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Vancouver Resource Investment Conference

What a show, and what a time to be there!

28 January 2003 * by Richard Lancaster

Vancouver was amazing; the turnout was great - although next year it'll be outstanding. There were two thousand assorted gold bugs, stock boosters, newbies, newsletter writers and idealists, milling around the trade show area and attending the excellent panel discussions and presentations. With gold going to new highs during the day and the Dow sinking below 8,000 for the first time since last October, the Monday session that Michael Nystrom and I attended was the perfect setting for reinforcing what we believe and how we see the future developing.

There was palpable tension over geo-political issues in the air; there was some excellent discussion on this topic in the second to last panel of the conference last night, where the most amount of passion was displayed in terms of "controversial issues." But I'll get back to this later.

Michael and I were mainly there to see Bill Murphy speak, and to meet folks who are of a like mind - in terms of how they see the economy developing, their views on sound money and market manipulations. We also wanted to learn about mining stocks, how people see the current valuations of these stocks, and who trades them, and why.

First, let's summarize the day's gold related stock information:

There was a huge amount of data given to the audience regarding very specific stocks, mainly gold exploration companies - but other metals and diamonds stocks were mentioned sporadically throughout. One of the big "take homes" for me was just how this advisory industry works in and of itself. There is a lot of boostering in the mining & exploration business, and investors need to beware (paranoid may be the best term actually!). Learning how to apply visceral instincts to deciphering what is being said by whom and why - is possibly one of the investors' most important tools in this space. Of course investors also need to do their homework, and thoroughly. Gold exploration and mining stocks are hugely speculative.

It is very easy, having lived through the entire Internet phenomenon as CEO of my own company, from 1994 to 2002, to see a new speculative bubble inflating in the gold industry. The new dot.bombs will be mining stocks in the years ahead. Some of these stocks will return 1000% +, and many of them will be pure hype with absolutely no substance. If you are entering into this space for the first time as an investor you really need to go and study the history of financial markets, the "bubble phenomenon" and how to navigate your emotions through the quagmire of constant change, uncertainty, elation and devastation - I experienced all this, and more, as an entrepreneur in the greatest financial bubble of all time! This time around, I'm much better prepared, but I studied hard and soaked up information from all sources to reach this point - don't be lazy. Learn how to think for yourself.

Anyway, for the precious metals investor I think some of the very best advice came from Paul van Eden (Co-editor of Doug Casey's International Speculator). He basically said, "Invest in people not projects." He was very aggressive with his opinion - which I liked, his self-assurance was very comforting, and the logic he used was impeccable. His perspective was that solid business managers within the mining industry are rare; once you find them, follow them. Solid managers will find the right projects! More on Paul's opinion's a little later.

Bob BishopI also enjoyed the presentation by Bob Bishop (here he is on the Big Screen). Bob is one of the "old school tie" guys from San Francisco, reminds me of the Bay Area investment bankers I used to work with - very polished, slight air of superiority, but quite passionate about his stock picks. He had some very sound advice for traders; "Take some profit, take money off the table when the stocks spike upwards, don't be caught holding the stocks through the top and then riding them back down." There was much more to Bob's presentation than this though, he articulated a global financial picture that is long term unfriendly to the stock markets - and very gold-friendly. He spoke with great depth and authority, and I would suggest his newsletter is well worth reading if you have a lot to invest and need sage advice.

At the end of Bob's presentation I was lucky enough to ask him the last question. Here is how it went (the edited version):

Me: "Where do you see the US Dollar going by the end of the year, where do you see the POG (Price of Gold) ending the year, and where do you see the POG topping out"

Bob: "….it's just guess work…I think we go $1,000+ in the next 3 years. I think its going to go in fits and starts and I think its important to know the back story of gold right now…..the hedge situation, the derivative situation in this market. In the last gold cycle the word was, "The Gold is there," whereas in this cycle "The Gold is gone." I really don't think the central banks have the gold, its gone!" Bob said more than this, but this was the most important aspect of what he said. The central banks of most of the industrialized world have sold their gold, later I'll discuss a little about GATA and why. Bob did not give a number for the US Dollar at year-end - he is not a currency trader, but he said we are very early in a "big picture swing."

John Kaiser, editor Kaiser Bottom-fishing, then spoke about Canadian Diamonds; his diamond mining presentation was so data intensive, and dry, that Michael and I both took a quick nap! John is clearly the Canadian expert on diamond mining - his assertion that Canada could be producing as much as 50% of global diamond output in the years ahead was an eye-opener though - woke me right up! Especially when you consider that Canada produces approximately 5% today. Of course John's presentation kept referencing De Beers throughout - as the diamond cartel holds sway ultimately over the industry - needless to say this "acceptance" so readily of the monopoly nature of the industry, especially in times like these, was a little nauseating for me. John's analysis was expert by any definition, his integrity was apparent and I would suggest that if you are in to diamond investing that he might be your man to follow. Personally, I do not believe in the investment value of diamonds, it's just not my bag!

The Coffin brothers both presented during the day on various panels. Their primary investment advice echoed Bob Bishop's - "Take profits." One particularly powerful statement by David Coffin, which resonated with me, was "all gold stocks are trading stocks." In other words, gold stocks are subject to peaks and troughs based on breaking news. Trade the news, buy the dips, sell when you hear of a story being broken in the news that will pop the stock temporarily. Pick the top, sell and take some profit, then buy the dip.

Various other presenters strutted their stuff throughout the day's sessions. Below are some of the most interesting stock picks that were provided by some of the best gold analysts in the world today. These are the recommendations of a panel of newsletter editors who were asked to pick their "somewhat risky and then crapshoot" stocks - so these are the companies that the experts feel are highly speculative - that could go to the moon - or crash. Perhaps a diversified portfolio of all of these would be the way to go? Hey, maybe Michael and I will start a mutual fund of all of these stocks, hand's up investors who would like to participate!!

Michael Nystrom
  • Altius Minerals
  • Aurizon Mines
  • Candente, Resource
  • Cusac Gold
  • Doublestar Resource
  • Freegold Ventures
  • Minco Mining
  • Minefinder,
  • NovaGold Resource
  • Orezone Resource
  • Pacific Northwest Capital
  • Redhawk Resource
  • Virginia Gold Mines
  • Navigator
  • Almaden
  • Nevada Pacific
  • Radius
  • Eagle Plains
  • Odyssey
  • Maximus

I've done a lot of analysis of mining stocks in order to build my own portfolio - and listening to these guys collectively has helped me refine how I go about the process, and will enable me to better balance what I own. There is simply no substitute for getting expert advice!

Some of you know that I write from the perspective of being a "sound money" proponent, a seeker of truth and justice in the world at large, and therefore I am an advocate of gold for those reasons. I'm an idealist! Therefore, I believe an investment in gold is both a statement of support for free markets, freedom of choice and freedom from oppression. Gold is the ultimate store of value in the physical world today - has been FOREVER! (Your individual soul is the absolute ultimate store of your own value!).

Anyway, back to gold! Because of gold's well known status globally as the ultimate store of value, and because of its very special position in our financial system, there has been a quiet war waged on the Price Of Gold (War Against the POG) by the central banks, bullion banks and various governmental and non-governmental institutions globally for the past twenty years.

Bill MurphyTwo men that I know of, and totally respect, have for the past 4 years been fighting a battle to expose the truth of the manipulation of the POG; by whom, to what affect and why. This is the story told by GATA, the Gold Anti-Trust Action committee. Bill Murphy is the Chairman of GATA and the founder of Le Metropole Café, a financial commentary site. He and GATA Treasurer, Chris Powell (a newspaper editor by trade) both spoke at the show yesterday - and in my opinion had the most important message for the conference, which was completely reinforced by Bob Bishop's earlier comments about the central banks not having gold in their vaults anymore - and concealing this fact from the public for the past 20 years as the gold was sold off at artificially low prices. This I believe is the biggest story on planet earth right now, I can think of nothing else that has more impact on our daily lives than the ramifications of this amazing issue.

Bill's speech to a full house was right to the point. For 4 years GATA has been ignored, ridiculed and tormented, just last week I waded in to an unsavory lambasting they were taking on www.theminingweb.com in their defense (not that they need my help, but it was just the right thing to do). Bill, as a former pro-footballer for the New England Patriots, is more than capable of taking care of himself! For the past 4 years as they've exposed this gigantic fraud, their efforts have shown scant reward, other than the internal knowledge that they were fighting for a just cause and slowly gaining ground.

Well now the tide is very visibly changing!

Here is a partial transcript of Bill's remarks. I videotaped the show, and let me tell you, reviewing it today was a pleasure. But enough already, you want to know what he said right!? The following are extracts from the speech that I think are vital. I urge you, if you are not part of the GATA Army, join today. Learn all you can about this issue, study the history of gold, follow the money and understand how this all came about. For more information go to their site, come to our site, read, digest and think for yourself. The independent investigation of the truth is your right, your responsibility - use your power to understand what really makes the world go around!

Here are the extracts. You'd better sit down. (Last comment on this, if you feel you can disprove what Bill says here then come forward with your evidence. In the three years I've been following the money I have reached the identical conclusions as Bill and Chris - I can find no objective way to refute a word of what Bill is saying here).

Bill started by stating he wouldn't go back and give the "whole spiel" on GATA and all of the minutiae, and that he wanted to discuss the Strong Dollar Policy, what it was, where it came from and how it was enacted.

Take it away Bill:

"What did specifically they (central bankers, IMF, BIS, ESF, Treasury, etc.) do to keep the dollar strong?"

Bill Murphy"They rigged the gold price. The motive for rigging the gold price was; to keep the dollar stronger, hide inflation, to keep interest rates lower than they would've been, to attract money to the U S stock market, to take away a very simple barometer from the public - which is gold. With gold rising as it is today people say, "Well something is wrong." They automatically do it right or wrong that's what they say. That was the motive of the US government, the motive for the bullion banks was that they got free money for about six or seven years. How would you have liked to have gone to your banker and said I would like to borrow money for 1% interest rates? They would've thrown you out right on your kister. It just doesn't happen, but it did for these people - because they would borrow gold, the bullion banks, from central banks that had it sitting in their vaults. They would take it to the markets, sell it, that supply would create pressure. They would borrow at 1% interest rates, and then they would use these funds for their funding operations. They virtually had free money to do whatever they wanted to do on Wall Street."

"But there is a problem with that and now they are facing it big time. This was a great deal as long as you could borrow gold at $300 and pay it back at $300, or borrow it at $280 and pay it back at $280, and what if the price went lower? But now with gold heading to $400 and much, much higher they got these things at loan shark rates and they are choking."

"…..the rigging of the gold price was the lynch pin that is causing so much aggravation in the financial markets today…..through this strong dollar policy and the rigging of these markets they caused a financial bubble, the bubble is now bursting and it has a long way to go. So the ramifications are profound for everybody."

Bill then went on to discuss the basic movements of the POG over time, the supply shortfall in gold production, central bank gold lending, the rise in mining stocks being in the thousands of percents for certain stocks going forward, and various other issues. He stated that now the gold cartel is unraveling. The bullion business is on fire. The smart money is buying gold as they know GATA are right. Bill stated that at GATA they are waiting for what he called a Commercial Signal Failure. This is panic buying by commercial banks to cover their short positions, when this happens there will be a massive spike in the POG.

Here are a few more choice quotes from Bill, these are keepers!

"The International Monetary Fund is the Arthur Andersen of the world!"

"Australia has 3 ½ tons of central bank gold left!"

"We have a gold derivative neutron bomb that is going to go off…..it's a matter of time before this kicks in and you will have a massive gold short squeeze."

He then offered up a quote from US Secretary of the Treasury from last week: "This wasn't picked up by the American press, because we have such a great free press in America! (chuckles from the camera operator…) Here's a quote from Secretary of the US Treasury Paul O'Neill quote:

"It is all about sound bites, deluding the people, pandering to the lowest common denominator."

The above-mentioned quote basically sums it all up for me!

Bill went on to mention that every time GATA speaks up that the POG shoots up, this is attributed to the fact that the very smart money follows GATA information - maybe this is a trading tip? Dunno really!

At this point Bill wrapped up his speech and handed the podium over to Chris Powell. Earlier today Chris (pictured below) published the entire transcript of his excellent speech to the GATA Army, if you would like to read it go to www.gata.org and become a member. The excellent news from yesterday's event is that Bill was interview for the first time in 4 years by the major financial media after the event, so watch for that story to hit the press shortly.

GATA's day has arrived! Vancouver was the moment in history when the Biggest Story in the World was finally told……..and heard. The outcome of this event will reverberate around the financial world and affect global events for years to come, it may be hard to notice at first - but the cat is out of the bag and now the real battle will begin. No doubt events will get far messier before they are eventually cleaned up. Unfortunately how things may get messier is what I will finish with, and is how the conference ended for me.

Chris PowellAs mentioned earlier the second to last panel was on "World Outlook." This was basically the only part of the conference that was dedicated to the geo-political ramifications of the machinations within the gold industry. To a person on the panel there was agreement that the economy and markets were going to get a lot worse.

Victor Adair, Senior Vice President Refco Futures (Canada) - one of the largest global futures trading firms - had this to say, "the markets (US) went too high in the first place. They will go lower than their real value………UNBELIEVABLY LOWER."

He then went on to state that the US imported deflation while it exported manufacturing jobs. That the big action was in currency trading and that the 50% appreciation of the US Dollar from 1995 to 2001 spelt a large downturn in the US Dollar going forward.

Paul van Eden then went on to say that we may experience the worst of all possible economic consequences, whereby luxury items such as cars, boats, fridges, etc. would deflate in price, whilst basic living commodities such as oil and food would inflate in price - - providing price relief for the wealthy who least need it and slamming the poor who are already losing their jobs and their incomes. That to me sounded like a description of the 2nd Great Depression.

Finally there was some real tension on the panel regarding the War on Terrorism, the War on Iraq and the true motivations behind the current US government's actions. It was agreed by all that the economy was in serious trouble way before 9/11 and that there was no way to stop the economy from going in to a massive decline. Where there was some serious tension was whether or not the current regime in the US is using these wars as a distraction from the economic debacle that is underway and to cover the manipulations that have gone on and continue to go on.

From my own down-home analysis I would say that the people in the room, based on clapping and cheering, where overwhelming of the opinion that there is something much more sinister going on with Iraq that purely a war on terrorism and evil. At one point the comment was even made that "America is the biggest terrorist nation on earth."

This was quite a show people! I wish you all could've been there.

One thing that was not debated in the time I was at the show was Precious Metals Mutual Funds - of which I am currently a big fan. So, shortly Michael Nystrom and I are going to launch from www.depression2.tv our own newsletter entitled The Dashboard. In the first edition I will analyze the current state of the PM Mutual Fund segment, the past 12 months performance, my favorites (I currently own 4 of the best ones and have for some time) and how to gauge the overall marketplace of over 13,000 funds. Michael will provide his own excellent commentary on topical economic activity. As always we will somewhat differ in how we think the 2nd Great Depression will actually come around, but what you won't hear us argue about is whether there will be one!

Cheers Richard Lancaster

PS. The subject of economic depressions is a dismal one in some ways, and being a commentator on it feels like being some kind of economic proctologist, or worse (no offense if you are a proctologist). I believe in a very positive outcome to all of this negative activity, this is all part of the growth of humanity and a necessary stage we all have to live through. As such it is very important to learn what is happening and why, who does what to whom and why. Being in denial of the ugly stuff is simply not an option if we are to realize our true potential here on earth.

Keep the Faith, Rich

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Pop Goes the Bubble Part III: Buy Gold Now!!!
2003 Predictions

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