Patriotic Portfolios -- July 6th news...

* Oil tops $61, Stocks Fall -MW
* Fed boosts rates another quarter -CNN
* U.S. Deficit`Unsustainable,' Central Bank Says -BL
* Iran's New Leader to Pursue Nuclear Plans -AP
* Iran declares worldwide 'Islamic revolution' -WT
* Oil Rises to Record on Iranian Output Concern -BL
* Saudi Billionaire Threatens U.S. Author -AIM
* What's rising faster than stocks? Coins -CSM
* Gold rush may mean inflation bust -CNN/Money

* Gold breaks out but the best is to come -FT
* The Left's PR Campaign for Islam's Koran -Craig R. Smith
* 10 Things You Don't Know About Terrorism -Loretta Napoleoni
* The Many Evils of Inflation -Hans F. Sennholz
* YES!! Gold market screams "BUY ME" -Bill Murphy
* When Hathaway Discusses Gold, the World Listens -Dorothy Kosich
* The final altar call -Julia Duin

"The Bureau prints approximately sixteen million notes each day. The Bureau has the power to create money and almost any amount of it. The only limiting factors are the speed of the presses, and the public's willingness to accept it."

-Government Securities, U.S. Bureau of Engraving
More quotes...

MARKET NEWS DIGEST

NEW YORK (CNN/Money) - The Federal Reserve raised its target for a key short-term interest rate by a quarter of a percentage point at the end of a two-day meeting Thursday.

The move, widely expected by Wall Street, marked the ninth consecutive time the nation's central bank has boosted rates in the past year as it continues to fight inflation.

In its closely watched statement, the Fed said it would probably keep increasing rates at a "measured" pace. This phrase, which has been used in every Fed statement since May 2004, is an indication that another quarter-point hike is likely when Fed chair Alan Greenspan and other Fed policy makers meet again on August 9.

Following Thursday's increase, the federal funds rate, which banks use to determine their overnight lending rates, now stands at 3.25 percent, its highest level since shortly before the September 2001 terrorist attacks. Although this is still low by historical standards, there is a growing sense among many economists and investors that the Fed may stop raising rates after August's meeting.

Recent signs of weakness in the manufacturing sector and oil prices that are hovering near record levels have raised some concerns about a looming economic slowdown. Bond guru Bill Gross, who runs the world's largest fixed-income mutual fund, even suggested last week that the Fed may need to lower rates by the end of the year.

The Fed acknowledged in its statement that energy prices have risen since its last meeting in May but also said that despite this rise, "the expansion remains firm and labor market conditions continue to improve gradually."

The central bank also noted that "pressures on inflation have stayed elevated..." The major stock indexes, little changed before the announcement, edged lower afterward.

http://www.marketwatch.com

U.S. Deficit`Unsustainable,' Central Bank Says -BL

June 27 (Bloomberg) -- The record U.S. current-account deficit may disrupt the global economy and President George W. Bush isn't doing anything about it, the world's major central banks said in a report.

``There is no doubt that the U.S. external accounts are on an unsustainable trajectory,'' the Bank for International Settlements, whose members include the U.S. Federal Reserve and 54 other central banks, said in its annual report today. ``The continuing absence of a policy response increases the chance of a disorderly market adjustment.''

The bank didn't set out the risks, though economists such as Kenneth Rogoff, a Harvard University professor, earlier this year said foreign investors may lose confidence in the U.S. dollar if the current-account deficit rises. That may force the government to increase interest rates to lure them back.

The current account is the broadest measure of trade because it includes investment income, tourism and financial transfers such as foreign aid.

The Basel, Switzerland-based BIS is the latest critic of the U.S. deficit, joining the International Monetary Fund, trading partners such as Canada and political opponents in Congress. The current-account deficit rose to a record $195.1 billion in the first quarter and was equal to 6.4 percent of the $12.2 trillion U.S. economy, also a record.

At that level, the U.S. needs to attract about $2.1 billion a day to fund the deficit and keep the value of the dollar steady. A fall in the dollar would raise inflation and may reduce consumers' purchasing power, slowing the economy.

FULL STORY

Iran's New Leader to Pursue Nuclear Plans -AP
June 27, 2005
By KATHY GANNON
ssociated Press Writer

TEHRAN, Iran (AP) - The president-elect of Iran vowed to restart the nation's controversial nuclear program, saying it was meant only for peaceful energy purposes. Defense Secretary Donald Rumsfeld labeled the new ultraconservative leader as ``no friend of democracy.''

Asked about relations with the United States during his first news conference since Friday's election, Mahmoud Ahmadinejad said Sunday that Iran ``is taking the path of progress based on self-reliance. It doesn't need the United States significantly on this path.''

In a sign of tensions likely ahead, Rumsfeld dismissed the vote as a ``mock election.''

Ahmadinejad entered the crowded chambers in Iran's municipal building with little fanfare, maintaining the unassuming style embraced by the roughly 17 million Iranians who voted him to power in a landslide victory.

His government's foreign policy would focus on ``peace, moderation and coexistence,'' he said.

``Moderation will be the policy of (my) popular government. Extremism will have no place in (my) popular government,'' he said.

He fielded questions confidently and smiled broadly when asked by an Iranian female journalist wearing a colorful head scarf whether he would introduce a strict dress code.

It wasn't his job to decide, he said.

``I am the president. There are people who make those decisions,'' Ahmadinejad said. He appeared to be referring to the judiciary and the police, which enforce the law on the dress code.

In his opening statement, he promised to shun extremism and cobble together a moderate regime. Yet critics say his election only consolidated the hard-liners' hold on power, and no reform-minded people remain in the government.

``He is no friend of democracy,'' Rumsfeld said on ``Fox News Sunday.'' ``He is a person who is very much supportive of the current ayatollahs, who are telling the people of that country how to live their lives, and my guess is over time the young people and women will find him as well as his masters unacceptable.''

A key concern for the United States is Iran's 20-year-old nuclear program, revealed in 2002.

FULL STORY

Related Story:
Operation Divest Terror -- WND -- 7-5-05 -- Private-sector offensive aims to shut down 'business' of extremists...The goal of "Operation Divest Terror" is to help investors identify U.S. companies whose business activities provide revenues, equipment and technology and political cover to governments that sponsor terrorism – and send them a message this is a bad business decision.

6-30-05 --Iran's new president declares worldwide 'Islamic revolution' -WT WORLD TRIBUNE.COM -- Iran's president-elect has proclaimed an Islamic revolution of global proportions. Mahmood Ahmadinejad said his election coincided with what he termed a new Islamic revolution. "The wave of the Islamic revolution will soon reach the entire world," Ahmadinejad said. "In one night, the martyrs strode down a path of 100 years." [image] An American hostage outside the U.S. Embassy in Teheran, on Nov. 9, 1979. The man at right has been identified as Iran's president-elect Mahmood Ahmadinejad. -AP

ATOMIC IRAN -- Introduction and Foreword By Craig R. Smith ...The International Atomic Energy Agency (IAEA) reported on March 2, 2005 that Iran has backed away from cooperating in key areas with UN experts investigating possible atomic weapons work. Then comes news that a Russian plant has announced they're ready to deliver nuclear fuel "at any time and in a necessary amount to the first reactor of the Iranian nuclear power plant in Bushehr, Iran" -- over strong American objections. What's wrong with this picture? Are the inmates running the prison?

Oil Rises to Record on Iranian Output Concern -BL

June 27 (Bloomberg) -- Crude oil reached a record in New York for a third straight day, approaching $61 a barrel, as the election of a nationalistic government in Iran raised concern foreign investment may suffer in OPEC's second-largest producer.

Mahmoud Ahmadinejad, who won the runoff for the Iranian presidency, said yesterday he would favor domestic companies to develop the country's oil reserves, the world's second-biggest. He also plans to pursue a nuclear energy program to generate electricity, which may heighten tensions with the U.S.

``It's going to be very challenging for Iran to increase oil production,'' said Francisco Blanch, senior energy strategist at Merrill Lynch & Co. in London. ``What the country needs now is money. The new government has made it clear that foreign investment isn't going to be very welcome.''

Crude oil for August delivery rose as much as 80 cents, or 1.3 percent, to $60.64 a barrel, the highest price since oil started trading on the New York Mercantile Exchange in 1983. Oil, up 55 cents at 1:45 p.m. London time, has gained 67 percent from a year ago. It averaged less than $19 from 1995 through 1999.

``I want to expand the domestic industry,'' said Ahmadinejad, who will take office in early August. ``In the oil field, the priority will be on domestic contractors, specialists, investors and workers.''

If Iran's Ahmadinejad ``gives preference to the national oil company, over Shell for example, there's a possibility that Iran's oil production may have peaked and now be set to decline,'' said Deborah White, an economist at Societe Generale SA in Paris, referring to Royal Dutch/Shell Group. ``The refining jitters that drove the market to records last week are aggravated by the fact that we've seen a regime change in Iran.''

OPEC Output

Governments of some oil-producing nations, such as Russia and Venezuela, are increasing control over their domestic energy industries, seeking to benefit from higher market prices for crude and rising tax receipts from oil companies. Mexico has a ban on exploration by foreigners, which may hamper the development of deposits and slow production growth.

The Organization of Petroleum Exporting Countries is considering a proposal to raise output quotas by 500,000 barrels a day to help lower prices, OPEC President Sheikh Ahmad Fahd al- Sabah, who is also the Kuwaiti oil minister, said today.

Saudi Arabia, the world's largest oil exporter, would be willing to raise the limit, a Saudi official familiar with the nation's oil policy said today. Nigerian President Olusegun Obasanjo also said he backs an increase. Nigeria was OPEC's No. 5 producer in May.

Distillates, Gasoline

OPEC, the source of about 40 percent of the world's oil, is pumping almost as much crude as it can to boost inventories and meet increasing use in countries led by the U.S. and China.

Oil prices surged in 1979 after the Iranian revolution reduced the country's exports. An eight-year war in the 1980s between Iran and Iraq also curbed exports from the two Middle Eastern producers, sending prices to a record when adjusted for inflation. For U.S. refiners, oil cost $35.24 a barrel in 1981, according to the Energy Department. That's $75.44 in today's dollars.

Brent crude for August settlement today advanced as much as 85 cents, or 1.5 percent, to $59.21 a barrel, the highest since the contract started trading on London's International Petroleum Exchange in 1988.

Oil has gained about 16 percent this month on concern U.S. refiners will strain to store enough distillates for the northern hemisphere winter while they meet summer gasoline demand. As the world's biggest oil consumer, the U.S. burns about a quarter of the world's oil output, using about 10 percent of global supplies to make gasoline.

Energy Demand

``Until we get a clearer picture that demand is slowing, we can expect the market to test new highs,'' said Tor Kartevold, an oil analyst at Statoil ASA, Norway's No. 1 oil company. ``High prices are already affecting demand in Asia, where higher retail prices have started to bite. That's probably not enough because the market focuses on the U.S.,'' where consumption of gasoline and diesel keeps surging, he said.

U.S. demand for distillates, a category of fuels that includes heating oil and diesel, jumped 6.9 percent in the four weeks ended June 17 compared with the year earlier period, according to the U.S. Energy Department. Refineries are struggling to make enough transport and heating fuels before the fourth quarter, when global consumption peaks.

``The market feels very concerned that as we go into the fourth quarter, there's not going to be enough spare capacity to supply peak demand,'' Merrill's Blanch said.

Global oil use in the fourth quarter is expected to rise to 86.4 million barrels a day, a record, according to an International Energy Agency forecast. That's the amount of oil that about 43 supertankers can carry.

Foreign Investment

Outgoing Iranian President Mohammad Khatami, who has governed since 1997, passed a law on foreign investment in mid-2002 that boosted spending by international oil companies. Shell, Europe's second-biggest, has been working on a project for Iran's state oil company to increase production at the Soroush and Nowruz offshore oil fields.

BP Plc Chief Executive John Browne said in January that the company he runs, Europe's largest oil producer, would avoid doing business in Iran because of U.S. sanctions. The U.S. says Iran wants to build weapons from its nuclear program and calls Iran a sponsor of terrorism. Iran has rejected the charges.

``The U.S. will probably put pressure on Europe and Japan to withhold investments'' in Iran's oil industry, said Anthony Nunan, manager of international petroleum business at Mitsubishi Corp., Japan's biggest trading company.

Iran `Hawkish'

Iran is one of OPEC's most ``hawkish'' members in terms of production quotas, advocating output cuts more than most members. Saudi Arabia has favored higher production when prices rise.

``We are afraid that Iran will become more of an OPEC hardliner,'' White of Societe Generale said. ``If it's a more conservative government, they may decide to cut their production. It's like the transition to Chavez in Venezuela.''

Venezuelan President Hugo Chavez helped OPEC recover its ability to restrain output and increase prices by sticking to his country's output quota. A strike by Venezuelan oil workers against Chavez throttled the country's oil production at the end of 2002 and in early 2003.

http://www.bloomberg.com

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Saudi Billionaire Threatens U.S. Author -AIM.org
It is troubling that a respected author and expert such as Ehrenfeld was sued in a London rather than U.S. court.
June 22, 2005

Dr. Rachel Ehrenfeld is acclaimed for her detailed and investigative reporting on complex financial networks that support drug trafficking and terrorism. She was one of the first investigative journalists to draw attention to the controversial political and global activities of George Soros, the billionaire who took advantage of a loophole in U.S. campaign-finance law and spent $23 million last year to try to defeat President Bush for re-election.

Ehrenfeld, the Director of the New York-based American Center for Democracy, has been a research scholar at the New York University School of Law, a visiting scholar at the Columbia University Institute of War and Peace Studies, and a fellow at Johns Hopkins School of Advanced International Studies. She has also served as a government and law enforcement consultant, having most recently advised the U.S. Defense Department's Threat Reduction Agency.

However, Ehrenfeld's work, as well as that of other authors, is now at risk because of a lawsuit filed in London, the world capital for what's now called "libel tourism." At stake is nothing less than freedom of the press here in the United States and the First Amendment right of journalists to cover matters affecting U.S. national security and survival. This case involves another billionaire, Khalid Salim a Bin Mahfouz of Saudi Arabia.

Ehrenfeld's saga began with the publishing of her 2003 book, Funding Evil: How Terrorism is Financed and How to Stop It. This, Ehrenfeld's fifth book, examined the alleged involvement of Bin Mahfouz and his relatives and others in the funding of al Qaeda, Osama Bin Laden and other terrorist entities. Bin Mahfouz, who denies any role in sponsoring or financing terrorism, responded by filing a lawsuit against Ehrenfeld in London, claiming defamation.

The Bin Mahfouz family describes itself as "a major participant in Saudi Arabian business affairs for many years" and "one of the country's major investors both at home and abroad." The family also funds humanitarian activities abroad. But Bin Mahfouz and his lawyers have been busy going after writers and authors who claim to have documented that some of these humanitarian activities have turned out to be terrorist-related.

The family website identifies several "books, reports, newspapers, magazines and web based publications" which "contain numerous errors of fact about Khalid Bin Mahfouz and his family. Some of them make serious allegations against him, which are manifestly false and defamatory." The website also lists several publications, including the Washington Post and Wall Street Journal, which have corrected inaccuracies about him. It goes on to state that "Khalid Bin Mahfouz and his family reserve their rights against the authors, editors, publishers, distributors and printers of these publications. Furthermore, it should be noted that they expressly reserve their rights against any person or entity which repeats any of the erroneous allegations contained in these or any other publications."

Legal Threats

AIM sympathizes with any individual whose reputation is damaged by the media, and the record shows that Bin Mahfouz has obtained corrections of the record and apologies from a number of major authors and journalists who have alleged that he was involved in terrorism. But we are also concerned by the possibility that wealthy individuals could use the courts to silence their critics.

It is troubling that a respected author and expert such as Ehrenfeld was sued in a London rather than U.S. court. Although the book was not published or marketed in Britain, Bin Mahfouz was able go forward with his suit because 23 copies of her book were shipped overseas to people in London and because one chapter was accessible to residents there via the Internet.

In regard to the Ehrenfeld book, the Bin Mahfouz website declares that, "On 3 May 2005, Mr. Justice Eady in the High Court in London awarded Sheikh Khalid Bin Mahfouz, Abdulrahman Bin Mahfouz and Sultan Bin Mahfouz substantial damages in their libel action against Rachel Ehrenfeld and Bonus Books. The Judge also made a declaration that the allegations contained in a book, 'Funding Evil,' written by Rachel Ehrenfeld and published by Bonus Books were false and highly defamatory of the Claimants. The Judge ordered the Defendants to pay the Claimants' costs of the action and publish a correction and apology. The full Judgment of Mr. Justice Eady will be made available shortly."

Different Legal Standards

Under English law, however, the plaintiff does not need to prove malice or negligence. The burden of proof falls upon the defendant who must prove that all his/her statements are in fact true, not just that they were reported in good faith. Such a legal process is unthinkable in the U.S., where the burden of proof is upon a public plaintiff who must prove that what was reported about him/her was demonstrably false, malicious and/or reckless.

Bin Mahfouz, whose wealth is estimated by Forbes magazine at $2.8 billion, has yet to lose a case in the London courts. Ehrenfeld said that other publishers have capitulated to his legal threats because surrendering is cheaper than launching a defense.

Ehrenfeld boycotted the London court proceedings, was found guilty, and ordered to pay £60,000 (US $109,470) as a "down payment" on damages. (Media erroneously reported the figure as a final fine of £30,000.) The London Times reported the judge as saying it was "false" to say that Bin Mahfouz financed or supported al Qaeda or other terrorist groups.

Ehrenfeld says her reporting on Bin Mahfouz was based largely on public and other authoritative sources and included footnoted references to documents or information from the CIA, Department of Defense, Treasury Department, and Congress. She also cited investigative reporting by the Wall Street Journal, Washington Post, London Times, The Economist and the Financial Times. But some of her sources, she contends, have access to confidential information that they could not discuss in open court.

Freedom Of The Press

Ehrenfeld said that she has no intention of complying with the court order and has chosen instead to fight for her First Amendment rights by suing the billionaire in New York. She wants the court to find the London judgment to be unenforceable in the U.S., and to reiterate that publication of her book may continue in the U.S. because it is constitutionally protected speech. What Ehrenfeld is seeking is a legal remedy to vindicate her rights and protect her integrity and reputation as a writer. "This is a landmark case which I hope will make a legal precedent," she says. She adds that, "thus far Bin Mahfouz has successfully used the UK courts as an instrument to intimidate and try to silence investigations about his and other Saudis alleged role in financing Islamist terror organizations."

Ehrenfeld sees the outcome of her New York case as a pivot point for national security reporting in the U.S. She says that authors should not have to fear getting sued over publishing what they regard as thoroughly researched information about alleged terrorist networks and their backers. Ehrenfeld says she has already learned of a major publisher who has decided to shelve a new book on Saudi-related terrorism because they fear the financial burden that may come with having to defend the book in London courts. She says that in the wake of previous Bin Mahfouz lawsuits filed in London against other authors and reporters, newspapers now reference alleged Saudi funding of terrorism in only the vaguest of terms.

Ehrenfeld's lawsuit states that, "[Bin Mahfouz] both hides the truth of his acts behind the screen of English libel law and seriously chills legitimate and good faith investigation into his behavior and links to terrorism." Contending that the funding of terrorism is one of the most crucial issues of national security and of immense public interest, the lawsuit states that "It is common knowledge that inquiry into sources of such funding has been difficult. This action will allow such inquiry in the public interest to continue."

www.aim.org
To contact Rachel visit public-integrity.org
Ed. Note: I am currently reading FUNDING EVIL By Rachel Ehrenfeld and I plan to publish my book review soon. In the meantime, Here is what others are saying...

Operation Divest Terror -- WND -- 7-5-05 -- Private-sector offensive aims to shut down 'business' of extremists...The goal of "Operation Divest Terror" is to help investors identify U.S. companies whose business activities provide revenues, equipment and technology and political cover to governments that sponsor terrorism – and send them a message this is a bad business decision.

What's rising faster than stocks? Coins -CSM
Since the dot-com bubble burst, rare coins have trumped stocks as investments.
By The Christian Science Monitor
Jun 20, 2005

A significant portion of Gene Sherman's wealth comes from old money, some that even dates back to the Roman era.

That's the advantage of coin collecting. You can pursue a hobby and get a start on building a fortune.

These days, that fortune is sparkling brightly.

With general shakiness in the economy, some investors are bullish on coins because they are tangible assets that are not as susceptible to the same market pressures as stocks and bonds. The value of precious metals is up, an indication that the value of coins is on the rise. The CU3000 Rare Coin Index, meanwhile, has handily outperformed the stock market since the peak of the dot-com bubble five years ago.

The index, which measures the value of the 3,000 most actively traded coins, has increased about 20% over the past five years, while the Dow Jones Industrial Average has dropped more than 5% and the Standard & Poor's 500 index has declined at least 20% during the same period. (Over a decade, though, stocks come out on top.)

So is it time to dust off that old penny collection and get serious?

Opinions are divided

"My wife feels this isn't the wisest investment," says Sherman, who lives in Palos Verdes, Calif., an exclusive seaside community south of Los Angeles. "But every coin in my collection is increasing in value, and I think coins are a hedge against inflation."

Even though more than 15% of his assets are tied up in coins, Sherman invests in coins for love of their beauty and history, not as a way to make money. Since there is no scientific method when it comes to determining the value of a coin, experts note, would-be collectors need to know what they're doing.

FULL STORY

NEWS FLASH - 7-1-05 -- Investing in American History Pays Big
Quarter ounce of gold sells for $1.38 million

Kevin Lipton Rare Coins of Beverly Hills paid $1,380,000 for a rare MS-65 1796 quarter ounce gold coin last night for a client. Less than 10 years ago he bought the exact same coin for $600,000. Why "because it's on of the greatest examples of early American historic coinage he's ever seen, according to Mr. Lipton.

Kevin Lipton Rare Coins also sold a rare 1794 silver dollar for $1,150,000 last night to an unnamed investor ... the same coin he sold 10 years ago for $400,000, according to Lipton.

Why are investors paying millions for rare coins on a weekly basis now?

Author and CEO Craig Smith says, "Big money is desperately searching for assets that are safe, private and have plenty of growth potential ... especially with inflation and interest rates rising."

Mr. Smith thinks this may be the best time in the last three decades for investors -- big and small -- to get informed about the fast paced world of investment-grade U.S coins which are an investment in American history that pays big dividends for those with patience.

Related Story:
Investors Flock to Coins Amid Rising Metal Prices -WSJ ... Rare coins are starting to attract investors more at home with stock brokers than coin dealers. The interest in coins comes as sophisticated investors are increasingly looking for assets outside of the U.S. stock market, which many market observers expect to post only modest gains during the coming year. In buying rare coins, individuals not only acquire a collectible asset, but they are also getting exposure to precious metals. The prices of gold and silver, from which many popular U.S. coins are made, are both rising smartly.

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COMMENTARY

Gold breaks out but the best is to come -FT
By John Dizard, London Financial Times
June 26, 2005

I have been rather annoyed by the recent rise in the gold price. I have started writing a book on gold and wanted its price in the big currencies to go nowhere, that is to say, a little up, a little down, for the remainder of the year.

Then, starting at the beginning of 2006, I wanted it to begin a gradual rise, with that increase becoming dramatic in the autumn of that year to coincide with the book’s publication. That was the plan.

Instead, gold has begun what the technicians call a “break-out” against the euro, the dollar and now the yen. I take some comfort in the belief that this is the beginning of a multi-year bull market in the metal, which probably means a bear market in almost everything else.

The trigger event in the recent break-out was the defeat of the European constitution in the French referendum. Technicians and traders who had been plotting every little squiggle of the dollar price of gold suddenly noticed that the euro, which had traded in tandem with gold since its inception, had become decoupled from the metal.

It was only last week, however, that the dollar price of gold briefly broke above the key level of $443. Martin Pring, a cautious technical analyst, says: “That move above $443 breaks an important uptrend line for gold. But it is not just the dollar price; gold in global terms is doing well.” Gold traders tend to be technicians, rather than fundamentalists. The huge above-ground supply of gold means that attempts to judge the metal’s prospects by looking at mine production against identifiable demand for fabrication will not work very well. It is investor sentiment that is important.

Kevin Grady, who manages trading for Refco on the floor of the Comex in New York, confirms: “It was the break-out of gold in euros – that is what everyone is looking at.”

For years gold trading had been a game of mine owners hedging their production by selling gold short in the dealer market and on the exchanges. Their relentless shorting of their own product crushed the last generation of goldbugs.

Mr Grady says: “The mines are now out of the picture. Investors are feeling comfortable trading gold because the mines won’t sell against you.” Most of the mine short sales were effected through the over the counter dealer market. As one such dealer in London says: “At its peak, mine hedging [short sale positions] was about 120m ounces. Now I think it is lower than 50.” The traders say every sell-off in gold is taken as an opportunity by the miners to buy gold to cover their short positions.

Why were the miners selling gold short in the first place? It was a cheap way to borrow money to cover their capital expenditures. Mines could borrow gold at low interest rates through central banks, intermediated by bullion dealers. They could pay it back from mine production in future years. during the gold bear market of the 1980s and 1990s, short selling production made it possible for mines to lock in good margins. This hedging kept the gold dealers in business for 20 years of thin investor demand.

Now the investors are back. According to Mr Grady: “Retail used to be one contract, two contracts, or five contracts. Now retail is 50, 100, or 200 lot blocks.” A single gold futures contract on the Comex requires original margin of $1,300. There are apparently a lot of individuals who can throw $130,000 at a gold position on the exchange.

This has been made easier by the introduction of electronic order handling. Customers can enter orders, get them filled on the floor, and have that reported to them in 10 to 16 seconds. That is faster than flipping houses in Florida.

There has also been more activity on desks of the over the counter dealers. As their customers among the mining companies gradually de-hedge and reduce their positions, they are replaced by sellers of commodities indices. The sellers of the indices, which now have capitalisations of $50bn-$60bn, need to hedge their sales to customers with purchases of the components, which include gold. European institutions have been significantly increasing their participation in the indices.

The gold mining stocks have not been attracting the new interest that the metal itself has. Shares peaked in November and then took a dive. They have recovered since but not yet to the highs of autumn. “The shares have been moving about three times the rate of the gold price,” says Cesar Bryan, the manager of the Gabelli gold fund. “Since the recent gold bottom in May, the metal is up about 5.5 per cent and equities are up 16 per cent.”

That makes sense. With hedges taken off, companies’ earnings are leveraged to the metal price.

I still think a big rise in the gold price is at least a year away. Central banks need to give up on raising or even holding rates and then try to reliquify their way out of asset deflation.

That’s when the real fun will begin.

http://www.ft.com

Related Stories:
6-24-05-- Gold rush may mean inflation bust -CNN/Money -- Gold rising against nearly every currency when oil is at $60 a barrel may signal serious inflation woes ahead. New York Institutional Gold Conference: "the price of spot gold will hit $850 an ounce in the next few years..." When inflation grips a market, the value of dollar-denominated assets is eroded.

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NEW!! -- The Future of Gold and Silver CD Offer! -- Craig Smith Interviews Bill Murphy, GATA -- Recorded: June 1, 2005 (30:00 trt) ... Bill Murphy, founder of The Gold Anti-Trust Action Committee, explains why gold should be $750 and silver $15 an ounce -- nearly twice current prices -- IF major bullion banks would finally stop their market manipulation!

The Left's PR Campaign for Islam's Koran -CRS
Welcome to the courtroom of the future: "Your religion please?"
By Craig R. Smith
Worldnetdaily
June 27, 2005

"Everybody understands what the Holy Scriptures are. If they don't, we're in a mess."
- Judge W. Douglas Albright, Guilford Superior Court, Greensboro, NC News-Record

Before September 11th, how often do you remember hearing about the Koran on the radio or in the nightly news? You can probably count the number on one hand, unless your religion is Islam.

But since 9-11, the Koran is all over the news as the far-Left media has buckled to the pressure of the likes of The Council on American-Islamic Relations, bogus Newsweek reports about Gitmo, etc.

It seems the radical Left won't be happy until they force America to place the Koran on the same level as the Bible. And now, they're trying to say to the American court system that it's unconstitutional to force Muslims in U.S. courts to swear on the Bible! Instead, they want to allow Muslims to swear on the Koran.

Welcome to the courtroom of the future…

- A courtroom that no longer requires judges to tote a Bible as they enter the court

- A courtroom that no longer requires "all to rise" in honor of that Bible under his arm

- A courtroom where you'll first be asked: "Which holy book do you believe in?" before swearing in

- A courtroom in which atheists may refuse to swear in, based on "no religion"

Keep in mind that liberals couldn't care less what anybody did to a Bible anywhere. But if we the People allow a Koran to be desecrated in any way or, heaven forbid, destroyed... watch out for the wrath of the godless!

What in heaven's name is going on here? Wasn't obedience to the Koran the basis for the 19 Islamic radicals declaring Jihad (holy war) against America and leveling the WTC and killing 3,000 innocent civilians?

The fact is, most Islamic centers and mosques in the United States are largely funded and controlled by militant Muslims who are committed to destroying the very nature of America. It now appears the Left is committed to destroying America along with them.

Surprise, surprise! Those who want the crosses removed from all public places, the ones who want "In God We Trust" off our coins, those who want "under God" struck from the pledge, those who want all Christian references removed from public view -- are the same ones standing up for the Koran.

More than two years ago, the Pentagon issued detailed rules for handling the Koran at Gitmo, requiring U.S. personnel to ensure that the "holy book is not placed in offensive areas such as the floor, near the toilet or sink, near the feet, or dirty/wet areas." Interestingly, the Pentagon does not have any similar policy regarding any other major religious book -- including the Bible!

Yes, we've bent over backward to show undue respect for the Koran simply because Muslims believe insulting the Koran is a form of blasphemy, which in Muslim countries is punishable by lengthy imprisonment or even death.

But guess what? THIS AIN'T A MUSLIM COUNTRY … yet anyway! Polytheist perhaps, but not Muslim.

Peaceful change -- beginning at the grassroots

The Jerusalem Post recently reported, "America has never been able to establish a bridge between itself and the Muslim masses. America has very foolishly imposed one corrupt individual, like Egyptian President Hosni Mubarak, Haq or the Saudi kings, who have no credibility with the masses. If America succeeds in connecting itself, subtly, with the grassroots in those countries, it will succeed in creating goodwill for itself, because America is essentially a good power, and goodness will show itself when it has translated itself into the welfare of the people. Once that is achieved, a mindset will evolve which will in turn herald the death of anti-Semitism, and affluence will provide the challenge to the clerics who feed the poverty-stricken mosques with hatred."

U.S. support for the demonstrators in Iran is a perfect example of what we should be doing to reach out to Muslims. If America keeps moving in this direction, this may well become the first example of success, thanks in part to Dr. Jerome Corsi's Iran Freedom Foundation aimed at strengthening ties between Americans and Iranians and calling for peaceful change in Iran.

Here's a final news item I think you'll find supremely ironic. FridayFax reported last week that more and more Muslims are throwing the Koran into the trash and even rivers, and picking up Bibles.

"One day, an Imam held the Koran up in the Mosque, saying 'This book has done nothing to improve our lives.' Then he threw the book in the river. The congregation of around 4,000 men followed their leader's example, throwing their Koran in the river too."

Bottom line: Don't buy the Left's lies about "Koran desecration" at Gitmo. Don't buy the Left's notion that freedom of religion means freedom from religion. America has a long history of religious tolerance, while at the same time holding to the basic truths of the Bible … NOT the Koran!

Craig Smith WND Archives

10 Things You Don't Know About Terrorism -Loretta Napoleoni

Two and a half years into the 'war on terror', the US is running a $500 billion budget deficit, its highest ever and the country is struggling to cover war costs. Terrorism seems to be a very costly business. So how can terrorists afford it? The answer is simple: terrorism is their business.

1. Terrorism has always been a business

During the Cold War terrorism was the trade of the superpowers. They fought wars by proxy across the world by funding local armed groups with legal or covert operations (for example the Contras in Central America). In the late 1970s-early 1980s, some of these groups managed to privatize terrorism. To raise money, they used a mixture of legal and illegal activities -- the IRA had the monopoly of private transport in Belfast; the PLO got a cut out of the Hashish trade from the Bekaa Valley; Carlos the Jackal and Aby Nidal became 'guns for hire' for Arab leaders such as Gaddafi.

2. Globalization boosted terrorism

In the 1990s, as international economic and financial barriers were lowered, terror groups expanded their businesses, which become transnational. Today, money is raised cross border, as proved by the joint business empires of Yousef Nada and Idris Nasreddin, two of bin Laden's associates. According to the UN, their portfolios, which range from real estate to fisheries, sprawl across Europe and Africa, and are worth hundreds of millions of dollars.

3. Each time an American reads a newspaper or takes a sip at a soft drink, they contribute to Osama bin Laden's financial empire

Terror businesses could not stay out of the largest consumer market in the world, the US. In the mid 1990s, while residing in Sudan, Osama bin Laden acquired 70% of Gum Arabic Company Ltd, which produces about 80% of the world supply of gum arabic. Extracted from the sap of the acacia trees that grow in Sudan, gum arabic is used to make ink stick to newspapers, to prevent sediment forming in soft drinks and to create a protective shell around sweets and pills to keep them fresh. The US is the largest importer in the world. Bin Laden's investment proved to be a very sound one. In November 1997, when Clinton imposed economic sanctions on Sudan, a number of American importers including the Newspaper Association of America, and the National Soft Drinks Association of America, objected. Eventually, Gum Arabic was exempted.

4. The Terror Economy is Bigger than the GDP of the United Kingdom

Globalization also facilitated the merging of terror enterprises with criminal and illegal activities. This meant big business. Today their joint yearly turnover is a staggering $1.5 trillion dollars, higher than the GDP of the United Kingdom.

5. The terror economy props up western capitalism

The bulk of the $1.5 trillion flows into Western economies and gets money laundered in the US and Europe. This is a vital infusion of cash into these economies. If we were to cut it overnight, the West would be plunged into a recession.

6. The illegal/terror economy grows faster than the US economy

Up to now, terror business has been conducted in dollars, primarily in 100 dollars bills; so are arms and drugs smuggling and other criminal and illegal activity. Thus, a rough indication of the rate of growth of the terror economy is given by the yearly infusion of new stock of US dollars. In the year 2000, as much as two third of the US money supply, equivalent to $500 billion, was taken out of the US monetary system for good and is now held abroad. This figure refers to money taken abroad in suitcases or via offshore accounts. If these statistics are correct, then the rate of monetary growth of the terror/illegal economy is higher than that of the US economy.

7. 9/11 was one of the greatest insider-trading events in modern history

Terrorists are also very skilled speculators. During the week before 9/11, an unusually high volume of trading was reported in certain sectors, e.g. air transport, energy and insurance. Shares of American Airlines and United, the US airlines involved in the 9/11 attack, were targeted. A similar trend was reported in the insurance business, with leading companies becoming the object of exceptional and unexpected speculation on the futures market. The weekend following the attack, Ernst Welteke, president of the German Bundesbank, admitted that there had been insider trading by 'terrorists' and added that the commodities markets had also been targeted. Indeed, days before the attack, oil and gold experienced a sudden and inexplicable rise in price. This was followed by a surge in activity on the futures market. On 12 September, oil prices jumped by more than 13 per cent and gold prices went up by over 3 per cent. Prices continued to climb all week. Anybody who knew what was going to happen on 11 September could have predicted such a trend.

8. Profiteering on Terrorism

Terrorism is such a good business that even the US government tried to get a stake in it. Last summer, the Pentagon was forced to abandon a 20 months project, Future PAM, to launch an online futures market that allowed speculators to bet on assassinations, coups and acts of terrorism. The project was headed by a leading expert on state sponsored terrorism, retired vice admiral John Poindexter, formerly national security adviser under President Reagan. In the1990s, Poindexter was convicted on five felony counts, including lying to Congress, destroying documents and obstructing congressional inquiries into the Iran-Contra scandal. Several US senators strongly opposed the project on the ground that terrorists would be the biggest beneficiaries as they are the ones who carry out the attacks.

9. Terrorism is such a good business that nobody really wants to eradicate it

So far, international efforts to curb terror financing have failed. An insignificant $140 million of terror money have been frozen since 9/11, 70% coming from accounts held in the West. Business profits generated by Al Qaeda front companies and donations from the Muslim world are mostly untouched. For example, Haramain Charitable Foundation, a Saudi charity worth $30 million per year, is still active in several countries. Recently Haramain has opened a new Islamic school in Jakarta, a hot bed of Islamist terror in South East Asia. Twice the Saudis have agreed to shut this charity, which is headed by Sheikh Saleh bin Abdul Aziz al-Ashaikh, Saudi minister for Islamic affairs, but never did it. So far the Saudis have frozen $4.7 million of terror money, closed 6 of the 241 Saudi charities and prohibit the collection of coins at the entrance of shopping malls. Not a lot when compared with UN reports stating that prior to 9/11, as much as 20% of Saudi GDP went to fund Al Qaeda alone.

10. Twice the US passed on the opportunity to get hold of Osama bin Laden

Is terror such good business as to prevent the arrest of bin Laden? In 1996, the Sudanese Minister of Defence, Major General Elfatih Erwa, offered to extradite Osama bin Laden, then resident in Sudan, to the US. American officials declined the offer. Instead, they told General Erwa to ask bin Laden to leave the country. 'Just don't let him go to Somalia,' they added. In 1993, 18 US soldiers had been brutally killed in Somalia in street riots involving Al Qaeda supporters and the US feared that bin Laden's presence in the country would create further unrest. When Erwa disclosed that bin Laden was going to Afghanistan, the American answer was 'let him go'. A few weeks after 9/11 the leaders of the two Pakistani Islamist parties negotiated with Mullah Omar and bin Laden for the latter's extradition to Pakistan to stand trial for 9/11. Once again the US refused the offer.

Two and a half years into the 'war on terror' it is apparent that the winners are the terrorists -- while Al Qaeda's finances are still intact the US is running the highest budget deficit in history. What can be done? Start by treating terrorism for what it is: a global business; force our Muslim allies to act immediately to curb terror funding and concentrate our efforts to hunt terror money in our countries, even if that implies putting under investigation the strongholds of Western capitalism: Wall Street, the City of London and the thousand offshore centres linked to them.

Related Story:
6-28-05 -- U.S. AID accused of funding terror -UPI ... The U.S. Agency for International Development has been accused by an Israeli group of indirectly funding Palestinian terror activity. Funds from USAID were indirectly used to fund terrorist activity, alleges a new report by the Israeli monitoring organization Palestinian Media Watch, reported by the Jerusalem Post.

Related Book:
Terror Incorporated -- Tracing the Dollars Behind the Terror Networks By Loretta Napoleoni... Loretta Napoleoni is an economist who has worked for banks and international organizations in Europe and the US. She has written novels and guide books in Italian and translated and edited books on terrorism. She is among the few people who interviewed the Red Brigades in the early 1990s. She developed the idea to research and write a book on the economics of terrorism while interviewing the leaders of the Red Brigades.

Related Offer:
Operation Divest Terror -- WND -- 7-5-05 -- Private-sector offensive aims to shut down 'business' of extremists...The goal of "Operation Divest Terror" is to help investors identify U.S. companies whose business activities provide revenues, equipment and technology and political cover to governments that sponsor terrorism – and send them a message this is a bad business decision.

The Many Evils of Inflation -Hans F. Sennholz
June 22, 2005

Many people know how to earn money, but few are aware of what the Federal Reserve System, acting on behalf of the U.S. Government, is doing to their money. It is inflating and depreciating the dollar at various rates--at double-digit rates during the 1970s and early 80s and at single-digit rates ever since. The present dollar is worth no more than 10 cents of the 1970 dollar and 50 cents of the 1980 dollar.

The reasons and explanations given for this loss may change over time, but the consequences are always the same. Inflation covertly transfers income and wealth from all creditors to all debtors. It dispossessed present creditors of nine-tenths of their 1980 savings and enriched debtors by the same amount. The dollar savings accumulated since then have shrunk at lesser rates but are fading away notwithstanding.

No wonder, many victims readily conclude that thrift and self-reliance are useless and even injurious and that spending and debt are preferable by far. They may join the multitudes of spenders who prefer to consume today and pay tomorrow, and they may call on government demanding compensation, aid, and care in many forms. Surely, the hurt and harm inflicted by inflation are a mighty driving force for government programs and benefits.

In their discussions and analyses of various problems, economists usually avoid the use of moral terms dealing with ultimate principles that should govern human conduct. Ever fearful of being embroiled in ethical controversies they seek to remain neutral and “value-free.” They do counsel legislators and regulators on the cost-efficiency of a policy but not on its moral implications. They may offer professional advice on the efficiency of money management but not on the morality or immorality of inflationary policies. They dare not state that inflation is a pernicious form of taxation which most people do not recognize as such.

Authorities of money and banking rather than taxing authorities redistribute income and wealth under cover of ignorance. Placed on every person in the form of higher goods prices, the application does not fall equally and simultaneously on every buyer. The people who receive the newly created money first may actually benefit as goods prices readjust rather slowly. Others who receive it later or not at all will have to tighten their belts. Above all, inflation ravishes the savings of countless Americans and turns many into prodigal spenders and debtors.

The biggest debtor also is the biggest inflation profiteer. With some eight trillion dollars in debt, the Federal Government is by far the biggest winner. In fact, it gains not only from debt depreciation, which at just three percent amounts to some $240 billion every year, but also from Federal Reserve money and credit creation that enables the U.S. Treasury to suffer annual budget deficits of some $500 billion a year.

Without the power to inflate and depreciate the dollar at will, the U.S. Government would be a different institution, like that which the Founding Fathers had envisioned. But endowed with the power of inflation it has become an almighty organization that redistributes income and wealth and refashions the social and economic order.

The primary beneficiaries of the new order are its own managers: legislators, regulators, and a huge army of civil servants. They are first in power, prestige, and benefits. Many U.S. Senators and Congressmen are the admired and esteemed benefactors of countless petitioners for handouts and favors. They are revered for every benefit they bestow. And there are the officials of the Department of Commerce with 7 benefit programs, the Department of Education with 34 programs, the Department of Energy with 6, the Department of Health and Human Services with 8, the Department of Housing and Urban Development with 14, the Department of the Interior with 3, the Department of Labor with 9, the Department of Transportation with 9, and various government commissions and authorities with another 10 programs.

Federal politicians and agents are the wise and virtuous judges and juries of benefits amounting to more than $1 trillion every year. How “honorable” would they be, pray tell, without Federal Reserve assistance in financing the deficits and its power to print more money?

Evil acts tend to breed more evil acts. Inflationary policies conducted for long periods of time not only foster the growth of government but also depress economic activity. Standards of living may stagnate or even decline as growing budget deficits thwart capital accumulation and investment that are sustaining the standards.

Inflation misleads businessmen in their investment decisions, which causes much waste and many bankruptcies. In fact, it is the root cause of the boom-and-bust cycle which wreaks havoc on economic activity. Indeed, inflation breeds many evils of which most Americans are unaware.

Since 1971 when President Nixon abolished the last vestiges of the gold standard and repudiated all obligations to meet international obligations with payments in gold, the U.S. dollar has been the dominant world currency. It enables Americans to buy massive quantities of foreign goods and services, suffering annual trade deficits of more than half a trillion dollars now, and making payment in ever depreciating dollars. Foreign central and commercial banks as well as many foreign individuals are using their dollars with the hope that they will retain their purchasing-power in the long run. Asian creditors are holding more than $2 trillion in claims, Japan and China alone an estimated $1.5 trillion between them.

A dollar depreciation rate of just 3 percent strips Japan and China of some $45 billion in purchasing power every year. They undoubtedly are suffering such losses in silence because they are mindful of the many benefits they are receiving from amicable relations with the United States. American capital is rushing into China, building many plants and introducing modern technology while some 20,000 young Chinese are studying at American colleges and universities.

The Politics of Unemployment Sennholz on labor and inflation: $22 At the same time Japanese and Chinese companies are investing surplus dollars in the United States, assuming control over American corporations. If the United States government should ever disrupt this peaceful relationship with discriminatory trade restrictions and painful barriers, the Asian creditors may dump some dollar holdings. The dollar crash would be heard around the globe.

There is no conscience in politics. Economic policies may be changed, reformed, and readjusted because they are ineffective, unproductive, and unpopular, but rarely ever because they are immoral. Debt may be a grievous bondage to an honorable man, but it may be a “national bond” which, in President Roosevelt’s words, “is owed not only by the nation but also to the nation.” Surely, politicians have a code of laws to observe and obey, but honesty in matters of debt and money is not one of them.

If it is true that we cannot do wrong without suffering wrong, we must brace for more grief to come.

Hans F. Sennholz, Professor Emeritus Grove City College and Adjunct Scholar of the Mises Institute, is the winner of the 2004 Gary G. Schlarbaum Prize.

http://www.mises.org

Related Story:
CPI RIGGED, "REAL WORLD" INFLATION 7% -- Is the CPI index rigged? By Craig R. Smith -- It's nonsense to say that we live in a world of 2 to 3 percent inflation today, because the government has systematically stripped out of their CPI virtually all of the "real world" indicators ...

YES!! Gold market screams "BUY ME" -Bill Murphy
June 24, 2005
www.LeMetropoleCafe.com

June 23 - Gold $440.80 up $3.20 - Silver $7.24 up 1 cent

YES!!!

"I detest that man, who hides one thing in the depths of his heart, and speaks forth another." – Homer

The Gold Cartel had its chance to put gold away on Tuesday and Wednesday. What was so noticeable about those two trading days was their failure to do so, as noted by MIDAS. Well lo and behold, they got their third chance today and still shot blanks.

Gold came in unchanged with the dollar sharply higher against the euro. This alone had me ranting right after trading commenced on the Comex. Soon after the opening, the euro went down one full point, while gold ticked up 50 cents and more. The euro price of gold rocketed to 364+ after the first half-hour of trading.

As someone with 25 years of commodity trading experience, and at the highest level at times, this had me licking my chops, which is why I am writing this so early on in the day. It is rare that a market screams, "BUY ME" to you. This is what Tony Wilson of Refco in Toronto and I were jumping up and down about this morning with gold at the unchanged mark.

There is a significant reason to point this out – and that is to give you more confidence that the Planet GATA analysis of the gold market is the correct one and has been for some time. AND, that the historic gold/silver move is about to kick into high gear, just when most investors aren’t paying attention to what is happening and why.

One month ago you could not find anyone, anywhere who said gold could run like this without dollar weakness, much less dollar strength; nary a one, except MIDAS/Planet GATA and, of all people, Dennis Gartman. Of course, our reasoning for such an occurrence could not be further apart.

It has been Planet GATA’s contention the gold market has been rigged by a Gold Cartel taking physical gold from the central banks and clandestinely lending this gold into the cash market via their bullion dealers to artificially suppress the price by hundreds of dollar per ounce. They have done so to such an extent that the central banks probably have less than 14,000 tonnes of gold left in their vaults, instead of the 32,000 tonne figure bandied about by Planet Wall Street and the apologists of The Gold Cartel in the mainstream gold world.

It has been GATA’s contention the bad guys would eventually hit the wall, meaning run out of enough supply to meet demand, which is disappearing at a rate of 1500+ tonnes per year greater than mine and scrap supply. We, including the very savvy John Brimelow, have also pointed to a short-term gap in their supply chain this summer due to the European sellers of gold in the Washington Agreement having gone through most of their quota for this current selling year, which ends on September 25th.

Is it any wonder then that gold is dazzling investors by running higher, even as the dollar continues to rise and rise? PRICE ACTION MAKES MARKET COMMENTARY. While NO ONE out there said this was possible a month ago, now everyone is leaping on board as to what is happening and why. The most popular reasons for gold moving like it is seem to be:

*Global interest rate yield drops.
*Increasing inflation (even as so many on Wall Street state on CNBC there is no inflation threat).
*Greater concern over fiat currencies.

All of these are valid to some degree, yet none are new. Only the "NO" votes over the Euro Constitution are a development not in play before the past few weeks. Matter of fact, the historic reasons for gold to move up have diminished of late with happy US real estate, stock market and bond investors everywhere. Over the past couple of years, at various times, you could have come up with many more powerful reasons for gold to move up like it is, rather than ones presently discussed.

Most of the commentary re gold seems to be more of a struggle to explain what is going on. For sure, we see one different explanation after another. The only consistent explanation over the past many months, even years, comes from Planet GATA. We have stated over and over gold will move much higher when The Gold Cartel begins to lose control over their price-rigging scheme. We already know they have LOST one of these tools – that being their using the dollar for manipulation purposes. You don’t hear this from anyone not in our camp. Whether exactly correct or not, we have it right so far and have been Steady Eddie with our analysis – just like we got it right when gold was below $300 per ounce – when so few others were bullish. As I mentioned the other day, this latest gold development is just one more reason for money managers and gold companies to attend Gold Rush 21. The Masters of the Gold Game will be there, all together for the first time ever.

GATA is on the money once again. More importantly, as a result of the nefarious activities of the white-collar crooks in the Gold Cartel, we know what lies ahead for the price of gold and why. The price move up in gold will ASTOUND the investment world. I believe this will be invaluable input for those taking the time to go north to The Yukon Territory in early August. Please take some of your time to send this part of the MIDAS commentary to your gold companies with a personal short note attached. Ask again, even if they said no the first time. Persistency rules the day.

While there is reasoned concern over the sharp gold open interest increase on Comex with The Gold Cartel stopping gold at the $440 level basis spot, of more trouble to the shorts is the 25,000 August $445 call position. This is a HUGE number and gold has to rise only a few more dollars for them to go in the money with a month left until option expiry. August gold closed at $443.20. As is, some of the trade who wrote these calls are covering as they must do as the price goes closer to the call price. Much of this buying is strictly based on delta hedging formulas, which means as the price of gold rises towards the call price, the writers of the calls must gradually buy futures to cover their upside exposure.

It is important to keep in mind by far the most significant buyer of these calls is a former trader for Goldman Sachs who now works for a fund. If anyone would have the inside track about what has really transpired over the years in the gold market and what lies down the road, it is a former trader for Goldman Sachs. The floor reported this trader doing a little bit of selling this afternoon, which is very normal.

Should August take out $445, which I expect it to do, all heck can break loose.

August gold http://futures.tradingcharts.com/chart/GD/85

Gold’s breakaway gap around $430 continues to hold and it ought to from here on in. There are no other gaps to fill, so all systems go from that technical standpoint.

Silver has me totally confused. It ought to be on the move. My only comments are that it is not doing so because the bad guys are in the process of losing control of gold, thus they are all over silver for the time being.

The silver open interest rose 1073 contracts to 132,207, a new high. This bears close watching. One day silver is going to go bonkers.

http://www.lemetropolecafe.com

When Hathaway Discusses Gold, the World Listens
By Dorothy Kosich
MineWeb
June 22, 2005

SAN FRANCISCO-- When Tocqueville Asset Management's John Hathaway speaks, analysts, investment funds and a hefty percentage of the gold mining industry listen. And, in the renowned gold bull's opinion, the most exciting development to take place in the gold market lately "is the implosion of the euro."

In a luncheon address to the San Francisco Gold Forum Tuesday, Hathway declared that the first half of 2005 has been "noteworthy in that two important capital havens have been soundly discredited: (1) multiple categories of speculate debt investments and (2) the euro. The demise of both is still in progress."

As traders have become overwhelmingly bearish on the euro, Hathaway predicted that “a decent rally is most likely around the corner." He noted that gold has risen 10% against the euro since January 1, currently trading at 360 to an ounce of gold. Nevertheless, Hathaway asserted that it was a stretch to "project a complete demise of the euro."

The advance of the price of gold is an indicator of "progressive credit deflation," Hathway explained to an audience of analysts, institutional investors, and mining executives. "Investors come to gold through a process of elimination," he suggested. "It's an odyssey of disappointment in other investment vehicles. It's part and parcel of a recession in credit."

Hathaway asserts that a credit squeeze is in the offing. "Expanding credit spreads, a declining Barron's confidence index, the flight to quality, the Fed's response of liquidity creation all add up to a credit squeeze," he suggested. When credit is harder to obtain gold does better. Hathaway feels "junk credit will be buried in due course by a global slowdown," insisting that, indeed "the economy is headed toward some kind of slowdown." He also speculated that potential candidates for the next economic bubble to burst include hedge funds, China, and the stock market.

Nevertheless, in Hathaway's opinion, "the mother of all bubbles" is the U.S. Treasury market. "Rising nominal interest rates in U.S. Treasuries will inflict severe collateral damages on subsidiary bubbles, including housing. This won't occur until foreign central banks turn their backs on the dollar."

Since the Federal Reserve has no ability to tolerate a recession, Hathaway predicted "they will do a u-turn. They will declare victory. ...At that point, we will see the gold market kick into another gear."

SUPPLY IS TIGHT

"Even though trading houses in New York and Europe seem to find plenty of paper gold to trade in a knee-jerk fashion according to the news of the day," Hathaway insisted that physical gold supply "is extremely, extremely tight." The shorts on the CFTC indicate 757 tonnes of supply or one third of annual gold production, he said. "It's short because Central Banks have oversold their allotment under the Washington Agreement," he added.

To maintain an allocation of 500 tonnes, Central Bank flow is going to drop by 25% over the next three months, Hathaway projected. "It is short because production is falling. ... I keep hearing stories about the threats to maintaining production at these levels," he warned. "It is short because gold is flying off the shelves from the refineries to the Middle East." Hathaway estimated that the turnaround time for incoming metal at refineries is about four to five days at the most.

"The last reason it is really tight is that the ETF has been a great success" with a market cap of $3.2 billion or 7.5 million ounces of gold, he suggested. "At $30 billion, the ETF would demand more than 80% of the annual production. It's not going to happen overnight, but it will happen."

The big difference between a gold share and the ETF, according to Hathaway, is that a gold share is limited by the investment banker's fee and printing capacity. "Whereas the ETF is limited to the effect that if you create more shares, you have to actually buy more gold to back it," he added.

Hathaway theorized that there are two segments of gold investors including investors like him who are very bullish on gold and "want to get the most octane possible for our clients." But, he added, there are many potential investors in gold (such as university foundations) who are not so aggressive in their outlook and want gold to protect capital.

Hathaway declared that he likes that gold is about 3% from its 17-year high that gold achieved last December. "We certainly have a lot of room for people to eliminate alternatives (the financial paper asset kind) and move into gold and that really is the story," he concluded.

http://www.miningweb.com

NEW YORK -- New York -- and America -- said goodbye to Billy Graham yesterday in a three-hour tribute of music and preaching that drew 90,000 people to see and hear the evangelist's last U.S. crusade.

Making their way through packed subway trains and traffic jams that were backed up more than three hours beforehand on the Long Island Expressway, crowds braved broiling sun to hear the 86-year-old evangelist speak for 25 minutes during a midafternoon rally at Flushing Meadows Corona Park.

They stood and cheered as the white-haired evangelist, accompanied by his eldest son, Franklin, slowly made his way to the stage with the help of a walker. Although his large, wooden pulpit included a chair in case the elderly preacher needed to sit, Mr. Graham stood throughout his 25-minute sermon.

Although he held open the possibility of a fall crusade in London, the evangelist took time to say several farewells -- including to his longtime music director, Cliff Barrows, 82, and soloist George Beverly Shea, 96.

"They have put up with me so many years," Mr. Graham said. "They are two of the greatest men of God I have ever known."

His final sermon was vintage Graham: The Old Testament patriarch, Noah, and the Second Coming of Christ.

"You've come to this crusade expecting to live many more years, but you never know," Mr. Graham said. "The Bible says today is the accepted time, today is the day of salvation. ... But there will come a time when it will be too late for you."

During a three-day period, as many as 242,000 people came to see the evangelist, including 12,000 who attended a children's crusade Saturday morning. The crowd nearly equaled the 250,000 that Mr. Graham drew during a one-day 1991 rally in Central Park. More than 9,400 people of all ages and a wide variety of nationalities committed their lives to Jesus Christ during the crusade.

Speakers who preceded Mr. Graham to the stage repeatedly referred to the evangelist's departure from a public life that began 60 years ago at the close of World War II. Mr. Graham suffers from Parkinson's disease, prostate cancer and other ailments.

One speaker, the Rev. Rob Johannson of Queens, called yesterday's event "a historic moment."

"May we take up the torch of evangelism that Dr. Graham is laying down," he said.

Country music star Ricky Skaggs said evangelical Christianity has many teachers "but few fathers."

http://www.washtimes.com

Welcome to the 21st century paradigm shift
-- from a "stock-driven era" to a new "commodity-driven era."
In "Economic Solutions for the 21st Century" you'll discover ...
* SOCIAL SECURITY REFORM ... A plan to unify America
* WHY YOU MUST OWN assets that offset a DECLINING DOLLAR
* WSJ SAYS: "You don't have to be rich to invest in COINS."
* WHY SILVER could rise to $50, $75 or even $100 per ounce.
* "ATOMIC IRAN" spells the beginning of a new U.S. "Dirty War"

David M. Bradshaw is Editor of REAL MONEY PERSPECTIVES, a new, syndicated daily financial/cultural news digest. In 2001, he published REDISCOVERING GOLD IN THE 21ST CENTURY: The Complete Guide to the Next Gold Rush and has been an economic commentator since 1987, when he produced the World Economic Perspectives radio show. In 2004, he produced "A CITIZEN'S GUIDE TO COUNTER-TERRORISM" a free-to-the-public educational resource on DVD and CD. In 2005, he released a new CD, "WHAT'S YOUR WORLDVIEW?" a one-hour CD sample from his 24-hour series, "THE BIG PICTURE: The Shape of Things to Come" discussing geopolitical, economic and spiritual trends in the 21st Century. MORE ... PERSONAL NOTE: Youngest daughter Braida Zoe (age 16 mo.) is now feeding herself, running, climbing and soon swimming. Shown with her mom (and loving wife) Micki.