"Leroy,
The below article is a must read. Gold is up over $18 on
last week and $10 overnight. Here is one analysis on this
phenomenum.
SteveH
GOLD - WHY DID THE PRICE RISE SO DRAMATICALLY?
The price of gold exploded upward by $18.25 per ounce last
week to close at $286.15 in New York. Why this dramatic
rise? The "Financial Times" which falls all over itself to
explain why gold is indeed a barbaric relic and which always
assumes gold is a bad investment couldn't explain even why
gold had risen to even to $274 on Thursday, even as lower
than expected inflation reports came from the U.S. Let me
see if I can help the boys from London figure out why gold
might have risen so sharply last week. Here are a couple of
my own ideas.
1. The Financial Times and most everyone has been
conditioned to think that gold only rises only with higher
rates of inflation. In fact, gold rises when people lose
confidence in fiat currency for whatever reason. What that
happens, they recognize that a fraud has been perpetrated by
the banking system and governments who permit the debasing
of currency to occur. So, gold frequently rises during times
of deflation as well as inflation. In fact, as Ian Gordon
has pointed out, it is during the Kondratieff winters when
deflation rather than inflation prevails, that gold has its
greatest run. As we enter the current Kondratieff winter in
the existing cycle that began in 1949, we should not be
surprised to see gold rising dramatically in the weeks and
months to come.
2. The "Financial Times," has done its best to first dismiss
then undermine the proclamations of GATA and Reginald Howe,
the plaintiff in the gold price manipulation law suit now
filed with a Federal court in Boston.
First they tried to ignore their statements. But now, it is
becoming more difficult to do that with GATA now getting
national attention in South Africa where the gold price
rigging has had a most pernicious effect on that society.
So the Times is no longer able to ignore GATA, so it has
done its best to marginalize and undermine the efforts of
GATA by providing articles with misinformation such as the
one on May 7th that quoted a professor Neuberger who
dismissed GATA's charges. Not only were Neuberger's claims
without merit and half baked, but the Financial Times failed
to disclose that he was anything but an impartial analyst.
Instead he was on the payroll of one of the defendants in
the Reginald How law suit. What kind of an objective view
could he have about GATA's Charges. We know the agenda of
the Financial Times is to defend the bankers and their right
to continue counterfeiting currency and that the bankers are
thus the natural enemies of gold. But I believe more and
more GATA's credibility is on the rise, because the evidence
is so overwhelming in its favor so that when someone with an
open mind, such as the folks in South Africa start to
examine what they have to say, they can no longer be
dismissed. Thus, I think the light that has begun to shine
on the gold market conspiracy by GATA and its efforts in
South Africa as well as the efforts by Reginald Howe in his
law suit may now be causing some of the players in the
market to begin reducing their short positions. 3. In fact
one of the most significant players of all, namely the U.S.
Government may be influenced, assuming as I do, that the new
Administration is more law abiding than the Clinton
Administration was. Evidence that the Bush folks may be
refusing to play the games of the Clinton Administration to
rig the gold markets by dishording American gold and/or
twisting the arms of foreign governments to lease their
gold, may be gleaned from an announcement made via GATA this
past Monday. With the Friday afternoon move by gold through
$275 like a hot knife through butter, GATA's announcement
has been lent considerable credibility. Here was the
announcement by GATA. "Greenspan Gold Bombshell via Bob
Chapman"
"A bombshell received from Bob Chapman, fits in perfectly
with the information you have been getting from Midas the
past 4 weeks or so; Bob, who is a big GATA supporter and
Editor of the "International Forecaster," sent us the
following even before he published it in his own newsletter.
"Our intelligence sources have informed us that Alan
Greenspan has given the bullion banks until the end of May
to clear up their hedging and outstanding gold derivative
positions. Evidentially this process has been going on for
some time. Furthermore, Tony Blair will try to make
available, at the upcoming British gold auction, additional
gold which will go to banks designated by Greenspan. We were
also told that AngloGold will sell forward a designated
amount of gold to banks also specified by Alan Greenspan.
Our source for this intelligence has been very accurate in
the past. They also said they thought that gold would break
out over $275.00 an ounce by Friday." At about 12:00 noon on
Friday, I took a lunch break and before I went upstairs for
lunch, I wondered in my own mine how legitimate my friend
Bob's story was, since at that moment gold was selling at
about $273. Certainly getting over $275 before the end of
the day was not impossible, but time was running out for
this to happen before the end of yesterday. When I returned
to my office about 40 minutes later, I was amazed to see
gold suddenly cutting through $275 like a knife through hot
butter. It finished the day in New York at $286.15! I
guess my friend and competitor Bob Chapman was not full of
beans after all!
Incidentally, Bob provides a great newsletter. He jokingly
told me he prices it just below mine. I know I run the risk
of losing subscribers when I recommend the work of a
competitor, especially when it is one who does such good
work as Bob. But I'm going to do it anyway, because I think
Bob deserves it and as one of my subscribers, so do you.
Where Does Gold Go From Here?
Given the action of the markets, there is reason to believe
Bob Chapman's report about Greenspan's remarks was correct.
I believe Reginald Howe has it figured out exactly right
when he included Alan Greenspan in the gold price fixing
scheme. He had to be at the very heart of it and when he
said in 1998 that "central banks stand ready to lease gold
in increasing quantities should the price of gold rise" he
was in fact an operative part of that scam because he was
sending a signal to the bullion banks named as defendants in
Reggie Howe's lawsuit that it was safe to continue to with
their lucrative "gold carry trade" business because with
this statement, the bullion banks could count on always
being able to cover their short positions with lower priced
gold. When previously questioned about this, Greenspan
denied that the Fed or the U.S. was dishording its gold.
But now there is reason to think Mr. Greenspan may not have
been forthright about this issue. Based on information
pieced together by James Turk and Reginald Howe, it seems as
though the U.S. may have been swapping gold to other
countries, thus freeing up those countries to sell the
physical gold from their own coffers. This may have been
done by the Clinton Administration in order to get around
their lack of Congressional support to sell U.S. gold in
order to lower the gold price in support of Rubin's strong
dollar charade and his crony capitalist buddies at Citicorp
and Goldman Sachs which firm had been the chief bullion bank
at the heart of the gold manipulation business during
Rubin's days at Treasury. If in fact this run up in the gold
price late last week took place because the Bush
Administration is not willing to go along with the market
manipulation orchestrated by the Clinton and Blair
administrations, then indeed we could be at the start of one
of the most amazing runs for gold in history. I say that
because the amount of money printed, especially since 1971,
as pictured on the front page of our May issue has enormous.
With so much "purchasing power", even a small stampede into
gold could take it beyond its old high of $850. Actually,
given the need for the U.S. to try to print its way out of
the enormous debt enslavement America has gotten itself
into, the amount of money yet to be printed may in fact make
the past growth in fraudulent U.S. dollars small by
comparison. We could in fact face a hyper-inflationary
situation. Thus, in terms of a rapidly depreciating
currency, the price of gold in terms of that currency could
be absolutely enormous (i.e. in the thousands of dollars per
ounce) when this the dam breaks. When this is to happen is
anyone's guess but when it does take place it is likely to
be very rapid. Following Bob Chapman's remarks, Bill Murphy
made the following remarks. "I can't see how the bullion
banks can cover without being bailed out. The weekly
supply/demand deficit is too big. The only way for them to
cover without the price going bonkers is for someone else to
take on their shorts. This ought to be interesting. If Bob's
intelligence is on the money again and The Gold Cartel has
run out of protection - look out!"
Well folks, apparently Bob's information was "spot on" which
leads me to think the Gold Cartel may have run out of
protection. So for the boys at the Financial Times, there is
your answer as to why gold has made its shocking rise. It is
a rise GATA and many more of us gold bulls have expected for
quite some time. And if you had not been so willing to buy
what ever the power elite tell you to print, you may not
have found it so surprising either. You might have actually
been able to get the truth out to the market before that
little known under-resourced non profit organization known
as GATA.
Favorite Gold Stocks
If yesterday's major move in the price of gold really is the
beginning of a major bull market in gold, then we have got
to get ready for this move by focusing more sharply on the
individual gold shares on our list. Which ones should you
put be buying most aggressively now and which ones should
you wait for confirmation of a bull market before buying.
First let me say that we cannot be sure that gold has turned
the corner with last weeks very encouraging action. We have
seen many false starts in the past. But based on
fundamentals and the issues discussed above, there is a
distinct possibility that we have seen the first baby step
toward a move upward in gold to levels that should take the
metal at least two or three hundred dollars higher than its
Friday close. But until we have a confirmation that this is
the "real McCoy", I think it is prudent to continue
allocating 10% of our portfolio to "A" quality issues and
10% to "B" quality issues as they are so defined in page 16
of our monthly newsletter.
When we finally begin a protracted gold bull market, the
stocks that will make the biggest gains will no doubt be the
exploration stocks because as they make discoveries, they
add more wealth relative to their market value than do the
larger producers who's move is largely confined by the price
of gold. Traditionally we had always focused more on the
exploration stocks, but with the rigged market of the past
few years, the price of gold fell to such a paltry level
that we simply had no choice but to basically ignore the
exploration issues in favor of those companies that had at
least one project in production or nearing production, thus
enhancing their chances of survival.
In general, only after gold rises into the $300 to $350
range do I think it will make sense to begin start focusing
more on the juniors. Until then, I would continue to
concentrate on "A" and "B" quality issues. "A" quality
issues are defined on the back page of our newsletter as
companies with producing gold mines. "B" quality companies
are those having either a feasibility study or a
pre-feasibility study as they are defined on the back page
of our newsletter.
Among the "A" quality issues the following are currently on
our page sixteen list. Agnico-Eagle Mines, Aurizon Mines,
Crew Development, Durban Deep, Goldcorp, Newmont Mining,
Placer Dome, Repadre Capital Corp., Richmont Mines, and
Royal Gold.
The only stocks on this list that we are somewhat hesitant
about buying a the present time are Aurizon Mines and
Newmont Mining. Our reluctance with respect to Aurizon
results from declining cash flows related in large part to a
declining gold production. However, given a rising gold
price not only will that help increase profitability on
existing production, but it will also increase the
likelihood that the Casa Berardi project, which has a
resource in excess of 3 million ounces will come on stream.
Regarding Newmont, we note that given the company's large
debt load its debt rating has declined somewhat. However, a
rising gold price will help alleviate this credit rating
issues as well.
Overall, I have no problem continuing to own either Newmont
or Aurizon though I may be somewhat more cautious in buying
them than some other "A" quality issues. "B" quality issues
on our list include American Bonanza, Canarc Resources,
Coral Gold, Gabriel Resources, Golden Phoneix, Minefinders,
Nova Gold, Polyment Mining and X-Cal Resources. My top five
picks at this time among this group are Nova Gold, Golden
Phoenix, Minefinders, X-Cal Resources and Canarc Resources.
The "B" quality issues are really the ones we need to pay
closest attention to because these are the ones that will be
next to make really big moves. Having projects that are
ready to place into production or at advanced stages, they
are likely to attract analysts and investor attention very
soon, unless the recent rise in gold proves to be a false
start. "C" and "D" Quality Issues later in the Bull Market
Given our aversion to companies with less advanced stage
projects, we have largely avoided "C" and "D" quality
issues. In fact among the gold shares, we have only two, "C"
quality issues, namely Barramundi Gold and Eaglecrest
Explorations. Likewise, we have just two "D" quality issues,
namely IMA Explorations and Virginia Gold. All four of
these companies could have explosive percentage growth in
their share prices with a rising gold price and so if gold
continues to rise, we will begin to pay more attention to
lesser developed companies as the price of gold rises.
Lets just hope this is not a false start. If the Republicans
are true to their free market rhetoric, rather than submit
to the politically expedient actions of the Clinton
Administration who obviously saw fit to rig the gold price
as part of the bubble stock market and strong dollar fraud,
then this could be the "real McCoy." May 22, 2001
Jay Taylor, Editor of J Taylor's Gold & Technology Stocks
miningstocks.com"
I have grown to know Steve H over the years at Stockmans ( stockman-forum.com ) ...IMHO, he presents more than accurate and objective input!!!
For more objective commentary, I recommend Leroy's Forum!!!
Go PDG!!!
Later...Gator |
