Thai Guru's Gold und Silber ... (Informationen und Vermutungen)

November 19 – Gold $446.40 up $4.30 – Silver $7.57 up 4 cents

Gold Keeps On Rising/A Tale Of Two Planets

The secret of joy in work is contained in one word - excellence. To know how to do something well is to enjoy it...Pearl S. Buck

GO GATA!!!

The morning commenced with all sorts of commotion. The dollar was tanking to begin with when Alan Greenspan spoke bearishly on the greenback on a panel in London (see below). Color the dollar south for the rest of the day and for a long time to come (barring normal short-term corrections here and there). This blunt commentary from the Fed chairman is very unusual and has big picture connotations. His comments today will not be transitory. They will be of a longer lasting nature.

Then the French announced they will sell 500/600 tonnes of gold over the next five years. Since they specifically mentioned five years, it should mean their sales will be in accordance with the new Washington Agreement.

Associated Press
Bank of France to Sell Gold From Reserves
11.19.2004, 07:15 AM

French Finance Minister Nicolas Sarkozy and Bank of France Governor Christian Noyer have finalized discussions on the sale of a portion of France's gold reserves.

Noyer confirmed his intention to sell 500 to 600 tons of the 3,000 tons of gold kept in vaults underneath the Bank of France headquarters in Paris over the next five years, the Finance Ministry said in a statement Friday.

The sale will be accompanied by an increase in cash reserves. Noyer will determine the rate at which the gold is sold, paying particular attention to the precious metal's market price.

At the end of five years, profit generated will yield more than euro200 million (US$262 million) per year in interest. This sum will go to the state to help pay off France's euro1 trillion (US$1.3 trillion) debt and to finance long-term employment, notably in the area of research, the ministry statement said.

-END-

On the Greenspan comments:

Greenspan cements market view US wants weaker dlr

By Jamie McGeever
NEW YORK, Nov 19 (Reuters) - If financial markets felt any lingering doubt that U.S. policymakers want the dollar to depreciate, Federal Reserve Chairman Alan Greenspan blew it out of the water on Friday, analysts say.

The Fed chief told a conference in Frankfurt the U.S. current account deficit cannot widen at its current pace indefinitely and that, given the size of the trade deficit, foreign demand for U.S. securities will wane at some point.

"It seems persuasive that, given the size of the U.S. current account deficit, a diminished appetite for adding to dollar balances must occur at some point," Greenspan said.

"This situation suggests that international investors will eventually adjust their accumulation of dollar assets or ... seek higher dollar returns to offset concentration risk, elevating the cost of financing of the U.S. current account deficit and rendering it increasingly less tenable," the U.S. central bank head warned in a speech.

Increasing domestic savings and cutting the budget deficit are key to correcting the massive U.S. external deficits, he said. But it was his remarks on the current account gap and foreign demand for U.S. assets that currency dealers seized on.

Although Greenspan has highlighted these concerns before, and he did not specifically mention the dollar or exchange rates in his Frankfurt speech, analysts say the implication is clear: a weaker dollar is needed to help correct the deficits and U.S. policymakers won't stand in its way.

"Greenspan has said most of these things before, when he has had his back against the wall in Q & A (question and answer) sessions, but these are prepared remarks," said Greg Anderson, senior foreign exchange strategist with ABN AMRO bank in Chicago.

"It makes it clear that U.S. policymakers do not want to stand in the way of market adjustment that leads to a lower dollar. This really lays it out. It makes it clear that all of the policymakers in the U.S. are on the same page about it," Anderson added.
Jason Bonanca, director of foreign exchange research at Credit Suisse Firs Boston in New York, agreed. "It's a helluva speech. It's remarkable. In the short term, I think what he's calling for here is a weaker dollar, even though he's tightening (monetary policy). I think this is a watershed."

Currency markets immediately sold the dollar, pushing it to fresh 4-1/2-year lows against the yen and near-9-year lows against the Swiss franc.

Stocks also fell sharply, reflecting the reaction across asset markets to Greenspan's concerns about foreign funding of U.S. deficits.

-END-

Thoughts and recap on Greenspan:

*Whatever happened to Charlie McCarthy Snow and his strong dollar garbage talk?
*Greenspan is saying what all of us here at The Café knew many, many months ago. What could be more obvious?
*Wall Street is horrified that someone would actually tell it like it is.
*Now that the election is over, Greenspan is willing to tell the truth. What a guy!
*Greenspan is covering his butt. He knows what is coming.
*When you HAVE to let the "S" hit the fan, you might as well do so right after the election and get it over with.

What to make of this? First, those out there in the gold world who still don’t "get it" that the official sector and The Gold Cartel are all over the gold price, they truly must be a bunch of morons. The French announcement at this point in time tells us how orchestrated the gold market really is and how concerned the banking elite in the world are that the price will explode - or in other words, dramatically reflect the deficiencies showing up all over the place in the fiat currency system.

I keep waiting for gold to do just that, explode. Yet, it would appear this is becoming less and less likely until there is some financial crisis out there and The Gold Cartel is overpowered. Now, this could come at any time, like next week. However, the gold action over the last few weeks reveals how determined the manipulators are to keep the gold price action under control, even as they sound their bugle for retreat.

For the mental midgets out there who STILL don’t "get it," one only needs to review the latest commentary on the dollar:

Germany's Eichel Calls For Common Plan On Dollar

By Emily Church
CBSMarketWatch.com
Friday, November 19, 2004

LONDON -- German Finance Minister Hans Eichel is calling for Europe, Japan, and the United States to work together on currencies.

In an interview on German radio ahead of this weekend's gathering finance ministers and central bank chief from the top 20 economies, Eichel said "within the trioka -- i.e. Japan, America, and Europe -- we'll have to sit down together and try to reach a common solution," AFX News reported, citing the interview with DeutschlandRadio Berlin.

Earlier, in an interview with the Frankfurter Allgemeine Zeitung, Eichel urged further moves toward greater exchange rate flexibility among the West's key Asian trading partners.

Also on Friday, German Economy Minister Wolfgang Clement called on policy makers to take action against any sudden drop in the U.S. dollar. The dollar's fall "deserves our whole attention, especially from those responsible for monetary policy," Clement told Bloomberg News in an interview in Bangkok. He didn't specify what action the policy makers should take, the report said.

-END-

Sudden drop in the dollar, sudden rise in gold. What’s the difference?

Seems Clement and Greenspan could be at loggerheads here.

As far as gold is concerned, it is a currency. Who out there in the investment world could possibly think gold is not discussed at length behind closed doors by the very same people? They are petrified gold could spiral upward in an out of control nature. They know the alarm bells this would sound in the financial market community and among the dumb-downed financial market press. To grasp current central banker mentality you only need to review what John Brimelow brought to our attention on Wednesday re: former Fed Chairman Paul Volker’s memoirs:

"…..Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake.

"Through March, the price of gold rose rapidly, and that knocked the psychological props out from under the dollar."

It is a mistake Greenspan and the rest of The Gold Cartel are going to prevent from happening again at almost at all costs. Have prevented would be the more appropriate way to describe it as the management of the gold price rise has been going on for years. This is the reason for the $6 Rule, etc.

What is so loathsome is how the central banks and Gold Cartel lie about what they have been up to regarding bullion. Worse is the silence of the mentally challenged in the gold industry who give them a pass on their nefarious activities.

That is the bummer side of today’s MIDAS. Now for the good stuff. For every action there is an equal and opposite reaction. The chickens are coming home to roost. The Gold Cartel has cooked its own goose by deceiving the public for so long – most likely a decade now. The bad guys are running out of available physical gold to continue their scam. They are running out of ammo and options to keep the gold price from exploding at some point down the road – like in the months to come.

By continually keeping gold from doing what it wants to do, The Gold Cartel has allowed demand to soar while they are dumping CHEAP GOLD to manipulate the price. The Indians, Chinese, Russians, Arabs, etc., are all over it. They are not blind. They have seen the handwriting on the wall for some time as far as the dollar is concerned. They keep loading their boats as do the big smart money hedge funds.

As a result of the price suppression scheme, the cash market remains firm as the price rises. Thus when the bad guys try to knock out the specs in one of their patented attacks, it is met with a new wall of buying. This has been going on for months, as you well know because MIDAS keeps bringing it to your attention, over and over again. The cabal’s old ways of doing business are just not working anymore.

Back to the day’s action. The outside market gold factors don’t get much more bullish:

*The Greenspan bearish dollar comments were dramatic with the dollar falling .40 to 83.32 and the euro rising .40 to 130.15. The yen rose to 103.04.
*Yesterday, because of the new ETF, gold drew more attention in one day on CNBC than it did for all the previous 356 days combined.
*Oil rose SHARPLY.
*The CRB made a 23-year high close at 288.98, up .98.

Still, The Gold Cartel capped the price all day long. Gold made it to Mahendra’s long predicted price point of $448, to the penny almost, and then the crooks whacked it lower a bit late. Just once for gold to pop $3 in the last ½ hour of trading like a free market would after such an incredible run and making continuous 16-year highs. When that occurs, we will know the bums are on their way out.

The DEC gold chart, not bad all – like the Energizer Bunny:

http://futures.tradingcharts.com/chart/GD/C4

The gold open interest fell 2271 contracts to 360,976 with the DEC dropping 16,282 to 226,917. The floor said there wasn’t much switching today for being this late in the lead contract month. Maybe as much as yesterday. That should leave more than 200,000 contracts open with only 5 trading days left until first notice day. The Comex is closed next Thursday and Friday. We could really get some fireworks the next two weeks.

Silver continues to act like it has a lead weight around its neck. No zip at all. The silver open interest fell 665 contracts to 125,865 with the DEC dropping 4323 to 78,055. The silver stocks have risen the past couple of days to 102,870,931.

Never seen anything like the sentiment in gold for such a bull market. The more gold rallies, the less people care. There isn’t the least bit of froth as far as the gold market is concerned. SO BULLISH! Been talking this way for months and the price keeps rising. The latest:

*Money is not coming in to the major gold funds.
*Small specs have little interest on the long side of futures (UNBELIEVABLE, for the third week in a row the small specs got MORE SHORT! Their long position went up by 2,265 contracts. However their shorts increased by 3,454)
*The Café Sentiment Indicator is a mediocre 5. That is about the highest it has been the entire move up, which is terrible. Last year it was a 9.
*US gold coin interest is only STARTING to accelerate.
*Gold shareholders can’t wait to sell.
*Interest in the smaller golds is pathetic. Not much better this week in most of the seniors.

Seems it is mostly the biggest, smartest money in the world that is taking the plunge into gold. Wait until the public wakes up. Yukon Gold Rush here we come.

John Brimelow Report

Advantage physical

Friday, November 19, 2004

Indian ex-duty premiums: AM $8.17, PM $7.83, with world gold at $442.65 and $443.80. Very ample for legal imports. This is basis Bombay, but the other importing cities Reuters monitors present the same picture. The world’s largest buyer of bullion is a firm bidder for imports at these prices. This occurred despite slight weakness in the rupee, faltering under the Reserve Bank’s clear determination to block further appreciation.

On previous surges in world gold in recent years, Indian prices have slipped decisively below import point some weeks and $20-$30 below the short term peak. This time, as far as India is concerned, the rally has quite a bit further to go.

TOCOM gold was comatose, completely overshadowed by turbulence in the platinum contract (which traded almost three times as much $US volume). On the equivalent of 11,736 Comex contracts, open interest was static (down 64 Comex lots) the active contract closed down 3 yen, and world gold stood 5c above the NY close at the end of trading. (NY yesterday traded 110,839 contracts, of which 24,730 could be attributed to switches. Open interest slipped 2,271 lots.)

However there was interesting news from Japan: a Reuters story confirming that there has been an upswing in demand for physical gold from the public:

"TOKYO, Nov 19 (Reuters) - Japanese investors are flocking to gold coins and bars amid an increased willingness to diversify into hard assets after a series of typhoons lashed the country and a major earthquake struck last month… The retail arm of Japan's largest bullion house, Tanaka Kikinzoku Group, said its sales of gold to investors rose sharply in October and the trend was carrying over into this month… Tanaka did not disclose specific volumes of gold, but said sales of gold coins and bars rose 30 percent in October from a year earlier and jumped 60 percent against the previous month…"

Of course, there have been some signs of this from the import data for some months. Previous bullion buying binges in Japan have started out being advertised as having such causes, and then turn out to have financial structure anxiety roots as well. Government guarantees of bank deposits is set to lapse on March 31 next year.

Increasingly it appears that the propensity to hold bullion in the different parts of the world has shifted. Very bad news for Bears.

If the Bank of France sale, announced with a fine sense of timing this morning, is within the Washington Accord, it is not news.

The advent of the ETF has of course made assessment of NY trading murky. Consequently the insights furnished by the overseas physical markets become more important. Right now, the signs are all Bullish.

JB

CARTEL CAPITULATION WATCH

There is a tale of two planets the way I see it. The Wall Street planet believes interest rates should stay down, the stock market should soar, and real estate prices should continue to rise in meteoric fashion. They believe the US economy is rocking along and corporate profits in the coming quarters should take the market much higher. They don’t believe the budget and trade deficits matter much.

Many who live on our GATA planet see the factors which kept the market up as behind us – namely low interest rates, government economic stimulus, and various tax cuts. We see the horrendous deficits as a serious problem. We know the gold price was rigged for nearly a decade. This price suppression scheme hid many structural deficiencies in the US financial system.

Our planet views the dollar drop as US inflationary. Their planet is in denial, or has been. Today the light bulb might have gone off for a few. The US has big problems and they have to be dealt with.

Some on the Wall Street planet decided to move to ours, the GATA planet. The DOW fell 116 to 10,457, while the DOG was belted 34 down to 2070. This Greenspan comment had a number of the WS planet people taking flights to our domain:

``Rising interest rates have been advertised for so long and in so many places that any one who has not appropriately hedged his position by now, obviously, is desirous of losing money,'' Greenspan said at a central bankers' conference in Frankfurt.

The bonds dropped a point to 112 20/32.

Still, considering the magnitude of Greenspan’s comments, the reaction was subdued considering the recent stock and bond market rallies. Watch for the trickle to turn into a flood in the days, weeks and months to come. We are going to have to jack up our own real estate prices on our planet very soon. Time to think about an immigration policy.

Mahendra is unreal. He called the oil move down and then in his commentary last weekend he said: "This week will be very interesting for oil because I see a sudden rise in oil prices from Thursday." Crude oil rose $2.22 per barrel today to $48.44. His clients are cleaning up. Congrats to our friendly seer.

From the brilliant Bill King in his latest last night:

Thursday was the range day we expected, except the action was more listless than we guessed. There were only a couple minor probes with no follow through or enthusiasm…Thursday’s economic data was modestly worse than expected - jobless 334k (330k exp), LEI -0.3 (-0.1) and Philly Fed 20.7 (23.1).

LEI has been negative for five consecutive months, a feat that normally signals recession. Merrill Lynch economists Sheryl King and David Rosenberg in their "Economic Commentary" yesterday highlight the close correlation between GDP and the LEI. The most notable exception since 1990 is the huge surge in the LEI that occurred after 9/11 due to Easy Al’s aggressive credit creation and the modest GDP uptick that resulted. It wasn’t until Bush’s massive fiscal stimulus in 2003 that LEI and GDP re-coupled.

In October, Northern Trust economist Paul Kasriel noted the same GDP-LEI link and added that personal income is falling sharply now that the tax cuts are exhausted. (Chart 3 in report) http://www.ntrs.com/library/ec…rch/outlook/us/us1004.pdf

-END-

India gold demand input:

Bill, this Dow Jones news wire further confirms the excellent John Brimelow reports on Indian Gold demand!!
JC

DJ Intl Demand Boosts India Apr-Oct Jewelry Exports 78%-Exec

MUMBAI (Dow Jones)--The high price of gold and increased overseas demand boosted the value of Indian jewelry exports 78% in the seven months through

October, the chairman of the Gems and Jewelry Export Promotion Council said Friday.

Indian jewelry exports in the April-October period rose to INR77.36 billion ($1.71 billion) from INR43.35 billion a year ago, Bakul Mehta told reporters at a conference in Mumbai.

While high gold prices - up 20% on the year - led the growth in exports, Mehta said a shift in jewelry manufacturing activity to India also was a major< factor.

"The trend looks promising and we are confident the jewelry industry will be able to cross the export target of $13.3 billion set for the full (fiscal) year," he said.

Gem and jewelry shipments make up about a fifth of India's total exports.

A major portion of jewelry manufacturing includes diamond cutting and polishing, with nine out of 10 cut and polished diamonds traded globally coming from India.

The council said that total exports of both jewelry and gems, including colored gemstones, grew 31% in the April-October period to INR367.34 billion.

"Demand is growing and we now have major retailers like Wal-Mart, Tiffany's and Zales sourcing from India," said Mehta.

The council is currently trying to improve the supply of rough diamonds and gold to further boost exports.

"We are looking at all options...and are working with the government to increase mining of precious metals in India," he said.

-END-

Chuck checks in with a good laugh:

Bill:
This is how I think that Mr. Greenspan’s testimony today has really transpired. The has probably been revised by the mainstream media.

"Gentlemen:

Good morning. As Chairman of the Federal Reserve System, you realize that I am privy to a lot of critical economic information, some of which as you can readily understand, I cannot divulge as it may affect the marketplace.

But today I have an important announcement to make. It has just come to my attention that the United States is running a very large trade deficit. I am not sure what the significance of this is, but I am told that this is not a good thing. Should this trade gap continue, I have been informed, that it might have some possible negative consequences. Now I am not saying that it will, but solely as an outside chance, it might. Now please do not ask me why or how this might affect the economy, because I am not very versed in this area. But I can refer you for more information to Mr. Kudlow or Mr. Kramer who are two highly visible and opinionated economic experts. You might find what you are looking for from them.

I cannot take any more questions at this time. Thank you

***

Houston’s Dan Norcini tells it like it is:

When asked if emerging-market economies are prepared for higher rates or if any new crises are around the corner, the Fed chairman was unusually blunt. "Rising interest rates have been advertised for so long and in so many places that anyone who hasn't appropriately hedged his position by now obviously is desirous of losing money."

Bill:
Remember back in February or March of this year when Greenspan testified before the Senate Banking Committee and calmly informed home mortgage holders that they ought to switch to adjustable rate mortgages to take advantage of the low rates? Now, here we are some 8 or 9 monhts later and the same guy is basically telling the same people that those nice, low, fixed-rate mortgages are a thing of the past and that those who listened to him and did not lock in the low fixed rates are now screwed! Amazing hubris!
Dan

More from Dan on the COT:

Hi Bill:
Not sure if you had time to look over the Commitments data.

About the same comments I made on Monday could apply. I am surprised to see that the commerical category in gold continues to buy right alongside our usual culprits on the commercial side who continue to sell. They matched more than half those cartel sells with some buys. The last time the commercial long category was this size was back in September when gold was trading closer to $400.

What is really interesting is that the COMBINED NET COMMERCIAL position is -166,227 which is still some 30,000 shy of the peak it reached back in April this year when it hit -196,307. There is still plenty of room among that designation of traders before we get anywhere near an "excessive" short position among the commercials. That is just a simple observation based on the data.

The NET FUND LONG position in gold is still some 21,000 contracts less than its peak back in April this year. There is still room to run there as well.

Also, the small specs added MORE NEW SHORTS than they added MORE NEW LONGS. Still a lot of top pickers among the small spec side. That is in almost complete contrast to SILVER where the SMALL SPECS are piling on the longs at an almost 2:1 ratio. What is remarkable when you compare SILVER to GOLD is that the commercial category in silver did nothing but SELL this past week. That is in stark contrast to gold where it appears more end users are fearful of rising prices and are hedging long anticipating higher prices.

I could see where someone could call Silver a bit "frothy" but I certainly do not see it in gold; not with the small specs continuing to add more new shorts than new longs and commercials adding longs at the rate they are…... …………

I forgot to add that even though the silver position could be called a bit "frothy", the NET COMMERCIAL short position is still about 9,000 contracts or so below the peak it made in March this year. Currently it is at -78,663 compared to -87,299 back then.
the small specs are still some 10,000 contracts or so shy of their largest NET LONG position which was again back in March of this year.
Dan

For those bummed out over the crummy gold share action:

Bill:
I invest by the 95:5 principle. Loosely translated: "only 5% of investments will exceptionally outperform the broad market." Where is that 5% today? You guessed it – in precious metals. Look @ the 3 year chart of gold. Look at the 3 year chart of the dollar, and all things that depend on it. Compare them. Look @ the 1 month chart of the U.S. Dollar – there had not been "ONE" close above the "10 Day" moving average, let alone the 20,50,100 or 200 day moving average. Some people want to give up their gold shares for dollar denominated assets? This is NOT a rational market. For all of you who are tired of holding gold stocks (which are leveraged to the price of gold roughly on a 3:1 basis) one of the emotions you will have to overcome is impatience. Does my timetable rule Mr. Market? No way. Mr. Market is schizoid, with a little help from "friends" who not being able to control the physical gold market any longer, appear to be shifting to roiling the gold shares market. Why do they do this? My guess is that they want the shares, that you are tired, afraid or incapable of holding on to. You may however buy them back from these same guys at way higher prices. Nice fellows, these guys! Do you remember the dot.com irrationality? IF you hang on to your shares, you may be able to see a much higher level of irrationality in the years to come in the precious metals share market. You make your own choices, as for me I can’t see a better value to be had in today’s market than the gold shares, and particularly the junior exploration firms.
Best,
Will the Peasant

The Peasant has it RIGHT!

Chuck is back with some late goodies:
In spite of the crappy action in the stocks, we are getting ready for some fireworks. No doubt in my mind. To show how ridiculous it is, Ross River announced an extremely bullish take on one of their properties and the stock actually went down 10% after opening higher.

I think that the Chairman's statements are laying the basis for a buying panic here. He is so concerned about his public image that he will never be seen as having egg on that lovely face. He will not allow himself to be perceived as being clueless, which in fact, he is. My thought is that he has just been told by one or more of our dollar benefactors that they are pulling away from their commitment to continue to support our paper. That either means a collapse in the buck or sharply higher interest rates.

Also I just got off the phone with my friend at Centenniel, and he told me the same thing that I heard from my local coin merchant: the inquiries in the metals are exploding. Throw that onto the newly commenced ETF which allows pension funds to buy gold, a rising price that will breed a frenzy, a massive short position, empty vault rooms, a technically ugly stock market and parabolic gold and silver charts, and something huge is around the corner. I have a feeling that there are some major decisions that will be made this weekend by fund managers to get their feet wet.

I'm ready and you deserve it.

Puerto Vallarta is lovely in the winter.
Chuck

Why is Barrick doing so well lately with so many other quality gold firms struggling. The no-nothings are touting it. Smith Barney put out a buy on Barrick ($24.83, up 71 cents) today.

Samex (78 cents, up 3 cents) came out with some drill results last night. On the surface they were dull. However, if you read between the lines and look below the surface, it is very exciting. Why:

*They have found copper where Phelps Dodge couldn’t.
*They have discovered a porphyry copper/gold mineralized intrusive system.
*What they found so far is the type of material which often leads to the economic part of the system.
*The team of geologists are VERY upbeat, realizing it usually takes 30 to 70 drill holes to figure out a porphyry like this.
*If it is what SAMEX thinks it is, the discovery will be of significant size.

For the full Samex news release; http://www.samex.com/news/aa-n…04/NR8-November18-04.html

The new gold ETF traded on the NYSE closed at 44.78, a noticeable $1.40 premium to the US spot close.

The gold shares continue to stink up the place, almost beyond comprehension. The higher gold goes the worst they act. Clearly the thinking is this gold rally cannot last, thus better to dump gold shares on rallies before the inevitable correction – a correction predicted by many for weeks now. The XAU gained 1.37 to 109.68 and the HUI dinked its way to 241.32, up a piddly 1.95.

With the sizeable amount of gold options on the books and the amount of DEC open interest on the Comex, there is a shot for a gold rocket ship ride next week, especially since so few are looking for one. Almost everyone is looking for a huge correction in the price. Practically no one is looking for the price to take off from here. However, look at the chart, forgetting it’s gold for the moment. This is a chart of a commodity which looks like it is going to go into an acceleration stage.

Unless something dollar bullish comes out of the G-20 meeting this weekend, the dollar should tank Monday as Greenspan’s comments become fully appreciated. This could cause some convulsion in the US financial markets and cause The Gold Cartel great stress and a loss of control of the gold price in the near-term. Either way, we have one exciting Monday coming up.

What keeps hitting me over the head is thinking back to 1987. Rates were going up then and the dollar was dive bombing. Wall Street paid little attention. PRICE ACTION MAKES MARKET COMMENTARY. Since the US market was doing fine, the sinking dollar didn’t matter. Then the market crashed and shook the world up.

Whatever happens next week, gold and silver’s time is upon us. Gold is going to be the GO TO investment around the world. Demand will grow and grow. The Gold Cartel WILL be carried out on GATA’s stretchers at some point ahead.

Sweet dreams and remember:

GATA BE IN IT TO WIN IT!

MIDAS "TEN HORNS" MURPHY

Nov 19, 2004

<>Global: Why the World Needs a Weaker Dollar

Stephen Roach (New York)

A $40 trillion world economy is dangerously out of balance and seriously in need of a fix. A decline in the dollar is not a cure-all for all that ails the world, but it should go a long way in sparking a sorely needed rebalancing. That adjustment may now be under way.

Global imbalances are a shared responsibility that requires a joint resolution. America is guilty of excess consumption, whereas the rest of the world suffers from under-consumption. Growth in US consumer demand averaged 4% annually (in real terms) over the 1995 to 2003 period, nearly double the 2.2% gains elsewhere in the industrial world.

America’s consumption binge has not been supported by internally-generated income growth. Instead, US consumers have borrowed against the future by squeezing saving to rock-bottom levels. The personal saving rate stood at just 0.2% of disposable personal income in September 2004 — down from 7.7% as recently as 1992. Moreover, large federal budget deficits have taken the government’s saving rate sharply into negative territory — pushing the overall national saving rate of consumers, businesses, and the government sector to historical lows.

America’s saving shortfall has major consequences for the rest of the world. Lacking in domestic saving, the US imports saving from abroad in order to fund the ongoing growth of its economy. And it must run massive current-account and trade deficits to attract such capital from overseas. The United States balance-of-payments deficit hit an annualized $665 billion in mid-2004, or a record 5.7% of GDP.

The flip-side of America’s consumption binge is an overhang of excess saving elsewhere in the world. This shows up mainly in the form of sluggish consumption growth and current-account surpluses in Asia (especially Japan, China, and Korea), Europe, and the Middle East. For now, America draws freely on this reservoir — currently absorbing about 80% of the world’s surplus saving by attracting an average of about $2.6 billion of capital inflows from abroad per working day. Not only has the United States turned increasingly to offshore production platforms and labor markets in recent years, it is now outsourcing its saving, as well.

This is a highly unstable arrangement. For starters, America’s current-account deficit seems set to widen further over the next few years, moving into the 6.5% to 7.0% vicinity by late 2005 or early 2006. As such, the US will be asking more and more of its global financiers to fund budget deficits and excess consumption. That may be asking too much. Private overseas investors have already turned skittish in providing capital to the US, leaving overseas central banks to fill the void. Over the 12 months ending September 2004, foreign monetary authorities have accounted for 28% of total net foreign purchases of long-term US securities — nearly double the 15% share of the prior 12-month period.

The day will come when foreign investors simply say "no" to this arrangement — refusing to fund America’s consumption binge without getting a meaningful concession on the terms of financing. That’s when the dollar collapses, US interest rates soar, and the stock market plunges. Under such a crisis scenario, a US recession would be all but inevitable. And a US-centric global economy would undoubtedly be quick to follow. Unfortunately, with America’s current-account deficit now in the danger zone, that day of reckoning could well come sooner rather than later.

The only way to avoid this wrenching endgame is for the world’s major central banks to move preemptively on the dollar, carefully managing a gradual but significant depreciation over the next several years. There are several advantages of such an approach:

First, it would trigger a gradual rise in US interest rates — in effect, sparking a price concession on bonds that is probably the only way that foreign investors can be enticed to keep sending capital to America. That, in turn, would suppress growth in those sectors of the US economy that are most sensitive to interest rates, such as housing, consumer durables such as cars, and business capital spending. That would result in higher domestic US saving and a reduced need for foreign saving — the essence of a classic current-account adjustment.

Second, a weaker dollar, of course, means other currencies need to strengthen. So far, the euro has borne a disproportionate share of the adjustment. Asian currencies have barely budged — especially those of Japan and China. That reflects the role that cheap currencies play in supporting export-led Asian growth — and the desire of Asian authorities to keep buying dollar assets in order to keep the magic alive. A failure of Asia to adjust and accept some of the burden of a weaker dollar will put increasingly intense pressure on the euro — leaving an already fragile Euroland economy in even tougher shape, with a growing sense of resentment toward Asia. Asia’s monetary authorities — including those in Japan and China — now seem resigned to more flexible approaches in managing their currency regimes. That could go a long way in relieving the burden on Europe.

Third, as the currencies of Asia and Europe strengthen in response to a weaker dollar, there will be downward pressure on exports in these two regions — the main drivers of their growth in recent years. This will force Asia and Europe to push hard to stimulate domestic demand in order to compensate — resulting in a reduction of saving and a related narrowing of current-account surpluses. This is easier said than done, of course — especially since it entails increased effort on labor market and other structural reforms in order to unshackle long-dormant domestic demand.

A fourth and final reason to welcome a weaker dollar is that it would be an especially potent force in defusing mounting global trade tensions. Dollar depreciation provides support to US exports that, together with an interest-rate-induced slowdown of domestic demand and imports, should reduce the trade deficit and temper protectionist risks that still seem quite evident in many quarters of the US Congress. To the extent a weaker dollar forces greater currency flexibility out of Asia, that would reduce the possibility that Europe could turn up its own protectionist campaign. A weaker dollar provides better balance to the tradeoff between economic and political forces.

In the end, a lopsided world needs a jolt to find this healthier state of balance. A weaker dollar is the functional equivalent of a major shift in the world’s relative price structure that could well lead to greater balance. Given America’s gaping and rising balance-of payments deficit, dollar depreciation is all but inevitable. There are two options for the world’s financial authorities — remain in denial and get blindsided by a dollar crash or move ahead of the markets and manage the downside. With the dollar now back in play and depreciation proceeding at a gradual pace, there is more reason for hope than despair. Yet if the world’s politicians and policy makers step in to arrest this trend — either by stabilizing the dollar or allowing it to appreciate — then all bets would be off. Today’s unbalanced global economy needs a weaker dollar more than ever.

Dollar depreciation has long been central to the global rebalancing framework that drives my view of the world economy. It’s not that a realignment of foreign exchange rates is the cure-all for a lopsided world. If anything, currency-related impacts on trade flows and inflation have actually diminished over the past decade. But, in my view, a shift in the world’s relative price structure is a powerful signaling mechanism that puts a number of other forces into play — economic as well as political — that are essential for the urgent rebalancing of an unbalanced world. Provided the currency shift doesn’t get out of hand, a sustained but managed weakening of the dollar is good news for the global economy and world financial markets.

pro aurum hat 2 drittel seiner bestände bei angeblichen 448,50 verkauft. da waren sie aber fix und haben die allererste minimale chance des verkaufes genutzt. (obwohl m.e. der höchststand am freitag unter 448 war)
wochenlang haben sie uns erzählt, bei 430 steigen sie groß ein. ab 430 wird alles gut. als wir der 430 immer näher kamen wurden sie schon kleinlauter. dann musste es schon ein signifikantes durchbrechen der marke sein. irgendwo bei 432,xx haben sie dann nach langem zaudern mit vollen hosen gekauft und fast jeden tag erzählt, wie unwohl sie sich doch jetzt dabei fühlen. nun haben sie ja den kleinsten strohhalm genutzt, um aus dem großteil ihrer positionen raus zu kommen. da haben sie nicht gezaudert.
wahrscheinlich bin ich ja nur ein kleiner, ahnungsloser anleger, welcher die großen strategien der experten nicht versteht. allerdings versuche ich möglichst billig zu kaufen und warte nicht wochenlang, bis die kurse "oben" stehen. dann kaufen und über die situation erschrecken, in welche man sich leichtfertig, als die kurse noch weit unter 430 standen, hineingeredet hat. Da klang das alles ja noch so schön professionell und war "weit" weg.

bei silber vor einigen wochen das gleiche spiel. warten bei steigenden kursen auf "einstiegskurse". dann haben sie nahe dem hochpunkt gekauft und wurden bei der ersten korrektur wieder ausgestoppt.

hier hat mal einer geschrieben, das wären kaufleute. gut, bei karstadt und holzmann nennen sie sich wohl auch so.

ps, ich bin froh und dankbar, dass es goldhändler gibt. so etwas kann nur förderlich sein. allerdings werden in der deutschen wirtschaft wie in der politik die ergebnisse der pisa-studie täglich bestätigt.