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Jim Puplava''s ''Financial Sense Newshour'' interviews GATA trio on market rigging
8:08p PT Wednesday, November 2, 2005
Dear Friend of GATA and Gold:
Our friends Hans Kahn and Dan Tessler at Au Capital LP
in Jupiter, Florida, whose fund appreciated almost 16
percent in the third quarter of this year and is ahead
6.5 percent for the year through September, have given
permission for some excerpts from their excellent
October 24 newsletter to be shared with you. They
pretty much match GATA's view of the world.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
By Hans H. Kahn and Daniel Tessler
Au Capital Letter
October 24, 2005
The rise in gold bullion prices against all major currencies [in the
third quarter], including a generally strong and rising US dollar,
was most encouraging. Gold shares rose nicely but at less than
their usual multiple of bullion gain because the larger issues led
and because high-grading of production at lower prices and higher
energy and other costs restrained demand for shares relative to
physical demand for metal.
While oil prices led the financial news, most hard commodities rose
to long-term highs, which general commentary ascribed mostly to a
spreading fear of inflation. We welcome broader understanding that
any proper measure of inflation would show considerably higher rates
than subjectively manipulated official figures have shown, just as
honest counts would show unemployment substantially higher and
investment and job-growth substantially lower. However, we sense
that markets are slowly acknowledging more significant matters.
Enormously difficult and chronic conditions have resulted from years
of monetary, fiscal, and political management at a "Guiness Book of
Records" level of irresponsibility. And financial assets clearly
will be first-wave casualties if markets start enforcing the
obligations that officialdom has shirked.
The most significant fact in the economic world today is that
countless millions of workers have entered the cash economies of
their developing countries in the past twenty years or so and now
compete in world markets for the first time. Behind them are
hundreds of millions more. They imperil the advanced societies that
aren't primarily commodity suppliers -- not because they are cheap,
though that helps for a start, but because they are competent,
motivated, and increasingly well-trained, well-managed, and well-
equipped. Their threat is not that they make quality exports or save
and invest at home, though these things also help for a start. Their
threat is that their rising incomes will come to represent virtually
all the growth in world demand and that they likely will be able to
meet virtually all of their own demand internally.
Much like the United States after the Civil War, these developing
economies are on track toward self-sustaining, self-financing,
autonomous growth and considerable freedom to set their own terms of
trade.
Thus the fundamental forces at work in the world require the rich
kids to change themselves to sustain themselves. It's quite
possible, given insight, leadership, and effort, but it's harder
than and not so quick or fun as another trip to the mall. Among
other things, we'll need more to sell than a new issue of "Lethal
Weapon" or Fannie Mae.
Particulars vary among the United States, Germany, France, Britain,
Japan, and others, but our general condition is the same. Leaders
are in denial, though some know better. Populations are nave and
uninformed, though some suspect the truth. And governance, policy,
and lifestyles cheer yesterday without serious thought for
tomorrow.
In America real wages haven't grown meaningfully for a generation,
even against understated inflation rates. To maintain the standards
derived in our fading era of dominance, government, households, and
financiers increase debt at near-parabolic rates. Business generates
surpluses but no longer invests them enthusiastically in domestic
expansion. The nation as a whole saves approximately nothing.
This path could and we believe should have been blocked by
collapsing liquidity. Instead we spin and spend our way to radical
dislocation, courtesy of lower taxes, higher trade and budget
deficits, negative real interest rates, and other policies that
facilitate the least helpful behavior.
That, we think, is today's reality. Like cancer, it is no less
malignant for growing slowly, and no less perilous to ignore. Now
symptoms intrude everywhere.
In America, again, the management of Delphi, the largest auto
supplier, made general news when saying recently that only a 60
percent wage cut could preserve workers' historical pension rights
and values. (Yes, this is old economy, but 60 percent?)
If Alan Greenspan wants higher interest rates as he professes so
often, why are real rates still decidedly negative after two years
of resolute labor?
In a similar disparity, Greenspan recently advised John Q. Homeowner
to beware the same adjustable-rate mortgages that he plumped as
bargains a year ago.
On the political front, the World Wrestling Federation appears to be
the model for our self-congratulating, self-perpetuating, trans-
partisan Washington elite. See how huffily and puffily the solons
grapple, now a Demican victor, now a Republocrat, with never a
genuine threat to disrupt the show.
Imperial feasting abounds. Our current favorite example is the $220
million "bridge to nowhere" of Sen. Ted Stevens, R-Alaska, who
chairs the Senate Appropriations Committee. It will keep 50 of his
constituents off the ferry for a mere $4.5 million each; if they all
commute and pay us $5 a day, we'll have our money back in 3,600
years. Spock, verify those numbers! Bones, bring me an
aspirin!
What we call spin-and-spend, Greenspan less crudely called a "loss
of budget control" in recent private conversation with foreign
officials. Perhaps he wanted them to leak his remark and thus get
one clear, sober statement on record before the end of his term.
We expect, and he may fear, that he will be seen eventually to have
been our most profligate and intellectually corrupt central banker
ever.
A saddening augury for future policy came in today's nomination of
his successor, the professorial Ben Bernanke. Non-professors
nicknamed him "Helicopter Ben" when he stated publicly (and
seriously) that US dollar deflation is impossible given the Federal
Reserve's access to modern technologies -- specifically, printing
presses and helicopters. Stocks went up a lot on the news.
You can't make this stuff up.
Before the 2000 presidential election, Au Capital's Dan Tessler
predicted publicly that George W. Bush, if elected, would reap the
whirlwind and become the last Republican president for a generation,
the modern Herbert Hoover, so to speak. Dan knew nothing then of the
coming 9/11; Iraq; acceleration in the rise of commercial China and
India; probable imminence of peak oil production; and the
substitution of a colossal real estate bubble for a merely gigantic
equity bubble. Those are mere details in this context. Rather, our
overview was, and is, that America and the other rich kids are
fundamentally challenged by worthy competition, are as yet
fundamentally unresponsive, and are approaching the tipping point
when reality may start writing the headlines without spin and
without permission.
This was written in the dark while Hurricane Wilma beyond the window
demonstrated the raw mastery of nature over our elegant little
works. It makes you think. Modern finance is an oh-so-elegant
construct, adorned with all manner of fine derivatives and carry
trades and asset-backed securities, but on what monetary bedrock, on
what immutable value proposition does it really stand? How will it
do in a really big wind?
------------
Distributed courtesy of Au Capital LP, 304 Villa Drive, Jupiter,
Florida 33477, telephone 561-691-3825, e-mail
digitaldaniel@adelphia.net.
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RECOMMENDED INTERNET SITES
FOR DAILY MONITORING OF GOLD
AND PRECIOUS METALS
NEWS AND ANALYSIS
Free sites:
http://www.cbs.marketwatch.com
http://www.usagold.com/amk/usagoldmarketupdate.html
http://www.capitalupdates.com/
http://www.silver-investor.com
http://www.thebulliondesk.com/
http://www.goldismoney.info/index.html
http://www.minersmanual.com/minernews.html
http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
http://www.investmentrarities.com
http://www.kereport.com
(Korelin Business Report -- audio)
http://www.plata.com.mx/plata/home.htm
(In Spanish)
http://www.plata.com.mx/plata/plata/english.htm
(In English)
http://www.resourceinvestor.com
http://www.goldpennystocks.com/
Subscription sites:
http://www.lemetropolecafe.com/
http://www.interventionalanalysis.com
http://www.investmentindicators.com/
Eagle Ranch discussion site:
http://os2eagle.net/checksum.htm
Ted Butler silver commentary archive:
http://www.investmentrarities.com/
----------------------------------------------------
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WHO HAVE SUPPORTED GATA
AND BEEN RECOMMENDED
BY OUR MEMBERS
Blanchard & Co. Inc.
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Centennial Precious Metals
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1-800-869-5115
http://www.USAGOLD.com
Michael Kosares, Proprietor
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Don Stott, Proprietor
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Gold@gwe.net
El Dorado Discount Gold
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Harvey Gordin, President
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Gold & Silver Investments Ltd.
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info@gold.ie
Investment Rarities Inc.
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Greg Westgaard, Sales Manager
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Kitco
178 West Service Road
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Toll Free:1-877-775-4826
Fax: 518-298-3457
and
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Toll-free:1-800-363-7053
Fax: 514-875-6484
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Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
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Ed Lee, Proprietor
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leecoins@aol.com
Lone Star Silver Exchange
1702 S. Highway 121
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214-632-8869
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fax: 952-925-0143
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Contacts: David Schectman,
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Missouri Coin Co.
11742 Manchester Road
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info@mocoin.com
314-965-9797
1-800-280-9797
http://www.mocoin.com
Resource Consultants Inc.
6139 South Rural Road
Suite 103
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Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877
Metalguys@aol.com
http://www.buysilvernow.com
Swiss America Trading Corp.
15018 North Tatum Blvd.
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http://www.swissamerica.com
Dr. Fred I. Goldstein, Senior Broker
1-800-BUY-COIN
FiGoldstein@swissamerica.com
The Moneychanger
Box 178
Westpoint, Tennessee 38486
http://www.the-moneychanger.com
Franklin Sanders
1-888-218-9226, 931-766-6066
----------------------------------------------------
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