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To: ild who wrote (22756)	12/2/2004 3:22:08 PM
From: ild	Respond to of 110194

Date: Thu Dec 02 2004 14:45 trotsky (BWP@shares and ETF) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved it seems to me there's a number of factors contributing to the malaise, but the major one is probably that the market doesn' currently believe PoG 450 to be sustainable in the near term. the compression of the yield spread is behind all this - it is usually the precursor of a stronger dollar, which in turn tends to pressure gold. combine that with the fact that the speculators have very large net long exposure, and it's no wonder the market is doubtful. otoh, the yield spread could be on the verge of expanding again...especially if more evidence comes in that says the rate hike cycle is likely over ( so far we have: a sharp slowdown in Japanese and European growth...a slowdown in housing bubble activity, a slowdown in retail sales, still anemic capacity utilization, falling real wages, the GDP deflator at a 42 year low, a failure of capital spending to revive to any appreciable extent and 5 consecutive months of declining leading indicators. oh, and corporate profits have begun to fall again as per the last quarter ) . this sounds like a lot, but it's probably not yet enough. for unfathomable reasons everybody seems fixated on the lagging employment indicators - while the forward looking ones like the 'help wanted' index are ignored. so i will venture an opinion diametrically opposed to what fishy said today: if the market becomes convinced that the Fed is done hiking, the yield curve steepening will be back in fashion, and then both gold and gold shares can resume their rise ( with a lag usually ) . Date: Thu Dec 02 2004 14:30 trotsky (flash) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved " So, China's hugh consumption increase and its subsequent desperate search for oil suppliers is a mirage? " and i said that where, exactly? it's amazing how people always try to put words in my mouth. and what has this got to do with the fungibility of oil? what in fact has it got to do with anything at all ( like e.g. the Iraq invasion debacle ) ? it seems obvious that a developing economy will begin to use more oil - this is not only true of China, but many Asian nations. India may well become an even bigger consumer than China one day. are you suggesting we should forcibly arrest their economic development so we can keep the oil for ourselves? that's not only naive and unrealistic, but reminds me of a mindset that prevailed a century ago during colonialist times. China's economic development creates wealth for the entire world as it were - we profit as much from it as they do. the problem of peak oil is more likely to be successfully addressed the better developed the world as a whole is - since it will require an enormous effort in terms of capital and ingenuity. it doesn't become more likely that we will solve this problem if the bulk of Asia stays a third world backwater, it becomes LESS likely. warfare with its unreasonable and uneconomic claims on resources likewise makes it less likely - solutions to problems of this sort are far more likely to be achieved when there is peace and civilization is allowed to flourish. the blockheads who believe everybody who resides more than 50 metres from one's own borders is an enemy have yet to contribute anything worthwhile to humanity's progress...unless you think that killing and maiming and destruction of property somehow do that. Date: Thu Dec 02 2004 14:05 trotsky (goldeye@ski) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved i only remeber a few specific instances of 'crucial points' , there were at least two or three in '01/'02 were he was simply completely wrong ( shorting or selling one day before a major low in '02 for instance. at one stage in late '01 he was here at kitco and tried to convince me that it wasn't a bull market AT ALL - the HUI traded just above 70 points at the time ) , and there was one call that he got very much right, which is the one most people remember because it presaged the April sell-off. i note that very recently he managed to go long again right at a top. i call that 'coin toss accuracy'. the best i can say about his work is that he tries to keep risk at a minimum. Date: Thu Dec 02 2004 13:53 trotsky (flash@'sell to whom'?) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved well, LOL. you should really brush up on your economics. with a fungible commodity like oil that is traded all over the world it does not matter 'to whom' it is sold. if A sells to B instead of C, then D will sell to C. so if Iraq had decided to sell exclusively to China, other suppliers would have reduced their deliveries to China and begun to serve Iraq's former customers. when the 70's embargo was analyzed post mortem it turned out that the embargo had no effect at all on crude oil availability for this very reason ( i'm sure you can find the relevant texts with a little googling ) . it largely had a psychological effect, as opposed to a physically measurable one. the real reasons for the 70's oil price rise were 1. the US production peak in '70 and 2. the inflationary monetization of the price rise by the Fed. Date: Thu Dec 02 2004 13:21 trotsky (P.Yorkie@Ghawar) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved yes, it needs 7m. bbl. of water every day to keep up reservoir pressure - and the oil coming from the wells is cut commensurately ( rumor has it it's 50% or so ) . note that this water injection requirement is steadily rising - when Ghawar was discovered, it needed no water injection at all. clearly it's closing in on the production peak - and since it's the by far biggest Saudi field, this means the entire country is closer to peak production than generally assumed. at least that's my guess considering Ghawar. btw., most of the remaining giant fields in the world are close to, or at their peak. Cantarell ( Mexico ) is expected to see an output decline of 50% over the next 5-8 years for instance. i think it's number 2 after Ghawar currently. so those very old giants are really worth worrying about ( and keeping an eye on ) .