''Midas'' commentary for December 12 posted in the clear at GoldSeek

Section:

10:45p ET Saturday, December 13, 2003

Dear Friend of GATA and Gold:

Thanks to John Embry, president of Sprott Asset
Management in Toronto, for his kind remarks
about GATA in the essay he wrote for the December
5 issue of Investor's Digest of Canada, and to
Investor's Digest for permission to share the
essay with you below.

Embry writes:

"GATA, the Gold Anti-Trust Action Committee,
headed by the irrepressible Bill Murphy, was
virtually ignored for several years despite
unearthing all sorts of skullduggery in the
gold market. However, with the passage of time,
virtually all their revelations are proving to
be true and their outstanding work is being
increasingly acknowledged around the globe.

"GATA continues to be shunned by the mainstream
press in North America. But that will change.
Unfortunately, the truth takes a long time to
surface and, when it comes to gold, GATA is the
truth."

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

* * *

Precious metals advice: Buy silver bullion

By John Embry
Investor's Digest of Canada
December 5, 2003

Excitement continues to grow in the gold world, with the
gold price reaching seven-year highs and challenging the
US$400 per ounce level. There are many reasons
advanced for the move, with the primary one focusing on
the weakness of the U.S. dollar. While that is no doubt an
important factor, the real reason, I believe, is that the world
is waking up to the fact that we are on the cusp of serious
global monetary debasement.

The U.S. currency is in deep trouble as a result of America's
remarkable financial profligacy, which has manifested itself
in unthinkable levels of debt and humongous fiscal and
current account deficits. No thinking person doubts that.

However, America is also most every other country's
favored destination for its exports, so other nations are
reluctant to let their currencies appreciate a great deal
against the U.S. dollar. Ergo, to counteract the upward
pressure on their currencies, I anticipate considerable
money printing in foreign countries for the express
purpose of propping up the U.S. dollar and cushioning
its fall.

China has been explicit in stating its intention to
maintain the yuan's peg with the greenback, Japan has
only grudgingly let the yen rise because a higher yen
exacerbates existing deflationary tendencies in its
economy, and concern is already mounting among
Canadian industrialists as they watch our currency
rise to levels which undermine our competitiveness
in the all-important U.S. market (over 80 percent of
Canadian exports end up in the U.S.).

As a result, people throughout the world are stepping
up their gold purchases to protect themselves from the
flood of paper money being created. This increased
buying of physical gold is putting relentless upward
pressure on the price of bullion. This represents a
major change in the market. Previously, when the
anti-gold cabal (central banks, bullion banks, et al.)
launched one of their frequent selling attacks on the
floor of the Comex, the long speculators would panic
and run for cover, leading to another victory for the
bad guys.

Now, however, with the mounting physical demand
creating a floor under the gold price, the long
speculators are emboldened. They're prepared to
stand their ground and increase their positions in the
face of increased selling pressure from the anti-gold
crowd. Gold is explosive currently because of the
December option expiry, which occurs on Nov. 24.
If gold has comfortably cleared the US$400 per
ounce level by then, the December $400 calls will
be triggered and we could have some real fireworks.

As I write this, the short-term outcome is unknown
because the central banks and their bullion bank
accomplices are becoming increasingly desperate,
and may pull out all stops to thwart a move over
$400 per ounce at this time.

Nevertheless, even if they win yet another skirmish,
it will be a pyrrhic victory because the tide has
turned against them. There is only a finite quantity
of gold in the world, and the cabal has already
expended a good portion of its ammunition. Thus,
the rising physical demand which I alluded to earlier
is going to lead to dramatically higher prices in the
not-too-distant future, irrespective of their actions.

All you have to really know is that all the gold mined
since the beginning of time is worth approximately
US$1.5 trillion, and the value of all the world's publicly
traded gold stocks is less than US$100 billion.

Total U.S. debt at all levels -- government, consumer,
and corporate -- is at least twenty-fold greater than all
the world's gold assets, and is growing rapidly. Which
would you rather own, a tangible like gold that has
held its value through centuries, as paper money came
and went, or a U.S. debt instrument?

To make your choice easier, be reminded once again
of the comments of Federal governor Ben "Weimar"
Bernanke, who has publicly stated that the U.S.
government has a printing press and will use it to
print as many U.S. dollars as necessary to forestall
deflation. He has also alluded to dropping money from
helicopters if need be. A very encouraging development
from the perspective of gold enthusiasts occurred in the
last month, and that was the news that the Blanchard
and Co. lawsuit against Barrick Gold and J.P. Morgan
Chase would be proceeding to the discovery phase.

After the initial ruling several months ago, the defendants
attempted to have the case dismissed, but the Louisiana
federal court judge, Helen Berrigan, held firm.

If I were Barrick and Morgan Chase, I would be very
concerned because Blanchard is a Louisiana-based coin
dealer and the case is going to be heard on its home field.

There have been ongoing allegations of manipulation in
the gold market for years, and now we are going to have
some potentially embarrassing questions asked and the
defendants are going to have to answer them under oath.
Should be interesting.

In November, I attended the New Orleans Investment
Conference, which was started 30 years ago by the late
James Blanchard, a true hard-money advocate.

GATA, the Gold Anti-Trust Action Committee, headed
by the irrepressible Bill Murphy, was virtually ignored
for several years despite unearthing all sorts of
skullduggery in the gold market. However, with the
passage of time, virtually all their revelations are proving
to be true and their outstanding work is being increasingly
acknowledged around the globe.

GATA continues to be shunned by the mainstream press
in North America. But that will change. Unfortunately, the
truth takes a long time to surface and, when it comes to
gold, GATA is the truth.

I find that many gold stocks are getting seriously
overhyped at present, and numerous second-rate outfits
specializing in "closeology" (having dubious properties
in the vicinity of successful orebodies) are getting
financed.

Although I remain extremely bullish on gold stocks in
the intermediate and long term, I am concerned that
if the overall stock market gets whacked (and it should),
gold stocks may be viewed more as stocks than
proxies for gold bullion. As such, they may undergo a
correction to rid the market of the momentum players
that are now piling in.

Accordingly, I would prefer to recommend silver bullion
(US$5.30 per ounce) as an investment this month. Silver
historically has traded at a 40-to-1 ratio with gold (for
example, it would take 40 ounces of silver to buy an
ounce of gold), but today the ratio is 75-to-1, implying
that silver is seriously underpriced. In addition, there is
a huge supply-demand imbalance, with silver demand
far outstripping mine supply.

Above-ground stocks, much of which resulted from the
Hunt brothers' abortive attempt to corner silver in 1979,
are rapidly disappearing, and several new intriguing
applications for silver are on the horizon. In addition,
silver is a small market that has been severely abused
by the same paper players who have suppressed gold,
and large short positions are being protected with many
of the same tricks that have plagued the gold market.

When silver breaks free, many people are going to be
shocked by how fast and far it goes.

------------------

John Embry is president of Sprott Asset Management
in Toronto and manages the Sprott Gold and Precious
Minerals Fund. He wrote this essay for Investor's
Digest of Canada, 133 Richmond St. W., Toronto,
Ontario M5H 3M8, which granted permission for its
distribution by GATA.

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