Les dessous de l’information mondiale-Downside World News

Some attacks being blamed on Iranians.

Steve Watson
Infowars.net
Monday, February 5, 2007

An article in the Sunday Telegraph this weekend pointed towards evidence that an secretive and elite unit of the British army is actively engaged in recruiting and training Iraqi insurgents and terrorists as double agents.
This confirms what many have speculated for a long time, that Britain and the US are deeply involved in bombings and attacks inside Iraq which are subsequently attributed either to Sunni insurgents or shadowy terrorist cells such as “Al Qaeda in Iraq”.

The Telegraph article states:

Deep inside the heart of the “Green Zone”, the heavily fortified administrative compound in Baghdad, lies one of the most carefully guarded secrets of the war in Iraq. It is a cell from a small and anonymous British Army unit that goes by the deliberately meaningless name of the Joint Support Group (JSG), and it has proved to be one of the Coalition’s most effective and deadly weapons in the fight against terror.
Its members – servicemen and women of all ranks recruited from all three of the Armed Forces – are trained to turn hardened terrorists into coalition spies using methods developed on the mean streets of Ulster during the Troubles, when the Army managed to infiltrate the IRA at almost every level. Since war broke out in Iraq in 2003, they have been responsible for running dozens of Iraqi double agents.
A look into the history of the secretive JSG or Force Research Unit (FRU), the cover name it operated under in Northern Ireland, reveals the extent to which the British government supports and engages in acts of terrorism in order to further its agenda in occupied territories. Iraq, as it turns out, is unsurprisingly no exception.
The FRU is the same ultra secret cell of the SAS whose criminal activities in Northern Ireland were under investigation by former Scotland Yard commissioner Sir John Stevens for more than a decade, during which time it emerged that the unit was involved in the murder of civilians in Northern Ireland.
According to Detectives, ‘Military intelligence was colluding with terrorists to help them kill so-called “legitimate targets” such as active republicans…many of the victims of these government backed hit squads were innocent civilians.’
“Beginning in the 1980s the highly secretive FRU was sent into Northern Ireland to recruit and train double agents to work inside the paramilitary groups,” writes Michael S. Rose.
“The FRU combated IRA terrorism by the use of paid informers, blackmail, ambushes, and other methods not approved by the Geneva Convention. In the worst case, British officers decided that in cases when it would be difficult to bring suspected IRA terrorists to justice by legitimate means, the FRU would enlist outlawed guerilla groups that possessed both the desire and the means to murder the IRA men. According to Stevens Three, the FRU assisted Protestant terrorists in carrying out what were, in effect, proxy assassinations of Catholics. In order to forge such alliances, the British officers had to overlook the fact that the interests of the Protestant death squads were not those of the United Kingdom and its government.”
The FRU was further exposed by former member turned whistleblower Kevin Fulton.
Fulton worked for the FRU for much of his career as he was infiltrating the IRA. In his role as a British FRU agent inside the IRA, he was told to ‘do anything’ to win the confidence of the terrorist group. Fulton Told the Sunday Herald:
“I mixed explosive and I helped develop new types of bombs. I moved weapons. If you ask me, ‘Did I kill anyone?’ then I will say ‘no’. But if you ask me if the materials I handled killed anyone, then I will have to say that some of the things I helped develop did kill.
I reiterate, my handlers knew everything I did. I was never told not to do something that was discussed. How can you pretend to be a terrorist and not act like one? You can’t. You’ve got to do what they do. The people I was with were hard-hitters. They did a lot of murders. If I couldn’t be any good to them, then I was no use to the army either. I had to do what the man standing next to me did.
I broke the law seven days a week and my handlers knew that. They knew that I was making bombs and giving them to other members of the IRA and they did nothing about it. If everything I touched turned to shit then I would have been dead. The idea was that the only way to beat the enemy was to penetrate the enemy and be the enemy. At the time I’d no problem with this way of thinking.”
Fulton revealed that his handlers told him that his operations were ’sanctioned right at the top… this goes the whole way to the Prime Minister. The Prime Minister knows what you are doing.’
Every major IRA bombing in England and Northern Ireland has had the fingerprints of the British government and the FRU all over it.
The August 1998 Omagh bombing, which killed 29 people, was known ahead of time by the security services and yet the bomb team wasn’t intercepted. The reason? One of the members of the bomb squad was working for army intelligence and MI5. The bombing was allowed to go ahead.
Kevin Fulton claims that he phoned a warning to his RUC handlers 48 hours before the Omagh bombing that the Real IRA was planning an attack and gave details of one of the bombing team and the man’s car registration.
Documents, lodged as part of a court action being taken against the British government by a disgruntled military intelligence agent, also reveled that an FRU major was the officer who was the handler of the British army’s most infamous agent inside the IRA — a man codenamed Stakeknife.
Stakeknife is one of Belfast’s leading Provisionals. His military handlers allowed him to carry out large numbers of terrorist murders in order to protect his cover within the IRA.
The London Observer further revealed some of the methods employed by the FRU in Northern Ireland, including the “human bomb” technique, which involved “forcing civilians to drive vehicles laden with explosives into army checkpoints”.
This throws a great deal of light on at least one reported incident in Iraq just over a year ago where British SAS agents, dressed in Arab garb and head dress, were caught attempting to stage a terror attack.
The soldiers drove a car towards a group of Iraq police and began firing. According to the Basra governor Mohammed al-Waili, one policeman was shot dead and another was injured.
Early reports cited as originating from BBC World Service radio stated that the car used contained explosives.
In light of this it is pertinent to ask the question, are civilians in Iraq being killed as “legitimate targets”?
We have previously covered the Iraq “order out of chaos” or “strategy of tension” theories in great detail, citing Pentagon documents, esteemed researchers and the testimony of Congressmen and Ambassadors.
All agree that it is entirely plausible to suggest that the US and British governments are operating an underlying strategy which serves to keep the country mired in turmoil to justify the continued presence of occupational forces.
In many cases the evidence suggests that the armed forces role is to prod terrorist cells into action, thus exposing them to “quick-response” attacks. The FRU revelations of recruiting, training and equippingterrorists in Iraq is thus telling.
An even more startling question comes to mind, are everyday ground troops being killed in attacks that their higher ups either have extensive knowledge of or have actually coordinated themselves?
Recently there have been reports of US soldiers being killed by insurgents wearing American military uniforms. Iraqi officials said the gunmen disguised their intent with uniforms, American flak jackets, guns and a convoy of at least seven GMC sport utility vehicles, which are usually used by American officials in Iraq.
It is possible that insurgents may have been able to lay their hands on a couple of uniforms, but where did they get a whole convey of vehicles from?
Further interesting light is thrown on this topic when one considers that the explosives being used in many roadside bombs and car bomb attacks in Iraq have been proven to be developed using advance technology from photographic flash units, which were employed by the IRA some 15 years ago after Irish terrorists were given advice by British agents.
Kevin Fulton has again provided vital information on this, revealing how MI5 helped to buy bomb parts and technology in the US which were subsequently used by the FRU in Northern Ireland and have now found their way into the hands of Iraqi resistance fighters.
“In late 1993 and early 1994, I went to America with officers from MI5, the FRU and RUC special branch. They had already sourced the transmitters and receivers in New York following liaison with their counterparts in the FBI,” Fulton told the Sunday Tribune in June, 2002. Fulton’s trip was confirmed by the FBI, according to Matthew Teague, writing for the Atlantic. The Independent on Sunday “has also spoken to a republican who was a senior IRA member in the early 1990s. He confirmed that Mr. Fulton had introduced the IRA to the new technology and that the IRA shared this with ‘like-minded organizations abroad.’”
There can be no more clearer evidence that our special forces are recruiting, training and arming the Iraqi insurgents.
What’s more, in an attempt to shift the blame away from British and US special forces, the US government has attempted to pin the blame for the use of this advance infra-red bomb technology on Iran:
“According to U.S. military figures, 198 American and British soldiers have been killed, and more than 600 wounded by advanced explosive devices manufactured in Iran and smuggled in through the southern marshes and along the Tigris River. Attempts to disrupt these networks, combined with the decision to send a second aircraft carrier to the Persian Gulf as a warning to Iran, significantly raises the stakes, according to former Assistant Secretary of State Martin Indyk.”
So all in all here we have clear evidence of Britain and the US recruiting terrorists in Iraq, training them, providing explosives and advanced detonating technology and then blaming the attacks on Iran, thus raising the possibilities of widening the war across the Iranian border.
The FRU is, as previously stated, a wing of the SAS. A cursory look into some of the covert activities of the SAS, along with the equivalent Delta forces in the US, involving terrorist groups again reveals the fact that the British and US establishments are not engaged in fighting a war on terror, they are perpetuating the terror as part of their overall agenda.
British and American special forces notoriously paved the way for an influx of radical Islamic mujahideen fighters and arms into the Balkans in the early nineties and trained them in order to counter Serbian forces during the Bosnian conflict.
The SAS, under a joint strategic directive of MI6 and the US Defence Intelligence Agency, also later notoriously trained Kosovo Liberation Army terrorists in the Balkans in the mid to late nineties. Several investigations corroborated this.
The KLA was known to be heavy infiltrated at this time by “Al Qaeda” or mujahideen fighters associated with Osama Bin Laden who had declared a “global war on the US”. It was even alleged that Bin Laden had directly financed the group, yet the US and Britain still went ahead and covertly trained the KLA.
The KLA was then used to increase ethnic tensions and further destabilize the region, just as is happening now in Iraq. Attacks by the KLA were used to justify Western intervention in the Balkans.
There is also extensive evidence to suggest that British and US special forces have helped create, support and train Albanian terror cells from which a great deal of the KLA finances are derived.
The activities of the FRU in Iraq need to be investigated immediately. We have a branch of the military that is operating above the law and outside of the Geneva convention within a theatre of war. Moreover this unit has an extremely dirty past that involves carrying out terrorist atrocities and blaming them on persons or groups it wishes to see removed.
The driving agenda in Iraq is to set down permanent bases and dominate the middle east from there. Thus the war is allowed to rage on to keep our forces there.
The FRU’s past activities also clearly reveal that the British government is not engaged in a real war on terror, they use the vehicle of terrorism to steer the greater agenda of conquer and control where ever they see fit. The Delta forces of the US work in direct collusion with this wing of the SAS towards the same goal.

The result has been a crisis of liquidity rather than default. America’s tendency to live beyond its means is over. The US greenback is continuing its orderly retreat and every sign (financial, economic, and political) points to further depreciations.

American’s indebtedness, long its Achille’s heel has unwittingly redrawn the economic and political map of the world. In the wake of a loss of trust in the US financial system, gold is a good thing to have and our intermediate target is $1,000 an ounce.

Gold is a reasonable proxy for prices, a hedge against investor anxiety, and a store of value particularly compared to stocks and currencies, which are subject to a variety of unpredictable economic factors.

The Center Of Capitalism Is Burning

The main driver behind the collapse in credit are the “weapons of mass destruction” (as Buffett calls them) created by Wall Street. America’s prescription was easy credit and to keep interest rates artificially low which was the cause of reckless lending and the subsequent implosion of almost $500 billion of derivatives. This time the big investment banks have been hoisted upon the very paper that they created which has already caused huge losses and the demise of some their leaders.

Wall Street is in peril. Wall Street prospered by financial engineering every form of debt into tradeable assets to spread risk and of course generate fees. The slicing and dicing of risk created exotic derivatives of structured products. The boom hinged on cheap money and confidence in the quality of these assets. Today, we are in uncharted waters as no one knows to unwind these newly devised structures of finance.

Banks used to be safe as houses, yet history show that bank failures are all too common throughout financial history, from the closing of the Herstatt Bank to the collapse of Long Term Capital Management to the S & L debacle in the US. History shows no one is too big to fail. England experienced its first collapse in the millennium. Banks have been forced to increase their writedowns and the Street fears that there is insufficient capital to back these writedowns. Moreover, the newly appointed Emperors of the boom like the hedge funds and private equity players, feasted on the various financial products and became highly dependant on borrowed money and leverage. The credit crunch saw these institutions dump their assets. The emperor was found to have no clothes.

Central Banks Are Part of the Problem

However, what is also at risk is not only the financial institutions but the world’s central bankers’ credibility. The loss of that credibility is like losing one’ virginity, once lost it cannot be restored. For example, in a bit of Wall Street cronyism, the Fed’s helicopters dumped dollars on Wall Street and have not yet reached Main Street. Central banks attention today is exclusively focused on resolving the problems in the banking system, ignoring the inflationary consequences of an open vault monetary policy. That the central banks were willing to bailout the big banks, exposes not only the hypocrisy but the dangers to the financial system. Central banks are supposed to be independent and stewards of the financial system, they should not be co-dependent nor conflicted.

Also few notice that the central banks continue to flood the markets with money particularly at the last quarter end. After cutting rates by 25 basis points, the Fed pumped $41 billion into the US financial system, the most since September 2001. The Bank of England has so far extended our $40 billion to Northern Rock. There are still credit logjams from New York to Belgium, yet the monetary aggregates on a global basis remain loose. Central banks are simply printing too much money.

The Fed gave investors what they wanted by lowering short-term rates which was sort of shock therapy to the credit markets. However, the Fed’s action comes at a cost. The reduction in rates removes the sole prop to the US dollar and reinforces the view that the Fed will reflate its way out of America’s problems. The rate reduction in essence is the continuation of an overly loose monetary policy that will eventually undermine what is left of the integrity of the dollar. The rate reduction also comes on the heels of the Bank of England’s U-turn bailout so soon after pledging it would not underwrite handouts. Financial panic hit the public and the central bankers.

“Made in America” Policy Scrapped

While Wall Street is enjoying the Federal Reserve’s 25 basis point rate reduction, noteworthy is that many other central banks have not joined the Americans. For example, the Saudi’s central bank matched the Fed’s 25 basis point rate cut but ignored the bigger September reduction, raising speculation that Saudi’s would follow Kuwait’s example and drop the long-held dollar peg. Flush with $500 billion, the Saudi’s may revalue the riyal upward and even tighten reserve requirements to quench inflation. Iceland too actually raised rates to a record 13.75 percent to rein in inflation. Australia’s central bank raised its interest to 6.75 percent to an 11 year high despite the Aussie dollar at its highest level in 23 years. Few remember that Beijing broke its peg with the US dollar in mid 2005 and while the renminbi has appreciated, China’s economy’s growth is still among the fastest in the world. Even Ecuador is threatening to ditch the greenback. We believe that the shift by some central banks to decouple from the world’s reserve currency is a desire to avoid being dragged down when the currency bubble bursts. Gold will be a good thing to have as a store of value and medium of exchange.

Subprime, the First Domino

In domino-like fashion, the sub-prime mortgage problem was only the first of many to fall as the result of the huge global imbalance that has emerged over the past ten years. What began as a sub-prime mortgage crunch, turned into a credit crunch and now a dollar crunch. In addition to the bailouts, investment bankers have created ever fancier securities or super-tranches of linked collateralized debt obligations of asset backed securities. However, investor appetite for these synthetic collateralized debt obligations has disappeared. Wall Street just doesn’t get it. Bernanke’s bailout only served to mask the real consequences of their earlier banking conduct. Nothing has changed. The second domino has fallen.

Coventree, Northern Rock and Countrywide were unheard names five years ago. These financial institutions seemingly grew from nowhere financed by easy credit as they financed long term liabilities with short term paper. Now, they have now been caught offside. Unfortunately this is not the end of the contagion.

Undermining the trust among banks, many banks have stopped dealing with one and other. In the UK that helped trigger a funding squeeze for Northern Rock which is now for sale. In Canada, Coventree triggered a collapse of the $50 billion Asset Backed Commercial Paper (ABCP) market. Today the banks are no longer willing to finance the structured products like ABCP conduits or SIVs. There are an estimated $350 billion and $400 billion of SIVs outstanding. But like ABCPs, the financial engineers failed in their attempt to unload risk unto others, and the investment banks are caught again.

Rather than bite the bullet and markdown assets to reasonable levels as they did during the S&L debacle of the late 1980s, Citicorp, Bank of America, and JP Morgan with the help of Treasury Secretary Paulson are stalled in the creation of a new superfund, the Master Liquidity Enhancement Conduit (MLEC) to avoid a fire sale of assets. The banks are throwing good money after bad money and are simply creating yet another derivative to paper over the sins of the last derivative. MLECs are to purchase assets from the same bank affiliated structures that could not find financing in an extinct commercial paper market. The MLECs only perpetuate and prop up that other weak paper like ABCP, SIVs etc. It won’t cause the asset sales at realistic prices. It won’t buff up balance sheets. It won’t work. The dominoes keep toppling.

America’s financial problem is that so much debt is backed by assets with inflated values that fire sales would drive prices down even further, putting pressure on the big investment banks’ fragile capital base. Next year, an estimated 2 million homeowners will lose their homes, destroying $100 billion or more of value. With the mortgage market seized up and the home equity disappearing, an over-leverage consumer will have trouble keeping up with the payments. But where are those losses? The problem with America’s credit woes is that this paper was built on loose sand. As long as the credit markets remain paralyzed, the big banks’ balance sheets will weaken further as they are forced to take on their ever larger amounts of commercial paper and leveraged loans. All in all, this won’t solve the liquidity problems. The banks reported their worst quarter since 2001 but the carnage keeps on mounting. Writeoffs on mortgage linked assets have surpassed $60 billion but the losses could exceed 5 times that. UBS recorded a loss of $3.4 billion, Citibank would face $10 billion of writedowns, Merrill Lynch’s losses stood at $8 billion. Deutsche Bank revealed losses topping $3 billion. If the damage widens, it will wreak havoc on an over-leveraged economy much as the innocuous sub=prime crisis has done.

US Greenback Death Spiral

When Bush took office in January 2001, the national debt stock at less than $6 trillion. Today after tax cuts, war spending and a credit boom, the debt stands at $9 trillion. One of the biggest causalities is the US dollar, which has finally begun its overdue correction as the credit crisis unfolds. However, we believe the dollar’s decline is just a prelude to a much more substantial fall given the need to shrink the $750 billion current account gap, which runs almost 6 percent of GDP. The US manufacturing sector has dwindled to less than 20 percent of GDP, worsening America’s trade gap to grow. In 1988, the US trade gap stood at $247 billion (when the euro averaged $0.88). Today, the greenback has fallen 40 percent against the euro, but the trade gap has worsened (the euro is close to $1.50). America’s trade deficit must be financed by $2 billion of capital a day from the rest of the world. Since foreign investors are no longer buying significant amounts of US stocks or even their paper in the wake of mortgage crisis, the trade deficit must somehow be financed. Former Fed Chairmen Greenspan said the dollar decline may reflect foreigner’s reluctance to buy US securities and that, “there is a limit to the extent the obligations to foreigners can reach”. We have reached that limit.

At a time when the US requires more than $2 billion a day to finance its bloated current account deficit, the depreciating dollar acts as a disincentive to foreign investors for additional investments in US securities, particularly when they reduce rates. To no surprise, foreign investors dumped their holdings of US securities by a record amount, according to the latest US Treasury figures. To be sure, the dollar has lost its safe haven status as the credit crisis unfolds. In August, total oversea holdings of US bonds, notes and equities fell a net $69.3 billion after a revised increase of $19.2 billion in July. The August outflow surpassed the previous record of $21.2 billion in March 1990.

The United States continues to spend more than it produces. The chronic twin deficits are bloated by war spending and America’s insatiable appetite for oil which has caused the trade deficit to explode to almost 6 percent of GDP. Over the last ten years, the consumer accounted for 70 percent of American spending, driven largely by the housing boom and the doubling in property prices. That has ended and now price inflation not asset inflation will plague consumers in light of rising energy, food and higher financing costs.

Ironically the credit crunch started a new bubble. Newly created money is fuelling the boom in global commodities. Currencies are losing value against commodities and gold due to open-market operations that sees everyone absorbing excess dollars with newly created currencies. The printing presses are on full steam. Global monetary policies are excessively stimulate as a result of the demise of the greenback, ensuring our intermediate target of $1,000 an ounce. Reflationary forces to end the credit crunch has caused a dollar crunch and investors are looking to hard assets to keep their value. To be sure, the dollar has lost its status as the world’s reserve currency.

China booms amid financial woes

The US is no longer the sole engine of global growth. While America is being buffeted by the housing downturn, credit woes and weak US dollar, China has replaced America as the rise of their consumer class, means their rapidly growing economy is no longer as dependent on exports. Today, three of the five most valuable companies in the world are now Chinese ahead of Exxon and General Electric. Japan too, continues to grow and surprisingly these countries have been able to withstand high oil prices – something that the Americans have not been able to achieve. More importantly, is that the central banks have pursued an independent monetary policy by the not following America’s reduction in interest rates.

The turmoil in the global credit markets has so far left Asia, particularly China relatively unscathed. Asia’s strong economic growth and massive foreign reserves have enabled Asia to withstand the slowdown in the US and Europe. Asia has decoupled from the US due in part to the robust economic growth and huge foreign reserves. Asian stock markets continue their rise. Unlike ten years ago, when Asia was the centre of a global financial storm, Asia has learned its lessons by decoupling from the North American train.

But perhaps no country has revelled in its independence than China which has pursued an independent monetary policy and avoided a major revaluation. Like elsewhere, interest rates did not drop after the US Federal Reserve rate cut. A revaluation would reduce China’s income as well the value of foreign assets of more than $1 trillion since most of those reserves are in US dollar denominated investments. In addition, inflation would not be addressed by an upward revaluation. Price rises in China are mainly domestically generated and a revaluation would not help reduce these costs. If inflation were mainly imported, a revaluation would make sense. Moreover, at a time when currency uncertainty was prevalent, China finds itself competing for capital. A revaluation would increase the country’s purchasing power and imports but make it more expensive for foreigners to invest. The US bilateral trade with China has gone from $6.2 billion in 1989 to a current estimated $250 billion this year. The government is slowly opening its capital markets to foreign investors, so a revaluation would also make it more costly.

Today, the world has become less US-centric and more Asia-centric where growth opportunities are more attractive. In addition, we believe China’s surplus will be deployed strategically with some $16.1 billion of foreign assets purchased last year, up 34 percent from $12 billion from the previous year. China’s $200 billion investment fund is a fraction of the wall of money destined and there will be stiff competition for foreign assets ranging from resources to Wall Street to auto-makers. Thanks to the capitalist stock market, the Shanghai stock market has climbed by a third since yearend. Yet the market is not even a source of funding for corporations. China’s behemoths are largely state-backed and the balance sheets are state-backed. Fears of overheating are misplaced.

The bubble will eventually burst but China’s entities’ will escape unscathed. China has excess savings and they are still at the nascent stage in building experience in international investing. However, they have shown a propensity to learn fast. We believe China will shift more and more of its $1.4 trillion currency hoard to other assets, particularly gold. China has less than 2% or only 600 tonnes of gold in reserves, a small fraction relative to other major industrialized countries. That compares with over 8,100 tonnes for the Americans and 3,422 tonnes for the Germans, the two biggest holders of the metal. China will produce almost 260 tonnes, displacing the United States and Canada. South Africa, the world’s largest producer, produced 275 tonnes, it’s lowest in 85 years. China will want to be self-sufficient so we see the industry benefitting form privatization and the usage of western technology. China is an excellent gold province and relatively underexplored. We expect China to increase consumption of gold as its people become more prosperous and expect its central bank to boost its reserve position more in line with Europe that has a 15% weighting of gold behind the euro. Gold in particularly is something China does not have enough of yet. That will change.

The Chinese are now looking into buying stakes in companies such as KKR and private equity Carlyle following the acquisition of a stake in Bear Stearns. The National Council for Social Security Fund was set up as part of the pension plan policies for China and the security fund has joined a number of other large Chinese state institutions investing overseas. Recently Industrial and Commercial Bank of China, China’s largest lender, struck a deal to buy 20 percent of Standard Bank in South Africa. In addition, the Chinese entities, through the mandates of their securities regulator, have approved QDIIs and QFIIs using large entities to make investments overseas. In addition, so many of the major Chinese Institutions have secured stock market listings, raising cash that they are now looking around for targets, particularly merger and acquisition vehicles. Because the one common challenge facing Chinese institutions is the lack of capital market knowledge, China is expected to seed many of the Chinese institutions in order that they make other acquisitions so they won’t run into the high profile difficulties of earlier aborted deals like Minmetal’s bid for Noranda.

Recommendations

Despite the move in gold and gold stocks, this asset class is relatively under-owned. Most institutional portfolios have less than a market weight and some in fact have no gold stocks at all. Despite sterling performances, many precious metals/portfolio managers tell us that withdrawals remain more of a concern than inflows. Part of the reason for the lack of retail involvement is that gold has yet to record new highs such as nickel, copper, lead or oil. Gold is money and with supplies constrained, growing demand from the Far East is expected to take gold stocks even higher. Gold is not only a commodity but money as well. We believe that the consequences of saving America’s banks will cause a new cycle of credit creation, competitive devaluations and a round of inflation. The liabilities of the banking system are the main reason why gold will trade higher than $1,000 an ounce. Gold has no liabilities and throughout the millennium continues to maintain its value. Gold is immune to default. After all, in the gold world there is no mark to model only mark to market.

The gold price hurdled over the $800 an ounce barrier en route to $850 an once. The gold index finally increased with the larger cap companies leading the way. The senior producers have been plagued by a flat production profile and rising costs. We continue to believe that investors will be rewarded by investing in gold and particularly gold stocks, since there have been times when gold stocks have outperformed by gold more than 2 to 1. It is our belief that once gold breaks above $850, institutions will buy up whatever mining companies are left standing after the industry itself feasts on the remaining smaller players. The best potential remains the mid-tier and junior explorers from a risk reward point of view. We continue to like, Barrick, Kinross, Agnico-Eagle and Newmont among the larger cap players since they are liquid. However, the best potential remains the more junior situations like Aurizon Mining, Eldorado, Etruscan and High River Gold as growing producers. Noteworthy of our ten juniors, two juniors (Bema and Miramar) have been gobbled up. We also recommend the silver stocks such as MAG Silver Corp. and Excellon for their exploration prospects and their exposure to silver. We remain convinced that the junior explorers such as Continental Minerals, Philex Gold and St. Andrew Goldfields, Unigold and USGold are attractive due to their active exploration programs. The junior explorers and developers should be bought as a package and are attractive on a valuation basis particularly since the majors are paying more $300 an ounce for gold in the ground. We continue to believe that the takeover activities will continue and while we are likely to see fewer mega-deals, the industry consolidation will continue. As such, we expect the mid-caps to be among the hunters since they too are prey. Kinross and Agnico-Eagle and even Newmont are vulnerable.

Companies

Agnico-Eagle Mines

Agnico-Eagle, a second tier producer is flush with cash and on a growth trajectory that includes five mines under construction. These mines will not require further financings and to date, Agnico-Eagle’s management has not been plagued with the execution problems of other producers. Agnico reported a modest profit in the third quarter of $0.08 or $11.5 million due primarily to a non-cash foreign currency translation loss of $25 million or $0.19 per share. At LaRonde, Agnico’s main mine in Quebec, the mill processed an average of 7,500 tonnes of ore per day in line with expectations. Agnico still produces gold at (-$307) an ounce due to the byproduct credits. Agnico-Eagle’s cash hoard stands at $427 million which is sufficient to finance its expansion. In addition, the Company will receive $122 million from the exercise of warrants at yearend. At 100 percent owned Goldex mine in north western Quebec, Agnico should producer 170,000 ounces beginning in the 2nd quarter of 2008. In northern Finland, 100 percent owned Kittalia mine will produce 150,000 ounces of gold by the 3rd quarter of next year. At 100 percent owned Lapa mine in northwestern Quebec, Agnico will producer 125,000 ounces per year now that the shaft has reached final depth. In addition, following the acquisition of Cumberland, Agnico-Eagle is developing the Meadowbank property in Nunavut but initial production is not expected until 2010. In summary, Agnico’s plate is full with an excellent project pipeline. We continue to recommend the shares here for its rising production profile which is among the best in the industry.

Barrick Gold Corp

Barrick Gold, the largest gold producer in the world, launched a friendly $805 million all cash bid for Arizona Star which is a joint venture partner with Kinross on the huge Cerro Casale copper-gold project in Chile. Cerro Casale has a multi-billion dollar capital cost and Barrick’s involvement will accelerate production, although that is not expected until after 2010. Barrick reported 3rd Quarter earnings of $0.40 of share or $345 million and gold production of 1.93 million ounces, down from 2.16 million ounces a year ago. Importantly, cash cost increased to $370 an ounce up from $281 an ounce. Barrick will meet this year’s production guidance of 8 million ounces plus and over 400 million pounds of copper but the near term production profile is flat. Barrick’s dilemma is that its pipeline requires multi-billion dollar expenditures at not only Cerro Casales, but Donlin Creek, Pascua Lama, Pueblo Viejo, and Buzwagi. While Barrick has an excellent pipeline, the huge capital commitments in order to replace its production is a daunting task. The biggest, however is Pascua Lama, where Barrick has more than 8.5 million ounces of hedges attached to it, making that project less and less viable at current gold prices. Consequently, we believe that Barrick will likely buy an unhedged producer, not ironically for its reserves, but for the unhedged production, as a way to offset the very expensive hedge policy. When that happens, Barrick will be an excellent buy, other than a trading buy.

High River Gold Mines

High River is bringing on one of the largest silver projects in the world which unfortunately is in Russia. The Prognoz project in eastern Russia has excellent grade, a strike length in excess of 1,800 metres and is a huge deposit. High River has a 42 percent interest in Prognoz. High River has brought on stream the Taparko mill which will result in 100,000 ounces of production next year and 140,000 ounces thereafter. The mill is still in a start-up phase and the start up complements the Berezitovy in Russia which came into production. High River is poised to produce over 300,000 ounces next year and thus the shares are recommended for its rising production profile.

Excellon Resources Inc.

For some time we have been recommended Excellon as a junior silver producer with excellent upside exploration potential. Excellon will producer 2.5 million ounce from its Platosa project in Durango Mexico despite capacity limitations at Penoles’ Fresnillo Naica mill. Excellon plans to build its own mill which will not only let them handle increased capacity but also allow the Company to benefit from lead and zinc byproduct credits. Excellon paid its silver debentures off and so the balance sheet is pristine. The new mill will handle 350 tonnes of ore per day and a floatation plant is planned onsite to handle the lead and zinc concentrates. We expect the mill to start up late next year and the mill should pay back within months. More importantly, Excellon is in the midst of an aggressive exploration program with four rigs turning. The Company believes that they are on the edge of a carbonate replacement deposit (crd) which could launch the Company into major status. We like Excellon’s near term prospects and believe the Company has the wherewithal to reach the next stage. Buy.

Etruscan Resources Inc.

Etruscan is a growing junior producer with a dominant land position in the gold belts of West Africa. The Company has projected 90,000 ounces from the 90 percent owned Youga project in Burkino Faso which will come on stream this quarter. We like Etruscan here not only for the production from Youga but also for its Samira Hill mine in Niger and the huge land package. Etruscan should release a new resource complementing Youga’s mineable reserves of 580,000 ounces of gold. Youga and the Agbaou gold project in the Côte d’Ivoire lie in the West African gold belt. In addition the Diba and Finkolo prospectus in Mali complements the Youga and Etruscan has a resource in excess of 2 million ounces. Etruscan has not only a solid production base but the exploration prospects and land package make this an excellent play. We recommend the shares here.

Mag Silver Corp.

Mag Silver released additional results from the Juanicipio property in Mexico. The company has been developing this prospect with joint venture partner Penoles, owner and operator of the nearby Fresnillo mine. Penoles has a 56 percent interest and a high grade silver prospect with a strike length of more than 1.3 kilometres. The Company has been drilling wide step outs and have enjoyed continous success and to date, we estimate the envelope contains 250 million ounces. Management is extremely experienced and we believe the Zacatecas Juanicipio property is the crown jewel. Not only does Mag Silver have a strategic partnership with the largest silver producer, Penoles but Mag has more than half a dozen other prospects. For example, Mag’s Batopilas, a 48 km2 property in Chihuahua has had excellent results and two rigs are turning. Mag is also on track on sourcing a potential carbonate replacement deposit (crd) at Cinco De Mayo, where an active program has begun. Dr. Peter McGaw, the author of numerous studies on CRDs is guiding Mag’s quest at Cinco De Mayo (Mag also has 3 other potential crds). We like Mag Silver for its exploration prospects. The company recently issued 3 million shares, giving it sufficient cash to conduct its exploration prospects. We would buy the shares here.

Newmont Mining Corporation

Newmont mining reported a disappointing 3rd quarter due to increased costs. The 3rd quarter contained a number of extra-ordinary items and the Company will produce between 5.2 and 5.4 million ounces this year but at a cash cost $400+ and ounce. Richard O’Brien, Newmont’s new man-in-charge, is sweeping the cupboard clean and is spinning out Newmont Capital through a $1 billion offering renaming it Franco-Nevada. Newmont has assembled a experienced Board with Pierre Lassonde and Dave Harquail managing a good part of the old Franco-Nevada assets, including an excellent royalty portfolio. The push-out however obscures Newmont’s problem and that is a flat production profile. Newmont expects to spend between $170 and $175 million on exploration which is too small given its cash flow. We expect Newmont to remedy this and rather than tuck-in acquisitions, we think the company will look for a company builder. Most of its programs are centered around its operations and thus we think that Newmont will be an active shopper. Newmont’s friendly $1.5 billion bid for Miramar is more of a tuck-in acquisition. While Newmont will likely fast-track the Doris North development, Hope Bay is a project for tomorrow and is not a panacea for Newmont’s lack of growth. Newmont’s difficulty of replacing of reserves at its aging mines is a common problem for the majors. However, O’Brien’s new focus is likely to see a more aggressive Newmont, and thus we recommend the shares here.

Philex Gold Inc.

Philex continues to develop the Boyongon deposit in the Philippines led by joint venture partner Anglo-American. Three drill rigs are currently operating at the Boyongon project and Anglo-American is obligated to provide a prefeasibility study before the end of the year. We believe that this excellent huge tonnage gold/copper porphyry deposit discovered in 2000 is an excellent open pit operation and Anglo will want to consolidate its interest. Consequently we expect that the cash rich Philippine parent of Philex will buyout the minority shares and Philex Gold is an excellent buy since the resource picture to date just gets better. Buy this junior for the takeout.

Continental Minerals Corp.

We recently visited Continental Mineral’s main asset is the Xietongmen copper/gold porphyry deposit in Tibet, China. The deposit remains open in three directions. Continental has filed a positive feasibility study and is waiting for permits. Xeitongmen has 180 million tonnes grading 0.45 percent copper, 0.62 gpt gold, 0.64 gpt silver. China’s largest nickel company, the Jinchuan Group is strategic and major player will provided funding through to construction which expected to begin in the middle of next year. The project is well located as far as infrastructure and Jinchuan has opened a lot of doors. The feasibility study calls for almost 200,000 ounces and 1.75 million of silver and 1.16 million pounds of copper annually and a mining life in excess of 10 years. The shares have gone sideways due to the lengthy permitting and regulator process but much progress has bee made.

Continental has received all the necessary permits and the mining license and project application permits are only needed. We expect the mining license to be granted by yearend. Xietongmen is an excellent asset and with the backing of the Hunter Dickson Group. Continental will be a major producer in China. We believe the government is highly supportive of the project and will expedite Xietongmen into early production.

http://www.safehaven.com/article-8884.htm

Vanguard (Lagos)

. But over this matter of plans by the United States to establish what it calls the Africa Command or Africom in the Gulf of Guinea, it is time to call for deep caution and to agree with Nigerian officials that we should take the American initiative with a pinch of salt. On the surface of it, Africom appears like a good idea, at least going by the words of its deputy military operations officer, Vice Admiral Robert T. Moeller.

According to him: “The command will allow the United States to do more with our African partners when it makes sense to do so and when it’s in their interest to do so.”

Conceding that the scheme is viewed in several concerned quarters as a ploy to militarise Africa, Moeller declared: “that is definitely not the case”. One would wonder aloud when the US suddenly became interested in partnering with African regimes to defend interests of African countries. Throughout the fourteen years that the Liberian civil war lasted, America stood aloof, while Nigeria, gravely concerned for the stability of the region, spent huge amounts of human and material resources to end the war and restore peace. Liberia, regarded as America’s unofficial 51st state, did not seem important enough for the US to go beyond its cosmetic posturing over the crisis.

Now, the world’s number one superpower has suddenly become an enthusiastic African military partner. And what is responsible for this new mood? Good old oil, that’s what.

The Gulf of Guinea has emerged as the second largest pool of commercial petroleum resources in the world, next only to the Gulf of Persia and its territorial environs. In fact, it has recently surpassed the Persian Gulf as America’s highest supplier of crude oil. Right now, three major countries share the resources of this zone viz: Nigeria, Sao Tome and Principe as well as Equatorial Guinea, because of the contiguity of their marine boundaries.

Perhaps under-standably, the President of Sao Tome, Fradique de Menezes has displayed open fear of insecurity. Having suddenly come into great oil wealth with great prospects for future prosperity, Sao Tome first approached Nigeria for friendship (or at least, it was enthusiastic when an overture for friendship was offered by Nigeria, with which it now shares a joint economic zone). Nigeria, under its former President, Olusegun Obasanjo, actually sent troops to flush out the leaders of the July 16th 2003 coup d’etat in that country, an event that took place while de Menezes was on an official tour to Nigeria. This apparently increased de Menezes’ sense of insecurity.

Perhaps he had reasoned that Nigeria’s ability to so easily do away with military interventionists in his country was an open demonstration of what our country can do if it decides to have a bigger bite of the oil resources beyond its current fair share. Months later in November 2004, de Menezes took a trip to the United States and asked for America’s protection. In an instant, a pact was agreed to allow American military presence in the small archipelago.

Not satisfied with only a small piece of the new oil destination of the world, America stepped up its formation of the Africom, making open moves to extend the kind of cohabitation it enjoys with Sao Tome and Principe to Nigeria. However, Nigeria does not have Sao Tome’s security fears. We are the dominant force in West Africa. We do not need America’s Africom.

We are not under threat by any of our neighbours. We are also great neighbours because we are not only a peaceable country, we are actually protective of smaller sister countries, a favour that is often goes unreciprocated or even appreciated.

Unlike America, Nigeria helps other African countries without counting the cost or calculating the economic gains. We don’t even need the Africom for our engagement with the Niger Delta militants because it is essentially a protest rebellion. But if we should need help, it is up to us to design modalities for acquiring it and where we want to get it from.

The kind of “partnership” a US military base will offer in the Gulf of Guinea will not be different from the well-known American traditional do-gooding which eventually sparks off instability, radical regimes, wars, revolutions and attritional violence.

THOSE who have discovered the writings of John Perkins, the bestselling author of The Economic Hitman and The Secret History of the American Empire will agree with us when we observe that primary interests of American corporatocracy usually drives these military “partnerships” that eventually end up causing instability.

The story is the same- from Panama to Iran, from the Philippines to Iraq, American corporate colonialism, which has been thoroughly laid bare by Perkins, has left a long trail of gunsmoke and blood.