please direct all salutations and gratitude to Dealer
she taught me everything I know
she is still working to polish my interpersonal style
so be patient with her, since I am still a work in progress
as for Gold Retreat, dunno really
does anyone?
here is my May13th list of (revised) reasons why gold rises
and brief parenthetic status
most are "NO CHANGE"
I think GOLD will rise steadily
mine experts claim equilibrium supply/demand price is $600/oz
the slower it rises, the less likely a big pullback
a slow rise enables intraday backfilling and consolidating
we saw a pullback in early April back under 300
but it didnt retreat as much as the goomba experts expected
we saw another pullback in midMay back under 310
recently we have evidence of destroyed Gold Cartel, of desperation, and probably short covering
remember the Gold Cartel has a naked short of about three years of world gold and silver production
in sum: not until it rises fast
its rise does not compel it to retreat
only a fast rise would facilitate an airpocketed pullback
/ JW SBG
20 REASONS WHY GOLD WILL RISE
Jim Willie, May 13, 2002
1. real rate of interest has been near zero since Oct2001
- real rate of interest defined to be 3-month TBill yield minus CPI rate
- bond disincentive, no real return on investment
- credit market is 5x larger than stock market
- strong historical precedent for rise in gold
(NO CHANGE)
2. trade debt is approaching 5% of US GDP
- symptom of overvalued dollar, lost export competition
- strong historical precedent for decline in US dollar
(WORSE)
3. money supply increased 30% since Jan 2001, 85% rise since 1991
- monetary inflation plants seeds of eventual price inflation
(NO CHANGE)
4. rising world tension, desire for safer safe haven, Islamic countermeasures
- threats of terrorism (conventional, biological, chemical, nuclear)
- Middle East escalation, probably retaliation to US attacks on Al Qaeda
- potential financial warfare directed at US dollar
- redirected flow of petrodollars to Europe, new Arab minting of new coins
(NO CHANGE)
5. unwinding miner hedges, end of gold leasing, reducing supply
- 1000 ton annual supply/demand shortfall
- eventual central bank discontinued selling
- lost control by Gold Cartel (central banks, bullion banks, hedged miners)
- end of gold leasing program, with inelastic demand, inelastic supply
- unwinding of largest naked short position in history (3 years supply)
- end of trashing of South African Rand (world’s leading gold supplier)
(WORSE)
6. dismantled mining supply apparatus, from systemic price below production
- decade of neglect, lowest CPI-adjusted prices for commodities since 1929
- approximately 2 years to turn the switch and produce gold in a shutdown mine
(NO CHANGE)
7. no more Japanese savings guarantees, private investor showing new awareness
- Japanese private citizen savings total $12 trillion, prolific savers
- reports pose that Japanese could eventually own 70% of world gold
- worldwide trend of private investors now also in USA, Germany, Arab world
(NO CHANGE)
8. new federal deficits from inefficient wartime and security spending
- increased supply of bonds leads to reluctance to hold additional amounts
- increased supply of bonds adds to the already exacerbated money supply increase
- corporate debt collapse leads to pressure on federal and household debts
(WORSE)
9. trade tariff resumption discourages global trading village concept
- tension leads to reduced trade, cutbacks in dollar exchange, distrust in USA
- protection trends worsen economic slowdowns worldwide
(NO CHANGE)
10. accelerating worldwide currency turbulence
- Japan, South Africa, Argentina, Brazil, Mexico, Taiwan, PacRim, Turkey
- unbacked currencies acting as hot money, creating frequent airpockets
(NO CHANGE)
11. world perception of American institutionalized dishonesty
- scandals, accounting fraud, broker conflict of interest, exaggerated earnings
- consequent resentment of American hegemony, lost trust
(NO CHANGE)
12. end old economic cycle of prosperity, begin new cycle to correct excess
- famous Russian economist identified 60-70 year cycles of boom and bust
- Kondratieff summer in 1999, followed by Kondratieff winter inearly 2000’s
- evidence is stock market broken bubbles, massive debt collapse, world recession
- recession is atypical: excess goods & capacity, debt collapse, price deflation
(NO CHANGE)
13. extreme rise in foreign holdings of US assets
- 45% of US TBonds, 25% of US Corp Bonds, 12% of US Stocks
- lost control of our own economy (interest rate, value of dollar)
- diversification away from American financial instruments
- faulty US TBond deposit base supporting entire foreign economies
(LITTLE CHANGE)
14. correction of US dollar usage as both store of value, banking reserve asset
- the dollar is backed by debt, thus represents a denominated debt instrument
- dollar collateral (gold) is in process of depletion, perhaps 50% depleted
- foreign banks use the dollar as basis for fractional banking reserves
- full circle coming toward currency backed by hard asset of gold
(NO CHANGE)
15. rising costs from entire energy complex
- political, legal, environmental obstacles to increased supply
- public utilities and regulated industries are horribly mismanaged
- gold is highly correlated with crude oil
(BETTER SLIGHTLY)
16. European currencies offer more attractive alternative
- low US TBond yield is undermining the US dollar
- Euro has better competitive position (trade surplus, 15x gold backing)
- Euro also benefiting from diversification by other nations(e.g. China, Arabs)
(EURO HIGHER NOW)
17. divergence of deflationary credit-based economy, inflationary cash-based economy
- debt collapse has led to widespread deflationary economic conditions
- public mismanaged energy industry has shortages, poor infrastructure, rising prices
- monetary expansion keeps the yield curve steep, forecasting future price inflation
- refusal of long bond yield to come down despite current deflation
(NO CHANGE)
18. Bureau of International Settlements has targeted the US dollar for a corrective decline
- Swiss desire to install Euro as new gold-backed currency
- reversal of yen carry trade, reversal of gold carry trade
- previous target was the Soviet Union
(NO CHANGE)
19. Sept 11th marks the turning point for US Dollar
- 1989 presaged a rise in the dollar to stretched highs with fall of Berlin Wall
- 2001 presaged a correction after blowoff top following World Trade Center attack
(NO CHANGE)
20. high gold price leads to higher demand, lower supply
- demand drops during price declines, becomes nonexistent at lowest prices
- as price rises, a worldwide fever develops and gains momentum
- supply was enormous at gold’s lowest prices with Central Bank and miner selling
- as price rises, hedge sale cashflow declines, money goes to cover forward contracts
(NO CHANGE) |
