Precious Metals Market Update #3


Precious Metals Market Update #3

THE TIGHT TRADING OF A FIXED MARKET

Gold has proved itself in the past to be the most effective hedge against inflation, stock market volatility and political and financial uncertainty. This year gold and silver has defied these traditional catalysts for higher prices. We have maintained for over two years that the persistently low price of gold and silver, despite a massive supply over demand deficit, is the result of a concerted effort to hold their prices down and reduce investor interest in these metals.

There are several articles on this website that deal with this issue in greater detail.

For most of the month of November, gold has traded in the tight range of 1% at around US$266 per oz, the tightest range it has traded for any extended period of time in nearly 10 years. Many analysts believe this has further demonstrated the artificial manipulation within this market.

“When there is a market comprised of participants from around the world in many countries, buying and selling 24 hours a day, any rational person would expect some differences in daily pricing, especially when the market is roiled by financial and political turmoil.

There is sufficient evidence that, despite the ongoing political uncertainty in the US Presidential election, the cutting off of Iraqi oil, the meltdown in the NASDAQ, that coincidentally has wiped off billions of capitol from the markets, the sky high and hardly likely to go lower oil prices, placing a tremendous brake on the US, and thus the world economy, that this market, along with the silver, market is rigged. This rigging has artificially interrupted the normal market.” source – Speculative Stocks.

In recent days gold has broken out of this tight range, rallying a few dollars to US$275 today.

The year 2000 has been the worst year in the stock market for two decades. Historically gold has been contra-cyclic to the stock market. When the stock market has been up, gold has been down, and visa-versa.

THE FIVE KEY FACTORS
In this Precious Metals Update, we have been saying continually that there is at least five key factors that will lead to the eventual unraveling of this gold and silver market fixing;

1) higher crude oil prices
2) Middle East instability
3) stock market wipe out
4) lower US dollar
5) increasing inflationary pressures within the west.

Each one of these key factors continue to deteriorate by the day, pointing to much higher gold and silver prices in the future. The longer and more extensively these markets are “fixed”, the greater the upside price movement once the market turns.

STOCK MARKET TURMOIL
The year 2000 has been the worst year in the stock market for two decades. This is a global problem as currently the US stock market contains just under 50% of the entire world’s equity wealth.

The NASDAQ started the year at 4069 points after last year’s amazing move up of 86%. The tech index peaked on March the 10th this year at 5048 points. It has since moved down nearly 50%, to today’s level of around 2650 points. This is the worst year in the NASDAQ since 1974.

The Dow began the year at 11,497 points and peaked on January 14th at 11723 points. On December 1st the Dow closed at 10,373 points, a drop of 11.5% from its January 14th high, and a drop of 9.8% from its January open. This is currently the worst year for the Dow since 1977, 23 years ago.

It is our belief that the stock market has a long way to go to the downside to reach traditionally reasonable valuations. Historically gold has been contra-cyclic to the stock market. When the stock market has been up, gold has been down, and visa-versa.

Between 1929 and 1933 the US stock market lost 90% of its valuation while the purchasing power of gold increased by 130%. An even more dramatic example was the US markets in the early 1970’s through to the 1980’s.

In the early 1970’s the stock market in the US tanked. It took the best part of 10 years for the market to reach its early 1970’s highs of Dow 1000 points. Meanwhile, between 1971 and January 1980, the price of gold climbed from $35 oz to an intra day high of $850 oz, a move of 2300%.

SUPPLY AND DEMAND
In the past I have focused on the natural physical supply deficit, where annual demand for both physical gold and silver far exceed mine supply of both these precious metals. We have examined that, in light of record demand and shrinking supply in both these metals, prices have moved lower, contrary to normal market behavior.

The Platinum Group of Metals (PGM’s) have moved up strongly over the last two years as a result of increased global demand and restricted supply. On December 4th, palladium rose to a record US$880 (up $40) and platinum to a 13 year high of $622 on the news of possible delays in exports of these metals from Russia early next year.

By comparison gold and silver, facing more acute supply deficits, have gone down. As with any market, eventually supply and demand must meet. For supply and demand to meet, there must eventually come an explosive move in the price to the upside.

On December 6th the Australian Financial Review ran the story “Gold Conspiracy”.

“The theory is that the Federal Reserve Bank, with the aid of Goldman Sachs and Chase Group, is intervening in what should be a free market and beating down the price of gold within an inch of its life.

Net short positions held by financial institutions are astronomical. One analyst claims it would take 10 years of supply to satisfy demand if all contracts were closed out and physical demand had to be delivered.”

A DEATH BY DERIVATIVES
In this Financial Review article, the writer, when referring to “net shorts”, is referring to the derivative positions held on the books of gold producers, bullion banks and other financial institutions.

Derivatives are futures, options and warrants that were originally designed to hedge, or protect, producers and market participants from sudden price swings in a given commodity. Over the last decade the size of the derivatives markets have grown many times larger than the underlying markets they where originally designed to hedge. The total size of the global derivatives market is now estimated to be approaching 100 trillion dollars.

Many large banks hold huge derivative positions in their bullion departments. The gold derivatives held on the books of just the bullion department (small relative to the total operations of the bank) of one particular bank is estimated to be worth close to 50% of the entire assets of the bank – more of this in a future update.

The writer of the Financial Review article is saying it would require 10 years of physical gold supply to unwind the currently held derivative positions. This translates to all the mine supply the world over to the year 2011 before 1 oz could be consumed in electronics, jewelry or more importantly, investment demand.

THE MOTIVE
One of the most common questions I get is; why – what is the motive behind keeping the price of gold low?

The answer is simple – gold and silver is, and always will be, a natural alternative to government issued currency and bonds. Gold and silver is free market money. When investors flee into gold and silver, as they did in the late 1970’s, they first sell their holdings of stocks and bonds, driving the value of government currencies down. Gold and silver is difficult for governments to track, control and tax. Government and central banks don’t profit from investors owning gold and silver, as they cannot create the metals from nothing, as they do with their bond issues.

As we have repeatedly said, the longer the gold and silver markets are artificially suppressed in face of massive supply deficits, the greater and more explosive the eventual upward price movement. “That is why buying gold, silver and the precious metals shares is a once in a lifetime investment opportunity.” (MIDAS – lemetropolecafe.com)

by Philip Judge
2000

Precious Metals Market Update #3

THE TIGHT TRADING OF A FIXED MARKET

Gold has proved itself in the past to be the most effective hedge against inflation, stock market volatility and political and financial uncertainty. This year gold and silver has defied these traditional catalysts for higher prices. We have maintained for over two years that the persistently low price of gold and silver, despite a massive supply over demand deficit, is the result of a concerted effort to hold their prices down and reduce investor interest in these metals.

There are several articles on this website that deal with this issue in greater detail.

For most of the month of November, gold has traded in the tight range of 1% at around US$266 per oz, the tightest range it has traded for any extended period of time in nearly 10 years. Many analysts believe this has further demonstrated the artificial manipulation within this market.

“When there is a market comprised of participants from around the world in many countries, buying and selling 24 hours a day, any rational person would expect some differences in daily pricing, especially when the market is roiled by financial and political turmoil.

There is sufficient evidence that, despite the ongoing political uncertainty in the US Presidential election, the cutting off of Iraqi oil, the meltdown in the NASDAQ, that coincidentally has wiped off billions of capitol from the markets, the sky high and hardly likely to go lower oil prices, placing a tremendous brake on the US, and thus the world economy, that this market, along with the silver, market is rigged. This rigging has artificially interrupted the normal market.” source – Speculative Stocks.

In recent days gold has broken out of this tight range, rallying a few dollars to US$275 today.

The year 2000 has been the worst year in the stock market for two decades. Historically gold has been contra-cyclic to the stock market. When the stock market has been up, gold has been down, and visa-versa.

THE FIVE KEY FACTORS
In this Precious Metals Update, we have been saying continually that there is at least five key factors that will lead to the eventual unraveling of this gold and silver market fixing;

1) higher crude oil prices
2) Middle East instability
3) stock market wipe out
4) lower US dollar
5) increasing inflationary pressures within the west.

Each one of these key factors continue to deteriorate by the day, pointing to much higher gold and silver prices in the future. The longer and more extensively these markets are “fixed”, the greater the upside price movement once the market turns.

STOCK MARKET TURMOIL
The year 2000 has been the worst year in the stock market for two decades. This is a global problem as currently the US stock market contains just under 50% of the entire world’s equity wealth.

The NASDAQ started the year at 4069 points after last year’s amazing move up of 86%. The tech index peaked on March the 10th this year at 5048 points. It has since moved down nearly 50%, to today’s level of around 2650 points. This is the worst year in the NASDAQ since 1974.

The Dow began the year at 11,497 points and peaked on January 14th at 11723 points. On December 1st the Dow closed at 10,373 points, a drop of 11.5% from its January 14th high, and a drop of 9.8% from its January open. This is currently the worst year for the Dow since 1977, 23 years ago.

It is our belief that the stock market has a long way to go to the downside to reach traditionally reasonable valuations. Historically gold has been contra-cyclic to the stock market. When the stock market has been up, gold has been down, and visa-versa.

Between 1929 and 1933 the US stock market lost 90% of its valuation while the purchasing power of gold increased by 130%. An even more dramatic example was the US markets in the early 1970’s through to the 1980’s.

In the early 1970’s the stock market in the US tanked. It took the best part of 10 years for the market to reach its early 1970’s highs of Dow 1000 points. Meanwhile, between 1971 and January 1980, the price of gold climbed from $35 oz to an intra day high of $850 oz, a move of 2300%.

SUPPLY AND DEMAND
In the past I have focused on the natural physical supply deficit, where annual demand for both physical gold and silver far exceed mine supply of both these precious metals. We have examined that, in light of record demand and shrinking supply in both these metals, prices have moved lower, contrary to normal market behavior.

The Platinum Group of Metals (PGM’s) have moved up strongly over the last two years as a result of increased global demand and restricted supply. On December 4th, palladium rose to a record US$880 (up $40) and platinum to a 13 year high of $622 on the news of possible delays in exports of these metals from Russia early next year.

By comparison gold and silver, facing more acute supply deficits, have gone down. As with any market, eventually supply and demand must meet. For supply and demand to meet, there must eventually come an explosive move in the price to the upside.

On December 6th the Australian Financial Review ran the story “Gold Conspiracy”.

“The theory is that the Federal Reserve Bank, with the aid of Goldman Sachs and Chase Group, is intervening in what should be a free market and beating down the price of gold within an inch of its life.

Net short positions held by financial institutions are astronomical. One analyst claims it would take 10 years of supply to satisfy demand if all contracts were closed out and physical demand had to be delivered.”

A DEATH BY DERIVATIVES
In this Financial Review article, the writer, when referring to “net shorts”, is referring to the derivative positions held on the books of gold producers, bullion banks and other financial institutions.

Derivatives are futures, options and warrants that were originally designed to hedge, or protect, producers and market participants from sudden price swings in a given commodity. Over the last decade the size of the derivatives markets have grown many times larger than the underlying markets they where originally designed to hedge. The total size of the global derivatives market is now estimated to be approaching 100 trillion dollars.

Many large banks hold huge derivative positions in their bullion departments. The gold derivatives held on the books of just the bullion department (small relative to the total operations of the bank) of one particular bank is estimated to be worth close to 50% of the entire assets of the bank – more of this in a future update.

The writer of the Financial Review article is saying it would require 10 years of physical gold supply to unwind the currently held derivative positions. This translates to all the mine supply the world over to the year 2011 before 1 oz could be consumed in electronics, jewelry or more importantly, investment demand.

THE MOTIVE
One of the most common questions I get is; why – what is the motive behind keeping the price of gold low?

The answer is simple – gold and silver is, and always will be, a natural alternative to government issued currency and bonds. Gold and silver is free market money. When investors flee into gold and silver, as they did in the late 1970’s, they first sell their holdings of stocks and bonds, driving the value of government currencies down. Gold and silver is difficult for governments to track, control and tax. Government and central banks don’t profit from investors owning gold and silver, as they cannot create the metals from nothing, as they do with their bond issues.

As we have repeatedly said, the longer the gold and silver markets are artificially suppressed in face of massive supply deficits, the greater and more explosive the eventual upward price movement. “That is why buying gold, silver and the precious metals shares is a once in a lifetime investment opportunity.” (MIDAS – lemetropolecafe.com)

GOLD HERITAGE CERTIFICATE NEWS –  The Gold Heritage Certificate is a sophisticated gold ownership and asset transfer instrument, and can be tailored to suit a myriad of complex investment and asset relocation applications

The Gold Heritage Certificate is governed by strict internal and external checks to insure maximum integrity and security of certificate holder’s bullion.

The Gold Heritage Certificate has released its Independent Auditors Report. This independent Audit was conducted by a member of Horwath International and confirms an excess of 100% bullion in storage against certificates issued.

Several refinements in the Gold Heritage Certificate program have been released.

1) The establishment of Australia Fair International Limited in Vanuatu now offers the client the greatest degree of client information privacy in the world. This facility can provide fully numbered accounts if required. Under Vanuatu law, there are no reporting requirements in relation to the movement of funds, or the disclosure of any information relating to its companies or their clients.

2) Australia Fair International Limited has announced the European Trust Company as its Third Party Custodian. The role of the Third Party Custodian is to provide an independent counter-signatory to the client trust account and the bullion storage facility. No bullion can be removed form the bullion storage facility or funds from the client trust account without the signatures of both AFIL and the independent custodian.

ADVANTAGES
The Gold Heritage Certificate offers numerous advantages over owning and holding gold in other forms. These include cost effectiveness, flexibility, liquidity, security, safety, and the ability to hold, relocate and transfer assets privately around the world.

BUYING AND OWNING GOLD
The Gold Heritage Certificate system allows you to purchase bullion at gold spot price on any given day plus a minimal issuing service charge (in most cases, as a result of bullion fabrication costs and bullion dealers and brokers fees, buying gold in other forms such as coins or bullion bars command a much higher premium over the gold spot price). The Gold Heritage Certificate holder has the complete flexibility to hold, transfer or sell their gold bullion at any time.

ASSET TRANSFER
Gold Heritage Certificates are a very convenient, flexible and liquid gold-backed asset. No restrictions are placed on the private dealings of certificates.

The Gold Heritage Certificate holder can quickly and efficiently transfer their certificates to other persons or entities. When a certificate is transferred to a new owner, the legal title claim to the underlying gold also changes. This makes Gold Heritage Certificates an ideal way to privately transfer and relocate assets. Many people are using these certificates as a means of private gold payment between entities or people.

by Philip Judge
2000


Precious Metals Market Update #3

THE TIGHT TRADING OF A FIXED MARKET

Gold has proved itself in the past to be the most effective hedge against inflation, stock market volatility and political and financial uncertainty. This year gold and silver has defied these traditional catalysts for higher prices. We have maintained for over two years that the persistently low price of gold and silver, despite a massive supply over demand deficit, is the result of a concerted effort to hold their prices down and reduce investor interest in these metals.

There are several articles on this website that deal with this issue in greater detail.

For most of the month of November, gold has traded in the tight range of 1% at around US$266 per oz, the tightest range it has traded for any extended period of time in nearly 10 years. Many analysts believe this has further demonstrated the artificial manipulation within this market.

“When there is a market comprised of participants from around the world in many countries, buying and selling 24 hours a day, any rational person would expect some differences in daily pricing, especially when the market is roiled by financial and political turmoil.

There is sufficient evidence that, despite the ongoing political uncertainty in the US Presidential election, the cutting off of Iraqi oil, the meltdown in the NASDAQ, that coincidentally has wiped off billions of capitol from the markets, the sky high and hardly likely to go lower oil prices, placing a tremendous brake on the US, and thus the world economy, that this market, along with the silver, market is rigged. This rigging has artificially interrupted the normal market.” source – Speculative Stocks.

In recent days gold has broken out of this tight range, rallying a few dollars to US$275 today.

The year 2000 has been the worst year in the stock market for two decades. Historically gold has been contra-cyclic to the stock market. When the stock market has been up, gold has been down, and visa-versa.

THE FIVE KEY FACTORS
In this Precious Metals Update, we have been saying continually that there is at least five key factors that will lead to the eventual unraveling of this gold and silver market fixing;

1) higher crude oil prices
2) Middle East instability
3) stock market wipe out
4) lower US dollar
5) increasing inflationary pressures within the west.

Each one of these key factors continue to deteriorate by the day, pointing to much higher gold and silver prices in the future. The longer and more extensively these markets are “fixed”, the greater the upside price movement once the market turns.

STOCK MARKET TURMOIL
The year 2000 has been the worst year in the stock market for two decades. This is a global problem as currently the US stock market contains just under 50% of the entire world’s equity wealth.

The NASDAQ started the year at 4069 points after last year’s amazing move up of 86%. The tech index peaked on March the 10th this year at 5048 points. It has since moved down nearly 50%, to today’s level of around 2650 points. This is the worst year in the NASDAQ since 1974.

The Dow began the year at 11,497 points and peaked on January 14th at 11723 points. On December 1st the Dow closed at 10,373 points, a drop of 11.5% from its January 14th high, and a drop of 9.8% from its January open. This is currently the worst year for the Dow since 1977, 23 years ago.

It is our belief that the stock market has a long way to go to the downside to reach traditionally reasonable valuations. Historically gold has been contra-cyclic to the stock market. When the stock market has been up, gold has been down, and visa-versa.

Between 1929 and 1933 the US stock market lost 90% of its valuation while the purchasing power of gold increased by 130%. An even more dramatic example was the US markets in the early 1970’s through to the 1980’s.

In the early 1970’s the stock market in the US tanked. It took the best part of 10 years for the market to reach its early 1970’s highs of Dow 1000 points. Meanwhile, between 1971 and January 1980, the price of gold climbed from $35 oz to an intra day high of $850 oz, a move of 2300%.

SUPPLY AND DEMAND
In the past I have focused on the natural physical supply deficit, where annual demand for both physical gold and silver far exceed mine supply of both these precious metals. We have examined that, in light of record demand and shrinking supply in both these metals, prices have moved lower, contrary to normal market behavior.

The Platinum Group of Metals (PGM’s) have moved up strongly over the last two years as a result of increased global demand and restricted supply. On December 4th, palladium rose to a record US$880 (up $40) and platinum to a 13 year high of $622 on the news of possible delays in exports of these metals from Russia early next year.

By comparison gold and silver, facing more acute supply deficits, have gone down. As with any market, eventually supply and demand must meet. For supply and demand to meet, there must eventually come an explosive move in the price to the upside.

On December 6th the Australian Financial Review ran the story “Gold Conspiracy”.

“The theory is that the Federal Reserve Bank, with the aid of Goldman Sachs and Chase Group, is intervening in what should be a free market and beating down the price of gold within an inch of its life.

Net short positions held by financial institutions are astronomical. One analyst claims it would take 10 years of supply to satisfy demand if all contracts were closed out and physical demand had to be delivered.”

A DEATH BY DERIVATIVES
In this Financial Review article, the writer, when referring to “net shorts”, is referring to the derivative positions held on the books of gold producers, bullion banks and other financial institutions.

Derivatives are futures, options and warrants that were originally designed to hedge, or protect, producers and market participants from sudden price swings in a given commodity. Over the last decade the size of the derivatives markets have grown many times larger than the underlying markets they where originally designed to hedge. The total size of the global derivatives market is now estimated to be approaching 100 trillion dollars.

Many large banks hold huge derivative positions in their bullion departments. The gold derivatives held on the books of just the bullion department (small relative to the total operations of the bank) of one particular bank is estimated to be worth close to 50% of the entire assets of the bank – more of this in a future update.

The writer of the Financial Review article is saying it would require 10 years of physical gold supply to unwind the currently held derivative positions. This translates to all the mine supply the world over to the year 2011 before 1 oz could be consumed in electronics, jewelry or more importantly, investment demand.

THE MOTIVE
One of the most common questions I get is; why – what is the motive behind keeping the price of gold low?

The answer is simple – gold and silver is, and always will be, a natural alternative to government issued currency and bonds. Gold and silver is free market money. When investors flee into gold and silver, as they did in the late 1970’s, they first sell their holdings of stocks and bonds, driving the value of government currencies down. Gold and silver is difficult for governments to track, control and tax. Government and central banks don’t profit from investors owning gold and silver, as they cannot create the metals from nothing, as they do with their bond issues.

As we have repeatedly said, the longer the gold and silver markets are artificially suppressed in face of massive supply deficits, the greater and more explosive the eventual upward price movement. “That is why buying gold, silver and the precious metals shares is a once in a lifetime investment opportunity.” (MIDAS – lemetropolecafe.com)

GOLD HERITAGE CERTIFICATE NEWS –  The Gold Heritage Certificate is a sophisticated gold ownership and asset transfer instrument, and can be tailored to suit a myriad of complex investment and asset relocation applications

The Gold Heritage Certificate is governed by strict internal and external checks to insure maximum integrity and security of certificate holder’s bullion.

The Gold Heritage Certificate has released its Independent Auditors Report. This independent Audit was conducted by a member of Horwath International and confirms an excess of 100% bullion in storage against certificates issued.

Several refinements in the Gold Heritage Certificate program have been released.

1) The establishment of Australia Fair International Limited in Vanuatu now offers the client the greatest degree of client information privacy in the world. This facility can provide fully numbered accounts if required. Under Vanuatu law, there are no reporting requirements in relation to the movement of funds, or the disclosure of any information relating to its companies or their clients.

2) Australia Fair International Limited has announced the European Trust Company as its Third Party Custodian. The role of the Third Party Custodian is to provide an independent counter-signatory to the client trust account and the bullion storage facility. No bullion can be removed form the bullion storage facility or funds from the client trust account without the signatures of both AFIL and the independent custodian.

ADVANTAGES
The Gold Heritage Certificate offers numerous advantages over owning and holding gold in other forms. These include cost effectiveness, flexibility, liquidity, security, safety, and the ability to hold, relocate and transfer assets privately around the world.

BUYING AND OWNING GOLD
The Gold Heritage Certificate system allows you to purchase bullion at gold spot price on any given day plus a minimal issuing service charge (in most cases, as a result of bullion fabrication costs and bullion dealers and brokers fees, buying gold in other forms such as coins or bullion bars command a much higher premium over the gold spot price). The Gold Heritage Certificate holder has the complete flexibility to hold, transfer or sell their gold bullion at any time.

ASSET TRANSFER
Gold Heritage Certificates are a very convenient, flexible and liquid gold-backed asset. No restrictions are placed on the private dealings of certificates.

The Gold Heritage Certificate holder can quickly and efficiently transfer their certificates to other persons or entities. When a certificate is transferred to a new owner, the legal title claim to the underlying gold also changes. This makes Gold Heritage Certificates an ideal way to privately transfer and relocate assets. Many people are using these certificates as a means of private gold payment between entities or people.

by Philip Judge
2000