Fiat -- Sharefin, 02:53:11 02/16/04 Mon Failure in Iraq and the Consequence for America The decline in the value of the US dollar against the euro is significant. Conventional wisdom says that it has been lowered to improve the US economy, and therefore Bush's prospects at the November presidential election. This is probably not the case, more likely the market is discounting a fundamental change in its status, from hegemony, toward co-existence with the euro as a trade and reserve currency. This will have profoundly negative implications for American prosperity. The European single currency project has always been to build a currency to rival the dollar, a currency that the world will accept at face value, in the same way that gold once was, Sterling before the WW1, and the dollar is now. Today the US enjoys the advantage of dollar denomination of all internationally traded strategic commodities, and therefore enjoys a major economic advantage. When America wants to buy, the chairman of the Federal Reserve writes a bigger number in the authorised exchange ledger; when the rest of the world wants to buy, they have to earn dollars first. ~~~ The published reasons for toppling Saddam Hussein can be safely discounted, the real reason is to secure the Iraqi petroleum reservoir as a dollar-denominated fief. Proved reserves are second largest in the world and, given that most of Iraq has yet to be explored, probably the largest. Unfortunately for America, policy makers underestimated the Iraqi national character, and the US Army is mired in a guerrilla war it cannot win. ~~~ America could have achieved most of what it wanted -- which is a large reservoir of dollar-denominated petroleum -- with a little more thinking. Saddam Hussein and the Baath party were desperate to save themselves and have sanctions lifted, and could have been induced to grant significant petroleum concessions in return for salvation. But, quite foolishly, the Bush administration chose conquest instead, and now, the project having turned sour, they will get nothing for the expenditure of money and lives. Bush and company have emptied the treasure chest on Iraq, and there is no prospect of replenishment, let alone replenishment with interest. They must be kicking themselves now. When America wakes up to the consequences of this misadventure, it will be very angry indeed. Oil -- Sharefin, 02:47:44 02/16/04 Mon Saudi Paper Accuses US Of Waging War On OPEC RIYADH (Reuters) - A leading Saudi Arabian newspaper says the United States has no right to warn OPEC against cutting oil output and accuses Washington of waging war on the cartel under the guise of protecting the global economy. OPEC, led by Saudi Arabia, on Tuesday announced a surprise reduction in crude supplies from April, drawing a caution from the United States that it risked stunting world economic growth. The daily, al-Riyadh, said OPEC's decision was aimed at balancing supply and demand and that oil producers have made sacrifices to protect the global economy, including opening the taps during the U.S.-led war on Iraq to make up for a loss in Iraqi crude production. "The U.S. media campaign over production cuts is accompanied by U.S. problems in Iraq, high unemployment, rising debts and war costs and the elections battle, and the only scapegoat is accusing oil producers of harming the U.S. economy," the Arabic-language newspaper said on Thursday. "America...made no secret of its strategy to rob OPEC of the right to protect its interests," the daily said, adding that by encouraging oil exploration and production in non-OPEC states, Washington was waging "an open war on OPEC and oil producers, especially Arab countries which represent the strength of OPEC". Gold -- Sharefin, 01:47:59 02/16/04 Mon Barrick knocks down Pascua rumours Dogged by rumours about its Pascua Lama project, Barrick Gold has firmly extinguished the latest conflagration. ~~~ Late last week, Mineweb came into possession of a set of notes prepared by a Vancouver firm with a self professed “vested interest” in Pascua. The notes appear to be a corroboration of many of the startling accusations levelled by one Jorge Lopehandia who has been fighting a guerrilla war, consisting mostly of insults and absurd claims, against Barrick for years. He has been dismissed as a gadfly, especially after losing a defamation case in an Ontario court last year when he failed to appear. Nevertheless, the notes recast Lopehandia's claims in rational language with new information and that caught our attention; and the grapevine's. Gold -- Sharefin, 01:45:09 02/16/04 Mon Barrick Gold trumpets its silver holdings Capitalizing on rising metal prices, top Canadian gold producer Barrick Gold Corp. is presenting a more diversified profile to investors and highlighting its extensive silver holdings a day after announcing a nickel exploration deal. "I think it's fair to say that Barrick possesses one of the largest silver resources in the entire world," president and chief executive officer Greg Wilkins told analysts. At the current silver price of about $6.50 (U.S.) an ounce, Barrick's silver holdings have an "in-situ" market value of approximately $5-billion, Mr. Wilkins said. Gold -- Sharefin, 01:44:08 02/16/04 Mon Unconditional no-hedge pledge from Barrick Barrick Gold [ABX] made its most decisive break from hedging today. Chief executive Greg Wilkins, in the job exactly a year, told investors on a conference call that the company's assets were no longer at risk from commodity price volatility, which would facilitate a steady reduction in the company's gold hedge book which currently stands at 15.5 million ounces. ~~~ The reductions have been insufficient to stave off ballooning unrealised losses on the hedge book though. It stood at a whopping mark-to-market loss of $1.725 billion, a 42% deterioration from the third quarter's negative $1.2 billion and 170% worse than for the end of 2002 when the book recorded negative $639 million. The hedge book would consumer almost twice Barrick's end-of-year cash holdings. Gold -- Sharefin, 01:41:48 02/16/04 Mon Barrick lives up to hedge-cut pledge, despite cost Barrick Gold said on Friday it was prepared to lose out on higher gold prices on a third of its output this year as it lives up to a promise to wipe out its bulky hedge book. The Toronto-based miner, the world's third-largest bullion producer, owns the gold industry's biggest hedge book, a thick pile of contracts it entered into over many years to lock in prices for its as yet unmined gold. Barrick scored when the gold price was weak but the metal's 65 percent gain in the past three years to over $400 an ounce has overtaken the price it has pre-sold much of 15.5 million ounces of its production. Hedging has become unpopular with investors, who want to see the full benefit of today's high gold prices. Chief executive Greg Wilkins said on Friday the company would deliver at least 1.5 million ounces out of anticipated production of 4.9 million to 5.0 million ounces in 2004 into hedge contracts, even if it means losing money on sales. "We will accept the opportunity cost of managing the book down," Wilkins said in a conference call with analysts to discuss Barrick's fourth quarter and 2003 results. Gold -- Sharefin, 01:39:30 02/16/04 Mon Barrick profit rises 43% Higher gold prices and gains on derivatives more than offset rising costs and pushed fourth-quarter profits up 43 per cent at Barrick Gold Corp. ~~~ Gold sales for the quarter were 1.36 million ounces, down from 1.54 million in the final three months of 2002. Periodic Ponzi Update PPU -- $hifty, 23:04:17 02/15/04 Sun Ponzi Chart Periodic Ponzi Update PPU Nasdaq 2,053.56 + Dow 10,627.85 = 12,681.41 divide by 2 = 6,340.75 Ponzi Up 12.23 from last week. Thanks for the link RossL ! Go GATA ! Go GOLD ! $hifty Fiat vs Gold -- Sharefin, 19:15:03 02/15/04 Sun Bank Secrecy Act: Gold Brokers Will be Forced to Register Gold Sales "Under the rule," Congressman Paul continued, "dealers in precious metals who purchase or receive more than $50,000 in jewels, precious metals, precious stones, or jewelry are required to adopt an anti-money laundering program. The program must include the adoption of 'know your customer' type procedures. In addition, the dealers will also be required to report receipts of over $10,000 in cash." When Congress enacted the Bank Secrecy Act, it required the Treasury Department to report within one year the need for any additional legislation to fully implement the money-laundering aspects of the Act. The Treasury Department made an additional request on September 26, 2002. They asked that a provision be added to the law, Section 103.23 that said: "...a person who transports, mails, ships, or receives; is about to, or attempts to transport, mail, ship; or causes the transportation, mailing, shipment or receipt of monetary instruments, is deemed to do so 'at one time' if...that transaction totals more than $10,000..." (and/or if) "...[shipment or delivery is spread out over one or more days] "...for the purpose of evading the reporting requirements..." is guilty of violating the law and is subject to its penalties which includes fines and imprisonment. "Know your customer procedures" Paul continued, "require dealers to develop a profile of a typical money launderer. The profile is based on a list of legal transactions, which federal bureaucrats have determined are often engaged in by money launderers. Dealers are required to file a suspicious activity report whenever one of their customers matches that profile. "Far from being the type of effective and focused program necessary to identify terrorists," the Texas Republicans said, "the 'know your customer' approach forces the government to look for needles in a haystack. This is because financial institutions file these reports regardless of whether they have any real evidence of criminal activity. For example, according to information obtained by my office, 99.999% of all Currency Transaction Reports are filed on law-abiding citizens. Aside from raising serious concerns about the government's respect for individual privacy, a system with this amount of "false positives" diverts valuable law enforcement resources away from the investigation of real terrorist threats to the harassment of innocent citizens. "Furthermore," Paul said, "at a time when the economy is, at best, recovering from recession, I question the wisdom of imposing costly new reporting and record-keeping regulations on small businesses. Most jewelers and precious metal businesses are small 'mom-and-pop' operations that cannot easily afford to comply with burdensome record-keeping regulations. Many small dealers, in order to provide absolute proof that they are not dealing with terrorists, drug dealers, or other black marketers, will keep a database of all customers to share with the government. Thus, this regulation establishes a de facto database of every precious metals customer in the nation. Such a database would have great potential for abuse if a future administration decided to engage in another mass confiscation of gold, similar to the one that occurred under the Roosevelt Administration in the 1930s. "Concerns over the loss of privacy," Paul noted, "are going to drive legitimate gold customers into the black market. Ironically, by expanding the illegitimate market for gold, these regulations will enhance the ability of international terrorists to use the precious metals market as a haven for money laundering while decreasing the ability of law enforcement officials to apprehend terrorists. Treating all precious metal customers as 'guilty until proven innocent' turns the fourth amendment on its head. Quite simply, the federal government lacks any constitutional authority to snoop on the transactions of law-abiding gold dealers and customers absent evidence that the proceeds are being used for money laundering. In conclusion, the proposed regulation expanding the money laundering provisions of the Patriot Act to jewelers and precious metals dealers will further bury law enforcement officers in false positive Suspicious Activities and Currency Transactions Reports, thus hindering efforts to identify and apprehend terrorists. This regulation will also burden small gold dealers and jewelers with new paperwork requirements, expanding the black market for precious metals and turning every law abiding gold coin collector into a criminal suspect. Therefore, I urge the Treasury Department to withdraw this regulation." Fiat -- Sharefin, 00:28:48 02/14/04 Sat Record currency interventions subsidizing U.S. debt, but experts warn flows unsustainable Japan is on an unprecedented spending spree, all focused on the same product: the U.S. dollar. Tokyo bought an astounding $172 billion last year to keep the yen from strengthening too much against the greenback. The push only accelerated in January, when Japan snapped up another $67 billion. That Japan's government is buying dollars to prevent a stronger yen from smothering a feeble economic recovery at home is not new. But the scale of the current round is far beyond its earlier interventions. The purchases are so large they are effectively subsidizing record U.S. budget and trade deficits, keeping American interest rates low and worrying some experts that a painful shock will hit if the spending spree stops. ~~~ Japanese investors -- mostly the government -- bought a net $104 billion in U.S. debt between January and October, according to calculations by Japan's Nihon Keizai newspaper. That's a third of the $314 billion in fresh debt Washington issued during that period. There have been other effects. John Vail, senior strategist at Mizuho Securities, a brokerage unit of Japan's largest bank, said the yield on the benchmark U.S. bond would now be about 6 percent instead of 4.1 percent if Japan hadn't been so active in the foreign exchange and bond markets over the last 13 months. That means that if not for Japan, U.S. consumers would be facing higher interest rates on their home mortgages and credit cards. ~~~ Some of the risks are obvious. If Japan stops buying as much U.S. debt, both Washington and the private sector will have to pay more to borrow. "There is a chance Americans will suffer a shock when and if Japan stops intervening and its demand for Treasurys tapers off," said David Parsley, associate professor of economics at Vanderbilt University. The higher rates would force Washington to dedicate more resources to paying the interest on its debt, taking funds away from other programs and dampening the economic recovery in the United States. Eisuke Sakakibara, an aggressive interventionist during his tenure as Japan's vice-finance minister for international affairs from 1997 to 1999, also noted that the Finance Ministry's activism cannot last forever. "You have to think of an exit policy sometime," he said. "It distorts the market. It takes the vitality out of the market. It has an unnatural impact on the U.S. bond market." But Sakakibara's successors are showing no sign of letting up. Parliament said this week that it would allow the Finance Ministry to draw another 21 trillion yen ($200 billion) on a special account used for intervening.  Silver Talk or Perp Walk -- auspec, 20:07:46 02/13/04 Fri The following letter is being sent to the various COMEX regulatory authorities as well as interested parties around the globe via the internet: SILVER TALK OR PERP WALK This letter is being written in regards to the ongoing discrepancies in the COMEX silver market which is under your authority. It is also being distributed to enlightened individuals around the globe and to the more general public for informational purposes. Let me start with the fact that there is a well documented and undeniably extreme short position in COMEX silver, to the point that it is a multiple of known world silver stockpiles. This anomaly has been allowed under the supposed watch of the CFTC as well as NYMEX and other authorities and has the likely potential of becoming a major disruption to the integrity of these and other important markets. The short position is undeniable yet it still leaves us with a few possibilities to its eventual unfolding. Let's probe these possibilities under the following headings: The silver shorts are actually legitimate as unknown physical silver is in existence somewhere around the globe to back the short positions. The shorts have no legitimate backing by physical silver. The shorts are somehow guaranteed by the Federal Government or one of its branches such as the Federal Reserve or the Exchange Stabilization Fund {ESF}. If the short silver position is actually able to be covered by physical silver if it becomes necessary, then this entire issue is moot and I am wasting your time as well as my own in complaining about the lack of fairness in the COMEX silver market. I have followed the silver market closely for the last ten years or so and even owned silver bullion some 30 years ago. To put it bluntly….there is no way these outsized commercial shorts have the silver available to cover their shorts and anyone who understands this market completely comprehends this fact. As the many letters and articles expounding on this COMEX {CRIMEX} fraud are distributed amongst the general public, they, also, will understand the bottom line on COMEX silver………THE SILVER ISN'T THERE!!! I stand ready for you to correct this premise, but, of course, won't hold my breath in the meantime. Once the worldwide general investing public as well as financial institutions understand what the very few now know, THE SILVER ISN'T THERE, there will be no chance of the manipulation continuing for long. This process is now well under way. That takes us to the second major premise….the shorts have no method of covering their positions with physical silver. This is the consensus opinion of those many individuals that have taken the time and effort to formally complain to the various government officials that oversee the COMEX markets and it is my basic conviction as well. This naked shorting has allowed the price of silver to be manipulated unnaturally downwards, well below the average cost of production of an ounce of silver, by those in the know, much to the detriment of those not in on the fix. Truth be known, however, these same manipulators have also frequently made money via what amounts to “insider” trading by moving the silver market higher temporarily here and there as well. The likes of Morgan Stanley and Goldman Sachs have pretty much had their way on the COMEX exchange in both gold and silver as they have made it their personal playground or cash cow. I say this with impunity from slander because it is plainly the truth. This is a far cry from the honest and fair markets that more naïve Americans believe their country operates and these Americans will be somewhat shocked when this market implodes along the lines of Enron or Long Term Capital Management. It is my strong belief that Enron and LTCM are more representative of current US markets than mere anomalies, sad to say. What stands behind these out of control naked short positions? Who's the guarantor of last resort? Is someone backing these unidentified four or eight large commercial silver shorts with more than a simple “wink and nod”? Will they simply be bailed out, when, not if, the positions explode in their faces? Are these various investment or billion banks operating on their own behalf only or are they operating under the authority of a US Government entity? I believe the shorts will be deemed “too big to fail” quite obviously, and one way or another, US citizens will be sent the bill. Grants to crony capitalist special interests are well beyond commonplace as is outright “monetization” via the vehicle of inflation, a.k.a., the Federal Reserve. This is the near future for those who have honestly risked participation in the COMEX metals markets because, for whatever reasons, the US Government and the oversight authorities of COMEX have decided, in their best central planning modes, that a rising silver market is somehow a threat to their overall plans. Is it actually legal for the US Government to “intervene” in the silver market via this “paper” game {shorting silver without having adequate backing}? That is a distinct possibility but it is a most dangerous game once it is exposed as is now happening. These short positions are nothing but derivatives that are used to control COMEX silver and they are tools of desperate men and totally doomed to failure. Why do I say that as I now approach the key part of this letter? Silver is a fairly easy market to play with, short or long, because it is such a SMALL market in that not much actual money is required to heavily influence it. A billion dollars isn't much in the world of international finance but it would be most significant in its impact on the silver market. The silver market is tiny in comparison to the gold market and the gold market is tiny compared to most all other markets. This has allowed silver to be basically controlled by various “commercial” entities, especially as they have been allowed , without proper regulation, to endlessly sell silver contracts with no hope whatsoever of providing actual silver should their schemes fail. You must know that this coin has two sides and that is the crux of this letter. When one comes to understand that there is actually VERY LITTLE physical silver standing behind the COMEX fraud it also gives tremendous opportunity to those who yearn for honest and fair markets. Thank you silver manipulators for you have laid the groundwork for your own demise. This tiny, tiny market, with little actual silver behind it and presently controlled by paper derivatives, is therefore most vulnerable to physical off take!! For some time now I have been an advocate of taking delivery of physical silver as well as gold, but it is only lately that the drumbeat for this very same action is gaining intensified publicity. May silver observers have recently come to the same conclusion that the fraudulent price setting mechanism for world silver, COMEX, cannot withstand significant demand for physical delivery. This, good Sirs, is what you must understand as more and more frustrated and abused investors, one by one, take on the CRIMEX game players by playing exactly the opposite game of paper derivatives…………namely, PHYSICAL SILVER POSSESSION. This Sirs, is now your problem, like it or not. If this letter serves as further inducement for individuals and entities around the globe to exercise their legal rights and end the COMEX silver fraud…….so be it. I have no particular affinity for crooked markets or even a market unknowingly and unfairly backed by a US Government entity. If the US Government is behind this silver suppression, and there is a distinct possibility that it is, then participants in the COMEX markets deserve to know it. What do you think will happen when informed people around the globe understand that the US Government had long suppressed the price of silver, via uneconomical dumping or inherent backing of derivative games? Does that not loudly scream that silver is undervalued and likely to release itself from manipulation in a manner that will shock all participants {especially the shorts}? I trust this letter is taken as being written in a polite manner, I also trust it is taken as being written in a straightforward enough manner to get some serious attention. Attention especially by those in a position to quickly correct this fraudulent market via regulation and responsible oversight BEFORE the wrong is corrected by those in a position to correct the fraud by taking home physical silver. I'm of the strong position that our US markets need to be run fairly for the benefit of all participants or they need to be shut down. I hold no particular affinity for COMEX as the world's price setting mechanism for silver. By the way, once the silver market escapes derivative control by COMEX, gold won't be far behind as it is also being manipulated to the detriment of honest participants. Let me summarize the reasons that I believe COMEX silver has now arrived at CHECKMATE. This letter is written more to demonstrate how close this entire scenario is to disaster than to plead with a few civil servants to start looking into the misbehavior of certain silver market participants. It's very late in this game. Please act accordingly for you are a mere expanded campaign regarding physical off take of COMEX silver away from COMEX silver destruction. This campaign is now well underway. Yours for honest markets, auspec Gold -- Sharefin, 00:42:24 02/13/04 Fri COMEX gold extends Greenspan rally to 15-day high COMEX gold rose to a 15-day high Thursday, as precious metals continued to benefit from investors' perception that the Federal Reserve was in no rush to raise interest rates and saw little harm in a weak dollar. Fed Chairman Alan Greenspan repeated to the Senate Banking Committee Thursday his prepared speech Wednesday to House members, which financial markets interpreted as a green light to resume the dollar disinvestment that lifted gold to a 15-year peak last month. Gold -- Sharefin, 04:21:23 02/12/04 Thu New U.S. Consumer Campaign Targets One of the World's Dirtiest Industries: Gold Mining WASHINGTON, DC - Earthworks/ Mineral Policy Center and Oxfam America today announced the launch of "No Dirty Gold," a consumer campaign intended to shake up the gold industry and change the way gold is mined, bought and sold. The two organizations have targeted the U.S. gold jewelry market for the major consumer campaign, because gold mining is arguably the dirtiest industry operating in the U.S. and in many parts of the world. "Right now, purchasers of gold jewelry and high-tech products have no alternative but to buy products that contain dirty gold," said Keith Slack, Senior Policy Advisor with Oxfam America. Adds Payal Sampat, International Campaign Director with Earthworks, "We're asking consumers to consider the real cost of gold and we're enlisting their help to put an end to mining practices that endanger people and ecosystems." Gold mining is being targeted as an industry ripe for reform through consumer pressure because of the extensively documented human and environmental costs of gold mining. The production of a single 18 Karat gold ring weighing less than an ounce generates at least 20 tons of mine waste. Metals mining employs less than one-tenth of one percent of the global workforce but consumes 7 to 10 percent of the world's energy. Additionally, Earthworks and Oxfam are releasing a report today, called "Dirty Metals: Mining, Communities and the Environment," which details the massive pollution and, in many cases, human rights abuses that have become hallmarks of gold and metals mining in countries such as Peru, Indonesia, Ghana and in parts of the United States. The report and a fact sheet on gold mining can be downloaded from www.nodirtygold.org. Fiat -- Sharefin, 17:57:07 02/11/04 Wed Gold firm as dollar falls, copper soars Gold prices rose sharply Wednesday after Federal Reserve Chairman Alan Greenspan told Congress that the weak dollar could help reduce the huge U.S. current account deficit. The subsequent fall in the dollar also helped boost prices of grains, which are more competitive with a weak dollar. Greenspan's optimism about economic growth also pushed copper and lumber, two basic industrial commodities, to sharp gains. ~~~ Traders said they interpreted Greenspan's remarks as an expression of tolerance for the dollar's decline, which was a strong catalyst for gold's rise to 15-year highs last month. "You don't need to look too much further than the U.S. dollar and pretty much Alan Greenspan's testimony in front of the House," said Bernard Hunter, a director at bullion dealer ScotiaMocatta in Toronto. Greenspan told the House Financial Services Committee, in a semiannual policy report to Congress, that "the prospects are good for sustained expansion of the U.S. economy." But in discussing the dollar, Greenspan added: "The currency depreciation we have experienced of late should eventually help contain our current account deficit as foreign producers export less to the United States." Currency traders took that as a green light to sell the dollar until U.S. interest rates start rising. Gold -- Sharefin, 07:36:13 02/11/04 Wed DSF 2004 gold sales cross $82 million Enthusiastic DSF shoppers have helped Dubai's Gold and Jewellery Group generate sales worth Dh300 million ($81.67 million) so far, it was announced. Gold -- Sharefin, 07:32:46 02/11/04 Wed Japan's monetary alchemy may not yield gold The most aggressive experiment in monetary policy ever conducted is now under way. Japan is printing yen in order to buy dollars in such extraordinary amounts that global interest rates are being held at much lower levels than would have prevailed otherwise. In essence, the Bank of Japan is carrying out the unorthodox monetary policy that the US Federal Reserve intimated it was considering in mid-2003. In other words, the BoJ is creating money and buying US Treasury bonds, which is helping to drive down US interest rates and underwrite US economic growth - and, by extension, global growth. It is inconceivable that economic policymakers in Tokyo and Washington do not understand the impact that this unprecedented act of money creation is having on global interest rates and economic output. The amounts involved are staggering. Since the beginning of 2003, monetary authorities in Japan have created Y27,000bn with which they have acquired approximately $250bn - that amount is equivalent to more than 4 per cent of Japan's gross domestic product. It also represents $2,000 for every person in Japan. In fact, it would amount to $40 per person if divided among the entire population of the world. Most importantly, it is also enough to finance almost half of America's $520bn budget deficit this year. The amount of new yen that Japan "printed" and converted into dollars during January 2004 alone was enough to finance 13 per cent of the US budget deficit. The investment of those dollars into dollar-denominated debt instruments clearly explains why the yield on the 10-year US Treasury bond fell last month in spite of the 10 per cent upward revision in the Bush administration's budget deficit projections. By accident or by design, Japan is carrying out the most audacious endeavour to conjure wealth out of nothing since John Law sold shares in the Mississippi Company in 1720. So far, the results have been impressive. Japan's monetary alchemy has been the most important factor in allowing the US government to finance a $700bn deterioration in its budget over the past three years without pushing up US interest rates to levels that would pop the wealth-creating property bubble there. ~~~ These developments highlight a fundamental question that has been debated over centuries: can governments create money and make the population richer without setting in motion a chain of events that ultimately ends in monetary chaos? We may be about to find out as Japan tests the hypothesis on an unprecedented and global scale. If this experiment in unorthodox monetary policy succeeds, then we have arrived at a new international monetary paradigm. Governments will have discovered how to finance limitless deficits through the creation of paper money, and we all can look forward to an age of great prosperity. If it fails - as have all past attempts to create wealth from thin air - then the world may not be able to avoid a severe and protracted economic slump as the extraordinary imbalances in the global economy (caused by the explosion of fiat money in recent years) begin to unwind. In mid-2003, economists at the US Federal Reserve published a paper explaining why the Fed was not "out of bullets" despite having cut short-term interest rates to 1 per cent. That paper stated that "the Fed could even implement what is essentially the classic textbook policy of dropping freshly printed money from a helicopter," if necessary, to stimulate the economy. Today, that helicopter is in the air. But, strangely, it is not the Stars and Stripes that is painted on its side, but rather the Rising Sun. That much is clear. What still is not quite discernible, however, is who is actually in the pilot's seat. Gold -- Sharefin, 07:12:57 02/11/04 Wed Gold rises in Europe as dollar pushed down "We expect the market to remain quiet ahead of Greenspan's congressional testimony on the economy...however, the recent liquidation of some long positions and a weaker dollar may entice further fund buying in the near future," Rothschild said in a bullion report. Traders and analysts were looking for investment funds to switch back to gold after the recent washout had reduced some of their long positions in the metal. Kevin Crisp, precious metals analyst with Koch Metals Trading, said the market would remain prone to volatile moves due to the large speculative flows of money. "The dramatic moves...highlight just how much speculative money has come into commodities," he said. "There is this cycling of froth from one market to the next. Then you have a blow-off in the markets, but underlying it all there is still obviously a lot of money in there. It is maybe money that is going to stay in (gold) longer than many anticipate." Gold -- Sharefin, 07:11:51 02/11/04 Wed AED300 Million in gold and jewellery sales supported by enthusiastic global jewellery lovers The Gold and Jewellery Group are reportedly delighted with the response that the Win 47 Kilos of World Family Gold Coin promotion is receiving among the millions of global visitors to Dubai this Dubai Shopping Festival. With a staggering AED300 million in gold and jewellery sales already confirmed, global shoppers are embracing not only jewellery products but also the recently launched World Family Commemorative Gold coin. Pre-Eid sales were confirmed as AED195 million and, as a result of the group's intensive marketing activities during the Eid break, sales have been boosted by over 35 per cent to a figure of AED300 million in just seven days. Gold -- Sharefin, 06:59:10 02/11/04 Wed Legal doubts cloud UK gold fund LONDON – In an acutely embarrassing set-back for the World Gold Council plan to promote investment in the precious metal, Gold Bullion Securities (LSE:GBS), which effectively enables gold to be bought and sold on the London Stock Exchange, will have to be re-launched. Problems have arisen with the legal structure of the UK GBS, which is backed by the WGC. Traders in London say these have prevented many fund managers from buying the securities. And it is the funds that carry most of the market's financial weight. Gold -- Sharefin, 06:57:36 02/11/04 Wed WGC pushes on with US Gold fund Barclays Global Investors is the latest institution to jump on the gold bandwagon, stealing a march on the World Gold Council's belaboured exchange traded gold fund for America that has yet to win approval from securities regulators. Barclay's “iShares COMEX Gold Trust” is a literal carbon copy of the WGC products that currently trade in Australia and the UK, with near-term launches in South Africa and Europe. Once approved, the gold iShares will trade on the American Stock Exchange under the symbol IAU. ~~~ Barclays addition of “Comex” to its gold brand is important to note. Hard core gold bugs would resent having Comex branded securities because the exchange has been so successfully maligned as an agent of conspirators and because it represents a “manipulative paper market.” Clearly, Barclays is not aiming at gold bugs, but at a much broader audience that would take comfort from linkage to a well-known American body. Fiat -- Sharefin, 06:49:14 02/11/04 Wed Dollar slide ignores G7 warning The dollar has sunk against other major currencies, squashing hopes that a meeting of leading industrial nations in Florida could stem its decline. The meeting of finance ministers from the Group of Seven had condemned "excess volatility" in exchange rates. ~~~ Analysts, however, said there was little to suggest that the currency's long-term direction was about to reverse. Downward trend The dollar has sunk rapidly against the yen, the pound and the euro in recent months, in the face of apparent tacit US sanction of its decline. A call in September's G7 communique for "more flexibility" in exchange rates also encouraged the movement. The weight of massive US trade and government deficits has added to the downward pressure, along with the persistence of rock-bottom US interest rates. The trend has worried policy-makers elsewhere, who fear their own fragile economic recoveries could be damaged if their exports are priced out of the lucrative US market. Thus the weekend statement, which coupled the needs of Europe and Japan with a reiteration of the "flexibility" demand. The latter, observers believe, was targeted at China, which the US blames for keeping its exchange rate artificially low and in turn hurting US exports. A Chinese paper speculated the government in Beijing would revalue the yuan this year, but the government said the report was untrue. Gold -- Sharefin, 06:45:52 02/11/04 Wed Gold refinery hits mother lode Higher prices, reliability concerns fuel demand at mint Rushing to melt down everything from banged-up wedding bands to gold bars, the Royal Canadian Mint refinery is the busiest it's been in a decade, thanks to higher gold prices and customer concerns about reliability. "There's increased demand, there are more requests coming in -- generally speaking, we're very busy," said David Madge, the executive director of bullion and refinery services at the Ottawa-based mint, adding that the mint's refining activity is the highest he's seen in his nine years with the organization. ~~~ The mint specializes in high-grade material -- 70-per-cent gold or higher -- and upgrades it to nearly 100-per-cent gold for coins or bars. A typical lot size for melting is between 700 and 1,200 ounces; customers bring in amounts ranging from 12,000 ounces a year to more than one million ounces a year. Refining is a small part of the mint's operations, accounting for 2 per cent of revenue in 2002, compared with 60 per cent from gold and silver bullion. Fiat vs Gold -- Sharefin, 06:31:55 02/11/04 Wed Bill urges use of gold, silver as legal tender Promoting the use of gold and silver by state government would trigger a flood of investment in New Hampshire, according to supporters who want a bill to proscribe their future uses. Rep. Henry McElroy, R-Nashua, donned an Uncle Sam hat at a news conference Monday to urge lawmakers keep alive his bill that would make New Hampshire the first to endorse the use of gold and silver as legal tender for state government. “This is nothing new to this country,” he said. “It's what we were founded upon.” Dr. Edwin Vieira is a constitutional lawyer from Virginia who helped McElroy, Rep. David Buhlman, R-Hudson, and others prepare the bill. “Paper currency in this country has lost its purchasing power since World War II. Precious metals have retained their purchasing power. This will stimulate investment in New Hampshire if you take this important first step,'' Vieira said. But the House Commerce Committee found little support for the change due to the strain it would place on the state treasurer's office and the private banking system, said Rep. Leo Fraser, R-Pittsfield. ~~~ Rep. Dan Itse, R-Fremont, said this has led to more inflation in the economy and a devaluing of the dollar here and abroad. “Even today, we have low inflation now, but the common bank savings account interest rate is lower than the inflation rate. That is the definition of an unstable economy,'' Itse said. Federal Reserve Chairman Alan Greenspan has praised the stability of the U.S. economy when gold backed its currency. Any federal conversion would require the government to purchase huge stockpiles of the precious metal, Greenspan said. If the government estimated the price of gold it was to buy as too low, Greenspan has warned taxes would have to be raised to keep government operating. Edward Lee of Merrimack, who owns his own gold and silver depository, insists state government costs under this bill to allow gold and silver as an optional choice would not be significant. To cover costs, Lee said the state could mark up the price and charge a handling fee for those who would want to be paid in gold or silver. “There would be a small investment to get things going and the state could be profitable in a period of months,'' Lee said. Fiat -- Sharefin, 06:28:55 02/11/04 Wed Get your gold while it's still in the ground Investors who believe, as I do, that gold is in the early stages of a bull market have to decide whether to buy bullion or invest in gold mining shares. I recommend the latter because of the leverage. The first example of the leverage is that the total market capitalisation of all the gold mining stocks is less than 0.5pc of the stock market capitalisation of all stocks. Investors would only need to re-allocate a tiny proportion of their assets to bullion and gold mining stocks to rocket-propel their prices far beyond previous highs. A gold mine that produces gold at $200 an ounce offers relatively low leverage. With gold at $400 an ounce, on a rise to $450, profits would increase by 25pc against 11pc for bullion. With a rising gold price it would be much more rewarding, albeit potentially riskier, to invest in more marginal mines. One that produces gold with a break-even point of $350 an ounce would be making $50 an ounce with gold at $400. An 11pc rise in the gold price would double the mine's profits. Junior mines usually have further development work to do before they begin to produce gold. Therefore their gold resources will not be classified as reserves and are likely to be described as inferred resources. When buying the shares of first- and second-tier producing gold mines in America and Canada, investors pay an average of approximately $135 per ounce for their gold reserves in the ground. With a non-producing junior company investors pay an average of $45 an ounce for their resources. ~~~ To obtain the maximum leverage it clearly makes sense to buy gold in the ground as cheaply as possible. The cost per ounce is determined by dividing the fully diluted market capital (less any obviously surplus cash) by the number of ounces of gold in reserve and resource estimates. Fiat -- Sharefin, 06:23:46 02/11/04 Wed An Investment Legend's Advice Warning to bull market enthusiasts: It's going to be a bumpy ride. That, at least, is the view of Sir John Templeton, the 91-year-old founder of the Templeton Funds who made a killing four years ago shorting technology stocks. Now the legendary investor is predicting it will take "several years" before a sustained rise in U.S. stocks because he believes they are way overvalued. ~~~ His big concern today: the U.S. consumer. He says Americans have taken on too much credit card and mortgage debt. Household borrowings hit a record $9 trillion last year, or 110% of personal disposable income. Meanwhile, personal bankruptcies rose to 1.6 million, another record. Templeton predicts home prices will fall and defaults rise. "When I was young, in the three years after 1929, a high proportion of people lost their homes in foreclosure," he says. "It's likely to happen again. It's not abnormal. It's cyclical, and it will put pressure on all prices." Fiat vs Gold -- Sharefin, 14:56:05 02/10/04 Tue A Short Term Correction JF: Long term, I think we are definitely still in a rising gold price environment. In the near term, we're in the midst of a correction. It wouldn't surprise me to see the correction go on for a bit longer. However, once it ends, I think gold starts trending higher and goes on to reach new highs before the end of the year. TGR: How high? $450? JF: We topped out on this cycle at $430, so $450 is not unreasonable. It depends a lot on what happens with the dollar. The market has been completely focused on the dollar/gold trade. If we see further collapse on the dollar, I don't see any trouble getting above $450, even closer to $500. TGR: What, if any, other factors do you think will affect gold pricing? JF: I think ultimately other factors will come into play. The dollar is number one. It has the market's attention right now. But I think as this gold market progresses, you're going to see gold rise in all currencies, not just the U.S. dollar. There is a tremendous amount of imbalance in the global economy right now. This is evident if you look at things like trade deficits and manufacturing capacity. The weak labor markets, household debt, especially in the U.S. It's going to be tough for the economy to keep going as it has without correcting some of these imbalances. In the meantime, these imbalances create financial risk, which in turn leads investors to gold. It's a good environment for investing in gold. TGR: Do you believe a lot of the equities are fully valued right now? JF: I think they were fully valued going into December. Since then, they've been trending down faster than the gold price. So I think the valuations are really starting to look attractive right now. I think the question on everybody's mind is, do the equities start to perform better, or does the gold price drop down to match the equities' performance? That's the normal chain of events for a correction – the equities lead bullion. So we will have to wait and see if the equities play catch-up. But right now, yes, they are oversold. Fiat vs Gold -- Sharefin, 14:54:47 02/10/04 Tue Gold Market Summary Today's roundup on gold will actually involve a review of currency trading for the day. That is a message in itself. As everyone in the Community knows, gold is honest money and is trading as a currency. The game now is to discover when gold appreciates at a better rate than the strongest currency because at that point all currencies are depreciating in terms of gold. It is coming soon, rest assured. The natural step is the transition of gold from a commodity to a currency and then the ascendancy of gold to the strongest currency.  Fiat -- Sharefin, 14:05:33 02/10/04 Tue Duck, Duck, Goose: Financing the War, Financing the World Shortly after the US was forced off the gold standard, a young economist by the name of Michael Hudson received a grant to study the effect of the demonetarization of gold. His report was made not only to the US government, but also to Wall Street firms such as his former employers, the Chase Manhattan Bank and Arthur Andersen. The problem was that despite his phrasing the situation in the most critical terms, his report revealed that the US was on inadvertently on the verge of the greatest boondoggle of all times. ~~~ By going off the gold standard at precise moment that it did, the United States obliged the world's central banks to finance the U.S. balance-of-payments deficit by using their surplus dollars to buy U.S. Treasury bonds, whose volume quickly exceeded America's ability or intention to pay. All the dollars that end up in European, Asian, and Eastern central banks as result of American's excessive import-imbalance, have no place to go but the U.S. Treasury. Because of the restrictions placed on the central banks_ there is no place else for this money to go_these countries were forced to buy US treasuries or else accept the worthlessness of the dollars received through trade. ~~~ At what point does the cycle collapse and can it do so internally_or as you've suggested, does it only stop when Asia, Europe, and the East finally refuse to buy US treasuries? MH: The US Treasury-bill standard finances the military, but doesn't need imperial war to succeed. So far it's being accepted voluntarily, as other countries have not yet figured out how to extricate themselves from a system that is bleeding them more and more. To date they haven't tried very hard to create an alternative, but now the system could backfire, as Bush's aggressive diplomacy is prompting Europe, Russia and China to stand up for their own self-interest. And that's what they need to do. They didn't stand up for their self-interest when the World Bank and IMF were formed, but now they have to do so. People are now beginning to raise the question of whether countries really need their central banks, which are essentially lobbyists for the Washington Consensus, as are the World Bank and the IMF. They follow the Chicago School in lobbying for high rates and a large cushion of unemployed so as to maximize financial power relative to labor and the products it produces. Financial exploitation now exceeds the old-fashioned exploitation of labor by actually employing it, albeit for low wages. Central banks are staffed by Chicago School monetarists, and are allowed to take only a 3% deficit whereas in the US it is limitless. Europe and Asia should abandon the false start with their central banks and should rely on their Treasuries, which are Keynesian or could be Keynesian. The national Treasuries should set up a credit system with bonds and IOUs based on euros and other currencies. SS: Okay, but isn't it most likely that the whole thing ends in a crisis, one more devastating to the US than the "Asian Flu"? What would this crisis look like? MH: There will be a crisis when Europe, Asia and Latin America finally break away. The U.S. has said it can't pay back its dollar debts and doesn't intend to. As an alternative, it has proposed "funding the US dollar overhang" into the world monetary system. Other countries would get IMF credit equal to their dollar holdings, but these holdings no longer would be US Treasury obligations. The US would wipe its debt to foreign central banks off the hook. This would mean that it would have got all the balance-of-payments deficits for the past 32 years for free, with no quid pro quo. The US has been proposing this for 30 years whenever Europe raises the issue of payment for its dollar holdings. American diplomats have said that they won't allow central banks to use their dollars to buy US corporations, for instance. When OPEC countries proposed this after 1973, the US Treasury reportedly informed them that this would be considered an act of war. As for Europe, it never has pushed its own self-interest in the World Bank or the IMF. Periodic Ponzi Update PPU -- $hifty, 23:27:15 02/08/04 Sun Ponzi Chart Periodic Ponzi Update PPU Nasdaq 2,064.01 + Dow 10,593.03 = 12,657.04 divide by 2 = 6,328.52 Ponzi up 51.41 from last week. Thanks for the link RossL ! Go GATA ! Go GOLD ! $hifty Gold -- Sharefin, 20:53:17 02/08/04 Sun Newmont again rises to reserve challenge Newmont [NEM] once again trumped its sceptics by replacing gold reserves net of depletions and disposals. The world's number one gold company by production and market value grew reserves by more than 4 million ounces to 91.3 million ounces to extend group mine life to just over ten years Fiat -- Sharefin, 20:50:16 02/08/04 Sun Currency 'Volatility' Worries G-7 Officials Top economic policymakers from the world's seven major industrial powers indicated Saturday that they are concerned about the dollar's recent sharp fall against the euro, issuing a statement denouncing "excess volatility and disorderly movements in exchange rates." ~~~ Quick Quotes Look Up Tables | Portfolio | Index Currency 'Volatility' Worries G-7 Officials Finance Chiefs Give Europeans, Concerned About Dollar's Fall, What They Want By Paul Blustein Washington Post Staff Writer Sunday, February 8, 2004; Page A18 BOCA RATON, Fla., Feb. 7 -- Top economic policymakers from the world's seven major industrial powers indicated Saturday that they are concerned about the dollar's recent sharp fall against the euro, issuing a statement denouncing "excess volatility and disorderly movements in exchange rates." The statement, released after a meeting of finance ministers and central bankers from the Group of Seven nations, marked a shift in G-7 policy and a victory for European officials. The Europeans have complained vociferously in recent weeks that the strength of the euro, which is trading at a near-record against the dollar, is threatening their economies by driving up the price of European exports. "We got exactly what we wanted," Italian Finance Minister Giulio Tremonti said in an interview with Bloomberg News, echoing comments by his French and German counterparts. "We're very satisfied." At the same time, the G-7 statement included wording that was clearly aimed at prodding Asian export powerhouses, particularly China, to end policies that keep their currencies relatively low against the dollar. "More flexibility in exchange rates is desirable for major countries or economic areas that lack such flexibility," the statement said. ~~~ G-7 statements are minutely parsed by currency traders and can influence currency values, because governments sometimes back up their words with substantial purchases and sales of currencies by their central banks. But no such actions were promised in Saturday's statement, beyond the group's usual admonition that the member governments would "cooperate as appropriate." As a result, analysts voiced skepticism that the G-7 could stop the dollar from falling further in months ahead, in light of the giant U.S. trade deficit. Fiat -- Sharefin, 20:34:17 02/08/04 Sun The next big trend: Foreclosure The number of foreclosures has jumped in some places. For buyers it's both an opportunity and a risk ~~~ As we pointed out in our July 2003 article "Foreclosure: Hit or myth?" there are several stages of foreclosure. The first, pre-closure, is the stage at which the owners have defaulted on their mortgage payments but haven't actually gone through foreclosure proceedings. Experts say it's difficult to find desirable properties at this stage. Next, the property goes up for public auction, but this phase is too risky for most buyers because there is little time for inspections, and owners sometimes have the right to buy back the property within a certain period of time. The third stage, post-foreclosure, is the most accessible to individual buyers and the least risky. At this point, the property is either owned by a bank or by a government agency such as the U.S. Department of Housing and Urban Development (HUD). Gold -- Sharefin, 20:32:15 02/08/04 Sun Barclay's to launch gold ETF San Francisco-based indexing giant Barclays Global Investors filed with the SEC Friday to launch a new exchange traded fund for gold investors, to be called iShares COMEX Gold Trust. Pending regulatory approval, the ETF will be listed and traded on the American Stock Exchange under the symbol IAU, according to the filing. "The objective of the trust is for the value of the iShares to reflect, at any given time, the price of gold owned by the trust at that time, less the trust's expenses and liabilities, " the company said in its filing. COMEX is the exchange market on gold futures contracts operated by Commodity Exchange, Inc., a subsidiary of New York Mercantile Exchange, Inc. Equity Gold Trust has already filed to launch a new U.S. gold-bullion based ETF that, if approved, will trade under the ticker symbol GLD on the New York Stock Exchange, with the World Gold Council as sponsor and the Bank of New York as trustee. According to the filing, a share would represent one tenth of an ounce of physical gold. Fiat -- Sharefin, 20:30:17 02/08/04 Sun Let the dollar drop Some think the dollar has fallen too far. On the contrary, it has not fallen by enough THE dollar is the world's dominant currency. Should the world therefore be worried by its recent plunge against other currencies? Plenty of people seem to think so. When central bank governors and finance ministers of the G7 economies meet this weekend in Boca Raton, Florida, the fate of the dollar will be high on their agenda. Since 2001 the dollar has fallen by 33% against the euro and by 15% against the Japanese yen. Currency traders around the globe will scrutinise every word from Boca Raton, looking for a signal that governments might act together to stem the dollar's decline. Many businessmen will be holding their breath as well. Fiat -- Sharefin, 20:22:32 02/08/04 Sun MINEWEB.COM GLOBAL GOLD & SILVER WATCHLIST The watchlist currently comprises public companies with a US dollar market capitalisation (fully diluted) exceeding $95 million (+/-5%). In addition, mining and exploration companies must have proven and probable reserves. Non-mining companies can qualify with audited bullion holdings (e.g. gold funds). Fiat -- Sharefin, 20:20:43 02/08/04 Sun Can A Change In Wording Save The Dollar? Last week, the “considerable period” language was dropped by the Fed in their FOMC policy statement. Although the latest statement reflects the Fed's belief that growth and inflation risks are nearly equally balanced, and even though the Fed explicitly stated they had time to be patient about removing accommodative monetary policy, the shift to more neutral language was a surprise to most primary dealer economists, who interpreted this change in language as an indication the Fed knew something about incipient inflationary pressures reappearing that the rest of us didn't. Bonds sold off as a consequence. Ironically, this sell-off came despite the first decent bounce in the dollar index for months. We interpret the change in language differently. Last week, we spoke of a growing weak dollar constituency, but emphasised that no central bank had an interest in being party to a dollar collapse. We still maintain that in the absence of a complete meltdown in the capital markets, the Federal Reserve is probably not keen to see a big appreciation of the dollar. On the contrary, it is happy to perpetuate the gentle declining trend. Of course, the danger of any trend, once it becomes firmly established, is to intensify, accelerate, overshoot, and ultimately spin out of control. Fiat -- Sharefin, 20:19:03 02/08/04 Sun Fed Fires First Shot Across the Market's Bow Yesterday, the Federal Reserve Board's Federal Open Market Committee removed its "considerable period of time" stance for keeping interest rates at 46-year lows. Instead, it indicated that it could remain "patient" before making a change to its artificially-low interest rate policy. So, what does this mean for you? First, you need to understand that interest rates have no where to go but up, especially with the inflationary pressures of bloated budget deficits that could total as much as $1 trillion by the end of fiscal 2004. Gold -- Sharefin, 20:18:01 02/08/04 Sun The Risks You Run When You Own Gold, and the Danger You Face If You Don't Fiat -- Sharefin, 20:14:17 02/08/04 Sun Cooking the Books: U.S. Banks are Giant Casinos While media financial reporters keep the current focus of the public eye on Martha Stewart, the insolvency of U.S. banks due to their derivative holdings is being swept under the carpet. Because banks have not been making a profit from traditional lending, derivatives became a fantastic way for them to net huge gains by trying to guess (gamble on) future prices of commodities or stocks. They were able to take these gambling risks because the Fed is supposed to back them from losses that would make them insolvent (more liabilities than assets). The worst part is that derivative transactions stay off the books and away from the prying eyes of investors and analysts. ~~~ U.S. stock markets are being manipulated to show overall value gains and "profits" is to keep U.S. banks "paper solvent". In reality, the public is being conned into thinking that U.S. banks are still solvent because they show "gains" in their stock "paper" value. If the U.S. markets were not manipulated, U.S. banks would collapse overnight along with the entire U.S. economy. U.S. banks are merging with each other to hide their derivative losses with "paper asset" bookeeping that incorrectly shows they are solvent with enough "assets" to overcome their losses. In reality, this is smoke and mirror accounting, a scam worth $Trillions. Fiat -- Sharefin, 23:47:35 02/07/04 Sat THE JOB "LOSS" RECOVERY AS DEMOCRATIC presidential candidates tell audiences daily, the U.S. economy since George W. Bush took office has had the greatest job losses since the Great Depression. Americans are growing increasingly anxious that as the economy roars back, workers aren't being called back. In the third-quarter of 2003, U.S. GDP grew at a blistering 8.2 per cent, but the employment numbers didn't budge. Economists had been virtually unanimous that the government's employment report for December would show a big job gain. The average predicted by these economists was 150,000, but some optimists expected as many as 250,000 new jobs. The actual reported score: 1,000 new jobs in a workforce of 147 million. (Canada produced 53,000 jobs in the same month with an economy roughlyone-eleventh the size.) This near-zero gain in what is probably the single most important economic statistic came despite Bush's tax cuts, a federal deficit that is running at an annual rate of about US$500 billion, and Alan Greenspan's desperation strategy of lending out Federal Reserve money at a mere one per cent. ------------- As has been recognised in the past the US Gov't is prone to fudging the economic numbers it releases to create rosy scenarios. Why then did they choose to release such damning numbers prior to this G7 meeting? In the past they've been seen to massaging the very same datasets much higher only to revise them lower in later months. They could have done the same to these numbers & adjusted them later if they so wished & it would not have been out of character. Also Gov't numbers never send the PMs soaring like they did on Friday when these numbers were released. It appears that they are playing a game here with intent to manipulate perceptions. Specifically prior to the G7 meeting. It appears on the surface that they wish the US Dollar to fall further & harder & are prepared to manipulate perceptions so as to enact this fall. It appears that so far what we've seen has been currency adjustments with the real currency war about to begin.  Gold -- Sharefin, 00:53:18 02/07/04 Sat Wealth: Those in the Know Have Nowhere to Go SO WHERE DOES GOLD COME IN My conclusion is that physical gold stands a very good chance of having its purchasing power remain either intact or amplified after an adjustment. I am not viewing physical gold as an investment and I am not measuring it to the dollar. It does not matter if an adjustment never comes, the metal will survive my time on this earth and will provide value to someone else. I am holding gold because I want to have something left over should my Real Estate, stocks, bonds, foreign currency, commodities, all blow up in a dislocation. As I have hoped to explain, Many people in the mainstream investment community, not just the bear market community, see an economic dislocation on the horizon. After an economic dislocation, Gold will provide purchasing power to buy assets that are properly valued or even undervalued. Oil -- Sharefin, 00:43:14 02/07/04 Sat A New American Century? Not! Despite the apparent swift U.S. military success in Iraq, the U.S. dollar has yet to benefit as safe haven currency. This is an unexpected development, as many currency traders had expected the dollar to strengthen on the news of a U.S. win. Capital is flowing out of the dollar, largely into the Euro. Many are beginning to ask whether the objective situation of the U.S. economy is far worse than the stock market would suggest. The future of the dollar is far from a minor issue of interest only to banks or currency traders. It stands at the heart of Pax Americana, or as it is called, The American Century, the system of arrangements on which America's role in the world rests. ~~~ The point to stress, however, is that the neo-conservatives enjoy such influence since September 11 because a majority in the U.S. power establishment finds their views useful to advance a new aggressive U.S. role in the world. Rather than work out areas of agreement with European partners, Washington increasingly sees Euroland as the major strategic threat to American hegemony, especially 'Old Europe' of Germany and France. Just as Britain in decline after 1870 resorted to increasingly desperate imperial wars in South Africa and elsewhere, so the United States is using its military might to try to advance what it no longer can by economic means. Here the dollar is the Achilles heel. With creation of the Euro over the past five years, an entirely new element has been added to the global system, one which defines what we can call a third phase of the American Century. This phase, in which the latest Iraq war plays a major role, threatens to bring a new, malignant or imperial phase to replace the earlier phases of American hegemony. The neo-conservatives are open about their imperial agenda, while more traditional U.S. policy voices try to deny it. The economic reality faced by the dollar at the start of the new Century, defines this new phase in an ominous way. ~~~ A hidden war between the dollar and the new Euro currency for global hegemony is at the heart of this new phase. ~~~ The crucial shift took place when Nixon took the dollar off a fixed gold reserve to float against other currencies. This removed the restraints on printing new dollars. The limit was only how many dollars the rest of the world would take. By their firm agreement with Saudi Arabia, as the largest OPEC oil producer, Washington guaranteed that the world's largest commodity, oil, the essential for every nation's economy, the basis of all transport and much of the industrial economy, could only be purchased in world markets in dollars. The deal had been fixed in June 1974 by Secretary of State Henry Kissinger, establishing the U.S.-Saudi Arabian Joint Commission on Economic Cooperation. The U.S. Treasury and the New York Federal Reserve would 'allow' the Saudi central bank, SAMA, to buy U.S. Treasury bonds with Saudi petrodollars. In 1975 OPEC officially agreed to sell its oil only for dollars. A secret U.S. military agreement to arm Saudi Arabia was the quid pro quo. Until November 2000, no OPEC country dared violate the dollar price rule. So long as the dollar was the strongest currency, there was little reason to as well. But November was when French and other Euroland members finally convinced Saddam Hussein to defy the United States by selling Iraq's oil-for-food not in dollars, 'the enemy currency' as Iraq named it, but only in euros. The euros were on deposit in a special UN account of the leading French bank, BNP Paribas. Radio Liberty of the U.S. State Department ran a short wire on the news and the story was quickly hushed.[2] This little-noted Iraq move to defy the dollar in favor of the euro, in itself, was insignificant. Yet, if it were to spread, especially at a point the dollar was already weakening, it could create a panic selloff of dollars by foreign central banks and OPEC oil producers. In the months before the latest Iraq war, hints in this direction were heard from Russia, Iran, Indonesia and even Venezuela. An Iranian OPEC official, Javad Yarjani, delivered a detailed analysis of how OPEC at some future point might sell its oil to the EU for euros not dollars. He spoke in April, 2002 in Oviedo Spain at the invitation of the EU. All indications are that the Iraq war was seized on as the easiest way to deliver a deadly pre-emptive warning to OPEC and others, not to flirt with abandoning the Petro-dollar system in favor of one based on the euro. Informed banking circles in the City of London and elsewhere in Europe privately confirm the significance of that little-noted Iraq move from petro-dollar to petro-euro. 'The Iraq move was a declaration of war against the dollar', one senior London banker told me recently. 'As soon as it was clear that Britain and the U.S. had taken Iraq, a great sigh of relief was heard in London City banks. They said privately, “now we don't have to worry about that damn euro threat”'. Why would something so small be such a strategic threat to London and New York, or to the United States that an American President would apparently risk fifty years of alliance relations globally, and more to make a military attack whose justification could not even be proved to the world? The answer is the unique role of the petro-dollar to underpin American economic hegemony. ~~~ It is becoming increasingly clear to many that the war in Iraq is about preserving a bankrupt American Century model of global dominance. It is also clear that Iraq is not the end. What is not yet clear and must be openly debated around the world, is how to replace the failed Petro-dollar order with a just new system for global economic prosperity and security. Now, as Iraq threatens to explode in internal chaos, it is important to rethink the entire postwar monetary order anew. The present French-German-Russian alliance to create a counterweight to the United States requires not merely a French-led version of the Petro-dollar system, some Petro-euro system, that continues the bankrupt American Century, only with a French accent, and euros replacing dollars. That would only continue to destroy living standards across the world, adding to human waste and soaring unemployment in industrial as well as developing nations. We must entirely rethink what began briefly with some economists during the 1998 Asia crisis, the basis of a new monetary system which supports human development, and does not destroy it. Oil -- Sharefin, 09:52:31 02/06/04 Fri IN YOUR FACE “The Cheney report is very guarded about the amount of foreign oil that will be required. The only clue provided by the [public] report is a chart of net US oil consumption and production over time. According to this illustration, domestic oil field production will decline from about 8.5 million barrels per day (mbd) in 2002 to 7.0 mbd in 2020, while consumption will jump from 19.5 mbd to 25.5 mbd. That suggests imports or other sources of petroleum… will have to rise from 11 mbd to 18.5 mbd. Most of the recommendations of the NEP [National Energy Policy, May 2001] are aimed at procuring this 7.5 mbd increment, equivalent to the total oil consumed by China and India . -- Professor Michael Klare “Bush-Cheney Energy Strategy: Procuring the Rest of the World's Oil” Foreign Policy in Focus, January 2004 The White House Stonewall goes on, as the Bush administration continues to deny the non-partisan General Accounting Office's request for information on who the White House Energy Task Force met with while formulating national energy policy. For the first time in history, the GAO has sued the executive branch for access to the records. It has been 42 days since the GAO filed their suit against the Bush administration and 333 days since the White House first received the G A O request. Why is the White House going to such lengths? What are they trying to hide? Truthout, www.truthout.org “White House Stonewall” April 5, 2002 ~~~ Nature laughs as pundits spin and concerned peoples around the world frantically and frenetically expend futile, disorganized energies against the juggernaut of tyranny and madness: elect a Democrat (any Democrat); impeach Bush; write a check to support an activist group; place an ad; stage a protest march; vote; don't vote; file a suit; file another suit; demand that the major media tell the truth, as long as it's the truth you want to hear; blame political ideology; blame a religion; blame a race; blame Capitalism; blame Communism; fight each other to release your frustrations and fears. That will make it better. Do anything but accept the obvious reality that for the US government to have facilitated and orchestrated the attacks of 9/11, something really, really bad must be going on. There are so many inconsistencies, proven lies, conflicts of interest, and contradictions in the Bush administration's accounts of 9/11 that the sheer multitude of them – in a rational world – would have brought the government to a halt long ago. But this is not a rational world. It is full of people – on both sides – who are not behaving rationally. Fiat -- Sharefin, 06:28:36 02/06/04 Fri History's Greatest Heist: The economic-distribution effects that accompany reliance on law and economics theory lead me to pose a key ethical question: how much financial value should anyone be allowed to strip out of a company in which the public invests to fund retirement security? And in which fiscal resources are invested for that purpose? The abuse of fiscal subsidies multiplies the financial carnage because their intended use for private purposes (i.e., broad-based retirement security) forces the public to forego investing those resources elsewhere – in education, health care, research, foreign assistance, national security, environmental restoration, and so on. These misappropriated funds must be recovered and this massive fraud undone. Those who've long embraced the law and economics model can be expected to cast recovery as a dreaded “redistribution of wealth.” Yet by choosing to rely on an economic theory that's long been notorious for making the rich richer, pension trustees chose to divert resources from retirees and taxpayers to those least in need of the security these funds are meant to provide. Recovery is required to reverse this (still ongoing) redistribution of wealth from retirees to the well-to-do. Equity mandates a reallocation of funds that were intended for pensioners all along. What's been offered in the guise of reform is too little, too late. Absent reform of the underlying investment theory, pension trustees will continue with business-as-usual. Beguiled, seduced and misled by law and economics theorists, retirees will continue to see their prospects for security ravaged in a way that's certain to further widen today's fast-widening economic divide, all the while preempting vast fiscal resources meant to address the insecurity that's long been known to accompany such divides. As yet, no lawmaker dares concede the full extent of the looting, even though the largest asset collapse since Herbert Hoover has shattered retirees' already-weak prospects, worsening an emerging fiscal nightmare just as 76 million baby-boomers near retirement. The greatest danger lies in the fiction that a few bad apples are the problem. Or that a few fines are all that's required to cure an investment model certain to plunder pensions in precisely the same way. Reform will be meaningful only when those responsible for this plunder are prosecuted, the pilfered funds recovered, and the law and economics model reformed. Anything less only confirms lawmakers' complicity in history's greatest heist, even as the perpetrators remain at large and the pace of the plunder quickens. Gold -- Sharefin, 22:33:37 02/05/04 Thu Russia reduces gold exports 21.5% in 2003 MOSCOW. Feb 4 (Interfax) - Russia reduced gold exports 21.5% from 191 tonnes in 2002 to 150 tonnes in 2003, Valery Braiko, head of the Gold Producers' Union, said at the Gold 2004 conference in Moscow. Explaining the drop, Braiko said there was a rush to export gold in 2002 because the 5% export duty on the metal had just been lifted. In addition, Russia hardly increased gold production last year: mine output rose just 0.8% to 159.915 tonnes. Silver exports, though, soared from 514 tonnes in 2002 to 800 tonnes in 2003. Russia raised gold production 3.5% to 176.903 tonnes in 2003, the Union has said. Mine production edged up 0.8% or 1.2698 tonnes to 159.915 tonnes and incidental or by-product gold output grew 4% or 387 kg to 10.153 tonnes. But recoveries from scrap or secondary production soared, by 168.5% or 4.289 tonnes to 6.935 tonnes.  Just for fun -- Sharefin, 22:30:30 02/05/04 Thu Introducing the amazing new Penta-Lawn 2000! The Looniest Of All 9/11 Conspiracy Theories Fiat -- Sharefin, 22:25:16 02/05/04 Thu Bank raises interest rates to 4% UK interest rates have been increased to 4% from 3.75% following the latest Bank of England meeting. The move had been widely expected after recent economic data had shown the economy growing strongly. The housing market is showing few signs of cooling, consumer spending in the High Street has remained strong and manufacturing has begun to recover. Experts believe further interest rate rises will be needed later in the year to keep the economy from overheating. The move will mean higher mortgage payments for homeowners.  Gold -- Sharefin, 22:12:10 02/05/04 Thu Canada's gold reserves have been reduced to a pile of loose change. After more than two decades of what the Finance Department describes as ``gradual and controlled'' selling, the last of the country's 20.9 million ounces of gold bullion left the Bank of Canada in December. That leaves the central bank with 100,000 ounces of gold coins in reserves in Ottawa. And the Canadian government, which wants to complete a plan to clean the gold out of its vaults, is unsure what to do with them. ``It's a different market than bullion,'' Finance Department spokeswoman Andree Houde said in an interview. ``What we decide to do can affect the value of the coins held by gold collectors.'' Canada has been selling off its gold reserves for almost 25 years, replacing them with assets that generate income, such as international bonds. The 21 million ounces of gold it had at the outset would be worth about $8.4 billion at current prices. The federal government has made $13 billion selling its gold and investing the proceeds, Houde said. Getting rid of the coin stash would make Canada the first member of the Group of Seven industrialized nations to eliminate its gold reserves. The G-7's other members -- the U.S., Japan, Germany, the U.K., France and Italy -- still hold bullion. Gold Standard Until 1971, when Former President Richard Nixon ended the ``gold standard,'' the value of the U.S. dollar was backed by the U.S. government's gold reserves. Countries such as New Zealand, Israel and Oman have since cleaned out their vaults of gold, according to the World Gold Council. Canada dropped its gold standard in 1931 and began selling its reserves in 1980. ``The policy is still on,'' Houde said. ``The difference is that additional factors have to be considered.'' Houde declined to discuss the face value of the coins, their condition, or give any description, saying such information was commercially sensitive. That makes it impossible to assess the value of the cache, and the effect the release of 100,000 ounces would have on coin prices, coin dealers contacted by Bloomberg News said. Gold -- Sharefin, 22:10:59 02/05/04 Thu Gold output hits record 200 tons in 2003 BEIJING, Feb. 6 (Xinhuanet) -- China's gold output reached a record 200.598 tons in 2003, according to the China Gold Association. In 1945, China's gold output was 4.5 tons, and reached 100 tonsin 1995, sources at the association said. Since the early 1990s, the Chinese gold industry has experienced a huge change. China canceled the policy of controlling the buying and selling prices of gold in April 2001, and opened its first gold exchange center in Shanghai in 2002. Gold -- Sharefin, 22:06:14 02/05/04 Thu Russian gold and currency reserves skyrocket On January 30, the Russian Central Bank's gold and currency reserves amounted to $84.1bn, stepping up $1.4bn over a week. The reserves have been rising for a fourth week in a row. Since January 2, they increased by $7bn, and the bulk of the sum was accumulated over the past two weeks. These figures testify to the fact that since January 16 the Central Bank has purchased dollars in large volumes, sending the reserves to their record high in the history of Russia and the Soviet Union, according to Central Bank Chairman Sergey Ignatyev. Gold -- Sharefin, 22:01:23 02/05/04 Thu Germany considers using its gold reserves on R&D BERLIN - Chancellor Gerhard Schroeder has suggested that gold reserves at the Bundesbank, Germany's central bank, could be used to finance research and development projects, in an interview published on Thursday. ~~~ The issue of using gold reserves to finance government projects is a recurring theme in Germany, but the Bundesbank has said in the past that its reserves should not be used to finance the federal budget. The Bundesbank is the second biggest holder of gold reserves in the world, after the US Federal Reserve, with about 3,400 tonnes. Gold -- Sharefin, 06:45:54 02/05/04 Thu Lassonde sees gold strong for years Newmont president and gold bull with money to show for it, Pierre Lassonde, remains upbeat about gold prices for at least the next two and half to three years, mostly due to currency pressures. ~~~ “Total debt – private, corporate and household – is close to 295% of GDP and it seems to me that the Fed has painted itself into a corner. There is not a whole lot of room to move interest rates,” he says, adding that there won't be much risk of upsetting the president's chances ahead of the November general election. He also reiterated the gold-positive impact of the growing budget deficit with government spending racing far ahead of revenues and likely to balloon even more as the Bush administration attempts to buy votes by ladling out entitlements. Lassonde warns: “Who's going to pay for it all? We're currently paying for it through the current account deficit which is at 5 per cent of GDP. . . and it's being paid for by the Asians. We spend, they save. In doing so we're digging ourselves a hole to China – but that won't last forever either.” Consequently, he remains convinced that gold will continue to appreciate this year. And so far, very few people have timed gold as well as Lassonde and his business partner, Seymour Schulich. Fiat vs Gold -- Sharefin, 22:53:20 02/04/04 Wed Newmont profit more than doubles on gold strength Newmont cited increased reserves for its gold production forecast of 7 million to 7.5 million ounces per year through 2006, with production increasing after that. The company said its equity gold reserves at the end of 2003 stood at 91.3 million ounces. ~~~ Newmont's hedge book at the end of the year was 2.35 million committed ounces sold forward through 2011 and 528,000 ounces of uncommitted ounces in put option contracts. The company also said the mark-to-market value of its Australian gold hedge books was negative $11.8 million at the end of 2003. Mark-to-market refers to recognizing the market value of a hedge instrument at a particular time. Fiat vs Gold -- Sharefin, 22:50:21 02/04/04 Wed Can A Change In Wording Save The Dollar? The change in language of the Fed should be understood in this context: it at least creates some doubt in the minds of speculators that the dollar is a one way bet, thereby helping to avert a dollar collapse. This also provides some support to beleaguered Asian central bankers apparently fighting a losing battle against accelerating dollar weakness, notably the Bank of Japan. Perhaps one should see Japan's Minister of Finance Sadakazu Tanigaki's comments, “Japan needs to carefully consider diversifying its official reserves to include more holdings of gold”, as a veiled hint that its seemingly endless support of the dollar will not go on forever. The Bank of Japan announced last week that it spent 7.2 trillion yen in the month of January, at the behest of the Ministry of Finance, to forestall further appreciation pressures on the yen. That the Bank of Japan has intervened on such a scale suggests that the dollar's fundamental weakness is far greater than has been hitherto implied by the relatively gentle decline in the dollar index. But for the BOJ's unprecedented support, and (equally important) the renminbi peg (whose absence might also create a freefall in the dollar), the greenback might have already taken on status comparable to the Argentinean peso. Putting the odd bit of grit on the icy slope of dollar devaluation serves to prevent this fiasco from occurring, but it does not fundamentally change the underlying picture. Fiat vs Gold -- Sharefin, 18:01:24 02/04/04 Wed Japan just can't switch to gold - yet WHETHER a studied statement, an off-the cuff comment or a veiled threat, Japanese Finance Minister Sadakazu Tanigaki's suggestion last week that Japan could diversify part of its huge foreign exchange reserves into gold has had international reverberations. It has brought home once more the fact that the vast dollar reserves which Japan and the rest of Asia hold are a Sword of Damocles for the dollar and the US Treasury market. The impact of such a move on the dollar would be severe. And as Japan has a third of total US Treasury securities held outside the US, the impact on the bond market would also be severe. Mr Tanigaki's statement (in answer to a question in Parliament) that he felt it necessary to take a view on the future composition of Japan's foreign exchange reserves (the bulk of which are in dollars), and that this might include a review of gold holdings, comes at a time when other Asian nations have been expressing concern about their vulnerability to the dollar. It also occurs when Asian central banks (the People's Bank of China for one, an informed source told BT) are expressing strong interest in gold. ~~~ There was an occasion in 1996 when former Japanese prime minister Ryutaro Hashimoto pondered out loud during a visit to New York about what might happen if Japan were to reduce its (even then) large holdings of US dollar securities. Washington appeared to get the message and the severe upward pressure that the yen had been subjected to eased off. Mr Tanigaki, according to some schools of thought, may have been issuing a similar veiled threat ahead of this week's G7 finance ministers' meeting in Florida. Alternatively, the minister may have been floating a trial balloon to see what impact it would have on the gold, foreign exchange and US Treasury bond markets. As it happened, very little, even though as UBS commented, Mr Tanigaki's remarks may be the biggest story in the official gold sector for many years. The dollar paid more attention to hints by the US Federal Reserve that it could raise interest rates sooner rather than later. The Treasury bond market also seemed too preoccupied with domestic events to notice the remarks. The fact is, however, that at some time the threat of Asian governments running down their colossal dollar holdings (which constitute the bulk of the US$1.9 trillion of official foreign exchange reserves held in Asia) is going to crystallise. It could happen if Japan's economy is moving, as some economists suggest, beyond total export dependence towards a broader-based domestic recovery. Or it could happen if rising US interest rates stall growth and demand for imports. But happen it surely will and reshaping the dangerous structure of mutual dependence between East Asia and the US should be top of the agenda for the G7. Fiat -- Sharefin, 17:59:51 02/04/04 Wed Pimco's Gross: Watch out below The huge jump in debt is really troubling the country's most watched bond investor. Hearing Pimco's Bill Gross preach doom and gloom for the U.S. economy doesn't raise eyebrows anymore. Perhaps only Morgan Stanley economist Steve Roach seems more of a worrywart. But in his latest note Gross takes an unexpected twist on who may be to blame for America's eventual financial downfall: Pimco itself. The common trope on the U.S. economy is that over the past two decades it has gone from manufacturing-based to services-based. Gross thinks, however, that the economy has undergone a second transformation and that it is now finance-based -- both profits and employment are now chiefly a function of how much debt is getting generated and what that debt costs. ~~~ It's a situation, Gross worries, that cannot persist. Debt levels cannot go up forever. Eventually fixed income investors -- maybe Pimco, maybe Asian central banks, maybe leveraged hedge-fund players -- are going to remember that what they are doing at root is lending money, and that the ultimate point of lending is to get back the cash you've handed over, plus interest. When that happens, thinks Gross, there's going to be a recession unlike any we've seen since at least the early 1980s, back when United States had a manufacturing-based economy. ~~~ There's a message there for Alan Greenspan, too. The surge in debt and debt spending couldn't have happened if the Fed hadn't been busy trimming short-term rates to the point where they are now below the rate of inflation. Eventually the Fed will have to hike, and when it does, writes Gross, the economy will slow and may even falter. Engineering a rate rise that doesn't buffet the economy badly will be a tricky business, but, following Gross' thinking, continuing to put off raising rates could be even more dangerous because it facilitates the piling up of debt to unsustainable levels. Gold -- Sharefin, 08:35:55 02/03/04 Tue Sir John Templeton's Outlook On Business & The Stock Market KANGAS: Gold stock stocks have been surging. Does this indicate trouble down the line? And wouldn`t they make good investments or do you think that that bull market is over for gold? TEMPLETON: No one ever knows when the market is over. But the great boom in gold is more than half over. Let`s put it more broadly, Paul. All currencies, not only the American dollar but all currencies always go down, mainly because of democracy. The voters will vote for a person who is going to spend too much. And so you have to expect all currencies to go down. And just recently, America has started to spend too much and the currency has already gone down a lot. But other nations now realize that and they don`t want to lose out to America. So they make their money go down, too. Gold -- Sharefin, 08:32:01 02/03/04 Tue Ivanhoe tumbles 25% on 'optimistic estimates' Shares in Ivanhoe Mines Ltd., the latest vehicle of controversial mining promoter Robert Friedland, slumped 25% after the company released results of a key study looking at development prospects for its Turquoise Hill property in Mongolia. Ivanhoe, whose shares advanced 215% last year, mostly over excitement over the Mongolia project, said yesterday the scoping study bares out its belief that the deposit has the potential to become one of the world's largest copper-gold mines. Gold -- Sharefin, 08:30:38 02/03/04 Tue Investors cut Lihir adrift Continuing operational and financial disappointments and an outlook pointing to further underperformance looks to have finally taken the wind out of the sails of Lihir Gold's gold price-induced bull run. Shares in the Aussie-listed Papua New Guinean gold miner [ASX:LHG] have had a big correction from an all-time (end-of-trading) record peak of A$1.79 last October and from A$1.59 less than a month ago to their closing price today (Tuesday) of A$1.20, equating to plunges of 33 and 24.5 percent respectively against a buoyant gold price background. This seems to suggest investors have had enough of riding the stock as a gold price-leveraged instrument. Moreover, some analysts have almost thrown away the key as far as Lihir is concerned. “We struggle to find an appealing investment theme for the company that would justify owning the stock,” argued Credit Suisse First Boston analyst, Michael Slifirski, adding “corporate appeal is negligible”. According to the Melbourne-based analyst, it was only the improved gold price that had propped up Lihir's share price in recent months despite the company's poor returns, technical and country risk, high costs and low free cash generation. But lately punters have become fed up with its string of production and earnings letdowns and flat outlook. Consequently, “the equity's correlation with the gold price has broken”, Slifirski said, with market support evaporating. Gold -- Sharefin, 08:26:43 02/03/04 Tue Lower gold price predicted in second half of 2004 Gold will continue look to the dollar for direction, but a forecast turnaround in the US currency in mid-2004 could push gold prices lower as investors flee the market, Societe Generale said yesterday. In its quarterly commodity review, the bank said the 70% rise in gold prices since their low of February 2001 was linked predominantly to dollar depreciation. "The market has ignored internals and has chosen instead to focus solely on external factors," Socgen's report said. "Yet this has increasingly come down to just one, the decline of the USD, as geopolitical concerns have eased and the economy and stock markets have rallied". Socgen's view was for the dollar to turn decisively around the middle of this year, thus putting gold prices under pressure. It said the only other element with potential to move prices greatly was the upcoming central bank gold sales agreement (CBGA). The five-year pact, due to expire in September, placed a ceiling on gold sales of 400 t/y. The bank expected a new CBGA to be signed with a higher ceiling of at least 2 500 t over five years and with greater flexibility over annual amounts. Socgen forecast a marginal recovery in gold jewellery fabrication in 2004 to 2 525 tonnes, after a cumulative decline of 23% in the three years to 2003. It said that despite all the talk about vibrant investment demand, at the physical level, official sales of gold coins were flat and bar hoarding outside Europe and North America collapsed by 35-40% in 2003. Global production of gold was forecast to decline by up to 1,5% in 2004 to 2 575 t. Producer dehedging would continue, but at a lesser pace than the past couple of years. Fiat -- Sharefin, 08:23:15 02/03/04 Tue WILL "BUY AMERICA" BECOME THE WORLD'S NEW MANTRA? Since 2001, the steep decline in the U.S. dollar compared with the currencies of our major trading partners is now hurting them. Their dollar holdings have been steadily losing value against their own monetary units. This places foreign dollar owners in a dilemma! Should they continue to maintain or increase their dollar positions while they sustain further exchange losses, or should they use at least some dollars to acquire other assets that might maintain their value? What are their best options, and what are they likely to do? First, they can use their U.S. dollar hoards to acquire their own currencies. However, if they take this direction they will further weaken the dollar against their own monetary units. This in turn will damage them as it will generate additional losses to the dollars that they continue to hold. Further, it will cause their monetary units to continue to appreciate. This will make their products more expensive in dollar terms and may price their goods and services out of the market and injure their already weakened economies. Second, they can acquire gold or other strong currencies such as the Euro. This is certainly already occurring and is an important reason for both the Euro's and gold's strength and their secular Bull Markets. Finally, they can begin to purchase dollar denominated assets. The latter option is not a new one. If you will recall, during the latter half of the1980's, a wave of foreign purchases occurred of American real estate and businesses as well as irreplaceable works of art and other items that ultimately found their homes across one of the great oceans. This “buying of America” was led by the Japanese, and at times a certain amount of U.S. outrage occurred as asset after asset was being gobbled up by our foreign trading partners. During this era, landmarks such as Rockefeller Center, Pebble Beach as well as Universal Pictures were acquired by the Japanese. Further, large U.S. factory complexes were purchased by foreign entities that allowed them to assemble and manufacture items such as automobiles for sale to the American market. I believe that the dollar's secular Bear Market is destined to foster a similar period of foreign demand for U.S. enterprises, projects, properties and possibly national treasures. As the U.S. monetary unit's decline extends it will force an increasing number of U.S. dollar holders to reevaluate the desirability of holding a steadily depreciating currency. It is likely that as this decade unfolds a trickle of foreign purchasers of U.S. assets will swell into a mad rush. This, as foreigners strive to exchange their steadily depreciating dollars for both tangibles such as gold, silver, various commodities, as well as dollar denominated items that possess intrinsic or eternal value. In the end, the U.S. may find various foreign entities owning some or many of our most valuable and treasured assets. Fiat vs Gold -- Sharefin, 08:12:35 02/03/04 Tue The Greater Depression The language used by the Federal Reserve Open Market Committee in its press release of January 28th contained a semantic change from previous minutes. Instead of saying that they will keep interest rates low for “a considerable period” the FOMC instead decided it would just “be patient” about raising interest rates. The market, on the other hand, has no patience. The dollar immediately strengthened against the euro and, as a result, the US dollar gold price declined. In spite of yesterday's action the dollar is still very weak, and will continue to decline for many more years. The more it declines, the more volatile it is likely to become. In turn that will cause an equal amount of volatility in the dollar-gold price. ~~~ Consumers now have no purchasing power left: they spent all their money and all the money they could borrow. Corporations will have no choice but to engage in price wars and in the short term that will lead either to lower prices (deflationary depression) or stagnant prices. There is a probability that fiat inflation of the money supply could ward off deflation. We will most likely see a prolonged period of economic stagnation if it does. Lastly, the massive influx of foreign capital and the debt driven economic expansion lead to a considerable investment in infrastructure. Manufacturing capacity currently exceeds production by 33%, a historically low level of capacity utilization and this is what causes depressions. It is unlikely that we will see capacity utilization increase until consumer balance sheets are fixed, and that could take a long time. As Doug Casey often said, when the history books are written the coming contraction could well become known as the “Greater Depression”. I find it hard to imagine that the US dollar is going to reverse its downward trend while US consumers pay off their debt, file more bankruptcies and see more of their friends collect unemployment insurance. And a declining dollar means higher gold prices in US dollars. Gold -- Sharefin, 08:07:17 02/03/04 Tue Panel of Experts All Agree on Strong Future for Precious Metals Doug Casey said that, “gold isn't just going to go through the roof…..it's going to the moon.” Doug is a guy who has made a lot of money in the market over the past thirty years and I take what he says seriously. He feels that a great way to take advantage of, what he predicts is becoming a “significant bull market in gold”, is to invest in gold mining stocks. In a recent article that Doug wrote he said, “The public will be chasing these things the way they ran after Internet stocks.” For the wary, Doug said, “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.” He points to the peak years of 1973, 1980, 1983, 1987 and 1996. “This one will be the biggest of them all, because not only will gold 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.” (The three and a half thousand or so attendees at the Gold Show all agree with Doug that the next “hot sector” could very well be precious metals.) Gold -- Sharefin, 07:59:46 02/03/04 Tue Staying Bullish: A Talk with Adrian Day, of Adrian Day's Global Analyst The correction in gold is certainly not unexpected. Looking at prices over the last year, it has moved way off the trend line. And with the dollar correcting a bit, it's not surprising that gold has started to pull back. I think the correction probably has a little further to go, and I'm not at all concerned. In my opinion, we're in a long-term bull market, and one or two years could take us to $550 or $600 per ounce. As a long-term fundamentalist, I'm much less concerned about what might be happening this week or next week. In this market, you want to be looking for opportunities to invest, and not worrying about short-term corrections. Gold has had a reasonably good correction – approximately $20, or less than 5% from the top – well, that's really not too bad. ~~~ The gold market now generally has two types of investors – the traditional “gold bugs” who have either returned or stepped up their buying, and very short-term oriented hedge funds. Recently, sophisticated money has been coming in from some of the big pension or generalist funds, but that's still moderate and very selective. What's missing in the gold market is the investing public in the middle – including professionals and individuals. Although gold has been virtually the top-performing asset class for three years running, it isn't attracting new investors. Part of that might be a timing issue, since when gold was doing well in 2002 the broad market was down so much that there was a reluctance to jump from a collapsing sector into gold, which might also collapse. But now that the broad market is coming back, the sentiment seems to be that investors may buy gold when their other stocks get back to breakeven. I take this as a good sign – because if everybody jumped in right now – gold would go even higher. Fiat -- Sharefin, 07:52:05 02/03/04 Tue The Currency War The U.S. is running a “silent currency war” against the rest of the world by not only trying to devalue the dollar until the economy begins to grow on a sustained basis, but until employment starts to grow as well. As long as the U.S. is dedicated to 5% budget and trade deficits and 1% short-term interest rates, the fall of the dollar is guaranteed. Our government's policies are extraordinarily self-indulgent and profligate. The Treasury and Federal Reserve want to punish savers by continuing to reward financial speculation, credit creation and spending. Indeed, there is no better way to punish savers than to offer a 1% interest rate and a 20% annual drop in the value of the dollar. Moreover, be assured the Federal Reserve will not raise interest rates and will continue the limitless flow of credit until there is enough growth in employment to ensure both the Fed Chairman's re-appointment, and the President's re-election. Stabilizing the dollar will be our trading partners' problem. ~~~ Under the Clinton Presidency, the genius of Larry Summers was to sell gold to make the dollar look strong. This policy worked. The reverse will also work. Responsible central banks that want to help the United States establish responsible budget, trade and interest rate policies, should “buy gold not dollars” to make their currencies “look weak”. Moreover, there are any number of things that foreign central banks and governments can buy with new local currency that will help hold their currencies down, give the country something of value, and stop enabling the Federal Reserve to run a monetary policy fit for a drunken sailor. Countries should “manage their currencies down against the dollar” by buying gold and silver, oil and more oil, tin, copper, zinc, etc. Countries with sounder monetary and economic policies, such as England, Australia, and Europe, are major oil importers. Now would be a wonderful time to fight back against the U.S. currency war by printing up some money to fund a strategic oil reserve. Countries such as South Africa, Canada, and Australia, should buy gold, silver and other commodities they produce to manage their currencies down. This policy is in their clear national interest because it will build up central bank reserves that will hold their value and give their miners jobs! Most countries do not have as their clear national policy to “steal American jobs”. Therefore, their monetary policy should be one that builds real financial reserves and gives their citizens something of value for their money. Only Japan and China have to play America's dirty currency war and hold the value of their currencies down by buying dollar assets. Holding dollar assets will cost their taxpayers a king's ransom because they are the ones who are ending up with the factories and jobs. All that Americans will be left with are massive debts and an almost worthless dollar for a currency. Indeed, the only way foreign central banks can really help America is to treat the United States the way friends treat their friends who drink by not letting them drive drunk. The motto for central bankers should be “Central Banks Don't Accommodate Financial Suicide”. The problem for the world's central banks is that irresponsible U.S. budget, trade and monetary policies threaten the entire monetary system. It will be very interesting to see what foreign central banks do. World inflation remains highly likely. Gold -- Sharefin, 07:45:51 02/03/04 Tue AngloGold says to unwind Ashanti hedges over a year South Africa's AngloGold Ltd said on Thursday it would likely take around a year to sell off excess bullion hedging it will inherit when it takes over Ghana's Ashanti Goldfields in coming months. The bullion market has been supported in recent years as mining companies buy back gold to trim their hedging -- the selling of gold forward at pre-set prices to lock in revenues. Many analysts, however, expect less trimming of hedging this year. AngloGold "We will be moving and looking to restructure the Ashanti exposures as promptly as we can and as promptly as the market will accommodate," Marketing Director Kelvin Williams said. Later, an AngloGold spokesman told Reuters the company expected to take around a year to unwind the hedges. The combined hedge exposure was around 13-14 million ounces of gold, but this constantly changes as fluctuations in the gold price and exchange rates affect the value of hedge derivatives. Gold -- Sharefin, 07:43:20 02/03/04 Tue Gold price hurts physical demand While gold finished strongly in the final quarter of 2003, the metal's rising price had affected physical demand, Anglogold executive director of marketing Kevin Williams pointed out on Friday. Gold averaged $363/oz during the year, $53 (17%) above the average in 2002, with the price again mirroring the moves in the currency market, particularly the US dollar exchange rate against the euro, which fell steadily during the fourth quarter. However, Williams said, this led to a decrease in gold offtake for jewellery of 7% year-on-year during the second half of 2003 alone, while falling by some 11% compared with 2002. “We are looking at a 25% drop in gold demand for jewellery over the last four years. This is cause for concern for most gold producers,” he stated. Lower levels of producer dehedging added to the reduced demand, while only a substantial increase in implied net investment demand helped to balance the physical market. Gold -- Sharefin, 07:33:06 02/03/04 Tue Opaque Gold Bullion slammed Operation of the World Gold Council backed Gold Bullion Securities (LSE:GBS), which allow investors “effectively to buy and sell gold on the London Stock Exchange for the very first time”, is being criticised by some bullion market professionals. They are complaining about a lack of transparency and suggest the scheme is not providing clear indications of the underlying investment demand for gold that they hoped it would. Gold -- Sharefin, 07:30:31 02/03/04 Tue London gold stock is world's best in 2003 There is no substitute for raw returns if you're an investor, but very few people caught London listed Caledon Resources [CDL] which topped our global list in 2003 with a US dollar gain of 2,549 per cent. Gold -- Sharefin, 07:28:54 02/03/04 Tue Gold yields precious returns Gold funds have soared an average 45 percent the past 12 months, leaving investors wondering: Is there a way to invest in gold funds without leaving your account strip-mined? The answer is a cautious yes — but only if you pair your gold fund with another type of fund. As a group, gold funds are even more volatile than technology funds, regularly registering huge gains and losses in rapid succession. ~~~ The funds are volatile because they invest in gold-mining stocks, rather than the yellow metal itself. And gold-mining stocks magnify gold's moves. That's because small moves in the price of gold have a huge effect on a mining stock's earnings. ~~~ Gold stocks fluctuate not only on the gold price, but analysts' anticipation of the price six to 18 months in the future. Because gold is considered a safe harbor in catastrophic times, the threat of war can send gold stocks soaring. Outbreaks of brotherhood can send gold plummeting. In short, gold funds take the usual fluctuations of the gold market and put them on steroids. Gold -- Sharefin, 06:59:52 02/03/04 Tue Gold sold by Norway was long gone; Australia admits gold is for rigging markets "Useful light is shed on the week's events by one of Bill Murphy's readers at LeMetropoleCafe, Mihaly. "He points out that the annual report of Norway's central bank reveals that 94 percent of the 33.6 tonnes of gold the bank had at the end of 2002 had already been lent out -- that is, sold. So the Norwegian gold sales just announced did not add fresh supply to the market. Given the insignificance of the amount of gold involved here, this was effectively manufactured news. The bank's annual report can be accessed on the bank's Internet site here: "http://www.norges-bank.no/english/publications/annual_report/ "The information is in Note 3 on Page 71. "Of course the noted gold bear greatly enjoyed yesterday, which he accurately points out was reproduced across a range of commodities. He is concerned to suggest that the pattern of the Bundesbank's comments on gold indicate malign intent. In view of the Norwegian information this is certainly plausible. "Nevertheless, it is clear that keeping gold down here is going to require large fresh supplies of physical gold." Mihaly has another goodie for us: "The 2003 report of the Reserve Bank of Australia .... http://www.rba.gov.au/PublicationsAndResearch/AnnualReports/ ... shows on Page 85 that Australia has loaned out all 1,465 tonnes of its gold. That's not really a surprise but something else is, on Page 31 under 'Reserves Management': "'Foreign currency reserves assets and gold are held primarily to support intervention in the foreign exchange market. In investing these assets, priority is therefore given to liquidity and security, in order to ensure that the assets are always available for their intended policy purposes.'" What these two informative tidbits mean: First the Norwegian news. Norway's gold has already been sold. Gone. The Norwegian central bank's press release was disingenuous, suggesting that the bank had just dumped central bank gold and there was more to come. The announcement was made to correspond with the trashing of the gold price a few days later. Nothing is that coincidental when it comes to the gold market. The announcement reveals the depths to which Western central banks will go to coordinate their statements and activity to trample the gold price. "Conspiracy" is much too small a term to describe the price-suppression scheme. The Norwegian news supports GATA's claims that central bank gold loans are three times those acknowledged by the gold industry and the Gold Cartel apologists. The Norwegian gold loans were not included in any of the official gold reserve numbers. More than 90 percent of Norway's gold reserves have been counted among total central bank gold reserves even though they were no longer in the vault. How many other central banks have done the same deceitful accounting? For whatever reason, the Norwegian gold loans now suddenly are to be recorded as sales and not loans -- that is, Norway will not ask for its gold back. Asking for its gold back would put upward pressure on the gold price. This sort of revelation adds support to GATA's belief that Germany is in the same boat as Norway, only Germany's gold loans are hundreds of tonnes greater. This suggests that a big percentage of Germany's gold is lent out too and that, to avoid complications, the Bundesbank also wants to record its gold loans as sales. Thus any German gold sales would have no impact on the gold price; they would be nothing more than accounting entries. Second, the Australian revelation. The Australian central bank report says it all. Gold is used "to support intervention in the foreign exchange market." GATA calls it market manipulation, just like what we saw yesterday. The stark language used in this Australian government is more evidence that GATA has been right all along. Oil -- Sharefin, 06:45:09 02/03/04 Tue Corrupted Thinking In A Money Culture It is the general view that the U.S. economy has outperformed the rest of the world in the past several years. Judging by real GDP growth rates, this is true. Yet the reason why is obvious, easily explained, and disastrous in its consequences: the U.S. credit machine has no parallel in the world. It is geared to accommodate absolutely unlimited credit for two purposes - consumption and financial speculation. There has developed a tremendous and growing imbalance between the huge amount of credit that goes into these two uses and the minimal amount that goes into productive investment. Instead of moving to rein in these excesses and imbalances, the Greenspan Fed has clearly opted to sustain and foster them. ~~~ There can be no question that the rapid sequence of asset bubbles - stocks, bonds, housing - that the United States has seen in the past few years were crucial in stimulating economic growth. Considering, though, its tremendously lopsided effect on consumer spending and the associated consumer-borrowing orgy, we are unable to regard this as a reasonable and sustainable policy. It works in the short run from the demand side, but it has come at heavy structural costs. With these remarks, we wanted to make one thing perfectly clear. It is not profits, savings and investment that drive U.S. economic growth. It is America's unparalleled credit machine, and that alone, which makes all the difference in economic growth and wealth creation between America and the rest of the world. ~~~ Yet our disbelief in the U.S. economy's breakout from its protracted sluggishness has one main reason: All the economic growth of the past two years, anemic as it was, is traceable to a seemingly endless array of asset and borrowing bubbles. Quoting analyst Stephen Roach, “the Fed, in effect, has become a serial bubble blower” - first the stock market bubble; then the bond bubble; then the housing bubble and the associated mortgage refinancing bubble. As a result, consumer spending has been surging well in excess of disposable income for years. The idea was that sustained and rising consumer spending would in due time stimulate investment spending. It has grossly failed to do that. Our assumption rather is that consumer spending will slow as the asset and consumer borrowing bubble are sure to fade. Seeing no big investment recovery, we expect a surprisingly weak U.S. economy in 2004. Oil -- Sharefin, 06:42:02 02/03/04 Tue AngloGold gives glimpse of the future AngloGold today gave a hint what the company will look following its merger with Ghana's Ashanti Goldfields, a deal that will boost the group's production and position it for a run at Newmont's top spot. The new company, will be dubbed Anglogold Ashanti everywhere except in Ghana, where the name will be reversed. The new entity will produce 6,6-m ounces by the end of AngloGold's 2004 financial year, as just 9 months of Ashanti production will be incorporated into Anglogold Ashanti's numbers. By the 2005 financial year, Anglogold will be closing in on Newmont's 2003 production of between 7,2-m and 7,4-m ounces. AngloGold chief executive Bobby Godsell said Ashanti could be a 1,6-m ounce producer if it retained its current momentum, but it was difficult to give a definite answer on the company's contribution to Anglogold as yet. Oil -- Sharefin, 06:40:46 02/03/04 Tue Has global oil production peaked? Today's civilization depends on an abundant and relatively cheap supply of oil. It fuels most of our vehicles, aircraft, ships, and trains. It provides the raw material for fertilizer, some clothing fabrics, most plastics, and many chemicals. Oil heats many of our homes and businesses. So when experts discuss when oil production will begin to decline, the world pays heed. The question now making the rounds in energy circles: Has production already peaked? If it has - or if a peak lies only a few years away - the repercussions would be huge. It could intensify a scramble by oil importers to tie up existing reserves. Decline could lead to scarcity and higher prices, possibly recession, while prompting an urgent push to alternative fuels and conservation. Gold -- Sharefin, 06:39:10 02/03/04 Tue Japan forex intervention hits record high in Jan Japan spent a record 7.1545 trillion yen in currency intervention in January -- equivalent to $67.56 billion at Friday's rate -- to stem the yen's rise against the dollar, Finance Ministry data showed. That total, which covers the period between December 27 and January 28, compares with the previous monthly record of 4.4573 trillion yen last September. The Japanese authorities spent an annual record of 20 trillion in 2003. ~~~ "I personally think the figure was within expectations but it looks like other people thought 'they spent this much and still couldn't stop the yen's rise?' as the dollar is now being sold," said Kenji Kobayashi, senior manager for foreign exchange at Bank of Tokyo-Mitsubishi. The MOF has continued to maintain a strong presence in the market this year, aggressively intervening during the first trading week from January 5, sending the dollar up by two yen at one point on January 9. Despite this heavy intervention, the dollar fell to a three-year low of 105.45 yen (JPY=) on Tuesday on speculation that Japan may row back on its efforts to hold down its currency to avoid criticism at a Group of Seven meeting next week. Japanese officials could come under fire from their European counterparts, who are worried that the euro might be left to bear the brunt of the dollar's fall, which could hurt European exports, traders say. Gold -- Sharefin, 06:37:25 02/03/04 Tue Gold's plunge seen as short-lived Greenback gets boost from speculation the Fed may raise rates sooner than expected Gold prices tumbled yesterday, falling below $400 (U.S.) an ounce the first time in nearly two months as the U.S. dollar got a boost from speculation that the U.S. Federal Reserve Board may raise interest rates sooner than previously expected. On Wednesday, the Fed said it could be "patient in removing its policy accommodation" instead of repeating its months-old pledge to keep interest rates low for an unspecified "considerable period." Hedge funds and others appeared to interpret the change in wording as a significant policy shift, sending the dollar up and gold -- which is priced in U.S. currency -- for its steepest decline since 1997. Gold -- Sharefin, 06:31:48 02/03/04 Tue LBMA analysts uniformly bullish on metals All the big four precious metals – gold, silver, platinum and palladium – will end this year with average US dollar prices substantially above those for 2003. That's the conclusion of the annual poll of analysts carried out by the London Bullion Market Association. Gold -- Sharefin, 06:27:17 02/03/04 Tue 2003's best and worst gold-silver stocks Gold -- Sharefin, 06:21:05 02/03/04 Tue Gold lower after FOMC hints at rate hike Gold was lower in afternoon trade after the FOMC hinted that US interest rates may rise sooner than expected, dealers said. Gold was down 3.93 usd at 406.45 usd/ounce. "Hints of a policy change towards interest rates by the US has put gold under pressure," James Moore at TheBullionDesk.com said. ~~~ The less doveish stance of the FOMC minutes weighed on gold. Gold -- Sharefin, 06:19:41 02/03/04 Tue Gold clings near $410, ignores cenbank chatter BUNDESBANK PLAYS ITS CARDS - NO SURPRISE TO MARKET More central bank reserve developments emerged early on Thursday, although Germany's Bundesbank statement was in line with market thinking, traders said. The Bundesbank said it favoured closing a deal to limit central bank gold sales with terms as close as possible to the terms of the 1999 agreement that expires in September. It added it would like an option to sell 120 tonnes of gold per year under a new accord, or four percent of total stock. Most major European central banks are signatories of the current Gold Agreement that succeeded in putting a floor in bullion markets, and they have indicated they aim to renew the deal when it expires this year. On Wednesday, the market absorbed news that Japan was considering the low weighting of gold in its reserves and that the Norwegian central bank had sold 16 tonnes of gold. "These have competing bullish and bearish implications for the gold price. Overall, we believe that gold shall find increased fund support as a result of this recent deluge of news, notwithstanding that the euro/dollar direction will remain the major underlying focus for most short-term speculators," Barclays Capital said in a daily report. Elsewhere on the supply-side, South African miner Harmony Gold said on Thursday it had closed out 365,000 ounces of gold from its Australian hedge book. Harmony is the world's fifth biggest gold producer and now has 495,000 ounces hedged. Traders said hedge-lifting is becoming increasingly common, given gold's recent strength -- prices hit 15-year highs of $430.50 earlier this month -- and is likely to continue. Gold -- Sharefin, 06:17:06 02/03/04 Tue NY gold hits 2-week high, eyes dlr, Japan reserves COMEX gold prices shot to two-week highs on Wednesday, bolstered by a shaky U.S. dollar at midday and news overnight that Japan was considering the low weighting of its gold reserves, dealers and analysts said. Separate news that Norway's central bank sold 16 tonnes of gold briefly capped the metal's rise before it recovered and breached resistance on fund and speculative buying. ~~~ Traders said gold also got help from comments by Japanese Finance Minister Sadakazu Tanigaki, who said he would be considering gold after he told a parliamentary committee he thought it necessary to take a stand on diversifying Japan's foreign reserve assets, which are mostly dollar-denominated. Rinehimer played down the immediate impact of the comments. "The Japan news was not very specific -- and it wouldn't take a lot of gold to increase the percentage that they have now," he said. According to HSBC analyst Alan Williamson, Japan's end-December gold reserves amounted to just 765 tonnes, of 1.5 percent of its total reserve base, the lowest of any industrialized country except Canada. Gold -- Sharefin, 06:14:59 02/03/04 Tue Gold: Bull Market In Force The new year started off with a bang as gold hit a 15 year high. The rise of the last six months has been the best advance in the three year bull market and gold had its best rise last year since 1996. The metals markets were clearly the top performers and it was the same story in 2002 with gold and gold shares the big winners then too. This alone shows the power growing in the bull market. WHAT ABOUT THE YEAR AHEAD? As we enter 2004, gold remains bullish, the U.S. dollar's at an eight year low, commodities and currencies are the most bullish in 10 years, stocks are near two year highs and interest rates remain near 45 year lows. Gold -- Sharefin, 06:11:55 02/03/04 Tue Washington Agreement waning? The Washington Agreement on central bank gold sales may not hold the weight it did five years ago as the market remains bullish on gold this year and as the dollar loses ground as a reserve currency. The Washington Agreement – now dubbed the Central Bank Gold Agreement - was first signed in September 1999, regulating the amount of gold that member banks could sell to 400 tons a year over the five-year life of the agreement. The agreement runs from September to September each year, and is due to be renewed in September this year. But the agreement may already be losing some relevance. Bloomberg reported today that Japanese finance minister Sadakazu Tanigaki told a Japanese parliamentary committee that his country would have to “carefully consider” diversifying its central bank's reserves into gold, sending a tremor of excitement through the gold market. Japan has $673,53-bn worth of reserves, with only $10,24-bn of that in gold, the lowest proportion of reserves held in bullion amongst the world's 45 largest reserve holdings. Gold -- Sharefin, 06:10:06 02/03/04 Tue India drops gold import restrictions New Dehli - India on Wednesday announced it would allow free import of gold into the country, the world's largest consumer of the precious metal, and eased customs duties on other goods to boost trade. The move by the government came as it geared up for early national elections expected to be held in April or May. "In keeping with demands from the trade we are allowing the free import of gold and silver into the country," said Commerce Minister Arun Jaitley while announcing India's interim import-export policy for the fiscal year 2004-2005. He said the government would issue a more far-reaching import-export policy after national elections to be held later this year. Gold -- Sharefin, 06:05:05 02/03/04 Tue Japan says to cautiously consider gold in reserves Japanese Finance Minister Sadakazu Tanigaki said on Wednesday he wanted to carefully consider whether to change the weighting of gold in Japan's foreign reserves. Tanigaki told a parliamentary committee he thought it necessary to take a standpoint of diversifying assets in Japan's foreign reserves, which are mostly made up of dollar-denominated assets. Asked about gold, he said he would think about it carefully. "There are various discussions about the positioning of gold in foreign reserves, even among...currency authorities," Tanigaki said. "If I say something too simply, I think there could be a large effect on gold markets...so I would like to consider it carefully," he said. Gold -- Sharefin, 05:49:50 02/03/04 Tue Japan says to cautiously consider gold in reserves Japanese Finance Minister Sadakazu Tanigaki said on Wednesday he wanted to carefully consider whether to change the weighting of gold in Japan's foreign reserves. Tanigaki told a parliamentary committee he thought it necessary to take a standpoint of diversifying assets in Japan's foreign reserves, which are mostly made up of dollar-denominated assets. Asked about gold, he said he would think about it carefully. "There are various discussions about the positioning of gold in foreign reserves, even among...currency authorities," Tanigaki said. "If I say something too simply, I think there could be a large effect on gold markets...so I would like to consider it carefully," he said. Gold -- Sharefin, 05:48:11 02/03/04 Tue Japan has to mull gold holdings in reserves JAPAN needs to 'carefully' consider diversifying its official reserves to include more holdings of gold, Finance Minister Sadakazu Tanigaki said. 'That would be necessary for the purposes of diversifying assets,' Mr Tanigaki said at the fiscal and finance committee of the lower house of parliament in Tokyo. He was responding to a question by Jin Matsubara of the opposition Democratic Party of Japan regarding why most of the country's official foreign reserves are in foreign currencies and US Treasuries rather than other assets, including gold. 'There is debate among international monetary authorities about gold's role in foreign reserves,' Mr Tanigaki said. Boosting holdings of gold 'would affect the gold market and so should be carefully considered'. Japan is the largest holder of official reserves in the world, a record it held since October 1999. The country had a total of US$673.5 billion of official reserves, including foreign reserves, as of December, according to government figures. Gold -- Sharefin, 05:33:05 02/03/04 Tue Gold froth frenzy In a possible new signal that feeding frenzy is to resume among global gold diggers, Denver-based Newmont has filed a regulatory document in the US, declaring its intention to raise up to $1,2-bn in fresh debt and equity. A London-based specialist equities dealer says that Newmont, the world's No 1 gold digger, may in part have been inspired by the near-complete merger between South Africa's AngloGold and Ghana-based Ashanti Goldfields. The merged African company would become the No 1 gold digger by ounces, at 7,6-m a year, surpassing Newmont's 7-m ounces. Newmont had already raised just under $1-bn in November 2003, in a fresh issue of shares. As such, markets are awash with speculation that Newmont is about to swallow one of its rivals. Gold Fields (which has historic ties with Newmont) has been mentioned, as has Canada-based Placer Dome, which manages and owns 50% of the South Deep gold mine in South Africa. Gold -- Sharefin, 05:31:11 02/03/04 Tue Gold growing in the backyard Gold nuggets may be growing in your backyard, just like potatoes, say Australian researchers. But it may take millions of years for this crop to ripen enough for the picking. Gold -- Sharefin, 05:23:09 02/03/04 Tue S Africa's Durban Deep Takes Stake In Internet Company Gold miner Durban Roodepoort Deep Ltd. (NasdaqSC:DROOY - News) , known as DRD, said Monday it has paid $200,000 to take an initial 1.4% stake in GoldMoney.com, an internet-based gold marketing company. In a statement, DRD, which mines around 1.0 million oz of gold a year, said it has an option to increase its stake to 14.3% of the company for a total investment of $2.0 million. GoldMoney, launched by James Turk, has around 10,000 customers globally and holds around 30,000 ounces of gold in storage for them. Through GoldMoney, gold is stored in vaults but only units of account called goldgrams are exchanged. A goldgram represents a buyer's ownership of a portion of gold held for GoldMoney customers in a secure vault. GoldMoney's servers keep track of purchasers' ownership of goldgrams and the gold held is insured by Lloyds of London. Silver -- Sharefin, 05:20:28 02/03/04 Tue The Silver Bullet The title of this essay draws on the previous two essays where the Lone ranger and his silver bullets carried the theme that the price of silver metal is being aimed right at the core of the large commercial short positions in precious metals - gold and silver - with gold for now taking the back seat while the coming explosion in the silver price takes place. As Ted Butler, the silver guru, explains in his first weekly report on the silver situation for 2004 at www.investmentrarities.com/01-13 there is a cumulative short position in silver that is literally humongous in terms of annual production and available supply. This is of course not news. Ted has been writing about silver and the growing short position relative to the shortfall in production vis à vis demand for a long time. And very little has been happening to silver to show that there was any significant risk for the short players in the market. Not even when Warren Buffet purchased silver in bulk 6 years ago did the price spike last more than a few weeks before the price fell back again. Rumours at the time was that some of the Buffet Hoard had been leased to ease the tight supply condition following his purchase while some would even have it that some of his purchase was to be delivered forward as there was not sufficient silver at hand to effect delivery of his orders. And despite the evidence that silver was entering a very tight market, the price sagged and took almost 6 years to get moving. But the more recent behaviour of the silver market - coupled to increasingly widespread anecdotal evidence that silver metal is practically unavailable in bulk - are showing signs of a coming short squeeze in silver that could blow the price sky-high. Gold -- Sharefin, 23:00:47 02/01/04 Sun India, Japan may push gold higher A BULLISH sentiment has been added to the already firm gold market with announcements coming from two major nations — India and Japan in quick succession. Notwithstanding the fact that the Euro-dollar direction will remain the focus of most short-term speculators, gold is likely to find increased fund support, according to experts. The Government's decision to allow direct import of gold and silver is seen as a shot in the arm for the bullion market. As part of the package of reforms designed to stimulate exports, the Government has decided to allow jewellery exporters, domestic bullion traders and citizens to import gold and silver directly without going through intermediary agencies. ~~~ Citing the experience of another country, Mr Naqvi said that the Indian situation is similar to what occurred in South Korea through the mid-1990s — the so-called `touchdown trading' — that led to a dramatic increase in monthly South Korean gold imports from 10 tonnes per year to a peak of 80 tonnes in July 1997. Subsequent changes in rules brought this trade to an end. The latest development has the potential to raise India's gold imports, it is believed. It would not only increase import figures, but would also tie-up a considerable amount of physical gold in these financing transactions. Another view is that a large increase in Indian bullion imports could help keep the rupee from appreciating. The other bullish news for the gold market was that "Japan is cautiously considering an increase in gold reserves." Japan has $10.24 billion worth of gold, or 765 tonnes (24.6 million ounces), a proportion of 1.5 per cent of its total reserves. Periodic Ponzi Update PPU -- $hifty, 21:31:34 02/01/04 Sun Ponzi Chart Periodic Ponzi Update PPU Nasdaq 2,066.15 + Dow 10,488.07 = 12,554.22 divide by 2 = 6,277.11 Ponzi Down 68.97 from last week. Thanks for the link RossL ! Go GATA ! Go GOLD ! $hifty Snipped -- Sharefin, 17:07:25 01/31/04 Sat Economically we IMHO just entered the financial equivalent of the Bermuda Triangle. The compasses we use to measure the system are staring to fail, and it becomes harder to navigate out of the great expanse of unknown. We have at hand the economic "OTHER" that will not be cleanly described but be assured the journey through this abyss won't do us any lick of good. Fiat -- Sharefin, 06:43:54 01/30/04 Fri Reserves and Money Supply I would not want to be long stocks today, even if the DOW makes a new high, more or less confirming some sort of bull market. Even my position in gold shares scares me, since it seems clear that all stocks will get sucked into the whirlpool of collapsing market values. ~~~ To answer your question-we don't think the current slowdown in the money supply is due to a slowdown in the monetary base. The base consists of currency in circulation and reserves in the banking system. The currency in circulation at this time is more dependent on foreigner's fear of devaluation of their own currencies and the grey market in the U.S. The reserve part is dependent upon the FOMC purchases of Treasury securities, but if the banks receiving the proceeds don't loan the money out (or if there is little demand for loans) the Money Supply numbers will drop. This process is called "pushing on a string" and is what happened in Japan over the past 13 years and the U.S. in the Depression. We have included the Monetary Base and M2 and MZM so you can see the MB is not declining as much as the money supply. The decline in the money supply may be indicative of the deflationary cycle we have been predicting. By the way the money velocities are also declining sharply. So the short answer to your question is that we believe you are giving the Fed far too much credit for being able to control the money supply. They can only target one item at a time, either the supply of reserves or the overnight lending rate and they have chosen the latter, having officially stopped targeting money in 2000—and unofficially long before then. We believe they made this choice since they know they can't control the demand for the reserves (only the supply). Fiat -- Sharefin, 06:38:59 01/30/04 Fri Global Business Leaders Fret About Growth "The value of the currency for some corporations presently starts to be endangering the potential growth of results. It is a fact," Mer told Reuters. ~~~ This adds up to no big solutions at the G7 meeting, said Alan Blinder, former U.S. Federal Reserve vice president and economics professor at Princeton University. In a U.S. presidential election year, the U.S. economy benefits from a weak dollar, so major changes in U.S. policy are not expected. "It is going to be difficult" and dangers are mounting for the world economy, Blinder said. Gold -- Sharefin, 06:36:25 01/30/04 Fri Bullish on bullion Some experts are betting heavily on precious metals U.S. economy and geopolitical strife are major reasons John Embry's voice grows louder as he rails against American profligacy and what it implies for gold and silver prices. "It's a shocking monetary debasement," the veteran fund manager says. "They're just pouring money into the world. They're printing money so the debt load doesn't fall on their heads." He pauses a moment, his voice growing hoarse, then adds darkly: "This will be reflected in interest rates." It's a strange picture: A great economic power busily printing paper money to pay its bills, which already add up to an unprecedented three times its gross domestic product. So far, its creditors and trading partners seem content with the paper notes even though they haven't been backed by bullion for years and pay hardly any interest. But that will change, Embry believes. When it does, it could spark a crisis of confidence in the U.S. dollar and paper money generally. Then real money — gold and silver bullion — will prove its enduring worth. "Before this is over, people will be astounded at the heights to which precious metals go," he says. "In the early 1970s, when gold began its slow but steady climb from $35 (U.S.) an ounce, no one could conceive" that it would surpass $850, he adds. "I don't see a big difference between now and the 1970s." ~~~ "The Fed's going to depreciate the dollar against anything that moves," Hoye says of the American central bank, echoing Embry's concern. The American Stock Exchange's HUI Gold Bugs Index could rise to a high of 600 from about 230 now and a low of 35 in late 2000, he predicts. He finds gold's recent retreat encouraging, having predicted it months ago. "First we have to get all the gold and silver bugs out of the market before we can advance on financial reasons." In Victoria, too, long-time gold analyst Martin Murenbeeld is more optimistic about gold than he has been for a long time. "Our medium term forecast is for continued strength in the gold price," he says, "mainly because the U.S. dollar decline is not finished." Murenbeeld adds his voice to the growing concern about soaring U.S. government debt because it "puts a lot of pressure on the monetary authorities to print more money." An indirect way of adding money and credit to the financial system is to keep interest rates low, he notes. ~~~ Richard Russell, editor of Dow Theory Letters, has been watching gold and silver for longer even than the other seasoned analysts mentioned above. His enthusiasm for the metals is barely restrained. In this new, global world, there's only one global currency, Russell writes. "That currency is gold." Russell has been recommending silver stocks for months and favours Pan American Silver Corp. Russell, like Hoye, takes a dark view of the world economy. "Remember, there are powerful deflationary forces operating in the world today — and they are world overproduction and the almost unsustainable levels of U.S. debt." Against these forces, "the Fed is inflating, inflating," Russell notes. But will it be enough? As Embry points out, a pumped-up money supply means a debased dollar, which in turn means it will take more of them to buy an ounce of gold. Gold -- Sharefin, 06:26:48 01/30/04 Fri SEC examines Calandra's Ivanhoe links Investment guru's endorsement of energy, mining companies has raised suspicion Investing guru Thom Calandra's enthusiastic endorsement of Canadian promoter Robert Friedland's high-flying energy and mining companies appears to be at the centre of a probe by the U.S. Securities and Exchange Commission. Mr. Calandra, author of the on-line newsletter The Calandra Report, abruptly resigned Thursday as chief commentator for the CBS MarketWatch website after missing a deadline to hand over personal stock trading records to the company. Gold -- Sharefin, 06:24:59 01/30/04 Fri Glitter returns to mining as investors flock to shows VANCOUVER -- With the gleam of gold in their eyes, thousands of investors are expected to flock to two mining shows over the next week in Vancouver, reflecting the biggest surge of excitement in the industry for a decade. "Two or three years ago, you'd go to one of these shows and the room would be half-full and you could throw a bowling ball down the aisles and not hit anyone," said Robert Quartermain, president of Vancouver-based Silver Standard Resources Inc. "But at the gold show [in November] in San Francisco, at times the aisles were so packed you had to turn around and find another route." Fiat -- Sharefin, 06:20:44 01/30/04 Fri China-US: Double bubbles in danger of colliding What happens when two bubbles collide? Do they both burst, or do they coalesce and become an even bigger bubble - which will eventually burst even more spectacularly? That is the question posed by the growth figures from both the US and China, whose growth rates are tied in ways that neither seems to want to admit too loudly. ~~~ China recycles trade surplus into US Treasury bonds American companies may have forgotten what Henry Ford propounded when he first built his Model T: If you do not pay high enough wages to your workers, they can't afford to buy your product. One simple basis for that Bush boom is that China is recycling its US$100 billion-plus trade surplus with the US back into dollars, and especially into US Treasury bonds. Almost half of the US Treasury bonds are now owned in Asia. So China is financing Bush's bold economic experiment: running two or more wars simultaneously with a huge budget and trade deficit, and equally huge tax handouts for the richest Americans. One has to question the long-term economic rationale for China of putting its long-term assets into very low-interest bonds in a currency that has already dropped recently by a third - and is going to drop even more. It certainly makes strategic sense: if push came to shove over, for example, the Taiwan Strait, all Beijing has to do is to mention the possibility of a sell order going down the wires. It would devastate the US economy more than any nuclear strike the Chinese could manage at the moment. ~~~ If the US economy sinks and Americans stop buying Chinese goods, then it will compound the US slump as China first stops buying US bonds that have inflated the American bubble and then moves on to selling them. On the other hand, if the Chinese economy falters and it stops recycling dollars into the US economy, then the boom stops anyway. Indeed, it seems that China increasingly will need more of that cash to pay for energy imports anyway. But New York money manager Schmeidler, and others who remember that economics is the dismal science, realize that it is still better science than politicians drumming up votes and investment bankers drumming up business seem to understand. The West is in the red, and if it crashes, the East may join it. Gold -- Sharefin, 07:52:13 01/29/04 Thu The Bear's Lair: Drowning In Liquidity To add insult to injury, European policymakers are besieged by a Greek chorus from across the Atlantic, pointing out mysterious European "structural problems" that supposedly condemn Western Europe to an eternity of minimal productivity growth and economic stagnation. In reality, Europe's "structural problems" of high taxes and heavy social costs are no worse and in some respects better than they have been for the last 25 years; there is a demographic problem approaching when the post-war baby boom retires, but we are half a decade away from that yet. It is little wonder that the modestly reforming French and German leaders, lumbered with an ever-appreciating currency that decimates their export markets and attracts a flood of under-priced Asian imports, find the moral lectures of the wholly un-reformist Bush administration hard to bear. Britain shows what might be happening to the U.S. if it had pursued the fiscal but not the monetary side of the Bush/Greenspan U.S. policy. There the government deficit is widening rapidly, but the currency remains strong and the trade deficit, always a weak point of the British economy, is nowhere near crisis level. In Britain, unlike in the United States, the housing bubble appears to be beginning to deflate, but confidence in the economy is very much lower, with an economic optimism index currently registering minus 26, an excess of pessimists over optimists. There's no question that we are in a place without roadmaps -- this particular combination of circumstances has not as far as I know been seen before. In 1929-33, the Federal Reserve pursued a tight monetary policy, with catastrophic results in terms of bank failures, making the Great Depression far deeper than would have been necessary as a result of the Wall Street crash. In Japan in the 1990s, the authorities pursued a loose fiscal policy similar to that being followed by the Bush administration, but the Bank of Japan, while allowing interest rates to decline, pursued a monetary policy considerably tighter than that followed by Greenspan since 2001. ~~~ As I said, the current combination, of very loose monetary policy, very loose fiscal policy, an overvalued stock market, a housing boom and a huge U.S. payments deficit is new. 1973 is a reasonably close analogy, as are bizarre episodes deep in history such as the French Mississippi scheme of 1720 and the early years of the German Weimar republic in 1920-22. The sudden disappearance of U.S. money supply growth is telling us something, probably that there is a deep recession ahead. The sharp rise in gold, oil and commodity prices is telling us something, probably that we are about to experience a burst of inflation. The Chinese situation, and the huge disconnect between U.S. and European economic performance are telling us something, probably that the U.S. dollar's value is about to enter, not just a moderate decline, but a true collapse. Gold -- Sharefin, 08:19:07 01/27/04 Tue Newmont's possible offering spurs more deal talk Newmont Mining Corp.'s signal it could raise an extra $1 billion by selling stock and debt has rekindled talk on Wall Street about the world's biggest gold producer gobbling up a mining industry rival. A hot streak for Newmont stock, up roughly 50 percent over the past year, has increased the odds that the Denver-based company could use its shares and increased buying power to make an acquisition, those who follow the company said. ~~~ Wall Street analysts have mentioned Canada's Placer Dome Inc. as a potential acquisition target. Bryan said a deal with Barrick Gold Corp. also could attract Newmont, though an obvious favorite has yet to surface. Newmont in November raised about $1 billion by selling 24 million shares of stock, stoking speculation the company could use the proceeds for a potential deal. Now, fresh filings with the U.S. Securities and Exchange Commission on Friday give the company the ability to raise more than $1 billion more. Newmont already has enough cash flowing in to meet its spending plans to boost production, so "it would appear that acquisitions may be a greater focus," Merrill Lynch analyst Michael Jalonen wrote in a research report on Monday. With current operations, Newmont hopes to increase annual gold sales to about 7.7 million ounces in 2007 from about 7.3 million ounces in 2003. A combination with Placer Dome, Jalonen said, would add about 3.6 million ounces of gold a year to the company's output. Gold -- Sharefin, 08:19:58 01/26/04 Mon Gold prices likely to lift, says Godsell AngloGold chief executive Bobby Godsell expected gold prices, which touched a 15-year high this month in London, to keep rising, extending the life of mines and boosting industrywide exploration spending, he said on Friday. The gain was making more of Johannesburg-based AngloGold's projects viable, the head of the world's second-largest gold producer said in a televised interview from the World Economic Forum in Davos, Switzerland. AngloGold's projects were expected to produce about 30 million ounces over their lifetime, Godsell said. "All indications are for more movement on the upside rather than retracing its steps,'' Godsell said. "The higher the price, the more projects meet a sensible investment hurdle. It's returned people to the exploration trail.'' Periodic Ponzi Update PPU -- $hifty, 01:13:42 01/26/04 Mon Ponzi Chart Periodic Ponzi Update PPU Nasdaq 2123.87 + Dow 10568.29 = 12,692.16 Ponzi Down 24.40 from last week. Thanks for the link RossL ! Go GATA ! Go GOLD ! $hifty Fiat -- Sharefin, 09:59:40 01/24/04 Sat Dollar under pressure from all sides It was open season on the dollar with the US unit losing ground against the euro, yen and pound as dealers questioned the ability of central bankers to stem a general dollar sell-off. Sterling in particular headed towards 11-year bests against the American currency after the release of better than expected figures for British fourth quarter economic growth. ~~~ The dollar has been under severe pressure in recent weeks due to worries about the swelling US current account deficit as well as the country's rock-bottom interest rates. This movement was temporarily halted after a series of eurozone officials, notably European Central Bank president Jean-Claude Trichet, expressed concern about the euro's ascent to a string of best-ever levels against the dollar. "But this is now becoming a non-event from a market perspective: it will take a more threatening stance to deter investors from buying the euro/dollar," said Childe-Freeman. In Asia as well, traders were running less scared of the response of Japanese authorities when faced by a movement of the dollar below the traditionally-defended 106-yen level. "The aggressive nature of the intervention being conducted by the Japanese authorities would suggest that the authorities are determined to forestall a break lower in the dollar-yen rate," said Derek Halpenny of Bank of Tokyo-Mitsubishi. "The problem of course is that the market remains sceptical of the commitment," he added. Fiat -- Sharefin, 09:56:44 01/24/04 Sat What High Yields? The average ten-year junk bond gives you less than 6.5%. Meanwhile 80% of junk trades above par, and 63% above the call price. Investors are oblivious to the dangers. ~~~ Monrad has a list of complaints. Yields are low. Ditto, the quality of new junk issues. Inflows into junk-bond funds are strong. And complacency levels about credit risk are high. Monrad surmises that interest rates will be going up because that is what the Federal Reserve seems to be hinting. But he does not have to surmise that investors are oblivious to the dangers. ~~~ The junk market is as blind to risk today as it was in 1999. In this setting the word "junk" is not pejorative. It is descriptive. There is no yield to speak of in "high yield"--you're not being paid for the risk you take. The average yield for a speculative-grade debenture with a ten-year maturity is less than 6.5%. Marko Budgyk, managing director of Helix Investment Partners, says that 63% of the junk market trades above call (the price at which the issuer can, at its option, redeem an outstanding bond), and 80% of the market trades above par. "Corporate credit isn't just overvalued," Budgyk protests. "It has reached bubble-like levels." Gold -- Sharefin, 09:37:19 01/24/04 Sat Merrill ups gold price forecasts Merrill Lynch raised its gold price forecasts due to continued U.S. dollar weakness and low interest rates. The 2004 forecast was raised 12 percent to $435 per ounce, the 2005 forecast was increased 21 percent to $440 per ounce and the 2006 estimate was lifted 17 percent to $420 per ounce. In addition, the long-term forecast was raised to $375 per ounce from $350. Fiat -- Sharefin, 09:35:44 01/24/04 Sat Europe gold drifts up in quiet trade on weaker dlr Gold bullion drifted higher in quiet European trade on Friday but prices were unlikely to climb significantly, as Germany's Bundesbank bid for an option to sell 600 tonnes under any future central bank gold agreement continued to weigh on the market, analysts said. ~~~ The Bundesbank request, disclosed on Wednesday, for an option to sell gold under a possible renewed agreement after expiry of the current pact in September, prompted some long liquidation. The agreement allows the 15 signatory central banks to dispose of excess bullion without flooding the market. Traders said the market has largely recovered from the selling spree, but analysts said that despite the fact Germany's suggested amount would be well absorbed by the market, the announcement still has a bearish effect. Fiat -- Sharefin, 09:25:20 01/24/04 Sat Who Rules the World, Really? Now tell me: who has had the real reigns of power in his hands? Who has more consistently, more continuously, and more steadfastly drunk at the fountainhead of US economic power? Who truly had the most lasting and profound effect on the direction of this nation? Is it the President, or is it the central banker? This country should be renamed to more properly reflect the identity of its true master. It should be called the “United States of the Fed.” But that was then. This is now. Last week, one carefully chosen word from across the Atlantic has served to stem the euro's advance, and has pulled the dollar back from its precipice. And that word did not emanate from the thin-lipped mouth of Mr. Al “Magoo” Greenspan. That word was uttered with a French accent from the ECB's Tower of Power, in the city of Frankfurt, in the former Republic of Germany. Whatever the ultimate fate of the dollar will be, it already lies in the hands of foreigners. It is no longer up to Americans. It is no longer in the power of the Federal Reserve or the US government to reverse the fall of the dollar. ~~~ In the meantime, all currencies will depreciate against each other, and precious metals and other commodities will rise, and rise. The dollar will lose power, and your dollar-based bank (and trading) accounts will be sapped of their strength. The metals will reign supreme - for a while at least. Fiat -- Sharefin, 09:22:35 01/24/04 Sat Dollar Plunge Accelerates; Market Ignores Euro Rhetoric The dollar is extending its losses Tuesday despite more rhetoric from euro-zone officials warning against sharp currency moves -- words that dealers say seem increasingly empty unless backed up by action. As there is no sign that is on anyone's radar screens just yet, least of all those of European Central Bank's governing council members, the dollar is giving back huge chunks of last week's sizable gains. "There's still little to suggest they're willing to put a floor under the dollar ... [or] a cap on the euro," said Tim Stewart, chief global currency strategist at Morgan Stanley in New York. "There's still no finger on the trigger for a monetary-policy response [to the strong euro] or direct intervention." The dollar's plunge Tuesday comes despite the release Monday in Brussels of the communique following a meeting of European Union finance ministers, known as Ecofin. The Ecofin statement said: "In the present circumstances, we particularly stress stability and we are concerned about excessive exchange rate moves." That marked a significant change of wording from previous statements, which consistently mentioned the desirability of a "strong and stable" currency. The statement was followed up Tuesday by remarks from ECB chief economist and governing council member Otmar Issing in testimony to the European Parliament's Economic and Monetary Affairs Committee. The central bank remains concerned about "excessive exchange-rate movements," he said, adding the "verbal intervention" in recent days warning against market "volatility" has had a substantial impact in weakening the euro against the dollar. But Michael Klawitter, senior currency strategist at WestLB in London, noted that following ECB President Jean-Claude Trichet's warning last week on the " brutal" moves and "excessive volatility" of exchange rate swings, the Ecofin communique might have been expected to contain stronger language, and perhaps even mention specific exchange-rate levels. "The Ecofin statement was less strongly worded than Trichet's statement in Basel last week," said Mr. Klawitter. "The market is taking the view that Ecofin's main concern is less the absolute level of the euro and more the pace and volatility of its moves." Fiat -- Sharefin, 09:17:30 01/24/04 Sat Japan loses £40bn in currency fight JAPAN'S Ministry of Finance has lost more than £40 billion in the past financial year trying to bet against currency speculators, The Times has learnt. Cabinet Office insiders admitted yesterday that the currency losses have spiralled out of control, after a renewed attempt by the Finance Ministry to prop up the dollar and talk down the value of the yen. The insiders told The Times that losses in a special ministry account that holds the Government's intervention reserves are expected to soar to Y7.8 trillion (£40 billion) by the end of the financial year. This month the Government has already spent a record sum trying to prevent the yen from rising too high against the dollar, a movement that would hurt Japan's all-important exporters, on whose prosperity all hopes of an economic recovery are pinned. However, in trading in Tokyo yesterday it was clear that Japanese exporters were also preventing the massive currency intervention programme from succeeding. As the yen fell to Y107.50, a number of carmakers were understood to be dumping large amounts of their foreign-earned dollars on the market. Gold -- Sharefin, 09:14:08 01/24/04 Sat London gold stock is world's best in 2003 NEW YORK (Mineweb.com) -- There is no substitute for raw returns if you're an investor, but very few people caught London listed Caledon Resources [CDL] which topped our global list in 2003 with a US dollar gain of 2,549 per cent. Gold -- Sharefin, 09:07:57 01/24/04 Sat Barrick meets targets, trims hedge Barrick Gold Corp. said Tuesday it matched production and cost targets in 2003 and continued to trim its hedge book, although lower ore grades at mines in Peru and the United States will likely mean slightly lower numbers this year. For 2003, Barrick reported total production of 5.51 million ounces at a cash cost of $189 (U.S.) an ounce. In a statement, it also again said it expects 2004 gold production to be between 4.9 million and 5 million ounces at an average cash cost of $205 (U.S.) to $215 an ounce. ~~~ Meanwhile, Barrick also reported that its hedge position was reduced by 600,000 ounces in the fourth quarter As a result, Barrick's 2003 year-end position declined to 15.5 million ounces - down 2.6 million ounces year over year - representing less than 20 per cent of Barrick's reserves. "In keeping with its no-hedge policy, Barrick will continue to pursue opportunities to further reduce its hedge position with the objective of reducing it to zero over time," the company said. Barrick has cut its hedge position by about 36 per cent over the past two years. Fiat -- Sharefin, 09:05:09 01/24/04 Sat The Currency War The U.S. is running a "silent currency war" against the rest of the world by not only trying to devalue the dollar until the economy begins to grow on a sustained basis, but until employment starts to grow as well. As long as the U.S. is dedicated to 5% budget and trade deficits and 1% short-term interest rates, the fall of the dollar is guaranteed. Our government's policies are extraordinarily self-indulgent and profligate. The Treasury and Federal Reserve want to punish savers by continuing to reward financial speculation, credit creation and spending. Indeed, there is no better way to punish savers than to offer a 1% interest rate and a 20% annual drop in the value of the dollar. Moreover, be assured the Federal Reserve will not raise interest rates and will continue the limitless flow of credit until there is enough growth in employment to ensure both the Fed Chairman's re-appointment, and the President's re-election. Stabilizing the dollar will be our trading partners' problem. If any countries wish to bring sanity and stability to the world currency markets, it will not be the U.S. It will be up to our trading partners to "act like adults and say no" to the indulgent child. A falling dollar looks good and is a stimulant to our economy in the short run. Foreign cars and other goods become more expensive and less competitive, helping our domestic industry. U.S. corporations can bring profits back from overseas (profits in Euros look 30% better when they are brought home to the US in dollars.) ~~~ There is a way out for foreign countries, but it is not what the U.S. expects or would want in an election year. Our Federal Reserve is throwing a great party with easy money and a weak dollar while asking responsible governments and central banks to suffer our "hangover" for us. There is no natural law that says that the only thing foreign central banks can do to take the pressure off their rising currencies is to create money and buy dollars. Under the Clinton Presidency, the genius of Larry Summers was to sell gold to make the dollar look strong. This policy worked. The reverse will also work. Responsible central banks that want to help the United States establish responsible budget, trade and interest rate policies, should "buy gold not dollars" to make their currencies "look weak". Moreover, there are any number of things that foreign central banks and governments can buy with new local currency that will help hold their currencies down, give the country something of value, and stop enabling the Federal Reserve to run a monetary policy fit for a drunken sailor. Countries should "manage their currencies down against the dollar" by buying gold and silver, oil and more oil, tin, copper, zinc, etc. Countries with sounder monetary and economic policies, such as England, Australia, and Europe, are major oil importers. Now would be a wonderful time to fight back against the U.S. currency war by printing up some money to fund a strategic oil reserve. Countries such as South Africa, Canada, and Australia, should buy gold, silver and other commodities they produce to manage their currencies down. This policy is in their clear national interest because it will build up central bank reserves that will hold their value and give their miners jobs! ~~~ Indeed, the only way foreign central banks can really help America is to treat the United States the way friends treat their friends who drink by not letting them drive drunk. The motto for central bankers should be "Central Banks Don't Accommodate Financial Suicide". The problem for the world's central banks is that irresponsible U.S. budget, trade and monetary policies threaten the entire monetary system. It will be very interesting to see what foreign central banks do. World inflation remains highly likely. Gold -- Sharefin, 08:58:29 01/24/04 Sat TREASURY RENEGES ON 30 YEAR BOND HOLDERS The U.S. Treasury will default on contracts with investors, mostly individuals, who loaned the government money in 1979 on the agreement that they would receive 9.125 percent interest every year until their bonds mature in the year 2009. No longer will politicians and appointed bureaucrats be able to brag that the United States has never failed to live up to its obligation as the safest investment in the world. Investment is no longer guaranteed. The Bureau of Public Debt announcement claims that this recall applies to about $4.6 billion in 30 year bonds issued on May 15, 1979 and calls for their redemption by May 15, 2004. Of course, investors holding these bonds are not forced to cash them in and can hold them until 2009 if they want, but they will no longer receive the interest promised, the main reason for investing their money in the first place. That means that if you loaned the government $10,000 in 1979 you will lose $912.50 a year, $4,562.50 in the next 5 years, in interest you would have been due from the government—before the government decided to back out of their end of the contract. ~~~ At a time when the International Monetary Fund (IMF) is already warning the Bush administration about its fiscal irresponsibility, and the Treasury is selling less than half of all securities put up for auction, this action is bound to reverberate negatively through the bond market. How long will it be before the United States loses the credit rating it has enjoyed for years and investors, particularly foreign nations that hold a significant portion of our national debt, decide it's safer to buy Euros or something else instead of loaning us money? And don't forget, those on the honest side of our national debt can cash-in their securities at any time. It's not like the bogus nonmarketable bonds the government gives us when they borrow/steal our Social Security and other dedicated entitlement money. The action taken today could very well be the tip of the iceberg on the voyage to bankruptcy. Gold -- Sharefin, 08:53:48 01/24/04 Sat GFMS - the bull's rationale MINEWEB: Paul, we need to talk about gold, though. You brought out your predictions in the last little while, in the past 24 hours, and the headlines are “$450 gold price by mid-year”. Perhaps you can take us through the reason why you have that view. PAUL WALKER: Sure. I think the core factor underpinning the rather bullish forecast that we have is a premise on a macroview specifically related to the US economy, and the potential weakness for the dollar going forward. And when you look at the imbalances that exist in the US economy, our view is that you're going to see portfolio shifts associated with that out of the US, continuing to look elsewhere for investment returns. That gold is going to benefit from that, as it already has to a relatively small degree and that should see certainly higher US$ gold prices, but probably higher gold prices in other currencies as well. Gold -- Sharefin, 08:49:45 01/24/04 Sat Soft prices to boost gold demand in India BOMBAY (Reuters) - Gold demand in India, the world's largest consumer, is likely to rise in the coming weeks with a softening of world prices ahead of the peak marriage season that fuels buying, traders said on Monday. Jewellers and consumers have increased buying but are still refraining from big purchases because they believe prices could slip further, they added. ~~~ "Strong demand will definitely come in, if prices stabilise at the current level or fall to about $390 an ounce, as the next four to five months are going to be the good buying season," he said. ~~~ Traders estimated demand for gold bars in Bombay, the country's financial capital, at 400 to 500 kg a day, up from about 175 kg a week ago. The city accounts for about one-fourth of India's demand. Gold demand in Madras had almost doubled to 100 kg a day in the past week and could rise further to about 125 kg in the coming days, traders said. "People have waited so long for prices to fall to a comfortable level. Now they have started buying again and will keep on raising volumes with every drop in prices," said Narendra Singh Rathore, a trader based in Jaipur. Silver -- Sharefin, 08:02:49 01/24/04 Sat Coeur d'Alene Mines silver production sets 100 million ounce record Coeur d'Alene Mines Corporation (NYSE: CDE) announced that the Rochester mine surpassed 100 million ounces of historic silver production, reaching a major milestone as one of the world's most productive silver mining districts. Fiat vs Gold -- Sharefin, 08:00:28 01/24/04 Sat Dollar won't hurt gold Paul Walker, an analyst at Gold Fields Mineral Services (GFMS) says last week's strengthening of the dollar against the euro does not affect his forecasts of a $450/oz gold price by mid-year. ~~~ Walker told Moneyweb's Classic Business on Friday: “We always countenanced the possibility that gold's relatively rapid run up to the recent highs would see a retracement.” Recent news out of the US hints that the economy has turned a corner and a strengthening of the dollar is imminent, but Walker does not believe this to be the case. “I think that it is a temporary blip and we will be back to business as usual over the next couple of weeks.” His rather bullish forecast is related to GFMS's macro-view of the US economy. Walker says there are imbalances there, which will cause portfolio shifts out of the US, having a positive affect on gold. “It has already benefited to a small degree, and it should certainly see higher US$ gold prices, but probably higher prices in other currencies as well. Gold -- Sharefin, 07:58:12 01/24/04 Sat Fool's gold ... or the great gold rush? This is normally the kind of stuff I warn about: Tugging at investors' emotions by prophesing economic mayhem and predicting the only way to riches during these troubled times is to buy a certain investment. In this case, gold. But let's face it: These are troubled times -- and investors who held gold in their portfolios last year have struck it rich. As confidence plunges in the American dollar (the world's reserve currency since 1944) -- gold prices have gone through the roof, soaring from $270 US an ounce in March 2001 to as high as $435 US an ounce in recent weeks. That may be off gold's lofty highs of $800 US an ounce back in 1980 -- but it's enough to stir excitement for gold buffs and shine the spotlight on what was once known as the Rich Man's Money. ~~~ Most analysts agree this is a minor correction and as the U.S. dollar continues to slip this year, there's more upside for gold. But by just how much is where there are differing viewpoints. "Our forecast is as the U.S. dollar continues to move down a little bit further, we anticipate more upside potential for gold," said Patricia Mohr, Scotiabank vice-president and commodity market specialist. However, Mohr does not share the view of some gold buffs who believe not only will gold crack $800 US an ounce but will go on to hit loftier highs. as it enters a long bull market. Key, they argue, is the United States being bumped from its position as the world's super economy, as foreign investors lose confidence in the U.S. greenback. "It's all about the debt," argues West Coast investment adviser Ian Gordon, author of the newsletter The Long Wave Analyst. What he's referring to is a growing mountain of U.S. debt -- including the growing trade deficit, government debt and household debt. Washington, for example, owes $6.7 trillion while American households are carrying record debtloads which total a whopping $8.4 trillion. Even Federal Reserve Board Chairman Alan Greenspan has warned of the evils of debt. Back in 1966, Greenspan remarked, "Deficit spending is simply a scheme for the hidden confiscation of wealth." ~~~ So, what's going on? Gordon, who works for Canaccord Capital and is a believer in the Kondratrieff Cycle, warns this is a temporary stock market recovery -- and equities will take another hit this year. His short-term prediction is gold will flirt with its $435 US an ounce level and if it cracks it, it's on the way to $500 US an ounce by year-end. Gold -- Sharefin, 07:48:24 01/24/04 Sat Central banks set to renew gold pact European central banks are likely to renew their five-year agreement restricting gold sales in the spring, well ahead of its expiry in September, in a move that could prolong the two-year bull run in bullion prices. The new agreement is also expected to raise the limit on aggregate annual sales by the 15 participating central banks, which include Germany, France, Italy, and the UK, from 400 tonnes to more than 450. Klaus Liebscher, governor of the Austrian central bank -- a signatory to the accord -- said he was "very optimistic" that a new gold agreement would have been "negotiated by the spring." In an interview with the Financial Times, he said the talks were "not yet in the end phase. But he indicated Europe's central bankers were supporting a renewal of the agreement. "It is wise to renew the pact ... and many of my colleagues see it that way." ~~~ Liebscher said he thought "sales of 450 tonnes a year or a little more" would not be a problem for the market as long as it was forewarned. Analysts said the renewal of the pact at these levels would be positive. The pact has a big influence on the gold price, and many had expected the central banks to seek a bigger increase in sales. GATA -- Sharefin, 07:46:04 01/24/04 Sat Bundesbank Board Opposes Welteke's Gold Sale Plan, Spiegel Says Jan. 17 (Bloomberg) -- The board of Germany's Bundesbank opposes a plan by its President Ernst Welteke to sell some of the central bank's gold reserves to fund research in Europe's largest economy, Der Spiegel said. ``Welteke won't get a majority for his proposal,'' the magazine cited an unidentified board member as saying. Only three of the board's eight members are in favor of the proposal, Spiegel said, citing the board member. The Bundesbank's board will vote on the proposal in February, the magazine said. The Bild am Sonntag Sunday newspaper said earlier this month that the Frankfurt-based Bundesbank and the German government have agreed to sell up to 600 tons of the central bank's gold to raise as much as 7 billion euros ($8.7 billion) for a fund to promote education and research. The government expects the fund to generate interest income of between 250 million euros and 300 million euros a year, the paper said. Gold -- Sharefin, 02:38:51 01/22/04 Thu INTELLIGENCE SPENDING BILL (HB2417) GOLD, SILVER, PLATINUM, PALLADIUM AND DIAMONDS The US Financial Gestapo has finally moved against coin owners. A number of banks, Washington Mutual, Sterling Savings & Venture Bank have sent out changes of terms notices to all of their customers. As of 1/1/04, you won't be able to store cash, or gold and silver, in your safe deposit boxes. This is being done under the guise of terrorism and national security. The new Intelligence Spending Bill (HB2417) that has just been passed provides that institutions reveal their customer's private financials as well as general information, including tangible things. Banks must now spy on you. They are not the only ones: reporting on you to the government are also stock brokers, credit-card companies, insurance companies, dealers in precious metals and stones or jewels, licensed senders of money, telegraph companies, airplane and boat dealers, Realtors and estate closings and the US Post Office. George Orwell must be having a good laugh. There was'nt even a debate on the Bill forcing Coin dealers to turnover records to the government upon request. And if you hoard your gold at home you are anti-American or some kind of terrorist sympathizer. Gold -- Sharefin, 07:54:13 01/21/04 Wed Bundesbank confirms wants to sell 600 tonnes of gold by 2009 FRANKFURT (AFX) - The German Bundesbank said it wants to be able to sell a total of 600 tonnes of gold over the next five years, confirming an article in today's Boersen-Zeitung. A Bundesbank spokesman said the bank requested a sale option of this amount during negotiations with other European central banks to renew their five-year agreement on gold sales, known as the Washington Agreement. The current agreement expires in September, but media reports this week suggest the banks want to renew the agreement as soon as this Spring. The new deal is expected to raise the limit on aggregate annual sales by the 15 participating central banks, which include Germany, France, Italy and the UK, from 400 tonnes to more than 450, Austrian central bank governor Klaus Liebscher was reported as saying. The Bundesbank spokesman said the question of when and if the bank sells any gold has yet to be decided. Gold -- Sharefin, 22:01:23 01/20/04 Tue John Embry: Sprott Asset Management (Canada) MINEWEB: Well, reading your latest writings on this subject you make a compelling case for gold – and talk about an “explosive” picture for it. Perhaps we can go through the four major reasons that you did use for this reasoning, and the first one is the bullion banks. Tell us exactly how the bullion banks have been capping the market, and why you think this is not going to continue. JOHN EMBRY: Well, essentially, the bullion banks in conjunction with their associates, the central banks, have been supplying an awful lot of gold into the market over the last number of years. It's by what I call the “leasing mechanism”. It started out very innocently with producer hedging, and it did sort of facilitate a forward sale – you end up selling gold in a spot market that has bought from the central bank. And the bullion banks obviously were the facilitators of this, and they got heavily involved, and then financial speculators saw this was too good an opportunity to pass up. So you can sort of get your hands on central bank gold at between 0.5 and 1% or 1% lease rate per year. The gold gets sold into the market, and then the proceeds are used to purchase financial assets, stocks, bonds primarily, earn a spread, and so a huge amount of gold was got into the market that way. And so consequently what happened was it was one of these trades you couldn't fail on, until everybody did it to such an extent that essentially it overwhelmed the physical market. And the gold price eventually bottomed and started to rise, and now all these guys are on the wrong side of the market. They've got shorts that probably are sufficiently large that to cover them would be very painful. So consequently they tried to control the gold price. ~~~ MINEWEB: Do you think that's possible – that we have a rise as we saw in the 1970s when the gold price rose many-fold? JOHN EMBRY: Yes, I think it's very probable in the sense that if you look at what's going on in financial circles and this, what I would consider is the US has put themselves in an utterly untenable position. Money is coming out of their current account, the deficit at an alarming rate, and at the same time their fiscal deficits are rising sharply. US paper is being debased seriously, and the thought is that gold will rise as the US dollar falls. But I think it's much bigger than that, in the sense that a lot of other countries are going to reach a threshold that, when their currency gets high enough against the US dollar, it's going to start to impact on their economies. I mean, the Japanese already figured that out and they've been buying US Treasuries hand over fist, to try to keep the yen from rising. Here in Canada the dollar has risen very significantly against the US dollar, and already people are starting to feel uncomfortable about how far this can go. So I mean, the weakness of the US dollar I think is going to lead to more money printing in other countries as they try to resist the rise in their currency against the US dollar for competitive reasons. And that's when gold gets really exciting. Lenny's Corner -- Sharefin, 21:55:30 01/20/04 Tue General Comments There is only one answer. Gold, over the last year or two, has been behaving NOT LIKE A COMMODITY, but a CURRENCY. Such a close correlation between the USD/ Euro or the value of the Dollar Index indicates that valuing gold as a commodity has been virtually useless. It is acting as a currency, it is acting as MONEY. In college, in philosophy, there is this theorem named Occam's razor. It states that the easiest answer is most probably correct. Therefore, gold is now money because it is acting as money. As such, all fundamentals factors in this market must be accorded short shrift. It seems that such matters have little material effect. It seems almost unimportant that Indian gold demand fades when prices are high and shines at lower levels. It seems totally irrelevant that the gold producers have repurchased millions of ounces of gold in this market. It appears foolhardy to judge global jewelry demand and make any assumptions. Gold has been, simply, a currency of late. The very facts demand we see it that way. Throughout history, there have been times that gold has been accorded commodity status. And, there are times, as now, where the battle cry of the hard money crowd, "GOLD IS MONEY", has been echoed through the halls (these days, please substitute internet chat rooms). But now, until things change, gold is simply money, another currency. And remember, rule #1 (or is it #2?) of the commodity trader's handbook is that a trend stays a trend until it doesn't. Gold -- Sharefin, 21:43:12 01/20/04 Tue Europe's central banks to limit sale of gold to help stabilise price European central banks were set to renew a deal to stabilise the gold market, the head of Austria's central bank said yesterday. The so-called Washington Agreement would be renewed well ahead of its scheduled five-year expiry date, Klaus Liebscher told the Financial Times. The deal should be ready in a few months and might raise the maximum amount of gold a central bank could sell in a year from 400 tons to 450 tons. Gold -- Sharefin, 21:58:46 01/19/04 Mon Tuesday January 20th 2004 PRICING UNCERTAINTY IN GOLD Pollock & Mackenzie Currently the market perceives gold as a hedge against a declining US Dollar. In contrast we view gold as the ultimate insurance for global uncertainty, and its associated risks. When framing the value of gold, deflation and inflation are not mutually exclusive position points. Presently, we are experiencing aspects of both phenomena concurrently. No matter the prevailing or countervailing wind between these forces, gold will provide safe harbor. WE ARE PRICING UNCERTAINTY TO GOLD. Gold provides the ultimate arbiter of comparative value, it always has. A deflationary outcome must to be considered regardless of central bank willingness to provide an inflationary backdrop. The integrity of fractional reserve banking cannot by its very definition be indefinitely maintained. Such systems are bankrupt at origin. During times of severe economic dislocation the dollar value of gold becomes irrelevant. We are pricing dollars in gold not gold in dollars because all fiat paper currencies will eventually find their benchmark in gold. Presently these slips of fiat money paper are colateralized in debt with the promises of repayment in good faith. Since these systems are bankrupt at origin failure eventually becomes apparent to all as common interest to a common system with mutual but not equal benefit erodes. During deflation the "fiat-money" conversion price of gold could be in fact very low. By example gold could be priced at $200 per ounce, however the amount of purchasing power could be profoundly more than gold in a runaway hyper-inflationary environment. We believe that purchasing power of gold will increase during uncertainty. It is advantageous for all portfolios to have a gold component as the definitive store of value. Efforts to inflate do in fact cause deflation. Our economic leadership, and government, embarked on a clearly defined policy to weaken the US Dollar. The stated objective of this policy was to reduce the current account deficit by expanding exports. This policy has significant side effects, many unintended results, and risks. THE CATCH, WITH INFLATING LIABILITIES AWAY WITH A WEAK DOLLAR POLICY RESIDES IN THE FACT THAT THE USD PROVIDES THE WORLD WITH ITS RESERVE STORE OF VALUE. WE ARE THREATENING THE STATUS OF THE RESERVE CURRENCY. To solidify the reserve currency, the United States has to at all times provide the world with products, materials, services, and intellectual property, at prices the rest of the world can absorb. Therefore, by printing money we are only serving to undermine international confidence in the value of our capital stock, and our ability to provide return. As we intentionally exporting inflation. The domestic economy will continue to lose jobs because our domestic labor pool cannot compete with the fair value of global labor rates. Effectively, we are inflating away our advantage of holding rights to the reserve currency. Capital and Jobs are being exported under the specter of Globalization. As the natural trend to unemployment continues the economy contracts. Aspects of the economy start to break as contractual commitments like rental agreements, mortgages, pensions, and insurance cannot be serviced. A liquidity crisis emerges. Many people equate a dollar bottom with a cup of coffee priced at $5 a cup. In a deflationary environment it would be more likely that a cup of coffee would cost .25c that few had. This is the gold purchasing power effect we initially described. Again, Gold's purchasing power will allow you to hold a currency that acts as a store of value in a deflationary environment. Warren Pollock is a guest author on Jim Sinclair's Mineset and has been published in journals including the Journal of Homeland Security. John Mackenzie manages private capital and host's a gold forum/investors exchange on Yahoo groups Periodic Ponzi Update PPU -- $hifty, 23:25:48 01/18/04 Sun Ponzi Chart Periodic Ponzi Update PPU Nasdaq 2,140.46 + Dow 10,600.51 = 12,740.97 divide by 2 = 6,370.485 Ponzi Up 97.585 from last week. Thanks for the link RossL The madness continues! Go GATA ! Go GOLD ! $hifty Gold -- Sharefin, 20:38:07 01/18/04 Sun Early renewal of central bank gold agreement seen to be supportive of price Central banks set to renew gold pact European central banks are likely to renew their five-year agreement restricting gold sales in the spring, well ahead of its expiry in September, in a move that could prolong the two-year bull run in bullion prices. The new agreement is also expected to raise the limit on aggregate annual sales by the 15 participating central banks, which include Germany, France, Italy, and the UK, from 400 tonnes to more than 450. Klaus Liebscher, governor of the Austrian central bank -- a signatory to the accord -- said he was "very optimistic" that a new gold agreement would have been "negotiated by the spring." In an interview with the Financial Times, he said the talks were "not yet in the end phase. But he indicated Europe's central bankers were supporting a renewal of the agreement. "It is wise to renew the pact ... and many of my colleagues see it that way." His comments will help to reassure gold investors, who have seen its price rise by 20 percent in each of the past two years on geopolitical tensions and a sliding dollar. Analysts believe gold, which hovers just above the $400 an ounce level, could now touch $450 this year. Liebscher said he thought "sales of 450 tonnes a year or a little more" would not be a problem for the market as long as it was forewarned. Analysts said the renewal of the pact at these levels would be positive. The pact has a big influence on the gold price, and many had expected the central banks to seek a bigger increase in sales. "A limit on annual sales of between 450 and 500 tonnes would be positive for the market," said Paul Walker of Gold Fields Mineral Services. "This is at the lower end of expectations." GATA -- Sharefin, 20:33:53 01/18/04 Sun Bundesbank's board is said to oppose Welteke on gold sales Bundesbank Board Opposes Gold Sale Plan, Der Spiegel Says From Bloomberg News Service January 17, 2004 The board of Germany's Bundesbank opposes a plan by its president, Ernst Welteke, to sell some of the central bank's gold reserves to fund research in Europe's largest economy, Der Spiegel said. "Welteke won't get a majority for his proposal," the magazine cited an unidentified board member as saying. Only three of the board's eight members are in favor of the proposal, Spiegel said, citing the board member. The Bundesbank's board will vote on the proposal in February, the magazine said. The Bild am Sonntag Sunday newspaper said this month that the Frankfurt-based Bundesbank and the German government have agreed to sell up to 600 tons of the central bank's gold to raise as much as 7 billion euros ($8.7 billion) for a fund to promote education and research. The government expects the fund to generate interest income of between 250 million euros and 300 million euros a year, the paper said. ------ Is Germany getting wise to the gold sales racket? In my opinion the importance of this brief news story cannot be overstated. Here's why: * Fed Chairman Alan Greenspan had just made a big splash in Berlin. * This story contradicts a planted and false story the Germans were committed to sell up to 600 tonnes of their gold, which has been Welteke's plan all along. GATA believes Welteke has been a stooge of the Gold Cartel for a long time. * Most importantly, this is the first positive gold story from any Western central bank since GATA was formed five years ago, and it reveals serious German concern over all this multi-year gold selling by the West. * The Der Spiegel article suggests that its source has been in contact with all members of the Bundesbank board. It is not just one man's opinion. It is a consensus. The story was leaked to send a message. * Perhaps a group of German central bankers is looking at the low prices received by the Swiss and British for their gold and are making a stand that they will not be drawn further into this U.S.-inspired folly. * More and more Germans can see the foolishness of the United States regarding our horrendous current account and budget deficits and know what the result is going to be: a soaring gold price and a troubled dollar for years to come. Why sell gold cheap to invest in a depreciating dollar? * The Germans have an historic fear of hyperinflation. They can see commodity prices on the move, led by oil above $35 per barrel. They see the United States following in their footsteps of yesteryear. Now is a time to BUY gold, not get rid of it on the cheap to the Chinese, Russians, Arabs, and Indians. * For years there has been a pro-gold faction in Germany that might have been held in abeyance. Perhaps, with the sharp rise in the gold price, the pro-gold faction believes that it is time to make its move. As GATA consultant James Turk has repeatedly pointed out over the years, there is a very serious question whether half of Germany's gold is already gone through leasing and swapping schemes. Bundesbank gold sales now may be nothing more than an accounting gimmick to write off the gold the bank knows it cannot retrieve without sending the price through the roof. It could just be that the five recalcitrant Bundesbank board members are outraged that Germany could its valuable gold be given away and want to put an end to the matter. We will hear a lot more about Bundesbank gold in the months to come. * If Bundesbank's pro-gold faction wins out (and it appears to be in the lead), it should have an effect on other Western central bankers and cause them to rethink their gold sale and lending policies. Many of these bankers are like sheep. Turn one of the leaders and many more could follow. * There is a good chance that the brilliant efforts of GATA supporter Ferdinand Lips are paying off dramatically. Just before Christmas Lips distributed 500 copies of his book, "The Gold Conspiracy" -- the German text of what has been published in the United States as "Gold Wars" -- with a personal letter to the most important political and financial leaders in Switzerland. Lips has worked for years to expose the manipulation of the gold price and the folly of Western central bankers who are dumping gold. * And yes, GATA's five-year effort to do what Lips has been doing may be paying off in Germany too. We have received much feedback over the years that our message has been heard by a number of influential Germans. Fiat vs Gold -- Sharefin, 20:10:36 01/18/04 Sun Sell oil for gold, Mahathir tells Saudi Arabia JEDDAH, Saudi Arabia, Jan 18 (Reuters) - Former Malaysian Prime Minister Mahathir Mohamad said on Sunday that Saudi Arabia should sell oil for gold, not dollars, to avoid being "short-changed" by a decline in the U.S. currency. "The price of oil is $33, but the U.S. dollar has declined by 40 percent against the euro so you're effectively getting $20," Mahathir told an economic conference in Saudi Arabia's Red Sea city of Jeddah. "So you're being short-changed." Saudi Arabia, the world's biggest oil exporter, has justified higher world oil prices by saying they are necessary to compensate for the slide in the U.S. currency. Mahathir, who retired last October, spent much of his time in office upsetting Western governments and defying their economic orthodoxies. But he became a respected spokesman in Islamic and developing states and received an ovation in Jeddah. He suggested countries tally their total annual imports and exports and settle the difference at the end of the year in "gold dinars". Sounding a discordant note, Mahathir also warned Saudi Arabia against rushing to join the World Trade Organisation (WTO), saying it was not necessarily a positive move. |
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