Barrick won''t hedge anymore, Chairman Munk says


10:51p ET Wednesday, November 19, 2003

Dear Friend of GATA and Gold:

Thanks to GATA's Mark Webber for the transcript of
Sprott Asset Management President John Embry's
interview on Report on Business Television in
Canada this week. It's appended here.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

ROB-TV's "Lunch Money" with Michael Hainsworth
12:20p ET Tuesday, November 18, 2003

Hainsworth: John Embry is president of Sprott Asset
Management. Thanks for being here.

Embry: Michael, a pleasure.

Hainsworth: Let's talk about gold but as it relates to the
U.S. economy and the inflation data we got -- or the lack
of inflation data we got -- out of the United States. What
does that tell you, first of all, about the recovery in the
United States, because pricing power doesn't seem to
be there?

Embry: The recovery in the United States is questionable
to me. We had a great quarter numerically. You look at a
lot of the underlying dynamics and I don't think the real
power is there. And as you point out, pricing power in
certain things isn't there. On the other hand there is
rampant inflation in certain parts of the system, like in
housing. If you look at things like shipping rates, they've
gone through the roof. Food is starting to rise. Energy is
rising. So I dispute this idea that there's no inflation in the
system. I think there's considerable inflation in certain areas.
And there's deflationary pressures where stuff's coming from
China, where there's an oversupply of stuff in other parts. And
so they can somehow construct a number that says that
there is no inflation? I think if you ask the average guy he'd
say,"My paycheck isn't going as far these days."

Hainsworth: And with that paycheck, as you pointed out not
going as far these days, the U.S. Federal Reserve finds itself
in an interesting position. They've essentially already
telegraphed no interest rate changes for all of 2004.

Embry: Let me tell you why I think that's the case. Basically
they're terrified of one thing: higher rates that affect the mortgage
rate. And so essentially what they're doing, by saying we aren't
going to have any actual rise in short rates, is putting on a trade
for the speculator, because he can borrow short and buy long
bonds, take a nice spread, and it actually creates a bid for the
long bond. So I think these uys are playing a very dangerous
game, because will be overtaken by inflation. There will be
some real difficulties when rates do naturally start to rise.
Because the dollar's falling, which is inevitable, is going to
cause rates to rise irrespective of what the Fed does.

Hainsworth: So where does gold go in a situation where we
have continued downward pressure on the U.S. dollar? We
have an economy, as you suggest, improving in some areas
but not in others?

Embry: Not robust, no.

Hainsworth: What does that do for gold? We were talking
$400 an ounce last time?

Embry: Well, we should have had $400 an ounce -- except
the chaps on the other side of the market, who have a problem
with an awful lot of open calls in the December expiry, which
is coming up November 24, attacked the market yesterday.
It looked like it was going through $400 in Asia until they got
at it in London and really got at it in New York, and at one point
had it down $11 or $12. But there are big, big buyers in the
market -- buyers of physical gold. Gold's going through
$400. It's just a matter of whether it's tomorrow, next week,
or the week after that. It is most assuredly going through $400.
And when it does that, it could get a wind at its back and go
a lot further.

So the world's figuring it out. There's an awful lot of money
creation going on all around the world. The gold price doesn't
really go up. People don't understand that. Gold is a standard
of value that has existed through centuries. The value of paper
money goes down because it gets debased. That's what we're
in the early stages of.

Hainsworth: If as you say we're expecting gold to surpass
$400, if not tomorrow or the day after. ...

Embry: Soon.

Hainsworth: A week or so anyway. ...

Embry: Soon.

Hainsworth: That pushes us into that November 24th date: the
expiry date. Does that create a problem?

Embry: It creates a huge problem so maybe I shouldn't say
"tomorrow." I think it will probably. ... They may be able to
withstand the upward pressure. They're sure going to try to
withstand the upward pressure until this option expiry date
goes by next Monday.

Hainsworth: So, do we see gold-related stocks follow suit?
Because we really haven't to some degree been seeing that.

Embry: Well, we have. I think the gold stocks are ahead of
gold bullion. Gold bullion had better go through $400, as I
suspect, or some of these gold stocks that are up on posts
are going to sort of get a fairly significant correction. It's a very
tenuous point right now because if it does go through $400 with
a lot of momentum, there's going to be a riot. People are
going to be fighting to get into gold stocks. You see it today
with the gold price heading up and up, at one stage, $5 and $6.
There was a real bid to the big gold stocks.


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