"With this higher gold price scenario unfolding, any major gold producer with short gold hedges that plans to buy back a huge chunk of its outstanding shares will in fact buy them back and then go lower in price."
Este parágrafo transmite a opinião do J. Sinclair em relação ao programa de compra de acções próprias por parte da ABX (Barrick Gold). Segundo ele esta decisão não traz valor aos accionistas. Seria melhor se a ABX aplicasse os milhões de USD, que vai gastar na compra de acções próprias, na redução das elevadas posições hedge que detém. Desta forma a cotação sairia beneficiada uma vez que a ABX beneficiaria de uma maior exposição à cotação do Ouro
Well, so much for being cautious. The dollar went straight into the pooper today. No Exchange Stabilization Fund presence was evident as the dollar got hammered overnight.
Forget the supposition that the G7 will not make any decision that is positive to the dollar. They have neither the obligation nor the intention to do that. The reason is simple. The dollar rally failed to close over .955 so it took out support at .945 and is headed to .920.
I have seen rotten markets before but the failure to rally off the .945 level is downright awful. The dollar isn't even strong enough to put in a dead cat bounce. Therefore, it is road kill. (See it on next week's menu at the Road Kill Café). I will freely admit that the degree of weakness demonstrated by the failure to rally off of and hold for awhile at .945 was surprising to me.
The US Dollar as a target of the continuing world wide war with terrorism
You can forget the spin city foolishness about the US wanting the dollar lower. That assertion is akin to believing the Fed makes interest rates. Interest rates are the product of long, medium, and short US Treasury paper made in the market place. The value of the dollar is not dictated by the intentions of either the Fed or the US Treasury but is made in the market place. The fact the Exchange Stabilization Fund has made no significant showing all week is a disaster for the US dollar. When an entity that has been pounding a stock lower or pushing it higher fails to show up, the market heads in the other direction in a frenzy. Well, the manipulator of the dollar, the Exchange Stabilization Fund, which has been at least trying to keep it looking like a currency and not like Enron, failed to make its guest appearance again today. What have they seen that kept them out of the dollar market today? Could it be these huge offerings of US dollars out of Islamic/Asian countries? Yes, that's probably it. Is this a tactic in a new kind of war? Yes it is. Can the US bond market continue climbing in price with the dollar falling so precipitously? Not a chance!
Can the US dollar go below .920 and what happens if it does?
Well, simply stated, it means STAGFLATION. The decline in the dollar has so far hardly benefited anyone anywhere. It will, however, offer a bargain basement sale on all commodities produced in the US.
That means higher commodity prices, which will affect the profitability of the basic manufacturing sector in the US, producing the stagflation we saw in the 1970's. This is very much Deja Vu and a throwback to the 1978 period but much too soon in the gold cycle. I am beginning to feel that gold will disqualify itself as a currency medium by going too high too fast. That would be unfortunate but pleasing to those holding gold investments.
Conclusion:
The US dollar failed to move above .955 even though it reached up to slightly below that mark. The close in the US session below .945 puts .920 into play. A close below .92 will deliver STAGFLATION into the world economic scenario. No one anywhere expected to see the dollar weaken so soon. No one anywhere expected the Exchange Stabilization Fund to throw in the towel. But something white, made out of cotton, and rectangular flew into the dollar trading arena this week. The ESF could only be seen in the distance making a hasty exit. All the Kings Men could not put Humpty Dumpty back together again so they simply stopped trying.
Gold:
The aborted attempt by the Gold Cartel of Common Interest to hold the price of gold back on the last two night's close looks like a failure of gargantuan proportions. These maniacs, who are short gold, are finally waking up to the reality that they are dead meat. You can take that to the bank now.
These are not stupid people, just world class egomaniacs who believe they can control a market. Nobody controls a market except for a brief period of time. And even then, it is more a grand illusion than a real occurrence.
Time is also catching up with the derivative geniuses, most notably those that have created the huge pile of gold derivative paper sewage.
These non-funded, specific performance, contract obligations called over-the-counter derivatives, guaranteed only by the balance sheet of the entity representing the losing side, have the financial world in dire fear of the opposite side of their financial success.
The "Down Wedge" TA formation in gold that broke out one trading day after April 4th to the upside, has a price objective of $380 - $390. It certainly looks like it intends to complete whatever it is going to do before JULY 4th 2003. Mark that date on your calendar.
China and Gold
The entire world is on the reflation train. If you think that China is not on board, you are thinking like an isolationist. As I have told you, gold anywhere affects gold everywhere because borders have never stopped the trade in gold and will not now nor in the future.
Have a look here at the Chinese Consumer Price Index. Do not make the mistake made by collegiate economists who look only at the static number. Rather, look at the rate of change and the direction of change. China is in a reflation mode just like virtually every other economy on the planet.
This is one more reason why gold will be over $400 in the not too distant future and why the Gold Cartel of Common Interest is "DEAD MEAT."
With this higher gold price scenario unfolding, any major gold producer with short gold hedges that plans to buy back a huge chunk of its outstanding shares will in fact buy them back and then go lower in price.
However, any major gold producer with short gold hedges that is willing to go long gold derivatives, with the right of transfer of their derivative contracts and the right of financial offset with the gold bank that constructed their short gold hedges in the first place, will not buy back any significant amount of the shares they are willing to buy back and the stock will make new all time highs in this market above any previous experience of a gold bull market.
Are you listening? I have your best interests in mind. I know gold and you know that I know gold.
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