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Gold -- Sharefin, 06:09:27 08/07/02 Wed

interesting comment (from Reuters) by a trader on today's gold action:

NEW YORK, Aug 5 (Reuters) - COMEX gold was higher early Monday after
CFTC data on Friday showed longs had cleared the decks for more buying
in last week's wipeout and Newmont Mining indicated it would step up
its hedge buyback program...........

The Commitments of Traders report released after the close on Friday
showed the net fund long position at COMEX fell to a mere 385 gold
contracts as of Tuesday from 26,238 lots a week earlier.....

Also supportive on Monday was the remark by Newmont President Pierre
Lassonde that the world's biggest mining company was looking for ways
to accelerate the unraveling of millions of ounces of gold hedges
assumed in the takeover of Australia's Normandy Mining this year.
The company has already eliminated two million ounces of a total of 10
million ounces inherited from Normandy and has vowed to rid itself of
all positions as soon as possible. "That's going to put a floor
at $300 now -- that, and the Commitments of Traders," said a bullion
dealer. "We were trying to push it lower and now it's not going to
see the follow-through they expected."

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Gold -- Sharefin, 06:08:07 08/07/02 Wed

Gold Outlook Lures Dealers Back To Australian Conference

The dealers are back.

That's the buzz at the three-day 10th Diggers and Dealers conference here, an annual get-together in one of Australia's biggest gold mining towns.

Robert Champion de Crespigny, former chief executive officer of Australia's Normandy Mining Ltd. (A.NDY), which was swallowed up by Newmont this February in a A$4.5 billion takeover, agreed.

No Better Time In Gold Indus Than Now

"You couldn't get a better time" in the gold market, he told reporters here Wednesday.

"The basic fundamentals that I've always talked about are getting so close to being right at the moment," he said.

He was here to receive the "Dealer of the Year" award, in recognition of his ability to generate competitive tension in the takeover for Normandy, thereby resulting in "spectacular shareholder value enhancements," the conference organizers said.

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Gold -- Sharefin, 06:02:28 08/07/02 Wed

Gold Up On Speculator Buys, Eyes Stocks

Spot gold in London had pushed higher at
the fix Wednesday morning on light speculator buying during Asian trade
despite a strong rebound for the U.S. stock market and dollar.
Australian and Japanese-based buying was said to have accounted for the
rally, which helped the market hit an intraday high of $309.55 a troy ounce,
just below resistance at $310/oz.


"People don't seem to know which way to play the market at the moment with
so many conflicting signals around," said a London-based dealer. "(Gold)
prices have slipped over the last few weeks while we saw the equities tumble
so it's hard to say how much pressure we will come under if the economy
manages to bounce now."

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Gold -- Sharefin, 06:00:54 08/07/02 Wed

AngloGold warns about gold price

AngloGold Limited said on Wednesday suggestions that gold prices would trade higher were "over-optimistic".

AngloGold executive officer Steve Lenahan said there was little evidence to support some forecasts of a rising bullion market.

"We are cautious about planning our business on a price that is substantially higher than the current spot (price)," Lenahan said at the Diggers and Dealers mining conference.

The warning follows a move by AngloGold to cut 4.1 million ounces from its hedge book in the half-year to June 30 to gain more exposure to bullion market prices.

A need to hedge gold was a lynchpin of AngloGold's failed bid last year to acquire Australia's Normandy Mining.

Normandy was acquired by US-based Newmont Mining Corporation, vowing to unwind some 10 million ounces worth of hedges.

Newmont president Pierre Lassonde earlier this week sounded a more optimistic tone for bullion, predicting the metal would trade as high as $350 an ounce this year if the US dollar weakens.

Australia's AurionGold Limited plans to reduce its gold hedges to below 50% of reserves from around 60%.

The current level of hedges held by AurionGold, the subject of a hostile takeover bid by Canada's Placer Dome Inclusion, is around 4.7 million ounces.

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Gold -- Sharefin, 05:58:01 08/07/02 Wed

Placer jumps to 21 per cent of Aurion

CEO and managing director of takeover target AurionGold [ASX:AOR], Terry Burgess, sent out mixed signals to the market today (Tuesday) at the annual Diggers & Dealers conference in Kalgoorlie. While confident AurionGold would remain an independently owned gold miner he also didn't write off possible future merger or acquisition activity. However, in a late development tonight Placer Dome [NYSE:PDG] advised the ASX it had received a further 10 per cent acceptances for its unsolicited bid, lifting its equity in AurionGold to 21 per cent.

Burgess echoed the buoyant sentiments of gold bull Pierre Lassonde, tipping gold was in the midst of an upwards surge. "The US dollar is overvalued and there's going to be more pain in US equities," he said, pointing to favourable indicators for the gold price. Further, the unwinding of producers' hedged positions was having a positive effect on the gold market, both in terms of fundamentals and perception, according to Burgess.

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Gold -- Sharefin, 05:54:43 08/07/02 Wed

Gold up $6 - watch gold/silver live around the globe

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Fiat -- Sharefin, 05:47:35 08/07/02 Wed

BUSH’S ADMINISTRATION MIGHT DROP THE DOLLAR RATE

The good and bad of weak $$$


Economic experts believe that the American administration is not really interested in a strong US dollar. There is even indirect evidence to prove that. Bush’s administration is probably going to repeat the scheme, which was used 25 years ago. Washington ProFile news agency reminded that it was the time of the so-called Reagan’s weak dollar.

The USA gained the support from industrially developed countries of the Group of Five (G-8 nowadays) in September of 1985. The states started the process of cheapening US dollar vs. major currencies of the world. Dollar lost 50% of its value within the period of two years in comparison with the price of German DM and Japanese yen. This simultaneously resulted in the growth of the American export - it gained 22.2%.

President Bush is likely afraid to repeat his father’s mistakes and to lose political scores and even the White House, maybe. That is why he is likely to use several elements of “Reagan’s economy,” but Bush is supposed to take into account the wishes from USA’s partners. The reduction of dollar is very bad for Japan - its balance of trade will considerably drop, and the process of the extrication from the economic crisis will slow down. Taiwan has the same problem.

The countries of the European Union actually win from the growth of the euro rate. However, a strong euro is capable of hampering the economic growth in those countries: expensive European goods will lose their competition on the international market. That is why China, South Korea and several other countries are working on the dollar replenishment of their gold and value reserves. The central banks of a lot of countries of the world are maintaining the high dollar rate on their home markets.

The reduction of dollar is not good for the countries, whose currencies are not struggling with dollar, euro and yen for the title of the most popular currency of the world. Their balance of trade with the USA and with each other will change, since the considerable part of commercial transactions is performed with the use of dollars. The growth of the rates of national currencies vs. dollar is absolutely not good for the majority of the states, because it will cause damage to their balance of trade, and increase the volume of the foreign debt. The countries, which export oil and other energy carriers, including Russia, Kazakhstan, Turkmenistan and Azerbaijan, might experience trouble as well.

“Reagan’s dollar” did not last long, though. In 1987 the countries of the Group of Six agreed to decrease the speed of reduction of the American currency. This decision was not profitable for the US export - this index dropped six times in six years. Dollar gained 28% vs. 34 major world currencies in the 1990s.

A strong dollar played a positive role for the USA too: the American export was getting more expensive, import was getting cheaper, the USA was keeping the acceptable foreign trade balance. Furthermore, the cheap import allowed the USA to successfully struggle with inflation rate.

Economists argue, if the current reduction of US dollar is good for America or not. Some experts believe that the reduction of dollar will not show any considerable influence on credit rates and therefore, on the state of things on the labor market.

The inflation rate in the USA is under the strict control, the interest rates are on the lowest level over 40 years. Now the American economy is stronger than the economies of the European Union and Japan. That is why the reduction of dollar rate will only play a positive role, activating the American export and providing three percent of the economic growth. This is what experts believe. A weak dollar will give an incentive to foreign investors to buy cheaper shares and other assets of American companies.

There is also the opposition opinion on the matter. Some financial analysts think that a weak American dollar was jeopardizing the American economy. If US dollar gets weaker, then foreign investors get rid of the stocks of American companies, thinking that it is the vestige of economic weakness, which will result in the economic setback of the whole world.

American consumers provide about a quarter of the world sales. If they get poorer, and if import goods get more expensive, then European and Asian exports will have severe problems.

The American stock market is the largest in the world, and its problems will automatically result in the problems of other stock markets of the world.

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GATA & Gold -- Sharefin, 17:11:27 08/06/02 Tue

Leaked Gold Report Reveals Trouble Ahead. . “CONSPIRACY THEORY” GAINS NEW CREDIBILITY

You didn’t hear about this on the national news, CNBC, or in your local newspaper. After all, most of these controlled/scripted sources of “news” are still trying to keep us all believing that all is well with the world, even as the stock market and economy show new cracks. For all its obvious faults, “the system”-i.e, the fractional reserve monetary system administered by the Federal Reserve-is still sound, according to these pundits. Thus, and in spite of the rally in gold and gold stocks in 2002, the press will usually go out of its way to dismiss gold as either a viable investment alternative or as having any relevance to today’s financial and monetary structure.

With this mindset, our press saw fit NOT to cover a news story that broke recently which should have made the front pages of at least every financial publication. It’s a story that has much more to do with the financial markets generally than one merely of interest to “gold bugs.” And it’s one which-if the warnings inherent in it ever come to pass-could lead to the insolvency of a number of major institutions, and devastate global financial markets

From time to time in my newsletter The National Investor (www.nationalinvestor.com), I have commented on the ongoing efforts of GATA (the Gold Antitrust Action Group-www.gata.org) to bring to the light of day their contention that gold prices have been artificially controlled by a cabal which includes our own Federal Reserve. In short, GATA has assembled considerable evidence that various financial institutions have made a bundle of money in recent years by betting on the decline in the gold price. This was done in a variety of ways; “short sales” of borrowed gold from central banks, hedging on the part of some major mining companies and the creation of complex derivative transactions among them (to understand the intricacies of this, I suggest you visit the above-referenced web sites.) Until recently, these bets paid off handsomely, as gold went from over $400 per ounce in January, 1996 to lows around $250 per ounce more recently.

The trouble now is that, with gold prices having bottomed and now starting to rise, many of these same institutions face potential disaster. It has been reported, for example, that the banking powerhouse J.P. Morgan, Chase and Company has over $40 billion of exposure to gold-related derivative contracts; these instruments could destroy Morgan’s overall financial health in the event the gold price were to spike considerably higher. Thus, to protect Morgan and certain other financial houses in the same boat to one extent or another, it has been claimed that the world’s central banks-led by the Fed-are now conspiring to keep the gold price from rising too much. Further, the way this effort is being conducted has opened up the entire financial system to a potential meltdown if the bankers fail in their suppression efforts.

Though GATA’s claims, if true (and I believe they are in this regard) paint the picture of impending danger for the financial markets equal to or greater than anything currently in the Establishment news, they have none the less received short shrift. For the most part, the group and its adherents are dismissed as “wackos” and “conspiracy theorists” who are simply trying to come up with excuses for the lousy investment performance of gold throughout much of the last two decades. Meanwhile, a financial time bomb with possible ramifications extending well beyond the gold market itself continues to tick.

However, the recent publication of a March, 2002 report obtained by GATA has given significant new credibility to the group’s claims. It has also made some people in the financial world extremely nervous.

It seems that well-regarded mutual fund manager John Embry of Royal Bank of Canada authored a report on the gold market for his peers at the bank early this Spring. In it, he offered his viewpoint that--among other things--there has indeed been a “conspiracy” to suppress the gold price, the suppression has been engineered chiefly by the U.S. Federal Reserve, and that the Fed is scared to death that it could lose control and have tens of billions of dollars worth of gold-related derivatives to clean up one day. Somehow, this report made its way outside the four walls of RBC, and ended up in the hands of Bill Murphy at GATA. Needless to say, Murphy has spread Embry’s report far and wide. I would too, if I were him; after all, Embry is one of the most highly regarded money managers in North America. His firm is not some local coin shop where local militia members come to talk conspiracy over coffee all day long, nor is it the publisher of one of the many sales-oriented newsletters that hawk gold come Hell or high water. It is one of the biggest financial companies in Canada.

For their part, embarrassed (and quite angry) Royal Bank officials were quick to claim that Embry’s report does not represent the bank’s views. Instead, this was a report meant for other managers and big shots at RBC, and was not intended for public consumption, they say. Bottom line, the bank is hopping mad that, of all the people who got their hands on this, it was Bill Murphy. (NOTE: Murphy claims that this report also went to some of the “biggest and best” clients of the bank, one of whom forwarded it to him.)

Embry cannot be dismissed, however--and he is respected enough that this report is turning some heads as more people read it. As Matthew Ingram of Toronto’s Globe and Mail put it in one article on this crazy story, getting such a well-regarded money manager from a major bank to essentially agree with what GATA has been saying for a few years now is, “. . .a bit like the U.S. government admitting that yes, there was a top-level CIA plot to assassinate former president John F. Kennedy, and the whole lone-gunman theory was just a crock.”

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Gold -- Sharefin, 06:18:09 08/06/02 Tue

When will Gold really move?

The correlation between CRB and Gold is not new to me, but it suggests/ reminds me about an interesting point, often forgotten, when Gold is regularly hyped by war and financial instability. The rise in Gold (the tide) is most likely to come in tandem with CPI inflation (the rate of change) and the other important commodities inside CRB - when the real action starts. In the mean time you get these spasms, like in October 19-20, 1987 up 20 dollars one day and down 20 the next, just to make gold bugs feel like horny pigs, not achieving orgasm. The same must have been the case recently. From time to time some of CRBs components do spike, but very rarely do we see a broad based rise in commodity prices, as we indeed experienced in the 70ties, ending early 80ties as the time Federal Reserve Banker Paul Volker hiked interest rates aggressively. Was that a cause or did he act according to a "hidden scheme" or the Cycle? To produce commodities is most of time worse then producing any other generic goods. You are pressured like a lemon, except once in a while, and it seldom last, its the short sellers (with good nerves) dream.

For Gold, commodities and CPI inflation (the rate of change), there is an established and eminent study, done by the well known Russian economist Kondratieff: It suggests that inflation peaks in: 1980+56=2036. Last time gold start to move in 1968 (12 year in advance of the peak), the Bretton Wood and gold standard agreements were wrecked officially a few years later. Within January 21st 1980 Gold was up more then 20 times (silver even more) on an irrational emotional wave, which learned economists tried to explain to us with oil shock, war and inflation of course. My point is that the latter and Gold is the same wave, a flight to hard assets, back to basics. Until such time the public will support paper, how ironic it seems. If you are skiing in the mountains, you are safe as long it is not "the season for avalanches." The public is a strange creature, for years they can support an illusion, even having strong suspicions, just to throw it out in no time. This is a very interesting subject, and the only thing I can say: observe human behavior, do not listen to theories, my own included.

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Fiat -- Sharefin, 04:18:16 08/06/02 Tue

Stocks to pay price for 'snap-backs'
Sharp rallies now point to intense selling later

Desmond on Monday said the stock market ultimately will pay the price for investors' refusal to descend into bouts of furious selling.

"Our 70-year history shows that 90 percent up days that are not preceded by 90 percent down days usually turn out to be upside blow-offs that are quickly followed by new lows," Desmond said. His NYSE-based study earlier this year showed the bear-market washout - a classic capitulation by every investor and their mother-in-law - comes after a series of these 90-90 down days, followed inevitably by furious buying.

Desmond, using Lowry's Reports internal measures of supply and demand, says the one-day rally staged a week ago, "was accompanied by a significant increase in downside volume, showing that sellers were aggressively dumping stocks into the rally."

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Fiat -- Sharefin, 04:10:14 08/06/02 Tue

Pot calls kettle black - Washington accounting scandals worse than Wall Street?

Have our politicians in Washington no shame? Given the shenanigans they employ to manipulate the federal budget, they should be among the last to criticize corporate America's accounting methods.

Perhaps our elected representatives are hoping that if they divert our attention to how corporations are cooking their books, we might not notice what a mess they've made of the federal government's books.

According to Bill Frenzel, who himself served in Congress between 1971 and 1991 and who now is a guest scholar at the Brookings Institution, one of the only differences between the accounting methods used by some corporations and the Federal government is that criminal sanctions do not apply in the latter case.

This situation has led a number of investment newsletter editors to throw up their hands in disgust.

Tongue firmly in cheek, Harding muses: "I'd hate to think it's the same kind of self-serving on the part of Washington that Wall Street firms and corporations have been guilty of, trying to make investors (and voters) think that everything is better than it actually is."

Harding concludes: "Rather than dragging more CEOs off to jail right now for previous problems, Washington might do investors a bigger favor by investigating why the government itself is misleading investors with incorrect information."

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Gold -- Sharefin, 01:56:07 08/06/02 Tue

Aurion Gold aims to lower hedge book

Australia's AurionGold Ltd said on Tuesday it plans to reduce its gold hedges to below 50 percent of reserves from around 60 percent to gain more exposure to spot bullion prices.

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Gold -- Sharefin, 01:48:14 08/06/02 Tue

Announcement of New Chief Executive Should Presage Fireworks At The World Gold Council.

Pierre Lassonde then went on to flesh out this contention about the falling dollar, weak equity markets and the rising gold price with examples from the 1930s. He ended by giving his Australian audience - I am an Australian, therefore I hedge - a lecture on what he described as the “bane of this industry for the last 10 years.” He reckons it is now a fad of the past which is just as well as he had calculated that every 100 tonnes of gold hedged reduces the bullion price by US$5/oz. On this basis the elimination of between 300 and 400 tonnes of hedging expected this year should boost the gold price by nearly US$20 million.

He then pre-empted his friend Chris Thompson by announcing that Newmont is working with the new boss of the WGC to produce a new gold instrument which would take anything from 500 to 1000 tonnes of gold off the market each year. Thompson is actually visiting London this week and may well have been planning to combine a comment on this with the announcement of his new CEO who will be someone very well known, but from outside the gold industry. The fact that Lassonde and Thompson are working together on this certainly means that some fireworks can be expected at the World Gold Council in the next few months.

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Gold -- Sharefin, 01:42:15 08/06/02 Tue

Gold imports dipped 9 per cent in '01-'02

Contrary to the general impression, gold imports have declined by 9 per cent in 2001-02 compared to 2000-01, even as importers have shifted to markets in East Asia and West Asia for sourcing the precious metal. According to numbers available with the ministry of finance and company affairs, gold imports in 2001-02 stood at 488.863 tonnes, compared to 539.157 tonnes in 2000-01. Finance minister Jaswant Singh had recently told Parliament that India was the largest importer of gold, which blocks a lot of funds, which could instead go into productive savings. The gold imported through the baggage route at the international airports of Mumbai, Delhi and Bangalore has also seen a similar dip of 37 per cent. Gold imported through the baggage route in 2001-02 was 22.92 tonnes compared to 36.12 tonnes in 2000-01. There has been a drop in imports from both Switzerland and the UK, from where India imports the largest quantity. It has gone down by 12.23 per cent for Switzerland at 283.9 tonnes in 2001-02 compared to 323.47 tonnes in 2000-01. Imports from the UK have also gone down by 65 per cent to 31.980 tonnes. In terms of a country-wise break up, the largest rise in imports is from Australia, which has soared by 1150.8 per cent in 2001-02. Current imports from the country stood at 13.134 tonnes in comparison with just 1.050 tonnes in 2000-01. This was followed by Malaysia, the UAE and South Africa. However, for 2001-02 imports from Singapore were bloated by a consignment of 22.6 tonnes brought in by a Chennai-based jeweller who subsequently re-exported the stuff. Imports from Malaysia in 2001-02 stood at 3.063 tonnes, which is 2.3 tonnes more than 2000-01. Imports from South Africa were up by 13.9 per cent at 126.512 tonnes, while imports from the UAE were up by 302.8 per cent at 18.170 tonnes in 2001-02.

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Gold -- Sharefin, 01:41:10 08/06/02 Tue

Organic growth to lift gold firm’s output 16%

South African gold company Harmony - which has a reputation for acquiring and turning around mining assets - is now in a strong organic growth phase with several capital projects under way and a number of others under consideration.

Following numerous acquisitions since 1997, the company has grown from its small marginal base in the Free State to become the third-largest producer of gold in South Africa, with some of the best margins in the business.

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Gold -- Sharefin, 01:38:26 08/06/02 Tue

Newmont plans to accelerate unraveling Normandy hedge-book


In the news, world number one miner Newmont that said it would look at ways to accelerate its unraveling of the hedge positions it inherited with the takeover of Australia's Normandy Mining. Inherited with the takeover in February, the mining house has already extinguished some two million ounces of a total 10 million ounces but has vowed to rid itself of the entire positions as soon as possible.

Newmont forecast gold production of over seven million ounces this year. The firm has criticized hedging as hurting the gold price by erecting a false ceiling on upward price movements. However, some firms defend hedging as a way to protect margins when bullion prices fall.

Normandy’s multi-year hedges stood at around 7.3 million ounces at the end of the first quarter, down from 9.5 million ounces in February.

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Gold -- Sharefin, 01:36:57 08/06/02 Tue

AurionGold Echoes Newmont's View On Gold Price

AurionGold Ltd. (A.AOR), Australia's largest listed gold mining company, said Tuesday it agreed with Newmont Mining Corp.'s (NEM) views that gold is in a bull market.
"I think that we are in an upward surge for gold...I do echo Pierre Lassonde's comments," Terry Burgess, AurionGold's chief executive officer, told reporters.

He was referring to Lassonde, president of Denver-based Newmont, who said Monday that gold is in a fundamental bull market.

Lassonde said gold could rise to US$350 a troy ounce in the next 18 to 24 months.

Burgess also concurred with Lassonde's view that the U.S. dollar is set to weaken further, in turn boosting gold.

As well, gold will benefit from further pain in the U.S. equity markets as investors seek out safe-haven assets.

"There's still going to be some pain in the U.S. equity market," Burgess said.

Burgess, who previously declined to comment on the gold price, said he changed his stance after being asked repeatedly by investors to talk on the subject during a recent roadshow to Singapore and Hong Kong.

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Gold -- Sharefin, 01:33:09 08/06/02 Tue

Ian Cockerill: MD, Gold Fields Limited

Ian Cockerill's here. No sordid secrets at Gold Fields Limited. You're the new chief executive. You've only been in the hot seat for a month, and now you come out with stunning results like this Ian. Hopefully you can keep it rolling well into the future. Good numbers today from Gold Fields Limited. But let's just pick up on something I mentioned to David before you came into the studio. With all of these wonderful figures, operating profit up 160%, headline earnings nearly 300% higher, a record dividend, you still describe the highlight of the year, without doubt, as being Nelson Mandela ringing the bell at your listing on the New York Stock Exchange.

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Gold -- Sharefin, 01:28:54 08/06/02 Tue

AngloGold Goes to Patagonia as Pickings Get Slimmer

After more than $9 billion of takeovers in the world gold mining industry in the past year, AngloGold Ltd. Chief Executive Bobby Godsell -- like his rivals -- is running out of acquisition targets.

Almost half of the 36 companies in BNP Paribas's index of the biggest gold companies in 2000 have been swallowed up in takeovers. That's forcing producers like AngloGold to buy small mines like Cerro Vanguardia in Patagonia, Argentina, rather than organize corporate takeovers in Toronto and Johannesburg.

AngloGold and rivals such as Newmont Mining Corp., the largest gold miner, and Barrick Gold Corp. may also start swapping mine stakes to cut costs and boost output after a 10 percent rise in the price of gold this year.

``There are very few corporate plays left of any size,'' said Peter Bacchus, head of mining, metals & steel at Salomon Smith Barney in Sydney. There may be several transactions that put together operations that really belong together, he said.

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Gold -- Sharefin, 01:23:04 08/06/02 Tue

Harmony Gold - Well-Positioned For New Mining Bill

Commenting on the South African government's Minerals and Petroleum Resources
Development Bill, and news that local black economic empowerment groups could
hold as much as 51% equity in all new mining projects, and up to 30% of
expansion of existing mining operations, Harmony Chief Executive Bernard
Swanepoel said: "Although there could be a costs involved in complying with the
new legislation, the company feels that it is well positioned for the new era
in South African mining."

South Africa's parliament passed the Mineral Bill June 26, paving the way for
all minerals rights to be vested with the state as part of a
'use-it-or-lose-it' policy.

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Gold -- Sharefin, 01:20:27 08/06/02 Tue

Gold market turns jittery on Jaswant's statement

WILL the Government hike customs duty on gold in order to discourage large imports or will it resort to the extreme measure of banning gold imports altogether?

With his statement in the Rajya Sabha on the opening day of monsoon session of Parliament a few days ago, the new Finance Minister, Mr Jaswant Singh, has managed to kick off, both within the country and outside, intense speculation about Government's attitude to the yellow metal.

The unease in the market has followed Mr Singh's pronouncement that India's huge gold imports were a large unproductive investment and that there was need to move away from savings in gold to other productive avenues.

Some observers believe the Finance Minister wants to bring out idle gold into the productive system; but he has not stated that clearly. Previous attempts to mop up gold with people have not met with success because of faulty design of the scheme- either inadequate returns or administrative hardship or both.

Also, there is good deal of reluctance on the part of people to part with gold - a prized possession- which actually reflects their thoughts about the credibility and ability of the Government to fulfil its promise.

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Gold -- Sharefin, 08:47:10 08/05/02 Mon

Newmont Forecasts Gold Price at $350 Within Two Years

Newmont Mining Corp., the world's biggest gold producer, said the price of gold is likely to rise to $350 an ounce in the next 18 to 24 months because of a lower U.S. dollar and falling gold production.

``We are only at the very beginning of a gold bull market,'' Newmont President Pierre Lassonde told the Diggers & Dealers gold conference in Kalgoorlie, Australia. ``I'm fairly confident that we will see $350 within the next 18 to 24 months, and we could see much higher prices'' if there is any political and economic uncertainty in the U.S.

In 1985, the dollar fell 33 percent and gold rose 66 percent, Lassonde said. ``Would I expect the same kind of reaction today? Absolutely,'' he said. ``The dollar is going to come down. Gold is always the anti-dollar.''

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Gold -- Sharefin, 08:17:01 08/05/02 Mon

Canada's Barrick: Still Well-Poised For More Acquisitions

Canada's Barrick Gold Corp . said Monday that it is still well-poised for more acquisitions, despite the US$ 2.4 billion merger with Homestake Mining last year.

"We've had very smooth integration with Homestake," so "if the right opportunity presents itself, we are certainly prepared to act," said, Barrick's senior vice president of exploration.

However, Davidson declined to comment specifically on what assets Barrick, currently the world's second-largest gold miner, are looking at.

There have been recent reports that Barrick has looked at Australia's AurionGold Ltd and is contemplating taking over Canada's Placer Dome, which is in a hostile takeover bid for AurionGold .

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Fiat -- Sharefin, 04:30:07 08/05/02 Mon

Pimco Bonds - Investment Outlook - William Gross

PIMCO of course does not wear virgin white in the active management arena. We have our structural tilts centered around the sale of volatility and the near perpetual positive shape of the yield curve between 30 days and 12 months. We also make mistakes - witness our premature entry into energy and telecom bonds in order to cyclically increase our corporate debt exposure. But we at least have the common sense to recognize a long-term sucker's bet when we see one. Warren Buffett, or perhaps his sidekick Charlie Munger, is fond of saying that if you look around the poker table and you can't identify the fish, then you be the fish. Managers using corporate tilts may have thought they were the skippers of their own ocean-faring tuna boats, but as it turns out, they had gills and are now sucking for oxygen in a local trout farm located in a city near you. They be the fish.

Last week, the corporate bond market pond was nearly frozen solid. It has thawed somewhat in recent days, but there's still ice visible on the surface. Take a look at the charts below as an indication of the lockup and lockout of risk capital in recent months.

Corporate bond bid-ask spreads are as wide as I've seen them in years and much of the universe is quoted on a "dollar" instead of a "yield" basis, which means that these bonds are being treated as equity instead of debt. When a corporate bond is quoted 52-55, as many are these days, it's tantamount to acknowledging that they are being viewed on a liquidation (i.e. near default) basis. How did we get to this point and are things really this bad? The "darkest before dawn" analogy suggests "probably not" to the latter question. And the former query was answered substantially in last month's Outlook: The heightened suspicion of corporate dirty tricks, the near crashing stock market, the ENRON and WORLDCOM experiences with bonds plummeting from par to 10 cents on the dollar in less than a year's time - these are the triggers which cyclically (on a short-term basis) reduce markets to extremely oversold prices. We are at that point now in this near frozen corporate pond. From the depths of winter will spring surely follow. That is why PIMCO entered the telecom arena just a few short months ago. Unfortunately, what we thought was December was just a temporary freeze in the midst of fall. Mistake.

Still, while many of our corporate bond holdings (and those of other Big Seven managers) will undoubtedly do well in future weeks and months, the dominant determinants of corporate bond underperfomance will be with us for the next few years at a minimum. The rapidity of technological change - a Moore's Law of corporate bonds if you will - is one primary reason. Too many future losers seemingly doubling every 18 months with the remaining winners paying off at a maximum of par. Didn't used to be that way, pre-New Age Economy, but it is now and corporate spreads have to widen out to compensate. The second reason is the metamorphosis of the banks discussed in last month's Outlook. While the press tended to focus on my comments on hedge fund behavior (as did I), undoubtedly the most important market influence in addition to technological change has been the transition of banks from risk takers in the short-term corporate lending arena to risk avoiders - sloughing off their loans via syndications and hedging potential bankruptcies via purchases of default insurance in the (until recently) vibrant credit default market. The bank's retreat from the corporate lending arena has left a void that will take time and higher yields to fill. One day corporates will become a decent long-term bet despite their structural negatives but we'll need higher yields before that day arrives. When it does, PIMCO will be back in the water, hopefully reincarnated as a shark and not a trout.

If PIMCO's belief that (1) technological change and (2) the reversal in bank lending attitudes are key to the pricing of the corporate debt market over the next several years, it remains unclear where appropriate spreads to Treasuries should eventually rest. While many corporate bonds are trading (if at all) by dollar sign as opposed to yield, suggesting the potential for huge gains or huge losses, there is no J.P. Morgan of the 21st century willing to step up to the plate and "save" the market. Some would suggest Greenspan is that man. The Fed's staff has for instance in the past year or so done academic studies on the potential for the Fed to buy either corporate bonds or stocks in an emergency situation. Preliminary indications seem to indicate that they believe the Fed can do anything it is not specifically prohibited to do, and therefore the support of corporate bonds would be fair game. Our "close to the Fed" sources, however, suggest that while Greenspan might have the authority to act, he is in no way disposed to. WE understand that he is well pleased with the off-loading of credit risk from the banks to the Big Seven and insurance companies alike. To his mind, the moving of risk from a levered sector (the banks) to an unlevered sector (investment managers and insurance companies) is just what the doctor ordered to stabilize the economy in an emergency environment. Perhaps. But let me alert you, Mr. Greenspan. The corporate market at the moment is close to full tilt, half frozen, trading on price - not yield. While you perhaps contently rest on the historical laurels of near 0 percent real Fed funds, its stimulation to the housing market, and your hopes for an eventual robust recovery, the cost of capital for corporations is nowhere near 13/4 percent or even that 6 percent level available to first time borrowers in the mortgage market. The cost of capital for Baa and lower corporations is in double digits. Aa and A companies can barely come to market. You sir, have a problem. If the cost of corporate capital skyrockets, the markets move the other way, and then of course, the economy follows.

And oh, for sceptics who will claim that this is an attempt to get the Fed to bail PIMCO out of its lousy corporate positions - forget it. I like my Sprint bonds even though I bought them at 95 cents on the dollar instead of the current level of 60. Anyway, despite my assertions that Fed staff have researched the possibility, I do not believe they will or even should do so. We're corporate light, even though in this case one Lite beer is one too many. We have only benefited from the naiveté of the "corporate tilters" that went too far. We're in the catbird's seat such as it is or better yet the Captain's chair on that tuna boat sailing on the high seas. It's just fair warning that with a tilting corporate bond market, the economy itself may not be far behind. Let's just hope the pinball analogy doesn't apply to the economy itself and that we soon aren't forced to declare "Game Over." Greenspan's almost out of quarters.

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Lenny's Corner -- Sharefin, 00:46:35 08/05/02 Mon

GENERAL COMMENTS:

Last week may have seen the end of the most vicious decline in price for silver and gold in almost 10 years. Previously, the prices of both were rallying nicely, with the speculative and investment communities supporting the upward trends in prices. And suddenly on July 23rd, the debacle began, only to be continued into last week. There are many theories and thoughts as to how and why the gold and silver markets became so aberrant. Let me give you the one that I believe has the most credence, which is not to say to that other factors may have been highly contributory. As in all good stories, as in all good mysteries, there are usually unseen and unknown co-conspirators.

Historically, over the past several months, it has been only the buying by speculative and investment interests that moved the gold market higher. Please note that such buying and accumulation was extremely sound, being based upon a multitude of bullish factors such as a falling USD, a falling US equity market, the inherent bullish fundamentals of the gold market, less hedging by producers, etc...and a host of other bullish factors. But, it was investment alone that moved the prices higher, rather than underlying industrial/commercial demand, which was extremely poor, as demonstrated by the fact that in the past and current rally, gold lease rates barely budged off rock-bottom levels of less than 1/2 of 1% for a 30 day tenor.

Over the past 6 months, the large commodity hedge funds and most speculators were totally committed to their long positions, and all attempts to dislodge them were massive failures. Naturally, I, and other analysts, expected such trends to continue, as there seemed no trigger imminent that may force a change of opinion among the buyers. Ahhh....but I, and many others were wrong. The one thing about trading that I find so incredibly appealing is that as soon as you know the rules, they change them.

As volatilities exploded in all the markets, from the wildly swinging 600, 700, 800 point days in the DJIA, to the sharp moves in the currency markets, and even to the uncharacteristically heady movements in the grains, the black boxes (the technically derived computer systems) that run a goodly percentage of all of the large and larger commodity hedge funds, issued a sell on all positions for the express purpose of reducing risk and limiting financial exposure. Any market that had significant investment of speculative interest saw massive amounts of selling, from copper to coffee to Euros to gold. The selling was indiscriminate and weighty. And to quote the scripture, selling begat more selling begat more selling and the gold and silver collapsed. For no other reason than that mentioned above. And without the support of the industrial and commercial interests, gold prices fell to the levels where such industrial interest would be rekindled.

In a truly spectacular justification of technical analysis, silver and gold prices both fell almost precisely to their 200 day moving average early last week, and then managed a bit of a rally. Gold is now $11 off its intra-day lows and silver about 6 cents off the lows. I look for gold and silver to now grind higher, in a return to the upward trend and a reversion back to the mean. I strongly believe that the worst is over for the bulls.

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Fiat vs Gold -- Sharefin, 00:41:53 08/05/02 Mon

JP Morgan Fails to Report $45 Billion in Gold Derivatives to the SEC

The following three current documents indicate that JP Morgan Chase has reported to the Office of the Comptroller of the Currency $45,234 Million in total gold derivatives as assets under the control and use of JP Morgan Chase however they have not accounted for these gold derivative assets in either their SEC form 10Q March, 31, 2002 or their 2001 Annual Report. This finding implies that JPM shareholders have far greater risk than previously disclosed by the company.

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Periodic Ponzi Update PPU -- $hifty, 19:28:12 08/04/02 Sun

http://home.columbus.rr.com/rossl/gold.htm

Periodic Ponzi Update PPU

Nasdaq 1,247.92 + Dow 8,313.13 = 9,561.05 divide by 2 = 4,780.52 Ponzi

Up 17.27 from last week.

Should be another interesting week!

Thanks for the link RossL.

Be ready to excavate that chart !

Go GATA

Go Gold

$hifty

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Fiat -- Sharefin, 19:02:46 08/04/02 Sun

Market Stress Pressures Economy - Fed

Severe stress in global markets has nerve-wracked investors fearful that one big shock could jam the gears of the financial system -- much like the crisis days of 1998.

"People feel like gasoline has been dumped on the floor and it wouldn't take much to ignite it," said James Glassman, senior U.S. economist at J.P. Morgan Chase.

Plunging stocks and multibillion dollar bankruptcies the past month have investors assessing the widespread damage to banks and insurers. If more scandals or failures come to light further straining capital markets, it could force central banks to jump to the rescue, pumping money into the system through lower interest rates.

Fear is starting to hurt economies as well. The financial market squeeze in both the United States and Europe is depriving businesses of crucial capital and sharply increasing their cost of borrowing at a time when global growth, led by the $10 trillion U.S. economy, appears to be losing steam.

"The Fed has to get concerned about the capital markets effectively tightening for the Fed at a time when it wants policy to remain accommodative," said Brad Stone, chief U.S. market strategist at Barclays Capital.

"The Fed may need to lean against that. Some weeks ago that looked like a very low risk. Now it's definitely a real risk," he added.

"The way the events are unfolding right now for the near term, dealing with these many financial constraints is going to impinge and impinge and impinge on economic activity," said prominent Wall Street economist Henry Kauffman, who has argued the Fed should cut interest rates.

Swap spreads -- a measure of banking sector risk that signaled the systemic distress in 1998 -- popped out last week on the credit anxiety about J.P. Morgan before stabilizing. Investors are even raising risk premiums on assets usually considered very safe like mortgage-backed securities.

With markets so stretched, harried traders are looking anxiously for the one trigger that could set off an explosion.

Rattled markets showed their heightened state of anxiety on Friday when rumors of an emergency central bank meeting in Europe to help a failing bank or insurance company swept through trading desks, sparking selling of stocks and powering gains in safe-haven short-term Treasuries.

Banking trouble fears hit a fever pitch on July 24 when rumors spread of liquidity problems at J.P. Morgan Chase -- the largest U.S. bank-- and Citigroup after congressional revelations of their dealings with failed energy trader Enron Corp. The impact across credit markets was harsh and swift.

Europe has also seen its fair share of worries about the quality of its banks and insurance companies on the asset losses, providing fodder for the rumor mill.

On July 25 Germany's second largest bank, HVB Group , posted a second-quarter loss and described business conditions as among the worst since World War II.

The current pain in capital markets has yet to reach those extreme levels of distress, said J.P. Morgan's Glassman. But he said the market sees conditions as deteriorating to the point where a crisis could happen "at any moment."

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Gold -- Sharefin, 09:17:12 08/04/02 Sun

Go for the gold!

In these unsure times, everybody wants a bit of certainty - and that means good, old fashioned gold. But for how long will the high prices hold? Is it time to invest in the yellow metal or pull out?

Rafiq Ahmed has the answers.

In times of international uncertainties, investors turn to more tangible assets, such as real estate and precious metals. Gold possesses the distinctive characteristics of money: it serves as a medium of exchange, a store of wealth (long-- term savings) and a unit of value. Besides gold holdings, investors are lately showing preference for gold bars, gold coins, paper (metal certificates) and specialist funds (which invest exclusively in gold mining company shares), monitored by the FTSE Gold Mines Index.

This index, which tracks gold equity markets in the Americas, Africa and Australasia, boasts market capitalisation of $50.63bn and has generated a 62% return in the year to June 2002. The gold price surged through the key resistance level of $320 a troy ounce (oz) in late May and touched $330/oz in Hong Kong in June before slipping back because of light profit-taking by investment funds.

There have been seven short-lived rallies since February 1996 when gold hit $420oz. However, most analysts believe the market's upside potentials now have solid fundamentals. Kelvin Williams, marketing director of AngloGold, the world's largest gold producer, said: "Unlike other price rallies in recent years, where the gold price has tended to rise on the back of a single issue or incident, the current price improvement has been built on a number of favourable circumstances for gold."

The positive factors underpinning gold's new-found lustre among institutional and private investors are:

*A marked turnaround in investor sentiment largely because of geopolitical tensions, which if sustained over the coming months, can prove crucial in reviving the industry's fortunes. Chris Thompson, chief executive of Gold Fields, remarked: "People are feeling far less secure than previously. Gold has always been the investment that people reach for when they feel uncomfortable."

*The substantial reductions in producer-- hedging, i.e. forward- selling on the gold derivative markets. This indicates limited downside risk for gold prices. Lately, there has been a marked change in producers' hedging strategies. Jonathan Best, AngloGold's financial director explained: "We've continued to manage our hedge book aggressively and we are taking out the weaker positions in the hedge book right now so that going forward, we don't have a long period when we will be receiving lower prices or incurring an opportunity loss." AngloGold has cut its hedging positions by about 105.74t during the past six months.

Heavy hedge-book loses?

According to Gold Fields' findings, hedge-book financial losses to producers could be heavy over the next few years if prices surge to between $330/oz and $345/oz. Macquarie Bank (Australia) estimates that total hedge-book of gold miners world-wide may drop by 400t in 2002.

Therefore, the supply of bullion in the markets will become tighter because of declining producer-hedging and robust investment demand should buoy the price of gold.

*Global mine production is expected to decline this year or next thanks to greater consolidation and rationalisation within the industry during the past two years.

*The gold rally was also helped by the US dollar's weakness against a number of other major currencies. A softer greenback versus the euro and the yen, in fact, reduces gold prices in many other currencies, thereby making the precious metal more attractive to buyers in Asia-Pacific and Europe. The greenback and gold have a counter-cyclical relationship. If the dollar surges, bullion prices fall and vice versa.

*Lower US money market rates are discouraging speculative short- selling of gold by international hedge funds. In times of rising US interest rates, it's profitable for hedge funds to borrow gold from the bullion banks, sell it and place the money in high-yielding cash- deposits and major OECD-country Treasury securities.

*The lacklustre performances of stock markets in America and Western Europe have also had an impact on the price of gold. This in turn, reflects doubts about the health of global economic recovery and hence revival in corporate earnings. During the past year, gold investments have outperformed bonds and equities. The World Gold Council writes: "People buy gold when there is a stock market crash or things are unstable because gold tends to hold its value. Cash is eroded by inflation, but gold bullion tends to rise in value. It is usually seen as a hedge against inflation."

Controlled bullion sales

The September 1999 Washington Accord commits 20 of the world's leading central banks and international financial institutions (the Bank for International Settlements and the IMF together control 85% of the globe's bullion reserves), to hold gold as a reserve asset and to limit gold sales to 4001 per annum until September 2004.

The signatories have also agreed not to increase their gold- leasing programmes and expand the use of gold futures and options during this period. The central banks are complying with the accord, thus eliminating the market's fear of an uncontrolled heavy official selling. Gold-producing countries in Africa and South America would of course welcome an extension of the Central Banks' Gold Agreement after 2004.

Central banks world-wide hold more than 33,000t as part of their foreign currency reserves, equivalent to 13 years of current mine production. The five-main official holders of gold reserves are the US Federal Reserves Board (8,148t); Germany's Bundesbank (3,4560; Banque de France (3,025t); Banca d'Italia (2,45 10 and the Swiss National Bank (2,151t).

Supply-deficit

The demand for gold has continued to surpass the supply of newly- mined gold for many years. According to the latest report, "Gold Survey 2002," compiled by Londonbased Gold Fields Mineral Services (GFMS), world-wide mine production in 2001 totalled 2,604t, against aggregate gold usages in jewellery, fabricated products and investments of 3,483t. The jewellery sector accounts for 75% - 80% of gold offtake, especially in Asia and the Middle East.

Despite sustained falls in gold output, South Africa still remains the world's largest producer (394t) last year. GFMS report shows that 80% of SA production comes from mines owned by AngloGold, Gold Fields and Harmony. Other major producers are America, Australia, Indonesia - which owns the world's biggest gold-mine, Grasberg (which produced 108t) - China, Russia and Canada.

Last year's average spot price was $271/oz while total production costs averaged $228/oz. Future trends

Some prime investment banks like UBS Warburg, Deutsche Bank, HSBC and Barclays Capital are anticipating gold to average above $300/oz this year and between $320/oz-$340/oz in 2003. GFMS provides more cautious forecasts of between $285/oz and $315/oz over the next year. The yellow metal's 10-year moving average is $331 /oz.

But stronger prices of $350/oz-$380/oz, though unlikely in the near-term, would trigger profit-taking and renewed producer-- hedging, thus weighing on the markets. Also, more marginal mines in South Africa and elsewhere will be brought back into production and increasing supplies should ultimately lead to lower prices.

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Gold -- Sharefin, 01:39:11 08/04/02 Sun

Japan bank reform threatens expected gold rush

A week ago it seemed so simple: Japan scraps full state protection of bank deposits, investors panic, bullion houses sell a lot of gold.

That formula sent gold prices soaring in February as the first stage of a plan to end deposit guarantees prompted investors to pile money into traditional safe-haven assets.

It was supposed to happen again as the fiscal year-end approaches next March, when the government is due to finish the job.

But signs this week that Tokyo could be backtracking on bank reforms have put Japan's expected gold rush in question - and given bullion houses pause as they prepare sales campaigns reminiscent of last year's media blitz.

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Bob Chapman -- Sharefin, 01:16:11 08/04/02 Sun

There is no question there will be more very bad news coming regarding JP Morgan Chase. They will be exposed as the worst fraudsters in Wall Street history. This involves not only Enron and a number of other companies in money laundering scams but also the rigging of the gold and silver markets. This firm is totally without morals or scruples. They are totally corrupt. We’d imagine the SEC and the New York Attorney General will really take them apart, particularly the Attorney General. This is only the very beginning of their nightmare, which hopefully will lead to their exposure and the end of the rigging of the gold and silver markets. Citicorp is equally bad off as their partner in crime, but they have considerably more capital. JP Morgan has a derivatives book 2-1/2 times as large as the US economy, that’s why the US Treasury has to take over their positions. If they don’t the 51% of total derivatives they have written will come crashing down and with them the world financial system. The US Treasury and the FED are conspirators with these banks. When JP Morgan goes the whole elitist structure crumbles and they all end up in jail or dead. When the public finds out what they have done they may well lynch them. Now you can understand why George W. Bush wants the police powers that he has requested from Congress. He can use them to suppress the people and protect his evil cohorts. JP Morgan Chase could only have been allowed to amass derivatives 42 times its assets while in collusion with government and the forces that control government and the FED. In fact, when they go down the financial system will grind to a halt. No banks, no cash, no credit cards, etc. Only gold and silver coins will spend and you best have extra food and water available and the proper equipment to defend yourself. This is not a pipedream. This is very real. JP Morgan and Citicorp have never been anything other than criminal enterprises going back over 100 years. They were bankrolled by the British Royal Family and have held sway over American business and government for over 100 years. These are the same people who have funded both sides of every war for the last 800 years. Meanwhile you load up with gold and silver stocks and take the wildest ride of your life.

GOLD & SILVER POTPOURRI

Most of you never having lived in Europe can't appreciate the European penchant for gold, especially gold held by their central banks. This desire was born out by the ECB being forced to include gold as 15% of its reserves. Wait until the Germans find out all their gold is gone. They'll probably find Gerhard Schroeder hanging from a light standard on Bahnhofstrasse.

The US Treasury and the FED have played the Bundesbank for suckers. We believe that shortly the German people will find this out and their actions could force a total capitulation of the gold manipulation cartel. The Bundesbank's transgressions could be exposed soon internationally by GATA via the German press and TV and also in the US on C-Span. The noose is tightening and what better place to start than in Germany. This would be major campaign fodder for Edmund Stoiber. If any of our German subscribers know Mr. Stoiber, please put him in touch with LeMetropoleCafé.

The manipulation of gold and silver prices and shares is so obvious that it astounds us. These conspirators don't care who knows what they are doing. That manifests their police state mentality. Reporters either don't report what is going on in the metals market because they are clueless, or they are told to shut up. The same goes for the brokerage business. Do you really think Barton Briggs wanted to run away with his tail between his legs?

JP Morgan Chase and Citicorp shares were clobbered, and word is they and all the other banks and investment banks were pulling money out of Europe due to a liquidity crunch. The FED and other central banks are again secretly supporting the dollar. The Plunge Protection Team almost every day attempts to manipulate the Dow. They are in reality spreading the pain far and wide as they distort the inevitable. When you have government manipulating markets there are no professionals only insiders.

Word reaches us from a deeply implanted mole that a major silver problem is brewing. Silver must be delivered quickly to avoid a major run on the metal. There is a major scandal that is ready to hit, which will send silver prices considerably higher.

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Antal Feteke & Gold -- Sharefin, 00:37:26 08/04/02 Sun

GOLD-EAGLE UNIVERSITY

SUMMER SEMESTER, 2002

Monetary Economics 101: The Real Bills Doctrine of Adam Smith

Lecture 1: Ayn Rand's Hymn to Money
Lecture 2: Don't Fix the Dollar Price of Gold
Lecture 3: Credit Unions
Lecture 4: The Two Sources of Credit
Lecture 5: The Second Greatest Story Ever Told (Chapters 1 - 3)
Lecture 6: The Invention of Discounting (Chapters 4 - 6)
Lecture 7: The Mystery of the Discount Rate (Chapters 7 - 8)
Lecture 8: Bills Drawn on the Goldsmith (Chapter 9)
Lecture 9: Legal Tender. Bank Notes of Small Denomination
Lecture 10: Revolution of Quality (Chapter 10)
Lecture 11: Acceptance House (Chapter 11)
Lecture 12: Borrowing Short to Lend Long (Chapter 12)
Lecture 13: Illicit Interest Arbitrage





FALL SEMESTER, 2002

Monetary Economics 201: Gold and Interest





IN PREPARATION: COURSES TO BE OFFERED IN 2003

Monetary Economics 201: The Bill Market and the Formation of the Discount Rate
Monetary Economics 202: The Bond Market and the Formation of the Interest Rate

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Thanks to GATA -- Sharefin, 00:18:29 08/04/02 Sun

This one for the archives.
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A tale of two precious metals: Lending emerges as new element in gold supply

THE third-quarter update of Gold Demand Trends was presented in Johannesburg this week by George Milling-Stanley, manager of gold-market analysis for the World Gold Council (WGC).

Milling-Stanley was not quite at a loss to explain why the fundamentally strong picture of gold demand was not translating into a higher gold price.

A fourth component of gold supply - gold lending by central banks - is becoming the biggest player in the total equation. The other three, newly mined production, recycled gold and central-bank sales, are widely known and readily quantified but gold lending has taken off recently as central banks seek to increase the return available on their gold holdings.

Milling-Stanley says this gold is only loaned and will need to be repaid as London good-delivery bars: central banks often call the gold back at the end of the year. The trouble is much of it has been manufactured into jewellery.

Milling-Stanley hears only whispers of defaulters on these gold loans. "There is some nervousness in the gold market, some concern about the depth of the liquidity."

He notes more than 3 000 tons and maybe even 10 000 tons have been borrowed and are owed back.

"It will be very interesting to watch trends in gold-leasing rates. At the moment there is an inverted yield-curve where short-term leasing rates exceed long-term rates. This suggests big speculators in the markets.

"I believe hedge-fund short sales are largely responsible for a substantial increase in the supply of gold to the market - gold that has been borrowed back from central banks and sold to finance these short positions.

"This is what has been depressing the price so far in 1997. There is no doubt the large speculators are taking advantage of the market's fear of central bank sales to bully the gold price down and make huge profits."

On central bank sales, Milling-Stanley notes more than a hint of hysteria.

"It is completely the wrong idea to think there is wholesale dumping. There have been only three significant sales of gold by central banks in the past two years. This means that 177 countries still think it is a good idea to hold gold," Milling-Stanley says.

The Russian finance ministry reported a sale of 31 tons of gold, proceeds of which were needed to pay state debt to the gold mining industry.

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Andy -- Sharefin, 00:03:46 08/04/02 Sun

Weekday Commentary from Jim Puplava

We may be heading for more problems next week that will take a healthy dose of intervention to avoid. There is now a full-scale banking crisis emerging globally with systemic risks everywhere that could be amplified by the leverage in the financial system from derivatives. With bankruptcies and junk bond defaults at record highs, there are huge counterparty risks that lie waiting to erupt. Someone somewhere is on the wrong side of these trades. The following is a sample of the systemic risks that are starting to emerge. Friday, Societe Generale, France’s second largest bank, reported a 41% decline in second-quarter net income as a result of taking a $371 million hit for bad loans. The same day in London, Lloyds TSB said it has become the latest to be hurt by turmoil in the world financial markets. The bank said it was increasing its loan loss reserves by 50% to cover loans it made to Enron, WorldCom, and Argentina. There were rumors also circulating around that one of the nation’s largest airlines is close to going under. Business Week intimated that UAL may file for bankruptcy this year. A spokesman for the airline declined to comment on the Business Week story.

Still Watching The Banks
With Brazil now on the ropes, the IMF is considering giving the country more time to repay its $11 billion in loan payments due next year. We now see bankruptcies rising, companies as well as countries defaulting on their debt, credit spreads widening, and one has to wonder, Who is next? There is too much debt and the growth in derivatives has only compounded this situation. Over the last few weeks, worries and concern has started to spread over the nation’s top three banks and their exposure to derivatives. The current exposure exceeds J.P. Morgan Chase’s net equity. Even as large as Citigroup is, their current exposure could cause severe problems for the banks, especially if systemic risks throughout the world’s monetary system start to multiply as we are now starting to see unfold.

In fact, given the extent of their derivative book and considering that they are in all of the wrong places, it is hard not to imagine that one of these three banks are headed for trouble, if not all three. The banks are supposed to have risk control measures in place. Yet with derivative books this large, it doesn’t seem possible they can avoid the occurrence of future problems. In the case of JPM, their derivative book of $23.4 trillion and equity base of $40 billion is all that covers $51 billion in potential credit risk, not mentioning the $68.8 billion in derivative risk exposure. These three banks are in all of the wrong places -- corporate loans, loans to emerging markets, and counterparties to a Titanic-size derivative book. Add to this the fact that most of the derivative books of these major banks are of the OTC variety -- which means they are far riskier and less liquid -- it isn’t too imaginative to envision more problems occurring. A lot of the derivative business is based on blind faith and assumptions. These are the assumptions that are built into the derivative risk models that provide the theoretical pricing for much of these complex instruments.

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Andy -- Sharefin, 23:59:00 08/03/02 Sat

Here's the link to the CFTC responce

I would guess that they've said the same to Ted but that Ted doesn't agree with their opinions.
Neither do I......

You only need to look to the dominancy of the market makers to know that they can shift the prices when they choose to do so.

I would hazard a guess that a similar letter could have been penned by Gov't Authorities re Enron, World Com, et al, just a few years ago.

Time will tell the story & we only need wait and let the
price show the truth.

Say if JPM were to go down & the POS climbed 500% then you would have your answer.

I would guess if you asked Alan Greenspan about the Economy that he would smile & say all is OK and a receovery is coming.

Gov't bodies don't like to create an informed public.

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Strange reply to The Silver King Ted Butler -- Andy Hill, 23:31:08 08/02/02 Fri

Interesting link (sorry you must cut and paste I dont know any other way. Why respond to Ted Butler's this way instead of a reply to him directly as in the past? http://members.aol.com/borneagle/silver.html

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Fiat -- Sharefin, 20:38:19 08/02/02 Fri

Two Years Into the Worst Financial Crash in History

We are now two years into the worst market crash in world history, with the major stock markets already down some 50% from their peaks in 2000. The markets are now back to their 1997-98 levels, but carrying half a decade's more debt, leverage, and speculation. In market terms, we have crossed the peak and are now headed down the back side of a very steep mountain. How far and how fast we fall, is largely a matter of actions taken, or not taken, on fundamental economic policy. As long as the Bush Administration and the Federal Reserve maintain their Hooveresque "the economy is fundamentally sound" stance, we can expect sharp plunges, punctuated by futile attempts to bail out fictitious and unsalvageable market values.

A graphic example of how fast the markets can fall is the sharp plunge in the Dow from a high of 381 in September 1929, to the low 40s in June 1932, a fall of some 90% over two years. The Dow didn't break 100 points again until mid-1933, and did not rise above 300 points until early 1954.

~~~~
In the over-the-counter derivatives markets, it is relatively easy to keep giant derivatives disasters hidden, because no one knows unless the counterparties tell them. Other market participants and the regulators might find out in short order, but the public is rarely told, especially when the problem is serious. Still, actions taken in the wake of a crisis can provide tell-tale signs.

In the case of the derivatives crisis of 1997, the tell-tale sign was the mid-1997 emergence of the so-called "Asian crisis," which was actually a currency-warfare attack on the Asian Tiger economies by Anglo-American financial interests. In typical form, the bankers were attempting to postpone their own bankruptcy by stealing from the Asians. This assault continued into 1998, targetting one Tiger after another, generating billions of dollars in loot and sending funds fleeing to the relative safety of the U.S. financial markets. The result can be seen in the rise of U.S. stock markets during the period.

The game came to an abrupt halt in September 1998, when looting-target Russia caught the markets off-guard with a default on its GKO bonds and a devaluation of the ruble. The prospect of a sovereign default-the "debt bomb" policy advocated by LaRouche-sent the financial markets into panic, with investors fleeing speculative paper in favor of more secure U.S. and German government bonds. This, in turn, caused many derivatives speculators to hemorrhage money, with the markets moving in the opposite direction from their bets. Long-Term Capital Management, the giant Nobel Laureate hedge fund, went bankrupt and was bailed out by the banks at the urging of the Fed. Many other derivatives players, some considerably bigger than LTCM, were also grievously wounded.

In response, Greenspan and his central banking peers launched what speculator George Soros later called the "wall of money," flooding the markets with liquidity and promises, and a cover-up of the extent of the damage. Only later would the players admit what LaRouche said at the time: that the global financial system came within a hair of melting down in 1998.

It was this "wall of money" approach, combined with a liquidity injection under the guise of preventing potential Y2K problems and a regulatory blind eye to "creative bookkeeping," which led to the sharp rise in U.S. financial markets from late 1998 into early 2000.

The attempt to bail out the system in 1997 led to the blowup in 1998, at which point another bailout was launched which blew up in 2000. Since then, global markets have plunged, major corporations have collapsed, pensions and retirement funds have evaporated, and the financial system is disintegrating. But don't worry, because a bailout is in the works. After all, the markets always rebound, don't they?

Systemic Crisis
The U.S. stock market bubble was actually a global phenomenon, financed in part by huge flows of investment capital into the country. Money poured into the United States during the go-go 1980s, though that flow ebbed a bit when the U.S. banking system went under (the Fed secretly took control of Citicorp and arranged shotgun marriages for the big banks) after the real estate market collapsed. To save the day, the financiers unleashed the derivatives market, unpayable debt was rolled over, and financial deregulation escalated. Changes in the tax codes allowed money that previously would have been paid in taxes to instead be gambled in the markets, and corporations used money that should have been invested in their business activities to support their stock price. The bubble soared, but the physical economy suffered, as health care, education, transportation, goods production, and research and development were all choked back in order to feed the bubble.

As the bubble grew, the cash poured in, but that process abruptly reversed after the market peaked in 2000 (Figure 7). The decline in U.S. stocks led to a decline in the inflow of foreign capital, which in turn further depressed stocks. This process was ameliorated by the strong dollar, because the rising dollar increased the profits of foreign investors as the markets rose, and reduced their losses as the markets fell. However, in 2002, the weakness of the U.S. economy has caused the dollar to fall, including a sharp fall against the euro (Figure 8).

The process defined by a falling stock market, a falling dollar, and reduced foreign capital inflows spells doom for the U.S. financial bubble, and when the United States falls, the world falls with it. Add to that the outbreaks of this systemic disease in Japan, Argentina, Brazil, Turkey, and other nations, including growing problems within Europe, and you have a prescription for disaster.

Sinking Banks
In all the corporate disasters breaking out in the United States, two names keep cropping up with uncanny regularity: J.P. Morgan Chase & Co. and Citigroup. Both were major lenders to Enron, and according to a report by the U.S. Senate Permanent Subcommittee for Investigations, both banks were active participants in Enron's fraud, using offshore affiliates to help Enron disguise loans as energy trades. Both banks lent heavily to the energy-pirate and telecom sectors, and are undoubtedly facing losses in the billions of dollars as those sectors vaporize.

J.P. Morgan Chase is the result of the acquisition of J.P. Morgan & Co. by the bigger Chase Manhattan. The deal, which closed on the last day of 2000, has been an absolute disaster as measured in ordinary-and therefore misleading-market terms. The market capitalization of the combined Morgan Chase is now less than that of Chase alone on the day before the merger, with Morgan (or at least its equivalent value) having simply vaporized (Figure 9). This is not surprising, as it was likely a bankruptcy at Morgan, and perhaps Chase as well, which led to the takeover of the aristocratic Morgan by the commoners at Chase.

The merger only bought a few months. Indications are that Morgan Chase blew up in mid-2001 and was secretly taken over by the Fed, similar to the way Citigroup's predecessor, Citicorp, was in 1989. During the fourth quarter of 2001, Morgan Chase combined its two lead banks, Chase Manhattan Bank and Morgan Guaranty Trust. As part of that process, $125 billion in assets and $7 trillion in derivatives simply disappeared from the combined banks' books, suggesting major financial problems. Still, with $24 trillion, Morgan Chase has more derivatives than any other bank in the world, and more than enough to make a spectacular explosion.

Citigroup may be under Fed control as well, as rumors of major derivatives losses circulate. Citigroup is the result of the 1998 takeover of Citicorp by Travelers Insurance, creating what is now the largest bank in the United States, with just over $1 trillion in assets and $9 trillion in derivatives. On July 18, Saudi Prince Alwaleed bin Talal, Citigroup's largest individual shareholder, said that he had invested another $500 million in the bank, raising his holding to $10 billion. Alwaleed, a nephew of Saudi King Fahd, obtained his initial stake in the bank shortly after the Fed took it over in 1989 and began arranging a bailout. The latest cash infusion raises suspicion that Alwaleed is performing a similar service for Citigroup.

Not to be left out is Bank of America, whose $620 billion in assets puts it third behind Citigroup's $1 trillion and Morgan Chase's $713 billion. Bank of America's $10 trillion in derivatives puts it solidly on the hot seat in any financial crisis, and it has also loaned heavily to bankrupt companies. Rumors are flying that Bank of America has applied to the Fed for a secret bailout.

If the Fed winds up running the three biggest banks in the country, who's going to bail out the Fed?

Mutual funds, pension funds, and insurance companies are also big holders of stocks and have been hard hit by the decline. There's a lot more damage out there than has been admitted so far, and the hemorrhaging is continuing.

~~~~~~~

IN GOLD I TRUST.......

---

Gold - from TVX -- Sharefin, 09:44:09 08/02/02 Fri

Fundamentals for Gold for new investors
========================================
========================================
INVESTMENT POOL:
================


GLOBAL FINANCIAL PROFILE

...$7.5 trillion Amount invested or saved worldwide in 2000

$1.7 trillion Amount invested in developing countries in 2000


Portfolio investment (stocks and stock funds)

$50 trillion Estimated total value of world stocks, bonds, securities and
other financial assets

$37 trillion Total global equity market capitalization

40 per cent Share of global equity market capitalization located in the
United States

20 per cent Share in continental Europe

10 per cent Share in the emerging economies

20 per cent Drop in value of all world equity funds in 2000

32 per cent Drop in value of emerging market equity funds in 2000...

I found this while looking for info on total worldwide assets

Now if this is accurate then it certainly wouldn't take much to move
the POG. Since the value of the world's gold is currently about $1.3
Trillion($300 * 4.4 billion ounces), it would not take a large shift
of assets to double the value of physical gold. A shift of 2.6% would
do it.

Since there is 7.5 trillion apparently INVESTED every year, you
wouldn't even need a SHIFT of assets to gold. What would happen if
people just invested 1/3 of their new investment money in gold? After
what folks have been exposed to over the last two years or so what is
their confidence in regards to investing in the market?

Then we can tackle the 100 billion or so dollars in equity value of
all the gold stocks in the world. That is another monumental
opportunity. There is only TWO TENTHS OF ONE PERCENT OF ALL EQUITY
invested in the gold share market right now. Many financial advisors
are cautioning people not to go overboard and to only invest 5% of
their capital in hard assets. Do you realize if they did only that,
that ALL gold shares would be worth TWENTY-FIVE TIMES what their value
is today?

THOSE, folks, are some of the reasons why gold investors are currently
such confident holders of their stock. The risk reward/ratio in this
market is phenomenal


....we just need to get past a little glitch called government interference.

source of stats

ALSO:

Gold Stats
by: zeromarginerror
02/27/02 12:54 pm
Msg: 108290 of 108317

All the central banks/govt's of the world own collectively about 1 billion ounces.

If America has 300 million people, and 10% of these are millionaires,
that's 30 million people.

If these 30 million people put 1% of $ 1 million into gold bullion coins,
(hardly a large hedge) that would equal a $ 10,000 investment per
millionaire. At today's gold price of $ 300/ounce, that would collectively
buy, you got it, 1 billion ounces of gold.

All this goes to show how tiny the gold market is, and how great the
potential, also, if this rich country of America ever gets gold fever in a
serious way, such as is happening in Japan now. Of course, gold would not
be at $ 300 an ounce if this were to occur. By the way, that 1 billion ounces
of demand would take about 12 years of current gold production at the
current rate of 2500 tonnes per year.....



SUPPLY/DEMAND FUNDAMENTALS:
===========================

- Total demand is approximately 4800 tons according to RBC Global
Investment Management*

- Gold mine supply is approximately 2,600 tons and is expected to fall
by 25% over the next 5 to 7 years if gold remains at $300 according to RBC

- The difference is made up of scrap supply(recycling, which is
estimated to be 600 tons), CB(central bank) selling for the most part
and forward sales.

- CB's have been loaning out their gold to be sold forward for the
last decade. Even the gold bears will acknowledge that the CB's have
loaned out close to 5,000 tons of their gold. The gold bulls put the
figure at around 15,000 tons with some saying it is up to 30,000 tons.
CB's only have about 33,000 tons of gold including that which they
have loaned out to be sold. The gold they loaned needs to be paid
back. With a current supply demand deficit that CB's themselves are
patching up, where are those who sold the gold into the market going
to get the gold to pay back the CB's?! If a price of $300 per ounce
will only get 3,200 tons onto the market how high must gold go to make
up for the minimum 5,000 ton short position to be satisfied? Assuming
that these loans are paid back at 500 tons per year the gold market
will need to make up AT LEAST an extra 2,100 tons PER YEAR for TEN
years, between mine and scrap supply and gold demand plus gold debts
owed, to balance the market. One expert predicts that the gold
equlibrium price is $600 per ounce.

- The president of Newmont mining puts the elasticity of the POG at $5
for every 100 tons of extra demand. In other words for every 100 tons
that needs to be satisfied, it will take a $5 higher price move to do
it. Since it is probably near impossible for mine supply to make up
the difference between the CB short position and the market, then the
only place that could satisfy demand is a higher gold price to coax
sellers into the market. That being said it would take a price of
$250((5000 / 100) = 50 * $5 = $250) higher just to make up the gold
short position ALONE. If you also include the 1600 ton yearly supply
deficit this is another $80. THAT equals a gold price that is close to
$650!! Of course if gold gets anywhere near $500 in a quick amount of
time demand will shoot through the roof so what we will have is a
compounding demand problem for the shorts!! A good example of that is
that recently on the gold futures market alone, open interest went up
fifty percent(from 80,000 contracts, representing 8 million ounces of
gold, to 120,000 contracts, representing 12 million ounces of gold) in
the most popular contract based on the move from $270 to $310. Can you
imagine the demand if gold were to rise to levels not seen in 20 years?

- A few years ago in the late '90's it was stated that 75% of all
mines are losing money below $300 per ounce. In the past this price
deficit was made up by forward selling (where the 5000 ton deficit
came from) which is slowly beginning to be eliminated and high
grading, a practice which mines deposits that only have higher
percentages of gold. I don't know the current numbers for mine cost
but the numbers I gave are only a few years old and things don't
change too quickly in the gold mining business.

World Gold Exploration (dollars spent)

US $million

1997 3,600
1998 2,350
1999 1,665
2000 1,400
2001 1,200
2002 1,000

(numbers via the world gold council and CIBC**)

This is with the understanding that it takes years(up to seven
according to the president of Newmont mining) for a gold mine to
produce the metal(slow infrastructure build time) ONCE AND IF
EXPLORATION HAS FOUND IT!

Most of the older shareholders in the gold market know these facts.
They realize that at current prices gold and gold stocks are still on SALE.

*RBC report can be found here:

RBC report

**CIBC report can be found here:

Keep it simple.

Bill O’Reilly always says, "keep it short and pithy" in reference to e-mails. I have been told at times that my Storm Updates are "a lengthy read.” The reason for their length is that they reflect the damage and the complexity of the nation's economic and market infrastructure as well as the unwinding of the world’s present monetary system. These issues can’t be discussed in simple prose or in short pithy essays. Monetary policy and its impact on the financial markets, the economy and the credit systems are complex subjects. I don’t need to tell you about the thickness of economic books. Needless to say, economic and financial issues are complex subjects that take time to explain, especially now since systemic risk exists everywhere. The world’s monetary system based on the dollar is in the process of unraveling. The expansion of monetary policy in the 1990’s and its concomitant explosion of credit fed into the financial system creating multiple bubbles in the economy and the financial system.

---

GATA & Gold -- Sharefin, 07:34:47 08/02/02 Fri

GATA chairman urges Senate to interrogate Morgan -- and you should too!

Dear Friend of GATA and Gold:

GATA Chairman Bill Murphy has sent the
following letter to the U.S. Senate's
Permanent Subcommittee on Investigations, and
we ask that our supporters in the United
States send similar letters to their own
senators.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Dear Senator:

J.P. Morgan Chase Chief Executive Officer
William B. Harrison's response to the
Senate's Permanent Subcommittee on
Investigations was notable for what it did
not say.

Morgan Chase and Citigroup have been
unlawfully manipulating the price of gold for
many years, according to the findings of the
Gold Anti-Trust Action Committee, of which I
am chairman. Our evidence of that
manipulation may be reviewed at www.GATA.org.

The committee might want to query Morgan
Chase and Citigroup Weill about their gold
derivative positions, as these are related to
the Senate's investigation. According to the
U.S. Comptroller of the Currency, two-thirds
of the total gold derivatives at reporting
banks are concentrated at these two
institutions. Significantly, the gold
derivatives at Morgan and Citibank jumped in
the first quarter of this year, in stark
contrast with gold derivatives at the other
reporting banks.

Following are some questions you might like
to ask Mr. Harrison. He should have no
problem answering them, since he stated the
following in his written response to the
committee: "As the largest corporate lender
in the world, transparency is key to our
business."

1. Have J.P. Morgan Chase, its subsidiaries,
its special-purpose entities, related
companies, or agents acting on its behalf
conducted any gold-related transactions with
the U.S. Federal Reserve System, the U.S.
Treasury Department, the U.S. Exchange
Stabilization Fund, or any other part of the
U.S. government, directly or via an
intermediary, in the last 20 years?

2. If so, specifically what transactions were
these?

3. Do such arrangements continue? If so, what
is their status?

4. What is the size of such transactions?

5. What was the purpose of such transactions?
Were they conducted for investment reasons,
or was there a stated or implied intent to
depress the price of gold?

6. According to the Quarter 1 2002
derivatives report from the Office of the
Comptroller of the Currency, the notional
value of gold derivatives on the books of
Morgan Chase stood at $45.234 billion, a
12.24 percent increase from the Quarter 4
2001 figure of $41.049 billion. Exactly what
accounts for this large increase? Is the
expansion of the gold derivative book the
result of increased gold borrowing or
swapping with one or more central banks?

7. Does the figure of $45.234 billion
effectively represent the size of Morgan
Chase's gold loan book? Further, does this
figure represent position data indicating the
size of Morgan Chase's gold loan book at a
point in time, or is it transaction data
representing the turnover of various gold
derivatives?

8. Is Morgan Chase aware of any effort on the
part of bullion banks or central banks aimed
at depressing the price of gold?

9. Has Morgan Chase, including its
predecessor, subsidiary, and related
companies or related entities, ever engaged
in a gold swap with the Federal Reserve, the
U.S. Treasury Department, the U.S. Exchange
Stabilization Fund, or another U.S.
government agency? If so, how large was the
transaction and what was its purpose? Does
such an arrangement continue?

10. Has any government entity, domestic or
foreign, provided any sort of guarantee to
cover losses suffered by Morgan Chase in the
gold market? If so, specifically what
guarantees? Did Morgan Chase engage in any
gold-related transactions with the knowledge
that a government entity was prepared to
cover any of Morgan Chase's losses?

11. Morgan Chase maintains the largest gold
derivative position of all U.S. banks at $41
billion. Does Morgan Chase carry those gold
derivatives as balance-sheet assets?

12. What entity is the original source of
gold used for those derivatives? What records
exist for any such transactions?

13. Was the gold involved purchased? If so,
where, when, and at what price? If the gold
was borrowed, how is it the Morgan Chase gold
derivatives are now listed as balance-sheet
assets?

14. Are the Morgan Chase gold derivatives
established largely to enhance the
counterparty's short or long side of the
commodities trade?

15. Was Enron ever a counterparty to any
Morgan Chase precious metals derivatives?

16. Did Morgan Chase's long-standing precious
metals derivatives trading manager, Dinsa
Mehta, recently leave his job? Why?

17. How much in terms of troy ounces and U.S.
dollars are Morgan Chase's direct, indirect,
and contingent liabilities to pay gold? What
is the maturity of each of those liabilities?

I believe that Morgan Chase is a subsidiary
of the Morgan bank holding company. So you
might want to expand the investigation to the
non-bank parent as well as the bank
subsidiary to something like the following:

18. Have Morgan Chase (the holding company
and banking subsidiary), its subsidiaries,
special-purpose entities, related companies,
or agents conducted any gold-related
transactions with the U.S. Federal Reserve
System, the U.S. Treasury Department, the
U.S. Exchange Stabilization Fund, or any
other U.S. government entity, either directly
or via an intermediary in the last 20 years?

19. Was Morgan Chase ever formally implicated
in inappropriate metals market trading
practices? Did it pay a fine? In that
inappropriate metals trading activity (the
Hamanaka, Sumitomo copper market case in
1993), did Morgan Chase use offshore accounts
similar to those in the Enron operations?
What was the design goal of the trades -- to
enhance the counter-party's short or long
side of the trade? Did Morgan Chase or
Sumitomo's Hamanaka first suggest the
offshore account technique?

You might also like to ask Enron the
following questions:

1. Did Enron possess a precious metals
trading license from the London Bullion
Market Association? What did that license
cost?

2. What was the nature (which metal) and
magnitude (quarterly size) of Enron's
precious metals trades?

3. Were precious metals trades integrated in
any way with Enron's energy trades?

4. Were the Enron precious metals trades
facilitated in any way by Morgan Chase or any
of its offshore affiliated entities such as
Mahonia? Which Morgan Chase entities were
involved? To what quarterly magnitude?

5. Who first suggested that Enron get
involved in precious metals activities? When
was this suggestion made?

6. Was Enron ever a counterparty to any
Morgan Chase precious metals derivatives?

7. Did Morgan Chase's long-standing precious
metals derivatives trading manager Dinsa
Mehta recently leave his duties? Why?

It would be my pleasure to go Washington to
meet with your committee on this matter.

All the best,

BILL MURPHY, Chairman
Gold Anti-Trust Action Committee

---

GATA & Gold -- Sharefin, 07:32:08 08/02/02 Fri

An open letter to the central banks about their leased gold

Dear Friend of GATA and Gold:

Here's a letter written by James Sinclair,
CEO of Tan Range Exploration and a veteran
executive in the gold business, and Harry
Schultz, editor of the International Harry
Schultz Letter, that GATA asks its supporters
to send to their country's central bank. A
directory of central banks has been posted
here:

http://www.lemetropolecafe.com/Ni2/CentralBanks.html

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Dear People:

Do you know that Enron has been reported to
have many derivative transactions in gold?

Do you know that gold producers represent
only 11 percent of the notional value of gold
derivatives reported on the books of the
international commercial banks by the
International Monetary Fund? Therefore,
approximately 89 percent of the ultimate
beneficiaries of gold you have leased have no
gold production with which to replace your
gold.

Do you know who has been the ultimate
beneficiary of all the gold leases you have
been party to?

Do you know that in time you might be
revealed to have inadvertently financed
corporate crimes, as with Enron?

Do you realize that it is impossible at
present market levels for the gold that you
have leased to be returned as gold?

Do you know that the ultimate beneficiaries
of the gold you have leased are poor credit
risks and getting worse?

Do you realize that as the investigations
into the affairs of the corporate criminals
progress, you may well lose all the gold you
have leased, financed crime, and failed a
national trust?

As head of a central bank, now that you are
informed, you are obliged to investigate the
practices of gold leasing and take
appropriate measures to stop financing crime.

Sincerely yours,

James Sinclair and Harry Schultz

---

Gold -- Sharefin, 07:29:45 08/02/02 Fri

Gold specialist sees growing shine in metal's prospects

For one thing, he says the gold market cycle tends to last about 30 months, which suggests it has another nine months to run, before gold prices begin to soften again.

Furthermore, Mr. Holmes says the performance of gold and gold stocks is negatively correlated with the Standard & Poor's 500-stock index. For example, gold stocks tripled in value over a three-year period in the early 1990s, a period of soft stock markets.

So far this year, the S&P 500 is down 22.94 per cent, while the Philadelphia gold and silver index is up 14.04 per cent.

Furthermore, gold companies have said they plan to reduce their hedging programs, which could have the short-term effect of pushing the bullion price higher. And central bank holdings of bullion have fallen to the levels of the 1950s, he said. In addition, exploration expenditures by mining companies have fallen sharply since 1997. That will affect supply down the road.

He feels that the price of bullion could rise into the $375-to-$400 range by the first quarter of 2003.

---

Fiat -- Sharefin, 06:23:44 08/02/02 Fri

Investors pull $47bn out of equity mutual funds

Investors continued to flee a grim US stock market in July, with early industry estimates suggesting that some $47bn was pulled out of equity mutual funds - the largest net monthly outflow in history, according to new data. The forecasts have raised concerns that investors are losing faith in equities and could further upset an already volatile market.

---

Gold -- Sharefin, 06:12:44 08/02/02 Fri

U.S. Housing Bust Another Step Towards $1,245 Gold

We need to now turn to how "inflation" relates to the coming U.S. Housing Bust and the future for Gold, a simple motivation. Federal Reserve policy is established based on a faulty assumption that the CPI is an adequate measure of price stability. That measure is likely to rise causing the Federal Reserve to respond by tightening monetary policy and bursting an already shaky Housing Bubble..

---

Gold -- Sharefin, 06:08:55 08/02/02 Fri

India to step up gold imports shortly

India, the world's largest gold consumer, is likely to latch on to easing global prices and step up imports ahead of the festival season which starts next month, but demand will be sharply lower than last year, traders have said.

Local gold prices are derived from global prices as India imports nearly 70% of its annual demand of about 850 tonnes, accounting for over 20% of the world gold demand.

Traders have estimated that local gold demand could fall by 25-30% in 2002 from about 855 tonnes in the previous year.

---

Gold -- Sharefin, 06:07:14 08/02/02 Fri

DEMAND FOR GOLD RISES IN PAKISTAN IN Q1

Demand of gold in Pakistan rose to 41 tonnes during the first quarter of the year 2002, showing an increase of 38 per cent against the corresponding period of last year.

---

Gold -- Sharefin, 06:04:04 08/02/02 Fri

Gold Fields reports record Q4 earnings

Gold Fields, the South African gold miner, on Thursday reported record earnings for the fourth quarter as it built on a third successive quarter of gains.

---

Gold -- Sharefin, 05:56:05 08/02/02 Fri

Mining charter will bring SA to its knees

JOHANNESBURG - Gaping holes have begun to appear in the government's blueprint for black empowerment in the mining industry, with senior market commentators warning that the planned ownership change of the country's mining assets will bring the country to its knees.

---

Gold -- Sharefin, 05:54:37 08/02/02 Fri

Australia's AurionGold Still Rejects Placer Dome Bid

---

Gold -- Sharefin, 05:40:39 08/02/02 Fri

AngloGold lops 2.4m oz off hedge

AngloGold, South Africa's largest gold producer, confirmed today it had reduced its hedge book 2.4 million ounces bringing the total reduction this financial year to 4.1 million ounces, about 33 percent of its total book.

AngloGold puts brakes on hedge buyback

South Africa's number one gold producer says it will slow down an aggressive hedge buyback policy, which it says has been a dominant force in buoying the gold price. Nonetheless, the group says it remains positive about the prospects for the gold price.


Kelvin Williams: Executive director, marketing, AngloGold

The main issue of the quarterly results issued today was the further reduction of the hedge. Are jewellers still buying, and what is happening in the Chinese market?

---

Gold -- Sharefin, 05:36:48 08/02/02 Fri

New charts for goldbugs - click here.

Here's a new series of charts covering spot prices and global gold indices and also specializing in Australian Gold Indices.

The charts are laid out in daily/weekly/monthly series with 9/18 moving averages.

The series cover:
Spot Gold
Spot Silver
US Gold Indices - XAU - HUI - GOX
SA Gold Index
Canadian Gold Index
Australian Gold Indices - GR-100 - GR-50 - GR-20 - GR-International

These charts will be updated daily.

Please enjoy....^o-o^....

---

XAU 2 Day / 5 Min -- SilverDragon, 09:00:28 08/01/02 Thu

XAU 2 Day / 5 Min

On the ‘XAU 2 Day / 5 Min’ you can see the ‘Break Out / Pull Back’ more clearly…

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=us%3Axau&sid=&o_symb=us%3Axau&freq=6&time=2

SilverDragon

---

XAU 10 Day… 15 Min … Keep Em Crossed!!! -- SilverDragon, 08:45:20 08/01/02 Thu

XAU 10 Day… 15 Min … Keep Em Crossed!!!

On the XAU 10 Day / 15 Min …

· Large Double Bottom
· Bounce on the 15 Min Rising Bottom Line
· Through the Declining Tops Line
· Pull back to the Declining Tops Line

KEEP EM CROSSED!!!

SilverDragon

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=us%3Axau&sid=&o_symb=us%3Axau&freq=7&time=18

---

Dr John Coleman on Jeff Rense show -- Giovanni Dioro, 13:58:32 07/31/02 Wed

Dr John Coleman is due to appear on the Jeff Rense show Thursday evening as one of 2 guests. If you can't listen live, the shows are archived. Dr Coleman will be talking about the economy and why gold and especially silver are good investments.

Jeff Rense Program

---

Gold -- Sharefin, 06:48:15 07/31/02 Wed

Jim Sinclair on at 5:05pm Wednesday

The Tom O'Brien Show will have Jim Sinclair on his radio
show tomorrow at 5:05PM - Get his up-to-the-minute
call on gold & the hottest issue in the financial world -
the NY Banks & the Derivatives Trap: DON'T MISS HIM!
(Tom is on daily M-F from 4-6PM EST)

---

Fiat -- Sharefin, 06:41:55 07/31/02 Wed

Uruguay's Peso Falls After Banks Ordered Closed

Uruguay's government temporarily halted activity at all banks on Tuesday to stop a crippling run on deposits, sparking a slide of over 14 percent in the value of the peso.

Worried depositors who lined up at banks found that cash machines had been turned off after the South American nation's spiraling recession, due in part to turmoil in neighbors Brazil and Argentina, forced the first bank holiday in decades.

---

Gold -- Sharefin, 06:22:22 07/31/02 Wed

08:54 ET Stocks to Watch: : Goldman Sachs raised its rating on the gold
sector to MARKET OVERWEIGHT from Market Weight, saying it believes the
dollar will continue to weaken, govt. deficits will continue to widen, and
investors will continue to look for alternative asset choices to diversify
their investments. FCX, ABX, LIHRY, RIO, AU and PDG received separate
upgrades to reflect the firm's upbeat view of the sector. Patrick J. O'Hare,
Briefing.com

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Gold -- Sharefin, 06:10:04 07/31/02 Wed

Coin smashes auction record

A very rare gold coin has been sold at auction in New York for a record $7.5m.
The $20 coin, known as a double eagle, took less than 10 minutes to sell to a telephone bidder.

The previous record auction price for a coin was just over $4.1m, paid in August 1999 for an 1804 US silver dollar.

The double eagle was minted in 1933, but never went into circulation.

President Franklin D Roosevelt ordered the destruction of all 500,000 of the coins, but one survived and went missing for 60 years.

It was legally on sale for the first time.

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Gold -- Sharefin, 05:50:44 07/31/02 Wed

Bernie Schaeffer: Gold Still Precious in My Book

I turned bullish on gold on December 18, 2001 and my opinion has not changed in the wake of the recent pullback in gold and the even sharper decline in gold shares.

From a fundamental perspective, I believe the case for gold remains sound. In fact, my assessment is that the financial markets do not currently assign sufficient weight to the possibility of major negative developments such as a dollar collapse, a stock market crash that takes out the recent "bottom." a U.S. debt implosion, foreign market contagion, war and terrorist attacks. A position in gold and gold shares is an intelligent hedge against such developments.

Another bullish factor from the fundamental perspective is that the market capitalization of the entire gold mining industry is comparable to the market cap of a single large-cap tech stock - Dell Computer. This indicates two things to me. First, the gold stocks are far from being priced at "bubble levels." And second, if just a fraction of the money currently invested in non-gold equities moved to gold stocks, there would be an explosive rally in the golds, perhaps to multiples of current price levels.

From a technical standpoint, there are numerous indicators showing support for gold and gold stocks after their recent declines.

My advice to those who are long gold and/or gold stocks is to hold their positions. If you have not yet made any purchases in this sector, the sharp correction off the May peaks presents a good opportunity for you to leg in.

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Fiat -- Sharefin, 05:46:54 07/31/02 Wed

'Dr Doom' sees more market pain

Asked whether a panic could set in, Mr Dye said, "There's always that risk in financial markets because there tends to be trend-adaptive behaviour by the participants - which means that we actually act like animals in herds."

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Gold -- Sharefin, 21:04:43 07/29/02 Mon

Gold Off Lows, Consolidating

All eyes were focused on the equity markets and the U.S. dollar for signs of further strength on both fronts that could be seen as detrimental to gold.

However, the fund selling pressure seen Friday died down somewhat Monday morning to keep Aug off Friday's lows of $300.50, and the $300 region remains touted as initial support on any further dips.

Indeed, Ian McDonald, manager of precious metals trading at Commerzbank in New York, said he expected the $300 level to provide a floor for the Aug gold market for the time being as the market enters a "much-needed and welcomed consolidatory phase."

He added that "trickles" of physical buying were beginning to re-emerge in the $300 region, which were seen as encouraging. The prevailing strength Monday morning in the dollar and equity markets, though, limited overall buy-side interest to "pullbacks only."

Gold was expected to hold in a broad $300-$320 range for the short to medium term as prices continue to consolidate, he added, but in the longer run it would move higher again as the dollar continues to suffer further attrition against other currencies and equity markets remain jumpy.

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Gold -- Sharefin, 21:01:52 07/29/02 Mon

Gold nears US300/oz

WHILE the rest of the market celebrated yesterday, gold stocks were hammered as bullion prices slid to within a whisker of the psychological $US300 per ounce barrier.

Reflecting the strong rises posted by the US sharemarket and dollar at the weekend, gold lived up to its contrarian reputation, shedding $US7.35 to finish the day at $US302.15/oz. Gold has now fallen 8 per cent since peaking at $US328/oz in early June.

With signs that the US dollar is regaining the eye of global investors, analysts warned that in the absence of further major accounting scandals and threats of terrorism, bullion prices were likely to fall further over the next quarter at least.

Lihir Gold plunged 10¢ to $1.06 after reporting that taxes owed on forward sales had contributed to an 80 per cent dive in first half net earnings to just $US4.2 million.

Number two producer Newcrest Mining also fell 6¢ to finish at $5.80, despite expectations it will be the next Australian miner to draw the eye of cashed up offshore predators like AngloGold and Barrick.

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Gold -- Sharefin, 21:00:03 07/29/02 Mon

Harmony accepts offer for AurionGold

Harmony Gold, South Africa's third largest bullion miner, has accepted Canadian miner Placer Dome's offer for its 9.8% or 43.350 million shares in AurionGold.

Harmony chief executive, Bernard Swanepoel, said: "The Placer Dome offer is logical and adds value for AurionGold shareholders. In our view, the terms of Placer Dome's offer are attractive and represent fair value for AurionGold.

We believe that the revised offer is substantially above the price at which AurionGold would trade in the absence of the offer or if the Place offers did not proceed.

We look forward to becoming a Placer Dome shareholder and expect its price to reflect the benefits of the acquisition of AurionGold."

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Gold -- Sharefin, 20:56:53 07/29/02 Mon

Leaked mining document to be discussed on Tuesday

The draft manifesto, which proposes that 51% of all new mining projects must be owned by black entrepreneurs within 10 years, was leaked to internet news service Miningweb last week shortly after the minister distributed it to mining companies, the Chamber of Mines and other role players in the industry.

Tuesday's action is an effort to restore confidence in the mining industry and to repair the damage caused to investor confidence by rumours. Mining company share prices have already fallen sharply since the document was leaked on Friday.

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EL Dorado Found? -- Kagalaska, 20:55:24 07/29/02 Mon

Interesting link http://www.godlikeproductions.com/bbs/message.php?message=2328&topic=3

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Gold -- Sharefin, 20:11:34 07/29/02 Mon

Gold market seen undergoing return to bear market

Gold investors let go of their holdings in droves last week, causing the steepest one-week decline in over 2-1/12 years, with many sellers of the sometimes safe-haven asset ignoring renewed terrorist threats and volatile stock prices to reposition for a bear market.

Dealers and analysts said they think many players are now betting that gold's glory days are over.

"The safe-haven is coming out of gold and going back in to other markets. It's served its purpose. It's held its value. Now the stock market has come down sharply and the sense is that opportunity is elsewhere," said a dealer at a large bank.

"They're betting that the top is in," he added. "People are shifting out of gold and back into other markets."

With financial markets in general looking topsy-turvy last week, many gold watchers were perplexed when the flight to safety play seemed to be unwinding along with share prices.

And while some bullion dealers with customers who straddle both markets needed to raise ready cash through gold sales, others pointed out that the more savvy investors had been off loading gold even before last week's stock market thrashing.

Others pointed out that a primary driver of gold to its recent chart tops was U.S. dollar weakness. In the week before the precipitous stock market slide, they said, gold failed to benefit from continued dollar weakness, indicating to some that gold had seen its best prices.

"The seeds for gold's downfall were sown when we were making new lows on the dollar, new lows on the equity market and gold was struggling at $323.50 (an ounce)," he said.

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Fiat -- Sharefin, 20:00:54 07/29/02 Mon

'Fannie and Freddie Were Lenders': US Real Estate Bubble Nears Its End

The U.S. financial system is now dependent to an unprecedented degree upon one prop: the greatest housing-real estate bubble in human history. A hyperinflationary spiral has sent home prices shooting up by 10-40% annually in recent years-depending on the region of the country-and artificially pushed the price of millions of homes into the $400,000 to $1 million range or above. Already in 2001, one out of every ten homes for sale in the United States was priced at $1,000,000 or more. Since then, prices, assessments, real estate taxes, and mortgage credit volume have continued to spiral upwards, even as the productive economy staggered downhill. Many homes today are simultaneously glorified shacks-with plastic exteriors and gold-plated faucets in the bathroom-and yet unaffordable to most American families.

This housing bubble is without precedent, far larger than the 18th-Century Mississippi Bubble of Venetian-Scottish agent John Law. In 1717, Law established the Mississippi Company and issued shares to the public, initially against the supposed wealth to be drained from France's Louisiana Territories in North America, and eventually against the value of all of France's colonial trade. These were shares, effectively, against ground-rent. In 1719, the value of the Mississippi Company's paper shares rose to 40 times their original value, and many times the wealth that possibly could back them up. In 1720, the shares collapsed, bankrupting the nation of France. The U.S. housing bubble's stated ground-rent value is 1,000 times greater than that of the Mississippi Bubble. Unless corrective measures are taken, the inevitable collapse and the ensuing devastation will destroy millions of families.

The cumulative value of all homes in America is now an astounding $12.04 trillion, which is only $3 trillion less than the hyperinflated value of all the stocks traded in America. People have been deluded into buying homes in the $250,000 to $500,000 range, on the grounds that if they can hold on to them for two to five years, they will be able to re-sell them at an even higher price; or, alternatively, that these are the only homes available, and that if they don't buy them now, however overpriced, prices will go even higher and become further out of reach. Millions of families are spending 35 to 50% of their annual income on mortgage or rent payments.

There is a physical constraint on their ability to pay, and thus, ultimately, a constraint on the housing bubble itself: These families are one or two missed paychecks, or the loss of a job, away from defaulting on a mortgage. Default rates on mortgages insured by the Federal Housing Administration-used primarily by families of middle or modest income-have recently reached 10% in some urban areas of the United States. As a wave of cumulative mortgage defaults spreads, the housing market will implode, wiping out trillions of dollars in housing values.

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Gold -- Sharefin, 19:43:36 07/29/02 Mon

Gold down - but not out?

Gold's giving way was another triumph for Dow Theory Letters' Richard Russell. He shocked the metal's friends with a special bulletin last Tuesday night warning that gold stocks had broken down on a technical basis -- right in time for the rout.

But this Russell call illustrates his weaknesses as well as his strengths. Only a couple of weeks ago, he was predicting that gold would go "to the moon."

Although his discipline in responding to price action is impressive, it does make you wonder how much his longer-run rationalizations about i