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CBSMarketWatch''s Calandra finds GATA''s Murphy at the front in the gold war
4:15p ET Monday, May 13, 2002
Dear Friend of GATA and Gold:
Thom Calandra, editor of CBSMarketWatch.com,
today featured GATA Chairman Bill Murphy and his
proprietary Internet site, www.LeMetropoleCafe.com,
in his daily commentary. More than any other
journalist in the mass media, Calandra continues to
tell the world about gold. Please thank him and check
out a href=http://CBS.MarketWatch.com.http://CBS.MarketWatch.com./a
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
SEARCHING FOR MR. AND MRS. GOLD-BAR
By Thom Calandra
Monday, May 13, 2002
SAN FRANCISCO -- Nasdaq watching has become the sport
of gold investors, who believe the technology index's daily
tumbles will lead to greater gains for the metal.
Some of Wall Street's paid analysts are coming around to
the same opinion. quot;The dollar has become weaker and
gold/gold shares continue to outperform,quot; say Kevin Lane,
Douglas Lomma and their team at Technimentals Research,
which serves Wall Street hedge funds and trading desks.
With gold shares at their highest point since October 1999,
gold investors look to the American public's disgust with
Nasdaq and the broader stock market, combined with a
drop in the price of the U.S. dollar, to spark the bullion
group's next rally. Chart watchers such as Technimentals,
which has marked gold equities and gold futures' gains all
year, expect Nasdaq to keep sinking.
quot;Volume and other breadth statistics have been rather
anemic of late, leaving (last) Wednesday's rally suspect
from its onset,quot; Lane and Lomma at Technimentals said
Monday. quot;We suspect that the September 2001 lows will be
retested unless 1,560 holds and can muster another rally
that can sustain close above 1,782 area.quot; The Nasdaq
Composite Index Monday morning was at 1,605, down 18
percent since Jan. 2.
Gold investors are relishing the mining companies'
six-month rally -- one that has catapulted gold-based
mutual funds to 65 percent and greater gains this year.
Now, gold companies' fervent believers, watching Monday
as the vaunted XAU gold stocks index pierced the 80 level,
are looking for greater gains in the price of the actual metal.
The price of an ounce of gold in the spot market, at $310, is
up 20 percent this year vs. gains of 75 percent and more for
many mining shares. The gold share index (XAU), were it to
close above 80, would be doing so for the first time since
Oct. 13, 1999.
quot;This sure has been a long haul, but we have to be very
close to a big move up,quot; says Bill Murphy, who operates
what many regard as gold's ground-zero Web magazine,
Le Metropole Caf (a href=http://www.lemetropolecafe.com/http://www.lemetropolecafe.com//a).
Murphy is also chairman of the Gold Anti-Trust Action
Committee, which asserts that various government bodies,
including the Federal Reserve and the U.S. Treasury,
manipulated the bullion market in an effort to keep the dollar
strong and interest rates low.
Murphy, along with a small but growing number of analysts
and mutual fund managers, sees gold and silver prices
surging for reasons that include the rotting of gold reserves
by mining companies that endured more than a decade of
flat or falling prices for bullion.
In that area, Murphy, who forecasts gold prices will double,
triple, and maybe quadruple in coming years, has some
support. John Reade of UBS Warburg in London is on
record with his view that years of paltry investment in new
mines eventually will take their toll on the world's gold
supplies. quot;Slowing exploration expenditure has led to fewer
credible gold projects under development,quot; Reade says in
a report that dates back to late 2001. quot;New mine supply
will decline sharply from the end of 2002 at the fastest rate
Reade on Monday told me from London he was updating
his firm's gold-price forecasts. The new levels are expected
Wednesday. In recent weeks, dozens of analysts on Wall
Street and in London and Toronto have revised upward their
gold price forecasts. Most professional forecasts made at
the end of 2001, for this year, hovered around $270 an ounce.
Reade and UBS Warburg's precious metals group forecast
an average $296 an ounce for 2002.
Total mining exploration budgets fell 17 percent last year,
but that was for metals of all types, according to Metals
At ground-zero on bullion's front line, Le Metropole Caf's
Murphy, a former professional football player, also believes
the use of gold derivatives will lead to a mad scramble for
bullion as the price of the metal rises. JP Morgan Chase
(JPM) held $41.04 billion of gold derivatives of all maturities
as of Dec. 31, according to the Office of the Comptroller of the
Currency. The total amount of gold derivatives for U.S.
commercial banks and trusts last year was $63.3 billion.
Another gold believer, newsletter editor Ian McAvity, is
co-founder and a director of Central Fund of Canada (CEF),
a closed-end fund that is the only way to own gold and
silver directly via the U.S. stock market. McAvity says
hedged gold-mining companies that use derivatives to
manage the price of their bullion production soon will face
a rough period as they move to the spot market for gold
from the so-called spot-deferred market. McAvity, in a
study he made in 1993, calculated the positive effect on
gold prices sparked by just one company, Lac Minerals,
when it decided to close the books on 500,000 ounces
of hedged gold.
Toronto's Barrick Gold (ABX), now owner of Lac Minerals,
is regarded as one of the largest users of gold derivatives
in its spot-deferred sales. Barrick is the world's largest
gold company as measured by market capitalization, $11
Some on traditional Wall Street are nervous, but not about
an explosive move higher in gold's price. Rather, the banks
are starting to see gold shares as expensive. Goldman
Sachs, eyeing tiny TVX Gold (TVX), downgraded its opinion
of the shares Monday toquot;market performerquot; from quot;market
outperformer.quot; When Goldman Sachs boosted tottering
TVX to quot;market outperformerquot; on March 26, the stock sold
for 67 cents. That was a couple of weeks before the
Toronto company, fighting a legal battle over mining rights
in Greece, raised $75 million Canadian in a stock offering.
Now, at 95 cents, the company hopes to reverse split its
NYSE-traded shares, pending a shareholder vote later
Gold tends to rise sharply during the rare spans when
investors are abandoning the dollar. The once-embattled
euro is now worth 91.6 cents. Just several weeks ago, the
euro was 87 cents. Merrill Lynch fixed income strategist
Thomas Sowanick says money managers face the
greatest risk from continued weakness in the dollar, which
had been trouncing every currency in the world, with the
exception of the British pound, for the past 10 years.
Murphy at Le Metropole Caf also has high hopes for
silver, a metal that has trailed gold's gains by a wide
margin. Murphy says along with gold's future gains,
which mining company equities clearly are betting on,
will come strong percentage gains for silver, which sells
for $4.60 an ounce -- exactly where it began 2002.
quot;There are three or four big, big silver players that have
dominated the sell side for years,quot; Murphy says from his
Texas headquarters. quot;I think silver will explode. As you well
know, it can move a dollar in a day. And that is what I predict
is coming. It will move up violently and fast.quot;
At The Dines Letter (a href=http://www.thedinesletter.com/http://www.thedinesletter.com//a),
newsletter editor Jim Dines calls silver quot;the poor man's
gold.quot; Dines made his reputation as quot;the original gold bugquot;
in the 1960s and 1970s, when he made aggressive, and
mostly correct, forecasts for rising mining shares. Dines
forecasts quot;the mother of all gold and silver ralliesquot; is still
ahead of us. His favorites among silver companies include
Coeur D'Alene Mines (CDE), whose shares trade for barely
a dollar on the NYSE.
RECOMMENDED INTERNET SITES
FOR DAILY MONITORING OF GOLD
AND PRECIOUS METALS
NEWS AND ANALYSIS
COIN AND PRECIOUS METALS DEALERS
WHO HAVE SUPPORTED GATA
AND BEEN RECOMMENDED
BY OUR MEMBERS
Centennial Precious Metals
3033 East 1st Ave.
Denver, Colorado 80206
Michael Kosares, Proprietor
US (800) 869-5115
European Union 00-800-2760-2760
Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889
Miles Franklin Ltd.
3601 Park Center Building
St. Louis Park, Minn. 55416
1-800-822-8080 / 952-929-1129
Contacts: David Schectman,
Andy Schectman, and Bob Sichel
Resource Consultants Inc.
6139 South Rural Road
Tempe, Arizona 85283-2929
Pat Gorman, Proprietor
Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
Dr. Fred I. Goldstein, Senior Broker
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