Forum: Edelmetalen » Goud en zilver Rockin & Rollin

[verwijderd] 23 september 2004 19:13

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Gold Call Options Outstanding For October Maturity Close of Monday from "The COT Geek’s Book"

Figures as of 11 AM ET

$400 Strike 4,519 options
$410 Strike 7,177 options
$420 Strike 7,337 options
$430 Strike 5,384 options

Total Geek position probably written as naked calls 24,417 equivalent October month gold futures.

What do you think would happen if professionals called the majority or all of these October gold contracts? Try gold over $440.

Can this happen? Sure it can. Will it happen? The answer is only if the time has come for the "payback" for Nixon taking the US totally away from gold by reducing the Gold Cover Clause to zero percent and then canceling it.

Was "Our Crowd" double-crossed by Nixon? Did Nixon get run out of office for this double-cross as Watergate was nothing but child's play? Political parties had been spying on each other since the beginning of this democracy.

The other possibility is a simple squeeze which always occurs when one side gets too rich, too confident, and too crowded.

Keep in mind that the numbers above represent only October futures as the Comex option is not on gold itself but on the future. Now think what 25,000 or so to buy at the market would do to the market. It is too late to really hedge these other than buying the futures of gold.

The geeks are so cocky you can bet that are simply naked and will go into Monday just that way. Let's see if this is their crucifixion.

Thursday, September 23, 2004, 11:13:00 AM EST

Is This The Geek’s Last Stand?

Author: Jim Sinclair

The Facts:

1/ The option writing geeks make the God of Greed look like a kindergarten student in the School of Greed.

2/ They always shoot without covering their written calls at some rational profit but rather by taking out the hated Gold Bugs at $0.10.

3/ At 11 AM this morning the refreshed open interest will be published. Check www.jsmineset.com for the open interest which translates to the short interest on written gold call option maturity this Monday for October strike on the $400, $410, $420, and $430 posted for your review with comment no later than noon today.

This could well be the first time that the option writing COT Comex Geeks face a squeeze to kill.

This is a game only for the pros who might just take delivery of any call maturity on the close of Monday that is at the money but not necessarily in the money.

Such action would cause the gold market to vault because the geeks never cover. They always want all your money so maybe this time they will not only get none of it but pay you for the pleasure of their demise.

[verwijderd] 26 september 2004 10:36

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A report from the Silver Summit in Coeur d'Alene

By Rick Thomas
Coeur d'Alene Press, Idaho
Saturday, September 25, 2004

cdapress.com/articles/2004/09/25/busi...

COEUR d'ALENE -- You might as well spend all your
money now. Better yet, borrow as much as you can
and spend it fast, because it will soon be worthless.
Or still better, invest in silver or gold, which will
always be precious.

Richard Daughty, also known as the "Mogambo Guru,"
was the keynote speaker Friday at the Silver Summit
at the Coeur d'Alene Inn and made that prediction.
He thinks Alan Greenspan is out of his mind.

"They ought to put a retarded chicken in charge of
the Fed," he told more than 200 mining company
executives and investors. "Create money. Create
money. A retarded chicken could do that."

Daughty, general partner and COO for Smith
Consultant Group, serving the financial and medical
communities, and the writer/publisher of the
Mogambo Guru economic newsletter, calls himself
"the angriest guy in economics." He said the country
and the world should return to the gold standard or
international economies will come crashing down,
with the U.S. falling hardest.

"You cannot get rich by going into debt," Daughty
said. "Money should be only silver and gold. The
government cannot print silver and gold."

A dollar was worth $1 in 1913, he said, and is now
worth "2 freaking cents."

"People want to know why I'm so mad," he said.
"That's why."

He described "fractional banking" as a system that
allows a bank to loan $100 with a $1 deposit. In only
four cycles, that dollar means $1 million in loans.

"This is not right," he said. "All money is debt."

That growth of debt threatens the fabric of society, he
warned.

"We owe $34 trillion, and have a $74 trillion financial
liability," he said. "Where are we going to get $74
trillion out of 120 million people? You'll never make
that much money."

He said the U.S. dollar is being held up by Chinese
currency, the yuan, and when that country's economy
changes from an export to a domestic focus, the
dollar's value will collapse.

"People will dump dollars and hoard silver and gold,"
Daughty said.

And barring a corrupt market manipulation, oil will
also not go down in price, but will cost "hundreds
of dollars per barrel."

His solution: "Get plenty of silver and gold and a
large-caliber weapon to dissuade people from trying
to take it away."

Daughty's pithy and hilarious comments had the
crowd howling with laughter. The presentation was
videotaped for David Morgan of Silver-Investor.com
and will be available at that Internet site some time
after Oct. 7, Morgan said.

"Wasn't that great?" Morgan said.

The Silver Summit, in its second year, drew 460
people from all over the world, up from about 100
last year, said David Bond, organizer of the program.
It concludes today with a tour of mines in the Silver
Valley and other events.

[verwijderd] 27 september 2004 17:51

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( BW)(TX-GOLD-ANTI-TRUST) Class-Action Suit Seeks Damages
For Gold Investors from Barrick and J.P. Morgan Chase,
GATA Says

Business Editors

¶ DALLAS--(BUSINESS WIRE)--Sept. 27, 2004--Everyone
in the United States who lost money trading gold since
1998 could recover damages from Barrick Gold and J.P.
Morgan Chase if a federal class-action anti-trust lawsuit brought last week in New Orleans prevails, the Gold
Anti-Trust Action Committee says.

¶ The suit is being underwritten by Blanchard & Co.,
the New Orleans coin and bullion dealer, and builds on Blanchard's own anti-trust suit against Barrick and Morgan
Chase in U.S. District Court in New Orleans. The first suit, which is in the "discovery" or evidence-collecting phase, charges Barrick and Morgan Chase with manipulation of the
gold market. That suit seeks injunctive relief -- a court
order to stop Barrick and Morgan Chase from manipulating
the gold market -- and is expected to go to trial in
April 2005.

¶ The class-action lawsuit, in which gold investors Greg McKenzie and A.J. Miller are the lead plaintiffs, will
attempt to quantify the financial harm done by Barrick
and Morgan Chase to gold investors and devise a remedy for
their restitution.

¶ "We expect to obtain compensation for all gold owners,
not only for their losses from their gold investments but
also for the profits they should have realized," Blanchard
CEO Donald W. Doyle Jr. said in an interview with the Gold
Anti-Trust Action Committee.

¶ GATA consultant Reginald H. Howe brought a similar
federal lawsuit in Boston in 2000. It was dismissed on jurisdictional grounds in 2002. Since then GATA has
documented and publicized evidence of manipulation of
the gold market by Barrick, Morgan Chase, other bullion
banks, and the U.S. government.

¶ "The exact number of gold owners who are members of
the class is unknown at this time and can be determined
only through appropriate discovery and expert testimony,"
Doyle told GATA. "But we allege, on information and belief,
that the members of the class owned, during the period at
issue, about 96.5 million ounces of gold having a market
value of $38.58 billion at $400 per ounce. Once a judgment
is obtained and the amount of damages suffered by the class members is determined, those damages will automatically be tripled under the mandatory provisions of the federal
anti-trust laws.

¶ "In 1983 Barrick Gold Corp. was a start-up company
with a single mine in Canada and a founder with no
experience in the gold business," Doyle said. "By 2001
Barrick had amassed off-balance-sheet assets that
were worth more than the market capitalization of the next
five biggest gold-mining companies in the world combined. Barrick made $2.3 billion on its short sales of gold and
made a profit on those short sales for 62 consecutive
quarters. A short sale is inherently a high-risk speculation. How many true speculations have ever been profitable for 62 consecutive quarters?"

¶ Blanchard's original lawsuit charges essentially that
Morgan Chase provided Barrick with so much borrowed gold -- presumably obtained from central banks -- on such favorable terms that Barrick could overwhelm the market and move
prices up or down at will and not have to repay the borrowed gold for many years if at all. In some years, Blanchard maintains, Barrick was able to supply to the market more
gold than was supplied by all the bullion banks combined.

¶ In an attempt to have Blanchard's lawsuit dismissed,
Barrick, according to GATA, seemed to acknowledge the plaintiff's premises. Barrick submitted a motion arguing that
in borrowing gold and selling it into the market, the
company was acting as the agent of central banks and carrying out their policies in the gold market and thus should share their immunity from lawsuits.

¶ U.S. District Judge Helen Berrigan rejected Barrick's
motion and sent the case on for discovery and trial.

¶ "While the price of gold fell by more than 25 percent,"
Doyle said, "Barrick was able to increase its annual
operating cash flow by more than 400 percent. Barrick became
the dominant gold mining company in the world through acquisitions made with the profits from its short
sales of gold. By suppressing and depressing gold prices,
Barrick forced its competitors to sell gold assets and
companies at fire-sale prices.

¶ "The measures that Blanchard has taken have already
been good for the gold industry and our clients. Since
we began discussions with Barrick in this lawsuit, the
company has reduced its hedging position by 10 million
ounces, adding gold demand and subtracting gold supply.
On December 2, 2003, Barrick's president and chief
operating officer announced that Barrick had given up
hedging for good. By consenting to the termination of its
short sales of gold -- assuming that Barrick honors its commitment -- the company took a major remedial step
sought by Blanchard's original complaint.

¶ "I believe that the class action will be successful
in recovering damages and putting a stop to practices
that have suppressed and depressed the price of gold and all tangible assets," Doyle concluded.

¶ Blanchard's Internet site with information about its litigation is: www.savegold.org/.

--30--BD/da*

CONTACT: Gold Anti-Trust Action Committee
Bill Murphy, 214-522-3411
LePatron@LeMetropoleCafe.com

KEYWORD: TEXAS NEW YORK MASSACHUSETTS LOUISIANA
INDUSTRY KEYWORD: LEGAL/LAW BANKING MINING/METALS CLASS ACTION
LAWSUITS
SOURCE: Gold Anti-Trust Action Committee

[verwijderd] 28 september 2004 15:08

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Argentina's Central Bank Increases Gold Reserves

Reuters
Tuesday, September 28, 2004

www.reuters.com/newsArticle.jhtml?typ...

LONDON -- Argentina's central bank bought more
gold in July and August, taking its gold reserves up
to 1.77 million troy ounces by the end of August, or
55.1 tonnes, according to data on the bank's
Internet site.

The bank confirmed in August that it had bought 42
tonnes of gold in the first half of 2004 to diversify
its reserves after the end of the peso's one-to-one
peg against the dollar in early 2002.

The bank's website showed that gold reserves were
at 1.72 million ounces (53.5 tonnes) in July and 1.37
million ounces (42.6 tonnes) in June.

[verwijderd] 30 september 2004 10:33

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From Wexford Capital Management:

September 28, 2004: Weird behavior in financial markets signal distress.

I am not convinced that the Powers That Are will be able to keep everything glued together prior to the Presidential Election, Plunge Protection Team, Exchange Stabilization Fund, Federal Open Market Committee or not. Just because Sir Alan and the very Democratic-spending-like Bush Administration have kept the economy afloat with still-very-low interest rates and a barrage of tax cuts does not mean that there are more rabbits left in the proverbial hat of government-created liquidity to pull out any more. We are dealing with global markets today, and most overseas exchanges don't give a hoot how many days it is before the American elections; plus, the currency and bond markets are so massive that there is not enough manipulative tea in China to affect prices for more than a few minutes during the 24-hour global trading day. Regardless of what happens during the upcoming debates, Bush will likely win re-election. Kerry is a man without a definitive cause (except to replace Bush) or a clear, consistent message. However, I just read a piece where the Democrats should consider themselves lucky that Kerry has run such an incompetent campaign, especially in light of significant American employment problems, surging Twin Deficits, the potential of a U.S. military draft, and an economy and stock market sputtering into November 2nd. The America that the next President inherits is faced with such massive geo-political, economic, and financial system problems that he who is left holding the bag when the UNAVOIDABLE IMPLOSION occurs will see his party banished for decades. Of course, us lowly citizens who must be lucky to get our shoes on the right foot each morning will be more disposed to throw all the bums out and start afresh with true structural reforms to the system, but don't tell the Pachyderms and the Jack-Asses!

Remember that I have sounded the warning cries like a Village Idiot for the last several years about the inherent dangers to the balance sheet explosions of Freddie Mac and Fannie Mae?!! Not only are these gargantuan liquidity generators grossly undercapitalized with equity at a drop-in-the-bucket of 2% of Assets or less, but we are now beginning to see some of the bodies hidden in the Swamp of Creative Accounting float to the surface of regulatory and citizen scrutiny. I knew it, I knew it, I knew it. If an entity is forced to increase capitalization on the asset side of the ledger, how does it continue to package residential mortgages for secondary market sale at the current level of massive liquidity creation without proportionately ballooning the liability side of its balance sheet? Those GNMA notes that foreign central banks have been slurping down with their export-driven excess U.S. dollars, like they wouldn't be available the next day!, are going to have to be cut back if Fannie is going to build up its pure equity account of Retained Earnings. If volume of production is going to have to take a not insignificant hit to re-capitalize the company since floating more common stock in today's environment is not a likely alternative to generate the tens of $Billions needed for equity capital enhancement, then the spreads on GNMA paper over Treasuries are going to have to increase to maintain profitability. Liquidity in the former sea of mortgage finance is going to slacken at just the time when Home Affordability at the settlement table is having an effect on buyers in many residential markets around the country, aka Sticker Shock.

With 10-year Treasury rates taking an unexpected dip as of late due primarily, as far as I can figure out without implicating the Federal Reserve in systemic liquidity maintenance per prior pronouncements to buy Treasuries to affect intermediate rates, to foreign central bank Dollar recycling of an $500 Current Account Deficit, expect the best news on mortgage rates to now be behind us with the GSE sequential confessions. The marketplace has no choice but to demand a repricing of GSE paper due to a loss of confidence in the ability of the issuer to honestly and consistently report financial results and even to meet its obligations directly without Government Bailout during adverse market conditions (i.e., a sudden and/or rapid change in rates up or down). And the only way the U.S. Government can bail out any of the GSE's is to print more Dollars since the Federal piggie bank is basically broken, the value of which seems inevitably headed for another 20% devaluation in the shake of a G-8, G-9, or G-10 bureaucrat's tux tail. Beggar Thy Neighbor with U.S. Dollar Devaluation is one of the less painful ways out for the world's central banks, regardless of what it does to their local Euro or Yen balance sheets, since the American Growth Engine is sputtering badly and China's is progressively getting a speed governor installed. This is a prime example of the financial system distress I have been writing about for years. That mortgage-backed paper that you thought was so risk-free with an attractive yield doesn't look so attractive anymore, especially since they can only be converted into Dollars which aren't worth the paper they are printed on. Repricing GSE paper in the secondary market means repricing paper in the primary mortgage market for Joe and Josephine Six-Pack, particularly if Fannie Mae is forced to cut back on production volume to shrink its bloated balance sheet! THE LIQUIDITY CRUNCH IS HERE!

Actually, it took extensive governmental audits to uncover the goo-covered fraudulent GSE accounting, and most whistle-blowers were given the internal brush off which cements any conscious investors' viewpoint that the corporate structure is still rife with corruption and self-serving actions on a scale that will make the Enron elite look like choirboys. Please take note that hedge position losses have been hidden on the books to prevent a loss of confidence in Fannie Mae as the March swing in interest rates must have caught these smug derivatives traders with their pants down. There have been several times over the last 3 years that debt market prices and, hence, yields have swung dramatically in one direction or the other, and I can bet you Raines' next slush fund bonus (Webster's needs to redefine the terms, "THEFT, THIEF, CON ARTIST, etc."!!!) that major, major derivatives losses were generated but did not flow to the quarterly bottom lines. Hey, how are corporate officers going to live like kings if they are held accountable like the rest of us commoners?!! The executives and Board members should all be fired before their next bloated paychecks, but we will see if government overseers and regulators have gotten true religion in cleaning up corporate governance.

The 10-year Treasury is also signaling the next recession that will be upon us before the snow melts in the Rockies in 2005. The Fed will get to 2% Fed Funds by year-end, and may consider increasing the interest rate buffer before March of next year so it can try to save the day again by cutting rates in the summer of 2005. But of course, my bet is that it will be an exercise in futility by mid-2005 since the Debt Accumulation Wall (DAW!) has already been hit by the American Consumer and the derivatives web is beginning to come unraveled as we all knew it would. I doubt seriously if we will ever get to an inverted yield curve prior to the upcom

[verwijderd] 30 september 2004 10:35

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part 2

But of course, my bet is that it will be an exercise in futility by mid-2005 since the Debt Accumulation Wall (DAW!) has already been hit by the American Consumer and the derivatives web is beginning to come unraveled as we all knew it would. I doubt seriously if we will ever get to an inverted yield curve prior to the upcoming 2005 Recession, since Sir Alan has one foot onto the retirement gold course; that would require another 8 Fed tightenings of 25 basis points at today's intermediate rates around 4%. Oil gushing past $50 per barrel on its way to $60 or $70 is going to greatly assist in the process during a winter that may be as unkind as the past summer/fall has been to Floridians. Any economist that thinks the rebuilding of Florida, which will see an exodus of inhabitants over the coming years due to the staggering 2004 loss of property, lives, and livelihoods, will stimulate national GDP had better reread Economics 101 on the price elasticity of demand. Even the BLS will admit that as prices of a good or service rise significantly, the consumers attempt substitutions or curtail their purchases/usages of same. The tragic events in Florida over the last 2 months are going to cause the prices of every building component, not to mention foodstuffs no longer available for harvest, to climb steadily in the months ahead. Building materials prices were already setting records in 2004, partially due to Chinese competition for supplies, and now an outright shortage in plywood, insulation, cement, and dimensional lumber is probably inevitable. I will wager that homeowner's insurance premiums in Florida (AND elsewhere) will skyrocket, as many insurers experience record losses that cannot be mollified by investment portfolio gains in stocks and bonds; I will also bet that insurers have derivatives losses from bond market volatility in 2004 that have yet to come to light, and that one or two major carriers are going to become insolvent/bankrupt. Not a certainty, but a high probability. Financial system distress is like a virus that can spread to many sectors rapidly.

As the yield curve flattens due to Current Account recycling AND Sir Alan FOMC treasury purchases just before the election (which I am convinced of upon further reflection and another cup of coffee), the Spread Game of Borrowing Short & Lending Long is getting squeezed like a retired Texas Air National Guard officer. As the spread or differential between short-term interest rates and intermediate rates narrows, the risk to the Carry Trade in virtually every asset class that could be leveraged in the last decade increases exponentially. Since extreme leverage of 20 to 1 has been employed in these up-until-now no-brainer positions, unexpected market moves in the Dollar, interest rates, or the stock market can put the equity capital of the hedgers at substantial risk in a matter of hours. With rising oil prices hitting new nominal highs, who would have thought that 10-year interest rates could have declined in this environment?!! This weird behavior in the financial markets is abnormal, and likely to catch many derivatives positions on the wrong side of these unusual markets. With niggardly interest rate increases in the U.S. at a time when more prudent central banks in England, New Zealand, Canada, and Australia are attempting to reign in inflation expectations by pre-emptively raising rates and tempering excessive speculation in various local asset markets, the Dollar is currently more resilient than one would expect given the fundamentals. Half-Trillion Dollar Federal Deficit and Current Account Deficit Twins, 1.75% short-term interest rates, under-reported inflation, epidemic financial corruption, stagnating economic growth, unpopular international policies, and an American Consumer and Governments laden with history-setting debt burdens should not be supporting the Greenback. However, this is another example of weird behavior in the markets that is destined to fool even the most accomplished of traders. Success breeds smugness, and smugness breeds imprudence.

What does this have to do with the price potential in gold and silver? EVERYTHING.

As I have said until even I am sick of hearing it, the precious metals have consolidated since April, and are poised to break-out in one direction or the other. Given the above developments of weird behavior in the current financial markets and about 20 unlisted reasons, I believe we are at the cusp of the next major UPmove in gold and silver. Once gold breaks $430 per ounce and silver nudges $7 per ounce, you will be able to hear the screams of pain coming from the trading pits at the Comex. Markets do not operate by the calendar. They operate by the influences of the day and the minute, and the hour is drawing near when the bull markets in all of the precious metals will be reconfirmed for all but the most-diehard bears to recognize. Something big is in the wind. Keep a strong cup of java handy so you don't blink.

[verwijderd] 30 september 2004 14:06

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Nu $ 415

[verwijderd] 30 september 2004 23:21

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Gold Market Summary
Thursday, September 30, 2004, 12:48:00 PM EST

Author: Jim Sinclair

Any close above the critical demarcation line breached by gold early this morning signals its re-entry into a full bull market posture.

But don't for a moment think that those who stand to lose so much by gold’s rise will not stand and fight with all the resources they have at their disposal.

However, it's important to understand this simple rule: gold is the inverse of the US dollar.

The growth of the world-wide Forex (currency) market to a daily rate on a busy but not exceptional day is one trillion, six hundred million dollars in total.

Because of the unbreakable inverse relationship between gold and the dollar the size of the Forex market, no central bank, group of banks, the Exchange Stabilization Fund or the international investment community can stop what is now occurring.

Gold closing above $417 December future will have signaled the crossing of this critical line of demarcation. Battles will take place all the way to $428 and certainly again at the high challenge of $430.30 but the die is cast.

[verwijderd] 2 oktober 2004 11:54

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The GATA Heroes by Marilyn Guinnan
9-30-4

You read how history repeats itself and how, regardless of what course society is believed to be on, the pendulum always swings back. Besides evidently encapsulating civilization in a type of time warp, pendulums are boring. At least staccato rhythm is interesting, but let's move on to an example rather than digress, as it's easy to go off on a tangent about pulses and beats and how there's rhythm to the universe, yes a pulse, an inhaling and exhaling, that offers the old dull pendulum a touch of respectability, after all. Even so, since this piece is about gold, believe it or not, and the blatant manipulation of its price, and the very valiant Gold Anti-Trust Action Committee, we'll begin to weave a bit of history into GATA's tapestry by way of preamble.

There was this fellow John Law (1671-1729) on the lam from same, who, Scottish by birth, settled in France and, long story hacked to pieces, started the fiat money skullduggery. John Law asserted that if the government needed money all it really had to do to obtain it was print it! Why go to the trouble and expense of mining gold or silver - what was the point when it wasn't necessary? So France goes off the gold standard and all is well, or should I say wealth, for a time.

But of course firing up the presses is all too easy and before you can say Rive Gauche, French francs are everywhere (and U.S. dollars these days, as history has indeed repeated itself) inflation is rampant; what once cost a centime overnight costs ten francs, so that the people are being robbed of their wealth, just as, again, we are being robbed of our own wealth today. Fiat money simply cannot work, long term. It will always implode. In fact, our U.S. dollar has already begun to demonstrate its fragility.

When John Law's foolhardy money scheme fell apart like a paper boat on the Seine, the French franc became next to worthless, so that John Law went from hero status to persona non grata in the flick of an eye, just as Sir Alan will in the months ahead, (even if Greenspan isn't wholly to blame.) Events resulting from Law's money fiasco eventually escorted in the French Revolution, and we must think that the same could easily happen in the U.S. People can just be so damn fickle when their jobs disappear and they're hungry. A sort of mob mentality rears its ugly head when children cry out for food and a whole boxcar of worthless paper money won't buy a crust of bread.

"Fiat money didn't work in the past," goes the Fed's motto, "So let's try it again!" Though they of course knew it was doomed to fail, for what this is really all about is bringing the once mighty USA to her knees so that her sovereignty will be stripped from her and she'll fit right into the totalitarian New World Order. Sir Alan will probably step down before he has to take any heat, but not before he reminds us that it was Nixon who retired gold from our then (barely) honest currency, " . . . so please! None of this is my fault already." He will not mention that Nixon wasn't acting of his own volition, that no president does, including the mental and moral midget currently residing at 1600 Pennsylvania Avenue. Nor does anyone in the public eye ever make a big point out of the fact that the Federal Reserve is a privately run corporation and not connected to the federal government in reality, at all. As the third central bank in this country (we threw out the first two) it did not exist prior to 1913 and it is unconstitutional, to boot, as only Congress has the power to coin money.

That the price of gold must be held down from the unsavory Federal Reserve's viewpoint (clever, weren't they? To call this illegal enterprise "federal"?) is not difficult to comprehend when you consider that if gold is allowed to soar, it would mean that people prefer gold to currency. A skyrocketing gold price reflects badly upon the government so that they control the price rather than clip their own wings (read: curtail their own madness) by cutting back on the printing press money.

Under the gold standard, if a government overspent, people would turn in the currency in return for the gold that backed it. Loss of gold would soon cause the government to employ moderate spending. Less spending, less debt, of course. Without the gold standard, government has no realistic control on spending so that the financial obligations rise as ours have, to the tune of thirty-seven trillion dollars. Let's write that out numerically, to get a better mental grip of what we're facing: $37,000,000,000,000! Can you even begin to fathom such a figure? In unison: "We're in major trouble!" Yes indeed.

To continue, if left alone, the gold price would rise as this phenomenal debt continues heading for Jupiter. So the price of gold is held down artificially, in order for the government to state that inflation is under control, when, of course, it is obviously not under control. But wait, are we not supposed to have free markets?

Gold is historically "the" safe harbor. If the price of it were on the move, it would become a Mecca for investors, for it would signal trouble at our doorstep. (It isn't just 'trouble' at our doorstep, people; it's the economic Grim Reaper and he has come for our dollar.) Rising gold tells the world that the government is overextended. It reveals that inflation is occurring. It says that the currency is not worth what it was, and is being depreciated. It underscores the fact that fiat currency has nothing tangible backing it. Nothing.

Now, the way the price of gold is controlled is by bullion banks leasing gold from Central Banks, so the bullion banks have the gold to sell into the market and hold the POG down. Fifteen thousand tons or so are "short," meaning borrowed. (Interestingly enough, an independent audit of Ft. Knox has been disallowed by our government since the Eisenhower Administration in the fifties, which leads you to wonder . . . Is Ft. Knox empty? That gold belongs (-ed?) to the people; is it even there? A former guard was quoted as saying no, it is not. "The gold is gone," he said. If it is in fact there, why won't the government allow fan independent audit?)

Enter GATA. (www.gata.org) Every villain has a nemesis. Al Capone would've gone on thriving without Elliot Ness breathing down his neck, and the Sheriff of Nottingham would have gone on bullying and robbing the poor had it not been for Robin Hood. And we, the beleagured people of these United States, robbed of our wealth? We have GATA. Gold Anti-Trust Action committee.

Your homework assignment, boys and girls, is to visit that website. Your good deed for the day will be to offer GATA a donation, however small. These heroic people are fighting the good fight, and they're doing it for you.

[verwijderd] 4 oktober 2004 10:21

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Gold May Top 15-Year High as Dollar Falls vs Euro, Survey Says
By Claudia Carpenter Bloomberg News Monday, October 4, 2004

quote.bloomberg.com/apps/news?pid=100...

NEW YORK -- Gold prices may rise above the 15-year
high of $433 an ounce this week on speculation the
dollar will decline and spur investor demand for the
precious metal, a Bloomberg survey showed.
Twenty-seven of 44 traders and investors surveyed
Sept. 30 and Oct. 1 predicted prices will rise for a fifth
week. Ten forecast a decline and seven said prices
would be little changed. Gold reached a five-month high
of $421.90 an ounce Oct. 1 and had its biggest weekly
gain since mid-August.
"There is a good chance gold will break out to a new
high given weakness in the dollar," said George Ireland,
48, who manages about $100 million at Boston-based
Ring Partners LP, which trades in bullion and shares
of gold-mining companies.
Gold has climbed 13 percent from a six-month low of
$371.30 in early May on speculation that record-high
energy costs will curb U.S. economic growth, reducing
demand for the dollar. The U.S. currency's decline
against the euro last week was the biggest since the
five days ended Sept. 10.
The majority of gold investors and analysts correctly
predicted the market's direction in 12 of the 24 weeks
since the debut of the Bloomberg survey, including
the past five weeks.
Eighty-five percent of the time, gold moves in the
opposite direction of the dollar, said Gregory Wilkins,
chief executive of Toronto-based Barrick Gold Corp.
Gold has benefited from speculation that the dollar's
decline will help accelerate inflation, which erodes the
value of assets such as stocks and bonds.
"There is a lot more latent inflation going forward,
which I believe will be beneficial to the gold industry,"
Wilkins, 48, said last week during a presentation at
a gold conference in Denver.
Gold for December delivery rose $11.50, or 2.8
percent, to $421.20 an ounce last week on the
Comex division of the New York Mercantile Exchange.
Prices are up 9.4 percent in the past year.
The Tocqueville Gold Fund, with about $500 million
in assets, is seeking shareholder approval Oct. 22
to double its allowable purchases of gold bullion to
20 percent of total assets, partly because of
declines in the dollar.
"We're going to see new highs in gold before year-end,
certainly next year," said John Hathaway, 63, who
manages the New York-based Tocqueville fund.
"Owning physical metal is a more conservative way
than owning higher-risk gold shares to participate in
the favorable macroeconomic environment for gold,
including a falling dollar."
Matthew Turner, an analyst in London at Virtual
Metals, is among the 10 survey participants who
expect gold to fall this week. Gold's 7.9 percent
rise in March to the 15-year high on April 1 was
followed by seven straight weekly declines.
"The price hasn't been very comfortable at these
levels all year," Turner said.
Prices topping $433 this week would be a sign that
any demand for gold is speculative and "would not
be constructive" for the rally, said Carlos
Perez-Santalla, president of Hudson River Futures
in New York. He expects a rise this week that will fall
short of the 15-year high.
Hedge-fund managers and other large speculators
are betting prices will keep rising. They increased
their net-long position in New York gold futures in
the week ended Sept. 28, the U.S. Commodity
Futures Trading Commission said Oct. 1.
Speculative long positions, or bets prices will rise,
outnumbered short positions by 82,118 contracts
on the Comex, the most since Aug. 27, the
commission said. Net-long positions, which peaked
this year at 144,253 on April 9, rose by 17,791
contracts, or 28 percent, from a week earlier.
Goldman Sachs Group Inc. in a Sept. 28 report said
gold will trade in a range of $390 to $450 an ounce in
the next six to 12 months as the dollar falls and
mining companies reduce their fixed-price sales
contracts, limiting supply. Gold last traded at $450
an ounce in July 1988.
"Gold prices are likely to remain between $414 and
$425," said Prithviraj Kothari, director of Riddhi Siddhi
Bullion Ltd. in Mumbai. "There is interest from hedge
funds and gold prices may remain in the higher range
of $420-$425 if oil prices move further up."
Crude oil prices that reached a record $50.47 a barrel
last week are forecast to rise this week, according to
a separate Bloomberg News survey. Higher energy
prices probably will help send the dollar lower on
expectations for slower economic growth, another
Bloomberg survey showed.
Rising oil prices and a falling dollar are positive for
gold, said Frank McGhee, head gold trader at
brokerage Alliance Financial LLC in Chicago.
"If oil prices continue to rise, I would expect that you
will see Arab buying of both the euro and gold as
they look to defend the value of the petrodollars they
are receiving," McGhee said.
Central banks in the Middle East, source of about a
quarter of the world's crude oil, as well as Argentina,
have been buying gold, Tocqueville's Hathaway said.
Central banks are the largest holders of bullion.

[verwijderd] 5 oktober 2004 21:19

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Dear Friends of GATA and Gold:

Movements in the price of gold are sometimes "so
enigmatic" and central banks and bullion banks are
so involved with it that the gold market may be
less than free, the deputy chairman of the Bank of
Russia says.

The deputy chairman, Oleg V. Mozhaiskov, made the
remarks in a speech at a meeting of the London
Bullion Market Association in Moscow in June, but
the LBMA and other participants in the meeting
suppressed it, refusing repeated requests to
release a copy. After months of negotiation, the
Bank of Russia last week supplied the Gold
Anti-Trust Action Committee with an English
translation, which is appended.

In his speech to the LBMA Mozhaiskov cited GATA's
work at length, and while not formally endorsing
it, he showed that the Bank of Russia has been
following it closely and knows that much more
has been going on in the gold market than is
widely acknowledged. Likening the central bank
to a giraffe, Mozhaiskov quoted a poem well-known
in Russia: "The giraffe is tall, and he sees all."

The central banker acknowledged that the great
increase in the use of derivatives and central
bank leasing of gold have depressed its price in
recent years.

Mozhaiskov also denounced "the blatant lack of
discipline" of United States fiscal policy and "the
social and economic injustice of a world order that
allows the richest country in the world to live in
debt, undermining the vital interests of other
countries and peoples."

Despite its use as jewelry, gold is mainly a
financial asset, not merely a precious metal,
Mozhaiskov said, and international financial
circumstances are making gold particularly and
hard assets generally ever more desirable for
investment.

GATA is grateful to Mozhaiskov and the Bank of
Russia for their willingness to address gold
market issues openly, and we will encourage
study and discussion of this speech.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
The London Bullion Market Association
Bullion Market Forum Baltschug Kempinsky Hotel, Moscow June 3-4, 2004

Perspectives on Gold: Central Bank Viewpoint

By Oleg V. Mozhaiskov, Deputy Chairman Bank of Russia

I would like to thank the conference organisers
for this opportunity to share my thoughts on
such a complex, even mythical subject as gold
and the prospects for the near and medium-term.
I assume that the request was made for one
simple reason: that I, as a senior executive of
the Bank of Russia, should know more than
other ordinary mortals. In general, this logic is flawed, although there is sense to it: It is necessary to understand the
Central Bank perspective regarding this
precious metal, particularly given that it does
have approximately 500 tonnes of the metal in
its vaults.It is from this perspective, that of central bank,
that I intend to base my presentation. I hope you
can understand that it is quite a specific topic,
management of gold reserves. This is distinct
from the views adopted by gold prospectors,
industrialists, investors, speculators, and
ordinary purchasers of jewellery.

For the central bank, the gold stock is the
international payment reserve for the whole
country -- for the state authorities, private
companies and corporations, as well as individual
citizens. Like any reserve, it needs to be
conserved, in terms of both actual physical form
and its value. To a lesser extent, we need to be
concerned about its liquidity, or more precisely,
market price developments.

The central bank's duties in managing gold
reserves may therefore not seem particularly
onerous to a commercial trader, who has to
close dozens of transactions daily to achieve
results by the end of the day.

In this there is a grain of truth. The central bank's
specialists do not have to follow real-time price
movements every day and every minute, or react
instantaneously to every little twist and turn in the
market. We are concerned with other, less
immediate problems regarding gold. In a figurative
sense the central bank's attitude can be compared
with that to a giraffe. I have in mind an image of an
animal that suggests certain ambiguity, at least in
the Russian language.

On the one hand, when Russians say that someone
is reacting like a giraffe, they are highlighting that
person's slow reaction. It even suggests a degree
of slow-wittedness. On the other hand, the evident
magnificence of the animal commands respect.
"The giraffe is tall, and he sees all" -- the words of
the Russian bard Vladimir Vysotskii are well known
throughout Russia.

With this allegory in mind, I would like to mention
the issues concerning gold which fall within the
"giraffe category", or more formally, present
concerns of a central bank.

These are several: the volume of actual precious
metal stock, both in absolute and relative terms
(essentially, the optimum component of the metal
in total monetary reserves); methods of controlling
the stock; ensuring both security and availability
for liquidity purposes and at the same time
optimising income-earning potential. All these
issues reflect very practical concerns.

It may seem strange but all bear direct relation to a
problem that is often considered purely theoretical:
What is gold currently, and what will it be tomorrow?
Real money with intrinsic value? A raw material? A
cash commodity that has lost some of its monetary
functions? If so, what are the prospects -- complete
loss of gold's role or a restoration of lost functions,
in one form or another?

There is a wide circle of leading financiers who believe
that pondering on these themes is a fruitless academic
exercise. They are convinced that the heads of the
world's richest countries, who once agreed to abolish
exchange of national currencies for gold at a fixed rate,
have in fact demonetised gold altogether. In their eyes,
the existence of official gold reserves is simply a
remnant of the past, a financial monument to the gold
and gold-currency standards, which will ultimately be
absorbed by the global gold market. This market has
properly organised infrastructure, products, rules, and
procedures, and central banks are merely one of its
clientele. For them, this is the only reality to be
reckoned with.

Is this a true picture for gold in the modern world?

Many people do not think like this; the reality is more
complicated. The contemporary gold market has
emerged as a byproduct of a series of agreements
between governments, initiated by the United States
and supported by the other major powers, in whose
possession the bulk of all gold ever extracted lies.

These agreements (the most important of which were
the Jamaica Agreements of 1976) created ideal
conditions for stimulating international trade by means
of expanding credit facilities in national currencies.
The obligations on debtor countries to pay off the trade
deficits with gold (upon demand of the creditor
countries) severely limited the exporter countries'
opportunities for trade expansion. The importer
countries were made to live within their means,
predicated by their gold reserves. Gold was
therefore considered by a number of economists
and policy makers as an instrument guaranteeing
order and justic

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Gold was therefore considered by a number of economists
and policy makers as an instrument guaranteeing
order and justice in international economic relations,
while others remained convinced that it hindered
international economic progress and development.

The latter, as you know, secured the upper hand.

That brief look back into the past was necessary to
make the following conclusion: The present state of
the gold market and its future cannot be analysed in
isolation from the problems of the international
monetary system.

Some people may question this conclusion because
of the incompatibility of the present volumes in the
respective gold and foreign currency markets. I would
suggest that the volumes do not matter for this
particular purpose. The modern monetary system,
although undoubtedly robust and long-standing, in
fact has a number of flaws and weaknesses. These,
like the birth of the new, can cause health problems
to the participants of the system.

This disconcerting phenomenon occurs because, by
taking gold out of international payments turnover,
people are undermining payment discipline. The
discipline I have in mind is at a macro-level; that is,
the discipline of rich industrial countries whose
convertible currencies have taken the role of an
international trade medium by virtue of their
economic strength and have been accepted by the
world community as reserve units of payment.

Although there are several reserve currencies, the
blatant lack of discipline is demonstrated by the U.S.
dollar. I am leaving aside the main aspects of this
problem, such as the social and economic injustice
of a world order that allows the richest country in the
world to live in debt, undermining the vital interests
of other countries and peoples. What is important for
us today is another aspect, which is connected with
the responsibility of the state issuing the reserve
currency and for the international community
preserving that currency's buying power.

Given the actual behaviour of the dollar on the forex
markets, the problem could be more accurately
termed the irresponsibility of the U.S. government in
relation to the market valuation of its currency in
international circulation.

Today the net debt owed by the United States to the
outside world (the so-called "international investment
position") is in the region of US$3 trillion. To
understand the scale of this figure, let me remind you
that it exceeds the total official currency reserves in
all the world's countries (including the United States
itself). According to the International Monetary Fund
statistics at last year-end, the world pool of foreign
currency reserves totalled Special Drawing Rights
2,013 billion or about US$2,800 billion. The volume
of cash only ("greenback" banknotes) available outside
the United States totals about US$400 billion.

The world has come to a paradoxical situation in which
the creditor countries are more concerned with the fate
of the dollar than the U.S. authorities themselves are.

Thus, the evolution of the U.S. dollar's reserve role in
recent years has given ground to some quite pessimistic
forecasts, based on rational economic theory. No wonder
that the number of people who have held assets in dollars
and now wish to diversify them partly into gold -- the
traditional shelter from inflation and political adversity
-- is steadily growing.

The statistical correlation between the market prices of
dollar and gold is obvious. For the problem we discuss
today it means specifically that gold, in addition to its
unique physical and chemical properties used in
industry, has retained its particular monetary
attractiveness for cautious financial investors, and its
market price is still heavily influenced by the state of
the international monetary system.

This dualism in gold price formation distinguishes it
from other commodities and makes the movements in the
price sometimes so enigmatic that market analysts
need to invent fantastic intrigues to explain price
dynamics. Many have heard of the group of economists
who came together in the society known as the Gold
Anti-Trust Action Committee and started a number of
lawsuits against the U.S. government, accusing it of
organising an anti-gold conspiracy. They believe that
with the assistance of a number of major financial
institutions (they mention in particular the Bank for
International Settlements, J.P. Morgan Chase,
Citigroup, Deutsche Bank, and others), some senior
officials have been manipulating the market since
1994. As a result, the price dropped below US$300 an
ounce at a time when it should, if it had kept pace with
inflation, reached US$740-760.

I prefer not to comment on this information but dare
assume that the specific facts included in the lawsuits
might have given ground to suspicion that the real
forces acting on the gold market are far from those of
classic textbooks that explain to students how prices
are born in a free market.

So even those who stick to traditional economic
theory in analysing and projecting gold market
developments should admit that various factors that
influence gold price interact between themselves in a
constantly changing manner, sometimes in a very odd
way. Here, as in nuclear physics, some factors briefly
disappear or cease to act, and in their place comes a
new dominant market factor. This causes confusion for
the forecasters in their efforts to build a logically
balanced model for the metal price movements.

So I do not even dare shed light on the methodology
of gold price forecasting, but would like to risk outlining
basic factors, which are permanently (and I stress
"permanently") acting on the market. There are four of
them -- two relating to the raw material properties of
gold and two to its monetary qualities.

As an economist educated in the Marxist school, I
believe that the base for gold prices is rooted in the
sphere of the real economy. Like any mineral raw
material, mined gold has its intrinsic value. This value
fluctuates quite significantly depending on the location,
time, and technology of extraction. The market averages
out the individual expenses, optimising them at a level
that is acceptable to the industry that uses the metal
in its production. The absolute values in monetary
terms for this factor fluctuate, although they are the
least mobile element of the price.

The production cost category has its own "floor and
ceiling." The technological particularities of gold
extraction determine the minimum price level at which
production is economically feasible in the industry
as a whole. We think that the worldwide level is currently
about US$200 per ounce. This is the minimum price limit.
With lower prices the industry will plunge into a zone of
catastrophe. So the average costs of gold production in
volumes sufficient to satisfy expected market demand
(over the past 15 years this has averaged 2,500 tonnes
with the upward trend) are the first factor.

The second factor is the real volumes of demand
generated by the consuming industries for physical gold.
The behaviour of industrialists (jewellery is playing the
most important role) is mainly caused by factors
connected with an economic activity

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economic activity cycle. During the
1990s there was a significant but uneven rise of demand
for jewellery: from 2,200 tonnes in 1990 to 3,200 tonnes
by the end of the decade, with a peak of 3,350 tonnes in
1997. The first three years of the new millennium saw a
decline of demand from jewellers; the volume of metal
purchased by the industry dropped down to 2,550 tonnes
in 2003. The fundamental correlation between gold prices
and the volume of demand from industry is normally linear
in character. This correlation cannot be the sole cause
behind the dramatic falls in prices, but can show a vector
for price movement, which can be enhanced or indeed
maximised through the efforts of speculators.

However, even when speculative activity is relatively quiet
this vector is not always clear. There are "anti-phases" in
economic activity in various parts of the world, and on top
of these, various national traditions in demand for the
metal.

A recent example of this occurred at the turn of the
century. After prices reached a 20-year low of US$252 in
May 1999, demand for physical metal increased and
pushed the price temporarily to a new "equilibrium level"
of US$300 by the end of the year. The concept of
"equilibrium" reflects the situation on the market when
its participants believe that they are aware of a balance
between supply and demand. It brings a measure of
price stability to the market.

Such a situation appeared to take place following the
central banks' Washington Agreement on Gold.

However, as soon as demand started to shrink again
and a danger of excess supply arose, prices went
down. This was the beginning of a two-year market
stagnation, with the price waving within a range of
US$270-290. It was not sufficient for the metal
producers, but they were unable to control the
situation. It was investors who made the weather on
the market.

Now the time has come to admit that investment
demand was, and still is, the main driving force behind
price fluctuations on the gold market. The changing
character of demand heavily depends on what is going
on in the international foreign currency and financial
markets.

The investors pay continuous attention firstly to the
dollar rate of exchange and secondly to the level of
interest rates for financial assets. The volatility of
these indicators directly influences investor interest
in gold. Since this interest is realised not through
operations with physical metal but through deals with
gold derivatives on stock-exchange and
non-stock-exchange markets (where gold is mentioned
only as a base asset), the volume of these deals can
exceed the volume of trade in physical metal dozens
of times. Last year turnover with gold derivatives was
about 4,000 million ounces (or 129,000 tonnes), but
physical metal actually sold totalled 120 million
ounces or some 3,860 tonnes. As it is said: Feel the
difference!

It is true that the markets for derivatives linked to
other raw materials also usually exceed the operations
with base assets. The difference in volumes are
incomparably less (five to 10 times). At the same time
the markets for derivatives with foreign currencies and
prime securities as base assets are developing every bit
as rapidly as the gold derivatives.
What can we infer from that?

One conclusion, at least, is clear: Gold is predominantly
a financial asset, not merely a precious metal.

In this capacity gold is competing with other financial
assets on a variety of parameters. Being inferior in
terms of returns, it is far more reliable than anything
else for protection against war-related, political,
financial, economic, and credit risks, and also provides
a high level of liquidity and lower management costs.
However, since the rate of return is the main measure
of success for financial institutions under normal
conditions, investment-related decisions depend
directly on the stability of the international monetary
system, strength (or weakness) of the dollar, and the
level of interest rates on financial markets.

This dependence is not linear in nature. Correlation
factors change from time to time because decisions
are taken by investors individually on the basis of their
market expectations. As a result, investors' reaction
may race ahead or lag behind developments on the
forex and financial markets. If we examine gold price
movements over the last 10-12 years, it becomes
clear that during the first half of the 1990s the
dominant factor was the weak dollar and the market
was still living in hope of a recurrence of the 1980s
"gold fever."

From 1997 onward, as the dollar strengthened, these
hopes were dispelled, investors turned around, and price
fell to the level of support on the physical market. It
seems to us that the depth and duration of this
depressed phase of gold prices were to a considerable
extent caused by the wide use of gold derivatives by
investors. Insofar as these instruments are intended for
protecting banks and their customers against unwanted
and unexpected changes in price dynamics, they can
provoke massive closing of the existing position at a
specific moment. This process may take the form of a
chain reaction. As a result, the price falls below the
level dictated by the sensible interests of investors.

I would also like to note that recently the central banks
have been playing a significant role in the gold market.
Low interest rates in the money markets and revaluation
of gold reserves in line with lower market prices have
exacerbated the problem of the financial efficiency of
gold stock management. To earn some income on the
stock and compensate for "book losses" caused by its
revaluation, a number of central banks have started to
place a part of their reserves into deposits with
commercial institutions -- leasing operations.

Data available to me suggest that these banks deposited
about 1,000 tonnes in 1991, and 10 years later the
volume of the deposits reached 4,800 tonnes. Naturally,
the central banks' activity increased market liquidity and
thus also put downward pressure on the gold price. The
influence of these operations, however, must not be
exaggerated. It is even incomparable with the pressure
that was exerted on the market of gold derivatives.

The same conclusion can be made about the central
banks' sale of some of their gold reserves. All market
participants have been paying particular attention to
these operations since September 1999, when 15
European central banks agreed in Washington on the
orderly sale of 2,000 tonnes of gold from their official
reserves over the next five years.

One month ago the agreement was extended for a
further five years (to September 2009), setting the total
sale limit at 2,500 tonnes or 500 tonnes per year. One
may wonder if these agreements and sales indirectly
indicate that these countries have embarked on a
long-term gold demonetisation programme and if their
statement that "gold will remain an important element
of global monetary reserves" is nothing but a sort of
soothing therapy for the market. Such opinions exist,
although they do not prevail.

I think that the agreements do not give ground for this
view.

First, the participating countries own between them
12,300

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First, the participating countries own between them
12,300 tonnes of gold. The share of the metal in their
official monetary reserves has reached 36 percent.
This is significantly higher than the average for all the
world's countries (10-12 percent). So the sales can
be seen as optimisation of the reserves structure.

Secondly, the countries making the sales (France,
Germany, and some others) are currently enduring
budget deficits exceeding the limits laid down by the
Maastricht Treaty. Hence, this may explain the
temptation to solve their budgetary problems without
reducing expenditure or raising taxes.

The current decisions by the monetary authorities in
European countries could therefore be considered
sensible, like the actions of certain Asiatic states that
in recent years increased the gold portion within their
monetary reserves. The internal imperfections of the
international monetary system (which I spoke about
earlier) have already led to a number of regional
financial crises and still carry the danger of larger
upheavals. Under these conditions, the growing
interest of investors in real assets, gold in particular,
is more than justified.

And on that optimistic note, I would like to end my
presentation.

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Company Press Release
Thursday, October 7, 2004

biz.yahoo.com/ccn/041007/8eb82f3dcd42...
l

VANCOUVER, British Columbia -- First Silver Reserve Inc.
(FSR on the Toronto Exchange) today announced that the
ccompany has invested a portion of its cash assets in
silver.
First Silver Reserve starts holding its cash in silver

This silver was purchased in early September at prices
substantially below the current spot price of silver.
First Silver has purchased 100,000 ounces of silver
(equivalent to approximately 5 percent of annual mine
production). This silver is not available to be loaned.

This purchase followed the decision by the company in
early 2004 to investigate the acquisition of silver to
capture upside in silver prices in addition to profits
realized from silver production.

First Silver Reserve is a company focused on the
production and exploration of precious metals in Mexico.
First Silver owns and operates the San Martin Mine in
Jalisco State, Mexico.

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China-silver get the connection???

David Morgan

It seems China is in the news day after day, and rightfully so. The Chinese economy is responsible for almost everything I have purchased the past few years. Recently many financial commentators have mentioned that the Chinese have begun to exchange those U.S. obligations into hard commodities such as copper. This trend is likely to continue, as trading paper back to tangibles is the wisdom of the ages for beating the fiat dealers.

I just returned from Toronto and met with a few friends for lunch before making my flight back to Washington. During this luncheon I was asked to provide a few highlights on the silver market. Perhaps the most important point to be emphasized was that according to the Silver Institute the Chinese use about 1/70th the amount of silver per household that is used by advanced economies.

This is changing rapidly however the host of the luncheon pointed out the Chinese people desire refrigerators, computers, CD players, TV's, microwave ovens, and automobiles. Simply stated the Chinese want to have a life style similar to that enjoyed by Europe, America and Canada.

Since China represents 1.3 billion people if the usage came to that of the Western economies it would require 130 million ounces of silver annually. This will not take place overnight of course but the trend is in place. In fact check China is interested in silver from the Silver Institute www.silverinstitute.org/news/pr06oct0...

Another interesting fact that Dr. Michael Berry wrote in his morning notes; Silver and Uranium share an interesting history. They are relatively unknown and until recently both have been contrarian investments unloved, unwanted and out of favor. It takes courage and insight to buy a contrarian investment. Both metals are now seeing the "light of day." Uranium's price has just begun its upward trajectory to the $60 to $100 range and silver is going to see much higher levels. Both metals have been under explored and under produced for the past 20 years.

Dr. Berry was also at the luncheon mentioned above, in fact we sat next to each other and he pointed out some interesting facts about China and their influence in the commodity sector going forward. What caught my attention was when he mentioned that the Chinese keep their silver business very quiet.

Earlier I wrote a bit about the Chinese and the lands they have devoted to the study of silver see www.silver-investor.com/dm_aug04_poor...

The great one, the Mogambo (most recently sighted at the Silver Summit 2) points out that "China's government has announced the takeover of the biggest mining company in Canada. An ABC news article says that "Chinese firm, Minmetals, which is owned by the Chinese government, is said to be paying about $US5.7 billion, for Noranda Mining. It has also been reported that the Chinese oil company Sinopec, which is controlled by the Chinese government, is in talks to acquire a large lease of oil bearing land."

Further Bob Moriarty of 321gold went to China and says, "I sorta thought the demand from China might be responsible for 50% of the price of any commodity. Wrong. All I could see was building cranes and worker bees swarming over construction sites seven days a week." So, his original estimate of 50% may be too low? Wow!

He went on to say, "China doesn't just have an impact on commodity prices. Prices are going up from here on copper, iron, moly, silver, oil, gold and everything else you need to construct a modern economy in the shortest timeframe in all of recorded history."

Minco Mining & Metals Corporation (Minco) and Silver Standard Resources Inc. announced that they have entered into a strategic alliance to jointly pursue silver opportunities in China. Under terms of the strategic alliance, Silver Standard will invest C$2,000,000 in Minco Silver to acquire a 20% interest in the new venture. Silver Standard will have preferential purchase rights to participate in future financing of Minco Silver in order to increase its interest up to 30% in Minco Silver. As part of the strategic alliance, Minco Silver will be the exclusive entity for both Minco and Silver Standard to pursue silver projects in China.

China-silver, China-silver, China-silver, I realize that is only three times, repeat until you see, hear, and understand the connection. There is a connection, China is going to need, want and use silver and a lot of it. Will this change the dynamics for silver in a big way, yes in a way few see or understand presently?

According to the Silver Standard press release…

"The Chinese economy has grown at an astonishing pace over the past 10 years, with annual silver consumption increasing from 24 million ounces to 47 million ounces. China appears to have an insatiable demand for all metals and we strongly believe that there will be continued growth in silver consumption. We are very pleased to participate in the Minco Silver strategic alliance in a country that has large silver resource potential with an increasing domestic silver demand."

Certainly moving from 47 million ounces of silver use in China to 130 is a three fold increase from current demand, but not unlikely. Especially considering the use of wireless technologies and superconductivity in their electrical grid. Stay tuned for the real China-silver connection it keeps getting more interesting.

David Morgan

October 7, 2004

David Morgan has a weekly radio show on the metals at www.netcastdaily.com/fsnewshour.htm, additionally he can be viewed on eTV at www.freemarketnews.com

[verwijderd] 11 oktober 2004 10:03

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GATA has struck paydirt once again. The following is an exchange between a supporter in our GATA ARMY and Rainer Widera, Head of International Financial Statistics for the Bank for International Settlements:

Dear Sir,

I am looking for some information on the gold market. It has been noted by some gold market observers that for the fourth quarter of 2001, GFMS (Gold Fields Mineral Services) reported that the delta-adjusted hedge book for gold stood at 2924 tonnes. At this point, the notional value of gold derivatives reported to the BIS was $231 billion. However, as of December 31, 2003, the BIS reports gold derivatives of $344 billion. Producer hedging, meanwhile, declined from 2001 to reach 2166 tonnes at year-end 2003.

How is this possible? It has always been claimed that the derivative position reflects the hedging of physical gold by the producers. How then can the derivatives position increase while the physical hedge position decreases? Can this be explained by an increase in speculative short positions unrelated to mining hedge books?

Regards
***
Thank you for your question on the relationship between producer hedging in gold and the BIS data on open contracts in gold derivatives. Please note that the BIS data are collected from banks and that their open gold derivative contracts reflect trading in the forward gold market not only with producers of gold, but with other commercial banks and central banks as well. It is therefore not possible to establish a 1:1 relationship between the BIS data and the hedge book of producers for gold published by GFMS.

Best regards

Rainer Widera
Head of International Financial Statistics Monetary and Economic Department Bank for International Settlements Centralbahnplatz 2CH-4051 BaselSwitzerlandTel: +41 61 280 8425 Fax: + 41 61 280 9100
***

Quite frankly, this is the key to understanding the real gold market, what GATA has discovered over the years, how The Gold Cartel has suppressed the gold price years, etc. It is the key to understanding what the gold fraud is all about.

It seems GFMS and the World Gold Council are really fronts for The Gold Cartel. They have refused to deal with the gold price suppression scheme – that the central banks have surreptitiously dumped 13,000+ tonnes of gold to keep the price far lower than it would have been if allowed to trade freely. How else to explain their silence and unwillingness to confront such blatant contradictions to their year-after-year reporting? Some comments on what makes the specifics of this BIS note so significant:

"Please note that the BIS data are collected from banks and that their open gold derivative contracts reflect trading in the forward gold market not only with producers of gold, but with other commercial banks and central banks as well."

This statement confirms what GATA has been saying all along. GATA's conclusion has now been validated not only by the market (outstanding derivatives are growing even as producer hedge books are being reduced) but it is now validated by the BIS telling us that banks are using derivatives and that they are using them for their own books -- their own proprietary trading and position taking. GMFS numbers are flawed because they do not account for the fact that banks are short gold, i.e., they have gold liabilities.

"It is therefore not possible to establish a 1:1 relationship between the BIS data and the hedge book of producers for gold published by GFMS."

Thus, the gold industry has it wrong. They can't explain the derivatives numbers. They can't explain the huge amounts of gold mobilized from the FRB in NY and the UK, which amounts to enough gold alone to dwarf the industry consensus and does not even take into consideration the gold mobilized from Switzerland and other financial centers where hard numbers are not available.

The fact that GFMS and the World Gold Council refuse to deal with this blatant contradiction reveals the degree of a lack of intellectual integrity on their part. Both of these organizations have hurt gold investors, gold shareholders, gold companies and the poor people of sub-Saharan gold producing countries to an incalculable degree. In my opinion (for this reason and many others) both of these disgraceful operations should be disbanded. Any gold corporation or public company supporting either one of these organizations should be ashamed of themselves for contributing to a shallow hoax. Why aren’t gold producers up in arms over this disturbing scam perpetuated by the WGC and GFMS?

The sooner the evidence of this orchestrated deception is disseminated to more and more in the investing world, the sooner the gold price is going to go berserk. Gold shareholders should be outraged at this farce and start raising "Kane" with gold company CEOs.

[verwijderd] 13 oktober 2004 09:07

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Gold smugglers still up & running
SAMIK DASGUPTA & SHUBHAM MUKHERJEE

TIMES NEWS NETWORK[ TUESDAY, OCTOBER 12, 2004 02:30:57 AM ]
NEW DELHI: While there has been a crackdown on terrorist and terrorism related activities, including money laundering across the globe, India still seem to be playing host to it through a rampant parallel gold trade. Smuggled gold, it may be pointed out, is often used as a barter for illegal activities.

There are various estimates of the size and scale of smuggled gold in India. According to bankers and analyst, the smuggled market of gold is almost 20% of the annual purchases of gold, which according to market sources, stands at Rs 40,000 crore. This means that as much as Rs 8,000 crore is outside the system.

Some other estimates put the total figure of smuggled gold figure in the country to be around 20 % of the entire country’s stock of 15,300 tonne. This comes to around 3,000 tonnes, valued at around Rs 2,000 crore, according to Value Reporting — Global Competitive Advantages in Banking & Finance, a book authored by Vipin Malik, an ex-RBI board member.

According to Mr Malik, gold has become one of the major means of money laundering in India. “Apart from resulting in wastage of precious foreign exchange, smuggled gold and diamonds have also become a lucrative source of illicit money transfers that are potential threat to the security and economy of the country”, he added.

In fact, gold imports (in terms of foreign trade) stand next only to oil imports. The figure of gold import in 2003 when read with those of 1994 figures are alarming enough to make one wonder as to how the policy makers have not woken up to the rising inflow of gold as an exchange medium, Mr Malik has noted.

According to analysts, the biggest threat of smuggled gold is its potential of being exchanged for non-legal and lethal purposes that can be used for anti-national activities. “Gold along with other precious stones are one of the best ways of storing black money”, they added.

According to senior bankers, the government has had a restrictive policy with regard to gold which has resulted in higher prices in the domestic market, which in turn has also resulted in hedging, smuggling and hoarding of gold.

“The government should bring in policies through banks, that would aim at tapping the cash market of gold, given the fact that gold has been the means of saving for the Indian masses through ages.

This would bring more and more illegal gold into the system,” explained a senior banker. Figures reveal India’s share of world gold stock has gone up from 7 % in 1994 to 10.9 % currently.

While India’s share in mining has been falling (a very small amount of 2 tonnes), the growth of demand in the domestic market has been met almost entirely through imports. While gold demand was 400 tonnes a year for the period 1990-95, it increased to 600 tonnes a year during the period 1994-2003. It went up to a staggering 900 tonnes a year for 2003-04.

[verwijderd] 16 oktober 2004 10:01

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Ten Rules for Silver Investing

1. When all else fails, there is silver.

No one likes to be a prophet of doom, but the simple truth is that silver is the world’s money of last resort. Should a severe economic collapse occur, leaving paper assets worthless, silver will be primary currency for purchase of goods and services. (Gold will be a store of major wealth, but will be priced too high for day-to-day use.) Thus, every investor should own some physical silver-and store a portion of it where it’s accessible in an emergency.

2. Start small- keep it simple.

Too many investors, upon deciding to beef up the metals portion of their portfolio, buy too much physical silver at once-and in the wrong forms. Beginning metals investors should concentrate on pure bullion bars or coins, in smaller sizes, looking to pay a minimum premium over the actual metal value. Avoid commemorative coins, decorative items, jewelry and other collectibles, all of which carry large premiums and have limited resale markets.

3. Boost the buying power of your dollars with mining shares.

If you are a typical investor, you cannot expect to be an expert on silver and the silver market- but you can invest in the people who are. Once you have established a core holding of physical silver, leverage both your knowledge and your buying power by purchasing the stocks of mining companies. These shares are highly responsive to changes in silver prices, frequently producing much higher percentage returns than the metal itself.

4. Dollar – cost average to lower your costs – and increase your discipline.

Dollar-cost averaging is an ideal way to implement Rule 2. By making same-dollar purchases at regular time intervals, you wind up buying more metal when prices are low and less when they are high. This approach helps you develop discipline, erasing the “trader’ mentality that infects many market participants and instead fostering an “investment” philosophy. Dollar-cost averaging also eases some of the sting when prices move against you, allowing you to view the downturn as an improved buying opportunity rather than a disappointing loss.

5. Do not get a raw deal from your dealer.

Because of the specialized nature of the physical metals markets, selection of a well established dealer with a quality reputation is essential. A good dealer will provide timely executation of your trades at fair prices with reasonable fees. Note, as well, that the lowest price is not necessarily the best price. In the past, some dealers who squeezed their price margins too low in order to attract clients were unable to make delivery, leaving those clients holding the bag.

6. What’s yours is yours – so keep it that way.

While it is wise to keep some of your silver where you can get to it easily, it is also important to keep the bulk of your metal in a safe place- especially as you holdings increase. However, if you establish an account with a brokerage warehouse or other public storage facility, you should make sure your holdings are kept segregated and that you can inspect them when you wish.

7. Silver speculation’s like cough syrup- good in small doses, but too much can make your portfolio sick.

Depending on your individual goals and our personal tolerance for risk, a small portion of the assets you commit to silver can be used for speculation, perhaps in futures contracts or options on futures. Never forget, however, that this type of trading is speculation, NOT investment.

8. A little information can mean a lot more dollars.

You do not need to be a student of the silver market to profit from your metals investments. However, you will greatly increase your chances of success-and the size of your potential profits-if you understand the fundamental factors that drive silver prices and pay regular attention to current supply and demand considerations.

9. Collecting silver is an art- but not really an investment.

Owning fine silver items- including rare coins – can provide great enjoyment and personal satisfaction. Like paintings and other artworks, they are beautiful and often quite valuable-and, if you are astute at buying and selling, they can generate large profits. In spite of this, however, always view such holdings as collectibles, NOT as investments. When you need your silver-or simply want to cash in- you do not want to have difficulty selling or be forced to forfeit a large aesthetic premium, both of which are likely with silver rarities.

10. More than 10 percent is too much of a good thing.

No matter how good the market looks-or how worried you are about the future of civilized society-you must always remember that silver should make up only a small portion of a well-diversified portfolio. I recommend committing no more than 10 percent of the average portfolio to silver-regardless of how strong you feel about the potential of the metals markets.

Note: Under the current economic conditions, I feel 20-25% is more appropriate, than the original 10 percent per the book global-investor book of investing rules pages 301-303. At the time the book was published the economic conditions were more stable but now that the world is in a war environment the higher allocation is necessary!

[verwijderd] 17 oktober 2004 23:51

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Harmony set to bid for Gold Fields

By John Reed in Johannesburg and Arkady Ostrovsky in Moscow
Financial Times, LondonSunday, October 17, 2004

news.ft.com/cms/s/5c410f94-2078-11d9-...

South African gold producer Harmony, with the backing
of Russian metals giant Norilsk Nickel, is poised to
make a surprise takeover bid on Monday for Gold Fields,
the world's fourth-biggest gold producer.

Harmony, South Africa's largest domestic gold producer,
will make a merger offer to Gold Fields' board and
shareholders, including Norilsk, that could foil
management's plans to merge with Canada's Iamgold.

If accepted by Gold Fields shareholders, the offer, which
is understood to have Norilsk's support, would create the
world's biggest gold company, with combined market
capitalisation of about $10 billion and annual production
of about 7.8 million ounces. The announcement of
Harmony's proposal, most likely a share swap, is
expected to come today.

For Harmony, the deal would satisfy a desire for
more and better gold assets in South Africa, its main
country of operation. By teaming up with Harmony,
Vladimir Potanin, the Russian business tycoon who
controls Norilsk, would continue to diversify away
from Russia at a time when many of the country's
oligarchs feel uncertain about their prospects at
home.

People in Johannesburg and Moscow familiar with
the bid plan said Norilsk's backing of the Harmony
offer, if approved by shareholders, could be a
prelude to a future deal spinning off some Gold Fields
international assets.

Norilsk declined to comment on the potential bid for
Gold Fields.

Norilsk unexpectedly became Gold Fields' biggest
single shareholder in March when it bought a 20
percent stake sold by Anglo American for R7.63
billion ($1.19 billion). At the time, Gold Fields
welcomed the investment and spoke of the two
jointly exploring international opportunities.

But Gold Fields' plan to merge with mid-sized
producer Iamgold, announced in August, is
understood to have angered Norilsk, which felt it
was not properly consulted. The Russian company
would see its stake in Gold Fields' international
operations diluted by plans to list them separately
in a new company 30 percent owned by Iamgold.

It is understood the Russian company has not yet
endorsed the Iamgold deal and recently stopped
returning calls from Gold Fields executives. "They're
not acting like a good, supportive shareholder," a
person close to one of the companies said.

Ferdi Dippenaar, Harmony's marketing director,
declined to comment on what he called "speculation
or rumours."

Wille Jacobsz, Gold Fields' corporate affairs head,
also declined to comment but confirmed that Norilsk
had not yet expressed support for the Iamgold
transaction.

Gold Fields is set to hold its annual meeting on
Nov. 16 and shareholders will be asked to vote on the
proposed Iamgold merger in early December.

By supporting Harmony's alternative offer to Gold Fields
shareholders, Norilsk would be able to realise its
international aims without falling foul of the South
African government's strict foreign-exchange controls,
aimed at preventing capital flight. Under these rules, to
buy control of Gold Fields with market capitalisation of
about $7 billion as of Friday Norilsk would need to offer
cash.

But the company's free cash was $1.2 billion at the end
of March 2004.

Last year Norilsk also bought a controlling stake in
Stillwater Mining, a U.S. platinum and palladium
producer, for $300 million.

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AB InBev	2	5.493
Abionyx Pharma	2	29
Ablynx	43	13.356
ABN AMRO	1.582	51.370
ABO-Group	1	22
Acacia Pharma	9	24.692
Accell Group	151	4.132
Accentis	2	264
Accsys Technologies	23	10.555
ACCSYS TECHNOLOGIES PLC	218	11.686
Ackermans & van Haaren	1	188
ADMA Biologics	1	34
Adomos	1	126
AdUX	2	457
Adyen	14	17.664
Aedifica	3	902
Aegon	3.258	322.680
AFC Ajax	538	7.087
Affimed NV	2	6.288
ageas	5.844	109.887
Agfa-Gevaert	14	2.048
Ahold	3.538	74.319
Air France - KLM	1.025	35.009
AIRBUS	1	11
Airspray	511	1.258
Akka Technologies	1	18
AkzoNobel	467	13.036
Alfen	16	24.403
Allfunds Group	4	1.469
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	114.819
AM	228	684
Amarin Corporation	1	133
Amerikaanse aandelen	3.836	242.831
AMG	971	133.164
AMS	3	73
Amsterdam Commodities	305	6.686
AMT Holding	199	7.047
Anavex Life Sciences Corp	2	486
Antonov	22.632	153.605
Aperam	92	14.961
Apollo Alternative Assets	1	17
Apple	5	381
Arcadis	252	8.736
Arcelor Mittal	2.033	320.625
Archos	1	1
Arcona Property Fund	1	286
arGEN-X	17	10.288
Aroundtown SA	1	219
Arrowhead Research	5	9.725
Ascencio	1	26
ASIT biotech	2	697
ASMI	4.108	39.087
ASML	1.766	106.252
ASR Nederland	21	4.452
ATAI Life Sciences	1	7
Atenor Group	1	484
Athlon Group	121	176
Atrium European Real Estate	2	199
Auplata	1	55
Avantium	32	13.642
Axsome Therapeutics	1	177
Azelis Group	1	64
Azerion	7	3.392

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