if god is a gold bar ...

This, from Sinclair is of interest:

(In my opinion EMP is one of the best placed gold stocks to take part in the next bull run for gold ... DRD has now over 17% of the stock and the Phase Two expansion phase and the recapitalisation of its major mine will have a dramatic effect both on production and on reducing operating costs ..... EMP is a sound medium / longer term play and represents sound buying at current levels .... DRD paid around 74/5c a share for its 17%+ stake)

April 13, 2003


Q&A
Shouldn't gold be at $370 now?


Q: Jim. With all this buying of gold shouldn't gold be $370 now?

A: Canada's Globe and Mail reports in its Friday, April 11 edition that gold producers around the world slashed their hedge books by a "phenomenal" 423 tonnes last year, trimming their forward sales commitments for the third year in a row. The survey quoted by the Globe says this is nearly three times the reduction seen in 2001.

The Globe's Wendy Stueck writes that Gold Fields Mineral Services noted that: "The 423-tonne decline last year dwarfed the 151- and 15-tonne reductions in 2001 and 2000, respectively, and provided a crucial basis for the strong gold price performance of 2002."

In its annual gold survey, GFMS said de-hedging, along with an increase in gold investment demand, was a key driver behind last year's rising gold prices and is expected to remain a factor this year too. The firm also pointed to higher gold prices in the second half of the year.

"After a period of postwar euphoria, stock prices will fall again because profits will disappoint," said GFMS managing director Phili Klapwijik. "Gold by the third quarter could be in the $340s (U.S.) and by fourth quarter we could see average prices in the mid-$370s (U.S.)."

You need to recall the example I gave you of the lack of trading volume in Comex December 2004 gold. This contract trades by special appointment only. The volume is almost non-existent and buying or selling 10 contracts (1000) is almost impossible unless you are willing to pay a fool's price above cash. Yet ABX could, IMO, buy to cover 13,000,000 ounces on a telephone call to their gold bank.

How is that possible? The answer is simple. It is paper gold, not real gold and they are usually dealing with the firm that granted the hedge position in the first place. So you are simply paying a ransom to be excused from the liability. This is not true with Newmont because the hedge it inherited from Normandy Mining was so stupid that the ransom required to get out of it is enormous and Newmont, IMO, will not pay it.

Paper gold has no real impact on real gold when the transaction is simply paying a ransom to the counterparty gold bank to get out of an already established hedge position. Therefore, the exit side does nothing much while the entry side depresses real gold. However, that is another rather long explanation not relevant to your question.

Believe me. If that much gold was purchased in the marketplace as real bullion gold, we would be looking in the rear view mirror at $529 gold. What a web these spiders (gold banks) have spun!

If god is a gold bar those boys are destined for hell.