Forum: Edelmetalen » Goud en zilver Rockin & Rollin

[verwijderd] 8 oktober 2005 11:43

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Would You Like to Pay by Check, Cash -- or Gold?

James Turk's Quixotic Quest:An Online Payment System
Based Entirely on Bullion By Craig Karmin
The Wall Street Journal Saturday, October 8, 2005

James Turk thinks he has a solution to worries about a weaker dollar: Stop using cash to pay for things -- instead, pay with gold.

A handful of companies are pitching services that let people make payments to one another denominated in gold, much as they might wire cash through a bank account. Amid soaring bullion prices and
simmering concerns about the health of the U.S. economy, they are finding a small but promising market.

One of the main providers, GoldMoney.com, based in the British Channel Islands and founded by Mr. Turk, currently has 23,000 users, he says, more than double the number a year ago. His company
followed on the heels of e-gold.com, a West Indies-based company started by a Florida oncologist that has offered electronic gold payments since 1996. A handful of other competitors, with names such
as e-bullion.com, also have sprung up.

"Gold's historic role has always been as the world's currency," says Mr. Turk, a 58-year-old former banker and self-described "gold bug."
That is a term more often applied to fringe characters who own gold to protect against market crashes or even Armageddon.

"Some gold bugs are very fervent," Mr. Turk says.

Still, he shares their belief that governments ultimately give in to temptation by printing too much money and debasing their currencies. He argues that current U.S. economic fundamentals -- rising
government spending paired with an increasing trade deficit -- will inevitably cause the dollar to weaken dramatically.

There are mainstream economists who share some of his concerns, even if they disagree with his proposed solution. And gold could prove to be a wise investment, because it tends to gain value at times of uncertainty. But it is hardly a one-way bet. For the past 25 years, holding gold actually has been a good way to reduce wealth. While
bullion prices recently hit $472.30 an ounce, their best level since 1988, that is down from $834 an ounce in 1980.

GoldMoney's users tend to be small-business owners who make regular purchases overseas and worry about currency fluctuations. Jeff Wright, a director for software-development company TimeWarp in Colorado Springs, Colo., has been using GoldMoney for more than three years to buy software from vendors in Europe and Australia. One benefit, he says, is that everyone avoids currency-conversion charges, which can be as much as thousands of dollars on large
transactions.

Of course, now he has to worry about volatility in gold prices. "I usually check it twice a week to see how things are going," he says.

Services like these aren't for everybody. For one thing, Mr. Wright points out that the first thing he had to do was persuade his suppliers to accept payments in gold and then set up online accounts
with GoldMoney. And the gold industry has proven to be rife with scams and swindlers. During the early 1980s, for instance, customers of the International Gold Bullion Exchange in Fort Lauderdale, Fla.,
once the largest gold-bullion dealer in the U.S., were shocked to learn that the gold bars stored in the company's vault were made of wood. Thousands of customers lost tens of millions of dollars.

Mr. Turk says he often fields questions about authenticity, and points out that he lists the vault company where the gold is stored on the company's Web site, as well as other documents attesting to the gold's validity. His customers' holdings are valued at $62 million, Mr. Turk says. Account holders' money is held in gold that is stored as 400-ounce bars in a vault just outside London.

In effect, each time a payment is made, one account holder is passing to another a claim on the stack of gold in the London vault. He says a transaction costs only about $1.50, compared with $20 or more for a bank wire.

Mr. Turk's own thoughts about the nature of money go back to his childhood in Ohio, where his austrian father emigrated after World War I. After the war, Austria suffered extreme hyperinflation that made its currency next to worthless.

Then, early in his banking career, while with Chase Manhattan in Asia, he was present in Bangkok in 1974 for the collapse of Herstatt Bank due to unauthorized foreign-exchange dealings. It marked the biggest bank failure in the history of what was then West Germany, and caused turbulence in financial markets around the globe.

"My family's experience and Herstatt's collapse made me realize that national currencies are much more inherently unstable than tangible assets," he says. That led him to start thinking about how to
circulate gold as a currency, a practice that started falling out of favor back in the 17th century, when the Bank of England issued the first widely circulated paper money as a stand-in for gold and silver.

After a stint in the United Arab Emirates, where he managed the precious-metals portfolio for the Abu Dhabi Investment Authority, Mr. Turk settled in London, where since 1987 he has published the
Freemarket Gold & Money Report.

His newsletter quickly became essential reading for gold bugs, a group he has an affinity for despite its quirks. In one instance, in the late 1990s a gold-bug organization called the Gold Anti-Trust
Action Committee demanded a congressional investigation into its claim that, in effect, Federal Reserve Chairman Alan Greenspan was conspiring to fix gold prices with the Bank of England and the government of Kuwait.

"The framers of the Constitution were gold bugs," Mr. Turk says. "That's why they insisted on a sound money policy of gold and silver when writing the Constitution."

In 1998, as e-commerce was taking off, Mr. Turk launched GoldMoney, seeing the Internet as a tool enabling gold to again be used as currency. Last year the company reported revenue of $37 million, Mr. Turk says, and he expects twice that much this year. The company has attracted outside investment from DRD Gold, a South African mining company, and IAMGold Corp. in Toronto, which together hold a 21% stake in GoldMoney.

Mr. Turk's case for bullion is rooted in history. He argues that all governments -- from ancient Rome to King Louis XV's France to 1990s Argentina -- eventually succumb to excessive spending. Rather than raise taxes, officials resort to printing more money, sparking inflation and financial collapse.

Because paper currencies are no longer backed by gold or another tangible asset, Mr. Turk likes to point out, they represent nothing more than a government's promise to honor them. But when currencies fall, he says, gold remains a valuable commodity.

"Unlike the dollar," he says, "gold is not ependent on the U.S. government's promise to honor it."

[verwijderd] 11 oktober 2005 09:12

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If You Like Gold Buy Silver By Sean Rakhimov
October 10, 2005 SilverStrategies.com

The world is running out of silver. Or is it? Let us qualify that: the world is running out of cheap silver. And how, you ask, we arrive at such conclusion? And I turn it right back at you, and say – show me the silver! With the price of every commodity going up what do you think it will do to the price of silver?

As we look around the world we find all but two-three dozen silver companies. That’s against a backdrop of hundreds of gold, oil, natural gas companies. Uranium is a hot topic. As of about 20 months ago. And we suddenly have over a hundred uranium companies (or companies that claim to be in uranium business). You don’t know them? Apparently, you don’t have to, for them to survive and flourish. We are not making it up, we refer you to the man who made a fortune in uranium stocks and is presently Senior Editor of Casey Energy Speculator, Phil O’Neall.

Oil is all over the headlines. Oil is the headline of the year. So far, anyway, because from the looks of it gold may steal the limelight before year end. Are we running out of oil? I believe we are, but that is not the reason why oil is making headlines. It’s the PRICE of oil we’re most concerned about. (We have enough oil to last us another few decades so why worry about peak oil now?) Oil price is largely the reason uranium is back in fashion and incidentally, uranium price has more than quadrupled since the bottom at $7 and change. So did the oil price.

Why is gold in the news the last few weeks? Because gold price just made a 17-year high. It crossed the $470 mark recently. Where is that relative to the bottom? Not even a double. But gold, oil, uranium are highly political resources. That’s why the media tends to focus on them. What else is in the news? Natural gas. What about lead, zinc, copper, timber, iron-ore, nickel, etc? Are they not worthy of a discussion? Jim Rogers thinks they are. But I would like to zero in on another ignored metal – silver.

David Morgan calls silver “the most important metal” and merits of it have been discussed before and will be again. So why is it ignored by the majority of investors? Because SILVER IS CHEAP! Cheap as in undervalued. But wait a minute, isn’t that what investors are supposedly looking for? Didn’t the best investor of all times, Warren Buffett, get where he is now due to his value investing approach? Doesn’t Buffett own 129 million ounces of silver? Then why investors shun silver?

Silver is bulky, I hear. Hmm. Buffett didn’t think so. He didn’t buy gold, he bought silver. Why is it bulky for the average Joe? Because SILVER IS CHEAP!! Because you can still buy quite a bit of silver for your investment dollar. I will bet my rent money that at $50/oz silver won’t be bulky at all, and those who didn’t want to hear about it at $7 and $8 will be lining up to get some, because at $50 they will be carrying home a substantially lighter load.

Doug Casey says, silver gets no respect, because for the most part silver is mined as a by-product of copper, lead, zinc and gold therefore it is mined regardless of silver price. However, that may be changing before your eyes. Silver Wheaton (AMEX: SLW) has pioneered the concept of unlocking the value of silver by-product by buying silver production from mines that earn their bread in other metal. Coeur D’Alene Mines (NYSE: CDE) has followed suit with its recent deal in Australia. Silver Standard Resources (NASDAQ: SSRI) and Vista Gold (AMEX: VGZ) have similar arrangements on some of their projects. The latter two had them even before Silver Wheaton, but due to the fact that their properties are not yet producing few investors paid attention. The attitude was - so long as it is in the ground, doesn’t matter who holds the rights to which metal. We know of more companies looking into similar opportunities.

Silver companies can’t make money mining it, comes another argument. That is mostly true, but not entirely. We know at least two silver mining companies that are profitable on operating basis today and two more that are getting close to profitability at current prices. But isn’t it the function of free markets to regulate asset prices? What happens when companies cannot make money selling their product (we have to speak in these terms to make our point)? They go out of business, the price of their product goes up and the higher it goes, the more companies get back in the business until the market finds balance between supply and demand. The above development of silver by-product being bought and sold as an asset of its own will do wonders for the industry.

Silver is not money, they tell me, it’s a commodity. Duh! Is that supposed to be bad for silver? Are we not in a commodities bull market? Oil is a commodity and you don’t see the oil price suffer from it. “Oil is different, it’s a source of energy” - argue skeptics. What do you have to say about molybdenum, rhodium, copper, lead? Those are not energy sources but have been showing some pretty returns in the last several years. If silver is a commodity, which of course it is (we’ll get to monetary aspect shortly), it will play catch up to the rest of the group. Last time I checked we were in a commodities bull market and those tend to last for 15-20 years. If, for arguments sake, we agree that it started around the year 2000, we still have about a decade or more of it ahead of us.

I want to get back to silver as money. Let’s see what we have here. English is my second language, but wasn’t the colloquialism “pay in silver” widely used till about 100 years ago? Don’t we have silver coins in most countries around the world? Doesn’t the US Constitution state that gold and silver are only viable money? Doesn’t the word “silver” mean “money” in some 50 of the world’s languages? And lastly, don’t the financial markets treat silver as money? According to CPM Group gold and silver are regarded as money by the financial markets because the open interest in these two metals is comparable to same in Foreign Exchange markets, i.e. currencies. No other commodity comes even close to gold and silver in that respect. That’s not me saying it. That is the world financial system in action.

I will take a chance here and tell a joke. Hopefully readers will look past its politically incorrect bias and focus on the point it makes.

A spokeswoman for a feminist group announces the results of a comprehensive study on gender induced properties of logic and says the following: “We ought to admit that men’s logic is superior to that of women, but at the same time, women’s logic is no worse by any means”.

Let’s sum up. Gold is money. Silver tracks gold, trades like it, but it’s not money. Some logic there. You catch my drift.

A few words about currencies. Currency is NOT money. Money is a store of wealth and buying power. Currency is merely a medium of exchange. It’s the stuff you carry around to pay for coffee. The two are confused because historically gold and silver were used as both. What are the chances of silver returning as currency? It’s not impossible. Hugo Salinas Price has the all 31 Governors of Mexican states supporting a silver based currency. Bernard von NotHaus of Liberty Dollar was able to convince thousands of people to use it and I have to agree with Bernard on this one – government controls the currency, not the money. Money is a universal store of value

[verwijderd] 11 oktober 2005 23:43

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GOLD HITS 18-YEAR HIGH

Tuesday, October 11, 2005 - FreeMarketNews.com

Economist John Maynard Keynes called it a "barbarous relic." Wall Street and central banks may have tried to suppress its price, and many financial planners still won't recommend it. But gold just went up again, and shows few signs if any of retracing its steps in the near future. This week it reached an 18-year high of $477.77 an ounce. A Bloomberg report calls the primary motivation "a hedge against accelerating inflation," noting that 29 of the 47 "traders, analysts and investors" they surveyed over the weekend "recommended investors buy gold." The report notes that gold has risen 8.1 percent during the past six weeks as energy prices reached record highs.

There are many interpretations for what is going on the markets now, but free-market economists have been predicting a long, steady price rise in precious metals in the 2000s because of the cyclical nature of markets and the predictable outcome of central bank "fiat" money creation. Wall Street, on the other hand, may still see the price of gold from a so-called technical point of view, and regard price fluctations as the result of short-term stimuli. Bloomberg quotes Mihir Worah, senior vice president at Pacific Investment Management Co., as follows, "We're going to see elevated inflation trends over the short term. A lot of the hedge funds are selling crude oil and getting into gold."

For those in the "free-market" camp, the price-action of gold is the result of larger forces at play. Much as in the 1970s, precious metals prices are responding to a great 20-year burst of money creation that pushed the Dow and Nasdaq to record highs by the end of the 1990s. Markets reacted similarly in the 1970s when the the money creation of the 1950s and 1960s pushed the Dow and Nasdaq to dizzying highs before a 12-year blow off set in around 1970. Free-market analysts and economists would not be surprised if this latest cycle lasted until the middle of the next decade - which means commodity prices could continue to rise along with other assets such as real estate and precious metals.

The current rally is the longest since a seven-week run last November and December. Next stop US$500? - ST

staff reports - Free-Market News Network

[verwijderd] 13 oktober 2005 09:47

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Local Banks Strike it Rich with Gold Coins

By Arindam Saha India Times / The Economic Times
Haryana, India Thursday, October 13, 2005

economictimes.indiatimes.com/articles...

MUMBAI -- As the price of gold scales an almost two-decade high, local banks are moving in to take advantage. Their target this time is the gold coin retail segment. Corporation Bank, HDFC Bank, and
IndusInd Bank are now jostling for a slice of the pie in this segment of the market.

A small gold coin weighing just 2 gm is being retailed for close to Rs 1,500 by some of the market players keeping in mind the upcoming
Diwali and Eid festivals. The banking regulator has now ensured that customers have the choice of buying these coins from either banks or
traditional retail gold outlets like Zaveri Bazar in Mumbai.

The latest entrants to the business of hawking gold coins are following in the footsteps of two seasoned players in the market — ICICI Bank and MMTC. And there are many others who are waiting in
the wings with similar products lined up.

However, with less than a month to go for this year's festival, latecomers may well miss out on cashing in on a good business opportunity. It is not just the small gift purchases from retail
customers that banks are eyeing. Many corporates like HPCL, BPCL and Nabard figure among their list of bulk customers.

Banks, unlike retail gold outlets, offer customers the comfort of proper assaying certificates and hallmarking. Though big retail shops often provide those details on request, several others are yet
to follow the global practice. For Corporation Bank, the entry into the gold coins segment is like pouring old wine into a new bottle. It was the first public sector bank to import gold in India after RBI sanction in `97.

"Currently 10,000 gold coins have been imported and all coins have goddess Laxmi's picture," said K Balasubramanyam, senior manager of the bank. Each coin weighs 8 gms and comes with a purity
certificate. Almost five years ago, Corporation Bank tried its luck with coins, but the scheme ended abruptly.

IndusInd Bank has also launched similar coins. Coins come in 5-10 gm range with fineness of 99.9%. Any customer can pick up the coins by paying cash up to Rs 50,000 at one time. More than 50 branches of the bank have been designated as sellers of such coins.

Like other, HDFC Bank also sells 24 karat and 99.99% purity gold. All such coins are imported from the PAMP Refinery in Switzerland. However, unlike the other sellers, HDFC does not sell gold in coin shapes. Its 5 gm gold product is available in bars.

With rising gold prices, business has been brisk for banks. Many banks had purchased gold when the prices were low compared to the current price of $475 a troy ounce. However, for the customer, what
counts is the day's prevailing price. The sale of gold coins by banks is open to non-bank customers too.

Like banks, PSU MMTC is also in the fray. It offers gold coins ranging from a tiny 2 gm to 20 gm. SD Shindhe, manager of MMTC, said that customers include individuals, retail and corporate entities.
It also sells silver coins of 25 gms or more. According to reports, MMTC is targeting to earn close to Rs 2 crore in the festival season.

[verwijderd] 14 oktober 2005 23:24

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SUA: BLOCK SILVER PRICE EXPLOSION
Friday, October 14, 2005 - FreeMarketNews.com

The Silver Users Association (SUA) is urging the Securities and Exchange Corporation (SEC) stop Barclays from creating a silver backed Exchange Traded Fund, according to Reuters. In a desperate move to block the ETF, the association made a plea to the SEC that argued that the economy could suffer if silver prices spike.

Barclays filed a registration to create the first silver ETF, however it is still pending regulatory approval. The Silver ETF would be similar to the popular gold ETFs, which are responsible for purchasing about 250 tons of gold worth $3.4 billion. The trust would take delivery of millions of ounces of silver bullion and store it in England. However, some speculators believe that there isn’t enough silver stored above ground to fulfill investment demand for a silver ETF. If the ETF is blocked for this reason, it could be seen as a bullish confirmation for investors.

The SUA was created in 1947 to lobby for companies that purchase and consume silver. Admitting that supplies are tight, the SUA fears that taking silver from exchange warehouses could be enough to set off a shortage. “We don't endorse a silver ETF because of the potential liquidity problems it would create,” the SAU wrote.

The admission by the SUA is astonishing given that all the major players in the silver industry have maintained for a number of years that the silver is plentiful and that the analyses of silver bulls as regards supply were wrong. In admitting that supplies are tight, not only does the SUA vindicate a long-standing argument of the silver bulls it also comes perilously close to an admission that the market has indeed been controlled by those forces which have wanted low, steady prices. By turning to the SEC, the SUA is admitting that the status quo - manipulated as it apparently is - should be continued by any means possible. Unfortunately, a manipulated price is, by defintion, a price that must rise somehow, someday. Perhaps, say the silver bulls, that day is now.

[verwijderd] 17 oktober 2005 09:42

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What is Happening with the Silver ETF? Roland Watson
Oct 14, 2005
www.321gold.com/editorials/watson/wat...

So what exactly is happening with the anticipated Silver ETF that Barclays Bank filed with the SEC in June? Their proposal to set up an exchanged-traded fund with an initial offering of 13 million shares each representing 10 ounces of silver set the world of silver abuzz but now all seems quiet. You can find the filing for the ETF at this official SEC link.

The alleged problems began when a rumour was reported on the 15th September that the SEC had rejected the filing. The text of the rumour is reproduced below from this link:

The US Securities and Exchange Commission has turned down Barclay's Global Investors application to establish a silver electronic trading fund platform, sources in the market told Platts Thursday. Barclays already have an ETF for gold.

A well-respected industry source said Thursday that there was "speculation in the market that Barclay's application for a silver ETF has been refused by the SEC." A second source told Platts that Barclays had filed the application with the SEC a couple of weeks ago. "I would be very surprised if it had been approved, another UK-based market source, unwilling to elaborate on his statement."

Barclays themselves went immediately on the offensive by denying any claim of rejection and maintaining that the filing was still awaiting approval. They also pointed out that this is a lengthy process having seen their Gold ETF take a year to go from filing to launch.

One could believe either of these claims or more reasonably go for the middle position, which is that it was rejected in the sense of requiring further amendment to calm certain objectors' nerves. However, the market action from the day the rumour came out is interesting. After bumping along at about $7.00 for a number of months, the price has jumped and jumped since that day of Thursday, 15th September 2005. The chart below confirms the "before" and "after" effect of this rumour date.

What can we deduce from this dislocation in price action? Did certain institutional investors get wind of this rumour and put two and two together? That is, this commodity is too illiquid and scarce to be subject to an ETF of 130 million ounces? The coincidence seems too much to dismiss and an ETF rejection or approval is bullish for silver either way. Time will tell, but silver is currently over 10% up in four weeks since the day that rumour came out.

However, looking at the other arrow on the graph, we have to understand that certain other voices were crying out against this ETF. This was most noticeable in the form of the Silver Users Association. Only days before this rumour of an SEC rejection came out, the SUA published their September newsletter containing a "white paper" on their opinion of the ETF.

This included an overview of the depletion of US government silver stocks over the years and the conclusion that a now fragile silver market would suffer if an ETF came in with its disruptive buying power. For good measure they talked about shortages and job losses.

The link is here and should not surprise anyone familiar with this organisation and the silver consuming companies they represent. Indeed, the SUA published essentially the same piece in their previous July newsletter just so we know their fears concerning the ETF. In that later September piece, they ended with this extra text to reinforce their objections to the SEC (with my emphasis added):

"This removal of large quantities of physical silver could have a negative impact on silver-industry specific employment as well as the overall economy, both through job losses and inflation.

The Silver Users Associations supports the buying and selling of silver as an investment. There are already several ways to do so without creating a potentially harmful situation to industry. We don't endorse a silver ETF because of the potential liquidity problems it would create. The SUA urges the SEC to take these issues into consideration before it decides whether or not to issue a silver ETF."

Their concern that this ETF could lead to silver shortages is illuminating and confirmatory of the bullish nature of silver investing. Of course, we have to decode the SUA's pessimistic utterances. What they actually mean is that a silver ETF would lead to a silver price surge not a silver shortage. The silver would still be available to their consuming members, only at a higher price.

It is also ironic to see their white paper talk about the running down of US government stockpiles that they themselves willingly partook of at depressed prices after the USA went off silver coinage. The SUA does not mind silver stockpiles, just so long as they have unfettered access to them!

So, the SUA publishes a condemnation of the silver ETF and a rumour of its rejection comes out days later. Was the SUA leaning on the SEC and lobbying hard in the corridors of Senate and Congress? Did their scare stories of shortages and job losses prove too much for certain politicians? It certainly seems to have had some effect.

We don't know for certain but we do love to speculate. One thing that needs no speculation is that any attempt to suppress investor buying has so far blown up in their faces. Neither are we convinced that the silver ETF is history quite yet.

Either way, it looks bullish to silver to us!

Roland Watson

[verwijderd] 18 oktober 2005 08:04

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Is the Day Nigh for Silver Bulls? By Jon A. Nones
17 Oct 2005 at 05:58 PM

St. LOUIS (ResourceInvestor.com) -- In a recent policy statement, the Silver Users Association (SUA) urged the Securities and Exchange Commission (SEC) to stop Barclays from creating a silver backed Exchange Traded Fund.

“The Silver Users Association opposes the creation of a silver ETF because of the concerns that doing so will require the holding of physical silver be held in allocated accounts, thus removing large amounts of silver from the market. By doing so, the ETF will cause a shortage of silver in the marketplace. If this happens, it will ultimately be the economy that suffers due to the negative impact taking large amounts of silver out of the market will have on industry,” the statement said.

Barclays Global Investors, the asset management arm of Barclays Plc, filed a registration in June seeking regulatory approval for a new silver ETF. If approved, the trust would be backed by silver held in England initially, and possibly at other locations down the road.

SUA Executive Director Paul Miller told Resource Investor that the removal of large quantities of physical silver would have a negative impact on industry-specific employment as well as the overall economy.

“So much silver would be taken out of the market place, which in turn, means higher costs to companies that use silver,” he said.

Miller added that the ETF would “obviously cause higher prices, and if some folks aren’t doing well, could mean loss of jobs.”

According to an article in FreeMarketNews.com, some speculators believe that there isn’t enough silver stored above ground to fulfill investment demand for a silver ETF. If the ETF is blocked for this reason, it could be seen as a bullish confirmation for investors.

“This is one of the issues that we’re going to discuss at our meeting next week,” Miller said, alluding to the SUA’s second annual meeting scheduled in October.

However, the SUA statement itself alludes to a shortage.

“A silver ETF would only exaggerate silver’s illiquidity given the sheer volume of physical silver needed to be shipped and stored,” the SUA wrote.

According to FreeMarketNews, the admission by the SUA is astonishing given that all the major players in the silver industry have maintained for a number of years that silver is plentiful and that the analyses of silver bulls in regard to a dwindling supply were wrong.

The SUA notes that the silver ETF would be similar to the popular gold ETFs, which are responsible for purchasing about 250 tonnes of gold worth $3.4 billion.

The SUA comes perilously close to admitting that the silver market has indeed been controlled by those forces that want low, steady prices.

And, by turning to the SEC, the SUA is implying that the manipulation should be continued by any means possible.

“This issue concerns a lot of our members,” Miller said.

The SUA represents the interests of companies that make, sell and distribute products and services related to silver. The Association’s members process 80% of all silver used in the United States.

Today, December silver climbed 1.3 cents to close at $7.875.

[verwijderd] 19 oktober 2005 09:42

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Investment column
By Tom Stevenson (Filed: 19/10/2005)

When they banged on the door and told her to leave, my mother-in-law didn't have time to dig up the gold. Her brothers came back under cover of darkness to retrieve the hoard that saw them through the chaos of India's partition.

She learned at a young age that a high value to weight ratio is what counts when you have to clear out on the back of a bullock cart. You can't take the farm with you.

It is a sign of the relative tranquillity of our times that for most of the past 25 years gold has been such a poor investment. Since peaking at $850 a troy ounce in 1980 as inflation and the oil price soared, it was downhill for two decades as equities and bonds hogged the limelight.

The price bottomed out at $250 in 2001 just as Gordon Brown, with exquisitely poor timing, decided to sell off half the UK's remaining gold reserves.

The 20-year slump in the price of gold compared with double-digit annual growth in the stock market over the same period - the S&P 500 rose by 12.9pc a year on average - and a real return of 7.5pc on US government bonds. Hardly surprising that gold was sidelined.

Fast forward to this month, however, and the price of gold has hit an 18-year high, reaching $482.50. If and when the 1987 peak of $502 is left behind, the way will be clear to scale the previous heights.Softly, softly a significant bull market has got underway.

There are three main reasons why the rise in the gold price looks justified. The fundamental argument is that demand, up last year to 3,500 tonnes, is outstripping supply. India alone is expected to import 850 tonnes this year, a 33pc rise on 2004.

At the same time, according to Paul Merrick, a vice-president at RBC Capital Markets, production has fallen. Last year it was down to less than 2,500 tonnes, with 430 tonnes already spoken for.

Most of today's mines were developed in the 1980s, when the price was much higher and even if large scale funding re-emerges there will still be a lag of several years before production begins. The slack has historically been made up by central bank selling but a recent agreement limiting government sales to 500 tonnes a year has capped this source.

The second reason for the rise in price is growing investment interest in gold as a financial asset - the net speculative long position on New York's Comex exchange has risen to over 20m ounces, against 5.3m in May.

The usual rationalisation is that investors are seeking a safe haven ahead of economic turbulence and as a hedge against inflation. Fears on this front were fuelled last week by data showing US prices rising at the fastest annual rate since 1991.

It is also true that worries about America's twin deficits could at some point lead to a reversal in the dollar's recent strength and a falling greenback traditionally underpins the price of gold.

Finally it is true that many Asian central banks might wish to diversify their reserves away from the dollar and gold is the obvious choice.

But on their own those reasons do not seem enough to merit the doubling in the price in recent years. The catalyst seems to be liquidity. Abundant cheap money has chased almost every other asset - from shares to property and oil - higher. Gold is the latest hot target. Flavour of the month it may be but that doesn't mean the price won't go further.

The third reason to think that the run in gold has a way to go yet is the fact that, historically, it is not expensive. The long run ratio between the Dow and the gold price (don't worry about the maths) is around 10:1. At the height of the dotcom bubble that soared to 40:1 but today it is still a well-above-average 25:1.

Rory Gillen, a fund manager in Dublin, puts it this way: "In the early 1980s one share in the Dow Jones index would have bought an investor three ounces of gold. Today, that same share will buy nearly 22 ounces."

In real, inflation-adjusted terms, too, gold looks good value. The 1980 peak of $850 an ounce would be $2,550 in today's money. That's more than five times the current price and puts even the most bullish forecasts of around $1,000 within a few years in perspective.

The history of markets in shares, property, commodity prices and oil suggests that the one thing all bull runs have in common is the capacity to roll on longer than most people expect. The good news is you don't need to bury it in the back garden these days.
# tom.stevenson@telegraph.co.uk

[verwijderd] 19 oktober 2005 23:27

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Geachte Gung Ho

Zoals ik al eens heb geschreven ben ik tot mijn, bescheiden, inzichten inzake de goudmarkt gekomen door uw draadjes grondig te bestuderen.

Ik ben u zeer erkentelijk voor de opgedane kennis en ik respecteer uw mening meer dan van anderen. Mijn beweegredenen om in goud te stappen heb ik dan ook altijd getoetst aan wat in mijn ogen uw gedachtengoed hieromtrent is.

Uw analitisch inzicht, uw brede historische kennis en uw objectiviteit wat betreft het te verwachten koersverloop van goud in al zijn verschillende beleggingsproducten hebben mij altijd tot steun gediend bij het nemen van beslissingen.

Hiervoor wil ik u hartelijk danken en ik hoop dat u de tijd blijft vinden om zo af en toe een vraag van mij te beantwoorden.

Met hartelijke groet,
Honky Tonk Girl

[verwijderd] 20 oktober 2005 13:21

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THE SAFETY OF GOLD Wednesday, October 19, 2005

www.freemarketnews.com/Analysis/102/2...
The big news, I guess, is that required bank reserves dropped to $42.2 billion, even as bank deposits climbed and new loans/leases dropped. Of course, the Treasury printing up $3.8 billion in actual cash last week was pretty exciting, too. This amount of cash comes to about $27 for everybody in America who has a job. And though it is obviously being used to pay off Iraqis and Halliburton and all kinds of people who would not take a check, it still adds to the world supply of dollars, and after just a couple of transactions will imbed itself in the world economy, ballooning the money supply a little bit more, and the dollar will get just that little bit much weaker.

Of course, it was not just the bankers and the Treasury acting like slimy little toads, as we can usually count on foreigners who have trade surpluses to keep buying our debt, and the other idiotic central banks of the world to keep buying our debt, too. Sure enough, they sank another $3.3 billion into that particular depreciating asset in the last week. What dorks! Imagine going home and explaining to your wife that, thanks to your supreme incompetence, you have lost a LOT of money in nominal terms, and when you adjust those losses for the loss of buying power of the dollar (inflation), then the real losses become so big, so large, so overwhelmingly huge that we are wiped out, and we have to either sell her car or one of the kids, and you know which one I'd pick.

But it is the breadth of the NYSE (cumulative advancing issues less declining issues) versus price which is interesting, as the former spent most of the year rising, and is now falling, while price ain't done squat, and is actually down, too. Hahaha! The dark and deserted hallways of the Mogambo Mansion echo with the eerie Mogambo laugh of contempt (EMLOC) at those who kept buying stocks, kept buying stocks, kept buying stocks in the face of zero gains! And now they are actually down on the year, too! Hahahaha!

The new bankruptcy laws took effect Jan 17, and so now if you need to declare bankruptcy, then you first have to pay for "credit counseling." Why? So that there will be a lot of people being put to work as credit counselors, doofus! Perhaps this is the fabled "re-education" that everyone, including the current chairman of the loathsome Federal Reserve, thinks is the answer to everything. American jobs being sent overseas? "Retrain the workers!" they all say. But they never answer the question "Retrain them to do what?" Now you know!

And if the housing boom is actually bursting at last, as is indicated by lots of anecdotal evidence and some odd statistical facts, then all those brokers and dealers and banks and intermediaries of every stripe and kind are going to need something to do with their considerable time, too! See how it all fits together? Hahahaha!

The most interesting thing was that on the Today.Reuters.com site was when we read "A U.S. silver industry nonprofit group opposes the creation of an exchange-traded fund backed by the precious metal amid concerns such an investment product could make silver too expensive or illiquid in the world market." Now, in case this is the first you have heard of an exchange-trade fund (ETF), Reuters helpfully elucidates thusly; "Commodity ETFs are designed to track the price of a specific product or basket of goods, and in the case of silver, one likely would be backed by physically stored metal." In short, some guys start a fund, buy up a lot of silver, and if you want to own silver, you can buy it by buying shares of the fund like an ordinary stock. Easy!

I thought to myself that my eyes were deceiving me, or I had had a stroke or something, because my Sensitive Mogambo Senses (SMS) were tingling like when I hear that something is in danger (be still, my beating heart!) of going higher in price, or what the SUA calls "too expensive or illiquid", because, like most greedy people who want to effortlessly make large amounts of money without actually working, I would like to "Get in on some of that action" (known in the investing biz as GIOSOTA), every time I hear about something getting "too expensive or illiquid."

So I am sitting here with this glazed look in my eyes as the article goes on to report that "The Silver Users Association is especially concerned that a new ETF might threaten jobs in the silver industry, as it would require large amounts of metal to be held in vaults and out of reach of the marketplace, a spokesman said on Wednesday." I raised my hand and said "Excuse me, but I am The Mogambo, cub reporter for the Interplanetary Daily News Gazette, and my question is 'Huh?' "

To make sure I got the point, they then trotted out a guy named Paul Miller, representing, so he said, the SUA. Well, he looked me right in the eye, and for a long while we just stared at each other, neither of us blinking. Then, just as I was about to fall to my knees and cry "Uncle!" he abruptly caved in and said "The concern we have is about jobs. That concerns our members greatly." For some reason, this tickled the hell out of me, as it seemed like such an odd thing to say. I figured "Yeah! Their own! Hahahaha!"

Composing myself and trying to show a little dignity for a change, I say "Let me get this straight: Silver in an ETF would take silver out of the marketplace and put it in vaults someplace dark and spooky, probably full of vampires and communists or something, whereas the vaults and warehouses that already contain the silver are bright and shiny, and do NOT have any vampires or communists. Is that it? And so the price would go up higher, but still within its historical range, probably somewhere between $30 and $500 per ounce, which is a LOT more accurate as to the true value of silver in the big freaking scheme of things (BFSOT) than its current low, low, low inflation-adjusted price, especially considering the big supply-demand disparity and complete elimination of global stockpiles. So, am I hearing you right, you jerks?"

At these words, the audience begins to become nervous and agitated, as they see that The Mogambo getting worked up, and that has NEVER worked out well if you believe what you read in the newspapers. They cringe in their seats as I, with an increasing fury, continue with a sneering tone of contempt in my voice. "But the SUA thinks that when demand swamps supply, and when the price of this scarce, expensive commodity soars in response, that employment in the silver industry will FALL? Hahahaha!"

I can see their faces contorted in fear as my incessant bellowing reaches a thundering crescendo, "Hell, the miners will be putting on double shifts to mine more silver when the price gets that high! The beleaguered debtor out here will pawn the family silver and get a little breathing room so that he can do a little spending! Silver will be speeding around and around the economy! In short, there will be jobs, jobs and more jobs, all over the damned place as a result of the silver ETF, you big stupid morons!" In a blind rage, I leap to ascend to the stage with the idea to grab those SUA guys and slap the hell of him until he stops spouting such gibberish. But they see me coming and take it on the lam out the back door, leaving me alone on the stage. Now I am even MORE mad! Grrrr!

The audience is hushed, frozen

[verwijderd] 23 oktober 2005 10:59

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Silver fragments help end smelly underwear

Just think how they could help disinfect a stinky financial system.....
* * *
From United Press International Saturday, October 22, 2005

www.upi.com/NewsTrack/view.php?StoryI...

LONDON -- Tiny fragments of silver woven in cloth used for underwear could end smelly undergarments, says a British underwear manufacturer.

Officials with North Face briefs say the silver fragments help stop bacteria from multiplying in briefs specially designed for those trekking on expeditions in the mountains or jungles, Sky News
reported.

The way the material is woven with the silver helps resist malodorous microbes and mildew, North Face briefs said.

"The fact that they resist odor build-up is sure to appeal to blokes everywhere who may be slightly challenged in the washing machine department," Keith Byrne, marketing manager for North Face, told the Daily Mail.

[verwijderd] 24 oktober 2005 08:10

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Resource Sector Interest and Awareness is Almost Nil

By David J. DesLauriers
21 Oct 2005 at 04:11 PM

TORONTO (ResourceInvestor.com) -- By all accounts we have been in a bull market for metals since about 2001. You wouldn’t really know that by looking at the juniors.

Despite the fact that it is easy to raise funds, and private placement and bought deal money is being put into the ground all the time and across the globe, follow through buying is nonexistent. In other words, there seems to be a serious divide between the ability to raise money, which one would presume to be a gauge of the level of market enthusiasm for a particular sector, and what is being paid for good news and good numbers.

The unfortunate reality is that aside from the few stocks that make up the HUI, the bull market is glaringly absent.

Multiples

In the first place, if you look at the multiples being paid for base metal developers and base metal producers, these companies are trading at about 4X cash flow. Nearly every analyst in creation is calling for $1 copper in 2007. Half of the companies out there, specifically the big ones are equally bearish.

Good News

Those who monitor the wire on a daily basis for company news have probably noticed that the Canadian feed consists almost exclusively of press releases from resource sector companies. It probably isn’t a stretch to say 8 out of 10. Three years ago, that number was probably 1 or 2 in 10, and you would be hard pressed to find more than that.

But what has been the upshot of all of this news? In the last couple of months, junior metals companies and now energy companies have followed a consistent pattern upon the release of positive news. If they’re lucky there may be a small upward move in the stock, but almost without fail within a week the share price is lower than it was when the positive results/news were announced.

It is ridiculous, and can only mean that the few funds that play in these stocks don’t know what is going on, aren’t paying attention, and don’t buy any stock in the market. It also clearly means that Joe Sixpack is nowhere near ready to enter the sector, and hasn’t heard the story.

The result is that this sclerotic, somnolent, stuporous market has to be one of the most inefficient markets in the world only because of complete but unwarranted disinterest. Either that, or this is a show-me market with no room for juniors.

Bull Market/Bear Market/What Will It Take?

The reality is that for the majority of companies in the sector – the small companies who find mines and feed production, the only way that the bull market has touched them is their ability to raise money. This correction, which started a couple of years ago, isn’t really a correction at all for these companies, merely a continuation of the bear market which started in 1997. The brief moment in time in 2003 when people took notice is probably better characterized as a bear market rally.

The pressing question is if nobody cares about good results and good numbers when gold is $467 and copper is $1.81, what is it going to take? The odd discovery has made little difference. What is worse, if and when gold and copper correct, they will take these companies down with them even though they never benefited from rising commodities prices in the first place. At that point all of the silly hedge funds that play in development names too illiquid to really handle their presence will dump their shares holus bolus making the situation yet more dramatic. Thus, reality suggests that things could get worse before they get better.

Conclusion

Because we are an upbeat bunch here at RI, let’s end on a positive note. The upside to all of this is that because none of these stories have run, the entirety on the inevitable run is still ahead of us, and when generalist funds and Joe Sixpack get involved, it will be a monster. Let’s just hope we don’t get old and grey waiting.

© Copyright 2005, Resource Investor.
Printed via the AbsolPublisher content management system.

[verwijderd] 25 oktober 2005 09:22

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THE SUA TOOK MY SILVER AWAY by The Mogambo Guru

We read an interesting tidbit on the today. Reuters.com site: "A U.S.silver industry nonprofit group opposes the creation of an exchange-traded
fund backed by the precious metal amid concerns such an investment product could make silver too expensive or illiquid in the world market."

Now, in case this is the first you have heard of an Exchange-Trade Fund (ETF), Reuters helpfully elucidates thusly: "Commodity ETFs are designed
to track the price of a specific product or basket of goods, and in the case of silver, one likely would be backed by physically stored metal." In
short, some guys start a fund, buy up a lot of silver, and if you want to own silver, you can buy it by buying shares of the fund like an ordinary
stock. Easy!

I thought that my eyes were deceiving me, or I had had a stroke or something, because my Sensitive Mogambo Senses (SMS) were tingling like when I hear that something is in danger of going higher in price, or what the SUA calls "too expensive or illiquid", because like most greedy people who want to effortlessly make large amounts of money without actually working, I would like to "Get in on some of that action" (known in the investing biz as GIOSOTA), every time I hear about something getting "too expensive or illiquid."

So, I am sitting here with this glazed look in my eyes as the article goes on to report, "The Silver Users Association is especially concerned that a
new ETF might threaten jobs in the silver industry, as it would require large amounts of metal to be held in vaults and out of reach of the marketplace, a spokesman said on Wednesday." I raised my hand and said,"Excuse me, but I am The Mogambo, cub reporter for the Interplanetary Daily News Gazette, and my question is: 'Huh?' "

To make sure I got the point, they then trotted out a guy named Paul Miller, representing, so he said, the SUA. Well, he looked me right in the eye, and for a long while we just stared at each other, neither of us blinking. Then, just as I was about to fall to my knees and cry "Uncle!" he abruptly caved in and said, "The concern we have is about jobs. That concerns our members greatly." For some reason, this tickled the hell out of me, as it seemed like such an odd thing to say. I figured, "Yeah! Their own! Hahahaha!"

Composing myself and trying to show a little dignity for a change, I say,"Let me get this straight: Silver in an ETF would take silver out of the marketplace and put it in vaults someplace dark and spooky, probably full of vampires and communists or something, whereas the vaults and warehouses that already contain the silver are bright and shiny, and do not have any vampires or communists. Is that it? And so, the price would go up higher,but still within its historical range, probably somewhere between $30 and $500 per ounce, which is a lot more accurate as to the true value of
silver in the Big Freaking Scheme Of Things (BFSOT) than its current low,low, low inflation-adjusted price, especially considering the big supply-demand disparity and complete elimination of global stockpiles. So, am I hearing you right, you jerks?"

I, with an increasing fury, continue with a sneering tone of contempt in my voice, "But the SUA thinks that when demand swamps supply, and when the
price of this scarce, expensive commodity soars in response, that employment in the silver industry will fall? Hahahaha!"

I can see their faces contorted in fear as my incessant bellowing reaches a thundering crescendo. "Hell, the miners will be putting on double shifts to mine more silver when the price gets that high! The beleaguered debtor out here will pawn the family silver and get a little breathing room so that he can do a little spending! Silver will be speeding around and around the economy! In short, there will be jobs, jobs and more jobs, all over the damned place as a result of the silver ETF, you big stupid morons!" In a blind rage, I leap to ascend to the stage with the idea to
grab that SUA guy and slap the hell of him until he stops spouting such gibberish. But they see me coming and take it on the lam out the back door, leaving me alone on the stage. Now I am even madder!

Rising to the theatrical occasion, I drop to one knee, raise my arm towards the heavens, and with a voice revealing a breaking heart, cry, "But are there are any limitations as to how much silver a citizen, a simple person like you or me, can buy? No! Is it written that the noble citizen must contain his lust for silver? No! Is there a law that dictates the legal size of my silver holdings? No!" Rising to my feet, I continue breathlessly , "It is therefore perfectly legal for people, individually or collectively, to go out and buy all the silver they want, including the piddly 130 million ounces of silver that this new ETF is supposed to be proposing buying."

That's how you invest in commodities, you SUA idiots! You buy the commodity, in this case silver, and you store it somewhere, hoping for a higher price in the future, or if the price drops, making plans to legally harass The Mogambo and his stupid idea to buy silver, because it is all his fault. Either way, you gotta buy it and put it in a safe place, and that is why it is called "storing"! And you don't bring the commodity out and sell it until the price gets so high that the profit is irresistible. When will that happen? It will happen after a period of time where all you do, all day long, is keep multiplying in your stupid little calculator,over and over, how much silver trades for right now in the open market by the number of ounces you have stored down in the basement and that
vulnerable safety deposit box at the bank (which you never trusted in the first place, and which is the same snotty little bank that has some sort
of "policy" against letting people booby-trap a safe deposit box, even though I am the one paying to rent the damned thing! And don't bother
bringing up all those Second Amendment issues, as I have been down that road with them many, many times to no avail).

But getting away from this SUA thing for a moment, if you want another reason to sell your own grandmother to get money to buy silver, and lots
of it, then listen to what David Bond, associate editor at Free Market News, says. China, he says, has admitted that they have literally run out
of silver, and now they need to buy it! A country so big that it has almost five times as many people as ours needs to buy silver, because we,a country that has five times fewer people in it, have used all the silver to get to where we are! I mean, the potential demand for silver staggers the imagination!

So, if you want my Stupid Mogambo Opinion (SMO) about whether silver is astonishingly cheap in light of these two developments, namely the
announcement by China that they were in the market as buyers, and the SUA announcing that a stinking ETF would make silver so scarce that it would
drive up the price to crippling levels, then I will take this opportunity to show off. Without a safety net or even checking the facts, I fearlessly
announce that I am staking out my claim to financial immortality by loudly proclaiming, in that piercing, girly screech I call a voice, that silver, at less than eight bucks an ounce, is so freaking cheap that it is also the fabled Mogambo Investment Tip Of The Century (MITOTC), which reads, in its entirety, "Buy silver now! And lots of it!"

[verwijderd] 26 oktober 2005 08:36

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Ben Bernanke - Manna or Mange for Gold Bugs?
By Tim Wood 25 Oct 2005 at 02:25 PM

St. LOUIS (ResourceInvestor.com) -- Gold bugs have an unrequited affection for Alan Greenspan since he made a cogent case for gold as the coinage of liberty. Forty years have passed since Greenspan penned his Randian manifesto, Gold and Economic Freedom. He now departs the scene never having realized his manifesto’s ideals. From the sidelines Greenspan will monitor his lingering influence, and he’ll wonder where the balance of history will come to rest between the forthcoming bouts of legacy burnishing and tarnishing.

The curious thing is that Greenspan’s successor, Ben Bernanke, is an hysteric. An anti gold standard hysteric predisposed to statism.

Let’s be clear, those aren’t my words. That’s what Greenspan said in 1966:

“An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.”

Ben Bernanke has devoted a portion of his intellectual capital to researching evidence that shows that the gold standard was a principle cause of the Great Depression, and that countries which retained the standard prolonged their misery. He is a gold standard antagonist.

Yet Greenspan has clearly transferred some blessing to Bernanke as his successor. Of course, we cannot altogether rule out that a man covetous of his legacy would delight in having a Keynesian Utilitarian take over.

Here there will be some dispute. After all, hasn’t Larry Kudlow sanctioned Bernanke as “not Donald Kohn, who is a demand-sider and a Phillips Curver”? Well, we can also note that Mr Kudlow thought that commodity prices were spent two years ago, and he has abandoned CRB Commodity Price Index targeting as it has continued to ratchet up.

Kudlow has also never come clean on President George W. Bush’s weird fiscal bilateralism. President Bush has supply-siders cheering when he cuts taxes, only to have demand-siders salivating when he urges the uncollected taxes to be fed into the pump-priming mechanism.

So it’s no surprise that Bernanke is the pick. He’s a Big Government man like Bush, and he acts far more like a Phillips Curver than a Laffer Curver, though with Friedmanite sprinklings.

This is academic and these men are academics which may cause us to confuse past and present occupations. The job of Fed boss is narrow – you have to maintain price stability (not to be confused with the dollar’s purchasing power) and you have to maintain full employment.

There is nothing in the Fed Chairman’s job description or the Fed’s articles of incorporation that commands a particular recipe be followed to achieve these twin mandates. So, like all good bosses, the Fed boss must please his owner by all means possible and legal.

That is why Alan Greenspan abandoned any notion of applying the lessons of a gold standard to modern American monetary policy. His job as Fed Chairman was to fulfill the mandates of the position, not be the idealist of his youth. That is why Greenspan has adopted the pose of a cipher in his commentaries on the economy – he is the privileged trader on nearly every market and he dare not surrender that advantage.

Ergo, you cannot ascend to the post of the world’s most powerful monopoly and remain a champion of laissez-faire. After all, the Fed is legally required to dismember and inter any and all money that pretends to compete with the paper dollar.

Even so, it is remarkable to contrast Greenspan writing this:

“With a logic reminiscent of a generation earlier, statists argued that the gold standard was largely to blame for the credit debacle which led to the Great Depression. If the gold standard had not existed, they argued, Britain's abandonment of gold payments in 1931 would not have caused the failure of banks all over the world. (The irony was that since 1913, we had been, not on a gold standard, but on what may be termed "a mixed gold standard"; yet it is gold that took the blame.) But the opposition to the gold standard in any form – from a growing number of welfare-state advocates – was prompted by a much subtler insight: the realization that the gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale.”

and Bernanke writing this:

“The gold standard orthodoxy, the adherence of some Federal Reserve policymakers to the liquidationist thesis, and the incorrect view that low nominal interest rates necessarily signaled monetary ease, all led policymakers astray, with disastrous consequences. We should not underestimate the need for careful research and analysis in guiding policy. Another lesson is that central banks and other governmental agencies have an important responsibility to maintain financial stability. The banking crises of the 1930s, both in the United States and abroad, were a significant source of output declines, both through their effects on money supplies and on credit supplies. Finally, perhaps the most important lesson of all is that price stability should be a key objective of monetary policy. By allowing persistent declines in the money supply and in the price level, the Federal Reserve of the late 1920s and 1930s greatly destabilized the U.S. economy and, through the workings of the gold standard, the economies of many other nations as well.”

It’s important to say that Greenspan and Bernanke are not disagreeing with each other; at least not insofar as the Federal Reserve’s culpability in pulling the levers that helped tip the world into Depression. The only notable difference in their gold standard writings is that Greenspan puts the Fed on the spot earlier than Bernanke does. Both would do better to digest Murray Rothbard's altogether more complete analysis of the Great Depression.

That said the early Greenspan was a romantic who believed that gold was an objective lodestar to restrain visible political avarice. In that he was partially correct.

Bernanke, by contrast, is a utilitarian pragmatist; even a relativist in the mode of Galbraith. He indirectly acknowledges that a gold standard was unsuitable to the designs of welfare statists seeking deficit funded patronage. But unlike Greenspan his concern is not ideological, only practical – that the panjandrums of the Federal Reserve maintain price stability at all costs.

It seems clear that this outlook has become the de facto worldview within the Federal Open Market Committee. “By any means available and necessary based on the political milieu,” constitutes the modern Fed’s rule book.

Bernanke’s writings and speeches have a compass needle that rests quickly

[verwijderd] 26 oktober 2005 18:17

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Silver Users Fear Silver Shortage Jason Hommel

Grass Valley, CA (silverstockreport.com) -- The Silver Users Association (SUA), a group devoted to the conflicting goals of keeping silver prices low and keeping silver available for users, stunned the silver investing community last month by repeating the claims made by silver investors and analysts that the silver market is very tight and that any significant investor demand will create a shortage of silver.

The SUA made the bullish case for silver when asking the Securities and Exchange Commission (SEC) to deny Barclay's petition for a Silver Exchange Traded Fund (ETF). Barclay's Silver ETF will require Barclays Global Investors to buy up to 130 million ounces of silver prior to the approval of a silver ETF, in anticipation of investor demand for the silver ETF. But the COMEX division of NYMEX only has 117 million oz. of silver in all wearhouse stock categories combined. Furthermore, COMEX market participants, through approximately 140,000 silver futures contracts at 5000 ounces each, already have claims of up to 700 million ounces of silver--silver that may not exist.

The SUA's position: "The Silver Users Association opposes the creation of a silver ETF because of the concerns that doing so will require the holding of physical silver be held in allocated accounts, thus removing large amounts of silver from the market. By doing so, the ETF will cause a shortage of silver in the marketplace."

The SUA is literally asking the SEC to limit investors' ability to buy silver through an ETF. A silver ETF, which would wearhouse silver for investors, and be easier for investors to buy and sell, makes more sense for silver than gold, because of silver's weight. At $6.80/oz., every $1,000,000 of silver weighs about 10,000 pounds. But there are already limits on silver purchases. At the COMEX, there is a position limit of 1500 contracts per person or entity per month (which is a limit of 7.5 million oz. of silver), and total silver deliveries to all market participants may be limited to 1.5 million ounces in any given delivery month.

Back in May, 2004, the U.S. Commodity Futures Trading Commission (CFTC), which is supposed to oversee and prevent market manipulation and defaults, issued a 9-page report on silver that acknowledged many of the bullish fundamentals for silver, yet went on to say that a short side price manipulation could not exist because there is "unrestricted access to the market, [because] many knowledgeable and well-capitalized traders would readily buy any silver offered at artificially low prices." Michael Gorham, director of the CFTC, in the same report, then contradicted his earlier statement by acknowledging and defending the current position limits that prevent unrestricted access to the silver market. Michael Gorham then resigned from the CFTC about 3 weeks later.

I maintain that limits are evidence of shortages, manipulation, and price fixing that is too low. In free markets with free prices, there are no limits and no shortages, because in case of an impending shortage, supplies are rationed not by limits, but rather, by higher prices. Obviously, those who would advocate limits on purchases, would rather not see higher prices. Today, it appears as if the SUA is more concerned with keeping silver available to its members than keeping silver prices low, since they can no longer continue to do both. The SUA is risking endorsing the bullish story for silver, in an attempt to keep silver available to users, and away from highly capitalized investors who may want to buy silver through a silver ETF.

So, what exactly are the bullish fundamentals for silver? The current bullish supply and demand fundamentals as published (but not well publicized) by the silverinstitute.org and cpmgroup.com are that about 600 million ounces of silver are mined each year, while about 870 million ounces of silver are consumed by industry, jewelry, and photography. The difference is largely met by recycling, and investor selling. In 2004, investor selling ended as 40 million ounces of silver was purchased by investors throughout the year, which drove silver prices up from a low of $4.15 to a high of $8.40/oz.

Historically, the silver to gold ratio was that 15 ounces of silver would be worth 1 oz. of gold. Today, with silver at $7.76/oz. and gold at $472, it takes just over 60 oz. of silver to buy one ounce of gold, thus, silver is much cheaper than gold when compared to historic norms.

Have we hit "peak silver", like "peak oil"? Peak oil proponants maintain that there is about a 40-year supply of oil in reserves. However, according to Ted Butler, (butlerresearch.com), there are only about 16 years of silver in in-ground reserves, worldwide. The silver to oil ratio hit a high of over 1, as $50/oz. of silver could buy more than a barrel of oil at $43/barrel in 1980. Today, with oil prices hitting $70/barrel, silver prices are again at historic lows as compared to oil, as an ounce of silver recently was 1/10th the price of a barrel of oil.

How important is above ground supply? In the copper market, the world is down to a 2-day supply of inventory at the LME: 64,000 metric tonnes. And in copper, since demand is expected to continue to exceed supply over the next year, then copper prices are poised to move up substantially.

But what about the existing above ground supply of silver? Precious metals are held privately, and are not able to be tracked or traced, so nobody truly knows what the above ground supply of silver of might be. However, experts maintain that about 40 billion ounces of silver has been mined throughout all of human history, and that about 90% of that has been irretrevably consumed by industry, jewelry, and photography. Most of the approximately 3-5 billion ounces of silver left is in the form of jewelry, mostly held in India. Silver that is in the form of above-ground, refined, deliverable, identifiable silver is about 150 million ounces, mostly held at COMEX. The U.S. government once held up to 6 billion ounces of silver, but around 2002, the U.S. ran out, and had to buy silver on the open market for its Silver Eagle coin program. The COMEX once had up to 1.5 billion ounces of silver about 10-15 years ago, but today has less than 1/10th of that: 117 million ounces.

Warren Buffet bought 129.7 million ounces of silver in 1997, and "concluded that equilibrium between supply and demand was only likely to be established by a somewhat higher price." Since then, numerous investment analysts and newsletter writers have grown increasingly bullish on silver prices, including: Ted Butler, David Morgan, Jim Puplava, Harry Schultz, Doug Casey, Richard Russell, and many others, including myself. With the addition of the CFTC and the SUA making the bullish case for silver, what knowledgeable silver analyst or commentator remains left to maintain a bearish outlook for silver prices?

So, if there is an impending shortage of silver, how have prices remained low? Well, there is no shortage of silver for industrial users (commercials) who have unrestricted access to silver; there is only a shortage of silver for very large investors (speculators), who are restricted by position limits. Silver prices are also low due to lack of monetary demand, and a general lack of interest or knowledge by most investors. Demonitization of silver started in the 1870's with G

[verwijderd] 26 oktober 2005 18:23

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Demonitization of silver started in the 1870's with Germany abandoning silver coinage to move to a gold standard. The last time 90% silver coins were minted in the U.S. for everyday monetary transactions was 1964.

So, how high will silver prices go? Conceivably, if investor and monetary demand continues to increase, silver may not be able to be priced in dollars if the dollar collapses completely. But how would silver be valued if not in terms of dollars? Well, about 100 years ago, when silver was used as money nearly worldwide, a day's wage varied between a silver dime to a silver dollar. A return of monetary demand worldwide, in conjunction with a silver shortage, could conceivably drive silver prices higher than historic norms.

Will higher silver prices hurt the economy? The SUA also says: "This removal of large quantities of physical silver [through a silver ETF] could have a negative impact on silver-industry specific employment as well as the overall economy, both through job losses and inflation." However, higher silver prices will also create jobs in the silver mining industry, which has been devastated by low silver prices. In fact, currently, there are no profitable public silver mining companies in the U.S. And of about 80 silver companies that I follow, there are only about 2 or 3 that are making any profits in 2005 so far, because oil and energy prices (which are a large part of mining costs) have risen faster than silver prices. Thus, once again, if silver prices are below the cost to mine, silver price remain at historic lows.

Whether a silver ETF or whether the growing sense of a silver shortage will drive investor demand for silver remains to be seen.

Interestingly, one way to get around current position limits on silver purchases is to become a "commercial" trader, such as by petitioning the SEC to open a silver ETF. If the Barclays Silver EFT is approved by the SEC, it will trade on the AMEX under the symbol SVL sometime in 2006.

Currently, the world's only ETF that contains silver is the Central Fund of Canada (CEF), (Ticker: CEF), which holds 50 ounces of silver for every 1 oz. of gold, and holds over 90% of assets in precious metals. At a 60 to 1 ratio for silver to gold prices today, about 44% of the assets of CEF are invested in silver. CEF holds about 32 million ounces of physical silver.

Conclusion: If there really remains less than 150 million ounces of silver in above ground refined form, then there is about half of an ounce of silver per person in the U.S., which means that if you have a single ounce of silver, the SUA might say that you have "more than your fair share".

More:
Background:
BERKSHIRE HATHAWAY INC. PRESS RELEASE (Feb. 1998)
U.S. Commodity Futures Trading Commission silver letter (May 2004)
Barclays iShares Silver Trust SEC Application (June 2005)
Nymex Silver Wearhouse Stocks
Barclays Global Investors Press Release on Silver ETF
Occasion for story:
Silver User's Association Policy Position on Silver ETF (Septermber)
Recent comments on SUA Policy Position:
A Surprise Silver Endorsement (by Ted Butler) (Oct. 10)
US silver nonprofit opposes new silver-backed ETF (Oct. 12)
SUA: BLOCK SILVER PRICE EXPLOSION (Oct. 14)
Is the Day Nigh for Silver Bulls? (Oct. 17)
Related story:
Copper rises to record in London as inventory drops for 5th day (Oct. 18th)

Email: j@silverstockreport.com
www.SilverStockReport.com

[verwijderd] 28 oktober 2005 08:30

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Dubai Logs in to Gold Futures

Economic Times / The Times of India
Gurgaon, India Friday, October 28, 2005

economictimes.indiatimes.com/articles...,curpg-
1.cms

MUMBAI -- Trading in commodity derivatives will soon be a reality in the Middle-East. Dubai Gold and Commodities Exchange (DGCX) will go online on November 21 with a futures contract in gold.

Some of the large banks in the Gulf are expected to trade in DGCX gold contracts. Leading banks like National Bank of Dubai and Standard Bank have taken DGCX memberships to hedge their market risks.

Apart from financial institutions close to 250 other commodity market participants have applied for DGCX memberships. Leading brokerages like Supama International, Bin Sabt and Swiss Gold have
also taken DGCX memberships.

Initially trading in gold will be restricted to six forward months. Silver contracts will be introduced in early '06. It also plans to start derivative contracts in energy products like crude oil and
furnace oil.

DGCX is promoted by Multi Commodity Exchange, Financial Technolgies (FT), and the Dubai government. It is an equal JV between India and
Dubai.

Framroze Pochara, chief executive, DGCX said, "The government of Dubai has supported the project from the very beginning. Now the exchange is expecting that at least 100 members will trade on the
first day."

Jignesh Shah, MD, MCX, which has been promoted by FT, said, "India along with a few other countries from Asia have the potential to corner a substantial portion of global derivatives trade in
commodities."

MCX, a promoter of DGCX, is already clocking close to around Rs 3,500 crore a day from futures trading in commodities like gold, silver and crude oil.

With a list of products like gold, silver, marine freight, steel and cotton, DGCX may in the days to come emerge as one of the leading exchanges.

Location of DGCX gives it an unique advantage over other Asian exchanges like MCX, NCDEX, TOCOM and Shanghai. DGCX enjoys a tax holiday and is located in a free trade zone.

The exchange will operate for 13 hours without a break. This will allow arbitrage opportunities with markets in Far East, Europe, and the US.

[verwijderd] 30 oktober 2005 10:41

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Goudpoll:$ 600 of $ 400 ?

moneycentral.msn.com/content/CNBCTV/P...

[verwijderd] 30 oktober 2005 17:00

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Ik denk dat goud eerder de 600 dan de 400 zal aantikken.
Echter ik denk ook dat zilver eerder de 15 dllr per ounce zal zien dan de 5 dllr per ounce.
Heeft puur te maken met vraag en aanbod, en veranderende klimaat naar commodities toe...
Indien de wereld economie ook nog blijft groeien dan hebben we niet eens een crisus nodig om boven genoemde niveau´s te halen.
Gr/brj

[verwijderd] 31 oktober 2005 09:45

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Mexico Mulls Silver Lining Against Currency Crash
By Pav Jordan Reuters via Banderas News
Puerto Vallarta, Mexico Sunday, October 30, 2005

www.banderasnews.com/0503/nr-platapur...

MEXICO CITY -- An influential Mexican businessman wants to reintroduce silver coins as legal currency -- as in Mexico's 16th century heyday -- and, farfetched as it may sound, the idea is
winning support.

The Senate has already passed the initiative, and the lower house is expected to vote soon on the bill, which has struck a nerve in a country where decades of financial crisis have fomented a deep
distrust of paper currency.

The central bank opposes the plan as anachronistic.

Hugo Salinas Price, founder of the specialty retailer Elektra, says silver could be the shield to protect Mexicans' savings from another currency collapse.

"The idea was born from the need to protect the currency," said Price, whose son, Ricardo Salinas, is chief executive of Mexico's No. 2 broadcaster, TV Azteca.

Mexico's peso is stable now, and has actually strengthened of late, but fear of currency collapse is etched deep in the Mexican psyche after previous financial crises.

Mexico was a top supplier of silver coins during the colonial era, when they were significant components of the Spanish and British treasuries. The minting of coins in the New World began in 1535 in Mexico City.

According to Price and advocate lawmakers interviewed by Reuters, the new coins would be valued according to the price of silver as a
commodity, with the central bank, Banco de Mexico, managing coinage and charging a 10 percent seigniorage.

The 1-ounce silver coin, called the Libertad (Liberty), would have no nominal value engraved upon it, and would circulate alongside the
conventional peso currency. Its worth would be stated daily in a central bank quote.

Silver traded at about $7.50 an ounce on Friday in New York. The peso was valued at about 11 per U.S. dollar.

Price said the Libertad would be protected from losing value because losses on commodity markets would be compensated for by central bank valuations.

Representatives of the central bank could not be reached to comment, but it has rejected the idea in arguments to legislators, citing concerns ranging from counterfeiting to minting costs.

Independent economists also argue against monetizing silver, saying it has no place in a modern world of interconnected and open
economies.

Rafael Urquia, an analyst with Banamex Accival brokerage in Mexico City, said the plan would limit the flexibility of monetary policy.

"I am inclined to think that this will not pass (Congress)," Urquia said in a recent interview. "I would like to think that the legislators sitting on economic committees have some common sense."

Opponents also cite the costs of adapting the currency system to incorporate silver coins, and list the subsequent transaction costs and even minting costs as other concerns.

"This idea of a hybrid currency seeks the best of both worlds - and I think that would be difficult," Urquia said.

Still, the 1994-95 financial meltdown known as the "Tequila crisis" is just the most recent example of why some Mexicans are eager for an alternative safe haven for their money.

Despite recent advances, Mexico still has one of Latin America's lowest rates of savings and bank credit.

Most past crises have coincided with presidential elections, and the tight, three-way race for the 2006 vote has generated worries that the peso could be in for a steep decline.

Still, Mexico produced some 3 million ounces of silver in 2004 and state governors and legislators say the plan could give a boost to the economies of states producing silver.

"We see this as a viable initiative," said Fernando Guzman, a federal deputy with the governing National Action Party. "It would bring a new vitality to the state economies."

Proponents of silver money cite Gresham's law - named after the financial agent of England's Queen Elizabeth I, Sir Thomas Gresham (1519-1579) - to support arguments that people tend to save
currencies with intrinsic values when they are traded alongside fiduciary monies.

"I can tell you one thing for sure, I don't always stop to pick up a peso if I drop it," said Violeta de la Torre, an office administrator. "But I certainly wouldn't leave a silver ounce lying
in the street."

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Accentis	2	264
Accsys Technologies	23	10.525
ACCSYS TECHNOLOGIES PLC	218	11.686
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ADMA Biologics	1	34
Adomos	1	126
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Aegon	3.258	322.654
AFC Ajax	538	7.086
Affimed NV	2	6.287
ageas	5.844	109.885
Agfa-Gevaert	14	2.048
Ahold	3.538	74.292
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Alpha Pro Tech	1	17
Alphabet Inc.	1	405
Altice	106	51.198
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AM	228	684
Amarin Corporation	1	133
Amerikaanse aandelen	3.835	242.719
AMG	971	133.057
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	14.920
Apollo Alternative Assets	1	17
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