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

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The John Brimelow Report

Chinese wonders M. East horrors

Monday, September 06, 2004

Indian ex-duty premiums: AM $6.98, PM $6.95, with world gold at $401.55 and $401.70. High: lavish for legal imports. The rupee weakened slightly today, with selling pressure partially attributed on Reuters to "gold-related (dollar) buying by a foreign bank" a virtually unprecedented comment which suggests trade is indeed active.

TOCOM gold was completely overshadowed by platinum, which fell a further $10 during Japanese hours on a dollar volume twice that of gold. Gold itself only traded the equivalent of 11,197 Comex lots, 30% below Friday; the active contract closed down 4 yen, but world gold edged up $1.25 above Friday’s NY close. (On Friday Comex was estimated to have traded 88,000 contracts.)

Friday’s story was really not the magnitude of the gold sell-off, but the ferocity of effort mounted to achieve it. According to the Comex estimates, 38,000 contracts traded in the final reporting period of just over an hour (the exchange closed just after 12 noon). Only one day last week traded decisively more. Pretty startling for a short session before a long weekend closing a Convention-blockaded week.

In essence, the Bears (whatever their motive) burned off a great deal of energy without much to show for it. This is not a surprise considering the physical market situation. US-centric, technically oriented analysts are naturally more apprehensive.

The LBMA Shanghai Gold conference is producing strange and wondrous sights. Between Barrick’s Sokalsky suggesting to Reuters that gold should see the "mid to high $400s" by the end of this year (e.g. within 17 weeks!), Newmont’s Pierre Lassonde, in his charmingly collegial way, saying they expect more gold company hedge-precipitated bankruptcies, and GFMS predicting a tripling of Chinese gold consumption in five years and talking of the Chinese having a "traditional frenzy for gold products" (not very visible this past decade, alas) the battered gold veteran starts wondering if he has stepped through the Looking Glass, or into a Time machine.

A Time Machine might seem most appropriate to those who remember the uglinesses of the 1970s. On a bloody Labor day for the U.S.M.C. it is timely to consider how the situation laid out in

http://www.exile.ru/2004-September-13/war_nerd.html

is going to be resolved.

JB

kalle14

Verstehe nicht was Du genau meinst?

mit Deiner Frage: Was ist mit den Minen los

Gruss

Thaiguru

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September 7 - Gold $396.90 down $5.10– Silver $6.36 down 31 cents

Stock News Bearish So PPT Ramps Market Up, Gold News Super Bullish So Gold Cartel Takes Bullion Down

Zitat

"America will never be destroyed from the outside. If we falter, and lose our freedoms, it will be because we destroyed ourselves." Abraham Lincoln, 16th U.S. President (1809-1865)

The more things change, the more they stay the same. The gold news the past 4 days, as expressed in this column, doesn’t get any more bullish. However, since PRICE ACTION MAKES MARKET COMMENTARY, it will barely be discussed by most of the pundits when discussing today’s gold market. This is exactly why The Gold Cartel made sure gold was taken down. Of course, when Comex was closed yesterday and most of the cabal was out on holiday, gold rose overseas – as it should have.

The only major news which could have impact on the stock market the past few days was Hurricane Frances, which could negatively impact the US economy in the weeks and months to come. Since the economic damage was worse than expected, it should have been a negative for the US stock market.

The PPT would have none of this, however, Upon waking this morning, the S&P was bid up 5, while gold was taken way down from Monday’s London close. Setting the tone for US stock market trading by the PPT is one of their specialties. It takes very little money to jack up the S&P’s when the cash (stock) market is closed. At the same time, the dollar was weaker with the yen much stronger. By day’s end, the yen rose over a point to 109.31, the euro gained .42 to 121.02 and the dollar fell .42 to 8.24. So much for the dollar/gold relationship again. It matters little when The Gold Cartel gets its dander up and goes into action.

Today’s market rigging could not be more blatant. However, not matter how blatant it is, town criers like those in our camp will be ignored. In the end this will lead to a complete financial market fiasco in the US. The rigging of our markets is leading to an Enron-type ending – except much grander in scale. All those who warned about something being very wrong at Enron (it was a fraud) were ignored, or fired. Even as Enron’s share price began to tank from $80+ towards zero, Forbes and Fortune continued to laud the firm, as did almost ALL the Wall Street analysts. Discovering the truth about Enron was the last concern of any of them.

The same is true today about the US financial markets, especially gold. To this day there has not been ONE serious treatment of the brilliant Sprott report by the financial market press around the world (it was sent to all of them by Fed-Ex). The one responsible story I expected to come out is now a week behind the time line I expected to see it. My guess is this story, along with pictures which were taken, has been spiked. Not only have there been no stories about this heralding report about the gold market, it has been met with stone cold SILENCE from the gold industry itself! The reason for that is obvious. The Sprott report cannot be challenged, so the gold establishment folk wimps say NOTHING. Unreal! The report is one which is aimed at helping these dolts.

This is all going to end very badly. The truth will eventually prevail and the financial market media and gold world establishment will be exposed for the hypocritical phonies they really are. When financial market chaos kicks in down the road, there will a myriad of cries of, "HOW COULD THIS HAVE HAPPENED?" Please file this somewhere and send them to read the MIDAS diaries of the last 6 years to GET HOW!!

The dye was cast today for gold. The Gold Cartel, in conjunction with its sister rigger The Working Group on Financial Markets (PPT), wanted gold sent lower to nullify all the bullish news which has recently surfaced. As we have seen in the past, the days in which gold should really take off, it does just the opposite – thanks to the crooked cabal. Case closed.

The gold open interest fell a staggering 12,378 contracts to 260,669 as the bad guys began their usual spec flush out on Friday in a major league way. Surely there was more liquidation today.

On a more positive note, our STALKER source has a hunch the mother STALKER (Chinese) could represent something like the major gold trading exchange in Shanghai and the new mini-STALKERS might represent smaller exchanges being set up in Nanking, Peking, etc. As you will see below, the Chinese are going all out to open up their gold market to the Chinese public. All of these exchanges will need bullion on hand to get their business’ started. Our source believes part of this $1.5 billion dollar tranche of gold they will be in the market soon to buy will go for this purpose. It’s only a hunch on my source’s part, but for other reasons I cannot discuss, it makes a good deal of sense.

Silver was annihilated. Straight down today. Our STALKER source with the London silver dealer contacts remarked today we saw the same kind of price action the last time the Royal Mint was in trouble this past spring – the difference being the price was much higher then. What none of us understand is how they keep doing what they do.

On the plus side, the floor reports this bloodbath has cleaned out all the funds. They are GONE! What a broken record this is.

The silver open interest fell 2822 contracts to 92.140.

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The John Brimelow Report

Finale?

Tuesday, September 07, 2004

Tuesday: AM $7.24, PM $7.66, with would gold at $401.30 and $400.60. This is basis Madras, usually slightly lower than Bombay (which was closed today). Very high; way above legal import point.

Monday: AM $6.98, PM $6.95, with world gold at $401.55 and $401.70. Also very high, and lavish for legal imports. Premiums over $7 are quite unusual. India is clearly a strong importer at these prices.

TOCOM today traded the equivalent of 21,696 Comex lots, 94% more than Monday. World gold was steady enough, going out at $401.20, 40c below the London close yesterday and of course $1.10 above NY’s Friday close, but Japanese futures traders, apparently, were upset by the notably firmer yen, and sold. Open interest fell sharply, the equivalent of 2,615 Comex lots (to only 90,200 Comex equivalent) and the active contract closed down 9 yen, a one month low. Once again platinum futures traded double the value of gold (unlike yesterday they did not fall). Gold is clearly unfashionable amongst Japanese futures traders at present. (In NY on Friday gold traded 68,508, with open interest falling 12,378 lots.)

Gold is still in fashion in the Middle East. Dubai trade statistics published on the interesting Dubai Metals & Commodities website indicate that Q1 gold imports by weight were 64% above Q1 ’03, 15% above Q4 ’03, and even 4.7% above Q1 ’01 when gold was at the post-Washington Accord nadir, below $270. Dubai’s imports are presumed to be substantially re-distributed around the region: which apparently likes buying gold right now.

As remarked yesterday, for those who missed my note then:

"The LBMA Shanghai Gold conference is producing strange and wondrous sights. Between Barrick’s Sokalsky suggesting to Reuters that gold should see the "mid to high $400s" by the end of this year (e.g. within 17 weeks!), Newmont’s Pierre Lassonde, in his charmingly collegial way, saying they expect more gold company hedge-precipitated bankruptcies, and GFMS predicting a tripling of Chinese gold consumption in five years and talking of the Chinese having a "traditional frenzy for gold products" (not very visible this past decade, alas) the battered gold veteran starts wondering if he has stepped through the Looking Glass, or into a Time machine."

It is only fair to note that, in the past, the extreme nature of Barrick’s involvement in hedging was surmised by some to be predicated on knowledge gleaned by this large company’s assiduously establishment-cultivating management. Consequently the bullish Sokalsky statement quoted above (hardly conducive to the economical lifting of huge hedges) has to be classified with the UBS assertion last week that the Washington Accord 2 quotas would not be taken up, as possibly indicating concrete knowledge, rather than reasoned analysis.

As noted yesterday, Friday’s short session was distinguished by exceptionally heavy volume, the heaviest in fact since August 20, when open interest made the virtually unprecedented 19,062 contract leap on a $6 price rise. This time gold fell $5 and the open interest fall (12,318 lots) eradicated about a quarter of the build-up in open interest since gold started trying to rise in mid August.

Clearly quite a few tired longs were blasted out on Friday. But the pressure in the final hour, with almost half the day’s estimated volume and a third of the weakness, suggests short selling too. So does the NY opening today. Given the visible behavior of the physical market, this is not a healthy level to be short.

JB

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CARTEL CAPITULATION WATCH

Here’s another reason for the stock market to roar on:

US layoffs up 6.6 percent in August to 6-month high

WASHINGTON (AFP) - Job cuts announced by US companies increased 6.6 percent in August to 74,150, a six-month high, according to a monthly tally released by outplacement firm Challenger Gray and Christmas.

Which is what the DOW did, following Friday’s big gain with another 81 to 10,341. The DOG was dragged along, gaining 18 to 1859.

Bonds rose ¾ of a point to 111 23/32. Oil fell to $43.31 per barrel.

A brief excerpt from Frank Veneroso’s stock market analysis put out this morning:

I believe we have entered the second leg of the bear market, and I believe professional and retail investors are just on the verge of waking up to that realization. Students of history know this can often be the more vicious and violent leg. The unusually sharp drop in volume this summer tells me people are walking away from the US equity market, and/or views are becoming increasing polarized, such that there are fewer bids and offers that intersect between the two normal distributions of bull and bear views. Ned Davis had this observation regarding sinking volumes in his September 2nd piece: "Volume has traditionally been higher in the second half of a bull market, but it has been slightly lower during the second half of the current bull. That may mean nothing or it may mean that demand is definitely lacking, and if so, that is a high-risk warning."

I also find the enormous relative performance catch up of utility and telecom sectors very telling. This is a clear manifestation of an increasingly defensive, yield oriented bet being placed by professional investors who cannot raise cash by mandate. They must stay in equities, they don’t like where the indexes are going, so they head for yield. Finally, the 50 day moving averages have crossed down through the 200 day moving averages on most of the major US equity indexes, which presents a very technically daunting picture for many naïve trend following professional and retail investors.

-END-

When the DOW put in one of its patented Hail Mary late rallies on Friday (over 120 points straight up in the afternoon), MIDAS sited a BOGUS Osama Bin Laden capture rumor as one of the main reasons why. I did not see this commented on anywhere else, but in MIDAS.

Here is the follow-up for you. It is both revolting and sickening and why I am so outraged at the present day power structure in the US. They are taking America down with one lie after another. No free markets, no free press, but plenty of propaganda. This Orwellian US operation is completely out of control:

Bill,
This fits the well worn pattern to a T, but the rabbit pulling magic is wearing thin.
jeff

http://www.reuters.com/newsArt…e=topNews&storyID=6167620

Pakistan: U.S. Official's Osama Claim Was 'Political'
Tue Sep 7, 2004 08:05 AM ET

***

This is not me talking about false rumors, but Pakistan and saying WHY! All they left out was the political reason was to get the stock market up to help Bush be re-elected.

GATA’s Mike Bolser:

Hi Bill:
The Fed added $8.5 Billion in temporary repurchase agreements today September 7th 2004, an action that upped the repo pool to $61.515 Billion and kept its 30-day ma running upwards. The DOW is up a bit this AM, apparently feeling the upwards support from the Fed's primary dealer's futures buying. I await the coming, market-moving "event" that is being carefully prepped by the Fed's acolytes on Wall Street. The DOW could still jump towards 11,750...the political campaign is quite young and the Wall Street Bulls crave another run. Greed is VERY predictable.

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Late last week I suggested that this Thursday, September 9th 2004 would be a deadline for getting IN one's gold vehicle. That recommendation continues, ESPECIALLY with today's fresh buying opportunity. There are significant things moving into place this week and bonds are a clue. Thursday, Sept 3rd saw a low for the Ten-Year Treasury and the gold cartel made their move against gold in my forward looking metric on Friday. That tripped my alert.

Bonds and the oddly flattening "yield curve"

Savvy readers already know that the curve depicting short and long interest rates over time is called "The Yield Curve". Expert bond traders live and breathe by what happens on this curve since they make huge financial decisions on how and why it moves.

One of my readers is a retired expert bond trader who has noticed a few things with today's bond yield curve for the ten-year treasury. Background first--the flattening of the curve can happen two ways: The short rates (which are Fed controlled) can classically move up (with long rates static) OR the long rates (Ten Year), ostensibly controlled by the "market", can move down with no change in the short rates (in response to deflation). Either of these actions flattens the yield curve. The Fed doesn't like steep yield curves.

What this trader sees clearly in the current flattening phase is that the long rates are coming down and this is a DIFFERENT KIND OF FLATTENING than shown in previous patterns. In his experience, whenever there is a change in the TYPE of flattening, it is time to exit the bond market. Thursday, September 3rd, 2004, the Ten-Year made a yield low of 4.29% but as the chart below reveals, the Ten Year has made a SERIES of higher lows and higher highs:

Readers will recognize the reason for the odd style change in yield curve flattening (by hammering the long rates down) as being likely due to Fed intervention to suppress the long rates through their "Policy Puts" as described by their ace Cambridge University consultant, Professor PA Tinsley. We appear set for a run to higher Ten-Year yields (In the view of my bond expert, perhaps up to 5.30%). So Thursday was the signal to exit bonds.

Flat PMA Lines behind the flattening yield curves

I draw your attention to another interesting feature of the attached Ten-Year.gif chart. The period beginning in June 2002 ushers in a remarkably flat proprietary moving average (pma) period to be followed in June 2003 with another long, linear rising phase in long rates...it appears to the untrained eye that the pma lines are being MADE flat, almost as if by computer algorithm. Also, their sharp, hairpin, directional turns give them away. I'm not ready to officially hammer the Fed on this one just yet, but I'll look for some more "coincidences" in the Ten Year yield.

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We know that the Fed steers the DIVG's moving averages and it is logical that they do the same in the all-important Ten-Year Treasury yields. In other words, IF a GOLD cartel exists, then a BOND cartel should ALSO exist since interest rates ARE eventually linked to gold (Gibson's Paradox).

The bottom line is that long rates are going up, likely because the "policy Puts" aren't working as well as they once did (Note the failure to dip sufficiently BELOW the target pma line in this last down phase), and whenever long rates move....gold moves But today's hammer on gold is just a head fake...an attempt to fool the cautious precious metals investor.

Today's move in gold and last Thursday's bottom in the Ten Year yield are screaming at us to get into gold today.
+++++++++++++++++++++++++++

Last week I suggested that if the Beslan hostage crisis went badly, Vladimir Putin would be in no mood to tolerate any further Georgian encroachment by US supported proxies. Over 300 dead out of 1,200 hostages, apparently not the result of a planned commando assault but from a tragic series of miscalculations by the terrorists (who must have had mass murder on their minds form the beginning). Read Putin's weekend speech to the Russian Nation:

http://www.itar-tass.com/eng/l…?NewsID=1214686&PageNum=0

Look at his expression in the supplied picture. Mr. Bush had better tread lightly in Georgia. Some in the Russian Federation go so far as to assert that Georgia is a staging area for terrorists:

Tbilisi denies presence of Chechen rebel bases in Pankisi Gorge
By: Tbilisi. (Interfax-AVN) on: 04.09.2004 [13:23 ] (85 reads)
http://iraqwar.mirror-world.ru…ticle.php?articleId=21664

Tbilisi. (Interfax-AVN) - Georgian Foreign Minister Salome Zurabishvili has denied statements that Chechen rebels bases are present in the Pankisi Gorge.

"Russia officially recognizes in the international arena that there are neither Chechen rebel bases, nor terrorists in the Pankisi Gorge. Therefore, all accusations against Georgia are unfounded," Zurabishvili said at a press briefing in Tbilisi on Thursday, commenting on statements by Leonid Ivashov, vice president of the Russian Academy of Geo-Political Sciences.

Ivashov said at a news conference on Thursday that, in fact, Georgia is a rear base for carrying out terrorist attacks against Russia. He also said that "rebel bases are located not only in the Pankisi Gorge, but in other parts of Georgia as well, including at medical centers." Corresponding financial centers for terrorism are also located in Georgia, Ivashov said.
++++++++++++++++++++++

This area is likely to spark a major conflict drawing Putin, now entrapped in revenge mode, to commit a sizable military force in direct confrontation with the US-leaning and educated Georgian Predsident, Mikhail Saakashvil. The $30 Million offered by the Bush administration for "biological non-proliferation buildings" appears more like a simple political payoff since Senator Richard Lugar recently delivered the check.
Mike

I came through he hurricane OK but my daughter in West Palm Beach took the brunt of 100MPH winds for many hours. Trees down, still no power, new generator failed (a lesson to run the things for many hours upon delivery to test their reliability). Still spotty phone service but no lasting damage. Now if only we can put the hex on approaching Ivan.

***

The gold fundamentals and positive news for gold gets better and better on a weekly basis these days. The latest:

Associated Press

China to Let Individuals Trade in Gold

09.07.2004, 02:02 AM

China's gold-crazed masses will be allowed to trade in the precious metal under reforms that will upgrade trading on the country's nascent market, state media reported Tuesday.

Trading in gold will provide another choice for individual investors who keep their money stashed in bank accounts due to a lack of desirable investment options, the official Xinhua News Agency cited the central bank governor, Zhou Xiaochuan, as saying.

Trading by individual investors would unlock some of the 1.2 trillion yuan (US$145 billion; euro 119 billion) now kept idle in bank savings accounts, Zhou said.

"China will speed up the opening of its gold market to bring gold exchanges more in line with international practice," Zhou was cited as telling an industry conference in Shanghai. "China's gold market will eventually become one inseparable part of the international gold market."

China still tightly controls trading in the precious metal, and restrictions on gold imports and exports limit international dealings.

The Shanghai Gold Exchange, the country's only gold market, opened in October 2002. Although two pilot projects have been launched for futures trading, most transactions are still spot dealings.

The 108 members of the exchange include only gold producers, gold-consuming companies and commercial banks.

The public's appetite for gold is evident, however, in the hoards of Chinese tourists that crowd into jewelry shops in Hong Kong and other Asian cities, intent on putting some of their savings into precious metal.

In late June, the Shanghai market began allowing trading in 50-gram (1.76-ounce) bars, lowering the threshold for investors, the state-run newspaper China Daily cited Shen Xiaorong, chairman of the exchange, as saying.

"We are continuously strengthening our creation of products," Shen was cited as saying.

Transactions on the Shanghai Gold Exchange totaled 235.35 tons valued at 22.96 billion yuan (US$2.7 billion; euro 2.3 billion) last year. In the first seven months of this year, trading volume jumped to 363.76 tons valued at 36.9 billion yuan (US$4.5 billion; euro 3.6 billion), Xinhua reported.

-END-

From http://www.urbansurvival.com (George Ure):

Eye Popping Gold Calcs

I had a little time on Monday to look at the most recent Treasury Department report on U.S. gold holdings, which you can find at: http://www.fms.treas.gov/gold/. A couple of things pop out when you look at the numbers:

The Treasury says there are 261,562,868.485 Troy fine ounces of gold.
They value this at $11,043,759,730.42.
This means the U.S. implied valuation of its gold stock is about $42 an ounce ($42.22 if you want to be precise about it).
I thought for fun, sport and amusement, it would be interesting to see what gold would be priced at if the price of gold was equal to the financial obligations of the United States?

To get there, I took the accrued Federal Debt: http://www.publicdebt.treas.gov/opd/opdpenny.htm available from the Treasury Department $7,365,716,545,609.45 and to which I added the Federal Reserves currency in circulation (M-1). $1,326,000,000,000. for a total debt +currency of $8,691,716,545,609.45.

Ask yourself: What would be the value the U.S. government would have to place on its gold stocks if they were to be balanced off against the wildly printed currency thanks to past and present inflations plus the runaway national debt? The answer...

$33,229.93 per ounce.

Going the other way: of the $8.6 trillion of currency in circulation plus piled on debt, using the whole stock of U.S. government owned gold valued at $401 per ounce, we find the government's gold would fetch a mere $104,886,710,262.485. Sure, $104 billion is a tidy sum, but if the government's gold was valued that way, we would still have a debt plus unbacked currency of $8.586 trillion. All these calculations are based on M-1 currency - and the problem gets far worse as you include the digitally created dollars of M-3 and beyond.

With the web bots forecasting gold to rise dramatically in the near future, we can't help by look at our modest gold collection (both coins) and wonder what they will some day be worth.

What should an ounce of gold be worth? There are lots of answers, but here are some I found on the net:

One ounce should buy a "good man's suit" along with a pair of good shoes and a belt. Assuming this was not a cheapie mall store a good man's suit could be in the $1,000 range today.
In 1954 an ounce of gold would buy you 12 barrels of oil. If oil stays in the range of $45 that would argue for $540 gold.
Just correcting inflation from gold's previous high of $850 in 1980 would price it at $2,054.70 an ounce in 2003. You could probably round that up to $2,116 because of the latest year worth of inflation.
Several decades back, an ounce of gold would buy "the Dow". However, the fact that the Dow is at 10,000+ today doesn't mean gold should be there - it may just be an indication of how wildly over-prices the stock market it.

On the other side, it wasn't that long ago that a $20- bill would buy a $20 gold piece. Today, it takes more than 20 of those same $20 bills to buy one! Another site notes "In 1960 a journeyman carpenter was paid about $6. per hour, for which he could obtain 60 silver dimes at any bank. In 1983 this same carpenter received about $12. Federal Reserve Notes per hour, yet it could only be redeemed for 15 (silver) dimes. His (our) labor is actually being devalued. "

http://www.livefree.com/freedomtech/part2.html

Our fear is not so much that gold will go up - it's that when it does go up it will indicate the collapse of something extremely important to the world - confidence in the U.S. dollar. And when that happens, the web bot's description of the economy at coagulating will be upon us.

-END-

From The King Report last evening on the European job picture:

The Observer: "Europe is reaching crisis point Forget America: the government should be worrying about the situations in France and Germany by Will Hutton The proximate cause of both France and Germany's political crisis is that they are not generating enough jobs and growth even though both are high productivity economies. .. They also need to change the structures in their labour markets, from wage bargaining to rules on working hours, that inhibit employment growth in the growing parts of their economy while designing welfare systems that support and encourage workers to move from areas of decline into areas of growth." http://observer.guardian.co.uk…ry/0,6903,1297576,00.html

-END=

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CARTEL CAPITULATION WATCH

Gold and US Presidential elections:

Hi Bill:

Over the last year I have seen a few articles that discussed how gold has traded in the past during US Presidential election years. Each article stated in summary that gold fares poorly in an US Presidential election year.

I decided to check. I was surprised to see that this is simply not true, unless you limit your sample to post 1981 through 2000 during which time gold was in a well defined bear market. If instead one looks at the 1970's, during which time gold was in a bull market, gold did well even in the Presidential election years of 1972, 1976 and 1980. In EVERY case gold closed either higher on the year or at its highs of the year and flat with the prior December. The attached chart shows this clearly, with colored labels and all.

Gold in US Pres Election Years.ppt

We are today again in a bull market in gold, by almost unanimous acclaim. Indeed, we are most likely in a secular bull market. Do secular bull markets last only 3 years? No, they are generally defined as secular only after they have had a 3 year run at least, and generally last a decade to several decades (see Adam Hamilton's "Gold Bull's Three Stages" at LeMetropolecafe.com). We are rounding the 3 year mark in gold's rise right now, sacramenting the secular bull view possibility.

Based on these observations, it would be "normal" to expect gold to close at worst flat this year from December, 2003 (417.25 was the London fix on December 31st, 2003) and very possibly higher. In 1972, the first Presidential election year of the 70's golden bull, gold closed out December around 66 dollars an ounce, up from about 43 dollars in December of 1971. That translates into a RISE of 53% DURING A PRESIDENTIAL ELECTION YEAR. So much for the myth that gold always does poorly in US Presidential election years.
All the best,
David.

A sample of the comments about Ed Steer’s essay at The Hemingway Table:

Dear Ed,

Your essay was stunning. It is the perfect companion piece to John Embry's expose.

For any person who wishes to seek and to understand the truth of the present state of the financial system, your essay is the most incredible piece of work I have laid eyes on. It lays out the basic premise in precise and convincing manner. More importantly, it contains a library of the most trustworthy sources now available to back the premise.

From having taken the journey from naivete and ignorance to painful acceptance of the truth, I have read virtually each and every source you have quoted. For most of us, these bits and pieces of information came over a period of years and were infused with doubts, questions, conflicting theories, etc.

There is no room for doubt or argument anymore. You have provided a map that will lead any inquisitive mind on a journey that can be taken in a manner of a few weeks of spare time. And that journey will change the life of any person who takes it, and give them impetus to take steps to mitigate the damages to their own life when systemic collapse becomes a reality. What a wonderful, amazing essay!!!
Terry Wetzsteon

The Daughters of Gwalia mess won’t be the last one:

Hi Bill

In the Biz section of today's SMH (Sydney's main paper):

The story is how Lihir is not looking like a good bet for institutional investors, esp. Rio Tinto...
Deutsche Bank speaks of 4 factors: lower gold grades, higher maintenance costs, higher fuel costs and deliveries into hedge book at a loss.

There follows a dark discussion of the dangers of hedging in the light of SoG, and how Lihir's hedging has become a subject of interest for mining types.

... more smoke!

Tim

Most of these long-term Aussie hedges were put on with gold below $300 years ago. By utilizing various derivatives strategies and the cantango at the time, the realized prices are higher than that, but far less than today. Meanwhile, costs for most of the gold producers have skyrocketed since then. Thus, they have LOCKED IN LOW sale prices, while their costs continue to escalate.

The government of Eritrea (Minister of Energy and Mines) has told Nevsun, Sunridge and Sanu to halt all activity until further notice...No reason is given yet as to why. Nevsun, which has a world class gold discovery in Eritrea, has seen its share price tank from around $4 to less than $2 in one day. Whatever the reason for Eritrea’s move, it has done damage to this very important sector to its weak economy that will last for years.

The gold shares fell, yet could be bottoming here. The XAU lost .78 to 92.15 and the HUI gave up 2.59 to 199.30.

While today was aggravating to say the least, nothing can take away from the extraordinary bullish gold news which continues to surface. This assault on gold and silver during the last two Comex trading sessions is an orchestrated effort to intimidate the spec longs and get them out one more time. My guess is this is The Gold Cartel’s LAST HURRAH. With the Chinese, Indians and Arabs (among others) in major buy mode, gold is not going to stay below $400 for very long. This email from a fellow Café member is the best way to view today’s assault:

Dear Bill,

I think we should be thanking the Gold Cartel with all our hearts for today’s action! Gold is on sale for $398!! And I’m buying!!!

You have mentioned some Metropole members are frustrated with bear raids like today. I say: Are you crazy? Frustrated? I’m REALLY HAPPY about it because it allows me to buy more physical ounces of gold than I imagined possible. Who thought we’d have another opportunity to buy gold under $400? I was afraid we wouldn’t. Whew!!

And anyone out there not buying with two fists today should be thrown in the brig for a few weeks or months to think about why not. When you get out you can cry about how you wish you’d listened since now you will be buying gold at much higher prices or else we’ll have had Mike Bolser’s exhaustion event on the Comex and there won’t be gold for sale at any price! .

Thank you JP Morgan, and thank you federal reserve, and the BIS, and especially you Goldman Sachs!! You are so special to me, I love all of you for giving me this opportunity to take my wealth out of your greedy, corrupt hands!!

Metropole Member and GATA supporter
David Almond, MD
Napa, CA

Listen to the DOC. Now is the time to be LOADING up!

GATA BE IN IT TO WIN IT!

MIDAS

Appendix

G'day Bill,

A case of "I told you so"!!!

Once again, I refer to the JORC and VALMIN codes of practice of the AUSIMM.

JORC CODE

http://www.ausimm.com/codes/jorc.asp

VALMIN CODE

http://www.ausimm.com/codes/valmin.asp

Reporting on a Quarterly basis to the ASX is MANDATORY for Resources and Reserves follwing these Codes.

I noted that the term Resource has been used in the article, when in fact it is the Reserves (those that are economic at the stated Gold price) that should be reported to the financial markets.

I would suggest that the Resources and Reserves have been incapable of meeting their Hedge Book, not for a month or two, but at least a year or two, or three or more. Incompetence. Their share price started to have problems in May 2001
(attached).

For SGW is say "golly gosh, we made a mistake" is too much to swallow.

SGW currently have at least +531 granted tenements in WA, + 266 pending tenement applications, containing at least 814 historical mines, resources and reserves. Furthermore, they may have failed to "Negotiate in Good Faith" with
Traditioal Owners concerning +200 pending tenement applications.

I would suggest that their "panic" concerning their Hedge Book goes way back to at least their acquistio of Tarmoola and Carosue Dam (May 2001?), which have shown to be "lemons", with the the grade not being there (poor
resources/reserve definition) and/or poor grade control prodcedures. There may have been a "lack" of Due Diligence in the verification of resourcs, reserves, production and reconciliation.

"To be or not to be", that is the question. I would suggest that we may be witness to a massive misreporting to the ASX, but then again only the Courts can decide.

I would suggest that any "class action" should look carefully at the share price history, especially that "magic date" of May 2001.
Aye,
Haggis

Gwalia 'knew' of gold woes

By John Paceas

The West Australian, Perth
Tuesday, September 7, 2004

Failed miner Sons of Gwalia last night said it had received a preliminary report on its gold resources more than a month before it was forced into administration last week.

The shock revelation comes as investors ponder a potential multi-million claim for sharemarket losses in the weeks leading up to Gwalia's $800 million collapse and suspension from trade.

Responding to a probe by the Australian Stock Exchange, Gwalia said a preliminary resources review was handed to the board on July 22, five weeks before it called in administrators on August 29.

However, Gwalia underlined that the results of the initial report were preliminary and hinged on further data from its WA mines.

A separate external report on August 12 subsequently indicated a "preliminary view" that plans and forecasts for the Marvel Loch mine were uneconomic based on known resources at that date.

Gwalia said it was then aware that "a material deterioration" of reserves and resources was possible, but that it needed to undertake further work before modifying its resource base.

Nonetheless, Gwalia conceded it had then begun contacting its lenders and hedging banks to seek an "enforcement standstill" of its financial obligations for six months.

The company also said a statement of its gold reserves and resources had been prepared by August 26 for presentation at a board meeting slated for the following Monday, but that it remained incomplete.

The statement had still not been signed off by a so-called competent person as required by law.

Gwalia last night said it did not become aware that its lenders would consider the reserves shortfall as a "material adverse change" in its financial position until August 28.

It therefore believed it had complied with its continuous disclosure obligations. A spokesman for the stock exchange was last night unable to comment on whether Gwalia's reply, lodged after 5.30 p.m. Perth time, would end its probe.

However, Gwalia's statement could have big implications for possible legal action by investors who bought shares before the collapse, potentially dating back as far as October 2003.

Listed litigation funder IMF Australia yesterday said it had been hired by several Australian and U.S. shareholders to weigh up all avenues to recoup their money.

IMF managing director Hugh McLernon said the key to any claim would be whether the market had been kept fully informed of Gwalia's financial position, and exactly when the company had discovered a likely substantial shortfall in its gold reserves and resources.

"If there is a material shortfall, then the market has been ill-informed ever since October 2003, when the statement was that there were 3.2 million ounces in reserves," McLernon said. "Anyone who purchased shares in that period (would have) an action against the company -- and that is potentially a very large claim."

More than $580 million in Gwalia shares were traded between October 8 last year, when the miner released its last reserves statement, and the time administrators were appointed.

McLernon said Gwalia's initial retention of Ferrier Hodgson on August 6 would face particular scrutiny as an item that may have been material to investors. About $30 million in shares traded after that date.

On Friday, administrators said Gwalia's debts may top $800 million. But a sale of the gold business and restructure of Gwalia's big tantalum division could deliver a substantial return.