Currencies, Gold, Silver and Oil [Archive] - Page 7

stolwyk

19-12-2006, 01:25 PM

TROUBLE AT MILL SERIES: Smoke and mirrors

Goldman Sachs made a lot of money because it has been appointed by Treasury to manage the markets.

It is a very important member of the PTT, the Plunge Protection Team. And think twice before talking of a massive DOW correction: Treasury will do whatever is needed to prevent a very sharp correction. If there is one, don't blame Goldman Sachs.

The FED and Treasury know that a strong correction will result in a hefty fall of the dollar as foreigners partake in investment, be it shares, bonds or whatever of value in the US.

Failure results in foreigners withdrawing from these markets and selling dollars, the very thing not wanted.

So, the PTT is flatstick protecting and managing the most important avenues of investment. At the same time it will try to depress the price of Gold, Silver and commodities as these are inflation indicators as well due to the current increase in the money supply of some 11% (It was 7% and then the FED decided not to let M3 known anymore) while the GDP is a real negative one. Ideally, the money supply increase or M3 ought to be not larger than the *real* GDP.

And one can't blame Poulson, the previous and very able CEO of Goldman S. having moved to Treasury. As the US treasurer, he is directing the PPT and he would'nt have changed jobs unless he knew that Goldman would make a lot of cash deciding what to buy or sell on behalf of the US Government.

It so happens that Goldman S. is frequently mentioned as being one of the "Rothchild" companies, so the elite more or less control many actions taken by the US Government and accommodated by the FED, another "Rothchild" creation and private company in many peoples' minds. (The FED is not owned by the US but there is London money in it).

Will the Rothchild Banks in the rest of the world know what Goldman S. invests in and discards on behalf of the US Govt? That is a question, some are asking.

Wall Street has distributed some massive bonuses this year and this explains the somewhat strange opinions of its economists. Not to toe the line means bonuses foregone or at least being chastized, perhaps. Or the economists having understood the Wall Street doctrine, would'nt dare to deviate from the path chosen by their leaders.

And Wall Street being cheer leaders for the FED and Treasury, hails even the slighest temporary improvement, be it real or fabricated by smoke and mirrors- fraudulent data served up by the FED. And this is used to stimulate the DOW and the Dollar once again.

Unfortunately, even most Democratic or Republican leaders from the House or Senate have a limited understanding of the economy or if they have, are more interested in being re-elected, and this won't happen if they advocate higher taxes while trying to be elected. They would prefer pork barrel projects instead, no matter what debt is being created-in any case these are not part of the Budget and neither is the cost of the wars in Iraq or Afghanistan.

I did mention before that the elected in the House and Senate are of a very poor calibre, IMHO and this has been confirmed by an American writer as well.

Gerry

stolwyk

22-12-2006, 08:31 PM

Just Before Christmas I'm as Good as I Can Be
By Richard Daughty "The Mogambo Guru"
December 20, 2006
http://www.kitco.com/ind/Daughty/dec202006.html

Could Silver Cost More Than Gold? By: Jim Otis
http://news.silverseek.com/SilverSeek/1166714888.php

December 20, 2006 (RHH). Gold Derivatives: Elephant in the Boardroom
http://www.goldensextant.com/commentary33.html

Confidence in the U.S. $ is falling: Excerpts from GLOBAL WATCH:
THE GOLD FORECASTER by Julian D.W. Phillips
December 20, 2006
http://www.financialsense.com/editorials/phillips/2006/1220.html

Gold Exchange Traded Funds – Strong Investment Growth
Excerpts From – “Gold Forecaster – Global Watch”
December 12 , 2006
http://www.kitco.com/ind/AuthenticMoney/dec122006.html

International Forecaster MidWeek Reading - Gold, Silver, Economy + More
By: Bob Chapman, The International Forecaster
http://news.goldseek.com/InternationalForecaster/1166636202.php

stolwyk

26-12-2006, 07:38 PM

Trouble at mill series: Conundrums galore.

1. Economics.
The US and other countries are strongly increasing the money supply be it by issuing easy credit or money market operations and are therefore promoting price inflation. The US is'nt keen to lower the dollar as they fear that foreign money won't buy US debt instruments unless a higher interest rate can compensate for any capital losses.

In any case, the ECB (European Central Bank) could further tighten interest rates and in doing so, attract foreign including US cash instead. The US can't very well increase rates because of the economy slowing down and the painful unraveling of the housing bubble. However, as mentioned, monetizing debt is a prime consideration in the US; it is currently running at about 11% according to reports.

Some countries are replacing some of their US dollars by Euros. Iran insists on using the Euro instead of the US dollar in oil trading. Others to follow.

The US has marginalized manufacturing because of outsourcing, thus exports can only slowly increase. All debt is massive, saving is negative (-1%) and the Current Account is a very high 6.6% of GDP. Thus, the US is boxed in with nowhere to go. The wars in Iraq and Afghanistan are a constant heavy drain on the purse.

China and other Asian nations are maintaining a high US dollar surplus and much of this is spent to buy US debt. This keeps US interest rates low and promotes US consumption of foreign goods.
China now has more than a trillion US dollars and much has been said about misallocation of these reserves. However, it is also an economic weapon which can be used to threaten the economic wellbeing of the US.

China is still benefitting from exports to the US and hence won't try to damage itself by suddenly flooding the US market with dollars. At the moment, China is promoting consumption and trade with its Asian partners; once this is advanced, then the US will become less relevant. In the meantime, this surplus of US dollars can be fully used to stop the US from taking anti China measures, eg trade protection.

2. Russia and Europe.
Russia is making its influence felt in countries which tend to favour the West and is busy controlling the energy supply to Europe. Obviously, Europe which has a great shortage of energy, would prefer this not to be so but can't do much about it. Germany tends to be anti-nuclear and that does'nt help. Europe fears Russia taking over the European energy market.

3. Iran.
There is no reason why the US should attack Iran as the risks are too high. A battle group of US warships is maintaining station off Iran. It could be used to support any Israeli strike or at least stop Iran from attacking Israel. However, the Chinese and Russians have big Iranian contracts and their presence in Iran would normally stop the US from taking any action even if Bush would favour it.

4. The Middle East.
Many Iraqis leave their country for better pastures. The US is in a difficult position because of the militias and interference by Iran who supports the Shiites. Afghanistan is a big exporter of opium and the Nato army is having a difficult time.

5. The use of derivatives or other instruments which may suddenly result in heavy defaults and bring down the financial system.

6. Gold.
Each of items 1-5 can be positive for gold but it is difficult to predict when. I believe that the PTT (US Plunge Protection Team) will do whatever it takes to keep down the Gold price for 2 reasons:
5.1: To make people believe that inflation is down and therefore price increases ought to subside. (The FED is already using smoke and mirrors to falsify important economic data).
5.2: To make investment in gold more difficult as anticipated returns may not take place. However, some mining companies make good profits at current gold prices. ETFs play an important role and are growing.

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

stolwyk

28-12-2006, 04:31 PM

Storm Watch Update: THE NEXT ROGUE WAVE
by Jim Puplava
http://www.financialsense.com/stormwatch/2006/1215.html

Dollar Drops; U.A.E. Says Selling U.S. Currency, Buying Euros
http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=acjLrGsR2NOY

International Forecaster MidWeek Reading - Gold, Silver, Economy + More
http://news.goldseek.com/InternationalForecaster/1167161002.php

Gold Takeovers Reach Record on Lack of New Supplies (Update1)
http://www.bloomberg.com/apps/news?pid=20601109&sid=aB3a0HjsLcYI&refer=news

Sanctions-hit NKorea selling off gold reserves: report
http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/249177/1/.html

Profiting from the Cartel’s Interventional Tactics
http://news.goldseek.com/GoldSeek/1167152963.php

stolwyk

31-12-2006, 02:39 PM

Trouble at mill series: COMMODITIES AND INFLATION

Inflation: There are monetary and price inflation.

Monetary inflation arises from watering down the currency, be it from increasing credit or printing more cash. The US FED does both because ordinary banks have reserve ratios which approach zero (Not holding back cash or deposits which normally can't be used for lending).

It does so to prevent a recession. Unfortunately, increasing the money supply without increasing production of goods leads to price inflation.

The FED tried to overcome that by not publishing the M3 data which gives the increase in money supply. It hopes that the public either won't ask for this or that the the normal increasing price inflation won't occur because of disinterest.

However, some astute commentators have managed to calculate M3 which is running at 10-11%; this compares with a real GDP of about -1% (The US is in recession). Monetary inflation is thus running at a high level.

Prior to the FED refusing to publish M3 data, monetary inflation was about 7%, thus the FED had a very good reason not willing to publish this. (Europe publishes it and at the moment it is running at a high 9.3%, necessitating more interest rate rises which will add additional pressure on the US dollar as the FED won't be able to increase interest rates without damaging the economy. Thus there is no incentive to increase the value of the dollar).

The FED's "new economy" has no negative GDP, because the GDP and many input data have been falsified so as to obtain a permanent ideal: no recessions- markets, including gold and silver are being rigged by the PPT (Plunge Protection Team) to achieve this.

However, the PPI (Producer Price Index) has been at a very high level recently, so more price inflation is to come irrespective of the false data the "Core inflation" supplies.

Price inflation may also occur because of sudden high increase in demand while production is low or is witheld; a scarcity factor: nickel, uranium and other commodities.

The price of commodities therefore also depends on monetary inflation of the in this case the USD world currency (Commodities tend to be expressed in USD) and other causes.

The US and world debts are so high that in some countries, including the US, raising taxes or employing other normal means to meaningfull reduce it, would not only be impossible but would also lead to a massive depression and nobody wants that.

So, the FED keeps on increasing the money/credit supply at a high level to reduce the value of debt and this affects the price of the dollar, commodities and other goods, bearing in mind that the FED/Treasury also rig markets.

At the moment, the dollar is being supported by Central Banks whose interest is not the destruction of the dollar but at some stage the fear is that some CB will break the ranks as some oil producers are doing.

Thus there is increased risk that the dollar could fall heavily at some stage and with it the belief that hyper inflation could take over resulting in massive price increases of commodities/goods.

It is possible that prices of some commodities could come down somewhat because of increasing supply, given time; more so because of the US slowdown. However, the high increase in the US and world money supply will counteract this, also, because of high demand from some nations, eg. China, India, Russia, Brazil.

Meanwhile, any high energy pricing could cause damage, particularly in the US and Europe.

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

stolwyk

01-01-2007, 08:30 AM

Trouble at mill series: CAN GOLD BE CONFISCATED.

"Franklin D Roosevelt, under Presidential Executive Order number 6102, confiscated all privately held Gold in the United States on April 5, 1933."
Much has been written about this and the possibility, it could happen again. Financial writers one after another agree that in an emergency, gold could be confiscated. I disagree.

In the thirties, the dollar was mainly a US currency and did'nt have a reserve status. Nowadays, most of the dollars are held overseas and nearly all Central Banks hold some or plenty. A few trillion are held by Asian Banks, including China who holds over one trillion. Unless the Governments of these CB's agree to a concerted action, Gold cannot be confiscated. It is doubtful that this consent will be forthcoming and a single action by the US alone won't have the desired result.

Such unlikely action could only come when all else has failed and that would be only after a period of heavy monetizing of debt resulting from a massive increase of the money supply and corresponding super inflation.

However, the US can not do this unilaterally as its economic fate is largely in the hands of its main creditors - particularly China - who would decide that such US action is not in their- or the world's best interest. They would rather prefer to take the pressure off the USD prior to this occurring and most likely would each decide on alternative replacement currencies, of which the EURO, the Chinese Renminbi, Gold and the Ruble could be the chosen ones. In this context, it could take quite some time before any action is taken so as to allow China to become financially stronger and the US to become weaker.

The dollar deserves to fall heavily but the damage would be enormous and this could lead to a heavy world depression. The major nations are well aware of this and would be prepared to step in and very gradually lower the dollar down to a certain level. To maintain their competitive position, the dollar won't be allowed to fall too heavily at any one time.

That exercise may well be repeated later on. Gold will be the beneficiary due to increased price, increased Central Bank holding and vastly increased investment.

The US held plenty of GOLD in the thirties but it is suggested that the Govt holds much less now. Massive investment by India, Opec and other investors, including hedge funds would have taken place and the physical gold held outside the US would vastly outstrip that held by the US.

In addition, much gold is held privately by citizens all over the world. It would be absurd for the US to reclaim gold as only a minority holding exists within its boundary and some would not be recoverable. Central Banks may not agree to go along with the US' wishes; fancy OPEC and the Indian Govt being asked to collect Gold!

The idea of robbing citizens of their gold is preposterous today, first because the Gold and dollars are everywhere and in massive quantities outside the US and also, because the US cannot act unilaterally anymore in much different world populous or financial US settings. Alternative fiat currencies will take over and this process has already started in a minor way.

That is my opinion,

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

stolwyk

04-01-2007, 09:11 PM

International Forecaster MidWeek Reading - Gold, Silver, Economy + More
http://news.goldseek.com/InternationalForecaster/1167850347.php

P. Schiff: Wall Street’s Spin-Meisters Are At It Again
http://www.kitco.com/ind/schiff/jan032007.html

RUMBLINGS OF EURO DISCONTENT by Christopher Laird
http://www.financialsense.com/fsu/editorials/laird/2007/0102.html

Gold: The Best Bet for Indians
http://www.resourceinvestor.com/pebble.asp?relid=27673

firpohorse

06-01-2007, 10:08 PM

Gold absolutely smashed overnight. How can the US be putting out such great employment numbers and their dollar be turning the corner?

I thought that their economy was meant to be in real trouble but it is not panning out that way.

Any thoughts?

denpal

06-01-2007, 10:22 PM

quote:Originally posted by firpohorse

Gold absolutely smashed overnight. How can the US be putting out such great employment numbers and their dollar be turning the corner?

I thought that their economy was meant to be in real trouble but it is not panning out that way.

Any thoughts?

In the big picture, it is just a blip.

firpohorse

06-01-2007, 10:51 PM

quote:Originally posted by denpal

quote:Originally posted by firpohorse

Gold absolutely smashed overnight. How can the US be putting out such great employment numbers and their dollar be turning the corner?

I thought that their economy was meant to be in real trouble but it is not panning out that way.

Any thoughts?

In the big picture, it is just a blip.

I hope so Denpal. I have over 80% of my investments in Gold Shares and I can see them getting a real hiding next week.

Crypto Crude

06-01-2007, 11:43 PM

firpohorse, yes the US economy is in real trouble...
Bush has done nothing to address US's all time extreme high debts...
and the Iraq pullout.... seems like the debts will contiue to roll on, for another 3years before anythings done... and when hes out of office then sort it out...this is bad news for their dollar...
they always have away of showing good news when theres bad... like they always have away of proping the DOW above 10,000 when its there or there abouts...when oil prices were around $70 they had a surprize dramatic oil reserves increase, yeah right...
gold price has just reacted to oil slipping 9% for the week... from feb 1st OPEC is cutting a further 500,000 barrels per day... back to $60 soon...
over the next few years your gold stocks will boom...good luck to you...

firpohorse

06-01-2007, 11:59 PM

That's reassuring. I'm in for the long haul anyway so I'll just put them in the bottom drawer for the next few years.

Cheers guys - your comments are much appreciated.

tricha

07-01-2007, 01:30 AM

Even with the gold price way up I can think of a host of Australian goldies going into production in the RED in the last year- TAM, BMO, BDG, TTR, CRS, EMP, BGF, LAF

And I had my Personal loss with BMAGold, promised the world and failed to deliver even at these high prices, when they stated they would produce for $250 an ounce.

Jim Rogers: Well, more money has been lost in gold mining stocks than in any other industry – including railroad stocks…

Exclusive Investment U Interview: Jim Rogers Predicts Another Raging Bull Market in Commodities: Issue # 541 By Dr. Mark Skousen, Chairman, Investment U

One of the most fascinating “adventure capitalists” I’ve met is Jim Rogers. He’s a free spirit, having managed money with George Soros, taught at Columbia University, written several financial books, traveled around the world by motorcycle (and later a BMW), and now settling down at the age of 60 to have a family… I’ve known Jim for years, and he’s a great friend. My wife Jo Ann and I spent an hour with him at his magnificent mansion in Manhattan (built in 1899), and his answers to my tough questions did not disappoint.
~ Enjoy! AEIOU, Mark

Mark Skousen: You’ve written a book called Hot Commodities: How Anyone Can Invest Profitably In the World’s Best Market. Given that commodities have gone through a major correction of late, are they going to make a comeback? Is this the top of a commodities market, or just a correction?

Jim Rogers: First, we’re in a secular bull market in commodities, which started early in 1999… I went back and looked, and the shortest bull market in commodities I could find lasted 15 years, and the longest lasted 23 years. So, if history is any guide, this bull market will last sometime until 2014 and 2022. That’s not a prediction; I’m just telling you what history would indicate. Yes, some commodities are up, but if you look at the commodities market, there are only five or six commodities that have made all-time highs. And they’re not even – most of them – above the old all-time highs. Zinc is, copper is, and oil is, but the rest of them, even aluminum, which got near its all-time high, or lead, or tin… they’re not far above their old all-time highs, for the most part.

Mark Skousen: Gold and silver… they haven’t hit their all-time highs.

Jim Rogers: Silver is 75% below its all-time high… gold is 30% below its all-time high. Sugar is 80% below its all-time high. Corn is 50% below its all-time high. Cotton is 60% below its all-time high. I could go on and on… and those aren’t adjusted for inflation. So, most commodities now are somewhere between 80% and 90% below their all-time high, especially adjusted for inflation.

So is this over? No. Copper and zinc may slow down for a while. We haven’t even really gotten started. Commodities have… my index has tripled… more than tripled.
Mark Skousen: So easy money has been made, in your opinion?

Jim Rogers: In zinc and copper. But not in coffee. Coffee is 75% below its all-time high. I don’t want to use the term “easy money,” but there’s still plenty of money to be made. Because in bull markets – in every asset class – eventually everything makes a new all-time high.

You buy land in Los Angeles, and if there’s a real estate boom, everything goes to an all-time high, eventually. Even the slums. And usually they go well above the old all-time highs, so we have a long, long, long way to go. There are always corrections. In 1987, stocks went down 40% in five months. Stocks went down in 1994, they went down in 1990, they went down in 1989… we had some big corrections.

But the smart people bought more… they didn’t panic and sell out. In the 1970s, gold at one time, during a two-year period, went down 50%, and a lot of people panicked and gave up, becau

Mick100

07-01-2007, 12:39 PM

Tell me about it

ex holder of CRS, BGF and LAF (LAF is more base metals than gold)

I think you can add HIG to that list of goldies in the red tricha - I still hold some (have sold down). Goldminers have been a huge dissapointment in my portfolio. On the other hand silver miners have been outstanding performers - I hold BSG and MMN.
The best approach with the gold miners is to go for the established ones with not too much hedging.
.

stolwyk

07-01-2007, 05:50 PM

B. Chapman: International Forecaster January 2007 (#1) - Gold, Silver, Economy + More
http://news.goldseek.com/InternationalForecaster/1168212594.php

Deepcaster: Profit Potential from The "War" on Tangible Assets
http://news.goldseek.com/GoldSeek/1168032083.php

EURO KEY TO US$ DECLINE
by Jim Willie CB
January 5, 2007
http://www.financialsense.com/fsu/editorials/willie/2007/0105.html

Schiff: MORE CONSUMPTION LESS PRODUCTION
http://www.financialsense.com/fsu/editorials/schiff/2007/0105.html

The Darwinism Effect of Resource Nationalism
http://www.resourceinvestor.com/pebble.asp?relid=27765

JBmurc

09-01-2007, 01:11 PM

$20,000 more US troops to fight in IRAQ
-lastest news on CNN was stating how further attacks in Nigeria will be on the increase with ties in the middle east on plans to drive up oil price in the future-

-Don't forget OPEC cuts on there way

IMHO-Chances some anti-US force will destory major western oil supply over the next couple months 50:50 80+ oil

Armed men attacked two foreign oil facilities in southern Nigeria yesterday, and both shut down production as security worsened in the restive, oil-rich region. Royal Dutch Shell PLC, which came under attack earlier this week, began evacuating families of foreign workers.

TEHRAN: A senior officer in the volunteer Basij militia said on Monday Iran could block oil traffic through the strategic Strait of Hormuz if the West threatens its economy over Tehran’s nuclear programme.

“Given Iran’s authority over the Strait of Hormuz, the passageway to more than 40 percent of the world’s energy, we have become so strong that the world’s economic and energy security are in the hands of Iran,” deputy Basij commander General Majid Mir Ahmadi was quoted as saying by the semi-official Fars news agency.

“We can exert pressure on the US and British economies as much as we ourselves are put under pressure,” he said. “US allies, especially those who host US military sites or facilitate American strategies against us, are exposed to our threat,” Mir Ahmadi added. “This is the Islamic republic’s strategy in the Persian Gulf – security for everyone or for nobody.”

Meanwhile, Iranian Supreme Leader Ayatollah Ali Khamenei has said that Tehran would never yield to international pressure to deprive it of its right to nuclear technology, state radio said.

JBMURC-holding- ARQ EKA buying-STO tomorrow

stolwyk

09-01-2007, 09:29 PM

Trouble at mill series: the vain fed strategy.

After that disastrous meeting of Bernanke and Poulson in China, there won't be any give or take by China. After all, China has more than US$1 trillion in USD reserves and part thereof is being used to shore up the US by financing it.

That USD reserve is a powerful strategic weapon.

China is a believer in competitive devaluation of its currency so as to promote exports and keeping its massive work force employed. And so it can compete better with economies like Vietnam and others. Other Asian countries are doing the same.

A lower USD won't be favoured by the USA and I have mentioned that on this thread before. It appears that the FED is relying too much on consumption and low artificial CPI data. The latter is running at about 8-9%, but the FED presents a much lower manipulated inflation number of say 2-3%.

Meanwhile, commodity prices have been higher than wanted by the FED. It needs lower Gold and commodity prices then this barometer of monetary inflation resulting in lower price inflation will indicate that it is low. A stronger Dow would also be preferred as the return from this would be higher than from Gold.

Manipulating these markets would tend to drive out gold investors, it is hoped and so, the fiat USD currency would be more accepted as the sole currency.

There are some very important items sofar not referred to or sufficiently dealt by writers and those deal with strategy:
1. A much lower USD would increase pricing, promote inflation and increase interest rates. It will also most likely lead to a depression.

2. A higher USD promotes consumption and would tend to either increase the current deficit or this increase will slow down somewhat now Housing is a problem.

But it is an increase just the same. The big difference is that Foreigners are financing this deficit at a cost of over US$2.3 bill/day, so, prices need not increase and interest rates need not rise. Of course, future generations will need to pay or alternatively, debt will be monetized and this process has increased lately at a rate of about 11% but the M3 data is withheld.

So, the FED is daring the rest of the world to act knowing that monetary inflation in many countries is too high as well, but the US stil attracts capital from the Central Banks.

But there is a risk that sooner or later there will be a greater urge to dispose of dollars and these would return to the US, promoting more monetary inflation and higher interest rates. It is at this point that hyper inflation really takes over, I believe. But only if China and other Asian nations allow it. And it may not be in their best interest to do that now as some have considerable exports to the US and apply competitive devaluations as well. Their own consumption levels need to be higher so as to produce better balanced economies with less risk.

Till then, foreigners will take over the juiciest US assets, if they are allowed to; the US will be hollowed out and writers already mention that the middle classes are being heavily squeezed. Not a good time for the Democrats being the majority in both Houses with very little- or no room to move.

US money is at present leaving the country and increasing EU interest rates will in time produce a beter return for the US dollar investment than the other way around.

Still it appears that Treasury and the FED officials favour item 2 rather than the more painful item 1. They hope that they can withdraw in time when the real fireworks start and as mentioned, Poulson's job is too look after the interests of the Illuminati Bank Goldman Sachs, while JP Morgan Bank also play a role as well.

Of course, other geopolitical factors, terrorism, resource wars and possible Capital controls have not been discussed in this post.

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

Mick100

09-01-2007, 11:13 PM

quote:Originally posted by stolwyk
[
1. A much lower USD would increase pricing, promote inflation and increase interest rates. It will also most likely lead to a depression.

2. A higher USD promotes consumption and would tend to either increase the current deficit or this increase will slow down somewhat now Housing is a problem.

If they want to tackle the trade deficit then a lower dollar is the only solution - this would make imports more expensive relative to domestically produced products meaning imports would be reduced . Also, US exports would be cheaper for foriegners to buy because when they exchange their currency for the USD they get more USD than before. This approach would be inflationary but I doubt if it would cause a depression.
,

stolwyk

10-01-2007, 03:30 AM

Unfortunately, we don't have an equilibrium to play with and debt monetizing is the priority. That is best done with a higher dollar because this tactic produces price inflation.

But if it is done with a lower dollar, then you wil have this inflation arising from monetizing and on top of that more inflation from the lower dollar. One can import less and cut back on consumption, but unfortunately, it is normally some 70 % of the GDP. Because the US economy is distorted, it will have a profound effect on less taxation coming in with the greater social, security and other Govt spending at current high levels to mop up unemployment.

Bear in mind that debt is staggering and monetizing will be their only way out (watering down the money supply and hence the value of the debt). Increasing exports in a quick and meaningful manner is difficult because of outsourcing and destruction of the manufacturing sector. And they won't be paying workers $2/hour as the Chinese do in certain areas.

Even raising capital for manufacturing is difficult with debt running so high and a savings rate approaching a negative -1%. There are better investments somewhere else.

I am sure that the other Central Banks are well aware of what the US is up to: the purposeful not recording of M3. However, it can be estimated just the same. Nevertheles, the not official recording has raised eyebrows everywhere and is a weakness.

The US is dealing with a FED which is partly composed of private interests unlike most Central Banks owned by Govts.

Gerry

stolwyk

10-01-2007, 05:12 PM

M. Faber: Irreparable Cracks in the Financial System
http://news.goldseek.com/DailyReckoning/1168377443.php

Hedge-Fund Borrowing Examined by Fed, SEC, European Regulators
http://www.bloomberg.com/apps/news?pid=20601087&sid=aMFZqx2S1aWg&refer=home

The Fed's role in the 2007 housing crash
http://www.atlanticfreepress.com/content/view/614/81/

Chavez's Nationalization Plans Rock Venezuela Markets (Update1)
http://www.bloomberg.com/apps/news?pid=20601086&sid=a7MZ9Beeugpw&refer=latin_america

A Phantom Rebound in the Housing Market
http://www.nytimes.com/2007/01/07/business/yourmoney/07view.html?_r=2&ref=business&oref=slogin&oref=slogin

stolwyk

11-01-2007, 11:05 AM

Merrill sees improved profit margins for [American] gold miners

Based on its forecast of higher gold prices in 2007 and improved production profile for certain North American gold mining companies, Merrill Lynch sees improved profit margins and higher stock prices for companies. However, production costs will also rise.

"While aggregate gold output (for the companies under coverage) is forecast to rise 6.4% to 23.4 million oz, the industry average total cash cost is forecast to increase by 11.1% to $300/oz," said Merrill Lynch 2007 Gold Industry Outlook. "However, thanks to our forecast for an 11.6% higher spot gold price, we expect North American gold producers to show improvements in industry profits in 2007. The industry's average net profit margin is expected to rise from 19.6% in 2006 to 24.4% in 2007."

Noting that valuation for the North American gold sector remain "at reasonable levels," Merrill picked the top performers for 2007. "The list includes growth-oriented, lower-cost gold producers with attractive valuations and exploration projects," the report said.

In the top senior gold producers category, Merrill selected Goldcorp's (GG) stock to increase from current levels of about $28.44/share to $38/share and Barrick Gold (ABX) to rise from $30.70/share to $38/share.

Below senior is top mid-tier producers. Merrill's choices are Yemana Gold (AUY) to rise from $13.18/share to $15.75/share and Iamgold (IAG) to increase from $8.81/share to $13/share. Eldorado Gold (EGO) falls into the top intermediate category and Merrill is forecasting a stock price increase from $5.40/share to $7.50/share.

Pan American Silver is the top selection for silver miners; the company's stock is forecast to rise from $25.17/share to $33/share.

For gold bullion, Merrill forecasts an average price of $675/oz in 2007 (up 11.6% year on year) and silver at $13/oz (up 12.2% year on year). "Our favorable outlook for gold is predicated on declining global gold output, lower net central bank sales, a rebound in fabrication demand, and still-strong investment demand," said the Merrill Lynch report.

"Propelled by a rebound in fabrication demand, growth in investment demand, and lower central bank sales, bullion averaged $604.65/oz in 2006, up 35.9% versus the 2005 average price of $445.42/oz," the report noted. "Bullion reached a 25-year high of $725/oz on May 10 before retreating back to the $550/oz level just a month later, indicating considerable intra-year volatility." The average silver price was $11.59/oz in 2006, up 58.3% from $7.32/oz in 2005.

Further supporting the forecast of higher gold and silver prices, the Merrill Lynch report noted its expected further weakness of the US dollar and for the Federal Reserve to begin easing interest rates in early 2007.

"In the medium term, fabrication demand should benefit from the next Indian wedding season in late winter-early spring," said the report. "In addition, we are looking for a higher average silver price in 2007 due to our expectation for further growth from fabrication and investment demand. However, the start-up of several new silver mines in the second half of 2007 may lead to a softer silver price in the latter part of this year."

The report noted that 2006 was a banner year for investors in gold bullion and gold stocks, with the spot gold price rising 23.2%, silver 45.7% and the S&P/TSX Global Gold Index registering a 29.3% gain.

"We would also ascribe the strong relative performance of the gold equities to the fact that recent merger and acquisition activity has shrunk the pool of higher-quality gold companies," the report said. "This has had the effect of pushing up the valuations of the remaining companies, in particular the North American mid-tier producer group. Thanks in part to soaring base metal prices, it is not surprising that the top share price performers were dominated by companies with base metal exposure." These include: Agnico-Eagle Mines (up 108.7%), followed by Yamana Gold (up 99.4%), Northgate Minerals (up 90.2%) and Hecla Mining (u

stolwyk

12-01-2007, 08:48 AM

B. Chapman:
International Forecaster MidWeek Reading - Gold, Silver, Economy + More
http://news.goldseek.com/InternationalForecaster/1168460035.php

STAY WITH GOLD
Co Debasement with USD
by Christopher Laird
http://www.financialsense.com/fsu/editorials/laird/2007/0109.html

WHAT'S BEHIND THE CRASH IN CRUDE OIL AND GOLD?
by Gary Dorsch
http://www.financialsense.com/fsu/editorials/dorsch/2007/0109.html

Financial sense Newshour:
http://www.netcastdaily.com/fsnewshour.htm

bermuda

12-01-2007, 01:17 PM

Thanks Stolwyk,
Very good article.A little Opec cheating and some warm weather and suddenly oil starts to slide.There is a good commentary on www.sharescene.com.au about a possible Saudi initiative to lower the oil price and thus force Iran into depression and thus stop the Shiite 'cresent' being formed.
The Saudi Sunni's are dead scared of the growing Shiite strength in the region.

stolwyk

14-01-2007, 04:23 PM

You can thank Bush for that.

Indian official says gold ETFs to be launched within a month
By Jon Nones
12 Jan 2007 at 02:54 PM

According to the Association of Mutual Funds in India (AMFI) chairman A.P. Kurian, gold Exchange Traded Funds (ETFs) are expected to be launched in India within a month.

Three mutual funds, Benchmark Mutual Fund, UTI Mutual Fund and Kotak Mutual Funds, have already filed offer documents for gold funds with the market regulator.

The World Gold Council said it has plans to launch a new gold ETF in India as well.

COMMENT: It wil enable people living in remote areas to invest; this facility was'nt there before. Wait and see gold being locked in.

B. Chapman: "The Kotak’s Gold ETF could be the biggest in the world considering India’s thirst for gold and could make the Gold ETF StreetTracks look like small change. This is why gold related assets are bought for the long term because gold’s future is very bright on a long-term basis".

+++++++++++++++++++++++++++++++++++++++++++++

International Forecaster January 2007 (#2) - Gold, Silver, Economy + More
http://news.goldseek.com/InternationalForecaster/1168876920.php

stolwyk

15-01-2007, 09:40 PM

THE PERTH MINT:
http://www.perthmint.com.au/gc/

As to Gold bars, I talked to Perth and there are 2 ways of investing:

1. Buying and selling BAR Gold, using a list of approved Brokers: Pay commission of 2% to buy and 1% to sell: these are percentages added to the spot price.

2. Investment with a minimum of $A50,000: No commission to buy or sell. (The PMDS cheme: "Perth Mint Depository Services".

One can buy stored allocated or unallocated metal. I learned that allocated metal cost an extra 1.5% per year.

Being a phone call, the reader needs to check these data.

Subject to audit,

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

stolwyk

16-01-2007, 03:15 PM

Asian Leaders Plan Free-Trade Area From India to N.Z. (Update4)

http://www.bloomberg.com/apps/news?pid=20601087&sid=aYKyPtaLLyjo&refer=home

Quote:

"The Asian leaders also agreed to reduce dependence on conventional fuels such as coal and invest in biofuels and nuclear energy. Each nation said they would adopt a 12-point plan to reduce fossil fuels and invest in green energy to combat climate change".

COMMENT: More pressure on QLND and WA (Uranium Mining).

++++++++++++++++++++++++++++++++++++++

Bob Chapman on Goldseek Radio:
http://news.goldseek.com/GoldSeek/1168923600.php

I use "Windows Media" and got good results by clicking on "Download" below "MP3" (Scroll down).
_____________________________

The Perth Mint:

PERTH MINT DEPOSITORY SERVICES

http://www.perthmint.com.au/gc/depository/download/pdfdocs/PMDS%20-%20AustNZ.pdf

denpal

17-01-2007, 11:11 PM

Euro looking weak for 2007:

http://worldpoliticswatch.com/article.aspx?id=445

Implications for GOLD if USD is also under pressure medium-term.

stolwyk

20-01-2007, 01:11 PM

THE TROUBLE AT MILL SERIES: NEW INDIAN GOLD ETFs

I want to refer to the coming launch of the Indian Gold ETF's; and there could be three!

May be some posters haven't caught on but these ETF's together with the existing ones could smash any Gold surpluses.

Indeed, they are the most feared entities by the Gold Cartel who will find that they won't be allowed to have it their own way anymore.

The ETF's are the biggest happening in the Gold world and more so if the Central Banks decide to offload less and production is not keeping pace.

It so happens that even when the Gold price falls, losses from the ETF's are small indicating that longer term holders find these vehicles very acceptable.

So, where did this all start? In India:
MUMBAI: Four-and-a-half years ago two Indian financial wizards took an idea of a new product to the market regulator the Securities and Exchange Board of India (Sebi). It was a financial innovation which proposed to give gold-crazy Indians the option to hold the yellow metal in electronic form (called gold ETF), rather than in the traditional forms —ornament, coins or biscuits.

That was 2002. The idea was a break-through one for the financial world. What the product gold ETF or exchange traded fund — proposed to do was in one shot turn a very popular physical asset into a financial asset. In the process it also promised to take care of most of the security risks associated with holding it in physical form.

Australia, also known for it vast mineral reserves, was the first to accept the idea of investing in a precious metal in electronic form. And in 2003 world's first gold ETF was launched in Australia.

Soon enough the kangaroos were followed by the Wall Street bulls and then those across the Atlantic, in the City in London. At last count, on the New York Stock Exchange alone, gold ETFs were worth over $8 billion and is one of the most popular ETF products now.

Back in India, after weighing the pros and cons, going through several presentations and committee meetings, on Wednesday Sebi finally gave its green signal to two Indian fund houses — Benchmark MF and UTI MF — to launch gold ETF. The Indian duo who had ideated the product, Sanjiv Shah and Rajan Mehta, are a happy lot now. These are also the two men who run Benchmark MF.

However, there isn't much time for the two to enjoy the good news. They are already on the job to be the first in the market with their brain-child, literally. "Yes. We have received the Sebi nod. We are working to launch the product in about one to one-and-a-half months," said Shah, ED, Benchmark MF.

UTIMF, the country's largest fund house with an enviable retail reach, is also gearing up to launch its version of gold ETF soon. "Among Indians gold commands a huge psychological advantage even as an investment option. With our reach and supporting logistics, we believe we could be the first in the market," said Jaideep Bhattacharya, chief marketing officer of UTI mutual fund.

Interestingly, the Indians' weakness for gold, punched with the convenience of not holding it in physical form, is what market players feel could turn Gold traded funds as a great success story for the fund industry.

For record, India is the largest consumer of gold in the world which imported an estimated 800 tonnes of this yellow metal in 2006. And ranked behind crude oil, in value terms, this precious metal is the second biggest import item for the country.

http://timesofindia.indiatimes.com/NEWS/India_Business/Sebi_allows_exchange_traded_fund_for_gold/articleshow/1260178.cms

Comment: Wait and see!

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

firpohorse

20-01-2007, 05:21 PM

So to summarise this Gerry, these EFT's are great news for the long term price of Gold?

stolwyk

20-01-2007, 05:57 PM

I would think so because India is by far the biggest Gold hoarder.

(At the moment, the other ETF's have together locked in some US$17 Bill in Gold).

It is possible that these new ETF's need to buy in some Gold to start their business so I expect an upward shift perhaps. It already rose $7.50 to 635 overnight but this was blamed on the rise of oil price and expected inflation.

Mind you, there will be some cannibalizing of investment in Gold ornaments going on (Substitution), but
"UTIMF, the country's largest fund house with an enviable retail reach, is also gearing up to launch its version of gold ETF soon. "Among Indians gold commands a huge psychological advantage even as an investment option. With our reach and supporting logistics, we believe we could be the first in the market," said Jaideep Bhattacharya, chief marketing officer of UTI mutual fund.

Comment: UTIMF will go where nobody has been before because of its retail reach.

I don't know if the Indian Govt may restrict somewhat the import of Gold. Perhaps no action will be taken.
One reason Gold is popular: the Indian Currency is constantly being watered down and has lost much value in terms of Gold.

Gerry

tricha

20-01-2007, 06:06 PM

Has the worm turned [?] The gold bugs on Kitco would say no, but.....

U.S. Economy: Confidence Rises to a Three-Year High (Update3)

By Bob Willis

Jan. 19 (Bloomberg) -- Americans entered 2007 more confident than at any time in three years as energy prices retreated and a strengthening labor market pushed wages higher.

The Reuters/University of Michigan's preliminary index of sentiment rose to 98 this month, higher than forecast, from 91.7 in December. The gauge averaged 87.3 in 2006.

Gasoline prices are down 28 percent since August, leaving more cash in the pockets of consumers, whose spending accounts for more than two thirds of the economy. The report caps a week of figures showing a rebound in housing, gains in industrial production and a drop in jobless claims to an 11-month low.

``The year is starting off on a solid footing, helped significantly by the dividend of lower oil prices,'' said Lynn Reaser, chief economist at Investment Strategies Group at Bank of America Corp. in Boston. ``The housing slump remains a dampening force, but it has been overwhelmed by these other positive factors.''

Treasury securities weakened after the report, driving the yield on the benchmark 10-year note up 3 basis points to 4.77 percent at 4:30 p.m. in New York.

Companies have also been confident enough in the economy to keep spending. Stronger orders of large equipment including power-plant turbines helped drive a 12 percent increase in fourth-quarter earnings at General Electric Co. Total orders rose 19 percent during the quarter and sales grew 8 percent.

`Psychology'

``There's a lot of optimism among businesses and consumers,'' Federal Reserve Bank of Kansas City President Thomas Hoenig said in a speech today in Kansas City, Missouri. ``That will, of course, be a positive factor in terms of the economy, because an economy is affected by the psychology of the business and the consumer as much as it is the strict number.''

The University of Michigan's expectations index, which some economists view as an indicator of future consumer spending, rose to 88.7, the highest since December 2004, from 81.2.

Still, some economists are skeptical of consumer confidence surveys and their correlation with spending.

``In our view, consumer sentiment and confidence indicators have never been more than loosely correlated coincident indicators of economic activity,'' said Joshua Shapiro, chief economist at Maria Fiorini Ramirez Inc. in New York.

Current Conditions

The gauge of current conditions, which reflects Americans' perceptions of their financial situation and whether it's a good time to buy big-ticket items like cars, rose to 112.5, the highest since July 2005, from 108.1.

``Recent reports do suggest we are getting back to trend growth faster than we would have thought.'' said Nigel Gault, director of U.S. research at Global Insight Inc. in Lexington, Massachusetts. Still, he added, ``I'm not sure we're completely out of the malaise in the economy.''

Consumers in the survey said they expect an inflation rate of 3 percent in one year, compared with 2.9 percent in the last survey.

``It's going to take several months' worth of data to provide statistically convincing evidence of a moderation of inflation,'' Richmond Fed President Jeffrey Lacker said in a speech in Richmond, Virginia, today.

January 2004

This month's reading is the second-highest since December 2000. The sentiment index jumped to 103.8 in January 2004, a month after American forces captured Saddam Hussein in Iraq.

Economists surveyed by Bloomberg News forecast a rise to 92.2, according to the median estimate in a Bloomberg survey of 60 economists. The January figure exceeded the highest estimate in the survey.

Consumer spending is holding up better than economists forecast last year after the biggest housing slump in 15 years slowed growth in the third quarter to a 2 percen

firpohorse

20-01-2007, 08:21 PM

tricha, you have to be joking!

stolwyk

21-01-2007, 02:02 PM

I intend to follow the launch of these Indian Gold ETFs.

International Forecaster January 2007 (#3) - Gold, Silver, Economy + More - By: Bob Chapman, The International Forecaster
http://news.goldseek.com/InternationalForecaster/1169421912.php

Guest expert: Faber:
http://www.netcastdaily.com/fsnewshour.htm

Don’t Forget the “Gold” in “Goldilocks.”
http://news.goldseek.com/EuroCapital/1169245589.php

stolwyk

24-01-2007, 10:39 AM

Is Gold a Currency, a Commodity, or a Store of Value?
Anthony S. Fell

"Gold got a stirring endorsement and the central bank system of infinite money a denunciation last week from a remarkable source -- a leading banker in Canada's financial establishment. The banker, Anthony S. Fell, chairman of RBC Capital Markets and former president of Royal Bank of Canada, delivered the endorsement and denunciation at RBC's client appreciation dinner in Vancouver. Fell's remarks on gold and the excesses of the fiat money system came at the conclusion of his address at the dinner and were forwarded to GATA today by a friend who was in the audience. Fell's remarks are excerpted below".

http://www.silverbearcafe.com/private/storeofvalue.html

stolwyk

26-01-2007, 09:12 PM

The four Indian ETF's to come:

That is of course the aim of the ETFs: To clean up any surpluses on the market and with the existing Gold ETFs (At present storing about US$17 bill worth of gold) make the job of the Gold Cartel - and I am including the Central Banks - very difficult, given some time.

These ETFs store real Gold and hence, there is less surplus available on the open market.

These ETFs together will hold more gold than some of the biggest Central Banks will, given time and hence won't be loved by the FED or US treasury whose job it is to get the Gold price down so that Gold does'nt compete with Fiat currencies. Also, Gold is a barometer of monetary inflation (The FED is actively busy to water down the money supply to the tune of 12% at present- it does that to reduce the real value of debt and also to prevent a recession).

History has shown that the big ETFs attract Funds and a feature is the more or less permanency of investments ie even if the price of Gold comes down, ETFs seem to be losing only a few tonnes. Hence, the more ETFs, the more Gold is withdrawn from the market.

India is the Bulls eye, because they are massive Gold holders. Also, more people can participate as one coming ETF has retail shops everywhere.

Obviously, manufacturing will be looking on and some bangles and gold ornaments kept by Indian women as security will be kept as bars by the ETF's instead.

Make no mistake about it: one Indian ETF is big, but 3 or 4 will have a massive impact.

Apart from this, the World Gold Council knows the effect of hoarding more Gold and a range of European countries are planned to have real Gold ETFs as well.

Put that altogether and the sum total is a massive weapon to overcome the Bullion Banks rigging of the gold markets.

And yes, it is much bigger than most HC members can visualize. One spin-off will be increased participation by very large investors.

There could be a side effect that money for exploration may be more difficult to raise as the ETFs could take priority.

So, unless the Gold company is producing or is near to production, share prices of these could be lower than expected.

I intend to follow up the Indian launch on one thread so as to keep the info together.

Is it good news for the Gold bugs? I think it is! The best forthcoming for a long time.

Gerry
Holds SLV (Silver ETF).
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

stolwyk

26-01-2007, 09:15 PM

The Gold Price-Fixing Conspiracy
http://www.kitcocasey.com/displayArticle.php?id=1186

International Forecaster MidWeek Reading - Gold, Silver, Economy + More
http://news.goldseek.com/InternationalForecaster/1169661661.php

IMF to make central bank gold lending data more transparent
By: Dorothy Kosich
Posted: '23-JAN-07 08:00' GMT © Mineweb 1997-2006

RENO, NV (Mineweb.com) --A Blanchard & Company study calling for greater transparency in central bank gold lending accounting has apparently helped to convince the International Monetary Fund to adopt a landmark accounting change in the way central banks account for gold loans.

The December 2006 study by Blanchard Vice President and Director of Economic Research Neal R. Ryan suggested that if more transparent governance was implemented in central bank gold lending, “gold prices will experience exponential growth because they will become a reflection of a fair and equitable market for all participants.”

“The IMF has essentially stated that they believe the market should receive correct accounting on loan information. The final test will be the implementation of the new accounting rules,” Ryan said at the time.

On Monday, New Orleans-based Blanchard announced that newly adopted IMF accounting changes mean that central banks will no longer include the amount of gold they have loaned and sold into the market as part of their reserve total assets,” according to Blanchard Chairman and CEO Donald W. Doyle, Jr.

Ryan declared that the IMF action “changes the entire landscape of the gold market for the betterment of all participants involved, because there is now data available that has never previously been published. A transparent market is a healthy market, and the gold market just got a lot healthier.” He added that it will take the IMF some time to institute the new accounting procedures.

Central banks have their purchases and sales of gold tallied by the IMF International Reserves and Foreign Currency Liquidity Statistics Department, and are updated every three months by the World Gold Council. Ryan asserted that while central banks report sales and purchases to the IMF, they do not report their levels of holdings on loans. He contends that “gold swaps between banks have just as large an impact on the market as gold loans, and even less is known about them in the marketplace.”

Blanchard is the largest U.S. retailer of American rare coins and precious metals. Its economic research unit provides precious metals market analysis for the financial and consumer media.

http://www.mineweb.net/american_notes/596209.htm

++++++++++++++++++++++++++++++

Blanchard has done much for the private investor and his latest effort is to be applauded.

The question now is: will the Banks be honest enough?

stolwyk

27-01-2007, 05:32 PM

Pse refer to previous post. Latest news:

IMF Has Not Adopted Accounting Changes to Gold Loans

By Jon A. Nones
25 Jan 2007 at 04:06 PM EST

http://www.resourceinvestor.com/pebble.asp?relid=28416

firpohorse

27-01-2007, 05:58 PM

Another kick in the guts for Gold!

stolwyk

28-01-2007, 10:26 PM

Marc Faber: Picks for 2007.

THE MONEY MASTERS: Parts 1 and 2: Videos
http://video.google.com/videoplay?docid=-8753934454816686947

Real silver prices: Last 650 years till 1998:
http://goldinfo.net/silver600.html

Categories of Gold Bars: http://goldinfo.net/goldbars.html

THE RISING LIQUIDITY WAVE!- by Puru Saxena
Editor, Money Matters
January 26, 2007
http://www.financialsense.com/editorials/saxena/2007/0126.html

stolwyk

03-02-2007, 05:32 PM

Precious Metals: The Speculation of a Lifetime
http://www.resourceinvestor.com/pebble.asp?relid=28615

WGC urges China to remove tax on gold trading
By Jon Nones
01 Feb 2007 at 05:16 PM
The World Gold Council is lobbying China to remove a tax on gold trading to boost demand in the world’s fastest-growing major economy, according to media sources.
Scrapping the 17% value-added tax on sales of gold bars will pave the way for banks to introduce physical trading for individuals, giving them the opportunity to profit from global price moves, the WGC said.
China held 600 tonnes of gold, or 1.3% of its total foreign reserves, as of July, compared with 8,133.5 tonnes in the U.S. Economists have urged China to diversify its reserves and increase gold holdings.
http://www.resourceinvestor.com/pebble.asp?relid=28622

FABER ON VIDEO:
http://video.google.com:80/videoplay?docid=6665390655611477207&q=marc%2Bfaber

J. Puplava: Storm Watch Update, Part 2
http://www.financialsense.com/stormwatch/2007/0201.html

firpohorse

03-02-2007, 07:51 PM

Well well!! It's all talk of doom and gloom today regarding Gold and other commodities. I can see why with brilliant employment numbers from the US confirming that their economy is the best in the world.

Some people are talking Gold at $350 in a couple of months. That doesn't appear to be a surprise after today's caning.

Mick100

03-02-2007, 11:28 PM

Read this cujo

http://www.gold-eagle.com/editorials_05/maund012807.html
,

firpohorse

03-02-2007, 11:50 PM

quote:Originally posted by Mick100

Read this cujo

http://www.gold-eagle.com/editorials_05/maund012807.html
,

Please the name is firpo!

I would like to believe that Maund guy but I think he's been wrong too many times before to take him seriously.

Cheers

stolwyk

10-02-2007, 08:23 PM

FALLEN EMPIRES AND THEIR CURRENCIES:
ROME, FRANCE, ENGLAND AND THE USA
Parts one and two.
http://www.europe2020.org:80/fr/section_global/230107.html

Silver in pyjamas could combat hospital bacteria
By: Lawrence Williams
http://www.mineweb.net/gold_silver/622518.htm

Guest Commentary, by Dr. Kurt Richebächer
Corporate America to the Rescue?
http://www.prudentbear.com/articles/show/341

DEAD PRESIDENTS' SOCIETY
by Rob Kirby
http://www.financialsense.com/fsu/editorials/kirby/2007/0206.html

stolwyk

11-02-2007, 10:46 AM

Caught in the net: Online tipster gives the blue-chips a shock
http://www.theaustralian.news.com.au/story/0,20867,21200419-643,00.html

International Forecaster MidWeek Reading - Gold, Silver, Economy + More
http://news.goldseek.com/InternationalForecaster/1170879609.php

stolwyk

16-02-2007, 07:53 PM

Marc Faber:
http://www.financialsense.com/transcriptions/2005/Faber2005.html

SELLING OUR COWS TO BUY MILK
by Peter Schiff
http://www.financialsense.com/fsu/editorials/schiff/2007/0215.html

UNDERSTANDING THE BULL!
by Puru Saxena
http://www.financialsense.com/editorials/saxena/2007/0215.html

stolwyk

25-02-2007, 11:16 AM

Merk: Bernanke the Dove
http://www.resourceinvestor.com/pebble.asp?relid=29207

IS THE FED FINALLY LOSING ITS CREDITABILITY?
by Peter Schiff
http://www.financialsense.com/fsu/editorials/schiff/2007/0223.html

A decent size gold coin:
http://www.theglobeandmail.com/servlet/story/LAC.20070222.RMINT22/TPStory/Business

Middle East wars in 90 seconds:
Covering a couple of thousand years:
http://www.mapsofwar.com/images/EMPIRE17.swf

The YEN:
http://www.jsmineset.com/cwsimages/Miscfiles/4213_Chart_for_2-23-2007.pdf

Housing Market Meltdown- Bob Chapman
www.theinternationalforecaster.com

stolwyk

05-03-2007, 12:11 AM

Hedge Risks on Stocks With Commodities, Says Faber (Update1)
http://www.bloomberg.com/apps/news?pid=20601084&sid=apUgsLGB4Co0&refer=stocks

International Forecaster March 2007 (#1) - Gold, Silver, Economy + More - By: Bob Chapman, The International Forecaster
http://news.goldseek.com/InternationalForecaster/1173024180.php

The Yen carry trade is unwinding:
http://news.yahoo.com/s/ft/20070302/bs_ft/fto030220070120226637;_ylt=AuBtEtKg6gHo93UOpINzsRb 2ULEF

Greenspan making money:
http://www.nytimes.com/2007/03/02/business/02greenspan.html?_r=4&adxnnl=1&oref=slogin&ref=business&adxnnlx=1172837120-tf6LsZk98B9c3VoeLaWfxg&oref=slogin

Goldman, Merrill Almost `Junk,' Their Own Traders Say (Update2)
http://www.bloomberg.com/apps/news?pid=20601103&sid=a0j4oiYE3Bfw&refer=us

US gold, silver sink; funds, yen carry trade hurt
http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com: 20070302:MTFH83714_2007-03-02_20-52-15_N02562015&type=comktNews&rpc=44

WHAT'S BEHIND THE GLOBAL STOCK MARKET SHAKE OUT?
by Gary Dorsch Editor, Global Money Trends Magazine
February 28, 2007
http://www.financialsense.com/fsu/editorials/dorsch/2007/0228.html

More hurricanes in the Gulf expected this year:
Evelyn Garris: 3d hour, part 1
http://www.netcastdaily.com/fsnewshour.htm

stolwyk

11-03-2007, 10:10 PM

Indian gold ETF eyes banks, mutual funds
http://sg.biz.yahoo.com/070221/3/46tvv.html

Schiff:
http://news.goldseek.com/EuroCapital/1173473029.php

China axes foreigners’ tax breaks
http://www.ft.com/cms/s/9fa78926-cd9f-11db-839d-000b5df10621.html

A. Hamilton: Gold-Stock fears:
http://news.goldseek.com/Zealllc/1173459801.php

International Education Report-By Michael Hodges (email)
(updated 1/2005)
- a sub-section of the Grandfather Education Report -
- which is a chapter of the Grandfather Economic Reports
http://mwhodges.home.att.net/education-c.htm

Robert Blumen: Is Gold an Inflation Hedge?
http://news.goldseek.com/LewRockwell/1173197041.php

"According to van Eeden, when the gold price is examined against a global weighted index of fiat currencies, it is rising approximately at the same rate as the purchasing power of fiat paper money is declining. Van Eeden’s data show that gold has done a good job maintaining purchasing power over time against fiat money inflation. In other words, gold functions as an inflation hedge. The market has priced it like other currencies on the international money markets".

stolwyk

15-03-2007, 05:46 PM

J. Williams: Shadow Government Statistics (SGS):
http://www.shadowstats.com:80/cgi-bin/sgs/data

New Century delisted amid criminal probes
http://www.marketwatch.com/news/story/accredited-home-plunges-new-century/story.aspx?guid=%7BA6FADE2F%2DB218%2D4BA1%2DA9E4%2 D5091667B5389%7D&dist=TNMostRead

GOLD SNIFFS RATE CUT - by Jim Willie CB
March 8, 2007
http://www.financialsense.com/fsu/editorials/willie/2007/0308.html

International Forecaster March 2007 (#2) - Gold, Silver, Economy + More
http://news.goldseek.com/InternationalForecaster/1173712849.php

First indian etf is moving ahead
http://www.business-standard.com/common/storypage_c_online.php?leftnm=11&bKeyFlag=IN&autono=21309

Iran to appoint 'oil bourse' chief
at http://www.silverbearcafe.com/private/iranbourse.html

The universe: Lets put it in Perspective
http://www.silverbearcafe.com/private/universe.html

stolwyk

17-03-2007, 01:26 PM

China's great firewall
http://www.theaustralian.news.com.au/story/0,20867,21362873-28737,00.html

Central Bank gold holdings fall to lowest since 1948, IMF says
http://www.bbj.hu/main/news_24081_central%2Bbank%2Bgold%2Bholdings%2Bfall %2Bto%2Blowest%2Bsince%2B1948%2Bimf%2Bsays.html

Comment: This could be a planted article as Central banks have double counted their gold reserves according to critics. Hence data are not necessarily true.

Bank of Russia:
http://www.cbr.ru/eng/

Russia: Staggering money supply:
http://www.cbr.ru/eng/statistics/credit_statistics/print.asp?file=mon_supply_06_e.htm

Schiff: From the Sub-Prime to the Ridiculous
http://news.goldseek.com/EuroCapital/1173970980.php

stolwyk

18-03-2007, 04:20 PM

OPINION

Gold has been volatile, partly due to Hedgefunds' reactions and the massive efforts of the PPT (The Fed's Plunge Protection Team).

According to John Williams, the current US real CPI runs at about 10% compared with 3% issued by the FED while M3, the creation of new money or Monetary Inflation, runs at 11%.

The latter has'nt been published by the FED for some time; obviously in the US, the public must'nt know.

As the Gold price tends to line up with monetary inflation, the PPT does everything it can to keep the Gold price down thereby trying to make Gold less popular.

As many Western countries and others, including India are running a high M3, one would think that the PPT is assisted by the world's Central Banks as well.

There are a number of factors which have slowed down the advance of gold prices:

1. The high degree of volatility which has inhibited the sale of Gold for manufacturing, from time to time.
2. While higher sales to the Chinese citizens were expected, much of their investment was directed to their stock exchange and projects of this vast growing country.
The Chinese "M3" is running at a colossal high of some 45% at the moment, so one would expect them to invest in Gold at some stage. More needs to be done to free up the trade in Gold. A couple of massive Gold ETF's ought to do the trick.
3. While there is a 500 tonnes per year limit on the sale of Gold by Central Banks, it is suspected that additional clandestine Gold is sold as well so as to keep the Gold price down and so protect their fiat currency.

India is creating a number of Gold ETF's and we are waiting for the market reaction.

True, the overall mine supply will be down this year, so this ought to stimulate Gold; so would a number of other factors amply discussed in these threads.

I do believe that provided the increase in a gold share price is greater than the increase in the price of metal, a gold mining stock would be preferred by some.

Unfortunately, the cost of mining in Australia is reasonably high, so I would prefer an explorer overseas which is close to a feasibility study and mining, assuming there is a good resource; the latter is often lacking in Australia, IMHO.

After all, such a well run company ought to strongly advance in exploration results and the share price over time regardless of the volatility and slow upward movement of the Gold price.

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

tricha

18-03-2007, 04:27 PM

Gerry - "Unfortunately, the cost of mining in Australia is reasonably high, so I would prefer an explorer overseas which is close to a feasibility study and mining, assuming there is a good resource; the latter is often lacking in Australia, IMHO."

You are 100% right about this Gerry, I should revise my saying that gold suks, to Australian Gold mining company Suks.;)

An overseas explorer :) point taken!

Wossname

18-03-2007, 09:05 PM

Gerry,

Interesting post.

For any interested, a source of synthesised USA M3 is at http://www.nowandfutures.com/key_stats.html.

I appreciated the Russion Federation Central Bank link from a previous post.

Gerry, do you have any links for Chinese M3 info please?

Do you also happen to know why Chinese M3 growth rates are so high? One would have thought that M3 growth only needed to increase at annual rates around 11% to match pace with the USA. Surely M3 increases running at that high a rate, 45%, are bound to create major bubble havoc in Chinese stocks and real estate?

It's one thing for China enthusiasts to suggest that China has a bright future, it's quite another to suggest that China will get there in a straight line. They appear to have some sizable economic and political issues to deal with along the way.

stolwyk

19-03-2007, 12:38 AM

Thanks Wossname,

I made an error as I was referring to Russia, not China.

Therefore,
"The Chinese "M3" is running at a colossal high of some 45% at the moment, so one would expect them to invest in Gold at some stage. More needs to be done to free up the trade in Gold. A couple of massive Gold ETF's ought to do the trick".

needs to be deleted.

As to China, increase in M3 was about 19.1%, India: 18.5%:
http://www.sirchartsalot.com/index.php?text_id=FIVESPAGE

This data needs to be upgraded perhaps:

For the full year 2006 for South Africa, the latest number is 23%:
http://www.busrep.co.za/index.php?fSectionId=561&fArticleId=3708304

Gerry

Wossname

19-03-2007, 02:50 AM

Thanks Gerry,

A Chinese M3 annual growth rate of 19.1 per cent still seems unsustainable, even if less than the Russian value. I wonder if the Yuan needs a substantially higher M3 growth rate than that of the USD in order to suppress innately greater strength.

Given the Chinese M3 value and other data, I'm inclined to think that Chinese growth is partly sustainable and partly not. By that I mean first that growth in Chinese industrialisation seems to me sustainable over the long term, assuming continued peace. However, over nearer terms, I think that Chinese - and world - growth may be set back when rising global liquidity eventually collapses under its own weight. The greater that global economic imbalances grow, the greater grow the pressures for them to unwind, and the less likely is it that such processes can be controlled.

stolwyk

22-03-2007, 11:42 AM

International Forecaster MidWeek Reading - Gold, Silver, Economy + More
http://news.goldseek.com/InternationalForecaster/1174499046.php

China, Now the World’s Largest Investor
http://news.goldseek.com/GoldForecaster/1174492800.php

Second Gold Indian ETF launched
http://business-standard.com/common/storypage_c.php?leftnm=10&autono=275128

GATA has referred to this as well:
http://www.gata.org/node/4836

Currency Issues – Other Emerging Carry Trade Liquidations
By Chris Laird
http://www.kitco.com/ind/Laird/mar192007.html

Japan's Economic Trap
http://www.resourceinvestor.com/pebble.asp?relid=29777

stolwyk

26-03-2007, 10:10 PM

International Forecaster March 2007 (#4) - Gold, Silver, Economy + More
http://news.goldseek.com/InternationalForecaster/1174869837.php

Richebacher: AN UNPRECEDENTED SPECULATIVE SPREE
http://www.financialsense.com/editorials/daily/2007/0323a.html

Fed accused of subprime ‘perfect storm’
http://www.ft.com/cms/s/8b229154-d8a2-11db-a759-000b5df10621.html

The Two Faces of China
http://www.resourceinvestor.com/pebble.asp?relid=30075

UPDATE 1-China to stop accumulating foreign reserves - Zhou
http://www.reuters.com/article/bondsNews/idUSN2035119120070320

_______________

CONFISCATION OF GOLD
I have on a number of occasions argued that this threat can be ignored as the situation is different and Gold is held all over the world. Also, the Gold Standard does'nt apply and so that threat to Fiat money does'nt exist.

How much Gold was turned in when Roosevelt demanded it? Apparently not as much as he had hoped:

The Confiscation Threat By James Turk
http://www.fgmr.com/confiscation.htm

tricha

29-03-2007, 12:15 AM

Why oil will hit $100 a barrel
By Nils Blythe
BBC News business correspondent

Cairn Energy believes that South Asia holds great promise for finding oil

The era of easy oil is over, but growing demand from countries like India and China is forcing oil firms to enter unusual territory.

Mike Watts is a man of deep convictions. For years he was convinced that there was oil in large quantities deep beneath the sand of the Rajasthan deserts in Western India.

Few other people in the industry agreed with him.

Mike's company - Cairn Energy - was in partnership with the Anglo-Dutch giant Shell to explore the area.

Eventually, after some discouraging early forays, Cairn paid Shell £7m to buy Shell out of the project.

Then, just over two years ago, it struck oil in a big way.

The find was big enough to propel Cairn from a small exploration business to a company with a value of nearly £3bn.

No big finds anymore

Enough to make a difference in an impoverished region of India. But not enough to alter the balance of supply and demand in the world.

"The easy oil has already been found," explains Mike Watts on a sandy hilltop overlooking the Mangala discovery well which made his company's fortune. Oil companies are having to look much harder for major new oil finds.

And while some new finds are being made, like Cairn's in Rajasthan, few people in the oil industry believe that new discoveries will match the vast oil fields found in the 20th century.

And demand for oil is likely to go on rising.

Energy audit

To see why, travel a few miles from Cairn Energy's Mangala well-head and visit the local school.

As India's economy is growing, energy demand will rise

It's the only stone building in the vicinity. The children walk here from simple huts surrounded by thorn hedges in the desert.

There is no electricity at the school or anywhere else. Local transport is provided by camels pulling carts.

And water is drawn from wells by hand.

Conduct a simple "energy audit" and you discover that the children use almost no energy. They were hazy about what a fridge was used for and few of them had ever travelled in a car.

But, with India's economy growing fast, these children and hundreds of millions like them are likely to become much heavier energy users as adults.

"If we are to rid ourselves of the scourge of poverty, demand for energy will at least double in the next 20 years," says India's former Energy Minister Mani Shankar Aiyar.

'Unsustainable'

And Mr Aiyar's view is broadly in line with the latest projections from the International Energy Agency (IEA).

Bill Gammell says the era of cheap oil is over
It forecasts that the world's total energy requirements will rise by half in the next 25 years.

The IEA candidly admits that such an increase would be "unsustainable" for the world's environment. It argues that in future much greater use will have to be made of non-fossil fuels.

And energy will have to be consumed much more efficiently.

But at present global demand for energy in general - and oil in particular - is rising inexorably. With supply struggling to keep pace with demand, oil prices are likely to remain high for years to come, according to leading figures in the industry.

'$100-a-barrel oil'

Sir Bill Gammell is the chief executive of Cairn Energy. He's a former Scottish rugby international who went to school with Tony Blair and knew George Bush when he was just a young Texas oil man with a famous father.

I think we might see $100 oil in the next five years

Sir Bill Gammell, Cairn Energy

Sir Bill's company was exploring for oil through the lean years of the 90s when the price of a barrel of crude was hovering around $20 a barrel.

Today the price is close to $60, and Sir Bill thinks it may go higher because supplies can barely keep pace with demand.

"I think we might se

airedale

29-03-2007, 09:39 AM

Tricha, $US 100 per barrel sounds very possible...even probable. It is in line with Matthew Simmons prediction in his book "Twilight in the Desert". Even $200 per barrel is possible.
And if you think about it, at $200/barrel it is still only $1.00 per litre for a 200 litre barrel.
The world will eventually realise that oil is too valuable to burn.

tricha

30-03-2007, 01:22 AM

Yep, Airedale its coming, $100

Chinese plant rolls out first MG

Nanjing Automobile bought the MG brand in July 2005
The first Chinese-built MG sports cars have rolled off the production line in the eastern city of Nanjing.
The manufacturer, state-owned Nanjing Automobile, bought the assets of collapsed UK firm MG Rover in 2005.

It plans to produce 200,000 new cars every year and hopes to sell the vehicles around the world.

But many are likely to be sold to the booming domestic market, with demand for luxury vehicles soaring amongst the country's wealthy elite.

In six short months the Chinese have built a massive new factory and installed the robots and assembly lines they bought from the collapsed Rover, reports the BBC's Quentin Sommerville in Nanjing.

And it was with music from the City of Birmingham Symphony Orchestra and against a video wall showing shots of Tower Bridge and Buckingham Palace that Nanjing Auto launched its two new models.

These are the MG7 saloon and the MG-TF sports car which, General Manager Zhang Xin told Reuters news agency, would be priced at between 180,000 and 400,000 yuan ($23,300 - $51,700; £11,800 - £26,300).

'Modern Gentleman'

The cars have not changed much, right down to the Union flag, which is still displayed proudly on their bodywork.

In pictures: Chinese MGs
MG's Chinese reincarnation
Chinese set for sales boom

The MG brand is being marketed in China as "Modern Gentleman".

"We are keeping the original British flavour," said Mr Zhang, quoted by Reuters. "But in the future, the major market for MG will be in China."

The company wants to sell the cars not just in China but around the world.

But with the Chinese car market growing by 10 million new cars every year, Nanjing Auto will likely be selling most of its MGs in showrooms closer to home, our correspondent adds.

The MG plant in Nanjing is capable of producing 200,000 cars, 250,000 engines and 100,000 gearboxes annually.

Nanjing Auto also plans to build some MGs at Britain's Longbridge factory for the European market.

And the firm plans to start producing MGs for the US market in Ardmore, southern Oklahoma, next year.

Nanjing Auto acquired bankrupt MG Rover's models and assets for £53m ($104m) in 2005, outbidding China's biggest carmaker Shanghai Automotive Industry Corp (SAIC).

Factory manager Paul Stowe, who relocated from Longbridge to China, told BBC Radio Five Live that Nanjing was "very hot and very dusty at times" in summer, and that "caused us some problems with the production facility".

"But with regard to working conditions and working practices it's very similar to anywhere else in the world," he added.

--------------------------------------------------------------------------------

Do you have an MG car? You can send us your pictures to yourpics@bbc.co.uk

stolwyk

30-03-2007, 08:18 AM

N.Z. Annual Current Account Gap Narrows on Exports (Update4)

By Tracy Withers

March 29 (Bloomberg) -- New Zealand's annual current account deficit narrowed in the fourth quarter as rising world prices for butter and milk powder buoyed exports, outpacing demand for imports.

The annual shortfall shrank to NZ$14.45 billion ($10.3 billion) in the 12 months ended Dec. 31 from a revised NZ$14.51 billion in the year through September, Statistics New Zealand said in Wellington today. The median estimate of 12 economists surveyed by Bloomberg News was for a NZ$14.52 billion shortfall.

A narrower deficit suggests exports may be starting to replace domestic demand as a driver of the economy's expansion, as Reserve Bank Governor Alan Bollard raises interest rates to curb spending. Higher company profits have boosted dividend payments to foreign investors, and may prevent the deficit making a significant improvement this year, say economists.

``We may have seen the worst, but improvement will be pretty slow, pretty gradual,'' said Su-Lin Ong, senior economist at RBC Capital Markets in Sydney. ``We need to see moderation in domestic demand and imports. The strong kiwi dollar adds to the challenge on the export front.''

The New Zealand dollar, or kiwi, rose 8.9 percent against the U.S. currency the past six months, the best-performing major currency tracked by Bloomberg. The currency bought 71.29 U.S. cents at 5 p.m. in Wellington from 71.05 cents immediately before the report.

The current account gap was 9 percent of gross domestic product compared with 9.2 percent in the year ended September, today's report showed. Analysts expected a deficit of 9.1 percent of GDP.

Dairy Prices

The deficit was a record NZ$15.1 billion or 9.7 percent of GDP in the year ended June 30.

Fourth-quarter exports surged 8.2 percent from a year earlier while imports gained 6 percent. Dairy prices surged 25 percent in the three months ended Jan. 31, according to an index calculated by ANZ National Bank Ltd.

The current account is the broadest measure of trade because it incorporates goods, services and financial transactions. The goods deficit narrowed and the services balance was in surplus in the year ended Dec. 31.

Still, the annual deficit on investment income widened to a record NZ$12.1 billion from NZ$11.84 billion in the third quarter.

Profits earned by overseas-owned companies, mainly banks, rose in the fourth quarter, while dividend and interest payments to overseas investors increased, the agency said. New Zealanders received less income from overseas investment, it said.

Foreign Investors

Offshore investors hold about 60.5 percent of total government debt, according to the central bank.

Profits at the nation's 30 biggest publicly traded companies rose 6 percent in the six months ended Dec. 31 from a year earlier, according to First NZ Capital Group Ltd.

Bollard on March 8 raised the benchmark interest rate a quarter point to a record 7.5 percent and said it is essential consumer spending and housing demand slows.

The central bank said the narrowing in the current account deficit will be more gradual than it expected in December. It forecasts the deficit will shrink to 8.6 percent of GDP by March 2007 and 8.5 percent of GDP a year later.

The gap is likely to be NZ$14.43 billion in the year to March 31, 2008, according to the average forecast of 10 economists surveyed by the New Zealand Institute of Economic Research.

``The deficit is still too high,'' Finance Minister Michael Cullen said in a statement e-mailed to Bloomberg News today.

Household Debt

``The worry is that the international investment balance, which includes the cost of our borrowings overseas, is still rising because we as a nation are still willing to take on more debt, much of it in the household sector.''

The net international investment deficit widened to NZ$143.2 billion at Dec. 31 from NZ$137.4 billion three months earlier. That's 89 percent of GDP compared with 62 percent in Australia, Cul

stolwyk

31-03-2007, 10:23 PM

C Puplava:
Statisics and graphs.

Julian D. W. Phillips, Gold/Silver Forecaster
Gold - Chinese rising demand affecting the gold price much more…
http://news.goldseek.com/GoldForecaster/1175292973.php

U.S. sanctions China over paper dispute
http://www.chron.com/disp/story.mpl/ap/politics/4675886.html

Financial sense: Naked shortselling: US Stock manipulation
http://www.youtube.com/watch?v=7fcre8P2UUY

Jim Cramer on Market Manipulation
http://www.youtube.com/watch?v=ZTt7IQB9rc0

Jim Cramer on futures
http://www.youtube.com/watch?v=iE0-vsAWlTY&mode=related&search=

stolwyk

01-04-2007, 01:47 PM

TROUBLE AT MILL SERIES: THE US/CHINA TRADE WAR

China Calls U.S. Paper Duties `Unacceptable', May Respond

http://www.bloomberg.com/apps/news?pid=20601087&sid=aLmSEcA2DZz0&refer=home

Comment: Now with the Democrats in the majority in the House of Representatives, the time has come to deal with these long outstanding problems.

There are a number of ways, China may retaliate and no doubt, they would have gone over any measures to be taken, long ago.

The Chinese also had some "understanding" as to keeping a large amount of US dollars, by now well over one trillion and they also have taken up a significant amount of US debt as well.

This was done so the US would not be in a strong position to fight China on the economic front while in assisting with keeping US interest rates down, it would secure trade with the US.

All this could finally be put on the table in this poker game. Obviously, China knows the strength of the US cards and it appears there is no full house, a flush or aces.

Both countries will need to be careful with the selection of weapons: an overkill could backfire.

This dispute will affect the US dollar and Gold could benefit.

http://money.cnn.com/2007/03/30/news/economy/china_trade/

Gerry

stolwyk

06-04-2007, 01:53 PM

THE BOTTOM LINE
A Debt Summary, 2007 Update by Michael W. Hodges, Author
Grandfather Economic Report
April 2,2007
http://www.financialsense.com/editorials/hodges/2007/0402.html

International Forecaster MidWeek Reading - Gold, Silver, Economy + More
http://news.goldseek.com/InternationalForecaster/1175709760.php

Schiff: No More Legs to Stand on
http://www.kitco.com/ind/Schiff/apr052007.html

Willie: Key Charts & Major Clues
http://news.goldseek.com/GoldenJackass/1175793743.php

Gold Comments By: Julian D. W. Phillips, Gold/Silver Forecaster
http://news.goldseek.com/GoldForecaster/1175788800.php

stolwyk

08-04-2007, 09:51 PM

This is big:

New Century collapse sends shockwaves across the biggest lenders on Wall Street
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article1610364.ece

Hodges: debt summary, 2007 update: http://www.financialsense.com/editorials/hodges/2007/0402.html

USA: Comparing values with the year 1790: http://www.measuringworth.com/uscompare/

The Roosefelt Gold confiscation:
http://www.fgmr.com/confiscation.htm

Shell: easy oil is gone:
http://www.bloomberg.com/apps/news?pid=20601072&sid=aH57.uZe.sAI&refer=energy

Interesting data from Williams:
Pse note that SGS=William's Shadow Govt Statistics:
http://www.shadowstats.com:80/cgi-bin/sgs/data

stolwyk

16-04-2007, 04:09 PM

B. Chapman: International forecaster: Gold, Silver, Economy + More
http://news.goldseek.com/InternationalForecaster/1176672911.php

Wednesday, April 11, 2007
Iran leads attack against U.S. dollar
Quietly waging economic war as it builds nuclear program
Posted: April 11, 2007
1:00 a.m. Eastern

By Jerome R. Corsi
Â© 2007 WorldNetDaily.com

While the world press has focused on Iran's plans to move ahead with enriching uranium, Tehran continues to wage economic war against the U.S. dollar behind the scenes.

Tehran has reached a decision to end all oil sales in dollars, according to statements by Iran's central bank governor, Ehrabhim Sheibany, in Kuala Lumpur at the end of last month.

Zhuhai Zhenrong Trading, a Chinese state-run company that buys 240,000 barrels of oil per day from Iran, approximately 10 percent of Iran's 2.2 million barrels per day total output, has confirmed a shift to the euro for its Iranian oil purchases.

About 60 percent of Iran's oil income is currently in non-dollar currencies, according to Hojjatollah Ghanimifard, who is responsible for international affairs for National Iranian Oil.

Even Japanese refiners who buy some 550,000 barrels of oil a day from Iran have indicated their willingness to buy Iran's oil in yen.

China, which buys approximately 12 percent of its crude oil supply from Iran, signed last year a long-term $100 billion deal with Iran to develop Iran's giant Yadvaran oil field. Estimates indicate China could draw 150,000 barrels of oil from the Yadvaran field for the next 25 years, assuring Iran's position as one of the major suppliers of oil to China for decades to come.

One possibility is that China may begin paying Iran for oil in yuans.

Meanwhile, China which now holds $1 trillion in foreign reserve holdings, announced March 20 it will no longer accumulate foreign exchange reserves.

This is more bad news for the dollar, since approximately 70 percent of China's $1 trillion in foreign reserve holdings are held in U.S. dollar assets.

About half of China's foreign exchange U.S. assets are invested in U.S. treasuries, which are vital to financing the continuing U.S. federal budget deficits.

The recent push by Iran to demand payment for Iranian oil in currencies other than the dollar marks a move away from a previous announcement that Tehran planned to open an Iranian oil bourse in March 2006, designed to quote oil prices in the euro.

Iran has yet to open an Iranian oil bourse, but demanding payment for Iranian oil in currencies other than the dollar is seen by many experts as a more direct attack on the dollar, especially if the Iranian decision backs a worldwide move away from using the dollar as the underpinning of world foreign exchange reserves.

Iran's central bank governor Sheibany also confirmed Iran is cutting U.S. dollar reserves to less than 20 percent of its total foreign reserve currency holdings. Iran plans to manage its foreign reserve currencies from oil sales in a basket of 20 different currencies.

The move by both Iran and China to hold fewer dollars in their foreign exchange reserve reflects a desire to diversify foreign exchange reserve portfolios amid concerns the dollar will continue to lose value versus the euro.

The dollar has lost 9 percent of its value against the euro in the last year and is down 35 percent against the euro in the last five years.

WND previously reported the late Iraqi dictator Saddam Hussein virtually signed his death warrant when he obtained the United Nations' permission to hold his Oil for Food foreign exchange reserves in the euro.

stolwyk

18-04-2007, 04:09 AM

Nanostellar Introduces Gold in Oxidation Catalyst That Can Reduce Diesel Hydrocarbon Emissions by as Much as 40 Percent More Than Commercial Catalysts

http://www.nanotech-now.com/news.cgi?story_id=21935

stolwyk

29-04-2007, 06:24 PM

Panama Has No Central Bank
By David Saied - Posted on 4/26/2007
http://mises.org/story/2533#

PROFITING FROM IMPENDING MOVES IN GOLD,
CRUDE OIL, INDICES & LONG-TERM RATES
by DeepCaster LLC
http://www.financialsense.com/fsu/editorials/deepcaster/2007/0427.html

WHAT RECORD HIGH? by Peter Schiff
http://www.financialsense.com/fsu/editorials/schiff/2007/0427.html

B. Chapman: International Forecaster MidWeek Reading - Gold, Silver, Economy + More
http://news.goldseek.com/InternationalForecaster/1177523342.php

stolwyk

05-05-2007, 10:56 AM

GOLD BREAKOUT DELAYED
by Jim Willie CB
May 4, 2007
http://www.financialsense.com/fsu/editorials/willie/2007/0504.html

CENTRAL BANK GOLD SALES TO END PREMATURELY?
Excerpts from GLOBAL WATCH:
THE GOLD FORECASTER by Julian D.W. Phillips
May 4, 2007
http://www.financialsense.com/editorials/phillips/2007/0504.html

Nanostellar Introduces Gold in Oxidation Catalyst That Can Reduce Diesel Hydrocarbon Emissions by as Much as 40 Percent More Than Commercial Catalysts
http://www.nanotech-now.com/news.cgi?story_id=21935

Canadian Mint Introduces Wheel-Sized 100 kg Pure Gold Coin (Update3)
http://www.bloomberg.com/apps/news?pid=20601082&sid=aeCwEp0qT3P4&refer=canada

"GROWTH" IS IN THE EYE OF THE BEHOLDER by Peter Schiff
Euro Pacific Capital-May 4, 2007
http://www.financialsense.com/fsu/editorials/schiff/2007/0504.html

stolwyk

15-05-2007, 11:51 AM

Silver and its use:

http://www.minco.ie/default.php?category=Silver&pageName=Uses%20of%20Silver

International Forecaster May 2007 (#2) - Gold, Silver, Economy + More
By: Bob Chapman, The International Forecaster
http://news.goldseek.com/InternationalForecaster/1179068460.php

Deepcaster:
A Golden Opportunity for Investors is a Golden Challenge for The Cartel
http://news.goldseek.com/GoldSeek/1178895760.php

+++++++++++++++++++++++++++++++++++++++++++++++++

COMMENT: US Reports say that current money supply increase is about 12% (M3). Add another 2% for credit creation. The real CPI is running at about 10%.

Funds extracted from house ATM's are less indicating the pressure is on. Instead, credit card use is huge.

The US is monetizing their debt but the M3 of many other countries is rising as well so as to maintain some exchange equilibrium and a competitive export edge.

So, a massive liquidity circulation has been created resulting in the rise of asset values and massive use of derivatives by Hedge funds and a big increase in M&A.

This is made worse by the Carry Yen trade from Japan although an increase in interest rates is expected. Even then, the value of the Japanese dollar may not grow much as it is not wanted.

Competive devaluations are not new:
http://www.sciencedirect.com/science/article/B6V84-45DMT0Y-GG/2/36cb02a6f2d5ea2c90fe168e090d8a56

___________________________________

Protection of resources has now extended to Uranium.
Russia who uses state companies to achieve its aim -as does China- is setting up a Uranium Corporation while South Africa is complaining that too much U could be leaving its shores while they need it themselves.

So, it is clear, that strategic stock piles will be built in various countries with the result that the non producing country will need to pay while this resource is being locked up.

Both Russia and China subsidize their state run companies which therefore are in a prime position to acquire companies if they are allowed to by other countries.

Uranium now joins Oil and Nickel as scarce and strategic resources and the competition for these commodities is increasing.

Gerry

stolwyk

19-05-2007, 11:26 AM

CASINO ROYALE, CHINA AND THE GHOSTS OF 1929- by Ty Andros
Editor, Tedbits Newsletter
May 17, 2007
http://www.financialsense.com/fsu/editorials/andros/2007/0517.html

c. Puplava: US Retail and Housing
http://www.financialsense.com/Market/cpuplava/2007/0516.html

FALSE HOUSING: GOLD HEADWIND - by Jim Willie CB
http://www.financialsense.com/fsu/editorials/willie/2007/0516.html

COMMENT:
GOLD: Sabotage by Banks.
Financial writers have been taken in by an Agreement which stipulates that no more than 500 tonnes of Gold can be sold by the CB's per year:

http://goldnews.bullionvault.com/central_bank_gold_sales_CBGA

Unfortunately, the CB's can also lease Gold to Bullion Banks who in turn can sell this on the market and this sabotages the "500 tonnes" Gold Agreement.

When the lease rates are down and the plunge protection team (PPT) is in full cry, a coordinated attack by the CB's selling and leasing Gold at the same time can keep the Gold price well below what is desired.

While these attacks were massive some time ago, it seems that the PPT is more concerned with keeping Gold below a certain level and allowing it to creep from time to time as is happening now.

The question is: will the leased Gold be returned? Many writers agree that it won't be and that the CB's real Gold reserves are far less than being mentioned.

Suffice to say that the "500 tons" Agreement is worthless while leasing is taking place.

And it is this problem coupled with the massive use of derivatives which is holding the price of Gold back. Of course, seasonal influences play a role as well.

It is only Demand which will finally restore the value of Gold.

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

stolwyk

27-05-2007, 10:51 AM

2nd Hour Guest Expert Peter Navarro, Ph.D.
The Coming China Wars- Where They Will Be Fought
and How They Can Be Won
http://www.netcastdaily.com/fsnewshour.htm

B. Chapman:
Train Wreck of the Week - May 21 2007
http://www.theinternationalforecaster.com/trainwreck.php?Id=172

Ignoring warnings, Chinese rush into stocks
http://www.reuters.com/article/reutersEdge/idUSPEK33676420070523

THE GOLDEN KEY- by George Kleinman
http://www.financialsense.com/editorials/kleinman/2007/0526.html

Credit as a Public Utility: the Key to Monetary Reform
http://www.globalresearch.ca/index.php?context=viewArticle&code=COO20070526&articleId=5772

B. Chapman: International Forecaster May 2007 (#4) - Gold, Silver, Economy + More
http://news.goldseek.com/InternationalForecaster/1180364460.php

stolwyk

08-06-2007, 03:28 PM

WORLDWIDE INTEREST RATES ARE RISING

Benchmark Treasury yield rises above 5%
Rate hikes in New Zealand and euro zone trigger move higher
By Leslie Wines, MarketWatch
Last Update: 3:45 PM ET Jun 7, 2007

NEW YORK (MarketWatch) -- Treasurys closed with heavy losses Thursday, after the benchmark yield hurtled above 5% for the first time since August 2006, on the heels of a global sell-off of government bonds triggered by foreign interest-rate hikes.

Selling pressure was intensified by the hedging strategies of many mortgage-backed securities portfolio managers that force them to unload Treasurys. There also is a trend among foreign central banks to diversify away from long-term Treasury notes.

The 10-year benchmark Treasury note closed a full point lower at 95-12/32 with a yield ($TNX : CBOE 10-Year Treasury Yield Index
News , chart , profile , more
Last: 50.99+1.29+2.60%

3:00pm 06/07/2007

$TNX50.99, +1.29, +2.6%) of 5.097%, after earlier venturing up to 5.12%, its highest level since July 2006. Bond prices and yields move in opposite directions.
The 30-year Treasury bond finished down 1-25/32 at 93-6/32 with a yield ($TYX : CBOE 30-Year Treasury Yield Index
News , chart , profile , more
Last: 52.03+1.19+2.34%

3:00pm 06/07/2007

$TYX52.03, +1.19, +2.3%) of 5.205%. Earlier the long bond yield rose to 5.223%, a level last seen in July.
At the short end, the 2-year note finished 3/32 lower at 99 24/32 to yield 5.004%.

Thursday's Treasury rout came on the heels of heavy overnight sales of German and other government bonds. The sell-offs were linked to mounting evidence that interest rates in many countries will stand pat or head higher.
The rate fears were intensified by an unexpected rate hike in New Zealand, which "kept tighter monetary policy firmly in the spotlight," said research firm Action Economics.
On Wednesday, the European Central Bank hiked rates and ECB chief Jean-Claude Trichet hinted broadly that further rate increases lie ahead.

The federal funds rate, the Federal Reserve's key barometer, remains at 5.25%. Investors will be watching to see if the benchmark yield, which is used to set mortgages and corporate bond rates, creeps up to the 5.25% level in coming sessions. Such a move would add to pressure on the Fed to lift rates. See related story.
T.J. Marta, fixed-income strategist at RBC Capital Markets, said his institution expects the benchmark yield to end the year at 5.4%, which would imply further rate hikes in 2007.
"This is a big move and there are three aspects to it," he said, referring to the benchmark yield's climb on Thursday.
The first factor is global growth and inflation, he explained, as illustrated by both the recent rate hikes and strong data reports in many countries. Marta singled out unexpectedly brisk Australian labor-market data that sparked much of the overnight bond selling.
In addition, there's mounting evidence of a structural demand problem, as foreign central banks diversify their currency reserves away from longer-term Treasurys, Marta said.

The U.S. depends on other nations to buy Treasurys to help balance Washington's books. Yet recent Treasury auctions have attracted dull foreign demand as emerging nations search for higher-yielding debt instruments for their reserves. See full story.
"Now China, Brazil, Russia and other emerging-market countries are looking for higher rates of return and want to diversify into other assets," said Tony Crescenzi, chief fixed-income analyst at Miller Tabak.

Feedback loop
The third heavy pressure on Treasury prices as cited by Marta is linked to the deterioration of the subprime lending market. As loans made to less creditworthy borrowers go sour, managers of portfolios of mortgage-backed securities are forced to sell off Treasurys to hedge their weakening loans, he said.
This, in turn, is a phenomenon that feeds on itself. "As yields go up, the mortgage-backed securities guys have to adjust their hedges," Marta said. "This means they have to keep ramping up their sales of Treasu

stolwyk

18-06-2007, 01:58 PM

J Perkins: Economic Hit Man

http://radio.goldseek.com/

stolwyk

27-06-2007, 12:17 PM

TROUBLE AT MILL SERIES: COMMENT.

Sofar, a number of negative factors have amassed so as to totally distort trading and there is less room for the FED to move now than before.

If it has to act on say a big derivative or sub prime mortgage fiasco, it can only increase the money supply once again putting a temporary stability into the system. But the spinoff will be a high inflationary cost which will need to be paid for later on.

Not acting will mean that the monetary disaster will rapidly spread engulfing those nations who also practice high monetary expansion, IMHO.

An issue only lighly touched on and certainly not talked about in Wall Street is the fact that Japan is the biggest sinner in this regard. They want to keep their currency down so as to be able to keep competing with exports to China and the US, big trading partners.

To this end they have diluted the money supply while giving a low interest rate to the saver, who can get a far better return by investment overseas. This Yen Carry Trade is materially contributing to the bubbles which cause inflation.

And if Japan decides to materially raise interest rates then this would increase the value of the YEN, thereby forcing borrowers to liquidate assets as happened before so avoiding making a loss on the currency.

Hedgefunds and Banks would get hit hard and at some stage the FED may have to step in with cash unless Japan can be convinced not to take too drastic measures.

China therefore can claim that other countries , particularly Japan, are the real currency manipulators.

In the meantine, investment is becoming much more "pragmatic", big cash is moving with the speed of light and there is'nt any real financial leadership. Profits made at the moment count.

While the FED and Central Banks will do everything to plug the ever increasing size of the holes in the financial system, the private investor may need to more frequently check his investments, perhaps moving more into cash and temporary triple A debentures for the time being.

As far as Gold shares are concerned, the market is now firmly controlled by the FED's and US PPT (Plunge Protection Team). I would only favour high quality smaller silver/gold companies. There are not too many of these available now geopolitical pressures in many countries apply.

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

tricha

30-06-2007, 01:06 PM

Food for thought[8)]

What exaxctly is Paul Vaneeden telling us [?][?][?]

http://www.financialsense.com/fsu/editorials/sobolev/2007/0629.html

stolwyk

05-07-2007, 03:13 PM

Silver - A Rare and Unique Investment Opportunity
Roy Tonnessen:

http://www.silverbearcafe.com/private/unique.html

Deepcaster: Good read:
http://www.financialsense.com/fsu/editorials/deepcaster/2007/0703.html

JBmurc

06-07-2007, 01:03 PM

-forget kiwisaver just invest your savings into NEM with gold tipped to reach 1000oz+ NEM bouncing along at long term lows its got to be a-- Strong buy;)

DENVER, July 5 /PRNewswire-FirstCall/ -- Newmont Mining Corporation NEM today announced the elimination of its entire 1.85 million ounce gold hedge position, establishing the Company as the world's largest unhedged gold producer. Newmont also announced plans to monetize components of its royalty and equity portfolio in the next twelve months, resulting in the discontinuation of the Company's Merchant Banking Segment as a separate business unit.

Commenting on the Company's strategic initiatives, newly appointed Chief Executive Officer, Richard O'Brien, said, "With the elimination of our gold hedge book, we have renewed our commitment to maximizing gold price leverage for our shareholders. In addition, we are focused on delivering improvements in our operating performance and cost structure going forward. We intend to realize the value from a significant portion of our non-core, Merchant Banking portfolio and use the proceeds to fund the development and growth of our core gold business."

slam

06-07-2007, 01:17 PM

hmmm
interesting JB
You amy need to start a thread on this I think:)

Cheers
Slam

stolwyk

08-07-2007, 10:30 AM

International Forecaster July 2007 (#1) - Gold, Silver, Economy + More
http://news.goldseek.com/InternationalForecaster/1183931692.php

Silver in Clothing Keeps Odors Away: 3 pages
http://abcnews.go.com/Business/wireStory?id=2676044

Where is the Real Risk in the Subprime Debacle?
By: John Mauldin, Millennium Wave Advisors
http://news.goldseek.com/MillenniumWaveAdvisors/1183929767.php

stolwyk

12-07-2007, 10:28 AM

International Forecaster July 2007 (#1) - Gold, Silver, Economy + More
http://news.goldseek.com/InternationalForecaster/1183931692.php

ROOF CAVES IN
MARTS TUMBLE ON SUBPRIME-BOND CARNAGE
http://www.nypost.com/seven/07112007/business/roof_caves_in_business_paul_tharp_and_roddy_boyd.h tm

Moody's Lowers Ratings on Subprime Bonds, S&P May Cut (Update1)
http://www.bloomberg.com/apps/news?pid=20601087&sid=ajiZ.rc8Aj5c&refer=worldwide

COMMENT: The PPT (Plunge Protection team) is trying to keep the price of gold down.

stolwyk

12-07-2007, 04:42 PM

To those complaining about a high AUS dollar (It could run to 95 cents US in a USD collapse), there is a way of a profitable investment by carefully selecting a SILVER stock which has the propensity to rise regardless of what the Gold price is in $AUS.

I tend to be an international investor and have come to the conclusion that in the main Aus gold stocks are not profitable and I shun these.

Bear in mind that the FED and US treasury are slowly moving into the panicking stage and while the US citizen is gullible, there is a limit to what he can stand.

The geopolitical situation is rapidly deteriorating and the pressure in the medium term will be on the Mid East oil reserves, now there is talk of a US withdrawal from Iraq.

Bush is a lame duck, the US is boxed in and has little room to move in this checkmate position.
Also, the Derivative and subprime problems won't go away. The US has no energy policy to speak of and its infrastructure is in a bad shape.

In the meantime, the FED and Central Banks are dumping Gold and the Plunge Protection Team is rigging this market trying to keep the gold price down. However, seasonal demand will soon pick up and this could make any rigging jobs more difficult.

The future is murky and unpredictable; massive events could suddenly eventuate.

Gerry

stolwyk

13-07-2007, 11:45 AM

Willie: Compound Damage Orgy (CDO)
http://news.goldseek.com/GoldenJackass/1184259425.php

p0ssy

13-07-2007, 08:52 PM

"......To those complaining about a high AUS dollar (It could run to 95 cents US in a USD collapse), there is a way of a profitable investment by carefully selecting a SILVER stock which has the propensity to rise regardless of what the Gold price is in $AUS."

Always facinated by your take on the bigger picture, depressing as it is. Do you have any thoughts on a silver stock that would meet this criterion?

stolwyk

15-07-2007, 11:24 AM

Thanks for that.

I am following the silver stock: GORO (Golden Resource), traded on the Nasdaq (In US dollars-US$4.70))-See thread:
http://www.sharetrader.co.nz/topic.asp?TOPIC_ID=24215

And Sabina: A Canadian stock: SBB.TSX: CAN$2.83
http://www.sharetrader.co.nz/topic.asp?TOPIC_ID=23433&whichpage=2

This stock will take longer to come into production, waiting for an all weather road and port.
https://license.icopyright.net/user/webEprint.act?id=3.7441-57268

Research Capital's report of 4 July 2007:
http://www.researchcapital.com/docid.php?docid=8283&ip=4a05a53d090a00e38aa85ef05b4b6d204d4ed3ef

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

stolwyk

19-07-2007, 07:18 AM

18 July:

Bear Stearns Tells Fund Investors `No Value Left' (Update1)
By Yalman Onaran
http://www.bloomberg.com/apps/news?pid=20601103&refer=us&sid=aI5Kc6vBtXD0

Bear credit hedge funds almost wiped out: sources
Leveraged fund worth nothing; larger fund reportedly loses 91% of its value

http://www.marketwatch.com/news/story/bear-credit-hedge-funds-almost/story.aspx?guid=%7B4465B0D7%2DF76F%2D4735%2DBE8A%2 DFC6038AFA93C%7D&siteid=yhoof

COMMENT: A lot more damage to come due to affected bodies only tackling the tip of the iceberg.

Pension funds are in a shocking position because there are rules in their constitution about the quality of their investments. Credit worthiness of these investments is determined by the Rating agencies who apparently have been over-rating these.

The problem is that many of these investments will be dumped sooner or later, affecting not only subprime or Alt mortgages but also the more respectable grades, ie A grade. That is because investors won't trust the Rating agencies.

Add to that margin trading an other derivatives designed to maximize profits by heavily leveraged and insured backing, and a powerful cktail is in the making.

Affected Wall Street firms don't comment much but rest assured that panicky phone calls from them to the Rating Agencies will be occurring daily.

After all, they would'nt like these Rating Agencies to move too fast on the matters involved.

Gerry

stolwyk

19-07-2007, 07:21 AM

19 July:

Metals - Gold rallies on Bernanke's US sub-prime concerns for US economy
07.18.07, 1:16 PM ET

LONDON (Thomson Financial) - Gold rallied after the dollar weakened when Fed Chairman Ben Bernanke highlighted the dangers of the sub-prime fallout to the US economy in his semi-annual testimony to Congress.

Gold tends to move counter to the dollar, as it is seen as an alternative asset to the world's most common currency reserve.

'The dollar is weaker and that is the main driver for gold right now,' said Calyon analyst, Michael Widmer. 'Now it's slipped below 1.38 versus the euro, everything seems to be pointing to the problems in the housing market and the potential for lower (US) interest rates weakening the dollar further.'

At 4.45 pm, spot gold was trading at 672.90 usd an ounce, compared with 665.00 usd in late New York trade yesterday.

Some analysts believe gold is asserting its position as a wealth guarantor in times of market volatility, following Bear Stearn's announcement that two of their stressed hedge funds are now essentially worthless after investing heavily in the US sub-prime market.

'Gold hasn't just risen because of the dollar, it's risen against sterling as well,' said BullionVault.com analyst Adrian Ash. 'A lot of people are concerned about Bear Stearns (nyse: BSC - news - people ), and the level of fear you're seeing in the market is bringing people back to gold.'

Gold is further supported by oil prices trading close to all time record highs. Prices have received a further boost from falling US inventories today.

Bullion often rises in line with oil as it is used as an inflationary hedge against higher fuel costs.

The lack of buying by jewellers, turned off by high prices in the historically quiet summer period, has limited some of gold's gains.

Among other precious metals, platinum is up to 1,318 usd against 1,308 usd after reports that South African mine workers rejected a pay offer from Northam Platinum, increasing the likelihood of strike action.

Its sister metal palladium fell to 365 usd against 366 usd.

Silver was up to 13.17 usd against 12.93 usd.

d.sheppard@thomson.com

ds1/ma/rfw

COPYRIGHT

http://www.forbes.com/markets/feeds/afx/2007/07/18/afx3927005.html

LATEST: Dollar: 80.2 (-0.17)

Gold was 674, now 672.4 ( Trust the PPT to act soon)

Silver 13.13 OIL 74.9

stolwyk

20-07-2007, 12:40 PM

Silver - A Rare and Unique Investment Opportunity
Roy Tonnessen

http://www.silverbearcafe.com/private/unique.html

stolwyk

20-07-2007, 12:42 PM

COMMENT:

B. Chapman is close to what is unfolding, although it takes time as the PPT (Plunge Protection Team) drawn from the unholy alliance of US treasury, the Fed, Morgan and Goldman Sachs and the Central Banks will do their best to keep gold and silver prices down.

Unfortunately, they can't control everything at the same time even if the US fiat money spigots are wide open to accommodate them.

Also, the number and degree of difficulties are increasing, the 14% increase in M3 (Money supply) now being accompagnied by the Yen carry trade and add excessive margin trading and other derivatives designed to maximize profits by heavily leveraged and insured backing, and a powerful cktail is in the making.

Should the Japanese currency rise due to increase in interest rates then a savage cutback in credit and capital will take place as happened some time ago.

However, some hedgefunds, pension funds, insurance companies will be caught up in the sub prime scandal. The problem is the excessive leverage amounting to 6-15 times the principal. They will be forced to heavily reduce this leverage due to falling house prices an fraudulent mortgages. This means a massive cutback in credit or capital also.

Add to that the consequential fall in the US GDP due to lesser increase in company profits and reduced retail spending, and the sum total must lead to a heavy US recession, a fall in share prices and a heavy cutback in credit creation, bearing in mind that the credit is there for the taking but the prospective borrower is too afraid to borrow or spend much:

Inflation will roar due to increasing oil prices because of a lower dollar and the increased costs of food products due to Bush pushing the expensive production of ethanol as well as current geopolitical problems which are firming up.

Anyone of these is a serious matter, but it looks that this time a host of negatives are converging and this is dangerous.

If the Fed decides with Treasury to plug the massive holes with more credit, expect the dollar to fall, hyper inflation to take over and a big increase in poverty amongst those who can't protect themselves.

I am holding 50% cash in short term investments (On call).

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

stolwyk

21-07-2007, 04:55 AM

Facts, Evidence and Logical Inference
by Frank A. J. Veneroso

Thu, 2007-07-19 14:38.

A Presentation On Gold Supply/Demand, Gold Derivatives and Gold Loans

http://www.gata.org/node/5275

stolwyk

23-07-2007, 11:14 AM

US: COMMENT:

There are a number of tragedies associated with the oversupply of residential housing:

1. Builders still have much vacant land which is costly to keep and needs to be built on, regardless of lower sale prices. Incentives to buy the completed properties are given but not included in the official sale price; eg the sale price of say $400,000 may include some $40,000 or more incentives but the headline price of $400,000 is the official price. Hence all official sale prices are overblown and the true losses are far more than conveyed.

Reference was made to land agents getting a 5% commission from the builder for steering prospective buyers to their properties. This practice adds another deduction to the sale price but is not recorded.

Many bought more than one property at a later stage with the intention of selling the second one later but unfortunately prices declined and they are stuck with it while paying high rates and outgoings. That increases the total stock of property to be sold and this may take years unless the owner is prepared to accept fire sale prices later on. Unemployment increases and consumption will go down, affecting the GDP.

2. Much has been said about subprime and the gangrene associated with it as well as the writing down of the value of the more bona fide mortgages due to mistrust of Rating Agencies worldwide. The latter have over-rated the values and this has diminished trust in the independence of these Agencies.

The CDOs which are packaged mortgage bundles are suspect and this affects the Banks, hedgefunds, pension and other funds and private investors. About 100 US mortgage lenders have gone out of business while the CDO problem persists. The Rating agencies have been slow with rerating CDOs, giving affected parties time to get out and this has been open to criticism. A recovery rate of as low as 10-30% in the dollar of many CDOs has been mentioned. Finally Bernanke had to admit that subprime was causing a problem.

3. While much of the Yen Carry trade has been used to buy US financial instruments, property will also be part thereof. Inflation in Japan is rising and so is the yen currency as confidence in the US dollar declines. There is a real risk that the dollar may suddenly decline, thereby boosting the yen and the yen borrowers will be forced to unwind their transactions and pay back their loans in yen currency as otherwise capital losses will occur.
Alternatively, Japan may increase the interest rate which will have the same result. Prices of US property will be affected. The Yen and Swiss carry trades are of great concern as a bad outcome will squeeze credit supply.

4. Derivatives. Banks have packaged the CDOs and sold these to hedge and other funds. The latter leveraged these investments up to $15 to $1 with cash loaned by these Banks or intermediaries. Obviously, if they may only recover say 40 cents in the dollar, then this leverage will magnify the losses. While the Banks will have unloaded some risk, participating "insuring" parties may not or cannot close out these transactions when they are called upon to pay out.

These parties may well reinsure this risk and a bad outcome will be a ripple effect attacking even the most trusted financial intermediaries.

Summary: Any of these negative outcomes can lead to a recession; in this case a combination of a number of negative events currently in motion will be bad for the US and some other countries. The PPT will do their best to keep the USD above 80 cents and US treasury has even asked China to keep buying US debt instruments (About $US2.4 bill/day is needed).

Add to that the outsourcing, the permanent deficits, the negative saving rate of -1.4%, the increasing oil price, the non existence of a coherent US energy policy, the breakdown of infrastructure, corruption, the cost of wars and other geopolitical problems and the outlook is not good.

China will try to keep the show going till it is satisfied that cutting loose of the US won't cause too much damage, a process which could take at lea

Enumerate

23-07-2007, 03:13 PM

quote:Originally posted by stolwyk
There are a number of tragedies associated with the oversupply of residential housing:

Excellent observations Stolwyk. I am inclined to believe that the NZ$ has been re-rated as a reserve currency following the decline of the US$ and inflation pressures evident in the worlds major economies.

To me, it is clear that the currents and patterns of global money flows have changed and some of the pricing patterns seen in housing and exchange rates will manifest these changes.

Specifically, housing prices in certain US regions are declining despite full employment levels (tradition indicates unemployment is a precursor to house price decline). Our own NZ market continues to be pumped up with Japanese liquidity.

It is difficult to anticipate how it will all unwind. Maybe we all will just have to become sharemilkers ...

stolwyk

26-07-2007, 05:02 PM

COMMENT:

The rapacious relationship: Illuminati Banks including Goldman Sachs, J.P Morgan and overseas Banks- The FED-US Treasury including the PPT (Plunge Protection Team):
http://www.silverbearcafe.com:80/private/rothschild.html

http://www.washingtonpost.com/wp-srv/business/longterm/blackm/plunge.htm

The FED lends cash to the Treaury at interest, an unusual phenomenon. The US could save themselves a lot of interest if Treasury took over all necessary functions from the FED and dismissed it. It is an unusual setup as normally, Central Banks are owned by Govts and hence create their own money.

Coincidentally, some US Presidents who were against the existence of the FED, including Kennedy, were shot.

It is in the interest of the FED and the Illuminati Banks to promote inflation by increasing the money supply and lend out fiat money to Treasury as much as possible and it does.

The Illuminati Banks, including the FED, are privately owned and date back to the Rothchild banking empire, still very active today. It operates from the City of London.

The incestuous relationship extends to the Goldman and JP Morgan Banks which the FED/Treaury use to manipulate the markets. To facilitate this, key Goldman Sachs staff is appointed by the US Govt (President) and Paulson is the latest Treasury appointee. He is also in charge of the PPT team and directs the overall activity.

Both Morgan and Goldman Sachs banks execute the required trading needed to manipulate the markets, including Gold and Silver. However, there is nothing to stop them advising their member Banks in the US or Europe as to what some of their tactics could be and so there is a grave suspicion that the Illuminati as a whole benefits from this.

Because many Central Banks from other countries hold large amount of dollars and also are members of organisations, eg the IMF, Worl Bank (Executive appointed by the US) and are dependent on the USD as the prime World Reserve Currency, much cooperation between the FED, US treasury and these Central Banks take place although some countries are busy replacing some USD by Gold and other currencies.

Some large Central Banks, eg the BOJ and Asian Central Banks will closely cooperate provided they are allowed to peg their currency intimately to that of the US and so have advantages. This is often forgotten when the finger is pointed at China.

So, in normal circumstances, many institutions or appointees protect the US fiat currency and try to prevent a depression or heavy recession. Unfortunately, the WTO (World Trade Organisation) suffers from much self interest from the large participants and this cooperation is superficial.

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

stolwyk

27-07-2007, 08:54 AM

26 July: COMMENT

As oil prices rise, the US creates more fiat currency so as to enable trading to continue.

It can claim that the additional money will be justified because of greater asset value per barrel, regardless of any reason, provided the prices stay stable or increase.

If the oil price suddenly markedly deteriorates in terms of US dollars then one could expect the US to rein in the surplus dollars so as to not to increase inflation. In practice, the system is'nt that fine because the possibility exists for higher oil prices after a lull as has occurred.

However, this is'nt the main topic in this post but rising oil prices are and at the moment it is US$76.22
One can't blame oil sellers for at least wanting inflation proof dollars rather than having to sell oil at lower dollar prices because the USD is now close to 80.

And there is every chance it will go lower and it certainly is the achilles heel of the US and the FED.

Already some sellers want to sell oil in Euros or other currency so as to ensure they don't have to keep tampering with US pricing by cutting back on production which is quite sensitive at the moment even if nations produce ethanol or use more gas. There is considerable doubt about stated OPEC reserves anyway, apart from more risk due to geopolitical problems.

The upshot is that there will be less demand for US dollars, more inflation and increase in interest rates no matter how much the PPT will try to prevent this.

Add to that the increasing diversion in reserve currencies at the cost of the dollar and the sum total is not exactly favouring either the value of the USD nor it continuing as the prime World Reserve currency.

The progression of this breakdown and consequences take time but can be hastened by US or other Institutions/ Individuals investing overseas if the returns are better than in the US (Press reports say they do get this.)

At the moment, overseas Central Banks are heavily supporting the US FED and Treasury by investing in Bonds which require a cover of at least US$2.4 bill/day.

The US is also monetizing debt and the M3 supply including credit creation amounts now to some 14% according to reasonable estimates.

The Sum total of the existing negatives as well as the outcome of expected risks first means that it would be difficult to raise the USD much higher than 80, mainly because the currency markets are massive and are not as easily manipulated by the PPT as the Precious Metal market. Lowering the value of Gold by the PPT will indicate that inflation is becoming less and that could steady the USD temporary perhaps. Of course, price inflation is running at some 10% with the massive rise in food and oil costs, so this manipulation can only be accepted by the unwary.

The US has asked China to keep investing in US Bonds, an unusual and degrading request never before made by any western nation. No wonder, the FED and Treasury are shaken by the rapid Chinese investments in other countries. Here is another risk as China has a massive investment in US Bonds already and any lukewarm treatment of this matter could result in the USD diving which at the moment is not in the interest of China and the US.

The Japanese yen carry trade and its eventual outcome will affect the dollar as do interest rate settings in the EU or or say Japan.

The decay of the dollar as a World Reserve Currency is continuing considering the existing massive risks discussed.

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities

Scuffer

27-07-2007, 09:03 AM

I would say your right maybe this is the start of the downward slide of the once mighty US$ it used to be what the blackmarket traders wanted in third world countries, would be interesting to know if that was still the case.I remember being asked to change money on the blackmarket a lot when I was backpacking in Nepal, they all wanted the US$, they laughed at the kiwi$:D

stolwyk

27-07-2007, 11:52 AM

COMMENT

Positive spin-offs from small correction.

1. First, the pressure has come off some beleaguered currencies, ie $A and $NZ.

At the moment, $A=US$0.87.16 US (-1.5%) and the NZ dollar is off 2.4% at 0.7822 US. That ought to promote exports, particularly to Japan.

Any further devaluations will depend on any corrections to come later on, bearing in mind that the US$ itself is weak.

2. It was fortunate that this warning came in earlier than generally expected and this would give Hedge- and other Funds some time to realign themselves. Obviously, any damage caused by subprime and flow-on effects cannot be undone.

3. It it will be beneficial in the unwinding of the Japanese yen carry trade, a major credit creator which has done damage to $A and $NZ in particular.

Without a warning, this speeding credit train would have been derailed perhaps next time around in a more massive correction.

China so far will be our support in the massive transfer of exports.
___________________________________

Article:
Yen surges as investors shun risky trades
By David McMahon

NEW YORK (Reuters) - The yen surged on Thursday, climbing to a three-month high against the dollar, as investors spooked by growing problems in credit markets fled risky assets financed by borrowing in the low-yielding Japanese currency.

Credit spreads widened, stocks fell sharply, and U.S. benchmark Treasury yields tumbled in a flight to quality that prompted currency traders to buy back yen that had been used to buy higher-yielding currencies like sterling in carry trades.

"It's clearly a case of the tail wagging the dog in the FX markets today," said Robert Sinche, global head of currency strategy at Bank of America in New York. "We're seeing a big rise in risk aversion and unwinding of positions in other markets, and that is hurting the carry trade."

The spillover to the currency market got even uglier after the dollar tumbled below its 200-day moving average against the yen, a long-term technical chart signal, triggering a wave of automatic orders to sell dollars and buy yen, dealers said.

By late afternoon, the dollar was down 1.4 percent at 118.70 yen, on track for its biggest daily decline against the Japanese currency in around 5 months.

Amid mounting fears that the U.S. housing market is deteriorating and worries that financing of corporate takeovers is becoming more difficult, the Dow Jones industrial average <.DJI> was also on track for its worst day in five months.

U.S. and European junk bonds took a beating, while the 2-year Treasury yield dropped 18 basis points, headed for its biggest daily fall in around three years. Analysts said that until stock and bond markets settled, currency traders would likely keep buying back yen and reducing their exposure to riskier high yielding currencies
The euro slid 1.3 percent to 163.20 yen after dropping to 162.90 yen earlier in the session, the lowest in more than a month.

The yen's gains were most pronounced against the New Zealand dollar, which boasts the world's highest interest rates and is a darling of Japanese investors, but was dealt a blow earlier in the day after the Reserve Bank of New Zealand said that it may have raised rates enough to cool inflation.

The kiwi fell 3.4 percent against the yen, the biggest decline since late February, to 93.10 yen.

Meanwhile the euro rose 0.1 percent to $1.3740, just over one cent below a record high hit earlier in the week.

The Swiss franc, another popular funding currency for carry trades, also rallied sharply. The U.S. dollar fell 0.8 percent to 1.2035 francs.

Dealing another blow to the dollar, U.S. new home sales fell unexpectedly sharply in June and prices slumped, according to a government reports on Thursday that pointed to continuing weakness in the housing sector.

"It's bad news all around for the dollar," said David Powell, senior currency strategist with IDEAglobal in New York. "That doesn't bode well for the category of GDP that's been a drag for so long, residential fixed constr

tricha

27-07-2007, 11:08 PM

Gerry - "I am holding 50% cash in short term investments (On call)."

Looks like u r in the box seat on this one Gerry.

I'm only 10% cash myself, was tempted to spend today, but could be more blood on the floor tonight.

Best of buying Gerry!

Cheers [B)][}:)]

stolwyk

28-07-2007, 05:10 PM

Thanks Tricha!

COMMENT:
The situation differs from other corrections because of the massive takeovers and buyouts having pushed the share price along to some 14000 points.

Because of the sudden stalling of international credit, this number is obviously too high and the market is trying to wind it back to more manageable levels. How far it will go down, I don't know but the SPP is flat out trying to control this fall somewhat and sofar this correction is not that onerous except that money has been lost.

The daily reports on subprime and failed buyouts tend to cause more leakages in the DOW/S&P, I think and it will take some time till we are on a level path, perhaps, hence no rush with reinvestment IMHO.

If anything, I would prefer a reasonable rise first-hopefully not a dead cat bounce- before the waters are tested again.

Bear in mind that apart from this credit crunch there could be other events suddenly coming from left field.

Obviously, fundamentals will have priority IMHO and while we are waiting we need to make up a list with possible reinvestments once the time is ripe.

I do expect the shares with beter fundamentals to turn first.

Much damage was done by the FED and Wall Street as well and it will take some time before some measure of confidence is restored.

However, the DOW falling say 200 points or 1.5% at a time is not a shocking event in these conditions anyway, although the outcome is harsh for some investors.

Referring to the Aussie/China equation, although Aussie shares may fall more than necessary, trading partner China will need the imports from Aussie and this applies to Russia, India and Brazil as well.

So, there are limits to any fall and Aussie is blessed.

There are some positive outcomes as well: the heat will go from many hedgefunds-I won't touch them- and we hope that the unwinding of the Japanese yen carry trade will further benefit the Aussie and NZ currencies as it is doing.

So yes, in hindsight this correction which could drag on for a while perhaps, may well have forstalled much more serious happenings although other problems remain.

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

stolwyk

29-07-2007, 11:10 AM

Hugo Salinas:

Where is the GOLD?

http://www.silverbearcafe.com/private/wheresthegold.html

stolwyk

02-08-2007, 11:00 AM

Rowan Callick, China correspondent | August 02, 2007
AUSTRALIA'S most influential economist, Ross Garnaut, forecasts in a report that China is at an historic economic and social turning point that will lead to an even bigger appetite for resources at higher prices.

"In 20 years time China is likely to consume more energy and metals than all of the industrialised economies today," Garnaut says.

This analysis is in a paper about to be published by the Rio Tinto-Australian National University China Partnership and will be handily ready for distribution soon after Rio Tinto chairman Paul Skinner and chief executive Tom Albanese present the firm's results later today.

The report appears to provide strong justification for Rio's recent $44 billion purchase of Canadian aluminium giant Alcan.

The report, China's resources demand at the turning point, was drafted by Prof Garnaut with a colleague, Associate Professor Song Ligang.

Garnaut was the chief economic adviser to Bob Hawke when he became prime minister in 1983, and helped mastermind the floating of the dollar and the rapid opening of the economy.

He then became ambassador to China before writing the report, Australia and the northeast Asia ascendancy, which helped steer Australia's focus towards Asia. He is now drafting a review of the impacts of climate change for the state premiers.

Based on studies of neighbours Japan, South Korea, Singapore and Taiwan at similar stages of their development, Garnaut and Song say in their report, China is about to enter "a period of resource-intensive demand unique in world history".

It would not be surprising at all, they say, if China's economic output multiplies by eight times over the next two decades. It has grown almost six times over the last two decades.

They have identified in China today "the interplay of forces whereby labour becomes relatively more scarce and the economy shifts towards more capital-intensive production" -- effects labelled "the turning point" by Nobel Prize-winning economist Arthur Lewis.

Garnaut and Song say: "Economies which are more urban, more investment-reliant and more export-oriented tend to have a more accelerated increase in demand for metals and energy per capita as they grow.

"Sure enough, these are all aspects of China's economy that stand out," they say.

Most countries increase their demand for metals and energy per person markedly when per capita income reaches $US2000-$US5000 ($2300-$5800). In 2006, China's GDP hit $US2000 per capita for the first time.

The heightened demand, says Garnaut, will come from the increased consumption of resource-intensive products in China as more people become middle class and become able to afford new homes and more expensive goods, such as air-conditioners.

The demand will also come, he says, from the need for greater resource inputs to the more capital-intensive products being made and exported. If the latest Chinese Government moves to slash the number of new energy-intensive ventures prove effective, China will import more aluminium (perhaps processed in Australia) than the more upstream alumina -- a further justification for Rio's purchase of Alcan.

The transition to more capital-intensive exports is a strong indicator that "the turning point in China has been reached" already, Garnaut and Song say. The country's energy demand has been growing more rapidly than economic output since 2002.

They say: "China's influence will be greater in the future, mainly for petroleum, but also for natural resources in a wide range of alternative energy sources, notably uranium" -- which China is shortly expected to start importing from Australia.

Overall, "it is therefore likely that global prices for resources will remain on the high track for the foreseeable future -- at average levels that provide incentives for continued rapid growth in supply for a long time".

It is also likely, they conclude, that "China's imports of metals and energy will rise to levels well beyond those of any other country at

stolwyk

06-08-2007, 11:06 AM

Big Bank Failure Could Turn
Credit Crunch Into Global Crash

http://www.larouchepub.com/other/2007/3430bank_failure_crash.html

stolwyk

06-08-2007, 02:37 PM

Japan and the ECB have not increased interest rates although they said they would.

They can't because the unwinding of the yen carry trade would strengthen the yen while interest rates rises by the ECB would strengthen the Euro and the fall out of both actions would push the already weak dollar index through the 80 mark.

Both Europe and Japan have decided to accept increased inflation, a sore point for the ECB. However, with the current liquidity crunch already in force and their still significant dollar holdings, they and China are unlikely wanting to damage themselves and the world at large.

Besides, they still don't know what the collective damage of subprime-derivatives is but I bet the FED will have the midnight oil burning trying to ascertain the extent of the big hot spots to come and any action to take which would involve more liquidity again and an increase in monetary inflation.

In the meantime the PPT is working overtime trying to manipulate the Dow/Nasdaq/S&P/ Gold and if possible, the dollar and the Central Banks are assisting it.

Meanwhile, the growth rates of China/Russia/India/Brazil have not slowed down to any marked extent: Canada, Australia and other suppliers to these countries ought to benefit IMHO.

stolwyk

09-08-2007, 12:14 AM

China threatens 'nuclear option' of dollar sales
By Ambrose Evans-Pritchard
Last Updated: 9:54am BST 08/08/2007

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Blog - Dollar to collapse?
Fistful of dollars - China's trade surplus reached $26.9bn in June

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.

Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

Xia Bin, finance chief at the Development Research Centre (which has cabinet rank), kicked off what now appears to be government policy with a comment last week that Beijing's foreign reserves should be used as a "bargaining chip" in talks with the US.

"Of course, China doesn't want any undesirable phenomenon in the global financial order," he added.

He Fan, an official at the Chinese Academy of Social Sciences, went even further today, letting it be known that Beijing had the power to set off a dollar collapse if it choose to do so.

"China has accumulated a large sum of US dollars. Such a big sum, of which a considerable portion is in US treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency. Russia, Switzerland, and several other countries have reduced the their dollar holdings.

"China is unlikely to follow suit as long as the yuan's exchange rate is stable against the dollar. The Chinese central bank will be forced to sell dollars once the yuan appreciated dramatically, which might lead to a mass depreciation of the dollar," he told China Daily.

The threats play into the presidential electoral campaign of Hillary Clinton, who has called for restrictive legislation to prevent America being "held hostage to economic decicions being made in Beijing, Shanghai, or Tokyo".

She said foreign control over 44pc of the US national debt had left America acutely vulnerable.

Simon Derrick, a currency strategist at the Bank of New York Mellon, said the comments were a message to the US Senate as Capitol Hill prepares legislation for the Autumn session.

"The words are alarming and unambiguous. This carries a clear political threat and could have very serious consequences at a time when the credit markets are already afraid of contagion from the subprime troubles," he said.

A bill drafted by a group of US senators, and backed by the Senate Finance Committee, calls for trade tariffs against Chinese goods as retaliation for alleged currency manipulation.

The yuan has appreciated 9pc against the dollar over the last two years under a crawling peg but it has failed to halt the rise of China's trade surplus, which reached $26.9bn in June.

Henry Paulson, the US Tresury Secretary, said any such sanctions would undermine American authority and "could trigger a global cycle of protectionist legislation".

Mr Paulson is a China expert from his days as head of Goldman Sachs. He has opted for a softer form of diplomacy, but appeared to win few concession from Beijing on a unscheduled trip to China last week aimed at calming the waters.

http://www.telegraph.co.uk:80/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml

+++++++++++++++++++++++

The columns on this thread have discussed this item at an early stage.

There are a number of problems associated with a too strong realignment in too short a time.

Besides, most countries in the East are offenders by pegging their currencies to the USD.

Actually, Japan is the worst offender because of their yen carry trade policy.

Gerry

stolwyk

11-08-2007, 01:29 AM

U.S. Stocks Are at Start of Bear Market, Faber Says (Update1)

By Eric Martin and Carol Massar

Traders at the New York Stock Exchange Aug. 10 (Bloomberg) -- U.S. stocks are at the beginning of a bear market in which benchmark indexes may fall more than 30 percent, investor Marc Faber said.

Faber, managing director of Marc Faber Ltd. and publisher of the Gloom, Boom & Doom Report, said losses in mortgage-backed bonds are not ``contained or easily solvable'' with interest rate cuts by the Federal Reserve. He predicted in an interview today that the Dow Jones Industrial Average will drop below 12,000.

Faber said investors conditioned to buy stocks on dips helped push the indexes to records after sell-offs in February and June. Emerging markets are particularly vulnerable to a so- called correction, or decline of more than 10 percent, because investors have bought into them heavily, he said. The MSCI Emerging Markets Index has dropped 9.9 percent since climbing to a record on July 23, cutting its gain for the year to 15 percent.

The Federal Reserve yesterday added $24 billion in temporary funds to the banking system, the most since April, amid an increase in demand for cash from banks roiled by U.S. subprime loan losses. Traders are speculating that the Federal Reserve will cut interest rates at an emergency meeting as soon as next week, according to Merrill Lynch & Co.

``I'm very critical of central banks,'' Faber said. ``They may bail out the system, but there will be a cost, and the cost will be inflation.''

Market Calls

Faber told investors to bail out of U.S. stocks a week before the 1987 Black Monday crash, according to his Web site. He correctly predicted in May 2005 that stocks would make little headway that year. The S&P 500 gained 3 percent. He also told investors to buy gold in 2001, before it more than doubled.

On March 29, Faber said the emergence of home loan concerns meant the stock market was unlikely to benefit from the conditions that supported its rally since June 2006. The S&P 500 climbed 10 percent between then and July 19, when it reached a record, and has fallen 6.4 percent since then.

To contact the reporters on this story: Eric Martin in New York at emartin21@bloomberg.net ; Carol Massar in New York at cmassar@bloomberg.net .

Last Updated: August 10, 2007 09:01 EDT

http://www.bloomberg.com/apps/news?pid=20601087&sid=aeYtlAQSOkSk&refer=home

stolwyk

11-08-2007, 04:06 AM

Dorsch: The “Plunge Protection Team” Working Overtime

http://news.goldseek.com/GoldSeek/1186671780.php

stolwyk

12-08-2007, 06:20 PM

How often are the Forecasters right?

http://www.cxoadvisory.com/gurus/

stolwyk

15-08-2007, 04:05 PM

ECB supplies markets with $10B more
But Europe's central bank scales back on liquidity contribution in an effort to wean investors off extra cash.

August 14 2007: 9:47 AM EDT

FRANKFURT (Reuters) -- The European Central Bank added more than $10 billion in extra funds to markets for a fourth day Tuesday but on a smaller scale, as central banks slowly pull out extra cash pumped in to avert panic about a credit squeeze.

Asia's central banks were back to business as usual and although investors remained cautious, there was little sign of the frantic selling of late last week.

Video More video

Some analysts say Asia is the place to look for a good financial bet. CNN's Eunice Yoon has more.
Play video

European shares fell 0.6 percent, but this followed the biggest one-day rally in 15 months Monday. The fall was in line with moves in the United States and Asia, where stocks slipped but bonds edged up as risk appetite remained weak.

Dems take on mortgage meltdown
The ECB said money market conditions were now close to normal, following concerted action by central banks around the world, which have added hundreds of billions of temporary cash since last week.

"The central banks acted quickly to keep the banking system ticking over and that's helped avoid a dramatic liquidity squeeze," said Peter Jolly, head of research at nabCapital.

"But people are clearly still nervous, wondering where the next body is buried."

In a clear sign that the scramble for cash is easing, the Bank of Japan drained ¥1.6 trillion ($13.6 billion) from the country's banking system in two operations, reversing two days of injections as surplus funds drove down the call rate.

The ECB, for its part, withdrew a net €40 billion ($54.78 billion), lending out €7.7 billion ($10.5 billion) for one day. It was the fourth such special operation since last Thursday, but each has been smaller than the previous one as market jitters have eased.

The money tides banks over until the start of the ECB's regular weekly tender on Wednesday, which will provide €310 billion, a €74 billion premium to estimated liquidity needs.

European money markets were little changed on the day. Overnight money bid was 4.02 percent, compared with as much as 4.6 percent during Thursday's squeeze, and just above the ECB's benchmark rate of 4 percent.

"It's miles better than Thursday or Friday," a money market trader at one euro zone bank said. Another trader echoed this view, saying: "The market liquidity situation at the moment, in euros as well as dollars, seems as good as normal."

Return to normal
Central banks have now withdrawn most of the extra cash pumped into markets to calm panic overexposure to complex credit derivatives linked to defaulting U.S. mortgages, since it was made up of short-term lending to banks that must be repaid the next day.

The U.S. Federal Reserve topped up markets with just $2 billion in extra cash Monday, less than banks requested and way below the $38 billion injected Friday, the largest amount for any single day since Sept. 19, 2001.

The Bank of Canada has also progressively cut the size of its liquidity injections and in Australia, the central bank's money market operations were back to something like normal Tuesday.

The Reserve Bank of Australia (RBA) added A$2.6 billion ($2.2 billion) in its regular operation, which was a little higher than average but modest compared to Friday's A$4.9 billion injection.

Still, news that more financial institutions have been hit by the mortgage problems kept the mood tense.

Investment bank Goldman Sachs Group Inc. (Charts, Fortune 500) said it would spend $3 billion to prop up a hedge fund that had been hammered by the recent market turmoil.

Australian mortgage lender RAMS Home Loans Group said it could suffer if the volatility in debt markets continued.

Switzerland's UBS (Charts), the world's largest wealth manager, delivered record earnings for the second quarter of the year, but warned that the upheaval in credit markets is likely to take a heavy toll if turbulent conditions prevail throughout the third quarter.

Will the Fed save the day?

Banks tighten mortgage terms

http://money.cnn.com/2007/08/14/news/international/bc.centralbanks.reut/index.htm?postversion=2007081409

stolwyk

15-08-2007, 04:11 PM

COMMENT:

There is an overall rule in US business which states that monthly redemptions of funds by Investors in Hedge funds occur after the 15th of each month.

Investors need to apply to hedge funds before the 15 of each month.

Hedge Funds may refuse to pay out if they are having problems raising cash in a hurry and they need permission:

"Sentinel told clients in a letter that it has asked the Commodity Futures Trading Commission for permission to halt withdrawals".

So, instead of a run on Banks we are having runs on Hedgefunds instead.

Tonight is the 15th of this month, US time.

Longer term, I was thinking of the DOW falling to 12000 but it could take some time.

It is clear that the world's Central Banks as a whole are very closely cooperating and this has stabilized the US dollar.

The PPT is flat out coordinating the manipulation by allowing the DOW never to fall to much. After all, a 287 points drop is about 2.2% of 13,000, still a high number.

Sofar, not that many companies with credit problems have been mentioned. Wall Street is still being investigated as to credit damage.

The Credit squeeze can best be compared with the reach of a giant octopus with its massive arms. It can reach in all directions of the Credit market, subprime or not. That is because contracts are insured by other contracts and it is the latter which presents problems.

Overall, I am satisfied that sofar the correct levers have been pulled by the Central Banks; after all, the money supply is strongly on the increase without these happenings anyway, so drowning the markets with much more liquidity is not needed at this time.

As to lowering of interest rates, the USD is relatively "strong" again. We need to wait.

I like to add that share prices of some Banks are even now high enough, so if they in turn are pushing cash into some Hedge Funds which they prepared in the first place and already have stakes in, I would'nt worry too much about that.

Sure, the resets of Mortgage interest rates will take place over a considerable time which is probably a good thing as far as the overseas investor in US equities is concerned (I don't hold any DOW or S&P stocks).

This way, the Central Banks and Govts can spread their policies over time. That is preferred above resetting all the relevant mortgages in a hurry.

Of course, the damage to US house prices is another matter altogether I tend to keep this subprime quite separate from the damage to credit markets.

Meanwhile, China, OPEC, Russia are sitting on hefty cash balances and they are well placed to deal with a falling market. Without them, the situation would be different indeed.

Demand for metals and uranium is continuing as well; the influx of cash into China is continuing so I doubt that the gyrations in the US or EU will make much impression on them except it will give them opportunities to invest or take over companies.

Overall, ignoring the noise and paid headlines, the current situation could have been worse, IMHO.

Gerry

Kookaburra

15-08-2007, 04:22 PM

I remain a skeptic about the future of health of the markets. I am completely cashed up and in mostly yen and some $US for the time being. As funds are repatriated with the unwind of the yen carry trade the yen should continue to rise. The US must still remain a safe haven, an while China could undermine the currency it would suffer enormous damage itself so I see the $US being supported in the medium term.

It seems to me we could face a period of deflation now and in that case cash will be king.

stolwyk

17-08-2007, 06:21 AM

16 Aug.

The Japanese investor was only getting 1% on his Japanese bonds and could get close to 5% on US Bonds and even more on NZ Bonds.

Investors therefore sold the Japanese yen and en masse attacked the NZ dollar which rose to 80.55 USD.

Provided the Yen stayed where it was, then there would be a capital appreciation as well when changing back into Yen.

Obviously, the NZ exporter was hurting but salvation came when the Hedgefunds which were also into NZ dollars had to immediately withdraw cash and the Yen carry trade collapsed.

Others, knowing that this would cause a slump in the NZ dollar, piled in as well and together bought back into the Yen and paid back their Japanese loan which was so generously given by the BOJ so as to keep the yen value low and hereby promote exports.

This had the following flow-on effects:
1. Selling the NZ dollar meant that this currency fell to the current 68.34USD, a fall of 15.2%, a bonus to the exporter.
2. Buying back into the yen meant that this is now: USD=116 yen, which has therefore strengthened.
3. The Japanese want a weaker yen, something like: USD=118.5 yen and are therefore buying the USD which has strengthened.
4. THe USD is now 82.1 and has risen well above the 80.0 mark.
5. This has affected the Gold price which has deteriorated to 665. The Australian currency has also moved down: AUS=0.808 and the Gold price in $AUS is now 823.

The unwinding of the Yen trade is still continuing with the late comers now making losses: a weak $NZ and a strong Yen.
At the same time, losses made in holding equities in Australia by NZ holders are softened because the $NZ fell faster and deeper than the $AUS.

The Japanese yen carry trade is in disarray and it will take quite some time to resurrect it. Obviously, it is not popular with many countries as their currencies can be affected. However, US treasury supports it as much of the resulting inflow is used to buy US currency and then the US Bonds.

That is my opinion,

Gerry

stolwyk

17-08-2007, 06:24 AM

It makes good reading that 40 Banks have lent cash to the US Country Wide but of course, in the overall context, credit has stalled and care needs to be taken that the world won't move into a very deep recession. After all, Country Wide is just one problem.

At the moment, inflation is higher than is wanted but as Gold and metals come down, it will at least subside somewhat.

Now the Gold price has moved down and the yen carry trade is close to destruction, the time that the FED needs to act, is coming closer.

The Yen has moved very fast to be now a very low 112 to the USD while Japan wants 118.5 to the USD. Japan can buy more USD to at least improve the situation and this will keeep the USD index at a reasonable level above 80 while more action is being taken. The Yen will be at centre stage in the proceedings.

So, slowly the various items of this jigsaw puzzle have been put into the right wanted slots and so the risk is somewhat declining should the FED take more meaningful action.

It may want more info from Wall Street who are loath to disclose the real problem (The SEC is looking into that), however, the FED by acting too late or not at all will be pushing the world into a deep recession or even depression now with some US economic stats deteriorating. Bernanke would'nt want that.

On the other hand, the FED can't really bail out "less deserving" Hedge funds with a lot of subprime mortgages, so a formula and selective treatment may well be used..

Suffice to say that the Central Banks will also move at the right time.

See what happens.

That is my opinion,

Gerry

stolwyk

17-08-2007, 08:13 AM

The FED also needs to take into account the increasing interest rates to be paid because of the credit crunch and the draining of the Japanese yen carry liquidity, particularly from Australia and NZ.

Higher interest rates are counter productive just now so a dose of liquidity from the FED would lower true private interest rates.

Gerry

Kookaburra

17-08-2007, 10:20 PM

I had drawn up a thoughtful reply to help you stop talking alone and it was lost to a time out function this site seems to now have. Anyway it seems to me your analysis is reasonable. I see a very high risk of widespread deflation. THe Japs already know about this from past experince and may well be happy to sit on large amounts of cash. THis will keen yen liquidity down and sustain its value even if the central bank tries to drive it down. Bernanke will probably ahve to drop interest rates as you say.

Kookaburra

17-08-2007, 10:23 PM

So I dont see gold rocketing up in the medium term. It too will be a victim of deflation. THe full impact of the liquidity cruch is still to hit home since much of the liquidity was driven by Japan anyway. When their funds are withdrawn that must create a downward spiral. The future looks bleak at the moment. However for those with cash the buying opportunities are going to be phenomenal.

stolwyk

18-08-2007, 02:28 AM

Thanks for that.

COMMENT:

The Fed did move by lowering the discount rate from 6.25% to 5.75%. That would suit the Banks.

We are now waiting for the Federal Funds rate to be cut from the present 5.25%. That will be controversial.

Apart from this, a lot more liquidity is needed.

What is the discount rate?

http://www.federalreserve.gov/monetarypolicy/discountrate.htm

___________________________________

ARTICLE:
Fed Cuts Discount Rate to 5.75%, Cites `Downside' Risks

By Brendan Murray

Aug. 17 (Bloomberg) -- The Federal Reserve, in an unscheduled meeting, cut the discount rate to 5.75 percent from 6.25 percent, noting market conditions have deteriorated since it last met Aug. 7.

``Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward, '' the central bank's Federal Open Market Committee said in a statement. ``The downside risks have increased appreciably.''

The FOMC left the overnight federal funds target rate unchanged at 5.25 percent.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a89yMX9v90rc&refer=home
____________________________

COMMENT
I do believe that the FED will move in stages in step with intelligence received. Gold rose to 662 for the time being.

The unwinding of the Japanese yen carry trade drained liquidity from the Aussie and NZ economies and the Central Banks had to step in.

The USD went down to the current 81.32 (-0.4)
The Yen has stabilized at USD=114.5 yen, but could move closer to 118.5 by buying the USD whenever the latter falls too quickly.

Gerry

stolwyk

18-08-2007, 02:49 AM

AP
Text of Fed Policy Statements
Friday August 17, 9:36 am ET
By The Associated Press
Text of Federal Reserve Policy Statements

Text of Federal Reserve statements Friday:
Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward. In these circumstances, although recent data suggest that the economy has continued to expand at a moderate pace, the Federal Open Market Committee judges that the downside risks to growth have increased appreciably. The Committee is monitoring the situation and is prepared to act as needed to mitigate the adverse effects on the economy arising from the disruptions in financial markets.

ADVERTISEMENT

Voting in favor of the policy announcement were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Richard W. Fisher; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Michael H. Moskow; Eric Rosengren; and Kevin M. Warsh.

To promote the restoration of orderly conditions in financial markets, the Federal Reserve Board approved temporary changes to its primary credit discount window facility. The Board approved a 50 basis point reduction in the primary credit rate to 5-3/4 percent, to narrow the spread between the primary credit rate and the Federal Open Market Committee's target federal funds rate to 50 basis points. The Board is also announcing a change to the Reserve Banks' usual practices to allow the provision of term financing for as long as 30 days, renewable by the borrower. These changes will remain in place until the Federal Reserve determines that market liquidity has improved materially. These changes are designed to provide depositories with greater assurance about the cost and availability of funding. The Federal Reserve will continue to accept a broad range of collateral for discount window loans, including home mortgages and related assets. Existing collateral margins will be maintained. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York and San Francisco.

On the Net: http://federalreserve.gov/

stolwyk

18-08-2007, 11:03 AM

COMMENT:

The decrease in the Discount rate (Rate charged to Banks) is beneficial to Banks while this borrowing can in some instances be spread over 30 days and this ought to promote some liquidity. Gold rose.

It is not an answer by itself and won't losen up liquidity to a great extent due to a number of factors, panicky withdrawals is but one and the Countrywide Bank's convoluted treatment by depositors is a good example. Leverage/derivatives remain stumbling blocks. The Discount rate had to be lowered as real interest rates for general borrowing had increased due to credit constraints.

Aussies may not realize what is really going on in this regard in the US where the Bank depositor is looking for safety.

Nevertheless, this action by the FED could be well interpreted as the first major step leading to more to come. Many are waiting for the FED Funds rate to be decreased; this will immediately affect mortgages which are due to be reset. Such a big step could well come later on as we are already starting on the election of a new US President next year and this requires a reasonable financial climate, more so as Bush has been disowned by a number of his own Republicans who consider him to be a real handicap in the election events to come.

The creation of a more benevolent economic time interval leading up to this election is of great importance and should'nt be underrated.

Obviously, greater world liquidity will affect metal and mining stock prices and the first rises have already occurred overnight. It is in Australia's interest that confidence is somewhat restored and for metal prices to recover, no matter that the steps taken sofar by the FED and decisions to come, will be inflationary.

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

Huang Chung

18-08-2007, 11:24 AM

Good post Gerry.

My initial feelings are that this move by the Fed may offer an opportunity to trim our sails a bit - i.e. to exit positions or pay down debt, whilst not completely loosing one's shirt.

Next week may not be the time to leverage up, chasing blue skies and sunshine.

stolwyk

19-08-2007, 07:00 PM

COMMENT:

The Yen carry trade has claimed its victims: investors too slow too act when selling their Australian and NZ investments and trying to pay off their Japanese loans, while both Aus and NZ currencies fell sharply and the Yen rose and now USD=114 yen; the Japanese like it to be 118.5 yen to the US dollar and may well resort to buying more USD so as to facilitate exports.

Meanwhile, some hedgefunds which made ample use of this Yen carry trade have been caught also and will suffer from capital losses on top of their investments of subprime and Alt mortgages (CDOs). These have as yet not managed to sell these investments.

The ECB, the FED and other Central Banks tried to liquify the condition where lenders were loath to support Hedge-and other funds due to suspicion of proven faulty ratings by the main Rating Agencies who were also directly involved in the CDO scandal.

Unfortunately, when the FED issued $60 bill, it did'nt filter down because the PPT companies who were making losses (Goldman Sachs, Morgan and others) claimed the money (No wonder that little was known about the true losses by these companies). Lending Interest rates shot up by some 0.6% while credit was seizing up.

Aug 16: " Fed Governer Poole said in an interview on Wednesday with Bloomberg TV that only a "calamity" would justify an interest-rate cut now, and that "no one has called up and said the sky is falling."
That was quickly answered by the FED who cut the discount rate charged by the FED to Banks- by 0.5% to 5.75% with the proviso that these loans now need to be paid back within 30 days instead of the customary few days. Gold rose. Commodities suffered, particularly those projects which need capital.

The FED Funds Rate remained at 5.25% but it is expected this may fall as well and thereby restore some sanity in the subprime market, assist in the resetting of mortgages and promote liquidity. Any decrease of this rate could have important consequences, including lowering the USD index.

The FED is now buying subprime CDOs; presumably the big Banks are the first to benefit. It may well have to monetize much of it due to mortgage holders walking off their properties.

The biggest problem concerns the leverage used by Hedgefunds while the contraction of credit has spread to the wider market, stopping buyouts, IPOs and raising of capital on a number of occasions. Total derivatives amount to $400 trillions, a massive sum. One can expect some heavy unwinding where possible but this will take time. When resets of mortgages take place, expect more fallout.

The only positives are the Chinese Olympic games coming up - the Chinese don't want to upset the current trade with the US - and now elections for the US President will take place next year, the FED will do everything to improve the economic picture from now on. However, the question about derivatives and leverage remains.

Gerry

stolwyk

21-08-2007, 08:33 AM

COMMENT:

The FED and other Central Banks have made emergency loans to Banks to facilitate credit which had more or less seized up.

That is to continue but spread over time. In the meantime, it has become more expensive to borrow money and in the US, conditions have tightened.

The FED has decreased the discount rate by 0.5% but left the Federal Funds rate in tact.
Also, the 90 day bill rate yield has come down and so, the spread has changed. Bringing down the Federal Funds rate as well, would remedy this situation to some extent apart from facilitating credit and resetting mortgages.

While the FED is not keen to do that, it may have to in order to settle markets. Next year a new President will be selected and the Republicans want a reasonable economy before that.

It would also result in a rise in the stock markets but the USD needs to be watched.

Meanwhile, the Yen has softened, now 115.3 to the dollar. If it keeps rising then we could be back into the Japanese yen trade once again with its increase in liquidity.

The PPT will watch Gold very closely while waiting for the next move from the FED.
__________________________________________

If we split the subprime issue into 3 problems:

1. As it affects the homeowner and the builder- the latter may well be sitting on a lot of expensive land: yes, a Fed rate cut would assist as it would free up sales to some extent and prevent private bankruptcies: owners vacating their property by handing in the keys. It would slow down the slide in house prices.

I do believe that the FED Funds rate will be cut shortly for 2 other reasons:
Bernanke has suddenly dropped the word "inflation" after having used it many times in previous announcements.
Cutting the rate will be complementary to and reinforce the overall positive prospects of other measures taken and to be accepted in the future.

2. As it affects the Banks and Institutions.
Yes, it would be positive as it would revalue mortgages to some extent. Of course, some COD's can't be brought back to life, however, Pension-and other funds would appreciate a cut. More credit will flow although lending standards will be tighter.

3. As it affects the Derivative and leverage practitioner.
Provided the Fed Fund rate is cut, these may marginally benefit but this is the area of the great unknown because information is hard to come by. The risk is very great that a big hedge fund may capitulate and it is this chapter which could prove an enigma to the Central Banks. It is time that rules be drawn up re the behaviour of this group.

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities

stolwyk

23-08-2007, 09:41 AM

COMMENT:

1. US Treasury and the Illuminati Banks.

Paulson, a heavyweight from Goldman Sachs, one of these Banks, is the US Treasurer.

While in theory, the FED and Treasury are separated, in practice one may think of Bernanke, Paulson and the rest of the FED. Such is Paulson's influence IMHO; his temperament complements that of Bernanke and he is in charge of the PPT as well.

The PPT discusses with other Central Banks ways and means to protect the dollar or at least minimizes the damage to the dollar.

It will be very interested in keeping the Gold price down apart from rigging the markets.
Now with seasonal demand for Gold coming up, its task will be more difficult but it will persist, particularly now while the creation of more credit by the FED and the Central Banks is taking place. This to curtail the overall subprime damage at Banking and Depository Institutions' levels.

2. "Them and us".
The FED did take care of the PPT and other Banks which were damaged by the formation of Hedge funds with CODs, (subprime). It did this in 3 ways:
2.1 Decreasing the discount rate by 0.5% to 5.75%.
2.2. Increasing the time of lending from a couple of days to 30 days. (In practice, these Banks could borrow for much longer by handing in the cash, then taking it out again). It is still possible that the actual PPT Banks may even borrow this money at a lower rate.
2.3 Sofar, the tax payers' Fannie May and Freddie have been stopped from increasing their holdings of mortgages (Most likely because there is fear that they would buy in CODs and their reputation already is a poor one, anyway).

Instead, the FED now buys mortgages and that would suit the beleaguered PPT companies whose Hedge Funds are neck deep in these COD instruments.
However, in theory, the FED will buy mortgages from everywhere.

It will be interesting to know the real buy-ins rather than the published data. Suffice to say that the taxpayer is bailing out these and other Banks/Institutions. However, this buying as well as the 30 day grace in borrowing from the FED will loosen up credit.

3. Paulson tends to think that the measures taken sofar will loosen up credit and that it will take time for the effects arising from the combination of private subprime-CODs and associated derivatives to unfold. The DOW seems to think that as well, I believe.

Spreading this load over time has an advantage in that it can be monitored better and more credit by the Central can be released if needed. Some of this credit can be repaid later on as well and possibly, the increase in the money supply can be controlled and the markets rigged by the PPT.

Sudden massive action leading to the issue of more credit than wanted could spook the markets and would be based on poor intelligence.

So, the spreading of these problems over time has its advantages, IMHO.

4. The Discount rate.
Cutting this is wanted by the mortgage holder who fears resetting in October and repeats later on; this would result in more liquidity, although other loans could be paid off.
Paulson thinks that that at this stage, it won't be necessary and he dreads a fall in the dollar because of increased inflation and any capitulation by the FED.

Rather they will be watching the very short time Bonds which yield because of panic, has dropped too far. Increasing this yield and decreasing the spread would indicate that this panic has gone and liquidity is progressing.

Thus, we have a waiting game at the moment. It is still possible that the Discount rate could be decreased by say 0.25 in Sept. This to pacify the electorate, now with the Presidential elections coming up.

5. The Australian economy has not been discussed. Suffice to say that the Chinese still import from this country and the demand is keeping up. And so it that from other fast growing countries, with iron ore at the top of the list. Hopefully, the investor realises this.
China will have its Olympic Games as well and will do everything to make it a success.

That is my opinion,

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

stolwyk

31-08-2007, 09:56 PM

http://news.goldseek.com/InternationalForecaster/1188570153.php

stolwyk

31-08-2007, 10:00 PM

Bush to Expand Government Role to Deal With Subprime (Update2)

By Holly Rosenkrantz

Aug. 31 (Bloomberg) -- President George W. Bush will today announce steps the administration says will help people with subprime mortgages keep their homes.

Bush will let the Federal Housing Administration, which insures mortgages for low- and middle-income borrowers, guarantee loans for delinquent borrowers, allowing them to avoid foreclosure and refinance at more favorable rates, according to an administration official.

The change would affect borrowers who are at least 90 days behind in payments and let them stay in their homes, the official said on condition of anonymity. Bush, in a statement in the White House Rose Garden, also will back proposals to provide tax relief for homeowners who refinance.

Tighter credit and higher borrowing costs threaten the housing market, which has been an engine of U.S. economic growth. Democrats in Congress and the party's presidential candidates have criticized Bush for not taking action to prevent the spread of foreclosures.

The president still opposes Democratic calls to let Fannie Mae and Freddie Mac, the two largest U.S. mortgage finance companies, boost purchases of mortgages as a way to ease lending constraints, White House spokesman Tony Fratto said.

Prevention

Bush's proposals will address ways ``to prevent these kinds of problems from arising in the future,'' Fratto said.

Stocks in Europe and Asia rose, led by mining companies and exporters, before Bush's announcement. The yen fell against all of the world's 16 most-active currencies as the president's plan revives confidence in borrowing in Japan to buy higher-yielding assets and restores ``risk appetite,'' said Kenichi Yumoto, senior currency dealer at Societe Generale SA in Tokyo.

``The news on Bush is going to be positive,'' said Kevin Lilley, who helps manage about $2.5 billion at Royal London Asset Management. ``It will hopefully help keep consumer confidence intact.''

U.S. home resales fell in July to an annual pace of 5.75 million, the slowest since November 2002, the National Association of Realtors reported on Aug. 27. Sales have declined for five consecutive months.

Fed Survey

About 14 percent of banks raised standards for mortgages to their most creditworthy borrowers and 56 percent made it more difficult for people with limited or tainted records to get loans, according to a Federal Reserve survey of senior loan officers in mid-July.

Among the plans Bush will announce is a joint initiative of the Treasury and Housing and Urban Development departments to identify people who are at risk of defaulting on their mortgages, the official said.

Bush wants the government to work with lenders, insurers and others to develop more favorable loan products for those borrowers, the administration official said.

Congress also is looking at ways to minimize the fallout from the collapse of the subprime mortgage market, including rising numbers of foreclosures among borrowers with poor credit or high debt. Democratic presidential candidates also are pushing for action to stem the number of foreclosures.

`Safer Credit'

Christopher Dodd of Connecticut, chairman of the Senate Banking Committee, said in an interview with CNBC last week that he plans to move legislation next month that would expand the FHA's role to ``provide additional avenues for people to get cheaper, reasonable, safer credit'' without relying on subprime loans.

Senator Hillary Clinton, a New York Democrat, said this month she plans to introduce legislation that would ban penalties for people who pay off mortgages early and require federal registration of mortgage brokers.

An administration proposal to give low-income homebuyers an alternative to subprime loans last month was greeted skeptically by Republican senators and congressional auditors, who said it might be too risky.

The FHA's plan to lower down payments and boost loan limits in its lending program doesn't include a pilot project or consider the impact on African-Americans, Senator Elizabeth Dole, a North Carolina Republican, told the Senate Banking Committee last month.

The FHA is trying to steer borrowers away from subprime mortgages that often carry higher fees and interest rates. The administration plan would also give the government the ability to charge different premiums based on buyers' risk.

Bush is holding to his position outlined earlier this month that Congress should first strengthen oversight of Fannie Mae and Freddie Mac before letting the government-sponsored enterprises exceed their current regulatory limits on mortgage holdings.

Fannie Mae and Freddie Mac have said they can help market liquidity by being allowed to buy more of the mortgages and mortgage bonds shunned by investors.

To contact the reporter on this story: Holly Rosenkrantz in Washington at hrosenkrantz@bloomberg.net .

http://www.bloomberg.com/apps/news?pid=20601087&sid=aqd.EXfD4wcY&refer=home

COMMENT: FUTURES are on green

tricha

31-08-2007, 10:02 PM

Gerry - " GOLD, SILVER, PATINUM, PALADIUM AND URANIUM

easy money

31-08-2007, 10:50 PM

IN other words..it does not matter how big a hole you dig..the gov or fed will pull you out....Reminds me of the film...ALICE IN WUNDERLAND.

stolwyk

01-09-2007, 02:59 AM

Bernanke says Fed ready to cut rates; stocks gain
Updated 1m ago | Comment | Recommend E-mail | Save | Print | Reprints & Permissions |

FED MOVES

By Sue Kirchhoff, USA TODAY
JACKSON HOLE, Wyo. — Federal Reserve Chairman Ben Bernanke said Friday that the central bank is closely watching economic developments to see if carnage in the financial markets is having a major impact on the overall economy — and that it stands ready to cut interest rates if it does.
Bernanke did not focus on inflation, which has been the Fed's chief concern, in remarks prepared for the keynote speech at the Fed's annual symposium at Jackson Hole, Wyo.

"The (Fed) continues to monitor the situation and will act as needed to limit the adverse effects on the broader economy that may arise from disruptions in financial markets," Bernanke said in his first public speech since credit and mortgage markets began freezing up earlier this month.

"It is not the responsibility of the Federal Reserve — nor would it be appropriate — to protect lenders and investors from the consequences of their financial decisions," Bernanke said.

But he added that "developments in financial markets can have broad economic effects felt by many outside the markets," and the Federal Reserve must take those into account when making policy decisions.

Stocks gave up some of their early gains Friday after investors were somewhat disappointed Bernanke did not indicate that a cut in the benchmark federal funds rate was imminent. But the major indexes were still higher.

The Fed chairman said the central bank is keeping a close eye on the credit markets and the housing sector for signs of further deterioration as mortgage lending tightens. And he cautioned that policymaking is more difficult than usual in the current, unsettled environment. While acknowledging that the economy grew at a strong pace in the second quarter of the year, he said economic data bearing on past performance "may be less useful than usual" as the central bank debates interest rates.

"Consequently, we will pay particularly close attention to the timeliest indicators, as well as information gleaned from our business and banking contacts around the country," Bernanke said.

"Inevitably, the uncertainty surrounding the outlook will be greater than normal, presenting a challenge to policymakers to manage the risks to their growth and stability objectives," he said.

Markets widely expect the Fed to cut the target for its federal funds rate. The central bank, which next meets Sept. 18 to debate interest rate policy, has held the rate — the basis for pricing of many business and consumer loans — at 5.25% for more than a year in an effort to tamp down inflation.

The federal funds rate is the amount banks charge each other for overnight loans.

In recent weeks, the Fed has acknowledged that economic outlook has worsened due to financial market turmoil. Rising defaults among borrowers with subprime mortgages — higher-priced loans aimed at consumers with impaired credit — have forced dozens of lenders out of business and hurt investors and hedge funds that bought bonds backed with the mortgages.

That has mushroomed into broader concerns in credit markets, making banks more reluctant to lend, leaving some businesses in a pinch and holding the potential for a deeper decline in the housing market. Bernanke noted that global financial losses have far exceeded even the "most pessimistic projections of credit losses " on subprime loans and noted that investors are still reluctant to take on risk on a variety of other products.

The Fed has taken actions to shore up markets — pumping billions of dollars of liquidity into the financial system and cutting the rate at which banks borrow directly from its discount window. Those actions have helped somewhat to stabilize financial markets, but Bernanke acknowledged that credit is still not flowing freely for commercial or consumer mortgage needs.

Bernanke noted problems in business financing, greater-than-normal volatility in stock prices and a surge in demand for safer Treasury bills. He said banks are worried that may be stuck having to hold loans they can no longer sell in credit markets.

The Fed chairman said the downturn in the housing market has been sharper and deeper than the central bank expected. The slowdown in housing construction has already cut growth, and the freezeup in mortgage markets could put housing into a deeper hole.

"If current conditions persist in mortgage markets, the demand for homes could weaken further, with possible implications for the broader economy. We are following these developments closely," Bernanke said. "Borrowers face noticeably tighter terms for all but conforming mortgages."

Conforming mortgages are those $417,000 or less which can be bought by mortgage giants Fannie Mae and Freddie Mac.

Bernanke cautioned that defaults in the subprime market are likely to intensify in coming months as borrowers with adjustable rate montages see their interest rates reset to higher levels, and find themselves unable to keep up with payments.

Contributing: Associated Press

http://www.usatoday.com/money/economy/2007-08-31-bernanke_N.htm

stolwyk

01-09-2007, 05:19 AM

Bush Proposes Subprime Mortgage Reforms
Friday, August 31, 2007

E-MAIL STORY PRINTER FRIENDLY VERSION
WASHINGTON — President Bush on Friday outlined ways to help homeowners facing foreclosure — the administration's first effort to deal with an expected wave of defaults fueled by the mortgage crisis.

The initiatives, which are not aimed at bailing out lenders or speculators, are designed to help homeowners with risky mortgages keep their houses. In remarks in the Rose Garden, Bush also discussed efforts to keep the problems from arising in the future.

"The government's got a role to play, but it is limited," Bush said. "A federal bailout of lenders would only encourage a recurrence of the problem."

The president insisted that the U.S. economy was strong and could weather recent turbulence in the financial markets. He said the mortgage market, especially the subprime sector, has shown particular strain. One of the most troubling developments has been an increase in adjustable-rate mortgages, which start out with low interest rates, then reset to higher rates after a few years.

"This has led some homeowners to take out loans larger than they could afford based on overly optimistic assumptions about the future performance of the housing market," Bush said. "Others may have been confused by the terms of their loan, or misled by irresponsible lenders. Whatever the reason they chose this kind of mortgage, some borrowers are now unable to make their monthly payments, or facing foreclosure."

A key element of Bush's plan would allow homeowners with good credit histories, but who cannot afford their mortgage payments, to refinance into mortgages insured by the Federal Housing Administration to keep from defaulting.

Earlier this month, Bush predicted that the ongoing decline in the housing market wouldn't become precipitous, but would result in a "soft landing."

He rejected any direct government aid to homeowners losing their houses to foreclosures, saying he only supported federal government help that would encourage refinancing and educate prospective home buyers about risky mortgage terms

"Anybody who loses their home is somebody with whom we must show enormous empathy," the president said at an Aug. 9 news conference. "The word `bailout,' I'm not exactly sure what you mean. If you mean direct grants to homeowners, the answer would be no, I don't support that."

On Friday, Bush:

— Urged Congress to pass legislation that would give the Federal Housing Administration more flexibility to help mortgage holders with subprime mortgages.

— Pledged to work with Congress to reform the tax code to help troubled borrowers rework their loans.

— Called for rigorously enforcing predatory lending laws and strengthening lending practices.

Foreclosure and late payments have spiked, especially for so-called subprime borrowers with blemished credit histories or low incomes. Higher interest rates and weak home values have made it impossible for some to pay or to keep up with their monthly mortgage payments. Some overstretched homeowners can't afford to refinance or even sell their homes.

Mortgage foreclosures and late payments are expected to worsen. Some 2 million adjustable rate mortgages are to reset to higher rates this year and next. Steep penalties for prepaying mortgages have added to some homeowners' headaches.

The economy enjoyed a strong revival in the spring although growing troubles in housing and credit markets have darkened prospects considerably since then. The Commerce Department reported Thursday that the gross domestic product grew at an annual rate of 4 percent in the second quarter — the strongest showing in more than a year.

But that growth could be the best showing for some time as the economy continues to be battered by the worst housing slump in 16 years and a widening credit crisis that has sent financial markets on a roller-coaster ride in recent weeks.

http://www.foxnews.com/story/0,2933,295369,00.html

airedale

01-09-2007, 09:46 PM

Gold rose $8/oz at Friday's close in NY.

stolwyk

03-09-2007, 12:53 PM

The Rating agencies have (purposely to some) overestimated the value of the Subprime mortgages and while this has resulted in damage to the mortgage holder, the damage to the COD (Parcels of mortgages) owner, because of leverage which often was 10:1, is much greater.

Unfortunately, these CODs were sold worlwide and nearly all western countries had either Banks or Institutions exposed.

We also have other derivatives involving a couple of hundred trillions dollars. We don't know if the Rating Agencies were active here.

Suffice to say that rules re lending and derivatives are urgently needed.

As time progresses, more becomes known about the Banks' exposure and the availability of credit which seized up apart from lending by some Central Banks.

It appears that if Credit is available, it will be at higher interest rates.
The scene is set for a deepening recession and this is the last thing wanted.

The President has now appointed the FHA as the agency to buy some mortgages.

It is quite possible that before long the FED discount rate will be cut as well. This will increase liquidity and assist in the resetting of ARM mortgage terms.
Also, it may prevent the EU from raising interest rates.

The monetary inflation worlwide is quite high and would further increase by the measures, the President/FED will take to loosen up liquidity.

This could be positive for commodities, The PPT will carefully watch and try to control the Gold price and the USD index while this is taking place.

As mentioned, the Presidential Election year could be a main contributor to any outcomes: The FED and Treasury could well have received their orders from higher up.

That is my opinion,

Gerry

stolwyk

05-09-2007, 10:29 PM

http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=D402468C-17A4-1130-F5D5FE1FCD2ED893

Comment: I believe that the FED is acting like a deer frozen in a search light: too little action, too late.

Ideally, the FED ought to reduce the Funds rate by at least 0.5% in Sept and by another 0.5% in Oct. And even that is late enough as the requirements for a deep recession are progressing now. Looking through the rear mirror is not good enough.

Failing that, the economy could stall and the investor will-as he did in NZ- look for safer investment channels, ie Banks rather than just Finance companies.

Gerry

stolwyk

08-09-2007, 05:41 PM

This was discussed in the "Trouble at Mill" series but here is a summary:

Pressure point:
1. Subprime mortgages. Although the damage is substantial unless further measures are taken, this by itself being the starting point of the flow, could be controlled by the Central Banks. If inaction occurs, expect a very deep recession, considering that the US economy has only patches of growth and less consumption and hence less GDP, can be expected.

2. COD's, where mortgages are bundled, rated and sold. The Rating Agencies did'nt do the job properly resulting in COD's being overpriced. Many are held by US Banks who onsold these. Unless FHA takes the bulk, they can't be traded and so cash is locked up in these instruments. The situation is bad in the EEC, where Banks refuse to loan to other Banks if COD's are used as collateral. This reduces liquidity, the life blood of trade and expansion of manufacturing/ takeovers/IPO's.

3. Derivatives.
3.1. The COD's were heavily geared, often at more than 10:1. Many COD's are suspected of overvalued mortgages, which if sold, may only realize 40 cents or less per dollar, resulting in massive losses and a credit squeeze. Often contracts may have dates at which these need to be valued, a big task. Many institutions have a rule which mentions that mortgages must have a certain rating; if not, these need to be sold. This results in additional mortgages coming into markets coupled with decreasing demand.

3.2 The market has about US$400-500 trillions worth of other derivatives. However, holding Banks and companies may also hold COD's or are engaged in transactions which can't go ahead because the demand for many COD's has dried up and so no cash is released.

Summarizing, items 2 and 3 are causing liquidity problems and the scope of these can't be determined as info from the companies concerned is only slowly released and then only partially.

That is my opinion,

Gerry

__________________________________________________ ________

Chris Laird discusses the possible derivative meltdown:

Over the last several years, there has been a lot of discussion about the size of the derivatives market, and how much it has grown since 1990. That market was around $20 trillion in size in ‘90, and now is estimated by the BIS to exceed $600 trillion world wide.

Given that amount is 10 or 12 times the entire world GDP of roughly $50 trillion a year, this amount of derivatives is just astounding. The fact is that world currencies are threatened if these go sour. We will get into this in a moment. First, let us discuss some derivative basics.

Derivatives proponents (brokers and bankers) have previously stated that the actual value of derivatives is a fraction of the actual total size, and that all the worry is overblown. The total size is called the ‘notional amount’. For example, if we decided to make a contract on the price of gold for 100 ounces, (a private futures contract between us) the notional amount would be 100 times the price of gold. If the price of gold rose $1, the value of that contract would be $100, but the notional amount is $68,000 (680*100). Derivatives proponents state the cry about the incredible notional amounts is over done, and try to get us to focus on the smaller ‘value’ amounts and not to worry.

Oh yes, we should worry!

Well, the fact is, when we hear of derivatives in $600 trillion amounts, the TRUTH is that this is the actual leverage out, and when values change, the value of the contract varies greatly - according to all that leverage. Notional amount is the actual amount being bet on, pure and simple. The de emphasis of gigantic notional amounts is mere smoke screen.

We have already seen what happened with the US mortgage derivatives, and how trouble in the subprime CDOs, SIVs, etc, spilled into other credit markets and caused panic and threatened systemic banking crises in the EU, US, and Canada. Right now, those central banks are vigorously trying to stem a meltdown in the money markets, as corporate paper (short term money for banks and companies) has pretty much stopped rolling over. The lenders in that market are afraid if they roll the paper over, they will be stuck with loans to companies banks and institutions who are hiding huge derivatives losses. If they roll over the paper (extend) then, if these borrowers go bankrupt, their CP becomes endangered.

This is why the Central banks are having a hard time convincing the CP markets to take advantage of their short term stop gap loans (via the discount window for example), and the central banks efforts to stem the credit meltdown is not working. In the EU for example, Libor (London interbank rates - short term money) rates have hit 9 year highs Tuesday - and bankers are saying that indicates the central bank efforts to revive the CP markets is not working. Bankers set rates among themselves - central banks can only offer their own money at CB rates, but they cannot force banks to loan it out. This is why the CP markets are still in severe trouble.

Bail outs?

We have heard the justified cries that central banks should not bail out all those reckless investors in derivatives, and their bankers and brokers. The trouble is, central banks may not have a choice, right or wrong. If derivative losses spread enough to paralyze the credit markets, then economies will grind to a halt. So, right or wrong, central banks probably have no choice but to try and stem the ongoing losses and credit crisis with bailouts.

Central banks will have to take on the huge losses

Now, we get to the heart of the matter. One of the ways the Fed was able to initially stem the most threatening problems from the mortgage derivatives mess was to buy the troubled stuff that no one wanted at book value. Eventually, central banks may find that is the only way they can stem the credit freeze. Just offering to loan central bank money to the system does not take the losses off peoples book’s.

Even if some short term action pushes some central bank money into the system, the losses stay and will have to be recognized at some point. So, this strategy by central banks of just loaning money will not work, and is only a very temporary stop gap measure. The existence of losses in people’s portfolios is what is stopping lenders from participating in the essential CP markets. If they even suspect someone has mortgage derivatives losses - they will not roll over the CP. The only solution? Central banks have to buy the bad assets (losing derivatives) at book value and take them off people’s hands outright. The Fed has been doing this, offering to take MBS and other non standard collateral for their money. Then, the troubled assets become the Central Bank’s problem.

Now, that amounts to monetization of losses. (Monetization is central banks buying out losses by printing the money for it.) This leads to serious trouble. A central bank can monetize some things, but it surely cannot monetize trillions and trillions of them over and over. If they do that, then the value of their own bonds collapses, and the currency devalues.

Now we get to some numbers. So far, the Fed, ECB, BOJ, and other central banks are all madly trying to flood money into the credit markets so CP will roll over. The trouble is, the CP markets are not normalizing, and eventually, these central banks will realize the only solution will be outright bail outs in gigantic amounts.

So far, CBs have already put out well over half a $trillion so far. We are probably going to see over a $trillion soon. With the notional amounts of derivatives in general exceeding $600 trillion world wide, we see a serious problem arising. You know, I would not expect the entire $600 trillion universe of derivatives to go bad, but, if even a fraction do, (they already are) then CBs end up being on the hook for trillions.

The problem is not made any easier by the fact that over 70% of all derivatives are OTC (over the counter - private one on one contracts). This is why the MBS and mortgage derivatives mess collapsed so fast, because there was no market for them. As losses spiraled out of control, no one wanted to touch them even at something like 5 cents on the dollar. The only solution? Central banks having to be buyers of last resort. The holders of these bad derivatives were forced to keep them on book - and then lost their own credit worthiness.

Another problem is that trouble in one sector of derivatives is like a loose cannon crashing around on the deck of ship in a storm. It spreads damage to other parts of the ship. Hopefully, the loose cannon crashes through the thwarts and falls into the sea….The sea in this case is all the nations’ central banks.

The derivatives ship

The derivatives ship is a multi deck aircraft carrier. Each deck is a sector of derivatives. Now, lets say, one sector of trillions of derivatives goes bad, and no one wants them. The holders (counterparties) then cannot offload them. Soon, the weight of mounting losses causes them to be unable to cover other derivatives they hold, and all of a sudden, the entire web of derivatives becomes in danger because the counterparties cannot now count on each other to cover their bets…The damage spreads from sector to sector, or to different decks.

All of a sudden, a systemic collapse emerges, and even if one institution has counterparties covering their losses (hedges) they find their hedges fail as the other party falls into insolvency.

Thus, the illiquid nature of OTC derivatives causes a gigantic systemic collapse. Right now, central banks are really afraid of this possibility. So far, central banks have NOT stemmed the crisis in CP markets. Libor rates prove that. Now, the CP market is the most vulnerable sector because it is money that has to roll over every 270 days or less. Considering that that market is 2.2 trillion in the US alone, and that it affects all aspects of commerce, we see we have a major problem on our hands. As of last week, about $250 billion of CP in the US has not rolled over (put another way, outstanding CP in the US has dropped by $250 billion, or over 10% of all of it!) in only 3 weeks!

Gold and the USD here

A couple of weeks ago, there was a stamped into US treasuries, and 3 month Treasury yields dropped up to 2% in one day. Eventually, those rates stabilized, but it showed flight into safety and into the USD. Another factor in play is that, as credit markets become illiquid, banks, institutions and companies hoard cash to operate. If they cannot roll over short term paper, they need cash. So, they hoard cash. This is happening right now in the European financial sector right now.

Gold is also benefiting from flight to safety. The advantage gold has in this situation is that, once people realize that Central banks will have to become buyers of last resort for $trillions of bad derivatives, they will prefer gold to actual currencies.

Gold is being whipsawed in two ways. One is flight into gold ultimately. The other is selling of gold during stock sell offs. Every time gold rallies right now, it is subject to panicky selling when investors need cash. And right now, everybody seems to need a lot of cash.

This story is only beginning, and I heard one good comment about this present derivatives / credit crisis that ‘the unwinding of credit and leverage will not be denied’. That means that all the leverage out there right now is subject to waves of unwinding. Considering all the leverage in the stock world, that does not bode well at all.

Will derivatives ultimately kill some currencies?

Now, given the fact that I don’t think Central banks can escape having to monetize more and more trillions worth of derivatives, the question arises ‘what will be the fate of major currencies?’

Central banks have a serious dilemma. If they let the financial system ‘take’ the losses, the credit markets freeze. That will just hammer world economic activity. If central banks do monetize all these growing losses (likely to snowball) then they threaten their own currencies. Both choices are quite bad. Can they work out of this mess? I don’t know. One thing for certain is they will have to act very soon. I think a consensus is building, that, as people begin to understand what is happening, they are going to start dumping some of the major currencies where the derivative losses are centered.

Ultimately, gold should benefit greatly in this situation, although it is subject to some panic selling when institutions need cash during equity crashes.

Also, considering the weakening US, Japanese, and EU economy due to credit contraction, we have one hell of a financial storm building on the horizon. It is a huge black cloud looming on the horizon in front of us. I can see no good reason to be staying in equity markets right now. Cash is definitely king at this time. (gold and precious metals are likely the best cash).

One final note, there has been some talk going around that commodities in general should benefit significantly as these currencies start to have trouble. One major reservation I have about that is that commodities are so sensitive to economic activity. If things really get out of hand in the financial world, I expect some significant economic slowing and falling demand for all the major commodities, and even possibly oil. The world equity bubbles are the only thing still keeping people spending. If those tank, the last standing source of profits for people is likely to start to evaporate. This is not going to be good for commodities.

http://www.kitco.com/ind/Laird/sep062007.html

tricha

08-09-2007, 08:56 PM

Gerry are you still 50% cash, looks like judgement day coming for the USA.:eek:

And Sally Malay do u still hold ??

stolwyk

08-09-2007, 11:13 PM

Yes, I hold SMY. I do hold cash.

Waiting for action from the FED. Apparently 4 of the FED Governors don't grasp the situation.
See what happens.

Gerry

stolwyk

10-09-2007, 02:00 PM

http://www.marketforceanalysis.com/Pubished%20Articles/assets/COMEX%20GOLD%20OPTION%20OI.pdf

stolwyk

11-09-2007, 12:25 AM

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

stolwyk

12-09-2007, 09:28 AM

GOLD 712. Metals rise. USD 79.7 and DOW up 181

Monetary Inflation is on the rise: A classic expected outcome!

The PPT and Central Banks are gradually lowering the USD, imo.

stolwyk

13-09-2007, 01:42 PM

The Next Reflation
Where It Will and Will Not Be
BY CHRIS PUPLAVA

http://www.financialsense.com/Market/wrapup.htm

stolwyk

14-09-2007, 03:12 PM

http://www.sprott.com/pdf/marketsataglance/09-2007.pdf

stolwyk

15-09-2007, 07:27 AM

RCM
Recession Watch
The Wondrous Alchemical Structured Finance Sausage Machine
The U.S. Credit Crunch
Not A Transitory Event

To: GPC and FICO
From: Frank Veneroso

September 5, 2007

https://www.paulvaneeden.com/MediaLib//Downloads/Home/Commentary/Frank%20Veneroso%20on%20the%20US%20Credit%20Crunch %20(263%20KB).pdf

Huang Chung

15-09-2007, 09:05 AM

Gee Gerry, that was some detailed report from Sprott. Must have taken them ages to write that one! :D

stolwyk

24-10-2007, 04:17 PM

Much has been written on the future economy of the US and the world. There are in the main 2 scenarios:

1. Uncontrolled lowering of the USD to say 70 or lower. The global outcome would'nt be good as mentioned previously. The amount of debt is so staggering that the already high monetizing rate of some 13 % could go higher and because other countries have a similar monetizing problem, will affect these as well. The world's Central Banks, the FED and PPT will do everything to prevent this.
The Creditor countries also got much to lose apart from a loss in exports.

Fortunately, China and some other large countries see this coming as well and want to protect their growth rates. This will also protect the countries with resources to some extent provided Gov expenditures remain tight.

2. The scenario of Gradualism.
This seems to be in progress right now with the aim of minimizing the damage. Creditor countries will prefer this as well. From time to time, the USD falls to fast and everything is being done to contain a further fall till much later. The US CPI will be reduced by unrealistic numbers created by the FED. The Gold price will be worked on by the PPT and all markets are constantly under supervision, if possible.

The PPT hopes that a "reasonable" low Gold price can prevail till the New Year, when manufacturing falls off somewhat later. This would cut down demand somewhat. Actually, Gold is cheap as theoretically a 13% monetary inflation should make it rise a lot more than is the case at present, IMHO.

I support item 2,

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

tricha

23-12-2007, 10:34 PM

Boom or Bust?
http://www.kitco.com/ind/Saxena/images/saxena.jpgBy Puru Saxena http://www.kitco.com/images/commmentary/bio.gif (javascript:biowindow('bio.html','BIO','top=50,lef t=200,width=575,height=420,scrollbars=1')) http://www.kitco.com/images/mailicon.gif (puru@purusaxena.com) http://www.kitco.com/images/printicon.gif (http://www.kitco.com/ind/Saxena/printerfriendly/dec212007.html)
Dec 21 2007 10:37AM
http://www.kitco.com/images/commmentary/share/bg_trans.gifwww.purusaxena.com (http://www.purusaxena.com/)

The global economy seems to be slowing down after the massive expansion which has taken place since 2002. Moreover, the recent rout in the equity and credit markets is yet again prompting several prominent analysts to claim that a catastrophic depression lies somewhere ahead. The doom-mongers are back in fashion again; pointing towards high debt levels, US housing recession and the eventual failure of the monetary system when making their dire economic forecasts.
According to this bearish camp, American debt levels are unsustainable, foreigners are on the verge of dumping their US Dollar assets and the world’s reserve currency is about to disappear from the face of this planet. Furthermore, this gloomy bunch is expecting a gut-wrenching decline in US equity and property prices.
So, are the pessimists correct in their assessment or will the US economy continue to muddle through over the coming months while nominal asset-prices move sideways in a ranging pattern? In my view, given the high monetary inflation taking place worldwide, the further scope for aggressive rate cuts by the Federal Reserve and the gigantic pools of money with the Sovereign Wealth Funds, the latter outcome looks more likely. Whilst I am of the opinion that the ongoing credit crisis and the housing recession will continue for the foreseeable future, I expect central-bank sponsored reflation to work yet again. In this modern era of endless money-creation, I anticipate that asset-prices will bounce back sooner rather than later.
After parabolic upward moves in the past few years, the majority of the base metals are currently undergoing a medium-term correction as the market discounts a growth slowdown in the US. With the exception of tin, all the other metals (copper, zinc, nickel and lead) seem to be caught in sharp medium-term pullbacks.
Recently, I have come across a number of reports by various analysts who are claiming that the bull-market in base-metals is now over. I beg to differ with this opinion and feel that we are witnessing a classic and violent correction within the ongoing bull-market rather than a full-blown bear-market.
As far as I am aware, the demand for base-metals will increase for several years as China followed by India continue to improve their infrastructure and build massive highways, airports, seaports, buildings and so forth. Moreover, the Middle-East is also undergoing a boom due to record-high oil and many oil-producing nations are also improving their infrastructure whilst the going is still good. Under the scenario that the price of oil stays high for many years, these nations in the Middle-East will continue to consume more metals for the foreseeable future.
On the supply side, escalating costs and environmental issues are making it very hard for new mining projects to come online and this should further eliminate fresh supplies in the future. Whilst this development is a disaster for the relevant mining companies (as gold company - Novagold recently realised), it is great news for the base-metals bull-market.
The barometer of global economic activity, Dr. Copper, has fallen sharply in the past month (Figure 1) and I suspect it may be about to commence a rally in anticipation of further interest-rate cuts by the Federal Reserve. The recent decline in the price of copper looks like an ongoing consolidation during the long-term bull-market. Once the credit crisis subsides, the price of copper is likely to stage an impressive rally.
Figure 1: Copper correction almost complete?
http://www.kitco.com/ind/Saxena/images/dec212007_1.jpg
Source: David Fuller, Fullermoney
Finally, over in the precious metals arena, both gold and silver are holding up reasonably well after some impressive gains. In my view, precious metals are simply consolidating before launching higher in the weeks ahead. I have little doubt in my mind that the Federal Reserve will slash its interest-rate in the next meeting and this should act as a catalyst for yet another rally in gold and silver.
Both gold and silver have recently broken out from large multi-month consolidations and this usually marks the beginning of an explosive move. So, I would suggest that you consider adding to your positions in this sector as I anticipate a strong rally over the coming months. Personally, I prefer to invest in precious metals via the producing-companies as they provide better leverage than physical bullion. So far in the bull-market, mining shares have outperformed bullion and this should continue in the future. Therefore, depending on your risk appetite, you can consider investing in top-quality gold/silver producers or physical bullion or a combination of both.
As long as the central banks continue to destroy the purchasing power of their currencies via inflation and as long as confidence in the financial system remains low, both gold and silver are likely to provide a safe haven for your hard earned capital.
Puru Saxena

Huang Chung

28-12-2007, 12:07 PM

Events in Pakistan overnight will probably bolster precious metal prices, and maybe oil as well.

tricha

12-01-2008, 11:51 PM

Events in Pakistan overnight will probably bolster precious metal prices, and maybe oil as well.

This would have been Gerrys year, I'm buying into one of his favourites, all will be revealed.

tricha

14-01-2008, 10:12 PM

Gold price goes above $900 level

http://newsimg.bbc.co.uk/media/images/41547000/jpg/_41547928_gold203.jpg The price of gold rose more than 30% last year

The price of gold has reached yet another all-time high, hitting $904.60 an ounce, as investors seek a haven from any potential US recession.
Gold prices have also risen on the back of expectations of further cuts in US interest rates.
The weak dollar has also boosted the metal, as this makes it cheaper for holders of other currencies.
With platinum also hitting a new high, some analysts are now predicting that gold prices could reach $910 an ounce.
'Uncharted territory'
"There is blue sky ahead of us and there is room for gold to go higher," said Darren Heathcote of Investec Australia in Sydney.
http://newsimg.bbc.co.uk/shared/img/o.gifhttp://newsimg.bbc.co.uk/nol/shared/img/v3/start_quote_rb.gif Nobody knows what the next target is for gold http://newsimg.bbc.co.uk/nol/shared/img/v3/end_quote_rb.gif

Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong

"We are in an uncharted territory, really."
Analysts added that gold prices were also being lifted by high oil prices and by speculative trading.
Gold prices increased by more than 30% in 2007.
The price of platinum hit $1,565 an ounce in Monday trading, while silver touched a 27-year high of $16.39.
"Nobody knows what the next target is for gold," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong. "$910, or $920 and even $950, we don't know."

Revhead

14-01-2008, 10:38 PM

Gold has already cruised thru US$910. The currencies are also going balistic!!!!!!!!! Dunno which is leading who there!

tricha

18-01-2008, 10:59 AM

The big picture, one year from now, things can only get worse, much worse.:(

Cheap oil is the driving force for cheap production, The US need lots of it at a cheap price. They are not going to get it. They can not afford to pay for it .

The dollar will surely crash and GOLD will be King till the world moves to alternatives. It will take many years.

China and Indai and the rest of us need it as Well, cheap oil.

This will be the headlines next - Credit card Crash, banks going broke.
Do u get the picture, the big question is what are u doing to protect your wealth ???????
My answer to it is GOLD and OIL stocks.

Gerry would have been having a field day right now!

http://www.321energy.com/editorials/casey/casey011008A.jpg

http://www.321energy.com/editorials/casey/casey011008A.jpg

tricha

19-01-2008, 10:28 PM

Did u read the article recently which stated Kiwi's bougt 300% more physical gold in 2007, Dam wish I was one of them :mad:

Well I bought into a company called CityGold ( CTO ) as a bit of insurance should the worst happen.

U might have read articles by Gerry that implied in the Great Depression gold was king and that included some gold companies, finding the right ones is the problem, most are Dogs.( CTO could be one of those, but no risk, no gain )

There's Just Not Enough Gold; Modeling A Dollar Flight To Gold
By Doug Dillon http://www.kitco.com/images/commmentary/bio.gif (javascript:biowindow('bio.html','BIO','top=50,lef t=200,width=575,height=420,scrollbars=1')) http://www.kitco.com/images/mailicon.gif (montyhigh@gmail.com) http://www.kitco.com/images/printicon.gif (http://www.kitco.com/ind/Dillon/printerfriendly/jan172008.html)
Jan 17 2008 2:47PM
montyhigh.typepad.com (http://montyhigh.typepad.com/)
http://www.kitco.com/ind/Dillon/images/jan172008_5.gif
http://www.kitco.com/ind/Dillon/images/jan172008_6.gif

bermuda

19-01-2008, 10:45 PM

bermuda

19-01-2008, 10:51 PM

Tricha,
Cant wait to meet you next week.

Hey Tricha , I will say it again

Cant wait to see you next week

I think we see the same image

See you soon

tricha

20-01-2008, 12:32 AM

Hey Tricha , I will say it again

Cant wait to see you next week

I think we see the same image

See you soon

Same here, just hope Grace can get our stuff through customs quickly. Seems to be a bit of a delay.
Have not watched the goggle box for 10 weeks.

See the same image, yep, the world is awakening to an inconvenient truth.

ynot

20-01-2008, 12:12 PM

I'm starting to believe $900 is still not too late to invest in gold.
apart from shares, what options do i have for buying gold.
Do you think buying gold bars as opposed to shares is a safer option?

Huang Chung

20-01-2008, 01:08 PM

Just guessing, but won't gold fall sharply if the Fed announces a 50 or 75 BP rate cut at the end of the month?? Wouldn't this be your entry point if you wanted to go long in gold??

Mick100

20-01-2008, 01:46 PM

I'm starting to believe $900 is still not too late to invest in gold.
apart from shares, what options do i have for buying gold.
Do you think buying gold bars as opposed to shares is a safer option?

have you considered putting money into an ETF
There's one on the aussie exchange - GOLD

HC - if/when the fed cuts rates at the end of this month it is likely to have the effect of putting downward pressure on the USD and upward pressure on the price of gold

I agree with ynot - it's not too late to buy gold
The gold miners, particuarly the juniors, have not moved up in price to the extent that they would be expected to considering the recent stength in the gold price - they are getting left behind. It's the large cap gold miners that have benifitted from the strong gold price so far.

Huang Chung

20-01-2008, 01:58 PM

Sumnerned

20-01-2008, 09:16 PM

Somewhat surprisingly oil supply averaged 86.5 mbpd in Q4/07.

Some of this increase is from China which has had significant shortages recently, and is probably not sustainable. Anyone know anything about the other increases?

Info at

http://omrpublic.iea.org/

Recent OPEC increases have largely come about because Angola and Ecuador have joined.

IMO there's still a high probability of oil supply shortage mid 09.

tricha

22-01-2008, 10:44 AM

Mick, my logic was that people would move out of gold and into shares, at least short term......it might only be a sucker's rally, but I was thinking that this would be the impact for a day or two until the credit crunch / recession woes hit home again.

Looks like we had the suckers rally in August Huang and yes a correction in the gold price, primarily because of the US dollar rise, suspect manipulation, maybe China and a few others realise they can not cut the cord just yet. So u might be right Huang we might has a mini suckers rally, we will know tonight, manipulation will see a bounce in the US market tonight, otherwise I see a 500 - 1000 point drop.:eek:

If u believe we are into and its going to be a full blown recession, like me.

Buy some gold producers or physical gold as an insurance policy.

I bought the gold producer which has not been re-rated yet, who could still be a dog, but thats life.

New Year, New Gold Record, Thanks to Investment Demand and Safe-Haven Status
By Jackie Steinitz
21 Jan 2008 at 02:09 PM GMT-05:00

LONDON (ResourceInvestor.com) – Increased investor interest has been the main driving force behind the recent price ascent in gold, according to the World Gold Council (http://www.gold.org/) in its latest quarterly Gold Investment Digest (http://www.gold.org/value/stats/research/index.html).
Total holdings in the gold ETFs tracked by the council increased by 10% during the last quarter of 2007 to 869 tonnes by the end of the year, worth $23 billion. Each of the ETFs enjoyed net inflow with the greatest inflows experienced by the market leader, streetTRACKs Gold Trust [NYSE:GLD (http://finance.google.com/finance?q=NYSE%3AGLD)], whose assets increased by 50 tonnes to 628 tonnes.

Investors in gold futures also added aggressively to their long positions with cumulative net longs on the COMEX and Chicago Board of Trade exchanges rising by 13% in weight and 25% in value during the quarter.
The reasons for the positive investor sentiment are well known, according to the WGC. They include:

Favourable demand and supply dynamics, especially in the light of rising income levels in key jewellery buying markets and the current tight supply conditions.
Rising industry costs, which have put a higher floor under the gold price.
New access channels, such as gold ETFs.
The increasing attractiveness of gold as a hedge, against dollar weakness, rising inflation pressures and rising geopolitical and financial risks.
http://www.resourceinvestor.com/MediaLib/Images/Home/Sections/GoldSilver/SteinWgc2.jpg
The tipping points for the recent $913 an ounce record on 15 January seem to have been a combination of safe-haven buying after former Pakistani Prime Minister Benazir Bhutto’s assassination, and inflation-hedge buying after oil pushed through $100 a barrel.
Price volatility also increased during the last quarter, with the 22-day rolling measure (http://www.gold.org/value/stats/statistics/investment/index.html) used by the World Gold Council rising from 12.4% at the end of Q3 to a peak at more than 25% in early December. However, the council have noted before (http://www.resourceinvestor.com/pebble.asp?relid=21595) that volatility in the commodity markets is often associated with price rallies, as supply squeezes and/or demand hikes change the supply-demand balance which pushes up the price, often simultaneously increasing fluctuations and volatility. Volatility in equity markets by contrast is often associated with falling prices.
Outlook
Although the World Gold Council does not publish explicit price forecasts, there appears to be optimism in the report that the conditions for a sustained rally in the gold price are in place, albeit one with corrections. Specific points noted are that:

Supply will remain tight due in part to continued producer de-hedging: Producer de-hedging has been one of the biggest contributors to the tightness of supply in recent years, according to the digest, as producers have continued to close out unprofitable hedge positions taken out in the late 1990s. It quotes figures published by Virtual Metals, which suggest that the hedge book has declined for 22 consecutive quarters from 101 million ounces in mid-2001 to 29 million ounces by the end of Q3 2007, and anticipates that de-hedging will remain an important theme in 2008 following Anglogold Ashanti’s [NYSE:AU (http://finance.google.com/finance?q=NYSE%3AAU)] announcement that it will close out its 10.6 million ounce hedge book.
http://www.resourceinvestor.com/MediaLib/Images/Home/Sections/GoldSilver/SteinWGC4.jpg

Although jewellery demand may have taken a hit in 2007’s fourth quarter, demand will resurface when the price stabilises: Full data on the supply and demand of physical gold in the fourth quarter will not be available until February, though the report noted that preliminary reports from India (which is the largest consumer of gold, accounting for more than 30% of global demand), have been disappointing; jewellery sales from the important Diwali period are expected to be substantially down from the previous year. Reports elsewhere in the media have noted sales in Dubai (http://www.khaleejtimes.com/DisplayArticleNew.asp?xfile=data/business/2008/January/business_January332.xml&section=business&col=), (sometimes known as City of Gold as it has 600+ gold jewellery shops), were down 30% in the quarter.

Nonetheless, the WGC takes the view that demand is more responsive to price volatility than to the absolute level of the gold price, particularly in Asia where jewellery is repriced on a daily or even hourly basis. It concludes, both from recent experience and from the rising wealth generated by India’s rapidly growing economy, that demand could recover once the price stabilises.

The price outlook may also be helped by new industrial applications: Industrial and dental demand for gold rose by just 3% in the year ending September 2007. But the WGC has joined forces with Nanostellar Inc (http://www.nanostellar.com/)., which has developed a new catalyst, NS Gold TM, for use in the automotive industry which uses gold in addition to platinum and palladium. If adopted, this could boost demand for gold.
The interest rate outlook for the dollar remains negative: This should continue to support demand for gold as a dollar hedge.
Gold’s safe haven status appears to remain intact according to recent research for the WGC: A recent report (http://www.gold.org/value/stats/research/index.html) by Rhona O’Connell commissioned by the World Gold Council examined the performance of gold in five instances of political and financial stress over the last decade, specifically the recent credit crisis, the wake of 9/11, the aftermath of the bursting of the dot.com bubble, the 1998 rouble crisis and the Asian currency crisis of 1997-1998. It concluded that it is fair to regard gold as a safe haven in times of risk. While the price may fall initially in the wake of financial market problems, this can be as gold is acting as an insurance policy and coming to the aid of stricken investors and being sold accordingly. Having used gold to relieve distress if then comes back to the market to reinvest against further tensions that may develop.Gold closed today in London at $871 per ounce.

http://www.resourceinvestor.com/MediaLib/Images/Home/Sections/GoldSilver/SteinWGC1.jpg

tricha

22-01-2008, 11:16 PM

Australian Dollar (javascript:KitcoIndex('charts.htm?AUD','AUD');)-0.57%01/22-04:401.16740.85661002.75-0.09http://www.kitco.com/images/1.gif http://www.kitco.com/images/down.gif-0.01%

Hard to read but the OZ gold price $1002

SBM ( St Babara limited ) had a reasonable quarterly report

http://sa.iguana2.com/cache/2479f3ad8b6d2c41c434eceffb3e71e8/ASX-SBM-291469.pdf

40K of gold produced at a cash cost of $518 OZ and still got hammered today.
Down 22%, god help them if it WAS A BAD ONE

Huang Chung

22-01-2008, 11:37 PM

Question - what is the point of holding gold stocks if they get hammered along with everything else in these dicy times? Doesn't look to be much of a hedge to me........

tricha

23-01-2008, 12:04 AM

Question - what is the point of holding gold stocks if they get hammered along with everything else in these dicy times? Doesn't look to be much of a hedge to me........

The market is in extreme panic at the moment. Good news is irrelevant.

Its an insurance policy, if we follow the US into a recession, ( remembering cash is trash )

If gold keeps rising, some of these gold producers will rake in the cash, some I might add, there are a hundred wantabees.

Picking the right few is the key and there are no warrenty.( just like my belovid BMA Gold) :p

If u go back over Gerrys posts, a lot make sense, buy gold or if u want the leverage buy gold shares.

Happy hunting

tricha

23-01-2008, 12:18 AM

JBmurc

23-01-2008, 08:27 AM

I also recommend CWA warrants -You can buy bullish position in gold silver think my recent 180 gold bull warrant gave me 1000oz gold leverage for 5-6k deposit

-am currently looking at taking another silver 180 day bull warrant

As for CTO tricha I'm also holding and believe we'll see them increase production this year at a low cost rate aswell as increase there proven reserves to well over 10mill oz they do have a potention 50mill oz in there tenaments

-I use to hold MON and may buy a few at this prices if they produced 40k oz in the 500's cost AUD thats 400+ profit an oz even if they can only get to half there goal say 250k oz ann in 09 surely there SP will be alot higher than now

-Gold & silver will really takeoff once some of the major Oil producing countrys want paid in Gold silver or similer back currencys for there presoius I'm sure I've heard theres are talk of alot of them not wanting to be paid in USD

tommy

23-01-2008, 10:41 PM

JBmurc

24-01-2008, 09:16 AM

Hi all,

Now that the stock market is starting to look less attractive, I'm thinking of getting exposure to gold, wheat and corn. Already own ASX:GOLD but a bit boring...

JBmurc you got me interested in trading commodities on CWA:

http://www.cwa.net.au/public/index.php

What is your experience with them? Are they any good? Any input will be appreciated, thanx all in advance :-)

Yeah tommy they are good I do all my trading warrants through a CWA broker am still no expert but they are so any Q's can be answered- doesn't take long to get an account setup either.

-Currently got bearish -cotton, natural gas bullish - live cattle

like to go bullish -gold silver oil soon.

tommy

24-01-2008, 06:51 PM

Thanx for da reply JB,

Will look into CWA... though I think I'll have to read some literature on warrants before taking the plunge, never traded them before :-P

Can you recommend any good sites on learning about warrants?

Definitely agree that being bullish on gold is more than a good insurance policy.

tricha

07-03-2008, 08:52 PM

Get Ready: Here Come the Gold Stocks!
By David Galland
06 Mar 2008 at 01:55 PM GMT-05:00

STOWE, Vt. (Casey Research Advertorial (http://www.caseyresearch.com/)) - You’d have to be a monk living in isolated penury to miss the fact that gold is on a tear. Specifically, it has risen from $277.75 on January 4, 2002 to $990 last week, a gain of 257% in just over 6 years. Over the same period, the trembling S&P 500 is up an anaemic 22%.
In a gold bull market, an investor would expect the profits on gold stocks to be a multiple of those to be had from bullion. That leverage comes from simple arithmetic: once a gold producer covers its production costs, then each 1% rise in the price of gold can translate into a 5%, 10% or even richer improvement in the bottom line. For a company such as Barrick [NYSE:ABX (http://finance.yahoo.com/q?s=ABX); TSX:ABX (http://finance.yahoo.com/q?s=ABX.to)], with 125 million ounces in proven and probable reserves, even a $1 per ounce increase in the price of gold can mean big money.

And so we see that between January 2002 and last week, the gold stocks were in fact up 612%. So far, so good.
Yet, the gold stocks have stalled in recent months; between August 1, 2007 and February 21, 2008 gold bullion rose 42%, but gold stocks were up just 37%.
What’s going on? Is it that, in their concern over the broader equity markets, people have forgotten that gold stocks are associated with gold? Or is something else at work here?
The answer is “something else.”
The Mothball Years
While there are a number of plausible reasons for gold stocks lagging of late, we have come to the conclusion that the true explanation reaches much farther into the past. It’s that the managements of the gold producers have only recently escaped the state of fear they operated under during gold’s 20-year bear market.
Consider: as recently as the year 2002, gold was still trading near $280. Against that number was a cash cost of around $250 per ounce for a typical company. That cost figure is about as low as the number could go, and it was the response of an industry beaten down and huddling in a trench.
Caution lingers after the reason for it has gone. As gold began its upward move in 2002, it did so against the backdrop of an industry still in mothballs and still run by managers whose primary skills were cost cutting and frugality. This is important on a number of fronts.

Having been trained in the acid bath of razor-thin margins, management was intensely sceptical about gold’s rally. They suspected it might be just another bear market trap, ready to punish unwary optimists who parted with cash to ramp up production.

In the hunkered-down years, miners focused on the higher-grade, easy-to-mine material that gave them the best shot at turning a profit, however small that might be. And being in survival mode, they were extremely cautious about buying new equipment or maintaining a large workforce. Employee rosters were reduced to the bare minimum.

Because staying in business was such an urgent goal, they were willing, even eager, to sell future production at a set price - a perfectly rational strategy in a bear market, because it at least assured they would receive a price that covered the known costs.
With all these factors taken together, it’s easy to understand why the industry was slow to respond when gold started rising. In fact, it was only in February 2003, with gold trending over $350, that Barrick Gold Corp., the world’s largest gold miner, began the expensive process of unwinding its hedges. And it wasn’t until November of that year that the company announced it would stop forward selling altogether and would eliminate its entire hedge book.
Once the turning point came – when management finally realized the bull market was for real - the industry began to scramble to catch up. Which, in a choo-choo industry like mining, means hiring and training lots of people, buying or refurbishing the equipment needed to reestablish production on second-tier deposits, upgrading facilities, building expensive new mills, etc., etc. And, of course, dealing with the challenge and expense of unwinding hundreds of millions of dollars worth of forward hedge contracts.
The rebuilding of the gold mining industry, in short, really only began in earnest over the past few years.
The Ugly Duckling Years
As would be expected, the costs associated with rebuilding the industry sent big hits to the bottom line, resulting in the kind of ugly financial metrics that repel institutional investors.
The metrics were not at all helped by the shift away from high-grade ore, because the lower the grade, the more the material you have to dig, hoist, haul and process, meaning increased production costs. In addition, the industry rebuild occurred against a backdrop of generally rising inflation and a falling dollar, which helped push the cash cost of production up by more than double from the mothball years, keeping the miners unattractive as investments.

By contrast, the base metals companies, which had hit bottom earlier, near the end of 1998, had already emerged from the mothball stage, thanks to increasing demand from China and elsewhere. They were, as a result, well on the road to recovery when the big price increases for base metals kicked off in 2004. So, while the gold miners have been widely shunned as ugly ducklings in recent times, the base metals sector has been enjoying salad days, reflected in multi-billion mergers and acquisitions and, of course, sharply higher share prices.
The Golden Years
Here at Casey Research, we are of the firm opinion that, now that the biggest costs related to restarting their industry are behind them, the big gold companies are poised to take off. The proof should come in rapidly improving margins which, lo and behold, we have begun to see in the quarterly reports now being released.
http://www.resourceinvestor.com/MediaLib/Images/Home/Sections/GoldSilver/ABXNEM.png
Just last week, Goldcorp [NYSE:GG (http://finance.yahoo.com/q?s=GG); TSX:G (http://finance.yahoo.com/q?s=G.to)] announced that fourth-quarter profit had nearly quadrupled over the same quarter the year before. And then Kinross announced that it, too, had posted a record quarter, with profits up almost three-fold over Q406. Meanwhile, Barrick reported that net profit for 2007 was 28% ahead of 2006. In addition, Barrick is feeling sufficiently flush (and optimistic) that it’s buying out Rio Tinto’s [NYSE:RTP (http://finance.yahoo.com/q?s=RTP); LSE:RIO (http://finance.yahoo.com/q?s=RIO.l)] 40% interest in the Cortez Hills joint venture for $1.695 billion… cash.
And the exception to this picture of profit eggs finally hatching is only superficially an exception. Newmont announced a loss of $1.8 billion in 2007. But most of it came from a one-time house cleaning - $531 million to unwind 18.5 million ounces of forward gold sales and a $1.6 billion non-cash charge to terminate operations related to merchant banking. Look past those elements, which are an overdue recognition of money that went down the drain years ago, and you find that Newmont’s mining business is actually in a healthy position. Looked at from another angle, Newmont [NYSE:NEM (http://finance.yahoo.com/q?s=NEM)] took these charges now because they could afford to do so and because they felt that the damage to their share price would be softened by the strong performance of their current operations. Now that they’ve cleaned up the books, they too are dressed up to join the profit party.
How to Profit
It won’t be long before others also note the pending improvements to the bottom lines of the big gold companies. The investment herd, we are convinced, is coming and, we expect, coming soon.
How to profit?
First and foremost, you want to be moving into the established producing companies post haste. The gangway on this ship is getting ready to be pulled up.
Secondly, you should seriously consider moving some funds into the higher-quality junior exploration stocks. History has proven that, absent an exciting discovery story, the big gold stocks must get in gear before investor sentiment can reach the critical mass needed to ignite the juniors.
History also shows that as profitable as the big gold companies are in a bull market, returns on the juniors can blow those away. Exponentially. This upside, of course, comes with a greater degree of risk.
But paradoxically, this risk has been largely mitigated by the majors’ slow take-off. That’s because, anticipating that the gold stocks would follow the metal higher – and history shows no example of them not doing so – investors have already poured record amounts of money into exploration programs. As a result, we now know which companies have the goods - significant discoveries that juniors have spent tens of millions to define and prove up with the clear intent of selling to the majors.
The missing element, of course, has been that, until recently, the majors didn’t have enough free cash to make those acquisitions. That is about to change.
While you don’t know me and so will have to take my word for it, I am not the type of person to fall in love with any investment. And any time I feel such an urge coming on, I check all my assumptions twice and then check them again. That said, I will also say that I have never been more bullish than I am now on the gold mining sector as a whole, with an added nod to the well-run exploration companies.
©Casey Research, LLC. 2008

tricha

07-03-2008, 09:13 PM

Shayne McGuire: The Early Innings of a Gold Boom

2/26/2008
by John Rubino
http://www.dollarcollapse.com/inp/program/images/img_print.gif (http://www.dollarcollapse.com/iNP/view_printer.asp?ID=64)
My new friend Shayne McGuire is director of global research at Texas’ $115 billion Teacher Retirement System, which means he oversees a vast portfolio of high-grade bonds, Blue Chip stocks, and cash. Not the kind of environment that’s usually hospitable to atavistic assets like gold. Yet he recently published a book—a very good book—titled “Buy Gold Now (http://www.amazon.com/gp/product/0470185880?ie=UTF8&tag=dollarcollaps-20&linkCode=xm2&camp=1789&creativeASIN=0470185880)”, in which he explains his belief that the dollar, U.S. bonds and many stocks are headed south, while gold is going to the moon. Here he is on why this will happen and how best to play it:

DollarCollapse: You're a rarity: A mainstream money manager recommending gold, an asset that usually does well when bonds, your pension fund's mainstay, do badly. Why?

Shayne McGuire: On the surface, gold makes sense in today’s environment. Gold does well when both bonds and stocks are doing badly, when there is insufficient compensation for the risks inherent in owning either asset class. In the 1970s, gold did very well in part because the stock and bond arenas were mine fields. Investors found that pulling money out of financial assets made sense. Simple as it sounds, the concern was with staying away from things that were going down, and this collective concern pushed gold up as more investors bought it, as is occurring today.

Gold fared poorly during the 1980s and 90s in part because there were high yields in the bond market, which rewarded investors moving into that arena during periods of stock market turbulence. But today, a 10-year Treasury bond pays investors less than a 4% yield, a level below inflation, which is beginning to rise again. Who wants a negative return? On the other hand, the stock market’s volatility has doubled in the last year and returns are negative. Now that a recession is on the horizon, gold makes more sense to more people each day and the market is tiny: a small amount of interest is making gold and other precious metals surge in value.

At a deeper level, there are a great many other reasons why gold continues to rise and why I believe we are in the early innings of a gold boom. The dollar, about which we could talk for hours, continues to plunge and there is a multiplicity of reasons why the greenback should stay weak, most notably the monstrous size of our national debt (government and private). The derivatives market, which was negligible 20 years ago, just passed the half quadrillion mark in size, and we know—based on the questionable record of banks’ risk management systems—that this is something to be concerned about. (LTCM, a single hedge fund which had two Nobel prize-winning PhDs helping call the investment shots, nearly brought the global financial system to its knees a decade ago. But back then the hedge fund industry was half the size of today’s, and the derivatives market is more than six times the size then, and several times larger than world GDP.)

Furthermore, there are strains on supply, as the mining industry struggles to increase production, and there are signs that central banks may begin to slow down their sales of gold after decades of dumping. Clearly, to this last point, there has not been a free market in gold. Perhaps we will soon discover gold’s real value, and I think it’s not cheap. Clearly, central banks have impeded a truly free market in gold. In the years ahead we will discover gold’s true value, and I think it’s several thousand dollars higher than what we see today.

I think it makes sense to believe that more and more investors will come to appreciate the value of something tangible that you can hold in your hand, a store of wealth that had been unchallenged for thousands of years until the last 30 or so.

DC: How have your colleagues responded to your coming out for gold?

SM: Judging by their interest in my book, I am surprised at how well many have responded. This was unexpected. Any MBA holder, who has been taught to value almost any asset, hits a stone wall when faced with gold: it pays no dividend or coupon, and without deriving a cash flow, the basis of most assets defined as being financial, there is no conventional way to determine its dollar value. Ultimately, it’s just a rock, right? I wrote my book with this question in mind: how can I convince friends with MBAs, who have never thought seriously about owning gold (and often mock its owners, like me!), that a polished rock could climb in value into the thousands of dollars? I was encouraged to learn that several of my colleagues, who eat, sleep and dream about finance, have decided to buy gold.

DC: Are the problems that have made gold such a good thing to own fixable, or will we have to go through a currency crisis followed by an economic collapse?

SM: I have no crystal ball, so I can only talk about what makes sense to me. The credit explosion (the way up the hill) could only have occurred if there had been credibility in the U.S. dollar, which is ultimately backed by the strength of the mammoth U.S. economy. A smaller economy never would have been able to accumulate debt equivalent to more than 300% of its GDP, as we have today; its currency would have collapsed, as has happened dozens of times in emerging markets in just the last twenty years.

For decades, up until very recently, concerns about the dollar were ultimately silenced by the verdict of the market: collectively, the investment world felt that the dollar could not fall—despite ever-climbing deficits—because it is the world’s currency: all of the powers that be—central and private banks and all governments—would ensure its safety. Japan, Europe, and the newly strengthened emerging markets have accumulated dollars to prevent its collapse and there is a collective sense that they will continue to do so. But now that the value of U.S. assets is in clear decline and the U.S. economy is decelerating more rapidly than any economy I can think of, the credit bubble has been punctured severely.

In 1933, President Roosevelt told the nation that national assets had fallen below the level of national debts in value after the 1920s credit bubble exploded. Today our assets (at least on paper) are worth substantially more than what we owe, but I know that quite a few people noticed in 2006 when a St. Louis Fed paper asked the stunning question “Is the United States Bankrupt?” Many of the Great Depression’s problems were exacerbated by the dollar’s strength: FDR was not able to weaken it even as he tried! Today, we have the inverse situation: all of the world’s major central banks are accumulating dollar reserves in a frantic effort to keep the dollar from collapsing.

I have lived through two currency collapses (in Mexico) and I hope we will be able to prevent one. But the outlook is not good. Currency collapses are always caused by excessive debt, and no nation has ever accumulated more than we have. Our debt is larger than global GDP, and that is without including the tens of billions in unfunded federal liabilities.

DC: How will we know when the dollar has bottomed and gold peaked?

SM: That is a very tough question because we have never faced a scenario like today’s. Former Fed Chairman Paul Volker smothered the gold rally in 1980 with double-digit interest rates that compensated investors for holding bonds during inflationary times. Today, the Fed stands ready to print money and keep interest rates in the low single digits and is ignoring inflation, at least for now, as they deal with the credit crisis.

I think gold will have peaked when the rewards offered for holding traditional assets are sufficient to compensate us for surging risks. If we consider that gold peaked when an ounce of the precious metal was near the value of the Dow Industrials index, then perhaps gold needs to rise at least ten-fold or the Dow needs to fall quite a bit.

Gold is the most underowned major asset class; it is almost completely absent from the vast majority of major funds in the world that exceed $100 million in value, of which there are hundreds if not thousands. Today, these funds can invest in gold with the click of a mouse and a great many of them are beginning to do so. The global asset market is worth around $140 trillion. If one percent of that moved into the miniscule $5 trillion gold market—less than 5% of which actually trades each year—gold’s value would skyrocket. Lacking a P/E or some other conventional investment metric with which to measure its value, I think gold will rise as high as the market will allow it, and I think we will have a speculative craze, just as we had with the Nasdaq. I think $10,000 an ounce is possible. But who can say what the limit is for an asset that has no P/E? Obviously, there will be a time to sell, but I think that is years in the future.

DC: In the meantime, what kinds of gold should people be buying?

SM: I think, as has happened many times before in human history, people will once again become increasingly concerned about the value of paper assets—receipts representing some questionable value—and will look toward physical gold and the rare coins market, in particular. I think the rare coin market could outperform the bullion market in the years to come and I tried to make an argument for this in my book. I prefer physical gold over ETFs and my three favorite coins are Buffalo one-ounce gold coins, pre-1933 Liberty gold coins, and—if you’ll allow me to throw in silver—Morgan silver dollars.

DC: Okay, speaking of silver, how does it fit into your framework?

SM: I personally like silver a lot, but it is a more speculative investment. If you want to bet on a dollar crash, this is a good way to do it. But caveat emptor. During the summer of 2006, silver fell around ten percent in a single day, a very painful thing to watch. Gold is far more stable: on a very bad day, it could fall three percent.

There are more industrial uses for silver, which makes the metal vulnerable in a recession. However, silver is used up in industrial production, meaning that each day there is less silver around, while virtually all the gold that has been mined and refined in world history is with us today.

Although China still has stockpiles of silver that it uses to control prices to some degree, the U.S. Treasury finally has sold off the remainder of the enormous stockpile it has accumulated in the 1930s. Today it holds zero. Hence, central banks cannot interfere in the silver market the way they do in the gold market. This is why I think silver has been so strong of late: hedge funds and other investors have realized that, say, a sudden announcement that the IMF is dumping silver could never happen, as just occurred with gold.

DC: Will we ever use gold as money again?
SM: Only if the dollar collapses and takes the Euro down with it.

tricha

13-03-2008, 10:08 PM

Talk about bad timing Gerry, dam u would have had a field day, it has all come to fruition. Always said one day you would get this right and unfortunately the day is upon us all.
Gold nearly $1000 US and oil nearly $110 :eek:

http://www.kitco.com/images/spot_gold.gif
SPOT MARKET IS OPEN
closes in 12 hrs. 16 mins.Mar 13, 2008 04:59 NY Time Bid/Ask990.30-991.10 Low/High980.60-991.50 Change (javascript:NewWindow('/glossary/LiveSpotGold.html#Change','LiveSpotGold','top=50,l eft=200,width=500,height=350,channelmode=0,dependa nt=1,fullscreen=0,resizable=no,toolbar=0,status=0, scrollbars=1,location=0,menubar=0,directories=0'); )+6.90 +0.70%30daychg (javascript:NewWindow('/glossary/LiveSpotGold.html#30day','LiveSpotGold','top=50,le ft=200,width=500,height=350,channelmode=0,dependan t=1,fullscreen=0,resizable=no,toolbar=0,status=0,s crollbars=1,location=0,menubar=0,directories=0');) +67.10 +7.27%1yearchg (javascript:NewWindow('/glossary/LiveSpotGold.html#1year','LiveSpotGold','top=50,le ft=200,width=500,height=350,channelmode=0,dependan t=1,fullscreen=0,resizable=no,toolbar=0,status=0,s crollbars=1,location=0,menubar=0,directories=0');) +340.10 +52.31%Charts... (http://www.kitco.com/charts/livegold.html)

Crude Oil (javascript:NewWindow('/glossary/crude.html','AU','top=50,left=200,width=525,height =570,scrollbars=yes');)109.78-0.14
Latest Gold NewsNY Time

tricha

14-03-2008, 07:03 AM

Gold hits $1,000 for first time

http://newsimg.bbc.co.uk/shared/img/o.gifhttp://newsimg.bbc.co.uk/media/images/44381000/jpg/_44381582_gold_ap203b.jpg
http://newsimg.bbc.co.uk/nol/shared/img/v3/inline_dashed_line.gif

See how gold has climbed (http://news.bbc.co.uk/2/hi/business/7284184.stm)

The price of gold reached a record, trading at $1,000 an ounce for the first time, pushed higher by a weak US dollar and fears about the US economy.
Concerns about a possible US recession are seeing investors buy up commodities such as gold as an alternative to company shares and the US dollar.
Since the beginning of the year the value of gold has increased by about 20%, after it rose 32% in 2007.
Gold will stay high as long as dollar and growth fears remain, analysts said.
"Every bit of bad US economic data boosts gold in two ways," said Fortis Bank.
"First because it reinforces the return of its role as a safe-haven asset, and second because the dollar falls on expectations of further Federal Reserve rate cuts."
Gold is measured and sold in troy ounces. One troy ounce equals 31.1035 grams or 480 grains. One troy ounce is equal to 1.09711 avoirdupois ounce - those widely used to measure weights in the US and UK.
Short term fix?
The dollar fell further on Wednesday against key currencies, including the euro and Japanese yen.
http://newsimg.bbc.co.uk/media/images/44489000/gif/_44489520_world_gold203.gif

At one point, it was worth less than 100 yen for the first time since 1995, while it plumbed new depths against the euro at $1.562.
Analysts are predicting that it could fall further as more details emerge of the losses suffered by banks and hedge funds due to investments centred on the troubled US housing market.
Already many companies have unveiled billions of dollars of losses which has caused credit markets to freeze and has created an environment where there is less money available for consumers and businesses to borrow.
At the same time, there are increasing signs that the US is on the brink of recession.
Official data out on Wednesday showed disappointing retail sales in February.
This has added to the recent drum beat of bad news, including a shrinking of the service sector in January and February, and an unemployment rate that is at its the highest level for five years.
'Cut and inflate'
Despite aggressive interest rate cuts and White House measures to stimulate consumer spending, it is expected that US rates - currently at 3% - will have to come down further.
Analysts said this will weaken the dollar further and accelerate inflation.
"The Federal Reserve is going to cut and inflate our way out of this credit mess and the implications are going to be higher and sustained inflation," said Ichael Darda, of MKM Partners.
"That's been signalled by not just gold but by virtually every commodity and the dollar." The oil price surged to a fresh high above $110 a barrel earlier, while agricultural commodities, including cocoa and coffee, also rose.

Oil rise sees prices touch $111

http://newsimg.bbc.co.uk/media/images/44487000/jpg/_44487666_oil_getty203b.jpg The cost of petrol is soaring around the world as oil prices rise

Oil prices rose to fresh highs for the seventh trading day in a row as the rush to assets considered safer than the falling dollar continued.
US crude gained more than $1 to touch $111 a barrel, before falling back slightly, while a barrel of London Brent hit $107.77, a new peak.
Investors are putting cash into oil and commodities like gold as a refuge from the dollar and volatile world stocks.
Oil prices rose despite US data showing a surprise rise in crude inventories.
'Intrinsic value'
A report from the US Energy Department's Energy Information Administration showed that US crude supplies rose 6.2 million barrels last week, more than three times the amount expected.
Petrol stocks were also higher than forecast.
Meanwhile, EIA analysts have predicted that oil demand will slow as the US economy, the world's largest oil guzzler, runs out of steam.
And Opec, the group of nations responsible for 40% of the world's oil exports, has echoed this view, refusing to increase output.
"Oil and other commodities have an intrinsic value to the extent that the US dollar depreciates, (oil) becomes relatively cheaper in terms of other currencies, such as the euro," said David Moore, a commodity strategist with the Commonwealth Bank of Australia.
"So you get an adjustment to compensate for that effect."

tricha

24-03-2008, 07:25 PM

Van Eck Gold Fund Manager Talks Market Conditions By Andrew K. Burger
23 Mar 2008 at 05:00 PM GMT-04:00

BAKU, Azerbaijan (ResourceInvestor.com) -- Whether its gold, platinum, uranium, iron or other precious and industrial metals and minerals, Van Eck Global has been at the forefront when it comes to providing investors of all sizes and shapes more and better access to hard and soft commodity markets through its investment funds and ETFs.
Gold is on what’s turned out to be an unprecedented bull run, but with financial and economic conditions worsening, can investors expect the price of gold to continue on its upward course? Commodities markets have always been notoriously volatile – this past week’s sharp and sudden pullback being the latest case in point. And with credit getting even tighter for the large, highly leveraged hedge funds that have contributed greatly to the bull run, smaller investors have even greater cause to be cautious.

Sell-offs and consolidation are part of every bull market, but just how bad will the effect of a collapsing financial system, deteriorating economic conditions and the decline of the U.S. dollar be for gold? To find out, RI spoke with Joseph M. Foster, portfolio manager for the Van Eck International Investors Gold Fund [AMEX:INVX (http://finance.yahoo.com/q?s=INVX)], gold strategist for Market Vectors Gold Miners ETF [AMEX:GDX (http://finance.yahoo.com/q?s=GDX)] and investment team member of the Van Eck Global Hard Assets Fund [AMEX:GHAAX (http://finance.yahoo.com/q?s=GHAAX)].
Interview
RESOURCE INVESTOR:Please briefly identify the key factors influencing the gold price at this point in time and explain in what way, and direction, they are doing so.
JOE FOSTER:In broad terms, the post-Bretton Woods financial system is failing due to years of overly accommodative monetary policies that have left the world awash in U.S. dollars. The symptoms of this financial mismanagement are the development of asset bubbles, excesses in credit creation and a collapsing U.S. currency. This, along with negative real interest rates and a potentially inflationary commodities price cycle are supporting gold as a financial hedge and currency alternative
RESOURCE INVESTOR:Please put gold's quick breach of the $900 level and rapid rise to $1,000 in some perspective. What can we learn from past history and any possible historical analogues you see?
JOE FOSTER:There was a similar rise in percentage terms in 2006 when gold topped out at $730. This was followed by a period of consolidation, which may also be in the cards in the current market.
RESOURCE INVESTOR:Please provide your perspective on the oil-gold price correlation. How positive has it been? Do you see this correlation continuing as long as oil rises or stays above a certain price?
JOE FOSTER:Fundamentally, there is no reason for gold to correlate with oil. Gold is a financial asset and oil is a source of energy. However, when oil becomes an inflation driver then they will move in tandem as investors hedge against inflation with gold. That is what we are seeing today.
RESOURCE INVESTOR:How much of this rise is due to the dollar's decline? The breakdown in housing credit and subsequent credit crunch?
JOE FOSTER:The gold bull market was primarily a dollar-linked phenomenon through 2006. Now, in addition to dollar weakness, we have layered on the weak economy, financial chaos and inflationary pressures. You couldn’t ask for a better scenario for gold.
RESOURCE INVESTOR:Do you expect to see further worsening in broader U.S. economic conditions, recession or stagflation for example? What would this portend for the gold price?
JOE FOSTER:I believe the U.S. is heading into the worst recession in many years and one that could possibly spread throughout the globe. The magnitude of the housing meltdown and the unprecedented failure of the credit markets make it unavoidable. I believe these problems will be supportive of gold for the many years it will take to return the markets to some form of normalcy. It’s an environment in which gold will thrive.
RESOURCE INVESTOR:How and to what degree does the supply-demand balance of bullion factor into the market price and outlook going forward?
JOE FOSTER:Gold has moved to new highs on investment demand. Anecdotal evidence indicates fabrication demand for jewellery has dropped materially. Fabricators would like to see some consolidation before they come back to the market. Markets don’t normally go up in a straight line, unless they are in bubble-mode. I don’t see this gold market as a bubble, so I imagine there will be buying opportunities later in the year.
RESOURCE INVESTOR:How have gold mining company shares performed in contrast? How can investors best determine relative value among gold mining company shares? How do you break down and value them?
JOE FOSTER:Gold shares have generally kept pace with gold; however we haven’t seen the high betas we would like to see across the sector. Many companies have struggled with costs and have had a hard time meeting expectations.
Stock selection is very important. We have several valuation screens and use proprietary modelling. Our performance has been good thanks to companies that are well-managed and have a pipeline of development projects. We’ve also been able to identify early opportunities amongst junior gold and silver stocks.
RESOURCE INVESTOR:How have the rise of ETFs, increasing participation by hedge funds and other investors affected the gold market ... and other commodity markets, for example oil, which were formerly dominated by producers and consumers? Will this continue? Is this necessarily good or bad from an industry perspective?
JOE FOSTER:There’s no doubt that the gold ETF has opened a new door for gold investors; many people and institutions which could not or would not have participated in past cycles. It’s a huge positive for the industry. Some think the ETF is cannibalizing the gold shares. I disagree.
Gold companies have generally done a poor job of managing their business, which is why performance is less than expected. They need to earn the recognition in the marketplace. With the exception of the South Africans, fourth quarter reporting was positive overall. If they continue to meet or exceed expectations, investors will take notice and we should see better share price performance.
RESOURCE INVESTOR:What do you see in the way of a short-term correction in gold, in gold mining company shares? Would you see these as buying opportunities? Why and why not?
JOE FOSTER:The market for gold and gold shares usually sees some weakness as we head into the summer months. Due to the unprecedented and tenuous economic and financial conditions, perhaps this year will be different. In any case, I believe the bull market is far from over and would view a consolidation as a buying opportunity.
RESOURCE INVESTOR:How might investors best distinguish between a short-term sell-off and correction and an actual turning point and reversal in bullish trend?
JOE FOSTER:I don’t think this bull market will end until there is a material change in the way governments manage the fiat monetary system. There is no discipline, the Fed sets the funds rate at artificially low levels, then supplies as much money as the market cares to take. We are witnessing the result. The 1970’s bull market did not end until Paul Volker was finally given the authority to take the painful measures necessary to smash inflation. Once the authorities are finished putting out fires, we will see if they attack the root cause of the problems.
RESOURCE INVESTOR:Do you see gold being at an early or mid-stage of some long-term bullish cycle? Why or why not?
JOE FOSTER:Following on my last response, I don’t have a lot of faith in our government to take tough measures or effectively manage something as complex as monetary policy. I think we are into an era of elevated financial uncertainty that will be prolonged by the looming funding crisis for Medicare and Social Security. Structurally higher costs for food and energy compound the risks. I don’t think we’ve reached the mid-point yet.
RESOURCE INVESTOR:Finally, any recommendations for investors who haven't yet participated in the gold/precious metals markets? For those who have and are looking for ways to better manage their investments?
JOE FOSTER:Gold is a great portfolio diversifier. An allocation to gold or gold shares should be a welcome addition for investors who believe that there are still considerable risks to their other more mainstream investments.
RESOURCE INVESTOR:Any particularly attractive gold mining companies out there? What should investors look for in a mining company?
JOE FOSTER:Our top five holdings are our favourites – Agnico [NYSE:AEM (http://finance.yahoo.com/q?s=AEM); TSX:AEM (http://finance.yahoo.com/q?s=AEM.to)], Goldcorp [NYSE:GG (http://finance.yahoo.com/q?s=GG); TSX:G (http://finance.yahoo.com/q?s=G.to)], Lihir [Nasdaq:LIHR (http://finance.yahoo.com/q?s=LIHR)], Randgold [Nasdaq:GOLD (http://finance.yahoo.com/q?s=GOLd)] and Kinross [NYSE:KGC (http://finance.yahoo.com/q?s=KGC); TSX:K (http://finance.yahoo.com/q?s=K.to)]. All of these have developing projects that will grow their production and keep costs under control. At $1,000 gold, these companies will see some very nice cash flows in the coming years.

airedale

24-03-2008, 09:10 PM

I am pleased to see that Joe Foster has Lihir Gold as one of his top picks.:)

tricha

24-03-2008, 10:26 PM

.................................................. ..................................................

GOLD AND SHARE MARKET CRASHES

There is the: "GOLD IS NO GOOD BECAUSE THE PRICE DIDN'T RISE LAST WEEK" brigade, but few realize that gold stocks are also kept as INSURANCE and often it can be cheap insurance in the right conditions such as exist now IMHO.

Here are a few examples:

THE GREAT CRASH OF 1929:
"Homestake Mining stock rose continuously from $80 in October 1929 to $495 per share in December 1935 - which represents a total return of 519% (excluding cash dividends) during the devastating bear market period.
Contemplate and appreciate the monumental difference in investment returns during a serious bear market. Smart-money invested $10,000 in Homestake Mining (hard assets) in late 1929 - which increased in value to almost $62,000 by December 1935. This represents a compound rate of return of 35% per year in appreciation alone!

"It is meaningful to note that in late 1929 the value of Homestake Mining was about $80 per share. Moreover, during the next six years Homestake Mining paid out a total of $128 in cash dividends.

In fact the 1935 dividend alone reached $56 per share. That's almost a 70% dividend yield payout (basis 1929) in only one year! Indeed, hard asset investments (gold mining shares) were islands of economic refuge during the grueling years of the Great Depression".

________________________________________

THE 1973/74 MARKET CRASH:

The Gold Mining Index, composed of ASA, Campbell Red Lake and Dome Mining, appreciated more than 260% from its 1973 low (40) to its 1974 high (147).

This merits being redundant. During the severe 1973/74 bear market, stocks lost half their value - while gold mining companies almost quadrupled".

http://www.gold-eagle.com/editorials/great_crash.html

NEED I SAY MORE?

Gerry

Readers, please do your own research and you decide if and when to buy, hold or sell any stocks.

tricha

27-03-2008, 08:09 PM

I am pleased to see that Joe Foster has Lihir Gold as one of his top picks.:)

Good gold producers will at $1000 + OZ gold for a while, be making serious coin.

Doug Casey: "Gold Is Going to the Moon"
By Casey Research
26 Mar 2008 at 12:31 PM GMT-04:00

STOWE, Vt. (Casey Research Advertorial (http://www.caseyresearch.com/)) -- As part of our survey of expectations for gold in 2008, one of our BIG GOLD editors interviewed famous contrarian investor and Casey Research Chairman Doug Casey. Here’s his take on what’s to come.
BIG GOLD: Gold has passed its 1980 nominal high. Why do you think it’s breaking out now?

DOUG CASEY: The fact that gold has moved above its 1980 high is meaningful only in an academic way; today’s dollar is worth only a fraction of a 1980 dollar. From here on, it’s best to avoid thinking about anything just in terms of dollars. What’s developing now is likely to be the biggest monetary crisis of the past 100 years, potentially the biggest since the U.S. Civil War. This isn’t a prediction, just an appraisal of the tumultuous possibilities that are opening up. Americans are going to have to learn to think more like Argentines: if an Argentine tried to keep track of value in the local peso, he’d be bankrupt in 5 years.
BIG GOLD: There are those who agree with you about a possible crisis but believe we’ll see deflation instead of inflation, or at least deflation before inflation.
DOUG CASEY: What we’re facing is a monumental monetary crisis that can take one of two forms. It can be deflationary, where billions and billions of dollars are wiped out through bankruptcies and defaults, and the remaining dollars become worth more as a result. Or it can be inflationary, where the world’s central banks keep dollar assets from being wiped out by supporting the issuance of debt - which is what they’re currently doing, by propping up failing banks and homeowners who can’t pay their mortgages. Those are your two alternatives. You can have either one - it’s really a flip of the coin as to which you get.
It’s also possible you can have both at the same time. You could have deflation in some areas of the economy, such as real estate, which is happening now, and inflation in other areas of the economy, where prices are going up, as with food and oil.
I’m of the opinion that government is so big and so powerful now, and the average person – idiotically – relies on it so heavily, that much higher inflation is inevitable. They’re certainly going to do their very best to keep a deflationary collapse from happening, because they all remember what it was like in the U.S. in the 1930s. Yet not too many people think about Germany’s inflationary collapse in the 1920s. It was much more unpleasant.
Inflation is the enemy of the person who works, saves and invests. But it’s the friend of the speculator.
BIG GOLD: Why do you think gold stocks have lagged while gold has taken off?
DOUG CASEY: Gold stocks are a play on gold. But they're also stocks. The best environment for them is when both gold and the general market are moving up, and lately the stock market has been problematical. People are going to panic into gold, because it's cash – money in the most basic form. Gold stocks are not money; they're speculative vehicles. And despite the strength in gold, the costs and risks of finding and building mines have gone up just as fast in the last couple of years. There's no necessity for them to move in lockstep with gold itself. That said, I think gold stocks are really going to howl as gold goes into the Mania stage.
BIG GOLD: The water in the pot is definitely getting hotter. Where do you think gold is going this year?
DOUG CASEY: Gold has been in a bull market since 2001. It’s gone up, on average, about 25% per year compounded, and there’s absolutely no reason the bull market should stop now. On the contrary, there’s every reason to believe that the gold bull market, having gone through its Stealth stage and still being in its Wall of Worry stage, is going to hit the Mania stage. To sell now would be to leave the big money on the table.
My best advice is, be right and sit tight. And that means staying long until you see a golden bull tearing apart the New York Stock Exchange on the front cover of Newsweek magazine, at which point it will be time to sell.
BIG GOLD: What price do you think gold will hit in 2008?
DOUG CASEY: Strictly gazing through a crystal ball, I think it’s going over $1,200, no problem.
BIG GOLD: What about the long-term price for gold?
DOUG CASEY: Just to reach its previous high in purchasing power, gold will have to go over $2,500 – probably more like $3,000 after you discount the phoniness in the government’s CPI numbers. But because this crisis is much more serious than the one in the late 1970s and early ‘80s and much more far-ranging, $3,000 is actually a fairly conservative number. I’ll say it again: gold is not just going through the roof, it’s going to the moon.
BIG GOLD: What advice would you give to readers of Big Gold about how to invest in gold and gold stocks in the coming environment?
DOUG CASEY: The first thing is, you’ve got to have a lot of physical gold in the form of gold coins. Second, make sure a large chunk of those coins is outside the political jurisdiction where you live. If you live in the U.S., they’ve got to be outside the U.S. If you live in Canada, they’ve got to be outside Canada, and so forth. Third, gold stocks are definitely going to howl, so you definitely should have a good position in them.
As important as gold and gold stocks are, though, I suspect we’re going to see foreign exchange controls of some type or description in the years to come. That means if you don’t have assets outside your native country, you’re going to be caught like a lobster in a trap. I think it’s very important to diversify internationally. Buying foreign real estate is one prudent way to do so because, even though there’s been a worldwide property mania, there are still some places where property is very cheap, leaving plenty of upside. In addition, if you pick a locale where you’d like to live, you’ll have a comfortable place to wait things out – which is a serious plus, because I think things in the U.S. are going to get really ugly in the years to come. And most important, the government can’t make you repatriate foreign real estate.
BIG GOLD: What if I don’t have the ability to buy real estate outside the country I live? I know you can have a foreign bank account and a safe deposit box, but I have to report those, so how does that help me?
DOUG CASEY: You have to report a bank account, but you don’t have to report a safe deposit box.
BIG GOLD: What if I have over $10,000 of coins in that box?
DOUG CASEY: It doesn’t matter. It’s just like having a million dollars of foreign real estate – not reportable. Of course they can change these arbitrary laws – probably to make them more restrictive and invasive – at any time.
BIG GOLD: Thanks, Doug, for the practical advice. Anything else you’d like to say to Big Gold readers?
DOUG CASEY: Hold on to your hat; you’re in for the ride of your life.:eek:

airedale

23-09-2008, 11:05 AM

Here is commentary by Mike Swanson on recent action.
Swanson is a long term gold bull
http://wallstreetwindow.c.topica.com/maamgzoabKCYpaKuE6QbaeQCNG/

JBmurc

23-09-2008, 06:38 PM

Pierre Lassonde: Moving Sideways Toward the Next Upside

-- Posted Friday, 19 September 2008 | Digg This Article | Source: GoldSeek.com

As a veteran gold analyst, co-founder/chairman of Franco Nevada Mining Corp., acting chairman of the World Gold Council, and former president of Newmont Mining Corp., Pierre Lassonde knows this sector inside and out. He understands the plight of the juniors and the many influences on gold's behavior. In this exclusive interview with The Gold Report, he predicts limited downside given the accelerating demand for natural resources.

The Gold Report: The downward spiral in the markets just doesn't stop. Junior mining stocks have been decimated, and the gold price went lower than any one predicted, although it seems to be recovering a bit. Do you see this as a repeat of the situation we had in the '70s, and what do you see as the outlook for oil and gold?

Pierre Lassonde: Yes, these are the same forces we had in the '70s. Just be prepared to see both oil and gold at much, much higher prices over the next four or five years after another nine to twelve months of so-so prices.

Today there's no let up in sight on the demand side while the supply side is constrained. There’s nowhere to go anymore to find oil. Something like 85% of all the oil reserves is in the hands of national oil companies.

Look at the resurgence of Russia as a Communist country — every week they seem to pass a new law against foreigners. Other countries are doing the same thing. This hurts mineral exploration. There aren't any great places to go anymore, making it difficult for the world resource companies to satisfy demand.

TGR: Gold in the '70s went from $180 down to $90. Where is gold's downside?

PL: I thought that the floor for gold would have been a lot higher than in the '70s. Demand is far more vigorous than it was. In the '70s the whole jewelry market wasn't nearly as mature. The ETF market didn’t exist. The central banks had it all. So I thought that $800 plus or minus $50 would be the bottom over the next 12 months.

TGR: Would you venture a guess as to what the upside could be?

PL: I've been saying that you’re going to see gold with three zeros after the first number. I just don’t know what that first number is going to be. It could be a one, a two, or a five.

It will depend on how much money we'll print to get out of trouble, which is what they did in '70s and they’re going to do again. Because gold is denominated in the U.S. dollar, that’s the currency to watch. The other thing is a panic effect.

In the '70s gold went to $850. But when you look at the last $150, it happened in a month. That was the panic effect because the real price was probably closer to $700. Will it hit $1,500 or $2,000 in the next five years? I don’t know. A panic effect could push it to $4,000 or $5,000. One thing for sure, we’ve seen $1,000. We’ll see it again and higher. I don’t know how big it’s going to be.

TGR:Do you think ultimately gold will detach from oil and the dollar?

PL: The relationship between oil and gold is not a strong one. I would say it’s a causal or an indirect relationship. The higher the oil price, the higher the inflation, the higher the gold price. That’s the kind of relationship you have.

When you look at the correlation over 20, 30, or 40 years, you find is there is none. It’s one of cause and effect, but there’s not a direct relationship. But there is one direct relationship between gold and U.S. dollars. That relationship is very strong.

Interestingly enough, it doesn’t always work one way. When Volcker arrived in 1977, he started hiking interest rates up and the dollar finally bottomed out that year and started to turn around. It even started to gain against the German mark, the yen, and right through 1978 to 1980, at the same time as gold was going up. So the two went up in tandem. It’s not always a one-way street with the dollar going down and gold going up. There are times, years in fact, where they both go up or they both go down. But when you look at the last seven years, six out of the seven years the gold price has gone up when the dollar has gone down.

TGR: Could both the dollar and gold could go up given the increased ETF and jewelry demand?

PL: I think it’s going to happen. Over the next two or three years you’re going to see the Fed liquefy the market as much as it can because there’s more trouble coming down the road with reset mortgages and defaults, and consumer loans. The Fed will keep on printing money and the confidence in the dollar will continue to fall.

However, over the next 12 months I think the dollar is going to firm up. That’s what happened in '75, ’76. You could see a $1.35 to the Euro. That would not be surprising at all. At the same time you may see gold in the $750-$775 range. Then the confidence in the dollar will start to turn around and will hit a new low before both the dollar and gold turn and go up again for the next two to three years. That will be the final leg of this bull market. But you’re looking at three to five years now. Not tomorrow.

TGR: Would define this stage as the "wall of worry?" We’ve had the stealth move in gold. Are we in the wall of worry before the panic, or do you think it’s going to be different this time?

PL: No, I don’t think it’s going to be any different this time. But the fact is that we’ve had very few discoveries. That absolutely amazes me. The gold recovery started in 2001, so we’re seven years into the cycle. When you look at the discovery rate, it’s around one or two per year. Personally, I’ve never seen this; it's extraordinarily low. And that bodes well for much higher prices at the same time. If you look at the '70s and '80s you had a lot of discoveries. But this time around it’s just not happening.

TGR: What explains that?

PL: Two or three things: The world for mining companies is shrinking. They aren't going to go Venezuela anymore, or to any of the "stanzs" in Russia, nor to a lot of African countries. Back in the 1990s the world was opening up. Today it’s shrinking.

There has been no breakthrough in exploration like we saw back in the '70s and '80s. We saw the advent of heat bleaching, pressure autoclaving, and advances in geophysics. We haven’t seen anything now for 10 or 15 years. So we’re still exploring on an exploration model that’s 30 or 40 years old. We need a breakthrough and you can see it by the cost structure of the industry increasing dramatically. Five, six years ago the cash cost in this industry was below $200. Today you’re looking at $450, $500. That’s quite unbelievable, but it’s a reflection of the paucity of discoveries, plus the inflation of oil and everything else.

TGR: When gold moved from $700 up to $1,000, the juniors didn't participate. Is that different from the '70s?

PL: Back in the '70s there were, at most, 1,000 juniors. Today there are 4,000 to 5,000. In this market liquidity has dried up. You can see it in the turnover volume from January to March. Compare that to the turnover from June to August. Liquidity is a quarter of what it was at the start of 2008. Juniors are dying on the vine for this reason. This situation will continue for another year, maybe two.

TGR: So will it shake out juniors that are not well structured—even those with good prospects?

PL: Everyone will feel the pain. It also presents a tremendous opportunity for well-funded smaller companies to acquire decent prospects. The rest will fall by the wayside or merge with cash-rich companies. Juniors are trading for $5 or $10 million and they’ve got more cash in the bank than their market cap. The market doesn't believe there’s going to be any discovery. There have been no discoveries whatsoever in the diamond space over the past couple of years. So it’s a tough, tough market. What really bothers me is that in the 1980s or 1990s, we saw three to five discoveries of 5 to 20 million ounces each, and upwards of 30 to 50 million ounces a year. That is what makes or breaks the industry. There are no discoveries of that magnitude now.

TGR: Because we haven’t found them or they’re literally not there?

PL: I think it's because we don’t have an exploration model conducive to finding them. But look at Canada. It’s got the second largest landmass after Russia. Has it been all explored? Not a chance. But it’s going to take time and money.

TGR: Will the supply issue become a crisis before we have new discoveries?

PL: Gold supply fell by 4% in the first six months of this year. This will be the seventh year in which production has dropped. It’s probably going to fall more in 2008 than it has in prior years. Australia, Indonesia, Canada, and the U.S. are all experiencing declines. Combine this with the drop off in central bank sales. 2008 will have the lowest central bank sales on record because the bankers have all had theirs head handed to them. They all sold gold for $250, $350, and $400—losing tens of billions of dollars. We could soon reach the point where central bank sales will be non-existent. That represents a loss of 500 tons of gold a year in a 3,000-ton market. That’s huge—nearly 20% of supply. Recycling has declined in the last six months too. Even though demand fell when gold hit $900 and $1,000, the supply has been shrinking just as fast. I don't see gold dropping much below $800—plus or minus $50.

TGR: You’re projecting over the next year or two that the dollar will strengthen. Could that push gold back to $500 an ounce?

PL: In the short run, anything is possible. But when I look at the supply-demand picture, at the growth of India and China's economies, and ETF demand, I can't see gold lower than $750. Could it happen? Sure, it could.

TGR: What are you telling investors to do with their money?

PL: I’m looking at some of the longer-term things that I like in my portfolio and adding to them. I see excellent value in the market right now, particularly in the gold sector. I like cash-flow positive companies trading at less than their net asset value.

TGR: A lot of people are talking about the U.S. entering a depression. You are convinced the Fed will keep printing money—and inflation will continue.

PL: Bernanke's mission is to keep the liquidity flowing. That’s why he rescued Bear Stearns, and will save Fannie Mae and Sallie. Ultimately, his actions will turn the economy around. Once the French and the German economies hit the skids, their interest rates are going to fall and they’re going to do the same darn thing. But we won't see the 12% to 15 % interest rates and inflation that we had in the '70s.

TGR: Why not?

PL: Back then we had structural inflation. The labor unions had more control then; now they have no power. Asia wasn't producing goods at cheaper and cheaper prices. When we talk about the 5.1% inflation we’ve had in the last 12 months, that's the peak for this half of the cycle. The second half will be the same or lower.

TGR: So we’re not going to see runaway inflation?

PL: No. I just don’t see it.

TGR: What are your thoughts on uranium? Do you think the world will turn to nuclear power?

PL: I do, but uranium producers have never been able to withstand prosperity. There is no shortage of uranium. You've seen peak uranium prices. New mines will open in Russia and Kazakhstan and all over the world. You’re not going to see that high price again. The long-term contract price will probably settle in the $40 range.

TGR: So that's it?

PL: Yes, but at $40, there’s enough resource worldwide to make money.

TGR: What about base metals?

PL: I like copper a lot because it's essential for building a nation's infrastructure. You need it in transformers, electrical substations, power distribution—everything. When you’ve got 2.5 billion people moving up the economic curve, the demand is just unbelievable. Every two years, China builds an electrical grid the equivalent of the UK and they’re going to continue to do that for decades. The coal China uses is terrible for the environment. They’re going to have to turn to nuclear power as will India. It takes 10 years to build a nuclear power plant and they’re finding the uranium a lot faster than they’re going to need it. But where is the big production of copper going to come from?

TGR: So the price of copper will go up?

PL: Copper will still come down a bit more. But over the next five to ten years, it will have a better price profile than any of the commodities except for gold and oil.

TGR: Would you recommend bullion?

PL: Absolutely. If you don't want to take time to analyze companies and follow stocks but you want to play the commodity, it's a good way to go. We came out with the gold ETF at the World Gold Council in November 2005. It's grown from zero to 750 tons in three years. It continues to be very popular. We launched the ETF as an alternative investment to the dollar. Now you can literally trade the ETF 24 hours a day, 7 days a week.

TGR: You haven't mentioned silver at all?

PL: It’s not a metal that I follow all that much. Of all of my mining companies and investments, silver represents only a very small portion of the revenue.

TGR: So, to recap, you see this market as a repeat of the '70s; gold could be trading sideways—maybe dropping to $750; and the juniors trading sideways too?

PL: The juniors have been decimated. From here on it’s a matter of surviving for the next two years. The juniors that will get the attention will be those with discoveries or takeovers.

tricha

10-01-2009, 10:00 PM

Gerry knew it, probably grew up with the Great Depression and what has happened, has been touted for 10 years. Hmm.

Sorry Readers; writers who want to be known are joining this site: it is a great site for exhibitionists.

Duty calls. I have here another article from the brilliant writer Dr Kurt Richebacher:

APOCALYPSE LATER -referring to the USA:
http://www.gold-eagle.com/gold_digest_05/richebacher010705.html

"In the third quarter of 2004, consumer spending accounted for 89.2% of real GDP. It is the familiar ruinous growth pattern. A viable economic recovery would require a strong contribution through sharply higher business investment and hiring. Both remain missing, although the recovery is entering its fourth year".

"Euroland's underlying economic performance is better than many commentators portray. Over the past decade, GDP per head has risen virtually at the same rate in euroland as the United States; euroland productivity growth (output per hour) and the rise in the employment rates were slightly faster than in the United States; and to maintain the same growth in GDP per head, U.S. workers have had to work much longer hours than their euroland counterparts."

tricha

19-05-2010, 11:34 PM

Gerry knew it, probably grew up with the Great Depression and what has happened, has been touted for 10 years. Hmm.

WELL lets get real, OZ dollar going down, gold in OZ dollar going up. Interesting quarter coming up for OZ goldminers.It suks, Gerry knew it was coming and now it is here.:mad ;:

http://www.dailyreckoning.com.au/images/dr20100519a.jpg

tricha

21-05-2010, 11:06 PM

http://www.youtube.com/watch?v=z6NfXk7Bvc8&feature=related

tricha

19-06-2010, 09:53 AM

Got your insurance yet ???

Gold on longest winning streak since 1920

http://www.financialpost.com/news/Gold+longest+winning+streak+since+1920/3170416/story.html

tricha

19-06-2010, 10:10 AM

Money will be worth less than the paper it is printed on, the worlds spending addiction will see to that, Gerry would love to be here to see his predictions come real.

The New Economic Reality, Part 3
by Monty Guild & Tony Danaher
Guild Investment Management, Inc.
June 16, 2010
In Part I (http://www.financialsense.com/editorials/guild/2010/0527.html), we discussed the history behind the current worldwide de-leveraging, which is the primary factor determining today’s economic landscape. In Part II (http://www.financialsense.com/editorials/guild/2010/0603.html), we explored the reasons for the current market volatility, and discussed the current game of tug-o-war between two contesting sides; those who anticipate a deflationary depression and those who anticipate inflation. As the contestants pull the rope in one direction and then the other, the market becomes volatile and fear spreads as both sides shout their views from bullhorns. Both Part I and Part II can be accessed on our website www.guildinvestment.com (http://www.mynewsletterbuilder.com/tools/refer.php?s=1531350921&u=21185845&v=2&key=7bf4&url=http%3A%2F%2Fmail.guildinvestment.com%2Fexchwe b%2Fbin%2Fredir.asp%3FURL%3Dhttp%3A%2F%2Fwww.guild investment.com).
Today’s installment, we will discuss potential influences which may tilt the playing field allowing one side or other to gain an advantage in the tug of war.
ONCOMING POSSIBLE INFLUENCES
There are many, but today, let us discuss three that are inflationary and three that are deflationary.
INFLATIONARY

Quantitative Easing by many member countries of the European community and other developed countries.
A new wave of stimulus spending by the U.S. government as it panics and pumps even more money into a banking system (a banking system that is not distributing the money to borrowers).
Continued strong growth seen in China, India, and other leading growth countries. These countries do not depend upon exports to the stalling economies of the world. Much of their economic growth is being powered by their infrastructure and consumer sectors.
DEFLATIONARY

Many over-levered local, provincial, or national governments will be unable to refinance or float new debt.
The oncoming failure of governments and pensions to pay the full amounts that have been promised, resulting in changes of retirement age, pension, and forcing austerity.
At present, the most important deflationary factor is the large cross-holdings of European sovereign debt by the large European banks, thus causing failures in the European banking system. This could cause a major deflationary impact as these countries are less likely to be able to repay the debt held by their own banks.
IN OUR OPINION, IT IS TOO EARLY TO KNOW WHICH EVENTUALITY WILL OCCUR
Our opinion is based on historical analysis and the principle that humans usually choose to avoid problems rather than confront them, especially when that human is a politician whose re-election campaign is at risk.
Historically, the U.S., Japan, and Europe (with the exception of Germany) have all opted for a Keynesian approach to counteracting depression. In other words, they prefer to spend their way to prosperity; running big budget deficits during difficult economic times. Politicians find it much easier to promise gifts to voters than to take them away. Because of this truism, we expect much more quantitative easing (QE) or money printing.
We agree with the prescient Jim Sinclair, who has said that we will have “…Quantitative Easing to infinity”. Quantitative Easing causes currency debasement and currency debasement leads to inflation. Ultimately, a destructive hyper-inflation may develop over the next few years if politicians do not rein in their spending impulses soon.
The alternative policy is to allow a banking system collapse which would be very deflationary, and therefore politically unpalatable.
THE MECHANICS OF CURRENCY DEBASEMENT
How has currency debasement developed in the many countries that have suffered from it over the centuries, and how will it work this time?
To put it simply, Europe and the U.S. are in the habit of spending more than they can raise in taxes, and more even than they are able to borrow. When spending on social programs is cut to rein in expenses, voters object. Fearing for their political future, politicians expand money printing to allow the programs to continue. (Over time, this causes much greater damage to the economy than a cut in spending would cause).
The supply of money increases but the demand for that currency stays constant, causing the value or purchasing power of the money to fall. This is called currency debasement. In recent years, both Europe and the U.S. have begun the process of currency debasement by their money printing exercises. This leads to a downward revaluation of a country’s currency and the increased impoverishment of those who hold long-term bonds and cash over time.
In our mind, the primary question for investors is how long will it take for the value of the currency to collapse?
WHICH INVESTMENTS PROTECT FROM CURRENCY DEBASEMENT?
Historically, gold and income-earning real estate have been the best hedges against currency debasement. In an inflationary economic expansion, fast growing companies, non-precious metals that are used for industrial purposes like steel and copper, or energy sources such as oil, coal, and natural gas, and investments in fixed assets which will rise in value, such as timber and farmland will do well.
Currency debasement is a monetary event that can accompany either a depression in economic activity or a growth in economic activity. An inflationary depression is much trickier and we will discuss that in future letters.
WHAT CAN ONE DO IN A BANKING SYSTEM COLLAPSE?
Even a partial banking system collapse is deflationary.
In our opinion, the biggest risk for European investors today is the collapse of his or her banking institution. Even the fear of this can be deflationary.
We cannot stress enough that depositors should be sure that their assets that exceed amounts insured by government sponsored bank insurance programs (whether they are bank deposits, stocks, bonds, currencies, cash, etc.) are held in a custodial relationship that is by law segregated from the assets of other investors and the assets of the institution itself. Further, depositors should make sure that the contents of that legal structure are audited by an independent auditor at least once a year.
THE BIG PROBLEM AHEAD IS THE THREAT OF A MAJOR EUROPEAN BANKING CRISIS
We anticipate that this event might look something like:
1. Banks are holding bonds of sovereign governments that cannot be repaid. This decreases the value of the banks’ capital, making them bankrupt, and the banks will have to get new capital to survive.
2. The only source of new capital will be their home governments (private and institutional investors will not be willing to participate).
3. Fear will cause runs on deposit institutions. Eventually, banks will be nationalized by their respective countries.
4. Then, in order to raise the capital for the banks, the countries which cannot sell any of their own bonds (for lack of buyers) will print money (QE).
5. The QE will expand the national balance sheet of these countries many times over.
6. Although these countries have printed a huge new supply of money, there will be no increase in the demand for the money, which will lead to a fall in the value of the money (the buying power of the currency falls).
Eventually, this devaluation of the currency (though good for exports) is highly inflationary. This inflation will cause the currency to fall further and a vicious cycle will take hold. This cycle will only end with the successful formation of a new currency partially backed by gold or some other fixed assets like land, real estate, etc.
WHO SUFFERS?
Bond holders, holders of the currencies which have been devalued suffer in any kind of inflation. A banking crisis that leads to a deflation helps bonds at first, but only if the issuer has the wherewithal to pay.
WHO CAN BENEFIT?
Those who hold assets that a failing bank cannot touch (assets that are separate form the banks assets even if held at a bank).
In our opinion, inflation can be experienced both in an economic expansion or an economic depression. In either case GOLD, CURRENCIES of countries with conservative financial management and stable banking systems, REAL ESTATE, and other real assets can do well.
In an inflationary expansion fast growing companies and producers of commodities will also do well. In a deflation, bonds will do well if the issuer can make the payments. Gold often holds its value in terms of buying power even in a depression.
In addition to taking steps to preserve capital during a deflation, there are other opportunities available to investors who have the ability to sell short or find ways to hedge. In coming letters, we will discuss some of these opportunities in more detail. In the meantime, we continue to watch the markets and political events closely to determine how and when the new economic reality will become clearer.
Thanks for listening.

tricha

26-06-2010, 09:32 AM

Got your gold yet ? isn't it beautiful and much better value than paper.?

Saudi gold reserve guesstimate doubles

Page last updated at 16:48 GMT, Monday, 21 June 2010 17:48 UK

http://news.bbcimg.co.uk/media/images/48134000/jpg/_48134106_saudigold.jpg Gold prices have quintupled since 2001

Estimates of the gold reserves held by Saudi Arabia have been doubled to 323 tons after an accounting change.
The Middle East kingdom had previously been calculated by the World Gold Council as owning a mere 143 tons.
The trade organisation said it changed its estimate "as a result of the adjustment of the Saudi Arabian Monetary Agency's gold accounts".
The surprise upward revision may partly be due to previously unknown gold purchases since 2008.
The price of gold has risen at an accelerating pace since 2001, and currently trades at $1,255 per troy ounce, about five times its level of 2001.
In London on Monday, gold surged to $1,265.30 per troy ounce.
"Gold has reached a new all-time high," said Commerzbank analyst Carsten Fritsch.
However, the metal suffered a brief collapse in value during the financial crisis of 2008, from $1,000 to below $700
Analysts say this dip in price may have been used as a buying opportunity by the Saudis.
Gold is treated as the ultimate safe investment by central banks - safer even than so-called "fiat" currencies like the US dollar, because there is a definite limit on the supply of gold.
"I think that it is a trend for central banks in the Middle East to buy more gold to limit exposure to inflation and instability to currency markets," said Pradeep Unni, senior analyst, Richcomm Global Services in Dubai.
"This precious metal is profiting from its status as a 'safe haven' and is likely to remain in strong demand as long as doubts persist about the chances of successfully resolving the debt crisis in Europe," agreed Mr Fritsch.
The precious metal briefly went out of favour in 2008 amid fears of a deflationary depression in the US, which would have increased the purchasing power of the US dollar.
But since 2009, growing market fears over the indebtedness of governments, including the USA, have given the gold market a new fillip.

inghamp

15-08-2010, 10:03 AM

Hi Tricha,

We all have access to this stuff. There is no need to spam it all here. The idea is to encourage discussion.. not spam :-)

tricha

15-09-2010, 12:40 AM

tricha

18-09-2010, 07:59 PM

The gold bubble, r u in yet ?

Jim Rogers: Gold is Headed Higher - Sept. 15, 2010

http://www.kitco.com/KitcoNewsVideo/kitco_news.htm

tricha

18-09-2010, 08:05 PM

Is it all over for America ?
Gold players gain on new record high

The West Australian September 17, 2010, 2:43 pm

http://l.yimg.com/fv/xp/wan/20100917/11/3154909151.jpg (http://l.yimg.com/fv/xp/wan/20100917/11/3154909151.jpg) Bloomberg / Adrian Moser ©

Most gold stocks enjoyed good gains today as the price of gold hit yet another record high above $US1280 an ounce this afternoon.
The precious metal rose to $1280.20 an ounce in Hong Kong trading, after opening at $1274.00-$1275.00.
This followed its previous all-time high of $US1279.50 reached in last night's trade in London.
Traders moved into the safe haven on rising concerns for the global economy after the European Union warned on Monday that fears of a resurgent eurozone debt crisis were likely to stunt the region's economic growth prospects this year.
And yesterday, analysts said that the US economy remained fragile despite a drop in the number of people claiming jobless benefits in the world's biggest economy.
The rise also came amid speculation that the United States may revert to crisis-era spending measures to boost the country's economy as fears grow of a fresh slowdown there.
Analysts expect gold to break the $1300 mark before the end of the year, although they said recent gains could be pared back as investors lock in profits.
Listed gold miners enjoyed strong gains in ASX trade today with market leader Newcrest closing up $1.32, or 3.29 per cent, at $41.50 having hit an all-time high of $41.62 in earlier trade.
Other gold players to benefit included Focus Minerals, which closed up 0.2 cents, or 3.7 per cent, at 5.6 cents, Norton Gold Fields up 0.5 cents, or 2.56 per cent, at 20 cents, Tanami Gold up one cent, or 1.21 per cent, at 83.5 cents and Ramelius Resources up 0.2 cents, or 2.41 per cent, to 85 cents.

tricha

09-11-2010, 09:50 PM

Hi Tricha,

We all have access to this stuff. There is no need to spam it all here. The idea is to encourage discussion.. not spam :-)

You can call it what you like Inghamp, this is real, the next bubble, you are either in early or like Skol watching the ship sail past, while you are sitting at the railway station.:D probably watching the seagulls and feeding them a few chips.

All good things come to an end, the trick is, to be on in and out before the bust.

The Fed, by printing 600 billion dollars of paper has scared the crap out of everyone. You only have to look at history, take Germany early 1920,s to know.( a wheel barrow full of paper to buy a loaf of bread) if you are holding US $, you are going to be caned.

Anyone with half a brain is going to buy gold, thats if you are lucky enough to hold US$, not debt like most of them yanks hold.

Stolwyk was a few years ahead of his time when he started this thread, a dam shame is is not here to finish it. He knew and I think deep down we all knew!:confused:

whatsup

10-11-2010, 10:40 AM

Is this a pause or a turn -- gold-silver and the U S $ ?

JBmurc

10-11-2010, 09:50 PM

Is this a pause or a turn -- gold-silver and the U S $ ?

IMHO It's just getting into gear Silver took so many years being well controlled in a tight 10-20 trading range now like in a blink of the eye it's broken out an driving ahead at $28 with much higher numbers a given IMHO the facts speak volumes

tricha

10-12-2010, 10:24 PM

Is this a pause or a turn -- gold-silver and the U S $ ?

Who knows what is going on, all I know is care is needed.

Dead Cat Bounce - Bernanke Dumber Than Gold - Get Out Of Stocks - Mike Maloney

http://www.youtube.com/watch?v=419aPXb7Uhg

elZorro

11-12-2010, 09:02 AM

Who knows what is going on, all I know is care is needed.

Dead Cat Bounce - Bernanke Dumber Than Gold - Get Out Of Stocks - Mike Maloney

http://www.youtube.com/watch?v=419aPXb7Uhg

The only thing I can't understand is: if gold/silver are going to be the best things to hold, why not producing miners too? Their margins will improve even more than the metals price. This is already happening, and I think you'll find that equipment suppliers to the mining sector are in a boom right now.

Perhaps hyperinflation would mean wages and fuel costs actually work against the extra gross profits miners would make. But a lot of their work is highly automated compared to older mining methods.

STRAT

11-12-2010, 09:05 AM

Who knows what is going on, all I know is care is needed.

Dead Cat Bounce - Bernanke Dumber Than Gold - Get Out Of Stocks - Mike Maloney

http://www.youtube.com/watch?v=419aPXb7UhgHi Tricha.
Are you considering selling all your oil stocks to buy physical Gold right now. What about peak Oil?
Surely you arent going to get out of oil before the Peak Oil story has paid off?

I watched the vid in your link and learned something so thanks for that. Id be wary of swallowing the whole story from anyone who has a book for sale though.

Right now Im having my best year ever and wont be getting off the hamster wheel until it starts to slow.

tricha

11-12-2010, 10:40 AM

Hi Tricha.
Are you considering selling all your oil stocks to buy physical Gold right now. What about peak Oil?
Surely you arent going to get out of oil before the Peak Oil story has paid off?

I watched the vid in your link and learned something so thanks for that. Id be wary of swallowing the whole story from anyone who has a book for sale though.

Right now Im having my best year ever and wont be getting off the hamster wheel until it starts to slow.

WELL Strat, best year ever, I'm having a great year too.:t_up:

But if this dude is correct :confused: when u listen to his story, he makes sound logical sense.
After a few beers last night and listening very carefully to his story I did this. U may like to try it, with a few beers of course.
I dropped the bottle cap onto the carpet. Watch very carefully what happens.:eek2:

The peak oil theory is very much intact, but what happened when we peaked last time :confused:, the market went pear shape and so did oil, it raced down to $35,.
So if his theory is correct and we do the next part of the bounce, oil will be so cheap, because no one will be buying it for a short period of time, so the peak oil theory will not pay off, just like last time.

At the moment I'm about 45% cashed up, I am going to revisit my risk and will probably take cash up to 80%, with the rest in gold stocks.

elZorro , good gold mining stocks that are producing are on the money.

Anyway more food for thought folks, take care and happy hunting :)

$10 Oil? Mike Maloney Schools Bankers on Deflation, Gold and Silver (Part 1 of 2)

http://www.youtube.com/watch?feature=iv&v=uzef43gdupk&annotation_id=annotation_163018

P.S u need to read both parts for it to make sense.

gazprom1

11-12-2010, 11:11 AM

WELL Strat, best year ever, I'm having a great year too.:t_up:

But if this dude is correct :confused: when u listen to his story, he makes sound logical sense.
After a few beers last night and listening very carefully to his story I did this. U may like to try it, with a few beers of course.
I dropped the bottle cap onto the carpet. Watch very carefully what happens.:eek2:

The peak oil theory is very much intact, but what happened when we peaked last time :confused:, the market went pear shape and so did oil, it raced down to $35,.
So if his theory is correct and we do the next part of the bounce, oil will be so cheap, because no one will be buying it for a short period of time, so the peak oil theory will not pay off, just like last time.

At the moment I'm about 45% cashed up, I am going to revisit my risk and will probably take cash up to 80%, with the rest in gold stocks.

elZorro , good gold mining stocks that are producing are on the money.

Anyway more food for thought folks, take care and happy hunting :)

$10 Oil? Mike Maloney Schools Bankers on Deflation, Gold and Silver (Part 1 of 2)

http://www.youtube.com/watch?feature=iv&v=uzef43gdupk&annotation_id=annotation_163018

P.S u need to read both parts for it to make sense.

Hey Tricha,

Thanks for your post. Very informative. I am 100% invested in shares (of available cash) at the moment mainly in the natural resources sector - 90% of profits are off the table invested in physical assets. I am picking POO to be north of US$120 (US$ v. other major currencies is crystal ball gazing) - 35% higher than current levels. I want increase my exposure to oil stocks - I prefer silver/copper to gold. However, I am wary of global uncertainties but cannot see oil at US$10 EVER AGAIN IMHO!!!!!

Wish a successful 2011.

Gazprom

tricha

17-12-2010, 08:38 PM

Hey Tricha,

Thanks for your post. Very informative. I am 100% invested in shares (of available cash) at the moment mainly in the natural resources sector - 90% of profits are off the table invested in physical assets. I am picking POO to be north of US$120 (US$ v. other major currencies is crystal ball gazing) - 35% higher than current levels. I want increase my exposure to oil stocks - I prefer silver/copper to gold. However, I am wary of global uncertainties but cannot see oil at US$10 EVER AGAIN IMHO!!!!!

Wish a successful 2011.

Gazprom

Cheers Gazprom

Successful 2011,lets all hope, but difficult times looming for us all. I do not want to give my 2010 gains back.
$10 would only be briefly, if his prediction comes to true.

Another scenaro would be this.

Hyperinflation Watch – Numbers Don’t Lie

James Turk (http://www.resourceinvestor.com/Pages/Resource-Investor-Author.aspx?key=James Turk)
Published 12/13/2010

http://www.resourceinvestor.com/News/2010/12/Pages/Hyperinflation-Watch--Numbers-Dont-Lie.aspx

Get that crystal ball out.:t_up:

tricha

19-12-2010, 01:22 PM

:scared: The U.S. Dollar Will Collapse in 24 Months :scared:

Your Only Hope: Owning Gold and Silver

By Greg McCoach
Friday, December 17th, 2010
Investors have been shuffling currencies around faster than a game of three-card Monte as the true value of world's paper money is being exposed.
But in the end, the only real winners would have walked away from the table long ago, their pockets stuffed with the only currency that really matters: gold. (https://www.angelnexus.com/o/web/24300)
http://images.angelpub.com/2010/50/6857/dec-2010-gold-bar-small.jpg
The consequences of decades of abuse to the system of credit in the United States are coming to a head. And the gray clouds that loom over the skies of the dollar are growing bolder by the day and darker by the minute.
The cold hard fact is I expect the U.S. dollar to ultimately collapse within 24 short months.
This failure will likely push gold prices to over $5,000 an ounce. Meaning that, even at $1,400 an ounce, gold is still dirt cheap.
Every investor should own gold right now as the ultimate store of wealth that will protect hard work and savings.
As the world begins to learn the true nature of the world's funny money, masses of new buyers will come flooding into the gold market. And this surging demand will be the catalyst that launches the price of gold into the stratosphere.
It's pretty simple...
Most investors are unaware, but the gold market is incredibly small.
There have only been about 175,000 tonnes of gold ever mined. That means there is only 0.9 of an ounce of gold for every person on the planet.
That's why they call it precious! Simply owning a single ounce of gold puts you in a much higher global economic class.
When the oceans of fiat money suddenly try to take a part in the gold market, the law of supply and demand will fundamentally force prices much higher.
But don't put all your eggs in the gold basket
While the price of gold will soar and get most of the attention, it's silver that typically outperforms gold, dollar for dollar invested.
In certain instances when gold prices have doubled, the price of silver has outperformed gold by a factor of more than six-to-one!
World Silverhttp://images.angelpub.com/2010/50/6856/dec-2010-small-silver.jpg

Investment Demand

Investment demand for silver has skyrocketed 522% since 2007.
World governments are hoarding silver; official sales have plummeted 83% in the past three years.
Above-ground silver supplies dropped 86% last year.
Industrial demand for silver has increased over the past decade, despite a 236% increase in prices.
The only problem with silver is that it's not as portable as gold.
You can hold $50,000 worth of gold with your two hands cupped in front of you. You could put that gold into your coat pockets and walk down the street without anybody knowing what you are carrying...
On the other hand, $50,000 worth of silver would take a hand truck to move.
Investors should also consider owning silver for the potential use to buy day-to-day items such as bread and prescriptions drugs, preparing for the time the government declares a “bank holiday” as the crisis in the banking sector exacerbates.
During a bank holiday, checks and credit cards will no longer be accepted as payment for goods and services.
For this reason, I also recommend keeping some cash on hand at all times. I'm not recommending stuffing the mattresses; but it's probably smart to keep a few thousand dollars in 1s, 5s, 10s and 20s around the house.
U.S. Silver Eagles would also be very useful in such an event, as they are considered legal tender in the United States and could be used to purchase groceries.
Why lose sleep?

Ownership of gold (https://www.angelnexus.com/o/web/24300) and silver will become one of the hottest investments on the planet.
The early adopters — those who wisely purchased their positions before the masses come — will sleep well at night while others fret as they watch the purchasing power of their savings evaporate like water in the Sahara.
Good Investing,
Greg McCoach
Editor, Wealth Daily (http://www.wealthdaily.com/)
Investment Director, Mining Speculator and Insider Alert

tricha

13-03-2011, 09:57 PM

Dam, Gerry if u were only still here, u would be in your element. I guess Rome was not built in a day and it did not collapse in a day.
The same would apply to the USA, gold, gold, gold.

Death sentence coming, interest for the USA is out of control.

hyperinflation nation 1 of 3 (peter schiff, ron paul, jim rogers,max keiser,marc faber,)

http://www.youtube.com/watch?v=Qinkg_Oh6Mg

tricha

14-03-2011, 12:30 PM

One for Gerry!

Mar 11, 2011 http://www.caseyresearch.com/sites/all/modules/custom/nmail/templates/images/cdd/none.gifhttp://www.caseyresearch.com/sites/all/modules/custom/nmail/templates/images/cdd/bg-marks.gifhttp://www.caseyresearch.com/sites/all/modules/custom/nmail/templates/images/cdd/none.gifGlobal pension assets are estimated to be – drum roll, please – $31.1 trillion. No, that is not a misprint. It is more than twice the size of last year’s GDP in the U.S. ($14.7 trillion). http://www.caseyresearch.com/sites/all/modules/custom/nmail/templates/images/cdd/none.gifhttp://www.caseyresearch.com/sites/all/modules/custom/nmail/templates/images/cdd/none.gifhttp://www.caseyresearch.com/sites/all/modules/custom/nmail/templates/images/cdd/none.gifhttp://www.caseyresearch.com/sites/all/modules/custom/nmail/templates/images/cdd/bg-twitter.gif (http://twitter.com/home/?status=The+Best+of+the+Week+--+http://tinyurl.com/6flub6j) http://www.caseyresearch.com/sites/all/modules/custom/nmail/templates/images/cdd/none.gifhttp://www.caseyresearch.com/sites/all/modules/custom/nmail/templates/images/cdd/bg-facebook.gif (http://www.facebook.com/sharer.php?u=http://www.caseyresearch.com/cdd/best-week&t=The Best of the Week) http://www.caseyresearch.com/sites/all/modules/custom/nmail/templates/images/cdd/none.gifhttp://www.caseyresearch.com/sites/all/modules/custom/nmail/templates/images/cdd/bg-email.gif (http://www.caseyresearch.com/printmail/27152) http://www.caseyresearch.com/sites/all/modules/custom/nmail/templates/images/cdd/none.gifhttp://www.caseyresearch.com/sites/all/modules/custom/nmail/templates/images/cdd/none.gifhttp://www.caseyresearch.com/sites/all/modules/custom/nmail/templates/images/cdd/none.gifhttp://www.caseyresearch.com/sites/all/modules/custom/nmail/templates/images/cdd/none.gifhttp://www.caseyresearch.com/sites/all/modules/custom/nmail/templates/images/cdd/none.gifThe Best of the Week http://www.caseyresearch.com/sites/all/modules/custom/nmail/templates/images/cdd/none.gifBy Vedran Vuk (http://www.caseyresearch.com/our-staff/vedran-vuk) http://www.caseyresearch.com/sites/all/modules/custom/nmail/templates/images/cdd/none.gifDear Reader,
Welcome to the weekend edition of Casey's Daily Dispatch, a compilation of our favorite stories from the week for the time-stressed readers.
Of course, if you want to read all of the Daily Dispatches from the week, you may do so in the archives at CaseyResearch.com (http://displaycddarchives.php/).

The Driver for Gold You’re Not Watching Jeff Clark, BIG GOLD (http://www.caseyresearch.com/crpmkt/crpSolo.php?id=207&ppref=CDD207XX0311A)
You already know the basic reasons for owning gold – currency protection, inflation hedge, store of value, calamity insurance – many of which are becoming clichés even in mainstream articles. Throw in the supply and demand imbalance, and you’ve got the basic arguments for why one should hold gold for the foreseeable future.
All of these factors remain very bullish, in spite of gold’s 450% rise over the past 10 years. No, it’s not too late to buy, especially if you don’t own a meaningful amount; and yes, I’m convinced the price is headed much higher, regardless of the corrections we’ll inevitably see. Each of the aforementioned catalysts will force gold’s price higher and higher in the years ahead, especially the currency issues.
But there’s another driver of the price that escapes many gold watchers and certainly the mainstream media. And I’m convinced that once this sleeping giant wakes, it could ignite the gold market like nothing we’ve ever seen.
The fund management industry handles the bulk of the world’s wealth. These institutions include insurance companies, hedge funds, mutual funds, sovereign wealth funds, etc. But the elephant in the room is pension funds. These are institutions that provide retirement income, both public and private.
Global pension assets are estimated to be – drum roll, please – $31.1 trillion. No, that is not a misprint. It is more than twice the size of last year’s GDP in the U.S. ($14.7 trillion).
We know a few hedge fund managers have invested in gold, like John Paulson, David Einhorn, Jean-Marie Eveillard. There are close to twenty mutual funds devoted to gold and precious metals. Lots of gold and silver bugs have been buying.
So, what about pension funds?

http://www.caseyresearch.com/sites/default/files/PercentageofGoldHoldingsinaTypicalPensionFund_1_0. png
According to estimates by Shayne McGuire in his new book, Hard Money; Taking Gold to a Higher Investment Level, the typical pension fund holds about 0.15% of its assets in gold. He estimates another 0.15% is devoted to gold mining stocks, giving us a total of 0.30% – that is, less than one third of one percent of assets committed to the gold sector.
Shayne is head of global research at the Teacher Retirement System of Texas. He bases his estimate on the fact that commodities represent about 3% of the total assets in the average pension fund. And of that 3%, about 5% is devoted to gold. It is, by any account, a negligible portion of a fund’s asset allocation.
Now here’s the fun part. Let’s say fund managers as a group realize that bonds, equities, and real estate have become poor or risky investments and so decide to increase their allocation to the gold market. If they doubled their exposure to gold and gold stocks – which would still represent only 0.6% of their total assets – it would amount to $93.3 billion in new purchases.
How much is that? The assets of GLD total $55.2 billion, so this amount of money is 1.7 times bigger than the largest gold ETF. SLV, the largest silver ETF, has net assets of $9.3 billion, a mere one-tenth of that extra allocation.
The market cap of the entire sector of gold stocks (producers only) is about $234 billion. The gold industry would see a 40% increase in new money to the sector. Its market cap would double if pension institutions allocated just 1.2% of their assets to it.
But what if currency issues spiral out of control? What if bonds wither and die? What if real estate takes ten years to recover? What if inflation becomes a rabid dog like it has every other time in history when governments have diluted their currency to this degree? If these funds allocate just 5% of their assets to gold – which would amount to $1.5 trillion – it would overwhelm the system and rocket prices skyward.
And let’s not forget that this is only one class of institution. Insurance companies have about $18.7 trillion in assets. Hedge funds manage approximately $1.7 trillion. Sovereign wealth funds control $3.8 trillion. Then there are mutual funds, ETFs, private equity funds, and private wealth funds. Throw in millions of retail investors like you and me and Joe Sixpack and Jiao Sixpack, and we’re looking in the rear view mirror at $100 trillion.
I don’t know if pension funds will devote that much money to this sector or not. What I do know is that sovereign debt risks are far from over, the U.S. dollar and other currencies will lose considerably more value against gold, interest rates will most certainly rise in the years ahead, and inflation is just getting started. These forces are in place and building, and if there’s a paradigm shift in how these managers view gold, look out!
I thought of titling this piece, “Why $5,000 Gold May Be Too Low.” Because once fund managers enter the gold market in mass, this tiny sector will light on fire with blazing speed.
My advice is to not just hope you can jump in once these drivers hit the gas, but to claim your seat during the relative calm of this month's level prices.
Jeff Clark is the editor of BIG GOLD,

tricha

08-04-2011, 01:14 PM

Got gold yet folks, it's set for it's next leg up.

http://www.resourceinvestor.com/News/2011/4/Pages/The-Dollar--Prices-of-the-SP-500-Gold--Oil.aspx
If the US dollar continues to weaken, in the short run I would view this as a positive for the S&P 500, crude oil and precious metals. If the dollar breaks down to new lows, it should help buoy the S&P 500 and gold prices. Gold has been consolidating for nearly 6 months and a breakout higher from current price levels would make a trip to $1,500 an ounce very likely. I would not be surprised to see gold work even higher than $1,500 an ounce depending on how violent the selloff in the US dollar might be.
The weekly chart of gold futures is below:
http://www.resourceinvestor.com/News/2011/4/PublishingImages/4-4-11-tgaog-GCArticle-3.jpg

tricha

16-05-2011, 10:58 PM

We got the next leg up, QE3 will embark soon, inflation u be rife in the US and gold will head towards $2000 an ounce, unfortunately most likely only in the USA, in OZ dollars which we are interested in.:confused:

:confused: as a little bit of insurance one should hold 5 -10 % in gold related stocks or physical gold, personally I hold 2 goldies.

15 May 2011 Last updated at 16:14 GMT
Gold rush: All change for the world's favourite metal
By Richard Anderson Business reporter, BBC News
http://news.bbcimg.co.uk/media/images/52483000/jpg/_52483980_011829904-1.jpg The perception of gold has changed fundamentally in the past ten years
Continue reading the main story (http://www.bbc.co.uk/news/business-13156756#story_continues_1) Related Stories

Gold in new record of $1,569.30 (http://www.bbc.co.uk/news/business-13236837)
Gold price hits record $1,500 (http://www.bbc.co.uk/news/business-13153263)
India invests in the gold rush (http://www.bbc.co.uk/2/hi/asia-pacific/8352739.stm)
Gold's position as the ultimate storer of value has remained largely unchallenged for centuries.
The metal's rarity not only meant it became a recognised and trusted form of payment, but also bestowed upon it an almost mystical allure.
This came about not through historical accident or coincidence, but for the simple reason that nothing else fitted the bill; almost every other element is either too common, reactive, corrosive or gaseous. And most of those that aren't are just too scarce.
Throughout history emperors, kings and queens, governments, central banks and investors have trusted gold to maintain its value.
This is simply because gold is a physical asset with a finite supply, unlike cash, equities and bonds, which can be printed or issued at will.
For investors, therefore, it has always been seen primarily as a good hedge against inflation - traditionally, few people bought gold to make money, simply to protect themselves against losing it.
Price surge
Continue reading the main story (http://www.bbc.co.uk/news/business-13156756#story_continues_2) Random gold facts

Just 165,000 tonnes of gold have been mined since the beginning of civilisation
This would all fit in a container measuring 20m x 20m x 20m
One hundred million people rely on gold mining for their livelihood
Fort Knox holds 4,600 tonnes of gold
The US Federal Reserve holds 6,200 tonnes
Of all the gold mined around the world, 60% is made into jewellery
From December 2000 to October 2010 the gold price increased by 400%
The largest gold coin ever minted - a $1m Canadian Maple Leaf - is 52cm in diameter
The world's oceans are estimated to hold up to 15,000 tonnes of gold
Gordon Brown sold half the UK's gold reserves at the turn of the century at about $260 an ounce. The gold price is now more than $1,500
Source: World Gold Council

But all this is changing. Gold has risen in value every year for the past 10 years, during which its price has risen fivefold to more than $1,500 an ounce.
No longer, therefore, is gold seen simply as a way to store value, but as a genuine investment opportunity offering the potential to make a serious return.
But should it be? It is certainly true that all the factors currently driving the price up are likely to continue doing so for the foreseeable future.
Laying aside short-term factors such as unrest in the Middle East and North Africa, and low interests rates making cash unattractive, there are three central drivers behind gold's seemingly unstoppable rise.
First, higher inflation rates driven by monetary easing across the world are making gold - the classic hedge against rising prices - more attractive.
Second, major global currencies - rival safe havens for investors' money - are looking decidedly dodgy.
The US dollar is weakened, due to the country's massive debt problem which the government seems unwilling or unable to tackle.
And the euro is undermined by similar issues among the so-called peripheral members.
Finally, economic imbalances between East and West - between the world's savers and the world's spenders - are fuelling a general sense of unease about the future direction of the global economy.
And as one investment manager put it, gold is "the great barometer of uncertainty".
Add to this the increasing demand for gold jewellery from the growing middle classes in India and China, and for gold bars from the central banks of these two emerging powerhouses, as well as long-term production that is unlikely to rise, and you might think gold was not just an attractive investment but a pretty sure thing.
'Fear trade'
Not so, say a number of analysts.
http://news.bbcimg.co.uk/media/images/52484000/jpg/_52484146_011806871-1.jpg Growing demand for gold jewellery in developing economies is helping to drive the price of gold up
"It is wrong to see gold as an investment," says Tom Stevenson, investment director at fund manager Fidelity Investments.
"It does not provide an income and is almost impossible to value. The fact that it is has risen in price is not a recommendation to buy; in fact it could be quite the opposite."
He does not expect the price to fall any time soon, largely due to the weak dollar outlook, but warns that, in the long term, the true price of gold must be linked to the cost of its production, which is much less than $1,500 an ounce.
Anything over and above this cost is just speculation, he argues.
In fact, stripping out inflation, the current price of gold is still below its 1980 peak. It would have to hit almost $2,000 to breach that inflation-adjusted record.
http://news.bbcimg.co.uk/media/images/52739000/gif/_52739689_gold_price624x408.gif
Yogi Dewan, chief executive of Hassium Asset Management, agrees.
The current surge in the gold price is based on "speculation and fear trades," he says.
"It's absolutely crazy [for the price] to be at $1,500 - we are clearly in bubble territory."
In fact, Mr Dewan argues that the price may drop sharply once interest rates begin to rise as the global economy continues to recover.
"If rates move significantly, there could be a massive move in price, possibly back towards the $1,100 level," he says.
This is simply because higher rates make cash and currencies more attractive, and signify a return of confidence in the global economy.
Too popular
http://news.bbcimg.co.uk/media/images/52483000/jpg/_52483982_011806920-2.jpg Central banks in India and China are looking to increase their holdings of gold
Most importantly perhaps, Mr Dewan also argues that gold is now a "crowded trade". In other words, too many people own it - not a characteristic savvy investors look for.
Part of this is due to the remarkable success of gold exchange traded funds (ETF). These are vehicles that allow investors to gain exposure to the gold price without having to own any physical gold.
The largest gold ETF, the SPDR Gold Shares, holds more than $55bn and is one of the largest ETFs of any kind in the world.
In fact these investment vehicles' popularity, along with the recent surge in the gold price, is further evidence for those who argue the price is being driven more by sentiment and speculation than by fundamentals.
It may well be, therefore, that the fundamental change in perception of gold, from storer of value to investment opportunity, could be the very reason to avoid it.
http://news.bbcimg.co.uk/media/images/52614000/gif/_52614810_gold_vs_assets_624.gif

Skol

17-05-2011, 09:01 AM

Looking at that chart tricha, anyone with half a brain would sell gold and buy equities.

Entrep

17-05-2011, 09:31 AM

Im starting to think sell everything - cash is King!

tricha

17-05-2011, 09:49 AM

Looking at that chart tricha, anyone with half a brain would sell gold and buy equities.

Entrep -"Im starting to think sell everything - cash is King! "

Cash will be king for the timeline of a cat Entrep, QE3 will have to come or its all over, the US are broke, borrowing :confused: billion a month to survive :t_down:
The game is nearly up, the biggest pozi scheme ever is about to get smashed, QE3 might delay it.
The printing presses are running flat out, China is also flat out switching to internal consumption, oil is way to high and we know why and this is amajor part of the US's debt problem ( import 10,000,000 a day @ $100 = 1 billion a day x 30 = 30 billion a month)

Gold will go to the sky in $US dollars.:eek2:

US reaches $14tn limit on debts (http://www.bbc.co.uk/news/business-13416475)

http://www.bbc.co.uk/news/business-13416475

The US reaches its debt limit of $14.3 trillion and takes measures to cut spending in order to avoid breaching it.

tricha

20-07-2011, 12:34 AM

Looking at that chart tricha, anyone with half a brain would sell gold and buy equities.

Hmm..................., Gerry was right, but it took longer than anyone could imagine, to come to fruitition.
The hangover is just about to start Skol.

19 July 2011 Last updated at 11:32 GMT
Gold price climbs to new record on debt uncertainty

http://news.bbcimg.co.uk/media/images/54134000/jpg/_54134044_56545309.jpg Gold prices have been rising because of continued concerns over Europe's debt crisis
The price of gold has hit a new record price of $1,610 an ounce as debt worries in the US and Europe have intensified.
It climbed above $1,600 for the first time on Monday, capping a record-breaking rally of 11 days of gains.
Gold is considered a safe investment and usually gains at times of global economic uncertainty.
But Spanish and Italian bond yields eased and banking shares rose, reversing large falls seen on Monday.
Government borrowing costs are continuing to rise, though. A Spanish bond auction was oversubscribed, but the government was forced to offer sharply higher returns to sell 4.45bn euros (£3.9bn) of bonds.
On the 12-month bonds, the average rate soared to 3.7% from 2.7% at the last such auction on 14 June. For 18-month bonds, the yield was up to 3.9% from 3.3% last time.
Bank rises
However, Italian and Spanish bond yields eased on Tuesday. The rate on Italian 10-year bonds fell to 5.7% having topped 6% on Monday, while the rate on the Spanish equivalent fell 0.15 percentage points to 6.12%.
On Monday, yields had risen in a sign that financial markets were sceptical that governments would be able to bring an end to the debt crisis.
European banking shares also rose on Tuesday, buoyed by the bond market and helped by a better performance from US bank shares late on Monday.
Shares in Barclays rose 4.7% in London, while Germany's Commerzbank and France's Societe Generale also gained more than 4%.
'More advances'
The record breaking gold price comes ahead of Thursday's summit of eurozone leaders in Brussels where they will once again try to contain the growing debt crisis.
Investors are concerned that Greece may default on its debt, and countries such as Italy and Spain, who are also struggling with high debt levels, will get pulled into the crisis.
"Gold hit another milestone... at $1,600 as investors lose confidence in the ability of politicians to get a grip with the debt problems weighing down on sentiment," said Michael Hewson from CMC Markets, a trading group.
"More advances look likely," he said.
As well as gold hitting a new record, silver also continued to climb, to above $40 an ounce, its highest price for two months.
US default?
Meanwhile in the US, politicians are struggling to reach an agreement on a deficit reduction plan in time to avoid a debt default before the deadline of 2 August.
http://news.bbcimg.co.uk/media/images/54133000/jpg/_54133889_54133888.jpg Please turn on JavaScript. Media requires JavaScript to play.

http://news.bbcimg.co.uk/media/images/54133000/jpg/_54133889_54133888.jpg Click to play

Advertisement (http://faq.external.bbc.co.uk/questions/bbc_online/adverts_general)

Gold price reaches new high on eurozone debt fears

There are also worries about the strength of the US economy and of the dollar.
Nicholas Brooks, the head of investment strategy at ETF Securities, told the BBC: "I think the concern is that if we see another round of so called quantitative easing, it's basically de-basing the US dollar. It's putting new dollars into the system and that of course makes investors concerned about holding on to US dollars.
"When they look at the alternative, the euro and the issues that are now affecting the euro, they look for alternatives and gold of course is one of the first places they go, along with other so-called hard commodities," he added.

drillfix

20-07-2011, 12:45 AM

Im starting to think sell everything - cash is King!

I am just about there Entrep. The bulk of it out of short term account yet holding still with a long term account which doesn't phase me really.

Scratching my head wondering if to commit to some swing trades yet cannot. Have traded twice today and exited out at Brokerage only to then rethink.

Tell you what, its hard for a trader to sit on his hands, but if that is a discipline I must learn then so be it.

tricha

07-08-2011, 10:48 PM

Hmm..................., Gerry was right, but it took longer than anyone could imagine, to come to fruitition.
The hangover is just about to start Skol.

19 July 2011 Last updated at 11:32 GMT
Gold price climbs to new record on debt uncertainty

http://news.bbcimg.co.uk/media/images/54134000/jpg/_54134044_56545309.jpg .

The hangover is here and Gerry was right.

Gold is the True Reserve Currency

http://www.financialsense.com/contributors/michael-pento/2011/08/05/gold-is-the-true-reserve-currency

tricha

11-08-2011, 10:27 AM

It is old news, but like Gerry, Mikes on the money, I mean gold\silver ;)

Mike Maloney and Max Keiser on Deflation, Gold, Silver and China

http://www.youtube.com/watch?v=uNXX906aT2Q

Shaneoz

11-08-2011, 10:52 PM

Seems like a lot of people are putting a lot of faith in precious metals.... maybe too much faith.

Looking back at history, precious metals dont seem to do much better than stocks around big events. Different currencies do adjust the look of the chart slightly but it seems like either at the same time or a bit after there is a correction. Saying that, I havent got a lot of data so my view might be skewed by small sample size but I would be surprised.

Looking at my charts, pm's do look a bit toppy to me, thats not to say they will fall out of bed in the next few days.

I know there's a lot saying they cant go anywhere but up.... But and its a BIG BUT..... The yanks are the biggest burglars on the planet. Its reasonable work to make a dollar but you have to make sure they arent going to steal it from you. Just wonder if they arent going to turn around somehow and screw everyone whose betting on the almighty greenback failing. Wont be the first time that everyone was caught with the pants around the ankles when it appreciated heavily and everyone was short.

Just an observation and abstract thought thats all. A bit of contrarian look through rose coloured glasses.

Righteo...Carry On.... Nothing to see here...

tricha

12-08-2011, 11:46 AM

[QUOTE=Shaneoz;354238]Seems like a lot of people are putting a lot of faith in precious metals.... maybe too much faith.

QUOTE]

Personally it not putting faith in gold, rather as an insurance policy, the collapse of the American dollar seems imminent.
So 10% of your shares\cash into gold or gold shares, might be all you have left. ( refer Germany 1924 ), when this unfolds. Which cpuld be anytime soon.

40 years on from gold standard, bugs crow

http://static.reuters.com/resources/media/global/editorial/interactives/goldprices_timeline/goldprices_timeline_tbn_sm.jpg

Record gold price

One-tael gold cubes (1.13 ounces or 38 grams) are seen at a jewellery store in Hong Kong in this August 11, 2011 illustration photo.

Credit: Reuters/Bobby Yip

By Jan Harvey
LONDON | Thu Aug 11, 2011 10:22am EDT

LONDON (Reuters) - Gold, and only gold, will be our salvation when the value of companies, banks, countries and even money itself melts away. Gold, not shifting currencies (http://www.reuters.com/finance/currency), is the foundation of wealth and security. Gold is back, for good.
This is the song of the "gold bugs" - the fervent fans of the precious metal who have clung to its investment value for three generations and now glow in the reflected luster of a record price approaching $2,000 for just one ounce.
Monday will mark the 40th anniversary of the United States' abandonment of the gold standard. But gold bugs kept the faith -- even when prices stayed under $500 for nearly 25 years after their 1981 peak.
Their passion derided, dismissed as hopelessly out dated doomsayers, their love for the metal seemed irrational.
The gold bug label itself goes back to master of the supernatural Edgar Allen Poe and his story of that name, a tale of golden beetle whose bite sends the hero to a chest of gold and jewels.
It reappeared as one of the first campaign buttons -- a brass bug sported by supporters of William McKinley in the bitter U.S. presidential election of 1896.
McKinley, the first presidential candidate to barnstorm across the nation, backed the gold standard against his Democratic opponent's proposal that it should be joined by silver in a fixed ratio. Loser William Bryan slipped into history but bimetallism lived on for a little in the think tanks of the day.
Fast forward and the financial crisis of 2008 has made gold the darling of investors from hedge funds to taxi drivers, and sparked a near-doubling of prices.
"Gold has been rising against all national currencies, and that's significant," James Turk, founder of bullion dealer Goldmoney, said.
"When there are problems with a national currency (http://www.reuters.com/finance/currencies)... people begin to worry about the value of their money, whether they're going to lose purchasing power because of inflation or other problems. As a consequence, they look for safe havens."
He was speaking as a true gold bug -- not in the dark days after Lehman Brothers' demise in 2008, nor in the depths of last year's euro zone (http://www.reuters.com/subjects/euro-zone) debt crisis, nor after Standard & Poor's recent downgrade of the United States' top-notch credit rating.
Turk's view came in a BusinessWeek interview he gave in 2005, well in advance of the current financial crisis.
"My long-standing forecast, made in a Barron's interview in October 2003, is that $8,000 per ounce will be reached sometime between 2013-2015," he told Reuters this week.
"I've stayed with that forecast over the years and see no reason to change it."
The world's current financial woes are only going to get worse if current policies continue, he believes, meaning the rally in gold prices is unlikely to stop here.
"Politicians and central bankers are making decisions that debase national currencies, and the resulting bad monetary policies they are following are causing the gold price to rise," he said.
Gold's latest push to record highs has gone hand-in-hand with a plunge in Wall Street stocks (http://www.reuters.com/finance/stocks) to their lowest in nearly a year, while the dollar is languishing near multi-year lows.
Long-term gold bull David Beahm, vice president of marketing and economic research at New Orleans bullion dealer Blanchard and Co., says worries over the stability of the stock markets (http://www.reuters.com/finance/markets) will be a key driver of higher gold prices.
"The best investment right now is gold," he said. "By diversifying one's portfolio with a negatively-correlated gold, investors can protect themselves from deep plunges in the equity market."
"There is no news in the market today or over the coming few months that is likely to stop the current gold bull market, as the fundamentals are firmly in place for gold to continue its rise," he says.
Traditional investment commentators have dismissed gold -- which, with no "intrinsic" value of its own, is only really as valuable as a buyer thinks it is -- as a classic bubble.
But those who have predicted its crash since it rose above $700 an ounce in 2006, on a simple "what goes up, must come down" analysis, have consistently been proved short-sighted.
Gold prices traded in a relatively narrow range from $250-420 an ounce for the whole of the 1990s. They have since more than quadrupled from that high, peaking at a record just below $1,800 an ounce earlier this week.
Their rise accelerated sharply from 2005 onwards, breaking through $1,000 an ounce in 2008 as the weaker dollar fueled demand for alternative stores of value.
Now gold bulls are predicting that prices, now around $1,750 an ounce, but still short of an inflation-adjusted high of nearly $2,500 in 1980, could climb even higher.
"I believe the price of gold will rise irregularly over the next several years, possibly reaching $1,850 an ounce by the end of this year, breaking above $2,000 in 2012, and possibly $3,000, $4,000, and even $5,000 in years to come," says Jeffrey Nichols, managing director of American Precious Metals Advisors and senior economic advisor to Rosland Capital.
"At the heart of this forecast is my observation (or belief) that the United States and, to a lesser but still significant extent, Europe have been living beyond our means for decades."
Back in 1896, losing presidential candidate Bryan's Cross of Gold speech turned the watching crowd into "a wild, raging irresistible mob," the New York Times reported.
Gold bugs, often accused of sensationalism, are finding their passion is becoming mainstream. "Raging" is probably no longer a suitable description of them. "Irresistible" is increasingly nearer the mark.
(Reporting by Jan Harvey, editing by William Hardy and Richard Mably (http://blogs.reuters.com/search/journalist.php?edition=us&n=richard.mably&))

tricha

06-09-2011, 11:38 AM

It's a dam shame Gerry is not around to take charge of his thread, it has taken a long time to come, but the reckoniing is well under way.

Gold is not about making money, but protecting your exisiting money. It's the best form of insurance you can have.

So you cashed up investors out there, beware.:scared:

Inflation (now ) , much higher inflation is coming and then we could have hyperinflation.

Basically cash will turn to trash.:ohmy:

denpal

06-09-2011, 01:37 PM

tricha

13-10-2011, 09:56 PM

Gerry Stolwyk passed away 17 December 2007 - for the record - RIP Gerry. There are still a few threads going that he started including this one!

Heres one for Gerry.

Gold Not a Bubble: It’s On Its Way to $10,000/oz

http://www.resourceinvestor.com/News/2011/10/Pages/Gold-Not-a-Bubble-Its-On-Its-Way-to-10000oz.aspx

Shaneoz

14-10-2011, 12:20 AM

tricha

15-11-2011, 06:42 PM

Well the reaction I thought was coming did happen. I was less than a month from the tops so I dont think thats too bad considering I only had a quick look at the chart.

A 20% fall is a good reaction. Something I would of considered normal.

If had been a buyer around the top my bum would of been twitching with a sharp fall like that. But it would of been a nice buying area below 1580 if you were watching it.

There is a good resistance at about 1760 which it would have to clear with a weekly close before I was confident it was back in bull mode though.

If it doesnt well.... 1500 then 1440 seem reasonable points to look at.

Time will tell I suppose. As it always does. Lets hope it doesnt go the way of silver. Lower tops and bottoms. Nice bottom end of Sept. 50% of the major top in April. Coincidence maybe maybe not....

No one knows, its like putting a bet on two horses Shaneoz.

How about covering your bet, that I am doing. a bob each way.

Glittering prospects David PottsNovember 13, 2011

http://images.theage.com.au/2011/11/12/2769880/gold-420x0.jpgGood as gold... there are excellent growth opportunities for investors attracted to shares in companies mining the precious metal. Photo: Peter Morris

Despite the likelihood of continued price rises, shares in goldmining companies remain undervalued.

http://www.theage.com.au/money/investing/glittering-prospects-20111112-1ncow.html

Read more: http://www.theage.com.au/money/investing/glittering-prospects-20111112-1ncow.html#ixzz1dkXWh8vt

Crypto Crude

16-11-2011, 02:44 AM

other day I got a 50-50 bet on the field vs smoking joe... cup day.... wee...
it was fun...
the field won..

whats happening,
whats a bob each way for you>?
:cool:
.^sc

tricha

19-11-2011, 11:34 PM

other day I got a 50-50 bet on the field vs smoking joe... cup day.... wee...
it was fun...
the field won..

whats happening,
whats a bob each way for you>?
:cool:
.^sc

Ar, the joys of youth, theres no tomorow, just today Shrewdy.

For us old farts, be prepared.;)

http://www.youtube.com/watch?v=tj2s6vzErqY

tricha

24-11-2011, 05:33 PM

Be prepared, copper is breaking down, all indications are bad, a friend in London, works in shipping says there is a major surplus of ships,

Gold is king, while the printing presses are running hot.

Australian Dollar (javascript:KitcoIndex('charts.htm?AUD','AUD');)
+0.54%
11/23-23:22
1.0266
0.9741
1735.38

tricha

26-08-2012, 10:10 AM

Another one for you Jerry. I hope you have a good sense of humour.

DEBT BOMB - The Global Financial Crisis Stripped Bare

http://www.youtube.com/watch?v=GXcLVDhS8fM

P.S Thanks to the Max and Stacy Show. the bits on the nipples are gold coins.

tricha

28-03-2013, 01:40 PM

In Gold we " TRUST"

Its taking a while to unravel, but if this happens again all hell will break out.

I'm picking Britian is close to following. They are going backwards.

Cyprus: A model or an exception? Are capital controls next?Wednesday March 27, 2013 13:23
Why would a small rocky island that represents a mere 0.2% of the European Union’s GDP be front and centre in the international financial press? Economic scholars argue that Cyprus leaving the Euro would be a devastating blow to the Union and that this accounts for the recent drop in the Euro and the stirrings of financial panic among other EU members. I suggest the following for consideration.
With its back against a wall, the Government of Cyprus made an unprecedented move to raise €10 billion, “suggesting” a tax on bank deposits. This created a psychological tsunami that quickly spread to financial markets throughout Europe. Although the Cypriot people reacted immediately, the bulk of the “money grab” would have targeted non-resident (i.e. Russian) accounts. Cyprus has long been the “Cayman Islands” for the Russians. One might argue that Cyprus is unique and that no one cares if “morally” suspect deposits are taxed. However, to truly understand the fear of the residents of the weaker EU states, the focus should be on capital flow markets.
With the introduction of the Euro, capital movements between members became unrestricted. It is interesting to note that prior to the introduction of the Euro, the weaker EU states — Greece, Spain, Portugal and, let’s add, Italy — had capital flow restrictions in place for resident accounts. Italy allowed its residents to transfer up to 100,000 lire (equivalent to about $1,000) to banks outside Italy without requiring Central Bank approval. In the 1970’s, foreign exchange firms developed mechanisms for Italians to hand over lire internally against receipt of dollars abroad. The going rate averaged 10%. Today, capital flow restrictions are less prevalent. In certain South American countries, where they still exist, this internal mechanism carries fees in the 25% range.
Are the Greeks, Spanish, Portuguese and Italians worried that the Cypriot initiative may be a precursor? The reality is that this initiative will probably not flow to other Euro members. But reality is of little relevance when we are dealing with PERCEPTION and FEAR. Some of the countries discussed have youth unemployment rates approaching 50%. Most of them have a minimal chance of meeting their European member obligations. The option of leaving the Union would devastate the purchasing power of their base currencies, with devaluations in the order of 50% to be expected. Should an exit from the Euro become a serious option, it would be preceded with stringent foreign exchange controls.
This psychology has contributed to increased accumulation of gold by European investors. With the recent Cypriot initiative, however, the question is now not, “Should I have a position in metals?” but instead, “Where is my metal holding safe from government confiscation?”
For this, let me give you the American example. Many Americans have an innate distrust of their government. In fairness, the United States does have a precedent of banning the ownership of gold. Let’s assume the worst case scenario that the ban is reinstated. For those American investors who do have this concern, it is completely irrational to buy gold from an American dealer or store gold, whether in the United States or abroad, with an American bank or dealer or their subsidiaries. The first port of call for any American government intent on confiscation would be these dealers who would be forced, on pain of stiff financial penalties, to hand over all records of sales and foreign gold holdings. This same logic is applicable to the European scenario. Is it not unreasonable, for instance, to expect the Italian government, should it impose capital controls, to pressure Italian banks to turn over all records of metal purchases and overseas storage accounts.
Geographical diversification into fully insured and segregated precious metals accounts is a suggested course of action for European investors. The question is now one of location. Storing metals within the EU or through subsidiaries of EU financial institutions abroad may require further reflection. A country that has a long history of a stable financial system, strong personal privacy laws, a resource-self-sufficient economy and no history of capital controls should be considered by international clients. Very few countries fit the bill and the natural choice among them is Canada.
By Peter Hug
Global Trading Director
Kitco Metals Inc. (http://www.kitco.com/)

tricha

30-03-2013, 12:21 AM

Joshuatree

30-03-2013, 07:40 AM

skid

30-03-2013, 08:56 AM

In Gold we " TRUST"

Its not looking good folks, England could follow suit.

Trouble is who will bail them ????

Where I live there are a lot of Brits and some of them are getting their pounds out now. If it snowballs, end game.
Same as Cyprus.

And if you listen to Jim Rogers latest, no currency is safe now.

If it gets to England it would already be game over.
The most likely to gon ext would be Slovenia.
The tipping point would be somewhere before Italy and Spain.
Spain would be the point of no return--Its just to big.
Dont panic-but have a back up plan
Reduce debt
Try and pay off the mortgage if you have one
Think about your countries bonds rather than bank dep.
Some gold..[some say 10% of assets]
Go to church and pray it doesnt happen

Aaron

30-03-2013, 11:27 AM

If it gets to England it would already be game over.
The most likely to gon ext would be Slovenia.
Reduce debt
Try and pay off the mortgage if you have one
Think about your countries bonds rather than bank dep.
Some gold..[some say 10% of assets]
Go to church and pray it doesnt happen
Am I understanding the Cyprus deal wrong. I would have thought making the mortgage manageable in the unlikely event interest rates rise would be the way to go. Paying it off and saving doesn't seem like a plan as the money printing and interest rate suppression is designed to induce inflation to help borrowers at the expense of savers. Cyprus was the next step were savers had their money taken openly without the stealth of inflation as it is not happening fast enough. What did people borrowing from Cyprus banks get? Probably low interest rates and nothing else. No calling in debts because if they do the financial system might collapse. A bloke saving up a $100,000 deposit for a house is going to be asked to help out more than a bloke with a million dollar house and a $100,000 mortgage. How is that right.

tricha

30-03-2013, 12:07 PM

Am I understanding the Cyprus deal wrong. I would have thought making the mortgage manageable in the unlikely event interest rates rise would be the way to go. Paying it off and saving doesn't seem like a plan as the money printing and interest rate suppression is designed to induce inflation to help borrowers at the expense of savers. Cyprus was the next step were savers had their money taken openly without the stealth of inflation as it is not happening fast enough. What did people borrowing from Cyprus banks get? Probably low interest rates and nothing else. No calling in debts because if they do the financial system might collapse. A bloke saving up a $100,000 deposit for a house is going to be asked to help out more than a bloke with a million dollar house and a $100,000 mortgage. How is that right.

Oh it is not right Aaron. Skid has the right ideas, except for maybe the God part.;;A Reason to Trust Central Banks?
By Jeff Clark

Bloomberg reported recently that Russia is now the world's biggest gold buyer, its central bank having added 570 tonnes (18.3 million troy ounces) over the past decade. At $1,650/ounce, that's $30.1 billion worth of gold.

Russia isn't alone, of course. Central banks as a group have been net buyers for at least two years now. But the 2012 data trickling out shows that the amount of tonnage being added is breaking records.

Based on current data, the net increase in central bank gold buying for 2012 was 14.8 million troy ounces - and that's before the final 2012 figures are in for all countries.

This is a dramatic increase, one bigger than most investors probably realize. To put it in perspective, on a net basis, central banks added more to their reserves last year than since 1964. The net increase - so far - is 17% greater than what was added in 2011, which was itself a year of record buying.

Here's a picture of total central bank reserves since the financial crisis hit.

http://www.dailyreckoning.com.au/images/dr20130328a.jpg

Whatever gold's price movements, positive or negative, central bank officials have continued adding a lot of ounces to their reserves.

But this understates the case, because most of the data exclude China, as well as a few other small countries. China last officially reported gold reserves in 2009, so the totals in the chart since then exclude whatever its purchases might have been.

Here's where it gets interesting: Bloomberg claimed that Russia has been a bigger buyer of gold over the past decade than China - by a full 25%. Based on data about gold imports through Hong Kong and the fact that, for the most part, Chinese production doesn't leave the country, it seemed to me that this could not be right.

The Chinese central bank holds an official 1,054 tonnes of gold in its reserves. Bloomberg states, based on IMF data, that China has added somewhere around 425 tonnes over the past decade.

I can't say exactly what the correct number is, but the Bloomberg number almost has to be wrong. Here's why:

Gold imports through Hong Kong in December alone hit a record high of 109.8 tonnes.
Imports for 2012 also hit a record high of 572.5 tonnes.
If you add 2012 mine production - remember that China is now the world's largest gold producer - roughly 970 tonnes of gold was delivered to various entities within the country last year.
Cumulative imports since 2001 have reached 1,352 tonnes.
Since 2001, imports plus production total a whopping 4,793 tonnes.

So Bloomberg is essentially saying that roughly 10% of the total gold available inside the country during that period was added to China's reserves. While it's true that Chinese citizens are buying a lot of gold (though perhaps more silver), it's highly doubtful that private parties bought 90% of all the gold brought to the Chinese market during this period.

I think - but can't prove - that China's central bank is buying more gold and at a faster pace than its Russian counterpart.

Jim Rickards, a highly respected author and hedge fund manager, said last month that China has probably already accumulated between 2,000 and 3,000 tonnes of additional gold reserves. If he's right, that would be roughly double or triple the 1,054 tonnes it reported in 2009 - not the 40% increase Bloomberg's numbers suggest.

At the very least, we can say that the Bloomberg report left consideration of China's imports and production out of its report naming Russia the top gold buyer of 2012. Okay...but so what?

Well, Jim thinks the next big catalyst for gold will be an announcement from China about its reserve position. Here's what he told me in late December:

'The catalyst for a spike into the $2,500 to $3,000 price range for gold will be an announcement by China, probably in late 2013 or 2014, that they have acquired 4,000 tonnes or more in their official reserve position. This will put China on an equal footing with the US in terms of a gold-to-GDP ratio, and validate gold as the real foundation of the international monetary system. Once that position is validated, gold will move to the $7,000 range in 2015 and beyond.'

Even if Jim's estimate is high or China doesn't make an announcement until later, it's clear that central banks around the world are buying gold in record quantities.

It almost makes you wonder...do they know something we don't?

The Russians gave us some hints.

Evgeny Fedorov, a lawmaker for Putin's United Russia Party, said, 'The more gold a country has, the more sovereignty it will have if there's a cataclysm with the dollar, the euro, the pound, or any other reserve currency.'

President Vladimir Putin told his central bank not to 'shy away' from the metal, adding 'After all, they're called gold and currency reserves for a reason.'

The Chinese have been quiet on this topic recently, after being very vocal a few years ago. Here's a recent quote.

'The current international currency system is the product of the past,' said Hu Jintao, General Secretary of the Communist Party of China.

Others have provided clues as well.

'We're in the midst of an international currency war,' said Guido Mantega, finance minister of Brazil.

'Quantitative easing also works through exchange rates... The Fed could engage in much more aggressive quantitative easing, to further lower the dollar,' said Christina Romer, former chair of the Council of Economic Advisors.

Economist Kyle Bass recently spoke to a senior member of the Obama administration about its planned solutions for fixing the US economy and trade deficit. When he asked, 'How are we going to grow exports if we won't allow nominal wage deflation?' the answer he got was, 'We're just going to kill the dollar.'

Yes, we're talking about the US dollar. Perhaps some investors have gotten complacent about the risks to the world's reserve currency - but not central bankers.

It's not hard to see why: whether they admit it or not, central bankers must know what it means to run the printing presses the way the US has since 2008, even if price inflation is not immediately obvious.

It's no surprise they want to hedge their bets, moving more reserves into something with actual value...something that can't be debased by a few computer keystrokes by an increasingly unfriendly government.

The US dollar has been the world's reserve currency since WWII. That's beginning to change, and the movement into gold is just one facet of that change. The buying by central banks is exactly what one would expect to see as we approach the end of the dollar hegemony.

The message from central banks is clear: they expect the dollar to move inexorably lower. It doesn't matter that it's been holding up against other currencies or that the economy might be getting better. They're buying gold in record amounts because they see a significant shift coming with the status of the dollar, and they need to protect themselves against that risk.

This leads to a second message: gold is not overpriced, in spite of the 500%+ increase since 2001. Indeed, with the recent correction, central banks are likely buying more, even as you read this.

Central bank gold buying will continue, of that we're certain. Even after Putin's binge, gold accounts for only 9.5% of Russia's total reserves. China's 1,054 tonnes is roughly 2% of its reserves.

It's clear that both countries, along with others, have decided to accumulate as much gold as they can, as quickly as they can, before the dollar's decline becomes more pronounced...and permanent.

This could explain why some central banks don't publicize their purchases. It also means that Bloomberg and other mainstream media outlets could be caught off guard when China announces higher gold reserves than expected - perhaps much higher.

Clearly we should take notice. If central banks are preparing for a major change in the value of the dollar, shouldn't we? The fact remains that the US dollar cannot and will not survive the ongoing abuse heaped upon it by government planners and federal officials.

That not only means the gold price will rise, but that many, if not most currencies, will lose a significant amount of purchasing power. This has direct implications for all of us.

Embrace the messages central bankers are telling us - the ones they tell with their actions, not their words. Buy gold. Your financial future may very well depend upon it.

Regards,

Jeff Clark
for The Daily Reckoning Australia

From the Archives...

Gold: The Worst Investment of 2013? (http://clicks.portphillippublishing.net//t/AQ/AA6hLA/AA62rQ/AAhzbg/AQ/AmYIzA/NTNd)
22-03-13 - Bill Bonner

JBmurc

30-03-2013, 01:38 PM

I personal don,t think trying to pay off debts straight away is the best
Move as currently many assets are cheap overall we haven,t seen major
Inflation from the loose monetary polices ...but it will come...and the winners
Will be the leveraged and not the savers...I.e I,m not going sell my bullion
Or shares to pay down loaned fiat money for our house when the repayments
Are less than it would be to rent,,, if the banks would I,d loan even more money
At 4.9% to buy assets that return 7-8%

macduffy

30-03-2013, 03:15 PM

skid

31-03-2013, 09:12 AM

Everyone does what they think is best-but there are not many experts that dont agree that if it hits the fan ,those with debt will be hit the hardest.
Even in good times the no,1 advice is to pay off your mortgage[on the house you are living in]
Everyone is talking inflation.Has anyone considered deflation?[thats what a depression is]
The jurys still out on that one.
Some believe that when things go sour,that so much money will be written off,that it will reduce the money supply and cause deflation[harry dent]

Not sorting your mortgage is the same as mortgaging your house to buy shares and gold.
That may be a bit to much risk for some.

If things get really bad I personally dont want to be dependent on others[Bank] if I can avoid it.

Ive done a fair amount of reading and almost all say the first step to surviving a real collapse is to eliminate debt.

But lets hope it doesnt come to that

skid

31-03-2013, 09:33 AM

I agree, JB.

While the threat, however unlikely, of haircuts to bank deposits hangs around, investors generally will be reluctant to leave too large a chunk of their assets in that form. Witness the strength of the USA and NZ sharemarkets, for example, as investors bid up the prices of available stocks, while also bidding up bond prices. Other considerations aside, this bodes well for the govt's SOE part privatisations.

That may be true now[as the price of asset is bid up]but if assets keep increasing in value [inflation]then the fact they[gov]have traded a valuable asset for some cash may not be such a great move. ie-Telecom-BNZ-etc.
I guess time will tell.

JBmurc

31-03-2013, 12:17 PM

tricha

31-03-2013, 01:42 PM

macduffy

31-03-2013, 04:15 PM

That may be true now[as the price of asset is bid up]but if assets keep increasing in value [inflation]then the fact they[gov]have traded a valuable asset for some cash may not be such a great move. ie-Telecom-BNZ-etc.
I guess time will tell.

Just to clarify, skid.

My comment related to the probable success of the SOE part privatisations as IPO's, not to whether or not they are good from the point of view of the country's finances.

skid

01-04-2013, 09:23 AM

Just to clarify, skid.

My comment related to the probable success of the SOE part privatisations as IPO's, not to whether or not they are good from the point of view of the country's finances.

What you sat sounds pretty spot on in that sense--I was just playing the devil advocate and taking it a step further

skid

01-04-2013, 09:37 AM

Well I guess it depends what you believe will happen
With just about ever country creating more debt and
More fiat money ...major Deflation will see us head towards
World war 3 ... You have the likes of Japan government stating
They will do everything possible to create inflation the USA will
Create 80billion per month till it happens.. Worldwide banks have
Never had more funds on deposit ,,,bonds at 300yr highs ....,

Im not sure what will happen--there are 2 schools of thought
The deflation scenario that h s dent talks about is far more scarey to me,and the one I hope doesnt happen.
He does have a point though that no matter how hard they all try to create inflation-if eventually the debt has to get written off[or disappears as companys fail]then that would take money out of the system and that could result in deflation.
Its kind of like when you have a share market crash and billions of dollars more or less disappear--your $50 share is now worth $25--where did all that money go?

incidently,I would be far better off with the inflation scenario,but the chance of deflation[at the end of the inflation run] makes me not want to have debt if I can avoid it.

JBmurc

01-04-2013, 10:32 AM

Im not sure what will happen--there are 2 schools of thought
The deflation scenario that h s dent talks about is far more scarey to me,and the one I hope doesnt happen.
He does have a point though that no matter how hard they all try to create inflation-if eventually the debt has to get written off[or disappears as companys fail]then that would take money out of the system and that could result in deflation.
Its kind of like when you have a share market crash and billions of dollars more or less disappear--your $50 share is now worth $25--where did all that money go?

incidently,I would be far better off with the inflation scenario,but the chance of deflation[at the end of the inflation run] makes me not want to have debt if I can avoid it.

Yes Inflation would be the better of the two evils ....reason I think we will see inflation is just in what I'm seeing at present ..Just looking at the Gold silver producers esp. the pure Silver ASX plays getting smashed of late even though Silver is more than double it's price from years ago they can't make a profit cost's have inflated and continue to ....locally building costs are inflating add 10% on last years price here...we did have deflation in costs couple years back to build but that only lasted a short time..

--every day there's 100,000 more humans wanting food shelter etc .....

--Yes if we did have major deflation the debt would be worth much more as my income would decrease (but then so should interest rates)

--Major Sharemarket crash I just don't see it ,,major corrections yes ,,I know from the micro/jnr resource sector I invest in we haven't seen growth but major selling for years I can see this getting even worse that would mean companies would be worth less than their cash in the bank or less than 4-5 year earnings....

I'm big fan of Kyle bass-his latest on japan--http://www.youtube.com/watch?v=ZY6IEpKRA7Y

skid

02-04-2013, 09:28 AM

Like I said -inflation would be best for me.
And most of the things you say make sense,as long as we are operating within the comfort of our present economic system.
But if we have a currency crash or a sharemarket crash or a run on banks somewhere leading to others and the dominoes start falling,then we could be breaking new ground.
Homeowners in the States have certainly experienced deflation in that sector.
I havnt read any Kyle Bass,but wonder how Japan would have fared if the rest of the world was going through the same thing-Japan had deflation ,but not on steroids.
Ive got a fair amount of assets including some gold and property,so if deflation happens I will get rooted,but I will still own a house to live in even if its not worth as much.
Im getting a bit long in the tooth so have decided to go conservative and concentrate on safety as much as possible [at the expense of lost opportunity on possible profits elsewhere][as long as we are still in this game]

skid

02-04-2013, 11:42 AM

This article that Tricha put in another thread is quite interesting
http://www.tullettprebon.com/Documents/strategyinsights/TPSI_009_Perfect_Storm_009.pdf

skid

02-04-2013, 11:58 AM

According to the above article--Globalization has alot to answer for--
trend #2 – the globalisation disaster
The compounding mistake, where the
Western countries were concerned, was
a wide-eyed belief that ‘globalisation’
would make everyone richer, when
the reality was that the out-sourcing
of production to emerging economies
was a self-inflicted disaster with few
parallels in economic history. One would
have to look back to a Spanish empire
awash with bullion from the New World
to find a combination of economic
idiocy and minority self-interest equal
to the folly of globalization.
The big problem with globalisation
was that Western countries reduced
their production without making
corresponding reductions in their
consumption. Corporations’
outsourcing of production to
emerging economies boosted their
earnings (and, consequently, the
incomes of the minority at the very
top) whilst hollowing out their
domestic economies through the
export of skilled jobs.

ynot

02-04-2013, 07:22 PM

Agreed, well composed article.

tricha

08-05-2013, 03:57 PM

This article that Tricha put in another thread is quite interesting
http://www.tullettprebon.com/Documents/strategyinsights/TPSI_009_Perfect_Storm_009.pdf

Very interesting Skid, McDuffy posted it a few months ago. Hence as we all know the world economies can not recover.

As cash becomes worthless.

We should not ignore the power that gold will play soon, if u do not have some as insurance, maybe you should have a very good look at it.
China gold imports to keep growing after hitting record highReuters May 8, 2013, 10:25 am

http://l.yimg.com/ea/img/-/130508/2013_05_08t022518z_1_cbre94706q900_rtroptp_2_marke ts_precious_rise-18oje5a.jpg?x=292&sig=YHBiBHsImp8m3k8fSwujkA-- (http://l.yimg.com/ea/img/-/130508/2013_05_08t022518z_1_cbre94706q900_rtroptp_2_marke ts_precious_rise-18oje5a.jpg?x=400&sig=WJ0LKGW5ck7AsyhlsDG8rg--)Reuters © A sales attendant shows a gold bracelet to customers leaning over a half-empty display case at a jewellery store in Hong Kong April 26, 2013. REUTERS/Bobby Yip

By Lewa Pardomuan and Fayen Wong
SINGAPORE/BEIJING (Reuters) - Chinese gold imports are likely to swell further after more than doubling to an all time high in March as retail consumers pounced when prices plunged to a two-year low last month.
China is the world's second largest buyer after India, and in both countries the steep fall in international gold prices in April unleashed years of pent up demand for coins, bars and jewellery.
That will help bolster prices for the metal, which has been abandoned by funds in other parts of the world in the wake of its historic fall.
"Physical demand picked up significantly over the last couple of weeks. Consumers and industrial users tend to see price drops as buying opportunities," Zhang Bingnan, secretary-general of the China Gold Association, told Reuters.
"Investment demand should continue to stay strong through the rest of the year because of limited investment alternatives," said Zhang, adding that gold sales and processing volumes both spiked in April.
Net gold flows from Hong Kong to China, the world's No. 2 gold consumer after India, jumped to 223.519 tonnes in March from 97.106 tonnes in February, smashing a previous record of 114.372 tonnes in December, data from the Hong Kong Census and Statistics Department showed on Tuesday (www.censtatd.gov).
That makes up more than half of record gold exports to China from Hong Kong in 2012, which stood at 557.478 tonnes.
In March, Shanghai gold futures fetched premiums of more than $30 (19.38 pounds) to global prices, making it cheaper to buy the metal overseas.
April could see imports swell further after the drop in international prices spurred frenzied buying in Asia, leading to a shortage of gold bars and coins in Singapore as well as Hong Kong, which is China's main source for gold imports.
Appetite for gold from India and China is a major factor in international gold prices. The two countries account for more than a third of global demand, according to the World Gold Council. China produced 403 tonnes of gold in 2012, but consumption was more than double at 832.2 tonnes.
Gold tumbled to around $1,321 an ounce on April 16, its lowest in more than two years, after a fall below $1,500 and fears of central bank sales led to a sell-off that stunned investors and prompted them to slash holdings of exchange-traded funds. It stood at around $1,460 on Tuesday.
"April imports will be stronger than March," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong. "The world was buying gold and China was no different at all."
HEAVY TRAFFIC
The drop in prices has prompted a gold rush in China, with Chinese shoppers flocking to retailers to buy jewellery and bars.
A spokesman for Hong Kong jewellery chain Chow Tai Fook <1929.HK>, the world's largest jewellery retailer by market value, told Reuters that traffic at its China stores jumped by 50 percent during the May Day holidays.
The surge in Chinese travellers during the three-day May Day holiday also drove gold sales in Hong Kong to rise by an estimated 50 percent, with total gold sales from April 29-May 2 reaching some 40 tonnes, local media quoted Haywood Cheung, president of the Hong Kong Gold and Silver Exchange, as saying.
The jump in Chinese physical demand also prompted some banks to ship in more supplies from London and Swiss vaults, traders said.
With China's economy still on shaky ground, investors there with limited options for their cash could still see gold as attractive. The fall has hurt big funds elsewhere that bet on gold continuing a 12 year bull run, eroding investor confidence in the yellow metal.
China's annual export growth may have picked up slightly in April due to a low comparison from a year ago, while import growth probably eased, a Reuters poll showed, suggesting the underlying momentum for both the domestic and global economies remains tepid.
(Additional reporting by Manolo Serapio Jr; Editing by Joseph Radford and Simon Webb)