Could not agree more with Kelvin Williams on this one:
Gold not dependant on dollar weakness
David McKay
Posted: Mon, 13 Dec 2004
[miningmx.com] -- GOLD would not be derailed from its upward price trend even if the dollar stabilised against the Euro, said Kelvin Williams, marketing director for AngloGold Ashanti. In an interview with miningmx, Williams said political instability and economic uncertainty were enough to keep supporting the price of gold…
-END-
From Jesse on the bond market:
Most people do not yet realize that the Treasury, independent of the Fed, is doing its own repos to add liquidity to the primary dealers. The 'reasoning' is that the Treasury uses this to get a better return on its surplus funds. The irony of this is that they are out there selling debt, while at the same time buying debt.
It has set a horrendous policy precedent to allow Treasury to tinker with the money supply directly, even if only for brief periods.
Highlights of Treasury Offering
Offering Amount: ………………………………....$12 billion
Maximum Award (50% of Offering Amount): .... $ 6 billion
Description of Offering:
Term: ………………………………….………….. 15 days
Auction numbe r: ………………….………..…….. # 73
Auction date: …………………….…………...…... December 14, 2004
Placement date: …………………………..………. December 15, 2004
Maturity date: ……………………………….…… December 30, 2004
Minimum bid amount: ……………...………....… $10 million with increments of
$1 million
Acceptable collateral: ……………………………. Commercial loans, in a Borrower- in-Custody (BIC) arrangement, are acceptable collateral for this auction, in addition to other collateral acceptable for term investments.
Submission of Bids:
The auction will be conducted in the single-price auction format. All awards will be at the lowest accepted bid rate.
Receipt of Tenders:
Bids must be received by 11:00 AM Eastern Time on the auction day.
Receipt Terms:
By credit to a reserve account at the Federal Reserve Bank on placement date.
Additional Information: http://fms.treas.gov/tip/index.html-
-END-
Cardinal Health Plans to Trim 4,200 Jobs
12.13.2004, 12:29 PM
Cardinal Health Inc., a medical products and services company, plans to cut 4,200 jobs, or about 7 percent of its work force, and close 25 offices as part of a three-year restructuring plan, the company said Monday.
Its shares slipped 1.5 percent by midday but are up more than 55 percent in less than two months.
The cuts are part of a previously announced restructuring plan designed to improve earnings by $500 million a year, the company said. Cardinal has about 58,000 employees.
-END-
CARTEL CAPITULATION WATCH
The DOW keeps on rising, up 95 to 10,638. DOG too. It jumped 20 to 2149.
James Turk sent out an open letter to the bullion desk. Did anyone publish it besides GATA, myself on http://www.goldseek.com? Figures, his critics bash him, then do now allow his points to be heard. Pathetic!
So much for China pooping out:
Dec. 13 (Bloomberg) -- China's retail sales grew 13.9 percent to the second-highest level on record in November as rising incomes spurred consumers to spend more on digital cameras, eating out and decorating their homes.
Sales rose to 496.6 billion yuan ($60 billion) from a year earlier, the Beijing-based National Bureau of Statistics said in a statement today. Sales in October rose 14.2 percent to a record 498.3 billion yuan. –END-
US economic news:
08:30 Nov. total retail sales 0.1% vs. consensus (0.1%); ex-auto reported 0.5% vs. consensus +0.3%
Prior total sales revised to +0.8% from +0.2%; ex-auto revised to +1.1% from +0.9
* * * * *
10:00 Oct. Business Inventories reported 0.2% vs. consensus +0.5%
Prior reading revised to 0.0% from 0.1%.
* * * * *
The John Brimelow Report
India, open interest Bullish, Gartman, NY opinion bearish, ETF puzzling
Monday, December 13, 2004
Indian ex-duty premiums: AM $8.55, PM $8.70, with world gold at $435.50 and $436.45. High; lavish for legal imports. The rupee jumped an import facilitating 1.2% today and the Indian Stock market closed at another record high. The world’s largest buyer of bullion is clearly in a mode to continue bidding the world market for metal.
"Indian rupee up over 1 pct as investment pours in" says one Reuters headline
"India "shines" again as new coalition settles down" is another.
" …economic indicators are robust. Stock prices are rallying and foreigners remain keen investors.
"The investment-led recovery that began 18-24 months ago is continuing to gain momentum, services are buoyant and the manufacturing sector will grow strongly for at least three to four years," said Prasenjit Basu, managing director, Robust Economic Analysis." "
India looks set for continued heavy gold importing – unless world gold rises considerably.
Although India has the courtesy to close for Christmas Day, despite only having a small Christian minority, Bears would be advised to consider that in fact the country - and indeed the other key physical buyer, the Middle East - will really be fully open for business for the rest of 2004. Loud proclamations that the gold market will wind down are likely to prove as fallacious as they did over the Thanksgiving holiday.
World gold crept up steadily for six hours from the Sunday evening open, but without any Japanese enthusiasm. TOCOM volume fell 22% to the equivalent of 18,684 Comex lots as the yen firmed; open interest shaded off the equivalent of 451 Comex. The active contract closed down 8 yen, but world gold went out $1.45 above the NY Friday close. Shanghai, interestingly, is showing $1.50 -$2.00 premiums over world gold. (In NY on Friday traded 57,274 contracts; open interest dropped 5,403 lots (16.8 tonnes). Open interest has now fallen 36,392 contracts – 113.2 tonnes – in three days. It was last at this level in late October.)
During the time the gold ETF (GLD) has reported precisely the same gold holding – 91.3 tonnes – despite having traded over 12 million shares (37.3 tonnes). Very odd.
The Wednesday timing of last week’s sell off neatly maximized the obscurity of its impact, rendering the latest CFTC data, cut off Tuesday, useless. UBS, which is plausible on these matters suggests
"Based on changes in Comex open interest for Wednesday and Thursday, the net long position fell by at least 3 million ounces. and we believe that another 1-2 million ounces of long liquidation took place on Friday to leave the net long position at a maximum of about 17moz, and possibly a million our two ounces …If we assume that the net long position has fallen to about 15 million ounces, then the scale of the sell-off is in line with some of the recent long liquidation events."
In other words, may have run its course. They do caution that usually the process takes more time. Of course, selling binges of this ferocity do not usually start with India an unflinching buyer, either.
The Gartman Letter’s Dennis Gartman today re iterates his advice of Friday to put on a long Silver/short Gold spread. He also insinuates that gold might break $400 soon. To the extent that he reflects a certain segment of professional trading opinion (about 100% in my view), this can be taken as evidence that a fair amount of shorting has already been done.
Gartman also takes the time to resume his jeering at the GATA suspicions about integrity of the gold market:
"The Conspiratorialists have it their way on both sides of the market all the while…
Gold plunged last week because the buyers had become too aggressively over.. although the Conspiratorialists will see this as evidence of manipulation and coercion, we see it as the very normal ebb and flow of speculative capital from one market to another."
Amusingly, on an earlier page he is found acknowledging
"The world, rather obviously, awaits tomorrow's FOMC meeting, but we can only wonder why this is so, for the Fed has made it absolutely certain what we are to expect… we shall agree with that overwhelming consensus conclusion. The Fed has
manipulated the consensus to an extraordinary degree… (JB emphasis)
The concept that opinion and gold price management might overlap is perfectly illustrated by a Bear Stearns essay today entitled
"Oil, Gold and the Growth Outook"
by David Malpass, a simplistic piece of US Financial Asset triumphalism, which advances, as its arguments that complacency is appropriate, the points that the dollar has rebounded, oil has fallen, and (with a chart but no other amplification) the simple observation
"Gold prices have declined from a $456 end-of-day peak on December 3 to $434 today."
JB
Morgan Stanley was a huge buyer of bullion all session long. Word to me also was the cash market was smoking.
My STALKER source gave a ring this afternoon. The latest:
*Their London Bullion dealer friend came out with his weekly commentary morning London time and well before Comex went into action. This conservative fellow is looking for gold to trade back up to $454 before year-end. Believes the dollar will drop further also.
*Re the STALKER group. The big STALKER (we believe to be the Chinese Government) is 80% done with $1.8 billion of bullion buying. The smaller STALKERS (2, 3, and 4) are 30 to 40% complete. In toto they are around 50% complete with their planned gold purchases.
This is one of the reasons the cash market remains so firm. You have the Indians competing with the Chinese, Russians, Arabs and gold producers trying to cover hedges. This kind of buying is causing fits for the corrupt Gold Cartel, who is trying to flush out the specs so they can get out of their short positions.
Silver recovered without any oomph. The silver open interest fell 2848 contracts to 103,181.
The dollar fell to 82.24, before recovering to 82.44, down .15. The yen rose from the 106 level to 104.88, while the euro gained .48 to 132.84.
The way I see it, market sentiment which is this bearish is not how a significant correction comes into play. One day of good market action (after five down sessions) does not get the bull back in gear. However, this is a good start. A close above $440 spot will do it.
For the moment the shares seem hopeless. It looks like it is going to take a move above $455, or arriving in January to bring in serious buying. Either way, the light bulb is likely to go off all at once. The long-term gold bulls who are sidelined are going to have to compete with first time buyers when gold begins to rocket. Those still owning gold shares after this desultory year won’t sell for anything. The competing bidders are going to have to pay up, way up, to be a part of the historic move up next year in the gold and silver shares. Most of the old gold crowd won’t do so. It will be the momentum crowd which will clean up and make the big bucks.
Gold sold off on the close with The Gold Cartel up to their usual antics. Chuck checked in with this observation:
"The sentiment towards the buck has stayed very bullish here even after today. Good sign. Still it's nauseating to see what happens to gold between 1 and 1:30 and at the end of the day. Nobody thinks twice about it. The gold people are comatose."
Good news: gold in euros settled around 329.40. Gold bounced back in terms of foreign currencies, yet has a long way to go before gold shows independence from the dollar action.
The gold open interest fell another 5403 contracts to 316,902. It has dropped 50,000 off its high, which probably includes a number of funds going short, making the drop that much more significant. The COT numbers compiled tomorrow for Friday will show a DRAMATIC shift. We should learn the commercials have covered more shorts than any time in the last 20 years in any one given time frame.
The other dilemma I have been trying to reconcile is how gold could have a sharp, meaningful correction (gold taking out $430 and heading for $400) with the sentiment so lousy. The Café Sentiment Indicator has not gone above 5 since this part of the gold bull move kicked in during September. Matter of fact, last week it fell to a 2, maybe a 3, the lowest since the Café opened six years ago. For the first time since its inception, the Café blanked twice (two separate days) in one week as far as paying memberships are concerned. Last year at this time, with gold around $423, 10 to 15 new members were signing up every day.
For me what is going on here is unprecedented when one considers gold is $16 off a 16-year high. As we all know, this crummy sentiment is reflected in the horrendous gold share action. Nobody seems to care or believe there is anything to this gold move – no potential from here on in. It is no wonder. Wall Street is gold clueless and pumps out disinformation. Meanwhile, most of the gold camp is short-term bearish and telling clients to get out of their gold shares. Who is out there to buy?
This is important because I have been trying to figure how gold would play itself out so the majority gets it wrong, which is usually the case. Today’s action MIGHT be the answer to that question. My take is what I have been harping on of late. Last week was an orchestrated raid by a desperate Gold Cartel to turn the specs into sellers so they could begin to cover their increasingly losing short positions. Because the cash market is so firm, they were able to take out the Johnny-Come-Latelies on this run down, but not those longer-term specs who have been riding the move up from below $430. Today’s turnaround with gold gaining in all currencies is a healthy sign the correction is over, with the cabal and trade wanting to buy any further corrections before gold takes off for $500.
Should gold move up from here like I thought it would, and was looking for yesterday, the correction camp has a problem. When and how do they get back onboard? When do they acknowledge we are not going to get the correction they thought was coming at the New Orleans Investment Conference? This is how the majority of the gold camp will not be on board when gold goes berserk. They will remain on the sidelines waiting for the correction below $430 which never comes. When they do decide to come back in they will be fighting to buy along with the public when gold goes $455 bid.
*With all the short-term gold bearish hysteria, the correction is a blip thus far when viewing the big picture.
*It was apparent to me last week that The Gold Cartel and trade, such as hedged gold producers, were in there buying what they could in the low $430’s. As a result of today’s price advance, they are likely to up their buy points to the $435 level, should we retreat back there again. They were paying up today also.
*On Saturday I chatted with my esteemed colleague Chris Powell and said if gold corrects to $400 like so many think and then goes back up, I am "out of here." Still feel that way. What I meant by that is I will not give my opinions about market direction in future MIDAS commentary. If I could be that wrong, then what I have to offer would be, and still could be, useless.
The reason for the rant is this. At $450+ I was still bullish, as it seemed to me the short-term correction camp had way too much company. Markets don’t accommodate the herd. Yet, the dollar popped sharply, GLD did their thing at the same time, and gold dropped $20. This has the correction camp congratulating themselves.
However, wait a minute, MOST of the correction camp was bearish with gold trading between $432 and $434. We know that is so because almost all the pundits at the New Orleans Investment Conference were calling for one a month ago. The gold price is now $4 to $7 HIGHER than where nearly all the long-term bulls called for this correction. Maybe they will be right in the end. Yet, for the moment, they are offside.
December 13 – Gold $438.50 up $5.10 – Silver $6.78 up 10 cents
Strongest Gold Performance In Some Time/Trade Continued Buyers
The best and safest thing is to keep a balance in your life, acknowledge the great powers around us and in us. If you can do that, and live that way, you are really a wise man....Euripides
GO GATA!!!
What a marvelous day for our team! Gold firmed up right out of the box last evening and kept on going, rising to $440 before The Gold Cartel showed up with a "No Mas" sign. For the first time in recent memory, they also were obliged to execute their $6 rule again. On its high of the day gold was up $6.40.
Today’s stellar price rise was significant for a number of reasons:
*Three times last week gold approached critical support at $430 and bounced off the low $430 area. This support level now becomes more important than ever.
February gold
http://futures.tradingcharts.com/chart/GD/25
Gold weekly
http://futures.tradingcharts.com/chart/GD/W
How about this from JC Trichet:
"Market intervention is a weapon at the disposal of every central bank" according to Daily Telegraph 3/12/04 page 87 (Ambrose Evans Prichard in Brussels).
The evidence is really pretty overwhelming, when you examine it, that the gold and silver markets are heavily "managed". Any analysis of them, without commenting on the main market driving force,...central bank intervention, is not worth reading. I believe that Dennis Gartman knows all this very well. I believe in fact, that he may have some inside information, from time to time of just how the market management is to take place, and this may explain these comments of his, last week.
"We shall now go on record to say that we have almost certainly seen the highs for gold for weeks, if not months, into the future. $455-456 shall be the highs against which we can not only exit our long positions that have been hedged… but against which we can actually sell gold short. (JB emphasis) We'd be not at all surprised to see spot gold trade back very near to the $405-410 level, over the course of the next month or two, with the risk now being heavily skewed against those who are long."
Mr. Gartman certainly did hit it on the head with these comments,.....so far, at least,.....but we all know that economic and financial reality are stronger forces than central banks, and I believe Mr. Gartman's confidence in the central banks ability to keep gold under wraps for "weeks, if not months" is misplaced.
Gold and, especially, silver tanked this week because of a concerted, orchestrated effort of the major bullion banks of the world, backed up, no doubt, by guarantees from central banks, to drive the price lower. These bullion banks joined together to sell endless paper gold and silver contracts at market prices, until the buyers bid those prices low enough to trigger sell stops and forced selling by those who had purchased gold and silver paper contracts over the last couple of months. Problem for the market riggers is that physical supplies of gold and silver are going out the door at an accelerated rate, at these artificially low prices.
For excellent, insightful analysis of the gold and silver markets, I suggest you send your readers to Bill Murphy's excellent web site, http://www.lemetropolecafe.com/.
Bill Murphy was the first to urge people to get into gold and gold shares. Anyone who has listened to him from the beginning, has already tripled, if not quadrupled or more, their money over the last 5 years. At Bill's web site, you will get much more helpful information on what is going on in the physical gold and silver markets, action which is leading the paper gold and silver markets. At Bill's web site you can read these kind of comments from physical silver dealers:
*The little guy silver buyers have come out of the woodwork in Europe on this price collapse as a result of the dollar gaining strength against the euro and because of the swift dollar price correction.
*He remarked fervently that the physical market is incredibly tight and expects price fireworks by year-end, or even "sooner."
*Says the paper traders are ruining the silver market. Comex is a joke, according to this experienced dealer. "If investors would just buy physical silver, the price would be $20 per ounce," the silver dealer says.
*He is very bullish.
You will be doing your readers a much greater service by directing them to Bill Murphy's web site when it comes to investments in gold and silver. Nobody has been more right than Bill on the real goings on in these markets and I doubt anybody has made his subscribers more money, with his advice, over the last five years.
Sincerely,
Rich Baumhower
First, the commodity pros: The two folks who know commodity trading better than anyone are Chris Foster and Dennis Gartman.
When I read Steve's complimentary comment on Dennis Gartman, I was highly disappointed. I don't know what Sjuggerud's views on market manipulation are, but I had to set him straight on a couple of things regarding gold, silver, and Gartman. I just wanted to send you a copy of what I said to Steve. Here are my comments:
I have always had the utmost respect for you, Steve Sjuggerud, and I was very surprised and disappointed that you recommended Dennis Gartman as somebody to listen to, regarding commodities, particularly gold and silver. I have never subscribed to Gartman, but I have read recent comments of his that are so far off the mark regarding gold and silver as to convince me that he is not one to turn to for truthful analysis of precious metals. Gartman has recently disparaged the views of John Embry, Bill Murphy and others who do not allege, but state emphatically that the gold and silver markets are rigged by central bankers, governments and bullion banks. It has become so obvious, that not only the gold and silver markets, but all financial markets are actively managed by central banks, especially our federal reserve, and governments around the world, that I see no point in trusting the analysis of anyone who says otherwise. I don't know what your own views on rigged markets are, but in case you also doubt that central banks attempt to manage the gold price, I refer you to comments by current and former central bankers. In 1998, Alan Greenspan testified before congress that "central banks stand ready to lease gold in increasing quantities, should the price rise".
Here is what Paul Volker had to say regarding the rise in the gold price in 1980:
"…..Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake.
"Through March, the price of gold rose rapidly, and that knocked the psychological props out from under the dollar."
Obviously, the central bankers of the world have learned not to make this mistake again.
Hi Bill,
I get Steve Sjuggerud's Investment U daily comments free in my email. In today's comments he had this to say:
Silver has been obliterated in the last few days...
Dec. 7 close: $7.82 per ounce
Dec. 8 close: $7.08 per ounce
Dec. 9 close: $6.74 per ounce
And gold is down by $15 an ounce. It's ugly out there right now in precious metals in particular, and commodities in general.
So what do we do?
I did what I do today... I hit the phones. I talked to the best commodity guys in the business, and I also checked in with my recommended coin dealers to see what they were thinking. Here's what they had to say...
While GATA is not allowed to be heard in the US, we are reaching Botswana, South Africa, Russia and other parts of the world.
April/May 2005 will be the 4th year anniversary since Frank put his presentation together for our summit. Taking Frank’s presentations in general, Frank really believes the central banks will run out of available central bank gold to sell less than three years from that date forward. Now we all know that is not going to happen. Way before they reach that crisis stage, The Gold Cartel and other central banks are going to have to change their game plan. Meanwhile, there is evidence via Argentina’s gold buying (among others) that some central bank will want to accumulate gold reserves. This is already occurring. Frank was right back then about the price move up as well as about certain banks turning buyers.
However, the smoking gun here is the noise coming from the establishment that the European central banks are unlikely to fill their 500 tonne sales quote under the new Washington Agreement. Smoke is beginning to billow in that regard. Worse for the cabal some of these sales might not even bring new gold onto the market but only be accounting adjustments for former leased gold turned into sales for cash.
Major point to focus on: The continued strength of the physical market, unprecedented when considering it held up on price strength (as in the run-up to $455), and hints of central bank holding back gold sales, are signs of stress for The Gold Cartel and the rest of the bullion price managers. They are strong indications Frank Veneroso’s presentation at the GATA African Gold Summit was right on the money as far a central bank gold lending was concerned. And right on the money they would begin to hit the wall with their scheme.
My bet is the future is now and the bad guys know it. They realize they are trapped and must find a way to run for the hills before it is too late. To do so they must act when the specs and gold community are short-term bearish. They must move when it is least expected they will do so and they will have to act before the cash market eats up too much of this cheap gold surfacing on this price break.
This is why I am so bullish and expect price fireworks far sooner and far more dramatic than most gold pundits believe are on the horizon.
Some feedback on today's radio interview from Botswana:
I opened your message about the live broadcast about ten minutes before five. At the moment I am in Botswana and the reception notoriously difficult. I then maneuvered my Jeep Cherokee into different positions around the farm in a vain effort to improve reception. In disgust, I gave up and parked the car in the garage and your voice came out loud and clear. The tin roof acted as an additional aerial and you were as clear as a bell!
I thought you came over very well without getting complicated. I am sure another many thousand people will have got the message.
Regards
Andy Brown
***
Evidence GATA was having some impact:
May 21 - Gold $284.05 down $2.10 - Silver $4.53 down 2 cents
Office of the High Commissioner in Nigeria Calls for GATA Action Plan
First, the important gold market news, which is the GATA news. There is no doubt in my mind that some very, very big heavyweight financial types are very aware of GATA, our GATA African Gold Summit and Reg Howe's lawsuit.
They have been buying for over a month now. That is why gold has been trading differently than in past years. These big time money guys are taking on The Gold Cartel and they know exactly what they are doing. They must be laughing at the gold analysts and gold reporters that still have no clue why gold has rallied so sharply ever since GATA arrived in Durban, South Africa. They are laughing all the way to the bank.
My interview with the South African Broadcasting Company top rated radio show, "PM Live," went very well. I followed Kelvin Williams, marketing director of Anglogold, who gave his telephone interview from Istanbul, where he is attending a gold conference. He spoke of the big short New York positions being taken out of the market as the reason for the gold rally. I concurred, but stated that we believed that the short position was much bigger than the gold trade acknowledged, using Frank Veneroso's 10,000 to 16,000 tonne gold loan numbers versus the industry standard number of 5,000 tonnes. I said that Frank calculated these numbers numerous ways and they all pointed to the same conclusion. I said that information was presented at the GATA African Gold Summit along with the GATA Action Plan Presentation.
I then said this is a Clinton Administration scandal, etc, and that as the size of the short position becomes more known and the GATA evidence of price collusion is studied, the price of gold would take off to $600 per ounce. There was more and that included my request for Africa's help in our truth and transparency quest. Co-incidence or not, the Office of the High Commissioner of Nigeria called our Durban headquarters and requested the Action Plan and everything else that GATA could give them after the radio interview. Rhoda Fowler even sent them my SABC TV interviews.
To read Frank's presentation at The GATA African Gold Summit, go to:
http://www.lemetropolecafe.com/pfv.cfm?pfvID=1525
Way back then you couldn’t find one Wall Street firm and bullion dealer who predicted what the price of gold was going to do and why. Worse, gold has rallied over $200 per ounce since the bottom and to this day hardly a one is bullish even now.
Before proceeding to the essence of Frank's insight into the gold lending world for your review, I thought you might enjoyed reading some MIDAS commentary back then to put where we are today in perspective and to appreciate how far we have come. While the rest of the world was morose about gold in those days, the GATA camp was circling the globe promulgating the real story to whoever would listen. We did not go unnoticed. When was the last time you recall gold rallying over $10 per ounce in any given Comex trading session?
May 18, 2001 - Gold $286.50 up $12.65 - Silver $4.55 up 8 cents
What A Day - Gold up $12.65 - Jacks for Openers - GATA Story Spreading
The dollar remains firm above 116 and the stock market could not be much stronger than it has been the past weeks. As I said in yesterday's Midas, forget all that; gold will make the big move because of the gold internals, not external forces.
Today, was a perfect example. And, if I am right, this is only the "jacks for openers" as in a poker game. The gold price has exploded ever since the Dow Jones story appeared on the eve of the GATA African Gold Summit. Adam Aljewicz's Dow Jones wire story was picked up all over the world and gold rallied $5 that day.
I was informed by senior Comex traders after the close that today that it was the dealers who were the big buyers, not the funds. Word is spreading all over the investment world about GATA and the Howe Complaint. A very well known fund manager called up some hot-shot financial man today and asked him why gold was so strong. The answer back to him was: "the lawsuit."
What is happening is that the exposure that GATA received at the summit, on the South Africa Broadcasting Company and in the Parliament in South Africa is taking hold. Word is spreading that GATA is right. Word is spreading about the enormous short gold position which cannot be covered - that Frank Veneroso's gold loan numbers of 10,000 to 16,000 tonnes are the correct ones - not the rigged, inept 5,000 tonne number of the bullion dealer lackey group, GFMS.
***
TABLE (Hard to read)
If we use our more aggressive numbers, we have less in those vaults and it is flowing out at a faster rate; consequently, it takes less than seven years to empty the vaults.
So whatever is happening in the gold market--- whatever is keeping the gold price down---if our numbers are correct, it can't go on that much longer, because we know not every central bank will lend or sell all it's gold. In fact, if our analysis is correct, the official sector knows what is coming. If the official sector is rational, it knows what will happen to the gold price when this large flow that is depressing the price abates and ultimately ends---the price will go up by a lot. Therefore, some rational central banks will not sell and lend down to the last ounce. Instead they will start to buy. So regardless of what has been happening in the gold market, if our data is correct, then, within a couple of years, whatever the official sector is doing, it will terminate and the gold price will rise.
What are the implications of all this dry statistical analysis for the claims of GATA? To our mind, it is very simple. There is much evidence that the consensus data on supply and demand is wrong and that the supply coming from the central banks is higher than the consensus estimates. In our opinion, the fact that the central banks do not acknowledge this but simply keep affirming the consensus data---despite abundant evidence to the contrary---represents considerable support for the allegations of GATA that there may be something deliberate and intentionally clandestine about the large flows of official gold that have been depressing the gold price.
***
It ought to be helpful to keep in mind gold was trading around $265 per ounce at the time.
Now to Frank’s presentation at the conference and what I consider so pivotal today regarding what I am drawing to your attention:
5/24/2001
Facts, Evidence and Logical Inference
A Presentation On Gold Supply/Demand, Gold Derivatives and Gold Loans
By
Frank A. J. Veneroso
INTRODUCTION Currently head of Veneroso Associates, formerly partner of the hedge fund Omega Advisors where he was responsible for global investment policy formulation. Through his own firm, Mr. Veneroso has been an investment and economic adviser in investment strategy to institutions and governments around the world in the areas of money and banking, financial instability and crisis, privatization, and development and globalization of securities markets. His clients have included the World Bank, the International Finance Corporation, The Organization of American States.
He has advised the Governments of Bahrain, Brazil, Chile, Ecuador, Korea, Mexico, Peru, Portugal, Thailand, Venezuela and the United Arab Emeritus.
Frank is a graduate from Harvard and has authored many articles on the subjects of international finance………..
Now, we will make two sets of assumptions. First let us take the current rate of drawdown and project it forward. Second, let us also assume some growth in that rate of drawdown. Let us then take our estimates of what is left in them thar' vaults and figure out how long this process can go on.
TABLE (hard to read)
First, we take our conservative numbers--- our lower rather than our higher estimates of gold lending. Here we project how long this process can go on if we assume no growth in demand and no decline in supply and conclude it will take a decade to empty the vaults. In this alternative projection we have assumed some growth in demand and some decline in supply. It will take about 7 years to empty the vaults.
