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"UNDER THE BED AND ACROSS THE SEAS"
published; 16th July 2004

IN THIS ISSUE

Under the Bed and Across the Seas – Philip Judge

The Bullion Trading Desk - Simon Heapes 

"BEHIND TODAY'S ENERGY SECTOR"
~ Is a World Oil Crisis Looming, some experts are saying YES, others NO.  What are the facts ? 
~ Will natural resource limitations effect the economy in coming years?
~ What are the supply / demand fundamentals of this market ?
~ How will geo-politics factor into the Energy Sector in the next 2 -3 decades ? 

Some commentators argue that there converging forces that will have an explosive effect on the crude oil market moving forward, " as the price of crude oil keeps rising toward $45 a barrel it has become increasingly clear that the world is heading toward a MAJOR OIL CRISIS THAT WILL DWARF THAT OF 1973." 

This month we will examine the facts.  

OUR TELECONFERENCE FOR LATE JULY 2004

with Justin Pettitt and Ryan Messer- July 30th and 31st 2004

For further details and registration, please follow the LINK. 
http://www.anglofareast.com/teleconference.html 

NORTH AMERICA
Friday Evening July 30th
9.00PM (USA East Coast time)

AUSTRALIA/NEW ZEALAND
Saturday Morning July 31th 
11.00 AM (Australia Eastern Standard Time)
Australia and New Zealand residents are welcome to join our USA call (by using a calling card it will cost callers less than 0.06 cents per minute - approximately AU$4.00). 

More information and registration LINK

UNDER THE BED AND ACROSS THE SEAS
15th July 2004 - Philip Judge



Recently there has been much talk about the potential for; 

While at first these theories may seem outlandish, given the rapid change in the world in which we are now living, they are scenarios that become more plausible each day. 

Obviously, as observed for several years by GATA and a few others, a COMEX default is only the tip of the iceberg when considering the potential for a larger systemic bullion banking default, given the establishment banking industry’s exposure to the huge physical short position in today’s market. 

THE OTHER 99.9%
 It is scary to learn that today 99.9% of people own 100% of their assets within the country in which they live. Further, 99.9% of people derive 100% of their income (whether investment or labour) from within the country in which they live. In this generation the vast masses have become complacent, people are not in anyway internationally diversified, and most of all, North Americans. 

Even a cursory look at history seems to indicate that those who have maintained an international perspective have managed to survive and in many cases even profited greatly, regardless if the days in which they lived dished up famine, holocaust, conflict, boom or bust. 

UNDER THE BED AND ACROSS THE SEAS
In today’s world it can be argued that owning large amounts of physical gold/silver coins or bars hidden under a bed is not as viable a solution as it once was. History has a way of repeating, as many Jewish and other families living in pre-WW2 Europe would remind us today. 

It is worthy to note that prior to and during WW2, many families were able to flee their war-torn and/or politically oppressive countries to neutral locations (i.e. Switzerland). Most nation’s paper currencies had become virtually useless, and it is reasonable to expect that gold coin held by individuals had long been stolen or confiscated. Documented cases indicate that safe passage out of a country was purchased, not by gold coin, but rather by gold accounts held in politically neutral banking jurisdictions, such as Switzerland. 

Across the Atlantic, for US citizens in the 19th and early 20th century, gold ownership was a God given right. Then suddenly in the early 1930’s it became illegal, a concept that was completely unimaginable only a few years earlier. While it remained illegal until the 1970’s, many US families and individuals continued their practice of holding and profiting from gold during this period by owning it in private (offshore) gold accounts, again in Switzerland. 

THE GOLD OWNERSHIP DILEMMA
The answer to the age old gold and silver ownership quandary is to own some of both. Some coins and bars held privately in the country where you reside may just help you out in a sticky situation on a day when you need it the most. As always, there are the logistical and safety issues to consider. 

Quite clearly the world is changing rapidly and international diversification of assets is as probably more important now than at any other time. If you are going to trust an institution with your tangible assets here is a short but important list of questions to ask ; 
a) is the institution / bank 100% backed by unencumbered physical bullion ?
b) does the institution / bank have regular independent bullion verification audits to insure that bullion holdings match client claims ? 
c) does the institution / bank independently vault it’s client’s bullion outside of the bullion banking establishment ? 
d) is the institution / bank internationally diversified with it’s client’s bullion vaulted in numerous neutral jurisdictions ? 
e) does the institution / bank provide the highest degree of client privacy ? 

© copyright 2004
Philip Judge is a director of The Anglo Far-East Bullion Company, a private bullion custodial, banking and financial services company.  (TOLL FREE within USA) 1 888 212 4558 . EMAIL

NOTES FROM THE BULLION TRADING DESK
15th of July 2004. Simon Heapes
"July 7th, GOLD rises $9.90 on one days trading, the highest in 6yrs"!
THE TIME TO GET REAL

In our regular “Notes from the Bullion Trading Desk” I continually refer back to the fundamentals that lie hidden beneath the surface of today’s precious metals markets. We have commented in the past that these fundamentals have little to do with the current day-to-day price movements. I have been repeatedly stated “the fundamentals haven't changed"!

Each week I speak personally to many dozens of people from the four corners of the globe, many whom are sophisticated and informed investors and asset managers. These are the ones who have managed to keep their minds clear of the confusion that pervades much of the financial press. They have kept their eyes clearly focused on the key fundamentals. 

On occasions however, I find myself speaking with individuals that have sadly fallen victim to poor information, half-truths, and often, outright lies. This is someone that no longer recognises the fundamental factors that are in place today. 

This type of investor will always be driven by emotional and technical factors, and near term price action. The trading patterns of a miss-informed or emotional investor is fairly simple. As the price runs up they become motivated by GREED. Exuberance drives them into the market immediately and usually they end up paying too higher price. As the price dips, they are become driven by FEAR, ending in panic selling and a loss been sustained. This kind of investor has no regard for the underlying fundamentals, and never truly gets to participate in the full potential of a bull market. Statistically speaking, gamblers in a casino have simular odds of success! 

TWO FUNDAMENTAL FRONTS ARE CONVERGING 
In the 1970's the price of Gold ran up 2,500%. The Vietnam and Cold Wars, Iranian Crisis, Watergate, double-digit inflation and oil crisis were just a few of the major geo-political and economic events and tensions that were shaping the gold market of that era. THEY WERE the GEO-POLITICAL AND ECONOMIC FUNDAMENTALS OF THE 1970’s.

Today much of the landscape is looking familiar. Rapidly escalating energy prices, an uncontrollable deflation/inflation tug-of-war, economic stagnation in much of Asia, the political quagmire of Iraq (not to mention Palestine, Yemen, Saudi Arabia, North Korea), renewed Russian banking liquidity problems and the potential for attack on US soil. The issuer of the world’s reserve currency (the USA) is running unsustainable trade and government deficits, while consumer debt is at an all time high. These are the major geo-political and economic events and tensions that are just starting to shape the gold market of our era. THESE ARE the GEO-POLITICAL AND ECONOMIC FUNDAMENTALS OF THE 2000’s.

When you combine this with rising annual supply deficits in both Gold and Silver (at never seen before highs) then we have a converging second key fundamental.

TIME TO GET REAL
These market fundamentals offer once in a life opportunities to those who make informed and measured decisions. On the other hand, emotion, poor information, half-truths, and often outright arrogance in face of fundamental realities is a formula for financial disaster. 

The vast majority of people, collectively and individually, tend to be reactive to their surrounding circumstances. It is a rare and prudent person that is proactive to their circumstances. It may only be a matter of time before the sophisticated investing public starts to say to itself, " IT'S TIME TO GET REAL " ! 

Given the Key Fundamentals discussed above, the explosive upturn potential for the precious metals market is running at a " 10 + + + "! 

Sincerely,
Simon Heapes

Simon Heapes is one of the AFBC research team.
ASIA/PACIFIC OFFICE
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