Oldtent Archives 2007 - 2008

go to the goldbugz site. i left you a message.

rno

Mr. Sinclair has just posted a link to his commentary at 4:19:00 EST that suggests that LIBOR (the London inter-bank offered rate), which is calculated every morning in London, may “becoming unreliable”.

Note the cautionionary stance of what otherwise could have been a bold foreward-looking statement, when they said  LIBOR “may” becoming unreliable, instead of  what they could have said which is that LIBOR “is” unreliable.

When will thinking people who are investing for a living recognize that stuffed shirts in blue jackets in London  cannot with any reliability set the price of gold each morning, just as they cant pretend  to know how to set the inter-bank offered rate each morning?

My surprise of the month is that the stuffed-shirts dont yet realize how irrelevant they are.

Buyers of gold in the middle East, China,  and India, and Russia - involving governments, institutions, and public buyers, will determine the price of gold.  The historical London price setting of POG is irrelevant, just as today’s blue-shirt London LIBOR postings are irrelevant.   Just my opinions.  Equiz.

The information in boldface below was updated on March 31, 2008.

HUI, the Amex Index of Unhedged Gold Mining Shares, has completed a bearish euphoric topping pattern stretching for nearly two years, as follows:

First left shoulder: 401.69, May 11, 2006.

Second left shoulder: 402.27, September 21, 2007.

Third left shoulder: 401.50, October 1, 2007.

Near-peak: 463.06, November 7, 2007.

First blowoff top: 489.49, January 14, 2008.

Confirming near-peak: 478.70, January 30, 2008.

Penultimate top: 505.65, March 4, 2008.

Final euphoric zenith: 519.68, March 17, 2008.

S J Kaplan

…wow I didnt know that in Kapland where they speak Kapanese a Blow Off Top can be superceded by a “Penultimate Top” which sounds pretty Final until you see a “Final Euphoric Zenith”….!!

….whats next ?

……an Absolute Maximus Penultimate Euphoric Blow Off Apex….?….?

Current global rally should take this average to, at least, its 300 DMA, imo. Sunday night should be interesting, beginning with the action in the Asia/Pacific region.

JBI

Good stuff, Fully. Chuck’s got it right, imo.

BTW, Mark Leibovit, from VRTrader.com, was on the Nightly Business Report tonight and he recommended 3 stocks: GLD, SLV and PAAS. He still believes GOLD is going to $1,200 within the next 12 months and silver to $45, at least….and much higher longer term. This guy has been bullish on the PMs for years has been saying all along that GOLD is going to $3,000 eventually. And he said so on national TV tonight. Balsy kind of guy, telling it like it is and will be!

Cheers!

JBI

THE LAST SELLER

Will this terrible, dark season ever end? That is what we all continue to depressingly wonder.

It has been so long since our juniors and exploration companies have risen for any real extended time. I was trying to think of some kind of relative comparison. All that I could come up with is to compare it to a chronic bodily pain such as arthritis. The horrible pain is always with you, but then one day it mysteriously disappears, and amazingly you are free of the pain.

I continue to believe that such a day for the small gold companies is very, very close, and many of us will soon be shocked and in wonder. As we watch the juniors sink like in a Chinese water torture, downtick by downtick, regardless of any positive news, I believe that we are witnessing the conclusion of a frustrating, extended correction.

Contrary to accepted wisdom, stocks bottom out not with a bang but with the proverbial whimper. They come when the last depressed seller cleans out his stock holdings, no longer able to wait it out because it has become too painful to endure.

This behavior is explainable when you understand how tops are completed. Tops are usually made in a burst of euphoria and greed, accompanied by enormous volume and universal acceptance. Even the stubbornly anti-gold bashers threw in the towel and proclaim that they see “it” and were now gold believers. They are the reverse of the last seller. They become the last converted bulls. There are no more buyers to be found, and then the decline begins.

But bottoms in a great bull market, such as what we have now been in, behave differently. Usually, the volume dries up, and because the juniors are illiquid, a small amount of selling has a disproportionate effect. A 60 cent stock can move down 25% on a 100,000 share day. Or a 25 cent stock might drop on 5,000 shares. I would estimate that the average trading volume today has shrunk to about 20-30% percent of what they were a year or two ago. And what is worse because there is so much irrational pessimism, stocks can decline almost daily with an up day nary in view.

It might hard to recall but a few years ago, ECU Silver sold for about a quarter with an average daily volume of under 100,000. But by the time it crossed $3, ECU commonly was trading over 1 million shares. But as it has receded, the volume has again dried up as the last seller licks his wounds and exits.

Unless a junior has a compelling story or discovery, you will find ECUs littered everywhere. Companies with proven reserves that might justify a price 2 or 4 times higher are languishing as the last seller continues to liquidate his dwindling holdings. There are dozens if not hundreds of exploration companies selling as though the next announcement will be bankruptcy. But that is how the gold companies looked back at the beginning in 2001 before many of them began to shoot up. Go look up the charts of Goldcorp and Agnico Eagle back at that time. In November 2000 you could have bought GG at $2.50 and AEM at $5. I think that most of us would take a 1,400 gain even with the sharp corrections.

The fundamentals for an historic bull market are not only still in place but they are much more powerful than they were back in 2001-2002 when the gold stocks began their lift off. Gold is up almost 400%; reserves continue to plunge; production is down dramatically; the rate of central bank sales has dropped sharply. And most importantly our assumptions of the world’s financial situation has been proven correct. The hypothesis that the dike must eventually leak is happening before our eyes. Today, there is no way out now of the structural problems but to print more and more paper. We face a indefinite future of constant depreciating currencies against the stability of the world’s historic money, gold. It is illogical to believe that we have reached the top of the move, and yet that is how the exploration companies have behaved. And it is just as logical to conclude that we can never have an elongated bull market without it ending in public participation and massive speculation. I wholly believe that before it is over, the junior gold sector will be the most speculative market the world has ever seen.

Stock bottoms are not announced by a trumpet blast or by a bell. They come unannounced and quietly while all potential buyers are still waiting for lower prices and a noticeable reversal before they will buy. The current environment is quiet, depressed with shares selling at the same ratio to the HUI as they did back in 2001 and at a historic low ratio to the metal. You will find that these correlations come only at major bottoms; but only after the last seller has done his thing. Start to look for some of your leaders in your portfolio to begin to break this long trend, and soon almost all of the gold shares will be joining them. The fun has not yet begun! Chuck ikiecohen@msn.com

Friday, April 18, 2008

PALM BEACH — In another sign of just how hot the mansion market is, the oceanfront estate built by billionaire businessman and philanthropist Sidney Kimmel has sold for $81.5 million, a record for the island.

John L. Thornton, 54, a former Goldman Sachs partner and chairman of the Brookings Institution, is the buyer, people familiar with the transaction said.

While the sale price was officially recorded Tuesday at $77.5 million, listing agent Paulette Koch said the buyer also paid $4 million in closing costs. That means Kimmel got his full asking price of $81.5 million.

The deal underscores both the strength of the mansion market and the desirability of Kimmel’s home at 1236 S. Ocean Blvd.

“The house was in impeccable condition, with the finest details,” said Koch, adding that three other buyers were interested in the property.

The estate boasts 5 lushly landscaped acres and 300 feet of ocean frontage. The 32,000-square-foot home was designed by Thierry Despont, who also created Bill Gates’ mansion.

The living room includes 26-foot ceilings and 20-foot-high glass panels that disappear into the floor at the push of a button.

The home also features a wine cellar, pool, waterfalls, staff quarters and an air chiller and 27-zone air conditioning system.

The sale tops the previous Palm Beach record of $70 million, which Ron Perelman’s estate fetched in 2004.

Palm Beach Realtor John Pinson said he wasn’t surprised that Kimmel’s house sold so quickly and for full price.

“There are only so many outstanding, exceptional properties, and this is one of them,” Pinson said. “It’s a very nice, isolated location, and the beach is very pretty.”

For many, the home’s property tax bill alone would prove daunting - $517,775 last year.

While the overall housing market in Palm Beach County has struggled since late 2005, the mansion market in the town of Palm Beach is booming.

County home prices dipped 4 percent from 2006 to 2007, according to the Florida Association of Realtors, but Palm Beach prices jumped 13 percent during that period, according to a study by Palm Beach attorney Les Evans.

“There are buyers out there with plenty of money that they can afford to spend,” Pinson said. “When you get into this very elite level, certain people are unaffected by economic changes because they’re blessed with a lot of wealth.”

Kimmel is founder and chairman of Jones Apparel Group and producer of films including The Kite Runner.

Thornton could not be reached for comment. In addition to his role with Brookings, an independent research and policy institute based in Washington, he is a director of Intel Corp., Ford Motor Co. and News Corp. He’s also a professor of global leadership at Tsinghua University in Beijing.

It’s not the first time Thornton has proved bullish on real estate.

In 2001, he set a record for New Jersey home sales by paying $18 million for a 118-acre estate in Bedminster that Princeton University had been using as a retreat, The New York Times reported.

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Oh, Lord!

The irony of it all!!!!

JBI

April 18 (Bloomberg) — Barrick Gold Corp., the world’s largest gold producer, wants to sue Canadian Imperial Bank of Commerce over the bank’s advice to invest in asset-backed commercial paper, the Globe and Mail reported.

Barrick, which owns about C$66 million ($65.4 million) in commercial paper, claims CIBC’s investment bank said the debt wasn’t tied to subprime mortgage assets, the newspaper said. This led the Toronto-based company to hold on to its paper and buy more before the market froze in August.

Barrick is challenging a C$32 billion restructuring of Canada’s non-bank asset-backed commercial paper in a Toronto court so that it will have the right to sue CIBC, the newspaper said, citing a court motion.

http://www.bloomberg.com/apps/news?pid=20601082&sid=aT3gvNDBCQZE&refer=canada

Market now sees end to Fed cuts, possibly higher rates at year-end

SAN FRANCISCO (MarketWatch) — A recent surge in the benchmark Libor interest rate has driven up other short-term rates, contributing to a rethinking about the direction of borrowing costs over the next year.

Libor gained 20 basis points in the past week, the biggest one-week gain since August, just as the U.S. credit crunch was getting into full swing. Libor, which stands for the London Inter-bank offered rate, is used to set everything from home-mortgage rates to large corporate loans.

Its rise coincided with mounting suspicions that global banks setting the rate may be keeping it artificially low to hide increases in their own costs. The rate’s gain reverberated throughout bond and futures contracts, compounding a growing sense that the Federal Reserve could soon end its interest-rate cuts and may even start raising rates by year end.

“The whole Libor situation has become a burning issue this week,” said Andrew Wilkinson, senior market analyst at Interactive Brokers. “As the flames took hold,” he said, “one would have been forgiven for thinking that the money market was suddenly pricing in a string of rate increases from the Fed.”

Interest rates implied by eurodollar futures and short-term bond yields jumped as traders dumped these securities priced to benefit from lower - not higher - interest rates.

“The front end of the yield curve is getting hammered by the rapidly shifting views on the Fed and how the easing cycle is over,” said David Rosenberg, North American economist for Merrill Lynch, in a note.

Yields on two-year Treasury notes Friday jumped to their highest end-of-day levels since February, to 2.13%, as traders sold off these short-term bonds. That flight drove yields, which move conversely to prices, higher. A rebound in stocks, helped by better-than-expected earnings, also weighed on bonds and lifted yields.

Bond prices sold off as “Libor adjusted higher, doubts entered into people’s minds about the pace of Fed easing going forward and, as suggested by Fed Fund futures, the terminal rate in this cycle,” said David Ader, U.S. government bond strategist at RBS Greenwich Capital, in a report.

The May fed funds contract, another proxy for short-term rates, is now pricing in a 100% chance of a quarter-point cut to interest rates when the Federal Open Market Committee meets April 29-30 — and that’s it. A week ago, these contracts also gave 44% odds of a half-point cut.

Similarly, short-term interest rates implied by eurodollar futures surged as traders fled these contracts.

Prices for December eurodollar futures tumbled 58 basis points over the past week to 97.11 in afternoon trading Friday, sending the implied interest rates in these contracts to 2.89% from 2.33% a week ago. The June contract lost 40 basis points, with implied rates bouncing to 2.86%.

Since the Federal Reserve’s fed funds target rate now stands at 2.25%, those contracts signal traders anticipate the Federal Reserve will at least stop cutting rates in the next few months and could even start hiking again.

This reassessment of future Federal Reserve rate cuts, combined with the jump in Libor, forced investors that had bet short rates would keep falling to unwind their bond and futures positions, putting pressure on prices.

“Those trades are being unwound because there was a perception that the yield curve and swap curve would continue to steepen,” said Thomas di Galoma, head of U.S. Treasurys at Jefferies & Co. “That’s come to an end,” he said, because Libor has increased.

Three-month Libor in U.S. dollars jumped 9 basis points to 2.9075% on Friday, adding to 8 basis point gain on Thursday, according to British Bankers’ Association data and FactSet Research.

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The dirtbags were at it again today, I see.

JBI

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Sorry I could not talk when you called…will call you tomorrow. Thx

respond later to your 17:03  if I  have anything relevant to comment upon.  In the meantime, I wonder about the 35+ Goldtenters who voted in the current poll that POG is going to exceed its recent high of $1026 sometime in May 2008.  Oh?  I would be surprised if that happened.  Mind you, I have been surprised before in this PM market before.  Most of my surprises have been on the POG downside when I least expected it.  So maybe May 2008 will surprise me in the opposite, more optimistic, direction.

Cheers.  Equiz.

gotcha now i understand. best. wj
ps: no gulf water yet why its still winter and even the fish wear fuzzy slippers. gata wait till july-august to be sure of the temps. [g]

Hey gang……I’m surprised there has not been any discussion, at least none that I am aware of, regarding those institutions acting as custodian for retirement accounts that will hold your funds in your name, segregated from other clients and from the assets of the firm itself.

I am aware that Citi Private Bank acting as custodian will segregate account assets, but a minimum of 1M is required to set up an account.  Can anyone direct me to an institution who can help me and doesn’t require you to be an accredited investor?   Us little guys got to protect what we have

mo

I count five unfilled gaps on USO since the break away gap in early february that started the latest commotion.

Should have a new poll, since Feb -  how many gaps will we reach in USO before a intermediate correction sets in?

hope this works, look at the bad tick on Jan14 ( we were trading at HUI 480 and then had a bad tick down to HUI 416.60 ( for only a minute ) after hitting a ST high of HUI 489.49 and see what happened the days following. Today we have another bad tick, HUI to 428.50 will be interesting to see what next week brings. This is mainly for traders ( so Ment don’t bother chirping in, TIA) and to see if canuckgold has found another way that the cretins give signals to each other or this could all be BUNK!

tinyurl.com/4ur8j8