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Gold -- Sharefin, 08:36:36 01/08/03 Wed

Italian gold jewellery trade worries over exports

Prospects for Italian gold jewellery exports in 2003 are gloomy because of the global economic slowdown, soaring gold prices and a weak dollar, industry officials said on Tuesday.

"The outlook is not encouraging as we are facing a slowdown in various markets, a strong increase in the price of gold and the threat of war in Iraq," said Andrea Turcato, executive director of Vicenza Fair, which hosts the world's biggest gem and jewellery trade fair in north Italy next week.

~~~
Italy is the world's biggest manufacturer and exporter of mass-produced and crafted gold jewellery.

The country is also the largest single consumer market in Europe and an acknowledged international trend-setter when it comes to jewellery design.

Biffi said Italian goldsmiths, renowned for their intricate jewellery designs, were already facing stiff competition from innovative jewellery manufacturers in Turkey, Israel and Asia who benefit from cheaper labour costs.

Turcato said the consumer who buys gold jewellery by weight would fork out for higher gold prices, but those who buy designer jewellery from retailers like Bulgari and Cartier, priced per item, would not feel an immediate impact.

According to its latest figures posted on website www.vicenzafiera.it, Vicenza Fair estimates that Italian gold jewellery exports fell 7.1 percent year-on-year to 4.07 billion euros in the first 10 months of 2002, weighed down by the sluggish global economy.

Biffi said recent weakness of the dollar would harm Italian export prospects to the United States, Italy's main jewellery market, accounting for about a third of its sales.


Gold -- Sharefin, 08:30:57 01/08/03 Wed

Do you need to hold more gold?

Gold bugs such as Dow Theory Letter's Richard Russell are convinced the moves of the last month are just the beginning. "My choice for the sector to be in during 2003 is gold," he writes in the current issue. "I believe that gold is in the early stages of a major or primary bull market."


Gold -- Sharefin, 08:25:14 01/08/03 Wed

Gold Companies See Opportunities With Price Rise

A higher gold price has given long-suffering gold companies a new lease on life, with the chance for more capital investments and smaller hedgebooks, but the world's biggest producers said on Tuesday it did not mean sudden production increases.

Companies like Goldcorp Inc , a mid-tier Canadian producer which has accumulated over 180,000 ounces in gold bars, said the price was not high enough to warrant selling its bullion stocks.

"We don't think it's high enough to consider selling the gold because we think we're still a long way from the top," said Chris Bradbrook, Goldcorp's vice president for corporate development.

Bruce Hansen, senior vice-president and chief financial officer for Newmont Mining Corp , the world's biggest gold producer, said a higher gold price meant bigger profits and a chance to pay down debt and reduce hedgebooks further.

~~~
"We will still as an industry see less production in 2003 than we saw in 2002 and it'll be a slow turn assuming that these prices hold," he said. "I don't think production will regenerate at a rapid rate here so we think there's more upside than downside."


Gold -- Sharefin, 08:21:04 01/08/03 Wed

Newmont says gold rise won't lead to more output

Newmont Mining (NYSE:NEM - News), the world's largest gold producer, said on Tuesday it did not expect the rise in the gold price to around $350 an ounce this week to lead to major production increases.
"We're not going to turn on the spigots in terms of production increases here, but there are incremental components of various of our mines that we will re-evaluate...that were marginal at lower prices,"


Gold -- Sharefin, 08:19:50 01/08/03 Wed

Placer CEO says to reasses uneconomical projects

Placer Dome chief executive Jay Taylor said on Tuesday the rise in the gold price meant the company would reassess projects that were previously uneconomical at a lower gold price.

He said the higher price gave Placer new confidence to spend money on technically difficult deposits like the Getchell gold property in Nevada, suspended in 1999 because of low prices, and the Pueblo Viejo asset in the Dominican Republic.

Taylor told Reuters in an interview that Placer was on target to reduce its hedgebook by 20 percent to under 7 million ounces in 2002, and was aggressively looking to cut the hedgebook of newly acquired AurionGold, the Australian company Placer bought in a hostile takeover.


ChartsRus -- Sharefin, 08:14:46 01/08/03 Wed

Here's two charts suitable as a backgound image for your PC.
Right click on the images and choose "Set As Background"

Then next time your neighbour pops in you can show him how good gold is going.


Gold -- Sharefin, 20:01:56 01/07/03 Tue

When the outlook is golden, start worrying

On Friday I telephoned my colleague who edits this page and said that I was thinking of writing this column about gold and currencies. I outlined my argument, that the dollar is still too high, that the US external deficit is not sustainable, that the European and Japanese economies are suffering from low growth, that the euro and the yen are attractive only compared to the dollar. I added that gold was making new highs, and that the preference for gold showed the lack of confidence in the main currencies.

On Saturday morning I opened the Business section and found an article by Richard Lambert headlined “US dollar faces year of living dangerously”. He makes many of the points I was planning to make, and makes them very well - the overvalued and declining dollar, the “enormous” US deficit on current account, “the sorry state of the world’s second and third biggest economies, Japan and Germany”, the Asian central banks propping up the dollar, the sharp rise in the price of gold.

On such occasions one’s first thought is to turn to some other subject. However, I admire Richard Lambert’s journalism. If he thinks that the problems of the world’s currencies are the most urgent subject for his first article of the new year, that makes it more, not less, likely that it is the right subject for me as well. If this is worrying both of us, and it is, then it is probably right for us to be discussing the difficulties and possible dangers. As Richard observes, “the moment of maximum uncertainty is probably close at hand”.

For the past 30 years I have been following the price of gold. In some circles I am regarded as a “gold nut”. I have no objection to the term and may, on occasion, have earned it. But it is not an altogether accurate description of my interest in gold. I regard gold as the alternative to the central banks’ currencies, and as a counter-indicator of the realities of the world’s currency markets.

Gold is very different from paper money. It has had very long-term price stability, whereas currencies normally lose 90-100 per cent of their value in each century. Its price does not determine the export costs of the nation of issue. It cannot be created except by an expensive mining process and in small quantities; it cannot, therefore, be over-issued for political reasons, to win an election or pay for a war. It is an asset which is not represented by somebody else’s debt or liability. It is the only form of asset that is both liquid, like a currency, and real, like property. For these reasons, it is the canary in the mine; major changes in the world exchange system usually show up early in the gold market.

In the past three years the world gold market has certainly been singing. Last week, it closed with gold above $350 an ounce; only a few weeks ago we were wondering whether it could break through $320. Not long before that the question was whether it could go above $300. The last time I wrote about gold, I commented that gold had been a better investment than equities and that I expected it to continue to outperform them.

It has, and on a worldwide scale. For the past three years gold has been a much better investment than equities, in Japan, Germany, Britain and France, let alone the United States. Gordon Brown insisted on selling a large part of the Bank of England’s gold reserve near the bottom of the market. Chancellors make rotten speculators.

~~~
There has been another major reason for the rise in the gold price. Asian central banks and the Asian public have been buying gold. Japanese consumers have been buying gold chains to increase the family reserves. They do, of course, pause from time to time. The Central Bank of Japan has $461 billion of reserves, on the October figure, up by $66 billion in the first nine months of last year. The reserves of the Bank of China have risen at a similar rate.

If China and Japan already have more dollars than they want, and are accumulating still more of them at a rate of more than $100 billion a year, they must be under pressure to diversify their reserves. Given the deep economic problems of Germany, the leading European economy, the euro is not an attractive alternative. Gold is a rational central banker’s solution to an excessive accumulation of dollars, particularly as the dollar is falling and is expected to fall further. Again, the rise in gold price can be seen as a devaluation of the dollar.

For the investor, such an analysis may help to answer some central investment questions. The dollar is likely to continue to fall, and the yen and the euro are likely to remain firm. The US economy will continue to grow faster than Germany or Japan. The gold price is likely to outperform most other assets. But such an analysis does not give any cheerful answers to the problems of the world economy and world trade.

After all, the United States is by far the leading world economy, Japan is second and Germany is third. The US has a serious problem with the deficit and the overvalued dollar; Japan and Germany have equally serious problems of low growth, financial deficits in the banking and insurance sectors, and non-competitive prices caused by their overvalued currencies. The big three all have sick economies. Their economic diseases may be different, but in each case the cure, if there is a cure, will be painful. Both the dollar and gold are telling us that a perilous adjustment in currencies and in real economies lies ahead.


Gold -- Sharefin, 19:58:27 01/07/03 Tue

All that glisters...

GOLD “bugs” like to believe that the precious metal is one of the best hedges against inflation and one of the best stores of value during times of uncertainty, like war. The rise of the gold price over the past couple of years seems to bear this out. On January 6th, the price hit $356.25 per troy ounce, a level not seen since March 1997. A looming war in Iraq, a spike in the price of oil and weakness in the dollar, the currency in which gold is traded, have all boosted demand.

---
Disinformation rules....


Gold -- Sharefin, 06:05:03 01/07/03 Tue

Andy Smith proves too bullish on gold

Hard core gold bugs like nothing better than to rough up Andy Smith, über gold maven and wordsmith who works for Mitsui Metals in London.
Take for example John McDonald who recently wrote on this site: “[Smith] seems of marginal utility if not counter productive. Perhaps he is the gold world's answer to Wall Street analyst problems - an analyst that always tells clients their industry is heading into a dead end. I certainly wince every time a journalist refers to him as a respected analyst, or even refers to him at all. A respected analyst should consider all possibilities.”

~~~
Not good enough for ‘Briale’ who opined on this site: “Of course you will forgive Andy this time. If he is wrong again, you better nail him to a cross.” Randall Ryll let it all hang out: “Why is this man considered a Gold Authority? He is wishy-washy, appears to know little about economics, and has lost clients at Mitsui tons of cash.” Diamond Jim got himself in a factual twister: “The guy’s has been dead wrong on his last three calls....”, while Dan Broucek is sure he has Smith taped: “He's NOT an authority on gold, he's just another opinionated bum.” ‘Black Blade’ was scathing: “Given his attitude toward Gold and those who invest in Gold, why does he waste his time hanging around?”

-----
Don't forget to read the commentaries at the bottom.
They are as humorous as the article.


Gold -- Sharefin, 05:34:30 01/07/03 Tue

Jim Sinclair remains confident of $400 gold this year

Today was a big day for gold and gold shares, gold shares up by nearly 5%, but the gold price through the $350 an ounce level. This is the first time since 1997 - five years - that the gold price has been at that level. We asked our New York correspondent, Timothy Wood for an appropriate comment he said no, rather speak to America’s Mr Gold, Jim Sinclair, who has been calling the bullion price incredibly accurately. Tim doesn’t give these kind of positive comments that easily, so you must be sure that he’s been monitoring very closely what Jim Sinclair has been up to and how he’s been calling. We go across the water now and welcome Jim. The South African gold shares today, Jim, were up by almost 5%, the gold price itself, bullion, cruised through $350 an ounce. Tim says your timing and calling of the gold price has been impeccable. So the obvious question is, where to from here?


Gold -- Sharefin, 05:29:31 01/07/03 Tue

Planets aligned for $377/oz gold

Bullion dealers surfed the wave of optimism carrying the gold market today, with at least two major banks speculating that bullion was primed for a run at the $377/oz level in the medium term. By midday in Johannesburg the metal had set itself a new six-year high of $354.50/oz, eclipsing the $353.75/oz level achieved on December 29 and the $350/oz average of March 1997.
Standard Bank London said in its morning precious metals report today (Monday) that the gold looked set to build on the gains made over the last fortnight. “With the market looking well supported around the $342 level both from a technical and fundamental basis, it would appear as though the price will look to make fresh gains in the week ahead. The upside sees various levels of light resistance, although the medium term objective should see the yellow metal target $377.00,” Standard Bank said.


Fiat -- Sharefin, 05:09:36 01/07/03 Tue

Greenspan & Co

Financial Vampirism

In the view presented here deflation is a huge wealth-transfer scheme from the producing sector to the financial sector, denuding the former of its capital, and enriching the latter with risk-free capital gains. Indeed, the beneficiaries of the falling interest-rate structure, making risk-free profits thanks to the zero-interest policy of the central bank, are the principals of the financial sector, chief among them those of the big money-center banks. Their obscene profits do not come out of thin air. Their wealth is not newly created wealth. It is existing wealth siphoned off the balance sheet of producing enterprise, forced into bankruptcy by the falling interest-rate structure. This is modern vampirism practiced by the financial sector, aided and abetted by the central bank, and its victim is the producing sector.

The bear market in stocks is not the cause but the effect of deflation. The cause is the artificial bull market in bonds financed by the central bank. If you ask the bond speculator about his obscene profits while the rest of the economy crumbles around him, he will shrug: "I play by the rules. And I did not make those rules either."
~~

The proof of complicity of the banks in the bond-speculation-scheme is the $100 trillion derivative monster. No small-time speculators could create such a Moloch. It was created by the big money-center banks, for their own benefit, with complete disregard for the disastrous effect it has on the producers of goods and services. The total face value of outstanding bonds falls far short of the colossal figure of $100 trillion. It is against common sense, and an invitation to disaster, to allow speculative long positions to exceed total supply. Messrs. Greenspan and Bernanke have no comment on all this, except to confirm policies that are conducive to further increasing the debt behemoth and further whetting the appetite of the $100 trillion derivatives Moloch.
~~~~

The producers are sitting ducks in this speculative shoot-out. They have no choice. They must carry the risk of owning productive capital, without which there will be no consumer goods for Mr. Greenspan and Mr. Bernanke, or for you and me. This is an accurate description of the mechanism whereby the capital of the producing sector is surreptitiously siphoned off for the benefit of the financial sector as the rate of interest is driven down to zero. The producing sector is condemned to bankruptcy. It is a victim of plunder sanctioned by the Criminal Code. This is the essence of deflation: speculators aided and abetted by the central bank are allowed to bid bond prices sky-high, in complete disregard for the havoc that falling interest rates will wreak with the capital accounts of the producing sector, not to mention losses inflicted on stockholders. The $100 trillion derivatives market is a monument to the folly of man in delegating unlimited power to the central banker to create as much fiat money as he wishes. Former central banker Paul Volcker knows. He has been there. He is quoted as saying that "the truly unique power of a central bank is to create money and, ultimately, the power to create is the power to destroy." If the central banker has unlimited power to create, then he has unlimited power to destroy. And destroy he does, especially the savings of ordinary people.


Gold -- Sharefin, 03:34:51 01/07/03 Tue

Freedom Is Lost in Small Steps

In periods of crisis, financial collapse and war, an independent and stable currency is the people’s protection against the “malice of the times,” as the Swiss Declaration of Independence (1291) so eloquently put it. A collapse of paper-ticket-fiat money systems and the ensuing costs of the anticipated Iraqi war, in addition to President Bush’s ongoing “War on Terrorism,” which inevitably will be “paid” for by inflation, may lead to a great economic disintegration and widespread poverty in an alarmingly short time.
~~~
Switzerland is now tied into the IMF-system, which prohibits member countries from linking their currencies to gold, and only to gold. The damages to the Swiss are not yet clearly visible, but like an economic B52 bomber, the IMF has cut a strip of devastation into other countries’ national economies. In any case, Switzerland is no longer free to choose its own currency and financial policies to pursue the common good. If gold coverage were to be reintroduced, Switzerland would have to leave the IMF, since it would be in violation of the IMF’s gold prohibition, and Switzerland would again have an internationally respected currency, offering protection against inflationary interests and other world economic shock waves. We would again have the world’s most trustworthy currency. Nothing could be more posi­tive for Switzerland, for its citizens and for its banking center.
~~~

Exchanging the nest egg for paper-ticket-fiat money?

The price of gold per ounce (31.1 grams) has risen from $275 to $320 (+18%) within the last twelve months. During this time, stock markets declined, and some worldwide super-companies collapsed, e.g., Enron, Swissair, Worldcom. Many others, some of them Swiss, are teetering on the edge of collapse. The world situation is serious, and the outlook for next year is glum. For this reason it is very unwise, even for an ordinary businessman, to sell the one commodity perceived everywhere as metalized crisis protection that maintains its value. When things get really bad, e.g., when one of the big banks fails, it will be very diffi­cult to contain the incident. The entire economic world may go into a tailspin and all pa­per-ticket-fiat currencies may crash simultaneously. All the paper-ticket-fiat currency reserves that the SNB has in dollars, euros and yen will not be of any great help in its role as “lender of last resort” (the central bank as final rescuer of the banking system). Then, it will have to resort to using gold-provided the gold is still there.


Gold -- Sharefin, 19:42:20 01/06/03 Mon

The investment of choice: Spot gold prices hit 6-year high. Some cry conspiracy ("Its price has been held artificially low for years!"); others say uncertain geopolitics makes it more attractive.

GATA Chairman Bill Murphy and GATA consultant James
Turk, editor of The Freemarket Gold & Money Report,
were interviewed tonight as part of the lead story on the
"Marketplace" business news program on the National
Public Radio network in the United States. The program
was broadcast on dozens of stations throughout the country
and there probably was not much U.S. geography beyond
the reach of its signal.


Gold -- Sharefin, 19:19:38 01/06/03 Mon

Canada sells gold, keeps shift into euro reserves

Canada took advantage of the sizzling price of gold last month with the sale of one-eighth of its remaining gold reserves, part of a long-standing drive to get a bigger bang for its foreign reserve bucks.

A finance ministry official said the decision to sell was not explicitly tied to a specific gold price, but added: "When the price of gold is enjoying some lift, we may conduct more sales at that time."

Canada has been selling gold from foreign reserves since 1980, investing the proceeds in bonds and foreign-currency securities that yield a return which "far exceeds the return that the government gets on gold," the official said.

Finance ministry figures released on Monday showed that the government sold 83,399 ounces of gold in December, leaving its holdings at about 599,000 ounces. That is down from some 21 million ounces in 1980 before the gold sales started.


Gold -- Sharefin, 17:30:33 01/06/03 Mon

Gold group urges SEC to investigate JP Morgan

The Gold Anti-Trust Action Committee (GATA), a group alleging banks and governments are covering up a conspiracy to keep gold prices down, has asked the U.S. Securities and Exchange Commission to investigate JP Morgan Chase and Co's involvement in the gold market.

The announcement by GATA in a press release Monday came one business day after JP Morgan, one of the largest bullion dealers, said Friday it had asked the SEC to check into rumors propagated on GATA's Web site last year that the bank had lost money in 2002 trading gold and gold derivatives during bullion's rally to six-year highs.

"We are asking them to investigate their role in the manipulation of the gold market and to investigate what these rumors are all about, about Morgan and the gold market," GATA founder and chairman Bill Murphy told Reuters. "What we have said is, 'it doesn't pass the smell test.'"

The group said it appealed to the SEC to investigate J.P. Morgan's denial of any exposure to changes in the price of gold. The request came in a letter to the SEC from GATA consultant James Turk, editor of the Freemarket Gold and Money Report.


Gold -- Sharefin, 07:18:16 01/06/03 Mon

Debt, Money, Gold and History

"The 19th century gold standard was the highest monetary achievement of the civilized world. The gold standard was neither conceived at a monetary conference, nor was it the brainchild of some genius. It was the result of centuries of experience."

Ferdinand Lips


Gold -- Sharefin, 07:10:12 01/06/03 Mon

Going for the Gold

Always a good read.....


Gold -- Sharefin, 06:56:31 01/06/03 Mon

India Gold - Importers shy away as world prices soar

Soaring global gold prices and poor demand in India, the world's largest consumer, have forced bullion importers to stay on the sidelines, traders said on Monday.

"We all are almost sitting idle and waiting and watching price movements," said Narendra Singh Rathore, a gold trader based in the north-western city of Jaipur, a leading gold importing centre.

Gold nudged its highest level for six years on Monday as signs of U.S. and British preparations for an attack on Iraq kept markets volatile.

Japanese investors returning from holidays piled into the safe haven of the bullion market.

Gold (XAU=) was quoted at $352.30/353.00 an ounce at 0820 GMT, up from $326 a month ago.

Rathore said daily gold imports into Jaipur shrinked to only about 300 bars (of 116.64 grams) over the past week, against the normal 4,000 bars.

The country imports an average of 14,000 gold bars a day, which is more than 70 percent of its requirements. The gap is met by local recycling of old jewellery and domestic output.

Traders said gold imports could rise next week with a pick-up in marriage-season demand, provided world prices did not fluctuate wildly.

"No one wants to trade when prices are sharply rising or falling. We are looking for some stability in prices," said a Bombay-based trader.

Gold jewellery demand normally rises in India during the Hindu Marriage season, which starts in mid-January and runs through to May. It forms an essential part of weddings as parents give the metal to their daughters for financial security.

Jewellers said gold inventories had fallen as they had not replenished stocks due to firm prices.


Gold -- Sharefin, 06:47:52 01/06/03 Mon

Gold Touches 6-Year High, Oil Nears 2-Year Peak

Gold nudged its highest level for six years Monday, oil hovered near a two-year peak and the dollar dipped as signs the United States and Britain were preparing troops for an attack on Iraq kept markets volatile.
~~
Japanese investors returning from holidays marked by news of preparations for a possible war on Iraq piled into the safe haven of the bullion market. That sent gold briefly back to touch $353.75 an ounce, a six-year high set last month, before it eased to around $352.55 at 0600 GMT.


Gold -- Sharefin, 06:43:56 01/06/03 Mon

Gold and Gold Stocks

“...The price of gold goes up, but gold stocks don't, and you don't know why. Or the price of gold stays steady, but gold stocks go down, and you don't know why. The extent to which gold affects gold stocks is not always the same, nor do they always move in "lockstep" with each other. So, how can we explain the relationship between gold stocks and gold?...”


Gold -- Sharefin, 06:35:55 01/06/03 Mon

A Tarnished Dollar Will Put The Shine On Gold

“...The most important dynamic affecting the gold price is, and will be, the fate of the U.S. dollar. The inverse relationship between gold and the dollar began with the dollar’s ascent to supreme status as the world’s reserve and trading currency, a role once played by gold. It stands to reason that when the dollar’s value is challenged, all sorts of people turn to gold...”

~~
Chances are, unless he's in the habit of adding Geritol to his Cheerios, today's investor is perhaps feeling a little clueless in this post-bubble bear market. On the other hand, those who have been through this sort of thing before might have noticed the one bright spot on the investment landscape - gold - which has been in an upward trend since the bubble burst in 2000.

Much has been written about gold's move and the many dynamics driving this trend. In no particular order, that menu includes:

The widening demand/supply gap, currently at 1,500 tons per annum, is due to an ever-increasing decline in production by the primary producers. At current current gold prices and for too many industry reasons to list here, production is expected to decline up to 30% in the next eight years.

The collapse of interest rates effectively eliminated the once attractive spread that compelled both producers and institutional speculators to sell forward. They sold forward as much of the stuff as the central banks would lend, and thereby capped the price.

Ironically, in the face of a reversing tide, these same producers are now scrambling to cover the short positions created by years of indifference to gold as anything but a commodity. Due to lack of disclosure, the magnitude of these short positions is unknown, but could be anywhere from 5,000-10,000 tonnes, or two to four years of production. And finally, the last couple of years saw an end to the "peace dividend." Instead, we witnessed an ever-increasing series of geopolitical crises that seem to pop up faster then pimples on a teen's face.

However, the most important dynamic affecting the gold price is, and will be, the fate of the U.S. dollar. The dynamics noted above will, for the most part, play but a supporting role to that of gold's inherent inverse relationship to the dollar.

To understand this relationship, we need only look back 30 years. (Arguably, we could go back several hundred years, as this is not the first time the world has had to cope with the temptations and consequences of paper money.)

In 1971, Nixon unlinked the U.S. dollar and gold, thereby terminating other sovereigns' rights to exchange their U.S. dollars for U.S. gold reserves. Predictably, the dollar took a swan dive, declining up to 70% against some currencies over the next 10 years. Conversely, gold began a decade-long bull market that saw the price top $800 per ounce by 1980.

This "Mutt and Jeff" relationship has played out several times since. One good example is the mid-'80s, when the dollar again declined by 50% over a two-year period, and the gold price moved up to $500. The reverse was seen in the mid-'90s, when the dollar commenced its five-year rise, and gold experienced a five-year bear market.

And once again, the relationship reversed itself just last year. You get the picture. Parenthetically, with the effects of inflation, the dollar has also lost 80% of its purchasing power during this same period. From a long-term perspective, this makes the gold story even more compelling. In the current go-around, with severe post-bubble forces at play, I believe we may be due for a 1970s-style gold market.

The inverse relationship between gold and the dollar began with the dollar's ascent to supreme status as the world's reserve and trading currency, a role once played by gold. It stands to reason that when the dollar's value is challenged, all sorts of people turn to gold.

So why is the dollar's value being challenged today? Well, quite simply, its role has been abused. Since the U.S. closed the "gold window," the only "asset" backing the dollar has been faith in the U.S. system, which was entrusted to it by the global community. The value of the dollar is impacted by many factors, including a) how much of it is printed, b) the rate of return it generates, c) the fiscal health of the government balance sheet sponsoring it and d) the general state of the economy it represents.

As, one by one, the foundations supporting these pillars erode, this faith may, at best, turn agnostic and, at worst, turn outright atheist.

Although history is littered with the destruction of once-supreme paper currencies, the total demise of the dollar may be a long way off, perhaps generations from now. But the statistics show the dollar is heading in that direction. For the purpose of this discussion, the trend alone is sufficient.


Gold -- Sharefin, 06:09:09 01/06/03 Mon

Strange Bedfellows

While most markets stayed thin in holiday trading, however, rumor mill conditions in the gold world thickened. Glossy eyed gold bulls ecstatic about gold's late season bull market signal and about being on the right side of the market heard Greenspan utter the word gold but three times. To them it was a superbowl pass and they ran the ball right past the end zone and onto the next field with the idea that key Fed officials have been signaling the coming of a reversal in more than 100 years of straight-line monetary debasement; that they plan to reinstate the gold cover clause, which served as a bridge to more soundless money under the Bretton Woods system.


Gold -- Sharefin, 05:40:22 01/06/03 Mon

Date: Sun Jan 05 2003 14:12
ANOTHER (THOUGHTS!) ID#200346:
Copyright © 2002 ANOTHER All rights reserved
All:
Where are those who say $200 gold? What happened to $300 “MAJOR” resistance?
Then they said $330 was wall. Again noone will believe $600 is time to buy.
ENOUGH of this foolishness!

Soon there will be “announcements” of large buyers of gold but will this be
“spin” to say many sellers? Now is time to watch what gold does and not hide
head in sand. Your eyes don’t lie. This is the beginning of the greatest
transfer of wealth in the history of all ages. What is wealth and do you have
it? The wealth of many millenniums and of your great fathers before you will
protect your family now. As for me and my house gold is wealth!

Thank you


Gold -- Sharefin, 05:29:23 01/06/03 Mon

GOLD: Prepare for the Meltup

Gold's impressive breakout in December provided the final confirmation, if any were needed, that it is in a bull market. After such a move the price is entitled to rest and consolidate, perhaps react some, which is what it is now doing. Despite many technical indicators showing an overbought condition, I believe that the vigorous uptrend now in train will not relent and gold will remain overbought and will continue upwards, perhaps with brief pauses, until the overbought condition becomes extreme.

Gold's impressive breakout in December provided the final confirmation, if any were needed, that it is in a bull market. After such a move the price is entitled to rest and consolidate, perhaps react some, which is what it is now doing. Despite many technical indicators showing an overbought condition, I believe that the vigorous uptrend now in train will not relent and gold will remain overbought and will continue upwards, perhaps with brief pauses, until the overbought condition becomes extreme.

Quite a lot of people missed this move, having been kept out of gold and gold shares by listening to Elliott Wave nonsense about gold dropping to $200 or by being scared off by the large commercial short position. As James Sinclair pointed out a while back, the commercials goofed up handsomely in the 70's, and they may be doing the same now. Just because people are "professionals" and move large amounts of money, doesn't mean that they always get it right.

Many readers of my articles know that I track market volume. Volume is the "lifeblood" of the market and, as an indicator, stands "head-and-shoulders" (no pun intended) above any other indicator or system in its ability to predict stock or market moves. The volume patterns on countless gold stock charts were screaming "buy!" well before the breakout. Examination of volume patterns enabled me to predict major breakouts in Bema Gold and Silverado hours before they happened, and in Vista Gold a few days prior to a major breakout and in Caledonia Resources, to position my readers in the stock at $0.15 a few weeks ago - it spiked up to $0.30 last week.

Gold's December breakout was, in my opinion, its most bullish development for well over 20 years. This breakout, which was the culmination of several years of preparatory price action, was of tremendous psychological importance. This move signalled completion of the huge "Cup and Handle" or "Double-Bottom" base area that has been forming for several years - the British government famously highlighting the low by selling half the UK gold reserves right at the bottom, to the considerable amusement of the Chinese and others - if they can't even run a railway network, how can you expect them to understand TA? Maybe they sold the gold to pay for the noble British contribution to Gulf War 2. Everyone concerned with the gold market, whether bulls or bears, and whether they like it or not is now put on notice that this is a bull market which has just entered the dynamic advancing stage. All gold bears, all with a net short position, have two choices. They either cover their short positions now, or very soon on minor dips, or they can bury their heads in the sand and cover later at a higher price and greater loss. I believe this realization is slowly percolating in their skulls right now.

The two primary emotional states that generate market trends are fear and greed. Of the two, fear is the more primal and urgent as it relates to avoiding loss, to survival. Market panics caused by fear are normally associated with a falling market, however, they can just as easily occur in a rising market. A "Meltup" is an upside panic, generated by fear on the part of holders of short positions, who stand to lose more and more the higher the market goes, and therefore scramble to cover short positions as the market rises. This short covering drives prices higher and further pressures remaining shorts who are then forced to cover, propelling prices higher still in a vicious circle (virtuous if you're a bull) and resulting in a vertical price spike.

I have several times in the past expressed the view that should the critical resistance at $320 - $340 be breached, then all those short the market would find themselves in a precarious situation, exposed to potentially huge losses should the price continue to rise. This resistance has now been breached and the remaining shorts, faced with the imminent prospect of runaway losses, are likely to generate a self-feeding Meltup. I believe the shorts are now at the point of "throwing in the towel," if so, any further advance in gold is likely to lead to a steep vertical spike towards the next significant resistance in the $420 price area. Such a move will result in the price spiking through the upper channel boundary I have drawn on the accompanying chart and result in an extremely overbought condition, which will probably be followed by the price dropping back into the channel.

In any event it will be a period of extreme volatility and during this period gold shares should go crazy. I view this as a strong possibility, say 60%, no more, as I do not have stats for the amount of short positions and I do not know what their "pain threshold" is. Even if this does not occur, I believe that the least we can expect is a steady advance. A short-term reaction by gold back into the $330's, which would be rendered more likely if the threat of war with Iraq soon turns out to be a massively orchestrated bluff, will not negate my bullish outlook. I do not see it going lower than the mid $330's because of the psychological impact of the recent breakout and the fact that the direction of the dollar is far more important than the Iraq factor. I believe that having cleared the resistance at $340 by a significant margin, it is likely to remain above $340.


Fiat -- Sharefin, 05:09:07 01/06/03 Mon

Inflation target coming: Yamasaki

The government and the ruling Liberal Democratic Party are poised to adopt an inflation-targeting policy to fight deflation and prop up the economy, LDP Secretary General Taku Yamasaki indicated Sunday.


Fiat -- Sharefin, 04:07:35 01/06/03 Mon

Deflation in a Debt Based Economy

I support the idea that Fed Chairman Greenspan is walking a high wire act between the two known evils of inflation and deflation. The possibility of inflation exists but is of secondary concern at the moment given the higher probability that loan defaults will cause trillions of dollars to simply disappear. This would surely cause a lack of liquidity that in turn, could cause a deflationary collapse of the banking system. Such a catastrophe would be to the detriment of Mr. Greenspan's real employer, and place severe strains on his public image, if not his self-esteem.


Gold -- Sharefin, 04:00:01 01/06/03 Mon

Patience can be worth its weight in gold

The top-performing U.S. mutual fund of 2002 is a real-life survivor.

In the depths of a 20-year bear market for gold, managers Jean-Marie Eveillard and Charles de Vaulx almost put the First Eagle SoGen Gold Fund out of its misery in 1998.

Five years after its founding in 1993, the fund's assets had never broken $100 million, as measured by annual figures from Morningstar Inc.

SoGen Gold posted an annualized loss of 9.1 percent from the end of 1993 through mid-'98, according to Bloomberg data. It was the runt of an otherwise prosperous SoGen fund group.

Things kept happening in the world, though -- here a debt crisis in Russia, there a blowup at the hedge fund Long-Term Capital Management. The managers decided to stay with their outpost in gold, a haven traditionally sought by investors in times of trouble.

"I thought if the financial system was so fragile that a hedge fund had to be bailed out, maybe we should give our gold fund a little longer," Eveillard recalled last month by telephone from Paris.

Patience rewarded! In December, First Eagle SoGen Gold sported a 110 percent gain for 2002, to rank No. 1 among more than 15,000 open-ended U.S. funds tracked by Bloomberg. Over the past three years, it has averaged a 33.8 percent annual gain.

"Gold is a small market," Eveillard said in a Bloomberg News interview in 2000. "So it wouldn't take much for the price of gold truly to rocket."

At last report, the fund's assets had jumped to $125 million, and Eveillard said new money was flowing in at the rate of $1 million a day.


Gold -- Sharefin, 03:46:20 01/06/03 Mon

Gold surges above $350

The price of gold jumped more than $5 (U.S.) an ounce yesterday to close above $350 for the first time in about six years, a move analysts saw partly as a vote against the U.S. dollar or for the likelihood of war.

Like other market players, Bruce Latimer, head stock trader for Dundee Securities Corp. of Toronto, could point to no specific news event to explain the gain. "It sort of caught people by surprise. When you get a $5 move in gold on a daily basis, that's a big move."

John Ing, a gold analyst and president of Toronto-based Maison Placements Canada Inc., said the price was clearly affected by the state of the currency in which gold is commonly priced.

"The dollar has been weak the last couple of weeks," he said, "and that's partly because of the geopolitical sabre-rattling that's going on. More important, it appears that the Americans' twin deficits [the budget deficit and the current account deficit] raise the prospects of a lower dollar. Foreigners who have usually been financing the deficits decided to keep their money at home."

Mr. Ing also pointed to a pickup in demand for bullion from the Middle East and China, among other factors favouring gold.
~~~
Among the metal's fans are Mr. Ing of Maison Placements, who argues that gold's most important recent move was to climb above $330 last month.

"Was $350 a breakout? The answer is no," he said. "Really, the $330 was the breakout. We have a near-term target of $375, but that's not the high; I think the high this year will be $510, so we've only just begun this bull market in gold."

Dundee's Mr. Latimer said some leading Canadian gold stocks barely responded to yesterday's jump, partly because they have mortgaged their chances of benefiting from higher bullion prices through hedging.


Platinum -- Sharefin, 03:42:05 01/06/03 Mon

Platinum shines on demand for diesel cars

As drivers in Europe turn to diesel engines for more efficient motoring, and governments push for tighter global emission standards, platinum is along for the ride.

In 2002, the spot platinum price climbed more than 20%, to about US$600 a troy ounce, a 13-year high. Much of that gain is attributable to a marked increase in demand for the metal in catalytic converters -- important parts of cars' anti-pollution systems. Demand is expected to grow in proportion to supply, holding prices near current levels.

"In short, the platinum market is in chronic structural shortage, which Western producers look poorly positioned to relieve until at least 2005," says Steve Sheperd, analyst at J.P. Morgan in Johannesburg. "After perhaps easing slightly from recent levels early next year, prices may well spend most of 2003-2004 above US$600."
~~~

"Although carmakers are technically better placed than in the past to switch, many may take some persuading and may hold off for a while," Mr. Briggs says. Manufacturers have become wary that any immediate substitution could result in a similar price reversal in favor of palladium within only a couple of years, setting in motion a cyclical price swing.


Fiat -- Sharefin, 03:39:03 01/06/03 Mon

US dollar faces year of living dangerously

In a very uncertain financial world, there is
one thing about which most people agree: the
US dollar is overvalued, and on a downward
slope. The drumbeats have been getting louder
in the past few weeks. The price of gold has
risen sharply as investors have looked for
safer places to park their funds; the new
year forecasts from the world's currency
analysts were almost universally pessimistic
about the dollar; the gloom-and-doom
merchants have been dusting off their
sackcloth. The only real debate seems to be
about whether the currency is set for a
gentle slide, or for something more dramatic.


Gold -- Sharefin, 03:33:49 01/06/03 Mon

JP Morgan, Enron, and Gold

I have today mailed the following letter to
the Enforcement Division of the Securities
and Exchange Commission. It's about time that
we learn the truth regarding JP Morgan
Chase's activity in the gold market, the full
extent of its gold exposure, and whether it
used gold loans to fund the so-called
"disguised loans" that it arranged for Enron.
Perhaps the SEC will help us learn the truth
by investigating these matters and reporting
the results.
~~~
Thus, your investigation into the rumors
about JPM's activity in the gold market is
timely, but the focus of your investigation
should not be, as JPM management implies, how
these so-called "rumors" started. Rather,
your investigation should determine whether
these rumors have any basis in fact. If they
do, then this is to also ask for your
determination whether the statements above by
Messrs. Harrison and McDavid are false or
misleading.

To assist you, I would like to bring the
following matters to your attention:

1) The Wall Street Journal published an
insightful article about JPM and Enron on
January 25, 2002 ("Insurers Balk at Paying
Bank Up to $1 Billion in Claims On Complex
Transactions"). That article provides an
overview about the financing provided by JPM
to Enron, through Mahonia Ltd., a company
Chase Manhattan (one of JPM's predecessor
companies) established in the Channel
Islands.

The article states:

"Prepaying for future delivery of a commodity
is known as a 'gold trade,' because it is the
way gold bullion has been trading for
centuries. In recent years, trading
companies, whether from Houston or Wall
Street, have been making more use of this
structure to buy and sell oil, natural gas
and other commodities. Some commercial banks,
including Chase Manhattan had to set up part
of these trades overseas because their
banking charters wouldn't allow them to take
delivery of commodities."

The article describes what is generally known
as a commodity swap, and gold is frequently
used in one side of the transaction. As an
ex-banker (1969 to 1980), I have some
knowledge about how these transactions work,
as banks are a facilitator for them.

When gold is used to finance a commodity
swap, bullion is borrowed from a central
bank, and sold to raise dollars, which are
then used to purchase the commodity on the
other side of the transaction (oil and gas in
the case of Enron). It is noteworthy that the
WSJ article specifically mentions a "gold
trade"; given this remark, anyone
knowledgeable about commodity swaps might
naturally assume that JPM/Mahonia was
arranging gold-for-energy swaps for Enron.

Thus, this WSJ article may be the original
source of the so-called "rumors" referred to
by JPM management. But importantly, this WSJ
article also suggests that these rumors may
have some basis in fact.

The article did not specifically state from
where Mahonia was obtaining the funding
needed to purchase the commodity contracts it
acquired from Enron (the so-called "disguised
loans" the insurance companies contended were
shams). Nor did a WSJ article published
August 13, 2002, ("Enron Probe Shines Harsh
Light on Financiers") disclose the nature or
the original source of the funding needed to
complete these commodity swaps, but this
later article does provide more information
about potential gold activities by JPM in its
dealings with Enron:

"In the world of commodities, particularly
gold trading, the 50-year-old Mr. Mehta
[Chase's and then JPM's head gold trader] was
well known. His successful marketing of
derivatives, and his enthusiasm for the use
of these instruments, helped the gold-hedging
business take off in the 1990s. Mr. Mehta and
his team executed [deals which] allowed Enron
to use an offshore vehicle known as Mahonia
to raise hundreds of millions of dollars from
J.P. Morgan."

Taken together, there are enough facts
disclosed in these two WSJ articles to
suggest that gold loans could be one possible
source of funding for Mahonia's commodity
swaps with Enron, and if so, these gold loans
could lead to the "gold exposure" denied by
JPM management.

~~
The point is that certain aspects of JPM's
derivative disclosure appear to be
inadequate. Thus, this is to ask that you
make a determination in your investigation
whether JPM's disclosure about its gold
derivatives has been sufficient, and indeed
whether the statements by its management
about JPM's gold exposure are not false or
misleading.


Periodic Ponzi Update PPU -- Shifty, 20:42:49 01/05/03 Sun

Preiodic Ponzi
Update PPU

Periodic Ponzi Update PPU

Nasdaq 1,387.08 + Dow 8,601.69 = 9,988.77 divide by 2 = 4,994.385 Ponzi

Up 168.345 from last week.

Thanks for the link RossL !

Looks like another interesting week ahead!


Go GATA !
Go GOLD !

$hifty




Gold -- Sharefin, 04:28:16 01/04/03 Sat

French Fund Managers Take A More Positive Attitude To Gold and Gold Stocks Than Their Peers In London.

The turn of the year is traditionally the time when all the UK pundits come out with their recommendations for the following year. Minews has scrutinised them , in so far that that is possible, and none have come out with a recommendation of a gold producer. Now that has to be strange as we move into a year when war in the Middle East looks very likely and with the dollar coming under increasing pressure. Maybe the journalists in the UK are not talking to the right people, though basically all they do is repackage comments from fund managers and analysts. Nobody seems to have explained that it is perfectly possible for equities to go on down for a 4th year in a row, especially when the average price earnings ratio for stocks in the FTSE All Shares Index is nearly 19.


Gold -- Sharefin, 03:29:07 01/04/03 Sat

The 'Gold Cap' Disembowelment Of America

The 'gold cap' is the deliberate, institutionalized use of physical gold and paper debt instruments for the criminal price fixing of the dollar/gold price relationship. The gold cap also encompasses criminal price fixing in the silver, currency and stock markets. Establishment criminology categorizes price fixing as white collar crime. The criminal price fixing of the 'gold cap' was created by, and is maintained by; the Federal Reserve Bank, the United States Treasury, and Wall Street banks and brokers. The 'gold cap' price fixing artificially prevented the dollar's natural free market decline in purchasing power as the total number of fiat dollar units expanded. The criminal price fixing of the gold cap, which capped the dollar price of gold, is also called the 'strong dollar' policy because it made the dollar extremely overvalued in world markets.

The criminal price fixing of the gold cap was to free markets what the Spanish conquistadors were to the Inca.

As a consequence of the Fed/Treasury/Wall Street criminal price fixing of the gold market, the dollar became stronger in relation to other internationally used fiat currencies left to free market forces. Have no doubt, it is physical gold that defines the dollar and every other fiat currency in the world. The purchasing power value of the U.S. dollar is defined by how much physical gold, or silver, a dollar will purchase. This has been true for more than two centuries of U.S. history and it is still true today. The gold cap contributed to the explosion of both debt; and, the total number of dollar units outstanding. The gold cap flooded the markets with physical gold and gold debt priced in dollars in order to artificially overvalue the purchasing power of the dollar in the short run. The very same actions in the longer run accelerate the eventual destruction of the dollar. The gold cap, since l995, achieved short-term political gains. However, the long term costs of those short-term political gains has been the accelerated financial disembowelment of United States corporations, stock markets, and citizens, in that sequence.


Gold -- Sharefin, 03:07:09 01/04/03 Sat

Why no talk of $32,567/oz ?

Therefore, a rational dollar price prediction for gold can be obtained by dividing available dollars by available gold. The best official figures for these are M3 and the U.S. gold hoard. For those of you who don't know, M3 is the best measure of the dollar money supply that the U.S. Federal Reserve uses.

M3 http://www.federalreserve.gov/releases/h6/Current/ $8.5 Trillion or (8,500,000 million) U.S. Gold www.fms.treas.gov/gold/index.html 261 million oz.

Admittedly, the official numbers are not very reliable. There are more dollars available than is listed as M3 because there are foreign bank accounts and many counterfeit dollars that are used as money in the world.

And the U.S. gold has not been audited since the 1960's, and many suspect it is totally gone, and not available at all. Nevertheless, the official numbers are the best figures available that we have to work with. If the figures are wrong, M3 is surely higher, and U.S. gold is surely lower. If either is the case, it would only mean that the rational dollar price for gold should be much higher than $32,000/oz.

At my web site goldismoney.com, I present a simple calculation: M3 / U.S. gold. Since gold is money, each dollar in existence could potentially buy gold. Current figures as of Nov. 2002 are: 8.5 Trillion dollars / 261 million oz. of gold. This ratio tells us the level to which the dollar needs to devalue if it were to be backed 100% by the U.S. "official" gold again. This number gives me an idea of a potential top of the gold market. This number, at the moment, is $32,567/oz--a number that I do not see discussed by anybody. Why not?


Gold -- Sharefin, 02:30:39 01/04/03 Sat

NY gold retreats as Dow, dlr start '03 with rally

But perhaps the main fundamental focus for gold players will be the dollar, which hit three-year lows against the euro on Tuesday but rallied sharply Thursday.

For the greenback, 2002 was the worst year since the late 1980s, and with U.S. interest rates at four-decade lows, gold looked better than most dollar-based investments.

Gold was the best performing sector on Wall Street, with the XAU index of gold and silver mining shares up around 45 percent last year, compared to a 25 percent gain for bullion.

Most investors interested in gold bought mining shares rather than getting involved with the physical bullion, which is cumbersome and expensive to transport, store and insure.

The gold market is minuscule and just a tiny diversion of global investor capital can have a huge influence.

That said, speculators on the COMEX led the way higher for gold in 2002 and the futures market is now extremely overextended by historical standards. So analysts are wondering where new buyers will come from in 2003.

Indeed, traders see a risk that gold producers will start selling forward again, after spending last year unwinding hedge sales and derivatives contracts that prevented many miners from benefiting fully from the rise in bullion prices.

"I think the nature of it will be puts instead of forwards and that means there will be less selling than usual," a bullion dealer said, referring to put options. "I think it will be the first quarter that they will be net sellers instead of buyers for a change, which is bearish to some extent."


Gold -- Sharefin, 02:22:54 01/04/03 Sat

Dirt Poor

The Internet offers access to a richness of ideas never before available. It is possible to wonder through and gather a tremendous volume of information and opinions of most any topic. A few years ago I began researching gold. One particularly interesting thread of discussion and speculation was promulgated by a bunch of whack job conspiracy theorists that decry the Fed and the Treasury for selling out the nation's gold. On the surface, most any sane man would dismiss this story completely. I nearly did. But it is my job to rake through the detritus of human ideas to find the one or two overlooked gems that can lead to fabulous riches. I have come the well considered conclusion, as did many hedge funds about a year ago, that this time the whack jobs are mostly right.

If they are completely right, there has been treason at the highest levels. However, I never believe a conspiracy theory where a failure of reason offers an alternative explanation. That's almost always.

The true story will likely never be known. Even if known, it will defy common explanation and will be discussed for many decades. The villains will remain in shadows and not be defeated by man but by the cycles of inflation and deflation. A natural force more powerful than nations or armies.

I have my own theories. Many are most certainly wrong, but drawing from the web and connecting the dots, a story can be told.

As Promised, A Scary Campfire Story

The story begins with Barrick Gold. And a strategy for growth. Very simply, Barrick would take advantage of a bear market in gold to acquire other properties at distress prices. Nice friendly Banksters were able to offer considerable assistance. Through the alchemy of derivatives, hedging, and forward sales the Banksters were able to offer Barrick quite a deal: no downside risk in the event that gold were to rise.

What's this. No risk? No such beast. Someone was taking the risk. With Big Daddy Bush on the Board, the operations and policies of the Exchange Stabilization Fund could be telegraphed to Barrick. Essentially, Barrick and the Banksters could front run the Treasury. After all, bond traders do it all the time. An honored tradition. Over the years Barrick grew to be the world's premier gold miner, with a hedge fund bolted to the side. A hedge fund with an edge.

As the years went by, a second administration found a use for this edge. Any one remember Clinton's temper tantrums over not being able to control long rates? Well, Larry Summers to the rescue. His understanding of Gibson's paradox set the stage for a manipulation of biblical proportions: By suppressing the price of gold, you can suppress long term interest rates. Eureka! The bond ghouls were defeated. Clinton and Rubin and the politicos of the day could inflate stocks and bonds forever. Or at least until someone else takes office.

Thus began a new period in economic history. A period where the Exchange Stabilization Fund facilitated the long peg on a bewildering array of gold swaps, gold leases, forward sales and unfathomable derivatives schemes. Spreading beyond Barrick, the entire industry has become caught up is a web of structured finance that could only be created during a financial mania, and can only be unwound during a deflation. The Treasury has recharacterized its gold reserves more than once. Only the naive believe that the type of fraud demonstrated by our corporate elites has not infiltrated the federal monetary system. The insanity began when the historic relationship between stock and bond prices was violated in 1996. Sobriety will return when historic reality returns to this primal relationship.

One by one, the party go-ers are sobering up. Austrian concepts are being considered. Mr. Market has been discounting hedged mining companies. Sir Alan has been emphatic about netting legislation before Congress. The Federal Reserve discussed buying gold mines after 9/11. The Russians have circulated the gold Ruble, the Chinese have liberalized the gold market, and the Islamic Dinar is about to launch. Lawsuits have been filed, first by altruists, now by commercial interests. Dollar devaluation was the consensus at Jackson Hole this year. Keynesian ideas are being dissed by Fed governors. Monetization of debt has become policy. Gold and its shares are breaking out.

And Greenspan, the closet gold bug, appears to be coming out.


Gold -- Sharefin, 02:03:09 01/04/03 Sat

Fed Focus - Late For The Sky

Two months ago, Morgan le Fay and I confessed to meditating nostalgically about gold.1 Not in a covetous way, I stress, but rather in the context of global monetary arrangements established after World War II at Bretton Woods, New Hampshire. Since then, both Fed Governor Bernanke and Fed Chairman Greenspan have thought out loud about gold, too. Morgan and I like the company! Very cool, she wiggles her ears; and I agree.

I'll come to what Ben and Alan had to say in a moment, but first, let me review why Morgan and I had wistful memories about gold, as part of the Bretton Woods arrangements. It was really a very simple deal: the dollar was pegged to gold at $35 an ounce, and everybody else was pegged to the dollar. Theoretically, the arrangements were a prophylactic against accelerating global inflation, in that the set-up putatively required America to embrace sustained monetary and fiscal discipline, so as to keep the dollar "as good as gold," limiting dollar creation via the fiat printing press. Such had been the foundation of gold-linked currency regimes for time immemorial: a check against the inflationist (immoral, many would say!) tendencies of governments, from kings to dictators to democracies.



~~~
And the truth of the matter is that America's redemption from inflationary sins had morphed into a bubble of irrational exuberance. What a long strange trip it had been from America's paroxysm of Jimmy Carter malaise. As the millennium turned, stocks crashed, just like gold and silver had crashed two decades earlier. And interest rates crashed with stocks, at the hands of aggressive Fed easing by Mr. Greenspan, the exact opposite of Mr. Volcker's frontal assault of soaring interest rates.

America's war against inflation was over and a new secular war against deflation risks was initiated. Mr. Greenspan never put it exactly that way two years ago, of course. But the proof of the pudding has been in the eating thereof, and short-term interest rates futures have been some mighty fine pudding over the last two years. The only question has been whether and when the aggressive reflationary easing would/will "get traction."3

"What the Sam Hill do you guys want?" I'm sure that Mr. Greenspan has asked more than a few times over the last two years. Finally, as I wrote last month,4 Greenspan found his answer: we, the risk takers of Wall Street, have wanted the Fed to quit pretending that it was not reflating. Reflationary tapioca wasn't enough.

We have wanted the Fed, in broad daylight, in front of the mother-in-law, and with no apology, to pour a reflationary fifth of the good stuff into the punchbowl: a put beneath private sector debtors' wings. Then, and only then, would private sector risk managers ask for a cup of the stuff with default risk. In November, the Fed finally poured, with Mr. Greenspan and Mr. Bernanke hailing the reflationary power of the printing press. Ever since, we in the private sector have been drinking up. It's good reflationary hooch: the Bernanke Put!

Particularly good stuff, say the gold bugs amongst us. I happen to agree with them, though I've never had a fondness for gold. If the war against inflation was started with the Fed flogging the gold speculators, then the war against deflation risk should logically commence with a Fed embrace of the gold speculators. The simple fact of the matter is that America, and the world, needs a devaluation of paper versus "stuff," the exact opposite of twenty-odd years ago. And gold is the global symbol for "stuff."

Over thirty years ago, America was forced to bust up the Bretton Woods arrangements, because America didn't want to deflate sufficiently to keep gold from rising above $35 an ounce. Today, just the opposite problem exists: America needs to inflate the money stock, while devaluing it against gold, so as to keep private sector debt obligations from sinking into a deflationary abyss. And the world needs the same thing: a broad based, wholesale devaluation of all paper currencies versus a basket of globally-traded "stuff."


Gold -- Sharefin, 01:10:59 01/04/03 Sat

Gold price rises as miners stop hedging

A key factor helping push gold prices to five-year highs is that miners have stopped betting the price will fall, according to Deutsche Bank.

While fears of a Middle East war have been blamed for gold's run to almost $US350 an ounce, the change of thinking by miners is just as important but not as obvious.

Gold is now 30 per cent higher than the prices below $US260 seen early in 2001.

"Historically, at these prices, the producers would have been very active in the hedge market," Deutsche said. "The belief that we are in a bull market has led to negative sentiment towards the hedged producers. Very little new hedging is being put in place."

The practice of hedging - usually the sale of gold borrowed from central banks, with the intention of paying it back with metal from the ground - increases effective supply, putting downward pressure on the price.


Gold -- Sharefin, 01:06:32 01/04/03 Sat

Will the dollar crash?

US net external liabilities are some 25 per cent of gross domestic
product. In five years, they will be at least 50 per cent. This
cannot go on.When it stops, the dollar will tumble, to ease the
reduction of a current account deficit now about 5 per cent of GDP.
It will have to fall a long way, as the rest of the world will not
easily absorb a big increase in US exports.
The trigger will be reduced willingness of the rest of the world to
buy US assets. That inflow has already fallen sharply since 2000. The
offsets have, hitherto, been a big reduction in the US private
capital outflow and big purchases of dollars by foreign governments.
Neither seems likely to endure.The trade-weighted dollar is already
down some 9 per cent from its peak in February. The chances of a
steeper fall in 2003 - principally against the euro - are at least
one in five. A further postponement of the end of an un- sustainable
imbalance would make that event not less probable but more so.


Gold -- Sharefin, 00:58:57 01/04/03 Sat

Gold bugs expect hot times in 2003

Year-end profit-taking drove down gold prices yesterday, but fans of the precious metal say conditions are right to maintain the price momentum it built up in 2002.

Geopolitical tensions, falling worldwide production and gold's appeal as a hedge against faltering currencies drove gold's performance this year and point to a positive outlook for gold in 2003, said John Ing, president of Toronto-based investment firm Maison Placements Canada Inc.

"There's no question that this is more than a year-end rally," said Mr. Ing, who predicts gold could soar to as high as $510 (U.S.) an ounce in 2003.
~~~
Mr. Ing and other commentators say much of gold's climb in 2002, especially its dramatic jump in December can be attributed to a faltering U.S. dollar and worries over how a war between the United States and Iraq could affect the price of oil and other aspects of the global economy.

Low interest rates and monetary policies aimed at boosting economic activity in countries such as the United States, Germany and Japan are also seen as setting the stage for a strong performance.

The metal has traditionally been viewed as a haven in times of trouble, and was once considered an integral part of most investors' portfolios. Gold hit its record high of $850 an ounce in 1980.


Gold -- Sharefin, 00:54:22 01/04/03 Sat

HAS GOLD HIT ITS PEAK?

Wayne Murdy, chief executive at Newmont Mining Corp. is so bullish on gold that his wife is catching the enthusiasm: She bought him a gold watch for their 34th wedding anniversary.

Gold producers like Newmont are fast unwinding their hedge positions and on hopes that gold will continue to rise. The precious metal has risen 23% this year, including an 8% gain in December alone.

"The relative attractiveness of gold in time of great economic uncertainty, with particular concerns over debt-inflation and U.S. dollar weakness, is improving," gold analyst Merlin Marr-Johnson at HSBC in London wrote in a report.

Heightened political tensions would only add fuel to the gold flame, analysts say. Gold traded above US$400 an ounce before the U.S.-led Gulf War against Iraq in 1991.


Gold -- Sharefin, 00:49:28 01/04/03 Sat

DEFLATION VIGILANTES

The imaginary scene is the festive Christmas party of the Federal Reserve Board. "Do you realize," one of the distinguished governors says late in the evening, his words slightly running together, "how much more money we could print if we cut down just one minor national forest? We could paper the whole damn world with C-notes." The others laugh till they cry.

Essentially, this was the theme of the talk given by Fed governor Ben S. Bernanke, one of Alan Greenspan's new hires, at the National Economists Club in Washington on November 21. Bernanke, a leading monetary scholar, called attention to a potent anti-deflationary technology. Using a device called a "printing press," he said, the government can "produce as many U.S. dollars as it wishes at essentially no cost." The accuracy of that observation is indisputable. The question is why a sitting Federal Reserve official would choose to make it. The United States is a substantial net debtor to the rest of the world. The enviable American standard of living depends on the willingness of foreign creditors to regard the dollar as more than a piece of paper that can be printed "at essentially no cost."

What was Bernanke thinking about? What should we be thinking about? Answers - partial answers, at least - to follow.


Gold -- Sharefin, 00:39:03 01/04/03 Sat

The Case For Gold, Reprise

But supply and demand, the derivatives market and impending political violence are only the beginning of the crises contributing to the renewed interest in gold this year (and next?... and the year after that?). "The most important dynamic affecting the gold price is," writes Giustra, "and will be, the fate of the US dollar."


Fiat vs Gold -- Sharefin, 00:31:12 01/04/03 Sat

Unmitigated Disaster and Demented Windmills

The Fed continues it's panic-driven exercise in blatant destruction of the currency, as it rammed another $11 billion into the banks last week. And somebody is doing something with plain old currency, as six billion of it was drawn out of banks and into circulation. Maybe it has something to do with Santa Claus.

But all this money being created will result in a huge price inflation, because that's what always happens. The threat of resultant inflation is the only reason that prevents governments from printing the damn money in the first place. If it weren't for the fact that terrible, awful things happen when governments print up excess money, there would be no proscription against it. As it is, every country has safeguards in place - hey! Stop laughing so I can finish the sentence! - to prevent the government from doing this.

Addison Wiggin included the following as the introduction to his recent screed about gold, "Unfortunately, any period in history of government-backed, or 'fiat' currency, has led to disastrous bouts with inflation." And since the current period of time is just another period in history, we know what will happen, since there is never a "New Era" that allows up to be down, black to be white, or monetary excesses to be benign.

There is already inflationary talk about how the twenty-year price doldrums of commodities is over, as evidenced by the 24% rise in the CRB alone.
~~~
Continuing with the line of thought and remarking on politicians, Addison Wiggin perfectly encapsulated government ineptitude when he wittily concluded that "government fiscal responsibility" is an oxymoron.

Continuing on a streak, Addison notes that, "According to Lipper, the average stock mutual fund is down 21.7% for the year. Of the 41 fund categories Lipper tracks, only three will end 2002 with a gain: all three are gold funds and they're up an average of 62%."

Not content to merely enumerate history of some investment classes, he dryly writes that, "In the past decade, the US money supply has doubled from $4 trillion to $8 trillion, with a full 25% of that coming in the last 18 months while the Fed tries to
reflate the economy."

Well, now you know one of the reasons why gold did so well this last year. And since Greenspan is the worst Fed chairman in the history of the worst idea of the twentieth century, namely the concept of the Federal Reserve as a central bank, you can expect things will not get any better. They will get worse.
~~~

"Amazingly, virtually no one today is willing to admit that Federal Reserve policy has been an unmitigated disaster just like it was in the late 1920s, as the problem was too much credit, which caused inflation in asset prices, which caused massive imbalances and a maladjusted economy."


Gold -- Sharefin, 00:13:44 01/04/03 Sat

Gold and Deflation

On September 8, 1933, almost four years after the October 1929 stock market crash, the new American president, Franklin Roosevelt, raised the domestic price of gold by 44 percent from $20.67 an ounce, where it had stood for more than a century, to $29.82 per ounce. The objectives of this change were to raise commodity prices and weaken the dollar in foreign exchange markets. More broadly, the aim was to help end the deflation that was crushing American businesses and households, especially those with debts, the burden of which was magnified by falling prices.

So virulent was the deflationary pressure, however, that prices continued to fall during the balance of 1933 while the dollar strengthened, thus exacerbating the deflation gripping the American and global economies. Therefore, on January 15, 1934, President Roosevelt proposed further reflationary measures to Congress, which promptly passed the Gold Reserve Act on January 30. The result was to fix the price of gold at $35 an ounce on February 1, bringing to 69 percent the total increase in the price of gold over the space of just five months.

Gold Hedges Inflation and Deflation

For those who were trying to preserve, not to mention enhance, wealth in an environment of persistently falling stock prices, shaky government finances, and governments vying for a weaker currency, to have bought gold in 1931, 1932, or early 1933 proved to be a brilliant move. The price of gold, which climbs steadily in a world of rising inflation (as it did during the 1970s, from $35 to over $800 per ounce), jumped suddenly and spectacularly between September 1933 and February 1934 amidst deepening global deflation.

Gold can be a hedge against the risks of both more inflation and more deflation because both phenomena entail the prospect of serious trouble for financial assets. Rising inflation depresses the value of outstanding bonds and riles foreign-exchange markets. Rising inflation also distorts relative prices and increases uncertainty about the market value of stocks; remember the stock market crash of 1973 and 1974 after the quadrupling of oil prices. Gold becomes the asset of refuge in periods of rising inflation.
~~~

Stocks Fall While Gold Rises

After more than two years of proactive, stimulative monetary and fiscal policy measures and despite an absence of overt deflation and the return of modest growth in America, something is definitely still disturbing investors, households, and businesses. The stock market, as it did after 1929, has gone down for three years in a row and now the price of gold, as it did in 1932, also a third down year for the stock market, has started to rise. Over the past two years, since January 2001 when the Fed began easing, the price of gold has risen from $260 an ounce to more than $345 an ounce or by nearly 39 percent. The biggest part of that increase--more than 20 percentage points--has come over the past year.

The history of the post-bubble scenarios both in the United States in the 1930s and in Japan in the 1990s is rich with suggestions to explain a sharp rise in the price of a sterile metal--gold--during a period of intensifying global disinflation and deflation. The recent weakening of the dollar coupled with a two-year period of rising gold prices suggests that investors are searching for a safe-haven asset at a time when equities have suffered and government finances--especially in Japan and Europe--are beginning to come under increasing strain. Until now, and in two episodes this year when investors fled riskier assets, including stocks, junk bonds, and emerging arket securities, they rushed into U.S. Treasuries and U.S. dollars. But more recently, over the first three weeks of December 2002, in what looks to be the early stages of another flight from risk, investors bought more gold, adding $25 an ounce, or nearly 8 percent, to the price in that short span.

Other symptoms of the rising disenchantment of investors with financial assets, especially stocks, appeared during the third consecutive year of falling stock prices. The search for alternatives to equity assets coupled with a change from a focus on wealth enhancement to a focus on wealth preservation has resulted in the adoption of two separate strategies by many investors. The disinflation and deflationary environment in the global economy, together with uncertainty, causes investors to abandon risky assets and to acquire claims on reliable sovereign governments such as the United States. Rising uncertainty also leads to an increased desire to hold cash or other highly liquid assets.
~~~~
But the rise in the price of gold is different. It serves as a sign that many investors perceive that reflation efforts have not been successful and will have to be intensified. This is not too surprising. While widely discussed, reflation efforts in Japan have neither been sufficiently aggressive nor successful. The other major economic area outside of the United States--Europe--seems to be stuck in a worsening disinflationary recession, and its central bank has been reluctant to ease as aggressively as the Fed has eased, while fiscal policy is actually moving in a contractionary direction.
~~~

Beware Higher Gold Prices

Optimists, making comparisons between the current post-bubble period and the United States in the 1930s, have been consoled by the notion that widespread deflation has not taken hold in the U.S. today. That is a dangerously misleading source of comfort. What we have learned over the past year is that low nominal GDP growth, the sum of modest real growth and tepid price increases confined to the services sector, is insufficient to produce widespread profit growth consistent with the forecasts--or perhaps the hopes--of most equity analysts. Therefore, the search for alternatives to equity assets together with a desire for wealth preservation, which has initially led to purchases of government securities and a movement into cash, will continue. If investors should conclude, and it would be premature to do so at this point, that the only option left to policymakers is to print money in quantities sufficient to create rising prices and perhaps dollar depreciation, the continued search for wealth preservation will lead to further purchases and a higher price of gold.


Gold -- Sharefin, 23:53:40 01/03/03 Fri

Gold Starts To Reflect The Possibility Of A New World Order

More than half the world’s population lives in the region which could be poised for rapid economic growth and offer great investment opportunities in the same way that maturation of America’s postwar generation powered the US economy over the past 50 yeasrs. Already China has taken over from the States as the recipient of the greatest part of the world’s capital inflow and its steel industry is growing at about the same rate as America’s is contracting. This is a strong hand for starters and China has not neglected to demonstrate to the western world that it is now open for business. A strong signal to this effect was the reopening of the Shanghai Gold Exchange after 50 years. And there may be more to this than meets the eye. The peoples of the Far and Middle East have long respected gold for its monetary value even when purchasing it in the form of jewellery. They have watched the inevitable swings from feast to famine of economies based on paper currencies and may have something else in mind. Already a gold Islamic dinar has been proposed and there is talk that China may initiate a gold backed trade currency.

Last year Ferdinand Lips, a well respected Swiss banker, produced a fascinating book called Gold Wars which is described in the sub-heading as “The Battle Against Sound Money as Seen From a Swiss Perspective.” In it he runs through the history of gold as the basis of currency from the Roman Empire, which started to go into decline when Nero debased the coinage, to the present day when gold is simply being ignored in favour of paper currencies. To the Western bankers and portfolio managers he poses two question, ‘What confused logic compels them to leave no room for gold in their portfolios? Do they really think that stocks of companies with no earnings or bonds in troubled currencies are sensible long term investments?”

His contempt for politicians who have pressurised central bankers into selling gold assets for paper is a recurring theme throughout the book. “ I will not ask anything of the politicians because they will never change. All they have done with their politics is to destroy the purchasing power of money. Free people will always believe in gold , and when the economic and monetary situation offers nothing but despair, they will want to get rid of the printing presses and the politicians.” Westerners are finding it difficult to appreciate just what a mess the present monetary system is in, so gold has so far made only a modest advance from US$270 to US$350/oz over the past year. But China and its friends have been accumulating bullion and this may prove to be only the beginning of the beginning of a new world order.


Gold -- Sharefin, 23:39:11 01/03/03 Fri

Gold Is Hip Again

Overlooked for the last 20 years, gold is back in vogue.
Its momentum as an investment option has been surging this month, with prices up 9 percent due to rising geopolitical tensions largely from Iraq and North Korea. Gold futures closed Friday at $349.70 an ounce -- a 51/2-year high.

Oil prices' recent ascent, the weak stock market and the softening real estate prices also are encouraging investors look elsewhere.
~~~
"That's the catch with the commodity," said Erik Gebhard, president of the commodity-brokerage firm Altavest Worldwide Trading Inc. in Laguna Hills, Calif.

"You have a physically tangible product, but its supply and demand nuances are in flux. You kind of have to assume that and look past that and say nobody on God's green earth will know everything. You need reasons to rationalize."

But metals analysts are betting that gold prices have some room to grow. Mr. Gebhard sees $400 an ounce "in the next several months."

Bill Oyster, president of Dallas-based DGSE Cos., said bullion trading at his company is up 40 percent so far this month, and up 30 percent year-to-date.

"If you're a professional trader, you've got to be crazy to short gold," Mr. Oyster said, adding that gold likely won't fall below $340 for now.

The "upward resistance" -- or the price at which investors might start to think it too expensive -- would be at about $375 by the summer months, he said.
~~~~
Metals analysts say gold's rise is long overdue. In the last 20 years, the democratization of the stock market, the advent of numerous fixed-income options and rising real estate prices prompted many investors to toss aside gold as an option best reserved for the paranoid.
~~~
Economic concerns also may be at play in gold's comeback. The weakening of the U.S. dollar due to the sluggish economy and the threats of inflation are weighing heavily on the commodity markets, analysts say.

In this view, robust consumption, rising oil prices and low interest rates -- and thus the greater money supply worldwide -- have signaled a possible resurgence of inflation next year, and gold has always risen along with inflationary fears.


Gold -- Sharefin, 23:35:01 01/03/03 Fri

Gold tipped to lose lustre in 2003

Despite shooting to a five-and-a-half-year high towards the end of 2002, analysts have a pessimistic outlook for gold going into the new year.

With economic growth forecast to improve and the possibility of tensions easing in the Middle East, analysts believe investors will turn away from defensive assets such as gold.

Instead, they are likely to plough money into investment vehicles offering potentially higher returns, such as equities and currencies.
~~~
Mr Maurer suggests the factors currently supporting the price - weak global equity markets, doubt about the strength and timing of a world economic recovery, a reduction in producer forward selling and tension in the Gulf - will be less influential in 2003.

"Our view of 2003 is with economic growth picking up, particularly in the US, and a return to less uncertain times. Investors will switch away from gold into other investment vehicles and we see prices heading back down under $US300 an ounce next year."


Gold -- Sharefin, 16:33:19 01/03/03 Fri

JP Morgan asks SEC to check into gold trade rumors

JP Morgan Chase & Co. (NYSE:JPM - News), a major bullion dealing bank, said Friday it has asked the Securities and Exchange Commission to look into rumors about gold trading losses that dogged the bank throughout 2002.

"We brought the nature and subject of the rumors to the SEC and asked them to look at it," a spokesman for the bank said.

The rumors about Morgan's gold and gold derivatives operations have been propagated over the Web site of the Gold Anti Trust Action Committee (GATA), a group that alleges bullion banks have colluded with central banks to prevent the price of bullion from rising.

The price of gold is at its highest in almost six years.

JP Morgan, which ran into trouble over its commodity and derivatives dealings with bankrupt energy giant Enron Corp., said in November that mark


Gold -- Sharefin, 16:29:14 01/03/03 Fri

MORE ON THE BLANCHARD SUIT…AND THE DEATH-DEFYING (?) BARRICK HEDGE BOOK

The Blanchard suit against Barrick and J.P. Morgan-Chase is, of course, a big story. The implications go far beyond what the current price of gold should be, and involve the financial health of banking houses and entire financial market sectors.
~~~
The real "story" here is how gold has been used as a vehicle for speculators to engage in, ultimately, very risky financial behavior. Far from being an issue solely of gold's "forced" or otherwise contrived underperformance as an asset class/investment, it's one of shenanigans (short selling, arbitrage, derivative trading and the rest) having been engaged in that threaten the health of several financial institutions, and even the whole monetary/financial structure itself.
~~
We must go beyond even this, though, to wonder what this mining giant’s fate might be. Last Fall, the company made more than one announcement warning of production shortfalls, earnings woes and more. Many are asking what on Earth is going on. With declining production, can the company keep all its long-term obligations to deliver gold at any price? Now the ugly duckling in the sector, will Barrick have the clout necessary to purchase more and better production? Does its reduced earnings for 2002 mean that-already-the company is having to eat some recent losses on its hedge book; losses it’s tried to tell investors were virtually impossible? Nobody really knows for sure right now. But there are lots of questions; and Barrick’s share performance especially during the second half of 2002 tells us that something may be badly amiss.

The Barrick dealings with Morgan do not involve a huge amount of gold, within the context of the overall short position which is said to exist. Blanchard’s going after these two, though, represents an achievable means of eventually blowing the lid off the entire universe of gold "manipulation." And-given Barrick’s position as a producer in particular-the antitrust case is arguably the easiest to make against them.


Gold -- Sharefin, 02:32:25 01/03/03 Fri

Behind the Vault
The Pope's Banks in America, the Giannini Family, and the American CIA


Gold -- Sharefin, 02:22:18 01/03/03 Fri

GREENSPAN REPORTEDLY BRIBES AND AIDS BUSH IN GOLD SWINDLES - part one

GREENSPAN REPORTEDLY BRIBES AND AIDS BUSH IN GOLD SWINDLES - part two


econ for newbies like me -- gertrude blake, 14:23:59 01/01/03 Wed

http://ingrimayne.saintjoe.edu/econ/TOC.html


Gold up 80% in Brazil yoy -- giovanni dioro, 05:34:37 12/31/02 Tue

In an inflation related article On today's front page of Brazil's biggest paper, Folho do Sao Paolo, there was a chart with various benchmarks. It probably comes as no surprise that leading the pack was gold, up 80% on the year when priced in the local currency, reaís.

In comparison, the real estate market here in Brazil has been quite stagnant for the past few years. Gold has far outperformed real estate, and it shows what a good investment precious metals can be as a hedge against paper currencies.


Periodic Ponzi Update PPU -- $hifty, 00:08:48 12/30/02 Mon

Preiodic Ponzi
Update PPU


Periodic Ponzi Update PPU

Nasdaq 1,348.31 + Dow 8,303.78 = 9,652.09 divide by 2 = 4,826.04 Ponzi

Down 111.14 from last week.

Thanks for the link RossL!

Looks like another interesting week ahead.

Go GATA
Go GOLD

$hifty




Gold -- Sharefin, 01:28:07 12/29/02 Sun

Pure Gold: A Veteran Of The Mines Makes A Concentrated Play On The Glittery Stuff

Indeed, Foster believes that gold prices have begun an ascent that could last
for at least 10 years. His theory: Mining companies scrimped on exploration
during the fierce bear market for gold from 1996 to 2001 -- and thereby set the
stage for a long-term shortage of supply. Even if they crank up exploration
now, the efforts could take years to pay off. "Mines are hard to find," Foster
says. "I can tell you from experience -- I've drilled a lot o's portfolio.
~~~
Foster does take a concentrated approach to gold. In 2001, he traded out of
platinum, tantalum and palladium to focus on the relatively small world of
publicly traded gold companies. Those outfits have a combined market value of
$60 billion, or less than one quarter of General Electric's value. Among his
favorites: Glamis Gold of Reno, Nev., an efficient company that has been
expanding through acquisitions. Foster figures Glamis will double its
production during the next five years. Glamis shares have been trading recently
at a 52-week high of 18.20.

In general, Foster favors companies that don't hedge their production -- and
thus benefit the most when gold prices rise. Foster says a full 80% of the
names in his portfolio refrain from hedging. In a further sign of
concentration, the fund's top 10 holdings account for nearly 60% of its assets.
~~~
Foster believes that the metal is benefiting from a major shift in investor
psychology. "What worked in the 'Nineties won't work anymore," he says. "Rather
than chasing stock-market returns, investors are turning to alternative
strategies that include hedge funds, real estate and gold."

But the main reason for Foster's bullishness is supply. During the next five
to 10 years, he says, gold production will actually decline for the first time
in 20 years, reflecting the aging of existing mines and the likelihood that few
new mines will start up. Not only is it difficult to find new gold; it's also
expensive. Successful exploration ends up costing anywhere from $25 to $75 an
ounce, Foster says.

A survey by Toronto-based Beacon Group found that worldwide gold production
by 2010 could be nearly 30% lower than in 2001, assuming a long-term average
price of $275 an ounce. The Beacon study, performed last year at the behest of
major gold producers, suggests that the crunch may not be fully evident until
after 2005.

Foster already sees a clear sign that the major gold companies are preparing
for price increases: They're allowing the hedges on their gold production to
run out. Such contraction in the hedging business should also put upward
pressure on spot, or current, prices of gold. That's because supply should
decline as companies sell less of their production into the future.


Gold -- Sharefin, 01:01:31 12/29/02 Sun

Central Bankers in the Dock: the Blanchard Controversy

Some comments on the storm over the Blanchard lawsuit Hoo, boy. All this dust being raised by Tim Wood's article on the Blanchard-Barrick-JPM lawsuit! One would think that the dispute of whether gold is being manipulated by a nest of conspirators has been settled a long time ago, with the pro and con camps withdrawing into their own circles so that each of them can tell their converted that they have WON!

And then Blanchard comes along to light the fuse again!
~~~~
There can be little doubt, if the bulk of these assumptions are not too far off the mark, that the decision of the central bankers to lease their gold in quantity for less than $4/oz p.a. and to continue to do so for at least 28 months during which the value of the bullion reserves fell by $163/oz from $415 to $252 (while earning, at best, $10/oz on just a portion of the reserves during this time), can only be due to two reasons: Massive, sustained stupidity by central bankers in the face of day to day evidence, to reveal a near criminal negligence of their mandated responsibilities A hidden agenda that was more important to them than the effect of their decisions and actions on the value of the bullion reserves in their care Observe that except in so far as there is reference to a possible "hidden agenda" for the decisions of the central bankers, there is no mention of conspiracy or manipulation in this essay. So please do not impute support for a 'conspiracy' theory to what is written here. The whole essay hinges purely on the wisdom (some might say 'sanity') of these central bankers in respect of their decision to sell and lease gold in quantity (a decision generally accepted as fact). Also on the fact they kept on doing so, even when they were clearly shooting themselves in both feet at the same time, at least in terms of their mandate to The People, the proper owners of the national reserves.

This brings us to the final assumption: 9. Assume that you, the reader, is the Judge in a matter where 'The People' sue their central bankers for the latter's negligent management of the country's gold reserves during the period February 1996 to July 1999; when the value of the bullion declined by $163/oz and the gold leases at best earned 10$/oz on a (small?) portion of these reserves. The People now seek either reparation or punishment, or both.

In the light of the above assumptions, all you have to decide, really, is whether the central bankers, in a climate of excess natural demand, did in fact lease gold in such quantity as to depress the price. Nothing more and nothing less. That is the crux of the matter.
~~~
Finally, though, this essay boils down to just one question - would you, as a judge, rule the central bankers Guilty or Not Guilty on the charge of acting in a manner that had the effect of reducing the value of the national reserves, contrary to what is expected of them in terms of their mandate to be prudent and diligent. No if's and no but's - a simple question: did the central bankers act in a manner contrary to fulfilling their mandate.

A simple question, but a Guilty verdict would lead to a mare's nest of other questions and suppositions that are not touched upon here, including, perhaps, mitigating circumstances in that these central bankers were pursuing other objectives critical to their function. But that would be supplementary to their guilt on the main charge.


Fiat vs Gold -- Sharefin, 23:41:52 12/28/02 Sat

Weekly Money Flows

GOLD OUTLOOK - The gold breakout continues with no signs of stopping. $350 was a bit of a problem at week's end as it is a big psychological barrier at least from a numerical standpoint. There could be years of short selling stop losses built up anywhere in the prices between here and $400 due to the producer selling that happened in the past but I can't be sure. If there are triggers they could be hit any day sending the price of the metal even higher. It is either that or there will be some red ink on the balance sheets of those who borrowed the gold to sell forward so Mr. Market will punish the shorts one way or another.


Fiat vs Gold -- Sharefin, 23:27:09 12/28/02 Sat

THE CATALYST!

The point remains...at present, housing prices are rising far more rapidly than incomes, a phenomenon that is obviously not sustainable in the long run, as affordability will become a problem sometime in the future - at least in areas where prices are rising by close to 20% per annum. So, whereas the flight into real estate may be nearing an end, the outlook for commodities is far more appealing. It is worth noting that despite weak global economic conditions and weak stock markets around the world, the CRB Commodity Futures Index has risen by more than 20% this year.

Commodity prices have also been in a bear market for more than 20 years and, in the age of capitalism, have never been as low as just recently.

Therefore, once fundamentals improve, prices could run away on the upside. For example, if synchronized growth around the world should materialize - a scenario about which we have serious reservations, but which is nevertheless a possibility for the short to medium term given central bankers' propensity to print money - then obviously the demand for all commodities should improve and drive prices higher.

But more importantly, with people like Mr. Bernanke at the Fed, and actually even being a serious candidate for future chairman of the Federal Reserve Board, depreciation of the dollar and a rise in commodity prices is almost guaranteed - particularly if the economy weakens.

In fact, Bernanke's declaration to the National Economists' Club in Washington that "The U.S. government has a technology called a printing press," didn't go unnoticed by the believers in sound money (gold), who subsequently pushed gold prices through an important resistance level. [Editor's note: Gold traded to $351 at the opening in Hong Kong this morning...and has gained $36 in the last month, or roughly since Bernanke made his speech. Next stop? Who knows, but $414 is the ten-year high set on February 5, 1996...no doubt, an important level to watch. Addison.]


ChartsRus -- Sharefin, 23:22:46 12/28/02 Sat

Charts Online

Looking as good as ever.....


Fiat -- Sharefin, 23:14:31 12/28/02 Sat

Giovanni
Here's another snippet which agrees with your thoughts & mine.

Federal government revenues rose ...
from about $2/person in 1791,
to about $3/person in 1860,
to about $15/person at the peak of the war between the states,
to about $8/person in 1910,
to about $62/person at the peak of WW1,
to about $2100/person in the 1980s,
until it currently exceeds $8870/person.

-- Congressional Budget Office (all figures in constant dollars)


Fiat vs Gold -- Sharefin, 23:08:40 12/28/02 Sat

Bouncing Betty

Bouncing Betty was an aspect of the Vietnam War explained to me by one of my Sergeants back in 1974. It was an explosive that when you set it off it would shoot up in the air and then explode. There was a lag when the unfortunate victim realized they were dead, although they hadn't actually died yet, since technically, the mine hadn't exploded. About where the global and American economies are as we enter the New Year of 2003. We are in the economic version of the famous Breck Shampoo ad, "Does she or doesn't she?" The economy has been in a rolling depression since the spring of 2000, even though you would never know it from the dominant mainstream reality smothering the United States Empire. Things are going to start happening shortly after January 2nd: economic things, political things and military things. 2003 will impose a brutal new reality upon the current fantasy one prancing around these here United States. Things are different now.

2002 was not a good year in economic terms. The Euro is at a three year high against the fiat dollar. The barbaric relic is showing signs of life. We have had record corporate credit downgrades. We have had record personal bankruptcies. We have had record corporate bankruptcies. Hmm, I wrote that last year too. It seems we set a horrible record and then proceed to do worse the next year. Record credit card default rates. Record home foreclosure rates. Record percentages of people overdue on payments. The reason this goes on year after year is because the system simply ignores it. The economic variation of one hand clapping. We have reached the level of debt related chaos needed to trigger an economic collapse. We just haven't experienced the economic collapse. Everything is in slow motion and we are just watching things unfold while denying any of it's happening.


When it Began -- giovanni dioro, 06:02:45 12/27/02 Fri

Sharefin, it looks like this monetary inflation started with the "creation" of the Federal Reserve Bank in america. For the next 15-20 years that followed were rampant credit creation (war spending in WWI and consumer spending in the 1920's).

When the gold standard would have normally led to a massive deflationary constriction, Franklin Delano Rosenveld (*ancestor's spelling) took away the american citizen's ability to redeem dollars for gold. That same gold (tons upon tons) was simply given to the banking consortium (federal reserve).

From that point on, america's gold was gone. It now belonged to the bankers. Any gold that was then stored at Fort Knox was held in trust for the bankers, it no longer belonged to the US Treasury - the Treasury was merely the guardian.

Like that saying, "Don't take any wooden nickels", a similar case could be made for "paper dollars". For the US Constitution defines a dollar as a certain amount of gold or a certain amount of silver. Thus a dollar is not paper, but is silver or gold.


Fiat vs Gold -- Sharefin, 23:06:37 12/26/02 Thu

Giovanni
Deflation has many disguises - taxation also.

Here's a classic on the deflation of purchasing power.
Notice when it all started.

Some things used to be golden...^o-o^...




Gold -- Sharefin, 22:56:34 12/26/02 Thu

Customers Queue for Gold Bullion

Customers lined up to buy investment-grade gold bullion yesterday, when it went on sale for the first time in Shanghai since 1949 -- making a mockery of retailers that refused to sell gold bars earlier this week, claiming there was no demand for it due to high world prices.
Responding to numerous phone calls from eager buyers, Shanghai Lao Feng Xiang Co. Ltd., the city's leading gold jewelry processor and retailer, decided to sell 15 kilograms of bullion on a trial basis. It's safe to say the trial was a success as almost all the gold bars were sold within two hours yesterday afternoon.
"We had prepared to launch the bullion in Shanghai some time next month. However, we changed our minds as we received more and more phone calls from residents asking to buy bullion," said Chen Kui, an executive with China Gold Coin Co., the country's sole wholesaler of gold coins and bullion.
A total of 14 kilograms of bullion -- in bars of 50 grams and 100 grams -- was sold to buyers who had placed orders during the past half-month.
And the remaining kilogram was sold quickly over the counter, according to Shi Xiaofeng, a sales manager with Lao Feng Xiang's Nanjing Road outlet.
"One man purchased 10 bars at once. People were really crazy for gold items," he said.
Some buyers were a little too eager to test the gold.
"Many wanted to take a bite of the bar, so I had to stop them," one saleswoman said. Biting gold is a traditional way of testing its quality, as pure gold is very soft.
The success of yesterday's trial run could change many retailers' thoughts about selling gold.
"When the world market stood at a six-year high late last week, no one dared to take the business from China Gold Coin. If citizens gave a cold shoulder to the bars, we would have to take the losses all by ourselves," said Lao Feng Xiang's Shi.
While the bars are bought as an investment, there is currently no place in Shanghai to cash them in, although officials with China Gold Coin is working with several banks to set up a buyback system within the next few months.
Some analysts say yesterday's sale was helped by a correction in world gold prices after they had risen for several weeks due to concerns about the possibility of war in Iraq.
Gold was selling for US$347 a troy ounce on world markets yesterday, down from a recent peak of just over US$350 last Thursday. The bullion at Lao Feng Xiang sold for 102 yuan (US$12.34) a gram (US$382.19 a troy ounce) yesterday. The price was fixed by China Gold Coin based on the floating prices on the Shanghai Gold Exchange.
While some analysts question the investment value of gold at current prices, others see it as a good hedge against inflation.
"Gold is a traditional investment tool for people to combat against inflation. Although you cannot reap quick profits from trading gold as you might on a stock market, investing in bullion is much safer due to its small fluctuations," said Wang Lixin, China manager for the World Gold Council.
Sales were so good yesterday that China Gold Coin is worried it doesn't have enough bars to meet the demand.
A similar gold rush in Beijing, Nanjing and other cities has led to a shortage, said the company.

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Yet again instituional reporting says demand is down, yet news from the source says demand as strong as ever.
This is common on all the reports stemming from India thru to Asia.

Traditional media sources are attempting to obscure the news and play down the demand.
Likewise with the WGC.

Traditional media sources are as corrupt as Enron & suffer from the same diseases.


Most People don't understand "deflation" -- giovanni dioro, 13:02:45 12/26/02 Thu

Most people like to talk about deflation without really understanding what it is.

In a time when gold was money and you couldn't just print as much of it as you wanted, we used to get deflations. People would borrow too much, credit expanded along with the money supply. Problem was that there came a point when there wasn't enough money circulating to pay back the loans + interest. Money supply collapsed and money itself was in great demand.

When money is in great demand, then those people who have it can charge a fortune to lend it out. What they charge to loan out money is referred to as an interest rate - the cost of borrowing money.

People talk about deflation now, but we don't have deflation because interest rates are extremely low. The Fed artificially sets low rates and creates as much money as it wants by buying stuff and loaning money to the US Govt which has a checkbook account with the Fed without limits.

Sure the people who can borrow from the Fed at low interest rates is limited, but nonetheless there is a trickle down effect, e.g. why should the bank pay you 4% interest on a savings account when it can borrow from the Fed at 2%?

Moreover, the money supply is not shrinking, but merely stagnating a bit. The way I see it, the only way gold is going to make another low is if interest rates head up to 10% or higher.

As long as interest rates stay low, the dollar should stay weak, and gold should remain strong. Position yourself accordingly.


Gold -- Sharefin, 09:38:30 12/26/02 Thu

Back to days of gold lang syne

CHASE dividends and put your faith in the yellow metal. That's the advice for investors facing another difficult year with global stock markets.

Experts say 2003 will be another tough one for the Australian share market. Careful stock selection will be the key to better returns, as Wall Street continues to suffer from the excesses of the 1990s and fragile consumer confidence.
~~
And the experts emphasise so-called "X factors" that could derail global recovery - including a protracted war in Iraq, more terrorist attacks and a crisis of confidence in the US dollar.
~~~
The US economy will struggle as it unwinds the huge debt levels built up by consumers and businesses in the debt-financed boom of the 1990s. This will also act as a brake on company earnings.
~~~
Fat Prophets executive director Jason McIntosh predicts further big falls in US stocks as the US dollar plunges under the weight of the country's current account deficit.
~~~
Fat Prophets also strongly favours gold, predicting it will reach $US400 an ounce next year, partly because of investors dumping the US dollar. It currently fetches about $US345 after spectacular, war-fuelled gains in the past month.


Gold -- Sharefin, 09:33:44 12/26/02 Thu

Gold improve further on stockists buying

NEW DELHI, DEC 26 (PTI)
Gold prices improved on the bullion market today on sustained buying by stockists in line with a rising trend in overseas markets and closed further gains.

Silver, on the other hand, remained neglected and surrendered moderate ground.

Marketmen said gold was quoted higher in fresh bouts of buying by stockists in the face of any fresh arrivals as most of the Asian markets remained closed for Christmas holidays.

They said traders expect a further hike in gold prices when markets open after the winter break as tension between Iraq and the US continued to be hightening.


Gold -- Sharefin, 23:25:31 12/25/02 Wed

Gold's Rally May Extend Into Early Next Year, Traders Predict

Gold, on track for its biggest annual gain in 23 years, may rise further in the new year as the threat of a U.S.-led attack against Iraq prompts buying of the metal as a haven, analysts and traders said.

Gold futures have soared 24 percent this year, reaching a 5 1/2-year high close to $350 an ounce, as tumbling stocks and a weakening dollar sent investors looking for alternative assets. Prices may rise as much as another $50, even before any attack, some traders said.

``We might go to $380 or $400, but it's going to have a hard time getting over that,'' said Leonard Kaplan, president of Prospector Asset Management, a money-management company in Evanston, Illinois.

``It is the only asset that is not somebody else's liability,'' Kaplan said.


Jim Sinclair Challenge to Robert Prechter -- Cobra, 04:40:27 12/25/02 Wed

Mr. Sinclair has issued the following challenge to the
Robert Prechter Followers of the Elliott Wave Theory
----------------------------------------------------------
locklimit . . Wed, Dec 25, 7:08AM ET
For the Wavers to think about, this was posted last night at a Major gold forum, I have followed the comments of the gentleman who made this statement and I think the post is credible, it's certainly made with some conviction. What say Wavers? -------------- Here is a post from Jim Sinclair challenging the Prechter crowd on the price of gold: Thought you might like to read Sinclair versus Prechter: From Jim: There is a major error circulating amongst our Elliot friends. That is deflation is negative to gold. The primary anti-deflation tool to be used during periods of threatened or real deflation price-wise is GOLD. I am willing to say that if the point of capitulation of opinion for the Elliot ( Prechter ) School of thought is $400 an ounce, I am looking for Prechter true believers to make a legally binding wager. I will wager in lots of $1000 up to 100 Elliot believers ( total wager $100,000 ) that gold will trade at $401 in 2003. To book the wager fax me at 860 364 0673. I will send you a contract for signature. To give our Elliot colleagues a fair chance, I suggest that they read my recent Editorial carried on www.financialsense.com, www.tanrange.com & www.lemetropole.com titled " Gold, the Deflation Solution." The Elliot Wave believers have not reviewed in detail the history of gold 1929-1940. May I suggest that you copy this gentlemanly challenge to the Elliot ( Prechter ) Doctrine and send a copy of it to all of the major Elliot web site and to Mr. Prechter himself. Mr. Prechter may wish to book the entire wager, himself. Regards, Jim


Fiat -- Sharefin, 21:26:55 12/23/02 Mon

THE US FINANCIAL SYSTEM BLOW-UP

THE US FINANCIAL SYSTEM BLOW-UP

Over the past 32 weeks, the US M-3 broad money measure has increased in quantity by $US 498 Billion. It is being inflated in q