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From the far side -- Sharefin, 23:28:17 09/26/02 Thu

Economist Martin Armstrong has now been in prison for 32 Months deprived of
his Constitutional right to a "speedy trial".

Date: Wed Jan 05 2000 04:24
GoldBird1a (Armstrong-Republic-manipulations)
Whilst I have read a lot on this site about Armstrong and his supposed short
gold position etc etc etc. I just thought everyone should know that it is
all BS. I have worked inside Republic Bank and quite frankly the whole
thing stinks of a major set up intended to frame Armstrong big time.
Armstrong was right about the manipulation of silver and a whole lot more.

Not only was silver manipulated, they do it all the time. If you want to
know the truth, it was Republic who has been behind almost every
manipulation I know of for at least the last 10 years, I've seen it first
hand. Buffet is not lily white and this silver purchase of his was not the
first. The manipulation by PhiBro in 1995 when they exercised the call
options way out of the money was executed by Andy Heck who now works for
Republic. The CFTC went to PhiBro demanding to know who the client was
behind the trade and they refused to give up the name. The CFTC did not do
their job as usual and just walked away demanding that they exit the trade.
PhiBro was owned by Soloman Bros and the authorization to squeeze silver was
given personally by Buffet. Does anyone really think that a small sub like
PhiBro could do a $1 billion trade without board approval from above? It
doesn't end there. Bribes were paid to Russian officials to "recall"
platinum so it could be inventoried. Republic helped Tiger corner the market
in palladium and stored it for them just like they moved the silver from NY
to London for Buffet. This thing even goes back to the manipulation of the
US Treasury Auctions. The Gov't boys are so stupid, when they threatened to
take the license away from Soloman Bros, Buffet came to the rescue. Ha! He
was behind that trade as well and his name was concealed then as always.
Then that trader left and started LTCM and had a real merry old time. Look
at who his investors were! Just before it blew up, Buffet agreed to bailout
that operation and wrote a letter stating that if his offer was ever
revealed, it would be void. That letter was published in the WSJ because it
blew up before Buffet could put the deal to bed.

The point is, Armstrong was trying to fight the crowd. He knew what was
going on and the word inside the bank was that he might even have tapes of
conversations between a lot of the players. Everyone is really worried about
that for sure. These guys take the market up get all you suckers believing
the rally is real and then slam it again. How do you think they make their
billions? They don't care about bull markets. They shag the markets to make
their billions off of the people who don't have a clue. They rotate between
the markets. All the same names were on the short-side in copper. Sumitomo
tried to fight these guys. They baited the Japanese into the trades offering
them untold credit. They then would short copper against them. Sumitomo
tried to defend their position and ended up buying the entire inventory.
When they had Sumitomo loaded, they ran to the authorities and did them in
calling it a manipulation. They made a fortune on that short trade. To add
insult to injury, Sumitomo ran to Goldman Sacks for help, Goldman started
selling thousands of contracts in copper that day and then accepted the work
out the following day after front-running their own client. Jimmy Goldsmith
was involved in this one as well as Safra, Tiger and a host of others.
They amazingly are all on the right side of everyone of these trades.

Hell - bribes were even paid to bank officials at the Central Bank of
Thailand to start the Asian Crisis! That was the evidence the Japanese took
to the G7 meeting and demanded controls against the organized hedge funds.
The US Gov't refused to do anything against the group of players because
this thing is so dirty nobody wants the truth out there. They told the
Japs they would agree to sanctions only. That's why Armstrong is being served
up as the Xmas turkey. Quite frankly, he knows too much.

Safra was paying bribes to people inside the IMF as well. They all thought
they had the IMF in their pocket. That's why they all invested so much
into Russia. They even set up Bank of New York on behalf of a rival group of
thugs in Russia and because Republic hates Bank of New York because they
are not part of the club.

These markets are never going to breakout until someone breaks up this
organized mob of billionaires. The Gov't is either too stupid or they are
involved with them - a high probability! After all, Armstrong had a $1
billion credit line in the bank and everyone knew it. Suddenly, his credit
line was pulled and Republic took $500 million of his clients money
pretending it was never there. That order came from good old Mr. Safra
himself and was carried out by George Wendler personally. And if anyone
believes that story about Safra's death, I guess they believe in Santa Claus
and a few other sudden deaths when the heat got turned up. If Armstrong or
his clients got Safra on the stand, the whole thing could have unraveled.
His bodyguard was changed just after this affair started. You fill in the

Armstrong was never short 700 tons of gold. In fact, to get the silver
manipulation going, Armstrong was out of the country and they ran their
orders through Republic to make everyone think it was Armstrong covering
short positions he never had. The records are all there!

All this stuff is on tapes, docs and emails. The question is, will the Gov't
go along with the big boys and cover everything up again? If so, they say
already Armstrong won't make it to trial. They cannot afford a open trial
with everything Armstrong knows. He probably knows far more than what has
been written here. They just can't afford for the world to know how rigged
this game truly is and how these billionaires really make their money at the expense of everyone else.

That's the real story. Take it for what it's worth.

Gold -- Sharefin, 22:36:21 09/26/02 Thu

MiningWeb Review- PDF file

AurionGold 's long kiss goodbye
Reinventing the World Gold Council
Ashanti clears the decks, ditches CSFB
Greens 'outrageous mining lies
Govt finds minerals compromise
Mining charter myths smashed
Impala outlines rerating rationale
Wilting Placer price to lure buyers
BHPB expresses concern for global outlook
Shame on the Australian Reserve Bank
Chile may oppose Anglo deal
Bull's production theory in error?

Gold -- Sharefin, 22:16:35 09/26/02 Thu

Freeport protected from predators

The law and order risk attached to mining in Indonesia may be working in favour of one of the juggernauts operating there, Freeport-McMoRan Copper & Gold [NYSE:FCX].
When global gold giants and diversifieds for that matter have a glance at the copper and gold output figures coming out of Freeport's freak of nature, Grasberg, they might be inclined to do a double-take like this writer did to check they're not seeing things.

Freeport's chairman and CEO, Jim Bob Moffett, said from Jakarta yesterday that he came away from his visit to Grasberg this week on a "real high", and why wouldn't he have been after hearing of the above-budget numbers the super mine was expected to generate.

Aggregate mine production and sales for the September quarter were forecast to exceed a whopping 510 million pounds of copper and 1 million ounces of gold as higher-grade open cut ore continues to be mined, Moffett reported, with Freeport's attributable share totalling more than 440 million lb and 840,000oz. These results would set new quarterly production records. "We're going into the next quarter with a lot of momentum," he said.

Gold -- Sharefin, 22:12:14 09/26/02 Thu

Barrick Gold cuts profit forecast; shares tumble

Just days after unveiling a massive expansion plan, Barrick Gold cut its profit guidance Thursday, citing high production costs and softer sales.


Strange how they can cut a profit when gold is falling to $250 yet their margins fall off when the price rises above $300.!!!!

Must have been the hedging.(:-)))))

Gold -- Sharefin, 22:07:10 09/26/02 Thu

Gold recycling jumps 50 per cent as new gold becomes dearer

India, the world's largest gold buyer, witnessed a decline in imports this year as volatility in gold prices drove consumers to recycling instead of indulging in fresh purchase. India's demand for gold dropped 40.5 per cent in the second quarter (April-June) this year since Indian demand is sensitive to price movements. In contrast, according to World Gold Council (WGC), use of old gold witnessed a 50 per cent jump during February and June this year as against 22 per cent during the same period last year. “Volatility and high gold prices drove price sensitive Indian buyers to recycling than investing in fresh purchases,” G.S. Pillai, WGC' regional director for India, told Business Standard. A study covering consumers, goldsmiths and scrap dealers carried out by the WGC revealed supply of recycled bars surged leading to widening of the gap between the prices of new and old gold. Heavy fluctuations in gold prices deterred Indian buyers who in turn reused old gold ornaments. Traders said supply of old gold grew and prices touched the $ 320 per ounce level because consumers exchanged old jewellery for new designs. “The volatile international bullion market, with gold rates swinging between $290 to $330 an ounce since January this year, led to drop in demand and only if the prices come down will sales pick up,” Naresh Khandelwal, a bullion trader in Delhi's Chandni Chowk said. Both trade and consumers held back from purchases. Dealers said they expect buyers to stay away from the market at current price levels and volatility. “Firm gold prices are deterring consumers from buying as much gold as they normally do during the festival season. Local demand picks up in mid-August and peaks in early November with Diwali,” Khandelwal added. “The industry is hopeful that once the sharads are over and navratri begins, sales would pick up even if the quantity bought is lower,” Pillai said.

Gold -- Sharefin, 22:05:40 09/26/02 Thu

S. Africa political risk for miners, banker says

South Africa, home to many of the biggest gainers among gold mining shares this year, may also make life difficult for investors. The government there is considering proposals that would require 51 percent of new mining operations, and about a third of existing mines, to be owned by blacks, the country's majority, within the next 10 years.

Gold -- Sharefin, 22:01:58 09/26/02 Thu

World's smallest miners may win big

Plus: S. Africa political risk for miners, banker says

The smallest gold mining companies will play catch-up with their larger counterparts when the rally in gold prices resumes, experts say.

In the gold industry, they're called juniors -- the small exploration companies -- and they offer the most upside potential in a rising market for precious metals, according to an array of analysts, geologists and executives who appeared this week at a bullion conference in New York.

"Juniors are the one place to be," said K. Brent Cook, a mining analyst at Global Resource Investments who is also a geologist. He's one of the few mineral experts on staff at a U.S.-based financial company.

Gold -- Sharefin, 21:42:55 09/26/02 Thu

The money trilogy: Gold, interest rates and the dollar

Sometimes the best trading systems are based on simple proven concepts without a lot of modification to muck up the process. One basic fundamental relationship exists among gold, interest rates and the dollar. Here, we explain the link in both historical and modern- day terms and show some straightforward ways to exploit it.

Currency, gold and interest rates have a complex interaction that has worldwide effects and a strong historical basis. Gold has been used as a currency for millennia. At one time, most of the world defined its money relative to gold. The world long has abandoned the Gold Standard, but gold as a currency link still weighs on the monetary system.

The interaction between gold, currencies and interest rates affects current and future mortgage rates, corporate profits and the strength of the job market. It is important to examine this relationship and its interaction in today's world markets. Having done so, the next step is developing some simple trading strategies based on what we have learned.

Gold -- Sharefin, 21:14:33 09/26/02 Thu

Should you sell your S. African gold shares?

Funds defend South African golds

Gold -- Sharefin, 21:12:59 09/26/02 Thu

Gold bears slink in the shadows

Gold -- Sharefin, 21:11:56 09/26/02 Thu

A Top in Gold at $330?

Gold -- Sharefin, 21:09:49 09/26/02 Thu

The glory of gold

They came for fire and brimstone. They got it. They are gold bugs; a 3,000 strong congregation that descended on the Marriot Marquis in Manhattan for the fifteenth annual New York Institutional Gold Conference.

Gold -- Sharefin, 21:07:17 09/26/02 Thu

Is the best behind gold stocks?

Gold -- Sharefin, 20:53:51 09/26/02 Thu

Selling South African golds

Dr Frank Lucas, head of boutique banking house Loeb Aron, issued a blunt sell on South African gold stocks, causing something of a commotion at the New York Institutional Gold Conference.
Speaking with unusual candour, the quintessential English banker said his firm was "very long physical precious metals and lightly exposed to SA," a position that would be sold down in coming weeks.

Slicing effortlessly through the blanket of political correctness that smothers discussion about SA, Lucas laid out a case for quitting its gold stocks and, by default, the country itself. His view has nothing to do with Afro pessimism or any other ism, simply a desire to stay married to his capital.

Fiat -- Sharefin, 20:50:31 09/26/02 Thu

Gold 'QQQ': Key to a precious rally

Security to benefit from bullion boom, experts say

Would an electronic substitute for physically owning gold boost demand for the metal in times of fiscal turmoil?

The World Gold Council, a bullion trade group, acknowledges it is working on a new investment vehicle for gold but offers few details. Experts at a New York bullion conference say they expect such a security, probably in the form of an exchange-traded fund that is listed on the New York Stock Exchange, in coming months.

"I think Chris Thompson's product will make a big difference," said Rick Rule, chief executive of Global Resource Investments. Thompson is the new chairman of the gold council, whose charter is to increase investment demand for gold. "If it's backed by the gold council and there is a big, recognizable gold depository involved, it will be a big success."

Fiat -- Sharefin, 20:39:50 09/26/02 Thu

A Tale Of The S&P500 P/E Ratios Over 75 Years

A reasonable and common-sense person can logically come away from a reading of this essay with the idea that we have completed a very large bull market top in the period from 1996 to 2002, and that we are now only in the early stages of a long and deep bear market that potentially has a very long way still to fall before prices reach fair value again.

Gold -- Sharefin, 20:11:10 09/26/02 Thu

Is silver a better hedge than gold?

In times of crisis like these, silver may offer a safer haven than the traditional refuge of gold, but there are fewer stocks with exposure to silver,

Some fearful investors have fled imploding stock markets for the traditional haven of gold. But several observers say silver offers more for the worried and weary.

"It's a hedge against chaos and confusion, just like gold," said Ross Beaty, chief executive officer and chairman of Vancouver-based Pan American Silver Corp. "Silver's the poor man's gold."

Gold -- Sharefin, 19:39:25 09/26/02 Thu

Gold execs make bold bullion bets

Executives from some of the world's most successful gold companies say they expect further gains for the metal.

The gains could come in the next several months, as a confluence of events shakes investor faith in traditional investments such as stocks, bonds and currencies.

The message coming from gold executives and the newsletter editors and fund managers who specialize in precious metals is that they expect gold to pierce $325 to $330 an ounce, a level that has repelled further advances thus far this year.

"I don't see $350 as a high," said Richard Sacks of Phoenix Advisory, a Chicago money manager who specializes in gold mining companies. "I see far higher."

"We probably won't get through the year without gold going to the next level," said Robert Bishop, editor of Gold Mining Stock Report.

"In the end game, you have to own gold, physical gold, in some shape, to be prepared for what the financial world has in store for us," said Sprott of Sprott Asset Management. Sprott owns 19 percent of a closed-end gold and silver fund, Central Fund of Canada, that trades on the American Stock Exchange.

Others were even more enthusiastic. "I think we're headed into a major bull market for gold," said John Brock of Brock Management Co. in Boston. "Thousands of dollars an ounce."

Magnetic Silver -- Cobra, 16:38:43 09/26/02 Thu

Send any suspicious magnetic silver items to
Bart at Kitco.....he could assay them. Most
refineries have an assayer on staff. This
would get to the bottom of this riddle. Every
time I send in scrap gold for refining I have
to pay for an assay and the assayed item is
always returned to me. Assay's are under $50
usually with most refineries. Spend the money
and find out what you have that's magnetic.

@ giovanni on magnets -- Galearis, 11:14:27 09/25/02 Wed

Fridge magnets would not be my choice for your project. They are, after all, only designed to be strong enough to hold a couple of pieces of paper on a fridge door. I use a pair (attached in tandem) of quite powerful "button" types of magnets. These would be used to hold cupboard doors shut, for example, and will very firmly hold the weight of a steel tableknife.
A good small horseshoe magnet available in J.C.Penny stores or a Woolworth's would also be equivilent; just slightly more bulky.

I might add that one metallurgical engineer in Toronto is disturbed enough by the news of magnetic sterling that he is now checking stores with his magnet. His estimate (speculation) is that it would take a 50% alloy of nickel to silver to get a ferro-magnetism response as described. That is a FWIW and report from another party (handle: Sierra Madre) at the USAGold forum. So far all my conversations with metallurgists would indicate a problem with this magnetic response. To date that has been two individuals - with six email queries to others and no responses as of yet.

Best regards,


@galearis - silver institute -- giovanni dioro, 09:01:00 09/25/02 Wed

I appreciate your comments, and I have to agree that I thought that "density" comment was ridiculous as well.

I went out looking for a magnet and all I could get was a good-sized fridge magnet. I tested it on a few coins I had. It was negative on the 1 oz. pure silver coin, negative on a common 20 cent euro coin, and magnetic on the silvery part of the bi-metalic euro coin which is nickel I believe.

By the way, what kind of magnet are you using?

@Sharefin & Giovanni -- Galearis, 07:52:33 09/24/02 Tue

What the Silver institute is (hoping?) thinking that some of this magnet action with the sterling chains is related to silver and its superior conductivity. The statement about density is silly, or we should see similar behavior with gold. A metallurgical expert, by the name of Gordon Franke, responding in the thread to the Tim Wood piece opinioned that a strong electrical field could induce a "sway" reaction in a superior conducting element such as silver. The concept was also speculated about on Eagle Ranch Forum - where this whole topic is still boiling.

From what Mr. Franke was saying, he did not have personal experience with what I and others are seeing - nor does the Silver Institute as of yet.

There is a world of difference between "sway" and "stick".
I am seeing "stick" after "sway". The magnetic reaction is not a light one that simply induces very slight movement in the jewellery.

If for whatever reason the manufacturers are silver plating (or rhodium plating) a 25-50 micron layer over another 25-50 micron layer of nickel, would THIS reality be enough to stick my one troy ounce sterling chain (for example) to my magnet?

Or, as the Silver Institute opinions, is there a deeper core of some magnetic element or alloy. I should point out that stainless steel may also be variably magnetic. I should also point out (from my researches) that alloying magnetic elements with other non-magnetic elements in some circumstances DESTROYS magnetism. All magnetism in this jewellery implies a very great potential for this being fraud. It does not prove it.

The Silver Institute is correct, however, there must be an assay, and if there is a problem, appropriate steps taken.

Best regards,


Giovanni - Galearis -- Sharefin, 03:54:34 09/24/02 Tue

Just a qucik note as I'm away on holidays for a few days but here's what I've just been sent by The Silver Institute.

Thank you for contacting the Silver Institute regarding a story written by
Tim Wood in Mining Web alleging that some major U.S. retailers are selling
jewelry falsely marked as sterling silver. Like you, we were troubled with
these allegations.

If in fact junk jewelry marked as sterling is being sold as sterling then
this is fraud. Fortunately, there are ample consumer laws in the United
States at the state and federal levels that would apply in these instances.
The retail outlets should take the necessary steps to assure themselves
that what they are selling is indeed sterling.

Neither silver or copper are magnetic, so on the surface the magnet test
seems useful. However, some metals professionals maintain that if one drew
a magnet slowly across a piece of sterling silver, one might experience a
slight drag because of the density of silver. It can be further
complicated, because jewelry with a coating of 925 sterling over brass would
not be magnetic.

Simple testers that could be used in a jewelry store are not available. A
sophisticated commercial tester for silver (and most other elements) is an
x-ray fluorescence analyzer, which can be either portable or in bench form.
However, this instrument will only identify the atoms on the surface, not in
the interior of the piece of jewelry. To get at the interior, the piece
would have to be cut through and the middle exposed to the instrument.

One possible solution is that retailers should request that suppliers
provide an additional piece of jewelry for every 100 pieces purchased for
destructive assay. In this way the retailer can check on the quality of the
silver being supplied. There is no other sure way to determine the true
silver content.

There are a number of organizations that represent the jewelry manufacturing
industry, most notably the World Jewelry Confederation ( and
the Jeweler's Vigilance Committee ( that you may want to
contact on this issue. In addition, you can contact the Federal Trade
Commission for federal consumer information at There you will
find many consumer education brochures and instructions for filing an
electronic complaint.

Thanks again for contacting the Silver Institute. We will continue to
monitor this issue.

@giovanni dioro & Sharefin re the sterling problem -- Galearis, 18:40:04 09/23/02 Mon

I should point out that there are at least two conditions for a good scandal: 1) the bad news and wrong doing must be real and verifiable and 2) the news actually has to get out to the greater number of the mainstream public.

To bring readers up to date I must state that just today a sample of magnetic sterling chain was sent the the (Canada) Competition Bureau for the purpose of assay by the Canada Mint. We will not have news for a while yet about 1) and it may not even be verified and that makes 2) even more more questionable.

My problem with these jewellery items was always their magnetism. In the past this always indicated plated items over steel (for example), and hence was a test for fraud sterling. Right now we do not know whether or not this stuff is being alloyed with nickel - which is not illegal, just stupid - or some other "suitable" metal that would still be within '925' purity standards and STILL make the items attractive to magnets.

If the Competition Bureau finds for my complaint, that was sent in three weeks ago to the day, we may have a REAL story. For now it is still only speculation and a minor pain in the posterior for dealers of used jewellery.

Whether (and if it IS a real scandal) this story has negative or positive impacts on the silver industry is yet another debate.

Whatever the final results, however, it should be known out there that a lot of magnetic "sterling" silver is now in sight to come down the tube. That is really all we have right now.

Best regards,


silver fraud -- giovanni dioro, 12:05:29 09/23/02 Mon

Sharefin, this is very interesting and exciting. You cite the positive aspects of this "alleged" fraud. Remember what Buffett did to the silver market when he bought up 129 million ounces - the price of silver initially rose around 30% (then higher when the Buffett followers moved in). Who knows how high it would have gone if Buffett (probably taking orders from his minders) hadn't talked down his investment and then leased it out.

Like you said, this alleged silver plating scandal could acount for a similar amount on a yearly basis to Buffet's stake. Such a significant stake can move markets when it buys up supply at the fringe. Also we must also take into account that the once humongous US stategic stockpile is just about empty. The prospects look good for silver.

We must however realize that a scandal of this magnitude could seriously damage consumer confidence in buying silver jewelry and thus hurt demand for silver and thus its price. Perhaps you have got no response back from the Silver Institute because they are scared of bad publicity and/or for legal reasons they won't comment.

I do hope they find out who is perpetrating this fraud and throw the book at them. In the era of easy money, false profits (prophets too), accounting scandals, etc., this is no surprise.

Caveat Emptor

Gold -- Sharefin, 08:29:44 09/23/02 Mon

Australia's Newcrest Books Huge FY Loss On Hedging

Australian gold miner Newcrest Mining Ltd. (A.NEW) reported late Wednesday a wider-than-expected net loss for fiscal 2001-02 due to its foreign exchange and gold hedging positions.

Gold -- Sharefin, 08:25:29 09/23/02 Mon

Canadian gold groups agree $2bn merger

Three Canadian gold companies agreed on Monday to merge, creating the world's seventh-biggest gold producer, with market capitalisation of over US$2bn.
In the latest move in the fast-consolidating sector, Kinross Gold is leading a three-way all-stock merger with Echo Bay Mines and TVX Gold. As part of the deal, TVX is also paying US$180m to buy out the 49.9 per cent stake in its TVX Newmont Americas joint venture held by Newmont Mining, the world's biggest gold producer.

Gold -- Sharefin, 08:23:03 09/23/02 Mon

Soft demand curbs price rise

The concerted dehedging programs of the world's major gold producers have not had the effect on the gold price many gold devotees had been hoping for. Although the reduction of hedge positions by miners, and therefore selling pressure, has helped boost the gold price, it has been largely kept under wraps by the decline in physical demand, according to a leading gold analyst.

Another bearish article from The Mining Web.
On wonders who sponsors them & why!!!

Gold -- Sharefin, 08:12:38 09/23/02 Mon

War threat quickens the pace of gold's rise

The fact that the gold price had moved gradually higher was a good signal for industrial and jewellery demand in the months ahead, O'Connell added.

"Physical buyers generally hold back when the market is volatile, but at the same time this volatility encourages speculators," she said.

Moreover, the bleak economic outlook in the US and Europe was encouraging the return of professional investors from these regions, "something that has been missing from the bullion market for the past 15 years or so".

O'Connell said: "Gold is now doing its job as a hedge against depreciation of value . . . Speculators use periods of volatility to try to make money, while investors want to preserve their wealth."

Gold -- Sharefin, 08:05:49 09/23/02 Mon

AurionGold on the brink

Persistent Placer Dome [NYSE:PDG] is on the verge of moving to majority control of takeover target AurionGold [ASX:AOR].
Buoyed by a rush of acceptances in the run-down to the sixth extension expiry last Friday night, Placer had no hesitation in extending its bid for a seventh time, until 2 October. And why not after surging to 42.45 per cent ownership (from 38.05 per cent). A couple more waves of acceptances like last Friday's and AurionGold will no longer be the largest independent Aussie gold producer, but a subsidiary of the Canadian global gold giant. That would have ramifications across the board, whether the AurionGold directors decide to finally recommend the offer or not. It's definitely crunch time for die-hard AurionGold shareholders.

Gold -- Sharefin, 08:02:25 09/23/02 Mon

World's most profitable gold company

Ian Cockerill has been integrally involved with Gold Fields' rise to global status in the past four years. He has been significantly influential in Gold Fields' remarkable advance as South Africa's largest gold-mining company by market capitalisation as at the time of going to press and its new current status as the world's most profitable gold company. Cockerill was carefully selected for his operational excellence by astute former CEO and current non-executive chairperson, Chris Thompson.

In succeeding Thompson as CEO this June, Cockerill, 48, has strengthened the operations team with some key appointments - without interfering with the three-pronged strategy that was put in place after his arrival at Gold Fields from Anglo Gold three years ago. The hallmarks of this strategy are inward investment in cost reduction, growth and market development.

Gold -- Sharefin, 07:55:58 09/23/02 Mon

Gold giants face production challenge

The challenge facing the three North American gold mining giants is daunting as they struggle to generate production growth at the same time as they must find almost 17 million ounces of gold a year just to replace reserves.

The gold mining industry is facing the prospect of declining production, said Douglas Pollitt, a mining analyst with Pollitt & Co. Inc., a Toronto investment dealer.

"Three of the four projects Barrick announced development plans for have been kicking around for years," he said.

The producers have all been mining high-grade ore in order to help sustain profitability as a result of low gold prices and when they start mining lower-grade ore their production will drop, Mr. Pollitt said.

All three companies -- Barrick, Newmont and Placer Dome -- have also been growing by acquisition and that, in itself, could create problems down the road.

Fiat -- Sharefin, 07:13:00 09/23/02 Mon

Open Letter to America from a Canadian

The only relation to this is that when one understands why, then one removes debt & buys gold.


Periodic Ponzi Update PPU -- $hifty, 23:23:52 09/22/02 Sun

Periodic Ponzi Update PPU

Nasdaq 1,221.09 + Dow 7,986.02 = 9,207.11 divide by 2 = 4,603.55 Ponzi

Down 198.49 points from last week !

We have a new all time Ponzi low !

65.65 points lower than the old record low set on 7/19/02

Thanks for the link RossL

Ross did you excavate the chart again? or am I getting a bit of vertigo?


Go Gold !


Bob Chapman - International Report -- Sharefin, 22:31:05 09/21/02 Sat

As of this writing the FTSE, the Financial Times 100-share index, is trading at 3,813. If you remember over the past year we have made you aware of a formula we keep that gauges relative affect of the FTSE in relation to the Dow. We predicted that when the FTSE reached 3,772 it will have reached the level it was at in March 1994 when the bull market began. Thus at 3,772 all the gains of eight years will have been lost. At that same time in 1994 the Dow began its assent, yet the Dow is still up 3,981, which is the result of manipulation by the Working Group on Financial markets. It means that in order to reach the level that the FTSE has fallen to, the Dow has to fall 3,981 points to Dow 3,961. This gives you an idea of how overpriced the Dow is and it leads us to believe that the next downward move in the Dow will be a free-fall plunge. Perhaps a 3-4,000 point plunge in a matter of three to four weeks. It also means gold would quickly go to $512 an ounce and perhaps to $840 an ounce. We fully expect this to happen. Everyone should now be long gold and silver shares, short the market and own the Prudent Bear Fund, which can be purchased through Rich Radez at 800-285-1700. We bought this superlative investment fund at $4.75 a share in January. It passed $8.00 a share on Thursday. This is your last chance to buy for mega gains, don't hesitate, and act now.
JP Morgan Chase's credit rating downgrade, which knocks them from the AA pinnacle to the A+A1 level, prohibits them from dealing with central banks, which in turn should mean they couldn't lease bullion unless dealing with another bank. Do other banks have bullion to lease? We don't think they do. That also raises the questions what becomes of the leased gold bullion position and what happens to their derivative positions? Must they unwind them? Due to the downgrade do counter parties have the right to alter their positions? Morgan's shares have been trading under $20.00. If $19.00 breaks will that drive gold over $330 an ounce? There is a good chance the event will do that. All this is exacerbated by a current account deficit, which means a lower dollar, which puts further upward pressure on gold and further downward pressure on Morgan's share price.
Investors who have held stocks and funds for five years are now about even. One more move downward and they will be liquidated. That may have begun with funds losing $52.6 billion in July. The funds are not gathering cash they are spending it. When heavy liquidation comes they'll have to do some mighty selling. The Dow dividend payment is still a paltry 2.2%. So what is one to do? That's simple; one buys gold shares and should have been doing so since April 2000 when we recommended one to do so. People who hold paper currencies are getting screwed, even if they are in Treasury paper. Bonds are still certificates of confiscation in the final analysis Gold has moved up while the TIPS spread, the yield premium regular Treasuries pay over inflation-protected securities, has contracted. Gold is where the stock market was in 1982 at about 800. That Dow went to 11,700. Are you getting the picture? Gold would have to go to a minimum of $1,800 an ounce just to play catch-up. After that, who knows? Markets are famous for overdoing things. We could see $2-3,000 an ounce. Can you imagine where gold stocks would be? *Goldcorp over $200 and *Agnico-Eagle over $400 a share. All those exploration and rising junior producers could all go from 50 cents to $50 a share. In the 1930's Homestake made a move, which could easily be emulated by *AEM and *GG and Durban Deep and ERPM went from 25 cents to $52 and $55 respectively. That's a fact, we were there, and our clients made fortunes. Gold is so cheap and it acts so beautifully. This is your last chance to join us on this wild journey, don't be left behind.
Barrick plans to reduce its forward sales position by 1/3, to 12 million ounces from 17.9 million by the end of 2003, this would equate to 15% of the company's current gold reserves as compared to 22% today. This is still a large hedge position and considering the horrible damage Barrick has visited upon owners of gold and gold shares over these many years, we still recommend the stock as a sell.
The First China Silver Conference was held in the Inner Mongolia Autonomous Region. Attendees heard that silver was in short supply and that silver supply through traditional channels had failed to meet manufacturers' demand for 12 years. Last year the shortage was met from government reserves, particularly from the US & China. China supplied 4 million tons of the total 86 million ounces of silver traded last year by governments on the global market. It will be interesting to see how much China sells this year and next. They could well be cooperating with the US government, suppressing prices.
A recent Merrill Lynch update on the gold sector found: Rating on cash flow for 2002 had *AEM first and *GG third; on cash cost *GG was second with $93 and *AEM third with $145; total cost per ounce *GG first at $119 and *AEM third at $195 per ounce. As you can see these are two top unhedged gold and silver producers.
The proof of the pudding is in the tasting. The XAU is up about 35% this year and the HUI, which is almost unhedged, is up over 100%. Gold is up 14%. Gold funds have doubled or tripled in size. The gold mining industry shares are still only worth $60 billion. That presents super leverage. As yet, the amount of money put into gold and silver shares, bullion and coin is a pittance compared to other investment medium. There has only been $107 million go into American Eagle coins. What this all means is that once investors catch on these investments will explode. Some of these 30 cent gold shares could easily go to $30. We have seen it happen before over the last 42 years. We are facing world wide financial, fiscal and monetary systemic risk, which engenders a flight to quality. Just as in 1930-32 the gold shares are predicting a deflationary depression and most professionals are too stupid to see it or have a vested interest in lying to their clients. If you want to participate consider two of the best-unhedged mining companies in the world, *Agnico-Eagle (AEM-NYSE) and *Goldcorp (GG-NYSE).
There is no question in our minds that George W. Bush is trying to get us into war as fast as possible in order for the conflict to precede the collapse of the stock market. Profits are not standing up. The S&P estimates of $57.50 are now down to $48.50 to$51.00. Our estimate last November was $45.50. Profits from financial companies over the past five years have been a disaster as previously set interest commitments are ripping bottom lines apart. On top of that pricing power is gone, inventories are again up and sales are drying up. JPM's shares are falling again soon to revisit $19 a share. Who would want to buy stock in a company with 35% of the $72 trillion in world derivative exposure? Every professional worth his salt also knows they are manipulating gold and if they make one major mistake, or gold climbs higher based on some event, their company will collapse. The same is true at Citicorp, AIG, BofA and Goldman Sachs, etc. On the other hand are all these positions for the US Treasury? We don't know but sooner or later we are sure to find out. As we said 2-1/2 years ago the central banks and agencies are short or have sold 15,000 to 29,000 tons of gold and that gold is gone forever. Without that overhang, with producers reducing hedges, with a 1700-ton annual shortfall of production to demand, we can most assuredly tell you gold is going higher, much higher. Now you know why we predicted war as a cover three years ago. This is going to be a wild ride and those in gold and silver should do very well.
As we predicted, a federal judge dismissed fraud claims against 11 insurers, which is a big setback to JP Morgan. It is now stuck with $965 million in losses on gas and oil trade with Enron. The insurers refused to pay because the deals were shams intended to hide loans.
Newmont is very slow exiting their hedges and very uncommunicative and arrogant in their treatment of shareholders. In addition their dumping of their shares in Lihir has endeared them to no one. It is now very obvious they took over Normandy knowing the losses they'd have to absorb if they attempted to exit their hedges. We have been a seller of the stock and remain so until those hedges are bought in.
The recent release by Normandy was very misleading. Normandy may have reduced their hedges, however Newmont still had 6.6 million ounces on their books as of the end of the second quarter. Newmont's hedge book was a negative $364 million. That means they still are in tough shape if gold goes up.

Fiat -- Sharefin, 20:30:17 09/21/02 Sat

Credit Bubble Bulletin, by Doug Noland

What an absolutely Dreadful Week for Structured Finance. Where do I begin…

The derivatives market is clearly becoming a very dangerous world. The Office of Comptroller of the Currency reported that total U.S. bank derivative positions increased $3.8 trillion during the second quarter (33% annualized!) to $50.1 trillion. Interest rate derivatives increased $3.4 trillion to $42.7 trillion, with “swaps” adding $2.9 trillion to $29 trillion. JPMorgan Chase only added to its dominance of the marketplace, with total notional positions increasing more than $2.7 trillion to $26.2 trillion. As financial professionals and portfolio managers, we look with concern when an institution continues to expand positions aggressively in the face of losses and a hostile market environment. When such an institution dominates the marketplace and is a key player in the U.S. and global financial system, continued expansion makes us very nervous.

This week JPMorgan Chase finally began to admit that things have gone sour and, importantly, that they have soured across the spectrum of its businesses - as we describe it, the “risk” market. “Houston, we have a problem.” Perhaps we will someday better understand if it has been a case of somewhat forgivable denial or, more likely, desperate obfuscation. For now, this is clearly a huge blow to structured finance and the U.S. Credit system. JPMorgan is everywhere, from interest rate and currency derivatives, to syndicated bank loans and collateralized debt obligations, to Credit insurance and liquidity agreements, to ABS, corporate, consumer and muni finance. They are the poster child for the “efficient” U.S. financial system so often trumpeted by Alan Greenspan - the heart and soul of “structured finance.” They are surely the undisputed King of off-balance sheet finance, as much as chairman William Harrison would now like us to believe the bank has been a victim of corporate chicanery. It looks to us like he has been operating the House of Chicanery. JP Morgan must be rolling in his grave. This bank is not the victim, but a major culprit of the myriad ills that today have so weakened our financial system and economy. To what extent this bank is a spreading terminal cancer only time will tell, but the diagnosis is not favorable. The trust is gone and financial markets are built on trust.

Fiat -- Sharefin, 20:27:23 09/21/02 Sat

Credit Bubble Bulletin, by Doug Noland

What an absolutely Dreadful Week for Structured Finance. Where do I begin…

In a development that should keep other risk players awake at night, FSA has abruptly been transformed from “prudent” asset-backed guarantor to THE critical financial partner in a failing subprime lending business. This is big. Similar to many others operating financial speculations based on sophisticated “risk” models, we expect FSA is in store for surprisingly enormous Credit losses that their risk models would have calculated as an impossibility. Dexia, FSA's European parent, saw its stock sink 15% this week. We have the sense that this week marked a major inflection point with many players now in the process of reevaluating risk models, financial guarantees and, perhaps, “structured finance” in general. For sure, recent events have been another major blow to the vulnerable asset-backed securities market and one more chip knocked off the bull market phenomena of Credit insurance.

Silver -- Sharefin, 20:24:37 09/21/02 Sat

I sent an email to the Silver Institute regarding the silver scam asking for their industry position & any comments but have not received a reply.

Also I was chatting with a friend re the silver scam and sent him the following which I thought you'd find interesting;

The following stats are from my CPM database on silver supply/demand:

From 1995 to 2000 silver jewelry has accounted for approx 250-300 million ounces per annum.
During the same time frame demand has been between 750-850 million ounces.
Jewelry therefore is approx 33-35% of total demand.

Silver production during the same period has been approx 380-480 million ounces with the rest coming from stockpiles & recyling.
Basically 52% of demand is being supplied from mine production - the rest from above ground stocks.
This is approx 350-380 million ounces of silver being removed off the shelf each year.

Jewelry as a percentage of mine supply runs at approx 62-67% which is an awesome amount.

That they have channeled silver from jewelry to other areas speaks of the shortages.

If they had to rob those other areas of demand to rechannel back into the silver jewelry area then there would be an even greater shortfall.

If this fraud was to amount to 100 million ounces (approx 30% of jewelry - just guessing) then that 100 million ounces has to be taken back from other sectors to rebalance the jewelry supply.

The global stockpiles that are being eaten up by the deficit would have an extra 100 million ounces demand placed on them.
This would equate to an additional 25% increase in the deficit at a time where stockpiles are almost being emptied.

As you can readilly see the increased preasures on the silver industry supply side is awesome.

This fraud is an awesome amount if only 30% of jewelry - if it's 60% then watch out.

central bank overhang -- giovanni dioro, 10:24:01 09/21/02 Sat

sharefin, agree with what you say, nonetheless the overhang of gold owned by the Swiss Central Bank has been a big dampener on price. I must say however that gold has performed quite well regardless of the agressive selling by the swiss.

Gold -- Sharefin, 02:00:09 09/21/02 Sat

Wishful Thinking!

Seems to me that the Professor is showing wishfull thinking in presuming that the Central Banks coffers are full to overflowing & that they are ready to sell.

I would hazard a guess that their coffers are well under half full & that they are in fact reluctant to sell into a rising price.
Evidence is available to support such.

Also the Professor states that because the miners are closing out their hedges that such gold as has been lent against them is being returned to the Central Banks.
Once again we have a very flawed asumption.

I am presuming that miners are utilising their banks accounts to pay out their hedges in fiat rather than physical. And in doing so the Bullion Banks are not passing this onto the Central Banks. Instead they are holding their obligation to repay such Central Banks with physical gold open.

The evidence for this is noticable in the latest OCC Derivatives report when whilst the miners have reduced their hedging the Bullion Banks have increased theirs.

It appears to me that the esteemed Professor has served up some hashed up presumptions that on inspection appear to be far from the truth and these points invalidate his whole article.

Why would one attempt to present such information in an intellectual manner when it's obvious that it's far from the truth.

I don't like to rubbish commentary from Goldbugs but this recent publication just seems to blatently wrong sided.

This is they type of misinformation one would expect to see published by JPM.(:-))))

Fiat vs Gold -- Sharefin, 00:01:22 09/21/02 Sat

Federal Reserve Board Abolition Act

Go to this website THOMAS -- U.S. Congress on the Internet and type in " HR5356 " and it will bring up Ron Paul's bill.


2d Session

H. R. 5356

To abolish the Board of Governors of the Federal Reserve System and the Federal reserve banks, to repeal the Federal Reserve Act, and for other purposes.


SEPTEMBER 10, 2002
Mr. PAUL introduced the following bill; which was referred to the Committee on Financial Services



To abolish the Board of Governors of the Federal Reserve System and the Federal reserve banks, to repeal the Federal Reserve Act, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
This Act may be cited as the `Federal Reserve Board Abolition Act'.
(a) IN GENERAL- Effective at the end of the 1-year period beginning on the date of the enactment of this Act, the Board of Governors of the Federal Reserve System and each Federal reserve bank are hereby abolished.
(b) REPEAL OF FEDERAL RESERVE ACT- Effective at the end of the 1-year period beginning on the date of the enactment of this Act, the Federal Reserve Act is hereby repealed.
(1) MANAGEMENT DURING DISSOLUTION PERIOD- During the 1-year period referred to in subsection (a), the Chairman of the Board of Governors of the Federal Reserve System--
(A) shall, for the sole purpose of winding up the affairs of the Board of Governors of the Federal Reserve System and the Federal reserve banks--
(i) manage the employees of the Board and each such bank and provide for the payment of compensation and benefits of any such employee which accrue before the position of such employee is abolished; and
(ii) manage the assets and liabilities of the Board and each such bank until such assets and liabilities are liquidated or assumed by the Secretary of the Treasury in accordance with this subsection; and
(B) may take such other action as may be necessary, subject to the approval of the Secretary of the Treasury, to wind up the affairs of the Board and the Federal reserve banks.
(A) IN GENERAL- The Director of the Office of Management and Budget shall liquidate all assets of the Board and the Federal reserve banks in an orderly manner so as to achieve as expeditious a liquidation as may be practical while maximizing the return to the Treasury.
(B) TRANSFER TO TREASURY- After satisfying all claims against the Board and any Federal reserve bank which are accepted by the Director of the Office of Management and Budget and redeeming the stock of such banks, the net proceeds of the liquidation under subparagraph (A) shall be transferred to the Secretary of the Treasury and deposited in the General Fund of the Treasury.
(3) ASSUMPTION OF LIABILITIES- All outstanding liabilities of the Board of Governors of the Federal Reserve System and the Federal reserve banks at the time such entities are abolished, including any liability for retirement and other benefits for former officers and employees of the Board or any such bank in accordance with employee retirement and benefit programs of the Board and any such bank, shall become the liability of the Secretary of the Treasury and shall be paid from amounts deposited in the general fund pursuant to paragraph (2) which are hereby appropriated for such purpose until all such liabilities are satisfied.
(d) REPORT- At the end of the 18-month period beginning on the date of the enactment of this Act, the Secretary of the Treasury and the Director of the Office of Management and Budget shall submit a joint report to the Congress containing a detailed description of the actions taken to implement this Act and any actions or issues relating to such implementation that remain uncompleted or unresolved as of the date of the report.

Gold -- Sharefin, 23:52:31 09/20/02 Fri

Next Monday & Tuesday, 9/23 & 9/24 The Tom O'Brien Show (TFNN) will be co-hosting the NY Gold Conference with Jim Sinclair. They'll have on for interviews & commentary all your favorites, Bob Chapman, Jay Taylor, the Aden sisters, plus many others. The show will be broadcast live from 3-6PM. There will be charts available at the TFNN website so you can follow the action!

TFNN Website

Fiat vs Gold -- Sharefin, 23:50:31 09/20/02 Fri

No link for this one
Transcript: Louis Rucksack's Week on Wall Street

Mr. Rucksack: Good evening, Welcome back.
Normally at this time in the show, I lamely try to tie in the week's
stock market performance with our pop culture or politics, name
dropping Madonna, Tiger, or W. as often as possible. But tonight
I'll dispense with the yadda yadda yadda and get to the point.

The Market decimated your portfolios again this week just past. It
was a surprise to all of us on tonight's show, as none of us last
week told anyone to sell a darn thing. According to our minutes, we
expressed concern about further volatility, but hey, during what show
in the past 25 years have we not said that? So we let you, our
audience, down once again. There, I put the puns aside, and told it
like it is. I hope my panelists take this queue and tell us what
they really think, and not just what gets them invited back.

Frank Capitalisto, you manage about 10 gazillion dollars of Other
People's Money. What are you throwing it at this week?

Frank. Capitalisto: Well, Lou, while I manage funds worth
about 10 gazillion dollars, we are only in about 1% cash right now,
so we're basically churning the account, selling some losers (which
means any of our stocks; techs, cyclicals, utilities, transports) and
buying more of the same. Sort of a re-balancing. Keeps us off of
the Yahoo chat rooms during working hours.

Lou: Any of those stocks have names?

Frank: No.

Lou: Okayyyyy……..So you think this might be the low for the market?

Frank: That's just your wishful thinking, Lou. Personally, I
think we have much farther to fall in the months and years ahead.
When the valuations return to some normalcy, then I'll repeat the
obvious cliches about in it for the long haul. Really, Lou, you
ought to read a stock market book one of these days. How about Mike
Alexander's Stock Cycles--"Why money markets will outperform stocks
for the next 10 years." (I don't know how to underline --editor)

Lou: Who has time to read? Well, with your negative outlook, why
not SELL some stock, and raise cash?

Frank: Oh, in my personal account, I'm 100 % cash. Bought some
puts, actually. But with OPM, it's just business as usual.

Lou: Well, let's turn to our old friend, Randall Carter. He's a
mellow fellow, always pours oil on burning waters. Randall, do you
share Frank's pessimism?

Randall: That's Carter Randall. Mr. Randall, to you, Lou. And
another thing. Know what I really think? Gold, Precious Metals.
I've been checking out the gold bug websites, and have learned there
is a secret Government Plot, led by Central Bankers and their ilk,
manipulating the price of gold, currencies, interest rates, you-name-
it. Maybe you're in on it too!

Lou: Lord knows I'm not bright enough for that stuff, heh, heh.
But I'm surprised you'd be interested in such things. But back to
topic: stock market. Like stocks?

Carter: In your dreams!

Lou: Bonds! What do you think of Bonds here?

Carter: Oh, definitely one of greatest hitters in baseball. Shows
good team spirit in the pennant race, too.

Lou: No, not Barry. You know, Government and Corporate issues.

Frank: Losers. Sir Printsalot has crippled interest rates, so who
wants to save or lend money at zero real percent? Tie up your dough
for years for nothing? What do you think will happen if the economy
should regain its normal strength?

Lou: I dunno, I only ask the questions, never answer them unless it
is a patently flippant answer involving a pun. What would happen?

Frank: A normal growing economy could double the rates, you know,
back to where they were during the 90's, that era we all profess to
like. Doubling the rates would cut your bond values in half. Half I

Lou: I never did understand how that works……..but not to worry, the
economy won't regain its normal strength, it will stagnate for
years. Well, let's move on. I've invited Gail DueBack to come back
again. You may recall that she was banished as a regular for being a
bit too early in her call for a bear market. Saving her clients from
the top of the mania was just too unforgivable. But my producer,
whoever she is, brought her back tonight anyway. Gail, is it payback
time for me, or what?

Gail: Lou, just admit you were wrong for the past 114 weeks on
your weekly show.

Lou: Okay, okay, I blew it. But it's only money, isn't it? Your
family still loves you, don't they? Well, they probably didn't
before your blew the wad. Gail, what's in store for investors in the
weeks ahead?

Gail: Probably more pain and agony. My special indicator shows a
30% loss on the S&P 500 by year end.

Lou: What indicator is that? We'd like to know, since it has been
bang on for 2 1/2 years!

Gail: It's the inverse Elaine Garzarelli indicator. I just take
her prediction, and go the opposite way.

Lou: She's our special guest tonight, so you'd better sharpen those
claws! I think I see a catfight coming! Well, before we meet our
special guest, let's just here from one more of our old, discarded
but right-on panelists: Mr. Jim Grant, now head of Agora Publishing,
and the one cool head that used eschew (gesundheit!) the stock
mania. Jim, are you bearish as ever?

Jim: What do you think, Curly Locks?

Lou: Uh, I'll take that as a yes. Well, it looks like we're out of
time once again. Nice to have our panelists back again, and smart
money is on Big Hair Garzarelli backstage in five minutes. So until
next week, this is Lou Rucksack, wishing all of you the best of good

Kitco and GoldMoney Establish Arrangement -- Sharefin, 23:33:04 09/20/02 Fri


Though physical gold & the holding of such is a desirable aspect of being a goldbug I serious doubt that I would ever be convinced to part with my stored up wealth for some of your cyber form of gold.

I believe that the emergence of trading gold in a cyber world is little different from trading paper gold and as such is open to all sorts of shenanigans.

In just the last few years since E-Gold evolved there's been numerous attempts to relieve such cyber holders of their assets as hacking code is simple & the protection of cyber acounts is open to such attempts.

Also there has been a dearth of cyber-games, MLM's
& other such pyramiding concepts that have evolved from such cyber assets and many websites have opened up in the attempt to relive others of their hard earned cash.

In reality I think that cyber gold & it's conitations are similar in nature to banks & their interests in ones personal assets - everyone seeking to eek out some percentage of anothers wealth.

As such it must be hard to convince knowledgeable goldbugs to the merrits of swapping physical gold in ones possession to cyber gold that's held in someone elses possession and for which they ask a percentage of profits.

Though the world constantly elvolves & we now have moved to a newer cyber world I can hardly recommend your services to true goldbugs.

The wisdom of holding ones wealth in the form of physical is abrogated once such values are transformed to a cyber nature.

At least this is my opinon from what I have seen so far.
Buyer beware!!!

A1 -- Sharefin, 23:16:50 09/20/02 Fri

I log & plot the Comex stockpiles & you can see them ploted here:

Comex Gold
Comex Silver

In the overall picture the numbers you mention though seeming large appear as typical gyrations.

Warehouse stocks update -- Al, 09:40:23 09/20/02 Fri

As of close of business on 9/19/02 433,053 ounces of silver were added to the warehouse stock ostensibly to replace the 1,013,000 removed during the period 9/17 - 9/18.
Total inventory as of 9/19 is 107,932,792.

Warehouse stocks -- Al, 09:30:39 09/19/02 Thu

I keep the NY mercantile silver warehouse stock on my radar.
Apparently, on close of 9/17 201,000 ounces were removed, on 9/18 (yesterday) 812,000 ounces were removed leaving the total on hand as 107+ million ounces. Where did over 1 million ounces go? Central fund of Canada? I thought they got filled a few months ago. If someone can shed some light on this it would be instructive. 1 million ounces is aprox
31,250 kilos.

Kitco and GoldMoney Establish Arrangement -- Hayek, 08:53:12 09/19/02 Thu

For Immediate Release

Media Contact
Kevin A. Mercuri
212-741-5106 ext 28

Kitco and GoldMoney Establish Arrangement
for Online Gold Transactions

Consumers Given Means to Buy & Sell Gold Online

New York, NY - September 17, 2002 - Rectifying a long-ignored deficiency in the precious metals transaction infrastructure, two leading precious metal operators today announced an alliance to create the means to buy & sell gold online. In doing so, Kitco, a precious metals retailer and GoldMoney, an asset-based online transaction system, are implementing an entirely new way for individuals and companies to buy & sell gold easily and inexpensively with the assurances of safe and secure allocated storage for their precious metals.

Prior to the alliance, gold purchases often required expensive shipping to the buyer because insured storage of gold was not practical or possible at low cost in many instances. Physical ownership of gold often involves complex and costly steps that are largely prohibitive for many consumers. The GoldMoney - Kitco alliance will enable anyone to purchase physical gold online and store their gold in a high-security facility in Great Britain.

“Kitco's proficiency in retailing precious metals, combined with GoldMoney's infrastructure will simplify gold ownership,” said James Turk, founder and managing director for GoldMoney. “Consumers will finally enjoy inexpensive storage with an easy way to buy gold. It's an important break-through, particularly now that gold ownership is again proving to be a wise decision.”

By creating this online way to buy & sell gold, GoldMoney and Kitco are letting consumers trade gold at real-time prices. Formerly, the lack of real-time trading often meant buy orders were subject to shifts in valuation until execution. In addition, consumers will have the unprecedented option of storing their purchase as digital gold currency (through GoldMoney) or in physical gold through Kitco's streamlined coin and bullion retail operation. Purchase, storage and exchange are thus efficient and economical.

Recognized as a leading retailer of precious metals, Kitco offers a complete line of highest-quality bullion products as well as refining and trading services for industrial users of precious metals. With more than 8 million monthly visitors, is ranked as one of the world's most popular sites for information on precious metals.

GoldMoney, inventor and patent holder of the asset-based online transaction process available from, allows consumers to conduct limitless transactions over the Web using gold - a time-honored asset - instead of fiat currency.

“This is a perfect example of vertical integration in response to market demands,” said Kitco president, Bart Kitner. “Kitco's website attracts a large and diverse clientele with an avowed interest in precious metals. By integrating GoldMoney into our system, thousands of GoldMoney users will have a simple way to buy GoldGrams, using US or Canadian dollars.”

Because GoldMoney is an established form of online currency, consumers will also be able to shop online using the value of the gold in their account. A growing number of online merchants and other entities accept GoldMoney payments due to its secure, irreversible, and instantaneous nature.


GoldMoney is Digital Gold Currency - gold in digital form that can be spent and transferred electronically. By converting the world's oldest money into a new and much-needed digital currency, GoldMoney allows consumers, merchants and consumers to avoid the intrusion and expense of credit cards as well as the hassle of using conventional fiat currencies online. GoldMoney founder, James Turk is the creator and patent holder to the asset-based online transaction system. GoldMoney services can be accessed at

Kitco is recognized throughout the globe as a leading retailer of precious metals for small and large consumers as well as the precious metals industry. Kitco provides highest quality bullion bars and coins for consumers, refining services for the jewelry manufacturing industry, and mill products. Kitco's website, is a nexus of the precious metals industry providing real-time pricing, industry news and a precious metals purchasing platform.

Gold -- Sharefin, 05:13:55 09/19/02 Thu

Gold in uncertain times

Speculation amongst market analysts and economists remains rife regarding the impact military conflict would have on the international gold price.

Local economists are sceptical about a significant shift in the gold price, though they admit a slight rise in bullion prices is possible should war break out.

The overall feeling is, however, that the rise will not be very significant and other socio-economic factors are expected to weigh equally on the yellow metal's trading value.

“In times of uncertainty - not only war, but also the state of international financial markets - people move towards the gold market,” he said.

“Should war break out, however, gold could find some support, as it did 20 years ago when there were problems in the Middle East and the price reached $800 an ounce”.

Roger Baxter, an economist from the South African Chamber of Mines, said a ‘multiplicity of factors' can be expected to impact on the gold price.

He said the decreasing flow of gold from central bank, together with a decline in new-mine supply, a move away from hedging and a weaker world economy would most likely push bullion prices higher.

“It must be remembered that political turbulence often leads to economic turbulence, but there are a number of factors that can affect the gold price,” said Baxter.

“The war will certainly have a bearing as wars often knock currencies and developing market economies”.

Gold -- Sharefin, 05:09:47 09/19/02 Thu

Gold climbs on U.S-Iraq tension, falling stocks

"With tensions in the Middle East simmering and the gold entering a period of typically strong seasonal physical demand the outlook for the yellow metal is positive and a test of resistance at $325 is not an unreasonable near term target," said Standard Bank London in a daily report.

"Gold seems to have a solid base as we approach the last quarter of the year," it said.

The market shrugged off news that German conservative Edmund Stoiber, seeking to oust Chancellor Gerhard Schroeder in elections on Sunday, ruled out selling Bundesbank gold reserves to finance the country's budget deficit.

Gold -- Sharefin, 05:07:51 09/19/02 Thu

China gold demand slides, worse than world trend-WGC

Gold consumption in Greater China tumbled by nearly 16 percent in the first half of the year due chiefly to a sharp drop in gold jewellery sales in Taiwan, the World Gold Council said on Tuesday

Gold -- Sharefin, 05:05:23 09/19/02 Thu

Is the Gold Standard History?

Let's just say that the existence of a central bank introduces an occasion of sin for the government. That is why under the best gold standard, there would be no central bank, gold coins would circulate as freely as their substitutes, and rules against fraud and theft would prohibit banks from pyramiding credit on top of demand deposits. So long as we are constructing the perfect system, all coinage would be private. Banks would be treated as businesses, no special privileges, no promises of bailout, no subsidized insurance, and no connection to government at any level.


As for financial markets, events this year have again underscored the underlying obsession, if you want to call it that, that the world's financial markets have with gold. It is not a coincidence that gold-mining stocks were the best performing during the bust period of this business cycle. And earlier this summer, we saw spot prices of gold begin to move very rapidly in response to the growing perception that the financial sector was far from bottoming out. Try as it might, the establishment just can't seem to crush the perception that gold is more reliable that government's paper money.

Indeed, gold continues to be seen as a standard of soundness, as the commodity to flee to in times of emergency, as the last store of value that can be counted on. Neither are these emergencies unknown in the modern world. In Latin America this summer, we witnessed governments prohibiting withdrawals from banks during financial crises, just as we saw in the early days of the Great Depression in the United States. Gold continues to be perceived as a safe haven from the wiles of political opportunism and violence.


Once having read Mises or Rothbard or any number of great monetary theorists, you begin to realize that understanding the monetary regime is the key that unlocks the mysteries of political control in our time. The Fed was created not to scientifically manage the economy - as the journals claimed at the time - but because it met the institutional needs of both the government and the banking industry. The government sought a means of finance that didn't depend on taxation, and the banking industry sought what Rothbard called a cartelization device. That is to say, the banking industry was seeking some way to prevent competitive pressures between banks from limiting their ability to expand credit.

Well, the central bank fit the bill. A central bank managing a currency that is not tied to anything real fits the bill even better. If a little power to inflate is good for the government and its connected banking and financial interests, a lot of power to inflate is even better. For this reason, it was very likely that the gold standard could not have survived the creation of a central bank, and, for the same reason, the creation of a new gold standard will have to do away with the central bank that would always threaten bring it down.

The power to create money is the most ominous power ever bestowed on any human being. This power is rightly criminalized when it is exercised by private individuals, and even today, everyone knows why counterfeiting is wrong and knavish. Far fewer are aware of the role of the federal government, the Fed, and the fiat dollar in making possible the largest counterfeiting operation in human history, which is called the world dollar standard. Fewer still understand the connection between this officially sanctioned criminality and the business cycle, the rise and collapse of the stock market, and the continued erosion of the value of the dollar.

In fact, I would venture to guess that a sizeable percentage of even educated adults would be astounded to discover that the Federal Reserve does more than manage the nation's money accounts, that, in fact, its main activity consists in actually creating money that distorts production and creates inflation and the business cycle. In fact, I would go further to suggest that many educated adults believe that gold continues to serve as the ultimate backing of our monetary system, and would be astonished to discover that our money is backed by nothing but more of itself.

We have our work cut out for us, to be sure, mainly at the educational level. We must continue to state the obvious at every opportunity, that the fiat system is exactly what it is, a system of paper money backed by nothing of real value. We must continue to point out that because of this, our economic system is not depression proof, but rather highly vulnerable to complete meltdown. We must continue to draw attention to the only long-term solution: a complete separation of money and state based on the commodity that the market has always chosen as money, namely, gold.


Back in 1997-98 you were considered a crabby kook, behind the times, to warn that the bull market in tech stocks could not last. But economic law intervened, and fashions changed. Back in those days, too, had you suggested that the business cycle had not been repealed, you would have been dismissed out of hand. But economic law intervened.

In the same way, there will come a time when the current money and banking system, living off credit created by a fiat money system, will be stretched beyond the limit. When it happens, attitudes will turn on a dime. No advocate of the gold standard looks forward to the crisis nor to the human suffering that will come with it. We do, however, look forward to the reassertion of economic law in the field of money and banking. When it becomes incredibly obvious that something drastic must replace the current system, new attention will be paid to the voices that have long cast aspersions on the current system and called for a restoration of sound money.

Gold -- Sharefin, 03:51:36 09/19/02 Thu

Hedging defense - Dr. Murenbeeld Replies

Gold -- Sharefin, 03:37:45 09/19/02 Thu

INTERVIEW: Bobby Godsell: Chairman, AngloGold

Gold -- Sharefin, 03:34:21 09/19/02 Thu

Barrick's move to cut hedging a sign of the times

Investors drive agenda

You know the tide has turned when Barrick Gold Corp., the world's biggest hedging proponent, starts paring down its hedge book.

And you know there is a lot of demand among investors for more information on the arcane world of hedging when a major Bay Street brokerage produces a long report on the subject and announces a road show conference on the subject in Toronto and Montreal.

Hedging strategies that looked great when gold was falling are now feared to be trouble if bullion keeps going up.

Skittish investors are reluctant to invest in companies that employ complicated off-balance sheet hedging strategies. For that reason alone, National Bank Financial mining analyst Tanya Jakusconek said in a report yesterday that Barrick could make the market a lot more receptive by simplifying its hedge book by eliminating variable price sales contracts and its bond portfolio.

The largest proponents of hedging, Barrick and Placer Dome Inc., have seen their share prices miss triple-digit returns enjoyed in 2002 by less hedge-dependent producers, including Kinross Gold, Bema Gold Inc. and Glamis Gold Inc.

Shares of Barrick are up a measly 6% in 2002, Placer is down 6% while Bema is up 330% and Kinross is up 198%.

Barrick has said in recent months that by 2003 it would reduce by one-third the amount of gold sold into forward, fixed-price contracts, and yesterday said it would not raise this amount in the future.

It's little wonder investors are leery of hedge books, which are made up of various complex instruments including fixed forward contracts, spot deferreds and variable contracts where interest rates and lease rates are floating.

NBF's Ms. Jakusconek noted in her dense report on hedging that hedge books are generally the largest they have been during the past 10 years and are at their lowest realized prices.

Barrick, Placer and Newmont have an average of 18% of proven and probable reserves hedged, or 2.7 years of production at a realized average price of US$354 an ounce.

Ms. Jakusconek says investors believe higher gold prices will trigger margin calls and counterparty credit issues if gold adds to an already 13% gain from its US$278-an-ounce low.

Yet Barrick has said it will not suffer from higher gold prices because it can defer contracts and instead sell into the spot gold market -- if gold rises above its realized price of US$340 -- while no counterparty can ask for early delivery of gold or terminate contracts, and margin calls will not be triggered at any gold price.

Ms. Jakusconek says Barrick has been able to defer contracts during the past 15 years, but that this practice would become more difficult if central banks stopped lending gold -- a trend that has already started -- or Barrick had trouble producing gold or was in default of its financial covenants.

National Bank said a US$36 per ounce rise in gold would erode US$1-billion from Barrick's hedge book, although the price rise for its unhedged 61 million ounces would boost the book's value by US$2.2-billion.

Fiat -- Sharefin, 03:29:40 09/19/02 Thu

New Monsters Inc. on Wall Street

Credit risk, derivatives in J.P. Morgan horror tale

"Not pretty," Murphy tells me from his Texas office. The New York bank has, by some estimates, more than $20 trillion of customized and other derivatives on its books. The Office of the Comptroller of the Currency lists J.P. Morgan Chase as the largest holder of gold derivatives, such as deferred-sale contracts and other hedged instruments, swaps and futures-linked devices that gold companies and central banks used to generate extra income during gold's descent in the decade of the '90s.

The faltering bank is regarded as one of the largest dealers in the lending of gold, a practice that generated steady profits when gold prices were (until this year) falling and interest rates were higher than they are now.

Fiat -- Sharefin, 09:01:31 09/18/02 Wed

BOJ to buy stocks from banks, credibility queried

Japan's central bank, moving to allay fears of a financial crisis, announced unprecedented plans on Wednesday to buy shares directly from banks in a surprise step that drove up stock prices but put its credibility on the line.

Sailing into uncharted waters for a central bank, the Bank of Japan said the plan was aimed at preventing market volatility and banking system instability from feeding on each other.

"The central bank must consider measures that will help banks reduce risks from their shareholdings," Bank of Japan Governor Masaru Hayami told a news conference.

The move -- described by ratings agency Standard and Poor's as "shocking" -- follows a fall in the Nikkei share average to 19-year lows this month, raising concerns about a financial crisis ahead of half-year book-closing on September 30.

Gold -- Sharefin, 23:32:57 09/17/02 Tue

Rivers ran with gold three billion years ago

Three billion years ago there was no life on land and no oxygen in the atmosphere. But the rivers ran with gold.

The world's biggest gold deposits washed up at their South African resting place in little bits, say geologists - possibly settling a century-old debate. Understanding the origins of the Witwatersrand Basin deposits could help prospectors to recognize the rock features that point to gold.

"The gold was transported into the basin by streams and rivers," says geologist Jason Kirk of the University of Arizona, Tucson. The gold was formed about three billion years ago, his team has found1. But the rocks on top are about 250 million years younger.

The arguments about how South Africa's Witwatersrand Basin became laden with gold have raged ever since the deposits were discovered. More gold has come from these 7,000 square kilometres than from any continent - about 50,000 tonnes over 120 years, nearly half of all the gold ever mined.

Gold -- Sharefin, 23:31:20 09/17/02 Tue

Gold fund glitters in dull market

All that glitters may not be gold, but the UK's only specialist gold fund has certainly enjoyed a glittering year.

Merrill Lynch Gold & General has handed its growing army of investors a more then useful return of 76.7 per cent over the last 12 months, trouncing the rest of the UK's 1,750 unit trusts and oeics, which have mustered an average 12-month return of minus 13.1 per cent.

Clearly the Merrill fund's strong run may falter if the global gold price were to drop.

But with international tension mounting amid the increasing likelihood of a US-led attack on Iraq, the precious metal is once again fulfilling its traditional role as a safe haven: from $276 an ounce on January 1, gold is now fetching $322 an ounce, a rise of 17 per cent.

Graham Birch, manager of the Merrill fund since 1999, bristles at the idea of the ý184m fund being a safe option in troubled times, however.


"Gold bullion is a safe haven, gold equities are a geared play on gold and are actually a speculation," he says.

"Most of the people who buy our fund are not buying it as a safe haven, they are buying it because they believe they are going to make some money out of it."

Merrill Gold & General invests in the shares of gold producers, sprinkled with a handful of platinum, diamond and silver miners. Mr Birch argues that these gold equities are three-to-five times geared plays on the gold bullion price.

Perhaps surprisingly, the manager does not explicitly attempt to forecast the future price of gold in constructing his portfolio. But he does have a view.

"My private view that it will probably go a lot higher. The gold price today is by no means excessively high. It is below the average of the last 20 years. I think we are in for a period of prolonged uncertainty," he says.

Gold -- Sharefin, 23:25:40 09/17/02 Tue

Gold mine production levels unsustainable - GFMS

Current gold mine production levels may not be sustainable because of depleted reserves at mature North American mine operations and a fall in new mines due on stream, a leading mine research group said on Monday.

"Gold Fields Mineral Services (GFMS) now believe that the world's current mine production levels may not be sustainable," the company said.

"Initial estimates for global gold mine production point to a significant fall during the first half of of the major causes is that output tumbled in Indonesia," London-based GFMS said in a statement.

Lower grades at mining operations in the US state of Nevada were expected to have left output "considerably lower" year-on-year to leave total US output at levels last recorded a decade ago.

GFMS gave no figures on mine output levels, but said it would finalise and publish details of its survey at a presentation of its global gold survey on September 24.

GFMS survey would support research by Toronto-based mining investment banking and research firm Beacon Group Advisors, which in April forecast global gold output falling this year for the first time in two decades, reflecting years of low prices and slashed exploration budgets.

Beacon estimated that world supply of mined gold may could plummet by nearly 30% by 2010 unless bullion prices rally and prompt miners to bring untapped deposits on stream.

Beacon Group's modeling showed global output below 60-million ounces by 2010, down from current levels around 83-million, if bullion prices averaged $275.

Even projections based on a price of $300 and incorporating planned new mine developments showed output falling sharply after 2006 to post a 22% drop from current levels.

Gold -- Sharefin, 23:21:10 09/17/02 Tue

Gold's double-edged sword

The very factors that have propelled global gold equities to new heights this year are threatening to shake the age-old foundation of world gold markets - Indian gold demand. Figures released today by the World Gold Council show the country's jewellery demand for the second quarter struggling to adapt to a protracted period of dollar gold price strength. Global investment demand, meanwhile, has remained worryingly static.

Gold -- Sharefin, 23:16:17 09/17/02 Tue

Barrick's tough sell on new projects

Barrick today unveiled further details of its development pipeline and hedging program, but the consensus view is that it does not change present valuations.

Gold -- Sharefin, 07:16:47 09/17/02 Tue

Barrick Gold sets bold growth plan

Barrick plans to reduce its forward sales position by one-third, to 12 million ounces from 17.9 million, by end of 2003. This would equate to 15 percent of the company's current gold reserves as compared to 22 percent today.

"We are further reducing our hedge position for three main reasons: interest rates are at 40-year lows, leading to lower forward premiums; Barrick has never been stronger financially; and the outlook for gold prices is positive," said Jamie Sokalsky, chief financial officer.

Gold -- Sharefin, 07:14:55 09/17/02 Tue

Political and Economic Worries Support Gold Investment in the U.S.

Jewelry Sales hold steady despite slowing demand for luxury goods generally

A report published by the World Gold Council today said that gold off take in the U.S. rose 2.8% to 70.2 tonnes year-on-year in the second quarter with a 41% surge in investment demand to 4.1 tonnes - up from 2.9 tonnes.

The report - Gold Demand Trends, published quarterly by the Council - said that the rising gold price, along with concerns over corporate government, the global political scenario and the still shaky economy, underpinned interest in investment gold in the United States. Moreover, demand for gold jewelry remained surprisingly stable- even increasing slightly to 66.1 tonnes - up from 65.4 tonnes despite hardening consumer sentiment caused by collapsing equity markets and geo-political tensions. Although purchases were concentrated in lower cost items demand held despite slowing sales of luxury goods generally. The report noted that if economic recovery in the U.S. becomes more firmly based, demand should improve although growth in the next few months is expected to be modest.

Gold -- Sharefin, 06:46:41 09/17/02 Tue


The Executive Committee of the World Gold Council is pleased to announce the appointment of two new members of the senior management team. Stuart Thomas is Managing Director of its newly formed subsidiary, World Gold Trust Services LLC and based in the World Gold Council's New York office he will be responsible for developing a new gold investment product. Simon Village will be Managing Director Investment Services based in London with a similar remit to promote gold investment products globally on behalf of the World Gold Council.

Stuart Thomas graduated from Fairleigh Dickinson University where he majored in Economics and Finance. He joins the World Gold Council from Morgan Stanley in New York where he was First Vice President, Director, Equity Capital Markets Sales and Solutions. Previously Stuart was with Merrill Lynch in New York for 9 years.

Simon Village graduated as a Mining Engineer from the Camborne School of Mines, UK, and gained practical knowledge of the industry working for Shell Minerals and the Anglo American Group. For the past 8 years Simon has been with HSBC in South Africa and London. Simon was responsible for Global Mining Research for the HSBC Investment Banking Group and most recently repositioned HSBC's Institutional Securities business in South Africa.

The creation of innovative gold-backed financial products will increase interest in gold as an investment. This is one initiative of several that will reinvigorate the Council under the leadership of Chairman, Chris Thompson, and the recently appointed Jim Burton as the World Gold Council's Chief Executive Officer.

Gold -- Sharefin, 06:43:50 09/17/02 Tue

Losing shine? Gold demand dips by over 40% in Q2

Rising prices, weak rural income due to poor monsoon and a less buoyant economy continued to hurt gold demand in the country during the second quarter of 2002 (April-May-June) and it declined by 41 per cent compared to a year earlier.

Gold -- Sharefin, 06:38:44 09/17/02 Tue

Stocks, Dollar Rise; Oil Falls as Iraq Says to Admit Inspectors

Stocks and the dollar rose after Iraq agreed to admit United Nations weapons inspectors, easing concern the U.S. may invade. Oil, bonds and gold declined.

Gold -- Sharefin, 06:36:26 09/17/02 Tue

No link or story on this one yet.


Gold -- Sharefin, 06:33:18 09/17/02 Tue

Newmont Mining to end hedging by February

Australian gold producer Normandy, owned by world number one gold miner Newmont Mining Corp , on Tuesday said Newmont would eliminate its hedge book by February next year.
"Newmont has completed a restructure of its hedge book, reducing total hedging by 1.1 million ounces since 31 December 2001, and has implemented a new hedging policy that will result in elimination of the Company's remaining hedge book of 300,000 ounces by February 2003," the firm said in a statement released in Australia.

Newmont had already committed itself to accelerate the unravelling of millions of ounces of gold pre-sold at fixed prices.

The mining house had already extinguished some two million ounces of a total 10 million ounces inherited with the takeover of Normandy in February this year.

Newmont, which forecast gold production of over seven million ounces this year, is among a growing legion of big miners with an aversion to hedging -- the practice of selling yet-unmined nuggets at fixed prices.

Newmont has criticised hedging as hurting the gold price by erecting a false ceiling on upward price movements.

Gold -- Sharefin, 06:27:57 09/17/02 Tue

Gold prices stunt Q2 demand

Gold demand in the second (April-June) quarter of 2002 fell 14.7 percent year-on-year to 729 tonnes owing to falling consumer confidence and a two-and-a-half year high for the spot price of bullion, the World Gold Council (WGC) has said. The WGC said political uncertainties and economic worries would underpin investment demand in the near future. "Unless the gold price rises again then jewellery demand should start to recover; the physical market now seems to have adapted to prices in excess of $300 per ounce," the council said. It was commenting in its quarterly report Gold Demand Trends.

Gold -- Sharefin, 06:25:45 09/17/02 Tue

Barrick unveils development plan

Tuesday announced a $2-billion (U.S.) mine development program expected to double profits by 2006 - a move the gold miner described as one of the biggest programs of its kind in the sector.

The five-year plan calls for an average two million ounces of annual gold production in the first 10 years at an expected cash cost of $125 per ounce. That's 29 per cent lower than the current production base, the company said in a statement.

Gold -- Sharefin, 06:22:16 09/17/02 Tue

Speculation Barrick may make move on Newcrest

Shares of Australian gold producer rise nearly 8% over two days

Investors in Australia are gambling Barrick Gold Corp. is ready to target one of that country's largest gold producers, Newcrest Mining Corp.

For its part, Barrick yesterday refused to comment on a Sept. 12 report published on, an African-based Internet site.

Old Gossip -- Sharefin, 06:07:27 09/17/02 Tue

This is the Dr. Beter AUDIO LETTER(R) 1980

Administrations come and go, my friends, but the more they
legislate, the more the country goes to the dogs. Millions of
Americans are out of work, but inflation refuses to quit.
Interest rates are heading up again, so say "Good-bye" to that
new home. Our auto industry is on the ropes, our cities are
decaying, our armed forces are falling apart, and at the center
of it all our dollar is shrinking out of existence. The dollar
is no longer "good as gold" because our gold is gone; and as long
as it stays gone, all the campaign promises in the world cannot
save the United States economy. The forces who stole our gold
are bringing down America's economy, and now they are using our
own gold to bring down war around our heads.

My friends, it's time to lift our eyes from idle campaign
promises to cast our vote for America before it is too late.
It's time for us, the American people, to use the gold weapon
ourselves. It's time for us to vote for the TRUTH by bringing
about a public investigation of the FORT KNOX GOLD SCANDAL
because only in that way can we hope to save our economy from
utter ruin, and only in that way can we seize a weapon big enough
to stop those who are dragging us all into the insanity of

Ever since 1914, war after war has been fought over oil.
Governments have been destroyed, others created, and still others
subverted; and whenever there is war for oil, gold is always the
trigger. Gold is such an important weapon of war that in early
1968 the Joint Chiefs of Staff became very alarmed over the
depletion of America's gold supply. They visited their then
President Lyndon Johnson in the White House. In an angry
confrontation they demanded that Johnson not reduce the gold
stock still remaining because it was needed for purposes of war.

The Rockefeller interests, now under the control of John J.
McCloy and associates, arranged earlier this year for eight
billion dollars ($8,000,000,000)--that's eight thousand million
dollars--in gold to be paid to the leader of Iraq, Saddam
Hussein. A very special private underground warehouse in Zurich
was used in this transfer of gold. This gold was an outright
bribe. It was to persuade Iraq to attack Iran. Eight billion
dollars, my friends, is a lot of money, but it was a cheap price
for the Rockefeller oil cartel, and for two reasons:

First, the gold which was used to bribe Iraq to start the war
was part of the gold which was stolen from you and me! The bulk
of the gold taken from America's stockpiles was flown to Europe
on multinational corporate jets. So, my friends, that $8-billion
in gold did not cost the oil companies anything except some jet
fuel, but it cost you and me part of our monetary gold, and it
has been used to start a war for which you and I will pay even

Eight billion dollars in gold was a cheap price for the oil
companies for another reason too. If their plans are successful,
the Rockefeller oil group will get back complete control over
Iran's oil and other natural resources, and they won't have to
pay those untold billions in oil royalties to their new Iranian

Silver -- Sharefin, 22:18:06 09/16/02 Mon

Silver swindle!

Earlier this month it came to my attention that hallmarked Sterling silver jewellery (925 fineness) being hawked at major US retail outlets and even prominent jewellers is probably little better than stainless steel.
Newsletter publisher Bob Chapman ran a simple magnetic test on Sterling products in Texas earlier this month and reported that nearly everything clung to his magnet for dear life. Sterling silver doesn't do that. He reported the fraud to the managements of the stores who promised to take action, but were still selling counterfeit stuff days later. Evidently the stores think this is not a problem or their communication is really that bad. They're going to get an expensive surprise.

To my wife's misguided delight, I suggested we browse the wares at the local jewellery stores in one of those cheerless, windowless shrines to consumerism (Quaker Bridge Mall, Princeton). Suffice it to say she was less than impressed at my interest in silver and less so that it was for its magnetic rather than aesthetic qualities. In short, most of the stuff was magnetic.

Given the evidence pouring in from around the country, this impacts tens of millions of ounces of silver. Duped customers are going to want their money back or the real thing. The stores, fearing litigation, will swiftly turn on their suppliers, who will turn on the manufacturers to get back the money or 925 silver. Either way, it looks very positive for silver producers and anyone else long silver because this is not a problem to be solved quietly. However, the danger is that a large chunk of people will be put off buying jewellery altogether since there is no way to be sure you're getting what is promised.

Gold -- Sharefin, 21:18:40 09/16/02 Mon

US-Iraq war factor already priced in

An Iraq-US war in its own right would not drive the gold price skyhigh, according to a leading global gold analyst. The talk of a solo or UN-sanctioned US attack against Iraq has been in the news for a couple of months now, and many market observers felt a war premium had already been built into the gold price.

Recent history showed war in isolation was not the key to movement in gold prices. "It is the impact of war, if any, on the major macro-economic variable that will be the crucial determinant for gold," said associate director of metals and mining at Macquarie Bank, Kamal Naqvi.

a bullish tidbit -- Al, 19:48:47 09/16/02 Mon

I was at the bullion bank today to buy another silver bar.
I selected my usual 100oz poured JM and elected to retire 490 dollars from my checking acount to set another bar free.
Anyway, the girl was chatty and she volunteered some interesting information, she told me that this morning a gentleman had come in to redeem a 100 oz certificate that he had purchased in 1980, for 40 someodd dollars an ounce.
Of course at todays prices he got just better than 10 cents on the dollar. This reminds me of a story from 1980 where a guy went down to sell all his silver in the forty dollar range and was bemused by all of the activity at the silver wicket, he remarked to someone in line that he guessed he wasnt the only one who was selling at such a high price.
"selling, buddy, we're here to buy silver"

ChartsRus -- Sharefin, 09:55:35 09/16/02 Mon

Charts Online

Also a few new chart series to look at.
Nikkei/Gold ratio

Gold FIBO ready to break through.

Dow FIBO breaking down.

Gold -- Sharefin, 00:31:45 09/16/02 Mon

They won't ring a bell at the bottom

Finally, I might also cite the gold market as an example of how a bottoming process works. In a bear market for two decades, it appears that gold made its final low at around $250 or $260 about a year ago, and it's kind of grudgingly moved back to around $315. I think gold is in the early stages of a bull market. Now, gold is a commodity (although it's also money), and not as well-followed as the stock market, so the bottoming process might be slightly different.

But I believe the psychology surrounding the gold market is quite instructive for bottoms at large. A couple of years ago, if you admitted to being bullish on gold, people would have looked at you as though they pitied you for being so dimwitted. In my opinion, that is the degree of disaffection we've got to see before it's safe to return to the U.S. equity market in any kind of moderately aggressive fashion.

Wheezy Al shuns musty tomes
Probably one of the most objectionable lines in a speech already riddled with objectionable comments was the following: "We were confronted with forces that none of us had personally experienced. Aside from the then-recent experience of Japan, only history books and musty archives gave us clues to the appropriate stance for policy."

Well, I would submit that needing "musty" history books to help solve a problem does not absolve one for not recognizing a bubble. That is precisely what those of us who recognized the bubble relied on to guide us through the period.

Meanwhile, as many of us were able to recognize the bubble -- because it was so obvious -- the chairman of our nation's central bank is now on record as asking us to believe that so long as he has not personally experienced a bubble, he may be excused from not recognizing it. Of course, he not only didn't recognize the bubble, he grabbed the pom-poms and microphone, and cheered about productivity at every possible chance, as well as the glories of the Internet.

In any event, Greenspan's inability to learn from history also surfaces in his disregard for the historical value of Fed minutes. Though not really reprised in the Journal story, his speech contains one boldfaced lie. To paraphrase, he said that the Fed had no tools to dampen the speculation of the bubble, short of fostering a serious economic setback. In the speech, he said, "It seems reasonable to generalize from our recent experience that no low-risk, low-cost incremental monetary tightening exists that can reliably deflate a bubble. But is there some policy that can at least limit the size of a bubble, and hence the destructive fallout? From the evidence to date, the answer appears to be no." This completely and totally contradicts the minutes of the Fed meeting in the fall of 1996 (released this past year), in which they admitted that raising margin requirements certainly would have popped the bubble, but they were afraid of what other damage might have been done.

The minutes recorded Greenspan's comments as follows: "I recognize that there is a stock market bubble problem at this point. . . . We do have the possibility of raising major concerns by increasing margin requirements. I guarantee that if you want to get rid of the bubble, whatever it is, that will do it. My concern is that I'm not sure what else it will do." I would argue that most people would rather have experienced a little economic turmoil back in 1997, 1998 or 1999 -- via the Fed doing the right thing -- than be subjected to the current, greater misallocation of capital and destruction due to Fed cheerleading and issuing what the market believed to be a put.

In the misallocation-of-capital department, those of you who would like to believe that Al has correctly pronounced the housing bubble to be nonexistent, please raise your hand, and please be assured that you have answered incorrectly. His assessment is going to be wrong, just as he has been wrong about virtually everything he's said or decided in his professional career. I point this out, once again, so that people don't suck in and believe what the Fed tells them, and so that they can think for themselves and be prepared. This is not to say that everyone should go out and sell their houses and rent. But I think that people would be wise to figure out ways to pay down their debt, rather than take out a home-mortgage loan and get more levered up, because housing prices are the next bubble to deflate.

Untenably lame
Now on to The New York Times for a look at a recent story titled "Policy makers hone debate: When to hold, when to fold." In the course of this news analysis, the paper ran another totally disingenuous follow-up comment by Laurence Meyer: "There was a sense of frustration that we couldn't deal better with the asset price bubble. (You see, now he too is admitting that they knew there was a bubble.) But I don't think anybody has come up with a strategy that people feel would have gotten the job done." And he goes on to lash out at his critics, who think that the Fed should have tightened monetary policy. "That's a politically untenable situation for a central bank to be in." (He is referring to the wealth loss that would occur.)

So, the former Fed head is also now acknowledging that there was a bubble. This is yet another example of how cowardly the Fed is (and yet one more example of the Queen's misallocation of knighthood). It is supposed to be their job to lean against the wind, not to pour gasoline on a lit fire. They crowed that CPI inflation was under control, so they felt no need to tighten, which is why you can only have an asset-price inflation when CPI inflation is more or less under control. (Of course, this time, it was even more under control because of the hedonic pricing that made it seem even lower than it was, but that's another subject for another day.)

So, that about sums up what I have to say about this miserable, whiny speech by Greenspan on behalf of the Fed. I would just like to emphasize that his admission of the bubble should mark the start of the process that ends in his being completely discredited. Yes, before this is all through, people will see that their apparent maestro is, in fact, the most incompetent and irresponsible Fed chairman in history. And sadly, lots of them will pay for his experiments and subsequent mistakes.

Periodic Ponzi Update PPU -- $hifty, 22:42:15 09/15/02 Sun

Periodic Ponzi Update PPU

Nasdaq 1,291.4 + Dow 8,312.69 = 9,604.09 divide by 2 = 4,802.04 Ponzi

Down 59.21 from last week.

Thanks RossL for the link!

Were just 132.84 points above the all time Ponzi low.

The Ponzi has fallen 2,976.92 points since April 7, 2000 when we started to keep track of it!

A trend I think will continue.

Be on the lookout for the fat lady.

I think I hear her warming up behind the curtain.


Go Gold !


Gold -- Sharefin, 19:56:20 09/15/02 Sun

September 11 Revisited

On the former you may recall our discussion of the Kondratieff winter. The Kondratieff winter is not just about falling stock markets and debt implosions it covers the entire broad socio/economic spectrum. The most recent Kondratieff winter (1930-1949) is a case in point. This covered the Great Depression, the rise of Nazi Germany and Imperial Japan, and World War 2. We are entering a similar period. Now it is the rise of the world's only superpower (some have called the United States the new Rome) and the rise of fundamentalist extremism. Where it all leads of course is open to conjecture at this time.


With the war drums continuing to beat holding gold and oil in your portfolio should continue to outperform the general stock market. Indeed it has been shown that gold outperforms in the Kondratieff winter so the preference area is gold stocks. And finally it should also be pointed out that during periods of war the stock market is not the place to be. If one recalls at the end of the 1970's when there were tensions in the Mid-East that culminated in another oil crisis, the Iranian revolution, the Iranian hostage taking and the Iraq/Iran war both oil and gold soared while the stock market fell.

Gold -- Sharefin, 19:21:59 09/15/02 Sun

Gold funds an option in tough times

Economic hard times typically are good for gold prices, so it's no surprise that in a year filled with anxiety about terrorism and concerns about accounting scandals that gold mutual funds have enjoyed solid returns.
No other fund category has performed better in the bear market. While almost all categories have posted negative returns, precious metals funds returned an average of 43.51 percent from January through August, according to fund tracker Lipper Inc.
That compares with 7.17 percent for real estate funds and 3.46 percent for bond funds, the more popular safe havens for investors.
"We're still in the early stages of a bull market -- maybe approaching the middle stage -- for gold," said Standard & Poor's metals analyst Leo Larkin.

Gold -- Sharefin, 19:10:29 09/15/02 Sun

Risky Business (some thoughts on Barrick's hedge programme)

Dr Martin Murenbeeld recently published a study in which he discusses the practice of hedging future gold production in general and Barrick Gold's hedge programme in particular. The study is titled "In Defense of Gold Hedging - The Case of Barrick" and anyone interested in reading it can do so by going here and downloading the document in pdf format.

Gold -- Sharefin, 19:07:47 09/15/02 Sun

Dueling forces

To repeat our summary of the gold market from the previous report, "Volatility and whipsaws notwithstanding, the immediate trend in gold futures remains up until the rim of the parabolic bowl in the daily chart is broken. Crossing above $325-$326 would be very bullish and would probably lead to a test of the June highs. Piercing above the June highs, even if only marginally, would indicate that gold will seek higher levels in coming months (even if the new high is followed by a pullback and lengthy consolidation)."

Silver -- Sharefin, 19:05:41 09/15/02 Sun

A silver sling-shot set-up

Gold -- Sharefin, 08:18:28 09/14/02 Sat


Congressman Ron Paul
U.S. House of Representatives
September 10, 2002


Mr. Speaker, I rise to introduce legislation to restore financial stability to America's economy by abolishing the Federal Reserve. I also ask unanimous consent to insert the attached article by Lew Rockwell, president of the Ludwig Von Mises Institute, which explains the benefits of abolishing the Fed and restoring the gold standard, into the record.

Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve's inflationary policies. This represents a real, if hidden, tax imposed on the American people.

From the Great Depression, to the stagflation of the seventies, to the burst of the dotcom bubble last year, every economic downturn suffered by the country over the last 80 years can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial "boom" followed by a recession or depression when the Fed-created bubble bursts.

With a stable currency, American exporters will no longer be held hostage to an erratic monetary policy. Stabilizing the currency will also give Americans new incentives to save as they will no longer have to fear inflation eroding their savings. Those members concerned about increasing America's exports or the low rate of savings should be enthusiastic supporters of this legislation.

Though the Federal Reserve policy harms the average American, it benefits those in a position to take advantage of the cycles in monetary policy. The main beneficiaries are those who receive access to artificially inflated money and/or credit before the inflationary effects of the policy impact the entire economy. Federal Reserve policies also benefit big spending politicians who use the inflated currency created by the Fed to hide the true costs of the welfare-warfare state. It is time for Congress to put the interests of the American people ahead of the special interests and their own appetite for big government.

Abolishing the Federal Reserve will allow Congress to reassert its constitutional authority over monetary policy. The United States Constitution grants to Congress the authority to coin money and regulate the value of the currency. The Constitution does not give Congress the authority to delegate control over monetary policy to a central bank. Furthermore, the Constitution certainly does not empower the federal government to erode the American standard of living via an inflationary monetary policy.

In fact, Congress' constitutional mandate regarding monetary policy should only permit currency backed by stable commodities such as silver and gold to be used as legal tender. Therefore, abolishing the Federal Reserve and returning to a constitutional system will enable America to return to the type of monetary system envisioned by our nation's founders: one where the value of money is consistent because it is tied to a commodity such as gold. Such a monetary system is the basis of a true free-market economy.

In conclusion, Mr. Speaker, I urge my colleagues to stand up for working Americans by putting an end to the manipulation of the money supply which erodes Americans' standard of living, enlarges big government, and enriches well-connected elites, by cosponsoring my legislation to abolish the Federal Reserve.

By Llewellyn H. Rockwell, Jr.

As with all matters of investment, everything is clear in hindsight. Had you bought gold mutual funds earlier this year, they might have appreciated more than 100 percent. Gold has risen $60 since March 2001 to the latest spot price of $326.

Why wasn't it obvious? The Fed has been inflating the dollar as never before, driving interest rates down to absurdly low levels, even as the federal government has been pushing a mercantile trade policy, and New York City, the hub of the world economy, continues to be threatened by terrorism. The government is failing to prevent more successful attacks by not backing down from foreign policy disasters and by not allowing planes to arm themselves. These are all conditions that make gold particularly attractive.

Or perhaps it is not so obvious why this is true. It's been three decades since the dollar's tie to gold was completely severed, to the hosannas of mainstream economists. There is no stash of gold held by the Fed or the Treasury that backs our currency system. The government owns gold but not as a monetary asset. It owns it the same way it owns national parks and fighter planes. It's just another asset the government keeps to itself.

The dollar, and all our money, is nothing more and nothing less than what it looks like: a cut piece of linen paper with fancy printing on it. You can exchange it for other currency at a fixed rate and for any good or service at a flexible rate. But there is no established exchange rate between the dollar and gold, either at home or internationally.

The supply of money is not limited by the amount of gold. Gold is just another good for which the dollar can be exchanged, and in that sense is legally no different from a gallon of milk, a tank of gas, or an hour of babysitting services.

Why, then, do people turn to gold in times like these? What is gold used for? Yes, there are industrial uses and there are consumer uses in jewelry and the like. But recessions and inflations don't cause people to want to wear more jewelry or stock up on industrial metal. The investor demand ultimately reflects consumer demand for gold. But that still leaves us with the question of why the consumer demand exists in the first place. Why gold and not sugar or wheat or something else?

There is no getting away from it: investor markets have memories of the days when gold was money. In fact, in the whole history of civilization, gold has served as the basic money of all people wherever it's been available. Other precious metals have been valued and coined, but gold always emerged on top in the great competition for what constitutes the most valuable commodity of all.

There is nothing intrinsic about gold that makes it money. It has certain properties that lend itself to monetary use, like portability, divisibility, scarcity, durability, and uniformity. But these are just descriptors of certain qualities of the metal, not explanations as to why it became money. Gold became money for only one reason: because that's what the markets chose.

Why isn't gold money now? Because governments destroyed the gold standard. Why? Because they regarded it as too inflexible. To be sure, monetary inflexibility is the friend of free markets. Without the ability to create money out of nothing, governments tend to run tight financial ships. Banks are more careful about the lending when they can't rely on a lender of last resort with access to a money-creation machine like the Fed.

A fixed money stock means that overall prices are generally more stable. The problems of inflation and business cycles disappear entirely. Under the gold standard, in fact, increased market productivity causes prices to generally decline over time as the purchasing power of money increases.

In 1967, Alan Greenspan once wrote an article called Gold and Economic Freedom. He wrote that:
"An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense--perhaps more clearly and subtly than many consistent defenders of laissez-faire--that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other. . . . This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights."

He was right. Gold and freedom go together. Gold money is both the result of freedom and its leading protector. When money is as good as gold, the government cannot manipulate the supply for its own purposes. Just as the rule of law puts limits on the despotic use of police power, a gold standard puts extreme limits on the government's ability to spend, borrow, and otherwise create crazy unworkable programs. It is forced to raise its revenue through taxation, not inflation, and generally keep its house in order.

Without the gold standard, government is free to work with the Fed to inflate the currency without limit. Even in our own times, we've seen governments do that and thereby spread mass misery.

Now, all governments are stupid but not all are so stupid as to pull stunts like this. Most of the time, governments are pleased to inflate their currencies so long as they don't have to pay the price in the form of mass bankruptcies, falling exchange rates, and inflation.

In the real world, of course, there is a lag time between cause and effect. The Fed has been inflating the currency at very high levels for longer than a year. The consequences of this disastrous policy are showing up only recently in the form of a falling dollar and higher gold prices. And so what does the Fed do? It is pulling back now. For the first time in nearly ten years, some measures of money (M2 and MZM) are showing a falling money stock, which is likely to prompt a second dip in the continuing recession.

Greenspan now finds himself on the horns of a very serious dilemma. If he continues to pull back on money, the economy could tip into a serious recession. This is especially a danger given rising protectionism, which mirrors the events of the early 1930s. On the other hand, a continuation of the loose policy he has pursued for a year endangers the value of the dollar overseas.

How much easier matters were when we didn't have to rely on the wisdom of exalted monetary central planners like Greenspan. Under the gold standard, the supply of money regulated itself. The government kept within limits. Banks were more cautious. Savings were high because credit was tight and saving was rewarded. This approach to economics is the foundation of a sustainable prosperity.

We don't have that system now for the country or the world, but individuals are showing their preferences once again. By driving up the price of gold, prompting gold producers to become profitable again, the people are expressing their lack of confidence in their leaders. They have decided to protect themselves and not trust the state. That is the hidden message behind the new luster of gold.

Is a gold standard feasible again? Of course. The dollar could be redefined in terms of gold. Interest rates would reflect the real supply and demand for credit. We could shut down the Fed and we would never need to worry again what the chairman of the Fed wanted. There was a time when Greenspan was nostalgic for such a system. Investors of the world have come to embrace this view even as Greenspan has completely abandoned it.

What keeps the gold standard from becoming a reality again is the love of big government and war. If we ever fall in love with freedom again, the gold standard will once more become a hot issue in public debate.

Gold -- Sharefin, 00:17:59 09/14/02 Sat

Threat of a conflict sends investors on a gold rush

Gold is attracting strong investor interest as prices move higher amid fears of another Gulf war.

Gold's last big rally was in 1993 but the metal has soared higher again in recent weeks as political tension between the US and the Middle East gathered pace.

Gold -- Sharefin, 00:16:27 09/14/02 Sat

Risky Business

Dr Martin Murenbeeld recently published a study in which he discusses the practice of hedging future gold production in general and Barrick Gold's hedge programme in particular. The study is titled "In Defense of Gold Hedging - The Case of Barrick" and anyone interested in reading it can do so by going here and downloading the document in pdf format.

Gold -- Sharefin, 00:11:24 09/14/02 Sat

All That Glitters

Gold Funds Are Outperforming, But Investors Are Slow to Catch On

Economic hard times typically are good for gold prices, so it's no surprise that in a year filled with anxiety about terrorism and concerns about accounting scandals, gold mutual funds have enjoyed solid returns.
No other fund category has performed better in the bear market. While almost all categories have posted negative returns, precious metals funds returned an average of 43.51 percent for the first eight months of 2002, according to fund tracker Lipper Inc.

That compares to 7.17 percent for real estate funds and 3.46 percent for bond funds, the more popular safe havens for investors.

"We're still in the early stages of a bull market - maybe approaching the middle stage - for gold," said Standard & Poor's metals analyst Leo Larkin.

Silver -- Sharefin, 00:08:38 09/14/02 Sat


Gold -- Sharefin, 00:03:24 09/14/02 Sat

S.Africa Q2 gold production up on 2001 quarter

South Africa produced 3.2 million ounces of gold in the quarter ended June 2002, up from 3.08 million ounces in the same quarter last year, the Chamber of Mines said on Friday.

Gold -- Sharefin, 00:00:24 09/14/02 Sat

Kazakh National Bank Ends Gold Purchases

The National Bank of Kazakhstan ended in 2002 purchases of gold from producers, bank head Grigory Marchenko told Interfax on Thursday.
In previous years the bank bought tonnes of gold from producers, Marchenko said. In particular, it bought 2.5 tonnes in 2001, he said.

In effect, the gold component, nearly 50 tonnes, in the bank's reserves which exceed $3 billion has reduced to 16%, Marchenko said. This is attributable to fairly fast growth of hard currency assets as well as ending the purchases of gold, he said.

On the other hand, the gold component must amount to at least 20% of the total, Marchenko said.

Gold -- Sharefin, 23:58:15 09/13/02 Fri

Asia central banks upping gold reserves

Asian central banks are likely to increase their gold holdings as they reassess their international reserves' overdependence on the U.S. dollar given the current economic environment, a senior official from the World Gold Council said Friday.

"We have seen 4 or 5 central banks which are now committed to writing a policy on gold, though I'm not at liberty to tell you who they are. But I have been assisting them," he said.

Thiedeman indicated that one central bank, appreciating that U.S. interest rates are at a 40-year low, is looking to reallocate its assets, reducing its exposure to U.S. Treasuries and increase its holding in gold.

In the last couple of years, several Asian central banks have been gold buyers, most notably the Chinese central bank. The Philippines central bank, as well as the central banks from Sri Lanka and Mongolia, have also be seen in the market.

Medium-term, another reason for some Asian central banks to increase their gold reserves could be the use of the gold dinar, as a means to settle international trade amongst Islamic states.

"I believe that there will always be a role for gold as long as political and financial crisis exist, so let there be no doubt that gold today is as good as it has ever been, perhaps better," he said.

Gold -- Sharefin, 23:55:47 09/13/02 Fri

Hedging takes shine off high gold prices

FOR most of the past 12 months, Australian gold miners have enjoyed the highest spot gold prices in nearly six years as war and global economic jitters helped the yellow metal regain its investment popularity.

But the high prices - gold touched $US331 ($600) an ounce at its peak - have not filtered through to the bottom line, with the gold sector returning a diverse range of profit results for the year to June 30.

Hedging proved the biggest culprit in the weaker results after a change in Australian accounting rules forced mining companies to adjust their books to reflect net market values of their hedge positions at balance date.

Gold miners typically have used gold and currency hedging, which involves forward selling production and locking in the Australian dollar at set prices, as a form of insurance on their earnings.

But in the past financial year, as the gold price moved upwards and accounting rules became stricter, hedging has actually worked the opposite way for many companies, whose net earnings have been decimated by higher than normal write-offs.

Gold -- Sharefin, 23:52:44 09/13/02 Fri

Odds shorten on Newmont becoming Placer predator

Expectations of an imminent new wave of gold industry rationalisation appear to be intensifying almost daily, and Placer Dome [NYSE:PDG] is set to be in the thick of the action. Though its share price has improved by more than US$2 in the past few weeks, the Canadian-based group is one of the vulnerable players, according to a leading global gold analyst, who believes the combination of its 25 per cent weaker share price (since 27 May) and partial stake in its target AurionGold [ASX:AOR] presents an interesting takeover opportunity.
While some North American analysts recently nominated Canadian rival and the second largest gold company by market capitalisation, Barrick Gold [NYSE:ABX], as the frontrunner to launch a raid on Placer, BNP Paribas Equities this week made a case for US-based Newmont Mining [NYSE:NEM] as the most likely contender. And AurionGold would figure prominently in the equation.

Gold -- Sharefin, 23:51:28 09/13/02 Fri

Newcrest and Gwalia in play

A prominent American investment bank has assembled a team of "rocket scientists" in Australia to assess options for a senior gold producer, thought to be Barrick Gold [ABX], to acquire Newcrest Mining [NCM] and the gold division of Sons of Gwalia [SGW] in one fell swoop.
A well placed source said formal preparations have been underway for at least three weeks and have taken on added urgency to pre-empt Newcrest funding its revival of the Telfer gold project on unfavourable terms.

The report was confirmed independently although it has not been confirmed that Barrick is the originator. AngloGold [AU] has been regularly linked to Newcrest as a consolation prize after losing Normandy to Newmont [NEM] in a bitter bidding war that ended in February this year.

Fiat -- Sharefin, 23:39:34 09/13/02 Fri

Bubble Trouble

While many investors are focusing on the risks of falling stock prices, they are ignoring an equally dangerous risk in the bond market. Like the equity markets, which are in a process of correcting the excesses of the 90's, a similar process is taking place in the debt markets. It began in the telecom sector, has now spread to the energy markets, and is slowly working its way to the financial sector. All of the loans, mortgages, credit cards, auto loans and other type of installment debt that have been syndicated will eventually be unwound.

A clear understanding of the U.S. debt problem and how it is financed leads to the conclusion that a dollar crisis is imminent. There is a limit to how much debt the American financial system can continue to absorb. At some point, there will not be enough money to finance it. There is also a time coming here shortly when foreign money will no longer be willing to finance America's voracious appetite for consumption and debt to finance it. When that moment in time arrives, the next step in the process of currency depreciation will be the monetization of assets, in particular Treasury debt and other financial assets. They will implode and go under.

In summary, the bond market is a bubble waiting to burst. All it will take is a falling dollar to deflate it. It is one bubble few investors see. Falling yields and rising bond prices don't register. The bond market bubble has kept afloat by asset transfers out of equities into bonds in a flight to safety. On Wall Street, few are able to think outside the box. For most fund managers, it is inconceivable that such an event could happen. Rising credit spreads, rising trade and budget deficits, and the enormous risk of expanding credit are simply ignored. To most money managers, switching to bonds has been like catching another train without giving any thought to its final destination. Another painful lesson is about to be learned.

Capital has sought refuge from stocks in bonds and soon is about to turn and run to the next sector - hard assets.....

When capital turns from bonds to gold - watch out......

Fiat -- Sharefin, 22:54:43 09/13/02 Fri

Mountain of Unregulated Derivatives

US Government Report (Comptroller of the Currency) reveals
massive unlisted & non-transparent derivative (short) positions in bankers' ("weak") hands.

We stand at turning point for the return of gold as currency.
Meantime, gold can rise to $1,450 to $1,700 over next 5 years.

Fiat -- Sharefin, 22:50:53 09/13/02 Fri

IMF warns of global credit crunch

An aversion to risk-taking by financial institutions in the current uncertain economic climate could lead to a credit crunch, threatening the pace of economic recovery, the International Monetary Fund warned yesterday.

The Basel-based Bank for International Settlements this week also warned that a further erosion of investors' confidence in the assets of banks could choke off credit needed to nurse fragile economies back to health.

The IMF yesterday identified a number of risks to orderly markets at the launch of its quarterly financial stability report. They included panic selling by investors, a sharp slowdown of investment in the United States and the failure of some banks.

The fund said there were "signs of contagion" from Brazil to other emerging market bond markets, though fewer than in previous crises.

Silver -- Sharefin, 20:59:00 09/11/02 Wed

Gold prices fall, issues reverse course

Gold futures prices eased Wednesday to close around the same level they were at a week ago, but key metals indexes reversed course to end higher a day after suffering a 5 percent decline.

"The risk for more selling is real and could send gold lower, but we expect physical buying and profit taking to prevent any price collapse," said Frederic Panizzutti, an analyst at GoldAvenue, a major gold online trading company.

Panizzutti expects gold to trade in the $312 to $318 an ounce range in the next few days.

On Tuesday, "gold attracted some reasonable buying flows on ongoing concerns about the conflict escalation between the U.S. and Iraq but also on renewed terrorist fears around Sept. 11," he said.

For now though, "the U.S. dollar and stock market could again become dominant factors for the gold price in the absence of any other news."

Silver -- Sharefin, 20:56:00 09/11/02 Wed

Gold and oil prices soar on jittery markets

WAR and Sept 11 jitters have given a significant lift to the prices of two major commodities - crude oil and gold - in world markets. Crude oil prices rose in early trading on Tuesday on the New York Mercantile Exchange (Nymex) following a warning by the US Navy that there could be possible attacks on oil tankers in the Gulf.

Silver -- Sharefin, 20:53:03 09/11/02 Wed

Shanghai Becoming China's Gold Trading Center

The sixth RNA China Gold and Precious Metals Conference held in Shanghai reinforced the claim that the eastern metropolis is becoming the country's gold trading center.

Shanghai, one of the largest gold consumers in China, registers more than two billion yuan (241 million US dollars) in sales of gold and jewelry annually.

Silver -- Sharefin, 20:51:22 09/11/02 Wed

China's Silver Market Shining after Opening-up

China has become an important market in the world for the consumption of the precious metal of silver since its deregulation.

Zhou Juqiu, deputy director of the China Nonferrous Metal Industry Association, quoted statistics as saying that annual silver consumption now stands at around 1,000 tons in China.

The China Photo-Sensitive Association and the Lucky Group, a major film producer in the country, predict silver consumption forphoto sensitive materials will grow at an average annual rate of about 8 percent in the 2002-2005 period. This year a total of 170 tons of silver will be used to produce color film and photo paper in China.

Attention is also paid to the electrics and electronics industry, which claims a majority 30-percent share of China's total consumption of the precious metal.

Wang Yingshan, president of Huatong Nonferrous Metal Trading Center Wholesale Market, forecast that the silver used for this sector will hit 700-800 tons this year, up from the 600 tons in 2000, and the figure will increase further to 1,000 tons in 2005, with an annual growth rate of 10 percent on average.

Gold -- Sharefin, 20:43:58 09/11/02 Wed

Gold/War: Gold Below US$325/oz For 2-3 Yrs

Gold could rally as much as US$15-US$30 a troy once from its current levels should any U.S. attack on Iraq happen soon, but analysts are divided if gold could hold those gains.

Some said the price spike won't last beyond a few days, as funds and speculators have been buying gold ahead of President George W. Bush's address to the U.N. General Assembly Thursday and would sell to take profits once the U.S. hits Iraq.

But gold bulls are saying the metal's fundamentals have changed and gold will certainly build on gains resulting from any attack.

"There are two things driving the market: the fundamentals and the sentiment of very short-term uncertainty," said Geoff Bell, head of global mining at BNP Paribas Equities (Australia).

"We would expect to see a better rally than anything we've seen in the last four to five years because the impediments then were more uncertain," he said.

The fundamentals of the gold market are in good shape, Bell said.

In the 1996-2000 period, gold producers over the world were busy building hedges, selling their production forward at set prices. Together with the hedge funds, producers would open fresh short positions every time gold rallied, he said.

With many major producers gradually unwinding their hedge books since late last year, these dampers on gold price rallies aren't there anymore, he said. He, however, declined to say how high gold would rise.

Keith Goode, managing director of Sydney-based Eagle Research Advisory Pty Ltd., is of the same view, noting that gold only benefits from war issues if it is already in a rally mode.

"So, I think that it is not running purely on the basis of the Iraqi situation," he said.

Gold -- Sharefin, 09:00:45 09/11/02 Wed

In defense of gold hedging

Criticism of hedging and hedgers has reached fever pitch. A lot of it has to do with a "told-you-so" hubris among commentators delighting in hedge book mark-to-market values turning negative as the gold price has risen. This has been taken as proof of earlier convictions, although many fail to admit that predictions of a repeat Ashanti-Cambior type blowup have not materialised even after gold breached $310 per ounce.
As a consequence, it has been open season on hedged companies. Whilst much of the vitriol stems from retail investors, it has also been fuelled, amazingly, by some gold producer executives. They clearly have a vested interest in promoting their own stocks at the expense of others, but the net effect is detrimental to the industry and deliberately obscures the wealth created through hedging.

Dr Murenbeeld addresses the subject in a professional, dispassionate manner that serious gold investors will enjoy. Miningweb is privileged to make the full report available for download.

Gold -- Sharefin, 20:29:19 09/10/02 Tue

Newmont's Lassonde: Gold Prices and Growth Outlook

Pierre Lassonde, president of Newmont Mining Corp., talks with Bloomberg's Frederic Tomesco about the outlook for gold prices, the company's hedging policy and growth goals. Denver-based Newmont is the world's biggest gold producer.

00:50 Outlook for gold prices over next two to three years
00:47 Hedging policy following purchase of Normandy Mining
01:33 Newmont's increase in exploration funding and growth goals

Listen Here

Lenny's Corner -- Sharefin, 20:25:04 09/10/02 Tue

Newmont President Pierre Lassonde Comments on Gold, Profits

Following are comments by Pierre Lassonde, president of Newmont Mining Corp., on the outlook for gold prices and the company's future earnings and asset sales. He was speaking to reporters after an award presentation in Montreal.

Denver-based Newmont became the world's biggest gold producer earlier this year when it paid about $7 billion for Franco-Nevada Mining Corp. of Canada and Normandy Mining Ltd. of Australia.

On how he expects gold to fare in the next two years:

``Political events are always a bit of an influence on gold, but at the end of the day they don't stay there for very long. The reality of gold right now is that it's in an up trend, and the reason is because the U.S. dollar is going down against a basket of currencies. That we've been saying for a year and a half, and we think it will continue for the next two to three years.''

On Newmont's policy on hedging:

``At Franco-Nevada, we had a very firm policy against hedging. We have never done any hedging and we believe that it's been detrimental to this industry. We've never changed our policy. With Newmont, we inherited the Normandy hedge book through the merger, and we have been very busy undoing the hedge book, as we have stated at Newmont that our policy going forward is to be an non-hedged company.''

Lenny's Corner -- Sharefin, 20:22:08 09/10/02 Tue


Last week was most certainly not your average ho-hum week for the precious metals as gold was propelled higher in price as investors world-wide were rattled by three influences, the seemingly imminent war against Iraq and the concurrent rise in the price of oil, the first anniversary of the terrorist attacks of 9/11 and the continuing weakness of both the Nikkei and the US stock markets. This most potent cocktail of fear and trepidation has pushed gold prices into the $320's; above ALL of it's moving averages and bodes well for further price increases in the future. Please be advised that there is "very heavy wood" (please interpret my jargon as meaning very substantial technical chart resistance) between current prices and the $330 level, and I do not expect the rise to be easy nor quick, unless upcoming news events trigger the need for higher price levels. Gold was up $7.60 for the week, as the buying seemed to be coming from the most reliable and best sources, the Bullion Banks, and the trade. I found such information to be most comforting as the speculators are most often wrong and the trade is most always right.

Silver was up about 5 cents for the week, largely in sympathy with gold. But further gains in this metal were capped by J.P.Morgan/Chase who emerged day after day as a large seller in the $4.57 to $4.58 range, thwarting the ambitions of the silver bulls. Please note that I use the word "capped" and not another adjective. Let me explain, if I may, as an old floor trader. If the market is trading at, lets say $4.57bid/$4.58 offered, a major concern who really wishes to sell, may enter the pit and offer a hundred or perhaps a couple of hundred at the offer, hoping that some local or public orders may indeed buy from them. If filled, they return as a seller, offering another couple of hundred contracts. In this method, contracts are really sold, and business gets done. BUT, if the major concern is simply trying to "cap" the market, and not really sell any product, they enter the pit and offer not one, or three, or five hundred, contracts, but they offer to sell 4000 contracts, as they did on several occasions this week. Now..local traders start selling in front of them, knowing and thinking that this order will remain unchanged, and prices never rise through the important level, even though this major concern may not have sold one contract. Markets are all about psychology, are all perception versus reality, and the perception of one large seller in the market effectively capped prices.

Now there are many who see such news, such disclosures, as proof positive of manipulation of the markets. Nothing could be further from the truth. Big money speaks loudest and big traders can and do have their way with the market, any market, for a period of time. I liken it to a poker game, with table stakes. The one with the largest amount of chips in front of him has a most definitive advantage. Now, please understand that the "large player" didn't get to have the most chips by being stupid, and such a player TRULY realizes that his influence is transitory in nature. He can "bluff" from time to time but not always. I still believe that silver is really "stupid cheap" at current levels and I have recommended that clients of the firm maintain long positions in this market.

Gold -- Sharefin, 20:05:22 09/10/02 Tue

gold retreats despite 9/11 terror alerts

COMEX gold fell on profit-taking Tuesday, shaking off a deluge of last-minute alerts that new attacks against Americans could be launched to coincide with Wednesday's anniversary of Sept 11.

The fall snapped a one-week rally in gold. But the safe haven premium that gold gathered was still largely intact and few traders wanted to go short with the U.S. slowly building support for a potential military conflict with Iraq.

"It looks like some of the people who tried to get long and buy yesterday ahead of Sept 11 amid all these tensions worldwide at the moment burnt their fingers and lost some money," said a dealer at a precious metals refiner."

Gold -- Sharefin, 19:02:27 09/10/02 Tue


Amid multinational scams, volatile stockmarkets and erratic currencies comes a call for the restoration of the world's most tried and tested means of trading - gold. AYMAN DUNSEATH explores the growing interest in this precious metal and its proposed use as the cornerstone of an Islamic trading bloc.

A quiet revolution is taking place in the world today. Or perhaps 'revival' is a better definition. The subject of columns and columns of daily business pages, and the means by which the vast majority of the world buy and sell - money, in its 21st century paper and electronic form, is under attack from a growing minority of detractors. Following a series of catastrophic economic collapses linked directly to drastic currency fluctuations, the all-important trust that paper money demands of its users for its very existence is in danger of being eroded.

The alternative? Gold - the oldest universal medium of exchange. "Gold cannot be inflated by printing more of it," says Professor Umar Ibrahim Vadillo, president of both Islamic Mint and "It cannot be devalued by government decree and, unlike paper currency, it is an asset which does not depend upon anybody's promise to pay."

Still unknown to the vast majority of paper money users, the major currencies have all floated anchorless since 1971, when US President Richard Nixon pulled the plug on the world's last metallic national currency - the gold-backed dollar. Till today, currencies are backed only by the full faith and credit of their issuing governments. In other words, paper money is intrinsically worth only the paper that it is printed on.

"All forms of paper assets - bonds, shares, and even bank deposits - are promises to repay money borrowed," says Vadillo, who also heads the global Islamic movement Murabitun, which is spearheading the revival of the gold dinar as an alternate currency. "Their value is dependent upon the investor's belief that the promise will be fulfilled. As junk bonds and the Mexican peso have illustrated, a questionable promise soon loses value. Gold is not like this. A piece of gold is independent of the financial system, and its worth is underwritten by 5,000 years of human experience."

As Mahathir says, "The gold dinar could be an important facilitating mechanism ... to move away from an inherently unstable and ultimately unjust global monetary system."

Old but still valid -- Sharefin, 09:36:14 09/10/02 Tue


The following letter was sent to the Secretary of the US Treasury Department in the new Bush administration by Mr Gordon Bamford who heads a pressure group entitled "South Africans For A Free Gold Market". A lot of it has been said before, but the paragraphs referring to the damage done to the fledgling economy of the Rainbow Nation by a gold market artificially depressed by central banks and finance house trading should be read by everyone who has ever espoused the fight against world poverty.

Fiat vs Gold -- Sharefin, 09:34:27 09/10/02 Tue


On September 5, the OCC released its derivatives data for the second quarter of 2002. Total gold derivatives remained almost unchanged at $71.4 billion notwithstanding continued reported reductions in producer hedging. However, as noted in a recent commentary, Morgan Stanley emerged on the COMEX during the second quarter as a major seller into gold rallies. Not being a commercial bank, Morgan Stanley does not report its derivatives to the OCC. Taken as a whole, this picture suggests that derivatives are still being actively employed to hold down gold prices.

Fiat vs Gold -- Sharefin, 09:32:50 09/10/02 Tue

Alan Greenspan Is No John Law

Welcoming the world's central bankers to their annual summer conclave at Jackson Hole, Wyoming, last week, Fed chairman Alan Greenspan delivered a remarkable speech. In unusually clear language, he acknowledged the existence of a bubble in the financial markets, but said it wasn't his fault. This got me thinking.

Gold bugs and kindred spirits have maintained for years that not only is the bubble the Chairman's fault, but that he is the very reincarnation of John Law. Doug Noland appears to have been one of the first commentators explicitly to draw the connection. See John Law and Alan Greenspan - The Great Inflationists, together with his more recent critique of the Jackson Hole speech. Adam Hamilton, Ferdinand Lips and others have also linked the two. In a prior commentary, my pal Reg Howe referred to Chairman Greenspan as “the most destructive monetary charlatan since John Law.”

However, upon reviewing some scholarship in the wake of the Chairman's speech, and mindful of the need for accuracy in the gold bugs' position on the Greenspan legacy, I am obliged to point out that the comparison, while valid in certain respects, is inaccurate in others. What is more, it is grossly unfair overall to the memory of Mr. Law.

Gold -- Sharefin, 09:29:47 09/10/02 Tue

China hopes to pull foreigners into gold sector

China, expecting to produce a record amount of gold this year, is looking for ways to attract foreign investment into its insular and rigidly protected gold mining and exploration sector, a senior official said on Monday.

The top 24 producers mine 75 percent of China's output, which is expected hit a record of about 190 tonnes this year after last year's 181.83 tonnes, he said.

China, which consumes a steady 250-300 tonnes a year, has come a long way in gold production in the past 50 years, with annual output exploding from just four tonnes the 1950s, Cheng said in a speech at the conference.

Gold -- Sharefin, 09:26:42 09/10/02 Tue

Bush saber-rattling boosts gold

Drums beating for test of $330 an ounce

On Monday morning gold rose to $323 an ounce in the spot market, not far from the $329.30 reached May 31. The metal disappointed gold newsletter editors during the summer, when both gold and the stock market lost ground.

Now, investors say global events - and not just a faltering American stock market -- will boost bullion prices.

"The gold market is now apparently disregarding stocks to some extent and -- with the drums of war beating more feverishly and the 9/11 anniversary racing toward us -- is beginning to give greater weight to geopolitical risks," says Brien Lundin, editor of the 31-year-old Gold Newsletter.

"I'm still looking for a probe of and then a break above $325 this month or next," says James Turk, a longtime newsletter editor and founder of payment system "That will mark the clear beginning of gold's bull market." Turk's six-month target, once gold hurdles $325 an ounce, is above $400.

Not everyone is tying gold's future gains to the Middle East. James Grant, of Grant's Interest Rate Observer, says gold almost certainly will gain as investors lose faith in Fed chief Alan Greenspan and the central banker's waning abilities to inflate the economy.

"Gold eventually will trade as a Greenspan reciprocal," Grant said. "What is bad for Greenspan is good for gold." Grant, who will be speaking at the New York gold show later this month, says the investing public is steadily losing its faith in the Fed's management of interest rates. In turn, the dollar will lose face among international investors.

"Greenspan is hugely overbought, to use a stock market term," Grant told me. "He is bound to enter a personal correction, and when he does people will stop holding the extra dollar." Gold prices tend to strengthen as investors abandon the dollar and dollar-linked securities.

Gold -- Sharefin, 09:23:01 09/10/02 Tue

Fear & greed to propel gold past $323/oz

South African equity and bullion traders were this morning cautiously awaiting the opening of the US markets for a bullish onslaught expected to take gold to within striking distance of the key $330/oz level. By midday in Johannesburg, gold had broken well above $320/oz and was hovering just below $323/oz, a price traders have pegged as its next major technical hurdle.

Head of equities at SCMB Securities in Johannesburg, Mark Kalil, said he remained confident gold could reach as high as $338/oz on coming days. "If they test the upside there, I wouldn't discount the (Johannesburg) gold index going another 25 percent higher," he said. Kalil said his bullish outlook for the metal was, among other, underpinned by Comex trading data which showed funds had been increasingly long gold for three weeks in a row.

Notwithstanding his cautious optimism, Kalil is recommending clients take profits after a strong seven-week run and sell part of their gold holdings into the current rally. He said investors should sell down their overweight positions in local gold shares and retain a market weighting in gold stocks of around 8 percent of their portfolios. "But if you are neutral at the moment, I definitely wouldn't recommend you go underweight," he said.

Gold -- Sharefin, 09:19:24 09/10/02 Tue

Gold price upside outlook moderate

The gold price has come a long way since 11 September last year when the World Trade Centre and Pentagon buildings in the US were attacked by terrorists on commercial airliners. The world is now a lot less stable than it was before that fateful day, but despite a US$50/oz (or 18.5 per cent) increase over the past 12 months the gold price performance has been muted given the prevailing volatile global environment, according to a leading global gold analyst, while the metal's status as a safe haven investment has been reinstated to some degree.
"Potential for major terrorist attacks remains extremely high, particularly given the failure to capture Osama bin Laden (not to mention the seemingly forgotten Mullah Omar) and the escalation of hostilities between the Israelis and Palestinians," outlined associate director of metals and mining at Macquarie Bank, Kamal Naqvi. "The clear intention of President Bush to attack Iraq to oust Saddam Hussein only adds to global security fears, all this with the background of the extremely fragile state of global financial markets."

Gold -- Sharefin, 09:17:48 09/10/02 Tue

Hedgers lag gold sector rally

In an uncertain world, safety can be expensive.

Nowhere is this more true than in the gold mining industry, where Canada's two biggest and most stable producers, Barrick Gold Corp. and Placer Dome Inc., are acting as a drag on the performance of a sector in the midst of its strongest bull market in years.

The S&P/TSX gold subgroup surged again yesterday, rising 3.3% to bring its total gain to 42% over the past seven weeks. But over that time, Barrick (ABX/TSX) and Placer (PDG/TSX) have lagged, rising just 19.8% and 31%, respectively.

It's a pattern that investors in Canada's two biggest producers are getting used to, and tired of.

The main problem, analysts say, is that both have heavily hedged their future gold production. By selling gold through forward contracts at fixed prices before it is even mined, hedgers can ensure stable cash flow in the hard times. But investors fear the practice will also depress their earnings growth when gold prices are on the rise.

"The plain fact now is that on any sort of fundamental basis, gold stocks are expensive," said Adrian Day, who manages about US$40-million in gold stocks for Global Strategic management. "The only reason to buy a gold stock is because you think the gold price is going up, and the plain fact is the unhedged companies are going to reward you a lot better when the gold price is going up."

Gold -- Sharefin, 09:06:11 09/10/02 Tue

Eulogy to Gold

I bought gold bullion back in 1998 as Y2K approached. That financial assessment was based on the fear of a financial hiatus brought on by digital money being wiped out or severely hampered. Thankfully, that threat came and passed but the gold, durable as ever, remained.

When the coins arrived, and I handled one of those golden discs, I understood immediately why kings have slaughtered and maimed for gold. I understood why nations for millennia have based their financial identity upon it. I understood why Moses declared that the gold of the land of Havilah was good. The coin I stroked not only reflected back to me a face, but also durability, stability and simplicity. Prime qualities in a rare but exchangeable material.

Therefore, it has outlived all its suitors. Nebuchadnezzar and Nero have gone, but the gold they assiduously pursued and possessed now resides in some bullion coin or bar, an item of jewellery, a museum piece or inside some machinery somewhere awaiting its next metamorphosis. Men may allow kings to be buried and decay, but they cannot allow that yellow metal to also lie in the dust while it transfixes their gaze.

Gold was $290 an ounce when I invested in it back then. It is currently priced at $310 and apparently on a long-term ascent at last. Back in that month of 1998, the Dow Jones was just above 8000 points. It is still just above 8000 points at the time of writing. Amazingly, gold has outperformed stocks over those four years and shows no sign of letting up. Who would have predicted that in 1998?

Now as I watch the bear market currently mauling paper investments left, right and centre; the appeal of renewing that golden acquaintance has been reinvigorated. Greenspan has now whipped the foot pump behind his back and is feigning innocence by whistling skywards. The savvy investors have seen his folly and are now running to that metal which not only does not depend on a credit bubble but thrives when it bursts like a hyperventilating school kid with bubblegum.

The alchemists sought the secret, which turned base metals such as lead into gold. The monetarists of government today think that have turned lead into gold via electronic printing presses. Like the alchemists of old, they hoped to flood the markets and get the spending benefit first. But their lead is still lead and my gold is still gold. Their paper "lead" mountain grows to the moon but the amount of gold has been set since the days of Creation.

So, worried about the Dow Jones crashing? Buy some bullion. Concerned about paper money becoming just paper? Grab some gold. Frantic about terrorists striking again? Invest in ingots. The bear market in gold is just about over; the sleeper has awoken and will again advance over the inflationary landscape. Hold onto your mettle and metal and watch capital preservation and appreciation in action!

Periodic Ponzi Update PPU -- $hifty, 22:30:36 09/08/02 Sun

Periodic Ponzi Update PPU

Nasdaq 1,295.3+ Dow 8,427.2= 9,722.5 divide by 2 = 4,861.25 Ponzi

Down 127.925 from last week.

Thanks for the link RossL !


Go Gold


ChartsRus -- Sharefin, 19:54:30 09/08/02 Sun

Charts online & updated

Silver -- Sharefin, 19:31:07 09/08/02 Sun

Silver Could Outshine Gold In 2003

Despite being seen as something of an ugly duckling among precious metals, silver could be ready for a breakout in 2003, and even outshine gold, said one Australian investment advisor.

"Silver looks compelling for several reasons, first of which is the supply and demand situation," said Locantro. "Silver production has been at a deficit to demand for 11 straight years. And this demand could increase further now that the U.S. government has signed a bill to purchase silver off the market to cover coinage programs after virtually exhausting its stockpile of the metal," Locantro said.

"Let's say the price of gold doubles. That would put it at around US$640 an ounce, which is going to be too expensive for many people. But if the price of silver were to double, it would still be trading under US$10."

And Locantro sees a good chance for silver to double its price some time next year.

"In 2003 I would hope to see a price acceleration toward US$10.00 an ounce and beyond as the shift into hard assets gathers momentum."

Locantro says that a big rally in silver will likely be sparked by a rise in the gold price, but adds that silver will eventually "disengage" itself from gold and even outperform the yellow metal in percentage terms.

Lenny's Corner -- Sharefin, 19:24:18 09/08/02 Sun


While many precious metal bulls have been somewhat disappointed with the price action of the last two days, believing that gold and silver values should have been taken much higher due to the sharp declines in the equities market and the continued deterioration in the value of the USD, in fact, we have made some excellent progress to the upside. Gold prices, due to continuing buying by the trade, closed today over the technical resistance of $315, and look to assault the $318 to $320 level shortly. Although these levels command great respect from a chart perspective, it appears that the risk is heavily weighed to the upside, especially due to nervousness of the market due to the coming conflict between the USA and Iran, and the imminent arrival of the anniversary of September 11th.

Silver continues to tread the waters between well-acknowledged support and resistance levels and we will need a breakout above $4.60 (or so) in the December contract to get a considerable rally going. This may not be as difficult as one might think, as the large speculative funds are now short this market and will be covering quickly if we move higher. These large commodity funds have painted a large bulls-eye on their chests, inviting the arrows of the professional traders and large bullion banks, and now present a most easy target for a tasty meal.

The gold/silver ratio is now in excess of 70 to 1, at or beyond the historical level where traders will buy silver to sell gold. Even though global economic conditions are none too favorable, which naturally depresses the industrial/commercial demand for silver, I still see this metal as just "stupid cheap". All that is required is patience, an extremely rare virtue in this financial world.

As expected, platinum prices did indeed fall back, and traders who follow our recommendations were rewarded. Prices for platinum and palladium are now relatively close to technical support levels and I do not see the possibilities of a sharp fall in value from here. Short positions should be covered judiciously.

While gold, as an asset class, ranks at or near the top of the list for the best performance for this year, it still attracts very little interest from the investing public. Recent information (which must be taken only as an indicative statistic) shows that only $300 Million USD, or perhaps a bit more, has found its way into gold bullion or gold shares. A most paltry amount. And, given the fact that India, the world's largest buyer of gold, is experiencing a rather poor monsoon season, which pauperizes the nation thus lessening gold demand, it is rather impressive that gold prices have done as well as they have. The gold bulls keep waiting for the Japanese public to buy gold (and they haven't), they keep waiting for the investing public to realize that gold is in a secular gold market and allocate some of their capital to this vehicle (and they haven't), and they scratch their heads in bewilderment that investors are still married to their stock investments, whose value continues to deteriorate, instead of seeking a market that has risen over 25% from its lows. I must admit my amazement as well. But I guess it only goes to show that investment in the precious metals is still very far off the radar screen. Again, perhaps the virtue of patience is required.

Australian gold production for the fiscal year ending June 2002 was down 8% year on year, even though gold prices rose during the period. With South Africa continuing to mine less gold, with Australia producing less, and with periodic difficulties at mine sites in developing countries, it appears certain that total global production will continue to fall just as demand may be rising.

Gold -- Sharefin, 19:15:50 09/08/02 Sun

Indians recycle gold as global prices rise

India, the world's largest gold buyer, will see a fall in imports this year as high prices drive consumers to recycle the precious metal rather than buy new jewellery, industry officials and traders said on Friday.

A study on the use of recycled gold carried out by WGC shows that use of old gold in the country jumped to around 50 per cent from the normal 22 per cent between February and June this year.

The study that covered consumers, goldsmiths and scrap dealers in different regions of the country, showed supply of recycled bars surged leading to widening of the gap between the prices of new and old gold.

Indian gold imports fell to 84.7 tonnes in the first quarter of 2002 compared with 127.5 tonnes in the same period of the previous year, WGC said.

Traders said they estimated the total imports in 2002 to fall by 15 to 20 per cent.

Gold -- Sharefin, 19:13:02 09/08/02 Sun

Sudan, Iran deny shipping Al Qaeda gold

Sudanese officials denied a Washington Post report that Al Qaeda and the Taliban militia sent several shipments of gold to Sudan in recent weeks, and Iran denied serving as a conduit.

The newspaper on Tuesday cited European, Pakistani and US investigators as saying the gold had been sent by boat from Pakistan to Iran or the United Arab Emirates, and then by chartered aeroplanes to Khartoum.

"It is a lie... Sudan is fighting terrorism and it has no links with Al Qaeda and Taliban or any other elements with connections to them," said Sudanese Internal Affairs Minister Abdel Rahim Mohamed Hussein, as quoted by the independent Al Sahafi Al Douli newspaper on Wednesday.

Hussein said Sudan had imposed strict border controls to prevent the infiltration of "radical elements." Al Qaeda leader Osama Bin Laden lived in Sudan from 1991 to 1996, when he was forced to leave and moved to Afghanistan.

Iranian government spokesman Abdollah Ramazanzadeh also rejected the report, saying: "There have always been claims. Some of the American press, taking special stances in line with Israel's interests, have fanned the fire."

Gold -- Sharefin, 19:10:30 09/08/02 Sun

War jitters lift gold and crude

Commodity traders' attention became increasingly focused on the possibility of a US attack on Iraq this week. By on Friday, war jitters had pushed crude oil prices close to one-year highs and helped gold to its strongest in six weeks.

Gold -- Sharefin, 19:09:20 09/08/02 Sun

Gold bulls strain on yokes as Bush sets sights on Iraq

Expectations of a bull run on gold were high this week after the bullion price burst through the key resistance level of $315 an ounce on concerns of a full-scale military invasion of Iraq by the US and its ally.

"As long as there is the threat of war, world equity markets remain weak, the dollar continues to lose value and oil prices climb, the gold bull market is still intact," said Allan Cooke, a director of Rice Rinaldi Securities.

Other positives in gold's favour include good physical demand from Asia, the ruling out of gold sales by Germany, gold producers cutting their hedge books and the fall in Tokyo's Nikkei this week to its lowest level in 19 years, amid fears Japan's banking sector was on the rocks.

Dirk Kotze, the manager of Coronation's resources fund, said all the factors that had initially created the bull run in the gold price were still in place.

"The gold price tends to consolidate at certain levels and then people forget that it is in a general uptrend. It is only when equity markets fall that investors remember gold," Kotze said.

GH -- Sharefin, 19:07:06 09/08/02 Sun

Re your comments on the Dabchick Index

I utilise spreads vs Comex gold within many of my charts as a comparitive measure of strength.
Using this spread one can see how the index being measured is performing vs gold.

That the measure is from Comex & a derivatives of futures I think doesn't matter as this is the price that is associated with gold all over the globe. Sure I could change it to spot gold but I doubt you would even be able to notice the difference.

As you can readily see from the chart the Dabchick plot closely follows the POG (well it is a derivative of the price) and the spread shown on the chart allows one to see whether the Dabchick Index is leading or lagging the POG.

It allows one to perceive whether the Dabchick index is stronger or weaker in it's movements in relation to gold.

And hence all the spread charts I show (& I do heavilly favour them) work in a similar fashion.

Regards Nick

Fiat -- Sharefin, 18:50:09 09/08/02 Sun

A Phone Call To The Fed

The following is a conversation with Mr. Ron Supinski of the Public Information Department of the San Francisco Federal Reserve Bank. This is an account of that conversation.
CALLER - Am I mistaking that when the Federal Reserve Act was passed (on Christmas Eve) in 1913, it transferred the power to coin and issue our nation's money and to regulate the value thereof from Congress to a Private corporation. And my country now borrows what should be our own money from the Federal Reserve (a private corporation) plus interest. Is that correct and the debt can never be paid off under the current money system of country?

MR. SUPINSKI - Basically, yes.

Dabchick Index -- GH, 11:37:00 09/08/02 Sun

To add to my previous note

Is it possible to use the actual currency value data derived by Mr Dabchick as a middle chart
and a spread showing the relationship to this info.

"This index is intended to show how gold is valued throughout the world independently of the value of any country's individual currency"

I appreciate how busy you are with such a large web site, yet this hard work by
Mr Dabchick does provide a fundamental tool in viewing Gold in a global picture.

Dabchick Index -- GH, 23:54:42 09/07/02 Sat


In taking a close look at the charts submitted by Mr Dabchick. I am confused on
what the "spread" chart is representative of. Not the Comex. USD?

The Comex is a futures index, so I am surprised it is being used
as a standard for a visual comparison of this independent POG Index.


Thanks for clearing this up.

Gold -- Sharefin, 20:25:55 09/07/02 Sat

In Gold We Trust - The New Money

There is widespread belief that gold's recent non-performance was attributable to a stronger dollar, stock market rally, and/or central bank manipulation. While it is true that gold's rise was tempered by the bounce in the US dollar, we believe that gold's nonperformance was attributable more to the fact that gold and gold shares were the only place where there were profits. In fact, our studies show that in the long term, gold is influenced not by transient factors such as central bank musings, but rather as a store of value when investors lack confidence in financial assets. Currently, gold is mired in a tight trading range of $305 to $318 an ounce. After recording a 2½-year high at $330 in June, the pullback is simply a normal correction process. We believe that gold is about to breakout of this trading range and is in the nascent stage of a multi-year bull market driven by a declining US dollar, global bear market and Middle East geo-political tensions.

hk -- Sharefin, 20:13:24 09/07/02 Sat

I hold nothing but contempt for you & your opinions and well you know why.
It's because of you & your opinons & likeminded people that I decided to leave the Kitco forum.

Go back to your playground and vex me not.


Fiat -- Sharefin, 20:10:43 09/07/02 Sat

Walker's World: A looming depression?

One of Germany's top economists is warning the country's leading bankers that Europe, and the rest of the world, are in dire danger of following Japan into a deflationary depression -- far more serious and prolonged than a conventional recession.

"The people running the world's central banks and those responsible for economic policy should take the signs much more seriously," argues Norbert Walter, chief economist for Deutsche Bank, Germany's largest, in a paper made available exclusively to United Press International.

The world last experienced deflation on a serious scale during the Great Depression of the 1930s. It is a condition when prices start falling, investors stop investing and companies and individuals still committed to paying off old loans go bankrupt because lower prices and lower wages give them no money to repay.

"The people at the top seem to be losing the sight of the big picture," he added.

"Heads of state are not economists, and their minds are currently busy with other things. The central bankers either lack the means or the conviction to cut interest rates. So it would seem appropriate if the IMF's experts assume the unassigned role of international policy coordinators."

The stars are all aligned, fears the top economist of Germany's biggest bank, for a very dismal economic outlook.

Gold -- Sharefin, 19:51:34 09/06/02 Fri

Gold to hit $1,000 as stocks fall for 20 years

The gold price could more than treble to $1,000 per ounce if western stockmarkets suffer from a 20 year bear market, says Hugh Hendry, the manager of the top-performing Odey Continental European fund.

"I think there are some circumstances where the gold price could go to $1,000. Logically you could construct an argument where the gold price goes up by several times its current value," Hendry said.

Hendry, who has invested in several gold mining companies through his hedge funds and the Odey Continental European fund (See Fund Fact Sheet), says a 20 year stock slump is not as strange as it sounds.

"I think the equities market will fall for 20 years. From 1929 it was 25 years before the market recovered and some stocks didn't come back for 40 years. When will we see 40,000 in Japan again?"

Hendry, a partner at Odey Asset Management, said it was 'ridiculous' that some market commentators think shares will bounce back in the next year or so.

"We've seen the biggest bull market in history and history demonstrates that the intensity of any bull market is more than matched by the intensity of a bear market. The S&P is on 37 times earnings. Bear markets end when stocks are on six to seven times."

Hendry is also investing in government bonds and says there is a bull market in risk-averse instruments with US and European bonds regularly making new highs.

However, despite recent share price rises, he is still very bullish on gold mining stocks.

"You want to own the unhedged gold producers because if the gold price rises their profits will rise dramatically," said Hendry.

However, he is less keen on holding gold bullion as he said gold bars have been confiscated by governments in the past and this could happen again if a government felt its currency was under threat.

The United States banned private ownership of gold bars from the early thirties to 1971 when the US got rid of the gold standard so that dollars were no longer backed by gold. France took a similar policy in the early 18th century.

A spokesperson for the World Gold Council said such a move would be unlikely these days with the move towards further de-regulation of markets.

"You can never anticipate what any government is going to do but I would think it would be extremely unlikely," she said.

GATA & Gold -- Sharefin, 19:47:23 09/06/02 Fri

GATA in Belgian Financial Times

Fiat vs Gold -- Sharefin, 19:33:08 09/06/02 Fri

US banks' derivatives top $50 trillion

The latest OCC Report can be downloaded here:
OCC Report June 2002

Here's an excel spreadsheet I maintain on the OCC Gold Derivatives.

Interesting to note that though mining companies are winding down their hedges the banks are increasing their derivatives which is as much as I thought.

The presumption I'm making here is that though miners are closing out their positions with the Bullion Banks, the Bullion Banks are not closing out their positions with the Central Banks.

To whit; physical gold is not going from the miners to the Bullion Banks to Central Banks but rather that fiat is being used to close out the hedge between the miners & the Bullion Banks, & the Bullion Banks are holding their side of the position with the Central Banks open.

This is therefore laying on more risk with the Bullion Banks.

From the far side -- Sharefin, 07:25:59 09/06/02 Fri

Canada's gold reserves r on the the verge of oblivion.
(IR) Sep 05, 23:32

In the late 70's Canada had approx 35 to 45 million oz of gold in our central
bank treasuries. Now looking at the vague calculations, we r down to between
500,000 to a million. Who do u think crushed the first gold rally of the
early 80's. It hurts to see what happens when u take orders from the biggest
super power on earth but I guess that's what happens when u'r meek and mild.

Gold -- Sharefin, 07:20:43 09/06/02 Fri

Investor apathy still hampers gold

Traders and equity analysts tempered their enthusiasm at the latest run in the gold price today, warning that the latest spike to around $318.50/oz was likely to be short lived. Few are prepared to predict a price for bullion, but the consensus is that sustained, genuine investment buying for the metal is the only hope for a real rally in the medium term. But just what the event will be to trigger the quantum leap in gold's trading range, remains to be seen.

Terrible editorial that seems to be paid for.

Gold -- Sharefin, 07:06:47 09/06/02 Fri

Do buy gold and silver

coins, bars and even some bullion proxies,
such as Central Fund of Canada (CEF), if personal storage of the
metal is a challenge. There's safety in numbers Tips for managing the
deflation of all things paper

In the coming bad months and years, the
ones that deflate paper assets and shrink the oceans of debt and
credit sloshing 'round the world, investors and workers will be
asking what they can do to avoid a total meltdown of their personal
This includes their homes, their bank deposits, insurance policies,
even their paychecks. Here are some starters, gleaned from many fine
sources, including the Weiss Safe Money Report, Robert Prechter's new
book, "Conquer the Crash," and "Crisis Investing" author Doug Casey's
International Speculator. Do investigate the integrity of all money
markets, bank deposits and other cash instruments at your disposal.
Not all money market accounts or funds are created equal. Those that
are based on risky short-term paper, from corporations or even
government agencies, probably won't allow you peace of mind in the
event of a fiscal meltdown. Several sources, including the Weiss Safe
Money Report, and Grant's Interest Rate Observer,
examine safety and liquidity issues surrounding commercial banks and
the fund companies that manage money markets. Do investigate cash
equivalents that exist outside of your home country, in the event of
political risk. Switzerland's bank reserves, unlike those in the
United States, are backed by a 25 percent savings rate that is
required of citizens by law. Do sell all stocks that are losing you
money. Do sell all stocks that are making you money. Don't consider
buying any stocks, or bonds, or anything considered a paper asset,
unless you are prepared to take a 25 percent loss. Or unless you are
prepared to hold for 15 years or longer (just ask the folks who still
own Ford Motor (F) shares.) Don't be lulled into a sense of false
security by the interim rallies staged by Wall Street. The rallies
are perfectly normal in that they allow sellers to exit with just a
bit more cash than they had a month ago, but not nearly enough to
make up for losses in this, the third year of falling equities.
Do buy gold and silver -- coins, bars and even some bullion proxies,
such as Central Fund of Canada (CEF), if personal storage of the
metal is a challenge. If currencies self-destruct from the drag of
decades of credit issuance by national and corporate treasuries,
bullion almost certainly will become a commodity with monetary
Do eliminate as much debt as you can -- credit cards, automobile
loans, margin interest, mortgages, second mortgages. The credit
overhang in the United States, more than $30 trillion owed by U.S.
companies, individuals and the government, is three times gross
domestic product, the highest ever. Besides saving you or your home
from personal bankruptcy, default or repossession, your elimination
of debt will be a service to this country's economy.
Keep your day job, sell the SUV and if you really see the red writing
on the wall, start short-selling some of the major equity indexes,
especially the price-weighted Dow Jones Industrial Average's exchange-
traded Diamond Trust (DIA) and its major components, like high-priced
3M (MMM).

Gold -- Sharefin, 07:04:04 09/06/02 Fri

Richard Russell on the Panic Phase

From Richard Russell's market comment today...

As for the stock market, we've just had the first 90% downside day. What this 90% day signifies is that the stock market is now open to, and readying itself for -- all-out panic.

I think where we are now is on track for the wide-open panic phase of this bear market. Note, I did not say a panic moment or a panic day, I said a panic phase. The panic phase could take a week or a few weeks or a few months.

Before the panic has ended, stocks will be knocked to their knees, consumers will be in shock, the housing bubble will have burst as will the auto-buying bubble, the July 23 lows will be history, and the "A" wave of this bear market will finally have come to an end.

When the panic phase ends, investors and speculators will be in shock, and the stock market will appear to be shattered -- torn apart, literally in pieces.

That will give us the most "sold-out" market in years. This sold out market will set the base for the corrective (upside) wave "B" of this bear market. The "B" should be an upside whopper, and it should carry well into next year. After this corrective "B" leg will come the final "C" leg -- but I'll talk about that when the time comes.

Question -- "Russell, why do you think the coming panic will be so severe?

Answer -- Ironically, the reason I believe it will be so severe is that it has been preceded by the largest load of misplaced bullishness, across-the-board denial, trash talk, and Wall Street baloney, that I have ever seen. It has been preceded by weeks and months of misguided optimism and ignorance concerning the meaning of the primary bear trend.

Instead of recognizing that this is a bear market and therefore preparing for major trouble, the US government has been spending its head off, states and cities have been running up huge deficits, business has loaded up on debt, and consumers have been buying as if a bull market is just starting.

All of this lays the groundwork for shock, surprise and horrendous losses. Frankly, I can't remember a situation like this in the half century that I've been watching markets.

Gold -- Sharefin, 07:01:45 09/06/02 Fri

Durban Deep a top performer in 2002

sterling fraud -- Galearis, 12:10:37 09/05/02 Thu

Hello Mr. Laird,

It is a pleasure to email you - especially over such an important matter. I would like to add a comment or two to emails that were posted by Bill Murphy at his GATA web site on the on-going sterling silver fraud. I was the one who broke this story in late August at the Eagle Ranch web site forum. Two of the people I first informed about this were my brother, Ted Butler and Bill Murphy at GATA. You saw my initial post of this, I presume, on the GATA web site. There has been considerable ensuing discussion about this on Eagle Ranch forum and I would urge you to read them in the archives over the past week or so.

If you do so you will find that I have formerly contacted our (Canada) Competition Board for action in this matter. FYI I include an amended copy of the letter; [] indicate additional material added:


To whom it may concern,

Recently, a major international fraud in sterling silver products has come to my attention.

This fraud extends throughout the United States, Canada and Europe. The nature of the fraud involves misrepresenting a marked sterling standard of 925 parts of silver to copper with wares that are only silver plated. The majority of this "sterling" ware was found to be fraudulent in that the bodies of the items (excluding clasps, in chains that have a small piece of spring steel present) were found to be somewhat magnetic. Sterling silver is NOT magnetic to any degree whatsoever. From the degree of magnetism one is to suspect that the main metal involved is nickel (possibly, but not probably cobalt). I first discovered the problem with a heavy "sterling" bracelet that I purchased in a jewellery store last January. Wear on this "925 sterling" bracelet revealed silver plate on a duller, very slightly more yellow silver coloured metal that was harder than silver. This visible evidence again revealed silver plating over another metal. Please note that I am also familiar with rhodium finishes used on some sterling jewellery.

I discovered this problem in August of this year while in northern Ontario doing field work [in botany]. Within the week I visited Timmins, Ontario and a local mall there. The mall had two jewellery stores and a [W-M] department store. One of the jewellery stores would be what one would call term 'high-end'. I checked their stock of men's necklaces and bracelets and found the majority of them to be magnetic. I should point out that these magnetic findings ALSO included the majority of large sterling chain merchandise in the [W-M] store.

When I arrived back home in southern Ontario, I checked the sterling bracelets and necklaces in a local town's only jewellery store. Again, the majority of the stock tested positive with the magnet.

As I am actively networked on a daily basis with numerous individuals that have varying degrees of expertise in precious metals (most of these individuals were U.S. citizens), I was able to elicit good responses and several [many] took the time to visit local jewellery shops and/or test their personal jewellery in their respective areas. They in turn contacted others who undertook this simple survey. The results were the same as I found for those that did this in the United States and Europe and a few expanded their search to earrings etc. Problems were also found in this area as well, although the extent is unknown.

What is inferred by this 'spot testing' campaign is that at minimum it would be more difficult to find men's sterling chain jewellery that is not fraudulent in purity in every jewellery store, department store (including W-M) and mall kiosk in the United States and Canada than jewellery that is present that is real sterling product. The majority of this merchandise is apparently made by one manufacturer and imported. [I have since checked other outlets for sterling merchandise - even to the extent of visiting a yard sale, flea markets and collectible shows. In every case I found suspect magnetic jewellery that varied in frequency in each retail establishment from 20% to 80% of the sterling chains checked. The yard sale (and two booths at a flea market) revealed ALL items to be magnetic and consisted of "sterling charms" - with no indication of source of manufacture. All the chains were of newer manufacture, and yard sale charms were owned for three years.]

All suspect jewellery found with the exception of one reported to be from Singapore are marked 'Italy".

In every instance it is marked '925' and marketed with signs near or on the box as 'sterling silver'.

Anecdotal evidence would seem to indicate that this problem is growing. I say this because two years ago I bought a sterling chain marked 925 and "Italy" and it tested out to be real sterling silver. I have since found that these chains, identical in style and size can now be found to be magnetic.

This would indicate that old 'good' sterling has been sold off gradually and is now being replaced by fraudulent product. [It may also indicate 'knock-off' merchandise from an unnamed source.]

The reason I have been on the watch for this sort of thing is two-fold. I am a collector of sterling and have studied the supply fundamentals of silver mining and its role in the financial markets price 'fixing' for years. The official (visible) above ground supplies of silver are all but depleted world-wide and most assuredly there is an increasing problem for commercials to find their silver bullion raw material. That fraud would surface was almost guaranteed and I have been watching for it - as another sign of severe supply deficits. That this was going to happen as an 'end phase event' was, for me, predictable.

But this has nothing to do with your mandate in this problem; it just serves to give you some background in my motivations for reporting this to you.

You have a very great scandal on your hands that is going to provide considerable disruption to consumers and retailers alike.

Finally: I have found on the net a manufacturer of sterling chains that would appear to be a manufacturer of this jewellery style. I , of course, have no idea whether or not these designs are patented and unique only to this manufacturer, but at the very least it will provide pictures of product that is suspect - in style. Again, I am not accusing this company of wrongdoing. One of the style forms of these chains (for example) is called "flat marina". As a rule retailers are not aware of the manufacturer, only the distributor.

I close with my final point that you may or may not have gleaned from my words. This fraud is an international one that impacts very seriously on the whole retail jewellery industry. This is a systemic problem of grave proportions. I invite you to investigate this aggressively. It should not even involve that much field work by your staff. Simply send a staff member to a local jewellery store that sells mass merchandise in sterling silver jewellery wares.

Please respond to this email and verify that it has been read. If it is not against policy to do so, please keep me informed of your findings.

Best regards,


Another comment posted in the Bill Murphy James Joyce issue states that nickel (which is, as you know, weakly magnetic) is also used to plate sterling. I submit, based on PERSONAL experience that the plating material is silver (is quite soft and is readily scraped off) and reveals a silvery duller metal underneath that most assuredly does not have the right hue AND is very much harder than any silver I have ever seen. Rhodium is, as you may also know, a silvery precious metal that is often used on sterling jewelry because it does not tarnish. The use of this metal is perfectly legitimate - although it has a very slightly different hue to it from silver also. Rhodium is not magnetic, of course. Nickel is not used as a plating element on these suspect chains.

No, the fraud involves (silver) plating over another metal, most likely nickel, (steel in the smallest braided chains), and this fraud is very huge, indeed.

Note: when checking for magnetism please try to keep gravity out of the equation. Make sure the chains are vertical in orientation and free-hanging when one draws close the magnet.

The public reactions of those with an interest in the precious metals markets over this situation (and some of the information errors that are also being posted by others) would seem to require it additional attention. I invite you to post this email, if you feel the importance warrants it.

Best regards,


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