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Fiat -- Sharefin, 20:22:30 02/27/03 Thu

What the world's ruling class is thinking now

[Laurie Garrett of Newsday -- and author of a great work of contemporary history, The Coming Plagues -- sent this email to a bunch of her friends. It got around. Then it got loose. Reportedly she is quite steamed about it, as well she might be. But it's been circulated to thousands already... -- Roger]


Hi Guys.

OK, hard to believe, but true. Yours truly has been hobnobbing with the
ruling class.

I spent a week in Davos, Switzerland at the World Economic Forum. I was
awarded a special pass which allowed me full access to not only the
entire official meeting, but also private dinners with the likes the
head of the Saudi Secret Police, presidents of various insundry
countries, your Fortune 500 CEOS and the leaders of the most important
NGOs in the world. This was not typical press access. It was full-on,
unfettered, class A hobnobbing.

Davos, I discovered, is a breathtakingly beautiful spot, unlike anything
I'd ever experienced. Nestled high in the Swiss Alps, it's a three hours
train ride from Zurich that finds you climbing steadily through
snow-laden mountains that bring to mind Heidi and Audrey Hepburn (as in
the opening scenes of "Charade"). The EXTREMELY powerful arrive by
helicopter. The moderately powerful take the first class train. The NGOs
and we mere mortals reach heaven via coach train or a conference bus.
Once in Europe's bit of heaven conferees are scattered in hotels that
range from B&B to ultra luxury 5-stars, all of which are located along
one of only three streets that bisect the idyllic village of some 13,000
permanent residents.

Local Davos folks are fanatic about skiing, and the slopes are literally
a 5-15 minute bus ride away, depending on which astounding downhill you
care to try. I don't know how, so rather than come home in a full body
cast I merely watched.

This sweet little chalet village was during the WEF packed with about
3000 delegates and press, some 1000 Swiss police, another 400 Swiss
soldiers, numerous tanks and armored personnel carriers, gigantic rolls
of coiled barbed wire that gracefully cascaded down snow-covered
hillsides, missile launchers and assorted other tools of the national
security trade. The security precautions did not, of course, stop there.
Every single person who planned to enter the conference site had special
electronic badges which, upon being swiped across a reading pad,
produced a computer screen filled color portrait of the attendee, along
with his/her vital statistics. These were swiped and scrutinized by
soldiers and police every few minutes -- any time one passed through a
door, basically. The whole system was connected to handheld wireless
communication devices made by HP, which were issued to all VIPs. I got
one. Very cool, except when they crashed. Which, of course, they did
frequently. These devices supplied every imagineable piece of
information one could want about the conference, your fellow delegates,
Davos, the world news, etc. And they were emailing devices --- all
emails being monitored, of course, by Swiss cops.

Antiglobalization folks didn't stand a chance. Nor did Al Qaeda. After
all, if someone managed to take out Davos during WEF week the world
would basically lose a fair chunk of its ruling and governing class
POOF, just like that. So security was the name of the game. Metal
detectors, X-ray machines, shivering soldiers standing in blizzards,
etc.

Overall, here is what I learned about the state of our world:

- I was in a dinner with heads of Saudi and German FBI, plus the
foreign minister of Afghanistan. They all said that at its peak Al Qaeda
had 70,000 members. Only 10% of them were trained in terrorism -- the
rest were military recruits. Of that 7000, they say all but about 200
are dead or in jail.

- But Al Qaeda, they say, is like a brand which has been heavily
franchised. And nobody knows how many unofficial franchises have been
spawned since 9/11.

- The global economy is in very very very very bad shape. Last year
when WEF met here in New York all I heard was, "Yeah, it's bad, but
recovery is right around the corner". This year "recovery" was a word
never uttered. Fear was palpable -- fear of enormous fiscal hysteria.
The watchwords were "deflation", "long term stagnation" and "collapse of
the dollar". All of this is without war.

- If the U.S. unilaterally goes to war, and it is anything short of a
quick surgical strike (lasting less than 30 days), the economists were
all predicting extreme economic gloom: falling dollar value, rising spot
market oil prices, the Fed pushing interest rates down towards zero with
resulting increase in national debt, severe trouble in all countries
whose currency is guaranteed agains the dollar (which is just about
everybody except the EU), a near cessation of all development and
humanitarian programs for poor countries. Very few economists or
ministers of finance predicted the world getting out of that economic
funk for minimally five-10 years, once the downward spiral ensues.

- Not surprisingly, the business community was in no mood to hear about
a war in Iraq. Except for diehard American Republicans, a few Brit
Tories and some Middle East folks the WEF was in a foul, angry
anti-American mood. Last year the WEF was a lovefest for America. This
year the mood was so ugly that it reminded me of what it felt like to be
an American overseas in the Reagan years. The rich -- whether they are
French or Chinese or just about anybody -- are livid about the Iraq
crisis primarily because they believe it will sink their financial
fortunes.

- Plenty are also infuriated because they disagree on policy grounds. I
learned a great deal. It goes FAR beyond the sorts of questions one
hears raised by demonstrators and in UN debates. For example:

- If Al Qaeda is down to merely 200 terrorists cadres and a
handful of wannabe franchises, what's all the fuss?

- The Middle East situation has never been worse. All hope for a
settlement between Israel and Palestine seems to have evaporated. The
energy should be focused on placing painful financial pressure on all
sides in that fight, forcing them to the negotiating table. Otherwise,
the ME may well explode. The war in Iraq is at best a distraction from
that core issue, at worst may aggravate it. Jordan's Queen Rania spoke
of the "desperate search for hope".

- Serious Islamic leaders (e.g. the King of Jordan, the Prime
Minster of Malaysia, the Grand Mufti of Bosnia) believe that the Islamic
world must recapture the glory days of 12-13th C Islam. That means
finding tolerance and building great education institutions and places
of learning. The King was passionate on the subject. It also means
freedom of movement and speech within and among the Islamic nations.
And, most importantly to the WEF, it means flourishing free trade and
support for entrepeneurs with minimal state regulation. (However, there
were also several Middle East respresentatives who argued precisely the
opposite. They believe bringing down Saddam Hussein and then pushing the
Israel/Palestine issue could actually result in a Golden Age for Arab
Islam.)

- US unilateralism is seen as arrogant, bullyish. If the U.S.
cannot behave in partnership with its allies -- especially the Europeans
-- it risks not only political alliance but BUSINESS, as well. Company
leaders argued that they would rather not have to deal with US
government attitudes about all sorts of multilateral treaties (climate
change, intellectual property, rights of children, etc.) -- it's easier
to just do business in countries whose governments agree with yours. And
it's cheaper, in the long run, because the regulatory envornments match.
War against Iraq is seen as just another example of the unilateralism.

- For a minority of the participants there was another layer of
AntiAmericanism that focused on moralisms and religion. I often heard
delegates complain that the US "opposes the rights of children", because
we block all treaties and UN efforts that would support sex education
and condom access for children and teens. They spoke of sex education as
a "right". Similarly, there was a decidedly mixed feeling about
Ashcroft, who addressed the conference. I attended a small lunch with
Ashcroft, and observed Ralph Reed and other prominent Christian
fundamentalists working the room and bowing their heads before eating.
The rest of the world's elite finds this American Christian behavior at
least as uncomfortable as it does Moslem or Hindu fundamentalist
behavior. They find it awkward every time a US representative refers to
"faith-based" programs. It's different from how it makes non-Christian
Americans feel -- these folks experience it as downright embarrassing.

- When Colin Powell gave the speech of his life, trying to win
over the nonAmerican delegates, the sharpest attack on his comments came
not from Amnesty International or some Islamic representative -- it came
from the head of the largest bank in the Netherlands!

I learned that the only economy about which there is much enthusiasm is
China, which was responsible for 77% of the global GDP growth in 2002.
But the honcho of the Bank of China, Zhu Min, said that fantastic growth
could slow to a crawl if China cannot solve its rural/urban problem.
Currently 400 million Chinese are urbanites, and their average income is
16 times that of the 900 million rural residents. Zhu argued China must
urbanize nearly a billion people in ten years!

I learned that the US economy is the primary drag on the global economy,
and only a handful of nations have sufficient internal growth to thrive
when the US is stagnating.

The WEF was overwhelmed by talk of security, with fears of terrorism,
computer and copyright theft, assassination and global instability
dominating almost every discussion.

I learned from American security and military speakers that, "We need
to attack Iraq not to punish it for what it might have, but
preemptively, as part of a global war. Iraq is just one piece of a
campaign that will last years, taking out states, cleansing the planet."

The mood was very grim. Almost no parties, little fun. If it hadn't been
for the South Africans -- party animals every one of them -- I'd never
have danced. Thankfully, the South Africans staged a helluva party, with
Jimmy Dludlu's band rocking until 3am and Stellenbosch wines pouring
freely, glass after glass after glass....

These WEF folks are freaked out. They see very bad economics ahead, war,
and more terrorism. About 10% of the sessions were about terrorism, and
it's heavy stuff. One session costed out what another 9/11-type attack
would do to global markets, predicting a far, far worse impact due to
the "second hit" effect -- a second hit that would prove all the world's
post-9/11 security efforts had failed. Another costed out in detail what
this, or that, war scenario would do to spot oil prices. Russian speakers argued that "failed
nations" were spawning terrorists --- code for saying, "we hate
Chechnya". Entire sessions were devoted to arguing which poses the
greater asymmetric threat: nuclear, chemical or biological weapons.

Finally, who are these guys? I actually enjoyed a lot of my
conversations, and found many of the leaders and rich quite charming and
remarkably candid. Some dressed elegantly, no matter how bitter cold and
snowy it was, but most seemed quite happy in ski clothes or casual
attire. Women wearing pants was perfectly acceptable, and the elite is
sufficiently multicultural that even the suit and tie lacks a sense of dominance.
Watching Bill Clinton address the conference while sitting in the hotel
room of the President of Mozambique -- we were viewing it on closed
circuit TV -- I got juicy blow-by=blow analysis of US foreign policy
from a remarkably candid head of state. A day spent with Bill Gates
turned out to be fascinating and fun. I found the CEO of Heinekin
hilarious, and George Soros proved quite earnest about confronting AIDS.
Vicente Fox -- who I had breakfast with -- proved sexy and smart like a
-- well, a fox. David Stern (Chair of the NBA) ran up and gave me a hug.

The world isn't run by a clever cabal. It's run by about 5,000
bickering, sometimes charming, usually arrogant, mostly male people who
are accustomed to living in either phenomenal wealth, or great personal
power. A few have both. Many of them turn out to be remarkably naive --
especially about science and technology. All of them are financially
wise, though their ranks have thinned due to unwise tech-stock
investing. They pay close heed to politics, though most would be happy
if the global political system behaved far more rationally -- better for
the bottom line. They work very hard, attending sessions from dawn to
nearly midnight, but expect the standards of intelligence and analysis
to be the best available in the entire world. They are impatient. They
have a hard time reconciling long term issues (global wearming, AIDS
pandemic, resource scarcity) with their daily bottomline foci. They are
comfortable working across languages, cultures and gender, though white
caucasian males still outnumber all other categories. They adore hi-tech
gadgets and are glued to their cell phones.

Welcome to Earth: meet the leaders.

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On the verge of 1970's type stagflation -- giovanni, 08:07:46 02/27/03 Thu

We are seeing further signs of economic meltdown as it looks like the american real estate market may be the next "shoe to drop". New home sales in america in january dropped 15% month on month. And this has come while interest rates remain at the lowest levels for decades. This is probably the normal fallout from the collapse in the stock market - a similar event happened after the 1987 stock market crash and the resulting housing and economic recession from roughly 1989 to 1992.

What is significant about this recession is that it has happened in face of an extremely loose monetary policy, as has noted economist Dr. Kurt Richebacher. What would happen to the economy and asset prices if interest rates were to rise significantly is that they would sink like a stone.

The 1990's were very much like the 1960's. Low interest rates, huge monetary expansion, enormous govt expenditures on programs like NASA's space exploration, LBJ's new society, and the Vietnam War.

America was allowed to expand its money supply in the 60's without visible inflation because foreign central banks bought up dollars as reserves. America was getting away with this license to print until it all fell apart in the 1970's when the dollar's integrity came into doubt. The result was a stampede out of dollars and into foreign assets, and precious metals which were artificially pegged to a low price. Gold soared from $35 to $800 in around 8 years.

I expect a similar event to take place over the next 10 years, as what has been going on is too similar to what happened in the 60's and 70's. It appears that precious metals prices have been artificially kept low through manipulation in the futures markets, while at the same time monetary and credit expansion has been obscene. The dollar has been the darling of the currency markets for the past 10 years but america's trade deficit of $300-400 billion per annum over the past 6 years or so is a powderkeg waiting to explode.

Once the dollar stampede starts, and signs are that it has already started, the global economy is screwed. Either foreign central banks abandon the US Dollar, or they continue to manipulate the dollar by buying up US debt and paying for it by printing more of its own currency. If it chooses the second option we will see what some refer to as the export of inflation - all currencies will generally decline relative to tangibles.

The objective for the investor is to preserve wealth. That means to avoid the US Dollar, and to avoid assets that have had big run ups in prices over the past 2 decades - they are likely in bubble stages.

Possible investments could be foreign bonds (short to medium term to avoid devaluation if inflation kicks in), precious metals like gold and silver, foreign real estate (such as in Brazil or Argentina where local currencies have lost over 50% of their value over the past year or two).

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Gold -- Sharefin, 05:51:43 02/27/03 Thu

The Gold Vocano - Part Two

NEW UNITED STATES GOLD-BACKED DOLLAR:
Jim Sinclair has taken the courageous stance of openly advocating and predicting an eventual gold-convertible USDollar. Necessarily, the present USDollar must either go through a near-death experience or be formally retired. I believe it will be retired in the face of a magnificent worldwide monetary crisis, with our declining abused bloated indebted currency at the epicenter, around which a strained global system revolves, saturated with dollars. I have elaborated in my first article upon the monumental forces and dynamics behind the USDollar Decline Vicious Circle. As the dollar declines in value, the many unchained powerful feedback effects will systemically show the way to further declines. Review the article (see ref#1) for a more detailed discussion of complexities. The key to the phenomenon lies in the dynamics of change. Many naïve observers of the economy and financial markets hail the onset of a lower dollar. But to their peril, they overlook how devastating the declining effect is on every facet of our economy and markets, as well as the world economy. The stock market, Trez bonds, corporate bonds, inflation rate, mortgage rate, supplier costs, import prices, energy costs, corporate profits, consumer spending, refinance cash outs, economic growth -- all these are detrimentally affected by a declining dollar. The vicious circle works like a revolving weapon, issuing blows to each listed economic factor with each repeated cycle. We simply depend too much on foreign capital, to the tune of almost $3 billion per day. I believe the destructive cycle will not end until a crisis develops and mushrooms. Each cycle ratchets up the destructive force, ensuring the next cycle's inevitable arrival, leading to a crescendo in the near future. The dollar declines act much like a debt downgrade, reducing the required cash flow in the debt-based economy for financing the debts themselves. Each round intensifies, putting greater pressure and strain on each debt component, setting up the next round of declines.

The crisis will center on the USDollar decline, which I believe will enter a slow-motion freefall. As the Fed enforces a ceiling on long-term interest rates, forestalling damage to corporate balance sheets and homeowners, they will dismantle the very mechanism to limit the extent of the dollar decline. Naïve observers again do not anticipate such an outcome. They make faulty assumptions on foreign willingness to stand pat and absorb continued and growing losses. They will not. Making matters worse, rising rates together with a falling dollar can deal a double loss to foreigners. High dollar valuation and low foreign labor costs have dispatched manufacturing capacity abroad for a wide range of sectors. Mfg operations have actively shipped to Asia, and assembly plants to Mexico, where labor and plant cost offer big cost advantages. When the market process shifts the strong dollar policy into reverse, all hell breaks loose. The internal mechanisms are absent on the monetary side, with a rate ceiling. They are also absent on the economic side; the apparatus has been exported for 20 years. The United States has neither the monetary nor the economic mechanisms necessary to effectively stem the upcoming uncontrollable USDollar Decline. We have witnessed evidence in a trade gap that continues to yawn wider. Only a gold monetary role will halt the decline.

Sinclair expertly articulates a gold-backed dollar, a new dollar, which would (will) enjoy the support of a partial cover clause. Alan Greenspan himself has spoken in less than his usually cryptic style on the possible return of gold to a monetary role. As Jim Turk reports, each ounce of gold in the US Reserve matches up with over $32,000 of US money supply ($8500 billion versus 260 million oz gold.) If a 5% cover clause were enacted, the USGovt purchases would find balance near $1600 per ounce of gold. Furthermore, official govt sources would be required to continue purchasing gold in order to keep pace with additions to the money supply expansion. A new $400 billion in annual monetary expansion would necessitate the purchase of $20 billion in new gold reserves, which amounts to more than 50 million oz. While this revolutionary step would certainly send the gold price to new heights, it would issue a much stronger signal. We would immediately see rampant competition for scarce gold resources, sending the price above the eventual point of equilibrium. Pressures on the relatively tiny annual gold supply would be utterly overwhelmed. The gold price would far surpass estimates of equilibrium, then settle back.

Given the history of gold tied in ratio to silver, I expect both precious metals to soar in value. Silver was once valued at a 16:1 ratio with gold in the Bimetallic Standard. The current ratio of 78:1 heaps disrespect on this unique metal with astounding technological properties. Convergence in time toward the historical 16:1 ratio will surely come about.

Other major currencies would (will) not necessarily follow suit to create a gold-backed euro or yen. Deeply troubled and endangered currencies would be forced to react in this extreme manner. Other nations such as China will choose instead to back their currency with gold, when positioned advantageously. One can see that only the best and worst positioned nations will back their currency with hard asset reserves !!! Private investors worldwide would enter into competition with the USGovt for that gold. The price of gold would enter the stratosphere. Again, naïve observers actually claim that gold would stabilize in price, since the USGovt would need it to stabilize. What utter shallow baseless nonsense drivel ! I expect gold will rise 10-fold, just like in the 1970 decade, when govt intervention failed to curb the market reaction to widespread currency debasement. Investors worldwide would force official govt buyers to pay up. Once more they overlook the dynamics of change. The USGovt would purchase massive amounts first to stabilize the dollar. It would continue buying every single year as monetary expansion continues its longstanding patterned model. The end result would be a magnificent transformation of the gold (and also silver) market, announcing sustained and regular gold demand, reversing 30 years of the official policy to put gold under foot. The USGovt might talk about legally capping the gold price, but we are talking about world markets, where US Law cannot apply. The impact on Asian Central Banks replenished with gold would change the face of the geopolitical and economic structures.

Gold would (will) stabilize only after the abuse of the currency ceases, only if stability is achieved, and not until it is achieved. Until the dollar currency stabilizes, one should expect gold to rise. If the Fed printing press can issue new dollars in limitless fashion, as Bernanke boasted, then gold also has corresponding limitless upside potential. Newton's Third Law of Motion dictates it - "within an equilibrium, every action invokes an equal and opposite reaction." Transition from old fiat dollar to new convertible dollar will be replete with risks and accidents and jolts from air-pockets, probably with high levels of resentment and distrust. This is the world reserve currency, the monetary standard, standing in denomination of 75% of world banks reserve assets.




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The Gold Vocano - Part One

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@sherwin - platinum coins -- giovanni dioro, 19:56:19 02/26/03 Wed

The perth mint in australia mints platinum coins. You can check out their website at
The Perth Mint

I also got the following information from their website about distributors in HK. Gold Corp runs the perth mint:

GoldCorp Australia(HK) Ltd
Room 405, St Georges Building
No 2 Ice House Street
Central
Phone: 852 2525 1130
Fax: 852 2810 6809

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Gold -- Sharefin, 02:43:09 02/26/03 Wed

Yellow brick crossroads

I love gold (or as they say in the gold camps of northwestern Quebec, "J'adore l'or"). It is really the most marvelous metal. It's the most ductile of all metals, capable of being drawn into wires finer than frog's hair. It is singularly malleable, and can be hammered into sheets so thin they're translucent. It is impervious to rust or corrosion, and immune to most acids. It is among the best conductors of electricity. It is a truly rare element; the amount of gold in the earth's crust being only two parts per billion. It has been a medium of exchange and a recognized store of value since the dawn of civilization.

And, perhaps most importantly, gold has the power to cloud men's minds. Oh, the northern lights have seen queer sights, indeed, among the men who moil for gold, as the poet Robert W. Service might have said.

For a mining promoter or a geologist, there's no easier way to convince a skeptical investor than to show him how to pan a handful of fines, swirling it around to reveal that siren smile of gold dust at the bottom of the pan. Suddenly the punter's eyes are afire with the flame that launched hundreds of gold rushes, and many an armada, too.

Anyway, before I get swept away on that tide, too, let me tell you, I'm trying to keep this whole gold bull market in perspective. It's been a long time since anyone has been so excited about gold. I remember walking through the main banking hall of one of the big banks on Bay Street back in 1980. There were hundreds of people lined up at the counter: I'd never seen the place so busy. What's this, I thought, a run on the bank? So I asked a security guard what was happening. He told me that all these people were lined up to buy gold. I found it a little odd that so many people wanted to buy gold when it was trading at its all-time high, when so few of them had been interested only a few years earlier when it could have been had for $65 (all prices in U.S. dollars) an ounce. I immediately went and sold all my gold. Of course, it wasn't that long before the golden balloon burst.

Through the rest of the 1980s and into the 1990s, gold languished, while every gold analyst at every dealer I ever worked for, year in and year out, predicted that gold prices would average $450 an once next year. We used to call them Godot Analysts, since they were always waiting for something that never came.

But gold is back. Geopolitical tensions, a weakening U.S. greenback, the debt bomb, stocks already trashed-and still expensive-gee, maybe it's time for a little of that old-time hard currency in the old portfolio. Why, unless I was hallucinating at the time, I was sure I even heard Federal Reserve Chairman Alan Greenspan waxing somewhat wistfully on the subject of gold-backed currencies the other day. Ok, sure, maybe he was having an irrationally exuberant moment-gold can do that to a person.

Gold has been enjoying a nice upward run, and the gold bugs have all, and I mean all, come out of their bunkers. Maybe some of them were running out of freeze-dried food, but many of them had seen the signs in the charts, and the golden goose was on the loose.

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Gold -- Sharefin, 02:37:25 02/26/03 Wed

Hedged In

Not that long ago, Barrick Gold Corp. was in the top tier of global gold companies. In fact, it was probably the most respected producer in the industry, and its shares received a premium valuation as a result. Has that situation now reversed itself, to the point where Barrick is being unfairly penalized? A case could be made that it has.

The key to Barrick's reversal of fortune, not surprisingly, is the price of gold. When the price of bullion was low, as it was for much of the 1980s and 1990s, Barrick's aggressive hedging program-which was pioneered by current Chief Executive Randall Oliphant-made it far more profitable than most of its peers, who were exposed to the spot price.

Barrick, however, managed to negotiate forward contracts that locked in relatively high prices for its production, and the use of this hedge "book" helped produce billions more in profits than the company would otherwise have had. The dependability of this strategy was the main reason for the premium on Barrick shares.

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Gold -- Sharefin, 02:32:12 02/26/03 Wed

There's more to this rally than just investor gold fever

For three months now, serious investors have watched in horrified fascination as the price of gold soared to heights unseen since the mid-1990s. They're fascinated because gold is, well, fascinating. They're horrified because, for the most part, they've missed the rally.

Gold, we all know, is one of the worst investments in the world. It is fickle, treacherous and wholly reliant on the whims of the mob for its daily ups and downs. Worst of all, gold never gets consumed. Almost all of the gold that has ever been pulled out of the ground since antiquity is still around. Central banks own most of it, and have an irritating habit of dumping big blocks into the market whenever the price starts to rise. Thus, none of the normal rules that apply to investments seem to apply. Gold is a universe unto itself. And it has done nothing but disappoint for most of the past 20 years.

And yet, there's this rally. Admittedly, it has taken a bit of a breather in February. But who's counting? Even given the selloff that began in early February, when the spot price briefly surged above $380 (U.S.) an ounce, bullion is still up more than 10 per cent since the beginning of December. The TSX gold sector, as represented by Barclays Global's iGold exchange-traded fund (XGD--TSX), is up about 8 per cent. Not bad considering that, over the same period, the Standard & Poor's 500 index, the broadest measure of the U.S. market, is down more than 10 per cent.

The obvious question: Where to now?

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Gold -- Sharefin, 02:27:14 02/26/03 Wed

Gold surges on international trend

The buying was mainly triggered on international trend on brisk buying by market players and general investors after reports of North Korea launching an anti-ship missile added to the anxiety over geopolitical hot-spots.

Marketmen said trading sentiments were already bullish on heavy purchases by market players amid reports of heightening tension between US-led allies and Iraq.

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how can i buy pl coin -- sherwin, 02:25:13 02/26/03 Wed

i want to knwo how can i buy pl coin? Maple leaf / US Eagel. 100 new. & ship to HK?
about 30 pcs 1 oz.?
sherwinlui

sherwinlui@yahoo.com.hk

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Gold -- Sharefin, 02:23:32 02/26/03 Wed

Gold surges on international trend

New Delhi
Gold regained its glitter following a sharp upsurge on the bullion markets across the country.

This was due to heavy purchases by stockists triggered by a firm trend in the international markets and registered gain ranging between Rs 95 and Rs 50 per 10 gram.

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Gold -- Sharefin, 02:21:19 02/26/03 Wed

Placer sees gold production climbing


Mining firm Placer Dome Inc. said Tuesday it expects gold production to climb this year by about 25 per cent this year while exploration spending will climb to about $60-million (U.S.).

In 2003, Vancouver-based Placer said it expects gold production to reach 3.5 million ounces up from 2.8 million ounces in 2002, which saw record production in the fourth quarter.

Cash and total costs are are expected to be about $194 an ounce and $256 an ounce respectively.

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Gold -- Sharefin, 02:20:09 02/26/03 Wed

Lihir's cuts to gold hedging pay off

Lihir Gold, the gold producer part-owned by Rio Tinto, said it had overhauled parts of its Papua New Guinea mine and was selling more gold at spot prices as it moved to take advantage of a 23 per cent surge in price in the past year.

~~~
"We rolled our hedge book out last year to give ourselves more year-by-year spot exposure, so we're certainly pleased with the increase in the gold price," managing director Neil Swan said.

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Gold -- Sharefin, 02:15:08 02/26/03 Wed

John Hathaway Talks About Investing In Gold - video interview

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Fiat vs Gold -- Sharefin, 02:13:32 02/26/03 Wed

China's Gold Output Expected to Reach 190 Tons in 2002

China's gold output is estimated to top 190 tons in 2002, sources of the Gold Administration of the State Economic and Trade Commission disclosed.

China produced 163.37 tons of gold in the first 11 months of 2002, up 0.69 per cent year-on-year and 105.4 per cent of the annual production plan. Smelting enterprises produced 63.39 tons, up 6.77 per cent. To be specific, Zhaoyuan produced 8,944.1 kg, up 18.8 per cent; Dongfang, 2,113.1 kg, up 50.8 per cent; Liaoning Xindu, 38 per cent; Daye, 3,669 kg, up 42.5 per cent.

Generally speaking, China's gold production is in a spiral rising trend.

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Fiat vs Gold -- Sharefin, 02:12:11 02/26/03 Wed

Gold traded lower after news on bank sale

Asian stock markets tumbled and both gold and oil prices soared higher on news that North Korea had fired a missile into the sea near the Korean peninsula in a provocative move ahead of the inauguration on Tuesday of South Korean President Roh Moo-hyun, in addition to renewed tensions over Iraq.

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On Commodity Exchange (COMEX), April gold started at around $356.70 an ounce and then climbed higher on $358 ~ $359 region as tensions from Iraq to North Korea took centre stage for jittery investors.


Gold prices reversed and lost some of its recent gains after the reports that the European Central Bank's receivables are down 326 million euro following a 30 tonne bullion sale by an unnamed national central bank. Although the bank sales were wholly in compliance with the September 1999 Washington Gold Agreement, the extent of the sales had dented the resolve of weak-handed speculators and triggered a round of uniform long liquidation.

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Fiat vs Gold -- Sharefin, 02:09:26 02/26/03 Wed

ECB Sold Gold Worth 326 Million Euros; Currency Reserves Fell

The European Central Bank said one of its member banks sold 30 tons of gold worth 326 million euros ($351.1 million) last week, in line with a central bank agreement of 1999. The seller wasn't identified.

Foreign currency reserves in the euro area fell 400 million euros to 224.2 billion euros in the week ended Feb. 21. Banknotes in circulation dropped 1.3 billion euros to 341.6 billion euros.

The ECB sets monetary policy for Germany, France, Italy, Spain, Portugal, Ireland, Finland, Austria, the Netherlands, Belgium, Luxembourg and Greece, the 12 countries that share the euro as their common currency.

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Hmmmm!!!!
Who was the buyer???
And where does the next lot come from???

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Gold -- Sharefin, 02:07:39 02/26/03 Wed

Gold down on ECB sale, Iraq disclosure

COMEX Gold tumbled in choppy trade Tuesday, reversing from a 13-day high after the European Central Bank said one of its members sold an unusually large chunk of bullion last week.
~~~
But support cracked after the ECB said gold reserves fell by 326 million euros because of a 30-tonne sale by a national central bank last week.

"That's what gave the price back from where we were last night," said a floor broker.
~~~

Dealers declined to speculate on which central bank dumped bullion. But they said selling into strength was the best way to take advantage of gold's rally and stabilize the market.

"It was certainly larger than normal. But of course what the market is telling us is it's taking on the central bank sales very easily now. Very efficiently," said MacDonald.

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Gold -- Sharefin, 02:00:25 02/26/03 Wed

Gold hedging brinkmanship is here

Newmont [NEM] has provided unusually fulsome disclosure - as far as gold producers go - on a troublesome portion of its hedge book. The revelations are important because they potentially recast the definition of hedging margin calls, as well as provide an unusual view of hedging counter party risk management.

Newmont revealed that its hedge counter parties for the Yandal operations - understood from Australian sources to be JP Morgan Chase and Credit Suisse First Boston - have exercised “right-to-break” clauses prior to the scheduled maturities of Yandal’s forward sale contracts. This means that the counterparties can demand cash settlement rather than wait to take delivery of promised ounces of gold. (See table at end of story)

The counterparties demanded early cash settlement in December and January, with the right to do so again in June 2004.

The right-to-break amounts to a type of margin call since it creates a distinct liability that is solely determined by the counterparty and is vastly different in character and impact from hypothetical mark-to-market losses conventionally reported.

Yandal is the festering sore on Newmont’s overall hedge book, comprising two thirds of its unrealised negative value of $433 million. Alarmingly for American investors, but commonplace for their Australian counterparts, is Yandal’s paucity of reserves relative to its hedged commitment - 2.1 million ounces and 3.4 million ounces respectively. The 1.3 million ounce deficit is equivalent to nearly two years of production and can only be offset by a large exploration discovery or by buying metal in the market.

~~~
Risk
The problem is all risk - what else could have triggered the cash calls. Yandal’s impecunious balance sheet and sharply higher gold price has clearly caused turbulence in the counterparties’ own offsetting contracts.

So Bullion banks willingness to stay their cash calls may be a function only of their leverage over players further along the chain. In the case of the Australian banks, it seems, from anecdotal evidence that they are under some pressure to deliver on their portion of the hedge agreements with the country’s Central Bank no source of help given its gold reserve sales and heavy lending.

That has some experts convinced Newmont’s brinkmanship could have much broader ramifications for bullion banking across the globe.

It is another timely reminder of how bullion banks held the upper hand when providing financing for new projects through gold forward sales, protecting themselves in several ways whilst leaving shareholders vulnerable. More so for companies with feeble balance sheets to begin with - companies investors should not have been encouraging to bring marginal deposits to account anyway.

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Gold -- Sharefin, 01:52:55 02/26/03 Wed

Gold cartel and hedge funds attack

Riding the gold market bucking bronco
By Harry Schultz

Both the AMEX Gold Bugs Index and the Philadelphia Gold Silver Index slid more than 4 percent over the one week period.

What happened? Two groups attacked the shares:

Hedge funds
Certain hedge funds are long bullion and have been shorting shares as a hedge -- not a quaint action for a hedge fund!

Some hedge fund managers saw that gold at $380 was 15 percent over its 200 day moving average -- the highest premium in 15 years -- so it was prudent to hedge.

If they¹re lucky, they'll profit on both positions -- if they cover before the turn appears obvious.

Gold cartel
The gold cartel put their boot in, shorting shares in the hopes of creating a negative climate so bullion would also fall.

Bullion finally caved in by day's end, falling back from its $360 Tuesday high.

In all this to and fro action, the gold indices formed small, toppy chart patterns and fell below a kind of neckline, targeting a lower price.

Not deep in price but deep in nervous-making for weak holders.
~~~
What to do?
Where is the gold price going? In my opinion, it will shoot past $400 in the months just ahead, probably by August. Later it will move to even higher numbers.

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Gold -- Sharefin, 01:49:32 02/26/03 Wed

TOCOM gold falls as news of ECB sale reaches Asia


Tokyo gold futures posted double-digit losses on Wednesday after news that a European Central Bank member bank had sold a big chunk of bullion sent the metal reeling overnight.

But even as copy-cat selling pushed yen-based futures to five-day lows, brokers said gold's safe-haven shine remained as bright as ever in an uncertain world.

"It's really just following New York lower after the ECB sale," a brokerage analyst said.
~~~
COMEX gold tumbled overnight after the ECB said gold reserves fell by 326 million euros ($351 million) because of a 30-tonne sale by a national central bank last week.

That sale came despite fears of war in the Gulf and the spectre of rising oil prices, suggesting that one central bank at least remained unconvinced of gold's safe-haven role.

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Fiat -- Sharefin, 22:57:35 02/25/03 Tue

Re-thinking Alan Greenspan

Alan Greenspan, like the US dollar, was for a long time believed to be almighty. But CFC’s chief strategist argues his actions and inactions have had huge implications for the global financial system, some very negative.

The Fed Chairman has made several critical miscalculations and missteps since 1999 that have exacerbated, if not actually triggered, many of the woes the United States and global economy are currently experiencing.

Not that fiscal policy has helped, but the Fed's lack of coordination and inappropriate actions have buffeted the US economy to the precipice of depression. One could argue that many of the mistakes attributed to Chairman Greenspan are not within the purview of the Federal Reserve or the banking industry. However, unlike his unceremonious predecessors, Chairman Greenspan by the virtue of a nearly deified public persona - he has shaped public opinion and affected public policy on a myriad economic issues.

If he is going to keep interest rates artificially low for an extended time, Greenspan needs to tighten bank lending standards for consumer loans, especially home loans, where he has now created a second bubble.

It's time to replace the irrational reverence granted to Chairman Greenspan with sober objectivity and examine the fragility of the world economy and vulnerability of the US dollar. History teaches us that the Federal Reserve and monetary policy can either be the market's very best friend or its most perverse enemy.

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Fiat -- Sharefin, 21:14:18 02/24/03 Mon

China learns the currency game

One of the more interesting developments at this weekend's G7 summit meeting in Paris is Japan criticizing China for using its currency to boost its exports at the expense of its global rivals.

It's ironic as Tokyo has used -- and still uses -- the same weak-currency strategy to incredible success over the years. Ask the United States, which adopted "managed trade" and other protectionist measures to fend off the Japanese export machine.

In Paris, Japanese Finance Minister Masajuro Shiokawa urged the world's richest nations to pressure China to drop its currency peg to the dollar -- which has been locked at around 8 yuan to the greenback since 1994. To the chagrin of the Chinese, the rival Japanese are attracting listeners as the U.S. and Europe indicated support for such a move.

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Gold -- Sharefin, 20:34:51 02/24/03 Mon

Gold jumps in Asian trade on Iraq, Korea missile

Gold prices steadied at midday
in Asia on Tuesday, after a US$3.00 leap at the opening on news
of North Korea's test firing of a land-to-ship missile, which
added to renewed tensions over Iraq as the U.S. and Britain
tabled a new resolution at the United Nations.
Spot gold leaped to US$360 an ounce bid in early morning
trade on Tuesday with confirmation that North Korea had test
fired a cruise missile into the Sea of Japan.
But the market dropped back after comments from a North
Korean official attending the Non-Aligned Nations Summit in Kuala
Lumpur that the test firing was for "security" or defensive
purposes and not an act of aggression.
"I think the way the market has reacted is pretty
reasonably," said Gordon Cheung, director of Precious Metals at
Mitsui Bussan in Hong Kong.
"Once the market has really thought about it and once the
officials came out to say this is for security reasons, it is not
aggression... the market took it pretty well," Cheung said.

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Gold -- Sharefin, 20:30:21 02/24/03 Mon

Value of gold India consumed in 2002 grows by 8 pct

Despite a sharp fall in gold imports, India's consumption of the metal rose by 8 percent in 2002, giving a boost to the traditional deep faith in the yellow metal as a "safe haven" investment during crisis.

The value-wise rise in gold import was an indication that India, the largest gold consuming nation in the world, had reaffirmed faith in the metal as an asset of safety as well as an item of adornment, according to Hiroo Mirchanda, associated director- Jewellery (India) World Gold Council said in a statement Friday.

"Gold's inherent value as an adornment and secure savings option was clearly evident in 2002. Despite high and fluctuating gold prices, the Indian consumer's loyalty to gold continued," she said.

Meanwhile, India's gold import fell to 797 tons in 2002 as against the previous year's import of 843 tons mainly due to the sharp rise and volatile gold prices during 2002.

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War -- Sharefin, 20:26:31 02/24/03 Mon

Oil, gold up on Iraq fears, N.Korea missile test

Oil and gold rose on Tuesday, Asian stocks fell and the yen wobbled as the United States and Britain circulated a U.N. resolution setting the stage for war with Iraq and North Korea test-fired a land-to-ship missile.

The U.N. resolution opened a fresh period of intense diplomacy among split Security Council members as France and Germany issued a rival proposal extending U.N. inspections for at least four months. No vote is expected on the new resolution for another two weeks.

Japanese and Korean stocks fell after a tumble on Wall Street and on news that North Korea had fired a missile into the sea near the Korean peninsula in a provocative move ahead of the inauguration on Tuesday of South Korean President Roh Moo-hyun.

Japanese shares <.N225> lost over two percent at one point and Korean stocks <.KS11> crumbled over 2.5 percent.

NYMEX oil futures gained 29 cents in electronic trading to $36.77 a barrel, approaching recent 29-month highs, after a rise of nearly a dollar in New York as the United States and Britain prepared to present their resolution.

Gold rose around $3 to $358.50/9.50 in Asian markets on concerns U.S.-led military action against Iraq was getting closer and on jitters over the North Korean missile test.

The yen was under pressure on the missile firing but the dollar still looked vulnerable to further selling on mounting fears over possible war in Iraq. Worries about Japanese intervention provided underlying support for the greenback.

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Lenny's Corner -- Sharefin, 20:01:09 02/24/03 Mon

GENERAL COMMENTS:

It was a mixed week for the precious metals, with gold beginning to consolidate in the low $350's after its tumultuous decline from $390 to $345 in the previous week. It would appear that much of the "war premium" has now disappeared and the gold price seems stable and durable at or near these prices. Historically, rallies due to fear and geopolitical tension tend to fade primarily due to the speculative excesses seen, but price advances in gold based upon bullish macroeconomic fundamentals are far more desirable. And, last week, economic news underpinned the gold market with the release of the PPI, showing the highest rate of inflation in 13 years. Factor in the burgeoning trade deficit, the growing governmental deficits in the USA, and the continuing death spiral of the USD, the probability (or should we call it certainty?) of higher inflation and investors will continue to seek the historic solution of buying gold not only for its prospects for continued appreciation but as a means of capital preservation in an economic environment where almost all other investment venues continue to look quite unfavorable.

While this commentary recently warned of the dangers inherent in the market when gold was rocketing skyward solely based upon speculative fever, the current gold price demonstrates a much more favorable risk/reward profile, and both investors and speculators should be looking to establish long positions. I would estimate that downside in gold will probably be limited to $10 to $15 from current levels, even if global geopolitical tensions completely subside, which seems incredibly unlikely. The low $340's should contain any decline in price, as strong physical buying by commercial/industrial concerns should be seen. The risks are now decidedly on the upside, and short positions in gold should be avoided like the plague. Gold was down 40 cents for the week.

I thought the silver market quite interesting last week, up 13 cents, as rumors abounded, and as one major Bullion Bank was extremely active on the exchange. In a recent press release, a major gold producer who currently has a rather large hedge position in silver, announced that they will be repurchasing their previously sold forward position in this market. In their words, "for a group of contracts, totaling 21 million ounces, we intend to "financially settle" (emphasis added) these contracts." This was enough to embolden the speculators and frighten the shorts in the market and prices rallied to contest the 200-day moving average at about $4.65.

One major Bullion Bank was extremely active last week in "selling the spread," meaning that they were buying the front months of silver as they simultaneously sold the back months. This trade is also termed a "cash and carry" trade, as the trader sometimes PAYS for the silver coming due in the short term only to deliver it in the future months. This strategy also has two intended or unintended responses from the internals of the marketplace. One, as the contango (the difference between the spot and the future price) is pressured, lease rates rise. Silver lease rates went from about .4% to well over 1% last week. To the untrained eye in the market, such a rise is seen as very bullish and encourages speculative buying. Secondly, speculative interest is also rekindled in the hope that the Bullion Bank will indeed take delivery of millions of ounces of silver in the coming delivery month, applying upward pressure to the market.

~~~~
The World Gold Council recently released the news that India, the world's largest demand center for gold, imported 31% less gold in 2002 over 2001. Total imports were on the order of 410 tons, about half of what was demanded from world markets just several years ago. The decline in demand is blamed upon the high price of gold and its accompanying volatility. While such statistics are, on their face, quite negative, there is some reason for optimism. Please note that total sales of gold in India remained rather constant at about 700+ tons/annum in 2002 BUT that internal sales of gold of an estimated 322 tons (a natural occurrence when prices rise and investors book profits) filled in the deficit between external supply and internal demand. Now, please understand that it is a market truism that such large amounts of gold sold into the market only occurs as prices enter new highs, and tend to fall back in size if the market consolidates. All in all, I find this fundamental news somewhat encouraging, rather than the bleak, bearish tone that a cursory examination would entail. After all, even with sharply higher gold prices last year, Indian consumers bought just about as much as they did the year before, just less was from the outside world.

It was also announced that sales of jewelry and watches in Germany fell by 7% in 2002 over the previous year. Perhaps this has more to do with the general economic trend in that country rather than a secular decline in demand. After all, these products are still luxuries, and their public demand is naturally curtailed in a poor economic environment. I really don't think that this means very much at all.

Of much greater long-term benefit to the gold market is the continuing liberalization in many countries, allowing investors and speculators greater access to the marketplace and new venues for trading and hedging. We have recently seen China begin to deregulate its gold market, allowing industrial buyers and sellers to deal directly on a new exchange. And, some bullion products are now beginning to be sold to individual investors. Demand in that nation has been in the 200 tons/annum range and some analysts are hopeful that it may reach 500 tons/annum in the near future. Now, news has emerged that after years of years of petitioning the government, India has finally changed their laws and has now allowed futures trading in the precious metals. This alteration will most certainly beneficially raise the demand for gold as jewelry manufacturers and retailers can now hedge their inventories, and perhaps even lock in future purchases of gold. Investors will also benefit as they can now buy gold directly, as an investment vehicle, without the associated higher costs of buying jewelry. Its really quite simple, kids always want to play in the new sandbox and investors/speculators are not at all different. Just remember the famous quip in the movie, Field of Dreams.."If you build it, they will come."

There is also news that the South African government will soon legalize the ownership of gold, in all of its forms, for the public. Heretofore, I believe that citizens of South Africa were restricted to only owning gold in coin form, and these coins were rather expensive and somewhat unavailable easily. With gold firmly entrenched in the mind of the average South African, it is likely that gold demand in that country will greatly increase. All such market liberalizations are very beneficial to the market long-term as they "legitimize" and expand the investment market for gold. History has shown us that jewelry demand can NEVER effectively raise the gold price as such demand is highly elastic, meaning that demand tails off as prices rise. We need the global investor to force gold prices higher and the more countries that allow such activities, the better the market can be.

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Richard Russell -- Sharefin, 19:59:49 02/24/03 Mon

I'd put those odds at 80/20 that the correction is over

Gold -- The rationale for buying and holding gold becomes clearer by the day. The US is faced with the "inflate or die" choice, and as the deficits continue to surge, the reasons for protecting ourselves with gold become overwhelming. Even the gold manipulators and gold hedgers will be pressed to the wall as the primary trend of gold breaks down all barriers.

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Gold -- Sharefin, 19:51:18 02/24/03 Mon

Newmont downsizes gold hedges in 2002

Newmont Mining Corp. the world's largest gold miner, on Monday said it had slashed by more than 40 percent the gold hedge book it inherited last year in a three-way international merger.

In a press release, Denver-based Newmont also said it would release its financial results for 2002 after the U.S. Securities and Exchange Commission (News - Websites) concured with its accounting for recent acquisitions.

Many gold companies use hedging to lock in prices for nuggets that have not yet been mined.

A committed non-hedger, Newmont acquired a large hedge book from Australia's Normandy Mining in the tie-up with Normandy and Canada's Franco Nevada Mining early last year.

Newmont said total ounces hedged through forward sales and options on a pro-forma basis fell to 6.6 million at the end of 2002 from 11.5 million a year earlier.

The company produced 7.6 million ounces of gold last year at a total cash cost of $189 an ounce. It said fourth-quarter output was 2.2 million ounces at a cash cost of $178 per ounce.

Committed ounces hedged through forward sales fell to 5.23 million at the end of 2002 from 9 million a year earlier.

"This represents approximately nine months of equity gold production, or 6 percent of reserves," Newmont Chief Financial Officer Bruce Hansen said in a press release.

"A minimum of 1.1 million committed ounces will mature or are scheduled to be delivered into (contracts) during 2003, and we will continue to look for opportunities to eliminate additional positions," Hansen said.

Hedging worked well for gold producers when gold prices were falling in recent years, but the practice backfired as the metal's fortunes improved, creating an investor backlash.

Gold companies that had relatively small hedges or did not hedge at all were able to enjoy the full benefit of the rally in gold prices in 2002 and this year.

~~~
Newmont said it had total gold reserves of 86.9 million ounces at the end of 2002.

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switching to -- Cyclist, 12:35:49 02/24/03 Mon

MDG.Sub 20.00 cad the stock is a steal.
Unbelievable but similar thing happened last year with Rangy.They were giving it away as well.

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ChartsRus -- Sharefin, 07:38:26 02/24/03 Mon

Hedged vs Unhedged Gold Stock Indices

Also MineWeb Gold Indice Comparisons
See which sector is outperforming/underperforming.

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Gold -- Sharefin, 03:01:17 02/24/03 Mon

Spending plans from gold sales given short shrift

The Swiss have thrown out a government plan to use proceeds from the sale of excess gold reserves for humanitarian projects.

Voters rejected two proposals on how to spend the money - a clear signal that the government needs to come up with new ideas about what to do with the cash.

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Gold -- Sharefin, 03:00:01 02/24/03 Mon

Turning to gold

The gold rush is on.

With the stock market clawed by a relentless bear market that shows no sign of letting up, the precious metal has regained luster as an investment.

Gold, long valued by investors as a refuge from war and other international crises, hit a six-year high of $370 an ounce on Feb. 4 before prices slipped a bit. Gold pegged for March delivery went for $354.50 an ounce late last week during trading on the New York Mercantile Exchange.

Gold's growing appeal to investors isn't really surprising since Wall Street has been in the dumps and people are searching for a safe haven, said Stewart Welch, founder of the Welch Group financial planning firm.

"Anytime you've got a market down three years running, people will say `Give me something else besides stocks,'" he said.

Institutional investors and wealthy individuals seeking refuge from war have traditionally been the main purchasers of gold. But recently gold has gotten a much broader following, Welch said.

"We're in a three-year bear market and investors have mainly sought three alternatives U.S. treasuries, real estate and gold," he said.

While gold prices rose about 60 percent last year, gold remains a risky investment, Welch said.

"The problem with gold is, it isn't a consistent performer," he said. "Whereas people can count on stocks most of the time, gold only works in times of crisis."

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Gold -- Sharefin, 02:56:36 02/24/03 Mon

Brown's gold sell-off leads to £850m loss

Gordon Brown's gamble in selling off part of Britain's gold reserve has cost the country almost £1bn, according to the latest figures.

Ruth Kelly, the financial secretary to the Treasury, confirmed last week that the mixed currency portfolio of euros, United States dollars and yen bought by selling gold is now worth £2.1bn.

But when the price of gold recently reached a six-year high, questions were asked. And the Treasury has confirmed that if the money had been kept in gold stocks, it would now be worth £2.95bn. In effect, the decision to sell off part of the gold reserve has cost the Exchequer £850m.

Conservatives are calling for Mr Brown to be held to account for his "bad housekeeping". The Tory MP Cheryl Gillan said: "I don't know why 40 per cent of our gold was invested back into euros because it is an untried, untested currency."

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Gold -- Sharefin, 02:51:29 02/24/03 Mon

Shanghai Exchange ends China's gold marketing control

On Oct. 30, 2002, the Shanghai Gold Exchange (SGE) was officially opened. This event ended the Chinese government's control of the country's gold marketing system.

Before the SGE was established, all of the gold produced in China had to be sold to designated Chinese banks. Based on an allocation and quota system, all enterprises needing and using gold had to apply for and, with permission and approved quotas, buy gold from the authorized Chinese bank organizations.

Following the establishment of the Shanghai Silver Exchange in 2001, the establishment of the SGE took more than two years to prepare. Currently, the buyers and sellers participating in the SGE are limited to members authorized and registered in China. The SGE currently has 108 members. They include 13 commercial bank entities, 24 gold producers, 61 gold users, eight gold smelters and two gold coin manufacturers. All members are Chinese entities. The members control about 75% of the Chinese gold production, 80% of the country's gold consumption and 90% of the gold smelting capacity.

Traditionally, 96% of all Chinese gold consumption was used for the jewelry industry. Individual investment in gold was prohibited under the old system. Chinese gold demand in recent years was about 200 t/a (6.4 million oz/year). Gold demand in China is likely to increase to 500 t/a (16.4 million oz/ year) within the next decade, if individuals can purchase and invest in gold.

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Gold -- Sharefin, 02:49:57 02/24/03 Mon

Real estate, bear, gold funds still shine

Throughout Wall Street's three-year decline, three fund sectors -- gold, real estate and so-called bear-market funds -- have been a haven for investors, providing solid returns that offset some of the overall market's losses. The popular wisdom is that these funds have the best of their gains behind them, but some analysts say it's not too late to buy into them.

With the economy still sputtering and the possibility of war with Iraq depressing the market, havens, or defensive sectors, still appeal to many investors.

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Gold -- Sharefin, 02:44:18 02/24/03 Mon

Gold's Glittering Allure Often Blinds Investors


In his classic 1935 book, "The Battle for Investment Survival," stocks-advocate Gerald M. Loeb describes the desire for gold as "the most universal and deeply rooted commercial instinct of the human race."

It is an instinct that appears to have resurfaced in recent months as investors have flocked to gold amid concerns about worsening economic conditions and a possible war with Iraq. But is gold's reputation as the ultimate haven really justified?

A look at the factors underpinning the price of gold suggests that, far from safe, making an investment in gold at current levels could be a lot riskier than many people think. That is because the more that gold rises, the less connected those gains are to fundamental factors such as physical demand and the more they rely on the whims of speculative traders. While prices may keep climbing, understanding why and predicting what they will do next will get tougher by the day

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Gold -- Sharefin, 02:31:13 02/24/03 Mon

The clock is ticking

The gold market in India could be set for a revamp over the next few months, following the announcement on Friday that the Indian government is lifting the ban on futures trading. The news has left the way clear for the National Multi-Commodity Exchange of India to start trading a further 54 commodities, including gold and silver from next month.

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Gold -- Sharefin, 02:28:31 02/24/03 Mon

Gold Products Favored by Chinese Consumers

The Spring Festival and approaching Valentine's Day celebration will offer glimmering business opportunities for gold retailers, experts and insiders say.
Regarded as auspicious gifts, gold jewelry and decorations were some of the hottest selling items around the nation during Spring Festival.
Last November's liberalization of the gold market together with the re-emergence of small-sized gold bullion on the retail market have proved an exciting new investment opportunity for investors.
~~~~
Besides the afore mentioned state-owned banks, the Shanghai Pudong Development Bank launched its gold leasing business last year -- the first time in China since 1949, when the domestic gold market was controlled by the central government.
Lu WenYuan, secretary-general of the China Gold Association, told China Daily that the active participation of the commercial banks was largely due to growing interest in the market.
So far, 108 units have registered as members of SGE, for the right to take part in on-spot gold trading.
They include 13 commercial banks, comprising state-owned groups, gold jewelry retailers, gold mine operators as well as gold processors.
"Liberalization of the market has brought a new business -- gold trading -- to banks, in other words, it has provided a new revenue channel for them," said Lu.
Liu Shan'en, an expert with the Beijing Gold Economics Research Center, said that the banks trading enthusiasm has been bolstered by a likely change in trading laws, which is set to allow individuals to invest in gold.

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Gold -- Sharefin, 02:21:12 02/24/03 Mon

Gold continues to earn its shine

"The slowing economy has eliminated the fear of inflation, but it has raised concerns about deflation," said Loyd Stegent, president of Stegent Equity Advisors in Houston.

"Since lower interest rates have been slow to the rescue, the Fed has had to take additional steps to prevent the deflationary abyss that occurred during the Great Depression," he said. "So they have turned on the printing presses in an effort to reinflate the economy and have been buying Treasurys."

Gold, of course, is always a hedge against inflation, the end result of printing money.

To Stegent, the federal budget deficit also weakens the already slipping dollar, sending more people to precious metals as the haven of choice. He is telling clients to put 10 percent to 25 percent of their assets in gold mutual funds.

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Gold -- Sharefin, 02:18:32 02/24/03 Mon

Gold still shines for the Swiss

Swiss experts believe the price of gold could rise to even greater heights - despite rocketing almost 40 per cent over the past two years.

Along with the Swiss franc, gold remains one of the world’s traditional “save havens”. In times of uncertainty, investors pile into the yellow metal, safe in the knowledge that it is the only real security against economic collapse.

After the tumult of the dot-com era, and ongoing instability in global equity markets, gold has taken on a new lustre, even though demand for jewellery remains stable.

“The price of gold is determined by the geopolitical situation, as well as demand,” says René Petter, head of Bank Leu’s precious-metals division.

Petter does not believe the Iraq crisis will be defused in the short term, and says demand for gold remains high - particularly among Japanese and Chinese investors.
~~~
Martin Jetzer, chief economist at HSBC Guyerzeller, agrees. “Two years ago the price of gold began an upward trend. This will probably continue until 2005,” Jetzer told swissinfo.

Jetzer also subscribes to the view that that a weak dollar has fuelled the gold boom. “We have seen this over the long-term,” he says.

Fabulous gold

Marc Faber, a Hong Kong-based Swiss finance expert who predicted the 1987 stock market crash as well as the 1997/8 financial meltdowns in Asia, believes gold is still a winner.

In his latest market commentary, Faber urges investors to jettison the dollar and US securities in favour of gold.

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Gold -- Sharefin, 02:14:26 02/24/03 Mon

Asia Gold-Japan gold fever subsidies, eyes on banking reform

Demand for physical gold in Japan has been an on-again, off-again affair in the last two years with the latest statistics suggesting the current high prices have severely deterred safe-haven buying, dealers said.

Japan imported just 2,157 kilogrammes of gold in January, 73.6 percent less than in the year-earlier month, the latest data from the Ministry of Finance showed on Monday.

"It's because of the high prices and I don't think they will be back unless there is a banking crisis," said a dealer with a major refinery in the Asia region, referring to the slowdown in purchases.
~~~
For example, Japan imported a total of 24,260 kilogrammes of gold in January 2002, 19,754 kg in February and 13,183 kg in March, bringing the total for the quarter to 57,200 kg.

The chief reason for the rise in demand was the shift by bank depositors of a portion of their savings from Japanese yen into gold, a safe haven investment in the event of a banking collapse.

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Gold -- Sharefin, 00:51:51 02/24/03 Mon

A 'barbarous relic' for a barbarous world

In contrast, we believed for two reasons that
gold and related assets were historically
cheap. First, supply/demand fundamentals were
improving in ways that had not been
recognized. Second, 5,000 years of history
assured us that investors eventually would
rediscover the monetary character of gold in
a dangerous, paper-intensive world.

Most of our return over the past decade
resulted from the further improvement and
spreading recognition of the commodity
fundamentals that we saw at the outset.
Investors by now generally understand that
gold demand chronically exceeds production;
that consumer demand, the largest component,
is growing with Asian incomes; and that gold
production has peaked and likely will decline
for some years as a result of diminished
exploration and development during years of
low prices.

How was excess demand satisfied for so many
years without substantially increasing gold
prices? The answer to that question is a
principal reason for our view that the
commodity fundamentals of gold are still far
more favorable than generally recognized.

Briefly, central banks met the excess demand
from official bullion reserves, by selling
significant volumes outright and by lending
even more through financial intermediaries to
producers and speculators. Producers and
speculators in turn sold the borrowed metal,
and physically delivered it, in order to
hedge future production, finance investment
or earn the spread between market interest
and low gold-lease rates. As a result,
producers, banks, and speculators in the
aggregate are obligated to return much
borrowed gold that now dangles from Indian
and Chinese earlobes. Estimates of that short
position range up to six years' mine
production and nearly half of nominal
worldwide central bank reserves.

Research by Reginald Howe and Frank Veneroso
increasingly supports the circumstantial case
that the Gold Anti-Trust Action Committee has
made for the high-end estimates.

In any case, it seems clear that there is a
short position that amounts to a large,
possibly unmanageable multiple of normal
demand. The resulting market imbalance, in
our view, eventually must be cleared at
substantially higher prices.

The second aspect of our initial rationale
was our belief that the traditional regard of
investors for the monetary character of gold
eventually would be renewed. That renewal
seems to have begun last year with the
spreading perception of rising, intertwined,
long-term geopolitical and financial system
risks. It has not yet contributed materially
to our returns, but we expect it to
strengthen over time and to substantially
boost investment demand for gold and related
asset values.

We think that prudent, mainstream investors
gradually will relearn history's lesson that
gold is what money ought to be. Gold is no-
one's liability, an asset that is produced by
work, not by credit; it is liquid, scarce,
divisible, anonymous, portable, dense, and
nearly indestructible. Call it a barbarous
relic for a barbarous world.

---

Periodic Ponzi Update PPU -- $hifty, 18:46:42 02/23/03 Sun

Ponzi Chart

Periodic Ponzi Update PPU

Nasdaq 1,349.02 + Dow 8,018.11 = 9,367.13 divide by 2 = 4,683.56 Ponzi

Up 74.08 from last week.

Thanks for the link RossL !

Go GATA!

Go GOLD!

$hifty

---

Fiat -- Sharefin, 04:33:40 02/23/03 Sun

One Recession Away from Deflation

Feb 21, 2003


Global: One Recession Away from Deflation
United States: The Metrics of Uncertainty
Japan: Keep Digging
Japan: The National Accounts vs. Reality
India: Moving to the A of POTA


Global: One Recession Away from Deflation

Stephen Roach (New York)



Just like that -- many have been quick to call off the deflation alert. An oil shock, surging commodity prices, and now a 1.6% monthly spike in January’s Producer Price Index all seem to be hinting more of incipient inflation. Yet, in my view, it would be entirely premature to issue the “all clear” signal on the deflation front -- especially in light of conditions in the world’s three largest economies. Japan is still in deflation and Germany, Europe’s dominant economy, is hardly out of danger. Meanwhile, America’s GDP-based inflation rate averaged just 1.0% in the second half of 2002, closer to the precipice of deflation than at any point in nearly half a century. Consequently, notwithstanding the recent resurgence in commodity prices, it wouldn’t take much for disinflation to morph into outright deflation. My concern is that another recession -- hardly a low-probability outcome with oil prices now in the danger zone -- could well be the trigger for just such an outcome.
~~~
Yet precisely the opposite now seems to be in the cards. Courtesy of a full-blown oil shock, the world is now flirting with yet another recession. Crude oil prices (as measured on a West Texas Intermediate basis) are now around $37 per barrel. Not only does that represent an 87% increase from levels prevailing at the start of 2002 (an average of $19.69 in January 2002), but today’s prices ($36.79 as of the close on 20 February) are nearly identical with the highs hit on 20 September 2000 ($37.20) that played a key role in triggering the recession of 2001. Unfortunately, oil shocks and recessions go hand in hand. That was not just the case in 2001 but also the outcome in the aftermath of the first OPEC shock of late 1973, as well as the result of the spike associated with the Iranian Revolution in 1979. And, of course, the same was the case following the sharp run-up in oil prices leading up to the Gulf War. In other words, show me an oil shock and I’ll show you a recession. It’s hard to believe that the current oil shock will be the one exception.
~~~
Therein lies the risk. In my view, it was the widening of the global output gap in 2001-02 for a low-inflation world economy that led to the subsequent lack of pricing leverage and the close brush with deflation. And now -- courtesy of another oil shock -- that global output gap is set for a sharp further widening. As I see it, that can only intensify the lack of pricing leverage, taking the world all the closer to the brink of outright deflation. In other words, the current oil shock should not be interpreted as an inflationary event along the lines of the outcomes of the 1970s. It is, by contrast, very much a deflationary shock. Prior to this oil shock, I would have depicted the world economy as being only one recession away from deflation. To the extent that recession may now be in the offing, the case for deflation actually looks more compelling than ever.

---

Gold -- Sharefin, 20:03:18 02/22/03 Sat

Beyond Iraq

Paramount among these is the overvaluation of the US dollar. The US currency topped out versus a trade-weighted average of other currencies in May 2001, and has been in steady decline since. Thanks to dollar overvaluation, US consumers have enjoyed a decade long influx of attractive imported goods and low inflation. Thanks to dollar overvaluation, our trading partners have enjoyed increasing exports and strong domestic economic conditions. A weakening dollar changes all this. Fear of further dollar weakness will be self-reinforcing to the extent it triggers divestment of massive dollar asset positions accumulated by non-US governments and investors over the past two decades. The dollar represents 76% of world central bank reserves. As was the case with the dot COM stocks, the US dollar is over owned and over valued. The dollar will weaken substantially, and lead to higher US inflation along with weaker foreign economic conditions. In its January 3rd, 2003 commentary, Bridgewater noted that "a drying up of private demand combined with support from official sources is a classic warning sign of an imminent collapse in a currency. We believe we are on the precipice." Official sector support for the dollar is especially strong in Asia where dollar trade surpluses are huge and growing. According to Bridgewater, the US is now relying on the official sector for 40% of capital inflows, the highest in ten years.
~~~
No wonder investors are running for cover. Miniscule bond yields offer little protection against the prospect of an orchestrated devaluation of the world's key currencies. A paradigm shift in the relative valuation of paper and tangible assets is underway. In such a shift, the list of safe havens is short. A new generation of investors, still conditioned by overripe 1990's platitudes extolling paper assets, will discover what a previous generation had learned and forgotten---the merits of gold.
~~~
Against this backdrop, the willingness of individual and institutional investors to prefer paper assets as a store of value will continue its retreat. For the foreseeable future, paper assets will be mired in financial purgatory. The decade and a half from 1968 to 1982 provides a good historical analogy. For those fourteen years, the financial markets were trapped in a trading range, while gold advanced from $40 to $800. Despite the Vietnam War, the Watergate Scandal, the vicious 1973-74 bear market and the late 1970's bout of double-digit inflation, the financial system survived and evolved. It was not the end of the world. The period simply marked a lengthy succession of events that added up to poor financial market returns. It led investors to prefer tangible to financial assets.

World financial wealth held in the form of paper assets stands conservatively at $50 trillion. The investment stock of gold, including central bank reserves, amounts to slightly more than $900 billion at the recent price. Central bank reserves of 33,000 tonnes account for slightly less than half of a very conservatively estimated investment stock of gold. Physical gold theoretically available to the market is at most $500 billion. Central banks, once feared as relentless sellers of the metal, are beginning to rethink their past folly. The net supply of central bank gold has been diminishing. The well publicized 400 tonnes being divested according to the Washington Agreement is being partially offset by the quiet accumulation of others, including the People's Republic of China. Iraq related hype notwithstanding, a significantly higher price target for gold seems appropriate. A reallocation of 1/10th of 1% of world financial assets, or $50 billion, would swamp the physical market, especially if it coincided with recognition by the central bank community that the dollar, rather than gold, is their least attractive asset. A mere $50 billion equates to more than two years of annual gold production, a quantity that could not clear the market within several hundred dollars of today's price.

---

ChartsRus -- Sharefin, 19:54:30 02/22/03 Sat

Hot off the press - two new gold indice series.
The first series are based on stock selections presented in the MineWeb article:
What is the point of the XAU & HUI?


These series are presented in short & long term charts along with a spread ratio vs gold to show performance.
All up 30 charts spread over 12 pages;
MineWeb Gold Indices

Of interest is the divergence between the hedged / non-hedged stocks.

The second series are from datasets provided by the AGC - Australian Gold Council & show the gold explorer/producer indices for Australia. Unfortunately these charts are only of short term nature.
AGC Gold Indices

---

option expiration ,hedgefunds,and -- Cyclist, 11:36:23 02/21/03 Fri

low liquidity of mutual funds will become a repeat performance at every third monthly Friday and the end of the month downturn of gold stocks.Time to buy ;right before the options expire today.

---

Silver -- Sharefin, 19:54:31 02/20/03 Thu

From LeMetropoleCafe on Silver AG

"Perhaps the best news of the day is the word circulating on the
Comex floor to "not be short silver under any circumstances." That
comes from the folks that have been running silver up and down like
a yo-yo these past months. Riggers, or no, their comments merit the
most serious attention. Their previous calls have been on the money,
so this is another call that I am taking to heart. My guess is the
price capping of silver is NOW OVER!

Silver at these prices make no sense. It is about to FLY and could
rocket through $5 very quickly!!!

GATA's Ed Steer on silver:

Hi Bill,
Things are getting interesting in the silver market. This is the
third day in a row that we've had upward movement in silver lease
rates. Today, rates more than doubled in the front months (to
1.44%), and up 70% in the one year to 1.70%. Not a lot, but the most
activity there's been in quite a while. With the situation in silver
even more precarious than it is in gold, it bears keeping an eye on
it.
Ed"

---

Gold -- Sharefin, 18:49:22 02/20/03 Thu

Fort Knox

How much gold the Federal Reserve will have to somehow procure from Canadian and South African mines, to carry out an expected or intended dealing with a financial meltdown. Namely, this by way of a gold standard/gold exchange policy which Greenspan of late has been promoting. Prior to becoming Fed boss, he promoted gold. Upon becoming head of the sinister PRIVATE central bank, upon orders, he downplayed gold and promoted paper money. The monopoly press ignores what was shown in the 1970s, namely there is no actual world bullion grade gold at Fort Knox. The bulk of the gold depository was quietly shipped in 1968 to stem a run on the gold of the Bank of England.[Hard-hitting independent journalist Tom Valentine and his then publication, National Tattler, now defunct, documented the absence of real gold at Fort Knox. At the time, his publication had a campaign demanding the Fort Knox vaults be opened for auditing.]

---

Gold -- Sharefin, 08:29:37 02/20/03 Thu

Sons of Gwalia digs itself into a big hole

Sons of Gwalia was on the verge of a crisis yesterday after it abandoned its interim dividend for the first time in more than 10 years and said it would struggle to meet its already revised full year net profit.

The company revealed it was cash-flow negative to the tune of $21.6 million for the six months to December 31 and had no cash in the bank due to the crippling impact of its hedge book, operational problems in its gold division and the severe down-turn in the global market for tantalum, of which Sons of Gwalia is the world's biggest producer.

The company's decision to conserve cash - it would have cost $12 million to maintain the 7.5c dividend paid in the second half last year - was seen as evidence the problems were bigger than the market first thought.

Its shares plunged a further 22c, or 12 per cent, to a fresh 11-year low of $1.61.

The latest fall leaves the miner valued at just $305.2 million compared to $1.33 billion 12 months ago and raises further questions about the future role of founding directors Peter and Chris Lalor.

---

Fiat vs Gold -- Sharefin, 08:24:23 02/20/03 Thu

DJ US Tsy: Anti-Money Laundering Steps For Metals Dealers
Dow Jones News Services

WASHINGTON (Dow Jones)--Metals and jewelry dealers that do more than $50,000 worth of business per year would need to set up an anti-money laundering strategy, under a new proposed rule released Wednesday by the U.S. Treasury.

The proposed rule covers precious metals dealers and refiners, jewelry manufacturers, loose gemstone merchants and retail stores that also act as a dealer in such items. Retail-only stores aren't covered by the rule, nor are dealers that buy or sell less than the $50,000 threshold.

The proposal is part of a series of regulations connected with the Patriot Act, counterterrorism legislation passed shortly after the Sept. 11, 2001, terrorist attacks. Businesses covered in the legislation are required to develop a strategy to prevent money laundering and curtail terrorist financing.

Comments are due 60 days after the rule is published in the Federal Register; Treasury said it expects the rule to be published next week.

---

Gold -- Sharefin, 08:22:14 02/20/03 Thu

Iran: Minister says gold reserves 500 tonnes, urges market regulation

Commerce Minister Mohammad Shari'atmadari on Sunday [16 February] called for gold market regulation in order to check fluctuations in prices of the precious metal.

Shari'atmadari in an address to a seminar on Gold and Standard advised the economic officials to raise standard in the business to lure in more customers on domestic market. He said gold sale on domestic market has almost doubled to 50 t from 22 t in the post-Islamic revolution era.

The Minister further called for increase in production of gold from domestic gold mines and application of satellite facilities for prospective gold-mine exploration. He said Iran's gold production has increased by 46 per cent to one ton in 2001 compared to that in 1997. He added that Iran stands 61st in the list of 93 major gold producers.

Shari'atmadari put Iran's gold reserves at about 500 t, saying the bulk has a meagre share of one per cent in the world's 50,000-tonne output.

---

Gold -- Sharefin, 08:17:55 02/20/03 Thu

Panic Is Near if 'The Gold Is Gone'

Murphy explains: "The essence of the rigging of the gold market is that the bullion banks borrowed central-bank gold from various vaults and flooded the market with supply, keeping the price down. The GATA camp has uncovered information that shows that around 15,000 to 16,000 tonnes of gold have left the central banks, leaving the central-bank reserves with about half of what is officially reported."

This is why those who follow such arcana are predicting an explosion in the price of gold. According to Murphy, "The gold establishment says that the gold loans from the central banks are only 4,600 to 5,000 tonnes," but his information is that these loans are more than three times that number, which means "they're running out of physical gold to continue the scheme."

According to Murphy, "The cartel has been able to get away with lying about the amount of gold in reserve because the International Monetary Fund [IMF] is the Arthur Andersen of the gold world." He has provided to Insight documents from central banks confirming that the IMF instructed them to count both lent and swapped gold as a reserve. "In other words, the IMF told the central banks to deceive the investment and gold world[s]. Once this gold is lent [or] swapped, it's gone until such time as it can be repurchased. And with the skyrocketing price of gold we're now seeing, it would be incredibly expensive, let alone nearly physically impossible, to get it back."

What is important to understand, says Murphy, "is that there is a mine and scrap supply deficit of 1,500 tonnes, which is an enormous deficit when yearly mine supply is only 2,500 tonnes and going down. On top of that, there are these under-reported gold loans and other derivatives that are on the short side. There is no way to pay this gold back to the central banks without the price of gold going up hundreds of dollars per ounce. So the peasants and women of the world will have to sell their jewelry at say $800 an ounce to bail out these short positions or someone is going to have to tell the world that they don't have the gold that they have reported," shaking the world's financial system to its core.

The gold bugs appear to be basing their identification of a world gold shortage on industry data, much of which has been summarized in two papers prepared by four different gold analysts at different times using separate methods. The first paper was written by governmental investment adviser Frank Veneroso and his associate, mining analyst Declan Costelloe. Titled Gold Derivatives, Gold Lending: Official Management of the Gold Price and the Current State of the Gold Market, it was presented at the 2002 International Gold Symposium in Lima, Peru, and estimates the gold deficit of the central banks at between 10,000 and 15,000 tonnes. The second paper, Gold Derivatives: Moving Towards Checkmate, by Mike Bolser, a retired businessman, and Reginald H. Howe, a private investor and proprietor of the Website www.goldensextant.com, estimates the alleged shortage of central-bank gold at between 15,000 and 16,000 tonnes -- nearly a decade's worth of mine production.
~~~~
John Embry, the manager of last year's best-performing North American gold fund and manager of the Royal Precious Metals Fund for the Royal Bank of Canada, says he is putting his and his clients' money on the "lunatic fringe" in this dispute: "I've examined all the evidence gathered by GATA and everyone else, and I think these guys are anything but lunatics. They've done their homework and have unearthed a lot of interesting stuff. The problem, though, is that the market is sufficiently opaque that there is really no way to know who is right and who is wrong."

"The fact is," continues Embry, "a lot of this stuff is based on estimations. I do however believe that, based on the evidence dug up by Veneroso and Howe, they are presenting equally if not more credible numbers than the other side. I find the campaign to undermine their credence simply bizarre. I think these guys [GATA] are right and that the number put out by Gold Fields Mineral Services as the amount of gold loaned out by the central banks is definitely wrong. Now, whether it's as much as 15,000 is up for interpretation. The recent release by the Bank of Portugal is important. When a central bank has 70 percent of its gold loaned or swapped, I don't think it is operating independently, and I suspect there are an awful lot of them that have loaned out much more than has been reported."

Embry says, "I've made a fortune for my clients investing in gold and gold stocks because I have operated on the premise that the Veneroso/Howe reports are right -- that gold was significantly undervalued in the daily quote and that it was going a lot higher. The circumstantial evidence, and I bet my clients' money on it, was very much in favor of the guys who said a great deal more central-bank gold had entered the market and driven the price down far too low. GATA has had this story from day one. I think that they're right and that officialdom doesn't want this exposed. GATA is willing to have a public debate but the gold world won't debate. I think there is a tacit admission of anyone who has an IQ above that of a grapefruit that Veneroso and Howe have a pretty good point. I'm an analyst who has looked at both sides of the issue and I bet my money on GATA. So far they've been right."

Whether the gold bugs are right about the reasons for the meteoric rise in the price of gold is uncertain, but, according to GATA's Murphy: "It's all the more reason to have the central banks come clean about the actual amount of gold that physically exists in their reserves. Either way, the price of gold will continue to rise because, as we already know and others are discovering, the gold is gone."

---

Gold -- Sharefin, 08:16:04 02/20/03 Thu



Murphy explains: "The essence of the rigging of the gold market is that the bullion banks borrowed central-bank gold from various vaults and flooded the market with supply, keeping the price down. The GATA camp has uncovered information that shows that around 15,000 to 16,000 tonnes of gold have left the central banks, leaving the central-bank reserves with about half of what is officially reported."

This is why those who follow such arcana are predicting an explosion in the price of gold. According to Murphy, "The gold establishment says that the gold loans from the central banks are only 4,600 to 5,000 tonnes," but his information is that these loans are more than three times that number, which means "they're running out of physical gold to continue the scheme."

According to Murphy, "The cartel has been able to get away with lying about the amount of gold in reserve because the International Monetary Fund [IMF] is the Arthur Andersen of the gold world." He has provided to Insight documents from central banks confirming that the IMF instructed them to count both lent and swapped gold as a reserve. "In other words, the IMF told the central banks to deceive the investment and gold world[s]. Once this gold is lent [or] swapped, it's gone until such time as it can be repurchased. And with the skyrocketing price of gold we're now seeing, it would be incredibly expensive, let alone nearly physically impossible, to get it back."

What is important to understand, says Murphy, "is that there is a mine and scrap supply deficit of 1,500 tonnes, which is an enormous deficit when yearly mine supply is only 2,500 tonnes and going down. On top of that, there are these under-reported gold loans and other derivatives that are on the short side. There is no way to pay this gold back to the central banks without the price of gold going up hundreds of dollars per ounce. So the peasants and women of the world will have to sell their jewelry at say $800 an ounce to bail out these short positions or someone is going to have to tell the world that they don't have the gold that they have reported," shaking the world's financial system to its core.
~~~
John Embry, the manager of last year's best-performing North American gold fund and manager of the Royal Precious Metals Fund for the Royal Bank of Canada, says he is putting his and his clients' money on the "lunatic fringe" in this dispute: "I've examined all the evidence gathered by GATA and everyone else, and I think these guys are anything but lunatics. They've done their homework and have unearthed a lot of interesting stuff. The problem, though, is that the market is sufficiently opaque that there is really no way to know who is right and who is wrong."

"The fact is," continues Embry, "a lot of this stuff is based on estimations. I do however believe that, based on the evidence dug up by Veneroso and Howe, they are presenting equally if not more credible numbers than the other side. I find the campaign to undermine their credence simply bizarre. I think these guys [GATA] are right and that the number put out by Gold Fields Mineral Services as the amount of gold loaned out by the central banks is definitely wrong. Now, whether it's as much as 15,000 is up for interpretation. The recent release by the Bank of Portugal is important. When a central bank has 70 percent of its gold loaned or swapped, I don't think it is operating independently, and I suspect there are an awful lot of them that have loaned out much more than has been reported."

Embry says, "I've made a fortune for my clients investing in gold and gold stocks because I have operated on the premise that the Veneroso/Howe reports are right -- that gold was significantly undervalued in the daily quote and that it was going a lot higher. The circumstantial evidence, and I bet my clients' money on it, was very much in favor of the guys who said a great deal more central-bank gold had entered the market and driven the price down far too low. GATA has had this story from day one. I think that they're right and that officialdom doesn't want this exposed. GATA is willing to have a public debate but the gold world won't debate. I think there is a tacit admission of anyone who has an IQ above that of a grapefruit that Veneroso and Howe have a pretty good point. I'm an analyst who has looked at both sides of the issue and I bet my money on GATA. So far they've been right."

Whether the gold bugs are right about the reasons for the meteoric rise in the price of gold is uncertain, but, according to GATA's Murphy: "It's all the more reason to have the central banks come clean about the actual amount of gold that physically exists in their reserves. Either way, the price of gold will continue to rise because, as we already know and others are discovering, the gold is gone."

---

Gold -- Sharefin, 23:28:06 02/17/03 Mon

Just a correction in gold -- and stocks?

Gold bugs are still bugging despite some sharp down days. In fact, they think they've found a smoking gun.

Or at least a smoking margin requirement.

Richard Russell of Dow Theory Letters just published this from a subscriber:

"I find it comical that less is said in the press about the margin requirements change that went into effect on gold on Feb. 6 -- announced Feb. 5, just as gold came off its 6 1/2-year high. Oh well, I guess since it isn't reported we can assume that has nothing to do with the recent $30 decline in gold. WOW!!! What a joke! Let's get some honest reporting from the press for a change."

Hey -- we do our best.

But one of the strengths of investment letters is that they will entertain wild theories that make the major media twitch. Such as that, over the past decade, the gold market has been knocked down by massive Central Bank sales -- something which turns out to have been (ahem) true.

---

Fiat -- Sharefin, 22:42:32 02/17/03 Mon

Will the Enron Tar Baby Go for the Gold?

The link for the prior article.

---

Fiat -- Sharefin, 22:40:41 02/17/03 Mon



By all accounts, last November former secretary Rubin, now a top official at Citigroup, telephoned Peter Fisher, the Treasury's current undersecretary for domestic finance, to suggest that he consider trying to dissuade the rating agencies from an impending downgrade of Enron's credit. Mr. Fisher, who in his prior job at the Federal Reserve Bank of New York had served as point man for the rescue of LTCM, demurred. Mr. Rubin's position with Citigroup, a major creditor of Enron, raises legitimate questions about his motives. More importantly, however, his suggestion belies any strong underlying belief in either financial transparency or the protection of individual investors. On the contrary, it shows a mind committed to the proposition that government officials may invoke their personal notions of the public interest surreptitiously to manipulate markets notwithstanding injury to private investors and without public disclosure of the benefits thereby conferred on their political friends.

Belief in this proposition probably does far more to explain passage of the CFMA than overt political contributions. Major markets targeted for derivatives deregulation -- interest rates, currencies, energy, and gold -- may be too large for private parties to manipulate, but they are all markets that governments regularly target with their own manipulative schemes. Prior to joining the Clinton administration, Mr. Summers described with academic rigor Gibson's paradox, i.e., the observed principle that in the absence of government interference, real long-term interest rates and gold prices move in an inverse relationship to each other. Gold leasing by central banks is the foundation for most gold derivatives, and their rapid growth since 1995 has corresponded with a breakdown in the operation of Gibson's paradox as long-term rates and gold prices fell in tandem. For more elaboration on this point, see Gibson's Paradox Revisited: Professor Summers Analyzes Gold Prices.

Derivatives are a powerful tool for pushing markets around, and the bigger the market, the greater the derivatives heft required. At virtually the same moment that Congress enacted the CFMA, the Fed approved the J.P. Morgan Chase merger, which by the OCC's figures at December 31, 2000, put 60% percent of the total notional OTC derivatives business of 400 reporting banks -- $24 trillion out of a total $40 trillion -- in one derivatives superbank that is also widely regarded as the Fed's bank. For a graphic display of the interest rate and gold derivatives of J.P. Morgan Chase, the nation's second largest bank, in comparison to those of Citibank, it largest, and all other commercial banks, see the charts near the end of Gold Regression Charts.

Talk about risk! LTCM, a private hedge fund, lost a mere trillion dollar gamble in derivatives despite being advised by the two Nobel laureates in economics who largely invented modern derivatives trading. When its troubles threatened to shatter the global financial system, the New York Fed felt compelled to organize a bailout. Unlike LTCM and other big derivatives losers, Enron was a major derivatives dealer. In both F.I.A.S.C.O. and his Senate testimony, Mr. Partnoy emphasized that major derivatives dealers have a huge edge over their customers no matter how large or sophisticated these institutions may be.

What is more, as the Enron case also illustrates, major derivatives dealers require good credit ratings and access to cheap funding. Today "too big to fail" is the best credit rating. It is not accidental that the OTC derivatives business outside the United States is also heavily concentrated in flagship banks like Deutsche Bank and UBS, the apparent purchaser in bankruptcy of Enron's energy trading business but not its trading book.

The following exchange between two seasoned investment professionals, John Neff and Mark Faber, reported in Barron's ("Roundtable 2002," January 21, 2002, p. 20) carries disturbing implications.

Mr. Neff: "Aren't there transparency issues in the emerging Asian markets?"

Mr. Faber: "In Asia, by and large, emerging economies don't have a lot of transparency. But where is the transparency in Enron? Where is the transparency in J.P. Morgan?"

The Enron affair makes painfully obvious that audited financial reports of large and complex enterprises, especially those with large OTC derivatives or other off balance sheet items, cannot be trusted to give an accurate representation of their true financial condition or the risks to which they are exposed. The federal government, of course, is the largest and probably most complex enterprise on the planet. As opaque as they were, Enron's accounting practices are likely no less misleading than Uncle Sam's.

Social Security is not indicted as a Ponzi scheme only because it is operated by federal officials and the ultimate suckers are Americans too young to vote or as yet unborn. Recent budget surpluses were not deficits only through the magic of a "unified" budget that applied income from trust funds, largely Social Security, to current expenses. But these problems are reasonably evident to those who care to look. In other areas, as demonstrated in a recent lawsuit by native Americans over trust funds administered on their behalf by the Secretary of the Treasury and Secretary of the Interior, federal officials are as secretive and duplicitous as Enron's.

No one knows where the many investigations of Enron may lead or what they may ultimately reveal. But there is little doubt that the smell of political scandal is in the air. Maybe that explains one of last week's more curious incidents. A visiting former politician told a top White House staffer that the last real audit of the nation's gold reserves took place more than a half century ago, and that only about 1000 tonnes remain of the 8500 supposed to be in Fort Knox. Fiction? Of course! The President is running for re-election despite suffering from previously undisclosed multiple sclerosis. What's more, he holds a Nobel in economics.

---

Lenny's Corner -- Sharefin, 22:28:09 02/17/03 Mon

GENERAL COMMENTS:

As the momentum is now definitively on the downside, and as the equity markets and the USD are rallying, I would venture a guess that we continue southward in price. There are still oodles of speculators with long positions that have yet to disgorge, both in the USA and the Far East. It is a truism in the markets that if prices go to an extreme on the upside, the next move will be to extremes on the downside. Physical demand will continue to be poor until some stability is seen in the marketplace, and if prices continue their rate of decline, physical buyers will just watch from the sidelines waiting for a more sedate environment. As noted in this commentary in the last weeks, the gold market was extremely overbought, and we are now seeing the results thereof, a technical long liquidation that has erased virtually all of the recent gains in price, from the technical breakout from $330 to the highs at $390 per ounce.

Long-term investors in gold should not be dismayed or disappointed with the market action of late. It is my opinion that we are still in a long-term secular bull market and that very "tasty" gains are still ahead of us. At current prices, gold is still under the 25-year average price of $362, making it a conservative buy at current levels. But, those who followed our advice of using close sell stops in the gold market just made a bit more than they deserved had the gold market continued its slow and steady upward moves. Those who kept buying all the way up, and did not utilize proper money management techniques just got buried by the ultimately fatal emotions of hope, fear, and greed. Trading and investing is not only a matter of knowing which way the market is going, as sometimes that is rather easy, but of knowing when and how to use money management techniques to either curtail risk or to maximize gains. I have never been an extreme proponent of the "buy-and-hold" philosophy and the recent moves in the gold market bear out my philosophy. Even long term investors would have been benefited had they used sell-stops in this market, as they would have exited their positions higher and now have the opportunity to buy at sharply lower levels.

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Gold -- Sharefin, 22:18:36 02/17/03 Mon

Power to the POG

Hands up everyone who believes the Price of Gold (POG) is being massively manipulated!?

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Gold -- Sharefin, 22:16:29 02/17/03 Mon

Taylor On US Markets & Gold

Did the New Treasury Secretary do this to Gold?
Was it just a coincidence that the gold markets took a hit on the very first day our new Treasury Secretary took office? As Bill Murphy pointed out, it was almost exactly when O'Neil left as Treasury secretary that the price of gold began to rise. Then about the time our new Treasury secretary had a chance to sit down at his desk and drink his morning coffee, on his first day on the job (Feb 7) the new "fox" in charge of the chicken coup (The Exchange Stabalization Fund), seemingly wasted no time in overseeing a breathtaking $7 decline in gold. Then on Wednesday, the yellow metal got hit for $10 on the downside.

While we think it is possible the new Treasury secretary wasted no time in using the ESF to go put the cap back on the gold market, more than likely it was the increase in margin requirements implemented to help the troubled crony capitalist banking friends of our policymakers that caused gold to swoon. But the bullish dynamics for gold remain the same. Despite the contention that the new treasury secretary is in favor of a strong dollar, in light of an economy that is becoming increasingly weak, there is less justification now than in the past for a strong dollar. As Marc Faber opined, the dollar would have to decline 80% before America could compete with the Chinese in carrying out industrial activities that actually add to the wealth of nations. A strong dollar would necessarily mean that gold would have to be put back in its box, but if that becomes the suicidal policy of America, it will quicken our demise toward a deflationary collapse of the system.

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Fiat -- Sharefin, 22:13:49 02/17/03 Mon

Six Myths of the Crash

Two and a half years into one of the most severe Bear Markets in History, the most striking feature of the typical economic discussion is the persistent state of denial about how parlous our situation truly is. Also notable is the unthinking promulgation of a species of economic fallacies which, though long since discredited, keep springing up like weeds to choke our reasoning about where we might go from here and, therefore, of how we should be preparing to act.

Let us take a look at a few of the more important reasons.

Myth #1: The consumer is two-thirds of the economy: as long as she is spending, we can avoid recession.

Myth #2: Lower interest rates and easy credit will promote recovery.

Myth #3: George Bush, Gordon Brown, Monsieur Mer and Signori Prodi and Tremonti are right: government spending can promote growth.

Myth #4: All tax cuts are good: those on dividends will drive equities higher.

Myth #5: We are staring deflation in the face.

Myth #6: Stocks always go up in the long run. The rally will start next quarter, or the quarter after that, or the quarter after that.

~~~
So where from here?

The first point to realise is that, whatever the monetary obfuscations of this fact, we have all squandered an enormous-perhaps an unsurpassed-amount of real wealth in the boom and the ramifications of this impoverishment will haunt us for some time to come.

Some say this will cause a deflationary collapse, but presently this seems a decidedly small, if nonetheless finite, probability-an out-of-the-money catastrophe option, if you will. At the first sign of any systemic crisis we will see the Fed swing into action with liquidity provision, and we will see exchanges shut; rules suspended or broken, and all manner of desperate remedies applied.

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Butler/Barrik & Silver -- auspec, 19:07:03 02/17/03 Mon

http://www.investmentrarities.com/02-17-03.html

Barrick's Silver Bombshell
By Theodore Butler

(The following essay was written by silver analyst Theodore Butler. Investment Rarities does not necessarily endorse these views, which may or may not prove to be correct.)

On February 12, Barrick Gold issued two press releases. (Both can be found at www.barrick.com) One announced the firing of its current CEO, and his replacement, due to poor financial performance, especially its stock performance. The other press release concerned its fourth quarter earnings and details on the hedge book. While there has been ample discussion and numerous articles on the gold hedge book, it appears that a blockbuster announcement on silver in the press release has gone unnoticed. And since Barrick is one of, if not the largest, silver short in the world, their announcement that they intend to deliver against and to buy back and cover their entire silver hedge book (not gold), could have profound impact on the market.

About four or five years ago I wrote about Barrick Gold and the influence their forward selling had upon the price of gold and silver. I held them up as the example of manipulation of gold and silver through leasing and short selling. I complained about them to the Securities and Exchange Commission, the Commodity Futures Trading Commission, Barrick's own auditors, and, of course, to Barrick itself. I think I was the first one to raise the issue publicly. I say this not to boast, but only to give full disclosure and perspective in what I have to say about Barrick today.

My main gripe was about Barrick's role in hedging. Legitimate hedging did not allow for years of future production to be dumped on the market in physical form, as leasing and forward selling permitted. Further, I complained that selling short years of production forward, regardless of the price, was so stupid as to defy description. Most of my writing about Barrick took place while gold traded under $300, and even under $275. My point was that legitimate hedging doesn't take place at prices approximating the cost of production. Shareholders are not well served by the company eliminating the profit potential from rising gold prices. Had Barrick taken this advice to cover their gold shorts at those price levels, they would have come out as heroes, and their shareholders would have benefited greatly. In addition, had Barrick covered their gold shorts while prices were low, they would have been in position to hedge at much higher prices (over $100 higher) and lock in real profits for their shareholders. Instead, they actually increased their short position and have suffered the consequences.

While they obviously made a serious mistake in not closing out their gold shorts while prices were low, Barrick is not run by stupid people. As one of the largest gold miners in the world, they get advice from what are thought to be the best minds in the financial world. They appear to be learning from their mistakes in gold, based upon the unambiguous nature of what they say about their silver hedge intentions. In the Notes to the Financial Statement section of their earnings announcement, in a section entitled, "Spot deferred silver sales contracts and written silver call options", Barrick stated the following, on Feb. 12:

"Spot deferred silver sales contracts have the same delivery terms and pricing mechanism as spot deferred gold sales contracts. A group of these contracts totaling 14.3 million ounces of silver are accounted for as normal sales contracts, as it is probable that we will physically deliver silver production into the contracts. For a separate group of contracts totaling 21 million ounces, we intend to financially settle these contracts, and therefore they are accounted for as derivatives under FAS 133."

In following Barrick closely for many years, I can tell you they have never made such a statement before. In addition to delivering this year's (maybe entire) silver production against the hedge book, Barrick intends to "financially settle" the rest of the silver short hedge book. That's big news. So big, that had they made the same announcement about gold, it would be all anyone talked about. But they didn't say that about gold, only silver. And I think there is a very good reason for that, namely, that Barrick finally understands the real risk of a big silver short position.

Barrick, in addition to being the largest gold, and probably largest silver short in the world, is also the "soul" of physical forward short selling. They were the pioneers and are the leaders and pacesetters of gold and silver hedging. They wrote the book. Everyone else followed their lead. For Barrick to come out and state their intention to cover their silver shorts is both profound and intelligent. It is likely that other silver shorts, including other mining company shorts, will also see the light and follow Barrick. That could have a big impact on the silver market. And it would be in the best interests of the other shorts to follow the leader, precisely because Barrick's move makes good sense.

Barrick has good reason to have decided to get out of their silver shorts, the same good reason for an investor to buy silver - the risk/reward ratio. There is not much real room to the downside in silver nor potential hedging profits or protection. Silver prices have gigantic upside potential, $50 or $100 higher, or more. Dimes to the downside, dollars to the upside is not very inviting to a short seller.

Barrick's directors and risk control people took a close look at their overall liability, in light of their poor performance, and obviously concluded that silver presented a problem. A 46 million ounce silver short position ( there's almost 11 million addition