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

March 7 – Gold $434.40 up 80 cents – Silver $7.35 up 1 cent

Volcanic Pressures Leading To Dramatic Upside Moves Continue To Build In Gold And Silver

"It must surely be a mistake to adopt an economic policy which makes you rich if you eliminate your national work force and transfer your production abroad, and which bankrupts you if you continue to employ your own people...I am afraid that even service industries will be subjected to substantial transfers of employment to low-cost areas. As unemployment rises and poverty increases, the towns will grow even more unstable. So the benefits of cheap imported products will be heavily outweighed by the consequent social and economic costs. The social division that this will engender will be deeper than anything envisaged by Marx in the nineteenth century. The wounds inflicted on their societies would be too deep to be acceptable without brutal consequences."

Sir James Goldsmith in the US Congress, 1994

GO GATA!

(MIDAS note: Sir James, a Brit, was one of the legendary traders/investors of all-time. He was involved in the great copper play like I was in 1987, except he traded it the right way and got out when he should have. I will never forget it when his guy in the US called me about the copper market from Hilton Head, South Carolina in 1987.)

As mentioned on Friday, Goldman Sachs was a seller Friday and DROVE down the close. This usually portends poorly for the next trading day as the fix is normally in for the day ahead. And, of course, it is another opportunity for Goldman Sachs to fleece you and the rest of the public. Anyone wondering how Goldman Sachs makes so much money in their trading department, this ought to give you some sort of clue.

However, when I retired for the evening, gold was up $1.50 even though the dollar was slightly higher. Good, I thought, a change of the cabal’s patented drill and obnoxious anti-trust trading routine. Not so fast. By morning gold was due $1 lower. Goldman Sachs had once again positioned itself for the next day’s Comex trading AND, to boot, capped the price on Friday for an extra buck on the close.

The dollar caught some bids as European gold trading commenced and that was all The Gold Cartel needed to take gold down. They received assistance from other traders who wanted to go with the stronger dollar/weaker gold flow. Early on gold eyed $430 again by dropping to $431.90 when firm cash market bids absorbed the selling. Gold went back up, followed by dollar weakening. Note the order of occurrence.

Gold went positive for a buck and change with the euro gold price spiking to 329.50. All was looking just fine with another reversal trading pattern developing, one reminiscent of the one on Friday. However, The Gold Cartel said, "NO MAS," like always, and capped the market, stopping the rally in its tracks for the last few hours of trading. Same ole, same ole.

The gold open interest rose 4554 contracts on Friday to 292,195. Obviously the specs poured in, and led by Goldman Sachs, The Gold Cartel capped the rally.

The silver open interest went up by 1196 contracts to 99,684.

The CRB tried to take a little breather and couldn’t do it. Despite a 13 cent drop in the price of soybeans, the CRB went higher again for the zillionth day in a row. It gained .19 to 309.35. Strength surfaced across the board, led by skyrocketing coffee which gained 6 cents per pound.

The dollar rose .25 to 82.78. The euro fell .25 to 132.15 after making a 131.90 low, however, the Aussie dollar and Canadian Loonie rose against the greenback.

The John Brimelow Report

Gold capped - but Gartman (& friends?) back Bulls again

Monday, March 07, 2005

Indian ex-duty premiums: AM $6.37, PM $6.79, with world gold at $434.60 and $433.70. Ample for legal imports. The Bombay Stock Exchange closed at a record high today for the third day running, and inflows of foreign portfolio investment funds are reported to be powerful. The amount arriving so far this year equals almost 30% of the entire 2004 intake. So the "wealth effect" appetite for gold from the world’s largest bullion importer should continue strong.

In fact, the Reserve Bank intervened heavily once again toward the end of the day to bring the rupee off its intraday high. The PM premium consequently may well understate the force of the India bullion bid during most of the day.

TOCOM’s gold interest was slight. Volume did rise 35% to the equivalent of an unimpressive 16,031 Comex lots, but open interest was static (up 45 Comex equivalent to equal 100,842 Comex contracts). Mitsubishi implies the "General Public" actually cut its long by half a tonne. The active contract closed up 9 yen and world gold was 95c above the NY close: Mitsubishi says bullion was "capped by dealers selling".

NY on Friday traded 51, 302 contracts; open interest jumped 4,563 lots to 292,904. Since open interest started rising nine business days ago, Comex has added 29,395 contracts – 11.1% - or 91.4 tonnes. The active contract has risen 60c. There seems to be a seller about.

The magnitude of this selling is the more impressive because it is partially masked by the liquidation of opportunistic shorts. As ScotiaMocatta very reasonably says of Friday’s fierce post-data rally on Comex:

"it appeared a number of players were already very short of gold. No real selling appeared after the release of the figures so a short covering rally soon commenced. The metal traded to the 433.50 area as there were was not a lot of gold for sale… later in the day when a round of dealer buying took gold to a brief high of

435.10/435.60. Gold then slipped back when the buyers were satisfied…"

Another perspective is gained by the CFTC data, which disclose that in the week ending Tuesday March 1 Specs added 17,004 contracts to their long, cutting their short by 653 lots, meaning they bought net 52 tonnes (gold went down 70c).

Wednesday and Thursday’s softness presumably occasioned the short selling to which ScotiaMocatta refers. Many experienced observers, such as Refco Research, had been counting on much more extensive short covering being revealed by the CFTC report...

The clash between the demonstrably resilient physical market and a clearly resolute seller has created a glass half full/half empty situation. Dow Jones today found a couple of observers operating on a simplistic dollar/US interest rate concept of gold to forecast a slide below $400. Absent an exceptionally violent rally in the dollar, the posture of the physical market makes this difficult to envision. And the dollar, of course, deviated from the bullish script on Friday.

The Gartman Letter, with impressive flexibility, has reconsidered:

"As noted above, we fear we were unwise in exiting our gold positions when we did. Certainly the market has told us we were wrong in light of the non-farm payrolls. We think it is wise then to buy some gold back and so we shall…"

Since gold began the long trudge upward almost exactly four years ago, the consistent pattern has been of a resistance level being established, doggedly defended, and then eventually overcome. Gold stuck for a couple of weeks at this level in November last year. So long at the physical market continues the pressure, there seems every reason to expect this pattern will continue.

JB

CARTEL CAPITULATION WATCH

The DOW could not penetrate 11,000, ending the day at 10,937, down 4. The DOG played catch up, rising 20 to 2090.

Whoa Nellie! Americans continue to go further and further in debt:

15:00 Consumer credit +$11.5B in January vs +$5.2B consensus
December revised to +$8.7B from prior +$3.1B.
* * * * *

Surprise surge in U.S. January consumer credit

WASHINGTON, March 7 (Reuters) - U.S. consumer credit outstanding surged a far greater-than-expected $11.5 billion in January, the biggest gain in three months, on jump in credit and charge card use, a Federal Reserve report showed on Monday.

The January rise was more than double Wall Street expectations for a $5.2 billion monthly increase, and followed a much stronger December result than first reported.

December's reading was revised to a $8.7 billion increase from its initially announced $3.1 billion climb.

Fed data showed January's increase as the 14th consecutive month of rising consumer credit outstanding and the largest monthly jump since October's $14.3 billion gain…

-END-

When the bubble buy mania breaks, and it will, look out below. The US consumer is going deeper into hock. Will their buying affect the coming US trade number?

News on the inflation front:

1:47 WHR WHR management comments from Raymond James Conference
Believes material costs will increase worldwide; sees strong levels of productivity as well as controlling but not decreasing SG&A expenses. Has implemented some price increases; sees 6-7% aggregate price increase across N. America, Europe, Latin America, and Asia. Says not backing away from product innovation.
* * * * *

The King Report
M. Ramsey King Securities, Inc.
Monday Mar. 7, 2005 – Issue 3110 "Independent View of the News"

The whiff of inflation and stagflation has intensified with Friday’s Employment Report. Nevertheless, the fin media and Street shills, in something out of Alice In Wonderland or 1984, hailed the jobs report as showing a robust economy without wage inflation. Some actually asserted that the report shows that there is no inflation; yet oil and commodities race higher. In this fantasy world of government manufactured CPI and loopy logic, ‘no wage growth while life’s necessities explode higher’ is heralded as wonderful!?! This is the further diminution of US living standards, which also implies more desperation borrowing by consumers to just keep running in place.

As we reasoned, the non-farm payroll (262k) was modestly better then expected (225k). However, the non-farm fictional number obfuscates a very ugly Employment Report. The underlying numbers in the report portend indicate significant weakness.

The Establishment survey fell 97k jobs and has shown job losses in two of the past three months. The pool of available labor rose by 264k, the first increase in the past four months; so the rate rose to 5.4%. The labor force participation rate remained unchanged at 65.8%, a 16.5-year low. The ‘employment rate’ returned to its 12-year low of 62.3% (from 62.4%). The ‘augmented unemployment rate’ (adds back into the labor force people not actively looking for a job but would take a job if offered) increased to 8.5% from 8.3%...PS – Beaucoup job cuts are on the horizon per all those mergers.

What jobs were created? Professional and business services (everything from janitors to temporary workers) accounted for 80,000. Retail and construction each added 30,000 jobs.

Due to this weakness, the markets quickly surmised that the Fed cannot tighten aggressively even with rising inflation. And with Easy Al again aggressively supplying the juice, we are back to the ‘cash is trash; everything up but the dollar down’ markets…Bonds rallied partly on relief, but mostly on the paradigm that Asian central banks are back, baby, and they’re buying bonds as part of $ intervention.

Most economists that inhabit The Street are inculcated in economic theory that holds the concept of "sticky wages" dear. This concept, and it was emphasized to us by Volcker’s staff chief when we worked with him, holds that the Fed is not concerned with ‘goods’ inflation because it can eradicate it relatively painlessly from the economy. But wage hikes cannot be purged without a nasty recession and commensurate political recrimination. Of course, this was taught before outsourcing and porous borders and it presumes the Fed controls US interest rates, instead of the BoJ or BPoC. And it was gospel before China became a major influence in oil and commodity markets. The bottom line is the world has changed dramatically and does not resemble that rather simple world/model that has been taught, "Since World War II" in US universities.

Chicago has allowed cab fares to increase about 6% or more, depending on destination and number of passengers. Cabbies have been complaining about rising costs, particularly fuel. Why can’t the cabbies get hedonically-adjusted fuel or a seasonally-adjusted meter?

Because stocks & bonds rallied, many linear-thinking, gurus, economists and fin writers that are conduits for them, see no inflation. However, the dollar tanked, gold, oil and commodities soared on Friday? Soybeans are up almost 30% and oil and gasoline are up 20% in about a month. The CRB is vertical…….

-END-

More on the real jobs picture:

Hi Bill,
If people have the sense that the economy and especially the jobs picture is not what it used to be, it’s because it isn’t.

A good graphical representation can be found here: http://www.jobwatch.org/

And remember, these jobs figures are after 1% interest rates, a massive tax cut and government deficits running $500 billion per year.
Yikes.
Dave

From Rhody with a flurry of goodies:

Good morning Bill:
Finally, I got a data feed I could trust. There were some big changes in lease rates last Thursday, but the data feed from Kitco had some inconsistencies that made me distrust the entire suite. Lease rates have become more volatile of late within a narrow band. One month silver lease rates actually dropped down to equal gold's on Thursday, but Friday they jumped back to a more normal .19%. Once again, one can borrow gold for an entire year for the cost of borrowing silver for one month, so silver liquidity is far tighter. Having said that, gold is back in significant backwardation with one month rates actually 50% higher than the 3 month rate. With the rise in gold's one month rate, the spread between one month and one year has contracted to .065%. So gold lease rates are ridiculously low, but they are in significant backwardation!!!!!!! This is a contradictory pattern as low general lease rates imply excess liquidity while backwardation screams of shortages.

Meanwhile, silver lease rates appear almost normal in comparison, except they all jumped significantly across all terms on Friday, with most of the increases heavily front loaded in the near terms. This always implies heavy leasing to cap spot metal prices, at least to me.

Leasing as a market is just as opaque as gold and silver. I don't think anybody fully understands it. I know that I sure don't, but I watch it because I think it's important. One gets a feel for a "market" if one does this. Leasing was designed as a mechanism to pump central bank metal into commercial hands in such a way that the selling of the metal is invisible.

Central banks got to keep lease contracts in the vault and counted them as gold, so even though the metal was gone, it showed up on their books as still there. The bullion banks that borrowed this gold then moved it on to metal users like Kodak or Tiffany's who fabricated it into product for sale. Everybody is happy as central banks get to sell down the metals, but show no depletion in their reserves, and the bullion banks obtain a lease interest cut, and commercial fabricators get artificially cheap raw material. This all works great unless somebody audits the vault, or the price of metal on spot markets rises. Central banks forego the audit, but what if gold rises??????

The lease rate may be cheap but the return of higher priced metal might not be, as gold can rise 2% in ONE day. Compare this to a .2% ANNUAL lease rate.

I was listening to Jim Paplava's weekly broadcast on Sunday, a program that I heartily recommend. Jim mentioned to one of his guest speakers that lease rates were extremely low at around .2%. His guest was a bond guy out of Chicago, and he had not heard of this. Jim proceeded to explain how the gold carry worked with speculators leasing gold at .2% and then selling it on the spot market so that the cash generated could be invested in T-Bills at 4%. This sounds like a magnificent spread of 3.8%, and if it really existed, I have no doubt that a gold carry would be driving the gold price down to China.

Jim forgot one tiny detail. That .2% is a gold metal interest, not a paper interest, and gold is in short supply. If gold is flat or declining in price, a gold carry is safe, but gold is in a bull market right now. (Gold is 8.2% higher right now than it was in March 5, 2004) That means if one did a gold carry one year ago, it would be underwater by about 4% and that assumes one just rolled the lease rather than try to buy back the metal on the open market.

It further assumes one leased more metal to pay the lease interest, which has also increased in cost by 8%. There are thousands of entities out there rolling lease contracts rather than settling the debt. In order to keep them solvent, the central banks have dropped lease rates to forego a default.

Because of the metal shortage, any attempt to buy back leased metal on the open market would result in an explosion in spot prices. I think the central banks would try to lease more metal to quell the rise, but private lenders might decide to call in leases forcing an increased demand for leased metal and a general rise in lease rates that would feed on itself. During the Buffett spike in 1998, one month lease rates for silver rose from 1% to 70% in a matter of weeks. That's a 70% METAL interest rate! At the same time silver leases were going through the roof, silver prices rose from $4.50 to $7.50. Rumor has it that over one billion ounces of silver have been leased, but not returned. Gold leases probably total over 8000 tonnes. See why lease rates MUST be kept down and why gold and silver must not be allowed to rise? Anybody who initiated a gold or silver carry under these conditions is committing financial suicide.

To get back to my analogy of a lease pump for metal supply, the low, low rates in gold and silver are signs that the pump is running flat out to support the metal debt (lease overhang) and the recent volatility in rates is a kind of vibration that signals increasing stress and incipient breakdown.

My apologies for the long message, regards Rhody.

Good input from Rhody. Only clarification I would have is the GATA camp (in general) believes the gold loans AND swaps are more like 16,000 tonnes.

When it comes to what Rhody lays out on the leasing and carry trades, not only is it lack of transparency, it is nefarious. The IMF instructs its central banks to LIE to the investment world re the true status of its gold reserves. GATA has caught them stone cold in this blatant deception:

The IMF has directed CB's not to disclose how gold is leased/swapped, only total reserves (proof below).

The IMF has denied this, "This is not correct: the IMF in fact recommends that swapped gold be excluded from reserve assets." Refer http://www.gata.org/bofi.html (search "correct").

However, numerous member countries/entities have proven the IMF has lied ie
· Philippines: "Beginning January 2000, in compliance with the requirements of the IMF's reserves …, gold under the swap arrangement remains to be part of reserves and a liability is deemed incurred corresponding to the proceeds of the swap." Refer http://www.bsp.gov.ph/statistics/sefi/fx-int.htm (search "swaps")

· The Central Banks of Portugal, Finland & Italy confirmed in writing that swapped gold remains a reserve asset under pertinent IMF regulations. The staffs of the central banks of Canada, Ecuador, Finland, Holland, and Portugal have also confirmed this. Refer http://www.goldisfreedom.com/IMFgold.htm, (search "Finland")

· European Central Bank: "Following the recommendations set out in the IMF operational guidelines of … developed in 1999, all reversible gold transactions, including gold swaps, are recorded as collateralised loans in balance of payments and international investment position statistics. This treatment implies that the gold account would remain unchanged on the balance sheet." http://solutions.synearth.net/2003/02/21

-END-

The World Gold Council should be all over this deliberate deception. Instead, they say and do nothing – which is par for the course since they are nothing more than an organizational extension of The Gold Cartel.

Heads-up for you:

Hi Bill,
I don't know if many or any of your customers are interested in this, but goldprice.org now has an Indian gold price site up in addition to a basic English site, one for Australians, one for the Chinese, one for the Taiwanese, and one for the
Japanese. http://goldprice.org

You were right to be wildly bullish on gold 1-2 months or so ago. Even I was particularly bummed out. But I took that as a great contrarian indicator to add to the bottoming action on the charts. Plus, I had my secret weapon:
Jesse Livermore's "Be right. Sit tight."
Best,
Bob Nugent (up here in Taxachussets)

Word to me is the Saudis have shifted more of their dollar assets into the euro than is currently known. They bought the euro heavily around the 110 level. They are not alone:

From Reuters
Sunday, March 6, 2005

http://www.reuters.co.uk/newsA…e=topNews&storyID=7818513

BASEL, Switzerland -- Asian banks have reduced the share of deposits held in U.S. dollars in favour of other currencies like the euro, according to new central bank data released on Sunday.

The share of U.S.-dollar-denominated deposits placed with Asian banks fell to 67 percent from 81 percent in September 2004 compared to 2001, according to the Basel-based Bank for International Settlements' latest quarterly report.

"The BIS banking statistics provide some tentative evidence that the deposits placed abroad by banks in the region have been increasingly denominated in currencies other than the U.S. dollar," said the BIS in its quarterly report on the global economy and financial markets.

-END-

GATA’s Chris Powell put out the latest on the gold ETF’s. His analysis says it all:

3:20p ET Sunday, March 6, 2005

Dear Friend of GATA and Gold:

The following commentary from the Economic Times in New Delhi about exchange-traded funds for gold in India confirms that such funds will not have to keep on hand all the gold they claim to have and thus may become new agents of the scheme to suppress the gold price.

The key assertion by the commentary's author, Puneet Jain, is this: "While gold fund managers could undertake trading to enhance the net asset value, yet it would be largely determined by the price of gold in the international markets."

Thus the gold price suppression scheme seems to realize that Indian demand for gold is the greatest immediate threat to the scheme and that the scheme can continue only by diverting that demand away from real metal into paper promises.

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

* * *

Stockistics: Gold

By Puneet Jain
Economic Times, New Delhi
Monday, March 7, 2005

http://economictimes.indiatimes.com/articleshow/1042630.cms

Finance minister P Chidambaram's budget has managed to propel stock indices to new highs despite offering little by way of concessions on the fiscal front.

Market's euphoria appears to stem from the sense of relief among investors that the FM has not rocked the boat in terms of the benign tax treatment given to income from investment in stocks.

We believe that easy liquidity conditions will continue to prevail for the stock markets and there would be plenty of foreign and domestic money chasing India stocks over the next few months. Therefore, short blips notwithstanding, stock markets appear to be headed higher in the near term.

As anticipated by us in the run-up to the budget, the big beneficiaries of government's fiscal policy appear to be companies in agri sectors like sugar, tea, coffee and fertilisers. Textiles and leather products companies too have received liberal handouts from the government and should do well in the coming years.

An interesting feature of this year's budget has been the decision by FM to allow gold-traded funds. These funds will be exactly like mutual funds with the only difference that while mutual funds invest in equities, gold-traded funds would buy gold for an amount equal to their corpus.

For example, if there was a gold-traded fund that offers units of the face value of, say, Rs 100, then investors could put in as little as Rs 100 for buying a small part of this gold fund and get the same degree of appreciation as the larger corpus.

We spoke with some potential fund managers who could float such schemes and they pointed out that the entry and exit loads on such units could be very small, as little as 0.25 percent, since gold is highly liquid and fund management in this case would be passive as the NAV would be linked to the price of gold alone.

While gold fund managers could undertake trading to enhance the NAV, yet it would be largely determined by the price of gold in the international markets.

Another interesting aspect of the proposed scheme could be that it could itself lead to a rise in prices of gold. My estimate is that as much as Rs 5,000 crore could be collected by such schemes in India since gold is extremely popular with Indian investors and the risk involved is also low, placing it at par with debt.

There's sense in silver too

This huge corpus could generate massive demand for gold in India leading to higher prices globally. Let's see if I am right!

One only hopes that the market regulators would issue guidelines for the gold funds quickly and allow the funds to be floated as early as possible. A large number of asset management companies are eager to float the scheme and tap a whole new market.

Government could also consider permitting similar funds for investing in silver as well, since silver too is a good hedge against inflation and unexpected crisis in financial markets.

While stock markets will continue to provide exciting times for investors, investments in gold funds should be used as a measure of prudence and risk management.

This one is way out of my league:

Dear Mr. Chairman,

Greeting from Malaysia.
I am Prof. Dr. Song Swee Hee from Kuching, Malaysia.

I have been to Italy in the year 2000 and have some currency of Lire with me.

I would like to change the Lire into Euro in Malaysia but no bank or money changer want to accept this money.

I have visited the website of the Central of Italy which stated that Lire can be changed until 2010. There is no email address for me to contact the Central Of Italy.

In this connection, I sincerely hope that you can advice me on how to change this Italian currency to EURO? I have 148,000 Lira to be convert to EURO. May I know how much EURO do I get if I am able to change? Can I change in the Italy Embassy in Kuala Lumpue, Malaysia

Thank you.
Prof. Dr. Song Swee Hee
Malaysia

PS: Sarge has informed me Dr. Hee is a Grand Master of Kung Fu. and was the first Malaysian to be inducted into the International Black Belt Hall of Fame.
New Straits Times
06-16-2001

Sarawakian inducted into Hall of Fame

KUCHING, Fri. - Kung Fu master, Prof Dr Song Swee Hee, has done Sarawak proud by becoming the first Malaysian ever to be inducted into the prestigious International Black Belt Hall of Fame recently.

Song, who is executive chairman of Martial Arts Federation of Malaysia and Instructor-in-chief of Nanyang Wushu Federation of Sarawak, was inducted by the US-based organisation as "Grandmaster of the Year 2000".

-END-

We could use the good Prof Hee in the GATA ARMY in our fight against The Gold Cartel! Any ideas for this Kung Fu master?

Mark Lundeen with superb input on what lies ahead:

Hi Bill
There is a dichotomy in this story below on the Australian mining industry – with rising costs mines should be shutting down, instead, equipment dealers can’t get mining equipment to mines until 2007 due to demand and miners are stealing trained staff to operate marginal mines due to the low cost of metal and the high cost of producing them. What gives? China!

China has more dollars than it wants but not enough basic materials for its needs, and the Australian miners know it. So they are getting ready for higher prices in metal. To make money in the next 10 years this is all you have to know – metals of all kinds are going to explode in price.

The shortage in equipment for mining in Australian reminds me of the chronic shortages in the old Soviet Union. Ultimately, "policy making" creates problems in areas of the economy that are not followed by the limited views of the "policy makers." The more economic "policy" the more economic problems. Clearly the replacement of mining company reserves were not on the list of concerns of the "policy makers" since the late 1990’s.

As similar shortages come to America, in food, housing and medical benefits do too the "policy" of selling trillions of dollars in US Treasury debt to finance unearned consumption in the voting base – expect big problems. The needs of "policy" will trump the needs of the economy. This is especially so when the US has a congressional election cycle of only 2 years.
Mark

*************

Shortages hit mining
By Robin Bromby
07mar05

http://www.heraldsun.news.com.…e/0,5481,12463075,00.html

CRITICAL shortages of mining equipment - everything from tyres to replacement vehicle parts - are fuelling fears the commodities boom is placing unsustainable strains on the Australian mining industry.

Soaring materials prices and contractor rates, coupled with a dearth of skilled workers in areas such as engineering and geology, are already starting to derail projects at the junior end.

But senior industry figures are saying privately that some of the biggest upcoming projects and expansions could be jeopardised because they will not be able to find the people, the machinery and the construction supplies to build new mines. ---

Croesus Mining and View Resources have shelved new gold mining projects because of rocketing charges from earthmoving contractors.

View called off its Bronzewing mine development last week, after learning that a 30 per cent hike in earthmoving costs would have added $50 million to the project over four years. This, added to shortages of skilled workers, made it financially unjustifiable.

But the shortages have spread to mining equipment.

There are now 18-month waits for new tyres for excavator and pit trucks, with prices for equipment in second-hand markets soaring. A Caterpillar 785-model 150-tonne truck with 50,000 hours now costs about $1 million - about the same as the price tag on a new truck, if you can get one.

Mining industry sources in Western Australia say some equipment dealers are taking orders for well into 2007 - and not before.

Steel prices have also doubled since 2003, and diesel costs have skyrocketed.

Any small resources company now planning a mine development, such as Bendigo Mining in Victoria, will have to redo all the figures, if they are going to buy steel for a processing plant.

Bendigo managing director Doug Buerger said the cost of the company's planned 300,000- tonne-a-year treatment plant had rocketed from the $25 million, flagged in the feasibility study, to $43 million. Half of that increase was due to higher costs of steel, concrete, earthworks and electrical work.

Intersuisse resources analyst Gavin Wendt said soaring steel prices would hit many new resources projects, such as the planned gas pipeline from Papua New Guinea to Queensland. "That would represent a huge cost blowout," he said.

But any small mining company aiming to build a treatment plant for a new project also would be hard hit. "There will be many companies out there working on feasibility studies that suddenly will be faced by a whole different set of costs," he said.

Miners typically operate fleets of vehicles. Dominion Mining at its Challenger gold operation in South Australia uses 450,000 litres of diesel a month. With diesel prices rising 20c a litre since mid-2004, managing director Peter Alexander said that added $90,000 a month to Challenger's operating costs.

"Fortunately, with a high-grade mine we can absorb these sort of costs," he said.

Mining contractors are facing a different sort of cost squeeze - having to constantly replace skilled staff.

One contracting executive who did not want to be named said there used to be an unwritten rule that, when a contractor went on to a mine site, the mining company would not poach staff. No longer. "As soon as the client hears that contractor has someone they need, money is no object. It's an integrity-free zone," he said.

The contracting company had one senior manager who was offered a 60 per cent pay hike to change sides. Super contributions of up to 15 per cent of salary and more weeks off were other enticements used by the big miners.

The executive said this trend was fuelling a huge inflationary surge in mining costs.

-END-

Houston’s Dan Norcini follows up with another one on mining shortages, making it two articles in one day:

Hi Bill:
Here's a fascinating Reuters story on the mining industry and its labor woes. This is something I had not considered before and has some interesting implications. As far as I am concerned, it is just more fuel for the fire - if demand for gold continues to increase as it has, the supply deficit is going to only get worse and this will put a further drain on Western Central Banks' gold resources to fill the gap. After all, someone has to dig the stuff out of the ground. If mining companies cannot attract enough skilled people to the industry to take care of the attrition rate, they are going to eventually either have to offer high wages as an inducement or shut down production at all but their most profitable mines. Either way, the chronic supply deficit will only worsen.
Best,
Dan

Labor woes burn Canada miners as prices heat up

By Nicole Mordant
TORONTO, March 7 (Reuters) - Up to half of Canada's aging mining-industry work force could retire in the next few years, a minerals conference heard on Monday, alarming news for companies already facing a growing skills shortage.

A recent surge in metals prices has sparked a rush into exploration, expansion, and the launch of new projects, creating demand for geologists, mining engineers, geoscientists, fitters, electricians and truck drivers, among other skills.

But labor supply is short, the result of a 20-year recession in the mining industry until 2001 and negative public perception about the industry, which have led to a reluctance to consider it as a career choice.

Last week, it was reported that Bronzewing, one of Australia's largest gold mines, would not reopen because of an acute labor shortage. Several smaller, earlier-stage projects in other parts of the world have been delayed because of work overload and a lack of skilled staff at assay laboratories.

"We are seeing a critical shortage of skilled trades in our industry," said Paul Hebert of Canada's Mining Industry Training and Adjustment Council, a body that is conducting a study into the make-up and needs of Canada's minerals sector labor force.

According to early results from the survey, the average age of Canadian mining industry employees is 50. There is evidence that fewer young people are starting careers in mining, and mining-specific university courses are getting rolled into other disciplines.

A major obstacle to recruitment is the cyclical nature of mining. In times of strong prices workers are needed but as soon as prices turn, companies tend to lay off staff.

"We are saying let's not drive out our brightest and youngest as the cycle turns down," said Patricia Dillon, corporate relations manager at Teck Cominco Ltd., who is working with Hebert on the Canadian study. Hebert and Dillon were addressing delegates at the Prospectors & Developers Association of Canada conference in Toronto.

Another problem is the public's perception of mining. In 1994, a U.S. opinion survey done by Roper Research ranked mining as the worst perceived industry out of 24. It came in behind tobacco as the public equated it with pollution, avarice and exploitation.

John Meech, a professor in the University of British Columbia's mining engineering department, said schools have a role to play to change these perceptions. UBC has adapted its program to focus on environmental issues, sustainable mining, safety and the use of technology.

He said that the industry is its own worst enemy. "They always complain when there are shortages... but they treat human relations in their companies the same as they treat environmental issues. They only plan for the next six months," he said referring to the cycle of layoffs and hiring.

-END-

Speaking of miners, while the Benedict Arnold of South Africa, Trevor Manuel, kowtows to The Gold Cartel’s Gordon Brown to push for IMF gold sales, which will contribute to more unemployment in the mining sector in his country, his miner countrymen, the ones lucky enough to work, often suffer this fate:

3 presumed dead at Harmony
07/03/2005 14:57 - (SA)

Johannesburg - World number six gold miner Harmony Gold on Monday announced that three miners were presumed dead at its Harmony two shaft in the Free State following a seismic event 2 300 metres underground.

"Four miners were trapped in the after effects of the event. One was rescued and sustained injuries to his right ankle. The other three have been presumed dead and Harmony is in the process of recovering the bodies," Harmony added.

Harmony will undertake a full and complete investigation into what caused the seismic event and have stopped the operation until safety can be assured for its employees, the company said. –END-

Manuel could care less about the poor and miners in his country. If he did, he would be calling for the cessation of all central bank gold sales, so the price would go up, so the economy and employment in South Africa would improve, so the gold companies could spend more money on safety measures.

The gold shares are back to their nauseating late sell-off too. After performing well on Friday, they couldn’t handle prosperity and cabal-influenced selling. The XAU gave up .85 to 98.95.

On a bigger picture outlook the HUI, down .88 to 215.66, is forming a monstrous reverse head and shoulder pattern which is powerful enough to send the gold shares sharply higher once 220 resistance is overcome.

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

The frustration of watching so many financial markets go up and then to witness gold forbidden to do so by a bunch of Orwellian crooks is hard to take at times. It is why the gold shares are having so much trouble. Specs of all kinds are running to those markets on the move due to the massive liquidity provided by the Fed. It is intensely aggravating:

*To watch The Working Group on Financial Markets and The Gold Cartel willfully deceive the investing public, a deception which will end badly and cause many Americans to lose their net worth when this scam falls apart.

*To have the gold industry ignore this fraud, the most important aspect of what they all do. Nothing affects them more than the artificial suppression of the gold price by many hundreds of dollars. There was a Nesbitt Burns conference in Florida last week and there is the Diggers conference in Toronto this week. I’ll bet the suppression of the gold price was not discussed at either. And, if it was, they probably had some dimwit knocking GATA.

How do these people explain the Russian central bank commentary, the Sprott Asset Management report, and now the GCC report out of Dubai, which all come up to the same conclusion: GATA is correct?

That said, the bad guys really are in deep trouble. Commodity prices continue on a tear are likely to rocket this summer. The dollar is a "dead man walking." Meanwhile, the US refuses to deal with its fiscal problems which will eventually lead to a loss of confidence in the ability of our politicians to deal with those problems until there is a crisis.

The longer The Gold Cartel suppresses the gold price and the powerful forces present in the world economies which want to propel the gold price higher, the more violent will be the upside explosion. We have a volcanic pressure cooker in play here with an inevitable conclusion coming.

GATA BE IN IT TO WIN IT!

MIDAS