The International Forecaster November 14/04
by Bob Chapman
November 14/04
THE INTERNATIONAL FORECASTER
NOVEMBER 2004 (#2) Vol. 8 No. 11-2
P. O. Box 510518, Punta Gorda, FL 33951
E-mail Addresses
International_forecaster@yahoo.com (for correspondence)
IF_distctr@yahoo.com (for information regarding your subscription or renewals)
CHECK OUR WEBSITE OUT
ADDRESS IS:
www.theinternationalforecaster.com
Our favorite Internet sites for gold and silver information are Goldseek.com,
GoldReview.com, Silverseek.com, CapitalUpdates.com and Howestreet.com.
*****
RADIO APPEARANCES
I am a regular guest on the Genesis Communications Network family of programs.
I am also asked to speak as a Guest Expert on various other national talk
radio programs.
Tune in to hear my latest analysis of current World events. If you go
to our site www.theinternationalforecster.com you can get information
on other radio programs we have been on.
For current information about my upcoming appearances on GCN or any national program, call: 1-800-686-2237 extension 347 for details, or go to www.gcnlive.com for live streaming from your computer.
Midas Resources has been a great help to us by taking calls and mailing out samples of the INTERNATIONAL FORECASTER. Founded by Ted Anderson, Midas Resources offers a fully trained team of professionals with decades of experience in the coin and metals markets. For friendly, up-to-the-minute quotes, news, and inside information about owning precious metals, call 1-800-686-2237
*****
TO ALL SUBSCRIBERS: We recently appeared on the Art Bell show with George
Noory on "COAST TO COAST AM" -- listener response was very strong,
and YOU can help us spread the word even more. Please take a moment and
email the show at CoastProducer@aol.com -- tell them you want to hear
Bob Chapman on the program again. Thanks for your help -- we’ll
keep you posted.
*****
We appear every other month on KFNN.COM - Sunday’s at 7:00 a.m.
Mountain time on the Pat Gorman Business Program. We have been a regular
for 15 years with Pat at Resource Consultants. He is a coin dealer and
can be reached at 800-820-5905. My last appearance is Sunday morning,
November 7th.
*****
Make it a point to listen to one of the longest running broadcasts on
short wave radio, Financial Survival 2000 sponsored by Discount Gold &
Silver Trading with Melody Cedarstrom for current news and reports not
found in the mainstream media. Financial Survival 2000 has been blessed
with regular appearances by Bob Chapman. Discount Gold & Silver Trading
is entering their 11th corporate year and has provided thousands of clients
with quality gold and silver coins, quality service and more significantly,
competitive pricing.
You can listen to Financial Survival 2000 streamed live from WBCQ.com
or listen from your short-wave:
The time (all Eastern) and frequency schedule Monday thru Friday is:
4:00 pm - 5:00 pm - 7.415, 9.330 (Monday Live with Bob Chapman and then
rebroadcast on following frequencies)
5:00 pm - 6:00 pm - 17.495
11:00 pm - 12:00 midnight- 7.415 WWCR
7:00 pm - 8:00 pm - 12.160 until Sept.1, 2004 then changed to 5.070. (Live
with Bob Chapman)
We are in the process of expanding to satellite and Internet broadcasts.
Located in Central Pennsylvania, Discount Gold and Silver Trading Co.
may be contacted by telephone at 1-800-375-4188 or by email at melody@discountgoldandsilvertrading.com
GOLD, SILVER, PLATINUM, PALLADIUM AND DIAMONDS
We are getting that warm glow again. The glow we got in 1976 when gold
began its last famous run to $850.00 an ounce. Inflation is again causing
gold to go higher, but it is not the main factor yet - it will be later.
The reason now is fiscal and current account deficits and a falling dollar.
Gold may be up 72% over the past 42 months, but it is still 50% from its
all-time high. An additional positive aspect for gold is the pending approval
by the SEC of the Gold Exchange Traded Fund, which is similar to such
other funds trading in London and Australia. It provides a direct exposure
to the gold price without going to the futures market, or buying physical
gold, coins or shares. It is very convenient for funds and institutional
buyers. These buyers will now be able to access a market not available
to them in the past. That will mean gold will be purchased that was not
purchased previously. We believe the dollar is going lower, some 30% lower,
and we also believe that dollar problem is going to persist for several
years. It may well be accompanied by higher inflation and perhaps mega-inflation.
The fundamentals are all in place, as gold production declines and reserves
decline as well.
As the euro, Swiss franc and other currencies moved higher against the
dollar, so has gold. Gold now has again become the premier currency. The
dollar market is now so large that no central bank or groups of banks
can for long influence its direction. The same has come true in the gold
market where physical buying has overwhelmed official selling. Do not
forget the euro was issued at $0.97, it fell to $0.8194 it is now $1.295.
That is an almost $0.50 move from the bottom of the euros range. Percentage
wise gold has not moved nearly as much, and if it is in fact the world’s
premium currency, it should be flying from this level. You must also remember
once the dollar goes to where it’s going, gold will still stay firm
or go higher as gold is the currency. Once the dollar finishes correcting,
will it still be the world’s reserve currency?
The war in Iraq and other deficit spending are draining the US of its
wealth. This guerilla war could go on for years. We could win the battles
and lose the war. The implications here are far worse than Vietnam. Four
more years of this fighting and any other military actions could financially
destroy America. We have the government and leaders that we deserve and
that is not a good thing.
The geniuses at Franklin Resources, which owned 11% of Sons of Gwalia,
or 20.2 million shares, made their last purchase on 10/13/04 and sold
5.7 million shares off market for an undisclosed same on 10/25/04, although
the stock had been suspended from trading in 8/30/04. They lost over $50
million. How is that for in competency? They should not have been buying
hedged producers in the first place.
The mining industry is facing inflating energy and construction costs,
and companies are attempting, where they can, to increase production that
is US dollar denominated. This pursuit has serious
consequences for the growth of new gold production in a short period of
time, with very few projects due to come on stream in the near term. A
company like Barrick Gold said annual production is forecast to rise to
a peak of 3.5 million ounces in 2006, compared with two million ounces
in 2004 and 2005, but the level will then drop dramatically to one million
ounces in 2007. For further new production seven to ten years is realistic.
Barrick’s Peruvian production has been falling consistently for
four months. The mines ministry said Barrick’s Pierina production
fell 67%, due to lower grades. Of course, Barrick has been high-grading
for years. Repeatedly we have said, “sell Barrick”, we hope
you are listening. This is a company in serious trouble.
Gold’s fundamental and technical picture is extremely positive.
The world is finally taking a hard look at the dollar’s value and
the huge fiscal and current account deficits. What we have talked about
for so long is finally getting the attention of professionals. As you
can see, production is falling at a meaningful pace throughout the world
and the gold cartel cannot suppress prices much longer. By the time the
public finds out what you know, prices will be $1,500 an ounce.
Last week silver inventory fell almost another 100,000 ounces.
First Barrick Gold says it will sell bonds worth $1 billion and now Placer
Dome is raising $500 million. This money is to cover their losses in their
hedge books, and hopefully reserves, by gobbling up exploration companies
with over one million ounces. Do not touch these two losers.
Merrill Lynch Investment Managers have a favorable outlook for gold, underpinned
primarily by emerging pressures on supply, which is as fundamental as
it gets. Amid relatively static demand, falling mine output over the coming
years and the potential for a reduction in European bank sales, stand
to prolong the rally in US dollar gold prices, says Merrill. They only
missed the rally from $250 to $435, genius that they are. They are right
on the fundamentals – the game is on big time.
Merrill Lynch is launching a new gold fund.
The ECB announced a sale of 14.5 tons of gold last week. They have only
sold 20 tons in the first five weeks of the new agreement. That is only
4 tons a week. If this average holds up for the year, the ECB will sell
40% of what it could, under the agreement.
Gold has broken out over $433, an ounce. We expect some profit taking
between $460 to $512; there is no resistance anywhere after 17 years.
Unfortunately, due to central bank intervention, charts are very difficult
to use effectively, from here on out it is all fundamentals and psychological.
After the central bank and government intervention in the gold market
is exposed, next, we should hit $850 an ounce with silver at $40 to $50.00.
Later, in 2005 or 2006, inflation or hyperinflation should top-out. At
that point, gold will be the only real money; the currency of last resort
and the flight to quality will have begun. Professionals will begin to
buy after $500 is crossed. The public will not even start until we reach
$850. This move in gold and silver began in 1962 triggered by the beginning
of massive deficit spending and inflation, so this result has been a long
time coming. We recognized in 1960, what was going to happen and stuck
with it all these years, because we were sure what the elitists were up
to. Based on this, we see gold at $3,400 as we see all currencies breaking
down, versus gold.
In the third quarter South African gold out-put fell 1.6%.
What is going on in the gold market is very remarkable. Every wave of
selling by the central banks is being met by more buying. The specs are
not running for cover, they are being joined by new fresh speculators.
Giant funds are involved, which have massive amounts of capital. The US
government and the central banks are finding the cost of driving down
the gold price ruinously prohibitive. There is unbelievable buying of
gold in the market. Nothing like this has been seen by professionals since
1980. Open interest is close to 350,000 contracts. The media knows the
market is under manipulation but we do not hear a word about it. They
call this lying by omission.
We are starting to see blatant currency manipulation as several major
European politicians try to talk down the euro and when they do that,
there is coordinated selling by the gold suppression cabal. No matter
what they do in prolonging the inevitable, the dollar will fall another
30% and gold will soar.
Silver contracts set new records with open interest hovering near 125,000
ounces, as silver Comex warehouse stocks dropped to a new low of 103,000,000
ounces.
Yesterday was the Diwali Festival in India. The Indian wedding season
still has two months to run; business and farming are prospering, so you
can expect record gold purchases for doweries.
There has been persistent gold buying by a large European bank, which
has all the earmarks of a derivative deal gone toxic.
The amount of non-monetary gold exported from the US in September was
worth $524 million versus $326 million in August.
Dubai has dubbed itself the “City of Gold”, and India, the
world’s largest consumer of gold, are forming a Dubai Gold and Commodity
Exchange, which will go into operation in late 2005.
Barrick Gold will issue $750 million in debt securities to cover its losses
on its gold hedge positions. At $440.00 an ounce, they have broken their
contracts, unless they get cash, and that is what they are doing. They
are currently offside over $2 billion.
Volume in the precious metals complex increased 59% last week. Open interest
rose 16%.
At the beginning, Exchange Traded Funds, ETFs, will increase gold off
take, but the final effect will be to add the liquidity of the ETA float,
which will act as an additional source from which to lower the gold price.
Thus, readers should stay away from this Trojan horse product. It only
assists the enemy, which includes the World Gold fantasy Council.
There is widespread resistance to the proposed Harmony merger with Gold
Fields by Harmony shareholders. That bolsters our negative opinion registered
when the deal was announced.
Goldcorp is being rumored as a takeover candidate with Placer Dome, the
natural suitor. If such a deal were made, we would be sellers of Goldcorp.
Placer has a large hedge position and is buried in South Africa. Newmont
or Agnico-Eagle would be proper suitors.
The word is gold producer de-hedging increased by 16% in the third quarter
or 144 tons. The total position hedged is 1.877 tons, or about 75% of
annual global gold mine output. Some producers hedge to finance projects
and some to manipulate the gold price. Hedging is down 40% since 2001.
Of the 54 companies that hedge, only six still enjoy a positive mark-to-market.
Sons of Gwalia and Thistle have gone bankrupt. Other possible victims
are Oceana Gold, Placer Dome, Newcrest, Barrick, Centerra, Buenaventura,
Xstrate and Western Areas.
Russia’s minister of mines says their placer gold deposits will
be exhausted by 2011.
to read more order the complete issue!
SUBSCRIPTION and RENEWAL INFORMATION: 1-YEAR $99.95 U. S. Funds. Make
check payable to Robert Chapman (NOT International Forecaster), and mail
to P.O. Box 510518, Punta Gorda, FL 33951. Please include name, address,
telephone number and e-mail address. We accept Visa and MasterCard charges.
Provide us with your card number and expiration date. We will charge your
card $99.95 for a one-year subscription. Note: We publish twice a month
by surface mail or 3-4 times a month by E-mail. Correspondence to Bob
Chapman international_forecaster@yahoo.com, or for subscription information
IF_distctr@yahoo.com
Foreigners please use foreign U.S. dollar denominated checks or Money
Orders.
*****