The Gold Trail by FOA - April 2001

All times are U.S. Mountain Time

(04/12/2001; 05:54:42 MDT - Msg ID: 62)

(04/14/2001; 14:10:14 MDT - Msg ID: 63)
The Journey
Thoughts are a river as it runs upon the land
they begin with a purpose and nourish us as sand

we walk a path by this water so near
and our vision must know this trail will prove dear

so trust in your heart that this way is the birthright
and the sun will light in the darkest of night

these Thoughts make us dream a truth that is whole and
"as this river runs through it, may it strengthens our sole"


Few things in life remain the same. Always near, yet sometimes far, the future is before us and will remain so for ever more. Look back for understanding, look back to know how we once thought, look back to confirm your own feelings, but don't look back to know the path ahead! That future, my friends is the water that flows from us today.

No one changes the world by their own actions. But the future can be shaped by our understanding and how we, as a people react to new perceptions. Yes, in our living of life, this very dynamic makes the world tomorrow. Better said, we are the future we seek to know! Understand us and where we are going and one can plot a course that points the future.


With time on my hands, recently, I did a research project. I ask all the Gold bugs in the world to stand in a straight line. Then asked all the physical gold advocates to make a parallel straight line next to them. Boy, that was some long line (smile). For days on end, I talked with many of them as I walked between the rows. I was struck to make several observations:

All the gold bugs seemed to be talking nervously. Always looking up and down the row to see what the next fella was doing. With cell phones, laptop computers, private radios and every form of communication, they were all trying to do the very same thing; trying to make more currency. Almost the same thing that people who trade the stock markets are doing. Strange, I thought. The gold bugs hated this unbacked fiat currency as a wealth trading unit or a wealth holding unit, but still wanted to own more of it than the real wealth of gold. All of their actions were aimed at protecting themselves against any loss of currency function by making more of the same failing currency. Keeping ahead of the coming loss by having more of the deteriorating wealth item added to them? Kind of like a French farmer's logic reply to the knowledge that Paris is about to fall; " I'm not worried, got my wealth in cash in the bank of paris and I know the government will add to my holdings enough to cover any failures of ruler ship". So I ask myself what is the farmer and gold bug gaining here?

Standing back across the row, I asked a physical gold advocate what he made of all this? It's all very clear to me he said:

"""""""You know, fiat is a good thing in this day and time and we all could not do without it. These gold bugs would have you think just the opposite, even while they try to make more cash wealth for themselves. Yes, it's true, the current major world fiat is breaking down as it folds it's hand. But the current gold market, these bugs trade in, is run by the same guys that don't want their fiat use to end yet. So when they change the rules of the market, look at how many gold bugs leave? Almost none of them.

The rules of play, using Casino Chips instead of real gold, are all right out in the open just as the gold market we used to know becomes little more than a shell game. A Dollar Gold Casino, if you will, and the gold bugs don't want to leave it. If they can't use "near gold" to play with, they won't play at all. So, their whole advocating of the gold story is just talk. They stay right with trading fiat assets instead of gold even as their market slowly fails their purpose.

It's almost as if they didn't really want gold wealth in the first place. I see it as if they want everyone else to make physical gold worth more so their fiat based assets can grow? God awful logic for a gold advocate, but then again, they aren't gold Advocates? These are the new breed, aren't they? Fiatgold bugs? Well, I write it all off as the Gold Bugs can't see the difference anymore and still crave playing in the same house, using the same house rules. Most of them would rather the government keep the fiat going at the expense of just a little higher gold price. Say $500? Just enough to make their fiat grow. Instead of advocating holding bullion wealth and a freegold market to crash the old system. Ha! Ha!, These guys even want those in charge to change the rules back into the players favor, bankrupting the house in the process! There is no chance in hell of any casino doing that to themselves. It'll only happen when the casino's credit is taken away. And that process is in the works, don't we know! That's why I am a physical gold advocate. My time will come as the fiatgold bugs go broke with the casino. I guess it's the nature of life that we go down with the ship we sail."""""


Will it all pass as this gentleman presents it? I sure do think so.

Tell me, how many of you are watching supply and demand, CBOT positions, Comex OI, trading volume, gold share directions and chart TI? And for how long have these items told you nothing about the direction of currency gold prices? You see, the future of the world value of gold is now waiting on the outcome of a political currency war. A process that's been in the works for more than a few years now,,,,,, And the longer this stretches out, the more the outstanding supply of "almost gold" securities is built up. Making the whole Fiatgold Bug arena ready to fail in a mighty fall.. All done in an effort to keep the dollar system going. We have been presenting this picture for some time now and the end comes closer.

Every time the ECB doesn't "blink", ANOTHER economic nation block looks closer at the EuroZone as the backing economy for a new reserve currency. As each day passes with the EuroZone showing even marginal growth without the benefit of an American style trade deficit, the internal economic dynamics of the USA builds against it's dollar management policy. Eventually forcing the US into a full blown super inflation that has no limits.

Every day that the ECB marks gold to the market, it says that; "when the market for gold is free of the forces of dollar management, it's value will be marked to the market ----- whatever that value may be and independent of the Euro currency's use and position in the world"! Indeed, by inference, the value of oil also be marked to market through gold. Slowly, the world shifts on it's axis, my friends. We must not be blind to this change.

It is as we pointed to; the different nature of the EuroZone economies, diverse social management and attitudes towards gold values, will eventually support that nation block in the mists of a crushing US downfall. Within the total dynamic of this economic transition, physical gold values will return to a level where they will once again represent the "wealth of nations".

For us, "the wealth of mankind".


So let the water flow clear as the sun in our day
this time is for us, as we push on for the bay

mind you this stream can speak words quiet and fair
this river of "Thoughts that are free as the air"

Ladies and gentlemen, friends and readers,
later today I will begin on the main USAGOLD FORUM the next series of:

"The Thoughts of Another"

thank all

[Editor Note: The following post by ANOTHER was provided at the Discussion Forum]

ANOTHER (THOUGHTS!) (04/14/01; 18:08:54MT - msg#: 51887)
To this USAGOLD Forum and Mr. Kosares, good evening.

Thank you FOA for your time and work.

We talk once again my friends. This forum, it grows strong for all ages and nature of peoples. Read they do, from all places on earth. I read and see the knowledge as written, but it be the knowledge we still must see that speaks with greater strength.

Walk the gold trails of my good friend, do I. On my feet are "strong sole" of thick leather, purchased with much knowledge of physical gold. These shoes not go bare before our journey is done. On trail I see your "thin sole" gold investments cast aside and scavenged by beasts. Their owners walk no more as these investments took not this hard road of dollar transition. Many more will wear paper gold wealth thin before this walk be done. Only physical gold will see sun after this storm.

Some say dollar strong and holds much value still. It bends not and is strong and worthy. I say their vision is limited to see only post supporting roof. Not what on roof already or what must be placed on roof. When new Euro currency is done, full weight of dollars will return as your wet snow. In that day, we check curve of this good post, not before.

Some say dollar buys much gold and is strong in metal. I say, paper gold be not metal! We have more dollars than gold in world. As long as your system works, you sell gold to gain real dollars and we sell dollars to gain real gold. All be well in your world and mine, yes? Soon, dollar return in bank and Euro return in bank be equal, no? More later, dollar return become even less than Euro. Tell me about your paper gold value then, my friend. Perhaps, dollar then seen strong in this lesser gold only. You think long and hard on this before end of year?

I think Euro buy much more oil then. We shall see. I will return often now. Discuss our future then.

We watch this new gold market together, yes?

Thank You

[Editor Note: The following post by ANOTHER was provided at the Discussion Forum]

ANOTHER (THOUGHTS!) (04/15/01; 18:58:39MT - msg#: 51943)
Mr Gresham (04/14/01; 18:44:54MT - msg#: 51889)
Welcome Mr. Gresham. We talk for a time, yes?

You write:

"We who read here generally buy the coins, one ounce and less. The "Giants" you speak of are usually buying the large bars (100 ounce?), yes?"

I ask you, how many of your bars in tonne? This is the small purchase size.

"Is there a limited supply for them to get, and only through the large brokers with their "private wealth management" programs?"

I would say the BIS is best broker, always. It best to sell dollars for gold when gold is offered.

"I am trying to understand why this knowledge you bring is not being acted upon by some others with "deep pockets", such that the markets would be moved, or shortages occur, even before the dollar is seen in weakness."

My friend, you see the gold with "Western eyes". In mind, it be always, "how much currency does my gold bring". In this world of much paper gold, it bring not much dollars yes. In such matter, your currency makers do make your wealth lay low. This dream of much dollar currency for gold is the illusion in the "Western Mind". Your men of "deep pockets" do probe for shortages, however, their wish for low supply is not to be found. Their pockets are full with "credit gold" and sad are they at currency price this brings. It is the fools game to corner paper gold printing press, no? Sir, I stand with no fools!

Days and nights do pass and one morning will bring a dollar price for gold you have never known. In that day, I will cast this currency down and walk with real wealth. In this day, the gold will trade in Euros and no bribe of credit gold will be needed to mark this new money.

Today, I my world it be how much gold does dollar currency bring. A difference in understanding from yours, I think. Today, amount of bullion available for dollars no longer the reflection of bullion dollar exchange, it be now the most terrible bribe for world dollar use. An acceptable deal in most of world, such is real world outside your laws, no?

But, it is here, in act of making extra credit gold, where the "shortage" you speak of, is measured my friend. A good man with one eye does see this time as of but few years and short days. Aside from our Euro political changes, history alone does show all great currencies end with this overselling of credit gold as last of era. This paper gold credit is always for the fools first and last. It value is later reduced to same as currency, along with holders of no gold.

It be our good fortune (and yours) that bullion is offered still. For the simple man, such as I, this wealth is that for kings but more so for his people. For all peoples, gold will be again the wealth of ages.

In this day, at end of dollar era, all do see real bullion sold for sake of market credibility, only. Perhaps too, bank credibility, I think. In this world, the lower this dollar paper price, the more bullion becomes available for credibility sake. It is the good thing for men of "small pockets" and the curse against traders and fools.

I bid you the good fortune of "small pockets" with much physical gold! We watch this new gold market together, yes?

Thank You

[Editor Note: The following two posts by ANOTHER were provided at the Discussion Forum]

ANOTHER (THOUGHTS!) (04/18/01; 06:19:54MT - msg#: 52086)

USAGOLD (04/16/01; 19:15:36MT - msg#: 51997)

----- I would also like to take this opportunity to welcome Another back to this Table. The circle is now joined in continuity again -- all around. Already I have added to my own file of vintage "Another (Thoughts!)" with this shrewd observation:

"This dream of much dollar currency for gold is the illusion in the "Western Mind". Your men of "deep pockets" do probe for shortages, however, their wish for low supply is not to be found. Their pockets are full with "credit gold" and sad are they at currency price this brings. It is the fools game to corner paper gold printing press, no? Sir, I stand with no fools!"

The smile of recognition returns to my face as this point is made in these few, short sentences better than I have seen it made in entire articles on the subject. Welcome back, my friend. --------

Mr. Kosares,

Thank you for your welcome and acknowledgment. I add that within this circle many feet have walked and the prints of the Kosares show most lasting impression. I see the stature of this man as American, however no Western mind is found within him. One day all will rush and follow your path before strong tide washes the deepest heal mark from sand.

It be true, my friend, in history no man does corner printing press. Many have take this path before. Even declare themselves "leaders" of "financial knowledge" and "sophistication", do they. The Gresham does make wonder about such things and asks for reason noone does claim gold from printer?

Such demand be as 100 men with contract asking Spanish farmer for 100 basket of olives where clear examination in field display only 10 basket. Such good reasoning have these men, demand delivery and illusion of wealth to others be none! None ask full collection for fear of illusion to become reality, no? Perhaps, take what offered and wait next year. Better, sell claims for olives to Western investors with little eyes and clean shoes? Perhaps financial knowledge and sophistication of these paper sellers is more considerable than average fool. In the days that come,

"better one olive in house than six blooms on tree"!

We watch this new gold market together, yes?

Thank You

ANOTHER (THOUGHTS!) (04/18/01; 06:41:33MT - msg#: 52088)

Mr Gresham (04/17/01; 10:33:51MT - msg#: 52041)
Was the Washington Agreement the most significant event in gold since you were last posting in 1998? Do you have any reflections on those events?

Mr. Gresham,

One must weigh the mind of this Randy. It be heavy, yes? Do read the thoughts of the BIS for these same are printed review as #52046. Hold a mirror to these events for reflection. Such descriptions I discuss come next day.

Thank You

(04/18/2001; 20:20:06 MDT - Msg ID: 64)
Lombards, Normans and Franks
Hello again, everyone! (big smile)

I'm glad to see you are wearing the big wilderness bags today. You got my message that it's time for a serious hike. Alright!

After years and months of talking about gold, I have talked to friends about switching my delivery. During all this time, I did my best to emulate Another's style of presenting information and observations. Mostly here on USAGOLD, while he stood aside for a period. If you have read any bit of his works you know that style. He points to things, inserts thoughts, then drops names, ideas, political intrigues and suppositions. All in his good way of making people think and form perceptions on their own. While he has sometimes talked "through" a forum venue, in the process reaching others he knows, this endeavor was always for the citizen and never started as a shallow ploy to influence traders. It was more for the simple person that those "Thoughts" were meant. Truly, in the middle of all the gold rhetoric, his one plain comment remained intact and has never changed; buy physical gold!

During this period, I worked at breaking up my delivery. Even in clarifying, my replies were mostly partial answers. I have to admit, this has been a larger challenge than expected (smile). Now, I want to talk to you as I have plainly conveyed perception to others in the past. Using a human dynamic to make my points, as is my usual mode. So, I'll continue to employ a down home, on the trail tone. Please remember, I'm restoring a world of lost disk data while doing this. At first, most of this will be right out of the old brain.

You have read the varied items in Gold Of Troy #56 and Troy and Beyond, Even to Rome # 58, so lets get going.


Onward the trail!

Look at this grand view.

It seems like forever, doesn't it? I'm actually speaking about this never ending struggle we have had understanding gold. Well, don't feel bad, mankind has been at war with gold for as long as he has gained an educated opinion about money. (grin)

Pity us. From the very beginning the good earth gave humans the perfect vehicle for commerce and trade, but we have bastardized it at every turn. No wonder so many modern people are lost to seize the day when it comes to keeping something of lasting value. They have been so influenced by today's convenient lifestyles that they lost the meanings of real structure in savings and savings with enduring historic stability! Content to trade their life's personal financial security, that these meanings would have provided, in exchange for some other perceived grander returns! Returns that only modern risk securities can provide. All the while placing an ever larger portion of their work's returns in long term peril. Assets from hard efforts they may never get to use!

It seems the whole of Western thought has some bit of concept about gold. They know it's good in crisis and will admit to making a quick shift into bullion at peril's first sign. Even Gold Bugs consider the point of timing when they will run for the cover of those big bars. Using their mine share profits to make a score! It's the same for investors in lesser metals; they just want to hit that quick ten times gain over gold before their split second switch to the yellow bullion occurs. Truly, it will never happen because gold will not hold still long enough for their purpose.

Hard money investors, to the man, point to a shortage of gold and the ongoing paper manipulation that's making it so cheap. Yet, in the mist of all their planning and strategic understanding the logic completely escapes them as to "from who" and "from where" they will all buy this bullion so quickly? As if each and every one of them has the secret timing and will beat out all the other Gold Bugs when conversion day comes. And still, somehow, someway the world bullion price will accommodate their gathered profits from playing these other "near gold" securities?

My friends, it was Another that always said "this gold market it be not as before". Perhaps this is the hidden perception that so scares Gold Bugs. The possibility that our physical gold market could jump well into the many thousands before their waited purchase. A jump in dollar value that never reverses. A jump that stops the contract function of this market in it's tracks! Frozen because the other side cannot supply the gold or the cash to cover their bet against you.

Then there is the Euro question. Many American Gold Bugs say it's just another fiat currency. But, in the same context I ask them "if that's so important to you , how did you just pay to fill up your car"? Others ask how I can trust the Euro. Well, I don't trust it any more than the dollar, or any other major world fiat. I just use it for the life function we all enjoy. Further, I ask back, how can you not trust the fiat you use?

The whole Another thrust about the EMU was to delineate the political shift that had been in progress for some 20 years. And how this ongoing shift would effect the currency valuations of everything we use. The price inflations that are coming that no one has ever deemed possible!

This shift revolved around the major world political players and their use of international trade vehicles to forward their own agenda. The very vehicles that impacted economies, and therefore our lives the most. Dollars, oil, gold the EMU, etc.. The discussion was much deeper and long-term in nature than many could grasp. It's focus was especially attuned to the coming change in the value of gold. A change so real, so profound that it's dynamic just couldn't be believed. We will indeed have to see it to believe it!

Even more so, it's all about the illusion of wealth that manifests itself so well at the very end times of major currency failures. Perhaps this is also a fear hidden in the Euro skeptics. The possibility that they will one day lose the wealth and lifestyle their dollar valuations afford them. Once again, the simple are warned from wise words, "your wealth, it not what your dollar say it be"!


It wasn't always this way.

Gold, that wonderful metal that has all the unique qualities to function as our one and only wealth medium, and we just can't use it without altering it's purpose. You know, the Lydians had it right, back around 430 BC. They didn't struggle with the concepts of money, like we do today. They just stamped whatever pieces of gold they found laying around and kept it for trade. There was no need to clarify for certain that their gold money needed properties of "utility", store of value, medium of exchange, etc. etc.. They didn't need to identify these qualities were in gold before they stopped questioning if it was safe to use gold as savings. Gold was owned and the knowledge that people owned it and carried it for trade was alone enough to make it "worth it's weight as wealth".

Why then and not now?

You see, back in antiquity there existed another property that could override our need for modern definitions of tradable wealth. That property was found in the one identifying mark of wealth that transcended all ages; real possession!(smile) This factor and this one factor alone had the ability to activate all the other modern attributes of money properties, even when the knowledge of these attributes was unknown in the ancient era. Come now, Alexander the Great didn't know about "utility" did he? (grin)



As a means of example; think about art work for a moment? That fine painting that graces your main prominent wall. It's tradable for something, isn't it? Perhaps that Renoir for the acreage down the street. That use would cover some of the medium angle, right? A little bulky, but the large value makes it no more or less cumbersome than five gold bricks.(smile) Utility? Just watch your friends stare at it for hours. Store of value? A Renoir? We don't even need to discuss this .

But, one more thing, is it wealth? Of course it is. You see, it is wealth because you possess it, and the very knowledge that you possess it is held by others. One, a few or perhaps many equate your value for that painting by your possession of it. That understanding starts a need / desire valuation in the minds of your friends and associates. This social dynamic flows through relatively close groups of people and can eventually stretches across the world as it activates this worth equation in us all.

These paintings command a value, a price, a demand, precisely because everyone of them is possessed by an owner. In the world of wealth, worth is enhanced because the supply is lessened by this "possession attribute". And possession is how most people in antiquity, understood wealth.

Think now, could the worth of all the Renoirs in the world be the same if say, half of those wanting such paintings could own a credit for one? And further, they considered that credit account as the same as the real thing. No! The publicly known art value could not be the same because the demand would be lessened and the value decreased. Satisfying the wealth need of these new owners with "almost Renoirs". In this way the owners of this true wealth, represented by those real physical paintings, could not see their worth value expressed in the marketplace. However, the inherent value would still exist, just not quantified "for all to see". A situation not dissimilar to our gold market today.

So, if the attribute of "possession" is a major component and identifying mark of wealth, why does it play such a roll to enhance the modern contemporary properties of real money? Because, with money, once possession identifies the item as wealth, that alone can represent the unique utility function money must have. In this light, we can see where money need not have a commodity use to satisfy it's utility function. The wealth function alone is enough when applied to money. Wealth is the utility.

The store of value function of money is further enhanced because the possession of real wealth also continuously maintains or increases it's worth over time, across generations. And that worth or value is relative to all things.

Further, a medium of exchange alone can apply to many metals, but it must be wealth and therefore owned outright by all who use it ""if it is to correctly function in it's ability to denominate real value in commerce"". This last thing is something we Western peoples have virtually no concept of and will one day suffer for it.

Today, all forms of cash money and most financial assets do not function as wealth because their ownership is second party at best. Fiat dollars, in every form including cash only represent something owed to you. A credit of goods or effort performed. It represents nothing owned at all. Their function in society does work but it works for us by providing a lesser valuation in trade than real items would produce. We accept this concept and reduction of worth as the price for modern high speed commerce.

Many hard money philosophers have pointed their finger at others for the fiat situation we use today. It was the bankers and governments, the kings and cohorts, big business and robber barons or some communist manifesto that forced us to use this type of money. Well, you may not like the process and consider yourself above or apart from it all. You may even declare all of them evil. But, in the end, one fact remain; society may govern itself in many ways over thousands of years, but it has never stopped the evolution that corrupts the use of real money as official money.

Over time and life spans gold has been brought into official use countless times. Only to be bastardized by forces, we as peoples can never control. After every failure and ruination of much wealth, the cries always return to bring gold back as money. Once again to begin the long hard road that leads to the same conclusion. Gold coins then bank storage then gold lending then gold certificate use then lending of certificates then certificates are declared paper money then overprinted then gold backing removed then price inflation then,,,,,, we begin again. But this time it's different the hard money crowd say. Yes, it is. Only the time has changed.

For the better part of human existence, gold alone has served all of the best functions of tradable wealth. But as soon as we call it our money, human nature takes over. Yes, we can call it a stock or a bond, a piece of land or a painting, a car, boat or antique, but just don't label it as money.

Up the hill and thru the pass!

The Lydians, Greeks and Romans all held gold. From Parthia through Rome and on to the Visgoths, Lombards, Normans and Franks, they all held gold as wealth. It was wealth first and traded as what we call money second. Possession identified that gold as real wealth, even if that ownership was for but the moment of a trade.

From the earliest times right into the Old World periods of Europe, gold served as the most valued wealth asset one could use in trade. It was by far the largest unit of tradable wealth in circulation that could be counted on to bring a premium in trade while shopping between cities. It moved, it flowed and it traveled. It was indeed, always "on the road"! Lesser metals and other tradable wealth assets always competed with gold for it's trading function, but only gold made the best "on sight" trade. When given the choice of other "almost moneys", gold would always bring an extra slice of meat or fuller basket of cloth.

The irony of gold use over most of it's earlier periods was that few average people kept it for long. Hence the seldom discovery of gold coinage where average people lived (see my earlier posts). Be sure, it represented wealth to these commoners, in good form and to the highest degree. Yet, their possession of this wealth usually constituted only a short time period. This short ownership occurred because gold did, would and could trade so much better for the needed things in life. For the worker, service wages paid in gold meant you just got a bonus or raise and the time had come to finally buy what you couldn't afford if paid in other means. If these people saved at all, it was usually in the form of the lesser metals (see my other posts).


If gold was so valuable back then, there must have been a bunch of it saved and transported into our modern time?

No, not really! We used to try and extrapolate all the gold that was mined and turned into jewelry, bullion or coin. If it was so good for coin and trade, civilizations must have saved every ounce, we thought! But something kept nagging at our conclusions. Something that kept turning up over and over at our digs.

Some of you have seen the Gold of Troy pieces or other fine examples of old gold craftsmanship at other museums. Ever notice how good they were at making gold so long ago? From intricate bracelets to rings, head dress items to fine cups, even the most thin of leaf. Some of it was so small we had to use magnifying glasses to see the work clearly.

This gold in jewelry and art work form was the other major form of traveling wealth. In many of our recent findings we now think that jewelry and coin traded places as easily as getting your check cashed today. Throughout the ancient land, gold centers occupied the trade routes. Any gold that rested for too long, was quickly recruited into a form that worked for the next traveler. In fact, evidence now points to all forms of gold ownership, not just coins, being a short term proposition for the average man. Indeed, contrary to what we thought, the fingers of all mankind did, through the ages, touch gold!

Now place yourself in that time. You work for Rome in the army, a fighting man. Not all of you were paid in lesser metals, many of you were relatively better off. You did carry some of your wealth with you in the form of gold coin or jewelry. In the case of a Roman soldier, a gold ring was very probable. When you went into battle, did you leave your few gold items laying in the tent? Or did you wire them back to a Swiss bank for safekeeping until after the battle? (big grin)

What we are finding, in the form of molecular fragments at battle sights, leads us to believe that most wars were fought with most wealth possessions worn or in pockets. Gold included. To make a long story short, we now believe that a great deal of early gold was scattered on trails, in the sea and during every war. In fact, rubbed, scraped and powdered to the four winds.

Because gold was so valuable in long trade, extremely small creations were carried as jewelry. Much smaller and much more able to be lost than other larger units of the lesser metals. The nature of so much of this gold was that it was easy to be lost and dispersed. Especially considering the modes of travel back then. We as museum visitors see all the magnificent pieces displayed. What we don't see are the countless broken, partial and fragmented items that are never offered for viewing.

Knowing what we know now, we believe that a very large portion of gold was lost and scattered on a yearly basis. Add to this the fact that most gold mining brought almost the same return as making many of the goods it purchased and we can see how gold was and is over counted. Where it was once taken as fact that all gold was looted and remelted, we now think that gold stocks were lucky if replaced.

By the time of the great gold coinages in Europe, the gold that flowed into these major commerce centers was all there was left in the world!.

Let's rest here for a few nights. There is a lot to consider before we go on.



(04/19/2001; 17:50:29 MDT - Msg ID: 65)

Hello again everyone,

I thought it would be a good idea to make some clear comments and replies regarding my perceptions. Using some questions and thoughts from the main forum will also help. This may make it easier for us all as we "follow in the footsteps"!

Auspec makes several points and contention for me to address. Please read his complete post first (and all the others I'll address). Hello auspec, you write in reference to my hike #61 here on the trail:

auspec (4/19/01; 08:48:52MT - msg#: 52175)
-------*If the dollar's status is now so similar to what it was in 1971, why would we see the Brazil type hyperinflation now as opposed to the simple ongoing degredation of fiat that we have all come to know and hate? Why the extreme portrayal of the dollar? It's clear the dollar is an old toad and there are young stallions waiting in the wings, but it's hard to see this as an all-or-none issue where the dollar {banana} goes from being the world's reserve currency to being "nada". Where's the middle ground with dual and competing reserve currencies in common use?*


Well sir, I'm going to try and reply in context to the way you asked these questions. Considering well all your prefacing stated before asking for info.

Using the 1971 dollar incident is a perfect way to engage common ground thinking about our contract gold market today. No it's not a perfect analogy, but it's real, real close and sharpens our understanding and ability to see the subject clearly. Especially considering the tremendous number of different hard money people that read this Centennial Forum. But we must not confuse the point by thinking a similar break today will cause the coming price inflation we speak of.

Yes, after the 71 dollar gold break, we did see some good price inflation. But was that caused by the wholesale cancellation of international dollar convertibility into gold? No! That price inflation was not gold backing related because we had already, years before, been printing dollars far beyond our stated gold to dollar conversion ratio, $42+/-. That spell of price run ups was the result of to many dollars being printed before and after the 71 gold breaking event.

Sure, the gold price run up after that didn't help the dollar's image. But, by then it didn't make any difference what the gold price was. Even if it want back to $10/oz. we were never going back to governing the volume of dollars in supply. Not by using gold, not by silver, not in any way that would fix or slow the presses! We couldn't. Any long term slowdown, then or now, in such an established fiat was well past the politically survivable stage. This is the way fiats work, rather gold backed or not, they always break from strict printing discipline. The history behind us says so and the future before us says so. As an example in dollar terms, look at any five year average of money supply growth from 71 till now? Truly, we were and are printing our way towards the end time of dollar use. The only question was how long would the world keep using dollars? How much longer
would the timeline extend?

Some hard money people thought that the world would simply convert to gold itself, in place of dollars. But, the simple fact, as I and most especially Another have made so often, is that the modern world must use a fiat form of currency to operate. And, considering that point, after the 71 gold break, there was no other strong, fluid currency for us to revert to. It wasn't until the end part of the 70s that the Europeans started down the long road of creating something else.

There were times when our foreign trading partners were thinking of breaking away. This is when the US spiked rates. Again, we confuse this action with stopping the inflation presses. Quite the contrary, the killing rise in rates was just a signal that we would not go completely hyper. On our side, the only reason we could afford to take this economic killing gamble was because oil was still priced and settled in dollars. But that is a whole Another book.

The prestige of many international dollar holders took a real bath because they held dollars in place of gold. When they tried to initially bid for gold, the US and London made sure the price rose fast enough to tell a story to these dollar converters. That is; "bid for gold and it will soar" cutting off your conversion. Sure the US made all sorts of noise about how awful and incorrect the rising gold price was. Even showed their hand at managing the price a little so it didn't go up too fast. All the while saying they were fighting for all they were worth to keep it down! Truly, the last decade shows naive Gold Bugs just how much in control they were and are of this so called "free commodity market in gold". Oh well, back to your point.

You see, the dollar is going to fail now because a good alternative is available now. All this has something to do with the coming new gold valuation, but that new price level is not related so much to gold backing a currency again. (more on that in a min). The dollar is toast because most of the world doesn't like the management policy. They didn't like it in 71, but tolerated it because gold was suppose to keep flowing in repatriation payments. And if they didn't like it back then, they god awful hate it now!

We like to think that the dollar is what it is because we are so good. (smile) But, the truth is that for over a two decade period +, none of our economic policy, our trade financing policy, our defense policy or our internal lifestyle policy has pleased anyone outside these borders. We managed the dollar for us (U.S.) and the rest could just follow along.

Our fiat currency has survived all these years because others have supported our dollar flow in a way that kept it from crashing it's exchange rate. We talk and think like we are winning the tug-of-war when, in fact, they just aren't pulling to hard. Waiting for their own system to form up.

Truly, most of the world likes the most conspicuous aspect of the euro that we describe as it's biggest weakness; it's management by several varied nation states. All supporting different thoughts, cultures, backgrounds and perceptions of government policy. Some compare it to the many nationalities in the US, but it's much more competitive than that. It's thought that this mixture will produce a more good for all management of a Euro world reserve currency. Truly, because gold plays no part in today's dollar management or the Euro, then political styling is all that's left.

My friends, a national fiat in our modern world only functions if the whole world uses and supports it's flow and most importantly likes it's management (political styling is the catch word). This support and use of our dollar can and will change faster than many think possible once the Euro is finished. Our dollar is not going to become a "banana" or "nada" in the future, as auspec notes. It already is and has carried this trait for some time now as does every fiat today. The only thing that keeps them from cascading away is world support and use.

When most of the major players that styled the Euro decide to swing even 1/2 support toward that new money, the exchange rate for our dollar will plunge to it's true worth! That dollar value is there now, you just don't see it yet. The price inflation that many (auspec) don't / can't see happening, will be the result of our currency management changing to confront the nature of all the above. The world economic financing, pricing, saving, settlement and opinion is shifting toward the Euro. As this happens the US will have to raise rates ever higher, even as it massively prints more currency to support our internal economy. Our entire economy will slow and fail as this price inflating process moves on. Some will call it stag / flation, but will change that description as the it becomes more of a crash / hyperinflation.

Right now, the actions of our fed is telling this truth. We must inflate while we watch the Eurozone enjoy it's basically internal trade economy. As other nation blocks embrace that zone, they will pull economic function from us.

You write:

*Comments: Again it is easy to see the dollar as losing a large piece of the action, but hard to see its total demise or its falling out of use. The US as the largest military force in the world certainly has its overriding benefits. The US has enormous resources; physical, financial, and spiritual. American creativity and "know how" has changed the world. This country will not turn over and simply give in! Let's look forward to the next 5 years and place probabilities on what is likely to happen as far as the dollar/euro is concerned. I will rank these various scenarios in what I see as their most likely odds of happening:


Auspec, before I list your most likely odds, I would like to comment on your above.

We must not confuse a currency's "total demise" or "falling out of use" with a "loss of identity". In our time there have been few major moneys that went away. Today, we have a whole world of national fiats "in use" and "not demised" that still carry their nations identity. They lose value at an incredible rate, are mismanaged to the highest degree, are laughed at and despised. But, still they are "in use" as they function for their governments and economies. Usually, they function along side whatever major reserve currency is in vogue. Today, the dollar, tomorrow the Euro. Make no mistake, the entire internal US sector can and will function as it's currency runs a price inflation just like these third world countries. We will adapt as they have by dropping our living standard accordingly and adopting the Euro as our second money. Also:

The prestige that we have the largest military force in the world does not help our money problem. We talk as if we will let any country die that does not use our money or support our currency. I point out that the British also made such comments and it didn't stop their downfall. Nor the Russians. Also:

I point out that many, many other countries also have the same "enormous resources; physical, financial, and spiritual" that we have. But the degrading of our economic trading unit, the dollar places the good use of these attributes in peril. Besides, the issue beyond these items is our current lifestyle. We buy far more than we sell, a trade deficit. Collectively, net / net, using our own
attributes and requiring the use of other nation's as well. Not unlike Black Blade's Kalifornians sucking up their neighbors energy supplies (smile). We cannot place your issues up as example of our worth to other nations unless we crash our lifestyle to a level that will allow their export! Something our currency management policy will confront with dollar printing to avert. Also:

NO, "this country will not turn over and simply give in" as you state. But, we will give up on our currency! Come now, let's take reason in grasp. Our American society's worth is not it's currency system. Around the world and over decades other fine people states have adopted dollars as their second money, only to see their society and economy improve. Even though we see only their failing first tier money. What changes is the recognition of what we do produce for ourselves and what we require from others to maintain our current standard of living. In the US this function will be a reverse example from these others. We will come to know just how "above" our capabilities we have been living. Receiving free support by way of an over valued dollar that we spent without the pain of work.

Your "various scenarios" with mine notes added :

1}Ongoing MODERATE debasement of US Dollar. {Brisker} Business as {than} usual.

----Near term, yes.-----

2}Gold and/or Oil breaks away from the dollar.

---- Oil is already doing so for a year now. The gold market is in the process of self inflating it's paper side of the function. The first minor lease rate signals are already behind us. The ECB and BIS are coming more in control as the dollar faction must either sell it's gold also or begin to fold. If they want the game to continue a little longer the US must not put it's gold on the market or the BIS and ECB would bid it with their dollar reserves. Ending it all then and there.------

3}Dual and competing reserve currencies. "Co-Currencies" in Reserves. The currency war that is in clear sight {thanks to ANOTHER and FOA}.

----- I would add that the vision of co-currencies is just a passing function as we get from here, dollar reserve, to there, Euro reserve.-----

4}Status quo.

----- We have not been here in our life times (smile).--

5}All out war that distracts/rescues the dollar and extends its life. Wag the dollar.

------ As we enter the down side of our economic function (like we are doing now) the massive money printing by the fed will risk the dollar's slow slide to becoming a super slide if a war breaks out. People run to the best managed world money in a war, not just the one with the current best exchange rate value. In the past the dollar was the one, today the Euro would receive the flow. The US would be risking killing it's last bit of dollar timeline with any war today.---------

6}Dollar merged with euro/backed by euro.

------ I know a few people that make a lot of sudden money wealth and give almost all of it to the church (or charity). Others are much more smarter and support the church (or charity) for the rest of their life. Retaining some control over how the charity is used. This is how the EuroZone would handle us. Actually, it's the same way we handled them after the war. We didn't just merge our checkbook into theirs, did we? Net / Net, they will have the wealth to be offered, not us.------

7}Brazillian or Weimar style hyperinflation of the USD, the Big Banana, or the 'little banana'.

------- Full on, wide open, in your seat, flat out! It's in the pipeline!------

You write and I comment:

Debt is designed for default as fiats are for debasement.

--- My friend, debt is the very essence of fiat. As debt defaults, fiat is destroyed. This is where all these deflationist get their direction. Not seeing that hyperinflation is the process of saving debt at all costs, even buying it outright for cash. Deflation is impossible in today's dollar terms because policy will allow the printing of cash, if necessary, to cover every last bit of debt and dumping it on your front lawn! (smile) Worthless dollars, of course, but no deflation in dollar terms! (bigger smile)

At $30,000 POG the US as we know it will be no more, agreed?

-----Agreed, but still in use. Just like all those Pesos around the world! But remember, at the very least, the first $10,000 of that figure would represent the current purchasing power of the dollar today. We will most likely get there long before price inflation jumps way up. Once the current dollar gold market fails and gives way to a free physical price, we will see that figure even as our
economic function drives all other hard money metals into the toilet. I talking about .50 cent silver. while gold races past it's first grand. When we see it we will understand it.-----------

What advantage would it be to the Power Elite to destroy the dollar.

-------- Wrong context. What advantage does the Power Elite gain by expending assets to save an already failed currency. Better to do what major players have done for centuries and are doing now, buy gold and evolve your power base to use the next reserve.-----------

The end of a currency's lifetime always ends in gold debasement?

---- In almost every case. Sometimes in the open, sometimes hidden.------

Ok, this is going overtime (smile). I will try to cover more (and others) in a day or so. Also, the question of Another at his keyboard? I reword things from him quite a bit for bare readability. But, his delivery is pure. I don't always pretend to understand it. Then, that's a whole other story (smile)



(04/21/2001; 21:12:52 MDT - Msg ID: 66)
Of Money and Men

Hello again!

Continuing along with our discussion, clarifying some points and positions, we once again offer some straight talk. Elwood has some points in his Elwood (04/19/01msg#: 52225). Sir, you referenced our last full hike on the GoldTrail #64, quoting first this portion:

"Many hard money philosophers have pointed their finger at others for the fiat situation we use today. It was the bankers and governments, the kings and cohorts, big business and robber barons or some communist manifesto that forced us to use this type of money. Well, you may not like the process and consider yourself above or apart from it all. You may even declare all of them evil. But, in the end, one fact remain; society may govern itself in many ways over thousands of years, but it has never stopped the evolution that corrupts the use of real money as official money."

Then you write:

------ Thank you, sir, for sharing your deep thoughts. True, your words are, but why is this a reason to abandon the fight for sound money? Surely you must be aware of the massive inefficiencies that will accompany a system with two moneys. There will be two prices for every good, one stable, the other not. Would not the timeline of such a system be extremely short compared to that of a system of sound money even though the sound money eventually becomes corrupted? How is this system better (or even different) than what we have today?---------

Hello Elwood (smile),

The fight for sound money is not dissimilar from the ages old fight for peace in the world. Mankind has been striving for peace over our entire existence and still it does not come. Countless lives and fortunes have been lost and the same battle continues. Perhaps we should reexamine our collective needs and try something different. Truly, what is to be lost? This is the same mind set our new political styling is shooting for. It's a good effort because history is on their side.

Yes, it's a noble effort to try and get the world on a sound money program, but after failing at it for centuries, a little side trip cannot hurt. (smile). Most people, like yourself, say sound money and think sound currency. Usually it's some form of gold backing that makes the currency sound. The trouble is it cannot be maintained. The logic in my words above are evident and the last part of the statement demonstrates the selfreplicating nature of our dealings with "sound money". Again, in a restructured form:

"""Society has never stopped the evolution that corrupts the use of real wealth (gold) as it strives to use it as official money""""

Elwood, I don't care if all of it is legal or illegal, moral or not, right or wrong, because the larger issue overwhelms these arguments. That being; we have never been able to control our power structures in a way that disciplines the printing of currency. The Romans alloyed other metals into their gold in a form of modern day paper printing. Even in the so called wonderful days of the various gold standards, be they actual coins or paper substitutes, the world debased the system from the start. Also you write:

----Surely you must be aware of the massive inefficiencies that will accompany a system with two moneys. There will be two prices for every good, one stable, the other not.-----

We never intend to have two moneys. The concept is better seen as the Euro and a wealth reserve. Still, to defend against your thrust, what do we have now? Travel the world, my friend and mingle in the world of currency. In almost every country of the planet there are several prices for ever good sold! All depending on what nations currency you choose to use. Today's system is working with perhaps hundreds of moneys!

------Would not the timeline of such a system be extremely short compared to that of a system of sound money even though the sound money eventually becomes corrupted? -------

My goodness, we have used a dollar system that has been debased and on the way out for 40+ years. Well before our 1971 gold break, this country was printing IOUs as if they were currency. Yet, the thinkers of our time, the same ones that employ two week trades on the stock markets, all ask for guarantees of decades before considering a new currency? Planners simply cannot employ the logic of a group that trades options, futures, strips and swaps, then asks for longevity before the fact.

-----How is this system better (or even different) than what we have today?---------

The real issue is our misunderstanding and misuse of the term "sound money". That thought has been bantered around for hundreds of years. Truly it does not exist except in the minds of men.

Money, the term, the idea, perhaps the ideal,,,,,,, is something we dreamed up to apply to one of our chosen units of tradable wealth. Usually gold. We could take almost every item in the world and use it in this same "money fashion". Still, this form of trading real for real is just exchanging wealth. It isn't exchanging money as we understand money.

Gold is no different than anything else you possess as your wealth, it just so happened to be the most perfect type of tradable wealth in the world. So it evolved to be used the most and eventually labeled in the same function of what we consider to be "sound money".

Now, consider that all wealth is represented in and of itself. You cannot reproduce wealth through substitution, like giving someone five pieces of copper for one piece of gold and then have then think they now have five pieces of gold! This is the process we try to perform within the realm of man's money ideals. We have always debased trading wealth by duplicating it into other forms and calling all of it, collectively, "our money".

This duplicating, this replicating, this debasement is the result of taking the concept of a credit / contract function ( paying in the future) and combining it with the concept of completing a trade at the moment. Think about that for a moment?

As an example, I'll give you a paper contract to pay you later for some oranges and you give me the basket of oranges. Better said, I just gave you modern man's actual concept of money.

Or I trade you a basket of apples "or gold" for those same oranges and the deal is finished, done! We have been taught to think that this is also the concept of money trade.

The first uses what our currency system has evolved into, what is really money in our mind. Where the second uses no credit form at all and is more comparable to trading real wealth as the ancients traded using gold.

Contemporary thought has always blurred these two notion; saying that these two methods of trading are one in the same and both forms use the same idea of what we think money is.

Further refined; we evolved our money ideals into a perception that credits and contract payments can be used as if they contain the same value in payment as trading real wealth. They could and can if managed correctly. But, we have never managed credit money to match the same proportions as existing real wealth (gold). We have tried to manage this combination of wealth trading and money credit for as long as we have been seeking "peace"!

We use, today, many forms of wealth holdings, all standing right beside our dollar use. Many of these wealth items have and do perform much better than our fiat currency. One has but to use one stock holdings as an example.

You may have $5,000 in cash in hand and in a checking account, while also owning $200,000 of ,say, Microsoft? Obviously, the stock is a competing, dual form of currency wealth. It's value rise has overshadowed the gain on your fiat. But, is it driving your currency out of circulation? Seen anyone recently using this superior form of competing wealth to pay for a fillup at the station? No?

We all need and must use some form of fiat currency to operate in this modern world. It makes little difference if MSFT went to $10 or $10 billion, you would still use the currency system in trade as a more efficient form of modern trade. Society now uses these " money" systems without any form of gold backing, not because they are "strong" or "stable", but because they work more than they fail.

Still, over the last several decades, we now have come to expect an attempt at "political styling" our fiat money that benefits more than one nation block. Further, we expect a wealth asset to not so much stand behind the system but to measure it's speed of failure or success. Knowing full well we will accept and expect some loss of value as payment for this use convince of Fiat Euro.

This is the road ahead. A fiat no different from the dollar in function, yet a universe away in management. A wealth asset that also stands beside this money, yet has no modern label or official connection as money. In this way modern society can circle the earth, to once again begin where we started. Having learned that the concept of wealth money and man's money were never the same. We shall see.



USAGOLD - Centennial Precious Metals does not endorse, assert or stand behind the accuracy or reliability of opinions, advice or statements made by any of the participants of this forum. These postings do not purport to give legal, accounting or investment advice. For that the services of a competent professional aware of your specific situation must be sought. USAGOLD / Centennial Precious Metals disclaims any personal liability, loss or risk incurred as a consequence of the use and application, either directly or indirectly, of any advice or information presented herein.