Continued:
Now further elaboration for you and I believe it is significant information.
As the ECB was coming into existence, the Germans (big gold holders) brought gold onto their balance sheet for the first time. It was a technical maneuver which brought their budget deficit into compliance with the new ECB requirements.
Everything was groovy doovy for the Germans until the English sabotaged the gold price with their nonsensical gold sale announcement. The gold price plummeted and so did Germany's ECB budget compliance. They were furious at the English and the "other players" that were instrumental in bringing about this announcement.
The Germans were the orchestraters of the surprise European central bank announcement which way more than countered what the British did. They quietly went around to the French and Italians, then others, to gain support for the idea. After that, they strong armed the Swiss and the English into signing the agreement.
This tells me that what we have in place here is going to stick. The European central banks with big gold holdings have had it the with English, the United States and certain nefarious bullion dealers that were denigrating their own valuable asset for self-serving and dishonorable purposes.
What was good for the goose has to be good for the gander. The English, via the U.S., “surprised.” The Germans “surprised right back.”
To all my good British Café members: Nice gold sale trade by your Abbot and Costellos at the Exchequer and the BOE. Sell gold at $261 and $258 to buy U.S bonds that are going straight down!
Potpourri and the Gold Shares
The XAU closed Friday at 77.09 down 2.94. Much of the weighting in this index is in companies that are heavily hedged. The very hedged companies were the place to be these past number of years. That success might have sown the seeds of their own destruction - at least for a few. Hedging was the "in" thing. Now the big hedgers, with too much call option exposure, might become more outcasts than the "untouchables" of old in India.
Trouble at the World Gold Council? Word from very high up says serious spats have developed among some of the large funders of the organization. Anglogold ???
One company that has not hedged and is a favorite of the renowned Harry Schultz, of The International Harry Schultz Letter fame, is Agnico-Eagle (AEM) traded on the New York Stock Exchange. This is a clean mining operation. They do not hedge,their gold reserves are going up, up up, and their cash costs are going down, down down.
I have met CEO Sean Boyd and like him very much. This is a winner in my book, too.
As you know, one of my favorites is Golden Star Resources (GSR on the AMEX). I liked it at 21, 1 1/2 seems like I am hallucinating. They have found an astonishing number of gold reserves and resources in the ground. I bring GSR up again because of their ironic involvement with the troubled Ashanti and Cambior.
This from Café member, Dan:
"These folks were smart enough to get some cash up front with Cambior, and have no liability with regard to the Omai mine, their joint project in Guyana.. I was told that they will try to get all of the Gros Rosebel project in Surinam from Cambior (50 % now), and Birim back from Ashanti.
Gros Rosebel is a block buster and GSR thought they had Birim in Ghana when Ashanti paid big bucks for the project. All this on top of all the other gold they have found in French Guyana. Their very, very exciting Dachine diamond project is also in French Guyana.
I think the good junior gold and exploration companies are steals right now. Gold futures and gold call options have moved vertically higher. The investment world still cannot fathom this gold move as they continue to get this "disinformation." Soon, the whole world will "get it" and look for companies that have gold resources. Many great gold companies are still priced at close to bankruptcy levels. Their upside potential is staggering.
As reported to you in the Cafe, there were gold defaults in Karachi by physical gold traders that could not meet their commitments.
Now this anecdotal story from a Café member about e-gold pricing this week. www.e-gold.com is a website which facilitates the electronic circulation of gold - "the ultimate worldwide free market currency."
Hello Bill!
I went to check up on the exchange rates for e-Gold, and I found that they'll buy at the spot rate of $322 / ounce, but they will only SELL gold at over $400 / ounce, a 25% spread. As this is certainly a far-cry from their usual 2% spread, I wrote to Jim Ray and asked him why. Here is part of his response:
"As everyone on this list is surely aware, there is a screwy situation in the precious metals (especially gold) markets. The published 'spot price' for gold does not seem to be the market clearing price for actual physical bullion. The prices published in the financial press are for paper gold, that is, for promises purportedly payable in gold. Anyone, however, who attempts to buy large quantities of actual physical bullion for immediate physical delivery/allocation is likely to be stonewalled. From our vantage point it appears that there is already a de facto 'holiday' involving the gold bullion banks. Slow delivery and rationing differs little from explicit default."
Does this sound warped, or what?
Sincerely,
Craig
Almost last, but not least. Y2K talk is heading into high gear. With the tightness in the physical gold market it might be prudent to think about what this Café member has to say:
"I am convinced that in most parts of the world, there will be y2k-related software, hardware and embedded system failures which affect the reliability of electric power, fuel supplies, telecommunications, equipment operation and just-in-time inventory
systems, just to mention a few pieces of the economic puzzle. In a nutshell, this means significant lost production.
My feeling is that magnitude of lost production in the extraction and refining industries will be huge. Although I can't prove it, suffice it say that "fix on failure" is the y2k remed"I am convinced that in most parts of the world, there will be y2k-related software, hardware and embedded system failures which affect the reliability of electric power, fuel supplies, telecommunications, equipment operation and just-in-time inventory systems, just to mention a few pieces of the economic puzzle. In a nutshell, this means significant lost production.
My feeling is that magnitude of lost production in the extraction and refining industries will be huge. Although I can't prove it,
suffice it say that "fix on failure" is the y2k remediation policy for practically all capital-intensive industries, and this means
guaranteed downtime. If you want a second opinion on this conjecture, contact Dr. Leon Kappelman at the University of North Texas, who is an internationally-recognized expert on the subject of global y2k remediation and contingency planning.
Has anyone factored in y2k-related production losses next year for gold, silver, platinum, palladium, copper, nickel, etc. and the potential price effect on these metals?" - Randy
One more thing. We received many reports that the N.Y. Fed was selling calls trying to hold down the gold market. Based on the Federal Reserve System charter, the Fed can lend gold and sell calls. They just cannot sell the gold. Is the N.Y Fed jeopardizing the U.S gold supply to help out the "Hannibal Cannibals?" This is a matter for the U.S Congress to look into. We have been notifying various banking committees of what we are being told.
Another adage fits: Where there is this much smoke, there probably is a fire. Is the N.Y. Fed the big short along with the hedge funds? How much Fort Knox gold is on the line here?
Bill Murphy ( Midas ) |
