Gold -- Sharefin, 21:29:29 10/15/06 Sun US ponders market manipulation Markets have been moving in directions favourable to the Bush regime Conspiracy theories have become the normal tittle-tattle of the financial markets. But ahead of the US mid-term elections on November 7, the blogging rants and radio phone-in hysteria have reached a pitch of intensity. Are the commodities and securities markets being manipulated? Pre-election paralysis on the part of the US Federal Reserve is not unusual. Yet you do not require a suspicious mind to wonder whether smoothing and intervention may be happening on a bigger scale than normal. President George Bush and the Republican Party are under pressure. The US army's body count in Iraq is reaching unacceptable levels, let alone the death toll of locals. At home there are fears the country is heading for a serious recession. If the Republicans lose control of Congress, let alone the Senate, the lame duck tail-end of Bush's second term could be calamitous. The long-run economic problems are nothing new. Although growth has been excellent, inflation has been running well above target and with the balance of payments deficit being so large, the dollar is in continual danger of tanking. Personal savings are nil and the US is, in effect, being financially supported by China. Until the summer, the trends appeared ominous. The Fed was raising short rates and inflation was climbing. The price of crude oil stopped short of $80 a barrel. Sales of new homes were dropping off a cliff. Then, as if by magic, everything changed. The oil price went into reverse, tumbling to under $60 with favourable implications for the Consumer Price Index measure of inflation – although not for the core rate, excluding energy. Similarly, the gold bullion price – an indicator of the potential fragility of the dollar exchange rate – has crashed from its early summer high. The Dow Jones Average two weeks ago advanced to a high, at last beating the bubble top in January 2000. However, the housing market poses perhaps the biggest threat. On some measures, US residential property inflation has turned negative on a year-on-year basis. The bubble is bursting. It is hard to see how the American government could manipulate home values. And yet long treasury bond yields have been falling for weeks. This is significant because the 30-year fixed mortgage rate has tumbled 50 basis points since touching a peak of 6.8% in July. Mortgage refinancing, which can revitalise the spending power of US consumers, has begun to pick up in volume. Confident consumers are more likely to vote for the party in power. However, the pattern is curious. Most markets have been moving in directions favourable to the Bush regime. Perhaps bonds and commodities have been anticipating a recession. But then why has the equity market climbed? Conspiracy theories have abounded since Hank Paulson, boss of Goldman Sachs, was nominated in May to become treasury secretary. He had no political qualifications but a powerful reputation as a market fixer. Was he brought in to shore up the financial and commodities markets ahead of the poll? Goldman Sachs has enormous market power: soon after Paulson's transfer to Washington, it achieved annual records for revenues and earnings. It is big in commodities. Strangely, in August, it cut the weighting of lead-free petrol in its influential GSCI commodities index. Since June, the weighting has been rolled back from 8.7% to 2.3%. Perhaps this was related to questions of market liquidity. Analysts argued, however, that this reallocation triggered a sale and a sharp price reduction, as index trackers – running $60bn in commodity funds – cut their exposures to the new level. Other cynical observers ask whether the US has been manipulating its strategic oil reserves stored underground in Louisiana. It ceased to top them up last April but there has been no attempt to dump crude on the markets. The gold bullion price is controversial. Why has it slumped when global economic growth remains strong and inflation is running above target in Europe as well as the US? Gold bugs are seizing on the public admission this month by Bundesbank president Axel Weber that, although his institution was not a seller of gold, he had been asked by central banks to release reserves through swap deals – presumably so that they can sell borrowed gold and push the price down further. The Fed, acting on behalf of the US treasury, is regarded as the prime suspect. After all, European central banks are not keen sellers of bullion: they fell more than 100 tonnes short of their 500 tonnes annual selling limit under the Washington Agreement, in the year ended September. Intervention by governments in markets is not unusual. A “plunge protection team” of top officials has been used occasionally by the US authorities to stabilise securities markets. Governments regard it as normal to manage currencies, including gold, in that category. The US treasury has an Exchange Stabilisation Fund, the activities of which are kept under wraps. It would be irregular, though, if such techniques were to be used to pursue political objectives. The temptation to put two and two together and make five should be resisted, however. Financial markets often behave abnormally when confronted with an uncertain political outcome. The Bush government may have been drawing on legitimate political favours, such as from the Saudis and possibly the Chinese. Post-election responses by the markets may tell us something. If the Republicans perform well but markets tumble, we will draw conclusions about intervention.  Gold -- Sharefin, 22:26:28 10/09/06 Mon SA gold production declining 5% annually South African gold production fell from 430 tonnes in 2000 to 295 tonnes in 2005 as lower grades of ore are mined and reserves are seen to be being depleted, and the country is soon likely to be overtaken as the world's largest producer of the yellow metal. Production will see an annual decrease of 5% over the next few years as new projects will not succeed in replacing continued falling production at existing mines, says Alex Conradie, chief economist of gold and platinum group metals at the Department of Minerals and Energy. The biggest recent drop in South African gold production took place from 2004 to 2005 when output fell by 12%. The majority of gold mines in South Africa are projected to cease producing gold over the next 10 to 20 years, while the ultra-deep South Deep mine on the West Rand of Johannesburg has the longest projected life span of 60 years. Fiat -- Sharefin, 11:54:18 10/05/06 Thu Calgary trader, 32, among world's best Canada's top-earning trader doesn't work on Toronto's Bay Street or for one of the big banks. Instead, he rocks the world's natural-gas markets from his hometown of Calgary, according to the just-released Trader Monthly ranking of best-paid traders. Brian Hunter, 32, raked in an estimated US$75-million to US$100-million in 2005, good for a share of 29th spot in Trader Monthly's annual ranking. Mr. Hunter generated US$800-million in profit for his employer, Amaranth Group Inc., making him one of the world's top natural-gas traders, the magazine reported. ~~~~ Top 10 traders & their yearly income....... 1. T. Boone Pickens, 77 Firm BP Capital Income* $1.5B+ 2. Stevie Cohen, 49 Firm SAC Capital Income US$1B+ 3. James Simons, 67 Firm Renaissance Technologies Corp. Income US$900M-US$1B 4. Paul Tudor Jones, 51 Firm Tudor Investment Income US$800M-900M 5. Stephen Feinberg, 46 Firm Cerberus Capital Management Income US$500M-600M Bruce Kovner, 61 Firm Caxton Associates Income US$500M-600M Eddie Lampert, 43 Firm ESL Investments Income US$500M-600M 8. David Shaw, 55 Firm D.E. Shaw & Co. Income US$400M-500M 9. Jeffery Gendell, 46 Firm Tontine Partners Income US$300M-400M 10. Louis Bacon, 49 Firm Moore Capital Management Income US$300M-350M Stephen Mandel, 50 Firm Lone Pine Capital Income US$300M-350M * Income figures are estimates Source: Trader Monthly Gold -- Sharefin, 05:50:30 10/05/06 Thu Bank gold sales set to moderate CENTRAL banks had become moderate sellers of gold, and were unlikely to renew a cap on sales once the existing Central Bank Gold Agreement (CBGA) expired in 2009, said GFMS, a UK-based metals consultancy. Central banks were also tipped to sell less gold than the 2,500 tons over five years stipulated in the CBGA, it said. However, GFMS said there had not been “a major policy shift” in central bank attitudes towards gold as a reserve asset. “We are perhaps on the threshold of an era of more moderate net official sector selling,” it said. ~~~ The first CBGA was an attempt to limit significant official sector disinvestment from gold in the late nineties, controversially led by the Bank of England which sold about 400 tons – half if total gold reserves - at prices as low as $261/oz. Seven years after the Bank of England's first public auction, gold is currently trading at $565/oz. In the first two years of the current CBGA, about 909 tons of gold has been sold with France selling 256 tons as part of its proposal to disinvest 500 to 600 tons. Germany also announced plans to sell 600 tons but has not sold any gold because it can't yet agree what to do with the proceeds. However, even if Germany were to sell its 600 tons, the CBGA signatories would be hard pressed to meet the 2,500 ton ceiling, GFMS said. “Given that last year's sales fell short of their annual quota, we are now quite sure that the 2,500 tons limit cannot be achieved,” said GFMS in a report. ~~~ Changes in the gold market also suggested that the renewal of the CBGA after 2009 was unlikely. Gold -- Sharefin, 05:19:41 10/05/06 Thu Gold Council to Offer Bullion-Backed Shares in Asia The World Gold Council, a producer group supported by the biggest miners of the precious metal, will sell securities backed by the bullion in Singapore from Oct. 11, the first such offering in Asia. The securities, known as an exchange-traded fund, are similar to those traded on the New York Stock Exchange, and will also be called StreetTracks Gold shares, the London-based council said today. Each share on the Singapore Exchange will represent one-tenth of an ounce of gold, and enables a holder to trade the commodity without taking physical delivery of it. ~~~ The launch ``will increase demand for gold, and it will bolster gold prices,'' said Ellison Chu, manager for the bullion desk at Standard Bank Asia Ltd. in Hong Kong. ``It's more convenient and easier for individual investors'' to trade shares in such a fund than to own the metal. ~~~ `Gold Affinity' ``There is a long history in terms of gold affinity in the Far East,'' said James Burton, the council's chief executive officer. The shares would appeal to investors who wanted to have gold in their portfolio, but didn't own it, he said. ~~~ The size of the assets linked to the nine other gold exchange-traded funds in the world, six of which are owned by the council, is about $11 billion, Burton said in an interview. ``We didn't think that we'd have $9.5 billion in three years,'' he said, referring to the council's funds, while declining to forecast future growth rates. The council launched its first gold exchange-traded fund in Sydney in April 2003. After next week's launch, these securities may also be launched in other Asian countries, including China, he said. ``There will be a time when we go to China,'' he said. ``We need to keep contact with the market there, and then decide when the time is right.'' ---------- US$11 Billion or approx 18 million ounces or 570 tonnes of gold or 20% of a years production. Not so much of a big deal so far. Gold -- Sharefin, 05:00:40 10/05/06 Thu Barrick says restricted supply supporting gold price Barrick Gold Corp., the world's biggest producer of the precious metal, said ageing mines are restricting gold supply and supporting prices. Global output may drop as mines age further, Gregory Wilkins, the chief executive officer of the Toronto-based company said on Thursday in notes made for a speech in Melbourne. Wilkins is “bullish” on the gold price, the notes said. Soaring exploration costs have prompted gold miners including Barrick, which paid $10 billion to buy Placer Dome Inc. in March, to seek acquisitions to expand production. World mine output fell 1,5 percent in the first half of 2006, led by South Africa, Australia and the US, Wilkins said without giving a figure for last year. “The rate of decline may increase given the age of the producing mines, costs and challenges to new developments,” Wilkins said. “Simple economics says a decreasing or flat gold supply means good news for the gold price.” Gold output this year is forecast to be 2 524 metric tons, little changed from last year, the company said. Annual mine production has been little changed at 2 500 tons for the past 10 years, according to GFMS Ltd  Gold -- Sharefin, 03:10:06 10/04/06 Wed Unearthing India's glittering stockpile If the women and temples of India were to sell every ounce of the 15,000 tonnes of gold they collectively possess, they could buy Citigroup at a 17 percent premium to the bank's market value. Of course, it won't happen, and not just because selling 10 percent of the world's above-ground stock of yellow metal would depress the price so much that the sale proceeds would not be enough to buy the world's biggest financial-services company. The reason that the idle wealth of India is not put to a productive use is a combination of economics, demographics, inheritance laws and a deeply rooted cultural affinity for gold. With the onset last week of the annual Hindu festival season, a busy period for jewelry purchases, bullion prices have started climbing, increasing the cost of what is already a colossally wasteful national habit. Financial innovation is needed, not to prompt Indian families to sell their grandmothers' bracelets - they will only do that to make a new pair of earrings - but to make better use of the money that is coming into precious metals either to speculate or to hedge against a drop in the value of paper money. Indian Prime Minister Manmohan Singh wants US$150 billion (HK$1.17 trillion) of overseas investment in roads, ports and power stations. With the government last week announcing 8.9 percent economic growth in the quarter ended June 30, bankers are forecasting industrial credit requirement at US$175 billion over the next three years. Most of this money - US$290 billion at the current gold price of more than US$600 an ounce - is already in India, lying in bank safe-deposit boxes, earning nothing. But far from channeling the gold into the financial system, households are spending more of their current incomes on adding to their hoard. India is the world's largest consumer of gold by volume, with average annual demand of 676 tonnes during the past decade, three times more than in China. Gold futures rose 3 percent in New York over the past two weeks as Indian jewelers began stocking up. Price alone does not deter Indian buyers. As the World Gold Council's recent research shows, when the precious metal became steadily more expensive from 2002 to 2005, Indians bought more of it. Demand for the yellow metal in India ebbs only when the price fluctuates too wildly, as it did in the first half of this year. ~~~ In the interim, jewelry demand may keep increasing as the economy and disposable incomes grow rapidly. Gold may also benefit from India's youth bulge. With two-fifths of the current population - or more than 450 million people - aged 19 years or younger, there won't be a dearth of marriages over the next couple of decades. Gold -- Sharefin, 07:38:11 09/17/06 Sun Gold ETF guidelines to be announced shortly Mumbai, Sept. 16 : Market regulator SEBI is busy giving finishing touches to the long-awaited detailed guidelines on the Gold Exchange Traded Fund (ETF), which will allow retail investors to buy and sell gold like units of mutual funds. ~~~ India will be the fourth country to have ETF in Gold after South Africa, the US and Australia, he said. ------- More Fiat Gold...^O-O^... Fiat -- Sharefin, 07:34:16 09/17/06 Sun Rigging the Market; the secret maneuverings of the Plunge Protection Team The Plunge Protection Team is a working group of high-ranking officials from the Dept. of the Treasury, Wall Street, and the Federal Reserve. Its purpose is to establish the protocols for preventing another incident similar to the stock market crash of 1987. In the event of a steep decline, the team is prepared to buy large amounts of equities in an effort to stabilize the market. Some people believe that the government has no right to interfere in the activities of “free markets”. Others think it is a prudent way of staving off economic collapse. Still others believe that the intrusion of government, aided by the privately-owned Federal Reserve and the NYSE, naturally favors the larger institutional investors and creates an uneven playing field for small investors. Whatever side one is on, it is proof-positive that “free markets” are merely a public relations myth with no basis in reality. The preservation of the system takes precedent over the lip-service to ideology; the “invisible hand” will always be overpowered by the manicured and mettlesome fingers of banking elites and Wall Street big wigs. This is their system and they're not going to let it be obliterated by some foolish commitment to principle. The Plunge Protection Team was first uncovered in comments by Clinton advisor, George Stephanopoulos on Good Morning America on Sept 17, 2001. Here's what Stephanopoulos said: “Well, what I wanted to talk about for a few minutes is the various efforts that are going on in public and behind the scenes by the Fed and other government officials to guard against a free-fall in the markets….perhaps the most important the Fed in 1989 created what is called the Plunge Protection Team, which is the Federal Reserve, big major banks, representatives of the New York Stock Exchange and the other exchanges and they have been meeting informally so far, and they have a kind of an informal agreement among major banks to come in and start to buy stock if there appears to be a problem. They have in the past acted more formally… I don't know if you remember but in 1998, there was a crisis called the Long term Capital Crisis. It was a major currency trader and there was a global currency crisis. And they, with the guidance of the Fed, all of the banks got together when it started to collapse and propped up the currency markets. And, they have plans in place to consider that if the markets start to fall.” Stephanopoulos comments are hardly shocking. They simply underscore the fact that “deregulation” has created an economic monster which requires more and more tinkering from the stewards of the system. Without the stopgaps provided by the Plunge Protection Team and the actions of similar organizations which forestall business bankruptcies, (bailouts) the whole over-leveraged system would quickly crash and burn. The irony is that the same corporate kingpins and banking moguls who've benefited the most from removing the rules for prudent investment are now trying to create a safety net for when it inevitably begins to unravel. It won't work. The numbers are too large. Trillions of dollars are presently held in shaky hedge funds and derivatives markets. If the market takes a steep and sudden downturn, there's nothing anyone will be able to do. Gold -- Sharefin, 05:26:51 09/14/06 Thu Hi Cyclist We're heading for the ultimate buy before the next MAJOR rally.   Gold -- Sharefin, 05:24:05 09/14/06 Thu Understanding the Gold Bull The current gold bull market, like the gold bull markets that came before it, is about falling confidence in the currency of the realm, which is, in turn, linked to falling confidence in central banks and governments (the purveyors of the official currency). Falling confidence in the official money, falling stock market valuations and the increasing purchasing power of gold are all part and parcel of the same trend, and once a major trend begins with relative valuations at one extreme it will continue until relative valuations reach the opposite extreme. When, during 1999-2001, the S&P500's P/E ratio reversed lower after reaching an all-time high and the gold price reversed higher after reaching an all-time low (in real terms) it became inevitable that new trends lasting at least 10 years had begun. Furthermore, there is no chance that government manipulation can prevent these trends from running their course. Empirical evidence that this is so was provided during the 1970s when concerted attempts by governments to stem the rise in the gold price failed dismally despite the fact that the official sector controlled a much larger proportion of the aboveground gold stock then than it does today. During 10-25 year secular bull/bear markets there are shorter cycles that may or may not be consistent with the longer-term trends. In this regard, the cycle that began around this time last year is, in some important respects, a deviation from the long-term trend even though it has featured a rising gold price. Over the past year the gold price has not been driven higher by a general decline in confidence, but, instead, by a rising sea of liquidity that has also pushed many other prices upward. At least, this is our view and it is a view that is consistent with a) gold's poor performance relative to most industrial metals, b) the substantial narrowing of credit and yield spreads, and c) the concurrent sharp rises in the prices of investments that normally aren't positively correlated. - Timeless comments by Steve Recovery start end of the week -- Cyclist, 14:20:35 09/11/06 Mon Slaughter fest in the gold arena,bounce for two weeks till the end of September.Be prepared for a major move down and for gold to hit 475-500 depending of the bounce starting end of the week. All FWIW Gold -- Sharefin, 06:51:47 09/05/06 Tue India set to be world's gold hub India, world's largest importer gold with over 800 tonnes of imports, is set to become a global hub for the precious metal. "The government is taking and will continue to take all possible measures aimed at making India the gold hub of the world," Company Affairs Minister P C Gupta told a global gold summit organised by Assocham. Till last year, India did not figure as a major trading center of gold and silver in the international market despite being the world's largest importer and exporter of value added jewellery items, he said. With commencement of future trading in gold, the scenario appears to be changing, Gupta said adding India thus is no longer be looked as a price taker or price seeker of the gold. As per estimates of World Gold Council, the annual Indian demand for the precious metal in recent years has been over 800 tonnes, most of which is used for fabricaction, he said adding, "we, therefore, have the potential of becoming a price-setter in the international market." Gold -- Sharefin, 08:57:31 08/24/06 Thu Ruff Roars Ruff is the third-ranked performing investment letter over the past 12 months, according to the Hulbert Financial Digest, up 61.47 % in a period during which the Dow Jones Wilshire 5000 has gained only 5.43%. ~~~ Ruff has summarized his current investment stance succinctly: "Investment vehicles to avoid: Stocks, bonds, fixed-return investments like utilities, REITs, residential real estate, ARMS (adjustable rate mortgages). Investment winners in bull markets: Gold, silver, copper and other base metals, uranium." Simply put, Ruff just appears to think we've gone back to the 1970s. He writes: "Gold and silver are now early in a historic bull market that will dwarf the 500-1700 % profits we made in the '70s. Gold will hit at least $2,172 and $100 silver is inevitable." (These are Ruff's calculations of the metals' 1980 peaks adjusted for inflation). Despite his gold bug background, Ruff claims this is a big change for him. He wrote recently: "I didn't recommend gold or silver in the Ruff Times for 22 years, until December 2003. We sold gold at $750 and $35 respectively in 1980, just two weeks before the high." ~~~ Instead, Ruff writes: "The most powerful, completely essential factor affecting gold is monetary inflation ... the most compelling force affecting silver today is the supply/ demand equation ..." Gold -- Sharefin, 04:20:15 08/24/06 Thu Bundesbank rejects gold reserves selloff Frankfurt - Bundesbank president Axel Weber yesterday ruled out the use of Germany's huge gold reserves to help fill gaps in the federal budget. Asked by Bild, the mass-circulation daily, whether the German central bank could simply sell some of its gold to plug the gaping holes in the budget that the government wants to fill by means of an increase in valued added tax, Weber replied: "You can't be serious." The Bundesbank chief continued: "Such one-off measures are never a good idea. Drawing on capital is not an alternative. It is better to press ahead with consistent debt reduction. And here a lot can be done on the spending side." Germany has 3 428 tons of gold, worth about E54 billion (R489 billion) at current market prices, making it the second-largest holder of gold reserves in the world after the US. In addition, it has E28 billion in reserves of foreign currencies, such as the dollar and the yen. The issue of what to do with such massive reserves has frequently led to tension between the government and the central bank, with politicians calling for the sale of some of the gold, particularly in view of recent rises in the gold price. But the Bundesbank has long opposed such requests, not least because a sale could be seen as a sign that it is vulnerable to political pressure. Weber told the Bild that the Bundesbank was not opposed in principle to a sale of some of the gold. "I could imagine shifting some of our reserves from gold into foreign currency," he said. "But we don't want to tap into Germany's currency reserves. Gold is part of Germany's currency reserves, of which we are the guardian. They are an important factor behind confidence in the stability of the euro." Fiat -- Sharefin, 21:48:49 08/20/06 Sun Stagflation in control of world economies especially in America and Europe Stagflation is in control of world economies especially in America and Europe. The new term to watch is hyper-stagflation where economy registers less than one percent growth while inflation goes way above 5% and even 10%. The US dollar and European currencies will depriciate against gold rapidly in that environment. Jobless recovery will tun into job-depleting recession with escalating commodity prices. Federal reserve will lose control over the interest rate as the yield curve flattens out. Stock markets and corporate profits will collapse because rising material input prices, stagnating productivity rise and lack of buying power of the consumers totally submerged in debt. Fiat -- Sharefin, 21:24:35 08/20/06 Sun Updated Summary of Current Outlook Due to the inability of the government or central bank to stabilize this environment, risks of the current situation evolving into a hyperinflationary depression are extraordinarily high. Such a development involving the world's reserve currency would lead to a collapse of the current global currency system. In order to regain public confidence, monetary authorities likely would structure gold into the base of any new international currency system. The unfolding inflationary recession is the worst of all worlds for the financial markets. Particularly hard hit will be the U.S. dollar, with significant downside moves looming for both equity and bond prices. Despite recent extreme volatility, the price of gold is headed much higher. At such time as the system re-stabilizes, post-crisis, there will be exceptional investment opportunities for those who have been able to preserve their wealth, capital and liquidity. MARKETS PERSPECTIVE The key financial markets remain in "transition" and are anticipating lower inflation and interest rates, and stronger corporate profit performance, than will come to pass. In terms of the broad financial market picture through year-end, the U.S. dollar should sell off sharply on a trade-weighted basis, particularly against the Swiss franc. As a partial result of the mounting dollar and inflation difficulties, the domestic yield curve will turn positive and steepen sharply, due particularly to rising long-term interest rates. The combination of the weak dollar and higher rates should not play out happily among equities. Concerns tied to the dollar, inflation and global instabilities suggest an upbeat year-end for the precious metals. As to Federal Reserve policy, dollar and inflation woes are good bets to trigger renewed hikes in the targeted federal funds rate, before 2007. What drives present-day Fed policy is an effort to avoid -- at least to delay as long as possible -- a global financial panic and currency-system collapse. As with the recent "pause" in rate hikes, the Fed's actions are designed to placate the financial markets as much as possible and do not encompass a planning horizon much beyond a week or two. Accordingly, the Fed most likely will focus on the dollar as a policy guide, resuming rate hikes when they are deemed necessary to keep the dollar from entering freefall. Equities -- The stock market continues to prove that it is the least rational of the financial markets, with the Dow Jones Industrial Average moving to a three-month high as we go to press. Other than as something of a mirror of excessive inflation, stock prices are relatively strong despite underlying fundamentals that are miserable. The economy remains in an inflationary recession, and that concept has started to gain recognition among a growing number of analysts. Implications are for declining corporate profits and competing investment opportunities in the credit market as interest rates rise. With a terrible dollar tumble ahead, investment opportunity competition also will be had from assets denominated in something other than U.S. dollars, as well as from gold. Once again, fall is approaching, and the squirreling season is almost upon us. I once retained a mass psychologist in an effort to explain why stock market crashes tended to take place in October and November. His answer was that humans had a vestigial squirreling instinct. As the squirrels start gathering acorns for the winter, so too do investment strategies among humans sometimes go through a shift. When the dollar takes its major tumble, and foreign holdings of dollar assets get dumped at a near-panicked rate, the ensuing U.S. liquidity crisis should be enough to take stock prices to relative levels that only could be viewed as nightmarish by the Pollyanna crowd. Such could happen anytime, with no warning; the current circumstance also could linger beyond year-end. Gold -- Sharefin, 20:43:40 08/20/06 Sun European banks may miss gold target Europe's central banks are expected to sell only about three-quarters of the full quota of 500 tonnes of gold in the second year of an agreement that regulates bullion sales, analysts said. ~~~ Europe's Central Bank Gold Agreement (CBGA) was negotiated in 1999 to stabilise prices when gold was languishing below $US300 because of the attraction of other investments. The pact, agreed in 2004, raised the limit on gold sales by its 15 signatories over five years to 2,500 tonnes at a rate of 500 tonnes a year, from 2,000 in the previous 1999-2004 period. The banks sold the full quota of 2,000 tonnes during five years of the first agreement and 497.2 tonnes in the first year of the current pact. "According to the data released, the signatories have sold around 338 tonnes up to last Friday. This would not include any forward sales, which have not yet matured," Jill Leyland, economic adviser to the World Gold Council, said. Gold -- Sharefin, 21:38:00 08/08/06 Tue The Midas Bug -- the bacterial alchemy of gold Bacteria play an important role in the formation of gold nuggets in Australia according to new research published this month in the international journal Science. Dr Reith's research has shown that bacteria play a significant role in the formation of secondary gold grains. His study of gold grains from the Tomakin Park and Hit or Miss gold mines in southern New South Wales and northern Queensland, respectively, led to a series of discoveries, which showed that specific bacteria present on these gold grains precipitate gold from solution. "The origin of secondary gold grains is a controversial topic that is widely debated within the scientific community," Dr Reith said. "There are those who believe the grains are purely detrital, while others believe they form by chemical accretion. "A third theory suggest that microbial processes are involved in gold grain formation which may be responsible for one of the largest gold deposits in the world, the Witwatersrand deposit in South Africa." Applying molecular biology techniques, Dr Reith discovered a living biofilm on the surface of gold grains collected. DNA profiling of this biofilm identified 30 bacterial species with populations unique to the gold grains when compared to the surrounding soils. One species was identified on all of the DNA-positive gold grains from both locations. DNA sequence analysis of this species identified it as the bacterium Ralstonia metallidurans. "The next step was to see if we could observe gold precipitation in the presence of a culture of this bacteria," Dr Reith said. "By placing a culture of the R. metallidurans in the presence of dissolved gold, which is highly toxic to microorgansims, I observed active gold precipitation. "A unique attribute of R. metallidurans is that it is able to survive in concentrations of gold that would kill most other micro-organisms." This research has significance for the mineral exploration industry – as current models of gold formation do not include a biological mechanism. "There may be new opportunities for the bio-processing of gold ores now that we have discovered bacteria that precipitants gold out of solution," Dr Reith said.  Gold -- Sharefin, 22:26:33 07/14/06 Fri Bulls bet on gold to top $1,000 A sudden surge in demand for gold options cashable at over $1,000 an ounce is the clearest sign to date that hedge funds and savvy traders are betting on a big rise in bullion prices. UBS said investors had begun to show keen interest in "call" options to expire in December with strike prices of $1,000 an ounce and above. The bank said buyers had even emerged for options dated late 2007 with a strike price of $2,500. John Reade, the bank's precious metals strategist, said: "Clearly some options traders are positioning themselves for very large moves higher." Fiat -- Sharefin, 08:27:24 07/06/06 Thu Henry Paulson and the Five Circles of Economic Hell As onerous as they are, the deficits described in Circle Three, above, constitute only a small fraction of the total indebtedness of the U.S. economy. The official “national debt” is approaching $9 trillion, as noted, a substantial figure, to be sure. But the government's “unfunded liabilities”—obligations it has committed to pay but for which there is no known source—are estimated at an incomprehensible $58 trillion. Add in revolving consumer debt, mortgage debt, and corporate debt, and the nation's total obligations exceed $90 trillion, more than seven times GDP. At the time of the 1929 stock market crash, total debt stood at two times GDP. These obligations will never be paid. The reason is that the job drain from the U.S., while it looks like a torrent now, is still only a trickle. Though the U.S. won the Cold War, it is rapidly losing the Cold Peace, which began when China ended its communist isolation and joined the world market. The average wage in China is $.57 per hour. China has more than half a billion workers meaning the drain of good jobs from the U.S. to China can go on indefinitely—and will. Alan Blinder, a Princeton economist and former Governor of the Federal Reserve Board, has estimated that as many as 56 million U.S. jobs are susceptible to outsourcing of the sort that has already dealt such damage to U.S. incomes. But this is exactly what Bush and Paulson and their fellow “conservatives” intend. This is the magic of “globalization” that the Heraldic voices of Thomas Friedman and others eulogize as inevitable. Globalization means liberating capital from all obligations to national well being, freeing it to pursue only the highest returns it can find, no matter where they may lie. That means seeking out the lowest paid labor and shifting all possible jobs there. That is China. Or India. The U.S. worker and the U.S. economy will be left to their own devices. All social safety net systems must be dismantled for, given the colossal debt, they can no longer be afforded. These include welfare, unemployment and disability insurance, pensions, health care, Medicare, Social Security, job retraining, and eventually, education. The U.S. is a high cost economy in a world where, when capital is perfectly mobile, low cost wins. If capital is to be honored, then the U.S. must be ballasted, abandoned, in the way the British economy was in the aftermath of World War II. It will be milked of its remaining assets—that is what the huge run-up in debt is intended to do—and then thrown away. The only government programs of substance that will be maintained will be police and military systems. The Patriot Act, with its massive recissions of civil liberties, is not so much directed at foreign terrorists as it is at future domestic dissidents, citizens who dare confront these putative inevitabilities with demands for democratic (as opposed to capitalist) recourses. The military, of course, is needed to carry out the nakedly colonial expropriations such as Iraq that remain the last hope of America to compete in the world: by controlling the oil, the substance without which no industrial civilization can operate. Paulson's job, then, is to arrange the write down of debt that must accompany the effective bankruptcy of the U.S. He will have to promise an IMF-like fiscal austerity to foreign lenders to keep the funding flowing until there is nothing left to take. This will mean draconian cuts in social spending, no tariffs, and the removal of all remaining controls on the mobility of, and returns to, capital. The dollar will be precipitously devalued with the consequence of massive inflation and stratospheric interest rates. These will only accelerate the decline. A new international reserve currency, based on a basket of currencies including the Euro, the Yen, the Chinese Yuan, and the dollar, will be devised. Gold -- Sharefin, 05:57:58 07/06/06 Thu Chinese reserve diversification buzz grows louder BEIJING (Reuters) - The opening of an office in Shanghai to help manage China's foreign exchange reserves could accelerate its long-awaited diversification into assets such as gold and overseas equities, economists said on Tuesday. Calls for China to wring higher returns from its hoard, believed to be invested mainly in low-yielding government bonds, are rising almost as quickly as the reserves, which an official newspaper has said swelled $30 billion in May to $925 billion. Xia Bin, head of the financial research institute of the Development Research Center, a cabinet-level think tank, joined in the chorus on Monday, saying China should both set up an international investment fund and increase its gold holdings. ~~~ He Fan, an economist at the Chinese Academy of Social Sciences, a top government think tank, said he was in favor of China owning more gold. He said it now had some $12 billion in bullion, about 1.3 percent of its reserves, a proportion also cited by central bank officials. "I think the authorities must have realized the need to raise gold reserves, but the problem is how to achieve it," he said. China's domestic gold output was too small to allow China to add significantly to its 600 tonne holding, while purchases on the open market would be impossible to keep secret. "I think it's appropriate to increase the proportion to 10-15 percent to match that of some European countries. But that will translate into large demand for gold, which could push bullion prices up sharply on the international market," He said. ~~~ For that reason, Wang at Bank of America said he expected China to increase its gold holdings slowly and perhaps hide its hand by buying through the State Reserve Bureau, which manages China's stocks of strategic materials, or other state companies. "Such transactions may not be reflected on the central bank's balance sheet," he said. Green at Standard Chartered speculated that the bank had indeed already been buying surreptitiously. He said the markets were awash with rumors that the central bank's gold holdings were much greater than the published total, which has not changed since the end of 2002. Silver -- Sharefin, 01:46:11 07/02/06 Sun Here's the stats showing the largest moves in silver - up & down - in price & percentage. The same can be said for silver as for gold - expect more volatility & extreme moves ahead. Viva La Bull!!! 30 largest dollar upmoves: 12/27/1979 2.04 04/28/2006 1.04 01/07/1980 1.025 01/02/1980 1.025 09/22/1980 1.025 10/06/1980 1.025 01/21/1980 1.02 02/11/1980 1.02 01/14/1980 1.02 12/31/1979 1.015 02/08/1980 1.01 01/15/1980 1.01 02/29/1980 1.01 02/05/1980 1.01 01/10/1980 1.01 12/18/1979 1.01 09/16/1980 1.01 04/08/1980 1.01 01/18/1980 1.005 01/17/1980 1.005 01/16/1980 1.005 02/07/1980 1.005 02/06/1980 1.005 01/11/1980 1.005 01/04/1980 1.005 01/03/1980 1.005 12/28/1979 1.005 09/11/1980 1.005 09/09/1980 1.005 05/02/1980 1.005 30 largest dollar downmoves: 04/20/2006 -1.99 06/13/2006 -1.44 04/24/2006 -1.19 10/20/1987 -1.025 04/30/1980 -0.995 06/11/1980 -0.995 06/10/1980 -0.995 01/24/1980 -0.995 01/23/1980 -0.995 12/11/1980 -0.99 04/03/1980 -0.99 03/27/1980 -0.99 03/21/1980 -0.99 03/18/1980 -0.99 03/11/1980 -0.99 01/25/1980 -0.99 01/22/1980 -0.99 02/28/1983 -0.99 04/02/1980 -0.99 03/28/1980 -0.99 03/25/1980 -0.99 03/19/1980 -0.99 03/14/1980 -0.99 03/13/1980 -0.99 02/20/1980 -0.99 03/07/1980 -0.99 03/01/1983 -0.985 03/31/1980 -0.985 03/26/1980 -0.985 03/20/1980 -0.985 30 largest percentage upmoves: 03/30/1995 9.61% 06/29/1982 8.64% 04/28/2006 8.34% 03/19/1985 8.15% 12/27/1979 8.05% 07/19/1988 7.96% 05/02/1980 7.96% 12/10/1997 7.71% 09/28/1999 7.46% 08/18/1982 7.38% 07/08/1982 6.78% 08/20/1982 6.74% 09/10/1987 6.68% 04/25/2006 6.67% 04/20/1987 6.65% 04/17/1995 6.49% 05/06/1994 6.46% 09/02/1982 6.40% 06/02/1988 6.36% 07/20/1982 6.34% 03/07/1983 6.27% 04/08/1980 6.27% 09/02/1987 6.20% 04/14/1987 6.15% 02/12/1997 6.11% 04/23/1987 6.09% 09/19/2001 6.08% 08/02/1982 6.05% 05/04/1987 6.05% 06/02/1980 6.00% 30 largest percentage downmoves: 04/20/2006 -13.75% 06/13/2006 -13.01% 10/20/1987 -12.15% 04/21/2004 -11.13% 12/08/2004 -9.38% 04/24/2006 -9.18% 08/05/1993 -9.13% 05/09/1995 -9.00% 08/07/1987 -8.22% 03/01/1983 -8.17% 04/27/1987 -8.08% 02/28/1983 -7.59% 04/28/1987 -7.56% 07/25/1988 -7.43% 06/14/1982 -7.37% 04/13/2004 -7.22% 03/31/1986 -7.16% 04/30/1980 -6.97% 06/08/2006 -6.85% 07/28/1982 -6.65% 08/27/1990 -6.56% 07/24/1991 -6.55% 03/04/1983 -6.41% 08/09/1982 -6.40% 10/29/1987 -6.37% 02/25/1985 -6.34% 05/15/2006 -6.32% 06/17/1982 -6.28% 06/22/1987 -6.21% 07/07/1997 -6.18% Gold -- Sharefin, 01:41:34 07/02/06 Sun Here's the stats showing the largest moves in gold - up & down - in price & percentage. As you can see the recent volatile moves (up & down) are extreme & compare back to the 1980's when gold was in full flight. Friday's $27.10 rise is the largest upmove since 1980 - also the largest upmove since this bull market began in 1999. Large moves like this are quite often associated with topping patterns but in this case what we are observing is a breakout from a correction within a bull market. This bodes that the future moves up in gold will potentially be volatile & large in nature as we move forwards. Providing that the cabal doesn't attack gold yet again we here have the potential for the prior highs in gold being taken out in short order. Viva La Bull!!! 30 largest dollar upmoves: 01/29/1980 50.3 03/19/1980 50.3 01/17/1980 50.2 01/16/1980 50.2 01/18/1980 44.8 01/15/1980 37.8 12/27/1979 33.1 12/12/1980 28.8 03/28/1980 28.4 03/21/1980 27.1 06/30/2006 27.1 04/07/1980 26 09/28/1999 25.9 09/22/1980 25.8 01/02/1980 25.8 09/08/1980 25.8 01/14/1980 25.7 02/05/1980 25.4 01/03/1980 25.3 02/06/1980 25.3 04/08/1980 25.3 10/11/1982 25.3 10/09/1979 25.2 01/11/1980 25.2 06/27/1980 25.2 07/22/1980 25.2 08/20/1980 25.2 10/07/1982 25.2 03/20/1981 25.2 10/10/1979 25.1 30 largest dollar downmoves: 01/22/1980 -49.6 01/23/1980 -49.6 01/24/1980 -49.6 01/25/1980 -49.5 03/17/1980 -49.1 06/13/2006 -44.3 03/13/1980 -37.1 03/10/1980 -36.4 05/24/2006 -36.2 01/17/1991 -30.6 08/27/1990 -26.8 05/15/2006 -26.8 10/11/1979 -26.4 02/04/1980 -26.3 01/30/1980 -26 09/09/1982 -24.9 02/25/1983 -24.9 06/10/1980 -24.8 07/15/1980 -24.8 07/30/1980 -24.8 01/08/1980 -24.7 03/26/1980 -24.7 03/27/1980 -24.7 10/23/1980 -24.7 12/11/1980 -24.7 01/07/1981 -24.7 09/26/1980 -24.7 11/06/1980 -24.7 12/10/1980 -24.7 02/22/1980 -24.6 30 largest percentage upmoves: 03/19/1980 9.77% 09/28/1999 9.11% 03/19/1985 8.03% 02/04/2000 7.98% 01/29/1980 7.45% 07/09/1982 7.09% 01/16/1980 7.04% 10/09/1979 6.59% 01/17/1980 6.58% 12/27/1979 6.48% 10/10/1979 6.16% 10/07/1982 6.14% 09/02/1982 6.00% 10/11/1982 5.87% 09/03/1982 5.66% 01/15/1980 5.60% 03/28/1980 5.57% 01/18/1980 5.51% 05/18/2001 5.44% 06/07/1982 5.33% 08/18/1981 5.23% 09/27/1999 5.14% 09/14/2001 5.08% 02/13/1975 5.07% 04/07/1980 5.04% 10/01/1979 5.01% 12/12/1980 5.00% 03/02/1983 4.98% 04/05/1982 4.95% 08/26/1982 4.94% 06/30/2006 4.60% 30 largest percentage downmoves: 03/17/1980 -8.81% 01/17/1991 -7.47% 06/13/2006 -7.30% 01/25/1980 -6.78% 01/24/1980 -6.36% 08/27/1990 -6.32% 10/11/1979 -6.10% 03/13/1980 -6.08% 09/02/1975 -5.99% 01/23/1980 -5.98% 03/26/1990 -5.85% 03/10/1980 -5.73% 01/22/1980 -5.65% 08/05/1993 -5.61% 08/27/1982 -5.55% 02/28/1983 -5.38% 05/24/2006 -5.37% 05/31/1983 -5.33% 04/19/1982 -5.28% 02/25/1983 -5.16% 09/24/1982 -5.10% 10/24/1997 -4.99% 09/09/1982 -4.97% 10/04/1982 -4.87% 10/04/1979 -4.86% 09/29/1982 -4.83% 02/22/1983 -4.72% 11/15/1978 -4.68% 03/27/1980 -4.62% 07/15/1976 -4.56% Fiat -- Sharefin, 21:54:14 06/29/06 Thu Richard Russell must have seen the movie America From Freedom To Fascism Coming soon to a movie house near you. Snipped ----- Original Message ----- In his Dow Theory Letter of June 28, 2006, Richard Russell presents below the most concise explanation of the Federal Reserve scam I have ever seen, even my cousin should be able to understand it. The fact that the politicians and banksters operating this scam are not prosecuted for criminal racketeering (RICO) is prima facie evidence that justice does not prevail for everyone throughout this great land. Yet, in spite of this massive theft of resources from American workers somehow the system still functions, its a miracle! JLK =================================================== THE FED - The papers are full of articles regarding what the Fed might do or not do with short rates. But how is it that nobody ever questions the very worth or non-worth of the Federal Reserve itself. The Fed has never been audited. It's legitimacy, it's worth, is NEVER questioned - the Fed appears immune to questions. One problem is that nobody understands what a monstrous fraud the Fed is. When the US government needs money, it doesn't just issue United States Federal Notes (dollars), which it certainly could do. In other words, incredibly, the US government does not issue its own money. Instead, the government issues bonds, thereby loading itself with ever increasing interest-bearing debt. Here's how this disgrace works - The US government issues a billion dollars of interest-bearing US government bonds. It takes the bonds to the Federal Reserve - the Fed accepts the bonds and places one billion dollars in a checking account. The government then writes checks to the total of a billion dollars against the checking account - a billion dollars that has been created "out of thin air." Meanwhile, the debts of the US grow and grow. And the government pays interest on the bonds. Yet that isn't enough for the US government. It taxes its citizens, taking away a percentage of their passive and active earnings. And as if that isn't enough, it robs its citizens via inflation, so that as their living costs rise, simultaneously their savings are whittled away. The Fed has been in existence for 93 years. In those 93 years the Federal Reserve Notes that the Fed issues have lost 98% of their purchasing power. To cover up this monumental scam, we hear the Fed blather and bluster about how worried they are about the current inflation rate. The current inflation rate is the cover-up; what kills us is the systematic year-after-year loss of purchasing power of those billions of fiat Federal Reserve Notes. So the system allows this semi-private banking system to create money out of absolutely nothing (all of it a loan to our government) and charge interest on this debt forever. Thus, the Fed collects interest on the government's own money. It's a system that is beyond belief, but one that runs the life blood of the nation - the life blood of a nation is its money. A communique sent from the Rothschild investment house in England to its associates in New York noted, "The few who understand the system. ... will either be so interested in its profits or so dependent on its favors that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending ... will bear its burdens without complaint." Silver -- Sharefin, 21:52:50 06/29/06 Thu Gold exchange to start silver trade SHANGHAI: Shanghai Gold Exchange is about to introduce silver trading for the first time after months of planning. ~~~ The launch underscores the rapid development of the silver market in China, which is widely regarded as potentially the most important consumer, producer and exporter of the metal. The exchange, which currently deals with platinum as well as gold, is expected to trade silver spot and spot-deferred contracts. ~~~ The country's silver consumption, mainly used by electronics and chemical firms, was estimated at 2,600 tons last year. This compares with only 900 tons two decades ago. The country is also an important producer and exporter of the metal. Silver production in China has been soaring at 10 per cent annually since 2000, when the State monopoly covering the purchase and marketing of the metal ended. Last year production reached 6,000 tons. Fiat -- Sharefin, 06:47:36 06/29/06 Thu GEORGE LET PLUNGE SLIP GEORGE Stephanopoulos knows all about the Plunge Protection Team, the secretive organization made up of Wall Street bankers and top administration officials whose job it is to come to the rescue of a faltering stock market. Here's the bombshell statement that an obviously nervous Stephanopoulos, once President Clinton's senior adviser on policy and strategy, delivered on ABC's "Good Morning America" on Sept. 17, 2001 - the day the stock market reopened after being shut for nearly a week because of the 9/11 terrorist attacks. The statement was barely noticed in the excitement of that time, so I will quote it here in full. I'm also citing it verbatim because Stephanopoulos blurted it out in the heat of that moment (stocks were struggling that morning) and because no other person with firsthand knowledge of this organization is likely to ever repeat these words. "And perhaps the most important, there's been - the Fed in 1989 created what is called the Plunge Protection Team, which is the Federal Reserve, big major banks, representatives of the New York Stock Exchange and the other exchanges, and there - they have been meeting informally so far, and they have kind of an informal agreement among major banks to come in and start to buy stock if there appears to be a problem. "They have, in the past, acted more formally. "I don't know if you remember, but in 1998, there was a crisis called the Long Term Capital crisis. It was a major currency trader and there was a global currency crisis. And they, at the guidance of the Fed, all of the banks got together when that started to collapse and propped up the currency markets. And they have plans in place to consider that if the stock markets start to fall." The most important line is the one about the "informal agreement among major banks to come in and start to buy stock if there appears to be a problem."  Gold -- Sharefin, 06:40:51 06/29/06 Thu Nymex Looks to China For Trade in Gold Futures BEIJING -- The New York Mercantile Exchange is hoping to begin the trading of gold futures contracts in China, a senior official said. In an interview, John Hanemann, vice chairman of the governors committee of Nymex's Comex Division, said the exchange has been in talks about launching its gold futures contracts with Chinese exchanges. China, meanwhile, has been looking to further develop its local derivatives markets. Gold -- Sharefin, 19:17:37 06/28/06 Wed Currency instability makes gold shine MONTREUX, Switzerland, June 27 (Reuters) - Gold represents a great opportunity for investors in today's world and may become the asset of choice because of instability in paper currencies, Anthony S. Fell, chairman of RBC Capital Markets said. "Investors forget that bear markets start when the skies are blue and bull markets start when there is despair and apathy in the air," he told a precious metal conference on Tuesday. "The vast majority of investors are so short term orientated, they just don't see the big picture unfolding." Gold prices surged to a 26-year peak of $730 an ounce in mid-May but fell more than $150 over the next month on a rise in the dollar and a general selloff in the commodities sector. "After a twenty year bear market, the past few years represent a major positive turning point in the fundamental long term outlook for gold bullion," he said. There was more inflation in the pipeline than generally anticipated and the paper currencies were becoming unreliable. Gold is often seen as a hedge against inflation. "Notwithstanding the recent downdraft in the gold price, gold has been in a clear uptrend against the U.S. dollar, the euro, the yen and the Indian rupee." "I believe the stature and reputation of the dollar as store value has been greatly diminished and undermined over the past decade," he said. Gold prices generally move in the opposite direction of the U.S. currency as they are often considered as an alternative investment. U.S. ECONOMIC SLOWDOWN Fell said the U.S. economy was headed for a slowdown later this year and there was a 50 percent chance of a recession in 2007, led by housing slowdown. He said the U.S. Federal Reserve might reduce interest rates in a year from now and there was a risk of a broad move out of dollar-based assets. "Looking ahead, it is my view that gold bullion is now in the very early stages of a long term...bull market which will carry it to much higher levels over the coming decade," Fell said. "Gold bullion is the one investment and long term store of value which cannot be adversely impacted by corrupt corporate management or incompetent politicians -- each of which is in ample supply on a global basis," he said. Some central banks and major investors would gradually favour gold as a core alternative investment. He said there were indications that some Asian central banks and a few others, with large holdings of U.S. dollars, would like to diversify their reserves. Gold prices would also get a boost from static to declining mine production, while governments around the world would continue to increase the money supply at a rapid pace. "Investors forget that at most gold mines, you have to move 35 to 40 tonnes of dirt and rock just to get one ounce. On the other hand fiat paper money can, and usually is, printed at will by computer." Gold -- Sharefin, 19:13:17 06/28/06 Wed Gold reserves set to disappear by 2020 The vice president of sales at Metals Economic Group (MEG), David Cox, speaking at the London Bullion Market Association (LBMA) conference has warned that gold reserves will be extinguished by 2020 if new discoveries are not made. According to reports at miningmx.com, Mr Cox told delegates at the conference that action must be taken soon because if present levels of exploration and discovery were maintained reserves would not last any more than 14 years. "I believe the world's gold majors have been good at replacing reserves but some of it has been from merger and acquisition activity and brown fields development," he said.  Gold -- Sharefin, 21:31:10 06/24/06 Sat From Richard Russell --------------------- I want to write a bit about gold and the meaning of a gold bull market. The central banks of the world are involved in a very strange enterprise. On the face of it, it's an "insane" enterprise. What the central banks are doing is telling people that they, the banks, can create wealth by fiat, by producing paper and stating by law (fiat) that the paper they produce is, in fact, real money or wealth. Of course this is nonsense, a total fraud, but the people of the world, at least most of them, accept that fraud. If everybody in the world accepts a given thesis, that thesis will work -- until it falls apart. The reason the paper fraud works is that the government tells people its money and that it's legal tender. And there's a method in their scam. You see, the men at the head of governments want to remain in power. In order to remain in power they must keep the population happy. How to do that? Create jobs, create conditions of "prosperity" -- and above all avoid recessions and even the periodic slowdowns. How to do that? Create ever-more fiat paper. Thus, the central banks become paper-producers, and that means there will always be some level of inflation. It's not a question of whether or not to create inflation, it's a question of how much inflation to create. But inflation is a tax on the people. Inflation takes away their savings and, dare I use the phrase -- their purchasing power. That's a phrase you will never hear the Fed or any central bank use -- "purchasing power." The Fed will make a great show of "warning" the people that inflation is "too high," and that they, the Fed, will defend you against "an uncomfortable" level of inflation. But the Fed will NEVER dare to compare the purchasing power of your dollar this year with the purchasing power of your dollars five years or ten years ago. Because that would be exposing the fraud. Currently, we have a problem. The problem is massive deficits and a massive debt structure. These debts must be serviced, and that means ever-more fiat money must be created. If the money isn't created fast enough, the nation slips into deflation, and the Fed can't tolerate that. So today we have a serious problem -- the underlying forces of debt demand more and more paper-creation and inflation -- in order to ward off deflation. Rising gold is a red flag dangling in front of the people. Thus, the central banks are fearful of rising gold. They are fearful because they know that the people, in their guts, understand the meaning of rising gold. When gold rises, it means that it requires more fiat paper to buy true money. That knowledge appears to be built into man's DNA. People know, despite all the governmental propaganda, that rising gold means that fiat currency is worth less. This is the basis of one of the great coming economic battles. From the Fed's perspective, the battle will be to inculcate in the public's mind and psyche that rising gold is meaningless, that it's a function of pure speculation, and that it has nothing to do with the purchasing power of fiat currency. Yes, the great battle of gold vs. paper lies ahead. And I can guarantee you one thing -- gold will win. And the fraud of fiat "money" will be exposed. In the end, the insanity of a central bank "creating" wealth will be exposed and the central bank system will not survive. It can't survive. It can't survive because in essence, it's a lie and it's evil. And the only power evil has is the power to destroy itself..... Gold -- Sharefin, 22:54:48 06/19/06 Mon US gold futures clash intensifies The battle for the US gold futures market is becoming more intense, with the first signs the Chicago Board of Trade's (CBOT) gold futures contracts are taking market share from the incumbent Comex. Since CBOT launched its electronic gold futures contracts in October 2004, the US gold futures market has grown. However, the recent gold price slide has seen several investors quit the gold market. That in turn has led to a shrinking of the amount of gold futures contracts held by investors. During the last two months, holdings in CBOT's gold futures have risen, and there was been a corresponding fall in the holdings of Comex futures. This has led to the CBOT increasing its market share at the expense of Comex, which is owned by the New York Mercantile Exchange. ~~~~ The CBOT gold futures contract now accounts for about 9.5 per cent of the total US gold futures market. Comex is responding to the increased competitive threat. Traders said the Comex policy of setting daily price trading limits had led to many trading suspensions in recent months as volatility in the gold market had increased. "When Comex suspended trade, the gold market would just move over and trade on CBOT," said Mr Reade. Comex is understood to be reviewing its daily price limit policy. Gold -- Sharefin, 05:59:01 06/19/06 Mon Remarkable Development in the Gold Market What does this mean? – quite simple – it means that there was a concerted effort on the part of this group of short sellers to FORCE THE GOLD PRICE DOWN. They had absolutely no interest in booking profits on existing shorts as the price tumbled some $100. This is a stunning development as it clearly indicates a concerted attempt to derail what was becoming a runaway bull market in the gold price that was threatening to garner far too much public attention. Remember - gold's perennial function is to serve as the financial “canary in the coal mine” which alerts the workers to hidden, toxic dangers. Quite simply, gold's stunning rally to $730 in the matter of a few months time was sending shock waves through the corridors of the monetary elites who were “looking into the abyss” if gold continued its meteoric rise. Something had to be done and quickly or this thing was going to get out of hand. Along that line, this past week I had sent some comments up to my good friend Bill Murphy over at GATA's fine site, www.lemetropolecafe.com detailing both in written and in visual chart form what appeared to me to be a deliberate assault that was being launched against the gold market beginning in the thin and illiquid conditions of the aftermarket Access trading session as soon as it opened for the resumption of trading in the afternoons. Bill included those in his daily Midas reports. Also, my trading buddy and good pal Jim Sinclair (www.jsmineset.com) had posted the same comments along with the price charts detailing the attack as shown on the 30 minute interval chart. As a trader who trades exclusively in the CBOT's full-sized electronic gold contract every single day, I am quite attuned to the normal order flow into that “pit”. What caught my eye immediately beginning last week and continuing with the assault on gold early this week, was the huge size of sell offers that came flooding into those pits late last week and earlier this week during the normally comparatively quiet afternoon session. Offers of 500+ to sell were relentlessly pounding the CBOT electronic gold contract. One enormous sell order of 943 hit the pit much to my stunned amazement. I found myself talking out loud to myself saying, “What in the world is going on here? Did I miss something happening in the world? Did someone Central Banker or Fed governor say something? Who in the heck is selling like this?” To give you some perspective – I rarely see buy or sell orders in the early afternoon session exceeding 100 contracts going either way. Clearly some entity was attempting to mercilessly pound the price down into lower levels looking to run stops in the thin conditions and set off a cascade of further selling which would then be expected to carry over into the TOCOM session that evening driving the price even lower as Japanese selling took over. So the question becomes, who would do such a thing and why? Then it all began to make perfect sense if one understands what both Jim Sinclair and Bill Murphy and the GATA gang had been saying about this recent price decline in gold, namely, that is was an orchestrated and deliberate attack by the Central Bankers of the West to break the back of the gold market and defuse the warning message that gold was sounding abroad. In our opinion, it started with the Bank of England either mobilizing its own gold supplies or gold from the IMF. This gold was then used to temporarily flood the market with extra supply with which to overwhelm the soaring investment demand thereby knocking the price of gold, and other commodities sharply downward to give the intended effect that fears of inflation due to commodity price rises had been effectively contained. In order to affect the most carnage on gold, this surreptitiously mobilized supply of extra gold had to be accompanied by a concerted and well-coordinated effort on the part of the Western Central Bankers and some of their allies of tough anti-inflation talk giving the impression that the CB's were going to be especially vigilant to nip any inflation genie in the bud. Think about this a bit and see if we can put two and two together. If you knew in advance that the BOE was about to make a move to derail the surging copper market and bail out its friends at the LME which was on the verge of witnessing a default among some of its members who had stupidly sold short into a roaring bull market in copper, and you knew that they would also do this by launching an all out assault on the base metals and especially on the gold price using mobilized Central Bank vault gold, what do you think you could conclude? Answer – the price of gold was going to fall sharply as it would be temporarily overwhelmed by the extra supply hitting the market. If you knew this would you not sell with complete reckless abandon? Would you not attempt to chase the market down as far as you could pushing into one set of sell stops after another? Would you not do this in the hopes of wrecking as much carnage on the market as possible and then eventually clean up by buying all those shorts back after you had broken the back of nearly every would-be gold bull on the planet? I know I sure would have! You would be a complete nitwit not to recognize such a gift horse being dropped into your lap! Well, that is exactly what I believe occurred. The BOE in conjunction with their cohorts at the Fed, would have tipped off its agents, or better yet, would have plotted with its agents Goldman Sachs, et al, that is was about to mobilize its gold or the IMF's gold and dump it onto the market. In the meantime Goldman Sachs and friends were unleashed to smash the paper markets in gold at both the Comex and the CBOT, and run as many speculators out of it as possible while seeking to inflict the most technical damage possible on the price charts. The intended effect was to be to so completely dishearten and discourage the public and the investment funds from buying gold that it would suffer an ignominious death and fall off the radar screens of investors. That would effectively get it out of the headlines and remove the pesky metal's telltale warning signs about the true state of the global economy. No more gold stories equals happy Central Bankers. There is no doubt that the plan worked to near perfection – I have never seen so much near total despair and disillusionment among the friends of gold as I witnessed this past Tuesday and early Wednesday. Out of everywhere, as if on cue, analysts confidently pronounced that the bull market in gold and in commodities was over, finis, kaput! Energy -- Sharefin, 04:03:15 06/08/06 Thu Energy Geopolitics 2006 America's domestic political situation is equally dire. The current administration came into office on the basis of a promise—set forth in the 2002 “National Security Strategy of the United States”—to achieve and maintain virtually complete global hegemony by discouraging any nation or combination of nations from achieving military or economic parity. That promise also—and crucially—included the goal of gaining unchallenged control of the world's oil and gas flows. Tactics reserved to that end included pre-emptive war and “regime change” anywhere necessary. The U.S. corporate/banking/military elite gave the neocon-dominated executive group virtually free rein to pursue these goals. Given that group's lack of a robust popular constituency, this entailed the fixing of elections, the mobilization of the media, the redirection of immense amounts of government revenue, the overriding of the Constitution as well as international laws and treaties, and the orchestration of a spectacular terrorist attack. The Bush-Cheney-Rumsfeld crew had its chance and, by near-universal opinion, achieved colossal failure on all counts. This failure was in fact predicted by many—including the millions who marched in streets to try to avert the Iraq invasion. But the current tragicomedy of the neocons' fall from grace can offer little satisfaction to anyone, in that it implies extraordinary perils to both the nation and the world. Over the past few months the consensus of the traditional power elites has shifted dramatically: they have evidently (judging by their statements and by the attitude of the mainstream media) concluded that the neocon cabal must go. Washington prosecutors, backed by the establishment's old-guard foreign policy “realists” inside and outside of government, are preparing revelations of scandals and the handing down of still more indictments. This may all be well and good in itself. However, the neocons' efforts have meanwhile squandered immense amounts of fiscal, political, and diplomatic capital. And these efforts have played out (not coincidentally) as global energy streams are drying up. America's power elites bet the farm on the neocons and lost. There can be no second chance. A recovery of America's former position of unquestioned dominance, enjoyed until only years ago, is simply not in the cards. The best that can be hoped for is a partial re-consolidation based on withdrawal and reconciliation abroad, and massive inflation at home. This is a reversal of truly historic proportions. The danger, of course, is that the neocons may be unwilling to surrender without a fight, and the casualties of that fight could conceivably number in the millions. In short, we are witnessing nothing less than the beginning of the disintegration of the American empire abroad, and of long-standing national economic and political structures at home. It is important to avoid overstatement: the US is still an immensely powerful nation militarily and economically, and one that yet commands respect in at least some quarters. But the degree of the recent erosion of that respect, while difficult to quantify, is nevertheless considerable and unprecedented. Gold -- Sharefin, 21:04:31 06/06/06 Tue Iran Hoarding Gold WASHINGTON -- Iranians are going for the gold - at least until someone else cuts them off. To forestall an effort by the West to seize Iranian assets in Europe, the Iranian leadership decided last fall to begin a massive, secret repatriation of its international currency reserves, according to Central Bank of Iran documents. The documents were obtained by an Iranian opposition group and shared with Newsmax. The documents detail eight shipments in chartered jumbo jets from Zurich's Kloten airport. The shipments, from October through late November, brought 250 tons of gold bullion from the vaults of Swiss banks to Tehran. The gold was purchased by Bank Markazi (the Central Bank of Iran) from Credit Suisse in Zurich, the documents showed. ~~~ Iran's leadership wanted to purchase 700 tons of gold, according to the Organization of the People's Fedaii Guerillas of Iran (OPFGI), a communist opposition group that obtained the Central Bank documents. However, their secret effort to convert Iran's foreign currency holdings into gold appears to have stopped when word leaked out earlier this year. The gold is now being held in the vaults of the Bank Markazi in Tehran, the group said. A Credit Suisse spokesman, Andres Luther, told Newsmax by phone from Zurich that it was bank policy not to comment on its clients. However, if the bank had shipped gold to Iran last autumn, "I can assure you that we fulfilled all the reporting requirements the state demands of us." Credit Suisse, Switzerland's second largest bank, announced on Jan. 23 that it would no longer accept new business in Iran or Syria. Mr. Luther said the bank's decision was not in response to U.S. pressure, as previously reported. ~~~ Jeffrey Christian, managing director of CPM Group, which tracks the flow and pricing of gold, told Newsmax that the reports of 250 tons of gold repatriated to Iran late last year "makes sense." "There has been a tremendous amount of gold going into Iran over the past eight months," he said. "Some of it belongs to the Central Bank, but part is to satisfy private investment demand." Since the first quarter of 2003, he added, "we've seen a broad range of Middle Easterners buying gold for storage outside the Middle East, the United States, Europe, or Japan. More people have bought gold over the past five years than in the entire history of mankind." The main repositories of these new gold findings, Christian said, were Australian, Singapore, Malaysia, and Thailand. The Fedaii organization also alleged that in a separate scheme, pro-Iranian Shiites in Iraq looted the Iraqi Central Bank and one of Saddam Hussein's palaces in the immediate aftermath of the 2003 war, and made off with 200 tons of Swiss-stamped gold bullion. The Iraqi gold was re-melted in Iran, cast into automobile bumpers, and covered with chrome. Iranian agents drove the cars with the gold bumpers into Pakistan and Azerbaijan, where they sold the gold to brokers at a 15 percent discount, the group said. "Sales of this gold are ongoing," sources at the OPFGI said. Gold -- Sharefin, 00:03:09 06/05/06 Mon Veteran gold bug sees price soaring to $3,000 an ounce Harry Schultz of the International Harry Schultz Letter has been publishing so long, since the early 1960s, that I regularly get email from readers insisting that he must be dead. He denies this. Dead or alive, Schultz is soaring right now. According to the Hulbert Financial Digest, his portfolio gained 130.85% over the year ending in May, vs. 10.6% for the dividend-reinvested Dow Jones Wilshire 5000. Over the last five years, Schultz gained 21.94% annualized vs. 3.63% for the DJ Wilshire. ~~~ But Schultz's long run is as apocalyptically bullish as ever: "My view has always been: current governments (which are bank-owned) won't voluntarily return to a gold standard, with its discipline on money creation. But, when the price roars to, say $1,600, they'll quite possibly be forced to do so, to appease a clamor for sound money - e.g. Bretton Woods II. The price could go to $2,000 while they debate new rules. Washington insiders would see it as their last chance to save the US dollar as a reserve currency. If they don't, the euro, yen or yuan could make a bid for that status ... If no rules are made at $1,600, gold could keep climbing till they do. Hello $3,000." Schultz has always advocating frenetic trading - he says he often buys and sells in the same day. He writes: "This market is going to $2,000, but en route it will most assuredly crash 3-7 more times and it's not smart to ride it down. Most people can't bear the pain when their stocks fall 70% as they will if bullion dips only 30%, as it often does." Gold -- Sharefin, 22:38:59 06/04/06 Sun Russia leading global 'stealth demand' for gold The world's big money brigade is snapping up gold bullion at eight times the rate originally thought, according to a report by UBS, the world's biggest gold trader. ~~~ The Swiss bank said information from its trading floor suggested that funds and investors were allocating 20pc of their commodity portfolios to precious metals. ~~~ Russia's reserves have surged to $237bn - the world's fourth biggest - after rising 61pc in 2004 and 40pc in 2005. With a current account surplus of 10pc of GDP, it must sweep up a big chunk of global gold output just to stop its bullion share of reserves from falling. In China, monetary committee member Yu Yongding last week issued the most explicit call to date for Beijing to diversify its $875bn reserves into gold to protect against a tumbling dollar. "We need to use some of the reserves to buy other assets such as gold and strategic resources such as oil," he said. ~~~ But if the global economy turns nasty, gold will ultimately decouple from its base metal cousins and regain its usual role as a safe haven currency and defence against dollar disorder. "The bottom line is liquidation first, haven later," he said. Gold -- Sharefin, 22:42:00 06/02/06 Fri NYMEX to remove price fluctuation limits on COMEX NEW YORK, June 2 (Reuters) - The New York Mercantile Exchange said Friday its COMEX Division will eliminate price fluctuation limits for all COMEX contracts. The change to no limits will take effect beginning with NYMEX ACCESS electronic trading on Sunday, June 4, for trade date June 5, NYMEX said. "This change was made in order to better facilitate the core functions of price discovery and hedging provided by COMEX products," it said. COMEX contracts include gold, silver, copper and aluminum. Gold -- Sharefin, 23:30:56 05/27/06 Sat Saudi firm buys gold from African central bank RIYADH (Reuters) - A private Saudi jeweller has bought 36 tonnes of raw gold from an African central bank for 1.8 billion riyals, a company spokesman said on Monday, confirming a newspaper report. Gold -- Sharefin, 19:51:55 05/09/06 Tue China urged to quadruple gold reserves BEIJING, May 9 (Reuters) - Some Chinese economists are urging Beijing to quadruple its gold reserves to 2,500 tonnes from the current 600 tonnes because the country foreign exchange reserves had become the world's largest, an official industry newspaper reported on Tuesday. "China should raise its gold reserves so those reserves can account for 3 percent to 5 percent of the foreign exchange reserves, instead of current 1.3 percent," the China Gold quoted Liu Shanen, an expert at Beijing Gold Economy Development Research Centre, as telling a conference. He said the suggestion was made in light of the country's economic strength and the size of its foreign trade. ~~~~ China has been trying to gradually diversify its reserve holdings away from the dollar. But economists say fears of a collapse in the U.S currency will prevent any dramatic shift. Central bank official figures showed China's gold reserves have remained unchanged since December 2002. Silver -- Sharefin, 22:47:10 05/06/06 Sat Snipped from The Silver Investor -------- At Berkshire meeting now....he said they sold all silver. He said he got in early and got out early. No sell price/date data given. Says he would rather hold businesses that have earnings. He thought "copper and some other commldities" are in a bubble. Didn't really talk about silver other than he sold it. Gold -- Sharefin, 22:50:27 04/03/06 Mon Demand for silver will give you a bigger bang for your buck Floor traders on Comex, where most of the chicanery in the gold market takes place, report that whenever gold attempts to break through a critical level to the upside, a large persistent seller with absolutely no interest in maximising his proceeds, appears and caps the price. What goes unsaid is that this is very simply the official sector's ongoing attempt to impose it's will on an increasing recalcitrant market. ~~~~ Switching topics, there have been several fascinating developments in the ongoing gold war recently. Allan Greenspan, in his maiden address following a return to the private sector, suggested the rise in gold was attributed to geopolitical concerns. That has to rank as one of the most disingenuous remarks in a long history of blatant lies about the state of the gold market. Greenspan oversaw the most aggressive creation of money in the US financial history. He, nevertheless, continues to deny that his profligacy is the primary factor underpinning the gold-price rise. Using doctored inflation numbers, while vehemently denying his active role in the gold-price suppression scheme, he continues to attempt to deflect blame elsewhere. I'm sure he will have an even more arcane excuse to protect his legacy when the gold price approaches four figures. Along the same lines, one of his main allies in the gold battle, the investment bank Goldman Sachs, was recently exposed on the TOCOM which is the Japanese equivalent of the COMEX in the US. The TOCOM is remarkably transparent compared to the COMEX in that positions are reported by firm rather than by category (commercials, speculators etc.) on a daily basis. When Goldman Sachs, a relatively new participant, began to conduct the same drill they had been carrying out on the COMEX, their machinations were revealed for all to see and it wasn't pretty. Presto, the rules were changed to conform to COMEX standards, permitting the anti-gold cartel to continue it's routine in greater secrecy. Is that pathetic or what? From the Far Side -- Sharefin, 20:59:57 03/28/06 Tue TWO TRILLION $ FEDERAL RESERVE ORDERS TWO TRILLION DOLLARS TO BE PRINTED AND PUT INTO CIRCULATION! SOURCES WITHIN THE UNITED STATES TREASURY ARE FLABBERGASTED! INFO CORROBORATED BY THREE SEPARATE U.S. TREASURY SOURCES Six months ago, the Federal Reserve quietly announced that as of March 20, 2006, they would no longer publish "M3" Data. The "M3" was the amount of cash the government printed to put into circulation, propping-up the U.S. economy. As of eight days ago, M3 data is no longer being reported, so there is no way for the public, investors or bond holders to know how much currency exists - and no way to gauge how much a "dollar" is truly worth. Three separate sources in the U.S. Treasury have told me that this week, the federal reserve ordered TWO TRILLION dollars to be printed! The U.S. Treasury is allegedly running printing presses 24/7 to accommodate that order. Treasury employees were specifically ORDERED not to talk about this to anyone because it could cause economic collapse. Even worse, I was also told that the whole Immigration Amnesty Debate (especially the well-funded well-attended protests) was deliberately scheduled to take place now, to divert attention from this massive printing/devaluation of the U.S. Dollar. The feds allegedly figured that by the time anyone found out, they could smooth things over. They figured wrong. Surprise, boys, you've been exposed! Watch for Gold and silver to skyrocket in price within days as the world wises up and begins dumping the U.S. Dollar. Fiat -- Sharefin, 20:52:50 03/28/06 Tue Asia must prepare for dollar collapse East Asian economies need to prepare for a possible collapse of the US dollar, the Asian Development Bank says. The warning comes as the US trade deficit reaches a record high and global interest rates continue to rise. Fiat -- Sharefin, 20:39:58 03/26/06 Sun Bond Market Association To Develop & Lead Implementation of ‘NewBank'-- A Public-Private Initative Designed To Provide Crucial Liquidity In Emergencies Affecting Government Securities New York, NY – The Bond Market Association announced today that it has accepted an invitation by a private-sector working group established by the U.S. Federal Reserve Board to develop and lead the creation of a so-called ‘NewBank', a standby bank that would only be activated if one of two existing clearing banks in the U.S. government securities markets was suddenly forced to leave the business. Both government officials and market participants have long been concerned about the possibility, even if remote, of one of the banks suddenly exiting the markets and have agreed the NewBank concept is an appropriate precautionary measure. ~~~ Since the mid-1990's all of the major participants in the U.S. government securities markets have depended critically on one of two clearing banks, Bank of New York and J.P. Morgan Chase, to settle their trades and to facilitate financing of their securities inventory positions. Interruption of a clearing bank's services has the potential to severely disrupt those markets, as was evident in the wake of the tragic events of 9/11. Further, the importance of the government securities markets to the U.S. and global economies cannot be overstated. The Federal Reserve and the U.S. Treasury are dependent upon them for implementing monetary policy, as well as funding and operating the U.S. government. Securities dealers are also increasingly dependent on tri-party repos for financing, with $1.9 trillion of securities now funded through this mechanism. "Securities dealers need a contingency plan in the event one of the clearing banks is forced to exit the markets," commented Micah S. Green, President and CEO of the Bond Market Association. "Establishing NewBank is a prudent market-based initiative aimed at mitigating any potential problems caused by the sudden involuntary exit of one of the banks." The idea of a standby bank was first recommended by a private-sector working group established by the Federal Reserve in 2004. The bank would only be activated if a credit, legal or other problem caused market participants to lose confidence in an existing clearing bank, and no well-qualified bank immediately stepped forward to purchase the exiting bank's clearing business. The standby bank is not designed to address resiliency problems such as those encountered after 9/11; regulators previously established resiliency standards necessary for participation by a clearing bank. Gold -- Sharefin, 20:38:06 03/26/06 Sun Another step forward for silver ETF BOSTON (MarketWatch) -- A controversial exchange-traded fund tied to silver prices moved a step closer to reality Tuesday. The Securities and Exchange Commission has approved a rule change for a silver ETF in registration from Barclays Global Investors that would allow the product to list on the American Stock Exchange, although the fund has not yet been cleared to launch by regulators. ~~~ The Silver Users Association, a nonprofit lobby group interested in keeping an orderly silver market, has led the opposition to the silver ETF. The SEC said in general, commenters opposed to the fund argued that approval of the silver ETF would result in serious liquidity problems in the silver market. Those opposed to the silver ETF said it would "negatively impact the silver market because . . . creation would require the holding of silver in allocated accounts, which would drain large amounts of silver from the open market and cause higher prices for silver products." Additionally, the opposition claimed resulting higher silver prices caused by the creation of the silver ETF would cause the loss of jobs specific to the silver industry. However, the SEC said it sided with the Amex's argument that, like other derivative products, the silver ETF would increase the efficiency and transparency of the silver market. Therefore, the SEC found the proposed rule change "in the public interest," saying it does not believe the silver ETF is "likely to cause serious liquidity problems in the silver market." Gold -- Sharefin, 20:35:30 03/26/06 Sun Bundesbank gold snub to Merkel The Bundesbank, the German central bank, on Tuesday rebuffed the Berlin government by announcing that it had decided against substantial gold sales before at least September. The decision, although widely expected, marked a fresh assertion of independence by the bank, which has been under pressure to sell by the government of Angela Merkel, chancellor. "Gold is an essential part of the currency reserves of the Bundesbank," said Axel Weber, Bundesbank president. "Decisions on the manner and size of reserves are taken autonomously." Mr Weber said that the decision related to sales in the current year of its option of 600 tonnes permitted by the Central Bank Gold Agreement, which expires in September 2009. ~~~ The cash-strapped Berlin government has stepped up pressure on the Bundesbank to sell gold, and for the interest on the proceeds to be used to fund research and education projects. The government has also proposed substantial cuts in Bundesbank staff bonuses in an attempt, some observers believe, to increase its bargaining pressure. John Reade, precious metals strategist at UBS, said it was unclear when the Bundesbank would sell gold under the current pact because the Bundesbank and the German Finance Ministry have yet to agree on how future gold sale proceeds will be distributed. "Until they reach an agreement, it is unlikely we will see any gold sales coming out of Germany," said Mr Reade. Fiat -- Sharefin, 20:31:42 03/26/06 Sun Credit derivatives rocked by loss at GM finance arm The discovery of huge hidden losses at General Motors's finance arm have raised fresh fears of bankruptcy at the world's biggest carmaker, sending tremors through the credit derivatives markets. The struggling group asked for a filing delay after admitting to an extra $2bn (£1.1bn) in accounting errors at its finance arm GMAC, raising total losses last year to $10.6bn. The news triggered a sharp spike in the cost of default insurance on GMAC's bonds, rising 75 basis points overnight. ~~~ Concern that General Motors may now be sliding towards the brink - linked to an estimated $200bn in credit derivatives - has renewed fears that the over-heated credit swap market could seize up in a crisis. ~~~ Timothy Geithner, president of the New York Federal Reserve, warned in a recent speech that the $300,000bn derivatives market had raced ahead of the infrastructure needed to support it. He said the plethora of new instruments may have led to a more dangerous concentration of risk. "They have not ended the tendency of markets to occasional periods of mania and panic. They have not eliminated the possibility of failure of a major financial intermediary. And they cannot fully insulate the broader financial community from the effects of such a failure." "There are aspects of the latest changes in financial innovation that could increase systemic risk in some circumstances, by amplifying rather than dampening the movement in asset prices," he said. Gold -- Sharefin, 20:28:37 03/26/06 Sun China to open theme park dedicated to gold BEIJING (AFP) - Gold-hungry China plans to open what it has billed the world's first theme park dedicated entirely to the precious metal, state media reports. Construction of the theme park kicked off Saturday near a working mine at Rushan city, east China's Shandong province, the Xinhua news agency said. When the 3.6-square-kilometer (1.4-square-mile), 200-million-yuan (25-million-dollar) park is completed, it will allow visitors to watch gold being mined and processed. ~~~ Last year, Chinese demand for gold rose eight percent to more than 250 tonnes, the council's data showed. Gold plays an important role in Chinese culture and is evident everywhere from temple decorations to the jewelry of newly-weds and the dental cavities of the rich. Last year, the China Economic Daily issued a special edition, published in gold. It came in two versions, the more expensive priced at 8,300 dollars and using 500 grams of gold. Gold -- Sharefin, 05:03:33 03/26/06 Sun Now They Tell Us: BIS Confirms Rigging Gold Prices William R. White, Economic Adviser and Head of Monetary and Economic Department at the Bank for International Settlements, has confirmed the central allegation of the Complaint in the Gold Price Fixing Case: that the BIS is the principal hub through which the major central banks organize their price fixing activities in the gold market. In February 2006, the Bank published the proceedings of its fourth annual conference held in Basel on June 27-29, 2005, as BIS Paper No. 27, Past and Future of Central Bank Cooperation. In his opening remarks to the conference and based on his eleven years of service at the Bank, Mr. White stated in part: Before turning briefly to an assessment of past efforts and likely future challenges, it is perhaps worth spending a minute on what is meant by central bank cooperation (emphasis in original). I think that the terminology developed for domestic monetary policy might have some uses here; namely, the ultimate objectives, the intermediate objectives and the operational instruments. The ultimate objectives have always been monetary and financial stability, though clearly the focus of attention has often shifted over the years. The intermediate objectives of central bank cooperation are more varied. First, better joint decisions, in the relatively rare circumstances where such coordinated action is called for. Second, a clear understanding of the policy issues as they affect central banks. Hopefully, this would reflect common beliefs, but even a clear understanding of differences of views can sometimes be useful. Third, the development of robust and effective networks of contacts. Fourth, the efficient international dissemination of both ideas and information that can improve national policymaking. And last, the provision of international credits and joint efforts to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful. [Emphasis supplied.] Foreign bidder error -- Ron D, 11:52:14 03/13/06 Mon another GOV error??..sure!! .Treasury prices Monday also are being pressured by concerns that the February revival of the 30-year long bond did not attract as much foreign interest as was originally thought, said Schwab's Hastings. The auction attracted an impressive 65.4% of indirect bidders, a carefully watched category that includes foreign central banks, but also includes other foreign and U.S. institutions. At the time of the 30-year auction, held in early February, the high indirect bid was cheered as a sign that foreign central banks remain buyers for long-term U.S. assets. However new allotment figures released by the Treasury Department last week indicate foreign participation amounted to only about 3% of the bid, leading to the conclusion that most of the 65.4% indirect bid actually came from U.S. institutions. ...." Silver -- Sharefin, 08:54:08 03/07/06 Tue LSE to launch silver tracker fund A silver price tracker fund, also known as an exchange traded fund, is expected to be launched on the London Stock Exchange within the next month by ETF Securities, which has already launched an oil-backed ETF on the LSE. ~~~ Unlike the various gold and oil backed ETFs and the BGI initiative, the proposed silver fund in London will not be physically backed by the underlying commodity. The funds raised by the proposed London listed silver ETF would not be spent on buying the metal, but the performance of the fund would remain linked to the silver price. Funds raised by existing commodity-backed ETFs are spent on buying the physical commodity, which adds to the increase in demand. Fiat -- Sharefin, 22:56:33 03/05/06 Sun Global credit ocean dries up The cash machine that sustained a world boom is about to close, and it's going to get ugly, says Ambrose Evans-Pritchard One by one, the eurozone, the Swedes, the Swiss and now even the Japanese, are turning off the tap of ultra-cheap credit that has flushed the global system for the past year, keeping the ageing asset boom alive. The "carry trade" - as it is known - is a near limitless cash machine for banks and hedge funds. They can borrow at near zero interest rates in Japan, or 1pc in Switzerland, to re-lend anywhere in the world that offers higher yields, whether Argentine notes or US mortgage securities. Arguably, it has prolonged asset bubbles everywhere, blunting the efforts of the US and other central banks to restrain over-heating in their own countries. The Bank of International Settlements last year estimated the turnover in exchange and interest rates derivatives markets at $2,400bn a day. "The carry trade has pervaded every single instrument imaginable, credit spreads, bond spreads: everything is poisoned," said David Bloom, currency analyst at HSBC. "It's going to come to an end later this year and it's going to be ugly, even if we haven't reached the shake-out just yet," he said. ~~~~ The new skittishness comes against a backdrop of ever more hawkish moves by Japan and Europe. "There are several hundred billion dollars of positions in the carry trade that will be unwound as soon as they become unprofitable," said Stephen Lewis, an economist at Monument Securities. "When the Bank of Japan starts tightening we may see some spectacular effects. The world has never been through this before, so there is a high risk of mistakes." Toshihiko Fukui, the Japanese central bank governor, gave a fresh warning yesterday that this day is near, saying the country was pulling out of seven years of deflation. The economy grew at a 5.5pc rate in the fourth quarter of 2005. In his strongest words yet, he said the bank would act "immediately" to curtail its extra injections of liquidity, preparing the way for rate rises above zero ~~~ Most of the world is now tightening, with no sign of a fresh credit window opening to keep the game going. This is new. Japan has had the tap on continuously as the trade exploded over the past five years, while America itself became the source of funds after it slashed rates to 1pc at the end of the dotcom bubble, and held them there until June 2004. The US Federal Reserve has since raised rates 14 times to 4.5pc in a belated effort to restore monetary discipline, with at least two more rises priced into the markets. It is an open question whether the yen, euro, Swiss franc and Swedish krona carry trades have occurred on such a scale that they have led to over-investment in Latin America and beyond, and compressed US yields, fuelling the American housing boom in 2005 despite Fed tightening. There are other big forces at work: huge purchases of US Treasuries by Asian central banks, and petrodollar surpluses coming back to the US credit markets. Stephen Roach, chief economist at Morgan Stanley, warns that the carry trade is itself, in all its forms, a major cause of dangerous speculative excess. "The lure of the carry trade is so compelling, it creates artificial demand for 'carryable' assets that has the potential to turn normal asset price appreciation into bubble-like proportions," he said. "History tells us that carry trades end when central bank tightening cycles begin," he said. Ominously, almost every bank other than the Bank of England is now tightening in unison. Fiat -- Sharefin, 22:53:04 03/05/06 Sun Collapse of the `Carry Trade' Will Blow Out the System On Friday, Feb. 24, the Daily Telegraph published a blunt admission that the entire global financial system is on the verge of disintegration, as the result of the imminent collapse of the yen carry trade. Ambrose Evans-Pritchard penned the Telegraph story, "Global Credit Ocean Dries Up," and quoted from a number of leading financial analysts, who warned that the entire system is jeopardized if Japan goes ahead and raises interest rates, thus shutting down the yen carry trade, which has fueled global hyperinflation and speculative bubbles for the past several years. As the Telegraph defined it, "The 'carry trade'—as it is known—is a near limitless cash machine for banks and hedge funds. They can borrow at near zero interest rates in Japan, or 1 pc in Switzerland, to relend anywhere in the world that offers higher yields, whether Argentine notes or US mortgage securities." Last week a crisis was triggered when the Fitch rating agency downgraded Iceland's sovereign debt. Interest rates in Iceland are 10.75 pc. The Bank of Japan has announced plans to abandon the zero interest rate policy, as early as next month. This has triggered the panic, cited by Evans-Pritchard. Evans-Pritchard quoted a number of analysts. David Bloom of HSBC warned, "The carry trade has pervaded every single instrument imaginable, credit spreads, bond spreads; everything is poisoned. It's going to come to an end later this year and it's going to be ugly, even if we haven't reached the shake-out just yet. People have a Panglossian belief in the march of global capitalism but that will change as soon as attention switches back to US financial imbalances." Stephen Lewis of Monument Securities was quoted: "There are several hundred billion dollars of positions in the carry trade that will be unwound as soon as they become unprofitable. When the Bank of Japan starts tightening we may see some spectacular effects. The world has never been through this before, so there is a high risk of mistakes." Stephen Roach, chief economist at Morgan Stanley, was even more blunt: "The lure of the carry trade is so compelling, it creates artificial demand for 'carryable' assets that has the potential to turn normal asset price appreciation into bubble-like proportions. History tells us that carry trades end when central bank tightening cycle begins." LaRouche Says: Let It Happen Political economist Lyndon LaRouche was far more plain-spoken and blunt. "The yen carry trade is in big trouble. The mere fact that such questions as those reported in the Daily Telegraph are being raised means that the carry trade is about to bite the dust. Iceland and other countries are going to go bankrupt. But the multiplier effect of the blowout of the carry trade is going to mean that the crisis hits with a magnitude far beyond any individual nation or currency. This will bring down the whole post-Bretton Woods floating exchange rate system." But LaRouche added, "Let it happen. The system is doomed under any circumstances, and we know what must be done to create a new, stable financial system, based on the principles of Franklin Roosevelt's original Bretton Woods System. I am ready with a recipe for precisely how to solve this crisis. Are you?" Gold -- Sharefin, 20:38:24 03/05/06 Sun China Leads From The Front By Doubling Its Gold Reserves This Year Interesting to read that the National Development and Reform Commission has stated that China intends to more than double its gold reserves to 1,270 tonnes this year. According to figures released recently by the World Gold Council on official gold holdings this will put it on a par with Switzerland in 6th position. In 2005 China increased its gold reserves by 20 per cent to 620 tonnes and now it is going to add a further 650 tonnes. Down at the bottom of the list, or very close to it, is the poor old UK with a paltry 311.2 tonnes thanks to the devious machinations of Chancellor Brown. On one side is Venezuela and just below is Belgium – not the usual place for a once proud empire. And what about Australia, Canada and South Africa, the three countries which traditionally prided themselves on their mining. None of them feature in the Top Twenty gold holders. China still has some way to go to catch up with the US which is said to have 8,133.5 tonnes of gold stored in Fort Knox. The word ‘said' is introduced deliberately as the gold depository at Fort Knox is a classified facility. No visitors are permitted, and no exceptions are made. Back in the 1970s a man named Edward Durrell claimed that substantially all of the US Gold Reserve being stored at Fort Knox had gone. A modest amount remained, but the rest had been shipped to London in 1967 and early 1968 for sale by President Johnson in an ill-fated attempt to keep the price of gold at US$35 per ounce. Since then there have been variations on this story and the sad thing now is that the US government retains so little credibility that no one knows what to believe.  From the Far Side -- Sharefin, 03:30:27 03/04/06 Sat Inside story: the Bush gang and Barrick Gold Corporation by Anton Chaitkin Barrick Gold, caught scrambling for loot amid the corpses in Zaire, is a corporate front for the George Bush-allied covert political apparatus. The Canada-based Barrick is Bush's only known current business enterprise. The company, which Bush now personally leads, was created by Bush's political partners--British elite narcotics financiers, and arms traffickers and money launderers. Using the influence of this political faction, Barrick acquired important interests, first in the United States, then in Canada and South America. In South America, as Barrick boasts in its 1995 annual report, the company has an aggressive, long-term approach, with mines and projects established in strategic locations in Argentina, Chile, Peru, Bolivia, and Brazil. ``Almost two-thirds of the exploration and development drilling budget will be spent in South America, where the company has decided to focus its efforts,'' the annual report states. In addition, with its intended conquests in Indonesia and Africa, the firm now says it aims to move from third to first among the world's largest gold mining companies. We present here the results of {EIR'}s investigation of the Bush company, centering on the following principal figures: George Herbert Walker Bush: whose father was a partner in the powerful London- controlled private banking firm Brown Brothers Harriman. Relevant to the Barrick story, Bush was U.S. vice president and chief of covert operations in the Reagan-Bush (1981 -89) administration, and U.S. President (1989-93). As a former President and power broker, Bush is Barrick Gold Corp.'s chief lobbyist, a stockholder in Barrick, and honorary senior adviser to Barrick's international advisory board. Adnan Khashoggi: a Bush-allied Saudi billionaire and arms trafficker, founder of the Barrick Gold Corp.; famous for his illegal weapons sales to Iran. Peter Munk: a business failure who became a protege of the British royal family, and Khashoggi's partner. Munk is chairman of Barrick Gold Corp. Brian Mulroney: Canadian prime minister (1984-93) and George Bush's errand boy; Barrick Gold lobbyist and director, Bush's lieutenant on the Barrick international advisory board. Barrick Gold was founded in Toronto, Canada, in 1983. The majority investment in the firm was held by Khashoggi and his arms-trafficking partners, who were just then gearing up the Iran-Israel-Nicaragua guns and cocaine tangle which would explode in 1986 as the ``Iran-Contra'' scandal. The nominal chief of Barrick Gold was Peter Munk, a Hungarian Jewish immigrant who had repeatedly ``died'' as a businessman, only to be repeatedly revived by princes and principalities. This much of Munk's story is before the public in a biography that was written and published with Munk's support, entitled {Peter Munk: The Making of a Modern Tycoon,} by Donald Rumball (Toronto: Stoddart Publishing Co., 1996). It vaguely describes Munk's public disgrace, his self-exile in London, and his sudden rise to near-billionaire status, ending with Munk's invitation to George Bush became honorary senior adviser to the board, created in May 1995. - The Clairtone heist - Peter Munk first became notorious in Canada in the late 1960s, as the beneficiary in an insider trading scandal. Munk and a partner named David Gilmour owned an audio equipment manufacturing company that had been heavily subsidized by the province of Nova Scotia. Munk and Gilmour quietly dumped 29,000 shares of Clairtone stock in 1967, just before publication of the company's financial report tipped off other investors that the company was failing. After Munk sold at $9 per share, the stock plunged to $1. Dr. Morton Shulman, a member of the legislative assembly of the province of Ontario, asked government representatives if Munk would escape with his money and no legal consequences (see Ontario Legislative Library record of Ontario provincial parliamentary debate on June 3, 1969). Ontario Minister of Financial and Commercial Affairs H.L. Rowntree responded that a court had been requested to order the Ontario Securities Commission ``to commence an action in connection with [Munk's] Clairtone Sound Company ... for an action in the name of the company for the accounting of profits allegedly made by him by reason of the improper use of inside information.'' But there was no government action, and Munk would indeed escape. A Clairtone stockholder named John Adams, who had lost about $5,500, had filed a legal action against Munk. Munk hired attorney Charles Dubin, whom Shulman described as ``a lawyer who acts for the Conservative Party whenever there is an embarrassment to be covered up.... He is amazingly good at covering up Conservative scandals.... And Charles Dubin ... knew exactly how to go about subverting the law in this case.'' Shulman reported that Munk's attorney gave Adams $35,000 as a settlement, on Adams's agreement not to make the case public. Then, ``the lawyer for Adams and Charles Dubin went into the Judge's chambers ... [and] requested the judge to remove the papers from the registrar's office and keep them in his own private chambers, which the judge did.'' Charles Dubin, Munk's inventive attorney, the fixer for Mulroney's Conservative Party, became Ontario's chief justice, and only recently retired. The disappearance of legal papers in the Munk case discouraged other stockholders from going after Munk. But the resulting scandal made him a pariah in Canada, and Munk moved to London to start a new life. - `Dope, Inc.' puts Munk back together - The sister of Munk's partner, David Gilmour, had married one of the Vansittarts, a family high in the Anglo-Dutch aristocracy. Munk's approved biography reports that this Vansittart activated the formidable Sir Henry Keswick, who made arrangements to lift Munk into a new career. Keswick's family merchant banking firm, Jardine Matheson, had long been the British Empire's leading, out-in-the-open organizer of Asian illegal narcotics trafficking and drug- money-laundering. (Keswick, Jardine Matheson, and their cohorts are central figures in {EIR'}s book {Dope, Inc.} (Washington, D.C.: Executive Intelligence Review, third edition, 1992.) Jardine Matheson made Munk the chief executive of a Bahamas-registered hotel corporation called Southern Pacific Properties (SPP), with Jardine money, and Jardine's chief executive, David Newbigging, as a director. Then, Jardine's historical dope partner, the Peninsular and Oriental Steam Navigation Company (P&O), joined the Munk enterprise; P&O's Lord Geddes himself joined Newbigging on the Munk-SPP board. In future years, as Munk rose to world prominence in the gold business, the Hongkong and Shanghai Banking Corp. and the Royal Bank of Canada, two ``Dope, Inc.'' financial agencies, would provide credit in the billions of dollars for Munk's expansion. Munk-SPP became a giant hotel owner in Australia and the South Pacific islands, and seized control of the Travelodge chain. Munk's rise in Australia was aided by his lifelong close association with fellow Hungarian emigre Sir Peter Abeles, Australia's transport mogul. Munk's stepfather had been secretary and assistant to Abeles's father in Vienna in the late 1940s. Abeles is reportedly known in Europe as ``the White Knight,'' in reference both to his British knighthood, and his reported large role in the cocaine trade. Jonathan Kwitney, in {The Crimes of Patriots} (New York: W.W. Norton, 1987), reports that, after Abeles encountered labor union problems in his American business, Abeles gave to gangster ``associates of ... the most powerful Mafia leader in the United States ... a 20% stake in his U.S. operations.'' His partners were indicted for hiding his payments, but Abeles refused to come to America to testify, and charges were dropped. - Khashoggi, Barrick, and the ayatollahs - In 1974, Munk signed an investment partnership agreement with arms-trafficking billionaire Adnan Khashoggi of Saudi Arabia. According to Munk's approved biography, the new alliance was cemented when Munk and Khashoggi were summoned to the London headquarters of Peninsular and Orient. P&O's hereditary boss was Lord Inchcape, whose predecessor in the 1920s (also Lord Inchcape) had directed Britain's India Commission to continue the Empire's opium production. Munk later told his biographer that he was nervous-- Khashoggi was late and perhaps ``the P&O directors wouldn't wait for us and it would seriously harm the relationship. It was already remarkable that they should have a Jew and an Arab together in their dining room.'' But, the mighty Lord Inchcape convinced Khashoggi to plunge in, and Khashoggi now provided most of the cash for the Munk enterprise. Since this arrangement was sealed back in the 1970s, Munk has grown in favor as London's creature. He became a regular skiing partner of Prince Charles, who recently attended the opening of a Munk speculative real estate venture (a factory outlet mall) in Germany. Munk is a member of the elite ``1001 Club,'' co-founded by Prince Philip, a worldwide grouping of aristocrats, bankers, and speculators who support a radical anti-industrial, ``pro- environmentalist'' looting strategy, and who provide a lion's share of the funding for Prince Philip's World Wildlife Fund. The first Khashoggi-Munk-London venture was an attempt to build a 10,000-acre ``jet set'' resort complex immediately adjoining the Egyptian pyramids. As the scheme threatened to destroy the entire historical/ archeological area, it evoked mass protests, and could not be forced through. Munk sued Egypt's government, and was eventually awarded $17 million by an international referee. Khashoggi and his associates, backers of the British- and Bush-linked faction of the arms trade, created Barrick Petroleum Corp. in 1981, registered as a Delaware, U.S.A., corporation. Junior partner Munk, having returned from London, set up a parallel ``Barrick Resources'' in Canada. But Munk's name was anathema to Canadian investors. So, Khashoggi was brought in to lend his prestige to Munk. Khashoggi made a televised publicity tour of the Toronto stock exchange, and announced that he had purchased 10,000 (Canadian) Barrick shares. At that point, in fact, Khashoggi, his brother, and their international associates already controlled the company, partially through Khashoggi's Lichtenstein-U.S.A. conglomerate, ``Triad.'' Munk was now launched as a corporate chairman in Canada. But this first Barrick, an oil development firm, went bust and lost all its money. In 1983, the Khashoggi-led group formed the gold company whose name was soon changed to Barrick Gold Corp. Sheik Kamal Adham was reportedly one of the new company's founding co-owners. Adham, the chief of Saudi intelligence, had coordinated royalist guerrillas in Yemen, with British arms secretly provided through Khashoggi. Beginning in 1985, Khashoggi borrowed $21 million, using his Barrick stock as collateral, for the covert transfer of arms to Iran for the Bush-North group, during an official U.S. arms embargo against the Khomeini regime. Khashoggi made Donald Fraser, the Toronto-based businessman who allegedly provided the loan from his Cayman Islands company, president of Khashoggi's Triad American holding company. Khashoggi used the Monte Carlo office of the Bank of Credit and Commerce International to launder money for Iran arms sales. Barrick Gold Corp. co-founder Kamal Adham was later prosecuted for fraud in the BCCI case, and paid a $100 million fine. Khashoggi's Saudi royal piggybanks also underwrote George Bush's Central American ``Contras'' adventures, making payments through the Swiss Bank Corp. and a Cayman Islands bank, totalling about $27 million. When the Iran and Contra scandals blew up in 1986, U.S. Attorney General Edwin Meese linked the two scandals in a Nov. 25 public revelation. The next day, Munk announced a shareholders' meeting to decide on an urgent restructuring plan. A new organization emerged, keeping the Khashoggi group in control, but easing Khashoggi out of the limelight and making Munk the sole public figurehead. Personnel were shifted into the Canada organization out of Khashoggi's Triad operations in Utah. Tariq Kadri, Khashoggi's longtime attorney, was made president of the Horsham holding company that was put over Barrick. As the U.S. Congress took up the arms-for-drugs investigation and other trails leading to Vice President Bush, Khashoggi became too hot for the Canadian partnership, and the Khashoggi group's shares were officially sold off. Khashoggi was himself arrested in 1989, in a fraud case involving the Philippines' Marcos regime. Taken from Switzerland and jailed in New York, Khashoggi was bailed out with a $4 million check from his partner, Peter Munk. - Bush cashes his gold chips - In 1986-87, at the height of the Iran-Contra controversy, the Barrick Gold Corp. acquired the Goldstrike property in Nevada for $63 million. The land, proving to hold $10 billion in gold, was the property of the U.S. government. Bush was elected President in 1988, and his administration put through a special dispensation-- applied only to the Barrick Gold Corp.--to speed up the normal procedures for a mining company to take official title (``patent'') to the land. With the Bush Goldstrike intervention, Barrick Gold shot up from insignificance, to world power status, and Bush himself climbed onboard. President Bush's ambassador to Canada (1989-92), Edward N. Ney, had been for many years a Bush political operative and an international coordinator of Bush's ``privatized'' intelligence activities. In 1992, Ney quit as ambassador and became a director of the Barrick Gold Corp. The following year, Brian Mulroney resigned as Canadian prime minister. Mulroney was the most unpopular Canadian politician; but, in power, he had directly aided Barrick's international ventures, and had worked closely with Bush to force through free trade agreements. Munk immediately hired the former prime minister as a Barrick step-'n'-fetchit. The approved biography explains Munk's point of view: ``Mulroney [was] the unhappy lightning rod for the angst of a whole nation, in office and out. Munk was well aware of these feelings toward his new recruit.... After nine years trotting around the world to meet world leaders, he had incomparable access to Presidents and prime ministers in all the key spots.... Mulroney arranged the necessary access to the key decision makers. Munk was starting to salivate at the prospect of an inside track into the huge Chinese territory.'' Mulroney has been paid over $300,000 per year by Barrick. Barrick announced in May 1995, that a new international advisory board was being assembled, under the leadership of ``honorary senior adviser'' George Bush, the former U.S. President, who, like Mulroney, had recently lost his job at the hands of the voters. On Nov. 27, 1996, the French newspaper {Le Monde} leaked the news that Barrick had been granted a concession to prospect for gold in Zaire--a lead which prompted the present {EIR} Barrick investigation. Canadian newspapers that same day reported that Barrick Gold had convinced the government of Indonesia to award to Barrick control over the world's largest gold find, and that {George Bush and Brian Mulroney had personally done the heavy lobbying} to accomplish this. The Indonesia deal is indeed startling. The small Canadian mining company Bre-X Minerals Ltd. had intended to develop the Busang gold mine, on East Kalimantan. Suddenly, the government announced that it demanded that Barrick Gold Corp. be cut in to a 75% ownership stake in the mine, which is estimated to hold 57 million ounces of gold, with a current estimated value over $20 billion. {EIR} contacted Placer Dome Inc., a rival company which has been bidding for the right to develop a share of the Busang mine. A Placer Dome spokesman would make no comment on Barrick Gold, saying only, of his own firm, ``We are a gold mining company, not a political organization.'' The U.S. Republican Party, of course, has been attempting to use President Clinton's fund-raising relationship with Indonesian supporters as a scandal to break the President. Former President Bush, meanwhile, has been reportedly telling world leaders, privately, that the Clinton Presidency is destroyed; that his son, Texas Gov. George W. Bush, will be the next President, reviving the Bush dynasty; and that, therefore, leaders would be smart to work with him now. Fiat -- Sharefin, 21:25:10 03/02/06 Thu "Who Is Going To Sort This Out?" We believe the shorting mechanics of the U.S. market, via duplicative and "naked" shorting, are amongst the most important issues for investors to focus on this year. Wall Street, in their role of proprietor, have taken on the role of villains in this drama. Millions of customers, the investing public, are provably victims of the equivalent of extensive counterfeiting. On February 13th, Yahoo's business news headlined, "Naked Shorting: Majority of Investors Say Penalties Should Be as or More Severe Than for Fraud and Counterfeiting." A survey conducted by Harris Interactive found that 76% of U.S. investors said someone who naked shorts a stock should face civil or criminal penalties or both. Investors also said the penalties should be in line or more severe than currently doled out for fraud and counterfeiting. As well, the survey found a strong link between respondents and the likelihood that their votes this fall would swing to candidates who take the position that investors' assets are more important than the Wall St. lobby. This issue has the potential to influence the November elections. Recognition of the circumstances is rapidly widening. The securities regulators of Utah and Connecticut recently issued subpoenas to the Depository Trust Clearing Corp. to obtain trading records of some of Wall Street's largest firms, data the DTCC had refused to divulge. Why were state authorities forced to subpoena the DTCC? Our successful Freedom of Information Act appeal showed six times the permitted level of failed deliveries for Overstock, which clearly lends credence to the supposition that abuses by brokers and banks are rampant and much larger than feared. Wall St. does not want you to know. Incredibly, the DTCC is owned by the very same brokers, banks and exchanges who are guilty of abusive failures-to-deliver shorted shares. ~~~ We see Overstock as a very unique situation, one that will eventually illustrate with alarming clarity that the system is quite broken. The short interest should never exceed the float, since that would be evidence that the same shares are shorted again and again - duplicative shorting - or that an even more abusive number of shares are being shorted without the requisite borrow. As more shares are certificated, and we believe they will be, the supposed float will continue to dissipate. Fairfax Holdings (FFH) CEO Prem Watsa recently took a 7% position in Overstock and it should come as no shock that FFH is also a victim of naked shorting and has been on the Threshold list for 112 straight days. What will the DTCC, SEC and Nasdaq do now that Overstock's short interest exceeds the float? Worse yet, what will they do if and when Overstock states that its entire authorized capitalization of 19.4 million shares have been certificated by their transfer agent? Any shares trading daily at that point will necessarily be the result of effective counterfeits, including shares shorted legally! The evidence will be complete that shareholders are being screwed. Overstock has authorized 19.4 million shares, but 28.3 million are now in shareholders' hands. Who is going to sort this out?! ~~~~ Trust fiat....^o-o^.... Gold -- Sharefin, 21:42:34 02/24/06 Fri DGCX set to ride high on booming gold market The Dubai Gold and Commodities Exchange is now trading more than 1,000 contracts a day after just three months of operation. This reflects the lively interest in gold as an investment class, surging gold prices and Dubai's ambition to be a centre of the world gold trade. ~~~ The physical trade for gold in Dubai is around 1.7 tonnes per day but market analysts expect the potential volume for futures contracts to be between 10 to 50 times greater than this trade. A lively market is therefore in prospect. Gold is really catching the eye of the international investment community for two main reasons: as a hedge against inflation and as a safe haven for investors if capital markets turn down. Gold -- Sharefin, 09:01:28 02/24/06 Fri New Charts CPI Inflation Adjusted Gold & Silver Charts - 300 Years More charts here Support GATA & use these charts as Desktop Backgrounds to show your friends how well gold & silver are doing. GATA Desktop Charts  Gold -- Sharefin, 08:55:48 02/24/06 Fri Análisis: La manipulación del oro GATA's story has reached the mainstream news media in Peru. A major newspaper in Lima, El Comercio, published last Sunday a long analysis of the suppression of the gold price, citing not only GATA but also the studies published by Sprott Asset Management of Toronto and Credit Agricole's Cheuvreux brokerage house. El Comercio's analysis concluded that Peru should diversity its foreign exchange reserves into gold. GATA has commissioned an English translation, which is appended here. CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. * * * Analysis: The Manipulation of Gold By Guillermo Arbe El Comercio Lima, Peru Sunday, February 19, 2006 http://www.elcomercioperu.com.pe/EdicionImpresa/Html/2006-02-19/impEconomia0458592.html More and more specialists are recognizing that the gold market has been controlled and manipulated by American and European monetary authorities for at least a decade. For a long time this has been an open secret, denied by those very authorities. Nevertheless, it is difficult for them to intervene massively in such a large market without leaving tracks. The first to point out the evidence was the Gold Anti-Trust Action (GATA), which has been protesting since 1999. A year ago Sprott Asset Management, a Canadian mutual fund, publicized a study on the intervention ("Not Free, Not Fair: The Long-Term Manipulation of the Gold Price," August 2004). The most recent report has been by Cheuvreux Investment, a London investment bank linked to Credit Agricole of France. This explosive report ("Remonetisation of Gold: Start Hoarding," January, 2006) maintains that the United States and Europe have been suppressing the price of gold through the sale and lending of their reserves, through many concealed methods. In fact, Cheuvreux repeats another open secret -- that central banks don't have the gold they say they have. Out of 31,000 tons registered officially, Cheuvreux estimates, between 10,000 and 15,000 tons have been leased out. This gold in reality doesn't exist; it has been sold by the borrowers. Cheuvreux also estimates also that without the gold supply of the central banks, there would be a deficit in the market of 1,300 tons. This equates to 50 percent of world production, an amount impossible to cover at current prices. After a decade or more of suppression, the price of gold is like a compressed resource, ready to jump as soon as the central banks relax their control. Some think that this loss of control has already begun. Cheuvreux estimates that the gold price will be between US$600 and US$900 per ounce in the next years, with the possibility of reaching US$2,000 "or more" if there were a crisis in the United States. Why would the central banks want to suppress the price of gold? There are a series of reasons that all sum up to one: the wish to eliminate gold's monetary role. For a central bank, gold is a hindrance. It competes with fiduciary money and impedes the central banks from having a monopoly over money and absolute control over monetary politics. The central banks maintain that gold is a "relic" with disadvantages compared to fiduciary money, in particular the dollar. But gold has two advantages: It has a value whether or not more is produced and its value is not part of the debt of any government. Fiduciary money, like the dollar, loses value in moments of crisis and amid deterioration of the confidence in monetary institutions. Then the monetary role of gold reappears. It is argued that in the real world, the high debt of the United States, its massive deficits, inflation, and excessive growth of the money supply would bring about a resurgence of the monetary role of gold and its value as a refuge, which could catapult its price even further in the next five or six years. The gold market has a considerable macroeconomic importance for Peru because we are one of gold's major producers. Nonetheless there is no culture of gold in this country. In times of inflation and crisis, the refuge is the dollar. Today, with a weak dollar, the refuge would probably be the euro. It's difficult to benefit as individuals from a rise in the price of gold. It's not easy to buy gold in reasonable quantities for small investors. The majority of the large producers of precious metals -- in South Africa, the United States, Canada, Australia, and Mexico -- mint gold and silver money, and that is the extent to which they permit common people to save or invest in precious metals. It would be interesting if the Central Reserve Bank of Peru (BCR) began to contemplate this possibility. I have the impression that the politics of the BCR are influenced by what they perceive other central banks are doing. And what those other central banks have been doing is selling gold. But this is changing. Now the central banks are beginning to buy gold, particularly the central banks separated from the tutelage of the U.S. Federal Reserve: China, Korea, Argentina, and Russia. Gold makes up almost 4.4 percent of our reserves in Peru. By comparison, the world average is 12 percent, and countries like the United States, Germany, France, and Switzerland have more than 30 percent of their reserves in gold. So maybe it would be wise for the BCR to line up with the global average. This would be a sensible diversification at any time but it would be especially reasonable now amid global monetary uncertainty. If we don't, again we will be far behind global trends. Gold -- Sharefin, 19:47:18 02/22/06 Wed Gold Demand Soars Global appetite for gold soared to a record last year, driven by increased investment demand, then slipped in the fourth quarter as record high prices took their toll, a report said Wednesday. The London-based World Gold Council, the industry's international body funded by gold producers, said demand for gold surged to $53.6-billion (U.S.) in 2005 from $46.1-billion the previous year. Each of three categories — jewellery, industrial and investment — recorded “double-digit year-on-year growth in dollar terms,” the report said. But it was the influx of investment dollars that marked the biggest change last year. Investment demand surged 26 per cent to 600 tonnes in 2005 from the previous year, compared with a 5-per-cent rise in jewellery demand to 2,736 tonnes and a 2-per-cent climb in industrial demand to 419 tonnes. ~~~~ In addition, remarks by central banks have suggested they might be buyers of hold again, although the report said it does not expect to see any immediate substantial purchases. Fiat -- Sharefin, 10:36:54 02/22/06 Wed The current tax on the world to buy US Dollars so that they can purchase their oil needs.  Gold -- Sharefin, 10:35:04 02/22/06 Wed We Are In The Early Stages of the Next Major Bullion Boom For several years, researchers affiliated with the Gold Anti-Trust Action Committee (GATA) have contended that central banks have flooded physical gold onto the market to help suppress gold prices. They figure that as much as 48 million ounces of central bank gold are being surreptitiously leaked onto the market every year to help hold down prices. The International Monetary Fund (IMF) has helped hide such moves. Central banks and other governmental organizations that lease gold as required by the IMF to report this gold as still being in their vaults - even though the IMF publicly claims that it does not have such reporting requirements. What finally blew the lid off the gold price at the beginning of December was the Russian central bank admitting that the 500 tons (16.1 million ounces) of gold it had reported as being held in its vaults in compliance with IMF requirements actually was only 123 tons (3.95 million ounces) in vaults and 377 tons (12.1 million ounces) that had secretly been leased out. With the Russian central bank having recently announced plans to increase their gold reserves to more than 32 million ounces, a plan endorsed by Russian leader Putin, you can draw some inferences. First, it is likely that the Russian central bank will likely not renew many of their gold leases as they mature. This will quickly add to rising gold demand at the same time that it reduces apparent supply. Second, other central banks may be forced to call in their gold leases to shore up the strength of the nation's currencies, adding more to gold demand and further reducing supplies. ~~~ Now we have new information that the central banks may have been deceiving the public about how little gold they really had in their vaults. That could easily lead to a gold buying frenzy that would dwarf the results of the last four years where gold and silver have more than doubled in price. Gold -- Sharefin, 09:11:41 02/05/06 Sun Broker Cheuvreux Ponders $2,000/oz Gold RENO--(Mineweb.com) In a January 30th sector report, the Parisian international security broker Credit Agricole Cheuvreux raised its mid-cycle gold price estimate from $750/oz to $900/oz, suggesting the possibility gold could climb to $2,000 an ounce and higher. ~~~ Mylchreest claimed that "covert selling (via central bank lending) of gold has artificially depressed the price for about a decade, but Bank for International Settlements' data on gold derivatives suggests its impact in on the wan. ...Our $900/oz mid-cycle estimate takes into account the long-term average ratios between the gold price and the prices of oil and the Dow Jones Industrial average." Mylchreest declared that "we also see the possibility of a spike to $2,000 or higher, if the story on diminished central bank gold reserves becomes widely accepted, if central banks in countries with large US dollar holdings compete to buy gold and diversify forex reserves away from dollars, and if the U.S. economy slides into either high rates of inflation or deflation." He estimated that central banks have loaned out between a third and a half of their reported gold reserves or 10,000-15,000 tonnes of gold. The short position between the central bank and the billion bank "is the foundation for the gold derivatives market which grew rapidly in the 1990s and currently has a notional value of c.USD300bn. Non-gold producers account for the majority of the short position and may not be able to cover their shorts without causing a spike in the gold price," Mylchreest suggested. Meanwhile, Mylchreest asserted that "despite official denials, there is much evidence to back the gold price suppression claims" made by the Gold Anti-Trust Action Committee (GATA), adding that "support for GATA has come from senior Russians officials." "We estimated that there is a substantial supply deficit in the gold market of around 1,300 tonnes p.a. before any central bank selling and perhaps 700 tonnes p.a. after the publicly announced sales, but before covert selling," Mylchreest said. "This compared with world gold mine output of only 2,500 p.a." Gold -- Sharefin, 18:53:08 01/29/06 Sun Tocqueville Gold 2005 Year-End Review & Outlook When I first started writing about the gold market, I thought the gold price could eventually reach four digits (The Investment Case for Gold-January 2002; archived on www.tocqueville.com). That seemed incredible at the time, because, if right, gold would triple. With gold trading at $560/oz as of this writing, $1,000 doesn't seem so far-fetched. As the bull market has evolved, so has my thinking. Four digits no longer seems like a stretch to me. Rather, it would seem that gold would be correctly priced at $1,000, just to catch up to other commodities like oil, base metals, natural gas, and platinum. We calculate the market cap of all above ground gold, including central bank reserves, equals about 1.4% of global financial assets. In 1934 and 1982, when investor stress reached extreme readings, that percentage was between 20% to 25%  The current very low ratio indicates complacency and suggests that gold could double even if worst case macro economic and geopolitical scenarios fail to materialize. If they were to materialize, the potential for gold would go well into four digit territory. Macro and geopolitical nightmare scenarios are probably motivating some capital flows towards gold. However, we estimate these represent a small fraction of what is driving the price. In terms of investment rationale, it is still possible, and in fact quite commonplace, to make a benign, even Panglossian, case for gold's advance: global asset rebalancing towards "hard assets", of which gold is only a bit player, an incidental subset; continuing prosperity in Asia where there is a cultural affinity for the metal; high cash flow to oil producing countries, many of whom don't particularly like dollar assets; the resounding success of the gold ETF (GLD-NYSE), which enables risk averse investors to buy the financial insurance that gold represents cheaply and efficiently (and in a little over one year has become the 14thlargest holder of gold in the world); and the recent disappearance of the central banking community as sellers. Gold -- Sharefin, 18:49:24 01/29/06 Sun Gold miners boost exploration as prices rise Figures have recently hit the highest level since '81 DENVER — From offices in a downtown skyscraper overlooking the snowcapped Rockies, Newmont Mining Corp. is intensifying a global hunt for the next mother lode of gold. Spurred by rising prices, Newmont opened one gold mine in Nevada in December and plans to open two more — one in Nevada and another in Ghana — this year. Another in Ghana is on tap for 2007. Other corporate prospectors are taking similar steps, dusting off back-burner projects and pouring more money into exploration around the world. They are moves that environmentalists decry as a threat to pristine habitat, air and water. Mining companies pulled back on production and exploration when gold prices faltered and sank to a 20-year low in the late 1990s after central banks determined they no longer needed to keep large gold stockpiles. By 2000, production had flattened out and then declined. Gold prices, meanwhile, have climbed back into the mid-$500 range, recently hitting the highest level since 1981. "We think it's going to be a good period for some number of years," Newmont Chief Executive Wayne Murdy said. Production is expected to be flat to slightly up in the next few years as companies complete regulatory and permit processes before starting operations, analysts and industry officials say. "Many of these projects, which were discovered in the mid-'90s or even earlier, were put on the shelf when prices drifted below $350. But these are the kind of projects that are coming back on stream," said Bruce Alway, a senior analyst with London-based GFMG, a precious-metals consulting organization. "It also means people are going to be spending money on projects that were more advanced or they're going to fast-track stuff that they've got on the books," he said. Silver -- Sharefin, 18:44:31 01/29/06 Sun Expectations on ETF ruling push silver to 22-year high Silver set the pace for commodity markets this week, reaching a 22-year high of $9.76 a troy ounce yesterday, on hopes that a new exchange traded fund (ETF) would attract significant investor interest. Barclays Global Investors is awaiting US regulatory approval for a silver ETF, and this generated higher trading volumes. ~~~ "There is a serious risk that the silver price could ramp up by 25 per cent over the next couple of months, driven by supply concerns," said Paul Merrick at RBC Capital Markets. With inventories low and falling, some fear an ETF could drive the market into a serious deficit. Gold ETFs, which allow investors to trade without the inconvenience of having to store or deliver the physical metal, have grown rapidly over the past year to accumulate 424.7 tonnes. gold -- Sharefin, 18:40:37 01/29/06 Sun Central Bank Gold Sales Seen Falling Short of Quota -HSBC LONDON -(Dow Jones)- European central banks are highly unlikely to sell the total 2,500 metric tons of gold permitted under the five-year Central Bank Gold Agreement, HSBC analyst Alan Williamson said Friday. Total confirmed and probable sales under the renewed agreement currently stand at 1,441 tons, of which 599 tons has already taken place and a further 842 tons are expected to take place over the balance of the agreement, Williamson said. "Within this category we have included the 130 tons of Swiss sales, which completes the longstanding disposal program, the 600 tons of likely French sales (151 tons already completed) and the Dutch sale of 165 tons (75 tons already)," Williamson said. "In addition, we have included likely Portuguese sales of 160 tons (of which 65 tons has been completed), Austrian sales of 90 tons (of which 15 tons done already) and probable Swedish sales of 60 tons (17 tons done)," he added. Williamson said also included are European Central Bank sales of 47 tons undertaken so far and the 6 tons of gold sold by the Bundesbank for coin minting. Also, Belgium has likely sales of 120 tons (of which 30 tons have been completed), and Spain has sold 63 tons. "These sales total 1,441 tons, or just over half of the potential sales under the agreement," Williamson added. In addition to these sales, there is a potential 876 tons of central bank disposals that can be identified, Williamson said. "Within this we would include a further 594 tons of German sales if the Bundesbank were to take up its full 600 tons allocation - although it passed on the possibility of sales in the first year of the revised agreement and has not yet stated its intentions," he noted. "In addition, we have included a further 220 tons of possible ECB sales, which is approximately what would need to be sold to reduce its holdings to 15% of total reserves, and a possible 62 tons of Belgian sales," he said. But even in the "unlikely event" all these sales materialize, Williamson said total sales under the renewed Central Bank Gold Agreement would be just over 2,300 tons, still almost 200 tons short of the maximum permissible. "Unless another central bank emerges as a seller, we remain of the view that the full 2,500 tons quota will not be filled. Indeed, in the event that either the Bundesbank and/or the ECB decide not to undertake any further sales, aggregate sales will fall short of the 2,500 tons maximum," he added. The five-year agreement is the second of its kind and limits combined annual sales of gold by individual countries to a total 500 tons. Each Central Bank gold agreement year runs from the end of September. gold -- Sharefin, 18:39:07 01/29/06 Sun Oil boom spurs gold demand in Gulf DUBAI: Gulf Arab demand for gold and diamond jewellery will surge in 2006 driven by soaring disposable incomes triggered by booming crude oil prices and flamboyant tastes, jewellers and officials said on Thursday. Gulf Arab visitors from oil-rich states such as Saudi Arabia and Russia are pouring into the desert emirate of Dubai to shop for discounted, tax-free luxury goods at huge shopping zones such as the Mall of the Emirates, which even has a ski slope, and the Gold Souk in the labyrinthine historic downtown. ~~~ Colin Griffith, chairman of the Dubai Gold and Commodities Exchange (DGCX), which operates a new gold futures market, predicted increasing sales of gold jewellery in Dubai to key buyers, such as the fast-growing Indian middle classes. “The trend is clearly up,” he told Reuters in an interview. Dubai as gold centre: Dubai is a leading centre for the import and re-export of gold, bringing in 503 tonnes of gold in 2004, the latest full-year figures, and sending out 261 tonnes, Griffith said. gold -- Sharefin, 18:37:36 01/29/06 Sun Inclusion of gold in MCEX - main reason behind spurt in prices Chennai, Jan. 29 (PTI): The inclusion of gold in the 'Multi Commodity Exchange'(MCEX) of India was the main reason behind the spurt in the prices of the yellow metal in the country during the past six months, a leading gold jeweler in the city said here on Saturday. The inclusion of gold recently in the MCEX had resulted in some sort of 'gambling' by some individuals, who hiked the prices 'artificially', thus, affecting the business of retailers and goldsmiths, Madras Jewelers and Diamond Merchants' Association President L K S Syed Ahamed, told reporters here. Quoting an example, he said a particular merchant would 'book' an order for gold worth Rs 8 lakhs with the MCEX, for which he would only pay Rs 40,000 as advance. He would "sell" the 'booked gold' when the prices went high, thus, making a profit, without even buying it himself. "The association is seeking legal advice on this issue of how to put a full stop to this unhealthy practice. Either gold should be removed from the MCEX or the buyer who booked the gold only over phone should be asked to pay the entire amount in one go", Ahamed said. The annual transaction of the metal in India is estimated to be 900 tonnes, the highest in the entire world, and South India alone accounts for 50 per cent of it, with Tamil Nadu topping the list among the southern states, he said. Fiat -- Sharefin, 17:34:52 01/20/06 Fri Selling panic closes Tokyo market Tokyo's stock exchange closed early for the first time in its history on Wednesday, in a bid to head off a meltdown after a frantic day's trading. The move was sparked by heavy selling in shares following allegations of fraud at internet firm Livedoor. The exchange suspended share dealing at 1440 local time (0540 GMT) - 20 minutes early - as the number of transactions threatened to breach trading capacity. Japan's Nikkei share index ended down 3% or 464.77 points at 15,341.18. Silver -- coco, 22:49:53 01/18/06 Wed re Silver Review by Israel Friedman "silver must be reviewed as a long term investment" but most of us have held silver bullion for 20+ years so how long is long? Silver is up 30% - in US dollars but much of the rest of the worlds currencies have appreciated against the US $ so this statement ONLY applies to the US. We are also repeatedly told of the major shortage of silver in the Comex and getting less every year and if this is the case why is it taking so long to become nil. Just 2-3 years ago I kept reading that silver would be $20 - $25 an ounce by the end of 2005 and yet it is still under $10 - seems the cabal is still alive and well. Thank goodness that forums like this have kept me "in silver." Most interesting article from Srinjay Sengupta - thanks gold -- Sharefin, 03:11:58 01/09/06 Mon Gold to sustain bull run in 2006 INDORE, India -- Overseas spot gold prices are likely to stay between $510-$600 per ounce during 2006 with a bias towards the higher end of the band because of heightened fund buying, demand- supply mismatch, a weakening dollar and speculative purchases by central banks, according to a report by the National Commodity and Derivatives Exchange of India (Ncdex). Indications that the US Federal Reserve might finally stop hiking interest rates may also push up gold prices, the report said. Quoting extensively from projections made by various fund houses and banks, the report said gold prices during the year are expected to be on the higher side. "Gold's bull run is likely to sustain itself in the near term as it continues to get support from investment funds and positive fundamentals," Ncdex said. The Ncdex report said the yellow metal remains high on the priority list of many funds and asset managers who want to diversify their portfolio. On the demand-supply front, the report said, demand in 2005 for the metal was around 3,957 tonnes, while supplies were only around 2,495 tonnes, and the situation is likely to continue in 2006 as well. "Moreover, moves to develop new mining ventures has been slow despite the surging gold price as production costs had sharply risen," Ncdex said. Gold -- Sharefin, 18:50:13 12/26/05 Mon Former Wall Street "Elf" Comments on Today's Gold Market RESOURCE INVESTOR: Do you subscribe to the belief that “the gold market is being manipulated?” MARK LEIBOVIT: Absolutely. From my understanding, the Blanchard suit against Barrick clearly demonstrated in testimony that the market was being manipulated, possibly even under the direction of Alan Greenspan himself. ~~~ MARK LEIBOVIT: I subscribe to the view we're in a 20-year bull market cycle. Anything is possible over such a period of time. For now, let's say $750-$800 an ounce within three years. Gold -- Sharefin, 18:45:18 12/26/05 Mon Forex watchdog faces dilemma on expanding gold reserve SHENZHEN, Dec. 26 (Xinhuanet) -- To buy or not buy? That's a question for Chinese foreign exchange authorities. They have been urged to expand gold reserve since the Renminbi appreciation, but the decision is hard to make since the gold prices are rocketing. Some economists have been appealing to the State Administration of Foreign Exchange to expand China's gold reserve after the Renminbi appreciation in a bid to reduce the country's reliance on the greenback. But others believe it's not a proper time to buy gold at such high prices. The State Administration of Foreign Exchange did not let out their voice, but folk economists have been prompting them to take actions. China should increase its gold reserve from 600 tons to about 2,500 tons in a short term and to 3,000 tons in a long term to cope with the versatile exchange rate risks, said Teng Tai, an economist of China Galaxy Securities Company. Too little gold reserve would pose threat not only to China, but also to the global monetary system, Teng said. China should increase gold reserve to reduce the foreign exchanges risks and diversify its state reserve with various goods, like gold and oil, in the long run, said Shen Xiangrong, director of the Shanghai Gold Exchange, China's sole gold market. gold -- Sharefin, 21:28:10 12/20/05 Tue Russian Gold Production To Fall: Gold Union Head 20.12.2005 09:00 Russia could reduce gold production 13 per cent by 2010, compared with this year's anticipated total to 130.7 tonnes. This information was presented by Valery Braiko, the head of the Russian Gold Prospectors' Union, said at the Union's congress. According to him, gold mine production in 2005 would fall by 10 tonnes to 150 tonnes due to a drop in mine production by all major producers except Polymetal. Overall output, including mined gold, by product mine production and gold recovered from scrap, would be 170 tonnes, compared with 180.5 tonnes in 2004, he said. Gold -- Sharefin, 07:03:03 12/16/05 Fri Gold to shoot up to 650 dollars an ounce LONDON (Reuters) - Heavy demand for gold from Russia, China, India, the Middle East and possibly the United States is likely to push the price up to a record high of $650 an ounce by the end of 2006, a fund manager told Reuters. In the United States, where demand for gold is about half that of Europe, concern about the impact of the changeover at the millennium boosted gold demand in 1999, and fear could at some time be a factor again, Frank Holmes, chief executive of U.S. Global Investors, said this week. "If fear takes hold the price of gold could jump faster than people are expecting," he told Reuters in an interview. Historically the highest price for spot gold was seen in 1980 at $850 an ounce and recently Japanese demand has pushed prices up over $540 an ounce, a rise of nearly 24 percent so far this year. Most of the demand has come from fund managers looking to diversify their portfolios into precious metals which have little or no correlation to stocks and bonds and central banks swapping dollar reserves for gold. Emerging market consumers are also buying more gold jewellery. "Emerging markets are driving up the price of gold," Holmes said. Holmes's fund invests in gold miners. It has around $1 billion (570 million pounds) under management and in the 12 months to September it returned nearly 20 percent. "The supply coming out of gold mines has been falling for the past couple of years and will continue to fall to the end of the decade. The birthing process to bring new supply on stream can take 10 to 15 years." The prospect of some central banks raising the proportion of gold they hold in their reserves is also on the agenda and adding to the atmosphere of gold fever in the market. Last month Russian President Vladimir Putin called on the central bank to gradually raise gold reserves. Russia currently holds around 386 tonnes or 12.4 million troy ounces of gold. "That triggered a rise above $500 an ounce," Holmes said. "Prior to that there was China, which we know is aiming to turn 2.4 percent of its foreign currency reserves into gold." Gold -- Sharefin, 06:59:20 12/16/05 Fri Bank of Russia Will Re-Evaluate Gold Yesterday, Bank of Russia announced that starting from January 1, 2006 it will re-evaluate the gold in the country reserve according to market prices. This decision was explain by the “necessity of aligning the published data with current market realities.” However, it looks like in reality the Central Bank (CB) is getting ready to buy massive amounts of gold, and the market prices will allow the bank to avoid accounting mistakes. Yesterday Central Bank announced that from Jan.1 of next year it changes appraisals for the gold, which is kept in national gold reserves. Instead of previous fixed prices, the CB will start to appraise the precious metal according its own quotes, which are close to the market price. Officially, the CB proclaimed that this re-evaluation is necessary “to align the published data with current market realities.” For the first glance, it looks logical—currently the gold in state coffers is appraised by the CB fro $300 per ounce. The same quotes were in the market in 2002. Since that time, the price for gold went up by 1.7 times. For instance, yesterday prices for the gold on world market were $520 - $524 per ounce. The CB decision might also have different motivation. During his recent visit of Magadan, Russian President Vladimir Putin announced: “I think Central Bank should pay more attention to precious metal on Russian Federation's territory when it is forming gold and currency reserve.” Besides, not long before this presidential remark, the CB officials headed by Chairman Sergey Igantiev, were saying about possibility to increase gold's share in gold and currency reserve. These statements even caused gold price fluctuation on world market. However, if the bank really is going to buy gold for the reserve this measure is justified. With such significant difference between purchasing price and the cost reflected in accounting books, there will be unavoidable serious mistakes in reporting documents. And this is not going to satisfy CB or its auditors.  Gold -- Sharefin, 20:38:05 12/15/05 Thu Gold, by default I plead guilty. For denouncing gold as an asset class. For castigating millions of Indian investors who invested their savings in it. For being insensitive to the ground realities of this ‘obsession'. For the dozens of times I've publicly condemned it during the past decade. And, most importantly, for not being able to empathise with the large mass of India that lives 50 km beyond metros, cities and large towns. But the reason is not because of price movements that can, and in this case have, proved analysts who pray at the alter of financial assets wrong. True, over the past 12 months, gold has risen by 25 per cent, breaching the Rs 8,000 mark, to close at Rs 7,540 yesterday. True, it is only the past three years has seen the beginning of this stratospheric journey. True, between July 1991 and March 2002, the price had been fluctuating in the Rs 4,000 to 5,000 band—except, of course, the small 14-month period ending exactly nine years ago, in December 1996. Also true, this spurt in gold prices has broken all previous trends and converted one of the most striking and most repeated past truth into a present myth. ~~~~ Let's leave global trends alone and move towards a more mundane and touchable reality here. The villager in Nu, about 100 km off Delhi, is unconcerned with anything beyond his crop and capital. As and when he generates a surplus, if it is large enough, he buys land; if it is smaller, gold. Now, there are more than 150,000 post offices, four out of every five catering exclusively to rural areas, according to Department of Posts. They are supposed to offer small saving schemes like PPF to small savers. As we all know, these are instruments that offer artificially high returns that are guaranteed by the government. And still, farmers, farm workers, petty traders, the whole village economy buys gold, not PPF. The reason? Access. Try opening a PPF account there and you face a process, a bureaucracy, a system that forces you to hit gold. Try opening a bank account with a public sector bank in the closest town and there are no cheque books. Simple matters that we take for granted in cities turn into full-fledged projects. Are these instruments, these banks (for now, we're not even talking about mutual funds) the exclusive preserve of the educated, wealthy, urban citizens? Surely, there is a logic why people buy small amounts of gold for their daughters in these villages—gold, for them, is a means of last resort. But here lies the surprise: most of rural India does not, as analysts imagine, buy gold jewellery, but gold coins. Gold jewellery, says an analyst, is bought by urban investors. The rural population doesn't buy jewellery because there is a strong emotional connect with it. A mundane coin is a mundane coin. Sell one today, buy one tomorrow—no guilt, no sentiment. The three-part logic is crystal clear. One, the front-end of financial intermediaries doesn't offer trust or convenience. Two, the processes are so cumbersome that corruption is inevitable—in the heart of Delhi, I have personally seen an old woman grovel before a post office clerk and finally pay a bribe to get her own money back even as I was told to deploy my small investment through an agent, so I could get part of his commission back. Three, higher returns, therefore, don't matter. It's gold, therefore. With all its accompanying statistics—Indian public holding about 7-8 per cent (more than 15,000 tonnes) of global stocks, buying Rs 40,000 crore (19 per cent of global consumption) of gold every year and so on. The recent change in guidelines that will pave the way for mutual funds to invest in gold is thrice removed from traditional gold buyers—lack of access, trust, understanding. For this to change, lots more needs to change. Guilty, as charged. Gold -- Sharefin, 21:14:53 12/14/05 Wed TOCOM Extraordinary Margins on Gold and Gold Options At the Precious Metals Market Management Committee held on December 12, 2005, the decisions were made to impose Extraordinary Margins for existing and newly established positions in the gold market on December 14 for all the contract months. Lifting of the Extraordinary Margins will be determined taking into considerations of the price movements, and will be notified as soon as the decesion is made. Commodity Contract Month Extraordinary Trading Margin / lot (Proprietary, General Customer, Member Customer) Gold All Contract Months (Existing Positions) JPY 25,000 All Contract Months (New Positions) JPY 50,000 Gold Options (sellers only) All Contract Months (Existing Positions) JPY 12,500 All Contract Months (New Positions) JPY 25,000 * Existing Positions: Positions which were made before December 14. * New Positions: Positions newly established on and after December 14. Gold -- Sharefin, 23:30:48 12/09/05 Fri Gold fever rages as price tops $530 Gold fever took prices as high as $530.40 an ounce for the first time in nearly a quarter of a century on Friday as investors, particularly in Asia, rushed to buy an asset that has gained over 16 percent in the past month. "This buying is just more of the same of what we have been seeing. I suspect also that it may be central bank buying that is supporting it on the dips," Paul Merrick of RBC Capital Markets said. ~~~ Gold's tight supply, strong global demand, worries about inflation and growing fund interest in precious metals and other commodities have unleashed a wave of speculative buying, defying warnings that the market was overbought. "The activity in the bullion market remains very impressive, with aggressive buying of any dips and a dearth of selling in the rallies helping to create a bullish chart pattern of higher lows and higher highs, thereby attracting more momentum-based fund buying," Alan Williamson of HSBC said. Fund managers were buying as part of a strategy to diversify portfolios, while some investors were speculating about potential purchases from some of the word's central banks -- previously long-time sellers "I strongly believe that Asia and China are buying -- but we will not know until they've finished buying or are close to it, for sure," said Juerg Kiener, chief investment officer at Singapore-based hedge fund Swiss Asia Capital, referring to central banks in the region. ~~~ In November Russia, Argentina and South Africa expressed interest in increasing their gold holdings, even though European central banks have sold more than 100 tonnes since September. Gold -- Sharefin, 10:06:14 12/01/05 Thu Awesome numbers here COMEX Deliveries We've just made a very important technical breakout & the numbers here are suggesting full market participation. According to these numbers the following deliveries have taken place Dec 1st - 13,664 contracts for gold or 1,366,400 ounces Dec 1st - 4,143 contracts for silver or 20,715,000 ounces Today: Dec 2nd - 1549 contracts for gold or 154,900 ounces Dec 2nd - 691 contracts for silver or 3,455,000 ounces Also of note is that the recent margin increases for contract positions. It almost looks like a raid on Comex stocks has begun. Look for excitement ahead. Fiat -- Sharefin, 06:23:40 12/01/05 Thu An Economy On Thin Ice By Paul A. Volcker The U.S. expansion appears on track. Europe and Japan may lack exuberance, but their economies are at least on the plus side. China and India -- with close to 40 percent of the world's population -- have sustained growth at rates that not so long ago would have seemed, if not impossible, highly improbable. Yet, under the placid surface, there are disturbing trends: huge imbalances, disequilibria, risks -- call them what you will. Altogether the circumstances seem to me as dangerous and intractable as any I can remember, and I can remember quite a lot. What really concerns me is that there seems to be so little willingness or capacity to do much about it. ~~~ don't know whether change will come with a bang or a whimper, whether sooner or later. But as things stand, it is more likely than not that it will be financial crises rather than policy foresight that will force the change. ~~~ So I think we are skating on increasingly thin ice. On the present trajectory, the deficits and imbalances will increase. At some point, the sense of confidence in capital markets that today so benignly supports the flow of funds to the United States and the growing world economy could fade. Then some event, or combination of events, could come along to disturb markets, with damaging volatility in both exchange markets and interest rates. We had a taste of that in the stagflation of the 1970s -- a volatile and depressed dollar, inflationary pressures, a sudden increase in interest rates and a couple of big recessions. Gold -- Sharefin, 04:45:01 11/30/05 Wed Gold Futures Margin Rate and Inter-Exchange Spread Changes Up to 50% increase on gold & silver margins...... Gold -- Sharefin, 10:14:57 11/27/05 Sun Will Dubai Become the New "City of Gold"? The much anticipated Dubai Gold and Commodities Exchange (DGCX) has officially launched becoming the world's newest commodities exchange and the first such marketplace in the Middle East. ~~~ In a late October press release, Dubai Metals and Commodities Exchange's gold executive director Colin Griffith said strong demand would boost Dubai's gold imports to 525-540 tonnes by the end of 2005 despite the recent jump in prices. Imports were 503.5 tonnes in 2004 while exports stood at 260.909 tonnes. He also said jewellery sales were expected to rise to 110-115 tonnes this year from 100 tonnes a year ago. “The Dubai exchange is an important development for the gold market in my view, and I expect this exchange will within five years have a standing comparable to other major gold exchanges like the Comex,” Turk concluded. Gold -- Sharefin, 10:00:31 11/27/05 Sun China Should Raise Gold Reserves-Economist (Dow Jones) China should raise its gold reserves to around 2500 ton in short-medium term, to over 3000 ton long-term to diversify FX risks, Teng Tai, chief economist at China Galaxy Securities, says in article published on state-run China Securities Journal. Gold -- Sharefin, 00:42:41 11/27/05 Sun Gold price hike freezes real estate market Over the last two weeks, real estate agents have had few customers. Doan Khac Thuat, Director of Saigon Real Estate Trading explained that the dramatic gold price increase has caused trading activities to come to a halt. Currently payment in real estate is undertaken by gold, not cash, and with such a dramatic price increase, clients will have to pay tens of millions of VND more for a house valued at 1,000 taels of gold. ~~~ According to Nguyen Ngoc Duong, Deputy Director General of Van Phat Hung, the continuous price increase will prompt investors to buy gold instead of houses and land as the profit made by real estate investment cannot offset the increase of gold prices. If the gold price keeps increasing, the real estate market will remain frozen. According to Lam Van Chuc, Director of Phuc Duc, the current real estate market has been narrowed compared to the same period last year. On Tran Nao and Luong Dinh Cua streets, where 110 real estate centres used to practice, there are now only 10 companies operating. Mr Chuc went on to say that real estate businesses are facing big difficulties due to stagnant activities, while some have to pay large sums of interest to banks. “If the situation continues, 30% of real estate businesses will go bankrupt,” he said. Gold -- Sharefin, 20:44:51 11/25/05 Fri Le Metropole Members, 4:53p ET Thursday, November 24, 2005 Dear Friend of GATA and Gold: When Russian President Vladimir Putin this week attended a mineral resources exhibition in the Russian Far East, endorsed the plan of the Bank of Russia to double its gold reserves, and expressed support for increasing his country's gold production, many assumed that Russian gold purchases would come from domestic production and thus not disturb international markets. But today's RIA Novosti report, dispatched to you earlier today, quoting the Bank of Russia's first deputy chairman, Alexei Ulyukayev, suggests otherwise. It suggests that Russia is ready to enter the physical gold market everywhere. This would be revolutionary, as noted by Michael Kosares, proprietor of Centennial Precious Metals in Denver, whose analysis at his firm's Internet site, www.USAGold.com, is appended here. Indeed, the unusual resilience of the gold price in recent months --particularly since GATA's Gold Rush 21 conference in Dawson City, Yukon, Canada, which was attended by one of President Putin's economic advisers, Andrey Bykov -- hints that a central bank has been a buyer for some time now. Of course Russia's central bank took official note of GATA in June 2004, when another of its deputy chairmen, Oleg Mozhaiskov, told a meeting of the London Bullion Market Association in Moscow about GATA's contention that Western central banks had been rigging the gold market to the detriment of the developing world: http://www.gata.org/RCBTakesNote.html While GATA, given the Russians' interest, has been trying to convey much to them, we have no inside information here. The Russians may be good listeners but they have yet to prove themselves conversationalists. But if YOU had a load of paper and electronic currency whose proliferation was unlimited and if you were disadvantaged by the imperial schemes of the issuer of that currency, what would YOU do to protect your wealth and your national interests? Centennial Precious Metals' Kosares argues that if the Russians are serious about buying gold, their announcement is the equivalent of the Washington Agreement of 1999, which put a ceiling on central bank gold lending and touched off gold's bull market. Kosares' analysis is below. CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. * * * By Michael Kosares Centennial Precious Metals, Denver http://www.usagold.com/cpmforum/ Thursday, November 24, 2005 "First Deputy Chairman of the Central Bank Alexei Ulyukayev said the bank would be purchasing gold 'on all markets on which it is available,' meaning both domestic and foreign markets." A few observations: 1. We should not forget that it was central bank buying that broke the back of the anti-gold cartel in the late 1960s early 1970s. This paved the way for the massive bull market of the 1970s. 2. Ulyukayev is not talking about paper trading for speculative purposes. He's talking about buying physical gold and storing it in reserve as a long-term asset. 3. This policy is a major, decisive departure for the G-8 in that one of its members will be exchanging currency reserves for gold -- and after a public disclosure. Russia now is receiving a large amount of foreign exchange for its oil and gas (this will not change for quite some time), probably in the form of dollars and euros.This looks like the first step in a long-term program. 4. Russian gold buying will become a new element in the physical gold market, and likely will put even more pressure on those short the metal to cover now while it is still cheap -- of course, that Russia follows through. But I can't see why they would announce such a plan without meaning it. 5. I rate this announcement by the Russian central bank as the equivalent of the Washington Agreement in 1999, which kick-started the current gold bull market. It amounts to a de-jure action that could have a major impact on the gold market and comprise the primary driving force for the second leg of this bull market. -END- Fiat -- Sharefin, 01:56:53 11/20/05 Sun HOUSING BUBBLE: the leak is growing and growing The housing bubble will burst with a bang without even a price collapse. When house sales slow, the impact does not stay mild. Builders typically finance new house construction with construction loans at high rates, even in this low rate environment, that have short maturity, typically 12 to 18 months. In other words, builders must roll over their construction loans with sales proceeds from finished homes, or the construction loan will default. Thus the financing structure of new homes production is sensitive to sale pace, which in turn is sensitive to sales price and mortgage rates. But prices cannot fall to speed up sales because the land acquisition and construction loans are structured by expectation of continuingly rising prices. When construction loans default en mass, the financial sector goes into convulsion. For existing homes, the weak points are debt service shortfalls, which are caused by rising interest rates and falling equity value (collateral) and stagnant income. With full market price mortgages, the incentive by borrowers to default when the market turns will be irrestitable especially for speculative investors. With cash out fanancing, many homes mortages will be underwater when the market cracks or even just stop rising. In previous crashes, lenders had a 30% equity cushion. After foreclosure, lenders can reduce the price by 30% and put the foreclose home on the market to get all its money back. But with cash out financing thining equity to zero, lenders even after foreclosure cannot reduce prices without eating full loss. Thus prices stay high, halting all sales. No sales, no cash flow means a sharp rise in non-performing assets and the financial structure under housing will collapse with great speed. The crash will not be a orderly correction of prices which would take time, but a collapse of mortgage finance that can suddenly erupt in a matter of weeks . A slow down of sales for six month can suddenly turn into massive defaults of securitized obligations within days, causing hedge funds to go under and pension funds to suffer heavy losses. It will not be merely a housing bubble burst. It will be a massive collapse of the mortgage backed security market with complex counter-party failures. It will be the financial equivalent of a neutron bomb that kills investors but leaving the buildings untouched. There will be no soft-landing. Either keep house price rising or face a massive financial melt down. The Fed can lower frr rate target to below inflation again but still it cannot stop the loss of money velocity, a deadly situation for a debt infested economy. The only option is inflation targeting, but under current circumstances of debt overload, inflation targeting cannot succeed unless wages rise spectacularly and the Fed has foreclosed that option long ago, since the expiration of Humphrey-Hawkins. A sudden sharp rise in US wages will bring on a new wave of corporate bankruptcies. Bernanke, keep the helicoptor in the hanger, its useless. No helcoptor can carry enough money to save the day. If you know what's good for you, withdraw from the new job now and go back to Princeton. Gold -- Sharefin, 00:33:53 11/17/05 Thu Russian Central Bank May Double Proportion of Gold Reserves Addressing delegates to the LBMA Precious Metals Conference on its last day, Russia's Head of External Reserves Management, Maria Guegina, said gold reserves as a proportion of all reserves may be doubled. Noting that Russia presently has 5% of its national reserve portfolio invested in gold, Guegina said, “10% of gold in reserves would be appropriate”. ~~~ Russia presently has 500 tonnes (17.64moz) of gold in reserves which it segregates as monetary gold, allocated gold and term deposits. The envisaged doubling of Russia's gold reserves as a proportion of all reserves at present values would consume all the country's annual gold output for around three years. Russia produced nearly 182 tonnes of gold in 2004 and is expected to mine and sell 183 tonnes this year. ~~~ Were the Russian Central Bank to move immediately to the 10% gold allocation, it would need to buy an additional 21.1 million ounces, or 646 tonnes. That is equivalent to over two years of South Africa's total annual gold output. Gold -- Sharefin, 23:08:40 11/14/05 Mon Gold output to drop to 80yr low 14/11/2005 19:15 Johannesburg - South African gold output was likely to fall to an 80-year low of 300 tons in 2005 down from 346 tons in 2004, which was the lowest level since 1931, Andisa Securities gold analyst Dr Dave Davis said on Monday. From 2006, South African gold output was likely to stablise at about 300 tons as a number of gold mining projects came on line like the South Deep mine, AngloGold Ashanti's (ANG) Moab Khotsong mine and new gold mining projects that Harmony Gold (HAR) was developing, Davis said at the London Bullion Market Association Precious Metals conference. In 2002, South African produced 400 tons of gold…. Gold -- Sharefin, 21:38:11 11/12/05 Sat He's Halfway There More recently the maestro has been creating too much money. In four years the price of gold--the best barometer of monetary disturbance--has shot up almost 80%. One result is the energy bubble. Another is higher short-term interest rates. Greenspan has been giving us the worst of both worlds: a mounting cost of money and more inflation. Bernanke appears to favor a more formal, less personal, less idiosyncratic approach. He has advocated adopting formal inflation targets. This is progress--of a sort. The problem, of course, in targeting inflation is in deciding which indexes and market indicators (such as inflation-adjusted Treasury bonds) to use. Indexes tell us what happened in the past. Monetary errors don't show up in indexes for at least a year. Think of the proverbial tanker and how long it takes for the vessel to change direction after the captain has made the decision to do so. We will have to see whether Bernanke can make the intellectual leap from inevitably flawed inflation indexes to using gold as his guide. Commodity markets, most particularly gold, will let Ben Bernanke know--in real time--whether he's gotten monetary policy right or wrong. If he does that right, he'll be our greatest central banker ever. One thing he will discover: Setting interest rates is a clumsy, blunderbuss, hit-or-miss way to conduct monetary policy. Rates should be set by the market. The Fed should instead target a narrow range for the price of gold and then create or extinguish money to keep the price within that range. Steve Forbes Fiat -- Sharefin, 00:36:42 11/12/05 Sat That is clearly the Fed's strategy That is clearly the Fed's strategy: to inflate while pretending to successfully restraining inflation. Holding cash will be dangerous if the Fed succeeds in its strategy. But the chances of success is very low. Asset price inflation will inevitably lead to stagflation which can only be cured by asset deflation, as Volcker found out in the 1980s. The possibility of the inflation/deflation cycle being accelerated by unforeseen events is unpredictable. But even without external perturbation, income cannot keep up with debt service after cash-out refinancing run dry. As asset appreciation slows while debt service needs stay high, a consumption liquidity crisis will emerge, which is deadly for a debt economy. As both personal and corporate income stagnates, credit rating will fall causing debt service charges to rise, further exacerbating the liquidity crisis. In the mean time, the Fed will run into a liquidity trap, pushing on a credit string. The Fed will run out of ways to inject money into the economy. Debt default will spread and bankruptcies will rise to wipe out debt, but the price will be a contraction of the economy. Bankruptcies make the post-bankrupt companies smaller as they emerge from bankruptcy and will decimate pension assets, further cutting into aggregate demand as well as the supply of capital. The Fed is not without reason in its dismissal of the significance of M3. After all, what is M3? It measures M2 plus time deposits over $100K and term repo agreements. But as I pointed out in my articles on repos, most of the proceeds of the now $5 trillion repos daily market goes to finance derivative contracts. Among monetary economists, the measurement of L, for liquidity, which measures M3 plus all other liquid assets, is now the key measurement, but L is not easy to measure because liquidity is a market condition rather than an intrinsic value of any asset in normal times. As usual, an emergency is one when you don't know what finally hit you at the most unexpected time. And one thing is certain, rising speed generated by fast acceleration always ends in emergencies. Hold on to your seats, we are heading for some very interesting times. Fiat -- Sharefin, 09:08:16 10/20/05 Thu Refco's Demise Stirs Memories of Previous Meltdowns Oct. 19 (Bloomberg) -- Refco Inc.'s two-week slide into insolvency stirred memories of the last time a big Wall Street firm teetered, then collapsed -- except it was quicker. Fifteen years ago, rumors swirled for weeks that Drexel Burnham Lambert Inc. was being targeted by regulators before the 1980s junk-bond financier filed for bankruptcy, author Martin Mayer said. The demise of Refco took just seven days. ``This was very quick,'' said Mayer, who interviewed top Refco executives for ``Markets: Who Plays, Who Risks, Who Gains, Who Loses'' (Norton, 1988). ``There is nothing between Drexel and Refco that is comparable in terms of speed and violence.'' Refco's collapse came a week after it disclosed that former Chief Executive Officer Phillip Bennett owed the company $430 million and that 2002-2005 financial statements shouldn't be relied upon. Refco filed for bankruptcy court protection Oct. 17 and agreed to sell its futures trading business to a group led by J.C. Flowers & Co. for $768 million. The company hired Skadden Arps Slate Meagher & Flom LLP to handle its bankruptcy. A hearing is scheduled for 11 a.m. today in New York before judge Robert Drain. Refco's business will be auctioned through the bankruptcy process ``later this month or early November,'' Christopher Flowers, chairman of J.C. Flowers, said in an interview yesterday. Drexel Between Drexel and Refco, at least half a dozen major financial companies have melted down. Long-Term Capital Management LP, a hedge fund run by John Meriwether, lost $4 billion in 1998 after a debt default by Russia. Fourteen securities firms and banks organized a $3.6 billion bailout in September of that year to avert the turmoil a forced sale of LTCM's investments would have caused. Barings Plc, a 233-year-old British merchant bank, collapsed three years earlier after Singapore-based trader Nick Leeson racked up $1.4 billion in losses. That same year, Tokyo-based Daiwa Bank Ltd. was forced to shut U.S. branches after revealing a $1.1 billion loss from 11 years of unauthorized trading by its chief New York government bond trader, Toshihide Iguchi. The difference for Refco is that it wasn't a rogue trader, or a misplaced market bet, that did in the company but rather allegedly criminal behavior by the company's CEO. Refco's disclosure of his debt set off a confidence crisis among clients and investors that couldn't be stemmed. ``The whole issue is trust,'' said Peter J. Solomon, chairman of the New York investment bank Peter J. Solomon Co. ``The trust was broken, and people didn't want to stay around long enough to verify.'' Warning Signals Refco provided some warning signals before its initial public offering in August. The company's chief financial officer left in October 2004, and a replacement wasn't named until January. The former CFO, Robert Trosten, received a $46 million severance package, the New York Post reported. Refco's auditor, Grant Thornton LLP, found two ``significant deficiencies'' in internal controls, according to the prospectus filed with the U.S. Securities and Exchange Commission. They included a shortage of people to prepare its financial statements and a lack of formalized procedures for closing the company's books. Grant Thornton CEO Edward Nusbaum said his company was fooled by Refco's Bennett. Refco raised $670 million in the IPO and its stock jumped 25 percent on its first day. The shares, priced for the sale at $22, now trade at 65 cents. ``If you are a compliance officer at one of the large companies and you read about how four years of financials can't be trusted, you're thinking there's no percentage in being a hero,'' said John Moscow, the prosecutor who won 16 convictions in the Bank of Credit and Commerce International case in the 1990s. ``You head for the hills.'' `Rogue Traders' Apart from Daiwa, so-called rogue traders have made an appearance most often when financial companies imploded during the past decade. That was the case in 2002, when Allied Irish Banks Plc discovered that John Rusnak, a trader at its Allfirst Financial Inc., had amassed and hidden $691 million in losses in more than five years before the bank noticed any discrepancies. It was much the same situation in 1996, when Sumitomo Corp. disclosed a $2.6 billion loss on copper trades. The Japanese firm blamed unauthorized trades by its chief copper trader, Yasuo Hamanaka, who was known as ``Mr. Copper'' in the markets because of his aggressive trading. A wrong-way market bet spelled doom in 1998 for Peregrine Investments Holdings Ltd., a Hong Kong investment bank run by Philip Tose. The bank fell under the weight of at least $300 million of bad debt that it bought from insolvent Asian companies, including a $265 million loan to Indonesian taxi company PT Steady Safe. Hidden Trades Four years earlier, Orange County, California Treasurer Robert Citron used borrowed money and derivatives to try to expand the municipality's investment fund. When interest rates rose in 1994, the fund tried to hide the trades before reporting it lost $1.7 billion. The county later filed for bankruptcy. Refco's stock plunge wiped out about $924 million in market value, after the company asked a bankruptcy court in Manhattan for permission to reorganize its $48.6 billion in liabilities. The company's bonds due 2012 yesterday traded at 55 cents on the dollar, down from 108 cents on Oct. 7, according to Trace, the bond price reporting system of the NASD. Finance Industry's Worst Disasters: Company - Date - Detail Refco Inc 2005 Hidden $430 million debt leads to bankruptcy Allied Irish Banks Plc 2002 Trader hid $691 million in currency trading losses Plains All American 1999 Lost $160 million because of Pipeline LP unauthorized crude-oil trading by an employee Long-Term Capital 1998 Lost $4 billion after a debt Management default by Russia Peregrine Investments 1998 Collapsed from at least Holdings Ltd. $300 million of debt bought from insolvent companies Sumitomo Corp. 1996 Disclosed a $2.6 billion loss on unauthorized copper trades Daiwa Bank 1995 Disclosed a $1.1 billion loss from unauthorized trades Barings Plc 1995 Trader Nick Leeson racked up $1.4 billion in losses Orange County, 1994 Lost $1.7 billion from debt California and derivatives used to expand its investment fund Kidder Peabody 1994 Took a $210 million charge to reflect what it said were false bond trading profits by trader Joseph Jett Metallgesellschaft AG 1993 Lost More than $1.5 billion trading oil futures contracts Drexel Burnham 1990 Filed for bankruptcy after Lambert Inc. pleading guilty to charges of insider trading and stock manipulation Merrill Lynch & Co. 1987 Mortgage trader accused of racking up $377 million loss in unauthorized trades Silver -- Sharefin, 23:09:26 10/15/05 Sat SUA: BLOCK SILVER PRICE EXPLOSION The Silver Users Association (SUA) is urging the Securities and Exchange Commission (SEC) stop Barclays from creating a silver backed Exchange Traded Fund, according to Reuters. In a desperate move to block the ETF, the association made a plea to the SEC that argued that the economy could suffer if silver prices spike. Barclays filed a registration to create the first silver ETF, however it is still pending regulatory approval. The Silver ETF would be similar to the popular gold ETFs, which are responsible for purchasing about 250 tons of gold worth $3.4 billion. The trust would take delivery of millions of ounces of silver bullion and store it in England. However, some speculators believe that there isn't enough silver stored above ground to fulfill investment demand for a silver ETF. If the ETF is blocked for this reason, it could be seen as a bullish confirmation for investors. The SUA was created in 1947 to lobby for companies that purchase and consume silver. Admitting that supplies are tight, the SUA fears that taking silver from exchange warehouses could be enough to set off a shortage. “We don't endorse a silver ETF because of the potential liquidity problems it would create,” the SAU wrote. The admission by the SUA is astonishing given that all the major players in the silver industry have maintained for a number of years that the silver is plentiful and that the analyses of silver bulls as regards supply were wrong. In admitting that supplies are tight, not only does the SUA vindicate a long-standing argument of the silver bulls it also comes perilously close to an admission that the market has indeed been controlled by those forces which have wanted low, steady prices. By turning to the SEC, the SUA is admitting that the status quo - manipulated as it apparently is - should be continued by any means possible. Unfortunately, a manipulated price is, by defintion, a price that must rise somehow, someday. Perhaps, say the silver bulls, that day is now. Fiat -- Sharefin, 22:17:23 10/10/05 Mon The Great Crisis of 2005 - End-Game 2005 From approximately 1987 on, Greenspan ran the Federal Reserve System as an implicitly hyperinflationary system. It was only in the Spring of 2005 that the hyperinflationary trends, such as the super-inflationary mortgage-base-securities bubble, were contained under management of the international monetary-financial system. A similar arrangement existed in Germany's potentially hyperinflationary system prior to Spring 1923. As long as the managers of the super-inflationary system were in top-down control of the system, the building potential for a hyperinflationary breakout was contained. However, once the dynamic limits of such containment were breached, as in the Spring of 2005, the hyperinflationary potential exploded into day-to-day actuality, as in the current explosion in prices of large categories of primary commodities, led by petroleum prices, and also the deadly bubble in inflation of housing prices. In both cases, 1923 Germany, and the world today, the bubbles behaved, up to a point, as what may be described as self-bounded, dynamic systems of a hypergeometric type. Once the self-bounding was breached, the hyperinflation tore loose, careening as if with a will of its own. Thus, economists and others who lack the competence to understand such dynamic systems do not recognize the implied rates at which the hyperinflation will proceed from here on out until a general collapse might occur. The danger is, that underestimating the explosive force of these bubbles would cause governments to wait too long before taking the radical reforms most urgently required to save civilization itself now. Silver -- Sharefin, 10:54:27 10/09/05 Sun SILVER TO SETTLE AT $7, COMFORTABLY Silver won't ride a rocket skyward, but should stay well at $7-per-ounce through 2006, a Scotiabank commodities researcher told 600 attendees of Silver Summit 2005 in northern Idaho. Patricia Mohr, who is Toronto-based Scotiabank's leading commodity analyst, said silver should comfortably rest on its laurels next year. But she did not concur with price forecasts proffered by silver analysts Jason Hommel and Bernard von Not Haus, who said fundamentals indicate silver will easily trade in multiples of 10 or even 100 to its current price due to supply-demand fundamentals and silver's scarcity relative to gold. ~~~ In short, it's anybody's guess what silver will do. Hommel rates silver at $30,000 per ounce, based on Biblical prophesy. Gold -- Sharefin, 10:31:27 10/09/05 Sun Gold is glittering again as an investment The last time an ounce of gold cost $470, Alan Greenspan was in his first year as chairman of the Federal Reserve. Seventeen years later, Greenspan is on the verge of retiring — and the metal finally is back to its late-1980s price level, after a long, long bear market. The gold/Greenspan convergence is raising suspicions on Wall Street. Some believe the metal's revival must be saying something about the economy the Fed chief is leaving to his as-yet unnamed successor. The purchase of gold — except in the form of jewelry or collectible coins — often is equated with a rising level of fear among investors. If people are trading their cash for an ancient commodity, it suggests some erosion of faith in the financial system. Is it inflation that's worrying investors? Or deflation? Or the prospect of a global economic crash that would lead to the ruin of national currencies? ~~~~ Even if that pass-through happens on a wide scale, of course, almost nobody's talking about the possibility of a return to the double-digit inflation of the late 1970s, which set the stage for gold's record price of more than $800 an ounce in 1980. On the spot market of the New York Mercantile Exchange, it closed at $466.10 an ounce Tuesday. But if U.S. consumer price inflation is 4 percent next year instead of the 2 percent to 3 percent that many experts foresee, it could be a shock to financial markets. That could benefit gold by default. Some investors also might turn to the metal if they become worried about serious deflation rather than inflation. Deflation, or a general decline in the prices of goods, services and financial assets, is what Japan lived through in the 1990s. If investors started to fear that that was possible on a global scale — say, because of a deep worldwide recession — gold's historic role as a store of value could mean that it would attract money that would probably be fleeing stocks and many bonds in that sort of environment. Indeed, any kind of economic calamity that would make people question the viability of national currencies, particularly the dollar, would most likely be great for gold, at least initially. To go too far down that road, however, is to enter the realm of the survivalists and others who believe the end of the world as we know it is imminent. If that day were to come, let's face it, you'd probably be smarter to own shotguns than gold bullion. Gold -- Sharefin, 10:24:10 10/09/05 Sun Why Gold's Gleaming The price of gold has risen to 17-year highs lately, conjuring giddy dreams among the bunker-and-canned-beans crowd that Armageddon is just around the corner. Yet among most investors, the ascent of gold to levels not seen since the Reagan administration has been a big yawn. The ore is widely considered an artifact of another era, a crock at the end of their grandpa's rainbow. Let's just say that the radio talk shows aren't exactly lit up with angry callers calling for a tax on the windfall profits of gold miners. If gold goes much higher, though, it's going to start making the nightly news, and maybe even the cover of a news magazine. Then it will begin to dawn on equity investors that something really important is happening, and that it might just be worth the effort to branch out from the straightforward earnings-and-economics world of stocks and into the supply-and-monetary-policy world of precious-metals trading. Gold -- Sharefin, 10:18:32 10/09/05 Sun Rising crude price, inflation make gold investors' favourite HYDERABAD: The yellow metal is becoming the hot favourite with investors for parking their funds. According to World Gold Council managing director (India Sub-continent) Sanjeev Agarwal, with crude price going up causing inflation, there is a tendency for the investor to find gold as the safest investment instrument. "There is an 80 per cent growth in investment in gold," he said. Replying to a question at a news conference here, he said that this was one of the reasons for the demand far surpassing supply of gold. "For the whole of last year, sale of gold was 648 tonne in India and this year the sale has reached an unbelievable 508 tonne mark till June and the prospects are that by year end it would be double last year's sale," he predicted. Silver -- sharefin, 00:58:41 10/07/05 Fri After writing the following to a friend I thought I should post it here for all. Certain to draw some flack but then perhaps it's needed. ------- What's the ratio of inground gold to silver 1:16 What's the cash cost of extracting an ounce of gold - approx $250 to $450 What's the cash cost of extracting an ounce of silver from free to $3.50 - the greater majority of silver is produced as a free carried by-product. How much gold is produced per annum - approx 80 million ounces at a cost of approx $28 billion (at $350 per ounce) How much silver is produced per annum - approx 650 million ounces at a cost of approx $1.2 billion (at $2 per ounce) This provides a production ratio of 1:8 Also remember that no silver or gold leaves this earth - what is used in industry gets recycled many times before being returned to the earth. Much gold ends up as junk jewelry thrown in a drawer - so to with the silver in photography. What silverbugs delude themselves with is that as far as above ground stocks go then one could presume that there is more gold available than silver but I think that this also could be debugged. Most gold held in today's world is in the form of jewelry & most of this is in a watered down form ie 14k junk. Even though 70-80,000 tonnes of gold is in this form that does not mean that such quantities would ever come to the market place the same applies for silver stocks. Have you read the CRA Report? I believe it's paramount to understanding silver stocks & supplies. Also how to judge what is present & what is available to come to market. CRA Silver Report So if you remove gold jewelry & non-available gold reserves what are you left with - remove the percentage of what remains that hands won't pass up to the market & what are you really left with. The CRA Report expects 2.2 billion ounces to come to market at $20 That's 68,500 tonnes of silver which I think would far outweigh available gold stocks. The argument that many silver bugs use should really be better defined - it should be what available stocks are there to come to the markets & at what price? Comex currently has approx 4 million ounces of gold available in registered form Comex currently has approx 60 million ounces of silver available in registered form I could go on & on and add up more stats but I won't. I think by now that you'll have got the picture. If you were to purchase the CRA Report & use the same principles involved to work out the gold situation I think you would find out what is worth more & why. Your impression that gold is expensive because it is rare is 100% correct. With rising oil prices many gold mines will become unprofitable but because base metals are needed the flow of silver will continue. |
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