Jun 30, 2007

Jim Sinclair: U.S Dollar Weakness Trumps Any Market Manipulation

US Dollar Weakness Trumps Market Manipulation

Posted On: Friday, June 29, 2007, 5:30:00 PM EST
Author: Jim Sinclair

Dear Friends,

They can manipulate as much as they want but it is all in the US dollar!

It is my opinion that those powerful short interests -- both legal and illegal -are frantic to cover and are therefore pulling out all the stops.

Dirty tricks, use of media pals, and all the usual underhanded methods seem to populate everything these days from gold to gold shares of good value.

Using the baseball analogy, "Three strikes and you're out," I rate today as strike number two at the .8050 to .8150 range on the USDX. The interesting part of this is that commentators are looking at the differential rate between the US Fed and other Central Banks. My comment is, "Like hell that is the reason."

The real reason is a meltdown of sub prime mortgages that appears to have caused Bear Stearns more of a problem than was first thought. When you see a new man come on board at Bear Stearns who specialized in asset maximization of corporations you know the horse dung has hit the proverbial fan.

I believe that Over the Counter Derivatives are now melting down, threatening many other well known international investment firms. And that is why the dollar looks like death warmed over. In addition, that is why the price of gold is under the great power of manipulation to hold it down so as not to reveal the degree of the problem.

Remember this about Over the Counter Derivatives:

1/ They have no regulation.
2/ They have no standards.
3/ Without standards there can be no viable market.
4/ They are unlisted
5/ They are traded by private treaty negotiation
6/ They are valued by "Mark to Model" which is a total cartoon.
7/ They have no financial guarantee such as a clearing house.
8/ They are unfunded special performance contracts floating in cyberspace. All funds in the OTC Derivatives are taken out as spreads and commissions.
9/ More than 50% of the earnings of major international investment banks come from granting in private treaty negotiations these instruments of mass financial destruction.
10/ The financial performance of the specific performance contract called OTC Derivatives depends on the financial capacity of the loser in the transaction.
11/ Control has been loose in the interest sensitive OTC Derivatives because of multiple dealings outside of the initiating two until no one knows who has what.
12/ The replacement value of these instruments is in the multi trillions of dollars.

Interest rate differential would not hammer the dollar as we are seeing today. Remember that three strikes and the US dollar is out. Expect every dirty trick and media negativity towards everything gold as quiet but frantic insiders attempt to offset a panic by subverting early warning systems.

Those in the know are frantic to cover their short positions which can only be accomplished if they stampede you by every means possible. They are going to fail. You are not. If you wish to screw the shorts royally - simply do nothing. They can make price but they cannot make cover as long as you are not spooked into selling everything gold. The gloves are off and the major battle between longs and shorts in gold is here!

Gold is going to $682 - $761 and then to $887.50 - $1000 plus

The bear market in gold shares is a total construction of bear raiding hedge funds that is doomed to failureJ. Sinclair's Mineset

Their really bad day is close at hand!

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Jun 29, 2007

Richard Greene: You would have thought it was a gold bull market

By: Richard J. Greene

There are just an overwhelming amount of bullish factors for gold and silver that are still cleverly being camouflaged so that the fewest possible can see them. From this point forward; remember the words of former Fed Chairman Paul Volker from the 1970’s, “the one mistake that I made was in not capping the gold price.” Do not forget that statement because they did not forget this time and that has created the most incredible investment opportunity for those that see through it that has ever existed. Control and manipulation in precious metals markets has reached a new level of transparency this year in an effort to discourage interest in the precious metals for their traditional investment merits.

A key event awakening the world to the continuing decline to worthlessness of fiat currencies led by the dollar; was when China was disallowed from spending some of its stockpile of reserves to purchase Unocal. China has amassed close to $1 trillion in reserves and has been instrumental in prolonging the viability of the U.S. dollar by recycling trade surpluses into U.S. bonds despite massive trade and budget deficits that can be traced to Americans consuming far in excess of what they are producing. The most basic of economic principles has been totally lost on the American public. Due to being led by feeble economic minds such as Ben Bernanke and Alan Greenspan, the American public has to be among the most economically illiterate empires in history. We have been on the verge of bankruptcy for so long that most don’t even have slightest hint that we would have crashed long ago if not for the arm twisting of other Central Banks by the U.S. to run similarly irresponsible monetary policies worldwide. The problem is right here in the United States and it starts with a lack of savings. (By the way, define saving as: that left over from the rewards of production that has not been totally consumed rather than the more commonly accepted; borrow money or extract equity to flip into the nearest asset bubble.) Yet our fearless financial leaders, (clowns), Helicopter Ben or Mr. Magoo would have you believe we Americans are bravely shouldering the world’s burden because we are more willing to consume with money we are borrowing from our trade partners and buying things we have not yet earned and taking rewards that others have earned and that we will be unable to repay. This is another form of the Adolph Hitler style of truth: say it often enough and they will believe it.

A debt-based fiat currency system that has now fully expanded worldwide has only one way to go and that is toward final collapse. Now that the U.S. has bought some time by convincing other countries to increase their money growth rates even higher than the U.S., we are at such high rates of growth worldwide, (on the order of 15%) that we are literally hurtling toward either hyperinflation or economic devastation. The U.S. is in a box and seriously at the mercy of other countries’ decisions because inflation is rising and we can not raise rates due to the leverage, particularly in housing, and we can not lower rates for fear the dollar will rapidly implode. Thus with money compounding worldwide at a 15%+ clip annually led by Russia at a 57% annual rate, inflation will be too obvious to even the biggest economic dullards. Even by holding rates constant the Fed would, in effect be easing aggressively as real rates would become even more negative than they already are. If you can not feel the walls closing in then you haven’t noticed the many countries that have spoken of diversifying their foreign exchange reserves or increasing their commitment to gold. Syria and Kuwait are the latest examples of countries that have had enough of the excessive money creation in the U.S. and have moved to de-link their currencies from the dollar. Our foreign policies have been heavy handed economically, militarily and financially. We are failing on all fronts and stand ready to slap China in the face with trade sanctions even while they have been most instrumental in keeping our currency from plummeting. We should fear the risk of a military aggression on our part is a bigger and bigger risk as our other two methods of control are weakening considerably. This would be an even bigger mistake. The U.S. dollar is on the way out and just because officials have convinced other countries to wreck their currencies at a faster rate does little to salvage anything except perhaps a little more time.

The U.S. continues to bleed enormous trade and budget deficits, has lost its industrial base, finds fewer takers of its oversupplied currency, and can’t even manufacture borderline positive economic statistics despite massive fraudulent manipulation. The World Gold Council earlier this month said world gold demand is running 31% above a year ago while supply continues to decline. The world’s largest producer, South Africa, saw gold production fall 7.5% last year to an 84 year low and continued declining in this year’s first quarter at an even greater rate despite an almost tripling of the gold price in the last five years. Gold production peaked in 2001 at 2645 tonnes and fell to 2470 tonnes by last year. Five of the top producers: South Africa, Canada, Australia, Peru, and the U.S. produced more than half that total in 2001 with 1330 tonnes and saw that drop off to only 1095 tonnes in 2006. These stats make a pretty compelling bullish case yet gold is trashed in the press, the TV, financial advisors, and especially the bullion banks and the gold cartel. They have resorted to an especially incredible tactic of late; instead of smashing down gold when negative news for gold is released, they especially whack it when gold positive news is released. Despite these attempts gold has held up even with heavy Central Bank sales, heavy shorting in the futures markets, double leasing of the same gold, and attacks on the gold ETF which has been driven down with dollars being thrown at these paper markets. Meanwhile, jewelry sales are up 17% and physical demand was high on any sell-offs.

The tide is turning as gold as a percentage of global currency is now down to 10% from a high of 84% back in 1950; so the Central Banks are running out of ammo to cap the gold price. Of course, those investors that continue to make their gold investments in the paper markets of the futures markets and the gold and silver ETF’s are helping to cap the price because the gold cartel will someday run out of gold but they will never run out of paper. These instruments are what help them to crush the charts of the stocks and the metals causing chartists and technical players to pile on downswings. There is more technical analysis on the major gold websites than ever…forget them, they do not matter. First of all 99% of them are trying to chart gold and the stocks in dollars and that is a totally frivolous effort. The dollar is a measure of nothing with unlimited supply at any point in time. Technical analysis is another tool being used to cap gold and gold stocks, nothing more at this point. Don’t listen to technical analysis and don’t listen short term price explanations of the days action. If you do, you will notice: higher interest rates are bad for gold; lower interest rates are bad for gold; high oil prices are bad for gold; lower oil prices are bad for gold; get it?...EVERYTHING IS BAD FOR GOLD! That’s what they have to get you to believe for the currency system of the world to make it through one more day. When that one more day doesn’t come if you listen to these people you will be left far behind and in an incredibly short timeframe.

Since 1970 the money supply of the world has increased more than 20 times the industrial production of the same period. This IS inflation. There is now more paper money added to the existing pile of money in the world EACH YEAR, close to $4 trillion, than the value of all the gold mined in human history and the pace is accelerating to the point that the paper money is beginning to be selectively rejected. Do you not believe that holding gold and silver will not go up more in value than paper nothing? This is all you ever have to know about gold and silver. PERIOD!

There is a favorite saying that I like very much attributed to Sidney Greenberg: “A successful man is one who can lay a firm foundation with the bricks that others throw at him.”

They are throwing bricks at you right now and they are made of gold and silver. GRAB THEM!

Richard J. Greene
June 28, 2007
Clearwater, Florida

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Jun 27, 2007

Soon the Chinese will be buying gold with both hands...

Individual gold bullion trading to be launched in China in July

Appropriately, during China’s year of the Golden Boar, the Shanghai Gold Exchange announced that it will offer gold bullion trading for retail investors next month.
by Dorothy Kosich
Tuesday , 26 Jun 2007

The Shanghai Gold Exchange is launching individual gold bullion trading next month through a partnership with China's Industrial Bank.

The Shanghai Daily reported Tuesday that the gold bourse has scheduled a joint briefing in early July with Industrial Bank about the service.

The exchange will also subsequently launch trading through Huaxia Bank. Industrial and Commercial Bank of China is likely to be the third entity to join the bullion trading scheme.

China's central bank, the People's Bank of China, gave approval for the gold bourse to start nationwide gold trading services at the end of 2006, the Shanghai Gold Exchange said Monday.

Under the new trading scheme, individual investors will be able to trade in gold from a minimum threshold of 100 grams, which would cost roughly 16,000 yuan (US$2,099). Investors can take home the bullion at lower prices than those of jewelers and coin makers. For example, investment-grade bullion fetches more than a 10% premium in the market.

The Bank of China and China Construction Bank are among the lenders that already offer virtual gold trading betting on prices through a special bank account. However, investors can't actually hold the gold bullion.

Earlier this month, the Shanghai Gold Exchange said it will work with more commercial banks to offer gold to retail investors. The Chinese have traditionally kept gold bullion as a safe haven to hedge against inflation and as a symbol of good fortune, according to the Shanghai Daily.

The Shanghai Exchange now trades gold, platinum and silver.

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Massive Loan Revocations Expected from U.S. Banks

By Ambrose Evans-Pritchard
The Telegraph, London
Tuesday, June 26, 2007

The United States faces a severe credit crunch as mounting losses on risky forms of debt catch up with the banks and force them to curb lending and call in existing loans, according to a report by Lombard Street Research.

The group said the fast-moving crisis at two Bear Stearns hedge funds had exposed the underlying rot in the US sub-prime mortgage market, and the vast nexus of collateralised debt obligations known as CDOs.

"Excess liquidity in the global system will be slashed," it said. "Banks' capital is about to be decimated, which will require calling in a swathe of loans. This is going to aggravate the US hard landing."

Charles Dumas, the group's global strategist, said the failed auction of assets seized from one of the Bear Stearns funds by Merrill Lynch had revealed the dark secret of the CDO debt market. The sale had to be called off after buyers took just $200 million of the $850 million mix.

"The banks were not prepared to bid over 85 percent of face value for CDOs rated A or better," he said.

"God knows how low the price would have dropped if they had kept on going. We hear buyers were lobbing bids at just 30 percent.

"We don't know what the value of this debt is because the investment banks shut down the market in a cover-up so that nobody would know. There is $750 billion of dubious paper out there in the form of CDOs held by banks that have a total capitalisation of $850 billion."

US property writer Paul Muolo described the Bear Stearns crisis as the "subprime Chernobyl," saying the bank had created a "cone of silence."

Abandoned by fellow banks, Bear Stearns has now put up $3.2 billion of its own money to rescue one of the funds, a quarter of its capital.

This is the biggest bailout since the Long-Term Capital Management crisis in 1998, which Bear Stearns refused to join at the time. Bear Stearns is now alone, a case of rough justice being served.

Lombard Street's warning comes as fresh data from the US National Association of Realtors shows that the glut of unsold homes reached a record of 8.9 months supply in May. Sales of existing homes slid to an annual rate of 5.99 million.

The median price fell for the 10th month in a row to $223,700, down almost 14 percent from its peak in April 2006. This is the steepest drop since the 1930s.

The Mortgage Lender Implode-Meter that tracks the US housing markets claims that 86 major lenders have gone bankrupt or shut their doors since the crash began.

The latest are Aegis Lending, Oak Street Mortgage, and The Mortgage Warehouse.

"There isn't a recovery about to happen," said Ara Hovanian, head of the building group Hovanian Enterprise.

Nouriel Roubini, economics professor at New York University, said there were now concerns about "systemic risk fallout" from the Bear Stearns debacle as investors look more closely at the real value of CDOs.

"These highly illiquid securities have been priced so far on unrealistic and distorted credit ratings as the ratings industry has been complicit," he said.

"They have not been rerated in a way that is consistent with rising subprime default rates," he said. "That is why Wall Street is in a panic. Losses will be massive once these assets are correctly priced to market."

Lombard Street said the Bear Stearns fiasco was the tip of the iceberg. The greatest risk lies in the "toxic tranches" of lower-grade securities held by the banks.

Much-trumpeted claims that banks had shifted off the riskiest credit exposure on to the asset markets was "largely a fiction," said Mr Dumas.

The worst of the US property crisis has yet to hit since there is an overhang of $2,000 billion of mortgages with adjustable rates that have yet to be reset. Many borrowers could see payments jump by half, or even double.

At the same time, a spike in 10-year US bond yields by 0.65 percentage points over the last six weeks has drastically repriced the cost of fixed mortgages, knocking away a key prop for the US housing market.

"With defaults at their highest in the 37 years that records have been kept, it could be a long hot summer," said Mr Dumas.

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Ted Butler: Blood from a stone

In his new commentary, silver market analyst Ted Butler reflects on today's smashdown in the precious metals. It's titled "Blood from a Stone" and you can find it at GoldSeek's companion site, SilverSeek, HERE

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Jun 22, 2007

How Long Will the Commodities Boom Continue?

By Roger Wiegand
Jun 21 2007 3:50PM

"What traders need to be careful of is a nasty stock markets smash this fall which could take down most of the global markets to some extent. This kind of pressure would sell all varieties of stocks, bonds, derivatives, debt instruments and futures and commodities markets. After such an event, we think those markets in precious metals including stocks; futures and cash prices would level off and rally again. The bonds are going to keep selling and the U.S. Dollar sliding beneath 80.00 is a danger to the entire global financial system. We predict Japan will grudgingly help prop the dollar when its apparent failure is imminent.

In our view, almost all nations of the world no matter what their feelings toward the USA would work in concert to prop the dollar. If the dollar takes a really big smash, we think everything goes down including even some of the best fiat currencies like the Canadian Dollar, Euro, Swiss Franc, New Zealand, and Australian dollars. This is simply unacceptable for not only those in power within the United States but in other nations as well. A crashing dollar would slop-over into most markets and the foreign dollar holders would take an unprecedented beating.

One of our excellent analyst friends has suggested the United States Treasury and Federal Reserve could chop the U.S. Dollar in half deliberately to reduce by 50% the debts of the United States. This is a really scary idea as it could have unconsidered ramifications and a substantial blow-back from other hidden aspects of finance. Trader Tracks takes the fall cycle of 2007 seriously and we will be devising an elaborate plan for risk control based upon our forecasts and market expectations. HIGH RISK AHEAD.

Fall Selling for Stocks, other Markets Becoming Visible with Early Signals

"Our fall 2007 markets predictions are showing signs of shaping-up as we have forecast. The large stock index markets should be selling and precious metals ought to be in a strong rally. We remain quite observant and respectful of the Plunge Protection Team and their abilities to twist and bend these markets to different trends. Never underestimate these market fixers and their power to temporarily make trouble for precious metals traders." - Traderrog"

Read the entire article HERE

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Mike Kosares: Don't fear central bank gold sales

By Michael Kosares
Centennial Precious Metals, Denver
Thursday, June 21, 2007

Those who say that the price of gold has been kept in check or driven down by central bank gold sales are looking in the wrong direction for an explanation of why gold has remained relatively rangebound.

Though these sales contribute in a limited way to holding the gold price in check, they are a minor back-and-fill operation more than a major policy-driven attempt to keep the price down.

The mere threat of sales and warnings about them from the press are as much factors in the market as actual sales (which, by the way, usually occur in the background, with little effect on the price).

Those who dwell on central bank sales allow the convenient explanation to divert their attention from the more complex circumstances affecting gold.

In the end, the result of all this activity is to present more opportunities for the more fundamentally attuned, so we shouldn't mind it too much.

Many years ago I wrote a magazine article titled "The Myth of Central Bank Gold Sales." It was an attempt to counter the mainstream press' view that all central banks were dumping gold. Nothing could have been further from the truth. Only a few central banks at any given time are sellers, and those sales generally are forced by circumstances -- that is, a poor balance-of-payments position, an attempt to meet Maastricht Treaty requirements, the need for a gold lender of last resort, etc. Gold sales (and leases) now are regulated by the Central Bank Agreement on Gold and so already are a known quantity in the gold market.

Few in the inner sanctum of the gold business believe that central banks sell gold because they want to get a better return on their reserves. Those who work in the physical market where mass tonnages are traded see the gold reaching the market as a blessing. One wonders where they would be if the central banks couldn't be induced to sell gold.

Some analysts recently attempted to tell us that central banks were again flooding the market with gold. This too was slightly wide of the plate. In reality, the amount of gold reaching the market so far this year is the same as last year. If the most recent bout of sales was an attempt to drive down the price of gold, it has met with limited success at best. As of this writing, gold is down 5.4 percent from its peak in April but up 2.5 percent on the year -- and gold's traditionally good months are still ahead of us.

To whatever extent central bank sales have dampened the price, they also have presented buying opportunities for those who see through the veneer and understand the real reasons for gold ownership -- as a means to long-term asset preservation and hedge against currency debasement.

We now are in the usual seasonal doldrums in gold, and if the past performance of this bull market holds true, 2007 still could be a good year.

Central bank activity in the gold market is regulated, essentially bullish, and an inducement to buy, not sell.

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Jun 20, 2007

Ron Paul: Ditch Fed, go back to gold

By Simon Constable
Tuesday, June 19, 2007

Anyone planning a long career at the Federal Reserve better think again if Republican presidential hopeful U.S. Rep. Ron Paul makes it to the White House in 2008.

Paul, R-Texas, is so disgusted with the Fed and its role in failing to stem inflation that he wants to eliminate the entire institution, including its army of economics Ph.D.s and other money wizards.

In its place, he proposes returning to a system of money abandoned more than three decades ago, after slowly falling out of favor for much of the 20th century: the gold standard, or backing paper currency with bars of the precious metal.

"Once you have a central bank" like the Fed, "they can't resist the temptation to create excessive volumes of money," says Paul, a longshot for the GOP nomination who leapt into the limelight this year when he clashed in a debate with former New York City Mayor Rudy Giuliani over past U.S. foreign policy actions in the Middle East. "And the consequence" of printing money "is rising prices or inflation."

Axing the Fed and introducing a new monetary regime is Paul's answer to what he sees as unsustainable fiscal imbalances and inflationary pressures in the U.S. economy.

Because no personnel appointments at the Fed would satisfy him -- no matter how hawkish on inflation they might be -- he says it's just better to do away with the institution.

The new money system would involve competing private banks like American Express issuing their own paper money backed by gold bars, Paul said. Holders of paper currency could redeem the notes for gold at the issuing bank or exchange them for notes printed by different institutions.

The idea of the gold standard is neither new nor without merit. It had its heyday in the 19th century with Britain's Bank of England at the center of the world financial order. Under the system, each country's money supply expanded or contracted depending on how much gold its monetary authority held.

Because there is little or no flexibility to the arrangement, money can't be created at government's discretion, keeping inflation in check.

For all its merits, however, the system broke down around the advent of World War I. Repeated tries at keeping a gold standard were made, but each eventually failed, most recently in 1971 when President Richard Nixon made the decision to leave the system.

While the gold standard's inflexibility is often touted as a strength, others view it as a hindrance to economic growth.

"Under the traditional gold standard, you have fixed exchange rates and free mobility of capital, but you give up domestic monetary policy," says Robert Wright, professor of economic history at New York University's Stern School of Business. "That's why the 19th century is the heyday of the financial panic."

Or in other words, the absence of a central bank like the Fed would leave the government with few tools to stop a market crash turning into a real depression.

Another problem Wright points to is the phenomenon of falling nominal wages.

Many of the conflicts between labor and factory owners in the 1800s had more to do with adjusting workers' wages downward in line with the overall price level than they did with owner-inspired greed, as is popularly perceived, he says.

Even so, salary cuts are not something most Americans would readily accept today.

Another practical consideration is where to set the gold price. Set it too low, and the mining industry could start hurting. That's what happened last time when the price was set at $35 an ounce, explains Jeff Christian, managing director of New York-based specialty commodities firm CPM Group.

That may go a long way to explaining opposition to Paul's plan from a very unlikely source: the gold industry itself.

"I believe that a return to a gold standard for the U.S. is [neither] advisable nor practical," says Pierre Lassonde, chairman of the World Gold Council and former president of Newmont Mining. "The best way for people to protect themselves worldwide against inflation or deflation is by owning gold directly through a gold [exchange-traded fund]," such as streetTracks Gold Shares.

Although Lassonde doesn't elaborate, one other problem might be the lack of gold itself. If the $5 trillion of global central bank reserves was backed by the 1 billion ounces of gold they owned, then the price would end up at $5,000 an ounce, compared to around $650 an ounce today, explains CPM's Christian.

Christian adds that Paul's proposal also plays directly into the hands of those who believe in conspiracies -- especially if the mechanics of the system are left to private banks.

"If the government gave over the management of the currency to the banks, then the conspiracy theorists would have a field day," says Christian, as now they'd have "evidence" that the banks had the government in their pocket.

And even those who believe that the problems of a gold standard can be worked out say that the political realities of U.S. politics mean that only the brave or foolhardy would raise the issue.

Michael Darda, chief economist at MKM Partners in Greenwich, Conn., says Paul may have achieved the best he could hope for as a minor candidate: getting the topic of monetary policy into the wider debate.

"It's really too bad, but nobody is going to touch it," Darda laments. "There is a definite place for it in the monetary system."

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Italians to launch new metal ETF investment products today

Precious Metals Analyst Neal Blanchard says the Italian trading bourse plans to introduce new metals ETF investment products Wednesday, which could place more pressure on metals supplies. Meanwhile, he also expresses concerns regarding recent central bank gold sales announcements.
Read this Mineweb article HERE

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Unprecedented dishoarding by central banks fails to push gold down

Neal Ryan's daily gold market note for the Blanchard Economic Research Unit today added up the desperation of the world's central banks to prop up the U.S. dollar system by rigging markets. Ryan finds central bank gold sales of more than 240 tonnes in just the last four months, dishoarding at an unprecedented rate. "Seeing the gold price hold above the $640 level during this period of increased sales should be the best demonstration of just how robust the physical demand side of the market is at present," Ryan writes...

Just announced this morning was a set of new metal ETF investment products for the Italian trading bourse, set to launch tomorrow. These ETFs are set to be backed by physical metal holdings and will be offered in gold, silver, platinum and palladium. Interestingly, ETF Securities stated in the release that the metal backing the ETFs will not be available for loan into the market, a concern many market pundits have become keenly aware of due to some loopholes in existing metal ETFs. While only time will tell as to how successful each of these ETFs will be on each new market bourse they enter, in tight markets like platinum and palladium, these investment vehicles have the ability to create a real squeeze in the supply available to the market. Even minor success in a handful of new offerings will create more demand than the platinum and palladium markets can currently handle and should push prices higher. Again, the only way for the average US investor to play these PGM markets is to buy the physical metal, futures contracts or a handful of mining stocks. There are no PGM ETFs available in the US.


We are now eleven days away from South African gold production going offline. Keep this issue on the radar over the next week and a half. It will seem like the issue came out of nowhere when it's the top market news item of the week. Currently, the labor union's wage demands and mining company's offers are no where near each other and losing this supply from the market at the same time central bank sales are slinking back off the market will drive prices higher over the summer months.


The ECB weekly financial update showed that this past week, one captive ECB bank sold 1.5 tonnes of gold into the market, continuing the drastically reduced sales trend over the past three weeks from the previous three months. This also confirms that ECB organizational sales have not yet shown up in market figures, despite already having been announced as finished.

Using updated IMF and BIS data on Central bank gold activity in the last four months, we're finally getting a grasp of the much larger picture of what has been happening behind the scenes in the gold market; with both ECB captive bank activity and outside of ECB banks.

While the Bank of Spain sales, Swiss National Bank announcement and the ECB bullion sales activity has been well documented the last few weeks in the market, what hasn’t been so apparent is the amount of sales coming in from other entities within the market over this same period of time including the Bank of International Settlements, National Bank of Indonesia and Bank of England. (The BOE was not a signatory to the second CBGA, so their sales as well as the BIS and Indonesian sales do not fall under the CBGA 500 tonne annual quota).

Spain: 108 tonnes

ECB: 37 tonnes

France: 29.1 tonnes

Indonesia: 23.3 tonnes

BIS: 22.7 tonnes

UK: 6.5 tonnes

Sweden: 3.3 tonnes

Assorted other central bank sales and ECB sales in June: 10.6

Neither the Bank Of England or the Bank of International Settlements has updated the market as to why they're now selling gold reserves. As is usually the case, the market wasn't aware of the Indonesian or BIS sales that fall outside of ECB reports until they were updated a few months after the fact. Because central banks outside of the ECB typically update sales and purchase activity on a 3 month lag, we still may yet find out about other sales that have taken place in the last four months in the market.

240.5 tonnes of sales in 4 months. To put that figure in some perspective; In 2005, central banks sold 674 tonnes (21.6 million ounces) of gold into the market, representing over 16% of that year's supply side of the market, sales averaging 56.1 tonnes per month. 2005 was the largest year for central bank sales in the last several decades. In the past four months, the market has absorbed 60.12 tonnes per month…possibly even more if some additional sales reports show up in the next few months.

At the risk of sounding repetitive, we feel the need to underline just how important it is to see the gold price hold up while digesting these massive sets of sales. At no point in time has the gold market had to absorb this much supply coming from central banks in such a short period. Seeing the gold price hold above the $640 level during this period of increased sales should be the best demonstration of just how robust the physical demand side of the market is at present.

Blanchard and Company, Inc. is the largest and most respected retailer of American rare coins and precious metals in the United States, serving more than 450,000 people with expert consultation and assistance in the acquisition of American numismatic rarities and gold, silver and platinum bullion. The Blanchard Economic Research Unit is a key source of precious metals market analysis and continues to be an important resource for financial and consumer media throughout the United States. Blanchard and its predecessor companies have called the New Orleans area home for more than 30 years. For more information about the company, visit www.BlanchardGold.com or call the company toll free at 1-800-880-4653.

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Jun 16, 2007

Aden Sisters: A Unique Era

A Unique Era

Mary Anne & Pamela Aden The Aden Sisters Jun 18, 2007 Courtesy of www.adenforecast.com

The gold market has been under pressure lately and some investors are feeling a little nervous. But the major trend is clearly up. That being the case, let's stand back and look at the facts...

Gold has been rising for over six years and it's gained 158% since then. That works out to 26% per annum, which has consistently been better than most other markets. The recent weakness is a bump in the road and it's not unusual. We continue to believe that gold will likely rise for years to come, eventually reaching at least $2,000 and it'll probably go even higher.

Read the entire Aden Forecast report HERE

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Jason Hommel: Swiss Gold Sales are Insignificant

Swiss Gold Sales are Insignificant

Silver Stock Report
by Jason Hommel, June 14, 2007

In my article last week, I spelled out various statistics on gold, as measured in tonnes.


To recap:

155,000 tonnes of gold were produced in the whole world, in the entire history of mankind.
2500 tonnes of gold are produced by the world's mines each year.
5000 tonnes of gold are actually traded each year (best estimate).
500 tonnes of gold are sold each year by European Central banks under the "Central Bank Gold Agreement". (CBGA)

Recent news of Swiss gold sales of 250 tonnes over two years will fall under the existing, known CBGA. Thus, there is no material change in the status of the gold market.

Furthermore, there is no change in the fact that paper money is still being created at the same rates as yesterday.

The world's central banks continue to print up as much paper money in one year, as the total value of all the gold ever mined in all of human history. Both annual paper money creation, and all the gold in the entire world ever mined in all of human history, are both worth about $3.3 trillion, or $3,300 billion.

Swiss gold sales of 250 tonnes are worth $5 billion.

Swiss gold sales pale in size in comparison to the Bank of China's $1200 billion of reserves. China hopes to diversify 5% of that into gold, which is $60 billion.

Where is China going to get $60 billion worth of gold, or about 2871 tonnes?

This remains the unanswered question in the gold market.

China's reserves: Golden dragon or sitting duck

Therefore, you can see how ridiculous and misleading the following headline is:
Swiss sales dash hopes of gold recovery

On the contrary, Swiss sales of 250 tonnes are a non event, and will not remotely satisfy China's oft-repeated desire and need for 2871 tonnes of gold.

Not even Resource Investor reports the facts correctly (and I advertise there!):
Switzerland Central Bank to Sell 250 Tonnes of Gold

RI reports that Virtual Metals claims that Portugal has 79% of its reserves in gold.

Matt Turner, commodities analyst with Virtual Metals, told RI it was significant that the bank said gold as a percentage of reserves had gotten too high, since many European countries have a higher share of gold reserves.

Greece has 80% of its reserves by value in gold, Portugal 79%, Italy 66%, Germany 63%, Netherlands 56% and France 56%. If these banks were to reduce their reserves to 30%, Germany would have to sell 1,802; Italy 1,341; France 1,273; Switzerland 394; Netherlands 311 and Portugal 235 tonnes.

However, GATA has shown that Portugal has already leased out 70% of their gold. Therefore, Portugal's gold cannot be sold twice at the same time!

GATA.ORG therefore writes a different headline regarding the Swiss gold sale:
Switzerland keeps bailing out its banks short gold

If the Swiss gold has already been leased, then this gold may be "phantom gold" sold directly to banks that are short gold, to let them off the hook for their gold leases. In other words, no gold at all may come to market from the Swiss sales.


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Jun 15, 2007

Switzerland keeps bailing out its banks short gold

Switzerland to Sell 250 Tons of Gold

By The Associated Press
via Yahoo News
Thursday, June 14, 2007

BERN, Switzerland -- The Swiss National Bank said Thursday it will sell 276 US tons of gold reserves over the next two years.

The sale would fetch about $5.2 billion (3.9 billion euros) at current prices.

The proceeds will be used to increase Switzerland's foreign currency reserves, national bank directorate member Thomas Jordan told reporters.

The share of gold in Switzerland's currency reserves has risen to 42 percent from 33 percent since mid-2005 due to the increase in gold prices. Jordan said the sale would return the share of gold in the currency reserves to their previous level.

The sale will occur at regular intervals over period of two years to minimize the impact on the gold market. Once completed, the national bank will hold 1,040 metric tons (1,146 US tons) of gold.

Between 2000 and 2005 Switzerland sold 1,300 metric tons (1,433 US tons) of surplus gold reserves. The proceeds -- about 21 billion Swiss francs -- were distributed between the federal government and the country's 26 cantons (states), which used the money to pay off debts.

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Jun 14, 2007

Richard Russell: I'm an old-timer...

Richard Russell
Dow Theory Letters
Jun 14, 2007

Extracted from the Jun 13, 2007 edition of Richard's Remarks

June 13, 2007 -- On June 7 the national debt of the US was $8.85 trillion. The annual interest on this debt is $406 billion or over one billion dollars each and every day of the year. The debt is increasing at the rate of $1.38 billion a day. Thus, we see the magic of compounding, but unfortunately what we're seeing is compounding in reverse.

With the above in mind, you have to ask yourself, "How in the world is the US going to finance its rising and compounding debt?" And the answer rings loud and clear -- it will be financed through inflation. I've said it for years, and I'll say it again -- it's a case of "inflate or die," and the US has no intention of dying. So we'll inflate, it's simply a matter of how rapidly we inflate and how successful the government and the Fed are in keeping the American people in the dark about what's happening to their money.

I'm an old-timer which means that I have a real-time perspective on what's happening to the purchasing power of the dollar. I remember bread at a dime a loaf, I remember full-course dinners at neighborhood restaurants for 90 cents, I remember new Ford cars for $450, I remember a double-scoop ice cream cone for a nickel. I've watched the purchasing power of the dollar going down the drain all my life. Now the process seems to be accelerating.

More recently, I've watched David M. Walker, our brave Comptroller of the United States, as he tours the nation and evidently will continue to tour until the 2008 elections. Walker is talking to anyone who will listen about the recklessness of borrowing money from foreign lenders to pay for running the US government and about the "demographic tsunami" that will arrive when the baby-boom generation begins to retire.

All the above is why I suggest that my subscribers accumulate gold. Furthermore, I've suggested that subscribers think of their gold holdings in terms of the number of ounces held. As for the price of gold, the price will take care of itself as the dollar slowly (I hope slowly) slides into the dusky realms of fiat-history.

There's no way of gauging how long this whole inflation process will continue or how long the dollar will be able to withstand the pressure of negative compounding. I've said for years that the Achilles Heel of the US is the dollar. Our "prosperity-on-loan" depends on the willingness of our overseas "friends" to accept US dollars. International finance is a cut-throat business. Nations tend to do what's best for them. All nations hold various quantities of dollars, and all dollar-holders must know that the US has no alternative but to continue on the path of systematic inflation.

Furthermore, the major developing nations, and I'm talking about Russia and China, want to be on an economic and political par with the US. To do this, Russia wants a convertible ruble, and China will want a convertible renminbi. As for the euro which is already convertible, it was created in Europe to compete with the dollar.

So far, most of the commerce of the world is done in dollars. But I don't know how long that's going to continue. In due time (when it suits them) Russia will make the ruble convertible and China will make the renminbi convertible -- but as I said, they will do it when they're ready and in their own good time.

I've held all along that the next war will not be a military war. It will not be a matter of the major powers fighting each other. The coming war for power and world leadership will be an economic war. It will be fought with competitive currencies and the movement of gold and the potential threat of nuclear bombs.

As for the bombs, they will only be a threat. World leaders know that no nation today can win a nuclear war. Nuclear bombs are for defense. If you have nuclear capabilities, you own the ultimate instrument of retaliation. Nuclear is the ultimate threat and therefore the ultimate defense. In classic Zen terms, it's "winning without fighting."

A full-page article in the June 12 Financial Times carries the headline, "Dragon Fleet. China aims to end the US Navy's long Pacific dominance." China is building its Navy as it moves to become the dominant power in the Pacific. At the same time, Russia wants to be the dominant power in Europe, and it wants all Europe to depend on Russian oil and gas. Both China and Russia want to "neutralize" the US. The years ahead should be exciting, dramatic and filled with danger.

lots more follows for subscribers...

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GATA will demand truth about U.S. gold reserves


Thursday, June 14, 2007

Constitutional scholar, writer, and lawyer Edwin Vieira has been retained by the Gold Anti-Trust Action Committee Inc. to lead an inquiry into the disposition and possible impairment of United States gold reserves.

Vieira, author of the monetary history of the United States, "Pieces of Eight," is a graduate of Harvard College and Harvard Law School and a renowned spokesman for sound money.

Consulting for GATA, using the federal Freedom of Information Act, and retaining a Washington-area law firm, Vieira will seek to compel the U.S. government to disclose records showing how much gold is in the government's custody; who owns it; whether it has been leased or otherwise made available to foreign governments or gold market participants; and whether the policies and practices behind the use of U.S. gold reserves have been meant to influence the price of gold.

GATA, a non-profit civil rights and educational organization founded in 1999, has published evidence that central banks and government financial agencies, including the U.S. Treasury Department and Federal Reserve, work together, usually surreptitiously but sometimes openly, to rig nominally free gold markets as part of their general program of controlling international currency exchange rates. That evidence includes the transcript of the meeting of the Federal Reserve Board's Federal Open Market Committee on January 31, 1995, which confirmed the U.S. government's participation in gold swaps, exchanges of gold with other governments so that gold might be introduced into markets without being easily traced to the originating government.

"Because gold is a measure of all currencies, government bonds, and the value of labor, a free gold market is crucial to the freedom of all markets and, indeed, to honest dealing and personal liberty throughout the world," GATA Chairman William J. Murphy said. "As the nominal holder of the largest official gold reserves in the world and the issuer of the primary world reserve currency, the U.S. government has much to answer for here. No one is more expert in these issues than Ed Vieira, and all GATA wants is the truth. In a democracy that should not be too much to ask."

In addition to hiring a Washington-area law firm, Murphy said, GATA's demand for the U.S. government to produce information about its gold reserves probably will lead to litigation under the Freedom of Information Act. So, he added, "We now will be especially grateful for financial contributions to underwrite our legal campaign for the truth."

GATA is recognized as tax-exempt by the U.S. Internal Revenue Service and contributions to it are federally tax-deductible in the United States. Contributions may be sent to:

Gold Anti-Trust Action Committee Inc.
c/o Chris Powell, Secretary/Treasurer
7 Villa Louisa Road
Manchester, Connecticut 06043-7541

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Ted Butler: Concentration foretells silver explosion

In an interview with James Cook of Investment Rarities, silver market analyst Ted Butler elaborates on the heartening changes under way in the silver market, whose increasing concentration foretells an explosion. The interview with Butler is posted at GoldSeek's companion site, SilverSeek, HERE.

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Jun 12, 2007

Reg Howe: Gold derivatives -- Chinese torture

Gold price-fixing case litigator Reg Howe, proprietor of GoldenSextant.com and consultant to GATA, has reviewed the latest gold derivatives figures reported by the Bank for International Settlements and figures that the Western central banks are short at least two years of world gold production. Howe also figures that they're not eager to get it back.

Howe writes that the most likely explanation for current low gold lease rates "is that they are effectively rollover rates for essentially past-due gold loans that can be neither thrown into default nor repaid without serious risk of unacceptable consequences for the world financial system."

Howe's new commentary is titled "Gold Derivatives: Chinese Torture" and you can find it at the top of the Golden Sextant home page HERE

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Jun 11, 2007

The Coming Collapse of the U.S. Dollar

The Coming Collapse of the U.S. Dollar

By M.R. Venkatesh
Rediff.com, Mumbai
Monday, June 11, 2007

The skew in the global financial system -- commonly called "global imbalance" -- seems to be fast spiralling out of control.

For some time now economists have been engaged in the mother of all debates: whether the US dollar would collapse by as much as 40% when compared to other currencies (some are even betting on the US dollar going belly-up) or whether there would be an orderly devaluation -- that is, a gradual revaluation of other currencies vis-a-vis the US dollar.

In effect, the question that is confronting us is not "whether" but "when" and by "how much."

This global imbalance can be understood in economic terms by simply examining the massive size of America's twin deficits -- trade and budgetary. Put modestly, Americans have been living way beyond their means, consuming much more than what they could possibly afford and, in the process, borrowing far beyond their capacity for too long.

This was facilitated by a policy of maintaining weak currencies across the world, notably in Asia. This policy of maintaining a competitive exchange rate for their currency to boost exports has resulted in a race to the bottom amongst various countries.

Nevertheless, this arrangement suited countries, both Asian (with a huge unemployed population) and American, (as it provided cheap imports for its huge consumption binge).

While the going was good, everyone profited and expected the arrangement to continue indefinitely. Unfortunately, linearity as a concept has limited appeal in real life, much less is global macroeconomics.

No wonder, of late, countries are discovering that this arrangement has its limitations. The current account deficit of the United States translates into current account surplus of exporting countries. To cover this deficit, US borrows: this corresponds to the forex reserves of exporting countries. The crux of the issue is that no other country, barring the US, has such a huge consumption pattern and an ability to absorb this huge export surplus.

In substance, countries are producing their goods, exporting it mostly to the US, and parking the resulting export surpluses with the US to facilitate US to finance its imports!

Clearly, the global imbalance is a by-product of this mindless competition by various countries to devalue their own currencies and the reckless consumption in US. Naturally, it is indeed tempting to blame US consumption for this crisis. However, one must hasten to add that the emerging economies -- notably Asian countries, especially after the1998 currency crisis -- with their fixation for weak currencies, are equally to be blamed.

The net result? Well, consider these facts:

By mid-May 2007, the US National Debt stood at approximately at mind-boggling $8.85 trillion -- i.e., approximately $28,000 for every American.

The basic structure of the American economy is that the deficit of the US government is 4% of the GDP and the household sector 6%, which are offset by a domestic savings of 3%, largely from corporates, leaving a substantial national deficit of 7% to be covered by the capital flows from the rest of the world.

The current account deficit of the United States for 2006 is estimated to be in excess of $850 billion. This approximates to 7% of its GDP. Surely, even for the US, this is unsustainable.

In order to ensure that this money is routed into America and to sustain its gargantuan borrowing programme, the US has repeatedly raised its interest rate to its current levels of 5.5%. While the very size of the US debt makes any further increase in interest rates virtually impossible (as it would make borrowings uneconomical), any cut in interest rates to stimulate its economy and make it competitive would mean that the US may not get the money it requires to sustain itself.

On March 28, 2006, the Asian Development Bank is reported to have issued a memo, advising members to be ready for a collapse of the US dollar.

Since end March 2006, the US Federal Reserve has stopped publishing the quantum of broad money (that is the aggregate of US dollars circulating in the entire world -- technically called 'M3') in the US economy. This is the worst possible signal that the US Federal Reserve could have sent to the world.

... Suspended sense of disbelief

Obviously, what aids and sustains the US dollar is a "suspended sense of disbelief" amongst countries about the value of US dollar. Yet, common sense tells us that the excess supply will obviously result in a fall in the value of any product. The US dollar is no exception.

Late Iraqi leader Saddam Hussein was fully aware of this paradigm. Seeking to exploit the inherent weakness of the US dollar, Saddam wanted to trade his crude in Euros, which would have lead to a lower demand for the US Dollar and thereby triggered a dollar collapse. And those were his "weapons of mass destruction -- WMD."

And if some analysts are to be believed, Venezuela and Iran too possess the very same WMD. Naturally, it requires some specious arguments and military intervention to protect the US dollar. Never in the history of mankind has a national army protected the national currency so vigorously as the US Army has done is the past decade or so.

What is bizarre to note here is that despite the fact that crude is produced mainly in the Middle East; officially it can be purchased in dollar terms from one of the two oil exchanges situated in New York and London. Obviously, should Iran carry out the threat to commence oil trade in Euros or better still an oil exchange, the US dollar would come under tremendous pressure.

The US dollar is akin to the promissory note of a defunct finance company. It is common knowledge that a currency, when not backed by anything precious is just a piece of paper. When US abandoned the Gold Standard in early 70s, countries habituated by then to the US dollar under the Bretton Woods arrangement continued to accept the US dollar as an international currency without demur as the world was not prepared for any other alternative. Else, the global economy would have collapsed by 1971.

But the diplomatic silence did not solve the problem. It merely postponed it and it has come back to haunt us.

Post gold standard, by a tacit approval of the Organisation of Petroleum Exporting Countries (OPEC) and strategic manoeuvring, the US had ensured that its currency is implicitly backed by crude, instead of gold. This explains the American 'geo-political and strategic interests' in the Middle East.

But over time even this was found to be insufficient and consequently the oil standard of the 70s gave way to an implicit multiple commodity standard of today. Naturally, commodity prices -- including crude prices -- have soared in the past few years. Unfortunately, this arrangement too is failing the US. No wonder the US dollar increasingly resembles a promisory note of a defunct finance company.

It is no coincidence that global trade in most commodities, including oil, is denominated in US dollars as the respective international exchanges are located in the US. To what extent are the prices of these commodities manipulated to protect the US dollar is anybody's guess.

However, it may not be out of place to mention that a barrel of oil which cost less than $10 to produce is sold approximately at $70 in the international market.

But as commodity prices go up it has lead to inflation across the globe. No wonder, countries are forced to increase their interest rates to fight inflation.

This has triggered an interest rate hike across continents and the US is finding it extremely difficult to sustain its current borrowing programme: it hardly has any elbow room to manoeuvre.

...Doomed if it does, damned if it doesn't

Meanwhile, countries are increasingly realizing that the value of the US dollar that they are holding is fast eroding, whatever be the 'officially managed exchange rate.' And if fewer people want the US dollar -- as for instance when oil is traded in Euro the demand for the US dollar will fall -- it would trigger an avalanche.

No wonder the US Fed is unwilling to make public the M3 figures, as it does not want the holding position of the US dollar to be publicised.

Interestingly, in such a doomsday scenario, some economists are still betting on central banks of other countries to defend the US dollar. It would seem that the US has 'outsourced' even this sovereign function to the central banks of other countries. After all, should the US dollar collapse, the biggest losers will not be the US but those who have US dollar-denominated forex reserves.

Naturally, countries holding US dollar reserves are caught on the horns of a serious dilemma -- should they seek to correct the global imbalance, it could result in the imminent collapse of the US dollar, and should they continue to defend the US dollar, they would be a long-term loser as the current arrangement has seeds of self-destruction.

While every central banker is conscious of this fact and thereby seeks to postpone the inevitable while nervously looking for his counterpart in any other country to break ranks and thereby trigger the collapse.

Surely, the emperor is without any clothes. There are only two possibilities from here on: Either we are witness a global meltdown of the US dollar, or allow controlled US dollar devaluation (read, revaluation of other currencies). If it is a global meltdown the global economy is doomed, if is an orderly devaluation, it is damned.


The author is a Chennai-based chartered accountant. He can be contacted at mrv1000@rediffmail.com.

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Jun 9, 2007

Gold down $20 for the week, but...

From GATA's newsletter:
"The Spanish Internet newspaper Libertad Digital, based in Madrid, today published a report about the Bank of Spain's gold sales that mentions GATA and Sprott Asset Management's chief investment strategist, John Embry. So we're hopeful that the report got something of our points across, even if we can't be sure, since the only Spanish we know here at GATA headquarters is "margarita, por favor."

Maybe some of our more cosmopolitan supporters will be able to make more sense of the Libertad Digital report. You can find it here:


When the Bank of Spain explained this week that it had sold gold to purchase "more profitable" bonds (http://www.gata.org/node/5146), Neal Ryan of Blanchard & Co.'s Economic Research Unit wondered aloud what sort of bonds are outperforming gold's recent return of 20 percent per year. The Spanish finance minister apparently didn't say and wasn't asked. But the way things have been going financially in Spain lately, he may need the margaritas more than we do."

El Banco de España vuelve a vender en mayo importantes cantidades de oro

Las reservas de oro del Banco de España siguen menguando. Si en sólo dos meses, marzo y abril vendió un 20 por ciento de sus reservas, en mayo continuó con las ventas, también a un alto ritmo: 28 toneladas. Pedro Solbes, ministro de Economía, achaca las ventas a la rentabilización de las reservas, pero los analistas prevén nuevas subidas del oro, cuya cotización podría alcanzar los 2.000 dólares (en la actualidad cotiza a 661,50).

(Libertad Digital) El Banco de España ha vendido 28 toneladas de oro en el mes de mayo, según se desprende del último informe de Activos de Reservas, que se suman a las 80 toneladas vendidas en los meses de marzo y abril. De este modo, en tres meses el Banco de España se ha desprendido del 25 por ciento de sus activos en oro.
El senador popular Javier Sánchez Simón preguntó este miércoles al ministro de Economía, Pedro Solbes, sobre las razones del órgano regulador de realizar las ventas de oro en marzo y abril. La respuesta de Solbes fue que "se pretende, vendiendo oro, activo no rentable, convertirlo en bonos de renta fija, que sí tienen rentabilidad". Y añadió "En base a este marco legal, el Banco de España ha llevado a cabo un proceso de fortalecimiento de su situación patrimonial tratando de mejorar la rentabilidad de su activo". "El oro ya no es rentable", sentenció. En mayo las ventas han continuado.
La onza podría alcanzar los 2.000 euros
El oro es un activo monetario, y de hecho fue la base de las monedas nacionales, junto con la planta, hasta que los bancos centrales las fueron desvinculando de los metales. No obstante sigue teniendo una gran relevancia, como demostró en 1980; entonces llegó a cotizar a cerca de 860 dólares, lo que equivaldría a cerca de 2.000 dólares de 2006. Varios expertos consideran que el exceso de liquidez en dólares, la debilidad cada vez más clara de esta moneda y las previsiones de inflación hacen pensar que muchos inversores vuelvan a refugiarse en el oro. En tal caso, podría volver a alcanzar niveles como los de 1980. De ser así, las razones de rentabilidad no serían tan claras.
Un informe del pasado año firmado por el banco británico Cheuvreux, de Crédit Agricole, apuntaba precisamente a la posibilidad de que la onza alcance los 2.000 dólares, ya que funciona "como una alerta temprana de crisis" y en la actualidad "hay un déficit de oferta sobre la demanda de unas 700 toneladas. El informe considera que las reservas reales de los bancos centrales podrían estar de 10.000 a 15.000 toneladas por debajo de las 31.000 reconocidas en ese año.
Hay numerosos analistas que observan un comportamiento consensuado y coordinado por los bancos centrales para vender oro y evitar de este modo que su cotización suba demasiado y actúe como "chivato" de una eventual crisis financiera. Es el caso del Gold Anti Trust Action Committee (GATA) o de analistas como John Embry. No obstante, estas ideas no son universalmente compartidas.
Las ventas de los bancos centrales
El 26 de septiembre de 1999 catorce bancos centrales europeos más el BCE firmaron el "Central Bank Gold Agreement", por el que acordaron limitar las ventas conjuntas de oro a 400 toneladas anuales. En 2004, cuando vencía el acuerdo, se renovó, pero aumentando la cantidad máxima de 400 a 500 toneladas anuales entre los 15 bancos centrales. Las ventas en 2006 alcanzaron las 390 toneladas, pero una reciente información apunta a que podrían volver a subir el nivel de ventas hasta las 500 toneladas.
No obstante, no todos los bancos centrales tienen la misma política. Fuentes del mercado apuntan a que Rusia, quinto productor mundial de oro, compró toda la producción de 2006 para depositarla en su banco central. En 2006 las reservas de oro y divisas de Rusia aumentaron en 121.500 millones de dólares, lo que supuso un incremento del 66,7 por ciento respecto al año anterior. Podría ser el caso también de China, aunque la opacidad de ese país no permite saberlo con total seguridad.

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Jun 8, 2007

John Embry: Gold's foes fighting losing battle

Sprott Asset Management's chief investment strategist, John Embry, writes in the new issue of Investor's Digest of Canada that "the anti-gold cartel is winning the odd skirmish but is losing the war" -- that war being to prevent the collapse of the U.S. dollar.
Embry pays special tribute to the research done by Ted Butler in the silver market.
You can find Embry's commentary, "Gold's Foes Are Fighting Losing Battle" at the Sprott Internet site HERE

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Jun 7, 2007

Enrico Orlandini: Gold, Where to Now

By Enrico Orlandini
Jun 6 2007 9:30AM

I have been following gold for better than twenty-five years and I’ll have to admit that I don’t recall seeing investors this discouraged in a long, long time. Maybe never! I think a lot of it has to do with a complete misunderstanding of what constitutes a bull market as well as how it functions. I read/been sent any number of commentaries about gold over the last month describing how the bull market is seasonal and May markets the time to sell. Others like Steven Hochberg of Elliot Wave fame have come out and stated that gold is due for a severe decline that will take price down to US $450.00. This is not the first time Mr. Hochberg’s made such a claim. He was wrong before and I’m here to say that he’s wrong now. Then there’s just pure fabrication. I skimmed an article the other day claiming that the well known gold analysts, the Aden Sisters, called an end to this leg up due to a technical failure. I had just read the article in question entitled “The Bubbling Metals” and the Aden Sisters made no such claim. When it comes to gold, misinformation is the rule rather than the exception.

If I use my clients as a gauge, you can cut the gloom with a knife. I am the first to admit that this leg up has taken a lot longer to get underway that I had anticipated, but there is no “Great Book of Gold” that you can thumb through in order to come to a quick and easy answer. Therefore I take pen in hand and try to smooth out some of the bumps. First and foremost, you must understand just why we have a bull market in gold. The reason is actually two-fold:

  • Presently there is no currency in the world that is backed by anything other than a ‘promise to pay’, and

  • All the world’s major economies are engaged in a printing war in an effort to have the cheapest currency. A cheap currency leads to cheap prices for exports.

With respect to the latter, the printing party actually originated more than a decade ago in the US and was later adapted by the Japanese in particular and the rest of Asia in general. Europe jumped onto the bandwagon somewhat further down the road. Currently there is no major economic power whose money supply is increasing at less than 10% per year and the US’s money supply is now increasing at a greater than 14%/year clip. That is an amazing figure for the world’s biggest economy.

Throughout history there have always been a group of investors, better known as the smart money, who have made a habit out of buying cheap and selling dear any significant bull market. This so-called smart money gets that way by paying very close attention to things like M-3, balance of trade, fiscal deficits, and so on. When they sense that things may get out of balance, they take the appropriate position, and wait for the inevitable. It should be mentioned that they are almost always the first ones to arrive and they are very, very patient. In the year 2000, the smart money noticed the staggering debt in the US, a world flooded by liquidity, and the very cheap price of gold. Being smart, they did the only thing they could do given the set of circumstances they encountered. They decided to accumulate gold and they went about their business as quiet as a church mouse. That for all intents and purposes was the beginning of phase 1 in the bull market for gold. In this historical chart for gold

You can see the bottom in late 1999, the retest in 2001, and the slow grinding methodical rise that followed and has continued relatively unabated until today. This first phase in the gold bull market continued roughly until December 2005 when gold closed above US $490.00/ounce which happened to be the last significant high way back in 1988.

I should mention that all major bull markets consist of three phases. As I’ve already mentioned, the first phase is where the smart money takes a position and by looking at the historical chart, you’ll see that it lasted five years. That’s a lot of accumulation! I would also like to point out that gold traded as a commodity during that initial phase and followed a certain pattern. One of the patterns had to do with seasonality: a rally from September to May and a pull-back throughout the summer. Just because a certain pattern prevailed during one phase doesn’t mean that it will dominate in the next phase. Once gold broke above the old US $490.00 high, it entered the second phase of the bull market and that is generally the longest of the three phases. Did you catch that? The second phase is almost always the longest; that means six years or more! The second phase features institutional buying where the Merrill Lynch’s of the world jump on board. Since gold is a special case, it is also highlighted by a transformation: gold ceases being a commodity and becomes money. Why would gold become money? It’s really not a complicated explanation. There’s just way too much worthless fiat currency floating around out there and more is being Eventually people catch on and look for something tangible that they can get their fingers on, and there is nothing more tangible than gold. It’s stood the test of time and it’s recognized in almost every culture around the world. Why I can take a gold coin to a tiny little Andean village at 15,000 feet above sea level, with no electricity or telephone, and somebody will recognize it for what it is.

So here we are, about two years into a six year second phase of a three phase bull market for gold. The third phase, when it finally comes around, will feature the kid who cuts your grass telling you about the great gold stock he just bought. It is the shortest of the three phases and is also features the blow-off to the upside. It will be the most volatile and the one where the price surges the most. If I were to guess, I would think that phase two will top out at US $1,200 to $1,600 and phase three will reach US $3,000 per ounce. And that is if the dollar doesn’t fold up its tent and go home. If that happens, all bets are off and gold could go to the moon.

That’s all well and good, but the average speculator wants to know what’s going to happen this week and not the next decade. Take a look at this weekly chart for gold and I’ll then I’ll give you my thoughts:

There are three things that you can take away from this chart and here they are in order of importance:

  • There is the bottom band of a long-term trend line (long red line) that has held up for three years and it remains intact.

  • If you look at the red and blue trend lines, you’ll see that gold is being compressed into a tighter and tighter trading range. Given the fact that this is a bull market, you have an 85% chance of seeing the break out to the upside.

  • Look at the pair of horizontal green lines that I’ve drawn in. These define a period of consolidation that has lasted almost sixteen months.

So when I add these three up, what do I get? Simple! You get a market that is on the verge of an upside explosion that will not only catch most speculators by surprise, but it will catch them on the sidelines trying to chase it on the way up. The next question is: when is this upside explosion about to begin? Here’s my answer: it already has. Precisely, the move up everyone has been waiting for began on May 24th when gold bottomed at 651.50 and bounced of the red trend line. It is now shaping up for its third and final run at good Fibonacci resistance at 695.5. What’s more gold will not only break through 695.5, but will run through the May 11, 2006 high of US $730.40 and up to a minimum of $775.00. That’s been my price target for six months but personally I can’t believe that gold has spent this much time building a base to rally another one hundred dollars. No, I suspect we built this base in order to support a run up to the all-time high of $882.50. It only makes sense when you stop to think about it. Just about everyone and their brother have thrown in the towel and that’s what a gold bull market does best. It sucks you in when you have no business buying and it pushes you out just when you should be in. Next stop, gold at $775.00!

Dow Theory Analysis SAC
Lima, Peru
June 04, 2007

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Jun 6, 2007

Εκτόξευση των τιμών σποτ ουρανίου προβλέπουν οι τράπεζες

...κάλλιο αργά;
Επί τέλους άρχισε κάτι να "οσμίζεται" ο ημεδαπός οικονομικός τύπος για την πρόσφατη -αλλά και συνεχιζόμενη- έκρηξη των τιμών ουρανίου (διαβάστε πρόσφατο άρθρο στη ΝΑΥΤΕΜΠΟΡΙΚΗ)
Εδώ και χρόνια τώρα οι ξένοι αναλυτές του τομέα ενέργειας το φωνάζουν σε κάθε κατεύθυνση. Το ουράνιο έφυγε από τα $7/ουγγιά το 2003 για να φθάσει σήμερα στα $135/ουγγιά!
Σχεδόν 20 φορές επάνω μέσα σε τέσσερα μόνο χρόνια. Πού θα φθάσει; Μερικοί μιλάνε για πάνω από τα $500/ουγγιά. Αυτή τη στιγμή εκατοντάδες νέοι πυρηνικοί αντιδραστήρες είναι υπό κατασκευή παγκοσμίως. Αποτελούν την απάντηση στη μόλυνση του περιβάλλοντος από τα κατάλοιπα των κάυσεων υδρογονανθράκων. Μόνη πρώτη ύλη τους είναι το ουράνιο.
Διαβάστε σχετικά στις σελίδες του oikonomika blog -μην μου πείτε ότι δεν σας έχω και εγώ προειδοποιήσει έγκαιρα ;-))

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Jun 4, 2007

Tanzanian Royalty Reports High Grade Assays

Tanzanian Royalty Reports High Grade Assays from Kigosi Project And Laboratory Results From its Kimberlite Exploration Program

Tanzanian Royalty is pleased to announce that a Phase 2 Reverse Circulation (RC) drilling program has confirmed the presence of two previously interpreted reef (vein) systems along with high grade gold values at its Kigosi Project in the Lake Victoria Goldfields of Tanzania.

The two shear zones that host the reefs have been traced along a strike length of at least one kilometre and are still open in both directions along strike and down dip.

The Phase 2 drill program consisted of 109 holes aggregating 4,057 metres. It focused on an area immediately adjacent to artisanal workings within the Luhwaika prospect area. Drilling was conducted along five control lines with a central baseline having a strike length of 2.8 kilometres. The lines varied in length from 300 metres near artisanal mine workings to approximately 1,100 metres on line 3250N where regional drilling was conducted to test coincident IP and soil anomalies.

The objective of this second phase of drilling was to test the strike continuity of the Luhwaika reef system which had never been drilled before. The program also provided the Company with an opportunity to evaluate surrounding gold-in-soil and geophysical anomalies. This particular phase of exploration was a continuation of the Phase 1 program that was prematurely abandoned towards the end of 2006 due to heavy rains. A third phase of drilling is presently under way at Kigosi.

The results presented below include the most significant gold mineralization intersected by drilling on all five lines. According to Tanzanian Royalty President, John Deane, "We can now confirm the existence of the two reef systems reported last year, namely the Luhwaika Main and Luhwaika West Reefs, and that they can be confidently traced out over a strike length of at least one kilometre."

The fifth line, line 3250N, intersected a quartz vein that hosted gold mineralization approximately 800 metres north of the last line drilled. Infill drilling will be required to establish if the gold mineralization in this quartz vein connects with the two known reefs.

Deane also said that because several zones of high-grade gold mineralization occur within the reef systems, the next phase of drilling will utilize 100 metres line spacing in order to identify the controls and trends for these high grade zones. "The reefs tend to flatten near surface, producing a gravel zone that may also hold potential to host goldbearing mineralization that can be extracted at very low cost," he added.

A summary of the drill highlights is given below:

Water hole (105m south of line 1450N
Hole No. From To Intercept Gold Including Comments
(m) (m) (m) g/t
KG20RC-W1 2 4 2 10.45 Gravels
Line 1450N
KG20RC-083 2 4 2 10.40 Gravels
KG20RC-085 6 7 1 4.01 Luhwaika Main
KG20RC-087 20 21 1 1.62 Luhwaika Main
KG20RC-088 0 3 3 2.48 Gravels
KG20RC-088 31 33 2 3.02 1m @ 4.89 Luhwaika Main
KG20RC-091 2 4 2 3.28 Gravels
KG20RC-093 1 3 2 1.62 Gravels
KG20RC-094 4 5 1 1.02 Gravels
Line 1650N
KG20RC-123 80 82 2 10.71 1m @ 20.30 Luhwaika West
Line 2050N
KG20RC-104 2 4 2 3.03 Gravels
KG20RC-107 4 9 5 2.39 1m @ 6.71 Luhwaika Main
KG20RC-109 15 16 1 7.21 Luhwaika Main
KG20RC-110 25 27 2 3.50 1m @ 6.39 Luhwaika Main
KG20RC-111 38 39 1 0.94 Luhwaika Main
KG20RC-116 2 4 2 4.79 Gravels
KG20RC-117 8 9 1 0.91 Luhwaika West
KG20RC-120 43 44 1 1.01 Luhwaika West
Line 2450N
KG20RC-033 3 5 2 0.99 Gravels
KG20RC-038 6 8 2 1.10 Luhwaika Main
KG20RC-039 14 16 2 8.83 1m @ 14.10 Luhwaika Main
KG20RC-040 24 27 3 0.94 1m @ 2.59 Luhwaika Main
KG20RC-041 31 33 2 6.33 1m @ 9.40 Luhwaika Main
KG20RC-042 39 41 2 0.78 Luhwaika Main
KG20RC-043 51 53 2 12.55 1m @ 23.00 Luhwaika Main
KG20RC-045 1 3 2 38.15 Gravels
KG20RC-045 74 75 1 1.13 Luhwaika Main
Line 3250N
KG20RC-076 23 24 1 2.66 Quartz vein

The above intersections are estimated to be very close to true thicknesses with all the drill inclinations being -60 degrees and the dip of the reef being -22 degrees. All holes are drilled perpendicular to the assumed strike of the reef(s).

Drilling within the Luhwaika Main Reef indicates a dip of -22 degrees towards the southwest and a true thickness of 1-2 meters. Mineralization is hosted by a sheared, highly silicified and sericitized granite with gold values ranging up to 23.0 g/t (0.67 oz/t).

The Luhwaika West Reef, which sub-outcrops approximately 200 meters to the southwest of the Luhwaika Main Reef, is essentially a mineralized quartz vein, dipping 30 degrees to the southwest with a true thickness of 2-3 meters and with gold values ranging up to 11.63 g/t (0.34 oz/t)

Diamond Analytical Results

The Company has received results from eight 50 kilogram kimberlite samples that were sent in for micro-diamond analysis in the latter part of 2006. These samples were collected from RC drilling over eight separate kimberlites that were discovered on two of the Company's diamond licenses. Receipt of the analytical results took much longer than expected because of the heavy backlog of work in diamond laboratories worldwide. Two of the eight sample composites returned very low quantity (one from each sample) micro diamonds while the remaining six were non-diamondiferous. These results indicate that none of these pipes will be of economic interest and no further work will be conducted on them. Nonetheless, the Company intends to evaluate other licenses in its portfolio that are prospective for diamonds.


Fire assay with flame AAS finish was conducted by Humac Laboratories in Mwanza, Tanzania, and SGS Laboratories in Mwanza. Duplicates and Standards were inserted in the sample stream sent to both Humac and SGS , and subsequent analysis shows that 95% of the standards fall within analytically acceptable (5% standard deviation) limits. Duplicates have a correlation coefficient of 87%, which is accounted for by the large nugget effect within the sampling. The figures used in this press release are the average grades taken for between one and three duplicates run by the labs on each analysis. Micro-diamond analysis was conducted at the SGS Lakefield Research laboratory in Lakefield, Ontario.

Qualified Person

The technical information contained in this document has been reviewed and approved by John Deane, President, Tanzanian Royalty Exploration Corporation Limited, a qualified person as defined by NI 43-101. He has an M.Sc. from the University of Cape Town (1993) and is a registered scientist with SACNASP (Reg. No.400005/05).

Respectfully Submitted,
"James E. Sinclair"
James E. Sinclair
Chairman and Chief Executive Officer

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Jun 3, 2007

¿Dónde está el oro?

Where's the gold?
By Hugo Salinas Price

(Including IMF gold)

Gold Reserves of all reporting Central Banks of the world in 1948, amounted to 970 million ounces, or 30,170 metric tonnes.

Gold Reserves peaked in 1966, at 1,230 million ounces, or 38,257 metric tones.

Gold Reserves declined to a minimum low of 889 million ounces, or 27,651 metric tonnes in 2003.

Gold Reserves increased once again, to 919 million ounces, or 28,583 metric tonnes, in January 2007.


www.goldsheetlinks.com and IMF DATA

Metric tonnes

World gold stock 1966: 76,000
CB and IMF gold stock 1966: 38,257
Gold in private hands 1966: 37,743
% of world gold in private hands 1966: 49.66%

World gold stock 2007: 157,000*
CB and IMF gold stock 2007: 28,583
Gold in private hands 2007: 128,417
% of world gold in private hands 2007: 81.8%

* 152,000 in 2005, plus approx. 2,500 yearly production.

From the tables we gather the following:

Since the Central Banks of the world began to sell off their gold reserves in 1966, when their stocks peaked at 38,257 tonnes, private individuals have added to their stocks, which were in 1966 estimated at 37,743 tonnes, as follows:

Private purchases of gold 1966-2007:

9,674 tonnes - net sale of gold by CBs 1966-2007

81,000 tonnes – every single ounce mined since 1966 to date, except for 933 tonnes reacquired by the CBs 2003-2007. (The CBs were no longer unanimous with regard to selling off their gold, in the period 2003-2007; the CBs as a group made net repurchases of 933 tonnes of gold in that period.)

A grand total of 90,674 metric tonnes of gold have been bought up by private individuals since 1966!

Will the world gold market – humanity, who has been saving gold forever – change its mind about gold as a wise investment? Will fiddling with the price of gold in New York, make the world change its mind about the wisdom of owning gold? As the world is swimming in fiat money creation, will gold savers change their minds and stop buying gold? Will hammering the price make the world gold market change its mind about gold, or will it just make gold cheaper to acquire for the millions that want to own it?

World stocks of gold are increasing at a rate of about 1.6% a year. Fiat money is growing by leaps and bounds, all around the world. Can the Central Bankers of the world hope to contain the price of gold, while the world’s creation of new money goes on at a frantic pace of about 12% a year – perhaps more?

CB and IMF reported share of world gold stocks has fallen from 50.34% in 1966 to 18.2% today; however, careful studies estimate undisclosed Central Bank loans of gold of up to 15,000 tonnes, which the borrowers (“bullion banks”) sold to private individuals. If CBs have actually lost 15,000 tonnes of gold in their useless effort to contain its price, then roughly speaking we would have:

Ownership of world gold:

CBs and IMF: 8.65 % of world gold stock

Private hands: 91.35% of world gold stock.

A dark shadow lies over the reported gold stocks of 28,853 tonnes as of 2007. These include 8,117 tonnes of US gold which the Treasury says are in “Deep Storage”. A most unusual and evasive categorization of gold! There are doubts regarding CB gold. Do they have what they say they have? Is there any gold at all left in US gold reserves?

Let’s put it this way: who has been judging correctly with regard to the wisdom of owning gold - a few dozen Central Bankers and Treasury chiefs, or millions of human beings around the globe? The collective wisdom of mankind has always held gold in high regard; surely it will continue to do so until the end of time. The few dozen arrogant men who think that this collective wisdom can and should be wiped out, are fighting the wishes of humanity and will have to fail in their efforts, simply because the IMF figures tell us that if they insist on being stubborn about not allowing the price of gold to rise and persisting in the sale of Central Bank gold, they will end up with no gold to sell.

Note 1: This article was inspired by Antal E. Fekete’s draft of his paper “THE DOLLAR: AN AGONIZING REAPPRAISAL – GOLD VANISHING INTO PRIVATE HOARDS”. I hope Prof. Fekete’s interesting paper is published soon.
Note 2: We have used figures regarding total gold stocks, yearly production, CB and IMF total holdings, and private holdings which are necessarily approximate. We have done our best to gather information provided to the IMF by CBs, but some banks do not report. However, by and large, the trends are clear and we stand by our comments in this article.

Hugo Salinas Price, President
Asociación Cívica Mexicana Pro Plata, A.C.
Mexico City
website: http://www.plata.com.mx

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