Disinformation about gold from The Globe and Mail

Section:

9:15a ET Saturday, May 12, 2007

Dear Friend of GATA and Gold:

Toronto's Globe and Mail today provides an example of the worst of journalism -- a story full of attitudinizing mockery that contains hints of its own contradiction but carefully avoids pursuing them or even allowing its targets to speak for themselves, concluding with an anonymous attack.

Gold advocates, the Globe and Mail's story says, are "frustrated that not enough is going wrong" -- as if gold advocates are rooting for economic disaster rather than striving to prevent it.

The Globe and Mail's story continues: "Who needs a safe haven that pays no interest or dividends (which is why Warren Buffett never touches the stuff), actually costs money to hold, and has historically been outperformed by most other asset classes, including stocks, bonds, real estate, and art?" And yet for more than five years both gold and gold mining stocks have spectacularly outperformed those other asset classes.

"Meanwhile," the story says, "the occasional geopolitical hiccup is driving no one to the safety of gold." Yes, the huge volume of gold purchases made outside the West in recent years signifies only a fascination with jewelry among people who are not bothered at all by the nearly infinite profusion of what has been passing as the world's reserve currency.

The Globe and Mail's story twice briefly acknowledges central bank intervention in markets -- first the currency markets and then the gold market itself -- without awakening the writer's curiosity about why things may not be enfolding in the world economy quite as quickly as might have been expected.

And then there's the anonymous attack:

"As one gold debunker says: 'This lunatic fringe has been out there at least since the U.S. dollar went off the gold standard. I seriously doubt that we will be going into an environment where we are all walking around with leather purses filled with gold coins instead of a debit card.'"

But as much as hard-money advocates may like going into their secret places and running their gold and silver coins through their fingers like Scrooge McDuck, even THEY don't expect or hope to be walking around someday with heavy metal jangling in their pockets. For even the Council on Foreign Relations and the Financial Times, not usually denounced by the establishment media as being part of the "lunatic fringe," have acknowledged that the Internet and digital gold already are fully capable of assuming the role of international reserve currency:

http://www.gata.org/node/4692

In short, what the Globe and Mail published today about gold wasn't journalism but active disinformation. It's appended to give you an idea of the work that still needs to be done.

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

* * *

Eruptions of Doom Spew
Steadily from the Gold Bugs

By Brian Milner
The Globe and Mail, Toronto
Saturday, May 12, 2007

http://www.theglobeandmail.com/servlet/story/LAC.20070512.RTAKINGSTOCK12...

Gold bugs must be a frustrated lot these days, because not enough is going wrong. Inflation remains well under control; investors are still pouring money into equities; and the U.S. dollar stubbornly refuses to collapse despite crippling U.S. budget and trade deficits, rising interest rates in Europe, and the latest obvious signs that the U.S. economy is slowing.

Meanwhile, the occasional geopolitical hiccup is driving no one to the safety of gold. And the outlook for the global economy is so good that no less an authority than former Fed chairman Alan Greenspan says it will be healthy enough to offset a U.S. slowdown.

So it should come as no surprise that gold has weakened in recent weeks. If global conditions are relatively benign for investors, who needs a safe haven that pays no interest or dividends (which is why Warren Buffett never touches the stuff), actually costs money to hold, and has historically been outperformed by most other asset classes, including stocks, bonds, real estate and art?

While bullion has softened recently, it has been a stellar performer compared with the companies that dig it out of the ground. But that may be about to change. Gold equities finally appear on the upswing after months in the doldrums, buoyed by stronger quarterly earnings. This divergence between bullion and gold stocks has occurred before. "It goes through cycles. But it's now at a point where, statistically, this is getting into a buy territory, provided the bullion price is rising," one analyst said.

Before gaining $5.50 (U.S.) yesterday to climb back to $670.60 an ounce, the metal had fallen to its lowest level in more than a month. But those who think the gold faithful have lowered their lofty expectations don't realize what a hardy breed this is. True gold believers never lose their rock-solid faith that their beloved yellow metal will one day soar into the stratosphere, once investors realize that it is the best refuge in a lunatic world of imploding equity markets, profligate central banks, and collapsing paper currencies.

"The economic numbers today should have been enough to sink the U.S. dollar. But they didn't," said an obviously disappointed David Chapman, an investment adviser and technical strategist with Union Securities Ltd. He was referring to an unexpected drop in retail sales last month, coming on the heels of more bad trade news, as the U.S. deficit widened by 10.4 percent in March to $63.9-billion.

Central bank intervention has been shoring up the currency, but its slide is inevitable, particularly if Asian central banks add gold to reduce their huge exposure to the greenback. "The bottom line is that the dollar is going lower and gold is going up -- through $700 to $800 and eventually $1,000 and even higher."

Martin Murenbeeld, chief economist with the Dundee Group of Companies, has a more modest forecast, and indeed is neutral on gold's near-term prospects. But he too is bullish in the long run. "I'm fundamentally not optimistic about the U.S. dollar. And so I am somewhat fundamentally optimistic about gold prices."

Besides a weaker U.S. currency, he cites such other influences as continuing healthy demand for gold, particularly in Asia, relatively flat mine output, and no expected increases in central bank sales. His forecast calls for a baseline average for the year of about $675 to $680, with a 45-per-cent probability that it will reach $730. "

That doesn't even come close to fulfilling the dreams of the gold bugs, who are perpetually optimistic that their pessimistic view of the future will eventually prove accurate.

As one gold debunker says: "This lunatic fringe has been out there at least since the U.S. dollar went off the gold standard. I seriously doubt that we will be going into an environment where we are all walking around with leather purses filled with gold coins instead of a debit card."

* * *

Join GATA
at the
World Gold, PGM, and Diamond Investment Conference
in Vancouver, British Columbia, Canada
Sunday and Monday, June 17 and 18, 2007

http://www.cambridgeconferences.com/ch_june2007.html

* * *

Help Keep GATA Going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at www.GATA.org. GATA is grateful for financial contributions, which are federally tax-deductible in the United States.