Business has never been tougher for the bullion banks

12:46p ET Saturday, November 16, 2002

Dear Friend of GATA and Gold:

Appended here are a couple of things that
seem insightful: first, an excerpt from the
great Richard Russell's recent commentary in
Dow Theory Letters, as quoted in GATA
Chairman Bill Murphy's own quot;Midasquot; commentary
at www.LeMetropoleCafe.com; and second, the
quot;Lunch Moneyquot; column from today's Financial
Post/National Post in Canada, which interviews
renowned gold fund manager John Ing of Maison
Placements Canada. If you can't get good
financial advice out of these two, at least
you'll have found a great place for lunch or
dinner in Toronto!

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

* * *

From Richard Russell in Dow Theory Letters:

With all this debt piling up, with all the
new credit being created, and with the
threat of increasing bankruptcies looming,
there will be an increased desire for
something intrinsic, something that isn't
created out of debt.

Yeah, I'm talking about gold.

And what do you know -- I've been having new
thoughts about the gold situation. The new
thoughts are that I don't think serious gold
buyers are at all eager to see gold surge
to new highs -- at least not at this time.
No, I think gold is under serious, quiet
ACCUMULATION, and the accumulators are
actually hoping that gold takes it slow.

One of these groups is the gold mines that are
still hedged and who are eager to get rid
of their hedges. The last thing these mines
want is a booming gold market at this time.

Another group is the quot;silent accumulators,quot;
those who see the writing on the wall and
who are quietly buying gold at what they
consider quot;dirt cheapquot; prices.

A third group is the gold banks that have a
huge short position in gold.

Still another group are the commercial
shorts. Part of these, of course, are the
gold banks.

If you examine the weekly gold chart that I
included on Page 6 of the recent Dow Theory
Letters, you will note that within the rising
channel there are six distinct declines in
gold. But this is important -- note that each
decline ended at a HIGHER LEVEL than the
preceding decline. This is a tell-tale sign
of accumulation.

The most recent decline in gold took December
gold down to a closing low of 311.20. This
close at 311.20 was just above the rising
200-day moving average of December gold.

From there gold rallied again. As I write the
50-day moving average of December gold stands
at 319.20. Dec. gold this morning sold at
319.70, slightly above its 50-day moving
average. The two immediate upside targets for
December gold are 325 and then 330. I don't
think gold buyers are eager to see those two
targets bettered today or tomorrow. No,
they'd rather accumulate gold at dirt-cheap
prices.

Newmont, I believe, will be the blue chip of
the gold share universe. This is the stock
that the funds will eventually buy. Newmont
is the world's largest producer of gold, and
the stock has outstanding management. NEM is
removing the hedge position that it inherited
when it bought its Australian company. NEM
took a sharp break on Nov. 12, but the stock
held well above its last decline low. I
believe NEM is a buy, and I bought another
500 more shares this morning for my own
account. Every subscriber should own some
shares in NEM.

The points I am making is that those who buy
gold here must be patient. This is the
accumulation phase of the gold bull market.
The funds have no gold shares. The public
doesn't even know how or where to buy gold
coins. Gold metal and gold shares are being
bought by knowledgeable investors who have a
vision of the future. That vision, I believe,
entails very hard times for paper money,
money that is created out of thin air by
central banks, money that is deemed quot;legal
tenderquot; by fiat.

* * *

John Ing Looks Forward
To Another Prosperous Year

By William Hanley
Financial Post / National Post, Canada
Saturday, November 16, 2002

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Cafe Tuscany is tucked away among the mostly
Chinese and Korean restaurants jostling for
attention on Baldwin Street in Toronto's
Kensington Market area. When we meet for
lunch with John Ing, president of broker
Maison Placements Canada Inc., we note this
Italian port in an Asian sea is akin to gold
as an investment -- something different in a
world dominated by paper assets.

Lunch with Ing, Bay Street's most ardent
admirer of gold, is getting to be a regular
event on the fall Lunch Money calendar. As
usual, and with a lustrous year for gold and
the gold stocks he recommended last fall
under his belt, he's ready as always to make
a cheery pitch for the barbarous relic, which
he concedes has mostly been a lousy
investment for more than 20 years but which
he now reckons is heading next for US$375 an
ounce from US$320.70 now, and then to US$510
some time in 2003.

But first, a little sustenance. Ing talks
about his quot;discoveryquot; of the small and
unassuming Cafe Tuscany, its excellent food
and quot;superbquot; wines as a gold bug might
describe stumbling upon a 10-kilo nugget in
the street. An oenophile, Ing pursues fine
wines at good prices with almost the passion
he has for gold.

Today, he lets proprietor and wine collector
David He, a Chinese Canadian whose father
does the cooking at Cafe Tuscany, select a
wine that will go well with the linguini
marinara we both order. A quot;fruityquot; Bordeaux,
the '95 La Cardonne cru bourgeois from Medoc,
will do very nicely. Something not quot;too big,quot;
he says. And he's right, though serving Lunch
Money a fine wine is somewhat akin to feeding
strawberries to a donkey.

Anyway, the food and drink settled on and
some chunky cheese-topped bruschetta to start
us on our way with the La Cardonne, we're
ready for the gold pitch.

quot;In a world where value is being questioned,
as in equities, gold has resurfaced as what
it has historically been -- a store of
value,quot; Ing declares. And the prospect of a
war in Iraq (we lunched before Saddam Hussein
gave the green light to UN weapons
inspectors) and its attendant risks can only
enhance what is a good basic case for owning
gold -- 10 percent of your portfolio for
insurance purposes in a risky world.

The twin U.S. deficits -- budget and trade --
make for a promising backdrop for gold, as
has the falling U.S. dollar, which has given
bullion a lift in the past year.

A year ago when we met and gold was still at
US$280 despite the Sept. 11 terrorist
attacks, Ing committed what was quot;almost
heresyquot; in the gold investing world by
telling Maison Placements' clients and
anybody else who would listen to buy all or
some of 10 junior gold stocks he was
recommending because they were quot;dirt cheap.quot;
As a group, they had gained more than 100
percent by June at the top of the golds
market and are still up 57 percent. By
contrast, the price of bullion has risen 17
percent, and the benchmark Philadelphia gold
index is up 25 percent. Meantime, the Dow
Jones industrial average has dropped 20
percent.

A couple of the junior names have changed,
but he's still recommending clients stick
with his quot;terrific 10.quot; They are:

-- Crystallex International Corp.

-- Eldorado Gold Corp.

-- Claude Resources Inc.

-- High River Gold Mines Ltd.

-- IAMGOLD Corp.

-- Miramar Mining Corp.

-- Repadre Capital Corp.

-- Northgate Exploration Ltd.

-- Philex Gold Inc.

-- St Andrew Goldfields Ltd.

Among the senior producers, he favours
Newmont Mining Corp. but continues to prefer
mid-caps Agnico-Eagle Mines Ltd., Meridian
Gold Inc., and Goldcorp Inc. He also likes
Kinross Gold Corp., formerly recommended as a
junior, but now making it on to a bigger
stage through its merger with Echo Bay Mines
and TVX Inc.

Another underlying story with gold, besides
the flight from paper assets into real
assets, Ing is saying as we set about the
spicy linguini marinara, is that demand
continues to outstrip supply, with the
investing demand more than offsetting the
drop in jewellery demand and central banks
refraining from selling their reserves.

The big companies have been paying lip-
service to exploring for new gold deposits,
he says, but they're not really looking for
gold. quot;Mostly they're doing development work.
You can't find these big deposits if you
don't explore. Producers need big projects to
grow. Otherwise, you're just going downhill
and you get penalized by the investors.quot;

A shortage of deposits with five million to
10 million ounces of gold make the move to
increased exploration and a continuing
consolidation of the industry both
inevitable. Which should be good for the
juniors and the mid-caps.

Another industry trend, the hedging of
forward production, is also out of favour
with investors. So the big hedgers like
Barrick Gold Corp. have been reversing their
hedge positions.

Ing maintains the stock market is still
overvalued, even though it's 20 percent lower
than it was a year ago when we last met for
lunch. quot;The conventional bullish view is that
the market is a good buy. The bear market has
lasted too long and that at 15 to 16 times
forward earnings is reasonable value. In the
Great Depression it was five to six times
earnings, and in the '70s it was 10 times.
The view now is based on the expectation of
strong growth. I don't see that.quot;

What he does see is that the price of gold
and the level of the Dow, which were even in
the gold bull market of 1980 around 850,
should be more in line. At the top of the
equity bull market in 2000, the Dow at 11,700
traded at roughly 45 times the price of gold.
If it were to trade at, say, 10 times, Ing
says, gold might be at US$500 and the Dow at
5000, from 8579 now. quot;I'm not saying the
Dow's going to 5000, but it's not
preposterous.quot;

The bottle of the splendid La Cardonne is
just about finished, making way for an
espresso.

We allow as how our guest must have done very
well indeed from the big gains in the 10
junior gold stocks. But Ing says he doesn't
own any of the stocks he recommends to his
institutional clients to avoid conflicts of
interest.

quot;I prefer to buy gold bullion physically,quot; he
says, rather than own the certificates.
Spoken like a true gold bug.

Now, a fine lunch at Cafe Tuscany over, John
Ing heads back to his office downtown on Bay
Street to work on his latest report for
clients, cheekily, but appropriately titled
quot;My Big Fat Gold Forecast.quot;