Gold und Silber... Informationen und Vermutungen I

"ANALYTICAL SCHIZOPHRENIA"

Part 2

Thursday 1st February, AD2007

In yesterday's Daily Dig we looked the some of the geo-politics and
supply / demand fundamentals that has driven the oil price up 25% in 7
months to August's 2006 levels of mid $70s.

Market commentators and analysts can be a funny breed, often given to
regular and dramatic changes in mind and outlook. "Philip, we are only
one small political event away from $120 oil" one research analyst told me last August. "Many people just don't realize how thin and fragile the
global crude market truly is," he continued.

Talk about a bullish outlook I thought.

Now in February 2007, Oil is trading around $54, having tested $50 lows
in January. "The energy bull market is over", "Oil prices are going to
crash", "Welcome back low gasoline prices", "Get out of the energy sector while you can" scream financial headlines.

Brainless commentary we can expect from the mainstream financial press, but I was surprised when recently visiting his website to see the same research analyst I spoke to last August, predicting $40 Oil now, a long way from his "one small event away from $120 oil" comment of just six months ago?

What so suddenly changed to adjust his outlook from $120 per barrel all
the way down to $40 per barrel? Is the Middle East any more
geo-politically stable now?

"The Pentagon is believed to be considering options that would allow it to destroy facilities such as Iran's main centrifuge plant at Natanz in a single night of bombing", reads one headline, "plans are under way for a massive bombing strike on sites where Iran is believed to be enriching uranium." Now is the first time since 2003 the US had two aircraft carrier groups stationed in the Persian Gulf. With another carrier group steaming toward the Gulf now, the potential for a widening of the US/Iraq/Iran conflict grows.

Despite the analytical schizophrenia surrounding us, today's long-term
global oil supply / demand fundamentals remain unchanged (i). Other
than one research report released containing fanciful adjustments to
global reserve estimates and the announcements of yet undefined
reserves in one new deep gulf field (ii), the picture remains the same.
Each day global demand grows, commercially viable energy alternatives
fail to arrive, and all the while we burn through vastly more of our energy
staple than we discover or replace. All this is rosy news for the correctly
positioned, long-term value investor.

As Individuals - our job is to equip ourselves with the knowledge that will
help us survive and prosper in our changing world. At Daily Dig - our job
is to dig up the relevant information that will provide you, our valued
readers, with this knowledge.

Sincerely - Philip Judge pjudge@anglofareast.com

(i) We currently consume 1 billion barrels of oil every eleven days globally.

This equals 30 Mega Fields per year. Mega fields are classified as fields that have reserves of over 500 million barrels or the potential to produce over 100,000 barrels per day of oil.

The last two decades have seen new discoveries fall dramatically; 2000
16 new Mega Fields discovered, 2001 8 new Mega Fields discovered,
2002 3 new Mega Fields discovered, 2003 0 new Mega Fields
discovered. The rate at which new Mega Fields are being brought online
lag behind our current rate of use; 2003 7 new Mega Fields brought
online, 2004 11 new Mega Fields brought online, 2005 18 new Mega
Fields brought online, 2006 11 new Mega Fields brought online, 2007 3
new Mega Fields planned to come online, 2008 3 new Mega Fields
planned to come online.

Source ASPO.

Le Metropole Members,

IMF would sell gold because European central banks won't anymore

Submitted by cpowell on 06:50PM ET Wednesday, January 31, 2007. Section: Daily Dispatches
By Michael Kosares
Centennial Precious Metals, Denver
http://www.usagold.com/
Wednesday, January 31, 2007

I don't think we are going to see any sale of gold by the International Monetary Fund. It looks like the Central Bank Gold Agreement's inability to reach the 500-tonne quota for the 2006 agreement year (only 350 tonnes were sold) left more of an impression than any of us realized.

The IMF's Committee of Eminent Persons, which interestingly included the head of the Chinese central bank and former Fed Chairman Alan Greenspan, is saying essentially that the IMF "could" supply the shortage left if the Central Bank Gold Agreement can't meet the 500-tonne allotment in the future. This translates to market neutral because, theoretically, whether the IMF sold gold or not, no more than 500 tonnes would go on the market over the CBGA year.

It seems that the gold banking system needs roughly 50 tonnes of gold liquidity each month to keep from locking up. There is a natural deposit attrition rate in the gold banking business. In the natural flow of things, individuals and entities request their gold deposits back, and somehow 50 tonnes seems to get the job done. That 50 tonnes has to come from somewhere, and lately the European Central Bank system has been stepping up when the liquidity gets tight -- as the gold supplier of last resort. It may that the European banks have signalled their intent to withdraw further from the CBGA allotments (maybe France is about to back out of sales?), and the IMF group is trying to fill the gap.

And maybe more depositors might want their gold back, since many of them are stretched Third World banks and depositors from places like the Persian Gulf and fewer central banks are willing to part with their gold.

At any rate, it's an odd assortment of "eminent persons" in this IMF group, and we should take note of its composition: Andrew Crockett, former director general of the Bank for International Settlements and currently president of JPMorgan Chase International; Mohamed A. El-Erian, president and CEO of Harvard Management Co.; Greenspan; Tito Mboweni, governor of the South African Reserve Bank; Guillermo Ortiz, governor of the Bank of Mexico; Hamad Al-Sayari, governor of the Saudi Arabian Monetary Agency; Jean-Claude Trichet, president of the European Central Bank; and Zhou Xiaochuan, governor of the People's Bank of China.

You can always tell that Greenspan has had a hand in the festivities when you read sentences like the following: "The limited sale of fund gold should be ring-fenced to exclude further sales and subject to strong safeguards to limit their market impact."

There is no doubt in my mind that China would like to see the IMF sell ALL its 3,217 tonnes of gold, particularly if China might become a primary recipient. Without any fanfare China would happily write the check for all 3,217 tonnes. Otherwise, I can't imagine why the Chinese central bank might have been included on this IMF committee, unless it was to demonstrate that the system is at least trying to get them some gold. Perhaps the Harvard Management Co. is thinking similarly (smile).

To round this off, we should remember that the last time British Chancellor Gordon Brown tried to get his hands on the IMF's gold, he was stopped dead in his tracks by the U.S. Congress. This new attempt to shake loose the IMF's gold may be happening because the new Congress might be more amenable than the last.

From the view of these "eminent persons," it's at least worth a try. But they may be in for some rough sledding. Key Democrats were opposed to the last IMF gold sale proposal because suppression of the gold price meant reducing the income of Third World gold-mining countries. That's probably why this IMF committee assiduously addressed the price-suppression concerns. We should remember that the United States holds virtual veto power over IMF actions. We'll see if Congress is more amenable this time around, but we have our doubts.

DON'T TRADE GOLD ON FULL MOON !

Was immer da kommt muss man aussitzen.

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