Forum: Edelmetalen » Goud en zilver Rockin & Rollin

[verwijderd] 5 augustus 2005 08:53

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Gold prices extend rally, end near $444
Prices at 5-week high; indexes mixed after four-day rise

SAN FRANCISCO (MarketWatch) -- Gold futures closed near $444 an ounce Thursday, extending a rally that's now claimed six out of the last seven sessions as traders kept a close watch on moves in the U.S. dollar and the possible strike of mineworker unions in South Africa.

The rally in gold "reflects a happy confluence of gold-positive and dollar-negative news," said Brien Lundin, editor of Gold Newsletter, including "looming labor strikes in South Africa, increased physical demand in China and an apparent exhaustion of central bank gold sales."

The potential strike over wage increases is a "concerted action by South Africa's three major mineworkers unions, and would be the country's biggest in 18 years," he said.

Its "impact has the potential to be devastating," Lundin said, and the "prospect of 28,000 ounces of daily gold production suddenly going offline has provided a noticeable boost to bullion prices this week."

Gold for December delivery's intraday high of $445 an ounce on the New York Mercantile Exchange before closing at $443.70 -- its loftiest level since June 29 -- up $1 for the session. Prices traded under $430 a week ago.

But to keep the bull market in gold alive from a technical standpoint, it's "crucial" that gold trade into the high-$440s before the end of the month, said Lundin. "I think the global trends now in motion make it likely that the metal will do that, and more," he said.

Meanwhile, the dollar was mixed against the world's major currencies Thursday, with Friday's U.S. jobs report taking precedence for traders after interest-rate policy moves in Europe played out as expected. The greenback hit two-month lows against the euro and three-week lows against the pound on Wednesday. See Currencies.

Back on Nymex, other metals futures closed broadly lower in New York.

Silver for September delivery declined by 5.5 cents to end at $7.252 an ounce. September palladium fell by $3 to close at $193.50 an ounce and October platinum ended at $910.60 an ounce, down $7.50, after climbing over $11 in the previous session.

September copper lost 1.7 cents, or 1%, to close at $1.6545 a pound.

Tracking inventories, copper supplies were down 201 short tons at 10,288 short tons as of late Wednesday, according to Nymex. Silver stocks were unchanged at 110.1 million, while gold inventories stood at 5.71 million troy ounces, down 5,942 from the previous session.

Indexes mixed

In equities, shares of metals-mining companies traded on a mixed note, prompting a split in the indexes that track the sector, which have been on the rise over the last three sessions.

The sector trackers found support from the climb in gold futures, but weakness in the other metals futures and the broader stock market capped the gains.

After Wednesday's remarkable rise, "some profit-taking in mining stocks is understandable and to be expected," said Lundin. Key metals indexes climbed as much as 5% Wednesday.

On Thursday, a 1.8% decline in Meridian Gold shares (MDG: news, chart, profile) , to close at $19.39, helped lead the Philadelphia Gold/Silver Index (XAU: news, chart, profile) down by 0.2% to a close of 95.77.

The Amex Gold Bugs Index (HUI: news, chart, profile) suffered a bigger decline, down 0.6% to close at 209.01 with shares of Hecla Mining (HL: news, chart, profile) down 7.9%, or 35 cents, to close at $4.07.

"In the light of today's more-sober market atmosphere, Hecla was downgraded by some analysts, leading to a loss of nearly 8% of its market capitalization," said Lundin. "This was a major drag on the performance of the Gold Bugs Index."

Hecla Mining reported on Wednesday a second-quarter loss of $6.4 million, or 5 cents a share, vs. a profit of $2.6 million, or 2 cents a share in the same period a year ago, as a strike at the company's Mexico operations and decreased gold production and increased costs at a Venezuela unit hurt results.

The only metals indexes that managed a climb was the CBOE Gold Index (GOX: news, chart, profile) , which closed up 0.1% at 86.28 amid a 0.9% rise in shares of Placer Dome (PDG: news, chart, profile) to $14.86.

Earlier, all three metals indexes traded at their highest since at least late March.

Myra P. Saefong is a reporter for MarketWatch in San Francisco.

www.marketwatch.com/news/yhoo/story.a...

[verwijderd] 5 augustus 2005 09:15

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Welcome back, gold bull? By Peter Brimelow CBSMarketWatch.com
Thursday, August 4, 2005
www.marketwatch.com/news/story.asp?
column=Peter+Brimelow&siteid=mktw&dist=
NEW YORK -- Is gold on the move again? Some letters think so.

Gold-mining stocks leaped to life Wednesday, after several weeks of
unusually sluggish action in comparison to the gold price. The Amex
Gold Bugs Index roared 5.4% higher, adding 10.83 points to 210.32,
while gold for December delivery closed up $5, a five-week high.

This wasn't just any 10.83 points. Last week, Martin Pring, recently
bearish on gold, observed gloomily in his Weekly Market Update:

"The gold share index often provides a leading indication of which
direction prices may move. ... If this series breaks ... we would
expect to see the gold price violate the support. On the other hand,
a rally above the nine-month down trendline would probably signal a
test of the $443-$445 area for gold. The two levels to monitor then
are 204 and 194.5, both basis daily close."

So as the index smashed through to Wednesday's upside breakout, even
LeMetropole Café's perpetually irascible Bill Murphy allowed
himself a smile: "How about them gold shares? They went bonkers."

Of particular note, the Gold Bugs Index "blew through all sorts of
resistance," which Murphy said was technically bullish in three
ways: soaring above "the congestion area" at the 200 level, closing
above key resistance at 205, and taking out a "significant downtrend
line" formed at last November's highs. Not only that, gold
moved "decisively" past this downtrend line.

As for the Philadelphia Gold/Silver Index, James Turk laid down a
threshold in his latest Freemarket Gold & Money Report:

"Once the XAU breaks above its 200-day moving average (currently at
94.64), the XAU will head toward the top of its trading range around
112, before eventually climbing higher still."

This, of course was also achieved on Wednesday.

Other of gold's friends got a jolt from Wednesday's move as well.
Brien Lundin's Gold Newsletter put out an alert entitled, "Welcome
Back, Mr. Bull."

"A sharp spike in bullion and the equities caps an impressive early-
week run, ushering in our much-anticipated late-summer rally," he said.

But more common is the caution expressed by Richard Russell:

"Gold has formed what I call an imperfect symmetrical triangle. ...
An upside breakout would mean gold moving above 440. ... Let's see
what happens. I still don't get the feeling that gold is even close
to the ultimate huge rise that I foresee."

In the more esoteric corners of the gold world, muttering is to be heard about the huge volumes of futures trading needed to engineer an objectively modest recovery in the gold price. Someone's still selling.

An oddity of the current situation is that two of gold's firmest
newsletter supporters are newcomers to the field. For the first time
in many years, Joe Granville's latest faxes have continued to
advocate gold shares.

And over at The Gartman Letter, self-proclaimed gold-bug despiser
Dennis Gartman held on to five of his six gold "units" (actually
long gold/short euros). The upshot: More than half his model
portfolio's comprised of gold plays.

As Gartman put it Wednesday morning: "The trend clearly is toward
higher gold prices in EUR terms. ... New highs lie just ahead."

Gold bugs must hope he can carry his rumored powerful hedge-fund
friends with him.

[verwijderd] 9 augustus 2005 09:07

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Fool's Gold by Sean Corrigan

In his memoirs, in his despair at what he saw as his inability to get the fragile sapling of economic reason to take a firm root, Mises himself was once moved to ask:

"Is the attempt to guide the people on the right road not hopeless, especially when we recognize that men like John Maynard Keynes, Bertrand Russell, Harold Laski and Albert Einstein could not comprehend economic problems?"

Indeed, we have to agree.

In fact, it would provide fertile ground for a doctoral thesis in that Just-So-Story ‘discipline’ of evolutionary psychology to speculate on whether there is something hard-wired into our atavistic, hunter-gatherer brains which does this.

Did all those years – supposedly spent on the sun-baked Savannah – mean we have been stubbornly tuned to the instant gratification of the kill and to the visible apportionment of its spoils among the familiar and ever-present members of our band?

If so, is this what makes it such a struggle to attain a full grasp of the phenomena associated with divided labour, indirect exchange, and ‘roundabout’ methods of production?

We’re sorely tempted to answer in the affirmative, for the idea of Keynes’ own frontal lobes consisting of little more than an economic "barbarous relic" is an irony almost too delicious to resist!

Thus, the job of eradicating economic errors often seems, as Mises’ lament implies, a Sisyphean task.

Picture the poor Austrian, doomed to the eternal task of heaving his rock of enlightenment up the hill of ignorance – only to have it slide from his sweaty grasp, to the diabolical glee of the Inflationist ghoul inevitably supervising his torment.

For example, there is presently a series of polemics rattling around the websites normally frequented by Armageddonist gold bugs and millenary financial doomsters, all emanating from the pen of Antal Fekete – professor emeritus (in Mathematics and Statistics) of the Memorial University of Newfoundland – and his acolytes.

In this, they have been dressing up that ugly sister of the 19th century Banking School – the Real Bills Doctrine (RBD) – in a racy new ball gown, while simultaneously disparaging us Austrian Cinderella’s as "enemies of freedom" for our stubborn adherence to the 100% gold standard in the face of their more sophisticated alternative.

One may acquire a hint of the sheer perversity of the clique’s argument when one knows that among the many enormities Prof. Fekete propounds is one in which he contends that the rate of interest is to be treated separately from the rate of discount, the first being "governed by the propensity to save" and the latter by the purportedly distinct "propensity to consume"!

But, leaving such evident contortions aside, RBD is subject to any number of pernicious flaws, not least that it rests on a ‘reverse engineering’ of one of the ideas – and an extension of yet another – framed by that egregious Scottish gambler, John Law, in his Money and Trade Considered; the first being that:

"…trade depends on money: a greater quantity employs more people than a lesser… nor can more people be set to work without more money to circulate so as to pay the wages of a greater number…"

– and the second on the widely held belief that, so long as money is rooted in ‘the needs of trade’, its increase can occasion no possible harm, thus:

"…the (note-issuing) commission giving out what sums are demanded and taking back what sums are offered to be returned, this paper money will keep its value and there will always be as much money as there is occasion or employment for, and no more…"

Here, Law – like many subsequent inflationists and real bills advocates – has overlooked one crucial flaw; that, absent the physical limitations of the scarcity of a hard specie standard to provide a restraint, this system tangles itself in not so much a Gordian, as a Gödelian knot.

The nature of this hangman’s bootstrap is that, as any California real estate speculator or Nasdaq day-trader will tell you, the ‘needs of trade’ are hardly independent of the quantity of credit available to finance them.

It seems to escape the RBD cultists that the sum one ‘needs’ to borrow in order to buy an asset – with which the loan will be collateralized – is self-referentially dependent upon the quantity of similar credits both already extended and currently competing for similar purposes, thanks to these credits’ crucial role in determining the asset’s prevailing market price.

As Henry Thornton – that giant of the Currency School – succinctly put it, two hundred years since:

"[Law] forgot that there might be no bounds to the demand for paper; that the increasing quantity would contribute to the rise of commodities and the rise of commodities require – and seem to justify – a still further increase"

Thornton’s near contemporary, Joplin, was equally quick to spot the error:

"Bankers, indeed, have the idea that their issues are always called forth by the natural wants of the country, and that it is high prices that cause a demand for their notes, and not their issues which create high prices, and vice versa. The principle is absurd, but it is the natural inference to be deduced from their local experience. They find themselves contracted in their issues, by laws which they do not understand, and are consequently led to attribute the artificial movements of the currency to the hidden operations of nature, which they term the wants of the country"

But, even were we to overlook these fundamental objections and to allow the Feketians their head, they nowhere explain to us how we are to determine the ‘reality’ of a given bill in today’s complex economy.

How are we to gauge the value of, say, the provision of legal services in a patent dispute, rather than that of a VLCC cruising the high seas? Or how might the act of contracting the WPP Group for an advertising campaign differ from laying claim to the very tangible cargo of iron ore nestling in the hold of a 1,000-ft carrier plying the waterways of the Great Lakes?

One might even maliciously wonder whether a margin loan on the NYSE is not at least a cousin to a ‘real’ bill, since it helps finance the purchase of a direct claim upon the net productive assets – the stock – of a private corporation. And what about a repurchase agreement used to finance a holding of that same corporate’s debt and hence to maintain a prior lien on a share of its income stream?

There is also a deafening silence on how the good Prof. Fekete might propose to prohibit the issue of finance ("pig on pork"), or accommodation bills (glorified promissory notes) – and lest the reader thinks we are here arguing about the niceties of some Victorian anachronism, he should be aware that the traditional bill’s latter day equivalents in this area, asset-backed securities, are a quintessential feature of the modern credit landscape, comprising a $1.8 trillion market in the US alone.

In failing to address these points, Prof. Fekete not only overlooks the sporadic bill-"kiting" crises which dogged Industrial Britain throughout what he supposes to be an untarnished golden age, he also fails to recognise that it would be only too trivial to disguise such bastard children as the ‘real’ thing in today's Andersen-Enron-Money Center Bank, financially-engineered, smoke-and-mirrors economy.

However, erratum longum, vita brevis, so, rather than picking o

[verwijderd] 10 augustus 2005 09:54

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Dale Doelling Says "If You Aren’t Long Gold Now Then You Should Be"
By Jon Nones

St. LOUIS (ResourceInvestor.com) -- Dale Doelling, Chief Market Technician of Trends In Commodities, offers insight into the China equation by examining the country’s economic boom and the short- and long-term ramifications it will have on the U.S. dollar and the price of gold. Mr. Doelling is a 20+ year veteran trader of the financial markets, father of the commodity advisory service Trends In Commodities and recent founder of LTD Investment Corporation.

JON NONES: After China revaluated its currency and delinked it from the U.S. dollar, we watched the price of gold surge. Is this just the beginning?

DALE DOELLING: The United States economy and our standard of living have been artificially elevated by foreign countries that have continued to buy our government debt. This has allowed us to continue to live way beyond our means. Five years from now we’ll probably look back at this event (China’s decision to peg its currency to a basket of currencies instead of solely to the U.S. dollar) as the beginning of the end for the U.S. economy and the beginning of the end for our current standard of living. We are about to enter an economic environment that few, if any, are prepared for and the end result will probably make the long-term deflation that Japan has experienced look like a walk in the park.

JON NONES: How will the revaluation affect gold in the short term?

DALE DOELLING: China new foreign exchange policy is going to become the starting point for the greatest advance in the price of gold and silver in history. I have been advocating LONG positions in gold and silver since the December gold contract was trading near the recent lows around $424-428. My analysis of the currency and metals markets points to an eventual dollar crisis and metals prices at all-time highs. I have no idea how long it will take but I believe that it will happen within the next 24 months.

JON NONES: What about the long-term effects?

DALE DOELLING: I try not to dwell on the long-term effect that this scenario will have on our economy, but I believe that the eventual fallout will resemble the personal and economic strife that we experienced in the Great Depression. The combined forces from the crash in the dollar, the debt, both public and private, that we’ll eventually have to deal with, and the resulting crash in real estate and equity prices will push us into a prolonged deflationary cycle and it will probably take a decade for us to recover from this economic catastrophe.

JON NONES: What will happen if China continues to revalue its currency?

DALE DOELLING: I believe that, like the bombing of Pearl Harbor changed the United States’ position on WWII, China’s change in policy regarding their currency is the event that will change the U.S. economy and our relationship with China forever.

JON NONES: How soon do you think the next revaluation will be?

DALE DOELLING: It doesn’t really matter because the psychological damage, which will take some time to actually become evident, has been done. This first step is what is going to change the tone of the currency markets in general and has already had a negative affect on the U.S. dollar.

JON NONES: Are there other aspects of China’s market affecting the gold price?

DALE DOELLING: The Chinese are just beginning to get their first taste of capitalism, and they will eventually become addicted to it. Look at the IPO of Baidu this past week. That should certainly tell us something.

JON NONES: What will China’s surging economy do to gold in the long run?

DALE DOELLING: I have never professed to be an economist but I do believe that China is going to become, if it isn’t already, a major economic force to be reckoned with. When the U.S. economy begins to spiral downward, China will become “the straw that stirs the drink.” My recommendation is that we all start learning Mandarin now.

JON NONES: What effect will China’s insatiable demand for oil and other commodities have?

DALE DOELLING: There’s no doubt that the escalation in China’s economy is going to continue to support commodity prices in general and I remain bullish on commodities across the board for the long term.

JON NONES: What will higher oil prices to gold?

DALE DOELLING: As a trend follower, the last thing a trader should do is try to pick a top in a market. I’ll be the first to admit that I have been very surprised at the resilience in energy prices over the last year. Like copper and gold, the energy complex remains entrenched in a strong uptrend and there’s nothing to suggest that these trends are going to end any time soon.

JON NONES: What about increases in interest rates?

DALE DOELLING: The Fed is between the proverbial “rock and a hard place.” They are in a position that I don’t envy whatsoever. The Fed’s stance on higher rates simply confirms my belief that the end will be really ugly.

JON NONES: Where do you see gold at the end of the year and beyond?

DALE DOELLING: Trend followers avoid making predictions on where prices are going because nobody knows for sure. If they think they do then they are delusional. But, if you put a gun to my head, I’d tell you that gold will be north of $500 and, quite possibly, $600 by the end of the year. Eventually, I won’t be surprised to see gold trading at $1,000 and beyond.

JON NONES: Is now a good time to buy?

DALE DOELLING: If you aren’t long gold now then you should be. The question is, do you wait for a pullback since we’re at fairly overbought levels or do you just take a position now? That depends on the individual’s circumstances and resources. But, frankly, I believe everyone should have at least 10%-20% of their investable assets in commodities right now and a good portion of that should be in the precious metals markets.

[verwijderd] 11 augustus 2005 10:51

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Gold Rush 21 Adopts the Dawson Declaration By: GATA

Dear Friend of GATA and Gold:

The Gold Anti-Trust Action Committee's Gold Rush 21 conference concluded today in Dawson City, Yukon Territory, Canada, by adopting the Dawson Declaration, appended here.

CHRIS POWELL, Secretary, Treasurer Gold Anti-Trust Action Committee Inc.
* * *

THE DAWSON DECLARATION

Resolved by the Gold Anti-Trust Action Committee's Gold Rush 21 conference at Dawson City, Yukon Territory, Canada, on Tuesday, August 9, 2005:

Having come to the heart of gold country to inquire into the condition of the monetary metals and the industry that produces them, we conclude and declare:

While governments affect to have no use for them anymore, the monetary metals are of greater importance than ever because of their ability to hold value independent of arbitrary government power. So ownership of and free trade in the monetary metals are basic human rights against expropriation.

While the monetary metals are unique as assets of intrinsic value that cannot default because they are no one's liability, this also has become their crippling weakness. For in being no one's liability, the monetary metals have had -- unlike their competitors, government-issued currencies -- no sovereign defenders.

Indeed, for years now the monetary metals have had few defenders at all, the gold mining industry's trade organization having been dominated by short-selling corporations that have obtained metal at the sufferance of the issuers of government currencies, the central banks. This has left the monetary metals almost helpless against competing currencies.

Since they issue competing currencies, governments have a powerful interest in suppressing what is perceived as the value of the monetary metals. Governments have achieved this suppression through strategic and often surreptitious lending and dishoarding of their metal reserves. While it is seldom officially acknowledged as such, this is the manipulation of currency and commodity markets that should be free and transparent.

This manipulation of the currency and commodity markets has become the primary mechanism of imperialism, projecting and maintaining the power of the international reserve currency, the U.S. dollar, and its issuer, the U.S. government, and compelling other countries to sell their exports for less than fair value.

To assist in the suppression of the monetary metals and at the urging of the International Monetary Fund, IMF member governments engage in deceptive accounting of their gold, deliberately confusing gold in the vault with gold that has been leased or swapped or whose ownership otherwise has been impaired.

In the absence of a government currency's direct and fixed convertibility to the monetary metals, the only purposes for government reserves of the monetary metals are currency intervention and market manipulation. To preclude this manipulation, governments should sell their reserves openly by a date certain, except metal needed for coinage.

As defenders of the monetary metals, we do not necessarily maintain that they should be the only means of exchange. We do not worship the golden calf or the silver bull; we are not idolaters. To the contrary, we believe that individuals and nations alike have the right to decide what they will use as money, even as we acknowledge that freely traded gold and silver are simply the most convenient guarantors of economic liberty.

Accordingly, we will:

* Defend the crucial place and purpose of the monetary metals and the industries that put them into circulation.

* Encourage the use of the monetary metals as parallel official currencies and in commerce and savings.

* Investigate, expose, and oppose attempts to subvert the monetary metals.

* And support giving the monetary metals a sovereignty of their own, the sovereignty of humanity above the nations.

[verwijderd] 12 augustus 2005 08:23

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Oil-Gold Ratio in Freefall
www.resourceinvestor.com/pebble.asp?r...

By Tim Wood
11 Aug 2005 at 01:28 PM

NEW YORK (ResourceInvestor.com) -- On July 6, one ounce of gold purchased fewer than seven barrels of crude oil for the first time in recent history. It was something of a blip and the ratio improved in gold’s favour until late July when the oil price began accelerating faster than bullion. Now we have seen four consecutive record lows culminating in today’s staggering low of 6.66 barrels of oil per ounce of gold.

That is the resultant ratio from the latest futures prices of $66.60 and $443.20 per barrel of oil and ounce of gold respectively.

The July 6 event was considerably higher – 6.91 barrels per ounce. In the days following the ratio went as high as 7.65 (21 July). So anyone who traded the ratio short gold and long oil leveraged a handsome 13% decline over just 21 days.

July’s monthly average ratio of 7.23 barrels per ounce was also a record, and showed a whopping one third decline from the recent monthly average high of 11.03bbl/oz set last November. So far the August average is just 6.97bbl/oz, which was inconceivable not too long ago.

Adjusted for inflation, crude oil prices averaged just over $57/bbl in July, the highest level in January 2005 dollars since February 1983.

Since the present US dollar gold bull market commenced at the end of the first quarter of 2000, the highest monthly average ratio (for gold bugs) was 17.46bbl/oz set way back in November 2001. The all-time high in the ratio is 48.65bbl/oz recorded more than three decades ago in June 1973.

On the monthly average ratio oil has been in a break-away uptrend since December 2003. That month broke a long losing streak relative to gold that had persisted from November 2000. Prior to that gold had been on the losing side of a cycle that ran from December 1998 when the high was 31.22bbl/oz, falling to just 8.85bbl/oz two years later; a 71% decline in the ratio.

Based on the long-term average ratio going back to January 1970, the implied price for gold is $1,161/oz and the price for oil is $25.56/bbl.

[verwijderd] 14 augustus 2005 13:17

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Growing, new uses for silver

More and more, silver has become the world's most vital and indispensable metal. It is a basic component for the operation and growth of global economies, and plays a vital role in the development of new technologies that advance the modern world. Every year, new products utilizing silver's unique properties are evolving which advance and improve people's lives.

Silver is leading a revolution in technology and medicine. The white metal's unique bacteria-fighting qualities are becoming more and more critical in healing conditions ranging from severe burns to Legionnaires Disease. In fact, the most powerful treatment for burns is silver sulfadiazine, which is used in every hospital in North America to promote healing and reduce infection.

Everything from surgical threads to bandages and dressings to doctors' coats and catheters are utilizing silver. In hospitals and homes, silver in ductwork provides maximum sterile atmosphere.

A new generation of silver-based consumer clothing is on the way. Used by such high profile athletes as five-time Tour de France-winner Lance Armstrong and his cycling team, silver-coated fabrics have proven their ability to help control inflammation and promote healing during high-level athletic competition. Now hundreds of clothing manufacturers are weaving silver into their products for the general consumer.

CPM Group estimates that growth in other uses of silver (after jewelry, silverware, photography, electronics and batteries) will climb 14% between 2003 and 2005 to almost 160 million ounces annually. Here are some highlights of developments that occurred in 2004, courtesy of The Silver Institute, which directs some of its funding to research and development of new applications for silver.

Silver Biocides
Silver has many growing applications in water purification. The Silver Institute estimated the market for silver biocides in 2004 at 2.9 million ounces.

Drinking Water Systems
Systems for the home and office use filters made from silver on carbon or silver on ceramic substrates.

Grey Water Recycling
Silver biocides have promise for systems to recycle lightly polluted or grey water from showers and baths in hotels, hospitals, nursing homes and other institutional facilities. New York and several cities in Belgium are investigating recycling of municipal water.

Ice Making
In the last two years, silver-based biocides have been incorporated into components of ice-making machinery to prevent build-up of slime and bacteria.

Food Processing
T.P. Technology Plc, in the United Kingdom, is using a silver/copper ionization system to purify water in the processing of fruits and vegetables. "Substantial" sales worldwide are reported by company officials. For more information, visit www.tarn-pure.com.

The U.S. Food and Drug Administration approved AgION(tm)'s Silver Antimicrobial Type AK to its approved list of food contact substances. The approval allows its use in food collection and storage equipment, appliances and beverage processing equipment. This AgION(tm) product is comprised of 5% silver packaged in an inert crystalline carrier. AgION Technologies, Inc. is a leader in the development of antimicrobial products using silver to reduce the impact of destructive bacteria, mold and mildew. For more information, visit www.agion-tech.com.

Drinking Water
Silver-copper ion water treatment units have been installed in all 12 of Canada's Calgary-region hospitals to prevent Legionnaires and other bacterial and fungal diseases from living in plumbing.

Bandages
CURAD and Johnson & Johnson have both introduced silver-based products into the growing silver-based bandage market. CURAD, a unit of Beiersdorf USA, is marketing CURAD(r) Silver bandages for consumers. For more information, visit www.curadusa.com. Johnson & Johnson is selling an antimicrobial alginate dressing, Silvercel, which uses X-static silver fibers from Noble Fiber Technologies, in the health care professional market. For more information, visit www.jnj.com.

Appliances
Korean manufacturers Samsung Electronics and LG Electronics have introduced appliances using silver nanotechnology. Samsung was first with a washing machine that sanitizes and deodorizes clothes and both companies offer refrigerators that kill bacteria and the odors they cause.

Fabrics and Clothing
Stearns & Foster is marketing a line of mattresses (Silver Dream) in the United States that incorporates silver into the fabric. According to the company, silver is ideal in killing odors caused by bacteria and helps prevent static electricity. For more information, visit www.stearnsandfoster.com.

Milliken-Kex, a unit of United Kingdom-based Milliken & Company is selling a line of rubber mats that feature antimicrobial silver-based UltraSan and anti-fatigue properties from Elastoguard rubber. The mats are becoming popular in kitchens, food processing plants, and grocery stores where workers spend a lot of time on their feet in bacteria-prone environments.
These mats are the first to incorporate an antimicrobial, which is NSF and FDA compliant: www.milliken-kex.com.

Zensah Performance (www.zensah.com ) has developed proprietary technology for seamless athletic and performance apparel. Zensah's fabric contains a layer of silver ions which help regulate body temperature, keeping athletes cool and dry in the summer and preserving body warmth in the winter. The fabric helps keep garments odor free and has moisture wicking properties to draw sweat away from the body. Zensah produces shirts and shorts that are available through its web site.

[verwijderd] 18 augustus 2005 09:37

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Money Men Stay Bullish Despite Gold's Steep Drop
By Jon Nones and Tim Wood 17 Aug 2005 at 06:32 PM

St. LOUIS (ResourceInvestor.com) -- Gold futures closed at their lowest level in a week after dropping as much as $7 during today’s trading to close with a loss of $6.30. A sharp decline in crude prices and a firm dollar were major contributors.

“Now, with the market closing just above key support at $445/oz, it will be interesting to see where we go from here. I don’t have a crystal ball but if December gold does close below $445, things could get ugly for a few days,” Dale Doelling, Chief Market Technician of Trends In Commodities, told Resource Investor.

Crude prices plummeted almost $3 to $63.27 per barrel following a report by the Energy Information Administration (EIA). This helped ease investor concerns that recent record-high energy prices may slow economic growth. U.S. stocks were up on the news as investors moved to the broader markets instead of gold as a safety net.

Peter Grandich, Editor of ‘The Grandich Letter’, told Resource Investor that an over-bought energy sector could present a short-term challenge for gold.

“A marked increased in Comex open interest these last few days has suggested significant short-selling is once again taking place. An extremely overbought energy sector that appears finally ready for some serious profit-taking, is also a short-term challenge for gold,” he said.

Furthermore, a 1% rise in the Producer Price Index in July was largely perceived as keeping upward pressure on U.S. interest rates, and thus propelling the dollar to two-week highs against the euro.

“The fact that December gold got into seriously overbought territory, while the dollar was seriously oversold has been the overriding factor in the market the last few days,” said Doelling.

Grandich further links gold to oil prices in saying, “[T]he absolute key to either chances of success or failure rests with the direction of the U.S. dollar. There, a dramatic move up or down is likely to rest on whether key support at 86 basis the U.S. Dollar or 92 resistance is taken out,” said Grandich.

However, Grandich sees the dollar going in only one direction.

“I believe the U.S. dollar has only one direction long term – DOWN! Therefore, I think gold will be more of a ‘buy the dips’ versus ‘sell the rallies.’”

The writing was also on the wall per the most recent CFTC commitment of traders data for gold. For the week ending 9 August, data shows that Large Commercial net short positions increased dramatically even as Non Commercial positions increased to camouflage that somewhat.

There was a massive increase in net long gold futures to the tune of 52,100 contracts, of which 49,700 contracts were new.

That left the net long position at 41% of total open interest, which is close to the highest level ever. Traditionally that has signaled a top. That seems to have worked out in today’s price action after pushing gold dramatically higher last week.

Newsletter writer John Doody also had an important observation, telling clients of the Gold Stock Analyst that China Central Bank clarity on its Yuan policy likely drove last week’s price increase.

Doody wrote: “The People’s Bank said the weighted basket that the Yuan will float against will be in “currencies of the countries to which China has a prominent exposure in terms of foreign trade…” In as much as Euroland and Japan are co-equals to the US as China’s trading partners the basket will require a significant reduction in purchases of US Dollar securities in order to boost Euro and Yen holdings.”

Despite today’s setbacks, Grandich says gold will remain bullish.

“Gold is seeing some of the best two-way trading in years. Bottoms first at $408, then $415 and most recently at $420 has given gold a solid technical foundation to challenge the old highs above $450,” he said. “Solid physical buying during what’s normally a seasonally weak period and the ability to rise despite a stronger U.S. dollar, have also been key bullish factors.”

Another aspect to possibly consider is India’s market. With religious festivals approaching in India, the world's largest gold consumer, demand for gold jewelry will most-likely pick up.

Indians see gold as an auspicious metal, which they give as a gift during religious festivals and weddings. Demand normally picks up from August with the beginning of the festival season and peaks in November during Diwali, the Hindu festival of lights.

“We have worked off some of the froth in gold and the dollar has rallied but I don’t think these short-term retracements are done quite yet. I remain long-term bullish on gold but nothing goes straight up, Gold included.”

December gold closed at $445.20 an ounce on the New York Mercantile Exchange, down $6.30, or 1.4%, for the session.

© Copyright 2005, Resource Investor.

[verwijderd] 18 augustus 2005 18:49

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Dear Friend of GATA and Gold:

MineWeb reports today that gold sales by central banks
have just exceeded the limits the banks set for such
sales this year.

That is, the central banks are having difficulty
supplying enough gold to the market to suppress the
price.

MineWeb's story, written by a longtime apologist for
the central banks and bullion banks, Rhona O'Connell,
is a fairly frank defense of central bank management
of the gold price, and thus may make it harder for
others to dispute that this indeed is what the central
banks are up to.

You can find the MineWeb story here:

www.mineweb.net/columns/london_beat/4...

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

[verwijderd] 21 augustus 2005 13:15

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What about Silver Demand?

Recently, an article was posted on ResourceInvestor.com By Craig Stanley Titled: “Silver's Near-Term Outlook” see www.resourceinvestor.com/pebble.asp?r...

The article was a good summation of the work done by GFMS on their recent annual silver survey that has been commented upon by many including myself in The Morgan Report and Franklin Sander’s of The Moneychanger. www.the-moneychanger.com/entry.phtml

The basic premise is that all we need to do to analyze the silver market correctly is to look at the supply. If we focus on the supply of silver and realize that the supply is increasing primarily because the 200 million ounces of silver that used to come back into the market as photo recycling may be as low as 185 million ounces due to digital photography. Secondly base metals mining is up significantly and therefore byproduct silver is up as well. The increase of silver produced in 2004 was estimated to be 23 million ounces greater than 2003.

These statistics can be taken at face value, but as Franklin Sanders pointed out in his article it is amazing how these figures get re-worked without any explanation whatsoever. Regardless, the point is supply is what we need to place our attention.

The Resource Investor article states “silver has been in a continuous primary deficit since at least 1996 according to Canaccord, with the deficits made up mostly by net government sales.” And then it goes on to state;

The Canadian brokerage believes that if the new applications for silver become popular, the annual deficit could widen to as much 250 million ounces. But although this could “result in some interesting price dynamics for silver given current inventories of 600 million ounces,” they “do not see a pinch point in the near term.”

Again, we have this overhang of 600 million ounces of silver bullion which is simply a number produced by GFMS without much detail at all. In fact there are large discrepancies in this study and the one produced by CPM group in New York that will be out shortly. Not only do the two studies differ in the total amount of silver bullion available, but they also differ in the amount used annually.

However, I wish to bring up the point that demand is far more important than supply. It is a fact that approximately 1.5 BILLION more ounces of silver bullion existed in 1980 when the price temporarily went to $50.00 per ounce. Why? DEMAND my friends, yes demand for silver, call it investment demand, monetary demand, or I am scare to death of what this piece of paper might be worth tomorrow demand, but demand is what took the price higher.

Gold for example has a rather healthy demand and the amount of gold bullion supply is far in excess of the silver bullion supply. The Money Metals – gold and silver – have been recognized as stores of value for thousands of years of human history. Gold has certainly done its job; it has preserved wealth for those that have invested assets in this metal. Gold has appreciated in U.S. Dollar terms roughly the amount the Dollar has declined. In other words, gold has maintained purchasing power.

Things are not all that well in the financial system these days to even mainstream publications. I read most of the periodicals that North Americans read, and many such as Forbes, Forutne, Business Week, and others state plainly that there are problems with the Social Security system and many pension plans are in dire straights.

In fact not only are America's Social Security finances strained, but look around the world: a major demographic tide of declining birthrates is pushing nations further and further away from the promises that they've made to seniors. As nations age, they have fewer and fewer workers to support more and more retirees.

Nations around the world are "grappling with the long-term affordability" of their pension systems, according to a World Bank report. China faces a demographic crunch. By mid-century, its population will be older, on average, than America's, thanks to its one-child policy. Starting about 10 years ago, China responded by broadening a social security system and enlarging a private pension system of "enterprise annuities," states Richard Hinz, coauthor of the World Bank report.

India, also with more than one billion people, has been trying to enlarge its pension system beyond that for civil servants and employees of sizable corporations to those occupied in the "informal" and small-business economy.

However what people should really be concerned about is what the Mises Institute recently pointed out in an article about Social Security. The article pointed out that there is a popular misconception that there is some kind of "full faith and credit" obligation on the part of Congress to honor these Social Security "bonds.” The plain and harsh truth is most have been led to believe that the current system is a retirement program funded with segregated entrusted assets, the integrity of which is guaranteed and backed by the U.S. government.

The debate about whether there is a Social Security cash flow crisis in 2017 or 2042 also turns on whether those "bonds" have any value. The basic assumption is that the "bonds" in the fictitious trust fund somehow have value either for the U.S. or for workers and their families.

As the Mises website article states: A bond is just a contract. A contract is an agreement between two or more parties that creates an obligation to do or not do a particular thing, such as pay out interest at a certain rate. Thus, one may not enter into an enforceable contract with oneself, which is exactly what the U.S. is pretending to do with those social security "bonds."

For a bond to be a real bond, there needs to be at least two parties; for example, the U.S. and a citizen who owns a U.S. treasury bond; or the U.S., as owner of a German bond, and Germany. The U.S. cannot issue "bonds" to itself and have their terms bind future Congresses.

Bottom line: These Social Security "bonds" are neither assets of the U.S. nor property of workers and their families. In the not too distant future, you will have to ask yourself if the Social Security system will perform its function of providing any real security. You may decide to take action for yourself and depend on your own abilities. The ability of any government to be all things to all people is an illusion that will become a harsh reality to the general population over the next several years.

The $75,000 Social Security Solution
We know that we have many readers outside of the United States, and our discussion about Social Security may not affect them directly, but it could indirectly. Because so much of the world’s economic activity depends upon the spending power of the U.S., it should be factored into your thinking about the ramifications of the current situation.

Long-term studies of commodity prices have shown that over time, commodities return to their mean. This “average” price, however, can remain outside of this range for a very long time. Silver has certainly remained outside of its purchasing power range for the past 25 years, and remains so today. Therefore we fully admit that having this knowledge for the past quarter-century was of little practical value. However, things are changing rapidly in the world’s financial landscape, and the new silver age is rapidly approaching, first from a technological standp

[verwijderd] 22 augustus 2005 09:55

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$10,000 Gold by Michael S. Rozeff

Should you own some gold? If so, how much? Why own gold? What might make its price rise dramatically? Although the future is uncertain, rational answers to these questions are possible. That means you can answer them. I can help somewhat. To begin with, one should understand the relations among three things: money supply growth, gold prices, and the consumer price index (CPI).

Between 1930 and 2004, gold rose in price from $20.67 an ounce to its present level of about $440. That’s a growth rate of about 4.1 percent a year. Over the same period, the CPI index rose from 16.1 to 190.3 or about 3.3 percent a year. Both gold and the CPI are linked to how much the money supply grew over this period. The M1 money supply was $24.92 billion in 1930 and grew to $1,340.2 billion in 2004. The growth rate was 5.4 percent per year.

I do not discuss here what real money might be in a free economy, which the U.S. does not have, or the pros and cons of various definitions of the printing press (fiat) money we do have. I will mention that the Federal Reserve (Fed) controls the supply of this fiat money. It is the only legalized entity that can write any amount of checks on itself without having anything in its account. When these checks are presented for payment by banks, it credits their account with reserves – a purely electronic or paper transaction. If the bank wants currency, the Fed gets the Treasury to print some and delivers it. This legal counterfeiting operation is how central banking works.

We the people have no possible use for the Fed that I can think of, but the State does. The Fed buys a lot of the debt that the State floats. It also seems to be a convenient way for the State to distribute its printing press money whenever it wants to. However, the U.S. government got along without the Fed until 1913.

Naturally the Constitution nowhere gives the Congress the power to print non–interest-bearing paper and call it money or legal tender. It does prohibit the States to "make any thing but gold and silver coin a tender in payment of debts," which clearly suggests that the Constitution meant gold and silver coin to be money. It does give Congress the power "to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures," which means to imprint gold coins and determine their weight. Congress also has the power "to provide for the punishment of counterfeiting the securities and current coin of the United States," which again says that money was coin. I suppose that this punishment has been declared to be nil in the case of the Fed.

There is also a demand for money, subject to a myriad of factors that will not detain us. A major one is that as the population grows, the demand tends to grow along with it. Since 1930 the U.S. population grew at almost a 1 percent rate.

We notice that gold’s price growth exceeded that of the CPI by 0.8 percent a year. Although that seems fairly close, over a period of 75 years the difference adds up. There are many difficulties and strange features of how the government computes the CPI, there have been many new sources of supply and demand for gold, and there have been many economic and political changes since 1930. Yet the two growth rates are not too far apart. It seems that gold has risen in price about in line with other common goods and services. Some people say that it takes about the same amount of gold (about an ounce) to buy an off-the-rack average suit of clothes today as it did 75 years ago.

This means that gold has been a good hedge against price rises (as measured by the CPI), or that gold prices kept up with price rises. The natural growth of supply and demand for gold has apparently remained so steady relative to other goods that the price of gold in terms of other goods has not changed very much.

There are some whose assessment differs substantially from this one. They estimate that it takes 3 ounces of gold worth $1,320 to buy a suit today, where it used to cost 1 ounce worth $21. They believe that the gold price today should be higher by a factor of 3 compared to its present price, or that $440 is way too low. The source of these statements is often someone anxious to market gold. I stick with the conventional view that gold has tracked the CPI closely.

The huge rise in the CPI index and in the price of gold means that the value of the dollar fell drastically between 1930 and the present. Since gold rose by a factor of 21.3 (or 440/20.67), the dollar today is worth only 1/21.3 = 4.7 percent of its value in 1930. The dollar has lost over 95 percent of its value in terms of gold. In terms of the CPI index, it has lost 92 percent of its value.

The cause of these declines in value of the dollar is that the Federal Reserve has shifted the supply of dollars upwards, well beyond the amounts that were warranted by the increases in demand for dollars that have occurred over this period. It bought a lot of things (mainly the debt of the U.S. government), created a lot of phantom reserves, and printed a lot of counterfeit currency called legal tender. These busy printing presses drove the value of the dollar down. The more dollars that were sitting in banks (because of cashing the Fed’s checks), the more that people borrowed and spent. Since the printing presses did not create any real goods or services, these dollars simply bid up the prices of the goods and services. That is (mainly) why a t-bone steak that cost $0.29 a pound in the 1920's costs $7.99 today.

Since the population of the U.S. grew by 1 percent a year, a very rough guess is that the supply of money since 1930 grew by 4.4 percent in excess of what population growth required. That might help explain why gold’s price went up by 4.1 percent a year, which is 1.3 percent less than what M1 rose. Gold’s growth exceeded the CPI’s growth perhaps because the CPI understates inflation. Both gold’s price increase and the excess growth of the money supply are better measures of inflation than the CPI. Measuring "excess money" is a problem, however, and gold’s value is volatile in the short run.

What’s inflation? Some economists define inflation in terms of price rises of goods and services. They use the CPI, but this measure is flawed for a variety of reasons. Alternatively, it may be more clear to say that inflation means excessive growth in the money supply, which then usually translates into rises in prices of various goods and services. Since in our system the State controls money via the Fed, the State is the sole cause of inflation because it controls the supply of fiat money. The Fed, usually doing what the President and Secretary of the Treasury want, causes inflation by increasing the supply of money. The public, however, can affect the rate of increase in prices by how intensively it uses this money (the money velocity).

Suppose that gold prices accurately measure the inflation rate. Its growth rate was 4.1 percent, which was 1.3 percent below M1 growth. Suppose the Fed had made the money supply rise by just 1.3 percent a year, then gold would today be about the same price as in 1930.

As we look ahead, we see that the Fed can keep inflating the money supply indefinitely, or until a hyperinflation occurs that ends the process. To get the gold price to $10,000 an ounce, gold has to rise by a factor of 22.7 (that’s 10,000/440.) That means the

[verwijderd] 22 augustus 2005 09:58

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part 2

That means the dollar has to lose another 95 % of its value. By then, a candy bar will cost $11. That’s not so outlandish. Today it costs fifty cents and many of us remember when it cost a nickel.

How long might this further depreciation in dollar value take if hyperinflation does not intervene? If it continues on at the same rate as during the past 75 years, then it will take about another 75 years. In the year 2100 a home that today costs $150,000 will cost $3,405,000. Some home buyers are rushing history a bit, it appears. I have a gut feeling that this is not going to happen, that something is going to happen that interrupts this process, for better or for worse.

Back to gold. Gold is an asset that goes up at the rate of inflation in the long run. Its ups and down in the short run depend on many factors, including investor perceptions of money supply growth in the future. More importantly, the ups and downs of the money supply also influence the prices of other portfolio assets like stocks and bonds in ways that are not always easy to decipher and not rigidly connected to what the price of gold does.

Remember the little toy where you roll the balls around trying to get them into the holes? You roll one and it dislodges the others? There must be some video games like this. That’s how stocks, bonds, and gold are. They move in crazy-quilt patterns sometimes; one goes in the hole and the others jump out. The ups and downs of gold do not correlate well with other assets like stocks and bonds. That makes gold a good asset to hold for diversification purposes, because sometimes it gives you a home run when the other assets are striking out.

Most investors do not hold much gold in their portfolios. They should, because gold is a good diversifier. There is no magic number for how much to hold. One source suggests a 6 percent holding, which gives the conventional order of magnitude that is recommended, usually from 3 to 10 percent. Actually, it would be nice if investors could conveniently hold a number of commodities. For example, the lowly metal, copper, has far outperformed gold in the past few years.

If you hold too much gold, you are likely (in many or most scenarios) to get greater volatility and too low a return, since its price is volatile and, although gold’s overall rate of price appreciation keeps up with inflation, it does not give a positive real return. How much is too much? Harry Browne has recommended holding 25 percent in gold, 25 percent in stocks, 25 percent in long-term bonds and 25 percent in short-term bonds. This is actually a conservative portfolio that has shown very steady performance. So you could go up to 25 percent in gold it seems. Since 1930, gold, by itself, has been a worse investment than bonds or common stocks. Over long periods of time, stocks and bonds have kept up with inflation and also provided some additional or real return. Nevertheless, a mix of some gold in a portfolio of other assets typically benefits the portfolio in those time periods when the stocks and bonds are doing badly.

Holding gold via an exchange-traded fund (ETF) currently has a big drawback, namely, gains are taxable at a 28 percent rate for any ETF that holds bullion. The IRS treats gold as a collectible and taxes capital gains accordingly. It is better either to buy gold stocks or a precious metals mutual fund until some ETFs come along that avoid this negative tax feature. An ETF based upon an underlying mutual fund will not have this problem.

Gold will be a superior investment to stocks and bonds in a number of gloomy but possible scenarios that involve rapid depreciation in the country’s paper or fiat money. If you believe strongly in these scenarios or have special insight that they will occur, then you may want to increase the amount of gold you hold. However, before going overboard, it is well to remember that most of us can’t beat the pari-mutual odds in a race with 5 horses.

First. If the Fed speeds up growth in the money supply, that’s greater inflation. Then gold will tend to rise more quickly in price too. Gold fell below $300 in the Clinton-Rubin era because the rate of growth in M1 slowed down from 7.8 percent a year in 1989 to 1994 to –0.01 percent a year over 1994–1999. That’s right. Inflation was essentially zero between 1994 and 1999. This is also one reason that interest rates declined so much and why the stock market rose so much.

Between 1999 and 2004, however, the growth rate of M1 picked up to 4 percent a year. The big spurts came on Bush’s watch as did the big stock market drops. I hold the minority opinion that the bear market in stocks is Bush’s bear market. The market began dropping one month before his election and the drop accelerated thereafter throughout 2001 as investors figured out what he was up to. Gold then jumped from the $300 area to the $440 area where it is now as it became apparent that his administration was up to more inflation. Wars always generate inflation, and Bush’s wars are no exception. Ordinarily, a record as poor as his would have meant a change in Presidents but the Democrats put up an extraordinarily weak ticket and ran a terrible campaign.

If the Fed in the future increases M1 at the 5–7 percent rates that were common from 1964 to 1994, what is likely to happen? A sustained 6 percent rate of increase in M1 will get gold up to $10,000 in just 52 years if gold rises at the 6 percent rate too. However, a steady rise in gold is very unlikely. Investor expectations could change sharply, as they have in the past, and gold might overshoot and jump to near $800 within several years of an M1 spurt of this size. Of course, the market would be highly speculative and constantly be re-assessing what the government (and thus the Fed) was up to and how long the high rates of M1 growth might last.

This scenario has some likelihood, anywhere from a 5 percent chance (20-1 odds against) to a 20 percent chance (5-1 odds against). These numbers start in my gut and progress to my pen. The chances rise if the Bush administration starts another costly war or decides to increase the military budget sharply. The administration is planning a war against Iran but "on the cheap," by using massive bombardment and local revolution rather than ground troops. However, these plans could go awry and lead to bigger expenditures. If the U.S. leads the world back into another arms race, as it seems to be trying to do, that also makes this scenario more likely.

Second. If the Fed increases the money supply faster and investors flee from the dollar or from dollar-denominated assets into commodities and real assets, then gold will skyrocket. In other words, if investor expectations of inflation alter from expecting a relatively benign (steady) and manageable process toward expecting a malign (wild) and uncontrollable process, then the velocity of money will increase. This will set off much higher price inflation even if the Fed keeps money growth at 6 percent. This scenario is like what occurred 25 years ago when gold rose sharply to $800 an ounce. A similar 6-fold rise today would push gold to $2,500 an ounce in a relatively short period of time. If this scenario occurred at any time in the next 10 years, the rate of return on gold would be a minimum of 17 percent a year at some point.

This scenario depends in part on a factor that is highly unpredictable, investor expectations. Ther

[verwijderd] 22 augustus 2005 10:02

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part 3
This scenario depends in part on a factor that is highly unpredictable, investor expectations. There is a herd mentality that can go to work in this case. If the general public gets the idea that major figures like Warren Buffet are abandoning dollar assets and moving capital overseas, it will lose confidence. This then exacerbates the process of dollar flight.

Third. If there is a political-economic shock of some sort that creates flight from the dollar and dollar-denominated assets, then gold’s price in dollars will rise sharply although its price need not rise in terms of other currencies. For example, suppose that the U.S. Treasury had difficulty in refunding debt at some auction and domestic interest rates began to rise sharply. This might come about if foreign investors lost confidence in the revenue-raising ability of the U.S. government because of a tax revolt or a secession movement. Then people anxious to get rid of dollars might bid the price of gold up. Shocks are, by definition, unpredictable. However, coming events sometimes cast their shadows before. If gold should begin rising steadily for no apparent reason, or in spite of a friendly environment, it would be a sign that something is amiss.

Fourth. Hyperinflation is possible. This is a very rapid increase in money supply accompanied by increases in the velocity of money. These drive the prices of goods up dramatically. In this situation, gold in terms of the depreciating currency will rise to extremely high prices. Hyperinflation is unlikely in the U.S. for several reasons. Most of the U.S. debt is short-term. If the Fed prints too much money, interest rates will rise and the budget deficit will increase sharply. This factor restrains the Fed from letting M1 rise too fast. Also, hyperinflation is a government’s last resort way to finance expenditures when it has no other way. The tax system in the U.S. rakes in so much money that it makes hyperinflation less likely.

All of these inflation scenarios cause stock and bond prices to decline. Since bonds are contracts that pay off in dollars, they are negatively impacted as dollars are depreciated by inflation. The effects on stocks are more complex and vary across different types of stocks. Usually the markets are disrupted enough by inflation that the overall net effect is negative.

Suppose that a portfolio has $9 in stocks and bonds and $1 in gold. Under one of these extreme scenarios, suppose that the $9 investment falls to $1, while the $1 investment in gold rises to $9. Then the portfolio maintains its purchasing power, despite the enormous loss in the bond-stock component. That is, a 10 percent position in gold maintains the whole portfolio value if gold rises by a factor of 9 while other assets fall by 89 percent. There are many such possibilities. A 5 percent position maintains 70 percent of the portfolio value if gold rises 450 percent when stocks and bonds fall by 50 percent. The $0.95 worth of assets declines to $0.475 and the $0.05 of gold rises to $0.225, which add up to $0.70. A 20 percent position maintains total value if gold triples when the stocks and bonds lose 50 percent of their value. This scenario sounds fairly plausible. The $0.80 of stocks and bonds dips to $0.40 while the $0.20 of gold rises to $0.60.

Looked at this way, it is evident that gold in the portfolio is equivalent to insurance against some devastating contingencies. Complete or partial insurance are possible. The more gold you have, the more insurance you are buying. Over-insuring is costly because the overall rate of return of the portfolio goes down if nothing happens. That’s because gold historically provides no real return. Everyone has to decide for himself what the odds of these scenarios or ones like them are, how to insure against them as with gold or some other real assets, how high gold will go when other assets decline, and how much to insure against these events. There are no pat answers to these decisions, but they are within the realm of understanding and even sensible computation.

August 22, 2005

Michael S. Rozeff [send him mail] is the Louis M. Jacobs Professor of Finance at University at Buffalo.

[verwijderd] 23 augustus 2005 09:31

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Treasury Department Claims Power to Seize Gold,
Silver--and Everything Else, GATA Says
Business Editor

MANCHESTER, Conn.--(BUSINESS WIRE)--Aug. 22, 2005--The U.S. Government has the authority to prohibit the private possession of gold and silver coin and bullion by U.S.citizens during wartime, and, during wartime and declared emergencies, to freeze their ownership of shares of mining companies, the Treasury Department has told the Gold
Anti-Trust Action Committee.

But gold and silver owners aren't alone in such jeopardy. For the U.S. Government claims the authority in declared emergencies to seize or freeze just about everything else that might be considered a financial instrument.
The Treasury Department's assertions came in a letter
to GATA dated August 12 and written by Sean M. Thornton,
chief counsel for the department's Office of Foreign Assets Control, who replied to questions GATA posed to the
department in January. It took GATA six months and some
prodding to get answers from the Treasury, but the
Treasury's reply, when it came, was remarkably
comprehensive and candid.

The government's authority to interfere with the
ownership of gold, silver, and mining shares arises,
Thornton wrote, from the Trading With the Enemy Act, which became law in 1917 during World War I and applies during declared wars, and from 1977's International Emergency
Economic Powers Act, which can be applied without
declared wars.

While the Trading With the Enemy Act authorizes the
government to interfere with the ownership of gold and
silver particularly, it also applies to all forms of
currency and all securities. So the Treasury official
stressed in his letter to GATA that the act could be
applied not just to shares of gold and silver mining
companies but to the shares of all companies in which
there is a foreign ownership interest.

Further, there is no requirement in the law that the
targets of the government's interference must have some connection to the declared enemies of the United States,
nor even some connection to foreign ownership. Anything
that can be construed as a financial instrument, no matter
how innocently it has been used, is subject to seizure
under the Trading With the Enemy Act and the International Emergency Economic Powers Act.

Having just gone through a controversy about a Supreme
Court decision about government's power of eminent
domain, most Americans may be surprised to learn that the Trading With the Enemy Act and the International Emergency Economic Powers Act could expropriate them instantly
and far more broadly without any of the due process
extended to parties in eminent domain cases. All that is
needed is a presidential proclamation of an emergency of some kind -- and of course Americans lately have been living in a state of perpetual emergency.

When the Trading With the Enemy Act was passed in
1917, gold and silver formed part of the official
currency of the United States and were essential to
ordinary commerce, so perhaps an argument could be
made then against "hoarding," even if "hoarding" could not be well defined. That is no longer the case; the United States has officially disavowed gold and silver as money and they no longer have a meaningful role in commerce. (GATA is working on that.) So gold and silver investors may want to ask their members of Congress to seek repeal of the statutes that give the government the authority to interfere with the private ownership of gold and silver, emergencies or not.

And ordinary citizens with no particular interest in gold and silver may want to ask their members of Congress to reconsider these statutes simply for being wildly tyrannical.

GATA's correspondence with the Treasury Department is posted on the Internet here:

groups.yahoo.com/group/gata/message/3276

[verwijderd] 26 augustus 2005 08:20

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The Kondratieff Winter Is Upon Us
By David J. DesLauriers 25 Aug 2005 at 05:28 PM
www.resourceinvestor.com/pebble.asp?r... voor grafiek

TORONTO (ResourceInvestor.com) -- Long Wave Analyst Ian Gordon spoke to Resource Investor about the Kondratieff Wave.

Briefly, the Kondratieff Wave was developed by a Russian economist named Nickolai Kondratieff (1892-1938) whom Stalin later sent to Siberia to ‘count the birch trees’. The major premise is that “capitalist economies displayed long wave cycles of boom and bust ranging between 50-60 years in duration.”

Those who would like some background on the Kondratieff Wave can visit this website.

Exclusive Interview

DAVID DESLAURIERS: Given the speed at which information travels these days, the pace of innovation, and the reality of interconnected markets, does the Kondratieff model need to be updated slightly, or are the timeframes for each wave still relevant?

IAN GORDON: Because it’s a very long cycle - I call it a lifetime cycle, and because we live longer it is a longer cycle than it was in Kondratieff’s day. Because it is a lifetime experience cycle, really no one recognizes what part of the cycle we’re in because they haven’t experienced it before.

You’re dealing with human sentiment really, mass sentiment and that doesn’t effectively change just because information is passed along more quickly. In effect the cycle is actually slowed, one reason being that we live longer and therefore it takes longer for a cycle to spend itself out.

Second, this is the first cycle that has occurred on a purely fiat money system so the central banks and particularly the Federal Reserve have the capability of prolonging the cycle by printing money.

DAVID DESLAURIERS: What part of the Kondratieff cycle are we in presently - is winter approaching?

IAN GORDON: We’re in the winter because the peak in the big autumn stock market is always a signal that you’ve entered winter. The big bull market in stocks, bonds and real estate always occurs in the autumn. The previous autumn was the 1921-1929 experience and this autumn was the 1982-2000 experience.

We are in the winter but its being masked by the Federal Reserve dropping interest rates almost in a panic down to 1% and also the huge money printing that Greenspan has done. So in some ways, the evidence of winter is not upon us but when we do feel it its going to be a lot worse than probably the previous winter experience because the debt build-up has been much more horrific.

DAVID DESLAURIERS: Given the degree of control that the United States has in its monetary and fiscal policy and the emergence of goods and wage deflation from China, can governments seriously prolong the autumn period?

IAN GORDON: What they’ve done is that at present we are in winter but its very benign because of the massive government intervention in the system simply through the Federal Reserve monetary and fiscal policy so that we’re masking it but through that masking we’re building an inordinate amount of debt in the system and that debt ultimately is the thing that really makes the winter apparent, and makes it really, really difficult for people.

We’re already seeing the debt bubble starting to collapse - you’ve seen it in the airline industry you’ve seen it in things like GM and Ford - I mean both of those car companies are really candidates for bankruptcy.

DAVID DESLAURIERS: Where does the Kondratieff Winter stand on whether we will have deflation or inflation, as market analysts are mixed on this issue?

IAN GORDON: I’m absolutely convinced that the cycle itself is an inflation/deflation cycle so that when the cycle starts at the beginning of spring, inflation is very benign - there is no inflation so this started in our present cycle in 1949, then you go into the summer; summer is always the inflationary part of the cycle because there’s always been a war in the summer - the War of 1812, the U.S. Civil War in the second summer, WWI in the third summer and the Vietnam War in the fourth summer.

When summer ends, that inflation turns to disinflation or falling inflation and in the winter the cycle then goes through the process into deflation, so disinflation turns to deflation. So I’m a deflationist, and the debt is also very deflationary.

If you look back at the Federal Reserve, Greenspan and Bernanke were talking about deflation three years ago. So they’ve really pushed back that deflation by these massive injections of money into the system, and China has been a huge beneficiary of that policy, with massive amounts of dollars that have gone into their economy. They are the second largest creditor nation now behind Japan. They’ve got all these dollars and those dollars are spent in China to build up the Chinese economy.

If you read Richard Duncan’s book, The Dollar Crisis, you can see that China is a perfect example of what happens when you have a huge trade surplus. You build up a bubble economy, a massive exuberant investment process sets into the economy and I think China is a bubble waiting to burst.

DAVID DESLAURIERS: Where can investors hide? Are gold equities as much of a store of value as the yellow metal itself?

IAN GORDON: In deflation really nothing sort of works and debt is absolutely horrendous in a deflationary environment so the investment of choice, commodities don’t work in a deflation and if you look at the 1930’s and the depression, 25% of Americans were unemployed and if you had the same kinds of numbers, and there is no reason to expect that were not given the massive debt bubble that has been built into the economy, so with that kind of environment commodity prices will come down quite dramatically. The U.S. GDP in the 1930’s dropped by half, so I think given that kind of environment the U.S. will be self sufficient in oil, and that means you wont rely on all these imports and prices will drop dramatically.

Look back to the Asian Crisis in 1998 its not that long ago that basically the Asian economies seized when Thailand went down and that really was because money that had been flowing into those economies because they were big creditors flowed out again because people got scared, they were worried about the banking system, so that is an example of what could happen to China. Keep in mind when that crisis occurred, oil dropped to $10 per barrel - imagine what would happen if the U.S. economy seized, with 25% of world GDP.

What happens to gold in a deflationary environment and a lot of people say gold is just a commodity and therefore its values will come off too, well I say if you look at what happened in the 30s, gold took on the role of money and people sought gold because they trusted it, they didn’t trust the paper or the banks so they converted their paper dollars into gold which was legal at that point. So much so that by the end of 1932, Hoover was told that the U.S. was running out of gold because the demand for gold was so terrific because everyone wanted it because they trusted it.

We’re going to see the same today and the price of that was reflected in the price of Homestake Mining which went up by 600% between 1929 and 1935.

Conclusion

Buy gold and gold shares, the future is clearly not friendly.

© Copyright 2005, Resource Investor.

[verwijderd] 29 augustus 2005 08:24

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Silver Challenges Support
By Gene Arensberg 27 Aug 2005 www.resourceinvestor.com/pebble.asp?r...

HOUSTON (ResourceInvestor.com) -- Silver has been trading sideways for six months, but it almost certainly won’t for much longer. The prime question during that half-year period was; Which way will it break? Increasingly less confident (complacent?) longs were hoping that the up-to-now very strong support at $6.80 would hold one more time while the bears hoped just the opposite. As of Friday, the odds shifted strongly in favor of the bears. Temporarily?

Back on July 19, I opined that until silver broke out of its trading range convincingly one way or the other, “maybe it’s best just to be a patient silver spectator.”

Up until Friday, one could have just taken the time off since then and not really missed very much. But Friday’s options expiration day trading put silver back in focus from a technical perspective.

A Coiled Spring

Since the powerful October ’03 to March ’04 definition breakout move to $8.50, silver respected a well defined linear uptrend until it was challenged in June. Rather than breaking down, since late February the metal has been trading in a rectangular trading range roughly between $6.80 and $7.60.

An attempt to reclaim the hallowed ground above that uptrend line to spring a bear trap failed during the first week of August. It was not a convincing breakout despite the attempt to regain the chart real estate above the 50 and 200-day moving averages. After only a week the white metal disappointed longs, shooting back under the trend line and both moving averages. The moving averages have since acted as resistance.

On Thursday, August 25, the spot price closed millimeters above the implied support of the bottom of the rectangular trading range ($6.80) with a last trade of $6.835. Long patient silver bargain hunters are now literally on the edge of their seats as the second most popular precious metal lost it’s grip above the lower end of the broad trading range. On Friday, the 26th, silver on the cash market showed a last bid of $6.736 after dipping as low as $6.706. That is likely just above the area where a large number of sell stops reside.

Here is a closer look.

The slippage below the long uptrend line in June was worrisome to longs, but now the challenge of support is the more important issue. Bulls fear that a confirmed breakdown of the $6.80 support might lead to a sell-stop triggering shakeout of stale long positions.

The last week of August is notorious for its light liquidity. I think breakouts and breakdowns should be viewed skeptically until they are confirmed this time of year. At the same time, breakouts of long rectangular trading ranges can be dramatic because of the large number of stops which have had time to find their way close to the implied support/resistance. A long-period trading range is sometimes like a coiled spring or a catapult. Usually it is best not to underestimate the amplitude and the velocity that a confirmed breakdown of a wide trading range might possess. Emphasis on the word “confirmed.”

Friday’s move comes just as the 50-day is crossing lower than the 200-day moving average (a “bear cross”) on the daily chart. At the same time, however, silver is approaching an oversold condition and there is not a very heavy speculative long book on the COMEX this time for breakdown fuel. This suggests that if a breakdown is confirmed, and the price gets into sell stops, while the move may be dramatic, it will very likely be short lived.

And, if a sell-stop triggering selloff gets underway, it just might be the last opportunity for bargain hunters to own “cheap silver” for a generation.

© Copyright 2005, Resource Investor.

[verwijderd] 30 augustus 2005 12:07

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Interessant rapport over zilver supply/demand van de CPM Grouop.

www.mineweb.net/sections/gold_silver/...

Gr/brj

[verwijderd] 31 augustus 2005 12:56

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Looking east for gold demand '30-AUG-05 13:30'

LONDON (Mineweb.com) -- The Indian Festival Season is upon us. So far this year, the evidence suggests that despite concerns over the initial paucity, and latterly excess, of rain in the Indian monsoon season, underlying demand has remained strong and helped to underpin gold prices; remember India typically accounts for 18-20% of global gold demand in any one year.

The Autumn Festival season is starting to gather pace as we approach Ganesh Chathruthi (the elephant-headed God of Wisdom and Prosperity, widely regarded as the most auspicious day of the year (and therefore generally pretty good for gold sales), and the season culminates in the world-famous Diwali, or Festival of Lights This year, Ganesh Chathurthi falls on September 7, and Diwali on November 1.

With US Labor Day on September 5 traditionally heralding the period when gold purchasing starts to pick up in the US (US fourth-quarter gold jewellery consumption typically accounts for between 39% and 45% of US annual gold jewellery consumption), now is a period of accelerating gold demand.

Meanwhile the Dubai Gold and Commodities Exchange (DGCX) has reported that since it opened its doors for applications for membership, it has been overwhelmed with in excess of 230 applications in less than two months. The DGCX is the world’s newest electronics commodities derivatives exchange and sits at the heart of the physical trade in the world’s gold and when in June it announced that it was to throw open its doors for membership the Exchange management said that initial membership would be restricted to 250. With the Middle East and the Indian Sub-continent between them accounting on average over the past five years for 33% of overall global gold jewellery and investment demand (and roughly 31.5% of global gold demand as a whole), the attractive prospects offered by membership of the DGCX have clearly excited the industry as a whole.

Framroze Pochara, DGCX’ Chief Executive, has noted that the exchange has seen “exceptionally strong interest from the UAE together with considerable interest from elsewhere. Applicants have included leading banks, both international and regional, bullion dealers and brokers. Based on this response we are very confident of having a large, broadly based and geographically diverse market when we go live in November". As noted before by Mineweb, the exchange will trade from 10:00 a.m. to 11:00 p.m. local time thus overlapping in real time with both the Far East and North America and members will be able to connect to the system from anywhere in the world. The system is to be centrally cleared (common practice nowadays) on an automatic order-matching system.

DGCX will commence trading in November 2005, first with gold futures, then silver futures and gold and silver options. These will be followed during 2006 and 2007 by a range of futures and options products in steel, fuel oil, freight rates, cotton and other commodities.

DGCX is a joint venture between Dubai Metals and Commodities Centre (an Authority of the Government of Dubai), Multi Commodity Exchange of India and Financial Technologies (India) Ltd. The DMCC itself already has over 550 members ranging from jewellers through energy companies and commodities and services companies including at least one asset management organisation and the international auction house Christie’s.

In a parallel development the Indian Exchange NCDEX (the National Commodities and Derivatives Exchange) has announced plans to roll out more contracts (largely agricultural, where the majority of its business lies, but also nickel and tin, hopefully by year-end; currently only copper cathode and mild steel ingots are offered in the base metals sector) and as soon as it has received state clearance it will start offering spot contracts. The NCDEX trades one kilo gold contracts and 30 kilo silver contracts delivery Mumbai and contract expiry on the 20th day of the month. Spot would allow added flexibility and the timing could well be synergistic with the activity on the DGCX.

It may be a little late for Diwali this year, but there is plenty of activity to enjoy in the months and years to come.

[verwijderd] 2 september 2005 20:18

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$10,000 Gold

by Michael S. Rozeff
by Michael S. Rozeff

Should you own some gold? If so, how much? Why own gold? What might make its price rise dramatically? Although the future is uncertain, rational answers to these questions are possible. That means you can answer them. I can help somewhat. To begin with, one should understand the relations among three things: money supply growth, gold prices, and the consumer price index (CPI).

Between 1930 and 2004, gold rose in price from $20.67 an ounce to its present level of about $440. That’s a growth rate of about 4.1 percent a year. Over the same period, the CPI index rose from 16.1 to 190.3 or about 3.3 percent a year. Both gold and the CPI are linked to how much the money supply grew over this period. The M1 money supply was $24.92 billion in 1930 and grew to $1,340.2 billion in 2004. The growth rate was 5.4 percent per year.

I do not discuss here what real money might be in a free economy, which the U.S. does not have, or the pros and cons of various definitions of the printing press (fiat) money we do have. I will mention that the Federal Reserve (Fed) controls the supply of this fiat money. It is the only legalized entity that can write any amount of checks on itself without having anything in its account. When these checks are presented for payment by banks, it credits their account with reserves – a purely electronic or paper transaction. If the bank wants currency, the Fed gets the Treasury to print some and delivers it. This legal counterfeiting operation is how central banking works.

We the people have no possible use for the Fed that I can think of, but the State does. The Fed buys a lot of the debt that the State floats. It also seems to be a convenient way for the State to distribute its printing press money whenever it wants to. However, the U.S. government got along without the Fed until 1913.

Naturally the Constitution nowhere gives the Congress the power to print non–interest-bearing paper and call it money or legal tender. It does prohibit the States to "make any thing but gold and silver coin a tender in payment of debts," which clearly suggests that the Constitution meant gold and silver coin to be money. It does give Congress the power "to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures," which means to imprint gold coins and determine their weight. Congress also has the power "to provide for the punishment of counterfeiting the securities and current coin of the United States," which again says that money was coin. I suppose that this punishment has been declared to be nil in the case of the Fed.

There is also a demand for money, subject to a myriad of factors that will not detain us. A major one is that as the population grows, the demand tends to grow along with it. Since 1930 the U.S. population grew at almost a 1 percent rate.

We notice that gold’s price growth exceeded that of the CPI by 0.8 percent a year. Although that seems fairly close, over a period of 75 years the difference adds up. There are many difficulties and strange features of how the government computes the CPI, there have been many new sources of supply and demand for gold, and there have been many economic and political changes since 1930. Yet the two growth rates are not too far apart. It seems that gold has risen in price about in line with other common goods and services. Some people say that it takes about the same amount of gold (about an ounce) to buy an off-the-rack average suit of clothes today as it did 75 years ago.

This means that gold has been a good hedge against price rises (as measured by the CPI), or that gold prices kept up with price rises. The natural growth of supply and demand for gold has apparently remained so steady relative to other goods that the price of gold in terms of other goods has not changed very much.

There are some whose assessment differs substantially from this one. They estimate that it takes 3 ounces of gold worth $1,320 to buy a suit today, where it used to cost 1 ounce worth $21. They believe that the gold price today should be higher by a factor of 3 compared to its present price, or that $440 is way too low. The source of these statements is often someone anxious to market gold. I stick with the conventional view that gold has tracked the CPI closely.

The huge rise in the CPI index and in the price of gold means that the value of the dollar fell drastically between 1930 and the present. Since gold rose by a factor of 21.3 (or 440/20.67), the dollar today is worth only 1/21.3 = 4.7 percent of its value in 1930. The dollar has lost over 95 percent of its value in terms of gold. In terms of the CPI index, it has lost 92 percent of its value.

The cause of these declines in value of the dollar is that the Federal Reserve has shifted the supply of dollars upwards, well beyond the amounts that were warranted by the increases in demand for dollars that have occurred over this period. It bought a lot of things (mainly the debt of the U.S. government), created a lot of phantom reserves, and printed a lot of counterfeit currency called legal tender. These busy printing presses drove the value of the dollar down. The more dollars that were sitting in banks (because of cashing the Fed’s checks), the more that people borrowed and spent. Since the printing presses did not create any real goods or services, these dollars simply bid up the prices of the goods and services. That is (mainly) why a t-bone steak that cost $0.29 a pound in the 1920's costs $7.99 today.

Since the population of the U.S. grew by 1 percent a year, a very rough guess is that the supply of money since 1930 grew by 4.4 percent in excess of what population growth required. That might help explain why gold’s price went up by 4.1 percent a year, which is 1.3 percent less than what M1 rose. Gold’s growth exceeded the CPI’s growth perhaps because the CPI understates inflation. Both gold’s price increase and the excess growth of the money supply are better measures of inflation than the CPI. Measuring "excess money" is a problem, however, and gold’s value is volatile in the short run.

What’s inflation? Some economists define inflation in terms of price rises of goods and services. They use the CPI, but this measure is flawed for a variety of reasons. Alternatively, it may be more clear to say that inflation means excessive growth in the money supply, which then usually translates into rises in prices of various goods and services. Since in our system the State controls money via the Fed, the State is the sole cause of inflation because it controls the supply of fiat money. The Fed, usually doing what the President and Secretary of the Treasury want, causes inflation by increasing the supply of money. The public, however, can affect the rate of increase in prices by how intensively it uses this money (the money velocity).

Suppose that gold prices accurately measure the inflation rate. Its growth rate was 4.1 percent, which was 1.3 percent below M1 growth. Suppose the Fed had made the money supply rise by just 1.3 percent a year, then gold would today be about the same price as in 1930.

As we look ahead, we see that the Fed can keep inflating the money supply indefinitely, or until a hyperinflation occurs that ends the process. To get the gold price to $10,000 an ounce, gold has to rise by a factor of 22.7 (that’

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All of these inflation scenarios cause stock and bond prices to decline. Since bonds are contracts that pay off in dollars, they are negatively impacted as dollars are depreciated by inflation. The effects on stocks are more complex and vary across different types of stocks. Usually the markets are disrupted enough by inflation that the overall net effect is negative.

Suppose that a portfolio has $9 in stocks and bonds and $1 in gold. Under one of these extreme scenarios, suppose that the $9 investment falls to $1, while the $1 investment in gold rises to $9. Then the portfolio maintains its purchasing power, despite the enormous loss in the bond-stock component. That is, a 10 percent position in gold maintains the whole portfolio value if gold rises by a factor of 9 while other assets fall by 89 percent. There are many such possibilities. A 5 percent position maintains 70 percent of the portfolio value if gold rises 450 percent when stocks and bonds fall by 50 percent. The $0.95 worth of assets declines to $0.475 and the $0.05 of gold rises to $0.225, which add up to $0.70. A 20 percent position maintains total value if gold triples when the stocks and bonds lose 50 percent of their value. This scenario sounds fairly plausible. The $0.80 of stocks and bonds dips to $0.40 while the $0.20 of gold rises to $0.60.

Looked at this way, it is evident that gold in the portfolio is equivalent to insurance against some devastating contingencies. Complete or partial insurance are possible. The more gold you have, the more insurance you are buying. Over-insuring is costly because the overall rate of return of the portfolio goes down if nothing happens. That’s because gold historically provides no real return. Everyone has to decide for himself what the odds of these scenarios or ones like them are, how to insure against them as with gold or some other real assets, how high gold will go when other assets decline, and how much to insure against these events. There are no pat answers to these decisions, but they are within the realm of understanding and even sensible computation.

August 22, 2005

Michael S. Rozeff [send him mail] is the Louis M. Jacobs Professor of Finance at University at Buffalo.

Copyright © 2005 LewRockwell.com

Michael S. Rozeff Archives

Forum	# Topics	# Posts
Aalberts	466	7.001
AB InBev	2	5.481
Abionyx Pharma	2	29
Ablynx	43	13.356
ABN AMRO	1.582	51.201
ABO-Group	1	22
Acacia Pharma	9	24.692
Accell Group	151	4.132
Accentis	2	264
Accsys Technologies	23	10.528
ACCSYS TECHNOLOGIES PLC	218	11.686
Ackermans & van Haaren	1	188
ADMA Biologics	1	34
Adomos	1	126
AdUX	2	457
Adyen	14	17.649
Aedifica	3	901
Aegon	3.258	322.664
AFC Ajax	538	7.086
Affimed NV	2	6.287
ageas	5.844	109.885
Agfa-Gevaert	14	2.048
Ahold	3.538	74.293
Air France - KLM	1.025	34.997
AIRBUS	1	11
Airspray	511	1.258
Akka Technologies	1	18
AkzoNobel	467	13.036
Alfen	16	24.331
Allfunds Group	4	1.468
Almunda Professionals (vh Novisource)	651	4.251
Alpha Pro Tech	1	17
Alphabet Inc.	1	405
Altice	106	51.198
Alumexx ((Voorheen Phelix (voorheen Inverko))	8.486	114.813
AM	228	684
Amarin Corporation	1	133
Amerikaanse aandelen	3.835	242.728
AMG	971	133.087
AMS	3	73
Amsterdam Commodities	305	6.686
AMT Holding	199	7.047
Anavex Life Sciences Corp	2	485
Antonov	22.632	153.605
Aperam	92	14.932
Apollo Alternative Assets	1	17
Apple	5	380
Arcadis	252	8.731
Arcelor Mittal	2.033	320.576
Archos	1	1
Arcona Property Fund	1	286
arGEN-X	17	10.288
Aroundtown SA	1	219
Arrowhead Research	5	9.716
Ascencio	1	26
ASIT biotech	2	697
ASMI	4.108	39.082
ASML	1.766	106.057
ASR Nederland	21	4.451
ATAI Life Sciences	1	7
Atenor Group	1	470
Athlon Group	121	176
Atrium European Real Estate	2	199
Auplata	1	55
Avantium	32	13.610
Axsome Therapeutics	1	177
Azelis Group	1	64
Azerion	7	3.390

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