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International Forecaster February, 2002 (#1)
THE INTERNATIONAL FORECASTER 2, February, 2002 (#1)
An international financial, economic, political and social commentary.
Published and Edited by: Bob Chapman Vol. 6- No. 2-1
Phone & Fax: 941 639 4756
On March 16, 2002 we will be speaking at the Resource Consultants, "Wealth
Protection 2001," Conference in Phoenix AZ. This conference has been a very
popular destination for us. This year we will be speaking with the likes of
David Tice, manager of the Prudent Bear Fund. Other speakers will include
Nick Russo, editor of "The Momentum Monitor," David Morgan from
"Silver-Investor. Com, Kenneth Weaver, renowned tax expert and a special
guest appearance from a person we can't announce yet. When we announce the
special guest they will fill up fast. This is your chance to register early.
There are only 350 seats available. The cost of this conference is $179
complete. However if you call my friends at Resource Consultants and mention
you saw this in our newsletter they will give you a $50 discount. They will
also give you further details of the conference. Call them now and register
at 800-494-4149 or locally in Phoenix at 480-820-5877. Don't forget to
mention International Forecaster for your $50 discount.
Today it was revealed that John Ashcroft spent $8,000 of our money for
drapes to conceal the offensive half-naked statues behind his podium. This
was an appropriate gesture, considering that they represent the Spirit of
Justice and the Majesty of Justice. We won't be seeing them during his
If you use leverage long enough it will destroy you. That is where the US
government, some corporations and many American consumers are today. Sooner
or later we return to basics and that is why in the long run fundamentals
are so important. Many are waiting for the dollar to correct and thus far
theyıve been disappointed. The dollar may be the best of a bad lot, but
because it is and gold is suppressed there is no warning of trouble, making
many frustrated dollar bears. We can assure you the dollar will correct.
Foreigners are not going to own an overpriced currency forever. The current
account deficit could be over 5% of GDP this year and over 6% of GDP in
2003. What sane investor would take on a dollar risk when cheap gold is
available? That means in 2003 the current account balance would move up from
todayıs $450 billion to over $650 billion. That means the US will have to
attract $2 billion a day in fresh money from foreigners up from $1 billion a
day last year. In 1985-dollar overvaluation led to a 50% plunge in the
dollarıs value. We think a similar fate is in store for todayıs overvalued
dollar. This time we see about a 20% correction simply because every other
country is in worse condition than the US. When this happens the gold cartel
will no longer be able to suppress the price of gold and the dollar will be
on its own. The best that can then be expected is a prolonged deep
recession. As American consumers reduce debt or go bankrupt consumption will
fall, as will imports putting the rest of the world into depression.
America and Japan should have bitten the bullet in 1990, but that wasnıt in
the plan for a new world order. The world and particularly America have been
living far beyond their means.
Arizona and California have approved plans for thousands of the lowest
income parents to become eligible for health insurance. Californiaıs $200
million plan will be paid in part by the federal government.
The US government is getting new powers under the USA Patriot Act, which
as we predicted are absolutely terrifying. It effectively deprives millions
of Americans of very precious freedoms. Something as yet not discussed as a
result of this act is what is called court stripping, that is the
legislature or executive branches depriving the judiciary of authority to
hear certain types of cases. The executive branch through executive order
and the legislature have removed terrorist acts from some courts. That would
include military tribunals. The courts are being denied their power to serve
as a check upon an executive branch increasing consolidating power within
itself. President George W. Bush is making the biggest presidential power
grab in American history.
Two former Paine Weber senior VPıs have admitted in court that they
illegally laundered money from a stock fraud scheme. They have been barred
from the industry and are awaiting sentencing.
Commercial real estate vacancies are running at 10-25% and rents are
going up $.60 to $2.00 a square foot due to a rise in property ownersı total
expenses from $10.60 a square foot in 1999 to $11.22 today. This is an odd
paradox, which can only mean more vacancies.
Since the inception we believed TrizecHahn, the Toronto real estate
company, would be a failure and recommend shorting its stock. Peter Munk,
TrizeHahnıs leader and CEO and Barrick Gold fame, which is part of the gold
manipulation cartel, has been a disaster in his leadership of TrizecHahn.
Recently the company took a 40% write-down on its Hollywood entertainment
complex. We believe once gold is allowed to trade freely Barrick Gold will
be a virtual non-performer. Sell both TrizecHahn and Barrick Gold.
Unemployment figures barely moved upward yet in December in New England
companies in which 50 or more employees lost jobs increased 53% to 116 from
November resulting in a 45% jump in unemployment claims. In the Midwest
layoffs were up 28% and claims 18%. Nationally such large-scale job cutting
actions dropped 9% in December. The Pacific Coast had a 44% decrease in
November due to the housing boom.
GOLD, SILVER, PLATINUM, PALLADIUM AND DIAMONDS
We find Adam Hamiltonıs reference to the collapse of the South African
rand more a compelling possibility than he does. Although we shorted the
rand for other reasons manipulation of the rand to entice more local gold
production at much lower rand cost could well have been the intent of rand
and gold manipulators. Physical gold demand has skyrocketed and there is not
enough physical gold on hand to meet the demand. As you know its been our
contention that the short position in gold is between 15 and 29,000 tons and
we made this projection almost two years ago and the people manipulating
gold would think nothing of manipulating the rand. At this juncture the
manipulators have to be in a desperate panic. We see no chance of gold
prices at $270 an ounce or lower. The amount of gold used to subdue the
latest rally over $290 must have been huge. At this stage the gold cartel
has no interest in expending its ammunition, or what they have left, on
driving gold down further. Hedge books are being unwound and maintaining
management of derivatives is becoming more difficult. Then there is the
timing factor. We believe that gold would have eventually been let free to
find its level. There was never a question of this. The big physical buyers
of the larger offerings were these very same people for themselves. The
peoplesı gold is what has been sold. Official government holdings. The
advent of Bill Murphy, Reg Howe, Chris Powell and GATA changed that. They
became a rallying point, plus the lawsuit, which is forcing the elitists to
have to unwillingly expedite their program for world government. In addition
9/11/01 made their work more difficult as will Enron, Argentina, Japan, etc.
and the growing physical offtake by China, India, Japan and the Middle East.
We are fast reaching a time when there control will be at an end. Remember
they are control and derivatives might not have to be unwound. Government
could make forced settlement, but physical from central banks will be gone
leaving fiat currency and government. We are asked worldwide at conferences
by E-mail and telephone, will the government try to confiscate gold again?
Our answer is always the same. This is not the 1930ıs. We have a populace
that is far different. The government has as much chance of getting our gold
as they do our guns. We believe 50% of Americans would turn both in. That
leaves 50% and about 200 million weapons in well-trained hands. We donıt
have to draw you any pictures. The current police action is not a war.
Congress hasnıt said it is. The war we see is a financial one. Itıs the
elitists against the people and we know who will win. As painful as it will
be, keep in mind no matter what course things take your goal is to improve
purchasing power no matter what the dollar does or no matter what the cost
of commodities. Precious metals will protect you against inflation, which
for now is history and from deflation in a flight to quality. Remember that
phrase flight to quality. That is what investment and life are all about.
This is what gold and silver historically are all about. Being the ultimate
sources of value. Metals that retain purchasing power over long periods of
time. That is why gold is the ultimate money.
Word is that Barrick was long Enron bonds and lost several million
dollars, and the IRS is looking at their offshore hedge book. Being good
corporate citizens they avoid taxes like the plague. Barrick is in bed with
JP Morgan Chase and JP Morgan Chase was a bed partner of Enron. It stands to
reason Enron was financing its pyramid via JP Morgan Chase and gold leasing.
If this is true with Enron bankrupt who is going to cover the Enron gold
short? The natural legal responsibility lies with JP Morgan Chase, but JP
Morgan Chase is the vassal of government. Will Morgan pay or will you and I
via our corrupted government? This could be the biggest story of our new
century and the collapse of Morgan. We may be on the cusp of a major setback
for the elitists due to their unbounded greed.
January 31st, 2002
Gold stocks seen rising as multiples stretch BMO analyst Paul Haavardsrud
Financial Post In the past three weeks gold stocks have shot up to
eight-month highs, stretching valuation measures to their upper limits. But
investors needn't worry about strained multiples causing share prices to
fall back, as the market is prepared to grant the group considerable leeway
this year, according to Geoff Stanley, a BMO Nesbitt Burns analyst. Gold
stocks are now trading at an average premium of 56% to their net asset
values, well above the average in the last two years of 39%, driven by
nervous money from the rest of the stock market, Mr. Stanley noted
yesterday. The market does expand its valuation levels for the sector, Mr.
Stanley could see Newmont Mining Corp., Barrick Gold Corp. and Placer Dome
Inc. trading between 60% and 80% above their net asset values. Translated
into share prices, that means new targets with upside of 21%, 4% and 11%,
respectively. After under performing the Toronto Stock Exchange 300
composite index by 22% since the market bottomed on Sept. 21, the TSE gold &
precious metals index has outperformed the benchmark index by 10% since Jan.
8. Real or perceived, gold's status as a safe haven investment in times of
heightened market uncertainty has helped the TSE subindex gain 7% in the
past three weeks, making it the best performing sector in the composite
index in that time. Investors' refound fondness for gold is not likely to
evaporate as quickly as it arrived, said Mr. Stanley in a note to clients.
"We are reassessing our target prices for the sector with the view of using
higher valuation multiples," he wrote. "Thereby increasing our target prices
in this environment rather than reducing the ratings as share prices
increase." With gold trading at US$281.90 an ounce, up US3.60?, yesterday,
the market is discounting a gold price about US$48 an ounce higher than the
spot price, well above the two-year average of US$28, he calculated. With
trading data showing more speculators taking long positions than short, a
notable switch from the bulk of the past few years, the signals are pointing
to an upward move in the price of bullion, Mr. Stanley wrote.
"Elektra sales of silver coins HAVE EXHAUSTED THE STOCK OF BANK OF MEXICO!
Elektra is expecting new deliveries of newly minted "Libertad" one-ounce
coins, this week. Central Bank of Mexico is quite surprised. Some stores, in
the meantime, are out of stock."
A Ford Motor shareholder has sued former top management for making a $1
billion mistake by failing to hedge positions in palladium and other
precious metals. The management had concealed the losses previously.
If Argentinaıs latest debacle teaches any lesson at all itıs when there
is financial turmoil you had best cash in almost all your currencies and own
gold coins. $44.8 billion in US dollar deposits in Argentina were converted
into almost useless pesos. Itıs of interest that Citibank and Bank of Boston
illegally funneled $26 billion out of Argentina in the days before the final
collapse in behalf of their elitist clients. They used over 300 armored
trucks to bring the money to the airport and slip it to Uruguay, which is an
offshore financial haven. We believe all $210 billion in government and
corporate debt will never be paid. The looting of Argentina over the past 10
years was directed by top elitists David Rockefeller and Citigroup. There
were 457 illegal lines of credit approved by the Central Bank, benefiting
Chase Manhattan, B of A, Republic Bank of Dallas, Bank of Boston and
Citicorp. This was all done with the help of a currency board. The banks
looted Argentina and caused its financial collapse, then were aided by a
host of Argentine elitists as well.
Norilsk Nickel in Russia has been issued a five-year platinum export
quota and a one-year rhodium quota by the Russian government. Our favorite
platinum, palladium, rhodium, nickel, cobalt play is *Starfield Resources
(SRU-CONX). We recommended it at C$0.39 not too long ago. It recently hit
C$1.09 and is trading at about C$0.95. We expect this stock to move
We believe Crystallexıs shares have been under subtle accumulation by
large buyers. We saw it close at about $1.95 on Friday and we believe it is
headed higher. It could be something is finally going to break in Venezuela.
A compromise government has been formed in Kosovo. The three groups involved
are run by CIA connected known criminals. The DPK, Democratic Party of
Kosovo, is run by Hacim Thaci faction and the Alliance for the Future of
Kosovo is run by Ramersh Haradinaj, both murderers and drug dealers,
financed by the US & UK governments. Thaciıs party will have the
Energes, the telecom group, will cut 500 more jobs bringing them to a new
total of 950 job cuts of 3,600 employees.
Every facet of the media extols the benefits of a socialized European Union,
so we thought weıd enlighten you with some facts. Euro zone GDP shrank 8%
between 1997 and 2000 according to OECD figures, while that of the UK rose
7% and the US 20%. Due to that abysmal record, 62% of Britons oppose entry
into the EU and if Denmark and Sweden join, they are insane. The EU and the
euro will eventually be a disaster. Wait until the depression hits them,
then weıll see how cohesive they are.
Itıs catch 22 for EU members. The commission has warned Portugal and
Germany about their excessive budget deficits and warned other EU
governments about failing to form costly pension systems. All the taxes and
then some are being spent on bureaucrats and bloated staffs. The EU sees
Germany and Portuguese growth under 1% this year and deficits over 2.5%
approaching the magical 3% of GDP.
The EU is really concerned Germany whose deficit is 2.6% of GDP might
soon reach 3%, which is the limit. Socialist Schroeder canıt get reelected
if he canıt jump start the economy, but if he does Germany will jump over
UK trade data showed an unexpected large deficit in November, the results of
exports falling faster than imports. This implies buoyant consumer demand
but also that exporters are still struggling with a slump in global demand
and the strength of sterling against EU currencies. The trade deficit with
the EU members grew to $1.74 billion from $1.03 billion in October, the
biggest shortfall since February 2000. The global deficit rose to $3.95 from
$3.4 billion. The Bank of England voted to hold interest rates at 4%.
British GDP grew 0.2% in the fourth quarter versus the third quarter, which
was up 1.9%. Itıs estimated growth for 2001 was 2.4% versus 3% in 2000.
Manufacturing output fell sharply while the service sector grew 0.9%.
The IFO index rose to 86.3 in January up from 84.7 in October. The Institute
expects the economy will continue to shrink for 2-3 months and growth will
likely contract against this quarter, which would be the third straight
quarter of negative growth. They expect a pick up in April. The economy grew
only 0.6% last year.
*Per SEC Rule 17B, an asterisk denotes that the International Forecaster is
required to disclose compensation for investor relations and has in previous
representations. This is a standard footnote in the weekly letter. For
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request the same by replying to this email. This is a standard footnote in
our market letter. Trading is risky and has inherent dangers of volatility
and of loss of capital. The IF is specifically not an investment advisor but
is a publisher of information. The IF strongly urges you to consult with
your investment advisor to determine your suitability before acting on any
Reference to securities herein should not be considered as an offer to buy
or sell the same. Such can be done only in accordance with applicable law
and only by authorized persons.
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