Barrick updates golden parachutes for top officers

Section:

Gold Market Summary for Thursday, March 18, 2004

By Jim Sinclair
http://www.jsmineset.com/

The formula for the explosion of gold in 1979 was a weak
dollar plus inflation in the midst of a recession. At the
moment, the Cartel is covering their short positions in
gold in expectation of higher prices.

I still expect the move in gold to be a chop out rather than
a launch out of this large consolidation. The formula for
what's coming is represented by the following:

WEAK DOLLAR + INFLATION
+ SOFT BUSINESS CONDITIONS
= BALLISTIC GOLD PRICE.

The reason for gold's strength today is short covering by
the reluctant professional short sellers who have been
fighting the long-term generational bull market in gold
since gold traded at $248.

It is apparent to me that those who have doggedly fought
the bull are throwing in the towel because, no matter how
hard the Bureau of Labor Statistics tries, it cannot hide
the price inflation building in commodities.

You can fool some of the people some of the time but not
all the people all the time. The day of reckoning has either
arrived or is just around the corner.

Anyone who understands the fundamentals of economics
and has a knowledge of monetary science knows that the
Federal Reserve is playing with a possible inflationary fire
by keeping interest rates at the false level of 1 percent.

Those in the know realize that the use of Bernanke's
made-in-Japan money printing press will in retrospect be
seen as a wild speculation with the future of the United
States. Further, the pros feel that even if the Fed backs
off this suicidal commitment to politics, interest rates will
rise at the slowest level in modern history.

There are many professionals now asking a pressing
question. The use of Japan as a non-traditional monetary
tool to liquefy the entire world and bull all world equity
markets is akin to the submarine captain in the movie
who failed to set his torpedo's fail-safe firing mechanism
because he was so sure he had his target nailed. The
torpedo missed its kill and went hunting for a new target,
only to lock back onto the firing sub.

There is a real chance that history will mark the
outrageously foolish Japanese borrowing of unlimited yen
in order to buy the dollar as the worst mistake ever made
in economic history. This torpedo, welcomed by and
possibly constructed by the Fed, may well have been the
event that history will say mortally wounded the global
economy by providing liquidity at just the wrong time.

While this terrific gamble by the Fed and the Bank of
Japan may have mortally wounded the U.S. dollar and put
the final nail in the coffin of the U.S.A.'s economic and
political dominance, it may well have left only the military
option open for the United States to maintain any semblance
of leadership.

What all this adds up to is that the Cartel is covering its
short position in gold. I still believe gold will chop out of
this consolidation.

Please review these Bloomberg news items.

* * *

Treasuries Fall as Producer Prices Rise and Jobless Claims Drop

March 18 (Bloomberg) -- U.S. Treasury notes fell after
government reports showed producer prices in January rose
and weekly jobless claims fell more than forecast.

The reports tempered optimism that inflation and job growth
will remain muted and allow the Federal Reserve to keep
from raising its target interest rate from 1 percent until
2005. Faster inflation erodes the value of fixed-income
payments.

"It definitely looks like disinflation has stopped and the
inflation rate has stabilized," said Gerald Lucas, chief
Treasury and agency debt strategist at Banc of America
Securities LLC in New York. "It reflects a little better pricing
power" on the corporate level, which should eventually pass
through to wages and finally payroll growth.

* * *

U.S. March Philadelphia Fed Factory Index Falls

March 18 (Bloomberg) -- Manufacturing in the Philadelphia
region expanded for a tenth month in March, a Federal
Reserve report showed. The Fed Bank of Philadelphia's
general economic index this month registered a reading of
24.2 compared with 31.4 in February. A number greater
than zero signals a higher percentage of the manufacturers
surveyed reported an improvement in business than
deterioration. The index reached a 10-year high of 38.8 in
January and has been positive since June.

* * *

My comments:

Weakening business conditions guarantee greater fiscal
spending and therefore greater monetary stimulation. This
is one of the ingreients that gave us the 1979-1980 gold
price explosion.

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