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-- Posted Friday, 12 December 2003 | Digg This Article
HAPPY HOLIDAYS ** Receive an Introductory Copy of the IF -- See Below ** THE INTERNATIONAL FORECASTER DECEMBER 2003 (#2) Vol. 7 No. 12-2 P. O. Box 510518, Punta Gorda, FL 33951 E-mail Addresses International_forecaster@yahoo.com (for correspondence) International_forecaster@earthlink.net (for information regarding your subscription or renewals) SUBSCRIPTION and RENEWAL INFORMATION: 1-YEAR $99.95 U. S. Funds. Make check payable to Robert Chapman (NOT International Forecaster), and mail to P.O. Box 510518, Punta Gorda, FL 33951. Please include name, address, telephone number and e-mail address. We accept Visa and MasterCard charges. Provide us with your card number and expiration date. We will charge your card $99.95 for a one-year subscription. Note: We publish twice a month by surface mail or 3-4 times a month by e-mail. E-Mail: international_forecaster@yahoo.com or international_forecaster@earthlink.net for subscription information.
US MARKETS As yet there are few signs of impending increases in employment. Labor markets nationwide have generally improved, but to get a real recovery, 300,000 new jobs a month are needed not 125,000 as per the FED. That will not happen and in the first six months of 2004, the recovery will begin to sputter. If we are correct that 8.2% growth for the third quarter was fictitious. All we see is slowing layoffs and increases in temporary jobs. Help wanted ads are up slightly but figures are still near 40-year lows. PIMCO managing director Chris Dialynas says that corporate bonds valuations leave little room for error and should be avoided because they’re overvalued. US corporations dependent upon foreign investors have jeopardized the post WWII US financial system. The more a company borrows the more money investors lend to the company. He said the FED bailed out the corporate bond market in 10/02. Clearly the FED invoked a too big to fail doctrine toward the corporate bond market at large. Almost everything George W. Bush has done is adding to the national debt and our grandchildren and children will have to repay that debt. Over the past few months, with the complicity of Congress, Bush has rammed through $87 billion to rebuild and secure Iraq and Afghanistan; approved a $401 billion defense appropriation bill, the largest ever; completed a $1 trillion tax cut on top of the $1.35 trillion reduction in 2001 and sponsored additional prescription Medicare benefits of $400 billion. How’s that for colossal spending. Our federal deficit will be between $500 and $600 billion this fiscal year and that’s if Mr. Bush doesn’t invade another country. The CBO, Congressional Budget Office says that by 2012 defense spending will approach $600 billion annually. When Bush took office, the CBO estimated Washington was on track to eliminate the publicly held federal debt by 2008. That means annual interest payments of $200 billion would have disappeared. Not anymore, as the federal debt is on course to soar over $7 trillion by 2010. That means annual debt service of $350 billion a year. This is the height of fiscal irresponsibility and it gets worse every day. We have been abandoned and spat upon not only by Bush and his neocons but also Congress. Incidentally, the Democrats also joined in on this orgy of spending. Discipline and honesty is something completely alien to politicians. It’s certain that in Washington no one is looking out for the future of the country. They are about to find out that you can’t defy gravity and reelection is something they won’t experience. The problem is the damage is already done. For the time being we may be stuck with WTO and NAFTA but FTAA has been derailed. The Miami meeting was another major debacle for free trade. The main contentions were agriculture and particularly orange juice. The US wasn’t about to give on these matters and if anyone had insisted on debate or consensus, the FTAA would have collapsed. When the Venezuelan delegate raised the question of how the FTAA would reach its January 2005 deadline, US and Brazilian co-chairs became visibly upset. Everyone was terrified to put new issues on the table. The American, Canadian, European colossus will never swallow Latin America, there is an indigestible populist nationalism that will not be bought or bullied. It wasn’t long ago that Brazilian President Lula said, “Brazil does not want an ideological confrontation with the US. We will negotiate and hope the FTAA will eventually go away.” As you can see, like so many politicians throughout history, Mr. Lula has sold out to the internationalists. He has already reversed his promise on land reform and not to allow the planting of genetically modified crops, giving in to elitist Monsanto. He has also caved in to internationalists’ demands for pipelines and dams in the Amazon, which has enraged Brazil’s environmentalists. Lula came to power via a $30 million IMF loan because Citigroup, Fleet Boston, JP Morgan Chase and General Motors badly needed a bailout roll-over for their Brazilian investments. It is clear that the US, Europe and world elitists are being forced to retreat in Latin America at least over the next year and probably longer due to a coming economic collapse in 2005 and the elitists’ loss of control of the world gold, silver and currency markets. The world doesn’t realize it yet, but the conspiracy is in deep trouble. As you readers know consumers are using short-term debt to manage mortgage payments, utilities and food all at the same time at prohibitive interest rates. This means bankruptcies will continue to rise and home foreclosures will continue to increase. Economic distress is all around us and the poor and the old will be the worst affected. The poor will lose the homes they really shouldn’t have had in the first place and those over 65 just can’t make it. These poor souls believe the Federal Reserve and low-interest rates forever. Thus, we have tax cuts, debt and war exactly as we predicted 4-1/2 years ago. Federal and state regulators have charged Invesco Funds and its CEO with civil fraud allowing big-money clients to make improper short-term trades. Retail sales ended November down 2.8% versus October. The pace of sales at major retailers grew by 4.4% on a year-to-year basis for the week ended 11/22/03 after rising 4.1% in the previous week. Consumer balances on credit cards, auto loans and other debt rose $15.1 billion to $1.97 trillion, a 9.7% increase on an annualized basis in September. That was on top of a debt increase of nearly $9 billion in August. Normally consumers pull back from spending and eliminate debt during difficult economic times and some even save. Not this time. All too many are bent on self-destruction financially, not caring what happens. George W. Bush and his neocons are playing the same shell game that Enron played. They use complex financials designed to withhold information from regulators and the public. The subterfuge is that separate entities report separately. Each is privy to receiving and responsible for disclosing only a subset of information. That means no comprehensive balance sheet, no transparency and no accountability. The Coalition Provisional Authority in Iraq projected $20 billion in oil revenues and thus far, they supposedly are at $2.5 billion. Incidentally, others say already CPA has stolen $5 billion. There was a most recent $18.7 billion handout but CPA needs another $39 billion for the next three years. This is theft and waste on an unprecedented scale without any real reporting. Without a paper trail the underlying intent has to be fraud. Already $11.2 billion in no-bid contracts have gone to Halliburton and Bechtel. This is theft on a colossal scale. More for subscribers.... GOLD, SILVER, PLATINUM, PALLADIUM AND DIAMONDS The Gestapo is at it again. The American debut of the WGC’s network of international exchange traded gold funds is still on hold and the group has been forced to proceed with the London listing of its global franchise. Gold Bullion Securities was launched on 12/02/03 and will trade on the London Stock Exchange as GBS starting on 12/9/03. The Australian and UK listings are expected to be mirrored by funds in Singapore, Tokyo and Johannesburg and hopefully eventually in National Socialist America. The Australian fund currently has almost 250,000 ounces in its books. Even though there is no US listing, American citizens can go directly to London and buy and that they will do, especially institutions. Yes, gold and silver will continue to appreciate due to debt and the decline of the dollar but a singular powerful case can be made for physical off take, particularly by India and China. We believe that they will alone generate more new bullion and jewelry demand than can be met by production or the sale of above ground supplies including official holdings. The elitists’ central banks are going to find out that gold is not a barbaric relic and that their dreams for a new one-world currency will be dashed. The shills, fronts and investment community are going to have their heads handed to them. The WGC, The Word Gold Council, is holding talks with a national bank in Dubai to cooperate on launching a gold accumulation plant that would allow investors to open interest-bearing “paper gold” accounts. A deal is expected soon. At present this facility is not offered by any bank in the Gulf although it is available elsewhere such as, Japan, Turkey, Singapore and Korea. The plans are becoming quite popular as stock markets have been rendered unpredictable and manipulated and deposits with banks are not worthwhile due to low interest rates. Perpetual war for perpetual peace and terrorism have created an unfavorable geopolitical situation throughout the world, which has caused gold to be the most sought after asset class. When you pull all the pro-gold and silver factors together you have an unbelievably powerful story. The South African rand has appreciated from 14 to under seven rand to the dollar. It could go as high as 5.50 to 6.50. At those high levels we’d expect the possibility that some mines would be forced to close. If gold and platinum mines were to be shut down, it would cut off 22% of the world’s gold supply and severely aggravate an already chronic shortfall of production. This should cause gold to rally against every currency not just the dollar. It is hard to say what physical and psychological affect a 5.50 rand would have on South African production and gold prices, but it would be very positive for gold prices. It could move gold up $200 to $300 an ounce or more. This is one of the reasons we have recommended staying out of South African investments. If you are not already out, get out. There are many North American alternatives. Gold hedging by commercials, producers and bullion banks is about 23,000 contracts or 100 tons of gold. They have had a tough time containing gold at current levels and their cost of carrying their losing positions are getting quite expensive. We would think if gold were to move up to $410.00 they’d have to cover or spend a lot of money averaging their shorts. That’s had to justify with a sinking dollar. We don’t believe they’ll average their shorts. We believe they’ll cover. That means buying up to 100 tons of gold back. With today’s physical demand and their lack of selling, we believe if the cover develops we could get a quick pop into the $430 -$450 per ounce area. This scenario is very realistic. In addition, it could trigger additional short covering by producers and it could trigger a devastating collapse. That could take gold to $500 to $600 an ounce, or more. One morning Wall Street is going to wake up and gold will be up $60.00 to $100.00 and what was a stealth bull market will become a bull market the media can no longer ignore. This is something Barrick is finally coming to terms with. Barrick will be very fortunate not to go bankrupt. It is curious that on Thursday Barrick announced they will continue to hedge and 10 days later Mr. Munk says, we are not going to hedge anymore regardless of what the gold price does. Something vast and powerful is going on and we can only guess what it is. It could be word from the elitists that the game is over or it could be the damaging proof Blanchard has against them. Barrick has a loss of $16 million for every dollar that gold goes up. Their forward sales debt equals its $2 billion cash position. As we recommended in 1993 the shareholders of Barrick should sue the directors individually after they fire them. What Peter Munk has done is criminal and unconscionable. Not only that, individuals who are not Barrick shareholders, yet have owned gold assets, should sue Barricks’ management for rigging the gold market. A rumor is making the rounds that the Comex has an arrangement guaranteeing the margin requirements of the bullion banks. These banks are already facing major losses. We believe it is the US Treasury making the guarantee. Ian Cockerill, CEO of Gold Fields, says, “gold is starting to be viewed as money. A low-inflation, low-interest rate environment is a very heady cocktail for the gold price in US dollar terms.” He predicts “sustained US dollar weakness with the FED prevents them from raising rates for fear of snuffing out any US economic recovery. The US government is pumping liquidity into the market via tax cuts and hoping like hell that they don’t have to resort to interest rate rises to kill off any hint of inflation.” Asian banks are diversifying out of declining dollars and into alternative currencies and into gold to increase its holdings to 10% of its foreign reserves, which is less than the proportion held by EU banks. That would more than compensate for any central bank gold sales. Central banks supposedly hold about nine years’ worth of global gold production. Australian and South African producers are faced with rising commodity prices and US dollar weakness, which is driving up both of their currencies, and that reduces their returns on US dollar denominated sales and increases local costs. A sustained strong rand could severely dent production out of South Africa, where the industry is characterized by mature and declining ore bodies. We mentioned this earlier and it could be explosive. Gold consumption in UAE, the United Arab Emirates, the 9th largest gold consumer, in 2002 exceeded 93 tons. In the third quarter of 2003 consumption grew by 15.9% to 20.3 tons. 89% of demand is for jewelry.
Transaction volume of the Shanghai Gold Exchange were up 20% to $321 million in November. 23.5 tons of gold were traded. Goldman Sachs says gold will breach $450.00 next year for the first time since 1988. Mind you, Goldman is part of the cartel that has been illegally suppressing gold and silver prices. Thus is a significant projection. The US Mint has sold out of the 2003 one-ounce American Gold Eagle coin. We have yet another man bites dog story. A Canadian judge has ruled that Barrick Gold can proceed with its defamation suit in Ontario against Blanchard & Company. The court, of course, lacks jurisdiction, but in Canada there are two separate court systems. One for the people and one for the elitists. Blanchard had compared Barrick to Enron, which, of course, is an understatement. The World Gold Council baked Gold Bullion Securities (LSE-GBS) got off to a flying start on Tuesday. Eighty-two million units representing 820,000 ounces of gold worth $334 million were traded. As a comparison, its equal member in Australia, since March, has traded 250,000 ounces. The price ended the day at $40.90, equal to $409.00 an ounce. The high was $411.50 and the low $408.00 an ounce. There were twenty-five, $1,000 trades, so small investors were present. More for subscribers.... ASIA The World Bank after several years has decided to increase its loans to Indonesia in order for the country to develop its rich natural resources. The loans are depended upon the level of corruption. The loans include a plan for increasing taxation, privatizing state enterprises so that transnational corporations can loot the country and revising procurement procedures so that can be controlled for foreign interests. We can’t figure out which is more corrupt, the Indonesians or the World Bank and the IMF. Exports of Chinese made electronics and information technology are expected to rise 41.2% year-on-year to $130 billion in 2003. Those goods accounted for 31.5% of China’s exports in the first 10 months of the year and that was a 34.6% increase. Bank of Japan foreign exchange reserves increased $172.3 billion or 42% year-to-date. Taiwan’s increased $6.2 billion during November to $202.8 billion with reserves expanding for the first 11 months at a rate of 28%. South Korea’s increased $46 billion to $156.3 billion. Guess who’s funding our deficit? Gross Treasury public debt is up $610 billion from a year ago. That’s the real budget minus cash. We would not want to be funding it. More for subscribers.... ** Receive an Introductory Copy of the IF -- See Below ** Full 27-page issue of this newsletter available to subscribers only SUBSCRIPTION and RENEWAL INFORMATION: 1-YEAR $99.95 U. S. Funds. Make check payable to Robert Chapman (NOT International Forecaster), and mail to P.O. Box 510518, Punta Gorda, FL 33951. Please include name, address, telephone number and e-mail address. We accept Visa and MasterCard charges. Provide us with your card number and expiration date. We will charge your card $99.95 for a one-year subscription. Note: We publish twice a month by surface mail or 3-4 times a month by e-mail. E-Mail: international_forecaster@yahoo.com or international_forecaster@earthlink.net for subscription information.
-- Posted Friday, 12 December 2003 | Digg This Article
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