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Oops - it didn't like my link - So here's the whole banana -- Edlo Traff, 08:43:56 07/22/02 Mon

(copyright Traff/Kitco - 2002)

Mrs Traff brought over a friend of hers and introduced her to me. Then my Mrs, said "Edlo, ya need to talk to talk to her about investing. I tried, to explain it, but I need you to talk to her for me. And she's got a question about her pool"

I said, "Sure darlin, whatcha wanna know"?

The Mrs, gave her friend a reassuring look and then said, "tell her Edlo, why we are investing in gold".

Well, I thought about what I should say. Should I try to discuss with her, the business cycle and explain the findings of my research covering 200 years? Or maybe, I should tell her about dow/gold ratio, PE's, fiat currency and our current record indebtedness?

After considering all these things, I said, “Tell me ‘bout your pool, Doris”!

Doris explained to me that her pool was getting dirtier than usual and those basket thingies weren't picking up many leaves. I asked her if her pressure gauge on her filter was showing anything suspicious, but she didn't know what one was. We called her son and made him run outside to check, and sure enough, that was the problem!

I told her that “every so often, a pool needs to be back-flushed”. After circulating 1000's of gallons of water every day and filtering out dirt, leaves and other garbage, the filters get clogged up and can't do the job any more. “back-flushing” reverses the flow of the water and spits out all that bad stuff that has been buildin up, for so long. I told her we could watch the dirty water coming out through a tube. When the water is clean again, we know we're finished.

She seemed to understand and I talked her son through the process over the phone.

And . . .

Her pool was again working properly with good circulation restored!

Then, she asked me about investments. She said “I've lost so much money in the market, I am even having trouble sleeping at night. And I've done everything that my stockbroker told me to do”.

I began, “Doris, ya know our economy gets backed up too. Stock prices and debt got way too high. There have even been some corporate big-wigs that have been lying to investors. Ya know Doris, every now and then we got to clean out all that garbage as well.”

I told her that I thought we were actually beginning that “Back-Flushing” now. I also told her that historically during these back-flushing times, investments into gold and silver have usually done quite well. I gave her the name of a couple mutual funds as well as a couple of my favorite PM stocks.

She smiled and seemed quite pleased with herself when she said, “This is a whole lot like fixing my pool isn't it?”

I replied, “Yep, Doris, you are right. Sometimes we just need to “back-flush”!

She asked me how long she should stay in PM's. I told her to watch her sight tube. When layoffs have ended and new hirings begin, when some of this record debt has been worked off or dealt with, then it'll be time to “jump back into the pool” again.

Uncle edlo (pool-boy, 2nd class)

Dirty Water -- Edlo Traff, 08:37:32 07/22/02 Mon

(Cause Sharefine id the "graph-Meister" and I picked -up somthin from his sight, I figured I oughta even it out by puttin somthin back)

Thanks Sharefin!

Fiat - no link -- Sharefin, 08:13:20 07/22/02 Mon

World Affairs Brief, July 19, 2002 Copyright Joel Skousen. Partial quotations with attribution permitted. Cite source as Joel Skousen's World Affairs Brief

With the DJIA down over 2,000 points in the past month, everyone connected with this market is having trouble keeping up the facade of proclaiming a "recovery right around the corner." Still, virtually every government spokesperson and private sector stock guru interviewed on radio or TV is trying to pitch the recovery, downplaying the depth and persistence of the current selloff.

President Bush has made two speeches in the past couple of weeks trying to bolster confidence in the economy, but in light of the president's own Harken Energy scandals, he isn't any more believable than Arthur Andersen & Company. Despite Congress' near unanimous passage of the biggest overhaul of accounting standards to date, few expect to see significant changes. The insiders in big business who are immune from the law seem to be everywhere. Federal Reserve Chairman Alan Greenspan also seems to have lost his touch. No longer do the markets respond positively to his old magic pronouncements. Despite recently assuring Congress that the economy was heading for a full recovery, stock markets continued downward that very day by 166 points. Bush responded by attacking the integrity of the market players: "We've got to change from a culture of greed to a culture of responsibility...[but] I'm an optimist about the economy." --So are all the desperate yuppie stockbrokers camped by the money tree on Wall Street, who have a very big vested interest in wishful thinking.

Now that an estimated 60 percent of US households own stock, more Americans than ever are at risk from this manipulation. Most Americans have still not sold their collapsing technology stocks, in hopes of a rebound. Even though the value is gone from many stocks, the full impact has yet to hit the markets. One thing is certain--there is a broadening lack of confidence in stocks that could plunge the nation into a really deep recession.

The Fed has used up most of its options; interest rates cuts, legislative bailouts, and old-fashioned presidential cheerleading aren't working any more. "You don't have too much room to go before you're at zero," said Sen. Paul Sarbanes, D-Md., at the Banking Committee meeting on Tuesday. The Federal Reserve has cut interest rates 11 times in a row, leaving the federal funds rate at 1.75 percent--the lowest in almost 40 years.

While media financial analysts futilely tout the impact of a few positive earnings reports, bad news keeps flowing in. Yesterday, chip maker giant Intel announced another round of layoffs and cutbacks, as did other profitable companies in the high tech sector. Every week it is getting harder to believe the establishment's pronouncements about the recession being over. There still is a lot of excess money floating around in the economy as the Fed keeps pumping up the money supply. But with a falling dollar, the US is finding itself hard pressed to attract the normal round of foreign buyers for US debt instruments and stock shares. The US relies on foreign investment to soak up about 1/3 of US debt. This means that the confidence game must be preserved at all costs. But America's corporate world is now highly suspect on the international stage. It's going to take more than a quick fix by Congress to restore foreign confidence and trust in US accounting practices.

But there is a much more sinister aspect to this story, a tale of government intervention which goes far beyond Federal Reserve rate cuts and confidence-boosting speeches. Today's financial markets are largely manipulated, in a variety of ways. In the first place, as the world is now discovering, large international corporations have long engaged in fraudulent accounting practices to hide debt and overstate earnings--not to mention evade taxes. Secondly, the markets are falsely primed and propped up by injections of fiat money and credit through the Federal Reserve. A true honest money economy would not have allowed the kind of rapid ‘miracle' growth the US experienced in the 90's. Third, the markets are also manipulated directly. Have you ever noticed that the general market for normal stocks has been declining or stagnant for more than two years, and yet the leading indicator stock averages rise and fall with tremendous swings? Why does the high priced DJIA rise in price when the stocks of which it is composed are flat or falling?

This is an indication of intervention by government in the markets--focusing on the key indicators only. The markets run as much on crowd psychology as they do on economic expectations. The government has long since learned that it is usually sufficient to make the DJIA or the S&P 500 stock averages appear as if they are beginning to rise, and the general public will fund the rest of the upswing, jumping on the bandwagon. Much of the direct manipulation of index stocks is done by intervening in the futures markets on large volumes, highly leveraged. Many of these trades take place after the markets have closed--so it's clear that the Powers That Be don't play by the same rules you and I have to follow.

HISTORICAL BACKGROUND: For the past decade and a half (since the October crash of 1987) the US government has operated a semi-secret coalition of private investment firms coupled to the Federal Reserve whose purpose is to intervene in the markets (using public funds or credits) in response to any major downturn. Prior to 1997, there were only rumors to confirm the existence of the government's illegal efforts to fix the markets. But since the market crash of October 1997 when the DJIA dropped 508 points, or 22.6 percent, in the biggest one-day loss in history, the existence of this group has been confirmed and become commonly accepted (and welcomed) within Wall Street. Technically, the government group is called the Working Group on Financial Markets (a.k.a. the "Plunge Protection Team"); the Secretary of the Treasury and the chairmen of the Federal Reserve Board, the Securities and Exchange Commission, and the Commodity Futures Trading Commission are the group's official members. In reality, they just give the orders; the actual intervention is done by a joint group of selected partners from 5 or 6 of the major Wall Street brokerage houses--a quasi government-private sector partnership that is totally illegal.

Understanding this little segment of financial history is important to your understanding of how the illegal side of government operates. Let's start with some background information by John Crudele, Financial Editor at the New York Post:

"Back in 1989 a Fed governor named Robert Heller proposed rigging the stock market. Heller had just left the Fed when he gave a speech suggesting that the central bank should step in and take direct action to keep the stock market from collapsing. The Fed had taken action before. It made sure there was enough liquidity during the crash of ‘87 to keep the system going. It may have even strong-armed a few banks into propping up the market. And it has often lowered interest rates at opportune times.

"But Heller's idea was different. He wanted a more direct approach, especially when the bond and currency markets were becoming uncontrollable [like they are these days]Heller believed that in an emergency, the Fed should start buying stock index futures contracts until it managed to pull stocks out of their nosedive. Essentially, whenever there is heavy buying of these futures contracts it causes the underlying stock market to rise. The futures contracts can be bought cheaply; they are highly leveraged so you can get more bang for your buck, and they eliminate the need for a rigger to purchase, say, all 30 stocks that make up the Dow. Heller explained that the process was simple. And it is. The trouble is, the government never has had authority to rig the stock market." [End of Crudele quote.]

Since when have the illegalities of government action stopped government recently? The Treasury Department decided to act without Congressional authority. As Rex Rogers wrote in November, 1997, the government by that point had the system down pat.

"Black Monday. On the last Monday in October [1997], the Dow dropped 550 points and, to everyone's relief, the exchanges stopped the trading thirty minutes early. If the new rules had not required the halt, it might have been much worse. Is this the beginning of the great crash? If it is, it won't be from a lack of planning on the part of President Clinton, Robert Ruben and the Federal Reserve.

"According to credible sources, it has become government policy to ‘protect' the investment community from the laws of gravity. The government has even admitted as much. Alan Greenspan gave a speech in Lueven, Belgium [site of all the notably policy speeches in the EU] on the 14th of January, this year, in which he touted the Fed's obligation to bail out banks and private financial institutions not just by printing unlimited amounts of money but also through ‘direct intervention in market events' [for which there exists no legal authority].

"S&P 500 Contracts. For a while now, there have been rumors among traders that the US government was stepping into the market from time to time to purchase S&P contracts. The obvious reason was to thwart short sellers and stem possible panics. The rumors [now known to be true] held that the government was buying S&P futures contracts through the good offices of Goldman Sachs, the firm once headed by Treasury Secretary Robert Ruben.

"If true, many people must have known about it. Everyone who did would be in a position to profit dramatically by purchasing the S&P futures in the full knowledge that the federal government was poised to intervene in the market to guarantee the profitability of their trades. [Every one of the insider brokerage firms did just that and profited handsomely. Outside these insider-connected companies, others who have direct access to Stock Exchange computers have developed programs to track these insider trades and tag along.] Under those conditions, anyone could trade S&Ps as profitably as Hillary Clinton did cattle futures.

"But I was skeptical. After all, such activity would (or should) require congressional approval. Also, if short selling is a legally sanctioned activity, wouldn't it be highly illegal to secretly intervene with public funds on behalf of the longs and ignore the rights of the shorts? [Good questions, and no one else is asking them--not the courts, not Congress, not the General Accounting Office watchdogs.]

"But seeing is believing, and now I'm convinced its true. The next morning after Monday's big 550 point break, I, and everyone else trading S&Ps witnessed a most remarkable event. It must have been the most blatant display of market manipulation in the history of Wall Street. Or at least the biggest and most public. In spite of this, to my knowledge, not a peep was made by the establishment press.

"The tip-off was the ‘timing' of a dramatic rise in the premium (number of points in which the S&P contracts were trading in excess of the value of the underling stocks). I have traded the S&P for years and I've never seen anything like it. The average ‘fair value' of the premium that day was 600 points. Exactly six minutes before Bill Clinton was to address the market crisis on television, the premium rose almost instantly to 3,500. This was undoubtedly caused by the concerted purchase of what had to have been at least a billion dollars worth of S&P contracts.

"The Computers Blinked. The strange thing is that it almost failed to work. Normally, anytime the premium rises just a little bit above the fair value, computers which are programmed by the arbitrage investment groups automatically enter orders to sell the overvalued contracts and simultaneously enter orders to buy the undervalued stocks generating an automatic riskless profit. But this time it didn't work. At least not like it should have. The premium rise was so fast and so big that, evidently, the fail-safe systems kicked in whereby the computer didn't believe what it saw. [He is wrong here. Computers don't act that way. Someone intervened to stop the programs from functioning.]

"Under these conditions, it stops trading and calls a human to see what is wrong. When I saw the 3,500 premium, I thought the same thing. Some kind of computer error. I immediately looked to see if the stock prices were rising, and they weren't. Dead in the water! I looked up at the TV, saw Bill, and it dawned on me. It was Slick Willie doing what he does best. Blatant manipulation of the highest order.

"I jumped in and made a very good profit. A lot of other traders did too. Of course Hilliary and Craig Livingstone were way ahead of me. But the computers were slower than all of us. It took about a half hour for their operators to override the systems and order the mass purchases of stock that the feds had been counting on. Ultimately, though belatedly, it still worked. A New Bull Market? All things considered, the con was perfect. The back of the would-be crash was broken and the bull was reborn. At least for now. The real mystery is why and how the media keeps mum.[It's called collusion and conspiracy]

"A concerted investigation by the Wall Street Journal, New York Times or Washington Post would surely reveal enough evidence to blow this outrage sky high. This is nothing less than the illegal clandestine tampering with the free market. But like the murder of Vincent Foster, the rigging of Wall Street is a dirty little secret the media establishment would rather not reveal. The American people suffer less from ignorance and more from an illusion of knowledge." [End of Rogers quote.]

In reality, the press was already in on the fix. Clear back in February of 1997, Brett D. Fromson, a Washington Post Staff Writer, had written the first major media story on the Plunge Protection Team, in an article of the same name. The government had obviously leaked the story to the Post in order to prepare the markets to look to government help when the next crisis arose. The article mentioned nothing about the government's lack of authority to fix the markets, and no one with any authority uttered a word of protest. It appears that what we are dealing with is more than just a fix in the stock market. Clearly the Powers That Be are trying to stave off a collapse, for now. Whether or not they can, given the market's tremendous downward inertia, remains to be seen.

Fiat -- Sharefin, 07:55:32 07/22/02 Mon


LONG TERM TRENDLINES BROKEN... Last week, we talked about several key market averages challenging 20-year up trendlines. Unfortunately, several were broken this week -- mainly in the NYSE and S&P 500 Indexes -- as shown in the chart below. This pretty much confirms that the "secular" bull market that started in 1982 has ended. That means we are now in a secular bear market -- which is usually much worse than the "cyclical" bear markets we've been used to for the past two decades. Notice that the price scale on the right is logarithmic, which means that it is based on percentage changes. That's why the scale gets squeezed as the numbers get higher. This differs from the normal arithmetic scale where each price increment is given equal weight. The reason we're showing this chart is because log scales are preferable for spotting long-term trend changes. And we certainly are seeing one -- to the downside.

Fiat -- Sharefin, 06:28:54 07/22/02 Mon

Banking System in Trouble?

Gold -- Sharefin, 06:17:49 07/22/02 Mon

The Short and Long-Term Outlook for Gold

In my entire 7 years looking at stock price charts I would have to say that Chart 1 below is surely one for the history books. Why? There are a number of reasons. First, note that Chart 1 is plotted on a YEARLY scale. You must wait an entire year just to plot another price bar on the chart! This implies that the oscillator plotted in the upper half of chart one is also only affected just once per year. Clearly this chart has some long-term implications. If you are somewhat familiar with Technical Analysis, then you know that when an oscillator breaks out up above the 20th percentile line, it issues a buy signal. The stochastic oscillator is good for identifying shorter-term buy and sell points along a major trend. However, in the much longer yearly time frame below, it is indicating a new bull market!

Goldfinger -- Sharefin, 06:00:47 07/22/02 Mon

Please note that this forum is a private one & moderated.
It is more for archival of gold news & charts than idle chit chat or opinionated thoughts on the gold markets.
There are many gold forums where you will be welcomed to discuss your opinions but here is not one of them.

If you look back through the archives you will soon see what the theme of this site is for.

Regards Nick

Aldebaran -- Sharefin, 05:55:14 07/22/02 Mon

The codes are correct ie
Trouble is that the Yahoo servers won't give out historical data on these quotes.

This is the code that no longer works

They used to but now no longer do.
The same thing happened to the JGOL prior to them closing it down.
The guys running the Yahoo servers have the ability to turn on & off certain features and they have taken a disliking to gold.

Just like the way the JGOL - XGO - TGL were removed.
Nothing suspicious but collectively it looks like collusion.

This is only a test. -- Goldfinger, 23:43:01 07/21/02 Sun

If this test succeeds ya'all may have da benefit of my expertness.

re:Also Yahoo removed spot quotes AG/AU/PL/PT -- Aldebaran, 22:57:14 07/21/02 Sun

These urls are working for me, are these what you were looking for?
Best Regards

Periodic Ponzi Update PPU -- $hifty, 22:42:14 07/21/02 Sun

Periodic Ponzi Update PPU

Nasdaq 1,319.15 + Dow 8,019.26 = 9,338.41 divide by 2 = 4,669.20 Ponzi

Down 359.81 from last week.

Is that a Caribbean tune I hear coming from Wallstreet ???

!!! " Everyone ready to Limbo ?" !!!

How Low can you go?

Thanks for the link RossL

Go Gold


Gold -- Sharefin, 19:52:51 07/21/02 Sun

Gold, real estate lure investors from stocks

Falling stock prices, investigations of corporate deceit, and money market funds that yield little more than inflation have pushed investors to real estate and precious metals as a shelter for their cash.

More Americans are seeking the comfort of precious metals as well. This week, a banker bought 1,524 one-ounce American Gold Eagle coins, worth about $500,000, says Michael Kramer, head trader at Manfra Tordella & Brookes Inc., a metals dealer in New York.

''One guy is buying 200 to 300 ounces of gold a week,'' Kramer says. Many people started picking up bullion at below $300 per ounce earlier this year, he says, so ''it is the first time in years that somebody has been able to have a profit.''

At FH Coins & Collectibles, a dusty, standing-room-only shop crammed with old porcelain and crystal as well as coins on New York's Upper East Side, owner David Heller says people are calling up or walking in off the street three out of five days a week and asking how to buy gold. Usually, he sells them American Eagle, Canada Maple Leaf, or South African Krugerrand coins.

''A year ago, you couldn't give it away,'' he says. Gold, which doesn't pay dividends, was trading below $300 an ounce and ''you couldn't interest anybody in buying.''

Demand at his shop now is almost as strong as it was in 1999, when investors hoarded gold on fears that the arrival of Jan. 1, 2000, would cause computers to malfunction and throw business into chaos. ''With everything going on in the economy, people want something substantial,'' he says.

Gold -- Sharefin, 19:35:57 07/21/02 Sun

Gold At 4-Wk Highs, Due Higher

However, any additional equity market weakness is expected to push gold higher again and allow for a retest of recent resistance around $327 and June's high of $330.

Leonard Kaplan, president of Prospector Asset Management, said that with the equity markets and dollar expected to register further declines over the coming months, gold is well poised to make another sustained push higher and target the $360-380 area by the end of the year.

Gold -- Sharefin, 19:34:15 07/21/02 Sun

SA Government's Bald Mining Lie Exposed

The SA Ministry of Minerals and Energy has contemptuously fobbed off requests to justify a claim that less than 1% of mining ventures in the country are "black" owned. Communicating through journalist cum spin doctor David Barritt, Departmental officials told Miningweb to do its "own calculations".

Gold -- Sharefin, 19:32:21 07/21/02 Sun

Gold regaining former glory as a safe haven

"Gold did not do well in the stock market bubble. But now that it has deflated, gold has returned as an asset class and as a reserve," said John Ing, president of Maison Placements Canada in Toronto.

Fiat Gold -- Sharefin, 19:21:15 07/21/02 Sun


A sharp rally in bullion prices has helped gold stocks shine a glimmer of light through the dark mood gripping the local stock market.

Fiat Gold -- Sharefin, 19:17:15 07/21/02 Sun

Standard Bank offers gold plan

Standard Bank Offshore has introduced a capital guaranteed product linked to the price of gold and with a 12-month lock-in period.

Lenny's Corner -- Sharefin, 19:14:59 07/21/02 Sun


The external macroeconomic changes in the financial world seem certain to propel gold and silver higher. On Friday, the US trade deficit set yet another record at 37.6 Billion USD, up 4% from last month and is demonstrating that money is flowing out of the US at an increasing rate. The stock markets in the US continue to collapse at breath-taking speed as disenchantment begins to grow among investors. And, most importantly, I do not expect these trends to change. I look for the USD to continue to lower prices and for the stock market indices to continue their incredibly vicious bear market. One can tell that the declines of the markets still have a way to go, over the longer-term, as investors are, incredibly, still rather confident that the bull will be resurrected soon. All the advice one hears on CNBC and from the financial press is that this is just a correction, soon to be over. Please note that if the stock market indices are lower this year, which is almost a certainty, we will have seen a bear market for 3 straight years, not seen since 1939-1941 (the beginning of WWII) and for three years during the Great Depression of the 1930's. To say that this is a correction is simply more disinformation and lies from the Wall Street firms.

To get off on a tangent, I see the stock market as doomed. If one believes, as I do, that markets have more to do with psychology than reality, that perception is more important than facts, then certainly investor psychology will only worsen as events unfold. Pardon the language, but you are only a virgin once. Confidence and integrity, once lost is impossible to regain. First, investors learned that some of the Wall Street analysts were simply shills and touts, without integrity or any prescient ability in the market. Secondly, investors were shocked to hear to learn of the fraudulent practices of some accounting firms, who completely shirked their responsibilities to uncover corporate misdeeds, and who were happy to conspire with corporate management for the benefit of a large fee. And then, you have news of corporate scandal after corporate malfeasance hitting the markets. Add to the recipe the fact that, since early 2000, the DJIA is down about 32%, the NASDAQ down 81%, and the S&P's down almost 50%, and one can sense that all hope is gone for a vibrant long-lasting recovery. Even if the economy begins a substantive turnaround, the damage has been done to the equities markets. Confidence has been destroyed.

As the economic and investment cycles change, from a complete worship of "paper assets" from the 1982 to 2000 era, to a beginning desire for hard assets, investors will begin to seek refuge from the cataclysm in other markets and will buy the precious metals. This process is still in its infancy as such paradigm shifts in psychology take a whole lot longer to take hold than one would think. But, we are seeing recommendations for the purchase of gold from respected analysts that would have seemed impossible in years past. Last week, Morgan Stanley's global strategist, Mr. Barton Biggs joined the goldbugs, in years past thought of as the lunatic fringe, in recommending gold. In his words, "I have never believed in gold, for all the conventional reasons, but now I am changing what's left of my mind. I think that there is a plausible case that a professionally managed portfolio...could realize returns of 15% real per annum in the difficult environment ahead". Continuing with his quotes, "In a bleak world, gold could beat almost everything else, it certainly is possible that gold can return to its long-term equilibrium inflation price of $500 per ounce".

OK, if that doesn't rock your world, global investment bank HSBC recently published a report on the gold market in which their analyst predicts that gold could have an upside of "$100 to $200". As the mainstream analysts begin to recommend gold, as investors weary of their failures in traditional investment vehicles begin to push some money into the gold market, we could certainly see some excitement, in my opinion. While such analysts may indeed be coming to the party a bit late, better late than never.

The turnaround by Mr. Biggs is attributed to Peter Palmado, chief of Sun Valley Gold, who authored a report that states that it is not the USD that predicts the gold price, but the stock market. Since 1988, the price of gold has had a negative .85% correlation with the S&P's, and since 1994, this correlation has risen to .94%. So, if you are bearish on the stock markets of the world, then it must follow that you are bullish on gold.

Recently, the acclaimed international precious metals consultancy, GFMS, identified China and India as the critical "swing" factors in the silver market. China, being a major seller of late, and, India, being the largest consumer in the world. It is estimated that silver demand in India has risen by over 20% this year. While the prospects of a declining global economy may deter silver prices from rising due to lessening fabrication demand, I would believe that it is probable that silver prices will largely shadow gold prices in the coming year. And the possibility exists that silver will gain a patina all of its own among investors.

Edlo -- Sharefin, 17:58:01 07/21/02 Sun

Thanks - I love drinking & I love drinking with friends.

Cheers to you too.

Thanks Sharefin -- Edlo Traff, 08:26:14 07/21/02 Sun

Thanks Sharefin,

Your post of the Jim Sinclair audio link, was most reinforcing.

I circulated it to my friends and loved ones as well as the "B&G". (I hope you approve)

Though you now hang out in a different pub than I, I still call ya "neighbor" and appreciate havin ya around.

Best to ya pardner,

Uncle edlo (Reachin cross the net to pat ya on your back)

Gold -- Sharefin, 07:11:27 07/21/02 Sun

India 'biggest' swing factor in global silver market: GFMS

An international metal consultancy agency, Gold Fields Minerals Services, has identified India as one of the biggest 'swing' factor in the global silver market apart from China.

"Silver demand in Asia is dominated by a handful of large markets, namely Japan, China, India and Thailand, who collectively account for around 40 per cent of the total world fabrication offtake," according to UK-based GFMS Director Paul Walker.

Gold -- Sharefin, 07:09:30 07/21/02 Sun

It's not too late for a gold fund

Viewed by many as an investment for troubled times, gold funds have been enjoying a shining moment. But if the gold bugs are right, and we are in the middle of a sustained bullion run, it is not too late to play the gold card.
Managers of gold funds are particularly optimistic because, unlike previous bull runs in gold, there appear to be more than one or two factors driving prices higher.
"The Washington Bank Agreement, signed in September 1999, limited the amount of gold that banks could sell back into the market every year, which has boosted confidence in this asset class," said Evy Hambro, who runs an international gold fund for Merrill Lynch.
"Global gold production will also be lower this year and in response mining companies have drastically reduced their dependence on exotic hedging contracts," he added. These, added to the weakening dollar and generally nervous market conditions, mean that gold has particularly strong support.
As a rule of thumb, for every 1 percent movement in gold prices, there is a 3 percent movement in gold stocks. Hambro recommended that investors limit their gold exposure to 5 percent of their portfolio.

Gold -- Sharefin, 07:05:06 07/21/02 Sun

Gold regaining former glory as a safe haven

Gold soared US$6.90 to US$323.90 an ounce yesterday as investors dumped stocks in favour of bullion, a commodity favoured as a safer bet than the weakening U.S. dollar or sinking global equities.

The prime driver was news of a record U.S. trade deficit. The trade gap for May was US$37.64-billion, a 4% jump from April. That points to a further weakening of the U.S. dollar because it shows that money is flowing out of the U.S. at an increasing rate. The dollar is at a 30-month low against the euro.

Then there was the ongoing meltdown of global capital markets. Falling stock prices have sent investors searching for alternatives. The S&P 500 composite index his down 25% this year.

"Gold did not do well in the stock market bubble. But now that it has deflated, gold has returned as an asset class and as a reserve," said John Ing, president of Maison Placements Canada in Toronto.

Mr. Ing believes gold is on track to rise to US$375 an ounce by the end of the year, and continue to climb to US$510 in 2003.

The gold bug has even begun to nip at market watchers who have previously favoured stocks.

"I am changing what's left of my mind," said Barton Biggs, chief global strategist with Morgan Stanley.

"This is a plausible case that a professionally managed portfolio consisting of the metal itself and gold shares could realize returns of 15% real per annum in the difficult environment ahead."

"Gold is becoming a more viable alternative, especially considering low interest rates and falling stock markets around the world," said Mark Rzepczynski, president of John W. Henry in Boca Raton, Fla.

Gold -- Sharefin, 20:30:06 07/20/02 Sat

A must listen report on gold, derivatives & what is coming in the markets by Jim Sinclair.

Jim Sinclair - audio file

ChartsRus -- Sharefin, 11:11:38 07/20/02 Sat

Half my weekly charts are now online.
The rest will follow tomorrow.

Major volatility & mega changes.
Looking forwards it looks very bright for gold.

Charts Online

Gold -- Sharefin, 11:09:13 07/20/02 Sat

Just to clarify what's going on with gold & the global gold indexes.

Across the globe there's four major producing countries and each of these countries had a major gold producers index.
They are;
South Africa - JGOL index
US - XAU index
Australia - XGO index
Canada - TGL index

Well in the last few months three of these indexes have been permanently removed.
The management of these sharemarkets indices have been taken over by either S&P or FTSE and in their opinions we don't need these gold indexes anymore.

S&P have replaced the TGL with the S&P TSX but the history of this chart only goes back a year.

Also Yahoo has removed it's spot quotes for AG/AU/PL/PT

It's almost as though those who control these market indices don't want investors to observe what is currently the hottest sector and to see how it's performing.

Hence my desire to replace these indices to observe the gold bull market with.

The new indices are all Market Cap Weighted and modeled on the former indexes.

They are:




These charts are updated on a daily basis.

Spread the word - let others know what's going on and why and where to find these new gold indices.

Gold -- Sharefin, 10:49:22 07/20/02 Sat

Here's a new gold index to replace the recently removed JGOL South African Index.

Fiat -- Sharefin, 03:51:30 07/20/02 Sat

The ultimate conspiracy charts.

Diagram one

Diagram one

Gold -- Sharefin, 21:03:58 07/19/02 Fri

The seminal gold analysis is in

For investors, gold is the single best hedge against the risk of low real capital returns, regardless of what may cause it: inflation, deflation, dollar weakness, credit, systemic, geopolitical risk, etc., or any combination thereof. That is the power of gold. It often defies investment classification, whether it is cultural or religious, Eastern or Western, ornamental, industrial, or monetary. Yet in an age where there seems to be an infinite supply of consumable commodities from DRAM to bandwidth to cars to money, what defines gold is scarcity."

Cobra -- Sharefin, 20:56:29 07/19/02 Fri

I'm still of the opinion that what is to unfold has only just started & that it's going to be a long time unfolding ie years.

That gold has stood up & allowed others to notice how it reacts is a good sign and more than promising of what's to come.

My swing chart's showing that we're getting close to the end of the current rout & I'd expect a bounce in general markets soon but then comes the real rout and this is when gold should really start to out perform.

The next few weeks I expect will be highly volatile and gold is looking like it wants to shoot the gate.
Whether the masters can control it and get a bounce in the equities is another question.
But then they almost look as though they are loosing control.

A quick mini crash down in stocks next week would be fitting with a bottom - then it's time for a breather before the next wave down.

Now the question is will gold breech $330 during this mini crash?
If so then it's all aboard the gold train.

Here's the latest Dow/Gold ratio chart with the latest reading at 24.76.

Time to hit the Bunker -- Cobra, 17:15:35 07/19/02 Fri

Nick.....we are looking at some serious incomming here,
the bunkers may be the only safe place to be for a while.
The ratio is making some serious moves and those who have made preparations in advance should be able to do just fine.
This is unfolding just like we thought it would, the gold market appears ready to make people sit up and take notice.

BOJ may allow dollar crash -- Giovanni Dioro, 14:20:18 07/19/02 Fri

I re-read my copy of "The Coming Disasters: an Update" published by Dr John Coleman's World in Review (see my 2 posts of July 10).

In it Dr Coleman says that Japan knows that the american consumer is tapped out and is going to abandon the US markets to a large degree and concentrate on developing its domestic markets. Now again it appears that Dr. Coleman's predictions are coming true.

The following article appears on Jeff Rense's site:

"Bank of Japan Governor Masaru Hayami made a shocking public warning July 11 of a coming 1971-style U.S. dollar crisis, the kind which collapsed the postwar Bretton Woods monetary system. "The possibility of a worldwide move to dump the greenback is fairly high," he told a televised meeting of the Japanese Diet. "A deterioration in U.S. fiscal conditions could lead to a weaker dollar," which "could prompt investors outside the U.S. to withdraw assets from the country."

Such blunt statements by Japan's Central Bank, let alone by the highly conservative 85-year-old BOJ Governor, are unheard of.

The recent steep decline of the dollar, Hayami said, "resembles the situation in 1960-1970, when the U.S. government was suffering from twin deficits"--referring to the combined domestic budget deficit and swelling U.S. foreign trade deficit which forced President Nixon to pull the dollar off gold, and torpedo the Bretton Woods system, in 1971. "The U.S. will probably fall into a twin-deficit status again this year," Hayami said.
Bank Of Japan Sees 1971-Style Dollar Crash

Silver -- Sharefin, 08:15:36 07/19/02 Fri

Aug Gold Jumps $7 To 17-Day Highs

Comex Aug gold futures pressed through
resistance Friday around $319 in the form of the converged 30- and 50-day
moving averages to trip resting stop-loss buy orders and hit 17-day highs of
Falling equity markets and a weaker dollar against other currencies were
behind the break higher. Dealers said more gains were expected on any further
stock market and dollar losses.
Resistance was seen at $327-$328 initially and then at $330.

Silver -- Sharefin, 08:13:58 07/19/02 Fri

Rediscovering the gold/silver ratio - pdf file

Gold -- Sharefin, 08:11:19 07/19/02 Fri

Poll: Gold price to keep rising

Gold and silver prices are forecast to rise this year and next while platinum and palladium will struggle to fend off declines, a Reuters poll of leading metals analysts showed on Friday.

The poll of 19 analysts forecast that gold would rally 16% this year to average US$313.27 an ounce in 2002, then gain at a slower rate in 2003 to average $319.75.

Gold -- Sharefin, 08:09:40 07/19/02 Fri

Western Areas closes 1.5 million ounces of hedges

South African gold miner Western Areas Ltd said on Thursday it has closed 1.5 million ounces of its hedge book, leaving its anticipated open hedge positions at 1.9 million ounces over 12 years.

Fiat -- Sharefin, 07:27:57 07/19/02 Fri

This bear is here to stay, Mobius says

Mark Mobius, the Franklin Templeton fund manager and emerging markets specialist, predicts the bear market is here to stay for another two years because valuations remain "out of whack" and investors have yet to reach the point of "disgusted selling."

"It's a bear market that's not going away anytime soon," said Mr. Mobius, the Singapore-based manager of the company's Emerging Markets fund and one of the industry's heavy hitters. He was in Toronto yesterday for the annual meeting of the Templeton Growth Fund, one of the benchmark products of the Franklin Templeton Investments family of products.

Fiat -- Sharefin, 07:02:47 07/19/02 Fri

The Secret World of Banking

All the headlines about corporate disclosures and the need for transparency are sending shivers through the banking industry and its regulators who have always lived in a protected and largely secret world.

Fiat -- Sharefin, 06:59:24 07/19/02 Fri

Who Controls The Federal Reserve System?

Now that we know the Federal Reserve is a privately owned, for-profit corporation, a natural question would be: who OWNS this company? Peter Kershaw provides the answer in "Economic Solutions" where he lists the ten primary shareholders in the Federal Reserve banking system.

1) The Rothschild Family - London 2) The Rothschild Family - Berlin 3) The Lazard Brothers - Paris 4) Israel Seiff - Italy 5) Kuhn-Loeb Company - Germany 6) The Warburgs - Amsterdam 7) The Warburgs - Hamburg 8) Lehman Brothers - New York 9) Goldman & Sachs - New York 10) The Rockefeller Family - New York

Fiat -- Sharefin, 06:52:06 07/19/02 Fri

The Plunge Promotion Team

The Fed and the UST routinely intervene in markets, indeed the Fed was set up to intervene. Bonds, currencies, gold - not to mention oil, via the Strategic Petroleum Reserve, and all manner of agricultural products, through the agency of other arms of government all these are regularly targeted for Governmental price-fixing..

The BOJ, BOK and HKMA openly interfere in stock markets, too, so what's the big deal about any hypothetical PPT activity?

Considerations of constitutionality, while of prime significance to Libertarian concerns about the role of the state, are not the issue here, but the functioning of markets is.

It is a prime tenet of von Mises and the rest of the Austrians that any government intervention in the market serves to pervert it and to pave the way for more intervention, usually to undo the unforeseen and unfailingly malign effect of the first.

Suppressing market activity in setting free and fair prices in exchange is like introducing a necrosis, a financial leprosy, if you will, into an extremity, even a limb, by preventing the unadulterated propagation of those critical market signals which allow the efficient allocation of resources to take place and for production, and hence income, to be maximised.

Just as in the case of a real leper, that lack of feeling, that desensitization allows for injuries and infections to occur without remedy, until, in the end, the victim succumbs to a life of blight, disfigurement and even incapacity.

So if the PPT is truly active - as we suspect, but cannot ever prove - we must draw two profound conclusions;

firstly, that markets are weaker than they seem - with all that lesson implies for traders - and that the short-sighted attempt to circumvent a violent decline is only likely to prolong the agony, while increasing the risk that the misled innocent, as well as the consciously culpable, are put at loss by being inveigled to overstretch themselves as part of the wrong-headed fetish for increased consumption as a panacea for all ills:
secondly, that the retardation of the necessary liquidation of the excesses of the Boom serve no purpose other than to prolong - but not perpetuate - the incumbency of those in positions of power, both governmental and corporate, who have been most at fault in reducing us to our present straits. This is a much more serious hazard to the commonwealth because, while the first is the way to turn a Bust into a Depression, this is the path by which a Depression is turned into a Dictatorship - however disguised in the rhetoric of economic ‘security'.
Rather than a Plunge Protection Team, what we need is the emetic of a Plunge Promotion Team.

Send 'em all to Chapter 11, let God sort them out, and let the entrepreneurs get on with investing scarce capital as best they can to alleviate Man's needs.

Gold up -- WIFFO, 06:41:44 07/19/02 Fri

Houston we have ignition! has finaly moved out of the starting blocks. After a dull week of nerve biting non -action as the dollar and stocks fell around it, gold suddenly decides to spike up. Is this the begining of the end of the charade about value for money, or is it the begining of recognition of what is safe value for money.

Gold -- Sharefin, 06:33:29 07/19/02 Fri


We do not believe investors nor the elitists understand the enormous impact
that China will bring to gold and the precious metals market

This is the most significant event since Americans were allowed to own gold bullion in 1971. We expect China will be a major gold buyer quickly, and will continue to be for years to come. This will be part of China's plan for economic supremacy rather than accomplishing power through war. The sale of dollars for gold would be natural for the Chinese. Gold adds to China's economic power.

That is also why Russia is accumulating gold. Short-term we will experience rising inflation due to the declining dollar, which will cause further dollar selling and more gold purchases. Remember gold is the ultimate currency and all the desperate, surreptitious, devious acts of the FED, Treasury, and gold bullion bankers to suppress gold and manipulate the gold market will be unsuccessful.

As gold goes higher and hedged producers get margin calls on their hedge positions, there is a good chance trading will be halted in their shares. Upon reopening we'd expect those shares to move lower. The lenders would then receive Treasury stock for their loans putting them in a controlling position in the companies. This is a good example why you don't want to own shares in a hedged gold producer.

Gold and silver: gold hit a mysterious block ever since last Thursday, when the G8 summit took place. Gold had difficulty keeping its head above water and rallying above highs. A bit of coincidence, eh? The latest round of concerted currency intervention to keep the dollar from collapsing last week failed miserably. In case the market participants playing these games forgot their history, it didn't work in 1995 when the dollar slid off the edge of the cliff and dropped to 79 yen. We don't think it'll work now as account deficits, trade deficits, and budget deficits are four to five times larger than they were then. The massive hang-up on dollars in hands of US investors and foreigners is frightening. If any one of the market participants gets an itchy trigger finger and decides to sell any type of volume, it will overwhelm any intervention we're seeing in the currencies market.

Gold -- Sharefin, 06:30:02 07/19/02 Fri

Gold sentiment index remains bullish

The wall of worry in the gold market remains quite resilient. There thus is no contrarian-based reason to expect gold's bull market to be over.

Consider the latest reading of the Hulbert Financial Digest's gold sentiment index. It measures the average gold market exposure of those gold timing newsletters tracked by the HFD that communicate electronically to their subscribers.

As of the close on Thursday, the index stood at 23.1 percent. That means that the average timer is allocating 76.9 percent of his gold portfolio to cash.

This is bullish because it means that most timers remain skeptical that gold is in a bull market. On all other occasions in recent years when gold approached or exceeded $300 per ounce, gold timers fell over themselves jumping on the bullish bandwagon -- with the Hulbert Financial Digest's gold sentiment index sometimes getting to as high as 90 percent.

Gold -- Sharefin, 06:27:08 07/19/02 Fri

Centaur Mining to be wound up next month

Centaur Mining and its sister company Centaur Nickel, will be wound up next month.

Centaur entered administration early last year when the companies could not meet interest payments to US investors.

A compensation offer from the company directors has been turned down by creditors and administrator, Robyn McKern, says Centaur will be liquidated at the beginning of August.

The groups owe unsecured creditors in Australia more than $80 million and over $500 million is owed worldwide.

Ms McKern says the liquidators will pursue claims against the company directors for insolvent trading.

"In the committee meeting, that we held earlier this week, the creditors expressed extreme disappointment that that's the way it has to go, that they are forced to await the outcome of litigation," she said.

Mr Gutnick could not be reached for comment.

His lawyers have previously denied Centaur traded while insolvent.

May 7-May 11, 2001
On Wednesday gold remained rangebound in the morning, fixing at $265.20 in London. Market talk that failed Australian producer Centaur Mining & Exploration Ltd might be FORCED to close out its hedge book brought the market suddenly to life later in the day and gold surged upwards, reaching above $270 before running into overhead resistance.

May 14 , 2001 :
Centaur has an obligation to deliver gold against a forward contract. But because the company stands to be wound up on Monday, it is FORCED to go to market and buy more than a million ounces of gold at an average $423 a troy ounce in order to close its hedge books.

April 23, 2001 * Robert Chapman:
Australia's Centaur Mining has defaulted on 40 TONS of gold to Chase Bank, yet the media fails to carry the news.

Fiat -- Sharefin, 23:48:10 07/18/02 Thu

Special Report - Corporate Corruption


Fiat -- Sharefin, 23:44:20 07/18/02 Thu

Economist Galbraith sees more corporate scandals

The revelations of corporate deception that have disillusioned investors and left Wall Street reeling come as little surprise to economist John Kenneth Galbraith.

The man who predicted nearly half a century ago that an American prosperity boom would usher in a rise in executive wrongdoing sees more cases as an inevitability that not even better regulation can halt completely.

"This is the crisis of the modern corporate economy," Galbraith, who wrote the best-selling book "The Great Crash 1929" in 1954, said in an interview at his home this week.

As he spoke, accounting scandals and fears about the economic damage they could wreak had crushed major stock market indexes to multiyear lows despite soothing rhetoric from President George W. Bush and other administration officials.

"As long as we have the power of management and the vital communities associated therewith, including auditing and the government, we are in risk of recurrent cases like Enron or WorldCom," Galbraith said.

Just as booms seduce some corporate leaders into bending the rules, business-cycle downturns reveal the rule-breakers, Galbraith wrote half a century ago of the 1929 crash.

"Should the American economy ever achieve permanent full employment and prosperity, firms should look well to their auditors. One of the uses of depression is the exposure of what auditors fail to find," he wrote in "The Great Crash."

"There's a certain parallel in all periods of boom and associated optimism leading on to insanity and recession leading on to a cautious pessimism and those are standard features which nobody wants really to recognize," he said.

"Whatever else human beings, business, the economy can control, the swings -- of optimism to pessimism, from conservative finance to reckless speculation -- have a life of their own. And an untold life nobody can quite predict."

One of the most interesting of those parallels in "The Great Crash" are so-called "incantations" by politicians, economists and authority figures when stocks were plunging.

Fiat -- Sharefin, 23:39:26 07/18/02 Thu

Corzine tied to stock scheme

Sen. Jon Corzine, whose Wall Street expertise plays a key role in Democrats' strategy on corporate responsibility, led an investment banking firm that is being accused of inflating stock prices in the 1990s and contributing to the market crash.

Fiat -- Sharefin, 23:38:16 07/18/02 Thu

U.S. working group has not met to discuss markets

The U.S. government has not convened its top-level working group on the financial markets to discuss the slide in U.S. stocks and does not try to manage the market's daily moves, the White House said on Tuesday.

"They have not met with particular reference to stock market activity because we don't try to manage stock markets' daily movements," White House spokesman Ari Fleischer said of the President's Working Group on Financial Markets.

The group, which includes representatives from the U.S. Treasury, the Securities and Exchange Commission, the Federal Reserve Board and the Commodity Futures Trading Commission, was created after the 1987 stock market crash to promote close cooperation among key agencies at times of market volatility.

There were rumors in European markets on Tuesday that the group might have met to discuss the U.S. stocks slide.

The group typically meets when the markets are disorderly and there are concerns they may cease to function properly, but it can also meet in calmer times to address complex issues facing the financial markets.

The group issued a statement after the Sept. 11 attacks and it was particularly active during the Asian financial crisis.

The Bush administration's decision not to convene the group, unofficially nicknamed the Plunge Protection Committee, may reflect a view that the recent declines in the stock market to its lowest levels since 1997 are not of that order.

Anyone want to buy a bridge?

Fiat -- Sharefin, 23:32:39 07/18/02 Thu

The Cycles of Financial Scandal

America is at a turning point. Corporate scandals, the fall of the stock markets, the sudden mobilizations in Washington of the last few weeks to legislate against some of the more egregious corporate abuses: they all indicate that the nation's attitude toward business is changing. It is potentially a bigger change than many politicians realize. What's unnerving them is that the payback from the market bubble of the late 1990's is becoming apparent to Main Street. The charts of the downside since March 2000 are starting to match the slope of the earlier three-year upside.

Not that it's a new phenomenon. In the Gilded Age of the late 19th century and again in the Roaring Twenties, wealth momentum surged, the rich pulled away from everyone else and financial and technological innovation built a boom. Then it went partially or largely bust in the securities markets. Digging out is never easy. But this time, the deep-rooted nature of "financialization" in the United States that developed in the 1980's and 90's may make it even tougher.

Near the peak of the great booms, old economic cautions are dismissed, financial and managerial operators sidestep increasingly inadequate regulations and ethics surrender to greed. Then, after the collapse, the dirty linen falls out of the closet. Public muttering usually swells into a powerful chorus for reform - deep, systemic changes designed to catch up with a whole new range and capacity for frauds and finagles and bring them under regulatory control.

Even so, correction is difficult, in part because the big wealth momentum booms leave behind a triple corruption: financial, political and philosophic. Besides the swindles and frauds that crest with the great speculative booms, historians have noted a parallel tendency: cash moving into politics also rises with market fevers.

Gold -- Sharefin, 23:29:35 07/18/02 Thu

Japanese housewife guide to investment

Earlier this year Japanese and U.S. television stations carried pictures of Japanese housewives queuing up to buy kilo bars of gold, costing around $10,000 at the time. Their action and subsequently that of investors around the world have resulted in a 15 percent increase in the price of gold since the beginning of the year. February saw a 700 percent surge in Japanese gold imports. Gold sales surged in other markets, too.
Japanese housewives are canny investors. So what is going on, what can they see that millions of us don't -- even after the value of our stock market investments fell more than the price of gold rose over the same period?

Like the rest of us, Japanese housewives have become disillusioned with stock markets around the world. Big savers, worried about the way the Japanese economy is going, the inability of Japanese politicians to do anything about it and the reduction of deposit insurance on bank accounts, they are moving out of the stock market and into gold.

Stock market scandals in the United States, the collapse of the dot-com boom, 9-11, U.S. President George W. Bush's threatening speeches and the Mideast crisis have put investors off the U.S. and other stock markets.

Investors are also worried about falling returns on U.S. Treasury Bills and U.S. bonds, other traditional investment vehicles for Asian investors, as they fear the continuing collapse of the dollar; pulling out of U.S. investment paper makes this a self-fulfilling prophecy.

Investors everywhere are turning to other assets. House prices and prices achieved in auctions for fine art and collectable wine, for example, are moving up in many financial centers. Anything but paper investments is the order of the day. Gold is one winner.

Individual investors have to be really worried about the securities markets and banks before they'll start buying gold either for investment or as an attempt to protect the value of their savings. Gold holdings draw no interest, and there are costs involved in storing it and/or insuring it. So the ordinary people who are currently buying gold in China are saying something about their confidence in the Chinese economy.

Is this vote of no confidence in the Chinese economy worrying people in the government to the extent that gold-market restrictions may be reintroduced?

Reintroducing restrictions on the gold market will not solve the underlying problems that make ordinary people seek escape from stocks and other paper investments. In the last major financial crisis (1989-1990), the people of China stripped shops of everything in their desire to put their savings into something they thought would protect value, causing considerable disruption to the real economy and the financial system.

Gold's availability for investment protects the real economy, although it does nothing to help the financial system and capital markets. Those clever enough to regard gold as a store of value are a small part of the total savings market. The financial system and capital markets must be reformed so that it makes more sense to maintain savings rather than keep gold in a safe. The availability of gold as a safety-valve investment will let those reforms take place on a more orderly basis.

Gold will always be a part of any reasonable investment portfolio. It has after all been a better investment than every major currency since World War II, as Japanese housewives know.

Gold -- Sharefin, 23:21:09 07/18/02 Thu

Barton Biggs goes bullish on gold - pdf file

Gold -- Sharefin, 22:49:09 07/18/02 Thu

Gold is more Summer than swallow - Kebble

There will be a doubling of production from the current 380,000-odd ounces a year to nearly 800,000 ounces a year, all coming primarily from a single shaft, and it will be producing gold at around $125 an ounce. So it will be one of the world's lowest-cost producers.

Production costs this quarter, which were a little bit higher than we would have liked, were about $190 an ounce. So there's going to be a big drop.

In fact, what we've done is that the money which we raised as Part 1 of the derivative transaction - we had a decision whether to go and complete the hedge, which would have given us the cash to pay a large cash dividend to shareholders. Instead, what we decided to do was to use the cash to close out the old hedge book. The $58m you're talking about is the cost of closing Western Areas' old hedge book, which was a direct overhang from the 1996 financing. The market may remember that Western Areas hedged, at that point in time, 8m ounces to pay for the costs of sinking the shaft and developing it to the point where it is today. So, rather than having a company which would have in essence been about 75% hedged over the next period of time, albeit on the basis that we pay out R10 cash plus what shareholders are receiving today, we decided that the R10 that they would have received was already in the share price, inasmuch as we had started to discuss these proposals when the Western Areas share price was 22. So R22, taking R15 out in value, in the moribund equity environment, seemed like a really good idea. Obviously, we wanted to see whether this gold market was a swallow or a summer, and I think we've determined that it's more likely to be a summer than a swallow, which means that we should be looking to improve the equity prospects of the company. Gold equity investors are more interested in companies which have smaller rather than larger hedges - and so we took the view that, rather than paying out a large dividend to shareholders, rather see an improvement in the equity price and distribute Western Areas shares back to the minorities. So, in fact, the cost of this thing has been in applying the first part of the transaction at a time when gold was about $285 an ounce and dealing with an old hedge book, at around $300. So it's not a train smash by any stretch of the imagination. It really puts the company on a sound footing.

If Western Areas was 75% hedged before this transaction, what is it now?

Around 40%.

I think we are going to have to look at the transcript that you've got - a Nasdaq listing, lower hedge book, clean up of the structure, new plant coming into production in 2003.

And 72 years of production, hello.

Gold -- Sharefin, 22:37:37 07/18/02 Thu

Gold's secular run in early stage - HSCB Report - pdf file

Linked from Mining Web

Gold -- Sharefin, 22:36:20 07/18/02 Thu

Central banks have lost incentive to sell gold forward

I think why I took the long-term view is that, if you don't take a long-term view, you get caught in the noise of the day-to-day volatility in the gold stocks. And I thought to myself, the key to any good call on a commodity company is to actually say what's happening in the underlying commodity. And if you look at some of the key drivers of the gold market, and there have been some changes in the last couple of months and in the last year, it's possible to argue a change. For example, the demand-supply fundamentals in gold have been in a deficit, where demand has exceeded supply. For the last few years, that's been in place and you would argue, well, why hasn't' the gold price gone higher, and the reason for that is that the central banks have been selling their gold into the market, and depressing it. Why has that been happening? Mainly it's been happening because of a thing called "contango" where, if you sell gold and take the proceeds that you receive from the sale and put it on a call account and earn interest, there's a positive yield effect - that you earn the interest on the gold you sold, and you benefit from the fact that you paid a very small lease rate to borrow that gold that you sold. Now that interest rates have come down, which is something that has happened in the last year, this contango has collapsed. So basically central banks and gold producers don't have the incentive to sell gold forward.

Gold's secular run in early stage - HSCB Report

Gold -- Sharefin, 22:31:01 07/18/02 Thu

Morgan Stanley "name" backs gold

More famous for punting Japan and other exotics, Morgan Stanley global strategist Barton Biggs is lately a gold bull, and a convincting one.

In a report circulated on Wednesday, Biggs wrote: "…I have never believed in gold, for all the conventional reasons, but now I am changing what's left of my mind. I think there is a plausible case that a professionally managed portfolio consisting of the metal itself and gold shares could realize returns of 15% real per annum in the difficult environment ahead."

A Sun Valley research report written by Palmedo concludes that it is not the dollar that predicts the gold price, but the stock market. "Since 1988 the price of gold has had a negative 0.85 coefficient of correlation with the S&P 500 and an R squared of 72%. As things got crazier since 1994, the negative correlation rose to 0.94, with an R squared of 88%."

Gold's advantage in the current circumstances is that such a tiny proportion of metal is available to the investment market. "Only 18% of the gold mined throughout history is held in investment form, or slightly more than $200 billion. The investable capital markets of the world are estimated to be about $60 trillion. In a low-return cycle for stocks and bonds, monetary and investment demand for gold turns positive, and there is a dramatic shortage of available metal," Biggs writes.

"This large differential can only be solved by much higher prices. The point is that it is not inflation or deflation that is the principal driver of gold, but the return from other long-term financial assets, particularly equities."

Sun Valley's modelling suggests that when capital markets offer a 10% return, gold will slump by 8%, but when capital markets are at par, gold should return 17%. The firm believes the "long-term equilibrium or inflation-adjusted price of gold in today's dollars is about $500/oz, as compared to the current price in the low $300s."

Biggs recommends large funds should have 5% invested in "professionally managed gold"

Gold -- Sharefin, 22:26:16 07/18/02 Thu

Aurion Gold rubs it in

AurionGold seized on the opportunity to bring forward the release of its June quarter production results to deliver further positive news that continued to put a dent in the perceived value of the current Placer Dome takeover bid.

Gold -- Sharefin, 22:24:26 07/18/02 Thu

Gold's upside potential $100 to $200/oz - HSBC

Global investment bank HSBC has published a report on the gold market in which commodities analyst Alan Williamson predicts the bullion price will peak at $350/oz in the final quarter of this year. The bank's London-based commodity research team also says the gold could "potentially…be looking at the most bullish scenario in twenty years", with a potential upside of between $100/oz and $200/oz.

The bullish outlook will be published in HSBC's Senior Gold Book which is to be released later this week and is based on the bank's own currency, general equity and macroeconomic forecasts. It comes as the bank increased its average gold price projection for the year to $313/oz, up from its previous forecast of $305/oz. It expects gold to average $325/oz next year. Williamson says gold's peak will coincide with a "final trough in global equity prices" at the end of the year.

"Into next year prices are likely to be volatile as the positive impact of a weakening dollar and ongoing improvements in supply and demand are at odds with the negative effects of a stock market recovery. Over the longer term, however, the risk to prices remains firmly on the upside," said Williamson.

Interestingly though, HSBC says this upside potential for bullion could be as much as $100/oz to $200/oz if gold benefits from the confluence of a bearish equity market, rising investment demand for bullion and an assertion of bullish supply-demand fundamentals.

"Potentially the gold market could be looking at the most bullish scenario in twenty years. If a more bearish macroeconomic scenario than HSBC expects does eventuate and new supplies deteriorate and investment demand continues to increase, there remains considerable upside to gold prices. With all these planets in alignment the pull on gold would be irresistible. Gold prices USD100-200/oz higher than currently could materialise," said HSBC.

Gold -- Sharefin, 22:21:39 07/18/02 Thu

W. Areas in dramatic gold turnaround

Western Areas made an about face on its restructuring today (18 July) declaring it would not pay out a long awaited cash dividend buy would instead issue shareholders with a cocktail of scrip in major shareholder JCI. This comes amid fears that the company's management may have damaged shareholder exposure to the world's largest gold ore body and possibly the last major new gold mine that South Africa's famed Witwatersrand Basin is ever likely to produce.

The conclusion of what has been one of the longest running revamps in South African corporate history came without the cash dividend which was widely expected to be paid to Western Areas shareholders, who have instead been offered a once-off scrip payout in JCI shares and debentures. Western Areas management have also completed an astounding about-face in their view of the gold market; a change of heart which carries a price tag of around $58 million in hedge restructuring costs.

Western Areas chief executive Brett Kebble said the group had changed its strategy in the face of a weak dollar and a more bullish outlook for gold. He said instead of paying out the dividend to shareholders, the group had decided to spend $58 million on buying back 1.5 million ounces of its old hedge position.

Questions still remain, however, over Kebble's decision only six months ago to take out a new hedge - which is now R850 million in the red - to fund the buyback of an existing hedge. Although it is understood that the original intent behind entering the derivative position was to payout the special dividend, the fact remains that shareholders are now left with a handful of thinly traded stock and debentures in JCI, a resource finance company.

Western Areas on the other hand is saddled with something of a toxic hedge position with runs until 2014. Kebble says Western Areas will not take out any more hedge positions under the current market conditions and will be opportunistic in eating away at the 1.89 million ounce book. The company must also now carry what amounts to a $240 million debt commitment, which management says is the total cost over twelve years of the $103 million loan.

Gold -- Sharefin, 22:03:47 07/18/02 Thu

Blatant U.S. Hypocrisy and South Africa

Manipulation of the international price of Gold

Historically, gold acts as a barometer for financial markets. Since 1995 the gold barometer has been tampered with so its usefulness as a warning beacon has been greatly dimmed. The price of gold and the dollar have an inverse relationship so that when the dollar is strong, the price of gold is usually weak. During the great Wall Street bull market of the 1990's it was an absolute necessity for the dollar to be strong in order to attract and keep huge amounts of foreign capital each month. If the enormous transfers of foreign capital into the U.S. dried up, the dollar would weaken and if the price of gold was to rise, this would be a warning sign to investors to pull out of U.S. financial markets. The hidden agenda of the U.S. Treasury and Federal Reserve has been to keep gold within a tight trading range.

GATA & Gold -- Sharefin, 22:01:53 07/18/02 Thu

Economic Factors or "International Conspiracy" Behind the Depressed Price of Gold - pdf file in Arabic

GATA has achieved a MAJOR press coup. The following
appears today in what may be the most prestigious Arab
paper in the world. In the West, it would be like being
featured in the New York Times. Of course, our Washington/
New York so-called FREE PRESS will not even mention that
GATA even exists. We are talking about 43 months worth of
U.S. press censorship.

Because this is hot off the London press this morning, GATA
wants to get this out NOW, so that the GATA ARMY in London
can pick up copies.

An English translation will follow at the Cafe.

My humble opinion is this: Once the sophisticated Arab world
realizes what GATA has uncovered, they will buy physical gold
with increasing fervor. They will now know what Barton Biggs
of Morgan Stanley knows!

Here is what Walid Ayyash, GATA's contact, has to say about
the story:


Economic Factors or "International Conspiracy" Behind the Depressed Price of Gold"

Under this provocative title, Alhayat, the leading
conservative Arabic newspaper published an interview with
GATA's Chairman, Bill Murphy, in its Issues section that
appears in its international addition of July 19, 2002.
The interview touches on a wide range of topics revolving
around Gold, geopolitics, and GATA's views on the
international conspiracy to keep the price of gold

The interview, which appears here below in English (not
yet available), is certain to create waves in the Arab
Middle East, given the influence of Alhayat, which is
Saudi owned among decision makers in that part of the

The interview is preceded by a brief summary about a
storm that was caused by John Embry, a senior analyst
for the Royal Bank in Canada, in which he supported GATA's
views on the conspiracy to keep the price of Gold down,
the ensuing disavowal by the Royal Bank, and Bill's
response indicating that the report was indeed published
on the RB letterhead and distributed to it's major
clients. The interview takes approximately half a page.

Our future -- wlavio, 22:40:41 07/17/02 Wed

Our future

There is a surprising financial-political and stock exchange bubble created and sooner or later it will burst. Through the means of scandals-illusions, the USA is training the public and investors to lose their financial assets invested into shares of the companies and stock exchanges first periodically and then finally, for the major part.

The scheme is simple, it was developed 16 years ago, and started to work 13 years ago. Asians invented it, but the worldwide spread was not a complete success - we will see who gets lucky and how. There are “bubble” firms created from the budgetary funds, which were taken on a short time (which came back into the budget in time, and then again into the markets) and advertising of their activity is created. Shares are released and through governmental and some social share funds buy for increase of the importance of these firms and ostensibly their activity. And further, more interesting air - these shares of pseudo - issue which participate only in exchange reports, but except the game of air (the federal budget, exchanges, social funds and some banks) they are nowhere legally and officially taken into account. The investors, not knowing about the air, bought them up, that is - they were sold to them, what created free money for different purposes and use, and real dividends. Also the games on exchanges for themselves- risk free game, everything is in their hands, and the income is growing like a snowball, and economic crisises do not matter much at the moment. With these means it is possible to create under the same circuit new companies with new means. The main thing is that this game has a scheme, regulating the air - it is impossible to inflate something with no limits, because in the end, it will not cost and weigh nothing. Therefore it is necessary to remove foam from the big soap bubbles before everything hasn't turn to dust, and keep the system disorganized.
Breaking the small-sized bubbles is useless, as they won't rescue the system. Then the US started with giants, what nearly cost Bush his portfolio, and maybe even life. These are only trial steps of regulating system and desire to keep it only in their own hands as it was distributed chaotically on all markets of the world. Some companies have are tens times more of “air shares” than official amounts.
To return it all in their hands they will start the pseudo-control of all firms - air, playing on exchanges and participating in running games. It will result big losses and tragedies all simple investors, as the others are already in a prize. The most important for them is to clean up potential competitors, which are already for a long time in a prize as well.
How will the financial scandals in USA come to an end? They will not even bypass the countries of Asia. The system would work farther, if the parties and interests would not change. But it is not one kind of air, offered to investors and ostensibly ignorant funds, the saddest thing is, that everybody knows about it. Especially, who approves funds and their rights.
The first scandals will begin after the beginning of checking the double bookkeeping records following the standard cost of shares of 3 companies, which they used several times. That makes: a) they sold officially not fixed shares to small investors; b) they let in the game the shares, which were not designated, existing in the game only during current day for increasing the volume. They manipulate and play on all world exchanges and create their own game without investing any means or shares, and attempt to change games to their own advantage. They also take out means from games and raise the rates artificially, to get rid of them fast. It also caused the falling of the basic indices and gave an advantage to earn more for the future.
Who knows about further development of scandals? And what will focus blind, and hereinafter naked investors their eyes on? To what will the basic investments be transferred and on where have they started to move already? How to beware oneself from false shares?
That is the main question now!
Will it be possible to reduce the air, and who will slip away?


Fiat -- Sharefin, 09:21:59 07/17/02 Wed

Vindication, Complication

Gold -- Sharefin, 00:24:45 07/17/02 Wed

Gold rush history retold in weighty book by collector

Caught in a vicious hurricane in 1857, the steamship Central America went to the bottom of the Atlantic Ocean with more than 400 people and a vast treasure of California gold.

More than a century later, the depths surrendered the gold, more than $100 million of it. It was the end of a long mystery involving the worst peacetime disaster at sea in American history, but the beginning of the story for historian and coin scholar Q. David Bowers.

He's written a weighty book containing an abundance of information about the discovery of gold; how it transformed California and the country; and how the Central America was lost, then found, rekindling a second gold rush of sorts that continues today.

Gold -- Sharefin, 00:18:18 07/17/02 Wed

Placer tipped to lift offer by 20%

Placer Dome might be trying to stare down its takeover target AurionGold, but in current market conditions the world's fifth largest gold company could be staring down the barrel of defeat if it didn't increase its offer by at least 20 per cent.

Gold -- Sharefin, 00:16:04 07/17/02 Wed

Gold Fields positions for share issue

Contrary to recent reports, Gold Fields has not yet pressed the button issuing shares worth an estimated $400 million. But it's likely shares will be offered and here's why.

Gold -- Sharefin, 00:14:08 07/17/02 Wed

Gold insiders reveal all

Extracts are from the record of proceedings at the Future of Gold Roundtable

Fiat -- Sharefin, 00:07:13 07/17/02 Wed


NOW for the really bad news: If the stock market continues to misbehave, it could lead to big difficulties for the already-fragile U.S. economy.

You already know the obvious way this happens. If the stock market goes down, people can't spend as much money on the nice things in life. So all businesses, except maybe the bread-and-butter industries, suffer.

But there could be a more worrisome, back-door effect on the economy. It goes like this:

The problems on Wall Street could cause foreign investors to pull their money out of the U.S.

Foreigners aren't heavily invested in U.S. stocks, but they have substantial holdings in U.S. Treasury bonds.

In fact, America couldn't have run those massive deficits for so many years if foreigners hadn't been willing to loan us money by buying our government's bonds.

Fear of the stock market's performance and potential weakness in our economy could cause foreigners to repatriate their money. If that happens, then interest rates in the U.S. will rise even though the Federal Reserve wants them to stay down.

The Fed controls only short-term rates. In fact, the rate edicts that come out of the Fed's Open Market Committee meetings may allow banks to lend money more cheaply, but they have very little impact on long-term interest rates.

These long-term rates are mainly set by the financial markets. And if foreigners no longer want U.S. bonds, overall demand will decline and rates will rise.

While it's generally accepted that the Fed will not volunteer to raise rates this year, pressure like this from the financial markets could force it to do so. That'll be about the last straw for an economic recovery that's already limping along and that has depended so much on low borrowing costs.

Fiat -- Sharefin, 23:56:21 07/16/02 Tue

US Treasury questions Wall Street's values

The United States Treasury has pledged not to seek policies to support Wall Street, with a top official suggesting the stockmarkets may have much further to fall.

With US sharemarkets suffering their third consecutive year of losses and the Bush Administration under pressure to arrest the crisis of confidence, Deputy Secretary of the Treasury Ken Dam told The Australian Financial Review: "I think that the most important thing in government policy is to be steady, prudent, and show that we're focusing on fundamentals, rather than trying to manipulate markets.'' He added that while the news of corporate misdeeds had damaged stock prices, there was another key factor at work: "I think that there is still this question of valuation. The historical valuation for S&P-type stocks is about 14 times earnings, and we still are apparently a lot higher than that."

This implies US stock prices could still fall much further. The current ratio of stock prices to earnings - a standard yardstick called a price-earnings ratio - of the companies in the Standard & Poor's 500 Index is about 30 times.

To reach Mr Dam's historical benchmark, US stock prices would have to fall by half from current levels.

Told of Mr Dam's remarks, Brian Wesbury, chief economist at the Chicago investment house Griffin, Kubik, Stephens, and Thompson Inc, said: "Wow, that's a major quote.

"It says he thinks the market's significantly overvalued. But to hear them talk as if it's a bubble still, and we just have to wait for it to come back to normal, is kind of frustrating.

"That tells us they have no policy in mind to help the market."

Fiat -- Sharefin, 23:45:35 07/16/02 Tue

Full Disclosure - not B&W - Green

Fiat -- Sharefin, 23:36:20 07/16/02 Tue

Market's late rebound may revive manipulation rumors

Yesterday's late-hour market snapback is certain to rekindle rumors that the major stock market indexes are manipulated at crucial times - possibly with the Treasury or Federal Reserve as a conspirator.

Whether those rumors are true or not - and I believe they probably are - there is no question that yesterday's late recovery did not involve small investors: It was an institutional phenomenon.

The reason that questions will be asked is that market breadth was much worse than the performance of the indexes. For example, on the New York Stock Exchange, losers topped gainers 3 to 1, although the Dow Jones industrial average was down only 0.5 percent and the Standard & Poor's 500 down only 0.4 percent.

The Dow was down 440 at one point; a steep ascent in the last hour and a half trimmed the loss to 45.34.

It was somewhat reminiscent of Oct. 20, 1987, the day after the huge market crash, when stocks were plunging a second day, but suddenly recovered and closed up 100. But losers topped gainers 3 to 1.

It was widely assumed at that time that index futures were manipulated, perhaps with the connivance of the Fed. It worked. Markets recovered.

Fiat -- Sharefin, 23:34:28 07/16/02 Tue

Economist predicts Japan's government debt will implode

The burgeoning Japanese government debt will eventually collapse - one more consequence of persistent deflation.

That's the view of John H. Makin, economist for the American Enterprise Institute in Washington, D.C.

Fears about Japan's dilemma are pervasive: Japan's bout with deflation has caused 13 staff economists of the U.S. Federal Reserve to do a study warning that a central bank should go that extra mile to avoid chronically falling prices.

Because of Japan's corrosive deflation, non-performing loans at banks and insurance companies are increasing more rapidly than the loans can be written off, says Makin. So the Bank of Japan prints more money, while the government issues more debt to pay its bills.

Japan's government debt will implode in one of two ways, says Makin: First, if the central bank creates enough liquidity to bring reflation, interest rates will rise and price of government debt securities will plunge. Alternatively, if the deflation isn't reversed and the government continues to issue more debt, "the outstanding stock of debt will rise too rapidly to be absorbed by Japanese investors," says Makin.

Japanese government debt is mainly held by its citizens. But since government debt is 140 percent of economic output, the consequences could be scary, says Makin.

Fiat -- Sharefin, 06:08:52 07/16/02 Tue

US Treasuries rise early as fear reigns on Wall St

U.S. Treasuries rose in early trade on Tuesday as market rumors of credit problems at a major U.S. bank hit fragile investor confidence on Wall Street, prompting investors to switch from stocks to relatively safe government bonds.

U.S. stock futures tumbled on the market talk of liquidity troubles at JP Morgan, pointing to losses at the opening bell. A JP Morgan spokeswoman in London said the bank did not comment on market rumors.

JP Morgan Chase fell as traders were unnerved by a spate of rumors ahead of the bank's quarterly results due on Wednesday. Its shares slipped to $28.50 in pre-open trade from $30.08 at Monday's close.

Gold -- Sharefin, 05:37:21 07/16/02 Tue

Australian Gold Sector to Invest US$4.24 BLN in 2002/03: Survey

Australia's gold mining industry will spend more than $A7.6 billion ($US4.24 billion) in capital works, new exploration and production activities in 2002/03, almost $A1 billion ($US557.5 million) more than last year.

Gold -- Sharefin, 05:27:50 07/16/02 Tue

Banks are Ready for the Openness of Gold Market

On 8 July, 2002, Hu Chunjiang, thesenior researcher of Bank of China Guangdong Branch pointed outthat all the preparation for banks to act as agents for theinvestors to purchase or sell gold is ready, and the business willopen before the end of this year.

According to the analysis, because of the weak USD, from thisMonday, the investment value on gold presented abruptly.

Hu Chunjiang said that currently, People's Bank of China hasalready approved Industrial and Commercial Bank of China,Agriculture Bank of China, Bank of China and China ConstructionBank to open the individual gold deal business. Bank of China hasdone all the preparation, namely the liquidation system, and thesystem for purchase and sale of resident individual were developedsuccessfully, the training of relating staffs was finished, as longas the Shanghai Gold Exchange opened, the investors couldimmediately realize gold transaction.

Hu Chunjiang also introduced that the form for individualinvestor to invest on gold will be same with the form of foreignexchange, the investors can determine to purchase or sell accordingto the quote price of the banks.

After the openness of Shanghai Gold Exchange, the banks willlaunch two types of gold investment products, one is gold bankbook,which reflects the gold deal according to the capital transfer inthe gold account, the other is the small block of gold, namely realgold transaction. All the resident who possessed current depositsaving account of Bank of China can apply for the gold investmentbusiness.

Gold -- Sharefin, 05:25:58 07/16/02 Tue

Gold prices climb as stock markets tumble

Gold prices climbed on Monday as the dollar lost ground and speculative funds thronged to the precious metal to shield themselves from steep losses in global stock markets.

"The risks of another sell-off in gold are limited as long as equity and US dollar weakness remain a feature of the broader market," said Howard Patten, metals analyst at Barclays Capital.

Lenny's Corner -- Sharefin, 05:06:24 07/16/02 Tue


The crisis of confidence in US corporate governance continues to deepen and worsen as each day brings forth another corporate fraud and scandal. Analysts from Wall Street, independent auditing firms, and corporate executives are now seen as conspirators in a scheme which has quickly decimated investor's portfolios. The change in investment psychology is accelerating, as investors are slowly beginning to realize that action needs to be taken, that their denial of the severity of their losses is now becoming reality. These shifts in public sentiment take a lot longer than one would at first imagine. But the trend is clear.

One forgotten feature of gold is that it is the only asset that is not someone else's liability. As promises are being broken in the financial markets, as expectations of riches are being dashed, investors will inevitably seek an asset that will not break their hearts. Yes, they are willing to accept losses, but they will hunt for an asset that will not lie to them, that doesn't suddenly make announcements of corporate malfeasance.

Proof that we are seeing a shift in investor psychology is, as one might expect, first showing up in the real estate market in the United States. As "paper" assets become less desirable, the very first "hard" asset that comes to the mind of an investor is real estate. Housing prices continue to rise in the United States, and median down payments for repeat home buyers have risen to 25% from 19% in 1999, a clear demonstration that investors are beginning to place more assets into this investment venue. The acquisition of precious metals will take a bit more time, but as we move into the future, the number of investors should rise.

On the economic front, on Friday, the Bush administration said that it expected the federal government to post a deficit of $165 Billion USD this year, due to the steepest decline in tax receipts since 1955. Now, add in the profligate creation of money by the Federal Reserve Board, add in continuing deterioration in equity values with the stock market now in the throes of its third year of sharp declines, add in the lowest USD interest rates in 40 years and the lowest interest rates among the G7, and one could not possibly expect the USD to garner any strength in the coming months and years. As the USD declines, one would naturally expect the precious metals would rise. Yet, another reason that I believe that gold is in a multi-year bull market.

Giovanni -- Sharefin, 05:01:22 07/16/02 Tue

Have a gander at this deceit.

Uncle Sam shown to be king of bad bookkeeping
Lost in all the outrage over the corporate accounting
scandals is one fact politicians do not like to acknowledge: The auditing problems at American companies cannot rival the bookkeeping
disarray of the world's largest enterprise -- the U.S. government.

Exaggerated earnings, disguised liabilities, off-budget shenanigans -- they are all there in the government's ledgers on a scale even the biggest companies could not dream of matching.

Implicit Obligations Bloat Public Debt Ten Fold
What the government owes is ten times larger than official federal debt, according to a new study produced by the National Center for Policy Analysis (NCPA) based on research conducted at the Private Enterprise Research Center (PERC) at Texas A&M University. The reason is a huge unfunded liability in the Social Security and Medicare programs.

"Anyone who has at worked for at least ten years has already earned minimum Social Security benefits and full Medicare benefits, even though the person may not collect those benefits for many years," said Andrew Rettenmaier, one of the study's authors. "The problem is, no funds have been set aside to pay what has been promised." According to the study, implicit liabilities dwarf the official public debt.

As of 2001, the cost of accumulated entitlement obligations owed is $12.9 trillion for Social Security and $16.9 trillion for Medicare.
When combined with publicly held debt in 2001, the total burden equals $33.1 trillion, or more than 10 times the official debt measure-and 3 times the size of the nation's output.

Governments Engage in Financial Trickery
All the attention being paid to private sector balance sheet manipulations is focusing similar attention on the efforts of governments around the world to hide public debt.

Social Security and Market Risk

How Secure is the Stock Market? With revelations about WorldCom and Enron dominating the headlines and the Dow's dive last week, it is no wonder that some are worried about saving retirement money in the stock market.

Market Manipulations -- Giovanni Dioro, 04:11:40 07/16/02 Tue

Manipulation in the Silver Markets

George Bush is a liar. He is not serious about cleaning up the markets or he would clean up his own house first. If you want to find bogus accounting, look no further than the bogus CPI numbers which is so subjective with a downward bias it ain't even funny. This tends to do several things. It keeps wage demands down. It lowers the amount the govt has to pay on its inflation-indexed debt. It overstates GDP because it is under-adjusted for inflation.

For example, a VCR goes from a 2-week to a 4-week pre-record, so they say the VCR became cheaper even if it rose in price just because it improved in performance.

How about the rise in the price of steak? Well, the govt statisticians will just throw out steak in the index and put in pork because when people can't afford steak due to inflation they will be forced to eat pork.

Remember when the price of oil tripled a couple of years ago. Well that was just a temporary thing; prices would go back to $12 eventually, so they claimed. Moreover people would carpool and ride bicycles so in fact the price of transportation actually went down, so it seems.

So the charade of see no inflation, hear no inflation continues. But to keep the illusion they have to keep commodity prices relatively low so that it doesn't force all commodities to rise and cause people to lose faith in paper currencies and tend to hoard commodities.

Look at what happened to silver on June 5 of this year. Silver had just broken out of an upward channel. This was very bullish - things were going exponential and silver was heading towards $6 per ounce. So in the evening when the futures markets were very thinly traded, huge sell orders came in which gob smacked both gold and silver.

Obviously if they had wanted to get a good price they would have sold in smaller amounts in more liquid markets. Either these people were stupid and didn't know what they were doing (I doubt that) or they intentionally sold heavily into illiquid markets so as to manipulate the prices lower. Isn't this illegal? Was there any investigation into who did this?

Who stands to gain by seeing gold and silver prices stop their runaway spiral?

First and foremost it is likely the people (banks) who write call options on the metals. They were looking at massive losses if the price of gold and silver continued to rise.

You can see in the chart linked below how silver was forced back into its channel on June 5.

Silver channel manipulation

Email Chatter -- Sharefin, 19:31:24 07/15/02 Mon

Conference on the Future of Gold - PDF File

CPM Group organized a one-day round-table discussion, The Future of Gold, for the International Precious Metals Institute, in June 2002 in Miami.

The debate was extremely interesting, with participants from major gold producers, major jewelry companies, bullion dealing banks, and others providing a range of opinions and insights into the state of the gold market, and the possible future course of this market.

The proceedings of the Future of Gold conference is available at the websites of both CPM Group and the IPMI.

This document is available to everyone, and the IPMI and CPM Group are encouraging people to distribute it, to post it on their websites, and to generally help spread the proceedings to all interested parties.

ChartsRus -- Sharefin, 10:27:39 07/15/02 Mon

Charts Online

Gold -- Sharefin, 10:23:20 07/15/02 Mon

Forget technology -- gold is the future, says top money manager

Investors still haven't fully embraced gold stocks or come to believe in a rally in the price of the precious metal because they remain convinced technology stocks are set to rebound, says a leading U.S. money manager.

Frank Holmes, chief executive of U.S. Global Investors Inc. -- manager of two of the top gold sector mutual funds in the United States -- said all the pertinent indicators, including a fall in the U.S. dollar and cuts in exploration, point to higher gold prices in the months and years ahead.

Gold -- Sharefin, 10:19:11 07/15/02 Mon

End of hedging's golden age?

No longer the flavour of the month - but by no means gone for ever - gold hedging seems to have completed a full circle, and will now only be used under specialised project-specific circumstances.

"Although the hedging era, which has been a significant feature of the gold-mining environment over the past 15 years, has come to an end, the concept will still be used in a far more austere way in certain circumstances, where it is economically viable, but not in the 'exotic' transactions of the past," hedging expert and Virtual Metals CEO Jessica Cross tells Mining Weekly.

Fiat -- Sharefin, 10:11:56 07/15/02 Mon

Asymmetrical Risks - Stephen Roach

Virtuous and vicious circles both have one thing in common -- a tendency toward asymmetric risks. During the late 1990s, the risks were skewed decidedly toward the bullish side, as financial markets rose to ever-higher highs. In a post-bubble climate, that movie now runs in reverse. The perils of deflation are key in shaping the asymmetrical risks of consumers, policy makers, and the body politic. To the extent we treat this latest sell-off in financial markets as yet another dip-buying opportunity out of the script of the 1990s, we're missing the basic point. In a post-bubble climate, there's a very different set of risks to contend with. In my view, the old rules just don't work any more.

Fiat -- Sharefin, 10:01:00 07/15/02 Mon

Is a "Triple-Digit Dow" Inescapable?

The biggest grizzly in the market today may be Bob Prechter. His latest book, Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression (John Wiley & Sons, $27.95), is riding atop's list of best-selling business and investment titles. It describes a truly horrible future for financial markets and society.

Anyone who doesn't recognize Prechter's name should know that through most of the 1980s, he reigned as one of the few market analysts with the power to move markets with the prescient calls he made in his newsletter, The Elliott Wave Theorist. So-called Elliott waves were developed during the Great Depression by an accountant named R.N. Elliott. They plot markets and the emotional undercurrents that, according to Elliott, drive them.

Q: So you see a crash as imminent -- is that the right word?
A: I think we're in one now, but we're in the very early stages. The same thing is true of a depression. People say, well, we're not in a depression, and there are no bread lines and all that. But those are symptoms of the end. And the time to understand what's coming is closer to the beginning, and that's where I think we are.

Q: Do I understand your whole scheme correctly as a deterministic one? That there's no way out -- we have the cycles, the waves, and the waves are going to come regardless. We may not know the extent of the waves ahead of time, but they're going to come, and there's not much that anyone can do -- you've just got to stay out of the way of the waves.
A: That's right. The social aspect of waves is unquestionably deterministic. The important thing, though, is that individual behavior is not deterministic. You can use your rational faculty to investigate this phenomenon, realize that you're dealing with social cycles of human behavior, and, A) get out of the way if you're fighting a trend, and, B) use those trends to your advantage.

Periodic Ponzi Update PPU -- $hifty, 22:44:08 07/14/02 Sun

Periodic Ponzi Update PPU

Nasdaq 1,373.50 + Dow 8684.53 = 10,058.03 divide by 2 = 5,029.01 Ponzi

Down -324.22 from last week!

Looks to me like the Ponzi is catching up to the trend set before September 11 and subsequent market rigging.

Thanks RossL for the link!

Go Gold


Gold -- Sharefin, 16:25:23 07/14/02 Sun

Gold can flame out

Gold -- Sharefin, 03:36:04 07/14/02 Sun

Rush to Gold

"Gold is essentially the refuge of last resort now," said Joe Duarte, a Dallas fund manager and author of Successful Energy Sector Investing. "The negative of that is that market history shows that a frantic rise in gold stocks precedes a major decline in the stock market."

Gold stocks are "extremely speculative," Duarte said, "so when people rush to gold it's for one of two reasons: They are truly scared, or they think things are so good they'll invest in gold because it's the last dog to rally. My indicators are telling me that people are getting very scared."

Local gold expert Douglas Silver, president of Denver Tech Center-based Balfour Holdings Inc., was even more blunt in his assessment: "If the world is going to hell in a handbasket, people flock to gold."

The question remains, however, whether the latest gold rush will last.

"For gold, it's the toughest of all sectors to predict where it will go," Duarte said. "But rallies in gold stocks often precede something dramatic happening - like the market crashing."

Balfour's Silver is convinced the market will falter for at least the next few months, so gold will continue to shine.

"Because we're getting multiple corporations surfacing with accounting problems, I think the government will crack down even more, so we're going to see more of it," he said. "I think we're just at the beginning of what will take at least a year to resolve."

Silver -- Sharefin, 03:33:19 07/14/02 Sun

The Significance & Sanity of Silver as Money

This article is about silver's monetary role throughout history, though it should be read as an overview since much more complete works exist on this subject. It is truly impossible to discuss silver as money without mentioning gold's role as well. At times countries have been on a gold standard or a silver standard or a dual standard. My aim with this piece is to encourage readers to consider the role they believe silver has in today's economy. Is silver a monetary metal? Is it an industrial commodity? Is it both?

Safety in Numbers? -- auspec, 13:44:15 07/12/02 Fri

I am going to attempt to make an analogy between the practice of dentistry in a method that flies in the face of organized dentistry and our own political/economic minority position compared to the Establishment.
A small, but very vocal group of dentists practice what is called Biologic Dentistry or Holistic dentistry if you prefer, several different names for a totally different perspective of practice. These minority practicioners, for example, refuse to place mercury, a known toxin, into their patients' mouths. Not only that but we provide MUCH information to our patients as well as the general public as to why the mercury is a potential hazzard. Scientific studies, etc, etc. Maybe 10 to 20% of the US practicing dentists feel this way and the numbers are growing yearly as the science continues to come in backing up our position. The dental establishment is run by the American Dental Association, all the way to the dental schools, state boards, and mainstream dental societies. They absolutely hate what these minority and dissenting dentists are doing, to the point of calling us 'self serving' or 'scare mongers'. They have also tended to pick us off one by one when the opportunity has arisen. No room for error when the dental boards can act as judge, jury and executioner. many fine practicioners have lost their right to practice as well as been financially ruined over the years in this present 'amalgam war'.
What has been an answer to safely practicing different from 'our peers'? For you see a dentist is judged in court by how similarly he practices to his peers. My actual peers are dentists with a similar philosophy as mine, but I will be judged by the standard of the 80 to 90%. Do you follow your conscience or the herd? The answer to this dilemma has been a 'safety in numbers' issue. Forming committed 'alternative' dental organizations for like minded individuals. We rely on solid science from peer reviewed scientific journals to back up our positions. The ADA puts out its propaganda rag/journal and it is merely a trade journal, without the highest standards of scientific scrutiny. They spin and twist and outright lie and the vast majority of the dentists believe their crap because they refuse to thoroughly investigate the issues for themselves, simply trusting their 'authorities'.
So we band together, form advocacy groups, legal experts and we defend ourselves tooth {smile} and nail. It's still a risky proposition to practice different from the mainstream, but there is much more comfort now than there used to be with all this backup support. We know history will award us the overwhelming victory. By the way I am also a dues paying member of the ADA even though I receive next to zero benefit for my money. Why? Because they have gone after a significant number more non ADA members over the years than ADA members.

What the hell does this have to do with honest money and markets and speaking our piece wherever we go? EVERYTHING!!
Our Govt is just like the ADA, they love to pick off the straglers or weaker individuals because they know they can get away with it. They have numerous lobbies to answer to and they cannot afford to pick a fight with strong lobbies.
Where are our 'strong lobbies'? Where are our organizations that are willing to fight for our dissenting/minority opinions? Where do we go to find 'safety in numbers', where if one is unfairly picked out the entire organization will respond in strength?
We have all seen our colleagues silenced our at least dampened by legislation that has been brought forth this very year. Freedom of speech stifled, and stifled blatantly. Intimidation. Yet the more that speak out the more each dissenter is safe from harassment and abuse. I don't plan to shut up, regardless of what comes. It's not only my Constitutional rights, but my God given rights first.
Can't exactly turn to the ACLU for much hope or help, they don't serve my brand of tea, beer or rum. Where does one go for a little umbrella protection if such an entity truly exists? Does it exist? Shouldn't it exist? Does anyone else see how helpful this could be and what a void that currently exists? The internet is ripe for such an entity.

Thoughts and comments are much appreciated!

Yappin along,


Gary Scott on the Dangers of US Financial Juggernaut -- Giovanni Dioro, 08:16:34 07/12/02 Fri

Gary Scott's 2 part exposé on the dangers of the global financial markets especially in america:

However, the banking problems run deeper. There is a huge distortion that could create a scandal worse than the U.S. Savings and Loan disaster of the early 90s. America's booming housing market swayed government backed Fannie Mae and Freddie Mac lenders to take greater risks. U.S. house pricing is notoriously cyclical and the drop in Wall Street can push housing prices down. Yet these agencies increased lending 20% per annum and now have 1.4 trillion of debt. Because of their quasi-official status, they have $32 of debt for each dollar of capital whereas large banks have $11.50 of debt per dollar of capital. They are making the same mistakes savings and loans made in the 80s. They are paying officials and staff way above public and most private sector rates. Even worse they are moving into "sub-prime" lending.

Here is the real rub. A dangerous house of cards has been built because these agencies are exempt from rules, which limit banks from holding too much exposure in any one company. Banks can hold all they want of Fannie Mae and Freddie Mac stuff.

Over a third of bank capital in the U.S. is held in this federal agency debt and equity, a highly concentrated risk despite the fact that during the 80s housing bust, Fannie Mae became technically insolvent, though regulators allowed it to keep operating...

Harbors from Danger

Harbors from Danger Part Two

Gary Scott is a very shrewd and respected economic analyst and author. He provides a free email newsletter service which details can be found on his homepage ("homepage" link found in above links)

Gold -- Sharefin, 20:26:14 07/11/02 Thu

The Gold Dealer's Cartel is Running Out of ACES

The supply of gold that has been sold by the gold dealer's cartel has mainly been arranged via gold leases from cooperating central banks to the gold dealers and their preferred clients, probably now themselves. It may well be that central banks, after selling huge amounts of gold via leasing the gold for sale, have come to the realization that there is a credit risk for them in this type of transaction. It is clear to the central banks that the borrowers of the leased gold are NOT the gold producing companies anymore. In fact, that is what I hear. As such, the central banks are lending huge amounts of gold via the lease programs to credit risks without production capacity. Assuming then that my information is correct, central banks will become reluctant to fulfill the ENDLESS leasing wishes of the gold dealer's cartel.

Party -- Sharefin, 20:05:29 07/11/02 Thu

Sharefin's off on a three day break so no news for a few days.

Happy goldbugging....

Gold -- Sharefin, 19:59:14 07/11/02 Thu

Placer, Barrick to be cut from S&P500

Mining giants Barrick Gold [NYSE:ABX], Placer Dome [ASX:PDG], Inco [NYSE:N] and Alcan [NYSE:AL] have been dumped from the New York Stock Exchange's S&P500 index as part of an all-US companies policy.
Removal of the four Canadian-based miners would become effective after the close of trading on July 19, Standard & Poor's reported last night. Netherlands-based Royal Dutch Petroleum [NYSE:RD], which owns 60 per cent of the Royal Dutch/Shell Group of Companies, also got the flick.

"The change puts all S&P500 members in compliance with … current selection criteria, which requires members to be US companies," Standard & Poor's said. Not only that but the elimination of Barrick hands Newmont Mining [NYSE:NEM] the mantle of undisputed gold stock in the US investment playing field. "Turnover in both Newmont (US$33 billion annual turnover) and Barrick (US$28bn) is more than double that of Placer and others," an Aussie analyst said. "The two majors are very dominant in the global gold sector."

Fiat -- Sharefin, 19:49:26 07/11/02 Thu

Placer 'needs' AurionGold deal

Placer Dome needs the AurionGold deal. That's the conclusion of leading securities firm JP Morgan, which says Placer would suffer the consequences on global gold indices if it withdrew from the current takeover bid for the Aussie gold miner.

Notwithstanding yesterday's announcement from Standard & Poor's that it would be dropping Placer from the influential S&P500 index, the Canadian-based gold giant had not enjoyed similar share price uptrends to those of its piers.

"Placer has been a gross underperformer over the past 12 months and has risen a mere 13 per cent (on the Toronto Stock Exchange) versus 36 per cent for the S&P Gold & Precious Metals Index, 173 per cent for the Johannesburg Gold Index, and 72 per cent for the ASX Gold Index (the latter was discontinued as of July 8)," according to JP Morgan analyst, Geoff Breen. Placer's comparatively small gain was the lowest of all the pure major gold producers.

Fiat -- Sharefin, 19:46:04 07/11/02 Thu

Standard Bank London - Market Comment

Light demand out of Tokyo and Singapore met Australian trade selling during Asian hours yesterday. Gold struggled to make any gains during the London time zone, despite deteriorating equity markets and dollar weakness. The Bundesbank President Ernst Welteke repeated that the Central Bank was considering selling some of its gold reserves under a new central bank gold agreement, once the current pact expires in 2004. Good fund buying was reported on the Comex Floor during New York hours as the equity markets continued to struggle. The yellow metal worked steadily higher with trade and locals operating on both sides of the market. Gold slipped lower during the afternoon session in thin trading conditions as funds decided to take profits. Excellent support from the physical market continues to provide a solid base at the $ 310.00 area, with resistance pegged at the $319.00 level from the 40-day moving average. Good two way business was reported in the silver markets yesterday, although unfortunately the white metal failed to make fresh gains to add to the previous day's rally. Momentum still appears to be with the silver bulls, but a slip back below the $5.00 level would most probably attract long liquidation, with $4.90 the obvious target. On the upside, resistance continues to be prominent around the $5.06 level, but a clear break should see silver target $5.25. Japanese Platinum futures rebounded yesterday on short covering, which was attributed to the firmer gold price, but trading in palladium was reported as light.

Fiat -- Sharefin, 19:44:07 07/11/02 Thu


In reviewing these numbers, we found that almost all periods of significant market decline in the past 69 years have contained at least one, and usually more than one, day of panic selling in which Downside Volume equaled 90.0% or more of the total of Upside Volume plus Downside Volume, and Points Lost equaled 90.0% or more of the total of Points Gained plus Points Lost.

Thus, our 69-year record shows that declines containing two or more 90% Downside Days usually persist, on a trend basis, until investors eventually come rushing back in to snap up what they perceive to be the bargains of the decade and, in the process, produce a 90% Upside Day (in which Points Gained equal 90.0% or more of the sum of Points Gained plus Points Lost, and on which Upside Volume equals 90.0% or more of the sum of Upside plus Downside Volume).

These two events - panic selling (one or more 90% Downside Days) and panic buying (a 90% Upside Day, or on rare occasions, two back-to-back 80% Upside Days) - produce very powerful probabilities that a major trend reversal has begun, and that the market's Sweet Spot is ready to be savored.

Gold -- Sharefin, 19:42:34 07/11/02 Thu

Comex Aug Gold Hits 7-Day Highs Of $318.30

Comex Aug gold futures stretched to seven-day highs of $318 by late morning Thursday. Increased buying prompted by a weakening in the U.S. dollar and falling equity markets pushed prices higher.

Aug had been constrained over recent days by the relative resiliency of the dollar against the euro, in particular, and was unable to muster much in the way of upside momentum despite the free-falling equities.

However, the equity markets received another pummeling Thursday morning, which turned the dollar lower against the euro, and raised the levels of buy-side interest in gold another notch.

That said, bank selling piled in to the strength to temper the ascent just ahead of 1200 ET, and prevented prices tripping resting stop-loss buy orders assumed to be in place above recent highs.

Indeed, by just after 1200 ET the bank selling had absorbed the weak dollar-induced buying and steered Aug back below the $317 level.

But the dollar weakness unleashed another wave of buyers soon after to drive Aug higher again, attaining the $318 mark by 1207 ET. Further gains are expected over the rest of the session.

Should that be the case, the $320, $322 and $325 levels lie in wait as resistance. Beyond there, the $330 level is targeted, dealers said.


Seems everyone is starting to note the manipulation.

Fiat -- Sharefin, 08:52:54 07/11/02 Thu

White Collar Crime and the Ongoing Economic Depression

QUESTION: Why, why, why, did corporate America and Wall Street resort to creative, deceptive and fraudulent business accounting and financial reporting practices in the mid and late l990s in order to create the illusion of phony corporate profits?

ANSWER: With the hindsight of Enron, Global Crossing, WorldCom, etc., it is becoming increasingly conclusive that Corporate America and Wall Street resorted to deceptive and WHITE COLLAR CRIMINAL financial reporting practices creating phony corporate profits because much of corporate America could no longer earn its traditional real business profits due to an ongoing business and economic depression!


The 'Pregnant Gorilla' is a business and economic depression that descended on the United States during the mid and late 1990s. Major accounting problems involving profits at WorldCom dated at least as far back as 1996. And four years ago in June, 1998, Frank A. J. Veneroso wrote about the economic and corporate problems already created by the 'strong dollar policy". ( Burdened with both debt and a political 'strong dollar policy', increasingly United States corporations could no longer make their historical real profits and corporate America slid into an economic depression. The essence of an economic or business depression is when many longstanding business operating profits become horrendous operating losses. As we now learn, week by week, that is what certainly happened to an increasingly significant portion of corporate America during the mid and late 1990s. THE 'SMOKING GUN' PROOF OF A REAL ECONOMIC DEPRESSION IS IN THE SECRET TRUTHFUL FINANCIAL STATEMENTS OF CORPPORATE AMERICA.

Gold -- Sharefin, 06:18:24 07/11/02 Thu

Japan's top gold retailer records 300% jump in sales

Japan's top gold retailer said Thursday its gold ingot sales posted a 3.2-fold jump in the six months to June as investors sought a safer haven for their money amid economic uncertainties at home and abroad.

Gold -- Sharefin, 06:17:12 07/11/02 Thu

Peru find Barrick's 'best'

'Certainly got a nice one': Doubles gold estimate at project to 7.3 million ounces

Peru deposit boost for Barrick

Barrick said yesterday that an intensified drilling programme at the deposit produced an "inferred resource" of 7.3m ounces of gold, which is up from the 3.5m ounces estimated in April.

Gold -- Sharefin, 06:15:34 07/11/02 Thu

Barrick tries to sidestep S&P500 eviction

True to form, Barrick did not take the loss of its S&P500 membership lying down. Simultaneously with the S&P news, Barrick announced a conference call to detail the doubling of resources at the Alto Chicama district in North Central Peru.
Even though Barrick would have preferred to spice up the second quarter results with the Alto news, it was a fine antidote to S&P's decision to keep its high profile index local. Canada bore the brunt of the decision and its resources sector will be especially hard hit by the eviction of Barrick, Placer Dome, Alcan and Inco.

The companies can expect a dip in stock prices over the coming days as global tracker funds jettison them in favour of the incoming companies. Tracker funds mimic indices so that investors can be assured of never under performing, although they're also assured of not out performing either. According to Merrill Lynch estimates, about $850 billion is tied up in S&P500 tracker funds.

It is ominous that not one of the substitution firms is from an extractive sector and that will weigh further on resource stocks as a category, simply by making them less visible to the broader market. But the weight was greater and more immediate for the deported Canadians.

Gold -- Sharefin, 06:10:33 07/11/02 Thu

Japan scientists develop long-lasting catalyst

Japanese scientists have developed a new type of catalyst for pollution-control systems in cars that promises to prolong efficiency and slash precious-metal usage by automakers, the journal Nature reported on Thursday.

As a result, carmakers will be able to cut palladium use by more than 30 percent, domestic media said.

The research spells good news for global automakers, which have long been seeking to reduce their dependence on the white metal amid erratic supplies from Russia, the world's top producer.

Gold -- Sharefin, 06:07:44 07/11/02 Thu

Gold leader set for e-transacting

Gold leader AngloGold has completed its integration projects with Quadrem in the South African region and is now transacting with sellers, the global mining, minerals and metals eMarketplace announced yesterday.

Quadrem is the eMarketplace for the global mining, minerals and metals industries that is revolutionising supply-chain processes and offering unrivalled benefits for sellers and buyers.

Gold -- Sharefin, 06:06:22 07/11/02 Thu

Gold promotion becomes a big hit

The Double Chance Gold promotion is giving away a kilo of gold in weekly draws. Taking place every Thursday evening at the Gold Souk, the draw has proven to be a big attraction for shoppers.

Gold -- Sharefin, 06:04:34 07/11/02 Thu

Gold price rallies on jittery markets, dollar

"The correction in gold has run its course and we expect gold to trade higher, targeting the recent high around $330 an ounce," said John Reade, metals analyst at UBS Warburg.

Gold -- Sharefin, 06:03:33 07/11/02 Thu

Gold hedging here to stay, says expert

A leading commodities risk-management expert has come out in defence of gold-price hedging, suggesting that it will continue to play a role in the gold market well into the future despite current negativity.
Speaking in South Africa last week, ScotiaMocatta MD Steven Lowe, who is based in London, argued that companies with well-structured hedges could protect revenues while maintaining critical exposure to any gold-price upside, and that, in many cases, would outperform non-hedged producers.

He forecast that the pendulum would eventually swing back in favour of hedging, adding that investors were not necessarily seeking maximum exposure to the gold price, but rather exposure to well-managed gold companies.

Gold -- Sharefin, 05:56:27 07/11/02 Thu

Gold Up, Boosted By Japanese Buying

Spot gold rose Thursday in Asia, as Japanese traders bought the yellow metal on a relatively strong yen, traders said.

Japanese trading houses bought spot gold while selling Tokyo Commodity Exchange gold futures, as the yen strength made spot purchases cheaper, said a Tokyo-based trader.

But the lack of further buying, particularly after Asian fabricators demonstrated strong buying interest Tuesday at the US$310-US$311/oz level, restricted gold to a tight trading range, traders said.

Gold market participants are also hesitant to buy, particularly after fund sales capped gold's upside Wednesday, rendering gold incapable of a convincing break of US$317/oz, said the Sydney-based trader.

"The upside is very heavy," he said.

Gold -- Sharefin, 05:53:46 07/11/02 Thu

Merrill Says Its Gold Funds May Rise as Stocks Fall

Merrill Lynch Investment Managers Ltd. said its top gold fund, ranked No. 2 worldwide, may add to this year's 85 percent gain as a weaker dollar and falling stocks rekindle demand for the metal and shares in gold miners.

Merrill's International Gold & General Fund has beaten this year all but one rival fund that invests in gold miners and has outperformed benchmark indexes in Japan, Europe and the U.S. South African miners such as Gold Fields Ltd. and Harmony Gold Mining Co. and Australian rivals such as AurionGold Ltd. make up more than three-fifths of the $1.2 billion in Merrill's gold funds.

Gold is having its best year since 1987, having gained 13 percent so far, as New York's Dow Jones Industrial Average lost 12 percent and London's FTSE 100 Index fell 17 percent. Tokyo's key Nikkei 225 Stock Average has gained 0.5 percent this year.

Gold prices were also driven higher this year by mining companies buying back some of the 500 metric tons of metal they sold in advance in 1999 to lock in prices as gold dropped to a 20- year low of $252 an ounce, Davis said.

Demand has increased as a result of the closing of forward sales by the companies, Davis said. ``It represents a major shift in the psychology of the mining industry,'' he said.

South Africa's physical gold production last year fell to its lowest level since 1954, curbing supplies of the metal.

Gold -- Sharefin, 05:48:16 07/11/02 Thu

No neat pattern can explain the fortunes of gold

There have been six gold price cycles since the price of the precious metal hit an all time high of $850 per ounce in January 1980. That peak came after the US abandoned the gold standard in August 1971 - when the dollar was pegged at $35 an ounce - and mainly reflected mounting investors' concerns during the 1970s about inflation.

Somewhat surprisingly, however, research undertaken by Straszheim Global Advisors, the Santa Monica, California-based investment advisory firm run by Donald Straszheim, Merrill Lynch's former chief economist, suggests there is no common denominator to subsequent gold price spikes.

The Straszheim research is significant because it suggests that it is almost impossible for investors to anticipate a gold price rise such as the recent rally, which has seen the price of gold rise by 28 per cent from a low of $255 in April last year to $327 early last month.

This guy never looked at this chart:

Gold -- Sharefin, 05:42:39 07/11/02 Thu

Swiss SNB Sold 8.9 Tons Of Gold In Period To July 10

Gold -- Sharefin, 05:38:50 07/11/02 Thu

Is gold the 'Internet stock' of the moment?

It's not surprising that a new poll shows 55 per cent of Canadians have lost confidence in the stock market and would rather put their money into real estate or gold. Not surprising, but sad, because they are repeating the same thoughtless reflex that got many of them in trouble in the first place.

Fiat -- Sharefin, 05:30:22 07/11/02 Thu

Foreign Investors, Get Ready To Be Paid Back In Cheaper Dollars

Well, it looks as though the fix is in. Greenspan has gotten the go-ahead from none other than his unbiased staff to step up US inflation. I am referring to the recent Fed staff study that everyone else is referring to these days, "Preventing Deflation: Lesson from Japan's Experience in the 1990s." One of the conclusions of the study is that when inflation gets closer to zero, the odds of deflation increase. Duh! If a price index is exhibiting no growth, then, of course, it is more likely to contract a 1% than if it were initially growing at 6%. The study goes on to speculate that if interest rates also are near zero when there is price-index stability, then monetary policy could be rendered impotent if deflation should occur. Why? Because with nominal interest rates at zero and accompanied with deflation, then the Fed would not be able to lower "real" interest rates. This is the conventional wisdom. Of course, the Fed could crank up the money printing presses, even at a zero nominal interest rate, and create more inflation. This would lower the real rate of interest even with a zero interest rate.

But the last comment is mine, not those of the study's authors. And it is the comments of the authors that Greenspan wants to hear. Now, judging from the nearly 8% year-over-year growth in M2 and the rise in commodity prices, as shown in Chart 1, there is little reason to be concerned about deflation here in the US of A. But, because we are the biggest net-debtor nation in the world, deflation could beget more deflation as it would make it more difficult for us to service our debt. So, as net debtors, we Americans want inflation, not deflation. And Greenspan aims to please us now, just as he did when he created the credit to inflate the stock market.

I said that we are the world's largest net-debtor nation. Chart 2 shows that the rest of the world now owns almost 12% of our total outstanding debt - up from less than 2% thirty years ago. When foreign creditors - and domestic ones, too -- get wind of Greenspan's intent to lower US inflation-adjusted interest rates, which today are only 0.55% in terms of the fed funds rate -- by stepping up US inflation, how do you think they will react? My bet is that they will run to the currency that will give them a positive inflation-adjusted return on their short-term money. And if all central banks join in with the Fed in pushing inflation-adjusted interest rates into negative territory, then there always is gold.

Fiat vs Gold -- Sharefin, 05:27:55 07/11/02 Thu


There has been a lot of talk over the past year or two about "the bear market," how long it's run and the damage it's caused etc. Well, if you think what we've seen to date is a bear market, I've got news for you:- it's BEARly begun - you ain't seen nothin' yet!

Take a look at the long term 10-year S&P500 chart below and you will see that this index is just completing a massive 5-year long "Head-and-Shoulders" top. This is a large, clear formation which has major implications. The rule with these patterns is that the fall which follows a break of the neckline, shown as the almost horizontal line on the chart, will at least equal in extent the preceding decline from the absolute top to the neckline, as measured on a log. scale chart.

Many commentators have remarked that we have had no panic so far in this bear market, failing to grasp that the reason for this is that WE ARE STILL IN THE TOP AREA. By far the worst is yet to come.
I state now, without exaggeration, that I firmly believe that we are now about to witness, within the next few months, possibly within the next few weeks, the MOST DRAMATIC STOCK MARKET CRASH IN HISTORY, which will make the crash of '29 look like a Sunday School outing. THE WRITING IS ON THE WALL - it's as clear as that NASDAQ board in Times Square (and what a warning that was!). A clear break of the neckline of the Head-and-Shoulders formation on the S&P500 will probably, as often happens, be followed by a brief but deceptive pullback towards the neckline. After that a vertical all-out crash to the 560 area is to be expected. This will be a straight down vertical plunge - the market will go down like an elevator with its wire cut.

I am a pure technical analyst and my assessment of the outlook is an objective one based solely on the technical condition of the market. However, it often adds a bit of color to later learn the fundamental reasons for what transpires on the charts. A little bird has told me that THE MAJOR WALL ST. BROKERAGE HOUSES WILL SOON BE FACING A TIDAL WAVE OF LITIGATION from investors who are, among other things, apparently upset at collectively losing trillions when the NASDAQ bubble burst. A thing that seems to have really narked them is that while the big brokerage houses were issuing glowing recommendations on many of these stocks, they were at the same time circulating Emails and memos internally which were, to put it politely, less than complementary about the stocks they were recommending and openly mocked the "suckers" who bought them. This is not conjecture, this is a matter of public record - these mails were not shredded or deleted and exist as evidence. Damages are likely to be awarded in the billions, possibly reaching gargantuan proportions. As already discussed, the charts indicate that A TOTAL MELTDOWN IS IMMINENT. We've already had plenty of warning of what to expect from the Enron affair and then, much more seriously, the Worldcom scandal and these were just the tip of the iceberg. This mass litigation against the big Wall St. houses may well be the factor that precipitates the crash.

Some readers may consider me to be a doom and gloom merchant. Not at all. "Every cloud has a silver lining" is my motto, at least when it comes to markets - except that I now prefer to say "Every cloud has a GOLD lining!" If I am right in my assessment, then when the broad market caves in there will be a huge amount of money on the move and scurrying for safety - what better place for it to go, in the present climate, than into gold and highly leveraged (at this time positively, of course) gold stocks? I recently read that THE MARKET CAPITALISATION OF ALL GOLD STOCKS IS ONLY ABOUT $90 BILLION, OR ONE THIRD THE SIZE OF MICROSOFT!! If this is only approximately correct then it would require just a small percentage of that "funk money" panicking out the general stockmarket into gold and gold stocks to force massive rises in gold shares, where supply will quickly evaporate. "Smart Money" is already heavily entrenched in gold stocks, obvious to someone who is experienced in reading volume patterns on charts and they are using the current dip in gold shares to quietly soak up even more. When prices start rising again they won't be in a hurry to sell, supply of stock will therefore be suddenly very limited. A newly-arrived army of anxious buyers will find a market bereft of stock and I don't think I need to tell you what that means

Gold -- Sharefin, 10:22:27 07/10/02 Wed

Gold Derivatives

By Ian Williams
Tue 9 Jul 2002(11151)

LONDON (ShareCast) - There may be trouble brewing in the gold market. But for a change, this trouble will be good for gold bugs as an unusual confluence of events pushes gold, currently trading around $310 an ounce, to $400 and above. And it will prove very bad for any big-name banks caught on the wrong side of this price move.

The phenomenon revolves around a highly unusual form of gold derivatives, a market in which Citibank, Goldman Sachs and JP Morgan are the major players. The particular form of derivative is a type of hedging pioneered by Barrick, one of the world's largest gold producers and a leader in innovative hedges.

Ordinarily, a hedge protects a producer or investor from the downside, but, other things being equal, it does so by limiting their upside. Barrick, however, has managed to construct a hedge that allows it considerable upside if gold rises. And one big bank could be caught very short.

Barrick has been a very good hedger, making use of all sorts of instruments and investment strategies. In fact, at the end of 2001, its hedge book had assets of $5.5bn, which was more than the gold-mining part of the company.

It appears that part of this success comes from what is known as a spot deferred forward sale contract, which it started using in 1990.

Barrick makes a forward contract with a bank to deliver (unmined) gold at a certain price at a certain date. But - and this is what makes these contracts different and, indeed, dangerous for counter-parties - Barrick also had the right to defer the delivery of the gold for periods ranging from five to 10 years. Recently Barrick has entered into contracts that allow it to defer delivery for 15 years.

While deferring or rolling over a contract is not unusual in the financial world, it can usually be done for only a short period and both parties have to agree. But Barrick appears to have pulled off a coup by writing extended-length contracts that allow it to take the decision unilaterally.

This can be very lucrative for Barrick. Say gold is trading at $300 an ounce and Barrick agrees to sell Bank X 1m oz of gold at $320 an ounce in 12 months. If gold then trades at $310 an ounce one year later, Barrick will sell the gold to the bank and receive a better price than it would get elsewhere. But if gold has shot up to $350, Barrick can choose to defer the sale to the bank, and sell its gold in the market. This gives it the best of both worlds - little risk and the highest price available.

If you are Bank X holding the obligation to buy the 1m oz at $320 per ounce, then you need to hedge this position in the market. Standard gold futures contracts have no deferral clauses, so you sell forward the gold that you don't have, which means you are now relying on Barrick to deliver the gold so you can fulfil your end of the bargain.

If Barrick decides to defer the sale, though, there could be trouble - which is what we hear could happen.

Apparently, one sizeable bank active in this market has a gold derivatives book of $41bn, a significant part of which is attributable to its dealings with Barrick. Barrick's contract apparently has the option to defer any sale. If the gold price starts to accelerate, Barrick could choose to defer and the bank will have to find some other way to get the gold it needs to fulfil its own obligations.

How will it do that? It will have to buy the gold - potentially hundreds of millions of dollars worth - in the market. A forced buyer of that size would send gold rocketing to $400 or even $450 an ounce, prices not seen since the early 1980s.

You may have a question: How could a bank do something so risky? Eight words give a clue to that: Enron, Savings & Loans, Long-Term Capital Management.

Ian Williams is head of fixed-income and commodity research at Durlacher.

Gold -- Sharefin, 09:29:15 07/10/02 Wed

The €40 Billion Question - PDF file

n As 36% of the world's gold reserves are in “Euroland” countries,
the Euro/gold price is far more important than is usually realized.
n Since touching a 9 year (implied) high in May of over €353/oz, Euro/
Gold has fallen over 10% to just over €316/oz. This has added €40
billion to Euro Area Central Bank bottom lines since EMU.
n But post-EMU, not only is gold marked to market, but profitibility
has gained a new importance.

Gold is a Dollar denominated commodity and consequently the “chart that counts”
and the technical indicators that drive the market are based on the US$ price.
This is especially true in a market that is as heavily influenced by speculative
buying on COMEX as this one. Even when other currencies make an appearance,
there is one that is generally ignored - the Euro. This is strange given the fact that
the Euro Area includes most of the potential sellers and is the largest gold holder
in the world. Moreover, since EMU all 11,646.5 tonnes of ESCB reserves are
marked to market on a regular basis (obviously in Euros). And as the Euro has
slid since its inception in 1999, the Euro/gold price has risen, a rise which
accellerated following Dollar/gold's bottoming in April 2001. Since January 2000,
gold has rallied from €245 to a high of €353, a rise of 44%. Although the inclusion
of Greece and various sales means that Euro Area holdings are lower today than
they were in January of 2000, basis today's statistics, this represented a gain of €
40 billion or almost 30% of Euro Area reserves. So why is this relevant? Because
Euro/Gold sits on a long term trend line going back to 1999. If it does not hold, the
technical damage could be severe and could take gold quickly through €300.

Why does this matter? Because in the words of the Bundesbank, “stronger profit
orientated management of hard currency and gold reserves should be one of the
tasks the Bundesbank must dedicate itself to.” A falling €/gold price will not help
Bundesbank profits and could ultimately “cost” the Euro Area €40 billion. Will
Central Banks “stop out” of hundreds of years of accumulated holdings? Of course
not. But it will strengthen the hand of those arguing for sales.

Gold -- Sharefin, 09:25:52 07/10/02 Wed

Oversupply fears derail gold rally

Just when gold had started to glitter again for the first time since the mid-1990s, the flash has suddenly gone out of the mining pan.

There are several unconnected reasons why gold is suddenly back- pedalling.

For a start, the rise was so sharp that a period of profit taking was inevitable. The Indian wedding season is also over, and demand has gone into what is a traditional seasonal lull.

Less explicable is the underwhelming impact of the latest corporate accounting scandals in the United States.

Normally, they could be expected to enhance gold's safe-haven status and add to demand, but in this case there was barely more than a blip.

At the heart of concerns about gold, however, is the issue of oversupply.

Even with the curtailing of heavy selling by central banks - the key factor in the 1990s slump - there are fears that if world production gears up as expected then the price will fall as a result of a gold glut several years down the track.

Ironically, that boost in production is being encouraged by the recent price rises, which made mines such as Telfer economic propositions once again. Thanks to Telfer, owner Newcrest is looking at potentially tripling its gold output over the next five years.

The Russians have recently made more noises about selling from their reserve, while China has welcomed foreign gold explorers into the mainland.

The big mergers in the industry over the past few years also mean that the top producers have set themselves very high production goals for the next few years - projects which will require a lot of extra capital to fund and which could easily turn sour if the price rally proves unsustainable.

Also, those companies which have actively hedged their portfolios at lower prices may well find themselves offside of any price rises if they are unable to unwind their positions.

Newcrest, for example, lost an estimated A$800 million on hedge contracts, and the company is now looking to raise A$1 billion to expand the Telfer mine.

In this complex game of push and pull it is difficult to claim with any certainty that gold is back in long-term favour. Most analysts are predicting a two to three-year upswing in the gold price, but that may not be good enough for the industry.

Gold -- Sharefin, 09:22:36 07/10/02 Wed

Gold Output Rises While Other Minerals Show Decline

Analysts say May mining data shows growth in SA is stable but mediocre

Gold -- Sharefin, 09:20:12 07/10/02 Wed

Barrick Gold doubles gold estimate at Alto Chicama

Barrick Gold Corp. (ABX) (ABX), the world's second-biggest gold producer, on Wednesday doubled the estimated size of its gold find at the Alto Chicama property in north-central Peru.

The company, which first announced the find in late April, originally said it could contain up to 3.5 million ounces of gold, but now calculates the property could contain 7.3 million ounces.

Gold -- Sharefin, 09:19:02 07/10/02 Wed

Gold expected to get support from equities

GOLD prices have traditionally had a close relationship with the dollar and the US equities. Specifically, the dollar has been a key driver for gold prices. But the behaviour of the two so-called `fool-proof' trading tools for gold in recent times has been a cause for concern.

A look at movements in the dollar and the equities markets on the one hand and gold market on the other since May shows that gold has dislocated from the dollar and dislocated even more from the US equities.

Over the past six months, the relationship between dollar and gold has become less clear-cut with gold prices running ahead of dollar depreciation in late-May and then dislocating completely in the final week of June.

Movements in recent weeks suggest that the US equities and dollar will remain tied together. There is expectation that the US equities markets will remain under pressure, so will the dollar, although no one is expecting a massive fall in the latter from the current levels.

If gold stands dislocated from the equities and dollar markets, where will support come from? According to Mr Kamal Naqvi, analyst with Macquarie Research Equities, support for gold may once again come from renewed interest in gold equities over the coming weeks.

Gold -- Sharefin, 09:15:59 07/10/02 Wed

Welteke Says Bundesbank Wants the Option to Sell Gold Reserves

Germany's Bundesbank, the world's second largest holder of gold, wants the option to sell some of its bullion after a central bank accord to limit sales expires, said the central bank's president, Ernst Welteke.

I wonder why Welteke keeps on repeating himself.
Especially when they can't move for two years.
Maybe the guy stutters (for the cabal)

Gold -- Sharefin, 09:14:16 07/10/02 Wed

Currency-focused COMEX gold backtracks in early trade

Technical analysts at JP Morgan Chase said in Wednesday's client commentary that Tuesday's break above $316 should reopen $320/323, at least.

"We have been suggesting that a potential base was developing over $310, with a break of $316 confirming," they wrote. "That initial move has now been seen and with the daily studies still in bull mode we expect follow-through buying."

In his daily precious metals report, Leonard Kaplan, president of Prospector Asset Management commented: "The technical indicators that I follow show the platinum and palladium markets to be dramatically oversold, and I look for rather significant rallies to occur."

Kaplan cautioned that bullishness should be tempered by the negative outlook for a global economic recovery as reflected by global share markets.

"Since these metals are almost strictly industrial in nature, and rarely see any benefit from "safe-haven" buying, the market tends to price these metals in relation to economic expectations," he wrote.

Gold -- Sharefin, 09:12:59 07/10/02 Wed

Gold gain points to market meltdown

When gold stocks rise sharply as a group on extremely heavy volume, it's almost always a sign of trouble ahead for the overall stock market.

Analysts say the 7.5 percent advance for U.S.-traded gold shares earlier this week -- the sector's largest increase since May 2000 -- points to renewed interest in the metal. It's also a sign investors accept the possibility that the stock market, and those few industries still holding onto gains this year, could come crashing down in coming days or weeks.

"What the market seems to be saying is that we've seen the end of Wall Street's oversold relief rally, and the resumption of gold's bull trend," said Bob Bishop, the longtime editor of Gold Mining Stock Report. "I'm guessing that (the July 5) lows in many gold stocks are likely to be the lows for some time, principally because of the amount of bad news that appears to be baked in the cake of the broader market and the U.S. dollar. That's good for gold, and bad for U.S. stocks and the dollar."

Gold -- Sharefin, 09:03:04 07/10/02 Wed

Deutsche Bank lifts precious metals forecasts

Deutsche Bank has raised most of its precious metals price forecasts for this year and 2003 because of the inflationary impact of central banks delaying interest rate rises due to uncertainties over the strength of the economic recovery.

Deutsche Bank said in a market note that it forecast gold to average $308.50 an ounce this year, rising to $320.00 an ounce next year, an increase of $11.50 and $20.00 an ounce respectively from its previous projections.

It saw gold falling back to average $315.30 an ounce in 2004.

Gold -- Sharefin, 09:00:40 07/10/02 Wed

Precious Metals: Back From the Brink

There is a growing gap between sentiment in the base & precious metals sectors. But stark differences exist among precious metals and their prospects for the coming months. Gold's price - supposedly fuelled by low US interest rates, a weakening US dollar, conflict in the Middle East and Kashmir, a reduction in producer hedging, official sector sales restraint, and an escalating crisis in the Japanese banking industry - has now seen the yellow metal at 3 year highs. And after a roller-coaster 2001, PGMs look more settled but exhibit contrasting fortunes. Guy Isherwood reports on current market thinking.

GOLD AT $850/oz ? There are some in the market that think this could be a distinct possibility. More on that later.
After a 'neutral' turn to the year the past several months have seen the gold 'longs' very much more in evidence, with the metal 'turning the corner'. Nevertheless, large speculative positions and official sales could cause a rapid reversal of gold's recent run, given the expectation of higher interest rates, the possibility of a resolution of the stand-off in the Middle East and Kashmir, more supply and a resumption of world GDP growth. But for the moment at least, gold is shining once again and analysts are upgrading their estimates for prices in coming two years.

Gold -- Sharefin, 08:48:42 07/10/02 Wed

Pendulum to swing back to hedging

This year's improvement in the spot gold price has not been substantial enough to overturn the much-debated study by the London Business School in which it stated that the impact of derivatives on the spot price of gold is likely to have been well below the 10 to 15 per cent estimate suggested by a simple consumption model of the gold market. According to Steven Lowe, managing director and head of metals marketing (Europe & Africa) for ScotiaMocatta, the overall impact of hedging over the last decade has been around 5 per cent. Lowe was speaking at a recent breakfast briefing in Johannesburg.

As for the current bull run in gold, Lowe is even more controversial. He asserts that hedgers have reduced their books for logical reasons but used the reductions as a reason to talked up the price of gold. But Lowe says the pendulum will swing back towards hedging before long as the outlook for gold starts to appear less impressive.

He is not alone in his view that it's a matter of time before the logic of hedging gold re-asserts itself. Daryll Castle, a fund manager for Stanlib Asset Management, a South African financial institution, says the time will come when hedged stocks are in vogue based on the fact that no market can continue to rise forever. "When the market's going down and things are looking negative for the gold market, you want the hedged players," he said.

Gold -- Sharefin, 08:44:12 07/10/02 Wed

CIBC's new gold stock valuation method

CIBC World Markets' Barry Cooper gold team at is winning plaudits for an option pricing model that explains the gap between conventional equity valuation metrics and how gold stocks actually trade.

Newmont president Pierre Lassonde referred to the 64-page report in an interview with Miningweb, recommending that investors: "Review this approach to valuing gold mining equities because it is able to provide one of the most accurate valuation models and best explains the "valuation gap" between traditional discounted cash-flow analysis of gold assets and the premium at which these generally trade."

The CIBC model: "Predicted share prices to within 10% of market values 78% of the time within the last six months without using artificially high gold prices or low discount rates." No wonder the report is entitled, Eureka!

The CIBC gold equity option pricing model assumes that stock prices derive from net asset value which is "calculated at the risk-adjusted cost of capital and spot gold prices rather than at long-term gold prices and low discount rates."

The NAV carries an option value - "the right to participate in future gold price swings". These are "long-dated, in-the-money options that carry significant option value in excess of the NAV."

Stripping out the jargon, that means gold producers' stock prices are largely determined by the gold the can lay their hands on in future - the quantity and quality of reserves, the mining rate, grades, ounces not smothered by hedging and so on.

Gold is a monetary asset, so you are assured of its value even when it is trapped in geological lock-box. All you're unsure of is how much time, effort and money it will take to mine, refine and sell the gold. At a very simple level, that is why reserve ounces in working mines attract a higher value than those in startups or dying operations.

Cooper says investors are buying three things when they fork out for gold shares, the NAV and two call options - one on reserves and the other on firm's ability to replace and add to mined ounces.

That is why gold shares carry valuation multiples out of kilter with run-of-the mill industrial issues. Consequently, when investors appear to be paying over the odds for gold shares, they premium is for a "call option on bullion with a strike price that is equivalent to the cost of extracting the gold from the ground."

Gold -- Sharefin, 08:38:46 07/10/02 Wed

Placer, Barrick to be cut from S&P500

Mining giants Barrick Gold, Placer Dome, Inco and Alcan have been dumped from the New York Stock Exchange's S&P500 index as part of an all-US companies policy.

Silver -- Sharefin, 08:31:22 07/10/02 Wed

Senate silver bill goes to President

In a concentrated study of brinkmanship, the Senate and House acted quickly during the last week of June to assure that there would be a continued silver supply for the the American Eagle program, agreeing to allow the Treasury secretary to go into the commodity market to obtain metal to strike the coins.

On June 28, the House initialed its approval stamp on S. 2594, the “Support of American Eagle Silver Bullion Program Act,” in a unanimous consent vote, just a day after the House voted 417 to 1 in favor of a longer and more involved bill, H.R. 4846, entitled “Silver Eagle Coin Continuation Act of 2002.”

Both measures addressed the same problem. After sales of millions of one-ounce coins that have generated more than $264 million in profits over the last seven years - and lots more since its initiation in 1986 - the nation's silver stockpile, the program's source for precious metal, has been all but depleted.

Measures had been introduced almost simultaneously in the House and Senate, going in two different directions. One, by Rep. Frank Lucas, R-Okla., sought to revamp the Mint's public enterprise program in an ambitious bill that restructured the public enterprise fund while also solving the immediacy of the silver bullion problem.

Sen. Harry Reid, D-Nev., took a different tack - one that avoided the controversial aspects of reforming the Mint. Reid's focus was on Nevada's 17.5 million ounces of silver produced last year - one-third of the nation's mining effort.

The House bill simply authorized the Treasury secretary to pick up silver for minting the bullion coins “from other sources as appropriate.” Reid was more explicit:

“At such time as the silver stockpile is depleted, the Secretary [of the Treasury] shall obtain silver ... to mint coins authorized under section 5112(e). If it is not economically feasible to obtain such silver, the Secretary may obtain silver for coins authorized under section 5112(e) from other available sources. The Secretary shall not pay more than the average world price for silver under any circumstances.”

This allows the secretary to buy newly mined silver, older silver or any other, for the term “average world price” means the price determined by a widely recognized commodity exchange at the time the silver is obtained.

Dave -- Sharefin, 08:25:53 07/10/02 Wed

The IMF and others are putting out warnings like they've run out of canaries to use.
Sure old George could be right but I think he's just an observer of the changing times.

If the currency is going to crash then what else do you do but sell.
So far we've seen the USD fall from 120ish to 106.
And at the same time the BOJ have thrown $US30 billion in selling Yen & buying the US Dollar.

Who knows how much Europe & the US have thrown at it to.

So what we've seen so far is serious selling of the US Dollar or US assets.
Same as with global equities - serious selling.

I would guess that we've only seen the beginnings of this selling.
Even if there's a rally coming soon after it's finished then the selling will begin again.

The great bull supercycle is over and all there is to do is sell it.

Abandoning the USD - @Dave -- Giovanni Dioro, 08:14:56 07/10/02 Wed


I don't think it's so much affording to abandon the USD as a change in protocol. Harry Schultz said in his newsletter a few months back that there had been a change in policy to guide the USD lower (that was posted here at the Golden Pot).

Moreover, Dr. Coleman thinks that Japan will abandon its decades-long intervention of supporting the dollar. He states this in his Report: "The Coming Disasters - An Update". Therein he also urges readers to buy gold and especially silver coins in face of a dollar collapse.
(see my earlier post - Gold & Silver (World in Review Article) for order info.)

Soros -- Dave, 07:45:23 07/10/02 Wed

Do you think ol George has it right Sharefin?

Can the foreign feckers afford to flee the $?

Gold & Silver (World in Review article) -- giovanni dioro, 07:39:06 07/10/02 Wed

Gold and Silver

With Argentina fresh in our minds, perhaps we will begin to see the wisdom of holding stocks of both metals (gold & silver), but especially the more easily traded silver rounds. Strange things have been happening. Both metals stocks showed significant gains in the aftermath of 9/11, “terrorist warnings”, and falling stock prices on Wall Street. In fact some gold and silver stocks gained as much as 60 % over the last five months as the smart investors began looking for a hedge. Then, inexplicably, came a rapid retreat, even stranger given the huge shortage of above ground silver. What investors have been doing is borrowing money at 1.9%, buying gold and silver and waiting for the expected inflation rate to rise to 4%. Given the weakness of the stock market, a 4 percent inflation rate is likely.

Yet the mystery is that the price of both gold and silver has not risen commensurately? Why not? What kind of skulduggery is going on here? It has one advantage for small buyers who can capitalize on the depressed market price of the metals, especially silver. As we have told our readers over and over again, there is no time like the present to buy silver. For information on silver rounds call us at 1-800-942-0821, but bear in mind, we are not “dealers”. Ours is a service to WIR subscribers, please do not call us every day for “quotes” as some people have done in the past. (Ed. Note: World in Review offers a good deal on 1 oz. silver rounds for subscribers of its newsletter from which this article is taken. Subscriptions to WIR are at the same US number above and are $65/yr in US, $75 for No. America, $95 elsewhere.)

As a further warning to our readers to get out of the stock market before it is too late, as we have been urging ever since we published the report “The Coming Disasters update”, the market is going to crash and may not survive this summer, we urge you to pay close attention to the following:

On Friday June 21, the Dow dropped 174 points to close below the 10,000 mark at 9,254 and the Nasdaq shed 23 points. The small gains made at the start of the week were wiped out. On Thursday June 20, the Dow lost 130 points and Nasdaq lost 32 points. These are not just statistics: What it means is that thousands of investors were wiped out, losing everything. As we have said, but it is worth repeating, these investors are never coming back. They cannot. Their capital is gone for good. As we said earlier herein, any talk of having reached the bottom of the bear market is now totally discredited. The market could eventually bottom out at around 3500 on the Dow.

On June 17 when we talked with some “experts” they assured us that the market had indeed, bottomed out. Instead what we saw this week was a gain on Monday followed by headlong retreat for the rest of the week, with Friday June 21 closing well below the level of a week ago, Friday 14.

What has happened to cause such an immediate loss of confidence? Undoubtedly the war in Palestine is having a serious effect. Investors are afraid that the United States will be stuck with the bill to pay for Israel war costs and the costs of building the new fortification wall between Israel and the Palestinians. A number of key investors said that they felt the drag on the U.S. economy occasioned by America's unswerving support for Israel would take our economy down even further.

Couple with that by the serious and continued fall of the dollar hitting its lowest level since November 2001, a serious situation has arisen. The dollar dropped to a 26-month low against the Euro and on Friday 21 dropped to 120.83 yen to the dollar. What this means is that coupled with the bad news from Palestine, the “smart” overseas investors are quitting US equities in record numbers.

Another indicator is the anticipated lower corporate earnings to be announced in July, so that combined with these three factors; the market was unable to keep what it gained on Monday. The immediate cause of Friday's steep losses on the Dow was the news that Israeli tanks had opened fire with machine guns and shells on a crowd of Palestinians out shopping in the market of Jenin. The Palestinians (mostly women and children) thought the curfew had ended: “The general mood is that the United States can no longer keep the lid on the anger and resentment felt by all Arab nations over such an incident, and they see it as adding fuel to the fire of hatred for the Israeli army. The situation is not being helped by the United States giving 100% support to Israel”.

Investors fully expect to see a steep rise in violence next week and continuing in the weeks ahead. If the investor trend goes into reversal, and overseas buyers stop buying the consequences for the stock market will be grave,” he said.

The dollar has fallen from 13 rand to nine rand to the dollar in the last month, so we can begin to see just how serious the dollar slide really is. Those of our readers who have not yet got their copy of “The Coming Disasters: An Update” are to get this guide which is proving highly accurate as a guide and a warning as to what to expect from our economy.

The above article appears in the May/June issue of the newsletter World in Review. It is without a doubt one of the best newsletters for behind the scenes news on world events and commentary on the ongoing encroachments on the US Constitution by those who would destroy it. Published by former British intelligence agent Dr. John Coleman, World in Review is truly one of a kind. I strongly urge you to subscribe to it.

World in Review
2533 Carson St.
Carson City, Nevada 89706

Tel: 1-800-942-0821

Gold -- Sharefin, 03:26:58 07/10/02 Wed

Stocks, Dollar To Free Fall, Gold To Skyrocket

The international financial system is coming apart at the seams & there is a lack of confidence. That's what I call the Bush factor in the economy. There is a liquidity crisis in financial markets, said Soros. Everybody's going home. The Swiss banks are going home. The strengthening of the yen clearly shows repatriation. Translated, that means that foreign capital is fleeing the United States in the wake of as yet not fully realized accounting scandals that will, according to Fox News on July 6, take an estimated $600 billion in value out of the U.S. stock market this year. One of the many smoke alarms triggered by this is the fact that the U.S. economy needs an estimated $1.5 trillion per year in new foreign investment just to remain solvent.

Reuters quoted Soros as saying that the global economic downturn had exposed the weaknesses of corporate America and how the U.S. administration runs the international economic system.

Soros is aware of what FTW and noted economic thinkers like Catherine Austin Fitts, former assistant secretary of housing, and British economist Chris Sanders of Sanders Research have been saying for years: as much as half of the value of the U.S. financial markets is derived from criminal endeavors, whether it is the laundering of drug money or the fraudulent cooking of financial statements to boost profits.


For years the price of gold -- the ultimate smoke alarm signaling a failing economy -- has been artificially suppressed by paper traders who are capable of flooding the commodities markets with gold future options when the price needs to be kept low. Why low? Because rising gold prices have always signaled inflation and/or a lack of faith in the financial markets. Years of efforts by the Gold Anti-Trust Action Committee, or GATA, while not being successful at halting or fully exposing the artificial manipulation of gold prices by the Federal Reserve, major banks, the Bank of International Settlements and major commodities traders, have opened the eyes of many to overt manipulations in gold pricing.

As one investment banker told me recently, there is five times more paper gold than there is actual gold out of the ground. If gold prices ever pop they ll be out of sight.

Over the past year, certainly since 9-11, gold prices have often moved in exactly the opposite direction (lower) from what conditions would dictate. The financial effort required to do this requires the support of powerful state banking institutions and cash to service the paper. Gold has risen in price from around $280 an ounce nine months ago to a high of around $327 in recent weeks. That s a return on investment of 16 percent -- far better than the Dow has done this year.

In our last economic bulletin FTW noted that the Dow had lost close to 900 points. Since March of this year it had lost, before the profit-seeking 300-point rally of July 5, almost 1,600 points. Yet even as the economic news worsened last week, the price of gold peaked and then started to fall. As of this writing it sits at $312 an ounce. The gold price dropped as the worst economic news was hitting the streets. Why?

As one astute gold watcher, Jay Taylor, summed it up in an October 2000 newsletter, Every single time there is concern about a stock market debacle, gold is bombed. Always.

On June 5 GATA described one of the recent moves to fiddle with gold prices. has just reported an explanation for the plunge in the gold price today. The plunge, MiningWeb says, came in the wake of a large after-market trade in New York last night, with an unnamed fund liquidating 5,000 futures contracts, a move which knocked the price first to $326/oz, then to $324/oz, and finally to $321/oz, &The sale was executed using the Access system on Comex, which allows for anonymous trading by large funds.

There are unmistakable signs of market manipulation now with regards to both gold and stocks. Who is it that keeps the markets from correcting, only making the inevitable crash that much worse? It s called the Plunge Protection Team, or PPT. And now it has to have the liquidity to flood both the gold and the stock markets with enough cash to keep the bubbles from bursting. This, at the same time that major banks like J.P. Morgan/Chase and Citigroup sit atop huge derivatives bubbles that have been estimated at between $150 trillion and $300 trillion. Most major U.S. banks have heavy exposure as a result of the mushrooming financial scandals. All of these bubbles require cash, and this is the liquidity Mr. Soros is rightly worried about.

Fiat -- Sharefin, 23:16:16 07/09/02 Tue

Global Economic Collapse Imminent

Pension Fund Disaster; Stocks, Dollar To Free Fall, Gold To Skyrocket

The last time FTW issued an emergency economic bulletin to its
subscribers was Sept. 9. At that time a derivatives investment bubble on the
verge of implosion, a 900-point drop in the Dow Jones average and a pending
liquidity crisis signaled a crash on the order of 1929. Only the attacks of
Sept. 11 and massive intervention from the U.S. Treasury and Federal Reserve
prevented the collapse. Investors blamed the ensuing market losses on the

The situation now is much, much worse as more factors combine to suggest
that foreign investors and trust in the U.S. economy might soon be a thing
of the past. Your pension is at risk today and your home may be at risk in
six months to a year.

One economic analyst has suggested that a nuclear exchange between India and
Pakistan might be the perfect cover for the biggest financial wipe out in
human history. I think that an ill-conceived and risky invasion of Iraq
might serve the same purpose. From consumer confidence, to corporate
accounting, to the dollar, to gold, to foreign capital flight, to pension
fund wipe outs, to the derivative bubble, to debt, there is not a single
economic indicator that is not flashing red.

The warnings are as clear, explicit and well-documented as were the warnings
received by the U.S. government throughout summer 2001 that a terrorist
attack against the World Trade Center would take place during the week of
Sept. 9 using hijacked airliners from United and American airlines. Nothing
was done to prevent that and apparently nothing is being done now in spite
of the fact that $4.2 trillion of your money has been stolen right in front
of your eyes.

Shell -- Sharefin, 08:59:38 07/09/02 Tue

Sorry but I can't help you with that one.

Gold -- Sharefin, 07:00:08 07/09/02 Tue

AurionGold: Content to stay independent

Terry Burgess, chief executive of AurionGold Ltd. says his company is content to remain Australia's largest independent gold producer unless Placer Dome Inc. boosts the value of its $1.36-billion hostile bid.

Fiat -- Sharefin, 06:46:32 07/09/02 Tue

If the Fed didn't exist…

printing money limits? -- shell, 22:21:29 07/08/02 Mon

is there any formal limit to the amount of 'money' the banks that own the federal reserve can 'create' in order to 'buy' gov't bonds?

many years ago alden wells told me [i think] that there is a limit.

can you direct me to any other person, books etc that might address this?

Fiat -- Sharefin, 22:10:22 07/08/02 Mon

BIS calls for honesty in banking policy

The Bank for International Settlements on Monday issued a dire warning to Japan over the shaky position of its banking system, urging the government to explain to taxpayers that their money could again be needed to clean up the problem-loan situation.

Fiat -- Sharefin, 21:55:33 07/08/02 Mon

IMF warns over dollar collapse

The head of the International Monetary Fund, Horst Koehler, has warned that central banks worldwide might need to work together to prop up the US dollar.

The global fall in stock markets amid uncertainty over the strength of the US economic recovery has led to further doubts about the strength of the dollar.

The US is also facing the largest trade deficit in its history.

A weak dollar would hurt exporters in Europe and the Far East by making their goods more expensive in the US, while in turn increasing inflationary pressures there.

Mr Koehler said that there was a danger that financial markets could "exaggerate problems so that they become a self-fulfilling prophecy".

But he admitted that there was a one-in-five chance of a global financial meltdown.

Gold -- Sharefin, 19:26:23 07/08/02 Mon

Kinross Wins Approval From Canaccord Post Merger With TVX And Echo Bay.

The proposed merger between Kinross Gold, TVX and Echo Bay is a further step down the line towards consolidation of the world's gold industry, and there are not many more steps to be taken. With this deal, as stockbrokers Canaccord Capital point out in a comprehensive analytical note, Kinross will vault into the ranks of the senior producers. It should now be promoted to the TSX 60 and is moving into a slot held by Homestake and Normandy before they were acquired by Barrick and Newmont respectively.

Gold -- Sharefin, 19:04:53 07/08/02 Mon

XAU Index

Fiat -- Sharefin, 18:49:48 07/08/02 Mon

How many WorldComs does it take?

I continue to believe that as this year unfolds, investors will broaden their disaffection not just for expensive stocks but for the Fed, Wall Street and Corporate America. How this will play out -- how we can understand the long-term picture and not be distracted by short-term noise -- can best be shown by backtracking a bit. Let's begin with the dot-com meltdown. Initially, people blamed themselves for losing money, but they retained their confidence in the Fed, Wall Street and Corporate America all through last year. The tragedy of Sept. 11 and its ramifications caused the Fed's wrongheaded chirping about a second-half recovery to go almost unnoticed. The terrorist attack became the scapegoat for why the economy didn't come back.

Gold -- Sharefin, 10:33:09 07/08/02 Mon

DRD closes out hedge book

Durban Roodepoort Deep (DRD) said on Monday it had closed out its full revenue hedge book.

"The outstanding fixed loss on the close out was US$17m, which will be repaid within the current financial year," DRD said in a statement.

The company said it would now receive the full spot price from its gold sales.

GATA -- Sharefin, 10:28:26 07/08/02 Mon

GATA Urges Congressional Support for Monetary Reform and Accountability Act on Gold

DALLAS--(BUSINESS WIRE)--July 8, 2002--The Gold Anti-Trust Action Committee (GATA) urges House Representatives on the Financial Services Committee to join Congressmen Ron Paul (R-Texas) and John Larson (D-Conn.) as co-sponsors of the Monetary Reform and Accountability Act (H.R. 3732).

The bill simply requires the president and Treasury secretary to get the approval of Congress before intervening in the gold market.

Treasury Secretary Paul O'Neill is on the record as being against the bill, which seeks only transparency. GATA chairman Bill Murphy points out, "Secretary O'Neill's response to the proposal is contrary to the cries of an American public who are outraged over one corporate financial scandal after another."

GATA has begun a grassroots information campaign tapping its vast army of supporters. These supporters will make an effort to inform the following Financial Services Committee members of the importance of this issue:


Doug Bereuter (Nebraska), chairman
Doug Ose (California), vice chairman
Marge Roukema (New Jersey)
Richard H. Baker (Louisiana)
Michael N. Castle (Delaware)
Jim Ryun (Kansas)
Donald A. Manzullo (Illinois)
Judy Biggert (Illinois)
Mark Green (Wisconsin)
Patrick J. Toomey (Pennsylvania)
Christopher Shays (Connecticut)
Gary G. Miller (California)
Shelley Moore Capito (West Virginia)
Mike Ferguson (New Jersey)
Bernard Sanders (Vermont)
Maxine Waters (California),
Barney Frank (Massachusetts)
Melvin L. Watt (North Carolina)
Julia Carson (Indiana)
Barbara Lee (California)
Paul E. Kanjorski (Pennsylvania)
Brad Sherman (California)
Jan D. Schakowsky (Illinois)
Carolyn B. Maloney (New York)
Luis V. Gutierrez (Illinois)
Ken E. Bentsen Jr. (Texas)

On February 14, 2002 Congressman Ron Paul issued a press release that included the following:

"The private Gold Antitrust Action Committee held a press conference this week to discuss federal manipulation of gold markets. The group has uncovered evidence suggesting that the Federal Reserve and the Treasury department, operating through the Exchange-Stabilization fund and in cooperation with the International Monetary Fund, have been systematically working to deflate the price of gold. Because rising gold prices are seen by investors as a barometer of inflation, the Fed has purportedly suppressed prices to disguise the true nature of the financial bubble of the 1990s."

RBC Global Investment Management Inc., a division of Royal Bank of Canada, whose gold mutual fund is among the best performing in the world, has also issued a report that was circulated throughout Europe to clients and prospective clients that fully endorses the analysis of the gold market done by the Anti-Trust Action Committee's (GATA). It concludes that the price of gold is being manipulated.

The RBC report says the price of gold is going to explode and cites "Increasing Evidence of Unsustainable Gold Price Manipulation" as one of its reasons. The RBC report points to 11 "factors" of evidence regarding the gold price manipulation:

1) Aggressive gold lending, which from an economic perspective is indefensible, has filled the supply/demand gap.

2) New York Fed gold has been mobilized when the gold price is rising.

3) Timing of Exchange Stabilization Fund gains/losses corresponds to gold price movements.

4) Audited reports of U.S. gold reserves show unexplained

5) Minutes of Fed meetings confirm officially denied gold swaps.

6) Rules on gold swaps have been revised and then denied.
However, individual central banks have repudiated the denial.

7) U.S. gold reserves have recently been re-designated twice, initially to "custodial gold" and latterly to "deep storage gold."

8) Statistical analysis of unusual gold price movements since 1994 indicate high probability of price suppression. The invalidation since 1995 of Gibson's Paradox -- that gold prices rise when real interest rates fall -- suggests that the real manipulation began then.

9) New York gold price movements versus London prices trading defy odds.

10) Timing of huge increases in bullion bank gold derivatives is consistent with gold price declines.

11) A rapid decline in U.S. Treasury holdings of gold-backed SDR certificates is not explained.

The RBC report goes on to say: "One or two of these factors could be viewed as random, but the full body of evidence is overwhelming."

The Gold Anti-Trust Action Committee has fully documented all 11 points cited by the RBC Global Investment Management Inc. regarding the manipulation of the price of gold. To date, no one in the gold industry has refuted any of GATA's specific assertions.

"The American public and Congress are demanding truth, full disclosure and fairness in U.S. financial markets. In that light, all of these Congressmen and Congresswomen on the Financial Service Committee ought to sign on to this Bill as co-sponsors," says GATA's Bill Murphy.

Gold -- Sharefin, 10:24:02 07/08/02 Mon

Gold equities set to drive gold price

The correlation between gold and the US dollar, which for so long has been a leading indicator of the metal's price moves, was no longer so clear cut, according to a leading global gold analyst.

Instead, renewed investor interest in gold equities would be a key driver of the gold price in coming weeks, Naqvi said. "The recent weakness in the gold price will be seen as a needed correction and expect further gains in gold equities and gold prices in the coming weeks, largely on the basis of a continued downward trend in global equity markets," he forecast.

Gold -- Sharefin, 10:21:57 07/08/02 Mon

CFO's hasty exit shrouded in mystery

Australia's largest independent gold miner by market capitalisation, Newcrest Mining [ASX:NCM], today dropped a bombshell when it advised that long-serving chief financial officer, Gary Scanlan, had left the company, effective last Friday.

There were two stand-out issues that could have been closely associated with Scanlan stepping down. First, there might be problems with the structure of the proposed debt funding of the Telfer project and Scanlan might have had a run-in with the board over the matter. And secondly, Newcrest's complicated underwater hedge book might have claimed a victim. One analyst said he hoped there wasn't weren't any nasty skeletons in the closet relating to the gold and foreign exchange hedge bookspositions.

Banks usually demand a level of hedging to underwrite revenue to cover their loans, but Newcrest's complex hedge position book might not make it so easy to incorporate more debt. We shall see.

Gold -- Sharefin, 10:15:39 07/08/02 Mon

Lassonde on gold and Newmont's future

PIERRE LASSONDE:I believe there are still many opportunities out there and despite the recent consolidation, the industry remains extremely fragmented. The new Newmont is in an even better position than Franco was to benefit from these opportunities because we have integrated the best resources of Franco and Normandy into Newmont. Newmont has a strong balance sheet, low-cost core assets, the largest land position in the world's best gold districts and the global skill sets for creating value with every ounce.

In regard to hedging, which is a subject we could spend weeks discussing, let me start by saying that the industry has been it's own worst enemy, which is why Newmont has a firm non-hedging philosophy. The use of hedging and other derivative instruments has served to depress the gold price and has made hedging a self-fulfilling prophecy. However, all the gold that has been borrowed and sold forward has to be repaid to the central banks - it is a zero sum game, after all - and what you have seen this year in the gold price is partly attributable to the numerous reports of hedge buybacks and delivery into hedge books, thus removing supply from the market.

In our 1999 Franco-Nevada annual report we talked about the eventual demise of the bubble. We said that the values were totally out of step with reality and that it was only a question of time. In our 2000 annual report our theme was the US dollar. Like the we warned that it was over-valued and that it too would have to deflate. It was not a question of if, but rather, when. This was based on simple fund flow analysis - every day the USA has to attract $1.3 billion in currency to cover it's current account deficit. How long will the rest of the world continue to support this gross over-spending?
The US dollar exchange rate is the key variable currently driving the gold price. In the 1985-1988 period, the dollar depreciated by 33% against a basket of currencies, at a time when the current account deficit was less than 3%. During the same period, the price of gold went up 66% from approximately $300 to $500 an ounce. Today the current account deficit is closer to 5% of GDP. Our bet is that gold will be going up a lot more than just the $50 an ounce seen in the last six months.

A few weeks ago, Goldman Sachs issued a report on the twin current account/trade deficit and the US dollar. One of their conclusions was that if the USA wanted to reduce its trade balance by just 50% the dollar would have to drop by 43% in value and stay there for a minimum of two years. Where do you think gold will go under this scenario? Our view - much higher. We are in a multi-year bull market in gold and the biggest mistake people will make will be to sell too early. The early stages of every bull market is characterized by the climbing of the proverbial "wall of worry". That's where we are and higher is where we think we are going!

Gold -- Sharefin, 10:01:57 07/08/02 Mon

Gold still a keeper

Gold -- Sharefin, 09:58:31 07/08/02 Mon

No Great Excitement Anticipated In Precious Metal Prices This Year.

An interesting article has been published in the latest edition of "Commodities Now" on Precious Metals. This is a magazine for the traded commodities markets and it runs over the whole gamut of prospects for gold, silver, platinum and palladium now and in the years ahead. So much has been written about gold of late that it will be left to one side, but the views of Guy Isherwood, the editor, on the other three are interesting.

ChartsRus -- Sharefin, 09:51:52 07/08/02 Mon

Charts online and all updated except for the COT charts.
No data has been released as yet.

Charts online

what to do at a PM top -- giovanni dioro, 08:47:26 07/08/02 Mon

L. Leslie,

Hopefully we will be fortunate enough to buy near the lows and sell near the tops. When it does come time to sell there will likely be better opportunities elsewhere such as stocks, real estate, bonds, or private businesses. That time though is probably at least 10 years away, methinks.

In 1980 the dow to gold ratio was about 1 to 1, today it is almost 30 to 1. That means, to many astute gold bugs, that you are better to hold precious metals like gold and silver and to wait until there are better opportunites elsewhere.

When stocks become so cheap that they become a screaming buy, that is time to jump back in. But they won't be a screaming buy until the ratio goes back to at least under 5 IMO.

Also in 1980 in face of runaway inflation, the Fed raised interest rates to the high teens. You could get nearly 20% interest on a risk-free rate. When this happened there was much hardship and the money supply was shrinking as a result of the higher interest rates. Many smart goldbugs got out of gold at that time and put their money into CD's or govt bonds.

Then after the credit crunch weeded out bad debt and interest rates started to decline as well as inflation, stocks provided a great investment.

Things move in cycles and waves. I believe it is a good time to have a good portion of your portfolio in precious metals because it appears that we are at a similar stage to where we were around 1968-1970.

Personally, precious metals (bullion and equivalent) make up around 20% of my portfolio. My biggest investment however is short-term norwegian govt paper in norwegian crowns earning about 6.5% pa.

what then? -- L. Leslie, 02:56:45 07/08/02 Mon

When we sell PM at the highs, where do you put the cash - won't it be losing money as you search for other assets?

Periodic Ponzi Update PPU -- $hifty, 22:56:17 07/07/02 Sun

Periodic Ponzi Update PPU

Nasdaq 1,448.36 + Dow 9,379.50 = 10,827.86 divide by 2 = 5,413.93 Ponzi

Up 60.70 from last week.

Should be an interesting week.

Thanks for the link RossL

Go Gold


Gold -- Sharefin, 22:05:59 07/07/02 Sun

Alan Greenspan and Gold: Lingering Doubts?

There it was, on live TV, in the Q&A session following Alan Greenspan's testimony before the House Financial Services Committee this week. Taking his turn with all the other committee members posing their loaded questions to score points with the voters back home about unemployment benefits, trade tariffs, tax cuts or whatever their pet issues might be, Congressman Ron Paul, a former doctor from the 14th district in Texas, asked Chairman Greenspan point-blank if he thinks the Federal Reserve operates just like Enron.

Ron Paul looked the Master of the Universe in the eyes and said, "…we have nearly a $6 trillion debt… Now the Federal Reserve comes in and they buy that debt in order to maintain the interest rate that they think is the right interest rate, and they take that and they use it as an asset. You put it in the bank, you call this debt that we have created an asset, and you use it as collateral for our Federal Reserve notes. So that's a pretty good scheme. And I think in moral terms, as well as in economic terms, it's very similar to how Enron operates."

Paul puts his legislation where his mouth is. Following a bill to abolish the federal income tax, his latest effort is a law that would forbid the president, the Treasury, or the Federal Reserve from engaging in any transactions in gold without specific authorization from congress. Paul believes that the world's central banks, including the Federal Reserve, manipulate the price of gold to keep it deliberately low, to mask the inevitable inflation of their paper money.

He says, "They readily admit that foreign governments have loaned tons of gold, and Britain is outright selling gold. Our government denies it, and I don't know the answer. Right now they are sticking with the story that they do not deal in gold. I received a letter from Paul O'Neill stating clearly that they are not dealing in gold. This legislation is merely an attempt to open up the debate, make certain they aren't dealing in gold, or if they are that Congress knows about it."

It's hard to get radical ideas like this listened to -- even if you're a congressman. I asked Paul whether he was taken seriously by his colleagues. "I think at times I'm a nuisance to them. They are so entrenched in the system. Those who do understand it would not like to rock the boat. It's no coincidence that we have a paper money system when we have a Congress that likes to spend a lot of money."

But Paul continues to fight his fight, and suspects that somewhere in Greenspan's heart of hearts, the Fed Chairman may secretly be on his side. "There was a very special article he wrote in 1966 in ," he told me, referring to "Gold and Economic Freedom," a powerful plea for the gold standard published by radical capitalist Ayn Rand, then a close friend of Greenspan's. "I have an original copy and Greenspan signed it for me. I asked him if he still believes it, and he said he 'wouldn't change a single word.' Maybe deep down inside he's having a few doubts."

I assign a considerable amount of blame for the wild oscillations our economy has experienced over the last five years to Greenspan's ad hoc monetary policies. So Congressman Ron Paul may come off like a radical -- but set against the context of the fawning, subservient adoration accorded Greenspan by virtually every other politician, I think Paul is doing us all a great service. He's telling the emperor that he's got no clothes--right on live TV.

Gold -- Sharefin, 21:59:29 07/07/02 Sun

The Great Gold Conspiracy Has No End Game

The Conclusion: Gold Will Always be Manipulated
Until unbacked fiat money no longer exists Royal Bank gold analysts will retract statements that gold is manipulated because they fear for their professional lives. Moreover, until the current FX system consisting of what I like to call 'paper in air' (freely floating currencies) is completely sunk expect Greenspan and others to deftly do everything in their power to keep up the norm - to keep selling gold at key moments in time to tarnish gold's 'safe haven' reputation.

In a world such as this the GATA remains a semi-powerless voice trying to expose the truth. What do I mean by 'semi-powerless'? Well, I am listening to everything the GATA has to say and I agree with a lot of it, but that doesn't mean enough sustained hard demand for gold will ever materialize and spoil the party. Remember that if people move from dollars to Euros the system still operates. If only a tiny amount of gold contracts ever results in delivery the system still operates. If new central bank sales can be lined up to meet or beat new demand the system still operates.
The system, which is central and bullion banks manipulating gold in many different ways, still operates until people hoard gold.

Lastly, ask yourself a serious question: if the fiat money party is ever spoiled what investor really wins in this situation? The people who had the foresight to own gold or the people who own shotguns? Knowing that I only have one chance to do so, I will not predict the end of the world today.

Soros at it again - predicts dollar downfall -- giovanni dioro, 12:47:04 07/06/02 Sat

George Soros, the billionaire financier, has warned that the US dollar could lose one-third of its value over the next few years. On the currency markets, meanwhile, allegations of yet another accounting scandal - this time at office equipment firm Xerox - made investors dump the US dollar and push it within a quarter of a cent of parity with the euro.

Mr Soros also warned stock markets could fall "much lower" if consumer confidence and growth faltered in the United States...

Soros warns of dollar plunge

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