Sep 29, 2006

ROB-TV interviews Jay Taylor on mining stocks

Jay Taylor, editor of J. Taylor's Gold and Technology Stocks Letter, was interviewed about mining stocks for an hour Monday on "Market Call Tonight with Michael Hainsworth" on Canada's ROB-TV, and you can watch the show at the ROB-TV archive here:

Click the play arrow once again after the intro
Duration: 46 m 34 s

Sep 28, 2006

Analysts predict soaring silver prices

Coeur d'Alene, Idaho (Platts)--25Sep2006

Whether or not the price of silver, along with gold, is being
manipulated to the downside by bullion banks and big
Wall Street traders was the subject of some disagreement at
the 4th annual Silver Summit in Idaho last week.
However, analysts told Platts they were unanimous on one
point: the silver price is headed seriously upward, fueled both
by fundamentals and near-historic levels of investor and
speculator interests.

"I am rabidly bullish on silver, and as we digest the first stage
of this bull market, we are poised to reach new real-time price
highs," said Sprott Asset Management's John Embry, adding that
he expected silver to be more volatile than gold but, in the end,
to outperform the yellow metal.

Embry continued: "As we slide down the slippery slope of credit
expansion, we will see further erosion of faith in fiat money.
The Federal Reserve will be faced with a monetary policy either of
deflation or hyperinflation as debt piles up. Hyperinflation will be
the more likely policy, and far from being a relic, silver will
re-assert itself as money."

Embry referred to a Sprott-issued report in 2004
entitled "Not Free, Not Fair" in which he suggested that
in leasing gold banks and other major traders had conspired
to suppress the gold price. At the Silver Summit he declared
there was similar "obvious price fixing" in the silver markets.
"The silence of the silver-mining companies in the wake of
these manipulations must end," he said.

CPM Group's Managing Director Jeffrey M. Christian said
he could find no evidence of silver price manipulation, but said
market forces would drive the white metal's prices much higher
than current levels in the near term, should investor or speculator
interest top 150 million oz.

"The silver market is shifting from 16 years of persistent net
sales from inventories to net purchases for addition to inventories,"
said Christian. "Investors are buying silver. The iShares silver ETF is
only a sideline, a consequence, of the surge of investor interest in silver."

According to Christian, the Indian government sold 35-mil oz
of silver in 2005, but sales could decline to 32.5-mil oz in 2006.
"Silver was legally re-exported from India in March and April 2006
after stocks of unsold new imports built up there," said Christian.
"The silver went mostly to dealer holdings in London, where the
metal will be available for delivery into the silver ETF."

Christian likened current market conditions to those of 1979,
when silver shot up to nearly $50/oz and the silver-gold ratio
dipped below 10:1. "This represents investors buying more silver,"
he said. Total silver bullion inventories, meanwhile, have fallen from
more than 2-billion oz in 1986 to nearly zero now, he noted.

--David Bond,


Sep 27, 2006

The venerable Richard Russell on taxes and the FED

On average, one millionaire leaves France every day. They leave to escape France's onerous taxes. France has a wealth tax which comes in on top of income, capital gains, inheritance and social security taxes -- this can cause the tax bills of wealthy individuals to outstrip their income.

Two million affluent American households gain nothing from the Bush tax cuts. This is because they are ensnared by the Alternative Minimum Tax.

Offshore tax havens help the wealthy avoid paying between $40 billion and $70 billion in taxes each year. The IRS complains that an armada of professional advisors help the wealthy dodge taxes and the IRS is hard-presssed to keep up with their strategies.

Russell Comment --
The income tax is a product or a result of the central bank system
. If the US government issued its own money instead of issuing debt, there would be no need to tax its citizens. The Federal Reserve has caused the US to be loaded with debt. The Federal Reserve has been an unbelievable boon for bankers and a never-ending curse to US citizens. A curse? Yes, via inflation and taxes, both of which rob workers of the fruits of their labor.

If the above is true, how is it that the citizens of this great country put up with the Federal Reserve? Easy, very few people understand how money is created in this country, and that includes our law-makers in DC. Nothing remains more of a mystery to the average citizen than our central bank system. People complain about taxes, they complain about inflation, but they never move their butts to ask, "How does the system work? And who does it work for? And why doesn't the US government issue is own money, instead of issuing debt?

The cental bank system is the greatest fraud ever perpetrated on the American public. It was installed through the ignorance and laziness of Congress. And it exists through the ignorance of the US public. The rationale for the Federal Reserve is never even questioned. It's legitimacy has never been debated before the Supreme Court. It's establishment was never legitimized by a Constitutional amendment. Its existence is a disgrace and a curse upon the nation.

So in the end, maybe taxes and inflation are what we deserve. And when did you last question our money system, or, for that matter, our money?


Enron CFO says banks were part of crooked schemes

By Laurel Brubaker Calkins and Thom Weidlich
Bloomberg News Service
Tuesday, September 26, 2006

Andrew Fastow, Enron Corp.'s former finance chief and architect of the fraud that led to the energy trader's bankruptcy, said company banks, including Merrill Lynch & Co. and Credit Suisse, were in on his scheme.

"In many instances, the financial transactions in which I engaged related to Enron were done with the knowledge of senior management, some of Enron's banks, and others, and were done primarily to meet Enron's financial reporting and credit-rating targets," Fastow said in a declaration filed in an investor securities-fraud case in Houston today.

Fastow, 44, singled out Merrill Lynch, Credit Suisse, the Royal Bank of Scotland Group, and Barclays Plc. in his declaration, which investors cited in their suit to help recover an estimated $30 billion in stock and bond losses. Fastow, scheduled to be sentenced today for the fraud, has previously refused to testify, citing his right not to incriminate himself.

Fastow created off-the-books partnerships used to hide debt and inflate income, he admitted when he pleaded guilty in 2004 to two crimes related to the Enron fraud. After disclosing the misstatement of its income in 2001, the Houston-based company filed the second-largest bankruptcy in U.S. history after WorldCom Inc.'s. More than 5,000 people lost their Enron jobs.

Fastow testified against Enron's former chief executive officers Kenneth Lay and Jeffrey Skilling, who were convicted of the fraud in May. Lay died in July. Skilling, 52, is appealing.

Merrill Lynch spokesman Mark Herr and Carolyn McAdam, a spokeswoman based in Edinburgh for Royal Bank of Scotland, said they had no immediate comment. Victoria Harmon, a spokeswoman for Credit Suisse in New York, declined to comment.

Peter Truell, a spokesman for Barclays Capital in New York, declined to comment. Barclays was dismissed from the suit in July. Investors have asked the judge to reinstate the bank in time for the case's April 2007 trial date.

The banks "worked to solve certain of our financial problems," Fastow said in his statement. "We told certain banks of our financial objectives and they, in many instances, created solutions utilizing complex financial structures." Some of the transactions made it "difficult for an investor to understand Enron's true financial condition" and were "deceptive."

The banks presented structured-finance transactions "in response to the problems we described to them," Fastow said in the statement. "In many instances, the banks primarily devised the financial structures, which contributed to Enron achieving its financial reporting objectives."

Fastow described leaseback transactions undertaken with Barclays in which the bank was assured that it wouldn't lose its equity in the deals. Fastow claimed he had seen bank documents that described the transaction as a "trust me" deal and that Barclays "agreed to go forward on the basis of explicit verbal support from the company's treasurer."

Fastow said he saw bank documents stating "Barclays would rely on assurances from Enron's treasurer that Enron would make up any shortfall in the equity return."

In December 1999, to meet financial reporting goals, Enron arranged the temporary sale of Nigerian energy barges to Merrill Lynch, guaranteeing to repurchase them in six months, Fastow said.

"Based upon my discussions with senior Merrill executives, I believe that Merrill understood the impact this transaction would have on Enron's financial statements, that the guarantee provided by me would likely change the accounting treatment of the transaction, and that the only reason for the transaction was to receive the desired accounting and financial-reporting treatment," Fastow said in his declaration.

In June 2000 an Enron off-books entity created by Fastow bought the barges.

* * *

Central bank rush to dishoard pushed gold down for two months

* * *

Gold Sales Fall Well Below Limit
Set in Central Banks' Agreement

By Kevin Morrison
Financial Times, London
Wednesday, September 27, 2006

European central banks have been big sellers of gold over the past six years but this year they appear to have lost their desire to sell the metal even though gold prices have been much higher.

Signatories to the Central Bank Gold Agreement, mainly European central banks, are estimated to have sold 400-420 tonnes of the 500 tonnes they are permitted to sell each year under the latest five-year pact.

Yesterday was the end of the second year of the second five-year pact and was the first year that official sales have fallen below 500 tonnes since the first pact -- introduced to steady the price of gold -- started in September 1999.

Philip Klapwijk, executive chairman of GFMS, the metals consulting group, said the shortfall was likely to be repeated over the next three years of the current agreement.

"When you look at the signatory countries it is hard to see who is going to step in and take the sales up to 500 tonnes," he added.

France accounted for about 30 percent of CBGA sales, up until the end of July, followed by Switzerland (15 percent), the Netherlands (14 percent), the European Central Bank (12 percent) and Portugal (9 percent). Other sellers included Spain, Belgium, and Austria.

France is forecast to sell a maximum of 344 tonnes by September 2009 while the Netherlands is expected to sell another 43 tonnes over the next three years. Switzerland has no plans to sell more gold.

No other signatories are likely to step in either. With the exception of about nine tonnes of gold coin sales in the past two years, Germany, the biggest holder of gold among the signatories, has not sold any of its 3,423.5 tonnes of gold, after a dispute between the Bundesbank and the German finance ministry. Likewise, Italy has given no indication that it plans to dispose of any of its 2,451 tonnes. GFMS forecasts that the shortfall from the gold sales pact could be as much as 855 tonnes over the five years of the current pact.

"I can't see the renewal of a new agreement, because what is the point? Most of the signatories would have sold what they wanted to," Mr. Klapwijk said.

Even though European central banks are reducing their gold sales, there has still been no sign of other central banks purchasing, with Mongolia's purchase of nine tonnes of gold this year being the largest central bank buy order.

Mr. Klapwijk said European central banks, which account for about 43 percent of world central bank gold holdings, will be in a different situation in 2009 compared to today. "In 1999, they had too much gold and the price was looking wobbly. In three years' time, they would have sold what they wanted to, and prices should still be reasonably firm," he said.

However, CBGA signatories have made a late rush in offloading gold in the past two months, contributing to the 7 percent decline in gold prices over that period. Until the end of July, signatories to the CBGA had sold only 331 tonnes, according to GFMS.

Gold was trading at $591.10 a troy ounce yesterday. Bullion prices have dropped about20 per cent since reaching a26-year peak of $730 in mid-May.

David Holmes, director of precious metals at Dresdner Kleinwort, said the decline in gold prices from their peak was a reflection of speculative investors exiting commodities markets.

He said the shortfall of central bank gold sales would normally have been positive for gold prices, as central bank gold sales have traditionally helped fill the gap between gold mine output and fabrication demand.

He said high gold prices this year had triggered a slump in global gold jewellery demand. GFMS has forecast that gold mine output this year will drop below jewellery demand for the first time since the early 1980s.

GFMS is forecasting gold jewellery demand to fall 18.6 per cent to 2,205 tonnes this year, less than projected gold mine production of 2,524 tonnes.

"The impact of lower central bank gold sales has been neutralised by the drop in jewellery demand, and lower gold sales in the future are unlikely to have an effect on prices until there are signs of a pick-up in jewellery demand," said Mr. Holmes.

* * *

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Sep 26, 2006

Commodities undervalued by 30%, Morgan resources fund manager says

By Jennifer Hill
Monday, September 25, 2006

LONDON -- The oil price might have fallen almost 25 percent from its peak, but the commodities sector as a whole is undervalued by around 30 percent -- giving further opportunity for growth -- according to one fund manager.

Ian Henderson, manager of JP Morgan Natural Resources -- the top-performing fund in the IMA All Companies sector over the past five years, according to Trustnet data -- told Reuters commodities are trading at a "very substantial discount to the broader market at large."

"The outlook remains that demand for commodities is going to continue to run at faster than GDP (gross domestic product) growth for quite a number of years and the industry is going to be hard-pressed to increase production fast enough," he said.

"As a result, prices received by producers are going to be supported for much longer than people expect and this industry is going to be enormously cash generative."

China is "absolutely critical" to rising demand, he said, but added that a boom in consumption in India had yet to be factored into the market.

"India has the same population, and uses about a fifth of the commodities that China uses," he said.

Henderson believes takeover activity in the sector will continue, with firms being prepared to pay a premium of some 30 percent to acquire assets.

"Today, I think the sector is about 30 percent undervalued," he said.

JP Morgan Natural Resources, which invests in undervalued assets in the mining and resources arena around the world, has turned in a stellar performance of late.

The 775 million pound fund is up 40.85 percent over the past year, 174.81 percent over three years, 349.20 percent over five years and 256.47 percent in the past decade, vastly outperforming the IMA specialist sector.

Henderson said the fund had been helped by sound asset allocation calls, as well as the fact that the sector had been "in vogue for the past five years".

"We were large investors in gold mining in 2002-03, particularly 2003, when the sector added a lot of value for investors as the gold price moved up from its lows and we've been quite good at switching from gold to energy and from energy to base metal producers, which has certainly helped."

The fund's largest holding is First Quantum Minerals, a small base metals business with a principal listing in Canada and assets in Congo and Zambia.

Base metal producers remain undervalued, he said, as investors fret over the cyclical nature of the sector.

"Most analysts are very pessimistic and investors are generally very pessimistic," said Henderson.

But "in the near-term, the prospects for zinc look fundamentally well underpinned. It's particularly attractive, followed by nickel and then by copper."

The UK open-ended investment company is 37.1 percent invested in base metals, 28.3 percent in energy, 25.2 percent in gold and precious metals, 8.7 percent in diamond and others, and has a 0.7 percent cash holding.

The oil price dropped below 60 dollars a barrel last week for the first time since February this year, and is down almost 25 percent from its peak.

Simon Denham, managing director of Capital Spreads, said on Monday: "Oil is falling once more as producers, who in the first half of the year were holding back on selling forward production in anticipation of the fabled 100 dollar price are now selling into the market as hopes fade for a bounce.

"We are now well below 60 dollars in the Brent at 59.80-59.85 dollars and longs are being squeezed out."

But, despite that, Henderson said there is still money to be made.

"Some of the energy companies I own have been performing very well," he said, citing Canadian business Antrim Energy, which has seen a near-50 percent rise in its share price since the start of the year.

"It's still possible to make money, especially in the production sector -- lots of small exploration companies will do well," Henderson added.


Sep 24, 2006

The Barbarous Relic. (μέρος Β')

(Συνέχεια του άρθρου του James Turk: "The Barbarous Relic")

Το Βαρβαρικό Απομεινάρι

Βάρβαροι που διαμένουν σε Ερείπια

Ο θεσμός της κεντρικής τράπεζας συμπληρώνει πάνω από 300 χρόνια ύπαρξης. Σε ένα τόσο μεγάλο χρονικό διάστημα ένας θεσμός είτε μετουσιώνεται σε κάτι που χαίρει μεγάλου σεβασμού είτε καταντάει ένα παρωχημένο απομεινάρι. Εάν υπήρξε κάποια εποχή που οι κεντρικές τράπεζες είχαν να παίξουν ένα χρήσιμο ρόλο, ήταν τότε που διέποντο από την πειθαρχία ενός κλασσικού κανόνα χρυσού. Έχοντας όμως εγκαταλείψει τους κανόνες του Νεύτωνα, οι κεντρικές τράπεζες πλέον ασχημονούν πάνω σην ελεύθερη αγορά και έχουν ταχθεί ενάντια στο πραγματικό χρήμα. Οι λόγοι για τους οποίους οι κεντρικές τράπεζες είναι όντως "βαρβαρικές" είναι οι ίδιοι ακριβώς με εκείνους που τις έκαναν ένα ανεπιθύμητο απομεινάρι. Είναι ένα απομεινάρι αυτοκρατορικό, εθνικιστικό και πολεμικό.

Μετρώντας μερικές εκατοντάδες χρόνια ύπαρξης, οι κεντρικές τράπεζες κατάφεραν να επιζήσουν όχι επειδή συνέβαλλαν στην ανάπτυξη του εμπορίου ή στην βελτίωση του βιοτικού επιπέδου της ανθρωπότητας. Κάθε άλλο. Οι κεντρικές τράπεζες επέζησαν επειδή είναι υποκριτικά και δουλοπρεπή παράσιτα που πιστά υπηρετούν το εκάστοτε παντοδύναμο κράτος. Ανεξάρτητα πόσο ανεγκέφαλο ή επιζήμιο μπορεί αυτό να είναι. Οι κεντρικές τράπεζες ακολουθούν ανεύθυνες πολιτικές που φθείρουν -ή και ακόμα καταστρέφουν- την αξία των νομισμάτων τους. Γι' αυτό ο θεσμός της κεντρικής τράπεζας έχει καταντήσει ένα απομεινάρι όχι μόνο βαρβαρικό αλλά συνάμα και επικίνδυνο.

Όταν ερχόμαστε αντιμέτωποι με την -τετριμμένη πιά- προπαγάνδα των πολέμιων του χρυσού τώρα πλέον γνωρίζουμε πως να απαντήσουμε. Το βαρβαρικό απομεινάρι είναι ο θεσμός της κεντρικής τράπεζας. Όποια κεντρική τράπεζα στέκεται εμπόδιο στην παλινόρθωση του αληθινού χρήματος, γίνεται συμμέτοχος στην απειλή που τα απομεινάρια αυτά ορθώνουν απένατι στο δημόσιο συμφέρον.

Κάπου στο όχι πολύ μακρινό μέλλον, όταν το δολλάριο ΗΠΑ θα έχει καταρρεύσει -όπως και όλα τα άλλα fiat νομίσματα που προηγήθηκαν- οι άνθρωποι μελετώντας την ιστορία θα αναρωτιώνται πώς ήταν δυνατόν βαρβαρικοί θεσμοί όπως οι κεντρικές τράπεζες να κατάφεραν να κοροϊδέψουν τόσο πολύ κόσμο και να τον κάνουν να πιστέψει ότι ήσαν θεσμοί κοινωφελείς με σκοπό το δημόσιο συμφέρον. Η απάντηση είναι ότι οι κεντρικές τράπεζες δημιούργησαν την ψευδαίσθηση της ευημερίας.

Επειδή ο κόσμος πιστεύει ότι τελικά τα καταφέρνει να ζεί καλά και δεν υποψιάζεται το παιχνίδι που παίζεται σε βάρος του, δεν έχει λόγο να αμφιβητήσει τις βασικές αρχές του θεσμού. Λόγω αυτής της έλλειψης αμφισβήτησης έχουν οδηγηθεί στο συμπέρασμα ότι ο χρυσός είναι το βαρβαρικό κατάλειπο και ότι οι κεντρικές τράπεζες κάνουν καλά τη δουλειά τους, ότι ο επίσημα μετρημένος πληθωρισμός είναι σε αρκετά υποφερτά επίπεδα και ότι το οικονομικό τους μέλλον είναι εξασφαλισμένο.

Όμως αυτά πολύ απέχουν από την ωμή πραγματικότητα.

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Sep 23, 2006

Οκτώ πράγματα για το Χρυσό που θάπρεπε όλοι να γνωρίζουν

Για τον James Turk είχα γράψει σε προηγούμενο άρθρο. Ανήκει στην top κατηγορία των ειδικών στα πολύτιμα μέταλλα. Γι'αυτό μεταφέρω αυτούσιο (δηλαδή χωρίς μετάφραση) ένα πρόσφατο άρθρο του για το χρυσό.
Ελπίζω σύντομα (είναι θέμα εύρεσης χρόνου) να μπορέσω να το έχω και σε μετάφραση για τους φίλους που τα αγγλικά δεν είναι το forte τους .

" 8 Things Everyone Should Know About Gold "

Gold is one of the world’s most misunderstood assets. There are many reasons for this unfortunate situation, but one stands out. Gold exists in an environment in which there are many powerful forces fiercely hostile to it. Most notable among these are governments and the myriad of vested interests that feed from the public purse or rely upon some government-issued license or privilege. Governments have confiscated gold, taxed it, propagandized against it and even outlawed it.

Gold does not have any powerful sponsor championing its cause. In fact, the opposite prevails. Apologists for central banks as well as government toadies clamoring for continued state control of money have worked hard to discredit gold where possible, for example, by blaming it for things it was not responsible – like the Great Depression – and by denigrating gold as a fondling of speculators or a superstition better suited for primitive economies.

In short, conventional economic wisdom and monetary thinking has one aim; it is to justify and perpetuate today’s monetary system. It does not undertake a critical review of the system nor take an unbiased, unprejudiced look at alternatives such as gold.

Yet despite this hostile environment, gold continues to be valued throughout the world. Stripping away the misinformation and half-truths about gold, it is clear that gold continues to serve an important role. Why is that?

It is because gold is useful, and as a consequence, it therefore has value. And how does gold’s usefulness arise?

Here is a basic primer highlighting eight essential features of gold that everyone should know. By evaluating them, it is possible to determine whether gold’s usefulness could be of value to you, just as it already is of value to countless millions of people around the world.

1) Gold is a special, unique commodity

Gold is a special, unique commodity because it is the only commodity produced for accumulation; all other commodities are produced to be consumed. Essentially all of the gold mined throughout history still exists in aboveground stocks. Nevertheless, gold is rare.

The entire aboveground gold stock is only about 155,000 tonnes. If all this gold were put into one lump, its size would be 8,000 cubic meters, the volume of which is equal to the bottom one-fifth of the Washington Monument or 3¼ Olympic size swimming pools. It is also astonishing to note that in one day twenty-times more steel is poured than the total weight of gold mined throughout history.

2) Gold’s supply is its aboveground stock

Because it is accumulated and not consumed, gold’s supply is its aboveground stock. This fact changes everything in terms of how to analyze gold.

Gold’s price is still a function of supply and demand, but the supply that matters is not the relatively little amount mined each year, which history shows only increases the aboveground stock year after year by a relatively consistent 1.7% per annum. Rather, gold’s supply is the total weight accumulated in its aboveground stock for the simple reason that a gram of gold mined today is no different from a gram of gold mined by the Romans two-thousand years ago. In other words, gold in the aboveground stock is perfectly substitutable for newly mined gold.

In the short-term gold’s supply is relatively unchanged because new mine production cannot be meaningfully increased quickly. As a consequence, gold’s price is principally a function of demand.

While it is common to hear that gold’s price is determined by jewelry demand, that belief is misguided. Just like wet streets do not cause rain, the price of gold does not depend upon jewelry demand. The important point is not the form gold takes when it is fabricated, but rather, the use to which it is put. Most jewelry is high-karat gold acquired because of gold’s monetary characteristics, not for reasons of adornment.

Therefore, the price of gold – or more precisely because it is money – gold’s rate of exchange to national currencies depends upon monetary demand, or what some people mistakenly call its investment demand. It cannot possibly be otherwise, given that gold’s supply is its aboveground stock and that some 80% of this amount is held for monetary reasons, and not for fashion, adornment or other factors.

3) Gold is money

This observation about monetary demand means that gold is money. In other words, gold is hoarded because its greatest usefulness arises from those attributes that make it money.

Gold’s advantages as money are numerous. Perhaps most important in our present age marked by the perennial inflation of national currencies, gold is money that cannot be debased by creating it ‘out of thin air’ by government fiat.

Another important factor in gold’s favor is the mountain of debt and financial derivatives that overhang the world economy. Gold is the only money that is not contingent upon anyone’s promise, an attribute that explains why gold is called “sound money”.

4) Gold is an alternative to the US dollar

The US dollar is in trouble because it is being debased – it is being inflated by newly created dollars that are used to fund the growing federal government budget deficits and other public and private debt. This insidious inflation erodes the purchasing power of the dollar month after month. Consequently, more and more people are turning to gold as their preferred money.

It used to be that the dollar was “as good as gold”. The dollar achieved that distinction because it was formally defined as a weight of gold under the rule-based system known as the gold standard. Under that system, which ended in August 1971, gold and dollars were interchangeable and essentially the same. But no more, to the detriment of those who hold dollars. By some estimates, the dollar has lost more than 90% of its purchasing power since then.

Despite this dreadful deterioration the dollar has suffered, it continues to circulate as currency. Those same inexorable forces that create a hostile environment for gold are at the same time promoting and propagandizing the dollar to talk-up its demand. The Federal Reserve’s pro-dollar, anti-gold propaganda is aimed to maintain the illusion that the dollar is reliable money. Consequently, in contrast to their interdependent and complimentary role under the gold standard, gold and the dollar have become competitors. In fact, gold is the dollar’s only serious competitor. They compete for holders, and it is their relative demand that determines their rate of exchange, or what we call the ‘price’ of gold.

The relative demand for gold and dollars also explains the importance of dollar interest rates, which need to be raised from time to time to entice people to accept the risk of holding dollars instead of gold. But remember, only real (i.e., inflation adjusted) interest rates matter. Nominal interest rates are not important. For example, if dollar interest rates are 10% and the inflation rate is 10%, real interest rates are zero, and low or negative real interest rates are bullish for gold.

5) Gold preserves purchasing power

Gold preserves purchasing power, but there’s another way to describe this essential feature of gold. Don’t view gold’s price to be rising. Rather, recognize instead that the purchasing power of the dollar is falling. This conclusion can be made clear by looking at the price of goods and services in terms of dollars as well as gold.

κλικ για μεγέθυνση

For example, the above chart presents a base-100 analysis of the price of crude oil in dollars and goldgrams from December 1945. Since then crude oil prices have experienced a 64-fold price increase in dollar terms. A different picture emerges though when crude oil prices are viewed in grams of gold. A barrel of crude oil today costs about the same amount of goldgrams as it has at any other time shown on the above chart. So even though the dollar is no longer defined as a weight of gold as it was under the gold standard, this chart clearly illustrates that gold remains the most useful standard by which to measure the price of goods and services.

6) Gold’s value is determined by the market

Gold’s value comes from its usefulness, not from central banks. It is important to understand that the market gives gold its value, though central banks would have you believe otherwise. Central banks tell you what they want you to hear. They would like you to think that they control gold’s price, as that perception makes it easier for them to bolster the demand for the dollar. But the reality is quite different. The market determines gold’s price, just like it determines the price of a Picasso or a loaf of bread.

Central banks intervene in the gold market – just like they intervene in many other markets. The reason for their attempts to manage the gold price is simple. By keeping the gold price low, central banks make the dollar look better. With their interventions central banks are trying to make the dollar look worthy of being the world’s reserve currency when in fact it is not.

The gold price is a barometer that measures whether a national currency is being managed well (i.e., no inflation). So by trying to keep the gold price low, central banks artificially make the demand for dollars higher than it would otherwise be. Intervention is also consistent with the statist philosophy of many governments these days, namely, that they will usurp whatever power is needed to try maintaining the status quo that preserves the privileged position politicians enjoy at the expense of taxpayers.

Though central banks do not control the gold market, they can influence gold’s price. Importantly, their influence is diminishing. Central banks have been dishoarding much of the gold in their vaults, so they now hold a relatively small part of the aboveground gold stock. After the Second World War, about 68% of the aboveground gold stock was in the vaults of central banks. It’s now about 10%.

Less gold within their control means that central banks have less influence on its price, which is one of the reasons central banks are no longer the factor they once were. To learn more about central bank involvement in the gold market, you need to know what GATA knows. The Gold Anti-Trust Action Committee has published the combined research of many analysts, including several articles by me, and it is all available for free at

7) Gold is in a bull market

Gold has been rising since 2001, and the many problems national currencies are suffering mean gold is headed higher still. How much higher?

No one of course knows because there is never any certainty when it comes to markets. But in my October 2003 interview in Barron’s I identified $8,000 as my 10-12 year target. I reaffirmed that target price and remaining 7-9 year time frame in a subsequent interview in Barron’s in May 2006. Now before you say that target is outrageous, consider the following.

It takes about $10 today to purchase what $1 purchased in the 1970s, which saw gold rise that decade from $35 to more than $800 in 1980. I expect history to repeat, achieving the same mathematical ratio in gold’s gain, but with the dollar result being 10-times greater to account for its loss of purchasing power. Thus, I expect gold will climb from $350 in 2003 to over $8000 within a decade’s time.

It is not unreasonable to expect that gold will once again command the purchasing power it once did, particularly given the ongoing inflation and debasement of the dollar. One should never underestimate the capacity of central banks to destroy the purchasing power of a currency. In other words, gold is not rising – as the above chart shows, it still purchases the same amount of crude oil it did 60 years ago. Rather, the dollar is collapsing.

8) Buy physical gold, not paper ‘gold’

It is prudent to buy gold because of the alarming problems facing the dollar and other national currencies. Gold offers a simple means to diversify and therefore hedge the risks inherent in national currencies, but make sure you buy physical metal, not paper. There is a big difference between owning metal and just a promise to pay metal to you. Sometimes the promise is not worth the paper it’s written on.

Examples of physical metal that you can own are coins, bars, high-karat jewelry and the gold offered by my company, GoldMoney, which stores the gold you own in a specialized and insured bullion vault near London, England. Examples of paper ‘gold’ are gold certificates issued by banks and mints, pool accounts, futures accounts and the NYSE listed exchange-traded fund. With these products you own a piece of paper rather than gold itself. These paper products give you exposure to the gold price, but they come with the risk of default, namely, that you won’t be able to get your metal when you need it.

Gold should be viewed as the bedrock asset in your portfolio, so do not take any risks with it. As a consequence, own physical metal instead of just someone’s paper promise.


One objective of this short essay is to present the rationale for buying and owning physical gold, but another aim is paramount. It is to present facts that enable one to use reason, and not emotion, in analyzing gold’s essential nature and therefore its usefulness. In our world, some things are not what they seem at first blush, a maxim that is particularly true for gold, which in recent decades has become one of the world’s most misunderstood assets.

Gold may not be for everyone, but a fresh look at the facts never hurts. The 8 facts presented here should be carefully considered to better understand gold, which is the first step in determining whether gold may be useful to you.

Copyright © 2006 by James Turk. All rights reserved.


James Turk is the Founder & Chairman of He is the co-author of The Coming Collapse of the Dollar.

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Mining Investment Expert Peter Grandich Interview

Και για να μην ...ξεχνιόμαστε, όσοι και όσες έχετε καταλάβει ότι βρισκόμαστε στις αρχικές ακόμα φάσεις ενός μακρόχρονου Bull Market στα πολύτιμα μέταλλα (generational long term bull market) τί πιό επίκαιρο από τη συνέντευξη του Peter Grandich που ακολουθεί....

(Πατήστε το Play ξανά μετά τη σύντομη διαφημιστική εισαγωγή)


Sep 20, 2006

Η αδήρητη αλήθεια των αριθμών

Χωρίς πολλά λόγια σας παραθέτω από τη σελίδα της CIA "The World Factbook", κατάλογο 150 κρατών εμφανιζομένων ιεραρχικά κατά το ισοζύγιο τρεχουσών συναλλαγών τους (Current Account Balance).

Όπως είναι αναμενόμενο, στις δύο πρώτες θέσεις πάνω-πάνω, φιγουράρουν η Ιαπωνία και η Κίνα, με την Γερμανία, την Σαουδαραβία και τη Ρωσσία στην 3η, 4η και 5η θέση αντίστοιχα.

Την Ελλαδίτσα μας μην την ψάχνετε στα πάνω κλιμάκια. Προχωρήστε αρκετά προς τα κάτω, ακόμα προς τα αρνητικά ισοζύγια και θα την βρείτε στην 143η θέση.

Όσο για τις ΗΠΑ, πηγαίνεται κατ'ευθείαν στο ...τέλος!!

Current account balance
Date of Information
1 Japan $ 165,600,000,000 2005 est.
2 China $ 160,800,000,000 2005 est.
3 Germany $ 115,500,000,000 2005 est.
4 Saudi Arabia $ 90,730,000,000 2005 est.
5 Russia $ 84,250,000,000 2005 est.
6 Switzerland $ 58,240,000,000 2005 est.
7 Norway $ 49,490,000,000 2005 est.
8 Netherlands $ 39,950,000,000 2005 est.
9 Singapore $ 32,740,000,000 2005 est.
10 Kuwait $ 26,920,000,000 2005 est.
11 Sweden $ 25,620,000,000 2005 est.
12 Venezuela $ 25,360,000,000 2005 est.
13 Canada $ 24,960,000,000 2005 est.
14 Hong Kong $ 19,700,000,000 2005 est.
15 Algeria $ 18,790,000,000 2005 est.
16 United Arab Emirates $ 18,540,000,000 2005 est.
17 Korea, South $ 16,560,000,000 2005 est.
18 Taiwan $ 16,220,000,000 2005 est.
19 Brazil $ 14,190,000,000 2005 est.
20 Malaysia $ 14,060,000,000 2005 est.
21 Iran $ 13,270,000,000 2005 est.
22 Libya $ 10,730,000,000 2005 est.
23 Qatar $ 9,270,000,000 2005 est.
24 Denmark $ 7,753,000,000 2005 est.
25 Belgium $ 6,305,000,000 2005 est.
26 Nigeria $ 5,597,000,000 2005 est.
27 Argentina $ 5,448,000,000 2005 est.
28 Finland $ 5,043,000,000 2005 est.
29 Oman $ 4,796,000,000 2005 est.
30 Angola $ 4,054,000,000 2005 est.
31 Trinidad and Tobago $ 2,880,000,000 2005 est.
32 Ukraine $ 2,531,000,000 2005 est.
33 Israel $ 2,385,000,000 2005 est.
34 Philippines $ 2,354,000,000 2005 est.
35 Egypt $ 2,207,000,000 2005 est.
36 Indonesia $ 2,016,000,000 2005 est.
37 Botswana $ 1,584,000,000 2005 est.
38 Bahrain $ 1,531,000,000 2005 est.
39 Austria $ 1,467,000,000 2005 est.
40 Morocco $ 1,255,000,000 2005 est.
41 Yemen $ 1,224,000,000 2005 est.
42 Syria $ 1,097,000,000 2005 est.
43 Uzbekistan $ 1,082,000,000 2005 est.
44 Peru $ 1,030,000,000 2005 est.
45 Belarus $ 852,000,000 2005 est.
46 Chile $ 702,700,000 2005 est.
47 Burma $ 700,000,000 2005 est.
48 Gabon $ 675,000,000 2005 est.
49 Namibia $ 509,200,000 2005 est.
50 Congo, Republic of the $ 493,000,000 2005 est.
51 Papua New Guinea $ 482,100,000 2005 est.
52 Bolivia $ 462,000,000 2005 est.
53 Equatorial Guinea $ 264,000,000 2005 est.
54 Turkmenistan $ 236,000,000 2005 est.
55 Azerbaijan $ 167,300,000 2005 est.
56 Cuba $ 49,000,000 2005 est.
57 Cameroon $ 39,000,000 2005 est.
58 Bangladesh $ 37,000,000 2005 est.
59 Haiti $ 23,000,000 2005 est.
60 Swaziland $ 7,000,000 2005 est.
61 Comoros $ -17,000,000 2005 est.
62 Sao Tome and Principe $ -20,000,000 2005 est.
63 Burundi $ -29,000,000 2005 est.
64 Seychelles $ -32,000,000 2005 est.
65 Honduras $ -42,300,000 2005 est.
66 Tajikistan $ -44,000,000 2005 est.
67 Gambia, The $ -53,000,000 2005 est.
68 Macedonia $ -81,100,000 2005 est.
69 Cape Verde $ -82,000,000 2005 est.
70 Uruguay $ -87,900,000 2005 est.
71 Lesotho $ -92,000,000 2005 est.
72 Guyana $ -112,000,000 2005 est.
73 Armenia $ -118,000,000 2005 est.
74 Kyrgyzstan $ -134,000,000 2005 est.
75 Laos $ -134,000,000 2005 est.
76 Dominican Republic $ -143,000,000 2005 est.
77 Cambodia $ -166,000,000 2005 est.
78 Rwanda $ -166,000,000 2005 est.
79 Belize $ -180,000,000 2005 est.
80 Cote d'Ivoire $ -193,000,000 2005 est.
81 Togo $ -199,000,000 2005 est.
82 Malawi $ -218,000,000 2005 est.
83 Paraguay $ -255,000,000 2005 est.
84 Guinea $ -268,400,000 2005 est.
85 Moldova $ -285,000,000 2005 est.
86 Eritrea $ -291,000,000 2005 est.
87 Vietnam $ -309,000,000 2005 est.
88 Mauritius $ -342,000,000 2005 est.
89 Uganda $ -355,000,000 2005 est.
90 Tunisia $ -359,200,000 2005 est.
91 Slovenia $ -361,200,000 2005 est.
92 Benin $ -400,000,000 2005 est.
93 Albania $ -416,000,000 2005 est.
94 Zambia $ -420,000,000 2005 est.
95 Madagascar $ -438,000,000 2005 est.
96 Burkina Faso $ -460,000,000 2005 est.
97 Kazakhstan $ -485,700,000 2005 est.
98 Zimbabwe $ -519,000,000 2005 est.
99 Tanzania $ -558,000,000 2005 est.
100 Ecuador $ -566,000,000 2005 est.
101 Malta $ -598,000,000 2005 est.
102 Chad $ -602,000,000 2005 est.
103 Georgia $ -625,000,000 2005 est.
104 Mozambique $ -639,000,000 2005 est.
105 Panama $ -705,700,000 2005 est.
106 Sri Lanka $ -776,000,000 2005 est.
107 El Salvador $ -778,000,000 2005 est.
108 Ghana $ -790,000,000 2005 est.
109 Nicaragua $ -835,000,000 2005 est.
110 Ethiopia $ -844,000,000 2005 est.
111 Senegal $ -848,000,000 2005 est.
112 Costa Rica $ -955,000,000 2005 est.
113 Cyprus $ -962,300,000 2005 est.
114 Jamaica $ -974,000,000 2005 est.
115 Pakistan $ -1,109,000,000 2005 est.
116 Guatemala $ -1,341,000,000 2005 est.
117 Estonia $ -1,375,000,000 2005 est.
118 Kenya $ -1,543,000,000 2005 est.
119 Jordan $ -1,613,000,000 2005 est.
120 Lithuania $ -1,771,000,000 2005 est.
121 Colombia $ -1,931,000,000 2005 est.
122 Latvia $ -1,959,000,000 2005 est.
123 Bosnia and Herzegovina $ -2,087,000,000 2005 est.
124 Serbia $ -2,451,000,000 2005 est.
125 Czech Republic $ -2,496,000,000 2005 est.
126 Croatia $ -2,541,000,000 2005 est.
127 Iceland $ -2,607,000,000 2005 est.
128 Sudan $ -3,013,000,000 2005 est.
129 Bulgaria $ -3,133,000,000 2005 est.
130 Thailand $ -3,689,000,000 2005 est.
131 Ireland $ -3,833,000,000 2005 est.
132 Slovakia $ -4,066,000,000 2005 est.
133 Lebanon $ -4,239,000,000 2005 est.
134 Poland $ -4,364,000,000 2005 est.
135 Mexico $ -5,708,000,000 2005 est.
136 Hungary $ -7,963,000,000 2005 est.
137 Romania $ -8,456,000,000 2005 est.
138 Iraq $ -9,447,000,000 2004 est.
139 New Zealand $ -9,688,000,000 2005 est.
140 South Africa $ -11,080,000,000 2005 est.
141 India $ -12,950,000,000 2005 est.
142 Portugal $ -17,100,000,000 2005 est.
143 Greece $ -17,860,000,000 2005 est.
144 Turkey $ -23,080,000,000 2005 est.
145 Italy $ -26,380,000,000 2005 est.
146 France $ -38,780,000,000 2005 est.
147 Australia $ -42,090,000,000 2005 est.
148 United Kingdom $ -57,610,000,000 2005 est.
149 Spain $ -83,140,000,000 2005 est.
150 United States $ -829,100,000,000 2005 est.