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

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The John Brimelow Report

Bears congregating: Can it be so easy for them?

Thursday, September 02, 20004

Indian ex-duty premiums: AM $6.38, PM $6.78, with world gold at $407.90 and $407.80. High: ample for legal imports. India continues to underpin gold at these prices.

The Istanbul Gold Exchange has published Turkey’s August gold imports. At 22.55 tonnes, volume was down 33% from July’s all time record (which may have been bolstered by the ending of some documentation bottlenecks in Turkish customs), but was the third highest this year (and apparently the 13th highest in the 9 years the IGE reports). Turkish Lira gold prices were of course appreciably higher than in July. Cumulative Y-t-D imports are now 10.8% above last year, which was a record.

Clearly, the Middle East has been a massive buyer of physical this summer.

TOCOM traded the equivalent of 17,912 Comex lots today, virtually the same as yesterday, with the active contract slipping one yen. World gold went out 90c below the NY close. Open interest jumped the equivalent of 1,624 Comex lots (to equal 93,959 Comex). This partially reverses some liquidation by the public which TOCOM members data indicates occurred yesterday. NY on Wednesday traded 35,558 lots. Open interest was up 2,705 contracts to 272,280.

The inability of gold to make progress despite some favorable influences, such as the dollar drop early yesterday and the oil rally later in the day, is cheering the bears. Barclays gloats:

Zitat

"We are concerned that about the failure of gold to break and hold above $410 despite the additional support of the euro rebounding back above 1.215 and this week's surprise news about Sons of Gwalia …the potential next week for a bout of stale long liquidation appears considerable."

Refco Research has become sufficiently alarmed to sell the long taken last Friday at a small profit.

Refreshingly, NM Rothschild is now apparently sufficiently unconcerned about Central Bank business as to be more explicit about the problem:

Zitat

"…it now appears increasingly likely that the Sons of Gwalia positions has been closed out. If this is the case the market has absorbed at least two million ounces of buying with relative ease, who was selling?... the speculative position is still very long and the market appears to be ambivalent to news that should be positive for the gold price."

Nevertheless, the condition of the physical market is such as to suggest the downside is limited. Also, such well- advertised expectations of a decline have probably already drawn in shorts, as the open interest data implies.

JB

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CARTEL CAPITULATION WATCH

This one is really going to make you sick to your stomach and one reason the stock market pulled off another Hail Mary winner.

14:47 Follow-up: unconfirmed speculation of Osama's capture
We will leave it up to the reader to judge the credibility of the source, but this is likely the genesis of the latest unconfirmed speculation regarding bin Laden.

Reference Link :

http://www.profindpages.com/news/2004/09/02/MN336.htm

* * * * *

You got to be kidding me! Another one of these phantom rumors to goose the market late in the day and ahead of the President’s acceptance speech! This must be the 10th time over the past year MIDAS has reported in this column about a similar rumor. Not one has panned out yet.

The other rumor which circulated late was Bush is going to make a big deal of out jobs tonight since he knows what the number is tomorrow. One day this will all end. For now it is shake the head time.

The US economic news continues its late summer trend of disappointing. The day’s important stuff:

07:21 WMT WMT reports August comps +0.5% vs First Call +1.5% (52.63)
Guides Sep comps to +2-4%.
* * * * *

Sept. 2 (Bloomberg) -- Wal-Mart Stores Inc., the world's largest retailer, said August sales rose 0.5 percent, the smallest gain in almost four years, as shoppers pared purchases because of higher gasoline prices and lower wages.
The sales gain met Bentonville, Arkansas-based Wal-Mart's lowered expectations for an increase of as much as 2 percent. Sales will rise 2 percent to 4 percent in September, the discounter said in a statement.

07:42 Yukos says prosecutors have frozen cash from units
Yukos says the frozen accounts make it difficult to pay its salaries, and notes that production could be halted. October crude oil is near the overnight high at $44.46. Range overnight is $43.75-$44.51.
* * * * *

08:30 Q2 Nonfarm Productivity reported 2.5% vs. consensus 2.7%; Unit Labor Costs 1.8% vs. consensus 2%
Prior readings were 2.9% and 1.9%, respectively.
* * * * *

08:30 Jobless claims for w/e 8/28 reported 362K vs. consensus 340K
Prior week unrevised at 343K.
* * * *

10:00 July Factory Orders reported 1.3% vs. consensus 1.1%
Prior reading revised to 1.2% from 0.7%.
* * * * *

10:58 Iraq's oil exports affected by pipleline blast, reports AFP -- Bloomberg
Iraq's oil pipeline to Ceyhan is reportedly on fire, according to the headlines. October crude oil is currently trading at $44.64, just off the highs of $44.75/barrel.
* * * * *
13:02 Iraq north oil exports shut until further notice after pipline attack ---- Reuters
Citing an Iraqi official. Note that Iraq's oil pipeline to Ceyhan was reportedly on fire as per our 10:58 ET comment. October crude futures are currently trading at 44.65/bbl.
* * * * *

After all the oil commotion and running above $45 per barrel, oil settled around unchanged at $44 per barrel.

The dollar rose .10 to 89.02 and the euro fell .27 to 121.59.

While the US economic news was not good at all, the DOW (10,290, up 121) and DOG (1873, up 23) went berserk late in the day, right on cue. The PPT’s Hail Mary play won the day again.

This FIGURES and is another reason the PPT had to gun the DOG along with the DOW today. Had they not, tomorrow could have been very ugly from a technical perspective:

Sept. 2 (Bloomberg) -- Intel Corp., the world's biggest computer-chip maker, cut its forecasts for third-quarter revenue and profit margins as growth in personal computer sales slows.
Sales for the quarter will be $8.3 billion to $8.6 billion, the Santa Clara, California-based company said in a statement distributed by Business Wire. That compares with an earlier forecast of $8.6 billion to $9.2 billion. Gross margin will be 58 percent, plus or minus ``a couple of'' percentage points, the company said, down from a forecast of 60 percent. –END-

Intel fell 7% after the close and made a 15-month low!
Hurricane Frances looks like it will batter Florida. If Charlie affected the numbers, Frances could be a rough follow-up punch for the US economy just when the incumbents least need it.

Congrats to GATA’s Mike Bolser (who called today’s explosive DOW rally and why in his commentary yesterday):

Hi Bill:
The Fed added $15 Billion in temps today September 2nd 2004, an action that dipped the repo pool a bit to $47.515Billion. The Intra-day pool tops $72.015Billion today, less than the $100B mentioned yesterday due to a smallish relative add this AM. The DOW isn't launching so far this morning (10AM) so we have a little mystery on our hands. The recipient in the recent past likely was oil derivatives and there have been reports of a refilling of the SPR operation that will be complete by Oct. Perhaps the Fed is still at it. Still there exists a potential for fireworks.

Putin

Chechen rebels hold over 350 hostages (mostly children) in North Ossetia but they also hold Vladimir Putin hostage as well. For who could make a decision to "stand firm" against negotiating with terrorists and watch the little ones die? Putin faces the unthinkable...how he fares will either elevate or wreck him. In a chess game sometimes the winner falls back. Explosions are reported there this AM...let's pray.

Another dangerous geopolitical conflict is worsening nearby and here is a npretty good review on the Georgian situation and other pertinent issues such as the forced Yuhos bankruptcy from Marshall Aeurbach: Putin And The Geopolitics Of Oil
http://www.prudentbear.com/internationalperspective.asp

If things spin out of control in the hostage crises, look for Putin to drop the hammer in
Georgia for his AND Sergei Ivanov's (Defense Minister) patience will have been exhausted. Ivanov, by the way is a first rate thinker. Anyone who takes the time to read his words comes away impressed.

LA Strengthening

Nestor Kirchner, Argentina's President, was happy that Hugo Chavez was retained for the 8th straight time in democratic elections. Indeed, the current bold friction against the IMF by Kirchner can draw lines to the August 15th Chavez vote. There is a resurgence of the Left all throughout Latin America (as the snippet below reveals) and a thinking man should nwonder how long it will take for Kirchner's overt gold standard leanings to regionally coalesce. Hugo Chavez is newly rich on oil revenues, Mexico is getting there and Brazil's Da Silva is steering his economy carefully through an nascent export boom (Your new granite kitchen top likely came from Brazil, mine did and was less expensive than the faux granite, DuPont's Corian).

It may just be a golden pipe dream, but there WERE open, violent protests this week in Buenos Aires at the arrival of the IMF's reconciliation representative Rodrigo Rato
http://www.newratings.com/new2/beta/article_462706.html. So we can expect no grand handshakes or photo ops smoothing things over. Instead, I see Kirchner and Chavez working slowly behind the scenes to hatch a unified Latin American Union of sorts with gold hovering just out of sight...for now.

Leftist leaders in Latin America celebrate the victory of President Hugo
Chávez in a recall referendum.
BY NANCY SAN MARTIN
nsanmartin@herald.com
http://www.miami.com/mld/miami…d/americas/9429276.htm?1c

CARACAS - President Hugo Chávez's overwhelming victory in a recall referendum brought kudos from across the Western Hemisphere. Latin America's left was ecstatic over what it viewed as further proof of the region's swing to the left.
+++++++++++++++++++++++++++++

The DIVG continues its march upward with appropriately concealed ups and downs to hide the true pathway. It appears more and more that Reg Howe's view that the may to Mid August hammer on gold was just a "waypoint" in a larger retreat. The retreat slope is around 5.5% annualized, too low for the final path so I'm not relaxing yet.
+++++++++++++++++++

I'm once again battening down the hatches for another hurricane (Frances) only THIS time I got the last little bit of appropriate 3/8 inch plywood at Home Depot (new shipments arrived last night). BTW the board was mis-marked as 5/8th inch from the factory. Most of the guys in the store couldn't tell the difference and paid more than they should have, what a surprise. My daughter has a place in West Palm Beach and reports near chaos at gas
stations (out) and grocery stores (out of most food items) but her house is new and due to Andrew's beneficial code passages, has all the latest shuttering features. Let us pray that it turns back out to sea and that there are no little boats out there. Friday's post may be delayed.

Prepare now to defend your portfolio against the Hurricane-like ravages of deflation AND inflation with gold and small debt-free natural gas firms. Don't focus on the day-to-day track of the impending storm...it IS coming.
Mike

Is this guy is referring to the PPT?

DJ Tsy Official: US Market Resilience Key To Fighting Terror

WASHINGTON (Dow Jones)--U.S. financial markets' ability to prevent, withstand and recover from attacks is essential to fighting terrorism, a senior Treasury official said Thursday.

"Fortunately the banking and finance sector is building on an already resilient foundation," Scott Parsons, deputy assistant secretary of the Treasury for critical infrastructure protection, said in prepared remarks to an industry group meeting in Las Vegas.

History has led the industry to be prepared. Since the first U.S. bank was chartered in 1781, financial institutions have been targets for criminals, and since 1985 more than 60% of terrorist attacks have targeted a financial institution, Parsons said.

The U.S. already has a strong regulatory foundation to protect financial institutions, he said.

"I believe protecting critical infrastructure is really a risk management problem, and that there is no 'one-size-fits-all solution' to be achieved through additional regulation," he said.

Parsons said the U.S. should be prepared for both attacks on physical infrastructure and cyber attacks, such as circulating stolen credit card numbers and account information on the Internet.

He said terrorists continue to plot against targets that represent U.S. leadership and lifestyles. So the public should be vigilant as the Republican National Convention closes, as Washington hosts the International Monetary Fund meetings, as the Nov. 2 presidential elections approach and during holidays such as Thanksgiving, Hanukah and Christmas, Parsons said.

-END-

Chuck checks in late:

It's nice to be home early for a change. I was just going to write you about the markets' action but you covered it clearly and well. Given the poor economic news today the market had all of the right to sell off sharply, but obviously that can't be in the script during the Republican convention. All things must appear to be proper and healthy during this week. I think also that the market might be discounting the very real possibility that the race might be tilting against Commander Kerry and his wobbly record toward terrorism. Time will tell. If the market holds above 10,000 at election time, Mr. Bush will repeat.

But nonetheless, I agree that I believe gold is mustering up an assault on a breakout at the important $410 and then much higher thereafter. My tea sentiment leaves are very positive--relatively high amount of continuing put buying in both the XAU and Comex options. The surprise should come when gold moves against a stable dollar even without much help from oil and other commodities, for the yellow metal is really currency and one that will be increasingly sought in an increasingly unstable world of finance and politics. Historically, post-Labor days have been very good times for dynamic markets. I would not be at all surprised by this happening during these most historic times.

Jeremiah said about the prophets of his day before the fall of Jerusalem in 586 BC, "Do not listen to what the prophets are prophesying to you; they fill you with false hopes. They speak visions from their own minds." Jeremiah 23:16 In spite of the shenanigans by the repressive financial forces and by the prophets of boom and good times, we are propelling into uncharted times and false hope will not sustain us. Chuck ikiecohen@msn.com

A heads-up:

Hi Bill,

Concerning the Mexican "oil find" the following:

Nobody seems to have noticed this statement Pemex expects output from its biggest oil field, Cantarell, to start declining by 14 percent each year from 2006.
http://www.alertnet.org/thenews/newsdesk/N30206303.htm
regards
Emile

Thursday, Sept. 2, 2004

Gartman

The Gartman Letter

…We are always reticent about commenting upon gold, for at the periphery the gold market is populated by rather disconcertingly angry men and women who are far too prone to believe any and all conspiracy theories of any kind. Far too often they are prepared to accept the "Black Helicopter School" of economic thought, perfectly willing to believe that

international conspiracy is behind each and every move of the gold market, and absolutely certain that the markets are driven, or manipulated, by unseen, malevolent forces or cabals. Further, when gold is discussed in even the least bullish terms, or heaven forbid, should gold be discussed in even modestly bearish terms, they become really quite venomous.

Apparently the fact that we admitted that we had "missed" the problem with the Sons of Gwalia and had failed to account for it in the upward price movement earlier this week was the reason to unleash a rather surprisingly strong series of e-mails to us last evening. We make no pretence of finding each and every reason why each and every market we try to follow moves higher or lower. We admit our mistakes and we move on. Would that the peripheral conspiratorialists who populate the edges of the gold market did the same.

We are grateful then to be included as one of the speakers at the London Bullion Metals Association's meeting next week in Shanghai. We expect to learn much from those attending and from others speaking at the meeting in Shanghai regarding the fundamental, technical and "psychological" forces that are driving the gold market. We expect those we listen to shall have far more cogent analysis of the gold market than the "Black Helicopter" manipulation theorists who have chosen to send us reams of rather ill-mannered, and in some cases openly threatening, e-mails and faxes.

-END-

No ranting today about this dummy Gartman, who is nothing more than a cabal apologist, as is GFMS. He is too much of a lightweight to bother with after this sort of a retort. How trite can you get? Something someone in grade school might say. A few of items of interest, however:

*I did not put his fax number in the MIDAS, nor did I suggest he be emailed. However, I did send him a copy of last night’s MIDAS commentary by email.

*When Gartman speaks of "Black Helicopter" manipulation theorists is he referring to John Embry and Oleg V. Mozhayskov, the Deputy Chairman of the Russian Central Bank?

*He was the one who attacked GATA first and then lied to me. Years later we learn why. The Gold Cartel bullion banks are his clients. Now there is real objectivity.

*As is ALWAYS the case, Gartman’s comeback is one of general silliness rather than dealing with the facts brought up in the Sprott Special Report. Until critics like Gartman come back with specificity as Andrew Hepburn and John Embry did in making their gold price manipulation case, responses such as this should be used as toilet paper.

Had a fun dinner with Derek Van Artsdalen of San Antonio, who was in town for couple of days. He is working on a special project which will be of interest to many Café members some time next year.

The gold/silver shares sold off in sympathy with bullion. The XAU fell .83 to 94.51 and the HUI lost 1.89 to 205.76.

Let me end this MIDAS on a positive note. In late from our STALKER source. It is becoming like a lions "pride" out there in STALKER world. The number of mini-stalkers is growing (4 or 5) and adding to the buying power of the mother STALKER. The amount to still be bought is $1.5 billion of gold bullion. They are looking for $405 to be taken out on the downside first. Much of the buying will be done out of HONG KONG. We are talking about physical gold here, not paper which will come back onto the market anywhere near these prices.

GATA BE IN IT TO WIN IT!

MIDAS

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Some food for thought to get the Sprott gold report out and about:

Appendix

Hi Bill,

A suggestion to shareholders of gold/silver miners:

Hand out the Sprott report to other shareholders and to reporters at annual meetings and ask management what they are doing about the manipulation.

For the energetic shareholders or anyone else for that matter, shareholder lists can be obtained from the companies under Canadian business corporation law if there is a matter relating to the affairs of the corporation that requires that shareholders should be contacted by anyone including another shareholder. I think ensuring all shareholders of all gold mining companies have a copy of the Sprott report, possibly with the intent to put forward a motion that management review the report and take action to protect company assets and viability if necessary, is valid reason to access the shareholder lists and distribute the Sprott report to all shareholders. Canada Business Corporations Act S.21(9) Use of information or shareholder list - A list of shareholders or information from a securities register obtained under this section shall not be used by any peson except in connection with (c) any other matter relating to the affairs of the corporation.

The above action will also dislodge the following defense many gold mining directors are hiding behind and once this defense is uprooted officers and directors might start to act more responsibly: Canada Business Corporations Act S.122(5) Defence - in good faith - A director has complied with his or her duties under subsection 122(1) if the director relied in good faith on (b) a report of a person whose profession lends credibility to a statement made by the professional person. Hmmm, World Gold Council and Gold Fields reports come to mind. So do key media figures. See how false or misleading reports are potentially being used and see why the cabal machinery has issued those reports? They play a VERY IMPORTANT legal role for the cabal. Do you see the importance of getting the Sprott report broadly distributed to clearly invalidate false data or misleading data contained in any report of a person whose profession lends credibility to a statement made by the professional person and therefore to eliminate this S.122(5) defense?

Every officer and director must act honestly and in good faith with a view to the best interests of the corporation. This is law in Canada. To not review the Sprott report and comment on it to shareholders if queried is not acting honestly and in good faith with a view to the best interests of the corporation. I believe Canadian business corporation law puts officers and directors personally at risk under the "known or ought to have known" provision. If the company is impaired and shareholders suffer (like they already have) and officers and directors had "known or ought to have known" about an illegal manipulation as being the cause and they did not act to expose and end the manipulation it is my understanding that they can be held liable. Neat, eh?

Wouldn't notifying ALL SHAREHOLDERS of producing gold companies of the Sprott report and about the manipulation be a responsible thing to do? I think we would then see some pressure on company management.

Ron Lutka

Bill, I've been thinking about all the great, groundbreaking work the GATA army has done. I'm sick of not hearing about it in the press.

Perhaps you could make a request of the army to send you names and email addresses of local reporters and editors who cover business news, so that you can do a blast email on important news to them when you have it.

I have found email addresses for the following reporters and editors who cover business and finance for the New York Times, nationally and internationally. The list is attached in an excel file.

NYT Business Reporters and journalists.xls

I hope we can make something happen here. At least we can say that they received the information. What they do with it is then on their shoulders when the people want to know why they weren't informed of the impending catastrophe.
Best,
Chuck

Hi Billy
In this post "Enron" environment, it seems that the hope we had that the cartel could be shamed out of their conduct is no longer valid. Their greed or desperation has anaesthetised their sense of morals and self esteem.

We need a new strategy Shaka, or a renewed attack with in an old strategy in these more fertile times.

How can we influence their behaviour?

To this end I still feel that the only workable alternative is still disseminate knowledge of the damage and death that their policy is causing in Aids ridden Africa.

The Sprott report which may have established the manipulation as more than the figment of our imagination for the masses, opens the road to say, that if the sprott report is true, then the harm damage and death caused by this policy in Africa is also true. No one can deny that it is a lack of money that is denying Africa medicine, education and basic needs.....causing suffering and death!

It is ironic that the people who screamed out against and fought the unjust rule of apartheid, are now depriving the post apartheid victims and now the REST OF MINING AFRICA the benefit of their only hope of income, that is the sale of their non replaceable resources.

While the Cabal may feel manipulation of gold and interest rates are par for the course, if we use our muscle to publicise the above, they cannot, shamelessly continue to kill.

Its time for the other horn to close in and apply pressure.

Time will no doubt take care of gold for us , but it would be nice to shove a horn up their butt. We have the ability, you have a large audience and army.

In our favour we have the fact that Americans are asking "what have we done wrong? Why are we unpopular?"

The Cabals behaviour highlighted now in the terms indicated above, will cause anger against the companies involved. No doubt about it. Lets tell the good Americans what’s happening for a few bucks.
Best Buddy

James (from Australia via South Africa)

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Royal Gold 4th Quarter Dividend

03.09.2004 11:00

US precious metals royalty company Royal Gold today announced that its Board of Directors has declared its fourth quarter dividend of US$0.0375 per share of common stock.

The dividend is payable on October 15, 2004, to shareholders of record at the close of business on October 1, 2004. The Company has paid dividends since 2000.

Royal Gold is a precious metals royalty company engaging in the acquisition and management of precious metals royalty interests.

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The Gold Price: Management or Manipulation?

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By: David N. Vaughn, Gold Letter, Inc.

How did gold do this past week?

It continues to do its own “thing” & right now that “thing” is primarily to continue to strengthen & to consolidate. And I know it gets very old to continue to hear the same ole’ thing, but it is this “same ole’ thing” that is eventually going to make a lot of gold stock owners a lot of money.

Gold is not moving too quickly up & it’s definitely not heading back down any time soon.

The powers that be are working diligently to keep gold from rising too fast. And while one power is attempting to cap gold’s rise another group of individuals are with haste buying every available ounce of gold when the price drops a little.

And what we just stated above are by definition the defining characteristics of a bull market. No matter how much effort Tony applies to keep that Jeanie in the bottle that Jeannie just pushes that much harder to get out.

Tim Wood at Mineweb.com is writing some good stuff lately. Read the following by Tim as he writes about Bill Murphy.

“He (Bill Murphy) is also prone to incendiary statements and imprudent foretelling that have made a pariah of the activist organization (GATA) in reasoned company.” Tim Wood, Mineweb.com, 8-24-2004

Sounds like Tim is struggling to say some kind words about his buddy, Bill Murphy. Personally, I interpret the text above as a complement. Let’s read part of it again.

“He (Bill Murphy) is also prone to incendiary statements…”

No one will ever accuse Bill Murphy of being a “patsy” & I respect anyone for having the guts to set the world aflame by making “…incendiary statements…”

But what does that last part say again?

“…imprudent foretelling that have made a pariah of the activist organization in reasoned company.”

Well, Paul Revere in his time was accused of “…imprudent foretelling…”

What’s that word used in the middle of the sentence?

“…a pariah…”

Wow! A strong word! How does the dictionary define a “pariah?”

Pariah - “…member of a low caste…” Funk & Wagnall’s Standard Desk Dictionary, 1976

[/B]Yes, one of the common folk! Nothing wrong with that.

Let me share a little secret here about Tim Wood & Bill Murphy. Ever seen the movie “Twins” with Arnold Schwarzenegger & Danny Devito? Bill & Tim don’t know it, but they are really genetic brothers accidentally separated at birth long ago.

Let’s read some more of Tim’s good writing.

“Interview: John Embry, Sprott Management” Tim Wood, Mineweb.com, 8-24-2004

John Embry: “…gold should be trading at least $200 higher than it is.”

And who is John Embry & should we be listening to his assessment of where gold should be?

John Embry runs Sprott Asset Management Inc., a private investment company, & manages over $1.6 billion in assets for various institutions, endowments & high net worth individuals. Well, if others have given the man 1.6 billion of their money to invest maybe we too should listen to him.

“John Embry: Well I’ve been on record for some time as thinking gold in the next, I said by the end of the year I might be right but I would say certainly in the next six months $500 & I don’t think there’s a great deal of difference between what we went through in the 70s & what we will go through in the rest of this decade so I think we’ve got a significant move way beyond that over the next five to ten years.”

Personally I do not like to predict how high the gold price may eventually climb or even when it may reach such & such a height. But what I will predict & place our emphasis on is the development of a “trend.” And the long term “trend” is for gold to climb dramatically higher.

Remember that ole’ bugaboo, inflation?

"Inflation isn't going away, and it's worse than the government says.”

Bill Bonner, The Daily Reckoning, 8-26-2004

And more?

“For example, the Bureau of Labor Statistics said that for the quarter ended in July, prices of food and beverages rose at a compounded annual rate of

around 5- 5.5%. Yet Sysco, the big food distributor, says that inflation last quarter, "as measured by the rise in our cost of goods," was 8%.” Bill Bonner, The Daily Reckoning, 8-26-2004

And I know we continue to tire of hearing the debate about inflation but please remember what our objectives are here. Our objectives are in outlining & pointing out “trends” & it would take a real idiot not to recognize inflationary forces at work in our world every day. And the “trend” is for these inflation elements to grow & grow.

You don’t believe me that inflation is real & a growing presence? Go to the grocery store & purchase a gallon of milk.

Now here is an interesting bit of news. Read the following & remember about all those thousands of good jobs our government is telling us are being created every month.

“The number of Americans in poverty & without health insurance each rose by more than 1 million in 2003, the Census Bureau reported Thursday.”

Peronet Despeignes, USA Today, 8-26-2004

Let me state something for the record here.

Good jobs pay their employees health benefits. The fact that the number of uninsured is growing by leaps & bounds is an indication that all of these new wonderful jobs our government is telling us about are all crap jobs that are basically subsistence type jobs that barely pay the bills.

And more?

“Ranks of uninsured grow to highest since ‘98”

“…the figures represent a stark reality for a growing number of Americans…” Julie Appleby, USA Today, 8-26-2004

Yes, the “…stark reality…” is that America is losing good jobs dramatically every year & not gaining them.

One night last week I was up late working in the office when I decided to get up & cook something in the kitchen. It was after midnight & everyone in the house is asleep. Well, I am busy doing my thing in the kitchen & of course the cooking smells began to permeate through the house.
The strong cooking smells actually awakened my wife. She hollered from the bedroom asking what was that horrid smell? She said she smelled an old shoe. She never has appreciated my cooking & I do try.

Are you familiar with the report John Embry with Sprott Management put out recently about the gold manipulation?

“Not Free, Not Fair concludes that there can be no other explanation for the apparently erratic behavior of gold but “severe long-term manipulation.” John Embry, Sprott Asset Management Inc, 8-19-2004

And what is this report about?

“…the more we investigated the gold market, the more readily apparent it became that the gold price appeared, in the politest of terms, to be managed. In fact, the price action seemed in many instances to be counterintuitive. On days when there were particular reasons for gold to rise, it often actually declined or was aggressively capped if the buying pressure proved to be too strong.” John Embry, Sprott Asset Management Inc, 8-19-2004

And whether you want to call this behavior appropriate management or give it a powerful word such as conspiracy the fact is that the central banks have a history of “managing” & controlling the gold price. Personally I don’t care if it is referred to as management or conspiracy our point is that the “management” of any commodity just so a group of elitist insiders & banks can make a lot of money is not right & it should not be legally allowed. The bottom line is that a handful of elitist folks made a ton of money for years off the backs of the “Joes & Janes” of the world. And that is not right.

The following additional text below is real good! Pay attention to the following & absorb it real well.

“A gentleman by the name of Brian Bloom attempted to explain the situation in a recent essay in which he stated, “I want to differentiate here between the meaning of the word ‘manage’ and that of the words ‘conspiracy’ and ‘manipulate’. The latter are emotive words that imply joint clandestine action, or anti-social behavior, whereas ‘manage’ implies joint overt and legitimate action”.1 John Embry, Sprott Asset Management Inc, 8-19-2004

The following text gets even better.

“He then went on to add that “there is no secret that the world’s central bankers are involved in ‘managing’ markets”2, suggesting that they were acting in the best interest of society and therefore their actions were justified. While appreciating Mr. Bloom’s attempt to clarify the matter, we at SAM are not terribly interested in semantics, believing that markets are either free or they are not free, irrespective of what terms are used to describe their lack of freedom.”

1 Brian Bloom, Managed Markets (July 30th, 2004): http://www.goldeagle.

com/editorials_04/bloom073004.html John Embry, Sprott Asset Management Inc, 8-19-2004

Wow!

Let’s read part of that text above again. Powerful words there.

“…markets are either free or they are not free…”

And remember, that when ever we observe this “management” you will always find a trail of blood suckers making a tidy profit off of this type of “management.”

And when ever I hear that this “management” is “…acting in the best interest of society and therefore their actions were justified…” I want to puke from the blatant hypocrisy.

And who else additionally benefits from the “management” of gold?

“Who are the beneficiaries of the gold price suppression? The central banks, who by virtue of their ability to control the gold price, hide from the public the true reality of their increasingly reckless monetary policies, and powerful financial institutions who continue to take advantage of unsuspecting investors laboring under the illusion that gold is indeed a free market.” John Embry, Sprott Asset Management Inc, 8-19-2004

Yes, let’s read part of that above text again.

“…powerful financial institutions who continue to take advantage of unsuspecting investors…”

And where are the investigators who were so quick to lock up Martha Stewart & prosecute the folks at Enron, WorldCom & other places?

“A government that fails to…maintain proper banking controls, such as in Brazils in the 1980s or present-day Zimbabwe’s, steals from its citizens as surely as Edward III & Stalin did.” William J. Bernstein, The Birth of Plenty, 2004

Yes, let’s use the word “steal.” Because when a government loosens it’s banking controls to allow a minority to profit at the expense of the masses then theft occurs.

“The absence of even one of these factors endangers economic progress & human welfare; kicking out just one of the four legs will topple the platform upon which the wealth of a nation rests.” William J. Bernstein, The Birth of Plenty, 2004

Yes, the wealth of a nation ultimately rests upon the pursuit of fairness & equality & when this collapses the loss of a country’s entire wealth is not far behind.

The following text below addresses well the issue whether it is of relevance if this “management” of gold is “tacit” or “overt.”

“GSA (Gold Stock Analyst) continues to believe that the gold price is manipulated by tacit, rather than overt, collusion; much the same as when one tobacco company raises prices, the others usually follow along.” John Doody, Gold Stock Analyst, September 2004, http://www.goldstockanalyst.com/sample/Sep04.pdf

Now I love John Doody to death & continue to recommend everyone to give his newsletter subscription a try if they are serious about gold stocks. But here I have to disagree with John.

This is the same line of reasoning we hear being repeated time & time again.

Is there really a big difference between whether our actions are “tacit” & “overt?”

If by our “tacit” (understood) actions we know that driving drunk may cause us to kill someone on the highway is the judge going to treat us more kindly & let us off scott free because our actions were “tacit” though it is understood well what type of outcome results from drinking & driving?

It’s OK if the central banks manage gold because their actions are “tacit” & not “overt.” Well, the courts state that ignorance of the law is not a defense. And in my opinion if you went about your actions with the complete understanding that someone was going to be hurt then the crime is just compounded that much more.

And the fact is that because of the central banks “tacit” management of the gold price a lot of “little” people have lost a lot of money & lives have been destroyed. If we are going to live in a society where excuses are going to be made to rob the little people then where is justice?

And really ultimately shouldn’t the law be determining if criminal intent is involved here & what crimes have been committed? We really should not even be splitting hairs on this issue as this is what the courts are designed to handle.

Fortsetzung folgt.......

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http://news.goldseek.com/GoldLetter/1094221403.php

The Gold Price: Management or Manipulation?

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By: David N. Vaughn, Gold Letter, Inc.

But, oh!

We are talking about the U.S. Government where everyone knows the rules of law do not apply. I think that Bill Murphy best eloquently describes where this price manipulation scheme is heading.

“Where I believe the report is going to hit a home run is with the big hedge funds, the wealthiest individuals of the world & foreign central banks. After reading it they will understand what the implications are. That will have them buying gold hand over fist. It is only a matter of time. The Sprott gold report could change the entire price dynamics of the gold market & has to have The Gold Cartel in a sweat.” Bill Murphy, LeMetropole, 8-26-2004

Any of you out there ever have any concrete work done at home? I need to widen my driveway. Did you know that the ancient Romans invented concrete? And when the Roman Empire crashed & burned the secret to making concrete was lost until just a few hundred years ago.

“In the centuries after the Fall of Rome, Europe’s wealth actually declined, as numerous critical technologies simply disappeared, the most important being cement, which would not be rediscovered for thirteen centuries.” William J. Bernstein, The Birth of Plenty, 2004

We can learn a lot from the study of concrete.

An additional interesting tidbit about concrete is the following.

“Chemistry alone will not make good concrete. People make good concrete…”

David Moore, PE, http://www.romanconcrete.com/docs/spillway/spillway.htm

Concrete even follows some of the principals of gold & sound money. Read the following.

“Whatever method the Romans used in facing concrete, and shaping it into powerful arches and lofty vaults, one should remember that underneath is the nearly indestructible mass of concrete providing structural integrity to the building, and holding it up.” http://id-archserve.ucsb.edu/arthistory/152k/concrete.html

Did you catch that last statement? Let’s read it again.

“…underneath is the nearly indestructible mass of concrete providing structural integrity to the building…”

You still did not get it?

“…underneath is the nearly indestructible mass of concrete providing structural integrity to the building…”

What we just read (several times) explains in a nutshell why gold is so very, very important to our world & civilization. Every society & culture must have a sound currency that is strong & durable & that will provide a “…structural integrity to the building…” And the building that gold supports as a stable & strong currency is our free society & the ability to trade & do commerce freely with one another & all around the world.

If you take away the soundness of a nation’s currency then you have the potential for chaos & financial bedlam. Now are you beginning to understand why gold is so very important? And if you acknowledge gold as important you need to be aware of the several elite gold experts whose research you can trust & depend on.

And one of these elite gold gurus is an individual by the name of Paul van Eeden. Paul cut his teeth with the top gold firm, Global Resource Investment, & later refined his skills working with the legendary Doug Casey.

I remember many years ago when I first began studying gold & I would eagerly & with great anticipation await Paul’s weekly commentary. His financial & gold related newsletter is not cheap, but the man’s knowledge of gold & investing is for real & many folks have made a lot of money with Paul. If you’ve got the bucks his financial investment newsletter is worth subscribing to.

The following is a bit of interesting & very important news from your friends at John Doody’s Gold Stock Analyst.

“Reported in recent 10Q filing w/SEC: Buffet increases Berkshire Hathaway’s bet against the Dollar to hold $19 bil in foreign currency contracts on 6/30/04.” John Doody, Gold Stock Analyst, September 2004, http://www.goldstockanalyst.com/sample/Sep04.pdf

Now I believe the key word in what we just read above is “INCREASE.” And the past 20 years or so have taught us to respect & pay attention to Mr. Warren Buffet’s prediction of future market direction. And if Mr. Buffet believes the venerable U.S. Dollar is heading further south then just where do you think this will send the price of gold?

Seems to me placing a bet with gold today is equivalent to placing one’s bet with Warren Buffet. And judging by his track record for being on the mark so many, many times that sounds like a good bet.

But let’s change the subject for a moment & talk about something even more important than gold & money.

Remember that movie I mentioned we went to go see a few weeks ago, “I Robot?” It stars Will Smith as the main character. I have often admired the actor Will Smith & wondered what kind of real person he is.

“…he was from a loving, solid, hardworking family, who not only encouraged Will to develop his natural talents, but guided him – lovingly & firmly – every step of the way.” Jan Berenson, Biography of Will Smith, 1997.

Family will always be more important than making money & it’s always a good idea to recognize those successful folk who come from a strong & loving family.

His family “…solidly working- class…” “Will’s family, who lived by the words “You get up in the morning prepared to go to work…”

You know you’ve succeeded as parents when you hear your child say the following:

“There are individual personality traits of celebrities & sports stars I admire, but the only people I continue to idolize are my parents.”

Wow! Wouldn’t you want your kids to someday say the same thing about us?

We can talk all day until the cows come home about gold & making money, but unless we have a loving family to share it all with then wealth is just an empty cistern.

Before we close I would like to address the likes of Tim Wood, Bill Murphy & John Embry. These men know that their writing is often considered as controversial & inflames passions & sets themselves up as targets. Never the less these men possess the moral courage to speak their own minds & are willing to enflame the world’s emotional passions even when those passions become personally directed against them.

“Before 1500, the well-being of the average human being was stagnant. The roots of that stagnation should now be obvious.” “…no European dared to think creatively or scientifically, since original thoughts often condemned their creator to oblivion…” William J. Bernstein, The Birth of Plenty, 2004

I liked what we just read.

“…no European dared to think creatively or scientifically, since original thoughts often condemned their creator to oblivion…”

And because today a few brave men are willing to “…think creatively…” & controversially the well-being of the average human is not stagnant.

Gold Letter is bringing gold to the masses.

Zitat

“The vast majority of the investing public has no understanding of, let alone faith in, gold as an investment…” Chip Hanlon, 8-9-2004

Start with an economical newsletter you can afford.

Gold Letter is an email subscription based newsletter providing a conservative review of gold, silver & other contrarian opportunities including Asia & China.

Can gold stocks really climb from just .10 cents to over a hundred dollars a share? Look at the hyperlink below to see the last gold bull market in the 1970s & how high many gold stocks climbed.

http://www.goldletterdv.com/WHYGOLD.PHP

David N. Vaughn

Gold Letter, Inc.

David4054@charter.net

Gold Letter Website

September 3, 2004

-- Posted Friday, September 3 2004

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http://www.channelnewsasia.com…world/view/104706/1/.html

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Time is GMT + 8 hours

Posted: 03 September 2004 1358 hrs

Six hurt in Peruvian protest march against gold prospecting

LIMA : At least six police officers were hurt when 1,500 farmworkers protesting gold prospecting in Peru's northern Cajamarca region fired slingshots at local police called out to clear a main road blocked by the demonstrators, authorities said on Thursday.

Eight protesters were arrested during the melee, the interior ministry said in a statement.

The demonstrators, mostly poor farmworkers, had blocked roads leading to Mount Quilish, 900 kilometres northeast of here, where the Yanacocha mining concern plans to do some gold prospecting and which local inhabitants consider out of bounds for commercial operations.

Confronted by police and Yanacocha employees, the demonstrators began firing slingshots, the ministry said.

Six police officers were hurt in the scuffle, said the ministry without indicating the extent of the injuries.

Panamericana television said several journalists covering the demonstrations were also hurt.

After the clash, demonstrators returned to the highway in the area with logs and stones and set up new road blocks, witnesses said. - AFP

Copyright © 2004 Agence France Presse. All rights reserved.

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http://www.instock.de/Nachrichten/10145861.html

Gold: Barren oder Münzen?

Von James DiGeorgia

Ich liebe diese Goldbarren, die man in Filmen sieht. Diese Goldbarren sind normalerweise das Ziel von Dieben, wie Goldfinger oder anderen Gaunern. Wenn Goldbarren nicht gerade geklaut oder in Filmen verwendet werden, dann werden sie hauptsächlich an den großen Rohstoffbörsen der Welt gehandelt, und die Zentralbanken der Welt bunkern sie.

Wenn Sie physisches Gold kaufen wollen, dann sollten Sie keine kleinen Einheiten kaufen. Selbst 100 Unzen-Einheiten sind zu wenig. Und ich empfehle dringend, NIEMALS Mini-Goldbarren – von z.B. 1 Feinunze – zu kaufen.

Zunächst einmal: Kleininvestoren, die 100-Unzen-Goldbarren kaufen, verlieren die Fähigkeit, diese einfach verkaufen zu können. Denn die meisten Goldhändler und Münzhändler nehmen diese nur mit einem Discount von 5–7 % an.

Dann: Meine persönliche Erfahrung mit kleineren Goldbarren ist ziemlich schlecht. Da bezahlt man einen Aufschlag von 3–10 % gegenüber dem Goldpreis, und bei Verkauf muss man einen Abschlag akzeptieren. Das führt zu einem Spread von 20 %, was erheblich zuviel ist.

Der Markt ist von Goldmünzen dominiert. Die Kleinanleger, die physisches Gold kaufen wollen, tun dies meist in der Form von Goldmünzen.

Es ist wichtig, hier zwischen Gold- und numismatischen Münzen zu unterscheiden. Eine Goldmünze leitet ihren Wert alleine vom Goldwert ab, und normalerweise hat sie einen kleinen Aufschlag gegenüber dem reinen Goldwert. Eine numismatische Münze leitet ihren Wert von ihrer Seltenheit ab, und sie kann bis zu einer Million Dollar kosten, auch wenn das der Goldwert dieser Münze natürlich nicht hergibt.

In den 1970ern war die südafrikanische Krügerrand die populärste Goldmünze der Welt. In Europa ist jetzt eine österreichische Goldmünze (99,9 % Gold) am populärsten geworden (die Goldmünze "Wiener Philharmoniker"). Dann gibt es noch eine sehr beliebte chinesische Goldmünze ("China Panda"), und natürlich den amerikanischen "Gold Eagle".

Welche Goldmünze ich empfehle? Den amerikanischen Gold Eagle! Denn der ist die liquideste Münze der Welt. Der Spread, also der Abstand zwischen An- und Verkaufskurs, liebt selten bei mehr als 7 % bei geringen Beträgen und bei größeren Beträgen selten über 5 %. Das sind allerdings Werte für die USA – in Europa kenne ich mich nicht aus, vielleicht ist da die österreichische Goldmünze günstiger!

Und kaufen Sie niemals Goldmünzen mit Kratzern oder irgendwelchen Beschädigungen. NIEMALS! Jeder Käufer, der sich auskennt, wird selbst die geringste Beschädigung zum Anlass für einen deutlichen Preisabschlag nehmen.

Kaufen Sie auch keine "seltenen" Goldmünzen. Bei Goldmünzen geht es nur um den Goldgehalt. Lassen Sie sich da nicht irreführen. Goldmünzen verdienen keine signifikante Prämie gegenüber ihrem reinen Goldwert.

Sie sollten den Verkäufer kennen. Checken Sie seinen Hintergrund. Wie lange ist er im Geschäft? Kaufen Sie von einem "namenlosen" Angestellten oder einem Verantwortlichen? Sie werden überrascht sein, wenn Sie wüssten, wie viele Menschen es gibt, die nur darauf warten, Ihr Geld zu stehlen!

James DiGeorgia schreibt als US-Korrespondent für den kostenlosen Newsletter "Investor's Daily". Weitere Informationen finden sie hier.

[ Freitag, 03.09.2004, 09:54 ]

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http://www.wienerzeitung.at/fr…ft.htm?ID=M19&Menu=212778

Euro & Gold 2.9.2004

Der Euro tendierte am späten Donnerstagnachmittag im europäischen Devisenhandel gegen den US-Dollar knapp behauptet gegenüber dem heutigen Richtkurs der Europäischen Zentralbank (EZB), der mit 1,2172 US-Dollar festgelegt worden war (Mittwoch: 1,2168 USD).

Der Preis für eine Feinunze Gold wurde am Donnerstagnachmittag in London mit 406,10 US-Dollar (Mittwoch-Nachmittagsfixing: 407,65 USD) festgelegt.

Erschienen am: 03.09.2004

Ob diese Empfehlung mal gut geht?

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http://www.instock.de/Nachrichten/10145860.html

Barrick Gold: Unter 16 Dollar kaufen

(Siegel Investments)

Der in Kanada beheimatete Minenkonzern Barrick Gold (NYSE: ABX, Kurs 19,99 Dollar) meldet für das Juniquartal eine Goldproduktion von 1,28 Millionen Unzen, was leicht über der geplanten Jahresrate von 4,9 bis 5 Millionen Unzen liegt. Barrick plant weiterhin, die Produktion bis 2007 durch die Inbetriebnahme von 4 neuen Minen auf jährlich 7 Millionen Unzen steigern zu können. Bei Nettoproduktionskosten von 209 Dollar je Unze und einem Verkaufspreis von 372 Dollar je Unze fiel die Bruttogewinnspanne von 195 auf 163 Dollar je Unze zurück. Der operative Gewinn fiel auf 12 Dollar je Unze, was einem aktuellen KGV von 178,1 entspricht.

Auf der Basis einer jährlichen Produktion von 5 Millionen Unzen liegt die Lebensdauer der Reserven bei 17,2 Jahren und die Lebensdauer der Ressourcen bei 25,6 Jahren. Die Dividendenrendite beträgt 1,1 Prozent. Die Verpflichtungen aus Vorwärtsverkäufen wurden von 15,5 auf 13,9 Millionen Unzen weiter reduziert und decken einen Produktionszeitraum von 2,8 Jahren ab.

Beurteilung: Barrick bleibt mit einem KGV von 178,1 ein uninteressantes nordamerikanisches Standardinvestment mit begrenztem Kurspotential, dürfte aber wegen der Wachstumsperspektiven bei einem Goldpreisanstieg unter den nordamerikanischen Standardwerten das größte Aktienkurspotential aufweisen. Negativ bleiben die hohen unrealisierten Verluste aus den Vorwärtsverkäufen. Wir erhöhen unser maximales Kauflimit von 14 auf 16 Dollar und unser Kursziel von 20 auf 22 Dollar und stufen Barrick als Halteposition ein.

Barrick wird in Deutschland mit den größten Umsätzen in Frankfurt gehandelt. Die WKN lautet 870450.

Siegel Investments ist Herausgeber der Zeitschrift "Goldmarkt". Autor Martin Siegel ist Berater des PEH Q-Goldmines-Fonds.

[ Freitag, 03.09.2004, 09:51 ]

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Economy Adds Jobs

The economy created 144,000 payroll jobs on net, the most since May. The July number was revised up from 32,000 to 73,000.

http://www.aba.com/Industry+Issues/BankEconomistOutlook.htm

Genau so macht man das!!!

Das macht man natürlich auch!

Einfach sagenhaft was einige neue Arbeitsplätze in den USA für ein explosionartig ansteigendes Interesse und Nachfrage-Schub an der Fiat Währung US Dollar auslösen kann!

Nun haben wir ja schon fast wieder Vollbeschäftigung in den USA, die Leute arbeiten jetzt so viel, dass sie keine Zeit mehr haben neue Autos zu kaufen. Darum verkauft GM und Ford bereits gewaltig weniger Fahrzeuge, und müssen die Produktion drosseln, wie gestern bekanntgegeben wurde.

Das Haushalts-, und Handeldefizit klettert in immer schwindelerregende Höhen, und die 8 Trillionen US Dollar Schulden werden höchstwahrscheinlich spätestens im 2. Quartal 2005 überschritten werden. Dazu braucht es noch ein O.K. des US Parlament. Das wird nächstens vermutlich auch bewilligt werden. Anders geht es ja wohl nicht sehr lange, bis die Amis Zahlungsunfähig werden.

Wozu braucht man da noch echtes Geld? Unnützes Zeugs wie das Gold, das stört ja nur. Darum sollen jetzt alle ihr Gold verkaufen, und soll wohl in "mündelsichere" US Dollar Staatsanleihen investiert werden.

Irgend ein Grossbetrüger hat auf die Frage, warum es ihm gelungen sei so viele Anleger hinters Licht zu führen, einmal erklärt:

Jeden Tag stehen auf unserer Welt Millionen Dumme auf. Man muss sie nur finden!

Gruss

ThaiGuru

uudo

Willkommen an Board!

Genau so ist es!

Die ausgebenden Banken dürfen sich freuen, über den Geldsegen den ihnen diese heutige Dollar push und Gold bash Aktion in die Kassen gespühlt hat.

Gruss

ThaiGuru

Es wäre sicher extrem aufschlussreich zu wissen, von wem denn genau dieses Sons of Gwalia Gold, das wie sich jetzt herauskristallisiert, nicht einmal als Reserven im Boden vorhanden war, bei dieser nakten Shortposition handelt sich immerhin um 500000 Unzen Gold, wann genau am Markt verkauft wurde, und wie weit dadurch die Gold Preise an diesen spezifischen Verkaufstagen negativ beeinflusst wurden.

Gruss

ThaiGuru

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Sons of Gwalia's gold hedging had big holes

By Stephen Bartholomeusz

September 4, 2004

One of the perplexing questions raised by this week's collapse of Sons of Gwalia is how so many smart investors could have got it so wrong.

Stranded on the register of the failed tantalum and gold producer are some of the cannier institutional investors, while some of their equally clever peers escaped in the nick of time.

Among Sons of Gwalia's substantial shareholders are the Templeton group, Schroeder and Aviva. Canadian miner Teck Cominco owns about 10 per cent and a major tantalum customer, Cabot Corp, is also on the register. Goldman Sachs, Wellington and National Australia Bank's funds management businesses were all shareholders until very recently.

Zitat

Also exposed to the collapse are some of the world's biggest banks, including Citigroup, HBOS, Goldman Sachs, JPMorgan, Dresdner, HSBC and, locally, ANZ and Commonwealth.

The institutions which got caught are angry. They knew the company's tantalum and gold arms had their challenges but hadn't envisaged the implosion.

While Sons of Gwalia is Australia's third-largest gold producer, that wasn't its main appeal to the institutions. They were attracted because the company controls more than half the world's production of tantalum - a rare metal used to make capacitors, used in electrical circuits.

Every mobile phone, laptop and video camera has tantalum in it, making Sons of Gwalia a seductive story for fund managers.

While the tantalum operations have had their share of problems - production difficulties, declining grades and long-term contracts that haven't enabled it to cash in on rising spot prices - they weren't behind Sons of Gwalia's demise.

It was the gold operations that undermined the group.

Sons of Gwalia, founded by the Lalor brothers, descendants of the Peter Lalor who led the Eureka Stockade rebellion in 1854, has produced about 5 million ounces of gold since it began producing the metal in 1984. Until this week, it had been expected to produce about 500,000 ounces a year.

Its ability to generate that production was critical because throughout its history it has fully hedged its production - in effect selling forward its entire output using some extremely complex strategies.

Generally that strategy has been profitable, although the group was hit hard in 2001 when the Australian dollar dived and its currency hedge generated losses.

Earlier this year the Lalor brothers, Peter and Chris, left the company and a new chief executive, former Pioneer International executive John Leevers, was appointed. A number of board changes followed and the new board commissioned a major strategic review of its operations.

That review's findings, supposed to be released late last month, appear to have catalysed the decision to call in administrators after talks with lenders failed.

Sons of Gwalia's chairman, Neil Hamilton, said this week that the review had identified a serious deterioration in the status of the group's gold reserves and resources which raised concerns about the company's ability to meet its hedge book commitments.

The position in which Sons of Gwalia found itself doesn't appear particularly complicated. It had committed to deliver a net 1.3 million ounces of gold to hedge-book counter-parties but the review had revealed a shortfall in economic reserves of about 500,000 ounces.

Sons of Gwalia had no way out - its hedge book was about $350 million underwater at June 30 on a mark-to-market basis and a rising Australian dollar gold price was exerting further pressure on the economics of the book.

The group had sold a lot more gold than it could produce. Its fundamental problem wasn't the hedge book or its gold operations but the interaction between the two.

The issue of how that could have happened is being investigated by the Australian Stock Exchange and the Australian Securities and Investments Commission.

There appears, however, to be an obvious explanation. The stated reserve estimates and production forecasts were wrong. Whether the miscalculation was deliberate or inadvertent will, obviously, be of consequence.

Sons of Gwalia had had some production problems in its mines, particularly those acquired from Teck Cominco when it bought PacMin for $160 million in 2001. It had experienced falling grades and rising cash costs after the failure of a pit wall, heavy rains, labour shortages and drilling difficulties.

But while revising down its profit expectation for 2003-04 to $21 million to $22 million in mid-July, the company had not indicated how parlous its position was.

That profit warning was the trigger for some of the institutions to exit the register. Most, however, were waiting for the outcome of the strategic review before coming to any conclusions.

In their enthusiasm for the "21st century metal" prospects for tantalum, the professionals, with hindsight, didn't focus enough on the gold operations and hedge book.

The complexity and the opacity of the hedging wasn't given sufficient emphasis, nor did the investors recognise that the problems within the gold operations might create a question mark over the economics of the resources and therefore over Sons of Gwalia's ability to meet its hedge book commitments.

They will pay a steep price for their distraction. The administration will crystallise the losses in the hedge book and inevitably exacerbate them.

There are suggestions that at least two of Sons of Gwalia's three gold operations are considered uneconomic, which in turn suggests the losses for the hedge book counter-parties could be very substantial and virtually guarantees that equity holders won't see any return once the tantalum business is sold and creditors absorb its proceeds.

The fate of Sons of Gwalia and its investors will reinforce the lesson provided by Pasminco's collapse and other hedge-related disasters.

Even sophisticated institutions will be reluctant to invest in companies with extensive hedging operations, particularly where the strategies are complex. And one suspects that even the investment banks which sit on the other side of the hedges will be more cautious in assessing the quality of the resources that underpin the production commitments and the proportion of production that can be sold forward.

Sons of Gwalia's strategy left it with no margin for error.

bartho@smh.com.au

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Analyst says Kebbles will not get full control of Aflease

By: Gareth Tredway

Posted: '03-SEP-04 15:40' GMT © Mineweb 1997-2004

JOHANNESBURG (Mineweb.com) -- At Afrikander Lease’s interim results announcement on Friday, CE Neale Froneman told shareholders that the compny had received written assurances from Roger and Brett Kebble that an offer would be made to minorities if JCI and Randgold & Exploration were to gain a controlling stake.

Nic Goodwin a gold analyst at T-Sec, a South African trading house, says the announcement is just a “red-herring”. He believes that minorities are keen on the company’s future uranium prospects and will not except an offer anyway.

Randgold & Exploration and JCI, two JSE-listed mining companies, have loaned Aflease R175 million in share swap deal, which in the end, will give the companies an effective 41 percent stake in Aflease.

Goodwin told Mineweb that the share swap was the only way a struggling company like Aflease could get funding. “A rights issue would have been very difficult,” said Goodwin.

The funds have been used to keep the company going until Aflease starts producing gold again. The company closed its open-pit operation in December last year after costs exceeded a tumbling rand gold price. A deal to buy the Kalgold mine from Harmony later fell through, leaving Aflease without an operating asset.

Almost a fifth of the R44 million capex needed to start production at the small Bonanza South project has been spent, with production expected in the second quarter of next year. Bonanza is next door to Aflease’s property near the town of Klerksdorp.

Froneman says samples that have been taken are in line with the original mine plan which claims a reserve of 150,000 ounces of gold, mined at a cash cost of R64,000/kg.

Goodwin, who attended the results announcement, said he was not too keen on the company’s gold prospects. Nevertheless he believes: “The uranium thing is very good.” The spot price of uranium has almost doubled in the past 18 months, currently selling at 17-year highs.

“Aflease has a big advantage, holding one of the world’s major reserves,” said Goodwin. Aflease’s uranium resource, originally mined by Anglo American in the 1980’s is said to hold more than half of South Africa’s “near available uranium.”

According to Aflease, the project could cost as much as R1 billion depending on which method is used to extract the uranium. Goodwin said the company had a problem of funding such a transaction, but said Friday’s announcement that end-user financing could be used, was very encouraging. He said that if capital expenditure is financed by a power utility in exchange for a cheaper uranium contract price, then money would sooner be available for dividends.

For now the company will need to maintain its expenses until its postulated fruitful future pans out. For the quarter to end-June, the cash loss was down at R6.3 million, compared to R8.6 million in the quarter before. About R11 million was spent on capital expenditure in the quarter.