TGDR Discovery Alert - Victoria Gold Corp

• Victoria Hits Another Wide Gold Intercept at Santa Fe: 284 m Grading2.50 g/t

Shares outstanding: 194.98 million
Market cap: 150.13 million
TSX.V:VIT - $0.77

Dear member,

Victoria Gold Corp came out with very encouraging assay results yesterday of diamond drill hole BH-3 at the Santa Fe gold exploration project, Nevada. Drill hole BH-3 averaged 2.50 g/t over 284 meter which includes a higher grade mineralized block grading 11.46 g/t over 11.3 meter.

2p ET Wednesday, December 30, 2009

Dear Friend of GATA and Gold:

GATA today brought suit against the U.S. Federal Reserve Board, seeking a court order for disclosure of the central bank's records of its surreptitious market intervention to suppress the monetary metal's price.

The suit was filed in U.S. District Court for the District of Columbia and targets Fed records involving gold swaps, exchanges of gold with foreign financial institutions. In a letter dated September 17 this year to GATA's law firm, William J. Olson P.C. of Vienna, Virginia, (http://www.lawandfreedom.com) Fed Board of Governors member Kevin M. Warsh acknowledged that the Fed has gold swap agreements with foreign banks but insisted that such documents remain secret:

http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf

The lawsuit follows two years of GATA's efforts to obtain from the Federal Reserve and the U.S. Treasury Department a candid accounting of the U.S. government's involvement in the gold market. These efforts parallel those of U.S. Rep. Ron Paul, R-Texas, who long has been proposing legislation to audit the Fed. The Fed has wrapped in secrecy much of its massive intervention in the markets over the last year, and Paul's legislation recently was approved by the U.S. House of Representatives.

The Fed claims that its gold swap records involve "trade secrets" exempt from disclosure under the U.S. Freedom of Information Act.

While GATA has produced many U.S. government records showing both open and surreptitious intervention in the gold market in recent decades (see http://www.gata.org/node/8052), Fed Governor Warsh's letter is confirmation that the government is surreptitiously operating in the gold market in the present as well. That intervention constitutes a huge deception of financial markets as well as expropriation of precious metals miners and investors particularly. This deception and expropriation are what GATA was established in 1999 to expose and oppose.

Of course GATA's lawsuit against the Fed will take months if not years to resolve. We think we have a good chance of winning it in court. But we can win it outside court, and much sooner, if the suit can gain enough publicity from the financial news media and market analysts and prompt enough inquiry from them and from the public, the mining industry, and members of Congress.

So GATA urges its friends to publicize the suit and to urge journalists, market analysts, mining companies, and members of Congress to join us in seeking disclosure of the Fed's gold market intervention records. If enough clamor is directed at the Fed about these records, the gold price suppression scheme will lose its surreptitiousness and fail.

Unfortunately the World Gold Council, which each year collects tens of millions of dollars in membership fees from mining companies in the name of representing them and gold investors, refuses to question governments about their surreptitious interventions in the gold market. These interventions powerfully influence not only gold's price but the prices of government bonds and currencies, as well as interest rates generally and the value of all capital and labor in the world. There is no more important issue in the world economy than gold price suppression.

So what should have been the World Gold Council's work has fallen to GATA, a non-profit educational and civil rights organization that operates from month to month on donations from people who share its objective -- free and transparent markets in the precious metals and fair dealing among nations generally. As we prosecute our lawsuit against the Fed, we'll be grateful for your support. We promise to do something with it.

For information about supporting GATA, please visit:

http://www.gata.org/node/16

GATA's lawsuit against the Fed is listed in federal court records as civil case No. 09-2436 ESH, the letters being the initials of the district court judge assigned to it, Ellen S. Huvelle.

You can find the lawsuit here:

http://www.gata.org/files/GATALawsuitVs.Fed-12-30-2009.pdf

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

TGDR Chart Of The Day - GOLD

GOLD's Inflation Adjusted high reaches $8000!

 
All other charts at:
http://www.golddrivers.com/chartsmember.aspx

Best regards,

TGDR CHARTS Update - LT

Presented to: The National Enquirer

By: Bill Murphy
Chairman Gold Anti-Trust Action Committee

Date: December 7, 2009

I am taking this to The National Enquirer because no one else in the US financial press has the gumption to explain a clandestine scandal, one which has indirectly affected every American. The Gold Anti-Trust Action Committee (GATA) was formed in January 1999 to expose a gold price suppression scheme fostered by a Gold Cartel, which includes the Federal Reserve, US Treasury, bullion banks like Goldman Sachs and JP Morgan Chase, and other entities such as The Bank of England.

In February of 1999 I was interviewed by Ron Insana on CNBC and that was the last time GATA was heard from via the US financial market press. Once they heard what GATA had to say about the rich and powerful in America, we were blackballed. The lone media exception came from outside the US, where I appeared on Bloomberg’s Asia Confidential last March and in November. It may be viewed here:

Asia Confidential - Bernie Lo interviews Bill Murphy, Chairman of GATA November 19, 2009:

http://www.youtube.com/watch?v=rw4T6IdHJ3w

http://www.youtube.com/watch?v=06_NMci4xnw

http://www.youtube.com/watch?v=OYiQZzbzeXo

***

The gold price suppression scheme is not a conspiracy theory, but, in numerous instances, a matter of public record. They may be reviewed in my colleague Chris Powell’s speech in Munich in early November:

Gold suppression is public policy and public record, not 'conspiracy theory'

Submitted by cpowell on Sat, 2009-11-07 18:16. Section:

Remarks by Chris Powell, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
International Precious Metals and Commodities Show
Olympia Park, Munich, Germany
Saturday, November 7, 2009

-END-

Chris is the editor of the Journal Inquirer in Manchester, Connecticut.

As Chris explains in his presentation, the gold price suppression scheme, kicked into high gear by President Clinton’s Treasury Secretary Robert Rubin as the essence of his Strong Dollar Policy, is about the surreptitious feeding of central bank gold into the marketplace to keep US interest rates lower than where they should have been, enhancing the role of the dollar as the international reserve currency, and to foster confidence in US financial markets.

Why is this important for National Enquirer readers to know?

As a result of the Gold Cartel engineering central banks to secretly lease gold into the physical marketplace, the price was artificially kept much lower than it would have been otherwise. Their deceptive maneuvers defused the gold price as an effective barometer indicating something was going wrong in the US financial market system. Lawrence Summers, who followed Robert Rubin as US Treasury Secretary, and is now President Obama’s top economic advisor, co-authored a paper while at Harvard titled Gibson’s Paradox and the Gold Standard, in which he explained the relationship between gold and US interest rates.

After all, when the price of gold takes off, the financial media talks of what? … too much inflation, higher interest rates coming down the road, bad news for the dollar, or a crisis of some sort. A rising price of gold is bad for business for the big banks in New York and for the politicians in Washington. The problem is this clandestine gold operation directly led to the financial crisis and high unemployment mess which is affecting all Americans today. GATA was not shy about telling the world what was going on, and what was to come, because of the gold price suppression scheme. We stated the case in a full-page, $264,400, color ad in the Wall Street Journal on January 31, 2008.

In the ad we said: "This manipulation has been a primary cause of the catastrophic excesses in the markets that now threaten the whole world." … Surreptitious market manipulation is leading the world to disaster."

You many review the ad here;

We also alluded to a gold price of $3,000 to $5,000 in the years ahead. How right we have been thus far as the price of gold has soared since we placed the ad, and we were right-on about the US financial crisis which ensued as 2008 progressed. And yet, NOT ONE person of the US financial market press contacted us regarding what our ad was all about.

So, you might ask WHY is this such a scandal and why should it be of importance to your readers? There are SO MANY REASONS…

*The gold market is the worst reported on market in history. Never have so many in an industry known so little about their own product. The gold industry is working with the wrong facts because they refuse to deal with the gold price suppression scheme, its ramifications, and the correct supply/demand fundamentals. This is why GATA has been so right about what the gold price would do the last years, while most gold analysts have had it all wrong. The industry says the central banks have 30,000 tonnes of gold in their vaults. But the work of several GATA consultants has revealed the central banks have well less than HALF that amount left.

The Gold Cartel has been using this secretive feeding of gold into the physical marketplace to meet a huge supply/demand deficit. But now their supply is drying up, which is the main reason the price of gold has begun to soar. Central banks have even turned buyers, as was the case recently when the central bank of India bought 200 tonnes of gold.

In the years ahead the price of gold will have to rise to $3,000 to $5,000 per ounce to clear the market, a prediction I made publicly over four years ago. Fortunes will be made for those invested in the gold market. High karatage gold jewelry is going to be worth a LOT of money. Much is being made of the public selling their gold for cash now. I suggest they think twice about doing so at this point in time. There is a lot of money on the table here, literally.

*The actions of the Federal Reserve, such as their facilitation of the gold price scheme, have hurt the average American terribly, in favor of the big banks like JP Morgan Chase, which is well known as the Fed’s bank and Goldman Sachs, also known as Government Sachs because so many from that firm have gone on to The Treasury. Recent Treasury Secretary Hank Paulson is a prime example.

*Congressman Ron Paul has sponsored a bill before Congress to audit the Fed. 313 Congressman are supporting his efforts, but The Fed and powerful banking interests are doing what they can to stop the bill from being passed. This past week Congressman Paul was on C-Span explaining why the bill is so needed. One of the reasons he mentioned was the Fed’s secretive operations, like the Fed leasing gold in an undeclared manner.

*There is great concern in the GATA camp that much of the 8,134 tonnes of US gold reserves has been compromised … that it is gone via "swap operations." GATA has a running struggle with the Fed via our Freedom of Information Act requests to find out about these operations. Their first response was to omit and redact hundreds of pages of the pertinent information we requested. President Obama said his Administration would be much more transparent. Thus, we again requested the information regarding "gold swaps" only to be denied once more. GATA appealed the denial, which was directed to the Fed Board of Governors’ Kevin M. Warsh, who responded to our Washington lawyer, William J. Olsen saying:

"In connection with your appeal, I have confirmed that the information withheld under Exemption 4" -- that's Exemption 4 of the Freedom of Information Act -- "consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of Exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you."

So there it is: The Federal Reserve today -- right now -- has gold swap arrangements with "foreign banks," which means the US does not have the gold they say they have in their vaults to support our currency, the dollar.

*Your readers might like to know there has not been an independent audit of US gold reserves since 1955 during the Eisenhower Administration. Can you imagine anything going that long without a true audit?

*GATA has been trying to explain the real gold story for a decade, but the gold establishment and financial press have been blocking our efforts all this time. For years (some still do) they called us "conspiracy nuts," but most of what we have been talking about is panning out, including the last nine years of price rises.

The GATA camp is not without stellar credentials, having hosted three international gold conferences…

1. The GATA African Gold Summit in Durban, South Africa on May 10, 2001, attended by 5 sub-Saharan African nations, the South African Reserve Bank, leading South African gold producers, the South African unions, etc., - an event that was prime time on SABC television. It focused on how the gold price suppression scheme was hurting the poor in South Africa.

2. Gold Rush 21 in Dawson City (the Yukon in Canada) on August 8^th and 9^th 2005 to expose the manipulation of the gold market. One hundred delegates attended from 14 countries, including Andrey Bykov, an economic consultant to Russian President Vladimir Putin, who said it was the finest conference he ever attended.

While there are a lot of Johnny Come Latelies trying to explain what the gold market is doing these days, GATA has had the scoop all along, a scoop which has essentially been banned in the US public media domain. Gold Rush 21 is our finest example of what we have accomplished over the years; showing the backgrounds of the people behind it; and forecasting to the world why the gold price was going to explode over four years ago.

I point to our TWO MINUTE trailer on this extraordinary event, which can be seen at

***

3. The "GATA Goes To Washington" conference on April 18 and 19 in Arlington, Virginia. 180 attendees came from 17 countries for the gathering. The conference showcased GATA’s FOIA efforts to learn the truth about US gold reserves from the Fed and US Treasury.

*When the gold scandal breaks, it will dwarf the earth shaking Madoff Ponzi scheme because of its financial implications, not only in the US, but all over the world. Harry Markopolos went to the SEC for a decade explaining that Bernie Madoff’s operation was a fraud. They paid no attention. GATA has gone to the CFTC for a decade about the gold fraud, including a meeting on December 18, 2008 with four members of the CFTC including their senior legal counsel. They have not paid attention either. But, what can we expect? The newly appointed CFTC Chairman came from Goldman Sachs.

*GATA believes the US Government would rather release nuclear bomb secrets than allow any information which would expose the gold price suppression scheme. We have gone to Washington and met with James Saxton, co-chair of the Joint Economic Committee; Dennis Hastert, Speaker of the House; Spencer Bachus, Chairman of the sub-Committee of Domestic and International Monetary Policy with gold oversight; and Speaker of the Texas House, Tom Craddick, a boyhood friend of President Bush. Mr. Craddick sent what we had to say to the President on his private fax. None of our efforts came to any fruition.

* Financial turmoil in the US is very likely to appear again in the coming months, much of it due to the aftereffects of the gold price suppression scheme. During this time, and throughout 2010, the price of gold is going to explode even further. The GATA camp recently uncovered some comments made by former Fed Chairman Alan Greenspan which he made in 1993 during a Federal Open Market Committee meeting:

Page 40 of the transcript here (Page 42 of the PDF version:

I have one other issue I'd like to throw on the table. I hesitate to do it, but let me tell you some of the issues that are involved here. If we are dealing with psychology, then the thermometers one uses to measure it have an effect. I was raising the question on the side with Governor Mullins of what would happen if the Treasury sold a little gold in this market. There's an interesting question here because if the gold price broke in that context, the thermometer would not be just a measuring tool. It would basically affect the underlying psychology."

What Greenspan was saying way back when was that by secretly putting gold into the market, it would affect the psychology of the markets, investors and the public. This was the beginning of the gold price suppression scheme. Greenspan used the word thermometer. For a decade GATA has used the word barometer to explain why The Gold Cartel was surreptitiously suppressing the price … they SHOT THE MESSENGER!

In the end, NOW, the American public has paid a terrible price for this falsely induced thermometer/barometer reduced complacency engineered by The Gold Cartel … which is a significant reason why so many Americans have been blindsided by the collapse of our markets.

WHERE IS OUR SO-CALLED FREE PRESS IN AMERICA?

It is time for the truth to be told so that Americans can prepare for what is to come and so that this sort of financial engineering nonsense, in violation of our free market principles and orchestrated by the rich and powerful in the US at the expense of the average American, never be allowed to happen again.

END.

The GoldDrivers Bullion Store

Why buy Gold from the GoldDrivers Bullion Store?

TGDR TA GOLD CHART - Support Levels

Dear member,

The International Monetary Fund said Wednesday it had sold 10 tonnes of gold to Sri Lanka's central bank for 375 million dollars, as part of a restructuring of IMF financial resources

It was the third IMF sale of gold in a month as the Washington-based institution seeks to reduce its dependence on lending revenue and bolster its finances amid the global economic crisis.

"The sale was conducted on the basis of market prices prevailing on" Monday, the IMF said in a statement.

Gold prices had hit a record high that day, topping 1,170 dollars an ounce. Since then, the price of the precious metal has soared higher to new all-time peaks as investors seek a safe haven amid economic uncertainty.

The sale brought the total IMF gold sold to central banks to 212 tonnes. India bought 200 tonnes between October 19 and 30 for 6.7 billion dollars and Mauritius bought two tonnes on November 11 for 71.7 million dollars.

Sri Lanka has a 20-month IMF loan of 2.7 billion dollars that was awarded in July after the island nation's reserves slumped to just over one billion dollars as the government made a final offensive to crush separatist Tamil Tiger rebels.

Sri Lanka's central bank in early November said it has been buying gold to diversify its reserves amid volatile currency markets but refused to reveal from which sources the bank was buying the gold or at what prices.

The IMF executive board approved the sale of 403.3 tonnes of gold in September. The fund, which currently holds roughly 3,000 tonnes of gold, is the world's third-largest official holder of the precious metal after the United States and Germany.

Gold and other commodity prices have surged in recent months amid a move away from a sliding dollar. The metal is also winning support over fears about a spike in inflation, as gold is widely regarded as a safe store of value.

The IMF said it would sell gold directly to central banks and other official holders for an initial period before selling the remaining amount on the open markets "in a phased manner over time," in line with an approach used by central banks to avoid market disruptions.

Yahoo, November 24, 2009

Gold production will continue to fall, despite a brief boost in 2009 and soaring prices, as deposits are exhausted and new discoveries remain elusive, say miners

In terms of production, "2009 is the outlier as far as the trend," Omar Jabara, spokesman for US-based Newmont Mining, the second-largest gold producer in the world, told AFP.

Overall, "it's a fact that gold production from mines has been in decline since 2001 and has gone roughly from 85 million ounces to about 75 million ounces a year," said Vincent Borg, spokesman for number one producer Barrick Gold.

"It sort of goes down about one million ounces every year and our forecast is that it will continue to decline despite the higher price" for gold nowadays, he said.

Almost everywhere, mineral deposits are being exhausted and new deposits are not being found fast enough to replace them, these experts explain.

South Africa, which was once at the vanguard of world production, saw a 9.3-percent drop in production year-over-year in the second quarter, according to its Chamber of Mines.

Globally, "it's just that the assets are not there anymore," Tonya Todd, a spokeswoman for Goldcorp, Canada's second biggest gold mining firm.

"Just because gold reached a new high today doesn't mean we can send a message to our 26 mines saying produce as much gold as you can today because they are already," said Borg.

"It's not like a water tap you can turn on and it comes right away."

Barrick and Newmont expect nevertheless to continue increasing production next year by seven percent and five to 10 percent, respectively. But long-term, it's downhill.

Omar Jabara explained that it takes from seven to 10 years to start production of a mine after finding an economically viable gold deposit.

And "no significant new discoveries have been found in recent years, despite the higher gold prices and despite higher exploration budgets," said Borg.

What is already happening and is likely to continue is that the grade or quality of deposits industry-wide will be "on average lower than deposits discovered in the past," opined Jabara.

The global gold mine production is forecast to rise by 3.7 percent in 2009 to about 2,500 tonnes, but will satisfy only two-thirds of demand, which soared this year amid the global financial crisis to 3,800 tonnes, according to the World Gold Council.

Historically, gold recycling or the sale of central bank stockpiles made up for supply shortages.

But during the latest financial crisis, banks have been buying up gold in large quantities to protect monetary reserves against weakness in the US dollar.

Since the start of November, for example, India's central bank has scooped up 200 tonnes of gold from the International Monetary Fund, at market value for about 6.7 billion dollars.

Amid uncertainty in the stock market, small investors and hedge funds are also coveting gold, driving up demand for the precious metal.

With mine production sloping downwards, an increasing supply of gold must come from existing supplies -- such as coins, bullion or jewelry -- but it will be very limited.

"All the gold ever produced through history amounts to about 165,000 tonnes, which would barely fill two Olympic-size swimming pools," said Jabara.

Gold prices soared to a record above 1,180 dollars in London on Wednesday hitting 1,180.20 dollars an ounce in trading on the London Bullion Market, after striking a series of historic peaks in recent days and weeks.

By Mandakini Raina Nov 24 2009 , New Delhi

Tags: IMF, Plan
India is open to buying more gold from the International Monetary Fund

It bought 200 tonnes for $6.7 billion on November 3. The Reserve Bank of India (RBI) may well buy IMF’s remaining hoard of 201.3 tonnes on acceptable terms, which are now under negotiation.

A government official said that the additional purchase would depend on the “successful pitching by RBI”. “RBI is an independent body, and the government does not interfere in its affairs. It will get the gold if its bid is successful and at the price it has offered,” said the official.

RBI did not respond to Financial Chronicle questions if it was bidding for the remaining IMF gold. The purchase of the first lot of 200
tonnes, RBI had said at the time, was a part of its foreign exchange reserves management operations.

Responding to query from FC, an IMF spokesperson said the gold sale process was still under way and “there is no fixed timetable for completing the sale”. Its spokesperson further said that “the fund does not wish to comment on discussions with individual members.”

RBI has good reasons to further enrich its gold reserves. In just three weeks it has been able to benefit by as much as $800 million on the investment of $6.7 billion it made in buying 200 tonnes from IMF.

Since 1999 RBI has been periodically valuing its gold reserves at “prices close to the market”. It has not done so since it purchased the gold from IMF.

RBI bought the 200 tonnes at $1,045 an ounce. The transaction, from IMF to RBI, involved daily sales that were staggered over a two-week period, October 19-30, with each daily sale conducted at a price set on the basis of that day’s market price.

On Tuesday, gold prices stood at $1,168, an increase of 12 per cent over the price RBI paid. The market value of the gold, as of Tuesday, thus stood at $7.5 billion – indicating a cool gain of $800 million for RBI.

RBI holds its forex reserves in a basket of currencies expressed in dollar terms. It is able to earn only a nominal return on the dollar reserves.

In an article in FC on November 4, Guild Investment Management CEO Monty Guild listed the merits of buying of gold. “It helps China and India more because their responsibility for financing IMF grows as they become powerful financially. It is a method to get IMF to self-finance in the short run and save China and India money,” he wrote. Guild said that since most of the gold bought would be out of reach for the retail market, “gold prices will not get hammered”.

Prime minister Manmohan Singh on Sunday said there wasn’t a substitute for the dollar yet. “My own feeling is that we have not entered an era of irreversible shift in the economic strength of the US,” he said ahead of his visit to Washington.

On November 3, the day RBI bought IMF gold, finance minister Pranab Mukherjee told the economic editors’ conference that the government wasn’t preferential in its treatment to either the dollar or gold. The buying of gold had a sentimental significance, as the government had to pledge gold with the Bank of England in 1991 to borrow money to maintain imports.

The IMF executive board had on September 18 approved the sale of 403.3 tonnes of gold -- one-eighth of the fund’s total gold holdings -- half of which was eventually sold to India. Bank of Mauritius bought 2 tonnes, leaving 201.3 tonnes still with IMF. The limited sales are part of IMF’s efforts to put its finances on a firm footing and raise money to lend to low-income countries.

Yahoo, November 24, 2009

Gold production will continue to fall, despite a brief boost in 2009 and soaring prices, as deposits are exhausted and new discoveries remain elusive, say miners

In terms of production, "2009 is the outlier as far as the trend," Omar Jabara, spokesman for US-based Newmont Mining, the second-largest gold producer in the world, told AFP.

Overall, "it's a fact that gold production from mines has been in decline since 2001 and has gone roughly from 85 million ounces to about 75 million ounces a year," said Vincent Borg, spokesman for number one producer Barrick Gold.

"It sort of goes down about one million ounces every year and our forecast is that it will continue to decline despite the higher price" for gold nowadays, he said.

Almost everywhere, mineral deposits are being exhausted and new deposits are not being found fast enough to replace them, these experts explain.

South Africa, which was once at the vanguard of world production, saw a 9.3-percent drop in production year-over-year in the second quarter, according to its Chamber of Mines.

Globally, "it's just that the assets are not there anymore," Tonya Todd, a spokeswoman for Goldcorp, Canada's second biggest gold mining firm.

"Just because gold reached a new high today doesn't mean we can send a message to our 26 mines saying produce as much gold as you can today because they are already," said Borg.

"It's not like a water tap you can turn on and it comes right away."

Barrick and Newmont expect nevertheless to continue increasing production next year by seven percent and five to 10 percent, respectively. But long-term, it's downhill.

Omar Jabara explained that it takes from seven to 10 years to start production of a mine after finding an economically viable gold deposit.

And "no significant new discoveries have been found in recent years, despite the higher gold prices and despite higher exploration budgets," said Borg.

What is already happening and is likely to continue is that the grade or quality of deposits industry-wide will be "on average lower than deposits discovered in the past," opined Jabara.

The global gold mine production is forecast to rise by 3.7 percent in 2009 to about 2,500 tonnes, but will satisfy only two-thirds of demand, which soared this year amid the global financial crisis to 3,800 tonnes, according to the World Gold Council.

Historically, gold recycling or the sale of central bank stockpiles made up for supply shortages.

But during the latest financial crisis, banks have been buying up gold in large quantities to protect monetary reserves against weakness in the US dollar.

Since the start of November, for example, India's central bank has scooped up 200 tonnes of gold from the International Monetary Fund, at market value for about 6.7 billion dollars.

Amid uncertainty in the stock market, small investors and hedge funds are also coveting gold, driving up demand for the precious metal.

With mine production sloping downwards, an increasing supply of gold must come from existing supplies -- such as coins, bullion or jewelry -- but it will be very limited.

"All the gold ever produced through history amounts to about 165,000 tonnes, which would barely fill two Olympic-size swimming pools," said Jabara.

Gold prices soared to a record above 1,180 dollars in London on Wednesday hitting 1,180.20 dollars an ounce in trading on the London Bullion Market, after striking a series of historic peaks in recent days and weeks.

Global gold production is in terminal decline despite record prices and Herculean efforts by mining companies to discover fresh sources of ore in remote spots, according to the world's top producer Barrick Gold.

By Ambrose Evans-Pritchard, International Business Editor
Published: 7:20PM GMT 11 Nov 2009

Aaron Regent, president of the Canadian gold giant, said that global output has been falling by roughly 1m ounces a year since the start of the decade. Total mine supply has dropped by 10pc as ore quality erodes, implying that the roaring bull market of the last eight years may have further to run.

"There is a strong case to be made that we are already at 'peak gold'," he told The Daily Telegraph at the RBC's annual gold conference in London
"Production peaked around 2000 and it has been in decline ever since, and we forecast that decline to continue. It is increasingly difficult to find ore," he said.

Ore grades have fallen from around 12 grams per tonne in 1950 to nearer 3 grams in the US, Canada, and Australia. South Africa's output has halved since peaking in 1970.

The supply crunch has helped push gold to an all-time high, reaching $1,118 an ounce at one stage yesterday. The key driver over recent days has been the move by India's central bank to soak up half of the gold being sold by the International Monetary Fund. It is the latest sign that the rising powers of Asia and the commodity bloc are growing wary of Western paper money and debt.

China has quietly doubled holdings to 1,054 tonnes and is thought to be adding gradually on price dips, creating a market floor. Gold remains a tiny fraction of its $2.3 trillion in foreign reserves.

Gold exchange-traded funds (ETFs) – dubbed the "People's Central Bank" – have accumulated 1,778 tonnes, making them the fifth biggest holder after the US, Germany, France, and Italy.

Ross Norman, director of theBullionDesk.com, said exploration budgets had tripled since the start of the decade with stubbornly disappointing results so far.

Output fell a further 14pc in South Africa last year as companies were forced to dig ever deeper - at greater cost - to replace depleted reserves, not helped by "social uplift" rules and power cuts. Harmony Gold said yesterday that it may close two more mines over coming months due to poor ore grades.

Mr Norman said the "false mine of central banks" had been the only new source of gold supply this decade as they auction off reserves, but they are switching sides to become net buyers.

Barrick is moving fast to wind down the remaining 3m ounces of its infamous hedge book over the next twelve months, an implicit bet on rising gold prices over time.

Mr Regent said the company had waited too long to ditch the policy, which has made the company enemy number one among 'gold bug' enthusiasts. The hedges oblige Barrick to deliver part of its gold into futures contracts set long ago at levels far below today's spot prices.

The strategy worked well in the falling market of the 1990s, but has cost the company dear in lost profits this decade. "Hindsight is always 20/20," said Mr Regent, who was appointed from the outside earlier this year.

Barrick bit the bullet in the third quarter, taking a $5.7bn charge against earnings on hedge contracts. Liberation is at last in sight. In 2001 the hedge book topped 20m ounces.

Mr Regent said the hedge policy has weighed badly on the share price and irked investors, becoming a bone of contention at every meeting. The financial crisis brought matters to a head as markets fretted about counterparty risk. "It was clear to me that there were a significant number of institutions who wouldn't invest in Barrick because of the hedge book," he said.

Barrick produced 1.9m ounces of gold last quarter, down from 1.95m a year earlier. Costs have been "trending down" to $456 an ounce, though rising energy prices pose a fresh threat. Total reserves are 139m ounces, far ahead of rival Newmont Mining at 86m.

The hedge book venture has not been a happy one, but those who predicted that Barrick would eventually "blow up" on its contracts may owe the company an apology.

Juniors Poised for Historic Bull Run

By Eric Hommelberg
November 05, 2009

On October 07 The Gold Report conducted an interview with me just after gold broke out to new news above $1030. During that interview I made the case for $1300 gold by spring next year and advocated to be invested in high quality juniors which are poised for a multi year bull run that could even surprise the staunchest junior investors. This piece is an update on that interview and shines a light on how to approach investing in junior gold mining shares.

Gold poised for correction? Not now!

On October 07 with gold prices just above $1030 The Gold Report asked me if I had one more final thought for the reader. I said:

Excerpt TGR Interview October 07, 2009

TGR: Any final thoughts you'd like to give our readers?

EH: Yes, most likely you'll be hearing bearish gold tunes in coming months from the traditional gold institutions, saying that gold's rise is not justified by its fundamentals and therefore bound to fall. They did so in 2003, they did so in 2005 and now they are at it again. The traditional gold institutions simply don't appreciate the fact that gold is money and how it has been manipulated over the years. Traditional gold institutions in 2005, with gold prices at $425, were saying that increased gold production would bring down gold prices; that certainly didn't boost their credibility. Still many analysts quote these very same institutions today for the very same argument— that increased gold production will bring down gold prices in the years ahead. GATA, on the other hand, said in 2001 that gold was going to $850 and that central bank selling wouldn't be an issue anymore within seven to ten years from then. We find ourselves right in the middle of that projection and gold is trading well above $850 and central bank sales have dried up completely. You are not going to hear these kind of predictions from the traditional gold institutions. No one has been right on the money more than GATA. It's therefore no wonder that GATA's credibility is rising fast. To give you an example here, the Chinese sovereign wealth fund ,which manages over $200 billion, has held already three teleconference calls with GATA—they wanted to know what GATA knows. We all know now that China has been accumulating gold for years; we all know now that China wants a new world reserve currency. This, of course, won't happen overnight, but it's quite obvious that the U.S. dollar as a world reserve currency is not going to survive. Gold will continue to rise until something new has been put in place on the monetary front and I think we are years away from that. So what I'd say is. "Stick to it and stay the course. “

END.

Well, we are just one month further now and $50 closer to our $1300 target by spring next year, this despite the many calls for $680 gold that have been aired since then through the traditional bear channels.

Now does it come a surprise to see gold holding up so well after breaching the $1000 mark and marching into higher grounds?

No, of course not, when The Gold Report asked me about a potential pull back I said:

TGR: Given the recent run-ups, would you expect a pullback before the price rises again?

EH: I don't expect a sharp pullback; nothing like the correction last year. That's not going to happen. Since gold breached the $1,000 mark for the first time in March 2008, the $1,000 area had been a resistance area. It took about five attempts to slash the $1,000 mark. A long-time resistance area becomes a support level once that level has been breached to the upside. That's exactly what happened a few of weeks ago, when we saw our first weekly close above the $1,000 mark in history. Furthermore we had our highest monthly close ever as well and this marks the beginning of a new up leg. The charts leave no doubt; they point to gold prices of $1250+ within the next six months. When you analyze the long-term charts you'll notice a pattern of long consolidation phases followed by sharp up moves. The consolidation phases last for about 18 months, the sharp up moves last for about six months, whereby gold can appreciate by 50% or more. We saw it in 2005 when gold just finished an 18-month consolidation period and then it shot up within six months from $430 to $730. That move started with a commercial signal failure, today with record high commercial shorts outstanding we could be on the verge of a commercial signal failure again

END.

Here we are, gold shooting up by $40 in the face of all nay sayers just like it did in 2005.  The odds of a massive commercial signal failure are increasing by the day. Certainly the Indian bombshell of buying 200 tons of IMF gold wasn’t exactly the kind of news the commercial short traders were waiting for. And yes, the FED not willing to defend the dollar won’t be giving much comfort either, and yes, the fact that more and more investors are demanding the real metal instead of paper gold substitutes like GLD (see also my entire interview with The Gold Report) is making things worse for the commercial short traders. So yes, we are on our way to $1300 gold which is consistent with previous patterns of consolidation phases followed by sharp up moves.  The chart below which we’ve send out to our members on Oct 07 visualizes this pattern:

TA GOLD CHART – WEEKLY (Oct 07)

Now fast forward to today with gold clocking $1080. Is it overbought now? Time for a correction? Don’t think so!

Another chart I would like to bring to your attention here is the relative gold chart which leaves no doubt at all. There’s still plenty of upside potential from current levels before extreme overbought territories will be reached.  If gold would reach the same overbought extremes as it did on the 2005 and 2007 run up then gold should clock $1285 which again is very consistent with my $1300 prediction by spring next year.

Relative Gold chart

The relative Gold Chart (rGold) is gold divided by its own 200 dma. It has proven to be a reliable indicator in spotting major bottoms for gold ever since the gold bull market began in April 2001.

Since the gold bull market began in April 2001 gold made two major tops in which it exceeded its own 200 dma by more than 30%. (rGold value > 1.3). This happened in May 2006 and in March 2008.

On the downside gold has made some major bottoms in which it dropped below its own 200 dma by 5 - 10% (rGold value 0.90 - 0.95)

The rGold range of 0.90 - 0.95  has proven to be a reliable BUY indicator indeed over the last 7 years

The relative gold chart leaves no doubt, gold has plenty of upward potential before reaching extreme overbought territories.. The relative gold chart would reach previous peaks (2006/2008) if gold would reach $1285 which is indeed consistent with my earlier projection of $1300 by spring next year..

Now with $1300 gold in mind for spring next year and gold prices headed to $5000 or more the years ahead (see my piece ‘Gold - Last Time to Buy gold below $1000?’, what could it mean for the junior mining companies? Well, the answer is “A Lot!” In Part II of this article I will be making the investment case for junior mining companies which could stun even the most staunch gold bull out there. Fiction or real possibilities? Well, read on and judge yourself.

Junior Mining Companies Poised for Historic Bull Run

It has been quite a year for the junior mining companies. Investors declared the junior sector for being dead by end of 2008, institutions willing to finance ongoing exploration projects were hard to find and hedge funds adopted a new fancy game which was to short juniors into oblivion. During fall of last year most juniors didn’t see any up tick in their stock quote at all since shares for sale were hitting the few willing investors left like a tsunami never ever witnessed before in the universe of junior mining companies. Many juniors were priced at bankruptcy levels, levels not seen since the gold bull market began in 2001. The inevitable result was panic, a real panic which drove most investors (and gold letter writers) out of the juniors pushing management of most juniors into a mental state of severe depression.

It became quite obvious during that time that many juniors couldn’t survive this dark winter without diluting themselves into worthless penny stocks if they could raise money in the first place at all.

I always maintained the view, even during this extreme depressed period of time, that the high quality juniors would come out as winners eventually. There’s no doubt in my mind that within a few years from now valuations for the better juniors will stun most investors, the better juniors will be priced at levels not imaginable today.. The pendulum always swings from one side to the other, in other words, from overvaluation to undervaluation and back etc…

In February 2009 I published the CDNX/GOLD ratio chart below. It’s a chart which represents the performance of the junior sector against gold. I suggested that we found ourselves in a window of buy opportunities never witnessed before. The reason was simple since never ever in history the junior sector had been so depressed as in late 2008. Now investing is a quite simple game, you buy shares when prices are low (extreme undervaluation) and sell them when prices are high (extreme overvaluation). Sounds simple right? But in order to act on this simple thesis you have to ignore the mass mainstream opinion since the mass is wrong on the market for more than 90% of the time. The reason for that is shockingly simple, it’s just a law of nature, you’ll never witness a major low when the mass is buying like crazy and vice versa. All major lows in financial history have been characterized by extreme panic selling, it’s just a matter of waiting patiently until selling panic has reached its climax and for momentum to be faded away necessary to push stocks further down.

Now who will tell you when downward momentum has faded away and panic has reached its climax? Well, nobody will tell you, especially not the mainstream financial media but the charts will do.

What charts?

When it comes to the junior sector I’m interested in how the juniors perform against gold. Look, the juniors sector could improve by let’s say 20% and you’ll say ‘Great”!’. But if this 20% gain has been achieved against a 50% rise in the gold price then quite obviously juniors were not the place to be from an investment point of view.

So by charting the junior sector against gold itself one could get a clue of juniors out performing or under performing gold. The ideal situation would be of course an environment where gold is on the rise while the junior/gold ratio is on the rise as well, then a tremendous leverage could be achieved by investing in the better juniors.

Now in order to chart the juniors against gold one should look at the CDNX index vs gold since the CDNX (although not ideal) represents most junior mining companies. In order to identify the major turning points one should filter out all the daily/weekly noise and concentrate on the monthly chart only.

Now finally let’s have a peek at the monhtly CDNX/GOLD ratio chart I published in Feb 2009:

CDNX/Gold ratio chart FEB 2009

This chart clearly demonstrated the extreme depressed levels juniors reached in late 2008 and the extreme upward potential for juniors for years to come.

Now fast forward to Sept 2009 and see how this chart unfolded itself over the last 7 months..  

CDNX/GOLD ratio chart NOV 2009

This chart clearly demonstrates a major bottom has been put in place indeed in Dec 2008. Now what does that mean for coming years?

Well, the key issue here are major turning points. The gold market began in 2001 and in early 2004 the junior sector had gone ahead of itself too far too fast. Yes, they became overbought against gold as shown in chart above..It was a time when most juniors were trading above the $1 mark (vs pennies today), it was a time when juniors hitting good drill results easily doubled in value.. We have never experienced such valuations ever since. So the period 2001 -  early 2004 was a good period to be in juniors. Looking back the year of 2004 proved to be a major turning point. Despite the rise of gold prices juniors had a hard time to catch up with gold. After mid 2007 juniors started to decline in value against gold with a anti climax being reached in Dec 2008. So we had a cycle here from undervaluation to overvaluation from 2001 to 2004, then the cycle took us back from overvaluation to (extreme) undervaluation from 2004 to 2008 and now we are almost one year underway in a new up-leg which could lead us to new overvaluations within a couple of years from now. Overvaluations that will stun even the staunchest gold bull out there.

Yes, I’m aware that the juniors were not the place to be over the last 5 years since they are beaten up to levels not seen since the beginning of the bull market in 2001. But as the CDNX/Gold chart above demonstrates the bottom has been clearly put in place in December 2008. From there onwards the only way seems to be up for years to come. Remember the seventies, investing in juniors could have made you millionaires by investing a mere $1000 into the best performing juniors. The thing is like today that the junior sector didn’t wake up until the final years of the gold bull market.  The first 6 years of the seventies bull market didn’t affect the juniors that much but things started to heat up dramatically from 1976 onwards. Any company with a name ‘gold’ in it saw its share price appreciating upon exploding gold prices. Juniors priced at pennies in 1975 went ballistic going into 1980. A good example concerns Lion Mines which went up from 7 cents in 1975 to $380 in 1980, or what about Warf Resources which went up from 40 cents to $560, or Steep Rock from 93 cents to $440.. These are no misprints, a $50 investment in Lion Mines would have yielded a profit of $380.000, not bad I guess…

Now you may wonder how come such astronomical returns are possible? The reason is quite simple, the junior market is so small that even a tiny inflow of money would have tremendous consequences for the average junior share prices.. Today, of all invested money less than 1% is invested gold and its shares and even a much smaller share in junior mining companies. Once the juniors start rising by multiples of 100% on a year to year base (as happened since December 2008) in the face of gold prices heading into new record high territories then people want to be part of that action and money starts flowing en masse into the junior sector. Even if a tiny percentage of all investment capital decides to chase the junior stocks all heck will break loose. It would be like trying guiding the Niagara waterfalls through a garden hose, needless to say some tightness will be encountered here and there…

Does it mean to go out now and buy all companies which have a name ‘Gold’ in it?

No, of course not, there will be big winners in the end but unfortunately many juniors won’t be going anywhere as well. The thing is that discovery of economic viable gold deposits is the key which will really launch a junior company. Now despite the fact over 2000 juniors are trying to convince investors they will be successful, only one out of every 2000 projects will ever make it to a mine. To make things even worse, during last decade only a very few world class gold discoveries have been made so by just randomly throwing money at juniors you will most likely end up going nowhere..

Next week I will be discussing some guidelines which could be helpful in your hunt for successful juniors. If you want to be kept updated on our Charts and upcoming interviews with CEO’s of promising juniors then please sign up HERE and start receiving our FREE GoldDrivers Report

Comments are welcome at:

ehommelber@golddrivers.com

Stay tuned,

Eric Hommelberg

The GoldDrivers Report /

The GoldDrivers Bullion Store

www.golddrivers.com

SPECIAL OFFER

Buy Gold at The Golddrivers Bullion Store and receive a free 1g gold bar

This offer expires on November 15, 2009

You can start ordering HERE

Why buy Gold from the GoldDrivers Bullion Store?

·         GoldDrivers has been validated by Valcambi Suisse as a valid business partner and became the first on-line retail seller that deals with Valcambi directly.

·         Valcambi Suisse is one of the most reputable refineries in the world and for more than 40 years the sole manufacturer of the famous Credit Suisse gold bars.  

·         All bars come with its official  'Assay Certificate' that guarantees the fineness of 99.99% pure gold and its content.

·         Our bars are priced at slight premiums above spot (lowest on the web!)

·         Easy checkout procedures, payment options through MasterCard, VISA, Bank wire, PayPal, iDEAL, GiroPay, FasterPay, Direct E-banking

11.05.09, 04:55 AM EST   

NEW DELHI, Nov 5 (Reuters) - Sri Lanka's central bank has been buying gold for the past five or six months as it diversifies its reserves amid volatile markets, the bank's governor said in an interview on Thursday.

'We have been fairly strong accumulators of gold reserves over the past few months,' Sri Lanka Central Bank Governor Ajith Nivard Cabraal told Reuters in a telephone interview from the southern Indian city of Chennai.

'We haven't stopped yet,' he added, declining to quantify how much gold the central bank had bought or how much of the more than $4.8 billion of the country's reserves were in gold.

'Many countries are today diversifying. They are also looking at intrinsic value of their reserves, so gold would be a natural candidate for that kind of reserve accumulation,' he said.

(Reporting by Tony Munroe; Editing by Alistair Scrutton)

((tony.munroe@thomsonreuters.com; +91 22 6636 9257; Reuters Messaging: tony.munroe.reuters.com@reuters.net)) Keywords: SRILANKA C.BANK/GOLD

By Joe Leahy in Mumbai

Published: November 5 2009 16:04 | Last updated: November 5 2009 16:04

The Sri Lankan central bank is buying gold to diversify its reserves and smooth out periods of dollar volatility, Ajith Nivard Cabraal, central bank governor, said.

The move, which follows India’s gold purchase, is part of a policy change on the part of the bank.

“We did experience this huge currency volatility during the time of the crisis that gave us the feeling that we need to save in something more solid,” Mr Cabraal told the Financial Times. “Naturally gold crops up as the more logical item.”

He did not reveal the size of the purchases, which analysts said were about five tonnes, far below India’s 200-tonne purchase.

Mr Cabraal described the buying as “fairly substantial . . . We have not stopped accumulating it”.

Jonathan Spall, a director at Barclays Capital, said: that, while Sri Lanka might be a minnow in terms of the gold it may buy, it was another argument “in the case being built for gold”.

Additional reporting by Javier Blas in London
Copyright The Financial Times Limited 2009. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

Move Seen as Effort to Diversify Reserves Away From the Dollar

By ABHRAJIT GANGOPADHYAY and ELISABETH BEHRMANN
NEW DELHI -- India's central bank bought 200 metric tons of gold from the International Monetary Fund last month, in the first major move by a major central bank to diversify its foreign-exchange reserves.

Analysts said the move is potentially bullish for gold, but it is by no means the start of a significant shift away from U.S. dollar holdings. The Reserve Bank of India said in a statement that the move was part of its effort to manage its foreign-exchange reserves.

"I would have advised the governor of RBI to buy gold as our forex reserve is comfortable," said Indian Finance Minister Pranab Mukherjee. "The RBI has done just that. That doesn't mean we don't prefer dollar any more or like gold any better."

Sonal Varma, an economist at Nomura Financial Advisory & Securities in Mumbai, said the purchase won't create a substantial mismatch between the Reserve Bank's assets and India's obligations. "Dollar will continue to be a significant part of foreign-exchange
holdings, as most of India's external debt is in dollars," the economist said. "The gold buying, as of now, seems just an asset-diversification strategy."

A senior finance ministry official said the central bank may seek to buy more gold from the IMF directly. "It makes sense to buy gold as it will appreciate more than the U.S. dollar," he said.

News of the purchase of nearly half of the 403.3 metric tons of gold earmarked for sale by the IMF boosted gold prices, reminding investors that central bank reserve diversification will continue to fuel demand for the metal.

In late morning in New York, gold for December delivery on the Comex division of the New York Mercantile Exchange was up $22.90 per ounce, or 2.2%, at $1076.30.

The off-market deal also reinforced the view that little or none of the IMF gold may eventually reach the open market, limiting the bearish impact such a big sale might have had otherwise.

The Reserve Bank bought the gold between Oct. 19 and Oct. 30, an IMF statement said. The $6.7 billion in proceeds from the sale indicate an average estimated price of $1,045 a troy ounce, far higher than the $850 per ounce the IMF expected to get a few months ago, when its executive board approved the sale.

Sue Trinh, currency strategist at RBC Capital in Sydney, said the announcement supported the view that central banks are looking for ways to diversify their reserves away from the dollar.

The Reserve Bank is "still a buyer at current high-price levels, indicating gold is likely to move up further," said Kunal Shah, an analyst at Normal Bang Commodities in Mumbai. "This is positive."

The IMF declined to comment on buyers for the remaining amount, but said it is still in "an initial period to sell gold directly to central banks and other official holders that may be interested in such sales."

There has been speculation that Chinese and Russian central banks may also be interested in buying gold directly from the IMF. Open-market sales will be conducted only if any gold is left after the "initial period" and "the Fund will inform markets before any on-market sales commence," the statement said.

Janet Kong, managing director at Goldman Sachs's commodities investment research division in Hong Kong, pointed out that central banks,once a source of concern to gold bulls as they sold their reserves of the metal, have become net buyers, and exchange-traded funds have become big buyers as well.

"Gold's investor base is broadening, which is positive for gold," Ms. Kong said.

Gold holdings in the SPDR Gold Trust, the world's largest gold ETF, have reached 1,103.52 tons, making SPDR the seventh-largest gold holder in the world.

"Diversification has been an ongoing story for Asian central banks, and gold is one of the possible diversifiers. Gold holdings in comparison to dollar holdings are low," said Justin Smirk, a commodity analyst at Westpac.

Write to Abhrajit Gangopadhyay at Abhrajit.gangopadhyay@dowjones.com and Elisabeth Behrmann at Elisabeth.Behrmann@dowjones.com

Nov. 3 (Bloomberg) -- India, the world’s biggest gold consumer, bought 200 metric tons from the International Monetary Fund for $6.7 billion as central banks show increased interest in diversifying their holdings to protect against a slumping dollar.

The transaction, equivalent to 8 percent of world annual mine production, was the IMF’s first such sale in nine years and propels India to the ninth-biggest government owner globally, according to figures from London-based research company GFMS Ltd. The country previously held 358 tons, the data show. The news was a “surprise because everybody was talking about China being the buyer,” said James Moore, an analyst at TheBullionDesk.com.

“The fall in the U.S. dollar seems to be pushing all the central banks to strengthen their portfolio with gold,” said N.R. Bhanumurthy, professor at the National Institute of Public Finance and Policy in New Delhi. “Gold is a safe store of value compared to the U.S. dollar.”

Gold for immediate delivery rose 0.2 percent to $1,061.48 an ounce at 1:20 p.m. in London and was less than 1 percent below its record $1,070.80 an ounce reached Oct. 14. India purchased the gold at an average price of about $1,045 an ounce, according to an IMF official on a conference call.

IMF Finances

The IMF sale accounts for almost half the 403.3 tons that the Washington-based lender in September agreed to sell as part of a plan to shore up its finances and lend at reduced rates to low-income countries. Asian nations, which have amassed stockpiles of foreign currency reserves since the 1998 financial crisis, have shown increased interest in diversifying out of U.S. assets as the dollar loses value against other currencies.

“The most important thing is that people want gold even at these prices,” said Ghee Peh, head of mining research, with UBS AG in Hong Kong. “There’s good support for prices for now” from the IMF’s disposal of bullion, he said.

The transaction involved daily sales from Oct. 19 to Oct. 30 at market prices and is in the process of being settled, the IMF said in a statement yesterday.

The purchase didn’t signify any loss of confidence in the dollar, nor did it show that the metal’s appeal was increasing, India’s Finance Minister Pranab Mukherjee said.

Loans to Poor

Proceeds from the sales and other IMF resources as well as individual contributors would help pay for discounted interest rates on loans to low-income countries, the IMF said in July. It plans to grant as much as $17 billion in extra loans to poor nations through 2014. The 403.3 tons the IMF agreed to sell amount to 1/8 of its stockpile.

Suresh Tendulkar, an economic adviser to Indian Prime Minister Manmohan Singh, said in an interview in July that he was urging the government to diversify its foreign-exchange reserves and hold fewer dollars. China and Russia have also stepped up calls for a rethink of how global currency reserves are composed and managed.

“There seems to be consensus among the central banks that it’s better to cut down on currency holdings and diversify into assets like gold, which has upside potential,” Krishna Reddy, a precious metal analyst at Way2Wealth Commodities Pvt., said in Mumbai. “The Reserve Bank of India gold purchase is a clear reflection of this belief.”

More Sales

Russia, China or Brazil may buy the rest of the IMF gold for sale, said Moore from the TheBullionDesk.com.

China, the world’s biggest gold producer, has increased reserves of the metal by 76 percent to 1,054 tons since 2003 and has the fifth-biggest holdings by country, Hu Xiaolian, head of the State Administration of Foreign Exchange, said in April.

The nation may purchase some of the 403.3 tons of gold being offered by the IMF, Market News International reported in September, citing two unidentified government officials.

“It’s more or less certain that government of India expects the U.S. dollar to weaken,” said Suresh Hundia, president of the Bombay Bullion Association Ltd., in an interview today. The purchase is “not so much about India betting gold prices will increase but that the dollar will fall. They are looking to diversify their foreign exchange reserves.”

India’s foreign-exchange reserves advanced $684 million to $285.5 billion in the week ended Oct. 23, the central bank said Oct. 30. That included foreign-currency assets of $268.3 billion, gold reserves of $10.3 billion and the special drawing rights with the IMF.

Off-Market Transactions

The lender has said it is ready to sell directly to central banks and later make transactions on the open market if necessary. The IMF official declined to say yesterday whether other central banks have expressed interest in purchases.

Given the “well-publicized concerns of many central banks over the level of their exposure to the U.S. dollar, further off-market transactions must be a clear possibility,” Aram Shishmanian, chief executive of the World Gold Council in London, said in a statement.

The IMF, which helped shore up economies from Pakistan to Iceland over the past year, has sold gold on several occasions. The last transaction was authorized in December 1999 and took place off-market between then and April 2000.

“Gold production has been declining for the past seven years, while demand, particularly the investment demand, has been growing steadily,” Way2Wealth’s Reddy said. “Central banks and even ordinary investors want to own more gold.”

To contact the reporters on this story: Sandrine Rastello in Washington at srastello@bloomberg.net; Kyoungwha Kim in Singapore at Kkim19@bloomberg.net.

Last Updated: November 3, 2009 08:43 EST

ANKARA, October 28 (RIA Novosti) - Turkey is switching to national currencies in trade with Iran and China, ending dependence on the U.S. dollar and the euro for about 20% of its commodity turnover, local media reported on Wednesday.

Turkey has already switched to settlements in national currencies with Russia amid weakening confidence in the greenback as the world's major reserve currency. The move was initiated by Turkish President Abdullah Gul during his visit to Moscow in February.

Turkey's decision to make settlements with Iran and China in national currencies was announced during a visit to Iran by Turkish Prime Minister Recep Tayyip Erdogan. The Turkish premier told a Turkish-Iranian business forum on Tuesday that the countries had prepared a legal framework for transition to settlements in national currencies.

"We have adopted a necessary legislative act and are prepared for the transition," the Turkish newspaper Milliyet quoted Erdogan as saying.

According to the paper, Turkey's trade with Russia, Iran and China exceeds $65 billion a year. Russia is Turkey's largest trade partner, with $37.8 billion commodity turnover registered last year.

Russian Prime Minister Vladimir Putin said on October 14 that Russia was ready to consider using the Russian and Chinese national currencies instead of the dollar in bilateral oil and gas dealings.

"We are ready to examine the possibility of selling energy resources for rubles, but our Chinese partners need rubles for that. We are also ready to sell for yuans," Putin said.

Britain's Independent newspaper reported in early October that Russian officials had held "secret meetings" with Arab states, China and France on ending the use of the U.S. dollar in international oil trade.

The countries are reportedly seeking to switch from the dollar to a basket of currencies including the euro, Japanese yen, Chinese yuan, gold, and a new unified currency of leading Arab oil producing countries.

The Independent said the meetings have been confirmed by Chinese and Arab banking sources, although Russian officials said they had no knowledge of the talks.

Order HERE - If you want to support GATA then enter 'GATA' in the 'Coupon Code' field when placing an order.

Dear member,

If you place an order at our Bullion Store before November 01 you'll receive a FREE 1g Valcambi Suisse Gold Bar.
By doing so you will be supporting GATA as well since GoldDrivers pledges GATA a 1g Gold Bar for each single order.

Why Support GATA?

The reason is quite simple, GATA has done outstanding research for more than a decade and exposed the manipulation scheme by western governments and central banks. If you know what central banks have  done to gold over the last 15 years then you'll understand why gold prices are headed to $5000 or more. Unfortunately GATA is still being ridiculed by most of the mainstream press but the simple truth is that no one has called for current gold prices back in 2001 except GATA. Back in 2001 GATA predicted gold prices exceeding $850 and predicted that central bank selling wouldn't be an issue any more within 7 to 10 years from then. We find ourselves right into the middle of that projection and gold prices are well over $850 and central bank selling has dried up completely. These kind of predictions you are not going to hear from the traditional gold institutions.

So GATA has been right on the money when it comes to gold for almost a decade now, sure enough some smart observers took notice:

• In 2002 John Embry, then working for the RBC endorsed GATA's views in an extensive gold report. In 2004 John Embry, then working for Sprott Asset Management issued a detailed report 'Not free Not Fair, the Long Term Manipulation of The Gold Market' in which he endorsed GATA's views

• In 2004 deputy chairman of the Bank of Russia Oleg Mozhaiskov cited GATA’s work at length in his speech to the LBMA in 2004 and concluded that: "Movements in the price of gold are sometimes "so enigmatic" and central banks and bullion banks are so involved with it that the gold market may be less than free"

• In 2005 President Putin's economic top advisor Andrei Bykov attended GATA's gold conference in the Dawson site Yukon and said afterwards this was the best gold conference he had ever the pleasure to attend. Russia has been a buyer of gold ever since.

• In 2006 Bank Credit Agricole issued an extensive report on gold which could have been written by GATA itself. The report says that Central banks have 10–15k tonnes of gold less than their officially reported reserves of 31k. This gold has been lent to bullion banks and their counterparties and has already been soldfor jewellery, etc. Non-gold producers account for most and maybe unable to cover shorts without causing a spike in the gold price. Clearly the report was inspired by GATA's work

• In 2007 CITI group issues a gold report which endorses GATA's claims that gold has been held down artificially. The report says that Gold undoubtedly faced headwinds that year from resurgent central bank selling, which was clearly timed to cap the Gold price. Citigroup argued that central banks have been forced to choose between global recession or sacrificing control of Gold, andhave chosen the perceived lesser of two evils.

• In 2008 The Chinese sovereign wealth fund which manages over $200 billion contacted GATA. They wanted to know what GATA knows. So far they already held three teleconference calls with GATA. We all know now that China has been, and still is, accumulating gold. we all know know that China wants a new world reserve currency, we all know now that China wants gold to be included in a new basket of currencies which could be used to settle their dealings in oil with Arab countries.

Now if you want GATA to succeed in exposing the truth in world gold markets then please make it possible and support them. Again, you will be supporting GATA by buying some gold at our Bullion Store. You and GATA will benefit both since both of you will be entitled for a FREE 1g Valcambi Suisse Gold Bar.

I sincerely hope you will take this opportunity to support GATA seriously and hope you'll enjoy our FREE 1g Gold Bar...

Best regards,

Eric Hommelberg

The GoldDrivers Report/
The GoldDrivers Bullion Store

www.golddrivers.com
 

Not Free Not Fair -
The long term manipulation of the gold price                       Aug 2004 – by John Embry/Hepburn

Gold & GATA                                                                          May 2005 - by Eric Hommelberg

Remonetisation of gold – start hoarding                              Jan 2006 - Credit Agricole report

Covert selling (via central bank lending)
has artificially depressed the price for a decade.

Central banks have 10–15k tonnes of gold less than their

officially reported reserves of 31k. This gold has been lent to

bullion banks and their counterparties and has already been sold

for jewellery, etc. Non-gold producers account for most and maybe unable to cover shorts without causing a spike in the gold price.

GOLD: Riding the “Re-Flationary Rescue”                             Sept 2007 - CitiGroup report

Central Banks: Capitulating on Gold?

Official Sales ran hot in 2007, offset by rapid de-hedging – Gold undoubtedly

faced headwinds this year from resurgent central bank selling, which was

clearly timed to cap the Gold price. Our sense is that central banks have been

forced to choose between global recession or sacrificing control of Gold, and

have chosen the perceived lesser of two evils.

Major GATA battle Victories in the Gold War –                     Dec 2008 - Adrian Douglas