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Gold -- Sharefin, 18:35:07 12/22/02 Sun

Gold hedge fever

Hedging gold price risk may allow a producer to make greater profits, and may depress the price of gold in the process. Is that any reason to sue?

Gold -- Sharefin, 18:30:04 12/22/02 Sun

Did gold need a lawyer to get past $350?

Seems like Timmy's going off the deep end.
Ridicule or rediculous?

Gold -- Sharefin, 18:24:35 12/22/02 Sun

Blanchard blacklists Mineweb

Blanchard & Company has retracted its promise to answer written questions from Mineweb because we have expressed an opinion on its law suit against Barrick. The following letter was sent by Blanchard media relations employee Neal Ryan:

Mr. Wood,
It has come to our attention that you have already made several public statements in relation to the Blanchard suit (Toronto Globe & Mail 12/19/02) and because of this have now lost journalistic integrity needed to report a fair and equal representation of our side of the story.

Gold -- Sharefin, 18:21:15 12/22/02 Sun

Charting the gold price

MINEWEB: We’ve listened to the fundamental view on gold. Let’s find out now what one of the country’s leading technical analysts has to say. Gregor Krall from NIB Securities joins us from Cape Town. Gregor, what say your charts? Could this move to around $350 an ounce for gold? Could that be the start of the rush beyond, say, $400?
GREGOR KRALL: It’s an interesting question, Byron, good evening, thanks for the opportunity. I think in the short term there’s a bit of a premium price and, in terms of the technical triangle formation that broke out at $326/oz it had an upside target of around where we got to this morning at $350, - in fact it was anywhere between $350 and $360. So, from a technical perspective it’s been behaving itself extremely well, but on the longer term basis what is really exciting is the break above $338, and that’s the October ’99 high for gold in dollar terms. And basically what that says is you’re looking at a bigger formation there, which has got an upside to around the $420 an ounce level. So I would be looking for a short-term pullback. Possibly even today’s action in terms of Japanese candlesticks could be a shooting star, so it could well be a short-term top. Perhaps a drift back to the mid $330s and then I would really be a buyer, because I think it really is an exciting longer term formation. So your previous guests I would almost disagree with. I think that it may be a range play, but there’s good upside in gold in the medium term

Gold -- Sharefin, 18:17:19 12/22/02 Sun

Andy Smith: Mitsui analyst

Next up is the precious metals analyst who has been described as the gold industry’s one-man demolition derby. It’s none other than Andy Smith from Mitsui Metals. Andy, the last time we had you on this programme, that was in October, the gold price then was floating around the $320 per ounce level. You weren’t too optimistic about gold’s prospects, but in the last 24 hours it has nibbled its way through the $350 level. Is it safe to assume that you don’t think this latest move is all that sustainable?

Right Andy, we’ll forgive you this time round for getting it wrong,

Well, I’m afraid you’re pushing your luck there. The further out you go, the more rational and therefore bearish I have to be.

The market keeps moving on me, and I want to be as fair as I can. I’d like to give the impression that I’m almost an evangelical agnostic. I think there’re a lot of strong and interesting things going on, but the outcome in terms of price might be quite boring around a fairly narrow range, which I think I said back in October, so I’m terribly boringly consistent.

Oh no, that’s the worst for gold.
As soon as there’s any sort of end-game closer, it’s a sell.

Gold -- Sharefin, 18:08:21 12/22/02 Sun

Lawsuit against Barrick just a case of investor envy

That said, not too many observers are taking the legal claim seriously, and for good reason. From an admittedly non-legal point of view, there's a fine line between the meaning of manipulation implied in the lawsuit and smart business. Dell essentially dictates pricing in PCs because of its league-leading efficiency. It uses this pricing power to gain market share and increase profit. Rivals don't particularly enjoy it, but if that's manipulation, how do investors like it? Plenty.

So why does the Barrick lawsuit set tongues wagging? Probably because, in the intriguing world of gold, Barrick's hedging raises suspicion. A lot of investors dislike short sellers, and technically what Barrick and so many other gold miners do when they hedge is to short gold.

It doesn't help that it does so with derivatives and with limited transparency in its financial statements (although that's improving). Or that Barrick came across as boastful when so many others were face down in the mine tailings. Or, for that matter, that Barrick seems to repudiate the role of gold as an investment, preferring to sell it as a consumer commodity best used as a body ornament. For these reasons and more, plenty of investors find much glee in Barrick's poor stock performance this year, even as other gold concerns are up by healthy double-digit margins.

Gold -- Sharefin, 18:01:32 12/22/02 Sun

Gold price still charging ahead

"Everybody thinks the party's over, if you look at the shares," said Douglas Pollitt, an analyst with Toronto investment dealer Pollitt & Co. "The metal is still strong, but when it comes to the shares, the agnostics are calling it a day."

Gold -- Sharefin, 17:58:52 12/22/02 Sun

'Lone gunmen' of gold strike again

There's something about gold that makes otherwise rational people - well, kind of loopy. Gold-rush miners risked life and limb in their quest for the yellow metal, and even though gold mining has become just another vast industrial machine run by globe-spanning corporations, it is still home to those who see deceit and conspiracy theories around every corner. At the center of many theories is Canada's own Barrick Gold.

The latest twist in the gold-price saga is a lawsuit against Barrick Gold and financial giant J.P. Morgan, a suit launched this week by Blanchard & Co. The New Orleans-based gold dealer is alleging the two companies depressed the price of gold through the use of derivative strategies, the true nature of which Blanchard claims is unknown because they involved a variety of "off balance sheet" transactions between the two.

The suit accuses the two firms of "unlawfully combining to actively manipulate the price of gold" and of making $2-billion (U.S.) or more in profits by selling gold short (that is, selling borrowed gold hoping the price will drop, then repaying the debt and pocketing the difference). According to Blanchard CEO Donald Doyle Jr., "the growth of global income and wealth would have lifted the gold price to approximately $740 if the price had been able to respond to the normal laws of supply and demand."
~~
Part of what gets the conspiracy theorists' blood going is the fact that the use of derivative contracts is poorly understood, particularly in the gold world, and also that the terms "derivatives" and "off balance sheet" are often associated with everything from the multibillion-dollar fall of hedge fund Long-Term Capital Management in 1998 to the scandal-plagued balance sheet of Enron. To add to the scent, J.P. Morgan took an almost $1-billion hit on some of its exposure to Enron's trading book.

Not surprisingly, one of the star exhibits in the gold conspiracy theorists' case is J.P. Morgan's exposure to gold contracts, which have a "notional" or theoretical value of about $45-billion - three times as much as some of its competitors. The implication, of course, is that at some point it will have to eat a big chunk of that exposure. J.P. Morgan, however, maintains that its exposure is not a problem, and that even if gold stays high it will not have to take a major hit to its bottom line.

In the end, the outcome of the lawsuit against Barrick and J.P. Morgan and of the GATA suit is almost irrelevant, because no matter what happens in either case, the real gold bugs will see it as more evidence that they are right, and that a shadowy cabal of politicians and corporate insiders is somehow pulling the strings in the bullion market.

Gold -- Sharefin, 17:56:13 12/22/02 Sun

Suit against Barrick will shine negative attention on hedging

A lawsuit brought against Barrick Gold and J. P. Morgan Chase by a U.S. coin dealer alleging the two have been conspiring to manipulate gold prices is based on nothing but conspiracy theories that have been swirling for years, some gold analysts say.
But they say it will bring negative attention to hedging programs used by Barrick and other gold companies to cushion themselves against falling prices but which some believe hurt the gold market by keeping prices low. Hedging, the practice of selling gold that has yet to be produced at forecasted prices, has been bad for the gold market and is Barrick's "Achilles heel," John Ing, a gold analyst with Maison Placements Canada, said in an interview Thursday.
~~~
The suit claims that J. P. Morgan Chase financed Barrick's repeated short selling with "remarkably advantageous terms not available to others, including deferred repayments and no margin calls."
~~~
Rodney Smith, a securities lawyer and a partner at Blaney McMurtry in Toronto, said that if the case isn't dismissed out of hand, Barrick could be ordered by the courts to open up all of its files, something that "could turn into a fishing expedition."
~~
Still, Smith said Barrick and J. P. Morgan have to take the claim seriously because it has been filed in court and they will have to respond. If the suit isn't dismissed it could take a number of years to argue and that could prove quite costly.

Allegations that there exists an international conspiracy to suppress the price of gold through dumping it in large quantities on world markets, and that this conspiracy is managed by a number of central and commercial banks is nothing new.

A Dallas-based organization called the Gold Anti-Trust Association has been investigating and speaking out about the issue for the past five years.

The group, which rallied around the last lawsuit against J. P. Morgan on the issue, said the new suit shows more people are discovering this so-called conspiracy.

The association says a recent report by John Embry, a Royal Bank gold analyst, that it says endorses the group's basic assumptions, has also given it credence.

"The world is beginning to realize that GATA was right all along," said Bill Murphy, a spokesman for the group.

Janine Waschuk, a spokeswoman for Royal Bank, said the discussion paper reflected Embry's views and research on various influences on gold prices and was intended for internal circulation only and wasn't distributed to clients.

"These papers assist them in forming investment decisions, but by no means reflect the views of RBC Financial Group," Waschuk said.

John Brimelow, an gold industry watcher based in Conneticut who is a marginal supporter of the theory put forth by the anti-trust association and Blanchard said the issue has been extremely difficult for money managers to speak about.

He said he thinks Blanchard has a "persuasive" case and that it will be interesting to see how the lawsuit against Barrick plays out.

Murgatroyd -- Sharefin, 17:46:58 12/22/02 Sun

The reason for the difference is that the chart you posted is from Comex data.
The price spike that occured on Thursday happened in London and by the time the US opened they had the price back down again.

Hence on the US CME data there's in no price spike.

If you look at a global chart you get to see the real price rather than the US controlled price.

Sharefin -- Murgatroyd, 05:42:33 12/22/02 Sun

I saw this Monthly Gold chart posted elsewhere
http://www.boomspeed.com/swing_waves/Gold_Monthly_Channel.gif
I recall your Wed 12/18 (20:10) chart showing a breakout, but this one doesn't - a bit scary?
Would appreciate any comments.

Fiat vs Gold -- Sharefin, 02:14:17 12/20/02 Fri

Remarks by Chairman Alan Greenspan - Issues for Monetary Policy

Although the gold standard could hardly be portrayed as having produced a period of price tranquility, it was the case that the price level in 1929 was not much different, on net, from what it had been in 1800. But, in the two decades following the abandonment of the gold standard in 1933, the consumer price index in the United States nearly doubled. And, in the four decades after that, prices quintupled. Monetary policy, unleashed from the constraint of domestic gold convertibility, had allowed a persistent overissuance of money. As recently as a decade ago, central bankers, having witnessed more than a half-century of chronic inflation, appeared to confirm that a fiat currency was inherently subject to excess.

James Sinclair -- Sharefin, 01:59:12 12/20/02 Fri

Federal Reserve Chairman Greenspan Confirms

Governor Bernanke's Reintroduction of the Subject of Gold
as Relevant to Present Economic Circumstances

I have learned over time to recognize that when a Federal Reserve Chairman discusses subjects, it is wise to take it seriously, not only what is said, but also, the fact that it is said. It was this approach that gave me the cue to know in 1980 that Chairman Volcker was going to take the anti-inflationary stance that he did successfully. It was this understanding that gave me the courage after having led the 1968 - 1980 gold bull market as its largest trader to sell 900,000 ounces of physical overnight plus an additional 1,200,000 ounces of gold as represented by Comex contracts the next day. The day before gold had traded on the Comex at $887.50. Something equally as important happened today and you must be informed. It is the absolute opposite of March 1980 and means to me that gold is in a very long-term bull market and will not be opposed by central banks. This is a major starting point for gold for many years to come.

We have already heard from Chairman Greenspan suggesting we might have come full cycle from the Volcker experience. Now let me quote to you the opening remarks of Chairman Greenspan today, December 19, 2002, speaking to the Economic Club of New York.

"Although the gold standard could hardly be portrayed as having produced a period of price tranquility, it was the case that the price level in 1929 was not much different, on net, from what it had been in 1800. But, in the two decades following the abandonment of the gold standard in 1933, the consumer price index in the United States nearly doubled. And, in the four decades after that, prices quintupled. Monetary policy, unleashed from the constraint of domestic gold convertibility, has allowed a persistent over issuance of money. As recently as a decade ago, central bankers, having witnessed more than a half-century of chronic inflation, appeared to confirm that a fiat currency was inherently subject to excess." [1]

You have just heard the Chairman of the Federal Reserve speak the Gospel of Gold. It was not said randomly. When a subject is put at the beginning of a presentation to an important group by the Chairman of the Federal Reserve System, it is there for a reason. I believe I know the reason. Gold is on its way back into the monetary system not, IMO, as convertibility, but rather as a Gold Cover Clause different in form from the previous Gold Certificate Federal Reserve Ratio that affected the cost of money as a corrective mechanism. This time the Gold Cover Clause will function as a control over the creation of fiat currency as a ratio to money supply in a free market for gold and valuation of US Treasury gold at market. I will explain to you during Christmas how this will effect gold trading in a firm range, in my opinion, at higher levels than we have so far experienced. I believe the price of gold is headed higher without significant interruption. I firmly believe that gold is headed back into the monetary system in a control mechanism with an adjustable market mechanism. Gold will be trading between $450 and $550 in 2003.

Ed Bugos -- Sharefin, 00:23:58 12/20/02 Fri

Thin Air Standard

If Wall Street's bull was a bubble, it was inflation induced, and to that extent, whatever valuations it sustained are in the process of being reversed now.

The Fed has been stepping on the gas pedal since the beginning of 2001 to fight off that corrective process, and for the first time in at least 70 years, confidence in the dollar remained strong long after Wall Street's bear market showed up. Both of these facts are unprecedented in their own way, but the dollar has finally begun to crumble this year under both, economic and political pressures.

To the extent that the dollar's gains in the nineties were the result of, or related to, the bullish but fleeting expansion in financial values, it's overvalued. That's a subjective assessment and it's going to stay that way until we change our mind, or until gold, stock, and commodity prices begin to tell another story.

Indeed, gold and commodity prices are rising because they're anticipating dollar devaluation. That is our main argument. And the reason our confidence in the dollar's demise is so strong is because we believe the tools the Fed used to prop up the dollar have been exhausted. Of course, productivity must be around, but it has little or no bearing on this argument at the moment. For, if Wall Street is suffering now from the backlash of a bubble environment today, caused by inflation and marked by overvaluation in the dollar, what is it going to suffer tomorrow as a result of the effects on the economy of the profuse inflation since the bear market began?

Let's put it this way. Banks like it when credit and currency supplies expand because their balance sheets expand in proportion. If such an expansion in monetary aggregates occurs alongside a stable or rising value of the currency the assets are denominated in, all the better. What lenders can't tolerate is when the value of this currency falls, which it tends to do when there's too much of it, or if it's too easy for too long.

The free banking world has a vested interest in the inflation, but it can't tolerate dollar devaluation. Inflation is "under control" when the dollar's value is manageable, but it is out of control when the dollar devalues.

The banking system is in trouble today, not just because it has a short position in gold, but also because it's losing control over this wealth transfer, if you will. In other words, because of the effects a falling dollar will have on prices, interest rates, and thus, the value of their assets.

It's no secret that by manipulating gold prices, one could theoretically control the inflation, or more accurately, sustain it, for as long as they could manipulate the gold price. The reason is that what they're really doing is manipulating the value of the currency. Combine that with a printing press and you own the world. By fixing the gold price, whether by clandestine manipulation or public declaration, the policy is actually aimed at fixing the value of the currency that is supposed to be money, but that can come to life out of thin air. Thus, instead of a gold standard maybe it should be called the "Thin Air Standard." Alas, our title.

The point is that gold's opponents are the same people that support the inflation aristocracy. There can be no question of motive. It's as plain as day. The only people that can't see it are those still on board the train, who find comfort in theories of elastic money, perverted extremes of utilitarian ideas, monetarism, government policies, and who remain unaware of the "relative" (Mises would say subjective) nature of valuation. To them, anything that is moving slower than the train is deflation; anything moving faster is inflation; and anything that's moving the same speed is simply not moving. It's absolute, not relative, and so, when they see that the gold sector is only a fraction of the size of the financial sector today, they ask, why on earth would anyone care about an industry so insignificant, in proportion to the market capitalization of say, Microsoft?

If this is your question, we aren't going to answer it, because we want you to sweat it out yourself. Go short gold. Believe in your conviction! You're right, the gold sector is insignificant relative to the "inflation" in other financial values, and even relative to other measures of industry, if you accept the Austrian theory of malinvestment as we do, since it has yet to be proven false.

So in Peter Lynch's style, two sentences or less, here's why gold is beginning a bull market: Wall Street's bull market was largely phony and the result of unsustainable easy money dogma; the same monetary factors lending to the overvaluation of the US dollar have been exhausted, and a decade-worth of imbalances in the gold market are about to be unleashed on a market saturated with dollar denominated financial assets or reserves.

Gold -- Sharefin, 23:51:32 12/19/02 Thu

Chinese shoppers queue for gold

China has allowed its citizens to buy gold bullion for the first time since the Communist Party took power in 1949.
Shoppers queued on Thursday to look at gold bars on sale in department stores in Beijing and the southern city of Nanjing.

Easing restrictions on gold sales is designed to create a new investment outlet for China's huge pile of household savings, worth nearly $1bn.

Analysts think demand for gold in China will rise sharply as a result of opening up sales of the metal to individual investors, and could even double.

Market reforms have made Chinese citizens into keen investors

Gold -- Sharefin, 17:48:29 12/19/02 Thu

Gold: A Vast Conspiracy?

Now that gold is spiking toward a six-year high, you might think the dealers would be celebrating. But at least one of them--Blanchard, of New Orleans--has instead filed an antitrust lawsuit against Barrick Gold and J.P. Morgan Chase, accusing them of conspiring to suppress the price so they could profit by short-selling.

Gold -- Sharefin, 06:50:55 12/19/02 Thu

Gold Shines Through War Clouds As Bullion Soars

Gold raced to its highest price in nearly six years on Thursday as increasing fears of war in Iraq lured investors to the precious metal.

Often a haven in times of trouble, gold has soared around 25 percent this year, spurred by fears of conflict in the Middle East, a weaker dollar, falling equity markets and rising oil prices, making it one of the best performing financial assets.

"Gold is on fire. It's all about fears and liquidity...there is enormous appetite out there as alternative investment opportunities are waning," said Andy Maag, metals analyst at UBS Warburg.
~~~
At one point in hectic Asian trading on Thursday spot gold surged more than $13 above New York's late price to reach $353.75 an ounce, its highest level since March 1997.

"The dollar looking set to trade lower, the threat of terror attacks in the U.S. and UK and the possibility of another Gulf War will make the market very nervous for the next few months and give the yellow metal the potential to make further gains," said James Moore, metals analyst at TheBulliondesk.com.

"I think $355 will be some kind of resistance level, but above there it clear water till around $420," Moore said.

Gold -- Sharefin, 06:48:46 12/19/02 Thu

Barrick in eye of gold conspiracy storm

Yesterday's lawsuit against Barrick Gold Corp. and J.P. Morgan Chase & Co., alleging a 15-year conspiracy to manipulate the world gold market, could have a serious impact on the two companies as they struggle to rebuild their bruised credibility, analysts say.

The case may also finally shed some light on one of the market's longest-running conspiracy theories -- that the world's biggest gold miners, led by Barrick, have made huge illicit gains from the long slide in gold prices during the past decade-and-a-half.

~~~
Barrick, controlled by chairman Peter Munk, has acknowledged that it is heavily involved in the hedging of its gold production. It sells a substantial amount of its production before it is mined, in forward sales contracts that lock in a guaranteed price.

In a series of complicated transactions, Barrick also borrows gold from bullion banks such as J.P. Morgan, and sells that gold into the spot market, driving down the metal price. Barrick then invests the proceeds, mostly into fixed-income securities, and makes a profit on the difference between the yield on its investments and the lower lease rate paid to the bullion banks. The firm repays the borrowed gold out of its own production and reserves, making money again if the gold price is lower than when it was first borrowed.

The miner has said this insulates it from the often volatile swings in the gold price. The strategy has proven so successful that many of the world's major producers, such as Vancouver's Placer Dome Ltd. and Newmont Mining, have followed suit, also hedging their production on the derivatives market.

But critics have long believed that Barrick's hedging activities go a lot further than the company lets on. They claim that Barrick operates more like a hedge fund than a mining company, and that its business strategy is built upon increasing cash flows through the decline of gold prices. Barrick denies this and says that although its hedging system allows rising profits even when the gold price falls, the firm benefits more when the price rises.

If a court rules that Barrick's trading strategies crossed legal lines, the results could be serious.

Gold -- Sharefin, 01:31:20 12/19/02 Thu

Gold looks even better if U.S. prints more money

It should have been front-page news in every business section in the world, but it wasn't. Every investment adviser should have called their clients and revisited their investment strategy, but they didn't.

I have no idea why so few of us took notice of Federal Reserve governor Ben Bernanke's declaration, in an official speech to the Economist Club in Washington, D.C., that the U.S. was prepared to turn the printing presses on to ward off deflation. It's a long quote, but worth reading, as it is arguably the most important economic statement of the year.

Specifically Bernanke declared that, "U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press [or, today, its electronic equivalent] that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation."

There are many implications to this statement, but I will only focus on two of them. First, while the Fed says the possibility is remote, it recognizes that deflation is a possibility, which is why they are prepared to drop interest rates so aggressively. It also hints that rate rises are not on the horizon because that would certainly force overextended consumers and businesses into bankruptcy, thereby enhancing the possibility of deflation.

Perhaps more importantly is the direct acknowledgement that the Fed is prepared to flood the system with dollars in order to stimulate demand, which unless other countries are printing even more of their own currency, would devalue the currency.

Gold -- Sharefin, 21:18:27 12/18/02 Wed

Same old, same old.

Read the news from the Bullion Desk News

And all the mainstream is quoting the rise in the POG as coming from War concerns.

Nothing new here it's all old news yet gold's risen $18.

Only new news out is Blancards lawsuit which gold is voting is true.

Same old same old.....

Richard Russell -- Sharefin, 21:15:20 12/18/02 Wed

Gold bugs don't really believe this is a building big bull market in gold

Gold -- The Commercials (gold banks, mines who are hedged) had a large SHORT position of 100,000 gold futures on Dec. 3. By Dec. 10 they had increased their gold short position hugely, adding another 25,000 contracts to the short side. These shorts constitute added supply to the market. It's clear that the powerful Commercials do NOT want higher gold.

In the great majority of cases, the Commercials will win the battle. But today the Commercials are fighting the primary trend of a bull market in gold. I'm not saying that the Commercials won't be successful in knocking gold down, but in rather rare instances the Commercials find they are on the wrong side of a powerful primary trend and they are losing the battle. If that happens, if they "give up" and decide that they can't beat the trend, then you can get a shorting panic as the Commercials panic.

Could that happen in the present gold situation? Sure it could. At some point, instead of flooding the gold market with more shorts the Commercials could "throw in the sponge" and conclude that they can't beat the trend. Will that happen? Again, I will only say that "it could."
~~~
I think it's the same thing with the gold mine shares today. Gold is rising, rising, but many "gold-bugs," probably most gold-bugs, don't believe their own BS. They don't really believe this is a building big bull market in gold. They simply don't believe it, and the gold stocks are acting that way.

With new highs in the metal, the stocks are rather reluctant to rally. But this will change in time. Believe me, it will change. Sentiment on the part of the gold bugs -- "Gold stocks have been down so long I forget what 'up' looks like."

Question -- Where does gold have to go before the gold shares "believe it?"

Answer -- I don't know -- gold at 350, 370, 390, over 400? I don't know, but sooner or later they will believe it. Although it seems like it will be "later.'

Gold -- Sharefin, 21:10:50 12/18/02 Wed

No Link!
---------
TOCOM gold at 5-1/2-yr high in panic buying spree

TOKYO, Dec 19 (Reuters) - Tokyo gold futures ended a frantic morning
session at 5-1/2-year highs on Thursday as roiling war clouds over
Iraq triggered a storm of stop-loss buying.
All yen-based gold contracts except the new December 2003
benchmark finished limit-up at lifetime highs. Turnover was a
staggering 144,782 lots or 144.8 tonnes in the morning, well over
Wednesday's full-day tally of 107,336 lots.

Gold -- Sharefin, 21:04:55 12/18/02 Wed

Gold rush starts in Beijing

Gold bullion became available to Chinese individuals as an investment option for the first time since 1949 as the small gold bars began selling in Beijing yesterday.
The first batch of gold bullion went on sale to individuals in the capital city's China Art and Crafts Plaza, Guiyou Plaza's Jianguomen and Fangzhuang outlets, as well as Caishikou Department Store.

No matter what insiders say, experts and individual investors regard yesterday's sales as a milestone for China in providing another investment avenue for the public.

"The opening of the individual gold investment business will significantly boost gold demand in China, taking into account the huge savings deposits of 1.3 billion people," said Liu Shan'en, an expert with the Beijing Gold Economics Research Centre.

Currently, the deposits stand at around 8 trillion yuan (US$966.5 billion), official statistics showed.

"Gold demand in the country will double soon from the current level of around 200 tons a year as a result of the opening of the business," said Liu.

Last year, gold consumption reached 213.2 tons, the fourth-highest level in the world.

In China Art and Crafts Plaza, ordinary Chinese people crowded to buy the small gold bars, while the pure 10-gram ones were hot sellers.

Gold -- Sharefin, 20:31:57 12/18/02 Wed

Bush the Elder’s Scheme - Where is the Outrage

In his last days as President, Bush Sr. sold U.S. government asset worth $10 billion to a friend for a mere $10 thousand dollars, pardoned his business colleagues, and then went on the company’s payroll for seven years.

At the very end of his presidency Papa Bush gave a sweetheart deal to the Canadian company Barrick Goldstrike. They got the rights to US land worth $10 billion in return for a nominal payment to the treasury of $10,000. But that does not seem to be all they got, or all they paid for either.

Gold -- Sharefin, 20:26:52 12/18/02 Wed

Email chatter:
John Mackenize
--------------
going to depart for a week or so from the usual market comments and
focus instead upon the market for gold.

since 1987, had the price of gold respond to market supply & demand,
the price of gold would be trading at $740.

private investors have far more money than all of the central banks
combined. the transfer of wealth that has occurred over the past 30
month is truly astounding, it is north of $5 trillion and likely far
higher. this would not continue if investors were to act in a unified
and collective manner to following the beat of wall street's drum.

i am pleased to see investors confidence wane, it means people are
less apt to buy the continuous bag of lies promoted by wall street's bull machine.

given the markets dismal performance many have asked me why gold has
continued to underperforms.

the answer lies in the question. gold is being ignored by wall street
as it represents sound money, no debt and removes the ability to
create something from nothing.

perception is reality and gold's performance since the beginning of
this last bull market has been lackluster.

but why?

look no further than cause/effect numero uno: barrick gold corp.
(abx).

barrick was founded in 1983 with one mine in canada. today barrick
is the richest gold mining hedge fund in the world.

abx's principal investors were members of the house of saud.

it's board is comprised of:

a former president of the u.s.
a former prime minister of canada
a former president of the german central bank
a former majority leader of the u.s. senate
a former white house chief of staff
a former secretary of defense
a former u.s. ambassador to the united nations
a former president of the urban league

ties to bcci are well documented. bcci being the largest collection
of
corporate criminals known to man and a historic financial failure.

some cast of characters. bush sr. sits near the top of the heap with
the bulk of his wealth earned over the past 8 years coming directly
from his participation with barrick.

barrick has earned over $2 billion in the past 59 consecutive
quarters
have come from short sales of gold.

barrick's growth has never been organic, it has grown by bankrupting
the competition thru price fixing and buying them up for pennies on
the dollar with proceeds earned thru short sales.

barrack's profits arise from advantageous “forward sales” thru it's
partner in crime none other than jp morgan.

to better understand barrick's position as the largest
gold short we need to look into the terms granted by jp
morgan chase. barrick's 10k's are limited in the actual
scope of information provided to determine real net shorts
sales.

suffice it to say it would have been impossible for abx to
have made $2 billion long gold during that timeframe.
impossible, so there is only one other side of the trade
and that is of course, short.

barrick's “spot deferred contracts” are actually short
sales of gold that add physical supply to the market that
has a negative impact on the price of gold equal to 100%
the amount of the sale. gold shorts incurs the obligation
to repay the borrowed gold, usually within a short period
of time, six months or less.

but not barrick; abx's are privately negotiated derivative
contracts., through which a bullion bank, acting on abx's
behalf, borrows gold form a central bank ar a lease rate
of approximately 1.5% and sells that gold into the market
with the bullion bank to earn interest on executed funds.
the interest premium has run 5%+ over the past five years.
most shorts sales are conducted with the delivery date set
to within one year.

however, under the terms abx has set with jp morgan chase,
barrick has the ability, at it's sole discretion, to
reschedule the delivery date under the terms of the contracts.

barrick is able to defer the repayment of borrowed gold
for as much as 15 years. essentially barrick has no cash
flow consequences and no margin calls should the price of
gold increase, all arranged thru jp morgan chase. abx's
sec filings are vague at best and no wonder… no other
mining corporation has been granted these terms.
should the price of gold rise, barrick can then sell its
production into the market at higher prices? a true
win/win situation.

for abx, rather than be forced to cover, they simply add
more physical supply to the market to cap price increases.
abx.

barrick has stated publicly they maintain a constant ratio
between its hedged positions and annual production… if an
8 to 1 ratio is balanced, then they clearly will attempt
to drive prices into the $200 range.

in early 2000 abx's ceo mr. munk informed the wall street
journal forward sales amounted to 24.1 million ounces. in
march of 2002 that number increased by 5.3 million ounces.
on september 27th, 2002 abx made a criminal blunder when
it announced production an issue, thereby substantially
reducing its forecasts for earnings.

Gold -- Sharefin, 20:10:09 12/18/02 Wed

Up Periscope!!!!
And on a monthly basis!

Resistance should now become support.

Gold -- Sharefin, 20:07:26 12/18/02 Wed

Interesting reaction from gold as to the potential JPM/ABX lawsuit?

Gold has risen from 336 to 354 off this news in just a few hours & in the gold world this is saying something!!!!

Gold by it's very action, is condemning JPM & ABX though the truth has yet to be exposed.

Gold is voting loudly & clearly that it has been manipulated and is pointing the finger at who.

Gold, at last is speaking!!!

Now will the people listen & will truth be exposed?
I guess we can expect JPM & ABX to deny the truth as much as they have denied before.

But gold has an Enronesque story to tell & soon the world will find out the truth.

In the meantime gold is voting with all it's got as to the outcome.

Who would you listen to now - Gold or JPM!!!....^o-o^....

Gold -- Sharefin, 19:57:16 12/18/02 Wed

Blanchard Press Release

Complaint for Injunctive Relief

In order to save gold, a lawsuit was filed by Blanchard and Company, Inc., the largest retail dealer in physical gold in the United States, and by Blanchard clients who bought gold bullion. The suit asks the Federal Court to terminate the trading agreements between Barrick and J.P. Morgan Chase and other, as yet unnamed, bullion banks. Blanchard believes its clients suffered substantial losses as a result of Barrick's and J.P. Morgan Chase's unlawful price manipulation, anti-trust violations and unfair trade practices.

This lawsuit is for Injunctive Relief.

SaveGold

Gold -- Sharefin, 19:46:51 12/18/02 Wed

Gold Bug Heaven

Meanwhile, J.P. Morgan fell 4.1% (vs. a 1.7% decline for the Philadelphia Stock Exchange/KBW Bank Index) and Barrick Gold dipped 0.6% after a gold dealer filed suit charging the firms with conspiring to suppress the price of gold and of violating antitrust laws.

"Barrick dismisses allegations of antitrust behavior as ludicrous and without merit and will vigorously pursue its legal rights and remedies," a company spokesman said late Wednesday. "Barrick hasn't had the opportunity to review the complaint in detail but the press release [announcing the lawsuit] contains numerous factual inaccuracies and defamatory statements."

J.P. Morgan did not respond to multiple calls seeking comment.

The suit was filed in the U.S. District Court of Eastern Louisiana by New Orleans-based Blanchard & Co., the largest retail dealer of gold coins and bullion in the U.S.

The lawsuit claims Barrick used off balance sheet accounting to dump billions of dollars worth of gold on the market in an effort to suppress the price of gold and weaken its competitors. Among other (unnamed) bullion banks, J.P. Morgan is accused of providing "crucial assistance" to this effort, according to Blanchard.

"The same type of accounting maze that hid Enron's debts made it possible for Barrick to manipulate the price of gold without the checks and balances that come from public scrutiny," Blanchard's chief executive officer, Donald Doyle, said in a statement. The lawsuit also claims the J.P. Morgan-enabled efforts by Barrick to depress gold prices "irreparably harmed" its business by dampening demand for its product and leaving it holding bullion that is worth less than it otherwise would be.

Blanchard's press release makes much of how J.P. Morgan and Barrick allegedly did all this in private, which prompts the question: How does Blanchard know about it and what kind of evidence has it compiled?

To that point, a Blanchard spokesman referred me to the company's request for an injunction, a copy of which is available at www.savegold.com.

The filing describes how Barrick grew from a relatively small mining company in 1983 to its current status as the world's second-largest gold producer, largely via acquisition. This transformation was chiefly the result of Barrick's "Premium Gold Sales Program," which the lawsuit describes as "unlike any hedging program as that term is commonly understood."

The program contains both highly favorable financial terms provided by J.P. Morgan and provisions allowing Barrick to "indefinitely" postpone the date it has to deliver gold to repay what it has borrowed for the purpose of hedging, according to the complaint. "Barrick, in combination with J.P. Morgan and other bullion banks, can dump millions of ounces of tangible central bank gold into the spot market at any time without risking the company's financial future," the filing alleges. "Such conduct is highly favorable to Barrick, weakening its competitors and allowing it to acquire additional [gold mining] reserves at bargain prices."

The suit also alleges Barrick executives made bullish comments about gold over the years even as they were increasing their employment of this program.

The notion that Wall Street firms (led by J.P. Morgan) have conspired with gold hedgers (led by Barrick) to suppress the price of gold is something that's been discussed openly in gold circles for some time now. But concrete evidence has been lacking. Whether Blanchard's case is sufficient to hold up in court remains, of course, to be seen.

On a seemingly unrelated note, I was speaking with Michael Painchaud, director of research at Market Profile Theorems in Seattle yesterday, and he made an observation that seems potentially prescient in light of this lawsuit. "Right now we're seeing financials scoring at lower end of the normal range" in terms of insider buying, Painchaud said. "We're looking over our shoulder that there may be some big problem here in this area down the road. It's an area of concern for us."

Another scandal and more lawsuits are certainly the last thing financial firms, most notably J.P. Morgan, need at this juncture.

Parting Thoughts
Then again, the lawsuit buttresses Blanchard's stated position that it "advised our clients to avoid gold like the plague until such time as the free market laws of supply and demand were allowed to dictate the price," according to their release.

To that point, I'd like to reprise what Jean-Marie Eveillard, manager of the $97 million First Eagle SoGen Gold fund, has often said when I've asked about this topic: Any attempt to manipulate gold (or anything else) will ultimately prove futile if the fundamentals support a rise in the asset in question.

Fiat -- Sharefin, 19:28:10 12/18/02 Wed

Selectivity will be the Key

I want you to visualize on top of the earth a gigantic flat bowl about three times the size of the earth, perched on a very large bamboo pole, which is continuously supplied with fresh water from a huge tap and is controlled by the world’s central bankers. Under what economists might call “equilibrium” (which does not exist in the real world), the water (money) would continuously overflow from the bowl evenly unto the earth and, therefore, economies around the world would expand and all asset classes would appreciate at about the same rate. However, the bowl being so large, relative to the flexible bamboo pole on which it is perched, is highly unstable and will lean towards one or the other side depending on which side of the pole investors lean on. If, collectively, investors are bullish about America, they will lean against the bamboo pole in such a way as to let the water (money) overflow into the direction of the American continent. If they are optimistic about the NASDAQ, the bowl will be tilt and overflow into the high tech, telecommunication, media, and biotech sector, and so on. In short, the direction of the overflowing water will depend on the expectations of investors, which in turn can be manipulated by opinion leaders, the media, analysts, strategists, politicians and economists.
Or think of the investment community at large as being very powerful due to its total size - similar to a herd of elephants - but not very sophisticated when it comes to financial matters. The elephants, being rather docile animals, will listen to the commands they receive from their mahouts (keepers). When the mahouts tell them to do something they will obey, and so, with their strength and weight, they can bend the gigantic bamboo pole for quite some time in the one or the other direction. The mahouts aren’t particularly sophisticated either - in our case, a group consisting of fund managers, stock brokers, economists, strategists and so on - but they have a keen interest to boost the productivity of their elephants and making as much money out of them as possible. Therefore, from time to time, they will give them new instructions as to which side of the bamboo pole they should lean on. This is only natural, because the mahouts’ salaries depend on the performance of the elephants and on the volume of business they do. Each time the elephants receive new instructions, the gigantic water bowl perched on the bamboo pole overflows into a different region, industrial sector, or another asset class altogether. The point is simply this: As long as the water bowl is continuously refilled with water coming from the water tap, which is controlled by central banks, and as long as the perch is buffeted around by the elephants, which are driven by the mahouts, there will always be some assets that will appreciate while others lose their momentum, depending on which side the water bowl is leaning towards. Therefore, there will always be major investment themes under the present monetary system, which sees to it that the water tap continues to supply the bowl with water - or, in our case, with paper money. So, what really frustrates investors is not a lack of investment opportunities, but their inability to accurately anticipate the direction of flow from the gigantic bowl.
~~~~
Still, I believe that we are at a very crucial juncture in the financial markets. Bonds have most likely reached a secular top. Interest rates will rise in the next few years - possibly far more than what investors now expect as commodity prices have made a secular low, following their more than 20 years bear markets and as the Fed will print money as if there was no tomorrow. In addition, I believe the present stock market rally in the US will shortly run out of steam - possibly between now and January of 2003 and thereafter, we will likely move into a trading range and eventually make new lows - maybe only in 2004 or 2005! Emerging markets should do better next year as in Eastern Europe there is a convergence play while in Asia a modest but enduring recovery is taking shape. Finally, the Fed’s easy monetary policies will ensure that gold will regain its proper place in the investment universe by rising significantly.

~~~~
Think elephants - think gold - think investors - POG......

Gold -- Sharefin, 18:26:32 12/18/02 Wed

JP Morgan: Buy Gold On Dips

JP Morgan recommends buying gold on dips, noting "larger bullish bias remains" despite pausing from bull run after break of key $340.50/oz resistance yesterday, short-term overbought signals on intraday charts. Pegs near-term support at $336, short-term support at $330; says market could try $350 if gold picks up to $340.50 again.

Lenny's Corner -- Sharefin, 18:24:55 12/18/02 Wed

Subject: RE: URGENT: Gold

With George Bush declaring that the Iraqi declaration of their past and present weapons capability has serious omissions and that he may declare Iraq in "material breach," with oil prices jumping over $1 today, with the equities markets quite weak, gold rallied from unchanged to up $5 on the day, matching the recent highs.

Although I am in the distinct minority here, I believe that we go a bit lower before we go higher. But, please remember that gold is in a secular bull market and higher prices will inevitably come.

However, looking at the risk/reward profile at this point in time, I think a retracement is more likely than a moonshot.

Leonard Kaplan
Prospector Asset Mgmt.

Gold -- Sharefin, 18:22:21 12/18/02 Wed

Gold price hits ten-year high

THE price of gold on the domestic market has surged dramatically over recent weeks to reach its highest level in 10 years.
The Saigon Jewelry Company (SJC) quoted the local price at VND5.9 million (more than $393) per tael (one tael equals 37.5 grams) on December 5.
By December 11, the local gold price had followed international trends and shot up to more than VND6.1 million ($406) per tael, VND400,000 below the record price of VND6.5 million ($433) per tael in the 1991-1992 period.
World gold prices have been soaring since the European Central Bank recently cut its interest rate to 2.75 per cent from 3.25 per cent. The international price rose to $326.1 per ounce in the same period, at one stage rising to $318.4 in just three days.
However, the price rise saw local gold traders record a 15-20 per cent drop in trade compared with previous weeks.
Gold trading firms in Ho Chi Minh City have suspended gold ingot imports because of the current high import price ($410-$411).
~~~
But, one senior executive from Vietnam Gold and Gemstone Corporation, or Vietgoldgem, warned that it would be difficult to predict the price trend over the next few months.
He also warned of a gold exodus overseas if the price of gold in Vietnam did not match world market prices.
“Although the central bank limits gold import licences, a large volume of gold has been imported into Vietnam via unofficial sources in recent years,” he said.
He was supported by figures from the WGC showing that in 2001, the volume of gold imported from Singapore alone stood at mor than 50 tonnes, an average of 137 kilograms per day. The country’s largest gold traders accounted for only 15-20 kg per day.

Silver -- Sharefin, 18:20:06 12/18/02 Wed

Taking a shine to silver

Interested in investing in precious metals but worry that gold -- having risen to $343 on Tuesday to its highest level in five years -- has gotten a bit ahead of itself?

Several newsletters suggest you take a look at silver instead. It is the so-called "poor man's gold," since it trades for less than $5 per ounce. Furthermore, while gold bullion has risen more than 20 percent so far this year, silver has risen by less than 3 percent.

To be sure, silver is not a perfect substitute for gold, and thus it dances to a different drummer. Much of the demand for silver comes from industrial uses, for example, so it is more vulnerable to an economic downturn than gold. An investment in silver thus is partially a bet on the precious metals sector in general and partially a bet on a stronger economy.

However, according to silver's devotees, demand for silver should grow markedly over the next several years even if the precious metals sector languishes and the economy stays weak.

Gold -- Sharefin, 18:17:34 12/18/02 Wed

In Response to Jim Sinclair on gold derivatives

Gold -- Sharefin, 18:02:58 12/18/02 Wed

After the Gold Rush

I'M ONE OF THE FEW people in America who still rents a safety deposit box. While it might seem like a useless appendage in an age of digitized everything, there are few things as reassuring as owning your own little piece of security deep in the heart of a major FDIC-insured bank. Safety deposit boxes are one of the best, yet surprisingly underused, services a good bank can provide: the ability to protect your tangible assets.
Why would you need a safety deposit box? As I wrote a few weeks back, when it comes to money, I tend to be a professional obsessive compulsive. That compulsiveness drives me to protect my holdings like a lioness guards her young. And I'm glad for that, because, while geopolitical news gets increasingly grim, I'm sleeping like a baby these days.

My sleep aid comes in the form of a safety deposit box full of gold bars located inside one of Chicago's biggest banks. More than Melatonin, Nyquil or a cheap bottle of wine, gold relaxes me. It's my worrying, bankruptcy, default, depression, up-all-night, frugality, so-I-can-rest medicine. When I said I was building an ark, I meant it.

Do I love my family? Yes. Do I think relationships are important? Naturally. Is there more to life than making money? Of course. All that being said, I can promise you that, in a crisis situation — a real crisis — it's cash that counts. And although most of us consider U.S. currency to be the best form of wealth, in a crisis situation, most of the world is more likely to accept gold than the greenback. Just ask any citizen of Argentina or Japan.

As we wrote a few months back, gold is the most widely quoted and internationally recognized form of wealth in the history of the world. If you're objective is to save and protect your assets, it doesn't get any more old school than gold.

Moreover, despite the lingering and common misconception to the contrary, even among seasoned investment professionals, the truth is that a higher gold price doesn't need to be accompanied by a massive global catastrophe. Think simple supply and demand: As we first wrote in the wake of Sept. 11, gold is astonishingly unrenowned. It wouldn't take a terrorist attack, but simply a small shift in investor sentiment to send literally billions of dollars moving into gold.

International appeal is just one of gold's attractions. For me, one of the best things about owning gold bullion is that people have a tendency to save it. Think about it: Most people's wealth consists of numbers on a screen. But gold must be looked after. It's beautiful, dense and cumbersome. Gold requires that you take care of it — and in an age when millions can me moved with a mouse click, there's something to be said for an asset that you can touch, hold and, best of all, protect.

Gold isn't my only asset — but it is a major one. The truth is, we're all in it for the long haul — but we sure don't need to be invested 100% in stocks. When it comes to hard-core savings, there's nothing more "long haul" than gold. If the last thing a person sells is his house, the second-to-last thing he sells is his gold.

As longtime readers know, gold has been on my radar screen for many years, going back to my days as a columnist for other publications in the 1990s. Like any admitted gold bug, I can always rattle off a laundry list of reasons why I'm bullish on gold. The biggest reason I can think of, however, is that gold is strong right now. The trend is up. And as much as we sometimes hate to admit it, trends tend to persist over time.

So I'm not going to try to convince you that the gold rally is for real. Heck, if none of the preceding arguments have worked, it's only higher prices that will finally sway the skeptics. But if you're sold on the idea of a gold allocation to your portfolio, allow me to outline a few of the many options for adding some exposure.

Gold -- Sharefin, 17:58:58 12/18/02 Wed

Lawsuit Vs. Barrick, JP Morgan Viewed as Publicity Stunt

News of an antitrust lawsuit being brought by U.S. retail gold dealer Blanchard & Co. against Barrick Gold Corp. and JP Morgan Chase & Co. is being dismissed by some equity analysts as a publicity gimmick.

Shares of Barrick fell in Toronto and New York early Wednesday afternoon after Blanchard & Co. announced its legal action. Barrick recovered from an intraday low of C$23.46 to close at C$24.45, down 0.8%. The Toronto market's gold index was up 2.8%.

"The market impact you already saw," Barry Allan of Research Capital said, adding that he believes the stock market will come to view the lawsuit as opportunistic.

"Why now? Why now, if this has been going on for so long? It's only now that hedging has become unpopular," because the gold price is rising, Mr. Allen said. "It just strikes me as being very sensationalistic."

As reported, Blanchard & Co. claims that the Toronto-based gold producer and JP Morgan teamed up to manipulate the price of gold. Blanchard, which deals in coins and gold bars, claims that the gold price should actually be at about US$ 740 an ounce -- or US$760 counting inflation -- if the market had been able to respond to the "normal laws of supply and demand."

In a statement, Barrick called Blanchard's allegations "ludicrous" and " totally without merit."

JP Morgan Chase hasn't commented on the lawsuit.

~~~
Doug Pollitt, an analyst with Toronto brokerage Pollitt & Co., hasn't seen the complaint filed by Blanchard, but said he doesn't expect it to be a major irritant for Barrick. "We don't think this is foremost among their problems,"
~~~~
Kerry Smith, an analyst with Haywood Securities, said a lack of disclosure by gold producers about their hedging contracts, and a lack of investor knowledge about how they work, may help fuel speculation about market manipulation. "It's all confidential," he said of various producers' hedgebooks. "It's just a big black hole."

In an afternoon research note, BMO Nesbitt Burns said that gold companies, bullion banks and other counterparties have followed the same practices as Barrick and JP Morgan. BMO Nesbitt said it expects the Blanchard lawsuit to amount to nothing in the end.

In September, consultant Martin Murenbeeld, president of M. Murenbeeld & Associates Inc. in Victoria, B.C., wrote an article defending Barrick's hedge program. He concluded that Barrick's intent is to manage price risk, and the program benefits were self-evident, as it insulated Barrick "more than adequately" against the risk of a sharp gold price decline.

The accelerated selling of gold by hedgers may lower the spot price of gold " somewhat," Mr. Murenbeeld stated. But there is more to the issue, he noted, including central banks selling gold, and actual production levels from gold companies.

Gold -- Sharefin, 17:44:47 12/18/02 Wed

Barrick Dismisses Anti-Trust Allegations

Blanchard and Co., a U.S. gold and coin dealer, said on Wednesday it had filed an anti-trust lawsuit against Canadian miner Barrick Gold Corp. and J.P. Morgan Chase & Co. for manipulating the gold price, but Barrick dismissed the claims as "ludicrous".

Toronto-based Barrick said the allegations were "totally without merit" and said it would vigorously defend itself and pursue all of its legal rights.

"Although Barrick has not had an opportunity to review the complaint in detail, the press release contains numerous factual inaccuracies and defamatory statements," a Barrick spokesman said, reading from a prepared statement.

Shares in Barrick, which is expected to produce 5.7 million ounces of gold in 2002, were down as much as 89 Canadian cents after Blanchard's statement, but rebounded to close down 20 Canadian cents at C$24.45 in Toronto.

Blanchard's statement said the lawsuit alleges that in the past five years Barrick and J.P. Morgan Chase injected millions of additional ounces of gold into the market, or several times more than the annual production of every gold mine in South Africa, the world's biggest gold producer.

"Since the end of 1987, when the collaboration between Barrick and J.P Morgan Chase began, the growth of global income and wealth would have lifted the gold price to approximately $740 (an ounce) if the price had been able to respond to the normal laws of supply and demand," Blanchard's chief executive, Donald Doyle, said in the statement.

"If gold had kept pace with inflation, the price today would be approximately $760."

Gold -- Sharefin, 17:32:53 12/18/02 Wed

Barrick, J.P. Morgan hit with suit

Blanchard and Co. Inc. has filed an anti-trust suit against Canada's Barrick Gold Corp. and J.P. Morgan Chase & Co. of New York, accusing them of suppressing gold prices and then making $2-billion (U.S.) in profits from short selling.

The suit, filed in U.S. District Court for the Eastern District of Louisiana, was brought by New Orleans-based Blanchard - the biggest retail dealer of physical gold in the United States - as well as clients who bought gold bullion.

"Blanchard is paying the costs of the suit, which asks the Federal Court to terminate the trading agreements between Barrick and J.P. Morgan Chase and other, as yet unnamed, bullion banks," the company said.

"Blanchard believes its clients suffered substantial losses as a result of Barrick's and J.P. Morgan Chase's unlawful price manipulation, anti-trust violations and unfair trade practices."

Blanchard's claims are allegations and have not yet been proven in court.

The suit alleges that over the last five years, Barrick and J.P. Morgan injected millions of additional ounces of gold into the market. Those additions, it said, amounted to several times the annual production of every gold mine in South Africa.

"By using privately negotiated derivative contracts and concealing the addition of billions of dollars worth of (physical) gold with off-balance sheet accounting, Barrick was able to make it virtually impossible for gold analysts and investors to determine the size and the market impact of its trading positions," Blanchard alleges.

J.P. Morgan, the suit alleges, financed Barrick's short selling through "remarkably advantageous" terms not available to others, including deferred repayments and no margin calls.

"Over the past five years, J.P. Morgan Chase loaned gold to Barrick at approximately 1.5 per cent; sold the gold into the market and invested the dollar proceeds at approximately 6.5 per cent," the suit claims.

"Then [it] paid both the proceeds from the sales and the 5-per-cent interest differential to Barrick whenever it repaid any of the borrowed gold."

Gold -- Sharefin, 17:31:07 12/18/02 Wed

Gold proponents to gather in Canada

Gold's spot price is enjoying a December effect, and that's no myth. "I happen to think we are on the threshold of closing above $340, quite possibly in such a way that will be startling to long-time gold observers," says Robert Bishop of Gold Mining Stock Report. "The artificial suppression of gold in recent times will have something to do with this," says Bishop, referring to the Gold Antitrust Action Committee's claims that central banks and governments act as a cabal to limit bullion gains, in the interest of promoting a strong-dollar policy.

The Gold Antitrust Action Committee, as those who read this column know all too well, is controversial. The group's research in the area of central bank and commercial bank gold leases and derivatives is compelling and warrants attention, now lacking, by the financial press. "We believe that the U.S. government surreptitiously assists a campaign to suppress the price of gold through the leasing of official reserves, and that this is really the essence of the strong-dollar policy," says Chris Powell, the committee's secretary and treasurer. See: Red-alert time for investors.

On Wednesday, a gold coin dealer, Blanchard & Co., filed suit against gold miner Barrick Gold (ABX: news, chart, profile) and bank J.P. Morgan Chase (JPM: news, chart, profile) for losses suffered by bullion investors as a result of "unlawful price manipulation, anti-trust violations and unfair trade practices."

Blanchard is a New Orleans company founded by the late gold proponent James Blanchard. "Since the end of 1987, when the collaboration between Barrick and J.P. Morgan began, the growth of global income and wealth would have lifted the gold price to approximately $740 if the price had been able to respond to the normal laws of supply and demand," Blanchard¹s chief executive officer, Donald W. Doyle, said in a statement.

Fiat -- Sharefin, 17:29:37 12/18/02 Wed

J.P. Morgan's Loan E-Mails Called `Explosive' by Trial Judge

J.P. Morgan Chase & Co. Vice Chairman Donald Layton's e-mails describing transactions as ``disguised loans'' are so ``explosive,'' said a U.S. judge, that he might exclude them at a fraud trial involving 11 insurers.

U.S. District Jed Rakoff is weighing whether to let jurors review the e-mails in a case where J.P. Morgan sued insurers to force them to pay $1 billion on surety bonds backing gas and oil transactions involving Enron Corp. The insurers refused to pay after Enron's collapse, saying the No. 2 bank masked loans to Enron as oil and gas trades involving an offshore entity.

`I Am Queasy'

``We are making disguised loans, usually buried in commodities or equities derivatives,'' Layton wrote in one e-mail. ``They are understood to be disguised loans and approved as such. But I am queasy about the process.''

In another e-mail, Layton said the phrase ``disguised loans'' was ``a pejorative phrase even if generally accurate.'' He suggested that a more accurate phrase would be ``derivatives-based fundings.''

Under New York law, insurers can write surety bonds for commodities sales, although they are barred from backing loans. The insurers claimed that the bank defrauded them into writing six surety bonds between 1998 and 2000 by concealing crucial details about the transactions. J.P. Morgan claims the surety companies failed to ask crucial questions.

In his opening statement for insurers, attorney Alan Levine alluded to the Layton e-mails when he said the bank used the words ``disguised loans'' in internal documents.

``Chase has a real problem with that phrase,'' Levine argued. ``These deals were disguised loans, and the words actually have the bad, nasty connotation that they deserve. This isn't our phrase, it's their phrase. A better one for what they did here I couldn't dream up myself.''

Gold -- Sharefin, 06:31:58 12/18/02 Wed

Gold prices reach five-year high

Against this backdrop, Weiss Research financial analyst Kevin Kerr said he could envision a scenario in which "investment banks with huge short positions [in gold] are going to start feeling the worst kind of squeeze imaginable, and they should have to start unwinding their short positions in a hurry."

"The investment banks saw an opportunity to short a commodity [gold] they felt would never regain its value," Kerr explained, adding that their reason was likely based on "greed and lack of foresight."

It's a "big mistake," he said, "now they're stuck in a big way."

The investment banks' move to quickly unwind their short positions could "light a fire under the price of gold," Kerr said, prompting further price spikes.

Gold -- Sharefin, 04:27:21 12/18/02 Wed

Gold’s fragile renaissance

MINEWEB: To help us make sense of the latest recent surge in the gold price is Darryl Castle. He’s a portfolio manager and analyst at South Africa’s Stanlib Asset Management (Stanlib). Darryl, apart from the “more buyers than sellers” gag, what is it that has set the gold price alight?

DARRYL CASTLE: At the moment the general consensus seems to be that it’s been the weakness of the dollar, coupled with the fact that people are worried about what might happen with Saddam Hussein and a general war scenario over there. I think that’s been driving it.
~~~
stocks had an absolute bumper session today. AngloGold, Gold Fields - both up 4.5 percent (relates to share activity on the 18th November - Ed). What kind of gold price do you think South African gold stocks are actually factoring in at these levels?

DARRYL CASTLE: That’s a moving target. It also depends on the rand and working costs, etc. But, as a ball park, I would say at the moment, they are factoring in probably $400 an ounce at the moment.

Yet Again -- Sharefin, 01:59:07 12/18/02 Wed

Bundesbank nails gold

Weeks of bullish sentiment and strong fundamentals in the gold market were wiped out in a single stroke last night by the president of Germany’s Bundesbank, Ernst Welteke. The governor said in an interview with Bloomberg that the German central bank would diversify its assets away from gold, a move which analysts say will mercilessly drive down the price of bullion.

~~~~
Yet again Mining Web picks up a news snippet (and indeed one that's been trotted out at every gold rise) and proclaims that gold's bullish sentiment & strong fundamentals were wiped out with one stroke.

Whose stroke I wonder? And from who's pen?

We've seen the Bundesbank continually try to use this news to flatten the gold price.
Earlier on it sort of worked yet now is benign news.

So MiningWeb tries to craft it into a new deadly life threatening piece of news for gold.

Sometimes I wonder if MiningWeb is more AntiGold than the Bundesbank.

The more one reads on their website the more their bias shines through.

Who needs a dozen Andy Smiths when Tim Woods is wielding his crafty pen.

No wonder their articles draw so much flack as they sure know how to whip it up.

Gold -- Sharefin, 01:06:42 12/18/02 Wed

Challenges mount for Gata as gold price rises

The Gold Anti-Trust Action Committee may have been too successful for its own good. At the recent New Orleans Investment Conference, one of the speakers remarked that “far too many people now believe in a conspiracy to ‘suppress’ the price of gold”; reason enough to dismiss it, he suggested.

~~~~~
Seems to me that Tim is counting his winnings yet the game has yet to begin.

Gold -- Sharefin, 01:00:18 12/18/02 Wed

As gold eyes $340, counter conspiracy exhorted

As spot gold hit $337.90 and Comex futures broke $338 on Monday in preparation for an apparent assault on the $340 level, some of those who believe the gold market is rigged to prevent higher prices proposed a “counter conspiracy.”
Pioneer newsletter writer Harry Schultz, Tan Range Exploration chairman Jim Sinclair and Gold Anti-Trust Action Committee chairman Bill Murphy are urging goldbugs to spend big on physical gold. “…you, acting alone and by your own direction and decision, can turn the tide against the illegal co-conspirators who are depressing the price of gold on a daily basis in hopes of breaking the back of the gold market,” blares the call to arms.

Gold -- Sharefin, 20:04:07 12/17/02 Tue

With gold on rise, experts point to several favorites

Gold proponents, nervously awaiting further gains after a startling one-week rally, are pointing to several areas they say are poised for profits.

They include tiny exploration companies, several overlooked bullion producers and the actual metal itself.

The dollar-linked spot price of gold Monday was continuing to defy gravity, closing the day at $336.40, a 38-month high.

"From here on out, the gold price will be linked strongly with the dollar," says Frank Giustra, a Canadian merchant banker and director of Endeavour Mining Capital Corp. (EDV: news, board). Giustra, in an article published Monday, examines the dollar-gold relationship and concludes the metal will "a currency of last resort" for central bankers and investors. See the article in Brien Lundin's Gold Newsletter.

Gold analysts are biting their nails, looking for further gains after years of reversals for the precious metal.

"I think we saw some pretty important breakouts last week, but it's important that we get follow-through," said Ian McAvity, whose Toronto-based Deliberations on World Markets is in its fourth decade of charting financial markets.

McAvity says the range of $325 to $340 is the current "breakout area" for the gold price. "This was an important inflection point range in 1991/93 and 1985/86. It also marked the peaks of the October '99 spike, when Ashanti Goldfields (ASL: news, board) and Cambior (CBJ: news, board) blew up their hedge books," McAvity says.

If spot gold and gold futures contracts launch a follow-through rally Monday or later this week -- and that's a big if -- McAvity sees a possible "struggle" around $340, "but $380 looks like the more likely resistance to halt an acceleration move."
~~~
The dollar-gold angle is filtering onto Wall Street.

"Gold is money and money is seemingly about to be devalued," says Caesar Bryan, who manages the $85 million Gabelli Gold Fund (GOLDX: news, board). Bryan, whose fund is up 80 percent this year, sees an increasing negative correlation: gold's rising price vs. the falling trade-weighted dollar and the falling U.S. stock market, as measured by the S&P 500 Index.

~~~
Robert Bishop of the long-standing Gold Mining Stock Report says he expects more of gold's positive price action. "Merely holding $330 is going to lead to a gathering of momentum -- and to prices that are likely to surprise those accustomed to viewing gold as a loser,"

Gold -- Sharefin, 19:58:37 12/17/02 Tue

Gold Hits Five-Year High As Dollar Reels

"The slump in the dollar has caused gold to spike upwards to $340 overnight, with the sharp jump in oil prices and heightened fears of a war with Iraq adding to the bullish sentiment," said Lawrence Eagles, analyst at commodities trader GNI.

"Historically when gold performs like this it tends to keep going," Eagles said.

~~
"Even with a very large net long fund position ... further price gains cannot be ruled out in the current environment," said Barclays Capital.

Gold -- Sharefin, 19:17:15 12/17/02 Tue

Gold hits 5 1/2-year high as dollar falls

Gold prices surged to a 5 1/2-year high on Tuesday as the dollar fell to its lowest level in three years against the euro and speculator enthusiasm for bullion bubbled over.

On the London spot market, the metal reached a peak of $341.70 an ounce, its highest since June 1997, fixing at $339 in afternoon trading.

Hedge funds and commodity trading advisers have been swarming into gold. By last Tuesday on New York's Comex, their long positions exceeded short contracts by 5.1m ounces.

Analysts suspect that this speculative net long position has risen substantially since then.

"There's a lot more interest, partly as a result of the deteriorating political and dollar situation. One of our US private banking clients bought 3,000 to 4,000 ounces yesterday," said a London banker.

"There has been a real development in sentiment. Everyone I've spoken to in the past two weeks has been very bullish. But it does make me wonder whether there's a self-fulfilling element to all this," said Paul Walker, a director of Gold Fields Mineral Services in London.

Some analysts argue that most of the fundamentals are priced into bullion already. Gold has ground its way up from $280 an ounce in August 2001, supported by a move away from hedging by gold producers, falling stock markets and geopolitical uncertainty. And with the prospect of war in Iraq on the horizon, investors are loath to be caught betting against gold.

"It would be hard to argue that gold was too low at current prices. We're now into speculative territory," said Martin Stokes, chairman of the London Bullion Market Association.

The market is increasingly looking to charting and technical analysis for its cues.

"We're into geometry, not geopolitics now. It's a case of triangles [a charting concept] and formations, not politics and economics," said Andy Smith, analyst at Mitsui.

He thinks that the market has scented a profit opportunity. "There's a huge technical gap here. There's nothing between $340 and $380," Mr Smith said.

Gold -- Sharefin, 04:50:59 12/17/02 Tue

Investors switching to gold on fear of war

Gold jumped to a 5-year high in early European trade as fears of a US attack on Iraq grew. The dollar also weakened and crude extended recent gains as the strike in Venezuela entered its third week.

The gold spot price broke resistance at $340 and reached $341.25 a troy ounce in late Asian trading, a level not seen since June 1997, before easing to $339.2 as London activity picked up pace.

Observers said the search for a haven helped push the shiny metal higher, following signs of growing US impatience with Iraqi dictator Saddam Hussein.

Gold -- Sharefin, 04:49:24 12/17/02 Tue

Spot Gold "Has Everything Going For It"

Spot gold "has everything going for it right now," says Australia's Westpac Institutional Bank, referring to gold-bullish factors such as 11-week high crude oil prices, geopolitical tensions which overrode equity market rise. U.S. funds bought after profit-taking pushed bullion down to US$332/oz, says Sydney-based trader; calls late NY's US$336.58 a "good, strong solid finish." US$340 firmly in sight, then US$350.

~~~~
Gold Still On Target For US$355/Oz

TECHNICAL ANALYSIS: Gold, now at 5-year high US$339.13/oz, still on target for US$355.00 on symmetrical triangle pattern on weekly chart triggered by Dec. 6 close above US$324.60; but swiftness of rally suggests price may be due for consolidation some time soon, hence look to take profit on portion of longs toward major underlying resistance at US$340.55, a low back in September 1993, says Dow Jones analyst Benjamin Pedley

ChartsRus -- Sharefin, 21:37:34 12/16/02 Mon

More of my favorite bullish charts

Gold with a set of Fibonacci moving averages - monthly
Note the breakout - very powerfull & when the last two moving averages flip over watch out!!!

AG/AU/PL Sentiment Index - monthly
Powerfull trendlines.

Global Gold Sentiment Index - monthly
Heading for new highs.

Global Gold Sentiment - monthly
Heading for new highs.

Gold poiint & figure - 5x3
Breakout & we should test the downtrend resistance line - we should poke our heads through it and bounce off it & take a breather.
What is resistance will soon become support & then the next leg up.

CME Gold - monthly
The Bull stretches it's legs - but just from the beginning!!!

ChartsRus -- Sharefin, 21:25:06 12/16/02 Mon

To follow gold's rise - watch the Euro - they are doing the Tango here & stepping in unison.

The break (spike down & up) at the bottom was I presume an ESF intervention that failed.
It was quite noticable when it happened as if it had won then the Euro would have broken down along with Gold.
When it failed then this was the trigger point for the beginnings of this rally for gold.

As can be seen in the chart the ROC is accelerating which will end up forming a parabolic curve.

Fiat -- Sharefin, 05:50:35 12/16/02 Mon

The Quintessential Inflation - The Great Weimar Inflation - Germany the early twenties

The “Weimar Inflation”. Much has been spoken about it, but few really appreciate key points, motives and reasoning. It seems that it was just excessive money, but in reality it was a constant shortage! The critical role of the velocity of money is also not understood in these situations, nor today. It was portrayed and possibly constructed as a financial accident, but linking the scene to that day’s politics shows another picture!

In understanding today’s environment and the prospects for “Stagflation” and the battle to export “Deflation”, understanding the Weimar Republic’s hyperinflation is one of the critical lessons for Investors today.

Gold -- Sharefin, 05:32:42 12/16/02 Mon

THAR SHE BLOWS! GOLD FINALLY TAKES OUT $330!

Sentiment will be the driving force now

When we re-entered the gold sector after a multi-year hiatus back in late 2000 with prices hovering around $260 - we did it purely for fundamental and macro market reasons. The price was dangerously close to the average cost of production rendering a lot of production useless. And the implications of the bubble bursting had yet to be fully felt. Nothing else looked favourable at the time. We were forced into it.;-)

The action we see now is technically and sentiment driven. The fat cap, don’t worry be happy crowd has been beaten to a pulp for nearly three full years now. And the previously totally discredited Gold bulls have been treated to a bull market for right around two full years now. Blue chip “establishment” brokerage firms like Merrill Lynch and First Boston can’t deny the trends any longer and are recommending gold stocks to the masses now. Now the masses can’t deny it either. With all the attention this vitally important break over $330 will garner - in perfect alignment with the bullish season just getting underway - this truly signals the beginning of the next leg.

Fiat vs Gold -- Sharefin, 05:29:22 12/16/02 Mon

The Value of Money

This of course was before the rejection of the gold standard. The creation of fiat was limited to the amount of gold backing it. A scenario in which supply was tight and demand was high. Simple economics. The Feds were prevented from printing fiat by virtue of the amount of gold in the coffers. Economics were so simple then. A wealthy person was both reviled because they had it, and respected because they had so much of so little. The value of money was true. The average person did not make frivolous purchases as there was not enough money for that.

International Forecaster -- Sharefin, 05:26:27 12/16/02 Mon

International Forecaster

Never any jail time, only fines. The SEC, NASD and NYSE have fined Deutsche Bank, Goldman Sachs, Morgan Stanley, Salomon Smith Barney and US Bankcorp Piper Jaffrey each $1.65 million. That is $8.25 million for destroying e-mails that could have well put them behind bars. These companies stole billions of dollars and receive a slap on the hand. The old boy network screws the public again. This certainly is encouragement to break the law again. Incidentally, the public won’t see a cent of that money.
~~~
The rats are abandoning ship. O’Neill and Lindsey don’t want to be on watch when the market and the economy collapse and the gold manipulation cartel are broken. They are both members of the brotherhood so they are or have been participating in what has been going on in the Exchange Stabilization Fund and with the Working Group on Financial Markets. They are responsible and, with the President, stand to be blamed and rightly so. Although the real instigators were Robert Rubin and Larry Summers. This is not a Republican or Democrat contest, it is a joint operation of elitists. They know no party. Rubin and O’Neill ran the ESF. They all probably have visions of being dragged off by the people as was Benito Mussolini and sharing his fate. Quite frankly, it’s all a disgrace. Traders all over the world are now talking about the stock, gold and silver markets being rigged. A London money manager who does business with one of the elitist Wall Street firms said banks are rigging the stock market. Exposure is what these culprits can’t stand. It ends their game. That could be expedited by an audit of US gold reserves. It would be convenient if someone on the inside came forward and told us what really is going on, or if finally the media covered the truth. All we can do is keep informing the public and forcing the issue. It won’t be long before we prevail, because behind the scenes there is chaos and that has to be why these two insiders wanted out.
~~~~
If the FED goes wild then we’ll have a spike upward in inflation, which will not last long. Sir Alan and the government have poured $4 to $5 trillion into the economy over the past three years. Yet, so far inflation is only 1.6%. Prices for goods are in negative territory and the price of services have begun to fall. According to the GDP deflator, prices are up less than 1% at the lowest level in 50 years. The last time this happened was in the 1930’s. Government, Wall Street, bankers and CNBC, better known as Tout TV, don’t want us to know there is deflation. That is in spite of all these aggregates being poured into the system. Now that goods and services costs are falling, next naturally will be wages. That is followed by layoffs and unemployment. Then, as you’ve seen over the past three years, come the bankruptcies. This is not the ebb and flow of a free economy. It’s the result of an economy, a financial system that has been ravaged since the 1960s. It is the result of free trade and globalization. We now specialize in exporting jobs and importing illegal aliens. It is going to be difficult to pay off your debts with dearer dollars or even more difficult if you have no job. That’s why we keep telling you get out of debt. Once massive credit default begins then real estate will collapse and the game will be over. We have a fiat currency; these prices will fall over 10% a year just as they did in the 1930’s. At least then we had a gold standard. Today we have Federal Reserve toilet paper. This is where we are headed, like it or not. Get those gold and silver coins and shares, they’ll be a lot more expensive soon.
~~~
At $331.10 an ounce, gold has broken out to the upside. Needless to say, CNBC gave it exactly 30 seconds of coverage. No one seems to have a reason other than it was about time. If you remember we predicted a breakout in mid-September and presto here it is. The rumors have it that it could have been a reaction of Muslim states moving to the gold dinar by 2005, or Swiss bullion dealers not rolling over their gold loans anymore or perhaps it was a delta hedging issue, where dealers or gold producers need to buy in order to cover their liabilities. The post mortem will come and everything and everybody gets carved up before we leave here. Then, of course, there is the physical demand, which has been unrelenting. Gold has broken up and out of a seven-month consolidation, so get ready for a wild ride.

The German press says six countries; Saudi Arabia, Oman, UAE, Qatar, Kuwait and Bahrain will start a custom co-operation in 2003, two years ahead of schedule. They will try to start a new currency in 2005 with an Arab dinar, which will be fixed against the euro, not the dollar. Rich foreign nations are tired of dollar imperialism and the idiotic antics of the IMF and World Bank. It is significant that the euro has 15% gold backing and the dollar officially has none.

Chancellor Gordon Brown and his Treasury officials have used an internal review to pat themselves on the back for selling more than half of Britain’s gold reserves, despite the fact the process lost the British taxpayers $300 million. Needless to say, the Treasury’s actions were ridiculous. They managed to pick the bottom of the market in which to sell into, a 20-year bottom. After they sold the gold price went up 30%. What a bunch of losers.
~~
As we reported some time ago, the Central Bank of China has been slowly converting its dollar reserves into euros and gold. It has also begun deregulation of its gold market. Over the next three years gold consumption should move from 200 tons a year to 400 tons and perhaps as high as 600 tons. It looks like the gold manipulating cartel is fighting a losing battle. If China stays out of war, gold consumption over the next 10 to 20 years could be astronomical. As we said a month ago, a sale of $200 billion and a purchase of gold in that amount would collapse the American economy and send gold soaring. America has its military settled into the Middle East and it would be of little use as a destructive force to retaliate against the Chinese and perhaps others. China is moving to back its currency with gold.
~~
Barrick’s accounting trickery didn’t impress us and it also didn’t impress Deutsche Bank, which downgraded the company’s shares from Buy to Sell. The problem is that operations are not sufficiently profitable to justify the generous market cap. What is doubly important is that Deutsche Bank is a major player in the gold bullion market. We believe they see far more problems than they are telling us about. As said six months ago and a year ago, Barrick’s hedging averaged at $300 an ounce. Anything above that was a loser for the company. It’s the derivatives, silly. Barrick is in trouble and the trouble will only get worse.

Gold -- Sharefin, 05:14:23 12/16/02 Mon

Rambling On Gold - Richard Russell

By the way, a huge battle is going on behind the scenes in the gold area. The latest figures show that Commercials increased their gold short position from 109,000 to 128,000 while they reduced their long position from 41,000 to 37,000. At the same time large speculators increased their long position from 48,000 contracts to 73,000 (wow!) while increasing their short position from 15,000 to 20,000. Those are huge changes. It seems clear that the Commercials are flooding the gold market with additional supply (shorts) while at the same time the big speculators have increased their long positions hugely.

So watch for gold to get erratic and volatile. There's a mighty battle going on. Gold bulls should take their positions and not be leveraged (or margined) to the point where they will be easily knocked out of the game. I almost never go on margin in anything I buy. Even in a bull market, when you're on margin the odds are that the "smart boys" will get you, and you'll be sent home crying. I've almost never seen it to fail, and I've seen a lot of markets, and I've seen a lot of margined players pressed to the wall.

I've said this many times but I'll repeat it. The hardest thing in investing is to load up at the beginning of a bull market, and then ride the bull to somewhere near the end. You can do it with a small position, but then you're not going to make that much. You can try with a large position, but after a while that position may get "too hot for you to handle."

What's the best strategy? Take a medium-sized position that you can live with -- and then have faith in the primary trend.

Somewhere ahead gold will go parabolic, and then what do we do? Do you sell real money for more paper? Do you just sit with your gold no matter what? Gold (and I'm probably talking about the metal) is probably something you should will to your kids. Why sell your gold? Why sell your diamonds? Why sell your Picassos and Modiglianis? They're intrinsic. They're true value. Keep 'em as long as there are counterfeiters who run the world's central banks (steady Russell, you're starting to go overboard).

Gold -- Sharefin, 04:59:14 12/16/02 Mon

Gold up Rs 110/10 gm to a 6-year high of Rs 5,450

Gold prices zoomed by Rs 110 per 10 gm to a 6-year high of Rs 5,450 on the bullion market here today on hectic stockist buying following a steep rally in overseas markets.

Silver also shot up by Rs 125 per kg. Standard gold opened sharply higher at Rs 5,400 and skyrocketed on heavy buying to close at a six-year high of Rs 5,450, revealing a gain of Rs 110 over yesterday’s close of Rs 5,340. Gold hit its all-time high of Rs 5,713 on February 6, ’96.

Gold -- Sharefin, 04:56:58 12/16/02 Mon

Shanghai Gold Exchange chooses additional suppliers of gold bars

The Shanghai Gold Exchange has allowed a second group of gold refineries, made up of eight domestic companies, to supply gold bars for trade on the exchange, the China Daily said.
~~~~
Only gold sold through the exchange will be exempt from value-added taxes, the newspaper said.

More than 10,000 kg of gold had been traded on the Shanghai Gold Exchange as of December 9, worth a total of 878 million yuan (US$105.78 million), statistics from the exchange show.

In November, 6,135 kg of gold was traded on the exchange, with a turnover of 522 million yuan.

Gold -- Sharefin, 04:55:03 12/16/02 Mon

India Gold - Imports negligible due to firm prices

Indian bullion traders, who have virtually suspended imports of gold because of high world prices and poor local demand, are unlikely to increase buying this week if prices stay volatile, traders said on Monday.
India, the world's largest gold consumer, buys 70 percent of the 800 tonnes it needs each year overseas. The rest is met mainly by gold recycled by local refiners.

"The sudden rise in world prices has almost halted imports as no one wants to burn his fingers in a volatile market," said Raju Bhai, a trader based in the northwestern city of Jaipur, a leading gold importing centre.

Gold -- Sharefin, 04:51:17 12/16/02 Mon

World Bank Gets It Wrong As Gold Moves Up A Gear

So, next stop US$350/ounce, eh? It certainly seems to be what most students of gold - technicians and fundamentalists - are thinking. Most of them, nevertheless, were caught out by the two latest upticks. At the end of last week spot gold rose to US$328.55 which was a six month high and New York Comex futures were at their highest for 10.5 weeks. The sudden resignation of US Treasury Secretary Paul O’Neill seems to have triggered the move which saw the week end with gold at US$326.20/ounce, up US$7.25.

For many weeks it had traded in the US$315 to US$320 range despite weakness in the dollar and ever more bellicose pronouncements from George Dubya. Ask anyone where gold was going during this period, however, and the answer was up. The only exceptions to this rule semed to be those who walk permanently out of step and the few with hedging positions clinging to the hope that they were on the right track. An excerpt from Notley’s Notes entitled ‘The Four Manic Peaks’, which was first published in June 2001, points to the commencement of a new era running on to 2010 when gold and commodities will be very much to the fore. Students of the Kondratieff long wave cycle theory see the next bottom happening in 2003 and reckon the impact of this will only be eased for those holding gold.

Then there are the fundamentalists, many of them espoused to the conspiracy theory, who claim that the largest banks in the world hold shorts on gold to the tune of 15,000 tonnes. This amounts to eight years of global gold production and would give them an exposure of US$172 billion. There is no way they could buy this back without gold soaring on to the US$1,000/oz level regardless of any forward sales or claims by contracted buyers. Banks have had a rough time of late, ever since Enron and WorldCom so are hardly in the best of health to withstand such a problem. Even if the Swiss Central Bank goes on selling 400 tones a year it will not make that much difference. And what banker wants to sell into a market which is flying?

~~~~
The article then got to the heart of the issue - supply and demand - which is the only real driver of prices. In a period when the price of gold has been weak there has been little incentive to meet growing demand through increased production. “Indeed, South African output has fallen below 400 tonnes a year for the first time since 1953. As any economics textbook will tell you, rising demand and falling supply equals higher prices. Also, consolidation among producers is creating greater supplyside discipline. Norman says: "Miners are less inclined now to kill a price rally by selling into it. They are allowing prices to gravitate higher naturally and are releasing metal into the market in a more delicate manner."

Against these bullish comments it is interesting to read the UBS Warburg Morning Report on the day that gold took a new look at life. “Gold has rallied this morning due to dollar weakness. As liquidity continues to diminish ahead of the festive season, increasingly violent swings may be seen in the gold market into the end of the year. With continued risks of Iraqi / terrorist tension, we believe that a short position in gold is too risky for most players and this prevents the gold market from coming under too much pressure.: A rally in gold prices ‘is not expected to endure as producer buybacks end and central bank selling continues,’ the World Bank said on Wednesday.”

How good it must be to be so prescient. Presumably it was the soothsayers at the World Bank who whispered in Chancellor Brown’s ear before he went off and sold a huge chunk of the UK’s gold assets. Minews will ensure that this deal is never forgotten and will calculate the loss to the country every step of the way.

Gold -- Sharefin, 04:01:48 12/16/02 Mon

Gold heads for highs as investors head for the hills

Johannesburg - The investment world is jittery: the gold price, which was floating near three-year highs of about $335 an ounce on Friday, may push even higher as investors flee to safe havens as the dollar weakens and stock prices fall because of war fears.

Gold shares rallied in tandem with the stronger metal. The six-member gold
index rose 6 percent on Friday, bringing its gains to 83 percent so far this year.

"If you have not bought gold shares already it is probably too late to buy," said Dirk Kotze, a fund manager at Coronation Fund Managers.

"If you have gold stocks it would probably be good to hold. If you're looking to sell it could be worth it to wait for the price to go another 10 percent to 15 percent from here."

Technically, Kotze said, bullion could go to anything between $350 and $400 an ounce, although he was not convinced it would get there.

Gold -- Sharefin, 03:57:50 12/16/02 Mon

Gold Prices Hit Three-Year High on Softer Dollar

LONDON -- Investor fears of war and nuclear weapons kept the gold market close to three-year highs in European trade on Friday.

A cocktail of flaring political tensions, spiking oil prices and a drop in the value of the dollar sent the safe-haven metal within sight of a three-year-old high of $338.00 an ounce.

"This is an unfolding huge bull market," said a U.S.-based metals broker.

Gold -- Sharefin, 03:51:46 12/16/02 Mon

Top gold traders expect price to ease soon

Dubai gold jewellers - who had major promotional campaigns during Ramadan, and are waiting to spend more for the Dubai Shopping Festival (DSF) - were a little unnerved when gold prices shot up yesterday to one of the highest in the last few years.

The gold price which soared from $318 to $333.4 per ounce as of yesterday - within a span of three days - took the Dubai gold price up from Dh35.75 to Dh37.25 per gram for 22 carat.

According to Haji Abdul Razak Yaqoob, chairman of the ARY Group, the spurt in the gold price is purely speculative.

"This is not a genuine price. It ideally has to be in the range of $300-$320 an ounce, and I am sure the current price is not going to hold long," he said.

However, Chandu Siroya of Siroya Jewellers, attributed the development to speculation as well as technical correction.

"Though the gold price has gone up in terms of the dollar, it has not happened in the case of the euro, proving that this is also a technical correction in terms of Euro-pean currencies against the dollar," Siroya added.

Gold jewellers in the 'City of Gold' have been nursing big hopes for the festive season ahead. If the price holds long to this level, they fear sales will be affected.

SKI -- Sharefin, 03:42:35 12/16/02 Mon

Jeff, I post a number of charts weekly that are a result of my earlier days watching your commentaries & have long enjoyed the cycles & formations as they play out.

The chart I posted in that link I had also sent to the Long Waves forum in mid-November hinting to the window of oportunity. So you can guess that I've been on edge the last few weeks as the formations have worked their way through the consolidation prior to the breakout. You can have no idea of my joy in seeing the pieces fall into play & the expected outcome produced.

I read your work on 321Gold & had noted your bullishness so when it tied in with my charts I was quite excited to say the least.

Lots of my indicators are pointing to what lies ahead and all I need do is think of all those smiling goldbugs & what lies in store.

I am more than curious on this weeks moves & then moving forwards towards end Jan through to March.

Exciting times ahead.

Cheers Nick

Fiat -- Sharefin, 02:49:50 12/16/02 Mon

Creature of Jekyll Island

When I did my research on this topic I came to the startling conclusion that the Federal Reserve System does not need to be audited, it needs to be abolished. This is very intriguing to think we should audit the Fed but I discovered that probably if they audited the Fed it would get a clean bill because it's undoubtedly doing exactly what it's supposed to do according to the law. What it is supposed to do according to the law is justification for abolishing it so all we have to do is understand what the Federal Reserve System is supposed to do and we'll be pretty upset about it. The fact of the matter is that most people haven't the foggiest idea of what it is in fact supposed to do.

I came to the conclusion that the Federal Reserve needed to be abolished for seven reasons. I'd like to read them to you now just so that you get an idea of where I'm coming from, as they say. I put these into the most concise phrasing that I can to make them somewhat shocking and maybe you'll remember them.

1. The Federal Reserve is incapable of accomplishing its stated objectives.
2. It is a cartel operating against the public interest.
3. It's the supreme instrument of usury.
4. It generates our most unfair tax.
5. It encourages war.
6. It destabilizes the economy.
7. It is an instrument of totalitarianism.
~~~~
Let's let that go for the moment and say ok if that is the purpose of the Fed, let's give it a report card and see how well it has done in stabilizing the economy. Since it was created in 1913 the Federal Reserve System has presided over the crashes of 1921 and 1929, the Great Depression of 1929-1939, recessions in the years 1953, 1957, 1969, 1975 and 1981, and a stock market Black Monday in 1987. We all know that corporate debt is soaring, personal debt is greater than ever before, both business and personal bankruptcies are at an all-time high, banks and savings and loan associations have failed in greater numbers than ever before in our history, interest on the national debt now consumes half of all of our tax dollars, heavy industry has all but been replaced by overseas competition, we're facing an international trade deficit for the first time in our history, 75% of downtown Los Angeles and other metropolitan areas are now owned by foreigners and over half of the nation now officially is in a state of recession.
~~~~~
The Federal Reserve System gets an A on its report card for maintaining control over the financial markets in New York. What about reversing the trend toward private capital formation. Boy, did they ever. Periodically they get those interest rates down so low and everybody is lured into the banks. Borrow like crazy and then the economy crunches down and they're all stuck with this overhead and they can't make their interest payments.

We've seen businesses go out of existence because they cannot service their debt. You've seen people lose their homes and their cars because they cannot service their debt. There are many giant corporations today that are just hanging in there by the skin of their teeth because of their debt overhead. The fact is that many of these companies now send more money to the banks every quarter in the form of interest payments on their loans than they send to their stockholders as dividends on their stock. Think about that for a minute. The banks which had no part in the operation of the company whatsoever, the banks which made this money out of nothing are making more money from these industries than the people who work for the money, save the money, invested the money and risked the money to own those corporations.
~~~~
I have one last topic that I want to talk to you about and then I'll get to the conclusion. This is an extremely important topic and it has to do with usury. In ancient times usury was defined as interest on a loan, any interest on any loan. In modern times that has been redefined to mean excessive interest on a loan. Moderate interest seems logical to us in recognition of the fact that if we work hard for our money, we save it and surrender its use for a period of time being a sacrifice on our part and then loan it to somebody else for their venture, we're entitled to a reasonable return on that sacrifice. A reasonable interest rate is a concept that very few people have problems with, it seems logical and fair.

But what is this thing called excessive interest? Thomas Edison said, "People who will not turn a shovel-full of dirt on the project nor contribute a pound of materials will collect more money than will the people who will supply all the materials and do all the work." I wondered when I read that if Tom was exaggerating so I got my calculator out. I assumed that there was going to be a $100,000 house built. I assumed that $30,000 would have to go for land, architect's fees and permits and that kind of thing. $70,000 would go for the actual construction of the house, building materials and labor. I assumed that the buyer would go to the bank and put 20% down and then borrow the balance at 10% over 30 years. I punched in the numbers and discovered that the borrower will pay to the bank in interest $172,741 compared to $70,000 paid for the construction of the house. In other words, about 2 1/2 times as much money will be paid to the bank in interest than will be paid to those who provide all the labor and all the materials. And you may say to yourself, yes but that's fair, after all a 30 year loan is a long loan and people work for their money and sacrifice its use and loan it and so forth and deserve to be compensated. No. Not this money. Nobody worked for this money, nobody saved this money. There was no sacrifice of any kind for this money. This money was created out of nothing and I suggest that $172,741 interest on nothing is excessive!

I think it's time for a new definition of usury as follows: any interest on any loan of fiat money (meaning money made out of nothing). This example of a $100,000 home, as shocking as it is, producing $172,741 unearned interest, this is just a grain of sand in the Sahara. You have to multiply that by all the homes in America, by all of these hotels in America, all the high-rise buildings, all the factories, all the airplanes, automobiles, farm equipment, schools, everything, all the physical assets of America. You apply this same ratio and can you see it in your mind? We're talking about a river of unearned wealth that is so wide you can't even think of crossing it, flowing perpetually into the banking cartel. A dead short across the productive element of society. Money being taken from people who are working hard providing the material and the labor. They don't even know that this is being taken from them and it's in this huge river of wealth flowing into the banking cartel. It's a staggering thought.

You are led to the question of where is this river flowing? Where's it going? Get a picture of this that it's all going into a lake somewhere and maybe there's a dam and the wealth is building up and somewhere they're getting it all. Getting it no, they're spending it. They're not accumulating it at all. What are they spending it for? The answer may surprise you. They're not buying more yachts and mansions with this money, they've already got all of those they possibly want. In fact they got rid of the mansions on Jekyll Island a long time ago because they were bored with that. That's not it. When a person has all the wealth that you could possibly want for the material pleasures of life, what is left? Power. They are using this river of wealth to acquire power over you and me and our children.

They are spending it to acquire control over the power centers of society. The power centers are those groups and institutions through which individuals live and act and rely on for their information. They are literally buying up the world but not the real estate and the hardware, they're buying control over the organizations, the groups and institutions that control people. In other words, to be specific, they are buying control over politicians, political parties, television networks, cable networks, newspapers, magazines, publishing houses, wire services, motion picture studios, universities, labor unions, church organizations, trade associations, tax-exempt foundations, multi-national corporations, boy scouts, girl scouts, you name it. Make your own list of organizations and you will find that this is where those people have been for many decades spending this river of wealth to acquire operational control particularly over those institutions and individuals, those organizations that represent opposition to themselves. That's a critical area for expenditure on their part.

Periodic Ponzi Update PPU -- $hifty, 21:44:37 12/15/02 Sun

Preiodic Ponzi
Update PPU

Periodic Ponzi Update PPU

Nasdaq 1,362.42 + Dow 8,433.06 divide by 2 = 4,898.06 Ponzi

Down 136.04 from last week.

Thanks for the link RossL!

Go GATA!

Go Gold!

$hifty

Cash - waiting for a new home? -- Mrw, 01:38:14 12/15/02 Sun

***
The Investment Company Institute, a mutual fund trade group, says an eye-popping $2.4 trillion was parked in money market funds at the end of November.

"That's a lot of cash, considering, there's only $2.5 trillion currently invested in equity mutual funds," says James Stack, editor of InvesTech Research. "Last year, investors poured a record $376 billion into money funds, or more than twice the preceding year's contributions."
***
http://biz.yahoo.com/rb/021214/column_stocks_weekscheduledcol_1.html

Stunning. Tsunami on the way?
(Sitting on a little Golden hill, on my shiny little surf-board....still waiting...).

Nice soundbite..... -- Mrw, 01:25:21 12/15/02 Sun

(....from 'Diogenes' on G.E. (Dec 15. 2.56))
***
When someone says "Gold pays no dividend" reply that "It doesn’t declare bankruptcy either!"
***

Hugh Hendry - if you read here - nice one for your next slot on Bloomberg.

SKI -- Jeffrey Kern, 21:40:25 12/14/02 Sat

Sharefin, I'm so glad that you noticed the historical formation on my indices that is so bullish. I have had great respect for your work. I am holding long gold stocks for a long time.

Gold -- Sharefin, 19:51:44 12/14/02 Sat

Why Gold is Going Up Even More

My long standing view is that gold is a currency, nothing more or less, and thus floats in concert with whatever the relative value of any given currency is. Gold has dramatically risen in terms of yen as the yen has dropped 50% against the dollar. As the dollar begins to drop, we see gold rise. I became a gold bull early this year as I predicted the drop in the dollar against the euro. I suggested the dollar and the euro would be at parity at the end of 2002. We are now slightly past that point.

Given the Fed desire for a lower dollar, our trade deficits, a business desire for a lower dollar and now even a willingness at Treasury for the dollar to decline, it is likely the dollar will drop even more against the euro.

Every time we have approached $320 gold in the past, there has been selling on the part of central banks which has knocked it back. Today it seems that those sell orders have been lifted. Are central banks now gold bugs? Hardly. But they are money managers, and are obligated to try and get the best returns for their reserves as possible.

My guess is they still think of gold as a barbarous relic. They still want to sell. But the signals from the Fed, the appointment of a man at Treasury who likely will let the dollar drift and the trade deficit all suggest to them they can get more for their gold if they sell later. They read the charts, and the charts say wait.

The key for the price of gold, in my opinion, is the price of the euro in terms of dollars.

In a preview of my 2003 forecast, I will give you my likely prediction on the euro today: I think the euro and dollar will approach the original levels of the euro when it was introduced -$1.17 or so. That is another 15-17% from here, and could easily take gold to $380.

Gold -- Sharefin, 19:36:54 12/14/02 Sat

SKI Gold Stock Prediction

The triple buy formation is the most powerful technical pattern possible. Prices should continue to rise. Avoid selling. Avoid finding reasons to sell.

If you're getting excited now I believe that you'll get more excited later.

The formation is a triple buy, never seen before except in theory (I've only seen the bearish triple sells).

So the system is mor