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Gold -- Sharefin, 00:21:41 01/20/03 Mon

Felix Zulaf in Barron's - no link
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- But the one really long-term theme I'm recommending is gold. Historically, it's been a hedge against inflation and fiat currencies.

Q: Mostly, it's been a hedge against capital gains.

Zulauf:
That's been true in the past 20 years, but it's changing. The price of gold moves in steps. From 1971 to 1980, the price went from $35 an ounce to $850. From '80 until the past few years, it fell from $850 to $250. Having put in a bottom around $250 an ounce, it's now trading $100 higher. We all know the history. Now the central banks in the U.S., Japan and, later, in Europe are trying to solve our economic problems by throwing money at the system. The end result will be more and more new money, without a counterbalance in the real economy. They created money out of thin air, which means the value of paper currencies goes down. That's the history of fiat currencies.

The whole process has been accelerated by the problems in the U.S. Personal consumption has been going up over the past 20 years. Instead of solving the problems of underinvestment and rebalancing the economy, which would be painful for a while, the central bank just throws money at the system and entices consumers to take on more debt. At best, the U.S. is in for a long period of stagflation, very low growth or worse. At some point, the world will begin to understand that the U.S. economy is fundamentally much weaker than generally believed.

Q: Then what?

Zulauf:
The U.S. is the largest debtor nation. About $3 trillion are held by foreigners, if calculated at the purchase price, and foreigners are still buying U.S. assets. Last year they bought about $45 billion of U.S. equities, but that will change at some point. When people realize there are fundamental problems in the U.S. economy, the dollar will begin to decline in a major way. The process actually started in 2001. Other central banks will at some point then try to support the dollar, because if it declines too much, it hurts their exports. They will be forced to adopt the same policy as the U.S. central bank, and you will have the whole world creating more fiat currencies. That's when gold will really run.

I use a timing model -- gold versus stocks, or the Dow Jones Industrial Average divided by the price of one ounce of gold. In 1929 you bought gold and sold stocks. The ratio was at 15 to 1. In 1942 you sold gold and bought stocks. The ratio was 3 to 1. In 1966 you bought gold again and sold stocks. The ratio was 28 to 1. In 1982 you sold gold and bought stocks because the ratio was 1 to 1. In 2000 you bought gold and sold stocks, because the ratio was 45 to 1. It's now 25 to 1. I don't know exactly how low it will go, but I'd guess somewhere between 1 to 1 and 1 to 3. We'll see in 10-12 years. That's why gold is my long-term call.

Q: Are you talking about buying gold itself, or futures?

Zulauf:
You buy real gold. In real terms, after accounting for inflation, it's about at the level where it sold in the 1930s. In actuality, it's where it was in the early 1970s. It's dirt-cheap.

Q: But you've got to store it. You've got to pay interest for the storage. You don't get any cash flow from it.
Zulauf:
If owning gold is not attractive, you buy gold stocks. But that's a different ballgame because you have corporate risks, managements that could mess things up, companies with liabilities. There is not much gold around. All the gold mined in the world equals 143,000 tons. That's a cube of 20 meters. At current prices, that gold is worth $1.5 trillion. Compare this to the U.S. debt of $31 trillion, and it's tiny. It's peanuts.

Gabelli:
The last time gold was at $400 an ounce, the XAU [the Philadelphia Stock Exchange Gold and Silver index] was about 180. Gold today is $355 an ounce, and the XAU is at 80. The contracts haven't moved.

Zulauf:
Well, the XAU is composed of different sorts of gold companies, and the heavyweights are those that hedge. They don't benefit from the rise in gold prices. Placer Dome and Barrick Gold hedge. They do not move up with the price of gold. Among the large-cap stocks, Newmont Mining has started taking its hedges off. It wants to go fully unhedged.

Gabelli:
The index has changed since 1994 because of mergers.

Black:
Isn't there one fallacy in your reasoning, Felix? Let's assume M2 or M3 [measures of money supply] grew by 7% or 8%, which is what happened in the past year. What happens when you're getting productivity gains of 4% and 5%? Ultimately, you're not going to have inflation.

Zulauf:
The policy of the U.S. central bank is going to destroy the dollar. Confidence in the U.S. currency at some point will collapse, and you'll have a run on dollars. Money can't go to other currencies, because they have to support the dollar. Gold will act as a monetary currency -- a currency without the liabilities of ill-guided central bankers. Another way of looking at it is to say the U.S. has underinvested in capital investment to supply the goods that U.S. consumers are demanding. You have spent your money by buying on credit instead of investing. The Chinese are investing. They are building an empire.

Samberg:
With our money.

Q: Felix, do you like any gold stocks?

Zulauf:
I am not a stockpicker in this field. I would just go with names that don't hedge -- for instance, GoldFields, Meridian or Newmont. Buy them and hold them. They will all be 10-baggers over the next 10 years.

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Gold -- Sharefin, 00:18:41 01/20/03 Mon

Murenbeeld gold model still flashing green

For those not familiar with the work of Dr Martin Mureenbeeld, his consultancy has established a name for itself forecasting the gold price. His latest projection is for a “narrow risk range of $340-70 and a wide range of $320-85” per ounce. The forecasts are derived from a proprietary statistical model that has the ability to determine the gold price with 88-92% accuracy depending on the time frame used.

Another way of looking at the risk ranges is that if you bought your gold securities at a price below $340 per ounce you should be okay to hold, and if you paid for them below $320 then you’re almost bullet-proof. For the top ranges, $370 is a more risk averse person’s sell signal and $385 a point where speculators might examine their positions.

Murenbeeld’s measured weekly analysis has patiently built the case for higher prices since 2001, catching the turn in the market almost to the day. For the London Bullion Market Association 2003 forecast roundup, Murenbeeld has submitted a range of $315-415 per once, with the average pegged at $355. That makes him $20 per ounce more bullish than Mitsui’s Andy Smith for this year.

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Gold -- Sharefin, 00:11:16 01/20/03 Mon

Mitsui metal forecasts for 2003

Seems like Tim & Andy sleep in the same bed & talk in the same language & use the same drugs (one would think reading the diatribe).

This article supposedly coming from respectible analists is the biggest load of crappola I've ever seen.
It's got bias's on top of bias's & reeks of negativity.

Tim needs to get his head back into perspective & cut out the kids talk and par back on his anti-gold bias.

He'd be far better off holding back his bias's and not trying to inject his opinions into his articles.

The more that Tim presents his opinions instead of just reporting the facts, the more the gold community shakes their collective heads & wonders why.
His narative is a sad mistake for factual information & worsens as the POG rises.

Truly a sad state of affairs.

ps
Don't forget to read the letters at the bottom for entertainment.

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Gold -- Sharefin, 23:41:10 01/19/03 Sun

Gold's Demand, Scarcity Indicates Share Price to Continue to Rise

Last year, when gold was
around $300 an ounce, I forecast we would enter a multi-year bull
market in gold with a one-year target of $365 an ounce, rising as
high as $600 on a two- or three-year view.
Contrary to popular belief, in 2002 the major buying impetus for an
upward move was mining companies buying back hedges rather than
investor interest, which was then very muted. But now that we have
had two years in which gold and gold assets have outperformed
everything else, investor interest is re-emerging as a powerful
force, increasing pressure on the mining companies to repurchase
outstanding hedges, which are still in excess of one year's supply of
gold. A huge gap opened up in the last 12 months between the share
performance of the few companies which are unhedged, such as Harmony
and Goldfields in South Africa, both of whose prices roughly tripled
in dollars, and Barrick in Canada, the most notorious hedger of them
all, whose price fell 1 percent. The more the price rises, the
greater the pressure on management to repurchase, which perpetuates
an even bigger rise in the gold price -- a classic virtuous circle.
Who are the major new buyers, then? China, for one. The opening of a
new gold exchange in Shanghai in December allows China's 1.2 billion
citizens the opportunity to buy gold as an investment for the first
time in 53 years. India, for another. With its population of 900
million, India is now the biggest buyer of gold in the world; it
purchases 700 tonnes per annum. Arab countries are also anxious to
reallocate bank reserves because of the pressure on the dollar. But
the most significant change is that US hedge funds have woken up to
the importance of gold. Last Wednesday alone, 5,000 contracts were
taken out in Comex, sending gold prices soaring by $10 an ounce. US
investors, concerned about potential inflation after recent speeches
about the Federal Reserves, are now flocking to gold.
There is now an annual shortage of 1,000 tonnes, and gold's scarcity
suggests the share price over the next three or four months will rise
to $420 an ounce, before stabilising over the rest of 2003 to between
$380 and $420. Such pressure on gold prices hasn't been seen for 20
years, and it's difficult to see how the upward move can be
restrained.

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Gold -- Sharefin, 23:38:32 01/19/03 Sun

Gold rally relies on committed investors, not spike speculators

Stronger demand for gold from individual investors would be needed to extend the metal's 25 percent rally of last year, according to Gold Fields Mineral Services (GFMS).

The surge in bullion to its highest prices since 1997 was sparked mostly by speculators, the London-based research firm said in a report.

Private investors must step up purchases to keep prices from falling in the aftermath of a US invasion of Iraq. But GFMS managing director Philip Klapwijk said they were "just not playing".

Prices would average $330 an ounce during the first half of this year, trading in a range of $310 to $370, Klapwijk said. The closing price of $355.10 on February 13 2002 was the highest since March 1997.

Private investors and funds last year were net purchasers of gold for the first time in three years, with demand indicated at 103 tons. The figure included both
buying and selling of the metal.

Much of the demand for gold from hedge funds "has come from those looking to make a quick return on a spike in the price", the report said. "The industry's challenge is to bring in a more committed type of investor."

Gold would be buoyed during the first half of the year by reduced sales of future gold production by mining companies as a hedge against falling prices, the report said.
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Hedging by gold companies declined last year, with producers purchasing a net 352 tons of gold as they bought back sales positions.

The reduced hedging helped boost gold last year, along with declines for equities and a weaker dollar, which made the metal more attractive as an investment. A weaker dollar made gold cheaper for buyers using other currencies.
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Global demand for gold from jewellers tumbled 12 percent last year to 2 704 tons as high prices discouraged purchases by consumers, particularly in India.

Demand in India, the largest user of the metal, was further eroded by drought, which slashed farm income and reduced buying of bullion as a form of savings.

Demand for gold bars rose 2.9 percent to 252 tons and mine production fell 2.3 percent to 2 543 tons, the first decline since 1995, the report said.

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Gold -- Sharefin, 22:58:02 01/19/03 Sun

Inflation fighter's Pimco champ

Commodity Real Return leaves every other fund in the family in the dust. Bill Gross, pessimistic about the economic outlook, says there's a good reason for that.

In a nutshell, Gross thinks the coming years are going to be tougher ones for investors in products like Total Return - and very good ones for investors in alternative investments like gold and other commodities or mutual funds, like Commodity Real Return Fund, that invest in them.

Gross believes the U.S. dollar, which fell last year to a three-year low against the euro and five-year low against gold, will continue to lose its value. That, he says, will lead to a reckoning for the U.S. economy, which has become reliant on foreign investment. (He is also sticking with his prediction, first made last September, that the Dow will fall to 5,000 - though he's cagey about when it will hit that level.)
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The 24 percent return in six months undoubtedly helped attract investors, too. How did fund manager Brynjolfsson manage this coup? Rising precious metal and energy prices - especially crude oil and natural gas - were key, pushing up the Dow Jones-AIG Commodity Index. That's the index whose ups and downs the fund largely reflects.

In the coming years, Gross thinks the inflationary pressures will only intensify as Alan Greenspan and the Fed, and President Bush and his Treasury, make good on their promise to avoid a Japanese-style recession by whatever means necessary, including turning on the government printing presses and flooding the economy with money.

Such a move could be devastating for savers, with foreigners scrambling to make sure they're not the last one out of the U.S. market. The upshot would be ugly, since a good chunk of the invested savings in the United States comes from foreigners. (They hold $7 trillion in our assets in all, Gross says, 35 percent of Treasury bonds, 25 percent of corporate bonds, and 15 percent of U.S. stocks.)

"Foreigners aren't going to let us off the hook easily," Gross says. And any exodus out of U.S. assets could have a "real fire-in-the-theater potential," he says.

Of course, the Fed could try to forestall a disastrous run by buying up the domestic assets that foreigners sell - a move that Gross admits would soften the blow temporarily.

"But ultimately," Gross says, "if the Fed has to do those sorts of things ... that's a perversion of capitalism as I know it and it would not be conducive to the long-term health of the economy."

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Fiat -- Sharefin, 22:34:40 01/19/03 Sun

The Grand Scheme of Things

The economic world's disparate interests are currently aligned because it has a common enemy: deflation. Born and bred out of the bowels of (1) globalization, (2) excessive buildup of "good times" debt, and (3) a demand-stifling demographic imbalance, the world is now threatened by deflation and its 21st century poster boy - China. And so the times are changing - not via a back room, cigar smoke laden plot, but step-by-step, month-by-month, policy-by-policy. The pieces are beginning to form a coherent whole but there is no giant, behind the scenes, puzzle maker - only individual countries trying to survive and, if possible, thrive during these darker deflationary days.
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In recent months we have been informed of additional measures which would hopefully eliminate the D word from our current economic lexicon: Bush's Republicans are convinced that the election gave them free rein to cut a myriad of taxes when in fact it was a homeland security referendum. We will, however, have lower taxes in addition to internal security. Japan is about to appoint a new central bank governor who may more aggressively reflate via inflation targeting. Europe is getting serious on structural reforms, as well as considering further interest rate cuts. And of course Fed Governor Bernanke has delivered the coup de grâce of anti-deflationary policies by threatening the use of seldom if ever used maneuvers such as buying Treasury and corporate bonds to keep the good times rolling. While in last month's Investment Outlook I shouted that I "believe them," it's still not clear if ultimately they or any other government will succeed. Japan is proof that deflation once it takes hold is a behemoth to be reckoned with.


This final playing card, however, must be viewed as just one of a multitude in an anti-deflationary deck that can and has been dealt in recent months and years by rather independently minded global poker players. Japan, Europe, and the U.S. may be employing rather similar strategies at different times but they do so independently in order to defend their own economic interests. Together, these disparate steps represent a grand scheme to defeat the deflationary Dragon now represented by China but created by globalization, high debt, and ongoing demographics tilted against consumption. Investment ramifications remain uncertain if only because the ultimate winner remains in doubt. What I think I do know however is that every weapon in the global arsenal will be fired at some future point to prevent declining prices and a concomitant economic collapse. With such resolve, and with U.S. Treasury yields already near rock bottom, the odds favor bear market Treasury trends if only because - as last month's Genie observed - when yields can't go down they must eventually go up. The Grand Scheme of Things points towards reflation over the next several years and higher Treasury rates but the Dragon will not go down easily.

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Periodic Ponzi Update PPU -- $hifty, 22:06:03 01/19/03 Sun

Preiodic Ponzi
Update PPU

Periodic Ponzi Update PPU

Nasdaq 1,376.19 + Dow 8,586.74 = 9,962.93 divide by 2 = 4,981.46 Ponzi

Down 134.84 from last week.

Thanks for the link RossL

Go GATA !
Go GOLD !

$hifty

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Gold -- Sharefin, 20:28:57 01/19/03 Sun

Portugal: The news that the Portuguese Central Bank lost gold through the exercise of a derivative deal, now commonly acknowledged by bullion bank commentaries to be capable of being followed by more, and from other Central Banks, lifts the rug from an area out of which could crawl some interestingly unpleasant sights. It also materialized that 70% of Portugal’s gold is anyway compromised by involvement in loans and swaps. From the point of view of the flow of gold to the market, a call exercise has been long preceded by the related physical transactions, and therefore does not constitute a new threat. Could it be possible that the Washington Accord C Banks might be forced into a humiliating admission that they cannot hold to their nominal ceiling as these arrangements trigger? Or could it be that the next entity to "go Ashanti" (discreetly, of course) will be some (no doubt outlying) Central Bank rather than the obvious producer candidates?

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Bill Murphy of GATA [Gold Antitrust Action Group -- www.leMetropoleCafe.com] points out that the Bank of Portugal in its Annual Report admits that 70 percent of Portugal's gold has in effect already been sold. The insinuation is that this is not the only central bank involved. Murphy argues that there is a strong probability of a 15,000 ton+ net short position which will have to be bought in by central bankers if the Gold price gaps higher than the $350's. Counter-contracting parties will have serious difficulty in buying physical gold if they cannot get it from producers, central bankers and multinational bankers' reserves - unless of course a huge premium is paid. Production has since about 1996 been less than demand. The shortfall has come from central bank reserves - banks which have been net sellers.

I believe that the evidence is mounting that Murphy is right -- when the news gets out -- the Gold price can go ballistic. The wise words on TV and in newspapers about how the Gold price is being driven primarily by Middle East war risks -- just does not make sense -- why would there be extensive institutional buying at current levels -- based largely on war risk -- when there have been several examples from the past which show that the threat of war in itself has seldom sustained higher gold prices? Gold prices often retreat as a war starts -- hardly the stuff that motivates the type of large volume and active buying seen in recent weeks.

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Thanks Bill (:-))))

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Gold -- Sharefin, 20:25:01 01/19/03 Sun

2003 - the year of gold

Last week the question whether the gold vaults - source of bullion that has been keeping the gold price in check - are running empty was discussed. From what happened last week, the answer is becoming more certain.
Yes, the supply of gold to keep demand in check is running low. Perhaps non-existent.

The vaults just might be empty.

From early 1996 to mid 1999 the gold price knew only one way - down. With statistics showing that demand exceeded natural supply from gold mines and scrap, the source of the excess supply that kept the price moving lower could only have been gold from the central banks. The converse is that when the gold price started it bull market 22 months ago, it could only have been that supply began to fall short in the face of demand.

There are of course two possible reasons for this change in the demand-supply situation; either demand picked up substantially or supply started to dwindle - or a combination of the two factors. News that demand had picked up on a global basis, very much so from private investors and with less information available of what institutions and governments were doing, seem to suggest that demand had taken off as uncertainty about the financial markets began to increase.
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With the change in the daily trading pattern, we may well see gold moving higher above $ 350 quite soon - perhaps only a week or two? In the past, New York was the graveyard of the gold price - after showing signs of life during Asian and European trading, the metal almost invariably got buried during US trading, often getting slammed down in a decisive manner during the last half hour of trading. While the Comex futures market was a key utility in this maneuver , it still called on at least some supply of physical gold to implement the tactics.

And now the pattern has changed. While Asia and Europe more often do little more than digest what is happening to gold, it has been the New Yorkers who have taken the price higher, ironically often during the last hour or so of trading, to leave gold at the session highs for the rest of the globe to make sense of what has happened.

Only two explanations are likely: the powers that be are no longer interested in keeping a cap on the gold price or, secondly, because demand is now outstripping whatever supply can be mustered, they no longer have firm control of the price.

My guess is the latter. And if correct, it means we will see gold rising in a consistent and accelerating fashion from now on.

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Gold -- Sharefin, 20:21:57 01/19/03 Sun

How far can the gold price go?

Increasing demand and depletion of gold reserves moving the gold price now.

The theme of the past two essays was that it would appear from the behaviour of the gold price that the vaults from where the gold had come to satisfy the excess demand and keep the gold price under pressure are running empty.
A combination of gradually increasing demand and depletion of gold reserves night well be the reason why the gold price has been in a bull market since March 2001. For six months from May 2002 the price was kept below $325/oz, establishing in the process a large triangle on the gold chart - a kind of pattern that in about 80% of cases acts as a continuation formation. When a price breaks out of a triangle, as gold has recently done, it extends the original trend, which in this case is the bull market.

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Gold -- Sharefin, 20:14:59 01/19/03 Sun

Illusion of Reserves

We won’t notice anything: our gold and FOREX reserves are already in other people’s pockets

It might seem that the Russian government is truly proud of the Central Bank’s speedily increasing gold and FOREX reserves. Of course, the reserves are some kind of a guarantee against any economic upheavals. When necessary, the government has a right to make use of the reserves. In fact, it’s almost never mentioned that the reserves are stored not in Moscow, not in the deep armored depositories of the Central Bank guarded by special purpose troops. And it is likely that at the moment when the Russian government urgently needs the reserves, someone may say Stop! as it will turn out that the reserves are frozen until particular “clarification” is done.

The RF gold and FOREX reserves reached a record showing of about 48 billion dollars in January. The reserves are mostly invested in the government securities of Germany and the USA, Deputy Chairman of the Bank of Russia, Konstantin Korishchenko said in an interview to Russia’s newspaper Trud. He says that a smaller part of the reserves is on bank accounts of the USA, Great Britain and Switzerland, the banks are with a very high rating. The Russian Central Bank prefers foreign government securities “as they practically don’t differ from deposits regarding the earnings yield, but the securities are of a higher liquidity.” The earnings make up a bit more than 2-3% at that.

On the one hand, it may seem that the situation isn’t dangerous as all: it is quite reasonable to place money where it will return a sure income. But this is good in case if the situation in the world is quiet. But currently, the situation is quite different. The USA is obviously experiencing a crisis, not to speak of Germany, where the crisis is evident. By the way, the whole of the world is already anticipating a war. And nobody knows whether seizure of Iraq will put an end to this war. What was the reason to store the gold and FOREX reserves somewhere far from Russia?

It is quite logical that the Central Bank bankers are thinking in a manner different from other people’s. The way of their thinking is even different from that one of commercial bankers. Konstantin Korishchenko agrees that this way of money placement is unprofitable for commercial structures, as the assets are not paying. However, the situation is different concerning the state bank. “We keep such gold and FOREX reserves because they “earn” trust to Russia’s economic policy, the trust that is mostly determined with the currency volumes on the Central Bank’s accounts.”

Indeed, as soon as we give the guaranteed reserve to foreign countries, they immediately treat us respectfully. Of course, they think that Russia has no place to go in this situation. When problems arose in the relations between the Arab nations and the USA, they immediately started withdrawal of their assets from American banks. Why? Because today nobody can say for sure how the situation may develop tomorrow. And assets kept in the banks of such an aggressive country as the USA may one day become not only unobtainable, but can be even used against the owners. It seems that the Russian authorities are not scared with this prospect.

What is more, it turns out that Russia’s gold and FOREX reserves are open investments in the American economy. This situation is probably not strange at all from the point of view of a banker: money is always kept where it is safer. But average Russian citizens don’t approve of this point of view. We know that the bank system is poor, that simple market mechanisms don’t work and that officials may make off with any sums of foreign currency. Isn’t it possible that the gold and FOREX reserves were hidden somewhere so that nobody could steal them? It is impossible to imagine how Russia would change if the whole of the sum was invested in the national economy. It would make the developed countries “trust us without any billion-size pledges.” The life of ordinary people would be different as well. It seems that it’s currently an inconvenient moment for this scenario.

In the same interview, Konstantin Korishchenko said that gold and FOREX reserves were no guarantee by themselves. The state runs economy with the help of two basic instruments: budgetary-taxation and monetary and credit politics. That is the reason why, he says, a crisis may occur in the country irrespective of the currency rate. Contradictions between both politics often become the reason for a crisis in the country.

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Gold -- Sharefin, 20:09:59 01/19/03 Sun

Gold to outperform silver, platinum and palladium

Gold prices will outperform those of other precious metals such as silver and platinum as political tensions, a weakening dollar and concerns of stagnant economic growth spur demand, analysts said.

"The factors that drew gold higher in 2002 shall continue to prevail in 2003," said Frederic Panizzutti, a director at Geneva-based GoldAvenue, a trading and marketing service. "There is a threat of further terrorism and the risk for a military intervention in Iraq combined with volatile stock and currency markets."

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Fiat -- Sharefin, 20:02:36 01/19/03 Sun

N.Y. Fed President Departing

William J. McDonough, the poor Irish orphan from Chicago who grew up to become one of the world's most influential bankers, announced yesterday that he will step down after a decade as president of the Federal Reserve Bank of New York.

On the Fed's interest-rate-setting committee, McDonough has been a staunch ally of Fed Chairman Alan Greenspan, voting to keep interest rates low during the 1990s as the economy boomed and stock prices soared. In a statement yesterday, Greenspan said McDonough's retirement "will leave a pronounced void" at the central bank.
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It is through the trading desk at the New York bank that the Fed buys and sells the Treasury bills that allow it to control short-term interest rates and, indirectly, the supply of money in circulation. And during financial crises, when the U.S. Treasury decides to intervene in global currency or debt markets, it is the Fed's New York desk that serves as the eyes and ears and keeps a watchful eye on global currency flows. The world's largest stash of gold lies in the bank's basement.

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Bob Chapman -- Sharefin, 18:28:27 01/19/03 Sun

The International Forecaster

The Shanghai Gold Exchange is preparing the way for overseas bullion dealers and individual investors to trade on the exchange. Chinese gold demand exceeds locally mined supply, so there is scope for foreign numbers, allowing direct sales to consumers. A cash only market at spot, presently the exchange is working toward deferred settlement.

JP Morgan Chase and the rest of the gold manipulation criminal cartel are not the only ones short gold bullion. We know there is a distinct possibility that Morgan will get bailed out, but there will be many others that won't be. You know I've believed that the short was 15,000 to 29,000 tons for three years. In fact, there may be little gold left in central banks. There will be covering of short positions coming and it will blow the top off the gold market. That is why we see $840 by June or by year-end. Remember we called for $350.00 an ounce last year and it happened. Shortly, hedge positions for the last quarter will be reported and will bring warmth and joy to your hearts. You are looking at disaster for many companies. Barrick, AngloGold and Placer Dome will be smashed. They are about to find out they have been in a street fight and lost and that they are no longer the masters of the universe. By the time we finish with them they'll be masters of nothing. We implored shareholders of Barrick and other hedgers to throw out their management in the early 1990's but we were a lone voice in the wilderness. Then came that giant Bill Murphy and GATA to lead and show us the way to expose the problem and these crooks. Finally our labors are going to show fruit and the cabal is about to go down in flames. All of you don't forget, don't just take your money and run, make sure these evil people pay for what they have done.

The Chinese central bank increased its gold reserve by 100 tons in the last quarter of 2002. That should go well with the 300 ton projected increase in public Chinese consumption in 2003. That 400-plus ton off-take wipes out the total official sales under the Washington Agreement. China will need gold because it faces a serious shortage of mineral resources. We then add to the mix a 1500 ton shortfall of production to usage, falling production and 15 to 29,000 tons either sold or short by central banks and you have a potent concoction that could send gold soaring. The game is over and we won. Watch the price soar and watch the failure and scandals that ensue. Next we pass into the illiquidity phase and that is when the shorts panic and pandemonium sets in. February will be a monster month for gold following an excellent January.

Low interest rates certainly make gold a more attractive investment. The opportunity costs are close to zero. Thus low rates are also causing negative interest rates. That is inflation at 1.8%, which is higher than the Fed funds rate of 1.25%. That is a negative return of .55%. Rates wont go up until later in the year due to the fragile economy, but when they do it will be due to a flight to quality. February through year-end gold's performance will be spectacular. We are still in an accumulation phase for gold as we begin phase two. This is the most stealth move in gold and shares in history. There are hundreds of funds with no gold shares at all, which is really mega-bullish, because they are supposed to be leading phase two. Not only does the public live in darkness but so do many of the professionals. They don't understand that gold is real money and is about to again replace the dollar as the world's pre-eminent currency. Foreigners understand but Americans don't. Then again, their media is freer than ours and they do get some of the truth, we get none of the truth except through newsletters and the Internet. That is why the market cap of gold shares is still only $75 billion up from $45 billion two years ago. Wait until only 5% of investors and money managers catch on. Once the shares move the gains will be colossal. Gold producers and bullion banks are still short and they have to eventually cover, which is an explosive situation. As you can see gold and gold shares are a lock and silver will follow, but remember you have to be in the game to win.

We believe there are three possible reasons that the US Government may return to a gold exchange standard. We believe the elitists were the shadow purchasers of the gold sold by central banks at their direction, the Malaysian Gold Dinar, which will be actively trading by June and an Islamic Arab Dinar to follow. This will force western governments to again back their currencies with gold. We also believe the euro to be a mitigating factor with its 15% gold backing. As gold prices rise so will the value of the gold backing the euro, thus the percentage of gold backing will rise. There is no question that Islamic countries are putting financial pressure on the US, UK and Germany. The Muslims believe they can destroy capitalism by forcing gold to the forefront and we agree that this could and probably will be successful. We then also have other mitigating events such as new gold exchanges in Dakar and China as well as rampant anti-American sentiment forcing the gold backing issue. Now we can better understand Sir Alan Greenspan's comments regarding monetary policy, unleashed from the constraint of domestic gold convertibility, has allowed a persistent over issuance of money He realizes that the US will have to return to a gold exchange standard to compete with other currencies. We would not expect a US or Fed move in this direction until gold traded higher than $1,500 an ounce. Once the dollar's value was reset against gold then economic recovery could begin. Then these criminals, if still in power, would begin the financial debauchery again.

Portugal sold 15 tons of gold. Its report reflected a 606 ton reserve now 591 tons with a swap of 381 tons and leased 52 tons or over 70% of reserves. They are probably the second biggest gold lender in the world and that really means 70% of reserves have already been sold. As we said before the game is over and we have won. Just wait and see. It will soon be public knowledge that most of the sovereign gold reserves are gone and all these countries have been lying about their gold reserves for a long time.

UBS Warburg says it expects gold to average $353 an ounce in 2003 and $356 an ounce in 2004. They also upgraded their opinions and price targets of several gold companies, one of which was our favorite *Goldcorp (GG-NYSE). The bank sees a favorable supply-demand balance, a weaker US dollar and continuing geopolitical uncertainty.

Deutsche Bank also weighed in with a 2003 gold price target of an average $340 an ounce.

Both estimates are plain stupid. They are devised to cap gold in this price range, but it won't work. The biggest scandal in financial history is about to break and when the shorts are forced to cover the price of gold will explode.

As we predicted long ago, as gold prices rose jewelry consumption would fall and investment demand would increase. That is just what has happened as GFMS reports that investment demand increased in 2002 from 117 tons to over 400 tons. This comes as production continues to fall. The fundamentals couldn't be better.

Gold closed up for the seventh week in a row, a truly phenomenal performance. Anyone who doesn't recognize that gold is in a bull market is just plain stupid. The gold manipulation cartel are buyers probably for themselves. Then there are the producers who are hedged, speculators who are short, banks and central banks that are short and the mega shorts in the gold shares that really haven't moved yet. As we told you at the beginning of the year gold will be $500 an ounce by the end of February and $840 an ounce by June or December. There is somewhere between 15,000 and 29,000 tons either short or sold and we are about to see a demolition derby that will last for at least two years. Silver is soon going to follow gold in a secession of lock-limit up days, and the specialists on the CFTC will be wiped out. Do we hear force majeure? The commercials are about to be decimated. While the biggest gold and silver bull market in history gets underway Wall Street ignores it, CNBC lies about it and the Fed and the Treasury are frozen in the headlights. Gold now has a mind and life of its own. GFMS says gold will average $330 this year and may hit $390.00. All they have done is talk gold down for years. They say after the Iraq war gold will return to $310 an ounce. They remind us of the touts on Wall Street who seldom tell the truth. The World Gold Fantasy Council is little better. How do they explain that the US Mint Gold Eagle sales were 33,500 ounces by the 15th of January, up from 9,500 for all of last January? Silver Eagles minted in January's first two weeks were 1,115,000, which is 200,000 more than in all of January 2002. The days of disinformation by the above criminals are over. The 15-year suppression of gold is over and the crisis of confidence begins. The elitists are about to have a Custer experience.

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Gold -- Sharefin, 18:12:05 01/19/03 Sun

Thar She Blows Again! Gold takes out $355 - The bears could be in trouble

Gold stock players suffer from Rear-View Mirror Syndrome

Meanwhile Gold Stock players have spent the last couple weeks selling their stocks, convinced that the relative underperformance of the stocks to the metal price is paramount to the end of of the world. Every other post on Kitco these days reads like: "I sold out today", or, "Dumped half my golds today."

They are fearful and bearish, here in mid-January, very early in the bullish portion of the six month seasonal cycle and well before the best expected gains in the cycle - and with everything else in the world so bullish for gold right now. I can’t ever recall witnessing such irrational bearishness. They just can’t seem to shake the "Rear-View Mirror Syndrome" - resulting from the June/July correction that dragged out to November. They are convinced the end is nigh, that gold stocks will never, ever outperform again, and this ironically in the face of the most bullish overall scenario I have ever seen for gold.

Maybe I am getting over exuberant. A short sharp pullback, correction, whatever, is most certainly due anytime. Technical indicators are overbought. The RSI is bearish. Every other time the price has rallied last year like this, it did correct for painful months at a time. A single piece of positive geopolitical news could trigger it.

On the other hand, think about this:

The MARKET - always eventually fools most of the people. Right now the majority are bearish and nervous. Commercial traders are so hugely short, they have only been more short one other time in history.

IF, and it’s admittedly a pretty big if because the commercial are usually right - but if the price of gold manages to hold 50% of Thursday’s gains and finds support around say $354.50 - the shorts will become extremely nervous. It could even violate fleetingly the $354.50 level - but pop right back up again. Then the shorts will be offside. The horror. They will only go so long before covering. It’s one thing to be offside on a long position - but another entirely to be offside on a short. If enough of them start covering - watch out. A massive short position like this cannot be covered in today’s gold market.

A covering panic could ensue.

Relative underperformance of gold stocks could end as abruptly as it began

And then the nervous Nelly gold stock players who have been profit taking will be left with a bleak prospect as well. Either: 1.start jumping back in at higher prices now, or, 2. risk being left behind for the rest of the seasonally strong period lasting until the end of May. Not to mention a collapsing US Dollar Index, war and who knows what else that could happen between now and then. This relative weakness of the gold stocks to the gold price that has so disturbed the gold stock players would abruptly end. The weak hands will lose. Strong hands (i.e.: like EGS readers who bought last year and patiently waited) will win big time.

I’m not saying it’s a sure thing. This is new territory. Betting against the Commercial players is foolish. You have to be out of your mind to do such a thing since they are almost always right. I’m not for a minute suggesting going long here. We did that long ago when prices were lower and safer.

What I am saying is, that if ever the conditions were in place for such a rare event as a short squeeze, this could be it. Or at least, the conditions are starting to come together very nicely for such an event. Fasten your seatbelts, just in case.

All last year subscribers will recall how I practically drooled over the powerful and rare "poetic symmetry" in the gold charts.

Since of June of last year - we have witnessed extreme Underperformance of the stocks relative to gold prices (correcting the previous year of extreme Over performance). This has been one of the most dynamic "Wall’s of Worry" I’ve ever seen.

Now, we may soon witness something else I have mentioned offhand lately. The "Perfect Storm" in favour of gold prices - a buying panic and a price melt up.

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Fair Play to you Sharefin -- Giovanni, 18:06:19 01/18/03 Sat

I agree with you. There is nothing wrong with presenting factual material that relates to gold. Whether it personifies a racial, ethical, or social group in a disfavourable way shouldn't get in the way of ignoring or covering up what is an important aspect as it relates to gold.

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Gold -- Sharefin, 05:44:54 01/18/03 Sat

Some people seem disturbed of the racial overtones in the article on The Jewish Hold In Switzerland & have complained to me of it.
Please note that this site has little interest in religion or racial matters & that the posting was made because of the gold news content & as such the article shall stay.

Indeed all goldbugs should be aware of the Swiss gold connection through the reading of Ferdinand Lips excellent book The Gold Wars. Like with much in the financial world of today there are underhand dealings where the intent is not ethical of nature when it comes to greed & wealth.

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Joe F Rocks -- Sharefin, 05:39:51 01/18/03 Sat

Please note that this is a forum for archiving gold news & not one for publicising your website nor short term market moves.
Please refrain from posting your site here.

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HUI Stochastics Flashed Buy This Week -- Joe F. Rocks!, 03:04:06 01/18/03 Sat

HUI appears to have bottomed near 137 last Wednesday.
Joe F. Rocks! Growth Stock Investor & Market Strategist

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Gold -- Sharefin, 01:06:42 01/18/03 Sat

The Jewish Gold in Switzerland

Jewish organizations claimed that Swiss banks were holding onto assets deposited by wealthy Jews in the 1930s and 1940s who later perished during the Second World War and so were never able to retrieve their money. Jews demanded that this money be put into a special fund for so-called "Holocaust survivors." More information has come to light about this Jewish extortion campaign, and I want to share it with you today, because it helps us to understand better the situation all of us are in. In the first place, let us be clear on the point that what we are talking about is not simply an effort by Jews to get back what rightfully belongs to them. It is not a matter of aging "Holocaust survivors" David and Sarah Goldblatt in Miami Beach trying to get their hands on an account their late uncle Abe set up in Switzerland before he was hauled off to Auschwitz in 1943 and never seen again. It is, in fact, a massive campaign of criminal extortion, complete with threats, deception, and fraud on a huge scale and criminal collusion by the Clinton government and the racist jewish controlled news media.

The initial response of the Swiss to the Jewish demand for money was that Jewish depositors always had been treated just like all other depositors, and that Swiss bankers already had investigated their dormant accounts and looked for rightful owners, and that there was at most a few million dollars in such accounts which might belong to relatives of Jews who had died during the war. All David and Sarah Goldblatt had to do to claim uncle Abe's money was present evidence that it was rightfully theirs.

This, of course, wasn't what the Jews had in mind at all, and so they began applying pressure and making threats. Switzerland's president at the time, Jean-Pascal Delamuraz, angrily accused the Jews of "blackmail" and "extortion" in trying to pressure Switzerland to turn money over to them without any evidence that they had a legitimate claim. But, unfortunately, Mr. Delamuraz was leaving office at the end of 1996, and his successor was more willing to pay blackmail in order to avoid trouble. Just to make sure that the Swiss got the message the Jews persuaded some of their Christian collaborators to join their campaign. Willing church leaders in Switzerland organized a public demonstration in Zurich by 15,000 churchgoers who demanded that the Swiss government and the Swiss bankers give "God's Chosen People" whatever they wanted and stop accusing the poor, persecuted Jews of blackmail.

The Swiss bankers and the Swiss politicians are a bit more hardheaded than these pale, soft, hymn-singing churchgoers, however. Arguments that God's Chosen People deserve whatever they want because the Bible says so have little effect on them. The real pressure was being applied to them out of the public's eye. On January 10, billionaire Jewish liquor merchant Edgar Bronfman, head of the World Jewish Congress, met with the Swiss ambassador to the United States and threatened him that unless Switzerland coughed up $250 million immediately, upcoming Congressional hearings by the House Banking Committee would be made as embarrassing as possible for Switzerland.

And other pressure was being applied behind the scenes. A group of New York Jews, claiming to be "Holocaust victims," brought a class-action suit against three of Switzerland's largest banks and petitioned the Federal Reserve Bank of New York to suspend the banking licenses of the defendant banks pending the outcome of the lawsuit. If such a petition were granted it would cause the banks to lose billions of dollars.

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Fiat -- Sharefin, 00:53:18 01/18/03 Sat

Housing market a Ponzi scheme

Economist Robert J. Shiller yesterday likened today’s housing markets to Holland’s tulip mania, the 1920s and 1990s stock market bubbles, various Ponzi schemes and other situations in which investments became overinflated due to excessive enthusiasm.
~~~
Shiller opened his remarks by offering several definitions of the term “bubble,” then presented his own definition:

“In popular discourse, a bubble seems to be a situation in which news of price increases spurs investor enthusiasm which spreads by psychological contagion from person to person bringing in a larger and larger class of investors who despite doubts about fundamental value are drawn to the investment partly through envy of others’ success and partly through a gambler’s excitement.”

A number of these factors are in play and the housing market “doesn’t have to have all these elements to be bubbly,” he said.

Shiller mentioned the “Madness of Crowds” book written in 1841 about the 1630s tulip mania that bankrupted prominent families in Holland and said author Charles Mackay’s classic words are still relevant:

“Many individuals grew suddenly rich. A golden bait hung before them enticingly…At last, however, the more prudent began to see that this folly could not last forever. Rich people no longer brought the flowers to keep them, but to sell them again and make a profit.”

Shiller linked the “bubble” concept to Ponzi schemes, in which later investors are attracted by the profits of early investors who are given later investors’ money.

“Real world bubbles are like Ponzi schemes even through they are not fraudulent,” he said.

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Fiat -- Sharefin, 00:38:26 01/18/03 Sat

The physics of financial catastrophe

Sornette’s fractal model suggests that the current rally will stall shortly and that prices will subsequently retreat much lower over the next 12 months to 18 months, punctuated from time to time by strong countertrend rallies. After the S&P 500 Index reaches the low- to mid-600s from its current perch around 925, his model predicts a multiyear period of convalescence for U.S. stocks before a new bull phase pushes prices back toward and beyond their 2000 highs.

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Fiat -- Sharefin, 00:34:29 01/18/03 Sat

U.S. war on deflation threatens global economy

However, before long, the dollar may become an overvalued currency, with an unsustainably large current account deficit and falling import prices fueling deflation. Thinking the unthinkable, the real concern for the global economy at the start of 2003 is that the United States will be the last and largest economy to suffer an emerging market crisis, in which foreign capital inflows become outflows and the dollar collapses. To defend the currency, Fed Chairman Alan Greenspan would have to raise rates, causing Wall Street to crash and the property bubble to burst, and other negative side effects.

One prescription for such a U.S. crisis would be an International Monetary Fund-style package. The IMF approach to crisis-hit developing economies says that the elimination of a current account deficit must be achieved through deflation rather than through devaluation. The IMF would almost certainly mandate that the Fed raise interest rates even further, and the budget deficit be cut to reduce excessive domestic demand.

In reality, of course, the opposite is poised to happen. This is because the Fed's primary focus is the opposite of the IMF prescription. It wants to inflate and will do so in a clear, decisive and ruthless manner. Too much has been learned about the collapse of asset bubbles and the threat they pose in destabilizing the financial system and unleashing unpredictable forces of deflation through negative wealth effects.

No, the most likely response to a crash on Wall Street is that rates will be slashed even further and the world will be flooded with U.S. dollars. The yen could shoot to 80 yen to the dollar or even higher. This really would kill any hopes of a global recovery.

Clearly, the United States will not lift a finger itself to stop the dollar's fall. It has not got sufficient foreign currency reserves to do so. If private borrowers of nondollar currencies go bankrupt, the U.S. government will not take responsibility for these private foreign liabilities--it will simply allow them to default.

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Gold -- Sharefin, 00:11:33 01/18/03 Sat

Reaction Time Running Out for The Reaction

Why, Jim? Well, it is simple. There is in the cash gold market a significant offering above the market. The cash market is a secret market that you can only know if you know the personalities in it and the major position takers. Something quite unusual is happening. There is a significant overhang of platinum supply for the platinum industry.

However, translated into gold, that above-ground supply is not really that big. There appears to be a very large take-down of that supply for which I cannot at this time offer a sound fundamental reason. Be that as it may, it has happened. The last time I saw anything like this in platinum was right before a $500 move started in the late 70's. Of course I am intrigued. Well, so is a major holder of gold with about a $70 profit.

The reason gold has been rising to nip at the bottom of the overhead is that the seller of gold has been selling some significant lots to a buyer willing to step up close to his offering price; thereby reducing the overhead supply. The market fell away as primary dealers knowing of this offering sold their positions; while offsetting them via Comex future sales against long cash bullion positions. The market did not fall away as it did the last time up in these lofty areas. Each day the overhead is being reduced.

If this action continues, I believe the entire block will be sold by late Friday or late Monday at the present rate. If this occurs, you can expect that the dealers who sold Comex contracts against their long positions will cover those contracts taking this chop into the high side of the range between $357 and $362.

So you see, it is not all lines and squiggles. Lines and squiggles are simply representations of real bids and offers. Timing comes from knowing the size of what is out there and if it is being reduced or increased. Chops come from dealers offsetting their positions in front of bid and offers coming into them. Knowing one without the other is knowing half or less of the actual story.

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Silver -- Sharefin, 23:23:18 01/17/03 Fri

SilverFinger - Nelson Bunker Hunt

IN THE SUMMER of 1979, an invisible hand reached out from an island in the Atlantic and quietly began tightening its grip on the world’s supply of silver. The fingers of that hand extended to London, New York, Dallas, Zurich and Jidda. But the only visible clue to its existence was a newly formed Bermuda shell corporation called International Metals Investment Company Ltd. That dull-sounding little trading company was not just another offshore tax scam but the operating front for a secret partnership seemingly capable of controlling the world price and supply of silver.

Appropriately enough, two of the principals in that cosmic alliance were Saudi Arabian businessmen with connections to the Saudi royal family. But another principal, the real genius behind the deal, was an American oil billionaire, the head of a clan sometimes referred to as “the royal family of Texas.” Though not quite as rich as the Saudi royalty, this man was one of the few private individuals in the world capable of playing in the same league. A lover of intrigue, in the past he had made international headlines with his mysterious wheeling and dealing. Before long, he would again blaze across the front pages. But for the time being, he remained in the shadows, operating behind the corporate veil of International Metals. His name: Nelson Bunker Hunt.

~~~
With the world apparently crumbling all around him, Bunker decided to go heavily into silver. This time, he and his brother Herbert-aided by second-family in-law Randy Kreiling, a commodities expert-began buying into the market with what would soon come to be known as the typical Hunt style. The key elements in their strategy were size, secrecy and surprise. Working through Bache and a variety of other brokers, they purchased not just penny packets but also millions and millions of ounces. Their first huge order was a 20,000,000-ounce December 1973 contract. Other big orders followed, and by early 1974, the Hunts had accumulated contracts totalling 55,000,000 ounces, or about seven to nine percent of the total estimated world supply. That gave them more silver than anyone on earth save the governments of a few countries and the silver exchanges themselves.

Bunker and Herbert placed their orders with more than the usual concern for confidentiality. Secret buying strategies are common in the commodity futures markets, where leaks of a big purchase can send prices skyrocketing. But most silver trader’s deal only in paper, not actual metal. The Hunts, however, were taking delivery on their contracts, all 55,000,000 ounces’ worth. That meant they had to put up roughly $160,000,000-in cash. Taking delivery on all that silver also meant that they had to store it somewhere and that, in turn, necessitated the second and more secret phase of their silver-buying scheme.

Most of the details of the Hunts’ great silver roundup are still secret, but sources familiar with the operation say it began with a shoot-out at the Circle K ranch. The property of H. L’s second family, the Circle K is a 2500-acre spread located east of Dallas. As straw boss for the operation, Kreiling recruited a dozen cowboys from the Circle K by holding a shooting match to see who were the best marksmen. The winners received a special assignment: riding shotgun on the Hunts’ hoard of silver.

With guns in hand, the Circle K cowboys flew up to New York aboard three chartered 707s the planes came from a nationally known charter company, but the name of the firm was covered with tape so that the only visible identifying marks were the planes’ registration numbers. The aircraft landed at La Guardia in the dead of night. A short time after their arrival, a convoy of armoured trucks arrived from the New York Commodity Exchange warehouse. Inside were 40,000,000 ounces of silver bullion. The transfer took place almost wordlessly. There was no joking or grabassing, just serious loading. When the planes were full, the cowboys climbed in and the pilots got clearance for takeoff. Their destination: Zurich.

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Gold -- Sharefin, 22:53:28 01/17/03 Fri

Greg Palast: Beat the Press

For those of us who've long suspected that our democracy is up for sale to the highest bidder, award-winning investigative journalist Greg Palast has uncovered disturbing evidence confirming as much. Palast's exposés of the theft of the 2000 election, the financial ties between the Bush and the Bin Laden families, and how these connections kept the FBI from perhaps preventing the horrific events of 9/11 have thrown fear into the hearts of media pundits. There has been a near-complete news blackout of the explosive findings documented in Palast's book, The Best Democracy Money Can Buy. First released in England, where he reports for the BBC and The Guardian, Palast's collection of writings is finally being published in America by Penguin/Plume books with 40% new material. In an exclusive HUSTLER interview, the author discloses the truth on high crimes in high places that the mainstream media is afraid to touch.

HUSTLER: Tell us about your new book. I know you've been able to get your groundbreaking exposés published in England and Europe, but, up until now, your stuff has been too controversial for the American media to touch.

PALAST: Not a chance in America, until now, thanks to the book.

HUSTLER: What kind of material do you have in the book?

PALAST: How about this for an example: After Daddy Bush left the White House, he went to work for a company called Barrick Gold Corporation in Canada, something you haven't read in the United States. The first thing he does is pick up a big, fat check and stock options from Barrick Gold Corporation for, essentially, selling them the presidential seal and the presidential Rolodex. And he writes letters to dictators like [former president of Indonesia] Suharto, saying, "Give these nice guys gold-mining concessions."

HUSTLER: What is Barrick Gold?

PALAST: It was founded with money from Adnan Khashoggi, the arms dealer. You may remember that Adnan was the bagman in the guns-for-hostages, Iran-Contra scandal. The sheikh got out, then Bush got in. You have to ask yourself a question: What would a Canadian gold-mining company do with a used president? Well, it turns out that before he left office, Daddy Bush put in motion an expedited process for laying claims to gold in the United States. It allowed Barrick Gold Corporation and a couple of other operators to lay claim to the largest gold mines in America. To stake a claim on $10 billion worth of gold ore, Barrick paid the U.S. Treasury less than $10,000.

HUSTLER: I would have gone for that, myself. I could have scraped together $10,000.

PALAST: All I can say is that Barrick was very, very grateful for the gold mine. But the public got the shaft, and Daddy Bush got the job. And George W. got the donations. That's the other thing that has been unreported here: People don't realize how much easy squeezy [campaign money] is flowing in. That includes things like parallel spending and soft money and hard money, which, by the way, hasn't ended. You know that our Congress has passed campaign-finance reform, so-called. What they did was eliminate soft money, but they doubled the amount of hard money. It's just Viagra for campaign donations. Our big problem is that we held something closer to an auction than an election in America. A lot of the reason [George W.] Bush raised all that cash-that easy squeezy-is because of his father's business connections. You're never quite sure where the Bush family's bank account ends, and the campaigns and our American policy begins.

HUSTLER: Did Barrick get anything else from Bush Sr.?

PALAST: He helped Barrick secure a gold-mining concession in Tanzania. Now the gold-mining concession was owned by another Canadian company, named Sutton, which Barrick hoped to get the rights from. But there was a problem: The land was worthless, because there were Tanzanian miners already on it who had the rights to the mine. That's why, in the first week of August 1996, Sutton bulldozers ran across that property with military police firing guns to chase off the miners. In the process, they sealed up the mine pits and, unfortunately, there were 50 miners still in the mines, buried alive, say witnesses. That's information that has not been reported in the United States. You can't get that word out for nothing, because Bush's gold-mining company terrorizes journalists who dare breathe a word about it. They terrorize newspapers; they've been terrorizing wire services, and so you don't get the story.

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Fiat vs Gold -- Sharefin, 21:13:56 01/17/03 Fri

The technicals:
Gold at 96% buy

US Dollar at 100% sell

Silver at 48% buy

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Gold -- Sharefin, 20:07:36 01/16/03 Thu

Late to the gold rush

Bank's embracing of metal, miners seen as a plus
How important is Wall Street's fresh round of upgrades for the gold industry?

To many longtime gold investors, Wall Street's embracing of the metal, which in 2002 rose about $66 an ounce, or 24 percent, is par for the course: a sign that sales-driven analysts are late to the profits in any market rally.

Still, even the most cynical of observers acknowledges the importance of professional support for a metal that Main Street investors mostly shunned during the most recent boom years.

This week, Wall Street and London banks upgraded their gold price forecasts and their ratings on several mining stocks. All see higher prices for the metal, which is attempting to surpass $360 an ounce for the first time since early 1997. See: Gold gets respect on Wall Street.

"These reports are good trend indicators, but they are lagging indicators -- not coincidental ones," says James Turk, editor of Freemarket Gold and Money Report. "It indicates that the trend is well enough established for them to consider changing their estimates."

The fresh round of positive forecasts for gold and the mining companies -- from the likes of UBS Warburg, Deutsche Bank and J.P. Morgan Chase -- follows moves by investment banks to reduce clients' holdings of stocks. In December, Merrill Lynch's chief U.S. strategist, Richard Bernstein, reduced his recommended stock asset allocation to 45 percent from 50 percent.

As it stands, gold (the physical version of it, that is) often is absent from the traditional asset allocation lists of the world's largest investment banks. Institutions such as pension funds that want to buy physical gold on behalf of clients must overcome custodial challenges and a herd mentality that still favors paper investments, even with stock markets across the world approaching six-year lows.
~~~
Naturally, the question investors are surely asking themselves, as gold's price continues to notch new highs, is: Invest in the metal or the mining stocks?

Cooper at CIBC World Markets says there have been only six spans in the past 30 years when holding bullion produced better gains than holding gold equities during periods when the gold price (38099902: news, chart, profile) was rising. The most significant was the 15 or so months in 1979 to 1980, when gold rose 165 percent while the S&P Gold Index rose 106 percent.

Wall Street analysts are slowly, perhaps too slowly, beginning to understand the positive effect that a declining U.S. dollar has on the gold price. About four-fifths of gold production and consumption actually happen in currencies other than the dollar. A weakening dollar stimulates demand and depresses supply.

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Gold -- Sharefin, 20:02:14 01/16/03 Thu

Gold, miners get Wall St. attention

JP Morgan technician sees $430 an ounce possible

Wall Street is starting to upgrade its opinions of gold and gold miners, a forlorn group that is trying to shake off years of torpor.

UBS Warburg says it expects gold to average $353 an ounce in 2003 and $356 and ounce in 2004. While the price levels are very near the current spot price for the metal, they represent a 10 percent and greater revision from previous forecasts from the investment bank.

Analyst John Reade at UBS in London said in his report that the volatility of the gold price is making his job of forecasting "harder than usual." Reade said if the dollar, which declined 16 percent in 2002 against the euro, were to "fall sharply" during a period of Middle East or Korea tension, gold's price could reach $400 an ounce. "The rally in gold that began in 2001 ... has been considerably assisted by the weakening of the U.S. dollar," he said in his report.
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In other Wall Street developments, a JP Morgan technical strategist said gold, flirting with six-year highs, most likely reached a bottom when it hit $254 an ounce in February 2001. The technician, Jordan Kotick, said the metal could approach $430 an ounce in coming years.

The price of the metal holding "above the monthly trend channel upper limit at $348 suggests that the market is consolidating its breakout," Kotick said. "These factors give increased credence to arguments that the market has in fact made a double-bottom pattern at $252/$254. Such a pattern would project a rally to $430 in coming years."

Kotick said the metal's price in the past week or so had contracted its daily range to $3 swings from $7 swings in price. "In the short term, the range contraction -- from $7 to $3 -- over the last few days portends a breakout in coming days/weeks," the JP Morgan analyst said.

In a telephone interview, Kotick said from New York that he was "cautious" about the gold price. If the price were to fall to below $345 an ounce, "then the short-term correction is under way and we could see it go to $325 to $330. This would be a good buying opportunity."

Kotick said his concern centers on the fact that market sentiment, or the view of fund managers and Wall Street professionals, "was the most bullish it's been in 15 years." A sharp rise in support for an investment can sometimes portend a short-term peak. Still, Kotick on Wednesday said the market appreciates "a supported story," and the Middle East turmoil was lending a floor to the gold price.

Deutsche Bank also increased its price estimate for 2003, saying the metal would average $340 an ounce this year, a 6 percent rise from its earlier forecast. The bank noted political turmoil in the Middle East and North Korea as contributing to a probable flight to gold.

John C. Doody, editor of Gold Mining Stock Analyst, said the outpouring of professional support for gold was a significant development for the metal. "Their upgrades are sure to bring more investment dollars to gold," Doody said Wednesday.

---

Gold -- Sharefin, 19:56:28 01/16/03 Thu

The Gold Derivatives Neutron Bomb

Today's sharp move higher is the biggest one
in memory on a closing basis. And yes, we
have another GATA coincidence.

It seems that every time GATA pops off about
the real gold story, gold bolts to the
upside.

It happened GATA's African Gold Summit in
Durban, South Africa, on May 10, 2001.

It happened when Reg Howe and I spoke at the
Mining Analysts Association's seminar in
London on May 23 last year.

It happened right after the report by Howe
and Mike Bolser, documenting the 15,000-tonne
central bank short position in gold, was
released on December 4.

And it happened today, 12 hours after GATA
disclosed that Portugal's central bank had
lost most of its gold.

Coincidences all!

Somebody is paying attention to what GATA has
to say.

Today's gold action was classic. Morgan
Stanley turned aggressive buyer right after
the opening, taking on the other bullion
banks. They kept at it and gold remained
firmly higher all morning, creeping
up to the critical $354.50 gold price. Then,
out of the blue and late in the trading
session, Goldman Sachs turned aggressive
buyer, taking gold up sharply on the day.

Over and over again these past weeks I have
been reporting Goldman on the buy side, not
the sell side. What we don't know is who they
are buying is for.

But for Morgan Stanley and Goldman Sachs to
be the featured buyers on a dramatic up day
for gold is very significant. It is an
indication that the rats are leaving the
gold-rigging ship. "Every man for himself"
must be the new deal.

Word is circulating in the bullion dealer
world:

* The central banks have written more gold
calls than they have gold to deliver. Good
grief!

* Aussie gold hedgers are getting hit with
knock-in calls. Some say their exposure is
160 percent of their mine life. Good grief!

* Barrick is grousing that they are going to
accelerate their hedge covering. Good grief!

How quaint! What do you think is going to
happen when those major forces all try to
cover at the same time?

It is called the Gold Derivatives Neutron
Bomb. It goes off.

There is no way that players of that size can
cover without driving the price of gold way
up. You can't cover massive positions like
that in a market that has a huge monthly
supply/demand deficit and little gold supply
around.

That is very bullish news in the aggregate.
Perhaps the Morgan Stanley and Goldman Sachs
buying is for the central banks, Aussie gold
producers, and Barrick. If it is, they have a
long way to go.

But it is amazing. I am hearing that veteran
traders still want to go short gold, not go
long. If the paid attention to GATA, they
wouldn't dream of it.

GATA stretcher-bearer: Prepare for active
duty, please. Gold has cleared all resistance
and will now head for $419 per ounce.

Today's close is particularly bullish because
gold consolidated for three weeks in the low-
$350 area. All those sellers are losers at
the moment. The close also tells traders that
the Gold Cartel has lost control of their
fraudulent manipulation. All they can do now
is rear-guard action to slow down the price
advance as best they can.

That means we are very close to that
Commercial Signal Failure I keep referring
to. The trapped commercial shorts (the Gold
Cartel and others) are going to have to give
up the ghost soon, which will lead to a
short-covering buying panic. There are no
gaps to fill in this gold market. That is
very bullish, as we still have the breakaway
gap ahead of us.

The gold news is bullish all the way around:

* The dollar closed in new low ground by a
good margin. March closed at 101.12, down
.57.

* The CRB closed in new high ground at 241.58
with oil rising to $33.66 per barrel.

* Iraq war news heated up as chemical
containers were found.

* The stock market is starting to roll over.

What a beauty of a gold chart:

http://futures.tradingcharts.com/chart/GD/23

If gold holds today's gains, it will give us
the seventh higher weekly close in a row.
Markets seldom do that. That tells you how
bullish gold is. That kind of action is
setting up an upside move of epic
proportions. Those moves occur when few
people understand the fundamental dynamics
that are moving the market (early in the
move). That is the case with gold.

The gold world refuses to tell the gold
truth. How many investors out there know the
GATA story and all we have distributed about
gold? How many realize that the price was
suppressed for years? How many know about the
15,000-tonne short position? Very few.
Someday they will know that story. Gold will
be $450 to $550 bid by then. Your gain, other
investors' loss.

---

Fiat -- Sharefin, 19:53:18 01/16/03 Thu

Federal Budget Deficit Expected to Reach Over $300 Billion Next Year
"The White House said Wednesday that the federal budget deficit will exceed
$200 billion in this fiscal year and probably go over $300 billion next
year, with deficits continuing for the next decade," reports The New York
Times.

---

Gold -- Sharefin, 19:49:43 01/16/03 Thu

Goldcorp war chest remains unspent

Goldcorp[GG], the sassy Canadian mid-tier gold producer, is sitting on a war chest of $327 million dollars as its rich Red Lake Mine continues to throw off cash and thanks to the rising value of its gold bullion stockpile.
Goldcorp’s physical gold holdings, amounting to 196,000 ounces, more than half of which it has bought in the market, have increased in value by a further $2 million since the end of the year when the final London Gold Fix was $342.75. It was fixed at $353.10 on Tuesday afternoon.

---

Gold -- Sharefin, 19:47:36 01/16/03 Thu

War final arbiter in gold price

GFMS, the independent precious metals consultancy, said politics would be the ultimate arbiter in directing the gold price this year which could settle anywhere between $370 to $310 per ounce. “If the Iraqi crisis blows up into a lengthy war, we could easily see the market over $370 per ounce. On the other hand, if the whole thing turns out to be a damp squib and investor bail out, below $310 is on the cards,” said Philip Klapwijk, managing director of GFMS. However, the average price in the first half of the year was expected to be $330 per ounce, 4 percent higher on the H2, 2002 average.

Commenting on gold’s appreciation last year, the UK consultancy said investment holdings was a major driver although the increase in interest was only from a relatively small pool of high net worth individuals. “The industry’s challenge is to get more institutional investors on board who’ll allocate investment to gold on long term considerations, not just to take advantage of a price spike,” Klapwijk said.

The increase in investment holdings in gold, although small in actual dollars, was owing to heightened political tension. Other aspects sending investors back to gold was falling stock markets, corporate fraud, low interest rates and a weaker UK dollar. Low interest rates were also thought to be behind the ongoing high level of producer de-hedging as this limits the advantage to be gained from forward sales. Interestingly, the possibility of a higher gold price was one of the reasons for reducing hedge books, GFMS said.

“De-hedging could prove important this year for price support if investors prove as fickle as some fear and fabrication remains poor,” Klapwijk said.

Fabrication of gold fell by as much as 10 percent in 2002 largely owing to the increase in the gold price. There will be a partial recovery this year but Klapwijk warned that if the gold price did not settle to below $330 per ounce this year first half fabrication levels could fall to below last year’s levels.

Mine supply holds less importance in determining price changes this year: “Mine production was down but by less than 60 tonnes. We’ll probably have to wait until at least 2004 before falls in mine supply get more interesting,” Klapwijk said. Official sector sales were thought to be flat last year though there is a possibility that sales in 2003, outside of Europe, could see an uptick in response to recent price gains.

---

Gold -- Sharefin, 19:44:48 01/16/03 Thu

Indian wedding gold jewellery orders seen down

Gold jewellery demand in India's current "wedding season" is down 15-20 percent year-on-year as gold prices have soared, Indian jewellers said on Wednesday.
But orders could pick up later in 2003, depending on events in Iraq, the jewellers told Reuters at the Vicenza fair in northern Italy, the world's main gem and jewellery trade show.

India is by far the world's largest consumer of gold and silver jewellery, importing around 850 tonnes of gold a year, about half of which is used for jewellery, as well as recycling some gold, jewellers say.

"Demand in the present wedding season is off 15-20 percent because of the price of gold which has gone up by about 15 percent over the past year," P.K. Jain of Diastar Jewellery Limited, based in Mumbai in western India, told Reuters.

"This could be a temporary phenomenon: everything depends on what happens in Iraq in the next two months."

Krishna Goyal, managing director of Jaipur-based Dwarka's Jewellers, estimated that orders in the current wedding season in India were off around 20 percent from this time last year.

"Fluctuations in gold prices are high, so the consumer is afraid," he said. "As soon as the uncertainty over Iraq ends, the market will pick up."

He added, "Gold imports will be lower this year -- maybe 15 to 20 percent less -- because of the higher prices."
---
Note the difference between these numbers & what the WGC is releasing.

---

Gold -- Sharefin, 19:30:04 01/16/03 Thu

Precious metals glitter

Equity funds that invest in precious metals charged ahead again in December as the price of gold soared.

The category's funds jumped an average of 23.8 per cent last month to bring their average one-year gain to 76.2 per cent.

The price of gold, which is viewed as a haven in times of trepidation, hit five-year highs last month as investors feared a U.S.-led attack against Iraq and a revival of North Korea's nuclear weapons program.

At the same time, the U.S. dollar weakened against the euro and the yen, and U.S. equities fell, making the precious metal more attractive as an alternative investment.

Early in the month, Merrill Lynch & Co. Inc., the world's largest brokerage, also enhanced gold's allure when it advised clients to reduce their U.S. stock holdings.
~~~
John Embry, portfolio manager for the Royal fund, said he built its portfolio on his strong conviction that the gold price would rise.

In Mr. Embry's opinion, the U.S. stock market looked vulnerable, and the U.S. dollar was "an accident waiting to happen."

He also thought the economy south of the border was in worse shape than the consensus opinion of it. Meanwhile, the financial community was speculating that governments might move to stave off deflation -- which could in turn spark inflation. "This is the ideal climate for gold."

As a result, Mr. Embry loaded up on shares of smaller players with developing ore bodies and relatively cheap stock prices.

Since investors had been ignoring smaller names, Mr. Embry reaped the benefit when the gold price started to rise and those beaten-down stocks were suddenly back in favour. "There was a revaluation because [the shares] were really cheap."

Meanwhile, Mr. Embry eschewed shares of producers whose hedging strategies forced them to sell gold at a previously locked-in price and therefore miss out on much of the metal's rise.

Those big, blue-chip companies had also already had a good run in their stock prices so they did not offer the same upside, he noted.

---

Gold -- Sharefin, 19:26:44 01/16/03 Thu

GO WITH THE TRENDS

Gold broke through the important $330 level in mid-December and it hasn’t looked back since. It’s currently at a six year high over $350, it’s risen more than $27 in the past month and the bull market is now in a stronger phase for the first time since 1980.

~~~
As you know, we’ve been taking gold’s bull market one step at a time, so let’s review the steps. The first important trend identifier is the 65-week moving average. This simple tool has identified the major trend since the 1970s. When gold is above it, the major trend is up and when gold is below the 65-week moving average, the major trend is down. Gold rose above this average a year ago August where it has stayed since then. This means the major trend is up as long as gold stays above $307.
~~~
Many have been asking for gold’s upside potential. The stepping stones are our targets and now that the 1999 high has been broken, our next target is the 1996 high near $415 (see the 1996 #1 peak on Chart 2). This is a level that can be attained this year. But first, the current rise is nearing our target in time and price near $360. This means we’ll likely soon see a downward correction, and then gold near $400 possibly during the next rise in a few months.

Once the $415 level is surpassed, the bull market will strengthen even more and the 1987 high near $500 will then be the next target (see Chart 2). If this occurs, the gold market would be hot because the current #1 rise would result in the best percentage rise in gold since the surge of 1980. And if gold breaks above $510, it would enter an explosive phase of the bull market where it could then surge to the $850 peak and beyond.

All of this can be attained as long as the bull market remains in process. And if it does, the upside for gold is wide open.

---

HUI May Have Bottomed Yesterday Near 137 -- Joe F. Rocks!, 10:33:00 01/16/03 Thu

Stochastics reached oversold yesterday and HUI is firm today.
Joe F. Rocks! Market Strategist

---

Fiat -- Sharefin, 09:01:03 01/16/03 Thu

Gold Futures and Options

"Expiration occurs on the second Friday of the month prior to the delivery month of the underlying futures contract. Beginning with the expiration of the December 2002 contract, options will expire on the fourth business day prior to the end of the month preceding the options contract month. If the expiration day falls on a Friday or immediately prior to an Exchange holiday, expiration will occur on the previous business day."

---
New Option Expiry Dates!!!

---

Midas -- Sharefin, 02:04:16 01/16/03 Thu

Portugal says most of its gold is gone and people are coming for the rest

Longer term, the most important news of the
day comes from Mitsui. Their Sydney
commentary, speaking of yesterday's
announcement by the Portuguese of a 15-tonne
sale, observes

"We think they got exercised on some calls
granted as part of a collar back in the 97/98
area. There may be more and with different
central banks. Gold didn't flinch."

According to the Bank of Portugal's 2001
annual report, out of its 606 tonnes of gold
reserves (now 591) Portugal swaps 381 tonnes
and lends 52 tonnes; that is, over 70 percent
in the lease market! They may be the second
biggest gold lender in the world. Might
option sales "structures" conceivably lead to
some further withdrawals?

Are tighter lease rates coming?

The footnote that discloses the distribution
of the Bank of Portugal's gold is at:

http://www.bportugal.pt/publish/relatorio/Chap_IV_01.pdf

(Scroll down to the nine page.)

The information that the Bank of Portugal has
been so specific in its annual report is, I
think, new to the market place. The news that
70 percent of Portugal's gold has, in effect,
already been sold, lends powerful support to
the view that much of the global central bank
30,000+-tonne hoard is gone. This insight
into a central bank's gold option activity --
with the insinuation others are also involved
-- further advances this case. And, once
again, the new spectacle of junior bullion
banks being willing to be so candid about
(possible) clients suggests that they think
that the era of central bank domination of
the gold market is drawing to a close.

---

Gold -- Sharefin, 22:10:14 01/15/03 Wed

JP Morgan says risk exposure in gold derivatives less than 10 Million US$

JP Morgan Chase, answering charges by a pressure group that it
may be facing excessive risks in the gold market but not disclosing them, said
its exposure to gold including derivatives is less than 10 mln usd.

JP Morgan was responding to allegations by the two-person Gold Anti-Trust Action
Committee (GATA), a pressure group which alleges bullion banks and central banks
are conspiring to rig prices in the gold market.

The US Securities and Exchange Commission (SEC) is now being asked to arbitrate
a long-running spat between JP Morgan and GATA which has generated a steady flow
of conflicting claims, rumors, accusations and denials with few hard facts.

Both sides are calling on the securities regulator to investigate their claims
about the other party. GATA asked the SEC last week to investigate its suspicion
that JP Morgan has a higher risk exposure to fluctuations in the price of gold
than what it has acknowledged publicly.

GATA's letter to the SEC spelling out its allegations followed JP Morgan's
request to the regulator on Jan 3 that it investigate rumors the bank was trying
to keep the price of gold down and covering up losses incurred from the recent
rise in gold prices.

JP Morgan Chase has registered 41 bln usd in gold derivative contracts as of the
third quarter last year in its filings with the US Office of the Comptroller of
the Currency. This is the notional value, or the sum of the value of different
contracts of the bank's clients holding different positions, long or short, on
the contracts.

Derivatives are financial instruments that derive their value from another
underlying asset, like gold. The most common derivatives are futures and
options.

"On any given day, JP Morgan's exposure to the gold market including derivatives
is less than 10 million dollars," a bank spokesman told AFX Global Ethics
Monitor.

"The risk of contracts is held by our clients and we actually don't have any
risk associated in the contracts."
~~~
But analysts agreed the information provided by JP Morgan is not enough to
understand the actual risk involved.

"There are two things that are absolutely critical to know which make it
impossible to conclude anything really powerful," said Vandervliet.

"First, is the net trading position long or short? We don't know. Second, how
much of these contracts are held by JPM versus held for customers supporting a
trading book and therefore not presenting JPM with a material risk. This is a
weakness of the disclosure and makes firm conclusions very difficult."

---

Gold -- Sharefin, 20:00:10 01/14/03 Tue

Six Abu Dhabi gold retailers close shop


Gold traders in Abu Dhabi are in a major bind as they battle bad debts and poor sales due to high prices.

Not surprisingly, the beehive activity at the capital's gold souq is at a lower pitch as traders come to grips with the prospects of a less than rosy future until business picks up again.

"If Dubai is bad, Abu Dhabi is worse," is the terse comment of Tushar Patni, chairman of the Abu Dhabi Gold and Jewellery Group.

Saddled with losses, some six retailers shut shop in 2002. And, if the dull phase in demand continues some more are likely to exit the business.

"Some of the retail traders are in bad debts and if business continues to be bad, they may be out of business," he said.

The current dull phase in demand in the otherwise vibrant gold market of Abu Dhabi is mainly due to the sudden rise in the price of the yellow metal.

According to Patni, the current price of gold is some $348 per ounce, but it might go up to $375 to $380 if market rumours are to be believed.

"If the price goes up further, sales will come to a standstill as buyers are now only waiting and watching."

A wholesale trader said much of the wholesale trade has stopped since the last few days. "The old payments are not coming and when sales are flat, why should one stock gold," he said.

An Arab trader (asking not to be named) in the old souq who has been in the business for the last 22 years seemed optimistic. "We are used to such cyclical trends. We also saw poor offtake during the Gulf War.

A shrewd businessman should make provisions for the ups and downs of his business. Gold has a knack of attracting customers again," he said.

Most traders said they get only two to three serious customers a day and that the future depends on the price.

"Right now there's no movement in our trade and business is down by more than 50 per cent. Only those who need to make urgent purchases are taking home gold," said the manager of Safa Jewellery.

---

Gold -- Sharefin, 19:58:18 01/14/03 Tue

Gold Falls as Speculators Sell From Biggest Holding Since 1996

Gold futures fell for the first time in three sessions on selling by speculators who had amassed their largest holdings in seven years.

Gold retreated from its highest price since 1997 on the round of speculator sales, traders said. Hedge funds and other large speculators as of Jan. 7 had bought 63,563 more gold futures contracts than they had sold, the largest ``net-long'' position since February 1996, a report last week from the U.S. Commodity Futures Trading Commission showed.

``We've moved up quite quickly, so it's not surprising that we would see a little bit of selling,'' said Raymond Chung, a partner at Crown Commodities Inc. in New York. ``We're still trying to build a base so maybe we can take this market higher.''

---

Fiat vs Gold -- Sharefin, 19:55:18 01/14/03 Tue

Gold outperforms major currencies, markets in '02

The performance of gold's price during 2002 largely reflects the fact that the professional investor has returned to the use of gold as a risk management tool, a World Gold Council (WGC) report noted.

In the 1980s and for much of the 1990s, the economic, political and financial environments were, in the main, seen as benign and there was no assumed need in the 'professional sector' for the use of gold as a hedge against risk.

Over the course of the year, gold outperformed the dollar by 25 per cent, the yen by 14 per cent, sterling by 13 per cent, the euro by 9 per cent and the Swiss franc, the other major recipient of 'safe haven' funds (notably from the Middle East), by 7 per cent.

The search for alternative assets is reflected in the relative performance against the major equity markets. Over the year, gold outperformed the FTSE by 52 per cent, the Dow by 47 per cent,the Nikkei by 44 per cent and the European index by 36 per cent.

Early background: The price started to improve in 1999 and 2000 on the back of strong physical regional demand and speculative short-covering. The former stabilised the price in mid-1999 just above $250/ounce and then took it slowly higher; the latter developed because of stable gold prices and falling money market interest rates.

The fact that this was happening in a period of relative political and financial calm, when there was no perceived need for substantial risk management, did bring gold to the attention of some money managers and other investors in the 'professional' arena. If there was no perceived need for the professional to be hedging against risk, then why was the gold price rising? Consequently, when global economic political and financial conditions did start to deteriorate, gold had already to some extent made its case for fresh attention. A solid fundamental backdrop was already in place.

Recent developments: Invest-ment in the latter part of 2002 and at the start of 2003 has been driven by geo-political concerns but the underlying background is more complex, and reflects currency concerns, along with the desire to hedge against risks in the equity and bond markets and, notably in the case of Argentina and Japan, risks in the banking sector.

Corporate governance problems also played a strong part during the first part of 2002, as a deepening mistrust of corporate reports and accounts augmented some investors' desire to hedge against equity exposure. Gold thus reasserted itself as an alternative asset class, enabling the professional investor to diversify his risk. With concerns also swirling in the markets about the destiny of the dollar, the euro and the yen, gold and the Swiss franc came into play as reserve currencies.

As a consequence, the professional investor is once again looking at gold as a hedge against risk - something that many individuals in developing nations have never ceased to do. These individual investors in the Middle East, Indian sub-continent and the Far East have remained loyal to gold as a safe haven, or an 'ultimate investment' as a portable anonymous form of money and it is this sustained activity which has formed the foundation of the change in sentiment in the rest of the world. The 'retail' investor in the so-called first world is also aware of gold's resurgence and there has been a noticeable rekindling of interest in coins and bars from this quarter as well interest in gold in other forms from other investment pools.

Offsetting this fresh demand to some extent is the fact that the slowing global economy had a negative effect on purchases of gold in the jewellery sector, and the poor Indian monsoon meant that Indian offtake, the world's largest, was particularly badly hampered. This is one of the answers to the question: 'Why didn't the price rise further, given all the other uncertainties in the world?'

One of the important features of gold is that more often than not, a reason for one man to buy it is the same reason for another man to sell it. It is this that helps make it an attractive alternative asset class as it has characteristics all of its own and a negative, if any, correlation with many of the other major asset classes. In this case, the slowing economy hindered jewellery purchases, but prompted purchases from investors concerned that stock market valuations were too high given the deteriorating outlook for earnings.

It is worth pointing out also that if the price had rocketed, the integrity of the demand side would have been severely undermined and such a rally would have proved unsustainable, as well as generating considerable resale of secondary metal and damaging new demand for the longer term.

Intermittent periods of volatility in gold's price last year generated the usual reaction from the regional buying centres - i.e. in times of volatility they moved to the sidelines. What was significant, however, was that there was little resistance on the part of these purchasers to return to the market at higher price levels once conditions had stabilised and the support lent from the physical market has thus been at steadily rising prices.

The market has therefore benefited from a solid underlying fundamental base, combined with a cocktail of influences that have led to steady investment activity from hitherto absent friends. The recent moves, in the last few weeks of 2002 and early 2003, have been predominantly concerned with increasing tension in parts of the Middle East and north Korea and the recent rapid upward moves have choked off physical demand in the near term. As we go to press the price is looking to consolidate between $345/ounce and $355/ounce. There is clear evidence of speculators in the market as well as investors looking for value and for risk management and this is currently generating a degree of caution in the expectation of profit taking.

The panoply of uncertainties in the external environment, however, is underpinning the tone in the market as gold is once again sought out as an insurance policy. There may be those in the market who will either wish or need in future to cash in their insurance;others will wish to hold on in case of further rainy days.

Gold has been seen as a currency and as an investment for thousands of years. During 2002, while other sectors showed signs of fear, gold offered the sheltering arm of a reliable elder brother.

---

Gold -- Sharefin, 19:50:19 01/14/03 Tue

Marriage season seen lifting India's gold imports

Gold imports by India, the world's largest consumer, are likely to start increasing from this week despite high prices with demand driven by the marriage season, dealers said on Monday.

But the high prices will dent appetite for imports, traders said. Local prices follow global trends as India imports most of its requirements.

"It's difficult to further postpone imports," said Narendra Singh Rathore, a gold trader based in Jaipur.

"But it is going to be a hand-to-mouth situation as no one will like to stock more than the urgent market needs since gold prices are touching the skies."
~~~
"High world prices are discouraging traders to buy gold from the banks which are designated to import the metal into India," said Suresh Hundia, president of the Bombay Bullion Association.

But imports were likely to pick up because supply of recycled gold, very high in recent weeks, was slowly drying up and demand was increasing, trade sources said.

"Traders prefer recycled gold due to its lower price than the fresh metal, but sustained supply of the old material is a problem," said H P Rajdev, a trader based in Gujarat.

Gold demand in India totalled 116.4 tonnes from July to September, down 8.5 percent from the same period a year earlier. Imports fell 12.4 percent to 87 tonnes, according to the World Gold Council.

-----
It appears from this report that scap supplies are drying up.
With demand @ 116.4 tonnes & imports at @ 87 tonnes the gap that must have been filled by scrap was approx 30 tonnes.

So the last few months where we experienced far higher prices have only drawn 30 tonnes of scrap from an estimated 11,000 tonnes of total holdingsSource.

It seems to me that most Indian's don't want to part with their gold & that scrap sources are drying up.....

---

Gold -- Sharefin, 19:39:03 01/14/03 Tue

In 2002 gold and currency exchange reserves have increased by almost 40%

The gold and foreign exchange reserves of Russia have increased by 38,5% to $47,792 bln in 2002. Gold and foreign exchange reserves are high fluid financial assets; they include monetary gold, special rights of borrowing, reserves position in IMF and foreign currency.

---

Gold -- Sharefin, 19:36:27 01/14/03 Tue

China's end-2002 gold reserves 19.29 mln ounces

China had gold reserves of 19.29 million ounces at the end of 2002, up from 16.08 million ounces at the end of November, the central bank said on Monday.

---

Gold -- Sharefin, 19:33:45 01/14/03 Tue

Shanghai Gold Exchange to extend afternoon session

The Shanghai-based newspaper said the session extension is aimed at meeting increasing trading demand.

---

Gold -- Sharefin, 19:31:23 01/14/03 Tue

ECB Sells EU37 Million of Gold Assets; Currency Reserves Fall

The European Central Bank said one of its member banks sold 3.5 tons of gold worth 37 million euros ($39.2 million) last week.

The sale was ``consistent with the Central Bank Gold Agreement of Sept. 26, 1999,'' the ECB said on its Web site.

----
Add this to Portugal's gold & you have 18.5 tons of gold that has presumably gone to feed London's insatiable demand.
Demand is strong as usual.

Where else do they have stocks left to raid.....

---

Gold -- Sharefin, 19:14:53 01/14/03 Tue

Cambior cuts gold hedging program

Prompted by rising gold prices, gold producer Cambior Inc. chopped its hedging program by 32 per cent last year and will slash it by nearly 40 per cent this year, the company said yesterday.

A mid-sized producer based in Longueuil, Que., Cambior said it would reduce its hedging commitments from 1.3 million ounces at the end of 2002 to 800,000 ounces by the end of 2003, a reduction of 38.5 per cent.

The lower level is the minimum required by lenders over the five years of a proposed new $65-million (U.S.) credit facility the firm announced in November.

Hedging is a complex strategy gold companies use to protect themselves from falling prices by selling future production and using other tactics. The strategy works well when prices are falling but can create problems if gold prices suddenly climb. Cambior ran into trouble in 1999 when prices soared unexpectedly and the company had to buy gold on the market to meet its delivery commitments.

Gold prices climbed by 25 per cent last year and have recently been trading at levels last seen in 1997. Spot gold closed yesterday at$354.70.

Cambior said yesterday it expects gold output of 522,000 ounces in 2003, down from 568,900 ounces in 2002.

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Gold -- Sharefin, 19:12:32 01/14/03 Tue

Deutsche Raises Forecasts on Gold, Platinum, Cuts Palladium

Deutsche Bank AG increased its 2003 gold price estimate because of investors seeking a haven, less producer hedging and a declining U.S. dollar. The bank also raised its platinum forecast and lowered its palladium estimate.

Gold will average $340 an ounce this year, 6 percent more than previously forecast, the bank said in a note to investors. Platinum will average $610 an ounce, 9 percent more than previous estimates, while the palladium forecast was cut 15 percent to $247.50 an ounce, the bank said.

The supportive factors for gold will be more potent in the first half of the year because ``the uncertainties associated with political crises in the Middle East and North East Asia.'' the bank's analysts said in their note.

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Gold -- Sharefin, 19:11:23 01/14/03 Tue

Bank Of Portugal Sold Gold Under Central Bank Agreement

The Bank of Portugal Tuesday said it sold 15 metric tons of gold in December in a bid to diversify its foreign-exchange reserves.

The Bank of Portugal said the sale was under the terms of the Central Bank Gold Agreement of September 1999. In that agreement, which includes the central banks of the Eurosystem, the U.K., Sweden and Switzerland, the central banks agreed to limit gold sales to a total of 400 tons a year over five years.

The Bank of Portugal is traditionally a large holder of gold, with around 600 tons, or around 47% of total reserves, the bank said.

It said gold is usually an asset with low return and since it no longer serves a monetary function that percentage "is excessive and doesn't allow optimal long-term profitability of the country's foreign-exchange reserves."

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Gold -- Sharefin, 19:08:01 01/14/03 Tue

Trading and Investing in Gold Stocks - Myth, Reality and Changing Trends - pdf format

“Gold that’s put to use more gold begets”
Shakespeare

The biggest increases in demand have come from countries along the ‘Old
Silk Road’ - from Turkey through to newly emerging Asian countries. In
the 1970’s and 1980’s, the most rapid economic growth occurred in the so
called ‘City States’ - Seoul, Hong Kong, Taipei, Kuala Lumpur, Bangkok
and Singapore, small countries dominated by their capitals. In the 1990’s,
development moved to the continents of Mainland China and India, where
economic development caused a large increase in gold jewelry consumers.
If China imported as much gold as the rest of S.E. Asia, in relation to its
GDP, the country would have to import 2,000 tons per annum. In both India
and China when government restraints on gold ownership were lifted
consumption doubled.
~~~
There has been a quantum leap in demand from Asia. In 1984 Beijing lifted
the ban on the sale of gold jewelry. Today, the average Chinese consumer
consumes a fraction of a gram versus over 10 grams per capita in Hong
Kong and Taiwan. In a typical year India imports 800 tons, 95% of which
goes into gold jewelry.
In the industrialized countries the typical markup is 200 to 400%. In Asia
and the Middle East, a 10 to 20% markup is standard. A Western wedding
ring contains approximately 4 grams of gold, while in India it can contain
100 grams. The average wedding in India involves at least a kilo of gold.

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Gold -- Sharefin, 18:50:45 01/14/03 Tue

Investors flee from equities into gold

INVESTMENT in gold almost trebled to £4 billion in 2002 as global investors sought a solid alternative to tumbling equities.
The precious metal is set for another boost from the World Gold Council, which is working on plans to make it easier for private investors to buy the asset.

Investors who have gambled on gold in recent years have been handsomely rewarded. It surged by 24% last year, while British shares lost a quarter of their value.

The World Gold Council said: “Investment in gold is being driven by fears of war in the Middle East and a desire to hedge against the risks of holding shares and bonds. The lack of trust in corporate accounts, after the WorldCom and Enron scandals, has deepened the perceived risks of holding equities.There are also concerns about the dollar, the euro and the yen, so gold has come into play as a reserve currency.”

The council has seen strong demand for gold from investors in Japan and Argentina, where there are growing fears about the banking sector.

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Gold -- Sharefin, 18:38:53 01/14/03 Tue

SKI Gold Stock Prediction

Note that this sideways pattern is likely to continue for 9 more trading days until the 92-96 index back prices move to their 4.96-5.03 highs and the 16-20 back prices move up into the current range of 5.22 and above. This expected sideways action might be enough for many overbought technical indicators to reach neutral or oversold territory. At that point, prices will either blast up out of this area (over 5.51) or they should fall hard and fast (below 5.21 to about 4.90), dropping 9-12% in 5 trading days to generate the 16-20 and 92-96 index signals together at the very end of January.

Theoretically I'd love to see that fall: if/when prices held there (as they are supposed to based upon the secular triple buy signal from the first week of December), the 92-96 index would then generate a pure bull market buy signal and we'd be sitting prettier than the 1978-1979 period. Emotionally it would be a lot nicer for prices to simply rise and rise.

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Silver -- Sharefin, 18:34:50 01/14/03 Tue

Why Silver

After hitting a multi-year low in November of 2001 around $4/oz, the silver price moved into an up-trend, much in sympathy with the gold price. Contrary to the gold price, the silver price fell out of its up-trend last summer but found support above the low of last November around $4.25.

The silver price has established a double-bottom from which level it is trending higher again, signally that a major turn-around has indeed been established.

A break of the resistance zone will be crucial and once achieved will act as powerful support.

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Gold -- Sharefin, 18:27:20 01/14/03 Tue

Central Fund of Canada Offers Exposure To Gold And Silver For Those Who Do Not Mind The Mix

Since then the management’s position has simply been that it will maintain the maximum backing for the shares at all times and the assets of the company are 98 per cent invested in gold and silver bullion. The balance is held in cash and mining shares.

The pity is that no actual split in terms of ounces between gold and silver as silver has failed to achieve the sustained performance of gold. The balance sheet, however, for the year to end October 2002 shows that net assets were dominated by gold bullion at a market average cost of US$89.7 million and silver bullion at a market average cost of US$89.04 million. These two figures compare with US$55.75 million in 2001 for gold and US$62.75 million for silver which confirms that gold performed slightly better. However the disparity between the prices per ounce of the two metals, which is of the order of 70:1 in favour of gold, brings with it an interesting mathematical problem. Which is easier, for silver to advance 10 per cent from US$4.80 to US$5.28 / ounce or for gold to move from US$350 to US$385/ounce?
~~~
Central Fund's shares qualify for inclusion in retirement accounts, pension and insurance plans and mutual funds that are otherwise precluded from hold physical bullion directly. The shares are listed on the American Stock Exchange as well as Toronto so investors can obtain direct exposure to gold and silver simply by calling their stockbroker. It will be interesting to see if the World Gold Council’s securitised gold instrument is going to be backed by allocated, segregated and insured gold bullion or by paper gold. The likelihood musts be that it will be backed by physical gold, though James Burton, the new CEO of the Council , is proving a bit elusive at the moment. What is quite clear, however, is that it will not be mixed in with silver.

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Gold -- Sharefin, 18:18:37 01/14/03 Tue

Goldcorp Bullion Holdings Grow to 196,000 Ounces

Goldcorp Inc. said on Tuesday its bullion stocks increased by 17,000 ounces during the fourth quarter to about 196,000 ounces, valued at $67 million.

The mid-tier Canadian gold producer said the market value of the bullion holdings was based on a gold price of $342.75 an ounce.

The company's bullion holdings have been accumulated by retaining a portion of the production from its Red Lake mine in northwestern Ontario. It also periodically buys gold bullion.

The company has said it expects the gold price to move higher over the next few years and has no intention of selling the bullion at current prices.

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Gold -- Sharefin, 04:57:49 01/14/03 Tue

Bill Murphy - Coffee, Orange Juice & GOLD! -TRANSCRIPTION OF INTERVIEW

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Gold -- Sharefin, 20:20:30 01/13/03 Mon

Interesting replies...

GATA's Unwilling Ally (Ed Steer)

Bill Murphy has it right for once. GATA is clueless enough now. (Bob Moriarty)

GATA and Gold (Peter Spina)

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Gold -- Sharefin, 20:13:45 01/13/03 Mon

Open Letter To the Authorities of the Silver Markets:

My letter was
about the comments by Mike Gorham that clearly show
that the silver market would, indeed, be manipulated
by the large short positions if they don't have silver
to back up their positions, and if they cannot deliver
silver to the longs who intend to take delivery.

And you did not answer my key question, which is, "Do
they have the silver to back up their short positions
and deliver silver?"

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Gold -- Sharefin, 19:59:53 01/13/03 Mon

Here's an excellent release by Bill Murphy


The fever builds....^o-o^...

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Gold -- Sharefin, 19:33:35 01/13/03 Mon

Finding the top gold stock picker

In the newsletter business, it is exceptionally unusual to find a publisher who maintains a waiting list, more so when the subscriber list is just 500 strong. That discipline remains despite the temptation and capacity to grow the report a hundred times in a gold bull market like this and after picking two of the top three gold stocks in the world last year.

Had you invested $1,000 in Nevsun and Seabridge at the start of the year - companies Bob Bishop’s Gold Mining Stock Report had fingered for profit - you would have gained an additional $17,000 by the end of the year (+858%). In addition, GMSR told clients to go long on Glamis Gold (+214%) and Goldfields (+191%) among some of its best picks.
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He has gained a reputation as one of the biggest stock movers in the business, making his endorsements heavily sort after. However, it’s not just another dog-and-pony Public Relations exercise the likes of which we see all too often nowadays. Bishop has no hesitation telling subscribers to sell, guiding them through each opportunity. He’s also unusually forthright about his own interests and makes it clear that he won’t recommend what he is selling
--
When prices had appeared to race too far in early 2002, Bishop coached investors as follows: “Price revisions have been widespread and are perhaps daunting to those just beginning to consider the sector, but in a gold market that continues to advance, these and other share prices seem certain to build on their already impressive gains.”

Bishop, a genial fellow who self-deprecates by saying he has made money on every commodity except gold, remains confident that we’ll see more gains despite lofty valuations. However, he does warn that increasing Internet exposure for particular stocks (not all of it kosher in terms of author’s conflicts of interest) has made the game more interesting because prices and volumes are becoming detached from their fundamentals as the herd takes over. Likewise, the increasing use of technical analysis - thousands of people making decisions based on the same patterns - is driving stocks away from meaningful valuations. Finally, a lot of the momentum is second and third-hand, with newsletter subscribers having gained an advantage of hours and days.

“I saw enough of the self-fulfilling prophecy phenomenon in the last cycle, a