Posts Categorized: General Editorial

Posted by & filed under General Editorial.

Dear Friends,

From the Dow Jones high in 1929 it took until 1932 to establish the absolute low. From the establishment of that low point in 1932 low it took 25 years to regain the 1929 high (1954).

It was no coincidence that Roosevelt went to fiscal stimulation in 1932 – 1933 in the form of jobs creation by proxy, such as the Civil Conservation Corp (CCC) and other make work programs. Roosevelt proposed conservation and other work programs as the means of unemployment relief during the 1932 presidential campaign. Senate Bill 5.598, the Emergency Conservation Work Act; was signed into law on March 31, 1933. This initiative is still on the books, having not been funded since 1941.

This is why liberal President Elect Obama will embrace fiscal stimulation with a vengeance, possibly as soon as at the Swear In Ceremony.

I am told that $1 trillion is only for starters.

Today is so different in substance than 1929 – 1932 even if it is a mirror image in unfolding chapters.

Monty is spot on regarding the total final cost of the Sin of OTC derivatives, saying that it will reach only $20 trillion if we are lucky.

CONSEQUENCES my friends. Consequences cannot be avoided.

While the Fed and Treasury take their lead into action from what went wrong with 1929 anti deflationary policies, no one is considering the consequences of their present economic acts that will go infinitely more wrong than any boo-boo in the 1929-1932 period.

Gold is going much higher than $1650. Alf Fields is right in his studies. My estimate of $1650 that I have held since 2000 is terribly conservative.

Be strong. Stop looking for why you are wrong and start knowing why we are right.

Bert Seligman taught me a simple truth:

“The weak succumb, the strong survive.”

Be strong in your commitment. Don’t let some wackjob with a second hand laptop and a bottle of cheap gin cause you to lose sleep.

Respectfully yours,

Click charts to enlarge the Dow action from 1900 onward in PDF format

djia1900s djia19201940s

Here are some questions to exercise your logic:

If there are $8.5 trillion of losses in OTC derivatives is there not a corresponding profit in cash or position value somewhere?

When the Federal Reserve buys all this so called toxic paper does the Federal Reserve not become the counterparty of obligation to the OTC derivative with humongous losses?

Why is there so much Washington noise about TARP, a program totalling $700 billion, and total silence on the subject of $8.5 trillion?

It was a stroke of genius when they named him BARNEY.

Posted by & filed under General Editorial.

Dear Friends,

I believe through the $2 trillion of fiscal intervention stimulation, a number I hear from the inside, the 8.5 trillion total so far is going to $20 trillion. Before this is all over the tremendous liquidity will transmute into inflation without precedent.

That is what you heard from Gold today.

The general equity rally in the early 30s was a humdinger so expect that rally to occur in the USA.

The only difference is when the monetary cat is let out of the bag by fiscal spending that Fat Cat will not go back into the bag. Gold will be launched into a multi-year phase of the long term bull market even when the equity rally in this bear equity market completes itself.

That encapsulates all you need to know concerning gold and the US dollar.

Respectfully yours,

Posted by & filed under General Editorial.

Dear Friends,

If you review the 1929 and to some degree 1873 experience, you will see that regardless of how terrible banking and general business were a significant rally back after the break took place.

The key element to the 1929-1932 event was the many programs that President Roosevelt undertook to affect Fiscal Stimulation.

I believe through the $2 trillion of fiscal intervention stimulation, a number I hear from the inside, the 8.5 trillion total so far is going to 20 trillion. Before this is all over the tremendous liquidity will transmute into inflation without precedent.

That is what you heard from the Dow and Gold today.

The rally in the early 30s was a humdinger so expect a multiple of that rally to occur in the USA. The only difference is when the monetary cat is let out of the bag by fiscal spending it will not go back into the bag. Gold will be launched into a multi-year phase of the long term bull market even when the huge rally in this bear market completes itself.

Respectfully yours,

Posted by & filed under General Editorial.

Dear CIGAs,

Trader Dan says:

“The more buyers that can be recruited to this effort, particularly buyers of large size, the more difficult the life of the paper shorts will become. Short of taking delivery of the actual metal, preferably pulling it out of the warehouses, the shorts can reign supreme over this market. What’s more – they are doing this with impunity as they pay no price financially to do so and profit quite handsomely I might add. Strip them of the metal and they are cooked. Then they will have to compete on a level playing field like the rest of us. Who was it that said, “He who sells what isn’t his’n, must pay the price or go to prison”? If the paper shorts are selling what doesn’t exist, namely tons of actual gold, forcing them to show us the actual metal will work to modify their behavior.  This is the only way to keep the Comex gold market honest.”

CIGA JB Slear of Fort Wealth Trading Comments on the Comex Delivery Process:

I wanted to give you a quick update on the delivery process. I have to say, this is not difficult at all, it just requires some time.

  1. You must have an account with a commodities firm to take delivery of COMEX Gold/Silver. Some clearing houses will not allow you to take delivery, so don’t hesitate to ask your broker.
  2. We started taking delivery in November Gold and these people got their gold bars by the first week of December.
  3. The process starts with the purchase of the contract in the delivering month, now December gold. With the account fully funded, we simply buy the futures and inform the clearing firm of our intent to take delivery.
  4. The costs out of the commodity account is (at the time of this writing) $756.1 per ounce, x 100 (for a 100 ounce bar), plus commissions and receipt fees totaling no more than $200 total per bar (Fort Wealth Trading Co.). So $75,810 in the account and about a week’s time to process the warrant/receipt, and your gold will be ready to be delivered.
  5. I will phone and receipt numbers once the stopper contacts us. “Stopper” is a term referring to the warehouse that holds the product. If your stopper is HSBC, they will require a faxed ID with the name and address of where the bar is to be shipped, along with a check for the freight and insurance/handling. HSBC has an account with the US postal service, and can tell you how much the shipping costs will be for sending an insured package. (I’d suggest Next Day Air, after all, it’s gold). If your stopper is Brinks, there is a slight difference in delivery. They will allow a credit card to be used for these additional fees and shipping, but require the bars be delivered to an institution (rightfully so too, you don’t want a Brinks truck stopping at your home). They will deliver to a Post Office, Bank, or business address.
  6. I haven’t had any stoppers from the other 2 warehouses yet, but the delivery procedures should be the same – minimal. Please be patient with these people, these procedures are in place to make sure the product goes to the right person, and from my understanding, these warehouses are busier now than ever before. I wonder why?
  7. This is it! Don’t let your broker tell you any different. It’s even easier to will call the product too. These warehouse people are absolutely wonderful and will do what they can to make it easier.

Non-US entities:

For our foreign investors, the process is the same. Jim tells me that the shipping process is different. Shipping cost quoted below include full value insurance.

I’m here of course to answer any questions or concerns you might have so feel free to call me and we’ll push the snowball downhill together. You save $200 an ounce over local coin and bullion dealers.

Sincerely yours,

Fort Wealth Trading Co. LLC
866-443-0868 ext 104

Jim Sinclair’s Commentary

For those Non- US entities the following shipper has been more helpful than any other contacted:

Based on 1000ozs of gold and a weight of 62.5lbs being picked up in Sharon, CT and delivered in Zurich the costs will be a total of $1,880.72.

If you have any questions, please feel free to contact me at (609) 903-1100.

I look forward to doing business with you.

Brenda Castro
Account Executive
Securities and Precious Metals
Dunbar Global Logistics
7717 NW 62 Street
Miami, FL 33166
P: (305) 436-7999
F: (305) 436-2808
C: (609) 903-1100



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Posted by & filed under General Editorial.

Dear Friends,

Let’s put on our practical thinking hats. I am inviting opinions from both our academic reader as well as those that believe answers are more accurate when derived by the “follow the money” concept.

The Fed says and statistics support that the majority of the $8.5 trillion in funds injected into the economy in many ways was to protect the US financial community. This has given comfort to the establishment intellectuals that there is no inflationary implication as a result of this massage and unprecedented liquidity injections.

Follow the money approach

The US Federal Reserve made $8.5 trillion available to Wall Street and other entities with OTC derivatives in their inventory. These “assets” have the potential for causing bankruptcy.

It is claimed that the majority of these funds will not have an inflationary impact because of the huge amount of T bills, bonds and note sales that will offset the inherent liquidity injections.

The main buyer of the Treasury instrument issued was China.

China sold US Agencies and as a courtesy bought US treasuries, claiming no negative impact on US financial plans.

The inviting question is who got sterilized? Sterilization impacts the entity that buys the T-bills.

The conclusion then is that it is China, not the USA that received the sterilization process tool. The Chinese, being no fools, offset this process by selling US Agency instruments.

It follows that the USA got the liquidity but not the sterilization, leaving all those funds locked and loaded to fulfill Dr. Milton Friedman’s accurate statement that inflation is monetary, not demand-pull or cost- push motivated.

The Fed figures say sterilized, but it is totally false when the “follow the money process” is utilized to understand the action.

China however did remain relatively dollar neutral as the product of selling agencies to buy T-bills.

Therefore the final answer is that $8.5 trillion that is unspecialized has been injected into the US monetary system.

Where is the Beef?

When the Fed buys OTC derivatives say from AIG, Fanny and Freddie and guarantees them against loss or keeps them on their balance sheet, the Fed becomes the principal counterparty as the loser to each OTC held or guaranteed.

It is reasonable then to assume that a non-performing OTC derivative instrument becomes a performing asset as long as it is held or guaranteed by the US Federal Reserve. The Fed would need to be responsible for the obligations of the losing counterparty to the special performance obligation.

If these defunct instruments are now functional it is reasonable to assume that bailout entities were losers in the specific performance contracts known as OTC derivatives. There has to be one or a daisy chain of winners out there of $8.5 trillion, either paid out or held as a full value position

Who are they?

Now let’s look at the assumption that the $8.5 trillion is not a factor because the intellectuals state that all it does is fill a black hole of losses.

You own a junior gold that has been under attack by naked and pool short sellers. Mr. Oliver has done the work of god to make cold calls to major stockholders (discovered in required filings) informing them of his opinion that the entity is overpriced at zero.

I now come to your house informing you that I feel sorry for you and hold the naked and pool short seller in contempt, therefore here is a check for the difference between your cost and the present market value.

Does that fill a black hole of losses or put you back in business? It puts you back in business with your wealth factor reestablished.

What intervention factor will start the flow of the absolutely unsterilized $8.5 trillion dollars of liquidly into the business section?

The answer is significant FISCAL STIMULATION through Quantitative Easing (aka wild-ass money printing) will trigger the dollar’s death by inflation of the currency unit. When road, schools, special education, music, athletic, teacher’s salaries, the no child left back, road building and local infrastructure building providers are granted Federal contracts with Federal guarantees of borrowing, they go to the bank. What bank against a Federal fiscal stimulus contract or guarantee will fail to lend up to 90% of the required funds?

That will open the barn door of liquidity.

This is followed by inflation then hyperinflation (a currency event not an economic event) in the midst of a recession so deep it threatens to be the second Great Depression.

The dollar declines below .72 and gold moves above $1024 on its way to $1650. What would make Alf Field’s technical projection of the price of gold at $3000, $5000 or even $10,000 correct?

The answer to that question is also easy: $8.5 trillion in government bailouts and direct cash injections as fiscal stimulus while quantitative easing throws money in the street for people to pick up (Bernanke and the famous Electronic Helicopter Money Drop Defalcation fighting speech will do the trick).

Obama will be cheered as saving the US economy for at least one year while the equity markets gets its 1930 rally for a year.

Keep in mind that the grease of the wheels of the equity market has been and always will be LIQUIDITY for a short to medium term rally.

Weekend Events

Republic Windows and Door Corporation got a surprise on Friday when it furloughed all its workers as a result of Bank of America calling their cash flow, plant and equipment based loan.

This morning and all weekend the employees are marching around the facility demanding their severance pay and reimbursement for vacation days earned after only a 3-day notice.

The Federal Warrant Act demands employees get 60 day notices or get paid for 60 days pay when furloughed.

The workers are after Bank of America and the assets of the firm to meet their legal demand.

As a side note the company does not have the funds for severance payment or its contribution to employee’s health insurance.

Most employees’ health insurance was up for renewal now.

The Bank of America was asked to extend the company loans for severance and health insurance. Their reply was “you have to be kidding.”

Christmas Shoppers Publicly Warned

The warning was given not to rob Christmas presents for their children in this difficult business condition.

To assume that present day workers will quietly go to soup kitchens or live as hobos is madness.

Soon stealing a loaf of bread for your family will be a capital crime.

Respectfully yours,

41 US States Face Bankruptcy In 2009

A recent study by The Center on Budget and Policy Priorities revealed that 41 states are facing severe budget shortfalls for 2009. Some states are worse off than others, with California ($31.7 billion) and Florida ($5.1 billion) leading the deficit pack. In all, the 41 states are currently facing a $71.9 billion budget shortfall. The key word here is “currently,” since a similar study was conducted by the same group only three months earlier, at which time “only” 29 states were predicted to face shortfalls of a “mere” $48 billion. As the recession deepens, so will the state’s budget problems, turning this “budget crisis” into a humanitarian disaster. Projections have already been made for a $200 billion shortfall by 2010.

These deficits have already transcended the computer screen of the statistician into real suffering of the most vulnerable sections of society. In dozens of states across the country, vital services are being cut to the elderly, disabled, the poor, and recently unemployed. Teachers are being cut from schools and tuitions are rising. Workers from state construction sites are being laid off, while social service employees suffer a similar fate. Non profits are closing their doors.

Most likely, these pains only mark the beginning. Many states have a “rainy day fund” of some kind that they use to plan for such crises. These funds are already depleted, or certain to dry up quickly, with “hard decisions” now having to be made. This is especially troubling when one considers that, in many cases, state cutbacks made from the 2001 recession remained in place. Not to mention that successive presidents have successfully plundered federal social programs. The new, extraordinary state budgets that are being drawn up to address the current deficit crisis will essentially destroy the social safety net for millions of people, including access to daycare, food stamps, welfare, and basic medical services.  The fact that the federal budget is in even worse shape, and will likely choose to follow a similar route of massive cuts, makes future predictions of social calamity all but certain.

The options available to states to respond to budget crises are limited since states are not allowed to run deficits; they must solve their budget problems immediately. Nearly every state government is reacting to the crisis in essentially the same way: by cutting essential services and raising “secondary” taxes (alcohol, cigarettes, gas, etc). In reality, after spending their reserve funds, states have only two viable options: cutting spending and raising taxes.



Standoff continues as workers protest layoffs

Sunday, December 07, 2008 | 12:50 AM

CHICAGO (WLS) — Workers are refusing to leave a Chicago factory they have occupied since Friday.They started a sit-in after getting three days notice that the plant was being shutdown.

"We’ve been here since yesterday and last night, and we’re not going anywhere. We are committed to this," worker Melvin Maclin said.

The protestors are calling their demonstration a peaceful occupation. Some 200 workers at Republic Windows and Doors are staying inside their plant, in shifts, even though the company has told them that – as of yesterday – their jobs no longer exist.

"I do whatever I have to do to support my family," said Armando Robles, who also was laid off.


Posted by & filed under General Editorial.

Dear CIGAs,

I recently completed the same mathematics that helped me so much in 1980 to determine the price that would be required to balance the international balance sheet of the US.

Balancing the international balance sheet is gold’s mission in times of crisis.

I recently did the math again and was sadly shocked to see what the price of gold would have to be to balance the international balance sheet of the USA today. That price for gold is more than twice Alf’s projected maximum gold price.

My compliments go to Alf for his work that has been spot on for a good deal of time.

All our tools are a crystal ball of sorts; a kind not having 100% input from the adopted discipline. Certainly Alf’s involves more than simple technical analysis talent. It is quite rare for two Gann guys ever to see the same thing in an axiom of TA. What Alf speaks about lately makes me feel God is long gold even if Oliver is short. You might recall it was Alf who correctly called the Uranium market.

None of us get it right all the time. For the speculator, you are only as good as your last call.

I think Alf has it nailed. Bravo to him.

Respectfully yours,


Elliott Wave Gold Update 23
By Alf Field

As this is going to be the last of these Updates, it is appropriate to review the reasons for writing this series of articles on Elliott Wave and the gold price. This will involve revealing a lot of personal detail and also unveiling an extremely high forecast for future gold prices.

The first article titled “Elliott Wave and the Gold Price” was published on 25 August, 2003. This article can be reviewed at the following site:

In August 2003 the gold price was in the region of $350 and there were a number of conflicting views about the future direction of the gold price. Robert Prechter, for example, was predicting a move to below $253 and possibly below $200. For a number of reasons I was of the opinion that gold was in the very early stages of a major bull market. My views were thus the opposite of Prechter’s and I eventually plucked up the courage to say so.

I count Robert Prechter as a friend, so my purpose was not to disparage his views. I was more interested in setting up some parameters or guidelines that would help determine the likely outcome if the gold price exceeded those levels. I concluded that if the gold price dropped below $309, the odds would favor Prechter’s view. If it pushed above $382, then my bullish view would probably be favored.

This was more than just an academic exercise because in 2002 I had made a major change to our family investments, moving some 40% of the capital into gold and silver bullion plus a selection of gold and silver mining shares. If Prechter’s view prevailed, our family finances would have taken a serious drubbing.

Another reason for publishing the Updates was to illustrate a major advantage of the EWP, which is the ability to prepare a template forecast (or “road map”) of how the market is likely to unfold in both the long and short term, including the possible terminal prices. The original article produced a template based on the rhythms that had been observed in the early stages of the bull market, based naturally on the assumption that my bullish views would prevail.

The early stages of the bull market revealed corrections of 4%, 8% and 16% at increasing orders of wave magnitude. Those numbers were used in the original template published in that 2003 article, a template that forecast that the first major move upwards could reach $630 after which a correction of the order of 25% to 33% would probably follow. In fact, if the sequence had been extended logically, the larger correction should be double 16%, or 32%, but this was shaved to 25-33%.

I thought that the $630 forecast was conservative and that this number would probably have to be adjusted upwards later once the minor waves unfolded. In 2003, with gold in the mid $300’s, a forecast of $630 was both courageous and extremely daring. There was no purpose served in taking the exercise beyond that point until after the $630 target had been achieved.

In addition, the 2003 article concluded that if $382 was surpassed, then the gold price would move rapidly to $424 without a serious correction. That did indeed happen, with gold reaching $425 before the anticipated correction occurred. That success encouraged me to write an article updating the original forecast. I did not anticipate that the consequence of that first update would be the production of this Update 23 some five years later.

There was a further undisclosed reason for writing these articles and that was to eventually highlight the massive potential of the gold bull market. I was reluctant to reveal what I really believed in 2003 as it was so bullish that it would have invited the arrival of the guys with straight jackets and padded cells.

As this will be the last of these Updates, I will reveal my previously unpublished “back of the envelope” calculations in 2003. They were as follows.

Major ONE up from $256 to approximately $750 (a Fibonacci 3 times the $255 low);

Major TWO down from $750 to $500 (a serious decline of 33%);

Major THREE up from $500 to $2,500 (a Fibonacci 5 times the $500 low);

Major FOUR down from $2,500 to $2,000 (another serious decline);

Major FIVE up from $2,000 to $6,000 (also a 3 fold increase, same as ONE)

A case can be made for an 8 fold increase in Major FIVE, which would continue the Fibonacci sequence 3, 5, 8. You can do the maths if you like, but the fact is you can pick your own number for the gain in Major FIVE. Three times the low of $2,000 was actually the conservative expectation, producing a bull market peak target of $6,000.

I would not have invested 40% of the family capital into gold, silver and the corresponding mining shares based solely on my bullish EWP expectations. The following is a quote extracted from “Elliott Wave and the Gold Price” written in 2003 and referenced above:

“I am not a gung ho advocate of the EWP. I discovered not only its strengths but also its weaknesses. I prefer to have fundamentals, technicals and the EWP all in place (if possible) before committing myself to an investment.”

As mentioned in this quotation, I prefer to have fundamental and technical analyses in line with the EWP before committing to a position. Obviously I was satisfied with the fundamental and technical out look for gold when I made the dramatic change in our investment portfolio in 2002.

The technical analysis included the following:

The 21 year bear market in precious metals had ended with the multi-decade down trend line being broken on the upside.

The precious metal markets were oversold with sentiment and emotional indicators sporting extreme negative readings with bullish connotations.

In the 1970’s bull market, gold increased from a low of $35 to a peak of $850, a massive 24.3 times the low price. If the current bull market was to be of the same order, then one could project an ultimate peak of over $6,221 ($256 x 24.3). This matched the $6,000 target determined under the EWP.

The fundamental analysis was the real clincher. I had become convinced that the world, and especially the USA, was heading for a major financial crisis that would be so powerful that it would overwhelm all other factors. It would become the single most important criteria impacting on investment decisions. Privately I referred to this as the “Big Kahuna” crisis.

I anticipated that the Big Kahuna would give rise to the risk of a systemic meltdown, which would result in the authorities “throwing money at problems”, bailing out all the banks and large corporations that got into trouble. This would lead to the destruction of the currency. I wrote about this in more detail in “Seven D’s of the developing Disaster” in April, 2005, an article that can be found at:

The consequence of the systemic meltdown would be a vast increase in newly created money which would result in a massive rise in the gold price of the order that I was anticipating. A further consequence would be the introduction of new national and international monetary systems. Several articles followed in the next few years, culminating in “Crisis Cogitations” which was published just 2 weeks ago at:

If you haven’t read “Crisis Cogitations”, I would urge you to do so in order to better understand the current crisis. Obviously the current financial crisis is the Big Kahuna that I had been anticipating, although I didn’t expect it to take five years to emerge.

Reverting back to the situation in 2003, both the technical and fundamental underpinnings for gold seemed to be pretty solid. Consequently I felt confident that the bullish EWP forecasts, both the shorter term and the undisclosed longer term expectation, would work out. There was no purpose served in revealing the potential for the market to reach $6,000. To get there, gold had to get to the $630 target first, which was a sufficiently daring forecast in 2003.

The current situation:

The chart below depicts the Comex Gold price on a weekly basis. In February 2006, in Update IV, the $630 target was increased to $768 as a result of intervening market action. A couple of months later the gold price exceeded $630 and moved to $733 in May 2006. From that point a 23% correction to $563 occurred.

Confusion reigned because a relatively minor correction had been anticipated, to be followed by a rise to $768. Thereafter the long awaited 25% to 33% correction was scheduled to occur. Instead, the decline measured 23% and the obvious conclusion was that this was the long awaited 25% to 33% correction, albeit slightly stunted. Quite possibly I was overly influenced by my previously unpublished rough target of $750 followed by a decline to $500. The actual outcome of a peak of $733 and a correction to $563 was remarkably close to my rough estimate and seemed to adequately fit the requirement for the end of Major ONE and the corrective wave Major TWO. In coming to this conclusion I glossed over the fact that the correction to $563 was an obvious triangle, and triangles are almost always 4th waves, yet I was calling it a 2nd wave, Major TWO. I also glossed over the fact that the correction was below the 25% to 33% magnitude required.

I mentioned previously that the early corrections were 4%, 8% and 16% at increasing orders of magnitude. If one were to be pedantic, one would say that the next level of correction should be 32%. Looking at the chart below, the correction from $1015 to $699 is 31%! It sticks out like a sore thumb. Surely this is exactly the 32% correction that we should have been anticipating for Major TWO?

Assuming that the $699 low on 23 October 2008 turns out to be the actual low point of the correction, and that remains to be proven, then we can conclude that we have seen the low point for Major TWO. That will allow us to update my original “back of the envelope” template to much higher levels, as follows:

Major ONE up from $256 to $1,015 (actually 4 times the $255 low);

Major TWO down from $1015 to $699, say $700 (a decline of 31%);

Major THREE up from $700 to $3,500 (a Fibonacci 5 times the $500 low);

Major FOUR down from $3,500 to $2,500 (a 29% decline);

Major FIVE up from $2,500 to $10,000 (also a 4 fold increase, same as ONE)

Once again, you can pick your number for the gain in FIVE and multiply it by $2,500. The numbers become astronomical and can really only be possible in a runaway inflationary environment, something which many thinking people are suggesting has become a possibility as a result of the actions taken during the current crisis.

Concentrating on the $3,500 target for Major THREE, which is a five fold increase from the low point of about $700, there is a case advanced in “Crisis Cogitations” for a five fold increase in money and prices in order to arrive at a “Less Hard” economic landing. In the USA, total debt recently exceeded $50 trillion and this is unsustainable given an economy with a GDP of only $14 trillion. The suggestion is that the debt level will reduce through bankruptcies to say $35 trillion while the new money created to save the situation will push up the nominal GDP to $70 trillion. A $35 trillion debt level is manageable with a GDP of $70 trillion.

It requires a five fold increase in prices to achieve the above result. Gold has retained its purchasing power over the centuries and will no doubt continue to do so in the current environment. Consequently gold will almost certainly increase five fold (or more) if the level of prices in the USA increases five fold.

In “Crisis Cogitations” it is acknowledged that the current credit/debt deflation could get out of hand and result in a serious deflationary depression. There is debate as to how gold will react in a deflationary environment, but the fact is that in a serious depression bankruptcies will be rife and price levels will decline. This may result in cash and Government bonds performing better than gold, but this is not certain. Gold cannot go bankrupt and is thus an asset that people can hold with confidence in a deflationary depression. It is possible that demand for a “safe haven” investment may be large enough to cause the metal to perform better than cash or Government Bonds.

The odds, however, strongly favour an inflationary outcome. Given a strong will and the ability to create any amount of new money via the electronic money machine, it seems a foregone conclusion that runaway inflation will be the end result. If Mugabe could do it in Zimbabwe, there seems little doubt that Ben Bernanke and his associates in other countries will have no trouble in doing it too.

Why quit writing these reports? I have noticed from the emails that I receive that many people are using these reports to guide their trading activities in gold. I have had no objection to this in the past, but feel that it would be foolish to trade gold in the circumstances of the Big Kahuna crisis that we are living though at the moment. It has become a question of individual financial survival in an environment where things are happening more rapidly and with increasing violence. I feel very strongly that it is time to quietly hold onto one’s gold insurance and not attempt to trade it. I do not wish to provide interim levels that may cause people to be encouraged to trade their gold to skim a few extra fiat dollars or other currencies, but lose their gold as a result.

So it is Good Bye, Good Luck and God Bless,

Alf Field
25 November 2008.
Comments to:

Disclosure and Disclaimer Statement: The author advises that he has personal investments in cash, gold and silver bullion, gold and silver mining shares as well as in base metal and uranium mining companies. The author’s objective in writing this article is to interest potential investors in this subject to the point where they are encouraged to conduct their own further diligent research. Neither the information nor the opinions expressed should be construed as a solicitation to buy or sell any stock, currency or commodity. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions. The author has neither been paid nor received any other inducement to write this article.

Posted by & filed under General Editorial.

Barrick Denies Report It Will Quit Tanzania Amid High Costs
By Stewart Bailey

Dec. 5 (Bloomberg) — Barrick Gold Corp., the world’s biggest gold producer, denied a news report that it is considering withdrawing from Tanzania because of high operating costs.

The company has invested $1.5 billion in the African country, is in the final phases of building its Buzwagi mine and “has no intention of pulling out of Tanzania,” Vince Borg, a Barrick spokesman, said today in a telephone interview from Toronto, where the company is based.

Earlier today, Dar es Salaam-based IPP Media cited Gareth Taylor, Barrick’s vice president for Africa, as saying that poor infrastructure in Tanzania made operations in the country unprofitable and could force the company to cease doing business there.

“Barrick has been and will remain committed to Tanzania,” Borg said. The company will work with the government to ensure the country’s legislation remains “competitive with other jurisdictions so that Tanzanians can continue to benefit from mining.”

Barrick fell C$2.51, or 7.6 percent, to C$30.59 as of 10:07 a.m. in Toronto Stock Exchange trading. The shares dropped 21 percent this year through yesterday.


Posted by & filed under General Editorial.

Dear CIGAs,

1. Today’s news on the cost of mining and infrastructure is in my opinion posturing for meetings between the Chamber of Mines and the Presidential Committee on Mining Revenue next week.

2. High costs can be a product of a company having sold the gold production of their mine forward 10 years in order to obtain non-recourse loans. The price of gold would then be delivered against those sales forward and used in the calculation of income in order to derive costs of mining according to International, Canadian and US Generally Accepted Accounting Principles (GAAP).

3. The infrastructure in Tanzania from Mwanza to Dar es Salaam is excellent.

4. A main high power electrical grid and delivery system exists in the area of Mwanza and can service multiple mines.

5. Gold can be shipped via air. This is most certainly true if you own multiple large aircraft yourself.

6. In my opinion mining costs in Tanzania are among the lowest in the world, especially if you have an open pit potential to finance your future underground operations.