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

*Recently, The Gold Cartel has prevented gold from moving up in anything other than dollar terms. What could change that in the near future?

Iraq is a fiasco. As it becomes more and more apparent the US is mired in a mess which will worsen our budget deficit, it will soon create further tension in financial markets around the world. As a result, demand for physical gold will increase even further.
US financial markets could undergo extreme turmoil in the weeks ahead. Interest in gold could explode as fear and safe-haven buying increases among those fleeing from more traditional markets.
A lot more to bring your way on this early December weekend:

From a fellow Café member:

"I found Brimelow's explanation of the Indian "ex duty premium" to be very helpful and thought I'd ask you to do those of us who are not traders (professional or otherwise) a favor and give us as good an explanation of a "commercial signal failure.’"

A Commercial Signal Failure is when the so-called commercials, or "physical trade" players, continue to build their positions as the market goes against them. On the other side of the trade the specs continue to increase their positions. The commercials, used to winning, keep expecting a correction. Sometimes the fundamentals are so extreme the commercials get buried. When their losses become too painful, they are forced to cover, usually in panic market conditions. This is when the failure occurs.

What is fascinating to me is NO ONE outside of the GATA camp is dealing with the unprecedented gold short position, which may be as high as 16,000 tonnes. This has never been the case throughout all of gold market history. Much of this position is related to leased gold used by The Gold Cartel to artificially suppress the price all these years. Sure, a good deal of these short gold positions might be forgiven by the US Government, Bundesbank, etc., but no way all of it will be. If only a fraction of these "commercial" shorts run for the hills at the same time, gold will go parabolic.

Then, there are some of the big hedgers who put on short positions with gold $100 to $150 lower than today’s price levels. With costs rising in local currency terms, many have to be choking on the hedged prices they are forced to live with. One of these days soon we are going to hear about another Daughters of Gwalia nightmare. Such an event could kick off my long-awaited "Commercial Signal Failure."

The fact that NO ONE OUTSIDE OF THE GATA CAMP even mentions such a potential happening is mind-boggling. Once again, this gold market is the least understood (by the industry itself and the investing public) and worst reported on one than any other in history.

Speaking of John Brimelow, his BRILLIANT explanation of the Indian premiums, so key to our understanding of why gold has acted so well for so long, has been posted at:

http://www.vdare.com/jb/041130_indian.htm

***

What fun for our team to know that JB’s diligent work has been key to understanding why gold has done what it has done for so many months. As reported, via John Brimelow, the cash market has been extremely strong on gold’s current move higher. The Gold Cartel has been unable to flush out the specs as they have done so many times in years gone by. As John has pointed out so often the past months, NEVER before have the Indian bullion dealers paid up like this on price strength to satisfy local market demand.

The latest on The Café Sentiment Indicator:

Boy has this been a winner. Been low all the way up and still is. Only a 5 at best. It was A NINE a year ago when gold was $422, $32 LOWER than it is now! Next to John Brimelow’s cash market, this has been the most significant indicator I have ever come across. The beauty of it is, I have presented it to you for the entire bull move up and expounded all the time why I thought it was so important. From my standpoint, what fun. It has been a HOME RUN indicator for gold futures players.

The savvy Chuck Cohen checked in on Saturday:

Bill:
Two straight days of huge share liquidation in the Rydex and the Central Fund is down to almost zero, the first time since the first time since the beginning of 2002. This portends something very large, as the last time this occur was at the very bottom of the HUI move up. We'll know soon………

Who later followed up with:

I have to say that I am a little freaked as I went through some of the internet pages. First, the Times is reporting that the retailers are panicking already because of the tepid season so far. But even more so here are my observations of the confluence of very extreme technical stuff. First, the Rydex PM has had a dramatic drop the past two days even with gold up. Usually VERY bullish. The Central Fund is now down to almost a zero premium. The last two times it was this low was at MAJOR lows in the gold indices. The tremendous drop in the price of oil which has brought only a yawn to the street and a disconnect with gold. One would think that gold would have some kind of sympathetic response with it.

Plus, the weakness in the dollar hasn't elicited any mention of gold or that it's sickliness might cause rates to shoot up.

Finally, check out the Times today on the plight of the Asian traders in dollars. What are their choices? NYTIMES.COM

Conclusion. If we aren't near something pivotal, then we might as well close down the shop and sell real estate. Chuck

This report is hard to swallow after GATA catching the US Treasury in so many lies about gold over the years:

US Treasury report finds no forex manipulation

By Laura MacInnis
WASHINGTON, Dec 3 (Reuters) - None of the United States' major trading partners manipulated their currencies to gain economic advantage in the first half of 2004, the U.S. Treasury Department said in a report released on Friday.

In its semiannual report to Congress on international economic and exchange rate policies, Treasury urged Asian countries with fixed exchange rates -- including China -- to institute more flexible, market-based mechanisms. The Treasury said China's fixed exchange rate regime has made the country's macroeconomic policymaking more difficult. It also said accumulation of foreign exchange reserves had fueled both credit growth and inflationary pressure in China…

-END-

Hello Japan, China????

FROM THE OFFICE OF PUBLIC AFFAIRS

To view or print the PDF content on this page, download the free Adobe® Acrobat® Reader®.

December 3, 2004
js-2127

Report to Congress on International Economic and Exchange Rate Policies

This report reviews developments in international economic policy, including exchange rate policy, focusing on the first half of 2004. The report is required under the Omnibus Trade and Competitiveness Act of 1988, which states, among other things, that: "The Secretary of the Treasury shall analyze on an annual basis the exchange rate policies of foreign countries, in consultation with the International Monetary Fund, and consider whether countries manipulate the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade."

http://www.treas.gov/press/releases/js2127.htm

-END-

Pot pourri:

Catherine Austin Fitts on the new World Gold Council ETF:

PS...speaking of the ETF, according to Money Laundering Alert, Bank of New York is back in negotiations with prosecutors to make a deal to avoid criminal prosecution again (as they did in 2000 for the Russian money laundering). Are they not the ETF trustee? Nice trustee.

-END-

Some thoughts on the gold share action from a fellow Café member:

Hi Bill
I'm still fully invested. If the basic, gold bull, share investor is fully loaded we have to wait for 'new blood' to enter the market before share prices will rise. In the meantime any trader or profit taker will only drive the prices lower. If the general equity markets are moving up or perceived to be doing so then the 'money' will stay there and not move into the PM market. If the opinion below is followed by action we could be in for a longer wait than we thought. In the meantime the gold market will grind higher as the $US falls. Mining profitability outside of the US is diminished as local currencies appreciate and costs increase. Canada for example. Some pm stocks have gone nowhere in the last 2 years. This will continue to put the squeeze on production and cause the bad guys to run out of resources sooner rather than later and we will get our anticipated breakout. In the meantime keep adding to positions on down turns and take the odd profit here and there as a particular stock does its own mini run up and then retreats again.

Just thought I would add my two bits as writing this tends to consolidate the thinking process.
Kindest Regards
Tony Brogan

To "rap" up for this Sunday, none of us know what The Gold Cartel will do to us on any given day, or over a short-term time frame. What we do know is the price action tells us they are fighting a losing battle. They are using up too much physical gold to keep it up for too much longer. My bet is they will lose the battle for $450 like they did at $430 and $330. Even if they do win this battle, they are losing the war. The large cabal shorts are on borrowed time.

For suffering gold/silver shareholders, it is my belief the quality junior and gold exploration companies are in the process of putting in a major bottom here and will double to quintuple, or more, by December 2005 as The Gold Cartel goes down to a brutal defeat.

GATA BE IN IT TO WIN IT!

MIDAS

December 6 – Gold $453.50 down $1.90 – Silver $7.90 down 9 cents

Gold Cartel Attack Thwarted Again

"Bulls of 1929 - like their 1990s counterparts - had their eyes glued on improving profits and stock valuations. Not a thought was given to the fact that the rising tide of money deluging the stock market came from financial leverage and not from savings."
- Dr. Kurt Richebacher

The London Am Fix was $455.75. Not long thereafter the cabal forces warmed up for their assault on gold, taking it lower into the Comex opening. Once the Comex commenced, they went into their usual bullion bashing drill. As a result, gold lost further ground against foreign currencies, dropping below 336 in euros. It recovered to 337.50 by the close, yet still another closing loss.

The geopolitical scene is heating up and should have some impact on the price of gold in the weeks ahead. Iraqi police, those expected to guard the election poll places, are being blown up at a horrific pace. Meanwhile, Saudi Arabia was shaken too:

04:56 Follow-up: attackers kill 4 Saudi guards, take 18 local staff hostage at U.S. Jeddah mission -- Reuters
Citing security sources.
* * * * *

04:51 U.S. consolate in Jeddah, Saudi Arabia has been sealed off by Saudi security forces
Reuters is reporting gunfire near the building and plumes of smoke rising from the area. Saudi police engaged the attackers, according to the reports. The U.S. has closed the embassy in Riyadh and its consulate in Dhahran.
* * * * *

For the second day in a row The Gold Cartel went all out to bury gold and came up short, as bullion finished the day $2 off its lows and well above $450 psychological support. As John Brimelow continues to report, the cash market is on fire. Attempts to break gold are met with ferocious buying. Thus, the bums aren’t able to flush out the specs. Happened ALL the way up, thus far anyway.

Received a call from our STALKER source this morning. Twelve midnight last evening, he received a dispatch from his London bullion dealer contact who, while still very bullish, was looking for a gold pullback to $448. This conservative dealer is still expecting gold to trade $464 by year-end.

The gold open interest rose 2117 contracts to 356,109, while the silver open interest gained 271 contracts to 125,375.

Silver traded funny all day long. Each time it looked like it was going to tank, it popped 5 cents. Then, late, it looked like it could reverse to the upside and it fell 6 cents near the close.

There is a great consternation out there in Café country over the World Gold Council’s ETF. Veteran, shrewd gold folks are in two camps:

*Those who believe the gold ETF is the best thing since sliced bread because it is a financial market entity which allows big money such as pension funds to buy physical gold. Heretofore they did not have a vehicle to do so. They believe this will create huge demand for bullion as time goes by.

*Those of us who agree with that assessment on the potential for gold ETFs, yet fault the World Gold Council for the structure of their entity. GATA’s Chris Powell gets right to the key points in a GATA press release this morning:

WORLD GOLD COUNCIL'S BULLION FUND
DOUBLE-COUNTS GOLD BARS, GATA SAYS

More than 2 percent of the gold reported as the property of the World Gold Council's newexchange-traded bullion fund on the New York Stock Exchange (GLD) appears to have been double-counted on account of duplicate serial numbers on the fund's gold bars, the Gold Anti-Trust Action Committee said today.

The duplication was discovered by GATA consultant James Turk, editor of the Freemarket Gold & Money Report and founder of the GoldMoney gold depository and Internet-based gold payment system. Turk examined the bar list reported to investors by the fund.

In today's statement, GATA argued that the duplication of bar numbers deepens concerns about the adequacy of the bullion fund's custodial and auditing arrangements.

"For years the suppression of the gold price and the manipulation of the gold market have been facilitated by the mystery that has been deliberately woven around the leasing of gold and around gold custodianship generally," GATA said. "If the World Gold Council's bullion fund is not to be suspected as another part of that manipulation, the council must answer some questions urgently:

"* Why does the bullion fund list ownership of duplicate gold bars?

"* Why have all the custodians and potential custodians of the fund's gold not been identified?

"* Why is the fund refusing to let its gold holdings be fully and publicly audited?

"* Is any of the fund's gold being leased, made available for leasing, or encumbered in any way?

"* Exactly what is the fund's relationship with the Bank of England, a major lessor of gold?"

Turk's report on the duplication of serial numbers in the bullion fund can be found on the Internet here:

http://news.goldseek.com/JamesTurk/1102312799.php

***

The GATA camp is only after the truth. After our being suckered by the mainstream gold world for so long, the World Gold Council, who has facilitated the gold fraud for so many years, should not be given a free pass when there are so many serious questions to be answered.

When it comes to the World Council and their new product, there are two items to keep on the front burner as far as I’m concerned:

*Since this new ETF came on stream, the gold price has acted worse in terms of foreign currencies than prior to its launch. This is a fact. Just look at the price of gold in terms of euros and pounds. Over the past couple of weeks gold hasn’t even kept pace with the dollar's fall. In euros gold closed at 337.50 after making a triple top at 344.

According to the World Gold Council’s numbers, their new entity created 100 tonnes of new gold demand in a brief period of time. This new demand represents 4% of total 2004 mine supply. With the Indians and others such aggressive buyers of physical, this should have sent the price soaring as gold already is in a severe monthly supply/demand deficit.

Instead, gold lost ground vis-à-vis foreign currencies. The only explanation, IF the WGC ETF was responsible for buying what they claim they did, is The Gold Cartel countered this sizeable buying by aggressively going into their coffers to keep gold from doing what it would have in a free market.

If I’m missing something here, please let me know.

*Point number two. When you look at the bigger gold picture, the World Gold Council has dropped the ball completely. When you compare coming up with one gold ETF, one which has glaring deficiencies, compared to allowing The Gold Cartel to continue its scam right under its nose, this ETF is relatively meaningless.

What I mean by that is we know that at least 10,000 tonnes of central bank gold has been surreptitiously fed into the marketplace. This is on top of any leased gold used by hedgers. That number is 100 times greater than the 100 tonnes accumulated by the WGC ETF, or only 1% of the clandestine gold lending – a mere drop in the bucket.

Had the World Gold Council run with the ball and exposed the gold fraud years ago, it might have come to an end some time back due to international pressure. The price of gold would be far higher than it is at the moment. Even if pressure by The World Gold Council didn’t stop the crooks, exposing that half the central bank gold is gone would have a huge impact on the investment community. Once investors fully comprehend the central banks don’t have the clout anymore they had for so long, thanks to their nefarious scheme, it will create a rush of gold buying all over the world. This is what GATA wants the investment world to know and is why "officialdom” silences us. This is what the World Gold Council has gone out of its way to prevent the world from understanding, which is why I consider them to be a useless outfit.

You might like to know the GATA ARMY is being heard:

Bill,
Today I received a telephone call from a Security and Exchange Commission attorney in response to my November 23 letter about the gold ETF. He wanted to follow up on some of the points I had raised. They are:

Concerning the differences between the wording in the prospectus and reporting in the media he said the SEC can’t prevent that. I said my concern was that the STREETtracks Gold Shares prospectus did not adequately list the risks that the metal might not be in storage. By contrast Merrill Lynch, often lists risk factors at the beginning of the prospectus in red ink so potential investors can have not doubt as to what they are buying into.
I said that the prospectus read like an effort to hide the risks so that if someday shareholders lose money because the gold is not there the trustee can say they were warned, if only obliquely. An historical caution I gave was the Salad Oil scandal from the 1960’s. American Express loaned million of dollars, based on collateral of tanks full of salad oil as security. Unfortunately, the tanks were empty and American Express had to write off the loan.
The attorney said there is some confusion at the agency as to whether STREETtracks Gold Shares is a "registered investment company" (RIC). One of his colleagues told him the security was a RIC. However, he said further checking turned up the fact that the security is not an RIC. Thus, shareholders do not have the protection afforded to owners of mutual funds. (The manager of a mutual fund has a hard time stealing the assets as he and the fund company do not have possession of the stocks and cash, which is resident with a third party such as the Depository Trust Corp.)
I suggested he review the prospectus of the Central Fund of Canada (CEF) to find out how a company goes about making sure that the gold it claims to have is really present. The attorney appreciated the suggestion.
I was pleasantly surprised to get that call. Clearly, the attorney and the SEC are seriously looking into this (he said they had gotten a lot of similar inquiries).

Best wishes,
Hank Fellerman

The John Brimelow Report

JB: India v. short sellers.

Monday, December 06, 2004

Indian ex-duty premiums: AM $7.81, PM $8.39, with world gold at $454.95 and $455.35. High: very ample for legal imports. The Rupee closed at a new import facilitating high, breaking $1 =R44 for the first time on this rally amidst reports of accelerating foreign portfolio investment inflows. This strengthening of the world’s largest gold buyer is a crucial obstacle to ambitious bears.

An interesting and unusually forthcoming article on the Indian web site redif.com (courtesy TheBullionDesk) suggests that the Indian demand schedule for gold has indeed been shifted by the country’s prosperity (Tanishq is a leading jewelry chain):

"On Dhanteras day…Tanishq's outlet in south Delhi. recorded an astounding 3,000 (visits)…virtually double the numbers the previous year. Sales that day touched an all-time high of Rs 1.75 crore (Rs 17.5 million). Tanishq's Bangalore headquarters has posted the startling countrywide sales for this day at over Rs 26 crore (Rs 260 million), up by over 30 per cent from last year. Tanishq…has seen a 100 per cent increase in its sale of gold coins this year over last year… Harish Bhat, chief operating officer…says he expects to end the year with a 45 per cent increase in sales of gold jewellery.

Only about half this growth can be ascribed to price increases. See

http://www.rediff.com/money/2004/dec/04spec.htm

Just like Friday, according to Mitsubishi, TOCOM experienced overseas selling from dealers at $456: the public was a modest buyer. On volume equal to 14,723 Comex lots (down 33%) open interest rose the equivalent of 1,020 NY lots: Mitsubishi infers a 4.1 tonne increase in the public’s long. The active contract closed down a yen: world gold was down 80c at $454.75. Japan seems tolerant of $455 gold. (NY Friday traded 67,133 lots; open interest rose 2,117 contracts.)

Parties operating out of New York are not tolerant of this price. The most interesting thing about Friday’s interesting trading was the scale and the ferocity of the attack on gold after the 8-30 AM payroll numbers, (which of course were shocking and unexpectedly gold friendly). Almost a third of estimated volume had traded by 9am. ScotiaMocatta observed:

"The metal traded to 453 in a matter of minutes but into a wall of selling from New York dealers. Further selling then came into the market from overseas source…"

The CFTC data indicates that as of last Tuesday significant short selling was already discernable. NM Rothschild noted:

The CFTC numbers showed that in the week to 30th …Funds were net sellers of over one million ounces … the …increase in the speculative short position has decreased the likelihood of a massive fall in the price."

UBS feels that since the CFTC reporting cut-off last Tuesday:

"open interest (excluding trade on Friday) has increased by 0.84Moz although looking at the move in the non-USD price, this may represent new shorts rather than additional longs.".

Taking the timing of the selling (including this evening after the NY close: the thinnest part of the day) and the open interest data, it looks pretty clear that the Gartman Letter’s view last Friday:

"we have almost certainly seen the highs for gold for weeks, if not months, into the future. $455-456 shall be the highs against which we can not only exit our long …but against which we can actually sell gold short."

is conventional in some trading circles.

Fathers of this years’ vintage on Indian brides will be delighted. The only question is if these shorts will hold on to the New Year, before being routed.

The noted bullion dealer bear is notably more circumspect. Indeed, he raises two potentially gold positive facts:

The BIS statistics on OPEC FX Reserves can be interpreted to mean the group has being buying some gold
and

In the week to Nov 30, the combined Comex/TOCOM/Comex options open interest fell 24 tonnes while gold rose $5. In fact, the $28 rise since the end of October has seen a 37.5 tonne decline. He seems puzzled as to the cause. One obvious possibility for the rise is ongoing physical offtake.
JB

CARTEL CAPITULATION WATCH

The DOW dropped 45 to 10,547, while the DOG scored yet another gain to 2151, up 3.

The dollar finished at 81.32, up .34, while the Euro sold off late, closing down .55. The 30-year DEC bond rose again – this time up 12/32 to 112 17/32.

Treasury Secretary Snow is on the way out:

05:11 President Bush has decided to replace Treasury Secretary Snow, reports NYT
Bush has been looking closely at a number of possible replacements, including White House chief of staff Andrew Card. An adviser to the White House said a decision to replace Snow had been made, as soon as Bush could decide on a successor.
Reference Link (registration required)
* * * * *

GATA’s Mike Bolser frequently mentions how gold soared when former Treasury Secretary O’Neill left office, prior to Secretary Snow’s nomination and confirmation. We believe this could have occurred because there was no one to run the gold manipulation scheme in the Exchange Stabilization Fund, as only the President and Treasury Secretary are able to do so. No President would want to soil his hands in the coming gold scandal.

The world is clamoring for the US to get its financial house in order. Yet, everywhere we turn, the call is for more spending:

WHouse sees borrowing to fund Social Security plan

WASHINGTON, Dec 6 (Reuters) - The White House said on Monday that it envisages using government borrowing to help finance President George W. Bush's plan to add personal retirement accounts to Social Security.

"There will be some upfront transition financing that will be needed to move toward a better system," White House spokesman Scott McClellan said.

Asked if the transition would be financed by additional government borrowing, McClellan said: "That's what you're looking at doing as part of the transition to a better Social Security system."

-END-

Since the President has pledged not to raise our taxes, how will our budget deficits ever come down? More evidence why the dollar is in DEEP trouble. So is our stock market in the months ahead!

Rhody on leasing:

Bill:
These lease rates are last Friday's, but they indicate that gold lease rates are in backwardation. Notice that the spread between one month and one year gold rates is 200%. If you check silver's you will see that the spread is a more normal 400%. This suggests considerable leasing of gold to augment the price suppression. Lease rates for both metals are low.

This does not compute. Low rates imply either negligible risk to the lender or plentiful supplies. Risk is not low anywhere in a credit bubble and we know that gold supply is actually tight at these prices, not ample. My conclusion is that the powers that be are doing everything possible to make official gold supplies available at subsidized lending rates. Mind you, if you hold bullion and your metal is being leased out to help pay for vault charges, you are being cheated, as the artificial lending rates now come nowhere near covering your vault charges. The logical thing to do is not to lend it, but pay your storage fees using fiat. Since the lease rates do not reflect the actual risk, it is unlikely that leased metal will be returned. If you lease it, you lose it.

I recommend taking bullion out of any storage system that leases to subsidize storage.
Regards, Rhody.

More from Rhody:

Hi Bill:
Kitco finally updated its lease rate data, so if you can stand another comment about gold and silver lease patterns, here it is. Gold's lease rates are still in backwardation, and that implies stress and serious effort at price capping. Silver lease rates are now rising across the board but faster in the near terms. This also implies stress and serious capping efforts on the spot price. However, with today's increases in silver rates, we have resurrected a pattern not seen since last April. During the last explosive rally of silver, one year gold lease rates became less than the one month rates for silver.

(One could lease gold for a year, cheaper than you could lease silver for a month.) Spot silver may be going parabolic here. Rhody

Mahendra’s latest missive this morning should brighten the silver bulls:

DEAR MEMBERS,
PLANETARY POSITION IS INDICATING THAT BIG FIREWORK OR PRICE EXPLORE IS COMING IN MY FAVOURITE (SILVER), MAY BE TODAY OR SOON IN FEW DAYS? GET READY,
PLEASE DON'T SELL OR SHORT SILVER.

THANKS & GOD BLESS
Mahendra
http://www.mahendraprophecy.com/

Talk about doing research:

Hi Bill,
I obtained some information on Canadian domestic banks by way of a Freedom of Information request. The way I read the data as at July 31, 1999 the Canadian domestic banks over sold gold/silver certificates by $633,344,000! They have since acquired much more physical and now they have more coin and bullion on hand than certificates sold and outstanding.

If you or anyone else (such as Blanchard & Co.) wants the FOI documents I will be happy to mail them.
Ron Lutka

Canadian Banks - Gold & Silver positions.xls

More from Ron:

Hi Bill,

The individual Canadian banks knew they were net short and they knew the Canadian banking industry overall was net short so that must have been okay with them, until GATA showed up and spooked them and they ran for cover. Good work!

To answer your question "What do you make of that?" I think this is very good evidence of a sea change in the bullion banking industry. Some of the smaller banks are breaking from the herd and covering then going long because they know where the POG is headed. However, the much larger banks like JPM, GS, HSBC, Deutches Bank, UBS and Morgan Stanley are in so deep they are having trouble getting out from under their shorts. It was easy for the small Canadian banks to cover because that would not run the POG up significantly by itself. On the other hand, JPM covering might run the POG up $500 or more by itself. That is my guess.
Ron

A lot of coverage on different aspects of gold companies and their shares:

Canada’s Sprott to buy Aflease
David McKay
Posted: Sun, 05 Dec 2004

[miningmx.com] -- CANADIAN fund manager, Sprott Asset Management, is set to buy a stake in Afrikander Leases (Aflease), the South African gold and uranium company. The new investment is a vote of confidence in Aflease’s plans to start mining uranium, possibly in about two years. Sprott has about $1.9bn under management.

Neal Froneman, Aflease CEO, has said in the past that his company could provide roughly 6% of world uranium supply from its South African resources. This is also a far cry from events almost a year ago when Aflease closed its underground gold mine under pressure from the stronger rand/dollar exchange rate. As a result, Aflease’s share price ended 49% lower year-on-year.

Aflease will issue about 12 million new shares to Sprott raising up to R40m, funds that will be used to expedite Aflease’s uranium ambitions. Froneman declined to comment on the investment, but it’s expected an announcement will be issued to the Johannesburg Stock Exchange this week….

-END-

Toronto, Ontario and Vancouver, British Columbia – December 6, 2004 – Goldcorp Inc. (TSX:G; NYSE: GG) and Wheaton River Minerals Ltd. (TSX: WRM; AMEX: WHT) announce that they have reached an agreement in principle to combine to create the world’s lowest cost, million ounce gold producer. The combination would be effected through a share exchange take-over bid where Goldcorp would offer 1 common share of Goldcorp for every 4 common shares of Wheaton River. –END-

Word passed our way is that a number of hedge funds are long bullion and short the gold shares. When the shares start their move back up, a move which is coming sure as shootin’, hedge fund covering could send them up quite quickly. While this NY Post article doesn’t get into the gold shares, it offers some insight into what is going on out there in that world:

NEW YORK POST

HEDGE FUNDS COULD BE NEW BUBBLE

By TERRY KEENAN

December 5, 2004 -- ON Wall Street, almost every year has its moniker: 1987 was the "Year of the Crash"; 1999, the "Year of the Dot-Com Bubble"; and 2002: the "Year of the Corporate Scandal."

And 2004? It undoubtedly will go down as the "Year of the Hedge Fund." Yes, these once "oh-so-exclusive" investment vehicles have sprouted like weeds of late, to the point where there are now twice as many hedge funds as there are stock mutual funds.

It's been a boffo time for the now $1 trillion dollar hedge fund industry, which typically charges a 2 percent management fee and gets at least 20 percent of the upside returns. With that kind of deal, it's generally all return and no risk for the hedgies.

But for market historians, the investor mania for hedge funds also raises a lot of red flags. Whether it was the frenzy for the investment pools of the 1920s, or the mutual fund mania of the late '90s, when the crowd piles into a hot "new" investment vehicle, the train has probably already left the station.

That's one reason why some savvy investors are warning investors to proceed with caution. One of those is Jim Rogers, a regular on the Fox News Channel's "Cavuto on Business," and the man who helped found the Quantum hedge fund.

In a speech in Japan this week, Rogers noted that the sheer number of new hedge funds that have proliferated in recent months should be enough to raise eyebrows. "With overcrowding, there will be some charlatans and incompetence. You can't have that many smart 29-year-olds around."

Meanwhile, performance at the average hedge fund has been slipping in an inverse proportion to their popularity — with returns falling behind many of the average benchmarks. Through October, the S&P Hedge Fund index was up 1.15 percent versus a more than 2 percent gain for the plain vanilla S&P 500. As the numbers suggest, you'd have been a lot better off starting a hedge fund in 2004 than investing in one.

TERRY KEENAN is anchor of Cashin' In on Fox News Channel, Saturday mornings at 11:30. E-mail terry.keenan@foxnews.com

Food for thought:

Bill:
Absolutely ambush in the pm shares this morning, especially silver, with the metals themselves showing good resilience so far. Hmmmmm?

I strongly suspect naked shorting of this sector facilitated by issuance of counterfeit paper shares by the now infamous Depository Trust Corporation branch of the Federal Reserve. I refer to the following excerpt from this article:

StockGate: SEC Paper Presented at SIA Symposium Calls Counterfeiting 'Pervasive'

". . . NBC's "Dateline" recently confirmed to FinancialWire that it is preparing a comprehensive expose of the "naked short selling" controversy.

The reportage is said to focus on allegations that "brokers, through their wholly owned clearing house system, the Depository Trust Corporation (DTCC), have effectively been creating counterfeit shares of stock through their 'Stock Borrow Program', which allows brokers to 'borrow' the same shares over and over again, artificially inflating the share count and driving the price of the stock down."

"http://www.investors.com/breakingnews.asp?journalid=24169752&brk=1
Tom K

A gold shares heads-up:

Bill,
I just received a phone call from my Broker's office at 9:30am this Monday the 6th.

I often take delivery of certificates, so they cannot be shorted by the bad guys, and to date the cost has been minimal to zero; to have the certs sent to me. The word from my Southwest Securities and First Financial Broker is:

D.T.C. ( DEPOSITORY TRUST CORP ) has notified my Broker that all delivery of certificates to shareholders after 1 Jan 2005 will cost the shareholder $75.00 per equity.

I guess; if the CARTEL cannot control the price of gold, then they'll make delivery of certificates expensive to hold for the owners of equities, and possibly enabling their CARTEL friends in crime--to short and naked short shares to further manipulate market activity.

This is not the (Free America) and (Free Markets) that I fought for in Vietnam in the 60's.

What goes around, comes around. The manipulators and crooks in high places will get what they have bestowed on the people and deceived the people with.

I am still adding to my shares on the dips. CDE, GSS, & ECU SILVER are screaming buys at bargain basement prices. Taking delivery of certificates make take on a new twist for me, but I'll hang in for OUR glorious payoff. Your brother (TIM) has some good physical prices in Phoenix.

For every $3,000 I invest in shares, I purchase $1,000 in PHYSICAL SILVER from Pat Gorman at RESOURCE CONSOULTANTS or http://www.buysilvernow.com/, in TEMPE, AZ.

The day the CARTEL gets their just deserts is not that far off! They will still try every trick in, or out, of the book to take money from honest people/investors.

Thanks to GATA and the contributors to the cafe, I AM STAYING OPTIMISTIC for the future of Gold, AND INVESTED; with adding of shares on the dips.

THANKS, BILL & CHRIS, for all of your hard work !!!!! And thank goodness we have the GATA Army that can see through the Camouflage of the BAD GUYS !!!!!
DOUG
Scottsdale, AZ

Some thoughts on the gold shares:

Hey Bill,
Seems today we have another case of self-fulfilling prophecy, or is it propaganda? The shill pundits continually predict that the shares will correct, and then they do!

Hmmmm? On the surface this seems to be that old axiom of the shares leading the markets, knowing where the commodity is heading that they represent. But, the commodity is not yielding to this prognostication. Neither gold or silver bullion are indicating any weakness that would warrant these sell offs of the shares. As a good contrarian, and proud conspiracy theorist, I have a different interpretation of what is occurring. My analogy is based on the premise that equity investors couldn't predict what was going to happen in the next ten minutes, never mind what might occur in an international bullion market. I know this because I am an equity investor, who has read dozens of books about predicting price movement based upon the examination of historic price data displayed upon a chart, and it can not be done with any consistency. Predicting prices based upon historic data is at best a fifty-fifty proposition. Especially in managed markets.

On the other hand, trend and price channel analysis are valuable tools, combined with an in-depth knowledge of the dynamics of the economic fundamentals at play; but, there is no reliable soothsaying outside of fundamentals. Accordingly, what we have going on here is the work of propagandists. Cartel shills disguised as market analysts coordinating their bearish prognostications in order to influence the market. It is a well established fact that the Central Banks use the tactic of "talking" to influence a market, while manipulating the hell out of it behind the scenes. That strategy has a basis in science, which has to do with overcoming inertia to start movement, because a body in motion will tend to stay in motion. The manipulators know that once they initiate movement in a certain direction, as the herd accepts their message, it will continue in motion. This common practice of theirs fits the present share situation perfectly.

For several weeks I have been reading about one pundit or another predicting that gold was overbought and in need of a serious correction. Gold wouldn't listen. The pundits plugged in a message variation about how fund managers would be taking profits from gold's significant run up for their year end gains. Still, gold would not fall. On or about November 18th, the shares did start to fall, even though there was no appreciable correction in bullion. The media propagandists continued proclaiming that the shares are leading the market, that they are predicting the immediate future of the bullion. The shares have corrected from 7.5% to 15%, although bullion has only corrected 1% to 1.5%.

This disconnect is not normal market behavior, in my opinion. Disconnects are almost always accompanied by intervention, or other fraud. A comparison to the bond and currency disconnect proves the point. The evidence that there is manipulation in the bond markets is overwhelming, regardless of it being Japan's buying or the Fed's own monetizing through off shore accounts. The manipulation, or more politically correct "management" is causing the disconnect between the US Dollar action and bond rates. In the case of the shares and bullion, the disconnect is equally evident. Moreover, the correction to the shares is disproportionate to any run up the shares have had with bullion.

The HUI responds less and less to the upward movement of the price of gold. Yet, it plummets violently to the downside with a miniscule loss in the bullion price. This price action in the shares is screaming MANIPULATION to me, because whenever there is a disconnect between the fundamentals and actuality, there is always intervention causing it. Accordingly, if they are known to manipulate the bond market, bullion market, and equity market, why wouldn't they are also manipulate the mining shares index? For me this is a no brainer. In closing Bill, I believe you will be completely vindicated, because bullion will indeed continue to rise, which shows that they have lost their grip and are relegated to expending their power in the miniscule share market. Their last hurrah? Go GATA!
Rich