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Stephen Roach -- Sharefin, 17:53:19 02/11/02 Mon

Global: When the Tide Goes Out

The operative view in financial markets is that this is just another cycle. If that’s the case, then there’s little reason to be seriously dismayed over the angst now unfolding with respect to credit and earnings quality. After all, so the logic goes, every cycle goes to excess in one way or another. That’s what recessions are all about -- the rocks that get uncovered when the proverbial tide goes out. History tells us that such shakeouts actually invariably lead to an over-shooting in financial markets. For disciplined investors, those are the excesses that invariably set the stage for great buying opportunities. Is that the case this time?

The risk is, it’s not. For starters, I continue to harbor the belief that this is not just another business cycle. I remain convinced that the US economy is only in the early stages of what could turn out to be a protracted post-asset-bubble shakeout. America’s current recession is, first and foremost, about purging of excesses on the supply side of the macro equation -- the overhang of capital and labor that was put in place as the bubble inflated in the late 1990s. The downturn had little to do with the demand-side adjustments that are typical by-products of a Fed-inspired anti-inflation battle. If that’s the case, the classic business cycle model offers little insight into what now lies ahead. It then follows that a US-dependent global economy will have to face the repercussions of America’s post-bubble adjustments for years to come. Therein lies the biggest risk. In the post-bubble era, the emergence of systemic risks could well be the most powerful force shaping the global economy. Sustained recovery won’t be easy in such a climate. Systemic risks have a way of feeding on one another -- perpetuating the bottoming process, keeping the economy vulnerable, and inhibiting the subsequent recovery.

In that context, I must confess to being struck by the preponderance of systemic risks that have emerged in this downturn. Yet, for the most part, these risks are being dismissed in the markets as event-specific, rather than symptomatic of broader underlying problems. For example, the aftershocks of this cycle have now drawn both income and balance-sheet integrity into serious question. Yet income risk is still seen largely in the markets largely as a "credit event" -- a post-Enron shakeout with limited contagion into the broader corporate community.

Maybe I’m naïve, but I must confess to being amazed at how little we in the macro community know about the possibility of more Enrons. The same is true of the markets. Our credit research group notes that "spread dispersion" is currently near an all-time high, with the latest outbreak of concerns more Tyco-driven than anything else. By contrast, AAA corporate spreads are little different than they were in early 1999; this tiering finds most utilities, consumer products, and even banks still outperforming the so-called troubled names. Yet, at the same time, there can be no mistaking the broader excesses of corporate leverage in the system; corporate debt currently stands at a record 65% of US GDP. While that doesn’t guarantee that there will be more Enrons to come, it does speak of a business culture replete with risk -- one that is ill-prepared to handle a broader contagion that would raise borrowing costs and/or result in a significant restatement of the underlying earnings stream that is required to service such obligations.

The same can be said of household sector leverage in the United States. Total consumer indebtedness currently stands at a record 73% of GDP. This, in my view, is an unmistakable legacy of the asset bubble. First stocks, now homes, American households have been unusually aggressive in borrowing to support lifestyles. In doing so, of course, they have depleted traditional saving balances and relied increasingly on readily available credit to extract newfound income from inflated asset values. The overhang of excess debt, however, remains a troubling aspect of the post-bubble hangover. Should income continue to weaken, or interest rates suddenly increase, it would be exceedingly difficult for the household sector at large to keep servicing this debt. The problem, of course, would be even more acute if the US were ever to experience a whiff of deflation. The debt-deflation trap is one of the most intractable dilemmas for any economy. Just ask Japan.

In the end, excess leverage is the ultimate breeding ground of systemic risk. It leaves economies exposed to the diffusion of risk that often follows from seemingly isolated credit events. For the moment, the markets have been successful at segmenting the fallout. Should that change in the face of further balance-sheet and/or income integrity revelations, the stage is set for a far more serious macro shakeout. Which brings the final dimension of America’s systemic risks into consideration -- a looming balance-of-payments financing crisis. Not only are US businesses and households overextended, but the United States has never been more dependent on foreign capital to finance its economic growth. Unfortunately, that dependence is very much like a drug. The more you deny it’s a problem, the worse the problem becomes. After hitting a cycle "low" of 4% of GDP in 2002, we expect the current-account deficit to rise to a record 6% in 2003 -- an external financing gap that can only be filled if America attracts nearly $2 billion of foreign capital a day.

Under the specter of a seemingly ever-rising dollar, most believe that the daisy chain of ever-mounting external indebtedness can exist in perpetuity. Yet, in the end, it obviously cannot. If the world stays locked in its current US-led growth dynamic, America’s current account deficit will only widen further -- pointing to the absurd endgame of foreign ownership of all the productive assets in the United States. That obviously will not happen. Our task is to figure out how this conundrum will be resolved. I have argued previously that two possibilities come to mind -- a crash in the dollar and/or a realignment of the mix of global growth away from the US and toward the rest of the world (see my 30 January dispatch, "Global Decoupling"). Whether it’s one or the other -- or a combination of both -- the broader macro implications are clear: A weaker dollar probably spells higher US interest rates, thereby exacerbating the debt-servicing associated with excess leverage. Conversely, if the current-account adjustment were brought about by a slowing of domestic consumption, the resulting income shortfall would also prove problematic for America’s debt-servicing capacity. In short, America’s looming current-account adjustment underscores the perils of further systemic risks in the years ahead.

The United States hardly has the only claim on systemic risk in the world economy. Japan is obviously at the top of the heap, with its dysfunctional banking system, the perpetuation of "zombie-like" businesses, and risk of yen depreciation. For emerging markets, the fault-line currently lies with Argentina. But the lack of post-crisis reforms in East Asia since 1997-98, in conjunction with only disappointing progress on reforming the international financial architecture, is hardly reason to breathe easy in this chronically crisis-prone segment of the world economy.

While I don’t want to minimize the potential problems of systemic risk elsewhere in the world, I continue to believe that those in the United States are worthy of special attention. As long as the world is lacking in an alternative growth engine, the character of any recovery in the US economy could well be decisive in determining the sustainability of recovery in the broader global economy. On that critical score, it pays to be wary; it may well be premature to celebrate the arrival of recovery in the world at large. That’s because the equity bubble of the late 1990s ended up infecting the real side of the US economy. Consumers levered up their balance sheets to extract incremental purchasing power from what was perceived to be a new and permanent source of wealth. Businesses followed the same script, with the excesses of debt going hand in hand with the rapidly emerging overhang of installed capacity. And foreign investors wanted a piece of the action, more than willing to serve as a permanent source of external financing to a nation that was running up a massive current-account deficit -- in effect, living beyond its means. In a post-bubble US economy, this movie must now run in reverse. As the tide now recedes, the unmasking of systemic risks holds the key to a sustainable recovery in the global economy at large.

London morning gold news -- Donald, 05:31:21 02/11/02 Mon

click here

Gold -- Sharefin, 00:33:04 02/11/02 Mon

US, gold to fire markets

"The recovery in gold reflects several factors including gold's status as a safe haven amid the current bout of equity market uncertainly," said AMP Henderson Global Investors senior Australian economist Simon Doyle.

"Investors are also reassessing gold's prospects against very low interest rates and returns from other assets that are likely to be modest over the medium term."

Gold -- Sharefin, 00:31:08 02/11/02 Mon

Gold shares: shining future beckons

Local gold shares are set to continue their merry rise this week after the gold price consolidated its move beyond $US300 an ounce in overseas markets on the weekend, with expectations of reduced producer selling and Enron-inspired financial concerns underpinning the gains.

Gold -- Sharefin, 00:29:56 02/11/02 Mon

INDIA: Best time to sell gold

BOMBAY, 11 February - This week, Indian investors have a dream run not only on the Indian bourses but also on the Indian bullion markets. While Indian bullion bankers were sitting pretty with not a single sale having taken place during the past week, the Indian investors made a quick buck. Prices of gold on Friday were at Rs.4,970 per 10 gram (22 carat) in the Bombay market, while it was Rs.4,980 and Rs.4,720 respectively in Kolkata and Chennai. In Delhi, the prices zoomed to cross a five-year record level at Rs.5,080 per 10 gram as against Rs.5,050 on Jan. 3, 1997.

Gold prices were quoted at Rs.58,000 per bar in Ahmedabad and there were no buyers at that level. The weakness in the Indian rupee against the dollar, down 1 percent since the start of 2002, also has made the metal costly in the domestic market, which depends largely on imports. Traders attributed the sharp gain in prices to concern from Japan’s general public over safety of the country’s banks, and from stock investors over weak equity performance. International gold market may have been buoyed by South African gold producer Gold Fields’ announcement that its earnings had tripled in the past quarter due to a weaker rand and an 11 percent increase in gold production.

This recent seesaw movement in the yellow metal prices has unnerved Indian buyers and they are now just content to trade scrap metal or recycled gold ornaments.

This increase in prices has led to a standstill in gold imports and trade in India, the largest gold importer in the world. While the family-run jewelers are hugely affected by the rise in prices, the branded jewelry market is not worried.

Indians had begun buying at around $278-$280 per troy ounce. But the jump in prices which is now at $297.75 to $298.75 a troy ounce, has completely halted the business. The current scenario in the Indian gold markets is that there has been a huge deluge to sell off but on the other hand, there has been no demand at all. There has been a complete halt on the buying, given the current rates. Indians have become very cautious, it’s an unfamiliar price band for them. It will take some time for both importers and retail buyers to reconcile. Indians are very price sensitive and now traders are waiting for some indication on the level at which prices would sustain.

Imports of the metal into Ahmedabad, India’s leading bullion market, has come to naught compared with about 4,000 bars (of 116.64 gm) imported daily about a week ago. India’s annual gold demand is around 850 tons with 600-650 tons met through imports.

India imported 359.3 tons of gold in the first half of 2001, up from 267.2 tons in the same period of the previous year, according to the World Gold Council. Gold demand in the country rose to 490.4 tons from 417.8 tons in the same period. The gap between demand and imports are met by recycled and smuggled gold. So what happens in the coming days? Analysts across the globe opine that global prices may be headed lower but are unlikely to return to $270 to $275 per ounce, a level attractive for Indian importers. They say that the bullion prices are moving to a new comfort level of $279-$285 per ounce. Pertaining to the Indian markets, traders agree that the buying has definitely come down but since the marriage season is on, people would have to buy. However, the quantity of purchases will reduce. This current phase of high prices was labeled as a medium-term effect‚ and was likely to continue till July-August. There is no doubt that the Indian bullion market is bullish and traders are expecting further gains in the coming days. It is expected that in the coming days, the prices of gold could easily move $10 in a day right now, and could trade back to $295 or go up to $315 a troy ounce.

So what does an investor holding a lot of gold do right now? The writing on the wall is quite loud and clear - sell now, sell all that you have! Infact JP Morgan’s Nick Moore has gone on record stating that this was the best time to take profits in gold, look for retracement, buy the dips. “With a wobbly dollar, wobbly equity markets, toxic corporate balance sheets and crumbling banking regimes ... holding gold is a great way to preserve capital,” says Moore.

In the current scenario, gold is the anti-currency, and when there are concerns with the financial system, gold tends to go up, that has always been the historical trend. This is the time to bring out all our shining yellow metal and sell it to make a killing in the markets. Gold is right now the safest investment haven and you should make hay while the sun shines!!

Platinum -- Sharefin, 00:27:43 02/11/02 Mon

Volatile equity markets seen driving gold price

Platinum -- Sharefin, 00:25:15 02/11/02 Mon

Aquarius Platinum confirms takeover talks with Placer terminated

Gold -- Sharefin, 00:23:59 02/11/02 Mon

Banking fears trigger gold rush in Japan

Gold -- Sharefin, 00:18:13 02/11/02 Mon

UK counts cost of Brown's gold sales

THE bill for Chancellor Gordon Brown's decision to sell more than half of Britain's gold reserves has hit £250m as the bullion price rises. It closed at over $305 an ounce in London on Friday, its highest for two years.

The Chancellor has sold 375 tons of the metal - more than 12m ounces - at an average price at least $30 (£21) an ounce lower than this. Had he held on to the gold, it would be worth over £250m more today. That is before losses made on converting the proceeds into euros - previously reckoned at over £50m.

Brown announced his plan in 1999 and the intention was to invest 40% of the proceeds in euros, 40% in dollars and 20% in yen. Dollar holdings have increased in value but the euro and yen have fallen sharply.

Neither Brown nor his officials can have foreseen the new interest in gold after Enron and other accounting related scandals. A UK fund manager said last week: 'Gold is nice and shiny and above all, it doesn't have to be audited'.

The Treasury and the Bank of England have scaled down the sale plan slightly. Initially 415 tons were to be sold of a total of 715 tons held in reserves. That has been reduced to 395 tons. All but 20 tons of this has been auctioned. The final auction is due on 5 March.

The best price raised at the auctions was $293.50 an ounce but some gold was sold as low as $255.75. Brown was criticised for depressing the price by announcing his sale plan in advance. Asked about the £250m loss, the Treasury said: 'Obviously there have been movements in the markets. This is about realigning the portfolio for the benefit of the long term.'

Gold -- Sharefin, 00:03:23 02/11/02 Mon

Gold steals spotlight from state of the nation address as investors think global

President Thabo Mbeki's state of the nation address was treated as a "non-event" on the local stock market on Friday, with investors opting to focus on gold as a buffer against more bad news expected from the US and the global economy.

Paul Marais, senior analyst at Barnard Jacobs Mellet, said the market was dominated by a sectoral rotation which saw investors buying precious metals and selling base metals, on expectations of a more pronounced dip in the US markets and a concurrent depreciation in the value of the dollar.

Gold -- Sharefin, 00:01:58 02/11/02 Mon

Jumpy Japanese join gold rush

With uncertainty in economy and banks, investors seek security in bullion

JAPAN is experiencing a gold rush as fears the banking sector may collapse drive ordinary Japanese to invest their savings in bullion, experts say.

Nori Mochihara, a trader at Mitsubushi Materials, said: "Normally people would come to our shop asking for 5kg of gold. Now they produce ¥10m or ¥20m and ask: How much gold can I buy with this ?"

Osamu Ikeda, spokesman for the president of gold and platinum company Tanaka Kikinzoku Kogyo, says his company's customers and sales have doubled since July-August.

There were 10 times more visitors than usual in the days immediately after the September 11 terrorist attacks, with one couple loading 30kg-to-40kg of gold into their car, he remembered.

"Gold's popularity has always increased in times of social or financial insecurity, or during a war," Ikeda said, pointing at gold crazes after the Soviet army invaded Afghanistan in 1979, or the great Kobe earthquake of 1995.

Images of golden nuggets gleaming from inside safes found in the ruins of houses destroyed by the quake, remain ingrained on people's minds, Ikeda said. But this latest gold fetish was not triggered by a natural disaster.

Incessant, "sensational" coverage by the media of Japan's deepening recession and speculation over an imminent collapse of banks, crippled by a mountain of bad loans, has sent people exchanging money for gold, he said.

"If you have a plunging stock market, weakening banks and no security blanket from the government, you would be worried of losing your money," he said. "In the Far East gold proved its worth in the currency crisis of 1998."

Gold -- Sharefin, 23:57:03 02/10/02 Sun

Gold is looking like a haven again

World markets seem to be stuck in a time warp as the "traditional wisdom" surrounding gold, the dollar and the precious metals haven status makes a return to the markets mind.

Gold surged above $300 an ounce this week, and traditional wisdom suggests that the yellow metal has regained its haven status as doubts about US accounting standards and the dollar's strength abound.

Gold -- Sharefin, 23:55:17 02/10/02 Sun

Golden Eagle secure financing for development of Bolivian Gold Project

Golden Eagle International, Inc. (OTCBB:MYNG - news) announced today that it has received an investment of $1.3 million to build the first phase of its recovery plant and complete the interior infrastructure of its gold mine in the Tipuani Gold Mining District of Bolivia. Golden Eagle's President, Terry C. Turner, said, ``Turn the page on Golden Eagle, because this is a brand new chapter beginning for us today. We have placed orders for significant pieces of equipment for our 1,000 ton-per-day initial plant. However, our ultimate goal is to expand up to our projected 11,000 ton-per-day operation on our Tipuani Valley gold deposit, to take advantage of higher volume and economies of scale to lower our estimated cost of producing gold to below $75 per ounce. That expansion will depend upon further financing, which we project, but cannot guarantee, will come in during 2002. This first phase is exciting for us because it opens the door for our development of a deposit that has produced an estimated 32 million ounces of gold in its known 500 year history.''

Lenny's Daily Commentary -- Sharefin, 23:17:37 02/10/02 Sun

Prospector Asset Mgmt

Last week was certainly a week to remember for long suffering bulls in the precious metals. Our highly exuberant and bullish posture was well rewarded as gold convincingly traded through the $300 price level, for only the fourth time in as many years, and rang up a gain of about $17.50 for the week of February 1st through the 8th. Silver, which truly did not have a life of its own this week and simply traded in the shadow of gold, was up over 3% or about 14 cents. In the last few weeks, this commentary had been recommending long positions in platinum, and traders who follow our recommendations were rewarded with a rally of $26 in prices last week.

All in all, I still look for the gold and silver markets to go higher, although I do not foresee a runaway market due to some internal pressures. Some of the proprietary technical indicators that I follow show these two metals to be dramatically overbought at present. But 25+ years of trading experience has taught me that such signals are simply tools and should not be followed blindly. Such cautionary signals will, in my opinion, only dampen the current rally, and will not end it. All week long, gold and silver were very supported in the market, with every dip in prices being bought. If forced to predict the coming week, I would guess that the gold market will enter into some manner of consolidation at current levels or slightly higher, with a strong bias to the upside. Silver will most probably follow.

Market analysts cite many reasons for the current rally, and each individual ascribes various ratios of importance to each reason. I would believe that the most important factor is now the growing reluctance of gold producers to forward sell their production. This change in the fundamentals of supply of demand is the reduction of hundreds of tons of gold per annum hitting the current marketplace. We also have the growing mistrust of investors with the accounting standards and public disclosures of public companies, which has been highlighted by the Enron debacle. Another well publicized factor has been the recent surge of buying of the precious metals by Japanese investors, who fearful of their economy, the value of their local currency, and imminent changes in deposit insurance coverage in their nation, has just begun to take a shine to the inherent stability of gold and platinum.

While the actual purchases of investment related by the Japanese are still rather meager in terms of absolute size, the trend is accelerating. In the first half of last year, they purchased about 3.5 tons per month. In the second half of the year, this number was pushed to a bit over 7 tons of gold. And in January, the last month for which estimates are available, about 10 tons were taken down. With $11 Trillion USD in savings, the market rightly anticipates more of the same. Please note that gold, priced in Japanese Yen, has risen about 25% in the past year, beaconing the way for further interest. With the imminent change in deposit insurance coverage for bank accounts, the market is looking for a massive rise in investment demand. Such demand is already being seen, to a great extent, by volumes in gold trading on Tocom, which has seen records set day after day for trading. This highlights of the recurring trading themes of this commentary. It is not the facts that determine the value of a commodity, but the perception of those facts. The psychology of a market has been, and will most probably always be, the driving factor behind price movement.

And, speaking of psychology and perceptions of the gold market, conditions are changing quickly in the USA. Gold mining stocks are mentioned repeatedly on CNN, the current rallies in gold are news events, and the beginning of resurgence in interest in this commodity is now taking place. Please remember that many "Western" investors tend to be "momentum driven", which is to say that they disdain buying "value" in a stock or commodity, but would rather buy into rallies, hoping to buy high to sell even higher. And, gains in those funds which specialize in the precious metals, have gained 46% over the last year versus a 17% loss in the average diversified US equity fund. Gold may undergo a cataclysmic transformation in investor psychology, from the ugly duckling to the absolute belle of the ball.

While the above verbiage is unabashedly bullish, there are, of course, many cautions to this market. "Value" investors, such as consumers in India and others have turned from buyers of gold to sellers. From talk in the trade, imports of gold into India have just about totally ceased, as those buyers are unwilling to chase this rally. During good times, India consumes about 70-80 tons of gold a month, a quite sizable amount in this market.

Another noted bearish sign for the gold market has been noted, by some analysts, as the continuing decline in lease rates during this recent rally in gold. I have not been overly concerned as to this fact as I had believed that liquidity would remain excellent as many gold producers announced that they would be delivering into their forward sales this year, adding physical gold to the marketplace. And, perhaps, it could be that current level of low lease rates depicts another, completely opposite, signal. It is possible that the demand for borrowed gold is declining as short positions in the market become more and more unattractive. Please remember that in many markets, an investor has to borrow gold, then sell it...hoping to buy it cheaper, in order to go short. If fewer investors in those markets wish to go short, demand for leased gold declines.

However, I do see the lease rate environment in gold changing quite rapidly in the coming weeks and months, which will create a superb trading opportunity. Just last week, the calendar spread (long June 2002 gold/short June 2003 gold) narrowed sharply as 1 year lease rates in gold jumped 25 basis points, or about 20%. Clients who followed our earlier recommendations for this spread benefited from this move. And, I look for lease rates to now begin to climb higher, and perhaps a substantial move higher. If this occurs, and I think it will, it will substantially reinforce the current opinions of the bull market in gold. I strongly urge clients of the firm to call for discussions of the risk/reward profile of this trade.

One of the reasons that I believe that lease rates in gold will go higher is due to the positions held by the bullion banks for producers. Please remember that many producers have sold call options in gold to these bullion banks. As gold goes higher, these bullion banks get longer and longer gold (due to the need to delta hedge their risks) and they will be sellers in the spot market as prices rise. In order to sell in the spot market and make delivery, they will need to borrow the gold, thus placing significant upward pressure on the price of leases in the gold market.

My parents instructed me never to insult a lady, but the "Old Lady of Threadneedle Street", the Bank of England, deserves it. As we reach their final auction of gold reserves shortly, it is best to examine their track record and market timing. With gold at $305 per ounce, had they just kept the gold, instead of auctioning it over the past several years, the value of such reserves would be 350 MILLION POUNDS (close to $500 Million USD) higher than the actual value received. In other words, they sold at the bottom of the market. Gold now makes up just about 7.5% of total British reserves compared with 55% for the USA, 46% in France, and 37% in Germany. In absolute terms, Britain now has smaller gold reserves than Venezuela, India, and Taiwan.

Gold -- Sharefin, 22:59:11 02/10/02 Sun

Has Gold Regained Its Long-Term Luster?

Has Gold Regained Its Long-Term Luster?
It took a beating in the '90s, but a host of uncertainties has sent prices soaring as anxious investors seek refuge in the precious metal

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The price of gold has been on a tear recently, surging $25, to $305 per ounce, as investors seek a safe haven from a variety of worries, including Argentina's debt default, Japan's shaky banking system, and Enron-fueled stock market woes in the U.S. Especially now, in the aftermath of the Enron disaster, there's an elegant simplicity to investing in gold. You don't need a congressional hearing to decipher its balance sheet or income statement. It's worth what the market says it's worth.

Gold is by nature a cyclical asset, though its appeal as a hedge against inflation had dimmed in the 90's era of waning inflationary pressure. During that period, the market price of the precious metal has been in a relentless downdraft, falling from a high of over $462 per ounce in 1990 to a low of $251.70 on August 18, 1999. But gold's long losing streak may finally be at an end.

Along with the gradual recovery in the U.S. economy, a combination of aggressive monetary and fiscal forces may set the stage for higher inflation ahead -- boosting gold's appeal. The Federal Reserve's 11 rate cuts since January, 2001, have pumped massive liquidity into the U.S. financial system. And President Bush's fiscal 2003 budget signals an inevitable return to deficit spending, though the shelved U.S. stimulus bill and the global lack of pricing power should help temper gains ahead.

A PREMIUM ON SAFETY. Add to this the increasing nervousness about the health of world economies and banking systems, and nervous investors could once again pile into the perceived safety of gold.

The list of concerns that could drive gold's price even higher is daunting. Corporate defaults reached record levels in 2001, and, despite signs of an economic recovery, are on pace to break that mark in 2002. Argentina defaulted on its sovereign debt and its banking system has plunged into chaos. Japan is in the grip of deflation, and its banking system is coming under increasing pressure. (Indeed, recent press reports indicate that worried Japanese investors have been buying gold bars.) The latest worry: the viral spread of accounting irregularities among previously high-growth energy and telecommunications companies.

These events can only enhance gold's safety premium. Sure, gold investors have been burned before -- the price has run up sporadically in recent years, thanks to short squeezes, only to drift back down again -- and recent gains may be just another flash in the pan. But some fundamental signs suggest that the metal's latest comeback could prove more durable.

The past decade was brutal for gold bugs. In the late '90s, even central banks, spurred by budget surpluses and monetary union in Europe, opted to pare down their stockpiles -- among the biggest in the world -- and lend out reserves for a nominal return of 1% to 2%. And gold producers themselves seemed to put little apparent faith in the market's value of their stock-in-trade. They have been utilizing vast and complicated forward-hedging schemes -- through the derivative markets -- to lock in a price for their output. In fact, as demand exceeded their production on occasion, they found themselves caught short -- needing to purchase some of the gold required to satisfy their hedges. Now those produces may be in line for a reversal of fortune.

ECONOMIC MIRROR. Buy-and-hold gold investors are ready. They've always been a hardy breed, willing to forego interest or dividends -- and incur storage costs -- for the perceived benefit of security and the possibility of price appreciation. Gold-mining stocks, which hit record highs recently, are probably a more efficient way of investing in the metal (as opposed to, say, storing several thousand ounces in your basement). But they can be subject to company-specific country or political risk -- with mining giant Freeport McMoRan's recent misadventures in Indonesia being the most recent example.

To be sure, gold is at best only a loose proxy for the economic cycle and market instability. And the precious metal, the classic insider's asset, is costly to hold and subject to impulsive, volatile price moves -- and supply-demand dynamics that are often mystifying, even to market veterans. So while a new golden age may indeed be dawning for the metal, investors lured by its recent ascendancy would do well to remember those caveats.

Gold -- Sharefin, 22:53:23 02/10/02 Sun

Gold rally likely to last for sometime, say analysts

Gold’s current rally is likely to last for some time yet as it is based on structural changes within the market, according to analysts.
They said the current gains might appear to have been triggered by a cutback on hedging positions by gold producers and by strong demand in Japan, but these were contributing factors at best.

“We expect that this rally may prove to be less of a temporary blip and more of a trend,’’ Howard Patten, analyst at Barclays Capital in London said.

Gold -- Sharefin, 22:51:07 02/10/02 Sun

Riding The Bull Market

When does the "bell ring"? The bad news is that no one knows. The good news is that a twenty-year bear market in gold is unlikely to be followed by simply a 2-month, 14-month, or even 24-month bull market (depending on ones' interpretation we have been in a gold bull for roughly 2 months or 14 months). In November of 2000, I told some of my confidantes to expect the gold market to outperform the broader market for five years so far so good. It is entirely possible that "the bell will not ring" until the precious metals are a daily topic of conversation in not only the media, but also in the conversations of the majority in their everyday life. If this is so, the golden bull is indeed in its' infancy.

Hong Kong has 38th consecutive month of deflation -- Donald, 13:53:22 02/10/02 Sun

Real estate prices have fallen 60% since 1997

Japanese plan to fight deflation by govt. purchase of stocks; restricting short sellers -- Donald, 08:51:51 02/10/02 Sun

click here

Banking experts shocked to learn Irish bank with $750m loss had no internal auditor. -- Donald, 08:33:41 02/10/02 Sun

click here

Robert Chapman - Gold Commentary -- Sharefin, 06:23:10 02/10/02 Sun

Gold DEMAND is going UP. Gold SUPPLY is going DOWN:
SANTIAGO, Chile, Feb 1 (Reuters) - Canadian miner Placer Dome Inc. (PDG) said on Friday it does not plan to begin construction of its Cerro Casale gold project in northern Chile, even after obtaining approval from local environmental authorities, because of low gold prices.
Chile's state environmental agency authorized on Thursday the $1.43 billion project, which would produce 975,000 ounces of gold annually.
"We are not going to develop the mine until gold prices improve," Felipe Ruiz, Placer Dome's regional director of public affairs, told Reuters.
"Three-hundred-fifty dollars per ounce is the gold price we are waiting for. There has to be a trend indicating that prices are heading toward that level and that is not happening," Ruiz said.
Who is a dwarf? Enron is a dwarf. That is compared to what’s coming at JP Morgan Chase. They only seem to have lost $2.6 billion with Enron. We ask what is there derivative exposure? Morgan does have $30 trillion in derivatives. Morgan is the leader of the gold manipulation cartel. They have many gold loans outstanding and they are mega short. It now comes out, as we guessed, that Morgan as reported by the Comptroller of the Currency, as of 9/10/01, held 80% of the gold derivatives the COC reported. It looks like Morgan could have been dumping short gold derivative positions on Enron to lower its exposure and this explains the mega loans Morgan made to Enron as it was going under. This also means Morgan and probably Citigroup are left to defend the gold manipulation position. They don’t have that kind of strength left, which means anything can happen. The big question is will the central banks throw their remaining gold reserves at the market? If we had to guess we’d say yes, but that would only be temporary. The game is on, be long. This is only the beginning of a wild ride. Incidentally, if Morgan unloaded a large portion of their derivatives on Enron and Enron is defunct, that means all their counter-parties either lose their money of their gold, which has already been sold into the market. This is explosive, be a buyer.
If Enron did anything it made it unfashionable to hedge or be a heavy derivative player. This means current buying in the $280’s could be hedgers covering their positions and even if it isn’t, there has to be pressure on Barrick, Placer Dome, Anglogold and the Australian managements to at least cutback, if not wipe out hedge positions. We still believe Enron was leasing gold and silver; they were too close to JP Morgan to not have done so. We’ll find out sooner or later.
Gold, silver and their shares charts look super. Be long, long, long. The shorts and hedgers have to be shivering in their boots as major gold and silver buying persists and the annual shortfall of production to demand maintains at 1700 tons annually. The key of course is JP Morgan. Their exposure on gold is colossal, but as congress digs into Enron, Morgan will get deeper and deeper into the financial quagmire. Morgan could go bankrupt and that means these gold shorts and derivatives could implode. That would give very serious upside velocity to gold, which would pull silver and platinum with it. We had predicted $300 gold by the end of January and that prediction was neutralized by the gold cartel at $290 an ounce. It still could be we are only a few weeks off.
Reports say the Japanese normally buy 1kg to 5kg gold bars. They are now buying huge amounts and they are taking it home not putting it in safe deposit boxes. How’s that for confidence in your government, the yen and the financial system. Customers say that even if the price of gold falls, it will never fall to zero. They are very concerned for the safety of their savings.
If hedgers cut back on hedging there will be less gold for the bullion banks to sell into the market and that’s happening. Worse yet, gold production is down and few projects are coming on stream. The evidence for gold is mounting and will become insurmountable. All we can say is buy with both hands, we are.
The investment world may finally be catching on that gold is the investment of our time. Low interest rates have been helpful and Japanese buying, up over 50% recently, has propelled the metal forward. The deposit insurance situation has been compounded by new lows on the Nikkei Dow, which we re-shorted at 10,800. We covered our 21,000 short at 9500. Of course, the yen is a lock to move lower to 142, a perfect environment for gold and silver. Who will be the next Enron or Argentina? The current account deficit is horrendous and will be over 4% this year. The stock market will soon penetrate its interday low of 8160. The dollar is being artificially manipulated and its days at lofty heights will soon be over, as are the days of a hyper-inflated money supply, which will now reverse into a full-blown depression. The elitists have killed America’s physical economy. The real estate, debt and derivative bubbles are about to collapse. Gold is money, gold is real, gold is wealth and gold is no one’s liability. It is difficult to bring such bad news of our future, but these are or will be the facts. Prepare yourself financially, spiritually, and economically because the next several years are going to be nightmare.
We view markets on fundamentals and the distortions caused by psychological warfare. We try to figure out what our adversaries are going to do before they do it. That doesn’t preclude us from looking at many other indicators. That is why we bring to your attention the average NAV premium for senior and intermediate tier gold shares. Their valuation premiums, in spite of hitting new highs, are still a long way from levels seen before 9/99, when valuation premiums dropped steeply, following the announcement of the Washington Agreement. NAV premiums have been increasing at the same time as the gold price, which is contrary to the normal pattern. Current valuation levels have not even reached the bottom of the range that had existed prior to the Agreement. This means money has been flowing into gold shares since late 2000. The sector is still only discounting a gold price that is at the bottom of the range that existed prior to its downward revaluation. That means gold shares are about to assume much higher multiples even though they perceive gold at about $350.00 an ounce. We remember in 1969 and 1979 when gold shares sold at 150 times earnings and silver shares up to 300 times earnings. Better yet, today they have far smaller capitalization. There are only $35 billion worth of gold shares traded. The upside possibilities are enormous. Any material inflow of funds in just a week could rocket these issues. We haven’t even begun to finish phase one of four upside phases. Based on estimated 2003 earnings’ projections at $300 an ounce gold could double during this year just from alternative investment flows that will be fleeing the general stock market trying to find a profitable home. We have seen this happen four times in the last 40 years. This analysis does not take into consideration higher or much higher gold prices, nor major negative financial events. These two issues and others will replicate what Homestake did from 1930 to 1936, and that is appreciate from $48.00 to $458.00 a share.
Once the criminal activities of the gold cartel are exposed, the entire financial system will be shaken to its core. When Americans, Germans, the Swiss and others find out that their gold, the only thing of monetary value has been sold, they will be outraged. If not lynched, officers of J. P. Morgan Chase, Citigroup, Goldman Sachs, Deutsche Bank and others, including officials of government and the FED, will be charged with criminal acts. We are getting close as rumors persist that J. P. Morgan Chase has derivative or gold bullion problems. There is also word that Morgan was hiding short gold positions offshore in secret accounts in order to keep them off the balance sheet. If the central bankers want to stop the present upward move in gold they will have to sell the remainder of their physical gold in the market. They may stop the rally temporally, but when the public discovers what they’ve done all hell will break loose and we could have a collapsed financial system. Golds fundamentals and the enormous structural supply demand deficit is overwhelming. Owning gold shares, coins and bars are the way to participate in this chance of a lifetime, not only to protect your wealth but also to profit.

Date: 2/8/2002 7:04:17 AM Central Standard Time
Gold surged over $306 early this morning as the Japanese public bought hugely on Toccom. Volume exceeded 1mm ozs again (eg 100,000 comex contracts) and open interest jumped 1.15 Mm ozs. The normally laconic Mitsui-Tokyo said: "What a day! Japanese public investor's buying supports gold market strongly today.

Friday, February 8, 2002
Gold Prices Hit 3-Year High As Japanese Seek Out Havens
TOKYO (Nikkei)--Gold is becoming more popular among individual investors looking for a safe investment, with the price of the precious metal going above 300 dollars per troy ounce on Wednesday on international markets for the first time in two years. Gold prices also rose to a three-year high on the domestic market on Thursday, with high prices in Japan helping to push up the price abroad.
A downtown Tokyo retail shop run by Mitsubishi
Materials Corp. (5711) offering gold for sale was so crowded during business hours on Thursday that sales staff could barely get away for lunch. "Gold sales since the start of this month have been 100% higher than those seen in January," one shop employee said.
Tokuriki Honten Co., a large gold bullion trader, said that total Thursday gold sales at its domestic retail outlets, including some 80 affiliated retail stores, were the highest since the beginning of January last year.
"The number of first-time buyers who purchase 1-3kg is rising, in addition to a widening range of buyers in terms of age," an official at Mitsubishi Materials said. At the same time, say some retailers, there have been a number of cases where large-lot buyers purchase more than 30kg (retailing for about 42 million yen) of gold at retail stores.
Trading volume on the Tokyo Commodity Exchange reached a 28-month high of 340,647 contracts for 1kg of gold on Thursday. Individual investors bought, while large traders sold contracts for arbitrage trading on overseas markets.
Many traders are selling gold in Japan and buying it abroad. "Small-lot gold purchases in Japan are one of the major factors boosting international gold prices," says one official at Mitsui & Co. (8031).
(The Nihon Keizai Shimbun Friday morning edition)

The Reality of Buying COMEX Silver
Anyone reading this newsletter knows that silver is the most explosively potential investment you can make in February 2002. It is NOT a good idea to store your silver no matter how secure the storage facility or what country it is in. The best way to own silver is to physically own it. You can buy 1000-ounce bars but they weigh about 70 pounds apiece and must be assayed before resale. UPS cannot ship these and the usual way to ship them for individuals is by first class, registered insured mail for about $100 a bar. An armored car service wanted $4,000 to ship 20 bars from Texas to Tennessee and the customer still had to drive to the armored car facility with a truck, as they do not deliver to homes. Another way is to buy bags of junk coins with $1,000 face value containing about 720 ounces of actual silver. These are about the size of a bowling ball and weigh about 50 pounds. They sell at a premium. Another way is to buy 100-ounce bars that are stamped and trade freely without assay.
It was suggested to us that I get my silver directly from the COMEX and take delivery. Here is the reality of that experience. We paid in full for four COMEX contracts of 5,000 ounces each for a total of 20,000 ounces. At $4.50 this came to $90,000 plus commissions. I then had the four certificates sent to me. The broker had never before had a client request delivery and take the certificates. The silver was at the HSBC Bank in New York City. I called them and asked that the silver be sent. The armored car service wanted about $4,000 for the 20 bars. And I would have had to drive 200 miles to their secure facility to pick them up myself. Most armored car services will NOT do this but Brinks Inc. will. HSBC said UPS will not carry silver and I called to verify that. They refused to mail them first class by USPS because there is a 70-pound weight limit and with packaging the bars would have gone over that limit. So we literally had to fly to New York City, rent a one-way cargo van and drive ten hours back home without stopping at a motel.
Find a discount coin and metals dealer that will give you a good price. Compare prices and call several. You must pay with a cashiers check or send a personal check a week ahead of time so it will clear. For God’s sake don’t pay cash or you may end up in prison (minus your money) for being a criminal. It doesn’t matter if you filed a tax return on your cash as paying for anything in cash now seems to be vaguely illegal. Buy an airplane ticket for cash in the airport and the DEA will have you in custody before you can get to your terminal.
How you store your silver is your business and not anyone else’s. Use your imagination. If you live in an apartment building you have a problem obviously. When- not if- silver goes to $50 an ounce or more you’ll be glad you did this whether you buy 1000 ounces or ten metric tons of it. And please remember that when silver went to the moon about 20 years ago there was plenty of silver and $50 back then is now $100. Don’t be surprised to see $100 an ounce silver in the next four years. Go to www.butlerresearch.com if you would like to see factual reasons for this.

Giving another boost to gold was AngloGold’s disavowal of forward hedging as they announced they wouldn’t renew hedge positions until it has reduced its book by another 6 million ounces.

Old Mutual Sells AngloGold, Buys Gold Fields, Harmony Gold
By Jonathan Rosenthal
Johannesburg, Jan. 31 (Bloomberg) -- Old Mutual Asset Managers, South Africa's biggest investor, said it is selling shares in AngloGold Ltd. and buying its rivals, betting they'll gain more from an expected rally in the gold price.
AngloGold, the No. 2 producer, has commitments to deliver 14.6 million ounces of gold at preset prices, limiting its benefit if gold gains, Old Mutual said. Gold Fields Ltd. and Harmony Gold Mining Co., South Africa's second and third-biggest producers, sell at current prices.
``Harmony and Gold Fields are more geared to the gold price,'' Alwyn van der Merwe, senior portfolio manager at Old Mutual, said at a press conference.

``For Harmony the gearing is phenomenal because they are not hedged at all.''
Old Mutual manages assets worth 215.2 billion rand ($18.8 billion) in South Africa. Gold producers and other miners were among South Africa's best performing stocks last year, benefiting from the rand's 37 percent decline against the dollar. Miners pay most of their costs in rand, but sell their products for dollars, boosting profits.
AngloGold gained 6 rand, or 1 percent, to 474 rand, while Gold Fields rose 5.2 rand, or 8 percent, to 72.7 rand and Harmony increased 4.2 rand, or 5 percent, to 89.2 rand.
Last year Gold Fields was South Africa's second-best performing company, gaining 124 percent. Harmony ranked third with a 123 percent gain and AngloGold seventh at 91 percent.
Gold, which has halved in price since 1980, is set for a rebound, said Michael Schroder, who manages Mutual's resources funds. The gold price will likely gain as producers have bought back gold they had sold at pre-set prices, reducing the supply.
``In the medium term we think there is still some upside potential for the gold price,'' Van der Merwe said.Old Mutual also cut its holdings in Cie. Financiere Richemont, Anglo American Plc, Sasol Ltd. and its own parent Old Mutual Plc, van der Merwe said. It is buying stocks including South African Breweries Plc Standard Bank Investment Corp. and South African Breweries.

“We have mentioned the Prudent Bear Fund numerous times over the last two years as an excellent way to play the market in these unusual and confusing times. Unusual inasmuch as deep recession/depression have not been as frequent in this past century as they were in previous centuries. Confusing because of the mammoth propaganda machine operated by GE, CNBC, Wall Street and government. You seldom get the truth and that is confusing. We believe this is the perfect time to purchase the Prudent Bear Fund and the Safe Harbor Fund. The market has just experienced a strong 30% bear market rally and precious metals stocks seem poised to go higher. The Prudent Bear Fund shorts the market and goes long precious metal stocks. As the market falls and gold and silver move higher those shares will also move higher. It is a perfect and simple way to invest during these troubling times for those who don’t have the experience and fortitude to pick individual stocks. The Prudent Safe Harbor Fund (PSHFX), which invests in high quality debt instruments, denominated in currencies other than the dollar, gives you an exceptional alternative to a falling dollar. You may purchase these funds though Rich Radez at 800-285-1700.”

Subscribe to THE INTERNATIONAL FORECASTER by emailing Bob Chapman

Charts to view -- Sharefin, 05:51:45 02/10/02 Sun

PM Point & Figure Charts

Gold Fibo Series M/A

Gold Volatility & Cycles

Charts to view -- Sharefin, 05:38:33 02/10/02 Sun

Breakouts abound!!!
Sentiment & hybrid indexes:
Gold Sentiment

AG/AU/PL Sentiment Index

PM Mutual Fund Sentiment

XAU Hybrids

GGSSI Index

Charts to view -- Sharefin, 05:33:27 02/10/02 Sun

Breakouts abound!!!
Global Gold Indices

Global Gold Indices In Local Currencies

FTSE Goldmines Indices

Charts to view -- Sharefin, 05:29:20 02/10/02 Sun

Breakouts abound!!!
Dabchick's Index

Charts to view -- Sharefin, 05:27:24 02/10/02 Sun

Breakouts abound!!!
The Price Of Gold In Major Currencies

Argentina considering full dollarization of the economy -- Donald, 03:41:50 02/10/02 Sun

This story is in Spanish

Gold is rising by default because none of the alternatives are safe. -- Donald, 03:21:22 02/10/02 Sun

Investors appear to have lost confidence in other investments.

Gold -- Sharefin, 02:01:22 02/10/02 Sun

Treasury blows £350m in great gold sale gamble

The surge in the price of gold could leave the Treasury's two year sell-off of its reserves, which ends next month, nursing a loss of hundreds of millions of pounds. The sell-off caused a storm of public protest when it began in 1999.
At the current gold price of $305 an ounce, the value of the 375 tonnes of gold auctioned by the Bank of England on behalf of the Treasury over the past two years is $3.7 billion (£2.6bn).

According to Bank of England records and a recent House of Commons Public Accounts Committee report, the Treasury received just £2.25bn in 16 auctions between July 1999 and last month. The total Treasury 'loss' compared with the situation if the Treasury had kept the gold would be around £350 million at current levels.

The 'loss' does not take into account proceeds from the purchases of dollars, euros and yen funded by the sell-off.

Gold has surged in value in recent weeks as investors seek a safe haven from worries about the world economy and accounting standards in corporate America.

Japanese consumers have also been flocking to banks to convert the rapidly depreciating yen into gold bars. There are fears that the banking system could collapse when government deposit guarantees lapse in March.

The World Gold Council is compiling a report on the effects of the UK auctions. An existing WGC analysis shows that gold makes up just 7.4 per cent of British foreign exchange reserves. In the US it is 55.6 per cent, in France 45.8 per cent, and Germany 36.8 per cent.

In absolute terms the UK now has smaller gold reserves than Venezuela, India and Taiwan.

All That Glitters Is Not Gold -- Sharefin, 18:59:29 02/09/02 Sat

All That Glitters Is Not Gold

Even though Enron employees and the company's accounting firm, Arthur Andersen, have destroyed mountains of documents, enough information remains in the ruins of the nation's largest corporate bankruptcy to provide a clear picture of what happened to wreck what once was the seventh-largest U.S. corporation.

Obfuscation, secrecy and accounting tricks appear to have catapulted the Houston-based trader of oil and gas to the top of the Fortune 100, only to be brought down by the same corporate chicanery. Meanwhile, Wall Street analysts and the federal government's top bean counters struggle to convince the nation that the Enron crash is an isolated case, not in the least reflective of how business is done in corporate America. But there are many in the world of high finance who aren't buying the official line and warn that Enron is just the first to fall from a shaky house of cards.

Many analysts believe that this problem is nowhere more evident than at the nation's bullion banks, and particularly at the House of Morgan (J.P. Morgan Chase). One of the world's leading banking institutions and a major international bullion bank, Morgan Chase has received heavy media attention in recent weeks both for its financial relationships with bankrupts Enron and Global Crossing Ltd. as well as the financial collapse of Argentina.

It is no secret that Morgan Chase was one of Enron's biggest lenders, reportedly losing at least $600 million and, perhaps, billions. The banking giant's stock has gone south, and management has been called before its shareholders to explain substantial investments in highly speculative derivatives - hidden speculation of the sort that overheated and blew up on Enron.

In recent years Morgan Chase has invested much of its capital in derivatives, including gold and interest-rate derivatives, about which very little information is provided to shareholders. Among the information that has been made available, however, is that as of June 2000, J.P. Morgan reported nearly $30 billion of gold derivatives and Chase Manhattan Corp., although merged with J.P. Morgan, still reported separately in 2000 that it had $35 billion in gold derivatives. Analysts agree that the derivatives have exploded at this bank and that both positions are enormous relative to the capital of the bank and the size of the gold market.

It gets worse. J.P. Morgan's total derivatives position reportedly now stands at nearly $29 trillion, or three times the U.S. annual gross domestic product.

Wall Street insiders speculate that if the gold market were to rise Morgan Chase could be in serious financial difficulty because of its "short positions" in gold. In other words, if the price of gold were to increase substantially, Morgan Chase and other bullion banks that are highly leveraged in gold would have trouble covering their liabilities. One financial analyst, who asked not to be identified, explained the situation this way: "Gold is borrowed by Morgan Chase from the Bank of England at 1 percent interest and then Morgan Chase sells the gold on the open market, then reinvests the proceeds into interest-bearing vehicles at maybe 6 percent. At some point, though, Morgan Chase must return the borrowed gold to the Bank of England, and if the price of gold were significantly to increase during any point in this process, it would make it prohibitive and potentially ruinous to repay the gold."

Bill Murphy, chairman of the Gold Anti-Trust Action Committee, a nonprofit organization that researches and studies what he calls the "gold cartel" (J.P. Morgan Chase, Deutsche Bank, Citigroup, Goldman Sachs, Bank for International Settlements (BIS), the U.S. Treasury and the Federal Reserve), and owner of www.LeMetropoleCafe.com, tells Insight that "Morgan Chase and other bullion banks are another Enron waiting to happen." Murphy says, "Enron occurred because the nature of their business was obscured, there was no oversight and someone was cooking the books. Enron was deceiving everyone about their business operations - and the same thing is happening with the gold and bullion banks."

According to Murphy, "The price of gold always has been a barometer used by many to determine the financial health of the United States. A steady gold price usually is associated by the public and economic analysts as an indication or a reflection of the stability of the financial system. Steady gold; steady dollar. Enron structured a financial system which put the company at risk and eventually took it down. The same structure now exists at Morgan Chase with their own interest-rate/gold-derivatives position. There is very little information available about its position in the gold market and, as with the case of Enron, it could easily bring them down."

In December 2000, attorney Reginald H. Howe, a private investor and proprietor of the Website www.goldensextant.com, which reports on gold, filed a lawsuit in the U.S. District Court in Boston. Named as defendants were J.P. Morgan & Co., Chase Manhattan Corp., Citigroup Inc., Goldman Sachs Group Inc., Deutsche Bank, Lawrence Summers (former secretary of the Treasury), William McDonough (president of the Federal Reserve Bank of New York), Alan Greenspan (chairman of the Board of Governors of the Federal Reserve System) and the BIS.

Howe's claim contends that the price of gold has been manipulated since 1994 "by conspiracy of public officials and major bullion banks, with three objectives: (1) to prevent rising gold prices from sounding a warning on U.S. inflation; (2) to prevent rising gold prices from signaling weakness in the international value of the dollar; and (3) to prevent banks and others who have funded themselves through borrowing gold at low interest rates and are thus short physical gold from suffering huge losses as a consequence of rising gold prices."

While all the defendants flatly deny participation in such a scheme, Howe's case is being heard. Howe tells Insight he has provided the court with very compelling evidence to support his claim, including sworn testimony by Greenspan before the House Banking Committee in July 1998. Greenspan assured the committee, "nor can private counterparties restrict supply of gold, another commodity whose derivatives are often traded over the counter, where central banks stand ready to lease gold in increasing quantities should the price rise." Howe and other "gold bugs" cite this as a virtual public announcement "that the price of gold had been and would continue to be controlled if necessary."

According to Howe, "There is a great deal of evidence, but this is a very complicated issue. The key, though, is the short position of the banks and their gold derivatives. The central banks have 'leased' gold for low returns to the bullion banks for the purpose of keeping the price of gold low. Greenspan's remarks in 1998 explain how the price of gold has been suppressed at times when it looked like the price of gold was increasing."

Furthermore, Howe's complaint also cites remarks made privately by Edward George, governor of the Bank of England and a director of the BIS, to Nicholas J. Morrell, chief executive of Lonmin Plc: "We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore, at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control, but we have now succeeded. The U.S. Fed was very active in getting the gold price down. So was the U.K. [United Kingdom]."

Whether the Fed and others in the alleged "gold cartel" have conspired to suppress the price of gold may, in the end, be secondary to the growing need for financial transparency. Wall Street insiders agree that as long as regulators, analysts, accountants and politicians can be lobbied and "corrupted" to permit special privileges, there will be more Enron-size failures. Securities and Exchange Commission Chairman Harvey L. Pitt, well aware of the seriousness of these problems, recently testified before the House Financial Services Committee that "it is my hope there are not other Enrons out there, but I'm not willing to rely on hope."

Robert Maltbie, chief executive officer of www.stockjock.com and an independent analyst, long has followed Morgan Chase. He tells Insight that "there are a lot of things going on in these companies, but we don't know for sure because much of what they're doing is off the balance sheet. The market is scared and crying out to see what's under the hood. Like Enron, much of what the banks are doing is off the balance sheet, and it's a time bomb ticking as we speak."

Just what would happen if a bank the size of Morgan Chase were unable to meet its financial obligations? "It's tough to go there," Maltbie says, "because it could shake the financial markets to the core."

Enron -- Sharefin, 18:53:53 02/09/02 Sat

MULTI-TRILLION DOLLAR FINANCIAL SCANDAL

Gold -- Sharefin, 17:47:14 02/09/02 Sat

Gold's floodgates open, finally

Adrian Day, a Maryland money manager who has specialized in gold mining companies for 30 years, swore to himself years ago he would bite his tongue if he ever caught himself saying, "This time it's different."

Yet there Day was, watching from his Annapolis office as the spot price of gold this week pierced the $300 level for only the fourth time in four years. "What really is different this time is the previous runs were provoked by a single instance, like Placer Dome buying back its hedge book," says Day, president of Global Strategic Management, which has $60 million under management. "This is not a short, sharp rally. It has been a nice slow trend up since January 2001, and it has not been provoked by one incident."

Gold's longtime believers are hoping the metal's rally this time around will be different. Some, like mutual fund manager John Hathaway, predict gold will surpass $1,000 an ounce in coming years. Others, like Pierre Lassonde, soon-to-be president of industry leader Newmont Mining (NEM: news, chart, profile), see gold mining stocks, already the best-performing sector in most of the world's stock markets, doubling again as gold goes to $350 an ounce. See Lassonde interview.

Normally, investors turn to the safety of U.S. bonds when they're seeking refuge from the kind of fiscal distress that is storming across Japan, Argentina and threatening Washington. However, a growing number of economists and currency specialists expect gold, not Treasury securities, to benefit this time.

Japan, which holds about 12 percent of the supply of U.S. debt, is facing what may become its biggest fiscal challenge ever.

"The meltdown of a G-7 economy is rare," says Carl Weinberg, chief economist of High Frequency Economics in Valhalla, N.Y. "Things like the big oil shocks of the '70s caused a flight to gold, and that was an unprecedented event."

This time, say gold's optimists, who remember fondly when gold was last at $400 (January 1996) and $800 (January 1980), it really is different. "If you look at the popular press, every article you read on gold is that gold is no longer money, that it is finished," says Lassonde, a co-founder of Canada's Franco-Nevada Mining, one of two gold producers that will merge to form the world's largest gold miner, Newmont, later this month.

"In the past two months, I have started to see more positive articles on gold," Lassonde says from his Toronto office. "As gold breaks the $300 barrier and goes to $325, that will drive the bull market in gold."

Petty or pretty?

For those unfamiliar with the world of gold and gold-mining stocks, the metal's slow grind to $300 an ounce from $265 one year ago must seem petty. Yet the small gain has propelled gold share indexes to five-year highs in Australia and record highs in South Africa, where a wave of mergers and weak local currencies are boosting the mining industry's prospects.

Gold fever? In Japan, gold prices are up 25 percent against the ailing yen in the past 12 months. Japanese consumers have quadrupled their hoarding of gold ahead of this spring's limit on government-guaranteed bank deposits.

An ounce of gold is now worth 600 Australian dollars. Australia's newspapers are starting to complain that foreigners have commandeered the nation's gold industry, with almost two-thirds ownership after Denver-based Newmont's $2.5 billion purchase of Australia's crown jewel, Normandy Mining. See Australia gold mining index.

The Financial Times Africa Gold Mines Index, meanwhile, has gained about 65 percent the past 12 months. Close to 50 money managers, a modern record, this week listened in on a quarterly update from South Africa's second-largest gold miner, Gold Fields Ltd, which raked in $67 million in its December quarter. That was triple what Gold Fields earned the previous three months. See Africa gold-mining chart.

Even in America, where most investors turn up their noses at gold and prefer to dabble in technology stocks, gold's gains have boosted the metals industry's mutual funds by 46 percent in 12 months vs. a 17 percent loss for the average diversified U.S. equity fund. See related story.

Economists and analysts, in the United States and abroad, are mostly pointing to fiscal distress as a reason for gold's climb. After all, jewelry and designer demand for gold, which accounts for about 75 percent of the metal's use, fell last year.

"Gold is the best leading indicator of monetary conditions," says currency analyst Kenneth Landon at Deutsche Banc in Tokyo. "It is also one of the least understood factors. That's what makes it so fascinating and potentially profitable for people who truly understand gold's significance."

Gold: an obsession

Newmont's Lassonde, who has been in the mining business for three decades, believes gold's rally this week above $300 will usher in a long bull market in the metal. In some cases, however, the belief among other gold bugs is a swaggering one that comes from a decade or more of frustration.

"Has a bull market in gold shares begun? Is the Pope Catholic?" notes Bill Bonner of The Daily Reckoning, one of dozens of investment newsletters that are promoting bullion's rise. His comments came just as the spot price of gold this week closed above $300 for the first time since February 2000. That was back when mining company Placer Dome asserted it would reduce the amount of gold it sold forward in a controversial practice known as hedging.

Alas, "when another gold company, Barrick, said they weren't buying back their hedge book, the market fell back," recalls Day, the fund manager. Gold quickly dropped below $300.

This time, large gold mining companies are more likely to reduce forward sales, which gets them a higher price for the metal but also encourages loose lending of gold by central banks and other entities. At least, that's what the gold aficionados believe.

South Africa's Anglogold, the largest of the notorious hedgers, and other companies almost certainly could lose an appetite for selling their product forward. "We believe a protracted bull market will lead to more buybacks, thereby reducing the amount of gold which needs to be borrowed," Barclays Capital precious metals analyst Matthew Schwab said from London. See related story.

If gold prices threaten to rise further, a hedger could find the extra few dollars an ounce it receives by selling into future little more than pile of beans compared to the spot price of the metal. Besides, as money manager Hathway of the Tocqueville Gold Fund points out, falling interest rates around the globe mean miners are no longer guaranteed a nice return when they take the cash from their forward sales and put it in an interest-bearing piece of paper.

Even scarier, hedging, which involves fancy financial footwork and the use of futures and sometimes derivatives contracts, could upset shareholders as the witch hunt for accounting irregularities sweeps Wall Street and Washington.

"The premium for safety is high again," says Hathaway, whose musings on the subject of gold come in the form of inches-thick manuscripts that he sends to shareholders of his fund, which like most gold mutual funds is up by almost a third since Jan. 2. "The new blood sport will be pointing fingers at companies who abuse pro forma earnings and other accounting methods."

Most Americans, and investors around the globe, don't own gold as an investment. Those who do own gold via mining stocks, not the actual metal as is preferred by consumers in Japan and India. For ordinary folks, the burning question about gold isn't about hedging or fiscal distress or even declining production of the metal in the top-three producing regions: Australia, North America and South Africa.

No, for most ordinary folks, the big question is: When will gold make it to the front page of the local newspaper? "It hasn't made the cover of Time magazine yet," says Lassonde in Toronto, where he and other top Newmont Mining executives will preside over the production of 5 million-plus ounces of gold a year, more than any company in the world. See our metals report.

In the U.S. stock market, major gold mining companies trade for as much as 10 to 12 times pre-tax cash flow. That seems expensive, but as Caesar Bryan of the Gabelli Gold Fund explains, "Gold shares provide you the earnings and the dividends and the cash flow. But there is another thing, and that is the option value of the gold (miners) have in the ground. That is why they trade at high multiples."

Still crazy, after all these years

Investors in the U.S. stock market are willing to pay the highest prices for shares of the world's largest gold mining companies since February 2000. The Philadelphia Gold and Silver Index that represents shares of Newmont, Barrick, Placer Dome, Anglogold and others approached 70 at week's end. Anything above that could spark a mania for gold shares, the metal's believers say.

"After all these years, it's not hard to imagine that gold stocks could become a lot like Internet companies were a few years ago," said Robert Bishop, the longtime editor of Gold Mining Stock Report who has been analyzing gold mining companies for more than two decades. "Of course, I say that with my fingers crossed."

Bishop points out that each $10 move in the price of gold magnifies operating margins for gold companies. Many miners, thanks to improved techniques, haul the metal from the ground at a cash cost far less than $200 per ounce. Companies such as Gold Fields and Harmony Mining of South Africa, because they refuse to hedge their production, easily could see their share prices double if gold were to rise another $30 an ounce. Six-month gains for shares of Gold Fields have far outpaced those of its hedged competitor and neighbor, Anglogold. See comparison chart.

Like many of his colleagues in the industry, Bishop is headed to Capetown in South Africa next week to attend a yearly mining conference that could provide evidence of mining consolidation and further gains for gold. Attendance is up 30 percent from a year ago, conference organizer Sandy Lawrence, president of International Investment Conferences, says. "I think this is where you will see the new bull market in gold starting to take off," Lawrence says.

The spot price of gold rose as high as $307.80 Friday in New York. A London fix of the metal's price at $305.10 was the first setting above $305 in two years. In Tokyo, as rumors swirled about a possible government freeze on bank deposits, December's gold contract hit its highest price, in yen, since August 1998.

If the rally continues, gold's believers may soon be calling themselves the next investment craze. Bill Murphy, the former Boston Patriots football player who founded what may be the world's most rabidly fanatic gold Web site, www.LeMetropoleCafe.com, this week was flashing the message, "Gold headed for $600 an ounce."

Murphy, a former Wall Street specialist in commodity futures for Shearson Hayden Stone and Drexel Burnham, also chairs the Gold Anti-Trust Action Committee (www.Gata.org). GATA is a Delaware corporation that believes the U.S. Treasury, New York Federal Reserve Bank and some of Wall Street's largest banks, including Goldman Sachs (GS: news, chart, profile), conspired to keep the price of gold depressed in the late 1990s as a way of manipulating economic signals. Some economists use gold as an advance indicator of commodity inflation, the enemy of the world's central banks.

"My guess is we will not see gold at $300 bid for very long. It could go $350 to $400 bid in a week as the short-sellers panic," Murphy told me confidently from his Texas office. "That will shine the light on GATA big time."

Lassonde at the merging Newmont/Franco-Nevada/Normandy, while well aware of the gold-conspiracy crowd, prefers to put the metal in a more clinical light. Lassonde says gold is unfettered by any company or nation's liabilities, unlike a Nasdaq-traded stock or a government's Treasury bonds. "The ultimate definition of a gold market is when gold is rising in all currencies," he says. "And that is happening now."

Crash Alert -- Sharefin, 16:51:58 02/09/02 Sat

George Ure - Urbal Survival

Biggest Collapse in History: WITHIN 2 MONTHS?

This weekend, in a special edition for both subscribers and casual readers, I am going to really go out on a limb and make a forecast - supported by the web bot outputs that were given to subscribers last week, and supported by one interpretation of Elliott Wave Theory. The forecast is this: The potential for the BIGGEST CRASH in the history of the WORLD is shaping up in the charts and it should arrive inside two months.

Dow/Gold Chart -- Dave Brooks, 12:16:27 02/09/02 Sat

The Dow/Gold chart makes me want to do the happy dance in anticipation. Thank you Nick, for this post.

On the other side of this coin however, it will be TEOTWAWKI... It's probably a good thing that you cannot open the windows on tall buildings, but roof jumping is going to be very popular on wall street.

What a story, Does this auction herald the New Bull in Numismatics? -- Dave, 09:34:08 02/09/02 Sat

A 1933 Double Eagle gold coin that never went into circulation is being sold by the federal government at auction this summer, with experts predicting it could fetch millions.

``We expect that this coin may become the most valuable coin in the world,'' said David Pickens, associate director of the U.S. Mint.

Sotheby's auction house and Stack's, a numismatic firm, are planning a July 30 auction of the coin, believed to be one of only a handful of 1933 Double Eagles to have survived when all 445,000 struck that year were ordered melted down.

Double Eagles were first minted in 1850 with a face value of $20. The ones that were minted in 1933 were never put into circulation because President Franklin Roosevelt decided to take the nation off the gold standard.

Before the coins were melted down, two were handed over to the Smithsonian Institution for historic safekeeping.

But one other somehow survived. It suddenly surfaced in public in 1996.

http://www.startribune.com/stories/535/1609091.html

COMEX FRAUD TEST IS ON!!! -- dan, 08:50:55 02/09/02 Sat

I believe the depressed price of silver relative to gold is the result of market manipulation to pillage long march call option positions. Now that those options have expired a clear indicator would be a rise in the price of silver. Low silver prices Fact or Fraud The Test Is On!!!

India has got to love this. -- Dave, 08:22:19 02/09/02 Sat

Pakistan, US Sign Defense Pact Ahead Of Musharraf's Visit

http://www.nasdaq.com/asp/quotes_news.asp?symbol=9999&selected=9999&news=MARKET

As Martha would say, -- Dave, 08:07:12 02/09/02 Sat

It is a good thing.

Silver Polymer™ batteries exhibit best in-class peak power which is critical for digital photography. Recently, a leading digital photography editor averaged 6X more digital shots with Silver Polymer™ cells as compared to comparable weight primaries and rechargeables.

http://www.zincmatrix.com/spusers.htm

Lance Lewis -- Sharefin, 07:53:29 02/09/02 Sat

Shorts Get Cold Feet

Gold was up almost $8 overnight but came in a bit as we approached the NY open. We opened above $300 and proceeded to vault up all the way to just shy of $310 on the April contract before we experienced a bit of a swoon into the close to end up $3.80 and well above $300 for the week. The HUI rose 2 percent but also ended well off its highs. Lease rates rose by over 50 percent in the one-month to .66 percent, which is the sharpest rally we have seen since September 11th. The COT report released this afternoon is a little disappointing for gold bulls as it appears commercials have almost doubled their net short position in gold since last week, which is somewhat bearish. The US dollar index slipped a touch to end at the low of the week. The yen fell back to a new low for the week, but failed to break to a new low. The euro rose a hair and back above the 87-cent level. Treasuries were higher as the yield on the 10yr fell to 4.87%.

This weekend we have the G7 meeting as well as the beginning of the Olympics in Salt Lake City. Today's action was not exactly what I would have expected to see if we were going to have some sort of big news concerning the dollar this weekend, but who knows? The vocal pressure on the dollar has been increasing as we approached this weekend's meeting. US automakers sent the White house a letter last week complaining about the strength in the dollar. On Wed, Ford was a little more vocal in complaining about the strong dollar, and then today in the Wall Street Journal, even the president of Honda Motor was quoted as saying the yen had weakened "too far." Gold shares rallied strongly once again today and many pushed to new highs with the metal ending the week above $300. Stocks rallied but still remain in their immediate short-term downtrends. Volume and breadth both stunk during today's bounce and had all the hallmarks of shorts simply getting a little cold feet ahead of the weekend. The bonds didn't do much though either way.

So, the stage is still set for something to happen in currency land, but there is no overwhelming evidence from the market that it will. Nevertheless, trouble continues to be on the horizon, and the market may break the dollar all on its own with the way things are progressing. Gold feeds on a general lack of confidence. The action of the last few weeks both in gold and stocks confirms to me that the market is finally losing the stubborn bullish confidence in stocks that it has held for the last 20 years of the bull market and amazingly during the first couple years of the current bear market as well. The market is losing confidence in companies' financials, confidence in the recovery, confidence in analysts, and confidence in the widely held belief that setbacks in the market are always met with rallies back to new highs once the Fed has worked its "magic." A lack of confidence in the dollar is the next shoe to drop I think. The risk continues to be to the downside regardless of what happens or doesn't happen this weekend. So, keep those helmets close by…

Kissed, -- Dave, 07:49:57 02/09/02 Sat

Well didn't them Politicians, Banks and Judges Kiss or apply vaseline to them Argentinians first??

Argentina -- Sharefin, 07:32:33 02/09/02 Sat

Argentines in New Protest of 'Gov't of Thieves'

Thousands of Argentines took to the streets in the early morning hours on Saturday, banging pots and pans in the latest peaceful protest against a "government of thieves" unable to end a chaotic recession in its fourth year.

"We've been raped by politicians, banks and judges," read one giant homemade banner held up by protesters as they streamed down Buenos Aires' elegant avenues after midnight.

How many tons of Silver will this application consume?? -- Dave, 07:30:40 02/09/02 Sat

CHICAGO and SANTA BARBARA, CA, June 21, 2001-Silver Polymer™ Batteries newly developed by Zinc Matrix Power Inc. (ZMP) are in routine use on the Chicago Mercantile Exchange Inc. (CME) trading floor. This innovative new rechargeable battery allows hand-held wireless network connected trading computers to run all day. Previously, floor traders had to use bulky belt mounted battery packs with power cords or swap out lithium ion batteries throughout the trading day.

In addition to their use at CME, ZMP Silver Polymer™ batteries are in pilot testing by a brokerage on the New York Stock Exchange (NYSE) trading floor. Mike Cheiky, the Chief Technology Officer at Zinc Matrix Power Inc. (ZMP), which invented this new technology, says; "The Silver Polymer Battery has an energy to weight ratio comparable to today's state-of-the-art rechargeable lithium batteries, but, because the silver and zinc reactants are much more dense than lithium and graphite, the Silver Polymer Battery packs much more energy and power into a given size, a feature which is very important in hand-held devices. Silver Polymer prototypes have achieved well over 2 kilowatts per liter, several times the power level of current lithium batteries. This ultra high peak power ensures that a trading floor hand-held can sustain continuous high speed wireless communications with its very demanding pulse power requirements right up to the closing bell, every day."

http://www.cme.com/news/printit.cfm?NewsID=0000111A-E9A1-1B41-87E580EDBEFB0000

Japanese price charts -- Sharefin, 07:18:37 02/09/02 Sat

Gold

Silver

Platinum

Palladium

Also good Japanese futures charts here:
Daifugo Futures
Gold is the sixth row and silver the seventh row.

auspec -- Sharefin, 22:22:12 02/08/02 Fri

It was Donald (who posts here) that first introduced me to that chart and long I've thanked him - thanks again Donald.

It tells a strong story and defines a cycle which passes through all of humanity's lives.

I don't know where the low will come in but it should fall between a ratio of 5:1 all the way down to 1:1 and err to the extreme (since the build-up was so extreme).

It's a meter of value that oscilates between fiat & physical.
For the Dow to get so low means that confidence is gone, so gold will go high.

I would guess something like Dow 3000 & Gold $3000 at a 1:1 ratio sounds approximately right.
It could well vary - say Dow 5000 & Gold $1000 at a 5:1 ratio if the coming depression is not so nasty or say Dow 2000 & Gold $6000 at a 1:3 ratio.

It's impossible to predict the extremes but I think that it's possible to predict the timeframe.
It almost seems weird to be able to be able to say that the extremes in the Dow & Gold prices will be met within the next few years.

So gold somewhere between $800 & $3000 & Dow somewhere between 6000 & 2000 within the next couple of years would be my guess.

Broad in scope & short in time.

Sharefin/"Eventually" -- auspec, 21:51:06 02/08/02 Fri

THAT was a pretty awesome chart, Sir Host! No, GATA could never have done this alone, all they can accomplish is a little daylight and the corresponding *acceleration* of the inevitable. That will suffice for the time being, thank you, and let's get some more. They have also taken an important stand as far as being willing to jump up and down on a table top, screaming bloody murder, "this aint right". Enough folks like that can turn ANY issue, and this gold market is an issue.

"Seems to me those who thought up these hedging plans years ago weren't looking forwards enough and now they're stuck." Couldn't help but repeat that one, excellent.
They hedge short, we position long. They want to take it to an extreme? We make sure they get punished for folly.
Cycles? That's sufficient reason, yet the core reason, for assuming a huge position in this market. Mr Market would have it no other way. only the EXTREME folly of man would try to do away with cycles. LOL.
Viva indeed!

From the Far Side -- Sharefin, 21:25:19 02/08/02 Fri

Leigh (02/08/02; 17:53:17MT - usagold.com msg#: 69652)

Waiting for Springtime

'Tis eventide along the Trail
A chilly night descends
Our garden tilled, we search in vain
For our Trail Guide and our friend.

He's left us now; he's gone apace
He walks the Trail alone
We weary travellers must find
The strength to carry on.

Lo! News comes in from lands afar
They're buying gold en masse!
From our vantage on the mountaintop
We watch, and raise our glass!

Soon our good Trail Guide will appear
The spring will burst in bloom
The Golden Trail will sparkle by day
And glow by light of moon.

Dear goldbugs, though the wait is long
And hearts may break with pain
Ne'er fear, for gold's a precious thing
We suffer not in vain.

auspec -- Sharefin, 20:44:00 02/08/02 Fri

Kinda makes me laugh(:-))) as for years there was a contention re to hedge or not to hedge over on Kitco. It didn't matter who was right or wrong just that the biggest mouths prevailed.

Now regardless of opinions the market has answered & is currently telling us the way forwards for the gold miners.

Hedging has been profitable for some, preserving/conserving for others, but downright damning for the industry. It allowed massive amounts of off-market gold to come to the markets. Fine whilst the price was declining but rather a worry in a rising market. Now those who were unwise in selling forward or leasing out their stocks will have to climb the wall of worry and cover their butts or loose them.

The actions of the leasers/hedgers has actually been to their downfall as it created a short term abundance of gold but has made a long term decline in stockpiles. It has hurt as it pushed the price lower. But on the other hand has accelerated depletion of stocks.
It gained them short-term profits at the expense of long term capital. They have gained short to loose long.

Demand has obviously been large enough to completely swallow all that could be put forwards and as such has grown considerably. Now as we watch those who seek to cover go out into the market place and pay expensively for what they are able to get. We wonder about those who follow in their footsteps. Where will this additional supply come from? Who will supply it?

The miners need to cover so they produce or purchase. In either event it is drying up liquidity as their supply is taken off-market. The CBs/BBs need to cover their leases so must roll forwards or go out into the marketplace. This also dries up liquidity.

So we have a market place that has exhausted stocks & raised demand.
And it this same marketplace that is expected to provide normal demand plus feed those who wish to cover.

Seems to me that those who thought up these hedging plans years ago weren’t looking forwards enough and now they are stuck.

So now we have the market as being short stocks/stockpiles - sold them already.
Hungry for more demand - after helping raise the demand through lower prices.
Unable to supply - lowered production, lack of liquidity

So up prices must go.
The more who seek to cover the more the demand will increase.

As for GATA - I’ve long supported them and believed that they have been instrumental in spreading the knowledge of the deception going on.
But to believe that they alone have turned the price of gold about is folly.
These markets would have turned by themselves eventually even if GATA never existed.

These markets are turning (like the equities markets) as they must as they go through the Long Wave. Men are but mice who flatter themselves if they think that they can cause such & such to happen.

One chart readily points to this happening.
Click here
It is a process in motion where society has built up to much capacity and values it too highly. All cycles swing from high to low and so on & on we must go.

Praise GATA and others also for spreading word of the wrongdoings but never forget to respect Mr Market as it is up to him to dictate the way forwards.

Those who don't understand the supply/demand equation for the PM's won't have a clue going forwards.
But to those who do and hold the metals long then their rewards are coming.

Viva the newfound gold bull market!!!!

Venezuelan currency has third day of heavy losses -- Donald, 20:14:06 02/08/02 Fri

click here

Gold in Japan -- Sharefin, 19:55:35 02/08/02 Fri

Trying to find the open interest & volumes for the TOCOM.

Here's some revealing data from the TOCOM website.
The explosive growth in turnover these last few days is stunning.
Daily Sale & Purchase - Gold
Daily Sale & Purchase - Silver

Yearly trading volumes

If the purchase of gold by the Japanese these last few days is the beginning of a trend then what's coming should be awesome.
The Japanese have a month left to purchase what they can and looking at the acceleration of the above numbers and thinking that there's a month to go and most all Japanese yet haven't caught onto this trend.
WOW!!! This could become a huge source of demand - quickly depleting stocks of gold & silver.

Please also note the rate at which silver sales are also accelerating.
As a ROC (rate of change) the acceleration behind these numbers is amazing.
And there's still a month to go during which this trend should accelerate.

Hamilton's Gold Stock Performance/Sharefin -- auspec, 19:52:32 02/08/02 Fri

I think that is an awesome looking chart, yet Hamilton decries it. How do you see it? It tells exactly what has happened these last 12+ months, which we all experienced, yet failed to se so clearly. Three cheers for the HUI {and the mysterious stocks contained therein}! Durby, what can I say? You have thrown a major wrench into the cabal machinery, they tried to bury/repay you last June, and to the victor goes the spoils. Screw em indeed! You blazed the path.
Now we got IAm Gold speaking out, joined by Nova, Samex, and a gaggle of avowed non-hedgers. Can you believe Samex guys are asked by the 'authorities' to explain their extensive price movement and CEO replies it is the failing gold suppression, hahaha. KUDOS!
Here's the opportunity; the shares are currently leading the POG, as they historically do, lets turn these profits into an accelerated POG upside. HOW? By supporting those that gave us the share upside in the first place, GATA. We're looking at $200 POG w/o these guys, must never forget that. The brightest minds in the gold industry agree with that statement. These guys are putting their butts on the line for all of us and we can really make a difference, right now. You get your Feb statement and things are really looking good? Think GATA. These guys have accomplished great things on a shoe-string budget, what'll they do with some real funding? Multiplier, this is the most volatile market on the planet, no?-
Never supported GATA? Now's your chance, these are real people working on your behalf, 18/6+. wouldn't have happened w/o them!
This site is renowned for its GATA contributions and its activist stance, thank you heartily! Time for each of us to do even more and nail this coffin shut!!
Screw em, indeed!

Housing bubble -- Sharefin, 19:15:28 02/08/02 Fri

Housing - The Next Bubble?

Banks take more knocks -- Donald, 19:02:20 02/08/02 Fri

click here

Risk -- Sharefin, 18:46:58 02/08/02 Fri

Who can understand, let alone manage, credit risk?

Gold Commentary - excellent reading from Adam Hamilton -- Sharefin, 18:41:17 02/08/02 Fri

Gold Challenges $300!

Enron -- Sharefin, 18:36:40 02/08/02 Fri

Enron: Ultimate agent of the American empire

Tom -- Sharefin, 18:09:24 02/08/02 Fri

Then I'd better get onto the charts.
Cheers

Gold -- Sharefin, 18:02:53 02/08/02 Fri

Gold Rallies Higher, Profit-Taking Looks Unlikely

The sustainability of $300-an-ounce gold remains to be seen, but the yellow metal's tenacious refusal to back off that level despite stock market gains and the temptation to take profits didn't fail to impress many participants.
The benchmark April contract on the Comex division of the New York Mercantile Exchange climbed a further $3.80 Friday to $304.40 a troy ounce, after having broken free of a consolidation pattern around $300. Dealer Frank McGhee at Alliance Financial LLC in Chicago expressed concern that now that the over-the-counter options expiration seen pushing prices higher had passed, the market could plummet to the low $290s if traders with $25 gains over the past week opt to take profits on their longs.
Options give holders the right, but not the obligation, to buy or sell the underlying futures if they expire in the right price range. Long positions are bets on higher prices.
"I'm cautious. I'd be a buyer $10 below here and $10 higher," he advised. "The prudent move is to take profits on longs and come back in later if it gets above $310."
But profit-taking is a temptation only for those looking for short-term satisfaction and many commodity fund managers have now shifted to a longer-range perspective on gold, according to Leonard Kaplan, president of Prospector Asset Management in Evanston, Ill. He cited the pullback from $290 in mid-January as an example of this.
"When the market fell from $290 to $282, the long speculators never got out because they never changed their minds," he explained. "They believed we were going higher and I don't see any rationale for them to get out at $305 or $310. They're in for the longer-term trend."
With the psychological brick wall at $300, he said it was unlikely they would choose to sell just three inches past the brick wall. That wasn't to say they wouldn't give in to temptation if prices reach as high as $320 or $325 an ounce, however, he added.
Precious metals analyst Brian Christie at Canaccord Capital in Toronto agreed the market would continue higher, but saw the need for a more measured advance than the meteoric rise of the past week.
Kaplan at Prospector said he doubted this was a runaway bull market and expected to see consolidation of the sort seen in the past few days on the way up.
"All the (price) dips seem very well-supported. Look at the hourly action. It's very positive," he noted. "You don't see sharp breaks that make new lows. The market is well-bid underneath."
A range of ideas have been floated to explain what distinguishes the present rally from previous ones that fizzled all too soon in the last three years, including producers' plans to reduce their forward hedge positions, or the amount of production they have sold forward in anticipation of falling prices.
Earlier this week, it seemed the widening concerns of how many more Enron-type debacles might be lurking behind unreliable balance sheets was contributing to the shift into the yellow metal.
But U.S. equity markets rebounded fairly strongly Friday, with the Dow Jones Industrial Average adding 119 points to close at 9744 and the Nasdaq Composite index up by 37 points at 1819. That suggested that confidence remains firm in the majority of U.S. corporate share valuations.
Although Alliance's McGhee agreed that Japanese investors' flight to quality amid concerns about the viability of their banking system was underpinning elevated gold prices, he said the lack of response in gold lease rates disturbed him. Lease rates are charged on loans of gold and are viewed as an indicator of supply tightness.
"If lease rates aren't supporting the move in the market, something is out of whack," he said. "I'd be much happier if I saw 2% to 3% lease rates in gold (instead of the current 1%). There's a disconnection between the flat price of the metal and the general trend in lease rates and unless those two are together, it's going to be tough to sustain the rally."
Gold lease rates have stayed low because the market knows that producers' plans to deliver into their hedged positions will provide added liquidity, according to Prospector's Kaplan.
Another factor keeping lease rates from rising is the psychology of industrial users, he added.
"Industrial users are like Indians, East Indian," he explained. "There's a price (of gold) they feel comfortable at and a price they don't feel comfortable at."
Jewelry fabricators haven't been participating in this rally, because they shy away from price instability and volatility, preferring to wait until a modicum of order and a clear price floor have been re-established.
Kaplan said there were many sell orders waiting to be executed between $307 and $309 an ounce next week and he guessed there were probably pre-placed buy orders in place above $310. April gold peaked this week twice at $309.

Gold -- Sharefin, 17:59:41 02/08/02 Fri

CFTC Commitments: Gold Nearing Top Heavy, Silver Bearish

Large speculators piled into the gold market this week and were heavily involved in the buying spree that catapulted Comex prices to their recent 18-month highs, according to the latest Commitment of Traders Report released Friday.
The CFTC data as of Feb. 5 showed that large speculators held 53,810 long positions and 19,722 short positions in gold, jumping their net long positions by over 20,000 contracts to 34,088 contracts. As at the previous reporting period, large speculators' net long position was 12,434 contracts.
According to Tim Evans, analyst at Pegasus Econometrics, this sizeable increase in net long exposure increases the likelihood of long liquidation in the near future.
He noted that as of Feb. 5, the 34,088 net long position was the largest exposure held by the large speculators since late September, and that since Feb. 5, "it is quite likely that that long position has been added to."
He argued that while this rush of fund buying has been very supportive for the market over this past week, the total speculative buying "is within 2,000-10,000 contracts of the likely extreme."
As a result, he expected long liquidation to occur into any further price strength in due course.
"Gold may have become the trendy investment choice as a store of value relative to currencies, bonds or the stock market, but we don't think it will take that much change in those markets to send the gold bulls stampeding for the exits again," he said.
In silver, large speculators headed in the opposite direction and reduced their net long exposure by 3,374 contracts to 25,221 contracts. The data indicated the large speculators held 30,712 long positions and 5,491 short positions, versus 32,428 long and 3,833 short positions at the previous reporting period.
Evans argued that some speculators may have indulged in some opportunistic selling over the week as silver prices rose in sympathy with the gold price rise.
Despite this lower net long exposure, Evans argued that "this market composition still poses greater risk of long liquidation than of fresh buying, as it would take only 11,000 contracts of purchases to bring the risk back up to the recent 36,208 contract extreme.
"Which we see may depend on gold, which could tow silver higher if it can extend its own gains, or send silver back to its lows if it puts in a quick top and then falls."

Gold -- Sharefin, 17:54:33 02/08/02 Fri

WGC Commentary - PDF File

The market remains extremely active with dips being bought with aggression, but also some selling from the trade
coming in towards the highs. Some of the buying has a consistent pattern to it, which suggests that it is of a
professional nature, while retail demand in Asia, especially Japan, remains very strong and, if anything, is accelerating;
in addition there are signs of retail interest developing also in Europe. The move from $300 to $307 was concentrated
in Asian hours, aided by some slippage in the dollar. Although this recent move has been very rapid, which has led
some commentators, notably technicians, to comment that the current leg is over-extended, underlying market sentiment
remains bullish. The volatility in the price action has seen the bid:offer spread widen this morning to $1.50. Activity
this weekend will be interesting as the Hong Kong market will be closed from Monday to Thursday inclusive for the
celebration of the Chinese New Year.

Gold -- Sharefin, 17:52:07 02/08/02 Fri

Gold rush is on as fear takes a hold

Evy Hambro at Merrill Lynch is the first to admit that until recently, the gold market had been in the doldrums for many years.

At the end of the 70s the price shot up to $700-$800 an ounce, and since then it's mainly been down, down, down. In late 1999 the price surged above $320 after central bankers met in Washington and agreed a moratorium on sell-offs. But then the price fell again, dipping below $260 a year ago before starting its upward ascent.

"Every move prior to this has been very sudden, but this has been a very gradual rise," says Mr Hambro.

Fuelling this is the current surge in demand for gold among the Japanese public, triggered by the decision of the government there to ditch rules that guarantee people's savings in the event of a bank collapse. With the Japanese stock market in turmoil and the yen falling, many people have been pulling their money out of accounts and buying jewellery and gold coins.

Added to that, gold production is starting to decline, which suggests the supply of gold will fall. Merrill Lynch reckons that these factors along with unstable stock markets and low interest rates mean that "the outlook for gold remains positive".

Gold -- Sharefin, 17:47:54 02/08/02 Fri

Gold regains investor favour to reach two-year high

This has brought cheer to the gold miners in South Africa and Australia, many of whom have closed their mines in recent years due to depletion of the mineral and rising costs.

In addition, the surging gold price, which is quoted in US dollars, is giving a boost to the miners’ bottom line against the backdrop of the weak South African rand and the Aussie dollar. Share prices of gold mining firmsin the two countries have also risen in tandem.

Trading volume of yen-based gold futures on the Tokyo Commodities Exchange soared to a new high of more than 326,000 lots yesterday, reflecting the “gold rush” in the Japanese market.

Gold -- Sharefin, 17:45:30 02/08/02 Fri

Party time marks bounce in bullion

GOLD companies were in a celebratory mood yesterday as bullion prices finished the week at $US307 an ounce and the spectacular week-long run showed few signs of slowing.

Across the eastern Goldfields companies reported an upbeat mood with many believing this could be the rally that would wake gold from its near five-year slumber.

But there was also some reluctance to be too bullish because many times in the past the gold price has disappointed by retreating quicker than it has risen.

Senior industry member Peter Lalor, the executive chairman of WA's biggest gold miner Sons of Gwalia, said that while history would show the rise was not sustainable, some of the signs this time around were positive.

"The fact that the three or five major companies who are consolidating the industry are first of all saying they are going to knock out high cost production and secondly saying that they are going to cut back on hedging is a very positive sentiment," he said.

"We are not finding anywhere near the gold we are producing.

"On a global basis the industry is working closely with the World Gold Council and we've just agreed to have the biggest spend we've ever had on a global basis on marketing gold for jewellery purposes, you've got financial market worries, Enron etc, so you put all those things together it's a reasonably positive story.

"But you still have to ask the fundamental question of is it sustainable on the physical supply-demand equation?"

"The drought is over after so long - we are getting calls from London, Europe and the eastern States institutions are now interested," he said.

"It certainly looks like it's got some legs this time, but every time we say that we live to regret it, but you sense it's going to stick around these levels."

You do realize that this is Donald's job to post these links -- TYoung, 17:42:14 02/08/02 Fri

sorry to have messed up the previous post

Gold -- Sharefin, 17:38:42 02/08/02 Fri

Gold Rush

Gold -- Sharefin, 17:37:30 02/08/02 Fri

Dubai gold prices could rise further

Jim Puplava-ANOTHER reason glod may be arisin' -- TYoung, 17:36:52 02/08/02 Fri

Storm Watch

Gold -- Sharefin, 17:35:57 02/08/02 Fri

Gold's present glitter could prove but a fleeting flash

Jim Puplava-ANOTHER reason glod may be arisin' -- TYoung, 17:35:34 02/08/02 Fri

Storm Watch

Gold -- Sharefin, 17:33:55 02/08/02 Fri

Structurally Unsound - PDF File

Option granting during the 1997 - 1999 bear market, has resulted in
a structural condition where the dealer market becomes
increasingly long gold as it rallies. As this is hedged by selling
spot, it results in an increased borrowing requirement.
n Therefore, although we believe that a higher price will result in
lower lease rates, until gold finds a new plateau, one should expect
lease rates to tighten.
If gold has entered a protracted bull phase, then we believe that lease rates will
fall. That being said, however, there is the potential for a spike in lease rates as
gold moves higher. Why? Simple - bullion bank options positions.
Notwithstanding the fall in hedging since 1999, many of the options positions
which exacerbated the move following the Washington Agreement remain. These
positions are too long dated (5-10 years) to have matured in the ensuing 3 years
and buybacks have tended to focus more on buying outright forward than on buying
back options positions, as the latter would require paying premium.
Hit by a declining gold price in 1997-1999, producers significantly increased the
size of their hedge books. As the price continued to fall, producers had to look for
ways to enhance their forward price beyond the simple contango. This resulted in
an explosion in options positions as producers granted upside calls to generate
premium. Although options also exploded in complexity, fundamentally all positions
involved granting upside optionality as a result of the upward sloping price curve
(which means that calls struck at a given price increase in value as you extend the
maturity). Both simple upside calls and convertible multi touches or “Parisian”
options (which are essentially long put positions which convert into the same or
larger amount of forward or call positions if a barrier is triggered on multiple
consecutive dates) have the same result - if they are triggered the granter of the
option becomes short and the buyer becomes long.
Therefore, as the price rallies, bullion banks become long gold. To hedge this they
sell spot. In order to accurately hedge the exposure, they then need to borrow
gold to the maturity of the option. In reality these positions will often be mismatched
(i.e. the bank will borrow gold on a shorter term basis). Either way, the rising price
will generate additional borrowing demand, therefore pushing up lease rates.
So one can reasonably expect lease rates to tighten as the spot price rallies.
Does this change our view that a protracted bull market would result in lower lease
rates? No. We believe that a protracted bull market will lead to more buybacks,
thereby reducing the amount of gold which needs to be borrowed. That being said,
until gold finds a new plateau, one can expect these structural positions to
exacerbate lease rate moves in an already thin and nervous market.

Gold -- Sharefin, 17:24:41 02/08/02 Fri

Gold Mining Stocks: A Risky “Safe Haven”

Gold humour -- Sharefin, 17:14:01 02/08/02 Fri

Top 10 signs of a gold market top for Gold Bugs

Gold -- Sharefin, 17:11:34 02/08/02 Fri

Those Old Golden Ducats

I fondly remember an earlier era
When shiny gold coins were well hid ‘neath my floor.
The eagle, the rooster, the sovereign, the panda,
I squirreled them there so I’d never feel poor.
If stock markets tanked I’d just smirk at the panic,
Inflation-swamped bonds made me chortle with glee.
A country defaulted, investors went manic,
But I had my ducats, it never touched me.
Those old golden ducats, those precious bright nuggets,
Financial worlds shook but it never touched me.

On long winter nights I took out my gold treasures
And sprinkled them freely o’er pillow and sheets
Then rolled amidst coins that gave me kinky pleasures
The kind you don’t get from T-bills or from REITs.
For what is an asset that’s nothing but paper?
A government’s promise, a company’s plea,
Whose worth swings each time they devise a new caper
Unlike my gold ducats, whose worth ne’er did flee.
Those old golden ducats, those precious bright nuggets,
Financial worlds shook but it never touched me.

Now times they have changed and uncertainty risen
As metals most precious have lost their cache.
With currencies sprung from their hard asset prison
It’s markets not metals that have final say.
All money is funny, and central banks love it
They set true worth’s compass, they’re happy, they’re free!
Alas in my mattress, my lumpy life savings,
Are shriv’ling away, oh woe, woe is me!
Those old golden ducats, my less precious nuggets,
Financial worlds changed-and it sure has touched me.

GATA -- Sharefin, 16:56:54 02/08/02 Fri

The Price of Gold is Going North of $600 Per Ounce!

Shadowfax -- Sharefin, 16:53:31 02/08/02 Fri

Interview on Global Tyranny

Galearis -- Sharefin, 16:50:33 02/08/02 Fri

The few errors I've pointed out of late appear to be more so involved with price tampering rather than data spikes.
On this chart you can readily see a couple of samples of data spikes.

The earlier errors I pointed out where when silver rose over $4.80 to $4.86 and Bart’s chart showed the rise and then later didn't show the rise. It appeared that someone had seen the rise and wanted it removed and took the prior 30 minutes data and pasted it into the time frame where silver rise was. This was so obvious as to make one wonder why. (You can see the charts of this event in the archive.)

The other errors I've noted are when Bart's chart flat-lines whilst a rally in the price is occurring.
This has happened twice of late right when the price was rising sharply in Japan.
The price rises were clearly evident on other live feeds yet on Bart's they didn't show up do to a flat line.

It seems to me that there is some dubious goings on, though I don't really have a clue.
I am just one who is noting the obvious.
When you supply a live chart with 24 hour coverage then one expects timeliness & accuracy.
This of late has proven to be a problem and I have been pointing out the obvious to others so that they can look & see and make up their own minds.

One reason glod may be moving -- TYoung, 16:29:48 02/08/02 Fri

The Credit Bubble Bullitin-Noland

Panning Barrick and the XAU -- auspec, 16:25:18 02/08/02 Fri

The following was extracted from an Adam Hamiltom essay called "Gold Challenges $300". No link at current time, but his essays are usually put up at GE shortly after coming out.

As gold stocks bear far more risk than owning the Ancient Metal of Kings itself, they should offer far higher returns than physical gold to compensate for their higher risk, leveraging the gold price. Incredibly, the gold stock with the largest market-capitalization on the planet by far, Barrick Gold (ABX, in red above), actually only returned 11.2% since early 2001, not even matching gold’s return! A major gold stock that does worse than gold itself in the most substantial gold rally in six years?!? This should be a scandalous revelation to the gold world!

Why on earth would any prudent investor in the