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Will Gold Ever Rally?

Yes Because:

Unsustainable supply/demand imbalance

 

Mine production has flattened out at 2,600 tonnes annually Scrap supply is flat at about 600 tonnes annually Current annual demand is about 4,900 tonnes (85% jewelry) and continues to grow Growing deficit of 1,700 tonnes annually filled by central bank sales (flat) and bank lending (rising rapidly)

Will Gold Ever Rally?

Yes Because:

Unsustainable short position
 

Central banks have loaned gold to earn income on reserves Bullion banks have borrowed gold for their own account (carry trade) and for producers (hedging) and used derivatives to limit their risk and generate additional income Loaned gold has been sold into physical market and now is jewelry Size of short position (> 10,000 Tonnes) can not be covered in market except at much higher prices

Will Gold Ever Rally?

Yes Because:

Unsustainable low inflation

The gold price rises with inflation CPI inflation has been very low due to strong dollar (Asian collapse and investment flows) Aggressive interest rate cuts and monetary expansion to avoid recession/deflation by re-inflating. "The race to the bottom" YTD Fed liquidity injection = 1 trillion CPI inflation inevitable: the Fed must inflate away exces debt or see debt defaults War is historically inflationary

Will Gold Ever Rally?

Yes Because:

Unsustainable U.S. dollar

Historically high U.S. current account deficit (> $400 billion annually) Deficit recycled primarily into U.S. debt securities U.S. now world’s largest debtor nation Foreign demand for U.S. securities declining and U.S. Dollar beginning major reversal Gold is only down in U.S. Dollars Since 1995 the U.S. Dollar is up 30% vs gold, 33% vs French Franc and 50% vs German Mark The Canadian dollar, French Franc and German Mark all buy as much gold today as in 1991

Will Gold Ever Rally?

Yes Because:

Unsustainable pricing for financial assets

Investment demand drives the gold price Gold is counter-cyclical, investors buy it when financial assets are out of favour Ownership and pricing (P/Es) of financial assets are at historic highs If financial assets continue to decline, investors will shift to gold The ratio of the Dow Jones Industrial Average to the price of gold reached an all time high in 2000  and is now declining rapidly, reflecting a major turn in the relative values of financial assets and gold (see opposite).

RATIO OF DJIA TO GOLD PRICE (1929 TO PRESENT)

Will Gold Ever Rally?

Yes Because:

Unsustainable gold price manipulation

EVIDENCE OF GOLD PRICE MANIPULATION
Aggressive gold lending has filled supply/demand gap NY Fed gold has been mobilized when gold price is rising Timing of ESF gains/losses corresponds to gold price movements Audited reports of U.S. gold reserves show unexplained variances Fed minutes confirm officially denied gold swaps IMF rules on swaps revised but denied	U.S. gold reserve recently re-designated as “deep storage gold” Statistical analysis of unusual gold price movements since 1994 indicates high probability of price suppression NY gold price movements versus London defy odds Timing of huge increases in bullion bank gold derivatives consistent with gold price declines Rapid decline of U.S. Treasury holdings of SDR certificates not explained

Will Gold Ever Rally?

Yes Because:

Gold is money again

September 11: The world is not the same Only gold is final settlement Return on gold is catching up to the dollar deposits Negative real U.S. interest rates (now 0.5%) undercut dollar, always gold bullish

Gold Price Now Poised to Move Higher?

Falling interest rates are removing the incentive to short gold…squeezing the shorts? Monetary inflation is on the rise Supply/demand imbalance growing

Production is set to decline abruptly at the current price Veneroso estimates true gold equilibrium price of US$600 The trigger??

SEABRIDGE RESOURCES INC.
www.seabridgegold.net

April 11, 2002

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