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Fannie Mae, Freddie Mac -- Sharefin, 17:10:35 02/05/02 Tue

White House Warns of Increase in Debt, Risk Threat at Fannie Mae, Freddie Mac

The Bush administration said Fannie Mae and Freddie Mac have funded their rapidly growing asset portfolios by increasing their debt outstanding and warned that the two companies may be taking on more risk with subprime loans.

The Bush budget said increased guarantee volume and retained portfolios "imply increased credit and interest-rate exposure." It said the two firms have tried to limit their exposure using various risk-management techniques. But these tools, the administration said, "do not eliminate all the risk associated with funding long-term, mostly fixed-rate assets that have uncertain payment streams."

"Furthermore," the budget added, "the hedging transactions transform credit or interest-rate risk into counterparty risk [the risk that the counterparty of a hedging transaction fails to honor the contract]. Thus, the GSEs' management of counterparty risk is of increasing importance."

Chris Thompson -- Sharefin, 16:49:05 02/05/02 Tue

Chris Thompson, Chairman, Gold Fields

Gold rally -- Sharefin, 16:46:31 02/05/02 Tue

Gold rally to 18-mth high buoys NY precious complex

COMEX gold on Tuesday broke above the safe-haven highs it hit after the Sept. 11 attacks, toying with the $300 an ounce psychological level in New York as investors diversified out of a nervous U.S. stock market.

The April COMEX futures contract rallied to an 18-month high at $299.80 and spot bullion hit a two-year peak, catalyzed initially as so-called ``Enron-itus,'' -- Wall Street jitters about corporate earnings and accounting irregularities -- prompted a move into hard assets.

``It started off at the open with funds,'' said a floor broker. ``It's a combination of stock market jitters and the fact that mining companies won't be hedging so much any more. It keeps resistance out of the market.''

Commodity funds worked themselves into a bullish froth as they chased the benchmark gold contract up $9, or 3 percent, to a settlement of $299.10 an ounce.

It was its highest since its early days in late Aug. 2000. The gold contract that was active at the time of the attacks registered a high at $300 in the first panicky trading after the twin towers collapsed.

``I think the market is a little bit overdone on the upside after three strong rallies,'' said David Rinehimer, head of commodities research at Salomon Smith Barney. ``I'm skeptical as far as the upside above $300 without some additional supportive news -- whether it's the equities dropping for whatever reason -- that could be an ingredient for higher gold prices.''

The Dow Jones industrial average closed off 1 point, steadying after dropping 220 points on Monday on fears that the collapse of Enron Corp. would open the door to more revelations about accounting malpractice at U.S. corporations.

Underlying gold's strength over the last week is mounting optimism that the gold mining industry is having a change of heart about the practice of hedging, or selling gold forward, which many investors believe was one reason for gold's dismal performance in recent years.

Spot gold closed at $298.00/75, its highest since fetching $301.50 on Feb. 24 2000, up from London's afternoon fix at at $291.95 and Monday's New York close at $289.10/60.

South African gold giant AngloGold Ltd said Monday it expects to reduce its hedge book by more than a third to about 10 million ounces in the next year, though it retained the ability to step up hedging if prices become attractive.

Rinehimer said that gold priced near $300 raised the specter of producer selling. ``You might have a different take of what producers are going to do at these prices.''

Hedging with forward sales and derivatives allows producers to lock in prices for reserves still in the ground and remain profitable when underlying gold prices fall. But it also can work against their interests because accelerating supply to the market makes it harder for gold to go up.

WGC Report -- Sharefin, 16:44:54 02/05/02 Tue

WGC Report - pdf file

Concerns over corporate integrity continue to blow
chill through the equity markets and the associated
weakness in the Dow and the dollar last night were
both supportive for gold, which once again
experienced mixed support in New York, with
professionals funds noted among the buyers. The
chart shows the ratio between gold and the Dow
Jones Industrial Average since the start of the year;
to date, gold has outperformed the Dow by 7.4%.

Goldenbar Report -- Sharefin, 16:38:46 02/05/02 Tue

Goldenbar Report - pdf format

AngloGold -- Sharefin, 16:32:29 02/05/02 Tue

AngloGold hedging cut rallies gold

South African gold giant AngloGold Ltd said on Monday it would trim its gold hedge book to about 10 million ounces in the next 12 months from about 16 million ounces, fuelling a rally in bullion prices.

"The general perception in the market is that hedge selling is drawing to a close," one trader said. Another trader said AngloGold's move was potentially more bullish for the metal.

AngloGold trimmed its hedge book by 3.5 million ounces in 2001 as it followed other mining companies seeking greater exposure to any upside that could occur in bullion markets.

This year, the company projects gold production of 5.8 million ounces at average cash cost of US$154 an ounce.

"In the past there has always been a gap between cash costs and the hedge price. That is now coming down and AngloGold is asking itself 'why hedge?" mining analyst Keith Goode of Eagle Research said.

Gold -- Sharefin, 16:30:05 02/05/02 Tue

Gold breaks weekend hoodoo

New York played the optimist on Monday and helped bid the price through the key $290 level. The primary short-term driver remains a shaky outlook for American equities where it is guaranteed that a thorough laundering of company balance sheets to rub out the spotty stains of "special purpose vehicles" - the off-balance-sheet partnerships that brought Enron low - will raise the number of Chapter 11 filings to breathtaking levels.

Special attention is being focused on banking giant JP Morgan Chase, which is thought to be suffering potentially mortal wounds from its exposure to a number of deals gone bad. Talk is that JP Morgan's active derivatives operation has magnified its exposure to the Argentina and Enron crises, among others, and that the true accounting for that will only be apparent in the weeks to come.

Enron -- Sharefin, 16:02:54 02/05/02 Tue

Post-Enron equity fears fuel 'flight from risk'

Equity markets in the US and Europe witnessed a "flight from risk" on Tuesday, with investors shunning any stocks that faced accounting or financial concerns.

Worries about the quality of corporate accounts in the wake of Enron's collapse were accompanied by fears that heavily indebted companies will either collapse or be forced to raise large amounts of equity to restore the health of their balance sheets.

The extent of investor concern was demonstrated when General Electric, the world's largest company, was forced to dismiss questions about the transparency of its accounting by again reaffirming its earnings growth targets.

The fall-out from the collapse of Enron has made investors far more cautious about the quality of corporate profits, particularly in the US, where accounting standards were previously assumed to be the best in the world.

Jay Pelosky, global strategist at Morgan Stanley, said: "The challenge to US accounting and regulatory standards could lead international investors to start to question the premium valuation they are currently paying for exposure to US assets in general and US stocks in particular."

Miners finally get Street's attention -- Sharefin, 15:58:38 02/05/02 Tue

Miners finally get Street's attention

Against a backdrop of fiscal devastation in Japan and ticking financial time bombs in the United States, long-forgotten gold mining stocks are attracting the attention of Wall Street money managers.

"I'm getting a lot more calls," says Pierre Lassonde, who later this month will become president of Newmont Mining (NEM: news, chart, profile), soon to be the world's largest gold producer upon completion of a merger. "When I was in Europe last year, I saw more interest in gold stocks than I have in five years."

As the metal's spot price reached a two-year high of $299 an ounce Tuesday afternoon, new figures pointed to heavy share accumulation of the largest gold-mining companies. Weekly money flows into those companies are at their highest point in more than three years, technical analyst Clark Yingst at Joseph Gunnar & Co. in New York says.

"Clearly, investors are unsettled by reports of fiscal distress," says Yingst, who tracks cumulative money flows based on whether investors are paying progressively higher or lower prices for a stock. Japan's yen took a 1.5 percent fall against the dollar Tuesday, while that country's benchmark stock index, the Nikkei 225, hit an 18-year low.

"The premium for safety is rising again," John Hathaway, manager of the Tocqueville Gold Fund, said Tuesday from New York. "Enron, Japan, Argentina, Kmart, maybe a large bank soon, it's all there for investors to see."

The gold mining group, as measured by the Philadelphia Gold and Silver Index, could rise another 15 percent to 20 percent in coming weeks, technical analyst say. The index, along with gold-mining indexes in Canada, South Africa and Australia, is soaring as gold attempts to surpass the elusive $300 level.

The 11 stocks in the so-called XAU index have on average gained more than 15 percent in the past 10 trading days. Companies such as Newmont, which will merge into two other gold-mining companies later this month, are seeing their average trading activity swell to 2.5 times their three-month daily average.

"My phone is ringing, that's for sure," says Lassonde, a former Toronto fund manager and co-founder of Canada's Franco-Nevada Mining (CA:FN: news, chart, profile), one of the two companies merging with Newmont in a $2.5 billion transaction.

The $20 or so gain in the price of the metal in the past two weeks has fueled a frenzy of activity in mining circles. Lassonde Tuesday pointed to the $100 million-plus of Canadian financings late in January for three small gold companies. Once the three-way merger of Denver-based Newmont, Franco-Nevada and Australia's Normandy Mining is completed later this month, Lassonde hopes to sell some mines from a Battle Mountain Gold purchase and other assets, about $750 million worth, to an eager gold industry.

"Our timing, I think, is propitious," Lassonde said from Toronto. "Goldcorp. (GG: news, chart, profile) and Meridian (MDG: news, chart, profile), lots of gold companies, need to replace their reserves - they need assets." See more on the gold rush.

Wall Street and London-based money managers are showing up for mining companies' conference calls in greater numbers. On Monday's earnings conference call from Johannesburg, "close to 50" money managers listened to Gold Fields Ltd. Chairman and CEO Chris Thompson discuss the South African company's record-breaking $67 million of quarterly profit, according to Cheryl Martin, a Gold Fields (GOLD: news, chart, profile) vice president.

Meanwhile, attendance at next week's metals and mining conference in Capetown, South Africa, will be at least 30 percent greater than last year's gathering, organizer Sandy Lawrence said Tuesday. See the conference details.

"People forget how far gold stocks can move in a rally," says Adrian Day, president of $60 million Global Strategic Management in Maryland. "You go back to when the general stock market crashed in '73 and '74 and gold went to $180 or so from $110 in two years, and the major gold mining companies quadrupled and quintupled in price. Homestake went to $60 from $11, and the South African companies did the same thing." Homestake Mining is now part of Barrick Gold (ABX: news, chart, profile), a merger completed last year.

"The fact is, there are a limited number of gold mining companies, I think $50 billion worth of market capitalization if you were to add them all up, the majors and the juniors," says Day, who populates about a third of his clients' portfolios with gold stocks. In comparison, General Electric, the world's largest stock market company, is valued at more than $350 billion.

Technical analyst Yingst sees the XAU, now above 67, its highest point since February 2000, reaching 72. "But first I think we'll see some backing and filling," he said about investors who are likely to take profits in their gold mining stocks.

Lassonde: the case for cash flow

Investor interest in gold mining stocks comes in the thick of rising prices for the equities. "The last five days volume for Barrick Gold and Placer Dome (PDG: news, chart, profile) have seen average daily volume that has exceeded the one-month average daily volume of each company by 20 percent and 24 percent, respectively," Chris Johnson, senior quantitative analyst at Schaeffer's Investment Research in Cincinnati, said Tuesday. "This has occurred while the price of the stocks have increased by 6.3 and 9.1 percent, a sign that investors have been accumulating theses shares."

The question for serious investors is whether gold-mining stocks can sustain their rally, which has boosted equity prices to 30 and in some cases 40 times their yearly pre-tax profits. Lassonde at Franco-Nevada/Newmont says he is frank about this question, which gets posed by fund managers scrambling to buy gold shares. Gold-mining stocks have made gold-based mutual funds the best performing sector for much of the past 14 months.

"Let's look at Newmont since I know that one best," says Lassonde, a former engineer who has been in the gold business for more than three decades. "If gold goes to $350 an ounce, (Newmont's) pre-tax cash flow would be about $1.6 billion, or $4 a share on a pro-forma basis." Given that major gold mining companies sell for about 12 times cash flow, "the stock would have to go to between $50 and $60," he said.

Which brings the question: Can spot gold prices surpass $300 an ounce, a level not seen since February 2000? The price of spot gold, $299 on Tuesday afternoon, was more than $6 above what professional analysts call an area of major resistance. The most active gold futures contract, meanwhile, hit $299.80 Tuesday, then settled at $299.10, a gain of $9 for the day. See metals report.

"One of these times it's going to get through resistance," says Robert Bishop, longtime editor of Gold Mining Stock Report. "I think right now we are seeing speculation that one or more mining companies covering hedges." So-called hedges allow gold mining companies to lock in higher prices for their metal. The practice encourages lending of the metal by bullion and central banks, thus adding to price weakness.

Anglogold (AU: news, chart, profile), one of the world's largest miners and the industry's most prolific user of forward-sale hedging in times of weak prices, reduced the amount of gold it sells forward by 19 percent in 2001, or some 3.4 million ounces. Earlier in the week, Anglogold said it could unwind as many 4.5 million ounces this year. Newmont, Gold Fields and other large producers have sworn off the practice of hedging.

Caesar Bryan, manager of the Gabelli Gold Fund (GOLDX: news, chart, profile) in New York, says he will head to Japan next week. Japanese consumers have quadrupled the amount of gold they are buying ahead of new government rules that will limit bank guarantees on cash deposits, starting in May.

"Gold is the ultimate hard asset, and one day, sooner than later, it will go through $300 an ounce," says Bryan, whose $27 million fund is up 22 percent since Jan. 2. He expects shares of companies that reduce their hedge books to become more attractive to investors in coming months. But he still prefers totally unhedged producers. His fund's largest holdings are Newmont, South Africa's Harmony Mining (HGMCY: news, chart, profile) and Gold Fields, all of them known as straight-shooters in the industry.

"The whole idea that gold is a useless investment has become pervasive," Bryan says. "I think that's about to end."

Gold futures near $300 an ounce -- Sharefin, 15:55:34 02/05/02 Tue

Gold futures near $300 an ounce

"Continuing doubt regarding equities and nefarious accounting techniques has raised the specter of further bankruptcies in the U.S.," said Erik Gebhard, an analyst at

Gold has "crossed over the long-term trend line extending from the Feb. 9, 1996, high of $417," said Prescott Crocker, manager of the Evergreen Precious Metals Fund

"This price action kicks in the shorts to accelerate their covering process and accelerates the price move up in a short term spike," said Crocker, whose $58 million fund has gained 20 percent since Jan. 2. Crocker was referring to short-sellers who have bet against the metal in recent months.

Crocker expects gold's gains to last another two days and "possibly extend to $320, which should then be followed by a consolidation of price in the $295 to $320 level for some period of time."

Some analysts pointed to waning investor confidence in U.S. capital markets. "I would note that the political situation in Washington is becoming more and more anti-business, which is a negative for the U.S. financial markets and, by extension, the U.S. dollar," said Kenneth Landon, a currencies analyst with Deutsche Banc in Tokyo.

Vox: Gold stocks -- Sharefin, 15:50:42 02/05/02 Tue

Vox: Gold stocks

What is the fast-beating pulse of the gold-stocks market telling investors?

For conspiracy-minded gold bugs, it announces the day of reckoning, foretold by countless exotic theories (ranging from the absurd to the tantalizing) about how and why gold has languished in the dank cellar of investors' affection for two decades.

For more sober-minded enthusiasts, who settle for railing against hedgers and central bankers, it's dj vu all over again. Although the two camps are separated by the magnitude of their suspicions, they share a view: Gold prices have been manipulated for too long and recent trends suggest that manipulation will come to a quick end.

For the sober camp, the rigging of the bullion market comes in various forms, notably forward gold sales by producers and the efforts of central banks - the U.S. Federal Reserve Board mainly - to "stabilize" gold prices, the idea being that a fast-rising U.S. dollar gold price would suggest a lack of confidence in a mighty greenback, which the U.S. economic imperial engine relies upon.

Years of weak and falling gold prices have yielded predictable consequences: After rising almost relentlessly for 25 years, gold production will drop, slightly this year, then precipitously.

Gold mining firms, by failing to earn their costs of capital, have depleted their coffers and shut themselves off from new money. The casualty rate is high. Planned production is being mothballed, and growth now comes mainly from acquisitions, hence the rapid pace of consolidation in the industry. Gold mining is not truly economic at prices below $400 (U.S.) an ounce, so no new production will be contemplated any time soon. The lag time between contemplation and production, is years long.

The other side of this hopeful argument is that confidence in the U.S. dollar will wane along with a fall in asset prices and a rise in mistrust in the system.

Confidence in the dollar is easy to foster with a federal funds rate of, say, 7 per cent; it's a sight more challenging today, after 11 interest rate cuts.

The historic parallel is the 1970s. After a lengthy period of low gold prices (depressed, some say, by central bank interference), production fell, confidence in the U.S. dollar deteriorated, and gold soared to more than $600 an ounce from $35

There are variations to these arguments (the spectrum of which investors can behold at and other sites). But in general, they don't seem easily dismissible, even after years of unrequited gold-bug enthusiasm. Investors who like these arguments, however, should not rush out and blindly buy gold stocks. TSE-listed gold companies are hardly bargains, with enterprise values that, in some cases, exceed the value of reserves by a factor of two.

This is not to say that they won't rise. A premium to the undiscounted net asset value isn't unusual, although it offends the value investor.

Enron -- Sharefin, 15:47:41 02/05/02 Tue

'Enron factor' lifts gold to four-month high

Rhona O'Connell at the World Gold Council said that the "Enron factor" seemed to be fuelling demand for gold as concern about accounting practices and a string of fourth-quarter results from US blue-chip companies had brought "bouts of fragility" to the financial markets.

It Might Be Dirty....... -- AuNuggets, 15:39:25 02/05/02 Tue

It might be dirty, but it sure is pretty!

Good Post from Hambone --, 13:08:29 02/05/02 Tue

Date: Tue Feb 05 2002 08:40
Hambone (Where we are.) ID#353300:
Copyright © 2002 Hambone/Kitco Inc. All rights reserved
In a bull market for bullion and PMs.

The last few days have seen geometric rises in many gold stocks and no doubt many bugs are wondering what comes next. Correction? Higher? Crash? To da Moon? Most of us ( I include myself ) handle losses much better than we do profits. So the question here comes to "what do I do?'.

The way I see it, the major strategies are these:
1. Do nothing.
2. Sell everything and take profits.
3. Sell part and hold part.
4. Buy more now.
5. Hold what you have and buy more on a dip.
6. Ignore the gold bull and trade.

Actually, #1 isn't as bad a strategy as you think, particularly if you're out of cash for 4 and 5. It's a bull market, and bull markets always bail you out. You cannot lose ( long term ) by holding. #2 is foolish. The worst mistake you can make is being out in a bull market. #3 is a strategy followed by many bugs on the board, who hold core positions and trade with a percentage of capital. Good if you're nimble and know what you're doing. However, you will make mistakes - the most costly of which will be selling too soon. #4 is really #1 for those with cash not invested. #5 is good - if you're sure a dip is coming. #6 is for the uptick's of this world. Good enought to call every turn? Have at it.

This move has been so fast and sharp, many bugs are scared - scared not to take profits and scared to do so. Remember, this bull is going to be a long one. Volitility is going to increase, so you ain't seen nothin' yet. Corrections will be sharp and painful. Rises will be glorious. Be anything but out of this market.

George Ure -- Sharefin, 07:36:12 02/05/02 Tue

Weekly report

The Gap -- Deadly Dennis Wheeler, 07:34:48 02/05/02 Tue

There is a gap on the April gold chart that was just about filled this morning. The gap occurred in October when the Sep-Oct runup was over. This would be a natural stopping point for gold -- short term, as it is now up for the sixth day in a row.

DD Wheeler

Enron -- Sharefin, 07:33:50 02/05/02 Tue

'Enronitis' sweeps through Wall Street

Top of the Gold Market? (Goldbrick & Sharefin) -- Olehickok, 07:08:21 02/05/02 Tue

Talking about top of gold market? he he he ... i love it. Are you guys serious? A chart would be XAU, when it hits around 150, but then i think we're going to go past 200 on it this time. :-)
Better indicator would be when everybody and their brother is talking about PM and POG and and buying mining stocks. Your barber, the cab driver, grocery clerks, politicians, used car salesmen, secretaries, and Casey talking about grim reaper coming to ruin the party. But you guys already know all this.

NEM going to $120 & Eldorado going to $15 C -- olehickok, 06:35:23 02/05/02 Tue

This humble goldbug's been waiting for this for 6 years. XAU to 90-100 by May, slight pullback thru the summer then to 200 by March '03. Get on board before it's too late.

Dow Vs Gold -- Slowman, 05:09:24 02/05/02 Tue

It appears the general accepted accounting practice for corporations ,especially large ones, is not being used. The rumor is they are using pro forma. This should bring the house of cards down and insure the bankruptcy of J.P.Morgan, BUT , I do not believe the U.S. govt. will let them go under. All of this should help the nice gold advance we have recently had and scare the public into investing into the precious metals sector as they try to PRESERVE WEALTH. This should last for at least the next 5 years. However, its kinda hard to buy silver stocks now when silver is so cheap. I myself am trying to get my FRIENDS to purchase coin or .999 silver but take physical delivery. GOOD LUCK TO ALL111111

Sharefin, it is good to see some civility. -- thomas v. privette, 22:45:08 02/04/02 Mon

Here's to your forum! It is great to be a goldbug. Though it is said we are crazy, at least we are richer for it.

Japanese yen is fixed to silver -- G-san, 22:40:30 02/04/02 Mon

Check out the url for tanaka kikinzoku in Japan. The yen price of silver has been virtually unchanged for the last two and a half years. Always in a trading range of sell 21 yen per gram and buy 18.With most days having 0% change. Silver also follows this trend as well as fluctuations in the yen the price remains the same. Despite what the chart says the price remains the same in yen per gram. Go back day after day and the silver price will be unchange. By the way silver is on the far right at the top of the price list

From Mining Web --, 22:21:45 02/04/02 Mon

Fridays have been awkward for gold. If the metal is up in London morning trade, you can be sure it will be down in New York afternoon trade. If New York can't damp the fire on Friday, it is satisfied to lay over until Monday when enough metal or negative sentiment is poured into the market to restore the downtrend.
Things have changed since May when the weekend hoodoo asserted itself time and again.

New York played the optimist on Monday and helped bid the price through the key $290 level. The primary short-term driver remains a shaky outlook for American equities where it is guaranteed that a thorough laundering of company balance sheets to rub out the spotty stains of "special purpose vehicles" - the off balance sheet partnerships that brought Enron low - will raise the number of Chapter 11 filings to breathtaking levels.

Special attention is being focused on banking giant JP Morgan Chase which is thought to be suffering potentially mortal wounds from its exposure to a number of deals gone bad. Talk is that JP Morgan's active derivatives operation has magnified its exposure to the Argentina and Enron crises, among others, and that the true accounting for that will only be apparent in the weeks to come.

There is reason to agree, but equal reason to be skeptical. As the Economist noted recently, a surprising result of Enron's collapse is how quickly and easily the credit derivatives market digested it. The point is forceful when you consider the sheer weight on the market given the string of collapses. By now, according to doomsayers, the entire banking structure would have collapsed.

Clearly, gold buyers are less optimistic. Recent defaults, whether sovereign or corporate, are taking on the appearance of an accelerating trend that can be traced to the Asian contagion of 1997. When those dominoes fell, they were effectively mopped up save for another outbreak in 1998. Now there has been a succession of failures that are more difficult to isolate and contain.

Simply tot up the write-downs, losses and inventory destocking reported worldwide in the past 15 months and it is obvious that the system is under severe strain. You cannot erase that quantum of wealth, no matter how widely dispersed, and expect the key US and European economies to resume the 1990s style growth. Gluttony has its consequences - Japan is living proof and, ironically, its citizens continue to convert yen into gold at a furious pace.

Also encouraging is the fact that gold buying was strong despite significant long liquidation. The World Gold Council reports that according to the latest Commitments of Traders Report gold longs cut their positions by 49 tonnes (1.6moz) to 90.3 tonnes (2.9moz) while shorts bought a meager 7 tonnes (0.23moz) leaving them with 51.7 tonnes (1.7moz). The next few days will be critical in determining whether the shorts can defend stops above $290 an ounce.

UBS Warburg notes a notable absence of "professional" selling into the higher price which is particularly encouraging. By traditional measures, $287 an ounce would have brought on a flood of selling driven by producer forward selling. But the hedging game has turned around with producers closing hedges rather than opening or maintaining them. AngloGold has announced that it will reduce its hedge book significantly, but the reduction will take most of a year.

Sharefin -- Cyclist, 22:12:25 02/04/02 Mon

I have been taking 50% off the table today and tomorrow
the rest.The gains have been spectacular and will wait
for a pullback.With any bullmarket the pullback is usually vicious and fast.Different indicators are flashing a pullback, with one particular reliable cycle giving a top
today and tomorrow.
Today the gold stocks were running a bit to fast ahead of the gold price as well.The bullmarket has a long way to go yet..:)

Cyclist -- Sharefin, 19:51:48 02/04/02 Mon

I don't watch goldstocks to close but I would wonder about a short term top on Tuesday.

The GOX & HUI have only just broken clear of their prior highs classifing this as a breakout and the XAU is about to do the same.

Likewise with the POG breaking clear - VIP.
Also I think that gold & goldstocks will surprise to the upside through coming rallies not due to their own merrits but rather because of general equities slumping.

There's an exodus from most all stocks across the globe at the moment and one of the few sectors to shine is gold.
Of late there's been plenty of reminders as to the gold sector doing well last year and by now the concept of gold & goldstocks being a profitable refugee status is clear too a large percentage of investors as say opposed to a year or even two ago.

So currently there's a wealth of money seeking a few stocks and so therefore the momentum should be strong.

Also of notice is the volumes in the gold stocks this last week and the way it's expanding as the prior highs in the XAU/HUI/GOX are taken out.

Here's the charts of the three indices breaking out.



Goldbrick -- Sharefin, 19:30:18 02/04/02 Mon

I would guess that the Dow/Gold ratio will print the top out in gold pretty well as what we are seeing is a flight from stocks to gold as a refugee status whilst paper is burning.

But this would be like standing way back from the trees and observing the whole forrest.
A very broad observation.

As to trying to guage the top with a closer perspective I would be watching the gold indices/gold for when they show the turning points.
Gold Indices vs Gold

gold/intered should be gold/interest -- GoldBrick, 18:37:54 02/04/02 Mon


When we get to the top -- GoldBrick, 18:35:46 02/04/02 Mon

Is there a graph or graphs in your collection that you consider one of the better indicators of a top? Gold/intereds, gold/cpi, gold/dow? Other that everyone talking about it and wanting to get in, how might you get out of PM stocks.

Tick-by-tick charts -- Sharefin, 18:29:24 02/04/02 Mon

Here's the latest tick-by-tick charts.
Please note that I've changed the links above where it says Gold Chart & Silver Chart to link into these tick-by-tick charts.
I'll update them daily or whenever they appear interesting & stop posting them into the body of this forum.

Gold - 60 minutes

Silver - 60 minutes

Press masks world's fiscal distress -- Sharefin, 18:24:42 02/04/02 Mon

Press masks world's fiscal distress

Banker, who also edits LDC Bond Watch, told me Monday he sees "bankruptcies ahead galore -- a mountain of debt is weighing on corparates globally, not just the U.S.A., and banks like JPM Chase and Deutsche Bank are being weighed down. Watch JP Morgan Chase," he says ominously.

Note that the two companies mentioned above carry the greatest weight in gold derivatives.

Gold futures top $290, shares up -- Sharefin, 18:21:09 02/04/02 Mon

Gold futures top $290, shares up

GE engulfed in 'Enron ripple' -- Sharefin, 18:19:00 02/04/02 Mon

GE engulfed in 'Enron ripple'

GATA -- Sharefin, 18:16:43 02/04/02 Mon

Former Patriot Wide Receiver Invites Washington Press to GATA PATRIOT GOLD Luncheon

Silver NEXT? -- Cobra, 18:04:12 02/04/02 Mon

I think so....It Should catch on Very shortly, the Silver Stocks May be the next to move good. PASS,SIL,SSRI,HL,AEM too...These bear watching the next few days...If they begin to move......AG will too.....Posted Monday---9pm 02-04
An Opinion ONLY. Don't do it because I said so. Due your own Due Diligence.

BOE Gold Auctions-a plausible, probable raison d'être -- FOG, 10:52:27 02/04/02 Mon

For a number of reasons, not the least of which the method of payment [in USDs, deposited at the New York Fed] one subscribed to the notion that the BOE's sale of gold was about something other than demonetization of gold, and questioned whether the gold sold was UK or US.

However, in the interests of accurate reportage, one is compelled to share ANOTHER plausible, indeed probable, explanation.

"On March 6, 1957, the Secretary of the Treasury signed an agreement extending to the British government a line of credit, "The Government of the United States will extend to the Government of the United Kingdom a line of credit of $3,750,000,000 which may be drawn upon at any time between the effective date of this Agreement" [COMMENT: This was a handsome sum of money in those days.]

Provision for deferment of annual installments:

"i) In any calendar year after December 31, 1956, in which the Government of the United Kingdom advises the Government of the United States that it finds that a deferment is necessary in view of the present and prospective conditions of international exchange and the level of its gold and foreign exchange reserves, the Government of the United Kingdom may defer the payment of the annual installment for that year of principal repayment and interest specified under Section 4.

***The first of any such deferred installments shall be paid on December 31, 2001, and the others shall be paid annually thereafter, in order.***

(iv) Payment of deferred installments may be accelerated, in whole or in part, at the option of the Government of the United Kingdom."

Gold serving a historical role, clearing debt.

intermediary cycle top -- Cyclist, 07:29:59 02/04/02 Mon

Tuesday for gold.

Tyco -- Sharefin, 07:05:36 02/04/02 Mon

$8 billion in Tyco deals not disclosed

Bush Seeks To Restrict Hill Probes Of Sept. 11 -- Sharefin, 04:45:50 02/04/02 Mon

Bush Seeks To Restrict Hill Probes Of Sept. 11

President Bush asked House and Senate leaders yesterday to allow only two congressional committees to investigate the government's response to the events of Sept. 11, officials said.

The president said the inquiry should be limited to the House and Senate intelligence committees, whose proceedings are generally secret. Senate Democratic leaders want a broader investigation, involving some committees that would be free to air their findings. The focus of the committee probes is likely to center on intelligence failures preceding the terrorist attacks that killed about 3,100 people.

Nikkei -- Sharefin, 04:29:32 02/04/02 Mon

Tokyo stocks end down on NEC woes, reform doubts

Tokyo stocks fell sharply for a second straight session on Monday, with NEC Corp leading a broad-based decline amid fading hopes for a speedy recovery in the tech sector and worries over Japan's structural reforms.

The tech-sensitive Nikkei average shed 1.63 percent or 159.50 points to 9,631.93, while the capital-weighted TOPIX index dropped 1.33 percent to a 17-year low of 943.51.

The Nikkei, which fell 2.06 percent in the previous session, ended numerically below the U.S. blue-chip Dow Jones industrial average for a second day .

It ended Friday trade below the Dow Jones's last closing level for the first time since August 6, 1957

Gympie Gold -- Sharefin, 04:13:58 02/04/02 Mon

Gympie Gold Beats Production Records in First Quarter With AIM Listing

Nice gold - shame about the hedges.
Specimen in quartz:

The finished product:

Hedging Programmes -- Sharefin, 03:56:10 02/04/02 Mon

Auditors Should Monitor Hedging Programmes And Ensure Shareholders Are Fully Informed

The debacle over Enron which threatens to bring down Arthur Andersen, one of the big five accountants, raises the question of just how close such advisers get to client companies and how stringent are their health checks on them, their advice and their follow-ups. Everyone is human, even accountants, and they want to hear the vote at the annual general meeting which gives them the audit job for another year.

In the case of mining companies this supervisory/advisory role is particularly pertinent in the case of hedging. How was it , for instance, that Mark Keatley, the finance director at Ashanti, managed to convince his fellow shareholders and the company's auditors , that he was a genius and should be allowed to keep the full details of Ashanti's hedging programme to himself? Apparently all the documentation was kept in a locked room to which only he had access on the grounds that it was all just too clever and complicated for anyone else to understand.

His counterparts at the banks involved in these hedges must have known what was going on and auditors pride themselves on their efficient intelligence so it is amazing that they heard nothing and took no action. At the time Leo Kaplan, the chief bullion dealer at LFG Bullion Services in Chicago, apparently reckoned that the banks were short no less than 10 million ounces of gold. And this was just on forward sales based on the bear market in gold which had been in process for a number of years. Presumably there were puts and calls in size to flesh out Mr Keatley's grandiose scheme.

The time has now come, however, when gold is not going steadily downwards and the hedgers'chickens may becoming home to roost. The South African gold producer Avgold, for instance, has not participated in the effective boom in the price of gold that has resulted from the fast depreciating rand. Unlike the non-hedgers such as Harmony and Gold Fields, it has hedged around 1.23 million ounces of gold. As a result its shareholders had minimal exposure to the spot rand gold price which rose by 23 per cent between the September and December quarters.

The banks bear a large responsibility for this as they automatically trot out a hedging programme whenever they lend money to producers, either to develop a new mine or expand an existing one. They want belt and braces so that they know the funds are in place to pay off loans and interest even before the gold is produced. It is of no interest to them that the companies and their shareholders do not get the benefit of any subsequent rise in the price of gold. This begs two questions. First, how would the mark-to-market positions of such producers stand if analyst Andy Smith is right and the gold price averages US$315/oz this year? And what contingency plans have auditors in place to notify shareholders of any major changes?

In Australia there is a deal of speculation that Newcrest may be the next target for one of the big boys. On the face of it Newcrest looks a plum with annual production rising to just under 2 million ozs if Ridgeway, Telfer and Boddington all perform up to scratch. But its hedge book has problems and a negative mark-to-market value of A$594 million may deter acquisitors. Even some analysts appear perplexed by the complications of its US dollar currency hedges and its Australian denominated forward sales, so how are shareholders expected to understand?

Closer to home Navan Mining, the disaster of London's AIM market, was ordered by Deutsche Bank to close off its base metal hedges in November. This action is generally though to have hastened its demise the following month. But were shareholders informed of this unilateral action? Not on your nellie. Questions to the finance director Chris Neal by Minews as to whether or not this was price sensitive and deserved to be announced met with an embarrassed silence interspersed with huffs and puffs. Surely the company's auditors would have to be informed of such a change in policy, and if so, it would be interesting to know why shareholders were left out.

Post- Enron, auditors will know that the eyes of the investment world are on them. In the case of gold producers they will be expected to monitor hedging programmes on an ongoing basis. Shareholders in some companies are going to be in for nasty shocks if Andy Smith's forecast comes true. Better they should understand the position now rather than later..

sro -- Sharefin, 03:52:51 02/04/02 Mon

Thanks for the article.
Gold: The Sovereign Power of the Veto

Live prices & live prices - spot the difference. -- Sharefin, 03:41:16 02/04/02 Mon

Here's three separate charts all coming from different feeds showing the 24 hour live gold price.

First there's the tick-by-tick chart.
This chart cleary shows the recent two tops with the last one higher than the first and the price topping at $287.10

Then there's the UK feed which only shows the last peak but it shows the peak topping at $287.30

Then there's the Kitco feed which shows the two peaks but here it shows the second peak as the same as the first and also it looks like the price stopped at approx $286.80
It doesn't show the price as going over $287 at all.

The first chart looks bullish, the second one more so but the last one almost looks bearish.

A similar story to the price of silver when it topped a few weeks ago.

Gold: The Sovereign Power of the Veto -- sro, 01:23:07 02/04/02 Mon

Thanks Dan & Kevin -- Sharefin, 00:09:39 02/04/02 Mon

Your comments are appreciated along with a lot of others offering support.

Needless to say there's plenty of fine folk who appreciate this new forum.

XGO -- Sharefin, 00:02:46 02/04/02 Mon

Australian Gold Index Rises to Highest in Five Years

Australia's index of gold stocks rose to its highest in almost five years, led by Normandy Mining Ltd. and Goldfields Ltd., after bullion prices rose to a two-week high.

The precious metal rose 2.4 percent last week to $286.250 Friday, its highest closing price since Jan. 16, partly on expectations repurchasing of the metal by companies changing their hedging strategy will reduce available supply.

Gold Fields -- Sharefin, 00:00:31 02/04/02 Mon

Gold Fields Limited Reports Record Earnings for Second Quarter F2002

- Earnings tripled up from R203 to R640 million
(US$24 million to US$67 million)

- Operating profit doubled up from R498 million to R1,064 million
(US$59 million to US$110 million)

- Attributable gold output up 11% from 886,000 ounces to 984,000 ounces

- Cash costs down 16% from US$200/oz to US$169/oz

- Rand gold price up 24% from R73,646/kg to R91,627/kg

- Acquisition of St Ives, Agnew and Damang completed will increase attributable gold production to more than 4.5 million ounces per annum

Thank you -- Kevin Thomson, 23:41:28 02/03/02 Sun

I have been reading the Kitco, Gold Eagle and other Sites for at least 18 months. I very rarely post messages as I do not wish to be pulled apart on a website forum.

I think the concept of this Website is great and I wish to thank you for creating the forum. It saves time and avoids all the off topic stuff. The only observation I would make is that even gold/silver will not run forever and intermarket analysis is valuable

I have been charting with Metastock for over 10 years however the reassurance that high quality opinions can provide helps me retain confidence in my positions.

Once again thank you and I intend to read the articles you post daily.


Kevin Thomson
New Zealand

World Gold Council -- Sharefin, 23:40:25 02/03/02 Sun

World Gold Council Siezing Golden Opportunity In Japan

TOKYO (Dow Jones)--The Japanese are quickly running out of safe places to stash their hard earned yen. Stock prices have slumped to levels not seen in almost two decades, several money-management funds have sunk below par value due to their exposure to Enron Corp. (ENE) and this April the government will pull the plug on its blanket guarantee for bank deposits in the event of a bank failure.

Recognizing a golden opportunity when they see one, the World Gold Council has launched an all-out media blitz to convince the Japanese that gold could be the prudent alternative to simply stuffing more money under their futons - and these efforts are starting to pay off.

"In recent months the Japanese have been showing tremendous interest in gold as an investment vehicle," said Itsuo Toshima, Japan's regional director for the World Gold Council. "I don't think we have seen this level of interest since the heyday of Japan's bubble economy in the late 1980s."

In fact, the council estimates that Japan's investment demand for gold in the third quarter of 2001 soared 91% to 22 tons from the same period a year earlier.

Toshima pointed out that Japanese investors have lost their appetite for risk taking due to the nation's prolonged economic downturn punctuated by a series of high-profile corporate bankruptcies.

Media Blitz Shifting Into High Gear

For the past few months, the council has been running a series of full-page advertisements to plead gold's case to Japanese investors.

"The first stage of our campaign was to build opinion and stir up interest in gold. Now we are entering the second stage where we want to channel this interest into actual purchases. We want to tell investors where they can buy gold and what gold investment products are available," explained Toshima.

To this end the council plans to run more advertisements and is working with the Nihon Keizai Shimbun, Japan's leading business daily, to set up a Web site dedicated to gold investing. There are also plans to establish a toll-free call center to offer investors advice on buying gold.

The council is also planing a series of nationwide seminars to promote gold that will feature a well-known politician and an economics professor from one of Japan's top universities.

Pension Funds Take A Shine To Gold

Toshima said that the events of Sept. 11 have overturned the conventional philosophies used by the Japanese in managing pension funds.

"There used to be the idea that you could diversify a pension fund by simply investing in Japanese, European and American stocks. If the U.S. stocks fell, then this would likely be covered by a rise in Japanese stocks. But stocks all around the world tumbled after September 11 and this resulted in Japanese pension funds taking big hits," said Toshima. "Japanese pension funds fell 9% on average just last year alone, and so fund mangers are really warming up to the idea of including gold as an alternative investment."

Toshima said the council has been arranging one-to-one meetings with pension fund managers to offer advice on the selection of gold products and purchasing methods. The council has even tapped global consultancy firm Watson Wyatt, a leading pension consultant, to assist in these efforts.

Toshima feels that corporate bankruptcies, the falling stock market and rapidly depreciating yen will keep the Japanese very anxious about their nation's economic health well into next year - which would likely keep gold in the investment spotlight.

"As a Japanese citizen, the economic realities are a little depressing," said Toshima. "But as a promoter of gold, these sure are some exciting times in Japan."

Gold Production -- Sharefin, 23:31:24 02/03/02 Sun

Amur Gold Producers Appeal To Government For Help

Delegates at a conference of gold industry bosses in Russia's Far Eastern Amur region have appealed to the government for help in connection with a possible sharp reduction in gold production.
The Amur region produced a record 13 tonnes of gold in the 2001 season, Nikolai Starkov, head of the region's natural resources committee, told Interfax. This earned 495 million rubles for budgets at all levels of government. The region's gold producers received just over 18 million rubles in loans.

But placer gold reserves in the region are becoming depleted, and the Russian Ministry of Natural Resources has been slow to issue licenses to explore new deposits.

"If geological exploration is not permitted very soon, gold production will fall significantly in as little as two years," Starkov said.

Argentina -- Sharefin, 23:07:52 02/03/02 Sun

Argentina Loan Conversion Plan May Wreck Banks, Analysts Say

Argentina's decision to convert all dollar deposits and loans into pesos at below-market exchange rates will saddle banks with billions of dollars of losses and may lead to their collapse, analysts said.

President Eduardo Duhalde yesterday ordered lenders to turn dollar loans into pesos at a rate of one-to-one and dollar deposits at 1.4, below the 1.95 per dollar rate at private exchange houses on Friday. The government will also eliminate a dual exchange rate system that fixed the peso at 1.4 per dollar for trade while allowing it to float freely elsewhere.

"They are passing through the complete burden of the devaluation to the banking sector," said Siobhan Manning, a sovereign debt strategist with Caboto USA, which has managed the sale of Argentine bonds. "They don't recognize the fact that banking system is on the verge of collapse."

Why this forum is currently moderated -- Sharefin, 23:03:51 02/03/02 Sun

There are some people who believe it is their right to rant & rave and that all others should listen & believe them.
To those people I say get a life and go and find another forum.

After seeing the abuse I received after stopping some posters venting their diatribe here it's no wonder I have gone to the bother of removing them.

To those who think it patriotic & their right to post freely whatever they will - go ahead & do it elsewhere.
This moderation has little to do with restricting voices but rather in removing the rubbish.

The purpose of this forum is to bring news & information about gold & the sharemarkets to the internet in such a way that one doesn't have to wade through a mile of inane posts and blather about who thinks what & why it must be so.
It's got nothing to do with frustrated egos who seek to disrupt and pontificate.

To all who don't like the current format you are more than welcome to move on & to do what you do best elsewhere.

If you wish to contribute then please do so in a friendly & constructive manner.
This forum is not for public abuse.

This is a private forum for the benefit of interested goldbugs.
In no shape or form will it be allowed to take on the abuses which exist elsewhere.

To those who are so pathetic to send me abusive emails (with false email addresses) because I won't let you abuse this forum - grow up and move along.

Enuff said and back to gold.

Gold rising -- Sharefin, 22:37:55 02/03/02 Sun

When Money Dies -- Sharefin, 17:42:35 02/03/02 Sun

When Money Dies - part 3

Nikkei - Dow -- Sharefin, 16:53:24 02/03/02 Sun

Japan -- Sharefin, 16:32:20 02/03/02 Sun

How low will the Nikkei go?
And how much gold will the Japanese buy on the way there?

From WaveResearch

Tick-by-tick charts -- Sharefin, 16:22:15 02/03/02 Sun

Gold - 60 minutes

Silver - 60 minutes

The Cheating of America -- Sharefin, 16:07:23 02/03/02 Sun

The Cheating of America

Think Enron and Arthur Andersen Are Exceptions? Think Again.
"Taxes are what we pay for civilized society," said former Supreme Court Justice Oliver Wendell Holmes, Jr. Most Americans probably agree. No one loves the IRS, but we do our duty as citizens and pay our taxes.
But not everyone.
As the Enron-Arthur Andersen scandal shows, avoiding taxes is a big and lucrative business. Enron paid no income taxes in four of the past five years -- it was able to transfer its assets among 881 subsidiaries that were set up abroad in tax-sheltered countries. And Enron is just one example. In 1995, thousands of the biggest corporations -- those with assets over $250 million -- reported no net income and paid no income taxes.
For a deeper look at the shady world of tax evasion, read The Cheating of America, by Charles Lewis, Bill Allison and the Center for Public Integrity (Harperperennial Library).
The book details how major accounting companies, law firms, and Wall Street brokerages - often with a wink and nod from Washington -- help affluent individuals and corporations avoid paying their fair share of taxes. Among the book's findings:

In 1996, over 16,000 of the richest Americans -- those making $200,000 or more - enjoyed an effective tax rate under 10 percent, lower than a middle-class family. Over 1,000 of these Americans, including 101 millionaires, paid no income taxes.
The rest of us must pay more to cover for the tax dodgers: $195 billion annually, or $1,600 per taxpayer.
In the face of a tax-shirking epidemic, the IRS is decreasing enforcement and prosecution.
"Federal officials at both ends of Pennsylvania Avenue would be shocked, SHOCKED, at any suggestion that they do not fully enforce the tax laws," says Charles Lewis. "But actions speak louder than words, and bluntly stated, those laws are not being fully enforced."
Think Enron and Arthur Andersen are exceptions? Think again. They got caught, but the cheating of America is business as usual.

The Struggle For The Legal Tender -- Sharefin, 16:03:31 02/03/02 Sun

The Struggle For The Legal Tender

Gold Could Be Whispering Something -- Sharefin, 16:00:18 02/03/02 Sun

Gold Could Be Whispering Something

As I titled Tuesday's summary (“Something Is Different”), there are some peculiar things happening in the market right now, Tuesday's sudden and brutal selloff ahead of the Fed meeting being the first. It was as if someone was saying, “I know something.” Copper is beginning to act bullishly as well, as it moved up to an 8 month high today after successfully retesting its 1999 low back in November. Short rates have begun moving higher in the last few weeks even as equities have declined (let's all remember that the Fed FOLLOWS the market and doesn't lead it.) The gold shares are going bananas and are far outpacing the gains that we are seeing in the metal. I'm not sure what it all means, but the market clearly smells something coming. And I don't think it's a massive economic recovery. It could be related to the war effort and Iraq, but I would think that oil and oil shares would be moving more in that case. It could also simply be misplaced optimism that the economy turning around, but it doesn't appear that way. The moves in these gold shares are not a short-term phenomena. We'll have to wait and see if we get more clues next week, but it could all be pointing to trouble coming for the dollar.

There's a G7 meeting coming up on the 8th and 9th in Canada where all the central bankers will be present, and meetings like this have been known to have surprise announcements (look no further than the Washington Agreement of 1999.) Currencies are so managed these days that big G7 moves never seem to happen through pure market forces. Judging by the way the market acts, we could be in for a devaluation of the dollar (something that American manufacturers have been complaining to the White House about quite vocally of late.) We'll have to wait until we get more data in the form of how the dollar, gold, bonds, and equities all trade next week going into the meeting, but something appears to be afoot. Should the dollar be devalued, this would obviously be bullish for gold, bearish for bonds, and (due to the run that equities have already had) bearish for stocks as well. With valuations as high as they are, a push up in long-term interest rates combined with foreign liquidation of US stocks would cause stock prices to move lower on such an event despite the obvious inflationary bounce in the economy that you might get from exporting with a weaker currency. It's hard to say how everything would net out on a move like that, but I don't think it would have the bullish effects that policy makers might intend. Every action has consequences, and a lower dollar means higher interest rates and higher commodity prices in the US, which a “priced for perfection” stock market that's 130% of GDP simply cannot stomach even if earnings bounce a bit from the pickup in export activity. That all goes back to the valuation issue that I keep harping on in these tech stocks that are all discounting a rebound in growth that simply isn't going to happen. Uncle Al has been slashing interest rates and exploding the money supply (MZM is up 20 percent year over year.) He's trying his best to inflate his way out of the debacle we find ourselves in, but the currency is not cooperating as the dollar continues to strengthen. Maybe the powers that be have finally decided to give it a helping hand?

But let's not get carried away. We'll have to revisit this next week and see how things are setting up before we can come to any firm conclusions. A drop in the dollar will be the absolute worst thing imaginable for US financial markets. There's really no good option to take once you are in a predicament such as we currently find ourselves, but a lower dollar is one of the steps back to rebalancing the US economy as well as the globe after the biggest bubble in history. So, it's going to occur at some point, but like a drug addict recovering from years of drug use, the road back is not easy and often quite painful.

Let's see what happens next week…

Bankruptcy candidates for 2002 -- Sharefin, 15:53:10 02/03/02 Sun

Bankruptcy candidates for 2002

After years of denial and complacency, Americans are finally starting to realize that the U.S. financial system is one megalithic house of cards on the brink of collapse. Enron has been the headline rage of late and derivatives were its undoing. Now that consumers are starting to find out just how big the derivative problem is, it's only a matter of time before widespread panic sets in and things really start getting out of hand.

We are compelled to offer our thoughts and forecasts on what the coming year might unfold in the way of bankruptcies, panics and (debt) collapses. At no other time in recent history have so many candidates for collapse crowded the field.

Gold gain points to currency risk -- Sharefin, 15:49:24 02/03/02 Sun

Gold gain points to currency risk

As the world's economic leaders meet in New York, professionals wonder whether gold's steady price rise this week is the first crack in the global currencies dam.

UBS Warburg's precious metals team Friday said, "Gold remains strangely supported despite the strength in the U.S. dollar. Although there has been news of good buying out of bank-distressed Japan, the reported quantities are not enough to explain the precious metal's recent resilience. We suspect that one or more large buying programs have been executed since the start of the year."

Landon's report is making the rounds in Asia. His view is one that may come to haunt investors in coming weeks. "The rising price of gold in all the major currencies indicates that investors have been losing confidence in the monetary policies of Japan, Europe and the U.S., in that order of concern," he says.

The UBS Warburg folks, meanwhile, are pragmatic. "The lack of selling ... confirms that the risks in gold remain heavily weighted towards a move higher," they said Friday.

"We're a long way from a runaway bull market, but it could not be any clearer that there is a significant amount of money now willing to bet that the gold price is going to continue its advance," Bishop said Friday.

Pedal to the Metal -- Sharefin, 15:46:08 02/03/02 Sun

Pedal to the Metal

Gold @ $350 -- Sharefin, 04:00:33 02/03/02 Sun

Newmont Mining CEO - $350/Oz Gold Likely In 2-3 Years

Newmont's three-way merger has already been approved by Franco-Nevada shareholders.

Murdy said in an interview that he expects Normandy's shareholders to tender at least 90% of the Australian company.

"Then we'll be able to merge the company," Murdy said.

The chief executive said Newmont will begin to "rationalize" the assets of the combined company once the merger is completed. He said that Newmont will raise between $250 million and $300 million in the first year through asset sales, including some of Normandy's smaller operations outside Australia.

Murdy said that the merger would give Newmont a much more conservative balance sheet. "We're looking to reduce our debt-to-capitalization ratio from a 40% to 24%," he said, adding that the company expects that ratio to fall below 20% through the sale of smaller assets within a year. "Our long-term goal is to have a debt-to-capitalization ratio of about 10%."

He said that the combined company will maintain its current yearly production of 8 million ounces until gold prices improve.

"As long as gold prices stay at these levels, we're happy just maintaining production and improving the quality of the assets we have," Murdy said."But if we saw a sustainable level of $300 to $350 (an ounce), then we would start looking at new projects."

The benchmark gold future contracts on Comex closed at $286.80 Friday.

"We see in the next two or three years, a good case for the price of gold to go to $350," Murdy said.

Newmont will continue to provide shareholders with a "pure play" investment in gold, the executive said. Newmont, unlike other gold producers, doesn't use forward contracts as a hedge against changes in the price of gold. While that leaves it exposed to declines in gold prices, it also means the company benefits fully if gold becomes more expensive.

"As the company is configured right now, each $25 increase in the price of gold results in a pretax free-cash-flow increase of $162 million," Murdy said. "And once we close out the Normandy hedge book, will get almost $200 million per $25 increase."

Anglogold -- Sharefin, 03:58:47 02/03/02 Sun

Anglogold on the acquisition path

Toronto stock close higher as golds add glitter -- Sharefin, 03:57:44 02/03/02 Sun

Toronto stock close higher as golds add glitter

"Expectations of higher bullion prices will carry these gold stocks higher," said John Ing, president at Maison Placements Canada.
"There's no question that looking ahead at all the uncertainty in the stock market that gold is a good thing to have."

Harmony -- Sharefin, 03:55:56 02/03/02 Sun

Harmony Facing Higher Price Tag To Buy AngloGold Mines

Chile gold & copper project -- Sharefin, 03:54:03 02/03/02 Sun

Chile OKs study on $1.43 bln gold and copper project

The project, located at an altitude of 4,000 meters in the Andean mountains in northern Chile, would eventually produce 900,000 ounces gold annually as well as 128,000 tonnes copper and 1.8 million ounces silver.

Platinum -- Sharefin, 03:52:53 02/03/02 Sun

Fuel-cells: driving platinum into the future

Barrick Gold -- Sharefin, 03:51:24 02/03/02 Sun

Barrick Gold 2001 production of 6.1 million ounces of gold at $162 per ounce

Godsell spurns value-diluting deals -- Sharefin, 03:49:37 02/03/02 Sun

Godsell spurns value-diluting deals

Enron -- Sharefin, 03:43:44 02/03/02 Sun

Enron Metals' Joe Gold Moves To Barclays Capital

Gold pulls up anchor and stocks, funds set sail -- Sharefin, 03:42:05 02/03/02 Sun

Gold pulls up anchor and stocks, funds set sail

Commitments Of Traders -- Sharefin, 03:38:26 02/03/02 Sun

Commitments Of Traders: Bullish Gold, Silver Still Vulnerable

Gold fund managers were seen getting ready for this week's rally by paring down their net long positions, according to analysis of the Commitments of Traders report released Friday, which showed their exposure to be half what it was a week ago. The risk of long liquidation is therefore greatly reduced from last week.
The CFTC report showed that, as of Jan. 29, large speculators held 29,044 long positions and 16,610 short positions in gold, slashing their net long exposure to 12,434 contracts from the 25,929 longs in the previous report.
Citing the 36,638-contract extreme from late September, analyst Tim Evans at Pegasus Econometrics saw room for fresh buying of anywhere from 15,000 to 20,000 contracts before a longer-term top was in sight.
"Of course, there is never a guarantee that fund managers will fully commit themselves and even the current report shows some potential for long liquidation instead," he said.
The funds that have clung to their longs since the last runup will probably be looking to take profits just a few dollars above where April gold on Comex closed Friday, at $286.80 an ounce, according to Leonard Kaplan of Prospector Asset Management in Evanston, Ill.
Broker John Tyree at Rosenthal Collins Group in New York expressed more confidence in funds' commitments to the long side, saying they were in the market for a much bigger run than the $4 spike seen Friday, holding out for at least another $6 to $8 to the upside.
But Evans at Pegasus expected the market to match the double bottom establish at $278.40 in the last week with a double top, probably ahead of the $289.50 downtrend resistance or the $290.50 peak from Jan. 16. Penetration above there would target the $297.50 high from September.
On the downside, failed resistance at $284.30 will serve as initial support, with scale down buying likely to emerge at $282 and $280 before a retest of $278.40 can occur.
"We'd look for a few sessions of consolidation to develop before looking to sell short on breaks," Evans advised.
In silver, large noncommercials also whittled down their long exposure, with 32,428 longs and 3,833 shorts bringing the total long exposure to 28,595 contracts, down from 33,036 a week earlier.
"The break to a new low Thursday may have resulted in a further reduction, but we think the market is still somewhat top-heavy with length," Evans said.
Though he saw room for roughly 8,000 contracts' worth in fresh buying before the 36,208-contract peak was matched, he predicted funds would look to further reduce their longs into any price strength.
As for prices, a double top of $4.335 in March silver two Fridays running establishes that as fairly formidable resistance, with any break above there likely to draw people's attention and warrant covering shorts. Further resistance between $4.40 and $4.56 will hinder a recovery attempt, "limiting it to an upward correction within what may still be a bear market," Evans warned.
In the other direction, a breach of support of the $4.21 low from Thursday will invite a retest of the $4.05 low from November or the declining channel support at $3.97, he said.

Moderators comment -- Sharefin, 03:06:53 02/03/02 Sun

Due to the nature of some recent off-beat posts I've put this forum back on to the moderated format for some time.

Please feel free to post gold or sharemarket related posts.

Recovery or Illusion? -- Sharefin, 19:44:02 02/02/02 Sat

Recovery or Illusion?

The Globalizer Who Came In From the Cold -- Sharefin, 19:42:07 02/02/02 Sat

World Bank Insider Speaks Out

The World Bank's former Chief Economist's accusations are eye-popping - including how the IMF and US Treasury fixed the Russian elections

Enron -- Sharefin, 19:37:48 02/02/02 Sat

Britain's Prince Charles Linked to Enron Execs

Enron -- Sharefin, 19:33:28 02/02/02 Sat

Enron was, in layman's terms, a nest of dirtballs

Argentina -- Sharefin, 19:23:07 02/02/02 Sat

Argentina 'on brink of anarchy'

Chapman -- Sharefin, 19:22:07 02/02/02 Sat

Gold & Silver Potpourri

Snipped from Robert's IF:
Word is that Barrick was long Enron bonds and lost several million dollars, and the IRS is looking at their offshore hedge book. Being good corporate citizens they avoid taxes like the plague. Barrick is in bed with JP Morgan Chase and JP Morgan Chase was a bed partner of Enron. It stands to reason Enron was financing its pyramid via JP Morgan Chase and gold leasing. If this is true with Enron bankrupt who is going to cover the Enron gold short? The natural legal responsibility lies with JP Morgan Chase, but JP Morgan Chase is the vassal of government. Will Morgan pay or will you and I via our corrupted government? This could be the biggest story of our new century and the collapse of Morgan. We may be on the cusp of a major setback for the elitists due to their unbounded greed.

(Remember the initial rumours of Enron being short 50 million ounces of silver - no rumours since)

"Elektra sales of silver coins HAVE EXHAUSTED THE STOCK OF BANK OF MEXICO! Elektra is expecting new deliveries of newly minted "Libertad" one-ounce coins, this week. Central Bank of Mexico is quite surprised. Some stores, in the meantime, are out of stock."

Eldorado and Bema to the Moon! -- olehickok, 09:53:06 02/02/02 Sat

Great forum!! Just found it after wasting to much time on Kitco's.
i'm just a humble goldbug but i predict XAU to 90-100 by May. POG back to $400-$500 by December 2002.(thus XAU could be 150+ by then)
Eldorado and BGO heating up, and we'll be talking about folds in these and not just %'s. e.g., 5 fold, 10 fold, 20 fold, not just 20% up, 80% up, 138% up. Get in now and beat the crowd. Katie Kork and Fan Blather will be buying from us after we've 10 folded. Politicians and lawyers will be buying from us after we've 20-30 folded.
Have a great day, thanks to moderator of this for having us.

auspec -- Sharefin, 23:23:09 02/01/02 Fri

Going on the past history there should be approx 3 years between lows & highs, so with one year almost gone we don't have long to wait.

More on Citigroup -- Sharefin, 23:15:30 02/01/02 Fri

I think that this article is of major importance.
Citicorp dupes customers

“The brokers were calling our clients telling them that this was a wonderful opportunity to buy these instruments,” says Joe Cotchett, a lawyer representing Silvercreek. “They were giving our client a sell job.”
Citigroup, Goldman and Banc of America declined to comment.
The suit is one of the first to put the blame for Enron squarely on Wall Street's role in facilitating Enron's deception. “Enron's investment bankers sold the securities which propped up the pyramid,” the suit alleges. “In the process, these firms earned $214 million in underwriting fees alone, and much more for lending, derivatives trading and merger advice.”

When the major market makers take to knowingly rip their clients faces off and expect to get paid for it, is the time that market players decide it's time to exit these markets.

All global markets are built on confidence & trust and when it's revealed that the biggest players are not playing by the books how does it relate to their customers who now must question past deals and the value thereof.

Who will be next wanting to purchase from them - especially in this climate.

This has the potential to snowball into something monstrous.
All the hot air holding the lofty valuations sky high has just heard a pin prick.

Now we should see a flight to gold, because we've just seen one of the majors caught selling hot air (paper) to a trusting client.

Watch the exits as the players have a look at what they're holding - paper - and contemplate about it's true value.

These markets are built on confidence and confidence is what holds them together.
Lose that confidence and basically all you're left holding is paper.
And in today's markets all this paper is greatly over-valued.

The bubble has been pricked and confidence is rapidly waning.
All across America & the rest of the globe, managers & market makers must be reviewing the paper they have and the value thereof.

Now who will be the first to say let me out of this game & give me my collateral back?
Who now is cashing in their paper and getting into gold early?

Once the rush starts it will be too late.
Already the damage has been done.
We just have to hear more of it.

The internals of these global markets built on trust have turned rotten.
Greed has ruined them to the core.
Profits & greed were sought as ethics were thrown to the winds.

Confidence now shaken remains to be shattered and then the panic begins as the players rush to cash in and get out before what they are holding is worthless.

Gold is in play & demand is rapidly building....^o-o^.....

Sharefin.....OK wit Me -- auspec, 23:09:14 02/01/02 Fri

The 1976 part of that chart really appeals to my greedy inner self. Politicos will be skrewd sooner, sooner, sooner, or later!
Shhhhhhhhhh? Let's not let any other potential gold buyers in on this one.

And the walls come tumbling down -- Sharefin, 22:55:08 02/01/02 Fri

Beijing banker sacked after $1bn disappears

auspec -- Sharefin, 22:53:02 02/01/02 Fri


I'll let you in on a little secret.

New webpage on Gold Indices - very bullish -- Sharefin, 22:40:24 02/01/02 Fri

Global Gold Stock Indices

Charts -- auspec, 22:34:40 02/01/02 Fri

I really do love and appreciate the charts, but we must recognize that, at this point in time, POLITICS is the major determining factor with gold. Am I wrong? When the charts strongly dictate that gold will soar is exactly when the manipulators do their manipulations, as recent history clearly spells out. Technicals TRUMPED by fraud. Fraud loses in the long run every time, but we must wait for the long run {patiently]! Manipulators understand technicals every bit as well as we do, and they fight the batle accordingly. NOW is, again, their time to pull 3 rabbits, 6 snakes, and 8 alligators out of their hinderparts. Give credit where credit is due. These sphincters are worthy of Guinness WBR {not stout}. "A" for effort, but "F" for choosing a loosing battle, govt. folly at its worst/best.
Finnie.......Thanks for this new Forum!

Topgun -- Sharefin, 19:29:22 02/01/02 Fri

You & me both, plus probably a lot of others.

My intent is to not let happen to this place what has happened there and that is why I posted what I did.

You are more than welcome to post here but please make it informative rather than a disgruntled rave.
Leave all your grievances elsewhere.

If you intend to convert sheep then you are on the wrong forum.
If you intend to perceive this forum's viewers as sheep then you are definitely on the wrong forum.

I have the ability & privilege to veto & delete any post that I believe doesn't fit in with the mettle of this place.
I can also ban ISPs if the need arises.

Ennuf said & back to gold.

NICK....................... -- topgun, 19:10:00 02/01/02 Fri

I'm here because KITCO has no substance. Maybe
I'm upset because of all the misinformation
on the boards. I'm tired of being burned and
hussled. Please show some compassion. I have
lost alot of friends because of my wealth.
I have lots to offer this board if the sheep
will listen. Suit yourself.

The Bottom Line -- Sharefin, 18:51:07 02/01/02 Fri

Waiting for the next shoe to drop

The disturbing question on everyone's mind these days has a frighteningly simple answer. Will there be another Enron? Yes, of course, there will be.

The more tantalizing questions: Who will be next to crack, and when will we find out? The identity of the next Enron is tough to know. Short sellers will speculate, of course. But disasters like Enron tend to explode like bombshells, meaning that everyone but insiders will be surprised when the cataclysm occurs.

The "when" is easier to discern. In coming weeks, as companies begin to file their 10-K annual reports with the Securities and Exchange Commission, the next wave of revelations will hit the market. It stands to be ugly. The reason lies in what auditors will force their clients to disclose in return for signing off on their annual reports.

"The interplay of the relationship between issuers (of stock) and auditors for every public company this year will occur under the cloud of Enron," says Boris Feldman, a litigator with the Silicon Valley law firm of Wilson Sonsini Goodrich & Roasati. "Every auditor in America is having a near-death experience," he says.

Topgun - moderators comment -- Sharefin, 18:44:30 02/01/02 Fri

Please could you post your views as they are, on the Kitco forum & not here.

I would prefer that this forum is for gold related news rather than rants or raves.

There are plenty of forums where you can vent to your hearts content.

If you've some informative news on gold then please feel free to post them here.

If you want to bitch & complain then please take your views elsewhere.

If you don't like what I say then please don't complain here but take it elsewhere.

This is a private forum and I am seeking to not let it go the way of the other forums.

All are welcome to post here but in a civilised way.
Regards Nick


The nut case SKI poster has everyone brainwashed like
he has a sacred system. You sheep don't get it. It
doesn't work and you still want to believe in chasing
rainbows in the sky. Then there's FACT and SURFER who
continually post junk and are always wrong. We have
alot of stupid people in this world and 98% are on
KITCO. I don't have to go to chat sites to see all
you sheep. I see plenty of you in the stores and
many who can't even drive a automobile. I have alot
of assets and I'm sick of sicko's trying to grab free
hand outs so they can piss way money with their non
existant set of values. I love to help people in real
need but I'm sick of sicko's. If your out there I'm
letting you know now and I think I speak for those
that invested and saved their money as well. I repeat
none of you pricks will get my hard earned money when
the house of cards collapses. I'm referring to those
people with no values and who want everything through
selfishness. The gates of hell will swing wide open
for you selfish greedy people who only have their own
agendas on their mind. This world will also be destroyed
by the likes of man of this caliber. Judgement day is
coming you pricks.

gold at $1000 by June/2002 -- topgun, 17:51:01 02/01/02 Fri

Why ???? The herd/public has been out of gold
for many years and the stampede is about to begin.
The metals have been completely sold off by the public
for many years now placing the proceeds into paper assets.
What do you think is going to happen ? How many sheep
are on this board ??? How many of you like the public
are brain dead ? How many of you need to consult with
other people before investing ??? For those that can't
see their own nose in front of their face you need not
listen to sheep. As I drive my car on the roads and
shop in the stores I have never seen so many confused
herds of people that can't function. America's time is
up as the people are starting to look like real zombies.
The cost of living is going to wipe out pay checks as it
soars to Uranus. The only problem is 90% of the public
is counting on a pay check to pay ther bills. Lets see
now can you sheep spell "DEVALUATION". Coming soon to
a theater near you. Baa Baaaaa

Sheeeep...............selling to early too will be your
own demise. Hate to burst all your bubbles on taking
profits. All of you will be horsewhipped out of the
market. I'll be back in a few months to see how all
you gready people did trying to time the market. So
far most of you can't make a dime. Hang it up sheep
trading is for suckers. Got to stay in to win and be
willing to go down with the ship. Or are you still
out to lunch. You will be when gold slices through
a $1000 and your not in. I can't believe the gold
boards and how many people think they can time the
market. How the sheep never learn !!!!!

Enron -- Sharefin, 15:52:51 02/01/02 Fri

Citigroup's Enron sales draw lawsuit

Would you trust your gold to these merchants?

TSE Canadian Gold Index -- Sharefin, 15:07:12 02/01/02 Fri

ASX Gold Index -- Sharefin, 15:03:54 02/01/02 Fri

Gold climbs $5 to touch two-week high -- Sharefin, 14:47:49 02/01/02 Fri

Gold climbs $5 to touch two-week high

Gold gain points to currency risk

SAN FRANCISCO (CBS.MW) - As the world's economic leaders meet in New York, professionals wonder whether gold's steady price rise this week is the first crack in the global currencies dam.

UBS Warburg's precious metals team Friday said, "Gold remains strangely supported despite the strength in the U.S. dollar. Although there has been news of good buying out of bank-distressed Japan, the reported quantities are not enough to explain the precious metal's recent resilience. We suspect that one or more large buying programs have been executed since the start of the year."

Gold's climb to almost $288 an ounce Friday may not seem so hot to stock-market investors. Yet the gain from $278.50 just five days ago has brought gold-mining shares in North America to their highest point in eight months, as measured by both the HSBC North American Gold Index and the Philadelphia Gold & Silver Index. Both indexes on Friday continued to rise. See HSBC gold share chart.

The metal's gain also is boosting mining shares in Australia, Canada and South Africa, where ailing currencies against the dollar are magnifying companies' operating profit margins. The gains have been strongest in Australia, where takeover fever is sweeping small and large mining companies. See Australia gold mine index. In Toronto, the stock market's gold mining companies as a group have risen more than 50 percent in the past 12 months. See Toronto Stock Exchange gold share chart.

As for bullion itself, the gains in the metal during a time of dollar strength, usually a downer for gold, prompt the question of who is buying -- and why.

Ken Landon, a Deutsche Banc analyst in Tokyo, explains a rising gold price almost always indicates depreciating currencies, regardless of exchange rates. In the past 12 months, the yen, he says in a report, has fallen 21 percent against gold. The euro has lost 15 percent of its value against gold. The dollar is off by 6 percent.

Landon's report is making the rounds in Asia. His view is one that may come to haunt investors in coming weeks. "The rising price of gold in all the major currencies indicates that investors have been losing confidence in the monetary policies of Japan, Europe and the U.S., in that order of concern," he says.

A foreign exchange analyst, Landon says the Federal Reserve, whose policies are increasingly inconsequential to consumers and investors, and American lawmakers are to blame, on this side of the globe, anyway.

"It was the Fed's rate hikes that caused an inverted yield curve, which was an infallible signal of the subsequent recession," Landon says about the central bankers' series of interest rate hikes that totaled 175 basis-points. The rising rates came to an end in mid-2000 as Federal Reserve governors tried to put the brakes on a surging stock market. The interest-rate hikes were followed by 13 interest rate cuts at the Federal Reserve.

The Deutsche Banc analyst also points to the Justice Department's campaign against Microsoft (MSFT: news, chart, profile) and the U.S. Senate's majority of "anti-free market Democrats" as red flags for investors, Finally, "Enron became a political issue in Washington, which increases the chance that the government will mount a new regulatory assault against business." Landon says gold is the only refuge for investors who seek to avoid currencies that are attached to economic and witch-hunt policies.

Gold rush in Japan

Reports that Japanese consumers are rushing to buy gold, first reported here more than a week ago, might explain part of gold's recent gains. Japanese investors bought about 10 tons of gold bars and coins in January, or double the monthly average from last year, according to the World Gold Council. The Japanese, who have a history of hoarding metals such as platinum and gold, are wary of an end later this year to full government guarantees on Japanese bank deposits. See more on this gold story.

Some precious metals analysts say that's no reason for gold's resilience. Such buying by consumers, they say, is a mere blip in the daily flows of gold, which is also lent out by central banks and bullion banks eager to earn a tiny interest rate on their holdings.

Andy Smith, a Mitsui Global Precious Metals analyst in London, tells me Friday it is almost always the mining companies who are responsible for large purchases and sales of gold. Many gold mining companies hedge their books by selling some of their production forward to lock in slightly higher prices, thus creating a need to buy gold in the futures markets.

"The finger in the air should normally point to miners," says Smith, whose price-range forecast for gold this year is $265 to $355 an ounce. See more on Smith. Smith said in the fourth quarter of last year alone, net buying by just two large gold miners, South Africa's Anglogold Ltd. (AU: news, chart, profile) and Australia's Normandy Mining (AU:NDY: news, chart, profile), amounted to more than 90 tons.

Smith is curious, like everyone else, about gold's stiff upper lip this past week. The UBS Warburg folks, meanwhile, are pragmatic. "The lack of selling ... confirms that the risks in gold remain heavily weighted towards a move higher," they said Friday.

As for the companies that pull metal from the ground, things are very good these days.

Anglogold, the world's largest miner until Newmont Mining (NEM: news, chart, profile), Normandy and Canada's Franco-Nevada agreed to combine their companies in January, just reported a 16 percent quarterly increase in net income to $88 million. In rand, which is near an all-time low against the dollar, Anglogold's profits rose 45 percent for the December quarter.

On Monday, South Africa's Gold Fields Ltd. (GOLD: news, chart, profile) will unveil quarterly profits. Gold mining companies across the entire continent of Africa are enjoying swollen profits, thanks in large part to their weak local currencies. Gold is largely denominated in dollars, and when exchanged for rand and other ailing currencies, mining companies' income statements are looking golden. The Financial Times Africa Gold Mines Index has gained more than 60 percent the past 12 months. See chart.

Robert Bishop, the longtime editor of Gold Mining Stock Report, says he just returned this week from two Canada mining and exploration conferences. Based in California, Bishop points to a spate of financings for lesser-known gold miners, including a $20 million (Canadian) cash infusion for Eldorado Gold Corp. (CA:ELD: news, chart, profile) and a $27 million (Canadian) one for Kinross Gold Corp. (CA:K: news, chart, profile).

"We're a long way from a runaway bull market, but it could not be any clearer that there is a significant amount of money now willing to bet that the gold price is going to continue its advance," Bishop said Friday.

As for the mood of the gold industry, Bishop says most mining executives, whether pushing paper in skyscrapers or scraping rock in dusty pits, still remember the spectacular failure of Canada's Bre-X in 1997. Bre-X's fraud brought steep losses, and heartbreak, to many investors and cast a cloud over the mining business. "That was the year Bre-X's John Felderhof won Prospector of the Year, and his associate, Michael de Guzman, spent most of the week (at a March 1997 mining conference) in Toronto strip joints," Bishop recalls.

"Felderhof had to return his award a few months later, and de Guzman, within 10 days of his visit to Toronto, took flight from a helicopter over the Indonesian jungle," Bishop says, in a report to his clients. In the wake of de Guzman's apparent suicide and Bre-X's collapse, "things haven't been quite the same since," Bishop says.

How many Enrons? -- Sharefin, 14:24:46 02/01/02 Fri

Two, Three, Many?

Snipped from John Maudlin's e-letter:
I read today where Enron owes $30 billion to its unsecured creditors and another $10 billion to its secured creditors. Good luck, guys. You can kiss the unsecured debt goodbye, and probably most of the secured.

John Meyers writes that the adjusted monetary base was about $500 billion in 1998. Today it is pushing $640. That is a huge growth of $140 billion. He argues that is inflationary and will eventually make gold rise. I am not convinced.

Enron wiped out $40 billion in one fell swoop. How much has been lost to Global Crossing, that star crossed company which only a few years ago George Gilder was hailing as among the best and brightest?

These two examples are a tip of the iceberg. Estimates are $25 billion to the US for Argentina and another $45 billion to Europe. Moody's has raised its estimates of global debt default in high yield bonds to 12%, an almost 20% rise. Credit card and other consumer debt defaults are near all-time highs. Mortgage defaults are similarly at high levels.

In the old days, you paid off the farm and celebrated by burning the mortgage. Today, banks and lenders are participating in another type of debt burning, as they burn the paper of those who are left with bankruptcy as their only choice.

This global paper burning is deflationary, pure and simple. Greenspan prints money and Ken Lay, Gary Winnick and their ilk burn it, except for what they manage to put in their pockets.

While I do think inflation could come back some day, my view (stated last week) that gold could finally get up off the mat (in 2003) is related to my concern about the dollar coming under pressure due to the likelihood that the trade deficit will be the highest in history, and will probably be responsible for bringing the dollar down (see last week's issue for a full analysis).

GUILTY FOR 9-11: BUSH, RUMSFELD, MYERS -- Sharefin, 14:17:42 02/01/02 Fri

Part 1
Part 2
Part 3
Part 4

China -- Sharefin, 14:14:00 02/01/02 Fri

Bank Of China's Mounting Problems

Bubblemania -- Sharefin, 14:01:05 02/01/02 Fri

House of Cards - The Second to Last Bubble

Bond Defaults -- Sharefin, 13:57:58 02/01/02 Fri

Record Corp. Bond Defaults in Jan - S& P

In a fresh sign that the credit woes of companies worldwide have not abated, Standard & Poor's said on Thursday that 41 issuers defaulted on $31.3 billion of rated bonds in January. Both totals set records for a single month.

Opps I forgot the "<a"; sorry.. -- thmann, 13:39:51 02/01/02 Fri

Corrected Link

There that should do it.


Opps I forgot the "<a"; sorry.. -- thmann, 13:37:46 02/01/02 Fri

There that should do it.


SILVER SUPERNOVA! (without "WWW") -- thmann, 13:20:08 02/01/02 Fri

For those (like me) that are getting a "404 file not found" error.


Well worth a read.

Open letter to George W. Bush from Michael Moore -- Shadowfax, 11:11:21 02/01/02 Fri

Well worth a read..

Open letter to George W. Bush from Michael Moore

Oil -- Sharefin, 22:38:08 01/31/02 Thu

Kuwaiti field explodes into inferno

Silver bulls -- Sharefin, 22:25:42 01/31/02 Thu

Silver Could Replace Toxic Chemicals in Wood, Preservatives and Marine Paints

Over 100 million ounces annually of silver could be used in biocides for the wood preservation industry and for marine antifouling coatings if further testing shows them to be technically and financially superior to current chemical-based biocides that are falling out of favor - some are being banned - because of their toxicity.

auspec -- Sharefin, 22:23:37 01/31/02 Thu

I'm amazed. That was pure coincidence.
I've not been able to log on here for the last couple of hours and had been sent the link earlier.
I never noticed your post untill afterwards.
Crazy huh......

Don't you like poetic license.(:-)))

Sharefin -- auspec, 21:50:53 01/31/02 Thu

Thanks for bailing me out on that silver link, back to the drawing board.

From Solari -- Sharefin, 21:49:46 01/31/02 Thu

Rumors --- and hard evidence-- swirl that the US Treasury, the NY Fed member banks and large corporations are cooking the books and trillions of dollars, gold and inventory are missing from the federal government. Something does not make sense. Sounds like financial hijackers have hijacked the financial system.

SILVER SUPERNOVA! -- Sharefin, 21:48:24 01/31/02 Thu

The Impending Silver Crisis

As the year 2001 came to a close the world has witnessed the last full year of low silver prices. Thanks to the general media blackout of what can only be reasonably called conspiracies in silver and gold markets, the public at large has absolutely no inkling of the approaching catastrophe. As usual, distractions from urgent matters are offered to the public in the form of professional sports and TV gossip shows, both of which have slight importance yet mesmerize attention. The silver story is one of the strangest in financial history. Crucial aspects have been detailed for several years by Butler. For silver investors, this is an opportunity which would not exist, except for the fact of long-term obstruction of free market forces. The obscene situation of a long-term short corner on the market, so-called regulators allowing it and press ignoring it---culminating in a price explosion, shortages and rationing, is among the most outrageous manipulations in business history.

When the crisis in silver and gold erupts and the foundations of banking giants shake, the public will demand to know why didnít someone tell them this was coming!

Cyclist/Silver Article -- auspec, 21:47:13 01/31/02 Thu

Yes, Cyclist, it is hard to believe that SWG is selling at current low FRN price, this one is the premier explorer, using OPM, and giving many multiple chances of success. Will be a $20 stock in the not too distant future, imho only. Surprised to see it going down while many Jrs/explorers are heading north.

SILVER ARTICLE! This is a good one by Charles Savoie:

Silver Supernova

OK, Sharefin, let's see if I'm now ready for prime time wit the above link.

Skolnick -- Sharefin, 17:49:04 01/31/02 Thu


===Federal Reserve Commissar Alan Redspan [that is what we call the Dictator] siphoned off hundreds of millions of secret Enron partnership funds, multiplied through fractional reserves and derivatives hocus-pucus, to temporarily support the Dow Jones 30 Industrials. Thus for the moment saving Bush from having to deal with a financial meltdown which he most likely could not effectively deal with. Old-timers say Bush was in danger of being "Hoover-ized", referring to President Herbert Hoover, 1930-31, falsely stating "prosperity is just around the corner". The September 11 events effectively prevented for the moment Bush having to deal with a gold stampede which would tend to discredit the Federal Reserve's hot-air paper money masquerading as the "U.S. Dollar". [See part two of this Enron website series.]


SWC -- Cyclist, 15:12:52 01/31/02 Thu

SWC got sold off,yesterday and early this morning,heavily
by an institution.
The supply dried up around the previous low.
This was "the" buying opportunity.
I think with a change of management the stock could quadruple in no time.
Just a great day

Interesting site -- Prometheus, 13:21:33 01/31/02 Thu

Here's a site, fairly new, which may become another good source of info. It's called and has the motto that second great depression will not be televised. Michael Nystrom, the editor, hopes to fill in some blanks.

record corp. bond defaults -- kiwi, 11:40:33 01/31/02 Thu

Elliott Wave Count---Thursday-1-31-02 -- Cobra, 08:22:35 01/31/02 Thu

The XAU ran into very stiff resistance yesterday at the 61.19 area right where I thought it would. This mornings pullback and low so far at 59.93 might be as low as it goes before we see XAU resume its Upward advance. Above 62.00 and I think we will see expanded trading ranges in all the precious metals. I think we have entered a 3rd wave to the Upside and any pullbacks will be shallow and brief. Most of the Gold stock charts have very favorable patterns, both on daily and weekly charts. The next move will be Up again. We commenced the 3rd of the 3rd on this last monday, we are in another minor two here I believe. This is NOT meant as investment advice and is a Personal observation Only. Due your own due diligence as to trading decisions.

Deflation -- Sharefin, 06:37:02 01/31/02 Thu

Japanese-Made Chip Equipment Orders Plunge 84% in December

Global sales slid 70 percent to $983 million in November from a year ago, the industry group said.

Breakdown -- Sharefin, 06:33:12 01/31/02 Thu

Greed, Complexity, Conflicts of Interest and The Moral Hazard

In a broader sense, the whole financial system has been infected with conflicts of interest. The argument of the complexity of today's modern corporation can account for only a part of the problem. Greed and avarice account for many of the other problems we see. The desire to gain wealth has come into conflict with moral responsibility. This emphasis on gaining wealth has invariably produced conflicts of interest that rationalize certain human action. Today's directors and executives who run corporations are more concerned about the performance of the price of the stock than the performance of the enterprise.

IDT -- Sharefin, 06:21:36 01/31/02 Thu

It's in the mail.

Lenny's corner -- Sharefin, 06:20:26 01/31/02 Thu


Precious metals have remained quite firm during the last two days as volatility has captivated both the equities and currency markets, Leonard Kaplan of Prospector Asset Management said.
"The stock markets in the U.S. have been wild, first falling considerably on Tuesday as concerns about fraudulent financial reporting and accounting standards shook investor confidence, and then rallying out of a deep decline Wednesday as the U.S. Fed, again, accommodated the market by doing exactly what most expected - nothing at all," Kaplan said.
Gold has surpassed the $280 per ounce resistance level and appears very strong, Kaplan said, with an immediate target at the technical resistance level of $285 in mind.
Kaplan said that silver, after successfully testing support in the low $4.20's basis the March contract, is trying to get enough "steam" to break through the $4.32-$4.33 level.
"Even platinum and palladium are looking firm here and I would expect a bit of a rally," he added.

Barrick -- Sharefin, 06:17:39 01/31/02 Thu

Barrick 2001 gold production at 6.1 mln ounces

Real Money -- Sharefin, 06:11:36 01/31/02 Thu

Bangladesh move on gold imports hailed

Hedging -- Sharefin, 06:09:08 01/31/02 Thu

Collapse of rand forces AngloGold to revise hedging

Analysts said the positive effect of the collapse of the rand outweighed its negative impact on AngloGold's hedging profits. But the company said, "The dislocation of the rand during this quarter required active management of the portion of the hedge book priced in rands", and the company has restructured the book to substantially reduce the rand-denominated portion of its forward contracts. The overall hedge position has also been trimmed by some 3.5m ounces over the year.

Kaiser Aluminum says it will default on interest payments due -- Donald, 05:53:25 01/31/02 Thu

click here

Mexican Central Bank says an inflation bubble is growing -- Donald, 05:41:32 01/31/02 Thu

click here

Why I am happy with my Aussie Gold Shares ... --, 04:03:14 01/31/02 Thu^HUI&d=c&k=c1&c=au,lihry,nem,

Anglogold Results ... --, 03:50:34 01/31/02 Thu

AngloGold doubles quarterly profits

By Hilton Shone

AngloGold Ltd, the world's biggest gold producer, on Thursday reported a net profit of R895-million for the quarter ended Dec. 31, 2001.

This is an increase of 104% on the R439-million in the September quarter. Headline earnings, which strip out exceptional items and their tax effects, came in at R971-million rand against R491-million.

Gold output for the three months to end-December was 36,012 kilograms (1,158,000 ounces) versus 37,254 kg (1,197,000 ounces). For the 12 months to December, AngloGold posted a net profit of R2.18-billion, up 95% on the R1.12-billion in the prior year.

Full-year headline profit was R2.48-billion an increase of 40% year-on-year. In the 12 months gold production amounted to 147,250 kg (4,734,000 ounces) down 13% on the previous year, as the group sold its Elandsrand and Deelkraal operations to Harmony Gold.

AngloGold will pay a full-year dividend of 18 rand per share, up 29% on the 14 rand per share paid in 2000.

Sharefin -- IDT, 21:59:30 01/30/02 Wed

Do you have a data set on gold that I could use for some analyses? I'm looking for something that would date back to the late 60s early 70s daily or monthly high low close on Comex or London Fix. Will settle though for monthly close on either Comex or London. Thanks in advance.

We Have Arrived!! -- auspec, 19:46:25 01/30/02 Wed

WE have now gone prime time wit the gold issue! I just finished watching West Wing and they portrayed what the yellow metal is all about in prime time, nekked, for ALL to see. Hollywood has spoken, quite clearly. You see, this scripted guy is trying to leverage his way into the Presidential circles with his 2 great concerns. Yes, he's a touch geeky looking, as well as quirky, but he does speak the King's English and is representing ALL of US. OK, so he's not just 'geeky' looking, he's a wild eyed wacko, but it's still 'GOLD' on national TV! The other issue is really not that important having something to do with Roswell New Mexico and possible alien creatures, let's just overlook that part. He clearly mentioned that 'Ft. Knox' is supposed to have 8,500 Metric tons of gold and has not been inspected by presidents since Roosevelt and Truman, so far so good. It does get a bit entangled as the two causes intertwine: "alien bodies at the bullion depository at Ft. Knox", but we must look beyond the obvious, no? I'm serious, these Hollydead script writers put the alien issue together with GOLD!!!! Ha, Ha, Ha, Ha, Ha, Ho!!
Maybe those that like to tell people howe to think are getting somewhat desperate? You know that "nothing is official until it is officially denied"? Well, it has just been officially denied, HollyWooden is our officialdom, right? Most sheeple will be SHAMED into the 'correctness' of avoiding gold and for sure avoiding aliens, forever the 2 shall be linked.
Party time, folks, we have arrived! Ridicule is an exponential step ahead of simply being ignored, please continue fighting us. Uh, what's the last part of Ghandi's little saying? Something like "we win"? This was so blatantly obvious tonight it's hard to see hau the cameraman could function with all the laughter going on. But, howe did the sheeple see it?
Personally, I take it personally, and will personally, tomorrow, head for Roswell!!!

PS My GFather had a ranch near Roswell and he said little about cattle mutations, probably trying to spare me

Newmont -- Sharefin, 19:21:32 01/30/02 Wed

Newmont Plans to Sell as Much as 10% of Normandy's Holdings

Gold industry taking time to digest consolidation -- Sharefin, 19:19:06 01/30/02 Wed

Gold industry taking time to digest consolidation

Trimtabs -- Sharefin, 19:01:24 01/30/02 Wed

TrimTabs Liquidity News

Corporate liquidity remains bearish. The two key corporate liquidity indicators - newly announced cash takeovers and new offerings - both are as negative as possible. There have been less than $300 million as the cash portion of new takeovers over the past five weeks - a record low for any four or five weeks. Similarly the $15 billion of new offerings sold the first three weeks of January are also the most ever.

Regardless, equity fund flows so far this January are well below the pace of every other January. If the market sells off this week, then flows should turn negative for the month. If that happens, then this will be the first negative flow January since 1990.


We remain bearish. Our model portfolio, unchanged so far this year, is up 4.9% since 12/28/01. Unless Friday's rally lasts, then stock prices could drop below the December lows and proceed to retest the September bottom. At the same time as corporate investors remain decidedly bearish, the VIX has dropped to 21, one of the lowest reading in quite some time.

Last week there were a few big completed cash takeovers adding liquidity, the new offering calendar took some time to get going and several mutual funds did get inflows. That could have helped rally the market late last week. If new offerings keep coming at a $1+billion or higher daily rate going forward from here and there are no new cash takeovers; then it won't matter how big the equity fund inflows.

John Myers - WHY GOLD IS SET TO SOAR -- Sharefin, 17:01:35 01/30/02 Wed


A decade ago I was 14,000-feet deep in a South African gold mine, sweating bullets and reaching for a bottle of water. My tour guide, a hardened South African mine executive, seemed immune to the heat.

"Mr. Myers. Mr. Myers!" I could barely hear him above the buzz of the rock drills only a dozen feet away. "You must understand," he yelled into my cupped ear, "the price of gold always comes down to one thing and one thing only. The number of U.S. dollars out there."

I don't know where he is today, but I bet he has a smile on his face. Why? Because he understands that the world is experiencing the same kind of dollar inflation today that made South Africa rich a generation ago.

A few gold bulls are beginning to think the gold pessimists may finally be wrong. The 1970s were a spectacular time for hard asset investors. This decade could be even better. The reason - the continual decline in the world's raw resources. Just as big oil is spending less at the drill bit than it is with acquisitions, so too are mineral companies spending less on exploration.

The Metals Economics Group reports that total worldwide nonferrous exploration stood at $5.2 billion in 1997. However, mineral exploration expenditures fell 29% in 1998, 24% in 1999 and 7% in 2000 (final numbers are still pending for 2001). As a result exploration expenditure last year were $2.6 billion, 50% of what they were only three years prior.

It is not hard to see that as current exploration slows down, we could be headed for a supply squeeze on several fronts.

According to a recent report by Global Resource Investments, "Mining is a depleting business and in real life mineral deposits are depleted fairly rapidly while at the same time, discovering new mineral deposits happens only occasionally."

Take copper as an example. The world consumes 16.5 million tonnes each year. However, the biggest copper mines in the world hold 12 to 16 million tonnes of copper. That means that each year the world consumes a major copper mine. And replacing these mines is becoming a tougher proposition. While the world still has considerable reserves, much of it is either of poor quality or in politically unstable parts of the world.

Yet buying up existing copper mines adds nothing to the world's copper supplies. At some point this fact will result in shortages. This, combined with inflation, will push hard asset prices into the stratosphere.

One of the biggest winners, I believe, will be gold.

Memo to Regulators: End Funny Financials Now -- Sharefin, 07:46:28 01/30/02 Wed

Memo to Regulators: End Funny Financials Now

By Pat Dorsey

To: The Financial Accounting Standards Board

Subject: Your golden opportunity

From: A concerned investor

As the accounting profession's equivalent of the Supreme Court, it seems to me that you folks are in a pretty enviable position right now. Oh sure, you've had some tough battles in the past, and you've been blasted in the press now and then for seeming to bow to political and industry pressures--but now you have a golden opportunity to take care of a lot of unfinished business. The outcry for closing up accounting loopholes is getting louder by the day, and it would be political suicide for anyone to oppose new guidelines that might help prevent ``the next Enron.''

Since I'm sure you're all very busy following the hearings on Capitol Hill--and reading the half-dozen Enron stories that the New York Times is publishing each day--I thought I'd help out by reminding you of some of the unfinished business that's out there. You'd be wise to carpe diem, though, because the current window of opportunity won't last long. As soon as Congress finds something else about which to grandstand, accounting will fade from the political limelight--and FASB will once again be a political punching bag.

Stock Options

If there's a single issue that needs cleaning up, this is it. The fact that stock options are not accounted for as a cost in companies' income statements is somewhere between a disgrace and a tragedy. As Warren Buffett has pithily put it: ``If options aren't a form of compensation, what are they? If compensation isn't an expense, what is it? And if expenses shouldn't go into the calculation of earnings, where in the world should they go?''

Of course, you know this already, since the Financial Accounting Standards Board (FASB) fought hard to have the expense of issuing options deducted from net income back in the early 1990s, but was forced to declare a Pyrrhic victory by relegating option-expense information to a footnote. As I'm sure you remember, the fight got pretty nasty, with Sen. Joseph Lieberman introducing a bill that would have essentially removed your status as the last word in standards for financial reporting. The president of one tech-industry trade group even said that you were ``running wild.''

So, you lost that fight--but you lived to fight another day, and now's the time. The facts concerning stock options are well-established: They represent a real transfer of economic wealth from shareholders to employees and executives, they have a cost, and costs should be deducted from earnings. If any company tries to tell you that options do not have a cost, ask them why they claim a tax benefit from the IRS on the options their employees exercise. And if they whine that the costs will be too great, and their earnings will take too large a hit, tell them to suck it up. Compensation is compensation, be it in options or in cash. The only difference is that one is currently charged against earnings, and one is not.

Hidden Assets (and Liabilities)

As things stand, what does and doesn't get consolidated in a company's financial statements is a lot murkier than it should be. Let's take the case of the ``disappearing wireless company,'' as my colleague Mike Hodel puts it. Cingular, which is SBC SBC and BellSouth's BLS 60/40 joint venture, doesn't show up in either company's financials because the two Baby Bells ``share'' control. (Both treat it as an equity investment.) This isn't too big of a problem yet because SBC and BellSouth have contributed most of the capital. But, Cingular has started to issue debt of its own--$2.7 billion as of year-end 2001--and this debt doesn't show up on either SBC's or BellSouth's statements. As this debt grows, more of Cingular's assets and liabilities will be off-balance-sheet, which will improve both firms' returns on capital. Although overall returns on equity aren't affected, the financial leverage component is understated while turns and margins are overstated. It sure seems odd that the nation's second-largest wireless company, entirely publicly owned, doesn't report its nearly $10 billion in annual revenue anywhere in an audited set of publicly available financial statements.

This is just one example of what I'm sure are many--while lawyers and accountants argue over what should and shouldn't be consolidated, investors aren't getting the information they need to make informed investment decisions. I notice from a posting on the FASB Web site that you've been deliberating on the consolidation issue for some time--maybe it's worth speeding things up a little.

Taking the Cookie Jar Out of the Cupboard

Here's one that's a little off the wall, but which would stop the abusive practice of companies taking huge one-time charges and then slowly reversing them. This results in a one-time ``nonrecurring'' charge that all and sundry are directed to ``look through,'' while future earnings are pumped up by the gradual reversals. Why not require companies to break out restructuring reserves as a separate line item, rather than burying them in the notes or in the catch-all ``other current liabilities'' category? Investors would then be able to see just how much--and how often--that reserve was being used to smooth out a rocky quarter.

If you can't get around to this one, that's OK. But it sure would be nice.

What Are Revenues?

While we're in the ``nice to have'' category, here's an accounting oddity common to biotech companies that needs cleaning up. Frequently, large pharmaceutical companies will partner with smaller biotech firms that have a promising molecule in their labs, and the deep-pocketed drug firm will reimburse the cash-starved biotech for part (or all) of the research dollars. The funny thing is that the biotech firms get to count these payments--which they turn right around and spend--as ``collaborative revenue.'' So, the more the biotech firm spends on research, the faster its top line grows. What a neat trick!

Now, if the ``product'' that the biotech firms were selling were research, this might be kosher. But if a biotech firm was created for the express purpose of inventing a cure for warts, and it gets to book the wart-research spending as revenue in years 1-5, and then also books the sales from WartBeGone in years 6-10, something sounds rotten to me. Why not just net the research payments against the biotech firm's own research spending, just like most companies net interest expense and interest income? Of course, that would mean small and unproven biotech companies wouldn't have top lines growing at 50% per year, but that's all right by me.

The ball's in your court, FASB, and the political winds are in your favor. I hope this time you're able to steamroll over Congress the way they've steamrolled over you in the past.


While the subject of stock option accounting is on the table, let's publicly congratulate Boeing BA. It's the only company I know of that actually does take option costs into account on the income statement. Kudos to them.

And after you've finished on the above call Ted Butler and Bill Murphy and they will point out a few inconsistancies in the PM markets.
It won't take long to sort out those few big players.....

Federal Reserve Family Tree -- Sharefin, 05:47:04 01/30/02 Wed


Korean Gold -- Sharefin, 05:40:36 01/30/02 Wed

A large-sized gold deposit with its pure gold concentration estimated at 5.4 tons, worth W49.3 billion, has been discovered in Haenam, Jeonnam Province, recently. Korea has been importing all of its gold since 1998 as the gold production within the country ceased in 1997.

Gold fever returns -- Donald, 05:38:05 01/30/02 Wed

One analyst makes a case for $600 gold

Ashanti -- Sharefin, 05:36:29 01/30/02 Wed

Large Gold Mine Discovered in Haenam

A large-sized gold deposit with its pure gold concentration estimated at 5.4 tons, worth W49.3 billion, has been discovered in Haenam, Jeonnam Province, recently. Korea has been importing all of its gold since 1998 as the gold production within the country ceased in 1997.

Ashanti -- Sharefin, 05:31:09 01/30/02 Wed

Ashanti dressed for the altar

Harmony -- Sharefin, 05:28:49 01/30/02 Wed

The world in Harmony - 75% of shares in foreign hands

Mining companies to seek minimum social standards -- Sharefin, 05:25:29 01/30/02 Wed

Mining companies to seek minimum social standards

Large mining companies are to appeal for governments worldwide to set minimum social and environmental standards for the sector in an effort to improve their image with investors.

An independent working group backed by 28 mining companies is set to publish the results of a two-year sustainable development study in March.

One of the key recommendations will be the creation of an intergovernmental forum on mining at the world summit on sustainable development in South Africa in September.

Big mining companies are becoming increasingly concerned that their access to capital and insurance could be restricted due to pressure on financial institutions to avoid socially or environmentally sensitive sectors.

Observers say a number of large financial houses are considering moving out of the sector because of the relatively low returns and concerns that their own reputations will be put at risk.

Mining companies to seek minimum social standards -- Sharefin, 05:24:18 01/30/02 Wed

Mining companies to seek minimum social standards

Large mining companies are to appeal for governments worldwide to set minimum social and environmental standards for the sector in an effort to improve their image with investors.

An independent working group backed by 28 mining companies is set to publish the results of a two-year sustainable development study in March.

One of the key recommendations will be the creation of an intergovernmental forum on mining at the world summit on sustainable development in South Africa in September.

Big mining companies are becoming increasingly concerned that their access to capital and insurance could be restricted due to pressure on financial institutions to avoid socially or environmentally sensitive sectors.

Observers say a number of large financial houses are considering moving out of the sector because of the relatively low returns and concerns that their own reputations will be put at risk.

Owning gold -- Sharefin, 05:19:46 01/30/02 Wed

Japs And French Jump On Gold Wagon; Who Will Be Next?

The bullion price has been in a bit of a rut since Chancellor Brown sold the penultimate chunk of UK gold assets a couple of weeks ago. Somebody has compared it with a duck swimming upstream, looking serene, but with a lot of action taking place under the water where it cannot be seen. In Japan, for instance, demand for gold from the public rose 54 per cent in the last quarter of 2001 according to the World Gold Council, following the attacks on the twin towers.

More than 20 tonnes of gold was bought for investment purposes during the quarter, bringing total purchases last year to 65 tonnes, 25 per cent higher than in 2000. There are signs that the Japanese appetite for gold is far from sated, so a total of at least 80 tonnes could be a realistic target this year. The major stimulus for this move has been the 8 per cent slide in the yen against the dollar, but the decision by the Japanese government to cap its guarantee of time deposits played a big role as almost 100 of the country's 658 credit unions and associations, which focus on individuals and small businesses, failed between October 1998 and the end of last year.

And the Japanese are not alone in putting their faith back into gold as a store of value. Minews did a special report earlier this month, a few days after the introduction of the euro, on the queues in French banks at the counters selling gold and precious metal coins and bars compared with those issuing euros. Moreover the banks were taking an active hand in this trade by maintaining franc prices for gold to encourage choice for those reinvesting savings in the old currency.

The Japanese and the French are shrewd investors and savers and where they lead the Brits may follow as threats to the pound increase. In this case it would be just as well if they know where to buy gold. The simplest way is to remind a stockbroker that it is possible to buy bullion in quite small amounts through a bullion bank and whisper the names of Samuel Montagu (HSBC) and Rothschilds in his ear to put him on the right track. The alternatives mean a bit of initiative from the individual.

Enron & Derivatives -- Sharefin, 05:16:23 01/30/02 Wed

OTC regulation flaws exposed by Enron

The furore over Enron - and cries from some quarters for greater regulation - come exactly one year after the US believed that it had put to rest the issue of derivatives trading supervision.

On a Friday night, December 15 2000, Congress passed complex and highly technical legislation which essentially ensured that much of the $94,000bn over-the-counter derivatives industry would operate outside the nation's commodities laws.

Senator Phil Gramm helped to resurrect the legislation after the House agriculture committee added a special exemption from regulation for EnronOnline, according to Michael Greenberger, a former official of the Commodity Futures Trading Commission. The package, attached to 200 pages of legislation of an 11,000-page general public funding bill, was barely noticed in the rush to adjourn Congress.

JP Morgan -- Sharefin, 04:57:38 01/30/02 Wed

JP Morgan bosses feel the heat after Enron

Two months ago, William Harrison, JP Morgan Chase chairman and chief executive, stood before 20 of Britain's most senior executives to proclaim his bank's work for Enron a triumph.

His company, formed by Chase Manhattan's acquisition of JP Morgan a year ago, won a role advising Enron because it was willing to put its enormous balance sheet to work on behalf of its clients, he said. Other banks had not had the stomach for such boldness.

At a private lunch in the bank's new City of London offices, Mr Harrison's guests listened politely. They included such senior figures of the UK corporate landscape as Peter Burt, formerly chief executive of Bank of Scotland and now deputy chairman of HBoS, and Sir Patrick Gillam, chairman of Standard Chartered.

But Mr Harrison's boast last November was one that he has surely come to rue. Enron filed for bankruptcy two weeks later, and JP Morgan subsequently acknowledged that its exposure to the energy trader was $2.6bn, rather than the $900m quantified initially in a press release.

There was less bragging from Mr Harrison earlier this month when he sent a voicemail to staff around the world. He told them he still had strong faith in the bank but admitted that some things had not always gone its way.

Indeed, the Enron episode has cast a cloud over JP Morgan and its senior managers. The company was built on the belief that commercial banks can build on their historic lending abilities to secure lucrative investment banking mandates.

The strategy has promise, but Enron highlights the risks in executing it. JP Morgan wrote off $451m of its Enron exposure last quarter, pushing it $332m into the red.

James Ellman, manager of Merrill Lynch's global financial services fund, a significant shareholder in JP Morgan, says: "This will make JP Morgan and others really think about how much exposure they want with individual companies."

It may also put pressure on JP Morgan's board to force changes among the company's senior management.

Some on the board are said to have been uneasy at JP Morgan's failure to issue a more precise estimate of the bank's exposure to Enron after the energy company collapsed.

At first, JP Morgan issued a carefully crafted statement saying it had $500m of unsecured exposure, and secured exposure that included a $400m loan backed by an Enron pipeline. No figure was given initially for the total secured exposure.

"It was tortured wording," said Reilly Tierney, an analyst with Fox-Pitt Kelton. "We thought, 'Bill Clinton is writing their press releases'."

Pressure for management changes will only be increased by the fact that the Enron disaster is only one of several sticky situations facing JP Morgan.

Last quarter, JP Morgan lost heavily in Argentina and on its private-equity holdings. JP Morgan is also a lender to other companies that have filed for bankruptcy, such as KMart and Global Crossing.

JP Morgan's response is that such losses are inevitable given its dominance of the loan syndication market, which involves selling pieces of loans to other banks and investors.

"With a 37 per cent market share in US syndicated lending, it is quite unsurprising we would have some exposure to our clients," said JP Morgan.

Reposting Japan Deflation -- Donald, 03:24:19 01/30/02 Wed

click here

BOJ board member says Japan has fallen into a deflationary spiral -- Donald, 03:07:41 01/30/02 Wed

click here

DJIA Market Decline -- Sharefin, 01:23:37 01/30/02 Wed

This is Going to Be a Global Disaster. The Flood of Bankruptcies and Defaults Has Barely Begun

Currencies & gold -- Sharefin, 22:33:26 01/29/02 Tue

While I was updating these charts today Gold Forex

I also produced some other gold currency charts which I thought worth showing here.

The first two are of the main gold currencies which I've had to scale in fit on the chart.
I don't think it's the price that counts so much as opposed to how the plots are travelling.
The first chart (short term) clearly shows the chaos of the SA gold price.

And the second chart (long term) shows the change in trend in the market since the 1999 lows.

The next two charts focus on percentage price movements.
They show the volatility within the marketplace rather than looking at the price.
Once again on the short term chart the SA gold price shows up.

And on the long term chart you can see the periods when gold has been active to the market conditions.

Here's more charts showing the SA Rand POG

Shadowfax -- Sharefin, 20:39:10 01/29/02 Tue

Thanks, quite an amazing read.
I wonder if the few paragraphs under "Derivatives “Inside” Enron" could also be applied to JPM & their derivatives.
It would not surprise me one iota.

Also interesting is EnronOnline which has been discretely taken offshore by UBS.
This arm was the one that did all the metals trading though if you search the net you'll find nothing to tie in EnronOnline & the PMs.

Enron & JPM would have been bossom buddies in the PM derivatives business.

Enron -- Sharefin, 19:56:12 01/29/02 Tue

One of the three monkees

T & GE next......

Enron -- Sharefin, 19:53:43 01/29/02 Tue

Enron losses OFF THE SCALE

Gold Chart - tick-by-tick -- Sharefin, 19:27:20 01/29/02 Tue

The last 12 hours in the current rally

Comex Gold -- Sharefin, 18:50:04 01/29/02 Tue

COMEX gold reversal lifts silver, options active

Shadowfax -- Sharefin, 18:47:57 01/29/02 Tue

Testimony of Frank Partnoy

Hi Prometheus - welcome

Opps -- Sharefin, 18:21:01 01/29/02 Tue


Watch your stocks -- Sharefin, 17:52:16 01/29/02 Tue

XAU Stocks

HUI Stocks

GOX Stocks

Also here:

Testimony of Frank Partnoy...Re: Enron -- Shadowfax, 17:48:55 01/29/02 Tue

Excellent sure and take time to read it all.
Thanks to Snowgirl for posting this on GE

HI -- Prometheus, 17:01:13 01/29/02 Tue

Good site, great to see you and Donald again.

Boston bank posts a US$507 million loss on Argentine devaluation -- Donald, 16:29:09 01/29/02 Tue

click here

Federal Reserve overrules PNC auditor -- Donald, 16:08:47 01/29/02 Tue

The Federal Reserve has overruled the auditors of PNC Financial and ordered the major regional bank to restate its earnings causing alarm bells on Wall Street.

IDT -- Cyclist, 15:45:51 01/29/02 Tue

The two stocks I own and have delivered are GG and MDG.
No debt and no hedging.
Any other stock is for trading,including the adrs'.
Illiquidity could become a problem for the ADR if a bank folds or reorganizes its assets.
Whether the FED will allow a major bank to fold or a forced merger is an open question,it will probably be the latter.
All banks are build on trust and nothing else.
When deposits are walking out of the door,loans will have to be called in or sold.That is your deflation /depression.
Not a happy tiding.

ADRs -- IDT, 14:26:02 01/29/02 Tue

Cyclist - What do think of ADRs such as DROOY, and HGMCY issued through the Bank of New York. I'm a bit nervous about the risk of holding these shares if banks start to fold.

Theory 'R' -- JPS, 14:16:02 01/29/02 Tue

"The very idea of gold's intrinsic value - value that is not dependent upon the actions or promises of any government - is publicly questioned by senior central bankers, and by the heads of major financial institutions"

Gold is the only credible threat to fiat currencies. It is the only thing standing in the way of total digital fiat systems.

That's why the central banks want it out of the way. The threat of an alternate store of value which can be unpredictable needed to be removed. The central banks need not even work in concert here, they are all working for their own ends, ultimately.

The plan to kill gold is as follows :

The price will be driven down to a very low level, as belief in gold as a store of value is completely shredded.

In this manner the theat will be eliminated, as there will be no more stockpiles, and nobody will be sure how much anybody else has or where it is. It will be spread so thinly that it can never be regathered. Gold is so powerful that it needs to be destroyed physically as well as intrinsically.

To achieve this, do the following:

1. Introduce and publicise central bank selling.

2. Hold public auctions.

3. Drop lease rates to ridiculously low levels to launch a carry trade.

4. Instigate forward selling, after bringing the two largest producers into the fold, in order to become the future distributors of the dirt-cheap gold. These two protect themselves by heavy hedging. Additionally these large producers benefit by consolidating an industry in disarry, buying junior companies cheaply as they suffer from the low gold prices.

5. Clean out the vaults of all the small stockpile holders around the world so that you control the major inventory.

6. When the price finds a bottom after this, form a central bank alliance and make a declaration that you agree to limit central bank sales, and slow leasing (ie. promising to stop your bad behavior). Be prepared for the ensuing gold spike (notice there were very few 'mine failures' in the Sept. 99 spike due to bank-instigated hedging), and wait for things to settle down to a 'bottom' again.

7. Strike with your weapon you created, the Agreement, by canceling it and resuming sales, dumping all the gold you have on the market, announcing afterwards that the Banks would no longer purchase gold.

Nasty, eh?

Breath of Fresh Air -- JPS, 12:35:02 01/29/02 Tue

All the action in the gold stocks & gold, and all Kitco has to offer is political & puerile drivel...this is great, keep it up guys.

Seems to me the big boys are buying gold stocks to offset their forthcoming losses in the shorting game..

gold to $288 shortly, and looking for upside from there; if it gets it it could go to $300 and beyond.

i have HGMCY at $8.50 and DROOY at $3.20 soon. volume is picking up incredibly in HGMCY especially, have a look at a 5-year volume chart.

don't be shaken out by the corrections..remember the mantra! the dips!!!

(with apologies to abby)

(heh heh)

Suresh Garg -- Cyclist, 12:02:05 01/29/02 Tue

This move in the XAU could come to a halt very quickly.
Your stops should be in place when long,my target date
for another cycle low is the forth week of March.
I expect the move to be explosive after that time frame.

Possible bank run in Japan -- Cyclist, 11:55:08 01/29/02 Tue

A major sell has been triggered for the next three
weeks by the BKX.
The drop is a huge one on the weekly we might see
a incredible capitulation in the market if 650
is taken out,we could see a bank run in the spring.
Any global bank is suspect now.
Well gold will shine in this kind of environment.


It's going there because nobody's is expecting it.
In my investing career for 30 years I have never seen
such a negitive investing public on the metals or any
market for that matter. Everyone, including all the metals
bugs have given up. Prices are now rising including the
cost of a postage stamp up 10% in June. When the rise comes
it will be breathtaking. Gold could easily go to $3K an
OZ. because the metals have nothing left in the market
but buyers. I have never seen such a opportunity in my
investing career. The big boys know that the sheep will
be herded into the metals for the purpose of the very
elite to reap huge profits never seen before and probably
never again for several decades. This is it folks and the
timing has never been better. If you can't see this train
coming by now, then you deserve not to participate in the rewards forthcoming. Very few will profit because they
sell too early and lose faith. Traders will be shaken out
from trying to time the market. Stay in and remain in.

Cyclist -- Suresh Garg, 11:08:40 01/29/02 Tue

Used to follow you when you were posting on Kitco. Cobra gave me the URL for this forum where you now post.
What is your time frame for the end of the current rally in XAU, and roughly at what level? Thanks.

SWC -- Cyclist, 09:03:41 01/29/02 Tue

Stillwater made a nice drop to its support.

Hi Finny--- -- cashcobb, 08:53:59 01/29/02 Tue

Nice site--see ye here now an again........JC

Mike Stewart -- kapex, 08:47:34 01/29/02 Tue

Good to hear that you are alive and well.

Always enjoyed your analysis!

newbie -- rjjj670, 08:14:22 01/29/02 Tue


Can anyone join in?

Cyclist -- Cobra, 06:47:07 01/29/02 Tue

Our styles are different but we often agree on the moment
as to direction. I have the wave count as ready to head north in a "C" wave in both gold and gold stocks...If your 1-30 cycle low comes in, I think we could explode out of here UPward. This minor correction is about over I believe.
A very nice A-B-C is in place the last few days. We may see some Very good moves Very shortly. You been in hibernation up there a Long time.

Long term XAU/Gold ratio -- Mike Stewart, 06:21:12 01/29/02 Tue

The average ratio of the XAU/Gold over the past 7 year cycle is .259. Based on current Gold prices,that equates to an XAU at 71.87, or 23% above today's levels to get to average! That is the average ratio. One standard deviation over normal (ready to sell alert) is 86.90. One standard deviation below (ready to buy alert) is 56.97.

As you can see, there is a lot of room to the upside before we are historically expensive. These target number rise and are recalculated daily as the price of gold rises (or falls). Obviously, for the XAU to become expensive the price of Gold must rise in tandem, raising the targets. (eg. at gold $350, the XAU sell alert would be .3132 * 325 = 101.79)

Japanese banks on a downward spiral -- Sharefin, 05:26:04 01/29/02 Tue

Japanese banks on a downward spiral

SA Profits -- Sharefin, 23:10:30 01/28/02 Mon

S Africa's Harmony 2Q Net $30.60 Mln Vs $11.1 Mln In 1Q

Harmony Gold focusing on profit margins as rand depreciation benefits

S.Africa's Harmony profits soar, sees more

three times the size of the Fort Knox -- Sharefin, 23:07:52 01/28/02 Mon

Russia enlarges gold output by over 8% in 2001

Russia's Lata-Bank Increases Gold Purchases

three times the size of the Fort Knox -- Sharefin, 23:06:04 01/28/02 Mon

Gold Deposit in Western Alaska Excites Explorers

Anglogold -- Sharefin, 23:03:12 01/28/02 Mon

AngloGold Reduces Forward Gold Sales by 3.5 Million Ounces

Seems like no one believes gold will be getting any cheaper...^o-o^

Global Crossing - Drudge Report -- Sharefin, 22:16:59 01/28/02 Mon


[which on Monday became the 4th largest bankruptcy in history]

A cycle low with a twist -- Cyclist, 20:43:36 01/28/02 Mon

As mentioned before Jan.30 will give a cycle low in gold.
If gold stocks won't come down from their lofty levels
and adjust with the gold price in the next two days,a break
below the Jan 30 price of gold will create a very sharp pull
back in the XAU/HUI.
Crude is forming a right shoulder,a break below 18 will
lower the price to 15.00 in a hurry.

Cobra,Kapex good to hear from you.
Make the day a golden one..:)

Canadian gold major will not be forced into deals -- Sharefin, 05:31:11 01/28/02 Mon

Canadian gold major will not be forced into deals

Ashanti gold production falls in 2001 -- Sharefin, 05:29:17 01/28/02 Mon

Ashanti gold production falls in 2001

Iranian Gold Industry Has Good Potential -- Sharefin, 05:27:40 01/28/02 Mon

Iranian Gold Industry Has Good Potential

Assuming that about 10 million Iranian women, above 15, are keen on using gold as ornamental items and that each trades in or has 30 grams of gold in her possession, an annual 300 tons of gold (quite a reasonable estimate) would be traded each year, he said.

A Small Gold Fund Stake Goes A Long Way -- Sharefin, 05:24:47 01/28/02 Mon

A Small Gold Fund Stake Goes A Long Way

Enron, Krugman, and the Public Intellectuals -- Sharefin, 05:20:53 01/28/02 Mon

All that glitters for Newmont truly gold

LaRouche -- Sharefin, 15:23:50 01/27/02 Sun

Typical Collapse Function

The pitfalls of buying gold & silver, bullion & coins -- AuNuggets, 07:58:23 01/27/02 Sun

You mean to tell me that USAG HYPE has all been a pack of lies ? (smile)

Sharefin @ Mandatory Tatoos Link -- Chicken man, 05:16:37 01/27/02 Sun

Just read the link (Note- not dot GOV!)...clicked on this link....:


Don't think the tatoo thingy will "fly".....but this I read on this was they are going to do a "trial" run some place in Florida

Best to ya from the coop..!

Madatory Tattoos -- Sharefin, 03:58:04 01/27/02 Sun


Central bank selling -- Sharefin, 03:50:43 01/27/02 Sun

The pitfalls of buying gold & silver, bullion & coins

Central bank selling -- Sharefin, 03:48:31 01/27/02 Sun

Central Bank Activity Not All Negative

GATA -- Sharefin, 01:25:20 01/27/02 Sun

In 1998, as he began, his
Internet site of financial commentary, Bill Murphy noticed
that the gold market wasn't trading as normal markets do.
Eventually he sensed collusion among market participants
to suppress the gold price and wrote about it repeatedly.

Following Murphy's commentary with great interest, a
newspaper editor in Connecticut, Chris Powell, noted that
collusion to control prices is against U.S. anti-trust law and
suggested that gold partisans and gold market participants
mobilize against it, and so GATA was formed and
incorporated in early 1999. Murphy is chairman, and
Powell is secretary/treasurer. GATA is recognized by the
U.S. Internal Revenue Service as a tax-exempt charitable,
educational, and civil rights organization. It has received
contributions from mining industry sources as well as
hundreds of individuals with an investment or philosophical
interest in gold.

GATA has advocated litigation against collusion to
suppress the gold price, and, indeed, has helped
bring such litigation in U.S. District Court in Boston,
with its consultant Reginald H. Howe. But GATA has
discovered that the gold-price suppression scheme
involves not only big bullion trading banks but also
governments and particularly the U.S. government.

Indeed, GATA has discovered that the gold-price
suppression scheme was actually put down on paper,
in public, by Harvard Professor Lawrence Summers,
just before he went into the Clinton Treasury Department,
eventually becoming treasury secretary. (He's now
president of Harvard.)

Summers co-wrote an essay for an academic journal
examining the inverse relationship between the gold
price and interest rates, and more or less concluded
that government could keep interest rates low by
suppressing the gold price. While there is no electronic
copy of Summers' essay, you can read about it here:

click here

The mechanisms by which the gold price is being
suppressed are, first, "leasing" of gold by central
banks, wherein government gold reserves are sold
into the market through intermediaries; and, second,
the sale of gold futures, options, and other derivatives
by bullion banks that, GATA believes, have assurance
from governments that, if they ever have to produce
actual gold to cover their positions, it will be made
available to them cheaply from official sources.

Gold leasing is a matter of public record among the
European central banks and some others. The United
States, which reports the biggest gold reserves in the
world, has always denied participating in gold leasing.
But GATA have information that comes close to proving
such involvement, undertaken through the secretive
and unaccountable Exchange Stabilization Fund of
the Treasury Department. Surreptitiously issuing
claims against U.S. gold reserves, the ESF and the
Federal Reserve Board have put those reserves at
risk and their true ownership is now in question.

One big piece of evidence of the surreptitious use
of U.S. gold reserves to suppress the gold price is a
statement by the Federal Reserve's general counsel,
Virgil Mattingly, recorded in the minutes of the Federal
Open Market Committee meeting of January 31, 1995,
which you can read about here:

click here

Evidence of an auditing sort can be found in some essays
by GATA James Turk, editor of the Freemarket Gold and
Money Report, which you can read here:

click here

click here

For a broad perspective on the legal implications of all
this, you can read the full complaint in the GATA-
supported lawsuit, Howe vs. Bank for International
Settlements, et al., here:

click here

The lawsuit notes that the market in gold derivatives is tightly
concentrated and overwhelmingly dominated by the J.P.
Morgan/Chase investment bank. Of course the House of
Morgan has a long and intimate relationship with the U.S.
government. This concentration in the market for gold
derivatives is in itself, GATA thinks, close to proof that the
gold market is manipulated and not trading freely. This view
is increasingly held by gold market observers.

A report on the one hearing held so far in the GATA lawsuit
can be read here:

click here

What are the purposes of the gold price suppression

We believe there are several:

1) To keep interest rates down by deceiving the bond
markets about the rate of inflation, inflation historically
being gauged in large part by the price of gold. You may
remember the famous comments about the bond market
that were attributed to President Clinton not long after he
took office. He was frustrated with having to take the advice
of his economic advisers that the approval of the bond
market was crucial to his administration's political success.
Clinton said he resented having to make his administration
one of "Eisenhower Republicans." GATA thinks that the
gold price suppression scheme -- the massive deception of
the bond market -- was Clinton's revenge.

2) To strengthen the U.S. dollar in relation to other curencies;
to suppress commodity prices generally, since commodity
prices take their cues from the gold price; and, by extension,
to raise living standards in the United States by expropriating
the developing world, which makes its living largely from
producing commodities.

3) To enrich through inside information about U.S. government
policy the Wall Street investment houses that have helped
implement the gold price suppression scheme and that long
have staffed the Treasury Department and Federal Reserve.

But the results of the gold price suppression scheme have
been far greater than all this. The results include the
devastation of the economies of the developing world, and
particularly sub-Sarahan Africa, and the vast misallocation
of capital throughout the world in the last decade. That is,
with the bond market deceived about inflation, the dollar,
and the strength of the U.S. economy, most economic
decisions around the world for the last decade have been
based on horribly mistaken premises. The U.S. stock
market bubble, now bursting, is evidence of this.

There's a lot more detail to be had here, but this is a start.
All GATA's dispatches to its supporters, wherein GATA's
evidence and commentary are laid out, are available here:

click here

GATA believes that the most important work to be done now is
to compel the U.S. government to admit and explain its
intervention in the gold market -- its secret underwriting of the
gold leasing done by central banks around the world and its
putting U.S. gold reserves at risk. This is, after all, PUBLIC
policy undertaken with PUBLIC resources, and there can be
no justification for surreptitious government intervention in a
supposedly capitalist economy in a democracy. Everyone
should have equal access to information about such policy.

GATA believes that the gold price suppression policy will end
when it is exposed, because it can't stand the light of day
and because no investors will take the other side of any trade
they come to realize is fixed.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
7 Villa Louisa Road

Le Metropole Cafe

All the best,

Bill Murphy
Le Patron

China -- Sharefin, 21:03:46 01/26/02 Sat

Gold Market to Officially Open to the Public This Year

Relaxed Control of Gold to Boost Demand in Market

auspec - Re: Andy Smith -- AuNuggets, 20:11:24 01/26/02 Sat

Must have read that Blanchard report...... ! (snicker)

Lasseter's Reef -- Sharefin, 17:31:56 01/26/02 Sat

Lasseter's Reef - fabulous fortune or fool's gold?

Andy Smith -- auspec, 16:43:35 01/26/02 Sat

Going from super bear to enthusiastic bull to even more bearish cannot win one too much credibility. Wonder who stepped on Andy's toes to make him step in it like this?

Andy Smith loosing the plot? -- Sharefin, 09:41:36 01/26/02 Sat

Analyst has two digits for gold

"Gold in the digital age -- two digits!"
That's how Andy Smith, the veteran Mitsui Global Precious Metals analyst, forecasts gold's price in the next five to 10 years: below $100.

A taste of their own medicine! -- SteveIS, 09:37:46 01/26/02 Sat

Despite a drop of $.25 during period of latest comex trader commitment report for Silver there was very little improvement (improvement meaning reduction of commercial short position). The commercials are still short 235 million ounces of silver or more than 7 times the entire elgible inventory at comex warehouses.

The supposedly trend following large specs are still 10 to 1 long after a 10% drop in the POS. After years of having their chains yanked it seems that there are some strong hand specs on the comex!

Normally the NAKED short commercials are able to shake out the spec wusses. The Specs are showing some balls and not letting go this time. The tightness in the physical market will prevent silver from going much lower! Now how are the commercials going to cover.

On Friday even a 1% rise in the dollar index was unable to push silver and gold lower. The gold stocks rallied admirably. The gold COTs are every bit as ugly as silver's but the market is so much larger it is harder to manipulate down as easily.

The banksters are ripe for a squeeze.

Ashanti -- Sharefin, 09:36:52 01/26/02 Sat

Ashanti reaches deal to restructure debts

Hedging -- Sharefin, 09:35:24 01/26/02 Sat

Durban Deep wants to clear hedge positions

Japanese Demand For Gold -- Sharefin, 09:33:34 01/26/02 Sat

Japanese savers invest in gold

Japanese Demand For Gold -- Sharefin, 09:31:14 01/26/02 Sat

World Gold Council's Weinberg Comments on Japanese Demand

ONE YEAR LATER -- Sharefin, 09:20:06 01/26/02 Sat


Japanese worries -- Sharefin, 09:10:04 01/26/02 Sat

Japan: How Worried is the US Administration?

Moody's yesterday gave its strongest warning yet that a crisis is brewing, revising its rating outlook on the ten major banks from stable to negative, and warning that "substantial support" will be necessary to improve the banks' capitalization to satisfactory levels, with the costs rising the longer it takes to deal with the problem. "Moody's believes that the sheer magnitude of the financial problems of Japanese banks creates increased uncertainties over the ultimate resolution mechanism and heightens the risks to bank creditors."

Derivatives Nightmare -- Sharefin, 09:06:21 01/26/02 Sat

Derivatives Nightmare

Cobra/DROOY -- auspec, 08:21:40 01/26/02 Sat

Seems like those that cried over the dearth of upstanding mining executives overlooked MW-W! The most profound words I have ever heard from a miner in relationship to the banking/govt clowns was simply "screw em". There are always a few good men willing to do what is right, even at the risk of personal harm. The Noahs of the world, the visionaries. Those that reach a goodly level of prominence w/o selling their soul in the process, those that reach this level and then generously reach down to assist others in an elevation process. Especially those who know it is wrong to use dollar hegemony to bludgeon third world citizens.
Yes, indeed, "screw em!"

Drooy -- Cobra, 06:48:14 01/26/02 Sat

Interesting comments about Drooy at the GE site at 09:16
Drooy to pay dividends in Gold.

THE DILEMMA FOR WEALTH -- Sharefin, 04:59:18 01/26/02 Sat


WTC -- Sharefin, 04:20:40 01/26/02 Sat

CIA complicit on September 11?

Shakedown for US companies -- Sharefin, 04:15:20 01/26/02 Sat

Shakedown for US companies

ThaiGold -- Sharefin, 04:14:12 01/26/02 Sat

It's like the gold game.

So far they have gotten away with it.
So far it's all above board.

@ Sharefin: Crime Suites... More Enrons Article -- ThaiGold, 01:54:18 01/26/02 Sat

Interesting and enlightening article. I enjoyed reading it.
But I must disagree with the author's final paragraph,
where he says, wraping it all up:

"The routine buying of politicians, federal regulators and
laws does not constitute a go-to-jail scandal since it all
appears to be legal."

How he reaches that conclusion, is beyond me. ...Tai

JP Morgan Chase -- Sharefin, 00:53:14 01/26/02 Sat

Hit for J.P. Morgan could be huge

Larger risks - PDF file -- Sharefin, 22:25:11 01/25/02 Fri

The GSEs: Risks to the Financial System and the U.S. Taxpayer

Fannie Mae and Freddie Mac today present a financial picture with troubling implications for the safety and soundness of the U.S. financial system and the exposure of the American taxpayer. These Government-Sponsored Enterprises (GSEs) have increased their debt five-fold since 1992. Learn how this debt affects you.

FM Watch

auspec -- Sharefin, 22:22:29 01/25/02 Fri

Watergate was years ago but Enron is now and going to become much bigger before we hear the end of it.

And it's going to vastly effect the financial markets which will have flow on effects to the gold markets.

Supposedly Enron is the largest financial failure in history.

Be it that it ends up becoming an EnronGate then it'll do it on it's own merrits...and not because you or I think so.

"Gate" -- auspec, 22:03:02 01/25/02 Fri

The best way to cheapen a 'scandal' is to associate it with the word 'Gate'. Been there, done that, way too many times. Watergate was 30 years ago, get over it!

Crime in the suites -- Sharefin, 20:54:34 01/25/02 Fri

And some are blind enough to think that manipulation in gold doesn't exist.....

There are more Enrons out there

Email chatter -- Sharefin, 17:03:13 01/25/02 Fri

Sniped from
John Maudlin's excellent email letter.
Well worth signing up for.

Today, with our record deficits, the rest of the world finances our excess buying binge by using dollars to invest in US companies, buying our stocks and bonds and buying products and services from the US. The dollar has become the de facto store of value for the world. Nowhere is this more starkly illustrated than in the year-end letter from Blanchard and Company. Blanchard was started decades ago by Jim Blanchard, and was one of the premier gold bullion dealers. Jim was a good friend and business associate, and I miss him as he is now walking streets of gold rather than selling them.

But Bill Bonner tells me that his old company wrote the following: "Effective as of January 1, 2002, Blanchard and Company is changing its business practices and policies in order to limit its exposure to falling gold prices, and recommends to its clients that they do the same. As of that date Blanchard will not maintain inventories of gold bullion or gold bullion products, nor will it market gold to, or solicit gold sales to, Blanchard clients.

"Gold is no longer a hedge against inflation, devaluation of the dollar or falling stock prices," continues the mailing from Jim's old company. "It is no longer a store of value. The very idea of gold's intrinsic value - value that is not dependent upon the actions or promises of any government - is publicly questioned by senior central bankers, and by the heads of major financial institutions."

The irony is huge. Jim fervently believed in a gold standard, and now his namesake company no longer believes gold is a store of value. ("Say it ain't so, Joe" comes to mind.)

But that is typical of companies and central banks around the world. That is why gold does not rise even as the money supply does. Central bankers simply do not want the barbarous relic and look to sell any time they can get a good price. In my mind, it is not a conspiracy as such, although many of my readers have sent me reams of material from GATA attempting to show it is.

I think it is simply that central bankers agree with Blanchard and Company. They do not think gold is a store of value and so look to sell. This selling pressure has kept gold down for years.

Now, stay with me, because I am going to write something that is long-term bullish for gold for the first time in years and years - maybe a decade or longer. I turned bearish on gold as an investment in the mid-80's and have been so ever since.

Gold May Be Ready to Rise (Finally)

I once visited Maputo, Mozambique on my way to Luanda, Angola (l-o-n-g story). Having a day layover, I went into town into the local market, just to look around. An unusual experience happened to me. I looked around and noticed that I was about a head taller than everyone else. I am only 6', so I am average in a crowd in the US.

But the local population was much shorter on average. I felt tall for the first time in my life. It must be what my 6'10" friend Greg Weldon feels like.

In the Land of Pygmies

I have frequently written about the rest of the world trying to lower their currencies against the dollar in order to make their products attractive to US businesses and consumers.

This week, the Bank of Japan executive director bluntly (for a central banker) stated that China should stop griping about the weakening yen because the Chinese currency is too weak and needs to be stronger. New studies surfaced this week which show Asian growth slowing dramatically as a result of the weaker yen.

This will set off a new round of currency wars as each country tries to lower their currency against the dollar. Remember me quoting even the Swiss central banker complaining about how strong the Swiss franc was?

The dollar is once again gaining strength against the Euro, and this is the main force pushing gold once again down to the $260 level. Dollar strength is gold weakness. Until the dollar drops, gold is going nowhere except the trading range it has been in for years.

There are two major problems over the horizon. The first is that not everyone can have the lowest currency against the dollar. This current round of "beggar thy neighbor" has to end sometime. It won't be next week or next month or next quarter, but eventually it will have to stop.

Countries are going to have to figure out how to compete on even terms rather than trying to simply lower exchange rates. Until that happens, we will not see sustained world growth of anything like recent periods. Destroying your currency is not a sound model for real growth.

If Japan wants to sell us a $10,000 Lexus or Korea a $5,000 Kia (as an extreme example), then Americans will buy them. But what can Korea buy for $5,000 if everything from the US costs so much to them? Why will they want dollars if there is nothing cheap in the US in terms of their buying power? It seems to me the current trend is unsustainable over the long term.

That brings up the second problem of the trade deficit. At $600 billion, we will need almost $2 billion a day to sustain our buying binge. As Stanley Roach points out, "We tend to treat this as America's problem, symptomatic of a nation that has long lived beyond its means. While that point is well taken, there's an even deeper issue at the core of this problem. America's gaping current-account deficit is also symptomatic of an increasingly unbalanced world that has become hooked on the US growth engine as a key source of economic vitality. And that's the real point of tension that I believe is likely to be critical to the global economy in the years ahead. A resolution of America's current-account problem will not be easy for the rest of the world. The global economy may well have to figure out how to grow on its own."

Morgan Stanley sees the dollar dropping by 20%. That should make gold rise 20% to the $340 level and maybe higher. That may be a few years off, but it is the first time I think we could see a sustained rise in gold in a decade.

In the land of pygmy currencies, the dollar is tall. But is it truly tall like my 6'10" friend Greg? Or does it only seem tall because the local market is so short?

How can we see $600 billion a year come into the US if every currency continues to get weaker and weaker? Where will it come from? Where will it go?

Enron -- Sharefin, 15:54:54 01/25/02 Fri

Drip, Drip, Drip: Eroding the Barriers to Corporate Crime

Enron and the Clintonites

Dicing with debt -- Sharefin, 15:49:26 01/25/02 Fri

Dicing with debt

Email chatter -- Sharefin, 15:28:27 01/25/02 Fri

Here we go again.....and not even on Clinton's watch

Former Enron Official Baxter Kills Self, Police Say

JP Morgan Chase -- Sharefin, 15:10:17 01/25/02 Fri

Enron-linked energy-trade venture could cost bank $1 billion

Enron-gate, and worse -- Sharefin, 15:04:40 01/25/02 Fri

Below are links to a series of 3 articles from the TruthOut web site that place the current mess we are in under a very different light than what we're used to... most of us.

1) Hell to Pay

"On November 7th, 2000, a clear majority of Americans came to the conclusion that George W. Bush was unfit to govern this nation. For a variety of dark and controversial reasons, that conclusion was thrown over. Sometime soon, if the media's electronic web continues to carry these sordid stories of corruption, greed and death, the American people will come to fully understand the consequences of that failed election. It is one thing to coddle and court a corrupt energy company for political and financial gain. It is quite another to coddle and court a murderous terrorist-supporting regime, hindering anti-terrorism investigations in the process, for the purpose of exploiting valuable natural resources. The former cost a number of people their retirement funds. The latter has cost thousands of people their lives. One is criminal. The other is abominable. George W. Bush is deeply implicated in both. There will be hell to pay."

2) Enron, Bush Officials Face Serious Legal Questions

It starts with a very good quote:
"The wish to acquire more is admittedly a very natural and common thing; and when men succeed in this they are always praised rather than condemned. But when they lack the ability to do so and yet want to acquire more at all costs, they deserve condemnation for their mistakes." - Niccolò Machiavelli

... and takes off from there..

3) Let There Be Light

"It has been 130 days since September 11th. We have heard many debates, accusations, and arguments about the genesis of the attacks. Every major news agency, and every talking head with a whisper of breath in their lungs, has weighed in. We have been told how we should respond. We have been told how we should feel. We have been told how we can help. In all that time, however, something essential has been missing.

We have yet to be told how such a thing was allowed to happen in the first place."


This series of articles is the most succinct and concise work I've seen that places the questions that the mass media seems to have been desperately trying to avoid.

It will be interesting to see how the Establishment reacts. Where will the fractures appear? Perhaps this is the beginning of the "mayor identity crisis" that is usually necessary to make the "ruthlessly honest internal self examination to bring about a merging of what we say to ourselves we are doing, and what we are actually doing."

Hope springs eternal. Bob

Enron-gate, and worse -- Sharefin, 14:54:28 01/25/02 Fri

Please distribute this to everyone you know. It was written by William Pitt, a teacher in Boston ( and it describes two scandals which have the potential to uproot a certain noxious Bush now occupying the Oval Office.


"Depend upon it, Sir, when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully." - Samuel Johnson

Some time just before January 7th, 2002, an asteroid capable of pulverizing A good-sized nation flashed through the void, passing perilously close to Earth. Had it struck our planet, the impact would have had global consequences. The energy of the strike would have been equivalent to the explosion of a number of large atomic weapons. From the media perspective, it would have been the biggest story since the extinction of the dinosaurs.

At some point in the next six months, a small, darkened corner of George W. Bush's consciousness will wish the thing had hit us. The apocalypse he and his fundamentalist buddies have been waiting for would have been at hand, and a number of potentially calamitous questions about to be put to his administration would have been avoided.

Sadly for him, the planet spins on. Beneath the unpierced stratosphere, the electronic beams of news agencies like CNN and the Associated Press have begun to spread like a widow's web from city to city and house to house. Carried on this invisible wind are rumors of doom, negligence and greed. Each and every one of these rumors lead inexorably back to 1600 Pennsylvania Avenue, which will soon be issuing significant numbers of visitor passes to lawyers if the pattern holds much longer.

Whichever part of the nation that never heard of the energy giant Enron Corporation has recently been introduced to the company in odious context. The story thus far is nothing less than astounding: Enron, a company valued in the billions on Wall Street, suddenly filed for the largest bankruptcy claim in the history of the known universe. 4,000 employees were abruptly shown the door after having been barred from dumping the company stock, meant to fund their retirement, while it was worth something. Meanwhile, Enron executives in the know were able to dump the stock, back when it was the gold standard on the Street, for a cool $1 billion.

Apparently, Enron was ailing for quite a long time. The aforementioned executives were able to maintain the mirage of financial viability by stuffing the debt into what are called 'off-balance-sheet partnerships.' In essence, each of the executives built personal banking bunkers and hid what has been revealed to be staggering Enron debts within them, keeping fact that the company was hemorrhaging money off the publicly displayed balance sheets. This maintained the company's credit rating, and allowed it to continue doing business.

This went on for four years, which means several things. It means most of The Enron executives were aware of and/or actively participating in this highly criminal and irresponsible activity. It means the stockholders, including 4,000 loyal Enron employees, were lied to. It probably means that the executives knew the stock value was doomed when they bailed out and cashed in several months ago. It means they let their employees lose the retirement funds they believed were growing within their Enron stock portfolios. It means a lot of people got screwed by a pack of sharp operators who didn't give a damn about anyone but themselves.

All this could simply be chalked up as yet another story of corporate greed run amok, until the umbilical political and financial connections between Bush and Enron are illuminated. Enron's capo, Kenneth Lay, was perhaps the best financial friend George W. Bush has ever known. Lay and a number of Enron employees essentially bankrolled Bush's 2000 Presidential campaign, going so far as to lend Bush an Enron corporate jet for trips between whistle stops. Before Bush got White House stars in his eyes, he worked very closely with Enron on energy policy in Texas.

This close connection led to the Bush administration's hiring of a number of influential individuals within Enron's orbit for important government positions:

- Thomas E. White, Bush's Secretary of the Army, was once Vice-Chairman of Enron Energy Service, and held millions in Enron stock;

- Presidential Advisor Karl Rove owned as much as $250,000 in Enron stock;

- Economic adviser Larry Lindsay leapt straight from Enron to his current White House job;

- Federal Trade Representative Robert B. Zoellick did the same;

- SEC Chairman Harvey Pitts was hand-picked by Kenneth Lay for the position, due to his notorious aversion to governmental regulation of any kind.

There are some thirty one Bush administration officials who had a line item for Enron in their stock portfolio, including Defense Secretary Donald Rumsfeld. It is fair to say that the woebegone corporation held, and continues to hold, enormous influence over the day-to-day machinations of Federal government policy. One wonders if Bush's recent gutting of the Clean Air Act, a decision designed to improve the fortunes of companies like Enron, was the brainchild of people with deep connections to the energy industry.

The trail of influence left by Enron leads also to the scabrous heart ventricles of Vice President Dick Cheney, who admitted recently to six separate meetings with Enron executives while formulating the Bush administration's energy policy. Cheney, a former executive of the Halliburton Petroleum interest, was in charge of creating this policy. For reasons soon to be exposed by subpoena, Cheney refused to detail the specifics of the creation of this policy, which included the multiple Enron meetings.

The General Accounting Office was preparing to sue Cheney to reveal this information when the September 11th attacks took place. Those subpoenas may be dusted off and mailed within a month. In the meantime, the Justice Department is preparing a serious criminal investigation into the collapse Of Enron. The democratically-controlled Senate is planning hearings on the matter as well. Columnist Robert Scheer has referred to the Bush administration's involvement in the Enron debacle as "Whitewater in spades." One wonders if "Watergate" would be a more appropriate comparison.

Bush's own dealings within the energy industry carry a disturbingly familiar echo to the Enron situation: once upon a time, he was a high-ranking officer of a petroleum interest called Harken Oil. On June 22, 1990, Bush sold his Harken stock and made $848,560, earning him a 200% profit. One week later, Harken announced a $23.2 million loss in quarterly earnings and its stock dropped sharply, losing 60 percent of its value over the next six months. Bush made a bundle while the other investors lost millions. Harken was Enron in miniature, and might have served as a warning to the American people if the press had chosen to pay any attention to it during the 2000 Presidential campaign.

There is a school of thought, espoused primarily by Republicans, that any investigation into potentially dishonorable or illegal actions by the Bush administration is tantamount to treason. We are at war, undeclared though it may be, and Bush must be free to prosecute this war vigorously, so as to defend our freedom and bring the murderers of American civilians to justice. If reports recently aired on CNN have any credence, however, Bush and his people may well have to answer for actions that make the Enron catastrophe look like a jaywalking offense, actions that led directly to the incredible carnage in New York and Washington, D.C.

In 1998, during the Clinton administration, the U.S.-based energy concern Unocal canceled plans to exploit massive natural gas deposits in Turkmenistan. They had planned to run a pipeline from Turkmenistan to Pakistan, where the natural gas could have been processed for Asian and Western energy markets. The idea was scuttled after Clinton ordered the cruise missile bombing of Afghanistan in response to a terrorist attack upon U.S. embassies in Africa which were planned and executed by Osama bin Laden. The pipeline would have had to pass through Afghanistan, and Unocal was Given the message in Technicolor by Clinton's people that Taliban-controlled Afghanistan was not to be given any sort of financial boon.

Apparently, the Bush administration found no moral dilemma in dealing with the Taliban to get to the gas. Immediately upon their arrival in Washington, a vigorous courtship of the Taliban was undertaken by Bush's people. In fact, if former U.N. weapons inspector Richard Butler is to be believed, the Bush administration had a vested interest in strengthening and stabilizing the Taliban regime, because a stable regime would compel investors to revive the Turkmenistan natural gas pipeline deal. The Taliban, demon of the moment, was the Bush administration's idea of a 'stable' government. Stable enough, anyway, to see the pipeline through.

The connections between Bush and the Taliban became so close that the Taliban went so far as to hire an expert on U.S. public relations named Laila Helms, so as to smooth the way between the two regimes. Meetings between the two nations continued at a high level, the last of which occurred in August, scant weeks before the September 11th attacks. All of these actions were taken to exploit the vast energy reserves in Turkmenistan for the benefit of American energy corporations.

The cozy relationship between Bush and the Taliban frustrated the investigative efforts of former Deputy Director of the FBI John O'Neill. O'Neill was the FBI's chief bin Laden hunter, in charge of the Investigations into the bin Laden-connected bombings of the World Trade Center in 1993, the destruction of an American troop barracks in Saudi Arabia in 1996, the African embassy bombings in 1998, and the attack upon the U.S.S. Cole in 2000.

O'Neill quit the FBI in protest two weeks before the destruction of the World Trade Center towers. He did so because his investigation was hindered by the Bush administration's connections to the Taliban, and by the interests of American petroleum companies. O'Neill was quoted as stating, "The main obstacles to investigating Islamic terrorism were U.S. oil corporate interests, and the role played by Saudi Arabia in it." After leaving the FBI, O'Neill took a position as head of security for the World Trade Center. He died on September 11th, 2001, trying to save people trapped by the attack, when the towers came down on top of him. The irony in this, simply, is horrifying.

In essence, the Federal agent who knew more about bin Laden than any living American was kept from investigating terrorist threats against this country. He was hindered because the Bush administration was desperate to cultivate the favor of the Taliban, who held terrorist mastermind Osama bin Laden in great esteem, so as to gain access to lucrative natural gas deposits in Turkmenistan.

If these allegations prove true, Bush and his friends allowed this affinity to hamstring investigations that could have thwarted bin Laden's September plans. If these allegations prove true, everything since September 11th has been a massive cover-up operation in which American soldiers and thousands of Afghan civilians have died. If these allegations prove true, the Bush administration has the blood of thousands of American civilians on its hands.

If these allegations carry even the faintest whiff of credibility, George W. Bush and members of his administration stand in taint of high treason and murder.

On November 7th, 2000, a clear majority of Americans came to the conclusion that George W. Bush was unfit to govern this nation. For a variety of dark and controversial reasons, that conclusion was thrown over. Sometime soon, if the media's electronic web continues to carry these sordid stories of corruption, greed and death, the American people will come to fully understand the consequences of that failed election.

It is one thing to coddle and court a corrupt energy company for political and financial gain. It is quite another to coddle and court a murderous terrorist-supporting regime, hindering anti-terrorism investigations in the process, for the purpose of exploiting valuable natural resources. The former cost a number of people their retirement funds. The latter has cost thousands of people their lives. One is criminal. The other is abominable. George W. Bush is deeply implicated in both. There will be hell to pay.

The stench that surrounds Enron's collapse must alert Britain's politicians to the corrupting influence of unregulated capitalism.

Will Hutton
Sunday January 13, 2002,6903,632020,00.html

The Observer

American democracy is increasingly a fraud. Money buys votes, influence and office. Contemporary Washington makes Caligula's Rome look like a vicar's tea party. American politicians' need for business donations on a gigantic scale to win their election campaigns now pollutes the discourse of the country's public life, with business writing public policy and corrupting everything it touches. And the noxious consequences, in terms of ideas and business practice, spill over into Britain. The bankruptcy of the energy trader Enron before Christmas with $40 billion of debts, the largest recorded in history, was spectacular. It had overstated its profits by half a billion dollars over three years and lost more still in private companies set up to enrich the coterie of top executives in schemes undetected by its auditors, Arthur Andersen. They, we learned last week, had happily disposed of potentially incriminating documents and misled Congress. In tougher times, Enron's capacity to hide what we would understand as theft was exhausted - and the company collapsed.

Now the subject of a criminal investigation by the Justice Department, the details spilling out offer a bird's-eye view of how business is done in the US, how favours are bought and how political ideas are honed to serve the interests of the political parties' benefactors. Two members of Bush's Cabinet - the Commerce Secretary and Attorney-General - have had to stand aside from the investigations because they received close to $100,000 in political donations from Enron. Chief executive Ken Lay, 'Kenny Boy' as Bush dubbed his close friend, personally gave Bush $100,000.

This was not innocent money for a buddy; Enron also greased the wheels of the Democrats. In 2000, it spent $2.4bn supporting candidates for public office in the US - $1.7bn for the Republicans and $700 million for Democrats. Enron wanted a return on its cash and could not afford just to back Republicans. As an energy trader, it needed to find markets in which to trade, which meant opening up the US's patchwork quilt of state and federally regulated electricity and gas grids to private interests; sometimes, Democrats served this purpose as well as Republicans.

Enron did not want to look like just another corporation using money to buy influence; it needed a cover story. It wanted minimal surveillance of its own operations and the maximum opportunity to enrich its directors while making paupers of its workers (before it collapsed, the directors sold $1bn of personally owned shares while forbidding its employees to sell their Enron shares in their private pension funds); energy markets opened up fast. The story was deregulation.

No chief executive was as fervent an apostle of how regulation cripples wealth generation as Ken Lay, and now we know why. Republicans, of course, were willing allies in the belief that nothing inhibits businesses more than having to respect the law of the land and accept obligations to the wider society in which they trade. But money talks, and during the 1990s Democrats became evangelists for the same set of ideas. How could they accept Enron's money, and that of dozens of other corporations, otherwise?

Thus, over the last decade, Ken Lay and Enron have bought a series of decisions that have driven the company's growth. In the early 1990s, the company ensured via the good offices of Wendy Gramm, then chairman of the Commodity Futures Trade Commission and wife of Enron-supported Texan senator Phil Gramm, that key aspects of Enron's trading should not be regulated; she was rewarded with a seat on the board.

In the mid-1990s, Enron spearheaded the botched deregulation of California's electricity grid, ensuring, amid the mayhem that would lead to black-outs and sky-high prices, that at least there was a mandatory spot market in electricity in which Enron could trade. It made sure, with Bush's election, that regulation remained favourable to Enron, helped design an energy policy based on more spot market trading and successfully lobbied for the repeal of minimum corporate taxes, the proceeds of which, had they come sooner, would have been used to plug the financial holes created by its own executives' venality. This was a much better use of the money than serving the public interest.

This was a pretty useful return on its political contributions, but Enron could not have made the progress it did without the intellectual backdrop that all regulation and taxation is bad - and that the more the US deregulated, the better its economy performed. This was, and is, balderdash.

For Enron was a major actor in the UK; it dominated energy trading, in particular in electricity and gas, and it took care to include a British political notable, Lord Wakeham, on its board as a non-executive director, though there is no suggestion that he has been involved in any alleged malpractice. When it collapsed, the untold story is that Britain's market-based electricity distribution system stood on the brink of collapse, too; without regulatory intervention, the country would have suffered a black out on a Californian scale. Yet the unseen and unpraised regulators at Ofgem (the merged regulator of Britain's gas and electricity markets) moved fast and effectively to ensure that other companies stood behind Enron's now defunct contracts . The lights stayed on.

Smart and effective regulation is the handmaiden of well-run markets that serve the public interest. It is time our politicians started saying so - and challenging the self-serving braying of our business lobbyists. Enron, and the philosophy that created it, stinks.

Ok, Let's play 20 Questions -- Shadowfax, 13:13:50 01/25/02 Fri

Catherine Austin Fitts
January 25, 2002

OK, let's play 20 questions....

When the Mexican bailout occurred and the Russian IMF loans in 1998
happened, where did the money go?

It went from one bank account at a NY Fed member bank to another bank
account at another NY Fed member bank, indeed it appears that the money
never digitally or physically left Wall Street.....

Ok, so lets not talk about money missing from Mexico or Russia, but from the
USA....Money missing from US Treasury, HUD and DOD.....

Who is the US depository for the US Treasury?

NY Fed....that is, Morgan-Chase, Citibank, Bank of New York, Goldman,

Who handles all the accounts for the HUD servicing?


Who are the primary dealers on the US Treasury auctions?

Morgan-Chase, Citibank, Bank of New York, Goldman

Who are the firms accused on manipulating the gold market by GATA?

Fed, Morgan-Chase, Citibank, Goldman

GATA also says that there appear to be manipulations of the stock market by
the Treasury/Fed...something they call the "plunge protection team." What
dealers are doing that?

Fed, Morgan-Chase, Citibank, Goldman, etc.

Who laundered $3 trillion out of the US gov't? Where did it go? Who got it?

Don't know but it could not have been pulled out without Fed, Morgan-Chase,
Citibank, Goldman knowing how much and where it went....

How did they launder the money offshore?

Don't know...

Who were Enron's big trading partners?

Morgan-Chase, Citibank, Goldman, etc.

Who were Enron's big lenders and investment bankers?

Morgan-Chase, Citibank, Goldman, UBS

How much were Swiss Bank accounts up as of March 2002?

Swiss bank accounts were up by an unexpected $8 trillion in on shore and off
shore accounts

The most sensitive Enron trading records were in Enron On Line. It was just
auctioned. Who were the big bidders?

Morgan-Chase, Citibank, etc.

Who won control of Enron OnLine?

UBS, one of the largest swiss banks

Who is the most recent board member of UBS?

Lawrence Weinback, former Chairman of Arthur Anderson

Other board connections?

Pug Winokur, chairman of Enron's finance committee, is chairman of the
compensation committee of the DynCorp board and has a partner who is on the
DynCorp board with him, Dudley Mecum who is on Citibank's board. Frank
Savage is also a member of Lockheed Martin's board. DynCorp and Lockheed
manage substantial information and accounting/payment systems for the
agencies with missing money and the agencies in charge of enforcement.

Trick Questions:

Enron's reported sales through 2000 represented a five year 57% increase.

Did any of that money flow through Houston or did it just flow around NY Fed
bank accounts and their offshore correspondants?

And did it flow from a NY Fed bank account that said "US Treasury" on it?

How long would it take DynCorp, manager of the PROMIS system for DOJ paid by
the taxpayer, to determine sources and uses of money through the Enron
trading accounts and find and seize all offshore Enron monies?

How long would it take a company like Lockheed and DynCorp to help steal it?

How long would an incoming Bush Administration have to keep Enron afloat
before they banks had all the money trail safely destroyed?

Why has the DOJ allowed Enron time to sell Enron OnLine and time to shred
all their documents and to allow Arthur Anderson time to shred their

Cyclist -- Cobra, 07:33:45 01/25/02 Fri

I always thought you were one of the best traders anywhere.
Good to see you out & about again.

cyclist -- kapex, 04:43:24 01/25/02 Fri

Good to see you again.

I would like to think it is you posting here and not someone typing in cyclist.

One way to know for sure is to say a quick hello at kitco as you haven't been there for a while.
Can't say that I blame you.


Japanese trade surplus drops 38% -- Donald, 01:14:23 01/25/02 Fri

Largest drop since 1970 blamed on global slump

Cyclist -- Sharefin, 23:08:51 01/24/02 Thu

Good times ahead for the goldbugs.
Please feel free to post some charts if you wish.

I like this coming break.
It should be to the upside judging by other inputs.
And there's every chance the next cycle high will eclipse the 1999 one.

Sharefin /XAU -- Cyclist, 19:36:22 01/24/02 Thu

The end of May I expect to see the XAU
hitting the upper 90's.
We are in a heck of a bull market,buy on the dips ..:)

Shared Capitalism -- Sharefin, 18:57:53 01/24/02 Thu

Current trends in economic inequality, both domestically and abroad, pose dangers to human dignity, democracy, political stability, fiscal sustainability, social justice, freedom, civil society, physical/mental health and environmental sustainability. These dangers are palpable, real and on the rise.

Ownership Statistics: Why a Shared Capitalism is Needed...

PDF File -- Sharefin, 17:04:05 01/24/02 Thu

Fed Policy and the Effects of a Stock Market Crash on the Economy

From the Far Side -- Sharefin, 16:51:14 01/24/02 Thu

sandstone . . Thu, Jan 24, 4:43PM ET
bond- here's where i got it from FWIW, from Doug Kass, at TS.C: "More From D.C. 1/24/02 02:13 PM EST I am hearing from my sources in Washington, D.C., that the U.S. is going to launch an attack on Iraq. And I just received the same information from a trading desk.

Greenspan -- Sharefin, 16:49:15 01/24/02 Thu

Greenspan's New Slant

Ready for take-off? -- Sharefin, 16:43:08 01/24/02 Thu

Ready for take-off?

Ready for take-off? -- Sharefin, 16:40:37 01/24/02 Thu

Ready for take-off?

Durban Deep -- Sharefin, 16:35:26 01/24/02 Thu

Durban Deep clawing back respectability

Cyclist -- Sharefin, 16:31:55 01/24/02 Thu

Lots of the gold indices I am watching also showed the same effect.
That the gold stocks ran too far ahead of the POG.
This is bullish going forwards but bearish short term as profits are taken and the goldstocks come back into line before the next rally.

The next rally going forward should be a good one with important levels being broached.

Pro-Forma Earnings ... Is It a Sham? --, 14:48:30 01/24/02 Thu

For the first three quarters of 2001, the one hundred companies that make up the NASDAQ 100 reported $82.3 billion in combined losses to the Securities and Exchange Commission (SEC). For the same period, these companies reported $19.1 billion in combined profits to shareholders via headline, "pro forma" earnings reports-a difference of $101.4 billion or over $1 billion per company.

Reports to the SEC (10Q's and 10K's) are regulated, must follow Generally Accepted Accounting Principles (GAAP), and are subject to audit. Headline, pro forma earnings are unaudited, and, in a poor economy, are varying more and more from GAAP as companies struggle to meet earnings projections.

Outgoing SEC Chief Economist Lynn Turner says pro forma earnings are effectively "EBS" earnings-"Everything but the Bad Stuff."

The five largest NASDAQ 100 companies (by market capitalization) had combined profits both on a GAAP and a pro forma basis. However, Microsoft (MSFT), Intel (INTC), Cisco Systems (CSCO), Oracle (ORCL), and Dell (DELL) reported combined real profits of $4.4 billion to the SEC, while reporting $13.4 billion profits to shareholders via pro forma earnings-$9.0 billion more. Thus, more than two-thirds of the headline pro forma profits resulted from net positive pro forma adjustments made to GAAP earnings.

Companies losing money were not the only ones to make extensive use of pro forma adjustments. For example, Microsoft reported earnings to the SEC of $3.8 billion for the first three quarters of 2001, but headline, pro forma earnings reported to shareholders were $7.0 billion-right in line with estimates.

Intel's reported pro forma profits ($2.6 billion) were over three times its profits reported to the SEC ($0.8 billion). Recently announced fourth quarter results continue this tradition. The headline EPS number was $0.15 per share thereby allowing Intel to "beat the street" estimate of $0.11 per share. It appears the GAAP EPS they will report to the SEC in a few weeks will be $0.07 per share. If Intel's report is a harbinger of things to come in the fourth quarter, pro forma earnings for the NASDAQ 100 will once again greatly exceed GAAP earnings.

Cisco Systems reported losses to the SEC of $3.0 billion, but reported pro forma profits to shareholders of $0.7 billion which "beat the street" (exceeded First Call earnings estimates). The "items," i.e., true accounting expenses, that Cisco expunged each and every quarter, were exactly enough to allow its headline pro forma earnings to be inline with or slightly better than earnings projections. These quarterly positive adjustments varied considerably and ranged from about 40 cents a share to 2 cents a share, but each quarter, Cisco's pro forma EPS ended up within a penny or two of estimates (equal or over but never under). Is this really just a fortunate coincidence?

Full Article:

Gold basing -- Cyclist, 14:26:56 01/24/02 Thu

Next week Tuesday ,gold stocks will have caught up with
gold.A run will start and will last till second /third week of February.A 278 stop on April gold should be just right.

Worth a full post - part 1 -- Sharefin, 07:16:08 01/24/02 Thu

The Investment Case For Gold

The investment case for gold centers on the notion that the over valuation and excessive supply of the US currency has funded a decade's worth of uneconomic investment and unsustainable consumption. According to Professor Robert Mundell, as recently quoted in The Wall Street Journal (WSJ) Europe “There will come a time when the pileup of international indebtedness makes reliance on the dollar as the world's only main currency untenable. It is no longer necessary or even healthy for the U.S. or the rest of the world to rely solely upon the dollar.”

The price of gold will rise as the dollar based system of credit and commerce falters under an overload of bad debt, weakening financial institutions, and a stagnant economy. The end of the NASDAQ mania marked the beginning of this process. The Enron bankruptcy, de facto default on sovereign debt by Argentina, and a looming financial crisis in Japan are random but high profile reminders of a deteriorating global credit environment. Turning points in long-term market trends rarely achieve completion within the confines of a single business cycle. The NASDAQ blowout was the noisiest and most visible sign of a turning point. Much more quiet has been the failure of the dollar price of gold to make a new low since August of 1999, a good six months before the Nasdaq peak.

A revaluation of the dollar, like a credit downgrade, will choke off the flow of capital destined to be misspent. Its principal manifestation is likely to be a substantially higher gold price. The revaluation of gold will be permanent, based on three factors, each representing time spans of different but overlapping durations. The three factors are:

(1) The structure the gold market, including the short positions, the annual flows of physical metal, and the economics of mine production, favors a price rise to $400 - $500. Current gold prices of around $280/oz. do not justify sufficient investment to maintain world gold production. Production is set to decline slowly in the current year and more precipitously in the years after.

(2) The deflationary climate prompts economic policies that lead to the increased issuance of dollars including rapid money growth and fiscal deficits. It will inspire protectionist measures, which effectively devalue dollars held offshore. It will lead to rising interest rates, inflation and weakening balance sheets.

(3) The metaphysics of gold, or market mythology and popular perception, have the potential to exert more influence than the other two factors combined. Market metaphysics change glacially over decades. They explain the vast swings in valuation as demonstrated by the chart depicting the Dow Jones average by the dollar price of an ounce of gold. These very long cycles in the public mood range from mania to depression. Imagine the opposite of the recent mania and you will picture the 1970's, even if you weren't there. The 1970's featured miniscule equity valuations, a cynical and apathetic public regard for investing, and distrust of financial institutions, political leadership, and currency.

Gold Market Structure

The current dollar gold price of $280/oz is inadequate to justify capital investment necessary to maintain mine output. Evidence includes the shrinking capital base of the gold mining industry, continuing poor returns on investment, and the inability to attract new capital. Meanwhile, the gold mining industry is caught up in a frantic contest to see who will be the largest producer. While there are possible strategic benefits for the emerging leaders, the process in the near term promises further dilution to long-suffering shareholders. The market cap of the entire industry approximates McDonalds's. The two or three “winners” in the consolidation race will still be tiny blips on the radar screen of capital markets. Size achieved at the cost of shareholder dilution will not attract generalist investors who are otherwise indifferent to gold. They are more likely to be turned away by the industry's disregard for returns on capital. Only a higher gold price will attract new money to gold mining shares.

The precipitous decline of exploration expenditures (see chart below) since 1999 will lead to an accelerating decline in mine output:

Mine output in 2001, estimated at 2600 tonnes, is likely to prove to be the peak, assuming no change in the gold price. Even if the gold price were to rise by $100/oz, the supply response would be muted. “Mothballed capacity” is negligible. Lower exploration means fewer ounces are being discovered, and that ounces mined are not being replaced. The lead-time to bring new discoveries into production is measured in multiples of years, even decades. Industry production of 90mm oz per year has been achieved at the cost of depleting capital, especially through high grading and starving mine development expenditures. The “growth” in output achieved by several of the major companies has been via acquisition rather than organic. Following a substantial rise during the 1990's, world mine production has turned static and will soon fall. A recent UBS Warburg study: “Gold Production Set to Plunge” dated 11/29/01 provides more details and amplification.

The industry's use of “cash cost” per ounce as its principal performance metric reveals a disregard for return on investment, and partially explains the 18% expansion of global production from 1991-2001 despite falling gold prices. However, the increase of mine supply justified by cash cost thinking is but one explanation for the inadequate gold price. Two additional critical factors responsible for an oversupply of gold were the substantial growth in forward sales by the mining industry and outright sales by central banks.

Forward selling or hedging by gold companies to “lock in” margins is the antecedent of business practices adopted by Enron and other entities that prefer counter party to market risk. The architects of the gold industry's lamentable dalliance with derivatives will engineer grief well beyond the gold sector. Financial market exposure to interest rate and foreign exchange derivatives dwarfs the notional value of gold and commodity contracts. Gold derivative traders have laden the books of their host institutions with the financial equivalent of toxic waste dumps. The intellectual basis for the existing gold derivative books, representing at least 5000 tonnes, or two year's mine production, was a bearish view of gold and a uniformly bullish view of the dollar.

Remediation may be costly, long term, and vulnerable to periodic short squeeze attacks by those who recognize that the supply of physical gold is scarce in comparison to gold-linked paper instruments that have been supplied by bullion dealers. The illiquidity of physical gold relative to gold derivatives endangers the creditworthiness of the issuers. A substantially higher gold price is not in the commercial interest of active or former bullion dealers.

The concentration of gold derivatives in the hands of one institution cannot be comforting to central bankers who had originally lent their gold reserves to a wide array of bullion dealers. JP Morgan Chase, also a major counter party to Enron in a variety of energy derivatives, held 80% of the gold derivatives reported by the OCC (Office of Controller and Currency) as of 9/30/01. Although total gold derivatives reported to the OCC have declined from the peak levels of $87.6 billion at year-end 1999, JP Morgan held only 40% of the total that time, which was prior to the merger with Chase. The decline in OCC-reported gold derivatives from the 1999 year end peak is most likely due to an offloading of positions to a non OCC reporting entity such as Enron, an Enron-like organization, or a foreign bank. Now that many have abandoned the gold derivatives trade, it appears that JP Morgan Chase has become the rear guard to defend the derivatives universe against higher gold prices.

The same central bankers might also question the fact that the hedge books of the gold mining industry already border on negative valuations even though the dollar price of gold is languishing. Mining executives might respond that within their hedge books, the real culprits were erroneous bets on local currencies, particularly the Australian Dollar or the South African Rand. However, the same bankers might wonder why the capacity for error should be limited to currency hedges but not the gold price.

Two years after its “hedge book induced” brush with bankruptcy, Ashanti Goldfields still has a substantial book of 8.4mm ounces (down from a peak of 12.2mm ounces) despite earnest efforts to remediate and production of more than 3mm ounces during the time span. Gold hedge books in the best of all worlds, meaning a well-behaved gold price, are difficult to liquidate. The easiest, lowest cost method to repay the borrowed gold as it is mined, returning it the bullion dealer who then repays the central bank. Should sentiment turn more positive or the gold price rise, miners will accelerate deliveries into their hedge contracts. Accelerated hedge book liquidation would shrink supply and accentuate a price spike.

The intellectual rationale for gold hedging no longer enjoys enthusiastic support. As one major mine company hedger said to me recently, “ the dollar price of gold seems unable to break $250 over the last three years, despite having repeated chances to do so.” Based on a low contango, or the spread between short and longer dated interest rates, forward gold prices relative to spot have decreased to the point where short term volatility could easily wipe out the hedging premium. The mining industry has already begun to respond to these new realities by accelerating deliveries into existing hedges or by abstaining from new hedges. Slack demand has deflated the formerly thriving gold derivative trade. The list of former major bullion dealers no longer committed to the business includes CFSB, JP Morgan (Chase has assumed most of the former JPM book), J Aron (Goldman Sachs), UBS, Deutsche Bank, and Dresdner. Even though these institutions are not increasing their exposure, previously written derivative contracts survive somewhere in financial cyber space and constitute a very large stale short position. The exodus has increased the concentration of counter party risk for mining companies and central banks alike. Mining companies face the new headache of rollover risk when existing contracts with departed counter parties expire. Finally, investors have begun to differentiate between the equities of hedgers and non-hedgers. Since 1/2/01, the shares of Barrick Gold, the most prominent hedger, have under performed declining 2% vs. a 13% gain for the XAU (Philadelphia Exchange Index of Gold Mining stocks) as of 1/22/01.

Of the three known extraordinary factors depressing the gold price in recent years, central bank selling, industry hedging, and rapid expansion of mine output, only the first remains. Central bank selling was motivated in part by a desire to diversify reserve assets away from gold. In addition, they were seeking attractive yields available from paper that could not be provided by the “sterile” metal. The banks have been so successful in accomplishing this that the US dollar represents 76% of central bank reserves (2000 BIS annual report). With dollar interest rates plummeting to barely positive real returns, it clear that this diversification has accomplished little beyond substantially increasing the risk profile of their reserve positions.

This pendulum has swung as far as possible. Look for a change in central banker sentiment towards gold and the dollar. The euro and the yen are liquid alternatives for diversification. In comparison, gold is not liquid at the current dollar price. Gold, like an extremely undervalued stock, might be seen as too difficult to position. However, the cure for illiquidity has always been a higher price. As central banks begin to act on their desire to diversify away from the dollar, gold will initially seem impractical. The practicality issue will vanish at higher prices. At a minimum, central bank selling will dwindle. More likely, sellers at low prices, the banks will become avid buyers along with the odd lotters.

With gold trading below its mining replacement cost, the factors responsible for this aberration dissipating, and a massive stale short position still outstanding, why hasn't speculative capital been attracted to this opportunity? Perhaps it is only a matter of time. On the other hand, potential new gold longs might be put off by concerns that the gold market, is in some way, manipulated. There is ample and credible evidence of manipulation in a number of financial markets, including gold. History, however, reminds us that price manipulation is unsustainable and creates violent price adjustments when abandoned.

The mining replacement cost of gold appears to be in a range of $400-$500/oz on a sustained basis, all other things being equal. However, that range does not take into account the tendency for speculative excess to overshoot a norm. It also does not take into account factors external to the peculiarities of the gold market. A reassessment of the dollar or a displacement of the dollar by some alternative and as yet unknown reserve currency would drive the gold price well above the equilibrium range suggested, and quite likely into four-digit territory.

The Deflationary Climate

“All the factors that will lead to inflation will operate through first weakening balance sheets, whether of the private sector or of the government or both. Credit worries will mushroom, increasing the attractiveness of outside assets such as gold. Finally, the accelerating trend in the world towards the restriction of free capital movements and towards a contraction in the financial services industry in general will reduce the available alternatives to gold.” (Bernard Connolly, AIG International Research, 1/11/02)

Aggressive rate cutting by the Fed and other central banks, historically high rates of monetary expansion, and a return to deficit spending do not suggest that inflation fears are driving economic policy. Those fears have been displaced by the prospects of stagnant to non-existent growth or even worse, a self-feeding contraction of credit in which borrowers are forced to service or repay debt through sales of assets.

Corporate debt totaled $4.9 trillion as of 9/30/01 versus $2.4 trillion at year- end 1989. During the same period, consumer debt reached $7.9 trillion versus $3.5 trillion. The 100% plus increases in both cases far outpaced the 80% cumulative increase in GDP. During 2001, there were three times as many credit downgrades of corporate-credit ratings as upgrades, the fourth consecutive yearly drop in credit quality and the steepest decline in creditworthiness since 1991, as chronicled in a WSJ article by Gregory Zuckerman (12/31/01). Debt is greater today than when the recession started. It would be unusual for an economic recovery to commence before a cycle of debt liquidation. As the chart below shows, if the current recession is indeed ending, it would be the first time that consumer debt relative to disposable income had not declined:

The essential feature of a deflationary climate is that debt burdens drive decision making by corporations and policy makers. Too much debt causes the economy to contract because interest and principal must be serviced by asset sales. Not only do general price levels decline, but so also do asset prices including stocks and real estate. Declining lender confidence in asset values causes credit to contract further. A weak economy amplifies debt burdens by cutting income, cash flow, and expectations. The greatest threat to economic growth then becomes a psychological shift that favors debt reduction over expanded consumption or investment. That is why the current thrust of US economic policy is to reduce the real and psychological impact of debt. The sole sign of its success will be a subsequent increase in the indebtedness of all sectors. Fearing a market-driven full-blown recession, which would restore liquidity and thereby establish a sound basis for long-term expansion, policy makers prefer the short-term solution of digging an even deeper hole.

The defining feature of the current economic landscape is not the events of 9/11 but Enron. Does anyone besides TV financial network commentators believe that the use of Enron's flawed practices were isolated? Maximum leverage and accounting deception were at the core of the 1990's culture. Corporate icons such as IBM and GE employed these tactics as well as lesser-known entities. Enron has unleashed long simmering concerns about credit and earnings quality that will not quickly disappear. The chart below, which shows the surge in quality credit spreads, clearly depicts credit deflation:

Worth a full post - part 2 -- Sharefin, 07:13:14 01/24/02 Thu

The Investment Case For Gold

The precipitous and wholesale abandonment of the anti inflationary policies of the 1990's, pivotal to the strong dollar, must suggest second thoughts to central bankers sitting on their vast accumulations of dollars. Undoubtedly, the October '01 downgrade of the dollar by the Chinese was driven by such considerations. In case the first announcement went unnoticed, the Chinese reiterated their intentions rather loudly on January 7th 2002. As reported in the Daily Telegraph, Chinese foreign minister Xiang Huaicheng said “I will instruct the responsible authorities that they should not just have a currency basket but rather that they should buy euros as quickly as possible.” The European Commission added “China and the European Union share a joint suspicion of American ‘hegemony' in the global economic system and have been edging toward mutual embrace for several years. Beijing has a strong interest in promoting a rival currency, but it has been waiting for evidence that the euro is a viable long-term currency before committing itself….” The Chinese apparently had fewer reservations about another alternative to the US currency. Holding more than $200 billion of US financial instruments, they have been steady, low profile buyers of gold in recent years, and have just announced an increase in their gold holdings of 120 tonnes. Chinese gold reserves now stand at 500 tonnes, still a small percentage of their total reserves.

The Chinese euro announcement preceded by a mere week another interesting downgrade by Moody's. In the second instance, the recipient of the lower rating was the commercial paper of General Motors from P-1 to P-2. As a result, the strongest of the big three automakers can no longer market its commercial paper to money market funds at a time when growing cash losses are forcing it to rely more on external financing, even though 2001 was the second highest year on record for industry car sales. GM shares a plight similar to Ford and Chrysler, which have together steadily lost market share to foreign manufacturers since the mid 1980's. Despite years of booming auto markets, GM's debt has increased and profit margins have decreased.

Both the dollar and GM downgrades were brought about by the all too successful strong dollar policy concocted during the Clinton administration by Treasury Secretary Rubin and Undersecretary Summers. The key tenets of that policy were fiscal surpluses, integrated global capital markets, deregulation, free trade and low inflation. These policies were transmitted ad nauseam through the financial media. The rhetoric and theatrics of transmittal included tame inflation, low interest rates, a rising stock market, and a low gold price. The payoff was the ability to issue dollars to our trading partners without restraint. Unfettered dollar issuance, an “exorbitant privilege” in the words of Charles de Gaulle, permitted the de facto globalization of the supply chain for the American consumer and business. Access to international capacity is the real secret behind low reported inflation. Cheap capital, in the form of low long-term interest rates and lofty equity valuations, was a co-benefit of the low inflation myth. Less favorable was that the decade-long pile up of dollar indebtedness became the foundation of consumer prosperity and booming financial markets. A second unfavorable consequence was a significant deterioration of the US external financial position. Finally, the NASDAQ mania, fueled by under priced capital, funded a sufficient quantity of uneconomic projects to cripple capital investment and credit markets for years.

Most of the fundamental underpinnings and theatrics of the strong dollar are history. They have been succeeded by down-trending stock prices, fragile consumer confidence, a stagnant economy, and plummeting productivity. Only a weak gold price and an overvalued dollar survive. The original architects and lead proponents of the strong dollar have been succeeded by a new administration, quite possibly with different thinking. That new thinking could include recognition that the quick fix to intractable economic issues would be a cheapening of the currency. Vigorous counter-deflationary policies, current and prospective, threaten to undermine the wealth of non-US investors that hold $6.4 trillion of US assets including 38% of the outstanding treasury debt, 20% of US corporate debt, and 8% of US equities.

The question remains as to against what the dollar will weaken. Neither of its principal rivals, the yen and the euro, seems appealing other than the fact that they represent liquid alternatives to the dollar. Should the expected US recovery fall short of expectations, or should a synchronized global recession prove unexpectedly prolonged, a principal casualty will be the standing and the value of the US dollar. A general downgrading of the dollar will lead to a reversal of capital flows, meaning that $ trillions of US assets held abroad will become a source of funds. A reversal of capital flows will induce a sharp decline against the euro and the yen, warts notwithstanding, and will be followed by rising interest rates, reported inflation, and a much higher gold price.

The perils of deflation are not unrecognized. In July, the NY Times noted that the strong dollar “is making exporters non competitive in international markets” and could in part be blamed for weak corporate profits, job losses, and faltering stock prices. In June, Bridgewater Daily Observations noted that “when economies are doing well most everyone believes in the beauty and efficiency of the free markets and free trade, but when the economy turns south people come out of the woodwork to decry the evils of unfettered markets.” (Bridgewater Daily Observations, 6/01). Among those to come out of the woodwork has been the steel industry, which has recently succeeded in paving the way for raising tariffs on imported steel by up to 40%. Free trade advocates note that the annual cost to consumers will approach $2.4 billion a year. Another recent protectionist measure was the recent passage of tariffs to limit imports of Canadian lumber. If economic weakness persists, trade barriers will proliferate.

The dilemma for economic policy is that the exigencies of combating deflation have considerable potential to undermine confidence in the dollar. Former Treasury secretary Rubin testified before Congress, “modifying our strong dollar policy could adversely affect inflation, interest rates, and capital inflows and would lessen the favorability of our terms of exchange with the rest of the world.” Despite these dangers, NY Times columnist Paul Krugman recently wrote “the strong dollar is one of the reasons the Fed is having trouble pulling us back from the brink. So right now, a weaker dollar is in America's interests.” Krugman likens the rising dollar to a Ponzi scheme, which is about to “run out of suckers.”

Does the recently launched euro have unappreciated merits as some think? Will Japan's fortunes take a turn for the better and lead to surprising appreciation in the yen? Either possibility has to be considered, but it seems more likely that the overcooked bull market in the dollar will unravel like NASDAQ, under the weight of its own overvaluation. As with that mania, skeptics were pariahs until the damage was obvious. Given the excessive central bank and capital market concentration in the US dollar, its extreme overvaluation relative to its counterparts, and the as yet unrecognized erosion of the dollar's fundamentals, almost any minor event could tip psychology and trigger an Enron-like meltdown. In that scenario, holders of dollars will look for liquid alternatives and ask questions later. Central banks will suspend gold sales and balk at rolling over bullion loans. Market sentiment towards financial assets will sour further. The bear market in financial assets, already underway, will become more widely recognized.

Market Metaphysics

Markets are above all driven by psychology and emotion. The progression from the previous nadir of pessimism in 1974 to the peak bubble optimism was imperceptible in the moment but a powerful determinant of price extremes. The new economy paradigm and the love affair with technology are transient phases that will be replaced by preoccupation with as yet unidentified concerns.

There is no way to figure extremes of valuation without considering psychology and market mythology. While the usual fundamental considerations of real interest rates and earnings are starting points for valuation, expectations or beliefs as to the future course of events are decidedly non- quantitative. Since 1910, the P/E ratio of the S&P has averaged approximately 15x. In that span of more than 90 years, the P/E has exceeded 25x only six times. Bear markets typically end in single digit territory. Recent S&P P/E measures in excess of 30x suggest confidence remains unbroken by the yearlong drubbing in stocks and the recession. Meaningful change in market psychology spans decades. Shifts are imperceptible in the context of shorter- term market and business cycles. However, there is no mistaking the contrast in mood that existed at the peak of the NASDAQ bubble just a short while ago, and the mood that prevailed at the 1974 low and for several years thereafter. How markets travel from one extreme to the other is unknowable. What is clear is the preponderance of confidence or the lack of it at each extreme.

In a 1997 speech (Leuven, Belgium) Alan Greenspan stated “a nation's sovereign credit rating lies at the base of its current fiscal, monetary, and, indirectly, regulatory policy. When there is confidence in the integrity of government, monetary authorities---the central bank and the finance ministry---can issue unlimited claims denominated in their own currencies and can guarantee or stand ready to guarantee the obligations of private issuers as they see fit.” This statement, extracted from Dr. Larry Park's monograph “ What does Mr. Greenspan Really Think?”, describes the essence of the strong dollar policy and suggests the pivotal condition, “confidence in its integrity” for it to remain in effect. Clearly, the highly indebted external position and continuing large trade deficit of the United States suggest that a “high level of confidence” has existed for many years.

For some time, the integrity of the gold market has been a subject of much question by a small minority who maintain an interest in such matters. Although the metal's dollar price has been relegated to sideshow status by most, there can be little doubt the low price has been one of the most important sound bytes for mass consumption underpinning the low inflation mythology of the new economy and the strong dollar. A long-standing affectation of disinterest by officialdom and market gurus begins to resemble the famous “dog that didn't bark” in the Sherlock Holmes mystery. Gold retains its financial market role as the “canary in the coal mine.” A sharply rising gold dollar price would send a clear message to even the most casual observer that something is awry with the Fed's “fine tuning” of the economy and financial markets.

If the dollar gold price's submissive behavior over the last five years has been the product of opportunistic interventions in the name of crisis management, admission of this would be unthinkable. In the context of world financial flows, gold is small and well within the resources of the US Treasury's Exchange Stabilization Fund on its own, or in league with other governments and commercial interests, to manage. Undersecretary Summer's scholarly work completed while a Harvard faculty member, “Gibson's Paradox”, suggested that dollar gold prices would vary inversely with real interest rates as measured by 30-year bonds. However, this relationship broke down in 1996 during Summers' tenure at the Treasury. To our thinking, there is no more powerful evidence to support the notion that the gold price has been rigged than the chart below depicting the relationship. Should the distortion of the gold market indicated by this chart come to an end, the subsequent rise in interest rates would severely undermine the viability of interest rate swap contracts. JP Morgan's derivatives exposure of $30.4 trillion as of 9/30/01 and approximately 60% of the total for OCC reporting entities, is dominated by bets on interest rates. It is safe to assume that those bets don't include interest rate levels that would accompany gold prices in excess of $400/oz.

In isolation, manipulation of the gold market might be dismissed as a well-intentioned exercise in market stability, the thought being that a misbehaving gold price would undermine the very confidence identified by Greenspan as so precious. However, to regard the manipulation of the gold price as an isolated matter would require a suspension of belief greater than for those who found value in dot com stocks. In fact, intervention in all markets including equities, bonds, currencies, and commodities has long been standard operating procedure for the Fed and the Treasury.

The invariable response to market shocks that threatened the now infamous virtuous circle of a strong currency and the bull market was decisive market intervention by the Federal Reserve and US Treasury. For example:

- Market crises triggered by the Asian meltdown, the Russian default, the collapse of LTCM, and plummeting stock prices post the NASDAQ mania, were countered by injections of liquidity by the Federal Reserve along with high profile public statements of assurance to the markets.

- The cosmetics of low inflation were fortified by debasement of Bureau of Labor Statistics inflation measures through dubious hedonic price adjustments and false productivity measures.

- A flare up in the gold price caused by a short squeeze following the Washington Agreement in 1999 was doused by fresh liquidity solicited from Kuwait, the Vatican, and Singapore. As discussed later, these maneuvers included mobilization of US gold reserves.

- The attempt to bring down long-term rates by suspending issuance of 30-year treasuries is the most recent and clumsiest of notable anti-market actions.

- In the true spirit of globalization, the government of Italy manipulated its own bond market to hide the true size of its budget deficit in order to be admitted to the European single currency. In a report published by the International Securities Market Association (November, 01), a currency bond swap was completed in 1997 to mask the true size of the country's internal deficit. The transaction was orchestrated by Long Term Capital Management, which counted the Italian Central Bank among its clients.

Richard Russell, a veteran stock market observer recently concluded that the stock market was being manipulated: “I've resisted this idea for a long time, but slowly and surely I've come to the conclusion that yes, the Fed does step in at various times and manipulate the market…. One of those ‘manipulation junctures' is right now. The Enron mess hit the markets, some indices that I follow were right on the edge, and ‘normally' I would have expected the markets ….to follow through on the downside today. But lo and behold, buying came in at the opening and the market pushed higher.” He goes on to say that “all manipulation does is hold off the inevitable.”

During the Clinton administration, auctions of 30 year treasuries were scaled back, some suggested, in order to lower interest costs to the government by emphasizing low coupon short-term maturities. Perhaps at a time when a wide spread existed between opposite ends of the yield curve, this might have made sense, but how to explain the recent suspension of 30 year issues altogether? With long-term interest rates already low, many saw this move as a not too subtle attempt to manipulate long-term interest rates by creating a scarcity of paper. As quoted in Grant's Interest Rate Observer, Ron Ryan (Ryan Labs) said, “When interest rates are low, the logical borrower wants to lock it up for as long as possible…Now they have done the Las Vegas bet that the two-year note auction rolled over 15 times, will have an average interest cost lower than the 30-year today.”

In the same article, Grant says: “A…deserving object of anger is the government's habitual recourse to market manipulation, whether through interest rates or mind games. We cling to the view that the U.S. dollar is vulnerable to a loss of confidence, with an attendant risk of rising interest rates. Market manipulation by market manipulation, the Treasury and Fed are dissipating this confidence.”

Greenspan reveals the intellectual rationale for market interventions in his Leuwen speech: “open market operations, in situations like that which followed the crash of stock markets around the world in 1987, satisfy increased needs for liquidity for the system as a whole that otherwise could feed cumulative, self-reinforcing, contractions across many financial markets.” Events subsequent to the 1987 market crash that exceed the Fed's pain threshold included the Asian meltdown, the Russian Defaults, the Y2K scare, the NASDAQ crash, and Enron. While Greenspan is aware that the use of sovereign credit creates moral hazard, i.e., the distortion of incentives that occurs when the party that determines the level of risk receives the gains from but is not exposed to the costs of, the risks taken, he cannot seem to find the appropriate limit for such intervention. To play it safe, the bar for intervention has been steadily lowered while the buildup of debt has multiplied systemic risk.

The Rubin/Summers Treasury and the Greenspan Fed bear the principal responsibility for creating the mania. The liberal use of sovereign credit by the Fed and Treasury over the past decade to bail out bad banks, insolvent hedge funds, and investors in foreign government paper, materially altered the calculation of risk by investors, corporations, and financial institutions. By removing the risk from serious investment mistakes, these policies incentivized the employment of excessive leverage that in turn inflated “the bubble.”

The disrespect for market outcomes reflected in US economic and financial policies is neither new nor inconsistent with the behavior of senior government officials throughout history. The London Gold Pool scheme to hold down the gold price illustrates autocratic anti-market behavior four decades ago. A striking non-economic example came with the recent release of the private tapes of Lyndon B. Johnson, which revealed that his public and private views on the Vietnam War were in complete opposition. It would seem that the grounds for distrust and cynicism are almost always present. What changes is the willingness of the public and the markets to look the other way. That willingness in turn would seem to be driven by whether the course of events appears to be satisfactory or unsatisfactory. The unwillingness of senior officials and policy makers to own up to the adverse consequences of their previous actions explains the phenomenon of digging ever-deeper policy holes. The refusal to accept the retribution of market outcomes explains a “culture of obfuscation”, to employ a former Clinton attorney's (Lanny Davis) phrase, at the core of all scams, whether in the public or private sector.

The manipulation of the gold price, seen in the context of an autocratic inner circle of policy makers committed to nothing more than their own career advancement, seems highly plausible. The mechanics of this manipulation are murky, at best. However, valuable insight is provided by the work of James Turk in “Accounting for the ESF's Gold Swaps” (1/7/02 Freemarket Gold & Money Report.) While his complex analysis of the mechanics and the accounting may be less than perfect, it is in my opinion substantially on the money. The bottom line is that US government official gold reserves have been mobilized through swap and loan arrangements to suppress the gold price, particularly in the aftermath of the Sept. 1999 Washington Agreement, which triggered a violent short squeeze. These arrangements in turn have been papered over and covered up by a succession of changes in financial statement nomenclature, accounting artifices, and document destruction ("That Shreddin' Fed" by Robert Auerbach in Barron's) reminiscent of Watergate or the most elaborate financial frauds yet known. At the end of the day, far more official sector gold appears to have been squandered to tame the dollar gold price than the generally accepted 5000 tonne short position countenanced by the Bank for International Settlements or Goldfield Mineral Services. Therefore, investors may contemplate a substantially higher dollar gold price target than previously seemed reasonable.

It is not unusual for the perception of a market, such as the dollar gold price, to lag fundamental change to a significant degree. However, the lag in this instance is especially great. Investors need to grasp not only the structural issues pertaining to the market itself, but also the interplay of these issues with the macro aspects of economic policy, currency valuation, and market psychology. This is especially difficult when significant information is withheld or obscured. In light of the substantial shift in fundamentals and the extreme lag in the recognition of these changes, the magnitude of the market adjustment is likely to be surprising. Whether the price adjustment occurs quickly or evolves over several years, the outcome will be a dollar gold price that is comfortably within four-digit territory.

The damage caused by an epic investment mania cannot be undone simply by a one or two year decline in stock prices. A mania causes a vast misallocation of capital. Over investment in high tech was only the most visible manifestation of this capital misallocation. On the other side was under-investment in key areas. We are saturated with computers, cell phones, SUV's, casinos, lawyers and debt, but there will be shortages of basic materials and industrial capacity when the dollar loses its preeminent status.

What produced the giddy valuations of the mania in part was investor confidence that highly competent management of the economy had produced a new era of business cycle stability, low inflation and continuous growth. In fact, these expectations rest on policies that have increasingly painted their proponents into a corner. In order to maintain credibility, ever more transparent manipulations will be called for and resorted to. In the process, credibility will be destroyed. To quote Grant again, “Mr. Greenspan has become a living symbol of the efficacy of price fixing. But it's likely that sometime before his career is over, he will become a symbol of the futility of that black art.” (WSJ 4/01)

Greenspan epitomizes the vigorous anti-market culture that has become entrenched at the core of economic policy making. Operating in the shadows of constitutionality, a “plunge protection team” consisting of Rubin/Summers/Greenspan “clones” monitors world financial markets contemplating the need for introducing US sovereign credit to achieve acceptable outcomes. The team was an organic outgrowth of the 1990's climate of morality that legitimized and institutionalized deception and obfuscation. The intellectual heritage of this group is more in sync with the central planners of the former Soviet Union than with the free market champions they are perceived to be. Unlike their Soviet counterparts, the plunge protection team operates outside the realm of established government institutions and accountability. However, the fate all central planners share is the certitude that market forces will topple their designs.


The new economic paradigm is that credit deflation begets inflationary outcomes. Gold, far from being irrelevant and antiquated, is the ideal lens through which to appraise this reality. As perfect credit, it will become more highly valued when investors attempt to shed assets impaired by decades of imperfect credit. A four-digit handle on the dollar gold price will signify not that the markets love gold. Instead, it will mean that they despise the alternatives. There is no specific reason to think that the movement in this direction should be precipitous. Bear markets have a way of taking their time, the better to deceive and to entrap as many as possible. Those who believe a business upturn will end the bear market will be among them. While there may appear to be no particular rush, violent shifts in market views usually come with little warning. An allocation in favor of gold would seem to be timely. The dollar's days as the premier global reserve currency are numbered. The repercussions of a dollar revaluation will be profound and long-lived. It is not too soon for investors to assume defensive positions in light of these prospects and it will not be long before they discover that gold is a core component of investment defense.

John Hathaway

January 23, 2002
© Tocqueville Asset Management L.P.

Worth a full post -- Sharefin, 07:03:51 01/24/02 Thu

Bullion Dealers: Spin Meisters of The Gold Market

Cast as the perennial bad guy of financial assets, gold faces many protagonists. Low gold prices reassure the bond market that commodity prices remain tame and that no inflationary threat exists. With low interest rates and firm bond prices, lofty equity valuations can be justified. The political world is happy to see gold languish. Its submissiveness imparts an "all is well" hue to the landscape. But gold's worst enemy by far is the bullion dealers. If not for their reign of terror, gold would in all likelihood have broken out of its long downtrend. Purveyors of unrelenting pessimism, their collective voices have affected a generation of thinking in the financial markets at large and among their clientele which includes mining companies, central banks, and hedge funds.

The dealer community consists of a small inner circle of blue chip institutions that control the flow of leased gold into the market place. Less than ten in number, their strong credit ratings qualify them as counter parties for central banks leasing gold. Since this trade originates as a short sale, dealers are predisposed to promote a bearish picture for gold. These institutions have persuaded the gold mining industry that the upside potential of gold is limited. Their message to the miners is: buy price protection from us. It is an absolute necessity to assure continuity of mining operations. Their message to the central bankers is: mobilize your gold for the leasing market so you can earn a return on this stagnant asset.

The success of their campaign is evident in the mindless negative slant of the financial press and attitudes of many leading mining executives. Their small number facilitates obscurity, secrecy and informal cooperation (collusion?) in their efforts to keep a lid on gold prices. While spreading their gloomy message for gold, they have built up a mega short position. Their relentless selling is a major, if not the principal, reason for gold's lackluster performance in recent years. The size of the short interest in gold has been estimated to be from 4000 to 8000 tons, or two to four years of new mine supply.

However, the world according to bullion dealers is beginning to veer out of touch with reality. They contend that there are three major reasons why gold can never mount a sustained rally: central bank or official sector selling, producer forward selling, and world deflation.

For years, the gold market has quaked at the prospect of official sector selling. Rumors or stories of such sales have frequently topped out many gold price rallies. Such rumors, spread by the bullion banks, encourage front running by their hedge fund clients. In truth, central bank selling has dwindled. The outlook is for little or no new supply from this source. Wim Duisenberg, chief of the new ECB, recently issued an emphatic public statement that Europe's vast gold reserves would not be sold. Duisenberg's point of view has been strenuously reinforced by European central bankers in private meetings. The Europeans regard gold as an important reserve asset whose value is of great concern. Unauthorized sales are unlikely and even gold leasing is likely to come under review once it is understood to depress the metal's price. Central bankers regard gold as an important basis of credibility for the new Euro, especially at the grass roots level. Official sector sales, in the succinct view of one knowledgeable observer, just "ain't gonna happen." If anything, official sector buying will become a significant source of demand, particularly in Asia, where gold is a very low percentage of reserves. This recent evolution in official sector attitudes is absent in the pronouncements of bullion dealer spokespeople.

The second most frequently invoked rumor to terrorize the gold market is of producer selling. This threat is as outdated and inaccurate as their central bank spiel. The gold mining industry has not added significantly to forward sales positions in recent years. The industry is already heavily hedged, and producer selling cannot and will not be the incremental source of supply it has been in the past. Based on slowing reserve growth due to reduced capital flows and low gold prices, significant new selling by the industry is unlikely. While gold mining managers are still inclined to sell into the rallies, they do so mostly to replace less favorable hedges on the books, and therefore there is no net increment.

The 1998 Asian meltdown provided a cue for macro hedge fund selling. Short interest rose to extreme levels three times since the Asian meltdown: year end '97, August '98, and January '99. This speculative selling pressure produced a succession of higher lows, suggesting that the worst expectations may have already been discounted. Asian economies now appear to be on the mend. As the Asian recovery becomes more apparent, the macro case for shorting gold and raw materials in general will evaporate. It is hard to ignore the reports of strong demand from traditional gold consuming markets. Preliminary numbers suggest that the fourth quarter of 1998 saw the highest gold consumption on record.

The deficit between mine production plus scrap and demand for gold continues to widen. It is conservatively estimated at 1300-1500 tons for 1999. If net forward sales by producers equal 200-300 tons, a generous assumption, short selling must exceed 1000 tons in order to keep the gold price locked into its downtrend. In other words, the bullion dealers must go out further on their short selling limb to defend their basis risk.

The macroeconomic argument for gold has swung to the bullish side. Heavy monetary and fiscal stimulus is being employed by world governments to fend off deflation. US money growth (M-2) exceeds 9%, the highest in ten years. Other world governments are doing their part with interest rate cuts and fiscal stimulus. Failure of these stimulative measures to thwart deflation will only lead to more intense application of the same medicine. A cycle of accelerating stimulus will ignite long dormant investment demand for gold.

The world has changed dramatically from the days when shorting gold was a good idea. Nonetheless, this does not stop the dealers from rumor peddling to promote business. One producer hedger observed that when such rumors appear at the top of a gold rally, it is impossible to get a straight story. It is not improbable that such selling represents proprietary trades by dealers defending their short positions.

If so, their position is on shaky grounds. The depressed gold price means almost no producers are reporting profits. The high quality leasing business has already been exploited. Financially strong producers, that cared to, have been selling forward for many years. What's left, for the most part, are the companies with weaker reserve positions and balance sheets. Hedge business placed on the books over the last year is the weak link that will break easily in a sustained gold rally. The basis risk for much of this short interest book is probably in the high 290's or low 300's.

There is circumstantial evidence that gold lending has evolved into a successor to the failed yen carry trade. Bullion dealers have enjoyed bang up profits over the last few years. A gold carry trade would seem like a rational line extension of their lucrative business. Low interest gold loans could fund long positions in the treasury market. Based on their trail of success, it would not be hard for them to recruit fresh capital from within the firm or outside.

One mining CFO observed that there is a kind of inverse euphoria rampant in the gold market that the gold price will never rise. Call writing and short selling are guaranteed ways to make money. Bearish sentiment has become increasingly cocky, overconfident and reckless. Such attitudes could well be founded on a perception of official sector policy towards the metal price. Increasingly lax credit terms reflect this sentiment. There has been a flood of gold mobilized by central banks in the last six to nine months. Over eighty central banks are now lending their gold. Lease rates have plummeted, terms have lengthened, and margin requirements relaxed. As credits have become weaker, more complicated derivative structures and higher fees have proliferated. A mining CEO professed to having been hounded in recent months by dealers promoting ever more lax credit terms. The sub prime lending business is alive and well in the bullion market. Just as internet investors were piling in at the top, there is an overcrowding of capital in this dubious trade, a precursor to a market turning point.

You can be sure this will come to an explosive end. The gold market is more wrong-footed than before its huge 1993 rally. At least the yen was a liquid currency that could be bought to cover shorts, even if there was a substantial loss to cover. The gold that is being borrowed from central banks is being sold into the physical market where it is being consumed as jewelry. It is no longer in liquid, deliverable form. Gold loans will not be as easy to repay as the borrowed yen. The shorts are facing an epic squeeze. Once the markets realize that the selling pressure has been artificial and the self-fulfilling, bearish axe grinding of a small group of institutions with their own agenda, there will be a swift re-evaluation of the market fundamentals. It could be quite some time before gold trades below the basis risk of the short positions.

Bullion dealers must assume that plenty of fresh central bank gold will be available if the price rises. This could be a dangerous assumption. The unanimity of negative opinion on the yen was followed by a huge short squeeze. The sentiment on gold is similar. If the price rises sharply, central banks will be reluctant to mobilize more gold for lease. Under such a scenario, the finances of the bullion dealers could be jeopardized. Lease rates are low because there is a huge supply of gold available for lease. The central banks have been coaxed (duped?) into the gold lending scheme by the relentless dealer pessimism. A strong gold price rally would dissipate negative psychology. Lease rates would spike as central banks ask for their gold back. Most of the banks have lent their gold against the credit of the bullion dealers and don't appear to appreciate the risk that they could actually lose the gold.

We are among the many gold investors who anticipated such upheavals as the Asia meltdown, LTCM, and Brazil, that remain disappointed by gold's indifference. It is quite apparent that gold has been held in check by the artificial constraints we have described. As these constraints become better understood, the short position that they are built upon on will come under speculative attack.

Our investment case for gold goes well beyond a short squeeze, but the catalyst for a breakout could well be just that. We expect investment demand to materialize in conjunction with the inevitable deflation of the stock market and dollar bubbles.

Gold is a David and Goliath story. Written off by the financial establishment and pinned down by the reign of terror we have described, all expectations are negative. Strong underlying fundamentals are ignored. Defenses against a breakout are flimsy and overrated. Gold today is an opportunity to take a low risk position that the financial markets are in the late stages of a blow off. At the very least, it provides insurance against such an event. We are looking forward to an imminent reversal in gold's status as an outcast among financial assets.

John Hathaway

February 1999
© Tocqueville Asset Management L.P.

Physical Buying Absorbs Gold Selling -- Sharefin, 05:37:44 01/24/02 Thu

Physical Buying Absorbs Gold Selling

Precious metals were trading mostly lower at midday Wednesday, with the markets
very quiet. Commodity funds exited some long positions albeit more hesitantly
than on Tuesday or Friday, now that the downside appears limited. "Slowly,
slowly they're selling bits and pieces, but there's some physical demand eating
it up as we dip," noted a trader at an international bank in New York. Feb gold
on the Comex division of the New York Mercantile Exchange fell $1.16 to $280.20
a troy ounce. What physical demand was seen, he said, was originating more from
the Middle East than Japan, despite reports that demand from Japanese investors
is four to five times what it was this time last year. His bank's Australian
office might have seen more business during Asian hours from the Japanese, he
added. A New Jersey-based trader agreed that Japanese buying wasn't spilling
over into business in the U.S. Lack of decisive moves in the U.S. dollar against
key foreign currencies such as the euro and the Australian dollar muted activity
in the gold market, he said. Deteriorating confidence in the yen and the
Japanese bank system has made investors in Japan willing to buy into rising gold
prices, where they previously were only buying into a falling market, according
to market analyst Rhona O'Connell at the World Gold Council in London. She did,
however, note some profit taking by Japanese investors overnight once the yen's
decline against the U.S. dollar had halted. The bank trader predicted gold
prices would test lower throughout this week. While some participants have
warned of more aggressive bailing out of long positions if the $280 level is
decisively breached, the bank trader pointed to $279 as a more significant
supporting price. "That's a level that should (attract) physical demand and
should be support," he noted, citing upside resistance at $283 an ounce. With
silver now seemingly oversold and believed to be in the middle of, rather than
at the end, a technical wave formation, J.P. Morgan Chase recommended short
positions be squared in preparation for a bounce to higher prices
. Mar silver
did look as if it was ready to rebound a bit from this week's lows, rising
earlier to $4.3150. But more selling at that level pushed it back down again to
trade at $4.275 an ounce, 1.3 cents below Tuesday's close. "The forwards are
back to positive -- contango -- flat bids on the one- month (lease rate)," the
bank trader said. "We've come off 50 cents, so there are some buyers down here.
Some people are taking profits from shorts. Some speculators think 50 cents was
enough (of a downward correction)." He pegged support for Mar at $4.23 and said
silver would gain momentum to the upside if it could break above resistance at
$4.38 an ounce. In a market report, J.P. Morgan Chase said it didn't interpret
recent declines in platinum group metals prices as a sign those markets had
completed their run to their highs, but the investment bank did advise selling
into further rallies. April platinum on Nymex broke briefly below the $468
support level identified last week, but rebounded to $469 an ounce, $6.40 lower
from Tuesday. Mar palladium dropped to $385, $13 lower than Tuesday.

China's gold production -- Sharefin, 05:34:52 01/24/02 Thu

China hits record high gold output at 181.83mt in 2001

John Hathaway -- Sharefin, 05:33:06 01/24/02 Thu

The Investment Case For Gold

Bullion Dealers: Spin Meisters of The Gold Market

Gold industry gets hardcore on P.R. -- Sharefin, 05:19:08 01/24/02 Thu

Gold industry gets hardcore on PR

Kenneth Lay Resigns as Enron Chairman/CEO -- Sharefin, 05:14:56 01/24/02 Thu

Kenneth Lay Resigns as Enron Chairman/CEO

Normandy accepts -- Sharefin, 05:10:58 01/24/02 Thu

Normandy Mining Urges Shareholders

Normandy accepts -- Sharefin, 05:09:30 01/24/02 Thu

Normandy Mining Urges Shareholders

Merril Lynch -- Sharefin, 05:07:55 01/24/02 Thu

Merrill sees firm gold prices in '02, healthy sector

Australia's Centaur Mining Shortfall As High As A$676M -- Sharefin, 05:05:43 01/24/02 Thu

Australia's Centaur Mining Shortfall As High As A$676M

Russia's gold -- Sharefin, 05:03:32 01/24/02 Thu

Central Bank's Gold And Currency Reserves Drop $200M

Enron Metals Sale To Leave Co With Fresh Slate -- Sharefin, 05:00:20 01/24/02 Thu

Enron Metals Sale To Leave Co With Fresh Slate

The Investment Case For Gold -- Sharefin, 23:13:12 01/23/02 Wed

The Investment Case For Gold

Bullion Dealers: Spin Meisters of The Gold Market -- Sharefin, 23:07:06 01/23/02 Wed

Bullion Dealers: Spin Meisters of The Gold Market

Argentine Congress debating a bill to allow CB to print money -- Donald, 18:47:25 01/23/02 Wed

Passage said to be a certainty

Major insurers are refusing to honor claims involving Enron -- Donald, 01:51:19 01/23/02 Wed

Insurers, facing billions in claims on Surety Bonds, are refusing to pay saying they were misled by Enron.

Chinese default has bondholders worried -- Donald, 01:37:39 01/23/02 Wed

Planned default of Fujian Trust, formerly owned by the provincial government, has the blessing of Chinese officials.

Australian Gold Conference April 2002 --, 01:01:51 01/23/02 Wed

Be There or Be Square!

Monday, 9 April 2001


The Hon Dr Geoff Gallop Premier of Western Australia Conference Opening
Pierre Lassonde Franco-Nevada Interview with Michael Pascoe
Daniel McConvey Goldman Sachs & Co Global supply - a long term view
George Milling-Stanley World Gold Council Prospects for gold demand - the long term outlook
Nick Paspaley South Sea Pearl Consortium Company overview
Chryss Carr South Sea Pearl Consortium How to market luxury products
Don Mackay-Coghill Gold Corporation Gold marketing: the producers' blind spot
Kamal Naqvi Macquarie Bank India's gold story
Herve Ferhani Banque de France Central banking and the gold market
Jessica Cross Virtual Metals Research & Consulting The role of derivatives in the international gold market
Douglas Fuller Gold Institute Technological and environmental impacts on supply and demand


Tuesday, 10 April 2001


Peter Lalor Sons of Gwalia Prospects and challenges for the Australian gold industry
Bob Buchan Kinross Gold Corporation Gold in the Americas
Bernard Swanepoel Harmony Gold Mining Company Consolidation and strength in the South African gold industry
Paul Burton World Gold New production regions
Keith Chan Trasy Gold Ex E-procurement
Nic Pollock Viewlocity Australia E-procurement

Email chatter - Catherine Fitts -- Sharefin, 21:46:07 01/22/02 Tue

Subject: Pug Winokur, PROMIS and the flow of data and dollars at SEC, HUD, DOJ, Treasury, NY Fed Banks and Enron

"In a digital economy, data about money is worth more than money."
---Nicholas Negroponte



Which would you rather have? A million dollars or access to the data about the closing prices of all listed NYSE stocks a week from now?

Which would you rather have? A million dollars or access to knowledge about what the US Treasury was planning to do in the gold market through NY fed dealers on its account for the next week?

Which would you rather have? A million dollars or access to knowledge about what the NY Fed was planning to do in the open markets for the next week?

Which would you rather have if you were a major investor and the chairman of Enron's Finance Committee....a million dollars or a flow of inside information about all the federal regulatory and enforcement decisions effecting you and your company?

Which would be better for your bottom line? To pay someone to get such data for you, or to have the government pay you to manage such data for them with one of your other companies?

ENRON's END RUN by Kelly O'Meara, Insight Magazine

Kelly O'Meara's article on Enron is copied with a link below. The article notes the linkage between Enron's board finance chairman and his role as lead investor in a company that controls the flow of highly valuable data that supports the US enforcement establishment.

"Although the UBS/Andersen twist definitely is one for investigators to contemplate, in the end it may prove only half as interesting as some of the apparent conflicts of key Enron board members. Take for instance Herbert "Pug" Winokur, who chaired the board's finance committee, which was responsible for ensuring the financial arrangements of the company were prudent and sound. A Harvard Ph.D., Winokur is the former chairman of Dyncorp, one of the federal government's biggest contractors. He remains chairman of DynCorp's compensation committee and is a major investor in that company. There is concern bordering on alarm among investigators that through this connection Winokur is in a position to obtain inappropriate information about the Enron investigations. According to DynCorp's Website, that company has the contracts for information-technology services at the SEC and the U.S. Department of Justice (DOJ), including all 93 U.S. attorneys' offices. This means that DynCorp manages all e-mail and digital communications of the federal agencies now investigating Enron."


Trap doors, hackers, spooks and all that aside, who do you think is reading and listening to what the SEC and DOJ enforcement teams are doing on Enron?
How do you think the GS-15 attorneys at the SEC feel about going after the guy who owns a piece of the company that controls their computer systems?
How do you think they feel about going after someone who is a powerful board member in the flow at the highest levels on all sorts of sensitive contracts and information for the CIA and military intelligence?


When I left the Bush Administration in 1990, I was persuaded that the internet and telecommunications could revolutionize our world in a positive way. I started a company that was a leader in creating financial software tools using relational databases and new ways of networking companies working together to reengineer community and government investment.

My business was organized around being a leader about data about money.
When we designed Community Wizard, our goal was to create widespread access for citizens to "how the money works". When we helped HUD achieve much greater illumination and disclosure about "how the money works" in the single family and multifamily mortgage markets, our goal was to create the access to data about government investment that generates substantially better performance for taxpayers and communities.

What I discovered in that process was that the growing gap between rich and poor in America and worldwide was a growing discrepancy between who had access to the data about how money and resources worked and who did not. The folks who did were moving to grab the money for themselves. Corporations use government to collect and manage data funded by taxpayers who then use it for the benefit of their investors and not for the benefit of the citizens or the intended purpose. The continued growth of access to inside information through government (military, intelligence and enforcement) and increasingly high powered surveillance and software tools is an important driver of the financial fraud that we are seeing today, including Enron.

One thing that will help each of us understand the Enron story and understand our world is to start looking at a situation and think about how the money works. Part of that is understanding who controls the data about how the money works and how they use that data, including for their own purposes.


When the DOJ investigators seized my office and ripped apart and destroyed our computer systems, one of my attorneys told me that what was happening reminded him exactly of what had happened to a company named Inslaw, run by Bill Hamilton, who had built the PROMIS software system.

My understanding is that PROMIS is used by the US intelligence and enforcement community to track money in the global banking system and to seize money from overseas banks that are on the main settlement systems.

I called Bill Hamilton and in the course of several conversations, he told me three things.

First, the company that had taken over the building of PROMIS was now becoming the leader in mortgage servicing software.

Second, that one of the companies that had taken over the responsibility for managing PROMIS for DOJ and the intelligence community was DynCorp.

Third, if I wanted to understand PROMIS, I should read Black Money by Michael Thomas.

Since then I have read and listened to many stories about PROMIS and various successor systems that combine powerful database technology and artificial intelligence with a variety of surveillance technologies, to give the people who use these systems tremendous power in business and in government. I have listened to many people tell me that PROMIS was very much involved in compromising HUD and HUD transactions.

Among those is a report from Mike Ruppert in From the Wilderness last year that Bill Tyree has reported that Pug Winokur's role with DynCorp at HUD is to use PROMIS to compromise the HUD accounts.


In April 1997, Bill Crist, President of Cal Pers, the largest pension fund in the US told me that "they have given up on the country and were going to move all the money out the country in the fall."

That fall, immediately following the time when DOJ managed to get me and my team pushed out of working for the federal government, money started going missing across the federal government. I have sent out numerous Solari Action Reports to the effect that over $3 trillion is now missing from HUD, DOD and a number of other agencies.

GATA has reported the diminution of the Treasury gold stocks as well as disturbing patterns of manipulation of the gold and stock markets. These could only happen with the support of the Department of Justice, the Treasury, and the NY Fed and its large members, Morgan-Chase, Citigroup, Bank of New York, Goldman Sachs, AIG, etc.

While this sounds implausible to most Americans, it's not. Not when you consider that essentially all of the federal computer systems in question have been turned over to the corporate control over the last two decades. Given recent GAO and insider reports about the control of accounting systems and information systems by Lockheed, DynCorp, AMS and other key private corporations servicing federal systems, and the lack of federal government employee supervision, it is increasingly likely that large sums could be moved out with very few --if any-- government career employees knowing what is happening. Those who suspected anything would have good reason to not saying anything. What happened to me and people like me was quite visible and quite effective at getting the message across, "see no evil, hear no evil, speak no evil."

The patterns are compatible with the movement of significant resources out of the US.

Of course, this raises the question as to how a group of large NY Fed banks might launder several trillion of dollars of money safely into offshore accounts without anyone being able to get it back.

So let me ask you the question. Just a hypothesis. If you were a criminal syndicate who had gotten tired of financing the US government as it is, how would you pull out money before you reengineered the system and launder it abroad into private and corporate control?


Understanding PROMIS and the use of advanced computer and surveillance systems is very useful in understanding the Enron story.

I think the way to start is to read Black Money by Michael Thomas. It's pulp fiction. But it will help you get a sense of how useful PROMIS may have been in stealing $500 billion from the American people through the Iran Contra/S&L fraud which was also centered in the Bush networks in Houston, Texas and Denver.

If PROMIS + Iran Contra cost us $500 billion in the 1980's, what might the same networks of people have managed to come up with in ten years of evolution to far more sophisticated technologies and control of government information systems by a handful of military and intelligence contractors whose investors are some of the most powerful people on the planet?


Here are some books that will help you understand the Enron story:

I. Black Money, by Michael Thomas

II. False Profits: The Inside Story of BCCI, the World's Most Corrupt Financial Empire, Peter Truell & Larry Gurwin. Boston: Houghton Mifflin Company, 1992.

III. Hot Money and the Politics of Debt, R. T. Naylor. Montreal: Black Rose Books, 1994.

IV. The Money and the Power: The Making of Las Vegas and Its Hold on America, Sally Denton and Roger Morris

V. The Mafia, CIA and George Bush, Pete Brewton. New York: S.P.I., 1992.

And some videos:

Enemy of the State, Gene Hackman and Will Smith

Anti-Trust, Gary Robbins

Enron's End Run

UBS implications -- Sharefin, 20:02:21 01/22/02 Tue

Enron's End Run

It gets even more complicated. The purchase of Enron Online in early January by Union Bank of Switzerland (UBS), one of Enron's leading lenders, adds a new dimension to the already conflict-ridden investigation. Lawrence A. Weinbach, board member and vice chairman of the audit committee for UBS, was for nearly four decades with the accounting firm of Arthur Andersen. He retired in 1997 from Andersen Worldwide as its managing partner and chief executive.

Furthermore, with the purchase of Enron Online, UBS not only takes control of the trading operations but of the trading records - crucial evidence in the investigation. Given the limbo between UBS and Arthur Andersen, many in the financial community wonder if investigators should subpoena the whole package to ensure against further destruction of records. Although the UBS/Andersen twist definitely is one for investigators to contemplate, in the end it may prove only half as interesting as some of the apparent conflicts of key Enron board members.

The same UBS who took care of Anglogold's share of Normandy.

More to this than meets the eye.

This could be a huge mover prior to the banks failures -- Sharefin, 19:57:56 01/22/02 Tue

Japanese savings switching to gold

Good for a laugh -- Sharefin, 17:38:24 01/22/02 Tue

Newmont victory rattles gold conspiracy

IAMGOLD walks the talk -- Sharefin, 17:12:15 01/22/02 Tue

IAMGOLD walks the talk

Barrick to swoop on Oz? -- Sharefin, 17:10:53 01/22/02 Tue

Barrick to swoop on Oz?

Freeport production plummets -- Sharefin, 16:55:40 01/22/02 Tue

Gold to shrug off Freeport output drop

NEW YORK, Jan 17 (Reuters) - U.S. mining company Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX - news) predicted on Thursday that its gold diggings would temporarily fall by a quarter this year, which might seem well timed for a downsizing gold industry hoping to restore its fortunes through reduced mine production.

Yet, North American analysts said the cut will do little to put the gleam back in gold after years of weak prices. The loss of 20 tonnes of supply from Freeport was a drop in the bucket compared with global mine production, and the 650-tonne-a-day over-the-counter bullion trading market, they said.

Gold prices ignored the news and were around $285 an ounce Thursday, down from $287.50 late Wednesday.

``The market is down $2. The market doesn't seem to think it's that significant,'' said David Rinehimer, head of commodities research at Salomon Smith Barney.

New Orleans, Louisiana-based Freeport said while announcing lower fourth quarter earnings that it sees gold sales in 2002 of about 2 million Troy ounces (62 tonnes), down from 2,644,800 ounces (82 tonnes) in 2001, a record for the company which is ranked among the world's top 10 gold producers.

``The 600,000 ounces to me is not a material amount,'' said TD Securities mining analyst Chad Williams, from Toronto.

The company reported a net loss of $2.1 million, or 1 cent per share, in the quarter, smaller than Wall Street anticipated, on lower costs and higher production of gold.

Freeport said the predicted gold output drop reflected the mining of lower grade ore bodies from its Indonesian mining unit, PT Freeport Indonesia (PT-FI). Freeport produces gold as a byproduct from operations at its massive Grasberg mining and milling complex, located in the remote eastern province of Irian Jaya.

The geology of the open pit operation means that gold yields can vary during the year, even while the ore remains economical.

``Looking beyond 2002 into 2003, we will be returning back into more normal ore grades and we will expect gold sales in 2003 and for the succeeding three years to be more in line with what we achieved in 2001,'' Freeport Chief Financial Officer Richard Adkerson told analysts Thursday in a conference call.

Global mine output in 2001 was 2,595 tonnes, according to consultants Gold Fields Mineral Services (GFMS), which released an updated version of its 2001 Gold Survey on Thursday.

Adding disinvestment by central banks and individuals, there is a surplus of gold and market prices remain close to the 20-year low at $252 hit in 1999.

Primary gold producers are going through a sweeping consolidation, looking for international synergies through mergers with low-cost mining companies.

U.S. gold giant Newmont Mining (NYSE:NEM - news) looks set this week to win a four-month takeover battle for Australia's largest gold company, Normandy Mining (Australia:NDY.AX - news), beating out rival AngloGold Ltd of South Africa in a bid to create the world's No. 1 producer.

Canada's Barrick Gold (Toronto:ABX.TO - news), merged with U.S. gold company Homestake Mining Co. in December, ranking it right behind AngloGold, which currently mines the most gold, about 225 tonnes a year.

But meaningful concentration may be far off for the bloated gold industry, which is also comprised of dozens of small mining companies. Meanwhile secondary producers like Freeport continue to churn out gold as a byproduct of copper and other metal mining operations.

The top 10 gold producers accounted for just 40 percent of the world's mine output in 2000, according to GFMS statistics.

Gold experts sees metal firming -- Sharefin, 16:49:30 01/22/02 Tue

Gold experts sees metal firming

Gold is expected to firm to $282 an ounce in the first half of 2002, with higher investment and more cuts in producer hedging offsetting a fall in demand for jewellery and electronics, Gold Fields Mineral Services (GFMS) said.
GFMS, a London-based commodity research and consulting firm, said the first-half 2002 average would be above the second half 2001 gold average of $276 an ounce.

It forecasts a trading range of $270 to $295 an ounce and said further upside was possible, particularly if investment in gold grew.

“Fabrication demand is expected to show further falls but this is expected to be more than matched by a rise in investment and a modest fall in producer hedging,” GFMS MD Philip Klapwijk said in an updated 2001 review of the global gold market released in Toronto.

He said a sustained breakout from the trading range would likely be positive, adding: “But this is going to need a much more positive outcome on the investment front - fabrication may not offer much fresh support until the second half.” A substantial change in gold investment was seen in 2001, but this was regarded much more as a curtailment of net disinvestment rather than fresh investment, the survey said.

Total world investment in gold, which includes coin sales and bar hoarding, swung to a positive 235 tons from 61 tons of disinvestment in 2000.

Klapwijk later told analysts and producers that positive investment demand for gold was forecast for the first half of 2002 as security concerns after the September 11 attacks on the US lingered.

There were also growing fears about company credit risk in the wake of Enron's collapse and news that US retailer Kmart is fighting to avoid bankruptcy.

He said the scale of net buying of gold in Europe and North America was not expected to reach 100 tons in 2002.

Fund investments in gold are expected to remain modest, he added, with short-term range trading rather than large bets.

Positions are seen to be neutral to long rather than short.

The post-September 11 rush for gold as a safe haven was short-lived, he said.

Gold prices have muscled their way back from historic lows over the past few weeks and were at $285 an ounce last Thursday.

The report said total world fabrication in 2001 fell by an estimated 7% year-on-year to 3 483 tons, largely due to lower global gross domestic product growth and declines in consumer spending.

The biggest losses were in jewellery demand but the steepest proportionate fall of 30% was in electronics, exacerbated by high inventories built in 2000, Klapwijk said.

World jewellery demand fell 6% to 2 995 tons in 2001 as the global economy slowed.

GFMS said the poor macroeconomic picture was seen weakening jewellery demand by about 10% in the first half of 2002.

Klapwijk said a new fashion trend for plain gold jewellery, bigger rather than minimalist pieces, could add support to gold this year.

Producer hedging is expected to fall in the first half of 2002 by a modest 26 tons, GFMS said.

Hedging added to demand for the second consecutive year in 2001 with a net decline in the outstanding position of an estimated 101 tons from 2000, due to widespread producer currency depreciation against the US dollar and ongoing caution.

“Shareholder pressure should keep the lid on hedging and we expect that pressure to continue,” Klapwijk told analysts.

GFMS said official sector net sales, which in 2001 were almost unchanged at 468 tons, were expected to remain stable for the first half of 2002, with net sales forecast to fall just 10 tons from last year.

World gold production in the first half of 2002 was seen down by three tons, with output for the entire year expected to rise by just under 1% from new mine production and expansions of existing mines.

In 2001, total production rose less than 1% from the previous year to 2 595 tons.

Global gold production -- Sharefin, 16:47:04 01/22/02 Tue

Top 10 Gold Producing Countries

Totals = 1980 tons down 5 tons on 2000

European Union worried that the Argentine crisis will spread globally -- Donald, 16:44:18 01/22/02 Tue

click here

Wayne Murdy -- Sharefin, 16:42:02 01/22/02 Tue

Newmont Mining's Murdy on Normandy Purchase

Denver, Jan. 18, 2002 (Bloomberg) -- Wayne Murdy, chairman and chief executive of Newmont Mining Corp., talks with Bloomberg's Kathleen Campion via satellite about the company's acquisition of Normandy Mining Ltd. and the gold mining industry. Rival bidder AngloGold Ltd. closed a $2.9 billion bid for Normandy ceding the battle for Australia's top gold miner to Newmont.

(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)

CAMPION: Joining us now to talk about the deal from the Newmont point of view is the CEO, chairman and president of Newmont Mining. He is Wayne Murdy, and he joins us from Denver now.

Wayne, thanks very much, and congratulations on winning the deal.

MURDY: Well, thank you, Kathleen. We still have a little ways to go, but this was gratifying, with today's news.

CAMPION: Let me ask you this. Newmont is leaping from the middle of the pack of gold producers to number one with this ambitious deal. Why are you so bullish on gold, a commodity that's lost half its value in 20 years?

MURDY: Well, as we look at the commodity, there's really some fundamental changes that have been going on for a period of time. Production's clearly going to drop off over the next several years. Demand has been very constant. And with the central banks now having articulated their intentions over the long term, there's a huge overhang that has been lifted. So we're bullish. As we look out over the next two, three, four years, we see gold having a very definitive move in store.

CAMPION: I understand that you said you may unhinge some of Normandy's so-called hedge book, that is gold sold already for delivery in the next few years. That would mean buying gold to cover those contracts. Why is that a good idea?

MURDY: Well, actually what happens is, in gold, when the company hedge, they sell forward, they're borrowing gold from central banks. That gold is then sold into the physical market. The proceeds are used to invest, usually very conservatively, in Treasury bills or something like that. And then, when the gold is delivered from the producer, it's turned back to the central bank. With respect to Normandy's hedge book, it's about 9 million ounces. With the shrinkage of interest rates, the contango, or the benefit of selling forward, has been lost. So as we move forward, we'll deliver that gold back to the central banks. That'll also physically take gold off the market.

CAMPION: So, will you completely de-hedge your Normandy book?

MURDY: Yes. We feel that companies that - that the institutions and investors that buy gold stocks, buy them for their counter-cyclical nature, buy them because they want a hard asset diversifier in their portfolio. And so, we want to give the shareholders of Newmont the full participation in that gold price rise.

CAMPION: Give us a look at the future here, Wayne. Your industry has been very much about consolidation. How far does it go? How many players are left standing in the foreseeable?

MURDY: Well, I think that this is something you have seen throughout the natural resources sector. It's been a little slower going in the gold industry. It's been a very fractured industry. But you're seeing a few large producers emerge. This is normal in a cyclical business, in the downturn, to see that consolidation, the drive for efficiency. Again, this is a transaction where we're also combining with a Canadian company, Franco-Nevada. It's really a three-way transaction. And this gives us a very special company, a very strong balance sheet, high leverage to the gold price movement, that effective - a very cost- effective company, that, at the low gold prices, we can do very well.

CAMPION: OK. And you are going to be the big dog, so to speak, in an industry based on a single commodity. That's a comfortable thing?

MURDY: Yes. We're very comfortable with gold. That is a solid investment, and it has been that way for many, many years.

CAMPION: All right. Wayne Murdy, thank you very much for talking with us today on the deal. You make the No. 1 position in gold mining.

MURDY: Thank you, Kathleen.

CAMPION: This is Wayne Murdy; he's chairman, president and CEO of Newmont Mining.

Swiss CB President says the Swiss franc is too expensive -- Donald, 16:29:35 01/22/02 Tue

click here

Gold news -- Sharefin, 16:20:46 01/22/02 Tue

Dealer Buybacks Halt Gold Slide

Shady Banking -- Tony Gallegos, 11:28:24 01/22/02 Tue

Suppose there was a banking crisis, not unlike the one taking place in Argentina, or the one about to implode
the Japanese Ecomony, and eventually the good ol' USA
banking system. Would anybody care to speculate on what
would happen to the price of Gold ?

Tokyo Tuesday plunge tied to possible K-Mart bankruptcy -- Donald, 04:22:47 01/22/02 Tue

Story includes comments on the renewed interest in gold by Japanese savers

London morning gold news -- Donald, 04:03:47 01/22/02 Tue

click here

Bob Rubin -- Sharefin, 03:57:24 01/22/02 Tue

Rubin Shouldn't Escape Enron Investigation

Hiding What? -- Sharefin, 03:38:55 01/22/02 Tue

Ex-Exec Says Enron Shredded Documents This Month

More on Japanese Gold Buying -- Sharefin, 02:52:05 01/22/02 Tue

Gold Rush
Starts Ahead Of Govt Deposit Guarantee Cap
Tuesday, January 22, 2002

TOKYO (Nikkei)--Individual investors are withdrawing funds from their
bank accounts to buy gold, months ahead of the government's April imposition
of a 10 million yen deposit guarantee cap. Gold bullion sales last month
trebled or quadrupled year-earlier levels, and sales have accelerated this
month. Fueled also by the yen's recent weakness, the domestic gold price has
hit a three-year high, indicating a veritable gold rush. Nonferrous metal
smelter Mitsubishi Materials Corp. (5711) had four times as much retail gold
sales last month as in December 2000, and expects to double December 2001's
figure this month. Bullion trading house Tokuriki Tonten Co. estimates it
had already topped last month's sales as of Friday. Sumitomo Metal Mining
Co. (5713) reports that 80% of phone inquiries for gold bullion this year
have been from new customers. Sharp increases in sales have been seen in
rural regions with traditionally high savings rates. Tanaka Kikinzoku Kogyo
KK group, Japan's biggest bullion seller, reports that sales this month at
its 130 outlets nationwide are in line to rise fivefold from last January's
level. Gold sales in Japan in the last four months of 2001 totaled 21 metric
tons, or 50% more than a year earlier, according to the World Gold Council,
which attributes the increase to insecurity following the Sept. 11 terrorist
attacks in the U.S. The 2001 figure is expected to be the highest in Japan
since the 139 tons sold in 1995, when gold sales were spurred by both the
Great Hanshin Earthquake and the failure of jusen home mortgage lenders.
(The Nihon Keizai Shimbun Tuesday morning edition)

Who will be Anglogold's next Aussie target? --, 00:53:50 01/22/02 Tue

PERTH - Australian punters are betting AngloGold [JSE:ASX] will strike back quickly after its bitter disappointment at losing out on number one gold producer Normandy Mining [ASX:NDY]. There is no question in the minds of investors that the South African gold giant will turn its attention to Newcrest Mining [ASX:NCM].
In early trade on the Australian Stock Exchange today, Newcrest gained 4.59 percent, while its gold-producing peers all retraced gains made last week. But whether AngloGold will have the appetite for a full-on tilt at Newcrest at current prices is another matter. The company is trading at a price-to-earnings ratio (p:e) over 30, almost twice the price of its closest peers. Goldfields [ASX:GLD] is trading at a p:e of about 10, Hill50 [ASX:HFY] at 15 and Sons of Gwalia [ASX:SGW] at 14.2.


The above report was released (Mon), since then both NCM and GLD have risen 5% (Tues)

Who will be Anglogold's next Aussie target? --, 00:52:48 01/22/02 Tue

PERTH - Australian punters are betting AngloGold [JSE:ASX] will strike back quickly after its bitter disappointment at losing out on number one gold producer Normandy Mining [ASX:NDY]. There is no question in the minds of investors that the South African gold giant will turn its attention to Newcrest Mining [ASX:NCM].
In early trade on the Australian Stock Exchange today, Newcrest gained 4.59 percent, while its gold-producing peers all retraced gains made last week. But whether AngloGold will have the appetite for a full-on tilt at Newcrest at current prices is another matter. The company is trading at a price-to-earnings ratio (p:e) over 30, almost twice the price of its closest peers. Goldfields [ASX:GLD] is trading at a p:e of about 10, Hill50 [ASX:HFY] at 15 and Sons of Gwalia [ASX:SGW] at 14.2.


The above report was released (Mon), since then both NCM and GLKD have risen 5% (Tues)

Australia -- Sharefin, 21:23:12 01/21/02 Mon

Australian Gold Conference

Anglogold -- Sharefin, 21:21:55 01/21/02 Mon

Where to next for AngloGold?

AngloGold looks to African mines

SA News -- Sharefin, 21:20:03 01/21/02 Mon

Earnings Surge Forecast for Gold Industry

GOLD company earnings are expected to surge in the December quarter with profit margins at levels not seen in more than 20 years, and already analysts are predicting higher gold company earnings for the first quarter of this year.

The slump in the rand's value has lifted the rand gold price nearly 24% over the prices in the third quarter of last year, leading to drastic jumps in the profit margins of SA's gold companies.

Japan Hot Stocks -- Sharefin, 21:05:14 01/21/02 Mon


Gold producers such as Sumitomo Metal Mining Co Ltd (5713) up on a Nihon Keizai Shimbun report on Tuesday that gold demand is rising as people shift money to the precious metal from bank deposits ahead of the introduction of a so-called pay-off system.

Currently, the government fully guarantees bank deposits when a financial institution fails, but the pay-off system set to be introduced in April would guarantee only up to 10 million yen ($75,340)

WHEN MONEY DIES -- Sharefin, 19:13:26 01/21/02 Mon


Choking on the Enron Pretzel -- Sharefin, 18:16:17 01/21/02 Mon

Choking on the Enron Pretzel

Bank of England official says the pound is "clearly overvalued" -- Donald, 17:21:35 01/21/02 Mon

click here

Silver Cot's -- SteveIS, 14:31:16 01/21/02 Mon

On Monday the POS for comex silver dropped over 20 cents. A reversal of this size would tend to improve the COT report. When the report came out Friday the commercials had added 4000 to their net SHORT position. The POS continued to fall the rest of the week (post the Tuesday report basis). Volume has been very moderate and open interest has dropped very modestly. This suggests a rather substantial short term downside for silver (still very negative COT).

However the lease rates are still showing a tight physical market. The lower price brings out the value oriented buyer. Seems the harder they fight to keep the price from rising the sooner they will lose control!

Argentine mortgage loans swelling beyond calculation -- Donald, 13:43:12 01/21/02 Mon

click here

Japanese bankruptcies surge to highest level in 18 years -- Donald, 13:10:35 01/21/02 Mon

click here

Moody's downgrades 10 major Japanese banks -- Donald, 12:56:15 01/21/02 Mon

Says their financial condition is "grossly inadequate"

BOJ says Japanese financial system faces systemic risk -- Donald, 12:28:37 01/21/02 Mon

Says the condition is becoming "increasingly serious" and could worsen toward the end of March

GFMS figures -- The Cynic, 09:04:20 01/21/02 Mon

Hi Sharefin,Thanks for providing this great informative site that cuts to the chase.Having just read the mining sites article about GFMS predictions

They quote that last year 100 tonnes of forward sales were closed out.As i understand it in the last quarter alone AngloGold closed out 125 tonnes and Normandy another 25 or 30 tonnes.GFMS seems to have understated the figures by a very wide margin,now where have i heard that one before?
I attempted to point this out at their message board below the article but for some reason it does not submit when i hit the button.Maybe someone else might point this out.
Keep up the good work.

AngloGold Bails Out Of Normandy, May Target Newcrest -- Sharefin, 07:47:52 01/21/02 Mon

AngloGold Bails Out Of Normandy, May Target Newcrest

SYDNEY (Dow Jones)--AngloGold Ltd. (AU) said Monday it will raise US$159 million from the sale of its stake in Normandy Mining Ltd (A.NDY), with analysts speculating that the South African company will soon use the cash to regain its position as the world's biggest gold miner.

Now that Denver-based Newmont Mining Corp. (NEM) appears set to win Normandy and its annual output of 2.3 million ounces, analysts said AngloGold is expected to focus on Australian majors Newcrest Mining Ltd. (A.NEW) or the enlarged Goldfields Ltd. (A.GOL).

Further down the takeover list for AngloGold and other international mining houses from North America and South Africa are Sons of Gwalia Ltd. (A.SGW) and Lihir Gold Ltd. (A.LIH) which mines gold on an island of the same name in Papua New Guinea.

In a statement confirming its sale of the 7.11% stake in Normandy, AngloGold said it will "seek to grow value through the acquisition of both individual ore bodies and corporate entities". The sale will strengthen its balance sheet and "put the funds to work".

AngloGold ended its bid for Normandy last Friday, saying the acceptances level didn't justify again extending its bid.

Its announcement didn't surprise analysts as Normandy had consistently favored the rival A$4.4 billion cash-and-share bid from Newmont, which will now leapfrog AngloGold as the world's largest producer with annual output of more than eight million ounces. Newmont also has a deal in place to buy Normandy's 19.9% shareholder, Canada's Franco-Nevada Mining Corp. (T.FN).

AngloGold said Monday it will sell its 159.3 million Normandy shares through a block trade deal with UBS Warburg and also through the on-market sale of a much smaller share parcel through Deutsche Bank, one of its key advisers during the four month fight for Normandy. UBS bought 151.75 million Normandy shares from AngloGold at A$1.95 each compared with Normandy's closing price Monday of A$1.98.

With annual output of 700,00 ounces a year and an open share register, analysts have identified Newcrest as a likely target for the seven million-ounce AngloGold in the near future. It has a current market value of A$1.33 billion.

The one million-ounce Goldfields could also be a candidate but a bidding war could emerge with South Africa's Gold Fields Ltd. (GOLD) which has a 9% stake or Canada's Placer Dome Inc. (PDG) which works alongside the company in the Porgera mine in PNG and the Granny Smith mine in Western Australia.

Newcrest's shares soared 3.9% Monday to close at A$4.76 and peaked at a seven month high of A$4.80 due to speculation it will be a good fit with AngloGold. Both are partners in the Boddington project in Western Australia where AngloGold owns 33% and has said it would like to buy the 22% held by Newcrest.

A bullish report by Credit Suisse First Boston also spurred buying for Newcrest. The investment bank assigned a 12 month target price of A$5.60 and said Newcrest could be worth up to A$16 a share in a takeover fight using multiples evident in the Normandy contest.

"Local peer pricing could imply a target price of A$8.50/share, while global peer pricing suggests the stock could be worth up to A$12.55/share," the CSFB report said.

The broker said AngloGold and Canada's Barrick Gold Corp. (ABX) are likely predators.

"We were able to identify real operational and exploration synergies for both companies with Newcrest, significantly greater than the trivial synergies between Newmont and Normandy," said CSFB. Also helping Newcrest's valuation is its strong suite of assets which could at least double current annual production of 700,000 ounces, it said.

In a recent report, Deutsche Bank said experienced hedgers AngloGold and Barrick wouldn't be deterred by Newcrest's out-of-the-money hedge book which was a negative A$1.09 billion at the end of last year's third quarter.

Goldfields Market Value Soars

Goldfields, which will soon be renamed Aurion Gold Ltd. following its merger with Delta Gold Ltd., ended Monday trade with a market value of A$1.2 billion. The stock ended steady at A$2.65 but has soared from below A$2 a share since its merger with Delta was announced late last year.

The company will be Australia's largest gold miner after Normandy is taken over. There are synergies between the part-owned Granny Smith operations and the adjacent Sunrise Dam project owned by AngloGold, said Frank van Rooyen, an analyst with Macquarie Bank.

But he said AngloGold could face a takeover fight with Placer Dome as the Canadian company would want to protect its interests in Australia and PNG.

Further complicating the situation is South Africa's second-largest gold producer Gold Fields, which could increase its 9% stake in Goldfields, said John Cathcart of Commonwealth Research.

Analysts ruled out A$1.5 billion Lihir Gold Ltd. (LIHRY) as AngloGold's next target as its single mine in PNG wouldn't aid the latter's desire to dilute its political risk associated with South Africa.

Newmont has a 9.7% stake in Lihir and said it "might well" bid for the rest if the battle for Normandy is successful. Rio Tinto Plc (RTP) has a 17% stake in Lihir but analysts think it is a willing seller if a bid comes at the right price for the 600,000-ounce a year company.

Lihir's shares fell 3 cents or 2.3% to close at A$1.29, in line with easier spot gold prices of US$283.35/oz.

Australian Dollar & Gold Bullish -- Sharefin, 07:38:38 01/21/02 Mon

Bullish AUD outlook supported by higher gold prices.

Commodity currencies have been poor performers so far this year.

The CAD sold off sharply last week; the South African Rand has been trending lower, while the Kiwi and Aussie traded within tight ranges, with a weaker bias. However, days of commodity currency weakness could be numbered as in a environment of increasing global investor risk appetite, these currencies should face stronger demand, maybe with the exception of the ZAR, where political issues and the lack of central bank credibility plays a part.

The AUD remains one of our favourite currencies for this year, supported by a moderate equity market valuation, strong domestic fundamentals, rising yield and interest rate differential and relatively strong corporate profitability. The Australian trade sector comprises 27% of GDP and commodity exports make up 46% of total exports, explaining why the AUD is considered a commodity currency. Traditionally, gold and the AUD (TWI) have been highly correlated. From its USD257/ounce low traded in February last year, gold has steadily moved higher reaching USD295/ounce in October from where it has corrected lower. This decline has been triggered by the expectation of heavy central bank selling. Interestingly, last week's gold auction by the bank of England was met with strong physical demand, driving gold prices higher after the auction. Yearly global gold production has been reduced to 2700 tonnes, while yearly Gold demand is 3800 tonnes. Central bank gold sales and commercial bank gold lending have closed the demand / supply gap.

However, central bank gold reserves have been reduced, suggesting central bank gold sales will dry up. Low money market interest rates and volatile and highly valued equity markets have increased the relative attractiveness of gold. In addition, the interest rate spread between Gold repo rates and G-7 interest rates has come down to a multi-year low, supporting gold prices from an alternative investment point of view. Chart 1 shows that Gold shares have already rallied, but so far this has failed to impact commodity currencies. However, gold related equity prices lead commodity currencies by about one year, suggesting that a rally in the AUD, but also the CAD is in the making. Central banks have created excess of liquidity and OECD money supply is currently growing at a rate of 16%, suggesting that an aggressive policy of reinflating OECD economies has set in.

As liquidity is looking for investment opportunities gold might be rediscovered. Gold share prices indicate that Gold is just about to break higher.

Swiss Gold Sales -- Sharefin, 07:35:19 01/21/02 Mon

Swiss SNB Sells 6.9 Tons Of Gold In Latest 10 Days

ZURICH (Dow Jones)--The Swiss National Bank sold around 6.9 metric tons of gold in its latest ten-day reporting period ended Jan. 18, statistics released Monday showed.

The latest sales brought the total disposals to around 428.8 tons since it began selling 1,300 tons of gold from surplus supplies under a framework agreed by 15 European central banks in 1999.

Emetra challenge LME -- Sharefin, 06:30:20 01/21/02 Mon

Emetra challenge

Emetra, the joint venture formed earlier this year between London Metal Exchange ring-dealing member MG plc, Internet Capital Corp. and Safeguard International Fund (MJ, February 18, p.132), is entering into a partnership with Germany's Deutsche Börse group to set up a non-ferrous metals derivatives platform on the internet. London-based Emetra says its goal is to "become the leading marketplace for spot and derivatives trading of non-ferrous metals". As such, the partnership is the first direct web challenge to the supremacy of the London Metal Exchange

LME Crisis & Enron -- Sharefin, 06:28:24 01/21/02 Mon

LME Crisis

Whatever the outcome, Enron Metals, through its earlier purchase of former German metals trader, Metalgesellschaft, is deeply entrenched in the European market place and any change of ownership or restructure would have a significant impact on the market.

Emetra & connections -- Sharefin, 06:23:07 01/21/02 Mon

The Metals Industry Discovers E-Commerce

A very comprehensive site due to be launched during LME week this year (October 9-13) is EMETRA. Originally the creation of MG plc, the largest ring dealing member of the LME, EMETRA will provide an e-commerce trading platform in both physical and derivatives non-ferrous metals, as well as information such as metal news, industry analysis, and reference materials to support the buyers and sellers. Prior to being absorbed by US energy giant Enron this year, MG actually began extending its activities as an LME brokerage to the Internet before teaming up with Internet Capital Group and Safeguard International Fund in February this year to form EMETRA. The site will also provide services to facilitate transactions such as logistics, shipping, financing, insurance and hedging.

However, EMETRA's list of participants does not end there. In June this year, EMETRA teamed up with the German stock exchange to set up a B2B platform to trade non-ferrous derivatives. At the time, Peter Sellars, CEO of EMETRA, said: "We are delighted to announce this partnership with such a prestigious entity as Deutsche Börse. The market know-how that Deutsche Börse brings will be invaluable in developing our derivatives platform. EMETRA's physical platform is on schedule to go live next month and this partnership ensures that EMETRA will remain at the forefront of the e-commerce non-ferrous metals market."

Enron takeover of MG Plc -- Sharefin, 06:01:09 01/21/02 Mon


Enron Spin-off -- Sharefin, 05:57:58 01/21/02 Mon


The Fund joined MG plc (MG plc, subsequently acquired by Enron and now known as Enron Metals) and Internet Capital Group, Inc. to form eMetra Limited to develop an Internet marketplace for trading non-ferrous metals on a world-wide business-to-business e-commerce platform, including physical trading and the trading of futures and options contracts.

Enron Spin-off -- Sharefin, 05:56:08 01/21/02 Mon


Who are we dealing with? -- Sharefin, 05:53:52 01/21/02 Mon

SDS develops a web-based trading platform using Microsoft technology for MG plc, the largest metals brokerage in the world.

SDS Applications (SDS) announces the launch of the first virtual trading platform for buying and selling metals futures over the Internet. The system, has been developed for the world's largest metals brokerage, MG plc, and offers a full London Metals Exchange (LME) trading and execution service designed to make trading on the exchange easily accessible to MG clients worldwide.

The Enron Effect -- Sharefin, 05:44:13 01/21/02 Mon

The Enron Effect

Argentine banks face $105bn loss -- Sharefin, 05:43:07 01/21/02 Mon

Argentine banks face $105bn loss

Odds on Newcrest to be next target -- Sharefin, 00:11:29 01/21/02 Mon

Odds on Newcrest to be next target

There is no question in the minds of investors that the South African gold giant AngloGold will turn its attention to Newcrest Mining. Miningweb also looks at how the rest of the Aussie golds shaped in today's trade.

Consolidation promotes hedge close out -- Sharefin, 00:10:19 01/21/02 Mon

Consolidation promotes hedge close out

PERTH - Precious metals market researcher Gold Fields Mineral Services, has forecast gold producers will pull back forward contracts covering more than 26 tons of hedged gold in the first half of this year. The GFMS report adds more grist to the mill for gold, which has seen a price consolidation this week around the mid-$280s.

Newmont Moving Forward to Create World's Premier Gold Company -- Sharefin, 00:06:33 01/21/02 Mon

Newmont Moving Forward to Create World's Premier Gold Company

Gold hike tipped as battle for Normandy ends -- Sharefin, 00:05:12 01/21/02 Mon

Gold hike tipped as battle for Normandy ends

Silver Chart - 60 minute tick-by-tick -- Sharefin, 00:00:04 01/21/02 Mon

Something to ponder from Midas -- Sharefin, 23:17:01 01/20/02 Sun

It seems to me that the price of gold has been creeping up since the fall of Enron and I've been trying to find a link. Today I read in The Telegraph, Enron: 'crimes were committed' "Meanwhile it has emerged that Sempra Energy of the US is poised to buy the London-based metals trading arm of Enron."

So I do some search to find the Enron Metals company and it's also called "MG Plc" the worlds largest metals trader, then I discover a joint venture called eMETRA.

Extracts from the news article: EMETRA seen posing threat to London Metal Exchange look even more suspicious, "EMETRA, which was founded in February as a joint venture between leading non-ferrous metal trading company MG plc MGA.L, Internet Capital Group and Safeguard International Fund, LP, has made no bones about its goal to wrest supremacy from the US$2 trillion a year LME."

"Who knows more about the LME than Mike (Hutchinson, managing director of MG)? He was on the board for enough years, and MG are one of the largest brokers and they know all the big clients..."

The rest of his report is also excellent with many pertinent points.

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