Egon von Greyerz talks to James Turk

James Turk interviews Matterhorn Asset Management's Egon Von Greyerz (one of the most brilliant minds in precious metals today) on the importance of owning physical gold (and silver of course) OUTSIDE the banking system.

James Turk interviews Hugo Salinas Price on silver and sound money

GoldMoney founder James Turk interviews Hugo Salinas Price, president of the Mexican Civic Association for Silver, about silver's potential to return as money and about sound money generally in a 22-minute video

James Turk: Silver is Approaching Stage Two of its Bull Market

Back in April 2007, I wrote about the three stages that appear in every bull market, and more to the point, that gold was approaching the end of stage one.  Gold back then was still trading around $690, and therefore well below its then record high of $850 reached in January 1980.  My view was that “gold looks ready to make a new all-time high. When that happens, stage two begins. There will not yet be widespread excitement about gold in the next stage, because that won't occur until stage three. But when gold makes a new record high, and particularly after it breaks into a 4-digit price, people will begin paying attention.”

I wrote a follow-up article in November 2009 entitled Welcome to Stage Two of Gold's Bull Market, just two months after gold broke above $1,000.  Focusing on the change in prevailing sentiment, I noted how differently gold was being treated.  "During the first stage of a bull market, the media and most investors alike focus on past issues, rather than future potential.  Over the past decade one consequently heard all the reasons not to own the gold…But there is a notable difference in this stage compared to stage one.  Look how many people are writing and talking about gold.  Gold has moved from apathy and neglect – stage one characteristics – to growing attention.  But importantly, instead of embracing gold and analyzing it to determine relative value, today’s attention is one of widespread disbelief and skepticism that gold can climb higher.  These are exactly the responses one should expect to emanate from stage two."  I concluded by noting that at some unpredictable point in the future, gold will enter stage three "when gold no longer is relatively good value."

I did not make any mention of silver in the above two articles.  It too has three stages, but silver is still mired in stage one, which began in February 1991 after silver had collapsed to $3.50.  It was an astounding 93% decline from its January 1980 peak of $50.  But as we can see on the following chart, $3.50 was silver’s low, and its price has been rising ever since.

This chart shows a massive accumulation pattern, marked by the green lines.  This pattern is a story of strong hands and weak hands, specifically, of silver moving to the former from the latter. 

From its $50 high in January 1980 to its $3.50 low in February 1991, the weak hands were shaken out.  At that point, the accumulation by strong hands – who were buying because the recognized that silver was an exceptional bargain – became the dominant force.  Their buying power was stronger than the selling pressure of the weak hands, and the price of silver responded by starting to climb.  It was classic stage one action, but here’s the important point. 

Silver is still in stage one.  It won’t advance into stage two until $50 is exceeded, just like gold did not enter stage two until its previous high of $850 was hurdled.

I expect that silver will exceed $50 this year, which is a point of view I first mentioned in my outlook for 2010.

Admittedly, I was a little early with my forecast about when gold would enter stage two.  So perhaps I will again be early by forecasting that silver will enter stage two of its bull market this year.  Regardless of the accuracy of my timing, one thing is clear.  Because it is still in stage one, silver remains good value.

James Turk: A spectacular year for gold and silver

In his new commentary today, GoldMoney founder, Free Gold Money Report editor, and GATA consultant James Turk celebrates the spectacular performance of gold and silver in 2009. 
Turk reports that gold rose in all major currencies except the Australian dollar, and silver beat even that. Turk's commentary is headlined "Gold Shines for the Ninth Consecutive Year" and you can find it at GoldMoney's Internet site HERE

James Turk: There goes the Financial Times again

September 18, 2009 - Certain segments of the media rarely give gold a fair shake, particularly when it approaches important price levels. These publications time and again take bald pokes at gold. So when I see articles doing that, I like to poke fun at the article, but more importantly, set straight its misrepresentations and errors about gold.

One publication that is consistently on the wrong side of the gold market is The Economist. Using its pathetic record of anti-gold articles, I have already documented its curiously timed invectives with what I call "Gold’s Infallible Indicator". See also "Gold’s Infallible Indicator - Six Months Later".

The Lex column from the September 9th Financial Times is another case in point. This disparaging - and highly misleading - account of gold can have no other purpose but to keep people from buying gold. It does not offer analysis, but propaganda, which is not surprising given the FT’s longstanding role as an apologist of central banking and fiat currencies.

Had Lex offered an unbiased analysis, it would have mentioned gold’s attributes, including the fact that it has appreciated at doubt-digit rates for nine years in-a-row on average against all of the world’s major currencies, making it one of the best performing asset classes this decade. And gold has done this without any counterparty risk, which is perhaps its greatest attribute and is not even mentioned by Lex.

Given my penchant for dissecting anti-gold propaganda pieces, this Lex column needs to be skewered. So here is my analysis of it, to help people read between the lines and put its propagandistic anti-gold fervor into a proper perspective. What follows is the Lex column in italics, with my comments inserted in the text.

Like a cure-all tonic prescribed by a travelling rural huckster, gold [My goodness, Lex not being one to waste words, sets the disparaging tone of this article right from the start by comparing gold to a "huckster".] somehow seems to be good for nearly everything that ails us. [Is it that gold just "seems" to be good, or could it be that gold really is that good?] Just consider the diverse economic backdrops that have caused its price to spike over the years: stagflation, financial panic, speculative mania and currency debasement. [Yes, and left unmentioned is the common denominator of all these problems, which is the mismanagement of national currencies by governments and central banks.]

Back in 1980, when the yellow metal hit $850 an ounce - still the record in real terms [Adjusting for inflation, it takes more than $2,300 to purchase today what $850 purchased in January 1980, using the US government’s current CPI calculator. However, the US government has since amended its CPI calculator numerous times. Fortunately, www.shadowstats.com makes available the same CPI calculator used when the Carter administration haplessly watched the gold price soar nearly three decades ago. Using this Carter-era calculator, it takes over $6,300 today to match $850 of January 1980 purchasing power.] - western economies were being squeezed simultaneously by the second oil crisis and record post-war inflation.

Fast-forward to March 2008, when it broke through $1,000 for the first time on safe-haven buying [Yes, gold is a safe haven, and people buy it because it does not have counterparty risk, among other reasons.] as Bear Stearns teetered. It approached the same level a few months later when bank worries had eased temporarily but commodity-fever was peaking, and again in mid-September when Lehman’s collapse created so much demand that smelters worked overtime to churn out bullion. [Yes, but not as fast as central banks were working overtime to print currency to bailout the banks and other failed institutions that had political clout.]

The thread connecting these episodes was fear. [Fear was the result, not the cause. The cause was the failure of bank regulation by central banks as well as their gross mismanagement that allowed the credit bubble to appear in the first place.] But for those who rushed to buy near the top, peace of mind was costly. [It has only been costly if you held stocks. Gold is above $1000, but the Dow Jones Industrial Average, for example, is still -15.7% below its level the day before Lehman collapsed and -47.5% below its all-time high.]

It would be tempting to dismiss the latest surge above $1,000 an ounce as more of the same were it not for concerns about the currency in which its price is denominated. [Here is a palpable attempt to marginalize gold, saying that it is solely US dollar denominated and that it is rising only because of problems with the US dollar, which of course is completely wrongheaded. Gold’s price, or more accurately because it is money, gold’s rate of exchange, can be measured against any currency. Importantly, because gold is rising against all of the world’s currencies, it is obviously not just the US dollar that has people worried.]The trade-weighted average of the US dollar against six world currencies has neared a multi-year low of about 77, down from 121 eight years ago, as foreign creditors fear an endless stream of red ink from Washington. [At last, some meaningful and useful analysis. But again, this tidbit disinforms as much as it provides useful information because it focuses only on the dollar. It thereby diverts attention away from other currencies, all of which are being mismanaged by central banks to some degree as evidenced by gold’s ongoing appreciation in those currencies.]

Stories of those who preserved their wealth or escaped hunger in decades past by hoarding precious metals when their governments set the printing-presses loose provide gold bugs with a compelling historical narrative. [Yes, and one that is very relevant today given what governments and central banks around the world are doing to national currencies by again setting the printing presses loose. But the US is not Weimar Germany [Not yet, but wait a few months.] and, in spite of interest rates that make gold ownership cheap, [Which is only one of gold’s many advantages at the moment] the opportunity cost of owning it is still unattractive in the long-run. [Complete rubbish. Gold has appreciated at double-digit rates on average this decade against all of the world’s currencies, and achieved that without counterparty risk. Gold is doing what money is supposed to do - preserve purchasing power.] Smarter ways to anticipate inflation include bricks and mortar, [The FT is obviously grasping for straws. Think about it. It is bricks and mortar - not gold - that have the burdensome carrying costs with maintenance, various property related taxes, etc., not to even mention that real estate prices have been falling] mineral rights [Owning gold has completely different risk/return criteria than owning any right to mine it.] or even equities, [Only if you choose the right ones, and this decade at least, it would have been very difficult to choose equities that have appreciated at rates better than gold.] all with vastly superior historical returns. [Stocks are investments, and gold is money. They are different things, with different uses, so they cannot logically be compared. Stocks do generate returns over time, whereas sound money does not. Gold’s appreciation during periods of monetary turmoil, like the present one, is simply the loss of purchasing power of the national currency in which gold’s price is measured.] Financial panaceas, such as medical ones, should always come with a health warning [And so should articles about gold in the FT].

GoldMoney's James Turk interviewed on Korelin Economics Report

Over the weekend Al Korelin of the Korelin Economics Report interviewed GoldMoney founder and GATA consultant James Turk about last week's wild market conditions, the growing disparity between the futures and physical gold markets, and the gold cartel's continuing efforts to suppress the metal's price. You can listen to it here:

James Turk: A fabrication bottleneck or something more?

GoldMoney founder James Turk, editor of the Freemarket Gold & Money Report and consultant to GATA, comments on the retail market's shortage of gold and silver in his new essay, "A Fabrication Bottleneck or Something More?" Turk writes that GoldMoney had a record week for purchases last week but has not yet seen a shortage of the large LBMA-standard bars in which it typically does business.
But Turk speculates that central bank gold vaults could be cleaned out if gold does not return to $900 soon. You can find Turk's essay in the "Founder's Commentary" section of the GoldMoney home page HERE

James Turk: America's second-biggest bank failure

GoldMoney founder James Turk, editor of the Freemarket Gold & Money Report and consultant to GATA, analyzes the U.S. government takeover of IndyMac Bank and concludes that the value of sub-prime and Alt-A mortgage debt still in the U.S. banking system is less than 50 percent of book value.

This implies that government insurance of bank deposits can't handle the problem without massive money creation. Turk's new analysis is headlined "America's Second-Biggest Bank Failure" and you can find it in the "Founder's Commentary" section in the third column of the GoldMoney home page HERE

James Turk: An Update on the Dollar

"Have I overstated the bearish case for the dollar in recent alerts? I don't think so. Am I still looking for a crisis in the dollar by this summer? Yes, but we need a new low in the US Dollar Index to confirm that its short-term downtrend remains intact. This new low will re-confirm the bearish outlook for the dollar..."

GoldMoney founder James Turk, editor of the Freemarket Gold & Money Report and consultant to GATA, gets out his charts to counter the worldwide propaganda campaign of the last week that's trying to push the U.S. dollar back up. Turk's new analysis, "An Update on the Dollar" can be found in the GoldMoney home page HERE

James Turk: Inflation fears and food shortages

James Turk, editor of the Freemarket Gold & Money Report, founder of GoldMoney, and consultant to GATA, occupies the Commentator's Corner at Kitco tonight, and he argues that food shortages are being caused by monetary inflation. Following copper, oil, and potash, food now is being monetized -- maybe in part because the Western central banks won't let gold and silver completely fulfil their traditional monetary roles. So for the moment grains of rice may have to do what grains of gold and silver used to...

Inflation Fears & Food Shortages

There have been numerous media reports about food shortages around the globe and the resulting riots caused by empty store shelves. Usually missing from these reports though is the reason for the shortages.

The problem is not agricultural, but rather monetary. In other words, the problem is not too few food staples, but too much money – or too much fiat paper currency to be precise.

In contrast to the classical gold standard, there is today no discipline on the creation of money, with the consequence that it is being created to excess. Rising prices of all goods and services are the inevitable result, and what’s worse, surging inflation has become a global scourge. All currencies are being inflated. Only the rate of debasement is different.

In an inflationary environment, it is basic common sense that soaring prices will empty store shelves. This outcome is also the experience of countless inflationary episodes throughout history. People dump the depreciating currency in favor of tangible, useful assets, and basic staples are high on the list of things to acquire.

The following table of commodity prices is from the April 24th 2008 print edition of The Economist magazine. Note the monthly and yearly increases for food.

The 69.0% increase in food prices over the past year makes a mockery of government reported price indices. Their bogus reports obviously understate the true rate of monetary debasement.

There is of course another problem causing food shortages, and no, it is not the speculators being so roundly blamed by the media. Government – or governments to be more precise – is again the cause. Many of them are acting in ways that cause food shortages.

Price controls and other blunders by foolhardy governments have disrupted the market process. If there were no government meddling and markets were left unfettered, the market process would competently and economically allocate resources, goods and services. This point is skillfully addressed in a recent article by Sean Corrigan posted at the Mises Institute: http://www.mises.org/story/2952

So far the food shortages and riots have occurred in countries with the worst inflation and most stringent government controls. But I expect these occurrences of shortages to broaden as inflation worsens. This point is being demonstrated by events presently taking place in the United States. Shortages of a few basic staples are developing.

Unfortunately, the response by some stores has not been constructive. Rather than increasing the price of goods being demanded, they are unilaterally acting to limit purchases by their customers. Perhaps they have been asked to take those restrictive steps by government agencies. Regardless of their motivation, these actions further disrupt the market process.

With the ongoing printing of fiat currency by governments around the world, inflation will worsen. Therefore, it is logical to conclude that there will be more so-called ‘shortages’ of food and other basic items.

by James Turk

James Turk: Print, Print, Print

GoldMoney founder, Freemarket Gold & Money Report editor, and GATA consultant James Turk remarks in his latest essay that the European Central Bank's conjuring of the equivalent of a half trillion dollars overnight is a flashing neon sign on the road back to Weimarism.

Print, Print, Print

In case you missed this news, the European Central Bank yesterday created 348 billion euros. That's equal to about one-half trillion dollars. Presto! Like magic, one-half trillion dollars of so-called "liquidity" appeared out of thin air.

It really isn't liquidity though. Let's call it what it really is. It's just newly 'printed' currency, created not with a printing press, but rather, with a simple book entry on the ECB's balance sheet.

Let's flash back to Weimar Germany in 1923. As that country's monetary problems worsened, the central bank, the Reichsbank, in the misguided thinking of that day printed one-half trillion of Reichsmarks. It also had the aim to provide liquidity.

Is there anything essentially different between what the Reichsbank did and what the ECB just did? Absolutely not.

Last week I wrote the following for one of my regular commentaries on the Kitco website, responding to the $40 billion of new currency that had just been 'printed' in an instant by the Federal Reserve: "Creating money this way is a barbaric process because it further debases the dollar, but is hailed by the banking insiders and their apologists as a brilliant maneuver to fight the worsening liquidity crunch. Of course it is a view of those with vested interests, and bluntly, is just their selling pitch to the masses."

We are in a monetary crisis, not unlike the one that plagued Weimar Germany. It is a crisis of fiat currency, where 'money' can be created out of thin air in an instant and in any quantity, which are actions that cause people to distrust the money. This lowers the demand for the debased money, and eventually leads to a flight from it. The demand for the Reichsmark was declining for years before its collapse, just like the demand for the dollar, euro and other fiat currencies is now declining as people seek safe alternatives.

Over the past few weeks John Rubino and I have been updating our book, The Coming Collapse of the Dollar, for a new paperback version that Doubleday plans to release in January. Not only has the content been updated, but Doubleday wants to update the title too. The proposed new title is: "The Collapse of the Dollar", to reflect the downward path of the dollar since writing our book back in 2004. The following is from the introduction to this new version:

"The stage is set, in short, for not just a further decline in the value of the dollar, but a collapse. Which means the turmoil-and profit opportunities-of the past few years were just a taste of what's coming. But note that despite the title of this book, it's not only the dollar that's headed for the trash heap of history. The real problem isn't U.S. economic mismanagement, but the whole concept of fiat currencies. Put simply, when politicians have the ability to buy votes by printing money, they do so. This lack of monetary discipline leads to an oversupply of currency which causes its value to decline until most citizens give up on it altogether. In the past this has happened to one country at a time, but today it's happening everywhere, with the world's dominant currency, the dollar, leading the way. The inevitable result will be a tumultuous few years in which the world discovers that fiat currencies -i.e., government-created-and-controlled currencies with no externally-imposed discipline on the printing press-are inherently flawed, and abandons them en mass."

As 2007 comes to an end, it is time to think about what lays ahead in the New Year. My conclusion is that the present crisis is going to get much worse and then end badly. How badly?

Well, no one of course can predict the future, but when you are on a road, you can obviously see where you are going. The dollar, euro and the other national currencies are on a road that is well traveled. We know where it is going. It's the same road the Reichsmark was traveling.
It's the road to the fiat currency graveyard.

James Turk: Liquidity won't help insolvency

"The Federal Reserve today announced a new scheme to inject more liquidity into the money markets. It cobbled together a partnership arrangement, as the Canadian, UK and European central banks also agreed to participate in the scheme.

The process of 'injecting liquidity' is a euphemistic way of saying 'creating money out of thin air.' The Federal Reserve doesn’t need a printing press to do this. They simply create a book entry on its balance sheet, and presto, $40 billion (or whatever amount they deem appropriate) of new ‘money’ is created, which the Fed then lends to those bankers coming to it hat in hand.

Creating money this way is a barbaric process because it further debases the dollar, but is hailed by the banking insiders and their apologists as a brilliant maneuver to fight the worsening liquidity crunch. Of course it is a view of those with vested interests, and bluntly, is just their selling pitch to the masses. It is a view so horribly misguided these insiders obviously realize it is wrong. They must know that the problem impacting banks today is insolvency, not liquidity.

Years of reckless credit expansion are coming home to roost. The boom is over, and since this past summer we have been in the bust, which is worsening day-by-day. Solvency is a problem of asset quality, not access to sources of funding. For example, Citibank didn’t have any trouble raising $7 billion of funding from a sovereign wealth fund at the right price, which was 11% – a rate far above the rates Citibank is paying to its depositors. This 11% rate reflects the risk of dollar inflation and the risk that Citibank has a lot of bad loans and other inferior assets on its balance sheet that will never be repaid.

There are gaping 'black holes' on the asset side of bank balance sheets. These black holes cannot be filled by creating money out of thin air. These black holes were created by assets that have 'disappeared'. In other words, bank balance sheets are loaded with assets that are not worth what they once were, or in the worst possible case, no longer have any value at all. The bank liabilities remain, but their assets have been reduced. If this gap is larger than bank capital, then bank solvency is called into question, and that is the process now being evaluated by the markets.

Even though they have already announced countless billions of write-offs, banks have a long way to go in toting up their total losses. They face a daunting task. Many – but in reality, probably most – of their assets are impossible to value.

Sub-prime paper no longer has a functioning market to provide even a nominal market price for these assets. As economic activity slows and unemployment rises, people who the banks now believe to be good borrowers will increasingly default on their loan obligations. For example, The Wall Street Journal reported on December 6th: "First came housing loans and the subprime-mortgage crisis. Now, signs of stress are creeping into another key consumer area: auto loans. Delinquencies in the auto-loan market are ticking up to their highest level in several years."

The economic boom-to-bust cycle caused by bank lending and their subsequent credit contraction is not rocket science, nor a startling revelation. The last banking bust occurred in the late 1980s and early 1990s. Before that, a much deeper bust occurred in 1973-1974, and it more closely mirrors the severity of the way the present bust is developing. Here’s how Ludwig von Mises described the process nearly one-hundred years ago, making clear the inevitable destruction of fiat currency from inflation.

"The course of a progressing inflation is this: At the beginning the inflow of additional money makes the prices of some commodities and services rise; other prices rise later. The price rise affects the various commodities and services … at different dates and to a different extent. This first stage of the inflationary process may last for many years. While it lasts, the prices of many goods and services are not yet adjusted to the altered money relation. There are still people … who have not yet become aware of the fact that they are confronted with a price revolution which will finally result in a considerable rise of all prices. These people still believe that prices one day will drop. Waiting for this day, they restrict their purchases and … increase their cash holdings.

But then finally the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. The crack-up boom appears. Everybody is anxious to swap his money against "real" goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time … the things which were used as money are no longer used as media of exchange. They become scrap paper.”

And scrap bank accounts. While paper was the predominant form of currency in Mises time, today bank deposits moved around by check, plastic cards and wire transfer are a much more significant form of currency than paper.

Given this new market intervention scheme announced today by the Federal Reserve, it is reasonable to ask, where else are central banks intervening today? It seems clear that they are capping gold, and I would not be surprised to learn about huge central bank sales taking place today when they get around to reporting it a few weeks from now. With new dollars being created with abandon, crude oil climbing back above $92 and the Commodity Research Bureau Index climbing to another record high, why is gold so quiet?

GATA knows the answer, and so does everyone else who has been following GATA’s work, which is available free at the GATA website, www.gata.org In another barbarous market intervention, central banks are obviously capping the gold price, but that creates a wonderful opportunity to buy more gold bullion and get rid of overvalued dollars, dollars that continue to be debased and inflated. Gold is much lower today than it would be if central banks weren’t capping its price. So use this opportunity to continue accumulating physical gold bullion."

*****

James Turk: Gold's Infallible Indicator - Six Months Later

"...Over the years, this indicator has been one of my favorites. It has been so good that I call it “gold’s infallible indicator”. True to form, this indicator is still scoring 100%."

To read about J. Turk's infallible gold indicator please click HERE

James Turk: Four Important Charts

Gold Money's editor James Turk has a simple -yet powerful- message derived from Four Important Charts.
You can check'em out at Gold Money web site by clicking HERE.

James Turk: The Search for a Safe Haven

Counterparty risk is becoming increasingly important. As the subprime mortgage contagion continues to spread, there is growing nervousness about all types of financial assets, and rightly so. No one yet knows how big the subprime problem even is let alone how big it will become. Not surprisingly in this present environment promises are being called into question. Counterparty risk has become a growing worry, particularly as the subprime mess spreads in ways heretofore unexpected.

Please click HERE to read J. Turk's article.

James Turk: Bernanke explains why Fed must rig gold price

GoldMoney founder James Turk, editor of the Freemarket Gold & Money Report and consultant to GATA, analyzes Federal Reserve Chairman Ben Bernanke's inflation speech this week and finds the Fed's rationale for manipulating the gold price.
It is, Bernanke said, a matter of controlling inflationary "expectations." That is, if you believe Bernanke, the public causes inflation by expecting it; the Fed doesn't cause it by increasing the money supply far out of proportion to the productivity of the economy.
Turk's new essay is titled "Controlling Inflationary Expectations" and you can find it at Kitco HERE

James Turk: Central bank dishoarding isn't breaking gold

GoldMoney founder James Turk, editor of the Freemarket Gold & Money Report and consultant to GATA, writes in commentary posted today that the recent huge increase in central bank gold dishoarding has failed to break the gold price appreciably in any major currency. That dishoarding will pass as gold consolidates, Turk writes, and soon gold will be reaching record levels in all currencies.

Gold From Different Perspectives

European central banks continue to dump gold. A new report by Don Doyle and Neal Ryan of the Blanchard Economic Research Unit observes: "ECB banks have not sold this much gold in such a short time period in the life of the 2nd Central Bank Gold Agreement. In the last ten weeks, ECB banks have sold over 120 tonnes of gold into the market ($1.9 billion in euros or $2.55 billion in dollars). In the previous six months, ECB captive banks sold only 112 tonnes into the market." Their full report is at this link:
http://news.goldseek.com/GoldSeek/1179846240.php

Clearly, central banks are lining up to keep gold from climbing higher, and to keep it below the critical $700 level. Central banks, however, are only buying time. They are fighting a tidal wave of money fleeing from fiat currency into the safety and security of gold, which is the only money not dependent on some government's or a central bank's promise. This observation brings up an important point.

Because central banks can through their monetary policy control the buying power of their domestic currency, it is easy to accept the notion that they can control the value of all money, including gold. This notion, however, is incorrect because gold and national currencies are fundamentally different.

Central bank balance sheets show that national currencies are their liability, while gold they own is an asset. One does not have to be a chartered accountant to appreciate this difference. Central banks can control the value of their liabilities (i.e., their national currency) in various ways. But they cannot determine the value of gold, anymore than they can determine the value of a Picasso painting or any other tangible asset. Only the market can determine the usefulness of a tangible asset, and therefore its value.

Central banks can influence the market process, and right now by dumping their reserves, they are trying to convince the market that gold's value is questionable. But the following charts show that the central banks aren't fooling anyone. Gold is in a bull market, and in order to better appreciate the magnitude of the bull market that central banks are fighting, it is useful to look at gold in terms of different currencies.

Gold is not just rising in terms of US dollars. Gold is rising against all of the world's major currencies. There hasn't been anything like this since the great 1960-1970's bull market in gold, or to phrase that period another way, the great 1960-1970's bear market in fiat currencies.

Importantly, though gold has retreated somewhat as a result of recent central bank selling, the above charts show the impact from this central bank dishoarding has been minimal. As large as central bank intervention has been, gold prices have hardly flinched. They remain within the pennant formations formed over the past year that are consolidating the tremendous gains gold achieved from August 2005 through to May 2006.

This current bout of central bank selling will eventually pass. When it does, we'll look back at it as we now look back on British chancellor Gordon Brown's decision in 1999 to sell one-half of that country's gold reserves, and describe this selling as Mr. Brown's decision is now being described - a colossal blunder.

So I continue to expect that gold will soon exceed US$700, and for that matter, it will also exceed C$800, £350, EUR510, SFr 840, ¥83,000, A$850 and R30,000.

James Turk: The battle for $700

James Turk, founder of GoldMoney, editor of the Freemarket Gold & Money Report, and consultant to GATA, has written what may be the clearest recent explanation of the manipulation of the gold market by the central banks and their agents, the Wall Street investment house bullion banks. It first appeared in the latest issue of FGMR and now has been posted in the clear at Jim Puplava's Financial Sense Internet site.
It is headlined "The Battle for $700" and you can find it HERE

James Turk: The pressure is building

GoldMoney founder James Turk, editor of the Freemarket Gold & Money Report and consultant to GATA, writes today that the gold market is a pressure cooker, ever-more suppressed by central bank dishoarding. But, Turk writes, the price chart suggests that gold is on the verge of breaking upward as it has done several times before since its bear market ended in 2001.

The Pressure is Building

Sometimes the markets can be compared to a pressure cooker. We're at one of those moments.

For months the pressure has been building. Gold is clearly undervalued and therefore its price needs to climb higher to bring the market into balance. This balance will occur when new mine production meets the demand for physical metal.

Presently, the demand for physical metal is greater than new mine production, and this imbalance creates the pressure. A higher gold price is needed to reduce demand.

Gold undoubtedly wants to go higher, but is being prevented from doing so. Central banks fear a rising gold price because it is a widely watched signal that inflation is rising. So rather than let its price rise to reduce demand, gold's price is being capped to make inflation appear tame. The present exceptional demand for physical metal is being met by dishoarding from gold's aboveground stock.

It is of course impossible to precisely measure supply and demand. There are just too many participants in the market, and most don't disclose their activity. The exception of course is central banks. But central bank gold reporting is unreliable, with some banks announcing their dishoarding well after the actual event. Further, they do not report how much gold they lend to bullion banks. This borrowed gold is then sold, thereby putting more physical metal into the market. In any case, here is what we do know.

Over the past seven weeks European central banks have markedly stepped up their dishoarding, clearly indicating that they want to cap the gold price below $700 per ounce ($22.50 per goldgram). They dishoarded 90 tonnes of gold, which is more than one-fourth of the gold newly mined during this same period. It is this price capping that has put gold in a pressure cooker.

In fact, the lid on that pressure cooker is rumbling. Whether it blows sky-high or not depends on who will blink first. If it is the buyers of physical metal, demand subsides and gold will remain under $700. If it is the central banks, their supply disappears with the consequence that gold will soar to a new multi-decade high above $715. I fully expect the central banks are ready to blink, and when they do, gold will soar higher to relieve the pressure that has been building.

Actually, the following charts indicate that central banks have already blinked. They are losing the battle for $700. Both gold and silver are breaking out to the upside from the triangle consolidation pattern formed in recent months. And look what happened to each metal the last time they broke out to the upside from the other triangle patterns shown on these charts. Both gold and silver began a major uptrend.

These charts show that buyers of physical gold are overpowering the dishoarding by central banks. That is the first step to a higher gold price.

The second step is for gold to be pushed higher by "hot money" stepping off the sidelines, where it has been parked for months as gold traded within the range that has confined it for the past year. This new buying will put central banks in a dire position, and I suspect they are unwilling to step up the dishoarding necessary to keep capping the price.

Most central bankers have I think learned a lesson from "Brown's Blunder", the badly timed decision by British Chancellor Gordon Brown to dishoard one-half of Britain's gold stock at the bottom of the market, an event for which he is still being roundly criticized. They don't want to repeat his mistake. But there is also another possibility.

Perhaps the central banks are incapable of dishoarding gold at a higher pace because of their active gold lending and dishoarding in the past. In other words, they may be scraping the bottom of the vault, so to speak, and are running out of gold they are willing to dishoard at today's price. This possibility is worth pondering.

I would like to conclude this alert with the same words I ended the last one: "Both of the precious metals remain in uptrends. Most importantly, both look ready to break above their multi-decade high set one year ago. So in the coming weeks I expect to see gold and silver exceed their May 2006 high."

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