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

The heat must be on Barrick Gold to come out with this:

High gold prices don't deter Barrick hedge cuts

VANCOUVER, British Columbia, Nov 23 (Reuters) - Today's higher gold prices won't stop Barrick Gold Corp. from reducing its hedge book, the world's third biggest gold miner said on Tuesday, adding that it remains "very committed" to bringing down the bulky forward sales position.

"A higher gold price does not preclude us from reducing the position. As prices are high we can blend lower-priced contracts (with sales at spot prices) and still experience earnings and cash flow growth," Jamie Sokalsky, Barrick's chief financial officer, said.

So much for their brilliant move years ago to build up their hedge book with gold below $300 per ounce. Hubris bites the dust.

-END-

14:27 GFI HMY announces GFI's motion for preliminary injunction has been denied (14.28 -0.47)
GFI's motion to block HMY's hostile bid was denied. The court also ruled that the evidence submitted failed to support GFI's claim that HMY misled shareholders relative to disclosure of its gold reserves. Note that GFI's bid to South Africa's Supreme Court to block HMY's hostile bid failed (see 11/11 comment).
* * * * *

If the gold shares are a leading indicator for the price of bullion, gold is going to completely collapse, like to $375. The XAU sank 2.54 to 107.71, while the HUI couldn't wait to take out 240 on the downside again. It closed at 237, down 5.02. More than pitiful.

As has been the case for some time, John Brimelow reports of a very firm cash gold market. While John reports on the Indian premiums (which are an indicator of local demand for gold in India itself versus the supply available), I also view it as an indicator of world demand. The reason is the Indians are competing against the Russians, Chinese, Arabs, etc., for the world supply out there. In days of yore the demand would dry up as the price rose sharply. The Indians would sit back and wait for the specs to be liquidated. Then they would re-enter the market. This worked for them for many years.

Now, if I am right, The Gold Cartel’s supply is gradually drying up. They are able to handle a controlled retreat with what they have been doing, but are unable to orchestrate a LASTING bombing. It would eat into too much of their ammo. Since the Indians are competing with all kinds of new investment demand for gold, their local bullion dealers need to keep their bids high to satisfy the buying requirements of their consumers.

Therefore, in this scenario, price dips in the near future should be minimal, or if sharp, ought to be very brief. Once the market breaks the shackles of the crooks and soars, the price will outrun the physical market and then gold should go through a normal and healthy correction.

Meanwhile the gold shares could not act worse. There is little conviction out there and almost no understanding of what the gold market is really all about. This is why I consider the World Gold Council and a good deal of the rest of the gold establishment to be a disgrace. They have done nothing to present the evidence GATA has uncovered of blatant price suppression. Matter of fact they have done what they could to do their own bit of suppression. Without the price manipulation gold would be hundreds of dollars higher and your share prices would be through the roof. We would all be smiling, happy campers. Instead, you have ennui and increasing despair as the share price action worsens relative to where the price of bullion is.

This says it all:

Bill,
In my nearly 2 years of following the gold market, today has to be the most blatant day of manipulation and capping I have ever seen. It is very frustrating that they can do this. This was a day when gold should have gone well over $450 and instead they hand us a $1.10 cent loss on the day. I am sure this is part of their tactic so that they can create bearish sentiment even at over $447. They will reap what they sow. Their day is coming.
Wendell

Will report in from San Diego tomorrow. Out of here.

GATA BE IN IT TO WIN IT!

MIDAS

Bill,
You might want to include this gold ETF article from Investors Business Daily in a satirical manner in Midas. Some of the comments by the institutional mutual fund managers are so stupid that they are worth noting. One says, "no more than a couple of percent in gold." (Now really Bozo, exactly what will a couple of percent do to your portfolio?) Another says, "it doesn’t do much of anything for your portfolio except get you the rate of inflation over time." (Oh my, well that is a h_ll of a lot better than the market over the past 4 years. And, I believe gold is up 75% since 2001 which is much better than the LBS inflation statistics!!!)

It is amazing what length these idiots will go to in order to protect themselves from criticism for not being in the #1 investment class since 2001!

-END-

Mutual Funds & Personal Finance
Tuesday, November 23, 2004

Gold ETF Gets Off To A Glittery Start
BY MURRAY COLEMAN
INVESTOR'S BUSINESS DAILY

The first U.S. exchange-traded fund that invests in gold bullion debuted last week amid record first-day trade, but some money managers and market observers are urging caution.

StreetTRACKS Gold Shares on Thursday set a volume record for derivatives on its opening day on the New York Stock Exchange. Some six million shares were traded. The next day more than 11 million shares of the ETF, which is distributed by State Street Global Advisors and sponsored by the World Gold Council, changed hands.

Each share of Gold Shares represents 10% of an ounce of gold. On the first three days of trading, its shares closed at 44.38, 44.78 and 44.97.

The demand for an easier and more direct way to invest in bullion as a hedge against inflation or a weak dollar was evident in the heavy volume in the ETF's first days. But not everyone was biting. David Fry, founder of the ETF Digest, is advising his 1,000 subscribers to hold off. Why?

He's not convinced that investing in pure bullion, rather than stocks of gold mining firms, is the way to go.

Another drawback: Since the ETF invests in gold, gains realized on sales of shares will be taxed at the collectibles rate of 28% instead of the lower capital-gains level of 15%.

So Fry is continuing to tell investors interested in gold to stick to stocks. "With stocks, you can get a dividend, which is a nice little extra," said Fry. "I'd rather wait until an ETF comes out that's based on a broad-based gold stock index than pure bullion."

The ETF might have greater appeal to stock speculators who aren't familiar with futures, options or coin markets.

Difficult Entry

"It's been very hard for individuals to get into the market," said Frank Holmes, chief investment officer at U.S. Global Investors, which runs $410.6 million in precious-metals funds. "And pension funds have told us that it's just too hard to get special approval from their trustees to go out and make complicated moves to include gold in their portfolios."

The price of bullion usually fluctuates less than gold mining stocks. That can be a plus or minus, depending on what's happening in the market. If gold is falling a lot, bullion is going to provide a less bumpy road down than stocks. But if prices are rising, stocks are typically going to do better.

"People need to realize this ETF is going to swing to whatever's happening in the gold market at any given time," said Mark Johnson, manager of USAA Precious Metals & Minerals Fund.

That's why some fund managers say they're not concerned about the short-term popularity of the new ETF. "Gold's volatility gives managers like myself a definite advantage over passive ETFs," said USAA's Johnson.

While most of his holdings are in gold stocks, he can also invest in other metal sectors. Right now, about 20% of the $337.8 million fund's assets are invested in other metals and cash.

"With such a volatile asset class, a manager's ability to go to cash and other commodities is critical," said Johnson, who also advises fund investors not to own more than a few percentage points of gold in their portfolios.

Investors pinning their hopes on gold ETFs will find their returns diminish greatly over time, says Johnson. With the commodity-based ETF, you miss out on the effect that improving stock dividends and rising earnings estimates have on stock prices, he said.

A stock-based index or mutual fund also doesn't have to worry about storage and handling costs for the underlying commodity. State Street's new ETF, since it's buying bullion directly, will pass those costs along to investors. It intends to sell part of its inventory to defray those costs and other administrative fees. The ETF will charge shareholders 0.4% of assets to cover expenses.

"The more investors State Street Global attracts to their new ETF, the more bullion they're going to have to buy," said ETF Digest's Fry. "That means it's difficult right now to tell just how expensive owning an ETF like this is really going to wind up being for individuals."

More To Come

More are likely on the way. ETF giant Barclays Global Investors has filed to come out with a similar bullion-based ETF. The American Stock Exchange also has created a new index of gold stocks. It says negotiations are under way for a distributor to offer a gold ETF in the U.S. based on that bogey.

"The bottom line with gold is that it doesn't do much of anything for your portfolio except get you the rate of inflation over time," said Scott Salaske, vice president at Portfolio Solutions, which runs $400 million in assets for individuals.

Many investors want to jump into commodities in times of rising interest rates. Salaske says his firm prefers Treasury Inflation Protected Securities, or TIPS, as a hedge. Those are Treasury bonds that are indexed to the consumer price index.

"The price of gold can be heavily influenced by people piling into the market for something like this new ETF," said Salaske. "With TIPS, the only real question is how much the CPI's going to rise."

It's also easier to track Treasuries and the CPI than gold futures markets, he adds. "And with TIPS, you're at least guaranteed a real return," said Salaske, "even if inflation's zero."

-END-

Just in. We are getting the attention of the SEC:

Bill is this buck passing or what?

From: SEC Help [mailto:help@sec.gov]
Sent: Tuesday, November 23, 2004 2:54 PM
To: Schilling, Danny
Subject: SEC Response - File # HO1034317

Dear Mr. Schilling:

Thank you for contacting the SEC.

I have searched the SEC public database and did not find any notice that the SEC has information that there this security does not have any gold. However, you should conduct your own research on any security before you invest.

Leslie M. Garner
Attorney
Office of Investor Education and Assistance
U.S. Securities and Exchange Commission

November 24 - Gold $449 up $1.60 - Silver $7.60 up 6 cents

The Drama Builds!

The most common sort of lie is the one uttered to one's self...Friedrich Nietzsche

GO GATA!!!!

"The gold market is not rigged."

"The gold market is not capped."

"There is no Gold Cartel."

"There is no such thing as a wild conspiracy to manipulate the gold price."

Nietzsche must have had the brain dead in the gold world in mind when he uttered his well known line above. After the last two days of blatant gold price manipulation, how could there be anyone out there left who STILL doesn’t get it?

Incredibly, there is. The gold industry itself is beyond hope. What a bunch of lightweights! No other industry in the world would allow these in-your-face price-fixing shenanigans to continue without an uproar - and I mean a BIG UPROAR. Well, we know they are a gutless lot. So, GATA will run with their ball in spite of many of them, like we have for six years. Meanwhile, no way am I going to hold back my contempt for most. What a legacy to leave their kids. We will win this thing. To heck with this dopey industry. The Gold Cartel is doing down.

For the third time in a week I am referring to what John Brimelow brought to our attention last Wednesday re: former Fed Chairman Paul Volker’s memoirs. It is more appropriate than ever to bring it back to your attention on a day such as this:

"…..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."

What else need be said? Greenspan (last Friday) and the finance ministers at the G-20 meeting last weekend told the world the dollar had to go down. To make sure the drop would not accelerate out of control, they must have agreed to make sure the gold price did not rise above $450 for the time being. Case closed. Joint intervention it is. For the brain dead in the gold world further explanation is in order: intervention means manipulation, suppression of free market forces, and price-capping. Intervention means various entities are conspiring to achieve their own objective.

This is what is so aggravating about the negligent World Gold Council. So what if they bring a gold ETF on board compared to exposing this blatant price-fixing scheme which is keeping gold hundreds of dollars per ounce below where it ought to be in a freely traded market? What, NET, has this GLD accomplished? Nothing. Zip. Zero. Gold is trading no differently than it has for months. The new (and perhaps substantial) buying brought in by this new trading entity is MEANINGLESS compared to the intervention thrown at the market by The Gold Cartel and allies. Exposing the gold sham for what it is would be worth 100 gold ETFs.

Woke up in San Diego this morning, early, and went right back to bed when I saw how gold was not allowed to get above $449/$450, even though the dollar was continuing its free-fall.

Meanwhile, the US bond market and stock market seem oblivious to the dollar collapsing. While gold is stuffed, they continue to go on their merry lofty price ways. American investors can go into denial if they want, like they did during the summer of 1987. However, what about foreigners who have invested in our financial markets? Their investments are being routed with the dollar tanking like this.

Short-term most pundits might find it hard to get a handle on what there is in store for the rest of this year, for good reason. Clearly The Gold Cartel is trying to set up gold for a trashing when the dollar corrects for some eventual reason. It is ironic that most everyone is dollar bearish and it keeps going down and down and down. Yet, at the same time, there are far more short-term gold bears than bulls at the moment. Two more well known pundits exited the long side of bullion yesterday. The dollar move down is not affecting the dollar bears, only the gold bulls. Then again, there is no Dollar Cartel.

Who would be bearish, or out of the long side of gold, if one only looked at a gold chart? If it were not gold, would so many be looking for an immediate correction? The Gold Cartel has been very effective in conditioning market participants on what to expect re future price action. Till now anyway. The gold chart reveals a gradual move up of new high after new high. The irony is how FEW in the investment world are bullish vis-à-vis what the chart tells us. The real surprise would be for gold to take off from here, not correct. ALMOST EVERYONE expects gold to retreat. Look at the continually horrendous gold share action to understand what most share investors believe is coming down the near-term pike. Yet, the share action has predicted a gold drop for many, many weeks – while gold goes up and up, even with the nauseating capping.

Those in the gold correction camp have a reasonable expectation when viewing how aggressive The Gold Cartel is with their gold price-capping activity in light of the dollar dive bomb. However, what would disturb me if I were in that camp is the amount of company there is of those who think the exact same way. What they may be overlooking:

*We have a four day gold holiday coming into play. Players around the world might be reluctant to put on new long positions with Comex closed for four days.

*Why buy here with The Gold Cartel so blatant in their price-fixing drills? The big money is probably on the sideline and waiting for gold to take out $450 before adding to established positions, or making new ones. A breach of $450, after all the cabal selling the past week, will reveal weakness on the cartel’s part. The sharks, smelling blood, will know that.

*The CRB made a 23-year high today, closing at 291.61, up 2.89. It won’t be too long before it takes out 300, a key psychological level which will create a good deal of hoopla and inflation commentary. The increased focus on increasing inflation in the US will add to gold fever excitement/demand.

*At some point the US stock and bond markets are going to give up their levitation routines. The Working Group on Financial Markets (PPT) can only do so much. The problems facing the US, so well articulated by Stephen Roach of Morgan Stanley, are not going away. They are worsening. When fears of US financial market distress mount, more and more smart money is going to turn to gold as “the go-to investment.” The dollar might firm up a bit as our interest rates shoot up with gold taking off at the same time.

The dollar closed at 82.46, down .53. The euro was last seen in flight at 131.66 and still rising. With what commodity prices and the dollar did today, it doesn’t get any more gold bullish as far as outside markets are concerned. You should be making a fortune as the gold price soars. Instead, you are being ripped off. If you have not already done so, join the GATA ARMY and do something about it. Scream bloody murder to your gold share CEOs.

Get this. Two days ago gold in euros was breaking out at 344. Today it was last seen at 340.94, which is horrendous and a real momentum stopper for those in foreign countries beginning to be excited about a bull move in gold. Why is gold in euros retreating with so many bullish factors going for it? The corrupt Gold Cartel; pure and simple.

This is our Thanksgiving Day holiday in the US. I am very thankful for my good health (knock on wood) and wonderful family. I am also grateful I have the opportunity to expose the bums whose secretive actions will eventually wreak havoc on the unsuspecting American public.

The gold open interest number revealed a staggering DROP of 18,148 contracts to 353,638. No reason to get into the DEC numbers when the US Government won’t let gold go past $450, unless the longs find a way to squeeze Uncle Sam. Here is the reason for the huge decrease. It was option related. Perhaps 15,000 of the drop could be linked to the 450 calls not going in the money. Delta hedgers sold futures positions as Tuesday wore on when it became very apparent that price level would not be breached and they would not have to deliver to long option holders.

The major gold price-capper today: You guessed it, Goldman "Hannibal Lecter" Sachs. Same ole, same ole.

Gold closed at another new 16-year high.

Silver continues to meander with little conviction either way. It is SO CHEAP. The shorts are going to be annihilated within the next few months.

The silver open interest dropped 2232 contracts to 121,720.

The John Brimelow Report
Huge price-capping operation underway

Wednesday, November 24, 2004

Indian ex-duty premiums: AM $7.60 and $6.88, with world gold at $ 447.25 and $ 448.85. Ample for legal imports. The rupee cleared $1 = R45 at one point today, only to be forced back by heavy intervention by the Reserve Bank. India continues to be firm bidder for world gold.

The contrast between the caution displayed by the Indian authorities and the feckless irresponsibility of the South Africans will be sadly noted by gold equity holders.

TOCOM is lying low. On volume equal to only 13,650 Comex lots (23% more than Monday) open interest was static (up 20 Comex lots). Of course the strength of the yen is inimical to holding yen futures. (Comex yesterday traded an estimated 150,000 lots, or almost 90,000 net of all switch effect. Open interest on Monday rose 5,633 lots (17.5 tonnes!) to a record 370,787 lots, and probably rose substantially again yesterday.)

Greatly to the delight of the skeptics, the ETF appears to have stopped accumulating metal, and trading volumes have fallen away too. Of course, this makes the huge COMEX activity yesterday (and today - 30,000 net of switches by 10 am) more ominous. Clearly the market is being capped at $450 by a very determined seller.

This seller is obviously not being helped by the behaviour of the dollar. The next two days, with the main physical consumers open, and opportunistic Comex allies away, may be far more difficult for gold's enemies than many currently presume.

I am not likely to be able to publish until Monday. A pleasant Thanksgiving to US readers.

JB

CARTEL CAPITULATION WATCH

The DOW rose 28 to 10,520, while the DOG leaped 18 to 2103. Up, up and away. Unreal!

The euro rose 1.35 the past two days. Gold? Up a whopping 50 cents. But, there is no manipulation!

US economic news:

08:30 Jobless claims for w/e 11/20 reported 323K vs. consensus
Prior week revised to 335K from 334K.
* * * *

08:30 Oct. Durable Goods reported (0.4%) vs. consensus 0.5%; ex-Trans (0.7%) vs. consensus (0.2%)
Prior week revised to 0.9% from 0.2% for Durables; 2.8% from 1.8% for ex-Trans.
* * * *

09:47 University of Michigan Confidence reported 92.8 vs. consensus 96, says Reuters
Prior reading was 95.5.
* * * * *

10:31 DOE reports crude oil inventories +100K barrels vs. expectations +525K barrels
Gasoline inventories reported +1.8M barrels vs. consensus +900K barrels. Distillate inventories reported +1M barrels vs. consensus +50K barrels..
* * * *

11:23 API reports crude oil inventories (1.2M) barrels
Gasoline inventories +2.9M barrels, while distillate inventories +1.8M barrels.
* * * * *

12:00 EIA reports natural gas inventories (49)bcf vs. consensus (13)bcf
For reference, year-ago data was (1)bcf. Prior week's data was (6)bcf. Expect nat'l gas to rally in reaction.
* * * * *

Stephen Friedman may have been the least visible economic advisor in recent memory. Compared to Lawrence Lindsay, he was invisible. Very strange. Soon, he will be history:

Bush economic advisor leaving
Stephen Friedman plans to return to private sector
The Associated Press
Updated: 12:55 p.m. ET Nov. 23, 2004

WASHINGTON - Stephen Friedman, one of the President Bush's top economic advisers, is leaving the White House to return to the private sector in New York, a senior administration official said Tuesday.

Friedman, who served as the behind-the-scenes coordinator for the administration's economic policies, is to leave by the end of the year. There is no imminent announcement on his replacement, said the official, speaking on condition of anonymity.

Friedman replaced Larry Lindsey, who resigned with former Treasury Secretary Paul O'Neill two years ago in a shake-up of Bush's economic team…..

. Bush named Friedman assistant to the president for economic policy and director of the National Economic Council in December 2002. Friedman had spent 28 years with Wall Street investment giant Goldman Sachs & Company, where he served as co-chair from 1990 to 1994, sharing the job at first with Robert Rubin, who left in 1992 to join the Clinton administration….

Friedman's selection by Bush initially sparked a revolt among conservative "supply siders," who questioned his commitment to further tax cuts because of his membership in the Concord Coalition, an anti-deficit group.

Friedman, however, allayed the concerns of conservatives and became an enthusiastic booster of the third round of tax cuts which passed Congress in the summer of 2003.

-END-

“During his time in the administration, Friedman mostly worked behind the scenes, coordinating economic initiatives and serving as the administration's liaison to Wall Street.”

Friedman had to be one of The Gold Cartel bag men, especially between the Exchange Stabilization Fund and Goldman Sachs. He has to know the game is about up and wants to get out of Dodge lickety-split.

The Year Of The Rooster – Gold bars on sale in China:

http://english.people.com.cn/2…0/eng20041120_164570.html ***

Meanwhile:

/FROM PR NEWSWIRE WASHINGTON DC 202-347-5155/ TO NATIONAL, FOREIGN AND BUSINESS EDITORS:

'China Tells U.S. to Put its House in Order' Remarks Draw Ire From U.S. Coalition
WASHINGTON, Nov. 24 /PRNewswire/ -- The China Currency Coalition (CCC) expressed outrage today at the inaccuracy and arrogance of statements of the Deputy Governor of the People's Bank of China accusing the United States of blaming others for its economic difficulties.

According to a November 22 Financial Times report entitled China tells US to puts its house in order, Deputy Governor Li Ruogu said, "China's custom is that we never blame others for our own problem. For the past 26 years, we never put pressure or problems on to the world. The US has the reverse attitude, whenever they have a problem, they blame others."

"The statement by Li Ruogu underscores China's unwillingness to acknowledge the seriousness of the current situation," said attorney David A. Hartquist who represents the coalition. "Apparently, China believes that minor modifications to the administration of its capital markets are sufficient to exonerate it from its beggar-thy-neighbor policies."

The coalition's position is that China's policy of undervaluing its exchange rate undermines not only China's economy but threatens the global financial system. The CCC points to agreement among respected economists that China's exchange rate is undervalued at estimates ranging from 15% to 85%. The coalition estimates that the degree of undervaluation is about 40%.

According to the coalition, the undervalued exchange rate effectively subsidizes China's exports and taxes China's imports. Further, it makes investment in China cheap, thus accounting for the continued growth in foreign direct investment in China to an unprecedented level of $53 billion in the first ten months of 2004.

China's foreign exchange earnings now are approaching $515 billion, almost $100 billion more than the comparable period last year. As a result, China's inflation rate has increased to over 5% compared to the deflationary period of a few years ago. China's money supply is growing 17% to 20% annually; and China has had to adopt administrative directives prohibiting bank loans to some industries in an unsuccessful effort to cool down the overheated economy.

"China must recognize that -- due to the sheer magnitude of its economy -- its policies affect global commerce. China's undervalued exchange rate policy has produced repeated complaints from President Bush, many members of Congress, the International Monetary Fund, Asia Pacific Economic Cooperation (APEC) finance ministers and European leaders," said Hartquist.

"China's exchange rate policy in fact places enormous burdens on those currencies that float against the dollar," Hartquist continued. "Whereas the value of the dollar and other major currencies are market determined, the yuan is set by fiat -- fixed at a 8.28 yuan per dollar. So, as the dollar depreciates against other major currencies such as the euro, the yuan also depreciates against those currencies, when it should be appreciating. Thus, other currencies must appreciate more than necessary to compensate for the fixed yuan."

Hartquist concluded, "China must take responsibility for creating stable financial conditions instead of forcing other economies to suffer the adjustment costs of China's exchange rate policy."

The China Currency Coalition is an alliance of U.S. industrial, service, agricultural, and labor organizations.

David A. Hartquist is an international trade partner with the Washington, D.C. law firm Collier Shannon Scott PLLC.

For further information, see http://www.chinacurrencycoalition.org or contact Meg Mullery at 202.342.8439 (mmullery@colliershannon.com).

SOURCE China Currency Coalition

-END-

A bit lengthy for the MIDAS, but too important to leave out:

The dollar's demise
Nov 23rd 2004
From The Economist Global Agenda

Is the dollar's role as the world's reserve currency drawing to a close?

WHO believes in a strong dollar? Robert Rubin, Bill Clinton's treasury secretary, most certainly did. John Snow, his successor but two, says he does but nobody believes him-if only because he wants other countries' currencies, in particular the Chinese yuan, to go up. Mr Snow's boss, President George Bush, in one of his mercifully rare forays into economics last week, also said he wants a muscular currency: "My nation is committed to a strong dollar." Again, it would be fair to say that this was not taken as a ringing endorsement. "Bush's strong-dollar policy is, in practical terms, to maintain a pool of fools to buy it all the way down," a fund manager was quoted by Bloomberg news agency as saying. It does not help when the chairman of your central bank, Alan Greenspan, whose utterances on the economy are taken rather more seriously than Mr Bush's, has said the day before that the dollar seems likely to fall: "Given the size of the current-account deficit, a diminished appetite for adding to dollar balances must occur at some point," were his exact words. The foreign-exchange market immediately decided that it was sated, and the dollar fell to another record low against the euro.

Mr Greenspan's words were of huge moment, and not just because he spoke clearly, unusual though this was, nor because the Federal Reserve rarely comments on foreign-exchange movements. No, Mr Greenspan's words were significant because he was tacitly admitting what right-thinking economists the world over have long believed: that the emperor has no clothes.

Mr Greenspan's previous line had been that America's ever-expanding current-account deficit was not a problem when capital could flow so freely around the world; and that, in effect, it would continue to flow to America because the country is such a wonderful place in which to invest. Now he is saying that it won't, or at least that investors will demand a cheaper dollar, or cheaper assets, or both, to carry on financing America's deficit.

But Buttonwood suspects that the deeper significance of Mr Greenspan's admission is that the game that has been played since the collapse of the Bretton Woods system in the early 1970s is drawing to a close. The dollar's status as the world's reserve currency-its preferred store of value, if you will-is gradually coming to an end. And, ironically, the fact that it has become so popular in recent years will only hasten its demise.

One man who undoubtedly believes in a strong dollar is Japan's prime minister, Junichiro Koizumi. Unlike America, Japan has been putting its money where its leader's mouth is. On behalf of the finance ministry, the Bank of Japan has bought more dollars than any other central bank has ever done. At last count, it had the equivalent of $820 billion in foreign-exchange reserves, most of it denominated in the American currency.

As goes Japan, so goes the rest of Asia. In an interview this week with the Financial Times, Li Ruogu, the deputy governor of China's central bank, the People's Bank of China, said that his country would not be rushed into revaluing the yuan, and that America should put its own shop in order. Mr Ruogu's bank, too, has been a huge buyer of dollars in recent years. China and the rest of developing Asia now have $1.4 trillion of reserves, mostly dollars. This is more than the combined reserves of the rest of the world (excluding Japan). Thanks mostly to Asian intervention, foreign-exchange reserves at the world's central banks have climbed from $2 trillion in 2000 to $3.5 trillion in 2004.

It used to be that countries amassed reserves as a war chest to protect against a run on their currencies of the sort suffered by East Asia in 1997, or Russia in 1998. But Asian countries have snaffled up far more than would be justified to prevent such crises. Their aim in accumulating these reserves is generally different now: to stop their currencies rising against the dollar and so keep their exports competitive. In effect, they are trying to peg their currencies; China's peg is explicit. Huge foreign-exchange reserves are the result.

Some pundits have dubbed this arrangement the new Bretton Woods. The Bretton Woods arrangement (a post-second world war agreement that tied the dollar to gold and other currencies to the dollar) collapsed in 1971. The present arrangement seems similarly doomed to failure. The big question is whether the world will suffer similarly ill effects when it collapses.

Past saving?

The upward pressure on Asian countries' currencies stems either from their saving too much and consuming too little, or from America saving too little and spending too much. American politicians, naturally, tend to concentrate on the first interpretation, because it stops them having to recommend unpleasant remedies, such as cutting deficits or encouraging Americans to save more. But Mr Greenspan's most recent comments show that he recognises the problem is more home-grown. Personal saving in America, as a percentage of household income, slumped to just 0.2% in September, close to a record low. Indeed, the savings rate has been declining remorselessly since 1981, when it reached a high of 12.5%. This lack of saving shows up in the current-account deficit, which is a record near-6% of GDP and rising.

In effect, foreigners are saving on America's behalf. In a recent study for the New York Fed, two economists, Matthew Higgins and Thomas Klitgaard, point out that the United States now absorbs more than the measured net saving of the rest of the world combined (suggesting someone's got their figures wrong somewhere). The American economy cannot continue to expand at its current rate without those foreign savings. The question is whether foreigners will be happy to carry on financing this growth with the dollar and asset prices at their present level. The private sector is already voting with its wallet: it has been financing an ever smaller percentage of the deficit, and there has been a net outflow of direct investment. That leaves the public sector-ie, central banks-and those, in particular, of Asia.

At the heart of the central banks' calculations is a trade-off: intervening to keep your currency down can be costly, but it is good for exports. Though the costs of intervention are hard to quantify, they are potentially big. Because the domestic money supply is expanded-those dollars must be paid for with something-it can cause inflation (though this can be neutralised through "sterilisation", ie, bond sales). But the big potential cost is in amassing a huge stash of dollars with precious little exit strategy. Quite simply, Asian central banks now own too many of them to exit en masse, for their exit would cause the dollar to crash and American interest rates to soar, which would cause huge losses on their holdings of Treasuries.

Get out while you can

The biggest risk, of course, is that lenders would lose pots of money were the dollar to fall. As the printer of the world's reserve currency, America can pass on foreign-exchange risk to the lenders because, unlike other indebted countries, it can borrow in its own currency. Messrs Higgins and Klitgaard reckon that for Singapore, the most extreme example, a 10% appreciation against the dollar and other reserve currencies would lead to a currency capital loss of 10% of GDP. Though loading up with even more dollars might of course stop the dollar from falling for a while, it would increase the risk of still larger losses were it eventually to do so. America already needs almost $2 billion a day from abroad to finance its spending habits, and the situation deteriorates by the week because America imports more than it exports, which worsens the current-account deficit.

The incentives to flee the Asian cartel (to give it its proper name) thus increase the bigger the game becomes. Why take the risk that another central bank will leave you carrying the can? Better to get out early. Because the game is thus so unstable it will come to an end, and probably a messy one. And what will then happen to the dollar? It is hard to imagine its hegemony remaining unchallenged when so many will have lost so much. And doubly so given that America has abused the dollar's reserve-currency role so egregiously that its finances now look more like those of a banana republic than an economic superpower.

-END-

From Garic last evening:

Bill,
For what it's worth I loaded the boat on my Favorite Gold Stocks today. The 3 I bought were Kinross, Newmont & Goldcorp. For months I have been telling you I liked the physical and the futures better than the stocks, because of disappointing results from the majors as far as falling production, rising costs and rising currencies all going against them fundamentally. My point was gold needed to go much higher for the companies to have improving fundamentals to support the stock prices. That is now starting to happen, meanwhile, we have analysts like Gartman telling people to unload half of their positions and to buy the ETF with the rest. The gold chart is easy to read. We just broke out of a 16 year base with technical targets much higher. Anyone recommending taking money out of gold after breaking out of a 16 year base, would have by definition recommended selling the Dow Jones at 1100 in September of 1982 after it broke out of it's 16 year base. While GATA has been very good at pointing out the drop in physical supply, the wild card in my book was physical demand. Your call on the Stalker was the beginning. In my opinion the $1.3 billion reported going into the ETF in the last 3 days will prove to be the straw that breaks the camels back. Even if only 75% ends up in allocated accounts, we now have another competing source for physical which could set off the biggest short squeeze any one of us will ever see. When the powers lost control of the oil market this year, oil rallied from $35 to $55 over a few month period. A similar move in Gold would put it Gold at $675 by spring. If you go back and look at the break outs in the 70's, 50% moves were routine. Today was options expiration on the Comex and for 3 days the dealers have been selling to protect $450. The best they could do was move it sideways. I have noticed the 4 a.m knockdowns from London have been fewer and further between. People who don't think we have had corrections aren't watching this market closely. If you look at the 60 minute charts we have had a correction every day. What has been missing is speculative type up moves. My bet is they are in front of us.

Reading your column I can sense the frustration in many gold bugs about the shares. Here is the way I see it. 1) make sure you have something that you know will participate if Gold goes up. The safest thing here is physical Gold. The more speculative obviously is the futures (obviously be careful with how muich leverage you decide to use). The ETF will participate and is better than no physical. 2) The Gold stocks will outperform all other gold investments but they must have much higher gold prices, which I expect. You need to make sure you have one's that will participate. I feel comfortable that Newmont will be much higher if Gold gets to $600. I like Kinross because they have the most exposure to $U.S. Gold prices (with most of their assets in the U.S. & Canada). 3) The juniors will participate and outperform but a lot of patience will be needed unless Gold moves much higher. Have a diversified portfolio, make sure you participate directly and make sure you are in a position to handle 10% corrections, then relax and be patient. Oh yeah, options expire so I never trade them.

Everyone worries about central bank intervention and large open interest. Gold broke through $330 and $380 and now $430 with these same worries. Moreover in the 70's which I consider the closest economy to today's the Central Banks were sellers of Gold the whole way up from $35 to $800. Someone should check these figures: from what I have heard in 1980 Gold open interest on the Comex was 500,000 contracts and Gold Open Interest on the IMM was another 500,000 contracts. While a correction can and will happen at anytime, I see the greater risk currently of losing one's position in an emerging bull market. The only thing that I am worried about stopping this bull market would be the Federal Reserve raising real interest rates to a positive 4%. That is what killed all of the bull rallies in the 80's. If my calculations of real inflation of 6% are correct that means Fed Funds would need to be raised to 9-10%. So I am looking for the first significant correction to come when the Fed decides to get aggressive with interest rates. I read Alan Greenspan's warning of last week as saying: "GATA is right we are losing control of inflation expectations and our control over monetary policy. Whether we have a disaster or not is out of my control and flipping a coin is as good of a forecast as any. That is not a statement that scares me out of my gold position, but is one I think will bring more to our camp.
Garic

The HUI could only manage a pitiful .21 gain to 237.21, while the XAU actually fell .54 to 107.17. Yuk!

The gold share action is beyond terrible. It is beyond comprehension when you know what GATA knows. However, there is a recent precedent to compare the stinko action to.

Judith McGee, Refco’s superb broker in Toronto, pointed how the oil stocks acted the same way when crude took out $40. There were few believers that the oil move was for real. For some time the higher oil went the worse the shares acted relative to the oil price move. Finally, the woefully under-priced shares took off. However, even today she tells me most of the oil shares are discounting $30 oil (she checked with several analysts). There is still not considerable belief the oil price will maintain its strength. WTI crude oil closed today at $49.44, up 50 cents.

We have seen the same market phenomenon as far as the gold shares are concerned. The more gold rises the more investors want to sell before gold’s “inevitable sharp correction” takes their profits from them. This sort of mentality has fed on itself as the poor share price action reinforces those who failed to sell one bullion rally to sell the next one.

For years MIDAS has categorically stated if you don’t know what GATA knows then you really don’t know much about what the gold market is truly all about. The gold price suppression scheme has dominated the gold scene for a decade and has been the most important determinant of the price over the years. Those who don’t recognize what has clearly transpired, remain clueless.

Well, we know most of the gold world IS CLUELESS. If they are clueless how can the investing public have any idea what has gone on and what is coming and why. It has to be a significant reason why so many investors, even fund managers, are bailing out of the shares.

Because of the nefarious goings on by the elitists in The Gold Cartel, the gold market remains the worst reported on and least understood market in history. This is what makes it so EXPLOSIVE. The biggest players (like the RUSSIAN CENTRAL BANK) know what we know and let the cat out of the bank in Moscow on June 4th at the LBMA conference. Since physical demand for gold around the world is so strong, the crooks who have deceived everyone for a decade are gradually losing control of their disconcerting fraud. Slowly but surely, they are running out of gold ammo to meet the growing annual supply/demand deficit. At some point in the near future, they will finally hit the wall for good and the price will go nuts as a number of informed Gold Cartel ally shorts will cover with gold going into fast market conditions on the buy side. As the price goes nuts, more and more market participants will realize GATA was right all along and will want in. Why? $500 gold might seem dear at the moment. Years from now it will look very cheap.

GATA BE IN IT TO WIN IT!

MIDAS

The GATA ARMY has followed up on James Turk’s suggestion and gone into action, like always. Nice work. Some samples of what is transpiring:

Henry Fellerman
7101 W. Yale Ave. #1103
Denver, CO 80227
hsfell@msn.com

November 23, 2004

Chairman William H. Donaldson
Security & Exchange Commission
450 Fifth Street, NW
Washington, DC 20549

Dear Mr. Donaldson:

On November 18 streetTRACKS Gold Shares started trading on the New York Stock Exchange. I believe it is both the first commodity-based fund and the first that purportedly deals in gold bullion. The two sponsors, the World Gold Council and State Street, says little about their venture as it is in a permanent “quiet period” under SEC rules since it may issue additional shares in the future.

Though the sponsors may be quiet, streetTRACKS Gold Shares is getting a lot of free publicity in the press. A typical example is a story that appeared in The Seattle Times on November 19. According to the article, the fund “…is designed to give investors the opportunity to invest in gold without requiring custody of the metal, which can be expensive.” The reader is led to believe that by purchasing shares in streetTRACKS he is getting an investment backed by gold. All of the stories in the Main Stream Media leave a similar impression.

The attached article by gold analyst James Turk makes a persuasive case that streetTRACKS Gold Shares may not in fact have gold backing them up. I find this extraordinary as scores of newspaper articles are causing the public to believe that this security is just a convenient and inexpensive way to buy gold. Mr. Donaldson, this is no different that if you thought you have purchased a house when in fact the house didn’t exist. Wouldn’t that be fraud? How can you let so much misleading information about a security your agency approved be in the public record?

If the sponsors intended that Gold Shares have gold backing they would take the basic precautions of storing the gold in bonded facilities, purchasing insurance on the gold and requiring the gold to be subject to periodic auditing by independent auditors.

According to information at http://www.streettracksgoldshares.com, the security is “Designed to track the price of gold.” Not to hold gold, but just to track it. The public is obviously being misled.

FELLERMAN
Page 2

Mr. Donaldson, a few questions:

1. If streetTRACKS Gold Shares issues shares to the public for money but doesn’t use the funds to purchase gold, has a fraud been committed?

2. If the money is used to buy gold but the gold is subsequently leased out, has a fraud been committed?

3. To the SEC is there any difference between gold in the vault and a promise to pay back leased gold?

4. Why is the SEC allowing such misleading information to be put out on a security under the agency’s jurisdiction? That the sponsors are in a permanent “quiet period” doesn’t seem to be an excuse. Surely the World Gold Council and State Street have an affirmative duty to correct the record.

I look forward to your reply,

Sincerely,
Henry Fellerman

Attachment: Where is the ETF’s Gold, by James Turk

Bill,
My question to the SEC is at the bottom of the page. Their (non) answer it directly below. Of course I will follow up and let you know the results.

I have continued to follow your writings on LeMetropoleCafe.com and also your work for the international gold community as well. I have of course since becoming a member of GATA broadened my reading to include books, articles, Jim Sinclair, FreedomForceInternational.org and a whole host of other non-gold related material. I am truly grateful to you for jump starting my education 5 years ago when I started to read MIDAS. I never thought I would become an educated economist and historian (I've spoken with Ph.D's in both disciplines who admit I might know a lot more then most in their discipline) starting in my early 50's. These days I'm reading The Federalist (Papers) to understand what we must do as Americans to re-educate our brothers and sisters.

Unfortunately, we are a point where further breakdown of the dollar will result in devastating hardship for most Americans at the hands of our favorite banking cartel. I don't like what I see coming. Keep up the great and inspirational work.

Warmest regards,
Herb Yussim
President
City Production, Ltd.

From: "SEC Help" help@sec.gov
To: "Yussim, Herbert" herb@cityproduction.com
Sent: Wednesday, November 24, 2004 7:45 AM
Subject: SEC Response - File # HO1034465

Dear Mr. Yussim:

The SEC does not technically "authorize" a registration statement so that the securities can trade. Instead, the SEC reviews registration statements and ensures the issuer has made full disclosure. This is done by the SEC making comments and the issuer filing amendments to the registration statement.

The issuer of GLD is street TRACKS GOLD TRUST (formerly EQUITY GOLD TRUST). The company's filings can be located on our EDGAR database at http://www.sec.gov/cgi-bin/bro…0001222333&owner=include.

According to the S-1, the Trust is an investment trust whose purpose is to hold gold bullion. Each share represents a proportional interest, based on the total number of shares outstanding, in the gold and any cash held by the Trust, less the Trust's liabilities.

For more information, you may want to contact the issuer at (212) 317-3800. You also can speak to our experts in the Divison of Investment Management at (202) 942-0659 or imocc@sec.gov.

Sincerely,

ROBERT T GREENE
U.S. Securities and Exchange Commission
(202)942-7221

***

Dear Ms. Gxxxx:

Thank you for your email and for taking the time to alert us to your concerns.

We have referred your complaint to the appropriate SEC office or division. If they have any questions or wish to respond directly to you, they will contact you. But at this point, our office can do nothing further to help you. This is because the SEC generally conducts its investigations on a confidential basis and neither confirms nor denies the existence of an investigation until we bring charges against someone involved. We cannot provide you with updates on the status of your complaint or of any pending SEC investigation. We know this policy can be frustrating, but it protects the integrity and effectiveness of our investigative process and preserves the privacy of the individuals and entities involved. Our policy is more fully described below.

Once again, thank you for contacting us.

Sincerely,

Ms. Kerry McGovern
U.S. Securities and Exchange Commission
(202)942-7150

November 26 - Gold $451.70 up $2.70 - Silver $7.68 up 8 cents

Gold Continues Its Relentless Move Higher Moving North Of $450

Gratitude unlocks the fullness of life. It turns what we have into enough, and more. It turns denial into acceptance, chaos to order, confusion to clarity. It can turn a meal into a feast, a house into a home, a stranger into a friend. Gratitude makes sense of our past, brings peace for today, and creates a vision for tomorrow...Melody Beattie

GO GATA!!!!

There is so much to bring your way I decided to do a MIDAS. The way things are going there will be too much to go over on Monday in one commentary.

Yesterday the dollar tanked once again with the euro soaring to 132.22 or thereabouts. Gold followed suit and took out $450 easily. Once this level was breached gold sped up to $452.85 in London. Mario in London noted:

“Both fixings were above $451 and all the bullion banks (JPM, Deut., Merrill and UBS) have revised their outlook for the dollar down.”

Today it was more of the same. The dollar sank and sank with the euro taking out 133 at one point. Gold rose to $455 in sympathy will the dollar drubbing. Slowly but surely gold is on the road to $500 as a first stop. This is despite an aggressive attempt by The Gold Cartel to keep it from creating too much excitement and accelerating rapidly to the upside.

Can the price-capping be any more obvious? The heinous Gold Cartel is not even allowing gold in foreign currencies to hold its own. In euros gold continues to retreat, closing just below 340 today. You would think someone out there outside of this camp might notice how ludicrous the price action is. It is not as if the dollar is the only factor which should be affecting the price. Commodity prices continue to make 23-year HIGHS.

You would think someone out there might notice gold never is allowed to move up sharply in any given day. Forget the $6 Rule. The price-fixers are so scared over excess gold excitement, they have kept almost all advances on the way up between $2 and $4. What a bunch of banana heads out there who comment on the gold market. They couldn’t get this market right if God came down from up high and gave them a script.

Oil rallied $2.30 cents the other day, or around 4%. That would equate to an $18 move in gold. Gold has been in a bull market for three years and except the stunning move up after the surprise Washington Agreement (when the signatories and price-fixers were caught flat-footed), gold has never been allowed to move up like that. Matter of fact, it has only been allowed to rise about half that much ONCE in three full years. One lousy time. No other major commodity bull market has ever traded like gold. Do any of the mainstream gold pundits ever make note of this? No. Never! The brain dead ones.

Lately I noted a few times how gold is the least understood, worst analyzed and most poorly reported on market in history. Here is an example of what I keep referring to:

INTERVIEW: Citigroup Bullish On Gold, Could Up 2005 Call

Friday November 26, 5:35 AM EST

SYDNEY -(Dow Jones)- The bull market in gold is showing no signs of letting up, according to Citigroup Inc. (C), which may soon have to raise its forecast for 2005 as a result, the bank's Sydney-based global commodity analyst told Dow Jones Newswires this week.

"There's no doubt that the recent weakness in the U.S. dollar is what's been fueling the recent rally in the gold price and left our forecast somewhat in limbo, and I guess potentially subject to upgrade," said Alan Heap of Citigroup's Smith Barney brokerage arm.

Heap's current average price forecast for next year is US$425 a troy ounce.

-END-

Could it get any more inane than this Citigroup drivel? Gold is $452. Citi is looking for gold to average $425 next year. And the headline is Citi is bullish on gold. Wonder who is more retarded, Citi or the gold reporter?

Besides pointing out this garbage, it is an example why the investing public is not interested in the gold shares or bullion. Why they can’t even spell gold yet. Citigroup is a quiet member of The Gold Cartel and was a defendant in Reg Howe’s lawsuit. They have been neutral to bearish ALL THE WAY UP. How bad is that? It is more than unbelievable these pros can be so dumb.

Course they’re not that dumb, just corrupt. You see not only did Citigroup fail to analyze the gold market correctly, so did all the other banks/investment firms in The Gold Cartel. NONE of the dealers in the cabal (like JP Morgan and Goldman Sachs) have been bullish the ENTIRE move. NONE called this market correctly from a fundamental point of view. What are the odds that would happen in any other stock sector, the bond market, the real estate market? That the brainiest, most esteemed firms on Wall Street could ALL have it wrong?

Of course the answer is ZERO. Only gold, as these firms have been the ones to rig the price all these years from the short side. Talk about a great story for an inquiring reporter. Go to these firms and ask for their documented calls the past 36 months and then query all of them how they could all get it so wrong.

As far as the public is concerned, many go to the experts in various fields to determine whether to invest or not. The bullion dealers are supposed to be the experts on gold. A good number probably go to big shot Citigroup for advice. Would you buy gold shares with gold at $452 when Citi’s target for next year is $425? The Gold Cartel bullion dealer crowd in New York (and elsewhere in the world) are either a bunch of dingbats or deceptive crooks – or both. Pick your own description.

Bingo! What MIDAS and John Brimelow have been POUNDING THE TABLE on for many, many months is finally receiving coverage in the mainstream gold world. About time:

By Rhona O'Connell
MineWeb.com
Thursday, November 25, 204

LONDON -- The pressure is on for physical gold. Demand is growing and production is falling. That is according to the latest gold supply and demand trends published by the World Gold Council covering the third quarter released this morning and which show a contraction in supply against growth in demand. ...

http://www.mineweb.net/sections/gold_silver/393445.htm

-END-

This is confirming good news as it means more and more pressure will be put on The Gold Cartel to come up with available gold supply to meet the growing monthly supply/demand deficit. The key to understanding the move up these past many months has been the incredibly strong Indian premiums JB has continually brought to our attention. Since the Indians must compete against other major buyers for the dwindling gold supply, they have had to keep their bids high in the international gold arena. Because the cash market has remained so firm, the bums haven’t been able to flush out the legion of specs. The commercials are getting their butts handed to them. A number have to be sweating it out here while they wait and wait and wait for the “inevitable major correction.” At some point we will get our major Commercial Signal Failure. The heat will be just too hot for some of the commercial shorts and they will run for the hills in a panic.

Lois was up early:

Subj: Euro/dollar traded to $1.3329 as of 1:11 ET this morning
Date: 11/26/04 4:54:07 AM Central Standard Time
From: LMRingel
To: Midasnh

CNBC in shock and awe this morning about this...don't people read? Of course your MIDAS subscribers knew this was right around the bend! Hope you've got those stretchers out and ready to go!!

05:28 CNBC reported that part of the reason for the weakness was due to unconfirmed speculation that China was selling U.S. Treasury holdings.
* * * * *

05:44 Follow-up: euro/dollar weakness
The aforementioned weakness due to speculation that China was selling U.S. Treasury holdings (see 5:28 comment) had its source in China Business News, which cited central bank adviser Yu Yongding, according to Bloomberg. Yu subsequently said he has no knowledge of the actions that China's Administration of Foreign Exchange's has taken and will take, reports Bloomberg
* * * * *