“Rich Dad”: Gold should reach $15,000/oz

Robert Kiyosaki, along with friend, and author of the Rich Dad Advisor Book, Guide to Investing in Gold and Silver, Mike Maloney, explains why gold and silver are vital investments for todays economy.

 

James West: “Gold Price is No Bubble”

The price performance of gold recently has all sorts of armchair economists waxing philosophical on the idea that this is the advent of a price “bubble”. While certainly everyone has and is entitled to their opinion, there are other features of humanity that we all possess, and much like many opinions, are best obscured from view.

Declaring that gold is in a “bubble” demonstrates complete ignorance of or disregard for the fundamental drivers of the almost ten year ascent of gold. And saying that the price is forming a bubble implies that, like the real estate bubble, the tech bubble, and the tulip bubble, the price must necessarily “pop” and return to a sustainable long term average.

During each of the bubbles of recent and distant history, the cause of the meteoric price ascents of these various asset classes were all predicated by the same string of events.

Supply was far outstripped by demand because the public perception emerged that the asset class in question was the ultimate asset class at that point in time. Disproportionately high levels of capital were directed to them, and upon the eventual discovery that supply could easily meet and exceed demand, the bubble pops, the price declines, and the herd mentality resumes its frantic search for the next ‘ultimate’ asset class.

Homes, technology and tulips are all a product of effort. With increased effort, more of each of these can be created. Supply can easily be ramped up to meet demand.

Not so much, in the case of gold. The availability of economic concentrations of gold in deposits near to the surface of terra firma is finite. Increased effort might guarantee the temporary increase in supply from known deposits, but each deposit is eventually exhausted, and no amount of increased effort can bring back the gold.

Gold, for the most part, is not used up. It is fabricated into jewellery or bullion or coins, and hoarded and preserved.

Technology, real estate, and tulips, on the other hand, are consumed and replaced. Technology becomes obsolete, homes wear out, tulips die and are reborn each spring.

Gold? Gold goes nowhere. Gold stays put. Gold is passed from generation to generation in last wills and as heirloom collectors items. Gold is recognized as a store of value that is not temporary.

The only way to diminish that is through government interference, such as the various legislative actions that have historically capped gold’s value at a fixed price, or if, for some reason, humanity decided to abandon its greedy predisposition to hoard value against future financial calamity.

The latter is just as improbable as the former.

The idea of capping the price of gold through international agreements flies in the face of the entire concept of free markets, now the near universally accepted preferred economic style. And the innate fear of not having enough that is a basic element of the human cerebral infrastructure is eternal, or at least, that’s how it seems.

So what could, for arguments sake, cause the price of gold to plummet suddenly, thus obviating the recent spike as a bubble?

Well, the forces of supply and demand are always dominant. If those who want to buy gold and are willing to pay the market price for it exceed the number of those who have gold and are willing to sell it, the price will be forced upward. Just as elementally, if sellers outnumber buyers, the price must needs decline. So simple.

And who’s selling gold?

Well we can point to the International Monetary Funds plan to divest itself of 400 tonnes of gold, ostensibly to finance the stimulus of nations unable to underwrite their own economic stimulus. But just as soon as the proposed sale is announced, India steps up to the plate to take half. In one transaction. The largest single lot of gold made available since the onset of the secular bull market, and a buyer is found easily.

Russia, the economic basket case of the world thanks to its national inability to govern itself with laws and reason as opposed to brute force, recently announced the necessity of a sale. But that is clearly necessitated by the national hands’ inability to refrain from raiding its own pockets. A genetic defect, it would appear.

Who else has sufficient gold to sell, that might drastically influence the supply/demand matrix to cause a popular abandonment of gold? China, the United States, and various G7 nations. But none of them are selling. Indeed, China has revealed that it has been the principle sovereign accumulator of gold for over 5 years.

Even during and post economic crisis, the impetus was to retain and accumulate, not sell gold.

No. The bubble we are immersed in at present is the currency bubble. Led by the disingenuous United States, the world has temporarily forgotten that despite the fact it is possible to print currency easily and with abandon, the laws of supply and demand will definitely re-assert themselves in due course. And that is what we are seeing now with the gold price.

The confidence in a dollar printed on paper being able to obtain a dollar’s worth of merchandise is fading with every treasury auction. The popular perception is growing that gold is indeed a monetary standard, and a store of value that can be trusted in both turbulent and stable economic conditions.

There is nothing on the economic horizon that can change this. We are in the period of descent for the American empire and its feeble dollar. The nation is bankrupt, morally and economically. It can no longer bamboozle the world into accepting its counterfeit currency in exchange for trade. Only nations who are forced by their vast holdings of the monopoly dough to entertain the notion that it has value participate in the illusion, because the alternative would necessitate a drastic re-valuation of their own financial integrity.

So on the supply side, there is no availability. No one is selling. The miners are mining as much as they can as fast as they can and still the buyers are lining up.

On the demand side, nothing but more, more and more demand. No trustworthy currency in sight (except perhaps the renmibi, increasingly a gold-backed currency), no asset class alternative that is comparable, no new bubble to chase.

I suppose its good to have alternative viewpoints in media. Its important to listen to all sides of a story. But if the issuing orifice declaring a bubble inhabits a region below the waist, those who act on such advice will find themselves duly smeared in good time.

Gold price bubble? Give me a break!

James West

www.MidasLetter.com

 

Salinas Price: It’s time to end World War II

It’s time to end World War II

Hugo Salinas Price

Oct 29, 2009

The shooting, the bombing and the killing of World War II stopped in August of 1945, and the War was formally over.

The United States and Britain knew the War was won, in 1944.

At that time, a Conference was called among the 44 Allied Powers, to determine the nature of the world’s monetary and financial system after the fighting was over. It was held at Bretton Woods, New Hampshire, USA, in July of 1944.

As a result of the Conference, a set of Agreements were signed.

The most important of all the agreements was the one that established that gold should be the money to be used to settle all trade deficits between nations, but in lieu of gold, dollars could be used to settle these deficits; at the option of all Central Banks, these banks could demand gold from the United States Treasury at a redemption rate of $35 dollars for each ounce demanded.

Thus, the United States could pay for its trade deficits either in gold or in dollars. No other nation was allowed to pay for its trade deficits in its own currency; for all other nations, settlement of trade deficits had to be done with gold or with dollars previously acquired in the course of trade with the U.S. or with other nations who had dollars. In other words, dollars – and only dollars – were as good as gold.

General de Gaulle (President of France, 1959 – 1969) has been quoted as saying that this was “an exorbitant privilege”. And so it was, a privilege of the victor in World War II.

Under the rules of war, a country at war may loot and plunder its enemy, if it can do so. Booty has always been a great incentive to get soldiers to fight, and World War II was no exception. When a war is over the looting and plunder stops and nations renew commercial relations, exchanging their goods in peaceful international trade.

In forcing on the Bretton Woods Agreements the acceptance of the dollar as a means of settling international debts, along with gold, the US established the will of a victorious power to continue to loot and plunder the whole world.

Formally, World War II was over. But in fact, World War II was not only not over, but the US had implicitly declared war on the whole rest of the world by imposing the dollar as a means of settling trade deficits, along with gold.

By running huge trade deficits which arose out of its expansion of credit and consequent money-printing, the US was able to leverage its gold holdings and send abroad masses of dollars to pay for imports. The exporting countries received dollars – not gold – for their export surpluses to the US. The dollars began to pile up in foreign Central Banks as “Reserves”. The exporting countries, not being nuclear powers, were afraid to demand gold in payment of their export surpluses, since such a request would very probably irritate the great power, and nobody wanted to offend the USA.

All this export of dollars in payment of trade deficits finally moved General de Gaulle to demand gold for dollars held by the Banque de France. This annoyed the US government and shortly thereafter, not coincidentally, there was an outbreak of rioting in France which threatened to unseat President de Gaulle, who had offended the US by simply asking for France’s gold.

The US, by means of the “dollar as good as gold” provision of the Bretton Woods Agreements, has been looting and plundering the rest of the world, non-stop, since the end of World War II. Very subtly, based on Bretton Woods, the US has continued to act as the triumphant victor in a war; it has never since the end of World War II ” [reassumed] among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle” it, as expressed in the Declaration of Independence, 1776.

The US has not assumed an equal station among the powers of the earth, since World War II came to a formal end. It has continued to impose its Imperial Will upon the rest of the world, as vassal states, and has been duly exacting tribute from the rest of the world, by means of its paying its trade deficits with dollars, which are nothing at all since 1971. The US did not truly “normalize” relations, neither with the Axis powers when World War II was declared formally over, nor with the rest of the world.

Commerce is an eminently peaceful activity. The seller forces no one to buy; the buyer forces no one to sell. The means of payment of commerce, since written history began, has been either goods for goods, i.e., barter, or goods for gold – a perfected form of barter. Silver has also worked well, as a means of payment of commerce. But anything else, any innovation, anything decreed to be a means of payment by anybody whatsoever, cannot be anything but an imposition, a violation of the rules of commerce.

The present ruinous condition of the world’s finances and its lopsided industrial development has not yet corrected itself. If anything, we are in the “eye of the hurricane” for the moment.

If all governments in the world were to collapse, commerce would not disappear; it would arise out of the disorder, and its money would be gold or silver, or both. Gold and silver are the natural means of payment for humans. Such is the intellectual decline in the world, that those in power have forgotten this; they and their paid lackeys in the financial press and financial media are dreaming when they think that they can come up with some effective but artificial, fiat means of payment, decreed by some governmental body. Any such fiat means of payment will inevitably preserve privileges for some, and impose burdens on others. Commerce cannot thrive under those conditions; it will go into permanent decline, along with our industrial civilization.

“Regionalizing” fiat currencies will only have the result of pitting region against region – as illustrated in Orwell’s “1984″. This is the fallacy underlying all talk about a “multi-polar world” while ignoring the need for a neutral, real and time-tested medium for exchange of goods.

The world’s principal powers should convene and come to an agreement for the establishment of the world’s monetary and financial system on the basis of gold as the exclusive medium for settlement of international trade deficits – a neutral, real and objective medium for commerce and finance.

If the governments of individual nations want to allow their banking systems to diddle with fractional banking and inflation, it is their right to do so. But when it comes to settling accounts with other nations, they must come up with the required gold.

Only then will we be able to say that World War II has ended.

###

27 Oct, 2009

Hugo Salinas Price

President

Asociación Cívica Mexicana Pro Plata, A.C.

Mexico City

email: plata@plata.com.mx

website: http://www.plata.com.mx

 

Paul Mylchreest: Gold Market: Accident Waiting to Happen Or Crime Scene?..

Market analyst Paul Mylchreest, who wrote the 2006 report for Credit Agricole’s Cheuvreux brokerage house concluding that the gold market was being manipulated surreptitiously by central banks (http://www.gata.org/files/CheuvreuxGoldReport.pdf) and, the following year, a similar report for Redburn Partners, (http://www.gata.org/files/RedburnPartnersGoldReport_11-12-2007.pdf), has revisited the gold market in a study for his own analysis service, the Thunder Road Report.

Mylchreest examines the gold traded in the world’s biggest gold market, London, and concludes that either a tiny amount of real metal is supporting a spectacular volume of paper trades, “an accident waiting to happen,” or else that the world’s gold supply is spectacularly larger than officially acknowledged and the London gold market has been used in recent years to launder questionably obtained gold, perhaps the fabled “Yamashita’s gold” plundered from Asia by the Japanese military during World War II, in which case the London gold market is a “crime scene.”

Mylchreest’s report is fascinating and as conscientious as the obscurantism of the gold world allows. It’s titled “Gold Market: Accident Waiting to Happen Or Crime Scene? Don’t Shoot the Messenger,” and you can read it HERE

 

King World News interviews Hugo Salinas Price

Hugo Salinas Price, president of the Mexican Civic Association for Silver, was interviewed for about 20 minutes Friday by Eric King of King World News.

They discuss the trauma of currency devaluation, the use of the U.S. dollar as a system of imperial taxation on the world, and the necessity of a means of real settlement of international trade, the dollar not really being one, since so many dollars are used only to purchase more U.S. government debt, which leaves open the obligation to pay. They also talked about Salinas Price’s plan for remonetizing silver in Mexico, the land of silver.

Click for King World News interview of Hugo Salinas Price

 

Declassified 1975 Fed memo explains need for gold price manipulation!

The Zero Hedge Internet site has unearthed another U.S. government memorandum from the not-so-distant past expressing the intent of the government to rig the gold price in a nominally free market and detailing the need for and methods of doing so. It’s a memo written in 1975 by the chairman of the Federal Reserve Board, Arthur Burns. It’s headlined “Exclusive Smoking Gun: The Fed on Gold Manipulation,” and you can read about it HERE

You can read the real Macoy below in glorious scribd ipaper format:

View this document on Scribd

 

Gold Big Picture: imminent bullish breakout!

• The graph shows a long term monthly gold triangle formation that gold is breaking out of:

• There has never been a monthly close above US $1,000.00 but we are on the way toward that goal.

• Moreover, you can see a huge upside down head-and-shoulders formation within the triangle.

All very bullish!

 

GATA: Fed admits hiding gold swap arrangements

Dear Friend of GATA and Gold:

The Federal Reserve System has disclosed to GATA that it has gold swap arrangements with foreign banks that it does not want the public to know about.

The disclosure contradicts denials provided by the Fed to GATA in 2001 and suggests that the Fed is indeed very much involved in the surreptitious international central bank manipulation of the gold price particularly and the currency markets generally.

The Fed’s disclosure came this week in a letter to GATA’s Washington-area lawyer, William J Olson of Vienna, Virginia (http://www.lawandfreedom.com/), denying GATA’s administrative appeal of a freedom-of-information request to the Fed for information about gold swaps, transactions in which monetary gold is temporarily exchanged between central banks or between central banks and bullion banks. (See the International Monetary Fund’s treatise on gold swaps here: http://www.imf.org/external/bopage/pdf/99-10.pdf.)

The letter, dated September 17 and written by Federal Reserve Board member Kevin M. Warsh (see http://www.federalreserve.gov/aboutthefed/bios/board/warsh.htm), formerly a member of the President’s Working Group on Financial Markets, detailed the Fed’s position that the gold swap records sought by GATA are exempt from disclosure under the U.S. Freedom of Information Act.

Warsh wrote in part: “In connection with your appeal, I have confirmed that the information withheld under Exemption 4 consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of Exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you.”

When, in 2001, GATA discovered a reference to gold swaps in the minutes of the January 31-February 1, 1995, meeting of the Federal Reserve’s Federal Open Market Committee and pressed the Fed, through two U.S. senators, for an explanation, Fed Chairman Alan Greenspan denied that the Fed was involved in gold swaps in any way. Greenspan also produced a memorandum written by the Fed official who had been quoted about gold swaps in the FOMC minutes, FOMC General Counsel J. Virgil Mattingly, in which Mattingly denied making any such comments. (See http://www.gata.org/node/1181.)

The Fed’s September 17 letter to GATA confirming that the Fed has gold swap arrangements can be found here:

http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf

While the letter is far from the first official admission of central bank scheming to suppress the price of gold (for documentation of some of these admissions, see http://www.gata.org/node/6242 and http://www.gata.org/node/7096), it comes at a sensitive time in the currency and gold markets. The U.S. dollar is showing unprecedented weakness, the gold price is showing unprecedented strength, Western European central banks appear to be withdrawing from gold sales and leasing, and the International Monetary Fund is being pressed to take the lead in the gold price suppression scheme by selling gold from its own supposed reserves in the guise of providing financial support for poor nations.

GATA will seek to bring a lawsuit in federal court to appeal the Fed’s denial of our freedom-of-information request. While this will require many thousands of dollars, the Fed’s admission that it aims to conceal documentation of its gold swap arrangements establishes that such a lawsuit would have a distinct target and not be just a fishing expedition.

In pursuit of such a lawsuit and its general objective of liberating the precious metals markets and making them fair and transparent, GATA again asks for your financial support and that of all gold and silver mining companies that are not at the mercy of market-manipulating governments and banks. GATA is recognized by the U.S. Internal Revenue Service as a non-profit educational and civil rights organization and contributions to it are federally tax-exempt in the United States. For information on donating to GATA, please visit here:

http://www.gata.org/node/16

You can also help GATA by bringing this dispatch to the attention of financial news organizations and urging them to investigate the Fed’s involvement in gold swaps particularly and the gold (and silver) price suppression schemes generally.

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

 

Sprott on US$: Safe Harbour no more

“The US dollar (USD) is the world’s “reserve currency”. This status is arguably the greatest privilege enjoyed by the US as an economic entity. Most people don’t appreciate its significance. As the world’s reserve currency, the USD is used by other countries across the globe to back up their own respective paper currencies. In some cases, it’s as basic as a country stockpiling US dollars in their central bank vaults. When asked what supports their Pesos, Rubles, or Yen, the powers that be simply point to their pile of US dollars as proof of value. Upon reflection, it’s quite obvious how tenuous it is to back up one’s currency with a pile of paper issued by another country, but this is exactly how the world of international currency has worked for decades. And it has worked quite well…until now.”

“…We keep coming back to the numbers for the US debt, and they don’t add up. Even Alan Greenspan, former Chairman of the Federal Reserve, believes that the rising budget deficits in the United States are “unsustainable”. Because the US Government is printing dollars to fund their liabilities, it is highly unlikely that we will ever see a failed bond auction similar to that of Poland. The far more likely outcome, therefore, will be a US dollar crisis. It is for this reason that we have positioned our hedge funds and mutual funds so heavily in precious metals.

At the end of the day, when the world finally realizes what the US has done to the world reserve currency, international investors will shift into an asset that no government can print. In our opinion the US dollar’s status as a ‘port’ in the financial storm has officially come to an end.“

Click HERE to access Sprott Asset Management’s assessment of the US$ position today.

 

James Turk: There goes the Financial Times again

September 18, 2009 – Certain segments of the media rarely give gold a fair shake, particularly when it approaches important price levels. These publications time and again take bald pokes at gold. So when I see articles doing that, I like to poke fun at the article, but more importantly, set straight its misrepresentations and errors about gold.

One publication that is consistently on the wrong side of the gold market is The Economist. Using its pathetic record of anti-gold articles, I have already documented its curiously timed invectives with what I call “Gold’s Infallible Indicator“. See also “Gold’s Infallible Indicator – Six Months Later“.

The Lex column from the September 9th Financial Times is another case in point. This disparaging – and highly misleading – account of gold can have no other purpose but to keep people from buying gold. It does not offer analysis, but propaganda, which is not surprising given the FT’s longstanding role as an apologist of central banking and fiat currencies.

Had Lex offered an unbiased analysis, it would have mentioned gold’s attributes, including the fact that it has appreciated at doubt-digit rates for nine years in-a-row on average against all of the world’s major currencies, making it one of the best performing asset classes this decade. And gold has done this without any counterparty risk, which is perhaps its greatest attribute and is not even mentioned by Lex.

Given my penchant for dissecting anti-gold propaganda pieces, this Lex column needs to be skewered. So here is my analysis of it, to help people read between the lines and put its propagandistic anti-gold fervor into a proper perspective. What follows is the Lex column in italics, with my comments inserted in the text.

Like a cure-all tonic prescribed by a travelling rural huckster, gold [My goodness, Lex not being one to waste words, sets the disparaging tone of this article right from the start by comparing gold to a "huckster".] somehow seems to be good for nearly everything that ails us. [Is it that gold just "seems" to be good, or could it be that gold really is that good?] Just consider the diverse economic backdrops that have caused its price to spike over the years: stagflation, financial panic, speculative mania and currency debasement. [Yes, and left unmentioned is the common denominator of all these problems, which is the mismanagement of national currencies by governments and central banks.]

Back in 1980, when the yellow metal hit $850 an ounce – still the record in real terms [Adjusting for inflation, it takes more than $2,300 to purchase today what $850 purchased in January 1980, using the US government’s current CPI calculator. However, the US government has since amended its CPI calculator numerous times. Fortunately, www.shadowstats.com makes available the same CPI calculator used when the Carter administration haplessly watched the gold price soar nearly three decades ago. Using this Carter-era calculator, it takes over $6,300 today to match $850 of January 1980 purchasing power.] - western economies were being squeezed simultaneously by the second oil crisis and record post-war inflation.

Fast-forward to March 2008, when it broke through $1,000 for the first time on safe-haven buying [Yes, gold is a safe haven, and people buy it because it does not have counterparty risk, among other reasons.] as Bear Stearns teetered. It approached the same level a few months later when bank worries had eased temporarily but commodity-fever was peaking, and again in mid-September when Lehman’s collapse created so much demand that smelters worked overtime to churn out bullion. [Yes, but not as fast as central banks were working overtime to print currency to bailout the banks and other failed institutions that had political clout.]

The thread connecting these episodes was fear. [Fear was the result, not the cause. The cause was the failure of bank regulation by central banks as well as their gross mismanagement that allowed the credit bubble to appear in the first place.] But for those who rushed to buy near the top, peace of mind was costly. [It has only been costly if you held stocks. Gold is above $1000, but the Dow Jones Industrial Average, for example, is still -15.7% below its level the day before Lehman collapsed and -47.5% below its all-time high.]

It would be tempting to dismiss the latest surge above $1,000 an ounce as more of the same were it not for concerns about the currency in which its price is denominated. [Here is a palpable attempt to marginalize gold, saying that it is solely US dollar denominated and that it is rising only because of problems with the US dollar, which of course is completely wrongheaded. Gold’s price, or more accurately because it is money, gold’s rate of exchange, can be measured against any currency. Importantly, because gold is rising against all of the world’s currencies, it is obviously not just the US dollar that has people worried.]The trade-weighted average of the US dollar against six world currencies has neared a multi-year low of about 77, down from 121 eight years ago, as foreign creditors fear an endless stream of red ink from Washington. [At last, some meaningful and useful analysis. But again, this tidbit disinforms as much as it provides useful information because it focuses only on the dollar. It thereby diverts attention away from other currencies, all of which are being mismanaged by central banks to some degree as evidenced by gold’s ongoing appreciation in those currencies.]

Stories of those who preserved their wealth or escaped hunger in decades past by hoarding precious metals when their governments set the printing-presses loose provide gold bugs with a compelling historical narrative. [Yes, and one that is very relevant today given what governments and central banks around the world are doing to national currencies by again setting the printing presses loose. But the US is not Weimar Germany [Not yet, but wait a few months.] and, in spite of interest rates that make gold ownership cheap, [Which is only one of gold’s many advantages at the moment] the opportunity cost of owning it is still unattractive in the long-run. [Complete rubbish. Gold has appreciated at double-digit rates on average this decade against all of the world’s currencies, and achieved that without counterparty risk. Gold is doing what money is supposed to do - preserve purchasing power.] Smarter ways to anticipate inflation include bricks and mortar, [The FT is obviously grasping for straws. Think about it. It is bricks and mortar - not gold - that have the burdensome carrying costs with maintenance, various property related taxes, etc., not to even mention that real estate prices have been falling] mineral rights [Owning gold has completely different risk/return criteria than owning any right to mine it.] or even equities, [Only if you choose the right ones, and this decade at least, it would have been very difficult to choose equities that have appreciated at rates better than gold.] all with vastly superior historical returns. [Stocks are investments, and gold is money. They are different things, with different uses, so they cannot logically be compared. Stocks do generate returns over time, whereas sound money does not. Gold’s appreciation during periods of monetary turmoil, like the present one, is simply the loss of purchasing power of the national currency in which gold’s price is measured.] Financial panaceas, such as medical ones, should always come with a health warning [And so should articles about gold in the FT].

 

Rob McEwen: $5,000/oz gold in 5 years?

DENVER GOLD FORUM

$5,000/oz gold? Rob McEwen says it’s coming in 2014 or 2015

Über gold promoter Rob McEwen has also developed a taste for silver mining.

Author: Dorothy Kosich

RENO, NV -

When über mining investor Rob McEwen makes predictions on gold prices or appears to have developed an interest in silver mines, retail investors heed his clarion call and place their bets that the gold price is about to soar.

In a presentation to the Denver Gold Group on U.S. Gold Monday, McEwen was somewhat subdued as he only briefly mentioned he thought gold could hit $5,000 an ounce before the end of the gold cycle As this reporter scrambled for a clarification of his remarks in a brief interview, McEwen stuck by his prognostication, forecasting the end of the gold cycle would occur either in 2014 or 2015.

McEwen is so dedicated to the power of gold, he told his audience of fund managers, analysts, investment bankers and miners that he personally owns 21% of U.S. Gold. In comparison most major mining CEOs own a mere pittance.

He is steadfast in his belief that the Cortez Trend-which hosts Barrick’s massive Cortez Hills gold project-will yield millions of gold ounces for his U.S. Gold company.

But, McEwen also has developed a fondness for silver, albeit he lacks the same passion for the precious metal as he feels for gold.

He declared to his audience Monday that “El Gallo, Mexico is becoming one of the world’s great silver discoveries. ” With a 540,000-acre position in what he called “highly mineralized lands,” McEwen’s U.S. Gold is spending $10 million in exploration over 12 months. He anticipates an initial resource and heap leach test during the first quarter of 2010.

Though he told Mineweb his interest in silver has been stimulated more by individual mining properties rather than a newfound passion for silver, McEwen has also become active in Minera Andes, which he says owns 49% of the world’s ninth largest silver mine, San Jose in Argentina. By 2010, McEwen forecasts that San Jose will have 7.5 million ounces of silver and 95,000 ounces of gold. He also predicts the operating cash costs will go lower than the 29% drop to $4.99/oz achieved in the first quarter of this year,

He also believes that Minera Andes’ Los Azules project is “one of the largest undeveloped copper discoveries in the world. And in keeping with his philosophy as Minera’s Chairman and CEO, McEwen owns 33% of the company’s shares.

As the years roll by, McEwen’s legendary penchant for marketing to the max remains intact as he offered audience members trillion dollar notes as an impromptu raffle prize at the conclusion of his talk.

 

Richard Russell: Fed will do anything to keep gold down

By Richard Russell

Dow Theory Letters

http://ww2.dowtheoryletters.com/

Wednesday, September 9, 2009

As the great Bob Dylan song goes, “There’s a battle outside, and it’s raging, it will soon shake your windows and rattle your walls, for the times are a’changin’.”

The battle is obvious — it’s the primary forces of overproduction and deflation vs. the Fed’s obsession (“whatever it takes”) to fight deflation and to produce asset inflation.

The one signal for rising inflation that the world understands is rising gold. The central banks do not want to see the gold signal, which tells the world that inflation is in command.

What the Fed really wants is asset inflation in housing. Housing is collateral for almost everything in the nation, and the Fed and Treasury are frantic to get housing prices heading higher.

Yesterday most assets got the message. Oil was higher, the base metals were higher, the stock market was higher, but gold (pressured by forces we know not from where) failed to close at the highly significant number of $1,000 an ounce or better. Incredibly, after being as high as $1,009 during yesterday’s session, gold closed at $999.80 — just 20 cents below $1,000.

Coincidence? Mistake? Random chance?

Hardly. To me it was obvious that the Fed did not want to see the following headline in the newspapers: “Gold closes above $1,000.”

Whatever it takes, it seems, will be utilized to hold the only constitutional money down.

When a can is placed on a stove burner, the pressure builds up inside the can. At some point, we know not exactly when, the can will explode and the pressure will be released. That, I believe, is where gold is.

You can threaten gold with forthcoming central bank sales. You can sell gold in quantity. You can smother gold with short sales. But the primary trend of gold will win out. It will be expressed today, in a month, or in 2010. The trick for us is to hold onto our position — don’t trade it, don’t move in and out with it, don’t hold so much of it that you get the heebie jeebies every time it dips $10.

The primary trend of gold is up. We’re riding the bull. The bull will try to shake us off his back. We’ll hang on.

The word is that China wants to load up on gold while diversifying out of its huge position in dollar-denominated securities (T-bonds). China’s problem is how to accumulate gold secretly without driving the price up. This has led to what is now called “the China gold put.” Every time gold backs off, China is in there to scoop up what is offered.

On top of that, China is urging its over-1 billion population to buy gold and silver.

Finally, China is now the world’s biggest miner of gold. China, in its patient way, is preparing for the future. The future that China sees is a world without fiat currency or a world in which its own renminbi is the world’s reserve currency.

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Chrys N.B. … got Gold..?