79 Common Sense Reasons For A Gold Standard: Prudent Investor

I adore Prudent (Toni Straka). 

I am posting on here his anthology of articles/videos/comic books !! on using the Gold Standard.  

Maybe someone stopping by will be motivated to read it all. 

I think with creditory economics being what they are today something needs to be done.  What I solutions I do not know, but here are 79 Common Sense Reasons For A Gold Standard

 The world enters the final stage of financial destruction thanks to a one-sided application of John Maynard Keynes' equation because politicians and central bankers did a terrific job in deficit spending since the USA defaulted on its gold obligations in 1971, but never followed Keynes advice to build reserves in surplus years. This is a direct result of a fiat money system that allows to create money at essentially no cost, to quote Fed chair Ben Bernanke from his infamous 2002 speech.
IMHO the heated discussion about a new gold standard will follow philosopher Arthur Schopenhauer's saying: "All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident."
Digging a little further I probably could come up with more than 79 facts debunking urban gold myths. I chose this number as gold has the atomic number 79.

1. Gold has been voluntarily accepted worldwide since 2,800 years.
2. All fiat currencies of the past 3 centuries have devalued to (near) zero within a human's life span.
3. All fiat money systems were abused by irresponsible politicians who ignited credit bubbles. All credit bubbles ended with a bust.
4. Under a gold standard. prices remained stable for more than a century in the USA.
5. Even former Fed Chairman Alan Greenspan got it in his early years. He wrote "in the absence of the gold standard, there is no way to protect savings from confiscation through inflation" in his famous essay from 1967 titled "Gold and Economic Freedom". Anecdote to the side: When Congressman Ron Paul got a copy signed by Greenspan, the parting Fed chair said in 2005 he still stands behind this essay.

Just press the link at the top for the rest ..

The Great Variety of Poor Rich People:Magambo Guru

By: Richard Daughty, The Mogambo Guru - The Daily Reckoning

-- Posted Thursday, 14 August 2008 | Source: GoldSeek.com

If you'd like a sample of the kind of "hedonic" qualifying idiocy running rampant in economics these days, The Economist magazine reviewed a paper by Christian Broda and John Romalis at the University of Chicago. These two guys say that the inequality between the rich and the poor is not as bad as it looks. This was such a surprising development that I and all my pals rooting around in the dumpsters behind the grocery store stopped to listen! We are not poor!

First off, we bums found out that we are not as bad off as we think we are because "around two-thirds of the increase in the standard inequality gauge is offset by the poor's lower inflation rate", which we get by consuming mostly non-durable imported items like food, clothing, and footwear that were falling in price!

The rich, who consume more services, comparatively suffer because they mostly consume domestic services, which are NOT imported, and so have prices that are going up with the inflation in the money supply!

I suddenly felt so bad for the rich that Lefty and I made a promise that the next time we come across an apple that isn't too mushy, we will give it to a rich guy as our way of helping them out!

And if that was not enough, these university egghead guys actually go on to say that the poor are actually thriving, as "the range of goods consumed by poor households increased by far more than for rich households. The benefit of this extra variety is not captured in income or inflation, but it can be quantified."

At this promise of quantification of the benefits of diversity of available imported goods as impacts inflation, I said, "Shut up you guys! This is going to be good!" As I stretched out on a pile of rotting cabbage in preparation for this exciting bit of news, I was actually all tingly at the thought of seeing how the inequality between the rich and the poor can be shown to be offset by sheer variety of goods in the marketplace!

It wasn't long in coming, and sure enough, before I could even get comfortable, the very next sentence was "If that gain is expressed as an addition to real income, the remaining increase in inequality vanishes."

Hahahaha! This is too much! The poor are as rich as the rich!

And lest you think that I am exaggerating the effects of inflation because that is just the kind of Hysterical Reactionary Loudmouth (HRL) I really am, this is one time I am not, as inflation in imported prices is still inflation in imported prices, and for those who are encouraged by the recent reports of seemingly positive GDP growth of 1.9%, Randall Forsyth in his Current Yield column in Barron's reminds us that GDP accounting means that "Soaring prices of imports, including petroleum, lowers the GDP deflator" because "imports count as a negative." Hahaha!
Inflation went down because imports went up in price!

In effect, he says, the government is applying "truly Orwellian logic: higher import prices mean lower inflation and therefore higher growth"! Hahaha!

This is so bizarre that even he can barely control his laughter, and says, "You can't make this stuff up."

Perhaps this is why I am so miserable these days, sitting here in the Mogambo Powerful Bunker Of Doom (MPBOD), uselessly looking at my desk covered in charts, reams of erstwhile useful analysis and miscellaneous "past due" notices from various creditors, knowing that it is all crap.

Even Chris Powell, of the Gold Anti-Trust Action Committee, agrees with me and says, in a pithy phrase that should congeal your blood at the tragic implications,

"There are no markets anymore only interventions."

Ed Steer of Casey Research tells me that we are not alone, and presents a commentary by Peter Degraaf and posted at Bill Murphy's lemetropolecafe.com, who "doesn't mind admitting that (technical analysis) is pretty useless in the face of this kind of intervention."

What kind of intervention? How about foreign central banks suddenly plowing a staggering $28 billion into buying U.S. debt last week, and stuffing the enormous haul of government and agency debt into their accounts at the Fed itself, taking their total ownership of government and agency debt to $2.4 trillion! At a lousy 5% interest, this is $120 billion in cash that we are shipping out of the country per year to these guys, just in interest payments!

And why are these foreigners doing this? James Turk at goldmoney.com explains "When central banks intervene in the currency markets, they exchange their currency for dollars. Central banks then use the dollars they acquire to buy US government debt instruments so that they can earn interest on their money. The debt instruments central banks acquire are held in custody for them at the Federal Reserve, which reports this amount weekly."

This would, then, explain why the dollar shot up last week, out of nowhere, for no reason that I can think of other than that all the alternative currencies suck even worse! Hahaha! What a world!

Aside from the stock and bond markets, Mr. Degraaf says that even "Gold closed just above the $850 support line during a washout caused by the performance of a US dollar that defies belief. Without any improvement in fundamentals, the dollar rose 132 points today. The largest gain in
years! Despite a banking crisis, low interest rates, huge deficits, money supply running in double digits, housing sector in shambles, the US dollar has now risen 8 out of the last 9 days. Someone please convince me that this is not rigged. Meanwhile at $855.00 the gold price is back at $323.00 expressed in 1980 dollars!"

And it is not just gold acting weird and grossly under-priced, but silver, too, as Mr. Steer notes that

"Ted Butler also mentioned yesterday that silverby any measurementis the most oversold it's ever been in its history."

In history!

My mind screams, "It's the time to buy!" And I would, too, but I went to the kids' piggy banks this morning and there is nothing in them except useless scraps of paper that say "IOU $5. Love, Dad."

They are not going to be happy when I explain to them that we are both victims, as I have no money either, just like them, and similarly because the Social Security Trust Fund is holding my "money" in the form of IOUs, whereas at least I said "love" at the end, which is a hell of a
lot more than the spendthrift, bankrupting government ever did for me! The bastards!

P.S. To get The Daily Reckoning sent directly to your inbox, sign up for our free email newsletter, or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.

Editor's Note: Richard Daughty is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter - an avocational exercise to heap disrespect on those who desperately deserve it.

The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning and other fine publications.

Visit The Daily Reckoning's website.

BOB CHAPMAN: great essay on FASCISM

we should listen to Goethe, Hugo Chavez betting on the wrong commodities, communism and corporate fascism, disinformation about democracy, resources in Montana and other states

"Everything in the world may be endured, except continual prosperity." -- Johann Wolfgang von Goethe

Yes, our German philosopher was humorously correct. Any time people are prospering like we were just before August 15, 1971, the day that will live in infamy when Nixon took us completely off the gold standard, the sheople will find a way not to prosper anymore. And happily helping them on their way to destruction have been the Illuminati, who wanted to have a monopoly on prosperity. Unfortunately, there is very little that is humorous about our myriad of ongoing economic, social and political debacles, save that the Illuminati and their henchmen, who apparently thought that they in fact could endure continual prosperity, have, in their lust for money and power, managed to destroy themselves and, in the end, will themselves succumb to Herr Goethe's statement.

Somehow, through the machinations of the elitist would-be lords of the universe, and through our own flaccid efforts to stop them, which amounted to little more than total inaction, we have all managed to screw up a free lunch - royally - and have once again failed to endure continual prosperity. And may we add that those who own gold and silver will come far closer to enduring continual prosperity than those who do not, so load up and get on the prosperity train, which will soon be leaving the station as a hurricane of problems blows our supertanker economy toward the unforgiving rocks of hyperinflation, recession and depression! Be sure to add a heaping helping of weapons, ammunition and freeze-dried food, and by all means get as far out of debt as you possibly can before our supertanker economy does a reenactment of the Titanic!

Finish this great essay here ..

The US Navy has shown an interest in this Glen Davis story .. Hmmmm.

Some VERY interesting names appear in this article from Vancouver's The Republic.

Can anyone spell

F-r-a-n-k G-i-u-s-t-r-a W-i-l-l-i-a-m C-l-i-n-t-o-n G-e-o-r-g-e HW B-u-s-h

Again I ask when do we get REAL North American coverage of deep investigative stories.

How much does Patrick Fitzgerald REALLY know?

All this is NOT Unrelated to the BAE scandal either, that I know.

HMMm mmmm ..

The late Glen Davis was no ordinary philanthropist

The murdered environmentalist inherited his wealth through connections that run from Conrad Black to Prince Philip

by Kevin Potvin

Glen W Davis, the reclusive environmental philanthropist found mysteriously shot to death in a Toronto parking garage May 18, was no ordinary businessman.

His wealth was inherited from his father, Nelson M Davis, who died of a heart attack in 1979 at the age of 72, when he was one of the richest men in Canada, and every bit the recluse his son turned out to be.

Nelson Davis was chair and president of NM Davis Corporation, his own secretive energy and mining investment company. More interestingly, Nelson Davis was also chair of Argus Corporation.

The Conrad connection

Argus was also originally a Canadian mining company founded in 1945 before it fell into the hands of one Conrad Black, who purchased a controlling interest in the company from the widow of the late Bud MacDonald, president of Argus till he died, in 1978. Black parlayed his gain into a purchase of Hollinger Mines, founded in 1909 and at one time the largest gold mining company in the Western Hemisphere. Black placed Hollinger under the control of his Nelson Davis-run Argus Corp, and placed Argus under his wholly owned parent company, Ravelston (named, bizarrely enough, after a minor character in a 1936 George Orwell novel who publishes a radical left-wing newspaper called The Antichrist in the basement of a derelict building).

Glen Davis’ father is not only described as Conrad Black’s early mentor, but he also sat at the nexus between the 34-year-old Black’s growing web of private companies and the public companies he was rapidly becoming invested in. Nelson Davis was not only Black’s senior by 42 years, he was by far the wealthier of the two men.

With Nelson Davis in charge of Hollinger through his chairman-ship of Argus, Black enticed to the board of Hollinger such right-wing luminaries as Henry Kissinger and Richard Perle. Perle also was hired by Black as president of Hollinger Digital, a subsidiary of Hollinger Inc. Black has been closely associated with many other men besides these who were also intimately involved in the criminal presidency of Richard Nixon, about whom Black has recently released a sympathetic biography. He also rose to a seat on the steering committee of the notorious Bilderberg Group.

Dad’s business

Glen Davis picked up where his father left off in 1979, after he died of a poolside heart attack in Arizona. He maintained much the same business interests as his father, as well as the connections. In the early 1980s, he struck up a relationship with Monte Hummel, then the president of World Wildlife Fund Canada, and now honoured as president-emeritus. Glen Davis went on to donate millions of dollars to plenty of causes in the years since, but none so much as what he donated to Hummel’s WWF.

The head office of the worldwide Prince Philip-launched WWF organization is strategically located in the secret banking enclave of Switzerland. WWF reported revenues in 2005 of US$121 million. Sitting on the current board of the Canadian branch of WWF are R B Matthews, president of Manitou Investments, which is deeply invested in mining concerns; Patricia Koval, a partner in powerful global law firm Torys LLP (alongside former Ontario Conservative Premier William Davis, no known relation to Glen); Bryce Hunter, chair of Huntro Investments, also involved in mining; and other top executives from AGF Management, Catalyst Paper Corp, J P Morgan, Morgan Stanley Canada, and Deloitte & Touche, as well as top executives from other leading banking and resource extraction companies. In a 2000 speech to members of the Davis Family Trust, Hummel offered that his first love, in the field of conservation, is the Canadian Barrens—the vast area between Hudson’s Bay and the MacKenzie River rich in minerals, including gold—containing perhaps the largest reserves of gold in the world according to analysts, though much of it remains inaccessible for now.

After meeting Hummel, Glen Davis, recent inheritor of what has been described as one of the largest personal fortunes in Canada (built up by his father through close association with Conrad Black, Henry Kissinger, and Richard Perle, through companies originally involved in resource extraction), also acquired a love for conservation and in particular for the Barrens area of Canada—the rich, largely untapped sea of resources first introduced to him by Hummel. He thereafter became a significant donor to Hummel’s WWF Canada fund, on whose board of directors sit the top executives of some of Canada’s—and the world’s—biggest resource extraction and banking companies, and began taking trips alone into the Barrens and becoming something of a world expert, with Hummel, on the region.

A secretive man

Davis was shot in the basement garage of the building housing WWF Canada, immediately after a meeting in WWF offices. The man who called Davis’ father his mentor, Conrad Black, is currently on trial in Chicago on embezzlement charges arising from the intricate financial relationship between Hollinger, Argus, and Ravelston that Black set up with Glen Davis’ father as his guide and mentor 30 years ago.

Police say they have no leads in the murder of Glen Davis, and no motive. He has been honoured by leading environmental organiza-tions for his largesse, but was said to be a very secretive man.

IMF Sells 440.3 Tons Of Gold

Published on Tuesday, April 08, 2008.

Source: All Headline News

Washington (AHN) - The executive board of the International Monetary Fund has approved the sale of some 440.3 tons of its gold supplies in a wide-ranging financial overhaul and to replenish its depleting coffers.

Dominique Strauss-Kahn, IMF managing director, welcomed the board's move on Monday, the action seen as a buffer to the expected $400 million budget deficit the Washington-based lending institution could experience in the next few years.

The board is projecting to generate at least $11 billion from the sale of at least 12 percent of its gold reserve. The money to be generated from the sales would fund the reorganization of the IMF and finance lending to needing countries.

Strauss-Kahn said it will also shore up diverse investments to generate income.
However, the IMF still needs congressional approval and legislative action of the 184 member-nations of the IMF.

The IMF is facing the challenge of cutting costs and trimming its bureaucracy, after a downturn in lending as some countries refuse to borrow money due to IMF's strict conditions.
The lending firm has a projected budget deficit of at least $140 million for the fiscal year 2008 which will end on April 30.

However, the IMF said the sale of the gold will be carried out in several transactions over several years so as not to affect the international gold market.

Global price of gold reached an all-time high of over $1,000 an ounce.

If We Had Memories, We'd Remember The 30s

As thousands of poor souls are trying to get their retirement money back after the collapse of asset-backed commercial paper (ABCP) notes, I have mixed feeling for them.

On the one hand, these are regular, hard-working, trusting individuals who thought they were investing conservatively in what amounted to a sure thing. These people have been directed by financial advisers, banks, money managers, etc, to invest in these "low-risk" investments after watching ads showing their friendly, non-threateningly pudgy banker as someone who can "join the family," or "earn your trust."

On the other hand, I am tempted to say that they got what they deserved. As callous as that sounds, it is true: the information has been out there for all to find that there is no such thing as a low-risk investment and that this - or any other disappearance of investment capital can happen at any time with warning. More to the point: that it is part of a deliberate scheme that has repeated throughout history.

Now, to be fair, if only truthful history and finance were taught in school, or if these subjects were covered regularly and truthfully in our news media, I'm sure that almost none of these people would have invested in the first place. Who would invest their hard-earned in a system that is set up to steal it?

Historically, in the good times the stock market is a place of complicated and exclusive dealings of the super-elite.

Then, suddenly, one sees a massive increase in the baiting of average Joes to get into the stock market. Take the massive increase in financial services advertising in the last ten years - or, especially, in hugely misleading and baiting day-trader advertising - services such as E-Trade have exploded out of the gates, getting their services up and running almost as soon as the servers for the commercial Internet were built, then dropping ads that male you feel as if using E-trade will make you rich overnight (when, in fact, just like any form of gambling, the vast majority of investors lose money to the house in the lung run).

This type of baiting has only meant one thing in history: CRASH. The common people are used to float the boat as high as it will go, then they are liquidated when it sinks. The attempted bail outs of the 30s, 80s, and 90s (and soon the 2000s) accomplish nothing - the market still ends up bottoming out - except protecting the paycheques and payouts to the boards of the corporate perpetrators of these scams. The Bear-Stearns and S&Ls of the world are bailed out - while Average Joe is screwed. People's entire portfolios (and even cash bank accounts) are liquidated.

Perhaps now people will wake up, learn about how these banksters are scamming them, remove all their money from the fiat banking system, and buy silver and other precious metals. Because, when it hits the fan, you'll still be able to buy clothes and food with silver. Don't believe us? Just try buying anything with your ABCP investment now!

Posted by Enjneer at 9:33 AM

FOMC, Inflation, US economy: Prudent Investor

Fuelling Inflation, FOMC Drops Fed Funds By 75 Basis Points

It appears the Federal Reserve will hold on to its ill-gotten strategy of sacrificing the value Federal Reserve Notes in order to avoid a recession. At least there were two votes against today's rate cut by the Federal Open Market Committee which slashed the Fed Funds rate 75 basis points to 2.25%, bringing it back to a level last seen from December 2004 to February 2005. This was also the last time that a Fed move stabilized FRN's temporarily for several months as inflation was much less a concern then.

Taking it from the FOMC statement the Fed is willing to risk it all as long as it keeps economic growth rates above zero.

Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened. Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters.

I highly doubt that more easy credit will solve anything as it is the root of the current problems. All those easy trillions printed by the Fed are nothing else than more layers of paper where frail counterparties promise to pay later.

Never mind the latest correction in commodity prices as neither your gas bill nor your grocery receipts will shower permanently lower figures - ever again. It evades my logical thinking as to how the Fed thinks all that easy money it will continue to flood markets with will not immediately sap through into commodities prices as we have seen it happening in the last 3 years.

Even the FOMC's own inflation expectations make all alarm bells ring.

Inflation has been elevated, and some indicators of inflation expectations have risen. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook has increased. It will be necessary to continue to monitor inflation developments carefully.

I translate this Fedspeak into, "prices will rise further but hopefully the slow US economy will dampen resource demand for a while." So what? More than 6 billion people elsewhere will be happy to gobble up resources as they have been doing for a while now. People will not eat less - unless food prices do really skyrocket - and lacking other transport will not consume less fuel.
Altogether there is no reason to change my strategy.

Banks go bust, central banks lend whatever markets wish for and there is absolutely no chance for a balanced budget in the US. Weaker FRN's may offer a glimmer of hope as it will make US exports cheaper, possibly creating mild economic growth.

As all structural problems only appear to get worse with every day - try to find a paper that does not write on emergency measures in the financial sector on a daily basis - gold below $1,000 looks like the steal of the day to me. Using the markets' irrationality in the face of more inflation to come and buying gold at the current level of $985 at the time of writing this may present a golden opportunity.

I'll eat my hat if gold does not trade above $1,100 before the end of the spring upmove.

Mogambo Guru speaks as the darkness descends

BORROWING TO GET A BETTER BARGAIN
by The Mogambo Guru

A reader of Agora Financial’s 5-Minute Forecast wrote, “You spend a lot of time talking about the loss of purchasing power of the dollar – and rightly so. Therefore, I fail to see the problem with anyone spending dollars as quickly as possible and incurring debt. That dollar spent today will be worth less, if not worthless, tomorrow, and the dollar repaid will be of lower value than the dollar borrowed. Can’t have the argument both ways.”

I was hoping that someone would ask me to field that question, as I was really chomping at the bit at the sight of a potential target for a test-drive of Random Mogambo Attack Mode (RMAM), where I take strange, unnatural delight in punishing stupidity by being rude, sarcastic, insulting, arrogant, argumentative and truly hateful, as is implied by the words “Attack Mode”.

And my reply would have been a real bargain, too, as it was a “two-fer”; not only would I have rebutted the argument, but I would have also been entertaining in a horrifying, embarrassing way, for no extra charge! Free!

For those who wish to hear my entire reply, I have handily expurgated the screaming obscenities, malicious lies, various libels, incoherent words and phrases, personal attacks and random death threats, and now the entire 50-page essay is boiled down to just the paragraph, “If you can guarantee that you will have an income that will rise faster than inflation, interest and taxes for the rest of your future life as your debt rises for the rest of your future life, then you are right; borrow as much as you want and party down, dude! You will, indeed, be paying back with cheaper dollars, handing yourself a bargain in the process, which is no problem for you because you are so smart and important that your employer will no doubt be happy – happy! – to pay you more and more wages and benefits at a rate that is actually higher than inflation in prices and taxes, for all the rest of your life! Lucky you!

“But if you are like the rest of us miserable creeps out here who are living hand-to-mouth and are one lousy ‘written reprimand in our employee file’ away from being fired and probably sued for sexual harassment or that whole embezzling thing, then no; borrowing for the sake of getting more of a bargain on some consumer item is really, really, really stupid.”

And I say this because a study by the University of Central Florida found that, as reported by the St. Petersburg Times,

“56 percent of low-income respondents said they could not pay their bills if they missed one month’s pay”

, which is not very remarkable since these are low-income people. But the startling part is that

“38 percent of middle-income respondents” also said that they could not pay their bills if they missed one month’s income, and that “24 percent of upper-income respondents made that same claim”!

And what percent of each class felt like they were so far in debt that “they will never be able to get out”? Oops! Low income: 25 percent. Middle income: 14 percent. Upper income: 10 percent!

And they are not going to get any help from their houses going up in value, as Martin Weiss of moneyandmarkets.com reports that, “The S&P/Schiller Home Price Index plunged 9.1% in December. Worse, the median price of new homes sold has tanked 15.1% from January of last year, the biggest drop in any month since at least 1964, when they first began tracking this measure.”

And so it is obvious that the reason nobody has any money is because they have no more money or credit after paying higher prices for everything else, as you can surmise from Ambrose Evans-Pritchard at Telegraph.uk.co, who reports that

“40pc of the world economy has an inflation problem”, which he proves by reporting inflation of consumer prices in China (7%), Vietnam (15%), Russia (12%), Bulgaria (12%) Romania (8%) Estonia (11%), The Emirates (12%), Qatar (14%), and India (5%).

And where did all of this inflation in prices come from that is making people hungry and angry? Mr. Evans-Pritchard is right on the money when he says, “I totally agree with those who blame the debt crisis on the irresponsible policies of the Fed and fellow central banks from 2003 to 2006, and indeed for [the] better part of fifteen years. They stoked this bubble by artificially holding rates too low (by government fiat). The money leaked into asset prices, just as it [did] in the US in [the] 1920s, and in Japan in the 1980s. (Two other low inflation eras).

“In effect”, he says, “central banks rigged the price of credit. In doing so they caused massive ‘inter-temporal misallocations’, to use the posh term of the BIS.

Or put another way, they stole prosperity from the future.”

You can imagine the powerful cinematic effect when he added, with just the perfect touch of ominous undertones, and augmented by my adding a soundtrack of people screaming while being torn apart by ravenous wolves,

“The future has now arrived.”

Ugh.

Until next week,

The Mogambo Guru
for The Daily Reckoning

The Mogambo Sez: “There is a darkness descending upon us.” Well, that was my first thought, and with which I was pleased in a strange, pretentious little literati way, but upon reflection, now I change that to, “The thread holding the sword of Damocles suspended above our economic heads is unraveling”, which suits the situation perfectly, but unfortunately doesn’t lead me to a clever segue to how you should buy gold and silver bullion, and oil stocks to save your financial butt, but which is, once you think about it, so obvious I don’t even have to mention it to someone as smart as you!

Copper slips in nervous market

HUMEYRA PAMUK

Reuters

March 14, 2008 at 4:07 PM EDT

LONDON — Concerns about economic growth in the United States and global financial markets erased copper's earlier gains on Friday after it traded up 2 per cent at one point on a weak U.S. dollar and falling inventories.

In other metals, supply problems and fund buying pushed London Metal Exchange tin to a record high of $20,900 (U.S.) per tonne.

Copper for three-months delivery hit an intraday high of $8,545, up 2 per cent, before closing at $8,375 per tonne. It closed at $8,380 on Thursday.

“It is a bit of profit-taking and some nerves are coming into the market,” analyst Leon Westgate at Standard Bank said.

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Investors were nervous as the dollar fell to a fresh 121/2-year low against the yen and a record low against the euro after Bear Stearns said its liquidity position had deteriorated, increasing fear of a deep U.S. recession.

The dive in the dollar pushed spot gold above $1,000 per ounce for the first time.

“This whole fear of the credit crisis being far from over seems to escalate on a daily basis,” analyst Daniel Hynes at Merrill Lynch said.

The fear of a U.S. recession hit European shares and the FTSEurofirst 300 index fell 1.06 per cent to 1255.02 points. U.S. stocks fell sharply with the Dow Jones industrial average down 1.93 per cent to 11911.52 points by 1717 GMT.

“It is a concern that one of the largest U.S. banks has problems ... but in metals it seems to be more of a selloff in nervous market conditions,” Standard Bank's Mr. Westgate said.

He said metals had held steady with some investors turning away from equities and putting their money into commodities.

“Commodities have done pretty well,” Mr. Westgate said.

A weak dollar makes industrial metals cheaper for local currency holders and boosts the appeal of commodities.

“Falling stocks and a weak dollar are the two main driving factors behind copper,” analyst Robin Bhar at UBS said. “Plus continued investor inflow to the commodities area generally.”

Copper is up some 27 per cent since the start of the year and powered to a record high of $8,820 per tonne last week.

Copper stocks in LME-registered warehouses stand around 128,000 tonnes, having fallen by 36 per cent since early January and only enough for less than three days' of global consumption.

But traders say the outlook is uncertain.

“News such as yesterday's weak retail data prompts people to say the U.S. is not doing well and copper, considering its big usage in construction, is going to suffer,” a floor trader said.

U.S. retail sales fell unexpectedly last month, deepening worries about the health of the U.S. economy, while U.S. Consumer Price Index data was flat last month after rising 0.4 per cent in January.

Three-months tin was last at $20,600 versus Thursday's last quote of $19,950/19,955.

Supply problems in Indonesia, China and the Democratic Republic of Congo highlight supply tightness, a Barclays Capital report said.

“We continue to view tin prices positively ... and anticipate further near term price appreciation and have increased our one month price target to $22,000/t,” it said.

Aluminum shed $30 to $3,085 a tonne.

Prices will rise this year and next because of power shortages in South Africa, and to a lesser extent China, a Reuters survey showed.

The price of cash aluminum would average $2,798 per tonne this year, rising to $2,930 in 2009.

Zinc was down $30 at $2,600 a tonne, lead fell $40 at $3,060, while nickel was at $32,550 versus Thursday's $32,150.

Things to watch: Rio Tinto, Barrick Gold

Rio Tinto sells gold mining interest

February 22, 2008 - 1:31PM
Source: ABC

Rio Tinto has sold its stake in its Cortez gold mine to its joint venture partner Barrick Gold.

Barrick, the world's largest gold producer, will buy the 40 per cent share in the Nevada mine for $1.85 billion.

The sale is part of Rio's plan to divest the company of about $16.35 billion of assets.

Rio says it will retain a contingent royalty interest in the future output of the mine.

Rio says it will benefit from a deferred bonus payment if a significant discover of resources is made at the mine.

http://bigpond.com/news/business/content/20080222/2169982.asp

Gold giant announces $26m loss

February 22, 2008 - 11:49AM
Source: ABC

Lihir Gold has suffered a full-year loss after restructuring its finances to take advantage of record high bullion prices.

The Australian-listed Papua New Guinea gold miner has reported a loss of about $26 million, reflecting the company's decision to exit its hedging program and to repay a big gold loan early.

But before tax and restructuring costs, record production and higher prices have resulted in a 25 per cent increase in operating profit to $213 million.

http://bigpond.com/news/business/content/20080222/2169801.asp

Post Christmas "market" news

I plan to update this as the day wears on.

Today's economic news being of course of high interest since sooner or later the truth must be told as to the MESS the global financial market is in.

Not looking for doom and gloom, folks, but just REALISM as the system falls to shreds and a ghost of its previous self.

Veeger

Gold rises for third day to near $830 on weaker dollar

SAN FRANCISCO (MarketWatch) -- Gold futures rose for a third day to end near $830 an ounce as the dollar fell to its lowest level in nearly two weeks against a basket of other major currencies, increasing the appeal of gold as a safe-haven investment. Gold futures for February delivery closed up $13, or 1.6%, at $829.5 an ounce on the New York Mercantile Exchange. It rose to an intraday high of $830.2 earlier in electronic trading, the highest in a month. The dollar index, which tracks the value of the greenback against a basket of other major currencies, fell for a third day, down 0.6% to 77.14, the lowest level since Dec. 17.

ENERGY STOCKS

Oil stocks hold gains as crude revisits $96

By Jim Jelter, MarketWatch

Last update: 4:18 p.m. EST Dec. 26, 2007

SAN FRANCISCO (MarketWatch) -- Oil stocks held modest gains Wednesday, drawing strength from crude oil's return to the $96-a-barrel mark in otherwise sluggish post-holiday trade.

At the close, the Amex Oil Index (XOI:

amex oil index

News, chart, profile, more

Last: 1,576.85+16.48+1.06%
5:10pm 12/26/2007
Delayed quote data

Helping fuel the upward move by big oil producers was a jump in February crude-oil futures back above $96 a barrel on the New York Mercantile Exchange, a level not seen for a month. The contract backed down slightly late in the day to finish at $95.97, up $1.84.

Buyers moved in on the market on reports that Turkey carried out another round of military strikes against Kurdish rebels camped in northern Iraq, a situation that raises concerns about further destabilization in the oil-rich region.

Crude prices were also supported by industry forecasts of a sixth consecutive week of declining U.S. inventories. The Energy Information Administration will release its weekly supply data on Thursday, a day later than usual, due to the Christmas holiday. See Futures Movers.

ConocoPhillips was the top percentage gainer in the group, up 2% to $88.97 a share, with Hess Corp. (HES:

hess corp com

News, chart, profile, more

Last: 104.40+2.02+1.97%
4:01pm 12/26/2007

Jim Jelter is Industrials Editor for MarketWatch in San Francisco.

RETAIL STOCKS

Holiday sales worries weigh on retail sector

By Andria Cheng, MarketWatch

Last update: 3:57 p.m. EST Dec. 26, 2007

Print E-mail RSS Disable Live Quotes

NEW YORK (MarketWatch) - Retail shares declined in the first day of trading after Christmas, with decliners including Target Corp., which had warned December sales could fail to match their year-ago level.

Retail sales from Black Friday through Dec. 24 rose 3.6%, at the lower end of its forecast range, according to a MasterCard Advisors' SpendingPulse report Wednesday. See full story.

Andria Cheng is a MarketWatch reporter based in New York.

MARKETWATCH FIRST TAKE

Weak holiday could mean consumer has wised up

Commentary: Shoppers play hardball with retailers as economy weighs

By MarketWatch

Last update: 2:54 p.m. EST Dec. 26, 2007

Print E-mail RSS Disable Live Quotes

NEW YORK (MarketWatch) -- Shoppers streamed through the doors of Macy's (M:

Macy's, Inc.

Some might consider the retail hustle and bustle to be a good sign, giving merchants a chance to recover from what's shaping up as a dismal holiday shopping season. But if consumers are smart, they'll keep close watch on their wallets.

Americans are wading through the quagmire of a housing crisis, credit crunch, soaring energy costs, a weak dollar, shaky job market and recession fears. What's more, last week, the Commerce Department reported the November saving rate for the U.S. consumer had gone negative. See full story.

The economy may be depending on consumer spending to propel it out of this mess, but the last thing we need to be doing is running up credit-card bills buying junk we don't need. A weak holiday season might mean that consumers are avoiding any tendency to dig themselves in deeper.

Shoppers were more cautious this year, and that reluctance forced retailers to slash prices ahead of the holidays, and more discounting is expected over the next several days. An early peek at the shopping results so far shows they've been lackluster, at best. Discounter Target Corp.

Sponsored by:

TGT 51.16, -1.28, -2.4%) cautioned that its December same-store sales might decline, and MasterCard Advisors said holiday sales through Christmas were at the low end of its expectations.

So retailers are going to try anything they can to salvage the season, and enticing gift-card recipients to put them to quick use could be the key. Revenue from gift cards isn't booked until a card is redeemed, which is one reason that after-Christmas shopping has taken on new importance just as gift cards have exploded in popularity.

Maybe after years of playing the economy's sacrificial-lamb role, consumers have taken some of the gloomy warnings to heart, and, instead of behaving like spoiled children in need of instant gratification, we're avoiding the urge to overspend this year.

-- Angela Moore, U.S. commentary editor

Gift Cards Cover Fuel, Living Costs, Help Consumers (Update2)

By Heather Burke

Dec. 26 (Bloomberg) -- Gift cards aren't just last-resort purchases by baffled holiday shoppers anymore. They're becoming the presents of choice for Americans who want to help friends and relatives cope.

Spending on holiday gift cards may climb 25 percent to $35 billion this year, according to Archstone Consulting LLC, boosted by cards that aid consumers contending with higher food and fuel costs and the deepest housing slump since 1991. That tops some estimates for holiday sales on Web sites.

Gift cards that pay for gasoline at Exxon Mobil Corp. stations, groceries at Wal-Mart Stores Inc. or medical bills through health-insurer Highmark Inc. will help increase the category to 5.9 percent of total U.S. holiday spending this year, according to Stamford, Connecticut-based Archstone. That's up from 4.9 percent in 2006.

``The practical usage of gift cards is the biggest story this year, due to economic fears of many consumers and tighter budgets,'' said Heather Dougherty, director of research at Experian Group Ltd.'s Hitwise in New York, which measures Web traffic. ``We see people who are searching for things like gas and grocery gift cards.''

Gift cards -- credit card-sized pieces of plastic with the prepaid amount readable by a scanner -- represent one of the few bright spots for retailers this holiday season. The National Retail Federation in Washington says total retail sales may increase 4 percent in November and December, the smallest gain in five years.

`Cultural Shift'

``We've seen a cultural shift in how we view gift cards, from a thoughtless, lazy person's gift to a thoughtful gift,'' said Scott Krugman, a National Retail Federation spokesman. ``It's becoming a practical gift for practical purposes.''

Gift-card sales also have been spurred by their increased availability in supermarkets and drugstores. Cards for Applebee's restaurants, Omaha Steaks, Visa Inc. and AMC movie theaters were among the selection at a Duane Reade Inc. drugstore in New York last week.

Prepaid debit cards such as those from Visa and MasterCard Inc. may be the most popular type of gift card this year, Archstone estimates, accounting for 16 percent of the total market. Cards for discounters such as Wal-Mart and food and beverage providers such as Starbucks Corp. probably will be the next two most popular categories, Archstone says.

Gift cards from credit card companies are gaining popularity because they can be used for many purposes, including living expenses, Hitwise's Dougherty said.

Utilities, Health

Gasoline station operators including BP Plc, Chevron Corp. and Exxon Mobil offer cards. Shoppers can buy gift certificates for customers of Portland General Electric Co. in Portland, Oregon, and Equitable Resources Inc. in Pittsburgh to pay utility bills.

Highmark, a Pittsburgh-based health insurer, on Nov. 1 introduced the Healthcare Visa Gift Card. The card allows people to pay for items such as prescriptions, Lasik eye surgery, facials, gym memberships and fertility clinics. Purchasers can buy cards worth $25 to $5,000.

``It gives the liquidity of cash, but it's more targeted to that recipient's needs,'' said Kim Bellard, a Highmark vice president. Interest in the card was ``higher than expected,'' he said, declining to disclose details.

Help With Co-Pays

Marie Kubovsak learned about the health-care gift card at the doctor's office where she does billing. She bought a $25 card last month as a Christmas present for a co-worker with fibromyalgia to help her cover co-pays or prescriptions.

``In a day and age where money is tight and everything, it's better to buy something that they're going to use,'' said Kubovsak, 53, of Reading, Pennsylvania.

Some Web sites offer philanthropic gift cards. TisBest.org allows card recipients to choose from 220 charities for a donation. Since the Nov. 1 introduction, the Web site has received about $170,000 in donations, said Erik Marks, founder of the Seattle-based site.

Traditional gift cards for apparel, accessories and electronics from retailers including Macy's Inc., Gap Inc., and Best Buy Co. remain popular.

Sixty-one percent of U.S. consumers plan to give gift cards this year, an American Express Co. survey found. Respondents said doing so made shopping faster and easier, and allowed recipients to get what they wanted.

`Makes More Sense'

Cyndi Mayon, a 56-year-old travel agent from Gilbert, Arizona, is sending a gift card to her grandson on the East Coast for Christmas. ``It just makes more sense,'' she said in an interview. Mayon didn't want to buy something that ``he has to return,'' she said.

Wal-Mart and Home Depot Inc., the two largest U.S. retailers, offer gift cards in various colors and styles. Lowe's Cos., Best Buy and Toys ``R'' Us Inc. allow consumers to add photos or personal messages to their cards.

Gift cards have helped retailers' holiday sales continue into January because consumers have ``fresh new money'' to spend, said Patricia Edwards, who helps manage $13.4 billion in assets, including Wal-Mart shares, at Wentworth, Hauser & Violich in Seattle.

Retailers have added merchandise right after the holidays and can often sell it at full price, Edwards said. Gift cards help reduce returned items, and people often spend more than the card amount, she said.

This may be the biggest day for gift-card spending in December, January and February, Burt Flickinger, managing director at Strategic Resource Group in New York, said in a Bloomberg Radio interview. Malls in Florida and Virginia reported 25 percent of purchases coming from gift cards today, Taubman Centers Inc. said in a statement. The company operates 24 shopping centers.

``It drives the consumer into the store after the holiday period, not before,'' Marshal Cohen, chief industry analyst at NPD Group Inc., said in a Bloomberg Radio interview.

To contact the reporter on this story: Heather Burke in New York at hburke2@bloomberg.net .

Last Updated: December 26, 2007 16:17 EST

Biggest Homebuilder Writedowns Are Yet to Come: Jonathan Weil

Commentary by Jonathan Weil

Dec. 26 (Bloomberg) -- Look at almost any major homebuilder's balance sheet these days, and it practically screams at you: ``Don't believe Mr. Market. Trust me!''

Either homebuilders as a class are grossly undervalued, or their assets are worth much less than their financial statements say. Odds are it's the latter. Home prices still show no sign of bottoming. And next month may bring lots of new confessions, when most of the companies report year-end earnings.

Take Pulte Homes Inc., for instance. The Bloomfield Hills, Michigan, company showed $8.1 billion of inventory at Sept. 30, namely land and houses. The company's book value, or assets minus liabilities, was $5.2 billion. Yet Pulte's stock-market value is only $2.7 billion, after a 68 percent drop in its shares this year.

That raises the question: Is Pulte's inventory, by itself, really worth three times more than the company as a whole? Probably not.

Pulte spokesman Calvin Boyd says the company tests its asset values quarterly, though he declined to comment on whether it might write them down more this year. Pulte reported a $787.9 million net loss last quarter, including $1.2 billion of pretax writedowns, about half of which were for inventory.

Eight of the nine U.S. homebuilders with market values of at least $1 billion now trade for less than their book values. Some like Pulte already have taken large writedowns on everything from real estate and joint ventures to goodwill. Yet their plunging stock prices indicate bigger charges to earnings may be needed.

Big Gap

While the stock market isn't the final word, a large gap between a company's book and market value is a strong indicator that writedowns are needed.

Under the accounting rules, companies mainly use internal estimates of future cash flows to test whether assets such as real estate may be impaired. If the values aren't supportable, companies must write down the assets to their so-called fair values, though these may be only loose guesses.

Pulte is one of five companies in the Standard & Poor's 500 Homebuilding Index; the others are Centex Corp., D.R. Horton Inc., KB Home, and Lennar Corp. While the five companies have a combined book value of $22.7 billion, the stock market says they're worth just $15.2 billion. Put another way, the market is signaling that their net asset values are inflated by more than $7 billion, mostly because of frothy inventory values.

Oddly, Wall Street analysts covering the stocks appear to be rejecting the market's hints. Pulte, for instance, is expected to post a $153.2 million fourth-quarter net loss, according to a Bloomberg survey of seven analysts. That suggests no one is counting on major writedowns. The loss would be much larger if Pulte were to mark its assets in line with what its stock price implies.

Lennar, Toll

At $317.2 million, only Miami-based Lennar is expected to post a bigger fourth-quarter net loss, according to a Bloomberg survey of six analysts. Lennar showed $6.7 billion of inventory at Aug. 31 and a $5.1 billion book value; its market value is $2.8 billion. Lennar spokesman Marshall Ames declined to comment.

Toll Brothers Inc., based in Horsham, Pennsylvania, reported an $81.8 million net loss for the quarter ended Oct. 31, driven by $314.9 million of pretax writedowns. Among major homebuilders, the gap between its book and market value is one of the smallest. Toll's inventory was $5.6 billion, and its book value was $3.5 billion, compared with its $3.3 billion stock-market value.

``If I thought I had something that required an impairment, I would have already taken it,'' says Joel Rassman, Toll's chief financial officer. ``If I didn't take it, it's because, based on today's market and our estimate of future market conditions, it doesn't require it. But if the markets continue to decline, it may change the calculation.''

Keeping Mum

Fort Worth, Texas-based D.R. Horton showed $9.3 billion of inventory and a $5.6 billion book value at Sept. 30. Its market value is $4.4 billion, down about half this year. D.R. Horton spokeswoman Jessica Hansen didn't return phone calls.

Dallas-based Centex showed $7.8 billion of inventory and a $4.2 billion book value at Sept. 30. Its market value is $3.2 billion. Centex spokesman Eric Bruner declined to comment.

KB Home, based in Los Angeles, showed $4.4 billion of inventory and a $2.7 billion book value at Aug. 31, compared with its $2.1 billion market value. KB Home spokeswoman Heather Reeves declined to comment.

Hovnanian Enterprises Inc. last week reported a $466.6 million net loss for its fiscal fourth quarter ended Oct. 31, including $382.7 million of pretax writedowns. The Red Bank, New Jersey-based company said it had $3.5 billion of inventory at Oct. 31 and a $1.3 billion book value. Its market value is just $448 million. Hovnanian spokesman Jeff O'Keefe declined to comment. The company's stock is down 79 percent this year.

You Gotta Believe

So, to believe Hovnanian's balance sheet, Hovnanian's inventory is worth almost eight times more than the stock- market value for the entire company.

One investor on Hovnanian's Dec. 19 earnings call asked: ``Can you believe the book value?'' Hovnanian's chief financial officer, Larry Sorsby, replied: ``We are just not in a position that we are going to make a projection.''

If Sorsby really believed the book value, my guess is he would have said so.

(Jonathan Weil is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: Jonathan Weil in Boulder, Colorado, at jweil6@bloomberg.net

Last Updated: December 26, 2007 00:05 EST

THE IMF: new roadmap to disaster

WORLD

Don't confuse IMF plan to dump gold and downsize with real reforms

BARRIE MCKENNA

December 18, 2007

WASHINGTON -- The plan is as enticing as ever.

The International Monetary Fund is gold rich, but revenue poor, so why not sell some of the gold, set up an endowment fund and secure the fund's future by investing the proceeds in higher-yielding assets?

At last count, the world's lender of last resort had 3,217 tonnes of gold stashed away, worth more than $80-billion (U.S.). Only the U.S. and German treasuries have more gold.

Right now, the IMF finances its operations by pocketing the spread in interest rates between the money it lends out to poorer countries and the rate at which it borrows money from its richer members.

When the global economy is in trouble, the IMF does well. More lending means more revenue.

But the institution seems to have lost its relevancy since the Asian financial crisis of the late 1990s. Many developing and emerging countries no longer need or want its cash because they don't want to be bound by its advice.

The IMF has outstanding credit of just $20.4-billion - a quarter of its loan book in 1999. And half of that credit is lent out to one borrower - Turkey. Several other borrowers, including Argentina, Brazil, Russia and Thailand, have opted to repay their loans early.

Other countries in Asia and the Middle East are part of a new class of countries that have amassed fat reserves of their own to deal with future credit problems.

If nothing is done, and the fund doesn't find new customers, it could be running an annual deficit of $400-million a year by 2010.

Dominique Strauss-Kahn, who took over as IMF boss last month, sees the gold sale as a key part of securing a future for the institution.

In a recent Wall Street Journal interview, he said he's seeking approval of the U.S. and other key shareholders to sell some of the fund's hoard to put the institution on a sounder financial footing.

The dilemma for Mr. Strauss-Kahn, a former French finance minister, is that the United States has never been a big fan of letting the IMF dump its gold stocks. Selling the gold would depress the value of the U.S. Treasury's own reserves. It would also hurt the U.S. gold mining industry, which is second only to South Africa in annual production.

What the U.S. thinks matters a lot. The United States has a de facto veto over what the IMF does by virtue of its 17-per-cent voting stake in the fund. Selling the gold requires 85 per cent member approval.

But Mr. Strauss-Kahn appears to have found a way to win over the United States. In order to appease IMF critics in the U.S. Congress and the Bush administration, he's pushing ahead with a plan to make the institution smaller.

The IMF managing director recently announced he's axing up to 15 per cent of the fund's work force. That could mean 300 to 400 of the IMF's 2,600 employees could lose their jobs.

Ostensibly, the layoffs are aimed at shoring up the fund's finances.

But it may also be part of a quid pro quo to get the U.S. to agree to some limited gold sales.

The problem with all this is that Mr. Strauss-Kahn seems to be going at the business of reforming the IMF backwards.

Boil it all down, and the IMF does three things: crisis lending, technical advice and surveillance of the international monetary system. Some critics complain it doesn't do a particularly good job at any of these.

That's why some countries - most notably Canada and Britain - want the fund to virtually get out of the lending business to focus on surveillance. There are other good options floating around, such as charging consulting fees for the fund's advice. There's also a push on to give developing and emerging countries more voting clout, which would likely steer the fund's operations in new directions.

But it now seems that reform is taking a back seat to layoffs. Mr. Strauss-Kahn, and his European backers, may have made the calculation that they can avoid some of the hard choices of reform by securing the fund's financial future with gold sales.

Any private sector chief executive would want to figure out what business the company will be in next year before working on a budget and staffing plan.

By going at the challenge backwards, the fund risks losing a generation of experienced staff, without knowing what skills it will need to run the fund in the future.

Read up on Gold Mining/Daily KOS

All That Glitters -- w/Poll (#3 in Series)

by Land of Enchantment

Thu Nov 17, 2005 at 02:11:12 PM PST

This installment in the series is about gold, and about the physical processes involved in mining. And the environmental consequences therefrom. These are the things that will happen if the Pombo Amendment passes, allowing for the fire sale of public lands. Links to the previous diaries and posts in this series are here, here, here, here, and here.

Here's the latest e-mail from National Environmental Trust regarding the Pombo Amendment: "Congressional Quarterly is now reporting that the leadership still does not have the votes to carry the reconciliation bill. Could happen later today or tonite, but might go back to rules for more changes in the bill tonite. Not too late for calls, letters, emails." Call your representative toll free at 1-800-828-0498.

Story below the flip

• Land of Enchantment's diary :: ::
• 
  

The Midas Touch

Gold has some special properties. It's shiny, it's easy to work with, it doesn't tarnish, and it conducts electricity. Those are the things its value is based upon. For centuries, its value is has been largely symbolic. That is, it's valuable because everyone says so. Its first use as currency was in a principality/kingdom called Lydia, occupying the central area of modern-day Turkey. That changed things. Our lexicon uses it to connote everything good: Golden Boy, Golden Rule, the Gold Standard, Good as Gold. But how good is it really? This diary starts to explore that question, and the next will finish it up.

Once upon a time, some 750 years BC, legend has it that Bacchus visited a little kingdom in what is now Turkey. It's king was named Midas. Bacchus liked his hospitality, and granted a wish, which we've all heard of. Perhaps he was greedy, or perhaps he was just tired of his people being poor. At any rate, Bacchus allowed him to reverse his wish when turning everything into gold didn't turn out, by bathing in the Pactolus River. His kingdom became rich. And gold washed downstream to the kingdom of Lydia, the first place in the world to issue standard gold coins as currency. This is where we move from legend to recorded history and physical evidence.

Timeline of Important Events in the History of Gold

• 687 BC Lydia originates state-monopoly on gold coinage (from Herodotus)
  
• 1492 Columbus's first voyage, setting mass looting of New World gold
  
• 1848 California gold rush
  
• 1980s Large scale cyanide heap leaching introduced

Gold has been mined for about 6,000 years in various corners of the world. 90% of all the gold mined in the world has occurred since the California Gold Rush, from 1848 onwards. Large scale gold mining began shortly thereafter in Australia and South Africa. All the gold ever mined would form a cube 19m on a side, which would fit easily under the Eiffel Tower in Paris. Link to see a picture of same.

Purifying the metal from the ore
Because of gold's chemical stability, it takes a little work to separate it from ore-bearing rocks. In earlier days, mercury served the role. Mercury is a heavy metal, persistent in the environment and toxic in various ways. It bioaccumulates in the body. Leftover mercury from gold mining is the primary cause of advisories limiting or forbidding the consumption of fish caught in polluted rivers to this day. 750,000 miles of rivers in the US carry fish advisories due to mercury as well as 13 million acres of lakes. See EPA's Fish Advisories webpage for technical information. Westerners for Responsible Mining as a more user-friendly discussion.

But since the 1980s there's a new kid in town: cyanide. Cyanide is a chemical union of one carbon and one nitrogen atom, held together by a triple bond. The molecule's shape is such that it easily bonds to hemoglobin, the oxygen-bearing pigment in our blood - it's what makes it red. Cyanide binds so well that it doesn't let go, thus starving the body of oxygen. That's why it's toxic.

Tailings
Those are the waste products associated with extracting the metal from the ore. There are other parts of mining. There's tailings, the waste left over after the ore has been processed. In the case of gold, it contains cyanide. While it's true that cyanide will break down, in time, to harmless carbon and nitrogen, that doesn't happen instantly. It remains toxic as cyanide for some time. And, it also forms a variety of complexes with other materials that can later convert back to cyanide. The point being that when environmental monitoring is done for cyanide, it doesn't measure these related cyanide species, so reported results are biased low. Cyanide is toxic for any organism that breathes oxygen, which doesn't rule out much. Not something to welcome to the neighborhood.

Tailings are wet, and generally stored behind a dam to contain them. From time to time, these dams breach. And then there's trouble. More here.

On 30 January 2000, a breach in the tailings dam of the Aurul S.A. Baia Mare Company, released some 100,000 m³ of cyanide-rich tailings waste into the river system near Baia Mare in north west Romania. This spill released an estimated 50-100 tonnes of cyanide, as well as heavy metals, particularly copper, into the Somes, Tisza and finally into the Danube Rivers before reaching the Black Sea.
...
IMPACTS

• Contamination of the Somes/Szamos stream, tributary of the Tisza River
  
• Contamination and interruption of the drinking water in 24 locations and of 2.5 million people
  
• Massive fishkill and destruction of aquatic species in the river systems
  
• Severe negative impact on biodiversity, the rivers' ecosystems, drinking water supply and socio-economic conditions of the local population
  
• Cleanup costs = N/A
  

This kind of thing happens routinely on a smaller scale.

Waste Rock and Overburden
Waste rock is that which doesn't have enough gold in it to be worth processes. Waste rock is separated from good ore, and tossed aside in big waste piles. Overburden is similar. For a pit mine, typically the ore body is not right at the surface. So other rock, sometimes hundreds of feet thick, have to be removed to get at the ore. This is the main source of the giant unsightly piles of rock so characteristic of pit mines. Typically, they're piled as steep as they can get, and sometimes have landslides.

This is just regular native rock, so there shouldn't be any toxic problems with it. Right? Wrong. It's been ground up small pieces, allowing air and water into the spaces between all the pieces. Think of it like coffee: You pour hot water over a bunch of coffee beans and not much happens. Grind them up into little bits, and we all know the result. A similar thing happens with these rocks. Typically, one of the elements in those rocks is sulphur, typically in the form of H2S, because it's been locked up deep underground with little exposure to air or water. When air and water happens, the whole business is oxidized, with sulphuric acid H2SO4 being the result:

And therein lies the problem. Sulphuric acid is a strong acid, and dissolves metals out of the rocks as it percolates through them. As in the drawing above, it enters groundwater and eventually makes its way to surface water. In the case of underground mines, the old mineshafts and adits themselves can act as conduits to the toxic water. This water can be as strong as battery acid. I'll spare you a long discussion of all the bad things that happen. The EPA link above can help those wanting more in-depth technical info. Except for catastropic accidents and spills, as described above, acid mine drainage is the primary source of pollution from hard rock mining.

In fact, ore processing for some metals, like copper, mimic acid mine drainage to separate the metal from the ore. The ore is ground up, stacked up into heap leach piles, and processed by adding sulphuric acid. All that extra acid poses environmental threats because it accelerates acid mine drainage when it inevitably migrates through the area surrounding the mine.

About 40% of all headwater streams in the West are impaired (to use EPA language) by acid mine drainage.

The New Gold Rush
From the point of view of gold mining, cyanide was a great technical advance. It can extract gold from low grade ores that couldn't be processed before. Too bad tons and tons of cyanide degrade all living things in the vicinity. Nevada has been particularly active in this new gold rush. The new mines are HUGE, as can be well understood by considering the following:

Nevada is the driest of America's 50 states, so its ecosystems are particularly sensitive to disturbances in its hydrological cycles. And with these gigantic mines, which chew up whole mountains and spit them out, hydrology is inevitably redirected. If the mine digs into a spring, the water is pumped away to keep the mine dry. If it's too dry, water must be pumped in to be used for processing. All this massive gold mining has caused massive disruption for Western Shoshone living in small groups scattered throughout the Nevada countryside.

Carrie Dann, Western Shoshone:

In our traditional way, that our people have told us, the water in the earth's body is like blood in your veins. It's a life system within the earth. And they're taking it out. What's going to happen then? Do you know? Nobody knows!

These two maps show Western Shoshone traditional lands covered by the Ruby Lake Treaty of 1864. Link to larger map showing some of the facilities in Newe Segobia, the Shoshone name for their homeland. Western Shoshone, living in such dry country, traditionally moved around a lot within the territory shown above. At times different small groups scattered to different areas. They all gathered to during the salmon run on the Snake River in Idaho to catch and dry fish. It's not hard to figure see their ancestral lands will be particularly hard hit by the Pombo Amendment sell-off of public lands.

Gold has not been kind to the Western Shoshone. The main overland route for the 49ers followed the Humboldt River across northern Nevada (I-80 follows much of the same route today). From a handful of wagon trains in previous years (such as the Donner party, who had the bad luck to pick a serious El Niño year), and a handful of trappers, over 30,000 forty-niners made their way along the main watercourse in Western Shoshone territory. All those thousands of horses and oxen stripping the landscape of forage, and thus decimating the Shoshone's hunting and gathering. Some of the wagon trains shot at Indians for sport; conflict of various sorts flared up. After a decade of this, the Shoshone were in a lot of trouble. They submitted to the Ruby Lake Treaty in 1863 (ink to full text here). It's terms weren't particularly favorable. But somewhere along the way, all the land got reclassified as National Forest, Bureau of Land Management, National Wildlife Refuge, Area 51, Nuclear Test Range, and so on. There was never a formal transfer of title. Link to larger map showing some of the facilities in Newe Segobia, the Shoshone name for their homeland.

The intent of the treaty was to get the Western Shoshone to take up cattle ranching, and many did. The Dann family obtained land for a ranch under the Homestead Act (below, left). (I'm staying with them as a case study, because it's easier to tell a story with a human face on it.) Today, if you stand where this picture was taken from, and do an about-face, you'll see one of the ten largest working gold mines in the world. And they've got plans for major expansion. The Pombo Amendment pending before Congress this week, will be a big help to the mining companies. I've discussed this amendment in previous diaries and posts here, here, here, here, and here.

Turns out that northeast Nevada is the epicenter of the new gold rush, in a geologic region called the Carlin Trend. If Nevada were a separate country, it would be the second largest producer in the world. 2/3 of all gold mined in the US these days comes from Nevada. Here's a map showing mines around the Dann Ranch:

The old Horse Canyon mine is at a site known as Mt. Tenabo to the Western Shoshone. It's estimated that roughly $10 billion of gold (yes, with a "B") lies within that mountain, which a mining company proposes to grind up into little bits, drizzle with cyanide, and extract the gold. The mountain, of course, has its own traditional meaning. Early maps from the 1860s show a location marked "Shoshone Wells."Here's the mountain from the ground:

The 1872 Mining Act, signed into law by President Ulysses S. Grant, is still in force. See the first diary in this series for discussion of its provisions. Its purpose was to promote settlement and development of the west after the Civil War and completion of the first trans-continental railroad. It allows for the sale of public land at $2.50 to $5 per acre. In the Clinton Years, Interior Secretary called a press conference to spotlight the $275 check the government received for a land sale involving millions of dollars of gold. This contributed to a climate where these sales were placed in moratorium. Mines still proceeded on public land, and were thus subject to environmental review under NEPA, NAGPRA, Endangered Species, Clean Water, Clean Air and so on. Pombo's Amendment changes that by again permitting sales, but for $1000 per acre.

Before Pombo, Rep. Jim Gibbons (R-NV) introduced a bill which would make an exception to 1872, and allow sale of 60,000 acres of federal land including Mt. Tenabo at fair market rates. (60k acres is a square about 9.7 miles on a side.) That might amount to $100 per acre, maybe more. At $100, the sale price would be $6 million for $10 BILLION of gold. Not the same bargain as Babbitt protested, but still a pretty good deal. Unlike when oil is extracted, no royalty fees would be required. Presumably Gibbons, who serves on the House Resources Committee which Pombo chairs, had a hand in crafting the Pombo Amendment to the Budget Reconciliation Bill. (The advantage to this approach is that Budget Bills are exempt from filibuster in the Senate.) Consulting the map above, it's pretty clear that Gibbons's mining company "constituents" will be the #1 beneficiaries of the Pombo Amendment boondoggle.

Meanwhile, there's been an ongoing dispute between Western Shoshone ranchers and the Bureau of Land Management. BLM exercises authority over public lands, including grazing leases. It's their contention that Western Shoshones owe millions of dollars in grazing fees for using public land. Only thing is, there's no paper trail documenting the transfer of title. Because it never happened. The Indians contend that they're doing exactly what they agreed to do at the time of the treaty, raising cattle on their traditional lands. They do not recognize the federal government's authority to charge lease fees for them to use their lands. Background: In the 1960s (or so) there was a bizarre court ruling that the Shoshone had lost title to their land through "gradual encroachment".

At that time, Congress passed a bill to compensate them - for most of the state of Nevada (plus) - at the rate of 5 cents per acre. Dirt cheap even compared to 1872 Mining Act prices. They refused to accept it, and the money's been sitting in escrow for all that time. All kinds of efforts to divide and conquer, or ram the settlement down their throats have been attempted since then. At present, with accrued interest, it amounts to (ball park) a one-time cash payment to each Shoshone of $30k. One mid-range heavy duty pick-up. Harry Reid, whom many Kossacks love to love, has led the pack in these efforts since he's been in office.

This matter has been taken to international forums on the grounds of human rights violations perpetrated by the US government. And the Western Shoshone had some rulings in their favor. None of which slowed the BLM down in confiscating a whole bunch of Indian cattle, and most of the Dann's horses which were put up for auction to offset the grazing fees.

So whaddya think? Is this about cattle grazing? Or is it about driving the Indians out so that multi-billion dollar gold mines can proceed without impediment? I think it's the latter, don't you? Did you think the days of dispossessing the Natives is something of the past, long over? Hasn't happened since the 1800s? Sorry, it's time to let go of another illusion about what the US government does in all of our names. I guess this is a good place for a link to the Western Shoshone Defense Project, in case you're disturbed enough about this to want to know more, or even help out.

BTW, I've recommended to YearlyKos that Western Shoshone Defense Project, and a relevant spiritual person, be invited to the gathering in Las Vegas next June. For an invocation (decidedly not affiliated with Jesus), and for a presentation. On the grounds that if you visit a place, you ought to know something about the locals. No telling if anyone with clout will notice. I certainly haven't got any!

Here's a quote from Carrie Dann regarding the land claims and land settlements:

The Indian Claims Commission payment constitutes selling of our Indian lands and destruction of the Indian heritage and culture. No money would ever compensate taking the land from our native people. No race of people has ever sold their homeland. Where will our homeland be if we accept the money? Let us walk with dignity and honor and never as a people without a country.

Of course, there are mining interests elsewhere, too. And corporate cronies all over the place to please. Though I wouldn't be surprised if those mining gold in Nevada haven't found a way for a few $$ to find their way to Pombo. Hopefully, Pombo's vulnerable in `06, due to redistricting, demographic changes in his district, and lack of concern for his constituents compared to the cronies. And judging by the editorials popping up all over the West (kudos to excellent media work being done by mining activists - link here), there's some backlash to his (ahem) crap.

Generally, we expect the Democrats, especially in the Senate, to do the right thing on these matters. In this case, Harry Reid is not the guy I'd prefer to have leading the charge. He has a long record of being in the pocket of mining interests. Dang!!!!

At any rate, there's hope in the House. The GOP hasn't mustered the necessary votes to get pass the bill yet, so there's still a chance to stop it. Could come up as soon as today, so keep your eyes pealed (peeled?!?) for alerts. National Environmental Trust website is a good place to look for the latest on this issue.

Next: The social and economic role of gold, and campaigns addressing a few of its more glaring problems: shareholder activism, No Dirty Gold. It would seem that the "No Summos Pendejos" installment will be coming later.

[*UPDATE:* This came to my attention after the diary was written, but is certainly relevant. Editor's Report from Indian Country Today today (November 17, 2005):

*Take it from the Indian, sell it to the highest bidder*

...

Well, some things never seem to change.

A potential land grab, the likes of which haven't been seen since the Oklahoma land rush of 1889, is upon us. A huge acreage of what remains traditionally Indian land, and yet in many places has seemingly been passed to the public domain as federal trust lands, is slated to be put up for claim and/or sale, if a provision pushed by U.S. Rep. Richard Pombo, R-Calif., chair of the House Resources Committee, passes Congress. Pombo's provision, slipped inside a House budget bill, would overturn a congressional ban that has kept both mineral companies and individuals from taking patents on public lands, prohibiting purchases in national forests and parks, for supposed mining purposes.

The new bill would make it legal for anyone to stake out a mining claim on public land and then be allowed to buy it. Pombo is ostensibly revising the 1872 General Mining Law that encouraged easy claims to stimulate westward migration. The loophole would now be expanded by lowering the levels of commercially viable ore that must be present. Ultimately, an estimated 350 million acres of ''public lands,'' much of which is still legitimately Indian land, could pass into private hands, at giveaway prices, under the new provisions. That estimate is more than three times the amount of land lost by Native nations as a result of the allotment acts.

In at least one case, the so-called settling of title with the Western Shoshone via legislative manipulation imposed by Sen. Harry Reid, D-Nev., and signed by President Bush allows the possibility of large privatization in that state, where nearly 60 million acres could ultimately be sold to developers. Six of the top 10 present claim-holders are foreign entities, mostly Canadian and Australian mining companies.

Poll

What should the sale price per acre be for Mt. Tenabo?

	5 cents (Indian Claims Commission)
0%	0 votes
	$2.50 (1872 Mining Act)
0%	0 votes
	$100 (Gibbons HR 2869)
0%	0 votes
	$1000 (Pombo Amendment)
0%	0 votes
	$100,000 (roughly 1/2 the value of the gold)
1%	1 votes
	Keep it public with gold mines
9%	5 votes
	Keep it public with no mining
29%	15 votes
	Transfer title to Western Shoshone
58%	30 votes

| 51 votes | Results

Tags: 1872 Mining Act, Western Shoshone, Richard Pombo, Jim Gibbons, Harry Reid (all tags) :: Previous Tag Versions

Permalink | 21 comments

Daily Kos Help

• Tip jar (4.00 / 15)

  Will use the tips to buy a few acres needing protection from a gold mine.

  Something new

  by Land of Enchantment

• Yes, but I am not sure (none / 0)

  • I like your Diary title...:0(, I thought someone dropped a ring in the toilette or something.

    Will the elite be happy living behind gated communities in the potential meltdown? Peace now. -7.00, -2.92

    by mattes

    You're right. I already changed it. (none / 1)

    • I intended to anyhow. It's been up a hour. That's long enough.

      Something new

      by Land of Enchantment

    • More supply - lower price n/t

• by TarheelDem
  

  • Next in series will address... (none / 1)

    ...market-related issues. For this one, more supply = more devastation. If the mining companies actually had to clean up their messes, rather than dump it on others, the economics would be different. Since most gold has symbolic value, rather than use value, it's a helluva price to pay.

    Something new

    by Land of Enchantment on Thu Nov 17, 2005 at 02:23:35 PM PST

    • Symbolic value

      If the price declines, the symbolic value also declines unless people get really scared about the economy.

      They should mine old computer cards instead.

      -6.00/-7.18 The Partie Lion

      by TarheelDem on Thu Nov 17, 2005 at 07:27:58 PM PST

  • Less damand also equals lower price

    and less destruction:)

    This is one of the reasons I don't buy Gold anything...although I'm sure silver mining is an issue as well.

    I'm a hopemonger.

    by Elise on Thu Nov 17, 2005 at 02:27:30 PM PST

    • Don't buy gold anything

      Have you ever looked at the contacts between the motherboard and any of the cards in your computer?

      -6.00/-7.18 The Partie Lion

      by TarheelDem
      

      
      

      • Thought those were bronze....

        or copper...

        I'm a hopemonger.

        by Elise on Fri Nov 18, 2005 at 11:07:22 AM PST

        • It's the tiny stuff you can't see...

          ...inside the plug-in chips. The super-miniaturized stuff uses gold.

          But that's only a very small percentage of gold use. South African depends on gold mining, which it does not do by cyanide heap leaching. And could more than meet the world's need for ICs (integrated circuits) and dental gold, too. For the practical use value uses, rather than symbolic uses.

          Something new

          by Land of Enchantment on Sat Nov 19, 2005 at 04:20:46 PM PST

          [ Parent ]

• Hopefully the price of gold will

  collapse and the issue will disappear.

  Imo the right price is the value of the gold less the cost to recover it less a reasonable profit margin for the miner ... though I would rather it be kept as public land. It's a national asset and shouldn't be squandered.

  "When the going gets weird, the weird turn pro" - Hunter S. Thompson (RIP)

  by redfish
  

• As one with less pull I imagine than you (none / 0)

  what is the best way to advance your notion of WSDP addressing kos convention?

  Keep it up.

  What's so hard about Peace, Love, and Truth and Progress?

  by melvin
  

  • Don't really know. I just keep mentioning it. (none / 0)

    There's a separate website for here. Currently in Beta version, and a little buggy. They want everybody to take the survey. To make suggestions, scroll down to a link on the left side which says "We'll laugh at your suggestions here". You have to register before you can post. Not very active, only a few posts a day so far.

    Something new

    by Land of Enchantment

    • For this, I'll jump through those (none / 0)

      hoops. Only for this.

      What's so hard about Peace, Love, and Truth and Progress?

      by melvin
      

• I've got a diary I wrote last night...

  that has an action link about dirty gold...The diary is here and the link is the one about Zales...it asks you to email them about fair mining practices.

  I just thought I'd add that here so people could take action. I don't mean to diary pimp...so I apologize for that. I hope you don't mind...and I hope I'm not getting too ahead...I see you've got No Dirty Gold coming soon...

  This is a GREAT diary though....we really need to defeat Pombo.

  I'm a hopemonger.

  by Elise

  • Interestingly, the (none / 1)

    Jewelers of America trade association, has taken a stand against the Pombo giveaway. Jewelry is the primary use of gold, so this is a case of acting on principle rather than only on the spiritually debauched motivation of profit only. From their letter to Speaker of the House, Dennis Hastert:
    

    On behalf of the Jewelers of America (JA), I am writing to register our strong opposition to a provision within the House Budget Reconciliation bill (HR 4241) that would result in a massive public land giveaway to corporations and private interests. We urge that this section ("Miscellaneous Amendments Related to Mining") be stripped from the bill.

    Also of interest is the recently formed "Council for Responsible Jewelry" here. There's likely some greenwashing involved, as founding members include gold mining giants Newmont & Rio Tinto, as well as Tiffany's, Cartier & Zales. Doesn't include the largest single retailer of gold in the U.S. ---- WALMART!!!

    Still interesting that they feel enough pressure to put up a front. Concerns it self with "Conflict Diamonds" as well,

    Something new

    by Land of Enchantment

    
    

    • Thanks for those links...

      I didn't know that!

      I'm a hopemonger.

      by Elise on

• Help!!!!!

  Somehow unrecommended in mid-switch to firefox (free at last). Everybody recommend to counter!

  What's so hard about Peace, Love, and Truth and Progress?

  by melvin
  

• I would really hate to see the West

  get the West Virginia treatment in terms of despoilation by the mining and energy cos. It's bad enough as it is now.

  "I just had the basic view of the American public -- it can't be that bad out there." Marine Travis Williams after 11 members of his squad were killed.

  by Steven D
  

  • Rep. Nick Joe Rahall II (D-VA)

    Has been in Congress for nearly 30 years. He's introduced some of the best mining bills over the years. And has also been pretty vocal on the Pombo Amendment. Nothing like first-hand experience to focus ones understanding.

    Something new

    by Land of Enchantment

    
    

    • s/b Rahal (D-WV)

      Off by 150 years. It's been along time since WV & VA were united as a single state.

      Something new

      by Land of Enchantment