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ARCHIVED DISCUSSION FROM 4/2/2002
All times are U.S. Mountain Time

(Yesterday's Discussion.)

Black Blade (04/02/02; 23:11:42MT - usagold.com msg#: 72584)
Soaring Oil Prices Seen Jeopardizing Economic Recovery
http://www.handelsblatt.com/hbiwwwangebot/fn/relhbi/sfn/buildhbee/cn/GoArt!201098,201098,515813/SH/0/depot/0/index.html

HB/svu DÜSSELDORF/BERLIN. As the Middle East conflict escalates, economists and other experts are debating the extent of the threat that rising oil prices can be said to present to the upturn in the global economy expected later this year.

The Organization for Economic Cooperation and Development (OECD) said that if the price of oil rises by a further $10 a barrel, it could shave half a percentage point off GDP growth in the industrialized world. Based on this calculation, Germany's GDP would grow by just 0.2% in 2002.

The current oil price already stands above the upper level of $25 a barrel on which the German government's council of independent advisers based its economic forecasts in autumn last year. "Expensive oil is a risk factor which we didn't see at the time," said Jens Weidmann, general secretary of the council. But the council as yet sees no reason to revise down its GDP growth forecast of around 0.75% for 2002.


Black Blade: These are rather optimistic projections IMO. Many foriegn countries are basing an economic recovery on a "supposed" Us economic recovery.


Black Blade (04/02/02; 22:56:15MT - usagold.com msg#: 72583)
U.S. to Tap Pension Funds to Avoid Hitting Debt Limit
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20World%20News&s1=blk&tp=ad_topright_topworld&T=markets_bfgcgi_content99.ht&s2=ad_right1_windex&bt=ad_position1_windex&middle=ad_frame2_windex&s=APKnL3RU4VS5TLiB0

Snippit:

Washington, April 2 (Bloomberg) -- The U.S. will reach the limit of its authority to borrow money on April 4, forcing the Treasury Department to tap a $40 billion civil service retirement fund to prevent the government from defaulting on its debts, Treasury Secretary Paul O'Neill said.

In a letter to congressional leaders, O'Neill said their refusal to lift the mandated $5.95 trillion debt limit will force him to tap the Federal Retirement Thrift Savings Fund, also known as the G-Fund.

Over the next 10 business days the government has obligations totaling $45 billion to $55 billion, including $27 billion in Social Security payments which it would be unable to meet without the maneuvering.



Black Blade: Can you say: "We're bankrupt!" I knew you could.


Black Blade (04/02/02; 22:46:41MT - usagold.com msg#: 72582)
Puplava Market Wrap Up
http://www.financialsense.com/Market/wrapup.htm

Energy on the Rise

Snippit:

Tensions in the Middle East, rising oil prices and lower profit forecasts all weighed on today's markets. Oil prices rose by $0.83 a barrel to $27.75, while natural gas prices ended the session with a $0.09 gain at $3.635. Prices of energy have been rising across the board due to rising tensions in the Middle East, which could cause a disruption in oil supplies to the West. Oil prices climbed higher after Iraq, a key OPEC state, threatened to cut off supplies to the West to force Israel to capitulate to Palestinian demands. Iraq is in discussions with Iran to impose and oil embargo against the U.S. should it decide to support Israel or move against Iraqi leadership. Iran has been caught supplying Arafat with arms, putting it on the list of states that contribute and support various terrorist groups such as Hamas, Hezbollah, Fattah, and al Qaeda. Today, Iran said the use of an oil embargo could be very effective in forcing Israel to withdraw from Palestinian territories. Iraq and Iran are moving to gain consensus with other OPEC members for an oil embargo against the U.S. and its allies in the region. With OPEC having cut back oil production and inventories of oil falling more than expected has resulted in oil prices heading back towards $30 a barrel. Crude prices at the end of the day were at their highest level in more than six months.

The growing conflict in the Middle East is also helping to push up prices in gold and silver. Gold prices closed at $306.90 on the NYMEX while silver prices rose $0.04 to $4.74. Up until recently during periods of political tension or an economic crisis, the U.S. dollar was the preferred haven in times of crisis. Not this time. The greenback is now considered vulnerable, and the attack on the Trade Towers also shows the U.S. itself is susceptible to attack. Therefore, global investors are turning toward gold and silver as a safe refuge during times of economic and political turmoil. Central bankers are trying to fight the shift out of paper assets into gold and silver by trying to resurrect the gold carry trade, hoping to encourage the selling of gold. Right now gold lease rates have come down while Treasury yields have gone up. The spread between the two rates, what it costs to borrow and sell gold, and invest in U.S. Treasuries has widened over the last three months.



Black Blade: Another interesting article.


YGM (04/02/02; 22:25:39MT - usagold.com msg#: 72581)
ALL.......Gold Rush!
Question of $20. or $30. day runs.....
From my view that would be lovely to see, 'BUT'
Remember Oct. /99 Gold ran up as much as +/- $10/$15 a day for a couple days and went from ?$260. range to $325. range +/-(I don't remember exact #'s) but my point is it stayed up for about 10 days/2 wks and the shorts (major ones)& Cabal never blinked, they just drove it back down over time. What I wish to see is the small but significant moves we're having now continue and the shorts continue their Kamakaze dives over a period of at least 30 days give or take and when they wake up and and smell the fire it will be too late and then and only then will they "PANIC" and feed the non-extinguishable fire with their own buying. I know about "ALL" the factors that can and will fuel the fire but think we definately need long exposure to higher prices before the Cabal will abandon the leaky ship that they have kept afloat for so long.....FWIW....YGM

PS: I do believe that time is finally under way and not another false hope. Their Bilge Pumps are worn out with rhetoric and over use. Go Physical & Sleep Well.

Black Blade (04/02/02; 22:22:58MT - usagold.com msg#: 72580)
Re: Bulldog – Oil

Sorry, but I don't speculate with futures contracts. However, I believe that the long-term outlook for energy is higher prices due to dwindling supply and increased demand. That said, it is possible that Middle East tensions may smooth out and oil prices might pull back some. I tend to invest in energy trusts (oil and natural gas), partnerships (propane), niche energy markets (uranium fuel reprocessing), natural gas pipelines, and some natural gas dominated utilities. And Gold and Silver of course.

The point is that we are not likely to see "Cheap Energy" again. The transmission grid is antiquated and in serious disrepair. Any economic recovery will only increase demand for energy – energy that we simply do not have. Energy is one cost that must sink straight to the corporate (and consumer) bottom line. This cost cannot be avoided or trimmed back if corporations wish to expand production. The bull market of the 1980's and 1990's were mostly due to an abundance of "Cheap Energy". Therefore any economic recovery in the short term is speculative at best.

In fact over the last couple of days while the price of oil and natural gas (and Gold) were rising strongly, the same oddball statements about "energy is not important to the economy anymore" were heard on various financial media. Even Alan Greenspan said such nonsense. Yet during the tech and dot.com boom we saw a tremendous growth in computers, server farms, increased telecom use of the Internet, a general rapid growth in industrial manufacturing, etc. The system finally imploded and the result was rolling blackouts in California, near collapse of the electrical grid on the East Coast (New York in particular), and states such as Washington refusing to sacrifice energy for energy deprived California (partly due to drought and partly due to phenomenal demand increases).

Since energy is strategically important to US national security and economic prosperity there have been calls in some quarters for an Energy Marshall Plan" to develop energy sources with the goal for energy independence. This is a desirable goal of course although extremely difficult given the political realities. It is possible that there will be a push from official quarters to move toward energy independence (possibly through a combination of conservation measures, relaxation of some environmental regulations and tax breaks). This of course will take several years. Therefore the long-term outlook for energy (natural gas in particular) is very strong.

This brings us to Gold and Silver as portfolio insurance. Every postwar recession has been preceded by an "energy crisis". Whether it was the 1973 Arab Oil Embargo, the 1979 Iranian Revolution and Russian Invasion of Afghanistan, or the 1990 Gulf War, each event preceded an economic recession. Of course Gold and Silver prices responded as well they should during periods of economic uncertainty. Some these event also led to double digit inflation and prompted politicians to emplace price controls. The end result was make a bad situation worse. We also know that Gold and Silver rocketed to record high prices. So from my point of view one could do well to invest in energy and insure ones portfolio with precious metals (the alternative currency).

I hope this helps, Cheers!

- Black Blade




Pizz (04/02/02; 22:06:04MT - usagold.com msg#: 72579)
A few comments to any interested
Hey friends, relax. Mood of the forum is starting to resemble day traders with more than they can afford bet on the come.

QUIT LOOKING AT EVERY LITTLE SPIKE, DIP, AND TRYING TO FINE TUNE THE MARKETS. Wether spot or paper.

YOU'LL DRIVE YOURSELF NUTS!!!!! Calm and confident should be the mood of the day, week, month and year as we watch what we believe, come to pass.

Gold and Silver are moving up. We know why. PM stocks are moving up - THEY WILL LEAD SPOT JUST LIKE THE SM'S LEAD THE ECONOMY. Stocks will not move like spot, they are more emotional because they are easier to buy and sell. Today they are neither ahead of gold or behind it, they are just there. Tomorrow will be different. They do not have to move in tandem and make sense hour by hour or even day to day.

Stock buyers are not spot PM buyers and vice versa. Some of us here are part of a small group that both buy spot and dabble in a little bit of paper. Most buy paper and are in for the short term. Don't follow the herd. NOTHING MOVES STAIGHT UP (OR DOWN FOR THAT MATTER).

Keep adding to your physcial position - it's the safest bet in town. THE FUNDAMENTALS HAVE NEVER BEEN BETTER IN ANY OF OUR LIFETIMES.

If you play paper (and most of us do), take your positions, ride them up - that's where they're going LONG TERM - and liquidate as you feel comfortable and buy more physical. Gold and silver are ready to break - up -. When they do, at the worst case senario IMHO, 10 to 15 years from now, gold should be trading in the thousands. Silver in the hundreds. May be 1 to 3 years - so what. Most of us still think in terms of fiat. THINK IN TERMS OF WEATH ACCUMULATION AND ANY FIAT YOU MAKE, INVEST IN WEALTH. We know the definition of wealth - Don't we???

Keep the faith and patience will be a virture you can either retire on or live very well (at least better than your peers.)

For those of you who like silver (I do), keep the faith. 90% of this country either can't (thats most of them) or won't buy gold because of price. When the bulk of the populace finally figure out what we know, just what in the heck are they going to buy???? My guess is silver.

GR2 - WHAT???????

Pizz


Black Blade (04/02/02; 21:41:58MT - usagold.com msg#: 72578)
Russian Oil Companies Struggling To Replenish Reserves
http://biz.yahoo.com/djus/020402/200204021223000508_1.html


MOSCOW -(Dow Jones)- Russian oil companies are struggling to replenish reserves this year, the news agency Interfax reported Tuesday, citing Deputy Energy Minster Valentin Shelepov.

Expected new reserve discoveries this year will be less than last year, Shelepov told a press conference in St. Petersburg .

In 2001, the country discovered about 300 million metric tons, or 2.2 billion barrels, but produced 347 million tons, or 2.536 billion bbl, an average of 6.950 million barrels a day.

Shelepov didn't forecast how much oil would be found in 2002, but said: " Distressing reports have been coming in from explorers in the first few months of the year."


Black Blade: As I have posted before. Don't look to the former Soviet republics for oil.


Gauntlet-Runner2("GR2") (04/02/02; 21:08:05MT - usagold.com msg#: 72577)
POG up,SharesDOWN,What's Up Doc?
Hello fellow Gold bugs, Long time lurker with macro-economic theory for a hobby. This is the 400 level finance course I never found at the university in the "happy valley". Methinks the disparity of the POG vs. the shares is due to the high volumes sold at upper price levels in expectation of 320 gold. Early birds are taking profits and too many late pidgeons have landed on a hot wire. The fact that POG is hovering over 300 is actually a negative factor for the shares because it's the Anticipation of it crossing 300 that gets the lemmings a leapin. Now it's like "I actually got to talk to her", but maybe she won't want to go out with me. Hey baby lets go to 310 and see if there is any oil on sale under 35 a barrel? Nope she's skittish and it's good for the scottish because ya gots ta buy em a wee bit cheeper so ya can become again a sounder sleeper. In like six months which ones haven't doubled?? wELL How much more fireworks are left in the bag. Better check my Fibanichi Ratios to sprinkle on my ramen noodles. Are they ready for a 30% or a 50% or the 22% retracement FROM WHAT the past month's rally or from the whole six month move? Big question on the Big Boy's minds. "Well we aren't quite sure". So they shorted in and they're selling to knock them down so they can buy it back cheaper. Smart money chasing dumb money like cats and dogs. But since gold and defense are the only bull sectors the lemmings will be back for slaughter house five in the panic sell. All that has to happen is for POG to drop under 300 for a few days and you can reread Withering Heights. Personally I don't see the minor's patterns resembling the majors and HL proved the late bloomer could hit a home run too. And I'm crying over ROOY again II. I wouldn't touch a geld moan share at this time. I'd only sell, like tomorrow at the open or catch the big red candle down. I'm only saying this for the short term. In the long term I think we will see a bifurcation of the gold market, when futures contracts get stamped "payable in cash only" before TSHTF, IMNSHO. And little physical to go around. Faith is what Jimmy Carter said we needed when POG was over 750. I remember the speech. We had a faith crisis. How much faith crisis do we have is the upside blush on the precious metals rally. Israel does not have the manpower to do another six day war, not with all the hardware the sons of Ishmael have now. So are we talking low level nuclear and a realm of USA haters because "Bush failed to contain the Israelis". That is exactly what I think it's headed to. In the long run, Israel ends up being occupied for 42 months, from the back of my history book. For it to be "occupied" it has to exist. So with all the holy people not caring about what's holy 'Thou shalt not kill' whoever wins is another's choice. It doesn't take a rocket scientist to figure out that the US could get in serious trouble fighting in two hemispheres with a serious lack of oil. China wants Taiwan and whoever sells their bonds will inhibit the other ones from selling theirs. Money is bullets in the financial war. The fed uses bonds to soak up excess M1 and M2. Monetary expansion is only jeopardized by a lack of economic expansion. If the US is able to tender its currency all over the world then that is how far the tentacles reach. Only where there is an alternative do we see competitive fiat systems making inroads to the big scam. I'm a realist. The US dollar is now backed by the big gun. Does anybody want to play? So as we see the European bloc forming under monetization of the euro that is not "backed by gold", the Americas under the dollar, and the Asian Tigers in their own circus with the yen. Britian ends up breaking up because its too small. What's a pound of pounds worth without any gold behind it. So Europe gets the UK islands near it. Australia will kiss up to the US for a new clear umbrella. And Canada is going to end up as the 51st state of America infront of Mexico that's destined to be the 52nd. Repatriation of wealth is the circus of this decade that no one can get a real grip on. Who can measure M3? The derivative casino is a deflationary force that soaks up dollars that may never get redeamed for real goods. That is where I see the water coming over the edge. Dollars will eventually get redeamed for real goods. Its amazing how the whole world loves green ink and paper. But for how long? There aren't many hamburgers at the stand for all the coupons they have printed. Britain may cave in to the Germans and go with the Euro but they aren't going to sell out of the USA. It's not a all-or-nothing scenario either. The rich have freedoms to domicile their wealth anywhere they want to. The Euro is near the status of the Confederate States of America 1860's style. They had two futile wars for a union but no one could speak enough German. So why do you think they can get a union without force? People in high places sipping wine just give up their power. Yeah the Federal guys all move down to the state level and the state guys move down to the local level. But where do the local guys go to? Oh yeah, they all go home. Never son. The southern Euro members will bleed the union dry with mismanagement. Lira into the river because they're too heavy to carry around. The only way the US could keep their union together was by force in a bloody worthless civil war. Europe is going to try it the peaceful way. Why do some goldbugs think the whole world needs to get to Armageddon for the POG to hit 1000. If gold was like any other commodity that was in demand as it is right now it can do 1000 POG. The dollar can go up with gold I've seen it. I'm more bullish on gold when I see that because it makes no sense. It shows an extreme demand not fear driven. When the dollar goes up and gold goes up it means a purer demand for gold is present in a proactive trend not merely reactionary. Like how Eggnog only comes around once a year. It's unique. I'm not touting geld moaning shares because its takes alot of guts to hold them. Look up ASL and check for the crash down, ABX and AU are about as scarey, sometimes the robbers get stuck in the hedges and can't escape. Just wait, all is not wonderful in the world of mining finance. When they want to buy back stock they flood the mines. Not that they have to add any water as they flood naturally when they turn off the pumps. Then they survey high grade areas and project vast reserves. Enron would never happen at a gold mining company because the accountants there are so much more adept at hiding numbers with new acquisitions. It's what it is, gambling. And everything I said is wrong if POG spikes up to 310 and holds. Hopefully I opened up a few cans of worms so we can spark up some more worthwhile discussion in keeping with the heritage of the greatest forum in gold. To keep truth in your innermost being I think one must run the gauntlet of this world. Getting ridiculed and jabbed is nothing new for the older goldbugs. I bought my first 3 Kruggerands at 174 and sold at 385. All my grass cutting money, hard earned kid cash. Those were the days. Then interest rates hit 22% and there were lines outside coin stores of people wanting to buy gold at 800 an ounce. The gold rush of '79...............to be continued............. :)

Bulldog (04/02/02; 20:58:25MT - usagold.com msg#: 72576)
Price of Oil
Black Blade some advice please
I am assuming that the entire Islam world is looking to wreck havoc on the U.S. Arabs supply money, Iraq & Iran weapons of destruction and the various terrorist groups, Hamas, Al Quaeda, etc. do the physical damage. I have heard you wax eloquently about the future price of oil. Since oil today hit a six month high, do you think this is an excellent opportunity for oil futures on the long side?

sector (04/02/02; 20:39:26MT - usagold.com msg#: 72575)
There Never WAS a Recession...So Your Fired!
CSFB Fires 300 Investment Bankers
CSFB fires 15% of investment banking workforce
By Lina Saigol in London and John Labate in New York
Published: April 2 2002 19:52 | Last Updated: April 3 2002 00:52

Credit Suisse First Boston on Tuesday fired 300 investment bankers, including 50 managing directors, in the latest effort by new chief executive John Mack to cut the company's high cost structure.

The job cuts, which represent around 15 per cent of CSFB's investment banking workforce, are some of the most aggressive on Wall Street this year. Investment banks have cut more than 25,000 jobs already as activity on Wall Street and in London's financial district slowed dramatically in profitable areas such as underwriting and mergers and acquisitions.

But for the first time the axe is falling on significant numbers of senior employees, many of whom at CSFB are on lucrative guaranteed contracts put in place by Alan Wheat, Mr Mack's predecessor.

Adebayo Ogunlesi, appointed head of investment banking at CSFB last month, told staff of the job cuts in a memo on Tuesday afternoon.

"I understand that change is not easy, but I have been enormously proud of the effort and contribution that all of you have made to ensure our Division's success . . . With these changes behind us, we now need to unleash the energy and extraordinary talents of the best group of professionals in the industry," Mr Ogunlesi wrote.

Mr Mack has pledged to cut $1bn in costs by the end of the year. Between September and October, the investment bank shed 2,500 positions, including 700 investment bankers, which were in addition to a round of cuts made soon after its merger the year before with Donaldson, Lufkin & Jenrette.

The merger with DLJ is part of the reason CSFB has such high compensation costs. CSFB's compensation is about 58 per cent of net revenue. That compares with rivals such as Goldman Sachs and Merrill Lynch, whose compensation accounts for roughly 50 per cent of revenue.

After the latest cuts, CSFB will have around 1,900 staff in investment banking, about the same number it had before the DLJ merger.
++++++++++++++++++++++++++++++++++++++
The mouth pieces from Treasury [Paul O'Neill] will think twice before making any more announcements of a "Recovery".


Black Blade (04/02/02; 20:35:46MT - usagold.com msg#: 72574)
SEC: Corrupt or Merely Incompetent?
http://www.bloomberg.com/feature/feature1017759064.html
Snippit:

Berkeley, California, April 2 (Bloomberg) -- We are living through one of those times when it is more fun than it should be to work at the Securities and Exchange Commission. An accounting scandal that began with Enron Corp.'s collapse and bankruptcy has touched all sorts of unlikely suspects. There isn't a company in America that cannot plausibly be investigated, and there isn't an investigation unworthy of public attention.


Black Blade: A matter of the fox guarding the hen house? Then again, incompetence would not be all that surprising.


LeSin (04/02/02; 20:35:41MT - usagold.com msg#: 72573)
Auschwitz Logic - Letter From Israel
http://www.antiwar.com/hacohen/h-col.html

Letter From Israel by Ran HaCohen

The Auschwitz Logic   April 1 , 2002

Canuck (04/02/02; 19:37:39MT - usagold.com msg#: 72572)
Rich
Pulling your leg amigo!

You and Mr. Weaver are tied for silver bull of the century.

;)

Canuck (04/02/02; 19:32:38MT - usagold.com msg#: 72571)
@ Solomon Weaver
Silver Bulls: The Great Silver Boom and Bust

Paul Sarnoff

page 31:

"..exchange officals were trying to find out from the longs what their intentions were with respect to their contracts...bullion dealers were becoming increasingly uneasy....if the longs had let go...willing to sell their contracts rather than holding out for metal."

page 23:

"...it became apparent that (longs) intended to accept delivery on their long futures contracts in the COMEX Sept. future."

page 21:

"....was worried about the pattern he saw developing in the silver market. Some of the silver longs, as their contracts approached maturity, were refusing to sell offsetting contracts, but instead were giving notice that they intended to take delivery....silver was becoming alarmingly scarce under the market's relentless demand..."

---------------------

I'm only a quarter way through the book, much reference to the Hunt brothers so far. I am at the part where Comex began to severely increase the 'costs' for the longs, the author makes reference to the blatant 'impartiality'. I sense that the long physical holders could not 'hold out' until the very last gasp of blood-sucking air was expelled by the crooked 'paper-traders'. I hope to understand, in the end, how fortunes reversed so abruptly.

It is also very clear, so far, that initiating the 'corner' would be relatively easy, the amount of money would be insignificant ie: a la Bill Gates, a la Saudi Arabia. The trick, I believe, would be to maintain the 'corner' whilst dodging the death threats!

Awesome read so far!!

sector (04/02/02; 19:32:18MT - usagold.com msg#: 72570)
@RobotGuy The Dubai Gold Market...
...is leading pog's price. The gold volume is up 500%.

The shieks don't have to embargo their oil to make a point. All they have to do is purchase physical gold. The same goes for wise US investors.

R Powell (04/02/02; 19:28:06MT - usagold.com msg#: 72569)
Canuck
"I remain thoroughly convinced that the 'bull' we speak of begins and ends with supply/demand fundamentals, the 'real' thing."
Well spoken. The rest is market noise, some self-fulfilling technical trading or market manipulation. All these will yield over time to the invisible hand. Even the central government control of the soviet USSR couldn't overcome the influence of supply and demand.
It isn't nice to fool with Mother Nature.
Rich

R Powell (04/02/02; 19:15:04MT - usagold.com msg#: 72568)
Canuck
Where have you been, my friend? Solomon was thinking about silver before Warren Buffet got his first pair of long pants.
Rich

R Powell (04/02/02; 19:11:50MT - usagold.com msg#: 72567)
Canuck
Solomon beat me to the punch in asking for the name of the book. If rather obscure, please include the publisher which helps in locating a copy.
Solomon's probably thinking that some detailed history of the last price explosion may give insight into how best to profit from the coming one. Also, is it well written and fun reading?
Thanks
Rich

Canuck (04/02/02; 19:05:57MT - usagold.com msg#: 72566)
@ Solomon Weaver
I was unaware of your fascination with silver Sir!!!!!!

;)

Chris Powell (04/02/02; 18:57:42MT - usagold.com msg#: 72565)
James Turk's analysis of the decision in the Howe case
http://groups.yahoo.com/group/gata/message/1070
Reg Howe won even though his lawsuit was
dismissed. The suit just needs to be taken
over by some gold-mining companies.

http://groups.yahoo.com/group/gata/message/1070

http://groups.yahoo.com/group/gata/message/1071


To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
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Solomon Weaver (04/02/02; 18:46:34MT - usagold.com msg#: 72564)
Canuck - your book
And what, pray tell might the title of your book on the explosion of silver be?

Sierra Madre (04/02/02; 18:35:08MT - usagold.com msg#: 72563)
Good move for gold, but other thoughts intrude

YGM's post at 4:16MT No. 72516 is absolutely ominous.
I don't discard the contents at all. Time to get religion!
Remember, the Mayan calendar ends with the "end of the 5th Sun" on Dec. 22, 2012. Coincidence? (The Mayan calendar counted 1,344,560 days. There is no Dec. 23, 2012.)

Gold is acting up. Is this thing about to explode? A panic is like nuclear fission. Once it gets going, it will not be stopped. We MAY see 10, 20, then 50 and 100 dollar rises per day. Game over!

Then we'll have a whole new set of problems to deal with.

I hope everyone is well stocked-up!

Sierra

Canuck (04/02/02; 18:11:53MT - usagold.com msg#: 72562)
@ Cavan Man
How are you mon ami!

I agree with you, there is no reason for gold to go down. Someone today mentioned that the fundamentals and technicals do not warrant a slide. I concur 100%. It in fact warrants a major gallop through and past 1999 resistance; there is much, much more wrong with fiat today than in Sept. 99.

I wonder though if some scam is underway in Japan, I wonder if some bullsnot conspiracy is underway in the M.E. I wonder if the accounting scandal is being swept 'under the carpet'. Given the supply/demand fundamentals gold SHOULD be much higher.

There are days when I wonder if FREE MARKETS will prevail.

Sorry, just thinking aloud.

Canuck.

P.S.: I feel slightly better that POG is presently above the NY close.

I am reading a book about the silver explosion in the winter 1979/spring 1980. Apparently the final straw was the 'demand for delivery', the physical squeeze beginning in October 1979. I remain thoroughly convinced that the 'bull' we speak of begins and ends with supply/demand fundamentals, the 'real' thing.



The Stranger (04/02/02; 18:03:05MT - usagold.com msg#: 72561)
Sierra Madre
With respect, I think you may be making too much of the weakness in gold stocks today. Gold traded up to the high achieved earlier this year and then stutter-stepped into the close. Gains in these equities have been so impressive. Who wouldn't blame those who "lightened up" here, just in case the resistance implied by this level holds?

But, in a day or two, I suspect most of that money (and more) which exited today will be getting right back into those same gold mining issues...and probably at higher levels. After all, where else are profits being made with such facility these days?



RobotGuy (04/02/02; 17:56:24MT - usagold.com msg#: 72560)
Sector and all
Thank you for ideas supporting why some equities may have travelled lower today.

Sector,.. you mentioned that the 'arabs are heavily buying gold in a militaristic sense'... Are they buying significant quantities?

I think this could really hurt North America if they decide they want gold for oil as others have stated in this forum. First buy as much gold as you can, and then charge others gold for exchange of commodities, suddenly North America has no gold, or as we all knew, nothing reserved. Who were the monkeys that ever decided we didn't need a gold standard? Who are the monkeys who continue to believe gold is a commodity?

I'll look forward to seeing this mess pan out. As for my stocks, I've learned from experience to just leave 'em sit. I lost a lot of money last year by moving it around too much, not to mention all those lost dollars in paid comissions.

Cheers!!

slingshot (04/02/02; 17:37:49MT - usagold.com msg#: 72559)
R Powell Msg# 72553
Bob Pisani's Magnificent List of Seven
Let the music begin!

Is that all the reasons they could come up with for the POG to move higher? May the Saints preserve us. How many are on this team? Wonder how long Bob's list would be if he ever logged on to this forum? Double for sure and even triple. Who will be first to buy Gold? His research team or Bob?

Bob must have seen a glimpse of the BIG PICTURE.
Just goes to prove.
If all they can do is come up with seven, we are way ahead of the pack.

Thanks USAGOLD and all at the Forum


Slingshot-----------<>

R Powell (04/02/02; 17:11:56MT - usagold.com msg#: 72558)
mikal
Thought you might be about! Good quote from Gibbon. Getting rich satisfies the need for a goal and being free from bill paying worries is a novel idea but making the journey may be more fun that reaching the destination. Here's another thought, "Please Lord, let the POG go to $10,000/ounce so I can prove that I can remain humble while being filthy rich."
I remember seeing that Mexican silver production was temporarily way down so that the 25% increase is just restoring its previous levels. I've forgotten why it was down, energy? The GFMS estimates of the silver deficit for year 2001 are between 80-90 million ounces. This is down from previous years but still a 7-8 million per month drawdown. Higher prices will increase production but it may take some doing. Doing often takes time, increasing production will too.
I'll be more than happy to see $6.50/ounce silver by year's end! And yes, when funds allow, I'll be a buyer of physical gold. I see merit in the physical-in-hand opinion but, when I look in my wallet, only silver is affordable so silver it is. I'd rather 100 silver coins than 2 gold ones. With paper option investments, I hold both and see about the same potential % return with an equal % increase in price. Some risk required!
Philipine silver stash? I wish I knew for sure. Ted Butler does too. Are you watching open interest? This rally may have some perseverence. Hope so!
Rich

Cavan Man (4/2/02; 17:02:21MT - usagold.com msg#: 72557)
Canuck
Why would POG go down under these current circumstances? I am talking about the metal not share prices.

Cavan Man (4/2/02; 16:23:25MT - usagold.com msg#: 72556)
@sector
My concern for owning stocks in lieu of metal is simply that the gold market is so thoroughly screwed up with shorts and specs and paper dreams to hedge dollar denominated wealth etc. ad infinitum, is that this very abnormal market will implode and then who can forecast the outcome? BTW, I own shares and metal.

Canuck (4/2/02; 16:21:08MT - usagold.com msg#: 72555)
Additional comments to the POG up/shares down day.
I went thru a dozen or so companies checking the days events. A couple of the majors drifted slowly down thru the day but most interesting quite a few did the big slide (ie: Agnico) at 2:00pm.

So we have a couple theories floating about that the shares got ahead of themselves, day traders now involved in the volatility etc.

One thing not mentioned, that does bother me, is the possibility of a negative factor after the Comex (1:30?) close. This would explain the sudden slide in the case of Agnico.

I hope I am wrong in a gut feeling that POG is heading down, a take that the market recognized late in the afternoon.

Trapper (4/2/02; 16:20:52MT - usagold.com msg#: 72554)
Mr. Gresham
Re. your post #72512
Your observation of the new postage stamp and it'e new world order link reminded me of somthing you might enjoy. When the Germany fell the US army spirited off with most all of the goverment files law books etc. Some years later after the translaters got the english done many of the US congressmen and senators found them good reading. Then about mid 1960's one senator layed in wait for an event to put his new knowledge to good use. President Kennedy gets killed in Texas by Oswald (yeah right)using a rifle delivered to him via US mail. Perfect.
Now our senator has his chance and viola the 1968 gun control act. Not only a law that is in scope and style of Hitlers 1938 gun control act but in many many places word for word. Oh well...live small.
RJ

R Powell (4/2/02; 16:12:58MT - usagold.com msg#: 72553)
More from Bob Pisani
Or, more likely, the research department behind the scenes. Bob now has a list of seven reasons why the POG is on the move.
1. Tensions, in the Middle-east (war) and tensions over bank deposit insurance in Japan
2. Safe haven buying in unsure times
3. Fewer bank auctions (but no mention was made of the Washington Agreement or its expiration date)
4. Momentum (a politically correct term for mania or blind, unthoughtout buying) investing. This should not be confused with rational exuberant gold accumulation sometimes known as "buying with both hands"
5. Short covering
6. Inflation fears (!!) Added emphasis is mine.
7. Alternative to the dollar. Bob had trouble reading this last reason and quickly added that some people actually question the eternal strength of the American dollar. He used the adjective "apocalyptic" in describing the thought process of these crazy people. Can you imagine? What next? Will someone suggest a slowdown in personal debt growth or (shutter) savings!
Rich

nickel62 (4/2/02; 15:56:03MT - usagold.com msg#: 72552)
With apologies to COBRA TO
I thought the article you posted was so important I wanted to post it in it's entirety to make sure as many people saw it as possible.

Creative accounting and the destructive risk
By Henry C K Liu

Alan Greenspan, chairman of the US Federal Reserve Board, frequently credits US growth in the 1990s to a rise in productivity made possible by advances in technology. Yet studies have shown that computerization did not simulate much rise in industrial productivity in the 1990s. Industrial computerization was essentially in place long before 1995. The 1990s boom in the US was not an industrial boom but a financial boom. This was made possible by three developments: the deregulation of financial markets, the computerization of trading of financial instruments, and globalization, particularly financial globalization.

The entire structured finance (derivatives) phenomenon would not be possible without any one of the above mentioned developments. Structured finance in essence allowed an unprecedented explosion of credit, by unbundling risks for a wide range of risk-takers who sought corresponding compensatory returns. While hedging initially provided protection against volatility to individual market participants, it soon became a profit center for financial institutions. This led to the institutionalization of volatility as a market opportunity. Financial institutions actually sought volatility in the system to provide a continuous profit stream.

Creative accounting, whose peculiar logic evolved from structured finance, also made the traditional debt/equity ratio immaterial. Ways were devised for the large market participants to structure debt as hedges, through swaps that avoided taxes and balance-sheet liabilities. Swaps enabled borrowers legally to book loan proceeds as current operating income and loan liabilities as future capital expenditure that could be kept off the balance sheet, inflating current earnings. Circular counterparty risks suddenly became neutralized risk, and cash flow from swaps became net revenue. These practices are now known as Enronitis.

On the macro level, the global finance game has become a sure win for those who use dollars, especially those whose government issues dollars by fiat. The world market has become a place where the United States makes dollars and the rest of the world makes what dollars can buy. But after the Asian financial crisis of 1997, the whole world essentially adopted dollarization, if not directly, at least through hedges, albeit sometimes at prohibitive cost.

At that point, the US economy suddenly began to lose its exclusive dollar hegemony advantage because US entities were no longer the only ones with access to dollars nor could US transnationals avoid non-dollar revenue. To maintain the "strong dollar" monetary policy instituted by US treasury secretary Robert Rubin at the beginning of the Bill Clinton presidency, the US Federal Reserve progressively tightened dollar money supply throughout most of the 1990s. But this did not slow the US economy because structured finance permitted debt to expand without a corresponding expansion of equity. A strong dollar gave the US economy a boom in low-cost imports, while the US trade deficit merely forced foreign exporters to hold dollar reserves to finance the US debt bubble through a US capital account surplus. Japan did this for a whole decade, pushing its own economy into permanent recession while its dollar reserves mounted. Mainland China, Hong Kong and Taiwan took up the slack from Japan by 1995 and the three Chinese economies together now hold more dollar reserves than Japan does. China, starved for capital for domestic development, thus finds itself stuck with US$200 billion in US Treasury bills that pay 5 percent while it is forced to offer foreign direct investment high double-digit returns. The annual interest gap alone is in excess of $20 billion, which amounts to half of China's current annual foreign-capital inflow.

Growth in the 1990s came from a structural shift of the US economy from industrial capitalism to finance capitalism. Through financial globalization, the US shifted labor intensive manufacturing off US soil to low-wage locations, thus lowering the cost of manufactured products. Financial products and services and intellectual property valuation constituted most of the growth, making the US a consumer market of last resort for the whole world. London, Frankfurt, Paris, Tokyo, Hong Kong and Singapore became financial outposts of New York, sucking up dollar reserves to support the US debt bubble.

This game is ending, as the US consumer market becomes saturated and condemned to low single-digit growth, regardless of business cycles. The wealth effect from a tripling of equity value did not double consumption in the US, because aggregate demand is constrained by a widening income disparity. The rich have bought all the manufactured products they need and the working poor cannot afford to buy all they want. The wealth effect did double investment globally, reflected in the phenomenal rise in market capitalization of US transnationals and financial institutions, particularly in the so-called New Economy. The competition for credit favored double-digit growth markets in the developing countries, but the US continued to dominate global finance through its sophistication and innovation in finance and through dollar hegemony.

The problem is that all unregulated markets eventually self-destruct. Weak competitors are naturally forced off the market, leading to monopolies that are the result of market failure of competition. Yet regulation cannot cure the problem preemptively because remedial regulation only makes sense after disasters, never before.

There is increasing evidence that the real threat to China is not democracy or the market economy per se but the peculiar US version of these institutions. The 19th-century industrial capitalism that Marx observed no longer exists. Finance capitalism is a system in which capital is only a notional value upon which to build a gigantic mountain of hidden debt. Representative democracy and unregulated market fundamentalism in the US mode now work as legalized constitutional devices to disfranchise the poor and weak, both locally and globally.

Greenspan acknowledged this in his semiannual monetary policy report to the US Congress, before the Committee on Financial Services on February 27: "From one perspective, the ever-increasing proportion of our GDP [gross domestic product] that represents conceptual as distinct from physical value-added may actually have lessened cyclical volatility. In particular, the fact that concepts cannot be held as inventories means a greater share of GDP is not subject to a type of dynamics that amplifies cyclical swings. But an economy in which concepts form an important share of valuation has its own vulnerabilities." He was of course referring to Enronitis.

Greenspan's observation about the vulnerabilities of conceptual valuation was on target, although his warning of vulnerability was disproportionately misplaced. Even after the Enron and Global Crossing controversies, Greenspan continues to resist regulation, preferring to rely on market discipline. The risk is much higher than he admits.

Past records do not reliably project future vulnerability risk. Any risk manager knows that accidents are always waiting to happen. The fact that it has not happened in the past does not mean it will not happen in the future. In fact, with each passing day without an accident, the risk of borrowed time increases. Low probability is only a source of comfort if the impact is not fatal.

Also, what Greenspan did not say, but admitted by implication, was that finance capitalism is operating with less and less reliance on capital. Capital has become a notional value in structured finance. Credit is no longer anchored by equity but by circular hedges. Debt-to-equity ratio is no longer a relevant consideration. Practically all US major businesses nowadays, with their high debt leverage, would have negative real equity if the price/earning (P/E) ratio were to return to historical norms. Blue chips are being shut out of the unsecured short-term commercial paper market. Corporate credit ratings are inflated by exorbitant market capitalization value, which in turn reflects irrational P/E ratios. Even now, during what many on Wall Street contend to be a savage bear market, the Standard & Poor's 500 Index yields 25 times earnings. It would have to fall by another 41 percent to reach the median valuation prevailing since 1957.

Such a decline can happen in a period of days in this age of program trading and socialized risk, even with circuit breakers and trading curbs. When that happens, structured finance will be a sea of dead and wounded in counterparty casualties, regardless of who won and who lost.

Henry C K Liu is chairman of the New York-based Liu Investment Group.



mikal (4/2/02; 15:49:49MT - usagold.com msg#: 72551)
@RPowell
Nothing ventured, nothing gained
Re: Your "yell" signal- 1) After some false signals a few weeks back, maybe our "irrational exuberance" should take this form: "I am indeed rich since my income is superior to my expenses, and my expense is equal to my wishes."-Edward Gibbon, Memoirs 2) Variety is the spice of life, so celebrate a little, diversify into AU (metal), and flame me once in a while! 3) Major resistance levels, recently posted here and there conclude >$4.48>>$4.75($4.80)>>$5.70>galactic enumeration. To consider: Can David Morgans $6.50 year 2002 top, satisfy you? Have you ruled out more selling from the Phillipine hoards? Mexican silver output, just announced, is up 25%, can Peru, Argentina, etc. be far behind, and is this just the prologue? Will you diversify into physical gold- the choice of Kings? :)) Thanks, your a breath of fresh air.

Pippin (4/2/02; 15:40:21MT - usagold.com msg#: 72550)
Gold occurences in Switzerland - recreational activities :-)
http://www.goldwaschen.ch/egold_occ.htm
Just for the fun of it: you may have heard the sentence that <<Switzerland is rich in poor mines>>.

What you may not know is this is also true for gold, as demonstrated by the URL above, which displays a map showing that gold exists in Switzerland also (apart in the banks' vaults of course), although in homeopathic quantities.

Can you imagine that a total of ...73 gold coins ("Goldvreneli") were minted from the mine of Gondo in Valais ? This may explain the Swiss National Bank's sales.

So if POG moves to $ 10K per once, who knows ...we'll maybe see gold prospectors even in Geneva :-)


Sierra Madre (4/2/02; 15:29:45MT - usagold.com msg#: 72549)
The XAU index descends...with gold rising...???

Yes, I saw it and it does seem strange.

"Manipulation" - it can work both on physical as well as on futures and stocks, too.

The stock market can be kept up - for a time - via manipulation. I guess certain stocks which are not supposed to go up, can be manipulated so they don't.

Not many people are attracted to physical gold; but a great many are into stocks; it is rather embarrasing, for the financial establishment, to have gold stocks go up. Too many commentators would have to notice. And that won't do.

We'll have to wait and watch. Much more of this, and we'll know the PPT is slamming gold stocks. If I am wrong, please let me know. Would shorting do the job, or not?

Sierra



sector (4/2/02; 15:26:18MT - usagold.com msg#: 72548)
@RobotGuy...Wht Gold Equities Slipped at the End of the Day
More and more funds are buying gold equities, still not enough to push a feather though. So when these 20 somethingfund managers [Who don't know Jack about this market] get a tiny gain they sell to "lock in their profits".

Never mind that the trade will run away from them as it has, lo these many months for about 15 months now. They imagine they can ride the crests by buying the dips. Trouble is, there aren't so many real dips any more.

Hui usually bounces back the next day and even overshoots the trend sometimes.

I've been thinking that the golds may detach from pog the way internets detached [Upward] from their non-existent earnings in late 1999 and 2000. Thus the normal 3X leverage of equities to pog may swell to 6X or 10X.

The problem with all this speculation is that we are in uncharted territory for gold...uncharted due to the skewed, deformed market fundamentals caused by US Government manipulation through the sales of our treasury's gold bullion.

Looking at historical [Back to the 60's] M3 Growth rates, Don Lindley has revealed an enormous spike of late in this metric. Only bad things are ahead for the cabal and everyone else who doesn't have gold.

On a personal note, this weekend I tried to persuade my sister to sell her Vivendi stock [Her husband is a Muckety-Muck for them]. She couldn't hang up the phone fast enough. "It will come back", she said.

This process...the belief mechanism that shuts out all reality is well examined by the the following quote:

"Of the ten leading vacuum tube manufacturers, none participated in the transistor revolution"...Chet Raymo [The "R" in TRW]. The same mechanism at work there is at work now in the gold paradigm shift. Most fundfs still shun gold...meaning they remain potential buyers.

The ME is a powder keg...Arabs are heavily buying gold in a militaristic sense...they may have guessed that doing so will hurt the US.

Think of your gold investment as the purchase of well-situated land.


Black Blade (4/2/02; 15:23:58MT - usagold.com msg#: 72547)
Gold Higher – Shares Lower

Gold prices are higher yet the mining shares are lower. How can this happen some ask. It is quite simple as the Gold shares overshot on the upside. Now the underlying asset must work to catch up (notice that Gold is still higher). As a result speculative market players are locking in profits and others are taking some profits to lower their "cost basis" on remaining shares (I have done this myself in the past). Interesting is that the physical metal appears to be in "accumulation". I suspect that there are greater (much greater) gains in Gold yet to come.

Another reason that Gold mining shares stalled out is that many fled to Gold shares for a "flight to quality" in the face of ME tensions (actually most did so for the speculative edge). This is not a concern to those who buy physical Gold for portfolio insurance purposes. However, some are debating how long these ME tensions will last or if they will escalate. It appears that the Israeli invasion is spreading and Palestinian attacks are continuing. If the war heats up some more we will likely see both physical and mining shares resume higher.

Also, today news has revealed that Stillwater Mining (SWC), the PGM producer in Montana is under SEC investigation for how they valued reserves. I bailed out of that dog long ago as they had a knack for selling forward at the lowest possible prices. Management is utterly incompetent.

On the PGM front, Russia still is not delivering into their metal contracts. This was not unexpected of course as Russian stockpiles have been essentially depleted since 1998. Any PGM supply must come from current production. As most PGM supply is from by-product nickel production form Norilsk Nickel, I would not hold my breath waiting for delivery. Base metal production is down due to lower base metal prices (although recovering of late) and therefore PGM production will be slow. Russian exporters have stated that they are waiting for Palladium prices in the $400 to $600 range. Another wildcard is that Ford Motor Co. is selling off some excess Palladium that they acquired at much higher prices (somebody had to have lost their job over that one).

Meanwhile Oil and Natural Gas prices are much higher. Most of this is due to ME tensions, yet there is also a growing consensus that there will be petroleum supply shortages come this fall and winter. I covered much of this earlier. There are growing concerns on Wall Street that the "economic recovery" was an illusion dreamed up by analysts based on murky data and overly optimistic projections based on dubious data. The chickens are coming home to roost.


TownCrier (4/2/02; 15:08:39MT - usagold.com msg#: 72546)
Understanding the industrially-driven metals
http://money.iwon.com/jsp/nw/nwdt_ge.jsp?section=news&news_id=reu-n02204955&feed=reu&date=20020402&cat=USMARKET
HEADLINE: Ford confirms PGM sales, palladium mkt steady

NEW YORK, April 2 (Reuters) - Ford Motor Co. is gradually selling palladium it no longer needs to reduce pollution from its automobiles, confirming in its latest government filing [its annual 10-K report] market suspicions that it had been reducing the precious metals inventory that cost it $1 billion when prices fell last year.

..."For our precious metals physically held, we have accordingly revised our stocking requirements and are in the process of reducing metals that are in excess of those stocking requirements (including market sales to the extent the market can absorb the metal in an orderly fashion)," Ford said in the the document.

Because of the catalyst design breakthrough, it projected that its palladium usage in 2002 will be down more than 50% from 2000.

But supplies of the metal have been very erratic in recent years ... prodded automakers and other industrial users to research cheaper and more readily available substitutes and to develop alternative technologies to meet increasingly stringent emission control laws...

To guarantee supply, Ford bought the metals aggressively in 2000 and early 2001 when palladium prices were on their way to record highs near $1,100 an ounce early last year.
But palladium prices collapsed to near $300 an ounce in late 2001 because of the global recession and frequent selling from Russia.

...Ford's annual report said it planned several actions for outstanding precious metal forward purchase contracts, including cash settling instead of taking physical delivery of the commodities.

-----(click link for full report)----

Similarities may be seen to exist through time and space, but modern circumstances are working to reveal that not all precious metals are alike for purposes of portfolio diversification and wealth preservation. Viva la difference! Call Centennial to discuss a diversification/investment strategy that is right for you.

R.

R Powell (4/2/02; 15:02:23MT - usagold.com msg#: 72545)
Robot Guy
Good question.
Without naming any specific companies, I believe we can say the mining company indexes like the XAU, the HUI and the TSE index are market indicators and may be mentioned in that context.
These indexes were up this morning but ended the day down. However, one day is much too short a time (unless you are a daytrader). Look at them in a much longer time frame. The XAU upmove preceeded POG by a good long time, measured in months not days. It's been advancing for over a year now and probably will continue (I hope) for many years to come accompanied by both POG and POS. Up, down, down, up but over any reasonable length of time- up!
These indexes started long before both gold or silver.
Will a definite end of this index trend announce the imminent ending of the metals' price bull? Blasphamy, you say? Hey, I'm looking ahead five or ten years. There will be a peak somewhere in both POG and POS. Anywhere north of $100/ounce for silver will suit me just fine.
Rich

TownCrier (4/2/02; 14:46:27MT - usagold.com msg#: 72544)
A grand juggling act by the U.S. Treasury
http://money.cnn.com/2002/04/02/markets/bondcenter/treasury_debt.reut/index.htm
HEADLINE: Treasury acts to avoid debt limit -- Department will tap government retirement fund as U.S. nears $5.95 trillion debt cap.

WASHINGTON (CNN/Money) Apr. 2 - ...As of Monday, U.S. government debt subject to a Congressionally set limit stood at $5.928 trillion, about $22 billion below the ceiling.
The Treasury said it will suspend investment in Treasury securities of the so-called G-Fund, one of five different funds that government employees have available in their federal savings plan, to avoid hitting the limit.
+
By suspending investment in the G-Fund, the Treasury will create about $40 billion in headroom for its usual debt securities. In order to tide it over until the mid-April tax flows. Treasury also said Tuesday it will sell about $46 billion in bills that will mature in mid-April to enable it to pay monthly benefits and payroll costs. Treasury usually has to sell debt in the early part of April, by far the biggest month for receipts, to make ends meet.
---(click link for full article)----

Worldwide, holders of U.S. debt securities watch this performance and they think carefully about the future and alternatives...

R.

Old Yeller (4/2/02; 14:42:30MT - usagold.com msg#: 72543)
Making yen at the office
http://www.ananova.com/yournews/story/sm_531444.html

Why not,the BOJ seems to love it,the common folk are just getting in on the action.

Is there something wrong with that?

Pretty hard to moralize,given the destruction of the Japanese economy thanks to official debasement of the currency.

RobotGuy (4/2/02; 14:34:30MT - usagold.com msg#: 72542)
Investor motivation??
I was amused/surpirsed/dissapointed today as I watched a number of mining companies stocks trade lower even as the POG was advancing. I don't understand why individuals would be selling lower in what appears to be a bull market. Is it merely a 'follow the lemming' market, or am I missing something here?

I know, I know, physical, physical, blah blah blah. I already own physical, I just want to understand how the market is functioning, because I believe there are also gains to be made in the securities markets. Don't pretend you don't know what I'm talking about, I know there are a few of you out there who also trade stocks.

Does anyone know what would motivate an individual to sell stocks on a "commodity" while the prices are moving higher? Add to that, that these stocks were trading for more when the POG was significantly lower. Please, assist a rookie would ya? Are we losing PM momentum? Are people already becoming bored with AU now that it's crossed the 300 mark and seemingly sitting strong? I don't understand.


R Powell (4/2/02; 14:31:06MT - usagold.com msg#: 72541)
From Bob Pisani and CNBC
In his at the bell closing comments he mentioned "the concept of gold as a safe haven is making a comeback".
Maria mentioned both oil and gold as the "news of the day".
Joe Kernan mentioned the higher prices of commodities as a group as one reason why the equities were down today. Apparently he sees an inverse relationship between the two and his preference would be higher stock prices. I would agree that the CRB will go higher at the expense of money inflow in stocks in our present situation. Is/has there always been such an inverse relation? Are paper and tangible assets always at odds?
The peoples stock market television channel has been mentioning gold, silver and oil all day. Of course, stocks related to both oil and metals were also mentioned with the usual charts, graphs, whistles, bells and opinions. We are getting exposure. If Joe and Jill bubblevision viewers are going to jump in, we may see it soon. Momentum and trend following buying may also be approaching.
I believe the Japanese deposit insurance coverage reduction April 1st deadline pertains only to long term or certificate of deposit type investments. Next year it will be lowered on common bank deposits. I hope gold buying continues in Japan but I know how quickly I attend to tasks that can be put off for a year.
On the technical side, I'm watching open interest which in silver has increased from approx. 66,000 contracts to over 77,000 contracts during this latest run up which started around the $4.30 level and must exceed $4.77 to assure a higher high. Maybe tomorrow!
Gold and oil, oil and gold all the day long. Now, isn't CNBC a wonderful thing? As to why, they haven't a clue but further investment money into gold/silver will gladly and unquestioningly accept their Middle-East tensions and "flight to safe haven" as reason enough to buy.
Mikal, if silver breaks above the old 477 high, am I then allow to yell!?
Rich


CoBra(too) (4/2/02; 14:09:42MT - usagold.com msg#: 72540)
Echos of my fleeting Thoughts?
http://www.atimes.com/global-econ/DD03Dj01.html
Interesting article -calling the push for globalization for what it is. A globalization of financial markets to the detriment of the real produc(tive- or)ing countries.

A rude awakening to these facts may be in the cards. Sooner as some think. cb2

Pippin (4/2/02; 13:03:39MT - usagold.com msg#: 72539)
TownCrier
I stand corrected - sorry.
I really did not intend to draw the attention of anybody to a certain security - I just answered a question of somebody who needed a comparison tool. But I understand the point.

Solomon Weaver (4/2/02; 11:59:53MT - usagold.com msg#: 72538)
Red Gold - an update on Gold in China
http://www.cbbc.org/ezine/archive/sector-reports/sector-report1.html

Red Gold
Slowly, the shroud of secrecy surrounding China's gold production and reserves is lifting and plans are afoot to deregulate the sector. But, as John Adams explains, there are still many steps to be taken before a free market in gold will happen

For many years the amount of gold produced annually in mainland China, its geographical source and the level held in the official reserves were mysterious state secrets, whose possession was dangerous to the holder. Much effort was devoted by Western analysts to determining exactly how much gold China had at any one point, and how much had been sold on the world markets to cover bad harvests or political upsets. China was known to be mining gold in modest but useful amounts of perhaps 50 tonnes a year, but beyond that little was known.

The food shortages which followed the disastrous Great Leap Forward in 1958 forced China to sell gold to buy grain abroad, depleting the national reserves. During the autumn of 1966, as the equally disastrous Cultural Revolution got underway, Red Guard searches in Shanghai alone are reported to have turned up some 35 tonnes of privately held gold, presumably in bullion or coin, and 450 tonnes of gold and silver jewellery. This is not surprising: China is estimated to have some 5,000 tonnes of gold in private hands, worth billions of dollars.

Despite the disruption created by the Cultural Revolution, the banking system continued to function, at least abroad, and China is reported cannily to have sold its sterling balances in 1967, prior to the devaluation of sterling, and to have bought gold at US$35 per ounce, benefiting from subsequent gold price rises also.

In 1976, at the end of the Cultural Revolution, some 81 tonnes of gold were reported to have been sold after the Tangshan earthquake and Chairman Mao's death. Similarly, there were gold swaps after the events of Tiananmen in 1989, when China's credit rating was low.

As China moves forward into the 2000s it is faced with some tough decisions as a new world trade order (another international structure not of China's designing) emerges. No longer politically isolated, and groaning under the multiple cash demands from state industries on declining state revenues, China is examining all expenditure with a cold eye.

Gold, which once served as a silent and efficient cordial to oil the wheels of trade, is no longer seen as central to its needs. Since the 1990s foreign exchange earnings from exports have soared to about US$154bn, and while the amount of gold held at reportedly 12.7m ounces has not diminished, the proportion has fallen back from perhaps 50-60 per cent to only 3 per cent of total reserves.

To get things into perspective
China currently produces some 170 or so tonnes a year of gold from a large number of small deposits in almost every province in China. This is nonetheless only as much as one large multinational such as Anglogold. Most gold originates from mines in Shandong province (about 25 per cent) though there are also useful amounts of alluvial gold in China's many rivers. The far west of China is still being explored, and the major foreign gold mining companies are convinced that there is a major strike still to be made.

The gold mines are coming under budgetary and lending constraints. Official subsidies for prospecting are being cut back, smaller mines closed down and polluting processes restricted. So long as the world price for gold remains around US$280-330 per ounce, Chinese production is likely to stagnate or falter in the medium term. Listing of mines in China or abroad, or take-overs, are possible solutions.

The mines, where they have been modernised, have used the most modern equipment available. Nonetheless, productivity levels per person remain unsatisfactory, and the general level of production even at the bigger mines may only be 5 tonnes or so. The many small-scale mines are being closed down or else starved of funds.

Foreign direct investment in gold mining has so far been disappointing. Even the gold "seniors" (the major gold companies) have found the approval process daunting (with over 40 separate steps), while the legal framework (such as on ownership and transfer of property rights) is unclear; the taxation regime does not allow for the special nature of mining investment. Dry wells may cost up to US$25m in prospecting and exploration costs which cannot be offset.

A dozen or so gold "juniors" have signed up to develop properties in China, but are constrained by the current low world gold price, and lack of bank and investor interest in funding. China has yet to attract the billion-dollar gold mines currently up and running in Indonesia.

On the structural side big changes are afoot in China. At the moment, all gold mined in China has to be sold to the People's Bank of China, which in turn onsells it to the wholesalers, manufacturers and retailers. In the recent past, the price paid by the People's Bank to the mines was well below the prevailing world price, giving a strong inducement to smuggling gold out of China. This was rectified by the authorities, and the price adjusted upwards. There it remained, while the world price plummeted, thus giving a strong incentive to smuggle gold back into China and sell it to the authorities as domestic production.

The only thing which made this system viable was the ruinous mark-up added to the price paid by the consumers of gold. The People's Bank now has the power to change the gold price without reference to the State Council, and it closely shadows the daily international price.

Towards a new system
In the first week of November 1999 the World Gold Council, in conjunction with China's National Economic Research Institute of the China Reform Foundation, the Development Research Centre of the State Council and the Financial Research Bureau of the People's Bank of China organised a forum in Beijing attended by over 120 delegates from the central bank, gold mining companies, the gold jewellery trade and various financial institutes.

The conference discussed a series of papers on the changing role of gold, but also concentrated on the reform of the Chinese gold market. In particular, the World Gold Council, the forum for gold producers worldwide, presented its paper entrusted to the National Economic Research Institute of the China Reform Foundation, on deregulating the gold market in China. The paper pointed to the special characteristics of the gold market in China, the lack of any precedent in any other market, and the difficulties inherent in the reform. The report suggests a several-staged reform of the gold market, among them:

Establishment of a gold market to replace the monopoly of the People's Bank over purchase and allocation via a gold exchange limited in membership to large producers, purchasers and brokers

Business to be limited to spot only transactions

People's Bank to begin decontrol of gold purchases with a dual-track system: this would allocate a purchase ratio to producers, who would, however, be free to decide whether to sell to the People's Bank or to the market. Any production surplus over quota to be sold on the market

Complete opening of the gold market with individuals able to buy and sell gold products for the purpose of savings and investment

Quota-based allocations to manufacturers to be abolished

Brokers to provide gold sales to small and medium-sized manufacturers

People's Bank purchases cease; all gold production sold directly on local market

Individuals free to purchase gold

Mechanisms for futures to be set in hand

Removal of the ban on gold exports and imports; direct linkage to the world gold markets. The report emphasises that this will also be conditional on complete convertibility of the renminbi

The establishment of a stabilisation fund in the interim period before China's domestic gold price is completely aligned with the international level, in order to smooth price fluctuation. The fund to be entrusted by the People's Bank to some local agency. These operations to cease on full linkage to the world market

The report also underlines the view that gold will continue to play an important part in China's national reserves as a stabilising factor in financial crises

These reforms will be difficult to implement, and carry a number of thorny problems concerning the convertibility of the renminbi, and the VAT status of gold when sold to private customers. Silver, for example, was deregulated at the start of 2000. It, too, was a metal held in the official reserves to the tune of perhaps 2,500-3,000 tonnes, but VAT is now chargeable at an assumed rate of 17 per cent, which has cast a shadow over the new market.

Gold fingers
In the meantime, gold sales to the private sector in China continue to boom. The major off-take is now in gold jewellery, which may consume 200 tonnes a year (more than total domestic mine production). The World Gold Council has identified Chinese demand for gold jewellery as one of the forces to drive world gold production in general, and has instituted marketing programmes in conjunction with local jewellers and media.

In 1998 the WGC worked with Shanghai Lao Miao Gold Company to set up a publicity campaign using a local television series "Love in Shanghai" to launch the Amour range of jewellery. Lao Miao's sales rose some 15 per cent after this campaign.

This was followed in late 1999 by a larger scale media campaign, again organised by WGC and Shanghai Lao Miao Gold, but this time launched in 18 major Chinese cities, and linked into Lao Miao's range of 24K jewellery collection, Forever, with items from the collection again worn in a 20-episode television programme.

The major target of this campaign was young women office workers, with salaries in the region of Yn2,500 per month (US$300). In 1999 Lao Miao was able to register a rise in sales of some 30 per cent. Not surprisingly, it has identified the major sales period as being the Chinese New Year (which varies according to the lunar calendar) and, less traditionally, St Valentine's day.

The main market in China is for gold of between 95.9 per cent content (959 fineness, 23 Carat) and 100 per cent (999, 24). While many items of jewellery are universal in appeal, some items are culturally specific to China: the astrological year signs of animals such as pigs and snakes, or the berobed Gods of Health, Wealth and Happiness, may have limited appeal elsewhere, though will be of interest to the large numbers of overseas Chinese.

But the big wide world moves on. The Bank of England has been directed by a reforming Chancellor to treat Britain's gold reserves as though gold was no different from frozen concentrated orange juice futures, or pork bellies in Chicago. In Beijing, resource nationalism may reign for a few years more, but Guangdong now buys its coal in Australia, and China is becoming heavily dependant on oil imports from abroad: "commoditisation", for gold as well as other products, is the new game.


TownCrier (4/2/02; 11:56:44MT - usagold.com msg#: 72537)
Pippin and Cometose
http://finance.yahoo.com/q?s=NEM&d=c&k=c1&c=HL&a=v&p=s&t=my&l=on&z=m&q=l
We generally try hard to avoid the slippery slope that will rapidly turn this particularly unique gold discussion forum into little other than a stock chat room, which are already a dime a dozen elsewhere on the internet. Many here very glad to have among the vastness of the internet at least this one site free from the blitz of promotions for Wall Street's paper in one form or another -- wheter it be debt securities (bonds) of the government, banks, manufacturing, mining, or retail corporations, or else the asset securities (stocks) of banks, manufacturing, mining, or retail corporations.

But briefly, since the two of you would have us all turn our attention to the fortunes of the Hecla and Newmont corporations, every picture tells its own story, and you'd be sure to want to cosider this one (see link above) in addition to the one offered by Pippin. How much real and steadfast comfort has been offered by the paper asset class representing these corporations by holders since long ago 1988? Since 1996?

In the meanwhile, to holders anywhere in the world under a wide assortment of currency regimes, gold metal offered all of the real security unique to gold metal, a bulwark against privation that gains in power even as confidence in all others is lost.

Again, there is ample material to discuss regarding gold's part in an evolving world in which economics plays an ever increasingly important role. I don't think that we need waste time or space here in giving one particular corporation or another a leg up with free publicity or attention. There are other avenues specifically provided to acheive those ends, and anyone with vested interests toward those ends are encouraged to seek them out for such purposes. Our attention here should remain on discussion of the unique merits of gold metal ownership as part of a diversified portfolio to stand against the shifting political and economic realities of each new day. Discussion of those shifting socio-political/economic realities being also fair game for discussion as they relate to a person's contemplation for gold ownership.

Randy

Pizz (4/2/02; 11:44:03MT - usagold.com msg#: 72536)
Comatose
Regarding Hecla - they mine gold too.

On Friday they announced they hit gold at depth at their La Camorra mine in Venezuela. Yesterday they announced the acquisition of a major lease for gold property also in Venezuela.

My broker has a volume alert on it right now, big blocks are being bought.

There was some speculation on another board yesterday that they may be a take over candidate - though I hope not.

Due your own due dilligence and not investment advice, I own a litte bit of this one.

Pizz

USAGOLD / Centennial Precious Metals, Inc. (4/2/02; 11:09:11MT - usagold.com msg#: 72535)
Hard assets... Easy access!

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