushroom" to make people believe in it. U.S. monetary policy currently has all three. ~~~ As an English banker by training, I am therefore conscious of a certain lack of credibility, particularly in a year when the U.S. stock market has risen nearly 20 percent, in warning of unsoundness in the U.S. economy. Nevertheless, British financiers, while generally in the last 200 years wrong about the U.S., were on a few occasions right; notably in 1837 (when state defaults and the lack of a banking system retarded U.S. growth for nearly a decade,) 1893 (when only masterly intervention in early 1895 by J. Pierpont Morgan prevented a U.S. default) and, most notoriously, in 1929-32. ~~~~ Greenspan, and the U.S. economy, could get lucky; by January 7 we will have a better idea of whether he did. That chance alone perhaps separates him from Ponzi, for whom long-run success, once the scheme took off, became impossible. But that's clearly not the way to bet. If the post-2001 "productivity miracle" disappears, or is sharply diminished by the new figures, there are two possible outcomes. One is that favored by the majority of the participants at the Cato conference, who determined that the Euro-dollar exchange rate would reach $1.60 by 2005. That would bring the U.S. trade deficit well back towards balance, at the cost of exporting a wholly unwarranted recession to the eurozone countries, whose currencies would at that point be about 50 percent above purchasing power parity with the dollar. Since the EU is unlikely to tolerate such an exchange rate lurch, there is another way to rebalance the U.S. payments position -- a devastating U.S. recession, worse than anything seen since the 1930s, probably accompanied by substantial inflation. The recession, by slashing imports, would reduce the payments deficit, while the inflation, by devastating holders of Treasury bonds (and quasi-government obligations such as those of Fannie Mae) would in economic terms balance the U.S. budget deficit. That's what comes of getting your economic policy from Charles Ponzi! Gold -- Sharefin, 19:03:00 11/27/03 Thu Bad smell, weak dollar lift gold Bullion touches US$402: Terrorism fears on eve of Thanksgiving add to market jitters A strange smell in the New York City subway sparked fears of a terrorist attack yesterday -- and briefly pushed the price of gold above US$400 an ounce. ~~~ During early trading, the gold price briefly touched a seven-and-a-half-year high US$402 following the report of strange fumes in the New York subway system. ~~~ Whatever the cause, fears of terrorism on the eve of the U.S. Thanksgiving holiday were just the sort of thing to activate a jittery gold market. On Tuesday, it was learned the United States economy grew by 8.2% in the third quarter, something that could have reinvigorated the weakening U.S. dollar. That didn't happen. Analysts said this was likely because the market had already priced the good news into the dollar's. Some also suggested that the sizable U.S. federal budget deficit is still causing enough worry to erode confidence in the U.S. currency. In the end, the U.S. dollar did drop off yesterday and that drove up the price of gold. Gold -- Sharefin, 01:20:36 11/26/03 Wed India still largest gold buyer India continues to be the largest gold consumer in the world despite the price of yellow metal shooting through the roof. According to Gold Field Mineral Service (GFMS) India's demand for gold has increased by 12 tonnes to 131.9 tonnes in third quarter (Q3) or July to September. In the Q3 of 2002, the gold demand was 117.8 tonnes. According to GFMS, total global demand for gold in the third quarter is estimated to have risen by over 5 per cent year-on-year. By far the largest contributor to this increase was implied net investment which jumped more than 150 tonnes quarter-on-quarter. ~~~~ The balance of producer hedging activity is estimated to have contributed a fraction (just one tonne in fact) to supply in the third quarter, the first time that this has done so in seven consecutive quarters. This somewhat abrupt change, however, does not really represent any shift in attitudes in favour of active hedging. Indeed, de-hedging continued in the third quarter with nominal positions of forwards, options and non-vanilla products all lower on a quarter-on quarter basis. A part of the reason for the measured rise in the global book at the end of the September quarter was the $42/oz increase in the valuation price compared to the end of the previous quarter, which resulted in an increase in the delta against vanilla options. The chief feature on the demand side in the third quarter was the jump in the implied net investment figure to 185 tonnes from 34 tonnes in April-June. This change and producer dehedging's abrupt deceleration means that the third quarter can be viewed as the period in which dehedging handed over the baton to investment as the chief supporter of prices. Gold -- Sharefin, 01:12:41 11/26/03 Wed COMEX gold wobbles early on GDP jump, rollovers COMEX gold dipped Tuesday morning after revised U.S. data showed the biggest quarterly economic expansion in 19 years, but it returned to neutral amid last-minute position rolling before December deliveries start. ~~~ "There are people rolling to February but there's definitely been some profit-taking as well," said a bullion trader. There was some selling after December $400 call options expired worthless Monday and disappointment that futures could not establish trading over $400 an ounce last week. ~~~ That was the low after the Commerce Department said preliminary third-quarter gross domestic product grew at an 8.2 percent annual rate, faster than the 7.2 percent rate in last month's advance estimate and the second quarter's 3.3 percent expansion rate. It was biggest jump in GDP since the first quarter of 1984. Gold -- Sharefin, 20:34:11 11/24/03 Mon Barrick puts 10-year hold on hedging, Munk says Served its purpose -- now 'we don't need it' Barrick Gold Corp. founder Peter Munk has pledged that the company won't hedge another ounce of gold for the next 10 years, his strongest statement to date about the gold giant's controversial strategy. "For the next decade, we aren't going to do any more hedging," Mr. Munk said in an interview with Bloomberg News at a Euromoney-World Gold conference in London. "The commitment to hedging has gone. Hedging enabled us to strengthen our balance sheet. Today, we don't need it." Barrick spokesman Vince Borg yesterday said Mr. Munk's statement is in line with the company's stated commitment to reduce its hedge commitments. "We still absolutely acknowledge that [hedging] has contributed to our cash position and our financial strength," he said. "But part of a hedging policy is to provide downside protection -- and in an environment of higher gold prices, lower interest rates and a strong balance sheet, there is less rationale for that." ~~~ The current mark-to-market value of Barrick's hedge book -- an accounting estimate of what it would cost to close out the entire book at current gold prices -- is negative $1.2-billion, the company said. Over the past year, Barrick has trimmed its hedge book to 16 million ounces from 24 million ounces, Mr. Borg said. ~~~ Mr. Ing said he did not expect Mr. Munk's announcement to have a significant impact on gold demand or prices, noting that he stopped short of saying it would close out all its hedging contracts. Barrick has been able to deliver gold at spot market prices and so has not suffered a financial loss from its hedging practice, but investors are still leery of the policy, said National Bank Financial analyst Tanya Jakusconek in a Nov. 11 report. "As the gold price continues to rise, Barrick's mark-to-market liability continues to increase, irking investors, despite being able to deliver production into spot gold price and receive 100 per cent of the upside to a rising gold market." In her report, Ms. Jakusconek described nine ways Barrick could trim its hedge book, including buying back some or all of is contracts, treating the hedge book as debt or assigning it to an asset and spinning out the asset along with a portion of the hedge book. Measured as a percentage of reserves and by years of production, Barrick's hedge book is smaller than that of Canadian gold giant, Placer Dome Inc., the analyst said, but at 16 million ounces Barrick's is the largest hedge book in the world. Fiat -- Sharefin, 20:20:05 11/24/03 Mon Impact of declining US capital inflows The wide range of declining currency inflows into numerous types of US financial assets makes it almost certain that the dollar, beset by global security concerns, trade-war anxiety and the crushing weight of the twin US current-account and fiscal deficits, is heading for a serious plunge against other currencies. The declining inflows, if they were to continue beyond the current month, would ripple ominously across the globe. A substantially cheaper dollar means serious trouble for the export-led economies that have traditionally depended on the United States as importer of last resort, making their goods more expensive. It is already causing a feeding frenzy in the shark-like world of currency traders, who have the ability to wreck entire economies through currency speculation. The latest US Treasury Department figures, released on Wednesday, show that net capital inflows into the country fell precipitously, from about US$50 billion (42 billion euros) in August to $4.2 billion in September, the lowest since the near-collapse and bailout of the Long Term Capital Management hedge fund rattled markets in 1998. Gold -- Sharefin, 00:51:30 11/24/03 Mon Australian gold prodn could overtake US Australia had a good chance of displacing the United States as the world's second largest gold producer within the next few years, Melbourne-based consultants Surbiton Associates said yesterday. ~~~ South Africa is the world's largest gold produder, with current annual output of just under 400 tonnes. The United States is the world's second largest gold producer. Mine production has fallen since the peak of 366 tonnes in calendar 1998 to a provisional output of 298 tonnes in 2002. The decline is due to a number of projects, particularly large heap leach operations, reaching the end of their lives. Australian gold production peaked at 318 tonnes in 1997/98 and dropped to 273 tonnes by 2001/02. However, production has subsequently begun to increase, to 285 tonnes in 2002/03. Gold -- Sharefin, 00:47:53 11/24/03 Mon Gold Reserves in Favor MOSCOW (Reuters) -- Rising gold prices should prompt the government to consider increasing the share of reserves assigned to the metal, as a weak dollar could reduce the value of the country's reserves, a Finance Ministry official said on Friday. Gold prices gained momentum this week with the euro hitting a record high against the U.S. currency, which makes up the bulk of foreign currency reserves. "It appears that next year a decline of the dollar against the euro may continue, despite a pickup of the U.S. economy," said Deputy Finance Minister Sergei Kolotukhin. Gold and foreign exchange reserves stood at an all-time high of $65.4 billion as of Nov. 14. Gold -- Sharefin, 00:30:51 11/24/03 Mon Gauging the commodity price gains Commodity futures prices have enjoyed some pretty hefty gains lately, and some could be in store for more of the same, experts say. "Relatively few investors yet realize it, but this bull market in gold and other commodities is going to be unlike any seen before," said Brien Lundin, editor of Gold Newsletter. Those who do realize it have sent prices for gold, copper, oil and natural gas soaring, he said. Higher prices will no doubt be discussed starting Sunday at the San Francisco Precious Metals Conference. Compared to a year ago, futures prices for crude, gold, and copper are up by more than 20 percent; natural gas is up 9 percent; silver is up 16 percent; soybeans and live cattle are up around 30 percent; and cotton is up 50 percent. The moves lifted the Reuters-CRB Futures Index, which tracks a basket of oil, metals and other commodities, near 251 -- its highest level in more than seven years and a 9 percent jump from the year-ago level. "These signposts point to massive allocations of capital into tangibles by deep-pocket investors," Lundin said. ~~~ So the gold market is actually driven by "sophisticated investors who realize that gold is, at heart a currency play," he said. And gold will continue to rise "because the dollar and every other major currency are being debased in an environment of beg-thy-neighbor-at-any-cost, competitive devaluations," said Lundin. Periodic Ponzi Update PPU -- $hifty, 22:34:15 11/23/03 Sun Ponzi Chart Periodic Ponzi Update PPU Nasdaq 1,893.88 + Dow 9,628.53 = 11,522.41 divide by 2 = 5,761.20 Ponzi down 88.27 from last week. Thanks for the link RossL Go GATA ! Go GOLD ! $hifty Gold -- Sharefin, 22:30:45 11/21/03 Fri Gold execs predict output shift Ten years from today global gold production will be dominated by Russian and other central Asian countries that once made up the former Soviet Union. This prediction was confidently made today by executives of some of the companies in the vanguard of this massive change. They were speaking at the Gold Investment Summit organised by Euromoney publications and the World Gold Council. Gold -- Sharefin, 22:29:06 11/21/03 Fri Early COMEX gold up after Barrick forswears hedging COMEX gold rose early Friday after Canada's Barrick Gold Corp., long among the most active hedgers, said it was no longer committed to selling the metal forward to protect future production from falling prices. The news underscored that the trend among producers to reduce their hedge books was still firmly in place. Along with the falling dollar, such "dehedging" has been a major factor in the 2003 bull market, which saw gold trade above $400 for the first time since March 1996 on Wednesday. "It should be absolutely bullish," said James Pogoda, vice president of precious metals at Mitsubishi International Corp. "I thought we would be a bit higher. Any time we've gotten close to $400 it's been capped." ~~~ Barrick Chairman Peter Munk told reporters in London that the company was cash rich and would do no more hedging over the next decade. Barrick was considered perhaps the most sophisticated trader among the major producers, with one of the largest hedge books. Using options and forwards, it generated profits even when the spot price of gold in the late 1990s was below the cash costs of prying nuggets out of the ground. ~~~ Given the recent volatility, dealers said anything could happen on a Friday, especially with options expiring Monday on the COMEX and in London over-the-counter trade, and positions being rolled over before December delivery notices start on Wednesday ahead of a four-day U.S. Thanksgiving holiday weekend. Fiat vs Gold -- Sharefin, 21:58:38 11/21/03 Fri The Nightmare German Inflation If history teaches anything, it is that government cannot be trusted to manage money. When currency is not redeemable in gold, its value depends entirely on the judgment and the conscience of the politicians. (That is the situation in this country today.) Especially in an economic crisis or a war, the pressure to inflate becomes overwhelming. Any alternative may seem politically disastrous. Whether it be the Roman emperors repeatedly debasing their coinage, the French revolutionary government printing a flood of assignats, John Law flooding France with debased money, or the Continental Congress issuing money until it was literally "not worth a Continental," the story is similar. A government in financial straits finds its easiest recourse is to issue more and more money until the money loses its value. The entire process is accompanied by a barrage of explanations, propaganda and new regulations which hide the true situation from the eyes of most people until they have lost all their savings. In World War I, Germany--like other governments--borrowed heavily to pay its war costs. This led to inflation, but not much more than in the U.S. during the same period. After the war there was a period of stability, but then the inflation resumed. By 1923, the wildest inflation in history was raging. Often prices doubled in a few hours. A wild stampede developed to buy goods and get rid of money. By late 1923 it took 200 billion marks to buy a loaf of bread. Millions of the hard-working, thrifty German people found that their life's savings would not buy a postage stamp. They were penniless. How could this happen in a highly civilized nation run at the time by intelligent, democratically chosen leaders? What happened to business, to wages and employment? How did some people manage to save their capital while a few speculators made fortunes? Fiat vs Gold -- Sharefin, 21:52:23 11/21/03 Fri IMF is urged to sell gold stock to ease African debt Dakar - African finance experts said the International Monetary Fund (IMF) could take more dramatic measures such as selling some of its gold reserves to ease the debt burden. After a two-day meeting in Senegal, experts from African finance ministries and regional institutions warned that Africa risked failing to meet the millennium development goals because of crushing debt payments. The UN goals set in 2000 aim to reduce global poverty by 2015 by halving the number of people who earn less than a dollar a day and have no access to water. The meeting suggested selling IMF resources to fund further debt reduction. "We estimated, for example, that selling half the IMF's gold reserves would amply finance all the extra reduction necessary for heavily indebted poor countries. -------- hmmmmm!!! America could pay off it's enormous debt too by selling it's gold - providing it has the gold to sell.(:-))) Fiat vs Gold -- Sharefin, 09:02:44 11/21/03 Fri Barrick Decision Stuns Bullion Markets Barrick Gold Corp stunned bullion markets on Friday by saying it was changing its hedging policy, and is no longer committed to selling the metal on forward markets as it is now awash with cash. "The commitment to hedging is gone...Hedging to us is no longer a requirement for running our business as it no longer creates shareholder value," Barrick Chairman and founder Peter Munk told reporters on the sidelines of a gold investment summit in London. "Hedging was a means to overcome cyclicality. Over the next decade, we will do no more hedging," Munk added. ~~~ Munk said that hedging had served the company well in the past, helping to make it the strongest financially positioned gold company in the world. "We have $2 billion in cash or in undrawn credit. But hedging today is not perceived favorably by the investment community. Being prudent today does not carry the premium which it carries in every other business -- everybody is risk averse except the gold business," he said. ~~~ As Canada's biggest gold producer, Barrick is the world's second-largest gold miner by market value and one of the largest bullion producers. Munk said that de-hedging could be an option that created shareholder value. "We could well do that in terms of assigning contract positions to our long term financing plans -- project financing for mines," he said. He said however that this was something the company had not done yet. "We're totally open minded now," he added. ~~~ Last month, Barrick CEO Greg Wilkins said the hedgebook was too big, and that it wanted to cut it back by about one third to 20 percent of gold reserves. Toronto-based Barrick has a hedge book which is equal to around three years of output. The book currently consists of about 16 million ounces of gold that has been sold forward. --------- --------- 16,000,000 ounces is approx 500 tonnes & worth approx $6.4 billion. It wasn't long ago that Barrick said that they were removing all their silver positions. Barrick's Silver Bombshell Forum archived -- Sharefin, 08:35:40 11/21/03 Fri The Forum has just archived itself & prior posts can be viewed here. |
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