from: http://www.aci.net/kalliste/ Click Here: <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- Gold Market No Capital for Gold Industry World's gold available for $40 billion. Continued rationalisation was essential for the gold industry to compete for investor funds in global markets, the Australian Gold Conference was told yesterday. The head of one of the world's top five goldmining companies, Mr Ron Cambre of Newmont Mining, admitted yesterday that "gold is simply not relevant to most investors" in today's technology-driven equities market. He said the four biggest North American gold companies had a combined market capitalisation of 0.14 per cent of the S&P 500 index. "The capital markets are telling us that size matters," Mr Cambre said. "North American gold funds today hold only $US2 billion [$3.3 billion] in assets as investors have withdrawn funds to invest elsewhere. "Future investors in gold shares must come from the generalists who judge us not against our relative performance within the industry, but against the outlook for all investments, including the dot.com world that few of us understand. "Considering that the Fidelity Magellan Fund and Vanguard's Equity Index Fund are each managing $US100 billion in assets, the threshold size for consideration by many portfolio managers today is a market cap of $US5 billion to $US10 billion." Mr Cambre said the market capitalisation of the global gold industry was less than $US40 billion, and only nine companies had a market capitalisation of more than $US1 billion. He said companies should also give thought to the re-emergence of the major mining houses of the past, and there was good logic to consider "multi-metallic" investments in the future. Mr Cambre said that despite hedging, no major North American producer had been consistently profitable in the past 10 years. "Looking only at earnings from operations, the average return on shareholders' equity for the top producers declined from 13 per cent in 1987 to zero last year. The average return for S&P industrials is above 20 per cent," he said. "Generating adequate shareholder returns must be the industry's number one challenge in the years ahead. "We must stop believing that because we are gold producers we can ignore the cost of capital. "Projects that do not have a high probability of returning solid double-digit returns at today's gold price cannot be justified." Mr Cambre's views on rationalisation were echoed by Delta Gold managing director Terry Burgess. "For the industry to survive in the lowering grade and lowering margin environment there will be an ever-increasing push for mergers and acquisitions to take place between companies," Mr Burgess said. "Adding value must be the reason for this as growth for growth's sake can only provide a short-term warmth followed by a hollow feeling - not unlike the feeling that Internet stock investors will experience when they realise that revenue without profit is not a driver." Mr Burgess said the outlook for the Australian gold industry was robust even in the face of the low gold price. "Hedging will still provide the confidence and price outcomes that will allow projects to go forward, although vigilant treasury management and controls will be of paramount importance," he said. "The reduction in exploration expenditure will not materially impact the output of Australian gold mining industry for another three years or so, due to long lead times between discovery and first production. "However, like a hand water pump, once the water flow stops, it will take an appreciable period of pumping, with no apparent results, before the water starts flowing again." The West Australian, April 12, 2000 Spy vs. Spy Computer Failure Left US Spy Sats Useless One more reason to abolish the US government. WASHINGTON, April 11 -- The United States government's ability to keep track of looming international threats was drastically curtailed last year because of a prolonged computer breakdown at the Pentagon agency that collects and analyzes photographs from spy satellites, several federal intelligence officials said. The computer malfunction was so bad in August that United States intelligence agencies were left nearly blind for a few days, unable to rely on photographs from any spy satellites for use in a wide range of intelligence operations, officials added. "This was a catastrophic systems failure," one senior official said. "We were really lucky that there weren't any major crises going on at the time." The computer crisis, at the National Imagery and Mapping Agency, began in early August and continued for about a month, and was far more serious than the brief, previously disclosed Year 2000-related problems in intelligence systems that occurred over the New Year's holiday, officials said. It came as the mapping agency was installing a new system, which caused the breakdown. Some critics have said the new system may have been inadequately tested. After months of work, the problem has largely been solved, although some officials said the system still did not work as it should. The malfunction was seen as a serious problem within the government because spy satellites are among the most important national security tools available to the United States. They provide the president and his advisers prized information through high-resolution images on every national security issue, including Chinese naval deployments and Iraq's rebuilding of its chemical weapons plants. For several weeks, the nation's fleet of spy satellites continued to take pictures, but the computer malfunction prevented the mapping agency from quickly distributing photographs from them over a classified network to Clinton administration policy makers, the Central Intelligence Agency and the Pentagon, officials said. With its sophisticated hardware malfunctioning, the government had to rely on low-tech solutions. Analysts at the mapping agency would look at the photographs on computer screens and describe them over the telephone to officials who needed the information. In other cases, the agency made printouts from its computer terminals and then had couriers deliver the photographs to policy makers at the White House and other government agencies. But the computer databases that contained archives of older photographs at the mapping agency were also malfunctioning, robbing analysts of the ability to compare the few new images they were receiving with earlier pictures of the same buildings and installations. That made it extremely difficult for intelligence officials to develop strong analytical judgments about critical foreign policy issues facing the president. The system was so badly limited that only imagery dealing with topics that posed short-term threats to the national security of the United States -- the North Korean nuclear weapons program, for example -- was processed quickly. "If we had had multiple hot spots flare up all at once, I don't think we could have handled it," said one senior intelligence official. "We were not quite blind, but we were way short for at least a few days." Analysts working on longer-term issues -- narcotics production and trafficking, for example -- were forced to endure much longer delays in their requests to obtain satellite photographs, officials said. "There was a major dip in the volume of imagery," said one official. "If you were an analyst monitoring the development of narcotics crops, or you were watching a new military facility being constructed somewhere, you faced significant delays." Senior government officials acknowledged that the prolonged breakdown represented a major technological challenge for the United States intelligence community. The breakdown has intensified an internal debate over whether the government is prepared to handle a new generation of spy satellites to be deployed over the next decade, the single most expensive intelligence program in United States history. Critics say the intelligence community is spending billions of dollars for the new fleet of high-tech spy satellites while largely ignoring how to process, analyze and distribute the flood of photos those satellites will send to Earth. Matching the new generation of satellites with the system of collecting and processing their photos "will be like lashing together a Mercedes and a Trabant," said one official, comparing the German luxury car to the economy compact produced by the former East Germany. The price tag on the satellite program, dubbed the Future Imagery Architecture, quickly grew by 50 percent, prompting Congress to demand a cap on spending increases. Although the exact price of the program is classified, the cost overruns have raised concerns about whether there will be enough money to improve the systems on the ground to handle the data from the new satellites. "The problem is that the Future Imagery Architecture program is being built without much consideration for the need to invest in infrastructure to support it," one official said. Task forces made up of senior C.I.A. and mapping agency officials worked on the problem from August through December, first to rig ways to get imagery to policy makers, and then to fix the computer malfunction itself. But problems at the mapping agency continued to flare for months, officials said. "I don't think it is still really fixed," said one senior official. Laura Snow, acting chief of public affairs for the National Imagery and Mapping Agency, said agency officials would not comment on the malfunction. "We can't go into details of the system because of security issues," Ms. Snow said. The computer problems developed just as the agency was overhauling its main computer system and installing a new one, called the National Exploitation System, in time to deal with Year 2000 problems, officials said. But as soon as it was installed in early August, analysts found it impossible to transfer images to administration policy makers and other intelligence analysts. "This was a massive information technology overhaul, and the lesson is that we in the intelligence community have to learn how to do that better," said one official. "There is a question about whether N.I.M.A. has expertise to manage the technical challenge they are going to face in systems integration and acquisition and support of the new satellites," another official said. The National Imagery and Mapping Agency has been at the center of debate since it was created in 1996, when spy satellite photo collection and analysis was transferred from the C.I.A. to the Pentagon at the urging of the former director of central intelligence, John M. Deutch. Critics in the intelligence community warned that the move was a mistake. They argued that with the Pentagon in control, the satellites would be used largely for tactical military issues, like determining how many tanks are in a certain region of Serbia, rather than intelligence issues with broad political implications. The New York Times, April 12, 2000 ------------------------------------------------------------------------ ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, All My Relations. Omnia Bona Bonis, Adieu, Adios, Aloha. Amen. Roads End <A HREF="http://www.ctrl.org/">www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance�not soap-boxing�please! These are sordid matters and 'conspiracy theory'�with its many half-truths, misdirections and outright frauds�is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. 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