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CARTEL CAPITULTATION WATCH II
Now you may not like it, and I don't like it, but I can see no other reason why Newmont and other producers have their head in the sand.
Look mate, in the end, you can only warn people so many times. If they don't get it by now, they never will... and beside gold and silver are going to explode soon, with or without them.
Well done on the great interview again.
Regards, Sid
Sid makes valid points about Newmont and gold companies fears of government retaliation. Since other Café members brought this up also, I thought it would be a good time to address the issue.
Clearly this is a concern and a fair one to some degree for those firms who are operating in the US. Of course, GATA understood this five years ago and we have always realized this is not a black and white matter. My thoughts on why the US Government excuse fear doesn’t cut it in the end:
*In essence the argument to let the Newmont executives skate on this one insinuates they have the creative ability of a swarm of nats. There are many ways to "skin a cat." They are paying $3 an ounce to the silly World Gold Council to promote gold jewelry. This is a lot of shareholder money. All they would have to do is discreetly get together with the other major gold producers and have the World Gold Council be the ones to confront the bullion banks/U.S Government and raise queries in the public domain about gold market manipulation. The WGC could have gone to the poor sub-Saharan gold producing countries and explain how the price suppression scheme is devastating their economies. Visible political pressure could then be put on the US with special attention and a heads-up going to the Congressional Black Caucus, etc. We know this can work because this is just what happened when the IMF proposed gold sales.
I think you get the point. All Newmont had to do was hide behind the World Gold Council. I am sure there are many other avenues they could have taken over the years, IF they had an ounce of creativity.
*The difference between a willingness to deal with the gold truth and GATA’s findings, versus the subservient and disingenuous course Newmont has chosen, is the difference between $400 gold and $800 gold. The difference between the investment world understanding that more than half the central bank’s gold supply is gone and has been used in a devious scheme to suppress the price the past decade is the difference between $400 gold and $800 gold.
What would the share price of Newmont be if gold were at $800 today, $120 per share? THIS would dwarf any local problems created by the US Government which might develop because they were disturbed by Newmont’s prying and attempts to expose the truth. (How sick is that? The fear is that one would be punished by our government for exposing its own deception and fraud!). What would the share price of Newmont drop to IF they did incur a temporary problem here and there, like just what happened to them at their Yanochocha property in Peru? A few dollars per share? $20 per share? Big deal! Shareholders would still be jumping up and down for joy with Newmont trading at $100 per share, instead of $40+.
I just don’t buy these lame excuses of the deadbeat gold companies anymore. They don’t cut it when all is said and done. For Newmont to give more credibility to Dennis Gartman than John Embry is an outrage of epic proportions. Gartman knows as much about the gold market as I do about nuclear physics. History is going to judge these timid executives very poorly.
Speaking of Dennis Gartman, he is at it again. From his daily GARTMAN LETTER commentary this morning, which is so anemic it almost takes your breath away:
Finally, we know nothing of the company other than it is Australian, but we note that Crosus Mining almost certainly shall come under attack by GATA for the company’s management announced earlier today that it has added to its gold hedge book another 120,000 ounces of gold. In the world of gold trading this is but a mote in the eye, but to us this is really quite an important announcement…and a courageous one.
The company’s managing director, a Mr. Mike Ivey, said Croesus remains "positive…on the gold price," but that it also remains leveraged to it. Given that, its wise to hedge some of its forward production, and we shall strongly agree. He said that management
Believe(s) that a prudent amount of gold hedging is to the benefit of the company and our shareholders… (Croesus) remain highly exposed and leveraged to the Australian gold price and chose the current strength in the Australian dollar gold price to protect our revenue base.
The anti-hedge community will surely take Mr. Ivey to task. Knowing nothing more about the company than this, we suggest that Mr. Ivey be applauded for his decision, which seems to us to be the decision of a reasonable, well intentioned businessman who simple finds himself in the "manufacture" of gold.
***
I truly feel sorry for people who actually pay that guy, which is no small amount. This I must check this out, however, I was told today he charges clients $3,000 to $6,000 a year for his daily letter and he has around 1,000 clients. That’s not chump change. For sure the guy knows how to market his material. My retort on Mr. Gartman's ramblings:
*How can anyone know nothing about a company and then say a business decision is a wise one? In and of itself, that statement reveals the depth to which Gartman studies an issue.
*It appears he wrote this to purposely aggravate GATA and gain favor with some of this bullion banking clients whom we have exposed for years. Gartman is like a first-grader tattling on his fellow 6-year old classmate to curry favor with the teacher.
*For crying out loud, Sons of Gwalia just blew up because of their ignorant hedging policies and here he is extolling Croesus.
*Gartman is really out of the loop and doesn’t get it. Shareholders are going to applaud Croesus by DUMPING their stock. He is clueless and doesn’t understand times have changed. $400 gold is nowhere and not a very profitable price for many gold companies as mining costs have risen significantly the past couple of years. No reason to own a company who caps the price at these levels.
*As for me speaking about hedging personally. I am not against it all. It can be a valuable tool for management and has been over the years for many in the commodities/financial markets. However, it has been a horror show the past many years for the gold world. Why:
*The bullion banks used the concept to aid their own price suppression scheme, making a fortune in fees in the process.
*It was most popular when the gold price was $300 or less. Those who hedged down at those levels made terrible business decisions and their share prices have suffered ever since.
*Gartman’s clients like JP Morgan Chase conned some producers like Newmont to make awful business decisions. Remember when Newmont sold it’s a fair amount of its production forward with gold around $260 right before the Washington Agreement Announcement.
*Imprudent hedging advice already buried Ashanti and the Daughters of Gwalia. Who’s next?
*This is the real kicker and leaves me to wonder if his initials really stand for Dummy Goofball. Years ago with gold under $300 he publicly attacked myself and GATA for our anti-hedging views. Made a big deal out of it, as I recently have covered (there was more which I have been unable to locate). He LAUDED Barrick Gold (a client) and extolled their brilliance. He cited Barrick as the flagship of the gold industry and its outstanding management. Since then:
CEO Oliphant was fired.
Barrick’s share price has been one of the worst in the industry. Back then it traded par with Newmont. Since Gartman’s tout, Barrick has fallen to a $23 to $26 discount to Newmont. Smart investors loathe Barrick.
Last year Barrick renounced hedging. Renounced it Gartman, you fool! DG went around drooling over Barrick’s hedging when gold was below $300. Now with gold at $400+, Barrick has given it up. How can that be so smart? By definition, EVEN Barrick Gold admits it was a BIG mistake to stay hedged below $300.
Barrick knows what is coming. The only reason they have most likely not lifted more of their hedges is the US Government and JP Morgan Chase won’t let them cover any faster. Barrick’s own CFO says gold could hit $485 by year end. Why would they not cover more gold down here if they could? Who in their right mind wouldn’t with that bullish an outlook?
As a result of their collusion with JP Morgan Chase and manipulation of the gold price, Barrick is defending two major law suits in New Orleans Federal Court. The judge found enough evidence of gold price manipulation and collusion to allow the case to go to Discovery. It can’t be going badly because the second case was just filed AFTER the Discovery process was ongoing for months.
And finally, a gold producer has to be nuts to hedge at these price levels. It tells me they (Croesus and anyone else doing it at these levels) know nothing about the real gold situation, like Gartman. Half the central bank gold is gone; the bullion banks are mega-short and cannot retrieve their gold without the price rising hundreds of dollars per ounce; the annual supply/demand deficit is 1500+ tonnes, which can only be met by surreptitious Gold Cartel selling; the Iraq War is a mess with the situation likely to worsen in the months ahead; oil is shooting for $50+ per barrel; the financial house of the world’s largest power, the US, is a horror show; and there is no telling what could happen in the gold derivatives arena when all heck breaks loose – a happening which might affect EVERY hedger!
Keep talking Dennis Gartman and inserting foot in mouth. The GATA camp thanks you for the entertainment.
You know, here is a good one for you. GATA’s Andrew Hepburn, our "Harry Potter," understands light years more about gold than this Dennis Gartman and he is still finishing his college schooling in Canada. Andrew notes this afternoon:
Bill,
Dennis Gartman says he disagrees with the Sprott report "in its entirety". Yet, a statement made by Gartman in the aftermath of the Washington Agreement, while not citing manipulation, does speak to the spillover effects that the unwinding of the gold carry trade had. A Dow Jones article dated September 30, 1999 included the following:
"Dennis Gartman, investment advisor and editor of the Gartman Letter, an investment advisory newsletter, said the "other shoe is already dropping badly," referring to Tuesday's intraday drop in U.S. stocks. He said he believed hedge funds are covering gold shorts by selling U.S. stocks and the U.S. dollar."
This statement is not dissimilar to remarks that cited possible systemic risk in the aftermath of the Washington Agreement. Frank Veneroso spoke of "an intense coordinated effort by the official sector to turn the gold price down at that time to avert financial instability." John Hathaway talked of encountering "numerous anecdotal indications that there was much pleading by this beleaguered group [i.e. banks presumably caught short] to the Bank of England and the US Treasury." Then governor of the Bank of England Eddie George is reported to have said that the official sector "looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake." And finally, Dow Jones said that according to Ted Arnold, then of Prudential Bache (and certainly not a rabid gold bull), central banks were selling gold in order to prevent a major financial crisis. That article noted that, "If gold prices continue to rise sharply, they could cause major losses at U.S. and European investment and bullion banks and cause a domino effect that could lead to a major financial crisis, said Arnold."
Given that reliable information (such as a statement by a gold analyst at Bank of Montreal-owned Nesbitt Burns) indicates that LTCM was short 400 tonnes, how Gartman can effectively side with the consensus estimates of total gold loans is puzzling to say the least (remember, he disagrees with the report in its entirety-so he must take issue with the contention that gold loans are far in excess of GFMS estimates).
Best Regards,
Andrew
By the way Gartman, you scoff at notion your clients are manipulating the gold price. The legendary Jim Sinclair, known as "Mr. Gold" in 1980 because he was the man who predicted what gold was going to do and why – whose clients included the rich Arabs, politicians, celebrities, etc., - has forgotten more about gold than you haven’t even learned yet. His comments today, including what he thinks of your clients (COT is Jim’s term for Gold Cartel):
Friday, September 24, 2004, 12:44:00 PM EST
Jim Sinclair’s Commentary:
You have to hand it to those COT crooks to play every hand. You also need to know how worried they are today. I hope they suffer the pangs of hell this weekend as their time is certainly overdue. These boys are hard on the defensive pulling every string they can. As far as this "BS" is concerned, I say the following:
1/ What is new? We saw this same BS in the 70s. Nothing imaginative about these guys.
2/ The effect of official sales is to allow major interests to purchase large gold positions at singular prices. Sales in the 70s were responsible for the bull market and not opposed to it. What makes you think it will be different now?
3/ When these nitwits have sold their gold, it will go to $5000 as owning it is more powerful than not owning it.
4/ Who expects any bank to fail to sell what they can under the Washington Agreement #2?
5/ What effect did Washington Agreement #1 have on gold after it turned the corner at $248? The answer is NONE.
-END-
The gold/silver shares wanted none of the precious metals sell-off today – not after their brilliant technical breakout earlier this week. The XAU closed up .23 to 96.30, while the HUI came back late to finish at 251.08, down .14.
As aggravating as today was, the big picture is really coming together. Gold, silver and the shares are SCREAMING BUYS! This is what I see coming in the near future (move over my friend Mahendra):
*Gold and silver are FINALLY going to take off out of nowhere and blow The Gold Cartel out of the water. The move will be dramatic and one which very few in the entire investment world are looking for. The clueless gold world will be even more surprised. More and more commentators are looking for gold to move after the US Presidential election (guess they must know about the manipulation bit too). It will catch many flat-footed if the move comes ahead of the election. The catalyst could come from anywhere – oil blowing through $50, Fannie Mae blowing up, etc.
*Out of nowhere, when gold takes out $430, gold investors all over the world will want in on the gold, silver and share move ALL AT ONCE. Those that missed out on the oil move, which is still on their radar screen, will want in on the gold and silver one. At the same time, those on board all this time, like us, won’t be selling. We will be buying more. This will lead to a frenzied buying panic with the prices of some of the juniors/explorations going berserk.
The timing of all of this is so, so difficult. Hopefully, the hurricanes battering Florida will end soon. The gold, silver hurricane season is still to come and they will all be of the "Category 5" variety!
GATA BE IN IT TO WIN IT!
MIDAS
Appendix
Michael Isenberg
4783 Alberton Court
Naples, Florida 34105
22 September 2004
Henry Paulson, Chairman & CEO
Goldman Sachs & Co.
85 Broad Street
New York, NY 10004
Dear Mr. Paulson;
Congratulations on the firm’s third quarter results.
According to the financial news most of your profits came from trading efforts, especially in the area of commodities. I find it amazing you can attain such stellar results, especially when small investors such as myself are frustrated daily by what appears to be management and/or manipulation of many of the primary markets in our country. A case in point being the gold market. Is it possible that Goldman Sachs just might be involved in manipulating this market? Is it possible that Goldman Sachs just might be in violation of United States Anti-Trust Laws?
I am certain you and others in your firm are aware of the Sprott Asset Management report entitled "Not Free, Not Fair." This is a brilliant piece of work written by John Embry, an honest, ethical, highly respected member of the financial community. The probable exception being the bullion and the central banks who appear to be engaging in activities relative to the gold market that are at the very least highly suspicious to me and downright illegal in the minds of many professionals who understand the complexities of trading far better than I do.
I have two simple requests of you and your firm.
1. Please report to the public the percentage of your third quarter 2004 profits that came from trading in the gold market.
2. Please read the Sprott Asset Management report, "Not Free, Not Fair." Following this exercise either publically support and agree with the basic theme of the report or publically state why you are in disagreement with Mr. Embry. Any contrary opinions on the part of Goldman Sachs should be supported by facts and documentation.
In all reality I have very little hope that Goldman Sachs has the moral courage to comply with my request. However, I am confident that your firm will be exposed for its manipulation of a supposedly free trading market if you are in fact guilty of such practices.
Keep an eye on the Blanchard law suite against Barrick Gold and JP Morgan-Chase. It could very well be the beginning of an avalanche ( assuming that the powers to be are unable to control the actions of the judge) that will bury those who have engaged in illegal practices that allow elitist financial institutions to steal the hard earned money from the people who are the real backbone of this country.
By the way, I am a member of The Gold Anti Trust Action Committee and I am proud to be involved with Bill Murphy and his associates.
Very truly yours,
Michael Isenberg
Member, GATA
cc Bill Murphy
