Replies to post #155352 on Zeev's Turnips Patch-No Politics (ZEEV)

[TJ Parker]

even on days like today when it was obvious that the intent was to drive the POG sharply down.

folks on prudent bear were saying that today's move was likely related to comex expiration. i tried to grab a bit of gg cheap, but nobody bit :-(

like you (i think), i've been accumulating short positions since 9/8. i'm happy to say that i'm finally short klic and holding :-) i wish i had a bit of brks too, but i'm rather diverse, and largely in big caps (intc, csco) with smaller positions in smaller stuff (kopn and swks have tanked nicely - high price, low short interest - ntap, pmcs, etc.)

so far, its feeling different than the previous corrections. particularly after that a.h. news on csco, where - as they were pushing the price up, the sellers kept pouring in ...

[basserdan]

*** Gold related post ***

G'morning ml,
Today marks the start of the fifth (and final) year of the Washington Agreement which allows the 15 CB's who signed the agreement to sell an aggregate total of approximtely 400 tons of Au on the open market. The five year agreement was for sales totaling up to 2000 tons.

As I suspected, it didn't take long for the 'announcements' to begin...... <gg>
==============================================================

Europe gold slips lower, absorbs Swiss sales plan

Friday September 26, 6:26 am ET

LONDON, Sept 26 (Reuters) - Gold was marginally lower in Europe on Friday morning with the market in consolidation mode after a sharp bout of profit-taking on Thursday that followed the market's vault over seven-year highs, dealers said.

Analysts said that bullion's overall uptrend -- sparked by speculative buying -- was still intact, with the market recovering quickly in Europe from a knee-jerk drop earlier on Friday when the Swiss National Bank detailed its gold sales plans. The Swiss National Bank said on Friday it will sell 284 tonnes of gold from excess reserves by the end of September 2004 and a further 130 tonnes in the year after that.

It said it had sold 886 tonnes of gold since May 2000 under a 1999 accord that limits disposals by major European central banks to a combined 2,000 tonnes by September 2004.

The market dropped almost $2.00 an ounce on the news before quickly recovering to trade around $384.00.

Spot gold (XAU=) was quoted at $384.00/384.75 an ounce by 1016 GMT, compared with New York's last trade of $384.20/384.90.

Rhona O'Connell, market analyst manager at the world Gold Council, said in a report that the SNB announcement was "an iteration of the bank's existing schedule for the disposal of 1,300 tonnes of gold over a five-year period and reflects no change in policy."

Bullion drove up to a high on Thursday of $393.30 -- a high not seen since mid-May 1996 -- as speculators piled into the metal, spurred by a surprise OPEC (News - Websites)decision on Wednesday to cut oil output and a weaker dollar that raised bullion's safe-haven appeal.

A weaker dollar makes dollar-denominated gold less expensive for investors using other currencies.

Analysts said the massive number of well-documented long positions on New York's COMEX futures market was weighing on investor sentiment, but the overall uptrend remained with a target of $400.00 an ounce still seen as achievable.

"I think the trend is still higher but I just worry that we've done a little bit too much too quickly. The reason why were up at $385.00-$390.00-plus is that funds have built a record
long position -- partly on the back of a weakening dollar and possibly a weakening stock market," said HSBC metals analyst Alan Williamson.

He said the market had also benefited from plans for exchange-traded gold-backed fund products, such as one proposed by the World Gold Council.

"My worry is that if either the dollar doesn't weaken as much as we're all expecting it to, or if there's further delays to these exchange traded fund products, there might be some short
term weakening in prices," he added.

http://biz.yahoo.com/rm/030926/markets_precious_europe_3.html

[basserdan]

*** Gold related post (GG) ***


Goldcorp to expand Red Lake to 700,000ozpa

Friday, September 26, 2003

CANADIAN gold miner Goldcorp is confident of further expanding its highly profitable Red Lake mine in Ontario.

Fresh drilling has increased the size of a deep, high-grade mineralised zone at the mine which is already producing 500,000 ounces of gold a year at US$80/oz.

Goldcorp chief executive Robert McEwan told Dow Jones Newswires after the Denver Gold Forum that the potential of the lower deposit at Red Lake could be as much as 3.8 million ounces.

He said the company was spending US$94 million on a second deep shaft at the mine. The 7200-foot shaft will help boost production to 700,000oz a year, lower cash costs and provide an alternative access point to the orebody.

The first full year of production from the new shaft if expected in 2007.

McEwan said Goldcorp wanted to expand production to 1 million ounces a year and was looking at potential acquisitions in North America, South America and Europe.

http://www.miningnews.net/storyview.asp?storyid=18867§ionsource=c18

[basserdan]

*** Stephen Roach (9-26-03) ***


Global: Protectionist Tilt

Stephen Roach (New York)

As expressed in Dubai, the G-7’s vision of market-determined exchange rates fit the script of global rebalancing like a glove. It promised the one shift in relative prices -- a weaker dollar -- that a lopsided, US-centric world so desperately needs. For a world beset by massive and unsustainable external imbalances, the G-7 recipe offered the best possible endgame -- a balanced global economy. It was the perfect ending to my bad dreams of the past four years.

I should have known better. A day in Washington has seriously dampened my newfound optimism. Cries of protectionism can be heard loud and clear in the hallowed halls of the US Congress. America’s jobless recovery has finally reached a breaking point. Republicans and Democrats, alike, are up in arms over the steady attrition of employment in this so-called economic recovery. Job-related distress is bad enough. But unrelenting layoffs, together with record and ever-widening US trade deficits, are a toxic combination in this highly charged political season. For Congress, the agenda is clear: It is now time for action against those deemed responsible for the distress of the American worker. China is the target.

That was the unmistakable message I took away from participating in congressionally mandated hearings held September 25 on Capitol Hill. The hearings were called by the US-China Economic and Security Review Commission, a permanent arm of the US Congress whose 12 members are selected by the majority and minority leadership of the House and the Senate. This group is charged with the weighty task of assessing the national security implications of the bilateral relationship between the United States and China. Under its charter, the commission is also given the mandate “… to provide recommendations, where appropriate, to Congress for legislative and administrative action.” And so I was summoned as a so-called expert witness for a hearing on “China’s Industrial, Investment and Exchange Rate Policies: Impact on the United States.” Little did I suspect the fireworks that awaited me.

The hearing started with a parade of senators and representatives who were unanimous in blaming China for all that ails the American worker. As of a few days ago, there were only two congressmen slated to appear. At least seven actually showed up, with both political parties and all geographic regions of the country well represented. The degree of venom was extraordinary. It left little doubt in my mind as to where this debate is headed. In the eyes of these politicians, China should be held accountable for the virtual destruction of America’s industrial base. Never mind the secular downtrend in US factory sector employment that has been evident for more than 45 years. It is China’s emergence that is now billed as the coup de grâce. The consensus of the members of Congress that appeared at this hearing was crystal clear: They are accusing China of relying on the combination of currency manipulation and unfair trading practices to rob American workers of their rightful livelihood.

But this US Congress is not all bluster. America’s legislators believe China must now be stopped at all costs. In keeping with this sentiment, protectionist legislation has recently been introduced in both chambers of the Congress that would slap huge tariffs on all Chinese imports into the US. The Senate version (S. 1586) sets that tariff at 27.5% -- midway between the 15% to 40% estimates the sponsors believe are reasonable approximations of the under-valuation of China’s currency. The House version (H.R. 3058) also imposes across-the-board-tariffs on Chinese imports, with the tariff rate to be determined by a computation of the “rate of manipulation” of the RMB. At the hearing, one of the House sponsors implied that the calculated tariff under that formula could easily exceed the 27.5% rate of the Senate bill. For what it’s worth, I argued in my own testimony that those estimates of RMB under-valuation are highly dubious for a Chinese economy that ran only an US$8.9 billion trade surplus in the first eight months of 2003, less than half the pace of a year ago. That observation, as did the rest of my case for the scapegoating of China, rang on deaf ears in this bipartisan onslaught of China-bashing (see my September 25 testimony, Getting China Right, available on our website).

Don’t get me wrong. I am not jumping to the conclusion that the enactment of these bills should be taken as a given. Hopefully, some semblance of reason will prevail in the end. But after this experience in Washington, I would now assign a lower probability to such hopes. An important shift of Congressional sentiment must be taken seriously. If I’m reading the mood of Congress correctly, America’s legislators are dead set on forcing China’s hand -- one way or another. One of the most seasoned members of the commission -- a 30-year veteran of the Hill -- came up to me after my session ended and said, “Your arguments are solid, but the political train has left the station. I can smell it -- something big is coming.” Other veterans present at this hearing came to similar conclusions and cited comparable reactions of shock at the inflammatory rhetoric. Even for the consummate Washington insiders, this hearing was over the top. Sadly, I guess that’s the bottom line: America’s jobless recovery has pushed a bipartisan coalition of US politicians to the brink. Unless there is a spontaneous resurgence of hiring -- and quickly -- US pressure on China seems set to intensify dramatically further in the months ahead.

The political economy of heightened trade frictions is hardly inconsequential for financial markets. Not only would such tendencies be disruptive to global trade and outsourcing but they would also represent a tax on consumers -- ironically, the same workers that politicians are so desperate to protect. All that spells a clear negative for world GDP growth. That’s always been the risk on the dark side of an unbalanced global economy. From the start, I have maintained that there were two avenues of resolution for a world beset with ever-widening external imbalances -- the economics of a US current-account adjustment driven largely by a weaker dollar, or the politics of trade frictions and protectionism. At Dubai, the G-7 took an important step in endorsing the economics of global rebalancing -- a step that made me more optimistic than I have been in some time. But what I witnessed in Washington was far worse than I had feared. I now find myself doubting the commitment of the US body politic to a non-binding and admittedly vague communiqué. Nor is the post-Dubai reaction on Capitol Hill an outlier. There has also been worrisome pushback from Japan and Europe.

In the end, jobs are the hot button for any politician. And the heat is now reaching a boiling point in the US Congress. Never before has a modern-day recovery in the US economy been accompanied by such carnage on the job front. The trade deficit is the icing on the cake. Protectionism is in the air, and China is the target. What a letdown.

http://www.morganstanley.com/GEFdata/digests/20030926-fri.html