The Gold Trail by FOA - June 2001

All times are U.S. Mountain Time

(06/04/2001; 09:36:54 MDT - Msg ID: 74)
Back On The Trail!

Hello everyone!

Well, it was some trip,,,,, and yes I did catch some fish. Person has to eat you know (smile).

Now,,,,, fishing is a slow sport at times and leaves time for conversation with others on deck. And because this little boat had room for more than two,,,,, there were a lot of Thoughts to talk about,,,,,, even during the dinners of our catch.

So, I be reading some of your recent conversation on the USAGOLD FORUM, and return to deliver some promised letters, thoughts and hikes. Good to be back (smile).


FOA / Your TrailGuide

(06/09/2001; 16:36:42 MDT - Msg ID: 75)
A letter from Another to me.

My friend, I must now walk your trail in closer step. Events are closing that bring the changes we have long seen and prepared for. The time grows short as these conclusions prepare to make appearance. The last of these Euro price ranges are in sight and even the Duisenberg hints his work is done for this new currency. A hard task was completed by him, his acknowledge to the French in May 98 was with a timeframe few could understand. Now his containment is done. With introduction of notes and coins, this money will become it's own director and his work will be well received. A good day, indeed!

All were present at the meeting. I think contractual conversion became topic of some urgency. This BIS must now consider the values these forms will hold in ours and their new futures. Values that will no longer be dictated in dollars, rather realigned in conversion and gold market failure. Truly, this failure of current gold will be reflected as anguish in these western goldbugs, both bankers and investors. All done as the saving wealth for your gold advocates and new reserve bankers finds it's new mark in our time. Your work, good man, has been as trying to reconcile the religions of this world. Telling both they are just while only one can be right in the end. So it is in this day of gold.

Some knew what was coming from the beginning. With the Hague Conference of Heads of State in 1969 sprang Copenhagen Report of 23rd July 1973. We pointed and all continued to turn away to follow where power was, not where it was going. With the Solemn Declaration in Stuttgart (1983) closely followed by the Single European Act (1987) even the BIS then understood the final goal. Margaret (Thatcher) soon expressed that signing that proposition (the Solemn Act) was her greatest mistake in office. While I do agree with her on a strategic political basis, such reflections by British leader only exposes the ignored, nearing failure of their shared singular currency dominance (both USA and England). Little is expressed of the wealth lost of our peoples and that of most Western economies as these government's efforts to preserve this failing system drains real wealth from our world.

Now these leaders full attention must focus on this money transition itself as Blair's next initiative (the Euro) will lead to a realignment of contract values of all kinds. Before the fact! The Maastricht Treaty allows that by Jan. 2002, all contracts will be converted into euros and new contracts must be denominated in euros. Because Blair has overseen the signing of both Amsterdam and Nice Treaties, his closest people understand the full impact Britons intentions will have on this world's paper gold market. As it be contractually expressed in dollars. The credibility of these to not only represent gold but to maintain loan collateral on books will lead to several high level agreements to address this loss. Indeed, how does one transition a metal contract without moving the metal once again? Especially if the Euro suddenly, without explanation, rises in value. A rise that leaves only the door of metal fulfillment? All eyes must now search for a way to transition this beast as it's use and function will fall away as the Euro further expands. Some of your American gold must come into play during this game of kings. It must, as the BIS will sanction a complete disposal of contract liabilities from metal into Euros unless some real US gold is given up. Something your Bush will endorse but not without a price! As contract gold falls in price while expanding the physical price. I suspect it (official US gold) will be given up at the exchange rate of many thousands and even that will be the little drop of water that allows dollars to remain in this game. Our time arrives, my friend. Even as fools make effort to gain wealth in a gold market that will soon exist no more.

Tested now are the economies of both EuroZone and DollarZone with high crude values. The response of both is known. The ways of dollar wealth hasten their demise, even in the face of ECB restraint. Open and outright are they (FED) to discredit their position. This test is done and the verdict arrives soon. As with gold and oil, Dollars and Euros will neither any longer flow in the same direction.



(06/09/2001; 19:32:22 MDT - Msg ID: 76)

Hello everyone!

Keep an eye on any lose rocks and boulders, an earthshaking event could come at any time. While our walks follow historically proven paths, the destruction of many of today's fake trails may hinder our progress of understanding for a while. Big loses by people, both large and small, who don't own what they thought they own, usually cause them to panic down the hill sides. Right into our little physical world! (smile)

I know there are some hikers here that understand the flow of water and how it expands over a "flood plain". But, many do not or cannot perceive how physical gold will rise to seek it's own level. A level equal only to other gold, in the hand and very physical. Or at the very least, gold owned, deeded and individually partitioned in a secure account vault.


I am taken by the mind that processes logic for it's own financial advancement. Usually, it (the traders mind) does a good job of gathering the facts, then inevitably it sees said illusion where reality appears. Even to the point of selling this same illusion to others that know it isn't there (smile). Our present gold market is just such a cloud on the wind.

All over this mountain there are guides that promote the huge overhang of contract gold. An overhang that has no real metal supply to settle it, if push came to shove. Even if a large portion of official gold was brought into play, the world paper gold market just could not be traded for real metal. On this most agree. Still, these same traders that understand and sell this concept, spend their days trying to know the exact time the default will occur so they can buy a bunch of paper contracts and profit. In their mind, they see that a major default will bring in an unlimited number of buyers. Both to get new contracts and to close out short positions.

In a very broad way, this view extends well into the rest of the not so visible gold market. The problem is that today, a timeline change in the currency markets is about to completely undo the end result of this strategy. The end result of this colossal change will break the gold markets into valuations of different amounts. Just like water, gold wealth of different properties cannot attain the same level. In the event of a large enough default, the entire world of paper gold trading will be forced into full cash settlement. The question will be presented: "if there isn't enough gold around to settle these commitments, then there isn't any point in letting the price rise further to effect still no metal settlement",,,,,,, " This was a contract trading market anyway, not a gold market"! Further, the international banking industry, in accords with their governments, will enforce a kind of "position limit" on the amount of gold liability they or their customers can carry. Both long and short. It will have nothing to do with the exchanges, rather it will be a bookkeeping problem being addressed by the banks. Still, it will impact the illusion price we use for gold,,,, downward. The net effect of this will be just the opposite of what paper gold players expect as positions are "force liquidated" prior to even a "cash settlement". This sudden dumping of major contract commitments onto the markets will drive the cash settlement price of gold,,,,, ?.

This is the reality of the political banking world we live in. Neither the EuroZone or DollarZone banking world is going to let the destruction of the Anglo/Dollar gold market shut down their financial system. Take some loses? Sure! But this portion of the pie is nothing compared to the troubles to be managed by the US (our Fed) as the dollar's roll as reserve is removed. Granted, once the game is underway a true Free Gold market, trading noncolateral gold, will come about. It will be endorsed as governments settle a small portion of their political scores using physical gold reevaluated up into the "low oxygen zone". Mostly it will be US gold being moved.


These goldbug guides (mentioned above) are mostly playing for a currency profit, not gold. The same is true of "in the ground" gold advocates. While their profits and loses grow and fall in line with most gamblers, slowly, these players are losing credibility as the paper markets out play these goldbug's net worth. As events they expect to repeat are rebuffed by massive "cash backed" selling of paper gold, the expected "big" profits always fail to arrive. It's been this way for as long as Another said it would! Yes, something could change and send paper gold through the roof before anyone can stop it. If it does,,,,, good! Physical gold will do very well! But, I doubt these profits will ever be sent out as checks in the mail. Believe it!

Witness the recent long blowout of paper players on the comex? The so called "big traders" these guides thought were about to demand delivery. They were not the real "Big Traders" (I know) were they? If they were they would have demanded delivery even if the short side sold 500,000 contracts short. Even it they (sellers) drove the paper price down with empty sales! The reason these real gold advocates (Giants) buy physical gold is because they are waiting for this dollar casino of a gold currency market to shut down. This reality will end in a locked, no delivery market! Once again, Believe it!

Truly, this recent move was long "little traders" wanting to make currency profits without the real assets to back it up. Nothing more. We will see more of this as it all comes to it's end. When the real gold run Another points to comes,,,,, no one will profit anything near the amounts physical gold advocates will.

Keep climbing:

As I have said so often, the numbers we look at for today's gold price are an illusion. Because there is no real physical market large enough in scope to balance the paper trading settlement price. The price for physical gold unknown. To our advantage, gold is sold by past and present owners and this supply helps lend credibility to the market. Without it, we could not buy any gold, only cash settled contracts. A type of settled market that, if you read Another's letter, is not far away.

We all have trouble understand how there is no value known for physical gold. Yet, if we look at another market we could grasp this issue. Take American real estate:

We all have an idea what that house down the street sells for. But consider that that price does not reflect the true value of the physical house. Just watching the 30 year loan rate tells us where most home prices are going. I think (as an unreal example) almost every person would agree that is the fed went into the market to buy any and all 30 year house loans until the rates fell to 1%,,,,,, home prices would explode! Conversely, if all credit for houses was shut off,,,,,,,,, cash deals only,,,,,, home prices would crash!

How does this reflect on our gold market? We can see where a cash house is worth one price while a credit house is at a different level. The physical is the same even though means of trading and owning it generate an illusion value. You don't truly own a house brought on credit, in this light we can see that you live in something actually owned by the bank. But, you benefit by trading it if the price rises. Actually, currency profits from ownership illusion.

Our gold market has been in this same illusion fog for decades. The gold so many in the industry think they own and trade is truly just a commitment of another entity to supply you with said gold. By far, we buy, sell, lend and borrow something of an illusion. Paper trading dwarfs physical by an incredible amount. Mostly because the majority of us investors do not want to actually possess, and therefore use the physical gold. This price illusion is exactly the opposite of my above example. The credit gold price is driven far below the real gold price because supply is easily expanded to extend to anyone wishing to trade an illusion. You have just seen such an event on the US comex recently.

Other guides all point out that this cannot go on forever as eventually "Real demand usage" catches up with available "real supply". I agree. However, society has a way of changing the rules when the economic wealth that their savings are based on comes into risk. Our fiat banks will not be allowed to fail. Just as in 1971, when that real gold demand suddenly expands it's boundaries to include ordinary gold investors, the supply rules will be changed again. Fortunately for us Physical Gold Advocates, the next rule change will evolve from a reserve system that has no threat from a rising dollar gold price. Even if the contract markets crash and physical gold traded in Europe goes into the thousands, the Euro will find strength from such an occurrence. The ECB will embrase it and promote the same.

Dollar gold in the thousands,,,,,, USA inflation going hyper,,,,, The EuroZone dealing with the changes as the BIS settles all our gold dealings,,,,,,,,, And cheap Euro oil making sure Europe doesn't fail too.

Do I wish for this? Only a fool would comment to ask such a question. Am I preparing for this transition? Another would be happy to see that I am! (smile)

Thank you all for walking
I'm here for a while and will be adding more over the days



(06/12/2001; 11:23:21 MDT - Msg ID: 77)
A discussion

-----Cavan Man (6/10/01; 19:35:39MT - msg#: 55822)---It's getting dark on the gold trail.----------

Hello Cavan Man, let's walk a bit!

I just looked outside my cabin, here on the trail, and everything looks very bright to me. (smile)But one has to allow me that view as I saw this "New Gold Market" a long,,, long,,,, time ago and began making adjustments. Adjustments in the kind of wealth I own that would carry me for the whole trip. Not just these little side trails (trades) so many Gold Bugs are still trying to make pay off.

It is difficult for us to define, in explanation form, a new political perception as it evolves. Especially with old Gold players still presenting their gold views in a "has been context". Trying to explain the latest paper pricing moves as if it will fit into their past game plan. It doesn't and as time passes everyone is slowly seeing that something is changing. Michael Kosares has the best game for new advocates and I think some of them are now going that way. Just buy gold from a dealer that sees thru the fog and forget the stories of "has been leverage". True, that leverage payoff may somehow show up for a while, but none of these players will get much of a check compared to what's coming.

Yes, it is frustrating for anyone that cannot see the whole picture. Gold Bugs watch as their portfolios are further impaired as a result of investing habits that cannot evolve. Again, all based on old perceptions about today's gold. While I, too, enjoy watching TI (technical interpretations) and daily movements in the price functions of "gold substitutes",,,,,, none of this has any bearing on what "real gold" values are today or will later be as this all plays out. You see, the drama is in the political game and that game is what will determine how soon and by how much the "real value" of gold is displayed. Non the trillions of paper gold trades made around the world today, on this failing dollar gold market, can define the real value of gold.


By now everyone should understand that for every dollar that can be bet on a rising price of "paper gold"; three dollars can be made available to create and sell them the other side of that bet. When the big political moves come later and change our currency game, therefore our gold pricing game, this very same fiat contract creating ability will stand against your receiving the later value of physical gold. As expressed in a paper price.

Truly, the market is not manipulated so much as it has found a short term opposing balance. A timely political balance that has used this unlimited fiat creation as the gold price controller. A force being used to smooth a transition from one currency to another. Gold Bugs use this very same fiat creation to buy long "fiat gold contracts" and then complain because the banking reserve system, we all use can do the same. These "Anti Gold Bug" traders can create and supply just as much fiat power to sell us gold as we can use it to buy gold. Then when our futures / paper price remains the same and it's a cabal killing us. Actually, it's the modern Gold Bug's desire to shun physical gold ownership that's killing him as that desire was discovered and exploited for political means. It's free enterprise,,,,, Gold Bugs created a demand for something paper and a paper supply creation is delivered.

I marvel at how advocates of paper investing spend their time trying to determine when someone is going to buy up and corner this kind of paper market. Forget it, it's not going to happen. No one can force a paper market that has unlimited creation potential. And only a fool would try to demand delivery of a good he doesn't have the assets to pay for,,,,,, and do it in a market he knows doesn't have the metal to deliver. I know this, you know this, the government knows this and the Giants know it. Far better to just keep buying gold that will one day be correctly valued when this market's political use is done. So, have you somewhat positioned yourself for the great cornering of this "gold printing press",,,,, or are you more smartly playing the Kings game?

A few comments on your post items:

--- 1. Comex defaults.------

Yes, once again, here is an area that brings out the most impassioned analysis of most gold bugs. They all watch and wait for this big event so their paper gold substitutes can finally get them back to even. (smile) Still, everyone has their leveraged bets, in some form, waiting for the big one.

On a side note:

I smile at this because we read about the great percentage gains leveraged people are enjoying every time "paper prices" make a little move. Lost in the discussion is that this "New Gold Market" has removed such a tremendous percentage of their wealth already, that several 100% moves in these "gambles" would not make them close to whole. On a complete, long term Net / Net basis.

Someone points out their paper purchase at the lows of say, just a year or so ago, and they are now ahead and you could be too if only your ears could ignore Another. Ha! Ha! Or even buy the lesser metals, as that's where we will make it all up. Always lost in the logic is the fact that these "Gold Bugs" don't or won't advertise their previous adventures. In Hawaii (where I had lived in a small place for some time) the locals have a name for this "thought process"; "Ocean Money"! It floats in on the tide, rots a while, then floats out. (smile) They say:

"Look at that new guy, he's leaving town with a million! Must be a real successful Bro caus he only lost 9 mil to beach rot! Managed to keep some! Came here with ten million and now is on the airplane bragging to his friends. Talking about how they could leave the islands with a million too,,, if all those listening would follow his lead ////// they be rich too!

Ha! Ha! Cavan Man, I think you (and others) get my point as this connects to our new traders at the forum. With good instincts, they will rot only a little also.
(huge, oversized smile)

Climbing now

So what are we looking for when I watch the paper gold prices and comex? What gets me excited when the market begins a little move? Well, it's not the fact that it's going up, rather we are looking to see if the impact of political change is working the gold derivative's credibility yet? I am looking for some wild spurt of trading that lasts for several days or weeks. Open interest rapidly surging hundreds of thousands of contracts, then just as fast plunging away. A paper gold market, containing tremendous price changes ($100++ or more per day, both up and down) that begin to call into question the ability of Comex to function. Not so much question it's function as an price setting exchange, rather question if it can later function at all in the metal settlement process.

Where the big positions on the opposite side of the longs (shorts) find themselves in a changing world market without physical supply,,,, at almost any price. Brought on by a currency transition. Where big physical bullion dealings (one tonne ++) between real buyers and sellers,,,, outside and away from the exchanges,,,,, begins to run at a huge premiums to our contract based paper trades. Perhaps hundreds of dollars or percent higher,,,,, even impacting the ebb and flow in the coins world as misguided investors quickly sell for profits only to find no market goods later at twice the price.

In this environment, the big shorts on all paper based exchanges will be selling these new "cash created contracts" to the very limits of their capital. And trust me, they will not reach those limits because an unlimited amount of credit will be made available to them. Remember,,,,, for them,,,,, regardless of the supply,,,, the demand,,,, or the price of physical traded metal,,,, as long as the paper contract price doesn't close "up" too much,,,,, there is no risk or call on their capital. They can just keep on selling.

But, eventually (perhaps over only one day!) the outside the exchange demand for physical and it's escalating premium, will most likely see legal force from their physical buyers driving long players to demand delivery. Even if it cannot be delivered. Long,,,,,, longggggg,,,, before these delivery demands ever fully surface, comex will state position limits, cash settlement and trade for liquidation only. For you new people, this is exactly what they did during the Hunt silver fiasco. They have to do this because the articles these exchanges were created under manifest these trading places as price setting and price hedging establishments. Where the greatest majority of their trading is meant for cash contract settlement, not physical delivery settlement.

In this light, only Gold Advocates understand that default on Comex is really the forced non metal settlement of a contract at a contrived paper price. A price far below the physical traded price. Most likely a last day of trading price that settles out hundreds of percent below the world price for physical metal trading,,,,,, as it appears the very next day.

The big difference today (from the HUNT problem then) will be in the nature of this default. His was brought on by private investors buying a commodity. Today, gold market default and failure will be forced upon the dollar gold world by a sudden lack of "price setting" credibility. And that loss of credibility will stem from the stressed conversion of dollar contracts into Euro denominated units that demand "market based performance" (physical priced valuations) or an escalated (higher) Euro based cash settlement. This all will manifest in a lack of credibility in paper dollar gold trading that can no longer be marked to the market at the same value of physical gold.

This failure of price matching,,,,, this failure of contract conversion into metal,,,,,, this failure in the world gold market to any longer be able to correctly price real bullion,,,,,, will lead to a wholesale dumping of all dollar contracts that have US based performance,,,,,,and start a fall away of all dealings based on present protocols dollar market gold exchange.

As a side note: This will not apply to the paper silver markets as silver will not have the Euro vs. Dollar political struggle. A struggle where the ECB members are trying to loosen their main asset (gold) as a reserve wealth backing to replace the massive loss of dollar reserves. Remember, further back on the trail we covered how these reserve dollars will be simply cast down. In this light, silver trading will bear the brunt of selling in an effort to balance loses from a gold exchange that no longer works. Because silver has no hope of an official free market, it's paper pricing system may run amuck until it's price plunges to??? This is the reason so many countries that are contemplating a switch from dollar to Euro use are selling physical silver and buying gold (China, India, etc). It also explains to movement of gold between countries that planned outright Euro conversion.

Back to gold's paper pricing breakdown:

It will not lead to the collapse of world banking so much as it will lead to a reallocation of value between assets vs reserves. Which are and which are not. Further, a loss of paper exchange trading will drive gold to it's true physically traded price. Gold in the tens of thousands per ounce will represent:

,,,, it's real currency value in today's expanded fiat world,,,,,,, then later it will advance further on the price inflation coming to the USA. This is where so many thinkers cannot see super priced gold. They are seeing the present illusion of gold value as it's base. Later, a gold move from say, $10,000 to $20,000++ will only represent a 50% rise. Liken to an oh so understandable $300 to $600 today.

,,,,, the total rejection of owning gold in any form except the real thing,,,, no amount of gold supply will come close to equalizing this current ownership imbalance built up over many decades. If anything, sellers will be confounded as nothing keeps pace with the gold rise. Once sold, it only costs double to rebuy.

,,,,, a return of old world values in that gold is worth owning as a lifetime wealth asset beside your cash and other investments,,,,,, While the US will experience a massive retrenchment of it's wealth perceptions, our move into gold will be chaotic and traumatic. Other parts of the globe will fare well. Life will go on. Remember, people talk about how the US makes a quarter of the worlds products and services and say the rest of the world cannot do without our operating as usual. But, they forget that we consume all of it (that 25%) and then import more. Our production fall away will mostly be at the mercy of our own slow down. As the dollar tumbles on exchange markets, so too will our cost rise to produce anything (massive hyper price inflation). Rendering a net / net non gain in world trade advantage. In other words, our goods may very well rise in price faster than our dollar falls. If anything, we become even less competitive with Euro based production.

Further Onward

This new realigned price of gold will offer no threat to the Euro as it does to our Dollar. The open gold value calculations by the ECB proclaim their intention to allow gold to rise as a Euro enhancement. Not a Euro replacement item. Remember, old world values dictated that gold was
not a competing money any more than Microsoft shares are against the dollar today.

Gold, from times past was a wealth asset more so than it was in the form of money. Granted, it became the fastest moving form of wealth, but as it traveled on the road it was still simply seen as a tradable wealth. It has been American and Western ideals that made gold a lend able money and forced it's competition against failed currency systems. We set currencies in fixed gold amounts and then inflated the currency. No wonder gold competed against currencies. The ECB will allow gold to go to the moon and everyone will love them for it. People will use the Euro whether gold is at 1 Euro or a trillion.

Arguments against this new logic (by failing Gold Bugs) are little more than a throw back to their outmoded Western money logic. ET (a USAGOLD poster) even thinks that by freeing gold to rise to whatever level it wants,,,,, we are somehow governing it??? That direction of thinking is caused by "promoted investing". The logic is to somehow invest in gold (the industry or it's paper leverage) more so than owning the metal. Leaving the agenda of physical gold storage to be something the official governments or private enterprise should do for us. They base their concepts on a return of gold recognition as a somewhat official government money after price inflation discredits the local
currency (Dollars).

Such logic suggests we buy into the various SEC sanctioned (government) paper gold substitutes while governments somewhat allow a devaluation of their money against gold. Say to $800? In this way the dollar is saved a little while the gold exchanges continue life as before. This, my friend was a failure in the past and the future will provide a very different rendering.

Higher we go

We have named our big fish and it is Allan himself! The old Gold Advocate, from way back, that knows how to use gold as a system saving tool when backed into a corner. They have reclassified some of the American gold for use later. It is still ours now, to be sure and has not been swapped or sold. It was renamed with the full intentions of our ESF buying dollar reserves from Euro CBs (and others) as the Euro later gains usage (and value) independent of the dollar. In light of the Blair vote, I would rate their move as very smart. This was done (and will be done more so later) to provide backing and settlement against US paper gold commitments owed to and already delivered into oil ownership. This paper is mostly in Euro banks.

This was "part" of the price we paid for oil to flow in dollars this last decade as the Euro was born. This was the price we paid for an extension of dollar use in oil settlement. It will be moved when gold trades at a much,,,,, much higher price. It backs Another's point of long ago that oil was traded for gold in the thousands at that time,,,, we just had to wait for the real price to be shown. It will!

This is the decades long game we are playing for, my friend. This is the big one we own gold for. This will be the defining moment in our time that changes perceptions about the value, reserve currencies and the wealth of ages. Watch with me now, as events prove all things!

Thanks, Cavan Man


(06/19/2001; 19:26:30 MDT - Msg ID: 78)
Time for a rest!

Hello ALL!

We are a little bushed from all the recent path clearing, here on the Gold Trail. So, rather than walk the trail today, I want to just speak a little about some various things that may interest some. Let's rest here on the porch and consider:

Of Credibility
A long time ago a gentleman told me; "go ahead, use your mind, speak for me as I give to you. Tell them our thoughts, it be good for all to know these things". With that comment, it all started. Even further back, long before we had these internet forums the logic and efforts behind this push was flowing..

Presently, I write almost entirely for myself. Another shares with me when and if as he sees fit. Often, to my consternation, and some embarrassment, his Thoughts do not arrive for copy when I say they will. Truly, this is as it should be.

I (we) expect none of you to consider anything said here as credible. Everything is given as I understand it. If you came with a notion that I am someone who sees the future; grab the children and run far away. For these Thoughts, and my ongoing commentary, are meant to impact exactly as the "gentleman" said they would. People hear them, and whether believed or not, the words leave a mark. A mental mark on the trail, if you will. And later, after the world turns, our little "stacks of rocks" will be easier to understand next time you are passing this way. In fact, your ability to find your own way will forever be enhanced for having seen this path in a different light.

Of Myself
I seek nothing and am paid nothing for this effort. CPM allows my discussion for their clients consideration and perhaps entertainment. It is not given as fact. To this end I offer this as Another has done; so these works are as free as the wind. My word is to remain, here only, until finished or as long as MK will accept me. That is all that binds my hand.

I have an old world kind of logic that requires me to stand upon or feel anything I invest my wealth in. And indeed, my wealth is partially what I know and speak. So to that end, I myself, some long time ago, have stood within the door of CPM's office! Just to look around. I spoke only to the woman at the front desk and was known to no one. By my word, this was my only contact with this fine company.

Now back to the task at hand: some comments and replies.

Instead of writing to every person that has commented to me on USAGOLD Forum over this last few days, I'll just reference a few and their

---- good words ----

and reply further myself.


------ "Thanks for working so hard for us, as always" ----

Thank you, Mr GRESHAM (smile)

------ "Can ya imagine the parallel to UAW autoworkers in the 80's who were smashing foreign cars?? How about out of work financiers rallying in downtown Flint against those "Euro lovin' traitors" who own gold just to undermine the great USA?? I'm beginning to wonder if finding some cozy place in Europe might be a wise move someday." ------------

Ha! Ha! DRAGONFLY, don't be too hard on humankind! If you decide to go to Europe, keep a place here also. We are not so bad, just like most of our extended families,,,,,, hate some and love the others! (grin)

------- "And not to forget MK's latest essay - it's a-(u)wesome." --------

COBRA(too), don't ever make the mistake of debating MK! I can see his mind and those letters stand for "Money Knowledge"! (smile)

--------- "Dollar use has expanded in the world over for almost 30 years without being tied to gold, therefore Euro use should do the same. Dollar used the idea of forced liquidation of contracts in 1971, therefore EU should the same in 2002.---------------

GE, just follow your own trail, sir. It will connect to ours soon enough. See you there.

---------Professor von Braun's latest update at The Rocket School of Economics,,, Excerpt from "Lecture 38"-----

Hi there, RANDY at the TOWER! Your input did not go without thought. The professor is real sharp and understands political power. Just look at how Placer Dome has just been forced to formally relinquished it's holdings in a major south american property. Between Bre-X and government grabs?????? what a place for us to put our wealth?

People forget to consider that taxing power is greater than takeover power for governments. When gold was money in the US, it didn't generate much tax revenue on it's sale. So, they grabbed the cash that at that time was in the form of gold. They didn't make any friends, but you have to admit it was a smart move.

But now it would most likely be reversed. Especially if the wealth reserve (gold) most world nations hold (the US will have a lot less a little later) becomes better taxable as the result of rising prices. In other words, there is no way governments today will grab gold if they can tax it's trade and production at far higher rates to gain fiat bookkeeping income. This avenue is part of what is behind the Free Gold drive that so few can see.

ORO rightly argues that high official taxes are what drive away all economic business endeavors and kills the tax paying goose. However, if the world's greatest wealth asset (gold) can be put in such demand that it's price starts a long steady climb,,,,,, without it competing with fiat money,,,,,, the mines will stay in production even if production is taxed to death and controlled by a new "Texas Railroad Commission". (Thanks Randy #56039!) Let's see, years from now, a mine produces gold at a gross dollar cost of $1,300 and ounce,,,,,, then sells for $27,225 an ounce,,,,,, the government taxes $23,000 an ounce,,,,,, Yup! they will make some good profit on the amount of allocated production they can do.

Just like oil today,,,,,,,, Free Gold is a good deal for tax income. And most gold industry workers will stay in their jobs (although some layoffs will happen) even though it's a dirty, almost break even deal for mine owners. Their business would only get a fraction of the profits from a huge rise in gold bullion and their shares would wallow in uncertainty as gold soars. But, then again, didn't your buddy Will Rogers say something about American risk takers,,,,like:

"staying out of the governments path with your investments is the second national pass time behind baseball"

Ho! Ho! That Will was something!

So, the future may just be a great deal for bullion owners as gold rises! Yes? Even old Aristotle would not have to sell and pay taxes,,,,,, at least until he wanted to sell to buy a better lifestyle. Yes, this is the reason that gold production is today and will be later such a bad investment.
Compared to bullion and rare coins, that is! *[With their regular capital gains tax rates.] *(Ed. note: appended according to following post)

---------------- "CALL ME SIMPLE, CALL ME WHAT EVER...... BUT THAT BAGS IT FOR ME" ---------------------

OK, BUENA FE! You are on the team,,,,,, onward! (smile)

------ "I do not understand FOA's statement that because the ECB decrees it, gold will not be anywhere, lent or borrowed. Seems to me that what I do with my gold is outside any jurisdiction of the ECB, and the same is true of many others" ---------------

Actually GOLDFAN, your feelings were easily comparable to those of drinkers during our American prohibition. Alcohol was against the law but people did it anyway. In many ways people's actions are the free market that is so powerful against government laws. During the war, everything from cigarettes to rubber was rationed and outlawed from typical use. Still, the market often overcame the law. Heck, even today, drugs and any number of other illegal activities are done as the law has little ability to stop the same.

But that's not the kind of law what this vision of a Free Gold market will depend on. These examples above outline rules and laws that restrict actions. For any wealth law to have an effect, it would have to be a known official protocol on the recourse side of disputed claims. Almost like how the dollar Legal Tender is a law in the US and mostly a protocol in the rest of the world. It regulates how you settle currency debts everywhere but has no real jurisdiction overseas. Except through IMF agreements.

On gold settlement, the comex did as much when it changed it's rules on silver during the 1980 hunt fiasco. By stopping the hunts from settling their futures contracts in physical silver, they stopped real people from dealing silver thru contract. At least on that exchange.

I don't expect the EBES (Euro Bullion Exchange System or whatever type name they use) to act exactly, but in the same spirit. No one is going to tell anyone they cannot enter into gold contracts. Sure, we will be able to borrow, lend, option or sell gold all we want. But, unlike those overt alcohol laws during prohibition, today's gold party people be able to drink all they want. (smile) That is deal in all the gold collateral you want. But, if any of those deals go bad because the other side wants to walk, instead of deliver, you will have to settle in cash. In a Euro court of law, no one could bind you to physical settlement if the deal was in Euro Legal Tender. Even if it was in the contract. You would have to accept cash, if contested.

Now, some say this will simply drive all gold deals outside Europe. That's thinking in the present context. But in the future the dollar reserve and it's credit gold market will be in a shambles with people running all over the globe just looking for a place to deal gold at all. Credit gold will be a joke by then as trillions of losses will be outstanding.

The effect of all this would be to drive most every portion of physical gold dealings into "on the spot" buying and selling. Mostly in Euros. A mine could still borrow, using the value of gold as collateral, but it would only be the "cash value" of that gold that could be used in settlement (if the deal went to court). OR physical settlement if both sides had no problem (and stayed out of court).

This kind of legal protocol change, not unlike changing comex rules of trade, only affects the financial side of gold and in no way restricts investors from cash spot dealing in physical gold. Again, it would force the world gold markets to adjust away from copying the old dollar markets that so manipulated the physical gold price in the first place. Of course, no one would be trying to deal gold in dollars then anyway.

In reality, very little physical gold would be borrowed, either ahead of production or from world stores to sell into the spot market. If one owned gold and wanted to liquidate to buy something, you would sell it, pay taxes and use your dollars ,,,, errrr Euros! Gold would, over time, rise to reflect it's real reserve value to both central banks and private owners the world over.

OIL, governments, corporations and families would once again all be buying real gold for the historic wealth value such a metal imparted to a portion of their total asset savings. The demand for gold would once again be generated for it's main "historic utility";

"a wealth no social group could inflate thru monetary credit use"

Gold would would then become a moving tradable asset that tended to value currencies in parallel. A wealth without a country or sponsor. If one preferred to see as MK might, as a money without a country, that's good too!

The effect would be the same. The physical price on gold would respond to the ebb and flow of a rare metal no different than the ebb and flow of currencies today. As the always present inflation tax took away from fiat, as it has done from the beginnings of time,,,,, so too would the various gains taxes take from gold as it was traded for cash to buy things. There would be no monopoly of either over the other. The wealth utility of gold would be matched by the necessity utility of digital money. Fiat would be inflated at "whatever rate" as it stayed in settlement use. Investments would be made and lost, no different than today in our largely "ungold" fiat money world. Only for gold, then, it would be purchased for it's longer term ownership by both official and private interest.

If there is one redeeming consideration here,,,, it is that gold, separate from all money issues, would rise to reflect all the wealth inherent in the world. Just as it's value did in ancient times. But remember, when trying to compare values back then, that bottle of olive oil was worth so much more to life than an equal item is today. However, our modern world has a 1,000,000 times the total wealth as existed back then. Truly, gold has a long journey of price appreciation before it even begins to slow. Our children will not see it's full value reached.

Will such a transition be stopped? Not if it benefits the purpose of everyone and this certainly will. Is it the best? No, I think ORO's directions are the best, but the world has proven we will never live with it. Much less even try to return to it. War "times 2" will not bring us to gold money again. Besides, we live in today and tomorrow, not the past and we have changed our economic dynamics far too much for gold to ever be used as credit money again. Yes, the dollar will fail and it's whole economic system will slowly (or quickly) fall away. But, we are an energetic lot and have already planned the next replacement.

So onward we hike to see how the path turns.

OK, enough for now. (smile) I want to thank everyone that read, commented or considered these thoughts. Both here and on the main forum as well as OROs great works. I'll reply more to other's posts when I return in a few days. Perhaps then Journeyman and I can go out for some burgers and beer on the USAGOLD Forum,,,,,, while we talk about our differences on gold (smile).

it's true they say, and now I know,
no one can teach where nations strive to go
we can only grasp this power of mankind
what conviction to conclude the thoughts of their mind
you hear others who cry so longing for an end
but only history marks that point with a pin
so make this is my task
to give on the chin
the Thoughts of Another from this
Western Gai-Jin

Thanks ALL


(06/19/2001; 19:47:46 MDT - Msg ID: 79)

Oh boy,

Left am item out and messed up my poem. Here is the corrected:

So, the future may just be a great deal for bullion owners as gold rises! Yes? Even old Aristotle would not have to sell and pay taxes,,,,,, at least until he wanted to sell to buy a better lifestyle. Yes, this is the reason that gold production is today and will be later such a bad investment.
Compared to bullion and rare coins, that is! +++ With their regular capital gains tax rates.++


it's true they say, and now I know,
no one can teach where nations strive to go
we can only grasp this power of mankind
what conviction to conclude the thoughts of their mind
you hear others who cry so longing for an end
but only history marks that point with a pin
so make this my task
to give on the chin
the Thoughts of Another from this
Western Gai-Jin

OK, good day to all

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