Gold -- Sharefin, 09:21:18 11/03/02 Sun Gold Market Manipulation & that Giant Sucking Sound During the very first days after becoming U.S. Treasury Secretary, Paul O'Neill candidly and honestly said he thought the U.S. dollar was too strong. Judging by the response of Wall Street, CNBC and the Financial Times, you would have thought he committed high treason. Yet, why would O'Neill not think the dollar was too strong? He should have known because he watched competitive pressures build against his aluminum company, not because of superior competition, but simply because his company was being taxed in the form of a stronger dollar. With the dollar growing stronger, the price foreign producers received for the sale of their production into the U.S. was rising while the price Mr. O'Neill received for his aluminum he sold overseas was declining. In other words, like American producers since the Clinton Strong dollar policy was implemented in the mid 1990's, Americans are being priced out of their own markets as well as foreign markets. Speaking as an American rather than a globalist, O'Neill knew that the dollar was too expensive. But the powerful interests who run America, the head guys at the major banking institutions on Wall Street, do not care much about America. They are globalists who will just as soon trade with the enemy if it means gaining global wealth, power and influence. These are the same bankers who, even with Roosevelt's knowledge, traded with Hitler during World War II. (For more information on this issue, read "Trading with the Enemy" by Charles Higham). So when O'Neill spoke honestly as an American, Wall Street interests began to question whether he was up to the job of being Treasury Secretary. The "Financial Times" talked about how the new Administration needed someone who understood Wall Street rather than Main Street. Well from that pressure point on, Mr. O'Neill learned very quickly to spout Wall Street's line, namely the falsehood that America needs a strong dollar. Wall Street might want a strong dollar to keep financial markets from falling out of bed. But an overvalued dollar is no good for anyone in the long run, not even Wall Street. Having sold out, Wall Street allowed him to stay, at least for the time being. Why does Wall Street want a strong dollar, even when it means American industry is disappearing from our shores? Because without it, the street would not have been able to suck in global capital into what now amounts to something like $1.5 billion per day. And without the strong dollar, which was engineered by the Rubin/Summers team, the stock market orgy which allowed Clinton to avoid removal from office and claim credit for the boom, would not have been possible. Armed with the knowledge of "Gibson's Paradox (see www.goldensextant.com), the Clinton Administration and the Federal Reserve knew that if it were to succeed with their collectivist interventionist policies of bailing out Mexico, Long Term Capital Management, Russia, Asia, etc. it would have to "cap" the gold price. And so it did. Having been taught a lesson about the strong dollar during the first days of the Bush Administration, all indications are that Treasury Secretary O'Neill has pretty well picked up were the Rubin/Summers team left off so far as gold manipulation is concerned. Roach has been saying ever more frequently of late that for the global economy to turn to some semblance of supply and demand balance, the dollar must become weaker. That would help reduce demand and increases savings in the U.S. and reduce savings and increase demand in other parts of the world. Roach says that the dollar must decline vis-à-vis the Euro and the Yen by 15% and 20% if it is to be restored to a level that makes sense on the basis of trade. Dr. Roach quite rightly says that to restore equilibrium to the global economy, the dollar must decline, whether Wall Street likes it or not. He says that on a trade weighted basis, the dollar needs to decline by 15% to 20% vis-à-vis the Yen and Euro. Then he says that unless the dollar is also devalued vis-à-vis the Chinese currency, the Euro and the Yen will have to appreciate by more than 15% to 20% vis-à-vis the dollar to make up for the overvalued Chinese currency. But that certainly won't be a fair solution for Europe and it won't solve a problem of trade imbalance between the U.S. and China. What is really needed is a return to a fixed rate regime based on a politically neutral currency like gold. Will that happen? Not as long as the U.S. remains in the drivers seat because the U.S. in fact is now gold poor. Even if you believe the U.S. has all the gold it claims to have in its vaults (it most likely does not because it claims gold leased out is still in its vaults) the U.S. does not even have enough gold in its vaults to provide a 1% backing of its money supply (M-3). By contrast, the Euro has about 15% backing plus most of the member countries themselves have considerable hoards of gold. Again, if we could see a reason for optimism regarding the growth of earnings, there may be some reason for hope that over the next several years, if stocks did not rise, but by merely treading water at current levels, rising earnings may bring PE ratios back into line with historical ranges between 10 and 20 times. Yet for reasons outlined above, not only do we think earnings are not going to grow, but we think they are likely to continue declining substantially into the future. Because we take this view, we do not think Robert Prechter's unfortunate vision of a Dow below 1,000 is not at all out of the question. Incidentally Ian Gordon's target decline is pretty much in the same range as that proposed by Prechter. Gold -- Sharefin, 09:16:08 11/03/02 Sun Basic Business Fundamentals Indicate that Gold Mining Shares Make Sense Taking the Emotion Out of Gold Gold -- Sharefin, 09:10:02 11/03/02 Sun Placer Dome extends AurionGold offer Placer Dome's shareholding in AurionGold is now over 78%. The two largest shareholders in AurionGold, being Colonial First State and M&G Investment Management, have accepted the Offer. Gold -- Sharefin, 09:07:58 11/03/02 Sun Harry Schultz Life Strategies How times change. A few years ago Merrill Lynch refused to take orders for gold shares. Now a Merrill Lynch analyst is projecting $550 an ounce gold or more. Merrill analyst Don Murphy said on CNBC (of all unlikely places) "I'm inclined to think gold is making a secular low, a buy of a generation. To be conservative, I'm saying $450 to $550, But my thought is gold could go back to challenge the 1980-81 levels at $850." As it happens, he's right.  The monetary world may enter a new paradigm next year. In June 2003 a bookkeeping gold dinar & silver dirham will enter the stage. A dinar will contain 4.25 grams of gold of 22 carats. The dirham will be 3.0 grams of sterling silver (or 0.925 pure silver). Malaysia has retreated from its original minted coin plan, under western pressure, IMO. There will be 4 stages for the transition from fiat to metal currency says the non-govt World Islamic Trading Organization. They say "Gold offers stability & order. Gold is the end of political money." Perhaps the die is cast at last! Let the sparring begin. Download these 5 sites for info: Islamic Mint / Ikim / Mineweb / Khilafah / Freelists The gold dinar plan is still taking form among several Muslim nations. It's a period of conceptualizing a new monetary unit that will lead to a real gold-in-hand system. The anti-freedom forces (Western bankers) are fighting it, but the odds are with the Muslims, who have the numbers, the faith (in gold), & the oil. Not to mention determination born of centuries of frustration at the western-controlled fiat system. Stopress: It's either a rumor or a tipoff. I'm told Barrick has been selling gold to force the price down so they can cover some of their huge short-hedge position at more favourable prices, or perhaps not cover if they prefer a gold bear mkt for their hedging strategies. My source says "ABX seem to want to kill gold; they seem to be gold's enemy, for if they force it much lower the chart could turn bearish." If I owned ABX, I'd get on the phone to them today & tell them to back off. Gold -- Sharefin, 09:00:12 11/03/02 Sun White mine ownership a myth The chairman and outgoing chief executive of Gold Fields, Chris Thompson, has criticised government thinking that the country's mining industry was in any way still in the hands of "mythical white owners". Thompson said in Gold Fields' 2002 Annual Report that "South Africa's mines are not, in fact, owned by the mythical white owners" but for the most part were now owned by foreign investors and local institutions, representing the "savings and pensions of millions of people in the street", a large portion of whom were black. Gold -- Sharefin, 08:56:59 11/03/02 Sun An Open Letter to Agnico Eagle Mines It is refreshing to discover, that there exists in the mining industry production management, a group of managers that believes in the traditional methods of finance. Both your policies not to hedge via the popular over-the-counter gold derivatives, and not to hedge at all, must receive significant recognition and the lasting respect of the entire gold/silver investment community. It is not easy to walk your own path in a world gone mad with paper gold/silver constructs that are unlisted, unregulated, non transparent, and of questionable financial integrity. To have not accepted the many invitations you received from then AA credit regarded & reputable international investment bank's gold dealer subsidiaries offering you supposedly almost free money and instant gratification is a rare and valuable management skill. We are, in my opinion, in the very early stages of a very long-term bull market for gold based not only on the five traditional elements of such a phenomena, but also the return of gold to the monetary system. You are a senior North American producing entity and should enjoy the same premium in the marketplace now being demonstrated by Royal Gold who has sought the other non-hedged gold-related high road, which is the royalty method of gold ownership. Have you noticed the premium nature being awarded to Royal Gold for not being involved in derivatives? Have you noted how the major North American Gold Producers are suffering in the action of their share price from their continued adherence to derivative hedging, as a result of the investor welcomed new accounting directives requiring more disclosure and profit analysis due to hedging and the attendant non-recourse project financing? Because of this, I believe, you do not need warrants to sweeten a financing. You can offer shares for whatever funds you require for project investment and succeed. Gold -- Sharefin, 08:53:11 11/03/02 Sun Anglo Gold fails to cash in That was an increase of just $2m over the previous quarter despite the fact that gold production was up 11%. The rise also failed to reflect the soaring price of the precious metal in recent months. The company said its profits had been somewhat held back by its hedging strategy - where it uses the futures markets as an insurance policy against fluctuations in the price of gold. Anglo Gold has already sold about 30% of the gold it will mine over the next five years at an agreed price. That will be good news for the company and its shareholders if the market price of gold falls, but it will prove costly if the price stays high.  Gold -- Sharefin, 08:50:24 11/03/02 Sun Barrick CEO upbeat on gold, rues timing of warning Barrick Gold, long known for stellar growth and rising profits, put its credibility on the line when a third-quarter profit warning came days after news of a big expansion, and the company now admits its timing could have been better. Gold -- Sharefin, 08:48:25 11/03/02 Sun Agnico-Eagle Shares Drop on Dilution Fears Agnico-Eagle Mines Ltd.'s announcement of a $167 million offering of 12 million new shares on Thursday sparked a 10-percent selloff of the stock on dilution fears. Gold -- Sharefin, 08:47:06 11/03/02 Sun Gold demand likely to soar The demand for gold in the Kingdom is expected to increase by more than 20 percent during the last quarter of this year, market analysts said. They attributed the increase to a growing trend to invest in gold amid fears of an imminent US attack on Iraq. Osama Al-Wazir, director of World Gold Council for the Gulf countries, said he expected increase in gold sales over the coming months as a result of new developments in the region. Muhammad ibn Saeed of Al-Amoudi Currency Exchange Center said there was big demand for gold coins and biscuits in recent months as many people, especially expatriates, wanted to preserve their money in the form of gold as a safe investment. The WGC reported recently that there was a 16 percent increase in gold sales in the Kingdom and other Gulf states during the first half of this year. Gold -- Sharefin, 08:43:47 11/03/02 Sun What's Good for the Goose Gold is coming back from a long southward trip. To get in on this commodity's rise, investors should take a gander at the mining companies that produce it. Here's an interesting fact about gold: Of the 140,000 metric tons produced since the yellow metal was first crafted into jewelry or melted into ingots, about 120,000 tons are still in existence, in the vaults of central banks, in museums, in drawers, or even dangling from navels. Unlike most commodities, gold is accumulated, not consumed. Thanks to its almost magical combination of properties, gold is soft and radiant yet indestructible. And because it doesn't react with oxygen, gold never rusts, corrodes, or tarnishes. The same cannot be said for investors' perception of gold, which has been heavily tarnished by a two-decade-long bear market in the metal. Although gold, at a recent price of $320 an ounce, is up about 18 percent this year, it is still down more than 60 percent since its peak of $850 an ounce in January 1980. "Investors have a lot of psychological baggage when it comes to gold," says Prescott Crocker, co-manager of the $125 million Evergreen Precious Metals Fund. "Many have come to believe that it is supposed to go down." It's time for a mental readjustment. The price of gold is poised to go higher-potentially much higher. With interest rates at 40-year lows, the opportunity cost in physically owning gold, which doesn't pay any interest, is no longer a big concern. Gold has also benefited from the recent uncertainties around the world. Talk of invading Iraq, new terrorist cells, more corporate scandals, and a double-dip recession will drive up the price as investors seek safe havens. Those moves could be sharp, sudden, and short-term, but gold should get a more sustainable boost from a weak dollar. After all, in many ways gold is just another currency. "The dollar and gold are in competition as a place for individuals to store their wealth and liquidity," explains James Turk, who writes the Freemarket Gold & Money Report. "As the dollar drops, gold will go up." Gold -- Sharefin, 08:38:59 11/03/02 Sun Another top gold analyst goes Dan McConvey, one of the most respected gold analysts globally, was retrenched yesterday (Wednesday) by Goldman Sachs New York. He has already taken his leave of the firm as is nowadays customary with large corporations. The news came as a shock to McConvey's colleagues, and creates additional uncertainty for the precious metals value chain which has been downsizing for nearly two years, despite the sector's recovery in terms of outright returns and increasing corporate banking business. Several institutions have abandoned metals trading in this period as liquidity evaporates (and continues to do so) and the overall market downdraught has unsteadied the metals sell side analyst community as well, even with gold stocks living up to their counterweight status. Sources say a number of other New York metals desks are feeling the pressure, which appears to be a blanket decision by the leading firms to concentrate on the most lucrative stocks. Although gold stocks have come back into focus, trading volumes have not risen sufficiently that they can pay the way for full-house research in a sector where the combined global market capitalisation is maybe half that of an already decimated telecom stock. Gold -- Sharefin, 08:36:50 11/03/02 Sun AngloGold mulls $620m projects AngloGold is assessing the viability of eight expansion projects estimated to cost roughly $620 million (R6.2 billion) adding 16.5 million ounces to the group's production profile. This is in terms of the South African group's intention to pursue organic growth in addition to a merger and acquisition strategy which, the group said, had not been surrendered notwithstanding its failed bid for Australian gold producer Normandy this year. Six of the expansion projects, equal to 11 million additional ounces, were in South Africa and the remainder were in Brazil (1.9 million ounces) and Western Australia (3.6 million attributable ounces). This latter project, planned for Boddington, would require the development of a new mine, according to AngloGold's chief executive officer, Bobby Godsell. The additional 16.5 million ounces was over and above 15 million ounces of gold expansions underway. From the far side -- Sharefin, 16:01:28 11/02/02 Sat Richard Russell The e-mail below is most interesting and most important. The writer believe that we're already in a state of hyper-inflaltion, and he presents a damn good argument to that effect. His answer for you and me -- GOLD. Subject: Trade Reparation, Hyperinflation and Gold Dear Richard, I feel honored that you would share my thoughts with your other subscribers. Some of my ideas may seem to come from a bit of a different angle than your typical American subscriber since I am an ex-pat of some 25 years now and lived in Japan during their roaring 80's, almost a mirror image of the roaring 20's in the U.S. I feel a hundred years old. It is more than evident now that the world financial system is coming to a crossroads that will result in a complete and total overhaul not dissimilar to a Bretton Woods. The magnitude of credit and debt creation, manipulation and pure speculation in thousands of different markets worldwide is beyond anything we can comprehend. The size of the numbers speak for themselves. If history tells us anything, war will be a part of the mix, unfortunately. What follows has been bothering me for some time now. It is something that most people may find absurd or maybe a bit nonsensical, but then again there is a lot of that going around nowadays. Let me speculate.... TRADE REPARATION, HYPERINFLATION, AND GOLD In early 1923, German railroad workers went on strike for an increase in weekly wages. They were asking for much more than the 2,500,000 marks they were presently earning. A few days later they settled on a 9,000,000 mark weekly wage. A week later their 9,000,000 marks bought less than the 2,500,000 marks they were earning a little over a month before. Yes, this was the infamous hyperinflation of Weimar Germany in 1922-1923. When shops would close and update their prices hourly and higher. When an old lady would have to bring a wheelbarrow of billions of paper marks to buy an apple, only to be mugged beforehand and have her wheelbarrow stolen from her. When the German mark was used as wallpaper or toilet paper. How could this happen? Simply. The Germans lost the First World War and the allies handed them a reparations bill ( 132 billion gold marks ) that they couldn't pay. Not only did the allies demand payment for damages, but also imposed restriction on German industry, even annexing parts of industrial Germany to Poland. Germany fought back by suspending payments in gold in order to expand the supply of paper money and pay for the war with fiat currency. By 1921 the German mark had plunged to being worth only one-third of a cent on foreign exchange markets. This didn't stop the German government from running up huge budget deficits and putting more marks into circulation. War reparations were destroying what little was left of Germany after the war, and laying the foundation for what was to be the greatest hyperinflation of modern times. Then, in 1923 French troops moved into the Ruhr industrial area of Germany, closing down factories in order to squeeze the gold out of the Germans. The Germans did the only thing they could and printed billions of marks to put up whatever resistance they could. The Reichsbank commissioned 2,000 printing presses to print around the clock in order to keep up with demand for the fiat paper money. Money was literally given to the people to spend in the confines of a complete socialist, welfare state. The mark fell from 20,000 to the dollar to 4,200,000,000,000 ( that's trillion ) to the dollar in a short period of nine months. The cost of an egg went for a quarter of a mark in 1918 to 5,000 marks in July, 1923 ... to the absurd cost of 80 billion marks three months later. It all ended when the mark was scrapped for a new currency called the rentenmarks which had a face value of 1 trillion of the old marks. Of course, Germany never really recovered and the economic landscape resulting from the hyperinflation of 1923 consequently brought Hitler to power. And we all know the rest of that story. In retrospect, Weimar Germany, absurd and nonsensical as it was, clearly illustrates what actually can happen when a country is bankrupted and cornered with no way of offering anything of value to pay off its bills. Fast forward to 2002. I hate to say it, but there is another Weimar Germany in the making and nobody wants to talk about it. Nobody! It has come about over such a long period of time and the bankrupting and cornering is being done so slowly and covertly that nobody notices or doesn't want to know. Nobody believes it can or will happen. For the month of September, 2002, the U.S. racked up a record trade deficit of over 38 billion ( $38,000,000,000 ) dollars. Not 3.8 billion. 38 billion! At this rate, the US is going to record a trade deficit of over 400 billion dollars just for this year alone. This is absurd. To put this another way Richard, as you like to do: This is like all Americans cumulatively swiping their AMEX card at the BIS ( Bank of International Settlements ) each and every month to the tune of $35 billion plus. And, we've been swiping this card for over thirty years now. But since its an American Express ( not GOLD ) card, we never have to pay the debt back. Why? Because it is NOT a GOLD card. It it were, we would have quit swiping long ago. These are hyperinflation numbers and the wheelbarrow would again be a hot commodity if these figures were taken to press. But they aren't. At any rate, the debt ends up as just a bunch of digits recorded on a hard drive somewhere at the BIS in Switzerland and the Treasury in Washington. Month after month we receive goods and services free from the rest of the world and Greenie's niece at the BIS keys ( Keynes?! ) another 35 bil. on the debt side of the U.S. Treasury ledger into the computer. Our creditors just keep hoping that someday they will be allowed to cash out those digits into something of real, tangible value. But the day is coming when our creditors are going to need the cash and cash out they will. Or it will be War. And the demand for payment, or Trade Reparations, will unmask the inflation that the FED and the U.S. Government has attempted to hide from us all -- for generations. We already have hyperinflation, they just haven't had to crank up the presses yet. The trade deficits and all the monopoly-money, digital debts we have piled up are going to be paid back in cheaper, hyperinflated dollars. The numbers tell us hyperinflation. The tide has already changed. U.S. credit is no longer good for 30 years; the 30 year bond is dead and illiquid. The 10 year bond is suppose to be the benchmark, but almost all monies raised by our government are in the shorter maturities, usually no longer than two years out. U.S. corporate debt for all practical purposes is junk. A bit more on the downside on Wall Street and everybody will be getting into cash, the little of it that exists. The clock is ticking, the war is on, both inside and outside the country. Another election, another crisis. A lower, lower dollar. No more AMEX, no more swiping, no more Greenie, and no more credit. When it comes, it just comes, Weimar just happened..... and GOLD just sits there patiently waiting for all takers... All the best, JD Russell Comment -- in case you're confused, JD is saying that the US extension of digital credit ( "monopoly money" ) has been so enormous that it can be compared to the the historic inflation of Weimer Germany. And you know something, I'm afraid he's right. By the way, the great German inflation of the 1920s set the stage for the arrival of Adolph Hitler and the Nazi party. I've said this before and I'll repeat it -- the installation of the Federal Reserve and the removal of gold from the US currency will turn out to be two of the greatest disasters ever to befall this great nation. If the Founding Fathers could see the damage the Federal Reserve and the removal of gold have done to this country, they'd be turning in their graves. Jack Welch, a hero a year ago, is now seen as symbol of corporate greed. Sooner or later somebody's got to put an end to the ridiculous, outrageous sums of money plus perks that executive are pulling out of corporate coffers. After all, these are public companies owned by their stockholders, not personal fiefs for corporate executives. Jack Welch, former head of GE retired with six residence in three states worth $30 million. He has security accounts worth $249 million. He has investments in limited parternships worth $14 million And he has GE non-qualified stock options worth $72 million. Welch has total assets of $456 million and a monthly income of $1.4 million. Kinda disgusting, thinks Richard Russell Gold -- Sharefin, 05:28:32 11/02/02 Sat Richard Russell November 1, 2002 -- Hey, you want to know the great irony of economics today? Here it is -- every nation in the world is dying to sell is goods and merchandise and commodities to the USA. And the USA pays all these poor bastards with junk paper money that is created out of thin air, created by our very own Federal Reserve. The question is -- how much longer can this go on? How long will our overseas friends go along with this charade? I really don't know. But I do know one thing -- sooner or later this ridiculous trading will come to a halt. Sooner or later people and nations are going to demand something real in return for their goods and their merchandise and their commodities. Say hello to gold. I think a year or two years or maybe five years we'll be looking back at 319 dollar gold, and we'll be saying to ourselves, "Where the hell was I? Where was I when gold was selling like dirt for 319 dollars an ounce when the world was being flooded with hundreds and billions of dollars of credits. Why did I believe the Fed when it told me that gold was garbage and dollars were money?" And so it goes. It reminds me of a story told about Einstein. Einstein was asked about infinity. He thought for a moment and said, "There are two things that are infinite -- space and human stupidity." He's another irony. The dollar is weak. Today the Dec. Dollar Index broke to it lowest level since July. The 50-day moving average of the Dec. Dollar Index ( 107.70 ) has turned down, and the Dec. Dollar Index has plunged far below its 50-day MA. As I write the Dec. Dollar Index is at 106.02. What does a country do to defend its currency? It raises rates, making its currency more attractive. But the US economy is so weak that it's now a "given" that the Fed next week will lower rates by a quarter of a point or possibly a half. Meanwhile, as I write this morning Dec. gold was up 2.50 before falling back. Question -- why aren't the gold shares surging instead of reluctantly ticking higher? My opinion -- the gold shares have been whacked so many times, they've been battered back and forth so many times -- that investors don't trust them to move higher with gold. In fact, deep in their hearts investors don't trust the whole gold situation. Big money, serious money, multi-million dollar money wants the metal, they want the safety of actual gold. When you hold gold you hold pure wealth that's ultimately beyond any government or government regulation to destroy. Gold shares are different. Gold shares are common stocks. Gold shares are mining operations. Gold companies can be confiscated by nations, they can be trampled by regulations, they can be battered by rebel forces, they can be subject to mine problems, they can be taxed, and like AEM they can watered with the issuance of additional shares of stock. Me, I like both. But I'm not kidding myself. Gold, the metal, is at the base of the wealth pyramid. Gold doesn't tarnish, it doesn't go out of style, it is our great barrier against the Fed's obsession with creating paper junk money. Gold stocks are a great speculation when the metal moves higher. Many mines, particularly mines with low-grade gold, have big leverage when the price of gold rises. As I see it, it's going to take time, maybe a lot of time, before investors believe that the bull market in gold is for real. In the meantime, as in all bull markets, gold will try to climb as high as it is able while NOT ATTRACTING the crowd. Remember, most of today's money managers were not around during the '70s. They've never seen a bull market in gold. And for the last 20 years, all they've seen is gold being bad-mouthed by the believers in fiat ( paper ) money. Gold -- Sharefin, 16:51:18 11/01/02 Fri The same spike after hours is also recorded from another data vendor. So it appears that gold was chased higher after hours even though the Kitco charts don't show it.   Gold -- Sharefin, 16:12:09 11/01/02 Fri Something strange in these charts. Kitco Gold  UK Gold  Being the end of the week - there's basically no trading afterhours when the US Closes till Monday morning. Yet the UK Gold price chart is showing it surged after closing....^o-o^.... From the far side -- Sharefin, 07:13:03 10/30/02 Wed Richard Russell like gold (Y2K) Oct 30, 08:09 "Meanwhile, the faster-moving 50-day MA for Dec. gold stands at 317.50. Dec. gold, as I write, is trading at 317.20. If Dec. gold can close decisively above 317.50, that would constitute a "buy signal." Note that the gold shares are beginning to firm across-the-board. If Dec. gold can close above 320 it will stir up more interest. And of course, 325 and more importantly 330 would be the next upside targets. Historically, gold shares have tended to hit their lows in the fourth quarter of the year. Well, we're there. As a matter of interest (I should say great interest) the Dow in August 1999 would have bought 42.1 ounces of gold. That was the peak of Dow strength against gold. Today the Dow will buy 26 ounces of gold. I've made this prediction before but I'll repeat it. At some point in this bear market, I expect the price of gold and the Dow to cross on a ratio of 1 to 1 as it did in 1980. At what price? OK, pin me down -- my guess around 2000 to 3000 or if anything lower. Dec. gold gapped up 2.50 to close at 318.10. This takes Dec. gold above its 50-day MA, which stands at 317.50, and gold thus flashed a "buy" signal. I bought more kruggies today." Richard Russell Dow Theory Letters From the far side -- Sharefin, 07:08:17 10/30/02 Wed A most profound inflation/deflation view from an e-mail to the Great Richard Russell (richard640) Oct 30, 08:41 A very interesting and important e-mail (below) received here this morning. Do I have smart subscribers of what! Dear Richard, Thanks for your great newsletter everyday. Recently there's been much talk about whether we are headed into a period of inflation or deflation. It really is hard to figure since there has never been a time when all countries of the world were off a gold standard. Even when England closed the gold window in 1914, the US, France and other gold-bloc countries still exchanged their respective currencies for gold. And then in 1933 when Roosevelt signed the Thomas Amendment which abandoned the gold standard the US had followed since 1879, most of the gold-bloc countries of Europe stayed with gold. The opinions of the experts seem to differ on many points to the inflation-deflation argument. And then there are the different interpretation as to what these terms mean. Everyone knows the technical meaning of inflation is an increase in the money supply. Deflation is a decrease in the money supply. Many people talk of rising prices as inflation and falling prices as deflation. Nobody talks about hyper-inflation; although the estimated world debt of 400 trillion dollars is a rather large number. Maybe it doesn't really matter since it's just a bunch of figures (credits and debts) stored on thousands of hard drives on thousands of computers scattered all over the world. But actually, to the average, everyday, working-class man on the street, the meaning of these words hit home when they are defined as follows: Inflation Decrease in purchasing power (money earned buys less) Deflation Increase in purchasing power (money earned buys more) Hyper-inflation Working for nothing (money earned buys nothing) The crux of the argument of a future inflation vs deflation really comes down to whether we will be able to purchase more with our money or less. And then again what is present-day money. We can't compare our money today with the money of 1914 or 1933. Gold, and paper representing gold, were used in the US from 1879 to 1933 as money. Today's money is not money at all. It is not gold and it isn't even fiat paper currency (as of July 31, 2000 there was only $539,890,223,079 of paper and coin currency in circulation---this used to be the capitalization of a couple of dot.coms). All we have now is credit. And there is practically no savings. Today, credit is money. And when credit becomes money, the money is actually never earned. And when credit is withdrawn, there is complete decrease in purchasing power which is defined as inflation. What will happen when we can no longer borrow (receive our money)? It doesn't matter where prices of goods and services go. Our purchasing power will vanish. No country with large external debts have ever experienced deflation when the credit dried up. They have all met with inflation, big time. Argentina is a case in point. In Argentina credit came to a halt and left the whole system in limbo. The debt-credit system locked up. The result has been that tenants can't pay rent, so landlords don't pay mortgages, so banks don't make new loans. Now, everything has been turned into a cash transaction, but no one has any cash. If you don't have cash, you can't buy anything. All contracts have become null and void since there is no credit. The 72% decline in the peso has caused the price of imports to soar and is set to result in an 80% inflation rate. Consumption is falling at a rate of 24% per year and the economy looks to shrink 18%. Rising prices and falling consumption? An unusual mix but the beginning of hyper-inflation never makes any sense. This is inflation or the destruction of purchasing power. The result of a pure credit based money system after the plug is pulled. Unlike Argentina, Japan has not experienced inflation. Why has Japan experienced deflation instead of inflation? There are a number of reasons, and these will not apply to the US when it experiences something similar to Brazil or Argentina in the future. First, the yen has remained relatively strong against the dollar. One US dollar to 124 yen is not a weak yen historically. Secondly, Japan has been and still is primarily a cash-based society. Credit still has not caught on to the degree it has in other western countries. You can still withdraw about 1,000,000 yen (US$8,000) in one hit from any ATM machine at your local bank branch. Just spread your money around to several banks and it is easy to pull the US$ equivalent of 40 or 50 grand out of the machines. And many Japanese still have twice or three times this amount in savings. Thirdly, Japan is still making money with about a US$50 billion annual trade surplus. Fourthly, most government debt (credit) is owed to the Japanese people themselves. Japan has very little external debt. Deflation in Japan has come primarily in the form of asset deflation which has only in the past four or five years begun to directly affect the price of goods and services and increased unemployment. It is now causing the lowering of salaries for Japanese workers, in some ways catching up with the decrease in prices and increase in their purchasing power (deflation). So what lies ahead for the US; inflation or deflation? Asset deflation is a given. It is happening everywhere in the world. It is happening everyday and has been going on for the last three years on Wall Street. Real estate is next. This is where Japan and the US do share common ground. But as for the everyday man on the street who is worried about his/her purchasing power..... If you believe that the rest of the world will lend the U.S. (work for the U.S. for free) 1,5000,000,000 dollars a day (and rising) forever, choose deflation. If you believe the yen is bound for 150 or 160 to the dollar, the euro is headed back to 85 euros to the dollar, and gold is about to tank to US$250 an ounce, choose deflation. If you believe the FED can increase the money supply to infinity and the digits created on all those computer hard drives will never ultimately effect the purchasing power of Joe sixpack on the street, choose deflation. If you believe the US Government can continue to run deficits in the hundreds of billions of dollars year in and year out and fight a world wide war on terror in every country in which terror exists and then also increase the purchasing power of the average John Doe, choose deflation. If you don't believe in the above, and believe that the party is over, and there really is never a free lunch, and that our foreign creditors really don't like us all that much anymore, and that the War on Terror will last more than two years, and ............your purchasing power for goods and services will continue to decrease as it has since your grand-daddy was born, choose inflation. And, for those hard-core lifer-type gold bugs, if you believe that the US$ will lose its status as the world's reserve currency just as the sterling pound did at Bretton Woods in 1944 exactly 30 years after they abandoned the gold standard in 1944, and since it is now 31 years since Nixon closed the gold window on the dollar............. choose hyper-inflation.....and go on buying your gold... Gold -- Sharefin, 01:49:03 10/30/02 Wed Newcrest aims to rejig gold hedges Australia's Newcrest Mining Ltd said on Wednesday it was committed to simplifying its gold hedge book after A$74 million in accounting provisions wiped out benefits of lower production costs last year. Newcrest, Australia's second-largest gold miner, held 5.7 million ounces -- more than six years' production. It also hedges some of the copper it mines. Unlike a number of rival miners in Australia and other big gold mining countries, such as South Africa and the United States that have reduced or abandoned hedges as the gold price trades above US$300 an ounce, Newcrest has retained much of its hedging. Gold miners worldwide reduced their hedge positions by 365 tonnes, or 11.7 million ounces, in the first six months of this year, a recent JP Morgan survey shows. Miners hedge by selling yet-unmined nuggets at fixed prices. But if bullion prices rise, hedgers run the risk of landing "out of the money," forcing them to sell gold below prevailing market prices. "The board is committed to simplifying the hedge book, which in future will be used only to provide a floor to underlie our capital investment while at the same time retaining maximum exposure to rising gold and copper prices," Newcrest Chairman Ian Johnson told the annual meeting of shareholders. "Unfortunately, the impact of the hedge book during the year meant that low production costs were unable to be translated through to an acceptable profit result," Johnson said. Gold -- Sharefin, 01:47:11 10/30/02 Wed GoldQuest seeks RBI okay to mint gold coins GoldQuest International, a gold numismatics company, has approached the Reserve Bank of India (RBI) for permission to mint legal tender coins in gold for collectibles market. The company already mints legal tender coins of the Kingdom of Bhutan in gold as collectibles. In India presently no private mint is allowed to mint the legal tender coins in gold. The company sells only gold medallion collectibles In India at present. It is planning to widen its range of products including legal tender coins and watches. Gold -- Sharefin, 01:46:03 10/30/02 Wed VIEWS FROM THE MARKET Gold was looking healthier after sharp drops in equity markets and a weaker dollar burnished the metal's safe-haven status, but would come under pressure if stocks bounced back strongly, analysts said on Wednesday. Silver was expected to hold on to one-month highs thanks to renewed buoyancy in gold, while platinum was seen trading quietly around current levels. GOLD - The precious metal hit two-week highs in European trade on Tuesday as stock markets slumped on the back of disappointing U.S. consumer confidence data for October. Growing anticipation of a U.S. interest rate cut would continue to support gold, as lower rates reduce the incentive of gold producers to sell bullion into forward markets, in effect limiting supply into the market. "Equity markets rallied after the COMEX close to finish almost unchanged, which has encouraged liquidation of the yellow metal this morning, confirming that the gold/equities markets are officially pegged," Standard Bank London said in a daily note. The bank expected gold to consolidate around current levels, before attempting to leapfrog to an upside target of $320.00. Gold -- Sharefin, 01:44:40 10/30/02 Wed Times Delhi Gold Fest: Seize a golden opportunity The gold rush is here. And the lucky few even won coupons worth Rs 1 lakh at draws held everyday by the Times Delhi Gold Festival. "The festival reminded consumers of the simple pleasures of buying gold. We tried to bring back the focus on gold jewellery. Delhi has been a tough market, but we managed to bring together some 60 jewellers and made this event a success," says Sharmili Rajput of World Gold Council. The festival was presented by The Times of India, sponsored by World Gold Council, supported by Gold Society of Delhi and produced by Sercon. "The event has been a success," said Vijay Singh of Sercon. "We managed to bring back excitement in the jewellery market by giving incentives to bored consumers," he said. More people splurged on gold this month than ever. "This festival removed the sluggishness in the jewellery market. For a year, we've had poor sales. This festival gave momentum to the market," said Gold Society of India secretary Rakesh Saraf. After the success of the Times Delhi Gold Festival this year, jewellers are planning a mega event next year too. Hemant Chawla of Chawla Jewellers said: "Consumers felt motivated to spend. We're planning to make this an annual event. In fact the rush was so much that it became difficult for us to manage. After months people are rushing to buy gold." Gold -- Sharefin, 01:43:11 10/30/02 Wed Bema Gold to acquire high-grade gold-silver project in Russia Bema Gold Corp. has struck a deal to acquire control of a gold and silver project in Russia. The intermediate gold miner said Tuesday it had signed a letter of intent with the government of the Chukotka, an autonomous region in northeastern Russia, to acquire up to 75 per cent of the high-grade Kupol gold and silver project. Gold -- Sharefin, 01:41:49 10/30/02 Wed Newcrest Expects to Complete Mine Funding in December Newcrest Mining Ltd., the biggest Australian-owned gold producer, said it expects to complete in December funding for its A$975 million ($540 million) Telfer mine project in northwestern Australia. The financing will include A$600 million of loans and A$230 million of equity, Newcrest Chief Executive Tony Palmer said in a presentation prepared for the company's general meeting in Sydney. Telfer, located in Western Australia, is expected to be the world's eighth-largest gold mine, with reserves valued at $5.5 billion based on current prices. The project may make Melbourne- based Newcrest a takeover target for rivals such as Barrick Gold Corp., investors have said. Gold -- Sharefin, 01:40:00 10/30/02 Wed TOCOM gold little changed as players await package Yen-based gold futures finished all but unchanged on Wednesday, caught in a tug-of-war between a firmer yen and momentum from gains overseas after dismal U.S. economic data ripped into stocks. Volume was moderate as speculators waited for a key Japanese banking and economic reform package, due later in the day, with Prime Minister Junichiro Koizumi making it clear various issues remained unsettled. "People are really sitting on their hands," a brokerage analyst said. "As long as the direction of the currency market remains unclear, you're not going to see a lot of active trade." Financial markets were on tenterhooks as acrimonious haggling continued over Tokyo's long-awaited package, which looked likely to water down harsh proposals on bank reform. Whether the government has the stomach to press ahead with painful reforms of a system groaning under 52 trillion yen ($423 billion) of bad loans could have major implications for future gold demand. Fears over the health of banks sparked a gold rush earlier this year as Japanese savers -- among the world's most prodigious hoarders -- rushed to put money into safe assets. But the kind of radical surgery that could trigger a similar rush appeared increasingly unlikely as bank shares soared on expectations of a "fudge" to the harshest elements of the reform package. Gold -- Sharefin, 01:38:23 10/30/02 Wed Gold Pauses But Market Still Solid 0834 [Dow Jones] Some short-term profit-taking shaves 75 cents off spot gold to US$316.95/oz in Asia, say traders; but gold's outlook remains cautiously optimistic after poor U.S. consumer confidence data, more talk of Fed rate cut next week. Upside target remains US$320, with support at former resistance at US$315. (WCP) 0833 [Dow Jones] OVERSEAS SUMMARY: USD managed to claw back some ground after early dive vs majors on woeful consumer confidence report; Conference Board's index 79.4 in October vs 93.7 in September, lowest reading since November 1993 and well below 90.0 market expected, opening door for Fed rate cut next week. EUR/USD hit highest point since Oct. 15 while USD/JPY slid to lowest level since Oct. 4, although USD recovered towards session end on move by stocks into modest positive territory. USD/JPY at 123.12 late after hitting 122.36, EUR/USD at 0.9830. DJIA ended day flat (+0.01%) after falling 170 points early on consumer confidence report; market aided by Procter & Gamble's 3.8% rise on solid 1Q results. Nasdaq fell 1.2%, Philly semicon index 3.1%. Treasurys rallied on sour economic news, talk of near-term rate cut, with 10-year +1 4/32 at 103 14/32 to yield 3.95%. December Nymex crude down 43 cents at $26.86/bbl on plummeting gasoline futures and before expected bearish API data. USD/JPY back over 123 mark in Asia on buying by big U.S. bank, but Japan market in general pretty quiet before BOJ, economic package; Nikkei +0.6% with government funds sighted in futures. USD/Asians getting support from USD/JPY. Bourses mixed as no cues from U.S. Gold -- Sharefin, 01:36:22 10/30/02 Wed Refco sees no swift opening of China derivatives China's fledgling derivatives market is likely to stay closed to foreign investors for years to come, with regulators mindful of a past attempt at liberalisation that ended painfully, U.S. futures brokerage Refco Group said. Gold -- Sharefin, 01:35:14 10/30/02 Wed SA gold refinery for Gulf project A state-of-the-art gold refinery, utilising Mintek's Minataur hydrometallurgical refining technology, has been specified for a project at the Dubai Metals and Commodities Centre, a major new precious-metals hub that is being developed in the United Arab Emirates. Gold -- Sharefin, 01:34:08 10/30/02 Wed S.African golds race as market mulls Soweto blasts A surge in gold shares fuelled by a weaker rand led the South African stock market to a positive open on Wednesday but caution ruled the day after a series of blasts rocked the sprawling Soweto township near Johannesburg. "The currency is determining direction right now in the stock market. Obviously it's weakened because of the bomb blasts," said one trader. Nine explosions rocked South Africa's Soweto township overnight, killing one woman. The explosions knocked fragile sentiment and sent the rand to its weakest level against the dollar in just over a week. Gold -- Sharefin, 01:13:44 10/30/02 Wed Business As Usual? An investment allocation to gold and gold shares makes sense only if one does not expect an imminent return to the investment world of the 1990's. Many who already believe that the odds of such a recurrence are slim still hold fast to the notion that a more favorable investment climate will be created by the still elusive economic recovery. “Business as usual” might not look like the 1990's, but is there any need to think that the current morass will be sustained once a business recovery takes hold? Aren't three years of declining equity markets enough? Three successive down years in the stock market was the limit even during the 1930's. History suggests that a return to more stable and friendlier financial markets is a distant prospect at best. Having suppressed the normal functioning of capital markets over the last two decades, the Federal Reserve and economic policy makers have set the stage for a protracted period of sub-par investment returns. Investment expectations at all levels remain excessive. The consequences of a further downshift in expectations would be to reinforce negative trends already in motion in the financial markets and the economy. Investment expectations are central drivers of economic activity and asset values. While this observation seems almost too basic to ponder, most economic forecasts and market analysis ignore the subject altogether. Investment and credit analysis are most often viewed as quantitative in nature. Emotional and psychological factors at the individual, institutional and public levels are frequently ignored. However, at certain times, these inputs far outweigh rational calculation. Author and MIT Professor Charles Kindleberger observes in Manias, Panics and Crashes (4th edition-p 91) that “expectations in the real world may change slowly or rapidly, and different groups may wake up to the realization----sometimes at different rates and sometimes all at once---that the future will be different from the past. The period of distress may be drawn out over weeks, months, even years, or it may be concentrated into a few days. But a change in expectations from a state of confidence to one lacking confidence in the future is central.” Gold -- Sharefin, 01:05:22 10/30/02 Wed IAMGOLD ups African stake in $339M deal Merges with Repadre Gold miner Repadre Capital Corp. has agreed to combine with IAMGOLD Corp. in a deal some say marks a new phase in the consolidation trend in the sector. Oil -- Sharefin, 01:03:55 10/30/02 Wed Colin Campbell on Oil Colin Campbell is both an academic and a businessman. Educated at Oxford and holding a Masters degree he has served as a geologist for Oxford University, Texaco, British Petroleum and Amoco (prior to the BP Amoco merger). He has served in executive positions with Shenandoah Oil, Amoco, Fina and was Chairman of the Nordic American Oil Company. He has served as a consultant on oil for the Bulgarian government as well as for Statoil, Mobil, Amerada, Total, Shell, Esso and for the firm Petroconsultants in Geneva. He is the Convener and Editor of the Association for the Study of Peak Oil and a Trustee of the Oil Depletion Analysis Center in London. As a member of The American Society of Petroleum Geologists, The Geological Society of London, and the Petroleum Institute of London he has delivered more than 35 lectures on oil depletion on three continents. His hosts have included universities, governments, and auto manufacturers. He has been published more than 150 times in the field including the 1997 book "The Coming Oil Crisis" (Multi-Science Publishing Co. & Petroconsultants). Before beginning this interview it is necessary for the reader to understand several critical factors about oil and oil production. All of these factors affect how much you or industry pays for oil, how much is available, and what this life-essential commodity can do. Almost every current human endeavor from transportation, to manufacturing, to plastics, and especially food production is inextricably intertwined with oil and natural gas supplies. Commercial food production is oil powered. All pesticides are petroleum based, and all commercial fertilizers are ammonia based. Ammonia is produced from natural gas. All oil production follows a bell curve, whether in an individual field or on the planet as a whole. On the upslope of the curve production costs are significantly lower than on the downslope when extra effort (expense) is required to extract oil from reservoirs that are emptying out. The best and easiest to produce oil is always extracted first to maximize profits. In 100 years mankind has used half of all the oil on the planet, oil that took billions of years to produce and is the result of climactic conditions that have existed at only one time in the earth's 4.5 billion- year history. Oil is a non-renewable resource. The key event in the Petroleum Era is not when the oil runs out, but when oil production peaks, especially as demand and population are rising. World per capita oil production peaked in 1979 and has been in decline since. The peak in volume of total world oil production is upon us right now, even as the demand or better said -- the need -- for oil is increasing rapidly. Several things are a given. First the total remaining conventional oil on the planet is estimated to be around 1 trillion barrels. Second, at present rates (not those of five or 10 years from now), the world is using close to 80 million barrels per day. At the current rate there would be only enough oil to sustain the planet for another 35 years under the best of scenarios. But the oil that remains is going to be increasingly expensive to produce and it will tend to be of a lesser quality, necessitating higher refining costs, than what has already been used. All of those costs will have to be passed on in the form of price hikes or -- in some cases -- spikes. Oil price spikes invariably lead to recession. The world's economy is based upon the sale of products that are either made from oil or which need hydrocarbon energy (including natural gas) to operate, either via internal combustion or via electricity. Different regions of the world peak in oil production at different times. The U.S. peaked in the early-1970s. Europe, Russia and the North Sea have also peaked. However the OPEC nations of the Middle East peak last. Within a few years they -- or whoever controls them -- will be in effective control of the world oil economy, and, in essence, of human civilization as a whole. Two of the nations that will peak last are Saudi Arabia and Iraq, both of which will not peak until the middle of the next decade. Saudi Arabia contains 25 percent of all the oil on the planet. Iraq contains 11 percent of all the oil on the planet. Science and the oil industry have confirmed that there is very little oil left to be found, certainly not enough to make a difference in this grim picture, a picture which goes a long way toward explaining the events of 9-11 and since. ------ Not only is the above going to impact the POG strongly over the long term but also a similar problem exists with gold. Production peaked & likely never to regain past heights. Depletion of major orebodies - exploration declining. Fiat -- Sharefin, 00:52:10 10/30/02 Wed Don't Count Too Much on Central Banks The notion that a central bank can mitigate the pain of business cycles and avoid depressions, an article of faith especially during the "Greenspan" era, is both untrue and counterproductive. We should return our thinking about central banks to a basic truth: They can achieve price stability; they cannot and should not fine tune the economy and stock markets. Gold -- Sharefin, 00:46:16 10/30/02 Wed Gold sold under Washington deal at 60% of total Marking the third anniversary of the Washington Agreement on Gold (WAG), the World Gold Council (WGC) reports that total sales under the agreement so far (from October 1999 to September 2002) amounted to 60% of the 2000 t scheduled for its five-year term. This figure translates into 1 197 t sold, with Switzerland having sold 603 t, the UK 345 t, Netherlands 136 t, Austria 90 t and Germany 23 t. Considering that Germany's gold sales resulted solely from the demand for gold for the minting of commemorative coins, its reported sale of 23 t seems high, yet the WGC says it reflects the strong demand for the special D-mark coins as the national currency was replaced by the euro. Swiss gold sales under WAG reflect 283 t sold in the third year, 200 t in the second and 120 in the first year. The total of 603 t sold raised just over $6,1-billion. The Swiss National Bank announced plans to sell a further 283 t in the fourth year of the agreement. This plan would leave the Netherlands, the only other major seller with gold to dispose under WAG, with a possible 117 t to sell in year four. It is predicted that the remaining 803 t of gold, under the agreement, will be sold by Switzerland and the Netherlands, with 639 t and 164 t respectively, between October 2002 and September 2004. The WGC also reports that Gold Fields Mineral Services (GFMS) estimates gross gold sales, by the official sector in the first half of 2002, amounted to 304 t. Of this, 231 t came from central banks operating within WAG - 138 t coming from Switzerland alone. The balance, of almost 70 t, came from a dozen countries, with China easily being the largest seller among them. For the same period, gold purchases are put at 14 t, with Russia accounting for four tons and the Philippines for eight tons. The WGC also reports that assurances that there will be no German gold sales during the duration of WAG have been reinforced. This was demonstrated in August when a proposal to use gold sales to help finance recovery from summer floods in Germany was quickly rejected. Yet the Bundesbank has not ruled out the possibility of gold sales after September 2004, despite an increase in conditions surrounding this move. This has lead experts to speculate that the Bundesbank wants to keep open an option to sell, but then only in small amounts. Meanwhile, the WGC says the failure to agree on the utilisation of proceeds may harm the popularity of Swiss gold sales. In September, the Swiss voted on two alternative proposals for using the proceeds from sales of 1 300 t of the Swiss National Bank's gold reserves. One proposal recommended a three-way split between the Swiss Federation, individual cantons and a philanthropic fund. The alternative suggested that the proceeds be channeled to support the country's pay-as-you-go pension scheme. Both proposals were rejected with strong majorities, so deliberations are back at the beginning. On the other hand, Asian central banks will buy more gold as their economies expand, the WGC reports. Foreign exchange reserves of many Asian central banks are expected to continue to build up quickly after the Asian crisis, thus even to maintain today's proportion of gold in the reserves, gold purchases would have to increase. The WGC says that China's reserves, in particular, are growing very rapidly. According to official figures, China's foreign exchange reserves stood at $246,5-billion at end-July, up $34,3-billion since the start of the year. Figures reported to the International Monetary Fund show that over the last year the People's Bank of China increased its gold holding by 105 t to 501 t at end-December last year, some two percent of total reserves. Commenting on how Austria manages its gold reserves, the WGC says the Austrian National Bank has voted in favour of the renewal of the central bank agreement. Austria has been a steady seller of gold for a number of years. In the late 1980s, the country held 657,7 t of gold, just more than double its current holding of 315,5 t. Recently, the WGC reports, 90 t of the total gold disposed was sold under WAG - 30 t in each of the three years. Austria considers gold to be an important asset class for the central bank reserves. In addition to gold, the bank primarily holds dollars and, in recent years, returns on dollar-denominated assets have been superior to those on gold. Bearing in mind the relative risk of the two asset classes for a euro-based economy, this led to the conclusion at the start of WAG that the bank should sell the 90 t. Gold -- Sharefin, 00:44:01 10/30/02 Wed Legislate internal BEE - Gold Fields The legislation of wider use of pension plans, mutual funds and equity ownership among employees of mining companies would provide true black economic empowerment (BEE), according to Gold Fields chairman Chris Thompson, who said in the group's annual report that white ownership of South African mines was a myth. Thompson was responding to the leaking and redrafting of the BEE charter earlier this year in which South Africa's government posited the view that the industry was the property of “white mine owners”. “The language of the draft charter posits that the industry is the property of the “white mine owners” and that transfer of ownership to black empowerment groups is a highly desirable event. Even if it were achieveable, financially or economically, transfer of ownership in and of itself will do nothing for job creation or alleviation of poverty in South Africa,” Thompson said. Gold Fields published its annual report for its 2002 financial year this morning (30 October). Gold -- Sharefin, 00:41:32 10/30/02 Wed Durban Deep ripped on accounting BOE Securities (S. Africa) does its best to keep analyst reports from wide circulation, but Mineweb has landed a fascinating examination of Durban Deep's [DROOY] third quarter results by mining analyst, Gary Pearson. Distributed to BOE clients earlier this week, the report is a no-holds barred dissection of the results that flips most house views upside down. “Don't take the numbers at face value” is the headline for a section that goes on to warn that the doubling in headline earnings per share for the three months to end September could not disguise a poor quarter. Gold -- Sharefin, 00:39:09 10/30/02 Wed Another royalty pure-play set to go in $223m deal Gold royalty companies have done especially well for shareholders during the recent run-up in the gold price, but only one significant option - Royal Gold [RGLD] - will remain on the boards once Iamgold [IMG] and Repadre Capital [RPD] close their merger. It won't go unnoticed that the deal is in many ways a mini Franco-Nevada / Newmont. Gold -- Sharefin, 00:36:39 10/30/02 Wed Gold price boosts Ashanti Q3 earnings African gold miner Ashanti Goldfields Co Ltd reported a surge in third-quarter earnings on Tuesday, boosted by the high price of gold. The Ghana-based miner, which has overhauled its debts with the backing of major shareholder Lonmin Plc, reported net profit before exceptional items of $22.5 million for the three months to end-September, up 55 percent from the same period last year, helped by lower interest charges. Ashanti's hedge book -- the source of its financial troubles in the past -- was in loss to the tune of $46.0 million at end-September, based on a spot gold price of $323 per ounce. The firm said it had limited the exposure of its forward sales book to movements in volatile lending rates, reducing its exposure by 1.6 million ounces to 2.78 million. It also paid off $33 million of its revolving credit, leaving that facility at $157 million. "Earnings are up, it's paid some debt down, and it has reduced some of the lease exposure on its hedge book. That's all positive, making a solid quarter," Gold -- Sharefin, 00:33:09 10/30/02 Wed Not sure yet but it looks like the price action of gold & silver (vs. the US Dollar) are pointing the way forwards. A close look at daily/weekly/monthly charts of the two metals (not to mention what platinum is doing.(:-)))) as well as the various gold indices shows that the trend is turning up again and we're about to move forwards from prior levels. COTs are also supporting a move upwards. Gold Silver US Gold Global Gold Australian Gold Canadian Gold SA Gold Perhaps the contrarian view of this move up in the metals is that the general markets are to move downwards and that the rise in the metals will come about because of a sell-off in US Dollar & equities and hence gold will yet again perform it's age old job of being a meter of financial confidence. ~ ~ ~ My swing chart is showing that we're topping out on the up cycle, which could well show a sell cycle occurring - either the markets tread water with little upwards momentum or we sell-off. Though I can't see a long term sell signal in the formation I will point out that at the moment volatility is extreme and indicative of large moves. Theoretically we should have another one or two cycles before we get a major sell cycle signal but with the markets in the current state anything could trigger a break from the normal. This could mean a sell-off that doesn't take out the prior lows and then another rally that fails to take out the prior highs. This would then have the markets set up in price & psyche for a major fall - a move downwards that would make the sell-off earlier this year look tame. If we do get this crabbing (down & sideways) action in the markets then I would expect the progressive waves to take a few months to unfold prior to this major sell-off. But if they bolt the gate then all bets are off. Regardless of the guessing game the POG is signaling that the action is soon to begin....alllllll aboard..... Swing Chart Gold -- Sharefin, 00:22:17 10/30/02 Wed News of SA gold expansion projects expected WILL it be a case of saving the best or worst for last? SA's two biggest gold companies are preparing to round off the third quarter reporting season, with AngloGold presenting its figures to the market on Thursday and Gold Fields following a week later. Of the three gold miners that have already reported, Durban Roodepoort Deep and Armgold showed an increase in earnings from the second quarter, and Harmony a decline. The average rand gold price was lower as the rand firmed and the dollar price softened, and in all three cases earnings were compromised by sharp increases in the costs of production. This was mainly as a result of soaring "factory gate" inflation, which is currently at a 13-year high. There is more pain in store for some during the coming couple of quarters as wage negotiations come to a head. Mining sector settlements have averaged about 9% so far, and since wages constitute about half of total costs, the additional burden will be significant. Silver -- Sharefin, 01:25:48 10/28/02 Mon Newmont, Debt & Derivatives They are down much more than $6,500,000 charged to earnings. What is not obvious to many in the announcement (because many do not understand accounting) is, IMO, that very large addition to long-term debt ($145,000,000) is the financed ("no margin") margin call. The revenue effect of the underwater gold short is booked to the gold price (as a reduction in potential revenue) and not realized as a loss yet. That is proper in today's accounting world treatment of such an event would increase debt now, but not yet decrease revenue. That appears to me what, in accounting terms, has happened. I believe that the losses on the open hedges will not be realized until the point of delivery of gold against the gold derivative sale or financial closure of the commitment. That is how the accounting directive approaches these gains or losses. You may recall that Newmont announced earlier this year that they had a $400,000,000 loss on the Australian acquisition's hedge position. Gold is $311 today. When the $400,000,000 loss was announced, the loss was calculated at $314. Some of those hedges have gone away. Much of it remains. I do not see how the loss on the now Newmont gold short position, then announced, could have changed much. As gold rises, which I firmly believe it will, these losses will grow and margin financing will continue to become larger. Therefore the long-term debt of these gold producer hedger entities will continue to grow. At the same time, future revenues will be compromised further. Eventually the balance sheet of the major gold producer will deteriorate in terms of liquidity vs. liabilities. At some point, the major gold producer hedgers practicing this approach to handling the gold derivative short positions and accounting in this manner will, IMO, suffer credit downgrades "as to counterparty risk" just like JPM. It is my opinion, based on experience, that you cannot count on banks continuing to loan huge amounts to finance a bad commodity positions regardless of present agreements. Bank ownership is changing. Remember: No major bank goes broke. They simply merge away. New bank management may not be so willing to finance billions of dollars in margin calls into future delivery. Banks have lending ratios and borrower credit status ratings that they as lenders must adhere to. Nothing is forever in finance especially credit lines. I can foresee a situation where multibillion dollar losses are going to have to be realized by major gold producers due to the gold producers deteriorating balance sheet or a downgrade of the gold producers credit status or a bank's own liquidity situation or the original derivative-granting financial institution's merger with a surviving financial entity not so friendly to commodity lending, the effects of which could kill an Elephant. These derivatives remain, for the gold industry, like a huge financial Asteroid headed right at them. Yes, for the gold industry leading hedgers, this situation is a Global Killer. Silver -- Sharefin, 01:23:45 10/28/02 Mon All that glitters is not gold When the Bureau of Indian Standards launched a survey last year on the quality of gold jewellery in the country, it found that only 250 jewellers had taken the BIS licence to get their jewellery Hallmarked. Today, that number has almost doubled. It is well know that even though the Centre introduced Hallmarking in April 2001, to authenticate gold purity by a third party other than the jeweller, the scheme has not had many takers. Then, last year, the BIS joined up with consumer groups, bought ornaments from a total of 120 jewellers in eight cities and got them tested. The results showed that 88 per cent of the jewellers surveyed had sold gold of lesser caratage or purity than claimed or promised. Now, the BIS must go further. As rural India accounts for nearly 70 per cent of the gold consumption in the country, it should now conduct extensive gold quality surveys in rural areas. That will not only give an indication of the extent of malpractice in this trade in the villages, but will also help create quality consciousness among rural consumers. BIS' proactive role should not end with the gold survey. It should take up similar market surveys on other products. Silver, for example. Silver -- Sharefin, 01:09:30 10/28/02 Mon The benevolent ruler The plan to introduce silver by degrees into circulation in our country, Mexico, is a plan that puts the benevolence of our rulers to the test. When the governed enjoy a silver currency, they have tranquility and peace guaranteed by the possession of money of enduring value. Each has his own future in his hands, as a result of the permanent value of silver: the center of gravity of each, is within himself; neither the individual, nor the country itself, is alienated from its center of gravity. The silver coin is a reality, not an abstraction like paper (fiduciary) money that is irredeemable in metal, be it silver or gold. Mental illness is the failure of the mind to relate coherently to reality. When the money that a nation uses is nothing more than an abstraction, psychic illness spreads, the population loses its bearings and disorder prevails in all aspects of life. In a word: society becomes alienated. The ideas that seduce mankind today are not benevolent. Real money of silver or gold is rejected because it implies benevolence on the part of the rulers, and today's ideas are not benevolent, they are malevolent - “evil wishing”. The governed are not to be offered “tranquility and peace”, rather they are offered fraud and pillage. The attitude that prevails today amongst rulers and the intellectuals that cater to them, is that the governed are to be administered, in order to improve them. We are not accepted such as we are, rather there is a desire to see us made differently, to put us into a mold that they, the rulers, consider better. Gold -- Sharefin, 01:05:02 10/28/02 Mon The 5 Elements for a Long-Term Bull Market in Gold Now Have a Nuclear Wild Card I am however starting to think that the plan for the Gold Dinar and support from other Islamic nations is a planned offensive against the use of the dollar as a settlement currency for oil. It is perceived, and correctly so, that the Islamic world is controlled via the use of the US dollar as the main settlement currency. When I say "controlled" I mean whatever happens economically in the USA is exported there via the dollar. Dollars exchanged for the Gold Dinar currency as a measure for gold settlements quarterly or gold convertible to pay for certain oil imports would end all the debate of whether or not gold has a place in the monetary system. What we are hearing now is that the Gold Dinar will be used as a "measure" settled quarterly in gold on an Islamic intra-nation basis, but that could change quickly. A review of the trade balances of Malaysia and its intra-Islamic trade partners indicates that if the Gold Dinar is employed as now suggested, it would tie up approximately 200 tonnes of gold production equal to 10% of new mine supply. If Malaysia went all the way and went to convertibility with a 15% gold cover, they would utilize more than 300 tonnes of new production. Either way, this is the Wildest of Wild Cards for Gold. The advent of the Gold Dinar, as now envisioned, would remove any discussion of whether or not we are embarking on a very long-term bull market in gold. I have already told you that I believe this is not just a gold recovery, not just a gold bull phase, not just a gold bull market, but the advent of the return of gold to a monetary application in which gold will be in a bullish posture on balance for the rest of my life. Silver -- Sharefin, 01:01:34 10/28/02 Mon Here We Go Again But if silver is not down in price because of China or because we don't have a deficit, then why is it down? Silver is down because of the continued manipulative trading practices on the COMEX, the worlds largest, and I would claim, only silver exchange. Please allow me to try and prove my allegation, one more time, and at the same time, bring you some very good news. I will base my proof on the weekly Commitments of Traders Report (COT), issued by the Commodity Futures Trading Commission (CFTC). Silver -- Sharefin, 00:57:51 10/28/02 Mon IS THE SILVER LIE READY? Periodic Ponzi Update PPU -- $hifty, 23:14:15 10/27/02 Sun Preiodic Ponzi Update PPU Periodic Ponzi Update PPU Nasdaq 1,331.13 + Dow 8,443.99 = 9,775.12 divide by 2 = 4,887.56 Ponzi Up 82.52 from last week. Looks to me like their rally is just about done. Thanks for the link RossL Go GATA Go Gold $hifty  Gold -- Sharefin, 21:31:01 10/27/02 Sun Greg The gold indices look to be comfirming the formation as well. I would have liked to see a spike down first to clear the downtrend but it doesn't look like we will get it. <:-))) Fiat rumours -- Sharefin, 21:29:07 10/27/02 Sun POTENTIALLY EXPLOSIVE INSIDE NEWS -- $170B JPM FRAUD Fiat -- Sharefin, 21:26:09 10/27/02 Sun U.S., JAPAN, GERMANY BANK SYSTEMS MELTING DOWN The banking systems of the United States, Germany and Japan--which possess up to two-thirds of the assets of the world's banking system, are now in meltdown. Even though the U.S. government has been faking figures all along--and the Bush Administration right now is lying as much as possible on this--the fact is that recently released U.S. bad-debt figures give some idea of the crisis. (Maybe someone has a sense of honor and/or maybe the bookeeper for the mob is putting out a signal!) * United States. The yearly debt report for the U.S.--"Shared National Credit Review" (Oct. 8)--put out jointly by the bank regulatory agencies of the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Agency, gives figures for a spectacular rate of increase in U.S. bad bank loans. Between 2000 and 2002, the percentage of loans that are classified as troubled ("adversely rated") has more than doubled. Of the $1.871 trillion in loan commitments that financial institutions have made in the United States, 12.6% are "troubled/adversely rated," compared with 5.1% in 2000. Then there's the pattern where so-called U.S. banks have abandoned the traditional way of banking--making loans, to the point where now banks' holdings of investment securities (corporate bonds, mortgage-backed instruments, etc.) exceeds their level of business loans. Then come the derivatives: As a whole, U.S. banks have notional derivatives holdings 81 times their equity capital, 13 times their loan portfolios, and over seven times their asset base. * Japan. The third largest banking system "reorganization/bailout" since 1998 is being attempted, because of non-performing loans in the range of $1 trillion. * Germany. The risk premiums on the debt of banks exploded in late September, as the creditworthiness of the entire German banking sector itself is in question. "Never in post-World War II memory, have the banking-financial systems of the three major economic powers--the United States, Japan, and Germany--experienced such crises simultaneously. Combined, these banking systems possess between two-fifths and two-thirds of the assets of the world's banking system. The breakdown conjuncture of these nations' interconnected bank systems defines a crisis point of the world financial system...." "Exemplifying the American banking system's overall crisis is the giant J.P. Morgan Chase Bank's evaporation. On Oct. 9, Moody's Investor Services cut its rating on Morgan Chase's long-term debt, by one notch, down to ``A1,'' which is its fifth-highest grade. This affects the rating on $42 billion of Morgan Chase's long-term debt. J.P. Morgan Chase, with $713 billion in assets, is the world's leading derivatives bank, with $26 trillion in such highly leveraged bets. Since the start of 2001, Morgan Chase's market capitalization has gone down from $106.5 billion to $33 billion. Morgan Chase is undergoing a death seizure which mirrors that which Enron experienced during 2001, where each month, it shrinks further. "Morgan Chase Chairman William Harrison has announced that he plans to fire 20% of the bank's investment banking division, which employs 20,000 people. (This would bring the number of workers fired at all divisions of Morgan Chase to 14,000 since the merger of J.P. Morgan and Chase Manhattan banks in December 2000.) On Oct. 9 the {Financial Times} reported a joke making the rounds on Wall Street, to the effect that a newspaper headline will soon appear, reading, ``J.P. Morgan To Cut Workforce 120%...'' * "Derivatives Losses Reveal Bankruptcy of the U.S. Banking System, by Hoefle, notes: "As a whole, U.S. banks have notional derivatives holdings 81 times their equity capital, 13 times their loan portfolios, and over seven times their asset base.... However, while the banking system is dominated by this derivatives bubble, the vast majority of these derivatives are concentrated in just a handful of banks ({{Figure 3}}). J.P. Morgan Chase alone had $26 trillion in derivatives as of June 30, 2002, some 50% of all the derivatives held by U.S. bank holding companies. Bank of America held over $10 trillion, or 20%, while Citigroup held $9 trillion, or 18%, giving these three institutions together 87% of the total....  Encouraging signs for Gold -- Greg, 13:24:12 10/26/02 Sat Possible A-B-C correction complete and trend reversal in the works.  Bob Chapman - International Report -- Sharefin, 07:23:46 10/26/02 Sat GOLD, SILVER, PLATINUM, PALLADIUM AND DIAMONDS We repeat for new subscribers: sell the hedgers. That means Barrick, Placer Dome, Newmont, Anglo-Gold and the Australians, particularly Sons of Gwalia, which has run into a host of problems, such as lower grade, as Barrick has had. We said seven years ago that these mines, which were high grading, would run into trouble eventually and we were right. It could be with lower grade and higher gold prices that most all of these hedgers could not deliver against their derivative contracts. If that happens bullion banks will go bust and that could bring down the entire derivative structure. Gold is a linchpin and once pulled the financial carnage will be unstoppable. Why hasn't Comex gone back to regular hours over a year after 9/11? Is it because it makes it easier for the bullion banks to rig the market? What happens when one or two big players demand delivery of physical gold or silver? If the exchange settles for cash it destroys the whole market on Comex and everyone will then move to other legitimate exchanges. As we know JPM has a vested interest in lower or stable gold prices due to its preeminent position as leader of the gold manipulation cartel and that they have large short positions in gold derivatives in collusion with central banks. Elaborate schemes have been considered and used since the late 1980s to free up the value of gold in order to continue a fiat money system. Now that gold sales and leasing by central banks is less of an option they have resorted to false bookkeeping, such as, you lease your gold, which in actuality has been sold by another party, and you still carry it on your books as an asset. Not only do Morgan's derivative positions in gold and other areas look dangerous, so does the market's opinion of Morgan. When we looked at their fundamentals and the chart patterns at $56.00 a share we knew then that other large investors saw the same thing we did. They sold and we went short. We now also may be looking at the bursting of the bond bubble if the 10-year notes activities last week are any indication, having jumped from 3.59% to 4.26%. If that happens Morgan would be in additional serious trouble having written a huge number of interest rate swaps. Incidentally, we are sure the fall in 10-year notes and the rise in yield was in part caused by Fannie Mae getting its books straight. We figure they had to buy $200 billion in 10-year Treasuries. We knew they bought $60 billion worth and they may well have been a buyer as foreigners and other hedgers were sellers. We'll find out in time. All we know is it looks like yields want to go higher. As a sidestep 30-year mortgage rates have jumped by 1/2%, which kills a lot of refinancing, which in turn cuts into additional consumer liquidity. There are going to be massive debts out there that are never going to be repaid, which puts enormous volatility pressure on derivatives causing huge losses similar to what happened with LTCM in 1998. Morgan has $20 trillion in derivatives on the books. The amount is beyond comprehension. It can only be that Morgan is acting for the US Treasury and the Federal Reserve. How could any sane banker put itself at $200 billion in real risk? Morgan couldn't without the collusion of those elitists who run our country. Morgan's exposure to litigation could run easily over $20 billion. How would they pay such judgments? They'd go bankrupt of course and then be resuscitated in reorganization by the US Congress, but their failure would allow gold to trade freely again. Thus, the demise of Morgan is very important to the future of gold. More bullish news. The short position on Crystallex has increased from 734,360 in November 2001 to 2,385,660 shares as of October 2002. This is similar to shorts in other gold and silver stocks. We are also seeing shorting on all the 20 to 60 cent recommendations. Once this market turns and these shorts have to cover, it will be explosive. Marxists and other former prisoners such as, Tokyo Sexwale are straining at the bit to take advantage of South Africa's new improvement charter, which calls for 26% of all mines to be owned by blacks within 10 years. The new mining charter calls for at least 15% of mines to be black-owned within five years. The black recipients, of course, are all ex-freedom fighters as in Zimbabwe. The law, as we warned two years ago, is a slow nationalization of the mining sector, which will deprive investors of the full fruits of their investments. It leaves open to negotiation black participation in any new mining ventures. Existing mining groups are setting up a 100-billion rand fund to bankroll the improvement initiative. Shareholders of South African gold and platinum shares, that is your money that is being given away to a group of people who spent their nights murdering white South Africans not so many years ago. That group included Mr. Tokyo Sexwale and Nelson Mandela, South Africa's new saint. The first indications were that the ruling black Africans wouldn't take 51% of all mining companies within 10 years and that state organizations should provide funding and warehouse the companies' shares. Are you not relieved shareholders that they are only going to take 26% of your investment? How gracious of the government. If you haven't sold your South African shares already, do so. We lived in South Africa for several years and we can promise you your investments will be destroyed. We strongly urge you to switch to unhedged North American producers such as *Agnico-Eagle (AEM-NYSE) and *Goldcorp (GG-NYSE.) HONG KONG, Oct 18 (Reuters) - Physical gold dealers in Asia gave a mixed picture of demand on Friday, with Hong Kong firms unable to fill the flood of orders while Singapore and Malaysia reported only a mild pick-up in demand ahead of the holidays. With the steady fall in the price of bullion this week, refineries and gold bar dealers in Hong Kong have run out of stock of good delivery kilobars bars. "There is no stock. We have checked with Johnson Matthey and Lee Cheong and they don't have stock. They can't supply the market," said William Leung, a dealer at Standard Bank London in Hong Kong. Dealers in Hong Kong were quoting premiums of US$0.15-0.20 an ounce over loco London prices, a turnaround from discounts of US$0.05-0.10 last week. ---- SUBSCRIPTION INFORMATION: 1-year $99.95 U.S. Funds. Make check payable to Robert Chapman, (NOT International Forecaster), and mail to: P. O. Box 510518, Punta Gorda, Fl 33951. Please include name, address, telephone number and email address. We accept VISA and MasterCard charges. Please provide us with your card number and expiration date. We will charge your card $99.95 for a one-year subscription. Please note, we publish twice a month by surface mail or 3-4 times a month by email. Our email is: bif4653@comcast.net or info@intlforecaster.com. For new or renewal subscriptions please contact 941-639-0619 or the above email addresses. Gold -- Sharefin, 07:18:53 10/26/02 Sat Comex Gold Depositories Someone just removed 8% of the CME gold deposits. Yesterday = 1945263oz Today = 1794127oz Someone just removed 151136oz of gold...  Gold -- Sharefin, 23:22:49 10/25/02 Fri Introducing the Islamic Dinar and Dirham Using the Dinar & Dirham Gold and silver are the most stable currency the world has ever seen From the beginning of Islam until today, the value of the Islamic bimetallic currency has remained surprisingly stable in relation to basic consumable goods: A chicken at the time of the Prophet, salla'llahu alaihi wa sallam, cost one dirham; today, 1,400 years later, a chicken costs approximately one dirham. In 1,400 years inflation is zero. Could we say the same about the dollar or any other paper currency in the last 25 years? In the long term the bimetallic currency has proved to be the most stable currency the world has ever seen. It has survived, despite all the attempts by governments to transform it into a symbolic currency by imposing a nominal value different from its weight. Reliability Gold cannot be inflated by printing more of it; 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. Portability and anonymity of gold are both important, but the most significant fact is that gold is an asset that is no-one else´s liability. All forms of paper assets: bonds, shares, and even bank deposits, are promises to repay money borrowed. 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. Gold -- Sharefin, 22:46:02 10/25/02 Fri PARADIGM SHIFT As more and more wake up to the utter fraud of paper money, it will be 1980 again, in spades. Gold's peak in 1980 of $850, multiplied by 4 would be $3400, and silver's $54 would be $216 per ounce in today's diminished buying power dollars. Will it be a good idea to sell gold and silver when they reach $3400 and $216, which would be comparable to 1980's peak? Yes, if the economy is still holding together, but not if every other price has quadrupled, as this would mean you have hedged yourself well, and preserved your assets, but selling then, with all other prices having quadrupled, would be throwing your hedge away, while inflation still rages. If prices have only doubled, and gold and silver quadrupled, it might be wise to sell, and I wouldn't discourage it. Gold -- Sharefin, 03:11:50 10/25/02 Fri Barrick Sees Its Share Of Total Hedging Market Declining Barrick Gold Corp. expects its 15% to 20% share of the world's estimated 100-million-ounce gold hedging market will drop as the company reduces ounces committed under its hedges, Barrick chief financial officer Jamie Sokalsky said Thursday. Barrick is in the hedging market every second day, on average, as it rolls over contracts, he said. The company's forward sales position was 16.9 million ounces at the end of the third quarter, and it plans to cut that position to 12 million ounces by the end of 2003. The mark-to-market value of Barrick's gold contracts was negative $301 million at the end of the quarter, at a spot gold price of $324 an ounce, but the mark- to-market value would approach zero, or breakeven, at a gold price of $307 an ounce, the company said. ---- Seems to me that Barrick would welcome a drop in price back to $307...^o-o^..... At the above rate it shows that a 6% drop (from $324 to $307) in the price of gold drops Barrick's mark to market value from negative $301 million to zero. In reverse does this mean that an increase in the price of gold from $307 (where Barrick's mark to market reads zero) up to $364 (a 19% increase) would increase Barrick's mark to market value up to $1 billion. Or do the formulas involved become more parabolic as the price rises. Gold -- Sharefin, 00:25:52 10/25/02 Fri White Paper on Islamic Bimetallic Currency Here's a copy of the full version of the paper. Fiat -- Sharefin, 23:18:23 10/24/02 Thu Robert Prechter predicts crash Financial forecaster Robert Prechter, author of "Conquer the Crash," speaks with Thom Calandra about his prediction that a period of deflationary depression is imminent and what investors can do to protect their portfolios. (Part 1 of 2) Presented on video stream Gold -- Sharefin, 23:14:26 10/24/02 Thu Goldcorp admits aborted acquisition Ever adventurous and with money to spend, Goldcorp [GG] admitted during today's investor conference call that an unusual entry on its cash flow statement related to an aborted acquisition attempt. Explaining the “in-out” transaction, Goldcorp chief executive Robert McEwen said: “Our investments have been designed to look at strategic investments where we can grow. We took a position in a company where we thought there was an opportunity. We looked at it more closely and decided that opportunity didn't exist, so we sold out; at a profit.” The amount was significant at $121 million, which meant that half the company's cash pile (the balance sheet boasts an additional $57 million worth of gold bullion) to build up its position in the target, which is though to be Placer Dome [PDG]. It's no secret that Goldcorp is shopping for assets to bulk up, but not all analysts were comfortable with this particular deal which hails too close to the company's portfolio management roots than its present incarnation as the poster child for gold stocks. Goldcorp is an arch opportunist though so it should not come as too much of a surprise, especially since this is not this year's first adventure. In a lengthy interview with Mineweb, due for publication in the next fortnight, McEwen admitted that the second quarter's purchase of gold bullion at an average price of $323 per ounce was a test of the physical market. “I was curious to see what the breadth of the market was,” he said, adding that he had inquired of a bullion bank how long it would take to acquire 20 tonnes of gold. The answer was two days, so he put in an order for just 6% of that tonnage and ended up waiting two weeks for delivery and a 50% increase in the spread. Gold -- Sharefin, 22:49:00 10/24/02 Thu Apparently the Murabitun website has gone down or been taken out. It occured just after the release of this paper. The paper is titledWhite Paper on Islamic Bimetallic Currency And I managed to source this copy (minus a bit missing off the end) from my cache. White Paper on Islamic Bimetallic Currency Gold and silver restore social equilibrium The dinar and the dirham can be the world currency of all free people Headlines The schism that divides the defenders of gold and silver and their adversaries is not only utilitarian but also philosophical. The defence of gold and silver is solidly based on some fundamental considerations of political philosophy that the defenders of artificial currency cannot ignore. "Money is not an invention of the State" wrote Menger, "nor is it the product of a law-making act. For its existence the sanction of political authority is not even necessary" Money is the product of the division of labour and of the economy of exchange that man has established. When the traders intended to exchange their goods and services for other more commercial goods the precious metals appeared as the best choice and became the currency for the majority of people. Gold and silver had value because they satisfied the needs of man. Contrary to what happened to other useful merchandise, they were easy to fraction, could be transported at low cost and kept safe with relative ease. For around 2,500 years the universal currency was made up of small pieces of gold and silver called coins. They survived for two millenia despite the numerous attempts by many governments that tried to manipulate them and replace them with their own medium of exchange. This perception of the very nature of currency and the characteristic of precious metals at the service of the economic exchange leads us to think that gold and silver will probably survive another two thousand years, and somehow or another, the gold standard will prevail a long time after the present eruption of artificial national currencies have been forgotten, or only remembered in the museums of numismatics. The choice of currency is a matter of crucial importance. Do we want a system where the government will issue and manage the currency by means of the political and economic process? Or do we prefer that the people's own decision makes the choice? If we entrust it to the government and financial institutions then we must be ready to live with an artificial currency, which is ideal to serve political purposes. It can be expanded and contracted at will. Always according to the policies and economical suitability of the moment. But above everything it can be inflated at will to complement the tax income. On the other hand if we allow people to make their own free choice, it may well happen that they choose as a medium of exchange a great variety of trading goods. In the past, through a selective process of several thousands of years they chose precious metals ;gold and silver; as currency. They will probably choose the same if the are given the freedom to do so. Imam Malik, the great Imam of Madina in the early period of Islam, stated: "Money is any merchandise commonly accepted as a medium of exchange". Thus through the testimony of one of the greatest Islamic Imams, the position of Islamic Law clearly stands in defence of the freedom to choose among all merchandise rather than the imposition of an artificial currency. Bimetallic currency is a natural currency as oppossed to the artificial one. There is no need for an Islamic government to establish a bimetallic currency by means of a deliberately legal act. In fact, the bimetallic currency, does not need rules or regulation, laws or official control. It only needs the individual freedom to possess and use gold and silver coins with an implicit elimination of all taxes impossed on their use. There is no doubt that the freedom to possess gold does not only mean the freedom to buy it and sell it for industrial purposes but also the freedom to use it as a medium of exchange. Using bimetallic coins means to have a healthy currency. It means that the value of the currency is independent of the government. It is true that it can not provide us with the unattainable ideal of an absolutely stable currency, but it protects the monetary system from the influence of governments and financial institutions, because the existing stocks of gold are independent of the desires and manipulations of the political and financial system. The bimetallic coins as international currency were in the past the product of an evolution that occurred naturally without the need for institutions or treaties between governments. Nobody had to take care to make them work as an international currency. When the main nations of the world adopted it as a currency, the world found that it had a world currency. It is true that the different currencies had different names and various weights. But that did not matter much, since all of them were made of gold or silver and they could be interexchanged freely. After all, an ounce of gold is an ounce of gold whether minted in the form of sovereign or eagles. The bimetallic currency united the world because the payments between nations ceased to be a problem. It facilitated trade world-wide and promoted, with it, a division of labour on a world scale. The nations specialised in the merchandise for which they enjoyed greater advantages in the international market. But above everything, the bimetallic currency, stimulated the export of capital from the industrial countries to the undeveloped areas. Without the fear of loss through devaluation or restriction in transfers, European and Muslim capital earnestly sought profitable opportunities in all the continents. As a result, trade and industry improved the conditions of working and life world-wide. Gold cannot be inflated by printing more of it; 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. Portability and anonymity of gold are both important, but THE MOST SIGNIFICANT FACT IS THAT GOLD IS AN ASSET THAT IS NO-ONE ELSE'S LIABILITY. All forms of paper assets: bonds, shares, and even bank deposits, are promises to repay money borrowed. Their value is dependant 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. It may be that the return to the bimetallic currency will be an arduous and prolonged task. Since it was lost through a gradual erosion of monetary freedom, perhaps we ought to reconquer it slowly and painfully going upstream back to freedom. This is the reason why we do not seek a law of reform or a law of restoration, nor a conversion or a parity, we are satisfied just with freedom. This is a short and direct path. It may take us years to tread this path and that will depend upon the resistance from ignorance and public prejudice and the greed and love of power of financial institutions. The government may for that reason take some stages in the path, which will offer new challenges that invite the supreme effort to restore freedom. Headlines for an Implementation Programme: Issuing and minting of dinars and dirhams according to the traditional standard weights and measures. Total freedom to buy, sell and possess any quantity of dinars and dirhams within Islamic Law. Facilitating the transport and transferral of gold for international trading by a network of appointed agencies throughout the world. And finally, changing all paper notes for newly minted dinars and dirhams, and abolition of all paper-money privileges. Issuing and minting of dinars and dirhams according to the traditional standard weights and measures. The first stage is the minting of the coins according to acceptable standards. Dinars and dirhams have already been minted under the supervision and standards of the World Islamic Trading Organisation and are in circulation in Spain, Germany and South Africa, soon to be followed by Switzerland, England and other Muslim countries. The definition of the standards of dinar and dirhams set up by WITO are based on the same size and weight than the original ones in Madinah al-Munawwara. The DINAR is defined as 4,25 grams of gold of 22 carats. The DIRHAM is defined as 3,00 grams of sterling silver (or 0.925 pure SILVER). WEIGHTS AND MEASURES DINAR 4.25 gm. 23m/m DIRHAM 3.00 gm. 25 m/m WITO's standard dimensions for the dinar and the dirham: Total freedom to buy, sell and possess any quantity of dinars and dirhams within Islamic Law. This has four stages: The first stage is the complete freedom to trade in gold and to possess it. Everybody has to be able to buy it, sell it, lend it, borrow it, import it and export it in any quantity. This includes the elimination of all taxes impossed on the purchase or sale of gold and silver. The second stage will be the individual freedom to use gold in all economic transactions. People must enjoy the freedom to use gold when buying goods or services, without the mediation of the artificial paper currency. That is, the law of Legal Tender by which it is obligatory to accept the artificial currency issued by the state as payment of every debt, public or private, will have to make an exception to all 'contracts in gold' or 'clauses in gold' that will determine specifically that the payment will be made in gold. In summary, the legal freedom to celebrate contracts in gold. Once this has been attained we would have reached the "parallel currency standard". This will not restrict in any way the official transactions, nor will it prevent the financing of the government. The system of state finance will continue to work. All contracts already established in US dollars or the official currency will be satisfied in that currency, but all contracts in dinars or dirhams will have to be satisfied in dinars and dirhams. The paper currency issued by the govenment and the dinars and dirhams will be circulating simultaneously. The relative supply and demand of each currency will determine its rate of exchange, which will fluctuate constantly in response to that supply and demand. The third stage in the way towards bimetallic currency will be individual freedom to mint coins. The first coins were minted by jewellers and private people. Private coins circulated freely in history throughout the whole world. Whoever does not want to take the time and bother to weigh and test these coins or has no confidence in the mark and stamp of the minter, he will still be free to use the official currency of the nation. The fourth stage will be that the goverment will decide to make its currency freely convertible into gold. It could adopt the prevailing rate of exchange between both currencies as legal parity and from that moment on the government will guarantee the unconditional convertibility of its paper notes in gold. This will be a legislation of the gold currency that will gradually lead towards freedom. Facilitating the transport and transferral of gold for international trading by a international network of appointed agencies throughout the world. It is quite obvious that in our era of artificial paper money currency, the way to bimetallic currency seems locked because of the lack of a nation that will take the lead. It is not realistic to think that the government of a western kafir country will provide such a leadership. Naturally the monetary authorities of US and the western countries will defend the present bankrupt state of affairs that makes so much less painful their own commercial deficits and their inflation. They would like to mantain their artificial currencies which forces creditor countries to accelerate their inflation in order to follow their pace. There is an alternative that allows one to attain monetary stability and economic cooperation: the national currencies must be all convertible and redeemable in gold, and the international balances must be satisfied in gold. But, again, that will not happen without a nation that will take the lead. The introduction of a gold currency in international trading will produce a mimetic effect in other Muslim countries who have had enough of supporting western nations' deficits and, on the other hand, it will provide a solid foundation for a newly c The intent of The Golden Pot is to become a news archive of the gold markets. Hence why I like to store relevent information here as opposed to being a chat site on gold. This way when the article get removed the information is still there for one and all to appreciate. Fiat -- Sharefin, 07:57:44 10/24/02 Thu BLACK TUESDAY OCTOBER 29th 1929 REVISITED? History would suggest that once every couple of generations there is a “cleansing cycle” that occurs within the financial markets, society, and even within humanity as a whole. Financial institutions collapse, diseases rage, locusts fly, hailstones fall, earthquakes increase, volcanoes rumble, Sunspots explode out from our heat source, wars breakout all over and despotism reins supreme. We appear to be entering one of these historic cycles at this seminal point in the maturation of the human race. Almost as if the entire planet is vibrating out of control, has some kind of harmonic resonance pushed us out of kilter, like we are getting disconnected from our core and spiraling out of control? Maybe it's our collective lack of moral backbone precipitating these events, as historically, such perilous times tend to follow a period of wild excess. The last time this happened was in the 1920's, 30's and 40's. It started with the Wall Street Crash of 1929, then it moved through to the Great Depression and ended beyond World War II. The question is: is it cyclically returning?  Gold -- Sharefin, 07:48:32 10/24/02 Thu World Gold Council reinventing itself "The WGC is going through a radical transformation process. We are in the process of restructuring, reducing the number of our offices to tighten up our operations and make the organization more accountable then in the past," Thompson told a conference Tuesday. Earlier this month, the new WGC Chief Executive James Burton, former CEO of the California Public Employees Retirement System, Calpers, took over with a new mandate of "reinvigorating" the council. Burton is expected to present by year-end a detailed and cost-effective overall strategy for the promotion of gold. Thompson said the council wants to revitalize investment interest in gold, "as there are opportunities in gold as a pure investment." But he also said that the council would continue to promote jewelry consumption, which will still be the biggest part of its budget. ~~~~ Speaking at the conference, gold investors were certainly bullish about the prospect of the yellow metal, especially in the current theme of risk aversion for the market. Gold has outperformed the Dow Jones by 70 percent since early 2001 and by a factor of 20 since 1980. David Crichton-Watt, managing director of The Phoenix Gold Fund, said "I don't think it's going to be rumors of war that drive investors to gold but the fear for their depreciating assets." Crichton-Watt pointed to the very high level of corporate debt in the United States and the increasing risk U.S. commercial bonds carry. "At the end of the day, the only asset class that is not a liability is gold," he noted. Naomi Fink from the UBS Warburg foreign exchange strategy added, "Gold remains a classic risk-haven and currently the price of gold remains very much driven by risk aversion." Fink saw some near-term price pressure on gold if there is a sustain rally in equities, as the two asset prices are inversely correlated. However, she also pointed that the U.S. dollar remains volatile and could see further pressure, which will be a positive for gold the medium-term. Gold -- Sharefin, 07:46:20 10/24/02 Thu Market quickly gets over Newmont restatement The post Arthur Andersen fallout continues, this time with a modest impact on Newmont Mining Corporation [NEM]. The world's largest gold producer and the most valuable one by market capitalisation, has been forced to restate earnings beginning with the third quarter of 1999 through the second quarter of 2002 after new auditors PricewaterhouseCoopers (PwC) had a different interpretation in regard to the accounting treatment for a Prepaid Forward transaction entered into by the company in July 1999. PWC replaced Arthur Andersen as auditor in May this year. The restatement will see Newmont's 1999 loss increasing by $3.6 million, $1.3 million for 2000 and $1.1 million for 2001. First half-2002 profits will be reduced by $500,000. Newmont investor relations spokesman Russell Ball noted that “the Prepaid Forward transaction was fully disclosed in the company's Form 10-Q for the second quarter of 1999, and in each subsequent quarterly and annual report filed by the company with the SEC. The restatement involved technical accounting criteria - the semi-annual delivery requirements of approximately 18,000 ounces were not satisfied by physical delivery from actual company production, but instead by ounces purchased by the company under forward purchase agreements.” Apart from the earnings restatements, Newmont must also reclassify elements of the balance sheet. Long-term debt will be increased by approximately $145 million, although total long-term liabilities are largely unaffected since the net proceeds of $137.2 million resulting from the prepaid forward contract were originally recorded as a long-term liability. Gold -- Sharefin, 07:43:28 10/24/02 Thu Malaysia Presses Ahead on Use of Gold Dinar for International Trade Malaysia will set up a secretariat to study and promote the use of the gold dinar as currency for international trade if the cabinet agrees, Prime Minister Mahathir Mohamad said Wednesday. Mahathir was responding to a request by a delegate from the Iranian Central Bank at an international seminar on the "Gold Dinar in Multilateral Trade" here. "If the cabinet agrees, then the Malaysian Central Bank will set up this secretariat," AFP quoted him as telling reporters after officially closing the seminar. Iran has expressed its support for the use of the gold dinar which, according to Islamic law, is roughly equivalent to 4.3 grams. Its value is based on world demand for gold. Mahathir, who is also finance minister, floated the idea in March, saying it could help prevent a repeat of the financial crisis which devastated Asia in 1997-1998, which he blames on "greedy" currency traders. Mahathir's economic advisor Nor Mohamed Yakcop said in August that Malaysia expected to use gold dinars for trade with Islamic countries from mid-2003 and was already discussing the system with certain Islamic nations. The move would be a strong step forward to unite Muslim nations, he said. Mahathir said Wednesday he had his eye on a few potential partners and that they were Muslim countries with strong and stable economies, but he did not name them. Gold -- Sharefin, 07:41:39 10/24/02 Thu Malaysia backs Iran proposal to set up international gold dinar Prime Minister Dr Mahathir Mohamad has agreed with Iran proposal to set up a secretariat in Malaysia to use the gold dinar among central banks of world Muslim countries. "Iran is keen, so we might do this with them," he told newsmen after closing the International Seminar on Gold Dinar in Multilateral Trades organized by the Malaysia's Institute of Islamic Understanding In the session, Ikim chairman Ahmad Sarji Abdul Hamid outlined some of the proposals and issues that needed to be examined before implementation. He said there was an existing prohibition by the International Monetary Fund (IMF) on the use of gold as a medium of payment and the proposed gold dinar would be a potential violation of the rule. He said there was also a need to study the effects of using a dual currency system tool and whether this would impede the growth of the gold dinar . Dr Mahathir later told the press conference these were problems that should be looked at and resolved. He said potential countries to use the dinar for trading were Muslim countries with a stable economy. In his speech, he said countries should not be too ambitious in launching the gold dinar for multilateral trade at one go, suggesting instead they start by pairing off two countries. He believed anarchy in the international financial regime would remain because it benefited the rich and powerful and to "protect ourselves, we must evolve our own payment system, our own trading currency." He said the gold dinar could be the currency for trade between nations and if all trade items were valued against gold, then there would be no problem with exchange rate. Dr Mahathir said while gold price could also be manipulated, this was not as easily done as the US dollar or other currencies. "No one can sell gold at below market price because he just will not be able to deliver when called upon to do so. Short selling will be very difficult, if not impossible," he said. He stressed the dinar was intended exclusively for international trade and was not to be used as currency for daily transactions in the domestic market because it was heavy and cumbersome to carry. Gold -- Sharefin, 07:39:00 10/24/02 Thu Barrick on target to reduce gold hedge program Barrick Gold said on Thursday it was on target to reduce its hedge program, or gold forward sales, to 12 million ounces by the end of 2003. The world's second-largest gold miner told an analysts conference call it would reduce the program from 16.9 million ounces at the end of September 2002. Gold -- Sharefin, 06:44:45 10/24/02 Thu Gold Producers, Derivative Hedgers Cause Suffering Selection of Healthy Gold Shares Shrinking Daily Healthy Gold Producers & Legitimate Juniors to Rise Exponentially as a Result Well, what goes around comes around. That coming around is what I believe to be the brave and commendable re-statement of Newmont in the form of accounting that there is no such thing as a "No Margin" Gold Derivative. What the industry calls "No Margin" is simply an agreement with the counterparty of the specific performance obligation, called a gold derivative, to finance losses forward. In other words, the losses on open gold derivative obligation in which the market moves against the performance becomes a long-term loan to the gold producer to be financed forward. This is also true of the so-called new magic spot deferred gold derivatives. When the price of gold goes against any derivative, the losses therein are financed forward as they now are arranged. With the brave lead of Newmont to set things straight, other major producers will have to re-examine how they are accounting for this awful sewage they are still maintaining, in my opinion, not by active market decision, but by reactive legal obligation to lenders. I do not believe these major producers are bearish long-term on gold. Rather, these gold producers do not want to accept full debt recourse to other producing assets on the now non-recourse production loans they have assumed for the new production they have brought on over the past eight to ten years. My message to the major gold producers is for the sake of the Industry, yourself and your shareholders: Please lift all those short gold positions immediately; while you still have a chance. ~~~~ By the time we are knee deep in a recognized gold bull market, we may well have lost more than 75% of gold shares as viable investments for the prudent man. That is the bad news. The good news is those majors who are hedgers (who now stand up and do the right thing) plus juniors with integrity and on-the-ground performance will, because of the lack of viable investment vehicles, be valued by the marketplace at much higher levels than they would have before. Gold -- Sharefin, 06:24:42 10/24/02 Thu S African eyes new 70m oz gold mine Avgold, the South African mid-tier gold producer, is to study the feasibility of the construction of a new mine in the Northern Free State to tap into a resource of more than 70 million ounces. The plans to tackle three gold-bearing fan structures to the north of its existing Target mine in a single development rather than the previously suggested piece-meal approach, were unveiled today by management. Gold -- Sharefin, 06:13:42 10/24/02 Thu Placer Dome CEO 'Can't Believe' How Market Is Valuing Co. Placer Dome Inc. is "firing on all cylinders" but the company's share price doesn't reflect its improving performance, president and chief executive Jay Taylor said Wednesday on a conference call. "I just can't believe how the market has priced us, but the market is what it is," Taylor said. Taylor noted that the company is concluding its takeover of Aurion Gold, calling it a major acquisition "that everybody wanted" because it removes uncertainty about Placer's declining production profile. As of Wednesday morning, Placer has acquired 59% to 60% of AurionGold shares, officials said on the conference call. Two items that are likely hurting Placer's stock price, Taylor said, are the company's July deletion from the Standard & Poor's 500 Index, which caused some major U.S. funds to sell their Placer holdings, and extensive arbitrage activity during the company's takeover bid for AurionGold. "Some people are a little reticent to go long on the stock while the arbs are in," he said. But the fundamentals of Placer's business are "exceptional," Taylor said, adding, "look at the earnings we're generating." Gold -- Sharefin, 06:10:57 10/24/02 Thu Barrick matches lowered forecast Barrick Gold Corp. met lowered third-quarter guidance Thursday, posting earnings that dropped amid a decrease in production and higher costs. During the quarter, Barrick said gold production from its operating mines in Canada, Australia, Tanzania and Chile totalled 1.38 million ounces at a cash cost of $180 per ounce in the third quarter, generating cash margins of $162 an ounce. For the full year, Barrick said it continues to expect to produce 5.7 million ounces of gold, at an average cash cost of $178 per ounce. Barrick also said it sees full-year 2002 earnings in the range of 33 cents to 35 cents a share based on spot gold prices averaging $315 per ounce for the balance of the year. The company also recently announced plans to add four mines in five years, with a total of two million ounces of new production at an average cash cost of $125 per ounce over the first 10 years of production. Gold -- Sharefin, 06:07:36 10/24/02 Thu What will drive gold next? - PDF File In the past four months, gold prices have been successively driven by the fall in the dollar, then the decline in equity markets and lastly the rise in oil prices. Different stories, sometimes similar and sometimes contrasting, lay behind each of these movements. The fall in the dollar first reflected the loss of confidence in the capacity of the US economy to rebound, then more generally investors' lack of interest in dollar-denominated assets as a safe haven in an economic environment totally lacking in visibility. Subsequently, it was the collapse in the equity markets, which reflected not only the absence of visibility with regard to companies' profitability, but more importantly a total loss in confidence in their financial figures. The correlation with oil prices is simply explained by the rise in the war risk premium. ¡ Even when all these risks were combined (for example, in September), i.e. when the idea of systemic risk could reasonably be put forward, gold was never able to attract investors seeking an asset of last resort. However, the most convincing evidence that this risk was not really present in the market mindset remains the central banks' decision to continue lending their gold reserves at derisory lending rates (at the short end of the curve) while, by definition, even low systemic risk should have made the credit risks dissuasive. Today the downside potential of the dollar is limited by the euro's lack of upside potential, the risk of deflation did not withstand the recent (fragile) recovery of the Dow Jones, and the risk of war in Iraq is likely to be protracted. In fact, gold is searching for a new story, hence a new driver. As gold is unable to rely on its own fundamentals to provide one, prices will simply drop in the meantime. Gold -- Sharefin, 00:51:20 10/24/02 Thu "Letter To My Broker" CONCLUSION: Long term upward price trend is gone, price-to-earnings ratios are high, maybe even higher considering corporate exaggerations or fraud, some balance sheets are weak, Kondratieff cycle due, bankruptcies are up, oil is up, unemployment up, interest rates to go up, consumer spending is dropping, recession is around the world, stock advisors losing credibility, further terrorist attacks possible, pension fund problems, Argentina and Brazil loans are risky, as is the gold derivatives gamble, and again the long term upward price trend is gone, and price-to-earnings ratios are high. Maybe it's just me but, other than gold stocks, the market just doesn't look like the place I want to be for a while. Maybe you could let me know. Yours sincerely, Joe Investor. Gold -- Sharefin, 00:49:00 10/24/02 Thu Going for the Gold Fiat -- Sharefin, 11:31:10 10/23/02 Wed Finance and Economic Breakdown... Doug has done a superb job of outlining the distinctive mechanisms by which debt has grown in this particular Bubble, and I won't try to duplicate his analysis here. Instead, I'll explain a non-mainstream theory that predicts the periodic occurrence of financial bubbles, and gives some indication of what can be expected in their aftermath. This theory is the "Financial Instability Hypothesis" developed by the late American economist Hyman Minsky. Writing as long ago and in such comparatively tranquil times as the 1960s, Minsky argued that capitalism is inherently flawed, being prone to booms, crises and depressions. This instability, in my view, is due to characteristics the financial system must posses if it is to be consistent with full-blown capitalism. Such a financial system will be capable of both generating signals that induce an accelerating desire to invest and of financing that accelerating investment. (Minsky 1969b [1982]: 224) This far-from-Polyannic view of capitalism can be summarised in one simple statement: investors borrow money during booms, and attempt to repay debt during slumps. The cash flows that they expected to have when they entered into debt commitments aren't there when repayments are due, so that debts are not fully repaid. Debt can therefore ratchet up over a series of booms and busts to reach levels that are ultimately unsustainable. Japan found itself at the end of this particular hilly road in 1990, and I share Doug's belief that America has reached the edge of the same precipice now. Ahead lies not more of the "walking on air" of the last six years, nor even a return to pre-Bubble normality, but at best a severe recession and at worst a fall into the uncharted territory of a debt-deflation. ~~~~ This belief was evident in the actions of the Federal Reserve-and Fannie & Freddie-in 2000-2001. The rapid plunge in official interest rates reduced the burden of mortgage debt and failed stockmarket speculations, while the extra credit from Fannie & Freddie allowed the housing bubble to continue inflating even as the stock market bubble deflated. Though the "regulators" averted an immediate crisis, their actions simply pushed the gamblers from one casino into another. Since most houses are money sinks rather than sources, one American's windfall profits from a house sale is another's increased debt commitments. This game can therefore only be sustained by rising incomes or falling interest rates. Incomes, both worker and corporate, are rising nowhere near as fast as debt, while interest rates are already near historic lows. I expect that interest rates will fall further, but there is a floor of zero below which they can't go, and that raises the next key issue in Minsky's theory: deflation. If the inflation rate happens to be high at the time of the crisis-as it was with the stock market crash back in 1973-then rising commodity prices enable indebted companies to repay their debts, and eventually the cycle recommences. But when the prevailing rate of inflation is already low, as it is now, firms with inadequate cash flows are forced to sell assets, to cut prices in an attempt to increase cash flow, or to go bankrupt. All three classes of action tend to further depress the current price level so that the crisis can turn moderate inflation into deflation. ~~~ My models of Minsky's thesis support his general contentions-that a market economy with finance can fall into a debt-induced Depression after a series of cycles in which debt ratchets up over time, and that Keynesian-style counter-cyclical spending prevents the excessive accumulation of debt. But these simple models can't model the massive accumulation of debt that is induced by the ultimately negative sum game of stock market and finance sector speculation. Nor can they predict the impact of the collapse of the Keynesian consensus on the effectiveness of counter-cyclical spending. When these are factored in, along with the sheer scale of waste that the Internet Bubble gave us, I would hazard the guess that the outcome will lie between the two extremes of my models-neither a calamitous collapse into a Great Depression, nor a brief cyclical downturn ultimately tempered by government spending, but a long, drawn out deflationary crisis like that currently afflicting Japan. ~~~ From a Minskian perspective, a debt-deflation occurs because asset prices and commodity prices have become decoupled, with asset prices and debt rising to levels that are unsustainable while consumer prices remain stagnant. Therefore either debts have to fall, or asset prices have to fall, or commodity prices rise, or some combination of the three. None of these methods is without drawbacks. Bringing prices back into balance by suppressing asset prices tends to be a self-defeating; reducing debt involves debt moratoria and other such "breaches of the rules"; while commodity inflation indirectly erodes the value of savings (the othe side to the debt equation). Fiat -- Sharefin, 11:00:07 10/23/02 Wed Morgan Stanley: Deflation Risk High The risk of deflation in the United States is high and rising, Morgan Stanley's chief economist Stephen Roach said on Wednesday. The goods sector in the U.S. is already in a deflationary cycle, and the prices of services will fall as the sector becomes more globalized, U.S.-based Roach told a seminar in Singapore. ``As globalization spreads from goods to services, there is a case for the low inflation U.S. economy being hit with a post-bubble recession,'' he said. The risks were related to excesses in the U.S. economy, such as the low savings rate, a capacity overhang, a possible balance of payments crisis and the record level of debt among corporations and consumers. ``The most lethal strain is debt deflation,'' Roach said. Fiat -- Sharefin, 10:55:51 10/23/02 Wed IMF Check-Mates Itself in Brazil You have to admit, there is more than a touch of irony in the situation surrounding Brazil's elections. In the weeks leading up to the vote, the international financiers holding Brazil's foreign debt- all $500 billion of it-extracted promises from every leading Presidential candidate, pro-government and opposition alike, that should they win the elections, they would maintain Brazil's current agreements with the International Monetary Fund (IMF). Backroom deals were cut, threats were delivered, and when the election rolled around, you could almost hear Wall Street breath a collective sigh of relief: "We're okay, boys. They've all agreed-including Lula-that they'll savage their economy before suspending debt payments. Thank goodness reason prevailed." But reality has asserted itself and threw a couple of hitches into the Wall Street scenario. First, Dr. Enéas Carneiro kicked over the chessboard. In his congressional race, Dr. Enéas, the Brazilian politician most closely associated with Lyndon LaRouche's call for breaking with the entire IMF system-Dr. Enéas calls it ruptura-won more votes than any congressional candidate in the entire history of Brazil. Now all political bets in Brazil are off. Secondly, the IMF has managed to place itself in check-mate in Brazil. It has engineered a debt bubble of such dimensions and characteristics there, that the IMF is about to destroy itself by successfully imposing its own policies. LaRouche recently explained the matter: "Any conditions that Brazil would capitulate to from the IMF, would, in effect, destroy Brazil; but that would also destroy the IMF itself. Whereas any action on the Brazil case which would be acceptable to the future of Brazil, which would actually enable Brazil to deal with its problem, would effectively bankrupt the whole IMF system. This is reality: If Brazil concedes, Brazil collapses and that causes a chain-reaction collapse of the IMF system. If the IMF concedes to Brazil, to reasonable conditions, the IMF collapses immediately-which is probably the best solution." In sum, 45% of Brazil's 700 billion real government debt is dollarized. Another 40% is interest-linked. Every 1-centavo decline in the currency boosts the debt by 3.5 billion reals; and every percentage-point rise in interest rates increases it by 4.2 billion reals. Meanwhile, the IMF and the speculators go merrily about simultaneously driving the real exchange rate down, and interest rates up. Result: Brazil's debt is arithmetically unpayable. Brazil stands at the edge of default-like it or not. The prestigious Financial Times of London recently explained to its often obtuse readers that, if the bail-out packages of Brazil prove insufficient, "this will not only destroy the fragile economy of Brazil, but also the very raison d'étre of the IMF." Brazil reached this pass by following IMF orders to the letter: it dollarized; it devalued; it is about to default; and, if it stays on this policy trajectory, it will soon die, as neighboring Argentina is now dying. Fiat vs Gold -- Sharefin, 05:18:34 10/23/02 Wed No Link..... October 21, 2002 -- Reading Fortune magazine is almost a "must" these days. With the stock of AOL-Time Warner sinking, maybe the gloom has overtaken Fortune magazine (Time owns Fortune magazine), but at any rate, Fortune calls the shots as they see them, and they are not always bullish with a perpetual "buy, buy" bias. The cover story of Fortune states that real estate could be the next "problem." The article makes the case for real estate being overpriced, and the gist of the piece is that real estate prices won't continue to rise. Another article warns that "Ford Careens Toward the Junkyard. . And because of rampant 0% financing, Ford's financial arm has a ton of bonds outstanding, a hefty $157 billion in debt, $23 billion of which must be renewed in 2002 alone. The problem is, Ford is 'barely covering' its interest expense today." In a rather shocking article, Fortune turns to "GM's Slow Leak. GM is banking on 0% financing to pump up sales and earnings. But it has a hole in its balance sheet that won't go away." It seems that GM's tab for future health-care expenses over the next 13 years is a staggering $38 billion in today's dollars. Even worse, is GM's pension plan. GM's obligations are now $76 billion. At the end of 2001 the company was short $9 billion. Put it this way, GM is going to be squeezed via its obligations to workers. On top of everything else, GM is literally giving away cars to keep its factories open and to retain market share. What's happening to GM is happening to many other large companies, maybe not on as large a scale -- but it's happening. Meanwhile, if you remember, I warned a few years ago that China might not be the fabulous source of sales from the US. I disagreed, I thought that China would be a fabulous source of supply. Now the China competition story is gaining increased publicity. The LA Times (a great newspaper) yesterday ran a big story on China. The crux of the China story is this -- China is not only manufacturing everything from washers-dryers to children's' toys, but China is moving rapidly into high tech. China also has an inexhaustible supply of super-low cost labor. The average worker in China makes 40 cents an hour -- one sixth of what a Mexican worker receivesand one-fortieth of what a US worker earns. China's merchandise exports last year came to $266 billion, with 41% of those exports going to the US. China passed Japan last year as the nation with the largest trade surplus. Russell prediction -- Within a few years I believe that the Chinese yuan will be made convertible -- the yuan will become a major currency along with the dollar, the euro and the yen. With its huge trade surplus, I expect the yuan to become a strong currency. And I would not be surprised if China, in its competition with the US, backs its currency with gold. Remember, the nation with the strongest current account and trade surpluses is the nation that tends to attract gold to its shores. Can you picture the attractiveness of a gold-backed yuan? Anyone wonder why China has just opened its new exchange -- the Shanghai Gold Exchange? More follows for subscribers. . . Richard Russell Dow Theory Letters Gold -- Sharefin, 00:06:57 10/23/02 Wed Goldman Forecasts Gold Supply to Fall 200 Tons in 2003 Global gold supply may fall next year by about 200 tons as producers reduce the volume of the metal they sell in forward markets, even if bullion prices fall, the Financial Times said, citing Goldman Sachs Group Inc. Gold miners this year have become net buyers, securing physical supply by buying back gold which was previously sold in the forward market, the paper said, citing Daniel McConvey, vice- president of global investment research at the investment bank. ``We do not expect a return to hedging if the gold price dips over the next year,'' McConvey said in the report. ``Rather, we expect that downward moves in the gold price will be met with stronger hedge buybacks.'' Gold -- Sharefin, 00:04:47 10/23/02 Wed World Gold Council Chairman Thompson Comments on Hedging, Price Chris Thompson, chairman of the World Gold Council, comments on the outlook for using gold as a hedge against risk. Thompson, who spoke after an industry conference in Singapore, also comments on gold prices and the future for exploration for the metal. The London-based council, established in 1987, is an international association of 24 gold producers set up to promote the use of gold. Its members include Denver-based Newmont Mining Corp., Toronto-based Barrick Gold Corp. and South Africa's AngloGold Ltd. Thompson is also chairman of Gold Fields Ltd., the world's fourth-largest gold producer. On hedging: ``The pressure on gold markets from hedging has now declined. The fundamental reason is that interest rates are so low that selling forward and picking up -- there's no profit. The low interest rate is the principle reason. ``Another reason is investors or institutions who buy gold stocks tend to have preference to buy stocks that are not hedged so that if the gold price goes up, then the full benefit of the increase accrues to the investors.'' On gold prices and gold exploration: ``There is less downside than upside'' on the price of gold. ``Gold prices are recovering from extremely low levels. They were at levels where the industry cannot replace its reserves. They have been at levels where the global industry reserves are declining or deteriorating.'' ``It's not yet high enough'' to encourage more exploration. A price ``higher than $350 (an ounce), I think, would accelerate the venture capital market.''  Gold -- Sharefin, 23:45:07 10/22/02 Tue No U-turn for 'one-way corrigans' Counter-trenders stick to forecast of market deflation Counter-trenders -- those who go against the grain -- say they'll keep going the opposite direction on a one-way street. "By far the greatest threat facing the United States in the next three to five years is a deflationary depression.," says Hochberg, who works for Elliott Waver Robert Prechter Jr. "The mere mention of this elicits a reaction of either total disbelief or complete derision from most mainstream analysts. We certainly understand that initial reaction, because a deflationary depression is so rare. But the evidence for just such an occurrence now is overwhelming, in our estimation." Put a group of Wall Street dissenters in one room and you'll find that half or more advise their clients to place a portion of their assets in gold, a metal that is most unwelcome at most major investment banks. "While Wall Street is sliding down the slippery backside slope of a popped valuation bubble, gold and mining stocks have enjoyed new investor interest and demand," says James Stack, editor of InvesTech Research. "The resurgence in gold can be attributed to the record trade deficit and subsequent pressures on the U.S. dollar." Gold believers, bucking what has been a stalled rally in the metal, say they see vast gains ahead for bullion. Larry Edelson, a former bullion trader who now edits the Safe Money Report, says gold has "rock-solid support at the $308- $310 level and is now base building for the next leg up, which should easily blast through the previous high and move on to $360 an ounce. U.S. stocks will get hit hard again and soon. A couple of positive earnings reports are not enough to turn the economy around. Overseas, stocks are especially vulnerable." Gold's most outspoken supporter, Bill Murphy of Le Metropole Café, says he will pull out all the stops when he addresses the New Orleans investment crowd next month. "Last year at the conference, gold was about $275, so it has risen $50 per ounce at best," says Murphy, chairman of the Gold Anti-Trust Action Committee. "My guess is we are looking at $500 before the 2003 conference, or 10 times the move of the past year." Murphy blames central banks and commercial lenders of bullion for depressing the metal's price in actions that resemble those of a cartel. He also points to governments and overseas consumers who are boosting their gold holdings. "Gold demand in China alone is expected to increase 300 tons next year. That increase alone represents more than 10 percent of mine supply," says Murphy. "I understand Iran is withdrawing gold from the London lending pool, which is probably the reason spot London price has gained over the U.S. very recently." Gold -- Sharefin, 23:40:06 10/22/02 Tue Gold Fields to Boost Output 10% in 2003, Increase Exploration Gold Fields Ltd. may boost output about 10 percent next year as higher prices encourage the world's fourth-largest gold producer to increase exploration. The company plans to spend $42 million to explore new areas for the metal in the year ended June 2003, said Ian Cockerill, chief executive of Gold Fields. That's including $30 million already earmarked for projects in Europe, Australia and Africa. Violence in the Middle East, concern over terrorist attacks and accounting frauds at Enron Corp. and WorldCom Inc. prompted investors to buy gold as a safer bet, helping the price of the precious metal rise 13 percent this year to $313.78 an ounce. ``With a slightly higher gold price, we feel a little bit more comfortable increasing the exploration spending,'' Cockerill said in an interview. The company spent $26 million on exploration in the year ended June 30, he said. That will help the company increase gold production to about 4.5 million ounces in the year ending June 30, said Chris Thompson, Gold Fields' chairman. The company mined about 4.1 million ounces last year. Gold -- Sharefin, 23:36:44 10/22/02 Tue Placer Q3 Earnings Meet Analysts' Estimates As of Sept. 30, the company had a net commitment of 7.1 million ounces, or approximately 16 percent of reserves, at an average price of $410 an ounce for delivery over a period of 14 years. The company launched a hostile bid for Australia's AurionGold in late May and said on Tuesday it had gained a controlling stake of 56 percent in the miner. The acquisition will make it the world's fifth-largest gold producer, increasing Placer's production by 1 million ounces an year. In an earnings outlook, the company said excluding the production of AurionGold, Placer Dome's share of gold and copper production in 2002 is targeted to be approximately 2.5 million ounces and 417 million pounds. Cash costs are seen at $182 an ounce and total production costs for gold is seen at $230 per ounce. Placer's shares have fallen 23 percent since the start of the third quarter in July, and 42 percent since it began its takeover battle for AurionGold. Gold -- Sharefin, 23:33:34 10/22/02 Tue Q3 Reports Q3 highlights: Bueneventura Q3 highlights: Cambior Q3 highlights: Placer Dome Q3 highlights: Meridian Gold ~~~ SOG profit forecasts slashed Gold -- Sharefin, 23:30:32 10/22/02 Tue World gold mine output seen sliding by 2004 Global gold mine production probably peaked last year and could start sliding by 2004 unless bullion prices rally, prompting miners to pump money into new projects, analysts said on Tuesday. Richard Davis, portfolio manager of the Natural Resources Team at Merrill Lynch Investment Managers, said exploration budgets plunged 40% in the late 1990s from their zenith in 1996 as gold prices languished near 20-year lows. Bullion has since revived, supported by greater investment demand and unwinding of producer hedge-books, but not enough to bolster budgets, he said. "At current levels, gold prices are too low to encourage sustainable, profitable investment in grass-roots exploration," Davis told the Nikkei Gold Conference in Tokyo. "Given the long lead-time between finding an ounce of gold and getting it out of the ground, the downward trend in gold production is unlikely to be reversed for some time. "Obviously this scenario should be supportive of gold prices going forward." Beacon Group Advisors, a mining investment banking and research firm, said in April that world supply of mined gold could plummet by nearly 30% by 2010 unless bullion prices rally, encouraging miners to bring untapped deposits onstream Gold -- Sharefin, 23:27:08 10/22/02 Tue Harmony issues charter warning The first indication of the complexity likely to follow South Africa's mining charter became apparent earlier this week with Harmony Gold warning against sellers of mining assets pocketing the black empowerment credits. In terms of government's plans to implement the mining charter, a scorecard approach will be adopted with white-owned mining companies receiving empowerment credits for facilitating black economic empowerment (BEE) transactions. Gold -- Sharefin, 21:37:10 10/22/02 Tue Preemptive Selling of Gold: The Bigger Picture A June 1996 high standard deviation preemptive selling episode brought about a downward directional change in the 200-day moving average of gold prices. Immediately following that change in trend, the two banks that later became J.P. Morgan Chase reported unprecedented one-time growth spurts in their interest rate derivatives, which are related to gold prices. Trading patterns in gold and interest rate derivatives are presented and striking correlations are shown, suggesting that a larger macro-economic strategy involving interest rates has been associated with gold and preemptive selling. This strategy has also impacted the interest rate sensitive government-sponsored enterprises. Current, deteriorating economic fundamentals are displayed, further suggesting that the gold and interest rate strategy is under duress. In closing, the work of currency crisis experts relating to exhaustion of gold reserves during unsustainable policy periods is briefly discussed.  Gold -- Sharefin, 00:18:44 10/22/02 Tue RBI cautions against 'e-gold' use as currency The Reserve Bank of India (RBI) has clarified on incidents off late, where dubious groups are creating a false impression among the public about the validity of “e-gold”, which is being called by offshore groups as valid electronic currency freely allowed in India and with a status of a foreign currency. The group floating this concept is one e-Gold, which is based in Bermuda --a tax haven island in the Atlantic. There is nothing new about such dubious concepts, given the fact that the internet is flooded with thousands of such schemes, which claim to provide users with alternatives to legal currency. The RBI got a whiff of this scheme through a pamphlet, which was being circulated with newspapers in the country. This stated that NRIs use this facility to make remittances directly to their families in India. The RBI has clarified that “e-gold” is not a currency of any sovereign state. “Use of “e-gold” in any transaction is violative of current rules in force in India. Members of the public, banks, money changers and other FIs are,therefore,cautioned against the use of “e-gold” as a currency in their transactions,” said an RBI release. The pamphlet offers people to open an “e-gold” account and states that e-gold is accepted in payment for goods and services as currencies, from somebody willing and able to make the exchange. A Web site of the group operating this service says that e-gold is fully backed at all times by gold bullion in allocated storage, which RBI says is clearly in violation of domestic regulations. Gold -- Sharefin, 00:15:39 10/22/02 Tue RBI bans gold money as payment channel The Reserve Bank of India (RBI) today disallowed “e-gold”, a payment channel which along with “goldgrams” has slowly been emerging as an alternate currency. The central bank sounded out warning bells to the general public against the use of “e-gold” as a currency. “Use of e-gold in any transaction is violative of current regulations in force in the country. The public, banks, money changers and other financial institutions are, therefore, cautioned against the use of e-gold as a currency in their transactions,” a RBI release said. The RBI said an impression had been created among the public by some agencies or persons that transactions involving “e-gold”, purportedly an electronic currency, were freely permitted in the country and that it had the status of a foreign currency. Replacing a currency with anything else was not done, said RBI officials. Gold -- Sharefin, 00:12:02 10/22/02 Tue Gold's Bull Market Gold is more than just another market. It's the world's most reliable and oldest financial barometer, and its movements tell us how healthy the economy is. Gold is also the ultimate currency, which is why central bankers don't like a rising gold price. It's the world's measuring stick because a rising gold price usually means financial trouble ahead. It's not a coincidence, for example, that gold reached a major low in August 1999, months before the stock market's euphoric bubble burst. Gold also moves opposite to the Dollar and it's not a coincidence that gold formed a major bottom in 1999-2001 while the Dollar was forming a major top. Many people believe that gold can only rise during inflation because that's what it did in the 1960s and 70s. Gold rose with inflation because that was the problem then. But gold actually rises when there's trouble with the Dollar and not just when there's inflation. In fact, the Dollar is the most important factor influencing gold because it's the currency used and recognized around the world. GOLD OUTPERFORMING ALL CURRENCIES… The Dollar has been falling all year and gold has been rising in a major bull market. Today's deflationary environment is causing a fierce competition of goods, and when a currency is strong it makes exports higher priced, which means they're unattractive compared to goods from countries that have a weaker currency. For the first time in many years, the major countries now want their currency to be weak. It's become more important to have strong exports than a strong currency. This alone is a breeding ground for a rising gold price. Over the years we've often said that the gold price is truly strong when it rises against all currencies. But the point is, it would not be unusual to see downward pressure on gold between now and about December, and that'll likely coincide with a further upward rebound in the stock market. Most important to keep in mind, this is a normal downward correction. And as long as gold stays above $297, the major trend will remain up and once the current downward correction is over, the bull market will again take the gold price higher. Gold -- Sharefin, 00:09:34 10/22/02 Tue Stocks and gold: Divergent, for now Stock market up, gold down? That's the conventional wisdom. Which is not always wrong. Bullion was mugged to the $310 range by sudden U.S.-based selling pressure yesterday afternoon (not for the first time). The Dow finished the day up some 2.6%. The conventional stocks-reverse-gold wisdom has even been endorsed recently by the formidable Richard Russell of Dow Theory Letters. Russell has repeatedly said that gold is in the early stages of an historic bull market. But on the weekend, he wrote: "I doubt very much whether gold is going to fare well if this rally in the stock market gets rolling." Russell thought the rally would roll. But only for a while. In such a rally, he added "forget profits in gold, your gold and gold shares revert to "insurance" items...You buy 'em and hold 'em. You don't fold them." Perhaps significantly, the gold timing investment letters followed by the Hulbert Financial Digest have been quick to turn pessimistic. Their average exposure is now -13.46%, i.e. they're net short. By contrast, the stock market timing letters are fairly (but not wildly) cheerful, 31.31% long. On the contrary opinion theory that experience has hammered into the not usually cynical Mark Hulbert, that's quite good for gold, OKish for stocks. If you scratch these gold bears, they often have bullish blood. One of the more successful gold timers, Craig Corcoran of Futures Hotline/Mutual Fund Timer, just wrote "Our gold mutual fund asset allocation timing model shifts to BEARISH (as of the July 19th close) ... The "smart money" commercial hedger of gold futures contracts used recent price weakness to cover a substantial number of outstanding short positions. While still holding a net short exposure of better than 48K, their 27K reduction in net shorts (from the previous report) suggests the gold price is reaching toward attractive levels - on a risk/reward basis. With the 200-day moving average coming in just under the $310 level, any further weakness in gold likely would present a new long-term buying opportunity..." Similarly, in their Aden Report, the Aden sisters anticipated the recent drop, saying $315 was the critical level: "Gold is weak short-term the longer it stays below $315. Below $312 means it could go to $305, yet still be firm in the big picture...XAU is weak below 64, but it has strong support at 56. It'll now start to stabilize if it stays above 60. We haven't been giving stops on our gold shares because of the oversold situation. Keep your positions and buy new ones during current weakness " XAU closed Monday at 59.89. Which is also interesting to Sy Harding of Street Smart Report. He wrote last Wednesday night: "...our indicators remain neutral for gold as it continues to decline. We said in the last newsletter it looked like the XAU was headed to potential support at just under 60, where we could possibly get our next buy signal for gold stocks." Closing thought: maybe gold and stocks are inversely related short term -- but in the long run, they can and do converge. Our wonderful charting facility shows that a dollar invested in gold five years ago would be worth as much (putting aside dividends -- and taxes) as a dollar invested at the same time in the Dow. Amazingly, the same would have been true for single dollars invested in gold and the stock market, respectively, in 1972. Gold -- Sharefin, 00:07:04 10/22/02 Tue COMEX gold slumps as stock recovery gathers pace COMEX gold slipped back toward recent lows on Monday as Wall Street's recovery gained momentum, shaking off stock selling that provided safe-haven support to gold early in the session. "It's just a continuation pattern of what you saw last week," said a bullion bank dealer. "The market just drifted down off the stock market. It's a pretty simple correlation there." There is little inclination to sell gold outright in the face of a possible U.S.-led war to disarm Iraq, new worries about North Korea's nuclear arms program, and super-low U.S. interest rates, which reduce the opportunity cost of holding non-interest-bearing bullion. Gold -- Sharefin, 00:05:47 10/22/02 Tue Festivals, low prices to boost gold imports from India Gold imports from India, the world's largest consumer of the precious metal, are likely to rise this week as global prices have fallen and festive buying has increased, traders said on Monday. Gold imports, which accounted for nearly 70 per cent of the country's consumption in 2001, could rise to 15,000 bars a day by end of the week from about 11,000 bars now, they said. One gold bar equals 116.64 grams. "More and more people, including those who had earlier suspended buying due to firm prices, are now purchasing gold jewellery ahead of the peak festival season," said Nayan Pansare, a senior official of gold trading firm Inter Gold. But demand in October-December is likely to be about 30 to 40 per cent lower than the 156 tonnes in the corresponding three months last year because prices are much higher than they were a year earlier. They were at $275 per ounce in October last. Demand is also likely to be dented because rural incomes have fallen due to a drop in farm output after a patchy monsoon. Country's rural population, which accounts for 65 to 70 per cent of the country's gold consumption, is now channelling its resources towards necessities, with luxury goods taking a backseat, he said. Gold -- Sharefin, 00:00:28 10/22/02 Tue Saddam removing gold, valuables from Baghdad In anticipation of a United States strike against Iraq, President Saddam Hussein has started removing gold bars and valuable works of art from the capital of Baghdad to the remote northwestern town of Abu Kamal near the border with Syria, a German newspaper reported on Sunday. Gold -- Sharefin, 23:57:28 10/21/02 Mon M'sia Urge OIC Member Countries To Use Gold Dinar Malaysia hopes that the Organisation of Islamic Conference (OIC) members and others will use Gold Dinar in future trade transactions in order to enhance economic and trade relationships among themselves. This will be among the issues to be raised during the two-day 27th annual meeting of the Islamic Development Bank (IDB) beginning here tomorrow, said Deputy Finance Minister Datuk Dr Shafie Mohd Salleh. Dr Shafie, who is heading a five-member delegation to the annual meeting, said Malaysia would impress upon the delegates that using Gold Dinar as an alternative means of transactions would strengthen them and shield them from the uncertainties of using the US dollar which is unstable of late due to the current development in the global economy and security. "We will entice Islamic countries to accept the concept of trading using Gold Dinar to facilitate and to enhance trade among Islamic countries as well as other trading partners, as we can no longer rely on the unstable dollar compared with other currencies in use presently," he told Bernama. With that, Malaysia hoped that initially Gold Dinar would be used as a bilateral payment arrangement (BPA), and ultimately the BPA would be expanded as a multi-lateral payment arrangement with other participating Islamic countries as well as other trading partners, he added. As the usage of Gold Dinar would become a normal practice, the poorer Islamic countries seeking aids and support from the IDB would gain the confidence of the Islamic funding and assistance institution, he said. Fiat -- Sharefin, 23:52:45 10/21/02 Mon Beaten-Up J.P. Morgan Rises on Buyout Rumor Bad news on the earnings and regulatory front has driven down the price of J.P. Morgan Chase's stock all year, making it one of the worst-performing bank stocks in the sector. Harold Schroeder, a portfolio manager with Carlson Capital, a hedge fund that specializes in buying and shorting financial stocks, said he gives "no credence" to the rumor. He said J.P. Morgan has a lot of problems that need fixing and a buyout won't necessarily make them go away. A J. P. Morgan spokesman couldn't be reached for comment. A Bank One spokeswoman said the bank doesn't comment on rumors. Last week, J.P. Morgan reported dismal third-quarter earnings. Net income at the bank dropped 91% from a year ago and J.P. Morgan's once vaunted investment banking division posted a quarterly loss. For much of the year, J.P. Morgan has been plagued with a rising tide of bad loans to telecommunication and energy companies, weak trading revenues on its equities desk, and concerns about some of its business practices. In recent months, there have been rumblings on Wall Street about the need for a top-level management shakeup at the bank, including calls for the ouster of Chairman and Chief Executive William Harrison. But Stumpf, like other industry experts, said he saw little substance behind the rumor. He noted that in this uncertain economic environment it would be difficult for any bank to pull off a deal for J.P. Morgan. Fiat -- Sharefin, 23:49:49 10/21/02 Mon JP Morgan market value dwarfed by smaller rivals' JP Morgan Chase is one of the biggest banks in the United States, but you wouldn't necessarily know that by its stock market value. "It's shocking," Fred Cummings, an analyst at McDonald Investments, said of the disparity between the banks' market capitalizations. "But that just shows you the market has lost confidence in (J.P. Morgan's) management team and they don't know how true that book value is at J.P. Morgan." "It's been there for a while -- a few months," UBS Warburg analyst Diane Glossman said of J.P. Morgan Chase's market capitalization. "But it is pretty astonishing on the face of it if you just dial the clock back a year ago." Still, J.P. Morgan's stock tumbled 48 percent in the first three quarters this year, underperforming the Standard & Poor's financial stock index, which fell about 22 percent then. Fiat -- Sharefin, 23:43:39 10/21/02 Mon JP Morgan Stock Up on Rumor J.P. Morgan Chase & Co. Inc.'s stock surged on Monday on speculation that Bank One Corp. would buy the bank, which is struggling in a weak market. But analysts doubted the deal would happen. "There is this takeover rumor on the stock," analyst Reilly Tierney of Fox-Pitt, Kelton said. "I think it's improbable ... Whoever buys J.P. Morgan is going to have to have a lot of capital to recapitalize J.P. Morgan, to address the balance sheet issues that clearly hang over the stock." J.P. Morgan shares gained 6.9 percent, or $1.30, to $20.27, while Bank One's shares were up 20 cents to close at $39.08 in on the New York Stock Exchange. But while Bank One Chief Executive James "Jamie" Dimon, a protege of Citigroup CEO Sanford "Sandy" Weill, has expressed an interest in expanding credit card, money management, retail and possibly investment banking units, analysts said J.P. Morgan Chase's loan books would be too risky for Bank One. Bank One has been reducing the size of its corporate loan book, after deciding the business was too risky and unprofitable. "Historically, Jamie Dimon, along with Sandy Weill, they've been bottom fishers, and J.P. Morgan's clearly attractively valued," said Fred Cummings, an analyst at McDonald Investments. "But I would bet against it because of the risk profile of J.P. Morgan's balance sheet in large corporate." Gold -- Sharefin, 23:36:23 10/21/02 Mon Fear index to boost gold, say many Bullion backers will present forecasts next month Bullion believers are more convinced than ever the precious metal will rebound strongly by year's end and into next year. The October stock-market rally has placed gold in a danger zone -- in danger of falling back to earth after briefly notching a 20 percent year-to-date gain. Yet the metal's highest-profile analysts are preparing to tell their audience they expect an explosive gold rally in coming weeks, months and even years. "I am surprised that gold didn't rally as the stock market tanked and the stocks of the big banks headed for single digits," Turk says. "But gold will rally for the same reasons: trouble in the big banks, higher oil prices, a weaker dollar, growing federal budget deficits. All of these things call into question the U.S. dollar. That's why my Fear Index is rising." Gold -- Sharefin, 23:33:03 10/21/02 Mon Glittering portfolios: Precious metals stocks shine 3rd-quarter leaders recognize gold's value during a market downturn "In gold we trust!" is the catchphrase of Scott Schumaker, the third-quarter winner of the 2002 Detroit Free Press-Raymond James Stock Picks Contest. The second- and third-place winners, Patrick Terrian and James Gostomski, respectively, also believe in the value of the precious metal. "Gold is the antithesis of technology," said Schumaker, a 37-year-old Troy insurance agent. So when tech stocks bottomed out, the three men decided they wanted their make-believe contest portfolios to include gold stocks. Gostomski, 51, of Warren added that "Historically, I thought when we were going into this recession, gold would do well and it has." Schumaker admits he reads a lot of financial papers and annual reports. He said investor Warren Buffet, successful speculator George Soros and technology genius Bill Gates all own silver commodities. And Schumaker said they can't be wrong. Who are his favorite financial writers? Bill Fleckenstein, who writes a daily Market Rap column for TheStreet.com's RealMoney and is president of Fleckenstein Capital, which manages a hedge fund based in Seattle. Alan Abelson, who was editor of Barron's, the Dow Jones business and financial weekly, from 1981 to 1993, and now writes the weekly column Up & Down Wall Street that he started in 1966. Bill Murphy of LeMetropoleCafe.com, a cyberspace cafe for investors and intellectuals. He also is chairman of the Gold Anti-Trust Action Committee (GATA) a voice for the gold industry. Schumaker says he checks out his own investments. "I do my own research, then tell my broker what to buy." He says the best investment he ever made was buying gold last year. "Gold and silver are the only investment I'll make other than real estate," he said. Schumaker is looking for the Dow Jones Industrial Average to go down some more and gold to go up to $1,000 an ounce. Gold -- Sharefin, 23:25:50 10/21/02 Mon Anglo takes a knock on mining tax rumours Talk of the introduction of an 8 percent royalty tax and a 5 percent export tax on mining companies hit Anglo American in early trading on Friday. But market nerves were settled by private statements from government sources indicating that the rumour was way off target. One local fund manager said the trading reflected how sensitive the market was to speculation, following the controversial leaking of the mining charter. "It is disturbing that an ill-informed E analyst in London can cause such a stir." The level of confusion became apparent from the fact that, within hours, some traders believed that the royalties would knock Anglo's earnings by 8 percent. A note sent out by another firm later in the morning reported that Anglo had received confirmation from the state that the rumour figures were far too high. The treasury is working on the money bill, which will detail the royalties that the mining industry will have to pay. The bill is expected to be published within six months. The industry expected a royalty of about 2 percent to 3 percent of turnover. There was no expectation of an export tax. Gold -- Sharefin, 23:23:10 10/21/02 Mon Harmony to float Russian gold producer Harmony Gold is to participate in the UK listing of Highland Gold, a Jersey-based investment company in which it has a 32.5 percent stake. Harmony chief executive, Bernard Swanepoel, said today that the listing was scheduled for the year-end. Mineweb understands Highland Gold, which houses a 200,000 ounce-a-year Russian gold mine among other assets, will take its place on London's Alternative Investment Market (AIM) at a possible value of $200 million. Assuming this is an achieveable market value, Harmony would have to chip in about R650 million ($64 million) in order not to be diluted. Swanepoel said his company was considering only marginal dilution. The country is the world's sixth largest gold producing nation at 155 tons, which is 5.9 percent of new-mined supply. Total production from Russia, which currently comes mainly from alluvial mining, has increased at a rate of 11 percent a year since 1999. Speaking on Mineweb's sister radio-show, Classic Business, Swanepoel said Highland's operations, of which Harmony has full management control, were currently producing 200,000 ounces a year; a third of that would be attributable to Harmony. He said the mine's cash costs were slightly below those of Harmony's, which came in at $204/oz for the September quarter. According to Harmony's annual report, Highland also holds a portfolio of potential projects at various stages of development. Gold -- Sharefin, 23:20:59 10/21/02 Mon Harmony struggles against inflation Harmony Gold's September quarter results raised an ominous portent for its South African gold-producing peers. Renowned for its thrift, Harmony reported a 13 percent increase in cash costs and showed signs that inflation was starting to corrode margins. Gold -- Sharefin, 23:16:07 10/21/02 Mon Newcrest back in black The next obvious Aussie gold takeover target, Newcrest Mining, has managed to lift itself into the black in the September quarter after a surprisingly large loss in the preceding quarter. Newcrest's attributable gold production for the September period reached 150,500 ounces and copper production totalled 14,718 tonnes (compared with 169,510oz and 16,250t respectively in the previous three months), while cash costs edged up to A$232/oz (from A$230/oz). Significantly, the realised gold price for the quarter improved to A$600/oz (up from A$542/oz), albeit on the back of lower gold sales of 134,739oz (178,783oz) because of the timing of concentrate shipments. But, the gold price received was made to look good by the provision for surplus hedging contracts raised at 30 June. Therefore, excluding this provision, the foreign currency exchange loss would have been an unhealthy A$123/oz, representing an adjusted achieved gold price of A$524/oz. The entire quarter's gold production was delivered into hedge book, cutting it to a total of 5.74 million ounces, or about 20 per cent of reserves and 11 per cent of resources. However, the mark-to-market value of the company's hedge position continued to flounder underwater at negative A$933 million at 30 September (made up of minus A$550 million for gold, minus A$336 million for FX and minus A$47 million for copper). Gold -- Sharefin, 23:13:15 10/21/02 Mon Chips Are Down for Dollar/Gold Periodic Ponzi Update PPU -- $hifty, 22:28:27 10/20/02 Sun Preiodic Ponzi Update PPU Periodic Ponzi Update PPU Nasdaq 1287.86 + Dow 8322.4 = 9610.08 divide by 2 = 4805.04 Ponzi Up 274.66 from last week. Thanks for the link RossL Go GATA Go Gold $hifty  Gold Charts R Us -- Sharefin, 22:23:27 10/20/02 Sun As many of you who frequent my website must have noticed I am calling for a honorary subscription to help support what I do & to improve it's services. So far I am embarressed to say that there's not been one single vote of support & sign-up & I am left wondering if I've got the coding correct or whether there's zero interest in supporting Gold Charts R Us & the efforts I have put into this website. What with approx 1500-2000 daily unique viewers there's only been 30 odd folk who've even bothered to click through to the subscription page. I urge all who are regular viewers of Gold Charts R Us to help support this website & my work. I am asking each & everyone of you who utilise my website to chip in and spend a few bucks supporting it. Nick Gold -- Sharefin, 21:37:07 10/20/02 Sun How To Buy Gold Gold is not necessarily a trading vehicle; it's a core holding. Buy it as privately as possible, put it away, and forget about it. You can accumulate gold using the commodity exchanges, in 100-ounce contracts, but that makes no sense unless you are dealing in large quantities. For practical purposes, you want to have the metal in your own possession, except for what you might store abroad. And you want coins, not bullion, for the same reason coin has always been used in transactions: it's more convenient, and you know exactly what you are getting without using a scale or calipers. Determining when to sell an investment is at least as hard as figuring when to buy. With gold, more than almost anything else, you will be tempted to hold it, or buy more, when you should sell. That's because the next major run in gold-the last on, I believe, before we return to a gold standard-will take place in a chaotic environment. The metal will grace the covers of Time and Business Week, and everyone will try to buy it in a panic. I hope to look around then and find some other value that's very cheap, something worth trading my gold for. Maybe it will be corporate convertible bonds with 20 percent yields. Maybe it will be Japanese stocks for a fraction of book value. Maybe it will be real estate, when it once again shows large cash-on-cash returns. No one can know what it will be, but something will be very cheap when gold is very dear. Say gold is triple its present level and the investment of the future is one-third its current price; that is, arguably, a nine for one return on capital. It may not be possible to get out of gold and into something else at the best possible moment. But if you keep looking with an open mind, it will be worth the effort. This decade should see the final bull market in gold, with a total restructuring of the world's financial system. It's hard to envision just another cyclical extension of what's been going on for the last 20 years, although it also seemed unlikely back in the early '80s when the economy not only muddled through but gave birth to a huge bull market. The grand finale of the upcoming last leg of the gold bull market should be reminiscent of the better scenes from the movie Rollover, if not Road Warrior. I expect to see gold well over $1,000 during the next few years, and I suspect I'm being conservative in that forecast, which is typical at the close of a long bear market. Fiat -- Sharefin, 21:13:33 10/20/02 Sun Systemic Fiat Currency Risk & John Exter's Golden Triangle The trouble is, as Merrill Lynch pointed with stocks down now for a third straight year, the pension funds of hundreds of top U.S. companies will be under funded at the end of 2002. What that means for the more fortunate workers is that their companies will remain in business and as such be able to make good on their pension fund commitments. But to the extent that companies are under-funded, they will now need to deduct those shortfalls against already paltry earnings so that PE ratios are likely to rise above already historically high levels. Now as the Kondratieff winter bears in upon us, the big question is how many firms will be able to survive and as such, meet their pension obligations whether or not they are under funded. Merrill Lynch estimates that 98% of the 346 S&P 500 companies with traditional pension funds, will be under-funded at the end of 2002. I can't imagine how that might ravage S&P 500 Earnings with those companies making up 70% of the S&P 500. Poor Abby Joseph Cohen. On aggregate, the pension funds of these 346 companies are expected to be under funded by $640 billion - or 69% of the total assets in their pension plans, according to a Merrill Lynch analysts study. Excluding post-retirement funds, pension funds are under-funded by $323 billion at the companies, a sharp drop from an over-funded position of $0.5 billion at the end of 2001. At the end of 2000, the reverse was true: The funds were over-funded by $215 billion. What a remarkable demise form the mania bubble days of the Clinton Administration created by printing press fiat currency. Given our view that the decline in stock prices still has a very long way to go on the downside before this bear market is over, it is possible that we are only now seeing the tip of the ice berg in terms of bankrupt pension funds. Remember the demographics are becoming increasingly onerous for America companies at this time. Increasingly, we aging Americans are about to begin consume our pensions for hospital care, etc., even as the value of these investments continue to decline. Lord only knows what political ramification all of this will have on future generations of Americans especially since the abortion of 40+ million American babies means there will be a much smaller tax base from which the government can transfer wealth from a producing to a consuming sector of our economy. There would of course be a solution for pension fund woes, if pension fund managers were able to do a little independent thinking. As I told the audience at Calgary, what we are now facing is systemic risk. And what we have to do to successfully survive this system wide risk is step outside of the fiat currency system that is in deep dodo. The only way to step outside of the currency system is to exchange the currency that is in trouble, namely dollars and other fiat money for gold which retains value no matter if banks can return deposits to their subscribers or not. You must step outside of the fiat currency system by trading your paper for gold. So at the top of the inverted triangle are the equity markets, which have to a great extent already begun a process of significant self-destruction. Some $8.4 trillion of wealth has already been lost from equities. Next to fall are the debt markets and we have begun to see lower quality issues now defaulting at levels not seen since the 1930's. According to Ned Davis who spoke on CNBC last week, an amazing 40% of junk bonds are now in default. Davis noted on Ron Insana's show that a normal default rate is 2%. A 12% rate was about as bad as junk bonds had gotten in the past. So the 40% default rate represents major, major problems in lower quality debt instruments. Next to decline will be higher grade paper followed by government debt itself. Finally, Treasury Bills and bank deposits will begin to evaporate and all that will be left standing will be gold. That is why gold gains value even faster than paper in a deflationary environment. Fiat -- Sharefin, 20:53:52 10/20/02 Sun GRASSO'S GAFFE Grasso, discussing contingency plans for an alternate site for the venerable exchange, made the stunning admission: "The more we work at it, the more we realize that to do it right, you have to do it at a nuclear distance," Grasso told a Bloomberg News reporter in an interview yesterday. "You can't be in the city if you can't be comfortable within a 25-mile distance," he added. "I'm flabbergasted," said Ben Steil, senior fellow on the Council of Foreign Relations. "Surely he is not contending that if lower Manhattan were obliterated he would continue to trade somewhere else?" "It's ridiculous," said a source at a rival exchange. "Next we expect to hear he has plans to avoid meteor showers as well. Could a suborbital trading floor be in the NYSE future?" Fiat -- Sharefin, 20:46:29 10/20/02 Sun Gold council touts metal as investment hedge The Enron scandal and the threat of war in Iraq are two good reasons institutional investors should move part of their holdings into gold, according to the World Gold Council. The council, a London-based promotional vehicle for the industry, is carrying one theme on its tour of North American financial centres. In troubled times, gold is a good way to stabilize investment portfolios. "It's an insurance policy against world problems," argued Rhona O'Connell, manager of market analysis. "Gold is stable. It's predictable and it is countercyclical [to the usual investment vehicles]. It lowers the volatility of the whole portfolio." The council recommends that long-term institutional investors reduce their bonds, cash or real estate holdings and invest 6 to 10 per cent of their portfolio in gold instead. "Most portfolios are overweight in equities and T-bills," said George Milling-Stanley, director of the council's Western Hemisphere operations. "Fund managers should balance them with gold." Not everybody is convinced by his argument, however. Douglas Porter, a senior economist at BMO Nesbitt Burns Inc. in Toronto, suggested that investors look at stocks in gold mines, rather than gold bars. "You can make a reasonable case for gold [mining] stocks as a hedge, but you can't make as good a case for the commodity," he said. "Even central banks are trying to reduce their holdings in gold because there's no return on it." Fiat -- Sharefin, 20:40:16 10/20/02 Sun China issues 2,216 tonnes silver quotas for 2002 China, a key global silver exporter, has issued quotas to domestic exporters for 2,216 tonnes of exports this year, up from 1,180 tonnes in 2001, the official China Mining News said on Thursday. China's silver export quotas have increased 10 times since 2000, when it was set at 200 tonnes, the industry newspaper said. China, the world's fifth largest silver producer, is expected to produce 2,000 tonnes of silver this year, up from 1,908 tonnes in 2001, industry officials said. Fiat -- Sharefin, 20:38:57 10/20/02 Sun Royal Mint in a pickle Britain's Royal Mint, which produces all British coins, yesterday faced calls for a radical overhaul after it suffered a record P6.5 million trading loss in its latest financial year. AFP reports that the mint, whose history can be traced back more than 1 000 years, suffered further embarrassment when it was revealed that a thief had stolen more than P25 000 in new P20 notes. Fiat -- Sharefin, 19:44:05 10/20/02 Sun Gold miners' Q3 profits seen squeezed Wage increases, a resilient rand and rising inflation are seen taking some of the shine off South African gold miners when they begin reporting September quarter results from Monday, analysts said on Friday. Fiat -- Sharefin, 19:43:04 10/20/02 Sun Capitalism's bad apples: It's the barrel that's rotten Gold -- Sharefin, 19:36:05 10/20/02 Sun Gold on sacrificial altar - again Speculators took less than a fortnight to destroy year-long hopes that gold was headed for a renaissance, with the precious metal marginalized by the an investment herd which has once again started thundering back into equities. Shortly after New York markets opened today, liquidation of long positions on the New York's Comex market knocked the price down to around the $311/oz level, more than $14/oz off its September 25 peak. “This is all about the Dow (Jones) and the dollar,” said one London-based bullion banker. “We've been afraid that there was a bit of black hole under this market and all we needed to fall into it was some good economic data out of the US.” The Dow Jones' has picked up about 15 percent in the last week, a bounce that has sent the gold longs scurrying to liquidate their positions and channel cash back into stocks. The momentum of the gold sales increased on the back of strong new housing figures released in the US and despite a fall in general US equities. “We just need that (recovery) to stop for gold to perform,” said Leon Esterhuizen, gold analyst at Investec Securities in Johannesburg. While the overwhelming sentiment among South African economists is that a recovery in the US is far from assured, and despite many expecting cataclysmic deflation to grip Western economies, investors have chosen instead to follow the latest short-term recovery on Wall Street. Fiat -- Sharefin, 19:26:09 10/20/02 Sun Ever-More Electable LaRouche Tells You What You Must Do About the Economy - Now! Time To Face Tough Facts! The first fact sane citizens will face, is that, contrary to current White House flim-flam, both the United States and the whole world monetary-financial system are hopelessly bankrupt, with banks, industries, and jobs in a spiral with no visible bottom. This is not just nations such as Brazil, Argentina, and Turkey. The combined world indebtedness total of some $400 trillions (loans, futures, mortgages, etc.), is unpayable. Whole categories of financial assets and obligations are becoming worthless. So even though the U.S. Gross National Product is posted at $10 trillions, the total U.S. debt now stands at $32 trillions (government, corporate, and household combined), and annual debt service on that, requires in the range of $7 trillions-or over 70% of yearly U.S. GNP! Any sane accountant would look at these numbers and shriek, "Bankrupt!" Consider some facts worth remembering. The U.S. third quarter, which ended Sept. 30, was the worst stock-market catastrophe since the Crash of 1987, with worse to come. The Nasdaq index has lost 78% of its market value since its peak in 2000. The same situation prevails abroad. In Japan, stocks sank to a 19-year low in September, and now constitute a crisis for bank holdings. In Germany, the Nemax-50 index of German "New Economy" corporations has gone so low that it will be shut down by year-end. The German DAX index has lost 70% of its value since March 2000. U.S. Federal, state, and local government budgets are now headed for blowout. Combined state government deficits hit $38 billions over just the 12 months ending June 30, 2002, as combined state revenues plunged 8%. The Federal budget went from contrived surplus status, into approaching a $315 billion deficit as of the Sept. 30 year end. Internationally, the various categories of national debt loads (Brazil, Argentina, Turkey, and others) totalling some $4 trillions, are unpayable, period. The last of the U.S. big bubbles-home mortgages and refinancing, is about to burst. U.S. homeowners' mortgages total $5.757 trillions; on top of that are $5 trillions more in risky obligations issued mainly by Fannie Mae and Freddie Mac, the giant secondary housing-market agencies. U.S. financial houses are in meltdown. The market capitalization of J.P. Morgan Chase, the second-biggest U.S. bank, has fallen 71% since early 2001, from a peak of $106.5 billion to just $31 billion. Morgan is not alone. Charles Schwab, Morgan Stanley, Merrill Lynch, Goldman Sachs, Citigroup, and Lehman Brothers are all down over 50%. Foreign money is fleeing U.S. stocks. In the first half of 2002, foreign investors purchased just $58 billion of U.S. stocks, a 50% decline from the $116 billion they purchased during the first half of 2001. The rate of U.S. layoffs and corporate bankruptcies is now at the stage of shutdown of the economy. Since August of 2000, 1.9 million manufacturing-sector jobs have been lost, including 1.5 million production jobs. I call for the convening of a New Bretton Woods conference-to deal with the trillions of dollars of unpayable financial claims of all kinds (debts, derivatives, collapse of inflated assets, etc.) and to set up a new world financial system of stable currencies, capital investment, mutual-interest trade, not free (rigged) trade, etc.; and secondly, for a full-scale infrastructure-building drive of the world "Land-Bridge" system, centered on the Eurasian Land-Bridge, as the economic and science driver for the 21st-Century recovery. Gold -- Sharefin, 19:21:53 10/20/02 Sun Dark day for Sons of Gwalia Shares in Sons of Gwalia [ASX:SGW] took an absolute hammering on the ASX today (Friday) after the major Aussie gold miner issued an ominous profit and production alert. By the close of trading, SGW shares had nosedived just under 30 per cent or A$1.31 to levels not seen for about nine years, ending a dark day on A$3.15. A thumping A$216 million was wiped from SGW's market capitalisation today, which now stood at a sick A$520 million, a long, long way from its 52-week high of A$1.4 billion when the shares were riding high at A$8.55 on 15 January. The softer gold price compounded the stock's plunge, but what got the market racing was what many analysts had feared for more than a year - tightening underlying cash flows from capital-draining tired gold mines. Fiat -- Sharefin, 19:19:34 10/20/02 Sun Long Valuation Waves Great valuation waves undulate through market history, creating stellar strategic buy and sell opportunities for prudent long-term investors. Gold -- Sharefin, 19:11:21 10/20/02 Sun Why Gold-Backed Currencies Help Prevent Wars Gold-as-money is a precondition for freedom Not only is there a correlation between gold currencies and war, but also between gold currencies and freedom. U.S. Federal Reserve Board of Governors Chairman Alan Greenspan wrote a well-known essay “Gold and Economic Freedom” in 1966 attesting to this. He recently confirmed that he believes this essay is applicable today. Once we remember that one of the first official acts transacted by Lenin, Mussolini and Hitler (and, by the way, also by Franklin D. Roosevelt) was to forbid possession of gold, we recognize the context. Even today the price of gold is manipulated and kept artificially low. Wall Street bankers and their helpers have been at it for quite some time. In the U.S. a lawsuit was filed. I cannot say more about this at the moment, but it should serve as an impulse to reflect on the present situation. These manipulations are described in my recently published book The Gold Wars: The Battle Against Sound Money As Seen From A Swiss Perspective. All we have today is paper-ticket-token money. It is equivalent to counterfeit money. It does not offer a citizen any security. He cannot save enough money. If he does save, most of it is lost. The situation is worst for recipients of wages and pensioners. In the end he is forced into the arms of the (welfare) government, and he effectively loses his freedom. Politicians will mostly resist the reinstallation of gold-as-money. Röpke was right when he wrote in his book Internationale Ordnung - heute (International Order and Economic Integration): “Depoliticizing money was never as vital as in the era of modern democracy.” Gold -- sharefin, 19:01:33 10/20/02 Sun Point of Decision - Gold & Gold Stocks I believe that we are at the point of decision with gold and gold stocks, what is known in “Catastrophe Theory” as the cusp. Last weekend I put out a short article stating that “the bottom is in” in gold and gold stocks. No sooner had this appeared than I was proved wrong, as far as gold itself is concerned, when gold broke down sharply out of its short-term uptrend. The gold stocks, however, held their ground, due to them being collectively, and in many cases individually, on a major support level as can be seen by a glance at the chart of the HUI goldBUGS index and the charts of numerous individual stocks. The Speculative Investor even put out a buy rec. on golds late last week on the basis of the HUI index, and therefore gold stocks, outperforming gold itself. I made the assumption that because the HUI index was on a major support level, which I figured would hold, the short-term uptrend in gold would also hold. This episode is a reminder to me that you can't make assumptions in this business. So, what now? I realize that this article is a long-winded way of telling you that I don't know what will happen over the next week or two. But I do know that I'm in good company and hope that this article at least helps to make you aware of the possible scenarios and the probability of these coming to pass. The long-term bullish arguments for gold remain in place. The credit and financial system remain a shambles which is getting worse, despite palliatives like rate cuts and the innovative feature in the US of allowing people to miss a couple of payments on their home loans etc. - all this is just procrastination. Medium term, however, gold and gold stocks may end up in the doldrums and be a traders market - this becomes much more likely if that medium-long term uptrend breaks in coming days/weeks. Gold -- sharefin, 18:56:42 10/20/02 Sun Moody's affirms Placer Dome senior unsecured rating Moody's Investors Service confirmed the debt ratings of Placer Dome Inc. The confirmation reflects the enhanced operating and growth profile, competitive cost position, and reserve development potential that the transaction brings to Placer. In addition, the transaction significantly improves Placer's geographic profile with the inclusion of this largely Australian based production. Gold -- sharefin, 18:52:21 10/20/02 Sun Gold is the thing Fund manager Jim Vail says the stock market's downturn may teach investors this time that their portfolios shouldn't be all about cash, stocks and bonds. "Gold has proved to be another asset class in this tough environment," said Vail, who began running the ING Precious Metals Fund four years ago when prices for the metal had bottomed. Gold -- sharefin, 18:49:54 10/20/02 Sun S Africa Gold Cos Ponder Way Forward For Black Ownership South Africa's big three gold miners are in a pickle. They only have a handful of options to meet new government targets on black ownership of South Africa's lucrative mines. For now, at least, the companies aren't expected to sell entire assets. Instead they will look to form partnerships at new mines and hive-off individual shafts to disadvantaged black groups. AngloGold Ltd. (AU), Gold Fields Ltd. (GFI) and Harmony Gold Mining Co. Ltd. (HGMCY) have been quick to play down suggestions that they'll just offload marginal operations - they say this wouldn't be in spirit of last week's government initiative on black empowerment - but they haven't indicated that they're willing to sell their cash cows. Analysts say blacks will need to take controlling stakes in these assets to meet the government's goals. Since these mines are money makers, the companies may be reluctant to part with them. At the same time, the marginal mines that companies would like to sell have limited shelf lives and wouldn't meet the ownership requirements in the long term.  Posts -- sharefin, 03:20:31 10/20/02 Sun The forum rolled over and archived itself into one massive archive which was unmanagable. This has been deleted and replaced with a new archive. To view all the past posts please click here. There's also a new link above to this archive. |
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