A federal grand jury returned the following indictments on April 24 with respect to E-Gold and its owner: each with one count of conspiracy to launder monetary instruments, one count of conspiracy to operate an unlicensed money transmitting business, one count of operating an unlicensed money transmitting business under federal law and one count of money transmission without a license under D.C. law. Subsequent to the indictment, the Department of Justice also obtained a restraining order on the defendants to prevent the dissipation of assets by the defendants, and 24 seizure warrants on over 58 accounts believed to be property involved in money laundering and operation of an unlicensed money transmitting business.
The indictment alleges that E‑Gold has been a highly favored method of payment by operators of investment scams, credit card and identity fraud, and sellers of online child pornography. The indictment alleges that the defendants conducted funds transfers on behalf of their customers, knowing that the funds involved were the proceeds of unlawful activity; namely child exploitation, credit card fraud, and wire (investment) fraud; and thereby violated federal money laundering statutes.
According to this, it appears that gold is passing the ultimate litmus test for validity as a currency: acceptance by organized crime. An anecdotal factor that is definitely gold bullish.
2 comments:
To be honest, I think the whole sector looks absolutely terrible. Gold is still pretty high, and people are jumping out windows to dump shares as quickly as possible. I think its because even with PM's high, these companies aren't reporting much in the way of earnings.
Maybe ABX will break the string of bad news tomorrow night.
Bob, thank you for your note. The miners have definitely been underperforming Gold as the Gold to XAU ratio is flirting with 5.00 again. Although I've gradually and slowly been buying into the weakness, I think it's quite possible that the Gold/XAU will need to dig higher well into the 5s before a turn around. That happened during the 2004-2006 consolidation so I don't see why it can't happen again.
As you know, the COT position was still pretty bearish at the last report, and since the, we've only shed $6 so I think it will take longer to unwind that, maybe another 1 to 3 weeks of selling or at least moving sideways to lower. I'd like to see Gold go to at least $660, but would prefer lower, maybe $640.
I think people are scared of a repetition of the May sell off like the horrible one that occurred last year and that is why they are "throwing away" their shares. That may turn out in the end to be the red herring and the kind of wall of worry that the market likes to climb, but I don't think that's a sure thing, you never know. May to August are weak months from the perspective of physical demand, so it will take a USD collapse for Gold to take its next big leg up--that's certainly possible, but it's hard to predict when that will happen so I think it's best to wait for sell offs like this one to reload.
I read the recent NEM earnings report, and it was a horror show in terms of margins and costs. A good example of a company that has been struggling despite the high gold prices. Cash costs of $421 per ounce. Ouch.
I thought AEM had a good result though, not so much the number itself, but they have negative cash costs for the forseeable future and plenty of production coming online in 2008. That year will be great for AEM.
What's your thought about GSS? I've been rebuilding my position in it gradually.
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