ARCHIVED DISCUSSION FROM 7/28/2002
All times are U.S. Mountain Time
(Yesterday's Discussion.)
USAGOLD
(7/28/02; 23:47:21MT - usagold.com msg#: 81749)
Thanks, Sierra. . .
Sorry all for the computation error. As you say still acceptable.
Old Yeller
(7/28/02; 23:47:10MT - usagold.com msg#: 81748)
Staring into the abyss,the US economy
http://straitstimes.asia1.com.sg/analysis/story/0,1870,134432,00.html?
We've heard that one before,or have we?Hard to know anymore,
gold investors seem to reaping the whirlwind of someone else's making.
Can't print gold boys,we know you've tried and there are many innocent holders of your financial alchemy products.
YGM
(7/28/02; 23:40:02MT - usagold.com msg#: 81747)
Another JPM Bomb..I missed this in June
http://www.kitco.com/ind/DChapman/june132002.html
Chapman and Hamilton will be the ruination of JPM :>}}}
"GO GATA"
YGM
(7/28/02; 23:36:27MT - usagold.com msg#: 81746)
MarkeTalk
http://www.kitco.com/ind/DChapman/june132002.html
Thanks, for thinkin of us...it has made the rounds, in fact I posted it and a few others to do with JPM & the Derivatives gang around the JPN and Goldman Sachs message boards last week (still ongoing actually) Does feel good to drop bombs on the enemy. Lots of doomers in their ranks and a few Gold believers...Regards (zulu_gold_wars)...YGM
Horatio
(7/28/02; 23:31:40MT - usagold.com msg#: 81745)
S.Africa
Leaked mining charter stirs up troubled market waters
Sherilee Bridge and Frank Nxumalo
July 28 2002 at 07:32AM
Johannesburg - Investors, panicked by the leaking of the government's draft empowerment charter for the mining industry, abandoned mining stocks on Friday raising fears of further carnage next week as international markets digest the plan to prevent white mine ownership of new mines.
Mine bosses called the draft empowerment charter "malicious", "unacceptable" and "effective nationalisation" and left emerging mining companies wondering where they would get the money to turn a political dream into reality.
The proposals revealed that the government's vision was to have all new mining operations in black control within a decade.
The document said mining companies must ensure that their black economic empowerment partners had at least a 51 percent equity stake in the operation before they apply for new mining licences.
Those seeking to convert existing licences to new mineral rights would have to surrender at least 30 percent of the venture's equity to a black economic empowerment partner.
"Should the applicant be unable to find a suitable partner, government should intervene through vehicles such as the Industrial Development Corporation and Development
Bank, so that such shares can be warehoused within these organisations," the draft charter read.
John Meyer, a resources analyst at SG Equities Research in London, said while there were still no details, the news was enough to send investors running for the hills.
Gold shares dived. AngloGold and Gold Fields closed 10 percent lower on the day. Harmony Gold Mining fell 16 percent and Durban Roodepoort Deep 18 percent in late Friday trade. While the lower gold price of $304.95 an ounce would have had a hand in the falls, sharper loses were recorded after 3pm when the market was abuzz with the news of the charter's contents.
The past two weeks have been marred by huge questions over the structure of black empowerment deals and the extent to which the government could standardise these deals through the charter.
The mining industry charter was expected to kick in December, when the Minerals and Petroleum Resources Development Bill is enacted.
Meyer said the bulk of the London investing community had been left wondering how long it would be until existing mining assets would have to comply with the 51 percent empowerment quota.
There was no indication of whether mining companies would receive compensation for the assets transferred to empowerment groups.
"Despite the government saying this is just the first draft, share prices will continue to fall until the South African government applies itself," Meyer said.
Junior miners agreed that the proposed minimum ownership levels had to tempered with realism.
Tiego Moseneke, the chairperson of the New Diamond Corporation (NDC), said: "We must get the buy-in of all the major players in the mining industry so that they understand the need to re-stimulate new economic activity and avoid having them obstruct the government's transformation plans."
But still some industry commentators labelled the proposal as "creeping nationalisation".
Dawie Roodt, an economist at PLJ Financial Services, said it was irresponsible of the government to prescribe these things until they were properly structured.
"This kind of thing just feeds the world's perceptions of Africa as the hopeless continent. Obviously we have to do something about the ways of the past but government must be extremely careful," cautioned Roodt.
"Soon it may not pay to be in the mining industry," said Roodt.
<http://www.businessreport.co.za/general/busrep/images/trans.gif>
MarkeTalk
(7/28/02; 23:26:27MT - usagold.com msg#: 81744)
Canuck, Cavan Man, YGM et al--JP Morgan Chase in trouble
http://www.zealllc.com/2002/jpmcrash.htm
I don't know if anyone has posted this link, since I have been away from the site this weekend attending a high school class reunion. Tonight a friend of mine told me to go over to Jeff Rense's site and to read several articles. And I saw a reference to the aforementioned link on Rense's site.
This article makes for good reading, especially after the implosion of JPM this week. It also answers many questions which my clients asked me this week. The author makes an excellent point that the stock is down 66% from its high in early 2000. This resembles more of a high-flying tech stock than a stodgy DOW 30 member. But we all know why the pummelling took place. In a word, derivatives.
GC
Golden Bear
(7/28/02; 22:50:50MT - usagold.com msg#: 81743)
YGM (msg#: 81729) Gold "MAY" See $275-$285 Again.....
YGM, all,
In Gold Wars, Mr Lips makes a remark that during gold's rocket ride to $850 in 1980, it made several SEVERE retracements, before continuing to move higher...
Canuck, hang in there with your bullion...
Black Blade
(7/28/02; 22:39:49MT - usagold.com msg#: 81742)
Debt fuels US gas and power bankruptcy fears
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1027694123937&p=1012571727085
Snippit:
US and European banks and bondholders lent an estimated $500bn to the crippled US gas and power sector, new research commissioned by the Financial Times reveals. The figure raises fears that a further string of corporate failures in the wake of the Enron scandal would expose lenders to heavy losses. The banks most active in arranging finance to the sector include Citigroup and JP Morgan Chase - both under scrutiny over their role in the funding of Enron - and Bank of America.
Black Blade: Yeah, I know that this has been posted, however, I did step out to have a few cold ones and a dinner with a couple of energy sector acquaintances on Friday. We discussed these events concerning the energy sector. It does appear that the US is being set up for a severe energy crisis. Some major points are that new planned power plants have been shelved due to less lending and the current spate of scandals that include several energy companies. Also, there are problems developing in the dilapidated energy grid that have not received much press. The only reason that Ng supply appears to have been increasing is due to the deepening recession and fairly mild weather. The US is still quite vulnerable. Today there was a report on CNN "Business Unusual" that covered the likely event of another energy crisis in California. The situation has improved slightly, fortunately due to a crippling recession that has reduced energy demand. The lack of sufficient energy could cap any so-called economic recovery. Now as the building of new power plants is in doubt as energy companies fail left and right, we are looking at another developing crisis. Note that General Electric has or will lay off several thousand from the energy turbine division as orders have been cancelled or shelved.
Sierra Madre
(7/28/02; 22:36:23MT - usagold.com msg#: 81741)
Oops, slight mistake USAGOLD!
14% of $10,000 is $1,400, so that would make an investment of $10,000 grow to $11,400. Still quite acceptable, of course.
Sierra
YGM
(7/28/02; 22:34:26MT - usagold.com msg#: 81740)
US Banks & Derivatives
http://www.rense.com/general27/hav.htm
Excerpt:
Have The Big US Derivatives
Banks Exploded?
By John Hoefle
Executive Intelligence Review
www.larouchepub.com/eiw
7-28-2
(EIRNS) -- Indications are growing that the top three U.S. derivatives banks--J.P. Morgan Chase, Citigroup and Bank of America--have been pushed to, if not over, the brink of "technical" bankruptcy by problems in the derivatives markets. (See end section for background on what derivatives are.--Mark) We say "technical" because the top U.S. banks have long counted hundreds of billions of dollars of fictitious assets on their books, making them bankrupt in reality, and solvent only by perception.
Both Morgan Chase and Citigroup have shown up with uncanny frequency as the top lenders to the current crop of exploding corporations and are clearly facing huge losses on their loan portfolios. With corporations and individuals going bankrupt at record rates and defaults soaring, the loan problems at Morgan Chase, Citigroup and Bank of America go far beyond what has publicly surfaced, but their loan problems pale in comparison to the dangers lurking in their derivatives portfolio.
J.P. Morgan Chase, the world's largest derivatives bank, is a prime example; a loss equivalent to less than 0.2% of its $24 trillion derivatives portfolio would be enough to wipe out every last penny of the bank's equity capital. {EIR} believes that Morgan Chase actually collapsed in mid-2001, and is being secretly run by the Federal Reserve, similar to the way the Fed took over Citicorp in 1989.
Morgan Chase is the result of the acquisition of J.P. Morgan & Co. by the bigger Chase Manhattan. The deal, which closed on the last day of 2000, has been an absolute disaster as measured in ordinary--and therefore misleading--market terms. The market capitalization of the combined Morgan Chase is now less than that of Chase alone on the day before the merger, with Morgan (or at least its equivalent value) having simply vaporized. This is not surprising, as it was likely a bankruptcy at Morgan, and perhaps Chase as well, which led to the takeover of Morgan by Chase.
Citigroup may again be under Fed control as well, as rumors of major derivatives losses circulate. Citigroup is the result of the 1998 takeover of Citicorp by Travelers Insurance, creating what is now the largest bank in the U.S., with just over $1 trillion in assets and $9 trillion in derivatives. Former Treasury Secretary Robert Rubin revealed on July 15 that he was retiring from his position as vice-chairman at the bank, and three days later it was announced that Saudi Prince Alwaleed bin Talal, Citigroup's largest individual shareholder, had invested another $500 million in the bank, raising his holding to $10 billion. Alwaleed, a nephew of Saudi King Fahd, obtained his initial stake in the bank shortly after the Fed took it over in 1989 and began arranging a bailout. The latest cash infusion raises suspicion that Alwaleed is performing a similar service for Citigroup.
Not to be left out is Bank of America, whose $620 billion in assets puts it third behind Citigroup's $1 trillion and Morgan Chase's $713 billion. Bank of America's $10 trillion in derivatives puts it solidly on the hot seat in any financial crisis, and it has also loaned heavily to bankrupt companies. Rumors are flying that Bank of America has applied to the Fed for a secret bailout.
Banking sources in Europe have confirmed to {EIR} that a major derivatives crisis is underway, centered around the giant U.S. derivatives banks, Morgan Chase and Citigroup in particular. Were one of the big derivatives banks to explode, it could overwhelm the Fed's ability to cover up the losses, triggering a chain reaction which could blow out the entire global financial system.
USAGOLD
(7/28/02; 22:31:44MT - usagold.com msg#: 81739)
Trapper. . .Some perspective
Some perspective:
Over the past 12 months, the DJIA is down 19%.
Gold is up 14%. (Even after the correction of the past few weeks).
Put another way:
$10,000 invested the DJIA 12 months ago would be valued at $8100.
$10,000 invested in gold would be valued at $14,000.
That represents a nearly $6000 swing.
The gold owner who has bought the metal as a long term hedge against stock market declines and dollar debasement is getting out of gold precisely what he or she wanted. His or her holdings have appreciated while stocks and the dollar have declined. Asset preservation has occurred.
Paupers?
No.
Home run hitters?
No.
Survivors?
Yes. (and in pretty good style)
And that might all one can ask for in this environment. At least for the time being. This is July. Gold quite often experiences cyclical lows this time of year -- a good time to add to one's holdings.
SEEKER OF THE GOLDEN GRAIL
(7/28/02; 21:59:24MT - usagold.com msg#: 81738)
COTs
PS - I'm waiting for evidence the small specs have sold before I take the plunge back in - these guys have historically been the dumb money that have signalled the peaks in gold over the years. Over the last decade, when they have held more than 40,000 contracts it was time to sell. As of last tuesday - they were still over 40,000. Let's wait until next week to see if they've sold yet - 30,000 or so to the 10,000 level would be nice but we may need a little more time and a little lower gold price to shake these rascals out of the tree so to speak. Good luck to all!
Trapper
(7/28/02; 21:52:49MT - usagold.com msg#: 81737)
The board
I must have fallen on my head again. My physical is under water and my stocks...just bad, very bad. I fear if we fall below support of 300.00 look out below. They used the nasdog to soak up the inflation from the last printing press race and now they are going to use the dow. They can print all they want, get the first use of the fiat, give some to joe sixpack via wages, tax the wages, and then get Joe to "invest" in the dow.Then they take the Dow down in 5 years and presto still no inflation.
I feel the only hope is silver. If the silver gets loose then maybe gold will follow. All the good, real, and right reasons for gold to go way up aren't worth squat if the big boys say...we won't let gold up till we say golds up. For all of us, have another bite of that s&%$ sandwich and shut up. Another and FOA might be wrong, or I might die of old age before they become right. Oh well live small..cause thats all the money I have left.
SEEKER OF THE GOLDEN GRAIL
(7/28/02; 21:48:08MT - usagold.com msg#: 81736)
Party Pooper
Hate to be one but can't we just attribute the dollar reversal, the gold reversal, gold stocks reversal, etc. to a case of moving too far too fast? It seems that with gold moving a mere 30% and gold stocks moving 100s of %, a healthy correction was in order. I don't know about you, but I took BIG profits. I started feeling GREEDY and thinking THIS TIME IS DIFFERENT and fortunately that was my cue to take profits.
The dollar is in a bear market (a high probability), but I certainly expect it to correct for possibly a month or two because it has dropped too far too fast. Then I find it quite reasonable that it will continue its bear market. Same with the stock markets, etc. Yes, it's quite plausible Central Bank, ESF or whomever interevened on Morgan-Chase's behalf because of their gold derivitve exposure, but it only worked because gold was due for a breather. I expect the next leg up comes in the fall possibly getting up to $400 before ANOTHER big correction takes place. Again I will sell when I get those GREEDY feelings and THIS TIME IS DIFFERENT. Hopefully the next leg up into 2003/2004 will take us even higher to 600.
I like investing in gold and silver stocks because they are so HIGHLY LEVERAGED against the metal and because I have made so much money! Making so much money has enabled me to continue to accumulate the physical for my (Real Money) savings account. I'm sure glad I didn't buy into the "ANOTHER" point of view that gold stocks should be avoided - they have been a tremendous tool for increasing my wealth. Please think about what I have said and get prepared for the next great leg of the bull market in gold and silver stocks. I'm sure USAGOLD will be tickled pink to have wealthy members hedging their enormous profits purchasing gold.
mikal
(7/28/02; 21:23:33MT - usagold.com msg#: 81735)
@YGM
Good to hear from ya. Admittedly, I have lower expectations also. Seeing the report from Sinclair, Chapman, BlackBlade, Randy, Siochaina and many others has given me continued hope. Hoping Price of Gold (POG) will shortly, after wandering as low as $295 or so, resume another leg up, before eventually recapturing its old title- VOG, Value of Gold.
Black Blade
(7/28/02; 21:22:44MT - usagold.com msg#: 81734)
The last sentence should read -
"Maybe morality and ethics of the majority of people in a given region is "defined" by the people they elect to public office."
Black Blade
(7/28/02; 21:18:43MT - usagold.com msg#: 81733)
Re: USAGOLD
I find that politicians tend to be quite "entertaining" critters. I was thinking of a couple of other noteworthy Democrats. Speaker of the House Tom Daschle probably doesn't need an attack by the Republicans. All they have to de is let him talk and he does the damage on his own. It is a matter of "give em’ enough rope and he'll hang himself". Then there is the senior senator West Virginian porker and Ku Klux Klansman Robert Bird. This guy is one of the more "entertaining" politicians, especially when he waxes philosophical. Sure, he is certifiably senile, but he is as fun as old Jesse Helms (aka "Foghorn Leghorn"). I don't know exactly why the Republicans don't respond to attacks by the Democrats. One of the rare occasions when I tuned into radio commentator Rush Limbaugh he did state that Democrats view politics as war and that any strategy regardless of ethics and legality was fair. Perhaps that is the difference in how the two major parties view modern politics. However, as I am neither Republican or Democrat I find the whole debate rather amusing. It is interesting that the Republicans have so much potential ammo and yet refuse to use it or are simply inept at the "art of war". With midterm elections on the horizon, they had better start using this ammo or else start to pull some rabbits out of a lot of hats if they wish to win back a majority in the senate. I too am surprised that they have not used their leverage this year. In fact some Republicans even appear completely timid. Then there are the Democrats that wear the Republican title (such as John McCain) who undermine the party's efforts much of the time. It is quite interesting. That said, I also find it quite interesting that the Democrats should be so vulnerable after several years of a corrupt and morally and ethically deficit Clinton administration, are able to carry on an attack with any degree of success. Maybe morality and ethics of the majority of people in a given region is by the people they elect to public office - and that is what is scary. "Interesting Times"
- Black Blade
YGM
(7/28/02; 21:09:21MT - usagold.com msg#: 81732)
Canuck
Gold Wars...by Ferdinand Lips
still waiting on my copy...YGM.
YGM
(7/28/02; 21:07:25MT - usagold.com msg#: 81731)
A Comment of FOA's...
I've Never Forgotten and Noone Should.....
'roughly' remembered:.....
"That the explosive launching of Gold would come from a direction and at a time that one would least expect."
I firmly believe that and to me that means even now in the midst of the current attack on Gold we could see a reversal that would literally shock the investment world....48 hrs could put Gold very quickly above the $400.00 mark and the subsequent rush would make it's purchase almost unattainable for the little guy. Who can say that even this coming week is not that time. Well I've got a litlle extra $$ and I sure as hell am not taking a chance waiting on $275. POG to purchase more....FWIW....YGM
Canuck
(7/28/02; 21:01:17MT - usagold.com msg#: 81730)
@ Cavan Man
"Gold Wars" is a book? By?
YGM
(7/28/02; 20:52:24MT - usagold.com msg#: 81729)
Gold "MAY" See $275-$285 Again.....
A week ago I'd have dissented with anyone who said that.....
But after seeing for the 100th time the strength and ability of the "Manipulators" I must be realistic and face facts....So as I adopt a revised attitude for POG over the next "Short" while I now will look to the positive side...
-Did I have any need to sell any Gold in the near term?..NO!
-Have I lost my perspective for Gold's future..NO!
-Will the Gold Market will become a long term death..NO!
-Will the JPM's & the Goldman Sachs get their just due..YES!
-Will Gold rebound with wilder swings to upside than down..YES! (past history can attest to that)
-Have the Cabal given us yet another 'CHEAP' buying opportunity..YES!
-Should I accumulate more Yellow metal..YES! YES! YES!
Time has long been on the side of the Cabal but I fear as others that they're running out of time and so the days of cheap Gold may be numbered, contrary to the current image of the Gold Market....The next 3-4 months will be very volatile and I plan to stay totally foscused on the bigger picture.....YGM.
"GO GATA, GO GOLD & GO PHYSICAL"
Cavan Man
(7/28/02; 20:50:58MT - usagold.com msg#: 81728)
Canuck
I asked Reg Howe once what could possibly break the stranglehold on the gold market. He said, "massive buying". I say, we're almost just as likely to experience "massive selling" instead. Until this once new and improved version of the London Gold Pool is broken up you'll never be satisfied with your investment in AU--never.
Cavan Man
(7/28/02; 20:46:10MT - usagold.com msg#: 81727)
Canuck & USAGOLD
That quote from our friend was spoken in the context of him being asked which way the gold market was going and when. He quickly disclaimed any ability to forecast the markets and said anyone who thought he knew when, where and how gold would rise should, in his words, "run away (from me)".
Look at all the volatility in the gold market the last 90 days or so. Obviously, something is cookin'. If you're looking at the gold market today and thinking you are looking at reality, I think you're looking in the rear view mirror instead.
USAGOLD
(7/28/02; 20:44:34MT - usagold.com msg#: 81726)
Black Blade. . .
I just realized that I should have added something to the Teapot Dome post. I'll repost with the additions:
"Per you last post. Agreed. I heard another interesting quote tonight: "History does not necesarily repeat; but it rhymes." What's interesting about the Rubin situation is that it is the Democrats plowing ahead on the scandals issue
and Rubin is one of theirs. Bush strategists have to be kicking themselves up and down Pennsylvania Avenue having thus far blown this issue. We advised them to take it on straightforward inauguration day, if you remember.
. . . .As I recall you made more than one post alluding to the possibilities what now seems an enternity ago. . . The Republicans have thus far blown it. THIS COULD HAVE BEEN THEIR ISSUE AND THE MID-TERMS WOULD HAVE BEEN THEIR ELECTION. AS IT IS, THE DEMOCRATS ARE LITERALLY TURNING THE TABLES ON THEM."
Black Blade
(7/28/02; 20:42:26MT - usagold.com msg#: 81725)
Re: cyberbat
I wouldn't worry about being runoff. The forum is for debate and discussion (within the rule of course). If you think that the POG will tank to $270 an ounce then that's fine. I know several others believe that the POG will retest $250 an ounce. However, the only reason that the POG has fallen as it recently has is due to the apparent need to sell all liquid assets because of a short squeeze in liquid assets. At least that is what information that I have been able to extract from several sources. This is not typical market action just as Chris Powell's post describes. It has caught many people off guard as the equities markets suffer, the US dollar remains relatively weak, geopolitical tensions remain high, debt from all areas increasing to record highs, higher demand, reduction of supply, etc. Still, I concede that the POG could retrace to lower levels; however, it will not be due to natural market forces if it does. That would require a firm belief that the shorts have the stronger hand. That strength is questionable, as the demand for the physical metal remains quite strong with current demand exceeding current supply. Anyway, I see no need to be concerned with expulsion for a contrary view. Hell. I have mixed it up with several posters in the past over divergent viewpoints – but then that's what we are here for – right? Cheers!
- Black Blade
USAGOLD
(7/28/02; 20:38:26MT - usagold.com msg#: 81724)
Waverider. . . .
Thanks for the reference. I've bookmarked it. The statistics run only through March, 2002, but I think we are going to find that the government has blown the lid off the national debt and with it the %-age held by the Fed. I did see a photograph one time of a single straw driven by the force of tornado into a two by four. I do not think that Japanese dollar demand aimed at the destruction of its own currency is an equivalency. Logic dictates that the Fed has stepped in, I think we'll find, and stepped in big time, but it would take a force equal to that of a straw being driven into a two by four to counter-balance the money-printing at the Fed over the last 6 months. And what's driving this unprecedented debasement? What Sierra Madre calls "a perpetual war" and the liquidity problems on Wall Street. And it doesn't end here.
Thanks for being here, Waverider -- a pillar of objectivity for us all.
Cavan Man. . .Thanks for the kind comment earlier today (yesterday?) on the forum. Who needs CNBC when you can get it all here, whenever you feel you need it? I though your reposting of the FOA comment as important a post as we've had today. In that it describes the kind of situation in which find ourselves. Either way, the paper market is going to disintegrate. That's why we keep telling people to have a good store of the physical before you play the paper game -- stocks, commodities or options.
Canuck
(7/28/02; 20:37:11MT - usagold.com msg#: 81723)
@ Cavan Man
There are a couple things I know for sure and there are umpteen thousand that I speculate about.
I speculate in gold. I have probably read a couple hundred books about investing and there is a common theme, nothing is guaranteed. There seems to be a common theme though, if one can anticipate the world's needs some 3-5 years out, one can capitalize on that.
If one had the vision to see the internet craze (build-up) in '96/'97 one could have rode the wave. Imagine getting in in at that time and having the 'where-with-all' to get out in '99/'00 before the storm. I read a newspaper article in late '99/ early /00 about 'internet use saturation'.
I wish for a moment that I could step outside of my body and kick my ass for an hour or two.
So........where are we.
Yes, the hangovers bubbles exist, some huge. Where will the fallout occur? Where will money flow? What will be the 'money-magnet' over the next couple years? Real-estate has had enormus gains in the last 3-5 years. Where was I? I had my finger up my butt, my mind in neutral and the engine stalling. Missed the boat a second time.
Several real estate agents have told me in the last couple years that when money burns it seeks safety, duh! Sierra Madre's post earlier is CLASSIC definition of gold BULL.
Here's a couple things I know now. Money will always chase highest ROI. Money in trouble will seek safety.
Here's what I see (short-term). The dollar is rising again, the famed global recovery is now not certain. It was assumed that Europe or Asia would pick up the slack in the global economic recovery and thus the weakening dollar. The dollar did slump, it did come off of it's highs but all of a sudden, and I mean ALL OF A SUDDEN, it has been realized that the economic slump will continue world-wide. The safety is still in the dollar, thus the rise in it and the free-fall of gold and gold shares.
The intermediate view?
The US has to get by the scandals, the overstatements, the lies. Let's be frank, the US has to get by the BULLSHIT. The US has to re-state it's (the country's earings) in a few days, followed by some 1000 corporations in a couple weeks and then we will see how the planet reacts. If everything has been anticipated correctly by the SM's nothing happens. So we go back to global economic activity, if the US is still the 'best bet in town' the dollar resumes the 'safety net'. If however, we get surprises and the US is skating perhaps the world will RESUME the 'dollar demise'.
"Feel lucky punk!" Place your bets.
So, Einsteins that we are, is JPM in trouble or is it not. S& P said it's 'devirative' portfolio was okay. They were downgraded on lower earnings not because it's going to flash and burn. So, at the end of the day is JPM fading or folding, not making great earnings or on fire?
So......is gold the 3-5 year play?
Gold will rise on one or both of two different counts, the dollar dies or it rises on its own merits. Gold, is it money, it is commodity? Gold the commodity died this week due to anticipated economic slumping, I think that's crystal clear. Gold the money awaits further news.
Long-term?
The planet is in trouble. Anyone not acquiring physical for 10-50 years out is brain-dead. I won't even qualify that outrageous statement.
Canuck.
ax
(7/28/02; 20:34:47MT - usagold.com msg#: 81722)
Do Lower Gold Share Prices Present a Buying Opportunity?
7-28-02
Just as some stock market analysts state that the low
regular stock prices are a buying opportunity, it seems
that the same reasoning could apply to gold shares.
This past week there was a considerable percentage drop in
prices across the board in gold stocks.
As prices dropped, the dividend yields of the various stocks
rose in inverse proportion giving some indication of the
magnitude of the drop.
Since gold share prices are highly sensitive to the price
of gold all investors in these shares must have confidence
that the price of gold will rise again. No matter how
high these dividend yields go or how low the share prices
drop, there is no guarantee that they are a buying
opportunity at this time unless the price of gold begins
to rise again both in the near and long term.
The following repost of friday's dividend yields gives
an indication of how the gold share market has readjusted:
ax (7/28/02; 12:56:06MT - usagold.com msg#: 81678)
DIVIDEND YIELDS SHARPEN UP FOR MAJOR GOLD STOCKS
7-28-02
Because of the sudden plunge in the price of gold and the
price gold stocks this week, the dividend yields for
major gold producers have increased.
DIVIDEND YIELDS FOR MAJOR GOLD PRODUCERS IN ALPH.
ORDER
AS OF 7-26-02:
GOLD STOCK //// DIVIDEND YIELD %
American Barrick /////// 1.50 % (AOL Quote)
Anglo Gold /////// 4.34 % (Sharenet)
Gold Fields ////// 1.28% (Sharenet)
Harmony ////// 1.32 % (Sharenet)
Newmont ////// .50 % (Aol Quote)
Placer Dome ////// 1.20 % (Aol Quote)
USAGOLD
(7/28/02; 20:15:33MT - usagold.com msg#: 81721)
Black Blade. . .with reference to Teapot Dome:
Per you last post. Agreed. I heard another interesting quote tonight: "History does not necesarily repeat; but it rhymes." What's interesting about the Rubin situation is that it is the Democrats plowing ahead on the scandals issue and Rubin is one of theirs. Bush strategists have to be kicking themselves up and down Pennsylvania Avenue having thus far blown this issue. We advised them to take it on straightforward inauguration day, if you remember. . . . .As I recall you made more than one post alluding to the possibilities what now seems an enternity ago. . . The Republicans have thus far blown it.
Waverider
(7/28/02; 20:15:08MT - usagold.com msg#: 81720)
USAGOLD
http://www.hussman.com/hussman/html/datapage.htm
Michael,
This is a good link to economic data where you'll find the Total Federal Debt, Federal Debt held by the Federal Reserve, and Federal Debt held by Foreign Investors. Interesting that data for the Federal Debt held by Foreign Investors stops at 1998, when it's around 23%. Hope that helps some. Cheers,
Waverider
cyberbat
(7/28/02; 20:13:26MT - usagold.com msg#: 81719)
@ downunder
I agree that we have a bought out media; Peter Jennings being one of the worst offenders, but that is on T.V., not talk radio. One small snippit, I have stated in this forum that the price of gold is being so manipulated that we will see $270.00 gold this year. So far, they haven't run me off yet.
Good to know that you still have a right to bear weapons there. One small problem I see though, is if it is registered, they now know where to go to get it. Mine are not registered and are perfectly legal.
With that thought in mind, let me give you a quote with respect to the regeistering of guns - "This year will go down in history. For the first time, a civilized nation has full gun registration. Our streets will be safer, our police more effecient, and the world will follow our lead in to the future." - Adolf Hitler 1935
Black Blade
(7/28/02; 20:09:54MT - usagold.com msg#: 81718)
Qwest says it expects to restate earnings from 1999 to 2001
http://biz.yahoo.com/ap/020728/us_qwest_3.html
Snippit:
DENVER (AP) -- Qwest Communications International Inc. said it expects to restate its earnings for 1999 to 2001 because of accounting errors related to optical capacity and equipment sales, and telephone services. "Most of these things are going to deal with timing," Qwest's chief financial officer, Oren Shaffer, said in an interview with The Associated Press Sunday night. "Should this have been in this period or in another period."
Black Blade: As we approach the August 14th deadline, it appears that the desperate scramble has begun. It looks like Qwest is leading the charge. Boy am I glad I sold this turkey.
Chris Powell
(7/28/02; 20:01:14MT - usagold.com msg#: 81717)
Full text of report citing Morgan Chase's desperation with gold
Since USAGold considers the article
below especially important, I'll post
the whole thing here and spare people
the distraction of the Internet link
and the trip outside the USAGold site.
----------------------
9:11p ET Sunday, July 27, 2002
Dear Friend of GATA and Gold:
Our friends at Au Capital in Bethesda,
Maryland, have graciously allowed us to share
with you their latest report to their
investors because it includes insights that
tend to confirm what you've been hearing from
GATA Chairman Bill Murphy and GATA's brain
trust. The Au Capital report may be most
notable for indicating that the spotlight in
the gold market is shining increasingly on
J.P. Morgan Chase, that Morgan Chase's behavior
in the market has become brazen, and that it is
being noticed.
Of course the more Morgan Chase's behavior
is noticed, the more difficulty the firm may
encounter in its manipulation of the gold
market.
The Au Capital report is appended here, minus a
chart that won't reproduce well in e-mail.
CHRIS POWELL, Secretary/Treasurer Gold Anti-
Trust Action Committee Inc.
* * *
Au Capital, LP
Bethesda, Maryland
July 27, 2002
To Our Limited Partners:
Our capital gained 27.1 percent in the second
quarter and 89.3 percent in the first half.
We beat our benchmarks rather dramatically,
even as we maintained a cash balance on the
order of 20 percent of capital. Our quarterly
and longer-term returns to June 30, 2002, are
shown below, and your individual account
statement and partnership financial
statements for the latest periods are
enclosed.
These longer-term data demonstrate three
important points.
First, you already know that we have
outperformed our peers and benchmarks
steadily and substantially over the years,
earning more on the uplegs and losing less on
the downside, but you may not know how
substantial the cumulative effect has come to
be. A $10,000 investment in Au Capital grew
to $22,393 at a rate of 8.9 percent
compounded annually from inception at the
start of 1993 to the middle of 2002. A
comparable investment in the gold-oriented
funds tracked by Lipper grew to just $13,048
at a 2.8 percent compound annual rate.
Second, we virtually matched the longer-term
return of the S&P 500 index of the largest
stocks in a period that included the greatest
equity price inflation in history and what we
believe is only the first phase of its
collapse. The difference is just $324 on a
$10,000 investment over nearly 10 years. (The
Au Capital return is net to limited partners,
of course, while the S&P index excludes
management costs, commissions, and dividends.)
Third, since the price of gold bullion
declined slightly in the period and the
leading index of gold mining shares was
unchanged, our returns clearly did not
benefit from any general revaluation of our
sector. We simply maintained our long-term
call on the price of gold as a hedge against
systemic risk to the values of financial
assets, and made some money for our trouble.
The objective of Au Capital was to maintain
the hedge at little or no cost, and we more
than met it.
Volatility within the period was substantial,
occasionally severe; our performance, as
expected, generally leaned against that of
the broader markets for financial assets,
especially in the mini-crises during which
markets actively considered systemic risk.
Volatility has increased again of late,
beginning with a $10 decline in bullion
prices on the last trading day of June. Our
portfolio has declined about 20 percent in
July to date. That single-day crack in bullion
prices has recurred twice since, bringing the
spot price back to $300 per ounce currently
and threatening to retest much of the recent
rise from the $270s.
As we wrote last time, shares had grown rich
relative to bullion, discounting $350 per
ounce, so we have been expecting a
significant decline in share prices. It has
surprised us, however, to see the metal price
itself decline severely as the broader markets
edged toward panic. Metal prices lately had
risen as stock prices weakened; with equity
markets threatening to crack during much of
July, we would have expected stronger reports
from gold bullion.
Further, the bullion-selling pattern looks in
many ways like market intervention by a large,
unidentified seller, and it is difficult to
imagine why anyone who was motivated to
accumulate a large, long gold position in the
first place would be choosing to sell
aggressively under the recently prevailing
circumstances.
The first "intervention" came in the last hours
of the last trading day of June, which was
mark-to-market day for the official reports of
banks and others with large gold derivative
positions. This feeds long-standing suspicions
that J.P. Morgan Chase and/or other bullion
bankers are massively short gold, as we have
explained previously, and that they must, and
are trying to, break the gold market to avoid
unmanageably large losses.
We remain agnostic as to cause, but agree
that the selling pattern is truly strange.
In general, although patience and a tolerance
for volatility will continue to be required,
the underlying strength in the fundamentals
of gold and the fragility of the financial
system as a whole are both conducive to our
further success over time.
With every good wish,
Hans H. Kahn and Daniel Tessler
Au Capital, L.P.
4938 Hampden Lane
Suite 337
Bethesda, Maryland 20814
301-469-8080
digitaldaniel@msn.com
Chris Powell
(7/28/02; 19:55:20MT - usagold.com msg#: 81716)
Au Capital report notes Morgan Chase's desperation
http://groups.yahoo.com/group/gata/message/1194
Report by Au Capital L.P. echoes GATA's observations
about Morgan Chase's desperate intervention against
the gold price:
http://groups.yahoo.com/group/gata/message/1194
To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:
gata-subscribe@yahoogroups.com
DOWNUNDER
(7/28/02; 19:54:45MT - usagold.com msg#: 81715)
AT CYBER BAT - - RE MY POST 664 to Horatio
cyberbat (7/28/02; 11:04:05MT - usagold.com msg#: 81671)
@ downunder
With respect to your last post, you need to understand one thing. People can express their opinions on this page and if that affects the shares of SA gold mines so be it. I don't know if you have freedoom of expression where you come from or not but I'll be D---- if I would take anything for granted or otherwise from 2 countries like Austrailia and Canada that were so bold as to pass laws seperating their firearms from innocent people. We in America are just about toast as far as morals are concerned, but we still have our freedom of expression and a firearm by our bedside.
Cyberbat
----------------------------------------------------------- I don't see how a "reasonable" person could interpret what I had to say as denying anyone the right to free speech.What
I did point out was that the issue of S.African Mining Laws had been discussed in detail over a month ago.I feel there should be some factual basis for comments that affect others
--- especially where investments are concerned.Try posting on this site that gold investments suck & that the POG has only one way to go & thats down! There would rightly be many screams of outrage as demands were made to back up the statement with some facts! --- thats the point that I hope you're "not as blind as - - " to see. :)
Your comments about guns was a bit obtuse but again facts should be checked or questions asked. For the record I have a 30.30 at home so I'm not unarmed! It's registered & while the gun laws here do suck it is possible to be armed.As far as freedom of expression goes apparently your mainstream papers won't print it so what to do? Long live free speech.
Black Blade
(7/28/02; 19:51:55MT - usagold.com msg#: 81714)
Re: USAGOLD – The corruption of Robert Rubin or the Ghosts of Teapot Dome?
Fear? Perhaps so. It could be a combination of both greed and fear. Though I liken former Treasury Secretary Robert Rubin to Sen. Albert B. Fall of New Mexico. In 1921, Fall became Harding's Secretary of the Interior and quickly moved to open the naval oil reserves in Elk Hills, California and Teapot Dome near Casper, Wyoming to private exploitation. Though he attempted to keep his actions secret he could not, and the Senate authorized an investigation by the committee on public lands. The Senate committee held extended hearings and soon set in motion a whole chain of occurrences. Secretary Fall, they found, had convinced Secretary of the Navy Edwin Denby and others that the administration of the reserves should be turned over to him. Fall had then leased Teapot Dome to Harry F. Sinclair's Mammoth Oil Company and the rich Elk Hills reserve in California to Edward L. Doheny's Pan-American Petroleum and Transport Company, meanwhile receiving from these oilmen gifts and "loans" amounting to some $400,000. Albert Fall was found guilty of bribery in 1929. He was fined $100,000 and sentenced to one year in prison.
In a similar vein, I see Robert Rubin's actions as equally egregious as that of Albert Fall and no less criminal. He may have given special access to Citigroup to planned government actions in areas that would affect the economy and therefore benefit Citigroup with foreknowledge. Rubin's payoff was to be rewarded with at the very least the top job at Citigroup. Now we find that he is using undue influence to continue to affect the markets, in this case the investigations into Enron and ultimately the roles of Citigroup and JP Morgan Chase in various unethical and quite possibly illegal activities. Of course due to the unwritten rules of executive privilege commonly held for former and current government officials we are not likely to see legal action taken against Robert Rubin as occurred with Albert Fall. That is unless there is a substantial amount of public outrage – that is unlikely as Americans have become immune to government corruption since the days of the Teapot Dome Scandal.
Anyway, that is my take on the whole mess.
- Black Blade
USAGOLD
(7/28/02; 19:50:39MT - usagold.com msg#: 81713)
A quote from Lenny Bruce. . . .
Speaking of fear and desperation. . . .
Some of you will remember the brilliant and troubled coffee-house satiricist, Lenny Bruce:
"My comedy is based upon desperation, destruction and despair. Without those things I'd be standing in the bread line right behind J. Edgar Hoover.
Also, just got an important artice forwarded from fellow goldmeister, Chris Powell:
"The first "intervention" came in the last hours
of the last trading day of June, which was
mark-to-market day for the official reports of
banks and others with large gold derivative
positions. This feeds long-standing suspicions
that J.P. Morgan Chase and/or other bullion
bankers are massively short gold, as we have
explained previously, and that they must, and
are trying to, break the gold market to avoid
unmanageably large losses.
We remain agnostic as to cause, but agree
that the selling pattern is truly strange."
________
I'll let Chris fill you in, if he so wishes. The analysis simply blends with my own. . . . . the beat goes on. . ..
Cavan Man
(7/28/02; 19:50:00MT - usagold.com msg#: 81712)
Canuck
That statement comes from FOA and it is a direct quote. I have never forgotten it. What comes after the failure is freegold according to that "essayist". Frankly, I don't really know what to make of it. I only know that at this point in the cycle of life, both economic and social as well as political, I'd rather own physical gold than any other investment. Each day in fact I worry about not having enough. Read "Gold Wars". It is a roadmap (one of many) to the future. Sorry to hear about your loss of conviction.
USAGOLD
(7/28/02; 19:38:33MT - usagold.com msg#: 81711)
All. . .
Let me rephrase that last post, what the 88 year old Wall Streeter said was that this stock market debacle would be far worse than 1929. . .I didn't quote him properly the first time around.
USAGOLD
(7/28/02; 19:34:02MT - usagold.com msg#: 81710)
All . . .
I hope my last post doesn't encourage a bunch of Biblical references, etc. . . . .In this case, I thought the allusion appropriate. The allegory, I thought, fit the situation. I really don't think greed is the prime motivator at this point in corporate America and on Wall Street. I think its Fear. And Fear, as I think we all understand, is a much more dangerous and primal emotion than greed. Expect anything. These will not be normal times. I saw an 88 year old veteran Wall Streeter interviewed on CBS News tonight and he said that this would be the worst stock market since the 1930s, but that it would not bring down the economy -- like 1929 did. I agree with that. Fiat money economies tend toward inflationary destruction; gold-based economies despression. We'll see hyper-inflation in the world economy first. . . .the Depression will come later. Fear will force the Fed to print money like there's no tomorrow, and nothing or no one will prevent it. In fact, when you consider the amount of debt monetization in progress, it is apparent we've already waded into the stream. . . . .Of the $400 billion added to the national debt over the past year, how much was bought by foreigners, how much by the American public, and how much by the Fed????
If anyone has the numbers, I'd like to see them.
Canuck
(7/28/02; 19:32:56MT - usagold.com msg#: 81709)
@ Sierra Madre , All; msg 81679
For anyone missing Mr. Madre's post today this is a must read. It explains ALL the reasons to be a gold bull; excellent review.
Mr. Madre,
In your opinion, why did gold suffer it's losses this week?
What do you see short, intermediate and long term for gold and gold stocks?
TIA,
Canuck.
mikal
(7/28/02; 19:29:34MT - usagold.com msg#: 81708)
@Canuck
Hang in there! Like Cavan Man qouted FOA:" The current gold market ...will fail going straight up or straight down." Which is to say, in the very unlikely event she pierces $290US, she won't stay there for long enough to register with the sheeple. The paper game folds. Better for them to keep it above $300, which is most probable short-term!
USAGOLD
(7/28/02; 19:18:20MT - usagold.com msg#: 81707)
You know what, Black Blade. . . .All . . .
I do not think it is succumbing to Greed. . . It was succumbing to Fear. . . . .Fear that the trading schemes would unwind. Now its fear they'll be discovered. In the story of Genesis, when Adam and Eve are found out, the most gut-wrenching discovery when their "eyes were opened" (recognition) was that they were naked. . . . . . A Sunday thought. . . .And why is it again that Rubin made that phone call??
Canuck
(7/28/02; 19:17:12MT - usagold.com msg#: 81706)
@ LeSin
Awesome post.
A matter of perspective isn't it!! Editorials in Canadian newspapers have discussed the need for oil. Some articles are very opinionated indeed.
Difficult to know the truth, yes?
Black Blade
(7/28/02; 19:16:06MT - usagold.com msg#: 81705)
Worsening Profit Outlook Threatens Gains: U.S. Stocks Outlook
http://quote.bloomberg.com/fgcgi.cgi?mnu=news&ptitle=Stock%20Market%20World&tp=ad_uknews&T=news_storypage99.ht&ad=world_stocks&s=APUQXVhY.V29yc2Vu
Snippit:
New York, July 28 (Bloomberg) -- Don't count on corporate profit growth to spark further gains in U.S. stocks. While analysts surveyed by Thomson First Call expect earnings for Standard & Poor's 500 Index members to rise 14 percent in the third quarter, the estimate ``keeps getting ratcheted down,'' said Don Ross, chief investment officer at National City Investment Management Co., which oversees $28 billion in Cleveland. ``And we think it's still too high,'' he said.
Black Blade: Exactly! The earnings estimates continue to be revised lower so that the companies can meet or beat the number. Just how far can the bar be lowered and the bogus accounting (ex. Pro Forma, Synthetic Leasing, Operating Earnings, etc.) continue until someone finally says the patient is terminal?
Canuck
(7/28/02; 19:01:33MT - usagold.com msg#: 81704)
@ Cavan Man, All
If gold breaches 300 this week I will post my finale.
Black Blade
(7/28/02; 19:00:10MT - usagold.com msg#: 81703)
Re: Paper Avalanche - GDP Restatements
On July 31st the US restates the GDP data for the last couple of years and it could be a negative surprise according to Morgan-Stanley's Stephen Roach and several others. Some state that it is a rear-veiw look at the economy, however, any serious revisions could mean that the strong economy was nothing but an illusion and that could set up another round of stock market losses. Could be fun! Cheers!
- Black Blade
Canuck
(7/28/02; 18:58:11MT - usagold.com msg#: 81702)
@ Paper
Just in case BB is tied up and I stand to be corrected but re-statement of last 3 years of GDP occurs on July 31st.
Speculation is that it has been overstated. Alot of speculation lately, yes?
Black Blade
(7/28/02; 18:55:22MT - usagold.com msg#: 81701)
Dollar higher against yen in Tokyo
TOKYO (AP) -- The U.S. dollar was trading at 118.84 yen on the Tokyo foreign exchange market at 9 a.m. (0000 GMT) Monday, up 1.47 yen from late Friday.
Black Blade: The US dollar is rocketing much higher tonight against the world's toilet currencies. Unknown yet is how much is due to MOF and BOJ yen selling and USD buying. The Nikkei is charging higher as expected. Japan is nothing more than a factory on a couple of islands assembling trinkets for export. They must have the weaker currency for survival. Looks like a lot of "entertainment" is in store for the US tomorrow.
Canuck
(7/28/02; 18:54:23MT - usagold.com msg#: 81700)
@ Cavan Man
I've been lurking for a few days. Where does your last statement come from? Most interesting.
Worried about being in too deep.
Cavan Man
(7/28/02; 18:44:17MT - usagold.com msg#: 81699)
"The current gold market.......
......will fail going straight up or straight down...."
FOA
Paper Avalanche
(7/28/02; 18:43:58MT - usagold.com msg#: 81698)
@ Black Blade
Greetings sir BB! Thank you for your tireless efforts to bring valuable and timely news to this forum (and I really like your comments).
What event will occur on 7/31 that you cited as being another possible trigger to a big implosion in the markets?
Thanks.
Paper Avalanche
misetich
(7/28/02; 18:39:41MT - usagold.com msg#: 81697)
Debt fuels US gas and power bankruptcy fears
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1027694123937&p=1012571727108
Snip:
US and European banks and bondholders lent an estimated $500bn to the crippled US gas and power sector, new research commissioned by the Financial Times reveals. The figure raises fears that a further string of corporate failures in the wake of the Enron scandal would expose lenders to heavy losses.
Dynegy and Williams, which have combined debts of more than $20bn, are among those that could be forced into bankruptcy following the collapse of their energy trading markets and a crisis of investor confidence.
Although the energy trading companies are under the most immediate pressure, the fall in electricity prices is hitting the finances of the entire US gas and power sector which SNL Financial, an independent research firm, estimates had total debts of $450bn at the end of last year.
Karl Miller, who set up Enron's European trading business and is now a consultant to distressed energy companies, claims these figures underestimate the total exposure because of large amounts of undisclosed, off- balance sheet debt.
"Managements continue to hide the ball from the capital markets. Managements have signed off on overly aggressive, fraudulent transactions and they have not been willing to take these big writedowns."
Some industry insiders believe the write-offs faced by banks and bondholders could exceed the losses caused by the collapse of WorldCom and Global Crossing. The two US telecommunications companies filed for bankruptcy with combined debts of $44bn.
"We are past the point of no return on significant levels of debt default in the energy industry, which will dwarf WorldCom and Global Crossing," said Mr Miller. "There is no doubt we will see multiple bankruptcies shortly."
US energy companies borrowed heavily in the late 1990s to take advantage of deregulation, investing in infrastructure and building up trading operations.
The debt of the top eight energy traders soared by 200 per cent to $115bn in the three years to May 2002, according to SNL Financial. Lenders were attracted by the strong earnings growth shown by the companies based on optimistic forecasts of future US power prices.
Following the fall in power prices, the companies - including Calpine, Reliant, Mirant, Aquila, El Paso, Duke and AES - are now struggling to support their borrowings as cash flow dries up and other sources of credit are closed off.
The banks most active in arranging finance to the sector include Citigroup and JP Morgan Chase - both under scrutiny over their role in the funding of Enron - and Bank of America.
It is unclear how much energy company debt these banks have retained and how much they have passed on to other lenders. In the case of failed telecoms companies, much of the debt was sold by banks to other investors.
***************
Lets repeat that again -The banks most active in arranging finance to the sector include Citigroup and JP Morgan Chase
This TRAIL is getting hotter!
Got gold?
Cavan Man
(7/28/02; 18:39:28MT - usagold.com msg#: 81696)
The stronger dollar?
Financial press spin?
For those of us paying close attention; do you remember when the USD index was over 120? In fact, it might have been closer to 122?? Today, it is 106 and change. So, it's up what, 2.0 plus/minus. That's a "stronger dollar"?
Are you paying attention? You'd better (you bet). Currency wars heating up.
Black Blade
(7/28/02; 18:25:37MT - usagold.com msg#: 81695)
How Wall Street could impoverish us all
http://news.independent.co.uk/business/news_analysis/story.jsp?story=319014
Snippit:
Top of the list: the chief executives of nearly a thousand of America's largest public companies are under orders from the Securities and Exchange Commission personally to certify that their financial results are accurate before a 14 August deadline. It is an exercise that is meant to restore investor confidence. It could have the opposite effect. Second, talk has turned to investigating the banks. And, finally, there was that Robert Rubin telephone call.
No one can miss the stench coming from the rot in corporate America. The roster of companies and their executives accused or charged with criminally deceiving investors gets longer by the day. Enron, Tyco, Global Crossing, Martha Stewart and ImClone, AOL Time Warner, and on it goes. The day we discover that even Mr Rubin succumbed to greed would indeed be a telling one. Secretary of the Treasury for Bill Clinton for four years, he has stood as a symbol of sober and erudite correctness. That day has not arrived, quite. But we do know that one day last autumn, Rubin placed a call to Peter Fisher, the Treasury undersecretary, with a disturbing plea. Enron was on the brink of extinction and Rubin asked for help in pressuring the rating agencies from downgrading its stock. There is sense in this, but it is sleazy. Rubin was by then a director of the Citicorp financial conglomerate and Enron was one of its biggest clients.
For Citicorp itself, trouble may be much closer at hand. With JP Morgan Chase, it was accused during hearings on Capitol Hill last week of helping Enron, the failed energy trader, to set up a network of hidden partnerships and misleading cash-flow transactions that directly helped it to conceal its mountain of debt from the markets. History tells us that when the banks stumble, the whole system fractures. The investigation into their role in the Enron debacle will take months. "It's a pretty sad story, in my judgement, but we haven't heard the end of it," noted the investigating committee chairman, Senator Carl Levin. The SEC's insistence that chief executives certify their financial statements by the middle of next month is part of an effort that is under way in all quarters – on Capitol Hill, in the White House (a little belatedly) and even among some parts of business itself – to answer public disgust with corporate America and eradicate the sickness.
Black Blade: The July 31st deadline should not go unnoticed either. We may find out that the past several years were all a lie as well.
misetich
(7/28/02; 18:08:00MT - usagold.com msg#: 81694)
Why the negative SPIN on gold by Bloomberg News?
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=APUP9wROhR29sZCdz
New York, July 28 (Bloomberg) -- This year's gold rally may finally be over.
...............
Gold's Seven-Month Rally May Be at End After It Plunges on Stronger Dollar
...............
Now, many gold investors agree that the metal is too costly.
``We started putting some of our funds in cash about a week ago, just in case,'' said Jean-Marie Eveillard, who manages $2.5 billion in First Eagle SoGen funds. The funds own shares of Denver-based Newmont Mining Corp., the world's biggest gold producer, and Toronto-based Barrick Gold Corp., the second- largest.
``The market was starting to look cold, and when you invest you have to look at the short-term horizon,'' Eveillard said. ``Gold and the gold stocks were just looking very expensive.''
..............
Weaker Demand
Gold's problems aren't just with speculators.
Demand from jewelers, the biggest users of the metal, fell 3.6 percent last year to 3,006 metric tons, the lowest level since 1996, the London-based Gold Fields Mineral Services said in a report in April. At the same time, mine production grew 0.8 percent to a record 2,604 tons.
``The big picture, as you would expect with higher prices, is not particularly exciting at the moment,'' said Philip Klapwijk, managing director of Gold Fields, a precious-metals research firm in London. ``I would be very surprised if we find out that gold jewelry demand globally was not down in the first half of the year.''
Investors last year sold more gold than they bought to take advantage of a rebound in prices from close to a 22-year low, Gold Fields said.
................
Central Bank Sales
Central banks last year sold a net 504 tons of bullion reserves, up 3.1 percent from 2000 and the most since 1992, the company said. Earnings from the sales were often used to buy interest-bearing government bonds.
``It's only gold,'' said Andy Smith, an analyst at Mitsui & Co. in London. ``The problem for gold is that it needs more speculators to run with the bull market, and it just isn't getting that.''
A sustained rally in gold would also need participation by private investors, traders said. Individuals seeking to protect their money from the damage inflation did to fixed-income securities, such as government bonds, helped send gold above $800 an ounce in 1980.
``Most of the buying we've been seeing is by the professionals, not individuals,'' said Tony Roggina, a gold trader at VIT Trading Inc. in New York. ``You need the public to keep the rally going.''
***********************
Misetich
The "boys and girls" appear to be at it again! Talking up the US economy (O'Neil, Lindsay)-
"planting" negative spin on gold market - (never mention producers buy-backs, increase investment demand from Japan etc in 2002- rather cite GFMS 2001 investment demand stats)
No mention that producers hedging dwindled due to low interest rates!
No mention of the Washington agreement!
No mention that gold production is forecasted on being lower for years to come!
If the US economy is REALLY recovering at 3.5 to 4% as O'Neil is forecasting for the year WHY are Feds interest rates so low?
The CB sales "scam" is getting tiresome- check out the stats-
http://www.gold.org/value/official/Gios/20/GOS_20.pdf
What we do know is:
Stress in financial system - as stock values tumbled
Stress in financial stystem- JP Morgan and Citi
Stress in financial system - Insurers
Stress in financial system - Brazil
Stress in financial system - Argentina
Stress in financial system - Turkey
or is the whole story this one
Indeed, worries about credit quality at some major banks swirled in markets this past week, reaching their apex on Wednesday as investors around the world piled into short-dated Treasuries, drying up liquidity in other fixed income markets.
"It's like walking through a landmine," said Jim Claire, director of fixed-income sales and trading at Evergreen Institutional Investment Management in Charlotte, North Carolina, describing conditions in the corporate bond market.
While few corporate borrowers have the stomach to tap the debt markets, the Treasury is expected to announce on Wednesday it will sell $22 billion of new five-year paper and $15 billion of benchmark 10 year notes the following week, according to Wrightson Associates.
http://www.forbes.com/newswire/2002/07/28/rtr678279.html
The gold VOLCANO is heating up!
Got gold?
Black Blade
(7/28/02; 17:56:01MT - usagold.com msg#: 81693)
'Dr Doom' sees more market pain
http://news.bbc.co.uk/1/hi/business/2154737.stm
Snippit:
Tony Dye - formerly boss of the Philips and Drew Fund management group, has always maintained that the share price euphoria of the late 1990s was simply hot air. In the year 2000 he was driven out of his job because his fund - which avoided most telecoms and tech stocks - performed less well than funds run by rival managers. "These episodes are very important, because they actually change people's behaviour. Financial markets go to levels which are unprecedented and unsustainable," he said. Companies and individuals tend to borrow more, because they believe that the good times are going to roll forever and they will get rich. "From my analysis, the bubble started some time back in 1994-95. It was at that point that the Dow went well beyond its long-term valuations and continued to do so throughout the rest of the '90s", he said. "If the market were today to be back to its long-term average value, it would still have to fall by 20-odd per cent." The market could achieve fair value through ten years of gradual erosion, or it could return to its long-term trend by means of a quicker, but more painful, readjustment.
President Bush has said that those who buy stocks now are likely to be rewarded. "He's maintaining confidence, which is their role - because their role is to try and prevent a sharp stock market decline turning into a complete rout," Mr Dye said. Asked whether a panic could set in, Mr Dye said, "There's always that risk in financial markets because there tends to be trend-adaptive behaviour by the participants - which means that we actually act like animals in herds." So who was to blame for creating this bubble? "You've got to come back to the financial authorities - the Treasury Secretary and the Chairman of the Federal Reserve Board - as being the most responsible," he said. "I think the financial authorities in America - and Greenspan was the foremost among them - made some very serious mistakes." "When the history books are written, Greenspan's reputation will be somewhat less than a maestro."
Black Blade: I think that he's right. Greenspan, Rubin, and O’Neill will go down in history as architects of this disaster so a large degree and sock puppets Clinton and Bush will also pay a price – so much for legacies. Meanwhile Herbert Hoover Jr. is still spouting off about how wonderful the economy is and that stocks are the place to be just like the elder Herbert Hoover did at the start of the Great Depression. I look forward to the "entertainment" that these buffoons can provide as they sail this ship into the rocks..
misetich
(7/28/02; 17:40:04MT - usagold.com msg#: 81692)
High anxiety, no panic over US recovery prospects
http://www.forbes.com/newswire/2002/07/28/rtr678195.html
Snip:
Treasury Secretary Paul O'Neill, who struck the theme by saying on Thursday there was a "disconnect" between a fundamentally healthy economy and gyrating stock prices and was set to blitz weekend talk shows with assurances a mild expansion was intact.
"The reality is that our economy remains solid and our recovery is well under way," O'Neill told the National Association of Manufacturers. His words were echoed on Friday by Federal Reserve Governor Mark Olson in a speech to a service club in Minnesota: "Its clear we're in a recovery period. It is clear that it will be slow."
..................
"We believe that the stock market decline is hurting business and consumer confidence, increasing investors' anxiety about corporate leverage, and will lead to a slowdown in consumer spending as households react by raising their savings rates," Goldman Sachs advised its clients on Friday.
...............
In fact, economist John Youngdahl cautioned, there was a danger "of losing the forward momentum gained from the inventory swing and fiscal policy stimulus" that helped boost growth at the beginning of the year.
..................
"The economy is more at risk than it was a month ago but we expect the recovery will continue because of a number of positive dynamics," said economist Patrick Fearon of A.G. Edwards and Sons Inc. in St. Louis, Mo. "Principally ... incomes are rising faster than inflation because of strong productivity gains, so consumers have more purchasing power and all this is being super-charged by irresistibly low interest rates."
Cheaper credit has made it possible for Americans to bolster their finances by refinancing homes at lower mortgage rates and to carry debt for less cost. At the same time, other assets like real estate and homes have kept appreciating.
"For perspective, household real estate assets probably appreciated about $600 billion in the first half of the year, providing at least a modest counterweight to the $3.9 trillion of equity wealth destroyed," economist James Glassman of J.P. Morgan Securities Inc. calculated.
That helps to make the Bush administration's case that there are grounds for moving forward to put corporate scandals behind and focus on the future -- a position the administration badly wants to advance ahead of November elections for fear it could be painted as mishandling the economy.
****************
Misetich
Guess everything adds up for O'Neil and the Bush administration
You wipe out $3.9 trillions of equity wealth and you increase 600 billions in real estate perceived wealth and you get the sound base for a FURTHER ECONOMIC RECOVERY.
Would you want O'Neil as your Treasurer?
Got gold?
Carl H
(7/28/02; 17:38:14MT - usagold.com msg#: 81691)
@Sierra Madre: Post 81679
Welcome Back.
Bravo. Well Said.
mikal
(7/28/02; 17:00:02MT - usagold.com msg#: 81690)
@LeSin
Thanks for that great piece! It's good to see it's in the Toronto Sun. LOL!
LeSin
(7/28/02; 16:19:24MT - usagold.com msg#: 81689)
An Iraqi & M/East Perspective
http://www.canoe.ca/Columnists/margolis_jul21.html
July 21, 2002
Saddam fights back!
How the Iraqi leader might reply to President George Bush's sabre-rattling
By ERIC MARGOLIS -- Contributing Foreign Editor
American President George Bush has been demanding a "regime change" in "evil" Iraq, which he plans to invade. Saddam Hussein's possible reply, from Baghdad:
"My fellow Iraqis, it's time for a 'regime change' in the United States. President George W. Bush must go!
"Bush is a danger to Americans, and to the whole globe. America has become a 'rogue state' that threatens world peace and stability. Oh, my brothers, America is the nexus of evil!
"I have just ordered our intelligence services to help Americans overthrow Bush and his evil clique. We are giving military training and cash to the Hells Angels, Louis Farrakhan's Nation of Islam, and the Michigan Militia. I've ordered our fearless agents to kidnap Bush and bring him to Baghdad. If he resists, they are authorized to shoot - in 'self-defense.'
"Defectors from America report the U.S. is the grandfather of weapons of mass destruction: over 8,000 nuclear weapons, 31,200 tons of chemical weapons, and enough biological warfare agents such as anthrax, botulism, plague, Q-fever, and rap music to wipe out the globe twice. The U.S. is the only nation to actually have used atomic weapons, killing 240,000 civilians, and it is thinking about using them again.
"Israel, which keeps threatening nuclear attacks on us and our Iranian brothers, developed its secret nuclear and biowarfare programs with covert American aid. So did Britain, France and India. America is a major proliferator of nuclear technology. Back in the 1980s, when we were still America's ally, the U.S. supplied us with the very chemical weapons and germ warfare stocks it howls about today.
"Speaking of biowarfare, we all know how in 1991 the U.S. destroyed our dams, reservoirs, water pumping stations, filtration plants and sewage systems in the Mother of all Battles. After the war, the U.S. refused to allow us to import materials to repair our destroyed sanitary systems - even banning chlorine to purify our water. The ensuing epidemics killed a million of our children.
"The U.S. refuses to allow inspection of its nuclear, chemical, or biological warfare arsenals, or to destroy the nuclear warheads it now possesses. Without inspection and destruction of America's weapons of mass destruction, the world cannot be safe. Who knows, the U.S. might strike at any nation that displeases it!
"Just last week, U.S. Secretary of State Colin Powell warned Washington 'reserves the right' to overthrow all regimes it considers a danger. The U.S. is developing new 'mini-nukes' called 'Arab busters' for use against Third World nations. Who's next?
"As for terrorism, we suspect the United States had links to Osama bin Laden and his terrorists. After all, didn't the U.S. finance most of the militant Islamic groups? The U.S. has sponsored terrorist groups here in Iraq and in Iran, Libya, Cuba, El Salvador, Congo, Nicaragua, Angola, Sudan and Indonesia. The U.S. tried to assassinate Egypt's president, Gamal Abdel Nasser, Iran's Islamic leadership, that crazy Khadafy in Libya, Gen. Adid in Somalia and, last, but not least, my humble self. Our prisons are full of U.S.-sponsored terrorists who sought to overthrow our glorious revolutionary regime and murder its heroic leaders.
"Now, a crazy cabal of petro-imperialists, Israeli agents of influence, fanatical Christian fundamentalists, Pentagon warmongers and Bush's pit bull poodle, Tony Blair, are plotting to invade beautiful Iraq. Then they plan to take their anti-Muslim crusade to Iran, Syria, Yemen, Libya, Lebanon - and any other nations that refuse to kiss America's feet. Bush's Texas imperialists are determined to turn the world into a U.S. version of the British Empire.
"The people in the Pentagon pulling Bush's strings know our beloved Iraq has the Mideast's second largest oil reserves after Saudi Arabia - perhaps the biggest, only Allah knows. Oil will soon be in very short supply worldwide. Even George Bush Jr., of Texas baseball, can understand this. America wants our oil. Watch out, Canada - your water may be next.
"I'm also deeply concerned about the welfare of America's suffering people. Their stock markets, accountant firms, brokerage houses and investment banks were run by super-crooks who make Ali Baba's 40 thieves look like simple melon merchants. Some of Bush's pals defrauded America's workers of their life savings, stole their pensions, and may yet cause a world financial crisis. In Iraq, such criminals would be shot and their families billed for the bullets.
'The Mother of all Lies'
"Now, after wrecking America's economy, the war party in Washington is whipping up hysteria by fabricating tales claiming we intend to attack America with all sorts of nefarious weapons. This is the Mother of all Lies. We were proctologically inspected for seven years by an army of UN 'experts,' many of whom turned out to be spies. All - well, most, anyway - of our chemicals and germs supplied by the U.S. and Britain are either destroyed or have become inert.
"President Bush is up to his ears in business scandals. November elections are approaching. Remember that naughty girl, Monica Lewinsky, who fired Bill Clinton's Scud missile? Clinton diverted attention by bombing us. The Bush White House is trying the same old trick, but on a grand scale.
"My heroic, democratic and peace-loving Iraqi brothers - it's time for a 'regime change' in Washington!"
--------------------------------------------------------------------------------
mikal
(7/28/02; 16:09:50MT - usagold.com msg#: 81688)
Military stance on Iraq offers hope for peaceful resolution
http://www.msnbc.com/news/786544.asp?pne=msntv
Iraqi President Saddam Hussein marked the 34th anniversary of his seizure of power on July 17.
Some military brass favor no Iraq attack
Containment seen as less risky
By Thomas E. Ricks
THE WASHINGTON POST
WASHINGTON, July 28 — Despite President Bush's repeated bellicose statements about Iraq, many senior U.S. military officers contend that President Saddam Hussein poses no immediate threat and that the United States should continue its policy of containment rather than invade Iraq to force a change of leadership in Baghdad.
..... The military's support of containment, and its concern about the possible negative consequences of attacking Iraq, are shared by senior officials at the State Department and the CIA, according to people familiar with interagency discussions.
.....Officials said the officers contend that continuing a containment policy is preferable to invading an Iraq that possesses an arsenal of biological and chemical weapons. Another concern is that Iraq could split up under a U.S. attack, potentially leading to chaos and the creation of new anti-American regimes and terrorist sanctuaries in the region.
Active-duty members of the military have not publicly questioned the direction of Bush's Iraq policy, but in private some are very doubtful about it.
"In my assessment, the whole containment-and-sanctions policy has worked better than it's given credit for," said one defense official sympathetic to the military argument. He noted that since the Gulf War ended in 1991, Hussein has obtained some spare military parts but has been unable to import new tanks, aircraft or missiles.
..... Retired officers and experts who stay in touch with the top brass, and are free to say what those on active duty cannot, are more outspoken in supporting the containment policy and questioning the administration's apparent determination to abandon it.
"I'd argue that containment is certainly a better approach than either marching on Baghdad or destabilizing the Iraqi government by killing Saddam," said retired Col. Richard Dunn III, a former Army strategist. "It only has to work until something happens to him — he's either killed or dies."
.....To fulfill U.S. promises to Turkey and Arab states that Iraq would remain whole, a defense official said, "I think it is almost a certainty that we'd wind up doing a campaign against the Kurds and Shiites." That would represent a striking reversal of administration policy of supporting the Kurds against Baghdad.
Also, officials worry, a large U.S. presence might antagonize Arab public opinion as well as impose heavy financial and human costs on the U.S. military, which already feels stretched by the war on terrorism and peacekeeping commitments in the Balkans.
organizations, he said.....
...click link for more
mikal
(7/28/02; 15:03:24MT - usagold.com msg#: 81687)
As the dollar goes, so goes the FED?
We know there are mounting concerns about the consequences of a FED rate hike OR reduction. The effects of a HIKE are variously either feared or championed: 1) reduce liquidity, credit availability, and inflation or inflation risks 2) increase corporate and consumer borrowing costs & slow the economy 3) increase flow of investment funds into higher-returning US Securities, bonds, money market accounts and thus dollars 4) Raise investor fears that all is not well in the US economy 5) Assist equities and US T-bills by appearing to be fiscally responsible and committed to balancing the budget. Pros and cons also arise from the rate reduction outcomes: 1) perk up liquidity, money supply, credit, inflation 2) lower borrowing costs, stimulate more spending and investment-corporate and consumer, assist debt-burdened local governments 3) decrease investment flows from overseas, increase foreign fund withdrawals and repatriation by reducing competitive rate advantage, etc... a small sampling that have at the least one common thread- they are trends already played out for the most part or are effects common to EITHER a rate or a boost, or at this stage, NO FED action. Lately the FED sees "risks balanced" lol, between a rock and a hard place. Not between "inflationary trends" or "deflationary outcomes", "growth and contraction" or other artificial Fedspeak. When the economy has less regulation, fiat, taxes, constraints, and overseas and domestic predators, it will thrive, prosper, and grow naturally. Investment decisions can only then, be planned casually, knowing savings and capital are BOTH solid short and long-term homes for money.
mikal
(7/28/02; 14:14:43MT - usagold.com msg#: 81686)
@TownCrier
"The dollar may decline..." Thanks for many great clips and comments. It's getting to the point where I ask, what major newswire and financial press outlet, e.g. Bloomberg, Business Week, AP, UPI, etc., is NOT looking at more US$ weakness straight ahead. Some of them give a cursory admission of a HUGE paradox- The FED can't lower OR raise interest rates! Not without irreversible damage, soured sentiment and panic out of the greenback and it's proxies like US and agency bonds, stocks, and real estate.
Black Blade
(7/28/02; 14:01:01MT - usagold.com msg#: 81685)
Saudis Turn On The West
http://www.guardian.co.uk/saudi/story/0,11599,764580,00.html
Snippit:
If Prince Abdullah is moving against the extremists it may be too late. The terrorists are organised loosely in cells and are hard to infiltrate. Many weapons, including more rockets, have been smuggled across the long and porous border with Yemen. Sympathy for al-Qaeda also extends far beyond the streets and into government. There are concerns that some officials in the Interior Ministry run by Prince Naif are sympathetic to their aims. It is feared that the anti-Western bombing campaign has been sanctioned by Islamic factions in government plot ting to take power and break ties with the West. That, some observers say, is why the bombings have been blamed on Westerners. The real bombers have protection from some very high places.
The death of Fahd could provide the trigger for a power struggle in the palaces of Riyadh which could ripple out and rock the whole world. Fahd was last week admitted to the Swiss hospital. Official Saudi sources quote the medical team as saying his condition is 'unstable'. As the king's death grows closer by the day, the rift between hardline Princes Sultan and Naif and the moderate Prince Abdullah widens. The prize they are fighting for is the oil-rich Saudi state. But the stakes are higher and the result will send shock waves around the world - whoever wins.
Black Blade: The world oil supply is in danger and the west is ill-prepared to meet the challenge short of war. If unfriendly factions such as the Wahabbists or those sympathetic to Al-Qaeda come to power in Saudi Arabia which is quite possible, then we will go to war to secure oil – there's absolutely no doubt about it. No one will sit back and let another oil shortage pass like in 1973. The US economy would collapse as we are ever more dependent on oil now than in the past. We do live in "Interesting Times".
misetich
(7/28/02; 13:55:26MT - usagold.com msg#: 81684)
Handicapping the (Once Almighty) Dollar
http://www.nytimes.com/2002/07/28/business/yourmoney/28DOLL.html
Snip:
By CONRAD DE AENLLE
The weakness of the dollar has left investors divided over the currency's direction, especially against the euro.
Some analysts expect the euro, now trading at 99 cents after stumbling last week, to climb toward $1.20. That would be above its original trading level of $1.17 at the beginning of 1999.
.................
A survey this month of global fund managers by Merrill Lynch shows a strong majority, 68 percent, naming the euro as their favorite currency over the next 12 months, with 13 percent favoring the dollar, 6 percent the Japanese yen and the rest stating no preference. The survey has found a tilt toward the euro for many months, even when it was falling against the dollar.
.............
John Beck, chief investment officer at the Fiduciary Trust Company International in London, is more bearish on the dollar. The United States buys more goods and services than it sells, producing a net outflow of dollars, so it needs foreigners to bring those dollars back through investment, he said.
With stocks faring poorly, demand for American assets has fallen, taking the dollar along with it. That situation is unlikely to change soon, Mr. Beck said.
The United States current-account deficit — a measure of the net exchange in goods, services and gifts among countries — is approaching 5 percent of annual economic output, he said, and the government's budget surplus has vanished. "That cannot be constructive for the dollar on a medium-term basis," he said, adding that it was "most unlikely" that the dollar would "continue to be the superstrong currency it was."
Mr. Beck expects the euro to rise to $1.17, its original level. He predicted that the yen would rise, too, though much more modestly.
................
GABRIEL STEIN, an international economist at Lombard Street Research in London, said that based on current economic conditions, it would be reasonable for the euro to climb as high as $1.10 or fall as low as 95 cents.
"If you want to do a traditional manufacturing-cost comparison, the right cost is $1.10," he explained, "But I doubt it is likely to go as far as that. More likely, looking at overall fundamentals in the United States and Europe, the right rate is slightly below parity, between 95 cents and $1."
The dollar is bound to recover over the long haul, he said, because the structure of the American economy is sounder than those of Europe and Japan.
**********************
Misetich
Wonder if these "experts" have factored in the initial market share loss of the US $ as a reserve currency? In the "long haul" as the EU expands one would expect its currency - Euro - to get stronger rather than weaker.
Most of these "experts" expect a US recovery - but then most of these "experts" did not see a bubble, did not predict a recession and have been projecting an earning recovery for the last 2 years.
The bubble burst has not completed its course - Lets wait patiently and see it unfold shall we.
Most want to see a slow US $ landing. Will it happen? Or will market dynamics will slam it down forcefully as in past history?
Got gold?
Ten Bears
(7/28/02; 13:54:34MT - usagold.com msg#: 81683)
What does this have to do with Gold???
"Moral relativism;" "Situational ethics"; "Greed is good";
"Don't judge, everything you do is ok"; "If it feels good, do it".
These ideas were planted in the last few decades; society is now reaping the harvest. The savings of millions have been decimated by those who embraced the "everything is grey" philosophy, and by the enablers who pump the money supply.
What does this have to do with gold? The paper gold prices and gold share prices are controlled by the same sort. It seems to this casual observer that extreme caution is warranted when playing in this rigged game.I realize I may be preaching to the choir, but a 5 to 20% physical gold position IMHO may provide a measure of insurance in these troubled times.
misetich
(7/28/02; 13:08:48MT - usagold.com msg#: 81682)
Trust Shattered, Wall Street Can't Afford Coincidences
http://www.nytimes.com/2002/07/28/business/yourmoney/28WATC.html
Snip:
By GRETCHEN MORGENSON
all Street analysts are definitely under the microscope these days. Which makes a sequence of events of last Thursday and Friday involving Goldman Sachs' semiconductor stock analyst very intriguing.
Semiconductor stocks were crushed on Thursday when the Taiwan Semiconductor Manufacturing Company announced that it was sharply cutting its capital expenditures because of nonexistent demand for chips. Investors in chip stocks ran for the exits, correctly assuming that if such a big maker in Taiwan saw no demand, neither would the rest of the producers.
Shares of big-name United States producers like Intel and Applied Materials sank on the news. The Philadelphia Stock Exchange Semiconductor Index — known affectionately as the Sox — tumbled. And the action took down the Nasdaq as well.
Although the Sox closed down 10 percent on Thursday, the index had been far lower earlier in the day; it recovered on significant buying. One especially large trade in the afternoon came from Goldman Sachs: the purchase of 10,000 call options on an exchanged-traded fund — called Semiconductor HOLDRs Trust — that is a basket of large semiconductor stocks.
The options are traded on the Chicago Board Options Exchange, and an order to buy 10,000 is unusually large. The open interest on these options — similar to the freely trading shares, or float, on a common stock — was around 1,400 before the order came in.
Any investor buying call options is betting that the stock underlying them is going to rise significantly. Given the excessive volatility in the market as a whole and the wide swings characteristic of semiconductor stocks in particular, it would take a person of great confidence to make such a trade.
Now for the intriguing part. On Friday morning, two hours before the market opened, James Covello, the semiconductor analyst at Goldman, upgraded the semiconductor equipment sector to overweight from market weight. Mr. Covello's reasoning? The big selloff in the sector was overdone.
"While fundamentals are not likely to improve in the near term, we believe that funds flow and seasonality may drive a meaningful move in the stock," he wrote. Mr. Covello added that his call on the group would be appropriate for shorter-term investors "who can be nimble enough to take advantage of a funds flow-driven rally and/or seasonality in the electronics supply chain." In other words, his recommendation was a trading buy.
When asked about these events, Katherine Baum, a spokeswoman at Goldman Sachs, said: "There is absolutely no connection between any of Goldman Sachs' trading activities and its investment research. And given the current environment it's outrageous to suggest that there is." She added that Goldman has strict guidelines on how much an analyst can communicate around an upgrade or downgrade. She declined to comment on whether the purchase was made by the firm for one of its customers or for the firm's own trading book.
Maybe it was just a giant coincidence that a Goldman Sachs trader put in an order to buy almost seven times the open interest in call options on the Semiconductor HOLDRs half a day before the firm advised its clients to buy into the sector. Although the shares in the exchange-traded fund closed on Friday roughly where they had wound up the previous day, they rose 3 percent early in the day as news of Goldman's upgrade spread. It is unclear whether the call options were sold.
In life, things happen by accident and they happen by design. It is not always possible to know which force is at work in each situation. But this much is known: Wall Street firms thrived during the late 1990's in part because investors were willing to suspend their disbelief. Those days are over. And Wall Street firms had better get used to the scrutiny.
Misetich
More and more moves by these alleged market manipulators, such as Goldman Sachs are being scrutinized - it will proved more difficult for them to repeat the scams of the past - though they will try -
Market manipulations are being questioned, Dow same day reversal of 400 points, followed by ANOTHER uptick of 500 points a few day later. It all adds up to loss of investor confidence. Will parked cash return to stock market under these conditions? Doubt it - as investors have been fleeced - by these scams over and over again-
Got gold?
TownCrier
(7/28/02; 13:00:24MT - usagold.com msg#: 81681)
A current crisis and lessons learned -- even hedge funds are toying with less leverage
http://www.forbes.com/technology/newswire/2002/07/28/rtr678223.html
BOSTON, July 28 (Reuters) - For hedge fund investors, the summer of 2002 is bringing back some ugly memories.
With stocks swirling lower with every stir of martinis at beach side resorts, investors remember the summer of 1998 and the spectacular collapse of Long Term Capital Management, wondering if another hedge fund disaster looms.
"There are certainly similarities," said Carrie McCabe, who directs hedge fund investments for pension funds at McCabe Advisors in New York. She said the violent market swings four years ago feel a lot like this summer's nerve-racking declines, which have contributed to the worst markets in 30 years.
But there are also plenty of differences: hedge funds are smaller now, investing with less leverage.
...Industry icons like George Soros and Julian Robertson, for example, who each managed over $20 billion during their heyday, reorganized after suffering heavy losses a few years ago.
Now managers often cap funds near $1 billion and use less borrowed money, or leverage, that can make gains or losses add up very quickly.
"There just isn't the amount of leverage in the system anymore," McCabe said, noting that funds might have had debt-to-capital ratios of 20-to-1 four years ago, but have now pared that back to 7-to-1.
Leverage was the key to disaster at LTCM and helped wipe out 90 percent of the firm's $4 billion in capital in a few weeks. What started out with Russia's debt default quickly turned into a liquidity crisis that engulfed emerging markets.
------(click url for more)-------
Did you know we are currently in a "CRISIS"? Check out this additional excerpt from the article:
----------...the roots of the current crisis are different. While the 1998 debacle started halfway around the world when Russia ran out of money to pay its debts, this time the crisis began when investors began to wonder how honest U.S. corporations are. "Last time we had an emerging market crisis that rolled into a credit crunch. This time the crisis is related more to the equity markets and is home-grown," McCabe said.-------
Those who are financially strong during a crisis tend to buy more gold, while those who are strapped and suffering are often forced to sell what they have to survive another day. On which side of the equation are you?
R.
misetich
(7/28/02; 12:56:46MT - usagold.com msg#: 81680)
Banks Are Havens (And Other Myths)
http://www.nytimes.com/2002/07/28/business/yourmoney/28BANK.html
Snip:
By GRETCHEN MORGENSON
But a risk that the banks cannot expunge is the fear taking hold among investors that the nation's largest financial institutions were central to the financing of the stock market bubble that has burst so spectacularly. That perception is not only punishing bank stocks, which were not long ago seen as a haven for investors, but it is also casting a pall over the entire market, fund managers say. If banks are found to have facilitated corporate misdeeds — such as hiding losses at Enron, as has been alleged in Congress — severe damage will be done to already battered investor confidence in the entire financial system.
................
Some of the nation's biggest and most trusted banks are in this fix at least partly because of their increased reach in all areas of financial services in recent years. The Financial Modernization Act in 1999 eliminated most of the barriers to certain business set up for banks under Glass-Steagall, the legislation that came out of the Great Depression. This allowed commercial banks to compete with investment banks for the right to sell securities to investors. And the larger banks approached the business aggressively.
For example, in May 2001, WorldCom raised almost $12 billion in a bond offering managed by Citigroup. The offering came when WorldCom's was still a high-grade name in the credit markets, and was presented to investors as an issue against which other investment-grade bonds would be judged, known as a benchmark.
Because the WorldCom deal was a benchmark bond, any portfolio manager running a bond mutual fund had to own the security. So when WorldCom began its free fall earlier this year, a throng of bondholders were holding the bag. The bond sale allowed WorldCom to clear out a lot of its bank lines of credit and push back the maturity dates on the loans.
Now, with WorldCom filing bankruptcy a little more than a year after the bonds were sold, investors are questioning how much due diligence was conducted by the banks that sold the securities.
Adding to bondholders' doubts about whether this bond deal should have been done is the growing awareness of just how close Jack B. Grubman, the telecommunications analyst at Salomon Smith Barney, a Citigroup unit, was to WorldCom. Mr. Grubman has said that he attended board meetings at WorldCom. His relentlessly upbeat pronouncements on the company helped the $12 billion bond deal get done.
...............
The work that J. P. Morgan Chase did for Enron, and which is now being examined by regulators, was plain-vanilla stuff, according to its executives. "They are a normal financing arrangement," William B. Harrison Jr., the bank's chief executive, said during a conference call last week. After Enron's failure, normal financing arrangements like these have become questionable.
..................
"A stubbornly high pace of defaults, assisted by the spectacular number and size of failures in the telecommunications sector globally and by other issuers based outside the United States, made the second quarter 2002 one of the most severe periods of credit stress since the Depression of the 1930's," said David T. Hamilton, who wrote the study.
MOODY'S said it expects the junk-bond default rate to hit 8.8 percent by year-end, down from the 10.7 percent peak reached in January, but still high. If the economy slips back into recession, banks could really be hurt.
"There are still big issues out there," Mr. Hendler at CreditSights said. "The C.E.O. sign-off date comes in a couple of weeks and there could be more of a shake-out from that," he said, referring to the new rule by the S.E.C. that chief executives must personally certify their company's financial statements.
"Banks still have venture capital issues, where valuations could go down," Mr. Hendler said. "And on the consumer side, some banks gave a good outlook for second half, but there's not enough evidence that the consumer is fine. All this weighs heavily on the banks."
*************************
Misetich
Greenspan defined it as infectious greed, did he mean BANKERS?
The most troubling aspect - is that bankers deny any wrongdoing - "They are a normal financing arrangement," they testified. Enron balance sheet was ponzi scheme, a shell, built by these type of financing arrangement and collapsed.
If Banks/Enron transactions reflected "normal financing arrangement the US and world financial systems are at HIGH RISK.
Got gold?
Sierra Madre
(7/28/02; 12:56:18MT - usagold.com msg#: 81679)
Has anything important changed?
Hi folks! I've been away for some time. So, I find gold has been knocked down to $302 something.
Gold is finished? Time to sell out? Forget the yellow metal?
The world has changed and gold is out of the picture and will remain so forever?
Some questions...
1. The US trade deficit was climbing up past $450 bill a year when I last looked. This has been taken care of? Foreigners will accept this flood of dollars forever and continue to buy US stocks and bonds forever?
2. The US fiscal deficit is not something to worry about? There is a perpetual war going on, Homeland Security expenses, spending like there is no tomorrow. Yet, tax revenues from corporations and individuals are likely to be very greatly reduced, in the present economic climate. The deficit in Washington D.C., which we will hear about a little later on, is going to be horrendous. This is not something to think about?
3. Stocks are back in fashion, or the media are trying desperately to make John Q. Public think so. Is it so easy to bring back irrational exhuberance? The public is going to buy, buy, buy stocks and these are heading up to their previous highs? Foreigners are pouring in to buy US stocks again?
4. The consumer has fixed up his finances? No more problems with debt? Everything is OK for the American consumer, he is going to go on buying with his credit card, with re-fi money from his house?
5. Corporate earnings are going up, across the board, and the future looks rosy for American coporations? Corporate spending is booming, jobs are abundant and layoffs a thing of the past?
6. The Price/Earnings ratio of all the indexes is way, way down - down to 8 times on the SnP? We can believe the projections for earnings by those who have been caught lying just recently? NO sense to hold gold in any amount, if earnings are booming and shares are cheap by historic measures. Is that the case?
7. The enormous debts incurred in the 90's and 2000 and 2001 have been greatly reduced? Corporate balance sheets are healthy and companies are looking to expand by acquiring more debt? Defaults are not going to continue; everything that was going to go under, has gone under and is behind us?
8. The banks are in excellent shape, no problems with bad debts? They are eager to lend?
9. No Mutual Fund redemptions are going to take place? In any case, the Fed can and will buy anything that the public discards, and that presents no problem whatsoever.
10. Everything for sale in this world goes up, and up, and up, except - gold and silver. This will continue to be the case for the foreseeable future, yes?
I guess my reasons for holding gold are irrational. Maybe it's because I haven't heard all the good news. Will someone please tell me about those old bugaboos I just mentioned, tell me they have all gone away and there is
NOTHING TO WORRY ABOUT!
Sierra.
ax
(7/28/02; 12:56:06MT - usagold.com msg#: 81678)
DIVIDEND YIELDS SHARPEN UP FOR MAJOR GOLD STOCKS
7-28-02
Because of the sudden plunge in the price of gold and the
price gold stocks this week, the dividend yields for
major gold producers have increased.
DIVIDEND YIELDS FOR MAJOR GOLD PRODUCERS IN ALPH. ORDER
AS OF 7-26-02:
GOLD STOCK //// DIVIDEND YIELD %
American Barrick /////// 1.50 % (AOL Quote)
Anglo Gold /////// 4.34 % (Sharenet)
Gold Fields ////// 1.28% (Sharenet)
Harmony ////// 1.32 % (Sharenet)
Newmont ////// .50 % (Aol Quote)
Placer Dome ////// 1.20 % (Aol Quote)
TownCrier
(7/28/02; 12:46:58MT - usagold.com msg#: 81677)
NEWSWIRE HEADLINE: Asia could have one currency in 15 years
http://www.nationmultimedia.com/page.news.php3?clid=6&id=2831&usrsess=1
Excerpts:
Can the "Chiang Mai Initiative", signed by 13 Asian countries in May 2000, lead to a single currency in the next 15-20 years?
...Asean-Plus-Three comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, Japan, South Korea and China.
Once that is done [the final signing of bilateral currency swap agreements], Asia could have a currency unity scheme worth an estimated $65 billion that could serve as a solid defence of each member country's national currency during critical times.
The scheme could also serve as the foundation for monetary union in the future in a fashion similar to the European Monetary Union, the precursor of the euro.
The euro ...is a product of more than 40 years of regional cooperation.
...today's euro ... is a by-product of that political motivation, ...On the other hand, Asia is driven by economic reas ons toward closer currency cooperation.
The most recent trigger was the 1997 Asian financial crisis ...contagious effects of that event spilled over rapidly into other Asian economies...
...Shortly after the 1997 crisis broke out, Japan unveiled its Asian version of the IMF, called the Asian Monetary Fund, but the proposal did not receive enough support from fellow Asian countries and was opposed by Washington, which feared it would undermine the IMF's global role.
-----(see url for more)-------
As demonstrated by the euro project, an Asian currency union would be a huge undertaking, but in any event, I can't conceive any way that efforts toward this end could be seen as a net positve for the current U.S. dollar.
The final note from the article is worthy of your deeper consideration:
"The pace of change in today's economy is much faster than in earlier decades." -- Dr Olarn Chaipravat, a senior Finance Ministry adviser
R.
TownCrier
(7/28/02; 12:28:41MT - usagold.com msg#: 81676)
And now we know...
http://www.bloomberg.com/emu/emu_news1.html?s=APUQUBBUTTGluZHNl
Excerpts:
Washington, July 28 (Bloomberg) -- The U.S. is ``all for a strong dollar'' and will pursue a policy to make it an ``attractive currency,'' White House chief economic adviser Lawrence Lindsey said.
Speaking on the ABC News program ``This Week,'' Lindsey said the markets set the value of the dollar and added the Bush administration is pursuing policies to keep the dollar strong.
---------------
And yet, no sooner is that said, then the article goes promptly onward to report the following matter of factly:
"The dollar may decline against the euro as statistics this week will probably show the U.S. economic rebound is losing steam."
At these gold prices, don't look a gift horse in the mouth.
R.
TownCrier
(7/28/02; 12:22:45MT - usagold.com msg#: 81675)
Casting a wider net
http://www.ananova.com/business/story/sm_638653.html?menu=
HEADLINE: Italian could replace Duisenberg at ECB if Trichet drops out - junior minister
excerpt:
...[Economics undersecretary Vito] Tanzi went on to say that for the moment Trichet is "the only candidate" to succeed Duisenberg next July, the newspaper said, noting that up to now the only other candidates have been French.
---(see url)----
TownCrier
(7/28/02; 12:16:02MT - usagold.com msg#: 81674)
Price discovery, from Bloomberg
Notable excerpts, presented in a way that might help you see this clearer:
New York, July 28 (Bloomberg) --
...gold had its worst week in 2 1/2 years...
Prices rose this year as investors fled [the] stock market....
The rally was fueled by hedge funds and other speculators, whose ownership of New York futures contracts reached a nine-year high in May, according to the Commodity Futures Trading Commission. Those ``long'' positions have since fallen by about a third.
[Contracts] for August delivery last week fell $20.60, or 6.4 percent, to $303.30 an ounce on the Comex division of the New York Mercantile Exchange. It was the biggest weekly decline since December 1999 and the lowest closing price since April 19.
[So much for investor interest (faith?) in these gold derivatives, the primary determinant in spot metal pricing. Now for a look at investor sentiment in mining shares.]
Gold stocks in the Standard & Poor's 500 Index have gone from being the best performing industry group, gaining as much as 49 percent this year as of May, to just another of the groups in the index that are showing losses for the year. The S&P Gold Index now is down 3.8 percent since the end of December.
-----------
Fancy that. A 3.8% decline in the shares since the new year began. Meanwhile, the metal itself is up $20, representing right now an annual pace of 12% gains.
Investors who can't see this very simple thing to justify ANY ownership of metal are apparently seeking too hard for things that aren't really there and can't be had.
R.
TownCrier
(7/28/02; 11:50:25MT - usagold.com msg#: 81673)
Dividends come back into focus
http://www.cleveland.com/business/plaindealer/index.ssf?/xml/story.ssf/html_standard.xsl?/base/business/1027770951299740.xml
It seems that investor psychology is getting back to the fundamentals of gambling, investments, and the meaning of security and wealth. How much longer until gold is rediscovered on Main St., U.S.A.?
HEADLINE: Playing it safe in bear market
Here are some excerpts:
07/28/02 (Associated Press) New York - When Carol Levey got married, her father gave her some investment advice: Buy stock in safe, dependable companies - the kind that pay dividends.
Nearly eight years later, Levey wishes she had listened. Her portfolio, which contained mostly riskier tech shares, has crumbled as the market plunged over the past two years. Now Levey and her husband own Exxon Mobil, IBM, McDonald's and Pfizer, all of which pay dividends to shareholders.
... with a grueling bear market sending stocks to their lowest levels in years, the dividend is back in vogue, touted for giving investors a dependable source of income.
With the market having lost about a quarter of its value over the past nine weeks, a 92-cent-per-share annual dividend from Exxon Mobil looks pretty good
[Now here comes the reality check from this same article...]
So far this year, the 350 dividend-paying stocks in the S&P 500 have declined about 11 percent, less painful than the 29 percent drop among those that don't pay dividends.
------(click url for more)------
Does a 92 cent annual dividend really take the sting out of a semi-annual eleven percent capital forfeiture?
I calculate not.
R.
timbervision
(7/28/02; 11:24:17MT - usagold.com msg#: 81672)
cyberbat
http://usgovinfo.about.com/library/weekly/aa030500a.htm
I'm not a gun owner in Canada, but our laws require registration not confiscation. As a Canadian I never understood, what I think I now understand, that the main reason behind gun ownership in the US was to provide a warning to would-be-kings (politicians and bankers today) to beware of the people's power. I somehow don't think that the average American understands that right now.
cyberbat
(7/28/02; 11:04:05MT - usagold.com msg#: 81671)
@ downunder
With respect to your last post, you need to understand one thing. People can express their opinions on this page and if that affects the shares of SA gold mines so be it. I don't know if you have freedoom of expression where you come from or not but I'll be D---- if I would take anything for granted or otherwise from 2 countries like Austrailia and Canada that were so bold as to pass laws seperating their firearms from innocent people. We in America are just about toast as far as morals are concerned, but we still have our freedom of expression and a firearm by our bedside.
Cyberbat
Mr Gresham
(7/28/02; 10:48:32MT - usagold.com msg#: 81670)
Blackjack & Black Blade
Thanks for the heads up on SA. Of course, the two articles have CP Abdullah positioned oppositely: in one he's "too pro-American", in the other, he's being challenged by a more "pro-American" group of princes. Classic disinfo in the sense of painting the one you're about to topple as a "valued ally" so it won't look like it came from you? (Think Diem 1963?)
Anyway, for anyone who wondered where the "peace dividend" went after 1989, the question was answered a year later in Iraq. You don't spend 300+ BD a year without expecting a ROI. (Of course, it hardly pays for itself via cheaper oil, but those pocketing their own dividends from the contracts aren't complaining about that bit of economic illogic.)
My understanding is that the SA oilfields and refineries (if any) are far from the population centers, is that right? It's always seemed to me to be a resource that is not too much under threat of takeover by the "locals". So all we have been about all these years is adjusting the mask of perception about "home rule" by the monarchs, disposable in reality at any time, but only as useful as they make themselves in the interim.
That must lead to some interesting family discussions.
Of course, the US must be vigilant to even the tiniest beginning of a trend against its interests. Especially ones it can't bribe to go away.
Very very far from even the usual operations of international trade, and international law, so that the "special relationship" really defines colonial resource extraction, toward which US military power has been directed since 1942, and for which nearly all the other interventions were merely practice scenarios.
USAGOLD / Centennial Precious Metals, Inc.
(7/28/02; 10:35:26MT - usagold.com msg#: 81669)
Learn the fundamentals for $5.95 -- more about gold investing than your financial advisor will ever know
http://www.usagold.com/cpm/abcs.html
"Without waxing philosophical, a few words are helpful concerning the mind-set with which you pursue your interest in gold ownership. Some enter the gold market to make a profit, others to hedge disaster, some to accomplish both. No matter into which category you fit, make sure you understand why you are going into the gold market. Convey that understanding to the individual with whom you are structuring your gold portfolio. The whys have quite a bit to do with what you end up owning.
"Frequently investors will say that any kind of gold will do because after all gold is gold, isn't it? This type of attitude has helped a great many coin shop owners unload unwanted inventory they hadn't been able to get rid of for years. This is probably a good deal for the coin dealer, but it could spell disaster for you. In the same vein, I have talked to hundreds, probably thousands, of investors in nearly a quarter century in the business. Quite often, potential investors have no more reason for buying gold than 'everybody else is doing it.'
"In Chapter 16 on portfolio planning, you will find some details on this important subject. For now, consider the inscription over the entrance to the temple of the ancient Delphic Oracle: 'Know Thyself.' Study. Read. Learn what's going on around you. Call a few gold firms and ask questions. There's nothing like conversation to stimulate thinking. Take time to lay a little groundwork. Then make your move. The political and economic situation being what it is, there is no better time to start than now. Know thyself -- your goals and needs -- and you will be a more confident, happier gold investor." (more)
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