Apr 29, 2007

Too Much Like 1929

HMS Global Economy

TOO MUCH LIKE 1929

by Bernard Ber
April 27, 2007

The following commentary will describe the final sequence of events that will lead to the implosion of the global economy.

As US real estate prices fall and depress US economic growth, private foreign investors begin to withdraw their capital from the US financial markets. This capital flow would by itself act to elevate the currency value of the country that it is returning to. However, the governments of developing foreign countries have policies in place to fix the exchange rate of their currencies. In order to maintain this fixed exchange rate, foreign central banks will print their own currency and exchange it for US dollars (which are then invested into US government debt). The amount of money printed and exchanged into US dollars by the foreign central bank will necessarily equate to the amount of private capital returning to the country. These central bank policies will act to artificially keep the value of the US dollar elevated and artificially keep US interest rates low...

Click HERE to read this (prophetic?) article

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Apr 28, 2007

Ty Andros: Blast Off, tsunami of cash hitting the street...

Tedbits
by Ty Andros

Tedbits is authored by Theodore "Ty" Andros, and is registered with TraderView, a registered CTA (Commodity Trading Advisor) and TraderVest LLC a GIB (Guaranteed Introducing Broker). He currently is the principle of TraderView, a managed futures and alternative investment boutique. Mr. Andros began his commodity career in the early 1980's and became a managed futures specialist beginning in 1985. Mr. Andros duties include marketing, sales, and portfolio selection and monitoring, customer relations and all aspects required in building a successful managed futures and alternative investment brokerage service.
Mr. Andros attended the University of San Diego, and the University of Miami, majoring in Marketing, Economics and Business Administration. He began his career as a broker in 1983, and has worked his way to the creation of TraderView of which he is the sole owner. An adherent of the Austrian School of Economics, Mr. Andros is active in Economic analysis and brings this information and analysis to his clients on a regular basis. Ty prides himself on his personal preparation for the markets as they unfold and developing a loyal clientele.

His latest missive "Blast Off, tsunami of cash hitting the street aka Repatriation!" is a MUST READ.

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A bull in bear's clothing

Toronto Globe and Mail published a wonderful profile of Canadian fund manager and GATA supporter Eric Sprott. The profile mentions the gold-price suppression scheme, and of course Sprott Asset Management was publisher of the groundbreaking study of the manipulation of the gold market, "Not Free, Not Fair."


A bull in bear's clothing
What gives Eric Sprott the vision to see opportunity in every discouraging trend? (Hint: It's a product you, too, consume)

BOYD ERMAN

From Friday's Globe and Mail
April 27, 2007 at 6:08 AM EDT


Observe the crowd when Eric Sprott heads to the front of a room full of financial types and launches into his routine: Eyes roll, heads shake and hushed voices trade asides.

It's hardly the reception you'd expect for one of the most successful investors in the country. But it's not difficult to fathom why Sprott makes audiences uncomfortable. People whose livelihoods depend on the financial markets don't want to hear yet again that the world is running out of oil, that the price of gold is headed for the moon, that the world's currencies are doomed to devaluation and the global financial system is on the brink of collapse. And they especially don't want to hear it from someone who is right so often—a guy who called the end of the technology bubble and the plunge in the U.S. housing market well ahead of time.

In a world fuelled by optimism, Eric Sprott is a big downer—unless you're one of the investors who has enjoyed the stellar returns in the $4.8 billion worth of hedge and mutual funds he and his team run at Sprott Asset Management.

The firm's predictions, chronicled in a monthly newsletter that Sprott co-authors, conjure up a Mad Max future where people fight over the last drops of gasoline. "We're relying on the price of oil going up," he says. "We're relying on the price of gold going up, the meltdown of the financial system." Sprott is so consistently nervous about a stock-market free fall that for the past seven years he's been telling investors to stay away from his firm's equity mutual fund, because, unlike his hedge funds, it can't resort to short-selling to protect against a plunge.

Yet people who know Sprott attribute much of his success to—get this—his sunny outlook.

"He's an incredibly optimistic person," says Scott Lamacraft, who has known Sprott since he did a summer-student stint at Sprott Securities in 1993. "That's what differentiates the great people in business from the not so great. For Eric, the glass is half full. You can be bearish and optimistic at the same time. You can see opportunities where other people don't."

Sprott has been so good at finding those opportunities that his equity fund—the very one he cautions against buying—has averaged annual returns of about 35% since 2000, according to Globefund. Facts like this feed the legend: Sprott is a man who can make money in any market.

$ $ $

Sprott, a tall, broad-shouldered 62-year-old, has prospered on both sides of the securities business—brokerage and fund management. Raised in Ottawa, he graduated with a commerce degree from Carleton University in 1965 and headed straight into the investment world as an analyst at Merrill Lynch.

In 1981, he founded his own brokerage firm, Sprott Securities Inc., which he turned into one of the most successful boutique investment dealers in the country. It was known for its focus on research: Fascinated with finding small companies with big potential, Sprott spent long days getting to know businesses and pitching the resulting ideas to fund managers.

But as the end of his second decade at the head of a brokerage approached, Sprott grew frustrated with the routine of coming up with investment ideas for others. Already running the Sprott Canadian Equity Fund, he itched to spend all his time investing. He sold Sprott Securities to his employees and founded Sprott Asset Management Inc. He has no regrets—he's better off for the change, both intellectually and financially. Sprott's secret? He reads—voraciously. He rises every morning by 5 a.m. to plow through three newspapers—The Globe and Mail, National Post and The Wall Street Journal, before getting into all the research that accumulates on his desk each day. Other people may run their funds with computer modelling and game theory; Sprott attaches clippings to his missives for investors. "I'm always shocked that you can read things in the newspaper that prove to be incredibly valuable, that a lot of people miss," he says.

For much of the 1990s, Sprott was a bull, and he didn't shy away from technology investments. One of his top picks in 1998 was Teklogix International Inc., a maker of wireless gear. It soared more than 400% that year. But as the decade drew to a close, the dizzying heights of the stock market were starting to concern him. In the summer of 2000, he happened across a story in The Wall Street Journal that made him certain that the bubble had to pop.

The article described an analyst who was concerned that some upstart phone companies, known as competitive local exchange carriers (CLECs), wouldn't be able to pay the interest on their bonds. "I thought, 'My God, if she's worried about the bonds of the CLECs, what the hell does that say about Nortel, which sells to the CLECs?'" Sprott says. "How are they going to pay their invoices? That was way before Nortel peaked out. There it was in The Wall Street Journal. We took it as gospel and realized that Nortel was going to have a lot of difficulty."

At the time of that epiphany, Sprott was already touting investments in gold, metals and energy as a safe haven. He went a step further in the fall of 2000, launching his first hedge fund so he could sell stocks short to protect investors in a market meltdown. Since then, Sprott has generated a compound annual return of 30% in that first hedge fund, and gone on to start two more.

There's more to the reading than just logging the time, of course. Sprott has trained himself to seek viewpoints from the edge. The "recommended reading" list on Sprott Asset Management's website is full of apocalyptic titles such as Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression and The Party's Over: Oil, War and the Fate of Industrial Societies. "You learn to be at the extremes, because at the extremes is where something is going to happen," says Sprott. "If you read the mainstream, you're not going to learn anything."

His employees get the message. "The first thing Eric taught me is to challenge the consensus," says Lamacraft, who now runs Sprott Securities, recently renamed Cormark Securities Inc. "Don't just believe what you read on the surface, but get one level deeper and see what's really going on."

Reading the viewpoints emanating from Sprott Asset Management, one could easily imagine that the firm is located not on Bay Street but in an underground bunker staffed by equal complements of conspiracy theorists and survivalists. There are suggestions from time to time that central banks are manipulating the gold market to depress prices; Sprott himself is a believer in the peak-oil theory.

"The peak-oil thesis says that if we've hit the peak, then production goes down forever," Sprott says, his tone darkening. "That's a big statement if it's true. Forever. Oh my God, can you imagine a world where we're trying to survive 10 years from now on 60 million barrels, or 15 or 20 years from now on 60 million barrels? It would be such a fight over who is going to get the oil. Because we have to have it. So it could be quite wild."

Then he brightens, saying, "But maybe we'll find solutions." Indeed, Sprott has placed big bets on some of those potential solutions. His firm is one of the largest investors in uranium companies, and has also piled into coal producers. Ethanol he's not so sure about, given that it takes a lot of energy to produce. So far, uranium has paid off spectacularly; coal hasn't. Maybe coal will climb when the supply of oil gets really tight, Sprott figures. In the meantime, he's not about to buy more, citing one of his maxims: Don't push a loser.

$ $ $

For a wealthy man, Sprott has a regular-guy persona. He tends to order Coors Light even at Toronto's priciest boîtes, and on a casual Friday you'll find him in chinos and a Tommy Hilfiger shirt, rather than in the Italian threads that many of his counterparts in the industry sport.

His big indulgences are philanthropy and collecting art. In total, he has donated more than $20 million to his alma mater and an Ottawa hospital. Although he says he's not the least bit artistic and never dreamed of becoming a collector—he goes all aw-shucks when discussing art—Sprott's office looks more like the National Gallery than a fund firm.

His is one of the finest private collections of Canadian art: Inuit sculptures adorn the lobby, and the walls are hung with paintings by Emily Carr, the Group of Seven, Jean-Paul Riopelle and Norval Morrisseau. Lately, Sprott has been branching out into impressionists. A van Gogh, no less, hangs just inside the front door.

The strange thing is, this big-time collector is colour-blind. "It's not the colour that does it for me," he says. "It's probably the contrast in the colours."

Art, philanthropy—enough to keep a man satisfied, no? Sprott does periodically think about slowing down. "I've had a good run," he says. "I don't need to start something else." Then he laughs, realizing that he is starting something else—a company that will invest in molybdenum, an obscure metal used to toughen alloy steels. Investors, lured by Sprott's reputation, anted up $200 million for units in Sprott Molybdenum Participation Corp. in April—twice as much as the firm expected.

"In one way, you wonder why you do it," Sprott says, turning reflective. "But we believe in it. I think it's going to be a good thing for people to invest in, so fine. Let's go do it."

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M3 is back!

After last year's FEDs suspect decision to hide M3 from prying public eyes (to conceal the embarrassing proof of continuous money supply increase), a group of stubborn investors who wouldn't take no for an answer, put up a financial web site and managed -inter alia- to resuscitate this most-hated-by-central-banks index.

The M3 is back folks!...along with dozens of other indexes and graphs.

M3 is back

Go check'em all out HERE.

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Apr 27, 2007

Central Bank Gold 101

Blanchard Economic Research Unit believes the recent failure by the gold price to break through above the $700 level has been due to the selling of bullion by Central Banks which has depressed the price, but this cannot continue indefinitely.

Neal R. Ryan (Blanchard Economic Research Unit)
Thursday , 26 Apr 2007

NEW ORLEANS -

It is our firm belief that the reason we have seen the gold market fail to take the $700 level over the past week is due to the continued increase in Central Bank gold sales, specifically those out of the European Central Bank (ECB) system.

Central Banks around the globe can influence gold prices via two methods. CB's can make outright sales and purchases of gold, or CB's can loan/swap gold into the market or call those loans/swaps back into their reserves. For the sake of this explanation, we'll leave the loan/swap segment out because until the IMF changes are implemented in the market allowing for correct accounting of those loans/swaps, we would only be using guesstimates and dumb luck to quantify those levels.

Before the Washington Agreement on Gold (now referred to as the Central Bank Gold Agreement - CBGA) was implemented in 1999, CB's were free to sell gold willy-nilly into the marketplace with no thresholds on volume or timing. Recognizing that the lack of oversight or control was destroying the value of their gold reserves, the CBGA changed that with signatories agreeing to only sell 400 tonnes annually from 1999-2004. Those levels were augmented in the 2nd Agreement to 500 tonnes annually for the 2004-2009 period. Starting in 1999, CBGA signatories were now restricted to only selling 12.8 million ounces and starting in 2004, 16 million ounces annually into the market. (1 tonne = 32,150 oz.)

Annual supply usually floats around the 120 million ounce level, so CB sales, assuming they fill their allotment each year, represent roughly 10-13% of annual supply into the gold market.

For the first time in the life of both agreements, signatories to the CBGA failed to reach their annual sales allotment coming up nearly 120 tonnes short in the 2006 calendar year. That 120 tonne shortfall in 2006, represented a decrease of about 3.2% in supply into the market.

This 3.2% decrease in supply has come at the same time we've seen an 8% decrease in annual mine supply over the past five years, 80 million ounces of demand via dehedging in the gold market, 2nd and 3rd tier central banks adding to reserves and increased investor demand across the globe.

ECB banks have sold over 76 tonnes of gold into the market over the past five weeks. This is in sharp contrast to the past 6 months when ECB banks had sold only 112 tonnes of gold into the market. We believe that we are still experiencing increased levels of sales this week, so we may yet revise the 76 tonne figure higher in the coming weeks. This huge influx of supply into the market has, in our opinion, been the one drag on the market, but it certainly has its upside.

So what's the upside?

History has shown that pressure is certainly applied on top of the market during each period of elevated CB sales. This can be no clearer illustration than what happened after the Bank of England and Gordon Brown announced they would sell over 400 tonnes of gold reserves, causing prices to hit 20-year lows in what most traders now refer to as the Brown Bottom. In the last decade, we have also seen the Bank of Canada sell off all of it's gold holdings, the Banks of Switzerland, Australia, Denmark, Spain, Portugal, Norway, Sweden, and France, amongst others, also sell off a major percentages of their gold holdings into the market. The one thing that has held true is that the gold price has continued to bounce back and head higher as these sales have concluded.

In the past, increased sale levels have had a significant impact on the market, most recently when 80 tonnes were sold into the market over 4 weeks in May of 2006, we saw prices fall from $730 per ounce and test the $575 level. To a lesser extent, we saw +50 tonnes of sales hit the market in September of 2006, sending prices from $605 to $565 per ounce. What we are seeing presently is that sales have increased considerably without the bottom falling out of the market as has been the case in the past. The market is experiencing some price weakness as it struggles to continue to digest these massive sales, but the price has continued to trend higher in the face of these increases. This is a watershed event for the market and investors need to understand what this means to them. The days of massive bank sale increases tanking the market are coming to a close for two reasons.

1. The market has finally demonstrated the ability to gobble up these sales and continue trending higher, even if the increased supply is keeping us from the major price increases we have been expecting.

2. Central banks have shown that they are simply running out of the gold they will part with via sales into the market. It is our belief that the Bank of France is the lone seller of any magnitude left out in the marketplace. Other ECB captive banks have completed their announced sales programs. The two others left with any sizeable gold reserves, Germany and Italy, have never sold gold of any significant amount under the CBGA agreements.

When the Bank of France is finished selling which we believe is coming close to being a reality, the market will have potentially lost a large portion (10-13%) of it's annual supply. We do expect at some point in the future to see CB sales to increase, but not until the price has had another significant increase as well. The IMF gold sales have been trotted out lately to solve IMF funding issues. Without approval from Congress, which we believe is quite remote, these sales will never take place.

While gold sales have increased over the past five weeks, levels should still be short of the annual allotment from the CBGA, the second time in two years. Look at these sales increases as a gift. They are allowing investors to add to metal holdings at lower prices while not tanking the market and causing investors to lose interest. When the banks are done selling, gold will be in the strongest hands, those of individual investors.

And taking a page from history, the gold price will also be considerably higher.

Neal Ryan is Vice President and Director of Economic Research for Blanchard Economic Research Unit - http://www.blanchardgold.com/


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Funny Money Report: Gold Could Reach $3,736.13 Per Ounce

Gold Could Reach $3,736.13 Per Ounce
BY: Lee Rogers
POSTED: 04-21-2007

From 1982 to 2000, the Dow Jones Industrial Average went from a bottom of 776.92 to a peak of 11722.98. This represents an annual compound return of 16.8% over the course of 17 years and 5 months. Ironically this rate of return is almost identical to the annual rate of return gold is delivering in its current bull market run. If we say for argument sake that the gold bull market lasts the same amount of time as the previous run in the DJIA from 1982 to 2000, we can project a gold price of $3,736.13 per ounce of gold by 2016.

Gold bottomed at $252.80 on July 20, 1999. 6.81 years later on May 12, 2006 gold peaked at $725 per ounce. This represents an annual rate of return of 16.7% which is only .1% off from what we determined the DJIA’s annual rate of return during its bull run from 1982 to 2000. Based upon the 16.7% annual rate of return this is how we came up with the $3,736.13 per ounce figure by 2016. This is actually a conservative figure considering that the last phase of the past two bull markets both the 1970’s precious metals bull and the DJIA bull from 1982 to 2000 ended in mania. The general public entered the markets which meant there were no more buyers and subsequently the long term bulls ended. We could very well see the same thing happen at the end of this bull market in precious metals. It would not be out of the realm of possibility to see gold go up to $5,000 or $10,000 in such a situation. I believe this to be a possibility considering that unlike the 1970’s we have China and India as factors as well as a chronically devaluing USD thanks to our friends at the Federal Reserve.

Using this same analysis we can also roughly determine a peak in gold for 2007. Based upon a 16.7% rate of return compounded for 8 years we arrive at a gold price of $869.64 sometime this year.

This might seem a bit high but considering the lack of interest in the precious metal markets at this moment in time, I don’t believe that to be the case. I still consider this a good time to buy gold and gold stocks simply because of the perceived lack of interest by general market participants. If we examine the traffic ranking of Kitco’s web site which is by far the most visited precious metals site on the Internet, we can see that traffic has bottomed out since the May 2006 peak. What’s even more interesting about this is the gold price isn’t too far off from that May 2006 peak and if we use Kitco’s web site traffic ranking as an indicator, the public has little interest in gold right now. As far as I’m concerned this means we still have a buying opportunity at current levels.

One ratio I follow religiously to determine if gold stocks are fairly priced in relation to the price of gold is the gold to XAU ratio. Amazingly, the gold to XAU ratio is currently at 4.81 which means that gold stocks are still cheap compared to the price of gold. That might seem hard to believe considering the recent run up in both gold and gold stocks, but when gold retraced back to $640 we believed that the market was vastly over sold. At that time the gold to XAU ratio was at 5.00 which I personally have never seen in the past few years that I’ve followed that ratio. That marked a strong buy signal for gold stocks and since that point in time we have seen a surge in gold mining stocks.

On a short term basis I do believe that we will be seeing some more resistance around the $700 level simply because of the market psychology involved with round numbers. We will also likely encounter resistance at the May 2006 peak. Once gold successfully breaks these levels we should see it make a move much higher. If we don’t hit our 2007 price target of $869.64 based off of our analysis, we should definitely see the gold price hit that mark in 2008.

Throughout this precious metals bull market our portfolio of gold, silver and commodity related stocks have performed extremely well. The recent surge in commodity prices has produced solid gains for many of the stocks that we own including new stocks that we purchased in the past few months. Over 80% of our stocks are in positive territory since our purchase date. We are planning on adding a new gold stock to our portfolio on Monday. To buy access to our portfolio and find out what stocks we own and what stock we are adding to it, check out the front page of our site located here.


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Apr 26, 2007

Chinese central banker urges diversifying into gold, oil, metals

By Wang Min and Zheng Jin
The Wall Street Journal
Wednesday, April 25, 2007

SHANGHAI, China -- China should "appropriately" increase its gold reserves and buy strategic resources such as oil and metals in order to broaden the investment channels for its huge foreign-exchange reserves, said People's Bank of China Vice Governor Xiang Junbo.

Mr. Xiang's comments yesterday come amid increasing discussion about how China will choose to invest its foreign-exchange reserves, the world's largest at $1.2 trillion as of the end of March. He said his comments, made in a speech at Fudan University in Shanghai, represent his personal views and don't necessarily reflect the stance of the central bank.

China's gold reserves have remained unchanged since December 2002 at 19.29 million fine troy ounces, according to central-bank data.

China is setting up a specialized investment agency to manage a portion of the reserves in a more aggressive fashion. Mr. Xiang said that agency could be funded by setting up a closed-end fund that would raise money from domestic investors, giving it cash to buy reserves from the central bank and invest them elsewhere.

The government should also continue its current policies of investing much of the reserves in low-risk bonds in overseas markets, and injecting some of the reserves into Chinese banks to help their expansion, he said.

Chinese holdings of U.S. Treasury securities totaled $350 billion at the end of 2006, and credit-ratings agency Fitch Ratings estimates that the country holds another $230 billion in U.S. government agency bonds.

Any decline in the U.S. dollar would hurt the value of China's foreign-exchange reserves, economists said, a prospect that has highlighted the cost of holding such a large portion of the reserves in U.S. Treasury bonds and has increased pressure to diversify.

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Apr 20, 2007

BBC: a "Nuclear renaissance"...

Planning for a new nuclear age
As the World Nuclear Association prepares to discuss how to meet the huge surge in demand for nuclear power, the BBC's Humphrey Hawksley wonders if the so-called "nuclear renaissance" could also prompt a complete re-examination of global nuclear policy...

Read this article HERE

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Apr 19, 2007

Aden Sisters: Keep Focused...

KEEP FOCUSED

Mary Anne & Pamela Aden

Gold is on the rise. Investors are excited, especially after last month's volatility, which proved to be nerve wracking for many gold investors. This alone reinforces why it's important to focus on the major trend.

Chart 1 shows gold's mega uptrend and as you can see, the volatility over the past year doesn't look like much. On the contrary, this chart illustrates gold's strength as it sits near the high side of the rise that started in 2001. This is the most important picture to keep in mind when investing in gold. The bull market since 2001 is clearly underway.

If this mega uptrend and channel stays in force, and we believe that it will for the reasons discussed in our article of March 9, 2007, then this bull market rise is going to make the 1970s spectacular rise look small in comparison. It will take time, but it's powerful because it's more of a global market today compared to the 1970s.

We can't stress enough how important the major trends are. Most assets have been up since 2003, but it's also important to see where the real strength lies. And it lies in gold because gold is better than stocks, bonds and the currencies.

GOLD: BEST PROFIT POTENTIAL

Note that the mega trend changed in 2002 when the ratio between gold and the Dow Industrials changed to favor gold (see Chart 2). These changes do not happen often but when they do, then the pendulum has swung and it still has a long way to go. This means that gold will continue to outperform stocks for years to come, like it's done in recent years. So this is another key mega chart to keep in mind when investing.

When we say gold, we mean the gold universe and the best investments within this ample sector. That includes silver, the other precious metals, natural resources and energy.

Other positive signs that reinforce a powerful bull market are when gold is strong in all currencies, and when all of the precious metals are rising in major uptrends. This is happening today.

Gold is strong in all currencies and so is silver (see Chart 3, which shows silver's surge against the euro since 2003). And all of the precious metals are on the rise.

SUPPLY NOT KEEPING UP WITH DEMAND

We have often discussed the reasons why gold will stay on track to rise in the years, and more likely decades ahead. Aside from growing global monetary inflation, price inflation, out of sight deficits and debt, a weak U.S. dollar and the war, there's also a growing shortage. In fact, there's currently a shortage in many commodities.

Gold production is down around the world. South African gold production, for instance, fell to its lowest level in 84 years last year. From the U.S., to Australia, Peru, Russia to Canada, production was also down. China was about the only country to increase its production.

And this is happening while demand is growing worldwide. The growth in China's demand for commodities is unprecedented, which will keep prices high. Plus, most investors don't realize that gold's been rising for six years, gaining about 200%, and once this becomes more obvious, it'll unleash a flood of new demand. Central banks are now also selling less gold.

HEADED HIGHER

An intermediate rise we call C started on January 5, which means it's been underway for about three months.

C rises tend to be the best, strongest rise in a bull market when gold reaches new bull market highs. Gold is currently at a nine month high and it has a good chance of testing and surpassing the May highs. For now, if gold can rise and stay clearly above $690, then $722 will become an easy target. Gold would be impressive above this level as it would reconfirm that a very strong bull market is underway.


By Mary Anne and Pamela Aden
17 April 2007

This commentary has been provided courtesy of adenforecast.com

Mary Anne & Pamela Aden are internationally known analysts and editors of The Aden Forecast, a market newsletter providing specific forecasts on gold, gold shares and the other major markets. Click here to visit their website at www.adenforecast.com

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Apr 18, 2007

e-rooster blog: Δώστε ένα απόγευμα για τον Kareem (και όχι μόνο)



e-rooster blog: Δώστε ένα απόγευμα για τον Kareem (και όχι μόνο)


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Richard Russell: (Real) Cash is Beautiful!

Richard Russell"... Cash is beautiful. With it you can buy a luxurious Bentley car, an apartment house in New York, a McDonalds franchise in San Diego or a million acres of land in Argentina. But wait -- don't hold onto your cash too long. Because today's cash isn't the cash of the early 1900's. In those days, you could turn in your cash and receive gold for it. Your dollars had something behind them that was tangible and eternal. The item that was behind your dollars or more properly Federal Reserve Notes was real, undisputed money. That situation ended in 1933. No more gold for your dollars. Today your cash has buying power, but that buying power is based solely on government fiat. And sad to say, the longer you hold your cash, the less buying power your cash will command.

Below I show a monthly chart of gold, the eternal money. As the chart indicates, since 2001 it has required more and more of today's fiat paper to buy an ounce of gold. The chart shows gold rising relentlessly from a low of 254 back in 1999 to almost 700 today. The blue line is a 13-month moving average, and the red line is a 34-month moving average.

What's happening?

I believe what's happening is that big money, sophisticated money, is slowly but relentlessly moving out of all paper or fiat money into real money or gold. Why would they do that? Here's the reasoning behind their move. The Fed and the central banks of the world are set against any contraction in the US or in the world economies. Remember, there's a natural tendency for markets and economies to regress to the mean. Currently, the US economy is operating well above trend -- therefore, the natural tendency for the US economy is to correct -- or to regress to the mean.

But the act of regressing to the mean for the US economy would mean recession. The Fed is dead set against recession. The Fed fears recession because of the enormous amount of debts and deficits built into the US economy. The Fed fears recession because of the fragile state of the US housing. Any recession in the US would almost surely produce deflation. And once deflation digs its claws into a debt-laden economy, the situation can get very nasty. In fact, the situation can get quickly out-of-hand.

Feb Chairman Bernanke, a leading student of the Great Depression, has already warned about the dangers of deflation. Bernanke wants no part of deflation. In fact, you might say he's preempting deflation. Mainly, because of the housing slump, Bernanke is already preempting deflation. And he will continue to preempt deflation. How does he do that? He does it by expanding the money supply and by fostering sub-standard interest rates. In other words, inflation is now being "force-fed" into the US economy. It's not a matter of whether inflation -- it's a matter of how little or how much inflation.

One very obvious measure of inflation is the amount of fiat currency it takes to purchase one ounce of gold. The monthly chart of gold going to 1997 tells the story. And its an accelerating story. Note how gold is pulling away from its (red) 34-month moving average.



What about holding a leading stock average rather than holding gold? The monthly chart below is a relative strength chart showing the performance of gold compared with the Dow. Here again we see that consciously or unconsciously the market in its wisdom is choosing gold over one of the strongest segments of the US stock market.

In July of 1999 one share of the Dow would buy 43.85 ounces of gold. Today one share of the Dow will buy only 18.44 ounces of gold. That's a decline of 58.2%. Thus, the Dow is steadily losing strength against gold. The reason, of course, is that the Dow is denominated in depreciating dollars.


What about the technical position of gold at this time? The P&F chart below tells the story. The latest move by gold has just filled the 695 box, it's highest level since the bottom of the correction. This opens the way for an attack on the 730 box recorded in May 2006.

The most recent move on the chart was an uncorrected advance from 640 to 695. This is a "high pole." Obviously, I don't know whether some correction or consolidation will be needed now or whether gold will move directly higher. It really doesn't matter. The trend is bullish for gold, and the base continues to build. The bigger the base, the more strength in the ultimate move to new highs. All that's needed now (and this has been the case all along) is patience, more patience -- and an understanding of the fundamentals."



To read more from R.R.'s quintessential market wisdom consider subscribing to his unique daily resume: The Dow Theory Letters

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Apr 17, 2007

Fears grow that Britain has lost control of its remaining gold

By Ambrose Evans-Pritchard
The Telegraph, London
Tuesday, April 17, 2007

As Gordon Brown prepares for a grilling in the Commons over his fire-sale auction of Britain's gold at the bottom of the market, concern is mounting that the Treasury may have lost control over the small amount still left in its vaults.

Peter Hambro, head of Britain's largest pure gold mining company, said he believed the Bank of England may have leased out its bullion to earn extra yield.

"The real risk is that the Treasury has lent out the remainder of the gold. It is very important to know whether the bank's gold lending is on a secured basis," he said. The concern is that counter-parties could default in a crisis such as the LTCM-Ashanti affair in 1998.

"The whole point of gold is that it's not somebody else's paper currency. It's the stuff that keeps you alive when everything else goes wrong," he said.

Central banks around the world have routinely lent out gold over the years to bullion banks such as Goldman Sachs and JP Morgan. The IMF last year questioned if they had lent out more gold than publicly revealed, a situation that would leave the market a large overhang of "short" positions. The Treasury said last night that it would look into any possible gold loans.

With gold now trading at $690 an ounce, Mr Brown's decision to break ranks with the US, Japan, France, and Germany by selling off 395 tonnes of gold has cost taxpayers more than Β£2 billion.

In a move that astonished dealers, Mr Brown insisted on selling the gold in open auctions. The first sale drove the price down to $254, the low-point of an 18-year slide. There were 17 auctions between July 1999 and March 2002 yielding an average of $274.9 an ounce.

Ross Norman, director of TheBullionDesk.com, said the reason for the sales was to support the fledgling euro. The proceeds were switched into 40pc euros, 40pc dollars, and 20pc yen. "His motives were political, but it was carried out in an incredibly foolish way, just as the market was turning up."

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Gold Boom / Dollar Bust: a Technical Analysis

by Joseph Russo

Gold Boom / Dollar Bust

After a short tirade inspired by the financial alchemy surrounding the world's reserve currency, we will quickly shift our focus to more stable realities.

Through a briefing of price charts, we will speculate on just how far the dollar can fall, and to what heights Gold may climb.

In addition, Elliott Wave Technology will share with readers precisely how we have kept our trading clientele on the right side of a rather challenging Gold market from the print high of 730.40 in May 2006, through the violent, and choppy, year-long consolidation experienced since...

Click HERE to read this article

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Apr 16, 2007

U.S. nuclear energy push could generate more global competition for uranium

Mineweb: Strategic consulting firm Stratfor suggests the resurgence of U.S. nuclear energy demand may be stalled by a lack of domestic waste repositories.

Author: Dorothy Kosich
Posted: Monday , 16 Apr 2007


RENO, NV -

Austin, Texas, strategic consulting firm Stratfor suggests that a renewed push for U.S. nuclear energy "could lead to even more global competition for uranium and a boom in nuclear energy investment."

The biggest stumbling block to domestic nuclear power is the lack of a nuclear storage facility, Stratfor warned in a recently published global market brief.

The proposed Yucca Mountain national repository in Nevada remains stalled, while concerns about terrorism have slowed the Bush Administration's Global Nuclear Energy Partnership (GNEP) promoting the reprocessing of nuclear fuel. Meanwhile, the storage of nuclear waste at nuclear facilities has drawn substantial local opposition.

Stratfor's analysis found that the United States may have to take a second look at nuclear energy "since expected GHG (Global Greenhouse Gases) regulations and requirements for coal plants to use cleaner technology will make coal-power energy more expensive." Nevertheless, the report suggests that "merely replacing the existing U.S. fleet of nuclear reactors could be worth as much money as all of the planned expansions in France, Russia and China combined."

"Such a development would not only revolutionize the U.S. domestic nuclear industry but would also lead to expanded nuclear technology research and development worldwide," Stratfor asserted. "Also U.S. acceptance of nuclear energy will likely lead to a quick increase in nuclear operations in other industrialized countries that have been hesitant to pursue further nuclear activity because of safety concerns."

"In the long term, geopolitical struggles for uranium supplies could emerge, with Central Asian countries and Russia becoming increasingly important players in world energy markets."

Stratfor contends that other factors will generate increased support for U.S. nuclear energy including: a younger generation--too young to recall nuclear disasters-concerned about the impacts of climate change; the growing popularity of energy independence with politicians and the general public; and support by some environmentalists for nuclear energy.

Internationally, industrial nations currently dependant on nuclear power now seek to secure uranium supplies in the face of growing global demand, particularly from developing countries such as China and India. While Stratfor acknowledged the possibility of future short-term uranium supply shortages, "the longer trend of rising uranium prices [as much as 57% this year] will not abate."

"Behind this surge are myriad developments attributable to increasing concern about rising petroleum prices; a belief that nuclear energy development can aid domestic energy security as natural gas and oil supplies from unstable countries increasingly are seen as risky; and current and expected fossil fuel energy sources," according to Stratfor.

Regulations on fuels emitting GHG will make fossil fuel more expensive compared to nuclear energy, Stratfor claimed.

Nations with abundant supplies of fossil fuels and uranium, such as Australia and Russia, can export uranium, develop their own nuclear industries, or pursue a combination of both. "Australia, which has massive coal supplies, is more likely to develop nuclear energy in response to carbon regulations, rather than out of a desire to bolster its exports of other energy supplies," Stratfor suggested.

In the U.S., Stratfor cited TXU's plan to scrap the majority of its planned coal plants and, instead, build two to five new nuclear plants in Texas. "The highly publicized private equity takeover of the energy utility company and its deal with national environmental groups, which dropped their lawsuits against the TXU's proposals to build 11 coal plants, was a major symbolic turning point," Stratfor said. "It bolstered environmentalists' belief that attacking coal expansion is an effective way to force companies to pursue cleaner energies. As coal plants continue to come under attack, nuclear energy will only grow more attractive."

Stratfor noted that more than 20 proposed U.S. nuclear facilities are now undergoing regulatory review, "and many in the industry and the Bush Administration act as if increased nuclear development is a reality."

Nonethless, "as long as Yucca Mountain is sidelined, with no immediate solution in sight, the risks involved in developing nuclear facilities facility will prevent a significant boom in the industry," Stratfor concluded.

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Eric Hommelberg puts British gold sales in perspective

GATA's longtime supporter Eric Hommelberg, editor of The Gold Discovery Letter and The Gold Drivers Report, has just published an essay putting into great perspective the renewed controversy over the Bank of England's gold sales. Hommelberg's essay is titled "Gold and GATA" :

GOLD & GATA


Sunday Times - Brown lost £2bn selling UK's gold

by Eric Hommelberg
April 15, 2007

GATA got another tremendous credibility boost today by a devastating article in the Sunday Times on the controversial gold sales announced by the Bank of England on May 7, 1999.

It was believed by GATA at that time that the timing of the announcement of these gold sales only had to serve one single purpose which was to drive the gold price down.

The price of gold had to be taken down since gold was at the verge of a significant break-out above the $290 mark which would hurt the commercial gold traders and banks which were heavily short at that time tremendously.

The funny thing is that two of the of the big short players at that time (JP-Morgan and Deutsche bank) informed their clients the day before the BOE gold sale announcement that gold was NOT GOING ABOVE $290. Now how did they know that? (source: Bill Murphy, LeMetropleCafe, May 10, 1999)

Well, the very next day we all knew why gold was not going above $290.

So from that perspective Gordon Brown’s decision to sell off half of Britain’s gold reserves and to announce the gold sale in advance could be considered as a great success since he got what he wanted, a crashing gold price which made it possible for the short players to cover at more convenient price levels.

Sure enough Blair and Brown came under heavy pressure since selling gold at rock bottom prices is about the most foolish thing one can do and has cost the British tax payer already more than 2 billion pounds and is likely to increase dramatically the years ahead.

You think these remarks re gold price manipulation/bailing out shorts are exaggerated?

Well, read on…

Suspicion on the announced gold sales ran so high that chief executives and chairmen of Placer Dome, Newmont Mining, Ashanti Goldfields, Homestake Mining, Gold Fields, and Anglogold wrote an open letter to Tony Blair. This letter included:

On 16 June 1999, in the House of Commons, Mr. Quentin Davies, from the Opposition Front Bench, speaking in the debate on gold sales, said that there is a persistent rumour concerning the position of international investment banks.

Mr. Davies said:

"...We cannot allow the rumors to grow, because they are extremely dangerous to public confidence. It has been suggested that the market is very short of gold, that the short positions may be a substantial multiple of the total amount of gold currently held by the Bank of England, and that the Bank's real motive is to save the bacon of firms that are running those short positions. ...Has the Government's whole plan been simply to drive down the gold price by whatever means, fair or foul, to save the position of certain figures in the city which apparently, are so short and potentially in such trouble?"

END.

Sure enough these allegations were denied by Blair and Brown but as John Embry (Sprott Asset Management) noted in his excellent report ‘Not Free, Not Fair, The Long Term Manipulation of the Gold Price’ it seemed the decision to sell half of Britain’s gold was ordered by British government over the objection of BOE officials.

Nevertheless the British government has maintained all these years that the gold sale decision was made consulting with the Bank of England. On July 14, 1999, Prime Minister Tony Blair said the following in the House of Commons:

"We sold gold on the technical advice of the Bank of England, and other countries have also sold gold."

Now this statement ‘we sold gold on the technical advice of the Bank of England’ contradicts what The Sunday Times found out and published today.

Sunday Times - Brown lost £2bn selling UK's gold
April 15, 2007-04-15

From interviews with key Treasury, Bank of England and gold market insiders involved in the decision, The Sunday Times has established:

o The Bank of England, which has managed Britain’s gold reserves for more than 300 years, was never asked for its advice on whether Britain should sell the gold. A senior Bank of England executive said the timing of the sale was “not debated”.

o At a secret meeting with senior gold traders, Bank of England officials were warned that the proposed auctions would achieve the worst price for taxpayers. The officials are understood to have agreed with the analysis but said they were powerless to influence the Treasury.

o Several Asian countries including China are named by an insider as having bought the gold “on the cheap” from the Treasury. The Chinese may have made more than £1 billion from Brown’s botched sell-off.

Warnings over the risks of losing money from the gold sell-off are understood to be set out in internal correspondence sent by Bank of England officials to the Treasury in 1999.

Last night the Bank of England sought to distance itself from the decision to sell off the gold. In an unusual intervention, it said: “In regard to the gold sales, the Bank acted solely as agent and the decisions were taken by HM Treasury.”

Its statement casts doubt over previous assurances given by Treasury ministers and Tony Blair to parliament that the decision to sell the gold reserves was made on the “technical advice of the Bank of England”.

A senior investment bank director, present at a meeting held by the Bank of England in May 1999 to discuss the sell-off, said: “We were told this was a Brown thing and that the Bank had no say over what was going on. The officials were unhappy.”

Let’s repeat one sentence here:

“Bank of England officials were warned that the proposed auctions would achieve the worst price for taxpayers. The officials are understood to have agreed with the analysis but said they were powerless to influence the Treasury. “ END.

You still think British government acted upon advice from the Bank of England? You really think that Blair told the truth when he said in the House of Commons:

We sold gold on the technical advice of the Bank of England. END

You really think it is coincidence that two major short players in the gold market told their clients just one single day before the BOE gold sale announcement that gold IS NOT GOING OVER $290?

The bottom line is:

Central banks have been supressing the price of gold for more than a decade by excessive gold sales and loans. It should be noted that it’s not only the Bank of England that lost half of its gold reserves but word is that only about 15.000 tonnes of gold is left in the vaults of the central banks world wide instead of the claimed total of 30.000 tonnes. The current central bank gold holding figures are misleading since they report leased gold as being a reserve asset. When the investment world learns what GATA knows they will realize that half of all central bank gold is already gone and gold prices will go ballistic.

It’s important to know what GATA knows since gold prices exceeding the $2000 mark before the end of this decade isn’t an illusion but could come earlier as you might expect.

Now please don’t think GATA is a bunch of dreamers since many heavy weight gold analysts like eg John Embry, Doug Casey and Peter Grandich already joined the GATA bandwagon for quite some time now.. Hope you’ll do the same!

Ps readers interested in detailed background info and history on GATA can take a peek at a lengthy piece I wrote on GATA in May 2005. You can find it here at:

http://www.gold-eagle.com/editorials_05/hommelberg051505.html

or else go to GATA's website at www.gata.org

Best Regards,
Eric Hommelberg
The Gold Discovery Letter/
The Gold Drivers report
www.goldddrivers.com

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Brown lost £2bn selling UK's gold!

From The Sunday Times
April 15, 2007
by Robert Winnett and Holly Watt

GORDON BROWN is to face questions in parliament after revelations that he disregarded advice from the Bank of England before he sold off more than half the country’s gold reserves at the bottom of the market.

Insiders involved in the decision have broken ranks after an 18-month battle in which the Treasury has blocked attempts by The Sunday Times to make public the official advice received by Brown before he sold the gold.

They have revealed that Bank of England officials had serious misgivings over the chancellor’s determination to sell 400 tons of bullion in a series of auctions between 1999 and 2002, when the price was at a 20-year low. Since then the price has almost trebled, meaning the decision cost the taxpayer an estimated £2 billion.

Please clich HERE for entire article.

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The Sunday Times: Goldfinger Brown’s £2 billion blunder in the bullion market

From
April 15, 2007

Chancellor ignored advice on sell-off
Holly Watt and Robert Winnett

GATHERED around a table in one of the Bank of England’s grand meeting rooms, the select group of Britain’s top gold traders could not believe what they were being told.

Gordon Brown had decided to sell off more than half of the country’s centuries-old gold reserves and the chancellor was intending to announce his plan later that day.

It was May 1999 and the gold price had stagnated for much of the decade. The traders present — including senior executives from at least two big investment banks — warned that Brown, who was not at the meeting, could barely have chosen a worse moment.

Please click HERE to read entire article

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Apr 14, 2007

Uranium Spot Price Climbs Above the $100/Lb mark

Last week witnessed a US$18 leap in the Uranium Spot price to US$113/Lb, the highest ever in the last 30 years:



This Uranium Bull Market seems to have no end in sight. Some of the contributing factors to this were examined at last week's Uranium Stock Summit in Las Vegas:
  • Saudi Peak Oil. Where a combination of data related to Saudi Arabia’s oil production like price, the number of rigs deployed in that country, and the amount of oil being produced from its wells clearly point to exhaustion. Given that oil prices are hovering around historic highs (the incentive), and (B) the Saudis are clearly looking to take advantage (demonstrated by the number of rigs now set to the task of finding more oil), then (C) the only logical reason that oil production is plummeting is that Saudi Arabia has peaked.


  • Saudi peak oil is -of course- just the tip of the "oilberg". Other producers are sure to follow suit.
  • Nuclear Power comeback. Nuclear power is no longer an option, but a prerequisite, but the problem is that in order to replace the looming energy shortfall, the world would need another 10000 nuclear reactors, whereas only 100 are now in planning or construction!

So there you are, but before committing your hard earned cash buying Uranium stocks, please.. D.Y.O.D.D.

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Apr 12, 2007

Enrico Orlandini: gold is on the threshold of an explosive move to the upside

"Gold is one of my favorite subjects and I can never get enough of it. The June 07 Gold futures contract went into the Easter holiday at 679.4 and that is a new closing high for this leg up. Some months back I advised you that gold was going to a minimum of 775.0 before we would run out of steam and nothing has changed my mind. I also told you that we would have two 7% corrections and that is just what happened. Now I am going to tell you that gold is on the threshold of an explosive move to the upside; the type of move where you could see an advance of 100.0 within a seven to ten day period. We have overcome good resistance at 667.1, 672.5, and 687.0 is the next target followed by a test of the significant Fibonacci resistance at 696.0. It was this resistance that turned back the last rally but I don't think it will stop gold this time around. Here are the magic Fibonacci numbers with respect to the June 07 gold futures contract:
GOLD'S SUPPORT GOLD'S RESISTANCE
623.3 696.0
649.3 721.7
672.5 746.3

The 775.0 resistance number I referred to earlier is with respect to the spot price for gold and it should be enough to stop the current leg up, but that doesn't mean that it will. As usual, I like to put gold's activity into perspective and the best way to do that is to view the historical chart:

This entire rally is nothing short of spectacular and what is even more fascinating is that the best is yet to come. You can see the May 2006 high of 732.0 and we are now within shouting distance ten months later. If there is one thing that makes me believe that we could go higher than 775.0, it is the fact that we have been consolidating gains for ten months. That could/should provide a powerful base for rally that may go well beyond 775.0 and could even challenge the all-time high at 882.5 but we'll just have to wait and see.

Silver, and to a lesser degree gold stocks are following in gold's footsteps. The May Silver futures contract closed up 12.0 at 1374.0 on Thursday and that is a new closing high for this leg up. Like gold, silver has a set of important Fibonacci numbers as well. They are as follows:

SILVER'S SUPPORT
SILVER'S RESISTANCE
1,328.1
1,389.6
1,358.7
1,423.6
1,456.0

In all honesty, I see more upward potential in silver right now than I do in gold and the following P & F chart for silver tends to agree with me:

We have a bullish price objective of 21.5 and that is slightly above my 20.73 objective and more than 40% above Thursday's close. Silver appears to be leading gold at this point in time while gold stocks appear to be following both; or maybe dragged would be a better word. On Thursday the HUI closed down 1.87 to end the week at 354.15 and that is just below good Fibonacci resistance at 354.84. There is good Fibonacci support at 351.59 and 336.11. I have been vacillating about the future of gold stocks to the point that I sold 25% of my portfolio some weeks back. I still hold the same portfolio that I bought in September 2004 and it is as follows:

BUENAVENTURA (BVN) = 20%
COEUR D'ALENE (CDE) = 5%
GOLDCORP (GG) = 15%
NEWMONT (NEM) = 10%
ROYAL GOLD (RGLD) = 20%
SILVER WHEATON (SLW) = 5%
CASH = 25%

Actually the cash component is a bit misleading as I used it to but gold on the futures market. Take a look at the following weekly chart of the HUI:

I have been wondering for weeks now if the HUI will follow gold up or the Dow down. As of today I do not have a definitive answer but as you can see above, the HUI is being compressed into a tighter and tighter range with a series of higher lows and lower highs. We are coming to a crucial moment in time where there will be a breakout in one direction or the other. Given the fact that this is a bull market, the odds heavily favor a breakout to the upside but the fly in the ointment could be the Dow. If the Dow rallies until mid-June than I suspect new highs will be made but if the Dow turns down this week, it might be a different story. We'll just have to wait and see. In the meantime I am long gold, silver, and gold stocks and that will not change."

Click HERE to read entire article

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Apr 11, 2007

CanAlaska Finalizes Uranium Exploration Venture

Vancouver, Canada, April 11th, 2007 --
CanAlaska Uranium Ltd. (CVV -- TSX.V) (the "Company" or "CanAlaska") is pleased to report that the Company has finalized an agreement with Mitsubishi Development Pty Ltd. ("MDP"), an Australian based mining company wholly owned by Mitsubishi Corporation in Japan, to undertake uranium exploration on CanAlaska's 100%-owned West McArthur project as originally reported last year (see CanAlaska press release dated September 6th, 2006). The West McArthur Project is situated in Canada's Athabasca Basin in the Province of Saskatchewan approximately 8km west of the McArthur River uranium mine (389,100,000 lbs. @ 25% U3O8). The Project comprises nine large claim blocks across 359 square kilometres (88,516 acres)...

Click HERE for the entire report in pdf (Adobe Acrobat) format.

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Apr 10, 2007

Jason Hommel: How to Fix Gold Price Fixing

by Jason Hommel, April 9, 2007

"The world monetary system is in serious trouble, and the main problem is that nobody who is in power seems to know how to fix it. This is the theme of an article at lemetropolecafe.com called "The Road to Roota or The Implementation of the Gold Standard." (You can read the article if you signup for a free two-week trial at lemetropolecafe.com, which I strongly suggest that you do.)

The Fed tried to work on a cure for the monetary system in 1981. See "All That Talk About Gold", from October, 1981.

It was thought, at the time, that the biggest difficulty was to determine the fixed, set dollar price, for gold and silver, and nobody could agree.

President Reagan decided to continue to let the market decide, and let the dollar "float", and it has been sinking ever since.

Five years later, in 1986, the president's commission came up with issuing gold and silver Eagles.

But they printed the term "$50" on Gold Eagles, and "$1" on Silver Eagles. Most everyone who has ever looked at one of these coins, which are worth about $700 and $15 today, will ask, "Why did they do that?"

Click HERE for the rest of the article...

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James Turk: Can we trust the silver ETF?

GoldMoney founder James Turk, editor of the Freemarket Gold & Money Report and consultant to GATA, has studied the SEC filings and prospectus of the silver exchange-traded fund on the American Stock Exchange (SLV) and has discovered that they go out of their way to provide for not actually having allocated silver to back the shares sold in the fund. Turk's research revives the long-simmering question of whether the precious metals ETFs are secure investments or just more mechanisms to be used by the financial powers and the central banks behind them to short the metals.

You can find Turk's new report, "Can We Trust the Silver ETF?" at Silver Seek, HERE

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Ron Paul: The Federal Reserve Monopoly over Money

"The greatest threat facing America today is not terrorism, or foreign economic competition, or illegal immigration. The greatest threat facing America today is the disastrous fiscal policies of our own government, marked by shameless deficit spending and Federal Reserve currency devaluation. It is this one-two punch-- Congress spending more than it can tax or borrow, and the Fed printing money to make up the difference-- that threatens to impoverish us by further destroying the value of our dollars"
You can read the full article HERE

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Apr 7, 2007

Casey Research: Uranium at $500?!

Uranium at $500?!

"...Okay, here’s the latest on the uranium front. Word on the street is that, due to the Ranger Mine flood, that company has now fallen back on force majeure for its outstanding contracts. Specifically, its deliveries will fall short by 5 million pounds next year. That shortfall is, to use the correct word, impossible to make up through increased production from other suppliers.

This has triggered a mad scramble, because due to technical considerations, a nuclear power plant simply cannot run out of fuel. But the problem is massively compounded by the fact that the utilities are now competing with the investment-oriented uranium participation funds for yellowcake. Simply, the funds are experiencing a wave of new investment demand… but they cannot take in new investors unless and until they are able to buy more uranium.

It is, you could say, a tug of war between fear (the utilities running out of fuel) and greed (the profit incentive of the fund managers).

Sitting in the driver’s seats we have the mines, at least those that still have not already signed long-term contracts for all of their production. And word is they are actively playing the utilities off against the funds in order to lock in higher prices.

While the news hasn’t been announced to the markets yet, our well-placed sources tell us that at the latest auction, uranium may have traded as high as $115 a pound. But more interestingly, industry pros are now saying that this is just the beginning of a whole new run-up in uranium prices. It is now pretty much a given that U3O8 is headed for $150 a pound, but there is an increasing level of chatter that uranium might go to $250, or even $500 a pound, as the supply choke worsens.

Of course, this is all wonderful news for the uranium juniors, and investors in their shares, but not all of these companies are cut from the same cloth. Most, and by that I mean the vast majority, are paper tigers propped up by nothing but a promoter’s well-told tales.

And almost all the juniors are well ahead of themselves on any even remotely rational pricing model.

So, if you are invested in this atomic-powered sector, be happy, but be cautious. As always, we’ll keep you informed on the latest in the Casey Energy Speculator."

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Apr 5, 2007

John Crudele: public letter to Treasury Secretary Hank Paulson

Dear Mr. Paulson:

How ya doing?

I think you're doing a wonderful job as Treasury Secretary. And don't think I'm saying that just because I'm looking for a favor.

You have been pretty invisible compared with others in that job and, frankly, that worries me a little. It also gets me to the point of this letter.

Hank, I don't trust you. There are just too many ways for you and your former Wall Street firm, Goldman Sachs, to cheat the financial markets.

But don't think I'm picking on just Goldman - I'm a little suspicious of any firm that can make billions on a single trade with the right connections.

So on July 25, 2006, my lawyer drafted a request under Section 552 of the Federal Code called the Freedom of Information Act asking for documents generated by the President's Working Group on Financial Markets.

Around here we call it the Plunge Protection Team.

That request was ignored, although we did get a phone call from someone many months back saying they were working on it.

So on Feb. 28 I had my lawyer file another request. This time we asked for minutes of meetings that might have taken place that day and the day before.

My poor lawyer is getting a little frustrated, but I told him maybe the requests got lost in the mail. That's why I'm sending this parcel Post, pardon the pun.

It's only April, but I get the feeling that you're going to ignore me again.

Perhaps you missed it, but around the time of the first FOIA request, I documented what I believed the Plunge Protection Team was up to.

I believe this group you head, and which includes regulators, brokerage firm chiefs as well as major market players, tries to protect the stock market.

George Stephanopoulos explained it - although not very eloquently - when he was a guest on "Good Morning America" on Sept. 17, 2001.

"And perhaps the most important, there's been - the Fed in 1989 created what is called the Plunge Protection Team . . . [and they] have plans in place to consider if the stock market starts to fall."

Poor George was a little discombobulated. It was right after the 9/11 terrorist attacks. But since he was a very close adviser to President Clinton, Stephanopoulos would have known if something as important as this was happening.

Don't get me wrong. I think rigging the financial markets is a good thing when the nation's security is at risk.

I'm a little leery of putting the likes of hedge funds, Wall Street firms and others with very vested interests in charge of this effort - how could that possibly go wrong?

If you want everyone to be aware that Treasury is on the ball and ready to come to Wall Street's rescue, why not turn over the documents I've requested?

Could it be because you don't want us to know about some very odd trading patterns on Feb. 27 and 28 this year that saved the stock market from having a truly ugly day?

Maybe you'd prefer not to explain why traders such as Paul Tudor Jones are reportedly being consulted by the Plunge Protection Team.

Anyway, I hope you can get that stuff to me pronto. At the very least, please have your lawyers call my lawyer and give him the usual runaround.

Have a nice day printing money.


Sincerely,

John Crudele

john.crudele@nypost.com

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The "R man" at it ...(again!)

Richard Russell"... Well, there is one other phenomena that I want to talk about, and we call them bull and bear markets. The thing about a big bull or a big bear market is that they both end in exhaustion. And to become exhausted, a trend has to overdue itself on both the upside or on the downside.

I'm thinking of the bull market in gold. Unfortunately, I can't tell you when, but somewhere ahead the gold bull market is going to get "crazy," it's going to "blow its top" and end in exhaustion. It's going to become so wild and speculative that you'll just shake your head and mumble that "I've never seen anything like this." Yes it's going to happen somewhere ahead -- it's going to happen sure as shootin', but damn it, I can't tell you when.

Since there are always bull markets operating somewhere in something, why do I choose gold as an example? I pick gold because gold is the most emotional of all items. The gold-bugs love gold. The honest money crowd loves gold. The anti-inflationists love gold. The government hates gold. The central bankers despise gold. The bankers and the inflationists abhor gold. The yellow metal is loved and it is hated. A gold bull market brings out elements of both fear and greed. The fiat money crowd is fearful when gold advances. The honest money bunch love it when gold advances. Gold brings out the emotions like no other tradeable item. When gold finally goes into its third speculative phase, there'll be nothing like it. It will be a spectacle to remember."

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Apr 4, 2007

Blanchard research: Gold defies bigger central bank sales

By Neal R. Ryan
Vice President and Director of Economic Research
Blanchard and Co. Inc, New Orleans
Wednesday, April 4, 2007


We've gotten our update on European Central Bank sales for the past week, and just as we figured, it was another week of massive increases in bank reserve gold selling. This past week's sales put roughly 17.5 tonnes of gold into the market. So in the last three weeks 45.5 tonnes of gold have flooded out of ECB banks into the gold market.

For a point of reference, in the previous three weeks, sales totaled only about 7 tonnes.

Considering past price action in periods when selling increased this dramatically, gold has held up well and even has made advances amid massive selling pressure.

The last two examples of similar selling collapsed gold prices. In September 2006, when more than 50 tonnes were sold into the market, prices fell nearly $30. And in May 2006, 75 tonnes were sold and prices fell more than $100 per ounce.

That gold has absorbed this increased selling and continued higher highlights two things.

First, the physical demand is quite robust. Second, central bank selling now is confirmed as the reason the gold market has not been reflecting the market conditions that should be pushing prices higher.

The wet blanket that has been thrown on the gold market should be lifted in coming weeks. We wouldn't be surprised to see major price spikes during the London open simply because the central bank gold supply dries up and continued demand forces prices higher.

Assuming that the Bank of France is the lone major seller left in the market, that bank is coming close to exhausting its allotment of sales under Central Bank Gold Agreement II. Germany has said that it will sell no gold in 2007. Spain and Portugal, after having sold massive amounts of gold in 2006, have sold no gold in five months.

This is significantly bullish. We're heading into the peak demand season and the supply/demand fundamentals will take control.

Today is also U.S. oil inventory report day. Significant draws from or additions to inventory figures will move energy and precious metals markets.

Iran has announced that it will be releasing the 15 British sailors. Interestingly, this news hasn't hurt the gold price.

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Ted Butler: The excellence of silver

In his new essay, silver market analyst Ted Butler makes the case for the white metal as well as it ever has been made.

Silver has done spectacularly well over the last five years but not as well as some other metals -- because, Butler says, of the huge and concentrated short position in silver on the New York commodities exchange. That short position, Butler writes, "must be resolved, and whether that resolution involves default or buying by short covering, it will have the same bullish impact on price."

(He's betting that the short position in silver will be resolved by default -- with a smile if not a hearty laugh at the commodities exchange's longs.)

You can find Butler's essay, "The Excellence of Silver," at GoldSeek's companion site, SilverSeek, HERE



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Apr 1, 2007

GOLD STANDARD UNIVERSITY

GOLD STANDARD UNIVERSITY
Announcing Session Two
at the Martineum Academy in Hungary
August 15-29, 2007
March 31, 2007

Session Two of Gold Standard University is announced for the period August 15-29, 2007 at the Martineum Academy in Szombathely, Hungary. The session is in two parts: the first week is taken up by the academic program, followed by an optional second week of recreation and sight-seeing.
Martineum offers full retreat-style accommodation and meal services in a nice quiet setting at modest prices in a former Carmelite cloister.

The academic program of Gold Standard University is based on a four-course curriculum, each course consisting of 13 one-our lectures with discussion, as follows:
Monetary Economics 101: The Real Bills Doctrine of Adam Smith
Monetary Economics 102: Gold and Interest
Monetary Economics 201: The Bill Market and the Discount Rate
Monetary Economics 202: The Bond Market and the Rate of Interest

Session Two offers Monetary Economics 102. At the successful completion of the four courses participants receive a certificate. Accreditation from the Hungarian Board of Higher Adult Education has been applied for. In addition to course offering, private or group consulting is available for extra charge during Session Two, as well as at other times by appointment. The fee for private or group consulting is $250 per hour, minimum of one hour, exclusive of room and meal charges.

A special feature of Session Two, included in the academic program, is a blue-ribbon panel discussion on gold and silver basis with the title: The Last Contango | The First Sign of Disintegration of the International Monetary System. Please note that this is a world premier, since results of research on the gold and silver basis have never been offered to the public before and, in so far as it was available could only be obtained at exorbitant private consulting fees.

The tuition fee for Session Two, for the first week of the academic program, excluding travel, but including room and breakfast for one week, is $1000 U.S. per person. Other meals are available on a ‘pay as you go’ basis. There is a non-refundable pre-registration fee of $250 that will be credited towards the tuition fee at the time of registration. Charges for the second optional week will be made at a rate to be determined in the near future.

Gold Standard University was started on the Internet by Antal E. Fekete, Professor Emeritus, Memorial University of Newfoundland, in the Summer of 2002. Now it continues live. The host institute is MARTINEUM ACADEMY, an Institute of Higher Adult Education located in the city of Szombathely, Hungary, see http://www.martineum.hu.
Szombathely is the capital city of Vas County in Western Hungary. If you would like to learn more about that part of the country, please look up http://www.vasmegye.hu where you will find well-written and well-illustrated information in English on the local population, culture, history, economy, and geography.

Recreational activities during, before or after Session Two are available through the courtesy of Martineum, which has a competent staff to help you plan your holiday around the academic program. Spouses, friends, and children are welcome at no extra charge, provided that they do not occupy a separate room, and do not wish to participate in the academic program. There are some famous spas in Hungary and Austria near Szombathely with therapeutic mineral hot water springs. There are also riding schools, archery, and many other recreational possibilities. Several museums offer interesting displays on local history, geography, and folklore.

During the last week of August the city of Szombathely is offering its Europe-famous annual Savaria Carneval, to recreate Roman times of two thousand years ago when Szombathely, then called Savaria, was already a major garrison town protecting the Roman province of Pannonia. The Carneval features Roman costumes, Roman cuisine, Roman plays, games, and other sport events. Martineum will be glad to get tickets for the various events of the Carneval and to organize transportation for the participants of the Gold Standard University. Up-to-date information on Savaria Carneval 2007 is available on the Internet: http://www.szombathely.hu

For further information on Session Two of Gold Standard University, please contact: GSUL@tonline.hu

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More on market corruption...

Here's another eye-opening analysis on the financial scams lying out there for the unaware investor:

"The Dark Side of the Looking Glass: the Corruption of Our Financial Markets": a presentation by Dr. Patrick M. Byrne, Chairman and CEO of Overstock.com

Moral:
Don't be an April Fool and Do Your Own Due Diligence Before Committing your Hard Earned Money!

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