Can dollar''s decline be kept under control?


9:08p ET Monday, December 8, 2003

Dear Friend of GATA and Gold:

Since a gold bug can need and deserve a cold beer after
a day of jousting in the markets with the gold cartel,
today's most important gold news may be the appointment
of former Barrick CEO Randall Oliphant to the board of
Coors Brewing Co. (The press release is appended.)

This probably means that Coors will be leasing and
selling 120 million barrels of Budweiser and buying them
back for a song after the country has gone on a 10-year
drunk and hasn't a clue what it's doing.

Meanwhile, it's getting around that OPEC countries are
moving funds out of the U.S. dollar. This has huge
implications not only for currencies but also for the
bond and equities markets and gold. A report to that
effect from CBSMarketWatch is appended, but here's the

Jim Sinclair and Ed Bugos are fighting over whether gold
shares are likely to get caught in any general market
panic. Bugos' commentary is here:

As always, Sinclair's commentary can be found here:

GATA has no position on this one but some of us figure
that it is unlikely that gold shares will join a
general market crash if only because the U.S. government,
using the Exchange Stabilization Fund, is buying and
selling futures and derivatives to support the stock
and bond markets as well as to slow the rise of the gold
price. It seems more likely to some of us that gold and
gold shares will simply outpace the rest of the market
in the onset of a Weimar-type dollar inflation. (No
matter what Oliphant does at Coors, that probably will
be bullish for beer and drinking generally.)

Last but not least, MineWeb's Tim Wood provides a
spirited rebuttal to commentary in Barron's that
asserted that gold stocks are way overvalued. Wood's
analysis is headlined "Barron's flawed case against
gold stocks" and can be found here:

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

* * *

Coors Adds Randall Oliphant
Former President and CEO
for Barrick Gold Corp.,
as Board Member

GOLDEN, Colo., Dec. 8, (company press release) --
Adolph Coors Co. and its principal subsidiary, Coors
Brewing Co., today announced the election of Randall
Oliphant to their boards of directors.

ACC and CBC chairman Peter H. Coors said, "We
believe our boards and our company will benefit from
Randall's considerable experience managing a global
business and we look forward to his contributions."

Oliphant, 44, brings 20 years of management, financial,
and operational experience to Coors. He is the former
president and CEO of Barrick Gold Corp., a Canadian
entity and one of the world's largest mining companies.
During his tenure as CEO, Barrick achieved its goal of
being North America's most profitable gold producer.
Oliphant also led an international expansion for Barrick
into South America, Australia, and Africa, and created
a pipeline of new mines that has positioned the
company for future growth. Oliphant was with the
company for 16 years. Prior to Barrick, he was a
chartered accountant with PricewaterhouseCoopers.

Oliphant's activities include directorships and advisory
positions with corporations, not-for-profit organizations,
and international governments. ...

* * *

U.S. dollar slide continues;
report shows OPEC dollar flows reversing

By Rachel Koning
Monday, December 8, 2003

CHICAGO -- The U.S. dollar hit its seventh straight record low
against the euro and slid to its lowest level vs. the British
pound in more than a decade on Monday, unable to shake investor
pessimism over trade imbalances.

In addition, Tuesday's Federal Reserve meeting is not expected
to produce a change to the U.S. central bank's four-decade-low
interest rate, which has continued to push global investors toward
higher-yielding currencies, including the British pound.

The euro traded to an all-time high $1.2239 earlier and was up
0.4 percent at $1.2214 in late U.S. trading.

The British pound hit its highest dollar value since October 1992,
at $1.7362. Sterling was recently up 0.2 percent at $1.7333.

"While its selloff is overdone, this general dollar weakness
should extend throughout the week," said Cornelius Luca,
analyst with Global Forex Trading.

As for sterling gains, "this is the fourth consecutive rising
week and there is little reason to expect this rally to end,"
he added.

Economists are mixed on whether or not the Fed panel will
begin hinting at higher U.S. interest rates in the wording of
the policy statement issued at the conclusion of each meeting.

Analysts said that confirmation U.S. rates would remain low
deeper into 2004 than financial markets previously were
betting on would add to pressure on the dollar, as the market
guesses that low rates are likely to turn off foreign investors
to U.S. assets.

The day's dollar decline was sparked by a report from the
Bank for International Settlements, which showed aggressive
first-half 2003 repatriation of OPEC funds out of dollars, as
the market had been suspecting. OPEC oil output is priced
in dollars.

The BIS report said money returned to OPEC countries in
the first half of this year topped 2001 and 2002 combined.

The report fueled existing concerns over sustainable
financing of the huge U.S. current account gap, which relies
on foreign investing in U.S. assets to offset record U.S.
buying of foreign-made goods.

Global economists have grown skeptical that even with a
U.S. economic rebound, capital flows into U.S. markets
can continue at recent levels.

Many analysts think the U.S. external trade imbalance
has signaled a dollar correction for some time, with some
thinking the euro could rise to as much as $1.35 next year.

The dollar also fell to a fresh seven-year low vs. the Swiss
franc earlier on Monday. One greenback was recently
fetching 1.2673 francs, down 0.5 percent from late New York
trade on Friday.

The dollar fell 0.2 percent vs. the Japanese yen at 107.33
yen, hitting a fresh three-year low at 107.12 earlier on

But once again, the greenback's yen decline was limited by
expectations that Japanese officials would intervene by
selling yen for dollars. A weaker yen gives Japanese-made
goods a competitive advantage in global trade.

"Japan's currency stewards at the Ministry of Finance are
never shy about telling key market participants where they
do not want to see dollar-yen trade," said David Gilmore,
foreign exchange analyst with Forex Analytics. "The latest
line in the sand is 107."

While no actual intervention was announced Monday,
officials did talk down the yen.

Japan's top financial diplomat, Zembei Mizoguchi, said he
thought strength in the U.S. economy would limit the
dollar's weakness, Reuters reported.


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