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9:34p ET Saturday, April 10, 2004
Dear Friend of GATA and Gold:
The Financial Post's interview today with John Ing, chief
of Toronto investment house Maison Placements, appended
here, echoes what you've been hearing from GATA and its
consultants and friends, like GoldMoney's James Turk and
Sprott Asset Management's John Embry, for a long time now.
The nice thing is that these points are starting to reach
the mainstream news media -- at least in Canada. Tomorrow
the world?
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Is it back to the '70s for gold?
John Ing detects strong parallels now with rally to US$850
By William Hanley
Financial Post (National Post), Toronto
Saturday, April 10, 2004
http://www.canada.com/national/nationalpost/search/story.html?
id=2dc0c246-35b1-4110-9198-ec4ae6be4025
On this Tuesday in late March, John Ing normally would
be running his 10 kilometres at lunch from the Cambridge
Club, not sitting in the club looking out at the rain
lashing down on Toronto's City Hall square. For the
fitness-conscious Ing, chief executive of Bay Street
boutique brokerage Maison Placements Inc., running has
become almost as much a part of his routine as his
day-in day-out belief in the ultimate value of gold.
Almost.
Ing is the Street's best-known gold bug, one of a hardy
breed of people who are true believers in what John
Maynard Keynes called a "barbarous relic." After a
20-year bear market that saw bullion fall from US$850
an ounce to just over US$250 in 1999, the believers
are once again making believers of many investors as
the relic's price hovers near a eight-year high of US$420
and gold stocks are subject to waves of speculation.
And the price is not stopping here, Ing says from his
window seat in the Cambridge's airy and comfortable
dining room on the 11th floor of the Richmond Tower.
"My sense is the big move is coming for gold,
notwithstanding that we've had a move of US$100
since we last met 18 months ago," he says of our
most recent lunch, in November 2002. "I've been saying
consistently that US$510 is my target, but I think it
will be easily surpassed this year."
Ing believes that for gold, which has been called the
ultimate store of value but which has been a lousy
investment for almost a quarter century, it's back to the
1970s, when the price rocketed with inflation to US$850
an ounce from US$50. "Every cycle exceeds the
previous one," he says.
The Cambridge Club, which is built around squash and
fitness, will also be harking back to the '70s next month,
when it celebrates its 30th anniversary. It's our third visit
here as a guest and the hospitality is such that we feel
we belong. Today the Ing party of two is treated to a
special starter by chef Steve Morsi. His hand-made
butternut ravioli lightly sauteed in sage, butter, and oil
is special, indeed. Our host has the fish special,
blackened tilapia with mashed potatoes and steamed
broccoli. We head for the grilled halibut with saffron
beurre blanc, fennel, and green beans.
"Everything is good," Ing says. We can't argue. Even
the portions seem to be sized for people who have just
had demanding workouts and will be having more.
And everything looks good for gold too in Ing's admittedly
biased book. He's especially excited by the fact that gold
is not just going up against the U.S. dollar, which has
been the classic hedge play so far.
He leans over to make his point.
"Finally, gold is starting to move out and break out against
the euro. In yen, gold is about to break out. In other words,
gold is going to start to outperform all currencies."
This is great news unfolding for the believers. Until recently,
those who bought gold with euros or yen had seen little or
no real appreciation of their gold investments because the
dollar was falling and falling against their own currencies.
"The last time this happened was in the '70s against the
Swiss franc," Ing says. "That's when people started to look
at gold seriously."
The primary driver of gold will continue to be a "classic
debasement" of U.S. currency, which he says is merely a
symptom of a sick U.S. economy that is indebted to China
and Japan, which may not want to hold U.S.
dollar-denominated debt and the dollars themselves in such
quantities forever. "They are starting to look at
diversifying."
Some of that diversifying, Ing says, will be further into gold.
"One of the reasons I'm bullish is that China has less than
2 percent of its reserves in gold. I believe they've been
buying every ounce the Europeans have been selling. They
also liberalized the ownership of gold. The man in the street
can buy gold. It was a cultural thing to give gold as a gift.
Chinese have a huge savings rate and the stock market is
considered too speculative."
So China, increasingly at the centre of world financial and
economic events, could be good for gold.
China also has a connection to another of Ing's gold themes:
inflation. China's and the economies of other Asian countries
have been red-hot and instrumental in the increasing demand
for oil, the rising price of which could help touch off
inflation, just as it did in the 1970s.
"What the Street hasn't even considered is inflation. That's
when gold really makes its big move. Inflation is now dead in
most economists eyes. ... Growth in Asia could stoke inflation."
So the universe is unfolding as it should for Ing -- just as
the 1970s did. "If I'm right, we're just at the beginning of the
[gold] cycle. All we've done is just come out of a 20-year
bear market."
In this new bull market, the "terrific 10" stocks he's been
recommending to clients -- and which on average have risen
almost 250 percent since June 2001 -- should continue to
outperform. They are Bema Gold, Campbell Resources,
Crystallex International, Eldorado Gold, Claude Resources,
High River Gold, Miramar Mining Corp., Northgate
Exploration, Philex Gold, and St. Andrews Goldfields. Among
the bigger stocks, he continues to favour Newmont Mining,
Agnico Eagle, Goldcorp, Kinross Gold, and Teck Corp.
He personally doesn't own any gold stocks. He never has,
even though he's been following gold since he got into the
investment business in Montreal in 1969. Instead, he prefers
to own bullion and, to a lesser extent, gold certificates. He
has "lots of cash," he says, and T-bills. And he is quick to
note that his firm, Maison Placements, has broker warrants
from companies it helps finance.
Since last we had lunch, Ing has missed out on the stock
market's big rally. But he still doesn't like the market and
gold is a counter-play against stocks.
Gold, of course, has done well since November 2002. But
for the record, we must note that he was calling then for
bullion to hit US$510 by the end of 2003. That's his
near-term target again for this year and he can foresee
scenarios unfolding that could see the price going over
US$600 and heading toward that magic US$850 after the
presidential election is over and the harsh realities facing
the U.S. economy come into focus.
"You should be making your investing decisions on what's
going to happen after the election," he says as he pays
the bill, a quick peek of which shows that the Cambridge
is perhaps priced a little below comparable Bay Street
restaurants. "I can guarantee you interest rates are not
going down."
The Cambridge has a clubby feel even for guests. The
service, as you might expect, is more familiar but very
efficient. And the prices for various classes of
memberships will frighten few people away.
John Ing will probably pick a different venue when next we
meet. Something with a '70s theme might be appropriate.
And we can guarantee the message of the gold true
believer will not have changed.
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http://www.minersmanual.com/minernews.html
http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
http://www.investmentrarities.com
http://www.kuik.com/KH/KH.html
(Korelin Business Report -- audio)
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http://www.plata.com.mx/plata/plata/english.htm
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Eagle Ranch discussion site:
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Ted Butler silver commentary archive:
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----------------------------------------------------
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----------------------------------------------------
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