Beiträge von Schwabenpfeil

Down Under Input:
G'day,
Sorry, but I "missed" Monday, as I had a day off.

Gold hit US$440, then pulled back a little to US$439.8. Looking very strong, in breakout mode. Next target is US$450.

The junior explorers and mining companies are not really reacting so far to the Gold price, and generally speaking there is still alot of "pumping and dumping". Beware!!!

The Markets are generally stalling, and after last weeks strong move, are now looking uncertain and fragile.

The US$ idex is a direct negative mirror reflection of Gold, and is looking like "burnt toast", and is headed toward oblivion and hyper-inflation.

Have a good one.
Aye
Ian Miller

The lease rates:

Hi Bill:
It is about time for another update on lease rates. Gold lease rates are flat to declining, while silver lease rates have begun to rise steeply. The capping of the gold price over the last two days was done with paper in concert with closed Asian markets representing reduced gold demand. Silver on the other hand has been less than impressive in terms of its spot price, but perhaps lease rate changes can explain this. Silver is in semi-backwardation. Silver lease rates are between 4 and 7 times the rate for corresponding terms in gold. Since 3 to 4 times gold is the "normal" ratio of silver over gold, I suspect that leased metal was used to suppress the rise of silver. There is another interpretation. If the present unprecedented open interest in COMEX silver includes a higher proportion of stoppers, and the commercials know this, a leasing spike may represent sellers of paper silver attempting to acquire physical to make good on their contracts.
Best regards, Rhody.

Dan:

Well said Jesse.
That is EXACTLY the point. Hayek's little work on this subject should have forever settled the issue as to whether a centrally planned economy could ever hope to avoid the inefficiencies inherent in a system in which a small group of fallible mortals attempt to make thousands of decisions whose repercussions are far beyond their limited powers of sight or understanding to grasp.

Yet we seem to have come almost full circle in this country and by DELIBERATE DESIGN placed this nation on the exact same footing as that which Hayek so aptly obliterated as unworkable. Talk about the hubris of men!

This is one of the things that Bill and I and a few others were discussing at dinner one night in New Orleans.

I believe it is a form of modern day FINANCIAL GNOSTICISM, in which an elite few believe that they are endowed with superior insight and wisdom and thus are on a plane above the rest of humanity and not prone to the mistakes of others who in the past have attempted to "improve" society. As if somehow, they and they alone, are able to avoid the lessons of history.
God help us all.
Dan

From Jesse:

There is little doubt in my mind that the Fed has been leading a coordinated effort, along with Treasury, to play the long end of the yield curve through coordinated buying of bonds and notes at artificial prices. My study of the custodial accounts and securities lending, the Treasury TIIP program and the TIC reports brought me there beyond all doubt. But why even doubt it when Bernanke laid it right out in its playbook? They believe they have a right, and perhaps even an obligation, to rig the markets 'for the greater good.'

One can question whether they are also capping the price of gold. To that I would say first that GATA has provided sufficient evidence of this, but second, what good would it be to play the yield curve game to cap interest rates and let gold trade freely? It would be like telling only a partial story, and leaving a great gaping marker in gold that shows the falsity of one's actions.

My concern now is to see if this is going to spread to corporate debt markets more directly, and even to the equity markets. Bernanke has implied that this is possible if we reach a certain point. I want to know if we have reached that point. I can dismiss the recent ramp in equities to a 'policy error' as I have shown in some detail in past notes. But the question for me is if we had reached the point where the Fed and Treasury would look at what had happened, and decide to carry on as a policy of more aggressive intervention, and fixing of the problem, by short circuiting even more of our capital allocation and pricing mechanisms?

The jury is still out on that. But each step we take down this path takes us further from free markets, and closer to a centrally planned economy such as that which we spent decades fighting against as an enemy of freedom, and into the malinvestment and unintended consequences that are always attendant on the abuse of power by a few arrogant men who abandon their principles.

So do I prefer that we have a market crash and a depression? Well, have we reached that point where the economy is not longer viable if it is real? Or do we merely keep putting off the inconvenient choices, keep shoving the discomfort into the future, which is perhaps a viable alternative to an elderly man with no children, who has his reputation to consider, but not to the bulk of the people, who realize that we have inherited a country and that it is only ours in stewardship, and we will leave nothing but a legacy for our children by which we will be judged.

***

Houston’s Dan Norcini in a running conversation with Jesse:

Here's a quote from Oster Dow Jones:

"U.S. wholesale prices rose at the fastest pace in nearly 15 years in October
as prices of energy and food surged. The producer price index for finished
goods rose 1.7%, the biggest increase since January 1990, the Labor Department
said Tuesday."

Now take a look at the Ten year and the Long bond. Yawn! Ho-Hum! ......................... They have barely budged. The CRB is still not that far off its multi year highs. Gold has cracked $440 and still the bond vigilantes are MIA as bonds refuse to break down and provide buyers with rising interest rates. So now we have a situation where we have a falling down with rising inflation as we knew would happen and long term rates that refuse to go up to offset. Hmmm...... I must have been sleeping during those portions of my economic classes.

So what is it going to take to wake bond pitsters out of their sleep of death and their state of denial?

Of course, now the talk turns to the fact that the PPI is "old" and does not reflect the fact that crude oil and energy prices have taken a subsequent dive. The futures markets are forward looking we are correctly informed. Obviously this is a case of selective visual acuity since these "forward-looking" bond pitsters must have been looking backward to the year 2002 or something while crude prices were streaking towards $50/bbl and Northeasterners were paying out the wazoo for heating oil.

As usual, the failure of the bond pit to respond to inflationary news is being interpreted as "safe haven" flows since the indices are having a down day. Those who believe that are prime candidates for some ocean front property in Arizona to quote George Strait. The obvious deduction is that something "stinketh in Denmark" and that the Central Banks are playing a game with the longer end of the yield curve. There is no other explanation.

My compliments to the Land of the Rising Sun. Hey fellas, it would be a lot simpler if you just put us on the Bank of Japan email list and send us the notice in advance. On second thought, never mind, we can read what you are doing just as easily by what is taking place.
Dan

Chuck checked in with similar commentary to mine:

What a battle to keep gold from popping here. How many days before the December contracts expire? It sure feels as though there is a squeeze here. It's also good to see GG blowing out here. Put the rest of your money in the golds so we can break out here. Yuk, yuk! Chuck

Fannie Mae accounting crisis

By Marcy Gordon
The Associated Press
Tuesday, November 16, 2004

WASHINGTON -- Fannie Mae's accounting crisis has taken a turn with its outside auditor KPMG refusing to sign off on its third-quarter earnings report, causing the mortgage giant to miss a regulatory deadline for filing it.

Fannie Mae, whose accounting is under investigation by the Securities and Exchange Commission, also said Monday that if the agency finds that it has improperly accounted for derivatives -- the financial instruments it uses to hedge against interest-rate swings -- it would show an estimated net loss of $9 billion for the July-September period. And it acknowledged that some of its accounting policies do not comply with generally accepted accounting principles.

Washington-based Fannie Mae, which finances one of every five home loans in the United States, disclosed the SEC investigation on Sept. 22, stunning investors.

The company, recently cited by regulators in the Office of Federal Housing Enterprise Oversight for serious accounting problems and accused of earnings manipulation, notified the SEC Monday that it would not file the third-quarter report on time…….

-END-

US net capital inflows $63.4 bln, above forecasts

WASHINGTON, Nov 16 (Reuters) - Foreign investment in U.S. assets edged higher in September and was ample to cover the monthly current account deficit, according to a Treasury Department report on Tuesday.

Net inflows of capital totaled $63.4 billion in September, after an upwardly revised $59.9 billion in August, the Treasury's International Capital report said.

Purchases of net domestic securities, a narrower measure that excludes transactions between U.S. residents and foreigners in foreign stocks and bonds, also rose to $61.0 billion in September from $60.2 billion in August.

Foreigners were net sellers of U.S. stocks in September for a second straight month, according to the report. They sold a net $3.8 billion in equities in September after selling a net $2.1 billion in August.

Foreign appetite for U.S. government bonds and notes increased in the month. Foreigners bought a net $19.2 billion in September, up from $14.6 billion in August.

The report, informally known as the TIC data series, showed a higher-than-forecast level of foreign interest in U.S. assets. Analysts had expected the September data to show foreign inflows in the range of $50 billion to $60 billion, though some forecasts were half that.

Market participants watch the TIC data as a measure of foreigners' appetite for U.S. assets, and is of interest to the currency market amid concerns about the American current account deficit. The September U.S. trade gap was $51.6 billion.

-END-

08:30 Oct. PPI reported 1.7% vs. consensus 0.6%; ex-Food & Energy reported 0.3% vs. consensus 0.1%
Prior total PPI unrevisedat 0.1%; ex-Food & Energy unrevised at 0.3%.
* * * * *

WASHINGTON, Nov 16 (Reuters) - U.S. producer prices shot up 1.7 percent last month, the biggest gain in nearly 15 years and well above expectations, as energy costs skyrocketed and food prices surged, a government report showed on Tuesday.

Even outside of food and energy, producer prices climbed a relatively swift 0.3 percent in October, the Labor Department said, well ahead of the 0.1 percent gain Wall Street had expected.

The increase in the overall Producer Price Index, a gauge of prices received by farms, factories and refineries, was the largest since January 1990 and easily outstripped expectations for a 0.5 percent gain….

09:00 Foreigners' Sept. U.S.-asset holdings reported $63.4B
Prior reading revised to $59.9B from $59B.

– END-

CARTEL CAPITULATION WATCH

The DOW finally gave up some ground, dropping 63 to 10,488, while the DOG lost 15 to 2079.

A heads-up from Jessie on the DOW:

I have a friend who believes that the big banks are 'signaling' to each other their intended price support levels for the major equity indices. He thinks he caught a signal that there is a 'put' under the Dow at 10,500 as of yesterday. Companies do signal pricing policy changes to each other, this I know first hand. Would the banks do something similar? It would be easy, and now that they are punters it might make sense to keep each other 'informed.'

Well, we dropped to 10,500 on the session lows. Let see what happens. This market is SO overbought and overdue for a 6 percent correction that I would be a believer that this is a conscious reflation involving the banks and not such a liquidity policy mistake if it holds up today.

Personally I think it was a 'mistake' (error on the side of recklessness) based on what I have written already, but I am keeping an open mind.

-END-

The John Brimelow Report

$500 by Christmas?

Tuesday, November 16, 2004

Indian ex-duty premiums: AM $7.76, PM $6.77, with world gold at $436.15 and $437.55. Ample, and adequate, for legal imports. The rupee closed at a 5-month high, despite being forced down at the close by Central Bank intervention. Intraday, it traded appreciably more strongly than the levels used in these calculations. India returned as a solid buyer of world gold today, with the rupee buoyed by relief over oil’s decline, and heavy inflows of foreign portfolio investment funds – the Bombay stock exchange closed at a nine-month high this afternoon. There seems no immediate reason for this pattern to change.

The fact that the world’s largest buyer of bullion is a ready importer at the current world price is of course more important than how much more gold it would have bought if prices were lower - which tends to be what Indian sources like to discuss. Nevertheless, it is true that if the much-heralded decline in world gold does occur, the Indians will be there to stop it.

TOCOM gold continued quiet, trading only the equivalent of 14,958 Comex (+2%), in dollar volume some 25% less than platinum. But apparently the "general public" was a modest buyer: the Mitsubishi data implies an accumulation of 2.6 tonnes, about 835 Comex lots. The active contract closed down 4 yen, and world gold went out 45c below NY. (NY yesterday traded 58,372 contracts, once again exceeding the Comex estimate by a startling proportion, in this case 36%. Open interest was static – down 283 lots.)

An ECB captive Central Bank apparently sold about 1.6 tonnes of gold last week – the previous week’s 14.5 tonne sale has not started a pattern so far. Interestingly, the Shanghai Gold Exchange discounts have contracted to only 75c to $1 or so compared to three times that level when gold was $4 lower last week.

With most of the world’s key physical buying markets closed yesterday, gold’s liveliness early in the day was somewhat surprising: the response in NY was not. UBS says:

"Gold traded to a fresh 16-year high of $440/oz during European hours yesterday but could not make further gains in US trading. The metal opened at its US session highs of $439.40 / 80 under pressure from early speculative selling. Noted selling around the $438.50 level from one European bank, together with US bank selling on the Comex floor pushed the market lower and gold fell to $436.10 / 60 where decent two-way flows were seen."

(ScotiaMocatta refers to "good support from overseas sources" at the low.)

As the Comex volume estimate "mistake" indicates, this capping effort had to be quite forceful: and the same has continued today, with gold trading sideway from 10am just above $440, and volume heavy at an estimated 75,000 for the day.

Meantime, the news channels are crowded with stories predicting an imminent gold price relapse: Dow Jones carried two quite different ones:

DJ Asia Precious Metals: Gold Correction Likely, Desirable
SYDNEY (Dow Jones)
And

DJ FOCUS: Spot Gold May Fall Toward $430 If NY Gold Fund Fails

Both laying heavy emphasis on the possibility of an undertow after the NY gold ETF launches. This appears to be the main hope of the bears – or at least, the bearish analysts.

Disconcertingly for this community, the CFTC data gave them less encouragement than expected. UBS is not even sure subsequent developments created a record long:

"Net long position stood at 21.2Moz as of last Tuesday, up 1.8Moz after gross longs increased by 1.95Moz and gross shorts were up 0.2Moz. We estimate that the net long position has increased by a further 1-3 million ounces since then to stand at about 22-24Moz now and close to or at the all-time high." (JB emphasis)

Rothschild identifies the reason:

"the short position which rose by half a million ounces to a little under 7 million ounces. The size of the short position is a clear indication that not everyone is convinced that gold will continue to rise. The short position is now as large as it was in April 2001 when gold was at US$257."
(JB emphasis – April 2001 was the second double bottom.)

In other words the CFTC data is much more bull-friendly than anticipated.

In every bull move since the spring 2001 bottom, the Indians have eventually backed out, usually $20-$30 before the ultimate peak. That they have not this time strongly suggests there is further to go.

But what really suggests there is further to go is the appointment of Condoleeza Rice as Secretary of State. Rightly or wrongly, this is certain to be seen by much of the world, particularly the Arabs, as the installation of a neoconservative puppet and a guarantee of more extensive US/Muslim conflict. Those with the stomach should read

http://www.antiwar.com/lobe/?articleid=3986

It was the injection of geopolitical stress into an already favourable situation which triggered the memorable late ’79 market.

JB

November 16 – Gold $439.80 up $3.30 – Silver $7.55 up 2 cents

Likelihood Of Gold/Silver Commercial Signal Failure Continues To Increase

"For the average American, freedom of speech is simply the freedom to repeat what everyone else is saying, and no more." - Gore Vidal

Gold showed early strength, then sold off when the dollar caught some bids. However, when the euro stopped going down, gold turned right around and shot back up. As the euro gained ground, it then propelled gold even higher. Buying by Goldman Sachs and Morgan Stanley took out staunch resistance at $440.

A new 16-year high London Fix of $439.40 is an indication of how firm the spot market is (see JB below again on this one).

If there ever was a day for gold to rocket, it was today – what with an astoundingly high US Producer Price Index, the Fannie Mae scandal growing and Iraq a mess.

Gold huffed and puffed. The Gold Cartel made sure it didn't finish above $440 on the bell, taking it down with some tape painting.

The gold open interest fell 414 contracts to 346,795 and the silver open interest dropped 173 contracts to 122,865. What is remarkable is how sizeable the December contracts are in both precious metals. For gold the DEC is 245,173, down only 2734 contracts. For silver it is 84,525, down 1630 contracts. The big silver shorts are rolling their positions into FEB with the biggest of all, Morgan Stanley, continuing to sell as the price rises.

It is extraordinary how gold and silver could trade like they have for months and fail to generate market excitement out of investors in the public sector:

December gold
http://futures.tradingcharts.com/chart/GD/C4

December silver
http://futures.tradingcharts.com/chart/SV/C4

The Café Sentiment Indicator is a 5 at best.

Gold is grinding its way up. The Gold Cartel is hard at work doing what they can to contain the market and keep upside volatility to a minimum. It was that stunning price rise after the Washington Agreement was announced on September 26, 1999 which almost did in a number of the dealers. The volatility numbers blew out to the upside, wreaking havoc with the black box option models. Margin calls went through the roof. This was the reason the $6 Rule was implemented by the crooks.

The question is, “What is this leading to?” For every action, there is an equal and opposite reaction. So what will the reaction be to this cabal containment policy? My bet is that it is leading to a price explosion in which they lose control of the gold market, at least temporarily.

How can this occur with such powerful people doing so much to stop it from happening? THE CASH MARKET does them in, that’s what. More and more of the big players around the world are competing for cheap gold. This is why the Indian premiums have been so firm all the way up. Demand is so stout in India, the local dealers must go into the international market to satisfy that demand.

Gold is trading as if something grandiose is in the works. When a market continues to make 16-year highs like gold has, we should be seeing it trade in a volatile fashion with wide daily trading swings. Not happening yet because of the capping. However, big money around the world may have set a trap for The Gold Cartel.

We have a DEC option expiry a week from today. There are 12,000 440 calls outstanding and 18,000 450 calls outstanding. Add the enormous December gold open interest to the calls numbers and you have the potential for some serious fireworks on the upside as we sail towards the month of December – especially with so many traders short-term bearish. Our STALKER source said even his London sources are short-term bearish.

On that note our Comex floor sources said the specs were piling in today and the open interest could rise another 5,000 contracts tomorrow and even the DEC contract could go up. Once again, this would be HIGHLY unusual so late in the contract trading period.

One other point to be aware of which could send the gold price soaring very soon. Many of those calls at $440 and $450 are delta hedged and were put on at FAR lower prices, say at $400 or less. Delta hedged means that the seller of the calls might only cover 5% of his exposure when the call was written. As the price rises, the option sellers need to buy more and more gold in case their trades go in the money. Should we start moving any higher from here, the sellers of the $450 calls will be there aggressively on the buy side, which will increase the upside momentum and the pressure on the shorts to cover.

We have the potential for some serious fireworks to the upside for both gold and silver in the days and weeks ahead. Each session gold trades like it has been leads me to believe our precious metals Commercial Signal Failure is right around the corner.

After the close, we learned the Comex warehouse silver stocks fell 604,760 ounces to make a new low of 101,577,955. Silver struggled today. However, with these stocks dropping like they are, the nervousness of the shorts has to be on the rise. We are due for the day when silver streaks to the upside.

The dollar dropped .18 to 83.87. The euro gained .15 to 129.58, while the yen closed at 105.39 and very close to the psychologically important 105 level.

Crude oil fell 76 cents to $46.11.

Going For The Gold Investment Advice

Looking ahead, Kosares said gold could be sitting in the $460s by the end of the year, with a move over $500 in 2005. A foray over $550 and even $600 is possible if the dollar loses another 20%-30%.

Gold opened Monday in Sydney at $437.20, compared with $437.85.

So just how much gold should investors be stuffing into their portfolios? Kosares said the commonly cited 5% weighting may be too small in light of the current environment and suggests placing 10% of one's portfolio in gold.

"Gold isn't so much an investment as it is a type of savings or insurance against currency devaluation," he said. "I think if you look at an investment pyramid you would have savings at the bottom and I think gold should be a part of that savings."

-By Jim Hawe, Dow Jones Newswires; 813-5255-2950; jim.hawe@dowjones.com

-Edited by Nick vonKlock

In addition to the flagging U.S. currency, Kosares said market supply and demand fundamentals also offer some compelling reasons to get into gold.

One of the most promising developments has been the trend among mining companies to close out their hedge positions.

As gold prices fell during the 1990s, mining firms aggressively hedged some of their gold, essentially locking in fixed prices for a portion of their future production.

However, this strategy backfires when gold prices are on the rise as miners are still forced to sell the hedged portion at the promised prices.

However, this trend reversed from around 2001 as miners began actively dehedging, or buying back hedged gold, to give themselves greater exposure to the suddenly rising spot prices.

Kosares described the huge swing in hedging to dehedging as the "backbone of the current gold bull market."

And this trend is expected to continue. A GFMS report out last week stated that the global hedge book is still saddled with around 60.4 million ounces, or 1,877 tons, which is equivalent to 75% of annual mine production. Kosares said
this figure could actually be more than 2,000 tons.

Kosares said he believes miners will keep buying back their hedged gold in what he says will be like "having built-in market support for the next five years."

Appendix

US Dlr Crisis Could Catapult Gold Over $600

By Jim Hawe

Of DOW JONES NEWSWIRES

TOKYO (Dow Jones)--The price of gold could surge to levels not seen since the early 1980s if a big chunk is taken out of the value of the U.S. dollar in coming years, one market insider says.

A further devaluation of the greenback by 20%-30% would make bullion more attractive as an alternative store of value and could propel the yellow meta over $600 a troy ounce, said Michael Kosares, founder and president of gold firm USAGOLD-Centennial Precious Metals Inc.

Kosares said crumbling confidence in the U.S. currency due to America's enormous budget and current-account deficits has left investors scampering for safe havens such as gold.

Phones at his Denver-based office have been ringing off the hook recently and there has been a sharp increase in requests for gold-investing information packets over his company's Internet site, he said.

"There has been increased buying by our regular customers, but also by a lot of first-time investors," said Kosares.

These investors have taken note that gold has been moving higher in a very tight inverse correlation to the drubbing of the U.S. dollar.

The author of "The ABCs of Gold Investing: Protecting Your Wealth through Private Gold Ownership" said the weak dollar trend will likely continue for the next four years with the Bush administration taking an almost benign stance toward the waning dollar.

"The euro bottomed against the dollar at 82 cents (October 2000) and has since peaked at around $1.30, an appreciation of 58%. In a similar manner, gold has risen 72% since its bottom," said Kosares. Gold hit a low of around $255 in April of 2001, but has been trading just under $440 in recent sessions.

The Wall Street Journal and Japan's Nikkei Financial Daily in recent days have both reported what currency traders have long suspected - that while the administration under President George W. Bush continues to say it favors a "strong dollar," it is happy to let the greenback fall. Barring increased U.S. saving or decreased consumption, a weaker dollar is one of the few remedies for the country's current-account gap.

The Nikkei report, in line with many economists' estimates, concluded the dollar would need to fall by 20%-30% to halve the ratio of the U.S. current account deficit to the gross domestic product - now near 6%.

This is the same 20%-30% devaluation Kosares said could kick gold over $600.

Dehedging - Backbone of Bull Market

The gold shares continue to stink up the place. The HUI can’t stay above 240 for anything. It fell 4.90 to 236.96, while the XAU lost 1.50 to 107.09.

One other key point which caught my attention in New Orleans was how $400 gold doesn’t cut it any more for strong gold company profitability. Costs have risen too much. In general the industry now needs $450+ gold.

Anyone can see how hard the corrupt Gold Cartel is doing what they can to keep gold from going to where it ought to. They have convinced most of the gold world they are going to win again – that gold will tank and the specs will be trashed.

As mentioned $15 ago on the downside, seems too pat to me. Too many bears out there. Last year at the NO conference, bulls were everywhere. Not this year and the price is much higher. My bet remains the same. We have an explosion before we get any sort of meaningful correction.

GATA BE IN IT TO WIN IT!

MIDAS

From the horse’s mouth – a veteran Café member and first rate geologist to another Café member, Eric Hommelberg:

In a message dated 11/14/04 10:46:03 PM Central Standard Time, writes:

I'm the geologist friend of Bill Murphy who wrote to you earlier, about the reserve replacement problems that the majors are facing. I can give you a first hand update, again, with some fresh new ideas.

I worked for Homestake for 5 years, for Barrick for 5 years, and much of the rest of the time for small companies. In 1998, the companies started laying off geologists, steadily and more each year. This continued through 2002. At that point, the bottom of the gold market, they thought they had it made in the shade. What they didn't realize at that time was that they had lost much of the cream of the industry, since they were very picky about hiring the best people in the industry to start with. At the bottom, of course, they realized that soon, if the market recovered, that they were going to have to rehire geological and engineering staff. The only problem was that many of these people retired and took city jobs at Home Depot, with the government, etc. These people were out of the market. The companies could not find top notch people to hire.. The gold price started to move up, and went up steadily (the breaking of the "cup and handle" pattern). The big companies gave a weak effort trying to find new employees, at sub-par salary levels (e.g. Newmont Elko). The gold price kept going up, and,,,,, all of a sudden,,, there was a new force in the market. Junior companies.

Now something unexpected happened, the Juniors started stealing the remaining top level geologists that the big companies had, such as Alan Branham (Midway Gold) and Marcus Johnston (Victoria Resources) of Newmont. Even Barrick just lost one of its top two mine geologists at Goldstrike to a barite exploration company! Another large company has hired geologists from peripheral government staffs to make up a shortfall.

Right now, the majors are faced with in-house staffs of declining quality, in a market that demands that they hire more top quality geos to replace their declining ore reserves. They can't compete with the juniors, who pay higher salaries, give more stock options, and have better work positions to attract new people with. In the meantime, the juniors will continue to steal the remaining good big company geos! In this no-win scenario, the major companies, especially Newmont and Barrick, will be forced to look to juniors mto acquire the exploration opportunities that they themselves will not be able to find or explore for. It is a supply-demand situation that the majors cannot win.

As a biased aside, Eric, I've just started up a new junior exploration company that will focus on Nevada and Mexico world-class opportunities in gold and silver. We're being underwritten by Haywood and Wolverton, and will come out of the gate with 3 good properties: 1) Chuchu-Estrella, Mexico (see my website at http://www.rmicgold.com ) , 2) Poker Flats, Nevada, which is located immediately adjacent and on strike with Newmont's new to be constructed Emigrant Springs Mine, and 3) a good property located next to the Round Mountain Mine, which has potential for high-grade silver and gold veins as well as a bulk-tonnage Round Mountain-analog target. Mexivada will also look for any world-class opportunity available, around the world, and I have contacts everywhere. I'm presently trying to horn in on a world-class gold/diamond target in an unexplored place in the world, unknown to big companies, which would open the eyes of investors around the world. We're aiming toward a public IPO on the TSX-V in the first quarter 2005, and now are going to start off with a 3-4M share private placement at C$0.30 (with a half warrant attached), and then do the IPO at 50c. The publicity will be augmented by founding partner Michael Schaefer of the Secret Stock Files, who has a large coterie of eager investors. Haywood is taking half the 30c offering, and Wolverton also will take a good chunk. If you two gentlemen would like to participate, I'll arrange to save you a block of shares each.

Thanks for listening!

Best regards, Rick Redern
rmicgold@frontiernet.net

A little food for thought:

Hello Bill,
I’m often accused of being nuts, but I bought gold shares for pennys and there worth 10 bucks now. When the us dollar plunges and gold gets wild where will salt be? I work at a salt plant in northern Alberta owned by rohm-haas , the plant is 50 years old and is a beat-up, rundown piece of junk,,,, but,,, head office is now all of a sudden excited to re-build it. Very strange turn-around in behavior.
Brent Mosley

John Mauldin, a nice fellow, got me going with his comments last week. He openly says the currency markets are manipulated. Then, he pooh-poohs GATA. Makes no sense.

DailyReckoning.com
Wednesday, November 10, 2004

http://www.dailyreckoning.com/…dy_index3.cfm&qs=id=10759

……..Secondly, we should take note that currencies are the one market in the world where profit is not the end game. In stocks, bonds, commodities, real estate, and anything else that moves, the object is to make a profit.

Currencies are a manipulated market. They are manipulated by the central banks of sovereign nations, which make decisions about what the level their own currency should be for the own economic and political purposes. That makes them volatile and very difficult to predict in the short term…

-END-

From Derek Van Artsdalen in San Antonio:

Howdy, Bill--
Just a snippet for "Midas" tonight.

I think your readers may find it interesting that exactly 25 years ago today, on November 15, 1979, the price of gold was only about six weeks from the start of its tremendous blow-off stage. That price explosion lasted just a few weeks, and gold eventually peaked around $875 per ounce ($850 on the London PM fix) in the third week of January 1980. For the record, the official London evening fix on this day in 1979 was exactly $386.00.

Here's the interesting part: this evening's London PM fix of the gold price was $437.60. That is, surprisingly, nearly 14% HIGHER than it was during its historic run 25 years ago!

Now, don't get me wrong. Given the price-capping antics of the cartel thugs, I certainly don't expect gold to blast off to eight or nine hundred bucks an ounce in the next two months (although anything is possible).

On the other hand, neither do I believe that such a short-lived run-up is likely this time around. In fact, we gold bugs have every reason to think that gold will—with periodic healthy corrections, of course—remain in a powerful overall uptrend for many years. The main point is that perhaps the gold cartel has far more reason to be nervous than we previously imagined...
Regards,
Derek

Wake-up Call Time:

Fed's Gramlich Urges Fix for Budget Gap

By Poornima Gupta

ANN ARBOR, Mich. (Reuters) - U.S. budget deficits pose a problem for both the domestic and world economies, but there seems little political will to fix them, Federal Reserve (news - web sites) Board Governor Edward Gramlich said on Saturday.

"We have big deficits now and the politics of deficit reduction, if you want to call it that, are terrible. If you even dare talk about raising anybody's taxes, that's political death," Gramlich said in a speech at the University of Michigan.

"In 10 years when the huge baby boomer cohorts begin to retire, we will really have problems," he added, saying the national savings rate was at a record low and would only weaken further when demographics shifted.

"This is a significant problem," he said.

Gramlich urged a return to the budget limits of the late 1990s that have since expired. "I thought that was quite successful," he said.

The Fed governor said many Asian countries, particularly Japan and China, are fueling their export industries by supporting the dollar and keeping their own currencies cheap.

"How long can they do that? If they begin to have inflation in their own countries, which is getting close in China, they are going to probably have to stop," Gramlich said.

"So we have a pretty unstable world situation ... right now," he said.

The route to stability is through faster growth in the domestic economies of U.S. trading partners, coupled with an increase in the U.S. savings rate.

"The way to get our saving up is by reducing budget deficits. I personally would like to see us get back to something like a balanced budget as soon as we possibly can," Gramlich said.

The Bush administration has pledged to halve the shortfall, which hit a record $412 billion in fiscal 2004 ending Sept. 30, over five years through spending controls and economic growth.

However, concerns that the budget gap -- and U.S. trade shortfalls -- will grow further in a second term for President Bush (news - web sites) have exacted a heavy toll on the U.S. dollar in recent days.

European officials, worried about the drag a soaring euro will create in their economies, are expected to raise the issue next week with Treasury Secretary John Snow at a meeting of finance chiefs from the Group of 20 wealthy and emerging economies in Berlin.

"Foreign countries will have to stop trying to stimulate themselves by exports ... and stimulate their domestic demand. This would all possibly have to be worked out internationally," Gramlich said.

"But I think there is a way out of it. It involves fiscal austerity for the United States and it involves demand stimulation for the rest of the world," he added.

-END-