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GOLD vs. DISAPPEARING BUCK

Jun 06, 2003


Poor Martha!... Unemployment and stocks up... $363 gold, dollar weak... "Marked turnaround"? -GREENSPAN ... Introducing: "The History of Your Money"


MARKET NEWS DIGEST

-Martha Stewart faces indictment - CBSMarketWatch

-Greenspan Sees 'Fairly Marked Turnaround' - FOX News

-Buffett, Roach Say Deficit Threatens U.S. - Bloomberg

-G8 meeting, stock outlook help dollar rally - Reuters

-Oil jumps to 6-week high - CNNfn


COMMENTARY

-GOLD VS. DISAPPEARING DOLLAR, Pt. 1 - Craig R. Smith, SATC

-STOCK MARKET RALLY: WHAT IT MEANS - Martin D. Weiss, Ph.D.

-DON'T LOSE SIGHT OF THE FOREST - Mary Anne & Pam Aden, CBS

-CURRENCY TRADERS BUSHWHACKED - Justin Lahart, CNNfn

-DOLLAR DUMPED BY GOLD DIGGERS - Paul Tharp, NY Post


QUOTES OF THE WEEK


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"The acceleration has not yet begun ...indications are suggestive of a fairly marked turnaround. We are stabilizing and there is some indication of return, but it's not at this stage by any means clear."

-ALAN GREENSPAN, FED Chairman (see below)

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"Figuring out what Alan Greenspan is saying, steering a course between his "indeeds" and "to be sures" is such a mind-numbing task that there is something of a cottage industry on Wall Street devoted to interpreting Fed-speak. But the Fed Chairman's chatter is crystal clear compared with the Bush administration's mixed messages on the dollar."

-JUSTIIN LAHART, CNNFN, (see below)

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"Right now, though, Wall Street stock promoters and their followers have the upper hand. The more they see news about debts or deflation, the more they try to persuade you that the Federal Reserve will come to the rescue. And the more they see news of an uptick in the economy following the Iraq war, the more they talk about "a real recovery under way. Watch out! It's just another great trap!"

-MARTIN WEISS, PhD, SafeMoneyReport.com (see below)

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"The question -- should I mess around with this bear market in stocks -- or should I take a large position in gold and gold shares and bank on the bull market in gold being the right way to go? I decided that the potential big money was with the gold bull market rather than trying to 'beat the bear.' And that's where I am now."

-RICHARD RUSSELL, Dowtheoryletters.com, 5/21/03

Read 74 more quotes by Richard Russell at swissamerica.com

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"How can anyone even consider buying overvalued stocks for long-term investing purposes? Yet, ever since 2000, Wall Street has been utterly ignoring the Long Valuation Waves and nefariously seducing investors into buying overvalued stocks, and they have already lost trillions by following this horribly flawed and negligent advice."

-ADAM HAMILTON, "Valuation Wave Reversion 2" http://www.lemetropolecafe (free trial membership)

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"Europe is on the brink of economic failure. Policy makers need to go into a state of “high alert.” Unfortunately, the EMU-driven mindset shows no such concern. That must change, as the gorilla in the region moves inexorably closer to its own deflationary abyss. The recent appreciation of the euro — and the likelihood of more to come — adds a special urgency to a shift in the policy mindset."

-STEPHEN ROACH, Morgan Stanley, Lessons of Japan

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"Money is the builder or destroyer of society. An honest money system brings prosperity to all citizens - willing to work. A dishonest one enriches a few at the expense of everyone else - regardless of how hard they work."

-CRAIG R. SMITH, History of Your Money (see below)

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"Gold's bull market is alive and well. More important, gold formed a major bottom in February, 2001. And despite its ups and downs, the major trend has been up for more than two years now. As long as this continues, and we believe it will, then gold is headed higher."

-MARY ANNE & PAM ADEN, Aden Forecast (see below)

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"A touch of gold fever is sweeping the world, and could worsen into a deadly allergy to the dollar."

-PAUL THARP, "DOLLAR DUMPED BY GOLD DIGGERS" - NY Post


"If we are obsessed by God, nothing else can get into our lives—not concerns, nor tribulation, nor worries. And now we understand why our Lord so emphasized the sin of worrying. How can we dare to be so absolutely unbelieving when God totally surrounds us? To be obsessed by God is to have an effective barricade against all the assaults of the enemy."

-OSWALD CHAMBERS, June 2, "Obsessed by Something?"

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MARKET NEWS DIGEST


Martha Stewart faces indictment - CBSMarketWatch
Shares fall as company discloses possible charges
By Luisa Beltran, June 3, 2003

NEW YORK (CBS.MW) -- Shares of Martha Stewart Living Omnimedia plunged nearly 18 percent Tuesday after the company said its namesake is facing an indictment "in the near future."

Shares of the company dropped $2 to $9.20 in mid-day action.

Stewart, who is both Chairwoman and CEO of Martha Stewart Living Omnimedia, is facing both criminal and civil charges. The U.S. attorney's office for the Southern District of New York will ask a grand jury to return "an indictment against her in the near future," MSO said in a statement early Tuesday.

The Securities and Exchange Commission is also expected to file a civil complaint against Stewart, the company said. Stewart has received a Wells notice, which informed her that the SEC would likely file civil charges against her.

http://www.cbs.marketwatch.com


Greenspan Sees 'Fairly Marked Turnaround' - FOX News
June 03, 2003

Federal Reserve chief Alan Greenspan said Tuesday he sees indications of a "fairly marked turnaround" in the U.S. economy, with May data suggesting it has "stabilized."

"The acceleration has not yet begun," Greenspan told a conference of top central bankers in Berlin, but he went on to note that recovering stock markets and other indications "are suggestive of a fairly marked turnaround."

"We are stabilizing and there is some indication of return, but it's not at this stage by any means clear," he said, addressing the conference via audio link.

"At this particular stage, with flexibility still increasing, I expect the growth rate to quicken in the United States. Maybe not as rapidly as some of the forecasts for the third quarter imply, but ... everything seems to be in place," Greenspan said.

And despite voicing reservations about using fiscal policy to steer the economy, he said that "fortuitously, this particular cut in taxes is happening at the right time."

Greenspan renewed his previous assessment that deflation is a remote threat.

"All in all, we're looking at a low-probability event," he said. "But if it happens, our concerns are such that it could be a significant event that would require insurance against."

http://www.foxnews.com


Buffett, Roach Say Deficit Threatens U.S. - Bloomberg

June 2 (Bloomberg) -- Economists such as Morgan Stanley & Co.'s Stephen Roach long have predicted that the rising U.S. current account deficit, the broadest measure of trade and net investment flows, would sour investors on U.S. assets.

The widening gap would send the dollar into a tailspin and force the Federal Reserve to raise interest rates to keep capital coming into the U.S., Roach and others have said.

It hasn't happened. The 10-year Treasury note yield has fallen to a 45-year low of 3.29 percent. The Standard & Poor's 500 stock index has risen 9.5 percent this year -- after the deficit grew to $503 billion in 2002, 5 percent of U.S. output.

Yet with U.S. interest rates lower than those in Europe, and the dollar's 20 percent drop against the euro in the last year reducing the value of U.S. assets, investment from outside the U.S. has fallen. Berkshire Hathaway Inc. Chairman Warren Buffett and International Monetary Fund Chief Economist Kenneth Rogoff, also have warned that the record deficit is unsustainable.

"We are in a country that is buying more from the rest of the world than we're selling, and we're doing it on a big scale," Buffett told U.S. chief executive officers at a Microsoft Corp. gathering in May 21 in Redmond, Washington.

"Any other country in the world that did that on that scale would have seen greater currency depreciation already," he said. "We have such a strong currency historically that there's been a delayed effect. But it's started to happen in the last year, and unless the underlying conditions change it's going to continue."

http://www.bloomberg.com


G8 meeting, stock outlook help dollar rally - Reuters

LONDON (Reuters) — The dollar gained more than a penny against the euro on Monday, extending a recent rebound from record lows with the help of a buoyant U.S. equities outlook and a summit of world leaders discussing currency developments.

President Bush told the Group of Eight leaders meeting in Evian, France, he wanted a strong dollar, according to officials present at Monday's gathering.

Weekend comments from Bush, that the market had devalued the dollar and Washington still backed a strong currency, had earlier helped boost the greenback nearly 1%, spurring a market looking for a correction from recent record lows.

"The president's position is that the United States supports a strong dollar and a strong dollar is determined by the market and that's why it is important to secure policies that advance growth in the United States," White House spokesman Ari Fleischer said on the sidelines of a Group of Eight summit.

"The market is looking at these comments suggesting that it's not such a complete one-way bet for the dollar — i.e. going down," Ryan Shea, senior international economist at Bank One.

http://www.reuters.com


Oil jumps to 6-week high - CNNfn
Crude prices near $30 a barrel as traders react to a stockpile deficit and a potential OPEC cut. June 2, 2003

NEW YORK (CNN/Money) - Oil prices climbed to a six-week high near $30 a barrel Monday as traders reacted to a stubborn deficit in U.S. stockpiles and a potential output cut from OPEC.

At midday London trading, light crude oil for July delivery rose 30 cents to $29.86 a barrel, the highest level since April 22.

Oil prices have rallied more than 4 percent since the middle of last week, when U.S. government data showed crude oil stocks were stuck 12 percent below last year's levels while gasoline inventories fell to a 6 percent deficit.

Coming a week before the summer driving season starts, when U.S. demand for motor fuel peaks, dealers feared a potential price spike.

"With global inventory still at extremely low levels and particular concern over low product and crude oil inventory in the U.S., there is little obvious sign of any significant weakness," Barclays Capital analyst Kevin Norrish said in a daily report. http://www.cnnfn.com


COMMENTARY


GOLD VS. DISAPPEARING DOLLAR, Pt. 1 - Craig R. Smith, SATC
June 3, 2003

In a letter to Thomas Jefferson in l787, John Adams wrote: "All the perplexities confusion and distress in America arise not from defects of the Constitution, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit and circulation."

What was true then... is even more true today.

Confusion surrounds the very meaning of the words; money, dollar, wealth, inflation, and credit. Add to this, widespread public ignorance and confusion concerning tax laws, and you have a system designed to control and enslave the population.

The money system operates in a way that would astound most Americans if they only knew how it worked. A dishonest money system is at the very heart of America's economic and social problems. The degree to which the money system is corrupt is the degree to which all other areas of society are corrupted.

Money is the builder or destroyer of society. An honest money system brings prosperity to all citizens - willing to work. A dishonest one enriches a few at the expense of everyone else - regardless of how hard they work.

If a group of men were able to gain control over the money system of a nation, would they not be masters of that nation? If they had unlimited power to create unlimited amounts of money, could they not direct the course of society and all of its institutions? If their alliance encompassed the length and breadth of the globe, would they not be masters of the world?

On November 22, 1910, the nation's leading bankers left by train at night from Hoboken, New Jersey on a secret mission to Jekyll Island, Georgia. Their mission-to create what was to become the Federal Reserve System.

The essence of psychological warfare is to confuse the meaning of words, and infiltrate the mind with conflicting concepts.

Use of the word "Federal" in the name "Federal Reserve" leads the public to believe that the Federal Reserve is a government institution. Contrary to this misleading use of language, the FED (as it is commonly called) is a private corporation owned by foreign and domesticbanks and operated for profit - no more Federal than Federal Express.

The FED controls the nation's money supply and interest rates, and thereby manipulates the entire economy, in violation of Article 1, Section 8 of the United States Constitution that expressly charges Congress with "Power to coin money and regulate the value thereof." Article 1, Section 10 of the Constitution says: "No State shall make any Thing but gold and silver Coin a Tender in Payment of debts."

Under the FED's direction, gold and silver coin were taken out of circulation between 1933 and 1965 - removed as the backing for our currency and replaced with monetized debt - in other words, credit.

"Today the entire world is out of balance because of credit and debt abuse and central bankers are now between the devil and the deep blue sea," John Mauldin summarizes. The FED cannot raise interest rates because it would throw the economy into recession. I expect the dollar to fall to new lows this year.

According to John Mauldin's upcoming untitled book, "Slow growth and inflation? Recessions? We have seen this movie before -- it is called 'Stagflation: The Return of the 70s' Only this time Alan Greenspan will be a scapegoat."

Learn more about the FED, read or listen to The History of Your Money #2 - THE FEDERAL RESERVE


STOCK MARKET RALLY: WHAT IT MEANS - Martin D. Weiss, Ph.D.
Safemoneyreport.com, June 3, 2003

In the last three months, the stock market has done exactly the opposite of what I expected: Instead of turning sharply lower, it has marched steadily higher. Instead of running into stiff resistance, it has made a new 11-month highs in the S&P 500 Index.

Meanwhile, however, the powerful forces that drive the entire world economy -- and ultimately, every stock market on the planet -- are following in lock step with the scenario I've been warning you about: Federal and state deficits out of control ... a morass of debts strangling consumers ... and now, a new, potentially devastating force striking our shores -- deflation.

So which will prevail? The stock market's current upward momentum? Or the dangerous forces that threaten to tear down our economic house of cards?

Inevitably, it will be the latter. When you least expect it, investors will suddenly wake up and smell the coffee. The indexes will come crashing down. The Dow and the S&P will plunge to the target zones I have been warning you about.

Right now, though, Wall Street stock promoters and their followers have the upper hand. The more they see news about debts or deflation, the more they try to persuade you that the Federal Reserve will come to the rescue. And the more they see news of an uptick in the economy following the Iraq war, the more they talk about "a real recovery under way."

Watch out! It's just another great trap!

What To Do ... FIRST, DON'T BE FOOLED BY THE RALLY. It does not change, by one iota, the fundamental forces that are driving the entire world economy into a long-term decline.

http://www.safemoneyreport.com


DON'T LOSE SIGHT OF THE FOREST - Mary Anne & Pam Aden, CBS
Watch gold closely for chance to get in
By Mary Anne & Pamela Aden, The Aden Forecast, June 2, 2003

EDITOR'S NOTE: Mary Anne & Pamela Aden are internationally known analysts and editors of The Aden Forecast, a market newsletter providing specific forecasts on gold, gold shares and the other major markets.

SAN JOSE, Costa Rica (CBS.MW) -- Gold's bull market is alive and well. More important, gold formed a major bottom in February, 2001. And despite its ups and downs, the major trend has been up for more than two years now. As long as this continues, and we believe it will, then gold is headed higher.

The daily ups and downs in any market can be confusing and they actually detract from what's really important -- as we've seen over the past few months. As gold moved lower, for instance, many investors threw in the towel, feeling that gold's days were over.

In other words, these investors were swept into the day-to-day action and news. They got excited and made decisions based on these noisy distractions, which bombard investors every day on TV, in newspapers and the Internet.

Every daily movement is emphasized as a big deal when in reality it's not. This information is actually geared to traders, not investors, and we know that traders lose money, something like 90 percent of the time.

Far more important are the major trends. These are the trends that last for months or years and that's where the best profits are consistently made, year after year. If you invest with the major trends and stay with them, you'll do far better over the long haul than any short-term trader could ever hope to.

http://www.adenforecast.com


CURRENCY TRADERS BUSHWHACKED - Justin Lahart, CNNfn
Reading the Administration's lips on the dollar has never been so hard. June 2, 2003: By Justin Lahart

NEW YORK (CNN/Money) - Figuring out what Alan Greenspan is saying, steering a course between his "indeeds" and "to be sures" is such a mind-numbing task that there is something of a cottage industry on Wall Street devoted to interpreting Fed-speak. But the Fed Chairman's chatter is crystal clear compared with the Bush administration's mixed messages on the dollar.

Monday morning the currency market was in a tizzy in reaction to a remark President Bush made ahead of the G8 summit in France this weekend. "Our policy is a strong dollar," the President said. "And we believe that good fiscal and monetary policy will cause our economy to grow and that the marketplace will see a growing economy and, therefore, strengthen the dollar."

"The market, at this point in time, has devalued the dollar, which is contrary to our policy," Bush concluded.

It all seems to directly contradict remarks Treasury Secretary John Snow made just three weeks back, when he noted that a weak dollar helps exports. In follow-up remarks a week later, he seemed to have put the United States "strong dollar" policy in for a major retooling.

"You want people to have confidence in your currency," Snow said. "You want them to see the currency as a good medium of exchange. You want the currency to be a good store of value. You want it to be something people are willing to hold. You want it hard to counterfeit, like our new $20 bill. Those are the qualities."

http://www.cnnfn.com


DOLLAR DUMPED BY GOLD DIGGERS - Paul Tharp, NY Post

May 29, 2003 -- A touch of gold fever is sweeping the world, and could worsen into a deadly allergy to the dollar.

Some investors think gold is ready to hit $400 an ounce - and keep soaring - for the first time in seven years, because there aren't enough safe currencies, bonds or stocks to handle the world's trillions in cash hordes.

The sinking dollar has prompted Asia's central banks to call a session next month on whether to unload their dollar holdings, which account for about 90 percent of the world's dollar reserves.

http://www.mypost.com


ABOUT THE EDITOR
David Bradshaw is the editor of Swiss America's Market News Digest and Real Money Perspectives. He is the founder of Idea Factory Press... publisher of Rediscovering Gold in the 21st Century...and The Big Picture... Contact at ideaman@swissamerica.com

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