This article appears in the April 20, 2007 issue of Executive Intelligence Review.
by Cynthia R. Rush
The fact that Barrick Gold was one of the principal sponsors of Al Gore's upcoming appearance in Santiago, Chile, as the keynote speaker at the May 11 conference, "Global Warming and Climate Change: The Time To Act Is Now," ignited a public outcry from several Chilean environmentalist groups which, along with an international spotlight placed on the case by the LaRouche Political Action Committee's website (www.larouchepac.com), has forced Barrick to withdraw its sponsorship from the event. Gore, for his part, is trying unconvincingly to distance himself from Barrick.
Some of the Chilean groups have limited themselves to denouncing Barrick's environmental crimes—polluting the air with toxins and destroying Chile's glaciers—and ask how the great champion of global warming could possibly associate with a monster such as Barrick. A distraught Sen. Alejandro Navarro, Socialist Party head of the Senate Environmental Committee, reported April 7 that he was writing a letter to Gore to warn him of what "his visit's ties to Barrick Gold have provoked, so he can evaluate the impact this will have on his speech." In a statement issued on her website, Fabiola Marín Salgado of the Vida Autónoma organization, stated the same day that "every environmentalist in Chile would like to warn him that his image as an environmentalist will be ruined if he attends events sponsored by Barrick Gold." Gore's association with Barrick shows "callousness," she said.
A handful of groupings has gone further and posted exposés published by EIR in the late 1990s on Barrick's role in African genocide, and its links to the covert intelligence apparatus run by former President George H.W. Bush and other characters and institutions whose allegiance is to the Anglo-Dutch financial oligarchy.
But everyone is missing the fundamental point that the blimpish Gore's association with Barrick Gold isn't a fluke. He shares the company's outlook of racism and genocide, and has the exact same financial and political backers. These include the Bush family—you ask, but aren't they Republicans?—and major figures in the global Anglo-Dutch financial oligarchy and raw materials cartels. George H.W. Bush sits on Barrick's International Advisory Board, along with former Canadian Prime Minister Brian Mulroney. Barrick Chairman Peter Munk a protégé of the British royal family, is a member of the environmentalist millionaires' grouping known as the "1001 Club," along with genocidalist Maurice Strong.
Barrick's African Genocide
When these criminals talk about "saving the environment," they mean getting rid of a large portion of the human race, especially darker skinned populations. Barrick's record in Africa makes the point.
During the 1990s, when Al Gore was Vice President, and also serving as chairman of the U.S.-South Africa Binational Commission (formed in 1994), the Toronto-based Barrick Gold was in the forefront of an "economic invasion" of the minerals-rich nation of Zaire. In 1996, Barrick Gold simply moved in and laid claim to gold mines at Kilomoto and Doko, in the northeast province of Haut-Zaire. Others joined in the stampede, including the hoary Anglo American Corp. (based in South Africa), and the newly formed America Mineral Fields (AMF, a British Commonwealth company, founded in Canada in 1995, for "exploration" purposes), which locked in a deal for the mammoth Kipushi copper mines in Shaba province. When even all these give-away deals—signed as preliminary contracts with Mobutu Sese Seko, the President of Zaire—weren't enough for the Anglo-Dutch commodities cartel, they pursued a "regime change."
On May 9, 1997 in Lubumbashi in western Zaire, representatives of a dozen financial entities associated with the mining cartel (diamonds, cobalt, copper, gold, zinc, tin, barite, boron, magnesium), met with Laurent Kabila, who took power over Zaire and its 45 million people less than two weeks later. All told, the raw materials grab, chaos, and strife cost millions of lives in the heart of Africa.
What About Pinochet's Nazis?
While ecology groups say they are perplexed by Gore's association with Barrick, they haven't said "boo" about the even more glaring fact that individuals and institutions tied to the bloody 1973 coup by Augusto Pinochet against then-President Salvador Allende, and subsequent 17-year Nazi-style dictatorship, are sponsoring the Santiago conference.
Gore's invitation to speak there came from multi-billionaire magnate Sebastián Piñera, failed 2005 Presidential candidate and also the driving force behind the creation, in Chile, of the "National Committee of Support for Al Gore's Candidacy for the 2007 Nobel Peace Prize." Sebastián, who with affiliated companies is paying a whopping $200,000 to bring Gore to Chile, is the brother of fascist José Piñera, Pinochet's Labor Minister who privatized Chile's once excellent state-run social security system in 1981.
Sebastián tried to win the Presidency in 2005 posing as a "Christian humanist" and touchy-feely environmentalist who was concerned about "the poor." But in fact, he was the preferred candidate of the University of Chicago's George Shultz-Felix Rohatyn crowd that installed Pinochet in power in the 1973 coup. The Chilean people didn't buy his story, and elected Michelle Bachelet instead. And today, statesman Lyndon LaRouche has noted, by inviting the anti-African racist Al Gore down to Chile, Sebastián Piñera has fully exposed himself.
Then there's the other sponsor, the right-wing daily El Mercurio whose owners, the Edwards family, have served the British monarchy dating back to the 19th Century, when it fought to ensure that nothing even remotely resembling the American System of political economy would ever take root in Chile. In 1973, editor Agustín Edwards was a leading organizer of the Pinochet coup, along with Henry Kissinger and Rohatyn's International Telephone & Telegraph Co. (ITT). The daily is a proponent of the Mont Pelerin Society's fascist economics and continues to defend the late Pinochet.
Given these facts, the question is whether Gore is travelling to Chile to help the Nazis overthrow President Bachelet. Right now, Piñera is running a nasty campaign to force her out of office, putting himself forward as the man who can save Chile from the "chaos" he says she has created. What he means by that, is that Bachelet's efforts—albeit timid ones—to move Chile away from the brutal economic model imposed by Pinochet's "Chicago Boys," and still largely intact today, will not be tolerated.
As LaRouche observed April 9, "We have not yet gotten to the bottom of the Nazi connections behind the late dictator Pinochet from Chile. The Nazi is dead, but Nazism is not. And we see this in the attacks coming from various quarters on President Bachelet, which are obviously coming from the undead fascists of the Nazi tradition of the late dictator Pinochet"
LaRouche added that these are people who may be in cahoots with a filthy character from Caracas, Venezuela, Alejandro Peña Esclusa. Peña, a former member of the LaRouche organization, subsequently became an advocate of the Pinochet dictatorship and associated with Pinochet's circles in the 1990s, and is now associated closely with the fascists in Spain and Italy, as well as the U.S. and his own country.
Bush's Gore
The Bush family directly, or banking and political interests intimately linked to the family, are among the backers of the two other conferences at which Gore is the keynote speaker. Jeb Bush's Inter-American Ethanol Commission (IEC), founded in December 2006 to resurrect the failed Free Trade Area of the Americas (FTAA) through biofuel promotion, is a major sponsor of the First Biofuels Congress of the Americas on May 11 in Buenos Aires.
One of the IEC co-chairmen is Luis Alberto Moreno, president of the Inter-American Development Bank (IADB) and former Colombian ambassador to the United States. The IADB, whose activities are now virtually indistinguishable from Jeb's IEC, is organizing the April 19 conference in Miami, sponsored by the free-market business grouping Poder New American Alliance-Green Forum, and Kissinger McLarty Associates.
The Kissinger connection is relevant here. In a fit of self-promotion, the IEC held a conference April 2 in Washington, D.C., "Towards a Hemispheric Biofuels Market: The Outlook for Private Investment." Aside from the three co-chairmen, Jeb Bush, Moreno, and Brazilian agri-business tycoon and former Agriculture Minister Roberto Rodrigues, the other speaker was former Kissinger Associates executive David Rothkopf. Rothkopf presented the study he had prepared for the IADB, "A Blueprint for Green Energy in the Americas," which he euphorically described as a call to transform the Caribbean into "the Gulf of Ethanol,"—an alternative to the Persian Gulf that will reduce dependence on Mideast oil.
Cuban President Fidel Castro's recent charge that the Bush biofuels push is the "internationalization of genocide," published as the lead item in the April 3 Granma Internacional, didn't sit too well with this crowd—and most emphatically not with Brazilian President Lula da Silva, who has declared that biofuels are "my obsession."
The Cuban leader took aim at the March 31 Camp David meeting between Lula and George Bush, in which ethanol production, and particularly the Brazilian model of ethanol based on sugarcane, was a key agenda item. Describing Cuba's own brutal history of sugar production based on slave labor and colonialism, Castro asserted: "No one has answered the fundamental question. Who is going to produce—and where—the more than 500 million tons of corn and other grains that the U.S., Europe, and other wealthy countries need to produce the huge number of gallons of ethanol that the large American and other corporations demand in exchange for their costly investments?" Where, he added, "are the poor nations of the Third World to find the minimal resources for their survival?"
On April 4, a very defensive Marco Aurelio García, Lula's foreign policy advisor, responded to Castro's article with the clinically insane statement that hunger in the world "is not a problem of lack of food, but lack of income." Garcia's remarks—which are characteristic of the Baby-Boomer generation's magical belief that economics is based on money, as opposed to physical production—are all the more stunning coming from a top spokesman for the Lula government, whose policy priority has purportedly been "Fome Zero," or "Zero Hunger."
Showing posts with label gold. Show all posts
Showing posts with label gold. Show all posts
Tuesday, April 17, 2007
Thursday, April 5, 2007
Average gold price to hit record high in 2007
Wed Apr 4, 2007 12:09 PM BST
By Atul Prakash
LONDON (Reuters) - Gold prices will set a record high this year in terms of their annual average and may scale new absolute peaks on a weaker dollar outlook, a slowdown in the U.S. economy and geopolitical tensions, a report said on Wednesday.
Precious metals consultant GFMS said in its Gold Survey 2007, which marks the 40th anniversary of its annual report, that worries over high oil prices and inflation might resurface should the United States decide to ratchet up the pressure on Iran.
"It's looking pretty certain that the record in terms of the annual average, $614.50 (an ounce) back in 1980, is going to fall this year," GFMS Chairman Philip Klapwijk said in a statement.
The average gold price was $603.77 an ounce last year.
"I would also be far from surprised if this year we saw the market moving above the 2006 high of $725. Quite whether we would then get close to the all time high of $850 is more doubtful, but I would certainly expect the upward price trend to continue on into 2008."
Firm gold prices so far this year, the acceptance of higher floor prices by physical buyers and a further, albeit smaller, decline in gold supply were also expected to boost investor confidence in the metal, the report said.
Spot gold
GFMS expected a drop in scrap supply in the first half of 2007 and subdued selling by central banks, which was likely to offset a modest rise in mine output this year.
Global mine production fell 3 percent to a 10-year low of 2,471 tonnes in 2006, with the maximum fall recorded in Asia despite China lifting output by 8 percent. GFMS forecast world production rising between one and two percent in 2007.
Central bank sales fell by 51 percent to 328 tonnes in 2006, resulting in a five percent drop in total gold supply to 3,906 tonnes. GFMS said net sales had continued in 2007 and might persist.
JEWELLERY DEMAND AT 15-YEAR LOWS
World gold demand fell by five percent to 3,906 tonnes in 2006 from a year earlier, mainly because of a 428-tonne slump in jewellery offtake to a 15-year low of 2,280 tonnes. Jewellery accounted for 58 percent of global gold demand last year.
"The chief architect of the decline was developments in the gold price, not only in terms of the absolute level but also the degree of price volatility," GFMS said.
Just three countries -- India, Turkey and Italy -- accounted for half the gross decline in total jewellery demand in 2006.
"Looking ahead to this year, price developments will remain a key factor in determining jewellery fabrication ... However, the decline this year, in percentage terms, is unlikely to match the 16 percent fall seen in 2006," the report said.
The report noted that gold dehedging accelerated last year, with a cut of 373 tonnes from the global hedge book. Total outstanding forward sales, loans and the delta hedge against options positions at the end of 2006 was at 1,364 tonnes.
Hedging allows producers to lock in prices for future output but can backfire if the market rises above the hedged price.
GFMS said gold dehedging might exceed 300 tonnes this year as producers were bullish.
Interest in gold exchange-traded funds and over-the-counter market also grew last year, but speculative activity in the main commodity exchanges declined. The gold market was dominated by institutional players and high net worth individuals, it said.
Wednesday, March 21, 2007
The Slow-Motion Stock Market Crash
by Robert Kiyosaki
Posted on Monday, March 19, 2007, 12:00AM
When my book "Rich Dad's Prophecy" was released in 2002, most financial newspapers and magazines trashed it because I discussed a looming stock market crash. Ironically, much of what I predicted in the book is coming true earlier than I expected.
On Feb. 27 of this year, a 9 percent market sell-off in China sent ripples of fear through stocks markets across the world. In the United States, the Dow's one-day plunge of 416 points was the steepest decline since the market opened after Sept. 11, 2001.
So the question is: Should stock investors be worried? As you might expect, some say yes and some say no.
Correction or Crash?
Personally, if I were counting on the stock market for my retirement or to put my kids through college, I'd be worried. Why? Because from my perspective, even if the Dow were to miraculously soar through 15,000, the stock market has been experiencing a long, slow crash for years.
This February, investors witnessed a drop of $583 billion in U.S. market wealth. Many experts are quick to point out that this loss of wealth is a mere drop in the bucket when you take into account that the stock market has been going up for four years. Most market experts say that the market was due for a correction, which is true.
In fact, the recent 3.5 percent drop is miniscule when compared to the 21 percent drop of the S&P 500 back in 1987. By definition, such a small drop isn't even classified as a true correction. According to BusinessWeek, a full-fledged correction is defined as a 10 percent drop, and a bear market is defined as a 20 percent drop.
Comparing Apples to Oranges
So how can I say that the market is crashing even if it continues to go up? To see the true crash, educated investors need to compare apples to oranges, not apples to apples.
When you compare the Dow to the Dow, or the S&P 500 to the S&P 500, that's comparing apples to apples. The Dow at 12,000 appears better than the Dow at 9,000, just as an apple at $1 a pound looks better than at $1.50 a pound, even though it's still the same apple. All that's happened is the price per pound of the apple has gone up -- the apple hasn't changed.
Years ago, my rich dad taught me to be a comparison shopper, especially when it comes to investments. He said, "You need to understand value more than price. Just because the price of something goes up doesn't necessarily mean the value has gone up."
He also told me, "If prices go up without a corresponding increase in value, it means the value of the asset has actually gone down." This holds true for all assets, including stocks, bonds, and real estate.
For example, when the price of a house goes up it doesn't mean that the house is more valuable. And prices going up may mean that something else is going down in value. In today's global markets, what's going down is the purchasing power of the U.S. dollar.
The Dow vs. Gold
To get a truer picture of comparative values, compare the Dow to the price of gold. When the purchasing power of gold is compared to the purchasing power of the Dow, the Dow appears to be crashing.
That means the average investor will need at least a 15 percent annual return on their stocks or mutual funds just to stay ahead of the U.S. dollar's purchasing power erosion -- that is, just to break even.
In my earlier Yahoo! Finance columns, I used history to forecast the future by comparing the dollar to gold and oil over a 10-year period. Here's the data:
| 1996 | 2006 | Percent Increase | |
| Oil | $10/barrel | $60/barrel | 500 |
| Gold | $275/ounce | $600/ounce | 118 |
Table updated 3/21/07.
What Next?
What this means for you depends upon your bullish or bearish outlook, your financial education, and financial experience. For example, I hear many young people today saying that the price of real estate doesn't go down. This is a naive opinion due to lack of financial education and experience. I heard similar misguided opinions about stocks in the dotcom era, just before the market crashed.
Personally, I tend to heed former Federal Reserve Chairman Alan Greenspan's caution about a possible recession ahead. I predict that if there is a recession, current Fed chairman Ben Bernanke (and, in an attempt to hold onto the White House, the Republicans) will flood the market with more money at lower interest rates.
Then the purchasing power of the dollar will once again drop, asset prices may rise, and the financially naive will actually believe that the value of their assets -- houses, stocks, and mutual funds -- have gone up in value.
Thanks to Mike Maloney, my go-to guy for information on gold and silver.
Monday, February 26, 2007
Every time Cheney opens his twisted lip the dollar takes a powder
Related
Bush Snr's major involvement in the gold business
---
Feb 26, 2007
That's Just My Opinion
By Mike Whitney
Gold traders love Dick Cheney. Every time he opens his twisted lip and barks out another threat to Iran, the dollar takes a powder while gold futures shoot to the moon. Maybe that’s the way Cheney likes it. After all, he dumped about $25 million in euro-bonds before he took office. Judging by the way he and brother-Bush have flogged dollar, he must have doubled his investment by now.
The old greenback has dropped nearly 35% in the last 6 years while gold has just about tripled. In 2000 the dollar was a trim, sinewy pillar of strength. It entered the ring like a young Mohammed Ali; darting to and fro while pummeling ihis prey with quick laser-like blows that were barely visible. Now, the greenback plods along like a 60 year old Rocky Balboa, wheezing heavily and reeling with every punch; waiting for the one roundhouse that will leave him staring up from the canvas, spitting up broken teeth and blood.
Ooooh; that hurts.
The dollar’s in a heap o’ trouble and Cheney is doing his level-best to make sure that it hits the skids before he leaves office. Just yesterday the snappish Vice President said, "It would be a serious mistake if a nation like Iran were to become a nuclear power. Then he added ominously, "All options are still on the table."
That oughta put the dollar on life support, eh?
At present, the rest of the world is really wondering if dollar’s going to pull through. Central banks in Europe, Japan, and China have increased money supply and kept rates low in order to prop up the droopy greenback. But that won’t last. Eventually, they’ll all have to raise rates to slow inflation and stop equity bubbles from going haywire. (The Chinese stock market increased by a whopping 140% in one year. They probably don’t want a Dot.com-type meltdown like we had in the US.) Regrettably, once interest rates start to rise, the dollar slip quickly from view leaving only fetid trail of vapor behind.
It’s astonishing how cavalier Cheney and the gaggle of racketeers at the Federal Reserve have been regarding the dollar. After all, why kill the goose that lays the golden egg?
As the world’s “reserve currency” the fed can simply print out a couple trillion whenever it comes up short and bring back boatloads of sleek, Chinese manufactured goods or tankers weighed down with petroleum to power our boxcar-sized SUVs. Or, maybe, Bernanke would rather crank-out another $12 billion in crisp $100 bills, shrink-wrapped and loaded onto pallets and sent off to Iraq where they can vanish in the black hole of corporate malfeasance.
No prob-Bob.
But what happens when the rest of the world sees that the “stewards of the global economic system” (that’s us) are nothing but a bunch of Texas yahoos, religious zealots, and war-mongering boneheads?
See, the funny thing about money is that it requires confidence in the provider that he will honor his part of the deal and operate in good faith. Otherwise, no one would dream of exchanging valuable resources and manufactured goods for silly, green tokens of credit-based fiat money with squiggly writing and funny looking men in powdered wigs on it.
We all expect money to have value, and yet, the Bush team continue to sabotage the currency with their unfunded tax cuts, their $9 per month war in Iraq, and their 35% expansion of the federal government. (Remember when Clinton said the “era of big government is over”?) The result of this craziness was thoroughly predictable; central banks are running for the exits.
Last Firday, the government reported that net capital inflows reversed from the requisite $70 billion to AN OUTFLOW OF $11 BILLION!
The current account deficit (which includes the trade deficit) is running at roughly $800 billion per year, which means that the US must attract about $70 billion per month of foreign investment (US Treasuries or securities) to compensate for America's extravagant spending. When foreign investment stumbles, as it did in December, it puts downward pressure on the dollar.
So what does it all mean?
It means they don’t want our stinking greenbacks. And, if they don’t resume purchasing our debt (US Treasuries or securities) the dollar will join Rocky Balboa on the canvas peering up blankly at the klieg lights.
“The full faith and credit” of the USA does not mean what it did 6 years ago. That’s a fact.
The Bush-Cheney-Federal Reserve axis believe they can keep this ponzi-scheme going by cornering the oil market (attacking Iran) and forcing the oil-thirsty world to accept our feeble banknotes. But that’s just nuts. The Chinese are already killing us by buying up oil and natural gas leasing rights around the world WITH OUR OWN DOLLARS!
It wasn’t supposed to work that way. We thought we were being clever by destroying the American labor movement and shipping our industry to China. We figured we could vanquish the middle class at home while we put the “fear o’ god” in the Chinese with our “shock and awe military” that was supposed to be out of Iraq in 3 years at the most.
How’d that work out?
Now the housing-bubble millstone is pulling millions of home owners beneath the waves while the maxed American consumer is down to his last credit card. In other words, the $11 trillion of new debt that was cleverly engineered through Greenspan’s low interest rate bonanza is about to detonate and bring the whole, wretched tower of American debt crashing to earth.
The US economy hasn’t depended on productivity for years, even though the American people work harder and longer than their better-paid counterparts in Europe. This entire mess was brought on by stagnant wages, the wealth gap, and a system that rewards the villaso-raptures at the top of the economic food-chain. Like Cheney, they believe they can keep this scam going on forever; forcing the world to take worthless sheets green scrip that’s backed up by $8.7 trillion of debt and wouldn’t even make good bird-cage liner.
But, then, that’s just my opinion.
Mike Whitney lives in Washington state. He can be reached at: fergiewhitney@msn.com
Bush Snr's major involvement in the gold business
---
Feb 26, 2007
That's Just My Opinion
By Mike Whitney
Gold traders love Dick Cheney. Every time he opens his twisted lip and barks out another threat to Iran, the dollar takes a powder while gold futures shoot to the moon. Maybe that’s the way Cheney likes it. After all, he dumped about $25 million in euro-bonds before he took office. Judging by the way he and brother-Bush have flogged dollar, he must have doubled his investment by now.
The old greenback has dropped nearly 35% in the last 6 years while gold has just about tripled. In 2000 the dollar was a trim, sinewy pillar of strength. It entered the ring like a young Mohammed Ali; darting to and fro while pummeling ihis prey with quick laser-like blows that were barely visible. Now, the greenback plods along like a 60 year old Rocky Balboa, wheezing heavily and reeling with every punch; waiting for the one roundhouse that will leave him staring up from the canvas, spitting up broken teeth and blood.
Ooooh; that hurts.
The dollar’s in a heap o’ trouble and Cheney is doing his level-best to make sure that it hits the skids before he leaves office. Just yesterday the snappish Vice President said, "It would be a serious mistake if a nation like Iran were to become a nuclear power. Then he added ominously, "All options are still on the table."
That oughta put the dollar on life support, eh?
At present, the rest of the world is really wondering if dollar’s going to pull through. Central banks in Europe, Japan, and China have increased money supply and kept rates low in order to prop up the droopy greenback. But that won’t last. Eventually, they’ll all have to raise rates to slow inflation and stop equity bubbles from going haywire. (The Chinese stock market increased by a whopping 140% in one year. They probably don’t want a Dot.com-type meltdown like we had in the US.) Regrettably, once interest rates start to rise, the dollar slip quickly from view leaving only fetid trail of vapor behind.
It’s astonishing how cavalier Cheney and the gaggle of racketeers at the Federal Reserve have been regarding the dollar. After all, why kill the goose that lays the golden egg?
As the world’s “reserve currency” the fed can simply print out a couple trillion whenever it comes up short and bring back boatloads of sleek, Chinese manufactured goods or tankers weighed down with petroleum to power our boxcar-sized SUVs. Or, maybe, Bernanke would rather crank-out another $12 billion in crisp $100 bills, shrink-wrapped and loaded onto pallets and sent off to Iraq where they can vanish in the black hole of corporate malfeasance.
No prob-Bob.
But what happens when the rest of the world sees that the “stewards of the global economic system” (that’s us) are nothing but a bunch of Texas yahoos, religious zealots, and war-mongering boneheads?
See, the funny thing about money is that it requires confidence in the provider that he will honor his part of the deal and operate in good faith. Otherwise, no one would dream of exchanging valuable resources and manufactured goods for silly, green tokens of credit-based fiat money with squiggly writing and funny looking men in powdered wigs on it.
We all expect money to have value, and yet, the Bush team continue to sabotage the currency with their unfunded tax cuts, their $9 per month war in Iraq, and their 35% expansion of the federal government. (Remember when Clinton said the “era of big government is over”?) The result of this craziness was thoroughly predictable; central banks are running for the exits.
Last Firday, the government reported that net capital inflows reversed from the requisite $70 billion to AN OUTFLOW OF $11 BILLION!
The current account deficit (which includes the trade deficit) is running at roughly $800 billion per year, which means that the US must attract about $70 billion per month of foreign investment (US Treasuries or securities) to compensate for America's extravagant spending. When foreign investment stumbles, as it did in December, it puts downward pressure on the dollar.
So what does it all mean?
It means they don’t want our stinking greenbacks. And, if they don’t resume purchasing our debt (US Treasuries or securities) the dollar will join Rocky Balboa on the canvas peering up blankly at the klieg lights.
“The full faith and credit” of the USA does not mean what it did 6 years ago. That’s a fact.
The Bush-Cheney-Federal Reserve axis believe they can keep this ponzi-scheme going by cornering the oil market (attacking Iran) and forcing the oil-thirsty world to accept our feeble banknotes. But that’s just nuts. The Chinese are already killing us by buying up oil and natural gas leasing rights around the world WITH OUR OWN DOLLARS!
It wasn’t supposed to work that way. We thought we were being clever by destroying the American labor movement and shipping our industry to China. We figured we could vanquish the middle class at home while we put the “fear o’ god” in the Chinese with our “shock and awe military” that was supposed to be out of Iraq in 3 years at the most.
How’d that work out?
Now the housing-bubble millstone is pulling millions of home owners beneath the waves while the maxed American consumer is down to his last credit card. In other words, the $11 trillion of new debt that was cleverly engineered through Greenspan’s low interest rate bonanza is about to detonate and bring the whole, wretched tower of American debt crashing to earth.
The US economy hasn’t depended on productivity for years, even though the American people work harder and longer than their better-paid counterparts in Europe. This entire mess was brought on by stagnant wages, the wealth gap, and a system that rewards the villaso-raptures at the top of the economic food-chain. Like Cheney, they believe they can keep this scam going on forever; forcing the world to take worthless sheets green scrip that’s backed up by $8.7 trillion of debt and wouldn’t even make good bird-cage liner.
But, then, that’s just my opinion.
Mike Whitney lives in Washington state. He can be reached at: fergiewhitney@msn.com
Monday, February 19, 2007
Friday, January 19, 2007
The Federal War on Gold
Part 3
by Jacob G. Hornberger, Posted January 19, 2007
Roosevelt’s rule by decree
Nullifying the gold clauses
The Supreme Court
The aftermath
by Jacob G. Hornberger, Posted January 19, 2007
It is impossible to overstate the significance of the Franklin Roosevelt administration’s confiscation of gold and its nullification of gold clauses in contracts. It is one of the most sordid episodes in American history. To get an accurate sense of Roosevelt’s actions, it would not be inappropriate to compare what he did with the domestic economic policies of a later 20th-century ruler, Cuba’s socialist president, Fidel Castro.
On April 5, 1933, newly inaugurated President Roosevelt issued Executive Order 6102, which prohibited the “hoarding” of gold by U.S. citizens. Americans were required to turn their gold holdings over to the federal government at the prevailing price of $20.67 per ounce.
Pursuant to Roosevelt’s executive order, anyone caught violating the law was subject to a federal felony conviction, 10 years’ confinement in a federal penitentiary, and a $10,000 fine. Soon after the confiscation, U.S. officials announced that the government would sell its gold in international markets for $35 an ounce, thereby devaluing the dollar by almost 70 percent and immediately “earning” a potential profit of almost $15 an ounce on the gold it had confiscated.
Two months later, Congress enacted legislation nullifying gold clauses in both government and private contracts, thereby requiring creditors in such contracts to accept devalued paper money in payment of such contractual obligations, even though the contract itself stipulated payment tied to gold.
Reflect for a moment on the significance of what Roosevelt did. Gold coins and gold bullion were private property, just like a person’s automobile, clothing, home, and food. On the mere command of the president of the United States, federal authorities simply confiscated gold holdings that were the private property of the American people and made it a grave federal offense to own such property in the future.
The gold seizure was no different in principle from Fidel Castro’s seizure of homes and businesses more than 25 years later in Cuba, an episode that U.S. officials still rail against while praising what Roosevelt did. Sure, Roosevelt paid Americans more money for the gold he seized than Castro paid Cubans and American companies for the property he seized, but the principle was the same: the rulers in both Cuba and the United States could appropriate people’s property at their whim.
What was Roosevelt’s justification for the gold seizure? He said that it was necessary to battle the Great Depression. Now, think about that for a moment. How in the world could the seizure of people’s gold relieve the consequences of the Great Depression?
Let’s say that I have $10,000 in gold coin in my house. The Depression hits. Prices plummet. Unemployment soars. How is my delivering my gold to the federal government in return for depreciated paper money going to relieve anyone else’s distress?
No, the real reason for Roosevelt’s gold seizure was twofold: First, he seized people’s gold for the same reason that Castro later seized people’s homes and businesses — to enrich the coffers of the federal government. Second, but more important, he did it to prevent the American people from protecting themselves from the onslaught of ever-depreciating paper money that he planned to use to finance his ever-extravagant welfare-state programs.
Keep in mind that the Framers had implemented a gold standard so that the American people would be forever protected from the destructiveness of inflation. It was the gold standard — that is, the requirement that the federal government redeem all its paper notes and bills in gold — that had operated as a restraint on government’s ability to print ever-increasing amounts of paper money. The gold standard’s positive effect on capital markets was also one of the primary reasons that the United States rather quickly became one of the most prosperous nations in history.
With his seizure of gold, Franklin Roosevelt revolutionized the monetary system of the United States — and without even the semblance of a constitutional amendment. It is instructive to understand how he pulled this off in a legal sense.
Roosevelt’s rule by decree
In issuing his executive order, Roosevelt relied on the Trading with the Enemy Act, which had been passed in 1917 as part America’s war against Germany in World War I. Yes, World War I, the infamous war that was supposed to make the world safe for democracy! This “temporary emergency” law, which should have expired with the end of the war, had instead been left on the books through the 1930s. This is the law that Roosevelt relied on in issuing his executive order confiscating people’s gold.
There’s another significant aspect to the executive order — the issuance of the order itself. That is, Congress did not enact a law expressly authorizing the gold seizure. Instead it was accomplished simply through a decree issued by the president.
What the Congress had done is delegate its power to make certain laws to the president, essentially vesting Roosevelt with dictatorial powers. In March 1933, Congress amended the Trading with the Enemy Act to vest the president with the power to declare “national emergencies” and then issue necessary decrees to deal with such emergencies, including even setting criminal punishments.
It was a type of executive power — rule by decree — that had characterized dictatorships throughout history. Thus, it shouldn’t surprise anyone that one of Roosevelt’s biggest admirers was Adolf Hitler, who was dealing with the Depression in Germany in much the same way that Roosevelt was dealing with it in the United States. As John Toland pointed out in his biography Adolf Hitler,
Hitler had genuine admiration for the decisive manner in which the President had taken over the reins of government. “I have sympathy for Mr. Roosevelt,” he told a correspondent for the New York Times two months later, “because he marches straight toward his objectives over Congress, lobbies and bureaucracy.” Hitler went on to note that he was the sole leader in Europe who expressed “understanding of the methods and motives of President Roosevelt.”
Nullifying the gold clauses
Roosevelt and his Congress did not stop at seizing the gold of the American people and making it illegal for them to protect themselves from the ravages of inflation. They also nullified every clause in every contract, both government and private, that tied the financial obligation to gold.
How did these gold clauses operate? Let’s say a corporation issued a 100-year bond for $20, promising to pay 3 percent interest. Any lender would ask himself the obvious question, “Why wouldn’t this bond be worthless in a hundred years because of inflation?” To ensure that that wouldn’t happen, the note would contain a “gold clause” which stipulated that the company had to repay the bond, both principal and interest, in the same standard of gold that existed at the issuance of the note.
So let’s say, for simplicity’s sake, the $20 bond was issued in 1885, with $20 equal to a one-ounce gold coin. Let also say that because of inflation, when the bond became due 100 years later, it would take $100 in paper notes and bills to buy one ounce of gold. With the gold clause in the $20 bond, the debtor would have to pay the creditor either a one-ounce gold coin or $100 in paper notes (plus interest). With the gold clause nullified, all the debtor would have to pay would be $20 in paper money (plus interest), even though it would purchase only one-fifth of an ounce of gold at the time of repayment.
It’s not difficult to imagine the adverse effect that Roosevelt’s actions had on long-term capital markets.
The Supreme Court
The constitutionality of Roosevelt’s gold-confiscation decree was never addressed by the U.S. Supreme Court. There were few federal prosecutions, possibly because Roosevelt didn’t want to take the chance that the Supreme Court would declare his confiscation unconstitutional. Better to simply let the lambs who were meekly complying with the law continue filling the government’s coffers with gold and leave the ones who weren’t obeying the law alone.
The gold-clause cases did reach the Supreme Court. Unfortunately, a majority of the Court declared the nullification of the gold clauses in private contracts to be a constitutional exercise of the president’s power. While it declared the nullification of gold clauses in government notes to be unconstitutional, the Court also held, in a twisted form of logic, that the holders of government debt had suffered no damage because gold was then illegal to own anyway.
The Supreme Court’s opinions in the gold-clause cases are worth reading. (See Norman v. Baltimore & O.R. Co.). The most persuasive arguments, not surprisingly, were published by the dissenters — McReynolds, Sutherland, Van Devanter, and Butler, who often voted to declare much of Roosevelt’s New Deal unconstitutional:
Just men regard repudiation and spoliation of citizens by their sovereign with abhorrence; but we are asked to affirm that the Constitution has granted power to accomplish both. No definite delegation of such a power exists; and we cannot believe the farseeing framers, who labored with hope of establishing justice and securing the blessings of liberty, intended that the expected government should have authority to annihilate its own obligations and destroy the very rights which they were endeavoring to protect. Not only is there no permission for such actions; they are inhibited. And no plenitude of words can conform them to our charter....
Under the challenged statutes it is said the United States have realized profits amounting to $2,800,000,000. But this assumes that gain may be generated by legislative fiat. To such counterfeit profits there would be no limit; with each new debasement of the dollar they would expand. Two billions might be ballooned indefinitely — to twenty, thirty, or what you will.
Loss of reputation for honorable dealing will bring us unending humiliation; the impending legal and moral chaos is appalling.
The aftermath
What was the reaction of the American people to Roosevelt’s gold seizure? By the 1930s, most of the United States had been under systems of public (i.e., government) schooling for at least three decades. After years of such indoctrination, even though Americans had not yet become dependent on the federal government’s welfare dole that Roosevelt was initiating, most of them nevertheless now deferred to the wisdom of federal officials to deal with such complicated subjects as economics, depressions, and monetary policy.
Thus, when Roosevelt issued his decree, it was not met with massive protests and demonstrations but rather with the same degree of meekness and submission that many (but certainly not all) of the Cuban people would display when their homes and businesses were confiscated by Castro several decades later.
The additional value of the public-school indoctrination was that it effectively immunized federal officials from having to bear responsibility for the consequences of their own wrongful conduct. For when U.S. officials announced that the 1929 stock-market crash and the resulting Great Depression were all the fault of “free enterprise” and that such things as the gold seizure and the New Deal were necessary “to save free enterprise,” entire generations of public-schooled Americans had no idea that they were being misled. If Americans had known the truth — that the stock-market crash and Great Depression, along with all the financial devastation and unemployment — had actually been the fault of the Federal Reserve, there would have been considerable anger, perhaps even violent revolts, against the federal government.
In 1974 Congress made it legal to own gold once again, providing Americans the means to protect their wealth from the inflationary propensities of the federal government.
Is there a possibility, however, that federal officials could confiscate gold again and make it illegal to own it? You bet your bottom gold dollar there is. For one thing, the Trading with the Enemy Act is still on the books and is still being used as the basis for presidential decrees. For another, ever since the Roosevelt administration, federal officials, assisted by the Federal Reserve, have never desisted from issuing ever-growing quantities of paper money, an inflationary process that has ravaged people’s savings. Finally, federal officials hate gold because its rising price in the face of inflation provides a public and an easily readable market message to the citizenry that government officials are destroying the currency.
And make no mistake about it. If another U.S. president issues a gold-confiscation decree, it will be enforced violently and brutally by federal officials. In the climate of the perpetual “crisis” known as the “war on terrorism,” combined with an “economic emergency,” it is not difficult to imagine that federal officials would conduct warrantless raids on banks to search bank records and safety deposit boxes and prosecute dangerous “enemy combatants” and “terrorist sympathizers” who show they “hate their country” by violating the law against the ownership of gold.
The ultimate solution to this financial chaos, destruction, and morass lies in sound money. The ideal is a free market in money, as the Nobel Prize-winning economist Friedrich A. Hayek observed. The second-best solution is the type of gold standard established by the Framers, where gold and silver coin are the official money and where the federal government is required to redeem all bills and notes in such money.
Both solutions would necessarily entail the abolition of one of the most powerful engines of financial destruction in American history — the Federal Reserve System — as well as the repeal of all legal-tender laws.
Jacob Hornberger is founder and president of The Future of Freedom Foundation. Send him email.
Saturday, January 6, 2007
Euro Key to US$ Decline
Euro Key to US$ Decline
Goldseek, Jim Willie CB
Blather from the USFed to cite an inflation threat and their vigilance to fight it speaks not to rising wages and rising prices from cost push. It addresses, nay screams, to their fear of a falling USDollar and the associated systemic rise in prices. Why? Because the United States has become fatally dependent on foreign finished products, foreign energy supply, and foreign credit, reminiscent of a Third World nation. All that is missing is the goose step among marching military columns. The gold price and silver price and oil price all will rise with a falling USDollar. And let’s not forget the mind numbing destructive failed policy in the entire Middle East, from each and every corner. Iraq is the quicksand. Iran is the powderkeg. Israel is the friction. Europe stands in the crossfire. Russia lies in wait, in far more control than the sleepy lapdog US press & media choose to report. For that would be to proclaim a return to the Cold War.
That icy belligerence of conflict is surely here, but on the energy front, which has earned the title the Global Energy War by me since 2003, ignited by the Shock & Awe of the Iraqi War. The only thing shocking is the degree of failure. The only thing of awe is the stubbornness to continue the course. The words mindnumbing fit more and more with each passing day. Ironically, the decisions not to bomb Iran have kept the USDollar up, and the crude oil price down. The decisions not to resume bombardment of Beirut have kept the USDollar up, and the crude oil price down. In the meantime, the USDollar remains fatally wounded, yet Uncle Sam, who leaks bills from his wallet, continues to walk upright. He is a hollow replica of his former robust self. Numerous friends and foes alike prop him up. One must actually check his pulse to see if he is alive. It might just be a skull & crossbones under the royal robes worn thin by the years. The price of gold, silver, and oil will benefit from the inevitable repeated USDollar declines, which will occur less often than expected for practical reaons.
Goldseek, Jim Willie CB
Blather from the USFed to cite an inflation threat and their vigilance to fight it speaks not to rising wages and rising prices from cost push. It addresses, nay screams, to their fear of a falling USDollar and the associated systemic rise in prices. Why? Because the United States has become fatally dependent on foreign finished products, foreign energy supply, and foreign credit, reminiscent of a Third World nation. All that is missing is the goose step among marching military columns. The gold price and silver price and oil price all will rise with a falling USDollar. And let’s not forget the mind numbing destructive failed policy in the entire Middle East, from each and every corner. Iraq is the quicksand. Iran is the powderkeg. Israel is the friction. Europe stands in the crossfire. Russia lies in wait, in far more control than the sleepy lapdog US press & media choose to report. For that would be to proclaim a return to the Cold War.
That icy belligerence of conflict is surely here, but on the energy front, which has earned the title the Global Energy War by me since 2003, ignited by the Shock & Awe of the Iraqi War. The only thing shocking is the degree of failure. The only thing of awe is the stubbornness to continue the course. The words mindnumbing fit more and more with each passing day. Ironically, the decisions not to bomb Iran have kept the USDollar up, and the crude oil price down. The decisions not to resume bombardment of Beirut have kept the USDollar up, and the crude oil price down. In the meantime, the USDollar remains fatally wounded, yet Uncle Sam, who leaks bills from his wallet, continues to walk upright. He is a hollow replica of his former robust self. Numerous friends and foes alike prop him up. One must actually check his pulse to see if he is alive. It might just be a skull & crossbones under the royal robes worn thin by the years. The price of gold, silver, and oil will benefit from the inevitable repeated USDollar declines, which will occur less often than expected for practical reaons.
Saturday, December 16, 2006
Dollar danger directly ahead
|
Friday, December 15, 2006
Brimelow, CBS Marketwatch: Gold & Oil to Rule New Year
NEW YORK (MarketWatch) -- In the new year, oil and gold will still rule, according a top-performing newsletter.
Justin Litle's Outstanding Investments is the fifth-best performing letter over the past 12 months, according to the Hulbert Financial Digest, up 37.2% vs. the dividend-reinvested Dow Jones Wilshire 5000's 16.54%.
Over five years, Outstanding Investments is up a remarkable 36.88% annualized, vs. 8.86% for the total return DJ Wilshire.
Unquestionably, this is because, for whatever reason, Outstanding Investments has been in synch with a major market move: the rebirth of oil and gold. But you can't argue with Hulbert numbers: It's really worked.
Editor Litle is aware of this, but he's carrying on anyway. As he wrote Wednesday night:
"Every New Year's Eve in recent memory, I've thought to myself: "It can't get any crazier than this. How can the new year possibly top the last?" Yet for five years running at least, the new year HAS topped the last, in all the ways that count.
"2007 is shaping up to be the same, yet even more so. A lot of chickens will be coming home to roost. 2007 could be the year we see oil above $100 ... the year gold breaks its 1980 highs ... the year silver jumps over the moon ... the year developing-world economics and infrastructure woes really hit home ... and that is just a start."
This is true both strategically and tactically. When I last checked in, Outstanding Investments was standing firm with oil and gold. See Oct 16 column
It worked, especially with gold.
Outstanding Investment's latest letter was published some time ago, in early December. The service continues to be intensely focused on what it sees as a looming brute physical shortage of energy, and raw materials generally, in the world.
It wrote: "It's like a broken record, I know: Chinese growth is driving the commodity boom. We hear it all the time. And it's true. The fact of the matter is that China has struck some incredible deals with countries like Canada, Russia and Venezuela, and the list goes on. While we've seen a pullback in many of the commodities in the third quarter, China used that pullback to prepare for the next leg of the rally in commodities. Meanwhile, the U.S. has been asleep at the switch and busy trying to stave off nuclear proliferation in various regions of the world, with about 50/50 success. The U.S. is woefully behind in the race to snatch up valuable resources and lock in key partnerships as we head past the halfway mark of the first decade of the millennium."
One result: Outstanding Investments seconds veteran editor Jim ("The Dines Letter") Dines' fascination with uranium. See Nov. 13 column
For example, Outstanding Investments continues to recommend Cameco Corp. (CCJ ![]()
CCJ )
... despite the recent flooding of the huge Cigar Lake, Saskatchewan, uranium mine, in which Cameco has a half interest. If anything, Outstanding Investments seems to think that this will just exacerbate the supply crunch.
Cameco Corporation...
Sponsored by:
... despite the recent flooding of the huge Cigar Lake, Saskatchewan, uranium mine, in which Cameco has a half interest. If anything, Outstanding Investments seems to think that this will just exacerbate the supply crunch.
Outstanding Investments does think about other things. For example, its most recent stock of the month was Walter Industries Inc. (WLT
Admittedly, it's partly a high-quality metallurgical coal play. But Walter also owns Mueller Water Products, a leading provider of water infrastructure products. Outstanding Investing thinks U.S. infrastructure is heading for a crisis. And, as it happily quotes someone saying, "Water is the new oil."
Walter Industries Inc
Sponsored by:
(WLT ) .Admittedly, it's partly a high-quality metallurgical coal play. But Walter also owns Mueller Water Products, a leading provider of water infrastructure products. Outstanding Investing thinks U.S. infrastructure is heading for a crisis. And, as it happily quotes someone saying, "Water is the new oil."
Outstanding Investments recommends buying WLT below $48.
Thursday, December 14, 2006
Adens doubt U.S. dollar bullish on bonds
NEW YORK (MarketWatch) -- More dollar doubts, again from a top-performing letter.
I know, it's my hobby horse recently. See Dec. 7 column
But the fact is that it's simple moves in key markets such as exchange rates that dominate investment performance.
Pamela and Mary Anne Aden have been publishing their Costa Rica-based Aden Forecast since the last gold bull market in the early 1980s. They are chartists, examining market moves in terms of visual patterns. But they also provide intellectually-appealing rationales. See Sept. 5 column
In their just-published December issue, the Aden sisters run a long-term dollar chart and comment: "This shows the dollar going back to 1972 when it first started trading in the free market. As you can see, it's been in a 35-year downtrend since then and it's also been trading in a huge down-trending channel. Within this channel, large drops have taken the dollar from the upper side of the channel to the lower side over the years. Since the current dollar decline started at the upper end of this channel in 2001, it's reasonable to assume that it'll end near the lower end as it has in the past ... If so, that would give the dollar a downside target near .85 against the Swiss franc before this bear market is over. And if that happens, it would mean a 29% drop in the dollar from today's levels."
To put this in perspective: Over the past 12 months, according to the Hulbert Financial Digest, the Aden Forecast has appreciated 15.23%, roughly in line with the dividend-reinvested Dow Jones Wilshire 5000, which is up 16.54%. Over the past five years, however, the Aden Forecast is up an impressive 14.21% annualized vs. 8.86% for the DJ Wilshire 5000.
Other Aden observations in their current letter:
- Stocks: "The Dow's long-term indicator remains bullish and it has room to rise further ... (But) for now, this chart is telling us that it's not time to be buying common stocks. If the bull market remains intact, we can always get in later, but the way things are unfolding with the dollar, oil and the economy, there's a good chance we won't. The speculation index reinforces this too ... This shows that speculation in the stock market is still at extremely high levels. It's certainly not as high as it was in 2000 when tech stocks were all the rage, but it's high nonetheless ..."
- Oil: "The oil price ... looks like it has finally bottomed and a renewed rise now appears to be getting underway. That'll be confirmed if oil now stays above $61.75 and then rises above $65."
- Gold: "If this pattern stays on track, then gold could surpass the $722 level. If it does, gold would be extremely bullish and it could then continue up to its 1980 peak near $850."
- Bonds (I have to think about this): "The bond market is looking good. Bonds hit a nine-month high this month as long-term yields tumbled to their lowest levels in nearly a year. The bull market in bonds is now picking up steam, but it's still early and prices are poised to rise much further. That being the case, we continue to recommend buying and holding U.S. government long-term bonds."
But, the Adens caution: "Since the U.S. dollar is now showing renewed weakness, we wouldn't keep more than 10% of your total portfolio in bonds at this time. The metals and foreign currencies are stronger than bonds, which is why we advise keeping a larger portion in those sectors, despite the strength in the bond market."
Current Aden asset allocation: 10% U.S. bonds; 30% cash (Euro, British pounds, Australian or New Zealand dollars); 60% gold and silver physical, as well as gold, silver, energy and natural resource shares.
By Peter Brimelow
By Peter Brimelow
Monday, November 20, 2006
Gold May Rebound as Dollar's Slide Spurs Demand for Alternative
By Pham-Duy Nguyen
Nov. 20 (Bloomberg) -- Gold may rebound on speculation the Federal Reserve won't increase interest rates anytime soon, eroding the value of the dollar and boosting the appeal of the precious metal as an alternative investment.
Twenty-one of 32 traders, investors and analysts surveyed by Bloomberg from Sydney to Chicago on Nov. 16 and Nov. 17 advised buying gold, which fell 1.2 percent last week to $622.50 an ounce, the first decline in six weeks. Nine respondents said to sell the metal, and two were neutral.
A U.S. housing slump and the lowest oil prices in 17 months probably will discourage the Fed from changing its overnight lending rate, after two years of increases, analysts said. Gold rose 20 percent this year as the dollar fell 6.5 percent against a basket of major currencies, including the yen and euro.
``Speculators are putting more money to work in gold,'' said Michael Guido, director of hedge-fund marketing at Societe Generale in New York. ``The hedge-fund community thinks the dollar is going to weaken based on a Fed that's on hold.''
Gold for December delivery fell $7.60 an ounce last week on the Comex division of the New York Mercantile Exchange. The decrease surprised a majority of analysts who predicted a gain when surveyed Nov. 9 and Nov. 10. Bloomberg's survey has forecast the direction of prices accurately in 81 of 134 weeks, or 60 percent of the time.
The Fed hasn't raised rates since June 29 amid the worst housing slump in 15 years. Housing starts in the U.S. tumbled in October to the lowest since July 2000 and building permits dropped for the ninth straight month to the lowest since December 1997.
Producer, Consumer Prices
The Fed also may keep overnight loan rates at 5.25 percent because inflation pressure may be easing. The Labor Department said last week that prices paid to producers in October fell 1.6 percent, matching the biggest decline on record, and the consumer price index dropped 0.5 percent in October, following a decrease of 0.5 percent in September.
``There is no one we can find who is bullish on the dollar,'' said Dennis Gartman, a gold trader, economist and editor of the Suffolk, Virginia-based Gartman Letter. ``There is certainly nothing in the CPI report to suggest that the FOMC will err on the side of tighter policies when it meets again next month.''
Gold and the dollar often move in opposite directions. Gold has gained every year since 2001, more than doubling in the past five years. The dollar index rose last year after three consecutive annual declines as the Fed boosted rates to damp inflation.
``We believe gold has some real potential to move higher before year end,'' said Frederic Panizzutti, senior vice president in Geneva for MKS Finance, one of Switzerland's four gold refiners. ``The dollar remains the prevailing factor.''
Investor Demand
Analysts say investor demand for gold may rebound after dropping 10 percent in the third quarter to 111 metric tons, the lowest since the second quarter of 2005.
Hedge-fund managers and other large speculators increased their net-long position in Comex gold by 9.5 percent in the week ended Nov. 14, the U.S. Commodity Futures Trading Commission in Washington said Nov. 17. Speculative long positions, or bets prices will rise, outnumbered short positions by 88,834 contracts, up 7,668 from a week earlier, the commission said.
Gold's strength relative to crude oil is reviving speculative demand that helped spur gains in the first half of the year, some traders said.
Oil dropped more than 6.3 percent last week, touching $54.86 a barrel, the lowest since June 14.
`We Are Bullish'
Gold ``has held well in the face of a 17-month low in crude oil,'' said William O'Neill, a partner at commodity research firm Logic Advisors in Upper Saddle River, New Jersey. ``Long term, we are bullish.''
Since mid-May, gold has fallen 15 percent from $732 an ounce, which was the highest price since February 1980. Oil has tumbled 29 percent from a record $78.40 a barrel in mid-July and is down 8.6 percent this year.
Any further decline in oil will make gold retreat, some analysts said.
``If oil continues to slide, it will put a lot of pressure on metals,'' said Peter Tse, chief precious-metals dealer at ScotiaMocatta in Hong Kong, the bullion unit of Bank of Nova Scotia. ``If gold hits stops at $615 or even below, we might see a pretty big drop.''
Gold futures reached a record $873 an ounce in January 1980, after oil costs doubled in a year, sparking a 13 percent rise in consumer prices.
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net
Last Updated: November 19, 2006 12:00 EST
http://www.bloomberg.com/apps/news?pid=20601087&sid=aEv9pgKHpIos&refer=home
Nov. 20 (Bloomberg) -- Gold may rebound on speculation the Federal Reserve won't increase interest rates anytime soon, eroding the value of the dollar and boosting the appeal of the precious metal as an alternative investment.
Twenty-one of 32 traders, investors and analysts surveyed by Bloomberg from Sydney to Chicago on Nov. 16 and Nov. 17 advised buying gold, which fell 1.2 percent last week to $622.50 an ounce, the first decline in six weeks. Nine respondents said to sell the metal, and two were neutral.
A U.S. housing slump and the lowest oil prices in 17 months probably will discourage the Fed from changing its overnight lending rate, after two years of increases, analysts said. Gold rose 20 percent this year as the dollar fell 6.5 percent against a basket of major currencies, including the yen and euro.
``Speculators are putting more money to work in gold,'' said Michael Guido, director of hedge-fund marketing at Societe Generale in New York. ``The hedge-fund community thinks the dollar is going to weaken based on a Fed that's on hold.''
Gold for December delivery fell $7.60 an ounce last week on the Comex division of the New York Mercantile Exchange. The decrease surprised a majority of analysts who predicted a gain when surveyed Nov. 9 and Nov. 10. Bloomberg's survey has forecast the direction of prices accurately in 81 of 134 weeks, or 60 percent of the time.
The Fed hasn't raised rates since June 29 amid the worst housing slump in 15 years. Housing starts in the U.S. tumbled in October to the lowest since July 2000 and building permits dropped for the ninth straight month to the lowest since December 1997.
Producer, Consumer Prices
The Fed also may keep overnight loan rates at 5.25 percent because inflation pressure may be easing. The Labor Department said last week that prices paid to producers in October fell 1.6 percent, matching the biggest decline on record, and the consumer price index dropped 0.5 percent in October, following a decrease of 0.5 percent in September.
``There is no one we can find who is bullish on the dollar,'' said Dennis Gartman, a gold trader, economist and editor of the Suffolk, Virginia-based Gartman Letter. ``There is certainly nothing in the CPI report to suggest that the FOMC will err on the side of tighter policies when it meets again next month.''
Gold and the dollar often move in opposite directions. Gold has gained every year since 2001, more than doubling in the past five years. The dollar index rose last year after three consecutive annual declines as the Fed boosted rates to damp inflation.
``We believe gold has some real potential to move higher before year end,'' said Frederic Panizzutti, senior vice president in Geneva for MKS Finance, one of Switzerland's four gold refiners. ``The dollar remains the prevailing factor.''
Investor Demand
Analysts say investor demand for gold may rebound after dropping 10 percent in the third quarter to 111 metric tons, the lowest since the second quarter of 2005.
Hedge-fund managers and other large speculators increased their net-long position in Comex gold by 9.5 percent in the week ended Nov. 14, the U.S. Commodity Futures Trading Commission in Washington said Nov. 17. Speculative long positions, or bets prices will rise, outnumbered short positions by 88,834 contracts, up 7,668 from a week earlier, the commission said.
Gold's strength relative to crude oil is reviving speculative demand that helped spur gains in the first half of the year, some traders said.
Oil dropped more than 6.3 percent last week, touching $54.86 a barrel, the lowest since June 14.
`We Are Bullish'
Gold ``has held well in the face of a 17-month low in crude oil,'' said William O'Neill, a partner at commodity research firm Logic Advisors in Upper Saddle River, New Jersey. ``Long term, we are bullish.''
Since mid-May, gold has fallen 15 percent from $732 an ounce, which was the highest price since February 1980. Oil has tumbled 29 percent from a record $78.40 a barrel in mid-July and is down 8.6 percent this year.
Any further decline in oil will make gold retreat, some analysts said.
``If oil continues to slide, it will put a lot of pressure on metals,'' said Peter Tse, chief precious-metals dealer at ScotiaMocatta in Hong Kong, the bullion unit of Bank of Nova Scotia. ``If gold hits stops at $615 or even below, we might see a pretty big drop.''
Gold futures reached a record $873 an ounce in January 1980, after oil costs doubled in a year, sparking a 13 percent rise in consumer prices.
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net
Last Updated: November 19, 2006 12:00 EST
http://www.bloomberg.com/apps/news?pid=20601087&sid=aEv9pgKHpIos&refer=home
Subscribe to:
Posts (Atom)