Chapman On Gold

November 26, 2002

America is sitting on the precipice of failure. We are not defeatists we are realists. We are about to embark on a war that is to enrich conspirators and perhaps end up destroying civilization. As we've known it, the American public and the world has been the victim of the biggest scam in recent history, which is fiat money and perpetual war for perpetual peace to cover the deceit and destruction of that specie. One way or the other we face terrible tribulation. What will be the event that finally triggers the collapse? We don't know. What we do know is there are many things that can cause it that we know of and many things other than what we expect. 75% of the reserves of foreign countries are denominated in dollars. We believe as the economic and financial situation worsens those dollars will be sold for local currencies and gold.

A particular case is China, which has no allegiance to anyone but themselves. A sale of $200 billion and a purchase of gold in that amount would collapse the American economy and send gold soaring. America has its military settled into the Middle East and would be of little use as a destructive force to retaliate against the Chinese and perhaps others. China is moving to back its currency with gold. A nation that saves close to 20% of its income might also be large buyers of gold. As you can see China could easily be the catalyst that brings about higher gold prices and a return to monetary sanity.

JP Morgan sounds like a broken record in their repeated denials that their gold derivatives position is in serious trouble. We released the numbers two weeks ago; they were picked up by professionals in Europe and made it into the media everywhere except in the US, which speaks volumes regarding our controlled media. Everyone in the world knows the GATA story and the rigging of the gold market except the Americans. JPM lies about most everything just as the rest of Wall Street, CNBC and our government does. JPM has no reputation left. Their retort to accusations of serious financial problems is always the same, "false and irresponsible." JPM's risk position is not neutral. They are short gold and every time gold rallies they and others, such as Goldman Sachs, Citigroup and AIG, attack the price. There is absolutely no doubt the group is operating under the protection of the US government and central banks. Of course, we are irresponsible requesting and asking for exposure of their gold derivatives position just like we don&Mac185;t have a need to know what the &Mac179;Working Group on Financial Markets&Mac178; is doing. Everything is a big, dark secret and we know from experience that every time there is a big dark secret something bad or illegal is being covered up. Why would JPM take such a major interest in gold derivatives, especially to the extent of holding two-thirds of all the gold derivatives held by 370 banks plus others that is four times the exposure of Citigroup? There is a reason. Of course, there's a reason and that is market manipulation. You heard it here first: JPM will go under. The government may save them but they'll become insolvent once gold breaks to higher levels. Then we'll find out the real story behind why 15,000 to 29,000 tons of official gold holdings have been sold.

The EU has approved a plan by DeBeers, which controls 60% of the world's rough diamond supply, for diamond sales, which gives dealers more rights.

Gold equities are trading at 1.88 times net asset value, which is close to fair value. The speculative market is long two million ounces versus 1.5 million ounces a week ago. Low interest rates encourage gold purchases and for this reason we expect specs to remain long and producer hedging to be virtually non-existent.

Gold mutual funds have outperformed all others this year providing the best returns since 1995. Moody's, which tracks 20 mutual funds with $3.2 billion in total assets says these gold funds are up 46% on the year, while gold prices were up 15%. Of 2,648 mutual funds covering 26 industry groups, the average fund is off 18% and real estate funds were off 0.2%.

The Russian Central Bank has put into circulation a gold coin denominated as 25 rubles and a silver coin denominated two rubles in the Signs of the Zodiac series, with the image of Sagittarius depicted on both coins. The gold coin, containing 3.11 grams, is hallmarked 999 and the silver coin has 15.55 grams, and is hallmarked 925. 50,000 gold coins and 20,000 silver coins will be put into circulation.

Business for the bullion banks is deteriorating largely because of the fall in hedging business. Producers have become more cautious as gold refuses to fall back to $300.00 an ounce and falling dollar interest rates make it unprofitable for mines to hedge or for speculators to sell the metal short. Producers are covering their hedges, which has put a floor under gold. They have gone from being a net seller of 500 tonnes a year to a net buyer of 500 tonnes a year, or a 1,000-tonnes swing. Investment demand is up 12% for the first half of 2002. The only conclusion one can come to is that in order for gold to stay at current levels of $320 an ounce, central banks have to be sellers of the metal or are going naked short the market, knowing, if they have to, they can cover if they have gold in reserve. The problem is they may not have the gold to cover.

As our President promotes perpetual war for perpetual peace as a cover for global financial and economic collapse, the Gold Dinar has arisen as an Islamic trading vehicle in an attempt to avoid the use of currencies. This would not be a gold standard. It would be a method of trade, which was last used when President Nixon decoupled gold from the dollar on August 15, 1971. Since then all currencies have become fiat except the Swiss franc. Dinar based trading accounts will be settled quarterly in dinars, between trading partners, as we have seen gold can be manipulated, as fiat currencies are, but not easily. Unfortunately gold is the only alternative that has weathered the test of time. A basket of commodities has also been recommended by some experts such as democratic presidential hopeful Lyndon La Rouche, so that is another possibility. Although it's been untried. The move to the dinar will be simple and with the Bush administration's attitude toward Middle Eastern Islamic countries and the hold the dollar has on the Islamic World, we see the dinar as a very viable alternative. We would expect a host of other countries would join the dinar in trade, sick and tired that they may be of dollar imperialism and American elitist military adventurism. This is borne out in Islamic countries such as Saudi Arabia, which has withdrawn hundreds of billions of dollars recently from American investments. The adoption in trade of the gold dinar is forbidden by the IMF and World Bank, thus they would have a major competing currency. This would be a major blow to the plans of the new world order and perhaps the demise of the IMF and World Bank. What you are witnessing is extremely important.

Besides events concerning Iraq, there has been a program of intermediation by the US and UK against Saudi Arabia, which really have them furious. Rand Corporation has declared Saudi Arabia as the mother of all terror and called for the overthrow of their government and other Arab dictatorships. Then there was the CFC Terrorist Financing Report, headed by Hank Greenberg, ex-CIA and president of money launderer AIG. It attacks Islamic charities as financers of al-Qaida. As you can see the Islamic world and many others have much reason to move to a gold dinar and defy the US, UK and its elitists. If it works it could take the entire fiat money system down and, of course, gold would rise considerably higher.

MOSCOW. Nov. 15 (Interfax) - Oleg Vyugin, first deputy chairman of the Central bank, does not rule out that the gold and currency reserves may reach $48 billion before the end of this year. Earlier, the Central Bank projected the gold and hard currency reserves at $44-45 billion at the end of this year. However, they reached $47.1 billion as of November 8. "I think we will maintain this rate in the near future," Vyugin said. He said he does not rule out that the amount of gold and hard currency reserves may increase in December. Vyugin attributed this to favorable conditions on the world oil market.

China has granted approval to its four biggest state banks to import and export gold after opening its first Communist-era gold exchange last month, though quotas have not been fixed, industry sources of Reuters said on Monday. China's foreign trade ministry would allow the Bank of China, Industrial and Commercial Bank, Construction Bank and the Agricultural Bank to import and export gold, they said. But these banks would still have to go through the central People's Bank of China to trade gold as the precious metal is regarded as a strategic resource, they said.

THE INTERNATIONAL FORECASTER
An international financial, economic, political and social commentary.
Robert Chapman, Editor
Phone & Fax: 941 639 4756
bif4653@comcast.net or info@intlforecaster.com

http://www.gold-eagle.com/gold_digest_02/chapman112602.html