  
..
Welcome
aboard the USS
"Depression"
Bob Moriarty
March 5, 2003
It's here and
it's now.
I first wrote
and called this a "Depression" in December of 2000
when we owned a computer company. Now the "Depression"
is obvious to enough people to actually make
the front page
of the business section of the Miami Herald. That makes it official
as far as I'm concerned.
And if you
read yesterday's report on Warren Buffett
you can see what the trigger is going to be.
How bad is
it going to get? Well, I have believed for years that the banks
in the US and probably world wide are doomed. For exactly the
same reasons Mr Buffett discusses. Banks worldwide have $128
trillion dollars in derivatives and the quality of those derivatives
makes used toilet paper look as good as gold.
Mr Buffett
has merely pointed out what should be obvious to anyone for the
last couple of years. Derivatives are a runaway train spinning
wildly out of control. One day soon some small event such as
a waterfall decline in the Dow (It's coming within the next six
months) or a bond market crash (It's due anytime at all now)
will bring down the whole edifice. Or it could be the housing
bubble which is popping
as you read.
It could get
as bad as civil unrest and martial law. Just imagine what would
happen if the banks closed for two weeks. Consider yourself warned,
I have been pretty mild in my recommendations but the handwriting
is on the wall. It's going to be serious.
It would be
worth having some spare cash and liquid gold/silver (1/10th ounce
gold coins or bags of 'junk' silver). The dollar has been in
the crapper for years and only now is the rest of the world figuring
it out. Our esteemed rulers in Washington, DC seem hell bent
on convincing the rest of the world that the United States is
run by a bunch of 5-year-old children whose idea of fun is rolling
around a live hand grenade. Take my word, the rest of the world
thinks this country is run by a bunch of fools and crooks. (Gee,
I wonder how they figured that out?).
I remain convinced
the small gold shares represent extraordinary opportunity. I
can't for the life of me see any solution to our economic problems
other than gold. There isn't a government or central bank in
the world who wants gold but once world trade stops for a week
or two, all sorts of interesting alternatives are going to be
considered. Gold happens to be the only alternative which will
work. They'll get it after awhile.
Gold is in
a bull market. Investors got over optimistic in December and
January and we have had a nice, normal correction. Many of our
stocks continue to make new highs week after week, (Lakota
(YLA), up 350% in five months) others such as Queenstake
(QRL) have announced blockbuster deals. Queenstake announced
an $18 million dollar purchase of a 300,000 ounce per year gold
mine in Nevada which will pole vault Queenstake into the major
leagues along with core companies such as Apollo Gold
(APG). I was a buyer of Queenstake again yesterday at US$.26.
I suspect the market just doesn't realize how good a deal they
just cut.
Cardero (CDU) and Ascot (AOT) remain my silver stocks of preference,
Northern Orion (NNO) is a simple choice as "copper
mine extraordinary." I will do a follow up in a few days
but the number of really attractive gold and silver stocks is
very high. Many stocks such as American Bonanza (BZA)
have come down 35% from their highs and are once again exceptionally
attractive.
You didn't
cause the depression and neither did I. Preparing yourself mentally
and financially are only the actions of a reasonable and prudent
person. The depression will do no more than correct the excesses
created in the previous boom.
It will be
serious.
But every cloud
has a silver lining. We will soon realize we cannot afford anywhere
near the level of Federal and State goverment that we have been
getting. It will be a relief to have less government involvment
in every aspect of our lives.
Bob Moriarty
March 5, 2003
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 321gold Inc Miami USA
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