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

CARTEL CAPITULATION WATCH

What a day for the Wall Streeters. The DOW leaped 107 to 10,940. The DOG is lagging. It went up 12 to 2070.

The Dow Theorists will be crowing with both the Dow and Transports making new highs. I’ll bet dollars to doughnuts we are very close to a top which will last for many years.

Crude oil closed higher AGAIN – to $53.78, up 21 cents per barrel.

US economic numbers:

08:30 Feb. avg. hourly earnings reported 0.0% vs. consensus 0.2%; avg. weekly hours 33.7vs. 33.8
Jan. avg. hourly earnings revised to 0.3% from 0.2%.
* * * * *

08:30 January non-farm payrolls revised to 132K from 146K
* * * * *

08:30 Feb. unemployment rate reported 5.4% vs. consensus 5.2%; non-farm payrolls reported 262K vs. consensus 225K
* * * * *

March 4 (Bloomberg) -- The dollar fell for the first time in a week after a government report showed the U.S. unemployment rate rose last month and fewer people were hired in January than initially reported.

Speculation the economy would add as many as 300,000 jobs overshadowed the Labor Department report that employers hired 262,000 new workers, the most since October and above the median forecast of economists polled by Bloomberg.

``The numbers were not strong enough to support dollar bulls' wildest desires,'' said Jason Bonanca, a currency strategist at Credit Suisse First Boston in New York. ``We are still improving and 262,000 is a good number, but details in the report were not so supportive.''

09:47 Feb. final Univ. of Michigan Confidence reported 94.1 (Reuters) vs. consensus 94.5
Prior reading 94.2.
* * * * *

10:00 Jan. Factory Orders reported 0.2% vs. consensus (0.1%)
Prior reading revised to 0.5% from 0.3%.
* * * * *

This one is a hoot:

Hi Bill,
I just listened to George Millings Stanley on Marketwatch for the world gold council.
He said , I wouldn’t like to give a future price of gold because I d be in big trouble with GATA if I did.
You have them cornered Bill.
Look ! !,over there, is that a stretcher bearer running to the stretcher rack ????
GO GATA
Steve

George Millings Stanley is a nice fellow actually. Just working for a corrupt outfit.

This is how we win the day:

But I have been feeding stuff to JR for a while. I sent him this yesterday.
http://www.rense.com/general63/rig.htm

-END-

You might like to know Dow Jones carried our Business wire release on Dr Woertz’s GCC gold report.

CNBC and inflation:

Bill,
Listening right now to Larry Kudlow on CNBC talking about how the CRB at near record highs is not inflationary because gold is muted and gold indices aren't reflecting inflation, is repulsive. What a shameless shill. Why no one has called him on official central bank gold sales is beyond me.

Mark Haines talks about the market being manipulated. He doesn't know how right he is, but ... he thinks it's the speculators.

Another talking head another monkey.
I hope this isn't a ruse, but if it is, more later.
All the best,
Raymond

Good grief. What fun to see what just came in from Houston’s Dan Norcini. I swear this came in after I had written my commentary above:

Houston's Dan Norcini:

Hey Bill:
Call me dense or something but the CRB just blew through the recent top of two days ago like it did not even exist and is threatening levels last seen back in December of 1980. The dollar gets mauled and goes caput and bond traders just yawn and take long term rates lower??? Watching a two point rally from off the intraday lows on account of some "benign" jobs and wages number is simply mind boggling.

This has gotten beyond weird in watching this - it is EERIE. It's like watching some sort of horror movie moving at slow motion. Scares the hell out of me buddy and I do not mind telling you. I cannot get over the utter complacency that we are witnessing taking place as these systemic pressures just build and build and build.

We both know what the COT data is going to show this afternoon before we even get the thing.
Dan

Comments like these are much appreciated on frustrating days like this one:

Bill: It is my belief that the release of the GCC Study is the reason for the gold market taking off today...not the weak dollar!! This is just another confirmation of your hard work...all of this is, slowly but surely, proving you right!! Please don't stop!! I am standing beside you...quietly...without any kind of notoriety...just carrying on with you.
I can't tell you how many friends and family I have lost over this thing. But I know that I will be proven right in the end. We will certainly prevail.
Earl

The senior golds fared OK today and closed near their highs for a change. The XAU gained 2.71 to 99.80 and the HUI rose 6.35 to 216.54. The HUI needs to clear 220 and off to the races we go.

HUI
http://bigcharts.marketwatch.c…&o_symb=hui&freq=1&time=8

The smaller golds were comatose. No interest. That will change. Just not yet. Not with other natural resource stocks flying and the general market making highs. Who wants to play in a rigged Casino when so much is going on elsewhere?

Dr. Woertz’s gold report out of Dubai and the United Arab Emirates took me back to my favorite posting ever at the Café. My friend Frank Veneroso wrote the piece and I never tire of reading it. It surely will be right up Dan Norcini’s alley:

Recollections of the Greatest Market Bubble Ever…

Memories of the Souk al Manakh

How large can a bubble grow before it bursts? Farther than you think. And there need not be a fatal pinprick that makes it burst. And when it bursts, the crash that ensues can be deeper and more discontinuous than you could ever imagine.

In May of 1982, while the bear market in US stocks was in its deepest throes, and the epic bear market in US bonds was still completing its base, I was called to advise on the greatest stock market bubble of all time---the Souk al Manakh in the Persian Gulf. Kuwait had had an organized stock market for some time. The great wealth created in Kuwait by the rise in the oil price in the 1970's led to seemingly endless appreciation in Kuwaiti stocks. In the Arab states in those days, only sheiks could grant corporate charters, and only corporations could become publicly traded companies. The royal family of Kuwait did not freely grant corporate charters for companies that might become vehicles for stock speculation, so there was a shortage of stocks to trade. This shortage and the new unparalleled wealth that was looking for vehicles of speculation gave rise to an over the counter market in Kuwait city where shares in companies domiciled elsewhere in the Gulf---principally Bahrain and the United Arab Emirates---were traded. Housed in a converted air-conditioned parking garage, this market was known as the Souk al Manakh---the camel market.

I was asked at the time by the government of the United Arab Emirates to advise on the creation of a stock exchange in the Emirates. Great fortunes were being made in shares of companies domiciled in the Emirates at the time. Why not bring all this wonderful new stock market activity home?

For six weeks I worked out of an office in the UAE central bank in Abu Dhabi. The city was modern, laid out along a crescent beach at the end of a promontory into the Gulf. The central bank was a modern glass building behind severe cement columns that met in graceful Moorish arches. From a great glass window of this modern building, I could see along a turquoise backwater old tanned fisherman working on brightly painted ancient fishing dhows that were beached on the blinding sands. The Sheik of Abu Dhabi was the richest man in the world then. Only a few decades earlier his brother, the former ruler, was afraid to walk the streets of what was then a small sandy seaside fishing village for fear of his creditors.

Being a macro oriented, top-down man, I set about to see how great a supply of stocks had been made available for trading on a formal market in the UAE. The results were simply unbelievable. The market capitalization of the Kuwait exchange and the Souk al Manakh combined ranked third in the world, behind the US and Japan. It was greater than that of the UK with all its foreign listed companies. How could this be? I asked, for both geographically and economically speaking, these few countries---Kuwait, Bahrain, and the Emirates (the former Trucial States under British domination)---were only postage stamps of sand on the globe. Oil had brought wealth to these small countries but their combined economies were still very small compared to those of the US or Japan or the UK. More striking was the fact that most of the visible wealth was not reflected in these companies. The rulers of these sheikdoms owned the oil wealth. The hugely expensive real estate was privately held, as were the extremely lucrative import franchises. What assets and income underpinned these multi-billion dollar market caps?

We did a bottoms up study to find out. In Bahrain, a financial center, there were banks, seemingly of substance. There was a raft of companies that made cement and clinker. These companies were domiciled in five former Trucial states whose names you never heard of that, alas, had no oil. There was a company or two that imported sheep and goats for slaughter. And then there was a handful of other companies whose principal activities were not at all obvious.

The Sheik of Abu Dubai was the richest man in the world at the time and the Ruler of Dubai was also quite well to do. The five other sheiks who had no oil were poor cousins. For founders shares these oil poor sheiks granted charters for corporations that could be traded on the Souk al Manakh. I can remember driving one day to a small derelict town that was the capital of one of these oil poor sheikdoms to analyze a company with a high flying stock on Kuwait's OTC market. For the life of me, on the balance sheet of this company I could find no assets of any kind. It dawned on me that, behind most of this third ranking stock market cap in the world, there were only a few cement and clinker plants, a slaughter house or two, and quite a few shell games.

How do you tell your host government that the stock market they want to bring home is a shell game? I pondered this diplomatic quandary for weeks as I looked out my office window at those ancient painted dhows in the desert sun. In the end I mustered the courage to tell the truth. "It is all a bubble," I told my client-. "And it will burst." To my relief and amazement, I was greeted, not with displeasure, but with laughter. "You Westerners have been coming here for five years", they told me, "and to a man you all have predicted a crash. Don't you understand, there has never been a place on earth like the Gulf with such unprecedented wealth? You will never understand that the Gulf market cannot crash."

I had a long time friend in London. His name was Ali. He was one of several Anglo Arab investment bankers that flourished in London in those years. When I passed through London on my way back to the US I stopped to tell him about my trip. Speculation on the Souk al Manakh was financed with a curious type of informal margin financing by way of post dated checks. So rapid was the rise in the Gulf market that post dated checks paid an interest rate of 100% per annum. Ali was financing speculators in this market. He listened and he smiled.

At the beginning of August I had completed my report for the government of the UAE. I told them that the market they wanted to organize was a bubble and that it would crash. Some weeks later I heard from Ali. He called to thank me for my advice on my recent visit. He had called in all his post dated checks. "Did you hear what happened to the Souk?", he asked. "No", I replied. "Well, it topped quietly at mid summer after you left, with no provocation. One can't quite say it declined or it crashed; it has just stopped trading."

The Souk al Manakh was the greatest speculative mania of all time. One could not even speak of valuation. Margin financing reached unimaginable extremes; one speculator, who had been a customs clerk two years earlier, had at the peak $14 billion in stocks financed with $14 billion of margin debt. The people involved believed that the oil rich Gulf was truly a "New Era". It did not take a trigger to burst this bubble; it simply crested sometime in the dreadful heat of the Middle East's summer. Its decline was so discontinuous it cannot be called a crash. There were simply no bids. ¨

Frank Veneroso
Veneroso Associates
November 19, 1999

Speaking of the Arabs, time for some of my old war stories to surface again. When my brother Tim and I were commodity brokers, we had a few Arabs for clients. Remember the disgraced BCCI. That was one of them.

Then, there was Ahmed Sarakbi, an Egyptian who built the roads in Saudi Arabia way back when they needed them. Was he one rich guy and a HUGE account! However, a real pain. Called so much and was on the phone so much, I used to have to run to the men’s room and back. My elbow used to get sores from me leaning on it with the phone in my hand. He was always on the phone. Until one day.

He was long something like 1260 gold (remember that one), 750 silver and like 400 to 500 yen and swiss franc contracts (each). The markets were fading badly and Ahmed had a margin call. Then they began to tank. Gold was down about $20. Everything was going wrong. All of a sudden I couldn’t find him … anywhere. No phone calls either.

I smelled trouble. My manager was in an office meeting in Chicago and I couldn’t find him either as I wanted to liquidate the account and needed permission to do so. I knew Ahmed would go berserk, so I wanted approval. That is some position to sell without an OK from somebody. I knew if it went badly, I would be fired AND sued.

I also knew if the floor smelled a problem, they would make life a nightmare for me by taking the markets down even further. Once they smell blood down there, you are finished. When the day started there was $6 million left in the account. I went into action, selling the biggest problem, silver (due to liquidity), first. My first 100 lot took the silver price from $11.50 down to $10.75, limit down. Uh-oh! This was not good. Fortunately, you could trade the spot contract (no limits) and arb out. I used every trick I knew, including using other brokers. Was I sweating and praying there would not be a deficit. Didn’t even have time to work that out as we were concentrating on selling, going back and forth between the Merc in Chicago and the Comex. Nothing we could do about it anyway.

By the end of this harrowing day, the account was emptied. Ahmed called two minutes after gold and silver closed like nothing was going on. Said his daughter had a toothache and he was at the dentist’s office with her. Yep, he went bananas when I told him what I did. The swearing was in Arabic so that didn’t bother me. His lawyer called a half hour later saying he would sue. Right on cue.

Around 6 at night, we figured out there was still $60,000 in equity left. Phew. A close call. On Monday the markets opened up sharply lower across the board. The deficit would have been $4 million and I would have taken down the small firm I was with at the time. The manager sent Tim and I a case of champagne that afternoon.

As for Ahmed, did he thank me? Nope. Just swore some more on Monday and still said he would sue. One thing about the Arabs, at least the ones I came across. They NEVER would admit they were wrong.

Then there was Talib Al-Nakib, a very wealthy Kuwaiti who also had homes in London and Geneva. Visited him once in Switzerland. My girlfriend was not allowed to walk with us. She had to stay behind with his wife. When he rode in the car with his animals, they had higher seating priority than his wife, or other women. Those were the dark days for Arab women.

Anyway, he liked his cocktails here and there. One early evening after a few toots in Geneva, he decided to put on a limit position in cocoa. The problem was it was the Friday before Labor Day weekend in the US and the market was thin. We drove it limit up. By next Tuesday the London traders had taken the market back to around limit down. A sobered up Talib chucked his position.

Another funny one was the time he had on a huge pork belly position, I think another limit position. This one a nice winner. The problem was his wife found one of his statements. He was not supposed to be trading bellies because it was pork. He felt obliged to blow out of that one also.

What a time those days were.

Have a great weekend and remember:

GATA BE IN IT TO WIN IT!

MIDAS

Appendix

March 4, 2005
New York Times
Deficits and Deceit
By PAUL KRUGMAN

Four years ago, Alan Greenspan urged Congress to cut taxes, asserting that the federal government was in imminent danger of paying off too much debt.

On Wednesday the Fed chairman warned Congress of the opposite fiscal danger: he asserted that there would be large budget deficits for the foreseeable future, leading to an unsustainable rise in federal debt. But he counseled against reversing the tax cuts, calling instead for cuts in Social Security, Medicare and Medicaid.

Does anyone still take Mr. Greenspan's pose as a nonpartisan font of wisdom seriously?

When Mr. Greenspan made his contorted argument for tax cuts back in 2001, his reputation made it hard for many observers to admit the obvious: he was mainly looking for some way to do the Bush administration a political favor. But there's no reason to be taken in by his equally weak, contorted argument against reversing those cuts today.

To put Mr. Greenspan's game of fiscal three-card monte in perspective, remember that the push for Social Security privatization is only part of the right's strategy for dismantling the New Deal and the Great Society. The other big piece of that strategy is the use of tax cuts to "starve the beast."

Until the 1970's conservatives tended to be open about their disdain for Social Security and Medicare. But honesty was bad politics, because voters value those programs.

So conservative intellectuals proposed a bait-and-switch strategy: First, advocate tax cuts, using whatever tactics you think may work - supply-side economics, inflated budget projections, whatever. Then use the resulting deficits to argue for slashing government spending.

And that's the story of the last four years. In 2001, President Bush and Mr. Greenspan justified tax cuts with sunny predictions that the budget would remain comfortably in surplus. But Mr. Bush's advisers knew that the tax cuts would probably cause budget problems, and welcomed the prospect.

In fact, Mr. Bush celebrated the budget's initial slide into deficit. In the summer of 2001 he called plunging federal revenue "incredibly positive news" because it would "put a straitjacket" on federal spending.

To keep that straitjacket on, however, those who sold tax cuts with the assurance that they were easily affordable must convince the public that the cuts can't be reversed now that those assurances have proved false. And Mr. Greenspan has once again tried to come to the president's aid, insisting this week that we should deal with deficits "primarily, if not wholly," by slashing Social Security and Medicare because tax increases would "pose significant risks to economic growth."

Really? America prospered for half a century under a level of federal taxes higher than the one we face today. According to the administration's own estimates, Mr. Bush's second term will see the lowest tax take as a percentage of G.D.P. since the Truman administration. And don't forget that President Clinton's 1993 tax increase ushered in an economic boom. Why, exactly, are tax increases out of the question?

O.K., enough about Mr. Greenspan. The real news is the growing evidence that the political theory behind the Bush tax cuts was as wrong as the economic theory.

According to starve-the-beast doctrine, right-wing politicians can use the big deficits generated by tax cuts as an excuse to slash social insurance programs. Mr. Bush's advisers thought that it would prove especially easy to sell benefit cuts in the context of Social Security privatization because the president could pretend that a plan that sharply cut benefits would actually be good for workers.

But the theory isn't working. As soon as voters heard that privatization would involve benefit cuts, support for Social Security "reform" plunged. Another sign of the theory's falsity: across the nation, Republican governors, finding that voters really want adequate public services, are talking about tax increases.

The best bet now is that Mr. Bush will manage to make the poor suffer, but fail to make a dent in the great middle-class entitlement programs.

And the consequence of the failure of the starve-the-beast theory is a looming fiscal crisis - Mr. Greenspan isn't wrong about that. The middle class won't give up programs that are essential to its financial security; the right won't give up tax cuts that it sold on false pretenses. The only question now is when foreign investors, who have financed our deficits so far, will decide to pull the plug.
E-mail: krugman@nytimes.com

Senate Democratic Leader Blasts Greenspan

By Dan Balz
Washington Post Staff Writer

Friday, March 4, 2005; Page A06 Federal Reserve Chairman Alan Greenspan generally gets accolades for his public pronouncements. Yesterday he got a brickbat from Senate Minority Leader Harry M. Reid (D-Nev.), who blasted Greenspan as "one of the biggest political hacks we have here in Washington."

Reid ripped Greenspan during an interview on CNN's "Inside Politics." He said the Fed chairman has given President Bush a pass on deficits that have built up in the past four years and should be challenging Republicans on their fiscal policies, rather than promoting Bush's plan to introduce personal accounts into Social Security.

"I'm not a big Greenspan fan -- Alan Greenspan fan," Reid said when asked about the Fed chairman's testimony this week urging Congress to deal quickly with the financial problems facing Social Security and Medicare. "I voted against him the last two times. I think he's one of the biggest political hacks we have in Washington."

Reid said that when Bill Clinton was president, Democrats had confronted the deficit problem by enacting a tax increase in 1993, which helped bring about a balanced budget and strong economic growth later in the decade.

"Why doesn't he respond to the Republicans and tell them the big problem here is the debt that this administration [has] created?" he said. "We had a $7 trillion-dollar surplus when Bush took office. Now we have a $3 or $4 trillion-dollar deficit. That's, in fact, what Greenspan should be telling people."

A spokeswoman said the Federal Reserve would have no comment. Brian Jones, spokesman for the Republican National Committee, which a few weeks ago sharply attacked Reid, called the minority leader's comments regrettable.

"It's unfortunate that at a time when the president is looking to engage Congress in a substantive and meaningful discussion on Social Security that Harry Reid is spending his time attacking the Federal Reserve chairman," he said.

Reid's personal attack reflected Democrats' frustration over Greenspan's support for the key element of Bush's Social Security plan -- voluntary personal saving accounts for younger workers funded by diverting a portion of payroll taxes. Reid has led the Democrats in their united opposition to Bush's plan, and Reid spokesman Jim Manley said Greenspan's congressional testimony on Wednesday amounted to "shilling for the president with proposals that would put us deeper in debt."

Greenspan has occupied an unusual position in Washington during his long tenure at the Fed: above partisan criticism, a figure celebrated by many as a wise and evenhanded guardian of the economy whose public pronouncements not only move markets but also greatly influence policy debates. But in recent years, he has opened himself to more criticism. Having supported tax cuts when Bush was pushing them in 2001 and now backing personal accounts for Social Security, he has become a target for Democrats.

As Reid made clear in his interview with CNN's Judy Woodruff, he has been a longtime critic of Greenspan. In 1996, Reid opposed a third four-year term for Greenspan and ordered a General Accounting Office report critical of the Fed's management. He described Greenspan and the Federal Reserve Board as "arrogant."

Reid also differed with Greenspan on monetary policy, arguing that he was keeping interest rates too high. "We should put the brakes on Mr. Greenspan's nomination before we once again empower him with the ability to put the brakes on the economy," he said then.

In his first months as successor to former senator Thomas A. Daschle (D-S.D.), Reid has proven to be a pugnacious and sometimes unpredictable leader. He has given the administration no quarter, and his comments sometimes have caused an uproar among fellow Democrats.

Shortly after winning the leadership post, Reid suggested to NBC's Tim Russert that he might vote for conservative Supreme Court Justice Antonin Scalia if Bush were to nominate him to be chief justice. Other Democrats and abortion rights advocates jumped on Reid, who opposes abortion rights.

March 6 – Gold $433.60 – Silver $7.34

Think Volcano

In 1932 apparently the memory of government fiat from the Civil War was still fresh enough in the public consciousness to consider its reintroduction, even to resolve the problems they were seeing in the trough of the Great Depression, as insanity.

"To an suggestion that the government shall set its printing presses free and flood the country with fiat money, all our economic intelligence reacts with NO. Only those will say yes who are mentally or politically unsound. And if a government is obliged by vote of the unsound to do it, then everybody, including the unsound, will begin to hoard gold because gold is the one kind of money no government can make or dilute." Garet Garrett, A Bubble That Broke the World, June, 1932

A quick MIDAS to bring a few important points to your attention on this late winter US weekend. The reason for doing so is the pressures continue to build for a coming gold and silver price explosion – AND they are becoming more apparent.

I tend to think about, and mention, the term explosion more than most. Perhaps it is because I spend so much time on doing what I can to stay on top of the gold fundamentals and also watch the extent to which The Gold Cartel is going to suppress the price on a daily basis, especially recently.

Based on the work of the GATA camp over the years, The Gold Cartel should be close to hitting the wall, meaning that they are running out of available central bank supply to meet surging demand around the world for gold. It is always important to keep in mind that without the surreptitious lending/swapping of central bank gold, the price would be hundreds of dollars higher. When The Gold Cartel hits the wall, that is exactly what will happen.

How I see it:

*First, we know from John Brimelow’s reports and others that gold demand is surging around the world. Reports surfaced again this weekend the Swiss gold refineries are going all out and can’t keep pace with that demand. As commodity prices advance through the year and the dollar comes under further pressure, this demand is likely to accelerate.

*When it comes to the supply side, the scenario is bullish on all counts:

. 8:27p ET Friday, March 4, 2005

Dear Friend of GATA and Gold:

Julian D.W. Phillips, editor of Gold-Authentic Money, reports that French gold sales have stopped. You can find his analysis at GoldSeek here:

http://news.goldseek.com/AuthenticMoney/1110121200.php

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

2. The Swiss decision to sell 1300 tonnes of its gold has about run its course. As I recall, this will be their last month of sales. The Gold Cartel counted on Germany to take over from the Swiss. However, as we know forces behind the scenes in Germany put the kibosh to those best laid plans. "Nada," said Germany when push came to shove.

3. The news for The Gold Cartel in securing above ground supply is disappointing for their scheme. What is coming out of the ground could be just as bad for the heinous ones:

Gold output sinks to nine year low in 04

March 6, 2005 - 1:14PM

Australia's gold output sank to a nine year low in 2004 following exceptional wet weather in Western Australia early in the year and a large number of plant closures.

Gold production for the year was down to 261 tonnes, 6.5 per cent less than 2003, Melbourne consulting group Surbiton Associates said.

Output for the December quarter was 66.6 tonnes, up slightly on the previous three months but 9.5 per cent less than the same period in 2003.

The industry suffered production losses early in the year due to exceptionally wet weather in Western Australia, which produces around three-quarters of Australia's total gold output.

"The amount of gold produced in 2004 was the lowest since 1995," Surbiton managing director Sandra Close said.

"The mining industry is the best hope of redressing Australia's appalling balance of trade.

"If the federal government is really serious, it should take steps to make all mineral exploration more attractive."

A number of Western Australian operations closed during 2004 including Sons of Gwalia, Hannans South, Kundana, New Celebration and Bronzewing.

Sons of Gwalia Ltd went into receivership last year and its namesake operation near Leonora has exhausted ore supplies.

Hannans South, Kundana and New Celebration were also older plants which ran out of ore.

Meanwhile Bronzewing owner View Resources has shelved the reopening of the mine because of high contractor rates and skilled labour shortages.

The downward trend in Australian gold output is a consequence of lower exploration spending and fewer new discoveries, Dr Close said.

Australia is now producing about 50 tonnes of gold a year below its peak production year of 1997.

This represents a reduction of around $900 million a year in gold exports at current prices.

"To put it simply, and say it yet again, Australia is just not spending enough on exploration," Dr Close said.

"It's five years since the last significant greenfields gold discovery was made in Australia."

New gold capacity commissioned late in the year at St Ives and Telfer in Western Australia and Cracow in Queensland, did not contribute significantly to 2004 production.

Despite the lower output, Australia appeared to have held its position as the world's second largest gold producer, although final 2004 production figures were not yet available elsewhere.

It follows South Africa which produces about 345 tonnes, and leads the United States which produces around 259 tonnes and China with 212 tonnes.

Australia should retain its ranking in 2005 as Newcrest's Telfer mine and Cracow ramp up production along with St Ives - owned by Gold Fields Ltd - and several other operations come into production.

The top three mines for 2004 were the Super Pit, owned by Newmont Mining Corp and Barrick Gold Corp which produced 888,484 ounces; Granites owned by Newmont which produced 640,000 ounces and St Ives which produced 505,218 ounces.

-END-

Which brings us up to the Adolf Hitler/Neville Chamberlain routine when it comes to the IMF selling gold to help the poor (proposal to be formally presented in April). England’s finance minister Gordon Brown knows the cabal is in deep trouble with the Swiss ending their gold sales and other central banks wanting to hold on to what they have. The suggestion is so dire Brown talked (paid off) South Africa’s finance minister Trevor Manuel to pacify the elitist cabal banking crowd by declaring South Africa would agree to IMF gold sales, even as the SA’s major gold companies are laying off miners because the price is too low re their costs. This treasonous act by Manuel is an outrage. The timing of this latest IMF gold sale proposal is no accident.

Most European central bankers must realize they have been conned long enough by the devious bankers in The Gold Cartel. Either that or they realize how untenable their position on gold sales will look in the years ahead as the price soars past $1,000 per ounce. Can you imagine how Gordon Brown is going to be vilified by his countrymen in the future for selling more than half of England's gold at $280 per ounce? Better keep his passport handy.

Back to the big picture scenario. We know the gold mine supply picture is a shrinking one around the world due to high costs, lack of exploration finds, and the gold price suppression scheme. Until gold rises to the $500 level, this is unlikely to change and will accelerate the cabal’s problems.

Just the coming supply/demand picture alone is enough to send the price of gold sharply higher in the months and years ahead. Pile the likelihood of a falling dollar on top of that and you have the makings of a move which few in the general investing world can comprehend.

Buffett deepens dollar worries

By Dan Roberts in New York
Published: March 5 2005 18:22 | Last updated: March 5 2005 18:22

Warren Buffett has warned that the US trade deficit risks creating a "sharecropper’s society" as his letter to shareholders sounded an increasingly bearish tone about the value of the dollar.

The billionaire fund manager said his own performance as chairman of Berkshire Hathaway was "lacklustre" because he struck out in his quest for new investments. Annual results showed the book value of Berkshire shares underperformed the stock market for the second year in a row while full-year profits fell 10 per cent.

But his sceptical view of current market valuations continued as Berkshire’s holdings of cash rose from $36bn in 2003 to $43bn by the end of December – equivalent to nearly all the "float", or excess cash, generated by its insurance businesses.

Mr Buffett’s bet against the dollar also grew. Foreign exchange contracts – mostly short positions against the US dollar – nearly doubled over the year to $21.4bn, generating $1.8bn in gains as the greenback fell against other major currencies.

These currency profits were partly responsible for a sharper than expected rise in fourth quarter earnings from $2.39bn to $3.34bn, although Berkshire earnings are notoriously volatile due to the timing of investment gains.

Mr Buffett stepped up his warning about the US trade deficit and the need to finance it with foreign investment, devoting more than two full pages of the annual report to the topic.

"This force-feeding of American wealth to the rest of the world is now proceeding at the rate of $1.8bn daily, an increase of 20 per cent since I wrote you last year," he said. "Consequently, other countries and their citizens now own a net of about $3,000bn of the US"

In particular, he warned that this meant a sizeable portion of what US citizens earned in future would have to be paid to foreign landlords.

"A country that is now aspiring to an "Ownership Society" will not find happiness in – and I’ll use hyperbole here for emphasis – a "Sharecropper’s Society," added Mr Buffett. "But that’s precisely where our trade policies, supported by Republicans and Democrats alike, are taking us."….

-END-

So much for betting against Buffet and Soros.

Meanwhile, the geopolitical front remains very shaky to say the least. While there is hoopla over the weekend re democracy breaking out in the Middle East re events in Lebanon, there are just as many ominous developments which are not discussed to any significant degree by the US media.

The death and mutilation scene in Iraq is atrocious and not improving in any way, shape, or form. With unconfirmed reports the US might conduct some kind of military action in Iran in June, this new warning is very disturbing:

Iran warns US, European pressure on nuclear could prompt oil crisis

by Siavosh Ghazi TEHRAN - Iran's top nuclear official on Saturday warned the United States and Europe of the danger of an oil crisis if Tehran is sent before the UN Security Council over its nuclear programme, rejecting outright their demands to halt uranium enrichment. Taking the matter to the Security Council would be "playing with fire", Hassan Rowhani, whose country is the second largest oil producer in OPEC, told reporters. "The first to suffer will be Europe and the United States themselves, this would cause problems for the regional energy market, for the European economy and even more so for the United States," Rowhani said at a conference in Tehran on nuclear technology and sustainable development. EU members Britain, France and Germany are trying to convince Iran to dismantle nuclear fuel work -- which the United States says is part of a covert atomic weapons development -- in return for economic and political rewards. Tehran has argued that it wants to enrich uranium to generate atomic energy for purely civilian use, and argues such work is authorised by the nuclear Non-Proliferation Treaty (NPT). The United States says the country is "cynically" manipulating a loophole in the NPT, and has threatened to take the matter to the Security Council to seek international sanctions. If Washington brings the issue before the Security Council, "Iran will retract all the decisions it has made and the confidence-building measures it has taken." He said Iran's leaders "could be called upon to make new decisions", but did not provide any details on what that would involve. "The stability in the region would become fragile and the United States would be the first to suffer," he said…

03/05/2005 14:20 GMT AFP and Turkish Press

Oil prices are already eyeing all-time highs. Should anything happen to needed supplies from the Middle East, $60 oil and higher is a lay up. Commodity prices have been shooting almost straight north for a month with the CRB also looking at all-time highs.

CRB weekly
http://futures.tradingcharts.com/chart/RB/W

On that note my friend Greg Pickup, who has written his savvy Chicago Perspective continuously since 1988 put out the following:

For the Week Ending March 4, 2005

In our Outlook 2005 we noted on the first page that "We caution that the instability in the supply/demand picture is far tighter than the current balance sheets would indicate" and

"Still the capital moving into commodity funds both of the traditional and Index variety continues to grow. Thus the flow of funds is the main short term determining price factor."

Commodity Index fund growth has been little short of phenomenal rising from an estimated $4.5 bln in June of 2003 to $40 bln by the end of 2004. In a conversation Friday afternoon we learned of a mutual fund that had allocated 7% of its funds to commodities.

This does not include funds of the traditional managed variety or hedge funds.

In a word commodities are hot. This is becoming apparent to even the casual viewer of Fox news which has hired Jim Rogers to promote the idea of commodities as an investment while simultaneously plugging his new book " Hot Commodities: How Anyone can Invest Profitably in the Worlds Best Market."

We note this simply as evidence for the case the money is flowing into commodities and not as an endorsement. The book is lightweight.

Still the fundamental camp continues to issue dire supply demand projections that forecast a world awash in commodities…..

-END-

Cafe contributor Dave Lewis hits the nail on the head:
Which brings us to Alan Greenspan's successful policy of gold standard mimicry. Here's my question for easy Al, what good will it do if Gold is still trading at $430 while oil is at $100, Corn is $10 and Wheat is $12? Talk about a Pyrrhic victory, right before the last ounce of Gold is sold at $430 to some Arab, Turk, Indian or Chinese about to reap a windfall, easy Al can claim that he held Gold in the same range for more than a decade, while oil prices quintupled. Good Job, at least from the perspective of bankers this past decade, who seem to be the only ones still benefiting from the faux Gold standard policy. At what point will this guy realize that whatever policy he is running it isn't keeping prices down? Then again wasn't this the same guy who supposedly fixed Social Security 20 years ago? My sense is that this guy will never change, he will just keep doing the same things until it blows up. This old dog will not learn new tricks.

The whole essay can be found below

http://www.chaos-onomics.com/gollum.htm

Regards, Dave Lewis

-END-

Does anybody care what those on our planet see? Markets are funny. One day nothing matters, then it is all that matters. At the moment Wall Street and investors are focusing on the micro in the US, such as corporate profits when it comes to our stock market, not the threatening inflation/sinking dollar scenario. Of course, many in our camp see excess liquidity as the key to the US stock market hitting new highs. From The Lasco Report this morning:

"What an interesting week to say the least, and it all has to do with liquidity. The Federal Reserve has created and continues to create massive amounts of liquidity. From Jan. 31st through February 21st the Fed increased the M-3 by US $72 billion. That's an annualized rate of close to $1 trillion dollars. Too much money chasing just about anything that can't be nailed down."

Except gold, of course, thanks to the Orwellians in Washington and New York whose price suppression and market capping has become more than obvious the past month. First, they stopped rallies at $430, then retreated a bit further to the $436/$437 level. They have been brazen enough to do so even with commodity prices continue making new highs on a daily basis.

The April gold chart tells it all:

http://futures.tradingcharts.com/chart/GD/45

I said I would keep it short for this Sunday MIDAS. All The Gold Cartel is doing is building up enormous pressures underneath the gold price (silver too) which are gradually gathering enough power to send gold hurtling towards $500 per ounce (silver past $10). This becomes more evident when viewing the gold and silver weeklies, which reveal powerful bases.

Silver weekly
http://futures.tradingcharts.com/chart/SV/W

Gold weekly
http://futures.tradingcharts.com/chart/GD/W

Usually, when I present this sort of commentary over the years, The Gold Cartel attacks the next day. Surely a coincidence, yet it happens over and over. No matter, what is coming, and soon, will be both dramatic and very profitable for gold and silver longs. It is time to be ALL OVER the gold and silver investment program whether it be with the shares, bullion or coins. The dog days The Father Knows Best crowd in Washington and New York have dealt us are coming to an end.

Oh yes, please keep in mind volcanoes often explode out of nowhere and when least expected to erupt. And never forget:

GATA BE IN IT TO WIN IT!

MIDAS

Appendix

The latest from the Orwellians in Washington:

Bush Sets Up Social Security 'War Room'

By LAURA MECKLER, Associated Press Writer

3/5 WASHINGTON - A new Social Security (news - web sites) war room inside the Treasury Department (news - web sites) is pumping out information to sell President Bush (news - web sites)'s plan, much like any political campaign might do. It's part of a coordinated effort by the Bush administration.

The internal, taxpayer-funded campaigning is backed up by television advertisements, grass-roots organizing and lobbying from business and other groups that support the Bush plan.

The president's opponents are organized too, though they do not enjoy the resources of the White House or Treasury to sell their message.

For the administration, the communications effort is being coordinated out of Treasury's public affairs office through the new Social Security Information Center. Three people have been hired, with two more hires possible soon. The first three employees are veterans of the Bush-Cheney campaign or the Republican National Committee (news - web sites).

"The uber purpose is to centralize and coordinate the administration's public affairs and communication activities," said chief Treasury spokesman Rob Nichols.

"Standing up this office demonstrates how important fixing Social Security is."

(What kind of person says "uber purpose"? notes The Café’s Jesse)

Bush has proposed allowing younger workers to divert some of their Social Security payroll taxes into private accounts that could be invested in stocks and bonds. In exchange, people who take the deal would see their traditional government benefit cut, with total benefits determined by the success of each personal account.

Younger workers are likely to see other cuts as well to help fix the program's long-term financial problems, though Bush has not detailed how he would handle this.

To sell the plan, the administration has launched a two-month travel blitz by administration officials including Bush, Vice President Dick Cheney (news - web sites) and Treasury Secretary John Snow, as well as other Cabinet officers and White House aides. The new center is coordinating their schedules.

It is developing talking points to ensure that all officials are "singing off the same song sheet," Nichols said. And it will soon launch a Web site featuring the president's comments on the issue, copies of speeches and news stories and columns that are supportive of the Bush plan.

Additionally, it will deliver "rapid response" to media coverage it doesn't like. "If there is an editorial in a paper that does not reflect the view of the president, they will engage in the traditional rapid response effort to ensure an op-ed or letter to the editor that states our view," Nichols said.

Staff also monitor public statements by lawmakers and others about Social Security and circulate those that are helpful to the cause.

The center is sending e-mails highlighting positive press coverage and administration statements to thousands of people including reporters, congressional staffers and members of the public.

Similar communications groups were used by President Clinton (news - web sites) to promote his policies. Still, some question the use of government money for a political agenda.

"They have the right to say their piece and to respond, but to create a whole team of PR experts to try and influence the media, I think, is an excessive use of taxpayer money," said Joan Claybrook, president of Public Citizen, who opposes the Bush plan.

Nichols responded that raising public awareness about issues is part of Treasury's mission.

"Financial education and literacy is part of the department's mission," he said.