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 (460k) May
2001 ...Gold could very
well be at a watershed. Evidence continued to build through April
that some central bank[s] had decided to pull the plug on the
gold carry-trade -- the primary deterrent to higher gold prices
since the early 1990s. Some speculated that the Bank of England
was recalling gold for its highly publicized gold sales program.
Others speculated that a continental central bank was recalling
gold as part of a policy change related to the Washington Agreement.
Whatever the case, the resulting shortage of metal sent lease
rates soaring again and touched off a wave of speculation on
gold's future. Three prominent commentators in our May issue
suggest that what's "afoot in the gold market" is akin
to what happened in the late 1960s when the London Gold Pool
broke down, and gold -- enthralled at $35 for the better part
of 35 years -- was sent on its merry way to first break through
the $200 level in 1974 and then over $800 by January 1980.
(120k) April
2001 ...Taking note of
it all, investors around the world continued to take gold off
the market at record levels and at the cheapest inflation-adjusted
prices in history. This month's NEWS & VIEWS is a jam-packed
exploration of most of these remarkable developments along with
what some of the more out-spoken critics and analysts are saying
about all this, including where gold might be headed in the months
ahead. . . . . THE WORLD GOLD COUNCIL'S ROBERT WEINBERG MADE
A SURPRISE REVELATION at the recent Financial Times Gold Conference
that thirty-five high net worth investors have invested some
U.S. $800 million in the purchase of approximately 90 tonnes
of gold in the past twelve months. Over the past four years,
those same high net worth individuals have bought about 250 tonnes
of gold, an investment of more than $2 billion at the current
price.
(280k) March
2001 ...The past month
was an interesting one for gold and it encouraged some very good
analysis and theory, the best of which we have hopefully memorialized
here. The table illustrating gold's fundamentals below [show
in newsletter] tells the bullish tale and remains our primary
justification for fulfilling your needs in the present. The imminent
threat of a gold shortage remains the seeker's constant companion.
(280k) February
2001 ...January is the
month when many financial firms, newsletter writers, analysts,
and pundits issue their fearless forecasts for the upcoming year.
So this year we thought it would be to our readers' benefit to
compile those forecasts in an easy-to-read format for our February
edition. The central theme remains the one that fascinates us
all -- gold and the politics and economics which attend it. We
focus on three issues that seem to have grabbed the gold-owner
psyche as 2001 begins: the California energy crisis; the relationship
between the new Bush administration and Wall Street; and, of
course, what 2001 might bring for various markets including gold.
"It
is our feeling that the short position is so huge in gold that
gold will not undergo a gradual increase, but rather a huge short
covering rally which will cause the greatest spike in any commodity
ever." --- David Skarica, Addicted to Profits (from Bull
and Bear Financial Report)
(110k) January
2001 ...Our only surprise
is that the whole New Age, New Economy, End-of-History bullet
train to Paradise didn't derail sooner. We have emphasized in
the past how gold offers portfolio protection against such recurrent
maladies such as inflation, deflation, equity market crashes,
systemic risk; political, social and economic breakdown, etc.
Gold is not so much the road to riches as it is the best option
available to protect what you have gained in other pursuits --
the stock market, one's profession and/or business among them.
Those who balanced their equities portfolio with gold over the
past few years, as recommended so often here, have done nicely
by their diversification -- keeping at least a portion of their
capital intact despite the worst stock market plunge since 1929.
This happened, as we suggested it would, in both The ABCs
of Gold Investing: Protecting Your Wealth Through Private Gold
Ownership (1996) and in these monthly ministrations. Now
I am beginning to consider, as some of you may have gathered
in my recent writings, the potential for a bull market in gold.
The theme of this issue is "Markets Cycle" and gold
does so no less than any other.
(64k) December
2000 ...Welcome to our
Christmas issue. While investors riveted their attention on the
Grinch That Stole the Wall Street Bubble, gold owners were treated
to an early Christmas in the form of some very positive developments
as outlined below. As we go to press, lo and behold the price
is even moving upward. In keeping with our practice of blending
the appropriate NEWS & VIEWS
for the novice as well as the advanced student of Gold History,
Finance and Economics, this month we have something under this
well-lit Tree for each and everyone. We invite you to reserve
that easy chair near the fireplace, pour a hot-toddy to soothe
the soul, and dive into not just a cap on the year most recently
passed, but a look at what 2001 might bring in the way of portfolio-crucial
events. This year give your portfolio the gift of gold.
(890k) November
2000 ...Gold displayed
its own version of lethargy during most of October, touching
on 13-month lows despite the evident decay in equities and good
demand in industrialized countries where investors are beginning
to feel the pinch from higher oil prices and accelerating inflation
trends. Steady gold demand from Asia where there is some concern
that a repeat of the 1997 "Contagion" might be in the
offing also provided support. Though gold languished in dollar
terms, it moved up nicely in just about every other major currency,
signaling what might be ahead for the gold price in the United
States should the U.S. Dollar suddenly turn south--a possibility
mentioned with increasing frequency in forex circles. Accelerating
currency decay was wreaking havoc on a number of fronts, not
the least of which was Australia where the gold mining industry
has apparently been pushed to the ropes--the victim of both hedge
book indiscretions and a rapidly deteriorating Aussie dollar.
All of the above (and more) are covered in some detail...
(850k) October
2000 ...In an anecdote
told recently by the World Gold Council's Haruko Fukuda to the
Business Club Zurich: "The great Russian opera singer, Feodor
Chaliapin, lost his entire fortune--then worth more than a million
pounds--in the Russian revolution.This disaster seared him. He
left Russia after the Revolution and went to live in France where
in 1931 he bought gold bars and put them in a safe in his cellar
in Paris. He was interviewed by the British Sunday Express newspaper
on the 5th of May 1935, when he said, 'People in Britain think
that governments cannot collapse. They think bank notes are money;
banks are impregnable. But I have had everything I made in 25
years stripped from me. I was reduced to singing for tea in which
there was sawdust, and bread in which there was wood. With my
bar of gold and a pen knife I shall never go hungry.'"
(200k) September
2000 ...It could be quite a September... much of this issue
is devoted to oil. ... Make that oil, inflation, international
politics and gold. The good King Ibn Saud, back in 1933, demanded
35,000 gold British Sovereigns in payment for oil exploration
rights in his country. Had he known that he was sitting on a
massive pool of oil that would make Saudi Arabia the most important
piece of real estate in the world, he might have asked for more.
Ibn Saud did however understand the ultimate value of a paper
promise, hence the payment in hard, yellow metal. To this day,
the Gulf (as it's come to be known) becomes squeamish whenever
it appears the Fed is printing too much paper currency (much
of which goes to pay for oil) and the price of oil begins to
ascend. The oil producers, it seems, are saying in essence, "You
have had a good run. Much of it has been at our expense. Your
economies are at full capacity. Now it is our turn."
(1.2M) August
2000 ...Currency printing can be covered by production for
awhile but it cannot be covered interminably, as we are finding
out now with oil prices. At some point, our trading partners
(the source of that production) wonder what they are getting
in return for their exports, so they raise prices to compensate
for the currency over-production. The result is reports like
the one released in July showing a $31 billion trade deficit--the
largest on record. At some point, the dollar will no longer hold
up under the pressure; the direct relationship between trade
deficits and a weak currency is in itself iconographic. Beyond
the burgeoning dollar problem, we also must contend with a financial
bubble that dwarfs anything that has preceded it. The two problems
meeting at some not-too-distant time and place will bear its
own wholly unique (and potentially explosive) consequences--a
consideration most gold owners have already taken into account.
Financial
author Anthony C. Sutton: "Those entrapped by the herd instinct
are drowned in the deluges of history. But there are always the
few who observe, reason, and take precautions, and thus escape
the flood. For these few gold has been the asset of last resort."
(200k) July
2000 ...One would have to say that gold's recent resilience
both in terms of worldwide demand and interest among various
analysts (see below) probably has to do with a growing discomfort
that can be summed up in one word-- INFLATION. With prices roaring
ahead in all sectors of the economy, particularly the oil sector,
the hoped-for quiet summer of 2000 is rapidly shaping up more
like the Summer of Our Discontent. ... UBS Warburg, one of the
largest banking firms in Europe, is warning its customers to
prepare for a "hard landing" in the United States and
worldwide "collateral damage." UBS Warburg goes on
to recommend that investors "should consider reshaping their
portfolios to prepare for turbulence."
(140k) June
2000 On the "dot com" mania from E.J. Welsh (The
Financial Commentator) as published in Crawford Perspectives:
"[Alan Greenspan] has also said that the Fed is not targeting
stock prices. But to a lot of 28 year-old money managers, this
seems disingenuous. They can think of no other reason why a company
with no foreseeable earnings should see its stock fall from 200
times 2001 sales to 100 times in less than four weeks. To those
investing according to the greater fool theory, it must be bitter
medicine to learn there are a finite number of fools."
(480k) May
2000 "This newsletter is written the weekend after the
Friday (April 14, 2000) stock market crash--an event for which
we are still taking a body count and can only guess the extent
of the shakeout in the months to come. The newspapers report
this morning that the public lost $2.1 trillion yesterday--the
largest one-day loss in stock market history. Though the events
of April 14 were significant in and of themselves, they were
in fact the culmination of a week-long slide in the indices which
reduced the value of NASDAQ by some 30% and the DOW by over 7%.
The trigger event for Friday's collision with reality was an
inconvenient surge in the Consumer Price Index of 0.7% which
suddenly catapulted the inflation rate toward dangerous double-digit
territory."
(180k) March
2000 "Apocalyptic expectations are unnecessary to project
a dollar gold price that includes four digits. It will require
only the inevitable unwinding of bearish producer and dealer
hedge structures amidst a change of market perceptions on the
desirability of financial assets." --John Hathaway/Toqueville
Asset Mgt ....."Gold demand in 1999 reached record levels.
Demand in the 27 [international] markets covered rose 566.2 tonnes
to 3,278.4 tonnes, 21% above the total for 1998." [from
the World Gold Council]
(460k) February
2000 "A central bank manipulating the price of money
is no different than the Politburo 'managing' the Soviet economy.
They had no clue whether the people needed cars or shoes. Some
things were in oversupply and others were scarce and so on. Intellectually
there is no difference between a centrally planned economy and
a centrally planned currency." Anthony Deden, "Reflections
on Prosperity"
(790k) January
2000 "Will 2000 be the year the markets serve retribution?
No one knows for sure, of course, but a large of number of investors
aren't taking any chances. Beginning in October, Centennial Precious
Metals began to see signs of a New Paradigm of its own. Investors
started calling with rather large orders saying they were hedging
a stock market correction by liquidating stocks and putting their
winnings into undervalued gold.
"Apparently, unbeknownst to us until recently, this move
to gold was occurring on a larger scale across the country. Felix
Freeman from Scotia Mocatta, a major bullion dealer, observes:
'The nature of gold buying is changing. Wealthier investors
are buying large lots, often US $1-10 million, not for Y2K reasons,
but to exit equity markets for capital preservation. Such buying
hasn't been seen in size for 10 years'."
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