GOLD'S FUTURE - June 10th news...

"Indeed, like paper money, in which the tangible gold of the earlier waves has been replaced by alpha-numeric figures stamped on intrinsically worthless sheets of paper, our knowledge is inexhaustible."

-Alvin Toffler, The Third Wave

MARKET NEWS DIGEST

Bush's econ cupboard is bare -USAT
June 10, 2005

WASHINGTON (Reuters) — Harvey Rosen, chairman of the White House Council of Economic Advisers, is stepping down Friday to return to his job at Princeton University, the White House said.

Harvey Rosen, chairman of the White House Council of Economic Advisers, is stepping down Friday to return to his job at Princeton University, the White House said.

"Today's is Harvey's last day here at the White House," White House spokesman Scott McClellan told reporters.

Federal Reserve Governor Ben Bernanke, [Ed. Note: aka "Mr. Printing Press"] nominated by Bush to replace Rosen, was approved Thursday from the Senate Banking Committee and is now awaiting a final vote by the full Senate, which could come as early as next week.

FULL STORY

Top Saudi Says Kingdom Has Plenty of Oil -AP
Jun 9, 2005
By ANNE GEARAN

WASHINGTON (AP) - Saudi Arabia has plenty of oil - more than the world is likely to need - along with an increasing ability to refine crude oil into gasoline and other products before selling it overseas, a top Saudi official says.

"The world is more likely to run out of uses for oil than Saudi Arabia is going to run out of oil," Adel al-Jubeir, top foreign policy adviser for Saudi Arabia's de facto ruler Crown Prince Abdullah, said Wednesday.

In a wide-ranging interview with The Associated Press, Al-Jubeir said relations between his nation and the Bush administration were strong but "the environment in which the relationship operates ... still leaves a lot to be desired."

He denied his country has any nuclear weapons ambitions, despite international concerns about a Saudi request to lower international scrutiny of its lone nuclear reactor.

He said he was "bullish" about the Saudi economy, which although based on the country's vast oil reserves has also diversified to include a galloping stock market.

http://www.

Demand to slow but oil to stay high -Reuters
Energy agency predicts U.S. will have to lean harder on OPEC supplies in near future.
June 7, 2005

WASHINGTON (Reuters) - Growth in world oil demand is expected to slow this year and during 2006, the U.S. government's energy forecasting agency said Tuesday, but it won't be enough to ease a tight market.

Major oil-consuming nations will have to rely more on the Organization of Petroleum Exporting Countries to supply the needed oil because non-OPEC oil production will not be able to accommodate the rate of demand growth, said the Energy Information Administration.

In its monthly forecast, the U.S. Energy Department's analytical arm lowered its estimate for world demand this year by 100,000 barrels per day (bpd) to 84.7 million, and by 200,000 to 86.7 million bpd for 2006.

That would put global oil demand growth at 2.7 percent this year and 2.4 percent for 2006, much lower than the 3.2 percent increase in oil use seen in 2004.

Average monthly U.S. oil prices are forecast to stay above $50 a barrel for rest of 2005 and for 2006, EIA said.

"Oil prices remain sensitive to any incremental oil market tightness. Imbalances (real or perceived) in light-product markets could cause light crude-oil prices to rise above $55," the agency warned.

For consumers, high crude-oil prices are expected to keep retail gas costs above $2 a gallon through 2006, EIA said.

Pump prices are expected to average $2.17 a gallon through the busy summer driving season, similar to last month's EIA projection.

Truckers will pay even higher prices for fuel, as the projected summer average cost for diesel is $2.22 a gallon, up about 45 cents from last summer, the agency said.

http://www.cnnmoney.com

Greenspan: Bond Yields Remain Unsolved Puzzle -BL

June 7 (Bloomberg) -- Federal Reserve Chairman Alan Greenspan said the ``unusual'' decline in long-term U.S. Treasury yields still can't be fully explained and that a situation in which short- term yields exceed long-term returns may not signal an economic slowdown, as it has in the past.

An inverted yield curve historically was ``a forward indicator for softening economic activity,'' Greenspan said in response to a question after speaking by satellite to the International Monetary Conference today in Beijing.

``I cannot tell you whether in fact we will see an inverted yield curve,'' Greenspan said. ``We would not automatically assume that it would mean what it meant in the past.''

Greenspan's comments suggest he still views the drop in market yields on government debt, even as the Fed raises short- term rates, as an anomaly. The central banker told Congress on Feb. 16 that declining long-term rates was a ``conundrum.''

Explanations such as a glut of global savings, which may spur bond buying, can't fully explain why yields are falling in the U.S. and worldwide, the central banker said. Other possible causes including increased bond demand from pension funds because of an aging population also don't answer the questions, he said.

``I think the flow of funds is altered in such a dramatic way since the last time we saw that sort of inverted yield curve that I'd be doubtful to merely extrapolate'' from the pre-1980s period, Greenspan said. ``I do know we would have to look closely at why it is happening.''

Hedge funds seeking high returns eventually may find fewer options and the industry ``could temporarily shrink,'' he said.

http://www.bloomberg.com

Related Story:
6-9-05 -- Testimony of Chairman Alan Greenspan -Federalreserve.gov The economic outlook -- Before the Joint Economic Committee, U.S. Congress ...Consumer spending firmed again, and indicators of business investment became somewhat more upbeat. Nonetheless, policymakers confront many of the same imbalances and uncertainties that were apparent a year ago. Our household saving rate remains negligible. Moreover, modest, if any, progress is evident in addressing the challenges associated with the pending shift of the baby-boom generation into retirement that will begin in a very few years...The apparent froth in housing markets may have spilled over into mortgage markets. The dramatic increase in the prevalence of interest-only loans, as well as the introduction of other relatively exotic forms of adjustable-rate mortgages, are developments of particular concern...despite some of the risks that I have highlighted, the U.S. economy seems to be on a reasonably firm footing, and underlying inflation remains contained.

Gold price could triple by 2015 - Miningweekly
As resources dwindle, the price of gold is set to rocket, says Andisa gold analyst Dr. David Davis.
Jun 7, 2005

His report, 'A trilogy of gold - an exploration in three parts', indicates that gold will reach $1,200 an ounce by the end of 2015.

His prediction is that in 2008 it will go to $700 an ounce, a year later it will climb to $750 an ounce and another $50 an ounce to reach $800 an ounce in 2010.

These predictions answer the question blazing through the industry currently: what will gold sell at and what will shares be worth in 10 to 15 years' time.

In arriving at the answer, Davis looks at the current gold price, historical trends in mining operations and historical supply and demand patterns in the 55-page report.

He argues that supply is falling behind demand and fewer reserves are being mined as resources diminish.

Not a new phenomenon, but previously this trend has been masked by Central bank sales and producer hedging - a dying practice.

When this ceases, says Davis, economies of the age-old supply/demand equation will take over and flame the price of the metal.

This, he argues, will mean investors having to be in the right place at the right time to make money.

FULL STORY

RATES: Soft and flat? Danger! -CNN/Money
Slow growth signs and flattening interest rates have economists and investors seeing trouble ahead.
June 6, 2005
By Chris Isidore, CNN/Money senior writer

NEW YORK (CNN/Money) - Not too fast and not too steep would normally be a good path to follow. Unless, of course, you are hiking in today's land of economics. Then that path, to some, looks pretty scary.

First, the slow part ...

Worries about the strength of the economy abound. The latest sign came Friday, when the May job growth was the slowest in two years. But that only followed a week that saw a manufacturing executives suggest the two-year industrial expansion may be running down, and another report showing a big jump in planned layoffs last month.

"Today's disappointing labor report supports the notion that the emerging soft patch in the U.S. economy is here to stay," said Ashraf Laidi, chief currency analyst for MG Financial Group.

Economists are now projecting the United States could see slower economic growth in the second half of the year, perhaps in the 2.5 to 3 percent range, rather than the 3.3 percent to 4 percent growth of the recent past. Placing slow growth bets

But far more important than past economic numbers or economists' forecasts are investors' ever-bigger bets in the bond market on slower growth ahead. This reflects a growing belief on Wall Street that the Federal Reserve may soon pause from, or even halt, its quarter-point rate hikes sooner rather than later.

Following the May employment report the yield on the benchmark 10-year treasury fell to a 14-month low early Friday. Even though long-term bond yields have rebounded from the low right after the jobs report, they remained below 4 percent on Monday.

"It's more important what investors believe, because those people are willing to put their money on the line like that," said Rich Yamarone, director of economic research at Argus Research.

Which brings us to the flat part ...

The investment activity that has the attention of Yamarone and other economists is the difference between long-term and short-term rates.

The yields on longer-term Treasury securities such as the 10-year note have fallen over the past year, even as shorter-term rates, such as the Fed's key short-term rate, the fed funds rate, or the 3-month Treasury yield, have steadily gained ground.

The condition is known as a flattened yield curve -- a warning sign for the economy that economists take seriously.

FULL STORY

Related Story:
6-8-05 -- White House Predicts Slower Growth and Higher Inflation -NYT ... WASHINGTON, - The Bush administration predicted today that economic growth will be slightly slower and inflation slightly higher this year than it expected six months ago.

CitiFinancial Starts Lost Data Notification -AP
By EILEEN ALT POWELL, AP Business Writer
Mon Jun 6, 2005

NEW YORK - CitiFinancial, the consumer finance division of Citigroup Inc., said Monday it has begun notifying some 3.9 million U.S. customers that computer tapes containing information about their accounts — including Social Security numbers and payment histories — have been lost.

Citigroup, which is based in New York, said the tapes were lost by the courier UPS Inc. in transit to a credit bureau.

The bank said the tapes contained information about both active and closed accounts at CitiFinancial's branch network. It said they did not contain information from CitiFinancial Auto, CitiFinancial Mortgage or any other Citigroup business.

The statement said that CitiFinancial "had no reason to believe that this information has been used inappropriately, nor has it received any reports of unauthorized activity."

Norman Black, a spokesman for Atlanta-based UPS, confirmed that the tapes were missing.

"Despite an exhaustive search for this package, we've been unable to find it," Black said.

It was the latest in a series of data losses or breaches that have forced financial institutions and other data collectors to warn customers that their personal information may be at risk.

Last month, media and entertainment company Time Warner Inc. said that computer backup tapes containing data on 600,000 individuals were lost by an outside data storage firm.

FULL STORY

Quirky Ways People Have Gotten Rich - Oprah.com
June 6, 2005

Gregg Stemm hands Oprah a coin from a sunken treasure

Greg Stemm turned his childhood dream of hunting for sunken treasure at sea into reality. His company, Odyssey Marine Exploration, scours the ocean floor, searching for ships that sank centuries ago.

Last summer, Greg and his team literally struck gold when they found the remains of the SS Republic, a ship that sank in a hurricane off the coast of Georgia in 1865. High-tech equipment is being used to recover the ship's booty from 1,700 feet below the surface. The astonishing find? So far, nearly 40,000 coins have been recovered. The entire collection of coins is estimated by some to be worth more than $150 million.

Shareholders of Odyssey Marine Exploration, a publicly traded company, will reap the rewards. More information is available at www.shipwreck.net.

Related Stories:
1927-D Saint-Guadens Double Eagle Sells For $1.65 Million At Long Beach -PCGS...(Long Beach, California) - One of the finest known 1927-D Saint-Gaudens Double Eagles, graded PCGS MS-66, changed hands for $1.65 million in a private treaty transaction during the Long Beach Coin, Stamp & Collectibles Expo, June 2 - 4, 2005.

THE GOLD AND SILVER OF THE S.S. REPUBLIC -Nat. Geographic ... Swiss America is a dealer for the S.S. Republic shipwreck coins.

COMMENTARY

IDENTITY THEFT = NATIONAL ID? -Craig Smith
WorldNetDaily
June 6, 2005

"The powers not delegated to the United States by the Constitution ... are reserved to the States respectively, or to the people."
-U.S. BILL OF RIGHTS, 10th Amendment

Americans enjoy unlimited benefits from new technologies in a wired world. But those wires send information in two directions; and the access to our personal data has never been more open for abuse, fraud, and, for some, even financial ruin.

It's not just the Internet that has eroded our privacy. In dozens, possibly hundreds of every-day activities, we leave a trail of our identity. As technology brings us closer together, the fragments of information about us are becoming much easier to piece together, revealing the most intimate details of our lives to potential thieves.

"Every 79 seconds a thief steals someone's identity, opens accounts in the victim's name and goes on a buying spree." -CBSnews.com

Identity Theft is in the news almost every day now. Recent headlines:

"CitiFinancial Loses Data on 3.9M" -AP
"Time Warner employee data missing on 600,000 employees," -CNN.
"Survey: Identity theft concerns haven't declined," -Dallas Business Journal.
"Federal Real ID Act May Be Flawed," -LA Times.
"Public backs ID cards to beat identity theft," -Computer Weekly.

How should Americans properly address the growing threat of identity theft?

1) By giving up more personal information to more government agencies... OR
2) By taking specific steps to preserve their personal and financial privacy?

Identity-theft hit my family a few years ago. Armed with just a Social Security number and address the thief was able to obtain enough credit to buy a new truck and open almost a dozen new credit cards. It took thousands of dollars in legal fees to get the credit damage reversed. Nothing was ever recovered from the thief.

Amazingly the victim never used a computer, shredded all mail and very seldom made telephone purchases. All this proves that even people who take precautions are at risk. Today this is a very typical story -- hitting one in 20 Americans yearly.

The Federal Trade Commission conducted a survey to clarify certain aspects of identity theft. The results were even more disturbing than the FTC had feared.

· 10 million Americans - 4.6% of the adult population - became victims last year.
· 27 million Americans have been victimized within the past five years.
· Identity theft cost the U.S. economy nearly $53 billion last year.
· The incidence of identity theft increased by nearly 41% last year.

The government proposed solution is a national ID card that will start off as a national driver's license, thanks to the recent passage of the Real ID Act.

"Your papers, please!"

The excuse for the bill is that it supposedly will reduce identity theft, illegal immigration and terrorism. But as usual, it's law-abiding citizens who will pay the price in reduced liberties. Americans may find it increasingly difficult to do ordinary business without presenting a national ID card, which may eventually include medical records and medications, allowing criminal computer hackers easy access to personal data.

Bottom line, the Real ID Act violates the 10th Amendment -- which politicians always brag about supporting, and which severely limits federal power. But the public believes national ID cards are "the best solution" according to a survey published last week in Computer Weekly.

A National ID card is not the solution to identity theft, illegal immigration or terrorism. Many people I've spoken with say they'd never support a national ID card, because they feel it is strips them of their right to privacy.

A revival of personal responsibility in America would greatly help in fighting off identity theft, illegal immigration, terrorism and much more. Secondly, we need to punish lawbreakers with harsher penalties instead of creating an Orwelian police state.

Personal privacy is the bedrock of America's vision of liberty, just like gold and silver are the bedrock of America's vision of economic liberty. Privately held gold and silver coins have helped overcome unexpected financial crises over history, including identity theft.

In fact, rare U.S gold and silver coins are one of the last assets you can legally own that's 100 percent private. Stocks, bonds, mutual funds and Treasury Bills are all registered investments and must be public. You could say U.S. rare coins stand as one of the last guardians of financial freedom, liberty and privacy in the 21st century.

Here are a few helpful links to learn how to fight identity theft for yourself:
1) Take Charge: Fighting Back Against Identity Theft -FTC (formerly: "ID Theft: When Bad Things Happen to Your Good Name")
2) IDENTITY THEFT QUIZ -Wachovia
3) Identity Theft Statistics -idtheftprotection.com
4) Phishing Alerts! -eblocs.com How not to be lured into identity theft...

Related Story:
Coming Soon: National ID Cards? -Erik Larkin

Special Offer: The Right to Own Gold - Are We About To Lose It ... Again?
-Swiss America Special Report

Why Can't Stocks Get On a Run? -WSJ
By E.S. BROWNING
Staff Reporter of THE WALL STREET JOURNAL
June 6, 2005; Page C1

Searching to explain the stock and bond markets' surprising ups and downs recently, some money managers think they have an answer. They believe we are suffering the effects of something called a "secular bear market."

That may sound like a cross between stock analysis and religion, but it actually is something much simpler. Here is the idea: Stocks were in a long-running, or secular, bull phase from 1982 until early 2000, when the market bubble popped. During that period, stocks occasionally did slump, and they even crashed in 1987, but they mostly rose. The Dow Jones Industrial Average put on 15.9% a year, on average, double the mean of 7.6% a year since it was created in 1896.

Stock performance can't stay above average forever. After such a long period of strength in the economy and in the stock market, the thinking goes, there is a risk of a lengthy period of softness -- a secular bear. From 1966 through 1981, a time of high oil prices and world tensions that followed years of stock strength, the Dow Jones industrials averaged almost no gain at all. They rose less than 1% a year on average, and that was more than eaten up by inflation.

Some money managers fear we are in the midst of another such prolonged weak period.

"Returns this decade have been and will continue to be below levels we enjoyed in the '90s and even the '80s, meaning that they will be in single digits on average," says Russ Koesterich, senior portfolio manager at Barclays Global Investors in San Francisco. "They are going to feel disappointing compared to what people grew up with over the past 20 years."

There could be sharp gains, as there were in 2003, or sharp losses, as there were in 2002. But in a secular bear market, the average works out to be low -- not necessarily 1%, but not 7%, either.

Part of the thinking behind this view is that the stock market and the economy became distorted during the bubble, and that the distortions still haven't been eliminated. Companies bought too much machinery, too many computers and too much fiber-optic cable, creating excess production capacity and helping explain why corporate investment since then hasn't been as robust as normal. Post-bubble economic weakness could help explain surprisingly low bond yields. It could be a reason that the economic "soft patch" keeps recurring.

In addition, consumers continue to have more debt than economists think is healthy. Stocks continue to trade at above-average levels, compared with corporate profits. As all these factors work their way back to normal, in this view, stock gains may be below average.

That kind of concern could be seen in the market last week, as the Dow Jones industrials broke a two-week winning streak and fell 81.58 points, or 0.8%, to 10460.97, following a drop of 92.52 points, or 0.9%, on Friday.

Still, plenty of investors remain optimistic and think last week's troubles are a passing storm.

FULL STORY

Why Gold Rigging Is Ignored by the Media -Nelson Hultberg
FinancialSense.com
June 7, 2005

In Bill Murphy's recent Midas commentary (June 6th), he hit upon one of the more devastating condemnations that can be expressed about a people and their society.

"It will surprise no veteran Café member/GATA supporter," Murphy wrote, "that the New York Times failed to even mention GATA in their New York Times Magazine story on gold on Sunday. I have been through this drill for more than six years....

"This will give you some idea of why I rant the way I do at times -- and have been doing so for many years now. We DO NOT have a free press in the United States. We DO NOT have free markets in America. As a result of controlling the press and rigging US markets, as well as distorting the real US economic numbers, the Orwellians are taking this once great country down the chute. The coming US financial market / economic disaster is going to devastate the average American, as they won't know what hit them and why."

What makes Murphy's commentary such a devastating appraisal of our people and our society? The answer lies in the reason WHY we no longer have a free press in America. For ours is a far more ignominious usurpation of press freedom than those of our historical predecessors.

In all the dictatorships of history, the process of enslavement is always brought about through a blanket "government enforced censorship." It becomes ILLEGAL to tell the truth. It is against the law to utter derogatory statements about one's leaders. To expose the Emperor's nakedness, is punishable by fines and imprisonment. Read the accounts of all the despotisms throughout history -- from the ancient Pharaohs, to the savage monarchial tyrannies of the Middle Ages, to the Nazis and the Communists of the 20th century -- and you will find the heavy hand of the State dictating what can and cannot be uttered in the press. The press is basically nationalized in some way so that the ruling bureaucracy decides what is reported every day to the people. Those who try to report truths deviating from the accepted government line are PROHIBITED BY THE LAW from doing so.

Observe, however, the form of "truth suppression" that is taking place in America today. It is not the kind that the 20th century Germans and Russians endured under their oppressors. In fact, if one looks around today, he sees no laws stifling the freedom of the press at all. This is what allows the elites in Washington and Wall Street to present themselves to the people as legitimate governing agents rather than the sinister cabalists and tyrants that they are in reality. For there are no laws suppressing freedom of the press in America today. There is no legal censorship of the press. Yet we in the gold community know that we do not have a FREE press in this country today! So what gives? How do we explain this conundrum?

The Sanction of the Victim

The answer lies in what Ayn Rand called the "sanction of the victim." Our dictatorship in America today is coming about voluntarily. And because it is, it is the most despicable and shameful form of enslavement that there is. Our media pundits and academics are willingly giving up their freedom, their rights, and their money to the unbridled State. They are willingly muzzling themselves. Like Pavlovian dogs, they continuously react to the appropriate stimuli of the statist elites in hopes of gaining the offered rewards -- acceptance in the herd and its rituals.

There are no laws that say the punditry of America must shun Bill Murphy, or ostracize GATA, or refuse to investigate the blatant "rigging of the markets" in today's world. Yet the pundits never bring GATA's issues of gold and equities rigging up. Silence is all we get. Total silence in face of evidence any educated, intelligent person could understand. And it's not because Murphy's style is the confrontational, in-your-face kind of attack journalism. There are other pundits and journalists (John Embry of Sprott Asset Management in Toronto, Kelly Patricia O'Meara of Insight magazine, etc.) who are not possessed of the pit bull intensity of Murphy, but are equally ostracized by Planet Wall Street and its pusillanimous lackeys.

FULL STORY

Related Offer:
Listen to a 30-minute interview with Bill Murphy available on a free audio CD by calling 800-289-2646, or registering HERE. See "The Future of Gold & Silver" story below.

NEW: "The Future of Gold & Silver" CD Introduction - IFN
Swiss America CEO Craig Smith asks GATA.org founder Bill Murphy
20 important questions about the future of gold and silver
June 6, 2005

INTRODUCTION
DAVID BRADSHAW: Welcome to this special presentation from Swiss America in the summer of 2005: The Future of Gold & Silver. In 2005, we offer "Economic Solutions" to the growing problems of debt, deficits the falling dollar, pension fund crisis and social security reform. TODAY, we bring you inside a private conversation between Swiss America CEO, Craig Smith and Gold Anti-Trust Action Committee chairman, Bill Murphy. What you are about to hear may shock you, but please take the time to fully research it before you take action.

CRAIG SMITH: Bill, Rediscovering Gold in the 21st Century was the first book printed to explain GATA's role. GATA and gold's awareness has increased since 2000 and 2001. Bill, could you start by giving us a summary of some of the major changes in the gold market as well as GATA's role since Rediscovering was first published.

BILL MURPHY: Great to be here, and thanks for your support over the years. GATA was formed back in 1999 by Chris Powell, the editor of a daily paper and myself to expose the manipulation of the gold price by a "Gold Cartel" - a consortium of the Fed, Treasury and bullion banks like Goldman Saks, JP Morgan, etc. We realized that they were keeping the price artificially low by manipulation and in doing so violating the laws of the United States. These big players in New York are making hundreds of millions (now billions) in profits while the average unsuspecting gold investor is being ripped off and taken advantage of.

CRAIG SMITH: It sounds as if you've been quite busy these last 5 years keeping current on all phases of the global gold market. In your opinion, what is the most compelling reason today for investors to purchase gold?

BILL MURPHY: They can make a lot of money. Based on what our work at GATA shows, the price of gold right now should be $750, if gold were just to keep pace with inflation. What the manipulators have done is the equivalent of keeping a balloon under water and this thing is going to explode as the manipulators lose control. Then I believe the price of gold will go well over $2,000 per ounce. There is going to be a frenzy for gold because of what they've done. What people don't understand is that the central banks only have half of the gold they say they have. Half the gold! And on a yearly basis, demand is about 1800 tons per year more than the mines and scrap can supply. So each year the supply is going down that they have to suppress the price, so when they hit the wall - and I think it's going to be very soon -- the price has to explode to meet the supply.

SPECIAL OFFER: To hear the rest of the story you must listen to the full 30-minute interview on a free audio CD available by calling 800-289-2646, or registering HERE.

Do China and U.S. Face Same Woes? -NORRIS
Floyd Norris, New York Times
June 10, 2005

TRADITIONAL large employers - the very foundations of the economy - are in trouble. They have debts they may not be able to pay, and are having great difficulty making any money. So they continue to borrow and look to the government for help.

The government could just let them fail, saying that those who cannot make the grade in the new era of globalization should make way for those who can. But there are costs to such a strategy, over and above the fact that those companies have friends in high places.

Millions of people rely on the companies for more than jobs. They have promised to provide the most basic of needs, including health care and old-age pensions. If they are allowed to fail, the costs could be large.

So it is today in China - and in the United States. It is remarkable that two major economies have followed such very different paths to get to such similar problems.

In China, the problem lies in the old state-owned industries. Communist China gave those companies all the social responsibilities that governments have in the West, and gave them the right to borrow what they needed at state-owned banks. Now post-Communist (in reality if not in name) China must deal with the residue. It hesitates to close those money-losing operations, and papers over the problems by forcing the banks to keep making loans.

In the United States, the problems are with pensions and health care costs, both of them traditionally paid by employers. General Motors, having announced plans to cut employment by 25,000 workers, is trying to get unions to let it cut benefits, but what it really wants is to shift some of what it calls "legacy costs" - pension and health benefits for retired workers - to the government.

THE government's Pension Benefit Guaranty Corporation is deeply in the red, having insured far too many pension benefits for premiums that are far too low. The law has all kinds of strange provisions, as the Government Accountability Office detailed in a report to Congress this week, that lets companies with underfunded pensions hide that fact from workers until it is too late.

The obvious solution is to let the guaranty corporation charge higher premiums and force companies to do a better job of funding their pension promises. The Bush administration has proposed such a bill, but many businesses object. It is likely that a watered-down bill will let companies put off dealing with the problem in hopes something will turn up. Sort of like China's method of dealing with some of its state-owned enterprises.

Some of the companies most affected are also having trouble competing with Chinese companies, and are pushing for action to make China revalue its currency. China might be more willing if it did not fear the impact of such a move on its banks, and if it did not think it might need the money it is piling up to restructure the state-owned enterprises and provide for their workers.

The problem of rising health care costs raises issues of American competitiveness as companies struggle to meet an obligation met by governments in other countries.

To make matters worse, Americans pay much more for their health care, in part because they pay high prescription drug costs that offset pharmaceutical companies' research costs. Most other countries impose price controls on drugs, thereby getting what amounts to a subsidy from the companies paying the health care bills in America.

There are many differences between the problems faced by China and America, of course, but perhaps one stands out. China is accumulating money that could be used to meet those obligations, while the United States is going deeper into debt.

http://www.nytimes.com

A EULOGY FOR THE CRB -Ed Steer
June 1, 2005

In light of the deliberate disinformation coming from within the American government regarding the Consumer Price Index (CPI), the Producer Price Index (PPI) and the (un)employment statistics from the BLS; it should come as little surprise to anyone that one of the most watched benchmarks that highlights commodity prices is about to be radically altered.

This benchmark is the CRB.

In a May 10th Reuters article that broke this story, it was described as follows…“The CRB Index is a leading global benchmark for commodity price movements. The Index is constructed of commodity futures contracts from the energy, industrial metals, precious metals, grains, livestock and soft sectors and offers diversified exposure to the commodity markets.” The entire article is hyperlinked here. It does, of course, fall into the ‘must read’ category.

The one very important thing that the above definition didn’t mention was the fact that each commodity of the current CRB has equal weighting. Well, that characteristic will end next month.

As the article points out, the CRB has been revised quite a few times in the past…ten times to be exact. But this time it’s totally different…as it’s getting the medical equivalent of a frontal lobotomy. This ‘new and improved’ CRB will now become a moving target…with a life span of exactly one month. At that point, the index can be revised, depending upon the whims of the architects of this index. The architects in this case are Reuters and an outfit called Jefferies Financial Products, LLC.

The article goes on to say….. “Effective June 20, 2005, the Index will undergo its tenth revision, amending its components to include three additional commodities (unleaded gasoline, aluminum and nickel) and remove one commodity (platinum). Component weightings will now take into account the relative significance and liquidity of the various commodities markets. In addition, the Index will rebalance its component weightings monthly and will derive its value from nearby futures prices.” (The highlighting is mine – Ed)

The highlighting in the previous paragraph should indicate to any rational intelligent person that the fix will probably be in for the CRB…whether commodity prices are rising or falling.

The question then begs to be asked is…who decides (or defines) things like “relative significance” or “liquidity” as it applies to “Component weightings”…as these are very subjective terms. The CRB may now become whatever ‘the powers that be’ want it to be.

I would like to venture a guess as to how it may be used to prevent the full force of commodity price inflation from showing up in this new CRB index. Firstly, both gold and silver will be relegated to bit parts in this new index and will most likely have very small weightings. Note the quote regarding “relative significance and liquidity” in the article. Both precious metals would fall well within that category.

Secondly, since the index can be revised every month, a commodity may be weighted higher if it is in a declining trend…or the price of that particular commodity is being managed lower. The opposite would apply if any particular commodity (or group of commodities) were in an extended bull market. Thirdly, if this new CRB index is not equally weighted between all commodities (which they have already stated it won’t be), who’s to say that the index itself has to ‘add up’ to any predetermined number?

In other words…if the CRB is under weighted in oil, natural gas, and the precious metals; does it have to be over weighted in something else to add up to say…100.00? If not, then what this means is that this new total CRB value could be made larger or smaller…depending on whether prices are rising or falling…anything to prevent asset inflation from becoming as noticeable to the general public.

Looking at the really big picture, let’s not forget about the ongoing war that we are all involved in…commodity money vs. paper (debt) money…and all the money and power in the world that’s trying to maintain our current fiat system. And…as has been presented ad nauseam by myself and others… here, once again, are Peter Warburton’s three famous paragraphs in his landmark essay “The Debasement of World Currency: It is Inflation, but not as we know it”. Please read them very very carefully! Never has what Warburton said had more significance than it does now…

“What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, their actions seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets.

It is important to recognize that the central banks have found the battle on the second front much easier to fight than the first. Last November, I estimated the size of the gross stock of global debt instruments at $90 trillion for mid-2000. How much capital would it take to control the combined gold, oil and commodity markets? Probably, no more than $200bn, using derivatives. Moreover, it is not necessary for the central banks to fight the battle themselves, although central bank gold sales and gold leasing have certainly contributed to the cause. Most of the world’s large investment banks have over-traded their capital (bases) so flagrantly that if the central banks were to lose the fight on the first front, then their stock would be worthless. Because their fate is intertwined with that of the central banks, investment banks are willing participants in the battle against rising gold, oil and commodity prices.

Central banks, and particularly the US Federal Reserve, are deploying their heavy artillery in the battle against a systemic collapse. This has been their primary concern for at least seven years. Their immediate objectives are to prevent the private sector bond market from closing its doors to new or refinancing borrowers and to forestall a technical break in the Dow Jones Industrials. Keeping the bond markets open is absolutely vital at a time when corporate profitability is on the ropes. Keeping the equity index on an even keel is essential to protect the wealth of the household sector and to maintain the expectation of future gains. For as long as these objectives can be achieved, the value of the US dollar can also be stabilized in relation to other currencies, despite the extraordinary imbalances in external trade.”

Peter Warburton’s entire April 2001 article, archived at David Tice’s Prudent Bear site.

As I mentioned before, this revision to the CRB index is just another attempt by ‘the powers that be’ to forestall a rush to hard assets from paper assets. They want everyone to go down with the fiat currency ship. Now it appears that the boys are trying to extend their influence over all commodities, rather than just the two they are actively managing right now…gold and silver; and two others that they are trying to manage…oil and natural gas.

One of many persons that can see this commodity freight train getting up to top speed pretty soon is the always erudite Doug Casey. In one of his latest offerings he had this to say…

“But you may be asking: Casey, what makes you so sure that this actually is a major secular bull market for the resource stocks?

There are lots of reasons. But in brief, we’re coming off the longest and deepest secular commodity bear market since the depression of the ‘30s. Commodity prices are still far closer to historic lows than historic highs, at least in “constant” dollars, which is what counts. The world economy is evolving away from the debt-burdened U.S. and towards China, India, and numerous smaller countries; their growth will be volatile, but it’s for real, and they’ll consume unbelievable amounts of raw materials in the coming years. There’s been very little mineral exploration for a full generation, the industry has come nowhere near replacing reserves, and a historic supply crunch in many commodities is in the making. Governments will always act stupidly, but the long-term trend is inevitably towards freer markets, higher standards of living—and higher resource consumption.”

It is just such a commodity boom Casey and many others are forecasting, that this newly revised CRB is meant to blunt. This attempt will fail. The index may become so discredited as a ‘benchmark’ that it might be abandoned entirely, and another index compiled to take its place…or run concurrently with it….such as the HUI has done with the XAU. They may manage the index, but they can’t manage every commodity on the planet that’s in it…or the ones that aren’t.

Doug Casey is right… “Governments will always act stupidly.” That would also apply to central banks and investment banks as well.

Based on this upcoming revision on June 20th, it would be my opinion that these banks (and their ilk) will keep a lid on all critical commodity prices until such time as this revised version of the CRB is up and running. Time will tell whether my musings in this essay have any basis in fact. I’ll find out soon enough.

http://www.financialsense.com

Millennium event: 500k Muslims follow Jesus, Pt. 1 -FridayFax
June 10, 2005

Some things only happen every couple of hundred years, others only every couple of thousand. This and the next Friday Fax are dedicated to one of these millennium events.

Fourteen centuries ago, Islam overran previously Christian nations such as Egypt and Tunesia. For the past thousand years, particularly since the barbarous "Christian" crusades and the development of un-Biblical westernised religious church traditions, Christians have found it difficult to win Muslims for the Gospel. Islam, with 1.4 billion adherents, is the world's second-largest religion after traditional Christianity which has proven resistant to the Biblical Gospel. As a young Christian, I heard only one message about Islam: "it is practically impossible to win Muslims for Christ" - a message from Hell, in my opinion, born out of centuries of pseudo-missionary frustration. Ineffective missionary methods, non-integrative churches and a fantastic lack of faith among top Christian leaders right up to the 1990's combined to create a climate of missionary unbelief. In 1982, only 2% of all Christian missionaries were working among Muslims - a ridiculously small proportion.

5,000 120,000 522,000

Yesterday, I ate lunch with three missionaries working among Muslims. One of them said "In the past two years, I've seen over 5,000 Muslims come to faith in Jesus in northern India. The work is growing so fast that the number will very likely soon pass 50,000. They meet in multipliable house churches, and ever more Mullahs are joining the movement..."

Another told "From our own experience and through other reliable sources, we know that in Bangladesh, 7,000 Muslims were baptised each month in 2003. They are radical followers of Jesus. In 2004, an incredible 120,000 joined them. Since 1997, the number of Muslims following Jesus has grown by 522,000." 522,000? That's more than the number of evangelical Christians in Switzerland, Austria and France together! Is that possible? What happened?

Baptist missiologist and author David Garrison says "More Muslims have come to Christ in the past two decades than at any other point in history. In North Africa, 16,000 Muslim Berbers turned to Jesus; in a central Asian republic, 4,000 Muslims have found Christ; 15,000 Kazakh Muslims found Christ in the past 15 years. In an appearance on Al Jazeera, Sheikh Ahmad Al Qataani, a leading teacher of Islamic clerics in Libya, said 'Every hour, 667 Muslims turn to Christianity, 16,000 every day, 6 million each year!' Those numbers are certainly exaggerated, but show that Islamic experts recognise what is happening: a massive missionary movement of Muslims to Christ."

A vision becomes reality

Let me use Kevin Greeson's story as an example of what's happening. Greeson is a Baptist missionary in southern Asia. In his book "Camel Training" published in 2004, he writes "In September 1997, I lay down on my hotel bed in Singapore, where I was attending missionary training. Before going to sleep, I saw a vision of thousands of Muslims in Bangladesh going to Hell. The vision's realism gripped me so strongly that I began to weep - for the first time in 22 years. The scene changed, though; the Muslims were given a new directive, were re-routed and went to Heaven. The next day, I was excited to hear that 30,000 US Christians had taken part in a prayer campaign for the people group among which I wanted to work, and that they had been praying the very hour I had my vision. My first years there as a missionary brought no fruit; after two years, we had gathered 23 women who worked weaving baskets for export to the West. Then we heard of Abdul (name changed).

Learning from Abdul

Abdul was a local church planter, and himself a saved Muslim - or Isahi (one who belongs to Isa/Jesus). In 1998, he had seen 50,000 Muslims baptised, and 8,000 churches planted by 2003. He was doing something differently, and we learned from him to do them differently too. We told the women to invite their husbands to a meeting; they all brought their husbands or fathers, and we explained verses from the Koran which speak of Jesus, showing him to be far more than just a prophet. They were excited and angry - excited, because they recognised the truth about Isa (Jesus), and angry about their Imams (islamic pastors), who had withheld the truth from them. Then we showed them the Jesus Film in their language. What then happened was unbelievable; the men insisted on meeting again the next day. For four days, they sat there and listened to the Gospel. They all turned to Jesus, and six new jamaats (house churches) were formed. Over the following 2 1/2 years, our team saw 4,500 Muslims baptised and 314 new churches started. Two years later, the number of churches had grown to over 800. The movement is still growing. What did we teach the Muslims which made them so open for Christ? It has something to do with a camel..." ... continued in next week's Friday Fax

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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, and yes, climbing everything. Shown with her mom (and loving wife) Micki among some bright Spring flowers!