 Wallace Street
Journal
London Homesick Blues
David Bond
May 10, 2004
"When you're down on your
luck
And you ain't got a buck
In London you're a goner.
Even London Bridge
Has fallen down
And moved to Arizona . . ."
These inspired lyrics by Texan
Jerry Jeff Walker were ever on your correspondent's mind during
his calamitous two-week visit to the extremities of Europe, commencing
in Moscow and ending in London.
After a full week of weirdness in Russia, and having watched
for way too many hours the flapping of Boeing 747-400 and Airbus
320 wings and winglets, we are now compelled to connect the dots
of the Metal Mens' mess on this continent a half-planet away.
Lundy is a lovely place, what with its towers and clocks and
such, but it is really no different from Moscow, except that
Russians speak far better King's English than do the Brits. The
architecture is about the same. Lundy has the Thames; Moscow
has the Moscow River. Both ancient cities circle bodies of water.
If you are Americanski, the telly will tell the tale. Bloomberg
and CNBC Europe are carrying their lead stories the weekend before
the Baghdad nastiness erupted; it is of the doubling of the size
of the European Union, now 450 million strong, ten new nations,
accomplished on a Friday night in Ireland to the drunken accompaniment
of several millions of Dubliners who had to be hosed down by
fire trucks. This now creates, outside China, the largest economic
engine on the planet. Was this story on the front page of your
local rag? Doubt it. Sure was over here.
A Gallup poll of Moscovites reveals a majority would prefer to
see Lenin's mummified corpse exhumed from its tomb and stuck
into a hole in the ground. We went to Lenin's Tomb last week
and were first in line to view the corpse. Also the last. Nobody
was ahead of us or behind us. Warren Buffett is shorting US dollars
and the Bush Administration, and staying away from Google's IPO.
Citigroup and Macdonald's have signs, buildings and offices up
and down the Arbat.
The people on this ancient continent are polite to us but they
don't really need our good graces. Brussels and Lundy are bellyaching
at Moscow about its arcane export quotas on nickel, lead, silver,
copper, zinc and PGMs, but they'll work it out.
Russia's Norilsk Nickel is fattening itself up on the planet's
gold, including a purported bid for 100 percent of gold-miner
Goldfields. Norilsk's already-done 20 percent purchase of Goldfields
was revealed recently to have been secured to Citigroup with
Norilsk's nickel production, which explains why your stainless
steel fasteners have doubled in price in the past few months.
Norilsk's CEO, whom we had intended to interview, conveniently
disappeared to Israel (or was it Spain?) late last week after
news broke that Norilsk was going to make the full-meal-deal
grab for Goldfields.
It gets curiouser.
China, the other big planetary player, actually the third rail
of world economics, is turning the screws down on its economy
in an effort to cool inflation and protect its massive US dollar
currency reserves preparatory to dumping them. Europe wants trade
concessions from China, too, which the Chinese will be all too
willing to grant should the EU rescind its arms embargo. The
new Bank of China advertises every half-hour on both Bloomberg
Europe and CNBC Europe. They are open for business. China's throttling-back
will be tough on commodities for the next few months but it is
temporary. They have stuffed 200 years of Industrial Revolution
into a single generation's lifespan and there's no looking back.
By 2050 China, urbanizing along a trend experienced by Japan,
Europe and the U.S. during their industrial revolutions, will
shift their population from the country to the cities, necessitating
the construction of the equivalent of a Los Angeles every two
years or less.
China, Japan, South Africa, and most European countries cannot
afford to see the dollar fall any further, but they also cannot
afford to keep propping the USD up, either. There is simply not
enough wealth on this planet to keep pace with the United Snakes
Federal Reserve Bank's printing presses. And at a fixed 6% interest
per year - the rate at which the Fed loans us our dollar bills
- why would the Fed wish to stop printing? It is, in the words
of Janet Reno and Jim Jones, for the sake of the children, no?
Please hang with us whilst we digress. What whacked us to our
senses was a visit in Russia this past week to the world's biggest
surviving rail-gun. It is a marvelous device, supported by some
13 pairs of railroad wheel trucks, each capable of hauling 100
tons. The rail gun is proudly displayed near Gorky Park. The
Russians own it, but the Germans built it in the early 1940s
with the intent of lobbing lead at Moscow from it. Things went
south for the Germans in 1944, and the Russians grabbed the rail
gun from them somewhere outside St. Petersburg. Short of an aircraft
carrier it is the most impressive piece of military machinery
we have ever seen.
Memories die hard. It does not occur to us Americans, in our
comfortable homes in Florida or Idaho, how hard a half-century
of war was on these people. What I see here is an awakening and
a rising, from the bar-room floor, of the participants in this
half-century-long bar-brawl, the bloodiest in history (the peace
of the Treaty of Versailles was, if you look at it rationally,
just a time-out in the penalty box whilst everybody regrouped
to go another round) and after 50 year' recovery smelling blood
in the waters.
The Europeans and the Asians are wiping the crud from their eyes
and they are coming-to. For 50 years they have been down, but
not out. Their fighting amongst themselves - Europe upon itself
and Japan and China at each others' throats - is over.
It is over for them. Which means it's just getting started for
us. The Baghdad fiasco squandered whatever goodwill was left
over from the Marshall Plan.
It was not Americans who discovered, conquered and settled America,
after all. Was it not instead the Russians, the Chinese and Japanese,
the French, the Spanish, the British and the Dutch?
For a half-decade these nations have been rummy, comatose, recovering
from the wounds of World Wars I and II. Certainly, resentments
over here in Europe will remain; Russia, for example, wants the
$20 billion in gold it sent to Japan for the purchase of weaponry
ordered during WW I but never got. But again, they'll work it
out. Reparations are cheap. All they need are resources.
And which country hasn't mined in 30 years? Which country hasn't
pumped oil in 30 years? Which country's own EPA environmental
movement is fund-raised for by a former Russian prime minister?
Whose own natty conscience has left its resources uncut, un-mined,
un-plumbed, preferring instead to plunder other nations for three
decades? Can you name one other than America?
What a tasty snack for someone awakening from a long dark sleep,
his barroom brawl wounds now fully healed, ready to settle up,
looking over an ocean now barely an Airbus-flap away.
As Bunker Hill's Robert Hopper would ask, Have you got rocks?
Better get some - the more zinc, lead, silver and gold the better.
Because the Russians are coming and they are not alone.
May 9, 2004
David Bond
David Bond covers gold
and silver mining equities for a number of national and international
publishers, including Platts Metals Week, a division of McGraw-Hill.
He lives in Wallace, Idaho, heart of the planet's richest silver
fields, the Coeur d'Alene Mining District. He is former editor
of the Wallace Miner, and holds regional and national firsts
in investigative journalism from the Atlantic City Press Club
(National Headliner) and from the Society of Professional Journalists
(SDX/SPJ) and has edited or written for newspapers on both coasts,
Canada and Alaska.
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321gold Inc
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