Forum: Edelmetalen » Goud en zilver Rockin & Rollin » Pagina: 7

[verwijderd] 14 februari 2005 15:04

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IMF gold sales - Why it will be a non-event Kenneth Gerbino Posted Mon, 14 Feb 2005 www.mineweb.net/sections/gold_weekly/...

Kenneth Gerbino has kindly allowed Mineweb to publish his note on the news that the IMF wants to sell some of its gold reserves and use it to give poor nations debt relief. IMF bureaucrats want to sell some of the IMF gold reserves and use it to give poor nations debt relief. This seems like a negative for gold, but it is a scheme that will not happen and should be understood by mining professionals and investors as to why.

Gold investors should realize that Central Bank and IMF gold sales are already factored in and discounted by the gold market and have been for the last 40 years. This has been a constant and long-term discount and it has always been in the market. If all the official gold were not in the hands of these government institutions gold would most likely already be trading at over $750 an ounce.

The government of South Africa will not allow in the world of public opinion their most important industry to be once again rocked by any gold sales or “dumping” for political reason that would upset the price of gold, especially with the Rand so strong.

Black Empowerment Groups in South Africa which now own billions of dollars worth of gold mining assets will not sit around while a few European bureaucrats attempt to try and destroy their piece of the South African pie that they have been fighting for and struggling to attain for over a century. This group will rally a huge support base of international conservatives and liberals to their cause against the latest IMF scheme.

Politically in the U.S., the IMF would have tremendous opposition from both Democrats and Republicans in both the House and the Senate. For starters, here are just a few of the opponents who have voted against gold sales in the past and have expressed very strong opposition to any IMF gold sales. The bankers would have to run over this group to get the U.S. Congress, which has voting control over any and all IMF voting. The U.S. controls 17% of the voting rights of the IMF Charter and 85% is needed to sell any gold, therefore the U.S. controls this issue. Below are just a few of the opponents to the idea.

Senator Harry Reid (D – Nevada) already has voted against past sales and he is now Minority Whip, one of the most powerful positions in the U.S. Government.

Senator Tim Johnson (D- S. Dakota) ranking member of the Financial Institutions sub-committee of the Senate Banking Committee.

Congressman Tom Delay (R- Texas) House Majority Leader the second most powerful legislator in the House.

Congressman Jim Saxton (R- New Jersey) Chairman of the powerful House Armed Services Committee and ex-Vice Chairman of the Joint Economic Committee. One of the most powerful elected officials in D.C.

Congressman Ron Paul (R – Texas) Vice Chairman of the Oversight and Investigations sub-committee on Financial Services, past sponsor of the Gold Coin Act of 1984, which passed by one of the widest margin of any monetary bill.

These men and many others have plenty of distrust for paper money schemes and understand that gold is an important monetary and reserve asset and should not be used to pay off bad loans made by the bureaucrats at the IMF.

The issue of helping poor third world countries to get debt relief could easily be accomplished by revaluing the gold held by the IMF (103.4 million ounces) and using the new value, a $42 billion asset, to balance the complete write off of the poor country loans. The IMF balance sheet would not feel the write off at all. Since many of these loans were quasi grants in the first place there would be no need to sell any gold. The money has already, in essence, been written off.

Some gold could be sold off-market directly to central banks. This was proposed by IMF deputy director Alassane Ouattara in 1999 but was quickly denounced by the IMF, as it would create a big headache for the banking establishment. This action would have opened up a philosophical can of worms. The perception of official recognition and validation that gold is a valuable reserve asset from some of the central bankers (those buying) and the opposite from the selling group (the IMF). Also the action of a central bank somewhere printing a few billion dollars worth of their currency and taking the gold would create a field day for the few dozen of the more or less rogue member countries of the IMF who would enjoy exchanging some paper and ink for some real money.

The poor countries in question that are referred to as HIPC’s (heavily indebted poor countries) owe about $11 billion to the IMF. At current prices this would amount to about 889 tonnes of gold. If this debt relief was to actually be accomplished by selling the gold it could surely take place over a 5 year period or about 175 tonnes per year that would equal 4% of the current annual global supply of gold.

It could have an effect on the price as supply is supply, but the gold would be surely snapped up by the bullion banks and mining companies that are “short” somewhere between 10,000 and 12,000 tonnes according to some very savvy analysts such as Frank Veneroso, John Embry and others.

The IMF can actually write off almost all the poor country debt right now because they have large loan loss reserves already set up. According to Professor Jeffrey Sachs, in 1999 the IMF had in the Reserve Account (General Department) $2.9 billion set aside, and in the ESAF (Enhanced Structural Adjustment Facility) Trust Fund another $2.8 billion plus 30 % of all money owed to this Facility was actually grants so that would add another $1.5 billion. That would total about $7.2 billion and is probably much higher today. This could be used for the debt relief.

Special Drawing Rights (SDR’s) were a monetary creation by the IMF to handle trade imbalances after WW II. This quasi-money allowed countries to manage temporary international trade liquidity problems with loans and credits to avoid the problems associated with maintaining fixed exchange rates at that time. Today the IMF has on its books 21.4 billion SDRs valued at about $1.50 each or $32.1 billion. Currently the IMF is attempting to double the SDR amount via a special amendment and has received the approval from 131 members out of 185 countries. The U.S. Congress must approve this new increase for this amendment to the IMF Charter to go into effect. If so, then the new SDR’s would add another $32.1 billion of funds to the IMF’s arsenal of paper money.

This so-called reserve asset would be available for future needs. Certainly a portion of this could be used for debt relief. The U.S. Congress will probably go along with this increase but it could be a trump card used by the Congressman and Senators to bargain against any possible IMF gold sales. This group will “sort of” have the moral high ground. “OK you need to print more money – fine - just don’t sell the gold”. As an aside, this doubling of the SDR quasi money reserve most likely means the bankers are worried about future international monetary problems. In that regard you would think they would want to hold on to as much gold as possible.

Since central banks can literally create as much money as they desire, it would be very easy for them to add funds via the IMF’s NAB facility. (New Arrangement to Borrow) This is a facility set up to al

[verwijderd] 18 februari 2005 08:59

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DOLLAR COLLAPSE AND THE SILVER INVESTOR
by Jennifer Barry www.discountsilverclub.com

America has prospered since the Bretton Woods agreement enshrined the US Dollar as the world's reserve currency. Today, over 60% of currencies held by central banks are dollars. Half of world exports are priced in dollars, as well as all IMF loans, and OIL. In order to get dollars essential for trade, foreign banks have to buy Treasury bills, or sell goods and services to American consumers. We no longer have a gold standard to restrain the printing of dollars. They cost almost nothing to produce, so we get to buy foreign products very cheaply. Since we run a trade deficit, where we import much more than we export, America has in effect a 0% loan from the world. This is sustainable only as long as other countries consider us a good credit risk.

For many years, the dollar was strengthened by this built-in foreign demand. However, this strength caused our exports to be very expensive, and forced many US manufacturers to outsource or go bankrupt. In November, we hit a record trade deficit of $60.3 billion. The only way to narrow this gap is to print money, that is, pay for foreign products with dollars that are less valuable. Federal Reserve Chairman Alan Greenspan has obliged, but the trade deficit continues to widen. It's now topped 5% of GDP, a level which usually causes a currency crisis.

The value of the US Dollar is based on supply and demand, and right now the supply is too high for the world's needs. Since 1999, countries have a new choice: the Euro. Russia, China, the Philippines, and Japan are currently considering holding more euros in their currency reserves. Until the US invaded, Iraq was selling its oil in euros, not dollars. In 2003, Malaysia proposed that Islamic countries use the Gold Dinar for foreign trade amongst themselves. If this happened, the demand for dollars would drop further.

In the last 2 years, the dollar has weakened significantly against the Euro and other world currencies. Japan and China were buying dollars to bolster our economy, and ensure that Americans keep importing goods at a blistering pace. However, in March, the Japanese changed tactics. They stopped buying US Treasuries, and decided to sell more products to other Asian nations. They've even been talking about establishing the yen as an Asian reserve currency. If China stops propping up the dollar too, its value will fall even further.

So, how can silver investors benefit from this potential currency crisis? First, printing money causes commodity inflation, and silver is not immune. It may be manipulated right now, but eventually, the supply deficit will cause the price to skyrocket. Since the dollar will be losing value at the same time, the price will rise even higher versus the dollar. Silver's artificially low cost is actually a gift, because it lets you stock up before the investing world discovers precious metals.

Second, silver is a real asset, and it serves as a safety net for your retirement savings. Paper investments are a promise to pay, a debt obligation of someone else. What happens if they default? Social Security has $7 trillion in unfunded liabilities, and will eventually go bankrupt, so you can't depend on it long term. Stocks could crash again, and bonds are destined to lose value as interest rates rise. Silver, however, has intrinsic value, and it can never be worthless.

Third, as people watch the dollar decline, inflation heat up, and imports become more expensive, they will start to lose faith in the dollar. Faith is important, since the dollar is a fiat currency, with no intrinsic value to support it. People will dump paper promises, and flee to hard assets like silver. It happened in the 1970's, and the commodity boom didn't end until interest rates passed 20%. Silver might become popular as money again, like it was for most of American history. In fact, it's already started. You can spend precious metals for goods and services, using GoldMoney, the Liberty Dollar, and the Gold Dinar, for example. Monetary demand will make you glad you bought silver when it was cheap!

jennifer@discountsilverclub.com

[verwijderd] 19 februari 2005 17:15

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North American gold miners are still prospecting for partners

By Nicole Mordant Reuters Friday, February 18, 2005

www.reuters.com/financeQuoteCompanyNe...
duid=mtfh79704_2005-02-18_22-35-10_n17302066_newsml

VANCOUVER, British Columbia -- "If at first you don't succeed, try,
try again" could become the motto of North America's merger-obsessed
gold industry.

Despite an unimpressive track record of five failed takeovers and
just one success in the past year, millions of dollars spent on
advice and wiped off market values, analysts say big, but
especially, mid-sized miners are as eager as ever to purchase.

"Several companies need to do transactions in order to maintain
their growth and accelerate it because this industry shot itself in
the foot for the past 10 years by not spending on exploration," said
Gordon Bogden, managing director of investment banking at National
Bank Financial.

This week, Canada's Goldcorp Inc. sealed a $2 billion deal to buy
Wheaton River Minerals Ltd., the first big gold merger to get the
blessing of shareholders in a year.

Wheaton is no stranger to taking a trip to the altar, having tried
last year to tie the knot with Iamgold Corp. After that romance
fizzled, Iamgold attempted a union with South Africa's Gold Fields
Ltd. but that was scuppered by a bid for Gold Fields as the merger
musical chairs continued.

Gold miners basically have two choices to replace mined-out metal
and expand reserves: find it yourself or buy it.

As big discoveries can be likened to the proverbial needle in a
haystack and, in any event, it can take seven to 10 years from grass-
roots exploration to production, it is not surprising that companies
are looking for a quicker route.

"No one has that time in this window," Bogden said, talking of
miners' desire to take advantage of the best gold prices since 1988,
before the soft U.S. dollar, the key driver of bullion prices in
this cycle, rebounds again.

Gold prices rise on a weaker greenback because it becomes cheaper to
buy the dollar-priced metal in other currencies.

This week, a softer U.S. dollar again helped boost gold miners and
base metal shares on the Toronto Stock Exchange, helping push the
S&P/TSX composite index up 100.25 points, or 1 percent, to 9,658.75
over the five days.

Analysts expect most of the merger action to be around mid-sized
producers like Agnico-Eagle Ltd., Iamgold, Kinross Gold Corp., and
the newly enlarged Goldcorp, which has already said it's scouting
for an acquisition or two this year.

"A lot of these guys have lived off a quality asset, but to build
the business beyond that is very difficult," said Darko Kuzmanovic,
who manages the Prudent Global Gold Fund and Prudent Global Natural
Resources Fund at David W. Tice & Associates.

"That's why I think it's easier for them to consolidate rather than
to take the risk that a Meridian took," he said, referring to
Meridian Gold Inc.'s run-in with environmentalists and local
residents in Argentina, which shut down its Esquel development.

UBS analyst Tony Lesiak suggests a marriage between the "New
Goldcorp" and Agnico-Eagle, as the target's production fits the size
Goldcorp-Wheaton are looking for, both firms produce base metals in
addition to gold, and Agnico has some useful tax pools.

Kuzmanovic suggests the mid-tiers could buy smaller exploration
companies with big in-development projects, but only once these
ventures are fully permitted and less risky.

Names that come up include Crystallex International Corp. and its
Las Cristinas project in Venezuela, Gabriel Resources Ltd. and its
Rosia Montana find in Romania, as well as Minefinders Corp Ltd.,
Alamos Gold Inc., and Gammon Lake Resources Inc.

The push for relationships could also come from the juniors' side
because of the rocketing costs for building mines as steel and
energy prices soar, says John Bowles, British Columbia mining
practice leader at PricewaterhouseCoopers.

"There are a lot of small companies with big projects and, with
prices where they are going, they are looking for partners to
develop them," Bowles told Reuters.

Whatever happens, investment bankers, lawyers and journalists are
likely to be kept busy again this year.

[verwijderd] 22 februari 2005 08:52

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The Maestro Changes His Tune by Rep. Ron Paul, MD

Nearly 40 years ago, Federal Reserve chair Alan Greenspan wrote persuasively in favor of a gold monetary standard in an essay entitled Gold and Economic Freedom. In that essay he neatly summarized the fundamental problem with fiat currency in a few short sentences: “The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit… In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value… Deficit spending is simply a scheme for the ‘hidden’ confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”

Today, however, Mr. Greenspan has become one of those central planners he once denounced, and his views on fiat currency have changed accordingly. As the ultimate insider, he cannot or will not challenge the status quo, no matter what the consequences to the American economy. To renounce the fiat system now would mean renouncing the Fed itself, and his entire public career with it. The only question is whether history will properly reflect the destructive nature of Mr. Greenspan’s tenure.

I had an opportunity to ask him about his change of heart when he appeared before the House Financial Services committee last week. Although Mr. Greenspan is a master of evasion, he was surprisingly forthright in his responses to me. In short, he claimed he was wrong about his predictions of calamity for the fiat U.S. dollar, that the Federal Reserve does a good job of essentially mimicking a gold standard, and that inflation is well under control. He even made the preposterous assertion that the Fed does not facilitate government expansion and deficit spending. In other words, he utterly repudiated the arguments he made 40 years ago. Yet this begs the question: If he was so wrong in the past, why should we listen to him now?

First, the Federal Reserve does not mimic a gold standard by any measure. The clearest example of this lies in our current account deficit, which our fiat currency encourages. Under a gold standard we would not have exchange rate distortions between the Chinese renminbi and the U.S. dollar, for example. True currency stability is impossible when fiat dollars can be produced at will and foreign lenders bankroll our deficits.

Second, inflation is a much greater problem than the federal government admits. Health care, housing, and energy are three areas where costs have risen dramatically. The producer price index is rising at the fastest rate in seven years. Bond prices are rising. To suggest that rapid expansion of the money supply and artificially low interest rates do not ultimately cause price inflation is absurd.

Third, Fed policies do indeed have adverse political ramifications. Fiat currency and big government go hand-in-hand. Without a gold standard, Congress is free to spend recklessly and fall back on monetary expansion to pay the bills. Politically, it’s easier to print new dollars than raise taxes or borrow overseas. The Fed in essence creates paper reserves that enable Congress to undertake spending measures that far exceed tax revenues. The ill effects of this process are not felt by the politicians, who can always find popular support for new spending. Average Americans suffer, however, when their dollars are “confiscated through inflation,” as Mr. Greenspan termed it.

It’s not enough to question the wisdom of Mr. Greenspan. Americans should question why we have a central bank at all, and whose interests it serves. The laws of supply and demand work better than any central banker to determine both the correct supply of money in the economy and the interest rate at which capital is available – without the political favoritism and secrecy that characterize central banks. Americans should not tolerate the manipulation of our economy and the inflation of our currency by an unaccountable institution.

February 22, 2005

Dr. Ron Paul is a Republican member of Congress from Texas.

[verwijderd] 22 februari 2005 09:01

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Hi GH !
Vandaag lijkt een goeie dag voor de metals en de miners te worden.
PoSilver: +$ 0.16
PoGold: + $ 4.20
Palladium: + $ 14

Het mag ook wel, de correctie heeft lang genoeg geduurd.
Het wordt tijd voor nieuwe Highs..

Groet

[verwijderd] 24 februari 2005 16:45

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Consumer demand for gold rose in 2004 for first time in four years

By Veronica Brown Reuters Thursday, February 24, 2005

www.reuters.co.za/locales/c_newsArtic...
3271e2f?type=businessNews&localeKey=en_ZA&storyID=7722316

LONDON --- Consumer demand for gold jumped 7 percent in 2004 -- the
first rise in four years -- with sharp price rises failing to deter
buyers, the industry-backed World Gold Council said on Thursday.

The outlook for 2005 pointed to weaker growth, however, as times
were harder and jewellery purchases less likely.

Global jewellery demand, accounting for a major share of
consumption, rose 7.5 percent in the fourth quarter of last year
compared with the year-earlier period, figures compiled for WGC by
consultants GFMS Ltd showed.

Jewellery demand for 2004 was estimated to be six percent higher
from 2003 at 2,673 tonnes.

"What we've seen in the past is that when the price rises people
tend to hang back from purchases. The reports we're getting show
that increasingly consumers expect prices to at least remain firm
and probably to rise," WGC economic adviser Jill Leyland told
Reuters.

"A lot of jewellery is bought as a form of savings, or even
investment. If you expect the price to rise, that will increase
desirability of the product," she added.

Bullion prices shot to their highest in 16 1/2 years in December at
$456.75 an ounce due to its inverse relationship with the dollar,
which plumbed record lows against the euro.

Analysts polled by Reuters in January expect the price to extend
gains in 2005.

Net retail investment grew 15 percent in 2004, with the China
Banking Regulatory Commission approval in late December for Chinese
banks to market retail investment products seen as a breakthrough.

Institutional investor demand was less buoyant, despite a positive
phase in the fourth quarter due to the launch of the New York-listed
streetTRACKS exchange-traded fund in November.

Institutional investment, including stock building and other items,
showed total net disinvestment of 124 tonnes in 2004 compared with
net investment of 653 tonnes in 2003.

"This largely reflects net disinvestment over the year
(notwithstanding the rise in Q4) by short-term speculative buyers
who had bought in 2003 and who sold their holdings when the price
fell back after the peaks early in the year," the report said.

"The scale of disinvestment was substantially lower than the amount
of purchasing in 2003, suggesting that many buyers had bought with a
longer-term perspective and held on to their investment."

On a regional basis consumer demand, including jewellery and retail
investment, rose 17 percent in 2004 in India -- the world's largest
gold market.

Leyland also said a "mini rush" had developed in rural areas of
India where people were living with the aftermath of December's
deadly Tsunami.

Leyland said distribution of financial aid to victims had prompted a
surge in gold jewellery in certain affected areas of Tamil Nadu -- a
key gold buying state."The reason is that people can wear the gold on their person so it's secure...until they are able to use it more constructively," she said.

Turkey retained its spot as the third biggest global consumer market
after India and the United States, with record annual jewellery
consumption and consumer demand.

Demand in major consumer China was up 13 percent in 2004, with better designs and higher gold prices helping to brighten the metal's allure.

United States jewellery demand was down slightly on 2003 in volume
terms, although value rose 12 percent.

"Retail spending in the U.S. was generally strong last year, but as
the year progressed became more fragile due to its reliance on
increasing household debt and to concerns about the future of the
economy," the report said.

Domestic demand from Italy, the world's biggest exporter of
manufactured gold jewellery, fell in the last quarter of 2004,
although a clear trend was seen there and in other western markets
for moving towards higher-end pieces.

[verwijderd] 3 maart 2005 13:09

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Consumer Demand For Gold On The Rise In China Thursday March 3, 07:02 PM

BEIJING, March 3 Asia in Focus - 2004 consumer demand for gold in the Chinese mainland jumped 12.8 per cent on-year. According to statistics from the World Gold Council (WGC), the mainland's consumer demand for gold reached 234 tonnes in 2004, up from 207.4 tonnes in 2003.

* China is the world's fourth biggest gold consumer after India, the United States and Turkey.

* China's gold demand is forecast to continue rising on the back of the country's economic growth and bullish gold prices, WGC added.

SUMMARY

2004 consumer demand for gold in China jumps 12.8 pct, says World Gold Council

[verwijderd] 4 maart 2005 09:12

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Paper $ Dead man walking!
HCM Daily Client Market Letter Harris Capital ManagementBoca Raton, Florida
March 3, 2005 www.harriscapitalmanagement.com

Below I have linked an interesting paper coming out of Dubai. This is a very interesting report and will undoubtedly have some influence on
Middle Eastern thinking regarding currencies. Among other things, this paper concludes that the price of gold is indeed managed by the G8.

The reason I think it's important is that if the Middle Eastern governments had much sense, they would be selling most of those petrodollars, buying gold, and storing it in a Russian bank before Wolfie and Rummy come knocking with the nasty stuff, which I don't think is more than a few months away.

The real currency is crude oil, and they're willingly exchanging it for paper before the bombs come. Not too bright, if you ask me. ...

"The Role of Gold in the Unified GCC Currency" The Gulf Research Center, United Arab Emirates
By Eckart Woertz
Vice President of CFC Securities, Dubai

Conclusion: "The paper dollar standard is a dead man walking."

www.gata.org/The%20Role%20of%20Gold%2... BW)(TX-GATA) Dubai Study Endorses GATA's Findings on Gold Market Rigging, Warns Oil Producers
¶ DALLAS--(BUSINESS WIRE)--March 3, 2005--A study
published by a research foundation in Dubai has endorsed the Gold Anti-Trust Action Committee's findings that Western central and commercial banks have rigged the gold market but have much less gold than they claim to have and so are vulnerable to rising demand for gold. The study recommends that the oil-producing countries of the Middle East diversify their ever-depreciating U.S. dollar holdings into gold.

¶ The study, "The Role of Gold in the Unified Gulf Cooperation Council Currency," was written by Eckart Woertz, vice president of CFC Securities in Dubai, for the Gulf Research Center. It quotes the work of GATA's consultants, including Frank Veneroso, and predicts that the gold price suppression scheme of the Western banks will fail just as their similar scheme of the 1960s, the so-called London Gold Pool, failed when the drain on Western gold reserves became too great. Once the scheme fails, the study says, "it will be highly difficult and expensive to accumulate a gold reserve. This is especially true for central banks that have low gold
reserves like those in the Gulf Cooperation Council countries."

¶ The study concludes: "The paper dollar standard is a dead man walking. Its debt, accumulated over the recent decades, is too high to be fectively repaid. It will either default or be inflated to such an extent that it
will not 'hurt' to pay it back. Therefore, the accrued imbalances in global finance and the inherent weakness of worldwide growth models that rely on a continuance of U.S. deficit spending are likely to usher in a serious crisis of currency systems in coming years.

¶ "Gold will be a suitable means of asset protection and ultimate payment in such a scenario. It will preserve the wealth of individuals and central banks alike and will ensure important maneuverability for the latter."

¶ GATA believes that the study is likely to have a profound influence on governments, banks, and investors in the Middle East and may accomplish there what the similar report by Sprott Asset Management of Toronto -- "Not Free, Not Fair: The Long-Term Manipulation of the Gold Price" --
is accomplishing in the West.

¶ The Middle East's oil-producing countries are especially obliged to heed the Gulf Research Center's study because their economies are based on a wasting asset, oil, whose depletion will leave them with little more than sand if the payment they receive is substantially depreciated or defaulted upon. In exchanging a real asset for paper assets that represent only unpayable debts, oil-producing countries are at imminent risk of massive expropriation.

¶ The study has been posted at the GATA Internet site here:
www.gata.org/The%20Role%20of%20Gold%2...

¶ GATA urges its supporters to publicize the study around the Internet and in communications with mining companies, investment houses, and news organizations.

[verwijderd] 4 maart 2005 13:13

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doe mij ff een cursus speedreading....pfff

[verwijderd] 5 maart 2005 12:15

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French Gold Sales Have Stopped!

Julian D.W. Phillips, editor of Gold-Authentic
Money, reports that French gold sales have
stopped. You can find his analysis at
GoldSeek here:

news.goldseek.com/AuthenticMoney/1110...

[verwijderd] 7 maart 2005 11:01

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Crude Oil Rises in Terms of the Euro

In February 2004 I wrote: "OPEC … appears to be pricing crude oil in terms of the euro." Analyzing the price of crude oil from 2001 through 2003, I noted that while crude oil's price rose 26.1% in dollar terms, its euro price was unchanged throughout this 3-year period. Thus, the jump in the crude oil price was a dollar phenomenon, and simply reflected the decline in the dollar against the euro.

The data for 2004 is now available. It shows that crude oil is now also rising in terms of euros, as can be seen from the data in the following table. The import data is from the Department of Commerce report entitled U.S. International Trade in Goods and Services. The source for the euro exchange rate is the Federal Reserve, and I have calculated the euro's average exchange rate to the dollar for each year based on daily data.

US Imports of Crude oil
(1) (2) (3) (4) (5) (6)
Year Quantity (thousands of barrels) Value (thousands of US dollars) Unit price (US dollars) Average daily US$ per € exchange rate Unit price euros)
2001 3,471,067 74,292,894 21.40 0.8952 23.91
2002 3,418,022 77,283,331 22.61 0.9454 23.92
2003 3,676,006 99,167,171 26.98 1.1321 23.83
2004 3,820,527 131,699,873 34.47 1.2438 27.71

We can see from column (6), the euro price of crude oil in the past year climbed 16.3% from €23.83 to €27.71. Thus, breaking from the results of 2001 to 2003, crude oil is now becoming more expensive in terms of both euros and dollars. But it is not just crude oil that is becoming more valuable (i.e., higher priced) in terms of the major national currencies. The rise of the CRB Index this past week to a new 24-year high is solid evidence that commodities in general are being re-rated by the market.

Gold is lagging this rise in commodity prices. In contrast to the CRB Index, gold is 45% below its 24-year high. Therefore, gold is relatively cheap and as a consequence, good value. It also means that gold has a lot of catching up to do, so gold is likely to outperform other commodities from here.

Gold has risen three years in a row, averaging over 13% per annum. Given the surge in the CRB Index, the odds are that gold is going to rise this year too, making it four years in a row. A 13% rise means gold would end this year at $494.40. And if it were to match the level already achieved by the CRB Index, gold's 24-year high is over $800.

Given that the CRB Index is already at a 24-year high, I do not think that gold will remain too far behind.

goldmoney.com/en/commentary.php#current

[verwijderd] 8 maart 2005 23:23

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Buffet In GOUD???
Is Gold Among Warren Buffett's $21.4-bn Currency Investments?

By Tim Wood 08 Mar 2005 at 01:27 PM

TORONTO (ResourceInvestor.com) -- Exactly two years ago, Mitsui Metals analyst cum gold bug pincushion, Andy Smith, distributed a delightful note to clients speculating about the possibility of Warren Buffet being invested in gold. Smith may have been more right than he realized.

The coke chugging, burger bolting chairman of Berkshire Hathaway has just told his investors that they were exposed to 12 currencies through $21.4 billion worth of foreign exchange contracts. What is not clear is if Berkshire has placed gold within the broad description of "currency"; which would be an accurate appellation for the metal which has been tightly twinned with the euro for some time.

Buffett is no obvious friend of gold having said of the metal in 1998 at Hahvahd: "It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."

Andy Smith was clued in to Buffett's potential revision by the terminology he employed for some portions the 2002 Berkshire annual report which was very gold buggish in its views on derivatives. Indeed, the 2004 report dealing with the US dollar and America's deficits, just released, could be a verbatim replay of the sort of the case put forward by the likes of Newmont's Pierre Lassonde and Dr Martin Murenbeeld.

For example, Buffett dissents from the more mainstream economist view that the trade and budget deficits are benign necessities that secure the world against economic depression. Buffett issued an exceptionally stern condemnation of the mercantilist attacks on America by its trading partners, which he says are resulting in the transfer of treasure abroad and fostering a de facto royalty mechanism.

"As time passes, and as claims against us grow, we own less and less of what we produce. In effect, the rest of the world enjoys an ever-growing royalty on American output. Here, we are like a family that consistently overspends its income. As time passes, the family finds that it is working more and more for the "finance company" and less for itself," Buffett wrote.

Buffett did not say it in as many words, but he is clearly suggesting that in such a scenario Americans would eventually refuse to pay tribute. In which case you'd better be holding gold as insurance.

Buffett is no stranger to precious metals having once poured 2% of Berkshire's wealth into silver; a 4,000 tonne position that was apparently liquidated at a loss.

Back in early 2003, Smith noted that you didn't need to see "gold" printed in the annual report - it was just between every line.

The caveat is that Buffett loves to talk to his book, and his annual reports are packed with populist themes, be it homilies against crooked executives or visions of a WMD attack on America. At the risk of sounding conspiratorial, it is notable that the Berkshire report, which would have been through the printers and editors for a while, was timed rather well against recent dollar weakness.

He is no fool and he knew that his comments would swing the currency market, just as any hint of an acquisition by Berkshire rocks the equity market.

It's always important to isolate the "Charlie and I" segments in the report. The 2003 highlight was: "Charlie and I believe Berkshire should be a fortress of financial strength… We try to be alert to any sort of mega-catastrophe risk…derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal."

This year it is: "Charlie and I run a clear risk with our foreign-exchange commitment. But we believe in managing Berkshire as if we owned 100% of it ourselves. And, were that the case, we would not be following a dollar-only policy."

That's a smoke-screen for shifting the market by semaphoring for the herd to follow his lead, something Buffett cannot do as easily with other securities because of regulatory controls.

That would suggest that if Buffett is invested in gold, it is small percentage rather than a big bet because it is clear that liquidity is upper-most in his mind as Berkshire looks for opportunities to deploy $43 billion into securities that are not macro-economic bets. However, the advent of gold ETFs does provide a means to play the market better through nominee structures and so avoid getting scalped by the coterie of bullion dealers.

FOOTNOTE: It is interesting that Buffett is so full of praise for the Financial Times which still holds the editorial line of its former economics correspondent, Gerard Baker, that the US deficits are necessary; or as he recently put it in Foreign Policy: "The political bloodletting that would ensue [were the US to cut its trade and budget deficits] would make the world wish it had kept quiet.

© Copyright 2005, Resource Investor.

[verwijderd] 10 maart 2005 12:39

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Gold again headed for new highs! Gareth Tredway '09-MAR-05 18:00'

JOHANNESBURG (Mineweb.com) -- A weak dollar has again fuelled another rally in the dollar gold price, pushing the yellow metal above $440/oz for the first time this year.

“Again the move in gold was induced by a weak dollar, as the euro broke a key level of $1.3270,” said Gregor Krall, technical analyst at BOE Private Client in Cape Town, “It (the euro) should hit $1.35 to $1.36 quite easily.”

Krall says it “is looking pretty bullish for gold” and if the metal were to track such a euro move then the price would reach and exceed the plus $456/oz 16 and a half year high reached in early December last year. According to Krall, gold could be taking a “breather for the next day or so”, and would head towards the record levels in “a few weeks.” Levels to watch are $445/oz and $457/oz according to Krall.

Standard Bank in London says traders are now looking for gold to target $450/oz. “The current state of the market is one, which is hypnotic and easily lulls one into complacency,” said the daily note from the precious metals division, “If that was true, we could be due for erratic sessions ahead.”

Leon Esterhuizen, precious metals analyst at Investec in Johannesburg, says gold could go two ways. One, inflation could be becoming an issue in the US as oil prices are again hitting high levels. “This could force them to increase interest rates at a faster level putting pressure on the dollar,” says Esterhuizen.

On the other hand, Esterhuizen says inflation measures put in place could control prices and allow the Federal Reserve to increase rates at its measured pace as previously indicated.

On Monday, US consumer credit figures increased from $8.7 billion in December to $11.5 billion in January. The market had forecast a decrease to $6.5 billion.

Gold producers in South Africa, the country that produces the most gold, are struggling under a strong rand environment. DRDGOLD recently announced restructuring at its largest South African operation. While an elimination of continuous operations at some of Harmony’s operations, means the company could retrench more staff.

And as if this were not enough, wage negotiations between unions and miners are set to start in June.

Krall says a break point in the rand gold price is R2650/oz. By Wednesday afternoon (SA time) gold was trading at R2546/oz. In the dollar terms gold was trading at $440.65.

[verwijderd] 14 maart 2005 08:48

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Mexico Mulls Silver Lining Against Currency Crash By Pav Jordan
Reuters Sunday, March 13, 2005
www.reuters.com/newsArticle.jhtml?typ...

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

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

The central bank opposes the plan as anachronistic.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[verwijderd] 14 maart 2005 09:58

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Nog een leuke wetenswaardigheid over "SILVER"

The Coming Silver Accident

By: Theodore Butler

Perhaps "accident" may not be the precise word to describe what I see coming in silver. After all, Webster’s defines accident as "an unforeseen and unplanned event or circumstance." While that definition certainly encompasses what I see ahead in the silver market, I need to add a qualifying adjective to complete my vision. That word is unavoidable. The silver market is headed towards an unavoidable accident.

This will not be like any accident you have ever witnessed or experienced. This is an accident you can fully prepare for, and greatly profit from. This coming silver accident could favorable and permanently alter your family’s standard of living and financial security. The great news is that preparations for this accident are simple and merely depend upon you applying common sense.

At the core of what makes the coming silver accident unavoidable is the immutable law of supply and demand. Supply and demand ultimately governs how all markets function. While some markets, including silver, can be artificially controlled or manipulated in price for long periods of time, eventually such manipulations must end if they are at odds with supply and demand.

Nothing has been more at odds with the basic law of supply and demand than the silver market. For many decades, the world has consumed more silver than it has produced. That has necessitated a draw down of previously produced silver - the existing inventories. There has never been a situation in any commodity where such conditions have failed to cause a dramatic price increase. While supply and demand mandates a sharp price increase, it has not yet come. That’s the groundwork for the coming silver accident. When it comes, the price will explode upward and reach levels that are talked about for decades to come.

The primary factors mandating a silver accident are excessive naked short selling and leasing. Silver has the largest short position that’s ever existed in anything. This is the key component to the coming silver accident. The total naked short position in silver measures into the billions of ounces and towers over real world supplies. This combined short position includes the COMEX, all other exchanges, forward selling and leasing, the cumulative issuance of unbacked silver bank certificates, unallocated storage programs and pool accounts. No other commodity has such a huge naked short position.

It is, basically, this bloated short position that’s at the heart of the coming silver accident. It is this same excessive short position that guarantees a financial windfall for your family. A naked short sale is the sale of something you don’t own. While common in financial markets, more than 99% of the world’s population will never sell short anything in their lifetimes. That’s because it’s an unusual and unnatural financial transaction.

Unbridled short selling can artificially depress the price. That is why we have restrictions on short selling that date back to the great stock market crash of 1929. In commodities, there must be a short for every long on every futures contract. Regulations are supposed to preclude excessive long and short speculation via speculative position limits, but these regulations have been abandoned in COMEX silver, despite the efforts of many of us to correct that.

There is one other aspect about short selling that is important to grasp. Whereas the word "sale" means closure or finality in all the billions of daily world business and financial transactions, a short sale is always an open or incomplete transaction. A normal sale marks the end of a transaction. A short sale marks the beginning of a transaction. A short sale must be completed at some point, in some way. There is no exception to this rule. Either the short sale is repurchased and closed out, or that which has been sold short is actually delivered and the open short sale is closed.

Precisely because all short sales must be closed out guarantees a silver accident. When I say that silver has the largest short position in history, I am also saying that silver has the largest number of incomplete transactions in history. Forget, for the moment, the manipulative and depressing effect this monumental short position has had on the price.

All short sales must be closed out in someway. With silver, could it be by delivering silver? Against the billions of ounces of silver sold short, how much do we have to deliver to close out these incomplete transactions? In the COMEX warehouses there’s 100 million ounces. That represents most of the known silver bullion in the world, but it’s mostly owned by investors other than the short sellers. Maybe there are a billion ounces of silver in the world, in coins, small bars and silverware, but that’s not eligible for delivery against the silver short position of billions of ounces. Not only is all the world silver in existence woefully insufficient to cover the monstrous short position, but most of this insufficient quantity isn’t even owned by the short sellers.

That’s why I’ve made such a big deal about the uniqueness of a silver short position that’s larger than existing world inventories. It eliminates one of the only two legitimate ways in which a short sale can be closed out. That’s why we’ve never seen any other commodity with a short position greater than what actually exists. How can you have a short position in anything greater than what actually exists?

The only remaining legitimate way a silver short position can be closed out is if it were bought back by the short sellers. From whom are these short sellers going to buy hundreds of millions and billions of silver ounces from? Or more correctly, at what price? Since actual delivery is out of the question, the only way the short sellers can buy back their bloated silver short position is to get every owner of real silver and every owner of paper silver to sell out. The price that would be necessary to accomplish that feat would qualify in any reasonable definition as an accident.

While there is no way to determine when the silver shorts will spook and rush to cover, time is not on the shorts’ side. They must try, at some point, to buy back and cover the silver they can’t possibly deliver. It is not important to know in advance what the actual trigger for the silver accident will be. All you need know is that with the critical and long-term physical deficit in silver, the short selling charade must end. Since we can’t determine when, don’t focus on the timing, focus on the inevitability of a delivery crunch.

Long-time readers know that Investment Rarities has been underwriting my articles for the past four years. For most of that time, the silver price averaged between four and five dollars. For the past year, the silver price has been six, seven or eight dollars. Does this increase mean that the price has finally responded to the law of supply and demand, and therefore eliminated the chance of a silver accident?

Normally, a price increase of 50% or 100% in a commodity should be sufficient to balance any consumption deficit. That’s a big move in any commodity. But not for silver. That’s because the consumption deficit in silver is unlike any other commodity deficit. Silver has been in a structural deficit stretching back for more than a half-century. You don’t

[verwijderd] 14 maart 2005 10:00

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het vervolg SILVER

Normally, a price increase of 50% or 100% in a commodity should be sufficient to balance any consumption deficit. That’s a big move in any commodity. But not for silver. That’s because the consumption deficit in silver is unlike any other commodity deficit. Silver has been in a structural deficit stretching back for more than a half-century. You don’t undo the damage of 60 years with a 50% or 100% gain.

There is zero evidence that production or consumption has been impacted by the price, or that the silver deficit has been cured. There has been no worldwide rush to find new silver mines in response to higher prices. Silver may have increased in price, but there has been zero effect on near-term production increases or substitutions in demand. No one has switched to gold or platinum jewelry because silver is up in price. The law of supply and demand hasn’t been affected one bit as a result of the recent price increases. The first prerequisite for the coming silver accident is very much intact. However, it takes more than a bullish supply and demand equation to cause a violent price event. Bullish fundamentals point to higher prices but not necessarily a price accident. In the silver short position, we have the needed reason, in spades, for an accident.

As a result of the 60-year structural deficit, we have exhausted just about all the world’s previously existing silver inventory. That includes just about all world governments’ silver inventory. When the unavoidable silver accident occurs, there will be no one to douse the price fire. This can’t be said about any other commodity.

This fact distinguishes between a gold and a silver accident. In gold, in a financial meltdown or currency crash (popular reasons given for a gold price accident), world governments own enough gold to extinguish a price explosion. In silver, they don’t own enough silver to put out a fire.

It’s rare to be presented with an unavoidable financial accident that you can personally benefit from. If you find my argument has merit, then position yourself in silver before the coming accident. If you wait until the accident happens, it will be too late.

*****

Leuk te weten,

groet,

Lucky

[verwijderd] 15 maart 2005 08:54

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Dear Friend of GATA and Gold:

Thanks to GATA supporter Mark Webber for transcribing the interview with Sprott Asset Management's John Embry on ROB-TV's "Night Cap" program in Canada last Thursday, March 10. The transcript, with a little editing, is appended here.

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

ROB-TV's "Night Cap" with Kim Parlee,substituting for Howard Green.
Thursday, March 10, 2005

Kim Parlee: Joining me on "Night Cap" tonight is John Embry. He is chief investment strategist at Sprott Asset Management. John, it's nice to see you.

John Embry: Nice to be here.

Kim Parlee: Let's start off with the selloff that we're seeing right now in all of the base-metal stocks, the energy stocks right now. I'm serious. Do you, would you see the similar thing happening with gold?

John Embry: Well, no. Gold's already done that. We saw that sort of thing starting in December. First we went through a couple of ugly months with gold. And gold is so far behind the other commodities that have been going up steadily that if you look at virtually any metric that I do, whether it's the CRB or oil prices, gold is severely undervalued compared to those. So no, I would be surprised if there was any significant selloff in gold.

Kim Parlee: Is it also the fact that it's linked to a currency? I mean, there is so much happening with that, that you're not going to see the same kind of volatility because it has that stability, I guess?

John Embry: That's an actually interesting observation because gold
is starting to reassert itself as a currency and that's why it is
attractive. It's attractive I guess as a commodity because there's a
lot more demand than there is supply coming out of the ground. But
the real thing that's going to drive gold going forward is it sort
of reasserts itself as the hard currency of choice.

Kim Parlee: That's interesting because we're hearing a lot of central bankers talk more about diversifying out of U.S. dollars. You know, not talking about diversifying into gold specifically, but just that say getting out of U.S. dollars, making gold more attractive.

John Embry: I think so. Definitely, they are going to be
diversifying out of U.S. dollars. Why they say it ahead of time, you know? That is, tell people what they are going to do and they jolt the market. I think they are sending a message to the U.S.: "Guys, get your act together." And then they keep coming out and denying that they're going to do anything. But it is sort of an ongoing process so I think it is significant. I think the foreigners recognize that the U.S.'s reckless path could put everybody in difficulty.

Kim Parlee: Reckless path on the budget deficit side?

John Embry: Budget deficit and allowing the current account deficit
just to blow out to epic proportions. I mean, you're talking like
close to $700 billion a year. And now the U.S. is $3 trillion in the
hole vis-a-vis the rest of the world. And it wasn't that long ago
that they were actually a creditor nation. Now they're a debtor
nation the likes of which have never been seen.

Kim Parlee: It's interesting because it's not just the foreign
central bankers who are giving their warnings. Greenspan is actually
just coming out right now and warning that budget deficits, right
now, are a bigger threat than the trade imbalance. Now the trade
numbers are coming out tomorrow as well. Do you agree with that?

John Embry: I think they're related. It's funny because Alan Greenspan basically endorsed Bush's tax cuts and what have you. And now that we have the serious budget deficit problem, which you could have predicted, he's coming out and saying they've got to do something about the budget deficit. So he's talking, to some extent, out of both sides of his mouth.

Kim Parlee: What's the next catalyst for gold? Is it still in the
U.S. dollar?

John Embry: Initially, I think, it is going to be the U.S. dollar.
Now but I believe it will go far beyond that. Because eventually the
U.S. dollar just can't fall to nothing, which a lot of people seem
to think. But one of the things that won't restrain it from falling
is that the other countries will be forced to debase their
currencies by printing more money to keep their currencies from
rising too much against the U.S. dollar. We've seen it in Canada.
Don Coxe is a friend of mine and I saw Don a couple of times in the
last couple of weeks. He is convinced that the Canadian dollar is
going to par. I don't think the Canadian government has any
intention of allowing it to go to par because our commodity business
would be fine but Ontario and Quebec would be wiped out.

Kim Parlee: Our manufacturing base?

John Embry: Our manufacturing base would be murdered. So we're all
alone. They talk about the euro going to 1.60, 1.70? Europe's not
that competitive with the United States at even 1.40. So I don't buy
the idea. The currencies that are severely undervalued are clearly
the Asian currencies. And they are the ones that will ultimately
rise a lot against the U.S. dollar.

Kim Parlee: But if you're a Canadian central banker, what do you do
with so much interest in commodities, oil, energy? How do you
dissuade people from buying Canadian dollars?

John Embry: That's a good question because I think David Dodge gave
a speech in Vancouver several weeks ago in which he said, "If it was
a legitimate rise in the Canadian dollar because terms of trade were
improving, because commodity prices were rising," etc., he would
probably not intervene to a great extent. But if it's driven by hot
money, which will be the second step, you'll see it rising and then
all the hot money sloshing around the world will come pouring into
the Canadian dollar. The only way you can combat that is by dropping
interest rates sharply and try to make it as unattractive as possible. It's not beyond the realm of possibility that you can go to par. But it would be so devasting for the Canadian economy, particularly the central part of the country, that I don't think it would stay there long because the country would be going to hell in a handcart.

Kim Parlee: I think we're going to leave it there for the moment.
Good note to finish off on.

John Embry: OK.

Kim Parlee: That's John Embry, chief investment strategist at Sprott
Asset Management.

[verwijderd] 16 maart 2005 08:34

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Is the Gold Price Being Managed? By James Turk March 15, 2005
www.kitcocasey.com/displayArticle.php...

On March 10th GATA (www.gata.org) issued a press release that presented an analysis of the gold market prepared by Dan Norcini, a futures trader based in Houston, Texas. Observing that the Commodity Research Bureau (CRB) Index – which is composed of seventeen different commodities important to economic activity – had just reached a new 24-year high, Norcini noted that gold was not keeping up with the rise in commodity prices.
To provide evidence supporting his observation, Norcini compared 1980 monthly closing levels of the CRB Index with the monthly closing gold price prevailing at the time. From July 1980 to January 1981 was the only time prior to this year when the CRB Index traded above 300. These results are presented in the accompanying table, which appeared in the GATA release.

GATA observed: "With the CRB Index where it is today …the price history of the last boom in commodities suggests that gold now should be priced between $591 and $647 per ounce -- and that does not adjust for the dollar's loss of purchasing power in the last 25 years."

Their press release then pertinently concludes: "Gold's failure to keep up with exploding commodity prices, as it did during the last commodities boom in 1980, is more powerful evidence of surreptitious intervention by central banks in the gold market."

It is a conclusion to which I wholeheartedly agree, and I would like to expand upon Norcini’s observations by presenting the relationship between gold and the CRB Index since 1980. My objective is to provide additional analysis that will bolster Norcini’s and GATA’s work, by making available more evidence that the gold price is indeed being managed, the net result of which is preventing gold from achieving its natural market price.

It will be useful to start with some brief background information. Gold is a unique commodity because it alone is the only commodity produced for accumulation. Every other commodity is produced for consumption. We eat corn, and our cars burn gasoline. Copper is consumed in the sense that it is dispersed in countless applications throughout the world. Even silver is consumed, to the extent that it is used in irretrievable photographic processes. But gold is not consumed; it is hoarded. For this reason, gold’s utility does not arise like other commodities from innate attributes and uses related to their consumption, but rather, gold’s usefulness arises from the fact that it is not consumed. In other words, because it is hoarded, gold is a store of value, which means that gold is money.

Because it is money, gold is sensitive to inflation and prices, so when left unfettered, gold leads the CRB Index. Turning to the above table, you may recall that gold peaked in January 1980, several months before the peak reached by the CRB Index. It leads on the upside – gold peaked before the CRB in 1980. Gold also leads on the downside. Historically gold has bottomed before the CRB Index, as can be seen in the following chart:

This chart presents both the month-end CRB Index and the spot New York gold price since January 1982. It’s a dual scale chart, with gold’s price on the right-hand scale and the CRB Index on the left.

In the first years of this chart, the relationship between the CRB and gold is clear. Gold is leading the CRB both to the upside and downside (points A, B and C), which is the result to be expected. However, by the early 1990’s their relationship changed significantly – gold was now lagging the CRB (note points D, E and F).

Point E is also noteworthy because gold’s rise lagged that of the CRB Index. In other words, it appears that gold’s advance in 1996 should have been much higher than the $405 price achieved, providing a substantial clue that the gold price was being managed to prevent gold from reaching its natural price level.

Further support for this conclusion comes from point G. Note that the CRB rose without any meaningful rise in the gold price. The results since then also lend credence to the argument that the gold price is being managed.

Note how the gold price has been lagging since point H – rather than leading – the CRB Index. Even though gold, as to be expected, bottomed in 2001 before the CRB, the CRB quickly began climbing more rapidly than gold, exactly the opposite experience of the advances leading to points A and C. What’s more, note the disparity at point I. The above chart completely supports GATA’s conclusion “that gold now should be priced between $591 and $647 per ounce.” Gold is well below the level already achieved by the CRB, clearly indicating – just as GATA concluded – that someone is trying to cap gold’s ascent.

Further evidence of this price capping is provided by John Brimelow (www.johnbrimelow.com) in his March 10th market review. He states: "In the last twelve business days, gold has risen $15.80 (3.6%) and [Comex] open interest has gone up 38,393 contracts, 14.7% or 120.66 tonnes. In essence, something funny has happened to the gold market. And clearly, as the open interest surge demonstrates, a large seller is currently preventing gold from joining the general commodity party."
A "large seller" indeed. As Norcini puts it: "Anyone who has the least bit of market understanding would have to ask who it is that sells in such a fashion and WHY?" And who could that large seller be other than a central bank? No profit-maximizing investor or trader would take the undue risk of selling gold in the manner described by Brimelow and at these levels given gold’s undervaluation compared to other commodities, as measured by the CRB Index. So it is logical to point the finger at central banks, as they do not exist to maximize profits. We know they exist to thwart and impede the free-market process through their ongoing interventions, whether furtive and not disclosed or open and announced, which brings us back full circle to the important difference between gold and all other commodities.

Central banks don’t hold soybeans, cocoa, copper or any other commodity. So central banks have no ammunition to keep the CRB Index from rising, but they do have a hoard of gold to use in market interventions. Thus, they no longer use that gold in its rightful and historical role as a reserve for the paper currency they issue. Instead, they see gold as a tool, which they combine with their incessant jawboning aimed at talking down the gold price, to add some occasional punch to what they mouth. They take some of their physical metal, but only as little as possible because their hoard is finite, and sell or lend it into the market. Then to maximize the impact of these occasional sales of physical metal, they sell through their intermediaries as much paper-gold (for example, Comex futures contracts) as the market will bear. So as Brimelow points out, Comex open interest boomed, while gold itself showed relatively little price ppreciation.

So, are these reasons to be bearish about gold’s prospects? Far from it. The net result of these central bank actions explains why I am so bullish on gold.

Central banks have created a wonderful opportunity for everyone who understands gold. Their interventions have made gold exceptionally undervalued. Relatively speaking, it is the cheapest commodity available for purchase, which is the flip-side of the analysis presented by GATA,

[verwijderd] 16 maart 2005 11:15

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Daily US Metals Commentary

March 15, 2005

METALS: OVERNIGHT CHANGE to 3:45 AM:London Gold Fix $442.00 -0.75 LME COPPER STOCKS 49,575 metric tons -300 tons COMEX Gold stocks 5.913 ml oz Unchanged COMEX SILVER stocks 101.4 ml unchanged.

OVERNIGHT ACTION: Minor buying support but action was mostly without true direction.

GOLD: With slightly higher action in the early US session, the gold market has pulled back away from the downside breakout point seen around the overnight low of $443.3. With some light physical interest noted in China overnight, the Dollar slightly lower and the US economic report slate today a little more active, we suspect that gold will be able to establish firmer support on the charts. However, in order to shift the Dollar action back into a distinctly supportive posture, the June Dollar will have to fall below the critical pivot point of 81.75. Traders might also watch the 134.23 level basis the June Euro as that could also be a critical inflection point. We still think that gold needs a quicker economy in order to foster the inflation/physical demand expectations in the marketplace. In fact, in order to significantly boost gold prices, in the wake of news that the net spec and fund long was 143,000 contracts, we suspect that the market will need more of a theme than simply a rising Euro/falling Dollar. Critical pivot point support comes in at $443.7 today and near term resistance comes in up at $446.

SILVER: Apparently the silver market isn't too concerned about an increase in production from a US silver producer, as the focus of the market continues to be gold and indirectly the direction of the Dollar. The silver market remains bullishly biased on the charts but must hold above the prior day's critical pivot point low $737.5 to shore up bullish sentiment. Trend line support in May silver comes in at $7.41 but we would not rule out a temporary slide back to the $7.25 consolidation zone. In conclusion, the silver market might have a slight positive tilt but in order to return to the recent highs, silver probably needs a stronger economic outlook or much more succinct leadership from gold.

METALS TECHNICAL OUTLOOK 3/15/2005

SILVER (MAY) 03/15/2005: A bearish signal was triggered on a crossover down in the daily stochastics. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The market back below the 18-day moving average suggests the longer-term trend could be turning down. The close below the 1st swing support could weigh on the market. The next downside target is now at 729.5. The next area of resistance is around 747.5 and 755.5, while 1st support hits today at 734.5 and below there at 729.5.

GOLD (APR) 03/15/2005: The daily stochastics have crossed over down which is a bearish indication. Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The major trend could be turning up with the close back above the 18-day moving average. The market's close below the 1st swing support number suggests a moderately negative setup for today. The next downside objective is now at 438.0. The next area of resistance is around 443.7 and 446.5, while 1st support hits today at 439.5 and below there at 438.0.

[verwijderd] 18 maart 2005 08:16

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Gold Prices Drop as Fewer Jobless Claims Boost Dollar
By Pham-Duy Nguyen Bloomberg News Service Thursday, March 17, 2005
www.bloomberg.com/apps/news?pid=10000...

SEATTLE -- Gold prices in New York fell after a report showed fewer
Americans filed for unemployment benefits last week, boosting the
dollar and eroding the appeal of the precious metal as an
alternative investment.

Initial applications declined to 318,000 in the week ended March 12
after surging to 328,000, the Labor Department said today in
Washington. Fewer claims indicate a strengthening economy and may
bolster the case for higher interest rates and purchases of dollar-
denominated assets, analysts said.

"Gold has no returns," said Ron Goodis, retail trade director at
Equidex Brokerage Group Inc. in Closter, New Jersey. "As interest
rates go higher, holding gold becomes less attractive, so that"s
going to cause gold to head back down."

Gold futures for April delivery fell $5.30, or 1.2 percent, to
$438.90 an ounce at 11:32 a.m. on the Comex division of the New York
Mercantile Exchange. A futures contract is an obligation to sell or
buy a commodity at a set price by a specific date.

Gold also weakened after an index of leading U.S. economic
indicators increased in February. The New York-based Conference
Board said today its gauge of the likely performance of the economy
over the next three to six months rose 0.1 percent after a 0.3
percent decline in January.

Fewer jobless claims and higher stock prices helped lift the index,
economists said. A rise in interest rates and a drop in the average
workweek restrained the gauge, which suggests the economy will keep
growing in the months ahead.

"An increase would normally be a drag on gold," Goodis said.

Gold may continue to weaken if a strengthening economy and higher
oil prices give the U.S. Federal Reserve more ammunition to raise
interest rates to stem inflation, traders said.

Crude oil for April delivery rose 34 cents, or 0.6 percent, to
$56.80 a barrel on the Nymex. The price earlier reached $57.50, the
highest since futures debuted in March 1983. Prices are 49 percent
higher than a year ago.

U.S. Federal Reserve policy makers will lift their benchmark rate by
a quarter point to 2.75 percent on March 22, according to the median
forecast of economists polled by Bloomberg. An increase would widen
the gap with the euro region, where the European Central Bank has
kept its rate at 2 percent since 2003.

"The Fed is so far behind the curve so they'll have to start raising
interest rates," said James Turk, founder of Channel Islands-based
Goldmoney.com, which stores about $40 million of gold for owners in
102 countries.

Gold prices may test $442 an ounce and reach $450 by the end of the
month, Turk said. "A lot of short-term traders dumped today," when
gold failed to stay above $442, Turk said. "Gold has a lot of
catching up to do with other commodities. Gold has to be considered
the best way to play the commodities boom at the moment."

AEX	910,35	+0,75%
EUR/USD	1,0841	-0,06%
FTSE 100	8.302,55	+0,33%
Germany40^	18.671,80	+0,94%
Gold spot	2.325,85	-0,07%
NY-Nasdaq Composite	16.735,02	-0,01%

VIVORY...	+0,24 +9,81% 0.235 9.8121
PostNL	+0,08 +5,73% 0.076 5.7315
JDE PE...	+0,78 +3,86% 0.78 3.8576
BAM	+0,12 +3,06% 0.118 3.0649
Aperam	+0,66 +2,51% 0.66 2.5057

NX FIL...	-0,15 -3,19% -0.145 -3.1938
DSM FI...	-3,00 -2,84% -3 -2.8396
AZERION	-0,03 -1,51% -0.026 -1.5081
BESI	-1,80 -1,33% -1.8 -1.3333
ForFar...	-0,03 -1,09% -0.03 -1.0949

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