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Gold -- Sharefin, 23:21:18 10/07/03 Tue

Summary of Interview - Gold Analyst

This is a summary of a video interview of John Ing, of Maison Placements. The interview was on ROBTV [www.robtv.com] on October 6, 2003.
_________________________________

1. The US dollar is the most overvalued currency. The Bush administration has indicated that it is abandoning the strong dollar policy. The dollar could drop 70%. This will be good for gold.
2. Gold companies will do better when the price of gold is at $400 per oz. The $350 to $375 range does not provide enough profit to support exploration. The mining companies are not finding much in the way of new deposits. When gold surpasses $400/oz, the mining companies that found their gold reserves a decade or two ago are going to profit most.
3. Barrick has been a looser recently becuase it still has 16 million oz. sold forward. Newmont has significantly improved its condition and has seen a share price increase because of this.
4. The gold companies such as GG and AEM will benefit because they have not sold forward.
5. He sees gold going to $500 per oz. and more. Inflation problems are likely ahead due to the current guns and butter policy of the US administration. It is a repeat of the economic conditions from Lyndon Johnson's era when gold took off due to similar policies as we are seeing today.
6. He also likes Bema, Miramar, Chrystalex.

End of Summary:





Gold -- Sharefin, 23:19:19 10/07/03 Tue

Gold loses its shine after selloff

Gold bullion climbed off the day's lows below $370.00 an ounce
on Monday but some of the sheen has rubbed off the precious metal following a deluge of investment
fund sales on Friday.

Speculators dumped the metal in New York on Friday, when the first rise in U.S. payrolls
in eight months lightened worries about the pace of U.S. economic recovery and dulled gold's
safe-haven allure for investors.

The funds have been behind gold's recent price spike to a seven-year high at $393.30 an ounce,
and further liquidation could be on the cards.

"A lot of people seem to be sitting on their hands today, waiting to see where the next move
is. The sell-off on Friday did catch pretty much everyone on the hop -- it was a painful business,"
one trader said.

"It's difficult to call now because there's still a lot of bulls out there trying to talk
gold up and calling the $400 level but the sad truth of it all is that people will be scared
of gold again," he added.

-----
Though Friday's drop in the price of gold was on large volume (over 100,000 contracts) the Open Interest only dropped by less than 5,000 contracts so there was little to no profit taking by the longs.
(Probably moreso the shorts were bailing & reversing into longs.)





Gold -- Sharefin, 23:15:52 10/07/03 Tue

Gold buying gathers pace as prices fall

NEW DELHI (Reuters) - Gold imports by India, the world's largest buyer, are expected to triple in key centres this week because of a fall in global prices, traders said on Monday.

"There was good buying activity on Saturday after gold fell in New York on Friday," said Girish Chokshi, a leading trader from Ahmedabad.

Daily gold buying in the city, a major trading centre, was expected to reach 150 kg this week, up from 50 kg last week.

Gold shrugged off upbeat U.S. jobs data and firmed in Asian afternoon trade on Monday on renewed buying interest after last week's sharp falls in New York, dealers said.

------
Seems gold doesn't need to fall too far to be considered a bargain.(:-))





Periodic Ponzi Update PPU -- $hifty, 02:04:34 10/06/03 Mon

Ponzi Chart

Periodic Ponzi Update PPU

Nasdaq 1,880.57 + Dow 9,572.31 = 11,452.88 divide by 2 = 5,726.44 Ponzi

Up 173.87 from last week

Thanks for the link RossL !

Go GATA !

Go GOLD !

Go Comets !

$hifty







Fiat -- Sharefin, 00:37:16 10/06/03 Mon

Tipping Point?

President of the Dallas Fed Robert McTeer responding to a question after his speech Wednesday at the Kanaly Trust Company Distinguished Lecture reception:

“What is my opinion of the current account deficit? Just to define the terms a little bit, the trade deficit is the excess of our imports of goods over our exports of goods. The current account deficit adds services and some other things in the balance of payments. It’s a better measure of our trading relationship with the rest of the world. In college in the 1960s when you studied things like that the answer was that a fairly large and sustained current account deficit – if you have a floating exchange rate – will cause the exchange rate to decline until it brings about equilibrium.

The U.S. is a little bit of an exception to that, in that its dollar is used all over the world as a currency by a lot of people and it’s held by central banks all over the world as a reserve currency. To some extent, the world has long been willing to hold the excess dollars that we put out by buying more than we sell to the rest of the world. And we get sort of a free ride. Sort of like we’re in a poker game and we never have to cash in our chips. In the late nineties, when we were doing so, we had such a dynamic economy, particularly compared to the Eurosclerosis in Europe, there was a lot of funds floating to the United States from Europe that sort of artificially held up our dollar and made the current account deficit larger. In the 1960s you learned that trade was independent and capital flows were the financing mechanism – they were sort of passive.

But these days capital flows are kind of independent too, and one could almost argue, not that our capital inflow is financing our current account deficit, one could almost argue that our current account deficit is financing our capital inflows. So long as that is happening, and as long as we are regarded as the dynamic economy and the best place in the world to invest, our large current account deficit is not going to cause us any problem. The problem will come when people change their mind about all that and they’ve decided, maybe suddenly, that the world has too many excess dollars and they’d like to sell a lot of them all at once in the foreign exchange market. If they did that all at once, we would experience an exchange rate crisis. We’d do no telling what to react to it. I don’t know exactly what would happen, but it wouldn’t be good. But we’ve had the potential for that to happen for several years now and it hasn’t. Most of the countries that own a lot of the dollar balances don’t have any real incentive to trigger a crisis like that. They would perhaps be hurt as much as anybody else by such a crisis. What is it they say: 'If you owe the bank a little money, you’ve got a problem. If you owe it a lot of money, the bank’s got a problem.' We might be in that situation.”


This was an unusually candid discussion from one of our prominent central bankers. I would furthermore argue that it is curiously germane. Mr. McTeer - with comments such as late-nineties flows “artificially held up the dollar;” that “suddenly” it may be a case that “the world has too many excess dollars;” and that “If you owe (the bank) a lot of money, the bank’s got a problem” – is a man after our own analytical hearts. With his above comments in mind, let’s take a step back and try to make a little sense out of an extraordinarily challenging environment.

I have argued that the Death of King Dollar “changes everything.” The late nineties presented an atypical environment conducive to a major Dollar Bubble. A dysfunctional dollar reserve global financial system had wreaked liquidity-induced boom/bust havoc around the world. Yet here at home, an historic stock market Bubble was running out of control. With major real economy and financial effects, an historic boom was running rampant throughout the U.S. technology sector. The U.S. economy was dramatically outperforming the global economy, with foreign investors clamoring for U.S. assets and direct investment to play the U.S. “miracle economy.” It was an amazing confluence of factors that came together. Importantly, many Credit systems around the globe were in tatters after a spectacular domino collapse. Southeast Asia had been decimated, along with scores of emerging market financial systems including Russia, Turkey and throughout Latin America. Strong demand for dollar assets (real and financial) reinforced American economic and market relative out-performance and exacerbated (over)demand for U.S. assets. Internationally, there really was only one game working: King Dollar.

Along with our King Currency, we also enjoyed the fruits from our benefactor Master Central Banker. No other central bank in the world could basically guarantee vibrant and liquid financial markets. No other central bank had the capacity/audacity to collapse interest rates and flood their domestic financial systems with liquidity to stem any unfolding crisis. Certainly, there was at that point no other central bank with the immense power to mitigate the negative consequences of bursting Bubbles by fueling larger ones. And although the bursting of a rather conspicuous stock market Bubble posed systemic risk, Fed chairman Greenspan was brazenly signaling that the Fed would aggressively cut rates in the event of significant stock market weakness. The enticement dangled in front of the speculators and dollar holders was a distinct possibility for a once-in-a-lifetime bond market play. Especially after being burned in so many other markets, the global leveraged speculating community came to appreciate that there was only One Game in Town: King Dollar financial assets. The Fed enjoyed credibility with the speculator community like no central bank in history and was pleased by it all.

Unbeknown to most, the linchpin to Federal Reserve “credibility” was located with the government-sponsored enterprises. Fannie Mae, Freddie Mac and The Federal Home Loan Bank system -- with the market readily assenting to implicit government backing on GSE debt -- enjoyed the phenomenal capacity to expand their liabilities (increase Credit), virtually without limit and virtually on demand. The GSEs -- and Wall Street “Structured Finance” to a lesser degree -- garnered their immense power from their extraordinary capacity to create endless perceived safe liabilities – a capability historically enjoyed only by the government monetary “printing press.” The GSEs and Wall Street had evolved to the point of creating a mechanism for generating systemic liquidity on demand and they were not bashful about employing it.

It was this capacity for aggressively expanding U.S. financial sector balance sheets (ballooning assets) during a crisis that provided the cornerstone to the market’s perception that the Fed could so easily reliquefy the system to mitigate financial tumult. The 1994 and 1998 episodes, in particular, had emboldened the leveraged speculating community. They learned that if the markets moved decisively against them -- Credit market liquidity began to wane -- an aggressive buyer (happy to pay top dollar) was only a phone call to Fannie or Freddie’s trading desk away. Why would anyone not believe this would fuel unprecedented excess?

So market psychology and profound financial innovation combined to nurture the Great U.S. Credit Bubble. Yet as fast as our ballooning trade deficits spewed dollar liquidity throughout the global financial system, these Bubble Dollars were recycled right back into U.S. financial assets and the real economy. Perceptions solidified that King Dollar was a permanent fixture of the global financial landscape and that trade deficits no longer mattered. We had to spend the "money" that was (and would always be) thrown our way.

But things always change, and manic delusions inevitably disenchant. With everyone zealously playing King Dollar and caution thrown to the wind, the game was at its end. To be sure, Credit and speculative excess always sow the seeds of their own destruction. On the one hand, there are resulting real economy effects (distortions to pricing, investment, the nature of demand, etc.) On the other, financial excess nurtures financial fragility. Both deleterious effects were all of the sudden conspicuous. Last year’s accounting scandals didn’t help, nor the near dislocation in the U.S. corporate bond market. The unfolding crisis quickly had its sights set on the vulnerable indebted consumer sector. The Fed responded by cutting rates to 1% and intimated “unconventional” measures to preserve the Credit Bubble. This incited a massive, leveraged speculation-induced reliquefication. This inflation, however, sealed King Dollar’s fate. Quietly, but importantly, Non-dollar asset began outperforming as dollar claims inflation accelerated.

Considering the degree of unrelenting excess pervading the U.S. Credit system (and consequent internal and external imbalances), an immediate dollar crisis would have been expected. But this is not your grandfather’s financial system, domestically or internationally. The GSEs have evolved to assume the crucial role of Buyers of First and Last Resort – assuring excessive and unending liquidity for the U.S. financial system. And, to this point, they have been able to accomplish this feat more successfully than any central bank in history. In the same vein, foreign central banks (largely Asian) have evolved as Bubble Dollar Buyers of First and Last Resort, assuring unending liquidity for dollar sellers, along with resulting excess liquidity globally. They lap up the liquidity created in such gross excess by the GSE-led U.S. financial sector, assuring Bubble perpetuation.

Global central bank actions gave the U.S. Credit Bubble free rein and fostered recent blow-off excesses. The prospering and ballooning speculators, with one eye on the GSEs and the other on the foreign central banks, have operated confidently and aggressively. Uncontrolled excesses -- Credit, speculative and economic -- have gone to truly astonishing extremes. All the while, the eager optimists have been emboldened. As analysts, it is today critical to appreciate the unparalleled financial and economic landscape that has evolved with GSEs as domestic financial backstop and foreign central banks as GSE and global financial backstop.

With Credit excess going to new extremes concurrently with waning demand for U.S. assets, foreign central banks are accumulating dollar securities like never before. The Bank of Japan has purchase in the ballpark of $100 billion over the past year, with the Chinese and other Asian banks not all that far behind. Ominously, this has accomplished only an orderly general dollar decline. Yet, central bank purchases have played a pivotal role in sustaining artificially low U.S. interest rates. It is one more irony of this aberrant environment that a weak dollar today supports the U.S. bond market (and Credit Bubble!). This is, as well, one more anomaly that repudiates the economic laws of market price-based self-regulation. And striving to front run the central banks, we have now reached the point where dollar weakness fosters speculative buying of U.S. Credit instruments (while the dynamically trading derivative players try to stay ahead of the speculators). As constructive as these central bank Treasury and agency purchases may appear on the surface, the upshot of this huge artificial support is that it only bolsters GSE and speculative finance-led domestic Credit excess (and resulting financial fragility and economic maladjustments).

There are myriad serious issues with this increasingly symbiotic GSE/foreign central bank “alliance.” For one, from deep domestic and international structural weaknesses/imbalances/distortions has emerged a (manic and uncontrollable) liquidity-induced expansionary environment. Second, the GSE and central bank financing mechanisms have all seductive appearances of being rock solid and sustainable. Third, this financial backdrop exacerbates already unprecedented leveraged speculation and untenable derivative expansion. Fourth, the GSE/foreign central bank “alliance” combines for the most powerful liquidity creation mechanism ever known to global finance. Surely, speculative excesses have never been as endemic to the global financial system, never – encompassing developed markets, emerging markets, equities, Credit market instruments and interest rates, Credit insurance and Credit default swaps, real estate, commodities, a derivative Bubble and so on. That such excess runs out of control in a global environment so susceptible to severe structural frailties recalls the seductively catastrophic environment of the closing years of the Roaring Twenties.

The truly frightening aspect of these circumstances is that both the GSEs and central banks have succumbed to Bubble dynamics. Individually and in concert, it is Inflate or Die. With the parlous mortgage finance Bubble, an incredibly leveraged Credit system, and a hopelessly distorted Bubble economy requiring massive and unrelenting Credit inflation/currency debasement, it is a safe assumption that dollar vulnerability is here to stay. Moreover, the out-performance of non-dollar assets (real investment and economies, financial markets and assets, and basic commodities) will augment dollar liquidation. And just as King Dollar foreign inflows were self-reinforcing during the late-nineties, there is evidence that non-dollar flows (investment and speculative) are now increasingly fueling self-reinforcing expansions overseas. This is especially the case throughout Asia (including India), Russia, Eastern Europe, Australia and elsewhere. This is the essence of my now weekly “Global Reflation Watch” and keen focus on foreign economies and markets. Global reflation is a dollar problem and central bank problem.

I do see relative strong performance sufficient to sustain major non-dollar flows. Foreign central banks, then, will continue to have no attractive alternative other than further dollar “Buyers of Last Resort” accumulation. We “owe (them) a lot of money, the banks’ got a problem;” a huge and ballooning problem. In reality, foreign central banks can’t turn off the Credit/liquidity spigot any more than the GSEs can turn it off. It’s out of control domestically and internationally. The speculative marketplace fully appreciates this dangerous dynamic, as the perception of endless global liquidity solidifies.

Mr. McTeer provided an additional candid and pertinent comment Wednesday night:

“One of the great things about moving to Texas after the banking crisis was that Texans are willing to talk about their bank failures, their own failures, and there’s no embarrassment about it whatsoever. It’s a very entrepreneurial country and we’re in the center of the entrepreneurial part of the country. And we’ll survive whatever they throw at us. I don’t know what the next external shock might be. It might just be that the current account deficit finally reaches a Tipping Point.”

Current account deficit reaching a Tipping Point? Are such thoughts even allowed at the Federal Reserve? Well, there is absolutely no doubt we are heading toward a major dollar crisis. The issue is only when. There is no doubt in my mind that the GSE Bubble will burst, and there are certainly enough issues unfolding to keep our analytical interest. These institutions and the marketplace are seemingly doing everything possible to ensure that this inevitable financial dislocation will be historic. I also have no doubt that the foreign central bank dollar Bubble will come to a most unpleasant end. That the interplay of these two ultra-powerful financing mechanisms has evolved to foster unprecedented Credit and speculative excess throughout the world is a deeply despairing worst-case-scenario unfolding right before our eyes.

To wrap this up, it appears we have entered what will be a wildly unstable environment, as we meander towards some type of financial “resolution.” Yet there is today an atypically fine line between financial dislocation (likely related to the dollar) and abundant global liquidity unlike anything seen in our lifetimes. There is a fine line between a “Tipping Point” break in dollar confidence and desperate foreign central bank dollar purchases (unprecedented global liquidity injections). There is similarly a thin line between endless liquidity supporting our leveraged Credit system and consequences of incessant liquidity excess at some point terrorizing it. And it does today appear reasonable to presuppose that things may look absolutely wonderful to most right up until the proverbial “wheels come flying off.” Most financial crises develop as liquidity disappears over a period of time. But the nature of the runaway GSE/central bank financial Bubbles may dictate that enormous over-liquidity works its seductive magic until it abruptly doesn’t work anymore: a systemic crisis of confidence.

In the meantime, there is this massive speculative community placing leveraged bets on stocks, bonds, currencies, commodities, Credit, spreads, and God knows what else. Additionally, there will be an unfolding Battle Royal as bets are placed as to how this all plays out, only ensuring greater chaos in the markets. An incredibly unstable environment has been nurtured, and we are today forced to be on guard for extreme price movements across the spectrum of now highly interrelated markets. This week had the “feel” of a commencement of some type of systemic dislocation, with an initial convulsion to the upside, at least for stocks. I wonder what Larry Kudlow would think of this week’s Bulletin?





Gold -- Sharefin, 23:48:05 10/05/03 Sun

Two attacks down - how many to go?


And to what effect - to turn the indices down.






Gold -- Sharefin, 22:36:51 10/05/03 Sun

Stay the Course

The drubbing that gold received on Friday no doubt has caused everyone a lot of soul searching. So I have prepared this alert to put Friday's action into its proper perspective, and to do this, I have prepared the following chart, which presents gold's weekly close in New York.

What is most striking about this chart is that Friday's sell-off is barely visible. Gold clearly remains well within its important long-term uptrend, above its 200-day moving average, and above its recent breakout point of $366. In short, there is nothing wrong with this chart, so by implication, there is nothing wrong with gold, which remains in its major long-term uptrend.

It is important to note that gold's drop occurred only in New York. In fact, gold closed in London at $382.75, $13.35 above the New York close only 1˝ hours later. So what happened? The shorts - probably led by government intervention - raided the market. For more information on this raid, see: www.fgmr.com

So what do we do? Simple, we stay the course. Continue to accumulate gold, as declines like the one seen on Friday enable you to get more metal for your dollars. And given the growing uncertainty about the dollar and its bleak prospects, gold is still the place to be.





Gold -- Sharefin, 22:32:48 10/05/03 Sun

15 Fundamental Reasons to Own Gold

1. Global Currency Debasement:
2. Investment Demand for Gold is Accelerating:
3. Alarming Financial Deterioration in the US:
4. Negative Real Interest Rates in Reserve Currency (US dollar):
5. Dramatic Increases in Money Supply in the US and Other Nations:
6. Existence of a Huge and Growing Gap between Mine Supply and Traditional Demand:
7. Mine Supply is Anticipated to Decline in the next Three to Four Years:
8. Large Short Positions:
9. Low Interest Rates Discourage Hedging:
10. Rising Gold Prices and Low Interest Rates Discourage Financial Speculation on the Short Side:
11. The Central Banks are Nearing an Inflection Point when they will be Reluctant to Provide more Gold to the Market:
12. Gold is Increasing in Popularity:
13. Gold as Money is Gaining Credence:
14. Rising Geopolitical Tensions:
15. Limited Size of the Total Gold Market Provides Tremendous Leverage:





Gold -- Sharefin, 22:28:46 10/05/03 Sun

How government manipulates the gold price -- and how it worked Friday

GATA consultant James Turk, proprietor of GoldMoney
and editor of The Freemarket Gold & Money Report, has
written a detailed description of how the U.S. government
ran the stops in the gold market on Friday and how it
intervenes in the gold market generally. Turk also has
discovered new discrepancies in the gold accounting by
the U.S. Federal Reserve and Treasury Department that
constitute evidence of that manipulation.

Turk has put this information in the issue of his
newsletter that will be distributed tomorrow and but
has generously allowed GATA to distribute it tonight.
We do so in the hope that it will prevent gold investors
and investors generally from being scammed again,
and we share Turk's confidence that the government
interventions against gold are becoming so brazen
and frequent that even mainstream financial observers
will start to notice.

Remember the remark of Allianz Dresdner's Frank
Veneroso to CBSMarketWatch Editor Thom Calandra
last week: The manipulation of the gold market is now
acknowledged in many European financial circles and
understood as another form of currency intervention.
GATA aims to make it acknowledged and understood
around the world -- even in the United States itself.

Note most of all Turk's admonition that the manipulation
of the gold price by the U.S. government is cause to buy
gold, not to sell it. It signifies that gold always has
been and remains the supreme money and store of wealth
and value and that it is far scarcer than those who are
frantically debasing government currencies want the world
to know. Otherwise there wouldn't be such efforts to
suppress gold's price.

Get it while you can and cling to it.

-------
How Governments Manipulate the Gold Market – A Primer

By James Turk
Copyright 2003 by The Freemarket Gold & Money Report
http://www.fgmr.com
Letter No. 332, October 6, 2003
Reprinted by permission

After gold trading closed in New York on Friday $13.70 lower
from the previous day, a Reuters article gave the following
reason for gold's rout:

"Gold tumbled 3.5 percent in New York on Friday as the first
rise in U.S. payrolls in eight months lifted anxiety about
economic growth and undermined the safe-haven case for
bullion days after it had hit seven-year highs."

Their point of view sounds plausible, I suppose, though I
think the recent "seven-year highs" in gold are far more telling
about gold's prospects than any one month's economic data.
But regardless of whether Reuters' conclusion makes
economic sense, the payrolls data was released at 8.30 a.m.
and gold's selloff didn't start until 12.10 p.m, almost fours
hours later.

So did we see a delayed knee-jerk reaction to the data?

Or was some other factor at work?

In my view, it was clearly the latter. It is becoming a well-known
"secret" that governments are trying to manage the gold price
by intervening in the gold market, and Friday's trading was a
good example of their fiddling with the free-market process.

Here are some pointers for everyone interested in learning how
governments intervene in the gold market.

1) Work with a proxy. The U.S. Exchange Stabilization Fund is
the ringleader of the government manipulation efforts, but it
never enters the market directly itself, regardless whether it is
intervening in the currency or the gold market. It works with
proxies in order to cover its tracks. The secretive ESF places
its orders to intervene with the Federal Reserve Bank of New
York, which carries out all intervention for the U.S. government
as well as all orders from foreign central banks placed for
execution during U.S. market hours.

When asked about its activity, the New York Fed never
discloses for whom it is acting, claiming that its account
agreements bind it to respect the confidentiality of its
customers. But this approach is still not enough to hide the
tracks of the ESF and the various governments who intervene
to distort normal market forces.

They want more cover, so the New York Fed places these
government-instigated trading orders with the big New York
banks. Because these banks have such huge trading volume,
the logic is that government-instigated trading will be hidden
amid the huge order flow handled by these banks.

This line of attack to hide the government's trades works,
except when the government's orders are so huge and
one-sided that they overwhelm normal market forces. So it
stands to reason that the repetitive and continuing entry by
banks like Morgan Chase and Morgan Stanley on the sell
side of the gold market at particularly critical market
junctures and at unusual times smacks of government
intervention.

This unholy alliance, also known to some as the
Washington/Wall Street axis, demonstrates that these two
forces are in bed with each other to serve their mutual
benefit. The banks that act as government agents aim to
make money any way they can, even if it means taking
despicable steps that are unfair and harmful to those
unaware when the government intervenes.

For its part, the government aims to distort markets from
operating normally.

Why does the government do this?

Because market prices communicate information, and
sometimes that information runs counter to what governments
would like us to hear and believe.

So governments intervene in a market by preventing it from
alerting us of the market message governments don't want us
to hear.

For example, we all know that the message of a rising gold price
means that the dollar is headed for rough times, which is useful
and important knowledge. But the government is more concerned
about protecting its own interests and those of the banks that
help it manipulate markets, rather than letting us receive a useful
market message to help protect our wealth.

2) Wait until after the London market closes, which, because of
the time change, is noon in New York. The London market is
basically a market for physical gold, while New York trades paper,
which represents only promises to pay gold. There's a big
difference between these two markets.

It is easy to manipulate paper because all a government has to
do is to create these paper promises out of thin air, as
government does all the time when it intervenes in the foreign
exchange markets. But governments cannot create physical
gold out of thin air.

So they tend to stay away from the London market, and put
physical gold into their market interventions only sparingly
because once they are out of physical (or unwilling to use
what they have left, which was the case with President Nixon
in 1971), their intervention game is over.

On Friday gold closed in London at $382.75, $13.35 above the
New York close only 90 minutes later. So, clearly, the
government through its compliant bank agents bombed only
the paper market.

3) Intervene on a Friday afternoon in order to have the maximum
impact from your intervention. After noon New York time, not
only is London closed but the rest of the world is closed as well.
This afternoon period in New York represents the moment when
the least amount of liquidity is in the market. So if government
interveners want "more bang for their buck," they can get it when
the rest of the world is asleep or already enjoying the weekend.

The limited liquidity that is the dominant characteristic of the
New York market on Friday afternoon makes it easier for the
interveners to get bigger price moves, which then gives them
a corollary benefit. A big price move can scare people,
particularly when they have the whole weekend to think and
worry about what the next week will bring. That result gives
governments even more "bang for their buck."

4) Just keep selling and selling. When you intervene in the
market on a Friday afternoon with the intention of forcing the
market lower, you begin selling short. Because you are the
government and you are creating promises only to pay gold
"out of thin air," you just keep selling and selling until you
hit key sell-stops resting in the market. After all, who is
going to give the government a margin call? Consequently,
there is no practical limit as to how many paper promises
the government can sell.

So how much do they sell? Simple -- they sell enough until
they complete their task, which is to drive the market lower.

But they also use the market itself to help them accomplish
their objective of lowering the gold price. Here is how they do
it.

It was no secret that $378 had become an important support
point, and consequently it was obvious that a large number of
longs had placed sell-stops under that level or intended to sell
if that level was broken.

So let's assume that the government starts selling and selling
and that it takes the government 20,000 contracts in thin
Friday afternoon trading to force the market down to the point
where the $378 level is broken. The government's selling is now
complete. Its mission is accomplished because of the new
selling that is generated when support at $378 is broken.

The market is now being driven lower by the longs who begin
selling to cut losses or protect profits.

As the market heads further below $378 support, more and
more sell-stops are generated because the snowball started
by the government is now rolling downhill on its own
momentum. Then the government interveners step back in
and slowly begin buying back their 20,000 contract short
"paper gold" position as the gold price heads down. They
buy what the longs themselves are now selling, enabling the
government to cover its short position.

The result is that the government ends the day with no
position, and assuming the government made $8 per ounce
on average (which is not an unreasonable assumption given
Friday's $13 drubbing), the government walks away with
$160 million picked from the pocket of the longs -- loot
that the government splits with the banks that acted as
their agents.

More importantly to the government, it achieved its primary
objective, which is to distort the free-market process by
forcing a lower gold price, thus hindering yet again the
market message that the dollar is in trouble and that people
should be stocking up with gold for the tough times ahead.

And the government did it without using one ounce of physical
metal.

So that's how they do it. Further proof will emerge Monday when
Comex reports Friday's drop in open interest. It may not be
20,000 contracts, but I would be surprised if it is less than
12,000. But if the drop turns out to be less than 8,000 contracts,
given Friday's estimated volume of 165,000 contracts (of which
125,000 apparently occurred after 12:10 p.m., when the
government started intervening), then the shorts are in real
trouble.

A small drop in open interest would mean that too few longs
were scared out of the market in Friday's price plunge, and
that, as a consequence, the longs are tenacious in looking
for higher prices.

In that case, the shorts with their huge position have become
even more vulnerable.

Further, if open interest drops by less than 8,000 contracts,
look for gold to rally back quickly into the $375-$385 range
seen the past four weeks.

Do I have documents proving the government intervention I
discuss above?

No, but the body of evidence developed over the past few
years by me (see www.fgmr.com), www.GATA.org, Reg
Howe (see www.goldensextant.com), Frank Veneroso
(see http://goldmoney.com/en/commentary/2003-09-04.html)
as well as many others is not only huge and compelling but
also growing.

What's more, I've just made a new discovery, but let me start
with a little background information.

Back in December 2000 I wrote "The Smoking Gun"
(http://www.fgmr.com/smokegun.htm) and noted the
discrepancy between the size of the U.S. gold stock
as published by the Federal Reserve in its monthly Bulletin,
which included "gold held by the ESF" in its report, and the
size of the gold stock published by the U.S. Treasury in its
monthly Bulletin.

The two reports were different, establishing that the ESF held
gold or owed gold (because in some months the discrepancy
was a negative balance) at the month-end record dates in
which there was a discrepancy, which was virtually every
month from the end of 1996 to my December 2000 publication
date.

Then, less than two months after the publication of my
discovery, the Federal Reserve in February 2001 inexplicably
changed its reporting of the gold stock to delete any reference
to the ESF, thus making its record of the size of the U.S. gold
stock equal to the Treasury's report.

This hasty change by the Fed is reported here:

http://www.fgmr.com/whatgold.htm

This after-the-fact "adjustment" to U.S. government reports was
revealing, given that the government felt sufficiently compelled
to hide further the tracks of the ESF to make this embarrassing
change to its reports. That appeared to be the end of this little
window into the operation of the shadowy ESF, because the
Fed was no longer reporting the U.S. gold reserve plus the ESF's
gold balance.

Or so I thought.

Recently I was analyzing the Fed's audited balance sheet
released in its 2002 annual report and I noticed that the
discrepancy has reappeared.

As of December 31, 2002, the Federal Reserve reports
$11,039 million in its Gold Certificate Account, but as of the
same day the U.S. Treasury Bulletin reported the U.S. gold
reserve to be $11,043 million. At the $42.22 book value used
to record these entries, there is a discrepancy of 94,741
ounces of gold on that one day.

What is the reason for this divergence in these two reports?

It seems obvious that this difference is the weight of gold held
by the ESF, which used to be reported by the Federal Reserve
in its monthly Bulletin.

The divergence between the two reports has reappeared because
the Fed can report in its monthly Bulletin whatever it wants to
include, or in this case, exclude. But it cannot exclude the impact
of the ESF on its year-end financial statement because if it did, its
auditors, KPMG, would not give an unqualified opinion in the audit.

So even though the Fed, presumably under the direction of the
ESF, tried to rewrite history by changing its monthly unaudited
reports, in the end the Fed failed because its manipulation of the
gold market has now been exposed in the Fed's audited financial
statements, which raises an interesting question.

Does this blatant management of the gold market by the U.S.
government mean that we should not buy gold?

Definitely not, unless you would rather rely upon the hollow
promises of politicians instead of the proven and reliable
trustworthiness of gold.

And regardless of any short-term considerations such as
Friday's trading action in the paper market for gold, consider
instead the important long-term case for gold.

The case recently was summarized wonderfully by fund
manager John Embry. His essay -- "15 Fundamental Reasons
to Own Gold" -- has been posted to the GoldMoney Internet
site, so there is no need to get into it here, except to say that
the long-term potential for gold is truly outstanding. See:

http://goldmoney.com/en/commentary.php

Each of John's 15 reasons offers sufficient incentive in itself
to continue buying and accumulating gold each month as your
cash flow allows.

In summary, government manipulators and their bank agents
won another battle on Friday to keep the gold price under
control. But they are losing the war.

Since touching $252 four years ago, gold has been in a primary
bull market. There is a steady and resilient worldwide
movement out of national currencies into gold, and given all the
fundamental reasons to own gold in preference to any national
currency, I expect that gold's primary bull market will continue.

Consequently, Friday's setback will soon be forgotten, and while
it hurts to see any market trashed in this way by the government,
there is a bright side to it.

Friday's late-day selloff has no doubt converted many more who
had been skeptical about government manipulation of the gold
market.

Yes, even though the government seemingly intervenes in every
market, there still are some who believe that the government
doesn't intervene in the gold market. But that group is rapidly
declining in number, and not only because of blatant
manipulations like the one that occurred on Friday.

Another factor is at work.

All one has to do is look at the dollar and its bleak prospects.

Given that sorry future, it is no wonder that people are moving
into gold, which explains the recent "seven-year highs" in gold
noted in the Reuters article. When one sees what is happening
to the dollar, they opt for gold regardless of the government
manipulation. The ongoing destruction of the purchasing power
of the dollar and the relative undervaluation of gold increasingly
makes gold the prudent choice.





Gold -- Sharefin, 22:20:31 10/05/03 Sun

Fund manager foresees shiny future for investors buying gold, platinum

Mark Johnson, the manager of the $235 million USAA Precious Metals and Minerals Fund, expects concerns about a weaker dollar and inflation to boost gold prices.

Gold will keep rising as this year's 10 percent drop in the dollar against the euro and low U.S. interest rates will fuel inflation, the 53-year-old Johnson said. The price of gold, favored by investors in times of accelerating inflation, is hovering at $385 an ounce, the highest since 1996.

"We're still pretty optimistic," Johnson said in a telephone interview from his office in San Antonio. "We think the dollar will continue to weaken for the foreseeable future."
~~~
This year, the USAA Precious Metals and Minerals Fund has received an added boost from the drop in the benchmark 10-year Treasury note, he said.

"What you saw this summer was a movement from bond funds into gold funds," Johnson said. "The bond market weakness implies that there are increased concerns about inflation, and that is a positive for gold."





Gold -- Sharefin, 22:17:12 10/05/03 Sun

India allows gold futures trading

India, the world's largest consumer of gold and silver, has allowed futures trading in both commodities for the first time in more than four decades.
The National Multi Commodity Exchange of India - based in the western city of Ahmedabad - will give bullion traders the option of hedging the risks arising from price fluctuations.

The Indian Government had banned futures in gold in 1962, after the Indo-China war, due to the loss of gold reserves.

India is the world's largest consumer of gold and silver.

It consumes 800 tonnes of gold annually, or about a third of the total supply mined in the world, the NMCE said.

The country has private hoards of 13,000 tonnes of gold.





Gold -- Sharefin, 22:11:08 10/05/03 Sun

Gold Market Perspective

an interview with John Embry and Special Guest Stefan Spicer with your host, Jim Puplava





Gold -- Sharefin, 22:08:40 10/05/03 Sun

Gold's glitter a gamble

New funds, tactics let you ride the bandwagon

The US$14 plunge in the price of gold yesterday was a vivid warning for investors tempted to jump whole hog on the precious-metals bandwagon.

Gold fell to US$374 an ounce, the lowest level in two weeks, as the greenback rose against the euro and the yen.

Of course, those gripped by gold fever -- many speculators and hedge funds are long on gold -- may view the sell-off as the proverbial buying opportunity.

Latecomers who joined the party only after gold mutual funds rose 16% in August (and 30% over the past 12 months) may be feeling buyer's remorse today.

Such outperformance should have served as a flashing yellow warning signal. Mutual fund investors are notorious for jumping on a trend only after it's been established. Chasing recent performance is what got investors into trouble in 1999, when they piled into the Nasdaq and technology funds.

But what if gold bugs are ultimately right and we are still in the early stages of a gold bull market? If that's the case, the recent dip creates an ideal moment to leap aboard the bandwagon.





Gold -- Sharefin, 22:05:51 10/05/03 Sun

Gold falls from 7-year high

Gold futures plunged, recording their biggest one-day drop in six years, as U.S. stocks and the dollar rose, making the metal less attractive as an alternative to equities and more costly for overseas buyers.
The price of bullion has fallen 6.3 percent from a seven-year high last week as stocks rallied on improved prospects for the economy. Stocks advanced Friday and the dollar had its biggest gain against the euro in a month after a government report showed the first increase in U.S. payrolls in eight months. Gold is priced internationally in dollars.

"Gold gave up in one day what it built up in a month," said Donald Coxe, chief investment strategist at Harris Investment Management, a Chicago-based unit of Bank of Montreal that oversees $18 billion.
~~~
The decline accelerated after prices fell below $380 an ounce, triggering pre-arranged sell orders from hedge funds, said Tom Boustead, an analyst at Refco LLC in New York.

Buying by hedge funds and other large speculators had contributed to the rally in gold, as they amassed their largest holdings in the metal in at least two decades.

Some expect prices to hit $400 GOLD, from Business 1

the rally in gold, as they amassed their largest holdings in the metal in at least two decades.

As of Sept. 23, speculators had bought 107,668 more gold futures contracts than they had sold, a report last week from the U.S. Commodity Futures Trading Commission showed. The net-long position had reached 122,847 on Sept. 2, the largest since at least February 1983.

"It just became too speculative," said Allan Corn, chief financial officer at Michael Anthony Jewelers, a Mount Vernon, N.Y.-based gold jewelry maker. "Physical demand was reduced because of the higher price of gold; people were definitely hesitating," Corn said.





Gold -- Sharefin, 21:44:09 10/05/03 Sun

Gold posts biggest drop in six years

The price of gold nose-dived yesterday in response to a rebound in the fortunes of the U.S. dollar.

Gold for December delivery fell US$13.70 -- its biggest one-day drop in six years -- in Comex trading in New York, closing at US$369.40.

An optimistic employment report from the U.S. government has raised hopes of a turnaround in the U.S. economy. That triggered a rally in the U.S. dollar, which before yesterday's news had fallen about 9% since Sept. 1.

Before yesterday, bullion had been one of the key beneficiaries of the greenback's troubles. Gold is bought and sold in U.S. dollars, so weakness in the currency encourages investors overseas to buy gold.

Gold peaked on Sept. 24 at US$387.50 an ounce, the highest price in seven years.

Yet just as a weak U.S. dollar encourages gold, a stronger currency drives away investors. That is what happened yesterday, when speculators dumped gold to capitalize on a rebound in the U.S. dollar.

--------
Seems more that the attack on gold was officially endorsed and planned in the US Gov't offices.
Here's the latest on the jobs forecast which was released after gold closed.

Data revision confirms weak US jobs picture
A warning by the U.S. Labor Department that it expects to revise down past employment data pours cold water on the view of some economists who believed the jobs market had been improving for some time, analysts said on Friday.

So the minute London had shut down trading they goosed the markets and trashed gold.
To what effect - well the prior Friday they did the same thing except they trashed the major gold stocks intent on turning the major gold indices.

This from the same Gov't which has lied it's way through the latest wars.





Gold -- Sharefin, 21:35:36 10/05/03 Sun

Saving Canada with Gold Grams

Based on figures from the International Monetary Fund's series on International Financial Statistics, the following table shows the official gold reserves of various nations at year-end 1985, 1993 and 2002. Canada sold 437 tonnes of gold from 1986 through 1993, reducing its gold reserves from 625 tonnes at the end of 1985 to less than 190 tonnes at the beginning of 1994, when it disposed of another 67 tonnes. Having sold an average of nearly 13 tonnes per year since, Canada is the world's only major economic power to have virtually eliminated its gold reserves.
~~~~
Although the Bank of Canada commissioned a full report to justify its handling of foreign gold during World War II and obligingly provides figures on Canada's gold sales since 1985, it directs all inquiries regarding the reasons for these sales to the federal government's Department of Finance. Suffice it to say that here, despite months of effort that ended at the "risk management" office, Mr. Steer ran into the proverbial stone wall. However, he did extract an intriguing admission:

But in the dying seconds of that last phone conversation with the "risk management" department, the person I was speaking to dropped a bombshell! We had spoken twice before, and he was a real decent and honourable fellow. This is what I remember him saying; "Well Ed, you may not be happy with the answer you got, but I can tell you that your enquiries regarding what happened to Canada's gold, set off alarm bells all over the Department of Finance. There are two things that this department is extremely sensitive about, and that is one of them."





Gold -- Sharefin, 21:30:45 10/05/03 Sun

All they need is gold at US$700

The United States is headed for record budget deficits, Washington's strong dollar policy is crumbling and the economic prospects for much of the world seem to be hanging by a thread.

Sounds like ideal conditions for the price of gold to rise, and hence a perfect time to buy gold mining stocks, right? Not exactly, according to analysts John Tumazos and Jared Muroff at Prudential Financial.

Mr. Tumazos and Mr. Muroff released a study of the gold mining industry yesterday, and they conclude that the biggest players are already fully-valued or overvalued based on their outlook for the price of gold.

"It appears that the gold stocks are trading not on the current gold price, but on bullish expectations for the gold price where it could cross US$500, US$600, or even US$700 an ounce," the report says.

~~~~
These guys need to do some homework.
Gold vs Goldstock values





Gold -- Sharefin, 21:27:39 10/05/03 Sun

Bullish on bullion

He defines intermediate term as the next three to nine months. "Gold has an attractive technical profile," Mr. Vialoux wrote. Bullion, which closed yesterday at $385.40, has support at its April, 2003, low of $319.90, its July, 2003, low of $343.40 and its 40-week moving average at $353.60. Gold's next resistance levels are $416.25 set in February, 1996, $423.75 set in March, 1990, and $499.75 established in December, 1987. "However, these resistance levels are stale and, therefore, less likely to be relevant when they are approached," he said. Mr. Vialoux also said fundamental prospects for gold are positive. After having temporarily strengthened during the summer, the U.S. dollar has turned south again. Should the dollar on a trade-weighted basis drop below support set in June, that would likely "trigger significant technical buying of gold and gold stocks," he said. Since gold is priced in U.S. dollars, it tends to become more attractive to foreign investors as the dollar falls.





Gold -- Sharefin, 21:25:45 10/05/03 Sun

Overvalued U.S. dollar is a slippery slope

A slide in the value of the U.S. dollar has spooked stock and bond markets this week, a reminder that a dollar crash could devastate the U.S. and global economies.
~~~
In recent years, foreigners buying dollars -- and investing in the United States -- have been an important prop for the economy. Should they suddenly get cold feet, propelling the dollar down, they probably would pummel the stock market, drive up interest rates and push up the price of imports, stoking inflation. Such a shock would drag down other economies as well, because so many countries depend on the huge U.S. market to sell their goods.
While many economists agree that the dollar is too strong, they are hoping for a gradual fall instead of a sudden plunge. But herein lies the danger: The herd mentality of markets can turn a gradual decline into an all-out run. If investors believe the dollar is headed down, they will sell their dollar holdings. Those sales will depress the dollar, sparking a new round of dollar selling in what can quickly become a downward spiral.
~~~
The United States in essence has been living beyond its means, importing more than it exports and relying on money from abroad to get by. That money can come from foreign investments in U.S. stocks or foreign purchases of U.S. bonds.
The current account deficit is headed toward a record $550 billion this year, the equivalent of $1.5 billion a day.
As this deficit grows, foreign investors could lose faith in the United States' ability to repay its debts. Any sign of weakness could lead them to dump their holdings, causing a dollar collapse.
"You're piling up more and more dry kindling, and at some point there could be a spark,"





Gold -- Sharefin, 21:20:39 10/05/03 Sun

Barrick hedging message still fluid

Barrick Gold [ABX] continues to send confusing signals about its gold hedging programme. Addressing the Denver Gold Forum, Barrick’s chief executive, Greg Wilkins, reiterated the hedge book’s benign nature, but also said the company was looking for chances to lighten it.





Gold -- Sharefin, 21:17:53 10/05/03 Sun



Switzerland's central bank will sell another 284 tonnes of gold by the end of September 2004 under the agreement struck with other European central banks in 1999, the bank announced.

But the bank said in a statement that it will sell the outstanding amount of gold remaining in its vaults once the agreement expires next year.
~~~~
"The SNB will sell the residual amount of 130 tonnes in the year following the expiry of the present agreement," it added.

-------
And then what off their coffers - they will be empty of gold.





Auspec -- Sharefin, 21:15:24 10/05/03 Sun

Well said - you should see some of the other comments I see being laid on Jim.
He is far too vocal & is lording it on high far too much.
He certainly needs to do some tweaking.(:-)))





Sinclair Being Sinclair re the Gold Quash -- auspec, 19:09:25 10/05/03 Sun

The following snippets come out of recent commentary from James Sinclair:

http://www.jsmineset.com/home.asp

The Curse of the Gold Advisors

Author: Jim Sinclair





"The price of gold has many enemies but the most seditious and dangerous to the Gold Community are the many that claim to be friends of gold - the so-called gold advisors."



"Even Friday after the employment numbers became public, gold was doing quite well, having broken out from its Power Down Trend. However, the Cartel short interest knew the road of weakness had been thoroughly plowed and planted by the advisors to the Gold Community."

"......the gun was loaded and pointed directly at you by the advisors Gold Community members actually pay."



"The sad thing is that they have no idea that they actually screwed their clients and the gold market royally. Who knows, they might just try doing it over and over again before they realize how dumb they are."

"Most of these guys are neither long nor short one ounce of gold nor one share of gold stocks. They don’t have to be as long as 200,000 of you send them the $69.95 per quarter."

"I will make significant $ in my opinion because of the advisors’ rank stupidity as a group."

"If these advisors really cared

"Let’s face it, this is WAR, nothing more, nothing less. The Cartel took in as much as $280,000,000 real dollar bills in Friday’s attack right out of YOUR POCKET thanks to your ADVISORS who no virtually nothing about gold."

"You just got ripped off thanks to the many ignorant gold generals yelling retro orders from the rear of the lines."

"The STOP orders in gold placed IGNORANTLY in huge sizes were totally visible because the floor traders holding them simply and covertly showed what was on their book to their pals for payback at another time."





"I will take on anyone that blames those numbers for gold’s fall because that was not the reason at all. It was a power play made by the Cartel that was set up by the ignorance of almost every gold advisor out there."

"Gold will charge at the $400 level again in 2003, probably sooner than later. You can be sure that the “Curse of the Advisors” will be a factor again as they issue sell recommendations at $386, $392 and $396 and we get the ignorant placement of large stop orders for the Cartel to pick off the WEAK flanks of this Gold Army."

"My bet is that event will be the US dollar under .9238 on the USDX second close. Since I see this as an absolute in my mind, I also see gold at $433 and $509 once the majority of gold advisors have sold out their loyal clients one more time."

"The price of gold has many enemies but the most seditious are those who claim to be friends of gold - the absolute majority of gold advisors."

END


Comments: You probably already know what I'm going to say, right? First of all, I am totally sold out for gold as well as silver and positioned accordingly. I also eagerly read most everything James Sinclair has to say.....he has incredible experience and heart. His service to the gold community is a real labor of love{?, it could have other factors mixed in}. He is a man of great achievement and a real factor in today's gold world. Thanks, JS!

All that being said............you knew there was more coming, no? I've heard this schtick before as it relates to mining companies. Sinclair is known to totally blast all other companies and their personnel as being incompetent as well as unethical.........to the near exclusion of his TNX. Maybe, when we still have mining going on during "Heaven on Earth" JS will totally be in charge..........but that day is not yet here. His blasting of the many fine people running mining companies, boosting himself in the process, is nauseating, at least to me. Sure, there are MANY crooks and sharks in this field, but there are also many caring and competent individuals running very successful companies. I happen to own many of them as well as his.

Who put me on arrogance patrol? Nobody, really, but I can't sit by and have this bloke blast everyone else within the gold community w/o sticking up for the many fine executives and advisors.

Now he blasts the many gold advisors of which he has previously stated he doesn't read! He reads Harry, talks to Kenny and that's apparently about it according to his own words. I beg to differ. I'm not a trader for the most part, but if I wanted to pay for a trading service and risk profit or loss in that manner, that would certainly be a viable choice. The world has room for traders. The world has room for gold bears, gold bulls, those that can't make up their mind which one they are, or even those with disciplined indifference. That's what makes a market. Remember, once more, I absolutely HATE what happened last Friday, stops being run by manipulators in the know. Still.

What I object to about Sinclair in this advisor blasting issue is the very same thing I object to in his mining company bad mouthing. The man thinks he and a few select friends are the "chosen ones", his trading method is the only viable one on the planet. If the whole gold community would just do as JS advises........everything would be golden. Sheesh, if everyone traded his method his method would no longer work. Right?

For a few examples:

Is Robert Prechter "ignorant"?
Is Julian Phillips?
How about Richard Russell?
Clif Droke?
Black Box Forecaster? Rick Ackerman
Adam Hamilton?
Etc?

Maybe some of these guys recommend trades and others hold for the cycle, but they've all pretty much been lumped together by the likes of J. Sinclair. Methinks something takes control over his museum quality ego. As much as I want the same thing he wants..........I can't go along with it. Sorry. The end doesn't justify the means.

How about the CRIMEX issue of allowing others to know where stops are placed? That's the crime, but what do you expect of CRIMEX? Duh? The problem is not with the many fine and sincere professionals that earn their living through researched and sound advice, right? These guys don't get paid for long if their advice is bogus! They put their butts on the line regularly and live and die with their calls. The free market allows them to stay in business, but only if they have a degree of success. Sinclair, if U were a timing advisor, last week, exactly how much $ would you have made for your clients? Oops. Easy to blame it on the "ignorant" gold advising 'traitors' though, isn't it? I have learned much from JS's charting protocols, but I can well assure you that there is only ONE person on the planet that thinks they are infallible {plus a bunch of wannabees}. For goodness sakes, markets DO get overblown, other issues have to be factored in {gut feelings, COT, etc}, and JS has no monopoly on TA. I, personally have seen this market as prone to what happened last Friday since early August. We've been on "quash patrol" so to speak. It was most predictable, it happened, and now we expose it and go forth. We DON'T disparage everyone else within the gold community that doesn't lap up every written word from the mouth of JS. Sheesh, again.

Time to find out exactly how and why CRIMEX allowed the stops to be known and targeted, imo. I always assumed they were well known to insiders.........thus the risk of this game. CRIMEX is nothing more than a paper game.......also like Nintendo or Pac-Man. Those stops, buy or sell, have a way of coming into fruition. This crooked game, at the margin {literally} decides the fate to a large degree, of the world POG. It depends on a little 'show-gold'........enough deliverable physical gold to allow the paper games to continue. Take away the 'show-gold', and it IS diminishing, and the entire facade evaporates. Sinclair is absolutely correct that this game does not have a level playing field.........and he correctly advises people to be leary of being targeted stops. Yet, he continues to play the paper game himself, mostly because he's so good at it that he, personally, will beat it in the end. He would like to bring along a lot of folks to participate with him. Admirable. Better he diminish COMEX gold by taking delivery and advising as many as he can to do the same. Better he use his influence to put an end to the stop targeting practice that takes place regularly on CRIMEX. Until the manipulated paper price setting mechanism is brought down.........gold nor silver will trade for their true values. Sinclair is nothing more than the Pied Piper of Paper Gold until he cleans up his act {I have to say something outrageous or everyone falls asleep on me, sorry}.

James Sinclair.........I still admire your vast knowledge and your TREMENDOUS efforts. They simply need a little tweeking.

Tweeking along,

a





Anatomy of a Gold Quash -- auspec, 11:47:37 10/04/03 Sat





How is this latest gold action going to stand up vs the test of time? Compared to the Bank of England announcement that they were auctioning off gold? Compared to the Bre-X scandal? Is this one the big one we've all been looking 4?

Did the likes of the lovely Aden Sisters, who pulled the plug on gold recently, or Weiss & Associates precipitate this downtrend...or did they simply perform the service that their paying clients expected? Scorn the "traders" as opposed to the "shoot the moon" players? Does only Sinclair know what he's doing and the rest are rank amateurs? Does Sinclair have some sort of hero complex that makes him think he's the annointed one, and if only everyone would listen to him all would be well in the world of gold. Did he make a mistake in comprehending all the various players in the market?

Lots of questions for sure. Personally, I don't think this $14 blip is going to amount to anything more than a speed bump as the next few months play out. To think that the gold quashing boyz are incapable of turning the market bearish, at least in the short term, is to fully underestimate our opponent. They simply ran the obvious stops in a contrived paper game. That is hardly any surprise and doesn't even fall on the same scale as Bre-X or the BoE announcement. This is what the paper game is 4, no? When there are something like 90 or so more gold derivatives for ounces of gold than ounces of gold that exist it's not too hard to have paper cover rock, like in the game many of us played as kids. There are MANY reasons that $395 or $400 have to be defended mightily, but they will fall as have all the other "critical" levels. For you see.........those that rig this game haven't really thought all this out very clearly and don't have a legit long term strategy........only short term reactions. Sound familiar {Iraq}? Fiat does as Fiat is.

So, gold was down about $14 today alone and silver down an even bigger %. Did something happen today that changed the long term fundamentals of both of these metals........at exactly the same time? Please explain it if U can.

The fools that blindly play the paper gold games are the ones that bring about these gold dips, but of course they're not all being taken for a ride. Tis a game of momentum and only needs a few gold "gurus" going offside, a few "funds" joining in {as part of the strategy}, and some weak hand gold holders and VOILA..............gold gets trashed. Right at noon today........the bottom fell out in an obviously coordinated manner. The paper game is rigged and most anyone who lost money this last week in it, unintentionally, has played the sucker. Much better odds in Vegas. Much better odds beating cancer. Pretty much on a regular 8 week schedule as recent cyclical charts have shown. Painfully obvious and also obviously desperate. The guyz who run CRIMEX are sharks and they pay big money {the "locals"} to get to rip the faces off of the largely unsuspecting public. There are "Funds" out there that play along with the gold quash.........they could care less if they make money or not...the primary objective is gold and silver CONTROL.

Will Sinclair, Dr Huang, Asians, Middle Easterners and the buying cartel show up soon and put in a floor on this market? Yea, it won't take long.

How to grade this particular gold quash? Nothing imaginative about it. The effect is not likely to last more than a week or so. All they accomplished was to let a little steam out of the market. No psychological damage like w the BoE announcement when so many who thought Britain was a FRIEND of gold were fooled. It happened shortly enough after the recent IMF meetings to look contrived..........exactly what so many of us were looking for. Also @ 12:00 on the last trading day of the week....no time to allow response. A bogus and meaningless jobs report, insinuations of CB gold sales for the gazillionth time thrown in for old times sake. Fool us once, shame on you...........fool us 22 times........shame on many of us. Watch India, Turkey, China and the current gold accumulators light up in anticipation next week. Smart money knows. This gold quash gets a D-.........totally predictable, unimaginative, obviously timed, and with little or no lasting effect.

If you own paper gold and think you really have something tangible...........just try to take posession. Good luck.

Where to from here.......? We build up momentum, once more, for the next 8 weeks. Another showdown. $400 is still the focus as that is where the EW boyz throw in the bearish towel and that's now what it will take, approx, to break through a contrived double top around $390 or so. If you want some more gold or silver stocks, or some more gold or silver.............CRIMEX is now holding a going out of business sale. The New Orleans Conference will be held in late October and there will be, once again, awesome gold enthusiasm abounding.

Trade your stocks and gold if you care to, hold em if U like, play the paper game if you insist, but know yourself and know your market. Freaking out? Freaking out? There's NO freaking out in Gold!!

An interesting point was made by Bill Buckler in his weekly Gold Commentary. The G-7's recent meeting came forth with the conclusion that currencies are to be more "flexible" which translated to many that the US Buck will find a much lower level. Buckler probes the rationale for this decision w interesting conclusions. Bottom line they came forth with this "goal", making it seem like it was their own desire, when in fact, it is written in stone because of market fundamentals. They couldn't change this dollar issue on a long term basis if they tried so might as well make it seem like it's what they want anyway.

Does this mean they will stop intervening and let the dollar collapse? Obviously not............see yesterday's market actions.

Gold.........? Buckler also reports that India just started paper gold trading YESTERDAY!! THAT oughta teach em a lil lesson, no? Not bad timing, once more, for a gold quash. It has also been brought out that all other markets were pretty much UP on the day but CLOSED by noon Fri, when silver was pounded first, followed by gold. Goldman and Morgan were the early identified sellers. It would be a shock to have it any other way, no?

Where to from here? Personally, I would NOT be surprised if this gold raid isn't already OVER. I'm not making that prediction but it is a clear possibility. CRIMEX doesn't have gold and silver all to themselves come Monday. They just pulled off an extremely obvious and contrived bear raid on gold in which gold enthusiasts were "JOBBED", and I'm totally serious.......I was kind in scoring this one a D+. Many of the gold loving 'insiders' are meeting in Calgary this very weekend and this "sucker punch" {being kind once more} will come to daylight for what exactly it was. Gold goes much higher, SOON!!

Paper players who didn't intentionally lose big money on gold and silver this last week...............our condolences to you, especially if this was your first trip down memory lane. If you're a repeat 'offended'.......hint, hint........figure it out. Fool me 16 times then shame on me and my impovereshed generations to come.

How{e} does one break the paper market's grip on gold? If one stays away then "they" can do whatever they want with it, being their own little playground. No, that's not it, CRIMEX must go the physical route. Play their paper game and take delivery of actual gold and silver, for without that action, the game continues in perpetuity. They just used our vulnerabilities to their advantage, hitting stop targets and making ninnies out of weak hand gold players; time to hit their obvious weakness.......PHYSICAL GOLD AND SILVER.........especially CRIMEX pyysical gold and silver. Where's the true "leverage" in the gold {& silver} market:

1. Mining shares?

2. Margined contracts?

3. Freeing gold from a contrived paper control by purchasing physical via CRIMEX?

Traditionally one thinks of the first two options as having the greatest leverage, but I'm beginning to have my doubts. What is keeping gold from $800 to $1000? Silver {especially} from flying much higher? Tis the paper price setting mechanism........nothing more, nothing less. Would it be that difficult to bust wide open? I don't reaslly think so for the gold price is set at the extreme margin.

Gold enthusiasts of significant size...........purchase on CRIMEX and take delivery. Smaller players........make sure you participate in the physical markets some how some way.

Gold CEO's..............Take down as many contracts as you are able and take delivery. Your shareholders will LOVE you and be indebted to you forever {see the GoldCorp profile}.

CRIMEX physical gold and silver in deliverable form is dwindling, why not speed up the process a bunch? Unless you're content with actions such as yesterday's $14 gold sell off, and silver's even larger % sell off. If this ridiculously blatant market manipulation doesn't make your blood boil over and say ENOUGH{!!!}..........then just hang around for more. It won't be far behind. Let's give these fascist jokers the F they so deserve.

Mad as Hell & not gonna take it any more! Smile.





Fiat vs Gold -- Sharefin, 00:37:38 10/03/03 Fri

Think Gold forget the Dollar

WHAT will history remember about 2003? That the eradication of Saddam Hussein's Iraq was but a pyrrhic victory for the US? That the Battle of Baghdad was a mere skirmish ahead of a much more seismic defeat in the Middle East? That the US won a war at the northern end of the Arabian Gulf only to be drubbed in nearby Dubai a few months later?

Let me explain: the decision made at the G-7 meeting in Dubai last week to weaken the dollar was a watershed in the rapidly unfolding some would say unravelling global economy.

And although the Americans see a drooping dollar as a triumph, my own view is that it signifies the beginning of the end of Pax Americana.

Any economist can tell you the US is living off borrowed money. Many will tell you it is also living off borrowed time. The big question is how long will it be before Uncle Sam feasting on a fix of 2,7bn worth of other nations' money per working day suffers from a bad case of cold turkey?

But before you start celebrating the prospect of the humbling of the hegemon, there is a catch. And it is a big one. Unfortunately, we are all hooked on the same habit. The globalised financial and trading system is high on a drug manufactured not in the Republic of Colombia but the District of Columbia: namely the US dollar.

Unrestrained production of the US currency is the cocaine that drives today's global economy. (It seems fitting that the US treasury secretary goes by the name of Snow!)
~~~
The general conclusion was "no": the US was still in charge. But it was telling that this was the first meeting that such a conclusion needed to be qualified by that all-revealing word "still." It begs the question: "For how much longer?"

The debate in Dubai centred on whether the coming collapse of the dollar would be a smooth retreat or an unseemly rout. Few officials from any nation wanted the latter, but markets often seem to go out of their way to snub their noses at such public sector wishes.
~~~
Already the central banks of Asia which are the main underwriters of the US's excesses are starting to doubt the dollar. Should they put all their foreign exchange nest eggs in the dollar basket? Increasingly the answer though few would admit to it in public is "no."

The US, from being the lender of the last resort to the global economy in the 1950s and 1960s, has become the borrower of the first resort in 2003. And like any banker faced with a runaway borrower, this is spreading a chill through the minds of the lenders of Asia.

Post 9/11, we have entered a dangerous period not just in global geopolitics but also geo-economics. The metric of value long central to global commerce, the dollar, is no longer the true north about which the world of finance can easily navigate.





Fiat -- Sharefin, 00:31:08 10/03/03 Fri

NY Times Columnist Sees Gloom in America's Future

President Bush is an incessant liar bent on destroying America's social safety net, central bank guru Alan Greenspan should shut his mouth on issues unrelated to monetary policy and the U.S. media have done a terrible job of keeping the public informed.

If those opinions seem stark, they are meant to be. The New York Times pays op-ed columnist Paul Krugman to ruffle feathers. The Princeton University economist has been writing for the Times since 1999 -- work now compiled in his latest book "The Great Unraveling."
~~~
While some critics dismiss Krugman's views as inflammatory, his book shows many of his predictions have come true, especially those about the nation's budget. And that makes his ultimate prognosis of the nation's fiscal outlook chilling.


"I think the United States is setting itself up for a Latin American-style financial crisis," he wrote in the book.


If Bush loses his job in the 2004 election, Krugman said, the day may yet be saved. But if he wins reelection to the White House, an economic meltdown will become "inevitable."





Gold -- Sharefin, 22:42:50 10/01/03 Wed

Joint Statement on Gold, Washington Agreement

In the interest of clarifying their intentions with respect to their gold holdings, the undersigned institutions make the following statement:

Gold will remain an important element of global monetary reserves.
The undersigned institutions will not enter the market as sellers, with the exception of already decided sales.
The gold sales already decided will be achieved through a concerted programme of sales over the next five years. Annual sales will not exceed approximately 400 tons and total sales over this period will not exceed 2,000 tons.
The signatories to this agreement have agreed not to expand their gold leasings and their use of gold futures and options over this period.
This agreement will be reviewed after five years.
----------
First quick conclusions:

Swissie ain't ole Swissie anymore: since May 2000, the excessive coverage (CHF 142.9/oz.) cease existing. Any study comparing the Swissie to the POG is irrelevant for the data after May 2000).
The Bank of England has to BUY BACK (120 to 160?) Tons of gold if UK is ever to join the Euro: the entry ticket is 15% of monetary mass transferred in gold to the ECB. This is why is called it foolish some sentences ago.
New candidate Central Banks also have to buy some yellah if they are to join the Euro.
Sales of gold in order to cover one country's deficit is explicitly prohibited by several European treaties.
The Central Bank of Greece recently sold a pack (12.5 Tons?) before signing into a renewed agreement. You never are too early.
The IMF has NOTHING to do with the WA, not part of it. Never been the initiator, in fact, the WA is a pain in their a$$.
Where do I want to lead?

Speculation: 400 Tons sales per year was a special situation. A renegotiated agreement could be for far less, say 20 to 50 Tons/year.
Speculation: UK will never join the Euro.
Speculation: Central Bankers have been know to buy high and sell low. (Proven with the Swiss CB and England CB sales). The risk for the Euro is more ECB sales (as the gold reserve are 15% of total reserves in gold, higher POS can lead to CB sales, lower POG to a loss of confidence as I don't believe the ECB would buy gold back).
Speculation: Other CBs, not signatories of the WA might sign the next version.
Speculation: The US will be a signatory of such an agrement when the Dollar devaluation will have run it's course. (aka suppression of the 46% debt held by foreign nations). Better said, there will not sign as they will initiate a new financial system.
Speculation: the US Dollar will be at the bottom before the next joint statement on gold will expire.

-------------
Another aspect that should be added in is the holdings of the CBs.
They claim to be holding 29,000-32,000 tonnes yet we all know much of this has been leased/swapped into the markets.

Therefore of the amount they have left how much will they be willing to sell into the markets.

The largest Central Bank gold holders are
Central Bank Holdings

US - not for sale
Germany - sell a bit - leased a lot
France - you can't have our gold at any cost
Switzerland - sell it lease it swap it - we're getting rid of it faster than we can find it - can't keep this up.
Italy - sold - leased swapped to the maximum
Netherlands - sold & leased all it can
Japan - we want to buy more?
Portugal - sold & leased all it can
UK - sold & leased all it can
Spain - sold & leased all it can
China - we want all we can get & more!!!

These countries control 80% (or 23,000 tonnes) of all CB holdings and as you can see there's not a lot of room for them to sell more. Some countries have been cleaned out & if one presumes that they've leased/swapped out approx 15,000 tonnes then they are only holding approx 8,000 tonnes which is what the US is Purported to be holding.

So when one adds up what they've got & what's left to sell & who would want to sell into a rising market you see this major problem.

Looking at the production/demand stats - also a looming problem as the CB's have been necessary to feed the deficit.

With little left to sell & burgeoning demand & lowering production the CB's have a major problem in keeping the perception alive that they have plenty to sell & will keep on deeding the deficit.
Gold Production/Demand





Gold -- Sharefin, 21:21:54 09/30/03 Tue

Noted strategist sees gold bull market

Veneroso also sees near-term risks for gold equities

On gold stocks
"There is a huge dispersion of valuations in the gold equities market. The ones that are the household names tend to be discounting much higher gold prices. Many of these companies sell at large premiums to net present value. So gold can rise, but the percentage appreciation can be a lot less than what people are expecting," Veneroso told me.

"The gold bulls say valuations don't matter, that the market in these things will be like an Internet mania. But if value does matter, we have trouble ahead out there. Nonetheless, there are the companies that trade at a discount to their net present value. Now the stocks have had a huge run, from 50 on the HUI (Amex Gold Bugs Index) (HUI: news, chart, profile) a few years ago to 210. And a lot of the money that is in these shares doesn't know what it owns."

On stock market risk ...
"It took three years from 1997 to March 2000 to take gross margin debt from $5 billion to $21 billion on Nasdaq (QQQ: news, chart, profile). That margin debt fell back by 80 percent by the end of 2002 to $5 billion. And now, on a lousy 15 to 20 percent retracement back up on the Nasdaq, this gross margin debt has quintupled to $26 billion, a new high, by July. In every other market bubble I can think of, margin debt came down and stayed down after the bubble burst. Some of this money has been chasing gold equities. That's the retail market. You also have hedge funds. They are under enormous monthly performance pressure, and their performances are all down. So they have gone into the gold stocks without knowing anything about gold. There is this kind of market risk in the gold sector."

... and gold risk
"Then there is the more important risk in the underlying metal. Basically, the official data from the GFMS (Gold Fields Minerals Services) and others on gold supply and demand are all wrong. The price of gold (38099902: news, chart, profile) has been held down by large central bank supplies. Some day these supplies will abate and the price of gold will go much higher. For now, these supplies continue and they may continue for some time."

On a 'managed' gold market
"In The Gold Book (1998), I said there is no obvious reason why central banks and other official organizations would want to manage the price of gold. I described how the existence of large amounts of gold lending created an inadvertent corner in the gold market. I called it 'the prison of the shorts.' The short position in the gold derivatives market simply could not be covered in a short period of time at any price, and certainly not at a low price. I predicted that, when the shorts in the market tried to cover, there would be some kind of crisis followed by a negotiated settlement between the short sellers and the lending central banks. My guess is that the official sector had to intervene to diffuse such a crisis after the gold price spike that followed the Washington Accord in 1999. They appear to have succeeded, and this intervention in gold markets continues, although I am not sure why," Veneroso told me.

"How do I know this intervention continues? There are 500 or 600 metric tons of speculative long positions on the COMEX, but that is the tip of the iceberg. The big market is the over-the-counter market. The total net speculative position is probably many times what we see on the COMEX. Thousands of metric tons? Who is taking the other side of that trade? In the old days, it used to be the producers, setting up their hedge books and selling forward. Now, they're covering hedges. Who else? There are gold dealers, and a lot of the people think these are the short-sellers in the market. After the price spike in '99, they have closed such positions. So there is only one possible counterparty now, and that is the official sector. This is just like currency intervention."

Why central banks might want to depress gold
"Asset bubbles create private debt bubbles. When people feel wealthier, they are more likely to spend more out of their income. And so they have to borrow. We saw this in Japan in the '80s. We see it in the U.S. When the asset bubble bursts, wealth disappears but the debt burden does not go away. Price deflation is really dangerous when you have rising private debt. That's why the Federal Reserve is so concerned about price deflation. It becomes a crushing burden that sends the economy into a debt-deflation spiral. Faced with this, the central banks realize they have to employ unconventional methods -- helicopter money it's called, the electronic printing press. More and more investors are catching onto this and the threat of a deliberate debt-alleviation inflation that will confiscate their paper money, and they see in this positive implications for the price of gold."

On 'expectations management'
"The stakes are very high for the official sector. If gold goes up to $420 an ounce, it will go above a 10-year level and more speculation will occur. The price will explode. It would become apparent that the central banks have been selling their gold at lower prices and basically been misleading the market in their incessant claims that no such intervention has been going on. They would wind up with a loud clarion call from a gold market that is no longer ignored, and if it turned out they were managing the market, it would be a huge blow to central bankers' reputations," the strategist said.

On the future
"I think the central banks don't want an exploding gold market. I think there are a lot of weak hands in the gold market. So the odds favor a correction of gold prices. We here feel there is more of a bubble unwind ahead of us in the overall paper market, more relapse. Not Armageddon, mind you, but more of what we've seen in the past three years. There is no synchronized robust global recovery. There is a global output gap. So that means more disinflation in the intermediate term. A shift in market perceptions from imminent inflation to more disinflation could dislodge some of the short-term speculative longs in the gold market," Veneroso said.

"If there is a real inflation threat at some future time, which is likely, portfolio demands of all kinds for gold will be sufficient to overcome any official resistance in the market."





Ponzi Correction -- $hifty, 01:45:12 09/29/03 Mon

Ponzi down 222.69 from last week.

$hifty





Periodic Ponzi Update PPU -- $hifty, 01:39:52 09/29/03 Mon

Ponzi Chart

Periodic Ponzi Update PPU

Nasdaq 1,792.07 + Dow 9,313.08 = 11,105.15 divide by 2 = 5,552.57 Ponzi

down 110.72 from last week!

Good to see you back RossL!

Thanks for the link

Go GATA !

Go GOLD !

Go Golden Comets !

$hifty







Gold -- Sharefin, 23:57:32 09/28/03 Sun

Gold riding at over 7-year high

Gold jumped to its highest level in over seven years yesterday as the surprise decision by the Organisation of Petroleum Exporting Countries (Opec) to cut oil output combined with a weak US dollar to burnish the metal’s allure as a safe-haven asset.

Share prices have fallen on concerns that higher oil prices could jeopardise an economic rebound in the United States, leading to a wave of short-covering that earlier pushed gold in Asia to the highest level since September 1996.

With speculators jumping onto the bandwagon in European trading, gold ran up to US$392 a troy ounce – its highest since mid-May 1996.





Richard Russell -- Sharefin, 23:51:05 09/28/03 Sun

Russell On the Dollar & Gold Stocks

Of course, there's another plus in the precious metals or real money picture. The other plus is that the general public isn't aware of the gold bull market. The gold bull market is still in its early stages -- it's in the first or accumulation phase. Gold is still "cheap" and silver, if anything, is even "cheaper."

All the gold ever produced in the history of the world has a value of about $1.4 trillion. The Fed creates that much liquidity in a matter of 18 months -- or less if it wants. The value of all the gold mines in the world is around $150 billion. That's less than the market capitalization of most of the individual stocks in the Dow.

Bull markets end in high speculation and public frenzy. We saw that most recently during the year 2000 on the NYSE. I want to remind subscribers of the phrase that was prevalent during the late 1970's right into 1980. It runs, "There's no fever like gold fever."

Remember that phrase. You'll be hearing it again before this gold bull market is over. And by the way, I foresee this gold bull market ultimately dwarfing the gold bull market of the '70s.





Gold -- Sharefin, 23:48:14 09/28/03 Sun

Rising gold prices surprise market watchers

Market watchers acknowledge that they've been surprised by gold's current strength.

For one thing, gold has largely been following the path of the euro, the currency representing 12 European nations that has been gaining against the U.S. dollar over the last year. But the euro weakened this past summer while the dollar strengthened, and gold prices surged higher.

And then this week, the dollar tumbled, but gold continued to climb.

There has also been a positive turn in the U.S. stock market and economy. Since gold is considered a safe-haven asset, investors historically have pulled out when those areas improve.





Gold -- Sharefin, 23:18:00 09/28/03 Sun

Gold is in fine mettle

Denver forum bullish as prices surge on news of weak dollar, low interest rates, growing U.S. debt.

Gold prices rose Monday to a seven-year high, fueling bullish proclamations at the Denver Gold Forum investment symposium.

Gold futures that hit $388 an ounce Monday could be headed as high as $500 within the next year, speculated Martin Murenbeeld, a Victoria, British Columbia-based gold analyst and keynote speaker at the Denver forum.
~~~
The surging gold market prompted Murenbeeld to joke that his conference forecast of higher prices was a foregone conclusion.

"Obviously I'm bullish," he said. "Nobody ever asks me to speak if I'm not."

In light of the weekend comments from the Group of Seven finance ministers, "the word is there's going to be a weaker U.S. dollar going forward; that has to be positive for gold," Ian Cockerill, chief executive of Gold Fields Ltd., the world's fourth-largest gold producer said at the Denver gold conference.

"We still are going to see a lot more legs" in gold's rally, he said.





Gold -- Sharefin, 23:16:07 09/28/03 Sun

Gold prices up

New Delhi, Sept. 25. (PTI): Gold prices rose across the country today ahead of the festival season as stockists enlarged their positions to meet the demand, and closed higher by Rs 100 and Rs 35 per 10 gram.
~~~
Buying by stockists ahead of 'Navratras', beginning tomorrow, was also supported by a steep hike in its prices in international markets where it touched a 8-year high of $ 400 an ounce.





Gold -- Sharefin, 23:14:55 09/28/03 Sun

Gem, jewellery stocks fall as gold turns dearer

The stock prices of gem and jewellery manufacturers and exporters have declined in the last one month as international gold prices have hit a fresh seven-year high.

The stocks have been falling since August-end with a consistent rise in London gold prices: first owing to the declining dollar and later on the strengthening of the yen.
~~~
India is wholly dependent on the imports of gold for its entire consumption and even export. Resistance for new gold jewellery increases with the rise in bullion price and household jewellery is recycled, leading to decline in jewellery demand.

Though exporters hedge their requirements and imports are made on consignment basis, the rising prices of bullion has dampened stock prices of jewellery companies.
~~~
India continues to top the chart of gold consumers, surpassing the cumulative demand of the west Asian market, China and Japan.

Indians continued to buy gold despite the near 11 per cent rise in prices and in fact stepped up their purchases of the yellow metal in the quarter ended June 2003.

The rise in demand also defied the hardship caused by the poor monsoon of 2002, which curtailed disposable incomes in rural India.

According to the UK-based Gold Field Mineral Services, the official data channel of World Gold Council, Indians bought a total of 184 tonne of gold for jewellery during April-June quarter, up 36 per cent from 135.2 tonne in the last comparable quarter.





Gold -- Sharefin, 23:12:51 09/28/03 Sun

Gold buying enters the busy season

Indian gold demand is expected to firm up in coming weeks as Hindus return to jewellery buying on Friday, which marked the begining of an auspicious period for gold buying according to Hindu mythology.

Experts believe the price of bullion will remain firm with gold anticipated to sustain its new 7-year highs in week ahead at major global markets.
~~~
Analysts said bullion’s overall uptrend — sparked by speculative buying — will continue, with the market recovering quickly in Europe from a knee-jerk drop earlier on Friday when the Swiss National Bank detailed its gold sales plans.
~~~
Rhona O’Connell, market analyst manager at the world Gold Council, said in a report the SNB announcement was “an iteration of the bank’s existing schedule for the disposal of 1,300 tonnes of gold over a five-year period and reflects no change in policy.”
~~~
Analysts said the massive number of well-documented long positions on New York’s COMEX futures market was weighing on investor sentiment, but the overall uptrend remained with a target of $400.00 an ounce still seen as achievable.





Gold -- Sharefin, 01:47:25 09/26/03 Fri

China's gold rush

Prominent gold experts and officials are urrging the government to lift the ban on individual trading in the precious metal as soon as possible, as quoted prices at the Shanghai Gold Exchange (SGE) continually hit record highs this month amid a surge in buying enthusiasm.

The introduction of individual traders, they say, would kill four birds with one stone, by invigorating flagging consumption, slashing the foreign trade surplus, trimming conspicuous foreign exchange reserves and easing international pressures on China to appreciate its currency.

It is "safe and feasible" for China to spend part of its foreign exchange reserves on gold imports, as well as place such purchases on the domestic market and open the market to individual players at the earliest possible opportunity, said Xi Jianhua, Bank of China's gold business expert.

About 20 per cent of respondents to a recent national survey said they were willing to spend 10 to 30 per cent of their savings in gold investment, indicating a huge potential demand for gold.
~~~
The money would create demand for about 3,000 tons of gold, he said. It would then only be natural for the country to expand imports as China currently has just 600 tons of gold reserves at its disposal, far from enough to cope with the potential gold rush.

In the initial stages, individual investors would create a market demand for 300 to 500 tons, according to analysts, and further growth would be gradual.

Spending on such a scale for gold imports would not have a significant impact on China's foreign exchange reserves, they said. Even if the anticipated 300 billion yuan worth of private investment was made right away, the country's US$356.5 billion worth of foreign exchange reserves at the end of July could cater for the demand with ease.

Using the reserves to purchase foreign gold would not only help withdraw billions of yuan now in circulation, but also boost the overall national import volume, Xi said, and thus "ease pressures on the appreciation of the yuan".

Xi's suggestions were echoed by Xu Shouxin, vice-director general of the China Gold Association.

Xu said the association has long proposed promoting individual ownership of gold, adding that the best way would be to allow commercial banks to start individual gold investment services at the earliest possible date.

He also stressed the need to spend part of the country's foreign exchange reserves on gold imports once the domestic market is opened to individual investors.

The time is now perfect for the government to make the move, say analysts, citing potential room for further hikes in gold prices, both in the domestic and international markets.
~~~
Some SGE members have been increasing their stocks in anticipation of heightened demand once the market is open to individual investors, said an industry insider who declined to be identified. "These investors have been very active, taking every possible chance to buy in."

Short supply
As the world's third largest gold consumer and fourth largest gold producer, China is suffering from a long-term shortage of gold, said Li Xisheng.

The country's annual consumption is about 200 tons, while its production equals roughly 180 tons a year.
~~~
Meanwhile, strong growth is expected in domestic gold demand over the long term, Li said, as individual incomes continue to increase.

-- First, per capita annual gold consumption in China is only 0.2 grams, far below that in Western and other Asian countries. The figure for India is one gram, while the United Arab Emirates averages the highest at 30 grams.

China is the largest potential jewellery market in the world, said Chu Xiangyin, an official with the China Council for the Promotion of International Trade. Consumption of ornamental objects topped 80 billion yuan (US$9.65 billion) in 2002 and has been growing by 15 per cent annually.

The market value should grow 10 times in 10 years, Chu said.

China is also on course to become a major manufacturer of gold jewellery in 2010 as a result of increased private spending power and lowered import tariffs, said Kang Xingzhou, vice-chairman of the China Gold Association.

Kang predicted that China's annual gold jewellery sales volume would reach 189 billion yuan (US$22.78 billion) by 2010, accounting for more than 10 per cent of the world's total.

-- Second, the demand for gold for industrial use will also increase rapidly as China becomes the world's manufacturing centre.

Currently, 90 per cent of the gold consumed in China is used to make jewellery.

-- Third, the potential for individual investment in gold as an option to currencies to maintain private wealth is almost unlimited.

Uncertainties about worldwide political stability and economic growth have strengthened this function of gold, Li said.
~~~
For thousands of years, the Chinese have traditionally saved gold and worn gold ornaments, analysts reason. If the government does decide to allow individual investors into the sector, the landscape of the entire gold industry worldwide could change completely.

China's gold rush

The introduction of individual traders in the gold market will, according to gold experts and officials:

-- invigorate flagging consumption;

-- slash the foreign trade surplus;

-- trim conspicuous foreign exchange reserves;

-- ease international pressures on China to appreciate its currency.

As much as 300 billion yuan (US$36.15 billion) in private money is estimated to flow into the gold market, creating demand for about 3,000 tons of gold.







Gold -- Sharefin, 22:38:02 09/24/03 Wed

Manager expects gold to jump further

RBC's Chris Beer says peak of cycle not reached yet

While gold has posted an impressive comeback over the past couple of years, Chris Beer sees more upside for the yellow metal ahead.

He co-manages the $303-million RBC Precious Metals Fund. He's the first to admit that gold, being inversely correlated to the S&P 500 index and U.S. dollar, is an asset class that defies typical equity analysis.

While gold stocks appear a little overbought in the short term, Mr. Beer believes the peak of the cycle hasn't been reached. To back his view, he cites several factors, such as the weakness in the U.S. dollar and low interest rates. Another key argument is the supply-demand situation: while the world produces about 2,500 tonnes of gold a year, the market consumes about 3,700 tonnes, he said.

A resurgence in the gold price has done wonders for the fund -- its three-year return is 55%.

While gold stocks can trade at "huge premiums," that's a function of the small size of the market, which creates a liquidity problem in the sector. Because gold stocks have a habit of taking off when the price of bullion spikes, the trick is determining how much investors have already priced into the stock, he said.

The main valuation criterion he uses for gold stocks is the price of a stock versus its net asset value, which is mostly determined by that price assumption. Assuming a certain gold price, he favours the companies that are able to increase their reserves, production and cash flow, as they will outperform the names with less or no growth.





Gold -- Sharefin, 22:17:35 09/24/03 Wed

HOW TO PROTECT ONE'S PENSION WITH GOLD

But let's go back to my original story. I exercised my leaps, sold my Barrick stock, and looked for an alternative. I asked a number of stock-broker friends of mine if they could recommend gold-mining companies that have deliberately reduced or, better still, stopped production in the face of falling gold prices. To my amazement, in each case my friends said that they were unaware of the existence of any such company. They are still looking.

I find it obnoxious that practically all the advice available to gold investors today is of the "get rich quick" variety. What about people who just want "to live and let live"? What about the retired people who want to protect the modest pension they have earned during their working lives? What about those on wages and salaries who in planning their retirement realize that the government-sponsored "old age security" just won’t be there for them when they will need it, so that they ought to provide their own? These people are not motivated by the thought of getting rich quick. They just want real protection, because they don’t trust the phony protection loudly propagated by plans sponsored by governments and employers. These plans are all suspect, because the benefits are denominated in an irredeemable currency, such as the dollar that managed to lose a record of 90 percent of its purchasing power during the very first decade after it was "cut free" from gold in 1971. There is no reason to believe that the dollar may not repeat or even beat that record in the new century! The point of my article is that these people are not being well-served by investment advisors who advocate the ownership of gold mining stocks with a management hell-bent to push up share prices by producing and selling all the gold the traffic can bear at the expense of mine-life (and there are lots of "non-hedged" companies in this category). The trouble with these companies is that they are exhausting their gold reserves prematurely, and their policy to replenish them is likely to fail as they do not reinforce prospecting with forward purchases of gold (as explained above under the caption "hedging true").

Pensioners should be very selective, and they should only look at the most conservatively managed gold mines with a declared policy of cutting back production (or withholding produced gold from the market) in response to falling gold prices. Once invested in the stock of such a gold mine, there are several strategies that (prospective) pensioners may choose from. The simplest is to sit back and collect the ever-increasing dividends the company is expected to pay once the gold price makes sufficient advances, to supplement their shrinking pension.

Another strategy is to keep "exercising the perpetual option" as the price of gold waxes and the value of pensions wanes. After each major surge in the price of the conservatively managed gold mine the pensioner would sell part of his holdings and convert the proceeds into gold bullion. This play is based on the expectation that the price of the stock of a conservatively managed gold mine will go up much faster than the gold price. This expectation is well-grounded. There is a double bonanza at work. In addition to the value of payable ore reserves, the volume of those reserves has to increase, as sub-marginal reserves enter the payable range thanks to the higher gold price. In this way the pensioner acquires gold ever more advantageously. In spite of paying an ever higher dollar-price for each ounce, every subsequent share sold is buying him more ounces. The conservatively managed gold mine produces gold for him. If he owned the stock of a less conservatively managed gold mine, the company would be producing gold for others. Pensioners have no use for a gold mining operation that prefers to make a quick profit at the expense of the life expectancy of the mine. They are not suitable as protection for one's pension against inflation or deflation. Pensioners don't need additional income while their pension still has value. They will need additional income when their pension is cut because of deflation, or loses its purchasing power because of inflation.

A third strategy involves borrowing against the stock, rather than selling it, to get compensation for the decreased value of one's pension. This strategy is designed to address the problem of taxes. Since there is no selling, there are no capital gains to be taxed.


Conservatively managed gold mines are hard to find. They are not glamorous, they never hit the headlines. It is likely that they do not presently pay dividends or, worse still, they report losses as holding gold properties involves costs (such as providing security, keep renewing mining licenses, paying a skeleton crew, prospecting for new properties, etc.) On the other hand, the price of the stock of such conservatively managed gold mines tends to be low and, initially, it may not increase spectacularly as that of a glamorous gold stock would. However, the policy of postponing exploitation will pay rich dividends at the time when the glamorous companies approach the point of exhausting their mines and must get ready to shut them down, as a result of premature depletion of reserves.

I am not getting paid for writing this article by anybody. In doing it I am trying to be helpful to my fellow pensioners facing the same problem that the value of their pension may evaporate due to deflation or inflation just at the time when they need it most. This should be considered as a thought provoking exercise to challenge conventional wisdom. Pensioners and prospective pensioners should do their own due diligence to find conservatively managed gold mines that would suit their needs best in protecting the value of their pension against the ravages of deflation or inflation.





Gold -- Sharefin, 22:12:18 09/24/03 Wed

Barrick In Management Shake-Up

Profits fell to $88m from $105m in the first half, and earnings for both this year and next are expected to lag 2002 results. "I don't want that to happen again," said Greg Wilkins, president and chief executive, in an interview with the Financial Times. He said Barrick's management structure had not changed during its 20-year life span, during which time it had evolved from a sole North American producer to one with operations on four continents.

After seven months in the job, Mr Wilkins said changes were necessary to restore "the entire approach that had been the hallmark of the company from the beginning". That means more autonomy for regional operations so that Barrick can become "much more nimble". While he called the changes "a milestone event", Mr Wilkins said "the outside world will not know whether this has been a successful thing or an unsuccessful thing for three to five years".
~~~~
Investors have criticised Barrick for its hedging programme, which has left the company with a potential $1bn liability if the hedges were marked to market.

But Mr Wilkins said it was focusing on the additional $160m that a $10 gold price jump adds to Barrick's mark-to-market liability, and ignoring the increased $870m added to its reserves.

Barrick also has 10 years to deliver on the hedges, and the gold price will weaken at some point during that time.





Fiat -- Sharefin, 21:54:18 09/24/03 Wed

U.S plays with currency fire

Although the turmoil it created has subsided somewhat, the statement by G7 finance ministers that global currencies should be free to fluctuate is an important one, one that will have far-reaching effects not just for the United States and Asia but for Canada as well. While the United States might like to think of itself as the puppet master, pulling strings in order to get certain currencies to do what it wants (including its own), currencies -- and those who trade them -- are notoriously fickle, and not inclined to take orders from anyone.
~~~
As U.S. companies see it, China manipulates its currency in order to keep it artificially low, and this in turn makes its goods more competitive than those produced in the United States. The manipulation comes because the yuan (which is known inside China as the "renminbi" or "peoples' currency") is pegged at a rate of 8.28 to the U.S. dollar. For the past year or so, the United States has been putting pressure on China to let the yuan "float" or fluctuate, which economists believe would cause it to move higher relative to the dollar.

China, however, has shown no inclination to do so, primarily because keeping the yuan low has produced tremendous economic growth for the developing nation (as well as U.S., Canadian and European companies that have moved their manufacturing operations to China), and moving it higher solely to benefit the United States isn't a particularly attractive option. China also probably feels singled out, since Japan manipulates its currency too -- but doing so actually helps the United States, and therefore is seen as acceptable.

In order to keep the yen low relative to the U.S. dollar, Japan buys billions and billions of dollars worth of U.S.-denominated debt, which provides a ready market for U.S. government bonds -- and the United States is selling more and more of those as a result of its gigantic federal deficit, which will likely approach the $500-billion (U.S.) mark next year. Japan is the single largest holder of U.S. debt with about $445-billion worth, although China is moving up rapidly. It's currently the third largest with about $126-billion.

Some economists say the United States is playing a risky game by trying to get China and Japan to let their currencies fluctuate, in part because of the enormous U.S. debt position the two countries have. What if they no longer have to buy as many billions worth of T-bills to keep their currencies where they are? That would not only make it more difficult to finance the federal deficit, but it could lead to higher interest rates. "If interest rates go up too fast, that will put the brakes on the housing sector," said Rajeev Dhawan, an economist at Georgia State University. "That could mess up the whole recovery."





Fiat -- Sharefin, 21:47:05 09/24/03 Wed

Germany and France open their coffers

France and Germany yesterday unveiled a Keynesian spending blitz to pull their economies out of slump and halt the "de-industrialisation" of Europe, deftly side-stepping the spending constraints of the Growth & Stability Pact.





Fiat vs Gold -- Sharefin, 21:26:47 09/24/03 Wed

Readings from the Book of Barrick: the Sequel

A few weeks ago I was startled out of my afternoon reverie by an inquiry from Melissa Davis, an investigative journalist for TheStreet.com. She was gathering material for a piece on Barrick Gold Corp. and wanted to follow up on my essay, Readings from the Book of Barrick, posted back in May. Sure thing, I said, delighted to receive a little recognition from someone outside the Taliban Wing of the gold bugs. There was just one problem: I hadn't kept up with Barrick ever since it became clear that CEO Randall Oliphant was exactly right when he asserted that the rumors regarding a deal with Gold Fields, which had prompted my musings, had been dreamed up by some guy in his basement. So I had to do a little homework in order to respond to Melissa's thoughtful questions. In the process, I learned some things that may be of interest to fellow gold bugs, but which may be too technical for inclusion in an article geared to a broader audience. Accordingly, Melissa's questions and my responses are set forth below, modified slightly for this format.

We'll post a link here when Melissa's article comes out.

1. Has much changed at Barrick since you published your essay? If so, what?

Three developments strike me as noteworthy.

First, they committed to a serious reduction in their gold hedgebook exposure. This was announced in a press release on September 17, which also laid out a growth plan. The growth plan got top billing but it’s pretty clear the point of the release was the hedge cutback, because the “growth plan” was mostly old news. The announced reduction would chop their gold forward exposure by a third, taking it down from about 18 million ounces to about 12 million ounces by the end of 2003. It would also slash their call option and variable price sales contract position by 1.5 million ounces over the same period, down from about 2.7 million ounces. The pledge is “based on market conditions,” whatever that means, but otherwise it’s unequivocal. This is a big deal if it’s real, but it was quickly overshadowed by the second development.

Second, they wrong-footed the market by lowering earnings guidance out of the blue. This was announced in another press release issued on September 26, just 9 days after the first one. The release attributed the miss to operating issues in Goldco: higher costs and lower output. What was weird about it was the timing. Why not combine the releases rather than stagge