Bond manager Bill Gross joins the conspiratorial kooks

Section:

12:45a ET Wednesday, September 29, 2004

Dear Friend of GATA and Gold:

The wonderful essay below by Karim Rahemtulla,
written for DailyReckoning.com, makes reference
to last year's New Orleans Investment Conference
and gives you an idea of the profitable investment
ideas that came out of it -- and will come out of
this year's conference, to be held from Wednesday,
November 10, through Sunday, November 14.

Rahemtulla will be participating again in this
year's conference and so will GATA -- and you can
help us by attending, since the conference will
make a generous contribution to GATA for everyone
who identifies himself as a GATA supporter when
registering. And the conference will conclude
with a GATA fund-raising lunch.

A colorful advertisement for the conference
has been posted at the GATA Internet site here:

http://www.gata.org/links.html

Click on it and you'll be transported quickly
to the conference's Internet site. One
registration for the conference costs $695
until October 22, when the rates go up, and
there are discounts for additional registrations.

Yes, it's not cheap, but the speakers will
include not only GATA Chairman Bill Murphy
but also former CIA Director George Tenet;
investment fund managers Jim Rogers, Marc
Faber, Frank Holmes, and David Tice; market
analysts and GATA consultants Frank Veneroso
and James Turk; newsletter editors Bob Bishop
and Brien Lundin; and many more.

When registering for the conference over the
Internet, be sure to look for the "How did you
hear about the conference?" window on the
registration form. Open it and click on "GATA"
and you'll be helping us a lot.

Attend our fund-raising lunch at the end of the
conference and you'll be helping us more. The
lunch will be held at 12:30 p.m. Sunday,
November 14, in the Armstrong Ballroom on the
eighth floor of the conference hotel, the New
Orleans Sheraton.

GATA's officers and consultants -- including
Murphy, Frank Veneroso, Reginald H. Howe,
Michael Bolser, James Turk, Robert K. Landis,
Ed Steer, Catherine Austin Fitts, Andrew
Hepburn, and your secretary/treasurer -- will
attend and take questions from guests.

Each guest will receive a bound copy of Sprott
Asset Management's August 2004 report
confirming GATA's work, "Not Free or Fair: The
Long-Term Manipulation of the Gold Price."

Admission to the lunch will be $50, there will
be a cash bar, and reservations are required.

To reserve a place, please contact me by e-mail
at GATAComm@aol.com or by U.S. mail at 7 Villa
Louisa Road, Manchester, CT 06043-7541 USA.

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

* * *

Deficits-R-Us

By Karim Rahemtulla
The Daily Reckoning
Tuesday, September 28, 2004

http://www.dailyreckoning.com/

Two years ago I made fun of gold and those who held
the precious metals at a conference in New Orleans.

Since then the price of gold has risen 25 percent. Not
bad, I say, and better than most financial indexes. I
still think those who hold the metal in bullion form are
playing with less than a full deck.

I am, however, all for holding proxies for precious
metals in a portfolio. These proxies can be in the form
of gold/precious metals shares or options. In fact, my
readers have been invested in the metals for more than
a year now. (I must admit I am the furthest from a gold
bug as far as investing goes, but do I do believe in the
concept of a strong currency backed by strong fiscal
and monetary policy.)

Pretending to be a doomsayer would be too easy.
Pretending to know when gold will reach that next
magical plateau of $500, if ever, would be crazy. I am
a pragmatist. What I do know is that the value of my
currency, the dollar, is being eroded daily with no end
in sight.

I could blame the politicians or the Federal Reserve for
taking the dollar down the low road, but they are only
doing what many of my countrymen are doing, borrowing
today and hoping to pay back tomorrow. Now if I were a
foreigner, that might not be such a bad deal. I could
borrow dollars today at very low rates and pay them
back later with even cheaper dollars. Now that's a good
trade.

But for my fellow countrymen the weak dollar is nothing
to be proud of and certainly nothing to continue to cheer
about. As long as we want handouts, the dollar will fall.
As long as we are at war, the dollar will fall. As long as
we mismanage our personal savings, the dollar will fall.

So you see the strength of the dollar is in our control
to a large extent. The multitrillion U.S. deficit may seem
pass, but it is quite real. The continuous deficit
spending that adds to that debt is real. Yet we sit back,
like the proverbial deer in the headlights waiting to get
slammed by a fast-moving semi that has a leaky
hydraulic braking system.

As a country we can't let go of entitlements that were
once reserved for the poorest and least fortunate in
this country. We look to the government, an extension
of ourselves, to bail out every failing institution. Yet
the government complies only after being given permission
by you and me. We tend to overlook the fact that we
are the government and the government is we.

Take the overburdened corporate pension system that
was created when the U.S. manufacturing base was
100 times stronger than today, when foreigners could
not compete, when the regulatory environment was
put in place to guarantee high profits. Today competition
is rife: Foreigners sell us goods that we want and
wholeheartedly embrace at our local Wal-Mart at
cheaper prices, and we cry about it.

The Pension Benefit Guaranty Corporation is running
a deficit of $10 billion, and just last week two major
airlines, United and USAirways, declared that they
would stop funding the pensions of employees. Who
will make up the difference? The PBGC, of course.
How so? How can a bankrupt government agency
bail out a bankrupt private organization? Easily -- it
will borrow more money from a bankrupt government.
So it is possible for money to be created from thin air
after all.

The PBGC problem is the first of many that we will
see in the next decade. Next will be Social Security,
created as a safety net for the poor but seen now as
an entitlement for everyone -- whether at the wheel of
a rusted-out Chevy or behind the wheel of a Maybach.
Next come Medicare liabilities.

The borrowing has just begun.

This continuous bailout process will not end in my
lifetime unless we 1) magically transform into a nation
of savers, 2) magically transform into a nation of
taxpayers with marginal rates of 50-70 percent, or
3) come to our senses and realize that supporting
government bailouts is the same as reducing our
standard of living.

I bet that none of the above will occur. When you
are fat and lazy, even reaching for the remote is an
ordeal.

If you believe as I do that our currency is being
debased, our deficits are not shrinking, and only
we are to blame for the problems, then you need
to adjust your financial plan. You must be able to
invest in ideas that outpace the loss of your
purchasing power -- not the 1 percent annual CPI
increase that we are all told to believe but the 40
percent increase in fuel costs (in dollar terms), the
11.2 percent annual increase in health insurance
premiums, the 10 percent annual increase in
college tuition, and the constant increases in those
luxuries that we need, like auto insurance, home
insurance, property tax payments, etc.

Of course, you could soften the impact of the
increases in a different way -- you could buy two
cars and get a multi-car discount!

It has been far too easy to ignore the writing on the
walls of government. We the people are going to
make "us the people" suffer. It is high time for
those of us who realize this inevitable crisis --
whether it comes for us or for our children or
grandchildren -- to take some steps to act on a
strategy that can counter a trend that is defined
and gaining momentum.

This does not mean selling all your stocks and
hiding in a cave surrounded by dead presidents.
It means taking the time to re-evaluate your
portfolio and engage in alternative investing.

Alternative investments usually don't come cheap.
They require education and cost you time. But the
rewards from understanding strategies that could
invigorate your portfolio are more important today
than ever before.

To me, alternative investing is not about buying a
"weird" security but adopting a mindset that allows
me to invest in different sectors, using different
strategies without feeling lost. Don't look to your
broker for this type of direction; it doesn't have a
symbol or a commission.

The first step is figure out how much of a
contra-dollar asset you need in your portfolio. I am
not recommending euros or yen or Malaysian ringgits
or even renminbis here. As far as I can tell, there
are just as many deficits-in-waiting abroad as
there are here.

The answer is to accumulate shares in high-quality
resource companies that will benefit from higher
commodity prices. There will be ups and there will
be downs, but in the end the tangible asset will
overcome losses from the asset is little more than
faith and hot air.

It is nothing short of common sense to protect and
insure yourself from financial calamity. It is also
common sense not to take a view that there is only
one outcome. It may be different 10 years from now
-- I truly hope so. But that would take monumental
sacrifice and changes in our fiscal and monetary
system, not a likely outcome. Waiting for the bell
ringer to announce that a crisis is here is not the
answer. The answer is to prepare for a variety of
outcomes, including that which may result in a
weaker currency and weaker economy.

With an endless supply of dollars and the endless
demand from U.S. consumers for disposable,
instantly gratifying products, there will be hell to
pay at some point. If you don't plan now, that hell
will look like this: a lower pension, a smaller check
from Social Security -- if you get one at all -- a higher
deductible for Medicare, a smaller home, a smaller
car and a less-fruitful retirement.

----------

Karim Rahemtulla is the former investment director of
the Oxford Club and runs two successful proprietary
trading systems: The Income Trader, a covered call
strategy, and The LEAPS Options Trader. He is also
editor of The Smart Options Report, a free,
twice-weekly e-mail newsletter.

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RECOMMENDED INTERNET SITES
FOR DAILY MONITORING OF GOLD
AND PRECIOUS METALS
NEWS AND ANALYSIS

Free sites:

http://www.jsmineset.com

http://www.cbs.marketwatch.com

http://www.mineweb.com/

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http://www.kitco.com/

http://www.usagold.com/

http://www.GoldSeek.com/

http://www.GoldReview.com/

http://www.capitalupdates.com/

http://www.DailyReckoning.com

http://www.goldenbar.com/

http://www.silver-investor.com

http://www.thebulliondesk.com/

http://www.sharelynx.com/

http://www.mininglife.com/

http://www.financialsense.com

http://www.goldensextant.com

http://www.goldismoney.info/index.html

http://www.howestreet.com

http://www.depression2.tv

http://www.moneyfiles.org/

http://www.howestreet.com

http://www.minersmanual.com/minernews.html

http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html

http://www.goldcolony.com

http://www.miningstocks.com

http://www.mineralstox.com

http://www.freemarketnews.com

http://www.321gold.com

http://www.SilverSeek.com

http://www.investmentrarities.com

http://www.kuik.com/KH/KH.html
(Korelin Business Report -- audio)

http://www.plata.com.mx/plata/home.htm
(In Spanish)
http://www.plata.com.mx/plata/plata/english.htm
(In English)

Subscription site:

http://www.lemetropolecafe.com/

http://www.hsletter.com

Eagle Ranch discussion site:

http://os2eagle.net/checksum.htm

Ted Butler silver commentary archive:

http://www.investmentrarities.com/

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

COIN AND PRECIOUS METALS DEALERS
WHO HAVE SUPPORTED GATA
AND BEEN RECOMMENDED
BY OUR MEMBERS

Blanchard & Co. Inc.
909 Poydras St., Suite 1900
New Orleans, Louisiana 70112
888-413-4653
http://www.blanchardonline.com

Centennial Precious Metals
3033 East 1st Ave., Suite 403
Denver, Colorado 80206
www.USAGold.com
Michael Kosares, Proprietor
US (800) 869-5115
Canada 1-800-294-9462
European Union 00-800-2760-2760
Australia 0011-800-2760-2760
cpm@usagold.com

Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
www.ColoradoGold.com
Don Stott, Proprietor
1-888-786-8822
Gold@gwe.net

El Dorado Discount Gold
Box 11296
Glendale, Arizona 85316
http://www.eldoradogold.net
Harvey Gordin, President
Office: 623-434-3322
Mobile: 602-228-8203
harvey@eldoradogold.net

Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
http://www.gloomdoom.com
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889
gwestgaard@investmentrarities.com

Kitco
178 West Service Road
Champlain, N.Y. 12919
Toll Free:1-877-775-4826
Fax: 518-298-3457
and
620 Cathcart, Suite 900
Montreal, Quebec H3B 1M1
Canada
Toll-free:1-800-363-7053
Fax: 514-875-6484
http://www.kitco.com

Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
Merrimack, New Hampshire 03054
www.certifiedcoins.com
Ed Lee, Proprietor
1-800-835-6000
leecoins@aol.com

Miles Franklin Ltd.
3015 Ottawa Ave. South
St. Louis Park, Minn. 55416
1-800-822-8080 / 952-929-1129
fax: 952-925-0143
http://www.milesfranklin.com
Contacts: David Schectman,
Andy Schectman, and Bob Sichel

Missouri Coin Co.
11742 Manchester Road
St. Louis, MO 63131-4614
info@mocoin.com
314-965-9797
1-800-280-9797
http://www.mocoin.com

Resource Consultants Inc.
6139 South Rural Road
Suite 103
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Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877
Metalguys@aol.com

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15018 North Tatum Blvd.
Phoenix, Arizona 85032
http://www.swissamerica.com
Dr. Fred I. Goldstein, Senior Broker
1-800-BUY-COIN
FiGoldstein@swissamerica.com

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

HOW TO HELP GATA

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c/o Chris Powell, Secretary/Treasurer
7 Villa Louisa Road
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USA

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