Bob Chapman was a guest on the Stirling Faux Show on the Corus Radio Network from CKNW AM980 in Vancouver on Sunday, January 12, 2003. Listen to this interview at
This interview will remain on this site until we do another one.
"Just look at us. Everything is backwards; everything is upside down. Doctors destroy health, lawyers destroy justice, universities destroy knowledge, governments destroy freedom, the major media destroy information and religions destroy spirituality." ---Michael Ellner
Featuring an incredible line-up of speakers Š covering all types of direct investments in Canadian public companies Š speculative investing, resource exploration, oil & gas, world outlook, investment strategies Š and more!
Wealth Protection 2003
Saturday Š March 28- 29th
Embassy Suites Resort Hotel in Tempe, AZ
Wealth Protection 2003 is coming. If you have been wondering what will happen this year and next you best not miss this years Wealth Protection conference. It is one of a kind. No one out there puts together a more comprehensive educational seminar than the people at Resource Consultants. Each year Pat and Linda Gorman from Resource Consultants bring together some of the best minds in the country to Tempe, AZ. for their Wealth protection Conference.
This year will be no different. The conference begins on Friday night March 28th at the Embassy Suites Resort Hotel in Tempe, AZ. From 7 to 9 PM. They will have a wine and cheese reception that evening and one of the speakers will spend an hour talking to you about the hows, whys, wherefores and who to trade the commodity markets. All the speakers should be present so you too can mingle and get to know these wonderful people.
Then first thing Saturday morning, March 29th, the conference continues. First up to the podium will be Robert Chapman. Bob will bring us his current insights on the market, economy and the political climate that may affect your money.
Right after Bob we will bring up David Morgan from Silver-Investor.Com. David's insights on the silver market will help you know exactly what to do with your current portfolio.
After David Morgan's speech we are proud to bring you Prof. Craig Hamilton. He will explain the benefits of getting some of your money offshore, in things like Swiss Annuities and other estate planning issues. We also have Sinclair Noe, our master of Ceremonies back from last year and this year they promised us that Pat Gorman, President of Resource Consultants will speak.
Wow! That makes for a busy morning. At noon they will provide a wonderful deli buffet lunch. Then at 1:00PM sharp they are back at it. The afternoon session includes Arch Crawford from Crawford Perspectives and Nick Russo from Russ Trading. Between these two men alone you have almost 100 years of Wall Street Experience.
Just when you think the day has ended we will bring all the speakers back up to the stage for a one hour round table discussion. These are always great fun and informative. But wait, it doesn't end there. At the end of the day we then put these gentlemen in small conference rooms and you have another full hour to pick their brains.
You won't want to miss this conference. Wealth Protection 2003 will be held March 28th and 29th at the Embassy Suites Resort Hotel in Tempe, AZ. Resource Consultants provides this incredible conference which includes, the wine and cheese reception, on Friday night, a deli buffet lunch on Saturday, all the conference materials and all of the best economic and monetary and investment advice you can't find anywhere else fro just $159.00. Call them and reserve your spot now. They only make room for 200 people. First come, First served on this one. Don't hesitate. Call Resource Consultants at 800-494-4149 or locally at 480-820-5877 and reserve your spot now. When you call ask them for the phone number of the hotel so you can also get the special rate on rooms. MasterCard or Visa accepted.
*****
Have I got a book for you! You think you know all about money? Well, so did I Š until I started reading The Creature from Jekyll Island; A Second Look at the Federal Reserve, by G. Edward Griffin. Sure, I had a good working knowledge of how our banking system functions and how money is created out of nothing to make loans, but I was blown away by the magnitude of the scam as it has evolved over the years. What a wild ride through history this is as the author reveals where money comes from, where it goes, and who makes it. The money magicians' secrets are unveiled, and you will get a close look at their mirrors and smoke machines, their pulleys, cogs, and wheels that create the grand illusion called money. A dry and boring subject? Just wait! You'll be hooked in five minutes. Reads like a detective story Ń which it really is. But it's all true: the cause of wars, boom-bust cycles, inflation, depression, prosperity. Your worldview will definitely change. This book is available on the Internet from The Reality Zone. The link is http://www.realityzone.com/creature.html.
Special Offer: You may also order it by calling Midas Resources Inc. at 877-479-8178. Midas Resources will give you a silver dollar from the early 1900s (a $12 value) just for purchasing the book at its normal price of $19.95.
US MARKETS
Just because some companies are sitting on lots of cash doesn't mean they'll pay a dividend or increase their dividend to enhance the Bush tax cut on dividends. Generally, shareholders are not interested in dividends and with debt to cash flow at 15.4%, we donÕt see companies rushing to the dividend window. Non-financial corporationsÕ debt loads were 57.2% of net worth in the third quarter, the highest in modern history. Do you really think theyÕll initiate a dividend program? Tax-free dividends are a non-starter. That may have been helpful 30-40 years ago, but in todayÕs financial environment it will be little help to the economy or the stock market. The prospect of rising government spending means more Treasury issuance, concentrated in the 5 to 10 year areas, which means the net supply of Treasuries would increase about $300 billion this year, which means the Fed will have to supply $1.3 trillion to the economy not $1 trillion, otherwise the government will crowd business out of the bond markets, forcing interest rates higher. This is short-term deflation neutralizing or inflationary. We canÕt tell which, because we can't gauge the anticipatory deflation drag. Fifty percent of a $600 billion tax package will be longer term supply side Keynesian reform that will somewhat reduce pressure on the bond market. On the other hand it will blunt a good part of its effectiveness on the economy.
There were only 19 venture backed IPO'S in 2002 worth $1.6 billion. The number of mergers and acquisition deals fell 17% in 2002 from 2001, as only 325 companies decided to merge. The dollar value fell 55%. The IPO offerings rose to $78 million from $63.1 million in 2001. Only seven of the 19 IPOÕs are trading above their offering price.
The index of service sector business activity edged down to 54.7 in December from 57.4 in November, a considerable drop. The service sector now makes up some 55-60% of all US consumer spending. There was an increase in service activity, the eleventh in a row, but a tepid increase. This is a reflection of growing unemployment. The ISM index of service-sector employment has indicated a contraction for 22 months in a row, but the Labor Department figures are far different. We believe the government figures are 100% bogus.
AmericaÕs health-care spending was up 8.7%, in 2001 the biggest increase in a decade. The health care budget jumped from $1.424 trillion from 13.3% of GDP in 2000 to 14.1% in 2001.
The ten-year tax package now goes to Congress. The $674 billion plan the first year would cost $102 billion. Thirty four million lower income taxpayers with a $39,000 income would receive $1,083 checks, dividend taxes would be eliminated and the rich would receive accelerated deductions. The child tax credit will be $1,000 up from $400. The result is the average taxpayer making $44,000 a year would save $27.00. Someone making $147,001 to $356,000 would save over $1,300. The states, which tie their tax codes to the federal code, would have a staggering shortfall and Mr. Bush has no plan for them in his legislation. We believe the plan is one to revive the stock market. Once the market falls again all the pension plans go under and the elderly canÕt afford to live. As before, 80% of that $1,083 will go to eliminate debt. He is trying to defuse the debt bomb and get money into the economy. ItÕs just another delaying action and inflationary as well. If dividends become tax-exempt, municipal bonds will not be as attractive to investors and states will pay more and have a harder time raising capital. If this section of the legislation looks like it will be passed, sell munis. Who will pay for the budget deficits? The plan guarantees higher real interest rates. The plan entails very serious long-term costs, which will further denigrate the dollar and truly compound the existing problem on a long-term basis. As the dollar falls, the flight to quality exacerbates the rise in interest rates. By year-end, if the legislation is passed in current form, 1/2% will be added to interest rates by the bill, putting them 1% higher. The result will be economic gridlock. We found the PresidentÕs reasoning ludicrous. He only sees a slight problem with the economy but he is using a sledgehammer to fix it. The economy is in deep trouble and he is lying about it. The $26 billion saved by investors in tax-free dividends will mean $26 billion more debt for the government. The package without question is a naked blatant effort to manipulate the stock market higher or to keep it from plunging, particularly during the up and coming pre-planned Iraqi war. We predict only a skeleton of the plan will be passed. The main reason is the purging of Trent Lott. Southern legislators are furious at what was done to Lott to get him out of the way. They wont talk about it, but watch their votes. The main reason the Reagan tax package was passed was 93 Democratic Southerners in the House and Senate voted for the bill. That surely wonÕt happen this time.
Apartment rents are falling again. Overall units fell 1.1% in the fourth quarter. The trend should last two to four more quarters, so it might be the time to lock in long-term leases. The cities hardest hit were Austin, Denver, Atlanta, Charlotte, Dallas and Seattle.
The average yield on six-month CDs over $95,000 was 1.33%, unchanged from last week. The yield on five-year jumbos was 1.23%, off from 1.24%. The two-year yield was 1.95%, down from 1.99% and the average five-year yield was 3.21%, down from 3.27%.
As we predicted, office vacancies climbed to 15.7% in the third quarter as rents fell. The good news is demand for space turned positive for the first time since the first quarter of 2001. That ends seven consecutive quarters of lessening growth. Vacancies still have a way to go. They should top out at 16.5% to 20%. The big worry in order to accomplish the better quarter, rents dropped 1.1% in the fourth quarter, to $21.79 per square foot per year including build-out costs. All told, rents dropped 7.7% for the year and are 16% off their peaks of $25.74 at the end of 2000. We see higher vacancies and lower rents for at least two more years.
GOLD, SILVER, PLATINUM, PALADIUM AND DIAMONDS
The Bank of Canada, a persistent gold seller over the years, was seen selling again just before year-end some 10% of their remaining reserves or 25 tons. We guess thereÕll be 20 nations with gold left soon. Canada now has 599,000 ounces left. That is down from 21 million ounces in 1980. What fools to be so short sighted.
Gold needless to say ended the year at a new recent high of $347.60 and the CRB index was up 23% for the year. 2002 was a very happy payback year for gold bugs.
The Shanghai Gold Exchange is preparing the way for overseas bullion dealers and individual investors to trade on the exchange. Chinese gold demand exceeds locally mined supply, so there is scope for foreign numbers, allowing direct sales to consumers. A cash only market at spot, presently the exchange is working toward deferred settlement.
JP Morgan Chase and the rest of the gold manipulation criminal cartel are not the only ones short gold bullion. We know there is a distinct possibility that Morgan will get bailed out, but there will be many others that wonÕt be. You know I've believed that the short was 15,000 to 29,000 tons for three years. In fact, there may be little gold left in central banks. There will be covering of short positions coming and it will blow the top off the gold market. That is why we see $840 by June or by year-end. Remember we called for $350.00 an ounce last year and it happened. Shortly, hedge positions for the last quarter will be reported and will bring warmth and joy to your hearts. You are looking at disaster for many companies. Barrick, AngloGold and Placer Dome will be smashed. They are about to find out they have been in a street fight and lost and that they are no longer the masters of the universe. By the time we finish with them they'll be masters of nothing. We implored shareholders of Barrick and other hedgers to throw out their management in the early 1990's but we were a lone voice in the wilderness. Then came that giant Bill Murphy and GATA to lead and show us the way to expose the problem and these crooks. Finally our labors are going to show fruit and the cabal is about to go down in flames. All of you don't forget, don't just take your money and run, make sure these evil people pay for what they have done.
The Chinese central bank increased its gold reserve by 100 tons in the last quarter of 2002. That should go well with the 300 ton projected increase in public Chinese consumption in 2003. That 400-plus ton off-take wipes out the total official sales under the Washington Agreement. China will need gold because it faces a serious shortage of mineral resources. We then add to the mix a 1500 ton shortfall of production to usage, falling production and 15 to 29,000 tons either sold or short by central banks and you have a potent concoction that could send gold soaring. The game is over and we won. Watch the price soar and watch the failure and scandals that ensue. Next we pass into the illiquidity phase and that is when the shorts panic and pandemonium sets in. February will be a monster month for gold following an excellent January.
Low interest rates certainly make gold a more attractive investment. The opportunity costs are close to zero. Thus low rates are also causing negative interest rates. That is inflation at 1.8%, which is higher than the Fed funds rate of 1.25%. That is a negative return of .55%. Rates wont go up until later in the year due to the fragile economy, but when they do it will be due to a flight to quality. February through year-end goldÕs performance will be spectacular. We are still in an accumulation phase for gold as we begin phase two. This is the most stealth move in gold and shares in history. There are hundreds of funds with no gold shares at all, which is really mega-bullish, because they are supposed to be leading phase two. Not only does the public live in darkness but so do many of the professionals. They don't understand that gold is real money and is about to again replace the dollar as the world's preeminent currency. Foreigners understand but Americans don't. Then again, their media is freer than ours and they do get some of the truth, we get none of the truth except through newsletters and the Internet. That is why the market cap of gold shares is still only $75 billion up from $45 billion two years ago. Wait until only 5% of investors and money managers catch on. Once the shares move the gains will be colossal. Gold producers and bullion banks are still short and they have to eventually cover, which is an explosive situation. As you can see gold and gold shares are a lock and silver will follow, but remember you have to be in the game to win.
We believe there are three possible reasons that the US Government may return to a gold exchange standard. We believe the elitists were the shadow purchasers of the gold sold by central banks at their direction, the Malaysian Gold Dinar, which will be actively trading by June and an Islamic Arab Dinar to follow. This will force western governments to again back their currencies with gold. We also believe the euro to be a mitigating factor with its 15% gold backing. As gold prices rise so will the value of the gold backing the euro, thus the percentage of gold backing will rise. There is no question that Islamic countries are putting financial pressure on the US, UK and Germany. The Muslims believe they can destroy capitalism by forcing gold to the forefront and we agree that this could and probably will be successful. We then also have other mitigating events such as new gold exchanges in Dakar and China as well as rampant anti-American sentiment forcing the gold backing issue. Now we can better understand Sir Alan GreenspanÕs comments regarding Ņmonetary policy, unleashed from the constraint of domestic gold convertibility, has allowed a persistent over issuance of money.Ó He realizes that the US will have to return to a gold exchange standard to compete with other currencies. We would not expect a US or Fed move in this direction until gold traded higher than $1,500 an ounce. Once the dollarÕs value was reset against gold then economic recovery could begin. Then these criminals, if still in power, would begin the financial debauchery again.
Portugal sold 15 tons of gold. Its report reflected a 606 ton reserve now 591 tons with a swap of 381 tons and leased 52 tons or over 70% of reserves. They are probably the second biggest gold lender in the world and that really means 70% of reserves have already been sold. As we said before the game is over and we have won. Just wait and see. It will soon be public knowledge that most of the sovereign gold reserves are gone and all these countries have been lying about their gold reserves for a long time.
UBS Warburg says it expects gold to average $353 an ounce in 2003 and $356 an ounce in 2004. They also upgraded their opinions and price targets of several gold companies, one of which was our favorite *Goldcorp (GG-NYSE). The bank sees a favorable supply-demand balance, a weaker US dollar and continuing geopolitical uncertainty.
Deutsche Bank also weighed in with a 2003 gold price target of an average $340 an ounce.
Both estimates are plain stupid. They are devised to cap gold in this price range, but it wonÕt work. The biggest scandal in financial history is about to break and when the shorts are forced to cover the price of gold will explode.
As we predicted long ago, as gold prices rose jewelry consumption would fall and investment demand would increase. That is just what has happened as GFMS reports that investment demand increased in 2002 from 117 tons to over 400 tons. This comes as production continues to fall. The fundamentals couldnÕt be better.
Gold closed up for the seventh week in a row, a truly phenomenal performance. Anyone who doesn't recognize that gold is in a bull market is just plain stupid. The gold manipulation cartel are buyers probably for themselves. Then there are the producers who are hedged, speculators who are short, banks and central banks that are short and the mega shorts in the gold shares that really havenÕt moved yet. As we told you at the beginning of the year gold will be $500 an ounce by the end of February and $840 an ounce by June or December. There is somewhere between 15,000 and 29,000 tons either short or sold and we are about to see a demolition derby that will last for at least two years. Silver is soon going to follow gold in a seccession of lock-limit up days, and the specialists on the CFTC will be wiped out. Do we hear force majeure? The commercials are about to be decimated. While the biggest gold and silver bull market in history gets underway Wall Street ignores it, CNBC lies about it and the Fed and the Treasury are frozen in the headlights. Gold now has a mind and life of its own. GFMS says gold will average $330 this year and may hit $390.00. All they have done is talk gold down for years. They say after the Iraq war gold will return to $310 an ounce. They remind us of the touts on Wall Street who seldom tell the truth. The World Gold Fantasy Council is little better. How do they explain that the US Mint Gold Eagle sales were 33,500 ounces by the 15th of January, up from 9,500 for all of last January? Silver Eagles minted in January's first two weeks were 1,115,000, which is 200,000 more than in all of January 2002. The days of disinformation by the above criminals are over. The 15-year suppression of gold is over and the crisis of confidence begins. The elitists are about to have a Custer experience.
If Zimbabwe does not change its new currency laws, the 50% of mining production left in the country will shut down. This includes Anglo-American's Bindura Nickel, Rio Tinto, Falcon and Impala Holdings. If a change is not forthcoming all mining in Zimbabwe will cease.
*Per SEC Rule 17B, an asterisk denotes that the International Forecaster is required to disclose compensation for investor relations and has in previous representations. This is a standard footnote in the weekly letter. For further compensation disclosure, please contact us at 941-639-4756 or request the same by replying to this email. This is a standard footnote in our market letter. Trading is risky and has inherent dangers of volatility and of loss of capital. The IF is specifically not an investment advisor but is a publisher of information. The IF strongly urges you to consult with your investment advisor to determine your suitability before acting on any information herein.
Reference to securities herein should not be considered as an offer to buy or sell the same. Such can be done only in accordance with applicable law and only by authorized persons.
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