-->By Michael Kosares
www.USAGold.com
Friday, November 15, 2002

In the following interview Mr. McEwen is
hitting on something vital. As a matter of
fact, when looking at the long-term prospects
of gold, as physical owners for the interim,
we should view this as perhaps the most
important gold story out there.

McEwen is absolutely correct, and people in
the industry who have tried to acquire a large
gold lot -- and I mean one to 10 tonnes, not
300 tonnes -- have found that the bullion banks
cannot produce. They can talk the talk, but
when the money's on the table, they can't
produce.

We had a call about six months ago from a
trading house in Canada looking for anything
of size -- 1 tonne or better. There was
nothing out there. The trader, who shall
remain anonymous, confided in me:"It's not
supposed to come to this, eh?" But someone
his firm represented needed metal and needed
it fast.

It happens. And it's going to happen with
more frequency as more gold loans become
due and mining production feels the hard
downward curve associated with depleted
high-grade zones.

The contradiction is that it seems that there
are always enough gold coins and bars for
small-investor needs. Somehow the gold is
found to keep mint and refinery production
levels consistent with demand. Why?

My own belief is that the bullion houses move
heaven and earth to keep up the appearance of
plentitude in order to prevent the public from
finding out the gold market's dirty little
secret: There's no gold in size for anyone
(including nation-states) who wants it.

Just think what that means when the gold loan
scenario rolls out of the paper game and real
metal becomes an issue for settlement.

In my view, the small Third World central
banks that have been depleted of their
reserves in these lending schemes are going
to get creamed, and there's little they will
be able to do about it.

Many people ask for the real reason why the
top central banks curbed gold lending through
the Washington Agreement. Once again it was
because fractional reserve gold lending was
getting out of control. The prospect loomed
that all hope for the return of deposited
gold would be lost in a massive default.

That propect hasn't gone away. It's still out
there and that's why buying gold now while
the bullion houses think they've got the wool
over our eyes is one of the best investment
prospects I have seen in my 30 years in the
gold business.

Last week we had the question of how the
late-1960s gold market compared to the present.
It does in one important way: It's the best
investment opportunity of a generation. View
control of the gold price as your friend, not
your enemy. The dollar market someday will
break the back of the gold cartel. When it
does, gold owners will look back at the
beginning decade of the 21st century as they
looked at the 1970s -- a time of unprecedented
returns on our portfolio insurance policies.

Sell the rallies in stocks. Buy the dips in
gold (the rallies in the dollar). That's
called taking advantage of the new reality.
Gold volumes at USAGold/Centennial Precious
Metals over the past three months are running
near 1999 levels. The wider world is unaware
of what astute investors are doing and
consider their good advantage.

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