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Fiat -- Sharefin, 02:53:11 02/16/04 Mon

Failure in Iraq and the Consequence for America

The decline in the value of the US dollar against the euro is significant. Conventional wisdom says that it has been lowered to improve the US economy, and therefore Bush's prospects at the November presidential election. This is probably not the case, more likely the market is discounting a fundamental change in its status, from hegemony, toward co-existence with the euro as a trade and reserve currency. This will have profoundly negative implications for American prosperity.

The European single currency project has always been to build a currency to rival the dollar, a currency that the world will accept at face value, in the same way that gold once was, Sterling before the WW1, and the dollar is now. Today the US enjoys the advantage of dollar denomination of all internationally traded strategic commodities, and therefore enjoys a major economic advantage. When America wants to buy, the chairman of the Federal Reserve writes a bigger number in the authorised exchange ledger; when the rest of the world wants to buy, they have to earn dollars first.
~~~
The published reasons for toppling Saddam Hussein can be safely discounted, the real reason is to secure the Iraqi petroleum reservoir as a dollar-denominated fief. Proved reserves are second largest in the world and, given that most of Iraq has yet to be explored, probably the largest. Unfortunately for America, policy makers underestimated the Iraqi national character, and the US Army is mired in a guerrilla war it cannot win.
~~~
America could have achieved most of what it wanted -- which is a large reservoir of dollar-denominated petroleum -- with a little more thinking. Saddam Hussein and the Baath party were desperate to save themselves and have sanctions lifted, and could have been induced to grant significant petroleum concessions in return for salvation. But, quite foolishly, the Bush administration chose conquest instead, and now, the project having turned sour, they will get nothing for the expenditure of money and lives. Bush and company have emptied the treasure chest on Iraq, and there is no prospect of replenishment, let alone replenishment with interest. They must be kicking themselves now. When America wakes up to the consequences of this misadventure, it will be very angry indeed.

Oil -- Sharefin, 02:47:44 02/16/04 Mon

Saudi Paper Accuses US Of Waging War On OPEC

RIYADH (Reuters) - A leading Saudi Arabian newspaper says the United States has no right to warn OPEC against cutting oil output and accuses Washington of waging war on the cartel under the guise of protecting the global economy.

OPEC, led by Saudi Arabia, on Tuesday announced a surprise reduction in crude supplies from April, drawing a caution from the United States that it risked stunting world economic growth.

The daily, al-Riyadh, said OPEC's decision was aimed at balancing supply and demand and that oil producers have made sacrifices to protect the global economy, including opening the taps during the U.S.-led war on Iraq to make up for a loss in Iraqi crude production.

"The U.S. media campaign over production cuts is accompanied by U.S. problems in Iraq, high unemployment, rising debts and war costs and the elections battle, and the only scapegoat is accusing oil producers of harming the U.S. economy," the Arabic-language newspaper said on Thursday.

"America...made no secret of its strategy to rob OPEC of the right to protect its interests," the daily said, adding that by encouraging oil exploration and production in non-OPEC states, Washington was waging "an open war on OPEC and oil producers, especially Arab countries which represent the strength of OPEC".

Gold -- Sharefin, 01:47:59 02/16/04 Mon

Barrick knocks down Pascua rumours

Dogged by rumours about its Pascua Lama project, Barrick Gold has firmly extinguished the latest conflagration.
~~~
Late last week, Mineweb came into possession of a set of notes prepared by a Vancouver firm with a self professed “vested interest” in Pascua.

The notes appear to be a corroboration of many of the startling accusations levelled by one Jorge Lopehandia who has been fighting a guerrilla war, consisting mostly of insults and absurd claims, against Barrick for years. He has been dismissed as a gadfly, especially after losing a defamation case in an Ontario court last year when he failed to appear. Nevertheless, the notes recast Lopehandia’s claims in rational language with new information and that caught our attention; and the grapevine’s.

Gold -- Sharefin, 01:45:09 02/16/04 Mon

Barrick Gold trumpets its silver holdings

Capitalizing on rising metal prices, top Canadian gold producer Barrick Gold Corp. is presenting a more diversified profile to investors and highlighting its extensive silver holdings a day after announcing a nickel exploration deal.

"I think it's fair to say that Barrick possesses one of the largest silver resources in the entire world," president and chief executive officer Greg Wilkins told analysts.

At the current silver price of about $6.50 (U.S.) an ounce, Barrick's silver holdings have an "in-situ" market value of approximately $5-billion, Mr. Wilkins said.

Gold -- Sharefin, 01:44:08 02/16/04 Mon

Unconditional no-hedge pledge from Barrick

Barrick Gold [ABX] made its most decisive break from hedging today. Chief executive Greg Wilkins, in the job exactly a year, told investors on a conference call that the company’s assets were no longer at risk from commodity price volatility, which would facilitate a steady reduction in the company’s gold hedge book which currently stands at 15.5 million ounces.
~~~
The reductions have been insufficient to stave off ballooning unrealised losses on the hedge book though. It stood at a whopping mark-to-market loss of $1.725 billion, a 42% deterioration from the third quarter’s negative $1.2 billion and 170% worse than for the end of 2002 when the book recorded negative $639 million. The hedge book would consumer almost twice Barrick’s end-of-year cash holdings.

Gold -- Sharefin, 01:41:48 02/16/04 Mon

Barrick lives up to hedge-cut pledge, despite cost

Barrick Gold said on Friday it was prepared to lose out on higher gold prices on a third of its output this year as it lives up to a promise to wipe out its bulky hedge book.

The Toronto-based miner, the world's third-largest bullion producer, owns the gold industry's biggest hedge book, a thick pile of contracts it entered into over many years to lock in prices for its as yet unmined gold.

Barrick scored when the gold price was weak but the metal's 65 percent gain in the past three years to over $400 an ounce has overtaken the price it has pre-sold much of 15.5 million ounces of its production.

Hedging has become unpopular with investors, who want to see the full benefit of today's high gold prices.

Chief executive Greg Wilkins said on Friday the company would deliver at least 1.5 million ounces out of anticipated production of 4.9 million to 5.0 million ounces in 2004 into hedge contracts, even if it means losing money on sales.

"We will accept the opportunity cost of managing the book down," Wilkins said in a conference call with analysts to discuss Barrick's fourth quarter and 2003 results.

Gold -- Sharefin, 01:39:30 02/16/04 Mon

Barrick profit rises 43%

Higher gold prices and gains on derivatives more than offset rising costs and pushed fourth-quarter profits up 43 per cent at Barrick Gold Corp.
~~~
Gold sales for the quarter were 1.36 million ounces, down from 1.54 million in the final three months of 2002.

Periodic Ponzi Update PPU -- $hifty, 23:04:17 02/15/04 Sun

Ponzi Chart

Periodic Ponzi Update PPU

Nasdaq 2,053.56 + Dow 10,627.85 = 12,681.41 divide by 2 = 6,340.75 Ponzi

Up 12.23 from last week.

Thanks for the link RossL !

Go GATA !

Go GOLD !

$hifty

Fiat vs Gold -- Sharefin, 19:15:03 02/15/04 Sun

Bank Secrecy Act: Gold Brokers Will be Forced to Register Gold Sales

"Under the rule," Congressman Paul continued, "dealers in precious metals who purchase or receive more than $50,000 in jewels, precious metals, precious stones, or jewelry are required to adopt an anti-money laundering program. The program must include the adoption of 'know your customer' type procedures. In addition, the dealers will also be required to report receipts of over $10,000 in cash."

When Congress enacted the Bank Secrecy Act, it required the Treasury Department to report within one year the need for any additional legislation to fully implement the money-laundering aspects of the Act. The Treasury Department made an additional request on September 26, 2002. They asked that a provision be added to the law, Section 103.23 that said: "...a person who transports, mails, ships, or receives; is about to, or attempts to transport, mail, ship; or causes the transportation, mailing, shipment or receipt of monetary instruments, is deemed to do so 'at one time' if...that transaction totals more than $10,000..." (and/or if) "...[shipment or delivery is spread out over one or more days] "...for the purpose of evading the reporting requirements..." is guilty of violating the law and is subject to its penalties which includes fines and imprisonment.

"Know your customer procedures" Paul continued, "require dealers to develop a profile of a typical money launderer. The profile is based on a list of legal transactions, which federal bureaucrats have determined are often engaged in by money launderers. Dealers are required to file a suspicious activity report whenever one of their customers matches that profile.

"Far from being the type of effective and focused program necessary to identify terrorists," the Texas Republicans said, "the 'know your customer' approach forces the government to look for needles in a haystack. This is because financial institutions file these reports regardless of whether they have any real evidence of criminal activity. For example, according to information obtained by my office, 99.999% of all Currency Transaction Reports are filed on law-abiding citizens. Aside from raising serious concerns about the government's respect for individual privacy, a system with this amount of "false positives" diverts valuable law enforcement resources away from the investigation of real terrorist threats to the harassment of innocent citizens.

"Furthermore," Paul said, "at a time when the economy is, at best, recovering from recession, I question the wisdom of imposing costly new reporting and record-keeping regulations on small businesses. Most jewelers and precious metal businesses are small 'mom-and-pop' operations that cannot easily afford to comply with burdensome record-keeping regulations. Many small dealers, in order to provide absolute proof that they are not dealing with terrorists, drug dealers, or other black marketers, will keep a database of all customers to share with the government. Thus, this regulation establishes a de facto database of every precious metals customer in the nation. Such a database would have great potential for abuse if a future administration decided to engage in another mass confiscation of gold, similar to the one that occurred under the Roosevelt Administration in the 1930s.

"Concerns over the loss of privacy," Paul noted, "are going to drive legitimate gold customers into the black market. Ironically, by expanding the illegitimate market for gold, these regulations will enhance the ability of international terrorists to use the precious metals market as a haven for money laundering while decreasing the ability of law enforcement officials to apprehend terrorists. Treating all precious metal customers as 'guilty until proven innocent' turns the fourth amendment on its head. Quite simply, the federal government lacks any constitutional authority to snoop on the transactions of law-abiding gold dealers and customers absent evidence that the proceeds are being used for money laundering. In conclusion, the proposed regulation expanding the money laundering provisions of the Patriot Act to jewelers and precious metals dealers will further bury law enforcement officers in false positive Suspicious Activities and Currency Transactions Reports, thus hindering efforts to identify and apprehend terrorists. This regulation will also burden small gold dealers and jewelers with new paperwork requirements, expanding the black market for precious metals and turning every law abiding gold coin collector into a criminal suspect. Therefore, I urge the Treasury Department to withdraw this regulation."

Fiat -- Sharefin, 00:28:48 02/14/04 Sat

Record currency interventions subsidizing U.S. debt, but experts warn flows unsustainable

Japan is on an unprecedented spending spree, all focused on the same product: the U.S. dollar.

Tokyo bought an astounding $172 billion last year to keep the yen from strengthening too much against the greenback. The push only accelerated in January, when Japan snapped up another $67 billion.

That Japan's government is buying dollars to prevent a stronger yen from smothering a feeble economic recovery at home is not new. But the scale of the current round is far beyond its earlier interventions.

The purchases are so large they are effectively subsidizing record U.S. budget and trade deficits, keeping American interest rates low and worrying some experts that a painful shock will hit if the spending spree stops.
~~~
Japanese investors -- mostly the government -- bought a net $104 billion in U.S. debt between January and October, according to calculations by Japan's Nihon Keizai newspaper. That's a third of the $314 billion in fresh debt Washington issued during that period.

There have been other effects. John Vail, senior strategist at Mizuho Securities, a brokerage unit of Japan's largest bank, said the yield on the benchmark U.S. bond would now be about 6 percent instead of 4.1 percent if Japan hadn't been so active in the foreign exchange and bond markets over the last 13 months.

That means that if not for Japan, U.S. consumers would be facing higher interest rates on their home mortgages and credit cards.
~~~
Some of the risks are obvious. If Japan stops buying as much U.S. debt, both Washington and the private sector will have to pay more to borrow.

"There is a chance Americans will suffer a shock when and if Japan stops intervening and its demand for Treasurys tapers off," said David Parsley, associate professor of economics at Vanderbilt University.

The higher rates would force Washington to dedicate more resources to paying the interest on its debt, taking funds away from other programs and dampening the economic recovery in the United States.

Eisuke Sakakibara, an aggressive interventionist during his tenure as Japan's vice-finance minister for international affairs from 1997 to 1999, also noted that the Finance Ministry's activism cannot last forever.

"You have to think of an exit policy sometime," he said. "It distorts the market. It takes the vitality out of the market. It has an unnatural impact on the U.S. bond market."

But Sakakibara's successors are showing no sign of letting up. Parliament said this week that it would allow the Finance Ministry to draw another 21 trillion yen ($200 billion) on a special account used for intervening.

Silver Talk or Perp Walk -- auspec, 20:07:46 02/13/04 Fri

The following letter is being sent to the various COMEX regulatory authorities as well as interested parties around the globe via the internet:

SILVER TALK OR PERP WALK

This letter is being written in regards to the ongoing discrepancies in the COMEX silver market which is under your authority. It is also being distributed to enlightened individuals around the globe and to the more general public for informational purposes.

Let me start with the fact that there is a well documented and undeniably extreme short position in COMEX silver, to the point that it is a multiple of known world silver stockpiles. This anomaly has been allowed under the supposed watch of the CFTC as well as NYMEX and other authorities and has the likely potential of becoming a major disruption to the integrity of these and other important markets.

The short position is undeniable yet it still leaves us with a few possibilities to its eventual unfolding. Let’s probe these possibilities under the following headings:

The silver shorts are actually legitimate as unknown physical silver is in existence somewhere around the globe to back the short positions.

The shorts have no legitimate backing by physical silver.

The shorts are somehow guaranteed by the Federal Government or one of its branches such as the Federal Reserve or the Exchange Stabilization Fund {ESF}.

If the short silver position is actually able to be covered by physical silver if it becomes necessary, then this entire issue is moot and I am wasting your time as well as my own in complaining about the lack of fairness in the COMEX silver market. I have followed the silver market closely for the last ten years or so and even owned silver bullion some 30 years ago. To put it bluntly….there is no way these outsized commercial shorts have the silver available to cover their shorts and anyone who understands this market completely comprehends this fact. As the many letters and articles expounding on this COMEX {CRIMEX} fraud are distributed amongst the general public, they, also, will understand the bottom line on COMEX silver………THE SILVER ISN’T THERE!!!

I stand ready for you to correct this premise, but, of course, won’t hold my breath in the meantime. Once the worldwide general investing public as well as financial institutions understand what the very few now know, THE SILVER ISN’T THERE, there will be no chance of the manipulation continuing for long. This process is now well under way.

That takes us to the second major premise….the shorts have no method of covering their positions with physical silver. This is the consensus opinion of those many individuals that have taken the time and effort to formally complain to the various government officials that oversee the COMEX markets and it is my basic conviction as well. This naked shorting has allowed the price of silver to be manipulated unnaturally downwards, well below the average cost of production of an ounce of silver, by those in the know, much to the detriment of those not in on the fix. Truth be known, however, these same manipulators have also frequently made money via what amounts to “insider” trading by moving the silver market higher temporarily here and there as well. The likes of Morgan Stanley and Goldman Sachs have pretty much had their way on the COMEX exchange in both gold and silver as they have made it their personal playground or cash cow. I say this with impunity from slander because it is plainly the truth. This is a far cry from the honest and fair markets that more naïve Americans believe their country operates and these Americans will be somewhat shocked when this market implodes along the lines of Enron or Long Term Capital Management. It is my strong belief that Enron and LTCM are more representative of current US markets than mere anomalies, sad to say.

What stands behind these out of control naked short positions? Who’s the guarantor of last resort? Is someone backing these unidentified four or eight large commercial silver shorts with more than a simple “wink and nod”? Will they simply be bailed out, when, not if, the positions explode in their faces? Are these various investment or billion banks operating on their own behalf only or are they operating under the authority of a US Government entity? I believe the shorts will be deemed “too big to fail” quite obviously, and one way or another, US citizens will be sent the bill. Grants to crony capitalist special interests are well beyond commonplace as is outright “monetization” via the vehicle of inflation, a.k.a., the Federal Reserve. This is the near future for those who have honestly risked participation in the COMEX metals markets because, for whatever reasons, the US Government and the oversight authorities of COMEX have decided, in their best central planning modes, that a rising silver market is somehow a threat to their overall plans.

Is it actually legal for the US Government to “intervene” in the silver market via this “paper” game {shorting silver without having adequate backing}? That is a distinct possibility but it is a most dangerous game once it is exposed as is now happening. These short positions are nothing but derivatives that are used to control COMEX silver and they are tools of desperate men and totally doomed to failure. Why do I say that as I now approach the key part of this letter?

Silver is a fairly easy market to play with, short or long, because it is such a SMALL market in that not much actual money is required to heavily influence it. A billion dollars isn’t much in the world of international finance but it would be most significant in its impact on the silver market. The silver market is tiny in comparison to the gold market and the gold market is tiny compared to most all other markets. This has allowed silver to be basically controlled by various “commercial” entities, especially as they have been allowed , without proper regulation, to endlessly sell silver contracts with no hope whatsoever of providing actual silver should their schemes fail. You must know that this coin has two sides and that is the crux of this letter.

When one comes to understand that there is actually VERY LITTLE physical silver standing behind the COMEX fraud it also gives tremendous opportunity to those who yearn for honest and fair markets. Thank you silver manipulators for you have laid the groundwork for your own demise. This tiny, tiny market, with little actual silver behind it and presently controlled by paper derivatives, is therefore most vulnerable to physical off take!! For some time now I have been an advocate of taking delivery of physical silver as well as gold, but it is only lately that the drumbeat for this very same action is gaining intensified publicity. May silver observers have recently come to the same conclusion that the fraudulent price setting mechanism for world silver, COMEX, cannot withstand significant demand for physical delivery. This, good Sirs, is what you must understand as more and more frustrated and abused investors, one by one, take on the CRIMEX game players by playing exactly the opposite game of paper derivatives…………namely, PHYSICAL SILVER POSSESSION. This Sirs, is now your problem, like it or not.

If this letter serves as further inducement for individuals and entities around the globe to exercise their legal rights and end the COMEX silver fraud…….so be it. I have no particular affinity for crooked markets or even a market unknowingly and unfairly backed by a US Government entity. If the US Government is behind this silver suppression, and there is a distinct possibility that it is, then participants in the COMEX markets deserve to know it. What do you think will happen when informed people around the globe understand that the US Government had long suppressed the price of silver, via uneconomical dumping or inherent backing of derivative games? Does that not loudly scream that silver is undervalued and likely to release itself from manipulation in a manner that will shock all participants {especially the shorts}?

I trust this letter is taken as being written in a polite manner, I also trust it is taken as being written in a straightforward enough manner to get some serious attention. Attention especially by those in a position to quickly correct this fraudulent market via regulation and responsible oversight BEFORE the wrong is corrected by those in a position to correct the fraud by taking home physical silver. I’m of the strong position that our US markets need to be run fairly for the benefit of all participants or they need to be shut down. I hold no particular affinity for COMEX as the world’s price setting mechanism for silver. By the way, once the silver market escapes derivative control by COMEX, gold won’t be far behind as it is also being manipulated to the detriment of honest participants.

Let me summarize the reasons that I believe COMEX silver has now arrived at CHECKMATE. This letter is written more to demonstrate how close this entire scenario is to disaster than to plead with a few civil servants to start looking into the misbehavior of certain silver market participants. It’s very late in this game. Please act accordingly for you are a mere expanded campaign regarding physical off take of COMEX silver away from COMEX silver destruction. This campaign is now well underway.

Yours for honest markets,

auspec

Gold -- Sharefin, 00:42:24 02/13/04 Fri

COMEX gold extends Greenspan rally to 15-day high

COMEX gold rose to a 15-day high Thursday, as precious metals continued to benefit from investors' perception that the Federal Reserve was in no rush to raise interest rates and saw little harm in a weak dollar.

Fed Chairman Alan Greenspan repeated to the Senate Banking Committee Thursday his prepared speech Wednesday to House members, which financial markets interpreted as a green light to resume the dollar disinvestment that lifted gold to a 15-year peak last month.

Gold -- Sharefin, 04:21:23 02/12/04 Thu

New U.S. Consumer Campaign Targets One of the World's Dirtiest Industries: Gold Mining

WASHINGTON, DC - Earthworks/ Mineral Policy Center and Oxfam America today announced the launch of "No Dirty Gold," a consumer campaign intended to shake up the gold industry and change the way gold is mined, bought and sold. The two organizations have targeted the U.S. gold jewelry market for the major consumer campaign, because gold mining is arguably the dirtiest industry operating in the U.S. and in many parts of the world.

"Right now, purchasers of gold jewelry and high-tech products have no alternative but to buy products that contain dirty gold," said Keith Slack, Senior Policy Advisor with Oxfam America. Adds Payal Sampat, International Campaign Director with Earthworks, "We're asking consumers to consider the real cost of gold and we're enlisting their help to put an end to mining practices that endanger people and ecosystems."

Gold mining is being targeted as an industry ripe for reform through consumer pressure because of the extensively documented human and environmental costs of gold mining. The production of a single 18 Karat gold ring weighing less than an ounce generates at least 20 tons of mine waste. Metals mining employs less than one-tenth of one percent of the global workforce but consumes 7 to 10 percent of the world's energy.

Additionally, Earthworks and Oxfam are releasing a report today, called "Dirty Metals: Mining, Communities and the Environment," which details the massive pollution and, in many cases, human rights abuses that have become hallmarks of gold and metals mining in countries such as Peru, Indonesia, Ghana and in parts of the United States. The report and a fact sheet on gold mining can be downloaded from www.nodirtygold.org.

Fiat -- Sharefin, 17:57:07 02/11/04 Wed

Gold firm as dollar falls, copper soars

Gold prices rose sharply Wednesday after Federal Reserve Chairman Alan Greenspan told Congress that the weak dollar could help reduce the huge U.S. current account deficit.

The subsequent fall in the dollar also helped boost prices of grains, which are more competitive with a weak dollar. Greenspan's optimism about economic growth also pushed copper and lumber, two basic industrial commodities, to sharp gains.
~~~
Traders said they interpreted Greenspan's remarks as an expression of tolerance for the dollar's decline, which was a strong catalyst for gold's rise to 15-year highs last month.

"You don't need to look too much further than the U.S. dollar and pretty much Alan Greenspan's testimony in front of the House," said Bernard Hunter, a director at bullion dealer ScotiaMocatta in Toronto.

Greenspan told the House Financial Services Committee, in a semiannual policy report to Congress, that "the prospects are good for sustained expansion of the U.S. economy."

But in discussing the dollar, Greenspan added: "The currency depreciation we have experienced of late should eventually help contain our current account deficit as foreign producers export less to the United States."

Currency traders took that as a green light to sell the dollar until U.S. interest rates start rising.

Gold -- Sharefin, 07:36:13 02/11/04 Wed

DSF 2004 gold sales cross $82 million

Enthusiastic DSF shoppers have helped Dubai's Gold and Jewellery Group generate sales worth Dh300 million ($81.67 million) so far, it was announced.

Gold -- Sharefin, 07:32:46 02/11/04 Wed

Japan's monetary alchemy may not yield gold

The most aggressive experiment in monetary policy ever conducted is now under way. Japan is printing yen in order to buy dollars in such extraordinary amounts that global interest rates are being held at much lower levels than would have prevailed otherwise. In essence, the Bank of Japan is carrying out the unorthodox monetary policy that the US Federal Reserve intimated it was considering in mid-2003. In other words, the BoJ is creating money and buying US Treasury bonds, which is helping to drive down US interest rates and underwrite US economic growth - and, by extension, global growth.

It is inconceivable that economic policymakers in Tokyo and Washington do not understand the impact that this unprecedented act of money creation is having on global interest rates and economic output. The amounts involved are staggering. Since the beginning of 2003, monetary authorities in Japan have created Y27,000bn with which they have acquired approximately $250bn - that amount is equivalent to more than 4 per cent of Japan's gross domestic product. It also represents $2,000 for every person in Japan. In fact, it would amount to $40 per person if divided among the entire population of the world. Most importantly, it is also enough to finance almost half of America's $520bn budget deficit this year.

The amount of new yen that Japan "printed" and converted into dollars during January 2004 alone was enough to finance 13 per cent of the US budget deficit. The investment of those dollars into dollar-denominated debt instruments clearly explains why the yield on the 10-year US Treasury bond fell last month in spite of the 10 per cent upward revision in the Bush administration's budget deficit projections.

By accident or by design, Japan is carrying out the most audacious endeavour to conjure wealth out of nothing since John Law sold shares in the Mississippi Company in 1720. So far, the results have been impressive. Japan's monetary alchemy has been the most important factor in allowing the US government to finance a $700bn deterioration in its budget over the past three years without pushing up US interest rates to levels that would pop the wealth-creating property bubble there.

~~~
These developments highlight a fundamental question that has been debated over centuries: can governments create money and make the population richer without setting in motion a chain of events that ultimately ends in monetary chaos? We may be about to find out as Japan tests the hypothesis on an unprecedented and global scale. If this experiment in unorthodox monetary policy succeeds, then we have arrived at a new international monetary paradigm. Governments will have discovered how to finance limitless deficits through the creation of paper money, and we all can look forward to an age of great prosperity. If it fails - as have all past attempts to create wealth from thin air - then the world may not be able to avoid a severe and protracted economic slump as the extraordinary imbalances in the global economy (caused by the explosion of fiat money in recent years) begin to unwind.

In mid-2003, economists at the US Federal Reserve published a paper explaining why the Fed was not "out of bullets" despite having cut short-term interest rates to 1 per cent. That paper stated that "the Fed could even implement what is essentially the classic textbook policy of dropping freshly printed money from a helicopter," if necessary, to stimulate the economy.

Today, that helicopter is in the air. But, strangely, it is not the Stars and Stripes that is painted on its side, but rather the Rising Sun. That much is clear. What still is not quite discernible, however, is who is actually in the pilot's seat.

Gold -- Sharefin, 07:12:57 02/11/04 Wed

Gold rises in Europe as dollar pushed down

"We expect the market to remain quiet ahead of Greenspan's congressional testimony on the
economy...however, the recent liquidation of some long positions and a weaker dollar may entice
further fund buying in the near future," Rothschild said in a bullion report.

Traders and analysts were looking for investment funds to switch back to gold after the recent
washout had reduced some of their long positions in the metal.

Kevin Crisp, precious metals analyst with Koch Metals Trading, said the market would remain
prone to volatile moves due to the large speculative flows of money.

"The dramatic moves...highlight just how much speculative money has come into commodities,"
he said.

"There is this cycling of froth from one market to the next. Then you have a blow-off in
the markets, but underlying it all there is still obviously a lot of money in there. It is maybe
money that is going to stay in (gold) longer than many anticipate."

Gold -- Sharefin, 07:11:51 02/11/04 Wed

AED300 Million in gold and jewellery sales supported by enthusiastic global jewellery lovers

The Gold and Jewellery Group are reportedly delighted with the response that the Win 47 Kilos of World Family Gold Coin promotion is receiving among the millions of global visitors to Dubai this Dubai Shopping Festival.

With a staggering AED300 million in gold and jewellery sales already confirmed, global shoppers are embracing not only jewellery products but also the recently launched World Family Commemorative Gold coin.

Pre-Eid sales were confirmed as AED195 million and, as a result of the group's intensive marketing activities during the Eid break, sales have been boosted by over 35 per cent to a figure of AED300 million in just seven days.

Gold -- Sharefin, 06:59:10 02/11/04 Wed

Legal doubts cloud UK gold fund

LONDON – In an acutely embarrassing set-back for the World Gold Council plan to promote investment in the precious metal, Gold Bullion Securities (LSE:GBS), which effectively enables gold to be bought and sold on the London Stock Exchange, will have to be re-launched.

Problems have arisen with the legal structure of the UK GBS, which is backed by the WGC. Traders in London say these have prevented many fund managers from buying the securities. And it is the funds that carry most of the market’s financial weight.

Gold -- Sharefin, 06:57:36 02/11/04 Wed

WGC pushes on with US Gold fund

Barclays Global Investors is the latest institution to jump on the gold bandwagon, stealing a march on the World Gold Council’s belaboured exchange traded gold fund for America that has yet to win approval from securities regulators.
Barclay’s “iShares COMEX Gold Trust” is a literal carbon copy of the WGC products that currently trade in Australia and the UK, with near-term launches in South Africa and Europe. Once approved, the gold iShares will trade on the American Stock Exchange under the symbol IAU.
~~~
Barclays addition of “Comex” to its gold brand is important to note. Hard core gold bugs would resent having Comex branded securities because the exchange has been so successfully maligned as an agent of conspirators and because it represents a “manipulative paper market.”

Clearly, Barclays is not aiming at gold bugs, but at a much broader audience that would take comfort from linkage to a well-known American body.

Fiat -- Sharefin, 06:49:14 02/11/04 Wed

Dollar slide ignores G7 warning

The dollar has sunk against other major currencies, squashing hopes that a meeting of leading industrial nations in Florida could stem its decline.
The meeting of finance ministers from the Group of Seven had condemned "excess volatility" in exchange rates.
~~~
Analysts, however, said there was little to suggest that the currency's long-term direction was about to reverse.

Downward trend
The dollar has sunk rapidly against the yen, the pound and the euro in recent months, in the face of apparent tacit US sanction of its decline.

A call in September's G7 communique for "more flexibility" in exchange rates also encouraged the movement.

The weight of massive US trade and government deficits has added to the downward pressure, along with the persistence of rock-bottom US interest rates.

The trend has worried policy-makers elsewhere, who fear their own fragile economic recoveries could be damaged if their exports are priced out of the lucrative US market.

Thus the weekend statement, which coupled the needs of Europe and Japan with a reiteration of the "flexibility" demand.

The latter, observers believe, was targeted at China, which the US blames for keeping its exchange rate artificially low and in turn hurting US exports.

A Chinese paper speculated the government in Beijing would revalue the yuan this year, but the government said the report was untrue.

Gold -- Sharefin, 06:45:52 02/11/04 Wed

Gold refinery hits mother lode

Higher prices, reliability concerns fuel demand at mint

Rushing to melt down everything from banged-up wedding bands to gold bars, the Royal Canadian Mint refinery is the busiest it's been in a decade, thanks to higher gold prices and customer concerns about reliability.

"There's increased demand, there are more requests coming in -- generally speaking, we're very busy," said David Madge, the executive director of bullion and refinery services at the Ottawa-based mint, adding that the mint's refining activity is the highest he's seen in his nine years with the organization.
~~~
The mint specializes in high-grade material -- 70-per-cent gold or higher -- and upgrades it to nearly 100-per-cent gold for coins or bars. A typical lot size for melting is between 700 and 1,200 ounces; customers bring in amounts ranging from 12,000 ounces a year to more than one million ounces a year.

Refining is a small part of the mint's operations, accounting for 2 per cent of revenue in 2002, compared with 60 per cent from gold and silver bullion.

Fiat vs Gold -- Sharefin, 06:31:55 02/11/04 Wed

Bill urges use of gold, silver as legal tender

Promoting the use of gold and silver by state government would trigger a flood of investment in New Hampshire, according to supporters who want a bill to proscribe their future uses.

Rep. Henry McElroy, R-Nashua, donned an Uncle Sam hat at a news conference Monday to urge lawmakers keep alive his bill that would make New Hampshire the first to endorse the use of gold and silver as legal tender for state government.

“This is nothing new to this country,” he said. “It’s what we were founded upon.”

Dr. Edwin Vieira is a constitutional lawyer from Virginia who helped McElroy, Rep. David Buhlman, R-Hudson, and others prepare the bill.

“Paper currency in this country has lost its purchasing power since World War II. Precious metals have retained their purchasing power. This will stimulate investment in New Hampshire if you take this important first step,’’ Vieira said.

But the House Commerce Committee found little support for the change due to the strain it would place on the state treasurer’s office and the private banking system, said Rep. Leo Fraser, R-Pittsfield.
~~~
Rep. Dan Itse, R-Fremont, said this has led to more inflation in the economy and a devaluing of the dollar here and abroad.

“Even today, we have low inflation now, but the common bank savings account interest rate is lower than the inflation rate. That is the definition of an unstable economy,’’ Itse said.

Federal Reserve Chairman Alan Greenspan has praised the stability of the U.S. economy when gold backed its currency.

Any federal conversion would require the government to purchase huge stockpiles of the precious metal, Greenspan said.

If the government estimated the price of gold it was to buy as too low, Greenspan has warned taxes would have to be raised to keep government operating.

Edward Lee of Merrimack, who owns his own gold and silver depository, insists state government costs under this bill to allow gold and silver as an optional choice would not be significant.

To cover costs, Lee said the state could mark up the price and charge a handling fee for those who would want to be paid in gold or silver.

“There would be a small investment to get things going and the state could be profitable in a period of months,’’ Lee said.

Fiat -- Sharefin, 06:28:55 02/11/04 Wed

Get your gold while it's still in the ground

Investors who believe, as I do, that gold is in the early stages of a bull market have to decide whether to buy bullion or invest in gold mining shares. I recommend the latter because of the leverage.

The first example of the leverage is that the total market capitalisation of all the gold mining stocks is less than 0.5pc of the stock market capitalisation of all stocks. Investors would only need to re-allocate a tiny proportion of their assets to bullion and gold mining stocks to rocket-propel their prices far beyond previous highs.

A gold mine that produces gold at $200 an ounce offers relatively low leverage. With gold at $400 an ounce, on a rise to $450, profits would increase by 25pc against 11pc for bullion. With a rising gold price it would be much more rewarding, albeit potentially riskier, to invest in more marginal mines.

One that produces gold with a break-even point of $350 an ounce would be making $50 an ounce with gold at $400. An 11pc rise in the gold price would double the mine's profits. Junior mines usually have further development work to do before they begin to produce gold. Therefore their gold resources will not be classified as reserves and are likely to be described as inferred resources.

When buying the shares of first- and second-tier producing gold mines in America and Canada, investors pay an average of approximately $135 per ounce for their gold reserves in the ground. With a non-producing junior company investors pay an average of $45 an ounce for their resources.
~~~
To obtain the maximum leverage it clearly makes sense to buy gold in the ground as cheaply as possible. The cost per ounce is determined by dividing the fully diluted market capital (less any obviously surplus cash) by the number of ounces of gold in reserve and resource estimates.

Fiat -- Sharefin, 06:23:46 02/11/04 Wed

An Investment Legend's Advice

Warning to bull market enthusiasts: It's going to be a bumpy ride.

That, at least, is the view of Sir John Templeton, the 91-year-old founder of the Templeton Funds who made a killing four years ago shorting technology stocks. Now the legendary investor is predicting it will take "several years" before a sustained rise in U.S. stocks because he believes they are way overvalued.
~~~
His big concern today: the U.S. consumer. He says Americans have taken on too much credit card and mortgage debt. Household borrowings hit a record $9 trillion last year, or 110% of personal disposable income. Meanwhile, personal bankruptcies rose to 1.6 million, another record. Templeton predicts home prices will fall and defaults rise.

"When I was young, in the three years after 1929, a high proportion of people lost their homes in foreclosure," he says. "It's likely to happen again. It's not abnormal. It's cyclical, and it will put pressure on all prices."

Fiat vs Gold -- Sharefin, 14:56:05 02/10/04 Tue

A Short Term Correction

JF: Long term, I think we are definitely still in a rising gold price environment. In the near term, we’re in the midst of a correction. It wouldn’t surprise me to see the correction go on for a bit longer. However, once it ends, I think gold starts trending higher and goes on to reach new highs before the end of the year.

TGR: How high? $450?

JF: We topped out on this cycle at $430, so $450 is not unreasonable. It depends a lot on what happens with the dollar. The market has been completely focused on the dollar/gold trade. If we see further collapse on the dollar, I don’t see any trouble getting above $450, even closer to $500.

TGR: What, if any, other factors do you think will affect gold pricing?

JF: I think ultimately other factors will come into play. The dollar is number one. It has the market’s attention right now. But I think as this gold market progresses, you’re going to see gold rise in all currencies, not just the U.S. dollar. There is a tremendous amount of imbalance in the global economy right now. This is evident if you look at things like trade deficits and manufacturing capacity. The weak labor markets, household debt, especially in the U.S. It’s going to be tough for the economy to keep going as it has without correcting some of these imbalances. In the meantime, these imbalances create financial risk, which in turn leads investors to gold. It’s a good environment for investing in gold.

TGR: Do you believe a lot of the equities are fully valued right now?

JF: I think they were fully valued going into December. Since then, they’ve been trending down faster than the gold price. So I think the valuations are really starting to look attractive right now. I think the question on everybody’s mind is, do the equities start to perform better, or does the gold price drop down to match the equities’ performance? That’s the normal chain of events for a correction – the equities lead bullion. So we will have to wait and see if the equities play catch-up. But right now, yes, they are oversold.

Fiat vs Gold -- Sharefin, 14:54:47 02/10/04 Tue

Gold Market Summary

Today’s roundup on gold will actually involve a review of currency trading for the day. That is a message in itself. As everyone in the Community knows, gold is honest money and is trading as a currency.

The game now is to discover when gold appreciates at a better rate than the strongest currency because at that point all currencies are depreciating in terms of gold.

It is coming soon, rest assured. The natural step is the transition of gold from a commodity to a currency and then the ascendancy of gold to the strongest currency.

Fiat -- Sharefin, 14:05:33 02/10/04 Tue

Duck, Duck, Goose:

Financing the War, Financing the World

Shortly after the US was forced off the gold standard, a young economist by the name of Michael Hudson received a grant to study the effect of the demonetarization of gold. His report was made not only to the US government, but also to Wall Street firms such as his former employers, the Chase Manhattan Bank and Arthur Andersen. The problem was that despite his phrasing the situation in the most critical terms, his report revealed that the US was on inadvertently on the verge of the greatest boondoggle of all times.
~~~
By going off the gold standard at precise moment that it did, the United States obliged the world's central banks to finance the U.S. balance-of-payments deficit by using their surplus dollars to buy U.S. Treasury bonds, whose volume quickly exceeded America's ability or intention to pay. All the dollars that end up in European, Asian, and Eastern central banks as result of American's excessive import-imbalance, have no place to go but the U.S. Treasury. Because of the restrictions placed on the central banks_ there is no place else for this money to go_these countries were forced to buy US treasuries or else accept the worthlessness of the dollars received through trade.
~~~
At what point does the cycle collapse and can it do so internally_or as you've suggested, does it only stop when Asia, Europe, and the East finally refuse to buy US treasuries?

MH: The US Treasury-bill standard finances the military, but doesn't need imperial war to succeed. So far it's being accepted voluntarily, as other countries have not yet figured out how to extricate themselves from a system that is bleeding them more and more.

To date they haven't tried very hard to create an alternative, but now the system could backfire, as Bush's aggressive diplomacy is prompting Europe, Russia and China to stand up for their own self-interest. And that's what they need to do. They didn't stand up for their self-interest when the World Bank and IMF were formed, but now they have to do so.

People are now beginning to raise the question of whether countries really need their central banks, which are essentially lobbyists for the Washington Consensus, as are the World Bank and the IMF. They follow the Chicago School in lobbying for high rates and a large cushion of unemployed so as to maximize financial power relative to labor and the products it produces. Financial exploitation now exceeds the old-fashioned exploitation of labor by actually employing it, albeit for low wages.

Central banks are staffed by Chicago School monetarists, and are allowed to take only a 3% deficit whereas in the US it is limitless. Europe and Asia should abandon the false start with their central banks and should rely on their Treasuries, which are Keynesian or could be Keynesian. The national Treasuries should set up a credit system with bonds and IOUs based on euros and other currencies.

SS: Okay, but isn't it most likely that the whole thing ends in a crisis, one more devastating to the US than the "Asian Flu"? What would this crisis look like?

MH: There will be a crisis when Europe, Asia and Latin America finally break away. The U.S. has said it can't pay back its dollar debts and doesn't intend to. As an alternative, it has proposed "funding the US dollar overhang" into the world monetary system. Other countries would get IMF credit equal to their dollar holdings, but these holdings no longer would be US Treasury obligations. The US would wipe its debt to foreign central banks off the hook. This would mean that it would have got all the balance-of-payments deficits for the past 32 years for free, with no quid pro quo.

The US has been proposing this for 30 years whenever Europe raises the issue of payment for its dollar holdings. American diplomats have said that they won't allow central banks to use their dollars to buy US corporations, for instance. When OPEC countries proposed this after 1973, the US Treasury reportedly informed them that this would be considered an act of war. As for Europe, it never has pushed its own self-interest in the World Bank or the IMF.

Periodic Ponzi Update PPU -- $hifty, 23:27:15 02/08/04 Sun

Ponzi Chart

Periodic Ponzi Update PPU

Nasdaq 2,064.01 + Dow 10,593.03 = 12,657.04 divide by 2 = 6,328.52 Ponzi

up 51.41 from last week.

Thanks for the link RossL !

Go GATA !

Go GOLD !

$hifty

Gold -- Sharefin, 20:53:17 02/08/04 Sun

Newmont again rises to reserve challenge

Newmont [NEM] once again trumped its sceptics by replacing gold reserves net of depletions and disposals. The world’s number one gold company by production and market value grew reserves by more than 4 million ounces to 91.3 million ounces to extend group mine life to just over ten years

Fiat -- Sharefin, 20:50:16 02/08/04 Sun

Currency 'Volatility' Worries G-7 Officials

Top economic policymakers from the world's seven major industrial powers indicated Saturday that they are concerned about the dollar's recent sharp fall against the euro, issuing a statement denouncing "excess volatility and disorderly movements in exchange rates."
~~~

Quick Quotes

Look Up Tables | Portfolio | Index

Currency 'Volatility' Worries G-7 Officials
Finance Chiefs Give Europeans, Concerned About Dollar's Fall, What They Want
By Paul Blustein
Washington Post Staff Writer
Sunday, February 8, 2004; Page A18

BOCA RATON, Fla., Feb. 7 -- Top economic policymakers from the world's seven major industrial powers indicated Saturday that they are concerned about the dollar's recent sharp fall against the euro, issuing a statement denouncing "excess volatility and disorderly movements in exchange rates."

The statement, released after a meeting of finance ministers and central bankers from the Group of Seven nations, marked a shift in G-7 policy and a victory for European officials. The Europeans have complained vociferously in recent weeks that the strength of the euro, which is trading at a near-record against the dollar, is threatening their economies by driving up the price of European exports.

"We got exactly what we wanted," Italian Finance Minister Giulio Tremonti said in an interview with Bloomberg News, echoing comments by his French and German counterparts. "We're very satisfied."

At the same time, the G-7 statement included wording that was clearly aimed at prodding Asian export powerhouses, particularly China, to end policies that keep their currencies relatively low against the dollar. "More flexibility in exchange rates is desirable for major countries or economic areas that lack such flexibility," the statement said.
~~~
G-7 statements are minutely parsed by currency traders and can influence currency values, because governments sometimes back up their words with substantial purchases and sales of currencies by their central banks.

But no such actions were promised in Saturday's statement, beyond the group's usual admonition that the member governments would "cooperate as appropriate."

As a result, analysts voiced skepticism that the G-7 could stop the dollar from falling further in months ahead, in light of the giant U.S. trade deficit.

Fiat -- Sharefin, 20:34:17 02/08/04 Sun

The next big trend: Foreclosure

The number of foreclosures has jumped in some places. For buyers it's both an opportunity and a risk
~~~
As we pointed out in our July 2003 article "Foreclosure: Hit or myth?" there are several stages of foreclosure. The first, pre-closure, is the stage at which the owners have defaulted on their mortgage payments but haven't actually gone through foreclosure proceedings. Experts say it's difficult to find desirable properties at this stage.

Next, the property goes up for public auction, but this phase is too risky for most buyers because there is little time for inspections, and owners sometimes have the right to buy back the property within a certain period of time.

The third stage, post-foreclosure, is the most accessible to individual buyers and the least risky. At this point, the property is either owned by a bank or by a government agency such as the U.S. Department of Housing and Urban Development (HUD).

Gold -- Sharefin, 20:32:15 02/08/04 Sun

Barclay's to launch gold ETF

San Francisco-based indexing giant Barclays Global Investors filed with the SEC Friday to launch a new exchange traded fund for gold investors, to be called iShares COMEX Gold Trust.

Pending regulatory approval, the ETF will be listed and traded on the American Stock Exchange under the symbol IAU, according to the filing.

"The objective of the trust is for the value of the iShares to reflect, at any given time, the price of gold owned by the trust at that time, less the trust's expenses and liabilities, " the company said in its filing.

COMEX is the exchange market on gold futures contracts operated by Commodity Exchange, Inc., a subsidiary of New York Mercantile Exchange, Inc.

Equity Gold Trust has already filed to launch a new U.S. gold-bullion based ETF that, if approved, will trade under the ticker symbol GLD on the New York Stock Exchange, with the World Gold Council as sponsor and the Bank of New York as trustee.

According to the filing, a share would represent one tenth of an ounce of physical gold.

Fiat -- Sharefin, 20:30:17 02/08/04 Sun

Let the dollar drop

Some think the dollar has fallen too far. On the contrary, it has not fallen by enough

THE dollar is the world's dominant currency. Should the world therefore be worried by its recent plunge against other currencies? Plenty of people seem to think so. When central bank governors and finance ministers of the G7 economies meet this weekend in Boca Raton, Florida, the fate of the dollar will be high on their agenda. Since 2001 the dollar has fallen by 33% against the euro and by 15% against the Japanese yen. Currency traders around the globe will scrutinise every word from Boca Raton, looking for a signal that governments might act together to stem the dollar's decline. Many businessmen will be holding their breath as well.

Fiat -- Sharefin, 20:22:32 02/08/04 Sun

MINEWEB.COM GLOBAL GOLD & SILVER WATCHLIST

The watchlist currently comprises public companies with a US dollar market capitalisation (fully diluted) exceeding $95 million (+/-5%). In addition, mining and exploration companies must have proven and probable reserves. Non-mining companies can qualify with audited bullion holdings (e.g. gold funds).

Fiat -- Sharefin, 20:20:43 02/08/04 Sun

Can A Change In Wording Save The Dollar?

Last week, the “considerable period” language was dropped by the Fed in their FOMC policy statement. Although the latest statement reflects the Fed’s belief that growth and inflation risks are nearly equally balanced, and even though the Fed explicitly stated they had time to be patient about removing accommodative monetary policy, the shift to more neutral language was a surprise to most primary dealer economists, who interpreted this change in language as an indication the Fed knew something about incipient inflationary pressures reappearing that the rest of us didn’t. Bonds sold off as a consequence. Ironically, this sell-off came despite the first decent bounce in the dollar index for months.

We interpret the change in language differently. Last week, we spoke of a growing weak dollar constituency, but emphasised that no central bank had an interest in being party to a dollar collapse. We still maintain that in the absence of a complete meltdown in the capital markets, the Federal Reserve is probably not keen to see a big appreciation of the dollar. On the contrary, it is happy to perpetuate the gentle declining trend. Of course, the danger of any trend, once it becomes firmly established, is to intensify, accelerate, overshoot, and ultimately spin out of control.

Fiat -- Sharefin, 20:19:03 02/08/04 Sun

Fed Fires First Shot Across the Market's Bow

Yesterday, the Federal Reserve Board's Federal Open Market Committee removed its "considerable period of time" stance for keeping interest rates at 46-year lows. Instead, it indicated that it could remain "patient" before making a change to its artificially-low interest rate policy.

So, what does this mean for you? First, you need to understand that interest rates have no where to go but up, especially with the inflationary pressures of bloated budget deficits that could total as much as $1 trillion by the end of fiscal 2004.

Gold -- Sharefin, 20:18:01 02/08/04 Sun

The Risks You Run When You Own Gold, and the Danger You Face If You Don't

Fiat -- Sharefin, 20:14:17 02/08/04 Sun

Cooking the Books: U.S. Banks are Giant Casinos

While media financial reporters keep the current focus of the public eye on Martha Stewart, the insolvency of U.S. banks due to their derivative holdings is being swept under the carpet.

Because banks have not been making a profit from traditional lending, derivatives became a fantastic way for them to net huge gains by trying to guess (gamble on) future prices of commodities or stocks. They were able to take these gambling risks because the Fed is supposed to back them from losses that would make them insolvent (more liabilities than assets). The worst part is that derivative transactions stay off the books and away from the prying eyes of investors and analysts.
~~~
U.S. stock markets are being manipulated to show overall value gains and "profits" is to keep U.S. banks "paper solvent". In reality, the public is being conned into thinking that U.S. banks are still solvent because they show "gains" in their stock "paper" value. If the U.S. markets were not manipulated, U.S. banks would collapse overnight along with the entire U.S. economy.

U.S. banks are merging with each other to hide their derivative losses with "paper asset" bookeeping that incorrectly shows they are solvent with enough "assets" to overcome their losses. In reality, this is smoke and mirror accounting, a scam worth $Trillions.

Fiat -- Sharefin, 23:47:35 02/07/04 Sat

THE JOB "LOSS" RECOVERY

AS DEMOCRATIC presidential candidates tell audiences daily, the U.S. economy since George W. Bush took office has had the greatest job losses since the Great Depression. Americans are growing increasingly anxious that as the economy roars back, workers aren't being called back. In the third-quarter of 2003, U.S. GDP grew at a blistering 8.2 per cent, but the employment numbers didn't budge.

Economists had been virtually unanimous that the government's employment report for December would show a big job gain. The average predicted by these economists was 150,000, but some optimists expected as many as 250,000 new jobs. The actual reported score: 1,000 new jobs in a workforce of 147 million. (Canada produced 53,000 jobs in the same month with an economy roughlyone-eleventh the size.) This near-zero gain in what is probably the single most important economic statistic came despite Bush's tax cuts, a federal deficit that is running at an annual rate of about US$500 billion, and Alan Greenspan's desperation strategy of lending out Federal Reserve money at a mere one per cent.

-------------
As has been recognised in the past the US Gov't is prone to fudging the economic numbers it releases to create rosy scenarios.

Why then did they choose to release such damning numbers prior to this G7 meeting?
In the past they've been seen to massaging the very same datasets much higher only to revise them lower in later months. They could have done the same to these numbers & adjusted them later if they so wished & it would not have been out of character.

Also Gov't numbers never send the PMs soaring like they did on Friday when these numbers were released.

It appears that they are playing a game here with intent to manipulate perceptions. Specifically prior to the G7 meeting.
It appears on the surface that they wish the US Dollar to fall further & harder & are prepared to manipulate perceptions so as to enact this fall.

It appears that so far what we've seen has been currency adjustments with the real currency war about to begin.

Gold -- Sharefin, 00:53:18 02/07/04 Sat

Wealth: Those in the Know Have Nowhere to Go

SO WHERE DOES GOLD COME IN
My conclusion is that physical gold stands a very good chance of having its purchasing power remain either intact or amplified after an adjustment.

I am not viewing physical gold as an investment and I am not measuring it to the dollar. It does not matter if an adjustment never comes, the metal will survive my time on this earth and will provide value to someone else.

I am holding gold because I want to have something left over should my Real Estate, stocks, bonds, foreign currency, commodities, all blow up in a dislocation. As I have hoped to explain, Many people in the mainstream investment community, not just the bear market community, see an economic dislocation on the horizon.

After an economic dislocation, Gold will provide purchasing power to buy assets that are properly valued or even undervalued.

Oil -- Sharefin, 00:43:14 02/07/04 Sat

A New American Century? Not!

Despite the apparent swift U.S. military success in Iraq, the U.S. dollar has yet to benefit as safe haven currency. This is an unexpected development, as many currency traders had expected the dollar to strengthen on the news of a U.S. win. Capital is flowing out of the dollar, largely into the Euro. Many are beginning to ask whether the objective situation of the U.S. economy is far worse than the stock market would suggest. The future of the dollar is far from a minor issue of interest only to banks or currency traders. It stands at the heart of Pax Americana, or as it is called, The American Century, the system of arrangements on which America's role in the world rests.
~~~
The point to stress, however, is that the neo-conservatives enjoy such influence since September 11 because a majority in the U.S. power establishment finds their views useful to advance a new aggressive U.S. role in the world.

Rather than work out areas of agreement with European partners, Washington increasingly sees Euroland as the major strategic threat to American hegemony, especially 'Old Europe' of Germany and France. Just as Britain in decline after 1870 resorted to increasingly desperate imperial wars in South Africa and elsewhere, so the United States is using its military might to try to advance what it no longer can by economic means. Here the dollar is the Achilles heel.

With creation of the Euro over the past five years, an entirely new element has been added to the global system, one which defines what we can call a third phase of the American Century. This phase, in which the latest Iraq war plays a major role, threatens to bring a new, malignant or imperial phase to replace the earlier phases of American hegemony. The neo-conservatives are open about their imperial agenda, while more traditional U.S. policy voices try to deny it. The economic reality faced by the dollar at the start of the new Century, defines this new phase in an ominous way.
~~~
A hidden war between the dollar and the new Euro currency for global hegemony is at the heart of this new phase.
~~~
The crucial shift took place when Nixon took the dollar off a fixed gold reserve to float against other currencies. This removed the restraints on printing new dollars. The limit was only how many dollars the rest of the world would take.

By their firm agreement with Saudi Arabia, as the largest OPEC oil producer, Washington guaranteed that the world's largest commodity, oil, the essential for every nation's economy, the basis of all transport and much of the industrial economy, could only be purchased in world markets in dollars. The deal had been fixed in June 1974 by Secretary of State Henry Kissinger, establishing the U.S.-Saudi Arabian Joint Commission on Economic Cooperation. The U.S. Treasury and the New York Federal Reserve would 'allow' the Saudi central bank, SAMA, to buy U.S. Treasury bonds with Saudi petrodollars. In 1975 OPEC officially agreed to sell its oil only for dollars. A secret U.S. military agreement to arm Saudi Arabia was the quid pro quo.

Until November 2000, no OPEC country dared violate the dollar price rule. So long as the dollar was the strongest currency, there was little reason to as well. But November was when French and other Euroland members finally convinced Saddam Hussein to defy the United States by selling Iraq's oil-for-food not in dollars, 'the enemy currency' as Iraq named it, but only in euros. The euros were on deposit in a special UN account of the leading French bank, BNP Paribas. Radio Liberty of the U.S. State Department ran a short wire on the news and the story was quickly hushed.[2]

This little-noted Iraq move to defy the dollar in favor of the euro, in itself, was insignificant. Yet, if it were to spread, especially at a point the dollar was already weakening, it could create a panic selloff of dollars by foreign central banks and OPEC oil producers. In the months before the latest Iraq war, hints in this direction were heard from Russia, Iran, Indonesia and even Venezuela. An Iranian OPEC official, Javad Yarjani, delivered a detailed analysis of how OPEC at some future point might sell its oil to the EU for euros not dollars. He spoke in April, 2002 in Oviedo Spain at the invitation of the EU. All indications are that the Iraq war was seized on as the easiest way to deliver a deadly pre-emptive warning to OPEC and others, not to flirt with abandoning the Petro-dollar system in favor of one based on the euro.

Informed banking circles in the City of London and elsewhere in Europe privately confirm the significance of that little-noted Iraq move from petro-dollar to petro-euro. 'The Iraq move was a declaration of war against the dollar', one senior London banker told me recently. 'As soon as it was clear that Britain and the U.S. had taken Iraq, a great sigh of relief was heard in London City banks. They said privately, “now we don't have to worry about that damn euro threat”'.

Why would something so small be such a strategic threat to London and New York, or to the United States that an American President would apparently risk fifty years of alliance relations globally, and more to make a military attack whose justification could not even be proved to the world?

The answer is the unique role of the petro-dollar to underpin American economic hegemony.
~~~
It is becoming increasingly clear to many that the war in Iraq is about preserving a bankrupt American Century model of global dominance. It is also clear that Iraq is not the end. What is not yet clear and must be openly debated around the world, is how to replace the failed Petro-dollar order with a just new system for global economic prosperity and security.

Now, as Iraq threatens to explode in internal chaos, it is important to rethink the entire postwar monetary order anew. The present French-German-Russian alliance to create a counterweight to the United States requires not merely a French-led version of the Petro-dollar system, some Petro-euro system, that continues the bankrupt American Century, only with a French accent, and euros replacing dollars. That would only continue to destroy living standards across the world, adding to human waste and soaring unemployment in industrial as well as developing nations. We must entirely rethink what began briefly with some economists during the 1998 Asia crisis, the basis of a new monetary system which supports human development, and does not destroy it.

Oil -- Sharefin, 09:52:31 02/06/04 Fri

IN YOUR FACE

“The Cheney report is very guarded about the amount of foreign oil that will be required. The only clue provided by the [public] report is a chart of net US oil consumption and production over time. According to this illustration, domestic oil field production will decline from about 8.5 million barrels per day (mbd) in 2002 to 7.0 mbd in 2020, while consumption will jump from 19.5 mbd to 25.5 mbd. That suggests imports or other sources of petroleum… will have to rise from 11 mbd to 18.5 mbd. Most of the recommendations of the NEP [National Energy Policy, May 2001] are aimed at procuring this 7.5 mbd increment, equivalent to the total oil consumed by China and India .

-- Professor Michael Klare
“Bush-Cheney Energy Strategy: Procuring the Rest of the World's Oil”
Foreign Policy in Focus, January 2004

The White House Stonewall goes on, as the Bush administration continues to deny the non-partisan General Accounting Office's request for information on who the White House Energy Task Force met with while formulating national energy policy. For the first time in history, the GAO has sued the executive branch for access to the records. It has been 42 days since the GAO filed their suit against the Bush administration and 333 days since the White House first received the G A O request. Why is the White House going to such lengths? What are they trying to hide?

Truthout, www.truthout.org
“White House Stonewall”
April 5, 2002

~~~
Nature laughs as pundits spin and concerned peoples around the world frantically and frenetically expend futile, disorganized energies against the juggernaut of tyranny and madness: elect a Democrat (any Democrat); impeach Bush; write a check to support an activist group; place an ad; stage a protest march; vote; don't vote; file a suit; file another suit; demand that the major media tell the truth, as long as it's the truth you want to hear; blame political ideology; blame a religion; blame a race; blame Capitalism; blame Communism; fight each other to release your frustrations and fears. That will make it better. Do anything but accept the obvious reality that for the US government to have facilitated and orchestrated the attacks of 9/11, something really, really bad must be going on.

There are so many inconsistencies, proven lies, conflicts of interest, and contradictions in the Bush administration's accounts of 9/11 that the sheer multitude of them – in a rational world – would have brought the government to a halt long ago. But this is not a rational world.

It is full of people – on both sides – who are not behaving rationally.

Fiat -- Sharefin, 06:28:36 02/06/04 Fri

History’s Greatest Heist:

The economic-distribution effects that accompany reliance on law and economics theory lead me to pose a key ethical question: how much financial value should anyone be allowed to strip out of a company in which the public invests to fund retirement security? And in which fiscal resources are invested for that purpose? The abuse of fiscal subsidies multiplies the financial carnage because their intended use for private purposes (i.e., broad-based retirement security) forces the public to forego investing those resources elsewhere – in education, health care, research, foreign assistance, national security, environmental restoration, and so on.

These misappropriated funds must be recovered and this massive fraud undone. Those who’ve long embraced the law and economics model can be expected to cast recovery as a dreaded “redistribution of wealth.” Yet by choosing to rely on an economic theory that’s long been notorious for making the rich richer, pension trustees chose to divert resources from retirees and taxpayers to those least in need of the security these funds are meant to provide. Recovery is required to reverse this (still ongoing) redistribution of wealth from retirees to the well-to-do. Equity mandates a reallocation of funds that were intended for pensioners all along. What’s been offered in the guise of reform is too little, too late.

Absent reform of the underlying investment theory, pension trustees will continue with business-as-usual. Beguiled, seduced and misled by law and economics theorists, retirees will continue to see their prospects for security ravaged in a way that’s certain to further widen today’s fast-widening economic divide, all the while preempting vast fiscal resources meant to address the insecurity that’s long been known to accompany such divides.

As yet, no lawmaker dares concede the full extent of the looting, even though the largest asset collapse since Herbert Hoover has shattered retirees’ already-weak prospects, worsening an emerging fiscal nightmare just as 76 million baby-boomers near retirement. The greatest danger lies in the fiction that a few bad apples are the problem. Or that a few fines are all that’s required to cure an investment model certain to plunder pensions in precisely the same way. Reform will be meaningful only when those responsible for this plunder are prosecuted, the pilfered funds recovered, and the law and economics model reformed. Anything less only confirms lawmakers’ complicity in history’s greatest heist, even as the perpetrators remain at large and the pace of the plunder quickens.

Gold -- Sharefin, 22:33:37 02/05/04 Thu

Russia reduces gold exports 21.5% in 2003

MOSCOW. Feb 4 (Interfax) - Russia reduced gold exports 21.5% from 191 tonnes in 2002 to 150 tonnes in 2003, Valery Braiko, head of the Gold Producers' Union, said at the Gold 2004 conference in Moscow.

Explaining the drop, Braiko said there was a rush to export gold in 2002 because the 5% export duty on the metal had just been lifted. In addition, Russia hardly increased gold production last year: mine output rose just 0.8% to 159.915 tonnes.

Silver exports, though, soared from 514 tonnes in 2002 to 800 tonnes in 2003.

Russia raised gold production 3.5% to 176.903 tonnes in 2003, the Union has said. Mine production edged up 0.8% or 1.2698 tonnes to 159.915 tonnes and incidental or by-product gold output grew 4% or 387 kg to 10.153 tonnes. But recoveries from scrap or secondary production soared, by 168.5% or 4.289 tonnes to 6.935 tonnes.

Just for fun -- Sharefin, 22:30:30 02/05/04 Thu

Introducing the amazing new Penta-Lawn 2000!

The Looniest Of All 9/11 Conspiracy Theories

Fiat -- Sharefin, 22:25:16 02/05/04 Thu

Bank raises interest rates to 4%

UK interest rates have been increased to 4% from 3.75% following the latest Bank of England meeting.
The move had been widely expected after recent economic data had shown the economy growing strongly.

The housing market is showing few signs of cooling, consumer spending in the High Street has remained strong and manufacturing has begun to recover.

Experts believe further interest rate rises will be needed later in the year to keep the economy from overheating.

The move will mean higher mortgage payments for homeowners.

Gold -- Sharefin, 22:12:10 02/05/04 Thu

Canada's gold reserves have been
reduced to a pile of loose change.
After more than two decades of what the Finance Department
describes as ``gradual and controlled'' selling, the last of the
country's 20.9 million ounces of gold bullion left the Bank of
Canada in December.
That leaves the central bank with 100,000 ounces of gold
coins in reserves in Ottawa. And the Canadian government, which
wants to complete a plan to clean the gold out of its vaults, is
unsure what to do with them.
``It's a different market than bullion,'' Finance Department
spokeswoman Andree Houde said in an interview. ``What we decide
to do can affect the value of the coins held by gold
collectors.''
Canada has been selling off its gold reserves for almost 25
years, replacing them with assets that generate income, such as
international bonds. The 21 million ounces of gold it had at the
outset would be worth about $8.4 billion at current prices.
The federal government has made $13 billion selling its gold
and investing the proceeds, Houde said. Getting rid of the coin
stash would make Canada the first member of the Group of Seven
industrialized nations to eliminate its gold reserves. The G-7's
other members -- the U.S., Japan, Germany, the U.K., France and
Italy -- still hold bullion.

Gold Standard

Until 1971, when Former President Richard Nixon ended the
``gold standard,'' the value of the U.S. dollar was backed by the
U.S. government's gold reserves. Countries such as New Zealand,
Israel and Oman have since cleaned out their vaults of gold,
according to the World Gold Council.
Canada dropped its gold standard in 1931 and began selling
its reserves in 1980.
``The policy is still on,'' Houde said. ``The difference is
that additional factors have to be considered.''
Houde declined to discuss the face value of the coins, their
condition, or give any description, saying such information was
commercially sensitive.
That makes it impossible to assess the value of the cache,
and the effect the release of 100,000 ounces would have on coin
prices, coin dealers contacted by Bloomberg News said.

Gold -- Sharefin, 22:10:59 02/05/04 Thu

Gold output hits record 200 tons in 2003

BEIJING, Feb. 6 (Xinhuanet) -- China's gold output reached a record 200.598 tons in 2003, according to the China Gold Association.

In 1945, China's gold output was 4.5 tons, and reached 100 tonsin 1995, sources at the association said.

Since the early 1990s, the Chinese gold industry has experienced a huge change. China canceled the policy of controlling the buying and selling prices of gold in April 2001, and opened its first gold exchange center in Shanghai in 2002.

Gold -- Sharefin, 22:06:14 02/05/04 Thu

Russian gold and currency reserves skyrocket

On January 30, the Russian Central Bank's gold and currency reserves amounted to $84.1bn, stepping up $1.4bn over a week. The reserves have been rising for a fourth week in a row. Since January 2, they increased by $7bn, and the bulk of the sum was accumulated over the past two weeks. These figures testify to the fact that since January 16 the Central Bank has purchased dollars in large volumes, sending the reserves to their record high in the history of Russia and the Soviet Union, according to Central Bank Chairman Sergey Ignatyev.

Gold -- Sharefin, 22:01:23 02/05/04 Thu

Germany considers using its gold reserves on R&D

BERLIN - Chancellor Gerhard Schroeder has suggested that gold reserves at the Bundesbank, Germany's central bank, could be used to finance research and development projects, in an interview published on Thursday.
~~~
The issue of using gold reserves to finance government projects is a recurring theme in Germany, but the Bundesbank has said in the past that its reserves should not be used to finance the federal budget.

The Bundesbank is the second biggest holder of gold reserves in the world, after the US Federal Reserve, with about 3,400 tonnes.

Gold -- Sharefin, 06:45:54 02/05/04 Thu

Lassonde sees gold strong for years

Newmont president and gold bull with money to show for it, Pierre Lassonde, remains upbeat about gold prices for at least the next two and half to three years, mostly due to currency pressures.
~~~
“Total debt – private, corporate and household – is close to 295% of GDP and it seems to me that the Fed has painted itself into a corner. There is not a whole lot of room to move interest rates,” he says, adding that there won’t be much risk of upsetting the president’s chances ahead of the November general election.

He also reiterated the gold-positive impact of the growing budget deficit with government spending racing far ahead of revenues and likely to balloon even more as the Bush administration attempts to buy votes by ladling out entitlements.

Lassonde warns: “Who’s going to pay for it all? We’re currently paying for it through the current account deficit which is at 5 per cent of GDP. . . and it’s being paid for by the Asians. We spend, they save. In doing so we’re digging ourselves a hole to China – but that won’t last forever either.”

Consequently, he remains convinced that gold will continue to appreciate this year. And so far, very few people have timed gold as well as Lassonde and his business partner, Seymour Schulich.

Fiat vs Gold -- Sharefin, 22:53:20 02/04/04 Wed

Newmont profit more than doubles on gold strength

Newmont cited increased reserves for its gold production forecast of 7 million to 7.5 million ounces per year through 2006, with production increasing after that.

The company said its equity gold reserves at the end of 2003 stood at 91.3 million ounces.
~~~
Newmont's hedge book at the end of the year was 2.35 million committed ounces sold forward through 2011 and 528,000 ounces of uncommitted ounces in put option contracts.

The company also said the mark-to-market value of its Australian gold hedge books was negative $11.8 million at the end of 2003. Mark-to-market refers to recognizing the market value of a hedge instrument at a particular time.

Fiat vs Gold -- Sharefin, 22:50:21 02/04/04 Wed

Can A Change In Wording Save The Dollar?

The change in language of the Fed should be understood in this context: it at least creates some doubt in the minds of speculators that the dollar is a one way bet, thereby helping to avert a dollar collapse. This also provides some support to beleaguered Asian central bankers apparently fighting a losing battle against accelerating dollar weakness, notably the Bank of Japan. Perhaps one should see Japan’s Minister of Finance Sadakazu Tanigaki’s comments, “Japan needs to carefully consider diversifying its official reserves to include more holdings of gold”, as a veiled hint that its seemingly endless support of the dollar will not go on forever. The Bank of Japan announced last week that it spent 7.2 trillion yen in the month of January, at the behest of the Ministry of Finance, to forestall further appreciation pressures on the yen.

That the Bank of Japan has intervened on such a scale suggests that the dollar’s fundamental weakness is far greater than has been hitherto implied by the relatively gentle decline in the dollar index. But for the BOJ’s unprecedented support, and (equally important) the renminbi peg (whose absence might also create a freefall in the dollar), the greenback might have already taken on status comparable to the Argentinean peso. Putting the odd bit of grit on the icy slope of dollar devaluation serves to prevent this fiasco from occurring, but it does not fundamentally change the underlying picture.

Fiat vs Gold -- Sharefin, 18:01:24 02/04/04 Wed

Japan just can't switch to gold - yet

WHETHER a studied statement, an off-the cuff comment or a veiled threat, Japanese Finance Minister Sadakazu Tanigaki's suggestion last week that Japan could diversify part of its huge foreign exchange reserves into gold has had international reverberations.

It has brought home once more the fact that the vast dollar reserves which Japan and the rest of Asia hold are a Sword of Damocles for the dollar and the US Treasury market. The impact of such a move on the dollar would be severe. And as Japan has a third of total US Treasury securities held outside the US, the impact on the bond market would also be severe.

Mr Tanigaki's statement (in answer to a question in Parliament) that he felt it necessary to take a view on the future composition of Japan's foreign exchange reserves (the bulk of which are in dollars), and that this might include a review of gold holdings, comes at a time when other Asian nations have been expressing concern about their vulnerability to the dollar. It also occurs when Asian central banks (the People's Bank of China for one, an informed source told BT) are expressing strong interest in gold.
~~~
There was an occasion in 1996 when former Japanese prime minister Ryutaro Hashimoto pondered out loud during a visit to New York about what might happen if Japan were to reduce its (even then) large holdings of US dollar securities. Washington appeared to get the message and the severe upward pressure that the yen had been subjected to eased off. Mr Tanigaki, according to some schools of thought, may have been issuing a similar veiled threat ahead of this week's G7 finance ministers' meeting in Florida.

Alternatively, the minister may have been floating a trial balloon to see what impact it would have on the gold, foreign exchange and US Treasury bond markets. As it happened, very little, even though as UBS commented, Mr Tanigaki's remarks may be the biggest story in the official gold sector for many years. The dollar paid more attention to hints by the US Federal Reserve that it could raise interest rates sooner rather than later. The Treasury bond market also seemed too preoccupied with domestic events to notice the remarks.

The fact is, however, that at some time the threat of Asian governments running down their colossal dollar holdings (which constitute the bulk of the US$1.9 trillion of official foreign exchange reserves held in Asia) is going to crystallise. It could happen if Japan's economy is moving, as some economists suggest, beyond total export dependence towards a broader-based domestic recovery. Or it could happen if rising US interest rates stall growth and demand for imports. But happen it surely will and reshaping the dangerous structure of mutual dependence between East Asia and the US should be top of the agenda for the G7.

Fiat -- Sharefin, 17:59:51 02/04/04 Wed

Pimco's Gross: Watch out below

The huge jump in debt is really troubling the country's most watched bond investor.

Hearing Pimco's Bill Gross preach doom and gloom for the U.S. economy doesn't raise eyebrows anymore. Perhaps only Morgan Stanley economist Steve Roach seems more of a worrywart.

But in his latest note Gross takes an unexpected twist on who may be to blame for America's eventual financial downfall: Pimco itself.

The common trope on the U.S. economy is that over the past two decades it has gone from manufacturing-based to services-based. Gross thinks, however, that the economy has undergone a second transformation and that it is now finance-based -- both profits and employment are now chiefly a function of how much debt is getting generated and what that debt costs.
~~~
It's a situation, Gross worries, that cannot persist. Debt levels cannot go up forever. Eventually fixed income investors -- maybe Pimco, maybe Asian central banks, maybe leveraged hedge-fund players -- are going to remember that what they are doing at root is lending money, and that the ultimate point of lending is to get back the cash you've handed over, plus interest.

When that happens, thinks Gross, there's going to be a recession unlike any we've seen since at least the early 1980s, back when United States had a manufacturing-based economy.
~~~
There's a message there for Alan Greenspan, too. The surge in debt and debt spending couldn't have happened if the Fed hadn't been busy trimming short-term rates to the point where they are now below the rate of inflation. Eventually the Fed will have to hike, and when it does, writes Gross, the economy will slow and may even falter.

Engineering a rate rise that doesn't buffet the economy badly will be a tricky business, but, following Gross' thinking, continuing to put off raising rates could be even more dangerous because it facilitates the piling up of debt to unsustainable levels.

Gold -- Sharefin, 08:35:55 02/03/04 Tue

Sir John Templeton's Outlook On Business & The Stock Market

KANGAS: Gold stock stocks have been surging. Does this indicate trouble down the line? And wouldn`t they make good investments or do you think that that bull market is over for gold?

TEMPLETON: No one ever knows when the market is over. But the great boom in gold is more than half over. Let`s put it more broadly, Paul. All currencies, not only the American dollar but all currencies always go down, mainly because of democracy. The voters will vote for a person who is going to spend too much. And so you have to expect all currencies to go down. And just recently, America has started to spend too much and the currency has already gone down a lot. But other nations now realize that and they don`t want to lose out to America. So they make their money go down, too.

Gold -- Sharefin, 08:32:01 02/03/04 Tue

Ivanhoe tumbles 25% on 'optimistic estimates'

Shares in Ivanhoe Mines Ltd., the latest vehicle of controversial mining promoter Robert Friedland, slumped 25% after the company released results of a key study looking at development prospects for its Turquoise Hill property in Mongolia.

Ivanhoe, whose shares advanced 215% last year, mostly over excitement over the Mongolia project, said yesterday the scoping study bares out its belief that the deposit has the potential to become one of the world's largest copper-gold mines.

Gold -- Sharefin, 08:30:38 02/03/04 Tue

Investors cut Lihir adrift

Continuing operational and financial disappointments and an outlook pointing to further underperformance looks to have finally taken the wind out of the sails of Lihir Gold’s gold price-induced bull run.
Shares in the Aussie-listed Papua New Guinean gold miner [ASX:LHG] have had a big correction from an all-time (end-of-trading) record peak of A$1.79 last October and from A$1.59 less than a month ago to their closing price today (Tuesday) of A$1.20, equating to plunges of 33 and 24.5 percent respectively against a buoyant gold price background.

This seems to suggest investors have had enough of riding the stock as a gold price-leveraged instrument. Moreover, some analysts have almost thrown away the key as far as Lihir is concerned. “We struggle to find an appealing investment theme for the company that would justify owning the stock,” argued Credit Suisse First Boston analyst, Michael Slifirski, adding “corporate appeal is negligible”.

According to the Melbourne-based analyst, it was only the improved gold price that had propped up Lihir’s share price in recent months despite the company’s poor returns, technical and country risk, high costs and low free cash generation. But lately punters have become fed up with its string of production and earnings letdowns and flat outlook. Consequently, “the equity’s correlation with the gold price has broken”, Slifirski said, with market support evaporating.

Gold -- Sharefin, 08:26:43 02/03/04 Tue

Lower gold price predicted in second half of 2004

Gold will continue look to the dollar for direction, but a forecast turnaround in the US currency in mid-2004 could push gold prices lower as investors flee the market, Societe Generale said yesterday.

In its quarterly commodity review, the bank said the 70% rise in gold prices since their low of February 2001 was linked predominantly to dollar depreciation.

"The market has ignored internals and has chosen instead to focus solely on external factors," Socgen's report said.

"Yet this has increasingly come down to just one, the decline of the USD, as geopolitical concerns have eased and the economy and stock markets have rallied".

Socgen's view was for the dollar to turn decisively around the middle of this year, thus putting gold prices under pressure.

It said the only other element with potential to move prices greatly was the upcoming central bank gold sales agreement (CBGA). The five-year pact, due to expire in September, placed a ceiling on gold sales of 400 t/y.

The bank expected a new CBGA to be signed with a higher ceiling of at least 2 500 t over five years and with greater flexibility over annual amounts.

Socgen forecast a marginal recovery in gold jewellery fabrication in 2004 to 2 525 tonnes, after a cumulative decline of 23% in the three years to 2003.

It said that despite all the talk about vibrant investment demand, at the physical level, official sales of gold coins were flat and bar hoarding outside Europe and North America collapsed by 35-40% in 2003.

Global production of gold was forecast to decline by up to 1,5% in 2004 to 2 575 t. Producer dehedging would continue, but at a lesser pace than the past couple of years.

Fiat -- Sharefin, 08:23:15 02/03/04 Tue

WILL "BUY AMERICA" BECOME THE WORLD'S NEW MANTRA?

Since 2001, the steep decline in the U.S. dollar compared with the currencies of our major trading partners is now hurting them. Their dollar holdings have been steadily losing value against their own monetary units. This places foreign dollar owners in a dilemma! Should they continue to maintain or increase their dollar positions while they sustain further exchange losses, or should they use at least some dollars to acquire other assets that might maintain their value? What are their best options, and what are they likely to do?

First, they can use their U.S. dollar hoards to acquire their own currencies. However, if they take this direction they will further weaken the dollar against their own monetary units. This in turn will damage them as it will generate additional losses to the dollars that they continue to hold. Further, it will cause their monetary units to continue to appreciate. This will make their products more expensive in dollar terms and may price their goods and services out of the market and injure their already weakened economies.

Second, they can acquire gold or other strong currencies such as the Euro. This is certainly already occurring and is an important reason for both the Euro’s and gold’s strength and their secular Bull Markets. Finally, they can begin to purchase dollar denominated assets.

The latter option is not a new one. If you will recall, during the latter half of the1980's, a wave of foreign purchases occurred of American real estate and businesses as well as irreplaceable works of art and other items that ultimately found their homes across one of the great oceans. This “buying of America” was led by the Japanese, and at times a certain amount of U.S. outrage occurred as asset after asset was being gobbled up by our foreign trading partners. During this era, landmarks such as Rockefeller Center, Pebble Beach as well as Universal Pictures were acquired by the Japanese. Further, large U.S. factory complexes were purchased by foreign entities that allowed them to assemble and manufacture items such as automobiles for sale to the American market.

I believe that the dollar’s secular Bear Market is destined to foster a similar period of foreign demand for U.S. enterprises, projects, properties and possibly national treasures. As the U.S. monetary unit’s decline extends it will force an increasing number of U.S. dollar holders to reevaluate the desirability of holding a steadily depreciating currency. It is likely that as this decade unfolds a trickle of foreign purchasers of U.S. assets will swell into a mad rush. This, as foreigners strive to exchange their steadily depreciating dollars for both tangibles such as gold, silver, various commodities, as well as dollar denominated items that possess intrinsic or eternal value. In the end, the U.S. may find various foreign entities owning some or many of our most valuable and treasured assets.

Fiat vs Gold -- Sharefin, 08:12:35 02/03/04 Tue

The Greater Depression

The language used by the Federal Reserve Open Market Committee in its press release of January 28th contained a semantic change from previous minutes. Instead of saying that they will keep interest rates low for “a considerable period” the FOMC instead decided it would just “be patient” about raising interest rates. The market, on the other hand, has no patience. The dollar immediately strengthened against the euro and, as a result, the US dollar gold price declined.

In spite of yesterday’s action the dollar is still very weak, and will continue to decline for many more years. The more it declines, the more volatile it is likely to become. In turn that will cause an equal amount of volatility in the dollar-gold price.
~~~
Consumers now have no purchasing power left: they spent all their money and all the money they could borrow. Corporations will have no choice but to engage in price wars and in the short term that will lead either to lower prices (deflationary depression) or stagnant prices. There is a probability that fiat inflation of the money supply could ward off deflation. We will most likely see a prolonged period of economic stagnation if it does.

Lastly, the massive influx of foreign capital and the debt driven economic expansion lead to a considerable investment in infrastructure. Manufacturing capacity currently exceeds production by 33%, a historically low level of capacity utilization and this is what causes depressions.

It is unlikely that we will see capacity utilization increase until consumer balance sheets are fixed, and that could take a long time. As Doug Casey often said, when the history books are written the coming contraction could well become known as the “Greater Depression”.

I find it hard to imagine that the US dollar is going to reverse its downward trend while US consumers pay off their debt, file more bankruptcies and see more of their friends collect unemployment insurance. And a declining dollar means higher gold prices in US dollars.

Gold -- Sharefin, 08:07:17 02/03/04 Tue

Panel of Experts All Agree on Strong Future for Precious Metals

Doug Casey said that, “gold isn’t just going to go through the roof…..it’s going to the moon.” Doug is a guy who has made a lot of money in the market over the past thirty years and I take what he says seriously. He feels that a great way to take advantage of, what he predicts is becoming a “significant bull market in gold”, is to invest in gold mining stocks. In a recent article that Doug wrote he said, “The public will be chasing these things the way they ran after Internet stocks.”

For the wary, Doug said, “How do I know? Because I’ve been in this market for 30 years, and I’ve seen it happen five times in the past.”

He points to the peak years of 1973, 1980, 1983, 1987 and 1996. “This one will be the biggest of them all, because not only will gold be running, but the public – trained by the 1983 – 2000 bull market – all have brokerage accounts, and will be looking for the next hot sector.” (The three and a half thousand or so attendees at the Gold Show all agree with Doug that the next “hot sector” could very well be precious metals.)

Gold -- Sharefin, 07:59:46 02/03/04 Tue

Staying Bullish: A Talk with Adrian Day, of Adrian Day's Global Analyst

The correction in gold is certainly not unexpected. Looking at prices over the last year, it has moved way off the trend line. And with the dollar correcting a bit, it’s not surprising that gold has started to pull back.

I think the correction probably has a little further to go, and I’m not at all concerned. In my opinion, we’re in a long-term bull market, and one or two years could take us to $550 or $600 per ounce. As a long-term fundamentalist, I’m much less concerned about what might be happening this week or next week. In this market, you want to be looking for opportunities to invest, and not worrying about short-term corrections. Gold has had a reasonably good correction – approximately $20, or less than 5% from the top – well, that’s really not too bad.
~~~
The gold market now generally has two types of investors – the traditional “gold bugs” who have either returned or stepped up their buying, and very short-term oriented hedge funds. Recently, sophisticated money has been coming in from some of the big pension or generalist funds, but that’s still moderate and very selective. What’s missing in the gold market is the investing public in the middle – including professionals and individuals.

Although gold has been virtually the top-performing asset class for three years running, it isn’t attracting new investors. Part of that might be a timing issue, since when gold was doing well in 2002 the broad market was down so much that there was a reluctance to jump from a collapsing sector into gold, which might also collapse. But now that the broad market is coming back, the sentiment seems to be that investors may buy gold when their other stocks get back to breakeven. I take this as a good sign – because if everybody jumped in right now – gold would go even higher.

Fiat -- Sharefin, 07:52:05 02/03/04 Tue

The Currency War

The U.S. is running a “silent currency war” against the rest of the world by not only trying to devalue the dollar until the economy begins to grow on a sustained basis, but until employment starts to grow as well. As long as the U.S. is dedicated to 5% budget and trade deficits and 1% short-term interest rates, the fall of the dollar is guaranteed.

Our government’s policies are extraordinarily self-indulgent and profligate. The Treasury and Federal Reserve want to punish savers by continuing to reward financial speculation, credit creation and spending. Indeed, there is no better way to punish savers than to offer a 1% interest rate and a 20% annual drop in the value of the dollar. Moreover, be assured the Federal Reserve will not raise interest rates and will continue the limitless flow of credit until there is enough growth in employment to ensure both the Fed Chairman’s re-appointment, and the President’s re-election. Stabilizing the dollar will be our trading partners’ problem.
~~~
Under the Clinton Presidency, the genius of Larry Summers was to sell gold to make the dollar look strong. This policy worked. The reverse will also work. Responsible central banks that want to help the United States establish responsible budget, trade and interest rate policies, should “buy gold not dollars” to make their currencies “look weak”. Moreover, there are any number of things that foreign central banks and governments can buy with new local currency that will help hold their currencies down, give the country something of value, and stop enabling the Federal Reserve to run a monetary policy fit for a drunken sailor. Countries should “manage their currencies down against the dollar” by buying gold and silver, oil and more oil, tin, copper, zinc, etc. Countries with sounder monetary and economic policies, such as England, Australia, and Europe, are major oil importers. Now would be a wonderful time to fight back against the U.S. currency war by printing up some money to fund a strategic oil reserve. Countries such as South Africa, Canada, and Australia, should buy gold, silver and other commodities they produce to manage their currencies down. This policy is in their clear national interest because it will build up central bank reserves that will hold their value and give their miners jobs!

Most countries do not have as their clear national policy to “steal American jobs”. Therefore, their monetary policy should be one that builds real financial reserves and gives their citizens something of value for their money. Only Japan and China have to play America’s dirty currency war and hold the value of their currencies down by buying dollar assets. Holding dollar assets will cost their taxpayers a king’s ransom because they are the ones who are ending up with the factories and jobs. All that Americans will be left with are massive debts and an almost worthless dollar for a currency.

Indeed, the only way foreign central banks can really help America is to treat the United States the way friends treat their friends who drink by not letting them drive drunk. The motto for central bankers should be “Central Banks Don’t Accommodate Financial Suicide”.

The problem for the world’s central banks is that irresponsible U.S. budget, trade and monetary policies threaten the entire monetary system. It will be very interesting to see what foreign central banks do. World inflation remains highly likely.

Gold -- Sharefin, 07:45:51 02/03/04 Tue

AngloGold says to unwind Ashanti hedges over a year

South Africa's AngloGold Ltd said on Thursday it would likely take around a year to sell off excess bullion hedging it will inherit when it takes over Ghana's Ashanti Goldfields in coming months.

The bullion market has been supported in recent years as mining companies buy back gold to trim their hedging -- the selling of gold forward at pre-set prices to lock in revenues.

Many analysts, however, expect less trimming of hedging this year.

AngloGold , the world's second biggest gold producer, said last year when it bid for Ashanti it would reduce the combined hedge book to fall in line with AngloGold 's policy of hedging a maximum of 30 percent of the next five years of output.

"We will be moving and looking to restructure the Ashanti exposures as promptly as we can and as promptly as the market will accommodate," Marketing Director Kelvin Williams said.

Later, an AngloGold spokesman told Reuters the company expected to take around a year to unwind the hedges.

The combined hedge exposure was around 13-14 million ounces of gold, but this constantly changes as fluctuations in the gold price and exchange rates affect the value of hedge derivatives.

Gold -- Sharefin, 07:43:20 02/03/04 Tue

Gold price hurts physical demand

While gold finished strongly in the final quarter of 2003, the metal’s rising price had affected physical demand, Anglogold executive director of marketing Kevin Williams pointed out on Friday.

Gold averaged $363/oz during the year, $53 (17%) above the average in 2002, with the price again mirroring the moves in the currency market, particularly the US dollar exchange rate against the euro, which fell steadily during the fourth quarter.

However, Williams said, this led to a decrease in gold offtake for jewellery of 7% year-on-year during the second half of 2003 alone, while falling by some 11% compared with 2002.

“We are looking at a 25% drop in gold demand for jewellery over the last four years. This is cause for concern for most gold producers,” he stated.

Lower levels of producer dehedging added to the reduced demand, while only a substantial increase in implied net investment demand helped to balance the physical market.

Gold -- Sharefin, 07:33:06 02/03/04 Tue

Opaque Gold Bullion slammed

Operation of the World Gold Council backed Gold Bullion Securities (LSE:GBS), which allow investors “effectively to buy and sell gold on the London Stock Exchange for the very first time”, is being criticised by some bullion market professionals. They are complaining about a lack of transparency and suggest the scheme is not providing clear indications of the underlying investment demand for gold that they hoped it would.

Gold -- Sharefin, 07:30:31 02/03/04 Tue

London gold stock is world's best in 2003

There is no substitute for raw returns if you’re an investor, but very few people caught London listed Caledon Resources [CDL] which topped our global list in 2003 with a US dollar gain of 2,549 per cent.

Gold -- Sharefin, 07:28:54 02/03/04 Tue

Gold yields precious returns

Gold funds have soared an average 45 percent the past 12 months, leaving investors wondering: Is there a way to invest in gold funds without leaving your account strip-mined?

The answer is a cautious yes — but only if you pair your gold fund with another type of fund.

As a group, gold funds are even more volatile than technology funds, regularly registering huge gains and losses in rapid succession.
~~~
The funds are volatile because they invest in gold-mining stocks, rather than the yellow metal itself. And gold-mining stocks magnify gold’s moves. That’s because small moves in the price of gold have a huge effect on a mining stock’s earnings.
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Gold stocks fluctuate not only on the gold price, but analysts’ anticipation of the price six to 18 months in the future.

Because gold is considered a safe harbor in catastrophic times, the threat of war can send gold stocks soaring. Outbreaks of brotherhood can send gold plummeting.

In short, gold funds take the usual fluctuations of the gold market and put them on steroids.

Gold -- Sharefin, 06:59:52 02/03/04 Tue

Gold sold by Norway was long gone; Australia admits gold is for rigging markets

"Useful light is shed on the week's events by one of Bill
Murphy's readers at LeMetropoleCafe, Mihaly.

"He points out that the annual report of Norway's central
bank reveals that 94 percent of the 33.6 tonnes of gold the
bank had at the end of 2002 had already been lent out --
that is, sold. So the Norwegian gold sales just announced
did not add fresh supply to the market. Given the
insignificance of the amount of gold involved here, this was
effectively manufactured news. The bank's annual report can
be accessed on the bank's Internet site here:

"http://www.norges-bank.no/english/publications/annual_report/

"The information is in Note 3 on Page 71.

"Of course the noted gold bear greatly enjoyed yesterday,
which he accurately points out was reproduced across a
range of commodities. He is concerned to suggest that the
pattern of the Bundesbank's comments on gold indicate
malign intent. In view of the Norwegian information this is
certainly plausible.

"Nevertheless, it is clear that keeping gold down here is
going to require large fresh supplies of physical gold."

Mihaly has another goodie for us:

"The 2003 report of the Reserve Bank of Australia ....

http://www.rba.gov.au/PublicationsAndResearch/AnnualReports/

... shows on Page 85 that Australia has loaned out all
1,465 tonnes of its gold. That's not really a surprise but
something else is, on Page 31 under 'Reserves Management':

"'Foreign currency reserves assets and gold are held
primarily to support intervention in the foreign exchange
market. In investing these assets, priority is therefore
given to liquidity and security, in order to ensure that the
assets are always available for their intended policy
purposes.'"

What these two informative tidbits mean:

First the Norwegian news.

Norway's gold has already been sold. Gone.

The Norwegian central bank's press release was
disingenuous, suggesting that the bank had just dumped
central bank gold and there was more to come.

The announcement was made to correspond with the
trashing of the gold price a few days later. Nothing is
that coincidental when it comes to the gold market. The
announcement reveals the depths to which Western central
banks will go to coordinate their statements and activity to
trample the gold price. "Conspiracy" is much too small a