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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/10/2006 : 20:54:54
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Gold Declines on Skepticism China to Buy Metal for Reserves
By Pham-Duy Nguyen
Nov. 10 (Bloomberg) -- Gold in New York fell from a two-month high on skepticism China will buy the precious metal to diversify its foreign-currency reserves.
China, which has about 1 percent of its reserves in gold, said the country will maintain a policy of reducing holdings of U.S. assets. Gold, sold in dollars, generally moves in the opposite direction of the dollar.
``People are skeptical,'' said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois. ``China is not going to buy precious metals for their reserves.''
Gold futures for December delivery dropped $2.10, or 0.3 percent, to $634.70 an ounce at 9 a.m. on the Comex division of the New York Mercantile Exchange. Prices jumped 3 percent yesterday to the highest since Sept. 6.
The metal was poised for the fifth straight weekly gain. It has climbed 0.9 percent this week.
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
…………..(Since gold is at a relatively high price, if the Chinese Government did say it was going to buy gold, lots of it, the price would go higher, meaning the Chinese would buy less than they had hoped. The Chinese are no dopes, if they are going to buy gold, most likely they will cut out the middle man and buy up a gold mine in Africa or South America, or buy the total production from some gold mine for a lower price than set by the commodities markets.)
Hey, after I wrote about the Chinese cutting out the middle man, look what I found out.
Chinese investor takes $800m stake in Anglo American - Irish Times, Nov 10 2006 8:39PM
Like I said, the Chinese are no dopes. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/10/2006 : 20:59:46
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OOPS, accidently posted it twice, either the main computer is acting up or mine is.
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Best Markets: Choosing Gold or Silver
By Roger Wiegand
“We think having to choose between gold or silver for market trading emphasis is like a must choose between chocolate or white cake. We like all cake too much; to our dietary chagrin. Gold and silver are the same. They are in the same tasty race with the same fundamentals. It doesn’t matter who wins or who is the leader. They are both delicious, outstanding, trading winners soon to be world champions.” –Traderrog
We have friends and business colleagues favoring both gold and silver. We have other friends who specialize in one or the other. In our view we love them both for commonality and special reasons exclusive to each. Let’s examine some features and benefits of gold and silver to help you determine your choices.
Market Size
Gold is the big guy in this comparison both for market exposure and the number of trading and investment vehicles readily available. However, silver has a highly important individual feature and that is a massive list of industrial and commercial applications growing daily. This is why confusion between the two is commonly expressed by the man on the street. Most do not know if silver is a precious metal or an industrial metal. The correct answer is both. Commercial manufacture of gold is primarily for jewelry and ornaments. Indian wives and single ladies adorn themselves with magnificent gold in a variety of necklaces, rings, bracelets, and hair stays. Gold is even woven into gorgeous cloth for elegant dresses and other types of clothing. We have seen a number saying 25% of all annual gold production is used for these purposes and the majority goes to India. Old school gold analysts remain transfixed on this market as the be-all-end-all for raw gold in the fall Indian buying season. We say other raw gold applications are appearing in the market place even as the Indian commercial market continues to grow.
Silver on the other hand has been a mining underachiever for over 20 years as artificial suppression has had its foot on silver’s neck and just about destroyed the silver mining companies. We know of a handful of silver CEO men, who in our view are the unsung hero’s of the silver mining industry. They endured that 20 year walk in the silver price desert and managed to keep their shareholders aboard and their respective company’s solvent. Now that was a legendary achievement!
Another critical difference is the location of gold and silver today and what has happened to historically mined resources. Most of the mined gold is still above ground in coins, jewelry, dental, ornaments, antiquities and other applications. On the other hand silver’s myriad of applications generally uses it up in non-recoverable products. Film was a major scrap silver re-supplier but that is disappearing as digital cameras do not use much silver. There is less film so this portion is gone but computers and electronics in the photo industry use silver.
Those things using gold are under-going a sea change of applications. Central banks, long holders of huge gold bar stock piles have foolishly been off-loading gold to pay for a variety of never-ending wasteful government needs. Unfortunately for their taxpayers, these sellers have been dumping gold at exactly the wrong time as $625 gold in our view is only about +20% up the rally ladder. Ask Gordon Brown, the UK’s government money guy who sold very early and wasted over $1 Billion in under-achieved taxpayer losses. In our opinion, this magnificent mistake will prove to be five times worse before the game is over.
Central banks were authorized under their international gold selling agreement to unload 500 tons of gold. Some of these bankers saw Mr. Brown’s trading tragedy and curtailed their selling. It has been reported the central bank gold gang sold roughly 390 tons of the authorized 500. We think they held back on the rest as prices were rallying too quickly.
Our question would be who is doing the buying? Are these people in the central banks buying from each other in which case none of the sales mean anything? This is top secret stuff and with computers, inter-bank wires, and high finance who knows where the sales are going and where they came from.
We would suggest the gold stays put in vaults and the ownership name tags change with new sales.
So is this gold on the open market flooding prices?
We think not.
Comparison of dollar values today show us silver near $12 per ounce and gold $625. This 52 to 1 ratio is changing quickly as prices seek new levels and public perception of both markets adjusts. We’ve read of a proper and historically common gold-silver ratio being 15 to 1. This should tell us silver has much further to go relative to gold in the precious metals trading and investing markets. Not too long ago this 52 to 1 ratio was more like 65 to 1. Times they are a-changing.
Gold Prices not Inflation Adjusted
Here is one that will get your attention. On an inflation adjusted basis we have seen gold prices projected by others averaging $1,850 to $2,250 per ounce.
Our trading forecast high for gold is $2,960
and silver $197
with one thrill-seeking finale using the 15 to 1 forever ratio.
Could this really happen? Yes it can and we think it will.
What we haven’t figured out or sorted out yet is what you buy with these profits?
Would people trade for these metals at those prices?
Would sellers give up that value for fiat paper money?
Or, would they trade for more hard goods like real estate, operating profitable companies or, what?
Another big question; will the public ever recognize gold inflation adjusted prices versus the Dow or the S&P.
We do not think they will.
Precious metals mining companies have stated production will be lower in 2007 versus 2006.
There are many reasons for this but foremost among them is country risk and lower reserves.
Dictator bandits want to tax or steal the profits and further enhance their respective nobility with everyday mine workers. What better way than to take-steal all you can get and force producers to pay higher wages?
These takers get rich and become political worker heroes in one fell swoop.
The number of mining-friendly countries is shrinking. Silver is plentiful is some very risky areas but in some friendly ones as well.
We saw a mining analyst’s report saying operations costs are up +18% in just one year.
Yes, the metals prices are rising too,
but so are the costs to get it out of the ground.
Expensive machinery, skilled labor shortages, fuel, electric power, parts, tires, water, permitting, legal reporting issues, etc; are all big nasty mining bills.
Big mines and economy of scale are vital in this inflationary environment to keep things under control for budgets and to maintain profitability. This is why large proven and inferred reserves in mining friendly political environments should enjoy the best pricing upside growth.
Precious Metals Mined with Base Metals
To further confuse the issue, silver and gold are often by-products of base metal mining. Fully 15% of global gold production originates from mines digging for something else. I do not know the figure for silver but somebody else should have that answer. Our next question then is what happens to the precious metals annual by-product production in a recessionary business slowdown? If 15% of all gold came from copper mines and they close or run those mines at diminished capacity that gold or silver stays un-dug.
Recessionary Metals Influence
We think this event strikes at exactly the time gold and silver prices rise and fly higher and faster in a flight to safety reaction when an economic malaise is recognized. This situation is not a maybe either. Things are fraying around the edges in global economies and base metal mining.
A recession should correct those base metal prices with selling most apparent among the highest flyers like copper. This could be one major mining industry upset. Normally, a sell cycle is a lot faster than the buying portion.
Exchange traded funds are in vogue and these little beauties need hard gold and silver to back-up their shares. The charters of these precious metals ETF’s are to sell easily transferable shares backed with the real goods. To accomplish this feat, fund managers have to buy gold and silver in very large amounts. We saw one number this morning saying 4% of annual gold production is moving into ETF’s. That is not to be dismissed especially when the public climbs aboard the ETF trading game with some real power. It would require only a tiny amount of ETF buying for the precious metals ETF’s to TRIPLE. On this playground we can buy gold or silver in separate funds or both within one fund. These funds have a very bright future indeed as they offer ease of entry and exit for the less experienced trading public.
Choices for Traders and Investors
We suggest that irrespective of your account size its smart to buy and hold gold and silver coins. Amounts selected relative to the owner’s available cash is a personal decision. We have heard of kids with paper routes saving nickels and dimes and investing in regular monthly purchases of these coins. We like to think of this as junior’s personal high flying stock market. Big coin buyers purchase hundreds or thousands of coins and stash them in banks or private vaults throughout the world. As an investor or trader, if you did nothing but buy coins for cash and hold them you could possibly earn more than anybody in this business. As long as the coins are safely secured they are literally and figuratively money in the bank.
Stocks
Precious metals stocks are usually referred to as juniors and seniors. Traders with large accounts tend toward the more stable, large company senior stocks as the objective is retention of capital rather than acceleration of gains. Sure these folks want gains too, but foremost they do not want to lose money. The seniors fit this category better than most juniors.
For gold, the seniors have a longer trading list than silver. For gold, juniors who are often called explorers provide the longest list of choices. In silver, the junior list is way longer than the seniors but doesn’t offer as long a list as gold.
Junior stocks are attractive as the potential upside is so much greater. The problem is there are so many how do we know which ones to buy? We suggest smaller accounts hold one or two seniors and a majority of juniors. Large trading accounts will not only gravitate toward large company stocks but will also place more emphasis on the ETF’s and physical metals for longer range investment.
We would warn all traders and investors to not trade silver futures and to only trade gold futures with strong experience. Novice futures traders will see capital evaporate in a matter of weeks unless they paper trade first and begin real money trading in small amounts. This takes some skill but can be learned with practice.
Historically, precious metals have two cycles per year for entry and exit. The one time it seems to pay to be out of the market is late May through August. However, day traders can still scalp futures throughout those months. Big accounts will either buy and hold ignoring the cycles or perhaps sell one-half their positions for the summer protecting previous fall-winter gains. Later, they simply re-enter at corrected prices and are off to the races once again. Smaller accounts tend toward trading more often but we strongly suggest if you are not the day trader type (we are not) hold the trading to a minimum for your stocks.
Metals Characteristics and Hedging
Gold is prominent in its market offerings and a few of the senior stocks are widely recognized by the non-precious metals trading community in New York. Certain large bank analysts have reported de-hedging is over which affect supply. These observers forecast little or zero de-hedging in 2007-2009. Until this week, we had not seen a quality report on the companies holding large hedged positions. We finally found one and in this review find it difficult to expect these miners will not continue to de-hedge with the numbers moving so dramatically against them.
Yes, the amount of de-hedging is down, but a few large miners will continue de-hedging and new smaller companies are actually accepting mining operations loans which demand hedging to protect lender-banks. From our viewpoint, most of these are for mines in very un-friendly areas of the world. Those mines have an excellent chance to be seized and nationalized if successful. If a lender demanded a hedging clause as a loan condition we would not do the deal; not in this bullish gold market environment.
Silver, on the other hand has very few large company choices and almost none have been hedging. Today we have a small choice of premium silver miners which in fact makes our job easier. Trader Tracks has had recommendation experience with some of the best.
Our newer strategy is to recommend less than ten junior and senior PM stocks. This becomes difficult the more you educate yourself about choices. It’s too easy to select 25 instead of 8. Others who are excellent stock pickers in the junior group will buy 20-40 of them and understand in the front most will not do much but a handful will be incredibly successful. There have been junior stocks jumping to 2000%! During the 1979-1981 PM rallies one stock moved from under $5 to over $35!
In Summary
Gold and silver both offer great opportunities for the same reasons and different reasons. Silver makes faster moves as the entire market is less than the total capitalization of GE. Gold offers more ways to trade and invest. Both offer great stocks in junior and senior categories. Silver is perceived to be a cross-over market destined to perform better than gold in better economies due to its commercial applications using and wasting the asset during production. Gold is more of an inflationary producer with a real money, flight to safety background. In our opinion, trade them both and educate yourself about the attributes of each. Both will be huge winners over the next three years and perhaps longer. –
Footnote
quote,
"We would suggest the gold stays put in vaults and the ownership name tags change with new sales. "
I had been told by a typing teacher of mine that when he was in the army, he had been stationed in Fort Knox. He said that when it came time to adjust who was owed what, gold wise, all that was done was the gold held in Fort Knox was moved to one wall with a sign on it stating that this gold was owed to England or France or whoever, while other gold depositories overseas did the same thing. No gold ever left Fort Knox, just as no gold left the vaults of gold depositories overseas, they just put signs on the gold saying which nation was owed how much. I guess this was done to prevent the risk of theft. Of course, this way the government can say it has this amount of gold on hand,
as far as who is the legal owner of said gold, well.......... |
Edited by - pencilvanian on 11/10/2006 21:20:18 |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/12/2006 : 20:26:28
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China 'to boost gold for years to come'
By Ambrose Evans-Pritchard
Last Updated: 1:07am GMT 10/11/2006
Gold surged more than $19 an ounce to $635 in New York trading after China's central bank chief said the country was eyeing "lots of instruments" as alternatives to US dollar reserves. Governor Zhou Xiaochuan said the bank had a "clear" plan to lower the dollar share of its exchange reserves, now $1 trillion and rising fast.
The scale of Chinese holdings means any move would shake up the currency markets, with a leveraged effect on the tiny gold sector. China holds roughly 70pc of its reserves in dollar instruments such as mortgage bonds. Dennis Gartman, a gold veteran and publisher of the Gartman Letter, told an RBC conference yesterday that China's moves to diversify reserves would power gold upwards for years to come.
"China holds 1pc of its reserves in gold, which I expect to rise to 5pc-6pc over the next 15 years. China will be a quiet, consistent, slow taker of gold," he said. He predicted Beijing would keep its dollars but use fresh reserves to buy euros and gold. It is unclear whether the poisonous trade relations between Beijing and the EU could cause China to lose its enthusiasm for the euro.
Anthony Fell, head of RBC Capital Markets, said gold's emerging role as a reserve currency would push the metal above its all-time high of $850 an ounce. "The correction we saw earlier this year is over and gold has embarked on the second stage of its long-term secular rise," he said.
Russia has talked of plans to raise the gold share of its reserves to 10pc. Although global mine supply will rise over the next couple of years, it will fall sharply from 2010. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/15/2006 : 20:03:41
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Not exactly bullion news, but as the price of gold goes up, people will do a lot of crazy things to get rich.
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South African police stalk gold mine pirates
JOHANNESBURG, South Africa (Reuters) -- In a dangerous cat-and-mouse game, South African police are battling armed gangs of gold pirates through dark mine shafts deep underground to stop an illicit gold trade worth more than $700 million a year.
Assistant Police Commissioner Mike Fryer said the new operation -- pitting police against pirate miners in shafts as deep as 1.25 miles below the surface -- opened a fresh front in South Africa's war against gold smuggling.
"Our biggest problem is that they were utilizing explosives and hand-made grenades to threaten the people underground," Fryer said. "If one of those goes off in the wrong place, the whole thing could come tumbling down."
Police have arrested 60 illegal miners in six operations in recent months, often following hair-raising encounters with rogue gold pirates who "hijack" mine shafts.
A series of photographs in Johannesburg's Star newspaper, which broke the story on Wednesday, showed dust-covered illegal miners and one of their hand-made grenades.
Police explosives expert Joe Meiring, who took part in the operation, said pirates assemble the bombs by sticking explosives in a bottle or a beer can and use iron for shrapnel.
"It can have a trip wire, or they'll just light it and throw it at you," he added.
Miners sometimes spent as long as a year in nightmarish underground tunnels without coming back to the surface to maximize their takings, Meiring told Reuters.
"There is no fresh air, it can be as hot as 38 degrees (100 degrees Fahrenheit), everything is very compressed and the humidity is extremely high. They work there, they sleep there, they eat there," he said. "It is hot and dark, and they age very quickly."
Illegal mining is big business in South Africa, where the Institute of Security Studies estimated in 2001 that mining companies lost as much as 35.6 tons of gold per year to the pirates -- equivalent to about one-tenth of the country's total gold production.
At current market prices that would be worth more than $700 million.
Fryer said the police began training their underground team after appeals from mine security personnel, who were running into armed panhandlers in dangerous disused tunnels.
"They actually threw one of their hand-made grenades at security but nobody was hurt" Fryer said. "They were lucky because it was a relatively stable environment ... further down the shaft it would have been horrific."
Meiring said the illegal miners use basic tools such as chisels to extract ore, which they then process using grinders and mercury, itself a dangerous process.
The illegal miners survive by buying surreptitious deliveries of food from regular miners at wildly inflated prices and sleep on wooden planks. Some even reportedly have girlfriends living with them deep in the shafts.
Meiring said that along with the danger of grenades and collapsing shafts, police worry the gangs are arming themselves to repel intruders -- which could open a bloody new chapter in South Africa's unfolding underground gold rush.
"About two months ago we caught one of them and he had a handgun, so they've definitely got those, and some security guys say they have seen them carrying AK-47s," Meiring said.
...............I wonder how many will start searching for some of those lost gold mines in the west now that gold has regained its shine?
I had heard that the first gold rush in the US took place........
in 1838 in Georgia! That is the reason the US opened a mint in Dahlonega GA, they wanted a mint nearby to turn raw gold into gold coins.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/17/2006 : 18:29:25
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On Nightly Business Report 11/17/06
Stan Wienstein of Global Trend Alert
Gave his opinion concerning precious metals
Gold-if goes below $600 sell,
Silver-decent better than gold
Of course, we are all Experts when it comes to gold and silver,
being a Respected Expert (One who is more often right than wrong)
is a much more difficult proposition.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/17/2006 : 20:01:06
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Apparent world gold supply down 17% as mine production plus hedging falls
JOHANNESBURG (Mineweb.com) --Gold supply represented by mining production and hedging fell 17% year-on-year in the first half of the year (2006) as miners failed to increase tangible gold production, sold less gold forward and closed out existing hedge positions.
Actual mining production remained subdued in second quarter 2006, rising only 2% from the same period last year, said the World Gold Council (WGC) in its October Gold Investment Digest.
Gold mines did increase spend on exploration and development over the past few years as the gold price has rallied strongly since 2001. But mine production continues to suffer from underinvestment in the industry that took place during the 1990s and 2000s as the lead time to bring major new gold mining operations into operation is very long.
“Long lead times imply that it can take ten years to bring a new mine on stream and five years to re-open an existing mine,” said the digest.
Mine production is the biggest source of gold supply, accounting for 62% of total supply over the past five years.
Australian production recovered in the second quarter after an unusually severe cyclone season caused a weak first quarter. Production also rose in Mexico and Brazil and from the Polyus mine in Russia.
But there was a planned output reduction at Grasberg, Indonesia, the world’s largest gold producer, and South Africa’s share in world output continues to slide. South Africa remains the world’s largest gold producer by a small margin.
Producers de-hedged about 157 tonnes of gold in the second quarter on the back of the strong price. They both reduced the hedging of their production and closed out hedge positions.
Net producer hedging declined by 299 tonnes in the first half of 2006 says the WGC in its analysis.
Producers hedged much of their output by selling gold forward in the 1990s to secure prices and help finance new projects – a process that contributed to depressing the gold price. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/19/2006 : 20:40:38
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We all are speculating that the price of gold, silver, copper and nickel will go up, this commentary spells it out clearly.
I don't know if I posted this before, It is good information to have and think about.
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Excerpts
The Speculator as Hero
Speculation will be the foundation of dynasties in the turbulent years ahead. The original Baron Rothschild knew how to profit from the politically created chaos of the French Revolution era. He became rich and famous by following his own advice to "buy when blood is running in the streets."
That doesn't mean the speculator is predatory;
paradoxically, he's a humanitarian.
When people are desperate to sell their possessions, he appears with cash - the very thing they want most.
When they change their minds and clamor to buy those things back from him during good times, he once again graciously accedes to the desires of the majority.
The speculator, like any other worker, tries to give his employers what they want. Value is subjective,
and the price at which something voluntarily trades hands is exactly what it's worth at the time;
the speculator simply gives value for value.
If he wasn't there to buy, perhaps no one would be, and sellers would be really in trouble.
…………..(My footnote, remember the Aesop Fable the ants and the grasshopper? It is we, much like the ants who prepare for the long winter ahead, the foolish grasshoppers are the ones who suffer from a lack of planning.)
Somehow, speculators have gotten the image of careless gamblers charging about in wild, frenzied activity.
It's a totally inaccurate image, at least where successful speculators are concerned. Good speculations are always low-risk speculations.
Far from taking risks, speculators only go in for "sure things."
They are rational and unemotional if they're successful;
the irrational and emotional who like to gamble and take chances don't last long playing the game, and they soon become ex-speculators.
While simplistic, a useful way to view the methodology of the speculator vs. an investor is this:
An investor risks 100% of his money in the hopes of receiving a 10% gain.
A speculator risks just 10% in anticipation of earning 100%.
If you are the least bit attentive, the longer-term risk/reward profile for the speculator is in an entirely different league than that of the "conservative" investor.
These days, while the chattering masses are frantically looking for safe harbors against the gathering storm, the speculator is accomeulating positions in the quality gold companies. While gold is more in the news than it has been in years, the average investor still views it skeptically, thinking gold investors are somehow goofy.
……………
Investing for income is the kiss of financial death.
Why haven't any of the great millionaires of the past taken advantage of the simple gimmick of compound interest to eventually take over the world?
(If the Indians had invested their $26 for the sale of Manhattan for a 5% compounded return, their money would be worth $2,790,729,193. today).
It isn't because they haven't tried, I'm sure.
It's because no investment will give you a true 5 percent for even the length of a lifetime. In fact, there's probably nothing that can be relied upon to yield even 3 percent over more than forty or fifty years.
You might comment, "What difference does that make?
I'm not going to be here that long."
But it does make a difference, because it shows the futility of trying to stay ahead in any type of "secure" investment.
Everything is a speculation, whether people know it or not;
those who settle for a low but "secure" return are penny-wise and pound-foolish in the most profound sense.
When you settle for a "conservative" return, even the slightest miscalculation, bad luck, or government fiat can wipe you out.
Taxes will always erode your capital, directly or indirectly.
Inflation, for the foreseeable future, is sure to get worse and fluctuate wildly as it does.
Banks and insurance companies - the very institutions that have always gotten away with offering low yields because they were so stable -
will fail as they always have...
especially given the current overvaluation of most U.S. real estate and the underlying loans that are looking increasingly shaky.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/20/2006 : 18:50:10
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This excerpt syas it all as far as gold and silver prices are concerned.
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Gold and Silver = Money
Nothing goes up in a straight line and that especially includes gold and silver.
This week, both gold and silver met some resistance and were pushed downward in price a bit.
This is actually good news because it allows us to buy more gold and silver at cheaper prices.
I never like to see a chart pattern that moves up so fast that it goes parabolic.
Usually after any parabolic move up in price we almost always see an immediate correction to the down side as the price reverts back to the mean.
We saw this sort of price action in the gold price this past May after a parabolic rise fueled by rampant speculation.
All of the speculators and non-believers in this long term precious metals bull have since fled after months of consolidation.
There is very little downside in entering the gold or silver market at these levels.
If you’ve read my previous articles you probably already know that I believe that the best way to preserve your wealth is by accomeulating gold and silver bullion. It is by far the most conservative investment anyone can make. The reason I say this is because saving Federal Reserve Notes has proven not to be a viable investment option. If the value of Federal Reserve Notes were listed as a stock, the company would have filed for bankruptcy and nobody would want to buy shares. When you see how much purchasing power Federal Reserve Notes have lost since their inception, it could be argued that Federal Reserve Notes have been one of the worst long term investment choices of the past 100 years.
What really makes our current economic system so crazy is the fact that most currency doesn’t even exist in the form of a paper receipt. Most currency exists as digits on a computer hard drive. When a bank loans money all they do is enter numbers in a computer system and make a credit to an account. Debtors have to labor in order to pay back the bank all of that money plus interest on the money that took them no effort to create. Banks are allowed to lend out ten times the money that they have on the books and charge interest on the money they loan which they never even had in the first place. If an average citizen were to do this they would be labeled a white collar criminal and arrested for fraud.
Since 1913 the Federal Reserve has slowly worked to defraud the American people out of their wealth. They even went so far as to steal the American people’s gold via Executive Order 6102. We’ve gone from a currency backed by gold to a currency that is backed by nothing and easily manipulated through computers. With so much wealth stored as digits on a computer, a worldwide financial collapse could be accelerated much greater than ever before.
It is easy to see why the central banking system seeks to control the price of gold and silver. Gold and silver are superior products to their worthless currency and they directly compete against it. Unlike fiat money or digital credits stored on a computer, gold and silver stores value. Gold and silver is money. It has been money for thousands of years. This is why I believe the story behind gold and silver price manipulation is real. If everybody suddenly decided that they wanted to trade in their paper currency for gold and silver bullion, these central banks would be put out of business. The higher the gold and silver prices go the less confidence people appear to have in the financial system.
The central banks need to maintain people’s confidence in the system because it is the major factor that drives the value of their currency. This is why gold and silver are not advocated as appropriate investment vehicles by mainstream institutions. Why would Wall Street advocate owning something that is a direct threat to their entire power base?
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/20/2006 : 18:53:46
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DOW THEORY ANALYSIS SAC
The Gold Report
The Last Word... Maybe
Enrico Orlandini
Nov 20, 2006
This is my fifth, and in all probability, my last Gold Report for 2006. It's been an interesting year to say the least. We didn't hit US $1,000/ounce as some projected and we didn't fall back below US $400/ounce as others anticipated. What we did do is make good upward progress with one exception, a spike up to a US $730.40 high on May 11th. That spike, although pleasant to watch, may have done more harm than good to the psyche of the average investor. It created an atmosphere of "irrational exuberance" if I can borrow a phrase from the greatest alchemist the world has ever known, Alan Greenspan. From the March 7th breakout to the upside, to the May 11th top, every day was a holiday for the gold bugs. As usually happens with periods of irrational exuberance, they are followed by periods of complete despair, and that was the case as the price of gold plummeted all the way back down to US $542.27 just one painful month later. Currently, the price of the yellow metal stands at US $622.50 and the stench of anguish is still in the air. That's uncalled for as far as I'm concerned and I would like to use the space below to explain why that is the case.
We began the year still entrenched in the first phase of a multi-year bull market in gold and we are going to end the year in the second phase of that same bull market. As you may recall, I defined the phases as follows:
The first phase is where the so-called smart money takes great pains to build a position.
They do so quietly
trying always not to call attention to themselves.
The second phase is where the institutional investors enter the market, and
The third stage is where the general public, your neighbor for instance, jumps on the bandwagon and the price goes vertical.
I then went on to mention that we could even experience a fourth stage highlighted by a dollar collapse and gold actually becoming money, which is really what is it anyway. Gold is not a commodity; it is money. Always has been and always will be! The paper with the pretty little pictures on it that you carry around in your pocket is not money. Rather it is a fraud perpetrated on you by the central banks of the world. Better yet it is the biggest unpublicized transfer of wealth the world has ever known.
.............Given what I saw on Friday, I believe the latter scenario will play out and we'll go on to test resistance at US $686.20 by the end of the month. In either case, we are headed higher and it is just a question of whether we must endure some short term discomfort this coming week or not. Looking a little further out in the calendar, I believe we'll see a close above US $730.40 in the spring of 2007 and a new all-time high sometime later in the year. Rest assured that there will be volatility along the way, and some pain, but the trend will remain up for years to come.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/21/2006 : 20:14:36
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Differing opinions as to what the future holds, it’s almost as bad as CNN. I wish somebody could get a crystal ball that actually worked.
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Impressions of the New Orleans Investment Conference
Larry LaBorde
Nov 21, 2006
After the past 5 days in New Orleans I am still suffering from information overload. Personally listening to almost 40 presentations from some pretty smart people with differing opinions can be confusing. Although many speakers seemed to have common threads that ran through most of their talks.
Many speakers felt that:
1. Bonds are finished.
2. All investors need some type of exposure to Chinese growth.
3. A down turn in the US economy is probable in 2007
(No agreement concerning the severity)
4. Get out of US dollars to some degree
5. Think global.
And to a lesser extent many felt:
1. Copper is going to turn down
2. The US stock market will experience a down turn. Keep stop losses close.
3. Go long on grains
4. Buy gold bullion and gold stocks
There were also a few memorable comments from several speakers such as:
Larry Abraham's enlightening description of how the Chinese intend to spend their 1 trillion dollar surplus in the 3rd world was fascinating. China intends to loan Chinese contractors money to build infrastructure (using Chinese built equipment) such as toll bridges, toll roads, ports and water systems. The Chinese contractors will own and operate these assets for profit so they can pay back the loans. The 3rd world will get their infrastructure built and the Chinese will make many new friends. They will then buy raw materials from their new friends whom they will extract over the new bridges, along the new roads and out of the new ports. The 3rd world will benefit selling their agricultural and minerals exports to China. China will benefit by creating new export markets for their consumer goods.
………………(Good for copper & nickel)
Curtis Hesler reminded us to: take profits every now and then, buy things that are going up and sell things that are going down. (Sounds simple but how many of us hold a losing position too long.)
He also said he does not trust US GDP numbers because bureaucrats count goods and services poorly.
He does however, believe in income tax numbers. He has more faith in yr/yr increases in income tax revenue as opposed to yr/yr increases in GDP as a way to gauge growth in the US economy. He also believes that in the future Japan is going to become a small unimportant country due to its demographic problems. Long on ag commodities and high tech - short on copper.
Frank Veneroso feels that the run up in base metals is a result of hedge fund buying.
He feels that this is not a result of demand but a result of speculation in the market. This is causing imbalances that will result in surpluses that will have to be worked off over a period of years pushing base metal prices back down. He is definitely short copper and other base metals for years to come.
Jon Nadler said there is an infinite supply of paper dollars chasing a finite supply of gold. Most of the gold purchases are going into the people's pockets and not the vaults of central banks. The new central bank of the people is the gold ETF.
Pam Aden confirmed that we are in the 6th year of a gold bull market. Copper is a bubble but gold is not. Gold is rising in all currencies since 2005. Invest with this gold trend and stay with it until the general trend changes. Corrections for a few months mean nothing. The gold bull will probably run 10 to 15 more years.
Robert Meier (RMB Group 800.345.7026) said we are in trouble in Iraq. We must travel to the other side of the world and have terrible logistics working against us. We also have terrible economic forces against us. A $1,000 RPG can take out a $7,000,000 tank. The 21st century will be full of wars for natural resources.
Jim Rogers said diversification was something invented by stock brokers to protect themselves. He said the best way to get rich is to put all you eggs in one basket and then watch the basket. Invest in commodities such as: grains, metals and oil.
China is the future, expect setbacks there but the long term trend in China is up. He even hired a Chinese nanny for his little daughter so she could learn the language. Forget investing in Russia and India for now. Buy his new book "Hot Commodities" to find out more.
Doug Casey was frank, honest and forthcoming with his refreshing libertarian ideas. Doug says you should "internationalize yourself". You should buy a lot of gold and silver coins, speculate in mining stocks
and sell it all when Time and Newsweek say gold is the best investment of the year on their front covers. He also said we are living in an awkward time in our history, it is too late to change things but too early to line up all the politicians and shoot them for the mess they have made.
Bob Prechter said the markets have done terrible when looked at priced in oz of gold instead of US dollars. Oil priced in terms of gold has been relatively flat over the last 35 years. Predicts buyers will simply leave the stock market and both stocks and bonds will drop hard.
Dr. Marc Faber was my favorite of the conference.
He says the 3rd world is financing the developed world - a condition that has never existed before.
Debt in the US is growing much faster than GDP which is unsustainable. The 5 major world currencies are the US dollar, euro, yen, renmimbi and gold. Diversify into all of them. Oil demand in emerging markets is growing very fast. Mr. Putin, who now controls the production of Russia's 10 million bpd of oil (more than Saudi Arabia) is the world's largest oil producer and the most powerful man in the world today - not Mr. Bush. Watch the Dow index priced in terms of gold. Go long grains.
Paul Van Eeden, however, seemed to tie it all together in my mind. He said that hedge funds did indeed purchase large positions base metals starting in mid 2005. He says they did so at the same time the Japanese central bank announced the end of the yen carry trade. The hedge funds had such large positions that they could not quickly unwind in the yen carry trade that they became worried about gigantic losses as a result of a declining dollar against the yen if the Japanese central bank stopped supporting the dollar. As a hedge against a declining dollar they purchased metals. Since this very large demand was not coming from true industrial demand it is artificial and may cause misallocations and imbalances in the metals markets. As a result base metals may indeed be in a bubble and fall as the hedge funds unravel their positions. However, gold is money! Another chart showed computations in the rise in gold stocks through yearly mine production figures vs. the rise in the US dollar supply. There is a surprising correlation with the exception of 1979/1980 and the last few years. According to his chart gold is currently $200+ dollars undervalued right now. It appears I now have a valid reason to be short copper (and other overbought base metals) and long gold.
In closing I would like to thank all the speakers including those not mentioned simply for brevity's sake for their input this year. I apologize in advance for any misstatement of anyone's work. The meager few words that I have written above are only a tiny fraction of the wealth of topics covered by some of the brightest minds in the world. Most of these speakers have newsletters that are available on a subscription basis for more detailed analysis of political and market conditions. To get individual stock picks you will just have to attend the conference next year. The New Orleans Investment Conference was the best investment in my time and money that I spent this entire year. In addition to the speakers I was able to visit and exchange ideas with investors from all over the world. I highly recommend everyone to take control of their investments and educate themselves. The New Orleans Conference is one of the best ways to do just that.
Larry LaBorde
................(All of this is, of course, opinion, not fact. Experts have been wrong in the past and will be wrong in the future. While many feel copper and nickel will decline, we can't forget that we paid basically face value for these metals. Up, down or sideways, these coins of ours will keep their face value no matter what. Besides, they will increase in value as the prices of copper and nickel increase over the decades as the dollar's buying power declines, inflation wise.
Many see a copper and nickel bubble because they want to see a bubble, ignoring the fact that supplies are still tight, demand is still strong, even with a US downturn, the third world, especially the Asian Tigers, still need bridges, skyscrapers, pipelines, etc. Demand for base metals, just like demand for gold and silver, is not going away any time soon.
Lastly, how many years did it take for silver to go from the base price of $1.29 per ounce to $4.00 per ounce? Silver has never fallen back to $1.29 per oz., while it has not gone straight up, it hasn't fallen to so low a price, either.
Nickel and copper will behave as all commodities do, they will go up, down, sideways, then right back up again.) |
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Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 11/22/2006 : 07:11:17
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That's the point that keeps me buying base metals via coins. Though I expect a downturn to the economy over the next year or so, I also don't expect mining production will be able to keep up with the long term demand for the base metals at anywhere close to the rather low prices we have seen in the past. Short of SHTF, developing nations will continue to have a growing need for the base metals in the years ahead.
Thanks for these posts.
________________________
If you can conceive it and believe it, you can achieve it. -Napoleon Hill |
Edited by - Ardent Listener on 11/22/2006 07:12:02 |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/22/2006 : 11:09:53
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You are welcome, Ardent Listener.
Reminder/footnote: Many of the developing countries are starting to behave like the western world, as far as health and safety of mines are concerned. As it gets harder and harder to get a mine up and running, expect supplies to remain tight while demand remains strong and prices to rise in the years ahead. |
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Metalophile
Penny Collector Member
USA
320 Posts |
Posted - 11/22/2006 : 11:33:09
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This may be a little off topic, but I see in the 11/21/06 post that many of these analysts say to invest long term in grains. Seems logical given the current emphasis (whether merited or not) on ethanol fuels and population increases. However, how does one do a long term investment in grains? I'm not brave enough to try the futures markets (novices are likely to be taken to the cleaners). The only logical answer I can bring myself to is to invest in farmland where grain is grown, but I'm not sure I have the knowledge on how to retain good (and honest) farmers to do the farming. My mother has a little farmland which my late father left her, and she's having a hard time dealing with these farmers who rent (or want to rent) the land. Also, I always wonder when the rent is based on a percentage of the crop how to verify the crop yield on your field without just taking the farmer at his word? This particular farmer rents land from multiple land owners in the area.
Metalophile |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/23/2006 : 18:21:45
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If I were to invest in Grains, I would take the alternative route and buy stock in a company that deals with agriculture/sells the seed to framers.
ADM is one of the 800 pond gorillas in the world of grains. There are others if you look into them.
While Big business, especially those who run big business, usually end up acting like eeeediots!, I say profit off of big business the same way big business profits off everybody else, get in, get your profits and get out when the gettin' is good.
Big business shows no loyalty to their customers, shareholders should show no loyalty to the companies, i.e. sell stock for a profit, (its an investment, not a marriage. The shares don't care if you buy and sell them.) |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/23/2006 : 18:24:23
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Anytime any organization, group or person sells large holdings of gold the price will be effected.
If you want quick profits, this is bad.
If you are buying for the long haul, this is good, since lower prices means more gold can be bought.
I wouldn’t be surprised to see China buy up a good sized amount of this IMF gold for its reserves.
The story……….
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Pressure grows on IMF to sell some gold stores
Directors support step to cover losses
SINGAPORE: The International Monetary Fund, one of the world's largest holders of gold, should sell some of its hoard to cover projected operating losses, say a growing number of the fund's executive directors.
The Washington-based lender predicts that it will lose $87.5 million next year and $280 million in 2009. Some directors say the fund should sell a portion of its 103 million ounces of gold, which are valued at $64.7 billion, and invest the proceeds in interest- bearing assets.
"We would support the use of fund gold as part of the solution to IMF financial needs," Tuomas Saarenheimo of Finland, chairman of a group that coordinates the position of European Union members on the fund's 24-member board, said during an interview in Washington.
The prospect of gold sales highlights the crunch faced by the fund as countries like Uruguay repay loans early, reducing interest income, and demand for fresh credit ebbs. Proponents must overcome opposition from the United States, the biggest owner of gold, which wants to keep prices high.
"Large gold holders and producers like the U.S. have been worried that IMF sales would drive down the gold price," said Ted Truman, a former U.S. Treasury assistant secretary and a scholar at the Peterson Institute for International Economics in Washington.
Brookly McLaughlin, a spokeswoman for the Treasury Department, said that sales were not "the appropriate option at this time for dealing with funding issues at the IMF." She declined to elaborate.
Rather than sell gold, the IMF should rein in an annual budget that has doubled to $980 million in the past decade, said Devesh Kapur, an economist at the University of Pennsylvania in Philadelphia. "Costs at the fund have been allowed to get out of control," Kapur said. "It now has a far bigger staff and budget than its role justifies."
A gold sale is among the options before an eight-member panel on IMF finances appointed in May by the managing director, Rodrigo de Rato. The panel, which includes the former Federal Reserve chairman Alan Greenspan, is to submit its report early next year. Other solutions include cutting expenses and asking member states for contributions.
Jeroen Kremers, the executive director, said that limited gold sales were preferable to seeking handouts.
"Becoming dependent on member states for annual budget contributions would seriously undermine the IMF's independence and thus its ability to fulfill its role in the world financial system," Kremers said in Washington.
Support for sales is building. Six directors representing 39 countries said they were in favor, while a seventh declined to comment. Finland and other Nordic nations, which opposed an unsuccessful plan in 2005 to sell gold to fund debt relief for poor nations, now back sales. One director, who declined to be identified, said gold sales would win the necessary 85 percent of votes by IMF members if U.S. opposition could be overcome. The United States has a 17 percent voting share in the fund, giving it a veto.
"It's hard to imagine a solution to the IMF's financial problems without gold sales," said Eduardo Loyo, the director from Brazil.
The IMF finance department in February recommended selling 11 million ounces of gold, or about 11 percent of its stockpile.
With gold at $627.70 an ounce in New York late Tuesday, more than double the price in April 2002, that would raise $6.9 billion.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/24/2006 : 19:11:30
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Some silver news for a change,
from Russia,
the 600 pond gorilla in the metals and commodities markets,
soon to be an 800 pound gorilla the way things are going.
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'Norilsk Nickel' Aims to Become the World's Largest Producer of Silver
KRASNOYARSK, November 24. /FIS/. Today Russia's largest silver producer is 'Polymetall' with the production output of 18.9 million ounces in 2005. However, if 'Nornickel' decides to implement the project in Tajikistan, it may take away the leadership and become one of the world's five largest producers of silver.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/24/2006 : 19:23:17
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Follow up on the IMF selling gold.
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Inflation Moves Into Overdrive
Excerpt
.............On this morning of November 22, the IMF is openly discussing the sale of their gold to pay off huge losses they incurred lending fiat money to deadbeat nations.
While we need to pay attention, in our view the senior IMF decision makers will hold their gold as they recognize current and future values.
Nobody in that notorious gang has any deep-seated desire to lose $1Billion through a gold sale like Gordon Brown did in the U.K.
Previously, we have read IMF statements issued by their top leaders with the inside power saying no gold will be sold.
Even if they sold some,
we would expect to see Chinese or Arab billionaires ready to buy with enormous checks in hand. We also know India is no slouch either as they steadily and readily import more raw gold for jewelry, ornaments and weddings.
India announced this week they will be opening their own new gold trading market similar to the Comex, London Metal Exchange, and the CBOT platform. We say the more the merrier. Anything to open gold markets to the public is good news for gold bugs and precious metals in general. –Traderrog
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/26/2006 : 18:56:17
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How many years did it take for silver to go from the base price of $1.29 per ounce to $4.00 per ounce?
Here is the answer:
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1965 price $1.293
1974 price $4.391
Silver had fallen below $4 per Troy oz from 1991-1992, but went right back up again.
Ya can't keep a good metal down! |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/29/2006 : 18:22:03
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Just turned on Nightly Business Report on PBS,
Wall Street liked the latest data and good news made the market go up.
Some see a soft landing on the horizon, As usual, any good news makes the market happy.
Ignore the bad news, that's tomorrow's problem, so say Wall Streeters.
The masses keep following the wisdom of Wall Street, not realizing the path to riches via the stock market leads right off a cliff.
The dollar is still losing value via inflation.
The unemployment numbers only count those who are recieving unemployment benefits, not those whose benefits ran out and still odn't have jobs.
Oil and commodities will be going up due to world wide increased demand.
Keep dollar averaging in your gold and silver purchases. Buy on the dips if you can.
I can't think of anyone who ever bought gold and silver who ever regretted doing so, unless they sold too soon.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/29/2006 : 18:30:20
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Gold futures dip as traders weigh economic data
Gold futures closed lower Wednesday to tally a two-session loss of more than $5 an ounce as traders weighed mixed data on the health of the U.S. economy and the dollar regained some lost ground against the euro
The U.S. economy grew at a 2.2% annual pace in the third quarter, a bit faster than the 1.6% initially estimated, the Commerce Department reported Wednesday in its first revision to the gross domestic product report.
But the government also said sales of new-homes fell 3.2% in October to a seasonally adjusted annual rate of 1.004 million.
And on Tuesday the Commerce Department reported that demand for U.S.-made durable goods fell 8.3% in October, offsetting September's 8.7% gain. The Conference Board also said Tuesday that uncertainty about the strength of the economy caused the second-straight monthly decline in consumer confidence in November.
"The risk is still that of lower growth coupled with inflation [so] gold will not have a very hard time proving itself, but feels a bit heavy at this very moment," said Jon Nadler, an analyst at Kitco.com, in e-mailed comments.
Gold for December delivery closed down $1.80 at $635.50 an ounce. It's tallied a loss of $5.10 in two sessions. In Tuesday's action on the New York Mercantile Exchange, the contract closed down more than $3, playing off and a speech from Federal Reserve Chairman Ben Bernanke on the U.S. economy as well as the action in the foreign-exchange market.
"Gold has again stalled at the $640 level...as technical resistance remains, but with the FX market overlooking Bernanke's relatively positive speech last night and oil prices starting to work higher as winter demand picks up, the outlook for gold remains positive with $650 being the metals target once the $640-$642 congestion is cleared," said James Moore, analyst at TheBullionDesk in London, in a note to clients.
There's also renewed speculation about central banks buying gold after comments from the former deputy governor of the Reserve Bank of India, saying that country should increase its exposure to gold within its reserve holdings, according to Moore.
The dollar rose against the euro Wednesday, a day after the greenback touched a fresh 20-month low against its foreign rival.
Against this background, December silver futures closed down 5.4 cents at $13.566 an ounce. January platinum rose $1.80 to end at $1,152.40 an ounce, but December palladium dipped $1.05 to close at $322.30 an ounce and December copper lost 1 cent to end at $3.128 a pound.
On the supply side, gold was unchanged at 7.49 million troy ounces as of late Tuesday, according to Nymex data. Silver was also unchanged at 108.4 million troy ounces, but copper stockpiles rose by 1,080 short tons to stand at 30,864 short tons.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/29/2006 : 19:26:28
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EPA announces it will regulate silver nanoparticle technology
By: Dorothy Kosich
Posted: '24-NOV-06 08:00' GMT © Mineweb 1997-2006
RENO, NV (Mineweb.com) --The U.S. Environmental Protection Agency has told members of the news media that the EPA has decided to regulate a large class of consumer items made with microscopic silver nanoparticles.
Recent research has determined that silver ions destroy bacteria, viruses, fungi, protozoa, and even cancer cells. Oligodynamic silver refers to the power of an extremely small concentration of silver ions to exert biocidal actions. A nanometer is about 10X the diameter of an atom or 10,000X smaller than the diameter of human hair. Nanotechnology makes it possible to manipulate materials at molecular or atomic levels.
Silver can be absorbed from the lungs and the gastrointestinal tract, according to EPA. When an excessive amount of silver is absorbed, tissues become impregnated with silver sulfite. Large amounts of this complex under the skin will result in a bluish or grey-blue skin color, a condition called argyria. However, the effect is not harmful to health. Silver taken orally is not considered to be toxic.
The Food and Drug Administration has limited authority over regulating certain categories of products include many products claiming to use antibacterial silver nanoparticles. The FDA is now considering whether it needs to revise its rules for nanoproducts.
Until now new products made with silver nanoparticles were not regulated. It is incorporated into products ranging from food preservation to toothpaste to cold products to bedding. In a statement to the Washington Post, Samsung said its “Silver Wash” clothes washer discharges “only very minute, inactive forms of silver” into the environment. “Samsung has and will continue to work with the EPA and state regulators regarding regulation of silver washing machines to maintain full compliance with all applicable laws and regulations.”
However, environmental groups, such as the Natural Resources Defense Council, fear that the increasing amount of nano-silver being washed down drains could be killing beneficial bacteria, may be toxic to aquatic life, and possibly cause human health risks. In a January letter to the EPA, Chuck Weir, Chairman of Tri-TAC, a technical advisory group for California wastewater treatment plants, wrote, “Silver is highly toxic to aquatic life at low concentrations and also bioaccomeulates in some organisms, such as clams.” Under pressure from other groups as well, the EPA decided to reexamine the release of silver ions into the environment.
On Wednesday the EPA said any company wishing to sell a product it claims will kill germs through the release of nanotech silver or related technology must provide scientific evidence that the invention is without environmental risks. The final rules will be published in the Federal Register within the next few months.
Scientists suggest that the very nature of nanotechnology—its ability to alter the fundamental properties of substances—is like to challenge the existing regulatory structure and generate confusion concerning the role of regulation.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/29/2006 : 19:57:15
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Gold de-hedging could total 15 million ounces this year
JOHANNESBURG (Mineweb.com) --Gold de-hedging is expected to total 15 million ounces (460 tonnes) this year – the highest level of de-hedging since the cycle started in 2000.
A further decline of 2.4 million ounces in the hedge book (76 tonnes) is expected in the fourth quarter of this year, said GFMS, UK-based precious metals consultancy in its November Global Hedge Book analysis.
Gold de-hedging slowed in third quarter 2006 with the hedge book falling by 2 million ounces (or 62 tonnes) in delta-adjusted terms on the back of a hefty decline of 1.7 million ounces in forward sales.
GFMS said that this return to “more sustainable” levels of de-hedging had been widely anticipated for the quarter.
Scheduled deliveries accounted for the bulk of the 53 tonnes decrease in forward sales, although AngloGold Ashanti contributed with a reduction in its longer dated forward contracts.
Newcrest, holder of the third largest producer hedge book, continued to deliver into its commitments as scheduled, reducing its forward sales by 352,000 ounces (11 tonnes) and its gold loans by 35,000 ounces (1 tonne).
The net nominal options book fell about 16,000 ounces (0.5 tonnes) quarter-on-quarter as the global vanilla options position increased by a marginal 5,000 ounces (0.1 tonnes) and non-vanilla options diminished further by a comparatively insignificant 21,000 ounces (0.6 tonnes).
“Coupled with the drop in forwards, the third quarter decline in the global hedge book amounted to 1.7 million ounces in nominal terms,” said GFMS.
AngloGold Ashanti led the pack of de-hedgers, topping the table with a reported 0.6 million ounces (20 tonnes) cut to its delta-adjusted position, while Barrick’s activity took a back seat after two quarters of significant book reductions.
Barrick reported a 0.3 million ounce (9 tonnes) cut to its corporate gold sales contracts and a rise of similar magnitude to its floating forwarding position – which had a combined effect of zero net change to the book volume.
Fresh hedging was limited in the third quarter, with only a handful producers such as PT Antam and Boliden reporting an increase in their hedge books.
Antam sought to “protect revenues and budget” by locking in price protection via the forward sale of a modest 3,000 ounces and Boliden added a reserved volume of cover to its 2008 production, amounting to 20% of anticipated gold production.
In light of the strong gold price of recent months, a number of producers chose to defer deliveries and sell gold into the market at spot prices during the quarter.
HEDGE BOOK COMPOSITION
The composition of the hedge book changed little quarter-on-quarter with 64% of the book comprised of forwards and gold loans, 36% by vanilla options and less than 1 % by non-vanilla products.
Changes were more striking on a year-to-year basis; with non-vanilla products “nearing extinction” after a 90 % drop in its share of the hedge book and forwards and gold loans’ stake falling by 9%.
In contrast, vanilla options have seen their share of the nominal book increase by over 30% year-on-year.
“Forwards fell back to less than 1,000 tonnes in the third quarter – a level not seen since the early 1990s,” said the analysis.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/30/2006 : 19:46:56
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Gold is up again, I don’t want to say anything about it so as not to jinx its rise.
Glad I bought a little bit of yellow yesterday.
Just keep in mind, lots of people play the game of gold gathering, from small time operators trying to add to their collections to the 800 pound gorillas who play the commodities game, to those in India who have hoarded for centuries and nervous Europeans who recall the inflation and destruction of their currencies within living memory. As I said, lots of folks are looking to gold as an anchor, once again, it is the common man who outsmarts the ‘genius’s’ of Wall Street.
Lots of money is gained and lost in a matter of minutes from one bad judgment in the commodities pit, though buying the bullion outright is the safest move.
Prices will continue to bounce around since some see gold shooting to the moon while others see gold headed for the basement.
Gold bugs and gold bears can look at the same data and see a completely different picture.
Like the name of this topic section says, hang tight!
Treat your gold as a golden 401k plan. Avoid touching it until the day you really need it.
Remember, substantial penalties from early withdrawal, you will be kicking yourself for selling too soon.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 11/30/2006 : 20:16:49
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I have noticed that there seem to be more gold coins offered on e-bay.
Even my usual on line seller with their own website is offering more on e-bay than on their online storefront. Expect demand to remain strong as more and more get the idea that owning gold and silver isn't such a bad idea after all.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 12/01/2006 : 20:26:05
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The age-old message: ingot we trust
Peter Hambro whips an Edwardian ten-shilling note out of his wallet, then a shabby note for two francs Belges, before slamming down a war-time papier for 50 centimes issued by the City of Lille in 1917.
"Absolutely worthless promises," he says triumphantly.
Out of his pocket appears a lovingly-cradled gold coin, the size of a sovereign, from the Ardennes fringe of the Roman Empire. Its metal content is worth more or less what it was when minted circa 50BC.
The executive chairman of Peter Hambro Mining, the biggest pure gold play listed on the London Stock Exchange, is not predicting a return to 1920s hyper-inflation but he does see echoes of the "beggar-thy-neighbour" policies that played havoc in the inter-war era.
It is common wisdom that the US dollar is stretched to snapping point by the deficit/debt debacle, but less understood that ageing Europe and Japan are too fragile to absorb the shock of a dollar slide, one that is perhaps already starting.
"It's now a matter of competitive devaluations. Countries are all debasing their currencies, so the question is which one debases fastest," he said. "Can any finance minister in the world think this is a good moment to buy dollars, but where else do you go?
"Do you think the euro is a structurally sound currency? I don't. It means buying into Italy, Spain, Portugal, and France with unfunded pensions and energy deficits."
"Sterling? Mrs Thatcher's legacy of financial rectitude is all but squandered and New Labour's creative accounting is Maxwellian," he said.
How high will gold go in the currency Götterdämmerung ? With a smile of approval, Mr Hambro notes the $4,000 to $5,000 forecast by the Swiss guru Dr Martin Murenbeeld.
Formally, he is sticking to a cautious $750 in 2007, then we'll see.
Mr Hambro predicts that the rising reserve powers of China ($1 trillion) and Russia ($273bn) will top up their holdings of gold in a slow, relentless switch away from dollar dependence.
The Hambro empire is smack in the middle of this nascent Asiatic super-economy, operating from Russia's Amur region, bordering China – once the spot where Mao Tse Tung feared a Russian tank invasion.
From there a trio of Hambro gold, iron-titanium, and timber companies supply the voracious industrial machine to the South.
"The Chinese are desperately short of iron ore for their mills, and they're so short of timber they've banned the used of disposable wooden chopsticks. There are just so many people in China who are getting a bit richer," he said.
To those such as Morgan Stanley's chief economist, Stephen Roach, who says the "China commodity story" is a speculative bubble, Mr Hambro suggests a visit to Harbin, a Manchurian city of nine million people where the Hambro lumber yards supply wood for an immense parquet flooring factory.
"The mayor of Harbin took me to see a basketball court in his building where the whole floor was covered with a model of the town. When I told him I didn't recognise the buildings, he said, 'This is the new Harbin.' The Chinese are doubling the city just like that," he said.
The gold operation, Peter Hambro Mining, is a Russian animal, created with Russian partners to exploit open-pit reserves bought for $1m in 1994. A decade on, it is worth near $2bn.
The company is now the fifth biggest listing on Aim. A lot of mid-tier miners have seen the gains of the gold rally wiped out by surging costs, up by an industry average of 70pc. His diggers somehow manage to extract nuggets at $135 an ounce, the lowest in the world. Output is leaping from a quarter million ounces to 1m ounces by 2009, the cusp of the big league. Profits were up 149pc in the first half of 2006.
"The secret to low cost is using Russians to do the work. We do all our own engineering and we use Byelorussian Belaz trucks you can mend in the middle of Siberia with a hammer and a spanner," he said.
Mr Hambro, an ex-Mocatta & Goldsmid man, learned Russian ways as the Soviet Union's chief counterparty for gold trades in the Brezhnev era, a post more fitting than it might look for an old-Etonian scion of a venerable banking dynasty. His family issued the bonds that built the Trans-Siberian Railway. He scoffs at the foreign invaders who gobbled up Russia's assets for nothing in the early 1990s – with or without bribes – and are now screaming breach of contract as the Kremlin tightens the terms. "The first lot were mostly drunks, idiots, and crooks," he said.
Others failed to go with the grain of a society they woefully misunderstood, notably PanAmerican Silver, forced to cede its assets to Polymetal.
More controversially, he takes the Kremlin's side in the dispute with Royal Dutch Shell, facing the threat of expulsion from Sakhalin after investing $22bn in the world's biggest liquefied gas project. "Russia is an unrecognisable country since the day that Shell deal was signed, and the price of oil is much higher. I agree with the Russians that the original terms were unfair," he said.
"Shell are posturing. They say they've got a contract, and the Russians say you're quite right and if you look closely it says you must not tread on green-throated frogs," he said. "The big guys can change the rules on you. We watched them do it in the UK when they put windfall taxes on the North Sea. Governments do it all the time."
Mr Hambro got a taste of it this week when Russia's eco-watchdog turned ugly on five exploration licences in the Arctic Circle, a minor headache but enough to knock 23pc off the share price on the London Stock Exchange in an hour yesterday.
Peter Hambro remains unflustered, admitting only that there may be a "rule of law risk" in Russia. "The gangsters are getting braver," he said.
Indeed they are, mowing down the central bank director on the Moscow metro. But was it just gangsters who murdered KGB defector Alexander Litvinenko with Polonium 210 at London's Itsu sushi restaurant?
Taking an indulgent view of Vladimir Putin's Tsarist fits is no doubt wise policy for a man sitting on an unmovable estate worth billions of roubles in Eastern Russia, but the Hambro family has not held its place for a quarter of a millennium at the apex of world finance by being stupid.
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Bullion Prices, Hang Tight
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