Tuesday, December 27, 2005

China's Gold Reserve

"Some economists have been appealing to the State Administration of Foreign Exchange to expand China's gold reserve after the Renminbi appreciation in a bid to reduce the country's reliance on the greenback." reports Chen Feng in an article titled China faces dilemma on expanding gold reserve, published on the Official Chinese Government Portal. (gov.cn)

Chen Feng reports, Teng Tai, an economist of China Galaxy Securities Company said "China should increase its gold reserve from 600 tons to about 2,500 tons in a short term and to 3,000 tons in a long term to cope with the versatile exchange rate risks... Too little gold reserve would pose threat not only to China, but also to the global monetary system."

Chen Feng points out china's gold reserve was reported at 600 tonnes at the end of June 2005. Which is only about 1.4 percent of China's total foreign exchange reserve, based on figures from the International Monetary Fund (IMF).

Many countries and organizations have gold reserves of more than 1,000 tonnes, including the United States, Germany, France, Italy, Switzerland and the IMF. See World Gold Holdings report at the World Gold Council.

The current global gold supply is 2500 tonnes per year. If China was to buy 1900 tonnes of gold in the short term, this would drive the price of gold much higher.

If China's gold reserves were to increase to 2,500 tons, it would make China the world's fifth-biggest holder of gold, behind the U.S., Germany, the International Monetary Fund and France. It is now the 10th- largest holder, according to the World Gold Council.

Even a modest increase in its gold holdings, for example to 5 percent of the value of its total reserves, would translate to extra bullion demand of 2,340 tons, or 67 percent of annual global consumption, Bloomberg.com reports Credit Suisse analyst Michael Slifirski said.

This announcement comes after the Russian Central Bank said it would double its gold reserves from 5% to 10%. See Russian Central Bank Gold Reserves to Double.

However, this announcement to increase the Chinese gold reserve by 1900 tonnes is nearly four times as big as Russia saying it will accumulate 500 tonnes.

Bill Murphy of Lemetropolecafe.com had this to say regarding the comments on gov.cn about China's gold reserves.

"Veteran Café members will also remember my relaying to you from South Africa, on my visits there in 2001, that the Chinese were scouring that country to secure gold supply.

One thing for sure, the Chinese are not going to make smoke like this without ALREADY securing a fair amount of supply through intermediaries. There is no way the Chinese could buy anywhere near that amount of gold without sending the gold price bonkers. The market is already in a 1500+ tonne supply/demand deficit per year. The tiny gold market cannot handle anything close to what is discussed in the article … not remotely close at prices below $600 an ounce.

Whatever has been done as far as Chinese gold buying is concerned, or is still to come (which should be considerable), all this central bank talk of gold buying has to have The Gold Cartel freaked out. The way the GATA camp sees it, they are short more than 10,000 tonnes and cannot get it back without driving the price sharply higher. What we have here is set up for a gold buying panic in the near future and for our long-awaited gold derivatives neutron bomb to go off."

Sunday, December 25, 2005

2006 Gold Price Predictions & Forecasts

James Turk, the founder of GoldMoney.com, and expert on gold was on Canadian Television this week predicting the gold price would hit US$600 in the first quarter of 2006, and US$900 before the end of 2006.

Bill Murphy of GATA.org (Gold Anti-Trust Action Committee), predicts the gold price will reach US$1,000 an ounce by the end of 2006.

When considering these gold price predictions for 2006 it is worth keeping in mind that in today's $ based on inflation gold would have to hit $2200US to be equal with the all time high of $875 reached in 1981.

Newmont Mining's President Pierre Lassonde has publicly declared he expects prices to be around $525 in January 2006. Newmont's president said gold "may rise to more than $1,000 an ounce in the next five to seven years as demand growth driven by Asia outstrips global supply."

Now for some Top Financial Firms Gold Price Predictions for 2006

The main stream media seems to let these "Top" Financial Firms get their predictions for the gold price wrong time and time again without saying anything. Lets see how they go in 2006, considering the gold price recently hit $540 US.

UBS raised its 2006 forecast for gold to $520. UBS said in a report in the Australian Investment Review "Gold's fundamentals also look stronger than previously expected, as supply and demand fundamentals and investment demand all appear stronger than previously anticipated."

Merrill Lynch has upgraded its gold price forecasts by 19% to US$525/oz in calendar 2006, as reported by Reuters in an article titled Gold seen marching into 2006 with fanfare,

Maquarie has increased its gold price forecast by around 8% to US$516/oz. for 2006, as reported in the Australasian Investment Review, in an article titeled, Macquarie Upgrades Commodities Prices (Again).

J.P. Morgan Securities have lifted its long-term gold price forecast to $500 an ounce from $450, with an average price of $558 in 2006, as reported by Reuters in an article titled Gold seen marching into 2006 with fanfare

Barclays Capital expects the gold price to average Dollars 465 in 2006 before falling to Dollars 450 in 2007 and Dollars 440 in 2008. Kevin Norrish, head of commodities research at Barclays Capital, said "We don't believe the current rally is sustainable. There is no shortage of gold and we don't see any evidence that central banks are going to start increasing the amount of gold in their reserves."

Stephen Briggs, economist at SG Corporate and Investment Banking, has forecast average prices at $515 in 2006 and $550 an ounce in 2007, as reported by Reuters in an article titled Gold seen marching into 2006 with fanfare

Kevin DeMeritt of goldcentral.com provides more gold price predictions for 2006.

Please post your own gold price predictions and forecasts for 2006 as a comment below.

Friday, December 23, 2005

Gold Price Suppression Scheme

The Gold Anti-Trust Action Committee has just released a Trailer for Gold Rush 21, a historic conference exposing the manipulation of the gold market.

Chris Powell, Secretary/Treasurer of the Gold Anti-Trust Action Committee said
"GATA is confident that the DVD will have a powerful impact on the gold market and other markets. We're also hopeful that it will either break the gold price suppression scheme or drive the central banks and their accomplices into the open, where their tactics will become prohibitively destructive."

You can view a trailer for the DVD here:

Gold Rush 21

Wednesday, December 21, 2005

When will the Gold Price Really Increase? - Part 2

The day will come sooner or later when the global investment funds estimated at $46 Trillion will try to move into the gold market, which is estimated to be valued at a only a tiny fraction of that amount. This event has been described by many as

Trying to force Niagara falls though a garden hose!

Back in April this year Jim Puplava of FinancialSense.com when talking about global investment funds moving into gold, said on his weekly internet radio show "If 5% of that money moves into gold there will be 20% to 30% moves up in the gold price in one day! But you have to be in it to win it." You can read more of Jim Puplava's Gold Price Forecasts in Part 1, When will the Gold Price move UP!

The Day the Gold Price really increases may be coming some time in the next 3 years.

A recent survey by Barclays Capital found investors were planning to significantly raise their exposure to commodities over the next three years. Almost 70 per cent of the Barclays Capital survey respondents expected to increase their exposure to commodities to 5 per cent or more of their portfolio.

Monty Guild who writes on Jim Sinclair's Mine Set has confirmed this survey with his own research in an article titled Massive Reallocation of Funds Into Gold and says "In conversations over recent weeks, my contacts have said that they plan to put 5% of their massive pension fund, mutual fund and hedge fund assets into gold."

Monty Guild said "Now 5% of $46 trillion is $2.3 trillion and 1% of $46 trillion is $460 billion. If the amount of gold shares purchased over the next three years equals even $460 billion it will cause the total value of all listed gold shares to skyrocket."

A recent article titled Why gold can go higher and higher, by Paul Tustain who is Director of www.BullionVault.com, puts this massive investment in gold into perspective.

Paul Tustain says
"Even now if all the gold ever produced on Earth were formed into a single cube its edge would be less than 20 metres - 2 metres shorter than a tennis court. That 20 metre cube of gold would weigh about 140,000 tonnes and each tonne is worth about 16,000,000 dollars. So all the gold in the world is currently valued at $2.2 trillion."

Of course not all of that gold is for sale or can be traded. A massive 75% of estimated physical gold is fabricated into gold jewellery. An enormous 7-12% of the worlds gold is owned by peasant farmers in India, who mostly keep it in the form of gold coins and bars. Do you think they will be selling it any time soon to the world's investment funds?

The Day the Gold Price really increases is fast approaching now that the gold price has passed $500US. James Turk of goldmoney.com points out in a recent commentary, many investors would have been waiting for the gold price to pass $500 as a signal that this gold bull market is real and that it is time to invest.

Global currency traders who are responsible for trillions of dollars in capital will also be realising that gold is increasing not only against the US Dollar, but against all national currencies!

How much of your own portfolio should be invested in gold coins and gold bullion?


The question you should be asking yourself is "Is a 5% investment in gold enough for my own portfolio to protect myself and my family?". Nelson Hultberg points out in his recent article Controlling Gold Over Time

"five and ten percent of one's portfolio seem to be way too low if things are really as bad as the analysts make out. If they really believe that the dollar is going to crash big time, then why would any analyst advocate only 5%-10% of one's wealth in gold and silver? This is one of those mystifying irrationalities that circulates among the "experts" without any justification."

"5%-10% portion of one's portfolio in precious metals seems like nothing but a pittance, terribly inadequate for the future that is staring us in the face. Analysts that recommend such a minimal percentage are not serving their readers very well in this writer's opinion."


So what percentage should you invest in gold coins and gold bullion? This would vary according to your temperament and other budget expenses. But as Hultber points out, it should certainly be far greater than the amounts conventionally recommended.

Don't wait for $2.6 trillion of global investment funds to flow into gold. The time to move at least 5% of your savings into gold coins and bullion, is right now! Sub $500 gold prices will seem like a steal in the years to come. For more info on buying gold coins and gold bullion visit our How to Buy Gold articles.

Monday, December 19, 2005

No Way Out - System Doomed to Hyperinflation

Here is the conclusion to John Williams' Shadow Government Statistics review of the 2005 Treasury GAAP accounting report:
"No Way Out -- System Doomed to Hyperinflation

The regular, annual $3.5 trillion shortfall in government operations cannot be covered by Uncle Sam; the situation has deteriorated beyond any hope of a solution within the existing system. Raise taxes? Even a 100% personal income tax would leave a deficit. Cut spending? Spending cuts that would bring government fiscal conditions into some semblance of order would be so draconian as to be beyond any political possibility in today's environment. What remains inevitable -- only a matter of time -- is a national bankruptcy.

Such circumstances in the past -- though no nation on earth has ever come close to experiencing the level of fiscal and financial fraud now being perpetrated on the American people -- typically have been "cured" by revving up the printing presses and creating excessive quantities of money. The end result is a monetary collapse in a hyperinflation, with the currency becoming worthless.
"

In times of hyperinflation, gold coins are a store of value which can not be printed out of existence. For more information on buying gold coins and gold bullion visit our section: How to Buy Gold

Sunday, December 18, 2005

Don't Buy Gold on Margin!

As we enter what many are calling the second leg of the gold bull market we can expect very sharp movements up and down in the gold price, such as the recent run up to $540 and then the quick retreat back to $500 support level. This type of movement in the gold price is normal in a gold bull market and was experienced in the bull market of the early 1980's.

Should you be concerned about these sharp movements in the gold price?

As long as you DON'T BUY GOLD ON MARGIN, then no, you have nothing to worry about.

Here are two views as to why you shouldn't buy gold on margin. The first is from Richard Russell who only buys gold coins and doesn't trade gold. The second is from Jim Sinclair who trades gold and also buys gold coins.

Richard Russell's view on gold has been posted by James Turk at goldmoney.com. James Turk speaks very highly of Richard Russell and in particular his track record on forecasting financial markets that have been published for the last 30 years in his Dow Theory Letters.

Richard Russell says "I don't buy gold futures. I don't buy gold on margin. I don't buy gold puts or calls. I don't trade gold. Therefore, when gold ran up to $540 on December 12th, I didn't get excited. And then when gold dropped to just above $500 yesterday I didn't get depressed. You see, on a daily or even weekly or monthly basis, I don't give a damn where gold goes. I don't care because I'm holding gold in terms of years, not months or weeks or days. And I own it outright. I don't own it the way half of America own their homes -- namely, on (mortgage) margin."

Read the entire news letter here.

Jim Sinclair whose website is jsmineset.com also has a similar view about buying gold on margin:

"For your sake -- DO NOT SELL INTO WEAKNESS -- unless you have committed the zero tolerance gold offense of margining yourself into a weak hand. Anyone other than a professional with 46 years of experience that trades futures on anything above a 50% margin is a world-class TURKEY waiting to have his/her feathers plucked by the pros.

The floor traders in this zero-sum game make a living by taking away your living. Your game is to play the market as investors, as aggressive investors by selling into strength and buying into weakness. Never, ever put yourself where many are today -- in total terror, caused by the margin clerk. Never, ever meet a margin call, because that nuisance, the margin clerk, is in reality your best financial friend. When he/she says send money -- don't. Just leave the table."


Source: jsmineset.com

If you really want to profit from the gold bull market, simply spend 10% of your money each month buying gold coins and gold bullion, or if they are too expensive buy silver ounce coins or rounds.

Don't concern yourself with the fluctuations in the gold price along the way, as the gold price is going much higher, and you will look back in a few years time and realise that it makes little difference if you buy gold coins at $500, $540 or even $750, you will still make amazing profits and you can sleep at night knowing that your gold investment isn't going to disappear due to a margin call when the gold price drops back a little during one of the inevitably up and down movements to come during this gold bull market.

Friday, December 16, 2005

Gold Price going to $3000 to $5000 in 4 years

GATA Chairman Bill Murphy was on television today in Canada. He appeared on "Business Morning with Jim O'Connell" on "Report on Business Television", a cable channel based in Toronto that is seen across Canada and around the world via the Internet.

Mr Murphy explains the gold price manipulation that he and GATA believe has been taking place and predicts the gold price is going to $1000 next year and $3000 to $5000 in the next three to four years.

You can watch the interview online at the ROB-TV Internet archive here:

http://www.robtv.com/shows/past_archive.tv

Look for Bill Murphy's segment at 11:40 a.m.

You may also find an interview with David Chapman, investment advisor & technical strategist for Union Securities interesting. He is predicting that the gold price will go to $850.

Look for David Chapman's segment at 3:33pm

Update: 22 December 2005

These videos are no longer available on the ROB TV archive. We are locating these videos and will place a link to them here as soon as possible.

In the mean time take a look at GATA's Trailer of the Gold Rush 21 historic conference on the long-term manipulation of the gold market:

Gold Rush 21 - Conference on the Gold Price Suppression Scheme
.

Dow Gold Ratio could put Gold at $100,000

If Mr. Bernanke does what he believes in - namely that asset deflation has to be avoided at all cost and, therefore, massively prints money, no matter where the Dow will be in future, at 36,000, 40,000, or at 100,000, as some pundits predicted in their in 1999 published books (of course shortly before the market tumbled), you will be able to buy the Dow with ounce of gold worth either $36,000, $40,000 or $100,000


Writes Dr Marc Faber in his article on the Dow Gold Ratio, Buy gold to hedge the US Dollar downside risk, published on ameinfo.com (Middle East Finance and Economy.

And you were worried because the gold price dropped below $500 for the third time in 24 years this week.

Dr Marc Faber is a highly respected investment advisor and fund manager. Dr Faber is the author of The Gloom Boom & Doom Report which highlights unusual investment opportunities, and is the author of several books including, "Tomorrows Gold - Asia's Age of Discovery", which highlights future investment opportunities around the world. "Tomorrows Gold" was on Amazons's best seller list for several weeks.

Here is a short section of Dr Faber's Bio, which provides a track record of his financial forecasts:

Famous for his approach to investing, Marc Faber does not run with the bulls or bait the bears but steers his own course through the maelstrom of international finance markets. In 1987 he warned his clients to cash out before Black Monday on Wall Street. He made them handsome profits by forecasting the burst in the Japanese Bubble in 1990. He correctly predicted the collapse in US gaming stocks in 1993; and he foresaw the Asia-Pacific financial crisis of 1997/98 and the resulting global volatility.



Dr Faber, believes that at some point in future, investors will lose faith in the value of US dollar denominated bonds and in the US dollar. At such time he believes, investors will drive US interest rates much higher resulting in tumbling bond prices and rush into anything but US assets such as equities and bonds.

Dr Faber said "This does not mean that all US dollar assets will collapse in nominal terms, but they could collapse against a 'hard currency' such as gold or possibly against non-US dollar currencies, provided foreign central banks pursue tighter monetary policies than the US. This, however, is an issue about which we cannot really be certain, as all central bankers have a propensity 'to print money'. Therefore, I feel that asset prices will tend to depreciate against the only currencies for which the supply is limited - gold, silver, and platinum."


Dr Faber points out the continued decline in the Dow/Gold ratio from a high of 45 to its current level of 20. The Dow Gold Ratio is the number of ounces of gold that is required to buy one Dow Jones.


Dr Faber said " What is, however, interesting is that despite the stock market's rebound since October 2002, the Dow/Gold ratio has continued to decline. Simply put for the holder of gold - the world's only honest currency, since it cannot be printed by some dishonest central banker - the Dow, although it increased in value in dollar terms, has continued to decline in gold terms with the result that, today, it 'only' takes 20 ounces of gold to buy one Dow Jones Industrial Average."

Dr Faber predicts in the future it will take only one ounce of gold to buy the dow jones.

James Turk of GoldMoney.com has also pointed out this same point in a recent commentary Don't Get Excited About Dow 11,000 where he said:

"Even though stocks may be rising when we look at their prices in terms of dollars, they are falling when we look at prices in terms of gold. In gold terms, stock prices have been falling since July 1999, six months before the DJIA peaked in dollar terms. As the purchasing power of gold has climbed since then, stocks have become cheaper."

Gold should top $1000 within two years!

Gold should top $1,000 within two years on its way to between $3,000 and $5,000, Bill Murphy of GATA.ORG was reported as saying in an article by The Globe and Mail in Toronto on Friday.

GATA believes that the U.S. Federal Reserve Board for years leased out large amounts of gold in paper certificates to suppress the gold price, thus bolstering the U.S. dollar as a reserve currency. GATA says the masterminds were Alan Greenspan, outgoing Fed chairman, and major U.S. financial institutions.

GATA says the U.S. Gold Reserve in Fort Knox does not have enough bullion on hand to meet its paper obligations. With the gold price rising and supply squeezed, the need to cover short positions with real gold will create a giant gold price increase -- and a potential crisis.

Murphy says "Russia, along with China and Saudi Arabia, have led the upsurge in demand for gold that has overwhelmed the U.S.-based cartel, he observed." For more info see our article Russian Central Bank Gold Sales Double

Source: The Globe and Mail.
By Gordon Pitts

Friday, November 25, 2005

Russian Central Bank Gold Reserves to Double

The Russian Central Bank has announced that it is to double its gold reserves.
a move that Michael Kosares of USA Gold says is "the equivalent of the Washington Agreement in 1999, which kick-started the current gold bull market."

Kosares predicts the announcement could have a major impact on the gold price and may be the driving force for the second leg of this gold bull market.

Russian President Vladimir Putin said this week he endorsed the plan of
the Central Bank of Russia to double its gold reserves, and expressed
support for increasing Russia's gold production.

The Russian News and Information Agency reports the Central Bank of Russia's first deputy chairman, Alexei Ulyukayev said the bank would be buying gold "on all markets on which it is available," meaning both domestic and foreign markets.

Michael Kosares of USA Gold provides the following observations:

1. We should not forget that it was central bank buying that broke
the back of the anti-gold cartel in the late 1960s early 1970s. This
paved the way for the massive bull market of the 1970s.

2. Ulyukayev is not talking about paper trading for speculative
purposes. He's talking about buying physical gold and storing it in
reserve as a long-term asset.

3. This policy is a major, decisive departure for the G-8 in that
one of its members will be exchanging currency reserves for gold --
and after a public disclosure. Russia now is receiving a large
amount of foreign exchange for its oil and gas (this will not change
for quite some time), probably in the form of dollars and euros.
This looks like the first step in a long-term program.

4. Russian gold buying will become a new element in the physical
gold market, and likely will put even more pressure on those short
the metal to cover now while it is still cheap -- of course, that
Russia follows through. But I can't see why they would announce such
a plan without meaning it.

5. I rate this announcement by the Russian central bank as the
equivalent of the Washington Agreement in 1999, which kick-started
the current gold bull market. It amounts to a de-jure action that
could have a major impact on the gold market and comprise the
primary driving force for the second leg of this bull market.


Chris Powell of GATA provides this insight into the move by the Russian Central Bank:

Indeed, the unusual resilience of the gold price in recent months --
particularly since GATA's Gold Rush 21 conference in Dawson City,
Yukon, Canada, which was attended by one of President Putin's
economic advisers, Andrey Bykov -- hints that a central bank has
been a buyer for some time now.

Of course Russia's central bank took official note of GATA in June
2004, when another of its deputy chairmen, Oleg Mozhaiskov, told a
meeting of the London Bullion Market Association in Moscow about
GATA's contention that Western central banks had been rigging the
gold market to the detriment of the developing world:

Oleg Mozhaiskov said "Many have heard of the group of economists who came together in the society known as the Gold Anti-Trust Action Committee and started a number of lawsuits against the U.S. government, accusing it of organising an anti-gold conspiracy. They believe that with the assistance of a number of major financial institutions (they mention in particular the Bank for International Settlements, J.P. Morgan Chase, Citigroup, Deutsche Bank, and others), some senior officials have been manipulating the market since 1994. As a result, the price dropped below US$300 an ounce at a time when it should, if it had kept pace with inflation, have reached US$740-760."
Source: Russia's Central Bank Takes Note of Gata.

While GATA, given the Russians' interest, has been trying to convey
much to them, we have no inside information here. The Russians may
be good listeners but they have yet to prove themselves
conversationalists. But if YOU had a load of paper and electronic
currency whose proliferation was unlimited and if you were
disadvantaged by the imperial schemes of the issuer of that
currency, what would YOU do to protect your wealth and your national
interests?

Monday, November 21, 2005

Hathaway Interviewed by Barron’s about the Gold Price

Here is an excerpt from the Barron’s interview with John Hathaway in which he paints a bullish picture for the gold market.

Barrons
By Sandra Ward
Interview with John Hathaway
Portfolio Manager, Tocqueville Gold Fund

Q: What's behind the move higher?
A: There is so much paper around, there are so many financial assets, and it only takes a small diversion from financial assets into gold to push the price higher.

Q: But what would lead to that diversion?
A: People are buying tangible assets, and gold is tangible and probably one of the most liquid and, in some ways, the least risky of all the tangible assets.

Q: There doesn't seem to be a lot of it around.
A: There is not a lot of it around. If you took one-tenth of one percent of global financial assets and stuck them in gold, you would wind up with a couple of years of mine supply. It is a trade you can't do. But it still gets back to the question as to why people would get more interested in gold, and it's not all based on bearishness. India is getting more prosperous, and Indians like gold. China is getting more prosperous, and the Chinese like gold. More disposable income in Asia definitely helps gold.

Q: Yet there are bearish factors behind the bull case for gold.
A: There is an ongoing currency debasing. Look at all the people who were bearish on the dollar a couple of years ago -- they've been been slammed because they put their money into the euro. They should have put it in gold. Warren Buffett just took a loss on part of his position in the euro. He was famous for being bearish on the dollar. How did he activate that? He took a 22 billion euro position because the euro was liquid and gold isn't.

Q: Are you surprised at the behavior of the euro?
A: Not really. It is a piece of garbage, really. There is no national treasury that stands behind it, but a committee of bureaucrats. Then there's the politics and social issues in Europe. There's a big difference in the growth rate between the U.S. and Europe, and there's a big differential in interest rates between the U.S. and Europe. Gold is going to rise against the dollar and the euro and the yen, which it has been doing for quite a while, but it has been doing it quietly, so most people aren't even aware of it.

Q: There are still a lot of skeptics on gold.
A: It's been five years since it's been in a bull market.

Q: Before that it had been in a bear market for about 20.
A: These days, the generations are much shorter. Residual skepticism is all over the place, and it is terrific because it gives the bull case longevity. If everybody were on board the way they are with energy, I would have to think of a new investment theme to work on.

Q: You have written about gold benefiting from a bubble in the U.S. Treasuries market.
A: The bubble is a reflection of the lack of investment alternatives. It is also a reflection of the perceptions of risk and the notion that Treasuries are a safe haven so they should be priced in a different way. There is so much money sloshing around the system, to the extent it is risk-averse it goes into Treasuries. On the other hand, you have negative real rates throughout the yield curve. Latest 12-month inflation is running about 4.7%. An investor has to go out almost 30 years on the yield curve just to get even. There is so much paper around and returns on assets are so hard to come by that it is driving money in this direction, and that's created the bubble. But these conditions are very favorable for gold.

Q: So what will focus people's attention on gold?
A: Hitting $500. That will fixate attention. This has been a stealth bull market. Only years after a bottom has been made do people realize it.

Q: Hasn't there been a disconnect between the price of gold and gold shares?
A: Day by day, tick by tick, they don't do the same thing. But if you go back to 1999, which was the bottom of the bear market in gold, gold has gone from $250 an ounce to nearly double that. And the XAU, a benchmark for gold shares that most people use, has gone from the low 40s to around 115. For the last year or so, the shares have underperformed the metal to some extent, but over a period of time and on a historical basis, the shares give you more octane then the metal itself.

Q: Why are the shares underperforming?
A: Costs are up so much, particularly for open-pit mines, which use a lot of energy pushing dirt around and hauling it. The cost of building a new mine is up a good 30% over what it was five years ago. So the economics of the industry, even though the price of the commodity is up quite a bit, are essentially just as crappy as they were when gold was at its lows.

Q: Will consolidation in the industry help that?
A: Not really. They might help a particular company's business, but it is not going to change the economics. What would change the economics would be a $200-$300 price increase so that gold would then outperform commodities. Gold has underperformed other commodities by about 50% for quite a few years. That tells you oil, copper and a lot of these inputs that gold producers need to get gold out of the ground have outpaced the price of gold. That is a fairly straightforward explanation of why margins have been poor. But there is another factor, and that is it is so easy for a gold company to get money. They have abused their ability to access what has been very low-cost capital by over-issuing shares. The stocks might be 20% higher if so many didn't declare open season on investors by issuing so much new stock.

Q: Do you take an activist role in that sense?
A: I'm very vocal about how investor-unfriendly the success of share issuance is. I'm particularly upset with the Canadian investment banks that do these deals.

Q: What's their defense?
A: The other side of it is that small companies, particularly the ones that are true exploration companies, are analogous to biotech stocks. They have properties that have potential value, but it takes a lot of money for drilling and exploration and metallurgical testing and feasibility before you actually generate revenues. Basically, they have to pass the hat all the time. Issuing shares is a quick and dirty way to get money, and for smaller companies, it's OK. But I object to any company that has a listing here in the U.S. on the New York Exchange or American Stock Exchange doing "bought" deals [in such a deal, a new-share issue is bought entirely by one underwriter to resell to investors].

Q: Is there any evidence that raising money has boosted production?
A: No. We just had a company in yesterday that is a particularly good example of this practice, and if you look at benchmarks like resources per share or ounces of production per share, they have been flat at this company for the last four years. So getting back to your question on why the shares have been sluggish in an environment in which the gold price is going up, it's because costs are way up and these companies issue stock without discipline.

Q: Haven't some gold stocks been hurt by strength in local currencies?
A: Certainly the South Africans were hurt because the rand went from something like 13 to the dollar to six to the dollar over a period of a year and a half or two years. That's like cutting the gold price in half. Even though the dollar price of gold has gone up, the rand price of gold is just now getting back to where it was a few years ago. To a lesser extent, strength in the Australian dollar and the Canadian dollar until recently squeezed margins for operations in those countries. But you get around that problem if gold is rising in all those currencies, which it is doing. But we have reached a point where gold isn't really linked to foreign-exchange rates because a lot of people are concerned about paper currencies in general.

Read more here

Thursday, November 17, 2005

Why Gold Price at 18 Year High?

The dollar is firm, oil has come way down, no crises at the moment, the stock market is roaring ahead, the US real estate market is holding up. "Everything is fine."

The gold price hit an 18 year high on Thursday the 17th of November 2005 with the PM fix of $486.15, a rise of $18 in just two days.

So what is the real reason for the gold price high?

Bill Murphey of Lemetropolecafe.com provides a very interesting explanation from a source he calls "Deep Throat" :

"There is an enormous problem out there re gold leases, as brought to your attention by Deep Throat. We are talking about hundreds of tonnes of gold. A bank, or some banks, has leased out physical gold and they cannot return this gold to their owners who want it back now for a very specific reason. This potentially monumental problem is under negotiation at the moment. Perhaps it can be calmed down for the time being. In the end it will have to blow up if the owners demand their gold back. If the banks go into the marketplace, WHEN THEY ARE FORCED TO, the price of gold will go berserk. Only a matter of time. The gold time bomb is ticking and the loudness of the ticking has become greatly more pronounced."

Murphey says the reason for the high gold price is "the Gold Cartel is losing control of their gold price manipulation scheme. There are a number of contributing factors which are surely in play, yet they are second fiddle as to what is really going on behind the scenes."

James Turk of GoldMoney.com says "The trigger for gold's rise this week was the announcement by the Federal Reserve that it would stop reporting M3 data in March. See Bob's post US Fed to Discontinue Publishing M3 Numbers.

Turk points out "The smart money is realizing that there are some tough times ahead for the dollar in 2006 and more importantly, by hiding the money supply and not reporting M3, the total quantity of dollars in circulation, the Federal Reserve is not facing that reality."

Tuesday, November 08, 2005

Bird Flu and the Gold Price

"It is only a matter of time before an avian flu virus - most likely H5N1 - acquires the ability to be transmitted from human to human, sparking the outbreak of human pandemic influenza"
said the WHO's director general, Lee Jong-wook today at a three-day meeting in Geneva at which hundreds of experts are drawing up a strategy to prevent bird flu from developing into a pandemic.

The World Bank warned today that a human pandemic stemming from bird flu could cause a "deeply disruptive and far-reaching shock" to the global economy that would cost up to $800billion. The World Bank predicts a 2 percent fall in global GDP if a human form of the virus were to spread worldwide.

The World Bank's outlook today was quite positive in comparison to a recent lengthy report titled An Investors Guide to Avian Flu. Sherry Copper and Donald Coxe, who work for BMO Nesbitt Burns, a Canadian bank, warn that Bird Flu could trigger an economic collapse similar to the Great Depression of the 1930's, with food, tourism and insurance industries devastated in a relatively short time.

Free Market News Network gives this perspective on bird flu and the gold price:
"If bird flu were to cause a human pandemic through mutation, would eventually drive gold prices higher. Why? An irrefutable and ongoing international crisis such as one that might occur in a rolling pandemic killing millions erodes belief in central government; absent a belief in central government, the value of paper or "fiat" money becomes questionable, then fungible, then worthless.

People in the West, having never for the most part (in this generation, anyway) been exposed to a crisis of survival, do not understand how truly fundamental is the human affinity for gold or silver. Money metals evolved in a fierce competition over 20,000 years - their value is literally "hard-wired" into the human psyche. Should a real crisis loom, the price of metals might well rise in concert with its REALITY (as opposed to HYPE about an impending reality). Throughout the millennia it has been an accurate gauge of panic. Is everyone so sure that the bird flu pandemic is destined to wipe out millions? The price of real money, gold and silver, should tell us so."

"This is the time for every country to prepare their national action plan - and act on it," WHO's director general, Mr Lee said today. "If we are unprepared, the next pandemic will cause incalculable human misery - both directly from the loss of human life and indirectly through its widespread impact on security. No society will be exempt. No economy would be left unscathed."

Perhaps now is a good time to prepare your own bird flu action plan.
Buying a few gold coins could be a wise move at this stage.

Here is a quote from a recent article on this topic titled How Would Gold React to a Pandemic? by Clif Droke.

So how should a gold investor approach a potential bird flu or other widespread health crisis? First, by not panicking or being too hasty to draw conclusions based on a possibility that is still relatively remote. Buying or selling an investment vehicle based solely on fear is a sure recipe for failure in the financial markets. Investment decisions must be based upon one's discipline, whether technically or fundamentally based, which negates the possibility of emotion getting in the way of the buying and selling process.

That said, the fear of a major bird flu outbreak -- even if the chances of an actual pandemic are remote -- will be among the factors supporting the gold price in the next few years. Gold is a major barometer of fear and does tend to rise in value with an increase in public fear and pessimism. Now that we're only eight years away from the bottoming of the K-wave/120-year cycle we've entered the "fear stage" of this long wave cycle. The gold price tends to outperform other investments at two points along the K-wave: the first during the peak inflationary phase (a' la the 1970s). The next during the deflationary phase such as we're now in.

With the "hard down" phase of the 120-year cycle comes an increase in warfare, natural disasters and even pestilential outbreaks (the previous 120-year cycle bottom saw major epidemics of smallpox and cholera). But equally important is the widespread lingering fear that the final few years of the 120-year cycle engenders. This fear, though unwelcome to some, is actually a bolster to the price of many hard assets, including gold and silver. The "Wall of Worry" that is essential to keeping the long-term upward trend of prices intact is kept alive by fear, including fear (whether grounded in reality or not) of various pandemic threats. Gold's longer-term uptrend will most likely continue to be bolstered by such fears.

Monday, October 31, 2005

Gold Prices

Gold prices are about to crush the world's strongest currency, the Canadian Dollar, signalling a new phase in the gold bull market.

If you have not taken steps to position yourself to take advantage of this move, now is the time to buy gold. It is better to be a few months early, than a day too late.

Many would be aware that gold prices recently hit an 18 year high in US dollar terms, mainly due to the appeal of gold as a safe haven in times of economic uncertainty. However, gold investment experts highlight the significance of gold breaking out against all major currencies and not just the USD.

In October 2005, gold prices reached a 12-year high in Swiss francs, a 14-year high in yen, and a 9-year high in sterling.

Gold prices have just broken out in Australian Dollars, one of the worlds strongest currencies. The Australian Dollar gold price hit a 17 year high of A$630.60 per ounce last week. All that remains now is for the Canadian Dollar Gold Price to break out.

Gold Investment expert James Turk of goldmoney.com says:
Once C$572 has fallen, gold will have made significant breakouts against all the world's major currencies. What's even more important, these breakouts have been launched from huge bases of accumulation within long-term consolidation patterns. This fact means that there is enough support under gold for it to climb higher for many more years.


"The fact that gold is now rising in value against other currencies is very positive in that we believe the bull market is moving into a new phase." says, Fatprofits independent gold investment advisers.

Fatprofits give this gold price prediction:

Our confidence in gold is based on the yellow metal's limited supply against the virtually unlimited supply of the paper currencies it is valued against. In times of turmoil and uncertainty, gold has always proven its worth. With unprecedented imbalances building in the global economy and gold's main competitor, the US dollar, losing its lustre, we believe it is prudent to take out some insurance against future uncertainty by holding gold or gold stocks.

Ultimately we believe that the gold price will rise north of US$850 an ounce. We therefore continue to favour an overweight position in gold and gold stocks as part of a diversified portfolio.

Sunday, September 04, 2005

$1178 Gold Price with $100 Oil Price based on Gold Oil Ratio

Tim Wood has written an article about the gold oil ratio in light of Hurricane Katrina.

"Katrina has now set the stage for a possible near-term realization of Goldman Sach’s much quoted and often disparaged forecast of an oil price super-spike to $100 per barrel." says Wood.

Wood says that based on the long-term gold oil ratio of 17.44 barrels per ounce, the gold price is “expected” to be $1,178, whilst the oil price is expected to be just $25.46/bbl. Wood says the last time the gold price came anywhere near the $1,000/oz level was in February 1983 when the inflation adjusted gold price reached a monthly average of $989/oz.

Wood says, If we accept that the oil price fundamentals are so superior that we’ve entered a new era, then we might adjust the gold oil ratio to half the long-term average. At that ratio the expected gold price is $589/oz and the oil price would be $50.92.

Looking ahead to a possible $100/bbl spike, the “new era” gold oil ratio of 8.72bbl/oz would imply a gold price of $872/oz. At the long-term average, $100/bbl implies a gold price of $1,744/oz.

More on the gold oil ratio.

Monday, August 08, 2005

Matthew Simmons Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.

Matthew Simmons the author of Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy was interviewed by Jim Puplava of financialsense.com this week.

Matt Simmons is the Chairman and Chief Executive Officer of Simmons & Company International, a Houston-based investment bank that specializes in the energy industry. Mr Simmons serves on the boards of Brown-Forman Corporation, The Atlantic Council of The United States, he’s also a member of the National Petroleum Council and The Council of Foreign Relations. He has an MBA from Harvard University.

Here is one of the most interesting sections of the interview:

MATT: In 1990 the United States was still producing 7.3 million bpd of crude oil, today it’s 5.1; the 7.3 was after a drop over the previous 5 years of 1.6 million bpd; our refineries only needed to run at 13 ½ million bpd; and we only needed to import 5.8 million bpd of crude oil imports to balance our system. Today we have to run our refineries at 100% or we have major product shocks; today, we have to import 10-11 million bpd, or we lose crude oil stocks; we have to basically create almost 3 million bpd of finished product imports; we have to run the system on a 24-7, all Summer long. And we still liquidate stocks.

So we have actually now created a pending domestic embargo, and we’re going to be lucky to get through the Summer without some periodic shortages. We probably will, but the odds are probably as high we will have some shortages, and then if we get through the Summer we have a fabulous respite from Labor Day to Thanksgiving, until we hunker to try to figure out how the world gets through the Winter of 2005 and 2006 because oil demand globally could easily go to 86-88 million bpd during the Winter, and that could easily exceed supply by 2-5 million bpd.

JIM: If that was to happen we would almost be looking at $75-80 oil, I suspect.

MATT: No, no, no. Oil prices could easily go up 5-10 times.

Listen to the interview at FinancialSense.com here.
Or read the transcript : Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.

Monday, July 25, 2005

Floating of Yuan Good For Gold Price

On the 21st of July 2005, the Chinese opted to float the Yuan within a specific range against a basket of currencies.

Jim Sinclair of jsmineset.com had some very interesting comments to make about this historic event and its impact on the future gold price.

Sinclair sees floating of the Yuan against a basket of currencies as effectively breaking its tie solely with the US dollar.

Sinclair says "this is an undeniable move away from the US dollar and will impact the thinking of those central banks who have already or are preparing to diversify out of complete reliance on the US dollar as a reserve currency."

"The most important implication of this move is that it reduces the need for China to purchase US Treasuries in the amounts accumulated in the past. " said Sinclair.

Sinclair concludes, "the move by China is presently neutral for the dollar but in a short time it will be recognized as negative."

Sinclair says "the strengthening in the recent lows for the gold price in this reaction. At the same time, the recent highs of the US dollar now become more significant as resistance and will be viewed as a probable top range should it be revisited.

Jim Sinclair's prediction for the gold price is that it will trade to $480 then $518 to $529. Sinclair says "The dollar will return in time to the .8050 level and much lower levels thereafter."

Now is the time to back up the truck and load it with gold coins.

Monday, July 18, 2005

Merrill Lynch Predicts Gold Price of $725 Due to Chinese Gold Jewellery Consumption

The price of gold may rise to $725 an ounce by 2010 as surging economic growth turns China into the world’s biggest jewellery consumer, said Graham Birch, who manages a Merrill Lynch & Co fund that has grown fivefold since 2000. Birch helps manage $8.5 billion in mining assets for Merrill Lynch in London, including the Gold & General Fund.

“The Chinese are getting richer, and have very high savings rates,” said Birch. “As they earn more money, they will spend more on things like jewellery.” Birch said.

“Chinese jewellery consumption rose more than 11% to 224.1 tons last year, according to London-based research group GFMS. It may increase to as much as 600 tons within five years", Birch says.

“The question is, where is all that gold going to come from?” said Birch.

Source: Merrill Lynch sees gold price at $725

Saturday, July 09, 2005

Gold Price Capped

The gold price has been capped at $440 per ounce since last December by repeated selling of gold reserves by European central banks and the European Central Bank itself, says GATA (The Gold Anti-Trust Action Committee).

GATA's findings are based on the research of its consultant, gold market expert John Brimelow of Aegis Capital in New York.

"The ECB reported on Wednesday a sale of 360 million euros in gold last week, 996,592 ounces at the bank's new book value for gold, or 31 tonnes," John Brimelow said.

"This is a huge amount, matched only by the sale of 47 tonnes announced at the end of March (but reported only in May) and a 31.9-tonnes sale last December last year." said Brimelow.

Each of these sales corresponded with the gold price going higher than $440, as can been seen in the 1 year Gold Price History Chart.

"An indisputable pattern has now developed for the ECB to step forward as a massive seller when gold approaches the $440s," Brimelow said.

Brimelow says the ECB will be obliged to suspend gold sales in September 2005 if they are to keep within the volume limits they set for themselves in the renewal of the Washington Agreement on Gold.

Source: GATA: European Central Bank Gold Sales Repeatedly Cap Price Around $440

Sunday, July 03, 2005

CNN reports $850 Gold Price Prediction

Katie Benner of CNN.COM reports that a handful of precious metals insiders at the recent New York Gold Conference predict that the price of gold will hit $850 an ounce in the next few years.

Benner says that the gold price rising along with the dollar and with oil jumping to record highs near $60 a barrel may signal a pickup in inflation ahead.

Benner quotes James Turk, co-author of the book The Coming Collapse of the Dollar and How to Profit From It saying "Despite all the rate hikes, the (Federal Reserve's) overnight lending rate is still less than inflation."

Charles de Vaulx, manager of the First Eagle Gold Fund told CNN "Middle East nations are getting more petro-dollars as (oil) prices rise, and they're not putting it back into paper assets," "They're trying to protect the value of their profits -- just like in the 1970s -- so they're buying gold," he said.

Read the entire article by Katie Benner on rising gold prices, oil prices and inflation at CNN.com

Thursday, June 30, 2005

Gold and Silver ETF

Post by Ron Lutka

What is REALLY DANGEROUS about these Gold and Silver ETFs in my opinion is that a certain class of entity is being inserted between the gold ans silver and the investing public. And that class of entity is registered broker-dealers (called "participants" in the silver and gold ETF) who can be associated with bullion banks, both of whom have historically been anti-gold and anti-silver and pro fiat and other paper.

From the Registration Statement

"The trust issues and redeems iShares only in blocks of 50,000 or integral multiples thereof. A block of 50,000 iShares called a "Basket". These transactions take place in exchange for silver. Only registered broker-dealers that become authorized participants by entering into a contract with the sponsor and the trustee may purchase or redeem Baskets. "

There are many items that are screaming flags as to potential evil intentions behind certain silver and gold ETFs and some of those screaming flags are:

1) players involved are in my opinion anti-gold and anti-silver;

2) the investing public is being eliminated from the physical gold and silver markets by way of these ETFs because the investing public CANNOT purchase a block of 50,000 iShares called a "Basket". They might not even have the right to buy or sell a Basket if they could afford to buy one as this might be a right solely of the "participants" whom are broker-dealers. Regardless, the affordability issue eliminates almost all of us.

The goal of these ETFs might be to replace the gold and silver futures exchanges as was hinted at by Lassonde a while back. If successful the investing public will not be part of the paper and physical gold and silver price discovery process as they presently are to a degree at the COMEX and CBOT. And if the COMEX and CBOT gold and silver trading is closed down the investing public will be excluded from accessing this physical source of metal which would likely be transferred to back the silve an gold ETF. Neat trick, huh?

3) the ETFs are far more complex than what they need to be to accomplish the stated effect for investors. Why not follow the simple Central Fund of Canada model? Answer: Because of 2) above.

Disclaimer: I INVEST IN GOLD AND SILVER. THIS IS NOT INVESTMENT ADVICE. DO YOUR OWN DUE DILIGENCE.

Friday, June 24, 2005

Hyperinflation

Jim Puplava of Financialsense.com has written an article in which he predicts the US is heading for Hyperinflation.

Jim explains how there is a current major disconnect between what is being experienced in real life on a day-to-day basis with consumers seeing their living costs go up, personal incomes failing to keep pace with the rise in the cost of living and what we are told about inflation that is published in official inflation figures.

Wikipedia defines hyperinflation as a condition in which prices increase extremely rapidly as a currency loses its value. It is inflation out of control. Formally, it is "an inflationary cycle without any tendency towards equilibrium."

Jim Provides the following ten reasons why he predicts Hyperinflation:


1. Global oil production will peak between 2005-2008. Economic growth ceases to exist as global economies and markets are thrown into chaos and turmoil.

2. The War on Terror escalates into a resource war over oil pitting the great powers the US, China, and Russia in a replay of “The Great Game.”

3. Debt creation and monetization hyperinflates as the government’s deficit spirals out of control with a war and a depression.

4. Foreigners begin to bail out of the dollar setting off a dollar crash.

5. The US puts in place capital controls to corral US and domestic money. The War on Terror will be given as the reason.

6. The government takes over GSEs owning most American mortgages.

7. A national mortgage bailout bill is passed lengthening mortgage payments in an effort to forestall debt defaults. A new restructuring agency will be set up to repurchase impaired mortgages from the banking system and renegotiate terms of the debt to avoid default. The 100-year mortgage is born.

8. A national retirement security act is passed forcing private pensions to buy long-dated zero-coupon government bonds that will be inflated away. The reason given will be for plan protection against bear markets.

9. As the US economy goes into a hyperinflationary depression the rest of the world’s economies follow suit. Money printing on a grand scale occurs in western and Asian economies as governments wrestle and try to satisfy the demands of a social welfare state and an angry, aging populace.

10. As governments hyperinflate and debase their currencies, gold will take on its true role as money rising in value against all currencies. The world will move towards a global currency backed by gold.

Read the rest of Jim Puplava's article on hyperinflation.

Read Thayer Watkins of SAN JOSÉ State University Economics Department, history of past hyperflation episodes in countries around the world.

Don't delay, buy gold today and protect yourself and your family from the coming Hyperinflation.

Tuesday, June 21, 2005

Central Bank Gold Sales

On the 20th of June Bloomberg ran an article that suggested the gold price may rise on speculation Central Banks will reduce gold sales.

15 European central banks agreed to limit gold sales and gold lending to 500 tons a year for the next 5 years in Septemeber last year. European central banks had already sold 346 tons of gold by April 1 2005.

That is about 13 tons a week, London-based researcher GFMS Ltd. estimates.

"If that rate of gold sales by Central banks was maintained, Central Banks that accounted for most of a 23 percent rise in gold supply in the first quarter will reach their sales target this week" Claudia Carpenter of Bloomberg said.

``They cannot keep selling at this rate,'' said Ian MacDonald, managing director of precious metals trading in New York for International Assets Holding Corp. ``We should really be asking where the gold is going to come from to meet growing investor demand.''

``The central bank issue is an important one for the next six months,'' said William O'Neill, a partner at Logic Advisors LLC, a commodity consulting company in New Jersey. Even if the sales target isn't met this week, the central banks ``will be selling less in coming weeks,'' he said.

Claudia Carpenter of Bloomberg said "Central banks are the biggest holders of gold, with 31,822 tons, or 1 billion ounces, in their vaults at the end of 2003, according to the International Monetary Fund."

Bill Murphey of GATA.ORG points out that the 31,822 tons or 1 billion ounces in central bank vaults figure assumes that the central banks have not sold any gold in close to a decade, nor lent/swapped any out.

Murphey says "this is a LUDICROUS number, yet the one bandied about so often by the establishment. The central banks are lucky if they have 14,000 tonnes left. The discrepancy is astounding and a featured reason WHY GATA has been silenced by those allied with the powerful Gold Cartel. For the world to know what GATA knows and believe it, there would be a gold buying panic."

"The price of gold will soar to ration future demand" says Murphey.

Murphey highlights that gold demand exceeds gold mine and scrap gold supply by more than 1500 tonnes per year. GATA suggests that this shortfall is filled by Central Bank Gold Sales.

Friday, June 17, 2005

Peter Petersen - Deficits and Serious Concerns for US Servicing Debt

Jim Sinclair described in the New York Times recently as one of the most famous gold speculators, whose website is jsmineset.com, has written about an interview on TV with Mr. Peter G. Petersen.

Sinclair describes Mr. Peterson as "The Chairman and one of the founders of the outrageously successful Blackstone Group. He is Chairman of the Council of Foreign Relations, founding Chairman of the Institute of International Economics (Washington DC), founding President of the Concord Coalition. Mr. Peterson was the Co-Chair of the Conference Board Commission on Public Trust and Private enterprises (Co-Chaired by John Snow, currently Secretary of the US Treasury). He was Chairman of the Federal Reserve Bank of New York from 2000 to 2004."

Sinclair says "Mr. Peterson spoke of his close and personal relationship with Federal Reserve Chairman Greenspan. He made many extremely important points in his conversation:

1. He spoke of three serious deficits, the Budget Deficit, Trade Deficit and what he considered to be the most important, the Current Account Deficit.

2. He added to these deficits what he considered to be just as important, the deficit in personal savings by US consumers.

3. He pointed out that a cumulative Budget Deficit of US$7 trillion was looming in this generation.

4. He spoke of Chairman Volcker's opinion on a lower US dollar.

5. He spoke of a prestigious group of 12 people and their views on the US dollar of which 11 expect it to go between 10 and 15 percentage points lower.

6. He pointed out that a Current Account Deficit running at 6 ½ percent of GDP must be considered as another cumulative item that will result in a foreign debt equal to 125% of a single year's GDP.

7. He pointed out that the servicing cost of this debt is a factor and possibly the most serious concern.

8. He concluded with the comment that expectation that international entities will continue to support this growth and the cumulative nature of the Current Account Deficit by purchasing US debt is not necessarily guaranteed."

Sinclair says "Petersen's interview was the most measured, articulate, non emotional sound analysis of the various complex conditions leading towards an epiphany for investors that will impact markets with the significance of Tsuami from 2006 to 2008 and then from 2009 to 2012."

Sinclair says the gold bull markets major move will be driven by the establishment
and that establishment will listen to Mr. Peterson.

Sinclar says "The move toward gold by the establishment big guns has started." and that in his opinion, 2006 to 2008 will be best years ever for the gold price.

Sinclair warns not to wait until 2006 to buy gold or you will find you are much too late. He says "things always start quietly before it becomes apparent. People trying to time the gold market perfectly are going to be left behind in the comet's debris trail."

Gold in Swiss Franks, Yen, Euro and Deutsche Marks Breaks Out!

The most bullish parts of this gold bull market is the price of gold breaking out in currencies other than the US Dollar, such as the Euro, Yen, Swiss Franks, British Pounds and Rubbles.

See our previous article on the price of gold in Euros breaking out.

HSBC said on the 15th of June 2005:

"gold has outperformed most other major currencies, suggesting the recent strength is not just a rejection of the Dollar and the Euro, but is perhaps the beginnings of a more sustained independence from the currency markets. Specifically:


Historical Gold price in Swiss Francs
- yesterday’s high of CHF548/oz was the highest level since April 1994.


Historical Gold Price in Japanese Yen
- the overnight high of Y1,506/g was the highest level since August 1992.


Historical Gold Price in British Pounds
- the high of £238/oz was just £3/oz off the nine year high of £241/oz seen in September 2003."


Historical Gold Price in Deutsche Marks
James Turk the founder of GoldMoney.com says "To breakout from this pattern, gold needs to close above Dm 706.31, the price it reached on July 30, 1993. This price equals €361.13. We are almost at that level...and I expect this breakout will happen soon."


Historical Gold Price in Indian Rupees

Dan Norcini reported in Lemetropolecafe.com said "What we are now seeing is gold asserting its true, historic function as THE PREMIER CURRENCY of choice. Investor confidence in both the Euro and the Yen is weakening as their respective economies continue to stagnate."

Norcini describes three Phases of the Gold Bull Market:

Phase 1 of the Gold Bull market was marked by the US Dollar price of gold moving up and breaking through important technical and psychological levels, most notably the $400 mark.


Historical Gold Price in US Dollars

Phase 2 should consist of gold price moving up against the other two major currencies, the Euro and the Yen. Norcini says "judging by Euro gold price of 350 being obliterated and now the Yen Gold Price of 468 giving way as well. This should shortly see the price of gold moving up against the other major currencies; the Canadian Dollars, the Swiss Francs, and the Australian Dollars as well as others and going on to make new multi-year highs in terms of those respective currencies.

Phase 3 will be the rapid acceleration or blow off phase.

We are now entering Phase 2 of the Gold Bull Market and now is the time to buy gold. It is the investment opportunity of a life time.

The gold price per gram charts in this article are from goldmoney.com
Where you can open a free account and buy gold in minutes.

Wednesday, June 08, 2005

James Sinclair Gold Interview in New York Times

On June 5, the New York Times published an interview with James Sinclair of jsmineset.com titled:

"Believing (and Believing and Believing) in Bullion" by Stephan Metcalf

James says "some of the main players in the gold market including myself. I have taken the liberty of excerpting the section about me for the Gold Community and I am also including a link so you can read the story in its entirety."

We have posted that excerpt here for Gold Price News readers, you can read the full article at the New York Times here.


Mr. James Sinclair of jsmineset.com

Among the most famous gold speculators, Sinclair proclaimed in the 70's that gold, then at $150 a troy ounce, would hit $900. (It eventually peaked at $887.50; he sold his position the following day, for a profit of more than $15 million.) Then, with some analysts predicting that gold could go as high as $2,000, he declared the gold bull market dead. (Within months, he was proved right.) In 2001, with gold near its bear-market lows, Sinclair told Forbes magazine that it could hit $430. On the day I met him, gold was trading at $434.

Sinclair remains a star attraction at gold conferences around the world, but in the 1980's he sold his brokerage firm and took his wife and two of his daughters to the foothills of the Berkshires, where he lives on a 40-acre equestrian compound featuring its own 9,000-gallon water system, its own electrical system and a shooting range. (''I like to cut a target every now and again,'' he told me. ''Get out my aggressions.'')

Sinclair's private office sports the typical C.E.O. blandishments -- a massive mahogany desk, a wall-mounted flat-panel computer monitor -- but also a profusion of religious items. Incense always burns, and a temple gong sits in the corner, along with a prominently displayed statue of Ganesh. Behind the desk there is a full-color portrait of Bhagavan Sri Sathya Baba, whom Sinclair visits frequently in India. ''I am an enquiring soul,'' he replied, when I asked if he was Hindu. ''All the great minds have wandered the Indus Valley.''

Perhaps because he has found spiritual satisfaction elsewhere, Sinclair regards gold with dispassion. ''Gold is not to be loved or hated, accepted or refused,'' he said. ''Gold is not barbaric or angelic. It fixes nothing in itself. But it is a mirror.''

Sinclair sees the health of the dollar reflected in the price of gold, and the health of the dollar is now in foreign hands. ''We're not talking about what I want, but about what is,'' he told me, as he picked through a tuna salad. ''If we go over $529, that is not good news,'' he said, referring to the price of gold. ''Anyone cheering for a high price of gold should get on Prozac.''

Sinclair says that when the dollar acts successfully as the world's currency, gold naturally returns to its status as a mere commodity. In the parlance, it demonetizes -- it loses out to the dollar as the world's reserve currency. But a mismanaged dollar, he said, could cause gold to remonetize. Our world would look very different then.

''The first sign is the foreign banks will diversify out of dollars. Then they will cease buying dollars. And then they will sell them.'' What could happen then? ''Stagflation. . . . Expansion of U.S. federal deficit. Expenses rise and incomes drop.'' Are we talking apocalypse? ''The most likely crisis is the collapse in the common stock of the operating entity. In this case, the operating entity is the United States, and the common stock is its currency.''

We had made our way up a hill, to Sinclair's koi pond and its accompanying meditation gazebo. As if on cue, what appeared to be a military airplane flew across the sky. ''That's carrying Iraqi supplies,'' Sinclair told me. ''We have war and monetary easing at the same time,'' he said, shaking his head. ''Everything has its season. That includes gold. Do I have a bet on gold? You know I do. Will I one day unravel that bet? You know I will.''

Why Gold Price Correction is Over

Dan Norcini says "I have received more than a few emails lately asking why I have been relatively quiet in regards to my writings. The short answer is that I, like many others in the Gold Community, have been patiently waiting for gold to give some sort of evidence that its corrective action was finished and that it was through going down."

Norcini says "In my opinion, the signals point to gold’s time being at hand once again. I have several reasons for stating so and will list them one by one and let the reader judge for his or herself. Please keep in mind that I am a trader and thus look for a preponderance of weight to favor a trade before committing 100% to it. The past week or so there have been indications that gold was base building and laying a floor for the next leg upward but it was a bit too premature for all but the most nimble traders to commit in a big way to this market as it does have a nasty habit of shaking would-be bulls and kicking them around a bit before settling down and behaving properly."

Read all of Dan Norcini comments and view his charts here.

Tuesday, June 07, 2005

Gold Price of $700 predicted for 2008

"The price of gold is set to rocket", says Andisa gold analyst Dr David Davis.

Davis's report titled 'A trilogy of gold - an exploration in three parts', suggests that the gold price will reach $1200 an ounce by the end of 2015.

David Davis predicts the gold price will be $700 an ounce by 2008, a year later he preidicts it will climb to $750 an ounce and another $50 an ounce to reach $800 an ounce in 2010.

Nicola Mawson Senior Online Writer with engineeringnews.co.za says on "These predictions answer the question blazing through the industry currently: what will gold sell at and what will shares be worth in 10 to 15 years' time."

Davis looks at the current gold price, historical gold price trends in mining operations and historical supply and demand patterns in the 55-page report.

Davis says supply is falling behind demand and fewer reserves are being mined as resources diminish.

"Not a new phenomenon, but previously this trend has been masked by Central bank sales and producer hedging - a dying practice" says Nicola Mawson.

When this ceases, says Davis, economies of the age-old supply/demand equation will take over and flame the price of gold.

Davis says this will mean investors having to be in the right place at the right time to make money buying gold.

Read more of Davis's analysis and predictions for US Dollar weakness, declining gold production and the future gold price.

Sunday, June 05, 2005

Julian Robertson Interview CNBC Economic Collapse

Al Martin of almartinraw.com has written an article about an interview with Julian Robertson on CNBC on the 24th of May 2004.

Read the full story here: Global Econmic Collapse

Friday, June 03, 2005

Global Economic Collapse

Al Martin of almartinraw.com has written an article about an interview on CNBC with the renowned funds manager Julian Robertson. Julian Robertson formerly ran Tiger Management, the world's largest hedge fund. Al Martin says the interview took place on the 24th of May 2004.

Al Martin said "‘Never Been Wrong’ Robertson. He has predicted every economic cycle, every debacle, every bull market, and every bear market. Of course, he’s a very old man now. But his reputation on the Street is like nothing you could imagine. When the segment of his interview was through, his comments alone took the Dow Jones down 50 points. Just on his comments alone. That’s how powerful this man’s reputation is."

Al Martin quotes Julian Robertson talking about a coming global economic collapse he predicts.

You can read that article at almartinraw.com

We have found an interview from the 24th of May with Julian Robertson
on CNBC which is very different to the one that is quoted on
almartinraw.com

Watch Julian Robertson Interview on CNBC posted at the Wall Street Journal apparently from the 24th of May

Here is some of what Julian Robertson said in the video :

He said "I am more disturbed than I have ever been in my investment
life about what lies ahead, the American consumer has driven the world
and the American consumer is out of gas and he is also involved in a
housing bubble that puts his very dwelling at risk, and it worries me
about what lies ahead because I don't see any easy way out.

I really don't know. I think that there will be an effort made to inflate
our way out. I think that effort is being made, has been made and
that's why the dollar has weakened so much against other
currencies,..."

Perhaps Al Martin watched a different interview?


If you want some solid information on the real potential for a Global
Economic Collapse
vist the following websites:

You can read more about the coming Perfect Financial Storm at financialsense.com

You can read more about the coming collapse of the US DOLLAR at dollarcollapse.com

You can read more about the American Consumer running out of gas at peakoil.com

For current gold prices in 23 national currencies in grams, ounces and kilos, gold commentary and information on how to buy gold visit goldprice.org.

Euro Gold Price

As predicted in (Gold Price to Increase on Serious Euro Concerns) posted in the the Gold Price News on the 14th of April 2005, the gold price in Euros has broken out since the French voted no to the Euro constitution.

The Euro gold price closed at $345.76 on on Friday the 3rd of June, a price not seen since the 11th of November 2004, when the price of gold in Euros was 343.221. The gold price was trading near $460 in U.S. Dollars at the time.

"The next resistance for gold in Euros is the April 2004 high at 347.446. If gold can breach that level in a convincing fashion, the major high near 351.50 is within reach. That is a big, big deal if that level can be broken." said Bill Murphy of Letropolcafe.com

James Turk of GoldMoney.com said "Is gold about to experience a cascading series of breakouts against the major currencies? It is possible, and the strength that we are seeing in gold’s price against other currencies – most notably the euro – is very encouraging, bullish news." James provides more charts and commentary on the break out of gold in rand and pounds here.

Historical Euro Gold Price Charts


1 year Euro Gold Price in grams


5 year Euro Gold Price in grams


10 year Euro Gold Price in grams

The charts above are from GoldMoney.com where
you can open a free account and buy gold in minutes.

Thursday, June 02, 2005

Alan Greenspan on Gold Price Manipulation

Congressman Ron Paul of Texas asking Alan Greenspan the US Federal Reserve Chairman about gold price manipulation by the western central banks:


Dr. Ron Paul:
Even if the central banks, who are the major holders of gold, are willing to sell gold in order to manipulate the price or hold the price at a certain level? We are not on a gold standard, so what would the motivation be?

Mr. Alan Greenspan: They are not doing it for purposes of fixing the gold price. They are looking for it to reduce their stock of gold when they have sold on the grounds that: one, it costs to store the gold; and, two, it didn't obtain any interest. So they perceived it to be a poor asset to hold. But the purpose was not to manipulate the price of gold.


Why is Alan Greenspan speaking on behalf of foreign central banks as to what those countries' motivations are for selling their gold?

Why is Alan Greenspan actually stating on their behalf that their purpose in doing so is not to control the price of gold?

How does he have such total knowledge of the actions of Foreign Central banks?

Why does he have the authority to testify before congress as to the thinking and motivation of foreign central banks' activities in the gold market?

Not to mention act in effect as their defense counsel.

The private Gold Antitrust Action Committee GATA has uncovered evidence suggesting that the Federal Reserve and the Treasury department, operating through the Exchange-Stabilization fund and in cooperation with the International Monetary Fund, have been systematically working to deflate the price of gold. Because rising gold prices are seen by investors as a barometer of inflation, the Fed has purportedly suppressed prices to disguise the true nature of the financial bubble of the 1990s.

Congressman Ron Paul said in a Media Release in 2002 "The Fed wants all of us to think the stock market is not overvalued, and that credit and monetary expansion can create lasting prosperity" he went on to say "gold prices should always serve as an unbiased indicator of the true health of world markets."

Tuesday, May 31, 2005

Silver Price Break Out Leads Gold Price

This is a time to buy gold and silver. "The risk/reward ratio based on the fundamentals and technicals is superb. Historic gold investment opportunities of a lifetime don’t come around very often." said Bill Murphey of Lemetropolcafe.com today.

Bill Murphey says, "While gold closed in new low ground for the move and has broken down technically from a chart standpoint, the case builds for gold to move a great deal higher, not lower. Today’s low of $412.70 ought to be it."

The silver price which often leads gold price has already broken out and the gold price won't be too far behind.



30 day silver price, (More silver price history charts at silverprice.org)

The silver price didn't follow the gold price down on Monday. Silver broke out of its very positive bullish wedge/triangle formation and hit $7.50, before some profit taking. That is a rise of over 4% in one day!

If the silver price moves like this when the gold price is going down and the dollar is going up, What will it do when the dollar collapses and the gold price explodes?

Monday, May 30, 2005

Gulf Cooperative Council Considers Accepting Gold for Oil

A lecture titled:

Oil for gold or oil for paper? Financial stability, gold, and the
ongoing rise in commodity prices.


was organised by the Gulf Cooperative Council and held in Saudi Arabia, it was attended by prominent members of the banking and finance industry.

The Gulf Cooperation Council heard that it should should peg its proposed currency to gold rather than the US dollar or Euro in a lecture presented by Dr. Ferdinand Lips an expert in currency and gold and author of the book Gold Wars.

"Being in the midst of a global currency devaluation scenario, it is worth noting that while oil is the king of commodities, gold is the king of money," Lips said.

Lips pointed out that "oil is underpriced and that oil producers are not getting real value by pegging it to the dollar."

Lips said "currencies, investments, and every crucial economic factor in the GCC countries are dependent on the US dollar, which shows increasing signs of structural weakness. The Gulf Countries could escape potential financial disaster by looking at certain other investment alternatives."

Friday, May 27, 2005

Reasons to be Bullish on Gold

Bill Murphey from lemetropolecafe.com.com says "Could the set up for gold get any more bullish, at the same time when everyone is so bearish?"

Bill gives the following reasons to be bullish on gold:

1. The gold/silver stocks are on a tear, ending an 18-month bear market.

2. The Silver Price has broken out decisively.

3. Commodity prices are on the move again with crude oil price is closer to staring at $60 per barrel rather than at a $40 oil price predicted by many on Wall Street. It finished today at $51.85, up 84 cents per barrel.

4. The US dollar reversed course, falling against all the major currencies. It closed at 86.41, down .61. The euro rose to 125.79, up .61. It would seem a "NO" French vote has been fully factored into the euro.

5. Most gold pundits are bearish and out of the bullion and share market. Most of the rest of the investment world doesn’t even have gold on its radar screen.

For more reasons to be bullish on gold subscribe to lemetropolecafe.com.com

$900 Billion US Deficit Predicted for 2006 by OECD Report

Jim Sinclair of jsminset.com points out that the OECD has made a startling prediction that runs totally against market expectations that are based on comments from the Federal Reserve.

Jim says "First the Fed Chairman announced the dollar bottom and the bond trading major international investment houses followed his lead in the dollar.

Next the Administration made a major speech predicting a lower US Federal Budget deficit in fiscal year 2005 - without any doubts or reservations. Adding to this major economic statement was the definitive comment that the US Federal Deficit would be cut in half by 2009."

Then came this statement by the OECD which indicated that the final deficit, as Jim says the bottom line, the speedometer of money leaving the US, the measurement of dollars entering into international market, the USA’s Current Account deficit will in calendar 2006 reach the historic level of $900 billion. That would represent 6.7% of the predicted GDP at that time.

Jim says "If the GDP does not make its predicted level in 2006, then what a black hole of Calcutta the dollar will find."

OECD chief economist Jean-Philippe Cotis told the Financial Times: “We are not saying there will be a doomsday tomorrow morning ... but because the adjustments [to global imbalances] are relatively slow, we are running the risk that an accident will happen. [..] Time is running out – the numbers are getting big, big, big.”

Tuesday, May 24, 2005

Government Intervention Against the Gold Price

The Gold Anti-Trust Action Committee (GATA) reported today "Government intervention against the gold price has risen sharply since the middle of last year."

GATA said, the increase in intervention in the gold price was disclosed last week in the Bank for International Settlements' (BIS) semi-annual report on the issuance of derivatives by major banks and dealers in G-10 countries.

The report was studied by GATA's consultants, James Turk, founder of GoldMoney and editor of the Freemarket Gold & Money Report; Michael Bolser, editor of the Interventional Analysis newsletter; and Reginald H. Howe, gold market analyst and principal of Golden Sextant Advisers.

James Turk described the new derivatives numbers from the BIS as "stunning" in regard to gold. Turk said "In major banks and dealers in the G-10 countries, the total notional value of gold derivatives rose from $318 billion at mid-year 2004 to $369 billion at year-end. "That $51 billion increase (32-percent annual rate of growth) occurred while gold miners were reducing their gold hedge positions. The reduction in hedge positions by mining companies should have resulted in a decrease in the aggregate position in the BIS report. That it didn't happen suggests that the international economist Frank Veneroso is right."

Here's what Frank Veneroso had to say in the March issue of Gold Newsletter:

There is only one possible explanation for why purchases of thousands of tonnes of gold in the futures and forwards markets do not blow the price of gold sky-high: The official sector must step in on gold price rallies as an offsetting forward seller.

How much more gold can governments dishoard to throw at the gold market to keep the price down? "The answer," Turk says, "is of course unknowable, both to us as well as to the governments intervening in the gold market. At some point the banks executing the government positions are going to reach the tipping point, when the free-market demand for gold overwhelms government gold price capping. I think that moment is near for one important reason.

"Price capping in gold can be prolonged only by continually supplying the market with physical metal. Right now the demand for physical metal is strong. So governments can sell all the paper derivatives they want, but it isn't going to stop people from buying metal. In fact, the low price of gold resulting from government price capping is causing the demand for physical gold to increase."

GATA's findings on the latest BIS gold derivatives report can be found here:

BIS Gold Derivitives Report

GATA Chairman Bill Murphy said this new evidence of government intervention against the gold price should compel mining companies to be represented at GATA's Gold Rush 21 conference in Dawson City, Yukon, Canada, on August 8 and 9. "Gold Rush 21 will hear presentations from gold and silver market experts from around the world," Murphy said, "and will develop a plan of action to restore free markets to the precious metals."

Information on Gold Rush 21 can be found here:

Gold Rush 21 Conference

Tuesday, May 10, 2005

Reasons for Gold Price to Increase

Alex Wallenwein of a1-guide-to-gold-investments says that the main stream press is suddenly reporting on the reasons why the gold price will increase, despite gold analyists reporting these reasons for over 2 years without any mention in the mainstream news.

Alex says the reasons being stated for the gold prices to increase are:

1. An under supply of newly-mined gold.

2. Gordon Brown striking out on his IMF gold sales proposal, with the US opposing it.

3. The Washington Agreement supporting gold by being generally against excessive Central Bank gold sales.

4. The real possibility of Asian countries buying whatever gold the European Central Banks dish up.

5. The never-ending story of the US trade deficit.

6. Gold is a "de facto currency" and therefore not subject to demand deficiencies caused by world wide economic slowdowns.

7. Gold is an inflation fighter and they can see stagflation approaching.

8. It's a natural hedge against the US dollar.

9. It traded predominantly between $420 and $435 this year, thus setting a new price floor, which is considered a "strong buy signal."

Friday, May 06, 2005

U.S. Employment payrolls - Net Birth / Death Model

Todays gold price was down $6 apparently on the news that U.S. employment rolls increased to 274,000 last month, which was much higher than the average estimates from Wall Street.

Minutes after the news came out, Retuers said: "Gold futures in New York fell sharply in early trading Friday as a surprisingly strong U.S. April nonfarm payrolls report boosted the dollar and dulled the allure of bullion for investors."

The article came out so fast its almost like they new in advance!

The dollar rallied in response we are led to believe. Which apparently undercut futures prices for gold.

"In the case of gold, prices moved precipitously close to its 200-day moving average" said Dale Doelling, chief market technician of Trends In Commodities, marketwatch.com reported.

"A close below this critical support level ... could tip the balance in favor of the bears for some time to come," he said. "The mid-April lows are the only thing between here and the logical downside target of $400, and this level could be reached quickly if we see some serious long liquidation in the event the market does break key support."

The Philadelphia Gold/Silver Index (XAU) was down 1.3%, the CBOE Gold Index (GOX) was down by 1.4% at 74.53 and the Amex Gold Bugs Index (HUI) dropped 1.6% to 182.07

Bob from Bob's Gold Price Column said "it's almost as if the G7 central banks were ready to buy the dollar as soon as the report came out. To conserve gold and silver they may be goosing the dollar instead, spending their foreign "currency" reserves instead."

"By tonight or tomorrow we'll have reports with the magic (hedonic
adjustments and all those type things) subtracted from this employment number so
that we'll have the real number. It could even be a negative number.

Just make sure you're taking the red pill. The spin out there is really
something." Bob says.

This is from the U.S. Department of Labour Bureau of Labour Statistics website, which produced these employment figures based on their Current Employment Statistics Net Birth/Death Model:

" The most significant potential drawback to this or any model-based approach is that time series modeling assumes a predictable continuation of historical patterns and relationships and therefore is likely to have some difficulty producing reliable estimates at economic turning points or during periods when there are sudden changes in trend. BLS will continue researching alternative model-based techniques for the net birth/death component; it is likely to remain as the most problematic part of the estimation process."

There is a little table on the U.S. Department of Labour website that says they estimated 257,000 of the 274,000 jobs in April using CES Net Birth/Death Model. That means that only 17,000 real jobs were actually created, the rest of the jobs were hypothetical jobs created with a statistical model.

And the reason the gold price was down $6 was???

Read Bob's latest article Gold and Silver Market Bottom

UPDATE: The gold price closed down only $4 for the day after bouncing back up from the long term uptrend and the bottom of a large wedge / triangle formation that has been developing which is very bullish for gold.